author: Carleton Harris, Chief Justice.

text:
    McCrory School District v. Brogden.
    5-2039
    333 S. W. 2d 246
    Opinion delivered February 15, 1960.
    [Opinion amended March 28, 1960]

      W. J. Dungan, for appellant.

      Lloyd, A. Henry and Victor L. Nutt, for appellee.
   Carleton Harris, Chief Justice.

This case was originally filed in the Woodruff Chancery Court as an action to quiet title in appellees, but was subequently transferred to Circuit Court, where appellees amended their complaint to ask ejectment. Appellees, trustees of the Harmony Baptist Church, received a quitclaim deed from Ethel L. Patterson, and the heirs of M. H. Patterson, deceased, on July 8, 1958, to the property here in litigation. Appellants, McCrory School District of Wood-ruff County, and its directors, likewise claim title. The property involved consists of something less than two acres, which was acquired in 1916 or 1917 by the public school district of Patterson, in Woodruff County, as a site for the erection and maintenance of a public school building in which to conduct a public school for the Patterson community. The district, which was known as Patterson School District No. 16, took possession of the land, erected a school building on same, and operated it as a school until this district was consolidated with appellant district. Appellants contend that the district, and its predecessor in title, have held the property adversely since before 1918, and have long since acquired title by adverse possession. Appellees’ claim is based upon the contention that the Patterson School District received the 1916 or ’17 deed to the premises from Mrs. Ethel Patterson and her husband, and that said deed contained a reversionary clause, which provided that the property would revert to the heirs of the Patterson estate if its use as school property be discontinued. Appellees further contend that the property was no longer being used for the purpose for which it was conveyed, and accordingly had reverted to the Pattersons. Having received a deed from Mrs. Patterson, who held power of attorney to act for the heirs, they assert ownership of the property. The Circuit Court, sitting as a jury, after hearing the evidence, held that the School District was entitled to possession for only so long as the property was used for school purposes, and that such use had been discontinued. Judgment was entered placing appellees in possession of the premises, and vesting them with title in fee simple. From such judgment comes this appeal, and we are called upon to determine whether there was any substantial evidence upon which the judgment could be rendered.

For reversal, several points are urged, but these will be mainly covered in our discussion of appellants’ first contention, viz., that there is not sufficient proof of title in the record to sustain the judgment in ejectment. Of course, it is well established that in ejectment, a plaintiff must recover on the strength of his own title and not on the weakness of the title of his adversary. See Jackson v. Gregory, 208 Ark. 768, 187 S. W. 2d 547. Nonetheless, we do not agree with appellants’ contention. This litigation probably results from the fact that the original deed to the Patterson School District was lost, and, if placed of record, such record destroyed. The present directors of the School District were unable to state the original source of title, nor was any evidence offered to show the authority for constructing the school building (in 1917) on the land involved herein, though it is obvious that a deed, or permission, must have been obtained from someone, i. e., the board did not just select a location and start building. However, there is potent evidence that the Pattersons owned this land at that time. Tom Chaney identified a certified copy of a warranty deed dated July 15, 1918, wherein Mr. and Mrs. Patterson conveyed property adjacent to the school building to him. The description excepted certain footage, and Mr. Chaney testified that the school building was located on this excepted portion. Mrs. Patterson testified that she and her husband had already deeded the excepted portion to the School District. Roy Coleman, an abstractor of Augusta, testified that the 1917 taxes were assessed in Mr. Patterson’s name. Be that as it may, the record clearly reflects that the School Board, in 1935, recognized the Pattersons as its original grantors. At that time, the district desired to build a new school building with the help of the Works Progress Administration. According to Wallace Law of Patterson, who was secretary of the School Board in 1935, the old school building had been condemned, and the Works Progress Administration agreed to help on a new building; the WPA officials desired to examine the deed, which had been lost, and would not construct the building until another deed was obtained. Mrs. Patterson was approached by board members, and agreed to give a second deed to the property, which deed was executed on September 3, 1935, and filed for record on May 16, 1946. The pertinent provisions of the deed are as follows:

“That Ethel L. Patterson, widow of M. H. Patterson, and Ethel L. Patterson, by Power of Attorney for the heirs of the Patterson estate, for and in consideration of the sum of One ($1.00) Dollar in hand paid by the Patterson Special School District, do hereby grant, bargain, sell and convey unto the said Patterson Special School District for use as for a School (said property to revert to the heirs of the Patterson Estate if discontinued as School property) the following lands lying in the County of Woodruff, and State of Arkansas, to-wit:
That part of the Northeast Quarter (NE]4) of the Northeast Quarter (NE]4) of the Northeast Quarter (NE]4) of Section Seven (7), Township Seven (7) North Range Two (2) West, now occupied by the building and premises of the Patterson Special School District.
Note this Deed is given in lieu of a former deed given by M. H. Patterson and Ethel L. Patterson, said deed having been lost or misplaced and record destroyed.
To have and to hold the same unto the said Patterson Special School District, so long as this property is used for school purposes.”

Of course, as pointed out by appellees in their brief, there was no reason to go to Mrs. Patterson for a second conveyance if the Pattersons had not been the earlier grantors.

Appellants contend that the 1935 deed was void because the description, cited above, was indefinite. In the first place, it would appear that the property could be located from the description given. The testimony reflected that the fence enclosing the school property had been in the same location for as far back as 1918. The fence was certainly a part of the premises. In fact, a surveyor who testified for appellants, when testifying about what property he was surveying, answered, “The School property, around the school house, the part of land that was enclosed by fence.” The deed recites the correct quarter - quarter - quarter, section, correct county, and limits the quantity to that occupied “by the building and premises of the Patterson Special School District.” As stated in American Jurisprudence, Yol. 16, § 262, p. 585:

“The courts are extremely liberal in construing descriptions of premises conveyed by deed with the view of determining whether those descriptions are sufficiently definite and certain to identify land and make the instrument operative as a conveyance. The purpose of a description of the land, which is the subject matter of a deed of conveyance, is to identify such subject matter ; and it may be laid down as a broad general principle that a deed will not be declared void for uncertainty in description if it is possible by any reasonable rules of construction to ascertain from the description, aided by extrinsic evidence, what property is intended to be conveyed. It is sufficient if the description in the deed or conveyance furnishes a means of identification of the land or by which the property conveyed can be located.” A more compelling reason why appellants cannot prevail upon this point is that the board was satisfied with, and accepted the deed; the WPA was apparently satisfied, for it continued with the construction, and the Patterson School District derived the benefits which were afforded by the execution of the deed. Having accepted the benefits, the district cannot now be heard to complain that the deed was inadequate or void.

Appellants further call attention to the fact that the reversionary language in the granting clause reads “said property to revert to the heirs of the Patterson estate if discontinued as school property”, and point out that the building is still being used to store desks and other school furniture. Here again, appellants’ contention is not well taken. It is clear from both the granting clause and the habendum clause that there was a clear intention of the grantors to create the possibility of reverter, or determinable fee, but we think it immaterial in this instance whether the above phrase controls, or the phrase which appears in the habendum clause, “to have and to hold the same unto the said Patterson School District so long as this property is used for school purposes”, for the evidence makes manifest that there was no intent by the district to continue to use the building for either purpose. It was stipulated that the School District caused the following notice to be printed in the Arkansas Central Leader on June 26, 1958:

“NOTICE OF SALE
The McCrory School District No. 12 offers for sale the Patterson School building (does not include land) to be bid on by sealed bids.
All bids must be in the superintendent’s office not later than noon, July 9.
The School Board reserves the right to reject any and all bids.
J. L. HOLDER, Pres.
PAUL BRONTE, Sec.”

In fact, it appears from the testimony of T. C. Bull, one of the school directors, that the only reason the building had not been sold was because no bid was received.

Appellants nrge that the judgment should be reversed because the power of attorney, relied upon by Mrs. Patterson to execute the 1935 deed to the district, and also the deed to appellees in July, 1958, was not placed in the record. The latter deed recited the date of the power of attorney, and the record book in which it was recorded. Mrs. Patterson, in her testimony, claimed the authority to sign for the five living heirs of her deceased husband, but appellants rightly assert that this was not the best evidence. However, as to the 1935 deed, we have already pointed out that appellants accepted the benefits afforded by that deed, and therefore cannot presently assert its invalidity. Likewise, even if Mrs. Patterson was without authority to execute the 1958 deed on behalf of the heirs, appellants cannot prevail. By the acceptance of the 1935 deed, appellants recognized that Mrs. Patterson held an interest in the property at that time (which is binding on them, even if she held no interest). Here, though the deed provides that the property shall revert to the heirs of the Patterson estate, no interest being expressly reserved by Mrs. Patterson, these words are clearly properly construed as words of purchase, rather than words of limitation, since the condition could (and in fact, did) happen during the lifetime of Mrs. Patterson. The common law rule against perpetuities is applicable in Arkansas, Article II, Section 19, Constitution of 1874. In Simes and Smith Future Interests, page 330, paragraph 282, with respect to the possibilities of reverter, it is stated:

“The possibility of reverter differs from the remainder and from the executory interest in that it arises only in the transferor or his heirs, whereas such other interests are always created in persons other than the transferor. Thus, where a person owning land in fee simple absolute conveys an estate in fee simple determinable and also shall pass to some third person, the interest of such third person would be called an executory interest. . . . Many executory interests which follow determinable fees are void under the rule against perpetuities while the possibility of reverter in the transferor is usually held to be not subject to that rule.”

In 1 Property A.L.I., § 44, p. 131, under the heading “Interest limited to person other than the conveyor”,, it is stated:

“When a limitation is otherwise sufficient to create an estate in fee simple determinable, the presence of a further provision that upon the expiration of such estate, the land is to pass to some person othér than the conveyor or his heirs, does not prevent the created estate from being an estate in fee simple determinable. Such further provision is often ineffective. When such further provision is ineffective, the limitation has the same effect as if no interest had been attempted in favor of a person other than the conveyee.”

Therefore, the creation of the determinable fee was valid, but the gift over to the heirs of the Patterson estate, insofar as Mrs. Patterson’s interest was concerned, constituted an executory interest and was void as violative of the rule against perpetuities. Upon the occurrence of the condition set out in the deed (discontinuance of the property for school purposes), Mrs. Patterson became entitled to possession (as against the district). Accordingly, in 1958, Mrs. Patterson had an interest to convey, and she certainly had authority to execute the instrument in her own behalf. A rather interesting discussion of the law relating to “Perpetuities” and “Determinable fees” is found in Brown v. Independent Baptist Church of Woburn, et al, 325 Mass. 645, 91 N. E. 2d 922.

To summarize, in seeking the deed from Mrs. Patterson, the Board indicated its belief that its original title to the property had been obtained from the Pattersons, and in fact, the instrument recited that it was given in lieu of an earlier deed. In accepting the deed, the Board was bound by its provisions. The provisions included the reversionary clause. As stated in American Jurisprudence, Yol. 19, § 21, P. 619:

“Estoppel of the grantee of a deed, viewed generally, is of the nature of equitable estoppel rather than technical estoppel by deed, since tbe estoppel is not predicated primarily on tbe execution of a formal written instrument wbicb cannot be denied or rebutted, but rather on tbe inability of a person, in tbe eyes of tbe law, to acquiesce in, and enjoy tbe benefits of, a transaction and at tbe same time reject tbe accompanying burdens. A person cannot claim under an instrument without confirming it. He must found bis claim on tbe whole, and cannot adopt that feature or operation which makes in bis favor, and at tbe same time repudiate or contradict another wbicb is counter or adverse to it.”

Appellants could only have acquired tbe property by adverse possession by bolding same adversely for more than seven years after tbe holders of tbe reversionary interest bad acquired tbe right of entry, i. e., for tbe statutory period after tbe property was no longer used for school purposes.

Judgment affirmed.

       Classes were held in the school until sometime in 1955.

       It is not clear whether the government authority was the Works Progress Administration or the Public Works Administration, since the latter designation is also used during the trial.

       According- to Mrs. Patterson, the furniture had been moved out, hut school equipment was taken back in when she asserted her claim.

       Mr. Bull admitted that discussions had been held with Mrs. Patterson to try and reach an agreement whereby the Board, the church, and Mrs. Patterson would all get some benefit.

       Mrs. Patterson testified that in giving the deed in 1935, she was requested by the board members to give such deed minus the reversionary clause, but refused to do so.


source: Caselaw Access Project

author: J. Seaborn Holt, Associate Justice.

license: Public Domain

text:
    Moore v. State.
    4963
    331 S. W. 2d 841
    Opinion delivered February 15, 1960.

      R. Dale Hopper, for appellant.

      Bruce Bennett, Atty. General, By: Bill J. Davis, for appellee.
   J. Seaborn Holt, Associate Justice.

Appellant, Lawrence Gene Moore, was found guilty by a jury of the crime of murder in the first degree while attempting burglary, and his punishment fixed at death in the electric chair. From the judgment comes this appeal. For reversal the appellant contends that the evidence was not sufficient to support the verdict and the verdict is ‘ ‘ contrary to the law and the evidence.”

The charge against appellant was based on § 41-2205 Ark. Stats, which provides: “All murder which shall be perpetrated by means of poison, ... or which shall be committed in the perpetration of or in the attempt to perpetrate, arson, rape, robbery, burglary or larceny, shall be deemed murder in the first degree.” The court appointed able counsel to represent appellant. At his trial, he first entered a plea of not guilty, but this plea was later changed to a plea of guilty and appellant submitted himself to the mercy of the court. A jury was then impaneled to assess Moore’s punishment and after hearing all the testimony, returned a verdict of guilty of murder in the first degree as charged and fixed his punishment at death by electrocution. Moore took the witness stand and freely admitted his guilt. He testified, in effect, — and his testimony was corroborated,— that together with an accomplice, Robert Cuttler, with the intent to rob the coin box of a soft drink machine, he broke in the Dabbs School house near West Memphis, Arkansas, in the night-time of September 20, 1958. Appellant carried a pistol. While in the building, the night custodian (Ross Nichols), who lived on the premises and had a bedroom in the building, apparently became disturbed and decided to investigate. Moore and his companion heard noises, became frightened and fled. As they were leaving the building, Moore fired a shot from his pistol down the hallway, which shot, he admitted, killed the deceased, Nichols. The bullet went through Nichols’ bedroom door, struck him just above the abdomen, inflicting a wound from which he died shortly thereafter.

Moore testified: “Q. Tell the Court how you got into the building. A. I broke a window on the lefthand side and me and Eobert entered through the window, entered the school, went down through the hall. Intersection, hall running that way, and one that way. It was dark in there. I couldn’t see nothing. We had to feel our way. As I got in I could see a door. Eobert told me — it was raining — he heard some kind of noise. About that time a train was coming. I told him he didn’t hear nothing, it was the train. I took the pistol out. By that time he ran around the steps. After he ran out, I don’t know if he ran out or not, but I fired a shot as he was running, I fired a shot toward the noise. * * * That next day I got back home, I was about the barn and heard the boss man say he heard a man got killed in the school house. He asked what did I do. I told him I fired a shot in the school. * * * Q. You specifically intended to steal money when you broke the window and went in the school house? A. Yes, sir.”

Appellant was 19 years old, with only a fifth grade education. He admitted, and it was shown, that he had been convicted of eleven burglaries before his conviction in the present case.

Following the murder, Moore gave his half brother (James Mallory) a package which contained the pistol used and told him to throw it away. Following instructions, Mallory threw the package in the Ten Mile Bayou, right back of his house. A police officer, following Mallory’s directions, found the pistol that Moore had used in killing Nichols, where it had been thrown. We hold the evidence amply sufficient to support the verdict.

Appellant also contends, for reversal, that “after the appellant entered his plea of guilty to the charge set out in the information, and threw himself upon the mercy of the Court and Jury, it was error to allow the coroner also the mortician to testify as to the probing of bullet wounds in the body of the deceased, and other evidence as to blood stains on the floor. The calculated effect of all this testimony was to inflame the passions of the Jury to the prejudice of the appellant’s plea for mercy.” This contention was decided adversely to appellant in the recent case of Smith v. State, (Opinion delivered May 25, 1959) 230 Ark. 634, 324 S. W. 2d 341. We there said: “During the trial, various objects were introduced into evidence relating to the crime, including pictures of the victims in wicker baskets, burned beyond recognition, Rorie’s bloodstained shirt, and the hammer used in the murder. Appellant objected to the introduction of several different objects introduced as evidence. This Court held such objections to be without merit, and stated: ‘The cause was tried to the jury just as though the defendant had pleaded not guilty. Every essential fact of the crime was established. The jury was instructed on the degrees of murder and the discretion as to the punishment.’ It would certainly appear that the exhibits here introduced, together with the evidence objected to, were plainly relevant to assist the jury in determining the degree of the crime. ’ ’

Finally, the appellant argues that “The Statement of the Court as to the power of clemency of the Executive Department of the State Government tended to influence and inflame the minds of the Jury against arriving at a sentence of life imprisonment.” The records reflects that during the course of the jury’s deliberation, on request of one of the jurors to see the judge, the court directed the jury to return into open court and in appellant’s presence, the following colloquy occurred. “COURT: Gentlemen, all proceedings in criminal cases must be in the presence of the defendant. Did you have some question? JUBOB: Yes, sir, as foreman of the jury, we want to know, can we give him life imprisonment with the understanding he is there for life? What is the minimum number of years he could serve? COUBT: Gentlemen, I am unable to answer that question. The sole power of clemency lies within the executive branch of the government, which is the Governor of the State of Arkansas. I cannot answer your question with reference to that. JUBOB: He can be paroled from life? COUBT: I cannot say he can be paroled, gentlemen. I say the clemency power is in the hands of the Governor of the State of Arkansas. JUBOB: Even if the jury would make a recommendation, it wouldn’t be respected? COUBT: It is within the discretion of the Governor of the State of Arkansas. He may exercise it regardless of any recommendation the jury makes. It is entirely within his discretion. JUBOB: Thank you.” We find no error here. In the recent case of Boone v. State, (Opinion delivered September 14, 1959) Law Beporter Vol. 105, No. 9, Page 366, where, in effect, the same type of occurrence was presented, we held a similar contention to be without merit. Our statute, which applies to a situation such as this, Ark. Stats. 43-2139, provides: “After the jury retires for deliberation, if there is a disagreement between them as to any part of the evidence, or if they desire to be informed on a point of law, they must require the officer to conduct them into court. Upon their being brought into court, the information required must be given- in the presence of, or after notice to, the counsel of the parties.” We think the trial court here carefully followed this statute and in appellant’s presence, gave proper information to the jury in line with our holding in the Boone case above.

Finding no error, the judgment is affirmed.


author: Ed. F. McFaddin, Associate Justice.

text:
    French v. State.
    4964
    331 S. W. 2d 863
    Opinion delivered February 15, 1960.

      Charles E. Scales, for appellant.

      Bruce Bennett, Attorney General, By: Bussell J. Wools, Asst. Attorney General, for appellee.
   Ed. F. McFaddin, Associate Justice.

On legal information appellant, Danny French, was tried on charges of burglary (§ 41-1004 Ark. Stats.) and grand larceny (§ 41-3901 et seq. Ark. Stats.); and from a conviction of burglary and petit larceny (§ 41-3907 Ark. Stats.), he prosecutes this appeal. The motion for new trial contains seven assignments.

I. Sufficiency Of The Evidence. This embraces Assignments 1, 2, and 3 in the motion for new trial. Mr. and Mrs. Loyd House operate a grocery store in Little Rock and have living quarters connected to the store. On a Sunday evening in November 1958, while the Houses were in the living quarters, one of the children reported that someone was in the store. Mr. House went through a hall in the rear and observed a man in the store. There was a reflector light shining toward the front door and the man was trying to open the door from the inside. Mr. House observed the intruder for several minutes; and when the latter saw Mr. House some ten or eleven feet away, he threw some cigarettes at Mr. House and said: “You’d better not come up here or I’ll kill you”. Mrs. House had followed Mr. House into the store and she likewise observed the intruder. When Mr. House told her to go get his gun, the intruder kicked out the glass in the front door and escaped. Law enforcement officers were immediately called, and the investigation disclosed: that the intruder had gained entrance into the store by prizing open a window in a storage room; that cigarettes were scattered all over the floor of the store room; that the cash register had been rifled, and that approximately $24.00 in currency had been taken. The police decided that the description of the intruder, as given by Mr. and Mrs. House, fitted the defendant, Danny French; and he was apprehended about ten days later.

At the trial Mr. and Mrs. House both positively identified the defendant as the intruder they saw in the store. There was evidence offered on behalf of the defendant contradicting the identification, and the defendant stoutly denied the crime; but from what we have detailed it is readily apparent that there was ample evidence to take the case to the jury and to support the verdict rendered on each of the offenses. Barrett v. State, 188 Ark. 510, 67 S. W. 2d 202; Thompson v. State, 177 Ark. 1, 5 S. W. 2d 355.

II. Objection To Testimony. This is Assignment No. 4 in the motion for new trial, and reads:

“That the Court erred in overruling defendant’s objection to the witness, Lloyd House, testifying that he identified the defendant outside of the room where the defendant-was in a line-up; . . .”

When the defendant was apprehended about ten days after the crime, Mr. House went to the police station and viewed a line-up of seven or eight persons, including French; and then told the officers that French was the man. At the trial when Mr. House was testifying, the following occurred:

“A. I walked up and faced the group of men lined up' there and I started to my right and looked each one over and this gentleman (indicating the defendant) was standing there, the last one, and I said, ‘I have seen all I want to see’.
Q. Which one was ‘this gentleman’?
A. Danny French.
Q. What did you tell the detectives?
A. I told them I had seen all I wanted to see and after I came out of the building—
MR. SCALES: Your Honor, I want to object to anything he said after he left the building or to any conversation that took place out of the presence of the defendant.
THE COURT: Just ask him if he identified the defendant.
Q. (By Mr. Robinson) Did you identify the defendant outside the room?
A. Yes, sir.
MR. SCALES: I object to that.
THE COURT: Overruled.

The defendant objected to the above ruling of the Court and at the time asked that his exceptions be noted of record, which was accordingly done.

Q. You got outside and told the detectives?
A. I told them that was the man, the last man on the left.
Q. Why didn’t you identify him inside the room?
A. I couldn’t see any need of pointing a finger at him.
Q. You didn’t want to point your finger at him?
A. That’s right.
Q. Did you have any doubt about that person being the one you picked out?
A. Not at all.
Q. Was that the same person you saw on the night of the 16th of November?
A. Yes, it was.
Q. Do you have any doubt about that?
A. None at all.”

There was no further objection or exception to this line of testimony. The appellant urges that the ruling of the Court was in error, since Mr. House did not announce his identification of the defendant in so many words in the presence of the accused; and the appellant cites these cases: Gill v. State, 194 Ark. 521, 108 S. W. 2d 785; Warren v. State, 103 Ark. 165, 146 S. W. 477; Burks v. State, 78 Ark. 271, 93 S. W. 983. There are several answers to appellant’s insistence. In the first place, the objection was: “. . . I want to object to anything he said after he left the building or to any conversation that took place out of the presence of the defendant”. The Court, in effect, sustained that objection, because the Court instructed the State’s Attorney: ‘ ‘Just ask him if he identified the defendant ’ ’. The question was then framed: ‘ ‘ Did you identify the defendant outside the room?” The answer was, “Yes, sir”; and to that answer there was an objection and exception. Certainly it was proper for the witness to answer that question and state when and where he identified the defendant.

Secondly, after the exception was saved, the State had the witness explain the identification; and as to that testimony there was no objection or exception.

And finally, the identification of the accused by the witness was not an attempt to support or bolster the previous testimony of the witness (as was the situation in Burks v. State, supra), or to have the testimony substantiated by others (as in Warren v. State, supra), or to show what other witnesses said (as in Gill v. State, supra). Rather, in the case at bar the witness House was giving a mere background account of events at the time lie identified the defendant at the police headquarters.

The fact remains that Mr. House positively and unequivocally identified the defendant and £ £ pointed the finger” at Trim before the jury and in the course of the trial from whence comes this appeal. The identification at the trial complied with all rules of confrontation (Art. 2, § 10 of the Arkansas Constitution); because there was actual confrontation, and also cross examination of the witness at the trial. Hickinbotham v. Williams, 228 Ark. 46, 305 S. W. 2d 841.

III. Instructions. Assignments 5, 6, and 7 challenge the rulings of the Court in regard to instructions. We find no error committed. Instruction No. 1 was on the presumption of innocence,- No. 2 on reasonable doubt; No. 3 on credibility of the witnesses; No. 4 was a cautionary instruction; No. 5 contained a definition of the offenses for which the accused was being tried; and No. 6 related to the various possible verdicts the jury might render. These instructions were all proper and correct. The defendant requested, and the Court refused to give, the defendant’s requested Instruction No. 1, which read:

“Where an arrest is made without a warrant, whether by a peace officer or private person, the defendant shall be forthwith carried before the most convenient magistrate of the County in which the arrest is made, and the grounds on which the arrest was made shall be stated to the magistrate.”

The Court committed no error in refusing this instruction because it was abstract. Ferguson v. State, 218 Ark. 100, 234 S. W. 2d 990. If there had been any evidence to introduce a confession, then an instruction like, or somewhat resembling, the one requested might have been proper; but in this case there was not the slightest indication of any attempt to show anything the defendant might have said while he was under arrest. The requested instruction was as foreign to the issues of this trial as would have been an instruction on the law of speeding or the right of an elector to vote. Instructions must be germane to tbe issues before tbe refusal can be claimed as error. Pleasant v. State, 15 Ark. 624. Gallaher v. State, 78 Ark. 299, 95 S. W. 463.

Finding no error, tbe judgment is affirmed.


author: George Rose Smith, J. Jim Johnson, Associate Justice,

text:
    Upchurch v. Adelsberger.
    5-2041
    332 S. W. 2d 242
    Opinion delivered February 15, 1960.
    [Rehearing denied March 7, 1960]

      McMath, Leatherman é Woods and James E. Youngdahl, for appellant.

      Moses, McClellan, Arnold,, Owen $ McDermott; By: Wayne W. Owen, for appellee.
   George Rose Smith, J.

This is a suit by the appellees, a husband and wife doing business as Comet Printing Company, to enjoin the city of North Little Rock from enforcing its Ordinance No. 21, adopted in 1904, which requires that all printed matter, blank books, and stationery used by the city bear the union label of the Allied Printing Trades Council. The complaint alleges that Comet has a contract with a recognized labor union, the Amalgamated Lithographers of America, but Comet is not entitled to use the union label specified in the ordinance and so is excluded from the opportunity to sell any printed matter to the city. The city made no defense to the case, but the appellants, as officers of the Allied Printing Trades Council, were permitted to intervene and defend, and they have appealed from a decree finding the ordinance to be invalid and enjoining its enforcement.

The proof shows that the Allied Printing Trades Council is made up of four AFL-CIO unions, being the Typographers, the Printing Pressmen, the Bookbinders, and the Stereotypers. The Allied label may be used by any printing shop that has contracts with at least two of these four unions. Of thirty-seven printers who are listed in the Greater Little Rock telephone directory eight are entitled to use the Allied label. Only one of the eight is situated in North Little Rock, and that one company has received substantially all the city’s printing business for at least the past twenty-two years. The Amalgamated Lithographers is, according to the exhibits in evidence, an independent union that was organized in 1882 and has some 36,000 members. It has contracts with at least two printing shops in Little Rock.

The appellants offered testimony to show that printed matter bearing the Allied label is uniformly of high quality and that the members of Allied’s four .component unions receive retirement benefits and other advantages accruing from their union membership. We do not detail this testimony, which is not disputed, as it does not control the outcome of the case.

Preliminarily, the appellants question the appellees’ right to attack the ordinance, as the appellees did not offer proof of their contract with the Amalgamated Lithographers. It is stipulated, however, that the appellees are citizens and taxpayers of North Little Rock, and this gives them sufficient standing to challenge an assertedly wrongful expenditure of public funds. Townes v. McCollum, 221 Ark. 920, 256 S. W. 2d 716; Garner, Sloan, and Haley, Taxpayers ’ Suits to Prevent Illegal Exactions in Arkansas, 8 Ark. L. Rev. 129.

On the merits the chancellor was right in holding the ordinance invalid. As far as we can discover the authorities are unanimous in declaring discriminatory and void any municipal ordinance which attempts to confine the award of public contracts to persons privileged to use a certain union label. Ordinances involving the particular label now before us, that of the Allied Trades Council, were declared invalid in City of Atlanta v. Stein, 111 Ga. 789, 36 S. E. 932, 51 L. R. A. 335, and Marshall & Bruce Co. v. City of Nashville, 109 Tenn. 495, 71 S. W. 815. See also Amalithone Realty Co. v. City of New York, 162 Misc. 715, 295 N. Y. S. 423, where, as here, the rival unions were the Allied Printing Trades Council and the Amalgamated Lithographers of America.

McQuillin accurately summarizes the reasoning that underlies the uniform holding of the courts: ‘ On principle it would seem that, as the primary duty of the public officers is to secure the most advantageous contract possible for accomplishing the work under their direction, any regulation which prevents the attainment of this end is invalid. A law demanding competition in the letting of public work is intended to secure unrestricted competition among bidders, and hence, where the effect of an ordinance is to prevent or restrict competition and thus increase the cost of the work, it manifestly violates such law and is void, as are all proceedings had thereunder. It may be further observed that, according to the judicial view so far declared, all such ordinances are void on the constitutional ground of discrimination.” McQuillin, Municipal Corporations (3d Ed.), § 29.48.

Monopolies are forbidden by the Arkansas constitution, Art. 2, § 19; and by statute purchases involving more than $300 can be made by cities of the first class only after competitive bidding. Ark. Stats, 1947, § 19-1022. Ordinance No. 21, which has created a virtual monopoly in the city’s printing business for many years, cannot be reconciled with the controlling provisions of the constitution and statutes. The city is free.to designate the kind of printing that it desires and to assure itself of good quality by the adoption of appropriate specifications, but it cannot follow a course by which all public contracts are channeled into the hands of favored bidders.

Affirmed.

Johnson, J., dissents.

Jim Johnson, Associate Justice,

dissenting. The record in this case, in my opinion, does not justify the conclusion reached by the majority. Had the case been fully developed my final conclusion possibly would be different. However, based solely on the record before us, I am unwilling to say that Ordinance No. 21, adopted by North Little Rock in 1904, is unconstitutional on its face.

Fundamental to challenge of an enactment of any governmental body is the presumption of constitutionality. This presumption is necessary to prevent litigious chaos and has been recognized at every level of judicial decision. Appellants offered evidence which was not refuted: that printing establishments bearing the mark of the Allied Printing Trades Council were required to meet certain standards; that the members of the organizations making up the Council were required to serve certain apprenticeships and receive the benefit of continued education in their craft; that their methods of operation were completely different from those of appellees. There was nothing in the record to show that other printing establishments were prohibited from meeting the standards required by the ordinance.

The presumption of constitutionality is a fundamental rule of construction announced and adhered to throughout the history of this Court: Bush v. Martineau, 174 Ark. 214, 295 S. W. 9; and for the many modes and manner of expressing this rule and the heavy burden placed on the party alleging unconstitutionality see: Comment 2, Ark. Law Review, 203; similarly, see: Lindsey v. Natural Carbonic Gas Company, 220 U. S. 61, a federal case holding that a substantial difference in method of operation justifies a classification and that the burden is on attacking party to prove it unreasonable. A careful review of this record reveals that appellee offered practically no testimony that can be considered as meeting this burden.

The established presumption is important in all phases of the instant case. It is based, of course, on the reluctance of the courts to interfere with the enactments of a coordinate branch of the government: the legislatures. As Chief Justice McCulloch stated in a leading Arkansas case on constitutional principles, Ex Parte Byles, 93 Ark. 612, 126 S. W. 94 (1910):

“The courts are not the guardians of the rights of the people of the state, except as those rights are secured by some constitutional provision which comes within the judicial cognizance. The protection against unwise or oppressive legislation, within constitutional bounds, is by an appeal to the justice and patriotism of the representatives of the people. If this fails, the people in their sovereign capacity can correct the evil; but courts cannot assume their rights. The judiciary can only arrest the execution of a statute when it conflicts with the Constitution. It cannot run a race of opinions upon points of right, reason and expediency with the law-making power. ’ ’

For the reasons stated above, I respectfully dissent.


author: Paul Ward, Associate Justice. Jim Johnson, Associate Justice,

text:
    Hilger v. Harding College.
    5-2014
    331 S. W. 2d 851
    Opinion delivered February 15, 1960.

      G. E. Yingling, Lloyd Henry, for appellant.

      Rose, Meek, House, Barron & Nash, for appellee.
   Paul Ward, Associate Justice.

On this appeal we are called upon to decide whether certain personal property and certain real property belonging to Harding College are exempt from taxation under Article 16, Section 5, of the Constitution of the State of Arkansas. Harding College (hereafter referred to as “College”) is a nonprofit corporation organized under the laws of the State of Arkansas and is operating a school under the name first above mentioned in the City of Searcy, Arkansas. The College campus and all buildings erected thereon are not being assessed for taxation. On the campus the College maintains and operates a printing shop and a laundry. The College also owns, in addition to the above, approximately 19 separately described parcels of land consisting of more than 400 acres. On a portion of this acreage the College owns and operates a dairy.

The equipment used in connection with the printing shop and the laundry and all of the real estate last above described were assessed for taxes for the year 1957. The County Clerk had extended the taxes on the tax record for said year against the said equipment and the real estate acreage; the Collector is demanding that said taxes be paid; and, unless the taxes are paid the equipment and land will be sold.

This litigation was instituted by the College against the Tax Collector, the Assessor and the County Clerk of White County asking the Chancery Court to cancel the 1957 assessments; to restrain the Assessor from assessing and extending fntnre taxes against said equipment and land, and to restrain the Collector from selling said equipment and lands for non-payment of taxes assessed for the year 1957. All the relief prayed for by the College was granted by the trial court, and this appeal follows.

The decision in this case rests within the interpretation given to Article 16, Section 5, of the Constitution of this State. This section, after first asserting that all property shall be taxed uniformly and according to its value, provides that the following mentioned property shall be exempt from taxation: “Public property used exclusively for public purposes; churches used as such; cemeteries used exclusively as such; school buildings and apparatus; libraries and grounds used exclusively for school purposes; and buildings and grounds and materials used exclusively for public charity”. (Emphasis Supplied). It is here noted that Section 6 of the Article above mentioned provides that “All laws exempting property from taxation other than as provided in this Constitution shall be void”.

A copy of the Articles and Agreement of Incorporation of the College were introduced in evidence and are a part of the record on this appeal. The first paragraph states in effect that the incorporators were acting on and in pursuance of the laws of the State of Arkansas for “incorporation of an educational institution”. It is clear, we think, that the “laws of the State” mentioned above refer to Ark. Stats. 64-1401. This statute relates to the establishment and maintenance of ‘ ‘ any institution of learning”, etc. The section immediately following the above section provides that “the purpose for which every such corporation shall be established shall be directly specified in said articles of incorporation and it shall not be lawful for said corporation to divert or appropriate its funds or property for any other purpose”, etc. Article 4 of the Articles of Incorporation sets forth the purpose for which Harding College was incorporated. In all essential parts said Article 4 reads as follows: “The purpose of said incorporation is to establish, maintain and operate a collegiate institution of learning under the said name of Harding College, for the instruction and education of men, women and children, in which said institution shall be maintained a standard four-year course of study leading to the baccalaureate degrees”. Said Article 4 further states that the College may own and operate a laundry, own farm land and engage in farming, own and operate a print shop or shops, and engage in any other business incident to the maintenance and operation of an educational institution provided that the revenue derived therefrom shall be used for no other purpose.

Ark. Stats. 64-1405, among other things, provides that the corporation (school) is empowered “to buy and to sell real and personal property . . . and to hold the same”.

It is important, therefore, to a decision in this case to examine the record to find out the nature, extent and usage of the personal property used in connection with the printing press and the laundry located on the campus of the College, and to find out the extent and usage of the off-campus real estate holdings of the College with a view to determining whether the property is being used “exclusively for school purposes”. It is necessary also to consider these properties and usages in relation to the aims and purposes of the College.

The evidence contained in the record consists of the deposition of Dr. George S. Benson, President of the College, and certain exhibits attached thereto. From these sources we find the evidence to be substantially as hereafter set out.

Printing Press. The College operates a printing-press for two purposes: It provides jobs for certain students and it provides an immediate and accurate service for college printing. About 10% of the total volume of work comes from outside of the College. The print shop shows a profit of 2% over the past nine years and it is not operated for profit. The print shop has never done any advertising. No one connected with the print shop is listed with the College faculty, and no scholastic credits are given for such work.

Laundry. One purpose for operating the laundry is to provide jobs to enable young people to attend college. The second is to provide convenient service to the institution, the faculty and student body. A third purpose is to provide practical business experience for students employed there. The laundry accepts work from the residents of Searcy who wish to bring their work there. Over the past nine years the outside work has amounted to about 37% of the total. The laundry is not operated for profit. There is no prescribed course for which credit is given in connection with the operation of the laundry. On one or two occasions the laundry has advertised for business from the general public. No one in connection with the laundry is listed on the College faculty.

The Dairy is operated for two fundamental purposes: One is to provide employment for the students and the other is to provide milk and meat products to the students at the lowest possible cost. Beginning with the present semester the College has commenced a course in animal husbandry to be followed by a course in poultry and a course in dairying. From time to time portions of the dairy cattle are sold when advisable to increase herd efficiency and the money goes into the operational fund. Over the past nine years the dairy has operated at an average 3% loss. Making a profit is not the chief concern of the College. The dairy began selling products to the general public in 1957 when the Searcy dairy ceased to operate and now the College dairy is the only Grade A dairy operating in that County. All of the dairy’s work is done by students except for one full-time operator. No one connected with the dairy is listed with the College faculty, but may be in the near future. No part of the dairy is located on the College campus.

Lands. The lands heretofore described, consisting of more than 400 acres, are not part of the campus and are used for cattle grazing. Some of the lands are several miles in distance from the College campus.

In addition to the above Dr. Benson testified, generally, to substantially the following: It is our purpose to train young people for effective living and good citizenship ; we try to combine practical training with scholastic training; especially the College is interested in the introduction of more livestock instead of the old one-crop method of farming, and in teaching young people to understand America’s private enterprise economy; we have a course this semester in animal husbandry for the first time for which credit will be given; we have on the farm a herd of registered White-Faced cattle, a herd of registered Holstein cattle, and a herd of registered Jersey cattle, all used in connection with the course given in dairying and animal husbandry; in keeping with good breeding practices we sort out and sell certain groups of animals when the herd becomes larger than we wish to keep; and the proceeds go to the College. Judging cattle is a part of our instruction. We do make a profit by taking smaller cattle and raising them and bringing them up to marketable conditions and selling them, the profit going into the College funds. There is a general delivery service in the operation and sale of dairy products to the general public. The Print Shop has been in operation for more than 20 years. It not only provides jobs for students who need the money but it serves to correctly and quickly do our own printing for the College, and only 10% of the work comes from the outside. The Laundry aids about 40 students each year to earn their college expenses, it provides convenient service for the institution, the faculty and the student body, and it provides practical business experience for the student employees. Over the past nine years about 37% of the laundry business comes from the City of Searcy, and during that time it has operated at a 6% loss. “I did not intend to make the impression that all three of them (Press, Laundry, and Dairy) are a part of the academic instruction” but they are related to it. “There are no prescribed courses for which credit is given with reference to the operation of the laundry”. It has been in operation since 1934. It would be possible but not desirable from an economical standpoint to operate the laundry and the dairy without making sales to outsiders.

We recognize the urgent demand and need for more educational institutions and also the wisdom of encouraging the satisfaction of those demands and needs in every legitimate way, but we are also mindful of our duty to protect the tax-paying public in every way required by the State Constitution. Notwithstanding the far reaching implications of the questions here involved there are only a few decisions of this Court to which we can look for guidance. The issues here presented for solution being peculiarly constitutional questions we deem it proper to rely as far as possible on our own Constitution and our own decisions. In the case of School District of Fort Smith v. Rowe, 62 Ark. 481, 37 S. W. 717, the court said: “As the decision of this case turns on the construction of our own constitution, we have not felt it necessary to discuss the cases from other states”.

In the Rowe case, supra, the School District owned certain vacant lots not used for school grounds which were kept for rent and for sale, the proceeds being used exclusively for school purposes. In the cited ease it was conceded that the vacant lots were “public property” which is not true in the case under consideration. Therefore, the Court was considering that portion of Article 16, Section 5, which exempts from taxation ‘ ‘ public property used exclusively for public purposes”. What the Court had to say should be pertinent in this case because we are here considering that portion of the same section which exempts “grounds used exclusively for school purposes”. In holding that the vacant lots were not exempt from taxation the court made, among others, the following announcements: ‘ ‘ The proceeds arising therefrom, when sold or rented, are to be used for the benefit of the public schools of said District, yet this does not justify us in holding that the land itself is now used exclusively for public purposes within the meaning of our constitution”. “It is necessary that a school district shall have a school building and grounds. If such property was taxed and sold for the non-payment of taxes the public would have to pay other taxes in order to replace the same, for it is absolutely essential that a school district should own a school house. For that reason school buildings and grounds are exempt from taxation. But it is not essential that a school district should hold land for the purpose of sale or rent, and as an investment for profit. When land is thus held by a school district it is deemed to be held by such corporation in ‘its commercial capacity as a private corporation’, and the reasons for exempting such property from taxation are slight as compared with those which exist in favor of exempting buildings and grounds actually and exclusively used for public purposes”. (Emphasis supplied).

This court was dealing with that portion of Article 16, Section 5, exempting from taxation “buildings and grounds and materials used exclusively for public property” in the case of Brodie v. Fitzgerald, 57 Ark. 445, 22 S. W. 29. The subject property consisted of rent houses and a mill, the revenues from which were used exclusively for the maintenance of a charity hospital. In that case the court quoted with approval: “ ‘Taxation is an act of sovereignty to be performed, so far as conveniently can be, with justice and equality to all, and exemptions, no matter how meritorious, are acts of grace, and must be strictly construed, and every reasonable intendment must be made that it was not the design to surrender the power of taxation or to exempt any property from its due proportion of the burden of taxation. As taxation is the rule and exemption the exception, the intention to make an exemption ought to be expressed in clear and unambiguous terms; and it cannot be taken to have been intended when the language of the statute on which it depends is doubtful or uncertain. The fact that the rents and revenues of a property owned by a charitable corporation are devoted to the purpose for which the corporation was organized, will not exempt such property from taxation. It is only when the property itself is actually and directly used for charitable purposes that the law exempts it from taxation’ ”. (Emphasis supplied). In that case the court also stated: “The guarded language of the constitution describing the property to be exempted as ‘buildings and grounds and materials used exclusively for public charity’ leaves no room for doubt that it was not the intention to exempt any other property from taxation, save such as is used exclusively for public charity, and that exemption cannot be extended to property leased or rented and from which revenue is derived, though the same be applied solely to support the charity”. (Emphasis supplied). In the case of Hot Springs School District v. Sisters of Mercy, 84 Ark. 496, 106 S. W. 954, this court again considered the matter of exempting property for charitable purposes. It was there stated: “It is well settled that no one can exempt his property from taxation simply by the exclusive use of the income for public charity; for that is a matter which appeals to his own individual spirit of benevolence. It may be given today and withheld tomorrow. But a different rule prevails where the property is directly and exclusively used for that purpose.” (Emphasis supplied). In the case of Robinson v. Indiana & Arkansas Lumber and Manufacturing Company, 128 Ark. 550, 194 S. W. 870, at Page 557 of the Arkansas reports, the court stated: “There is a material difference between the use of property exclusively for public purposes and renting it out and then applying the proceeds arising therefrom to the public use. The property under our Constitution must be actually occupied or made use of for a public purpose and our court has recognized the difference between the actual use of the property and the use of the income. So it will be seen that in our own cases last referred to, the property itself was not directly occupied or made use of for public purposes, but only the income derived therefrom and for this reason the court held that the property was not exempt from taxation under our Constitution”. (Emphasis supplied).

Because of the similarity of the language used in Article 16, Section 5, of the Constitution exempting from taxation property used for school purposes, for public purposes, and for charity, the principles and rules applying to one category will apply with force to the other categories.

When we apply the rules and principles set forth in the cases cited above to the facts and circumstances of the case under consideration the following conclusions are pursuasively suggested. The laundry equipment and the dairy equipment together with the land acreage upon which the dairy is situated were not, in 1957, being used directly and exclusively for school purposes and therefore were not exempt from taxation at that time. In 1957 no course was taught, no teacher employed, and no credits given and it would be unrealistic to say that any of these facilities were being used for school purposes. No doubt certain benefits accrued to the College and the students from these operations, otherwise they would not have been maintained, but, as we have pointed out above, it does not follow that the sources from which these benefits come are exempt from taxation. To hold otherwise would be to give a liberal interpretation to the exemption clauses in Article 16, Section 5, that this court has already rejected. If a school can own and operate a laundry and a dairy tax-free then we know of no logical or legal reason why it could not likewise own and operate a hat factory, a shoe factory, a clothes factory or any other kind of a factory.

We note that a sizeable percentage of the business done by both of these College enterprises is in competition with like businesses in the town of Searcy. Not only does this circumstance show that said enterprises are not operated exclusively for the College but it is contrary to the avowed purpose of the College to teach the benefits of “America’s private enterprise economy”.

We do want to point out however that the College now proposes to inaugurate a course in animal husbandry and dairying and perhaps other courses in which instructors will be employed and credits given. If and when that is done a different situation will be presented relative to the exemption from taxation of such equipment and lands as are necessary to implement such course or courses and as are used directly and exclusively therefor.

We have also concluded that the Print Shop was subject to taxation in 1957, but for somewhat different reasons. It is not denied that the shop is maintained for two purposes — to provide jobs for cértain students and to provide immediate and accurate service for school printing. Assuming, as we understand the case to be, that the printing is done for legitimate school purposes we think the equipment would be exempt under Article 16, Section 5, provided it was used exclusively for that purpose. "We do not think, however, that it was so used in 1957 since it is conceded that 10% of the work was not for the College. We recognize that a casual or incidental outside usage might not always be inconsistent with the constitutional requirement of exclusiveness but we are unwilling to say that the outside work in this instance was casual or incidental. The press has been in operation for many years and during all this time the outside work has been accepted. If we now arbitrarily hold that 10% is incidental and inconsequential and that it does not violate the constitutional injunction of exclusiveness, then we would open a Pandora box of borderline questions to plague the courts in the future. We are not inclined to endorse a procedure that could result in whittling away the intent of the Constitution. Again we point out that a different situation would be presented if all the printing work hereafter is done for the College.

In view of what we have heretofore said it follows that the decree of the trial court must be, and it is hereby, reversed.

Reversed.

George Rose Smith, J., not participating.

Johnson and Robinson, JJ., dissent.

Jim Johnson, Associate Justice,

dissenting. After a careful study of the case at bar, I find it impossible to agree with the majority view. Harding College is a private school. This Court held unequivocally in Phillips County v. Sister Estelle, 42 Ark. 536, that private and public schools are on a parity insofar as tax exemption is concerned.

My research reveals that not only are the public colleges of this State granted the tax exemptions here asked for by Harding, but in addition more than $600 per student is provided from State funds to support these public institutions. The question that comes to my mind is, if the majority opinion is allowed to stand, where will the line be drawn? Will it be contended in the future that the mere fact that a college provides housing for the faculty and dormitories for the students that it is in competition with the hotels, motels, rooming and apartment houses, with the real estate companies, etc., and should be taxable? Will it be contended .that the fact that the college operates a cafeteria that it is in competition with the public restaurants and cafeterias and therefore should be taxable for this activity? Will it be contended that the college athletic program, the stadiums and gymnasiums, which are built to provide the general public, along with the students, proper seating facilities; and the concession stands which are used to provide the general public and the students refreshments, all of which services must be paid for by the public or the students, are in such competition with public recreational facilities such as pool halls and bowling alleys, that they too should be taxable? Just where will the line be drawn?

In my view, the majority opinion is saying, in effect, that the above enumerated examples, in addition to the printing press, dairy and laundry apparatus, claimed by Harding as tax exempt, do not fall within Article 16, Section 5 of the Arkansas Constitution, as school buildings and apparatus, libraries and grounds used exclusively for school purposes.

My research reveals that there are no Arkansas cases directly touching the question now before the Court, but there are cases involving the “public purpose” and the “public charity” exemptions which are pertinent. With respect to properties devoted to “public purposes” and “public charity,” the language of Article 16, Section 5 of the Constitution is as follows:

“Public property used exclusively for public purposes, and
“Buildings and grounds used exclusively for public charity. ’ ’

It will be observed that in all three exemptions the phrase “used exclusively” appears, so necessarily the interpretation of that phrase as applied to public purpose and charitable property should be controlling in this case.

The case of Hot Springs School District v. Sisters of Mercy, 84 Ark. 497, 106 S. W. 954, is in point. The hospital was maintained by the Sisters of Mercy as a charitable institution. It contained rooms used exclusively by charitable patients, but it also had some rooms which were occupied by paying patients. A drug store was maintained in the hospital, and those who were able to pay were charged for their prescriptions. The hospital also maintained a school for nurses, employed a teacher, and employed girls who gave nursing services to patients while taking nurse’s training. All moneys received went to the hospital and no funds were diverted to any other institution. From the opinion:

“The judgment appealed from exempts only the ground upon which the hospital building is situate and the building thereon; and the sole question in the case is, whether or not they are used exclusively for public charity.
“. . . It is not denied that the whole object of the institution of appellee is one of public charity but appellant claims that it is not exclusively so used because pay patients are received, and because those able to pay are charged for prescriptions.
“. . . The fact of receiving money from some of the patients does not, we think, at all impair the character of the charity, so long as the money thus received is devoted altogether to the charitable object which the institution is intended to further.
“In the case of County of Henepin v. Brotherhood of Gethsemane, 27 Minn. 460, the court said: ‘A hospital with the necessary grounds, free to all who are not pecuniarily able, and supported partly by private contributions and partly by fees from patients, but producing no profit, is a purely public charity.’
“In the case of Penn. Hospital of Delaware Co., 169 Pa. St. 305, the court said: ‘Property which is used directly for the purpose and in the operation of the charity is exempt, though it may also be used in a manner to yield some return and thereby reduce the expenses.’
“We think the property meets the constitution requirement of being ‘buildings and grounds and materials used exclusively for public charity.’ ”

In Brodie v. Fitzgerald, 57 Ark. 445, 22 S. W. 29, it appeared that the Sisters of Charity and Mercy who operated a public charity also owned real property which was rented for income purposes. Taxes were levied against this rental property. It was contended that as the rental ultimately was used for charitable purposes, the property was exempt. This contention was rejected, this Court saying:

“Under our constitution the rule stated by 1 Desty on Taxation, p. 119, applies. It is as follows: ‘The fact that the rents and revenues of a property owned by a charitable corporation are devoted to the purposes for which the corporation was organized, will not exempt such property from taxation. It is only when the property itself is actually and directly used for charitable purposes that the law exempts it from taxation.’ ”

This case is without application here for the simple reason that Harding College does not rent any of its properties for rental income. It actually and directly uses all of the property it owns for educational purposes. The operation of the press, the laundry and the dairy are carried on primarily for educational purposes and the receipt of revenue from a few outside customers is just as incidental as was the receipt by the Sisters of Mercy of payments from those patients who could afford to pay for the use of the hospital’s facilities.

In pointing out why the rental property was held to be taxable in Brodie v. Fitzgerald, supra, this Court in Robinson v. Indiana & Ark. Lumber & Manufacturing Co., 128 Ark. 550, 194 S. W. 870 remarked:

‘ ‘ The reason is that under our constitution it is only when the property itself is actually and directly used for public charity that the law exempts it from taxation.”

Yoes v. City of Fort Smith, 207 Ark. 694, 182 S. W. 2d 683, involved a “public purpose” exemption. The City of Fort Smith issued revenue bonds and constructed a waterworks system. A reservoir was constructed in Crawford County some twenty-five miles from Fort Smith. The tax officials of Crawford County levied taxes against this property. They contended that all of appellee’s property in Crawford County was not being used “exclusively for public purposes,” and in their brief said :

“ ‘In order to secure its water supply, appellee constructed its dam and plant in the northern part of Crawford County, more than twenty-five miles from the city. This, we concede, it had a right to do, but only for one purpose, and that was supplying its citizens water within the corporate limits. When it went beyond this, it was no longer using the property exclusively for the public purpose for which the waterworks was designed. True, this and other courts have held that in connection with this purpose, mere surplus water may be disposed of, but it has never been held that the municipality can spread out into the general utility field and then escape liability . . .’ (i.e., liability of taxation on the property). Appellants thus concede, in this section of their argument, that appellee’s property would be exempt from the taxation here sought to be imposed except for the contracts to furnish water to (a) Alma, (b) Van Burén, and (c) Camp Chaffee.”

This Court answered:

“A city may sell surplus water without losing its right to tax exemption as public property used exclusively for public use. In 3 A. L. ft. 1445, there is an annotation on whether public property is taxable where income is received incidental to public use; and the rule is stated: 1 As a general rule, it may be said that where the primary and principal use to which the property is put is public, the mere fact that income is incidentally derived from its use does not affect its character as property devoted to public use.’ The annotation is supplemented in 129 A. L. R. 485, and also in 101 A. L. R. 790, where the case of Hope v. Dodson, 166 Ark. 236, 266 S. W. 68 is cited to sustain the above quoted rule.”
“Appellants say in their brief: ‘After the construction of the dam, under a "WPA grant, a large swimming pool and large bath house were constructed upon a tract of land which appellee had acquired wholly below the dam; admission fees were charged to swim in the pool, and other charges were made in connection with the use of the bath house, towels, etc.; cold drinks, sandwiches, and such articles, were sold at the bath house and about the swimming pool; a coin-operated music machine was operated. It is apparent that all of these things were separate and apart from, and had no relation to, the supplying of water. In addition to these things, a number of cottages have been erected upon the land below the dam, and title thereto is in Fort Smith . .
“All the area below the dam was placed under the control of the Parks Board of the City of Fort Smith and has all the time been handled as a public park. The facilities are open to the public at large, and are patronized by the people of Crawford County, as well as by people from elsewhere. A small admission charge is made for the use of the swimming pool, in order to defray towel expense, etc.; cold drinks and sandwiches are sold by a concession; but from all of the admission charges and concession money, the City of Ft. Smith has never made any profit; in fact, it still lacks several hundred dollars of receiving back its original outlay for towels. If any profit should ever be received, it will go back into maintenance, etc.”

The Court quoted this from Hannon v. Waterbury, 106 Conn. 13, 136 A. 876:

“The charge of a small fee covering a part of the cost of the maintenance of the pool in paying a supervisor, instructors, janitors, and the like, while the municipality furnished the buildings, the swimming pool, the apparatus and equipment in connection therewith, the coal, electricity, water chemicals, and other necessaries for the maintenance of the pool from the rule of governmental immunity. The city was not deriving a profit from this small fee, the charge was a mere incident to the public service rendered in the performance of a governmental duty.”

And then added:

‘ ‘ Without lengthening this opinion by the citation of other authorities, we conclude that the use of the property below the dam, as a swimming pool, bath house, and public park, did not destroy the status as tax-exempt property under Article 16, Section 5, of our Constitution.”

If an incidental charging for swimming, towels, cold drinks, sandwiches, coin machines, and the rental of cottages does not impair the “exclusive use” for public purposes, it follows that school property is used “exclusively for school purposes,” even though a small amount of surplus products and services may incidentally be sold to outsiders who are not solicited.

The above case certainly should be controlling in the case at bar. I can think of no excuse to give a different meaning to the same words used in the same section of the Constitution simply because in one instance the property of one of the finest private schools in this Nation is involved. If the majority is compelled to deviate from the rule set out in Hot Springs School District v. Sisters of Mercy, and Yoes v. City of Fort Smith, supra, it seems to me the least this Court could do would be to take the equitable approach to this situation by allowing a pro-rata tax exemption for that amount of the property here involved which is admitted to be used in the strictest sense exclusively for the school.

For the reaáons stated above, I respectfully dissent.


author: Sam Robinson, Associate Justice.

text:
    Glass v. First National Bank.
    5-2010
    331 S. W. 2d 861
    Opinion delivered February 15, 1960.

      James E. Evans, for appellant.

      Jameson & Jameson, for appellee.
   Sam Robinson, Associate Justice.

Appellee, First National Bank, Fayetteville, filed this suit to recover from appellant, Owen C. Glass, $300 which the bank had paid on a check drawn on the bank by Glass, there being no money in Glass’ account at the time the check was cashed.

On the 22nd day of January, 1958, appellant gave a check in the sum of $300 to Lloyd McWater, the check being drawn on the appellee bank. The check was sent to the bank the next day and payment was refused because of insufficient funds, there being only in Glass’ account. Later Glass notified the bank to stop payment on the check. Glass contends that the stop payment order was given on January 23,1958, and the bank claims such order was received on February 24, 1958. In any event, the stop order was made out and put in the files of the bank not later than February 24, 1958. Nothing further was heard from the check until September 16, 1958. At that time McWater, the payee named in the check, appeared at the bank and presented the check for payment. The bank teller, Mr. Leon Campbell, communicated with the bookkeeping department and upon being told the check was good, paid the amount of the check, $300, to McWater. Immediately thereafter employees of the bank discovered that they had made a mistake; that there were no funds in the account of Owen C. Glass. The mistake was due to confusing Owen C. Glass’ account with that of another depositor, Orin Glass.

Mr. Everett Skelton, a vice-president of the bank, testified that a charge had been made against the account of appellant Glass which absorbed the 42$, leaving nothing in that account, and that the account was closed on February 25, 1958. It may be inferred, however, from Mr. Skelton’s testimony that he did not mean that the account was closed to the point that it would have been necessary for Glass to make any further arrangements such as signing a signature card or otherwise, before he could deposit money in the bank. It merely appears that there was no money left in the account, but the account still appeared on the books of the bank.

The bank filed this suit in chancery against McWater and appellant Glass, seeking to recover the $300 paid on the check. Both defendants demurred. The McWater demurrer -was sustained, but the Glass demurrer was overruled and the case was transferred to circuit court. A trial before a jury resulted in a verdict in favor of the bank against Glass for the amount of the check, $300.

Appellant Glass first argues that his demurrer should have been sustained, but we do not agree. The complaint alleges that Glass drew a check on the bank which was paid by mistake. Certainly under certain circumstances a depositor is liable to the bank for the amount of an overdraft paid for the depositor, and the mere fact that the overdraft was paid by mistake does not as a matter of law preclude the bank from recovering. 7 Am. Jur. 442. But on the other, it cannot be said that the bank is entitled to recover against a depositor in such circumstances merely because a mistake was made. In some cases the facts may be snch that, as a matter of law the bank would be entitled to recover from a depositor for whom it had paid an overdraft. In other cases the facts may be snch that as a matter of law the bank cannot recover. Bnt here we think it was a question for the jury to determine whether in view of all the facts and circumstances of the case the bank is entitled to recover from Glass. If, in addition to Glass having no funds in the bank — which is not in itself controlling— many banks pay overdrafts for their depositors — and aside from the mistake of confusing the two Glass accounts in the first instance, there are other facts and circumstances from which a jury could reach the conclusion that an ordinarily prudent person would not have cashed the check without at least communicating with Glass, then Glass should not have to stand the loss occasioned by the bank’s acting in such an unreasonable and imprudent manner. But, if on the other hand it can be said that in cashing the overdraft, and aside from confusing the two Glass accounts, the bank did nothing other than what an ordinarily prudent person would have done in the circumstances, then Glass, the one who wrote the overdraft in the first instance, ought to have to stand the loss, if any.

There are certain facts favorable to the bank’s position. In the first place, Owen C. Glass did have an account at the bank, although there was no money in it at the time the check was cashed. There is nothing to indicate that Glass could not have made a deposit that would have been accepted by the bank at any time without making any further arrangements for opening an account. Next, Glass drew a check on the bank, in which he directed the bank to pay to McWater the $300. In paying McWater the $300 on the check, the bank made a mistake, but by drawing the check in the first place Glass had started the course of events that gave rise to the mistake. Likewise, there are circumstances from which a jury could find that if acting as an ordinarily prudent person in the circumstances the bank would not have cashed the check. The check was dated January 22, 1958. The bank cashed it on September 16, 1958.

At the time the check was cashed it may not have been a negotiable instrument. Ark. Stat. § 68-153 provides: “Where an instrument payable on demand is negotiated an unreasonable length of time after its issue, the holder is not deemed a holder in due course.” In addition, the bank still had' the stop-order that had been issued in February, and although the bank was not absolutely bound by it, in view of the fact that more than 90 days had expired since it was issued (Ark. Stat. § 67-532), it was something that could be taken into consideration in determining whether there was negligence on the part of the bank that precluded recovery from the depositor.

Over the specific objection of appellant, the court gave instruction No. 6, as follows: “If you find from a preponderance of the evidence that defendant, Owen C. Glass, gave a check for $300.00 payable to Lloyd McWater, drawn on the First National Bank, and that said check was presented to the First National Bank for payment; and if you further find that the First National Bank paid said check, by mistake, and charged same to another account through error, and that Owen C. Glass received $300.00 benefit therefrom, or any benefit therefrom, then you are instructed that the First National Bank should recover from the defendant, Owen C, Glass.” Instruction No. 7 is to the same effect.

According to those instructions, the jury was erroneously told that if Glass received any benefit, however small, by reason of the bank’s having cashed his check by mistake, then the jury would have to find for the bank. But, as heretofore pointed out, at the time the check was cashed it may not have been a negotiable instrument, and if the jury had found that it was not a negotiable instrument, but that Glass was nevertheless liable to the bank, he would be liable only for the amount he owed the payee, if anything (Ark. Stat. § 68-158). Glass contended that he actually owed the payee nothing; that under agreement with the payee the check was not to be presented for payment until the happening of a subsequent event and that such an event never occurred.

Reversed and remanded.


author: Jim Johnson, Associate Justice.

text:
    Warren v. Wheatley.
    5-2038
    331 S. W. 2d 843
    Opinion delivered February 15, 1960.

      Richard W. Hobbs, for appellant.

      R. Julian Glover, Wooton, Land & Matthews, Earl J. Lane and Wood, Chesnutt <S> Smith, for appellee.
   Jim Johnson, Associate Justice.

This is a taxpayer’s suit. The action was brought by appellant, H. C. (Dusty) Warren, County Judge of Garland County, in his individual capacity as taxpayer of Garland County, against the Board of Governors of the Ouachita General Hospital, an institution owned and operated by Garland County, and against Dr. George C. Coffey, to rescind the purchase by Ouachita General Hospital of a lot adjoining the hospital from Dr. George C. Coffey.

It was stipulated by the parties that there was no fraud or collusion in the purchase of the lot for the use of the hospital and that the lot was worth the $15,000 purchase price, or more.

Appellant alleged that the Ouachita General Hospital was not a legal entity and could not purchase real property; that Garland County could not legally purchase this property in the manner in which it was purchased; that the County Court did not approve the purchase of the property; that a specific appropriation of the Garland County Quorum Court was required for this purpose and that none was made; and that a portion of the funds expended for the purchase of the property was procured from monies specifically appropriated by the Quorum Court of Garland County for care of charity patients and for operation and maintenance of the hospital in violation of law.

As a separate cause of action against appellee, Hill A. Wheatley, Chairman of the Board of Governors of Ouachita General Hospital, appellant alleged that appellee, Hill A. Wheatley, had taken assignment from the seller, appellee, Dr. George C. Coffey, of a $10,000 note for the balance of the purchase price and had profited to the extent of $100 interest on the said note at the time it was paid, in violation of his duties as a member of the Board of Governors of the hospital.

Trial of the action in the Garland Chancery Court, in conjunction with another case involving this appellant and one of the appellees, resulted in dismissal of appellant’s complaint for want of equity and this appeal followed.

Appellees alleged that the purchase of the lot for the use of the hospital was necessary for the efficient operation of the hospital; that the funds for the purchase of the lot where procured from cash revenues of the hospital from paying patients not subject to appropriation by the Quorum Court of Garland County; that the conveyance of the lot to the Ouachita General Hospital was, in effect, a conveyance to Garland County because the hospital was wholly owned by Garland County; that the purchase of the lot was approved by J. M. Lowery, County Judge of Garland County, at the time of the purchase; and that the purchase of the hospital’s note for value by appellee, Hill A. Wheatley, and his receipt of the sum of $100 interest on the note was not a violation of his duties and obligations as a member of the Board of Governors of the hospital.

From the record on trial de novo we find that it is undisputed that the purchase of the lot for the use of the hospital was necessary for the efficient operation of the hospital. The Board should be commended for its interest in the welfare of the people of Garland County as evidenced by providing them this additional necessary facility at no expense to the taxpayer. The record reflects that the funds for the purchase of the lot were procured from cash revenues of the hospital from paying patients and therefore not subject to appropriation by the Quorum Court of the county. It is true that tax funds and funds from paying patients are mingled in the same bank account and that all payments are made from this common account. Even though we believe the better practice to be the establishment of a separate bank account for the public and private funds, we cannot say from this record that tax money was used in the purchase of the lot. The evidence is undisputed that the hospital’s expenses for authorized purposes regularly exceed the Quorum Court’s appropriation.

The proof shows that from the inception of the hospital the expenditures of the hospital for care of charity patients consistently exceeded the appropriations for the care of charity patients both from Garland County and from the City of Hot Springs, and that during the six month period ending December 31,1958, the total receipts from the city and county for charity patients were $17,000 and the expenditures for charity patients were $27,859.63. Unrestricted cash funds of the hospital made up this deficit. The proof further shows that during this six month period the hospital received $13,500 from the one mill maintenance and operation tax and that total operating expenses were $222,202.54, exclusive of the purchase of the lot. This deficit was also made up from unrestricted cash funds of the hospital received from paying patients and other sources.

It is obvious, therefore, that the funds for the purchase of the lot did not come from monies appropriated for other specific purposes by the Quorum Court of Garland County.

Appellant’s argument on this point is primarily based on the fact that all monies from every source, including the restricted tax monies, were placed in one general bank account for convenience in accounting and administration of the affairs of the hospital. The hospital’s accountant testified that separate ledger sheets were kept for the various funds, including the charity appropriations and the one mill maintenance tax, and that these funds were segregated on the books of the hospital. The hospital Administrator testified that on the day before the final payment for the lot was made, the hospital bank account amounted to $35,832.32, and that on the day the final payment of $10,000 was made, the balance in the bank account after this payment and after deposit of a check for $13,500 for one mill maintenance tax monies was.' $26,127. The records clearly reflect, therefore, that no part of the one mill maintenance tax or the charity appropriations was used by .the hospital in the purchase of the lot.

Since the members of the Board of Governors are trustees of the funds appropriated for the Ouachita General Hospital, and since the record reveals that at no time here involved did the common bank account fall below the amount contributed to the hospital from public sources, the money remaining will be deemed to have included the tax money. See: Chambers, Adm. v. Williams, Adm., 199 Ark. 40, 132 S. W. 2d 654; Powell v. Missouri & Ark. Land & Mining Co., 99 Ark. 553, 139 S. W. 299; Restatement Trusts 2d, Section 202 J, pages 451 and 452.

Appellant argues, and very forcefully so, that the Chancery Court erred in holding that the Ouachita General Hospital was a legal entity and could take title to real property. It was admitted by the pleadings and stipulations entered into between counsel that the Ouachita General Hospital was not a legal entity. Of course, we agree with appellant that the rule that before a grantee can take title to real property the grantee must be a legal entity is so basic that no citations are necessary. However, in this case the record reveals that the Ouachita General Hospital is wholly owned and operated by Garland County. That appellee, Dr. Coffey, did not prepare the deed to the Ouachita General Hospital. He did not have it prepared or have his attorney approve it. He relied solely upon the Board of Governors and the then County Judge J. M. Lowery as to the manner in which the conveyance was made and the transaction handled and as to the validity thereof. That twice during the course of the trial a correction deed from Dr. Coffey to Garland County was offered to appellant, H. C. Warren, County Judge of Garland County, and these offers were refused. Based upon this state of the record relative to the title to the property here in question, we are of the view that the offer of the correction deed should have been accepted and now should be accepted by the County Judge on behalf of the county. There can be no doubt from this record that the county, from the date of the purchase of this property, has held the equitable title while the legal title remained in Dr. Coffey in trust for the county. This transaction created an implied trust. Such trusts are those whieh are deducible from the transaction as a matter of clear intention but not found in the words of the parties or which are superinduced upon the transaction by operation of law as a matter of equity, independent of parties’ particular intention. Hunt v. Hunt, 202 Ark. 130, 149 S. W. 2d 930.

The remaining question is whether the appellee, Hill A. Wheatley, indirectly transacted business for profit with the Ouachita General Hospital while acting as a public officer and chairman of the hospital’s Board of Governors. The appellant argues that Wheatley violated his duties and obligations as a member of the Board of Governors of the hospital because he took an assignment of the hospital’s note to Dr. George C. Coffey for the balance of the purchase price of the lot and received payment in full of the note plus $100 interest due thereon.

The proof shows that Hill A. Wheatley did not enter into a contract with the hospital Board in connection with the purchase of the lot. Mr. Wheatley, in his private capacity, purchased a note bearing interest at 6 per cent per annum secured by a lien on real property. The note was paid and he received the interest called for under the note. Mr. Wheatley’s contractual relations were with Dr. Coffey and not with the hospital Board.

There can be no question but that Mr. Wheatley’s transaction with Dr. Coffey placed him in a position of doing indirectly that which he could not do directly, i. e., do business with the hospital. He assumed a position in which his personal interest, as the holder of the note, might conflict with his fiduciary duty as a member of the Board of Governors. There was, therefore, a breach of trust. The exact situation is discussed in Restatement of Trusts 2d, § 170, comment i: “If the trust estate includes property which is subject to an encumbrance, the trustee violates his duty to the beneficiary if he purchases the encumbrance for himself individually.”

In these circumstances the fiduciary cannot make a profit from the transaction. If, for example, he has bought the encumbrance at a discount he cannot recover its face value from the trust estate, for by doing so he would realize a profit. But the receipt of simple interest, at a rate not shown to be excessive, is not regarded as a profit to the fiduciary. The rule is stated in the Restatement, supra, § 206, comment h: “If he [a trustee] purchases the encumbrance for less than its face value he cannot enforce it against the trust estate for its full face value, but he is entitled only to receive the amount which he paid for it vjith interest thereon” (our italics).

The rule was applied in Trimble v. James, 40 Ark. 393, where an administrator had saved the estate by purchasing claims at a discount, though he was compelled to borrow money at ruinous rates of interest in order to do so. We held that he was entitled to recover his actual outlay only, with interest, saying: “The administrator is entitled only to actual advances, with simple interest at six per cent till repayment, without intervening rests.” It follows that Mr. Wheatley is entitled to retain the $100 which he received as interest, as it represents only simple interest at a rate not shown or suggested to be excessive.

From what we have said above, the decree of the Chancellor is modified only to the extent indicated and affirmed, and the cause is remanded with directions to enter orders consistent with this opinion.