Court Opinion

ID: 7822567
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:59:42.65086+00
Date Added: 2024-06-11T16:30:46.405113
License: Public Domain

George Rose Smith, Justice, dissenting. When the Thorntons employed the contractor, Bobby Tubb, to build their house, they did not require a contractor’s bond, and as the work progressed they made no effort to see that their payments were properly used. Consequently, under our law their house is subject to Howard’s materialman’s lien unless Howard is somehow estopped to assert the lien. I do not understand how the court arrives at the theory of estoppel. When the construction of the Thorntons’ house was begun, Tubb was already in financial difficulty. Mike Danner, Howard’s manager, had told Tubb that his credit would be cut off if any materials sold to him were not paid for within 90 days. Tubb agreed with Danner that any monies he paid to Howard would be applied to the oldest account. In that way Tubb was able to keep marginally solvent, partly by turning over $10,000 worth of real estate to Howard. Finally, however, Tubb was unable to meet the 90-day deadline and went into bankruptcy. As far as I can see, the Tubb-Howard arrangement was legal. There is no doubt that a debtor has an absolute right to direct the application of his payments to the creditor. Snow v. Wood, 163 Ark. 280, 259 S.W. 733 (1924). Hence Tubb had a right to direct that his payments be applied to his oldest accounts; so the parties could certainly adopt that procedure. It is true, of course, that a materialman cannot wrongfully apply money paid by a particular owner if the materialman knows where the money came from. Long-Bell Lbr. Co. v. Auxer, 221 Ark. 672, 255 S.W.2d 163 (1953). But here Tubb had eleven jobs in progress, and it is undisputed that Danner did not know the origin of Tubb’s payments, which were made by his personal check. The Thorntons did not take the simple precaution of making their advances payable jointly to Tubb and his supplier. Although the arrangement appears to have been legal, the court nullifies it by saying that it was “secret,” which prevented the Thorntons from somehow protecting themselves. I do not understand why the agreement was secret, nor do I think businessmen reading the opinion will understand why. The agreement already existed when Tubb began making purchases from Howard for the Thornton job. Tubb had been definitely slow in his payments, but he was staying within the 90-day limit. Does the court mean by “secret” that Danner should have warned the Thorntons at the outset that Tubb was slow in making his payments? Howard wanted to do business with Tubb, who had been a successful contractor and good customer for ten years. Was there a duty on Howard’s part to risk destroying Tubb’s credit, and lay itself open to a damage suit, by cautioning Tubb’s new homebuilders that Tubb was slow in paying? I simply do not understand why Howard, by agreeing to a method of applying Tubb’s payments — a method that Tubb had the absolute right to select — created an estoppel. An estoppel requires reliance by the other party. The Thorntons could not have relied upon an arrangement of which they had no knowledge. Unless Howard had a duty to inform the Thorntons, and the court’s opinion does not spell out any such duty, there can be no estoppel. Purtle and Dudley, JJ., join in this dissent.