Case Name: McMillan, Administrator, v. Palmer
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1939-07-03
Citations: 198 Ark. 805
Docket Number: 4-5550
Parties: McMillan, Administrator, v. Palmer.
Judges: 
Reporter: Arkansas Reports
Volume: 198
Pages: 805–814

Head Matter:
McMillan, Administrator, v. Palmer.
4-5550
131 S. W. 2nd 943
Opinion delivered July 3, 1939.
D. W. McMillan and J. II. McMillan, for appellant.
J. H. Loohacloo, for appellees.

Opinion:
Baker, J.
The appellee, T. B. Palmer, was indebted to Dougald McMillan, Sr., for borrowed money in the sum of $3,500. This was evidenced by a note bearing interest at 10 per cent, per annum and was secured by a mortgage on Palmer's home at Amity, Arkansas, a 91-acre farm about a half mile from the home, and 480 acres of land in Pike county.' This original debt was created in 1922. In 1931 the debt amounted to $3,641.18. At that time it was renewed and a deed of trust was given conveying all the property covered in the original mortgage, and there was added 75 acres of land in Car-land county, which was at that time the home place of Palmer. Dougald McMillan, Sr., died in 1933. This indebtedness had not been paid but had been increased by interest and advances for taxes. Dougald McMillan, Jr., was appointed administrator of his father's estate. On account of his efforts to make collection, Palmer made application to the HOLC .offering a mortgage upon his property in the town of Amity, where he then resided, for a loan of $2,500. He proposed to give a first lien on the property as security for the debt. The administrator filed a "consent" agreement to accept $2,500 in bonds from the HOL'C. The property was appraised, and it was finally proposed that a loan of $2,200 would be made, provided approximately $300 was expended in repairs on the home and in payment of certain taxes and expenses, leaving $1,820.03 to be applied to the debt due the estate. In accordance with this proposition there was later delivered to the appellant $1,800 in bonds and $20.03 in cash, and at that time the administrator executed a release in order that the HOLC might take and have a first lien against the home property at Amity. It is not in dispute that, at the beginning of these negotiations, the administrator informed Palmer that he could not secure a loan from the HOLC for an amount sufficient to pay Palmer's debt to the estate, and we think it may be conceded that after the bonds from the HOLC were delivered and credited on the indebtedness owing by Palmer he executed new notes giving a second lien on the homestead property and a first lien on the 480 acres in Pike county, a 90-acre farm near Amity and 75 acres in Garland county. This balance represented by the new obligations was $3,015, and Palmer executed three notes for $1,005 each, the first due one year after date, the second two years after date and the third three years after date. On these three new notes interest was payable at 8 per cent, instead of 10 per cent., according to the original indebtedness. Palmer did not make payment upon this indebtedness and suit was filed to foreclose upon it, including additional money advanced to pay taxes. After this suit was filed parties entered into an oral agreement whereby Palmer was permitted to cut pine timber from the Pike county land and apply $4 per thousand-feet upon the debt due the administrator. Not' all the timber was cut before Palmer ceased his milling operations . There' was an agreement made also whereby Palmer was permitted to enter into some mining operations on the Pike county lands. The Atlas Quicksilver Corporation was authorized to carry on these mining operations and for that reason it was finally made a party to this suit. When the suit to foreclose was pressed the defendants filed an amended, an swer in which they pleaded that the plaintiff had signed an agreement with the HOLC to accept the $1,832.40 in bonds as a full and complete settlement of the debt; that the plaintiff then, in violation of the law and by threats of the foreclosure of the mortgage, forced Palmer to give him a new mortgage on all the property for the difference in the amount plaintiff claimed the defendant owed and the face value of the bonds received and asserted these matters as a complete bar to plaintiff's right to recover.
In addition, by way of cross-complaint, defendant, Palmer, pleaded that he had paid from the timber cut upon the lands $1,678, and that this was paid through threat and duress, and he asked for a recovery of this sum. The decree of the court was in accordance with the defendant's contention, and plaintiff was not permitted to recover for the balance due upon the three notes aggregating $3,015 and advancements made to pay taxes, but the court also held that the payments made by Palmer of the $1,678 were voluntary, and that he would not be permitted to recover. Prom that decree plaintiff duly appealed, and the appellees have prayed a cross-appeal asking a recovery of the amounts paid upon the $3,015 alleged indebtedness.
In a matter of this kind wherein our opinions are preserved, there is little merit in repetition. On that account we are announcing as a preliminary to whatever comment that we may offer that the case of Sirman v. Sloss Realty Co., Inc., ante p. 534, 129 S. W. 2d 602, is determinative of the principles involved upon this appeal. It remains for us to make application of our conclusions therein to the case at bar. What wre have to say now in making such application may also be treated as supplemental to the case of Sirman v. Sloss Realty Co., Inc., supra, in overruling the petition therein filed for a rehearing. We find in this class of cases that counsel not only here, but in other cases that have been cited speak of and discuss propositions of secret agreements and fraud. If it is meant by the term "secret agreements," an implication that the parties have not dealt openly with each other, but with stealth and with hidden transac tions to the disadvantage of the HOLC, and that corporation has been injured thereby, it should make the complainant offer its proof thereof. It certainly does not lie in the mouth of Palmer to enter voluntarily into a contract with the administrator of the McMillan estate and then plead his own conduct as a form of secret agreement or as a species of fraud which impairs the contract entered into between Palmer and the HOLC and on that account invalidate the other contract made with the administrator of the McMillan estate. If it should be conceded that the release executed by the administrator of the McMillan estate was in itself sufficient to discharge the indebtedness Palmer owed, that fact alone would not be conclusive of the controversy presented on this appeal. That is true for the reason that the moral obligation to pay what one justly owes is a sufficient consideration to support a new note or other evidence of indebtedness executed in acknowledgment of the amount owing. Even an unwritten promise has been held sufficient to revive a pre-existing debt. Apperson & Co. v. Stewart, 27 Ark. 619; Gilbert's Collier on Bankruptcy, p. 384, § 574; Fonville v. Wichita State Bank & Trust Co., 161 Ark. 93, 255 S. W. 561, 33 A. L. R. 125. This last cited case is also authority decisive of the question of duress.
There is perhaps no more effective release of one from the payment of his just obligations than proceedings and discharge in bankruptcy. But it has been seen that one who renews his old debt discharged in bankruptcy by a new obligation is bound thereby. Such concession above set out, however, was not made. It was pleaded, established by proof and not seriously disputed that after the bonds were delivered there was an unpaid balance of the original debt. In the case at bar, as in other cases of this kind, the creditor was under no obligation to discharge his debtor for a sum less than the full amount due, and, if he permitted him to take some of the property mortgaged and pledge, it to another lender, this was a matter of agreement and contract, and we think that so long as the parties deal fairly with each other there is no cause or reason to hinder them in their freedom to contract in regard to their own private business affairs. There is no sounder public policy. Northwestern Mutual Fire Ass'n v. Pacific Wharf & Storage Co., 187 Cal. 38, 200 P. 934, 937.
Authority for the following statements may be found in 1 C. J. S., p. 468, § 3, and other standard texts. There was no dispute about the amount due or owing, hence no compromise or settlement for a sum less than the amount claimed. There can be very little merit in an argument or elaboration of the principles of accord and satisfaction for settlements that are controlled by such principles are matters of contract entered into by the parties. The parties made their own agreement. They executed new notes for $3,015, a second mortgage upon the Amity property and a first mortgage upon other property. Certainly the courts may not declare as a matter of law that the parties were not free to enter into and make their own contracts. Courts may not substitute for the parties agreements they did not intend and bar their rights of recovery that both acknowledged.
In addition to the authorities cited in the case of Sirman v. Sloss Realty Co., Inc., supra, we now call attention to Glick v. Bank of America, Civ. No. 3911 App. Dept. of Superior Court in and for Los Angeles County, case No. 470,595 Ct. 357, Certiorari denied January 3, 1939, 305 U. S. 657, 59 S. Ct. 357, 83 L. Ed. 426.
In the foregoing citation it appears that this matter was presented to the Supreme Court of the United States by writ of certiorari which was denied. It is perhaps apparent to every one that if the announcements in the Grlick Case above were contrary to the public policy in the United States, the highest court of our country might well have said so, making use of the opportunity to do so. We cannot think that a more extensive elaboration of the principles involved in this controversy will be of any particular benefit in this or any similar case.
It follows that the trial court was in error in dismissing the plaintiff's complaint, and the decree must, therefore, be reversed. It is reversed with directions to enter a decree of foreclosure and order a sale of the property giving such recognition to the mining company's rights as the contract provides, including in such sale also that in the second mortgage. .In directing a sale of the mortgaged property, the court may order such sale in the order requested by mortgagor, if deemed desirable. The homestead property may not be sold unless the other or remaining property be insufficient to pay the indebtedness.
The appellee was not entitled to recover, and his cross-appeal is dismissed.