576 MARTIN V. STATE EX REL. SALINE COUNTY. (171 • • MARTIN V. STATE EX REL. 'SALINE COUNTY: Opinion delivered June 28, 1926. APPEAL AND ERROR—CONCLUSIVENESS OF CHANCELLOR'S FINDING.— A finding of fact by the chancellor will be sustained oii appeal when not against the preponderance of the testimony. CouNTIEs--AuTHORITv OF COUNTY COURT.—Under the Constitution, the county court is the general fiscal agent of the county, and has p'oWer to do all thing's necessary to the preservation oi its funda.- 3: COUNTIES—POWER TO ISSUE BONDS.—Constitutional Amendment No. 11, authorizing county courts to. issue bonds: to secure the indebtedness outstanding at the time of its adoption, is self-executing, and the county court need not await the passage of an enabling act to order a sale of bonds. 4. CouNTIES AGREEMENT OF JUDGE TO ISSUE BONDS.—Where county warrants _were wortli not exceeding 60 cents an the d' ollar, an agreement of the county judge with one' owning -d'conaiderable athount of such warrants to issue bonds and redeeni the warrants • held 'and to be acquired by the other, .held supported bY -a Sufficient consideration. ' - FRAUDS, STATUTE OF—ORAL AGREEMENT—PART. PERFORMANCE.= Purchase . by a dealer of county warrants and issuance of bonds to pay same, in 'accordance with an oral agreement for redemp-. "tion of such warrants, held a Sufficient part -perfornience to take the agreement out of the statute. 6. EqurrvuRISDICTION—MULTIPLICITY OF suns. -Equity held to • • have -jurisdiction to determine riihts of a dealer in county war-, - rants relating to numerous warrants, which .might involve : a multiplicity of suits, if resort were had te law. INJUNCTION—PAyMENT. OF PUBLIC MONEY.—N . UnatiOn „at the instance of a citizen to prevent payment of more for county war- . rants tlian a dealer in such warrants was entitled to under an agreement with the county judge, held to present a proper case for equitable jurisdiction. Appeal from Saline Chancery Court ; W. R. Du,ffie, Chancellor ; affirmed. STATEMENT BY THE COURT. The State of Arkansas, on the relation of Saline County, brought this suit in equity against A. V. Martin and George H. Ramsey as treasurer of Saline County, to enjoin the county treasurer from returning to Martin
ARK.] MARTIN V. STATE EX REL. SALINE COUNTY. 577 certain county warrants, and praying that Martin be required to accept the price for said warrants which had been agreed upon between him and the county . judge of Saline County in order to induce the county judge to issue bonds in payment of said warrants. - • 'Martin defended the suit on the ground that he did not make such air agreement, and upon the further groUnd that any such agreement would be void because there was no consideration -for it: The chancellor made a special findings Of facts; which is embodied in his -decree, and whieh reada. as follows : " That John P. Kirkpatrick was elected countY jUdge of Saline County in the year 1924, and assumed:the duties of OffiCe aS such on or about January-1, 1925, And thereafter decided it was advisable to place said -county 'upothi a cash basis, iSsuing bonds under Amendment NuMber Eleven (11) to' thei Constitution-Of the State of • Arkan-saS, 'in ca g e sanie should be declared adopted, or by some other means in case decision on said amendment Should, be 'that it was not adopted, and, in deciding upon this; talked with defendant, A. V. Martin, who, 'at that time,. stated he had apPrOximately . $16000 Of the scrip' or War: rants of ' said county, and agreed with 'the Said county judke- to ' purchase other outstanding warrants;- which; withthe Warrants held bY him*, would Make approximately $30,000; and that he; said A.. V. Martin, would sell all the cottity Warrahts held and which should be-acquired by him isSued prior to Oetober 7, 1924, at the price of 75 Cents on the dollar, or turn same over to such person as the county judge might select at said price ; and, after' said arnendMent had been 'declared adopted by the SuPreme Court of the State of Arkansas, bonds wei'e ,issued by said county and the ainonnt fOr same received by Saidl connty immediately preceding the filing of this suit ; and, after said 'decision of the Supreme Court, said Martin agreed to turn over to said county and accept said price for all of said warrants held by him which Were issued prior to said October 7, 1924, and which were held by said defendant Martin immediately prior to the institution
578 MARTIN V. STATE EX REL. SALINE COUNTY. [171 of, this suit, and turned aVer..by him to the . said treasuyer of,said county. for payment,. amounting tO $18,642.03, and. for ;which the county treasurer erroneously issued. his check in the sum,of 100 cents on the , dollar_instead of . 75 cents on the dollar, but . which.check had not :been paid at the . ,thne. of . the institution of this, snit; and . that , said county, judge, acting- on behalf. of . said..county,, , would not. have caused bonds to have been issued under ,.said amendment eccept . for the , agreement with said defendant Martin. That, , at the .. tiMe the negotiationbetween said, county judge,. acting on . behalf : of, „said , cOunty, ,and said defendant Martin 'began the general Market price of the e , Crip of saki cOnnty Was around . 60 cents on the,dol-. lar , and, in 'Pursiianee and fnlfillment .,. of the..Contract betvieen said County jildge, aCting on . . behalf . of • _sod county, and defendant Martin, and . said' . Connty . jiidge," act-, ing;for i said Martin, pnrchased several thousand dollar. Worth of Scrip, 'and was 'instruniental . in ` aSsisting said de . fendant Maitin io pUrel lase a . materiat amoniit Of other scriP, and that' the sCrip ,held by said Martin and, pur-chal4ed' bi. and for' hirn,4;to the tin . t e wlien. bOnds were isS'uedjby i Said cOnntYlinderr the PrOvision'S Of•Said'arae4a-.. ment, amonnted to $30,158.55, and . that bonds Wereissned by said cOnntY in the amount of the. , indebtedness Of ,said. countY , . ..Tjaat said .. cOntraCt : wa g . 'made ..,hefWeen:.,said coUnty . thrOnkh its . county judge 'and .OfteerS,.nrid; had , it. not,heen . foi the said defendant Martin;.the-Conilty.would not,have acted to its detriment in. issuing. bonds '.! , A deciee 'Was entered in . aceordance with the: 4417. ings . , Of . ;the chancellor,, nnd the COunty. ,treasurer was, enjoined frOm paying tO .A.; V.. Martin More than 75 cents, o.n the , dollar for the , conntY warrants Which had „been deposited' with 'him,. in , accordance with . the ,Contract betW • e 0 e . n M • artin. and the County judge. The case is hcre onaPpeal. . • . • 'D;M. Cloud'and W. R. Donhcon,,, for appellant. , W. A. 'Utley . and Brouse (6 . .1 , 11cDcoviel, fOr appellee. HART, J., (after stating the facts). We deem it unnecessary to make an abstract of the evidence. While
ARK.] MARTIN V. STATE EX REL. SALINE CdUNTY. 579 the 'testimony of A. V. Martin flatly contradicts that of John P. Kirkpatrick, countY judge of Saline County; to the effeh that the agreement found by the chancellor 'was Made, still the testintony of ItirkpatriCk was corroborated by that of other'witnesses, and we think that it cannot be said that the finding of the chancellor 'was against the preponderance of the evidence. • Leach v. Smith, 130,Ark. 465, '197 S. W. 1160. • • . It may, be then taken 'as settled, in 'So.- fari . as this opinion is cOncerfied, that the Chancellor Was warranted in' finding that Martin and the county . judge of Saline , Comity Made a contrad whereby the former 'WaS • to ;receive 75 centh on the' dollar for the county warrants -Which he Owned at the time the -agreement Wa g made 'and those purchased piarsuant tO the agreement, and 'that these warrant§ had been depoSited with the county' treasurer for payment in accOrdance With the agreement - s The main 'reliance'of Martin for a reversal of the decree is that thet agreement in question was without Consideration, and is unenfOrceable.' • /Counsel' inVoke the applicatiOn' Of the' cOmmon-laW rule,*which has been followed ' in this State; that, Where part payment of a liquidated demand iS niade in full settleMent of 'the debt, no consideration exists RA . this promise of the creditor to 'release the rémainder'of . his debt, and an action may be maintained for it by 'Abe creditor. North State Fire Ins. Co. v. Dillard; 88 Ark. 473, 115 S. W. 154 ; Petti g . reth Machine Co. Harmon, 45 Ark. 290; 'St. L. Sw. By. Co. v. Mitchell, 115 Ark. 339;171 S. W. '895 ;' LedWidge v: Ark. Nat. Bank; '135 Ark. 420; 205' S. W. '808 ; United States v. BoStwick, 94 11:' S. and Fireinsurance Assn: v. Wickham, 141 U. S. 564. ' Cldyton V. 'Clark; 21 So. 565, 37 L. R.' A. 771, 60 Am. St. Rep. 521, the Mississippi Suprenie Court, in 'a vigorous opinion, declared the rule to be absurd and unreasonable,' and' expressly set it aside. ' : In a case-note to 41 A. L. R. 1490, it is said that the geueral rule that part payment of a liquidated indebtedness is no consideration for the discharge of the'intire t,
580 MARTIN V. STATE EX REL. 'SALINE COUNTY. [171 debt has always been regarded as technical and unjust, and that the modern tendency of the courts has been to enlarge the exceptions to the rule in order to avoid its harshness, and to carry into effect settlements, adjustments and compromises. In Chicago, Milwaukee & St. Paul Ry. Co. v. Clark, 178 U. S. 353, the Supreme Court of the United States, in commenting upon the rule, said : "The result of modern- cases is that the Vrule only applies when the . larger sum is liquidated, and when there is no consideration whatever for the surrender of part of it ; and, while the general rule must be regarded as.well settled,Vit is considered so far with disfavor as to he- confined strictly to cases within vit." - While our own court has adhered to the rule, it has recognized exceptions to it. One of these is that part payment of a liquidated indebtedness by a third person is a - sufficient consideration for its acceptance by the creditor in the discharge of the entire debt. Pope v. Tunstall, 2 Ark. 209 ; Gordon v. Moore, 44 Ark. 349; and Wilks v. Slaughter, 49 Ark. 235, 4 S. W. 766. ,V ; v In the Pope v. Tunstall case the court said that any change or alteration which renders the creditor 's situation more advantageous or -the debt more secure, will suffice. This court. has also held that, in cases of contradt for the payment of a liquidated sum of money, the *payment of a less sum will not be a good satisfaction unless it was paid and' accepted before the time when it was to have been V paid, or at a different place from that appointed for the payment. Cavaness v.-Ross, 33 Ark. 572,V -and Mqrtin-Alexamder Lumber Co. v. Johmson, 70 Ark. 215, 66 S. W. 924. So, too, it has been held that an agreement by a debtor not to go into bankruptcy and thereby be discharged from his debts furnishes a sufficient consideration tc; support a contract by the creditor to accept less for his debt than the full amount thereof. Dawson v. Beall, 68 Ga-. 328; Hinckley v. Arey, 27 Me. 362; and Her-
ARK.] MARTIN V. STATE KX REL. SALINE COUNTY. 581 man v. Schlesinger, 114 Wis. 382, 91 A. S. R. 922, 90 N. W. 460. We think that, under the facts of this case, the contention of Martin that the agreement to . take 75 cents on the dollar for his county warrants was without consideration and for that reason invalid, is without merit. In the first place, it may be said that, under our Constitution, the county court is the general fiscal agent of the county, and has power to do all things necessary to the preservation of its funds. Leathem Co. v. Jackson County, 122 Ark. 114, 182 S. W. 572. In the exercise of this power the county court might have called in all the county warrants for cancellation and reissuance, and might have canceled all those which had been illegally issued or whose issuance had been procured by fraud. Monroe County v. Broum, 118 Ark. 524, 177 S. W. 40 ; Izard County v. Vincennes Bridge Co., 122 Ark. 557, 184 S. W. 67; and Izard County v. Bank of Melbourne, 123 Ark. 458, 185 S. W. 794. Constitutional Amendment No. 11, authorizing county courts to issue bonds to secure the indebtedness outstanding at the time of its adoption, is self-executing, and the county court need not await the passage of an enabling act. to ofder a sale of bonds. Matheny v. Independence Cousty, 169 Ark. 925, 277 S°. W. 22, and cases cited. Before the agreement under consideration waS made between Martin and the county judge, the former owned certain county warrants, which are general orders pay-dble when funds are found in the county treasury, and which are to be paid in the order of their presentation. These warrants could not be paid until there were funds in the county treasury available for the purpose. Since the issuance of the warrants in question, it appears that there had 'been no funds out of which they could be paid, and they had not-been paid for want of funds. It is true that the warrants could be used in the payment of taXes by the holders thereof, but, on accoUnt Of there being no available funds from which to Pay -them,
582 MARTIN V. STATE EX REL. SALINE COUNTY. [171 they had depreciated in value * until they were not worth exceeding 60 cents on the dollar. In order to secure the price of 75 cents on the dollar, Martin made an agreement with the county judge that, if he would exercise his discretion in issuing bonds, he would buy up other outstanding warrants and take 75 cents on the dollar for them. ;Upon the situation being explained to the prosecuting attorney and others who held county warrants, they sold their warrants to Martin at a discount, and the county . judge a g siaed Martin a in buying up 'these warrants, so that he .could make profit by the county paying him 75 cents on the dollar for them. Then, pursuani to the agreement, he exereised his discretion and issued bonds , to an amount which would . pay off these warrants at 76 cents On the dollar, and thereby put the county on a cash basis. . - These facts differentiate this case from Schlessinger y. Schlessinger, 39 Col. 44, 88 Pac..970, where it was held that payment by a debtor of a sum less : than is due under his agreement to the creditor, who executes a release, not under seal, purporting to discharge the. debtor of . all claims under the agreement, .is not a satisfaction. of ;the debt, though the debtor borrowed the money with which to make the payment. In the first place, it may be said that one reason for so holding was that there was no averment that the plaintiff knew about the defendant's borrowing the money. Then . , too, the debt was due at a certain date, and it was the duty . of the defendant to pay it on that date, either with his own money or with borrowed money. 'It was a question -whether the county judge' could be compelled to issue bonds ' under Amendment No. 11 to secure money to pay off the existing-county warrants. Martin is also charged with knowledge that the county judge had the power to call in the scrip for cancellation and reis-suance, and that he might refuse to issue scrip which was illegal or whose issuance had been fraudulently procured in the beginning.
ARK.) MARTIN V. STATE EX REL SALINE COUNTY. 583 It is true, that there is no evidence in the record tem"- ing to show that • any of the scrip .held by Martin was, illegal or , fraudulently issued, but Martin , was, a scrip dealer, and had purchased all of his . county warrants from various , .persons, and knew the hazards attached ,to the calling in of the county warra • n ts by the county judge for cancellation and reiSsuance. Martin also knew' that no levy Of taxes could be rciad.e beyond the constitUtional lirnit for the purpose , of paying coUnty warrantd. These facts were sufficient to make, the case at bar , an excep7 tion to , the 'general rule; and the nantnal . prornideS and forbearanCe of the , countY judge and Martin were Suf-. ficient consideration for' the eiecution of the agreenient in question. . . . , On the question of the statute* of frauds, but little need be said. The facts recited above Constituted inch a suhstantial part of the perforMance the contraCt as in any event to take it out of the statute of frauds. Storthz v. Watt's, 117 'Ark. 500, 175 S. W. 406 ; anel N ' ewton 'v. Mathis, 140 , Ark. '252, 215 S. W. 615. ' Again; on the 'question of the jUrisdietion of the chancery court a short didcussion will suffice. The recoitl shows that Martin had numerous county Warrants Of various denominations, which would cause a multiplicity of snits, had a resort 'been made to law. •Again, under the allegations of the Complaint and the proof made in the case, Martin was not entitled' to *collect more than 75 cents on thedollar of the face value - of his county warrants, and the collection of an amount in excess of that sum would have amounted to an illegal exaction, which any citizen of the county might prevent by the injunctive process of a court •of equity. • The result of our views is' that the decree of the chancery court was correct, and it will be affirmed. • DISSENTING OPINION. MCCULLOCH, C. J. My conclusion . is that the alleged contract is not enforceable against appellant, for several reasons. In the first place, the contract was not made by the county court, but with the county judge in vaca-
584 MARTIN V. STATE EX REL. SALINE COUNTY. [171 tion, and there was no authority for the execution of such a contract by the county judge. Ross Drainage District v. Clark Counzty, 153 Ark. 175, 239 S. W. 740. In the next place, there was no consideration to support the contract, which was, in substance, one to accept payment of county warrants at less than face value. It was merely an executory contract to accept, without other consideration, payment of a - smaller sum than due in full discharge of the debt. This court held in Dreyfus v. Roberts, 75 Ark. 354, 87 S. W. 641 (departing from the rule theretofore adhered to by this court), that, when an agreement to discharge a debt by the payment of a smaller sum has been fully executed, " and such discharge is evidenced in writing, * * * it is a valid , and irrevocable act" ; but in the later case of North State Fire Ins. Co. v. Dillard, 88 Ark. 473, 115 Ark. 154, it was said that " where the agreement is not executed, and is not evidenced by any writing, then it is not a bar to an action on the original debt . ; and, not being a bar, it is immaterial why the agreement is not executed." Later on, in the opinion in that case, this court said : " Still, the promise is to satisfy, and until that promise is fulfilled the agreement has not become binding." There was no other consideration than the promise of the county judge to issue bonds under Amendment No. 11, for, if the bonds were issued, it could only be for •the purpose of paying old indebtedness of the county, of which appellant's warrants formed a part, and, when the bonds were issued and the proceeds thereof received by the county treasurer, these funds could only be -applied in the payment of such old indebtedness. In other words, appellant had the absolute right to have the warrants paid out of the funds which accrued from the sale of bonds ; therefore the promise of the county judge was merely to comply with the law in that respect. It is not important at this time to consider whether or not creditors of a county can compel the county court to issue bonds pursuant to Constitutional Amendment
ARK.] 585 No. 11, for, if they have that right, it is one which exists under the law and does not result from contract, and therefore the promise of the county judge to issue the bonds addorl nothing to appPllant,'Q legal right. n n the other hand, if the issuance of bonds was merely discretionary with the county judge, his agreement to do so was merely a promise to pay in part the debts of the county in discharge of the whole, and, as before stated, the unexecuted agreement was unenforceable. Finally, it is clear, I think, that the contract was unenforceable against appellant for the reason that there was no mutuality, in that it was unenforceable against the county. As before stated, the power to issue bonds is one created by law, and such power, or duty to exercise the same, cannot be enlarged or restricted by contract ; and if the county:court cannot be compelled under the law to issue bonds, then it is under no such compulsion by virtue of the contract. And the contract, even if it had been made by the county court itself, wonld have been unenforceable, hence appellant is not bound. I dissent therefore from the conclusion of the majority.
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.