Case Name: Wilson v. Nugent
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1927-10-17
Citations: 174 Ark. 1115
Docket Number: 
Parties: Wilson v. Nugent.
Judges: 
Reporter: Arkansas Reports
Volume: 174
Pages: 1115–1127

Head Matter:
Wilson v. Nugent.
Opinion delivered October 17, 1927.
Albert L. Wilson, for appellant.
Mahony, Yocum & Saye, for appellee.

Opinion:
Hart, C. J.,
(after stating the facts). It is earnestly insisted that the chancery, court erred in holding the written instrument of November 8,1924,'signed by Albert L. Wilson, to be a contract instead of a receipt merely. The same instrument may be a receipt and a contract. Where a writing, though in form of a receipt, embodies the elements of a contract, it is in its nature subject to the same rules as any other contract and is not open to variation or contradiction by parol evidence. 22 C. J. 1138 and cases cited; Seitz v. Brewers' Refrigerating Machine Co., 141 U. S. 510, 12 S. Ct. 46, 35 L. ed. 837; and Huckins Hotels v. Smith, 151 Ark. 167, 235 S. W. 787. This is in application of the well-settled rule that, when a written instrument contains such terms as import a complete obligation, which is definite and unambiguous, it is conclusively presumed that the whole agreement of the parties, and the extent and manner of their undertaking, were reduced to writing. In' such cases the instrument is in the nature of a contract and cannot be varied or contradicted by parol evidence, in the absence of fraud or mistake.
In the application of these principles to the writing under consideration, it may be said that Wilson might have contradicted the receipt feature of the instrument by parol evidence that the payment of $750 was not made in whole or in part. However, the contract feature of the instrument was complete in itself, and contained definite terms and bound the parties to mutual agreements. In this respect the instrument was contractual in its nature and stands upon the footing of other written contracts, and cannot be varied or contradicted by parol evidence. Hence it was not proper to show that one of the terms of the contract was that Wilson should deduct his living expenses before Nugent should receive one-third of his compensation. This would simply have had the effect of varying or altering the terms of the contract, which the parties had reduced to writing and which had been signed by the party sought to be charged.
It is insisted by Wilson, however, that the contract should be reformed so as to show that he was entitled to deduct his living expenses from the salary due him by the corporation before Nugent and the firm of Hutch-ins, Abbott, Allday & Murphy were entitled to receive anything. In this connection it may be stated that the Hutchins firm has been settled with by compromise and their rights are not involved in this appeal.
It is well settled in this State that evidence justifying the reformation of á written instrument must be clear, convincing and decisive. Welch v. Welch, 132 Ark. 227, 200 S. W. 139, and cases cited; and Meador v. Weathers, 167 Ark. 264, 267 S. W. 787. Tested by this rule, the chancellor was correct in holding that the written contract should not be reformed. While the testimony of Wilson made out a case for himself, it was contradicted by the testimony of Nugent and of two members of the Hutchins firm. Hence we are of the opinion that the court did not err in refusing to reform the contract.
The court held that the letter of February 1, 1925, signed by Nugent and delivered by his secretary to Flanery, constituted a breach of the contract, but that Wilson waived the breach by recognizing the contract as still in force after the letter had been written. In so far as Wilson is concerned, we are only required to deal with the latter phase of the question. It is a well settled principle of law, that, where one party, with knowledge of a breach of a contract by the other, recognizes the contract as, still in force, he will be held to have waived a breach thereof. Alfred Bennett Lumber Co. v. Walnut Lake Cypress Co., 105 Ark. 421, 151 S.W. 275; Clear Creek Oil & Gas Co. v. Brunk, 160 Ark. 574, 225 S. W. 7; Friar v. Baldridge, 91 Ark. 137, 120 S. W. 989. Tested by this well-settled principle of law, we are of the opinion that the facts in the record warranted the chancery court in holding that Wilson waived the breach of the contract committed by Nugent by allowing the letter just referred to to be delivered to Flanery. After this letter had been delivered to Flanery and used by him to the injury of Wilson and the other stockholders of the Oil Fields Corporation, Wilson allowed Nugent to continue as associate counsel in the management of the affairs of said corporation and recognized him as such associate counsel. This he did by writing him letters concerning the conduct of the litigation then in progress, by consulting him about the conduct and management of that litigation and the other affairs of the corporation, and by signing his name to pleadings, in the pending litigation.
Wilson seeks to escape responsibility for so doing on two grounds. In the first place, he insists that he had no knowledge that Nugent had committed this breach of the contract at the time he wrote him the letters and consulted him about the management of the litigation and the other affairs of the Oil Fields Corporation. It is a well-settled principle of law that notice of facts and circumstances which would put a man of ordinary intelligence on inquiry is equivalent to knowledge of all the facts that a reasonable inquiry would disclose where there is a duty to make the inquiry. In short, where one has sufficient information, to lead him to a fact, he shall he deemed cognizant of it. Waller v. Dansby, 145 Ark. 306, 224 S. W. 615; Jordan v. Bank of Morrilton, 168 Ark. 117, 269 S. W. 53; Walker-Lucas-Hudson Oil Co. v. Hudson, 168 Ark. 1098, 272 S. W. 836; and Richards v. Billingslea, 170 Ark. 1100, 282 S. W. 985.
Wilson admits, in his own testimony, that he had suspicioned the loyalty and good faith of Nugent before the letter in question was written, and that, shortly after it was written, he had knowledge of its contents, and believed that Nugent was acting in bad faith towards himself and the other stockholders of the Oil Fields Corporation. Wilson then could have ascertained by inquiry from Nugent the circumstances under which Flanery secured Nugent's signature to the letter and his bad faith in taking the letter away from Nugent's office during the latter's absence. If will be remembered that Nugent testified that he had told Flanery that the letter should not be delivered to him until he had received the sanction of Wilson and the Hutchins firm to use the letter. If Wilson then had doubted the good faith of Nugent and the truth of his statement in regard to the letter, he could have found out all about the matter by inquiry from the Hutchins firm and other sources at his command. Whether he believed Nugent guilty of bad faith or not in the matter, he knew the result of his action, for the letter was written and secured by Flanery, and he should have then declared the contract to be at an end, and his subsequent conduct in writing to Nugent about the conduct of the litigation of the Oil Fields Corporation and his recognition of him as associate counsel by consulting about the manner and conduct of the litigation will be deemed in law a waiver of such breach of the contract.
Another ground relied upon by Wilson to relieve him from a waiver of the breach of the contract is that he feared, if he discharged Nugent at that time, it would injuriously affect himself and other stockholders, in the conduct of the litigation then pending in the State and Federal courts. This constitutes no excuse. It will he remembered that Wilson was out of money, and that the employment of Nugent was largely due to the fact that he advanced sufficient money to notify the stockholders aúd persons interested in the oil and gas leases of the Oil Fields Corporation about the existing condition of its affairs. Wilson regarded this of such importance that he was willing to give Nugent one-thircl of his salary as attorney for such corporation in order to secure such advancement and to have his assistance otherwise as counsel in the case. He could not play fast and loose in the matter. He could not wait until the litigation had proceeded to a successful termination and then discharge Nugent and claim that the discharge should take effect as of a date several months prior to his actual discharge. If he thought it best to overlook what he considered a breach of the contract on the part of Nugent, he had a rig*ht to do so, and it did not make any difference what his motive was in doing so. The important thing is that he considered it best for his own interest to continue to recognize Nugent as his associate counsel, and this he had a right to do, if he thought it was to his best interest to do so, no matter what his reasons were. Therefore the chancellor was right in holding, under the facts and circumstances presented by the record] that, under the contract entered into between Wilson and Nugent, the latter was entitled to one-third of the salary received by Wilson from November 8, 1924, to June 22, 1925.
On the cross-appeal the decision of the chancellor was correct. The record shows that, during the progress of the receivership proceedings, Wilson was allowed a fee of $5,000, and Nugent claims that he should be allowed one-third of that fee under the terms of the contract. The record shows that, at the time Wilson received this fee, he insisted that it should be put in the defense fund as his contribution thereto, and he actually placed the sum in that fund, which the parties had agreed should be used to pay the living expenses of Wilson as well as the costs of the pending litigation. Nugent allowed Wilson to do this, and, under the principles of law above announced, will be deemed to have agreed to the course pursued by Wilson in the matter. If he deemed such course of conduct on the part of Wilson to have been a breach of the contract, he should have objected at the time. He could not stand by and acquiesce in his action in the premises and afterwards claim that it was a breach of the contract and that he was entitled to one-third of the fee.
Again, it is insisted by counsel for Nugent that he should be allowed an additional fee because other amounts were earned and will be allowed to Wilson, and that, under the terms of the contract, Nugent was entitled to one-third of the entire compensation. On this branch of the case we think the chancellor was right in not allowing Nugent to share such extra compensation. As we have already seen, the chancellor held that the Flanery letter constituted a breach of contract on the part of Nugent. Such holding of the chancellor was correct. It is true that Nugent explained that the letter had been secured by Flanery during his absence and against his explicit directions in the matter. He says that he did not intend for Flanery to obtain possession of the letter until he had secured the consent of Wilson for Flanery to use the letter. This did not make any difference as to the'result. By his own fault or carelessness in the matter, Nugent allowed Flanery to obtain posses.sion of the letter and to use it injuriously to the interest of Wilson, and thereby cause some of the-stockholders of the Oil Fields Corporation to lose confidence in his management of its affairs,. The record shows that the affairs of the corporation had become very complicated and were very much involved in litigation, which resulted in a disagreement among the stockholders about the conduct and management of the affairs of the corporation. The stockholders were numerous, and resided in various States, and it required a circular letter to bring to their attention any matter involving their judgment. It was necessary for them to contribute such sums of money as might be necessary for the conduct of the litigation, and this they would not he likely to do if they lost confidence in either the integrity or good judgment of Wilson in managing the affairs of the corporation and directing the course of the litigation.
The result of our views is that Nugent is not entitled to maintain his cross-appeal, and that the decree of the chancery court should he affirmed. It is so ordered.