872 ROSE CITY -MERCANTILE CO. V. MILLER. [171 ROSE CITY MERCANTILE COMPANY V. MILLER. Opinion delivered October 11, 1926. 1. - LANDLORD AND TENANT—RIGHT TO LIEN.—Where, after leasing a farm, the owner conveyed the land to her two daughters, they ..were „ entitled to enforce their lien for the rents subsequently accruing. 2. PRINCIPAL AND AGENT—ESTOPPEL.—Au agent who collected rents for 'a landlorctcannot question the authority under which he acted.. . CORPORATION—LIABILITY FOR ACTS OF PRESIDENT.—Where a_ corporation, whose president as agent for a landlord collected and cOnverted rents by applying them to pay debts due by the tenant to the corporation, the corporation is liable for such rents-. 4• •V -LANDLORD AND TENANT—wAIVER OF LIEN.—By authorizing a mortgagee of a tenant's cotton to sell it and apply the proceeds' to ' the payment of .rents, the landlord does not waive his lien in favor of such mortgagee, though the cotton has passed . to purchasers free from such lien. • V • 5. LA.Nn.LoRD AND TENANTENFORCEMENT OF LIEN.—Equity has juris-- diction of a suit . by a-landlord against a mortgagee of the tenant's crop; tvhich,•having authority to sell - the tenant's crop and apply the . proceeds :to , payment of rent, wrongfully converted a portion of such proceeds. . • 6. LANDLORD AND TENANT—CONVERSION OF CROP—LIARILITY —Where ihe- president of a corporation, which was a mortgagee of, a ten-' ant; sold the tenant i s croli On which there was a landlord's lien, • the corporation, by apprepriating i part of the proceeds, became liable to the landlord for an amount not exceeding the rent. Appeal from Pulaski Chancery Court; , John E. Martineau, Chancellor; affirmed. - Wills ce . Strangways, for appellant. J. C. Marshall, for appellee. SMITH, J. Certain preliminary pleadings and motions were . filed in this cause and are discussed in the briefs, but a stipulation filed upon the su-bmission -of the case in the court below -renders it unnecessary to consider them. In this stipulation it was agreed "that'this cause shall be tried as a suit brought for the purpose of enforcing the -rent lien of plaintiffs against defendant for 'cotton appropriated by it on-which the rent had not been paid
ARK.] ROSE CITY MERCANTILE CO. V. MILLER. 873 In support of this cause of action the plaintiffs offered testimony to the following effect : Mrs. H. . T. Urquhart, by written contract, leased her farm to two tenants. One portion of the farm was leased to Son Lewis, and another portion to Crawford Romus. The rent of one tenant was $1,750, and the rent of the other was $1,250. After executing these lease contracts, Mrs. Urquhart conveyed the farm to her two daughters, Mrs,. Miller and Mrs. Ragland, who are the plaintiffs in this suit. W. H. Miller, the husband of one of the plaintiffs, was agent for both the plaintiffs in the collection of the rents. The Rose City Mercantile Company, herein-after referred to as the company, a corporation, of which J. L. Atkins was president, made advances of money and supplies to sharecroppers of Lewis and Romus to enable them to make a crop during the year 1923, and, tO 's.ecure these advances, took a mortgage on the crop of these sharecroppers. Miller testified that Atkins stated to him that he would like to handle the crop to protea the 'interest of the store, which both understood to mean the Rose *City Mercantile Company, and that, pursuant to this conversation, he wrote Atkins the following note : "Little Rock, Ark., August 7, 1923. "Mr. John L. Atkins, North Little Rock, Arkansas. ."Dear Sir : .Referring to our conversation, pleasp find below memo of various rent notes maturing on or, before November 1, 1923. Crawford Romus $1,250.00 Son Lewis 1,750.00 Wm. Holman 250.00 "You are authorized to collect the above rent notes out of the first cotton, when picked, ginned and sold, you to furnish the 'Union Trust Company of Little. Rock, Arkansas, each Monday morning, weekly, with statement showing amount of cotton ginned and sold and to whom sold, and to deliver the Proceeds as collected to the Union
874 BOSE CITY MERCANTILE 'CO V MILLER. [171 Trust Company, to be credited on the above notes until final payment is made." Miller further testified that he later went away on a trip, assuming that the cotton would be sold by Atkins and the proceeds applied to the payment of the rent, Mit, upon his return, he found that, aft , er selling the cotton, Atkins had applied only one-half the pioceeds Of the crop of theisharecroppers to the accounts 'of the plaintiffs at . the bank. The other half had been credited to the accounts of the sharecropper' s with the .company. This suit' was brought against the company to recover the proceeds of the sale of the sharecroppers' cotton. There are but few questions of fact in the base, the principal one being the capacity in which Atkins acted in selling the cotton, it being one of the contentions of the company that Atkins was a mere trustee, whose actions herein set out did not render it liable for the proceeds of the sharecroppers' cotton, although this money was received and.applied by it to the credit of the sharecroppers' accounts. Another, statement of this contention is that the company had nothing to do with the cotton or proceeds of the sale, except that Atkins placed cash in the hands of the company as trustee -to hold and pay out on the order of Atkins, who bought cotton for the Lesser-Goldman Cotton Company, when Atkins made out tickets Showing the sum due for cotton purchased and to whom the Money should be paid, and that, in selling the cotton pursuant to the authority conferred in the note from Miller, set but above, Atkins was not the agent of the company, and the company is not therefore liable for the desttuction of the plaintiffs' landlord's lien. It is also contended that the plaintiffs did not show • mich ownership of the land as authorized them to maintain this suit for converSion, there being no relation of - landlord and tenant between the plaintiffs and the company, and further, that it was not shown that the plain-, tiffs had nbt been paid their rent.
ARK.] ROSE CITY MERCANTILE CO. v. MILLER. 875 It is finally insisted that, as the cotton- had been sold to a purchaser having full knowledge of the- existence -of a landlord's lien, and that the rent had not been paid, the plaintiffs should have attached the cotton-in the hands of the purchaser, and therefore the cause, which was brought in equity, should have been transferred to law and Vie -plaintiffs . required to proceed- against the purchaser of the cotton. The chancellor held the company liable for the conversion of the half interest in the crop belonging to the sharecroppers, and this appeal is from the decree entered in accordance with that holding. ' It may be first said that we think the' undisputed testimony shows that the plaintiffs were the owners of . an undivided half each of the land on which the crops were grown, and they therefore had' a landlord's lien on . the crops to secure the payment of their rent. More; over, Atkins was constituted agent for the plaintiffs- to collect their rents, and, having acted in that capacity, he must account to his principals as such. Under the agreement Atkins undertook to collect the rent 'for -the plaintiffs, and, under this authority, he sold the cotton and paid them one-half of the proceeds, and he wilr not be heard to question the authority under Which he acted: We think it a mere play upon words to attempt to distinguish between Atkins and the company' in the conversion of this cotton. Miller testified that it was understood in his conversation with Atkins, prior to writing the note set out above, that Atkins was the president of' the company, and the purpose of the . arrangeraent was to enable Atkins to protect the interests of the comp.any. The undisputed testimony shows that, after each -, sale of cotton, the company remitted one-half of the proceedS to the Union Trust Company, the depository designated in the Miller note, and these letters were written and signed by the company by Atkins as president. More-: over, the undisputed testimony shows that the proceeds of the sale of the interests of the sharecroppers were
876 ROSE CITY MERCANTILE CO. V. MILLER. [171 credited on the books of the company to the accounts of these sharecroppers, so that there can be no question but that the company was a party to and the beneficiary of the conversion of the cotton. As to the proposition that the testimony did not show that the rent had not been paid, but little need be said. Atkins handled and sold all the cotton, and the statement rendered by the company of the sales of the Atton showed that the total proceeds of all the cotton paid only a small part of -the, rent. • It is conceded that the sharecroppers were liable only for the pro rata portion of the rent due on the land cultivated ,by them,- but the proceeds of the sale cif their cotton were insufficient to "pay that part. During the progress of the trial the court stated that the plaintiffs would- have to make a showing that the rent due upon the •land of each subtenant was more than the amount of rent received by the plaintiffs; whereupon counsel for the company ,stated : "Counsel: It is much less. I will make ; a, statement for . the stenographer. The amount of cotton . raised by each subtenant produced less revenue than the amount of rent due• from each said subtenant" . This admission was evidently, made to avoid . the delay of proving what was obviously a fact easily , susceptible of exact proof. • There . was no waiver here of the landlord's lien in favor et Atkins or the coMpany. The agreement author, ized Atkins to sell the cotton, and the title to the cotton . passed tdthe purchasers free of the landlord's lien, but that fact did not deprive the plaintiffs of their right to sue for the money paid for the cotton. The company.was a mortgagee, and authority to it to sell the caton and apply the proceeds to the payment of the landlord's rent was mit a waiver of the lien. Bighanv v. Cross, 69 Ark. 581, 65 S. W. 101 ; Foster v. Bradivey, 143 Ark. 319, 220 S. W. 811 ; First Nat'l Rglik v. Duly all, 156 Ark. 377, 246 S. W. 471: Under the facts stated, the proper action was brought to impress the lien on the • proceeds of the cotton. The
ARK.] ROSE CITY MERCANTILE CO. V. MILLER. 877 sale of the cotton was authorized by the plaintiffs, and a suit at law by attachment to enforce the lien,against the purchasers who had bought with knowledge of the landlord's lien would have involved a repudiation of 'the contract of agency under which the cotton . was sold, even • though the cotton could have been found. The right here-asserted is that of the landlord to Sue' one' who has .knOwingly converted cotton upon which a lien exists, for the proceeds of such 'conversion; to the extent . of the debt secured by the lien. This right Was asserted in the early case 'of Reweis v. Barnes, 36 Ark:" 575, and has since been frequently' reaffirmed. Two of the later cases on the subject are Sledge & Norfieet Co. v. Hughes, 156 Ark. 481, 247 S. W. 1077, and Walker v. Rose, 153 Ark. 599, 241 S. W. 19, and these last cases cite other intervening cases. In the case of Walker v. Rose, supra, 'it was said: ' f 'When the bank, through . its . cashier,. advised Walker (a tenant) to ship cotton to a cotton factor out of the State, the 'cashier knowing at the time that the appellee', (the landlord) had a lien on suCh cotton for rents and supplies, aud When the cashier received. from Walker a draft on the factor for the-proceeds of such eotton and' used such drafts in paying Walker's indebtedness,. the bank by these' acts,converted tO its'own use the proceeda of the cotton with full knOWledge of the . fact that the • appellee had a lien upon such cotton, or its proceeds; for'. rents and supplies. The . decree of 'the court holding the bank liable . to the app.ellee for such proceeds under the. circumstandes Was correct, as disclosed , . hy the above . proof. Having knOwledge. of the.appellee's lien, it must' be held ihaf'the' Conduct of the bank was, tantamount to a destru Ction bY it of such lien. .(Citing numerous cases)." * The principle there announced is • controlling' and. conclusive of this ease. Here the testimony showS that Atkins, the president of the company, sold .cotton upon which the , plaintiffs _had a Jandlord's lien, and the pro-
878 [171 ceeds were paid to and appropriated by the company, and it is thereford liable for the sum thus appropriated, the amount not exceeding the rent: -• : The court allowed the company , credit „ for $99, ;the expense a , picking and marketing the cotton, and rendered judgment against the companY,for $383.05,,the net balance of the proceeds of the sale of the interests of the sharecroppers, and, as this is less , than the pro - rata Part of the rent: due on the land cultivated ' by them, the decree is correct, and it is therefore affirtned,
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.