author: J. Fred Jones, Justice.

text:
    A. R. CASSARD v. Annie Haynes CAMPBELL et al
    5-4528
    425 S. W. 2d 523
    Opinion delivered March 25, 1968

      McKay, Anderson So Crumpler, for appellant.

      Chambers So Chambers, for appellees.
   J. Fred Jones, Justice.

This appeal is from a decree of the Columbia County Chancery Court dismissing four complaints filed by the appellant, A. E. Cassard, against the appellees for cancellation of prior oil leases, .or for refund of amounts paid by appellant to appellees for oil leases which were encumbered by the prior leases. The cases were consolidated for trial and are consolidated on appeal.

The appellees, Annie Haynes Campbell, Ettie Haynes Halterman and Eachel Haynes McDonald, owned undivided one-third interests in twenty acres of land in Columbia County. The appellees Cary Haynes and his wife, Ozela, owned a forty acre tract and Cary Haynes was guardian of the estate of his father, J. W. Haynes, who also owned an additional twenty acre tract in the same area. Appellee, Naomi Haynes Wynne, also owned a twenty-acre tract in the same area.

On June 9, 1961, all the appellees executed oil and gas leases to J. Howard-Hooper for a primary term of five years. The record is not perfectly clear, hut apparently on Juné 12, 1961, Hooper assigned these leases to Continental Oil Company. On July 6, 1962, Continental assigned to Hunt Oil Company that part of the leases covering only the Pettit lime formation which is a shallow formation. The north Shongaloo Pettit Lime Reservoir was unitized under order of the Arkansas Oil and Gas Commission in October 1961, and appellees’ land was included in this unit.

This being the situation, in June 1964, appellant took five year standard leases from the appellees and paid them $50.00 per lease acre for the leases. Upon concluding that the unitization order (referred to by some of the parties as “water drive”) constituted a legal unitization, and apparently recognizing the perpetuation of the prior Hooper leases thereunder, appellant attempted to obtain releases from the assignees of the prior leases and being unable to do so, he filed suit in chancery praying an order requiring appellees to either deliver to appellant a release of the prior oil and gas leases, or refund to appellant the amounts he paid for the leases.

The chancellor dismissed the complaints for want of equity and on appeal to this court appellant relies on the following point for reversal, stated in question form, as follows:

“Is a warranty clause in an oil and gas lease defeated by actual or constructive knowledge of a prior, valid .oil and gas lease?”

The leases to the appellant contained warranty clauses as follows:

“Lessor here warrants and agrees to defend the title to the land herein described, and agrees that the lessee shall have, the right at any time to redeem for lessor, by payment, and mortgages, [sic] taxes or other liens on the above described lands, in the event of default of payment by lessor, and be subrogated to the rights of the holder thereof.”

Appellant testified that he did not know of the uniti-zation, and in this connection testified as follows:

‘ ‘ Q. Did you know that there was unitization down there to the Pettit lime?
A. No, of course not. I had heard that, some of the people involved in this had mentioned the fact that there possibly could be.
Q. You say you didn’t know about it and then you say that they told you about it?
A. They told me there was a possibility. However, I asked them if any consideration had been paid or if they were getting royalties or any rentals of any type, at least within the last 12 month period and they all told me no, so I presumed that certainly any valid water flood or any type unitization would have expired.
Q. In other words, you were aware that there was a unit down there at one time?
A. Yes, I didn’t know exactly what it covered.
# * *
Q. Do you recall discussing with Mr. Cary Haynes and Mrs. Wynne the Pettit lime being connected with the water drive?
A. I don’t particularly recall the discussion, I am not denying I had a discussion, I just don’t recall it.
Q. Isn’t it a fact that they were very hesitant to sign a lease and told you they didn’t want to?
A. Yes, I do recall that.
Q. And didn’t yon insist that they sign the lease?
A. Possibly fifty dollars an acre might have done t'he ihsisting, I didn’t.
Q. You talked with them considerably about it after they were hesitant to sign?
A. Yes, they were hesitant.
Q. And they were hesitant due to the fact that a lease was signed a few years before that they were .in doubt about?
A. That was the prime reason.”

Appellant’s attorney, who examined the abstracts of title and prepared the leases, testified from his memory, as follows:

“Mr. Cassard mentioned to me that part of the leases down there were in this unitization but he said that the unit wasn’t any good, that they hadn’t been paid any money, they hadn’t ever received any money, and that he was having it omitted from the abstracts, but the abstractor still placed a little notice in there that by request the unitization is there of record but at the request of the party for which they were preparing it, that they had omitted same and would furnish it upon request. * * * According to my recollection, he was sure that the unit was no good.”

The testimony of all the appellees was substantially the same as that of Mr. ¡Cary Haynes who testified on direct examination by his attorney as follows:

“Q. You know the Plaintiff, Mr. Cassard?
A. I do.
Q. Will you. relate the conversations and business dealings you had with him pertaining to leases down there ?
A. Well, Mr. Cassard came to me and wanted to lease the land. I told him I understood we couldn’t lease the land, we had been forced under a water drive, you know, Mr. McKay and them, the attorneys and everybody, and we fought the water drive but the conservation people ruled for them. I told him that Continental had my lease down there, if you want the history, but they had failed to pay the rentals on it and Cassard told me, he said, ‘As fax as the water drive, I am not interested in it.’ He ■said, ‘I am interested in deep stuff and as far as the water drive, it’s not worth the paper it’s wrote on, you have got to have a unit to have a water drive, you have got to have so many wells to form a unit and you aint got that kind of wells here and it’s not worth the paper it’s wrote on and if you will sign a lease to me I have got fifty dollars an acre for you,’ and I was fool enough to sign it. He brought me one form of lease, I believe oil and gas and mineral deed it called for, and I came to you and told you about it and you told me to change leases and I got an 881/8 form and went to his office and I told him the form changed and I wanted it put in there, ‘Understanding there being a lease under a water drive, ’ and his secretary called Mr. Cassard and held it up and he said, ‘That is all right, go ahead and fix it up,’ and they did. . . .
# * #
Q. And then also, you did request him you said, to put in there ‘Subject to the water drive’?
A. I certainly did.”

The unitization order was of record in Union County and there is no question that all the parties, including the appellant, had actual knowledge as well as constructive notice of its existence. We do not have the prior leases before us but apparently appellees thought they had expired under some rental provision of the leases. Appellant was quite sure they had expired if no delay rentals or royalty had been paid to the appellees for a period of one year. As a matter of fact, appellant was quite sure that the recorded unitization order was invalid.

As we view the record in this case, the. existence, or the validity, of the “water drive” or unitization, is only important insofar as it affects the validity by perpetuation of the prior leases. Neither the Hooper leases'nor their assignments to Continental and subsequent partial assignments to Hunt are in the record before us, so we are unable to determine what delay rentals, if any, were required to maintain the Hooper leases in force, and what attempt was made, if any, to vertically segregate that portion of the Hooper leases which was reassigned to Hunt within the unitized Pettit Lime Reservoir, from that portion of the Hooper leases retained by Continental outside the unitized Pettit Lime Reservoir. Consequently, we are unable to determine whether that portion of the Hooper leases retained by Continental remained subject to the payment of delay rentals after the unitization and assignment to Hunt, if in fact, the Hooper leases did contain delayed rental clauses at all.

It was stipulated, and the record indicates, that ap-pellees were never paid any delayed rentals under the Hooper leases, but there is nothing in the record to show what delayed rentals, if any, should have been paid under these leases. The record indicates that the Pettit Lime Reservoir was being depleted and was unitized as a conservation measure under a water drive recovery method, and that production was being maintained from the unit outside the actual acreage belonging to appel-lees. In any event, throughout the trial of this case, all parties seemed to recognize that the appellees’ land was within a pooled unit and that the unitization was legal and of full force and effect at the time of the trial. Vertical segregation is not alleged or argued, so it would appear tliat all parties recognized the perpetuation of the original leases by the unitized production.

This being the situation, appellant got nothing for his money except some experience and the right to contest the legality of the prior leases, if he desired to do so. Appellant was not obligated to defend his title against the prior leases, this, was an obligation appellees agreed to assume under the covenants of warranty in their leases to the appellant. Appellees followed their attorney’s advice in demanding a change in the lease forms in leasing to appellant, but instead of leasing subject to the prior leases as their attorney advised them to do, they leased to appellant without restriction and they warranted title which they apparently now recognize that they did not own.

Appellees argue that appellant simply took a chance on becoming wealthy from the production he hoped to obtain from deep oil formation, and that he perpetrated a fraud upon appellees in procuring the leases. As we read the record, appellees were receiving no royalties under the prior leases and they would have become at least one-eighth as wealthy as appellant would have become under the terms of their leases to him. We fail to follow appellees’ reasoning as to fraud practiced by appellant, when he was the one who had changed his position by paying to appellees $3,750.00 for something they had already sold and did not own.

There is no question in this case that all of the ap-pellees knew that they were selling to appellant outright leases when they signed the forms, and there is no question that they knew that they had already leased the same minerals to Hooper when they leased to the appellant and accepted his money under covenants that they would warrant and defend their title. The evidence is quite clear in this case that appellees thought that perhaps the original leases to Hooper had terminated, or at least their validity was questionable, because of the failure to pay delay rentals. There is no question that appellant knew of. the prior leases and that he was even more sure than appellees that the prior leases had' been abandoned, had terminated, or at least were invalid. Nevertheless, appellees warranted their title and agreed to defend it and it now appears that the appellant and appellees have concluded that the prior leases were valid when the leases to appellant were executed, or at least it is evident that they have concluded that litigation will be necessary to determine the validity of the prior leases, and the obligation rests on appellees to carry out that determination under the warranty clause of the leases they executed.

Appellant’s knowledge of the prior leases does not relieve appellees from the obligations of their covenants of warranty and their obligation to defend the title to the oil and gas they sold to appellant under the terms of their leases to him. Oklahoma City v. Harper et al, 180 Pac. 2d 162; Texas Co. v. Snow, 172 Ark. 1128, 291 S. W. 826; Gude v. Wright, 232 Ark. 310, 335 S. W. 2d 727.

The evidence is convincing that appellant was fully advised of the unitization of appellees’ lands under the so called “water drive” in.the Pettit lime formation, but being interested in the deep production areas outside and beneath the unitized area or zone, .he intended to lease the deep formation regardless of the status of the Pettit lime formation which he considered of little consequence as well as invalidly unitized. Aside'from the covenants of warranty in this case, if the entire lease to Hooper is being perpetuated by unitized production, equity and good conscience demands that appellees either refund to appellant the money he paid to them, or that they deliver to him the title they warranted that they owned. Under the covenants of warranty, the law requires that this be done.

If the original leases to Hooper have been segregated as to deep and shallow oil pools or sand, and the leases as to the deep oil have not been perpetuated by production from the unitized Pettit pool, and if the segregated portion of the Hooper lease has expired for nonpayment rentals, or for any other cause, it may be that appellees are in a position to deliver to appellant all that he was interested in (the deep oil) and all that he bargained for (beneath the unitized Pettit lime) when he procured the leases. Consequently, in such event, the appellees should have a reasonable time in which to clear their title to the minerals they leased to appellant before being required to refund the purchase price. If appel-lees are unable to deliver good title to at least the area beneath the Pettit lime formation within a reasonable time fixed by the court, appellees should be required to refund the amounts appellant paid them for the leases.

We aré of the opinion that under the circumstances of this case, the appellant is not entitled to interest on any amount refunded and that all parties should bear their respective costs.

This cause is reversed and remanded for further proceedings not inconsistent with this opinion.


source: Caselaw Access Project

author: Carleton Harris, Chief Justice.

license: Public Domain

text:
    Alvis HUDGENS v. SOUTHERN EXTRUSIONS, INC. et al
    5-4521
    425 S. W. 2d 718
    Opinion delivered April 1, 1968

      Bernard Whetstone, for appellant.

      Brown, Compton & Prewett and Riddick Riff el, for appellee.
   Carleton Harris, Chief Justice.

Appellant, Alvis Hudgens, suffered a hernia in May, 1963, arising out of his employment with appellee company. He was thereupon provided with medical treatment, including an operation to correct the hernia, and was paid compensation until he returned to work on September 2, 1963. On January 4, 1967, Hudgens filed another claim with the commission, alleging there had been a recurrence of the hernia. This claim was heard before a referee, who held that the hernia recurred in June of 1964, and that the claim was barred by the statute of limitations. The commission held that the recurrence was in October, 1964, and the claim was-accordingly barred, since same was not filed for more than two years from the time of the recurrence. On appeal to the Columbia County 'Circuit Court, the commission’s ruling was affirmed, and from the judgment so entered, appellant brings this appeal.

Hudgens testified that he began having symptoms of hernia trouble several months after his operation in 1963, He said that he had some trouble in February of 1964, and went to see Dr. Bryon Grimmett, a medical doctor practicing at Waldo. He testified that he again went to see Dr. Grimmett on June 11, 1964, 'and was told that he had a recurring hernia. He stated that in June, 1965, he had a severe pain that made him sick, forcing him to leave the job, and he was taken to Dr. Grimmett by the press foreman. Claimant said that he dreaded having an operation, and this was not performed until August of 1966. The operation was on the same side as the operation that was performed in 1963. Hudgens testified that the June, 1965, occurrence was the only time that he had to leave work because of pain involved.

Dr. Grimmett testified that the first hernia operation was performed by Dr. Weber, and that Hudgens returned to his work in September, 1963; claimant went to Grimmett in February of 1964, complaining of a bulge. He returned in June of the same year, and at that time the doctor found a “small hernia to one-tliird down the inguinal canal.” Grimmett testified that Hudgens told him at this time that “he was handling a billet and it started to slip and he grabbed it or something.* * *

“Well, Alvis told me that his job consisted of lifting-billets that weighed fifty pounds, the best I remember, I didn’t put all this down, and I felt like the lifting, when he said the billets were hot at the time they were lifted by tongs or something, I felt like it was directly related to his work.”

Grimmett first stated that claimant suffered a recurrence of the hernia in June, 1964, though, at another point in his evidence, he said that it was not until October, 1964, that he could definitely say that Hudgens had a “true hernia.” The doctor further testified that in June, 1965, appellee had to leave Ms work because he was having symptoms of strangulation or incarcerated hernia. Dr. Grimmett gave him medicine for pain and suggested that he return to work, using, as much as possible, his leg muscles, instead of his back muscles. In January, 1966, Hudgens still complained of having a lot of pain in the inguinal area from the hernia, and in August, 1966, it was decided that another operation should be performed.

Ark. Stat. Ann. § 81-1318 (Repl. 1960) provides:

“A claim for compensation for disability on account of an injury (other than an occupational disease and occupational infection) shall be barred unless filed with the Commission within two [2] years from the date of the accident.”

•Section 81-1313 (e) sets out that:

“* * *Recurrence of the hernia following radical operation thereof shall be considered a separate hernia and the provisions and limitations regarding the original hernia shall apply.”

Appellee argues that Hudgens did not suffer an industrially caused hernia, as defined in the act, until June 11, 1965; that this was the date of the recurrence of the hernia, caused by a severe strain in the hernia region, while working, and with pain so intense that he had to cease work immediately; further, that notice of the occurrence was given to the employer within forty-eight hours thereafter, and his distress was such as to require the attendance of a licensed physician within forty-eight hours after the occurrence. Here, appellant is referring to the requirements set forth in “Claims for Hernia” in Section 81-1313, and he mentions the case of Crossett Company v. Childers, 234 Ark. 320, 351 S. W. 2d 841, as supporting his position. We disagree. That case does not hold that an industrially caused hernia only occurs when these five requirements are brought into play. The language merely explains why special requirements are incorporated into the compensation act pertaining to hernia claims. The case has no bearing upon the statutory period allowed for filing a claim. Certainly, one who has sustained a hernia which arises out of his employment does not have to wait until some complication arises before filing his claim. Crossett Company v. Childers, supra, makes that very clear. The court said:

“* * *Tbere can no doubt that it was Childers’ work and working conditions that caused his congenital weakness to be converted into an actual case of hernia. Under the appellant’s theory Childers’ injury could never have been compensable, for the incident of February 9 did not cause him to cease work, as the statute demands, and by February 12 it was too late for him to require the attendance of a physician within the limit of forty-eight hours.”

It is thus evident that the taking of these steps is not essential to the filing of a claim, and the case also makes clear that one can sustain a hernia on the job without these experiences. The testimony is' positive that Hudgens had a recurrence of his hernia, following operation, no later than October, 1964, and since no claim was filed until January, 1967, same was barred by the statute of limitations.

Affirmed.

       According to the doctor, “A true hernia is the protrusion through the wall of the abdomen outside the abdominal cavity.”


author: George Rose Smith, Justice. Carleton Harris, Chief Justice,

text:
    Guy H. JONES v. Francis T. DONOVAN
    5-4474
    426 S. W. 2d 390
    Opinion delivered April 1, 1968
    [Rehearing denied May 6, 1968.]

      Jones & Stratton, for appellant.

      Francis T. Donovan, pro se.
   George Rose Smith, Justice.

This is a dispute between two lawyers, practicing in Conway, about the division of a $14,605.33 attorneys’ fee which they earned in T.I.M.E. Freight v. McNew, 241 Ark. 1048, 411 S. W. 2d 500 (1967). When the present controversy arose the bank that had been disbursing the proceeds of the Mc-New judgment filed this bill of interpleader and deposited the disputed funds in court. After a hearing the chancellor directed that the two lawyers share the fee equally. For reversal Jones contends that Donovan is entitled to only $5,000 — the sum that the chancellor would have awarded Donovan if his fee had been determined on quantum meruit.

The testimony is not before ns. Jones, in appealing, failed to bring’ up the testimony and filed instead a “stipulation,” signed by his attorney only, in which Jones agreed that “the facts recited in the- trial court’s memorandum opinion are true and correct.” Donovan did not sign that stipulation, but he has not insisted that the testimony be produced. That procedure enables us to state the facts in a few sentences.

Throughout a decade, ending about April, 1964, these two lawyers had worked harmoniously together in about a hundred tort cases. When either was employed in such a case he would engage the other’s assistance as co-counsel. It does not appear that the division of the fees in those cases was ever fixed by a written agreement between the two men. It was, however, tacitly understood all along that every fee would be shared equally, regardless of whose office originated the case and regardless of the particular services contributed by each lawyer to the litigation.

For some reason not disclosed by the record, but apparently having to do with political differences, the two men discontinued their association in 1964. A year or so later Jones was employed in the McNew case. Before drafting the complaint he happened to meet Donovan in a hallway and asked him to take part in the case. Donovan accepted the offer. Nothing was said about how the fee would be divided if the litigation ended in success, as it did.

Counsel for Jones, in seeking to limit Donovan to a fee fixed by quantum meruit, presents a two-step argument : First, the chancellor found that there was no “implied contract” for the division of the McNew fee. Secondly, in the absence of a controlling contract, this court (counsel insists) follows the minority rule by which the fee of the lawyer brought into the case is determined by quantum meruit rather than by the majority rule of equal division. Counsel, in insisting that we have adopted the minority rule, cites Dudley v. Adams, 227 Ark. 376, 298 S. W. 2d 701 (1957), and Terral v. Poe, 190 Ark. 346, 79 S. W. 2d 69 (1935).

The chancellor, in dividing the fee equally, took the position that the Dudley and Terral cases did not definitely commit us to either rule. There is much to be said for that view. In the Dudley case an express contract was found to exist; so the present question did not arise. In the Terral case the retained co-counsel was asserting a contract for only a fourth of the fee; so there was never any contention by either side that the fee should be divided equally.

We need not, however, decide the majority-minority rule question, because we find in the case at bar that there was a tacit agreement to share the fee equally. Although the chancellor, at the conclusion of the hearing, apparently made an oral finding that there was' no implied contract between the two lawyers, in a supplemental written opinion he pretty well receded from that view and gave effect, we think properly, to the ten-year course of dealing between Jones and Donovan. In directing that the fee be shared equally the chancellor went on'to say in his written opinion:

“This is supported by the general practice that existed between these two lawyers for ten years. It was logical for. Donovan to conclude that this custom would continue. Senator Jones had a duty, I feel in equity, to advise Donovan to the contrary, if he did not so intend. Actually, I believe he so unconsciously intended till political differences reared its ugly head. I realize I held there was no implied contract.”

There can be no doubt that the parties ’ prior course of dealing is to be considered in determining whether a tacit but still actual contract comes into existence. Cor-bin, Contracts, § 97 (1963); Southern Pub. Ass’n v. Clements Paper Co., 139 Tenn. 429, 201 S. W. 745 (1917). Justice Holmes put his finger on the point in Hobbs v. Massasoit Whip Co., 158 Mass. 194, 33 N. E. 495 (1893). There the plaintiff, a trapper, had sent eel skins to the defendant, a manufacturing company, on four or five occasions. Although there was no contract between the two the defendant had accepted and paid for the skins. The litigation arose when the defendant received another batch of skins and kept them for some time before they were destroyed. In holding that the manufacturer was bound by contract to pay for the skins the court summarized the law in a sentence: “The proposition stands on the general principle that conduct which imports acceptance or assent is acceptance or assent, in the view of the law, whatever may have been the actual state of mind of the party.” (Our italics.)

In resting our conclusion upon the existence of a contract we are not overlooking the parties’ agreement to submit the case upon the chancellor’s opinion, which included a statement that he had found no implied contract. That statement, however, was not so much a finding of fact as a conclusion of law stemming from facts already found. Needless to say, the parties’ stipulation does not bind us to accept that conclusion of law, any more than it binds us to accept the chancellor’s construction of the Dudley and Terral opinions. This must be true, for otherwise our appellate function in the case would be limited to that of placing an approving rubber stamp upon the chancellor’s decree.

Affirmed.

HaeRis, C. J., dissents.

Carleton Harris, Chief Justice,

dissenting. As I interpret the record, the two attorneys stipulated that the facts recited by the trial court in its findings are correct. It is true that this stipulation was only signed by appellant, but appellee, in his brief, makes clear (in my view) that he is, likewise, in agreement.

Among other things, the court found that there was no agreement, express or implied, between the two attorneys as to a division of the fee. On Page 25 of ap-pellee’s brief, though referring to another particular finding by the court, appellee states, “And, Jones and Stratton, have stipulated that these findings are true and correct.” Accordingly, I am of the opinion that the parties have agreed that the trial court’s fact findings were true and correct, and we therefore have no right to decide the litigation on the basis of an implied contract.

I respectfully dissent.


author: Paul Ward, Justice. Lyle Brown, Justice,

text:
    HOUSING AUTHORITY OF THE CITY OF LITTLE ROCK, ARKANSAS, et al v. J. H. PETERS and Elizabeth Peters
    5-4418
    425 S. W. 2d 720
    Opinion delivered April 1, 1968

      Spitzberg, Bonner, Mitchell & Hays and Smith, Williams, Friday & Bowen', by Michael O. Thompson, for appellants.

      U. A. Gentry, S. Hubert Mayes Jr. and Charles Mott Jr., for appellees.
   Paul Ward, Justice.

This is an appeal from a chancery decree which held two grantors mentally incapable of executing a deed. Other issues are also raised. The background facts set out below are not in dispute.

Facts. On October 27, 1961 J. H. Peters and his sister executed a deed to J. S. Kirkpatrick and his wife conveying to them a house and lot at 1408 Bishop Street in Little Rock. The purchase price was $4,000, of which $2,000 was paid in cash and the balance in monthly installments secured by a vendor’s lien. The Kirkpatricks substantially improved the property and then went into possession.

On September 22, 1964 the Kirkpatricks conveyed, by deed, the property to Housing Authority of Little Rock for $10,000, less the amount due the Peterses. When the Authority offered to pay the Peterses they refused to accept the money and satisfy the lien.

When the Authority filed suit to remove the lien on the property held by the Peterses they alleged that at the time they executed the deed to Mr. and Mrs. Kirkpatrick they were of unsound mind and incapable of doing so. Thereupon the court appointed Murt J. Donahue guardian ad litem for Elizabeth Peters and Mrs. E. J. Epps as guardian ad litem for J. H. Peters.

The issues of mental incapacity were presented to the Chancellor who held both Elizabeth and J. H. Peters were incompetent to execute the deed to Mr. and Mrs. Kirkpatrick, and canceled the same. Numerous other issues were also raised at the trial and decided by the court, but these issues need not be discussed since we have concluded the trial court erred in canceling the deed in question. The decisive issue therefore is wlietlier the court’s finding’ of incompetency is supported "by the weight of the evidence.

The rule for testing the mentality required of a person before he can execute a valid deed, in the absence of fraud, duress or undue influence, has been well established by many decisions of this Court. In Pledger v. Birkhead, 156 Ark. 443 (p. 455) 246 S. W. 510, there appears the following statement:

“If the maker of a deed, will, or other instrument has sufficient mental capacity to retain in his memory, without prompting, the extent and condition of his property, and to comprehend how he is disposing of it, and to whom, and upon what consideration, then he possesses sufficient mental capacity to execute such instrument.”

The exact statement copied above was approved in Petree v. Petree, 211 Ark. 654, 201 S. W. 2d 1009. In Donaldson v. Johnson, 235 Ark. 348, 359 S. W. 2d 310, a Mrs. Donaldson, 81 years old and suffering from “diabetes, arteriosclerosis, leukemia, secondary uremia and other diseases of old age”, executed a deed to her daughter for “$1.00 and other valuable consideration”, and then died nine days later. A son sued to cancel the deed on the grounds that the daughter “exercised undue influence on Mrs. Donaldson to secure the deed and also that Mrs. Donaldson was incompetent to execute the deed”. This Court in rejecting the above grounds, stated:

“The proof before the chancellor fails to show undue influence or lack of mental capacity at the time the deed was executed.” (Emphasis added.)

In the case here under consideration we think the weight of evidence does support a finding that Elizabeth and J. H. Peters did have sufficient capacity to retain in their memory, without prompting, the extent and condition of their property, to whom it was conveyed, and for what consideration at the time of the conveyance. Since practically all the testimony pertained to the mental incapacity of Elizabeth, we will examine only that part of the testimony.

Elizabeth and her brother, J. H., lived on the property for many years; they dealt with a realtor in selling to the Kirkpatricks; they refused two previous offers before accepting $4,000 on October 27, 1961. Then they purchased a home in the country where they desired to live. After the Kirkpatricks had made substantial improvements they sold to the Housing Authority for $10,000. The extent of the improvements is not revealed. It was established that Elizabeth’s actions were peculiar or unusual in that neighbors heard her make loud noises and often saw her scantily dressed— probably the result of drinking to excess. The essence of the testimony offered to show Elizabeth’s incapacity to execute the deed is set out below.

A Mrs. Mayes, who knew her in 1960, said she was some times incoherent, didn’t go to church, but was normal at times, and she knew nothing about her condition when the deed was made. Mrs. Nally knew her for twenty-seven years, but not since 1959, and knew nothing about her capacity when the deed was made. Mrs. Myers knew her but hadn’t seen her since 1955. Her guardian ad litem knew nothing about her from the year 1951 until after the sale was made. Dr. Elizabeth Fletcher, who saw her briefly in 1953, wrote a letter in 1958 having her committed to the State Hospital for a short time. The doctor was not positive that she actually saw her at that time. Dr. McMillan interviewed her at the time the deed was made when she applied to the welfare department for a job, and didn’t think she was suited for gainful employment. He didn’t have any record pertaining to mental incapacity, and he was not a psychiatrist.

On the other hand, five or six witnesses testified Elizabeth was at times normal and mentally competent, and that she fully understood all about the transaction with the Kirkpatricks. Moreover, at the time of the negotiation when the question of her mental capacity was raised, interested parties arranged for a hearing in Probate Court before Paul X. Williams (then a chancery judge on exchange) who pronounced her mentally competent.

We therefore hold that, under legal rules previously mentioned, the weight of the testimony does not support the finding Elizabeth Peters and J. H. Peters were not, at the time the deed was executed, mentally competent. In view of this conclusion it is not necessary to decide the other issues raised on appeal.

The decree of the trial court is reversed, hut it will have jurisdiction to take further necessary action consistent with this opinion.

BrowN, J., concurs.

Byrd, J., disqualified.

Lyle Brown, Justice,

concurring. I would decide this suit on the point of law raised by the Housing Authority. Its contention is that, as a bona fide purchaser of the property from the grantees of incompetents who have not been so adjudicated, its title should be protected. That position is the better rule of property law and is the rule in most jurisdictions. Goldberg v. McCord, 251 N. Y. 28, 166 N. E. 793 (1929); Brown v. Khoury, 346 Mich. 97, 77 N. W. 2d 336 (1956); and Christian v. Waialua Agriculture Co., 33 Haw. 34 (1934). The cited cases are based on case law, not statutes. There are numerous holdings to the same effect in Kentucky but they are backed by statute.

Since our rule on this point appears unsettled, and since we have no holdings to the contrary, that rule should be adopted. To hold otherwise, or not to rule on the point at all, will result in uncertainty of titles. Moreover, a remote grantee could be forced to defend his title against the alleged incapacity of anyone of a long line of grantors.


author: Paul Ward, Justice.

text:
    Mary Jane RIEGLER v. N. W. RIEGLER Jr.
    5-4536
    426 S. W. 2d 789
    Opinion delivered April 1, 1968
    [Rehearing denied May 13, 1968.]

      H. B. Stubblefield, for appellant.

      Hoivell, Price & Worsham, for appellee.
   Paul Ward, Justice.

In 1965 Mrs. Riegler (appellant) and her husband (appellee) signed a note payable to the Worthen Bank & Trnst Company, and on May 11, 1966 they were divorced. In December of that year the bank filed suit on the note and secured judgment for $4,887.30 against both parties. Neither party contested that judgment, but in the trial below appellant contended, and here contends, that appellee (as between themselves) is obligated to pay all of the judgment.

Appellant (by proper pleadings) contended that she was not obligated to pay any part of the judgment because: (a) she was only an “accommodation” signer on the note and received no benefits from the proceeds thereof, and; (b) her liability on the note was negated in a previous chancery proceeding. Appellee contended that Mrs. Riegler was a “co.-signer” of the note, that she received part of the proceeds, and that the matter was not res judicata.

The above conflicting contentions were presented to the trial court (sitting as a jury by agreement), and the trial court found and adjudged:

One, the prior chancery proceeding “was not res judicata as to any issue here involved”.
Two, appellant is not an “accommodation” signer of the note, and both parties are jointly liable to pay the judgment rendered against them.

For a reversal of the above findings and judgments of the trial court appellant relies on two points: One, her plea of res judicata “is supported by the undisputed evidence”, and; Two, she was an accommodation maker and is not liable to appellee for any part of said note.

One. The record reveals: The parties were married in 1943; they owned a home by the entirety; they executed a note to the bank in 1965; this note has been renewed twenty-one times — the last renewal being on May 5, 1966 which is the note in question here; on May 8, 1965 the chancery court, in a suit between the parties, ordered (among other things) that a “joint’account” in the bank in the amount of $4,000 he applied to the bank’s note. It this proceeding in chancery nothing was said or decided about the joint liability of the parties on the note, and no appeal was perfected by either party. The parties were divorced on May 11, 1966, and again no issue was raised as to joint liability on the note. The home (held by the entirety) was ordered sold and the proceeds were divided equally between the parties.

We fail to find in the record any evidence showing where the chancery court at any time considered or had any opportunity to decide whether appellant was a “cosigner” or an “accommodation signer” of the note sued on, or that she had discharged her liability on the note if she was in fact a co-signer.

Appellant cites Robertson v. Evans, 180 Ark. 420, 21 S. W. 2d 610, as holding:

“The test in determining a plea of res judicata is not alone whether the matters presented in a subsequent suit were litigated in a former suit between the same parties, but whether such matters were necessarily within the issues and might have been litigated in the former suit.”

Conceding the announced rule to be correct, appellant fails to point out, and we fail to find, where the issues here “were necessarily within the issues” in the prior chancery proceedings. Therefore we hold that the trial court (sitting as a jury) was justified in finding and holding as it did on the question of res judicata.

Two. Here, appellant contends the trial court erred in holding she was not an “accommodation” signer of the note, but again we do not agree with that contention.

The trial court based its decision on the ground that appellant did receive benefits from the proceeds of the note and, therefore, she was a co-signer and not an accommodation signer. We think that is the correct rule, and we also find in the record substantial evidence to support that finding of fact.

On the “fact” issue appellant testified, in essence: I assume we borrowed money to build our house; we •borrowed some money from an aunt for that purpose; I did not put any money in the house but did receive a half interest in it; I do not remember what the note to the bank was for; I cannot swear I did not receive any benefits from the note to the bank.

The burden was on appellant to prove she received no benefits. It was so held in the case of Fisher v. The Rice Growers Bank, 122 Ark. 600, 184 S. W. 36 and in McArthur v. Cannon, 229 A. 2d 372 (1967). Appellant appears to take the position it is immaterial as to whether or not she received benefits from the proceeds of the note, since the U. C. C. eliminated that element. The section of the U. C. C. relied on is Ark. Stat. Ann. § 85-3-415 (1) (Add. 1961) which reads,:

“An accommodation party is one who signs the instrument in any capacity for the purpose of lending his name to another party to it.”

However, in the McArthur case, cited above, the court held that a signer who received benefits from the proceeds of the note was not an accommodation signer. The above emphasised words are, we think, the key to a correct interpretation of the Code. In other words, if, in this case, appellee had paid appellant for signing the note to the bank and she had received no benefits from the note, then she would still be an accommodation signer even though she did receive some money or benefits for the use of her name. This is explained in comment 2 under the section quoted above.

Affirmed.

Byrd, J., disqualified.


author: Lyle Brown, Justice.

text:
    Jimmie HOLT et ux v. P. C. MINOR et ux
    5-4539
    426 S. W. 2d 163
    Opinion delivered April 1, 1968

      James E. Evans, for appellants.

      Joe B. Reed and Charles E. Davis, for appellees.
   Lyle Brown, Justice.

P. C. and Eva Minor sued Jimmie and Maxine Holt to recover judgment on a note in the principal sum of $1400. The defendants countered with an allegation of usury. The jury awarded Mr. and Mrs. Minor judgment for $1400 and the Holts appeal. Six points are raised for reversal. We shall treat only the issue of usury because that issue resolves the lawsuit.

We summarize the essential facts in the light most favorable to the lenders. P. C. Minor had charge of a house in Springdale owned by Mrs. Ryan. She gave Minor the authority to rent the house and generally look after it until it might be sold. Minor obtained as tenants these appellants, Jimmie and Maxine Holt. The tenants became interested in buying the property. In negotiating with Mrs. Ryan they reached an agreement that she would accept $1400 for her equity. The Holts were unable to raise the money through regular credit channels. Minor agreed to advance the $1400. Minor borrowed $1400 from the First State Bank of Springdale and executed his note, due in 360 days, and bearing interest at the rate of six per cent per annum.

On the same day Jimmie and Maxine Holt executed two notes in favor of P. C. and Eva Minor. One of the notes was for $1400. Minor gave Holt a check for that amount. Mrs. Minor testified that although that note called for ten per cent interest, the Minors had no intention of collecting interest unless the note became delinquent. The other note was for the principal sum of $220 (it is apparently conceded that the note should have been for $224). Mr. Minor testified that the amount of that note was arrived at in this manner: he charged $140 for his services in raising the needed funds; and the balance of $84 was added to cover the interest that Minor would be obliged to pay on his note at the First State Bank of Springdale. Holt liquidated the smaller note by direct payments to Minor.

Accepting the recited testimony of the Minors at face value, it is readily perceived that the Holt-to-Minor loan called for a charge well in excess of ten per cent per annum. We hasten to point out that P. C. Minor was clearly a lender, as opposed to an agent of the Holts. He cannot be classified as one employed by the Holts to negotiate a loan for them. It was his proposal to lend them the money and take as security for that loan two notes made payable to P. C. or Eva Minor. The manner in which he chose to obtain the funds was of no particular concern to the borrowers. In fact, it was not necessary that he borrow the money from the bank; the Minors owned a certificate of deposit in the principal amount of $4300. Instead of cashing that certificate, Minor used it as collateral to borrow the $1400. In that manner his certificate continued to draw interest and the Holts were supplying the money to pay the interest on the capital Minor used to make his loan to the Holts.

The situation here is not unlike the practice condemned by our court in Smith v. Eason, 223 Ark. 747, 268 S. W. 2d 389 (1954). There the lender, Smith, withheld from the loan funds $42 which he incurred in borrowing the money to be advanced to Eason. This court said those expenses were obviously not for the benefit of Eason and therefore were not legitimate charges.

It is common knowledge that most lending institutions operate on borrowed capital, or on money on deposit which draws interest. If such an institution charged one of its borrowers four per cent which the money cost the institution and added seven per cent for itself, usury would certainly have to be conceded. That is the very practice which Minor invoked. He charged the Holts ten per cent ($140) on his loan to the Holts, and added six per cent ($84) to cover his cost of raising the capital.

Reversed and dismissed.


author: John A. Fogleman, Justice.

text:
    DELTA DISCOUNT COMPANY v. George R. FRYER et al
    5-4509
    426 S. W. 2d 788
    Opinion delivered April 1, 1968

      McKnight & Blackburn, for appellant.

      Harold Sharpe, for appellees.
   John A. Fogleman, Justice.

Appellant asserts error on the part of the trial court in granting a motion for summary judgment. It contends that its answer to a request for admissions, even though verified by its attorney only, constituted a denial and thus preserved questions of fact for determination.

Appellant, a corporation, brought this action for foreclosure of a deed of trust executed by appellees to secure the payment of a promissory note executed by appellees to K-V Builders, Inc. 'While the note was payable to the order of K-V Builders, Inc., the deed of trust secured appellant, Delta Discount Company. Appellees first filed a general denial and then an amendment. The amendment asserted that the contract appellant sought to enforce was usurious and that neither appellant nor the payee in the note was incorporated under the laws of the State of Arkansas or authorized to do business in the state as a foreign corporation on the date of the execution of the note or deed of trust or on the date the amendment was filed. Appellees asked that the note and deed of trust be declared void for usury, that the complaint be. dismissed and that they have judgment for payments made. Appellees filed and served three separate requests for admissions. The last request asked appellant to admit that neither appellant nor K-V Builders, Inc. was incorporated or authorized to do business under the Arkansas statutes on the date of execution of the note and deed of trust, or on January 31, 1966. The answer to this request was signed and verified by one of appellant’s attorneys. Appellees, on January 25, 1967, filed and served a motion for summary judgment based upon the assertion that failure of appellant to properly verify its response to the request for admission constituted a failure to answer and left no genuine material issues of fact. No response was made to this motion which was granted on September 21, 1967.

The sole* argument for reversal is that this court has adopted the rule that answers to requests for admissions must be verified by the responding party, rather than by his attorney, upon an erroneous assumption that this view is supported by the weight of authority. Appellant asserts that the weight of authority supports the view that a sworn statement by the attorney for the party whose admissions are requested constitutes a sufficient response.

While it appears that there is a division of authority on the question, we need not now engage in a process of weighing these authorities for the rule has been clearly stated, adopted and followed in this state. Young v. Dodson, 239 Ark. 143, 388 S. W. 2d 94; B & P, Inc. v. Norment, 241 Ark. 1092, 411 S. W. 2d 506. Appellant argues that our adherence to the rule does not give proper consideration to the fact that a corporation can act only through its officers, agents and employees and that the particular questions involved here could only be answered by attorneys. Perhaps it is necessary in many instances that there be consultation between a party (either individual or corporate) and his attorney before such requests may properly be answered, but we see no reason why the requests could not have been answered by an officer of the corporation who had knowledge of the facts. We previously applied the rule to a corporate plaintiff who was served with virtually identical requests for admissions in B & P, Inc. v. Norment, supra.

Since it must be taken as admitted that both appellant and K-V Builders, Inc. are foreign corporations, not authorized to do business in Arkansas, the decree is affirmed.

       It should be noted that during this eight-month period appellant made no effort to obtain permission to properly verify its answer, as permitted under the authority of Kingrey v. Wilson, 227 Ark. 690, 301 S. W. 2d 23.


author: J. Feed Jones, Justice.

text:
    Mrs. Artalee WEBB v. A. F. LACEFIELD and Donald Lacefield
    5-4515
    426 S. W. 2d 154
    Opinion delivered April 1, 1968
    , Boscopf & Raff, for appellant.

      jReid, Burge & Prevallett, for appellees.
   J. Feed Jones, Justice.

Mrs. Artalee Webb filed suit in the Monroe County Circuit Court against A. F. Lace-field alleging damages as a result of personal injuries sustained by Mrs. Webb in an automobile collision caused by the negligence of Mr. Lacefield. Lacefield denied liability and pleaded contributory negligence. A jury trial resulted in a verdict and judgment for Mrs. Webb in the amount of $300.00. Upon denial of a motion for a new trial, based on inadequacy of the award, Mrs. Webb appeals to this court, relying upon the following point for reversal:

“The court erred in denying appellant’s motion for new trial because the jury verdict was contrary to the law and evidence, in that said verdict was inadequate and was less than the uncontroverted and actual out-of-pocket medical expenses incurred by the appellant and therefore was plainly the result of mistake, passion and prejudice as a matter of law. Further, that the verdict of the jury completely disregarded the instructions of the trial court with respect to awarding compensation for pain and suffering and lost wages.”

The injuries complained of occurred when appellant drove her automobile into a parking lot at a grocery store and the appellee backed his pickup truck from a parking space and struck the left front fender and door of appellant’s automobile. There is considerable conflict in the testimony as to the force of the impact and as to the severity, extent, and duration of appellant’s injuries. The evidence is not conclusive that appellant’s expenditure. of $530.00 for drugs and medical treatment was entirely for treatment as a result of her injuries.

The jury verdict, as reflected in the judgment on page 18 of the transcript, referred to by appellant, is as follows:

“We the jury, find for the plaintiff, Mrs. Artalee Webb and assess her damages at $300.00.”

Without objection, the trial court gave its own instruction No. 2, as follows:

“If you find for the plaintiff the form of your verdict should be: ‘We, the jury, find for the plaintiff, Mrs. Artalee Webb and assess her damages at the amount you think she is entitled to receive under the proof of this case.’ ”

Ark. Stat. Ann. § 27-1902 (Repl. 1962) provides as follows:

“A new trial shall not be granted on account of the smallness of damages in an action for an injury to the person or reputation, nor in any other action where the damages shall equal the actual pecuniary injury sustained.”

This court has held when the undisputed evidence shows that plaintiff is entitled to recover substantial damages, a judgment will be reversed which awards only nominal damages, because a judgment for nominal damages is, in effect, a refusal to assess damages. Dunbar v. Cowger, 68 Ark. 444, 59 S. W. 951. The rule is otherwise where substantial damages, rather than mere nominal damages are awarded. We have not deviated from the rule reiterated in the case of Smith v. Arkansas Power & Light Co., 191 Ark. 389, 86 S. W. 2d 411, where we said:

“Where substantial damages are awarded, a judgment will not be reversed because of inadequacy, if there be no other error than that committed by the jury in measuring the damages.”

The evidence as to damages is not undisputed in the case at bar, and the verdict for $300.00 damages was for more than a nominal amount in this case. We find no abuse of the trial court’s discretion in denying appellant’s motion for a new trial, and we conclude that the judgment of the trial court should be affirmed.

Affirmed.


text:
    JOHN B. MAY CO., Inc., v. Doris McCASTLAIN (B. Bryan Larey) Commissioner of Revenues, State of Arkansas
    5-4453
    426 S. W. 2d 158
    Opinion delivered April 1, 1968

      Floyd Sharp, for appellant.

      Lyle Williams, L. Phillip McClendon and Hugh L. Brown, for appellee.
   J. Fred Jones, Justice.

This is an appeal from a declaratory judgment decree of the Pulaski County Chancery Court and involves the interpretation of two sections of the Arkansas Gross Receipts Tax Act (Act 386 of 1941).

On March 18, 1966, John B. May Company, Inc. entered into a construction contract with the Board of Trustees of the University of Arkansas to install air-conditioning equipment and perform other construction work at the University of Arkansas Medical Center in Little Rock, Arkansas. Under a provision in the contract, .the Arkansas Gross Receipts (Sales) Tax of 3% was not added to, or included in, the original bid price, hut it was agreed that if it should later become necessary for the May Company to pay such tax on the materials and equipment used in fulfilling this contract, the contract would he reopened and the amount of the tax added to the original price.

Under an administrative ruling by the Commissioner of Revenues, the equipment was held taxable as a consumption by the contractor. The parties to the contract joined in a petition to the Pulaski County Chancery Court for a declaratory judgment naming the ap-pellee, Commissioner of Revenues, as defendant. The Commissioner responded to the petition and the case was submitted to the chancellor on an agreed stipulation of facts, which included the stipulation that the University Medical Center is a 'State-owned, tax-supported hospital.

The chancellor found that under the contract involved, contractor May was not an agent of the Medical Center but that under the Act he was the consumer of all machinery and goods used in the performance of a contract, and that the assessment of the tax against him was valid and legal. From the chancellor’s decision John B. May Co. appeals.

The definition section of the Gross Receipts Act (Ark. Stat. Ann. § 84-1902 [Repl. I960]) subsection (i) provides as follows:

“Consumer — User: The term ‘consumer’ or ‘user’ means the person to whom the taxable sale is made, or to whom taxable services are furnished. All contractors are deemed to be consumers or users of all tangible personal property including materials, supplies and equipment used or consumed by them in performing any contract and the sales of all such property to contractors are taxable sales within the meaning of this act.”

The exemption section of the act (Ark. Stat. Ann. § 84-1904 [Repl. I960]) provides as follows:

“There is hereby specifically exempted from the tax imposed by this act the following:
* # #
(p) Gross receipts or gross proceeds derived from the sale "of any tangible personal property or services as herein specifically provided to any hospital or sanitarium operated for charitable and nonprofit purposes; provided, however, that gross proceeds and gross receipts derived from the sale of materials used in the original construction or repair or further extension of such hospital or sanitarium, except State-owned, tax-supported hospitals and sanitariums, shall not be exempt from this act; provided that no unpaid tax imposed by Act 386 of 1941 on the gross receipts or gross proceeds derived from the sale of such materials to State-owned and tax-supported hospitals and sanitariums shall be collected after the passage of this Act [February 19, 1947].” [Italicized portions added to Act 386 of 1941 by amendment Act 102 of 1947.]

Appellant argues that it was the plain legislative intent, by Act 102 of 1947, to exempt 'State-owned, tax-supported hospitals and sanitariums from paying the sales tax on construction materials, either directly or indirectly- that the Legislature knew that such institutions were required by law to let such construction contracts to the lowest responsible bidder; that it was the intention of the Legislature by Act 102 of 1947 to repeal the definition of a contractor as a consumer whenever said contractor is doing business with a State-owned, tax-supported hospital or sanitarium; that the contractor, for purposes of the tax exemption, is nothing more or less than an agent of the tax exempt institution, buying and installing specified material and equipment for them at an agreed price; and that if it is held otherwise, Act 102 of 1947 will become a complete nullity.

Appellee argues that the intention and effect of Act 102 of 1947 was to provide an exemption only on sales made directly to State-owned, tax-supported hospitals and sanitariums; that the Act declares a contractor to be a consumer of goods used in his contract; and that the exemption doesn’t apply to contractors.

We agree with the appellee and have reached the conclusion that the chancellor’s decision must be affirmed. In determining the legislative intent, we look to the language of the whole Act. Tolleson v. McMillan, 192 Ark. 111, 90 S. W. 2d 990. If the language is ambiguous or uncertain, we may also look to the subject matter of the Act, the object to be accomplished, or the purpose intended, as well as other extrinsic matters which shed light on the legislative intent. McDonald v. Wasson, 188 Ark. 782, 67 S. W. 2d 722. But, in the case at bar, we find no ambiguity.

Prior to the amendment by Act 102 of 1947, § 84-1904 (p), supra, exempted receipts or proceeds derived from the sale of any tangible personal property or services to any hospital or sanitarium operated for charita-Me or nonprofit purpose, but specifically did not exempt the sale of materials used in the original construction or repair or further extension of such hospital or sanitarium. By the amendatory Act 102 of 1947, the Legislature excepted the State-owned, tax-supported hospitals and sanitariums from the proviso-of the Act taxing the materials used in the construction, repair, or further extension of charitable nonprofit hospitals and sanitariums, thus making the State-owned, tax-supported hospitals and sanitariums exempt in cases of sales to such hospital or sanitarium for original construction, repair, or further extension.

In construing tax exemption statutes strictly, as we must do (Scurlock, Comm. of Rev. v. Henderson, 223 Ark. 727, 268 S. W. 2d 619), we conclude from the wording used by the Legislature that the sale must be directly to such hospital or sanitarium to be exempt. This interpretation is further supported by the legislative wording in the proviso added by Act 102 of 1947, that no unpaid tax on receipts or proceeds derived from the “sale of such materials to State-owned, tax-supported hospitals and sanitariums shall be collected after the passage of this Act.”

Thus, the statute in clear and unambiguous terms requires the sale to be directly to the tax-exempt institution. Appellant contends that the contractor in this case is merely an agent of the institution, buying and installing specified material and equipment at an agreed price, and thus the sale would be to the institution. We cannot agree with this contention in light of § 84-1902 (i), supra. To do so would imply an agency when the Act clearly makes the contractor the consumer of “all tangible personal property including materials, supplies and equipment used or consumed by them in performing any contract. ...”

This same contention was advanced and rejected in the case of Alabama v. King & Boozer, 314 U. S. 1, 62 S. Ct. 43, 86 L. Ed. 3, where King and Boozer sold lumber on the order of contractors to be used by the latter in constructing an army camp for the United States. The Alabama Supreme Court had found the sale nontaxable, concluding that although the contractors were indebted to the seller for the purchase price of the lumber, they were so related by their contract to the Government’s undertaking to build a camp, and were so far acting for the Government in the accomplishment of the governmental purpose, that the tax was in effect “laid on a transaction by which the United States secures the things derived for governmental purposes,” so as to infringe the constitutional immunity. The U. S. Supreme Court reversed, stating:

“[T]lie contractors were to purchase in their own names and on their own credit all the material required, unless the Government should elect to furnish them; that the Government was not to be bound by their purchase contracts, but was obligated only to reimburse the contractors when the materials purchased should be delivered, inspected and accepted at the site.
*
[T]lie legal effect of the transaction which we have detailed was to obligate the contractors to pay for the lumber. The lumber was sold and delivered on the order of the contractors, which stipulated that the Government should not be bound to pay for it. It was in fact paid for by the contractors, who were reimbursed by the Government pursuant to their contract with it. The contractors were thus purchasers of the lumber, within the meaning of the taxing statute, and as such were subject to the tax. They were not relieved of the liability to pay the tax either because the contractors, in a loose and general sense, were acting for the Government in purchasing the lumber or, as the Alabama Supreme Court seems to have thought, because the economic burden of tbe tax imposed upon the purchaser would be shifted to the Government by reason of its contract to reimburse the contractors.
# # #
But however extensively the Government may have reserved the right to restrict or control the action of the contractors in other respects, neither the reservation nor the exercise of that power gave to the contractors the status of agents of the Government to enter into contracts or to pledge its credit.”

Appellant also contends that § 84-1902 (i); supra, pertains only to hand tools, construction equipment, etc. The King & Boozer case, supra, also refutes this argument. It could hardly be said that the lumber involved in that case fits in the category of hand tools, construction equipment, etc., but, to the contrary, it is clearly seen that lumber in that case, as air conditioners in the case at bar, becomes an integral part of the construction, yet is consumed by the contractor, for taxation purposes, in fulfilling his contract.

Even though Act 102 of 1947 contained a clause providing for the repeal of “all laws and parts of laws in conflict herewith,” we find no inconsistency between § 84-1902 (i) and § 84-1904 (p). Thus, there is no repeal thereby as appellant urges, as a general clause repealing all laws in conflict does not operate to repeal any laws not in conflict. Jones v. Oldham, 109 Ark. 24, 158 S. W. 1075.

Appellant also contends that the chancellor erred in failing to properly interpret the cases of Kern-Limerick v. Scurlock, 347 U. S. 110, 74 S. Ct. 403, 98 L. Ed. 546, which arose in Arkansas (see Parker v. Kern-Limerick, Inc., 221 Ark. 439, 254 S. W. 2d 454 and 223 Ark. 464, 266 S. W. 2d 298), and Alabama v. King & Boozer, supra. In his brief, appellant states that: “A study of the Parker v. Kern-Limerick case shows the final decision to be that where a Government Agency has a statutory sales exemption that a contractor, though defined as a consumer, becomes an agent for the owning agency for the tax exemption purposes.” We find that it is the appellant’s interpretation, and not the chancellor’s, that is incorrect. The King & Boozer case refused to imply an agency for purchase into the contract. In the Kern-Limerick case an agency for purchase was expressly created by the terms of the contract. Both cases recognized the same economic effect on the United States, but found the difference in the result to lie in the form of the contract. As stated in the Kern-Limerick case:

“Under these circumstances, it is clear that the Government is the disclosed purchaser and that no liability of the purchasing agent to the seller arises from the transaction. [This was found to be the opposite in the King & Boozer case.]
We find that the purchaser under this contract was the United States. Thus, King & Boozer is not controlling for, though the Government also bore the economic burden of the state tax in that case, the legal incidence of that tax was held to fall on the independent contractor and not upon the United States.
“But since purchases by independent contractors of supplies for Government construction or other activities do not have federal immunity from taxation, the form of contracts, when governmental immuniity is not waived by Congress, may determine the effect of state taxation on federal agencies,-for decisions consistently prohibit taxes levied on the property or purchases of the Government itself.” (Emphasis supplied.)

The latter proposition was equally stated in the King & Boozer case:

“The soundness of this conclusion turns on the terms of the contract and the rights and obligations of the parties under it.”

The appellant in the case at bar was not made an agent for the purchase of materials as was done in the Kern-Limerick case where the contract called for the contractor to act as purchasing agent for the Government, and title to the articles purchased passed directly from the vendor to the Government, and the Government was directly liable to the vendor for payment of the purchase price. These elements are not persent in the case at bar.

We agree with the chancellor’s finding that the relationship in the case at bar was one of independent contractor, not agency, and therefore the appellant was a consumer, or user, of the items involved within the meaning of the Act. The chancellor was correct in finding that the sale was to the contractor in this case and in holding that the sale to the contractor was taxable. The decree of the chancellor is affirmed.