Case Name: Adams v. Harrell
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1927-03-28
Citations: 173 Ark. 123
Docket Number: 
Parties: Adams v. Harrell.
Judges: 
Reporter: Arkansas Reports
Volume: 173
Pages: 123–127

Head Matter:
Adams v. Harrell.
Opinion delivered March 28, 1927.
McN alley é Sellers, for appellant.
Coy M. Nixon and E. W. Brockma,n, for appellee.

Opinion:
Hart, C. J.,
(after stating the facts). The subject of trust forms a large part of equity jurisprudence, and the equitable doctrine established in relation to trusts and trust estates enables a chancellor to deal with them in a way to maintain justice and good faith between the parties interested. The entire doctrine of trusts rests upon the principle that equity looks updn that as done which ought to be done. In the application of the principle, equity looks through form to substance, and it fashions its decrees. to carry out the purposes of the trust agreement and to protect the parties from bad faith and unnecessary advantage. In this connection it may also be stated that the appeal in chancery is a trial de novo in this court upon the same pleadings and evidence heard in the court below, and the finding of the chancellor upon disputed questions of fact will not be reversed unless it is against the clear preponderance of the evidence. Bearing in mind these well settled principles of equity and our familiar rules of practice in equity appeals, it cannot be said that the decree of the chancellor should be reversed.
Harrell rendered a definite and detailed account of his administration of the trust estate.' It showed each item of money received by him and for what purpose it was expended. It is not shown that Harrell in any manner profited by his administration of the trust estate.
In the beginning, he furnished money with which he and Adams each obtained a one-fourth interest in the oil and gas lease owned by Cook. Mrs. Allen and Tierce then jointly acquired a one-fourth interest. Cook retained a one-fourth interest. The parties borrowed $4,000 from Mrs. Allen to use in drilling operations. Mrs. Allen says that she loaned them this money because Harrell signed the note. The money was turned over to Cook to be used by him in drilling for oil on the lease. Cook did some work, but secretly left the State, taking the money belonging to the trust estate with him. Harrell, through Cook's wife, induced him to return to Union County and to assign the lease to Harrell, as trustee for those beneficially interested in it. The interest of Cook was' assigned to his wife.
Harrell then undertook to administer the trust estate by drilling for oil on the lease. He brought in two producing wells and sold the lease for the sum of $16,000 to be paid in oil. He then sold the oil payment of $16,000 for $5,000 in cash and $6,000 payable in oil. He obtained in all $11,000, for which he accounted to those owning the beneficial interest in the lease.
It is claimed by the plaintiffs, however, that he acted in bad faith in selling the $16,000 to be paid in oil for less than par value. They introduced witnesses whose testimony tended to establish that he should have obtained par for the $16,000. which was payable in oil. On the other hand, according to the testimony of Harrell and of two other reputable witnesses, who had had considerable experience in that oil field, Harrell sold the $16,000, which was payable in oil, for the full value thereof. It is not shown that Harrell profited by the venture. The most that can be said about it is that he became uneasy about the venture and sold too low in order that he might' reimburse himself for amounts advanced by him in purchasing the interest of himself and Adams in the lease and in borrowing money on his personal security and making other expenditures-in drilling for oil. In this connection, it may be stated that Mrs. Allen was pressing Harrell for payment of the $4,000 which she had loaned to him and Jfis associates. Cook had run off, and nothing could be made out of Adams or Mrs. Cook. Mrs. Allen was looking to Harrell for payment of the $4,000 loaned by her to him and his associates. Adams had never paid any part of the amount advanced by Harrell to him for his one-fourth interest in the lease. Under these circumstances, it cannot be said that the finding of the chancellor that Harrell acted in good faith in the matter is clearly against the preponderance of the evidence.
Again, it is claimed that Harrell acted in bad faith in making certain payments to a man named Koury. Harrell explains that these amounts were paid to Koury for well-drilling On the lease. We do not deem it necessary to set out the evidence in full or to discuss and review it in detail.
The chancellor made a specific finding of facts substantially as above stated and embodied the same in his decree. We deem it sufficient to say that we have carefully read the evidence in the case and cannot say that the finding of facts made by the chancellor is against the clear or decided preponderance of the evidence. The decision of the chancellor shows that it was made in conformity to the. principles of equity above announced, and it is our opinion that the decree should be affirmed. It is so ordered.