text:
    Kansas City Fire & Marine Ins. Co. v. Epperson.
    5-2701
    356 S. W. 2d 613
    Opinion delivered April 30, 1962.

      Wootton, Land <& Matthews, for appellant.

      Wendell O. Epperson, pro se, for appellee.
   George Rose Smith, J.

This is a suit by the appellee, Wendell O. Epperson, upon a Family Combination Automobile Policy that provided comprehensive liability and accident protection for him and members of his family. Epperson’s daughter was hurt in an automobile collision and incurred medical expenses of more than $2,000. The appellant admits its liability to the extent of $1,000; the dispute is about whether it is liable for an additional $1,000 of the total medical bill. This appeal is from a judgment holding the insurer liable for the entire $2,000 claimed by the plaintiff.

We may divide the insurance coverage afforded by this policy into two categories. First, the contract described Epperson’s two cars, a Pontiac and a Ford, and provided certain liability and property damage insurance with respect to claims involving those vehicles. Secondly, the policy afforded other coverage having no connection with either insured automobile. The present claim falls in the second category; that is, medical services were to be provided if Epperson or certain members of his family should be injured in any automobile accident, regardless of whether either insured vehicle was involved. The record does not tell us whether Miss Epperson was in one of the insured cars when she was hurt; under the terms of the contract that fact was immaterial.

The printed policy contained a schedule offering nine different kinds of insurance protection. A separate premium for each car was to be inserted for each form of coverage actually being put into effect. The provisions for Coverage C, medical expense, were as follows:

“Premiums Limits of Liability Coverages
“Car 1 Car 2
# * * *
‘ ‘ C $7.20 $4.20 1,000.00 dollars each person Medical Payments”

There were two other paragraphs in the contract that are pertinent:

“Limit of Liability: The limit of liability for medical payments stated in the declarations as applicable to ‘each person’ is the limit of the company’s liability for all expenses incurred by or on behalf of each person who sustains bodily injury as the result of any one accident.
* * # *
“Two or More Automobiles: When two or more automobiles are insured hereunder, the terms of this policy shall apply separately to each.”

We think the trial court’s conclusion to have been correct. As far as this aspect of Coverage C is concerned the insurer would have been liable for $1,000 if only one premium had been paid upon a single car. It is reasonable to think that the additional premium charged for the inclusion of a second car was intended to afford some corresponding added benefit to the insured. To this end the policy provided that its terms should apply separately to each car. If Epperson had carried a separate policy upon each vehicle he would have been entitled to receive $1,000 under each contract. The fact that the two coverages were combined in one policy does not compel us to reach a different result. To say the least, the combination contract is fairly open to two conflicting interpretations; in this situation we must construe it strictly against the insurer. We are unable to agree with the holding in Sullivan v. Royal Exchange Assurance, 5 Calif. Rptr. 878, where the court allowed only a single award of benefits under a similar policy.

It is also contended that the appellee did not recover the full amount sued for and was therefore not entitled to the statutory penalty and attorney’s fees. This argument is without merit. The complaint sought a recovery of $2,000. At first the defendant denied all liability. Later on it amended its answer to admit its obligation to the extent of $1,000, and a check for that amount was tendered. After the case had been submitted to the court the parties stipulated that Epperson might cash the tendered check without prejudice to his right to seek the other one thousand dollars. The complaint was then amended, quite properly, to reduce the claim to the sum left in dispute. The defendant has never admitted its liability for that amount. The plaintiff has evidently recovered the full sum sued for — half by the defendant’s admission and the other half by the court’s judgment.

Affirmed.


source: Caselaw Access Project

author: Paul Ward, Associate Justice.

license: Public Domain

text:
    Dean v. Stuckey, Admr.
    5-2689
    356 S. W. 2d 622
    Opinion delivered April 30, 1962.

      John S. Mosby, for appellant.

      J. G. Waskom and Gardner & Steinsiek, for appellee.
   Paul Ward, Associate Justice.

This appeal concerns certain questions of law which arose out of the administration of the estate of Joe Dean Goodin who died intestate, leaving real and personal property valued at approximately $400,000. It is important at the outset, in order to grasp the issues involved, to understand who constituted the heirs of the deceased and their relationships, and also the nature of the property.

Heirs. Joe Dean Goodin died January 11, 1957, unmarried, leaving no children. The administration of his estate began in March, 1957. The deceased’s mother, Myra C. Goodin, died April 28, 1957, and her estate is being administered under separate proceedings. Myra had a brother, J. J. Dean, who is now living. She also had a sister, Anna Williams, who is deceased, leaving-three children. The above are referred to as the “Dean heirs ’ ’.

The deceased’s father, J. P. Goodin, who died in 1951 had one half-sister and three half-brothers. All of these are now dead. Two of them had one child each (now living); one had five children (now living); one had eight children one of -whom is deceased, leaving six children (now living). These will be referred to as the “Bryan heirs”.

Property. The property affected by the administration of deceased’s estate, for the purposes of this opinion, can be designated as here set out. Paternal ancestral: An undivided one-half interest in 164.6 acres of land and 31.5 acres of land. New acquisition: 711.57 acres of land. Personal property: Among other things (a) On December 24, 1956 decedent leased 80 acres of land for the year 1957 and took a note for $1,950 due that fall; (b) On December 27, 1956 decedent leased the rest of the lands for the years 1957, 1958 and 1959 taking three notes, each in the amount of $21,250; (c) There was certain other income from the estate accruing during the administration.

After the probate judge had made a finding of heir-ship and after a final accounting had been made, the administrator, on March 29, 1961, filed his Petition for Distribution. Thereafter, on July 22, 1961, the judge issued a detailed memorandum opinion indicating what his rulings would be on all questions and issues involved. Based thereon a precedent for a decree was submitted by the Dean heirs (appellants) and another one was submitted by the administrator and the Bryan heirs (appellees), each setting ont in detail the real estate interest and the personal property each beneficiary would receive, and also how the costs attending administration were to be apportioned. Where the two precedents were in agreement such instances will not be discussed or referred to in this opinion. The court, however, approved the precedent submitted by appellees and rendered a decree accordingly.

On appeal appellants set out nine separate points for a reversal, but we have decided that all essential issues can be disposed of under two separate specific points and a third general point.

One. The trial court divided the new acquisition lands per stirpes among the Dean heirs and the Bryan heirs — that is, the court gave a one-sixth undivided interest each to the brother and sister (or the heirs of each) of decedent’s mother, and a one-sixth each to the three brothers and one sister (or the heirs of each) of decedent’s father. In so doing, we think, the court committed error. It is our conclusion that an undivided one-half interest in the new acquisition lands must go to the heirs of decedent’s mother and that the other one-half interest must go to the heirs of decedent’s father.

Ark. Stats. § 61-111 reads:

“Descent where no father or mother. The estate of an intestate, in default of a father and mother, shall go as follows: one-half to the brothers and sisters, and their descendants of the father; and the other one-half to the brothers and sisters, and their descendants, of the mother; provided, that if such line of either the father or the mother shall be extinct, then the entire estate shall go to such line of the other. This provision applies only where there are no kindred, either lineal or collateral, who stand in a near[er] relation, and does not apply to ancestral estates.” (The word near should be nearer. See Daniels v. Johnson, infra.)

In the ease of Daniels v. Johnson, 216 Ark. 374, 386-387, 226 S. W. 2d 571, in an exhaustive opinion, this . Court said:

“It is as though. § 61-111 read: ‘The estate of an intestate, in default of [descendants, or brothers or sisters or their descendants, or] a father and mother, shall go as follows . . .’ This gives § 61-111 its proper function, which is to define tlie manner of descent and distribution of non-ancestral estate under the third sub-paragraph of § 61-101.”

When § 61-111 is read in its entirety in conformity with the above quoted language there can be no doubt that it is controlling under the factual situation in the case under consideration, and that it dictates what our conclusion must be. Joe Dean Goodin’s estate is in default of descendants, brothers and sisters, and father and his mother. Therefore, one-half of it must go to the three brothers and one sister (or their descendants) of his father, and the other one-half must go to the brothers and sister (or their descendants) of his mother.

Appellees’ well reasoned and well presented contention is to the effect that this case is not controlled by § 61-111 but is controlled by §§ 61-101 and 61-110. It is certain that the issue presented is not without its perplexities. Harry E. Meek, in an exhaustive memorandum on the Law of Descent and Distribution written in 1961 and published in the Desk Book of the Arkansas Bar Association, in discussing Ark. Stats. § 61-101, said: “But where the intestate leaves no issue, either Sec. 61-110 or 61-111 must be consulted; and the relationship between the three sections has obfuscated Arkansas lawyers for more than one hundred years.”

However, we think a careful study of the history of these sections and their relation to each other confirms the conclusion heretofore reached. Prior to the passage of Act 52 of 1933 the law preferred the paternal heirs over the maternal heirs. For example, Crawford and Moses Digest §§ 3471, 3480 and 3481 all preferred the paternal heirs, but said Act 52 changed those sections to put the paternal and maternal heirs on the same basis. Sections 3471 and 3480 were changed by said Act 52 to read the same as Ark. Stats. §§ 61-101 and 61-110 respectively. Section 3481 (C. & M. Dig.) was changed by Act 52 to read as follows: ‘ ‘ The estate of an intestate, in default of a father or mother, shall go to the brothers and sisters, per stirpes. ” It is apparent this section did nothing to clarify the issue under discussion. However, the above section was changed by Act 117 of 1937 to read the same as Ark. Stats. § 61-111 (heretofore copied). It is necessary now to consider certain language found in § 61-110 (relied on by appellees) which, in all material parts, reads as follows:

“Descent where no descendants . . . but if the estate be a new acquisition, it shall ascend to the father and mother for life in equal shares, and upon the death of one parent, the share enjoyed by such parent during his or her life shall pass to the sole surviving parent for life, and then, both shares shall descend in remainder to the collateral kindred of the intestate in the manner provided in this act [§§ 61-101 — 61-105, 61-107- — 61-113, 61-115 — 61-123].” (Emphasis added.)

The question then is: What section of the statute is referred to by the word “in the manner provided by this act”? It seems clear enough that the above quoted words must refer either to § 61-101 (3rd paragraph) or to § 61-111, because none of the other sections mentioned seem to have any relevancy. Section 61-101 is eliminated by the language quoted from the Daniels case, supra. This leaves only § 61-111 to supplement § 61-110. So, when § 61-111 is applied to the undisputed facts in this case, it seems clear to us that one-half of decedent’s new acquisition lands passes to the Dean heirs and the other one-half passes to the Bryan heirs.

Tivo. Rent Notes. The trial court was correct (a) in giving the estate of Myra (mother of decedent) all rentals accruing, before her death, on the new acquisition lands for the year 1957, and (b) in giving the unaccrued rents (on the three notes for $21,250 each) to those who received the land, as their interests appear. The general rule in this connection is set out in 32 Am. Jur. Landlord and Tenant, 447-448, at page 364. In the first section we find this:

“Generally. — Rents accrued before tbe death of tbe lessor do not descend to bis beirs at law or pass directly to bis legatees, bnt devolve upon bis personal representative for administration and distribution as personal assets of bis estate.”

In tbe other section it is said:

“As a general rule, since rent to accrue is an incident of tbe reversion, upon tbe death of a lessor, who had reserved rent generally for tbe duration of tbe term, rents thereafter to accrue and to become payable either in money or in a share of tbe crops raised upon tbe premises do not devolve upon bis executor or administrator for administration as a part of bis personal estate, but descend at once, with tbe reversion, as real estate, to bis beirs at law. . . .”

Tbe above is true only where, as here, there is sufficient personal property in tbe bands of tbe administrator to pay debts and costs. In the case of Phillips v. Grubbs, 112 Ark. 562, 566, 167 S. W. 101, on rehearing, this same question of rentals was considered, and tbe Court said:

“Tbe decree ought, however, to be modified with respect to tbe order on Grubbs to pay tbe rent to Prank A. Wright as executor of tbe estate of Mrs. Carr. It does not appear that tbe lands or tbe rents and profits thereof are necessary for tbe payment of debts; therefore, tbe beirs are entitled to collect tbe same.”

See also, to tbe same effect, Gailey v. Ricketts, 123 Ark. 18, 184 S. W. 422 and Deming Investment Company v. Bank of Judsonia, 170 Ark. 65, 278 S. W. 634. We have carefully read tbe cases cited by appellants but find nothing to justify a conclusion that tbe said rent notes are personal property in tbe bands of tbe administrator to be distributed to them as such.

Three. Tbe trial court made directives with reference to the payment of certain expenses incident to tbe administration, some of which are unchallenged. Appellants say tbe accountant’s fee and tbe attorney’s fee should be prorated “taking into consideration tbe value of the real as against the personal property”. In regard to the attorney’s fee the trial court said:

‘' This charge, as allowed by the court, shall be prorated so as to charge the personal property with its correct share and those services relating to the land and its rent notes collected shall be charged to the land in proper portion of each interest therein.”

As to the accountant’s fee the court said:

‘ ‘ The court finds that this fee shall be charged to all in proportion to the interest of each in both real and personal property.”

Appellants fail to point out any error in the court’s directive and we cannot say any error exists. What constitutes correct or proper apportionment might depend on evidence showing what services the attorney and the accountant performed in their respective capacities. If any error has been made it can be called to the attention of the trial court on remand. The same thing can be done if, as appellants say, there are errors in the land descriptions.

The conclusions we have already reached relative to the heirs of the deceased call for an affirmance of the administrator’s cross-appeal.

The decree of the trial court is therefore reversed in part and affirmed in part, as indicated herein, and the cause is remanded for further proceedings in accord with, this opinion.


author: Sam Robinson, Associate Justice. Carretón Harris, Chief Justice.

text:
    Ballard v. Jackson.
    5-2530
    356 S. W. 2d 611
    Opinion delivered April 30, 1962.

      'Dinning & Dinning, for appellant.

      John L. Anderson, for appellee.
   Sam Robinson, Associate Justice.

Appellant, Louise Ballard, filed this suit alleging that she is a resident of New York; that she is the owner of certain property in Helena, and delivered possession of the property to appellee, John Wesley Jackson “with the directions that he was to look after and care for said property, collect the rental accruing from the same, and remit to her the unconsumed portion of the rentals.” Appellant asked that appellee be required to make a statement of account of rents received and that he be permitted to ‘ ‘ take credit for all amounts that he has expended, if any, for taxes, insurance, and repairs, if any, and that he be required to produce as exhibits the receipts and invoices showing the amounts of his expenditures.”

Jackson answered alleging that appellant had conveyed the property to him by deed reserving to herself a life estate. He further alleged that appellant had authorized repairs to the property and the payment of taxes and insurance; that he had expended $2,363.61 on those items and that the rents had not been sufficient to repay him for the money he advanced for such purposes. He submitted an itemized statement of account showing the expenditures.

Appellant then filed an amended Complaint and acknowledged that she had conveyed the property to Jackson reserving the rents and profits during her lifetime. AppeHant did not testify in the case either directly or by deposition. After considering all of the evidence, the Chancellor rendered a decree in favor of Jackson.

Jackson claims to have spent $2,363.61 on insurance, taxes and repairs, but $300.00 of this amount was for his own services. Under the circumstances we do not think he is entitled to be reimbursed for that time. He has collected $916.00 in rents. Prior to making the repairs, the two houses involved were vacant, uninhabitable, and produced no revenue.

Appellant executed the deed to Jackson in April, 1957, and subsequently authorized him to do what he considered best in connection with the property. On one occasion she wrote “I told John Wesley (the appellee) to do the very best he could with those shacks down there.” On July 31, 1957, she wrote to appellee “I am going to send you something on my tax bill I owe you.” On August 5, 1957, she wrote “I told Mrs. Douglas to talk to you about securing a loan from the Building and Loan Association.” On November 15, 1957, she wrote to appellee “I am leaving all decisions and deliberations up to you.” On October 1, 1957, she wrote “You can do whatever you feel necessary about the repairs.”

The evidence is overwhelming to the effect that appellant authorized the expenditures necessary to put the property in condition to be rented. Appellee mortgaged his farm to raise the money to make the repairs and pay insurance and taxes. He is entitled to be reimbursed out of the rents as indicated herein.

Affirmed.

Harris, C. J., and George Rose Smith, J., dissent.

Carretón Harris, Chief Justice.

I cannot agree with the conclusion reached by the Majority. Louise Ballard deeded the property involved to John Wesley Jackson in April, 1957, reserving the right to receive, apply, and use “all rents and profits that may arise from said property during the life of the said Louise Ballard.” Jackson, the “godson” of appellant, had apparently lived in one of the houses on the property for several years prior to obtaining the deed, or at least had had charge of the property, since the accounting by him dates back to 1955. He had been corresponding since 1954 with appellant, who had moved out of the state. The testimony reflects that on April 26, 1956, appellant gave her power of attorney to appellee authorizing him to borrow and to expend-“not in excess” of $350 for the purpose of making repairs, and to mortgage the property for that purpose. This power of attorney had been sent by Jackson to Louise Ballard for execution. However, he did not use it, but borrowed money himself, stating that the $350 “wouldn’t have started it.”

One house has been rented since June, 1958, for the sum of $28 per month. The other house, at the time of trial, had been rented for twenty-two months at the monthly rental of $12. It is true that appellant authorized Jackson to repair the property, but, in my view, appellee went far beyond the state of “repairing”, and actually improved appellant out of her interest in the property.

Appellant, without any valuable consideration, deeded the property in question to appellee. It will unquestionably become his absolutely upon her death. His investment is accordingly fully protected. Appellant deeded this property to Jackson because of her affection for him — but she certainly had the right to expect that during her lifetime she would receive some of the rents. I agree that appellee is entitled to the sums expended for insurance and taxes, and to an appropriate amount for repairs, but I do not consider it equitable for him to draw the entire rents each month to apply on the amounts expended. In my opinion, he has already received sufficient rental to afford reimbursement for necessary repairs, insurance, and taxes, but if this conclusion is incorrect, a portion of the monthly rental could be sent to appellant and appellee could still (though it would take a little longer time) receive the full amount due. Under the holding of the Majority, it appears to me that Jackson can continue to expend sums for the “improvement” or “repair” of the property, and continue taking all of the rental each month for reimbursement. Under these circumstances, appellant may never receive a nickel during her lifetime, and is receiving no benefit whatever from the property. In other words, under the Majority holding, though Louise Ballard reserved the right to receive the rents, she might as well have deeded the property to Jackson absolutely and in fee simple, for from a practical standpoint, her rights are completely extinguished.

I therefore respectfully dissent.

I am authorized to state that Justice George Rose Smith joins in this dissent.

       Apparently appellant’s name is actually Louis a, and she so signed the deed.


author: Sam Robinson, Associate Justice.

text:
    Edwards v. Williams.
    5-2673
    356 S. W. 2d 629
    Opinion delivered April 30, 1962.

      Guy FL. Jones and Francis T. Donovan, for appellant.

      Clark, Clark <& Clark, for appellee.
   Sam Robinson, Associate Justice.

Appellant, Moore Edwards, and J. L. Williams were opposing candidates for the office of Committeeman of the Democratic Party for Cypress Township, Faulkner County, in the Democratic primary held July 26, 1960. They each received 64 votes. Williams was the incumbent committeeman and accordingly would hold office until his successor was certified as being elected.

Edwards filed this suit to contest the outcome of the election alleging that certain illegal votes were cast for Williams. A pleading designated “Answer and Cross Complaint” was filed by Williams denying the allegations of the Complaint and alleging that certain illegal votes were cast for Edwards. Appellant filed a motion to dismiss the so-called “Cross Complaint” because the pleading was not verified. The trial Court overruled the motion and appellant has made the Court’s action in that respect one of his points on appeal.

Ark. Stats. 3-245 requires that the Complaint in an action of this kind be verified. There is no requirement for verification of the Answer. Although the document in question is styled “Answer and Cross Complaint” it is nothing more than an Answer asserting defenses to the Complaint. McLain v. Fish, 159 Ark. 199, 251 S. W. 686, is directly in point. There the Court said: “Appellant filed a motion to strike out the affirmative allegations of the answer with respect to charges of illegal voting, on the ground that these allegations constituted a cross-complaint, and that such an attack could not be filed except within ten days after the date of the certificate of nomination, and must be supported by the affidavits of ten qualified electors. The court overruled the motion, and appellant saved his exceptions. ... A contestee, for the purpose of raising issues of fact concerning the true result of an election, may present new matter without being required to comply with the statute with respect to the time and manner of instituting the contest. Our conclusion is therefore that the point made by appellant cannot be sustained.”

The parties stipulated in the trial court that appellant, Edwards, challenged only seven votes cast for appellee, Williams, and that Williams challenged only five votes cast for Edwards. After considering all the evidence, the trial court ruled that appellant received 58 valid votes and appellee received 61 such votes. On appeal appellant argues that the trial court erred in holding invalid the. votes of Donnell Russell, Mrs. Donnell Russell, James Bradley, Mrs. James Bradley, Mrs. E. R. Wilson and Mrs. Alvin Tanner and that the Court erred in holding valid the vote of Edna Louise Wilson.

The trial court found that Mr. and Mrs. Donnell Russell were not residents of Faulkner County at the time of the election held on July 26, 1960; that the Russells had moved from Faulkner County on June 3rd or 4th. Mr. Russell was asked: “Q: How long have you been in Little Rock? Since about the 4th of June? A: Yes. The 4th of June is when we moved in.” It is clear from Russell’s testimony that he moved to Little Rock in Pulaski County on June 4th and that he and his wife were not residents of Faulkner County at the time of the election.

In Wilson v. Luck, 203 Ark. 377, 156 S. W. 2d 795, the Court said: “Section 1, of art. Ill, of the Constitution, prescribing the qualifications of electors, requires that the elector ‘has resided in the state twelve months, and in the county six months, and in the voting precinct or ward one month, next preceding any election, where he may propose to vote, , . .’ If he has thus resided, then he (and, now, she, also) ‘shall be entitled to vote at all elections by the people. ’ This requirement, as to residence, is, of course, mandatory, and requires the elector to vote in the precinct or ward in which he had resided for one month next preceding the election, and not elsewhere. No consideration of the convenience of the elector or any practice in which he may have been permitted to indulge can abrogate and render nugatory this mandatory provision of the constitution.”

Next appellant contends that the trial court erred in holding that Mr. and Mrs. James Bradley and Mrs. Alvin Tanner were ineligible to vote in the Democratic primary. Ark. Stats. 3-256 provides: “All violations of this act shall be misdemeanors and shall be punished by fine of not less than one hundred dollars [$100.00] nor more than five hundred dollars [$500.00], and by imprisonment in the county jail for not less than thirty [30] days nor more than twelve [12] months. The following shall be deemed misdemeanors for the violation of this act, to wit: . . . (c) Casting a vote in a primary of a party to which the voter does not adhere or affiliate; provided, this does not apply to any one in good faith abandoning previous political affiliations.”

There is substantial evidence, in fact the preponderance of the evidence shows that Mr. and Mrs. Bradley did not affiliate or adhere to the Democratic party within the meaning of the statute. Mr. Bradley testified that he is neither a Democrat nor a Republican; that he is classified as an independent and in referring to his wife he stated: “She is just like I am.” He was selected as an election official by the Republican party and served as such, but stated that he would have served if he had been requested by the Democrats.

The evidence is not so strong as to the party affiliation of Mrs. Alvin Tanner, but she served as an election official, having been selected as such by the Republicans. She testified, however, that this was subsequent to the Democratic primary. Even if we should hold that Mrs. Tanner was qualified to vote in the Democratic primary it would not help appellant, because he would then have only 59 votes, whereas appellee received 61 valid votes.

Mrs. E. R. Wilson is an invalid and uses a wheel chair. She was brought to the polls in an automobile and driven to a point near the front porch of the voting-place, remaining in the car. One of the judges took a ballot to her and she marked it. The judge then returned to the inside of the voting place and placed the ballot in the ballot box. The trial court held Mrs. Wilson’s vote to be invalid. Ark. Stats. 3-834 provides: “No person shall be permitted to carry a ballot outside of the polling place.” Crawford v. Harmon, 149 Ark. 343, 232 S. W. 427, is controlling. There the Court said: “The facts were that J. P. Locke, a qualified elector, was sick at his home a short distance from the polling place, and one of the election judges went to Mr. Locke’s home and received the ballot and took it back to the voting place and deposited it in the box. It does not appear that this was done with any fraudulent design, but with an honest purpose on the part of the judges to permit the sick man to cast his ballot. The court properly threw out this ballot as having been illegally cast, but it afforded no ground for discarding the whole vote of the precinct.”

Appellant challenged the vote of Miss Edna Louise Wilson on the ground that she was not 21 years of age at the time of the election. Although there was evidence, to the effect that Miss Wilson was not 21 years of age until August 19, 1960, there is substantial evidence to the effect that she reached that age on July 19, 1960. Her mother testified to that effect and produced a leaf from the family Bible showing that July 19 was Miss Wilson’s correct birthday.

Affirmed.


author: Jim Johnson, Associate Justice.

text:
    Brandenburg v. Brandenburg.
    5-2523
    356 S. W. 2d 625
    Opinion delivered April 30, 1962.

      M. G. Lewis, Jr., and William B. Mitchell, for appellant.

      B. W. Thomas and Bichard W. Hobbs, for appellee,
   Jim Johnson, Associate Justice.

This case involves an action which, inter alia, seeks to establish the existence of a partnership.

William Brandenburg, Sr. and bis wife Luella Jane Brandenburg were tbe adoptive parents of Mrs. Brandenburg’s half-brother, appellee William Brandenburg, Jr. These three, for a time, operated a cleaning and pressing business in the City of Hot Springs. Upon the death of Mrs. Brandenburg, appellee brought suit against William Brandenburg, Sr., and Ruby Brandenburg, Executrix of the estate of Luella Jane Brandenburg, asking that the business be declared a partnership and that he be declared a one-third partner; for an accounting; for dissolution and distribution of assets according to the respective ownership interest; and declaration of certain real estate as partnership property. After an extended length of time, the trial court finally resolved the issues in favor of appellee and decreed that a general partnership existed between the parties. In addition, the trial court made extensive findings as to various amounts due appellee from the partnership operation, capital and assets, the total of which resulted in a judgment being rendered in favor of appellee in the amount of $15,673.71. From such decree William Brandenburg, Sr. and Ruth Brandenburg, Executrix, brought this appeal. During the pendency hereof, appellant William Brandenburg, Sr., died and the appeal is continued in his stead by the co-administrator of his estate.

For reversal, appellants urge seven points with numerous sub-points, all of which may be epitomized in two principal points, i. e., (1) That the trial court erred in finding that a partnership existed and (2) that the court erred in failing to appoint a Master to make an accounting.

I.

THE EXISTENCE OF A PARTNERSHIP

In the early case of Culley v. Edwards, 44 Ark. 423, this Court stated the rule that: “. . . the test of a partnership between the parties themselves has always been their actual intent,” and the rule is equally well settled in this jurisdiction that the existence of a partnership need be proved only by a preponderance of the evidence. See Wilson v. Todhunter, 137 Ark. 80, 207 S. W. 221; Williams v. Walker, 148 Ark. 49, 229 S. W. 28; May v. Sharp, 193 Ark. 340, 99 S. W. 2d 252.

With these rules in mind, we examine the record on trial de novo to determine whether the evidence meets the tests set forth above. There we find that appellee testified on two occasions that it was agreed between William Brandenburg, Sr., and Luella Brandenburg and himself that they would enter into a general partnership with respect to running the Brandenburg Cleaners and on the basis of this agreement appellee advanced certain moneys to be used for partnership purposes and that he worked at various times throughout the partnership in the business and managed the same and did other work in connection therewith and received no salary whatsoever, but a slight drawing account and he lived with his parents, the other two partners, at various times without paying room and board. The question of the partnership agreement was corroborated by two disinterested witnesses. Edward Bibb testified that Brandenburg, Sr. and his wife advised the appellee that if he would put his money that he then had into the business that they would buy some new equipment and call it the Brandenburg Cleaners and all three would be partners.

Clare Elizabeth Shannon testified that Brandenburg, Sr. and his wife told her that they, along with the appellee, were the three partners and she had heard them state this quite a number of times and that they told her that they were partners “three ways.” It is evident from the record that both of the foregoing named witnesses were in a position to know what the agreement was because of the fact that Edward Bibb stated that he was Mrs. Brandenburg’s nephew; had worked in the cleaners taking care of the business for a short period of time and had helped install some of the new equipment and machinery and that he visited in the Brandenburg home quite often and went on fishing trips with them and was more or less in constant contact with all three parties.

' Clare Shannon resided at 131 Central Avenue and the"' business establishment was located at 125 Central Avenue and she stated that she had lived with Brandenburg, Sr. and his wife for approximately nine months and she also had helped manage the business at one time and was in more or less constant contact with all three parties, and, therefore, was in a position to know the business relationship.

In addition to the evidence of appellee and these two disinterested witnesses, the record further reveals that William Brandenburg, Sr., himself, admitted that there was an agreement made between the parties as to a partnership business under which appellee was to receive one-third of the net profits. See Ark. Stats. § 65-107(4). Since the Chancellor had an opportunity to hear and observe the witnesses on the stand, great weight should be accorded his finding of fact. England v. Scott, 205 Ark. 47, 166 S. W. 2d 1014; May v. Alsobrook, 221 Ark. 293, 253 S. W. 2d 29. It follows, therefore, from what has been said and from other evidence brought forth in the voluminous record before us that we cannot say the Chancellor erred in finding that appellee had established by a preponderance of the evidence that it was the actual intent of the parties to establish a partnership.

II.

MASTER AND ACCOUNTING

It is conceded by all parties that this case was to be tried first on the sole question of whether a partnership existed. There are various places in the record where attorneys for appellants were attempting to bring out testimony regarding money matters, and counsel for the appellee objected, stating that what the question referred to was in the matter of accounting.

“Mr. Thomas: If the Court Please, that would be a matter of accounting.

“The Court: Yes that would be the matter of accounting.

“Mr. Thomas: If the Court please, that’s still going into accounting.

“The Court: I think you’re burdening the record here now.”

* # *

“Mr. Thomas: Now, if the Court please, that’s in the accounting, I don’t see where that’s a basis here at all. I don’t object to the boy answering.

“The Court: I think that’s a matter of accounting, what the profits were.”

«= # *

“Mr. Hobbs: Now, if the Court please, I think we’ve agreed to it three times that the question before the Court at this time is whether this is a general or limited partnership. The question of all this money should be referred to a Master.

“The Court: Granted.”

* * #

“Mr. Thomas: If the Court please, I’m going to object to all this line of questioning, it’s just taking up the Court’s time, everybody’s time, encumbering the record, on something that’s not even before the Court; it having been stipulated before the trial that the only question that would be presented to the Court was the general or limited partnership.

“The Court: Let’s try to narrow it down.”

From these quotations of objections made by counsel it is apparent that counsel and the Court during the trial agreed that if the court found that there was a partnership, then there would have to be either an accounting by the Court or by a Master. It is also evident from the record of trial that no accounting either by the Chancellor or by a Master was taken to strike an account or balance between the parties as a result of the Court’s finding of a one-third partnership.

In the course of the trial to determine the existence or nonexistence of a partnership, it became necessary for an abundance of testimony to be introduced relative to the handling of money and the financial affairs of the business. It was from these figures that the Chancellor made his findings and disposed of the entire case. Clearly, this was error. In fact appellee concedes on appeal that there was at least one error in the Court’s calculations in his favor which was in excess of $1,000. This partnership existed from July 1946 through October 31, 1954, not just a period of months but of years. An accounting will be complicated. It is evident from the record that there are many account books, tax records and other material available which will enable a Master to strike an equitable balance between the parties. As was said many years ago by this Court in Bryan v. Morgan, 35 Ark. 115,

“The Chancellor may himself state an account and announce the result, and decree accordingly. But this practice should be confined to simple and obvious cases in order to save the expense to litigants. In complicated transactions justice cannot be well done without a reference. ’ ’

and in Excelsior White Lime Co. v. Rieff, 107 Ark. 554, 155 S. W. 921, this Court stated the rule we apply here:

“Where numerous items are in dispute, and it is necessary to determine item by item to strike a balance between the parties, the Court should refer the matter to a Master to state the account.”

Reversed in part and remanded with directions to appoint a Master to state an account between the parties and for further proceedings consistent with this opinion.


author: Neill Bohlinger, Associate Justice.

text:
    Mann v. Ball, County Judge.
    5-2648
    356 S. W. 2d 643
    Opinion delivered April 30, 1962.

      Eldridge é Eldridge, for appellant.

      Lloyd Henry and Victor Nutt, for appellee.
   Neill Bohlinger, Associate Justice.

The parties appellant are the owners of certain lands in Woodruff County and the appellee is the county judge and ex officio road commissioner of Woodruff County.

The appellants filed in the Woodruff Chancery Court their petition for an injunction to restrain the appellee from trespassing, entering upon, or taking for public use a roadway on their property.

The appellants state, in their petition, that the condemnation of a right-of-way on their lands would be capricious, arbitrary, and an abuse of discretion on the part of the appellee as the area involved is actively served at all points by county roads that have existed for many years and that all residents that would be served by a new road are now served by existing county roads. They further allege that the financial status of Woodruff County is such that the county lacked the ability to compensate them for damages they would sustain should this county road be established. They prayed a temporary injunction against the appellee from entering on their property until an order condemning the road had been entered on the records of Woodruff County and until the claims for damages had been adjudicated in accordance with their rights under the Constitution of the State of Arkansas.

A hearing was had before the chancellor who denied the petition for the restraining order and from that denial comes this appeal.

The appellants first allege that the condemnation of the right-of-way across their land would be capricious, arbitrary and an abuse of discretion on the part of the appellee, and that the locality is at present adequately being served by existing county roads. Article 7, § 28 of the Constitution of Arkansas places the exclusive and original jurisdiction of all matters relating to county roads in the county court. Assuming, but not deciding, that the question of capriciousness, arbitrary action, or abuse of discretion might be raised in other proceedings, it is, nevertheless, not before us here as there has been no order of taking.

Appellants’ Point No. 2 raises the question as to whether or not the refusal of the chancery court to grant the injunction prayed for would result in the taking of appellants’ property without just compensation and Point No. 3 raises the question as to the financial ability of Woodruff County to pay for appellants’ land when taken.

From the record before us it does not appear that there has been entered in the records of the Woodruff County Court any order designating the route of the proposed road, the extent of the taking of the appellants’ property, nor the damages that would flow from such taking and no claim has been filed by the appellants with the county court. In this connection the case of Justice v. Greene County, 191 Ark. 252, 85 S. W. 2d 728, is pertinent.

‘ ‘ * * * The statute under which it was taken provides that his damages may be paid out of the general revenue of the county or out of the road and bridge fund. Proof that these funds had been exhausted for the fiscal year of 1934 would and could not prevent him from ultimately collecting his damages out of these or other available funds. Pie was given until June 7, 1935, to file his claim, and it follows that he would have such further time as necessary to litigate and establish it. For aught that appears in this record, he has not filed a claim, much less established it. Until these two things are done, it is not necessary for the county, in arranging its budget, to include therein his unestablished claim. It may be that his betterments equaled or exceeded his damages. In other words, he may not recover a judgment for any substantial amount. It would have been impossible at the time the land was taken or judgment rendered for the court to determine the amount of damages, and set aside any particular sum and segregate it from either fund to pay his damages. In taking the right-of-way, the county pledged its good faith and credit to pay appellant for it, but not necessarily out of the revenues collected in the fiscal year of 1934. It will be time enough for the county to include in its budget the amount of damages when, and if, appellant recovers a judgment.”

This case should be read with the case of Miller County v. Beasley, 203 Ark. 370, 156 S. W. 2d 791, as both of these cases are applicable to the facts here presented.

“It is our view that the act of taking is not complete when the judgment of condemnation is rendered. Since such judgment may be without notice, the lawmaking body must have had in mind an order of condemnation followed by entry upon the land. Such entry, being physical and visible, affords the proprietor an opportunity to exact payment or to require a guaranteeing deposit. If there is neither payment nor deposit, resort may he had to injunction; but should the proprietor stand by and. permit the land to be occupied and the immrovement to' proceed until substantial road work has been done, he is-then relegated to the county’s credit. The demand is against revenues for the year possession was taken, and. all of the restrictions of Amendment No. 10 attach.”' [Emphasis added]

In the instant case, as in the Justice Case, supra,. there has been no filing of a claim because in this case' there is no way in which the appellants can arrive at the' extent of their damage, nor can that be done until an. order has been entered by the county court from which the appellants can determine the amount of their property which it is proposed to take and evaluate that taking, with their severance damages, drainage damage, and all of those elements which must be' considered in arriving at damages when private property is being taken for public use. As we said in the Justice case, until these things-are done, it is not necessary for the county, in arriving at its budget, to include therein unestablished claims.

The appellants state, however, that they are apprehensive that the county judge might surreptitiously move upon their lands and perform a great deal of work and damage their property before they could reach the ear of chancery. We do not think that fear is well grounded. If the county judge moved upon the lands of appellants in the manner contemplated in the hypothetical case which appellants present in their brief, his entry could of course be enjoined and damages would be assessed for any wrong that had been done by the entry. It is difficult to indulge the presumption that the county judge would expend a large sum of the public money in doing' :a piece of work which he would be enjoined from completing and which the public could not enjoy until the right-of-way damages had been paid or secured. Appellants' apprehension seems to be bottomed on some general discussion by the county judge as to the advisability of the road and we take note of the fact that if the landowner remains quiescent and permits the work to be completed on his land, he relegates himself merely to the status of a claimant on the county revenues. He must move promptly to protect his rights, but his alacrity must be bottomed on something more substantial than general conversation before a cause of action has accrued. As is said in 1 Am. Jur. 2d, Actions, § 90:

“* * * On the other hand, an action cannot be maintained if it is commenced before the accrual of the cause of action which is sought to be enforced.” [Citing Sullivan v. Arkansas Valley Bank, 176 Ark. 278, 2 S. W. 2d 1096, 57 A.L. R. 296].

The chancellor found that the action was premature and with that finding we agree. The cause is, therefore, affirmed.


author:
George Rose Smith, J., Ed. F. McFaddin, Associate Justice, Sam Robinson, Associate Justice,
      Paul Ward, Associate Justice,

text:
    Universal CIT Credit Corp. v. Hudgens.
    5-2603
    356 S. W. 2d 658
    Opinion on rehearing delivered April 30, 1962.
   George Rose Smith, J.,

on rehearing. This was originally an action in replevin. The appellant’s complaint alleged the car to be worth $1,000. At the inception of the case the appellant obtained possession of the vehicle by executing a delivery bond.

The ease was later transferred to equity. In the final decree the chancellor canceled the contract for fraud and for usury and gave the appellees a judgment for $1,060, representing the value of the car and $60 damages for the wrongful repossession. We affirmed the decree upon the ground of fraud alone, without reaching the question of usury. 234 Ark. 668.

In a petition for rehearing the appellant correctly points out that the judgment is excessive if the sole issue is that of fraud. One who obtains rescission of a contract for fraud must return what he has received, the parties being placed in status quo. Johnson v. Walker, 25 Ark. 196; Kilgo v. Continental Cas. Co., 140 Ark. 336, 218 S. W. 171. Hence if the case is merely one of fraud the repossession of the car was not wrongful, for the purchasers were required to surrender it and could recover only their down payment of $245, with interest.

On the other hand, when a contract of sale is set aside for usury the purchaser is entitled to keep the property. Universal C. I. T. Credit Corp. v. Stanley, 225 Ark. 96, 279 S. W. 2d 556. If this contract was usurious the chancellor was right in awarding the appellees a judgment for the value of the car. It thus becomes necessary for us to pass upon the issue of usury, to fix the measure of damages.

The facts, as found by the chancellor, show that the seller represented the price of the car to be $1,095. The salesman induced the appellees to sign the contract in blank and later fraudulently filled in the price as being $1,395, an excessive charge of $300. The contract recites an interest charge of $133.42, which is within the legal limit of 10 per cent per annum if the price was really $1,395. If, however, the excessive charge of $300 is treated as interest the agreement is plainly usurious.

It is shown without dispute that before the seller would agree to the transaction he telephoned the appellant finance company for an investigation of the purchasers’ credit, to be certain that the conditional sales contract could be transferred. The appellees’ credit was found to be good. On the day after the sale the dealer assigned the contract to the appellant. The recited unpaid principal balance was $1,150, which the finance company paid by issuing a check for $943 and by. setting up a reserve of $207 which was to be paid to the dealer when all the monthly installments had been met by the purchasers. (Whether the practice of setting up such a reserve might involve usury as between the finance company and the dealer is not before us, for the dealer has not complained. The only issue here is whether the original transaction between the seller and the buyers was .usurious.)

Did the excessive charge of $300 amount either to usury in itself or to a scheme resorted to as a cloak for usury?

Where a lender induces the borrower to sign a note in blank and later fills in the principal in a sum greater than the amount actually lent it has been held (correctly, we think) that these facts support a finding of usury. Cortner v. Bennett, 230 Miss. 369, 92 So. 2d 559; Autocredit of Fort Worth v. Pritchett, Tex. Civ. App., 223 S. W. 2d 951; contra, Chambers v. Gilbert, 68 Minn. 183, 70 N. W. 1077.

Yet not every instance of fraud or trickery in connection with a loan or credit sale can properly be classified as usury. If a lender should knowingly give the borrower counterfeit money the transaction would be fraudulent and criminal, but it would obviously not be usurious, any more than the purchase of goods with counterfeit money constitutes usury. Again, if a thief should sell stolen property on credit the transaction would be subject to rescission, but not for usury.

To determine on which side of the line this case falls we must understand what is and what is not usury. ‘ ‘ The excess over the legal rate charged to a borrower for the use of money” is said to be usury. Bouvier’s Law Dictionary (8th Ed.). An almost identical definition is given in Webster’s Third International Dictionary.

The many definitions in our own cases are substantially to the same effect. “Usury is a corrupt agreement for more than the legal rate of interest on a loan of money, or for the forbearance of a debt.” Ford v. Hancock, 36 Ark. 248. “It is essential, in order to establish the plea of usury, that there was a loan or forbearance of money, and that for such forbearance there was an intent or agreement to take unlawful interest, and that such unlawful interest was actually taken or reserved. The wrongful act of usury will never be imputed to the parties, and it will not be inferred when the opposite conclusion can be reasonably and fairly reached.” Briggs v. Steele, 91 Ark. 458, 121 S. W. 754. A mutual agreement for unlawful interest is not necessary to constitute usury, but “there must have been an intention on the part of the lender to take or receive more than the legal rate of interest.” Bauer v. Wade, 170 Ark. 1020, 282 S. W. 359. “ ‘Forbearance’ . . . simply means that the person to whom the money is owed waits for all or part of the money after the consummation of the contract in which the money is involved.” Sloan v. Sears, Roebuck & Co., 228 Ark. 464, 308 S. W. 2d 802.

It will be seen that the fundamental characteristic of usury is the exaction of an excessive charge for the loan or forbearance of money. In the case at bar if the dealer had intended to keep the contract himself and had inserted an increased principal amount as a device for obtaining a greater return as compensation for his extension of credit then a finding of usury might well be justified.

The actual case, however, is quite different. Here the seller could not have intended to make a charge for his forbearance of the unpaid purchase price, simply because he never meant to forbear — that is, as we said in the Sloan case, to wait for his money. This dealer would not even enter into the sale until he had first made sure that he could immediately transfer the contract to the finance company. That the seller’s conduct amounted to fraud we have no doubt, but there is lacking the essential characteristic that is the earmark of usury.

It was the finance company that exercised the forbearance, but it did not receive an extra $300 for doing so. Instead, it paid the dealer in full for the recited principal of the debt and was to receive no more than legal interest upon its investment. In this respect the case is to be distinguished from Hare v. General Contract Purchase Corp., 220 Ark. 601, 249 S. W. 2d 973, and other recent cases in which we have found contracts of sale to be usurious. Here there is no indication that the appellant was aware of the dealer’s excessive charge or acted collusively in the transaction. And it is plain enough that this dealer’s method of operation, unlike the various cloaks for usury, could not be repeatedly used as a means of victimizing the public. The salient factor in this transaction was the seller’s dishonesty rather than his attempt to take advantage of the buyers’ need for credit. No dealer could long remain in business if he habitually defrauded his customers and subjected the finance company to many suits like this one.

In making a finding of usury the chancellor took the position that the recited interest charge of $133.42, although amounting to less than the legal rate upon the recited balance of $1,150, was usurious because it would have been an illegal charge upon a balance of $850, which was the sum orally agreed upon-by the parties. This position is not sound. Neither the dealer nor the finance company ever had any intention of charging $133.42 upon a principal balance of $850, nor did the purchasers ever have any intention of making such a payment. The fraudulent contract must stand or fall in its entirety. "We cannot make a new agreement for the parties by giving effect to the recited interest figure, which is favorable to the appellees’ contention, and at the same time rejecting the recited principal figure, which is unfavorable to them.

What we have here is really a routine case of fraud, for which the principles of equity provide an adequate remedy. Our constitution, Art. 19, § 13, imposes a severe penalty for usury; but we are not at liberty to amend the constitution, in effect, by extending its language to reach a transaction that does not fall within the letter or the spirit of any definition of usury that we have been able to find in any authority in any jurisdiction. Had this contract been usurious in the beginning the appellant would have taken it subject to that infirmity. Clem v. Nelson, 230 Ark. 296, 322 S. W. 2d 448. But the contract, while fraudulent, was never usurious, because no excessive charge was made for the loan or forbearance of money.

The petition for rehearing is granted. The decree is reversed and the cause remanded for the entry of a decree rescinding the contract for fraud.

Ward, J., concurs.

McFaddin, Robinson, and Johnson, JJ., dissent.

Ed. F. McFaddin, Associate Justice,

dissenting. The Chancery Court held that the contract was tainted with both fraud and usury. In the opinion of February 19, 1962, the Majority rested its affirmance on the sole ground of fraud. My concurrence to that opinion stated:

“My study of this case convinced me that the transaction was clearly usurious, and I rest my affirmance on that ground. As to the fraud matter, I express no opinion. ’ ’

On rehearing, the Universal C. I. T. insisted that since the contract was set aside on the sole ground of fraud, then this Court should eliminate the strict rules that govern in usury cases; and the opinion on rehearing agrees with the petition for rehearing. Thus, the Majority is now definitely holding that the transaction was not tainted with usury; and from such holding against usury I vigorously dissent because I am still of the opinion that the Chancellor was correct in his finding that usury was established.

I submit that the facts surrounding the original transaction established usury. On May 21, 1959, Mr. Hudgens and his daughter drove their 1951 Dodge car to the “West Memphis Auto Sales” and traded it for a 1955 Ford, which was priced at $1,095.00. The Hudgens were allowed $245.00 for their Dodge, leaving a balance due by them of $850.00. To this balance there was to be added the cost of insurance and the interest charges; and the payments were to be “about $50.00 per month.” That the above was the original transaction is thoroughly established and must be conceded by the Majority, because if this had not been the original transaction there could have been neither fraud nor usury. Mr. Harris, who represented the West Memphis Auto Sales, told the Hudgens that ther was no one at the place of business that afternoon (May 21st) to type up the contract; and so the Hudgens signed the contract in blank, leaving it to West Memphis Auto Sales to fill in the contract. The Hudgens left their Dodge car and went away in the Ford. Later, the Hudgens learned that the blank contract had been dated May 22, 1959, and filled in as follows:

Price of the Ford Car $1,395.00
Less Value of the Dodge Car 245.00
Unpaid Balance of Cash Price 1,150.00
Cost of Insurance 142.90
Interest Charge 133.42
Total Due $1,426.32

The last mentioned amount was payable in twenty-four monthly installments of $59.43 each.

The price of the Ford car was increased on the contract from the agreed price of $1,095.00 to $1,395.00; so instead of owing a balance of $850.00, as the Hudgens testified, the contract showed they owed a balance of $1,150.00; and the amount of interest that they were to pay was $133.42. That interest figure speaks volumes.! The evidence thus unquestionably shows that West Memphis Auto Sales intended that the Hudgens were to pay the definite sum of $133.42 as interest, and this is conceded by the Majority Opinion to be usury on an $850.00 obligation. The intention to collect a definite sum of money, which is in excess of 10°/o, is usury. Commercial Credit Plan v. Chandler, 218 Ark. 966, 239 S. W. 2d 1009. So I submit with all the power at my command that when it was shown that the original balance due was $850.00 and the interest to he collected on that amount was $133.42, then usury was clearly established in the interest charge. The Lower Court found there was usury and should not be reversed on that issue.

The Majority Opinion on rehearing contains this paragraph, which is a correct statement of the law:

“Where a lender induces the borrower to sign a note in blank and later fills in the principal in a sum greater than the amount actually lent it has been held (correctly, we think) that these facts support a finding of usury. Cortner v. Bennett, 230 Miss. 369, 92 So. 2d 559; Autocredit of Fort Worth v. Pritchett, Tex. Civ. App., 223 S. W. 2d 951; contra, Chambers v. Gilbert, 68 Minn. 183, 70 N. W. 1077.”

After recognizing the above quotation as a correct rule of law, the Majority Opinion seeks to differentiate the present case from the quoted rule on the theory that the West Memphis Auto Sales transferred this contract to the Universal C. I. T. and that it was the Universal C. I. T. that exercised the “forbearance” and did not receive the extra $300.00 for doing so. The transaction and the determination of the amount of interest to be charged is not to be determined after a transfer, but is to bé tested by what West Memphis Auto Sales intended at the time. General Contract Corp. v. Duke, 223 Ark. 938, 270 S. W. 2d 918. The West Memphis Auto Sales filled out this contract and transferred it to the Universal C. I. T. and received a check for $943.00 and also a potential subsequent recovery called a “reserve” of $207.00, which would be $1,150.00 as the total amount that the West Memphis Auto Sales was to receive. This was $300.00 more than the West Memphis Auto Sales should have received, and that $300.00 is usury in itself.

The Majority Opinion on Rehearing says:

“It will be seen that the fundamental characteristic of usury is the exaction of an excessive charge for the loan or forbearance of money. In the case at bar if the dealer had intended to keep the contract himself and had inserted an increased principal amount as a device for obtaining a higher return as compensation for his extension of credit, then a finding of usury might well be justified. ’ ’

In effect, that is what the West Memphis Auto Sales did. It raised the price of the car $300.00 and was to get $300.00 extra for the credit transaction, and that $300.00 was usurious. In Foster v. Universal C. I. T. Corporation, 231 Ark. 230, 330 S. W. 2d 288, we said:

‘ ‘ The appellant shows that the contract at its inception had in it the seeds of usury, because it allowed the appellee under the circumstances that came into existence in this case to retain some of the appellant’s money without promptly crediting such amounts on the maturing payments due on the contract.”

The same reasoning applies here. This contract had the seeds of usury sown in it because it allowed the West Memphis Auto Sales to get more than 10% for the forbearance of the real debt of $850.00. Merely because the West Memphis Auto Sales later sold the paper to the Universal C. I. T. doesn’t alter the fact that the West Memphis Auto Sales deliberately set about to have the Hudgens pay more interest than they should have paid; so the transaction was usurious in its inception, and the Chancery Court should be affirmed in its holding to that effect.

We are certainly opening the door to ruin all of our usury holdings by letting fraud by the seller be a defense against usury. That is letting one wrong be a defense against another wrong. The effect of the present holding will be that a seller may persuade a trusting buyer to sign the blank contract, and may thereafter raise the price and transfer the contract to a finance company and thereby both the seller and the finance company will avoid the extreme penalties of usury. As I see it, the vice in the Majority holding is the failure to recognize— as did the Chancellor — that usury was present in the original transaction.

Sam Robinson, Associate Justice,

dissenting. Article 19, Sec. 13 of the Constitution of Arkansas provides: “All contracts for a greater rate of interest than ten per cent per annum shall be void, as to principal and interest, and the General Assembly shall prohibit the same by law; but when no rate of interest is agreed upon, the rate shall be six per centum per annum.”

Notwithstanding the Constitution and the statutes implementing it, over a period of many years the practice of charging a usurious rate of interest had grown to the extent that in many instances interest was charged at a rate of more than 40 per cent per annum. In Hare v. General Contract Purchase Corp., 220 Ark. 601, 249 S. W. 2d 973, this Court gave a caveat to the effect that subsequent to the effective date of that decision the constitutional provision prohibiting usury would be enforced. Later, in several cases this Court made it clear that usury would not be tolerated. Sloan v. Sears Roebuck Co., 228 Ark. 464, and cases cited therein.

In the case at bar the effect of those decisions is swept away. Henceforth, in my opinion, the practice of charging a usurious rate of interest will occur more frequently than it did before the Hare case. Now the penalty for charging usury can be avoided by merely charging more than the agreed price and basing the interest on the fraudulent charge. Then, if the seller gets caught making the usurious charge, he will not have to suffer the penalty the law provides for usury.

Here it was found by the trial Court and by this Court that the purchaser bought an automobile for the agreed price of $1,095.00; that he paid $245.00 at the time of the purchase, leaving a balance of $850.00, payable in 24 equal monthly installments. Interest at the rate of ten per cent per annum would amount to approximately $95.00, but as shown on the face of the contract, the purchaser was charged $133.40 as interest, approximately 15 per cent per annum. But the majority in effect holds that no usurious rate of interest was charged because in addition to charging the unlawful rate of interest, an attempt was made to defraud the purchaser of an additional $300.00.

I respectfully dissent.

Paul Ward, Associate Justice,

concurring. I am concurring merely because I think the majority opinion went further than it was necessary to go in order to show there was no usury, and that consequently the opinion may possibly open the door to add to the present state of confusion relative to usury. I refer to the sentence which reads: “It was the finance company that exercised the forbearance, but it did not receive an extra $300 for doing so”.

Our former opinions have made at least one thing clear about usury — that is, if a note is usurious in its conception it cannot be purged of usury by transfer to an innocent purchaser. So, it occurs to me that the opinion went far enough by citing the Ford v. Hancock case and then pointing out that the addition of $300 was merely a fraud and had none of the indicia of a charge for the forbearance of the use of money.

       In his opinion, the Chancellor said concerning the usury:
      “The Chancellor finds that though there is a conflict in the testimony the preponderance of the evidence is to the effect that the execution of the .Conditional Sales Contract in blank by the defendants was obtained by false representation by the agents and employees of West Memphis Auto Sales and that the agreed purchase price of the automobile was $1,095.00 rather than the sum of $1,395.00 as reflected by the sales contract. Therefore, the finance charge shown by the contract of $133.42 exceeded 10% interest on the amount which should have been shown in the sales contract, and was therefore usurious. In the recent case of Foster v. Universal C.I.T. Credit Corporation, 231 Ark. 230, 330 S.W. 2d 288, opinion delivered Nov. 16, 1959, wherein the Supreme Court found that though a contract was not usurious on its face the seeds of usury had been sown' in the contract and became usurious upon the occurrence of a contingency which made the sales contract usurious. In this instance the inclusion of an amount greater than the purchase price agreed upon resulting in a greater rate of Interest than 10% on the balance due would have been such a contingency as would make the transaction usurious and therefore void.”


author: Carleton Harris, Chief Justice. Paul Ward, Associate Justice

text:
    Howell v. Henry.
    5-2695
    356 S. W. 2d 747
    Opinion delivered May 7, 1962.

      Edioin E. Dunaway, for appellant.

      Joe P. Melton and Chas. A. Walls, Jr., for appellee.
   Carleton Harris, Chief Justice.

The only question presented in this litigation is the proper interpretation of the language in the last will and testament, including the codicil thereto, of W. H. Eagle, Sr. The will was admitted to probate on March 21, 1906.

Appellant, Buby Eagle Howell, instituted an action in ejectment against appellee seeking to recover possession of 80 acres of land in Lonoke County. The complaint alleged that under the will of W. H. Eagle, Sr., W. H. Eagle, Jr., was given a'life estate in the lands in question, with the remainder in fee to his bodily heirs. Mrs. Howell was the only child of W. H. Eagle, Jr., who died September 15, 1959. She alleged that, as the only remainderman, she became entitled to possession of the lands upon the death of her father. According to a stipulation entered into between the parties, W. H. Eagle, Jr., and his wife, Elaine, deeded the lands to J. M. Gates on February 23, 1917, and following some subsequent mortgages and conveyances, appellee purchased the lands from the St. Louis Union Trust Company. Both parties waived trial by jury, and the cause was submitted to the court. After the filing of stipulations, exhibits, and the taking of testimony, the court held that appellant had no interest in the lands; that appellee owned said lands in fee simple, and was entitled to continued possession thereof. From the judgment so entered, Mrs. Howell brings this appeal.

The will of W. H. Eagle, Sr., executed on July 5, 1904, contained, inter alia, the following provisions:

“Second: I desire and will that my twelve children, hereinafter named, share equally in my Estate, including what I have already advanced to them and the amounts I may hereafter advance to them including also the bequests of this Will. * * *
Sixth: I will and bequeath to my son, W. H. Eagle and unto his bodily heirs the following described lands to-wit: (here describing lands)
Seventh: I will and bequeath to my son, Bryan Eagle and unto his bodily heirs the following lands to-wit: * * #>> (here describing lands)
Including the two just mentioned, Eagle devised lands to six of his children, using the term “and unto his bodily heirs” in each instance. The other six were left bequests of money. On January 16, 1906, Eagle executed a codicil to the will, containing the following provisions pertinent to this litigation.
“1st. In my said last will I gave and devised to my son W. H. Eagle certain lands which it was my intention to will and devise to my son Bryan Eagle, and gave and devised to my son Bryan Eagle certain lands which it was my intention to give and devise to my son W. H. Eagle, and one' of the purposes of this codicil is to correct the error above described. My sole purpose being that all of my children shall be equal in the enjoyment of my property and estate.
2nd. I now give and devise to my said son W. H. Eagle, the West half (W 1/2) of the Southeast Quarter (SE 1/4) of Section Five Township 1 North, Range 9 West, containing 80 acres which lands were in my said last will given to my son Bryan Eagle.
3rd. I give and devise to my said son Bryan Eagle the S 1/2 of the Northeast Quarter of Northwest Quarter of Section Five, Township 1 North Range 9 West, containing 20 acres, which lands were in my said Last Will given and devised to my said son, W. H. Eagle.
4th. In my said Last Will I estimated the value of the lands and other property given, bequeathed and devised, fixing the total value to be given to each child, and I wish it understood that it is not my intention, by this codicil to alter or change -such valuation, but simply to correct an error or oversight for when the total valuations allotted to my said son W. H. Eagle and Bryan Eagle respectively were made, my calculations were based upon the theory that each was to have the lands assigned him in this codicil. I therefore will and direct that such total valuations stand, as fixed and provided in my said will.”

Appellant stoutly contends that the court erred in holding that an estate in fee simple was devised to W. H. Eagle, Jr., rather than holding the will created a life estate only in Mr. Eagle with the remainder in fee to her. It is argued that Mr. Eagle, Sr. made clear his intention that all children should equally enjoy the property and estate, and that the codicil was only intended to substitute one piece of- land for another, which had been erroneously described in the will itself; that to hold otherwise would do violence to the intent of the testator. Appellant cites Eagle v. Oldham, 116 Ark. 565, 174 S. W. 1176, where it was stated:

‘ ‘ The first and great rale in the exposition of wills (to which all other rales must bend) is that the intention of the testator expressed in his will shall prevail, provided it be consistent with the rules of law.”

In United States of America v. Moore, 197 Ark. 664, 124 S. W. 2d 807, this court said:

"It is the well-settled general rule that a will and codicil are to be regarded as a single and entire instrument for the purpose of determining the testamentary intention and disposition of the testator, and both instruments together will be construed as if they had been executed at the time of the making of the codicil. They will not, however, be considered as a single instrument where a manifest intention requires otherwise. The construction of the provisions contained in a will and codicil may be different from that which would be given to the same provisions all embodied in a will. This is due to the fact that the mere making of a codicil gives rise to the inference of a change in intention, and such inference does not arise in the case of a will standing by itself. When a will and codicil are inconsistent in their provisions, the codicil, being the latest expression of the testator’s desires, is to be given precedence.”
“The burden in any litigation of this nature is upon the moving party, in this instance, the burden was upon the appellant in the lower court to prove, that by giving in fee to W. H. Eagle, Jr., this tract of land, an inequality would be created among the children. If there was any allegation prior to the filing of the suit, the same was not expressed at any time by the Executors nor the heirs at the time of the distribution of this estate, according to the proof. In fact, there was no evidence introduced to bear this argument out or to support it, and there being no question as to the change in valuation as between a devise in fee and a devise of a life estate, it is clear that the codicil was for the purpose of equalizing rather than for the purpose alleged by the appellant.”

It, of course, is possible that the language used in the codicil was a mistake on Mr. Eagle’s part, but, to the contrary, it also could well be that he was thoroughly familiar with the legal effect of the words used, and intentionally made the change in the choice of language. At any rate, there being nothing in either instrument to indicate that Mr. Eagle did not understand the meaning of the words used, we must presume that he understood the full legal effect of the language employed. As stated in Crittenden v. Lytle, 221 Ark. 302, 253 S. W. 2d 361:

“Certainly there is nothing in the will which indicates Mrs. Wilson did not understand the meaning of the words she used, and we must therefore presume that she did. In the early case of Moody v. Walker, 3 Ark. 147, this Court said:
‘When technical phrases or terms of art are used, it is fair to presume that the testator understood their meaning, and that they expressed the intention of his will, according to their import and signification. When certain terms or words have by repeated adjudication received a precise, definite and legal construction, if the testator in making his will use such terms or similar expressions, they shall be construed according to their legal effect...’ ”

In Park v. Holloman, 210 Ark. 288, 195 S. W. 2d 546, we said:

“The function of a court in dealing with a will is purely judicial; and its sole duty and its only power in the premises is to construe and enforce the will, not to make for the testator another will which might appear to the court more equitable or more in accordance with what the court might believe to have been the testator’s unexpressed intentions. ‘The appellants are correct in the statement that the purpose of construction is to arrive at the intention of the testator; but that intention is not that which existed in the mind of the testator, but that which is expressed by the language of the will.’ ” There is no ambiguity in the language used in the codicil; there is no reason for supposing that Mr. Eagle did not mean just what he said. That being ture, it follows that W. H. Eagle, Sr., devised to his son, W. H. Eagle, Jr., the lands in question, in fee simple.

Affirmed.

Ward, J., dissents.

Paul Ward, Associate Justice

(Dissenting). It seems to me this is a case where the majority can’t see the forest for the trees — the forest being the will and codicil as a whole and the trees being a few isolated words.

The cardinal rule for the construction of a will is to ascertain the intention of the testator, as announced in Wooldridge v. Gilman, 170 Ark. 163, 279 S. W. 20. A hurried investigation reveals that we have approved and followed this rule in fifteen other cases.

In this case we should consider the will and the codicil as one instrument for the purpose of trying to arrive at the testator’s intention. United States of America v. Moore, 197 Ark. 664, 124 S. W. 2d 807.

The application of the above rules to the essential facts in this case is a simple matter, and it leads me to but one conclusion.

The testator, by his original will, gave a distinct parcel of land (described by metes and bounds) to each of six children In each instance the testator placed a value on each parcel of land (ranging from $13,200 to $14,000). In each instance he made it clear that the land was being devised to the son (or daughter) “and his bodily heirs”. (This meant, of course, the child could not sell the land.) Also, the testator, in the will, stated he wanted his children to share equally in his estate.

Later the testator discovered that he had mistakenly switched lands in the case of “W. H.” and “Bryan”. It is clear to me that the purpose of the “codicil” was to correct the above error, and not to change the quality of the devised estate. Among other things, my conclusion is explained briefly by the following:

(a) . This view is the only view that maintains equality among the childreii.

(b) . In the codicil the testator, gave as one of his purposes “to correct error above described”. (The words “above described” refer to the mixup in descriptions only.)

(c) . The above was one of his purposes in executing the codicil. The question arisen: What was another purpose? Was it to change the title from a fee tail to a fee simple? The answer is found in the 5th paragraph of the codicil where it is explained that due to the death of his brother since the will was signed, he was appointing another personal representative.

(d) . The first paragraph in the codicil begins with these words: “In my said last will I gave and devised to my son...” No one doubts that by the above quoted words the testator was referring to his “bequeath to my son... and unto his bodily heirs ’ \ If that be true why attach an entirely different meaning to the same words (give and devise) when used later in the same paragraph? I can see no reason.

         Or “her bodily heirs”, as the case might be.

       Emphasis supplied.


author: Ed. P. McFaddin, Associate Justice.

text:
    Aldridge & Stroud, Inc. v. American-Canadian Oil & Drilling Corp.
    5-2529
    357 S. W. 2d 8
    Opinion delivered May 7, 1962.
    [Rehearing denied June 4, 1962]

      Mehaffy, Smith & Williams and D. D. Panich; Keith, Clegg & Eckert and Wright, Lindsey, Jennings, Lester & Shults, for appellant.

      Francis B. Borden, Jr., J. Hugh Wharton, J. S. Thomas, Joe B. Hurley, and Joel B. Dickinson, Dallas, Tex., for appellee.
   Ed. P. McFaddin, Associate Justice.

This case was pending in the Second Division of the Union Chancery Court, in one form or another, from 1956 until 1960, and involved a number of-parties and issues. Finally, the Chancellor was able to get all parties present for a hearing, and he disposed of the issues in a finding that listed the various controversies between the litigants. All of these controversies have become final except the four involved on this appeal. Yet it is necessary to give a rather lengthy recital of the background facts to present the four controversies now before us.

Mrs. Euth Corder Eoberts owned an undivided working interest in certain oil wells in the Smackover field in Union County. E. M. Crabtree and others also owned undivided working interests, along with Mrs. Euth Corder Eoberts; and in 1953 the owners of the working interests executed a lengthy contract, whereby E. M. Crabtree and others were designated as “operator” of all the working interests and clothed with certain powers and duties. Among other provisions in the contract was Section 22, designated “Preferential Purchase Eights,” to be later discussed.

On April 16, 1956, E. M. Crabtree filed suit No. 12904 in the Second Division of the Union Chancery Court against the American-Canadian Oil & Drilling Corporation, Euth Corder Eoberts, and various other parties on the said 1953 contract. Crabtree sought judgment against the various defendants for various stated amounts, and prayed that .their working interests be sold to satisfy the said respective judgments. Monsanto Chemical Company and MacMillan Petroleum Corporation were purchasing the oil runs from the property, and they were also made defendants so that the oil runs might be held subject to, the orders of the Court.

The American-Canadian Oil & Drilling Corporation (hereinafter called “American-Canadian”) had purchased the interest of Euth Corder Eoberts in the property in 1955; and that is the reason why American-Canadian was made a defendant. Various pleadings were filed, and on July 11, 1957, Aldridge & Stroud, Inc. (hereinafter called “Aldridge & Stroud”) intervened, claiming that Aldridge & Stroud held a note executed by American-Canadian for $75,000.00 and interest, and a mortgage on all of American-Canadian’s 011 runs from the Ruth Corder Roberts Smackover properties.

On October 28, 1957 Crabtree’s original claim against the owners of the working interests was satisfied and dismissed by reason of what is called the “Anthony Deal,” hereinafter to be discussed. But the case No. 12901 was still left pending because of the Aldridge & Stroud intervention. Then, on June 19, 1958, Crabtree intervened in the same suit, this time seeking relief against Ruth Corder Roberts and American-Canadian because of the “Anthony Deal.” Kay Van and William T. Poran intervened, and various other parties intervened; and what was commenced as a suit by Crab-tree for money he had advanced in the operation of the wells became almost a “free-for-all” receivership of the working interest that was originally owned by Ruth Corder Roberts, and which she had conveyed to American-Canadian.

As aforesaid, the Chancellor was finally able to get all the litigants and intervenors together to present the issues; and on December 22, 1960 there was entered the decree from which comes this appeal. There were a number of litigants and issues, but we have only four of those before us on this appeal; and we will now proceed to consider those four issues.

I. R. M. Crabtree’s Intervention. On June 19,1958, Crabtree intervened, claiming that he was entitled to purchase the Ruth Corder Roberts interest for some amount of money which counsel now estimate as $270,-000.00. The Crabtree intervention alleged; that under Section 22 of -the operating instrument of 1953, Crab-tree was given the preferential right to purchase the Ruth Corder Roberts interest if she ever sold; that she gave him notice that she was selling to American-Canadian for $400,000.00 cash and 150,000 shares of American-Canadian stock; that said notice was false, in that she sold on different terms; and that Crabtree could still exercise his preferential purchase right for the actual value of the property.

Should Crabtree prevail he would acquire all of the interest of American-Canadian in the Smackover property, so this is the first matter for determination. On the Crabtree claim the Chancellor, in his opinion, said:

“Although R. M. Crabtree was the moving party herein in the beginning of this action, and later as an Intervenor, and although he had the right to purchase the interest for which he has intervened herein, the Court finds, from the time of the letter to him advising that a sale was imminent, he made no effort to avail himself of this right, and that he cannot, at this late date, prevail in purchasing the property involved, and his cause of action, together with his Intervention, should be dismissed for want of Equity.”

We agree with the Chancellor’s findings on the Crabtree claim. The operating instrument of 1953 was never placed of record so could not be binding on any persons except those with actual notice. The dealings between Mrs. Ruth Corder Roberts and American-Canadian began in 1955, when she agreed to sell all of her working interest in the Smackover property to American-Canadian for $400,000.00 in cash and 150,000 shares of stock. American-Canadian experienced difficulty in acquiring the $400,000.00 in cash, and persuaded Mrs. Ruth Corder Roberts (whose husband had died in the meantime) to accept more stock and less cash. In the course of the negotiations, American-Canadian learned of the said Section 22 of the 1953 contract which gave Crabtree preferential rights to purchase Mrs. Ruth Corder Roberts’ interest; and a letter was written by Mrs. Ruth Corder Roberts to Crabtree on September 19, 1955, wherein she advised Crabtree of her February agreement to sell the property to American-Canadian for $400,000.00 cash and 150,000 shares of stock.

Crabtree wrote Mrs. Ruth Corder Roberts on September 30, 1955, acknowledging receipt of the letter, waiving all formalities or irregularities in the notice, and said: “. . . I have elected to exercise the option in that Agreement to purchase your interests in these properties.” But after Crabtree notified Mrs. Ruth Corder Roberts of his election to purchase her interest, he had a geologist go over the property, and then concluded from the geologist’s report that the interest of Mrs. Ruth Corder Roberts was not worth the amount for which she was selling it. So far as the record before us discloses, Crabtree never notified Mrs. Ruth Corder Roberts that he had changed his mind and would not take the properties. Instead, he remained silent. Under the terms of said Section 22 he was allowed only thirty days in which to complete the transaction after exercising his option. He did nothing further until he filed his intervention herein on June 19, 1958, which was over two years later.

As heretofore stated, American-Canadian was experiencing difficulties in acquiring the $400,000.00 cash to finance the purchase of the property from Mrs. Ruth. Corder Roberts, and finally this transaction (herein called the “Anthony Deal”) was accomplished: Mrs. Ruth Corder Roberts mortgaged her interest in the Smackover property to Anthony for $150,000.00 and received the cash; American-Canadian paid her $5,000.00, in cash and she received 395,000 shares of stock in American-Canadian of the par value of $1.00 per share. If the stock in American-Canadian was worth par, Mrs. Roberts received the equivalent of $400,000.00 in cash and $150,000.00 in stock; but the consummated transaction was different from the one originally planned. Crabtree says he did not learn of the variation in the transaction between Ruth Corder Roberts and American-Canadian until shortly after June 1, 1956. But, even so, on October 28, 1957, in this case No. 12904, he dismissed his original claim on the 1953 operating contract against American-Canadian and Ruth Corder Roberts; and then delayed until June 19, 1958 before intervening and seeking to pursue his alleged preferential rights against American-Canadian and Ruth Corder Roberts. Without going into the issue of res judicata, we affirm the Chancellor’s decision against Crabtree because of the equitable maxim: “Equity aids the vigilant, and not those who sleep upon their rights. ’ ’ Courts of equity do not sit to restore lost opportunity, or to renew possibilities that have been permitted to pass by neglect. After he learned the facts Crabtree delayed more than two years before intervening and asserting rights against American-Canadian. In the interim, the situation had changed. Values change rapidly in oil and gas matters (see Sanders v. Flenniken, 180 Ark. 303, 21 S. W. 2d 847); and Crabtree’s unconscionable delay is sufficient, in itself, to justify a court of equity in refusing to allow him to now receive the properties after it has been shown that his geologist’s report was wrong and that the properties have produced far more oil than was thought probable in 1956.

II. The Aldridge & Stroud Intervention. Aldridge & Stroud intervened in the proceedings on July 11, 1957, seeking judgment on a note for $75,000.00, executed by American-Canadian, dated April 4, 1956, and secured by a mortgage on the oil runs from the property. The witnesses for Aldridge & Stroud testified that the Company had drilled a well for T. E. Robertson Company, Inc. in Hudspeth County, Texas, which well was necessary to be drilled in order to validate certain leases; that the leases were all transferred to American-Canadian; that the balance due for drilling the well was $75,000.00, which American-Canadian agreed to pay since it had acquired the leases; and that the mortgage or assignment was security for the $75,-000.00 note. T. E. Robertson, President of American-Canadian when the note and mortgage were executed, testified that the note and assignment were legal and valid in every respect.

There are a number of suspicious circumstances regarding this Aldridge & Stroud claim; but we have a note and assignment, fair on their face, and the President of American-Canadian testifying that he executed the note and mortgage for the Company and that the same were valid. Without reciting all of the testimony, we have reached the conclusion that the resisting evidence is insufficient to show that the note and assignment Avere fictitious, or that they have been satisfied. We, therefore, reverse that portion of the Chancery decree which disallowed the claim of Aldridge & Stroud, and direct that the same be alloAved; but it must be alloAved junior to the Foran claim and the Kay Van claim subsequently to be discussed. In other words, the Foran claim and the Kay Van claim must be paid in full before the Aldridge & Stroud claim is paid.

III. The William T. Foran Claim. Regarding this claim there seems to be very little controversy. Foran loaned $12,000.00 to American-Canadian; and as security he received an assignment of the oil runs; his assignment Avas duly placed of record; and due proof of his claim was made. We affirm the allowance of the claim. As regards the Foran claim, the Chancellor’s opinion states:

“The Court finds that the claim of W. T. Foran is also a valid and bona-fide claim in the amount of $12,000.00 and that he should have Judgment for that amount, together with interest from date until paid at the rate of six per centum (6%) per annum. That said amount is a lien against the property involved herein, ? ?

IV. Mrs. Kay Van’s Claim. As a part of her sale to American-Canadian, Mrs. Ruth Corder Roberts executed a mortgage on the property to Anthony for $150,000.00. This has heretofore been referred to as “the Anthony Deal.” Default was made on this mortgage and Anthony filed foreclosure in the First Division of the Union Chancery Court. In order to prevent the foreclosure, American-Canadian persuaded Mrs. Kay Van to loan American-Canadian $72,000.00, which, with impounded oil runs, would be sufficient to pay the Anthony mortgage. In the meantime, American-Canadian had been placed in receivership in the State of New York and Mrs. Kay Van issued and delivered her $72,000.00 check to Evans, the New York Receiver. The funds were used to satisfy the Anthony foreclosure, which was dismissed. It was represented to Mrs. Kay Van by the attorney for American-Canadian that if she paid this money, she would be subrogated to the Anthony mortgage and would receive her money with interest. The fact that she paid the money is conclusively established by the original check in the record. But it is insisted that the New York Receiver received some amount and should have paid Mrs. Kay Van out of such proceeds. A study of the record shows that Mrs. Kay Van did not look to the New York Receiver for the money: she was told that she would be subrogated to the Anthony mortgage and would receive her money from the oil runs. She followed the procedure suggested by the attorney for American-Canadian. She has received part of her money, and she now seeks the balance. As regards her claim, the Chancellor said:

“The Court finds that Mrs. Kay Van’s claim for Judgment is a valid and bona-fide claim, and that there is due her the amount of $54,798.16, together with interest from this date at the rate of six (6%) per centum per annum until paid. The Court does not feel that this Judgment is a lien on the money held in the Registry of this Court, but should, rather, be a lien on the property involved herein as of and from this date.”

Mrs. Kay Van has not cross-complained from this latter finding; so the decree of the Chancery Court is affirmed as .regards the claim of Mrs. Kay Van.

V. Conclusion. The Chancery decree is affirmed in all respects except as to the Aldridge & Stroud claim. As to it, the decree is reversed and the cause remanded -with directions to allow the Aldridge & Stroud claim, but junior to the Foran claim and the Van claim, as hereinbefore stated. All costs are taxed against the oil properties.

Ward, J., not participating.

       Said Section 22 reads as follows:
      “22. PREFERENTIAL PURCHASE RIGHTS. If any party hereto should desire to sell all or any part of his interest in the jointly owned leases and materials, the other parties' shall have the preferential right to purchase the same as herein provided, except that such right shall not apply to a sale by any corporation which is a part hereto to a successor to all or substantially all of its business and assets or to a corporation which is a parent or subsidiary of the selling corporation, or affiliated with the selling corporation .through common ownership of voting stock, or to a sale by any individual party hereto to a private closed corporation organized by such individual party and of which he is the principal stockholder, or to a sale by any individual party to any member of his immediate family or any trust created by such individual party for the benefit of any person in the immediate family of such individual. Subject to the foregoing exception, a party hereto shall not make any sale of all or any part of his interest in the jointly owned leases and materials otherwise than pursuant to a bona fide written offer from a purchaser who is ready, willing -and able to purchase the same, accurately describing the interest to be purchased and providing for a purchase price payable in lawful money of the United States. If any party should receive and desire to accept any such offer, such party shall give written notice thereof to 'eách of the other parties, together with a true copy of such offer, and the other parties shall have the option, exercisable only by written notice given to the selling party within ten (10) days after the giving of notice of desire to sell, to purchase the interest described in the offer for the purchase price therein stated. If each option should be so exercised by the other parties, or any of them, the buying party or parties shall be allowed a reasonable time, not exceeding thirty (30) days, for examination of the title to the interest being purchased, the obligation of the buying party or parties to purchase such interest being conditioned upon title thereto being found to be merchantable in the selling party. Promptly upon approval of title, the purchase price shall be paid by the buying party or parties, and the selling party shall execute and deliver to the buying party or parties a properly executed instrument of conveyance of the interest being sold, with full warranty of the title thereto; if the conveyance is made to two or more parties, the interest conveyed to each shall be in the proportion that his interest in the jointly owned leases bears to the combined interests of all the buying parties therein. If the option above provided for is not exercised by any party here to within the ten-day period allowed therefor, the party desiring to sell shall be free to accept the offer, copy of which was submitted to the other parties, and to sell the interest therein described in accordance with the terms of such offer, but not otherwise.”

       This date appears in his “Petition” filed in the Chancery Court.

       See 19 Am. Jur. p. 333 “Equity” § 333.

       As regards the Aldridge & Stroud claim, the Chancellor said: “The Court is of the opinion that there is no merit in the Intervention of Aldridge & Stroud, Inc. and that the alleged ‘assignment’ to it is without consideration and same should be cancelled so as not to be a cloud on the title to this leasehold.”