Case Name: Paul HENDRICKSON v. Randall CARPENTER and Nita Carpenter
Court: Arkansas Court of Appeals
Jurisdiction: Arkansas
Decision Date: 2004-12-01
Citations: 88 Ark. App. 369
Docket Number: CA 04-0038
Parties: Paul HENDRICKSON v. Randall CARPENTER and Nita Carpenter
Judges: Hart, Vaught, Baker and Roaf, JJ., agree.
Reporter: Arkansas Appellate Reports
Volume: 88
Pages: 369–379

Head Matter:
Paul HENDRICKSON v. Randall CARPENTER and Nita Carpenter
CA 04-0038
199 S.W.3d 100
Court of Appeals of Arkansas
Opinion delivered December 1, 2004
Gibson &Hashem, P.L.C., by: Paul W. Keith, for appellant Paul Hendrickson.
Harrelson, Moore, & Giles, LLP, by: Steve Harrelson, for appellee Randall Carpenter.
Gibson Law Office, by: C.S. “Chuck” Gibson, II, for appellee Nita Carpenter.

Opinion:
Olly Neal, Judge.
Appellant Paul Hendrickson appeals from a decision of the Drew County Circuit Court dismissing his claim to recover funds expended for the benefit of the appellees Randall Carpenter and Nita Carpenter. On appeal, he alleges that the trial court erred when it found that his complaint was barred by a three-year statute of limitations.
The facts of this case are as follows. On June 4, 1992, appellant agreed to guarantee an $80,000 loan by Union Bank and Trust Company of Monticello to the appellees. A year and a half later, on December 27, 1993, appellant purchased the note from the bank. Following appellant's purchase of the note, the appellees continued to make payments on the note until June 14, 1999. On December 10, 2002, appellant filed a complaint seeking to be reimbursed $136,150. In her reply, appellee Nita Carpenter acknowledged that appellant was the guarantor on the note but disputed the amount due. However, in his reply, appellee Randall Carpenter made a 12(b)(6) motion to dismiss asserting that (1) the statute of limitations had run and (2) appellant was attempting to enforce "an alleged collateral suretyship promise without a sufficient writing nor a signature of the person to be charged evidencing a contract." The trial court found that appellant was seeking contribution and that the matter was controlled by a three-year statute of limitations, and therefore, appellant's cause of action was barred. From that decision comes this appeal.
Rule 12(b)(6) of the Arkansas Rules of Civil Procedure provides that:
Every defense, in law or in fret, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim or third party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may, at the option of the pleader, be made by motion:
(6) failure to state facts upon which relief can be granted.
In reviewing a trial court's decision on a motion to dismiss under Ark. R. Civ. P. 12(b)(6), we treat the facts alleged in the complaint as true and view them in the light most favorable to the party who filed the complaint. Martin v. Equitable Life Assurance Soc'y, 344 Ark. 177, 40 S.W.3d 733 (2001). In testing the sufficiency of the complaint on a motion to dismiss, all reasonable inferences must be resolved in favor of the complaint, and the pleadings are to be liberally construed. Id. Our rules require fact pleading, and a complaint must state facts, not mere conclusions, in order to entitle the pleader to relief. Arkansas Dep't of Envtl. Quality v. Brighton Corp., 352 Ark. 396, 102 S.W.3d 458 (2003). We look to the underlying facts supporting an alleged cause of action to determine whether the matter has been sufficiently pled. Id.
In his complaint, appellant alleged the following:
3. This is a claim brought by Plaintiff to recover certain funds advanced to or for the benefit of Defendants Carpenter.
5. Plaintiff paid the sum of $80,000 to Union Bank & Trust Company pursuant to his guaranty of a note owing by Defendants Carpenter to Union Bank. Attached is a copy of Plaintiff s check used to satisfy said note together with copies of receipts given by the bank in connection with this payment.
In an October 1,2003, order, the trial court applied Rule 12(b)(6) and found that the complaint alleged a cause of action. In the order the trial court also found that:
This is an action by a surety who claims that he paid an obligation which he and defendants owed and is entitled to contribution.
Pursuant to Hazel, et al v. Sharum, et al., 182 Ark. 557, S.W.2d 315 (1930), in a case similar to the one at bar, the Arkansas Supreme Court stated all of the signers of the note in question were joint obligors. They were joindy and severally liable to the bank for the whole amount of the note. Each was liable for the whole amount. The right of action for contribution accrues when one surety pays more than his share of the common liability. In most cases it is said that the contract for contribution between sureties is one which the law implies for their mutual protection and indemnity. Nearly all cases agree, however, that no cause of action arises until payment by one of their common debtors is made and the statute of limitation begins to run against an action to enforce contribution at the time of such payment; and the three-year statute of limitations is held applicable. Cooper v. Rush, 138 Ark. 602, 212 S.W. 94 (1919)[.] In this case, the promissory note allegedly executed between Union Bank & Trust Company and the obligors is eligible. However, for purpose [sic] of this proceeding, it is the assumption that the promissory note was executed by defendants as makers and plaintiff as guarantor. It is the Court's opinion that each signer of the note is an obligor to the bank. There is no allegation of an assignment of the promissory note by the bank to the plaintiff. Thus, the Court assumes that defendant [sic] ceased making payments to plaintiff on June 14,1999. The record shows that this action was filed December 10, 2002. The right of action for contribution is an implied obligation, one which is not in writing between the parties hereto and the Court finds that the three-year limitation statute controls. Accordingly, this action is barred by the three-year statute of limitations.
Appellant argues that he was seeking subrogation as an accommodating party and not contribution. Although this court gives great deference to findings of fact by the trial court due to the trial court's superior position to determine credibility issues, it does not give such deference to matters of law, in that the trial court stands in no better position to apply the law than this court. Acord v. Acord, 70 Ark. App. 409, 19 S.W.3d 644 (2000).
A guarantor is one who makes a contract, which is distinct from the principal obligation, to be collaterally liable to the creditor if the principal debtor fails to perform. First Commercial Bank, N.A., v. Walker, 333 Ark. 100, 969 S.W.2d 146 (1998). A party is entitled to contribution when he is jointly and severally liable on a note, and subsequently pays the entire obligation. See Wroten v. Evans, 21 Ark. App. 134, 729 S.W.2d 422 (1987). Subrogation is an equitable remedy that rests upon principles of unjust enrichment and attempts to accomplish complete and perfect justice among parties. Morris v. Arkansas Dep't of Fin. & Admin., 82 Ark. App. 124, 112 S.W.3d 378 (2003). A party's subrogation rights arise when one not primarily bound to pay a debt, or remove an incumbrance, nevertheless does so; either from his legal obligation, as in the case of a surety, or to protect his own secondary right; or upon the request of the original debtor, and upon the faith that, as against the debtor, the person paying will have the same sureties for reimbursement as the creditor had for payment. Welch Foods v. Chicago Title Ins. Co., 341 Ark. 515, 17 S.W.3d 467 (2000).
The trial court erred when it relied on Hazel v. Sharum, supra. The parties in Sharum, supra, were co-makers on the note at issue. Co-makers on a note are jointly and severally liable. See 12 Am. Jur.2d Bills and Notes § 439 (1997). In the present case, if we treat the facts alleged in the complaint as true and view them in the light most favorable to appellant, then appellant was a guarantor. As guarantor, appellant was not jointly and severally liable for the payment of the appellees' note. When appellant paid the note, he assumed the position of the bank. See Blackford v. Dickey, 302 Ark. 261, 789 S.W.2d 445 (1990) (stating that the person paying will have the same sureties for reimbursement as the creditor had for payment). Therefore, the loan papers between appellees and the bank constituted evidence of the agreement between appellant and appellees. Thus, a written agreement existed between the parties. Arkansas Code Annotated section 16-56-111 (a) (Supp. 2003) provides that actions to enforce a written obligation shall commence within five years after the cause of action shall accrue. The trial court erred when it found that appellant was seeking contribution and that the cause of action was barred by a three-year statute of limitations. Therefore, we reverse and remand the decision of the trial court.
Reversed and remanded.
Hart, Vaught, Baker and Roaf, JJ., agree.
Griffen, J., dissents.