121 Ark. 79 | Ark. | 1915
Appellant, F. C. McClelland, and certain other persons associated with him undertook to promote and organize a corporation for the purpose of developing fruit 'Orchards in the Ozark mountain district in this State, .and did in fact organize such a corporation under the laws of the State of South Dakota. A hoard of directors and officers were elected and an office was opened in the city of Chicago for the purpose of selling stock, but it does not appear that any sales of stock were made for cash. Options were secured hy those interested on land in Washington County, Arkansas. Appellant was acquainted with appellees, John C. Linton and H. C. Lemmerman in South Dakota and enlisted their interest in the enterprise referred to above. They finally came to Arkansas and decided to invest as much as $4,000.
The testimony .adduced in this action by appellees tends to show that when they came to Arkansas for the purpose of looking into the proposition they were met hy appellant and other parties ¡and shown over the locality, and that 'the plan for carrying out the scheme was fully outlined to them. It was a part of the plan that for every ■thousand dollars of stock subscribed the company would, as a bonus to the subscriber, give him the use for five years of five .acres of apple orchard, to be cultivated and cared for by the corporation during the term. The testimony tends to show further that it was represented to them by .appellant and his associates that they had options on certain lands which were about ‘to expire, and that money was needed for immediate purposes in order to buy the lands before the expiration of the options. The proposition was made to appellees, so they testified, that if they would agree to take stock, and would advance the price therefor, lands on which options were held would be purchased .and the title conveyed to appellees as security for the money so advanced; and that when enough of the stock should he sold to put the corporation on a working basis, .appellees would turn the lands over to the corporation .and take stock. Appellees accepted the proposition and agreed to advance $4,000 to be taken in stock, and said sum was paid over by them to appellant, McClelland, who purchased three tracts of land and took conveyances from the respective owners. In .the deeds which were executed by the grantors the name of the grantee was in each instance omitted and a blank space left for the insertion of the name. The deeds were duly acknowledged by the grantors and their wives and they were forwarded to appellees at their homes in ¡South Dakota. Subsequently, the names of appellees were inserted in the conveyances by agreement between them and appellant and the deeds were forwarded to Washington 'County and placed of record. The transaction between appellant and appellees occurred in the month of June, 1911, and nothing further transpired between them except written correspondence. The corporation stock was never delivered to appellees, nor did they ever turn over the lands, to which they held title, to said corporation. The corporation was .organized, as before stated, in the year 1911, prior to said transaction between these parties, but it does not appear from the testimony that it has ever been put on a working basis or that anything has been done' except in the way of an effort to sell ¡stock. In other words, it has never reached the point of doing business according to its corporate authority.
The present action is one instituted by appellees against appellant in the chancery court of Washington ■County, in which it is alleged that the said sum of $4,000 was by appellees placed in the hands of appellant as their agent .and trustee to use the same only for the purchase of lands which were to be deeded to .appellees, and that appellant had only used the sum of $2,750 for that -purpose, but had conspired with certain other parties, namely, L. A. Palmer, Mrs. L. A. Palmer and L. G-. Palmer, to deceive and defraud the appellees and to convert the remainder of said money to their own use and purposes. The complaint contains a further allegation that appellant .and the other defendants made false representations to appellees to induce them to pay over said money to the effect that said parties owned and controlled large tracts of land to he used in the establishment of said orchard, and that they would finance and carry on the work until all of the stock had been sold at par. The original owners of said lands were made parties defendant and the prayer of the complaint was that a lien toe declared in favor of appellees on said lands and that the same toe sold, .and that if the proceeds of sale prove insufficient to reimburse appellees for the amount they had paid over to appellant that they have judgment .against him for the unsatisfied balance. Appellant McClelland filed an answer, in which he denied all charges of fraud and misrepresentation and alleged that appellees agreed to purchase $4,000 of the capital stock of said corporation ; that said money was paid over to him as the representative of said corporation in payment of the price of the stock, .and that the whole of said sum was used in the purchase of said three tracts of land which were deeded to appellees. Appellant also filed a motion to transfer the cause to the circuit court. On a final hearing the chancellor found that there had been no false representations made toy appellant and his associates to appellees, tout that appellant had only paid the sum of $2,750 for the lands which were procured and conveyed to appellees, and rendered a decree against him in favor of appellees for the balance of $1,250 with interest. An attachment had been issued against appellant’s lands and the court sustained the attachment. Appellant McClelland prayed .an appeal to this court from that part of the decree .against ■him, and lappellees prayed .an appeal from so much of the ■decree as denied relief against the other defendants.
In Messinger v. Dunham, 62 Ark. 326, this court speaking on this subject through Judge Riddick, said: “This restriction of the right to attach to debts and demands .arising upon contract is for the purpose of excluding actions for torts and actions where ‘the contract relations between the parties do not furnish a basis upon which the measure of liability may be ascertained. ’ * * The action in this case was founded upon a demand against the defendant for refusing to perform a contract which he had made with the plaintiff. This demand arose out of, and the measure of damages in the .action depended upon, and was controlled by, the contract. The word ‘demand’ is broader than .the word ‘debt;’ and although the damages claimed were unliquidated, still we are of the opinion that the claim was ‘ a demand arising upon contract,’ within the meaning of the statute. ”
We think, therefore, that the court was correct in holding that .an .attachment will lie in an action of this kind, .and as defendant was shown to have been a nonresident it was proper to sustain the attachment. This disposes of .all the questions .arising on the appeal of Mc-Clelland.
As to the appeal of the appellees from that part of the decree which refused them relief against the other defendants, we are of the opinion that there was not enough testimony to justify a finding that those defendants conspired with McClelland for the purpose of misappropriating the fund. At least we can not say that the finding of the chancellor is not in accord with the preponderance of the evidence.
The decree, as a whole, is therefore affirmed.