The opinion of the court was delivered by: John E. Miller, District Judge.
On October 18, 1955, plaintiff filed its complaint against the
defendants seeking judgment in the sum of $395.60.
In the complaint it is alleged that one Grover Jernigan
borrowed from the United States, through the Administrator of the
Farmers Home Administration, the sum of $5,455; that to evidence
said loan the said Jernigan on August 28, 1952, executed and
delivered a promissory note payable to the plaintiff for the sum
so borrowed with interest at the rate of 5 percent per annum
until paid; that said note was payable in installments, the last
installment being due October 1, 1958, and the note further
provided that upon default of payment of any installment, the
entire indebtedness might be declared due and payable; that to
secure the payment of said note the said Jernigan on January 22,
1953, executed, acknowledged, and delivered to the plaintiff a
crop and chattel mortgage "on said cattle and implements therein
described", said crop and chattel mortgage being filed for record
the same day at 4:00 p.m., in Benton County, Arkansas, and being
abstracted in Chattel Mortgage Record 39 at page 107 of said
There remains due on said note the principal sum of $4,653.12,
and none of the chattels described in the mortgage remain in the
hands of the said Jernigan. Paragraph numbered 5 of the complaint
is as follows:
"On August 11, 1953, said Grover Jernigan without
the knowledge and consent of plaintiff sold 14
animals, which were covered by the chattel mortgage
heretofore described, for a net value of $395.60,
which was a fair market value for said animals at
that time, through the defendants doing business as
Benton County Sales Company, and no part of said
proceeds were applied on the note and chattel
mortgage, the defendants thereby depriving the
plaintiff of its security."
Summons was served on the defendants on November 11, 1955. In
due time and on November 25, 1955, the defendants filed their
answer, in which they admitted that they were citizens of
Arkansas and residents of Washington County in said state, and
that they were partners doing business as the Benton County Sales
The defendants neither admitted nor denied paragraphs 2, 3, and
4 of the plaintiff's complaint, but alleged that they did not
have sufficient information on which to base an allegation. The
exact words employed by defendants are as follows:
"3. Defendants neither admit nor deny paragraph 3
of said complaint for the reason given in paragraph 2
of this answer.
"4. Defendants neither admit nor deny paragraph 4
of said complaint for the reason given in paragraph 2
of this answer."
Defendants denied each and every allegation contained in
paragraph 5 of the complaint.
On December 28, 1955, the plaintiff propounded an interrogatory
to the defendant, W.H. Bartholomew, in the following words and
"1. Did the Benton County Sales Company keep a
daily sales record on August 11, 1953? If so, attach
a copy of the sales record for that date as pertains
to Grover Jernigan, Route 1, Gentry, Arkansas."
There was no formal reply to the interrogatory but the attorney
for the defendants delivered to the attorneys for plaintiff a
copy of the sales record requested by plaintiff, which document
was introduced in evidence by plaintiff and will be more fully
referred to in the findings of fact.
Upon the issue joined the cause proceed to trial to the court
on January 17, 1956, and at the conclusion of the introduction of
evidence on the part of the plaintiff, the defendants moved for
a dismissal on the ground that, upon the facts and the law, the
plaintiff had shown no right to relief.
The motion was orally argued by the attorneys, and the Court
stated that consideration would be given the motion at the
conclusion of all of the evidence, whereupon the attorney for the
defendants stated that defendants desired to stand on their
motion. Thereupon the case was taken under consideration, and the
Court, having considered the argument of the attorneys for the
respective parties, together with the pleadings and documentary
evidence introduced by plaintiff, now makes and files herein its
findings of fact and conclusions of law, separately stated.
The plaintiff is the United States of America, and the
defendants are citizens of Arkansas and reside in Washington
County in said state.
On August 28, 1952, one Grover Jernigan executed and delivered
his promissory note for the principal sum of $5,455, payable to
the order of the United States of America, acting through the
Administrator of the Farmers Home Administration at the office of
that Administration in Bentonville, Arkansas.
The note was payable in installments, the last of which would
become due October 1, 1958.
Upon default in the payment of any installment of principal or
interest, or upon breach by the maker of any of the provisions
contained in the instrument securing the note, the holder at its
option might declare the entire indebtedness to be due and
The note shows the address of the maker as Route 1, Gentry,
Arkansas (plaintiff's Exhibit 3).
On January 22, 1953, Grover Jernigan of Route 1, Gentry,
Arkansas, executed, acknowledged and delivered a crop and chattel
mortgage to the plaintiff, acting through the Administrator of
the Farmers Home Administration, to secure the payment of the
promissory note described in Finding of Fact No. 2.
Then follows a listing and description of 16 cows, 1 bull calf,
3 heifer calves, and 65 ewes. The weights of the cows ...