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UNITED STATES v. LEMONS

November 10, 1954

UNITED STATES OF AMERICA, PLAINTIFF,
v.
THEODIS LEMONS AND HILDA LEMONS, DEFENDANTS.



The opinion of the court was delivered by: John E. Miller, District Judge.

On March 18, 1954, plaintiff filed its complaint against defendants, alleging that it was the holder of a promissory note in the principal amount of $896.84, which note, payable to Arkansas Home Building & Repairing Company, had been executed by defendants and delivered to the said Arkansas Home Building & Repairing Co., and that said note had been duly endorsed and negotiated; that at the time of the filing of the complaint the balance due on said note was $786.32, plus interest. Plaintiff prayed judgment against defendants for the principal sum of $786.32, plus interest in the sum of $76.39 as of March 15, 1954, plus interest thereafter at the rate of 6% per annum, together with costs.

On April 27, 1954, defendants filed their answer in which they admitted executing the note payable to Arkansas Home Building & Repairing Company, but denied that said note was delivered or that Arkansas Home Building & Repairing Company was authorized to negotiate said note. Defendants denied that plaintiff was a holder in due course and alleged that the note was not endorsed or negotiated to plaintiff before maturity for value without notice of defendants' defense; that the note was executed upon the consideration that Arkansas Home Building & Repairing Company would furnish certain labor and materials in repairing defendants' home, and that there was a failure of consideration since the work contracted for was not completed and the work performed was not done in a workmanlike manner.

Defendants further alleged that Arkansas Home Building & Repairing Company was never authorized to negotiate the note, and denied that they were indebted to plaintiff in any sum.

On June 23, 1954, plaintiff filed and served upon defendants a request for admissions, attaching thereto the promissory note in question, together with the F.H.A. Title I Completion Certificate, Form FH-2, dated June 18, 1952, and purportedly signed by defendant.

The defendant, Theodis Lemons, responded to this request on June 29, 1954, admitting that the said note and Completion Certificate were signed by defendants, but alleging that said signatures were secured by fraud on the part of Arkansas Home Building and Repairing Company. More specifically, defendants alleged that the note and completion certificate were signed by them in blank at the time the contract (for the repair work) was executed on June 5, 1952, upon the consideration and promise of agents of Arkansas Home Building and Repairing Company to prepare another contract, which would include the repairs that had been agreed upon and which had been omitted from the contract dated June 5, 1952; that upon the execution of said corrected contract, the amount of the note and the amount of the monthly installment payments was to be filled in by Arkansas Home Building and Repairing Company; that said corrected contract was never submitted to the defendants for their signature, and the repairs agreed upon were only partially completed.

The defendants also admitted that they made no payments on the note, but denied that they were in default.

A pre-trial conference was had on September 20, 1954, and upon the request of defendants they were granted permission "to amend their answer to deny that they executed the note involved in this cause * * *."

Pursuant to the permission granted by the Court, on September 27, 1954, defendants filed an amended and substituted answer in which they denied executing or signing the note and the completion certificate and alleged that their signatures were placed on said documents without their knowledge or consent. Defendants also denied that plaintiff was a holder in due course.

Upon the issues thus joined the case was tried to the Court, without a jury, on October 19, 1954, and at the conclusion of the trial the case was submitted and taken under advisement by the Court. And now the Court, having considered the pleadings, request for admissions and answers thereto, exhibits, deposition of E.R. Livoni and ore tenus testimony of the witnesses, makes and files herein its findings of fact and conclusions of law, separately stated.

Findings of Fact.

1.

The plaintiff is the United States of America. The defendants are citizens of Arkansas and reside in the Hot Springs Division of the Western District.

2.

During the first week in June, 1952, an agent of Arkansas Home Building & Repairing Company came to defendants' home, which is located about six miles from Hot Springs, Arkansas, and discussed with defendants the condition of their home and repairs that were needed. The agent took various measurements of the house, but no details were agreed upon at that time. The agent returned on June 5, 1952, and again discussed the repairs with defendants. On this occasion defendants entered into a contract with Arkansas Home Building & Repairing Company for certain work to be performed on defendants' house, the price of the work to be $780. Both defendants signed the contract, and they also signed a Title I, F.H.A. Credit Application.

Work was started on the house and the work called for by the contract was performed, although defendants were under the impression that additional ...


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