{
  "id": 8721624,
  "name": "Charles M. BUTLER, Guardian et al v. Garland Lavon NEWSOM, Executor",
  "name_abbreviation": "Butler v. Newsom",
  "decision_date": "1974-04-29",
  "docket_number": "74-8",
  "first_page": "439",
  "last_page": "443",
  "citations": [
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      "cite": "256 Ark. 439"
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      "cite": "508 S.W.2d 323"
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    "name": "Arkansas Supreme Court"
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      "category": "reporters:specialty",
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      "cite": "185 S.W. 451",
      "category": "reporters:state_regional",
      "reporter": "S.W.",
      "year": 1916,
      "opinion_index": 0
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    {
      "cite": "123 Ark. 313",
      "category": "reporters:state",
      "reporter": "Ark.",
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        1556209
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  "last_updated": "2023-07-14T14:44:14.527021+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
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  "casebody": {
    "judges": [],
    "parties": [
      "Charles M. BUTLER, Guardian et al v. Garland Lavon NEWSOM, Executor"
    ],
    "opinions": [
      {
        "text": "George Rose Smith, Justice.\nRuffin and Rudolph Newsom were brothers whose family business, comprising farming, a cotton gin, and a store, was incorporated in 1959 as Newsom Brothers Gin Company, Inc. Ruffin had died in 1958; Rudolph died in 1972. After the latter\u2019s death his son, the appellee Garland Lavon Newsom, was selected at a family meeting to liquidate the business, which was conceded to be in failing condition. The appellee proceeded to sell the assets, pay the corporation\u2019s debts, and distribute what was left.\nThese two chancery suits, consolidated below, were brought by the appellants against the appellee individually and as the personal representative of his father\u2019s estate. The chancellor decided both cases in favor of the appellee. The cases present separate issues which must be separately discussed.\nThe essential facts are not in dispute. Before Ruffin\u2019s death the brothers operated the business as a partnership. After Ruffin\u2019s death his widow, as the administratrix of his estate, and Rudolph, as the surviving partner, incorporated the business. A probate court order approved the exchange of the estate\u2019s interest in the partnership for shares of stock in the corporation. Half the total stock was issued to Rudolph and the other half to Ruffin\u2019s widow and children in proportion to their interests. Rudolph managed the company until his death in 1972.\nThe first of the two consolidated suits was brought against Rudolph\u2019s estate by Ruffin's youngest child, the appellant Lisa Kay Newsom. She was one year old when the partnership was incorporated in 1959. Her stock in the corporation was then worth SI8,800, but through the years its value declined. Lisa Kay now contends, through her guardian, that she is entitled to repudiate or disclaim interest in the corporation and hold Rudolph\u2019s estate liable for the original value of her stock, with interest from 1959.\nThe chancellor was right in rejecting that contention. There is, of course, no suggestion that Lisa Kay, at the age of one, was a party to a contract which she can now disaffirm. Instead, she contends that under the Probate Code and the Uniform Partnership Act the incorporation of the family business was unauthorized and therefore void as to her.\nWe do not so construe the statutes. The Probate Code provides that property belonging to an estate may be sold or exchanged under court order when necessary for any purpose in the best interest of the estate. Ark. Stat. Ann. \u00a7 62-2704 (Repl. 1971). The 1959 probate court order found that, owing to the complexity of the partnership business, it was to the best interest of all parties that the interest of Ruffin\u2019s estate in the partnership be exchanged for stock in the new corporation. The probate court made no attempt to settle the partnership accounts, which distinguishes this case from our holding in Morris v. Stroude, 123 Ark. 313, 185 S.W. 451 (1916). The 1959 order was within the probate court\u2019s authority and binding upon the beneficiaries of Ruffin\u2019s estate.\nLisa Kay also relies upon the Uniform Partnership Act (Ark. Stat. Ann., Title 65, Ch. 1 [Repl. 1966]), under which we have held that a surviving partner who continues the partnership instead of winding it up does so at his peril. Zach v. Schulman, 213 Ark. 122, 210 S.W. 2d 124, 2 A.L.R. 2d 1078 (1948). There is a distinction, however, between continuing the partnership itself and continuing the business in which it was engaged, so long as the rights of the estate of a deceased partner are protected. The business of most partnerships, such as a law firm or a mercantile concern, is continued after the death or retirement of a partner, even though the partnership itself is dissolved. Here Rudolph, as the surviving partner, wound up the partnership by the transfer of all its assets to the corporation. Nothing in the uniform act requires either that the partnership business be terminated or that it be continued only as a partnership rather than as a corporation. Hence the appellant\u2019s argument that Rudolph violated his statutory duty to wind up the partnership cannot be sustained.\nIn the second case the corporation itself asserts a claim against Rudolph\u2019s estate. On March 1, 1967, the corporation signed a demand note to Rudolph Newsom for $41,059, with interest at 7% per annum. When Rudolph\u2019s son, t h e appellee, liquidated the corporate business, he paid the amount of that note to himself, as executor of his father\u2019s will, on April 19, 1972, with interest totaling $17,058.49. The corporation admits its liability for the principal debt, but it contends that it was not liable for interest on the obligation.\nWe agree with that contention, because the weight of the evidence shows that the parties never intended for the debt to bear interest. Through the years the various members of the Newsom families maintained running accounts with the family corporation, as for groceries and other subsistence. In 1967 the corporation obtained a loan from a federal agency, the Small Business Administration. At that time Rudolph\u2019s account on the corporate books showed a large balance in his favor, as a result of his having deposited the proceeds from a personal real estate transaction. The SBA required that Rudolph\u2019s claim against the corporation be subordinated to its proposed loan. To that end the note in question was executed and made subordinate to the SBA obligation.\nThe note was never shown on the corporate records as a debt of the corporation. To the contrary, the various family accounts were carried on the books in the same way as they had been previously. No interest was ever paid upon such accounts. Finally, the obligation, as a promissory note, was barred by limitations when Garland Lavon Newsom paid it to himself; but as a running account it was not barred, there having been debits and credits to the account. Upon the proof as a whole we are convinced that the execution of the note was simply a paper transaction required by the SBA, which did not change the character of the corporation\u2019s indebtedness to Rudolph Newsom. The corporation is therefore entitled to recover from Rudolph\u2019s estate the amount of the interest payment.\nAffirmed in part, reversed in part, and remanded.",
        "type": "majority",
        "author": "George Rose Smith, Justice."
      }
    ],
    "attorneys": [
      "Douglas Bradley and Jon R. Coleman, for appellants.",
      "Elbert S. Johnson, for appellee."
    ],
    "corrections": "",
    "head_matter": "Charles M. BUTLER, Guardian et al v. Garland Lavon NEWSOM, Executor\n74-8\n508 S.W. 2d 323\nOpinion delivered April 29, 1974\nDouglas Bradley and Jon R. Coleman, for appellants.\nElbert S. Johnson, for appellee."
  },
  "file_name": "0439-01",
  "first_page_order": 475,
  "last_page_order": 479
}