text:
    Green v. Jones-Murphy Properties, Inc.
    5-2162
    335 S. W. 2d 822
    Opinion delivered June 6, 1960.

      Warren & Bullion, for appellant.
    Coclcrill, Laser & MeGehee, for appellee.
   Carleton Harris, Chief Justice.

This is an appeal by Walter Green, a real estate broker of Pulaski County, from a judgment entered against him in the Pulaski Circuit Court in the sum of $2,000. Jones-Murphy Properties, Inc., is an Arkansas corporation, whose principal stockholders and officers are Drs. Kenneth Jones and Horace Murphy, the corporation being principally engaged in purchasing properties for investment. Ten acres, belonging to Mrs. A. D. Taylor and the heirs of her deceased husband, were purchased by appellee through appellant. Appellee paid $15,000 for the tract, and subsequently learned that the Taylors only received $13,000. The $2,000, less closing expense, was retained by Green as his commission. Appellee contended that Green was acting as its agent, and had thus wrongfully retained the amount in excess of the selling price. Green contended that the amount was simply his commission on property which had been exclusively listed with him for sale by the Taylors, i.e., he was an agent for the Taylors, rather than for appellee. Suit was instituted by the corporation for the $2,000 difference between the amount paid for the property by the company, and the amount received by the seller from the company, it being alleged that appellant wrongfully concealed the fact that he had entered into an agreement with Mrs. Taylor; that she had agreed to sell the property for $13,000, and that Green had made a personal profit of $2,000 in violation of his fiduciary relationship with appellee. On trial, the jury returned a verdict for appellee. Judgment was entered in accordance with the verdict, and from such judgment comes this appeal. For reversal, appellant contends that there was no proof of employment of Green as an agent, and further avers that the court erred in giving its instruction number two.

Proof on the part of appellee was as follows: Dr. Jones testified that in early November of 1958, while on his way to Rotary Club, he passed the property owned by the Taylors, and observed a homemade sign, “10 acres for sale”; the witness and Dr. Murphy had discussed the purchase of land for long term investment, and this unimproved land interested him; he became acquainted with appellant in the Rotary Club, and asked Green if he was familiar with the property. Appellant informed Jones that he was familiar with it, and that the price was too high. Subsequently, Jones purchased another ten acres from Green and Mrs. Josephine Graham for $10,000. In the meantime, Jones learned from Mrs. Taylor’s daughter that the Taylor property was still for sale. The evidence reflects, that sometime between the middle of November and the first of December, Jones called Green and informed him that he and Murphy were still interested in purchasing that property, and asked appellant to contact, in their behalf, the Taylor family, and see if the price £ £ could not be brought down. ’ ’ According to the witness, Green agreed to do this. Jones considered that Green was working for appellee for the purpose of obtaining the best price possible for the Taylor property, The witness stated no mention was made relative to compensation, it being his thought that the fee for services would be discussed when the deal was closed. According to the Doctor, sometime between the 10th and 15th of December, Green advised him that he had talked with the Taylor family, and the property could not be purchased for less than $15,000. Appellant considered this a “good price”. Relying upon the broker’s judgment, Jones, on December 20th, in behalf of appellee, entered into an offer and acceptance ’ ’ agreement, which was signed in the following manner:

“10. This offer is binding upon Bnyer if accepted within 2 days from date.
(Signed) Walter Green Kenneth G. Jones, M.D. Agent Buyer
The above offer is accepted this Dec. 20, 1958.
(s) Mrs. A. D. Taylor Seller
By W. Green, Agent Seller.”

In January, 1959, Green informed Jones there was a defect in the title to five of the ten acres; that they should go ahead and close the five acres without defect, but that the other five would have to go through guardianship proceedings. According to J ones, after some persuasion by Green, he agreed to this procedure. Appellant brought the papers and closing statement to his office for signing, though he did not read the papers in detail, and did not remember their contents. On January 31, 1959, sale of the five acres without title defect was consummated, and title conveyed to appellee; on the same date, unknown to appellee, a new contract for the sale of the remaining five acres was executed with signatures as follows:

“10. This offer is binding upon Buyer if accepted within............days from date.
Walter Green Jones-Murphy Prop., Inc.
Agent By Walter Green,
Buyer Agent
The above offer is accepted this J an. 31, 1959.
Jessie Taylor, Seller
Jesse Taylor, agent for heirs of
A. D. Taylor”

In the latter part of February or early March, Jones learned that the Taylor family had agreed to sell the property for $13,000, and he confronted Green with this fact.

Appellant testified that he had talked to Mrs. Taylor and her daughter about selling the property on several occasions prior to his discussions with Jones, but that he only obtained his exclusive listing contract on December 6, 1958. Admittedly, he did not tell Jones that he had the exclusive listing; likewise, he admitted that he did not place a sale sign on the property. The witness stated that he did not consider himself an agent for Jones, and had no reason to think that Jones regarded him as an agent; that the only contract he had was with Mrs. Taylor. Green testified that he had been out some expense in closing the transaction, and only realized $1,-453 for his commission. Relative to obtaining the exclusive listing, Green testified:

“Mrs. Taylor not being versed in real estate, being the only piece of property she had owned, she asked me to give her a guaranteed net price on the property and me pay all the expenses. When I had talked to her about the property, I talked to her daughter first, and she told me she wanted eighteen thousand for the property. When I called at their home I asked her to bring her family in to my office and discuss the lowest possible price she would accept and after figuring the price I would have to sell it to the doctors for to get my 10% commission, she agreed to accept, she told me, she said, ‘I have got to have $13,000 net to me. Anything you get above that, I don’t care what you get.’ I was acting as agent for Dr. Jones and Murphy, I mean agent for Mrs. Taylor to sell the property to Jones and Murphy because I had no written contract at all with Jones and Murphy prior to their making me an offer and acceptance contract. The only contract I had was with Mrs. Taylor, she wanted me to guarantee her $13,000, she didn’t care who I sold it to.”

He testified that he signed the January 31st agreement as agent of Jones-Murphy Properties as a matter of ‘ ‘ convenience. ’ ’ On re-direct:

“I couldn’t get Kenneth or Horace to come down. I had to take it to their office. At the suggestion of the insurance company and somebody at Pulaski Heights Bank, they had already pnt all the money up, they felt like there ought to be another contract drawn and signed by Mrs. Taylor and Jones and Murphy, and it was merely a contract of convenience more than anything.”

On cross-examination, he testified:

“Q. Did you tell Dr. Jones you signed that contract?
A. No, he said whatever I saw fit to do.
Q. After signing that contract did you tell him you had signed it?
A. I told him everything was all right.
Q. Did you tell him about this?
A. I don’t think I mentioned it.
Q. Did you furnish him a copy of it?
A. I don’t know. Everything was left up to me. I would call him maybe three days before I would hear from him.”

Under appellant’s primary contention of error, we are only concerned with whether there was sufficient evidence to support the verdict of the jury. Walthour v. Pratt, 173 Ark. 617, 292 S. W. 1017 (1927), is a case very similar to the one at bar. As here, the broker was instructed by the buyer to ascertain the amount that the owner of certain lots would accept for purchase, and there was no written agreement, or express oral agreement, that the broker would serve as agent for the buyer of the lots. On judgment being rendered against Walthour, he appealed to this Court, and in affirming the trial court’s judgment, this Court held the contention to be without merit, stating:

“The appellant earnestly contends that there is no evidence to show that he was the agent of appellee, and that, for that reason, the court should have directed a verdict in his favor. As to whether he was the agent of Mrs. Pratt is a question of fact properly submitted to the jury, and, under the facts as developed in this case, the jury might have found either way. They might have found that there was no agency. They however found that the agency did exist, and there is some substantial evidence to support this finding, and their finding of this fact is binding on this court.

It has been held many times that the findings of a jury on questions of fact, where there was any substantial evidence to support it, could not be disturbed by this court. It is not necessary, in order to establish agency, that the evidence show any express agreement.

‘It is not essential that any actual contract should subsist between the parties or that compensation should be expected by the agent; and while the relation, in its full sense, invariably arises out of a contract between the parties, yet the contract may be either express or implied. * * * Whatever evidence has a tendency to prove an agency is admissible, even though it be not full and satisfactory, and it is the province of the jury to pass upon it. Direct evidence is not indispensable — indeed, frequently is not available — but, instead, circumstances may be relied on, such as the relation of the parties to each other and their conduct with reference to the subject-matter of the contract.’ 21 E. O. L. 819-820. # # *

In the case at bar the evidence tends to show that the appellee requested appellant to see the owner of the lots, and appellees testify that the appellant told them it was Mr. Cox; that an offer of $1,850 was made; that afterwards appellant told appellee the offer had been accepted, a contract was signed, and afterwards deeds were executed and money paid. Tipton Cox testified that, when Walthour came to him or talked to him, he understood that Pratt was purchasing the lots, or that Pratt was the one making the offer, and that he was to make the deed to Bailey because some financing was to be done. * * *

. . . we think there was substantial evidence from which the jury might have found that the appellant was the appellee’s agent, and, while acting as her agent, purchased the property from Mr. Cox for $1,500, and had the deed made to Bailey and then conveyed to appellee for $1,850.”

In the case at bar, there was evidence that Jones requested Green to talk to the Taylors about the lots before Green obtained the exclusive listing contract, and that Green agreed to do this; no indication was given by appellant that he had obtained the exclusive listing contract from the Taylors, nor did he tell Jones the net price to Mrs. Taylor; Green never placed his own sign on the property, and in fact, the evidence reflected that the old homemade sign remained on the premises. Appellant admitted that in his discussion with the Taylor family, Mrs. Taylor agreed to the listing after he figured the price that the property would have to be sold for, in order for him to obtain the desired commission. Green likewise admitted that he had appellee in mind at the time as the sale prospect, and of course, the signing of the offer and acceptance agreement on January 31st by Green as agent of Jones-Murphy was rather potent evidence. Counsel for appellant point out in their brief, that Green also signed as agent for Mrs. Taylor, but we are not concerned with other possible agency relationships held by Green. As was stated in the Walthour case:

“He also objects to the instruction because he says that he was entitled to represent both Cox and Bailey and entitled to a commission from each. There is no doubt but that he was entitled to represent anybody he wished and charge a commission for representing them, but the question here is whether he was representing the appellee, and whether he made a secret profit, and these questions were both submitted to the jury, and its verdict settles these questions against the appellant. It was not necessary to prove fraud in order to entitle plaintiff to recover in this case. It is the duty of an agent representing a principal to faithfully represent that principal and to be loyal and faithful to his interest, and he cannot acquire any interest for himself in opposition to the interest of his principal. And the fact that an agent acts gratuitously and without commission does not relieve him of liability for wrongful acts or negligence, whether they amount to fraud or not.”

We conclude that there was sufficient evidence to support the verdict of the jury that Green was the agent of appellee.

Appellant contends that the court’s instruction No. 2 was erroneous, in that it permitted the jury to find that there was an agency, even though Green did not understand that he was being looked upon as an agent, and no specific contract had been entered into. We think that the Walthour case, heretofore quoted, answers this contention. Likewise, in 2 American Jurisprudence, § 24, pages 26 and 27:

“Whether an agency has in fact been created is to be determined by the relations of the parties as they exist under their agreements or acts. If relations exist which will constitute an agency, it will be an agency whether the parties understood the exact nature of the relation or not. * * * If an act done by one person in behalf of another is in its essential nature one of agency, the former is the agent of the latter, notwithstanding he is not so called.”

At any rate, no specific defect in the instruction was called to the trial court’s attention, a general objection only being made. Unless, therefore, the instruction was inherently erroneous, the general objection was not sufficient. This instruction was not inherently erroneous, and in fact, appellant admits that, under some circumstances, the instruction would be a proper statement of the law. The contention is without merit.

No reversible error appearing, the judgment is affirmed.


source: Caselaw Access Project

author: J. Seaborn Holt, Associate Justice.

license: Public Domain

text:
    State Farm Mutual Automobile Insurance Co. v. Fuller.
    5-2159
    336 S. W. 2d 60
    Opinion delivered June 6, 1960.

      Cockrill, Laser & McGehee, for appellant.

      McMath, Leatherman, Woods & Youngdahl, for appellee.
   J. Seaborn Holt, Associate Justice.

On June 22, 1958, Mr. Frank F. Fuller and his wife, appellee, Mrs. Verna Fuller, along with their two children, were occupants of an automobile driven by Orville E. Smith which collided with an automobile driven by A. C. Taylor and as a result of this collision, Mr. Fuller was killed and his wife, appellee, seriously injured. After emergency treatment Mrs. Fuller, a veteran of the U. S. Armed Forces, was admitted to a Veterans Administration Hospital after she had signed a form statement provided by the V. A. Hospital stating that she was unable to pay the necessary expenses of hospital treatment and domiciliary care. Her medical expenses at the V. A. Hospital amounted to $1,681.67. She was sent a bill for these expenses which she later paid. In September of 1958, Mrs. Fuller, appellee, filed suit against A. C. Taylor for personal injuries sustained in the automobile collision. When the V. A. learned of this suit, Mrs. Fuller, at its request, assigned to the V. A. any recovery of damages that she might obtain against a third party, Taylor, in payment for medical treatment resulting from her injuries. The Y. A. charge for hospital care for appellee was $1,681.67, the reasonableness of which is not in dispute.

Thereafter, the V. A. Hospital notified appellee’s attorney of their claim and forwarded copies of the assignment. Continuous demands were made by the Y. A. Hospital on appellee’s attorney until appellee finally paid the hospital bill out of funds which she received from her damage suit against A. C. Taylor. Appellee first made demand on the Southern Farm Bureau Casualty Insurance Company (insurer of Orville E. Smith, driver of the car in which the Fullers were riding) for payment of the Y. A. charges against her and for payment of other medical expenses actually incurred and this company paid all the bills except the Y.A. charges in amount of $1,681.67 which they refused to pay. At the time of the collision and injuries to appellee, as indicated, Frank Fuller, appellee’s husband, had in force an automobile insurance policy with appellant, State Farm Mutual Automobile Insurance Company, which contained these provisions: “Coverage C — Medical Payments. To pay all reasonable expenses incurred within one year from the date of accident for necessary medical, surgical, X-ray and dental services, including prosthetic devices, and necessary ambulance, hospital, professional nursing and funeral services. ¶ Division 1. To or for the named insured and each relative who sustains bodily injury, sickness or disease, including death resulting therefrom hereinafter called ‘bodily injury,’ caused by accident, while occupying or through being struck by an automobile. ’ ’ This policy was issued in Louisiana. Premiums were paid and the policy was in effect at the time of the accident above described.

Upon appellant’s refusal to pay, appellee filed the present suit against appellant, insurance company, in which she sought recovery in amount of $1,681.67, plus statutory penalty and reasonable attorney’s fee. Trial was had on September 1, 1959, before the court without a jury on stipulation of facts with, exhibits introduced. No witnesses were called by either party. Following the hearing, the court took the case under advisement and on November 12, 1959, entered a judgment for appellee in the amount sued for, $1,681.67, a 100% penalty, $336.33 as fee for appellee’s attorney, or a total judgment of $3,-699.67, together with costs. This appeal followed.

For reversal, appellant relies on the following points: “I. The court erred in concluding from the undisputed facts that the cost of the VA hospital care furnished appellee was medical expense incurred by appellee within the terms of appellant’s Family Automobile Policy. II. (A) The court erred in applying the law of Louisiana instead of the law of Arkansas to the assessment of statutory penalty and attorneys’ fees against appellant. (B) If the Louisiana law governs, the court applied an incorrect provision thereof.”

Appellant states its position and contention as follows: “Appellant refused to pay to appellee the amount of the VA bill for the reason that it did not represent medical expense ‘incurred’ by her. The VA did not charge appellee for the cost of her hospital care. ¶ Appellee had first made demand upon Southern Farm Bureau Casualty Insurance Company for payment of the VA charges and for payment of other medical expenses actually incurred. Southern Farm paid all of these bills but refused to pay the VA charges. ¶ * * * Appellant admitted its policy was issued to Frank F. Fuller; that it was in force at the time of the collision in June 1958; that appellee was hospitalized at the VA Hospital in Little Rock; and that $1,681.67 was the cost of hospital care. Appellant denied liability under its policy for the reason that the purported charges of the VA Hospital were not medical ‘expense incurred’ within the terms of its policy because appellee qualified for admission to said hospital under laws of the United States as a veteran entitled to free care and treatment for her injuries ; that the VA was without authority to make any charges against her for care and treatment; that any charges attempted to be made against her would not constitute a legal obligation; that the VA did not attempt to make any charge against her.”

In short, it appears to be appellant’s contention that appellee, Mrs. Fuller, was not entitled to be reimbursed for her hospital bill in amount of $1,681.67 on the grounds that these expenses “were not incurred” by Mrs. Fuller since she was a veteran and could have obtained hospitalization in the veterans hospital free of charge. We do not agree. It appears undisputed that at the time appellee entered the hospital she was, in fact, unable to pay for hospital services and had so stated in her written application. Therefore, at the time of her entry, being a veteran, she would have been entitled to free hospital services. However, it is also undisputed that after Mrs. Fuller had left the hospital, spending 79 days therein, on January 19, 1959, she effected a settlement of her damage suit against Taylor and out of the proceeds of this settlement she, on demand, paid the Veterans Hospital $1,681.67. We think that it was the intent of appellant, insurance company, and Frank Fuller, its insured in this case, that appellant company, in return for premiums paid by the insured, would pay the medical and hospital expenses on insured and members of his family in the event that they were injured in an automobile accident such as here.

The Supreme Court of Wisconsin, in a similar situation as here presented, interpreted the meaning of a provision in an automobile liability policy, which provision was identical with that now before us. This Wisconsin case, Herman Kopp v. Home Mutual Ins. Co., 6 Wis. 2d 53, 94 N. W. 2d 224, involved an action on an automobile liability policy by the insured to recover under the medical payment coverage for hospital expenses resulting from an accident while driving insured automobile. In that case it appears that the plaintiff was a subscriber to the Blue Cross Benefit Plan which plan was in addition to plaintiff’s liability policy supra with the defendant insurance policy which included medical payment coverage. It further appears that Blue Cross agreed to furnish insured hospital benefits in any affiliated hospital free of charge. The hospital where the insured was hospitalized was an affiliate member. Following the plaintiff’s hospitalization, he submitted to the insurance company a statement for hospital expenses which the insurance company refused to pay on the ground that it was not an “incurred expense” within the provisions of defendant’s policy. As indicated, the provisions of defendant’s policy in that case were identical with those in the present case. The Wisconsin Supreme Court, in holding in favor of the insured plaintiff, used this language: ‘ ‘ The defendant contends that, under the above-quoted policy provisions, it is a condition precedent to the insured’s right of recovery upon the policy for his hospitalization that he shall first have incurred a debt for the same. It is clear from the undisputed facts that no such debt was incurred by the plaintiff to pay for such hospitalization. However, a debt was incurred on the part of Blue Cross to pay such expense to Luther Hospital, and the plaintiff had paid quarterly premiums to Blue Cross as consideration for Blue Cross undertaking so to do. Thus expense was incurred for hospital services furnished ‘to or for’ the plaintiff insured. ¶ The afore-quoted policy provisions do not state who is required to incur the expense in order for the insured to recover for medical or hospital services supplied to or for him. There thus exists an ambiguity. It is a generally accepted rule of construction that ambiguities in a contract of insurance are to be resolved against the insurer who drafted the same and in favor of the insured. * * * Furthermore, policies of insurance are to be given a reasonable construction, and not one that leads to an absurd result.”

Just as the Blue Cross was held to have “incurred” the hospital costs, we think here the federal government, in effect, “incurred” the hospital costs of appellee in consideration for her services in the armed forces. The government provided these services to appellee even though, her disabilities were not service connected, provided she were unable to pay for such needed hospital services. In the present case, just as soon as Mrs. Fuller became able to pay her hospital costs (as indicated, from the proceeds of her recovery of damages against Taylor) she did so in the amount of $1,681.67 and at this point the said medical expenses, which are conceded to be reasonable, were, in fact, “incurred” by appellee within the terms of the policy, and the judgment of the trial court allowing recovery was correct.

Appellant is correct in its contention that the trial court erred in applying the law of Louisiana instead of the law of Arkansas on the assessment of the statutory penalty and attorneys’ fees against appellant.

Appellant’s contention that the trial court’s assessment of 100% penalty was error and that a penalty of only 12% may be allowed under our statute § 66-514 is correct and must be sustained. In a case of this nature the law of the forum, Arkansas, controls. In Aetna Casualty & Surety Co. v. Simpson, 228 Ark. 157, 306 S. W. 2d 117, we held § 66-514 to be a rule of procedure and applicable to an extrastate automobile insurance policy. We there said: “Appellant (liability insurance company) contends that Arkansas Statute § 66-514, providing for the payment of attorneys’ fees, does not apply in this case because a Tennessee contract is involved, although it matured in Arkansas. Notwithstanding the policy of insurance is a Tennessee contract, procedural matters must be in accord with the Arkansas statutes. The statute provides that attorneys’ fees shall be taxed as part of the costs. Where the policy matured in Arkansas and the action is brought in Arkansas, the Arkansas statute providing for attorneys’ fees and penalties applies. (Citing cases).”

The allowance by the trial court of an attorney’s fee of $336.33 appears to be reasonable and will be sustained. Appellee’s contention that her attorneys should be allowed additional compensation on appeal will not be granted because appellant has effected a substantial reduction in the judgment as heretofore indicated.

Modified and affirmed.


author: Ed. F. McFaddin, Associate Justice. George Rose Smith, J.,

text:
    Anderson v. Ryland.
    5-2195
    336 S. W. 2d 52
    Opinion delivered June 6, 1960.

      Joe Holmes, for appellant.

      Coleman, Gantt <& Ramsay, E. Harley Cox, Jr., for appellee.
   Ed. F. McFaddin, Associate Justice.

The question here presented is the power of a court of equity to sanction a deviation from one portion of a charitable trust instrument in order to accomplish the larger purpose of the charitable trust. Stated another way, the question is the power of a court of equity to permit a sale of the trust property, even though, the trust instrument states that the property cannot be sold.

In 1889 Joseph Merrill executed a trust indenture creating the Merrill Institute in Pine Bluff. The instrument recited in part:

“Know All Men by These Presents, that I Joseph Merrill of the City of Pine Bluff, in the County of Jefferson in the State of Arkansas being desirous of doing all the good I can while living and that the benefits may last when I am gone, and believing the most effectual way to accomplish this object is to provide some place of instruction and amusement to attract the young white people and bring them under influences calculated to elevate and improve them physically, mentally, morally and spiritually; Now therefore in consideration of One Dollar ($1.00) in hand paid and the premises herein set out, I Joseph Merrill do hereby give, grant, bargain, sell and convey . . .”

Then were named certain trustees, and there was conveyed to them a parcel of real estate which is situated at the corner of Fifth Avenue and Main Street in Pine Bluff. Specific wishes of Mr. Merrill were given for the use of the property as a gymnasium, lecture room, library, and that there be “. . . such other instructions in said Hall as will improve and elevate the physical, mental, moral and spiritual condition of those who attend them; Provided that no Sectarianism or Partisan Politics shall ever be taught therein. No gambling, no intoxicating drinks, no immoral books or other like publications shall ever be allowed in the said Institution. Should the means at the command of the Board of Trustees justify they shall in addition to the above provide and maintain a library with such Literature as shall further the objects of the Institution.” The instrument also recited — and this is the portion that causes the litigation:

“The Trustees shall have no power to sell, convey, or in any manner encumber the property herein conveyed or any part thereof. . . . But a breach of these restrictions herein or any of them, on the part of the Board of Trustees, or by their knowledge or consent shall in no case work a forfeiture of this grant, but shall only give the said Joseph Merrill, his heirs and assigns, and on his or their failure to act, then any resident citizen of the City of Pine Bluff, Arkansas the right to take such actions as will lawfully and promptly secure and maintain all rights and privileges herein granted. ’ ’

With funds provided by Mr. Merrill the trustees erected a building on the property, and the Merrill Institute has continued to this day. In Atkinson v. Lyle, 191 Ark. 61, 85 S. W. 2d 715, there was an effort by the trustees to mortgage the property; but this Court denied the trustees the power to execute the mortgage. For the past several years the trustees have allowed all of the building of the Merrill Institute — except for two store buildings which are rented for revenue purposes — to be used by the Boys’ Club of Pine Bluff; and a splendid youth program has been maintained, with instruction in crafts, physical welfare, showing of moving pictures, etc. But the location of the Merrill Institute is at the most traveled intersection in the City of Pine Bluff, and it is hazardous for youth to go through the traffic to reach the Institute.

Recently, a public spirited citizen of the City has agreed to donate to the Merrill Institute a large tract of land located in a residential district so that a new building may be erected for the Merrill Institute. The trustees can sell the present property at Fifth Avenue a Main Street for $150,000.00; and they propose to use a substantial part of this money to erect a building at the new location; and the trustees are very desirous to accomplish all of this. To test the power of the trustees to sell the original property at Fifth Avenue and Main Street and to use the proceeds for the new building, the appellant, as a citizen and taxpayer, brought this suit against the trustees. After a patient hearing the Chancery Court found that the trustees should be accorded the power to proceed as they planned. The Chancellor delivered a lengthy opinion, a major portion of which we copy:

CHANCELLOR’S OPINION

“This is a friendly suit brought by a taxpayer of Pine Bluff for himself and other taxpayers against the trustees of the Merrill Board. The Defendant Trustees filed an answer and in the answer they pray that this court give them authority to sell property belonging to the Merrill Trust. The Court will treat the prayer contained in the answer as a request for instructions by the Trustees concerning their duties and responsibilities as Trustees.

“The facts as brought out by the evidence, briefly stated, are as follows:

“One Joseph Merrill created the Merrill Institute, a trust, in February, 1889, for the purpose, using the language in the Trust instrument: —‘... to attract the young white people and bring them under influences calculated to elevate and improve them physically, mentally, morally and spiritually’. To carry out this Trust, he conveyed to the Trustees a tract of real property located at 5th and Main Streets in Pine Bluff, and provided for the erection of a building thereon.

“One of the terms of the Trust provides that the trustees shall have no power to sell, convey or in any manner incumber the property.

“There are three issues to be determined by this Court, namely: (1) Is the trust property being used today for the purpose or purposes designated by the settlor? (2) If the Trust property is being used in a manner that accords with the Settlor’s intention, will the Settlor’s intention be thwarted and will the innocent beneficiary suffer if the trustees’ request is denied? (3) If this Court should find that the Settlor’s intention is being thwarted due to no fault of the trustees, but because of unusual circumstances having arisen not foreseen or anticipated by the Settlor, and if the Court should further find that the innocent beneficiary will suffer, does this Court have the right, in the exercise of its inherent equitable powers, to permit the trustees to sell the trust property in deviation from the express terms of the trust instrument?

“These issues will be discussed in the order listed.

“ (1) Is the trust property being used today for the purpose or purposes as set forth in the deed in trust?

‘ ‘ The evidence indicates that since 1946, the property has been used and occupied by the Boys Club of Pine Bluff. Even though Boys Clubs as we know them today were not in existence in the year 1889, the year the deed in trust was executed, nevertheless, there is no question that the present use of the property is completely within the meaning of the trust purposes as set forth in the deed in trust. Mr. Merrill wanted to provide some place of instruction and amusement to attract the young white people and bring them under influences calculated to elevate and improve them physically, mentally, morally and spiritually. It is the opinion of this Court that no youth organization of our community or any other community could meet this requirement any more than a Boys Club. If Mr. Merrill were living today, it is beyond the shadow of a doubt that he would say ‘well done’ to these trustees for the manner in which they have used this property.

“ (2) If the trust property is being used in a manner that accords with the Settlor’s intention, will the Settlor’s intention be thwarted and will the innocent beneficiary suffer if the trustees’ request is denied?

‘ ‘ The Court finds that the Settlor’s intention will not only be thwarted, but that the beneficiary, the Boys Club of Pine Bluff, is suffering and will suffer more as time goes by. The undisputed facts reveal that when Mr. Merrill created this trust in 1889, the City of Pine Bluff was a small town; that there was no vehicular traffic; that there were no thoroughfares running adjacent to the property. The evidence further reveals that since that time, the city of Pine Bluff has grown in population to a metropolis exceeding 50,000 in and around the city. The location of the trust property is in the busiest location in the city, being adjacent to Main Street on the west and Fifth Avenue on the South. Fifth Avenue also is Highway 65, a U. S. Highway running the entire length of the State and heavily travelled. Both of these streets are crowded with vehicular traffic every day to such an extent that an extreme hazard now exists to the young boys who go to and from the Boys Club.

‘ ‘ The Court will observe that it has only been by an act of providence that only two boys have been injured in and around this location . . . It is the opinion of the Court that the circumstances have so changed since execution of Mr. Merrill’s trust declaration that his wishes and purposes are being thwarted. The Court further finds unless relief is granted to the trustees, the innocent beneficiary will greatly suffer, whereas, if their request is granted the wishes and intention of the Settlor will be more fully carried out and the trust property preserved.

“(3) If this Court should find that the Settlor’s intention is being thwarted due to no fault of the trustees, but because of unusual circumstances having arisen not foreseen or anticipated by the Settlor, and if the Court should further find that the innocent beneficiary will suffer, does this Court have the right, in the exercise of its inherent equitable powers, to permit the trustees to sell the trust property in deviation from the express terms of the trust instrument?

“The recent case of The George W. Donaghey Foundation v. Little Rock University, decided in the Supreme Court of Arkansas on the 29th day of February, 1960, and found in Vol. 106 of the Law Reporter, No. 8, at page 245, will become the land-mark case in Arkansas on the authority of trustees to relieve innocent beneficiaries from injury in cases such as is now before the Court.

“The Supreme Court in that case, in placing much emphasis upon the Settlors’ intention, stated as follows:

‘Will equity permit an innocent beneficiary to suffer under sucb circumstances? The answer has been given many times.’

“Then the Court quoted from 1 Restatement of Trusts 2nd, Section 167, under the heading of ‘Change of Circumstances’, as follows:

‘. . . “The Court will direct or permit the trustee to deviate from a term of the trust if owing to circumstances not known to the settlor and not anticipated by him compliance would defeat or substantially impair the accomplishment of the purposes of the trust; and in such case, if necessary to carry out the purposes of the trust, the court may direct or permit the trustee to do acts which are not authorized or forbidden by the terms of the trust.” ’ (My emphasis.)

“The Supreme Court in this important case also quoted from 89 C. J. S. Trusts, Section 87e (2), to the following effect:

‘ “In an emergency, or in circumstances not anticipated by the settlor, an equity court may, in order to preserve the trust or effectuate its purpose, authorize the trustee to deviate from its terms. * * * A Court of equity will put itself in the trustor’s place and endeavor to authorize the trustee to deviate from the terms of the trust in a manner which the court believes the trustor would himself have authorized if he could have anticipated a necessity for subsequent alteration of his plan.” ’

“The general rule as to the powers of a court of equity to act in matters such as this and under circumstances previously set out is found in 54 American Jurisprudence, page 225, where it is stated:

‘While generally the administration of a trust must accord strictly with the intent of the settlor and the terms of the trust, and while ordinarily even a court of equity has no right to authorize the trustee to depart therefrom, and will do all within its power to see that the trust is executed in accordance with its terms, it is generally agreed that a court may, upon the occurrence of emergencies or unusual circumstances not anticipated by the settlor, in order to carry out his ultimate purpose, and to preserve, or to prevent loss or destruction of, the trust estate, in the manifest interest of the trust estate, or, according to some authority, in the interest of beneficiaries or to save them from some plight, permit the trustee, to the extent necessary to such an end, to deal with the trust estate contrary to or in deviation from the express or literal terms of the trust instrument or declaration.’ This citation continues with this statement:

‘In this connection, the court is required to stand in the place of the creator of the trust and authorize what he would have authorized had he anticipated the exigencies rendering some change in his scheme necessary in order to prevent the loss of the subject of it. ’

“In 54 American Jurisprudence at page 226, section 284, the writer makes this statement: ‘ The Court should not substitute its judgment for the judgment and wishes of the trustor, and any power of a court to authorize departures from the trust directions should be exercised no further, it has been held, than necessary for the preservation of the trust property.’

“The basis of this Court’s action in allowing the trustees to sell the trust property and reinvest the proceeds in a more desirable property in a more desirable location is to preserve the trust property and estate for the benefit of the beneficiary.

“In a rather thorough Annotation on this subject in 168 A. L. R. at page 1019, the text writer makes this statement: ‘With scarcely any real dissent the cases, whether of charitable or of private trusts, are to the effect that a court of equity has power, or “inherent power”, to authorize a sale of property contrary to express or implied provisions or the patent general intent of the will or other trust instrument that the property shall not be sold. The statements commonly run to the effect that the power is one which exists in circumstances of emergency or exigency, and especially in circumstances not anticipated or foreseen.’

“At page 1029 of the above mentioned Annotation, we find this statement:

‘Passing notice may be taken of the fact that the proceeds of a sale of trust property sold in emergency stand in place of the property sold and are to be applied to the same general purposes ... A Court may decline to authorize a sale for purposes of reinvestment in the absence of any sufficient showing as to the availability, character, and propriety of reinvestments contemplated. ’

“This Court, prior to entering its Decree allowing a sale, made certain requirements of the trustees. These requirements, which have been met, were as follows:

1. The present property to be appraised by three qualified appraisers;

2. The sale of the present property to be for not less than the appraised value after all expenses paid;

3. Evidence that the Trust held fee title to the property at Ninth and Mulberry, the proposed new location of the Boys Club;

4. Detailed plans for the construction of the new building on the new site, including architect’s drawings, said drawings to include two store rooms to be used for business purposes in accordance with settlor’s wishes;

5. Bids to be accepted on the basis of the architect’s drawings, with successful contractor posting a good and sufficient bond for his good performance of said contract:

6. Under no circumstance is the new building and property to be encumbered and the proceeds from the sale of the present property is to be sufficient to pay all indebtedness connected with the change of location into new building.

‘Under these circumstances, considering Mr. Merrill’s wishes as expressed in his trust instrument, considering the change of circumstances not foreseen by Mr. Merrill in 1889, considering the fact that he expressed a desire in his trust instrument to not only do good during his lifetime, but that ‘the benefits may last when I am gone’, considering all of these matters along with other relevant points, this Court feels that it would be abusing its powers if the request were not granted on the petition of the trustees in this friendly suit. Certainly, no Court should take the arbitrary view under the facts here that a Court of equity cannot act to relieve the situation and preserve the trust estate, in view of the overwhelming majority rule as set out in the above mentioned citations, among many others.

“This Court, in making its ruling herein, is cognizant of the case of Atkinson v. Lyle, 191 Ark. 61. The Atkinson case involved the Merrill trust, the same trust now before the Court. However, this Court is of the opinion that the Atkinson case is not controlling in the case presently before the Court for the reason that the facts of the Atkinson case are different from the facts of the present case. The Atkinson case went to the Supreme Court from the Jefferson Chancery Court. In that case, the trustees of the Merrill Trust proposed to mortgage the building involved in this case, and sell some other property not involved in these proceedings. So, for the purpose of this case, the Atkinson case involved a mortgage of the trust property at Fifth and Main Streets in Pine Bluff, whereas the case at bar involves a sale of this property, with a reinvestment of the proceeds in a more desirable location and a more desirable building.

‘ ‘ On the basis of the facts before the Supreme Court in the Atkinson case, the Court had no alternative but hold as it did, because it can be readily seen that there is a vast difference between placing a mortgage on the property and selling the property under circumstances present in this case. To encumber the property with a Mortgage could certainly create a risk for the trust in that if the mortgage was not discharged, it could be foreclosed and thus the failure and destruction of the trust estate. However, on the basis of the facts before the Court, there is no possibility for the trust to fail or be destroyed. The trustees, under the supervision and control of this Court, have made fool-proof plans to see that Mr. Merrill’s wishes are carried out, the only change being in the location of the property. And as to the change in location, this Court would observe that however evident it might be that the Settlor designed and expected that the lot at Fifth and Main Streets should be the seat of his charity, it is still more evident from the scope and tenor of the deed in trust that it was the charity itself, and not the perpetual use of the location at Fifth and Main Streets for the stated purpose, which the donor had mainly in mind. The testimony was more than substantial to indicate that a continuance of Mr. Merrill’s charity at its present location would fail to secure the object manifestly intended by the donor in his trust instrument.

“So, the opinion in the Atkinson case is not binding and conclusive on this Court or any other court in the State of Arkansas because of the different facts involved. See Beck v. State, 14 S. W. 2d 1101, 179 Ark. 102. Also, the doctrine of stare decisis has no application where the subject matter in a subsequent suit is not identical with that in prior cases. Kincade v. C. & L. Electric Co-operative, 299 S. W. 2d 69, 227 Ark. 321.

‘ ‘ The real holding in the Atkinson case as far as this case is concerned, was that the attempt by the trustees to mortgage the trust property was void because in contravention of the settlor’s express wishes. That portion of the Atkinson opinion that applied to sales of the trust property would be dicta in the case at bar because of the different facts involved. And as was stated in the case of Campbell v. Beaver Bayou Drainage District, 219 S. W. 2d 934, 215 Ark. 187, in following precedents, Courts are guided by the real holding which is essential rather than by dicta which is incidental.

“For the reasons stated, the complaint will be dismissed and defendants’ request to sell the trust property involved is granted. ’ ’

We need add but little to the foregoing opinion. The Chancery Court correctly held that the main purpose of Mr. Merrill’s trust indenture was to “. . . attract the young white people and bring them under influences calculated to elevate and improve them physically, mentally, morally, and spiritually”, just as stated in the trust instrument. The other matters were specific details, or suggestions, or restrictions. The trust instrument executed in 1889 provided that the property at Fifth Avenue and Main Street could not be sold. But at that time the said location was outside the business district of Pine Bluff. In the transcript before us there is a picture of Main Street in Pine Bluff in 1890 which shows that Fifth Avenue and Main Street was then a timber covered area. Today that location is the hub of the metropolitan area of the City. To keep that specific property today for a youth center will be of danger to youth who might go there for lectures, physical development, etc.; whereas, youth will be greatly benefited by a new location of the Institute. As aforesaid, the prime purpose of the trust is to “. . . provide some place of instruction and amusement to attract the young white people and bring them under influences calculated to elevate and improve them physically, mentally, morally, and spiritually”. With that as the main purpose of the trust, equity has the power to permit the trustees to deviate from the restriction against the sale of the property at Fifth Avenue and Main Street, when it is shown — as here —• that the deviation is necessary to accomplish the main purpose of the trust. Henshaw v. Flenniken, 183 Tenn. 232, 191 S. W. 2d 541, 168 A. L. R. 1010; Amory v. Attorney General, 179 Mass. 89, 60 N. E. 391; Catholic Bishop of Chicago v. Elliott, 14 Ill. App. 2d 495, 144 N. E. 2d 874; Town of S. Kingstown v. Wakefield, 48 R. I. 27, 134 A. 815, 48 A. L. R. 1122; Foust v. Wm. E. English Foundation, 118 Ind. App. 484, 80 N. E. 2d 303; and Shoemaker v. American Security & Trust Co., 163 Fed. 2d 585.

In Slade v. Gammill, 226 Ark. 244, 289 S. W. 2d 176, we allowed the trustees to make a disposition of a portion of the trust property on the doctrine of cy pres. That doctrine is not invoked in the case at bar because the change of location is not a change of purpose of the trust; but what we said in Slade v. Gammill is applicable here in that these trustees have made a ‘ ‘. . . very fine common sense solution of serious difficulties”; and “. . . equity should approve such a solution. . .”. We affirm the decree of the Chancery Court.

George Rose Smith, J.,

concurring. I agree with the majority’s reasoning and conclusion, but I would express somewhat more emphatically my disagreement with the decision in Atkinson v. Lyle, 191 Ark. 61, 85 S. W. 2d 715. Insofar as that case holds that a court of equity is without power to permit any deviation from the exact language of a charitable trust I think the decision to be erroneous, and I would overrule it outright.

The power of chancery to sanction a deviation is generally recognized in the case of private trusts as well as charitable trusts. Rest., Trusts, §§ 167 and 381. We have approved the doctrine with respect to private trusts, as in Biscoe v. State, 23 Ark. 592, where we said that if the compensation fixed by the declaration of trust was insufficient to attract competent trustees a court of equity could make an order for additional compensation.

The power is even more urgently needed in the field of charitable trusts, where the public interest demands that the trust be protected from destruction owing to some change in circumstances not foreseen by the settlor. We have often applied the cy pres doctrine, which permits the court to apply the property of a charitable trust to some similar objective when the settlor’s original purpose fails. McCarroll v. Grand Lodge, 154 Ark. 376, 243 S. W. 870; State ex rel. Atty. Gen. v. Van Buren School Dist. No. 42, 191 Ark. 1096, 89 S. W. 2d 605. If we are willing to approve a principle that permits the fundamental purpose of the trust to be changed, as the cy pres doctrine does, there is no sound reason for refusing to permit a deviation in mere administrative detail. We actually approved a deviation in the recent case of Donaghey Foundation v. Little Rock University, 231 Ark. 748, 332 S. W. 2d 497, and I think we should take the present opportunity to set all doubts at rest by specifically overruling the contrary doctrine that was announced in Atkinson v. Lyle.

Holt and Robinson, JJ., join in this concurrence.

       The trust instrument provided that the trustees could select their successors, and the standing of the present trustees is unquestioned.

      231 Ark. 748, 332 S. W. 2d 497.

      Quoting the Trial Court’s opinion as regards Atkinson v. Lyle is not an approval of that holding in Atkinson v. Lyle. Permissible deviation in charitable trust cases is now allowed, just as is being done in the case at bar.


author: George Rose Smith, J.

text:
    Alexander v. Mutual Benefit Health & Accident Association.
    5-2097
    336 S. W. 2d 64
    Opinion delivered June 6, 1960.

      Tom Gentry and L. M. Alexander, for appellant.

      Mehaffy, Smith & Williams, B. S. Clark, for appellee.
   George Rose Smith, J.

This is a suit by the appellant to recover total and permanent disability benefits at the rate of $200 a month. It was stipulated that if the jury found that the plaintiff was disabled for the entire period involved (extending from the thirtieth day after his injury in an automobile accident up to the date of trial) then he would be entitled to recover $2,975. The jury returned a general verdict for the plaintiff for only $2,250, and both parties appeal.

The opposing contentions could not be more completely at variance. On direct appeal the insured contends that there is no substantial evidence to justify the jury in reducing his award, so that we should either increase the judgment to the full amount or grant a new trial. On cross appeal the insurance company contends that there is no substantial evidence to support any recovery at all, so that the judgment should be reversed and the cause dismissed.

We first consider Alexander’s direct appeal. He is the president and principal stockholder of Alexander Incorporated, an automobile parts rebuilding business which at the time of trial had eighteen employes. Before his accident on February 11, 1958, Alexander, according to his own testimony, devoted from 12 to 15 hours of physical activity to the business seven days a week. When he was on the road Alexander put in long hours driving in Arkansas and neighboring states, calling upon dealers, garages, and wrecking yards. On these trips he bought used transmissions, weighing as much as 210 pounds, and loaded them into his car. He also solicited orders for the resale of transmissions after they had been rebuilt by his company. On alternate weeks Alexander stayed at home and worked in the shop at Little Rock. There he tore down used transmissions, which required strenuous exertion, stood for extended periods at the lathe, supervised and instructed his employees, attended to administrative work, etc.

In the accident Alexander suffered a broken nose, crushed chest, broken ribs, injured knees, and, most serious, a spinal injury. He was in the hospital for a few days and submitted to traction treatment for several months. After about two weeks Alexander was able to return to work for an hour a day, and by the time of the trial he was working 5 or 6 hours a day for five and a half days a week. He testified, and his doctor corroborated this, that he was unable to do heavy lifting, that he could no longer drive the long hours required for road trips, that he can stand at the lathe for no longer than 15 minutes, and that his activity has been curtailed in other respects that we need not detail. A medical witness for the defendant gave testimony from which the jury might have found that Alexander could perform all his former duties, although with restrictions which amounted in the witness’s opinion to a 5% disability to the body as a whole.

On direct appeal there are two answers to the insured’s contention that there is no basis for any award other than the full amount sued for. First, there is substantial evidence to support the view that Alexander is no longer totally disabled. The jury could, of course, have found that the insured was completely incapacitated soon after his accident, while he was in the hospital or in traction. But the testimony about his condition at the time of trial consists either of his own statements or of the opinions of others who depended at least in part upon what Alexander told them about himself. The jury was not compelled to accept this testimony as undisputed, especially in view of the opinion expressed by the appellee’s medical witness, and hence the verdict may represent the jury’s belief that the plaintiff is no longer totally disabled.

Secondly, where there is substantial evidence to support a finding for either side we are not at liberty to increase the amount of a general verdict to the full amount called for by the plaintiff’s theory of the case. In this situation we have recognized in Fulbright v. Phipps, 176 Ark. 356, 3 S. W. 2d 49, and similar cases, that the partial award may be the result of a compromise in the jury room. It is plain enough that if we undertook to tamper with such a verdict the arguments in favor of increasing it would be equally balanced by those in favor of decreasing it.

The question presented by the cross appeal is more difficult. It cannot be said that Alexander’s earning capacity has been completely destroyed. His efforts at the shop, even though on a part-time basis, contribute something to the earnings of the corporation. On the other hand, the jury may have believed that Alexander’s earning power has been substantially reduced. He testified that he had found it necessary to employ two new men to take care of the road trips, and he had increased his working force at the shop. It is really impossible to say to what extent Alexander’s earnings have been reduced by his injuries, for part of his income is attributable to his almost complete ownership of the business.

In view of the evidence the appellee insists that the case falls within our decisions holding that an insured is not totally and permanently disabled if he is able to earn a livelihood, even though his earning power is reduced. The appellant answers this argument by citing our cases that say the test is whether the insured can perform all the substantial and material duties of his occupation. In candor it must be conceded that all our decisions upon the subject cannot be harmonized.

Without undertaking to discuss every pertinent case in our reports we may illustrate the problem by examining a few of our principal cases supporting each of the divergent views. In Metropolitan Life Ins. Co. v. Guinn, 199 Ark. 994, 136 S. W. 2d 681, the insured had been a coal miner earning four or five dollars a day. As a result of a leg injury he could no longer work in the mines, but he was able to earn about $7.50 a week as a dishwasher and menial helper in a restaurant. We held that he was not totally and permanently disabled, because he was able to do at least some work for compensation. This case cannot be reconciled with Metropolitan Life Ins. Co. v. Hawley, 210 Ark. 855, 198 S. W. 2d 171, where the insured was compelled to give up his work as a newspaper circulation manager, but he was able to earn a reduced income as a part-time salesman. We held that the proof that the insured had been forced to resort to some other occupation, from which he could not earn a livelihood reasonably comparable to that which he was earning when he obtained the insurance, presented a jury question on the issue of total disability.

Several of our cases, like the one at bar, involve persons owning their own businesses. In General Am. Life Ins. Co. v. Chatwell, 201 Ark. 1155, 148 S. W. 2d 333, the insured conducted a paint and paper store. After his injury he continued to operate the business, but he could not carry out some of his former activities, such as lifting paint cans and rolls of paper, and he employed an additional clerk. We denied recovery, holding that Chatwell was not “wholly prevented from engaging in any gainful occupation whatever.” The same result was reached upon essentially similar facts in Mutual Life Ins. Co. of N. Y. v. Phillips, 202 Ark. 30, 149 S. W. 2d 940.

The cases just cited are hardly consistent with the more liberal construction that we placed upon disability policies in decisions before and after those cases. In Aetna Life Ins. Co. v. Spencer, 182 Ark. 496, 32 S. W. 2d 310, the owner of a truck and produce business, although afflicted by arthritis, was able to carry on his occupation by taking his sons into partnership and limiting his own participation to supervisory and administrative duties. We upheld a finding of total and permanent disability. Similarly in Monarch Life Ins. Co. v. Riddle, 193 Ark. 572, 101 S. W. 2d 781, the proprietor of a beer distributorship lost the use of his right arm and so was unable to handle beer barrels or to drive a truck as he had formerly done. He was nevertheless able to continue his business, which expanded and prospered, by employing others to do the work under his supervision. A finding of total incapacity was upheld by a closely divided court. More recently we sustained a verdict for the insured in Franklin Life Ins. Co. v. Burgess, 219 Ark. 834, 245 S. W. 2d 210, despite the fact that the plaintiff was able to engage in limited activity as a clerk in a grocery store.

After reconsidering the whole question we are unwilling to follow cases such as the Guinn, Chatwell, and Phillips decisions, which hold that there can be no recovery even though the insured is unable to perform all the substantial and material duties of his occupation and even though his incapacity results in a substantial and demonstrable loss of earning power. In such a situation we think the proof presents a question of fact for the jury to decide. It is therefore our conclusion that the verdict for the appellant in this case is supported by substantial proof.

The appellee also suggests that the policy in question is unlike those considered in our prior cases, because it refers to a total loss of time and to a partial loss of time rather than to total disability. We have consistently refused to construe such clauses literally, for in that event the insured could recover only if he were continuously and helplessly confined to his bed. We perceive no real distinction between the language of the appellee’s policy and the clauses construed in our earlier decisions. Indeed, in some of our prior cases, such as Monarch Life Ins. Co. v. Riddle, supra, and Aetna Life Ins. Co. v. Orr, 205 Ark. 566, 169 S. W. 2d 651, the contract referred to a loss of time, but the opinions attached no importance to that particular wording.

Affirmed on direct and cross appeal.


text:
    Ark. Airmotive Division of Currey Aerial Sprayers, Inc. v. Arkansas Aviation Sales, Inc.
    5-2163
    335 S. W. 2d 813
    Opinion delivered June 6, 1960.

      Coleman, Gantt S Ramsay, E. Harley Cox, Jr., for appellant.

      Mehaffy, Smith $ Williams by W. A. Eldredge, Jr., for appellee.
   George Rose Smith, J.

This is an action by the appellant for conversion. On August 14,1957, the appellant bought an airplane from the appellee, under a conditional sales contract by which the seller retained title until the purchase price was fully paid. The contract was later transferred by the appellee to a Pine Bluff bank. The appellant’s complaint asserts that on January 8, 1959, the appellee wrongfully and surreptitiously entered the appellant’s premises, removed the airplane from its hangar, and converted the plane to its own use. The complaint sought damages totaling $76,000 for the conversion and also sought a judgment for $574.92 upon an account for labor and materials furnished to the appellee.

The appellee filed an answer stating that the appellant had defaulted in its monthly payments and had in other respects breached its contract. It was asserted that the bank had accordingly elected to declare the entire balance immediately due and had demanded and received payment of that balance from the appellee. The appellee alleged that it had rightfully repossessed the airplane pursuant to the conditional sales contract. To this answer the appellant filed a reply, asserting that the bank was still the owner of the conditional sales contract on the date that the appellee repossessed the plane and that the bank, by accepting a check from the purchaser that same morning, had waived its right to accelerate the maturity of the indebtedness. Both the defendant’s answer and the plaintiff’s reply contained a general denial of all allegations not specifically admitted.

At this point in the case the appellee filed a motion for a summary judgment upon the pleadings. For the purpose of this motion it was stipulated that the conditional sales contract was executed in Arkansas and that on the date of its execution the plaintiff, an Illinois corporation, was transacting business in this state without having qualified to do business herein as a foreign corporation. The trial court sustained the appellee’s motion for judgment, finding that the plaintiff conld not prove its cause of action for conversion without relying upon the conditional sales contract, which the court considered to be unenforceable under Act 313 of 1907. Ark. Stats. 1947, § 64-1202.

The appellant argues two points for reversal. First, it is contended that § 2 of the 1907 statute, which provides that an unlicensed foreign corporation cannot make any contract in the state which can be enforced by it, was impliedly repealed by Act 131 of 1947, compiled as Ark. Stats., §§ 64-1205 et seq.

We are unable to agree with the contention that the earlier law was impliedly repealed by the 1947 act. Section 1 of the older statute required a foreign corporation to qualify by filing a copy of its charter and appointing an agent for service. Ark. Stats., § 64-1201. The next section provided a dual penalty for the doing of business without complying with the act: (a) The unlicensed corporation was subject to a fine of not less than $1,000, to be recovered at the instance of the prosecuting attorney, and (b) the corporation’s contracts were unenforceable.

Act 131 of 1947 did not expressly repeal the 1907 statute. The 1947 act increased the fine to not less than $5,000, made it recoverable at the instance of either the prosecuting attorney or the attorney general, and contained administrative provisions not relevant to the present discussion.

There is no conflict between the 1947 act, which dealt mainly with the pecuniary penalty, and that portion of the 1907 act which rendered contracts unenforceable. In the absence of such a conflict an implied repeal can be found only if it appears that the legislature intended for the later statute to cover the entire field and thus to serve as a substitute for the original law. Forby v. Fulk, 214 Ark. 175, 214 S. W. 2d 920.

We think it clear that Act 131 of 1947 was not meant to be a recodification of § 2 of Act 313 of 1907. Section 1 of the older statute outlined the basic steps by which a foreign corporation might qualify to do business in Arkansas. This section was left untouched by the 1947 act, which by its terms applies to any corporation which fails to file a copy of its charter “as now provided by law.” Furthermore, it had been the state’s policy for forty years to supplement the monetary penalty by the additional provision that the contracts of unlicensed foreign corporations should be unenforceable. We are not persuaded that the lawmakers, merely by increasing the fine from $1,000 to $5,000, intended by that action to declare by implication that the state’s longstanding policy was being abandoned. The precise point was decided in Hicks Body Co. v. Ward Body Works, 8th Cir., 233 F. 2d 481, where the court held that the 1947 act did not impliedly repeal the 1907 law. We think the Court of Appeals correctly interpreted the Arkansas statutes, and we are in agreement with its reasoning and conclusion.

The appellant’s second point is that the trial court erred in concluding from the pleadings and stipulation that in no event could the plaintiff prove its cause of action without asking the court to enforce the conditional sales contract. The court below, in announcing its decision, relied upon this language in Republic Power & Service Co. v. Gus Blass Co., 165 Ark. 163, 263 S. W. 785: “The test to determine whether the plaintiff is entitled to recover in an action like this, or not, is his ability to establish his case without any aid from the illegal transaction. If his right to recover depends on the contract which is prohibited by statute, and that contract must necessarily be proved to make out his case, there can be no recovery.”

In our opinion there are two controlling reasons for concluding that the Republic case does not govern the case at bar. First, the present case arises upon a motion for a summary judgment upon the pleadings. Such a motion, in a situation like the one now before us, has not traditionally been recognized as a part of our practice. See the remarks of Judge Charles W. Light in a panel discussion reported in 12 Ark. L. Rev. 57, 63-66. The summary judgment procedure has been approved by us when the admissions in the pleadings left no justiciable issue for the court to decide. Trinity Universal Ins. Co. v. Robinson, 227 Ark. 482, 299 S. W. 2d 833, commented upon in 12 Ark. L. Rev. 178. It cannot be said that the pleadings in the case at hand leave no justiciable issue for the court. Both the answer and the reply contain denials as well as admissions. The motion for summary judgment may be likened to a demurrer to the plaintiff’s reply, and it is plain enough that that pleading is not subject to demurrer.

Secondly, at this stage of the litigation it cannot be declared with certainty that the appellant will necessarily be compelled to rely upon the conditional sales contract. A foreign corporation, even though unlicensed, is nevertheless permitted to bring suit to protect its property as long as the suit does not unavoidably involve the enforcement of a prohibited contract. Fletcher, Cyclopedia of Corporations (Perm. Ed.), § 8796. Quite obviously a corporation’s failure to qualify to do business should not have the effect of enabling third persons to misappropriate its property with impunity.

Here the appellant alleges a conversion. Although it is sometimes loosely said that the plaintiff in trover must recover upon the strength of his own title, the cases actually recognize that possession alone is sufficient as against a person having no better right to the property. “But the true rule is, and it is believed that on principle the adjudications may be harmonized upon this: That possession, or the right of present possession at the time of a conversion of chattels is sufficient as a predicate for trover in all cases where the defendant cannot show a better right, since possession carries with it a presumption of ownership.” Bowers, The Law of Conversion, § 432; accord, Rest., Torts, § 248. Upon the pleadings alone we do not attempt to decide — and indeed cannot decide — whether the appellant can prove its case without running afoul of the statute that applies to the contracts of an unlicensed foreign corporation. That is a matter that should he allowed to arise and he decided in the normal course of a trial upon the merits.

Reversed.


author: Paul Ward, Associate Justice.

text:
    Simmons National Bank v. Dalton.
    5-2164
    337 S. W. 2d 667
    Opinion delivered June 6, 1960.
    [Rehearing denied September 12, 1960]

      Coleman, Gantt & Ramsay, E. Harley Cox, Jr., for appellant.

      George Hoioard, Jr., for appellees Daltons; Carlton Currie, for appellee Universal C. I. T.
   Paul Ward, Associate Justice.

One of the principal questions presented on this appeal is whether there was a novation which discharged the maker of a note. The other question involved is whether certain transactions created a constructive trust. The trial court held that there was a novation but that there was no constructive trust. Appellant seeks a reversal on both questions.

The factual background out of which these questions arise is substantially as presently set forth.

On December 21, 1956 Ulysses G. Dalton, III, and his wife, Helen, (hereafter sometimes referred to merely as Dalton) purchased a 1957 Model Ford car from N. F. Trotter, executing to Trotter a conditional sales contract and also a note payable in monthly installments of $70.24 — the last payment falling due August 5, 1959. The contract and note were purchased by appellant, The Simmons National Bank of Pine Bluff. On December 19, 1957 Dalton’s car was involved in a collision with another car near Beebe, Arkansas, resulting in considerable damage to Dalton’s car. The record discloses that the insurance carrier on the other car involved paid $750.00 for the damage done to Dalton’s car. A few days after the collision Dalton traded his wrecked 1957 Ford for a new 1958 Ford (sales price of the new Ford being $3,180,000) with Guy Thompson who was at the time a Ford dealer at Beebe. In accordance with the trade agreement between Dalton and Thompson the latter received the $750.00 insurance payment heretofore mentioned, the wrecked 1957 Ford (valued at $2,180.00) and a note (with the conditional sales contract executed by Dalton to Thompson) in the amount of $2,400.00 payable in equal monthly installments. In addition, and as a part of said trade agreement, Thompson agreed with Dalton that he would pay the balance (amounting to approximately $1,400.00) due appellant by Dalton on the note and conditional sales contract heretofore mentioned. Thompson transferred, with recourse, to the Universal C.I.T. Credit Corporation (hereafter referred to as “C.I.T.”) the $2,400.00 note and conditional sales contract and received from C.I.T. a check for the full amount of $2,400.00.

Early in January 1958 Thompson mailed appellant a check for the balance due on the said Dalton note but about a month later appellant returned the check to Thompson (uncashed) because Thompson had asked to have the title to the 1957 Ford attached to the check and appellant did not have the title in its possession. It appears from the record that Dalton had not paid the sales tax on the 1957 Ford and consequently the Revenue Department of this State had not issued to him the said title. While appellant was holding Thompson’s check it notified Dalton about the absence of the title to the 1957 Ford and asked him to obtain same. Dalton made an effort to obtain a title certificate from the Revenue Department but for some reason failed to do so — and that was when appellant returned the $1,400 check to Thompson.

Following’ the above Thompson made three or more payments to appellant on the Dalton note but he did not make sufficient payment to keep the monthly payments current. Appellant in an effort to get Thompson to make regular payments on the note wrote him some nine or ten letters beginning on January 6, 1958 and ending on October 22, 1958. On or about the last mentioned date, when it became fully apparent to appellant that Thompson was insolvent and that he was not going to continue making payments on the note, it so informed Dalton, and it also told Dalton at that time that it was looking to him to pay the balance due on the note. Dalton, however, informed the Bank that he did not consider himself bound on the note for the reason that Thompson had agreed to pay it and thereupon appellant instituted this litigation.

In its Complaint in the Circuit Court appellant sought judgment not only against Dalton and his wife in the sum of $1,109.36, with interest, (the balance due on said note), but also asked that Dalton and the Credit Corporation “be made trustees to the extent of the aforesaid judgment of the 1958 four door Ford sedan” then in the possession of Dalton. Dalton filed a Cross Complaint, making Thompson a party defendant, and asked for judgment against him and C.I.T. C.I.T. entered a general denial and stated that it was a bona fide purchaser of the note and conditional sales contract executed for the purchase of the 1958 Ford. The cause was transferred to the Chancery Court.

After a hearing the Chancellor decree that there was a novation and relieved Dalton of all liability on the note, but refused to hold C.I.T. and Dalton, or either of them, liable to appellant as trustees. The Chancellor also dismissed Dalton’s Cross Complaint against Thompson and C.I.T. On appeal appellant contends (a) that the trial court erred in failing to hold C.I.T. and Dalton as constructive trustees, and (b) that it was error to release Dalton from the indebtedness.

Constructive Trust. In our opinion the Chancellor correctly refused to hold Dalton and C.I.T. liable to appellant as trustees. Apparently appellant concedes, as well it may, that neither of the above named parties was guilty of participating in any fraudulent transaction even though they both knew at the time the 1958 Ford was purchased that Dalton owed a balance on the 1957 Ford to the Bank. This is true because Dalton had a legal right to sell and Thompson had a legal right to buy or trade for the 1957 Ford without the knowledge or consent of appellant. See Dedman v. Earle, 52 Ark. 164, 12 S. W. 330, and Fairbanks, Morse & Company v. Parker, 167 Ark. 654, 269 S. W. 42. However, appellant says, citing authorities, that fraud is not always a necessary basis out of which a constructive trust relationship may arise. Even so, the cited authorities are of no avail to appellant under the facts of this case. Appellant relies on 89 C. J. S., Trust, Section 142, Page 1027, and also Restatement of the Law of Restitution, Section 160, Page 640, for authority that Dalton and C.I.T. hold funds ■which in equity and good conscience belong to it — the appellant — and that C.I.T. will be unjustly enriched if it is not held to be a trustee. We fail to see how this result would follow. Neither Dalton or C.I.T. has in any way impaired appellant’s security or imperiled its position — it still had Dalton on the note and it had a right to repossess the 1957 Ford. See Olson v. Moody, Knight & Lewis, Inc., 156 Ark. 319, 246 S. W. 3, and the cases cited therein. It is not denied that C.I.T. paid $2,-400.00 for the note and conditional sales contract given by Dalton to Guy Thompson and we know of no theory, under the facts of this case, that would constitute it a constructive trustee in favor of appellant. The same thing can be said in behalf of Dalton who legally purchased, for value, the 1958 Ford which he now has possession of. Nor do we agree with appellant that C.I.T. became a trustee in favor of appellant because it had knowledge that the $750.00 (paid by the insurance company for damage to Dalton’s 1957 Ford) was paid to Thompson as part of the purchase price for the new 1958 Ford. Even if it be conceded, as we do not here concede, that notice of the above facts would constitute C.I.T. as a trustee, we fail to find anything in the record to show that C.I.T. had such knowledge. No one testified to that fact and it was not shown on the conditional sales contract which C.I.T. purchased.

Novation. After careful consideration we have concluded that the trial court erred in holding that there was a novation, thereby relieving Dalton (and his wife) from the obligation to pay the note held by appellant. The learned Chancellor held, and it seems to be conceded by everyone, that there was no such novation at the time Dalton purchased the new 1958 Ford. It is undisputed that Thompson did agree to assume the debt to ■ appellant but it is not conceded by anyone that appellant knew of this agreement much less that it consented to release Dalton when the trade was made. Therefore, it must be assumed that if any novation occurred it took place later during the year 1958. The record fails to show, and Dalton does not even contend, that appellant at any time expressly agreed with Dalton that it would release him from the debt and look solely to Thompson for payment.

The learned Chancellor, however, took the view, and correctly so, that it was not necessary for appellant to expressly agree with Dalton that he wonld be relieved of liability and that he would look solely to Thompson, but that such agreement and intent on the part of appellant could be inferred from appellant’s actions. We do not agree, however, that such an inference is tenable under the facts of this case.

Let us take a look, therefore, at the record to see what appellant did and what transpired with reference to its dealings with Thompson and Dalton. Appellee Dalton lays much stress on the fact that appellant made an effort to collect from Thompson and it must be conceded that appellant did just that. Early in January 1958 (only a few days after Dalton traded cars with Thompson) Thompson mailed the $1,400.00 check to appellant with instructions to cash it only if the title to the 1957 Ford was attached. Appellant did not have said title, but it contacted Dalton and advised him of the situation. Appellant also, on January 10, 1958, wrote Thompson about the absence of the title, stating that they were informed that the sales tax had never been paid. In the letter appellant also stated that it had talked with Dalton about the matter and that Dalton was going to Little Rock to see about it. Again on January 23, 1958 appellant wrote Thompson that it had talked with Dalton that day and that Dalton was going to take the necessary papers to Little Rock the next day and that Dalton would let it know the outcome of his visit. On February 14, 1958 appellant wrote Thompson, returning his check, and stated that it was unable to secure the said title and also stated that there was a balance of $1,318.15 due on the Dalton note. The letter also advised Thompson that it was unwilling to continue carrying the account under the conditions without further payment. On March 5, 1958 appellant wrote Thompson another letter to the same effect. On March 28, 1958 appellant again wrote Thompson that “we will expect you. to pay U. Gr. Dalton’s car in full as soon as possible”. On May 2, 1958 appellant wrote Thompson to “please send another remittance on the account of Dalton”. On May 19, on August 5, and October 22, 1958 appellant wrote Thompson urging him to make payment.

The only two witnesses who were in position to testify relative to whether appellant Bank released Dalton from his obligation were W. E. Ayers, Assistant Cashier of appellant Bank, and Dalton himself. The relative portions of their testimony not heretofore mentioned are substantially as set out below.

Ayers was asked if there was any contact whatever with Dalton in regard to the delinquency of his account. He replied:

A. “Yes, on several occasions. I talked with him by ’phone and later he came to our office.”
Q. “"What was the nature of these conversations?”
A. “Briefly, it was to determine if he knew the reason for the delay in the title reaching our office, and if he knew any reason why it was being held up and also informed him that it was his responsibility to see that the account was paid in full.” (Emphasis supplied.)
Q. “Did he try to assist you in collecting this account.”
A. “Yes, it is our policy to assist our customers in any way we can, and naturally we followed that pattern in this case, agreeing to assist him in any way we could, at the same time indicating that so far as our records were concerned, the obligation was his.” (Emphasis supplied.)
Q. “Did you ever indicate to Ulysses Gr. Dalton he was no longer liable on this account?”
A. “No.”

■On Cross Examination:

Q. “Ik reply to your attorney’s question whether or not you had any understanding with defendant Dalton regarding this unpaid balance, you stated it was the policy of the Bank to assist the customers. Did you have any other understandings? What was the discussion had between you and Dalton regarding this account and payment of it?”
A. “Briefly, the discussion boiled down to this: So far as our records were concerned the obligation was U. G. Dalton’s.” (Emphasis supplied.)

Dalton’s testimony:

Q. “Did you receive any oral demands from The Simmons National Bank regarding the balance due?”
A. “I don’t think in the form of a demand. I did talk to them and they referred to the balance, but not in the form of a demand.”
Q. “Did they specifically ask you to make this payment at this time?”
A. “They didn’t specifically ask me to make the payment, but asked if anything could possibly be worked out, and I told them I assumed Mr. Thompson would take care of it.”
Q. “When was the last time they checked with you by ‘phone regarding this matter?”
A. “I think it was the month of May or June, by ’phone.”
Q. “Did you have any arrangements with the Bank to the effect they would collect it for you?”
A. “Not for me. I assumed it was his (Thompson’s) obligation to pay it; I was relieved of it.”
Q. “Were you not advised at that time the balance would have to be paid by someone primarily liable?”
A. “I was told it would have to be paid in order to clear your books, and you said you held me responsible, and I did mention to you that I did not feel I was obligated.”
Q. “Did you ever state to me (the Bank’s attorney) you didn’t feel you were obligated?”
A. “I stated that Mr. Thompson assumed the obligation to pay it off, at which time you mentioned I might consult a lawyer.”

Referring to the time when the automobile trade was made the witness was asked:

Q. “At that time you knew you were indebted to The Simmons National Bank?”
A. “Yes, sir.”
Q. “You knew they were holding retaining title on the vehicle?”
A. “Yes, sir.”
Q. “Did you notify the Bank of the collision?”
A. “I didn’t.”

Under the above factual situation we can see nothing, even in Dalton’s testimony, from which it can be legally inferred that appellant Bank agreed to or intended to release Dalton from his obligation on the note. Neither is there anything in Ayers ’ testimony, or in the numerous letters referred to above, from which it could be presumed that the Bank would in fact release Dalton. It appears conclusively to us, as it was stated by appellant’s employee, that what the Bank did amounted to nothing more than an effort to accommodate Dalton in its efforts to have Thompson pay Dalton’s debt. In this the Bank’s actions were in no way inconsistent with its intention to have Dalton remain liable on the note. In the case of Elkins v. Henry Vogt Machine Company, 125 Ark. 6, 187 S. W. 663, where the facts were somewhat similar to the facts here, the appellee company brought suit on three promissory notes signed by Elkins and others. The notes were given for machinery to be used in the erection of an ice plant owned by Elkins, et al. Elkins alleged that they had sold their interest in the machinery to C. C. Edwards, et al, with the understanding that they (Elkins, et al) were to be relieved from the payment of the note and that for a valuable consideration, consisting of the execution of a mortgage, to secure the payment of the indebtedness, and that the appellee Company released them from all liability. In that case this Court quoted with approval from 29 Cyc. 1130: “It is not essential that the assent to and acceptance of the terms of the novation be shown by express words to that effect, but the same may be implied from the facts and circumstances attending the transaction, and in the conduct of the parties thereafter. Such consent is not to be implied merely from the performance of the contract by the substitute, for that might well consist with the continued liability of the original parly . . .” (Emphasis supplied.)

In a ease of this kind the burden was on Dalton to show that he had been released by appellant Bank. In Brewer & Son v. Winston, Ad., 46 Ark. 163, it was so held. Brewer & Son brought an action against appellee Winston on a promissory note and recovered judgment before a Justice of the Peace. Winston appealed to the Circuit Court where he filed an answer stating that he had sold his equity of redemption in the mortgaged premises to a person by the name of Elliott who had assumed the debt as part of the purchase price, and that Brewer & Son had consented to accept Elliott as their debtor and to release the defendant Winston. The cause was tried in equity and a decree entered in favor of Winston. On appeal the Court stated the facts to be substantially as follows: The mortgaged premises had a grist mill on them valued at $325.00. Elliott was willing to purchase at the price, provided he was not pressed by the mortgage creditor whose debt was already past due; Brewer & Son assented to this arrangement — they were willing to receive payments from Elliott and give credit to Winston therefor but refused to give up Winston’s note and take Elliott’s note in lieu thereof; Winston swore that Brewer & Son consented to accept Elliott as their debtor and to release the original debtor, but Brewer and Elliott contradicted him. This Court in reversing the judgment of the trial court said: “But the judgment was wrong upon the merits. The burden was upon the defendant to prove that he had been discharged by a novation of the contract. ’ ’ This statement relative to the burden of proof has been approved in many other decisions of this Court.

Our decisions and the text-writers appear to be uniform in holding that it is necessary to show an intent on the part of the creditor to release an old debtor and substitute therefor a new debtor. In Home Life Insurance Company v. Arnold, 196 Ark. 1046, 120 S. W. 2d 1012, this Court, in dealing with this same question, said: “. . . the effect of the novation is the intention of the parties.” (Emphasis supplied.) Likewise, at Pages 266 and 267 of Volume 39 Am. Jur., it is stated, among other things, that: “In order to effect a novation there must be a clear and definite intention on the part of all concerned that such is the purpose of the agreement.” (Emphasis supplied.) In Williston on Contracts, Volume 6, Revised Edition, at Page 5254, Section 1870, under the sub-title “Necessity for the assent of all parties to a simple novation” it is stated: “It is undoubtedly a commonplace in the discussion of novations that the assent of all parties is necessary; and certainly . . . no old debtor can be discharged without the creditor’s consent, . . .” (Emphasis supplied.) Numerous cases therein are cited sustaining the above announcement.

In this case we are driven to the conclusion that Dalton did not, by his testimony, or the testimony of anyone else, discharge the burden which the law places upon him, and further that there is insufficient testimony to establish a clear and definite intention, or for that matter any intention at all, on the part of the appellant Bank to discharge Dalton from his obligation on the note. This conclusion is further substantiated by the concession of both parties and by the judgment of the Chancellor that there was not any novation at the time Thompson agreed to pay Dalton’s debt to this Bank, and by the undisputed proof that appellant did not know at the time of the arrangements made between Dalton and Thompson. If there was not any novation at that time then it would be interesting to speculate as to when the novation occurred. It is impossible it seems to us to fix such time under the record in this case. It follows, therefore, that the Chancellor erred in dismissing appellant’s Complaint against Dalton and to that extent the decree must be reversed.

Since the trial court held that Dalton was not liable, it then consistently held that Dalton had no right of action against Thompson and thereupon dismissed Dalton’s Cross Complaint. Since we are holding Dalton liable the cause must be remanded with directions that Dalton’s Cross Complaint against Thompson be reinstated.

The decree of the Chancellor is affirmed in part and reversed in part as heretofore indicated, and the cause is remanded with directions to enter a decree in accordance with this opinion.

Affirmed in part, reversed in part and remanded with directions.

Harris, C. J., not participating.


author: Sam Robinson, Associate Justice.

text:
    Mitchell v. State.
    4984
    337 S. W. 2d 663
    Opinion delivered June 6, 1960.
    [Rehearing denied September 12, 1960]

      Thad D. Williams and Christopher C. Mercer, for appellant.

      Bruce Bennett, Atty. General by Bill J. Davis, Asst. Atty. General, for appellee.
   Sam Robinson, Associate Justice.

On the 11th day of April, 1959, appellant, Lonnie B. Mitchell, was convicted of rape and sentenced to death. On appeal to this Court the judgment was affirmed on September 21, 1959. Mitchell v. State, 230 Ark. 894, 327 S. W. 2d 384. On January 14, 1960, appellant filed in the Union Circuit Court, where he was originally tried, a motion to vacate the judgment. This is an appeal from an order overruling the motion.

It is alleged in the motion that appellant is a. Negro and that it is the custom and practice in Arkansas to sentence Negro men to death for raping white women, but that white men are not sentenced to death for rape; that Negroes were systematically excluded from the jury which tried him; that he is an ignorant youth (he was 23 years of age at the time); that he did not have access to effective assistance of counsel; that a purported confession made by appellant was coerced and not voluntary; that at the time of the trial he was insane and not mentally present at the trial; that he was insane at the time of the commission of the rape; that he is presently insane; and that he was denied an examination by a private psychiatrist prior to his trial. Nothing is alleged in the motion that was not or conld not have been raised on appeal in the first instance except the allegation of present insanity.

In affirming the original judgment, this Court said: “We have carefully examined the entire record. The appellant had a fair trial free from error.” The judgment was affirmed and the mandate issued. In these circumstances the trial court did not have jurisdiction to set aside the judgment. In the case of Fortenberry v. Frazier, et al, 5 Ark. 200, this Court said: “The Supreme Court, except where bills of review, in cases of equity, and writs in the nature of a writ of error coram nobis, in suits at law, may be prosecuted, possesses no power to review, revise, or reform its adjudications and opinions after the expiration of the term in which they are pronounced and recorded, unless they are suspended by an order made at that term; and they irrevocably conclude the rights of the parties thereby adjudicated. Whatever was before the Court, and is disposed of, is considered as finally settled. The inferior court is bound by the judgment or decree as the law of the case, and must carry it into execution according to the mandate. The inferior court cannot vary it, or judicially examine it for any other purpose than execution. It can give no other or further relief as to any matter decided by the Supreme Court even where there is error apparent-, or in any manner intermeddle with it further than to execute the mandate, and settle such matters as have been remanded, not adjudicated by the Supreme Court.” (Emphasis supplied.)

The Court said, in Freeman v. State, 158 Ark. 262, 250 S. W. 522: “An appeal was prosecuted to the Supreme Court from the original judgment of conviction and sentence, which was affirmed. The appeal lifted the cause out of the circuit court; and, as the judgment was affirmed, it was beyond the power of that court to afterwards modify or change it in any respect.”

In the case of Swagger v. State, 227 Ark. 45, 296 S. W. 2d 204, a void judgment was set aside on defendant’s motion, but in that case there had been no appeal from the judgment of conviction. The case had not been before this Court previously. There had been no determination by this Court that the judgment was valid.

The motion has no merit, even if considered as a petition for a writ of error cor am nobis. Ever since the case of State v. Hudspeth, 191 Ark. 963, 88 S. W. 2d 858, it has been the rule in this State that subsequent to the affirmation of a judgment by this Court petitions for writs of error coram nobis cannot be made to the trial court without permission of this Court. No application was made to this Court for permission to file with the trial court a petition for writ of error coram nobis. Moreover, it was pointed out in the Hudspeth case that the writ will not lie where the party complaining knew the facts complained of at the time of or before the trial. All the alleged facts appellant now complains of were known at the time of the trial and at the time of the appeal to this Court except the condition of his mind at this time. That question can be determined, as provided by Ark. Stat. § 43-2622.

Affirmed.