author: George Bose Smith, J. J. Seaborn Holt, J.,

text:
    Brown v. Polk.
    5-1828-1829-1830
    322 S. W. 2d 681
    Opinion delivered April 13, 1959.

      James P. Baker, for appellant.

      A. M. Coates, for appellee.
   George Bose Smith, J.

We have consolidated these three appeals, which are from separate foreclosure decrees obtained by the appellee Polk in suits involving three different mortgages. The various debtors contend that Polk’s claims are usurious and therefore void. The chancellor rejected this contention and entered a foreclosure decree in each case.

We may confine our discussion of the facts to Case No. 5-1828, which is typical of all three appeals. On December 13, 1956, the appellants Isiah Brown and his wife, to refinance a debt against their forty-acre farm, borrowed $4,000 from Polk. To evidence the debt the Browns executed five promissory notes, payable serially at $800 a year, bearing interest at 8 per cent per annum, and secured by a real estate mortgage upon the farm. When the debtors failed to pay the first annual installment of the principal Polk declared the entire debt due and filed this suit in January, 1958.

The Browns base their charge of usury not upon the real estate mortgage but upon a separate account by which Polk furnished them with cash and supplies during the 1957 crop year. This furnishing account was evidenced by a $550 note which the Browns signed in January, 1957, the amount of the note being the parties’ estimate of the total advances that Polk would make during the year. The note recited an interest rate of 10 per cent per annum and was secured by a chattel mortgage on the 1957 crops. As it turned out, the proceeds from the sale of the crops were insufficient to pay the furnishing account in full. When Polk filed his suit to enforce the real estate mortgage he included in his complaint a demand for the balance due on the furnish account, under a clause in the mortgage which made that instrument security for all indebtedness owed by the mortgagors to the mortgagee at the time of foreclosure.

At the end of the 1957 crop year Polk’s wife, who acted as his bookkeeper, prepared a written statement of Brown’s furnishing account. This statement, dated October 17, 1957, listed Polk’s advances from January through September, totaling $1,075.86. Interest was added in the amount of $107.58, which is exactly 10 per cent of the total sums advanced, regardless of when the advances were actually made. In filing his complaint Polk attached a sworn itemized statement of the account, which reflects the same practice of charging interest at the rate of 10 per cent of the total amount advanced.

The appellants are correct in their contention that the three furnishing accounts are usurious. Upon almost identical facts we held in Brooks v. Burgess, 228 Ark. 150, 306 S. W. 2d 104, that the excessive interest charge constitutes usury. In the cases at har when the pleas of usury were filed Polk tried to purge the accounts by recomputing the interest, and in his testimony he attributed the usurious charges to mistakes on the part of his wife. With respect to a similar assertion of mistake we said in the Brooks case: “Here the lender made no effort to compute the interest at the legal rate, nor was there a mathematical error in his calculations. At the most Burgess made a mistake of law, that of thinking that his method of charging interest was lawful. If the usury laws are to mean anything at all it is plain enough that those who engage in the business of lending money must at their peril familiarize themselves with those laws. Otherwise there is nothing to prevent every lender from habitually collecting excessive interest charges, as long as he purges the account of usury when it becomes necessary to go into court.” That the account in the Brooks case extended over a period of eight years, while those now before us relate to a single year, is not a sound reason for making a distinction between the eases. The point is that Polk, through what was at most a mistake of law, sought to collect interest from these appellants at a usurious rate. Indeed, Polk admits that he actually collected excessive amounts of interest from other farmers that he furnished during the same crop year.

Even though the furnishing accounts are unenforceable, the appellants are not entitled to the additional relief they seek. First, it is asserted by their pleadings and intimated by their brief that the invalidity of the furnish accounts also renders usurious the real estate notes and mortgages. This argument is unsound, for the real estate loans and the crop loans were separate and independent contracts, so that the invalidity of the one would not affect the other. Starling v. Hamner, 185 Ark. 930, 50 S. W. 2d 612; Hirsch v. Perkins, 211 Ark. 388, 200 S. W. 2d 796; Hughes v. Holden, 229 Ark. 15, 316 S. W. 2d 710. That the furnishing account balance constituted other indebtedness within the catchall clause in the real estate mortgage did not, in our opinion, establish such a connection between the two loans as to permit one to contaminate the other.

Secondly, the proceeds from the sale of the crops were applied as payments upon the furnish accounts. It is now contended, on the authority of Edwards v. Rumph, 48 Ark. 479, 3 S. W. 635, and Humphrey v. McCauley, 55 Ark. 143, 17 S. W. 713, that when the debtor owes the creditor both a valid debt and a usurious debt, the creditor cannot without the debtor’s consent apply a payment to the illegal account. Here, however, it is clear that the debtors consented to the application of the payments, not only because the chattel mortgages contemplate that the proceeds from the crops will be applied to the furnish accounts but also because those mortgages expressly provide that the mortgagee shall have “the exclusive right to apply the net proceeds of sale of all crops” to any indebtedness which the mortgagee may select.

For the error of granting the appellee judgments upon the furnishing accounts the decrees are reversed and the causes remanded for further proceedings upon the real estate mortgages.

Holt, J., dissents.

J. Seaborn Holt, J.,

dissenting. I would affirm the three decrees in their entirety. I agree with the majority that the plea of usury cannot be sustained as to real estate notes, but I do not agree that usury attaches to the three furnish notes in the circumstances here. It appears undisputed that the furnish account notes were due in the case of Alonza Haggins and Ostelle Haggins on November 1, 1957 and in the Brown case on October 15, 1957. None of the notes, involved, called for more than 10% interest and were admittedly valid notes. The evidence shows (and Mr. Polk testified) that for some time he had been in very bad physical condition and that he entrusted his bookkeeping to his wife and he had her prepare a statement in October 1957 of the amount due on each of these furnish notes and on January 4, 1958 Polk filed the present foreclosure suits, and on February 7, 1958 each of the appellants answered with a general denial not mentioning the defense of usury; but on February 24 thereafter, after receiving appellants statement of the amount due on each note which showed that a usurious charge had been calculated on each of the notes, appellants amended their complaints, alleging usury as a defense. It further appears that when Polk learned that the statements which he had furnished did show usury, he immediately had an accountant prepare new statements, based on the provisions in the notes, and showing an interest charge claimed by him of less than 10%. The evidence further shows, as I read the record, that there was no intention on Polk’s part to charge usury and that when he discovered his wife’s mistake, he immediately had it corrected and submitted a corrected statement, as indicated. It is undisputed here also that Polk had never had any business transactions with appellants before. His wife, it appears, had had little, if any, experience in calculating interest and as I read the evidence, she made an honest mistake of fact in her calculations which, when discovered, was promptly corrected. Polk swore positively that he did not intend to charge usury and when he discovered the mistake, he immediately had it corrected.

“To constitute usury there must either be an agreement between the parties by which the borrower promises to pay and the lender knowingly receives a higher rate of interest than the statute allows for the loan or forbearance of money; or such greater rate of interest must knowingly and intentionally be reserved, taken or secured by such loan or forbearance. It is essential, in order to establish the plea of usury, that there was a loan or forbearance of money, and that for such forbearance there was an intent or agreement to take unlawful interest, and that such unlawful interest was actually taken or reserved.......................................................Such greater rate of interest must knowingly and intentionally be reserved, taken or secured by such loan or forbearance”, Briggs v. Steele, 91 Ark. 458.

In Baxter v. Jackson, 193 Ark. 996, 104 S. W. 2d 202, we said: ‘ ‘ Our law visits on a lender, who contracts for usurious interest, however small, a forfeiture of his entire loan and the interest thereon. It follows from the plainest principles of justice that such a defense shall be clearly shown before the forfeiture is declared. Usury will not be inferred from circumstances when the opposite conclusion can be reasonably and fairly reached. It is, therefore, well settled that the burden of proof rests on the party pleading usury, and it must be shown by the ‘clear and convincing’ rule, and not by the mere ‘preponderance’ rule. Viewing the evidence in this case accordingly, we are constrained to say that appellee has failed to meet the burden imposed by the rule.” This holding was reaffirmed in Commercial Credit Plan, Inc. v. Chandler, 218 Ark. 966, 239 S. W. 2d 1009. I think the present case is on “all fours” with our holding in Cox v. Darragh Company, 227 Ark. 399, 299 S. W. 2d 193. In that case the facts were: ‘ ‘ Mr. Darragh’s explanation of what happened is substantially as follows: "When Mr. Darragh was told of the transaction he called Mr. Lovett who was cashier of the Commercial National Bank in Little Rock and asked him to figure the interest; Mr. Lovett, who was busy at the time, said he would have his secretary make the calculations and call him in a short while; When the secretary called she gave Darragh the figures which were placed on the back of the note, and; That he assumed the figures were correct and did not check them personally. At the same time, according to Darragh’s testimony, he had his secretary insert the above figures in a letter which he had already dictated to appellant. Darragh further testified that the matter of excess interest was not brought to his attention until about the first of December when he promptly wrote a letter to appellant and apologized for the error in the interest calculations, explaining a mistake had been made, and gave him the correct interest calculations.....................................There can be no usury when the amount taken in the contract for interest in excess of ten per cent per annum was reserved through a mistake or ignorance of the fact that it was in such excess. If the lender, by mistake of fact, by error in calculation, or by inadvertence in the insertion of a date, contracts to receive an illegal rate of interest, ‘ such mistake, error or inadvertence will not stamp the taint of usury on such engagement, nor cause to be visited upon him, who did not knowingly and intentionally disregard the law in this behalf, the highly penal consequences of an usurious offense’...................To constitute usury in this state, there must be an intent to take or receive more than 10 per cent per annum interest”.

I also thiuk that the case of Brooks v. Burgess, 228 Ark. 150, 306 S. W. 2d 104, relied upon by the majority, is clearly distinguishable upon the facts. In that case, we pointed out that, ‘ ‘ The lender made no effort to compute the interest at the legal rate”, whereas here it is undisputed that immediately after discovering the mistake in his wife’s calculations, he employed an accountant who furnished a correct statement which showed, in fact, less than 10 fo interest. In the Burgess case the lender and the borrowers had been doing business with each other over a period of some eight years and the lender had consistently been charging, over the years, usurious interest. Here, as indicated, Polk had had no other dealings with the appellants and honestly, I think, tried to correct the mistake just as soon as he discovered it. “Usury is not inferred if the opposite conclusion can be reached”, Leonhard v. Flood, 68 Ark. 162, 56 S. W. 781. “ The wrongful act of usury will never be imputed to the parties and it will not be inferred when the opposite conclusion can be reasonably and fairly reached”, Briggs v. Steele, above. Here, as indicated the notes were not usurious in their inception. As I understand our rule, it is that it is only where contracts were usurious in their inception that no subsequent offer to remit the usury can give it validity. “A suit was brought to enforce a contract, which if enforced according to its terms would result in the exaction of usury; held if the contract was usurious in its inception, no subsequent offer to remit the usury can give it validity”, Habach v. Johnson, 132 Ark. 374, 201 S. W. 286.


source: Caselaw Access Project

author: Paul Ward, Associate Justice. J. Seaborn Holt, J.,

license: Public Domain

text:
    Bell v. Kroger Co.
    5-1633
    323 S. W. 2d 424
    Opinion delivered April 13, 1959.
    [Rehearing denied May 18, 1959]

      Guy H. Jones, for appellant.

      George F. Hartje, Owens, McHaney, Lofton McHaney, for appellee.
   Paul Ward, Associate Justice.

On November 23, 1951, about 7:00 p.m., Rickard Neil Bell, tbe husband of appellant, lost his life as the result of a collision between a car which he was driving and a 5-ton truck owned by The Kroger Company and being driven at the time by Windfrey Sory.

Suit was brought by the deceased’s widow to recover damages based on the following allegations of negligence :

The defendant Windfrey Sory failed to yield the right-of-way to the said Richard Neil Bell, deceased; the defendant Windfrey Sory carelessly, recklessly and negligently operated and controlled said five-ton Kroger truck in such a manner as to cause Richard Neil Bell, deceased, to bring and place himself in a position of deadly peril from which he could not escape and where he could not avoid said collision; the defendant Windfrey Sory failed to keep a proper lookout for other persons who may or could have been driving upon said highway at said time and place; the defendant Windfrey Sory operated said Kroger truck at said time and place in such a manner as to create an emergency for the said Richard Neil Bell, deceased, wherein the said Richard Neil Bell, deceased, could not avoid said collision; the defendant Windfrey Sory did operate, drive and maintain said five-ton Kroger truck upon said highway at said time and place without any lights and without proper lights after night time and in darkness and carelessly, recklessly and negligently failed to turn on the lights or sufficient lights on said truck until the said Richard Neil Bell, deceased, had driven his automobile to a point and to a position on said highway where said collision was inevitable and unavoidable; the defendant Windfrey Sory at said time and place recklessly, carelessly and negligently failed to turn on the lights on said Kroger truck in time to warn the said Richard Neil Bell, deceased, of the presence of said Kroger truck.

A trial resulted in a jury verdict in favor of appellant’s estate for $700 but nothing for the widow and children. This appeal is based on the alleged error of the trial court in allowing the introduction in evidence of an instrument known as a Tactograph, together with the testimony relating thereto. Generally speaking, a Tactograph is an instrument containing a clock with a paper dial attached which is fastened onto the motor of a truck in such manner that a needle will indicate on the paper dial the speed of the truck at any given time and also each truck stop and the time thereof.

In taking this appeal appellant designated only the pleadings and that portion of the testimony relating to the Tactograph. Appellees have not designated or brought forward any other portions of the testimony.

The issue presented by this appeal is a novel one in this state, and our research has revealed very little help from other jurisdictions. But after careful consideration we have concluded that the cause must be reversed for either one of two reasons which we hereafter discus®.

No sufficient proof of accuracy. Only two witnesses testified as to the operation of the Tactograph. One was Arthur L. Estes who was in charge of transportation for the Kroger Company, and the other was Windfrey Sory who was driving the truck at the time of the accident. Estes had only general knowledge of the use of the instrument but of his own knowledge he knew nothing of its accuracy. This was clearly revealed by his own testimony.

Q. “Mr. Estes, have you ever tested one of these on a drive yourself?”
A. “I have never tested one, no, sir.”
Q. “And you have no personal knowledge of their accuracy, have you ? ’ ’
A. “No, sir, I don’t have any personal knowledge of their accuracy.”

Mr. Sory was asked if “he ever actually checked one of these graphs against a trip” and he replied that he had and that at one time it was part of his job to do so, and he found them accurate. It is not shown, however, that he had checked this particular one and found it accurate. The contrary is strongly indicated by the record. The Tactograph in question was placed on the truck in 1948 and had never been repaired, although Sory admitted such instruments develop defects. He did state that if a defect occurred the instrument would not work. The record further indicates that this particular instrument was not accurate. Estes testified:

Q. “So that your Tactograph indicates on this graph that this truck did not stop at anytime from 4:30-4:35 in the afternoon until 7:00 o’clock, at the time of the accident?”
A. “That is right.”

But Sory, the driver of the truck, stated that he stopped at Russellville about 5:25, at Atkins about 5:45, also at Morrilton, and at Conway about 6:37. He said the accident happened at 6:55.

In view of the above state of the record and because we are here dealing with a novel concept of evidence, we think the court should have refused to allow the introduction of the Tactograph. In the case of State v. Dantonio (N. J.) 105 A 2d page 918 the court required a much higher degree of proof than is shown by this record.

The testimony was not relevant or competent. It cannot be contended that the Tactograph could possibly reveal any evidence conceivably pertinent to this case except the speed of the truck at the time of the accident. Yet there is nothing in the record to show that “speed” was relied on as an element of negligence. All the allegations of negligence relied on by appellant are set out above. It might be argued that “speed” was implied in the second paragraph if it were not for the fact that the specific acts of negligence are carefully defined in the other paragraphs.

The record does not show that “speed” was relied on in any of the testimony, and we cannot presume that it was. The last sentence of Section 12, Act 555 of 1953 reads:

“Where the record has been abbreviated, by agreement or without objection from opposing parties, no presumption shall be indulged that the findings of the trial court are supported by any matter omitted from the record. ’ ’

Sufficiency of Objections. The record discloses appellant indicated her objections on five different occasions. On page 26, when the first effort was made to introduce the Tactograph, she objected; on page 27 she objected to it on the ground of incompetency; on the same page she renewed her exceptions; on page 30 where the graph was finally introduced she saved her exceptions, and; on page 38 she asked that all testimony be stricken because the accuracy of the Tactograph had not been proven.

Although, appellant might have given more specific reasons for objecting in each instance, we think they all clearly indicated the action which she desired the court to take, i.e., exclude the Tactograph and all testimony relative thereto from the record. Section 21 of said Act 555 says that “it is sufficient that a party . . . makes known to the court the action which he desires the court to take ...”

For the errors indicated, the judgment of the trial court is reversed and the cause is remanded.

Reversed and remanded.

Holt and McFaddin, JJ., dissent.

J. Seaborn Holt, J.,

dissenting. I do not agree with the majority-view. A Kroger Company truck, driven by appellee, Sory, collided with a car driven by Richard Bell on Highway 65 in Faulkner County at about 7:00 P. M. on November 23, 1951, resulting in the death of Bell. Bell’s widow as administratrix sued to recover damages growing out of her husband’s death. She claimed damages for herself and next of kin and also damages for the benefit of the estate of her deceased husband. A jury trial resulted in a verdict in favor of defendants (appellees here) on appellant’s claim for herself and next of kin, but the jury allowed appellant $700.00 damages for the benefit of the estate.

Appellant brings this appeal seeking a reversal of the judgment on the grounds that the court erred in admitting in evidence a mechanical device called a “tacograph” together with a graph or recording made by this machine. She says, “All of the testimony, evidence, and the exhibit, pertaining to the so-called, ‘Tactograph’ (Also called ‘Tacometer’, ‘Tacograph’, ‘Tactometer’ and ‘Tachograph’) is incompetent, immaterial, and irrelevant, and should have been excluded as misleading to the issues before the jury and as prejudicial to the rights of appellant. The instrument, device, or appliance, most commonly referred to in this cause as a ‘Tactograph’, has not been proved as accepted and usual by custom, practice and usage, and expert or special knowledge would be necessary for the formation, of an intelligent opinion, or for presenting snch testimony or exhibit to a jury. This ‘device’, commonly unknown, was introduced and presented to the jury in this cause by witnesses without expert knowledge of the accuracy, the functioning or correctness of said ‘device’.”

I do not agree with these contentions.

Mr. Estes who is in charge of transportation for the Kroger Company testified in effect that a tacograph is a machine in general use by truck operators, that Kroger has had it on all of their trucks throughout the United States since 1947 up to the present, that it is placed in the cab of a truck, connected to the speedometer and operates both off the speedometer and through the medium of a clock contained in the instrument itself and records the movements of the vehicle. A graph is placed in the machine which is activated when the truck starts and continues in activation until the graph is removed from the device. While the machine is in action certain information is recorded on the graph as the truck moves on its designated route and when the trip is completed, the recording is removed from the tacograph, signed by the driver (Sory here) and filed with the one in charge of transportation, in this instance, Estes.

Appellee Sory, driver of the Kroger truck at the time of the mishap, testified as to the use of the tacograph and the recording which it made. He testified that the graph, or recording, introduced as an exhibit to Mr. Estes’ testimony was put in the truck in question at 10:39 A. M., that if opened by the driver and the chart removed this would be reflected on the chart itself by a cut on the outer edge of the graph. While the speedometer of the truck is working and the clock is running, the tacograph is accurate, that it cannot be tampered with or stopped unless the speedometer cable is disconnected or the clock broken which fact would be revealed on the graph itself. Sory went over the trip stop by stop in testifying as to the accuracy of the tacograph. It appears undisputed that the collision in question occurred at about 7 P. M. The graph, or recording, shows that immediately prior to the collision the truck was being operated at a speed varying between 42 to 45 miles per hour and that following the collision it then descended to zero. The graph further shows that the truck was continually in motion from 6:37 P. M. until 6:55 P. M., the time of the mishap. He further testified that he could take the recording and show exactly when he slowed down or came to a stop, that there was a stop in Russellville indicated at about 5:25 P. M., one at Atkins at about 5:45 P. M., one at Morrilton and one at Conway. That the graph shows the distance from the stop in Conway to the scene of the accident which is exactly 10 miles, that he stopped at a stoplight in Conway at about 6:37 P. M. and that the graph shows that the collision happened at 6:55 P. M. That he drove this 10 miles to the scene of the accident from Conway in approximately 20 minutes which is the exact time. The graph shows his approximate speed from Conway to the scene of the accident was 45 miles per hour and that his speed did not reach 47 miles per hour. By the use of this graph the supervisor (Mr. Estes here) is able to determine whether the truck stopped at places intended, to determine the speed of the truck at any given time and whether it stayed within the allowed printed speeds on the graph, 20 to 70 miles per hour.

The record reflects that the trial court did not permit the introduction of the tacograph, and the graph or recording, as conclusive evidence of the facts in regard to the operation of the truck in question but in this connection instructed the jury as follows:

“I will admit it. The weight — the jury will understand that this is a mechanical device. It will be admitted for whatever light it may shed — that is a question for the jury. The court holds that it is admissible. The weight, if any, to be afforded is a question for the jury. Such weight as you see proper or reject it as you see proper.”

As indicated, I am convinced, that there was no error in introducing this mechanical device and the recording in question which tend to corroborate the testimony of witnesses Estes and Sory.

Wigmore (Yol. II Sec. 665a P783), in discussing the use of scientific instruments, apparatus, formulas, and calculating tables says this: “Scientific instruments, Formulas, etc. The use of scientific instruments, apparatus, formulas, and calculating tables, involves to some extent a dependence on the statements of other persons, even of anonymous observers. Yet it is not feasible for the professional man to test every instrument himself; furthermore he finds that practically the standard methods are sufficiently to be trusted. Thus, the use of a vacuum-ray machine may give correct knowledge, though the user may neither have seen the object with his own eyes nor have made the calculations and adjustments on which the machine’s trustworthiness depends. The adequacy of knowledge thus gained is recognized for a variety of standard instruments. In some instances the calculating tables or statistical results are admitted directly, under an exception to the Hearsay rule (post, Sec. 1706). ”

In the case of Whitton v. Central of Georgia Ry. Co., 89 Ga. App. 304, 79 S. E. 2d 331, that court had for consideration whether a tape recording of the speed of a locomotive was properly introduced in evidence and in holding that it was proper evidence used this language: “Joe M. White testified that, after the report of the accident on September 1, 1952, he was instructed to take the tape from the speedometer of Diesel locomotive number 137, the engine involved in the collision. The tape is kept in the engine, in front of the engineer’s seat, and the tape covered the speed at which the engine was running at all times.................................................the purpose of the tape was to determine the speed the engineer makes in his run; that it does so by an electric device which is hooked onto the wheel and which turns the tape in the speedometer; that it has a pencil point on it to determine how fast the locomotive is running; that from the tape the speed of the engine can be determined at any particular point. He took the tape to Mr. Watson.

“(3) R. E. Watson testified that the locomotive’s speed as recorded was about 35 miles per hour at the 325 th. mile post, and then decreased uniformly to a stop before reaching the 324th mile post, which point represented the crossing at which the collision occurred, according to Watson’s testimony. Watson’s testimony was in explanation of the tape, and the fact that he did not know how the recording machine operated was no ground of objection to such evidence. Joe M. White had previously testified as to the method of the machine’s operation, and stated that the speed of the engine could be determined at any particular point from the record made. .........................................................The court did not err in admitting the speed recorder tape over the objection made thereto.”

As indicated here the tacograph recording tended to corroborate and substantiate the testimony of Sory and Estes. These witnesses were familiar with the operation of the machine through experience with it over the years. While this machine was not infallible, I think the court correctly admitted it to the jury for whatever value it might be to the jury in determining the question of negligence. I would affirm.


author: Sam Robinson, Associate Justice.

text:
    Kansas City Southern Railway Co. v. Ark. Commerce Commission.
    5-1813
    323 S. W. 2d 193
    Opinion delivered April 13, 1959.
    [Rehearing denied May 11, 1959]

      Hardin, Barton, Hardin é Garner, for appellant.

      Harry E. McDermott, Jr., for appellee Ark. Commerce Comm.; Russell G. Morton, for Appellee Assessment Coordination Dept.
   Sam Robinson, Associate Justice.

This case involves the proper valuation of the property of appellant, Kansas City Southern Railway Company, in the State of Arkansas for ad valorem tax assessment purposes. The valuation as corrected by the Arkansas Commerce Commission, hereinafter referred to as “Department”, was placed at $4,330,680. On appeal to the circuit court the valuation found by the Department was affirmed and the Railroad Company has appealed to this Court, contending that the proper valuation is only $1,439,965.

The formula used by the Department in determining the correct valuation of the Railroad Company property for ad valorem tax purposes consists in the average of three different methods of ascertaining the value of the property. (1) There is what is known as the RCN-D method, meaning Reconstruction Cost New minus Depreciation, the value arrived at by this method being furnished to the Department by the Interstate Commerce Commission; (2) there is the method of adding the market value of the corporate stock to the funded debt, it being considered that the total assets equal the stock and debts; and (3) there is the method of capitalizing the net income, which is to consider the average net earnings of the company over a period of years and then estimate the total value of the assets as being such an .amount as will produce a fair return on the value of the property. In this case the Department placed the total capitalized value of the railroad property at a sum which would yield 5.75% per annum after income taxes had been paid. The Railroad contends that the capitalized value should be such a sum as would yield 8.12%. Of course, if this rate of return were used, the capitalized value would he much less than such value when a 5.75% rate of return is used. The Railroad Company does not <complain of the formula used in reaching the total val-nation, but does stoutly contend that the Department made serious mistakes in reaching the total of each of the three parts of the formula.

First, with regard to the RCN-D: The valuation reached by the Department is $136,187,875. The Railroad says that it should be $132,031,203, or $4,156,672 less than the value found by the Department. The Railroad contends that the RCN-D figures furnished to the Department by the I. C. C. fail to take into consideration 3.2% depreciation for the year 1956 ■— the year immediately preceding the assessment year —• although net plant additions for that year totaling $1,462,657 were added to the valuation.

The appellee answers this point by saying: “In response, appellees point out that while no depreciation was shown for 1956, neither was appreciation shown.” And appellee further says: “It would seem that if it (the Railroad) sincerely believed it were entitled to depreciation, it should have submitted to the Commission a statement showing what the net plant additions were, the date of the addition, and the rate and amount of depreciation which they claim should be allowed. This was not done.” The record shows that the Railroad Company did contend that it was entitled to 3.2% depreciation for 1956. The record further shows a net plant addition for 1956 of the value of $1,462,657. The Department accepted the Railroad Company’s figure on the net plant addition, but refused to allow any depreciation for 1956. Appellee suggests that this Court take judicial knowledge that the I. C. C. valuation at the end of 1956 was some $11,500,000 greater than the valuation shown at the end of 1955. We do not think, however, that the valuation placed on a railroad by the I. C. C. on a particular date is a matter of such common knowledge or universal notoriety that this Court should take judicial knowledge of it. The fact remains that the Department was computing the valuation of the railroad for the tax year of 1956; certainly the Railroad had some depreciation of its property during that year, and it was given credit -for none. However, the Railroad was charged with new additions of $1,462,657. In view of the fact that no depreciation was allowed for the year in question, we do not think that the $1,462,657 should have been added to the valuation.

The Railroad contends that 25% should be deducted from the RCN-D value because of functional and economic obsolescence. It is claimed that if the Railroad were to be reconstructed only 37 % of the stations and office buildings would be required; that only 47.60% of other buildings would be needed and there would be reconstructed only 44.67% of its shops and engine houses, etc.; that 500,000 net tons of revenue traffic per year is obsolescent and unprofitable; and that 4.22% of its total system trackage is obsolescent; that a total of 25% of its property is obsolescent due to functional and economic factors. Undoubtedly functional and economic obsolescence is reflected in both the stock plus funded-debt method and the capitalized earnings method of valuation. In both of these methods the Railroad received the benefit of both functional and economic obsolescence. In 1944 a report of the National Tax Association made to a Congressional Committee said: “It is largely because earnings and stock and bond values reflect the obsolescence which railroads have suffered as a result of over-optimism and the advent of competitive transportation agencies that they are regarded as the most reliable evidences of unit value.” And in Bailey v. Megan, 102 F. 2d 651, it is said: “A computation of system value based upon average market price of stocks and bonds and a computation based upon a capitalization of net earnings reflect the effect, upon actual value, of obsolescence, of the competition of other means of transportation, and of all factors affecting earnings.”

If the functional and economic obsolescence is deducted from the RCN-D valuation, such deduction would have to be considered in connection with the other two methods of arriving at a proper valuation. It would hardly be fair that such obsolescence be used where it is to the Railroad Company’s advantage, but not be used in an approved formula when to the disadvantage of the Railroad. If the RCN-D value were the only method used in arriving at the valuation for tax purposes, perhaps the deduction for obsolescence would be required. But it must be remembered that this method is only one part of a three-part formula, and the obsolescence is reflected in two of the parts to the advantage of the Railroad. The RCN-D valuation is considerably more than the stock and debt value, but it is only slightly more than the income value. According to appellant’s contention with regard to functional and economic obsolescence, the RCN-D value should be about $30 million less than the income value and about $15 million less than the stock and debt value. Such value contended for by appellant apparently would be out of all proportion to the real value as reflected by the other parts of the formula used.

With reference to the RCN-D value as a proper part of a formula to determine the valuation for tax purposes, this Court said, in St. Louis-San Francisco Ry. Co. v. Ark. Public Service Commission, 227 Ark. 1066, 304 S. W. 2d 297: “Is this method — of cost value, capitalized earnings value, and stock and debt value ■— a fair ‘yardstick’ to determine the system value of Frisco’s property? Frisco claims that the cost value is overweighted and that it should be given little, if any, consideration; and Frisco also claims that some of the other factors in the ‘yardstick’ have been overemphasized. We hold that the ‘yardstick’ used by the Commission in determining the system value of Frisco in this case is fair and not arbitrary. It is undenied that such a ‘yardstick’ has been used by the Commission heretofore, and that such a ‘yardstick’ is used in other states. One such case is that of Chicago & Northwestern Ry. Co. v. Department of Revenue, 6 Ill. 2d 278, 128 N. E. 2d 722, decided by the Supreme Court of Illinois in 1955, with certiorari denied by the U. S. Supreme Court, 351 U. S. 950. This is not the only ‘yardstick’ that could be used, but it is fair and equitable. As Mr. Justice Butler said, in 1934, in Rowley v. Chicago & Northwestern Ry. Co., 293 U. S. 102, 79 Law Ed. 222, 55 S. Ct. 55, in discussing the assessment of railway properties by the State of Wyoming: ‘The ascertainment of the value of a railway system is not a matter of arithmetical calculation and is not governed by any fixed and definite rule. Facts of great variety and number, estimates that are exact and those that are approximations, forecasts based on probabilities and contingencies have bearing and properly may be taken into account to guide judgment in determining what is the money equivalent — the actual value — of the property. ’ ’ ’

Appellant says that the Department was in error in refusing to deduct from the RCN-D valuation certain properties which it claims are non-operating, and certain improvements. The Department did allow a deduction for some non-operating properties and on the others mentioned there is substantial evidence that they are not to be classed as non-operating, and that public improvements were deducted. Appellant maintains that the Department charged the Railroad with a working capital of $3,168,476, which is 12%% of its operating expenses for the previous year, the amount needed by the Railroad for a 45 day period, and that as a matter of fact it actually requires no working capital, because its daily revenues are sufficient to meet its needs in that respect. Whether the Railroad needs working capital is a question of fact. Evidence was introduced to prove that the same method of determining the required amount of working capital is used for every Class I railroad in the State, and we cannot say that the Department was in error in the finding that some working capital is required for Class I railroads.

Appellant next argues that 5.75% should not be used as a capitalization rate. In the Frisco case, a 6% capitalization rate was approved, and this was before taxes. Here, the 5.75% rate is after taxes. If 6% before taxes was reasonable in the Frisco case, certainly it cannot be said that in the case at bar 5.75% after taxes is not justified.

The next point raised by appellant is that the Department erred in failing to exclude current liabilities and unadjusted credits from the stock and funded debt method of determining value, and we think appellant must prevail on this point. Included in the stock and funded debt valuation are current liabilities and unadjusted credits. Ark. Stat. § 84-606 provides that the assessing authorities ‘ ‘ shall ascertain as nearly as it can and shall consider the market or actual value of all outstanding capital stock and funded debt.” The current liabilities and unadjusted credits in question are not part of the funded debt. They consist of such items as 1 ‘ traffic and car service balances between appellant and various other companies, audited wages and miscellaneous accounts payable, which include employees’ payroll allotments for U. S. Savings Bonds, and various prudentially accrued taxes, both federal and state, and employees’ withholding taxes, railroad retirement, etc., interest matured but unpaid on bonds which have been called as far back as 1945, but holders of some coupons have not been located and they cannot be paid by the trustee who holds the funds in New York,” etc. Appellee points out “that under the provisions of § 84-605 the Department is directed to include in the valuation every element that adds value to the property.” We fail to see how current liabilities and unadjusted credits can be considered as adding value to the railroad. Just the opposite effect would appear to be more reasonable. The fact that an engineer or conductor had not cashed his check does not make the railroad worth more.

Appellant owns practically all of the stock of the L. & A. Railroad, which is a separate corporation and is assessed and pays taxes as such. The L. & A. pays taxes on a valuation of $69 million. Since L. & A. pays its own taxes, appellant says it (Kansas City Southern) should have a credit to the extent of the full value on which L. & A. pays taxes, namely, the value of $69 million. The Department allowed a valuation of $18 million on L. & A. It is the contention of the Department that appellant is entitled only to a deduction for the value of the L. & A. stock owned by Kansas City Southern. The Department reached the correct conclusion. Insofar as L. & A. is concerned, Kansas City Southern owns only the stock. If Kansas City Southern had to pay taxes on this stock, certainly it would have to pay only on the value of the stock. But, since Kansas City Southern does not have to pay taxes on the L. & A. stock, the Department having classed it as a non-operating asset, only the value of what Kansas City Southern owns should be deducted, and that is the value of the stock.

The Department allocated to Arkansas 16.21% of the value of the railroad property. Appellant says the proper allocation figure is 13.41%, and argues that there are certain factors which render the Arkansas property less valuable than appellant’s property located in other states. Appellant contends that Arkansas has a “Full Crew Law”; that appellant is required to move its trains across a mountainous terrain in Arkansas; that Arkansas is responsible for only 9.88% of the originating tonnage, and only 2.97 % of the terminating tonnage; that Arkansas has lost in population, where other states have gained; that the per capita income of Arkansas is low compared to other states.

In the case at bar, the Department used the same method in allocating value as used in arriving at the valuation of all of the railroads in the State, and this method was approved in the Frisco case, and, as pointed out in that case, the ascertainment of the value of the railroad system is not governed by any fixed and definite rule. Finally, appellant contends that the Department erred in equalizing appellant’s unit value at 20%; that other property in counties in which appellant operates is assessed from a low of 13.82% to a high of 18.08%; that all utilities have been assessed at 20%. In the Frisco case, we said: “We recognize that obtaining a fair assessment of property has been a serious problem in this State for many years; but we know that considerable headway has been made toward more equitable assessments. Act No. 153 of the Legislature of 1955 shows the labor that the State is undertaking in this regard; and in § 4 of that Act the same figure of 20% is used. Some classes of property in Arkansas are assessed at more than 20% ; other classes are assessed at less than 20% ; but the State is striving for a 20% figure. In this case Frisco has failed to show either that the Commission was in error in fixing the figure at 20%, or that the said figure was arbitrary, or that the said figure would result in confiscation.” Likewise, in the case at bar we do not think the appellant has shown that the Department was in error or that a basis of 20% would result in confiscation.

Because the $1,462,657 in new additions for 1957 should be deducted, and because there should be deducted from the valuation the current liabilities and unadjusted credits, the judgment of the circuit court affirming the Department’s finding of valuation is reversed, with directions to remand the cause to the Department so that a valuation consistent herewith can be determined.


author: Jim Johnson, Associate Justice.

text:
    Yellow Cab Co. of Texarkana v. Texarkana Municipal Airport.
    5-1838
    322 S. W. 2d 688
    Opinion delivered April 13, 1959.

      Shaver, Tackett S Jones, for appellant.

      Chas. C. Wine, for appellee R. L. Torrans; LeRoy Autrey, for appellee Texarkana Airport.
   Jim Johnson, Associate Justice.

This appeal is brought by appellant, Yellow Cab Company of Texarkana, Inc., from a decree of Miller County Chancery Court dismissing its prayer to restrain appellee, Texarkana Airport Authority, from terminating a contract that existed between appellant and appellee. This contract granted appellant an exclusive concession to operate a “Rent-A-Car” business at the Texarkana Municipal Airport. Upon receipt of notice from appellee Airport Authority that the contract was terminated, appellant brought this action against the Authority and. appellee R. L. Torrans who is also in the “Rent-A-Car” business.

Torrans filed a cross-complaint seeking a declaratory judgment that the contract was invalid and made the City of Texarkana, Arkansas, a third-party defendant.

From a holding by the Chancellor that the contract was terminated under its expressed terms by prior notice being given appellant, this appeal followed.

For reversal two points are urged:

I.

The trial court erred in refusing to hold that the involved lease was for a term of five years and annually thereafter unless notice of intent to cancel be given at least thirty days prior to the commencement of any such additional annual period, and in holding that the lease was terminated on July 1, 1958.

II.

The trial court erred in holding that Ordinance B-746 was unconstitutional.

Point two wili be discussed first.

Appellant’s counsel forcefully contended throughout the trial as follows: “I want the Court to understand that we are not suing on the ordinance. We are suing on the contract ... I am not introducing the ordinance ; only the contract. That is all I am interested in. ’ ’ In compliance with appellant’s contentions and since it has long been the rule of this Court not to pass on constitutional questions when a decision can be reached on other grounds, we will not go into the constitutionality of Ordinance B-746. Duncan v. Kirby, 228 Ark. 917, 311 S. W. 2d 157.

Section 2 of the contract is as follows:

“The term of this lease shall be 60 months, commencing on July 1, 1956, and on July 1st in each year thereafter, on the same terms and conditions as herein set forth, unless either party hereto shall give to the other notice at least 30 days before the commencement of such additional period of its intention to terminate this lease, in which event this lease shall terminate on the 1st day of July in the year in which such notice is given.”

Appellees rely upon Section 2 of the contract as authority in the Airport Authority to terminate the exclusive contract by giving appellant 30 days’ notice prior to July 1, 1958, of its intention to terminate, which notice was given within the time specified.

Under point one appellant argues that the issues before the Court are: (1) Is the contract so ambiguous as to justify the trial court in admitting, over objections of the appellant, evidence of negotiations and construction by appellees as to the meaning of Section 2; and (2) did the section give the Texarkana Airport Authority the power to cancel the contract by giving 30 days ’ notice of its intention to cancel at a time within, and before the expiration of, the 60-month term of the lease?

After a very careful study of the contract we are of the opinion that Section 2 is so ambiguous as to be susceptible to more than one reasonable construction. Therefore, it was not error for the trial court to admit evidence of negotiations. Montgomery v. Ark. Cold Storage and Ice Co., 93 Ark. 191, 124 S. W. 768. Our rule has long been that the object to be attained in interpreting a contract is to ascertain the meaning and intent of the parties as expressed in the language used. Dent v. Industrial Oil and Gas Co., 197 Ark. 95, 122 S. W. 2d 162; American Snuff Co. v. Stuckey, 197 Ark. 540, 123 S. W. 2d 1063.

The pertinent parts of the record relative to the negotiations on the contract are briefly as follows:

On June 25, 1956, the authorized agents of appellant, Yellow Cab Company of Texarkana, Inc., entered into negotiations with the Airport Commission of the City of Texarkana, Arkansas, for an exclusive concession to operate a “Bent-A-Car” business at the Texarkana Municipal Airport. Agreement was reached that appellant would receive such exclusive concession for the consideration of $60.00 per month payable monthly in advance. The minutes of the Commission’s meeting show that the lease was to be for 5 years “providing the lease may be terminated by either party upon 30 days notice prior to each twelve month period.”

Appellant’s attorney thereafter drew up an agreement between appellant and the Commission with effective date of July 1,1956. On July 26, 1956, by ordinance, the City Council of the City of Texarkana, Arkansas, authorized the Commission to enter into and execute the agreement on behalf of the City of Texarkana, Arkansas. Pursuant to this authorization, the Commission executed this agreement.

A portion of the trial court’s excellent memorandum opinion is as follows:

“It appears to the court that the clear intention of the parties to this contract was that an exclusive contract was granted to the plaintiff for 60 months, or five years, and that 60 months, or five years in order to make it easy to understand, is divided into five one-year periods. The thing that is so likely to mislead us in construing this contract, is which date do we start from? July 1, 1956, or July 1, 1961, at the end of the five year period? It is clear to the court that the intentions of the parties were to start counting from July 1, 1956, and on each annual period thereafter, which would he July 1st of each year, either party to this contract could give the other party notice 30 days before the beginning of the next annual period of the contract and that this notice would terminate the remainder of the contract.’’

In addition to what we have said above, we also call attention to the settled rule of this Court that contracts are always construed most strongly against the one preparing them, W. T. Rawleigh Co. v. Wilkes, 197 Ark. 6, 121 S. W. 2d 886. Therefore, we cannot say that the Chancellor’s opinion was against the weight of the evidence.

Affirmed.


author: Carleton Harris, Chief Justice.

text:
    Dinwiddie v. Syler.
    5-1826
    323 S. W. 2d 548
    Opinion delivered April 20, 1959.
    [Rehearing denied May 25, 1959]

      Carlos B. Hill, for appellant.

      James R. Hale and Lovell <& Evans, for appellee.
   Carleton Harris, Chief Justice.

Belle A. Dinwiddie, appellant, instituted suit against Ethel Syler, appellee, in the Washington County Circuit Court, alleging ownership of certain lands in Washington County, and asserting that appellee had destroyed shade trees, shrubbery, grass and vegetation on said lands; actual damages in the amount of $2,000 were alleged because of Mrs. Syler’s trespass on the property, and judgment was sought for treble damages. After a motion had been filed to make the allegations of the complaint more definite and certain, an amended and substituted complaint was filed, to which appellee answered, denying all material allegations, and asserting her ownership of at least a part of the lands in dispute. After the filing of additional pleadings, the cause came on for trial September 10, 1958, at which time it appeared that an agreement had been reached between the litigants. The following proceedings took place in open court on that date.

“The Court: It is agreed between the parties in open court, as follows: That the plaintiff will dismiss her contention . . .

Mr. Hale: No. No, sir, we want this to be a judgment • — ■ a final judgment.

The Court: Just a minute. Will dismiss her contention for recovery of damages for loss of timber and by agreement, the property line between the plaintiff and defendant is agreed to be a line — an extension of the old fence line now in existence between the two properties from its termination at the present point on to the old Jefferson Highway. It is further agreed that termination of said extension of said fence line at the old Jefferson Highway will be marked by an iron stake determined and placed there by the County Surveyor, Ralph Shreve, which line is mutually agreed between the parties to be the established property line between the 70 feet owned by Syler and the 75 feet owned by Dinwiddie, as follows:

Part of the Northeast quarter of the Northeast quarter of Section twenty-four (24) in Township thirteen (13) North, of Range thirty (30) West, more particularly described as follows: Beginning at a point which is four and sixty-one hundredths (4.61) chains North and two hundred (200) feet South 86%° East of the South West corner of said forty acre tract, and running, thence East bearing South with the South line of the Dunlap Road seventy-five (75) feet; thence South 12° West two hundred sixty five (265) feet to the North line of the Right of Way of old route of U. S. Highway No. 71 (now “ Jefferson Highway”); thence Westerly with the North line of said Highway Seventy-five (75) feet; thence North 12° East two hundred sixty five (265) feet to the beginning point.

It is further agreed that the County Surveyor’s plotted description, by metes and bounds, will be presented to the Court and become a part of this order.

Mr. Lovell: With the west line run parallel.

The Court: You can state it any way you want to, but that is a suggested form. * * *

The Court: When Mr. Shreve has extended that line and put in the iron stake there, it is understood that Mr. Hill is dismissing his suit for the destruction of trees.

Mr. Evans: That is what we asked a while ago. We want the Court to direct a verdict for damages on that.

The Court: When I prepare a formal order, I will, certainly. And in addition to that, by agreement the property line has been established between Miss Dinwiddie and Mrs. Syler as it pertains to these particular lots involved here in Dunlap Heights to the town of Winslow, as being a continuation of the existing old fence now between the Syler property and the Dinwiddie property, which fence does not extend the whole length of the boundary, but that the agreed and established boundary shall be a continuation of the existing fence on to its intersection with the Jefferson Highway, to be established by the County Surveyor.

Mr. Lovell: One suggestion we were talking about a while ago. He says that fence gives it this (indicating a crooked line) so let’s start with the fence post at the northeast corner of that Syler lot and run in a straight line to this tree where all this wire is piled around and then make that a straight line and go right straight down.

Mr. Hill: If the Court please, I want to suggest that Mr. Shreve’s survey already shows only a difference of two feet between the wall and his survey line back to the rock wall across Mrs. Syler’s lot. For the purpose of description, I think the present survey would be sufficient to go into this order.

Mr. Lovell: I won’t go with that. The only thing I will go with, Judge, is starting up at that northeast corner and going down to that tree where the wire is and going straight down.

The Court: There needs to be a stake down at that other end so you will all know that this is the boundary line and firmly established and there will be no more difficulty. I think that is an important point.

Mr. Shreve: What I want to know is what two points in the fence are to be considered the line.

The Court: The tree with the wire around it.

Mr. Lovell: And the post in the northeast corner.

The Court: And the first post in the northeast corner. Is that all right with you, Mr. Hill?

Mr. Hill: I don’t know where the fence post is, but

The Court: It is the first fence post on that road. The first one. Is that right? Does every body under stand the stipulation there, which will be reduced to a formal order when Mr. Shreve furnishes the particular information, and Mr. Lovell, will you prepare an order?”

Pursuant to these proceedings, Mr. Shreve made the survey. At a subsequent hearing on October 7th, relative to Ms findings, Shreve testified that he undertook to make the survey in accordance with his understanding of the stipulation, but that he did not complete the one first started, because appellee objected to the location of the line; that subsequently, Mr. Lovell, attorney for Mrs. Syler, together with appellee, came and pointed out a certain fence post from which he was to begin, and the survey was then made in accordance with their instructions. The court accepted the survey as being correct, and entered judgment establishing the boundary line in accordance therewith. From such judgment, comes this appeal.

For reversal, appellant asserts that the survey was not made in compliance with the order of the court, and further, that same was made at the direction of the appellee and without notice to the appellant. Under the conclusion we have reached, it is not necessary to discuss the second point, nor is a detailed discussion of the actual survey necessary.

Had the metes and bounds description, recited by the court on September 10th, been used, the surveyor would have commenced at a point approximately 11 feet north of the beginning point actually used in making the survey presented at the court hearing on October 7th. In using the starting point directed by appellee, the surveyor accordingly ran a number of feet farther south, and as the line was run, there was a gradual veering to the east from the metes and bounds description, and a consequent encroachment on the latter until a difference of about 8 feet at the extreme south was reached. The confusion apparently occurred because appellee’s counsel would not accept the description contended for by appellant, but stated, “I won’t go with that. The only thing I will go with, Judge, is starting up at that northeast corner and going down to that tree where the wire is and going straight down. * * * And the post in the northeast corner. ’ ’ Mr. Lovell apparently felt that his suggestion would be followed in making the survey. When asked by the court, “Is that all right with you, Mr. Hill?”, counsel replied, “I don’t know where the fence post is, but -.” The record reflects no further agreement, and we certainly cannot say that the statement by appellant’s counsel, just quoted, constituted agreement to start the survey at the point suggested by appellee’s counsel. It appears to us that, though the court proceeding of September 10th is termed ‘ ‘ Stipulation”, no actual agreement was reached between the parties as to the making of the survey. A stipulation is defined, in law, as "an agreement between attorneys respecting the conduct of legal proceedings.” According to Bouvier, "A material article in an agreement.” Apparently, no agreement was reached. That the session of September 10th was confusing, is shown by the fact that Mr. Shreve first undertook to survey the premises under the description which is here advocated by appellant,' and only started over when advised by appellee that he had commenced at the wrong point. As he stated, "# * * I’m very much confused now. * # *” We can readily understand this confusion. It appears that in fairness to all parties, a new stipulation should be entered into, or the case should proceed to trial.

The judgment is reversed, and the cause remanded, with directions to proceed in a manner not inconsistent with this Opinion.


author: J. Seaborn Holt, Associate Justice.

text:
    Turner-McCoy, Inc. v. Hardy.
    5-1844
    323 S. W. 2d 562
    Opinion delivered April 20, 1959.
    [Rehearing denied May 25, 1959]

      Mehaffy, Smith Williams, Hersehel H. Friday, Jr. and William L. Terry, for appellant.

      Frank J. Wills, for appellee.
   J. Seaborn Holt, Associate Justice.

Hardy and Company, Inc., owned a tract of land in Pulaski County. This company proposed to huild, furnish and equip a complete plant on this property for the manufacture of hardboard building materials and the money for this purpose, in the amount of $850,000.00, was furnished by appellee, Mrs. Hardy. The building and equipment were substantially completed on October 5, 1956, and October 10, 1956 was designated by the architect as the date of acceptance. On January 7, 1957, Hardy and Company, Inc., executed a mortgage in favor of Mrs. Hardy securing the sum of $850,000.00 to be used in the manner designated in the mortgage. This mortgage was recorded January 9, 1957. As of January 7, 1957, it appears that $677,000.00 had already been advanced by Mrs. Hardy and used as directed; thus, it appears that this mortgage was not filed for record until the work for which the money was borrowed was substantially complete. On January 4, 1957, four days before the recording of said mortgage, appellant, Turner-McCoy, Inc., entered into a contract with Hardy and Company, Inc., “to furnish labor and materials necessary to fabricate and install certain piping and erect or install certain equipment as you may direct in your hardboard plant”. On April 15, 1957, appellant submitted its bill for $9,449.17 for such labor, materials and profit. It appears that the plant began the manufacture of hardboard about March 20,1957. The above is the only bill sent to Hardy and Company, Inc., by appellant until July 30,1957 when it billed Hardy and Company, Inc., as follows: “For labor required to perform the following work:

(1) Put into operation and adjust boiler feed water pumps & Copes Feed water regulator
June 17, 1957 $30.63
(2) Lower Copes feed water regulator generator
May 17, 1957 10.17
$40.80
Above at the request of your Mr. Travis McCoy”.

Thereafter, on August 8, 1957, appellant filed the present suit seeking a mechanic’s and materialman’s lien (Secs. 51-601, 51,604, Ark. Stats. 1947) for $9,489.97,— the amount of the April 15th bill plus the July bill of $40.80, or a total of $9,489.97. Under a second mortgage filed for record July 8, 1957, Mrs. Hardy had loaned Hardy and Company, Inc., additional funds totaling $205,762.39. The debts secured by both mortgages were due on or before December 31, 1957. Mrs. Hardy filed a cross-complaint seeking foreclosure of her mortgages, default having been made.

A trial resulted in a decree granting appellant (Turner-McCoy, Inc.,) a lien for $9,489.97 inferior to Mrs. Hardy’s first mortgage, but superior to her second mortgage above, and directed sale of the property for application of said liens. Appellant has appealed, asserting that its lien should be declared superior to appellee’s mortgage and appellee has cross-appealed, challenging appellant’s right to any lien.

Appellant says: “The sole question presented by appellant’s appeal is a determination of the priority between the lien of appellee’s mortgage and the statutory mechanic’s and materialman’s lien of appellant, there being little or no dispute as to the facts involved in a determination of the issue raised by appellant’s appeal”. It relies on the following points:

“1. Appellant’s statutory mechanic’s and material-man’s lien relates back to the beginning of the construction of the plant, and is accordingly prior to that of appellee’s mortgage.
2. As between the lien of appellee’s mortgage and the statutory mechanic’s and materialman’s lien of appellant, the latter became effective as of the date appellant’s contract was entered into with the owner, Hardy and Company, Inc., which date was prior to the date of recording of the mortgage”.

I

We do not agree with appellant’s first contention. The record here reflects that appellant completed its work of installing' the machinery under its contract of January 4, 1957 above, on March 14, 1957, and that the plant began operation soon thereafter. No lien notice was filed and no suit begun within 90 days from March 14, 1957. The contract for the plant building had been fully performed more than three months before appellant began its work. It further appears that appellant, at Hardy and Company’s request, did on May 17, 1957, the following work: “Lower Copes feed water regulator generator”, and on June 17, 1957, “put into operation and adjust boiler feed water pumps & Copes Feed water regulator”, charging for the May work, $10.17 and for the June work, $30.63, or a total of $40.80. This work, we think, amounted to nothing more than servicing machinery and fixtures already installed in the plant, in effect, corrective work, and we hold, in the circumstances, did not extend the lien period. The text writer in 143 A. L. R. 1190 announced the rule in this language: “With few exceptions, it has been held, in the cases considering the question, that after the installation of fixtures, machinery, or attachments in a building, services in the form of, or repairs to, such fixtures, machinery, or attachments, performed by the seller, or the one making the installation, should not be regarded as a part of the act of sale or installation, so as to make the time within which to file a mechanic’s lien based on such original act run from the time of performance of such additional services”. In order that an item may constitute a lien, it must have been furnished under one continuing contract, Ferguson Lumber Co. v. Scriber, 162 Ark. 349, 258 S. W. 353.

In view of onr conclusion that the appellant failed to perfect its lien within ninety days after the completion of the work on March 14, it becomes unnecessary to consider the other arguments made in the appellant’s brief. Since the appellant is not entitled to a lien on the property it follows, of course, that both of the appellee’s mortgages are entitled to priority. The decree is accordingly affirmed on direct appeal and reversed on cross-appeal, and the cause remanded for further proceedings.

Justice Robinson not participating.


author: Ed. F. MoFaddin, Associate Justice.

text:
    Camp v. Bank of Bentonville.
    5-1808
    323 S. W. 2d 556
    Opinion delivered April 20, 1959.
    [Rehearing denied May 2B, 1959]

      Claude Duty & Jeff Duty, for appellant.

      Little & Enfield, by Clayton N. Little, for appellee.
   Ed. F. MoFaddin, Associate Justice.

Jerry Lee Camp appeals from a decree of the Chancery Court which found that Camp, now of lawful age, had ratified a debt which he made while a minor. The question is whether Camp’s acts under the circumstances here shown, wore sufficient to support the decree holding that there had been ratification.

On January 9, 1957, Camp executed his note to A. V. Bright, doing business as “Bright’s Used Cars”, for $3,000.00, payable $125.00 per month until paid in full. The note was secured by a chattel mortgage covering: (a) one 1952 2-ton Chevrolet truck (b) one 1954 Plymouth sedan; (c) miscellaneous stock of automotive parts valued at $500.00; and (d) eleven cows and increase. Bright immediately and unconditionally transferred the note and mortgage to the appellee, Bank of Bentonville (hereinafter called “Bank”). The payments made to the Bank on the note were:

Date Amount Nature of Payment
2/25/57 $ 50.00 Cash
3/20/57 100.00 Cash
4/20/57 800.00 Proceeds of sale of Plymouth car.
5/1/57 47.52 Return of insurance premium cancelled when Plymouth car was sold.
7/1/57 51.00 Probably Cash
11/8/57 102.00 To be discussed later in this opinion
12/9/57 100.00 To be discussed later in this opinion
12/13/57 56.00 To be discussed later in this opinion

When Camp defaulted, the Bank filed suit for judgment and foreclosure of the mortgage. Camp’s defense was: that he was not 21 years of age until August 19, 1957; that the three payments credited on the note thereafter (i.e. November 8th, December 9th, and December 13th) were not sufficient to constitute ratification; and that he now disaffirmed the entire transaction. The said three payments came about in this manner: each was made to the Bank by A. V. Bright from money due by him to Camp, and each payment was made with Camp’s implied consent. The $100.00 on December 9, 1957 was part of the proceeds of the sale of a car. The payments of November 8th and December 13th were for money that Bright owed Camp for work. Camp was doing considerable hauling of some kind for Bright, and Bright, with Camp’s implied consent, made the two payments on the dates mentioned.

The Chancery Court held that Camp, after reaching full age, had ratified the note and mortgage; and under all the facts and circumstances here existing, we cannot say that the Chancery Court was in error. Some of our cases, on ratification after majority of a contract made during infancy, are: Vaughan v. Parr, 20 Ark. 600; Savage v. Lichlyter, 59 Ark. 1, 26 S. W. 12; Dunavant v. Fields, 68 Ark. 534, 60 S. W. 420; LaCotts v. Quertermous, 84 Ark. 610, 107 S. W. 167; Midland Valley Rd. Co. v. Johnson, 140 Ark. 174, 215 S. W. 665, 7 A. L. R. 1007; Bracy v. Miller, 169 Ark. 1115, 278 S. W. 41, 43 A. L. R. 114; Haydon v. Hillhouse, 223 Ark. 957, 270 S. W. 2d 910. The record here does not show that the consideration of the note, which Camp executed to Bright, was for necessaries; so the transaction was subject to disaffirmance (Midland Valley Bd. Co. v. Johnson, supra). Furthermore, in Vaughan v. Parr, (supra), Chief Justice English said: “The mere fact that an infant does not disaffirm a contract after he attains his majority is not, it would seem, of itself, a confirmation, but this fact may be made significant by circumstances”.

Turning from our own cases to other jurisdictions, we find there is diversity of authority as to whether payment on a note after reaching full age is, in itself, a sufficient act to constitute ratification. In 27 Am. Jr. 806, “Infants” § 80, the text reads: “A part payment of itself has been held not to amount to a ratification of a contract voidable on the ground of infancy . . . There is, however, some authority holding to the contrary, especially where the payment is accompanied by other acts, so that an intention to ratify may reasonably be implied.” In 43 C. J. S. Ill, “Infants” § 47, the text reads: “The purchase may be ratified after reaching majority by acts indicating an intention to ratify, as where the late infant pays part of the purchase money . . . ” In 43 C. J. S. 167, “Infants” § 74, the text reads: “An infant’s ratification of his contract may be either express or implied, as long as his intention to be bound by the contract is clearly manifested. In the absence of statute, an executory contract is not ratified by mere acknowledgment of the obligation or ordinarily, by a part payment.” In 43 C. J. S. 332, “Infants” § 117, in discussing the admissibility of evidence on ratification, the text reads: “ Batif ication may be shown by circumstantial evidence,- and evidence explanatory of what occurred after the infant reached majority has been held admissible on the. issue of ratification.”

From our own cases, and from all of the foregoing, we are not willing to hold that payment after reaching full age, is, in itself, sufficient to constitute ratification as a matter of law: rather, we think the better rule is, to examine each case on its own facts and determine whether payment, along with all the other facts and circumstances, constitutes ratification. We have done that in the case at bar. There is no claim of any kind that Bright ever imposed on Camp when the note and mortgage were executed on January 9,1957. Camp was working for Bright all along; and thought he was of full age, as he considered eighteen to be the lawful age. It was not until after this suit was filed and he had consulted an attorney, that he ever had any idea of disaffirmance of any part of the trade. This is the case of a man who was doing his own work, carrying on his own business, making trades in which there is no claim that he was imposed on, and who, after reaching 21, continued to make payments on the obligation, with no thought of disaffirming the transaction. Under all these facts and circumstances, we reach the conclusion that Camp, after reaching full age, ratified the particular transaction here involved.

Affirmed.

       Although the consideration for the note is not directly alleged, we get the impression from the evidence that Camp purchased from Bright the 2-ton Chevrolet truck which was included in the mortgage that Camp executed. On Page 44 of the transcript the following occurred in the course of Camp’s testimony when he was being interrogated as to payments on the $3,000.00 note involved:
      “Q. You made some payments?
      A. I made some when I first bought the truck.”

       Neither side has mentioned Act No. 337 of 1953, now found in § 68-1601 Ark. Stats., which makes certain requirements as to disaffirmance by a minor. If this Act had been invoked, it might have been shown that Camp was not entitled to disaffirmance. But in considering the case in the light of the Act, we have explored the transcript and we find that Camp testified that at the time of the trial A. V. Bright had possession of the Chevrolet truck and also the stock of automotive parts valued at $500.00. Since these items may have been the bargained items, we presume that the parties considered Bright’s possession to be tantamount to the Bank’s possession, because Bright was liable as an endorser on the note to the Bank. Probably this accounts for the fact that neither side made mention of Act No. 337 of 1953. See Security Bank v. McEntire, 227 Ark. 667, 300 S. W. 2d 588.

       Camp sold a Mercury car for Bright and Camp’s commission was $100.00; and Bright, with Camp’s implied consent, paid the $100.00 to the Bank on the note.

         In addition to the general statements, there is an annotation in 59 A.L.R. 281, entitled, “Payment by infant after majority on contract made during infancy as ratification;” and in 5 A.L.R. 2d 7, there is an extensive annotation on the failure to disaffirm as ratification of infant’s executory contract. Cases from many jurisdictions are cited and discussed in the said annotations.


author: George Bose Smith, J.

text:
    Manhattan Credit Company v. Burns.
    5-1831
    323 S. W. 2d 206
    Opinion delivered April 20, 1959.

      Talley <& Owen and James R. Howard, for appellant.

      Wayne Foster, for appellee.
   George Bose Smith, J.

In 1957 the appellees, Thornton Burns and his wife, bought a new car from a Little Bock dealer. The purchase was almost entirely on credit and was financed by the appellant, which took the buyers’ note for $2,817.30, secured by a chattel mortgage on the car and on certain household goods. When the car was damaged beyond repair a few months later, it was found that the collision insurance on the vehicle lacked about $700 of being enough to discharge the purchasers’ debt to the finance company.

The appellees brought this suit for a cancellation of their note and mortgage, asserting that the appellant finance company had contracted to keep the car insured in an amount equal to the unpaid balance of the note and, further, had assured the Burnses that that amount of insurance would be carried. The appellant denied these assertions and by cross-complaint sought to recover the balance due on the note. The chancellor granted the plaintiffs ’ prayer for a cancellation of the note and mortgage and held them liable to the finance company for only $50, as the collision insurance policy required the owners to pay the first $50 of the loss.

We think the proof supports the decree. The mortgage was on a printed form supplied by the appellant and contained this provision about insurance: ‘ ‘ Mortgagor shall keep said car insured against fire, theft and all physical damage payable to and protecting Mortgagee for not less than the total amount owing on said note until fully paid. Mortgagee may place any or all of said insurance at Mortgagor’s expense, if Mortgagee so elects.” The finance company in fact elected to take out the insurance, at the purchasers’ expense, but the policy that was obtained covered only the actual cash value of the car and for that reason fell short of equalling the unpaid balance of the note. The appellant seeks to excuse its failure to comply with the letter of its contract by proving that it is impossible to obtain collision insurance for more than the cash value of the insured vehicle and by arguing that in any event such a policy would be contrary to public policy and therefore void.

Assuming but not deciding that this position is well taken we are nevertheless of the opinion that the chancellor was justified in finding that the sales contract was procured by material misrepresentations about the proposed insurance coverage. Burns testified that he was assured during the negotiations “that I would be fully covered, that the insurance would take care of my note. ’ ’ This testimony is not really denied by the car salesman, who could not remember exactly what was said and who conceded at one point in his testimony that it would not be surprising if such a representation was made. Nor is Burns’ version of the matter denied by the finance company employee who participated in the negotiations. This witness testified that he told Burns that “he had $50 deductible collision insurance on the car,” but with respect to the car being insured to the full amount of the note the witness said, “I don’t remember exactly whether or not we told him he was not covered to the full note or not. I wouldn’t swear that I did tell him that and I wouldn’t swear that I didn’t tell him that.”

Burns ’ version of the matter is strongly corroborated by the recital in the contract, quoted above, that the insurance was to be not less than the total amount owed on the note. We think the proof sufficient to establish the fact that the contract was obtained by misrepresentation, and this is so whether the case falls within the ordinary rule that fraud is to be proved by a preponderance of the evidence, Hildebrand v. Graves, 169 Ark. 210, 275 S. W. 524; Gregory v. Consolidated Utilities, 186 Ark. 406, 53 S. W. 2d 854; Rose v. Moore, 196 Ark. 527, 118 S. W. 2d 870, or within the rule that a stricter degree of proof is required when a solemn written instrument is to be upset. Welch v. Welch, 132 Ark. 227, 200 S. W. 139; Green v. Bush, 203 Ark. 883, 159 S. W. 2d 458. It is also argued that Burns did not rely on the misrepresentation; but he says that he did, and in any event reliance is to be presumed when, as here, the misrepresentation goes to a material matter. Best., Contracts, § 479.

Affirmed.

MoFaddin, J., dissents.


author: Paul Ward, Associate Justice.

text:
    Davis v. Doyle.
    5-1843
    323 S. W. 2d 202
    Opinion delivered April 20, 1959.

      Ponder & Lingo, for appellant.

      Howard <& McDaniel, for appellee.
   Paul Ward, Associate Justice.

The question for decision is: Can appellant, Mitchell Davis, lawfully hold the office of Mayor of Hoxie and act as manager of the Hoxie Waterworks and Sewer System at the same time and draw salaries from both sources'?

The facts are not in dispute. Davis has served as Mayor continuously since 1949 and has drawn a salary in that capacity. Prior to 1949 Hoxie had a waterworks system and paid someone to service it, but it seems that there was no separate office of manager. In 1954 the City completed a sewer system, joined with the waterworks system, and created the office of manager of the combined system with a salary of $200 per month with an additional $100 per month for expenses. All this was done by a Resolution duly passed by the City Council, the material parts of which read as follows:

“Section 1. The office of manager of the waterworks and sewer systems is hereby created, with the following duties and responsibilities.
“A. It shall be the duty of the manager to maintain and repair the waterworks and sewer systems in proper working order to insure full and adequate service to the inhabitants of Hoxie, Arkansas, it being understood that he is to have the right to hire such additional workers as are necessary to accomplish this purpose.
“B. It shall be the duty of the manager to enforce all the provisions of the State Plumbing Code, as adopted by reference by the City of Hoxie, Arkansas, and to inspect and test all plumbing work for compliance with the Code.
“C. It shall be the duty of the manager to supervise the business operations of the sewer and waterworks system.
“Section 2. The office of manager having been filled temporarily by Mitchell Davis, he is appointed hereby as manager of the waterworks and sewer systems of the City of Hoxie, Arkansas, to serve for such a period of time as the above said duties are properly fulfilled, or until discharged by the Waterworks and Sewer Committee, said discharge to be approved by the City Council. He is to serve at a salary of $200.00 Dollars, and is to have an expense account in the amount of $100.00 Dollars, both to be paid monthly. ’ ’

On July 31,1958, appellees, as citizens and taxpayers of Hoxie, filed a complaint in Chancery against Davis, as Mayor and as an individual, and against the Treasurer and the Recorder of Hoxie, alleging essentially the facts set forth above, and praying that: (a) Davis be enjoined from receiving any further sums from the town of Hoxie for serving as superintendent (manager) of the said improvement district; (b) Davis repay the sum of $14,400 already received, and; (c) The Treasurer and Recorder be restrained from issuing or honoring any further voucher to Davis. In the answer appellants denied that Davis, at this time, was prohibited by law from holding both offices or from drawing both salaries, and in the alternative, stated that Davis should be allowed to retain the money already received as reasonable compensation for services rendered.

After a hearing on an agreed statement of facts, the Chancellor ruled that: Davis is enjoined from acting as Superintendent or Manager of the Improvement District, and from receiving compensation therefrom hereafter so long as he shall serve as a member of the City Council (Mayor) of Hoxie. The effect of the above ruling, it is noted, was to allow Davis to keep the money he had already received, and we think properly so. At any rate no appeal has been taken by appellees to that portion of the opinion.

It is our conclusion that the trial court was correct in holding that Davis could not act as manager of the Waterworks and Sewer System and draw a salary as such while, at the same time, occupying the office of Mayor of Hoxie. Such a double role, the Chancellor said, was “inconsistent and incompatible”, and, again, we think he was right.

In the case of Rogers v. Sangster, 180 Ark. 907, 23 S. W. 2d 613, the City of Osceola, by ordinance, attempted to lease the City Waterworks System to the Mayor and two members of the Council. This court, in sustaining the trial court which held the lease void, approved the following statement:'

“At common law, and generally under statutory enactment, it is now established beyond question that a contract made by an officer of a municipality with himself, or in which he is interested, is contrary to public policy, and tainted with illegality; and this rule applies whether such officer acts alone on behalf of the municipality, or as a member of a board or council. Neither the fact that a majority of the votes of a council, or board, in favor of the contract are cast by disinterested officers, nor the fact that the officer interested did not participate in the proceedings, necessarily relieves the contract from its vice. The facts that the interest of the offending officer in the invalid contract is indirect, and is very small, is immaterial. The statutory prohibition is frequently so wide in its terms as to prohibit any officer from contracting with the municipality, whether he takes part in the making of the contract or not.”

The Court also said that Ark. Stats. Sec. 19-909, which declares that no member of the Council shall “be interested, directly or indirectly, in the profits of any contract or job, work or services to be performed for the corporation, ’ ’ is declaratory of the common law. In Tappan v. Helena Federal Savings & Loan Assn., 193 Ark. 1023, 104 S. W. 2d 458, we held that it was incompatible for appellant to serve as Mayor of Helena and at the same time serve as a Commissioner of Street Improvement District of Helena,.

In addition to what we have already said, we also think Davis is barred from holding both of said positions at the same time by that portion of Sec. 19-909 quoted above. In Revis v. Harris, 219 Ark. 586, 243 S. W. 2d 747, we held that said statute prevented Harris from receiving money from the Clarksville Water & Light Company as a laborer while he was Mayor of that City.

We cannot agree with appellant Davis’ contention that the resolution of the Hoxie Council amounted merely to an increase in his salary as Mayor. We do not think, as Davis insists, that the above contention is sustained by the case of Kindricks v. Machin, 135 Ark. 459, 205 S. W. 815. In that case we said the City of Argenta, by resolution, abolished the office of manager of the Light Plant and imposed the duties of that office on the Mayor with an increase of salary.

Because of the views above expressed it becomes unnecessary to answer appellants’ argument to the effect that said Sec. 19-909 does not apply here since Davis was elected Mayor before the position of Manager was created.

Affirmed.


text:
    McCall v. State.
    4942
    323 S. W. 2d 421
    Opinion delivered April 27, 1959.

      Lester E. Dole, Jr., for appellant.

      Bruce Bewnett, Atty. General, by John T. Haskins,. Asst. Atty. General, for appellee.
   Carleton Harris, Chief Justice.

Appellant, MaysoMcCall, a Negro man, was charged hy Information with the crime of assault with intent to rape, it being alleged that he assaulted Lorraine Tate, an 11 year old Negro-girl, on March 27, 1958, with the intent to rape her. On trial, the jury returned a verdict of guilty, and fixed appellant’s punishment at 21 years imprisonment in the state penitentiary. Judgment was accordingly entered,, and from such judgment comes this appeal.

The proof reflects that Lorraine and her cousin, Willie Flint, Jr., 12 years of age, were walking back to-school during the noon hour, when Lorraine was stopped by McCall (whom she knew as “ Jaster”), who asked her for a piece of a sandwich she was eating. She testified that she gave it to Willie, who in turn, gave it to McCall . . . that McCall was standing on the inside of the fence, and called to her “to come over there, and I went to the fence, and he grabbed me.” Appellant then took her some distance into the woods. According to Lorraine’s evidence, appellant threatened “if I hollered, he’d kill me.” She then related that he laid her down on the ground, got on top of her, opened his pants, pulled her panties aside, and endeavored to place his male organ in her; that she could feel it against her body. According to Lorraine’s statement, she heard a car stop in the road, and McCall jumped up and ran away. Her mother, step-father, and uncle (who had been summoned by Willie) were in the car. The mother started calling, and the little girl went to her.

Willie testified that he and Lorraine were on their way to school, and McCall “called her to come over there, and he said, ‘Don’t you know I’m your cousin’, and she said, ‘No’, and he grabbed her and said, ‘Don’t you start to hollering. If you holler, I’ll kill you.’ ” The witness testified that McCall started pulling Lorraine over the fence, and appellant told him to “go on to the school house, and I started running. ’ ’ Willie ran home, and reported the occurrence to his parents, and his father, uncle, and aunt, went back to the scene in the car.

Further evidence showed that the little girl was scratched from briars and that her coat was muddy across the shoulders and across the bottom. She was taken to a physician, but he was not at home, and an examination by her mother showed no evidence of rape. Granville Warrick, city marshal and deputy sheriff at Bearden, received a call about the incident, and went straight to the scene. He arrived just as the relatives were helping Lorraine over the fence. From the testimony:

“Didyou see the defendant, Mayso McCall, there?
A. No, sir, he crossed over the road.
Q. Crossing from what area?
A. Cotton Belt.
Q. Would that be the area where you found the little girl?
A. Directly across the woods, he was still going into the woods the opposite way from where the incident happened.
Q. Did you catch him at that time?
A. No, sir.
Q. Did you attempt to holler at him?
A. No, sir, he was too far away to holler at and I went and got in the car and I called for Mr. Biggs and Mayso stopped at a house and ran into a chicken house and that is where I got him.”

Appellant was arrested about two hours after the occurrence, and the Marshal testified McCall was about ‘ ‘ two-thirds drunk”. The evidence was certainly sufficient, if believed by the jury, to support the conviction.

Appellant testified that he remembered nothing at all that happened on the date of the alleged assault. He stated that he was drinking that day, and knew nothing “until I came to myself in jail.” From the evidence: “Q. McCall, did you rape this little girl or try to rape her. A. I don’t know anything about it. Q. Are you denying that you did it? A. I don’t recall it. Q. You don’t know if you did or if you didn’t is that what you are saying? A. That is right.” He testified that he is subject to epileptic fits, has headaches, and his hands swell, though he did not know whether he had such a spell on the day in question. His grandmother and an acquaintance testified that McCall would have spells, and his hands and limbs would swell.

Appellant argues that he was not allowed to cross-examine these children as to their competency before the jury, prior to the presentation of the State’s evidence in chief, and this deprived him of a legal right. We do not agree. When the State called for Lorraine Tate, appellant’s counsel objected to the competency of the witness and requested that she be qualified, whereupon the court retired to Chambers, and the witness was interrogated by the State’s attorney. This examination revealed that Lorraine was in the 6th grade at school, had made good grades, had passed each year since entering the 1st grade, that she regularly attended church and Sunday School, had been taught to tell the truth, and knew she would be punished if she did not do so. Appellant’s counsel only asked one question of witness. Willie Flint was then examined, and his testimony reflected that he was 12 years of age, in the 5th grade at school, attended the same church and Sunday School as Lorraine (First Baptist), that he had been taught to tell the truth, and that he knew it was wrong to tell a lie. No questions were propounded to him by appellant’s counsel. The court then permitted the children to testify. Lorraine was placed on the witness stand before the jury, where substantially the same evidence, as to qualifications, was elicited. When the State’s attorney finished this phase of the interrogation, appellant’s counsel stated: “Is he through with the qualification? The Court: You can go ahead. Objection is overruled. Appellant’s counsel: Save our exceptions.” When young Flint was called to the stand, appellant’s counsel objected to the competency of the witness, which objection was overruled.

We find no error. The purpose of the examination in Chambers was to determine whether the children were competent to testify, and appellant had every opportunity to interrogate and cross-examine the witnesses at that time. However, only one question was asked of the little girl, and none of the boy. In addition, when the witnesses were turned over to the appellant’s counsel for cross-examination before the jury, there was every opportunity to cross-examine the youngsters relative to education, their knowledge of the difference between right and wrong, and any other questions relating to their intelligence or competency; in fact, some few questions were asked. In Keith v. State, 218 Ark. 174, 235 S. W. 2d 539, this Court said:

“Another well settled rule is that the question of competency is left to the sound discretion of the trial judge and in the absence of clear abuse of the judicial discretion exercised, it is not reviewable upon appeal. Yother v. State, 167 Ark. 492, 268 S. W. 861. In Payne v. State, 177 Ark. 413, 6 S. W. 2d 832, the court quoted with approval the following language of Justice Brewer, speaking for the court, in Wheeler v. United States, 159 U. S. 523, 16 S. Ct. 93, 40 L. Ed. 244: £The decision of this question rests primarily with the trial judge, who sees the proposed witness, notices his manner, his apparent possession or lack of intelligence, and may resort to any examination which will tend to disclose his capacity and intelligence as well as his understanding of the obligations of an oath. As many of these matters cannot be photographed into the record, the decision of the trial judge will not be disturbed on review, unless from that which is preserved it is clear that it was erroneous.’ ”

In the Yother case, the court permitted a 10 year old girl to testify; in the Payne case, a 7 year old boy was held competent to testify. Prom an examination of the record, it would appear that both Lorraine and Willie, Jr., were competent and entirely qualified to testify, and certainly we cannot say that the trial judge abused his discretion in so permitting them to testify.

It is next urged that the verdict was excessive. It has already been pointed out that there was substantial and sufficient evidence to support a conviction. The court properly instructed the jury as to the defense of drunkenness, and insanity, and further told the jury that it was their duty to determine the degree of credibility that should be given the testimony of the two child witnesses. McCall was found guilty, and under our holdings, it was within the province of the jury to assess the punishment. As stated in Turnage v. State, 182 Ark. 74, 30 S. W. 2d 865:

“* * * it was the peculiar province of the jury to fix the punishment in each case, and on appeal this court has no power to reduce it unless for the purpose of eliminating some error committed by the trial court. ’ ’

No reversible error appearing, the judgment is affirmed.

       Minnie Glo^ter also testified that she had seen Mayso “have crying spells and tell me his head was hurting” when he was about 6 years, of age.

       See also Alford v. State, 182 Ark. 1184, 34 S.W. 2d 224, where a 10 year old girl was held competent to testily; and Durham v. State, 179 Ark. 507, 16 S. W. 2d 991, where a 6 year old girl, upon whom an assault was alleged to have been committed, was held competent as a witness.