{ "id": 8725645, "name": "Abramson v. Franks", "name_abbreviation": "Abramson v. Franks", "decision_date": "1937-11-08", "docket_number": "4-4800", "first_page": "971", "last_page": "982", "citations": [ { "type": "official", "cite": "194 Ark. 971" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [], "analysis": { "cardinality": 924, "char_count": 21792, "ocr_confidence": 0.493, "pagerank": { "raw": 5.4033266686372354e-08, "percentile": 0.34071696844101723 }, "sha256": "ed8c743c56836c713bd580aad9b7040b6930610c79424862fd48917893303bce", "simhash": "1:0a52af962e05af63", "word_count": 3832 }, "last_updated": "2023-07-14T19:32:46.346325+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Abramson v. Franks." ], "opinions": [ { "text": "Griffin Smith, C. J.\nAbout 1923 the First National Bank of Holly G-rove was chartered. It functioned successfully under federal supervision until January 8,1931, with Rue Abramson, one of the appellants herein, as its president and largest individual stockholder. On January 9, 1931, the 'bank failed to open. Its affairs were thereupon administered by John M. Riley as -receiver until June 16, 1931. It then reopened under authority of the comptroller of the currency a\u2019nd continued to function until March, 1933, at which time President Roosevelt proclaimed a moratorium. Thereafter its business was liquidated under federal administration.\nAlthough appellees\u2019 suits were filed against Rue Abramson, and R. Abramson & Co., Incorporated, the \u2022evidence is not sufficiently clear to distinguish between the financial interests of Rue Abramson and the appellant corporation. It is shown, however, that prior to the time the bank closed in 1931, Abramson and the corporation and the. immediate members of Abramson\u2019s family owned $17,500 of the $25,000 capital stock of the bank.\nDuring the receivership period from January 9' to June 16, 1931, Abramson took the initiative in working out plans for reorganization. He seems to have had the full co-operation of John M. Riley, for it is apparent that the receiver, after familiarizing himself with the bank\u2019s affairs, came to the conclusion that its impairment did .not exceed the capital stock plus $12,500 in questionable notes, or a total of $37,500.\nStockholders of the bank, in pursuance of the plan to reorganize, submitted to a voluntary assessment equal to the face value of their stock holdings, and of this amount so paid in appellants accounted for $17,500. In addition, they absorbed and paid to the bank $9,750 of tlie $12,500 in charged-off notes. Abramson testified that he made further payments of $3,000, or a total of $30,250. Other stockholders met voluntary assessments sufficient to bring the total of new money up to $37,500. In view of this showing the comptroller of the currency ordered or permitted the bank to resume business. In tlie meantime, and as a condition precedent to approval by the comptroller, \u2022 depositors had executed written agreements to accept payment of their balances in four installments of 25 per cent, each, without interest, the first payment to be made when the bank opened, and the other installments in 6, 12 and 18 months.\nSale of the notes aggregating $12,500 was made upon order of Chancellor A. L. Hutchins, acting\u2019 in consequence of a petition filed by the receiver.\nAmong the officers and directors of the bank who receipted the receiver for assets when the reorganization was consummated were Rue Abramson, president, and P. M. Dearing, cashier. Dearing served as conservator under the receiver, and was re-elected cashier when the rehabilitated bank resumed business.\nOn August 24, 1935, Gr. L. Franks, .one of the ap-pellees herein, filed suit against appellants, alleging that by reason of the fraudulent representations made by the\u2019 appellant Rue Abramson, he had been induced to buy two shares of stock in the First National Bank of Holly Grove, such shares being of the par value of $100; also, that J. B. Johnson, who similarly purchased four shares of stock; A. B. Walls, Jr., who purchased one share; and Cornelius Archer, who purchased three shares, had, prior to the filing of suit, and for a valuable consideration, assigned to him all of their interests for damages arising out of such fraudulent transactions with Abramson. It was alleged by way of damages that each had been assessed an amount equal to the face value of the stock so held, amounting in the aggregate to $1,000, and in addition they suffered loss of the purchase price of the stock. Appellees Franks and Archer alleged that they had borrowed the sums of $200\u2019 and $300, respectively, from Rue Abramson with which to purchase the stock, and had executed to Abramson their promissory notes at eight per cent, with the stock attached as collateral. Of the $200 so borrowed by Franks, he alleged that $57.20 had been repaid, and that a payment of $18 in interest had been made. He also had paid the assessment of $200. Archer had paid an assessment of $300, but had not- paid his note or the interest, nor is it shown that assessments levied against Johnson and Walls had been paid. Bonner paid his assessment, with interest of $18.33. He also had borrowed $1,000 from Abramson with which to purchase ten shares of stock, and had executed his note at 8 per cent. Two interest payments had 'been met, one for $80, and one for $160. Bonner\u2019s damages were laid at $1,258.33. With respect to each appellee, there was a prayer that the notes given Abramson be canceled. The assignments alleged to have been executed by Archer, Walls, and Johnson, in favor of Franks, were dated August 20, 1935. Bonner\u2019s complaint was filed October 26, 1935.\nT. W. Bonner testified that he began doing business with the First National Bank in 1926, by borrowing $3,000; that in 1929 he borrowed $7,000, and repaid it, but when the bank failed in 1931 he owed a note of $2,000. In substance, Mr. Bonner said: \u201cBecause of my dealings with Mr. Abramson, I had implicit confidence in him, in his honesty and integrity. In the spring of 1931 he approached me on the proposition of selling me some bank stock. P. M. Dearing, cashier, also talked with me on the same subject. Mr.' Abramson told me they had a new bank and wanted to get some new stockholders. They wanted me to take some stock, and said they would make me a director-in the bank \u2014 said they would make a big man out of me. They made a trip over to my store at Blackton to see me about it. Mr. Abram-son told me the bank had good money in it and that they could pay the depositors any time they walked up and wanted their money. They told me they were issuing new stock. He did not tell me that they were going to cancel ont the old stock and issue new stock. What he said was that it was a new hank and had plenty of money in it. I did not know until six months ago that a chancery court order had 'been issued for the purpose of rehabilitating the bank. I agreed to purchase $1,000 of stock'in the new bank \u2014 the stock he wanted to sell me. I told him I didn\u2019t have any money, and he told me I didn\u2019t need any; that he would put up the money and hold the stock as security on my note. He kept the stock about six months, and one day I got it. It wasn\u2019t signed, so I signed it and sent it back to him. I have not paid the note, but did make two interest payments, one of $80 on December 19, 1931, and one of $160 on December 3, 1932. Later, when the bank failed, I was sued on a stock assessment, and paid the receiver $1,018.33, which included interest. Altogether, I paid out $1,258.33.\u201d\nThe appellee, G. L. Franks, testifying in his own behalf, told of conversations with Rue Abramson, saying : \u201cHe told\u2019me that the bank had made several thousand dollars, and that he would like to sell me a little bank stock to open up a new bank, and was going to do new business, and wanted to get new members and start a new outfit. I told him that I didn\u2019t have the money to put in the bank, that it would take all I had to carry on my business. He said, \u2018Don\u2019t worry about that\u2014 just give me your note and pay it when you feel like it; you can pay me eight per cent.\u2019 I told him I wasn\u2019t able to do that, and he named over several people who were going to buy some stock. He said: \u2018I will take your note, and any time you feel like you can\u2019t pay it off, I will take it over and cancel it.\u2019 About six months later I got notice that $16 was due in interest on the note for $200 I gave him, and I paid it. Later I got another notice, and I paid that. Then, later on, I went to him and told him I wasn\u2019t able to carry the debt, and he said \u2018all right,\u2019 so I thought he was supposed to cancel it like he said he would do. He went over and did something about the books and I did not think any more about it until tlie bank closed and they notified me that I was one of the stockholders. I did not attend any meetings and did not qualify as a stockholder. I asked them what they meant, so he kinda laughed and said, \u2018That\u2019s some old stock they are trying to put off on you.\u2019 I did not receive any stock or anything from tlie bank. I paid the interest twice, and that\u2019s all I know about it. I signed the stub at the bank receipting for the stock certificate.\u201d\nC. Archer, one of the appellees, testified substantially as follows: \u201cI live seven miles southeast of ITolly Grove, .and did business with the First National Bank prior to 1931. T made a deal with Mr. Abramson to purchase some bank stock \u2014 it was supposed to have been stock in a new bank. I purchased $300 worth of the stock. Mr. Abramson and Mr. Dearing both talked with me about it. Mr. Abramson said they wanted a lot of small stockholders; wanted them scattered over a larg*e area; said he didn\u2019t want the bank controlled by large stockholders. I told him I wasn\u2019t able to pay and he told me not to worry about the money* that he would lend it to me, take my note, and sell me the stock in this hank \u2014 a new bank. He told me that the officers would all be new officers, and that it would be a new bank. I gave him my note and he kept the stock as security. The note has never been presented to me, and I have not paid it. He has never made any effort to collect it. I bought the stock upon his representations, and was sued on an assessment. \u201d \u25a0\nAlthough on direct examination Archer testified that after executing and delivering his note to Abramson no further communication on the subject was ever had, he admitted, on cross-examination, that he did receive a notice from Abramson dated December 1, 1931. It was returned to Abramson with a letter in which he said: \u201cThis inclosed statement: I can\u2019t see how I can raise this amount at all. I will not get out of debt, and have some notes that I can\u2019t meet at all. If it will be possible, I wish you would get some one else to take this, as I can\u2019-t possibly see my way out of debt.\u201d On January 5, 1932, in response to this letter, Abramson testified that he 'wrote: \u201cI received your letter some days ago regarding the bank stock, and it will be satisfactory to carry the amount for yon until a later date. All we ask is that you send us a check for the interest figured below.\u201d Archer also testified: \u00a3