11'62 GOLDSMITH V. FIRST NAT. BANK OF ASHDOWN. [169 GOLDSMITH V. FIRST NATIONAL BANK OF ASHDOWN. OPiIIIOR delivered December 21, 1925. , LIMITATION OF ACTIONS—OPEN ACCOUNT.—An action on a verbal guaranty of an open . account for cotton advances, brought more than three years after the last item of the account,Is barrad by tha statute of limitation of three years (Crawford & Moses' • .Dig., § 6950). 2. LIMITATION OF ACTIONS—ESTOPPEL.—A defendant is not estopped to ,plead the statute of limitations unless it can be fairly said that he is responsible for deceiving the plaintiff and inducing him to . postpone . action upon some reasonably well-grounded belief • ' that his claini will be adjusted if he does not sue, or that • ' defendant will not avail himself of the statute of limitations.' 3. kRAUDS, STATUTE OF—ESTOPPEL.—A person is not estopped from • • pleading the statute of frauds by his conduct in failing to pay the debt of- another which he has verbally promised to pay and is able to pay, when by his failure to pay no fraud in law has been perpeti-ated upon the party to whom the promise is made resulting in the latter's injury. • '
ARK.] aOLDSMITH V. FIRST NAT. BANK OF ASHDOWN. 1163 Appeal from Little River Circuit Court; B. E. Isbell, Judge; reversed. A. D. DuLaney and James D. Itead, for appellant. Shaver, Shaver & Williams, for appellee. • WOOD, J. : This is an action by ,the First National Bank of Ashdown, hereafter::called appellee, against. A. Goldsmith, hereafter called appellant..• The appellee ;alleged that, the appellant was a stockholder.,and member of its board of directors and vice-president of appellee, ana . was also, during the cotton season.19 , 19 and :1920, engage.in the cotton business ; that during,,that season the appellee handled cotton accounts, payingto the 1?1.1yers of cotton money on their acceptances and taking the ware-. house receipts therefor, and,charging the,ampunts to , their respective accounts ; that Julius Winters was the nephew of the appellant,. and also engaged in the ;cotton business during that season; that Winters was; acting. for the appellant, and appellant was interested ,with him in the cot-. ton business and controlled and distributed all the .cotton that Winters bought; that appellant, at the beginninK of the icotton season, represented to the directors ,of the ap-pellee that Winters was his nephew and requested the, ap, pellee to carry his account during the cotton season of 1920, assuring the board that, if appellee would do so, appellant would give his personal supervision 'CO said ac-connt and be resporisible therefOr; . that,. acting'. ijoh tht? appellant's oral representations arid statemerith; the pellee, during 'the cotton season of 1919 arid 1920, flir nished Winters a large sum of 'Money to bny cotton; that during December, 1919, Winters sOld all the cottori h6 then had on hand, and paid the advancements made'bY lee to that date, and he then desired additional adVancements on cotton, hut the appellee'cashiei decided it:was; unsafe to continue advancing to Winters withont 'more security than the cotton pUrchased; and took -the:Matter up with -,the appellant. Whereupon. the appellant in-. formed the cashier that Winters' account WaS all right; and asked the cashier to continue 'to advance to WinterS, saying that the appellee was safe,' as the .account of
1164 GOLDSMITH V. FIRST. NAT. BANk OF ASHDOWN . [169 Wiriters was the same as aPpellant's Own; that, with this assurance, appellee continued to make Advances, te Winter's', 'and Caused the' appellant to 'Make \ te appellee's board of directbrs la statement\ t6 the effect' that he' (ap-P'elIanOwOuld , be rPersonally liable for any aavances*Made to Winters, and that' WinterS'accourit mould'be the Same a's , his own ;; tha,t during the eaten' f seaSon) apPeilant self purchased , Considerable cotton; 'which Wa§-handled Ithe: same manner , as : that' of Winters,' and' appellant ' Obtained ! large' adviancements • , uPon, * cotton, pur chased !by Wint l efs &din cotton brokers 'in Memphis ;• that the; priee'df 'eOttOli'declined;: and : When : the !cotton purchased by Winters WAs'dispoged of in. October, :1.920; he , Was' ()Whig' to app'ellee!.abalance, df• '$4517.25; which' reniains unpard , Ana whbuy iffsblvolt. : It was alleged' th•at • the• 'appellee • would lid have 'Made, the . advances td 1Winterhad 'Bathe. dpPeilant'perSonally guaranteed, , as befOre : Mention:6d; that he Wbuld' pay' Whiters1 accennt' if 'any , '1.6§ g 'occurred';' that • apPellee knew' , that Winfeis' Was irisOlveht,' 'and , the Credit • ' WaS extende'd sdlely' nijdn' the 'oral , ' taIinen1. of'the' appellant) ' The aPPelled 'prayed' jiidglicerie andount of' the' indebt,
edneSs'aild' intei'eSt: , • In his, answer appellant' denied specifically all the material allegations; 'of, the conaaint, and alleged that the credit' extended • • • • 03ST the appellee to Winters was extended, to him whelly On his own account". He averred that . tn6, ocgo , , promises, made, ;. were ,..oral ., and amounted , merely tp . 'the Proinise;bY : the hppellant to pay the debt of WinterS, and therefOre.the , appellant , pleaded the Stainte, of , ,fraurls. Appellant , also alleged , that the canse :of . ,aCtiOn , Was barred b , y the threeyear statute , of „ . : . ,The eause. was' tried by: a. jury, and, after hearing the evidence 'arid ?instructions ,of The court; the jury.,returned !vercliet in favor,of,,the appellee in tlipl . sum. of $4,517. JudgMent was entered in. favor , of ;the appellee in..that kim; : from; whiCh judgMent is, this r Appeal. • :
ARK.] GOLDSMITH V. FIRST NAT. BANK OF ASHDOWN. 1165 1. The conclusion we have reached on the issue as to whether the appellee is barred from maintaining this action by the three-year statute of limitations makes it unnecessary to discuss the testimony and instructions of the court , on the issues as .to whether or not the amount claimed by the: appellee was an original undertaking on the part of the appellant. For, conceding that the testimony was snfficient to sustain the verdict on that issue, and that there was no error in • the court's charge submitting . it, :nevertheless we are convinced that appellee's right of. action against appellant as for an original undertaking is barred by the three,year statute. of limitations. Section•6950, C. & M. Digest. • , This . action was instituted on October 3, 1923. Treating thd account in controversy as an original undertaking of the 'appellant, the testimony of the cashier of the appellee 'at the time the account accrued shows that the account stood on the books of the appellee in the name of Julius Winters, and that the last cotton acceptance was paidby the appellee for him on February 28, 1920. The cotton acceptances by the appellee for Julius Winters were all acceptances on demand. Therefore, if this account wAs an original undertaking of the appellant, he •was due the appellee the amount thereof ofi February 28, '1920; As this was an. open account, payable on demand, the statute of limitations began. to run on that day in favor of the appellant against the appellee. The balance due appellee on cotton acceptances, as shown by the accOunt of Winters on appellee's books, was $4,288.53, and for this sum Winters executed his note on October 18, 1920. There was a renewal of this first note in the sun' of $4,000 executed by Winters to appellee 'June 18, 1921, and another note in. the sum of $517.25 executed by Winter• to appellee on June 22, 1921: The .cas.hier of appellee testified that these notes were obtained ut the request of appellant and of all the 'board of directors of the appellee. The witness testified that . he• made every effort in the world to get , Winters to secure the original
1166 GOLDSMITH V. FIRST NAT. BANK OF ASHDOWN. [ 169 note and the renewal thereof for appellant's protection. WitnesS.wrote letters to Winters at the instance of the appellant, and the appellant wrote letters himself to.Winters.arging a, settlement of the account. There 'was testimony to the effect that, at a:meeting of the board of directors of the appellee as late as December 20 or . 22,. 1919, the board was going over the Cotton accounts of the aPpellee, and some of these accounts were*being severely criticised, the appellant making the principal. criticisms. : It was .suggested by: one of the members of the board that all individuals having.accounts had property back of them 'except Julius Winters, and that he had no property. Wherenpon, the appellant said, "Do not bother about that; I , am looking after : that; it is just .the same . as mine." That Was .said concerning the Julius Winters •account with the appellee :4 that time, and after that the ., appellee continued , to make advances to Winters, on his cotton account. Allan Winham,: the president of the appellee, testified that he attended' the' annual meeting of: appellee's board of directors on-January 10, 1920; and' again about Febrnary 1.0, 1920. The 'appellant had , called :on- him about the first of 1920 or the:latter part of 1919, and.had explained the statu 'of the: cotton accOunts of the appel-. lee. When the witness went over to Ashdown abont Jan-uary 10, he and' 'the appellant diScusSed : the cotton accounts of , the appellee, and witness insisted that deeds of trust :be made securing these accounts by various individuals who had property, and they were so made.. Witness. asked the appellant about • the 'property-of Julius Winters,'and aPpellant stated that Winters had no. property , at that lime, but that he (appellant) 'Was tooking after that accnunt, :and that witness need:not worry about that—that it would *be taken care of, and the appellee would not take . any losses on it.. Witness- felt that the account was safe beeanse appellant was, solvent. After that .at the meetings : of the:board this account was diScussed, and appellant stated: that he was doing all he
ARK.] GOLDSMITH V. FIRST NAT. BANK OF ASHDOWN. 1167 could td get Winters to pay it; that he had written Winters letters urging.him to pay . it . Witness had conversa-lions with APpellant at practically every meeting of the board until appellant went off of the board as to the best means of securing payment . of this account. Appellant was 'present at . these meetings, and seemed to: he much embarrassed when the account was discussed. In,1923, just: before . Christmas, in a. conversation. with .witness, .apPellant stated that he did not owe the account: • • Until that .time he. had .Tiever disavowed the . a cco unt until he .was sued, but in this conversation just before Christmas, 1923, he said that he didn't have any account ; that .it was Julius, Winters '.,business ; that it was . not, appellant's debt. The witness stated the.matter, was delayed becansP appellant was the richest man on, the board;of directors, and was its vice-president, and had been With the appellee a long time. • The country was passing through the period of .1920, .and •the. directors . did not feel like; they. shoW have a family row, and they .wanted to work,the account out of. Julius Winters. . The appellant was making an effort to get , Winters to :pay • the account, and. witness .desired to give him time to do:that; The appellee did not bring suit until Winters went into, ba.nkruptcy-, . The testimony of Winters was:to the',effect, that the appellantwent after him hard• about this matter, and tried to get him. to . execnte notes.. Appellant. was. Vice-president of the Appellee, and told witness that it Was :eni-barrassing to him for the notes not tobe paid. •Appellant was. witness' pncle. Now, conceding that the accdunt in controversy iVas the debt of appellant a.s an original undertaking on his part to pay the appellee, the' statnte of limitations 'b'egaii to run in.appellant's favor, 'as -We have seen;'On FebrizatT 28, 1920; when the last cotton acceptance was paid'hy' the appellee for Winters: Giving the above testiniony" itS strongest probative force in favor of the . appellee, it does not tend to prove any facts Sufficient to toll the statute 'of limitations. The . mOSt that the testithony tend•s
1168 GOLDSMITH V. FIRST NAT. BANK OF ASHDOWN. [169 to prove is that the appellant would take care of Winters' account ; that he would use his best efforts to have Winters pay the same, and to urge Winters to sign and renew notes for •the amount of the account. The testimony tends to prove that the appellant did all this, but there is not a particle of testimony tending to prove that after February 28, 1920, the appellant said or did anything calculated to cause the appellee to believe that the appellant acknowledged the indebtedness as his own, and that, if appellee would not institute action thereon, the appellant would pay the same. There was not even a verbal promise upon the part of the appellant after February 28, 1920, to pay the account, much less any written acknowledgment that the debt was his, and a written promise to pay the same. Nor does the testimony justify the inference that, after the statute of limitations began to run, and before the statute bar attached, the acts and declarations of the appellant were calculated to mislead the appellee into the belief that appellant would pay the debt for Winters, if he did not, and that by reason of such conduct on the part of the appellant, appellee delayed faction against the apPellant until after the three years from the time the debt was due. Section 6965, , C. & M. Digest, (Revised Statutes, c. 91, § 14), provides that "no verbal promise or acknowledgment shall be deemed sufficient in any action founded on simple contract whereby to take any case out of the operation of this act, or deprive the party of the benefits thereof." Unless estopped by his conduct, the appellant has the right to invoke, and is entitled to, the benefit of this statute. In Klass v. Detroit, 129 Mich. 35, it is held that a defendant is not estopped to plead the statute of limitations unless it can he fairly said that he is responsible for deceiving the plaintiff, and inducing him •to postpone action upon some reasonably well grounded belief that his claim will be adjusted if he does not sue." Mr. Freeman, in 95 Am. St. at p. 411, in an exhaustive note to above case, in which a great array of authorities is
Ninc.] GOLDSMITH V. FIRST NAT. BANK OF ASHDOWN. 1169 collated, states : "Notwithstanding . some Miliiet ,the authorities, the great weight of legal adjudication andthe universal trend of modern cases firmly establish the rule that an agreement or promise, whether : oral Or written; by the debtor . not to plead ,the statute of limitations„ made, before the expiration of the statutory period, , and relied upon by the creditor, until after the statutory , pe i riod has expired, operates as an estoppel in pais as against . . the debtor, and precludes him from,interposing the ,defense,q the statute to defeat the action." , ' * ,rule! continues Mr. Freeman, "is thus well, stated. in ., 1 W,ocici,'s Limitations . of Actions, 2d. ed.,, § 76, as'follows' :„ a promise not to plead the statute, whotiler made before or after the . debt is barred,•does not ; -attionnt toan . acknowledgment . thereOf or a promise' fo pay it, yet,. if made before the debt is barred, .and in _consideration' of forbearance to sue, and the creditor doesjorbear to ,sne upon the faith of the promise, it is : binding upon the debtor, and at least has the effect to keep; the , debt on, foot until the statutory period, , dating from such . . promise, expires,. either by way of estoppel, or, as a conditional promise to pay the debt in case the plaintiff proyes it. This court in Baker-Matthews Mfg. Co; Lbr. Co., 134 Ark. 351, at page . 355, stated,the,rule-by quoting 'from 17 R. C. L. p. 84, as 'follows `.f A. debtor has frequently been held to Ibe estopped from relying , 011 the statute' as a 'defense where, by acts-of a 'fraudulent character, he has misled the creditor' andrinduced him to:refrain from bringing ,suit within the statutory period. 'And if a defendant .intentionally or . .negligently :misleads a plaintiff by his misrepresentation's,• and causes 1 , him, :to delay suing until the statutory bar has fallen, the defendant will be estopped from pleading, the statute Of limitations.. And the prevailing view seems to be that :the dcic-trine of estoppel applies where, the creditor, before the debt is barred, is lulled intO security by the oral promises of the debtor that he will not avail himself of the,$tatute of limitations, 'and suit is delayed by reason thereof. It is
1170 G-OLDSMITH V. FIRST NAT. BANK OF ASHDOWN. [169 not necessary that the debtor should intend to mislead, but, if his declarations are such as are calculated to mislead fhe creditor, who acts upon them in good faith, an estoppel will be created." Ailplying this doctrine to the facts discloSed by this record, we find that there was no express . promise upon the part of the appellant te the appellee not to avail 'Min-self Of the statute of limitations if the appellee delayed the action beyond that period, nor waS there anything in appellant's 'conduct calculated tO induce the appellee to beheve that the appellant would settle appellee's . claim, as his own' debt, if the appellee refrained from. instituting the action, and tending to prove that the failure of the 'appellee. tO bring the snit within the statutory' peried wa's botTomed iipon'acts' or declarations of the apipellarit to the effect That the debt was his own, and that he would see to its Paythent. TO .sustaid their contentien that . the appellant' is estOpped 'from claiming the benefits of The statute of limitations, counSel for appellee rely upon a quotation from 17 R. C. L. p. 929 and the Cases of Hal& y . P'cti-i6t,t; 125' Cal. 472; 58 Pac. 164'; 73 A:'S. R. 64, and note, and also Mudd v. Harper, 1 Md. '110; 54 AM. Dec. 664: We have examined these authorities, and find that they' are all differentiated on the facts from The case at 'bar, and it would unduly extend this opinion te comment upon them. We conclude, therefore, that, under the faets ,of This record, the appellee's 'claim, treated as an original undertaking of the appellant, is barred by the statute of limitation's. 2. Learned counsel for the appellee contend that, even though the claim in controversy be not the original debt of appellant, nevertheless the appellant is estopped by his conduct from denying liability for such claim and of availing himself of the plea of the statute of frauds. Section 4862, C. & M. Digest, provides in part as f011ows: "No action shall be brought to charge any person upon any special promise to answer for the debt, defaUlt or mikarriage of another, unless the agreement, promise or
ARK.] GOLDSMITH V. FIRST NAT. BANK OF ASHDOWN. 1171 contract upon which such action shall be brought, or some memorandum or . note thereof, shall *be made in writing and signed by the 'party to be charged therewith, or signed by some other person by him thereunto properly authorized." • The debt of Winters to the 'appellee was evidenced by a note signed by Winters. .While there iS testiniony tending to prove that the 'appellant wrote letters •to Winters urging him to pay the • debt,-and that letters were written by others at the . instance of appellant urging Winters *to sign the notes evidencing the indebtedness to the appellee, yet this testimony does ,not warrant the inference 'that the appellant authorized Winters to *sign tliese notes in acknowledgment that the debt was the debt of appellant instead of Winters, or that it • Was their joint obligation. .There was testirneny in: the record tending to prove that; after Winters had gone to the linfit or his credit with the appellee on his cOtten acconnt, the appellant, who was ' then vice-president Of appellee, stated to the cashier that .Winters might 'want to bny more cotton, and to let him haVe the money ;Ahat it would 'be all right to 'continue the advances to Winters ; that his account was just the same as appellant's; and that appellant was looking after it." After this . statement Made by appellant to the* Cashier of !appellee and its board of directors, the appellee did make the* advance's to Winters ' , whiCh are the subject-Matter of this action. The above testimony is exceedingly pertinent and cogent, tending to provethat the advances made to Winters by the appellee were at the instance and request of the appellant, and that it . was an original undertaking on the part of the appellant to pay the, same, and juStified a verdiet to that effect, ' a's we have , already stated.. Tiut there , was testimony also tending to prove, and to justify a finding to the effect, that the debt to appellee was the debt and original undertaking of Winters, and not that of appellant. Therefore, to test the issue as to whether or not appellant's plea of the statute of frauds was well*
1172 GOLDSMITH V. FIRST NAT. BANK OF ASHDOWN. [169 taken,.we must treat the debt as that of . Winters. Giving the above testimony its strongest probative force in favorief-the appellee °Tithe issue of the statute of frauds, it only tends to prove that there was a verbal promise on the part of the appellant to pay appellee the debt • of Winters. The . appellant . is the uncle of Winters ; the testimony shows that be . is abundantly able to pay ,Winters', debt to the appellee ; he was a trusted officer of the appellee; its-vice-president,. and a member of its . board of direetors, and had- intimate and close business relations w • ith • th .,, e m ,•, . , It " w as dou . bt • less because of this situation and of the confidence appellee's board of directors, .cot/ es-pecialty president, had that .appellant would fulfill his, Premise, that•caused them not to exact of him a writ, ten Aligation or promise to . ..pay the • debt of Winters. However reprehensible in morals . appellant's conduct play ha.ve been under the circumstances, nevertheless it cannot besaid that he perpetrated any fraud in law upon the . appellee in not making a written promise to .pay the deht of Winters. In the eyes of the law appellee's board of directors. had knowledge of the statute of frauds,. as, well as the appellant. If it had been proved by the appellee that the appellant had derived a personal financial belie-. fit by- yeason of his promise to pay Winters' debt, then there , would be some plausibility in the contention of counsel for , appellee that appellant was estopped by his-conduct from repudiating such promise.. •But it occurs to us, in the, absence of proof of fraud on the part of the appellant resulting in direct financial benefit to a'ppel-lant and 'COnsequent loss to the 'appellee, the appellant is not estopped from claiming the benefit of the statite of frauds; A person is not estopped from pleading the statute of frauds by-his conduct in failing to pay the debt of anOtlief wilich he has verbally promised to pay, and is' abl6 to pay; When by his failure to pay no fraud in law has been perpethated upon the party to whom the promise is'Made resulting in injury . to such party. Mot to so hold would be in the teeth of the statute . of frauds and a nullification Of ' stich statute by judicial interpretation.
• We• have examined the • cases cited from our own court, and relied upon by appellee's' cbunsel in . suppoi't of' • their Contentidn. :that t appellant . is estopped: I bsrt his conduct from claiming the benefit of .thestatiite of frauds,' and . these . cases . are :differentiated .by. the 'facts froin the Case fat bar: ,..; ,,,.,,,, We therefore conclude that, treating the appellees . craim 'the debt of Winters; appellant'S 'plea-of the s. tat-ute of frauds under. , the 'evidence . pfes'ents a 'Complete defense,' beeause , there was . nO. Proof -that! apPellant promised, in writing . tO/paY such . claim: 0 'So; • • whether. .:the undertaking. be original • or!collateral, • appellee, it aPpeafs from Me undiSputed facth, is -Cast On' either. horn Of 'the dilemma.. :Therefore the' trial .dourt erred in! mit'granting . - appellant 's prayer . • foi'. Peremptory . ;instraction . t in .his favor. I. .• ,•• • ' 1' 'The judgment of the- ciituit'; dourt :.is therefore' 'reversed; and, inasmuch . as ! the 'cau:se . f §Cein g ■tO have been fully, developed; judgment' ill. he 'entered' here -in, favor of the aPpellant. 1 )+1- ./.•■ MI% JuStiCC 1 -1UMTE:EREY'S' • . ....!! •;,, !oi :•-• ".,.. •1/ •;t:, ;'..:1 :
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.