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,
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.
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 ...