author: Paul Ward, Justice.

text:
    ARKANSAS COMMERCE COMMISSION v. KANSAS CITY SOUTHERN RAILWAY CO.
    5-4564
    428 S. W. 2d. 83
    Opinion delivered May 21, 1968

      Claude Carpenter Jr., for appellant.

      Thomas Harper, for appellee.
   Paul Ward, Justice.

This is an appeal from the trial court’s judgment reversing the action of the Arkansas Commerce Commission (appellant) wherein it denied the Kansas City Southern Railway Company (appellee) authority to close its station located at Winthrop in Little River County.

The above proceeding was initiated and prosecuted in accord with the provisions of Ark. Stat. Ann. § 73-809b. (Supp. 1967) which, in parts material here, reads:

“b. Any railroad operating in this State may file with the Arkansas Commerce Commission a notice of discontinuance, ... of any of its agency stations together with a statement... to the effect that such agency station had been operating at a financial loss according to standard accounting procedures for not less than one [1] year immediately preceding . . . and such agency station may thereupon he closed . . . ninety [90] days after date of filing of such notice unless a petition for the re-establishment of such . . . station, signed by at least twenty-five [25] qualified electors residing in the city, town or political subdivision where the same is located, is filed with the Arkansas Commerce Commission within sixty [60] days after date of filing of the notice aforesaid. The Arkansas Commerce Commission is authorized, empowered and required to hear and consider all petitions for the re-establishment of any agency station discontinued ... by the railroad under authority of this Act [section,] which hearing shall he held Avithin sixty [60] days following filing of petition ... In determining whether an agency station should be discontinued . . . the standard to be employed is whether the railroad has operated the agency station at a financial loss according to standard accounting procedures for not less than one [1] year immediately preceding the filing of the notice of discontinuance, dualization or modification, or lohether operating economies would result therefrom.” ^Our Emphasis)

It is not disputed here that both parties followed the procedural steps outlined in the statute. That is: appel-lee gave the notice and statement; twenty-five qualified electors filed a petition, opposing the closing of the station, with appellant, and; in due time a hearing was held.

The Commission (appellant), on June 19, 1967, found: (a) The continuance of the station is required by the public convenience and necessity, and; (b) Discontinuance of the station should not be granted, and it was so ordered. This order was appealed to the Pulaski Circuit Court which, after reviewing the record, reversed the Commission and directed it to enter an order allowing appellee to discontinue the Winthrop agency station.

On appeal appellant relies on two separate points for a reversal. One, the trial court erred in finding the station was operated at a loss for one year, and; Two, the trial court erred in finding that operating economies will result to appellee consistent with public convenience and necessity if the station is closed.

One. The decisive issue here is whether appellee showed, by “standard accounting procedures”, that the station operated at a loss (as required by the statute).

It is undisputed that the exhibits introduced by ap-pellee before the Commission showed the station did operate at a loss for the required time. The only question then is, was the showing arrived at “according to standard accounting procedures”? This was one of the decisive issues in the case of CRI&P RLD. Co. v. Ark. Commerce Comm., 243 Ark. 661, 420 S. W. 2d 917. There the Commission and the trial court held against appellant because no such showing was made. There we said: “There was no testimony to show that the method used by appellant . . . was according to standard accounting procedures required” ... by the statute. That is not the situation in the case here under consideration, as is shown by the undisputed testimony of appellee’s witness, Mr. Johnson.

“Q. Is this allocation of 50% to origin and destination stations standard railway accounting procedure ?
“A. Yes, sir, it is.
“Q. Is the allocation of system expenses which yon have described in Exhibits No. 1 and No. 2 standard railway accounting procedure?
“A. Yes, sir.”

No evidence was offered by appellant to contradict Johnson’s testimony, and none to show he was not competent and qualified to testify.

Since we conclude the trial court must be affirmed on this point it becomes unnecessary to discuss point Tivo which is only an alternative ground for an affirmance but not for a reversal.

Affirmed.


source: Caselaw Access Project

author: Paul Ward, Justice. John A. Fogleman, Justice,

license: Public Domain

text:
    Marion BOBO v. G. C. SEBREE et al
    5-4574
    429 S. W. 2d 95
    Opinion delivered May 21, 1968
    [Rehearing denied July 15, 1968.]

      Ro&s & Ross, for appellant.

      Reinberger, Eilbott, Smith & Staten, for appellees.
   Paul Ward, Justice.

This is an appeal by Marion Bobo (appellant) from a chancery decree denying him a lien for material and labor under the provisions of Ark. Stat. Ann. §§ 50-601 et seq. (1947). The factual situation out of which this litigation arises, and about Avhich there is no dispute, is summarized below.

FACTS. In February, 1966 Mr. G. C. Sebree, his wife and her mother (appellees) contracted with A. F. Kelley to construct a dwelling on a parcel of land owned by them and located in Spring Lake Addition south of Pine Bluff. To finance the project, appellees borrowed $20,41.4 from a savings and loan association. Appellant, as a subcontractor, furnished and installed 178 yards of carpeting in the dwelling for which he charged $1,613.15.

Before construction was completed Kelley encountered financial difficulties which caused certain materi-almen to file a suit on November 4, 1966 to perfect liens on the property. On December 9, 1966 appellant filed an Intervention which contained, in substance, the following allegations:

(a) On July 25, 1966 he sold to appellees and Kelley the carpeting as stated above.
(;b) The carpeting was used in the dwelling on ap-pellees’ property (described in detail).
(c) On October 5, 1966 notice was given to appel-lees that a lien would be filed against the property on or after October 15, 1966.
(d) On October 20, 1966 said lien was filed in the office of the Circuit Clerk in Jefferson County.
(e) Appellees are indebted to him in the amount of $1,613.15 which is a first lien on said property.

The prayer was for judgment and a lien.

Appellees, in answer to above Intervention, stated that appellant had not substantially complied with the statutory requirements for perfecting his lien.

After a hearing, based on testimony and exhibits, the trial court, in a written statement, found: “In view of the fact that the materialmen’s lien law is in derogation of the common law, it must be strictly construed. See Dix v. Olds, 242 Ark. 850, 415 S. W. 2d 567.” Accordingly the court held that appellant was entitled to a judgment against Kelley for the amount prayed, but that such judgment did not constitute a lien on the property of appellees. The reason given by the court for said holding was that the Notice “did not state from whom the same (the amount) is due.”

On appeal appellant contends that the trial court erred in holding that the “Notice of claim” did not substantially comply with Ark. Stat. Ann. § 51-608 (1947). For reasons hereafter stated, we agree with appellant.

Section 51-608, in all parts material here, reads:

“Every person, except the original contractor, who may wish to avail himself of the benefit of the provisions of this act . . . shall give ten days’ notice before the filing of the lien, as herein required, to the owner, owners or agent, or either of them, that he holds a claim against such building or improvement, setting forth the amount and from whom the same is due.”

We now examine the “Notice” to determine if it did in fact constitute a compliance with the above statute. We are here concerned with only two items; (a) the amount due appellant and (b) who owed the amount to appellant. The Notice began with “Marion Bobo . . . claimant and sub-contractor” and was direct to appel-lees (naming them) as property owners, and to A. F. Kelley as the contractor, and was, in form and substance, as follows:

Notice is hereby given: that appellant has a claim against the following property (describing appel-lees’ property) to secure the amount of $1,613.15 for furnishing and installing said carpeting.

The Notice was signed by appellant’s attorney.

Item (a), the amount claimed, presents no problem since the trial court, in the written opinion, specifically found that the Notice “stated the amount of the claim”.

(b) In considering the issue here presented, we should first determine whether the lien section involved must be strictly construed or whether it should be liberally construed. It is our conclusion that, in this case, the section should be liberally construed to effect its purpose.

There are many decisions by this Court wherein it was stated that the lien statute should be strictly construed and there are many decisions where we said it should be liberally construed. Among the first classifications are: Flournoy v. Shelton & Co., et al, 43 Ark. 168; Van Etten v. Cook. 54 Ark. 522, 16 S. W. 477; St. Louis Iron Mountain & Southern Ry. Co. v. Love, 74 Ark. 528, 86 S. W. 395, and the recent case of Dix v. Olds, 242 Ark. 850, 415 S. W. 2d 567 relied on, apparently, by the trial court. Among the cases which applied to the liberal construction rule or hold a substantial compliance with the statute is sufficient, are: Anderson v. Seamans, 49 Ark. 475, 5 S. W. 799; Buckley v. Taylor, 51 Ark. 302, 11 S. W. 281; Speer Hardware Co. v. Bruce, 105 Ark. 146, 150 S. W. 403; Bruce Brown, v. Turnage Hardware, Inc., 181 Ark. 606, 26 S. W. 2d 1114; and, Geisreiter v. Standard Lbr. Co., 187 Ark. 893, 63 S. W. 2d 347.

The above apparent conflicts., in the decisions are not as real as they appear. Briefly stated, it appears from the noted opinions, that the strict construction applies where there is a doubt as to whether the subject matter comes within the purview of the statute. For example, in the Dix case, supra, the claimant sought a “lien on all the lands . . . and improvements described in the bill of assurance” for work performed “on a street or roadway surfacing contract”. There we properly applied the strict const ruction rule, and denied the lien. This Rule is very well stated in 18 R. C. L., at page 879, in these words “. . . . though a mechanic’s lien is said to be a favorite of the law, a statute cannot be so extended as to be applied to cases which do not fall within its provisions.”

In the ease under consideration here we do not have a situation like that in the Dix case. Here, no one questions the facts; that appellant furnished appellees’ home with carpeting: that it cost $1,613.15; that appel-lees knew he furnished it; that he filed his Notice in due time, and; that the Notice appraised appellees of all these facts, and they were in no way misled.

Applying the rule of liberal construction and substantial compliance, we conclude the case must be, and •it is hereby, reversed.

Harris, O. J., not participating.

Foolemak & Byru, JJ., dissent.

John A. Fogleman, Justice,

dissenting. I disagree with the majority because I do not feel that the notice to the property owners was in substantial compliance with the lien statutes. The deficiency was in the failure to state from whom the amount claimed was due. The notice was directed to both the owners and the contractor. There is no language from which the recipient of this notice could ascertain whether appellant contended that the amount was due from the owners or the contractor. This is important because, in addition to a lien on the property, appellant was entitled to personal judgment against one or the other, htft not both. If the amount was alleged to be due from the contractor, then the owners could call upon him and the sureties on any performance bond to protect their property from the lien. It would have been necessary for them to have proceeded promptly in this regard in order to hold a surety. The stage of construction at the time of the notice is not apparent, nor is there any indication whether final settlement between the owners and general contractor had been made. If it had not, but was imminent, then it was necessary for the owners to be clearly advised as to whom the liability was asserted against in order to adequately protect themselves in these dealings.

The contention of appellant in the trial court was based entirely on an alleged contract with the owners, not the general contractor. Now he asserts that his notice was sufficient to advise the owners that he was claiming that the amount was due from the contractor, the trial court having held that the contract was with the contractor, not the owners. Thus, he has pointed up the significance of the statutory requirement that the notice state from whom the amount is claimed to be due.

I agree with the majority in the distinction made as to strict and liberal construction of these lien statutes, but I fear its absorption in this salutary effort has obscured the real issue in this case. While the majority opinion states that the notice apprised the owners of certain facts, it is nowhere pointed out how the owners were advised from whom the amount was due. The majority opinion has, in effect, wiped the words “.and from whom the same is due” from the statute — a prerogative which is not ours. In Scott v. LeGrande, 225 Ark. 1022, 287 S. W. 2d 456, this court said that a notice was defective because it did not set forth in the notice “the amount claimed and from whom the same is due.” This is a rule of property which should not be departed from so effortlessly.

I therefore respectfully dissent. I would affirm the decree of the lower court.

I am authorized to state that Byrd, J., joins in this dissent.


author: Lyle Brown, Justice.

text:
    Joe Hoyt MERRITT v. STATE of Arkansas
    5343
    428 S. W. 2d 66
    Opinion delivered May 21, 1968

      Louis W. Rosteck, for appellant.

      Joe Purcell, Attorney General; Don Langston, Asst. Atty. Gen., for appellee.
   Lyle Brown, Justice.

Appellant Joe Hoyt Merritt, an inmate at the Arkansas Penitentiary, moved to dismiss two charges of felonious escape pending in the Pulaski County Circuit Court. Two terms of court intervened since the filing of the charges, and that fact would ordinarily entitle him to have the charges dismissed. His motions were denied and he appeals.

Merritt was committed to our penitentiary in 1960. In 1962 he was brought to Pulaski County for mental observation and he escaped. He was apprehended and returned to the penitentiary. That escape resulted in a charge being filed in the Pulaski Circuit Court. In July 1963 he was returned to Pulaski County for the purpose of arraignment on that charge. Arraignment was not perfected because he escaped again. That flight brought on a second charge of felonious escape. Within a few months he was in the Texas Penitentiary. He remained there until 1964, at which time he was delivered to our penitentiary authorities to serve the balance of his sentence. So far as the record discloses, Pulaski County authorities had no knowledge of Merritt’s return to this State.

Pulaski authorities apparently learned of Merritt’s whereabouts in 1966, at which time he was still serving out time in our penitentiary. He was again brought before the court and entered pleas of not guilty. At that time more than two terms of court had elapsed since the filing of the charges. Before the cases were reached for trial, Merritt’s motions to dismiss were filed. Those motion's were grounded on Ark. Stat. Ann. § 43-1708 (Repl. 1964) which requires that an accused who is incarcerated lie brought to trial before the end of the second term after the filing of the charges; however, delay which happens “on the application of the prisoner” effects a waiver.

The problem before us should here be succinctly stated. In the absence of a showing of knowledge on the part of Pulaski authorities of the return of Merritt, is he entitled to a dismissal of the charges?

— When Merritt made his successful escape he removed himself from the protective provisions afforded him by § 43-1708. That is true for two reasons:

(1) The purpose of the statute is to implement Ark. Const. Art. 2, § 10, which guarantees a speedy trial in criminal eases. While the constitutional and statutory-provisions were enacted to prohibit oppressive delays, they do not preclude the rights of public justice. See Beavers v. Haubert, 198 U. S. 77 (1905). The rights of public justice and the theory that the provisions afford relief to fugitives in all cases are not harmonious. Kansas has a statute almost identical with our § 43-1708. We agree with the holding in State v. Aspinwall, 252 P. 2d 841 (Kan. 1953), to the effect that an escaped fugitive removes himself from the protective coverage of the statute.

(2) The phrase, “unless the delay shall happen on the application of the prisoner,” includes any affirmative act by the accused which prevents a speedy trial. State v. Hess, 304 P. 2d 474 (Kan. 1956). Merritt’s escape and refuge in Texas at a time when the first charge was being processed for trial effected postponement of the proceedings.

We are next faced with a more puzzling question. When our penal authorities brought Merritt back to the penitentiary from Texas, was he ipso facto reinvested with the privileges afforded him by § 43-1708? Considerable research afforded no pointed answer. We start with the premise that the provisions for a speedy trial are not inflexibly mandator. See Leggett v. Kirby, 231 Ark. 576, 331 S. W. 2d 267 (1960). This court, in the exercise of sound discretion, should endeavor to blend the two cardinal principles afforded by the provisions —the prohibition against vexatious delay and the rights of public justice — and produce an answer which harmonizes with both principles. Guided by that approach, we conclude that in the absence of a showing that the authorities in Pulaski County were made aware of Merritt’s return and took no action within the prescribed two terms, Merritt’s rights under the recited statute did not reinvest.

Although the facts were slightly different, y/e are encouraged by the holding in State v. Pederson, 88 N. W. 2d 13 (Minn. 1958). There the fugitive returned to the State but did not make known his presence and request a trial. It was held that he waived his rights by escaping and only a return and a request for trial could restore his rights under a statute limiting the time for prosecution.

Any other rule would tend to defeat the rights of public justice as it pertains to returning fugitives. To hold otherwise would make it possible for a fugitive from justice to return to this State, become incarcerated under an alias in any one of our more than seventy-five county jails for a period of two terms of court and thereby nullify a pending felony indictment. The same immunity could be gained by being so confined on one of the several penal farms in the State, or in either of the branches of the penitentiary.

An escapee being returned to our penitentiary and who feels aggrieved by the pendency of other charges, can without the least difficulty make known his return and his desire that those charges be processed. Either a word to his warden, a letter to the trial court, or a letter to this court, or the federal district court, would accomplish the result. For Merritt, who feloniously fled the State to avoid trial, to rest in silence for a statutory period and thereby nullify the charge, does not comport with the rights of public justice.

Affirmed.


author: John A. Fogleman, Justice.

text:
    James Robert EVERS, d/b/a Suburban Motors v. GUARANTY INVESTMENT CO., a corporation
    5-4578
    428 S. W. 2d 68
    Opinion delivered May 21, 1968

      Kirsch, Cathey & Brown, for appellant.

      Dudley & Burris and Vernon J. King, for appellee.
   John A. Fogleman, Justice.

Appellant contends that reversible error was committed in the trial court’s granting appellee a summary judgment. The action was brought by appellee, a finance company, to recover from appellant, a used car dealer, on the latter’s endorsement and guaranty upon a number of past due notes given by purchasers of automobiles. Appellant alleged that these notes were void because given as a part of a scheme and plan of appellee to violate the Arkansas usury laws. After appellant had answered a request for admissions made by appellee, appellee took a discovery deposition of appellant. Appellant had previously taken the discovery deposition of John Y. Baltz, president of appellee company. Upon the record so made, appel-lee’s motion for summary judgment was granted upon the ground that the defense of usury is not available to appellant by reason of his participation in what he had alleged to be the plan to violate the usury laws.

We do not agree with the trial judge. In considering a motion for summary judgment, the evidence and all reasonable inferences which may be drawn therefrom must be considered in the light most favorable to the party against whom the judgment would go. Russell v. City of Rogers, 236 Ark. 713, 368 S. W. 2d 89; Deltic Farm & Timber Co. v. Manning, 239 Ark. 264, 389 S. W. 2d 435; Akridge v. Park Bowling Center, Inc., 240 Ark. 538, 401 S. W. 2d 204. A summary judgment may not be granted if there is any genuine issue as to any material fact. Westinghouse Credit Corporation v. First National Bank of Green Forest, 241 Ark. 287, 407 S. W. 2d 388. The burden rested on appellee to show the absence of any genuine or justiciable fact issue and to establish that appellant had no defense when the facts on the record considered were viewed in the light most favorable to appellant. Wirges v. Hawkins, 238 Ark. 100, 378 S. W. 2d 646; Van Dalsen v. Inman, 238 Ark. 237 379 S. W. 2d 261; Kratz v. Mills, 240 Ark. 872, 402 S. W. 2d 661.

Viewing the record as we must, we find material fact issues. The notes in question were given over a period of several months’ dealings between the parties. It was admitted that appellant made a sale of an automobile to each of the makers of said notes, after having reached an agreement as to the base price to be paid therefor, independent of any voice or control of the finance company. Thereafter, the notes were delivered to appellant made on forms it furnished to the dealer. They were payable to appellant, but he executed an unconditional guaranty on each note, along with his transfer of all his interest in the vehicle sold. Appellee was under no obligation to buy or accept any particular note from appellant. The dealer did not deal with any other finance company and recommended appellee to his customers. There is a conflict in the testimony as to whether appellee had ever refused any note offered by appellant. Appellant testified that the finance company never turned down a financing arrangement offered, but he admitted that they did, on occasion, say that too much money was involved on certain transactions. Baltz was sure that they did refuse to discount some notes. Some of the notes accepted were signed in blank at the office of appellant and taken by appellant or his authorized agent to appellee’s office where an officer of the finance company filled it in, adding to the price appellee was to receive for the vehicle a “discount” previously agreed upon and the amount of any insurance premium. Some of the notes were taken to the finance company by the customer, either alone or in company with appellant or his agent. Appellant states that the notes were all filled out at the office of the finance company, but Baltz testified that some of them were filled in when brought to him by the dealer who figured the discount and interest. Baltz was certain that some notes were brought in with the amount already filled in, without any previous arrangements for the purchase of the note by appellee. At any rate, the purchaser decided the term of each note which was payable in monthly installments. After the price and term were negotiated, the dealer usually called the finance company which advised the amount of the monthly payment. Neither party made any credit investigations. According to Baltz, repossessed automobiles were delivered to the dealer, who repaired and sold them and turned the proceeds over to appellee together with reimbursement for any loss. Evers stated that one of the vehicles repossessed was sold by appellee.

The parties disagree as to the amount of this “discount. ’ ’ Appellant says that there was a stated rate, but Baltz testified that it varied. Baltz states that they told Evers the amount in each case and the option to accept or reject was up to Evers. Baltz says that they merely purchased the notes for collection and depended entirely on the dealer’s endorsement.

Under this evidence, a trier of the facts might well determine that these transactions really constituted loans by appellee to appellant, and if the discount was greater than ten per cent, per annum, were void for usury. In such a case, we find the following statement from Restatement of The Law of Contracts, § 532, to be applicable:

“The sale of a pecuniary obligation of a third person at a discount greater than the rate of interest legally permissible is not usurious, but if the seller assumes responsibility for the payment of the obligation, the transaction, if intended as a device for a loan, is usurious.”

Even if these transactions are found upon trial not to constitute loans to appellant, the trial court might well find that the parties were engaged in a common scheme or design to obtain usurious contracts from appellant’s customers, and were equally cognizant of the illegality thereof. If so, neither would have any right of recovery against the other. Womack v. Maner, 227 Ark. 786, 301 S. W. 2d 438, 60 ALR 2d 1271.

Perhaps other questions of law or fact, or both, may be involved on trial of this case, but, as illustrated here-inabove, there clearly was no basis for a summary judgment in favor of appellee.

The decree is reversed and the cause remanded for further proceedings.

Harris, C. J., dissents.


author: J. Fred Jones, Justice.

text:
    Stella May WOOD v. Henry J. SWIFT, Trustee of the T. E. (Dick) Dill Trust Estate et al
    5-4527
    428 S. W. 2d 77
    Opinion delivered May 21, 1968

      Swift & Alexander, for appellees.
   J. Fred Jones, Justice.

This is an appeal from a decree of the Mississippi County Chancery Court, Osceola District, dismissing a complaint filed by the appellant, Stella May Wood, to set aside a deed executed and delivered by her to T. E. Dill.

The appellant, Mrs. Wood, was 87 years of age at the time of trial. Her husband had been dead some thirty odd years and she had lived alone at her home in Lux-ora, Arkansas, since her only son was killed in line of duty as a federal prohibition officer in 1934. From about 1934, Mrs. Wood had OAvned, in her own right by inheritance and purchase, a 160 acre farm in Mississippi County. A part of the farm had been taken for highway purposes leaving 115.74 acres which Mrs. Wood leased for cash. T. E. Dill was some sixteen years younger than Mrs. Wood and he owned a farm of some 400 acres near Mrs. Wood’s farm. In 1950 when Mrs. Wood was 70 years of age and Mr. Dill was 54, through the encouragement of mutual friends, they became acquainted with each other. Upon Mr. Dill’s second or third visit with Mrs. Wood in 1950, he assured Mrs. Wood, upon inquiry, that he was divorced and not married, so their acquaintance quickly developed into deep affection attended by constant companionship.

In August 1960, Mrs. Wood conveyed the title in her farm to Mr. Dill by warranty deed, which, except for the description and covenants of warranty, recited as follows:

“ WARRANTY DEED
KNOW ALL MEN BY THESE PRESENTS:
That I, Stella May Wood, a widow, for and in consideration of the sum of Ten ($10.00) Dollars to me in cash in hand paid by T. E. Dill, and other good and valuable consideration bad and received by me from him, and in consideration for invaluable services rendered and to be rendered me by Grantee, do hereby grant, bargain, sell and convey unto the said T. E. Dill, and unto his heirs and assigns forever, subject to the reservation hereinafter expressed, the following lands lying and being situated in the Osceola District of Mississippi County, Arkansas, to-wit:
* & #
Grantor hereby expressly reserves unto herself during the full term of her natural life the right of possession and occupancy in and to the above described property and the rents and profits arising therefrom, it being her specific intention by this instrument to convey to the Grantee herein the full fee title to said real estate, subject only to the life estate herein reserved by her.
TO HAVE AND TO HOLD the same unto the said T. E. Dill, and unto his heirs and assigns forever, together with all and singular the tenements, appurtenances and hereditaments thereunto belonging or in any wise appertaining, subject to the life estate herein reserved in Grantor.”

This deed was dated August 31, 1960, and was filed for record on September 2, 1960. It was prepared by Mbs. Wood’s attorney upon Mrs. Wood’s request and at Mr.'Dill’s direction. Mrs. Wood then went to her attorney’s office and signed the deed. The deed was delivered to Mr. Dill after it was recorded and the relationship of the parties continued as before. About two and one-half years after the deed was executed and delivered, Mr. Dill suffered a heart attack and moved into the home with Mrs. Wood. About the time Mr. Dill moved into the home with Mrs. Wood, she executed a will devising her home, without remainder over, to Mr. Dill, and Mr. Dill also executed a will including, all his real property in a testamentary trust for the benefit of his three daughters and his grandchildren. On June 14, 1965, Mr. Dill died and after his death, Mrs. Wood filed the present action to set aside the deed for lack of consideration, mutual mistake, failure to conform to the intent of the parties as orally agreed, unilateral mistake, unjust enrichment, undue influence, fraud and duress.

Upon trial of the case, the chancellor dismissed the complaint for want of equity and upon appeal, Mrs. Wood designates the following points for reversal:

“The court erred in finding and holding that the plaintiff failed to carry the burden of proof in every instance and in dismissing plaintiff’s complaint for want of equity and in failing and refusing to grant the relief prayed for in the complaint and amendment thereto.
The court erred in refusing to receive ,in evidence and consider in this case the Arkansas Supreme 'Court opinion in the Dill v. Dill case reported in volume 209 Arkansas Reports at pages 445, et seq.”

Primarily, a fact question was presented to .the chancellor in this case and upon trial de novo in this court, we are of the opinion that the decree of the chancellor is not against the preponderance of the evidence.

Aside from the land involved here, the Dill estat^' was by no' means insolvent. Mrs. Wood had one sistei in a rest home in Missouri, and another in California at the time of Mr. Dill’s death. Mrs. Wood had a brothel living at the time the deed was executed, and according to her own testimony she told her brother that she intended to deéd the property to Mr. Dill, but did not ask her brother’s advice in the matter and did not advise him of the details of the transaction. The brother has since died, and the two sisters are her nearest relatives.

Prom appellant’s own testimony, Mr. Dill made overtures to meet her in 1950 and she finally permitted Mm to call on her. Upon her inquiry, he assured her that he had obtained a divorce and had been separated from his wife for six years. They quickly became very close friends and constant companions. According to Mrs. Wood’s own testimony, Mr. Dill visited her several times a day, seven days a week, four weeks per month, and twelve months per year; and their relationship grew stronger as the years went by from 1950 when they met, to 1960 when she deeded the property to him,- and that intimate relationship continued for an additional five years until Mr. Dill’s death.

Concerning the execution of the deed, appellant testified :

“ [M]y health was beginning to fade in 1960 and I was afraid I would not be able to carry on much longer and I worried quite a bit about it and Mr. Dill, in order to relieve me of all of these worries, offered to take over for me.
• * #
He offered to take over, look after the farm, see it was planted, collect the rents and see I got my rent and he would see I was taken care of if I got sick, he would see my doctor bills and medical bills were paid and I had a home as long as I lived. After my death — we never figured I would out-live hiwu^af-ter my death he was to collect the rents and divide the profits with my two sisters, my oldest sister is in Sikeston, Missouri in a nursing home and the other sister is in California. He was to divide the income between them and after their death he was to have full possession.
* *
I decided I would rather give him a deed to it than leave it in a will because I was wanting to save him inheritance taxes. He would have to pay inheritance tax if he inherited through a will.” (Emphasis supplied).

Appellant denied receiving the Ten Dollars-consideration recited in the deed and contended that she intended, and that Mr. Dill knew, that their full agreement as to looking after and caring for her during her lifetime, and then paying the rents from the farm to her sisters during their lifetime, was to have been incorporated into the deed. Appellant’s life estate was very clearly incorporated in the deed and certainly the chancellor could have concluded that ten years of close daily companionship, as testified by the appellant, would have included “services performed” as sufficient consideration to support a deed for the remainder following a life estate. According to appellant’s testimony, she trusted Mr. Dill to have their entire agreement incorporated in the deed; she did not read the deed when she signed it, and after she delivered it to Mr. Dill, she did not see it again until after Mr. Dill’s death on June 14, 1965, when she read the deed for the first time, and learned that all of their agreement was not incorporated in the body of the deed.

According to appellant’s testimony on cross-examination, she had been receiving cash rent from her farm, but after the deed to Mr. Dill the land was leased on a crop rent basis, which enabled them to transfer the cotton allotment to more productive land. Mr. Dill went to the farm two or three times a week and appellant went with him on many occasions. Mr. Dill took appellant anywhere she wanted to go, and when Mr. Dill was on his way to Florida he was advised that appellant was ill and he returned without finishing his trip.

Mrs. Johnnie Meadows, one of the daughters of Mr. Dill, testified:

“Q. Did you or did you not know such a deed was in existence?
A. No, sir, I certainly don’t know a thing about, it.
Q. Did you, after your father’s death, visit with Miss Stella?
A. Very often.
Q. During that period of time did you and she discuss this land and her getting it hack?
A. On the telephone a few times we have. I don’t think on visits we ever did.
Q. That was the only mention of that?
A. On the telephone we have discussed it.
Q. Did you offer to release your interest in these lands to her on the basis that you knew your father had not put any money in these lands or paid any consideration for them?
A. No, not on that basis because I didn’t know about their business particularly.
Q. What was the basis?
A. Because Miss Stella and I have always been real good friends and that friendship means more than the money or the land.
Q. Do you know whether or not your father put any money in this land?
A. I have no idea.”

A cousin of Mr. Dill’s visited him in 1963, and was introduced to appellant. He testified as follows:

“Well, she showed me around her house and her flowers and Dick told her I was his cousin, used to «work for him, used to live in Osceola and she told me liow fond she was of Dick and how much he helped her in her business, that she gave him that farm for what he had done for her, she wanted to do something for him, he had been so good to her, she didn’t know what she would have done without him.
# # #
. . . [S]he said he had really been good to her. She said, ‘Now, I have been good to him too.’ She went ahead to say she had somebody to stay there witli her, he was not staying there regularly at that time, I don’t think, but she enjoyed being with him, he had helped her so much with her business that she wanted to do something for him.”

Mr. Swift, an attorney and the trustee of the Dill estate, prepared a lease for Mr. Dill and Mrs. Wood and testified as follows:

“That was the first occasion I had met Mrs. Wood and she proceeded in the course of our discussion to tell me how Mr. Dill acquired the property, advised me she made him a gift of this property prior to this time and was very proud of it and gave me the reason for having done so. * * * She was pleased to have made him a gift because of what he had done for her during their long relationship. She went into that relationship at great length. She was very proud of the fact Mr. Dill had brought some happiness to her. Always in Miss Stella’s mind when I met with her were- three paramount things that had stayed in her mind. One was upon her husband’s death his family had beat her out of some property. That was always a constant bother to her. She was always obsessed with the anguish of having lost her son many years before and third, she was so pleased that after Mr. Dill came into her life she had somebody to look after her. * * * She talked about the fact she had an income from it. That’s using her terminology. There was no doubt in her mind she had a life interest in the property. ’ ’

Mr. Swift testified that Mrs. Wood had told him that she had given the land to Mr. Dill, reserving to herself a life estate; that the relationship between Mrs. Wood and Mr. Dill seemed to be more of a mother-son relationship; that Mrs. Wood had inquired as to whether she had successfully avoided inheritance tax in the execution of the deed; and that she had expressed satisfaction in the disposition of the property under the testamentary trust executed by Mr. Dill.

On recall, Mrs. Wood testified that about the time Mr. Dill moved into her home, she told Mr. Dill that she wanted to make a will, and how and why she wanted it made, and that she dictated her will to attorney Hyatt; that the will was prepared by him and in it she left her home and everything to Mr. Dill. In discussing the will, Mrs. Wood testified:

“Q. At the time the will was discussed, was any discussion had as to where he should live when he was managing these properties, the farm lands?
A. At my death he was to maintain the home and keep it for his own personal home, occupy it, I suppose.
Q. Where would it go at his death?
A. There was no provision made after his death.
Q. There were no strings attached to the house?
A. No, as long as he lived he was to maintain it. as a home.
Q. Was that a part and parcel of the agreement you had at the time you delivered the deed?
A. No, this was not mentioned when I delivered the deed.”

In January 1945, Mr. Dill was granted a divorce from his wife by a decree of the Mississippi County Chancery Court and on appeal to this court the decree was reversed. Dill v. Dill, 209 Ark. 445, 191 S. W. 2d 829. The appellant contends that the chancellor erred in not admitting into evidence, and considering at the trial of this case, our opinion in the Dill case, supra. We are of the opinion that the chancellor was correct and committed no error on this point. There was no controversy in the case at bar concerning Mr. Dill’s marital status at the time of his death and there is no contention that he was ever married, or ever proposed marriage, to the appellant. It is true that the appellant testified that Mr. Dill told her that he was divorced and that she believed him and had confidence in him. Appellant satisfied herself as to Mr. Dill’s marital status on his second or third visit and it would appear that her confidence in him at thát- stage of their acquaintance was based more on infatuation, or desire for companionship, than on what Mr. Dill told her. On this point appellant testified as follows:

“A. There was one or two of my old friends, kind of gossipy, told me they heard he never had the divorce then I would approach him on the subject and he would deny it and tell me to quit worrying about that, that Judge Barham had got him a divorce and it was final.
* # #
Q. I believe you told people on various occasions you made this gift to Mr. Dill?
A. I don’t remember bragging about it, I remember telling one or two of my closest friends I had fixed the deed, had it made out to him. # * #
Q. Miss Stella, do you recall the heart attack Mr. Dill had?
A. Yes.
Q. You brought him from the hospital to your home?
A. Yes.
Q. That’s when he began living with you?
A. Yes, two and a half years before he died. He had no home to go to and I offered him my spare room and he accepted it and he liked it so well he just stayed on.
Q. After you brought him from the hospital these so-called friends called you again and warned you he was not divorced?
A. I believe so.”

We can see no connection between the character of Dill as it might have been revealed by the record in previous divorce proceedings, and the character of Dill and his overt acts in dealing with appellant during the ten years of their close association prior to the execution of the deed, and the additional five years after its execution and delivery as revealed in the record before us.

The record does not reveal the ages of appellant’s sisters, but the record does reveal that no provision was made for them in the will appellant dictated to her attorney. The record does reveal, from appellant’s own testimony, that it never occurred to her or Mr. Dill that she would outlive him, and the record also reveals, from appellant’s own testimony, that the reason she conveyed the property by deed rather than a will, was to save Mr. Dill inheritance tax on the transaction.

We agree with appellant’s contentions, and with the cases cited in support of them, that support deeds are recognized in this state; that when a deed is executed in consideration of future support and maintenance and the grantee fails to fulfill the provisions of the deed, the grantor may sue at law for damages, or may sue in equity to cancel the deed for failure of consideration. We agree with the appellant that “the real consideration in a deed can always be shown by parole evidence.” We also agree that a suit may be maintained in equity for revision of a deed for condition broken, the rationale of the doctrine being that an intentional failure upon the part of the grantee to perform the condition constituting the consideration for a deed, raises the presumption of fraudulent intention from the inception of the contract, and therefore vitiates the deed based upon such consideration. Such contracts are in a class peculiar to themselves, and where the grantee intentionally fails to perform the contract, the remedy by cancellation, as for fraud, may be resorted to regardless of any remedy the grantor may have had also at law. Goodwin v. Tyson, 167 Ark. 396, 268 S. W. 15. While reformation of a deed or contract for fraud or mistake is a proper matter for equitable jurisdiction, the burden of proving fraud, mistake or lack of consideration rests upon the one alleging it.

We conclude that the chancellor’s finding that appellant failed to meet the burden of proof in the case at bar is not against the preponderance of the evidence, and that the decree of the chancellor should be affirmed.

Affirmed.


author: Conley Byrd, Justice.

text:
    John A. RAUCH v. FIRST NATIONAL BANK in Little Rock
    5-4510
    428 S. W. 2d 89
    Opinion delivered May 21, 1968

      Smith, Williams, Friday & Bowen, for appellee.
   Conley Byrd, Justice.

John A. Rauch appeals from a judgment in favor of appellee First National Bank in Little Rock upon a guaranty signed by Rauch to accommodate John L. Copeland, Jr. For reversal he contends that his signature on the guaranty was obtained by fraudulent misrepresentation on the part of Finley Vinson, officer of the First National Bank; that the note or other instrument executed by John L. Copeland, Jr., was void under Ark. Stat. Ann. § 34-1604 (Repl. 1962,) having been executed for payment of a gambling obligation ; and that, since the bank waived its rights as to the guaranty of Barron Lange upon the same indebtedness, it thereby waived its rights as to appellant Rauch under Ark. Stat. Ann. § 85-3-606 (Add. 1961).

The record shows that John L. Copeland, Jr., when the guaranty agreement was executed, was manager of tlie Riverdale 'Country Club and bad gotten into financial troubles because of some gambling losses. He approached Mr. Finley Vinson of the First National Bank relative to an $11,000 loan, which the bank refused to make upon the security offered. Subsequently Mr. Copeland informed Mr. Vinson that Rauch, William E. Darby, William S. Miller, Jr., and Barron Lange would sign, his note. Pursuant to a conversation between Vinson and each of the guarantors a separate guaranty instrument was drawn for each party. Rauch’s guaranty agreement covered $4,250; Darby’s $4,250; Miller’s $1,-500; and Lange’s $1,000. Upon execution of the agreements a total of $11,000 was disbursed, and the record indicates that some of the money was used to pay off gambling debts that Copeland had incurred. Barron Lange died while Copeland’s payments were current and the time for filing claims against his estate expired before Copeland defaulted.

Rauch bases his claim of fraudulent misrepresentation upon the allegation that Vinson assured him the bank had sufficient collateral to cover the $11,000 note. Needless to say, Rauch’s testimony was controverted by Vinson’s, and under the circumstances we must hold that there was substantial testimony to support the verdict of the trial court sitting as a jury.

We find no merit in Rauch’s contention that Copeland’s obligation was void under § 34-1604, supra. A close reading of that statute shows that it voids obligations only where the money is “lent to be bet.at any gaming or gambling device. ’ ’ There is no testimony here showing that the money was lent for purposes of gambling.

The bank’s release or failure to claim against Lange’s estate had no effect upon Rauch’s guaranty because he specifically agreed that he would be liable notwithstanding a release of any other guarantor. Section 85-3-606, supra, recognizes that the release of one guarantor does not release another when the release is made with the consent of the latter. We know of no reason why the consent given by Ranch at the execution of the agreement should not be binding.

Appellee filed in this court a claim for additional attorney’s fee. We grant an attorney’s fee which, when added to that allowed by the trial court, does not exceed 10 per cent of the principal plus accrued interest.

Affirmed.

Ward, J., not participating.


author: Carleton Harris, Chief Justice. John A. Fogleman, Justice, Conley Byrd, Justice,

text:
    Guy Dwight SAWYER, d/b/a Sawyer’s All Star Foods v. PIONEER LEASING CORPORATION
    5-4501
    428 S. W. 2d 46
    Opinion delivered May 27, 1968
    [As amended upon denial of petition for rehearing] September 3, 1968.]

      McMillen, Teague, Bramhall & Davis, for appellant.

      Rose, Meeh, House, Barron, Nas<h & Williamson, for appellee.
   Carleton Harris, Chief Justice.

This case involves an ice machine. Appellant, Guy -Dwight Sawyer, is an independent grocer, operating in Little Eock. Appellee, Pioneer Leasing Corporation, is a Delaware corporation, which instituted suit against Sawyer for the sum of $2,039.40, pursuant to a written instrument termed “Master Lease Contract.” The instrument recites that the lessor is Pioneer Leasing Corporation and the lessee is Guy Dwight Sawyer d/b/a Sawyer’s All Star Poods. The parties agreed that lessee was leasing a Lineo lee Station, and provided:

“This schedule is for a period of 60 months, at $45.32 per month beginning July 23, 1963. First and last 4 payments payable at time of signing this Schedule in the amount of $226.60.”

Section 5 of the agreement recites:

, “No warranties or representations regarding the items herein leased or their condition, quality or suitability, or their freedom from latent defects, have been made or shall be deemed to be made by the Lessor, and Lessee has selected the items leased and the same have been delivered to Lessee at Lessee’s sole risk and discretion. ’ ’

Section 8 states:

“At the expiration of the term of this lease for any item(s) leased hereunder, Lessee shall immediately redeliver such item(s) at Lessor’s place of business or such other reasonable place as Lessor may designate within the State where the item)(,s) was leased, in like-condition as it was received, less normal wear, tear and depreciation; properly crated with freight prepaid.”

Section 9, a rather lengthy section provides, inter alia, that in ease of default in payment for a period of •ten days, lessor is authorized to take immediate possession of the leased property, and lessee shall remain liable for the payment of the total rental, all such rental being immediately due and payable. Both pages of the instrument provide, “This lease cannot be cancelled.”

The contract commenced on July 23, 1963, and appellant made his down payment, and several monthly payments, the last payment being made in May, 1964. Upon default, the suit was filed, and Sawyer, in his answer, asserted that the performance of the machine had been misrepresented at the time he entered into the contract, and that it was not suitable for the purpose for which he desired to use it, though represented to be suitable, and that there had been an implied warranty of fitness upon which he l-elied; that such warranty had been breached, since the machine had ceased to operate, and was incapable of being repaired. On trial, appellee moved for a directed verdict at the conclusion of the evidence, which motion was granted, the jury returning its verdict for appellee in the amount of $2,039.40. From the judgment so entered, appellant brings this appeal.

Sawyer testified that he had a number of customers who desired that he acquire an ice maker, in order that they might obtain packaged ice. He made inquiry, and subsequently, a man named Don Barnett from Benton (evidently learning of Sawyer’s inquiries) contacted him about a machine. Barnett showed appellant pictures of a Lineo ice making machine, and advised that the machine would work either inside or outside of the building. They decided the best location would be the front porch. Sawyer further stated that Barnett told him that the machine would manufacture 400 pounds of ice per day, and appellant, in agreeing to take same, stated that he understood that he was purchasing the property. Subsequently, Barnett brought back the lease agreement, heretofore referred to, and when Sawyer inquired why he was being asked to sign a lease agreement, instead of a purchase agreement, was told, according to the witness, “Well, it was just like buying a car, after you pay so many payments, it is your box.” Sawyer testified that he did not read the provisions of the contract in detail, and that he had only a sixth grade education.

Still further, according to the witness, the machine, after being installed, worked satisfactorily for about six months, in fact, until “the first cold spell came.” It then ceased to function. Appellant called Barnett to get the name of the mechanic for the company, and was advised that the company did not have one, and that Sawyer should call any refrigeration company. Ralph Henderson, a refrigeration man, was contacted, and the witness related that Henderson worked for over a month on the machine, and was paid “around $100.00 for his work,” but Henderson was unable to get the machine to produce more than fifty pounds of ice per day. Nothing further was done until spring, when a man named Byers was contacted; Byers, too, was unable to get the machine in any better working order, and only charged around $100.00 for his work, instead of the original intended charge of $150.00. After the unsuccessful efforts of Byers, appellant testified:

“Well, I called Mr. McCoy . . . well, I first call Mr. Barnett and in turn called Mr. McCoy, then I called Mr. 'Carter from Memphis and I called a fellow from Warren, then I called the ice making company itself, down in Texas . . . tried to get all of them to do anything about the box, tried to get it to operate. * * * None of them would do anything.”

Thereafter Sawyer quit making payments, and the suit followed.

C. H. Turner of Memphis, Treasurer of Pioneer Leasing Corporation, and in charge of all the records of tlio company, testified that Pioneer Leasing Corporation is in the equipment leasing business. He stated that his company buys equipment after it has been selected by the lessee, and he has signed lease agreements; that all items are delivered to a lessee at the latter’s sole risk, and that the company only purchased the ice making machine because Sawyer had selected it. Turner testified that he had no idea what Sawyer was told at the time he signed the lease; that Barnett had never been an employee of appellee, hut rather, was a sales agent for the supplier of the equipment; that the machine Ijad been purchased from the Tri-State Ice Machine Company, and Sawyer had paid a total of $679.80. The company official said that the expected life of the machine was eight or ten years, and at the end of the five-year lease period, Pioneer “more than likely would have offered to sell it to Mr. Sawyer” for a price that would have to be negotiated. He stated that appellee had had no leases on ice machines that had expired.

John P. McCoy, who had been employed by Pioneer in 1964, 1965, and 1966, stated that prior to the transaction, he had never met Sawyer or Barnett; that he did not write up the agreement and did not know who did write it. The witness had directed a letter to Turner, relating that Sawyer was very unhappy with the machine, had spent money endeavoring to have it repaired, and had expressed the thought that Pioneer should “put the pressure on Tri-State to get the machine working. He claims lie is not going to make any more lease payments until the machine is fixed. I told him that maintenance was not our problem.” McCoy had no idea what Barnett might have told Sawyer about his relationship with the company. These were all of the witnesses who testified.

Of course, the only question before this court is whether appellant offered sufficient evidence to warrant the submission of the case to the jury. There are no express warranties, and the appellant relies upon alleged misrepresentation by Barnett, and a breach of implied warranty. The testimony of Sawyer relative to Barnett’s statements has heretofore been set out. Appellee’s first answer to this argument is that Barnett was not an agent of Pióneer. The testimony of Turner (that Barnett was never an employee of Pioneer)' is pointed out, as well as the fact that Sawyer never did testify that Barnett said he was an agent or employee of Pioneer. Nonetheless, it is undisputed that Barnett was the man who presented the contract to Sawyer, and obtained his signature thereto. In fact, it appears that all proceedings in connection with the execution of the lease by appellant were handled by Barnett — who did not testify. Certainly, the obtaining of the lease was called to the attention of appellee company, for the instrument was subsequently executed by the president of the company, Barclay McFadden — evidence that the contract was thus ratified. More than that, the company accepted payments from Sawyer of over $600.00. In Mark v. Maberry, 222 Ark. 357, 260 S. W. 2d 455, we held that when one accepts the fruit of another’s agency in the sale of property, he cannot subsequently be heard to disclaim such agency. That case involved real estate, but the principle applies likewise to the sale of personal property. We think the testimony on the question of agency was certainly sufficient to make a jury question.

Appellee calls attention to the fact that the “spec sheet” describing the features of the Lineo machine, and prepared by the C. M. Lingle Company, maker of the machine, is stamped at the bottom as showing the distributor of this machine to be Arkansas Ice Making and Vending Equipment Company of Benton. However, we consider this only a circumstance to be presented for the jury’s consideration in reaching its verdict.

This brings us to the question of the implied warranty. Sawyer stated that Barnett told him that the machine would make four hundred pounds of ice per day, and it would operate either on the inside or outside of a building. The literature which was shown to Sawyer states that the ice maker has a capacity of “up to 400 lbs.” According to appellant’s evidence, representations as to the ice making capacity were not limited to the function of the machine during warm months; in fact, the literature shown Sawyer points out “bonus features,” one of which reflects the machine to be “winterized. ’ ’ "What this may mean, is not entirely clear, but it would appear that it could well mean that the ice maker will operate efficiently in the winter, as well as in the summer. "Whether Sawyer was entitled to rely upon this representation is simply another matter for the jury to pass upon.

It is also pointed out that the machine worked well for the first several months, and that, even if Barnett was an agent of Pioneer, and made the representations testified to by Sawyer, such representations (that the machine would operate outside), in order to afford appellant. relief, must have been false at the time Sawyer claims to have relied upon them; since the machine did operate, as represented, for six months, there could be no misrepresentation of this fact. As a matter of law, we cannot say that we agree. After all, six months is about one-tenth of the total period to be covered by the lease, a lease that was non-cancellable. Could it be said that, if one purchases a new automobile which operates entirely satisfactorily for a few months, any implied warranty that the vehicle was suitable for the purpose for which it was bought has been fully complied with even though it practically falls apart thereafter?

It is likewise argued that appellant employed mechanics to work on the machine, and continued payments for about ten months, and (says appellee) this confirms that Sawyer understood that there were no warranties, and that maintenance was solely his obligation. Of course, the record also reflects that Sawyer contacted Barnett and McCoy relative to the malfunction of the machine, but again, we simply point out that these were circumstances to be considered by a jury when determining the controversy, i. e., these acts by appellant over the period of time involved, do not, as a matter of law, bar him from obtaining relief.

Ark. Stat. Ann. § 85-2-316 (2) (Add. 1961), a part of the Uniform Commercial Code, provides:

“Subject to subsection (3) [which does not here seem applicable], to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify amy implied warranty of fitness the exclusion must be by a writing and conspicuous. [Our emphasis.] Language to exclude all implied warranties of fitness is sufficient if it states, for example, that ‘There are no warranties which extend beyond the description on the face hereof.’ ”

In the contract before us, this provision has not been complied with. In fact, the entire agreement itself, including Section 5, heretofore quoted, is in very small print.

Of course, appellant contends the transaction is governed by the code, but the code is generally thought of as applying only to sales. Appellee points out that the contract under discussion was not a sale, since the lease does not provide for the passing of title. We agree with that contention. Item 8, previously set out, describes what shall be done with the property at the end of the sixty months.

It is entirely possible, in fact, probable, as testified to by Turner, that Pioneer would have sold the machine to Sawyer if a price could be agreed upon, and the transaction is very close to being a sale. Still, the lease agreement definitely sets out that appellant shall, at the expiration of the term of the lease, immediately redeliver the leased property to lessor. It would thus be difficult to say that the instrument is not a lease — 'but we have reached the conclusion that it is subject to the pertinent, provisions of the code, more specifically, the quoted subsection of Section 85-2-316. In reaching this conclusion, we are impressed with the reasoning of several authorities in this field. E. Allen Farnsworth, Associate Professor of Law at the Columbia University Law School, in an article, “Implied Warranties of Quality in Non-Sales Cases,” 57 Colum. L. Rev. 653 (1957), states:

‘ ‘ To say that a warranty is implied in a sale is not to say that none is implied if there is no sale. Implied warranties of the quality of goods are today firmly entrenched in sales law and their growth has been paralleled by that of similar warranties where goods have been supplied under conditions not amounting to a sale. Yet so little attention has been directed to the latter that it is not unusual to find the assertion of an implied warranty rejected with the explanation that since the transaction was not technically a sale, no warranty could be implied. Conscious of this, the draftsmen of the Uniform Commercial Code state in a comment:
“ ‘Although this section is limited in its scope and direct purpose to warranties made by the seller to the buyer as a part of a contract for sale, the warranty sections of this Article are not designed in any way to disturb those lines of case law growth which have recognized that warranties need not be confined either to sales contracts or to the direct parties to such a contract. They may arise in other appropriate circumstances such as in the case of bailments for hire, whether such bailment is itself the main contract or is merely a supplying of containers under a contract for the sale of their contents. ’

The writer then compares other uniform acts (Uniform Sales Act and Negotiable Instruments Law), pointing out that, though the sales act does not expressly provide for the implication of warranties in non-sales cases, it has influenced cases involving the non-sale of goods; further, that the Negotiable Instruments Law has, at times, been used as a source of rules to govern non-negotiable bills and notes.

Continuing, the writer says:

“A bailment for hire differs from a sale in that, while a sale transfers ownership in exchange for the price, a bailment for hire merely transfers possession in exchange for the rental and contemplates the return of the chattel to the owner. Yet it is very like a sale in regard to the reliance upon the supplier of the goods, and it is not surprising that a warranty of fitness for the intended use has been implied in a variety of such cases. * * *
‘ ‘ The obligation is in many respects similar to that of the seller of goods. For example, there is no warranty where the bailment is gratuitous, nor does the duty extend to those not in privity with the bailor, and if the bailee has inspected the chattel, there is no warranty as to defects which the inspection should have revealed. The warranty is commonly described as though analogous to that of fitness for a particular purpose under the Uniform Sales Act, rather than that of merchantability.”

Still further, it is added:

“It has been suggested that just as the mass production of goods gave momentum to the growth of the modern law of the seller’s obligations for the quality of those goods, so too the mass production of housing can he expected to create new obligations of sellers for the quality of that housing. Even more certainly, the boom in enterprises which thrive on the rental of everything from automobiles and floor waxers to linens and diapers portends an increase in the obligations of entrepreneurs now operating largely under rules formulated during the time of the horse and carriage.
* * #
“The preceding discussion indicates that there is respectable authority for the extension of implied warranties to non-sales cases, in spite of a tendency to overlook the possibility. In borderline cases reasoning by analogy to sales law should not be merely a technique of last resort to be used only where the facts will not support the finding of a sale. It is preferable to categorization of the contract as one of sale and direct application of the sales statute.”

In Hart and Willier, Forms and Procedures Under the Uniform Commercial Code (1966), a similar view is expressed. The authors state in Paragraph 12.02, Subsection 1, Page 1-64:

“The warranty question is an example of application of Code provisions by analogy. While rented goods are not ‘sold,’ a property interest short of ‘title’ is transferred as in a sale and the transaction is in the nature of a bargain. Thus, express warranties, promissory or affirmatory in nature, could as well be a basis of the bargain under Section 2-313 as in a sale, and implied warranties, collateral to the transfer aspect, could logically accompany the transaction. More specifically, the lessor may expressly affirm that a machine to he leased will he of a certain model or capacity or the lessee may rely npon the lessor’s skill and judgment in supplying goods suitable for a particular purpose to the lessor [sec. 2-315], How much simpler and more certain it is for courts, counsel and parties if they can apply the rules of Article 2 by analogy to determine their obligations and their remedies. Still, courts at the trial level have shown a reluctance to do this. One court, however, has done so with reference to the sale of securities, expressly excluded from the definition of ‘goods’ in Section 2-105, insofar as Article 8 contained no rules relevant to the particular conduct in dispute. Both the leasing-of-goods and sale-of-securities examples involve commercial transactions and the Code encompasses commercial transactions. ’ ’

It is pointed out that Section 2-102 (Ark. Stat. Ann. § 85-2-102 [Add. 1961]) applies to transactions in goods, and that Section 2-202 (Ark. Stat. Ann. § 85-2-202 [Add. 1961]) omits all direct reference to sales transactions. The authors then state:

“ * * * It should, therefore, apply to a lease of goods —a transaction in goods — by this simple construction of statutory language. ’ ’

It is thus clear that there is respectable authority for applying code provisions in some instances where the transaction is analogous t'o a sale. It is true that the authorities cited do not discuss the disclaimer provision in the code, nor do we find cases where this provision, as applicable to a lease, has been decided. However, in Fairfield Lease Corp. v. Colonial Aluminum Sales, Inc., 3 UCC Rep 858 (NY Sup Ct., 1966), a case from the New York Supreme Court (not the court of last resort), a coffee vending machine had been leased by a vending company to the defendant. This lease had subsequently been transferred to a vending credit corporation, and suit was instituted against the defendant for a balance of payments dne under the lease agreement. After passing upon one point, the court then stated:

“The defendants also claim the lease, when considered in its entirety, is unconscionable (see, Uniform Commercial Code, § 2-302). This contention is based on the absence of any provision in the lease obligating the lessor to service and repair the machine, and the inclusion of a clause reciting that: ‘Lessee agrees . . . .[the machine] is suitable for its purposes, and that Lessor has made no representation or warranty with respect to the suitability or durability of [the machine] for the purposes and uses of Lessee, or any other representation or warranty, express or implied with respect thereto.’ In view of the denial of summary judgment, the court at this time need not decide whether the disclaimer of warranties is enforceable (Uniform Commercial Code, § 2-316) * *

So, at least, the question of whether the disclaimer provision is applicable, in appropriate circumstances, to a lease agreement, though not passed upon by the court, has been noted and urged as a point of reversal. We see no reason why, if appropi’iate lease transactions can properly be governed by the rules applying to sales, the disclaimer section should not also apply. If, in a sales transaction, one is required to exclude an implied warranty of fitness by a writing that is conspicuous, we see no reason why the same provision should not apply to leases that are analogous to a sale.

The comment by the New Jersey Supreme Court in the case of Cintrone v. Hertz Truck Leasing, Etc., 212 A. 2d 769, somewhat expresses our thinking in the matter. This case was not decided under the Commercial Code, but under common law warranties, although the code is referred to. The litigation related to the injury of Cintrone while a passenger in a truck which had been leased by bis employer from appellee. The complaint, inter alia, alleged a breach of appellee’s warranty that the vehicle was fit and safe for use. The trial court dismissed this warranty claim by Cintrone, but on appeal, the Supreme Court reversed, holding that, on the facts proved, the contract for the leasing and use of the truck gave rise to an implied warranty that it was fit for the use contemplated by plaintiff’s employer. It was further held that the evidence adduced created a jury question as to whether a breach of the warranty had been shown, and whether, if shown, it was the producing cause of the accident. It is true that this action was in tort, but we find it entirely logical to apply the same rationale to cases in contract. The court’s discussion as to this feature is as follows:

“There is no good reason for restricting such warranties to sales. Warranties of fitness are regarded by law as an incident of a transaction because one party to the relationship is in a better position than the other to know and control the condition of the chattel transferred and to distribute the losses which may occur because of a dangerous condition the chattel possesses. These factors make it likely that the party acquiring possession of the article will assume it is in a safe condition for usé and therefore refrain from taking precautionary measures himself. 2 Harper and James, Torts, § 28.19 (1956). Harper and James point out that the presence of such factors in sales set in motion the development of the doctrine of implied warranties. They decry the notion, however, that because the doctrine had its origin in sales, the warranty protection should be ivithheld in other situations when the same considerations obtain. And they argue persuasively that in the face of present-day forms of business enterprise, development of the warranty doctrine in sales should point the tray by suggestive analogy to similar results in cases cohere a commodity is leased. [Our emphasis.]
“In this connection it may be observed also that tlie comment to the warranty section of the Uniform Commercial Code speaks ont against confining warranties to sales transactions.* * *”

The court continued, first quoting the article from Farnsworth (not included in our earlier quote):

“ ‘The expansion of enterprises engaged solely in bailment for hire seems to justify increasing imposition of absolute warranties, at least to the extent that they would be imposed upon a seller of similarly used goods. In addition, reliance is greater than in the typical sale, for it is generally true that the bailee for hire spends less time shopping for the article than he would in selecting like goods to be purchased, and since the item is not one he expects to own,, he will usually be less competent in judging its quality.’
“A sale transfers ownership and possession of the article in exchange for the price; a bailment for hire transfers possession in exchange for the rental and contemplates eventual return of the 'article to the owner. By means of a bailment parties can often reach the same business ends that can be achieved by selling and buying. ’ ’

We are holding that Section 85-2-316 (.2) is applicable to leases where the provisions of the lease are analogous to a sale. Here, the contract provides that the lessee shall pay all expenses of repairs and maintenance ; further, Mr. Turner, the company treasurer, testified that it was probable that the machine would be offered for sale to appellant at the end of the sixty months’ period. The transaction really seems to be a sale in every respect, except for the fact that the instrument provided that the ice machine should be returned to the lessor.

Let it be remembered that this subsection refers only to implied warranties; this holding has no effect on any other provisions in the code — and, of course, to protect himself, the lessor néed only, in his disclaimer, to use conspicuous language. He is thus fully protected. After all, what legitimate objection can be made to using type (for the disclaimer) that is conspicuous?

This is the first case of this nature to come before this court since the Uniform Commercial Code was enacted into law by the General Assembly, and, though not meaning to imply that subsequent remarks are directed to the case at bar, we think it well to point out that agreements of this nature will be examined closely by this court. It is possible that similar agreements could be used to cloak usurious charges, i. e., a transaction which was actually a sale could be set up as a lease in order to enable charges to be made that would, under a credit sale, constitute usury.

In accord with the reasoning set out in this opinion, we are of the view that the court therefore erred in directing a verdict for appellee. The judgment is reversed, and the cause remanded, with directions to proceed in a manner not inconsistent with this opinion.

Fogleman and Byrd, JJ., dissent.

John A. Fogleman, Justice,

dissenting. I respectfully dissent because the majority opinion extends the provisions of the Uniform Commercial Code to leases of personal property. I find nothing in the Commercial Code which remotely suggests that it has any such application. The definitions in the Chapter on Sales, from which the majority has applied certain sections, would definitely eliminate leases. See Ark. Stat. Ann. §§ 85-2-103, 85-2-106 (Add. 1961).

I agree with the majority that the transaction here involves a lease and I think that this conclusion is inescapable. Yet, I cannot justify using the Uniform Commercial Code as a vehicle merely to reach what would seem to be a desirable result in this ease. The majority, in making this application, cites comments and authorities as to the desirability of extending to leases the doctrine of implied warranty of quality, so long and well associated with sales transactions. I would find no great fault with this extension of the common law doctrine. Such an extension would not reach the result reached by the majority, however, because under the common law the disclaimer in this contract would exclude any implied warranty. It is only by resort to the code that the requirement that such an exclusion must be “conspicuous” can be applied. By doing this, I feel very strongly that the court is acting legislatively. I fear the problems that will arise in the future when the application of other sections of the Commercial Code to leases is sought. The draftsmen of the code did not have in mind that the provisions thereof would be extended to leases, and it may well be that the application of other sections will be somewhat clumsy. See, e. g., %% 85-2-701 to 85-2-725, both inclusive.

I do not take the case of Cintrone v. Hertz Truck Leasing and Rental Service, 45 N. J. 434, 212 A. 2d 769, cited by the majority, to extend the Uniform Commercial Code to leases. It seems to me that the Supreme Court of New Jersey there extended the common law doctrine of implied warranty in sales to leases. Reference was there made to a comment by the draftsmen of the code. That reference to this comment (also quoted in the majority opinion) was made solely to demonstrate that the Uniform Commercial Code did not limit the court in applying case law doctrines of implied liability to transactions other than sales. It is interesting to note that the courts of New Jersey have refused to extend the doctrine in the Cintrone case in subsequent cases. Magrine v. Krasnica, 94 N. J. Super. 228, 227 A. 2d 539 (1967); Jackson v. Muhlenberg Hospital, 96 N. J. Super. 314, 232 A. 2d 879 (1967); Conroy v. 10 Brewster Ave. Corp., 97 N. J. Super. 75, 234 A. 2d 415 (1967).

It is significant that when there is an intention that a lease be covered by any of the provisions of the Uniform Commercial Code, that intention is given expression. In Ark. Stat. Ann. § 85-9-102(2) (Add. 1961) it is specifically stated that the Article on Secured Transactions applies to security interests created by lease intended as security. I have not been able to find any other mention of leases in the code, nor have I found any definition of terms in the statute that would include leases other than the definition of “security interest” [§ 85-1-201(37)] and “security agreement” [§ 85-9-105(1) (h)]. These sections only make a lease subject to the code provisions on “Secured Transactions” when it is intended as security. This seems to be a very strong indication that no other code provisions were intended to apply to leases under any circumstances.

In Victor v. Barzelski, 19 Pa. Dist. & Co. R. 2d 698 (Pa. 1959), it was held that the “merchantability” warranty of Uniform Commercial Code § 2-314 (Ark. Stat. Ann. § 89-2-314) and the “fitness” warranty of UCC § 2315 (Ark. Stat. Ann. § 89-2-315) depend upon a “contract of sale” made by a “seller” for applicability. There an apartment owner sought to recover damages from one who contracted to install a heater in the apartment, alleging breaches of these warranties. The contractor purchased the unit from a supplier and installed it. The evidence showed that the owners made known to the contractor that they were relying on his skill and judgment to furnish a suitable heating unit. The court said that the agreement did not create the buyer-seller relationship necessary to bring it within these code provisions. The parallel between these cases is close. "While the authority may not be one entitled to the greatest weight, the reasoning by which the conclusion was reached is certainly applicable.

The majority opinion implies that its effect is only to apply one isolated section of a chapter of the Uniform Commercial Code to leases rather than to sales. This particular section (85-2-316) relates, however, only to warranties defined in §§ 85-2-313 and 85-2-314. These sections refer only to warranties by a “seller” to a “buyer.” The meaning of these terms is that given in § 85-2-103(1) (a) & (d) unless the context otherwise requires. The warranties mentioned are also connected with contracts for sale. “Sale” and “contract for sale” are also clearly defined in § 85-2-106. None of these definitions remotely fit the situation before the court, principally because no passing of title from the seller to the buyer is contemplated here. The inapplicability of § 85-2-316 is further demonstrated by reason of the limitation of implied warranties to “contracts for * * * sale if the seller is a merchant with respect to goods of that kind.” Appellee cannot be said, even by the wildest stretch of the imagination, to be a merchant with respect to ice machines.

It seems singular to me that this court, in holding this section applicable, would place reliance upon an argument with reference to this section made before, but not decided by, a trial court in New York.

The majority opinion attempts to confine its application of the code section to leases analogous to a sale. I cannot tell, and it is not suggested, when a lease of personal property is analogous to a sale. Is the length of the term significant? Are the courts to examine a lessor about his intentions with reference to the disposition of the property at the end of the term? Is the requirement that the lessee shall repair (not unusual in leases) to be the decisive factor?

I am unable to discern how we will be able to decide the application of code provisions to leases on a section by section basis in the absence of clear statutory intent. Nor do I see any guide to the trial bench or bar, much less to the business community, in making these decisions. The purpose of clarifying, stabilizing and making uniform the commercial laws of the various states is tlms defeated by creating an atmosphere of confusion about the whole thing.

I would affirm the judgment.

Conley Byrd, Justice,

dissenting. I dissent from the majority opinion because I believe the lease under consideration was nothing more than a financial arrangement whereby appellee, Pioneer Leasing Corporation, was to loan money to Mr. Sawyer for the purchase of the ice-making machine. The record conclusively shows that such was the purpose of this arrangement. Mr. Don Barnett told Mr. Sawyer, “Well it was just like buying a car, after yon pay so many payments it’s your box.” Mr. O. H. Turner, treasurer of Pioneer Leasing Corporation, stated that they purchased the machine from the C. M. Lingle Company because Mr. Sawyer had selected it as the machine he wanted.

Prior to the Uniform Commercial Code and our usury decisions, this transaction would have been handled by a conditional sales contract. Therefore, Pioneer stands in the same position as would the bank if Mr. Sawyer had borrowed the money from the bank — i. e., it is entitled to collect the money it loaned. I would affirm the trial court without prejudice to the rights of the parties to sue the vendor of the machine for breach of warranty.

The same is true of appellee’s argument as to waiver; the fact that appellant made payments for approximately six months after learning of the malfunction, does not, of itself, operate as a waiver. The general rule, of course, is that a notice of a breach of any type of warranty must be given within a reasonable time after becoming aware of the breach. The determination of what is reasonable depends upon the factual situation presented in each individual case. See Dailey v. Holiday Distributing Corporation (Iowa), 151 N. W. 2d 477, where the plaintiffs continued to use purchased equipment' for eleven months after learning of defects, and endeavored during that period to remedy such defects.

      See A page 962 for paragraph inserted here by amendment .September 3, 1968.

       These were not cases under the code.

       Willier and Hart are professors of law at Boston College Law School.

       Under the common law, there was an implied warranty of fitness in leasing contracts of personal property.

       TMs paragraph was added by amendment May 27, 1968, after petition for rehearing. [See page 960.]