text:
    FARMERS COOPERATIVE ASS’N, INC. v Randall GARRISON and Ruby Garrison
    5-5243
    454 S. W. 2d 644
    Opinion delivered June 8, 1970

      Little ix Lawrence, for appellant.

      Putman, Davis if Bassett, for appellees.
   Frank Holt, Justice.

This is an action by appellant to collect on two notes. Appellees, Randall Garrison and his wife, are in the poultry business. Julian Hendren is the general manager of appellant corporation, Farmers Cooperative Association. Inc., a chicken feed retailer. In the early part of 1967, Hendren, along with Kenneth Handy, a representative of Farmland Industries, Inc. (a regional supplier in which appellant has an ownership interest), approached appellees to solicit their participation in a layer-feeder program. This program was a joint project of Farmers Cooperative and Farmland Industries. On April 5, 1967, a “Feeder Contract” was consummated between appellees and appellant.

The contract provided that appellant would sell to appellees, and appellees would purchase from appellant their entire requirements of mixed feed and concentrates at appellant’s “regular retail price or prices in effect on date of delivery* * *” Appellant also agreed to furnish appellees with 21,000 layer hens together with sufficient financing for the program. In this contract the appellees agreed to execute a promissory note to appellant for $34,650.00, covering the price of the hens and 29,800 pounds of feed, which sum plus interest was payable on demand. Without limiting the right of appellant to demand payment in full or in part at any time, the contract specified that all indebtedness evidenced by appellees’ note “shall be paid in full on or before May 1, 1968.” Appellant also retained by this contract the sole option to make advances to appellees, not to exceed at any one time the original sum of the note. The final provision of this contract provided that the appellees have read and presently understand the agreements and that by signing the contract they agreed to be bound by all of its terms. About a month later, or on May 9, 1967, both appellees executed to appellant a promissory note for $34,650.00. On August 2, 1967, appellee Randall Garrison executed a second note, payable on November 1, 1967, for the sum of $12,000.00.

Appellant brought suit against appellees on November 18, 1968, on the two promissory notes. The unpaid principal balances were then $34,603.93 on the initial note and $3,325.41 on the second note. Appellees answered and denied liability on the notes because of a partial failure of consideration. They asserted that it had been agreed upon between the parties that the notes would be repaid only from the proceeds of the egg, production; that appellant would continue to refinance appellees with successive layer hens until such time as the egg proceeds paid the appellees’ indebtedness in full; and that appellant breached the contract by refusing to so refinance. Appellees also counterclaimed for: (1) $35,155.02 loss of income because of the partial premature molt of their hens resulting from appellant’s failure to promptly deliver feed; and (2) $5,299.99 as an overcharge on feed, in that appellant breached its agreement to supply feed at competitive market prices.

Both Hendren and Handy testified, each denying that they ever made any representations or promises to refinance appellees with successive layer hens or to sell feed at competitive market prices. Over the objections of appellant, appellee Randall Garrison testified, and adduced testimony from other farmers who had been approached regarding the layer-feeder program, that Hendren and Handy persuasively represented such refinancing provisions and competitive prices as a part of the program. Garrison and his brother, who was present during part of the negotiations leading to the contractual agreement, testified that Hendren and Handy specifically promised to refinance appellees if necessary and to furnish feed at competitive prices. Garrison further testified that appellant, on occasions subsequent to the signing of the contract, reassured appellees that adjustments for feed prices would be made and that refinancing would, if necessary, be provided. There also was evidence presented that some price adjustments were in fact made between the parties.

At the conclusion of the testimony, appellant moved for a directed verdict on the two notes by reason of appellees’ admission that the notes were genuine and the balances correct. This motion being denied by the trial court, appellant then requested that the jury be instructed to return a verdict for appellant on appellees’ counterclaims. These instructions were refused. Other instructions were then tendered by appellant. By these instructions and others given by the court, the existence of any agreements regarding refinancing and competitive market prices for feed was presented as questions of fact. Thus the issues of appellees’ liability on the two notes and of appellant’s liability on the counterclaims were submitted to the jury. The jury found that appellant was entitled to recover nothing on the note [$84,650.00] dated May 9, 1967; denied appellees’ claim for damages for loss of income [$35,-155.02] alleged to have resulted from a delay in the delivery of feed; awarded appellant $3,797.54 on the note dated August 2, 1967; and found that appellees were entitled to recover $5,299.99 on their counterclaim alleging overcharge in feed prices. Appellant moved for a judgment notwithstanding the verdict on the note dated May 9, 1967. The motion was denied. From the judgment on the verdict comes this appeal.

One of appellant’s contentions for reversal is: “Any testimony regarding prior or contemporaneous oral modification of the written feeder contract should not have been admitted into evidence under the doctrine of merger.” We must agree.

It is a general proposition of the common law that in the absence of fraud, accident or mistake, a written contract merges, and thereby extinguishes, all prior and contemporaneous negotiations, understandings and verbal agreements on the same subject. See 17 Am. Jur. 2d, Contracts, § 483; 17A C. J. S. Contracts § 381. This is simply the affirmative expression of the parol evience rule. In analyzing the present case, it is helpful to refer initially to 3 Corbin on Contracts, § 573 (1960), which begins:

“When two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing. This is in substance what is called the ‘parol evidence rule,’ a rule that scarcely deserves to be called a rule of evidence of any kind, * * *. The use of such a name for this rule has had unfortunate consequences, principally by distracting the attention from the real issues that are involved. These issues may be any one or more of the following: (1) Flave the parties made a contract? (2) Is that contract void or voidable because of illegality, fraud, mistake, or any other reason? (3) Did the parties assent to a particular writing as the complete and accurate ‘integration’ of that contract?
In determining these issues, or any one of them, there is no ‘parol evidence rule’ to be applied. On these issues, no relevant evidence, whether parol or otherwise, is excluded.”

In the case at bar, it is not disputed that the parties made a contract; in fact, appellees not only admitted the existence of a contract and the alleged indebtedness, but based their defense and founded their counterclaims on an alleged breach thereof. Nor have appellees asserted that the contract is void or voidable on the basis of illegality, fraud, or mistake. However, appellees do in effect contend that the writing was not assented to as a complete “integration” of the contract and further point out that “[t]he record does not show that the court affirmatively found the feeder contract to have been integrated.” We cannot agree with appellees’ contenion. First of all, it is of no significance that the trial court did not affirmatively find the contract to be integrated; the burden here is on the appellees, who wish to avoid application of the parol evidence rule, to affirmatively prove that the feeder contract was not an integrated expression of the parties’ agreements. Graves v. Bodcaw Lbr. Co., 129 Ark. 354, 196 S. W. 800 (1917). Furthermore, as we view the record, the evidence adduced by appellees concerning the alleged agreements of refinancing and competitive market prices did not go to prove that the written contract was not intended as a complete integration of prior negotiations; but rather it tended to show what purportedly was the parties’ actual antecedent understanding which was in variance with the clearly expressed terms of the contract. Being of this latter nature, such evidence was introduced in violation of the parol evidence rule. Jackson County Gin Co. v. McCuistion, 177 Ark. 60, 5 S. W. 2d 729 (1928). Appellees here, in effect, sought to impeach the written contract, urging that it did not express the true intent of the parties, rather than simply attempting to prove that the writing was not a complete integration of the parties’ prior agreements. See Dunlop Tire & Rubber Corp. v. Thompson, 273 F. 2d 396 (8th Cir. 1959). In the case at bar, we do not construe the parol evidence to be of the effect that the parties did not assent to the writing as the complete integration of their contract.

The parol evidence rule is one of substantive law. In 4 Williston on Contracts, § 631 (1961), this proposition is explained as follows:

“The parol evidence rule * * * fixes the subject matter for interpretation, though not itself a rule of interpretation.
* * *
"It does not exclude evidence for any of the reasons ordinarily requiring exclusion, based on the probative value of such evidence or the policy of its admission. The rule as applied to contracts is simply that as a matter of substantive law, a certain act, the act of embodying the complete terms of an agreement in a writing (the “integration”), becomes the contract of the parties. The point then is, not how the agreement is to be proved, because as a matter of law the writing is the agreement. Extrinsic evidence is excluded because it cannot serve to prove what the agreement was this being determined as a matter of law to be the writing itself.’ ”

The question now becomes: When does a writing constitute a complete integration? In Jetter v. Windle, 229 Ark. 948, 319 S. W. 2d 825 (1959), this court subscribed to the language in its earlier decision of Wilson v. Nugent, 174 Ark. 1115, 299 S. W. 18 (1927), wherein it was held:

“[W]hen a written instrument contains such terms as import a complete obligation, which is definite and unambiguous,, it is conclusively presumed that the whole agreement of the parties, and the extent and manner of their undertaking, were reduced to writing.”

This “face-of-the-writing” test, however, has been somewhat discredited; and other cases in this jurisdiction hold that “* * * a writing may be amplified by parol evidence of an additional term or oral understanding, simply where the writing is ‘silent’ on the matter.” Comment, Scope and Operation of the Parol Evidence Rule in Arkansas, 4 Ark. L. Rev. 168, 175 (1949). Restatement of Contracts, § 240, authorizes the introduction of parol evidence:

“* * * if the agreement is not inconsistent with the integrated contract, and is made for separate consideration or is such an agreement as might naturally be made as a separate agreement by parties situated as were the parties to the written contract.”

With these principles in mind, we are of the view that the written contract constitutes a complete integration. Therefore, appellees’ proffered evidence of agreements, prior to and contemporaneous with the written contract, regarding the promised refinancing and assured competitive market prices for feed, should not have been admitted. The contract (dated April 5, 1967) clearly states that a note to be given later (the note was dated May 9, 1967) is to be payable on demand and must be paid in full on or before May 1, 1968. The contract is not silent on this point, and it is patently inconsistent with the clearly expressed terms therein to contend that credit was to be extended beyond the specified due date. See Young v. Westark Production Credit Ass’n., 222 Ark. 55, 257 S. W. 2d 274 (1953). Moreover, this court has had occasion to hold that parol evidence is inadmissible to sh,ow that a promissory note is to be paid from the proceeds of that undertaking for which the note was executed to finance. Atkins v. Garner, 222 Ark. 470, 261 S. W. 2d 266 (1953).

As to the prices for feed, the contract is unequivocal in stating that the feed was to be sold at appellant’s “regular retail price or prices in effect on date of delivery.” There is no ambiguity or uncertainty here, and parol evidence which tends to show that competitive market prices were contemplated asserts, in effect, that the parties meant something other than what they said in writing. Such evidence is not admissible. Johnson v. Missouri Pac. R. R. Co., 139 Ark. 507, 214 S. W. 17 (1919). In the case at bar, according to the written contract, the appellees attested to the fact that they read, understood, and would be bound by the terms thereof; they cannot now insist on a contract in conformity with what purportedly was their original oral understanding. Allen v. Thompson, 169 Ark. 169, 273 S. W. 396 (1925). The stability of our economic transactions and the contract law upon which they are founded demand strict application of the parol evidence rule. Hoffman v. Late, 222 Ark. 395, 260 S. W. 2d 446 (1953). See, also, Williston on Contracts, § 631.

Appellant asserts that “[t]o assume the parties agreed for appellant to lay out $34,000.00 per year for an indefinite number of years no matter what the result of the growing program was, cannot reasonably be said to be a consistent additional term.” Such an assumption might not sound reasonably consistent to a lawyer or a businessman; however, to an anxious farmer it might well appear fair and realistic, especially when presented in the persuasive terms of inducement to sign an adhesion contract. Although promissory inducements cannot be asserted to vary the terms of a subsequent written contract [see Ford v. Luria Steel & Trading Corp., 192 F. 2d 880 (8th Cir. 1951); Crawford v. General Contract Corp., 174 F. Supp. 283 (W. D. Ark. 1959)], such inducements and the reliance which they evoke may, nonetheless, amount to fraudulent misrepresentations sufficient to avoid the contract by way of defense. See Northwestern Rug Mfg. Co. v. Leftwich Hardware & Furniture Co., 176 Ark. 212, 2 S. W. 2d 1109 (1928).

It should be noted that we do not subscribe to appellant’s view that a failure of consideration on the contract is no defense to the suit on the initial note dated May 9, 1967. Suffice it to say that the note is representative ot appellees obligation on the contract and receives its vitality from this written instrument. Appellees’ damages, or a part thereof, might well have been the direct and foreseeable result of appellant’s failure to have made timely delivery of feed. In these circumstances, where daily feed supplies are essential to the intended objective of the contract, prompt delivery of the required quantity is necessarily an implied term in appellant’s contractual obligation. Partial failure of this consideration is a defense pro tanto. Ark. Stat. Ann. § 85-S-408 (Repl. 1961).

We must reject appellees’ contention that “the entire appeal is without basis because appellant waived any objection to the court’s failure to direct verdicts by requesting instructions.” Our case law which might appear to support this proposition [appellees direct us to Hankins v. Dooley, 229 Ark. 316, 314 S. W. 2d 691 (1958)] is distinguishable. Briefly stated, the rule is: Where a party requests, or acquiesces in, an instruction submitting a particular issue to the jury, he is not in an attitude to thereafter complain about the jury’s determination of that issue — i. e., he waives his contention that the issue should have been determined by the trial court as a matter of law, or simply not determined at all. But in none of the cases upholding a waiver which we have examined was there a motion for directed verdict prior to the tendering of instructions. Further, the parol evidence rule is a matter of substantive law of which, as opposed to procedural formalities, we are less inclined to find a waiver.

In the case at bar, the appellant expressly objected to the introduction of the inadmissible parol evidence and thereafter requested a directed verdict urging the proper exclusion .of such evidence. To extend this waiver doctrine to the present situation would impose upon appellant the dilemma of seeking favorable instructions at the cost of losing his right to appeal.

Reversed and remanded.


source: Caselaw Access Project

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

license: Public Domain

text:
    STARKEY CONSTRUCTION, INC. and MARYLAND CASUALTY CO. v. ELCON, INC., First National Bank in Little Rock First State Bank and Trust Co., of Conway, and Graybar Electric Co., Inc.
    5-5199
    457 S. W. 2d 509
    Opinion delivered June 15, 1970
    [Rehearing denied September 21, 1970.]

      Jones & Stratton, and Patten & Brown, for appellants and cross-appellees.

      Smith, Williams, Friday & Bowen, for appellees and cross-appellants.
   Carleton Harris, Chief Justice.

Starkey Construction, Inc., one of the appellants herein, hereafter called Starkey, was low bidder as general contractor for two Arkansas Power and Light Company projects, one a service center in Arkadelphia and one an office building in Conway. Maryland Casualty Company, Starkey’s bondsman, is the other appellant. Eicon, Inc., was given a subcontract on both jobs, being required to furnish labor, electrical, and mechanical materials for the Arkadelphia job, and to furnish electrical and labor for the Conway project. The subcontract for Arkadelphia was let on October 10, 1967, for $79,882.00, plus $114.25 later added; on November 7, 1967, the Conway subcontract for $38,912 was let. Eicon was unable to acquire a payment and performance bond for either contract, having reached its bonding limit on other jobs.

Eicon purchased materials from various companies, and furnished labor for the two jobs, and these materials and labor were to be paid by Eicon, which received periodic progress payments as required by the contract. Each progress payment-was computed to pay for 90% of the “completed work and materials stored on site” as of the 25th of each month. The first progress payment on the Arkadelphia job was received on December 5, and thereafter progress payments were made at approximate intervals of thirty days until June 26, 1968, such payments totalling $96,748.89. All Starkey checks except one for $1,661.00, were joint payee checks i. e., the checks were made out to Eicon and some of the suppliers, some of the checks including as many as six payees, and the rest in varying numbers. Starkey’s bank was the First State Bank and Trust Company in Conway, and Eicon’s bank was the First National Bank in Little Rock. When the joint payee checks were presented and honored against Starkey’s account in the First State Bank, all bore one or more forged endorsements. Relative to the Arkadelphia job, $70,339.25 in Starkey checks bore unauthorized or forged endorsements, and $22,994.00 of total progress payments totalling $26,305.00 on the Conway job bore forged endorsements. When the various progress payments were received by Jerry Lee, General Manager of Eicon at the time of the execution of the contracts, (subsequently elected president in February 1968), he endorsed one or more of the suppliers’ names to the checks before taking them to the First National Bank. However, each supplier except Graybar Electric Company was paid the amount due by Eicon. The bank had previously made loans to Eicon for job operating expenses, and had secured said loans by assignment of invoices -in most instances. When the progress payment checks were presented at the bank and cashed, Lee would apply part of the proceeds to the indebtedness due the bank by his company. The records reflect that after some of the loans were satisfied in full, additional loans would be made, and these were handled in the same manner. The final check given by Starkey which is involved in this litigation, was a progress payment made on the Conway job and was in the amount of $6,287.00, said check being dated June 26, 1968. This instrument likewise bore a forged signature, that of Mike Matula, and when it was presented to First National, was applied by the latter to indebtedness due it by Eicon. Starkey, who had just found out about the forgeries on the progress payment checks, learning that Matula’s name had also been forged, notified his bank, First State Bank and Trust Company of Conwa-y, that he was stopping payment on this check. Following this event,- Eicon ceased operations, and the completion of the job was taken over by Starkey (as of July 1, 1968), appellant expending $38,948.60 to complete the Eicon contracts. Of this amount, Starkey would have owed Eicon $22,000 if the latter had completed the job; accordingly Starkey spent $16,948.60 of its own money in the completion.

In November, 1968, after notice of an intent to file liens on Arkansas-Power 8c Light Company properties by Graybar, Starkey instituted suit in the Faulkner County Chancery Court naming Eicon, both banks, and all known possible unpaid labor and material suppliers of Eicon, seeking an accounting and adjudication of rights between all parties.

Consent judgments were entered for all material-men except Loren Cook Co. and Graybar, and these judgments were satisfied by Starkey. After the filing of numerous pleadings, the court heard evidence on behalf of all parties, and entered its decree on June 4, 1969, findings pertinent to the appeal now before us, being as follows;

“It is, therefore, considered, ordered and decreed that: (1) That the the pleadings are amended to conform to the proof. (2) Graybar Electric Company have judgment against Starkey Construction, Inc., and Maryland Casualty Company in the sum of $19,648.17 together with interest thereon at 6% per annum from August 1, 1968 until paid: (3) Starkey Construction Company have judgment against the First State Bank in Conway in the amount of $7,244.18: (4) that First State Bank, Conway, have judgment against the First National Bank in Little Rock for $7,244.18: that the First National Bank in Little Rock have judgment against Starkey Construction, Inc. in the amount of $5,428.52: (6) all other claims among Starkey Construction, Gray-bar, First State Bank and First National are dismissed: (7) That Starkey Construction, Inc. have judgment against Eicon, Inc. in -the amount of $23,827.40, and upon payment by Starkey Construction,- Inc. or Maryland Casualty Co. of the judgment awarded Graybar Electric Company herein, jurisdiction is retained for judgment over against Eicon, Inc. for the sums paid:”

Each of the judgments bore interest at the rate of 6% per annum from the date of decree and the court ordered that costs be borne equally by Graybar, Starkey and First National Bank. From the decree so entered, appellants bring this appeal. The two banks have cross-appealed from the judgments entered against them respectively. For reversal, appellants assert four points, as follows:

I

The Court erred in not awarding Starkey judgment against First State Bank for $93,337.89.

II

Alternatively, -the court erred in not declaring First National Bank to be constructive trustee for $31,604.29 for payment of materialmen.

III

The court erred in awarding Graybar Electric Company judgment for $19,648.17 against Appellants.

IV

The court erred in holding First National Bank to be a holder in due course of the June 26, 1968, check of $6,287.00.

The cross-appeal relates to point three, the banks contending the Court erred in awarding Starkey a judgment against them for $6,814.41, this judgment being based upon checks wherein Graybar was a payee. We proceed to a discussion of each point.

I

This contention is based upon the provisions of Ark. Stat. Ann. 85-3-419 Addendum). Subsection 1(c) provides that an instrument is converted when it is paid on a forged endorsement. Subsection (2) provides that in an action against a drawee, the measure of the drawee’s liability is the face amount of the instrument. Appellants point out the comment on these two subsections, as follows:

“3. Subsection (1) (c) is new. It adopts the prevailing view of decisions holding that payment on a forged indorsement is not an acceptance, but that even though made in good faith it is an exercise of dominion and control over the instrument inconsistent with the rights of the owner, and results in liability for conversion.

“4. Subsection (2) is new. It adopts the rule generally applied to the conversion of negotiable instruments, that the obligation of any party on the instrument is presumed, in the sense that the term is defined in this Act (Section 1-201), to be worth its face value. Evidence is admissible to show that for any reason such as insolvency or the existence of a defense the obligation is in fact worth less, or even that it is without value. In the case of the drawee, however, the presumption is replaced by a rule of absolute liability.”

It is thus appellants’ argument that the forged endorsements of one or more payees upon Starkey’s checks (totaling $93,337.89) destroyed their negotiability, and the drawee-payor bank wrongfully debited Starkey’s account. We find no merit in this contention, for it is agreed that all of the suppliers whose names were forged on the checks, except Graybar, were paid the money due them from the proceeds of each progress payment, notwithstanding the fact that they did not themselves endorse the checks.

Lee testified that he endorsed the names of various payees only in order to expedite the cashing of the checks; for instance, on checks in excess of $500.00, where Graybar was a payee, it would have been necessary to obtain the endorsement from the St. Louis office.

We cannot believe that it was the intent- of the General Assembly to hold a drawee (the bank) liable where the -money actually reached the parties intended by the drawer of the check.

The Chancery holding which denied Starkey recovery against the bank to the extent the money actually reached the payees appears to be the general rule in this country, and is so stated in 10 Am. Jur. 2d, Banks § 625, as follows:

It is generally held that a drawer will be precluded from-recovering from the drawee bank for paying his check on a forged endorsement where, notwithstanding the forgery, the proceeds of the check actually reached the person whom the drawer intended to receive them.” (Our emphasis)

The same statement appears in 9 C. J. S. Banks and Banking, Sec. 356 (c):

“Generally a bank is liable to the drawer of a check for paying it on a forged indorsement, in the absence of estoppel, contributory negligence, or ratification, or unless the money has reached the intended person.” (Our emphasis)

We find no reference in the statute heretofore mentioned to the situation presented in the instant case, i. e., where the money actually reached the party intended by the drawer.

Of course, as pointed out by appellees, in attempting to codify a large body of law it is almost impossible to anticipate all the factual situations that may arise. And it is for this reason that courts have adopted the principle, of statutory construction that a statute will not be construed so as to overrule a principle of established common law, unless it is made plain by the act that such a change in the established law is intended. In Barrentine and Ives v. State, 194 Ark. 501, 108 S. W. 2d 784, we said,

“It has long been the rule in this state that ‘A statute will not be taken in derogation of the common law unless the act itself shows such to have been the intention and object of the legislature.’ (citing cases). A careful reading of the act fails to convince that such was the intention and object of the Legislature.”

We also agree that the unauthorized endorsements were ratified by the persons or companies whose names had been forged when the payees accepted payments due them from the proceeds of the checks, Section 85-3-404 Ark. Stat. Ann. (1961 Addendum) provides that any unauthorized signature is wholly inoperative as that of the person whose name is signed unless that person ratifies it or is precluded from denying it. Of course, Starkey, contending that it is somewhat in the position of a subrogee of the payees whose names were forged, cannot possibly be in any better position than the payees of the check.

Since they unquestionably ratified the signatures by retaining the benefits of the transaction, Starkey is likewise in the same position. Appellants say that the issue of ratification was not raised in the pleadings filed by the banks; however, the initial finding of the Court in its decree was that the pleadings were amended to conform to the proof. We reiterate that the contention is without merit.

II

We likewise disagree that this contention contains merit. Starkey, of course, could have refused to make the progress payments to Eicon if Starkey found that materialmen were not receiving their money. This appellant was due, under its contract with Arkansas Power & Light, to first ascertain that Eicon was entitled to each progress payment before same was made. Certainly, there was a duty on Starkey to check each application for progess payments, and Truman Starkey, President and General Manager of- the construction Company testified that his brother would call the job superintendent and verify the percentages completed for the month; he would then obtain the approval of the architect that Eicon was entitled to an advance for supplies and labor under the contract, and would make the progress payment. He said that he called the material suppliers, and called Graybar nearly every month, talking with F. C. Lanigan, financial manager of the Graybar -Electrical Company, to determine how much Eicon owed Graybar, and- if the account was being paid satisfactorily. The witness stated that Lanigan would answer “Q.K.”, and Starkey did- not know otherwise until June 28, at which time he was told by Lanigan that the latter had not received any checks issued by Starkey. Appellant then learned that Lee was forging the names of payees.

Starkey testified, that as far as he knew, the First National Bank had-no better information than the contractor relative to whether Eicon was paying its bills, and he said that he did not request Fikes( Robert Fikes, Assistant Vice-President and a loan officer of the bank) or anyone else at the bank to go and examine the books on each of the payees to determine if the latter had received-their money before the bank accepted-one of the checks. The witness stated that he was aware of the fact that the bank was lending money to Eicon, and if the signature-s had been good, and the suppliers had been paid, it would have been all right for First National to apply proceeds from the checks to payment of loans it had made to Eicon.

As previously stated, Starkey was obligated under its contract with the power company to determine that all bills, labor, and material, going into the job, were paid before-each progress payment was applied for by Starkey. It was in compliance with this duty that Starkey made the investigation, heretofore mentioned, to determine if Eicon’s suppliers were being paid. In addition- to a job superintendent and architect to help in making his determination, Starkey also had the name of every supplier which had been furnished to it by Eicon. Starkey did not do what it is now contending the First National Bank should have done i. e., require the suppliers to furnish the company with paid invoices for the materials known to have been placed on the site of the job each month. On the other hand, First National had no contractual duty to conduct such an investigation of Eicon to determine that all labor and material bills were being paid; in fact, it was not even aware of the names of all of these suppliers. It had no job superintendent or architect at its disposal, and the testimony reflected that it is not customary in the banking business to make a check on each contractor who desires to cash progress checks at the bank to first ascertain if he has paid all labor and material bills. In fact, Starkey testified that he had no reason to believe that even if First National had conducted such an investigation, it would have gotten any -different answer from the suppliers than was given Starkey. Also, should not Starkey’s knowledge that Eicon was unable to furnish payment and performance bonds for the two jobs have made him particularly careful to see that Eicon’s suppliers had been paid?

It would seem that under the circumstances, the bank was entitled to rely upon the determination already made by Starkey that Eicon’s bills were being paid as contemplated; actually, it would appear that Starkey is now in the position of contending that the First National Bank is liable to Starkey for its mistakes. We think the evidence is rather clear that, even if the names of payees had not been forged, Starkey still would be in the same position, -for its troubles stem from the fact that it did not make-sure that suppliers were being paid before issuing new progress payment checks. It must also be remembered that the loans made by the bank to Eicon were for “operating capital”, i. e., the proceeds of these loans were to be used for the payment of labor, materials, and various overhead expenses for completion on this job as well as others, and progress payments were designed to cover overhead and profit as well as cost of materials and labor. In other words, the first monies received by Eicon to be applied to the costs of the Starkey job came from the bank.

Ill

This point pertains to the Arkadelphia job only, since Graybar was not listed as a payee on any of the checks given on the Conway job. The trial court found that, using the 25th of the month as cut-off date for each estimate, the amount of Graybar’s billings to Eicon which were included in all of the checks (Arkadelphia job) amounted to $14,697.21

After proper credits for three payments no longer involved in this litigation, the Court held that Graybar was due to receive $6,818.41 because of progress payments made, wherein Graybar was a payee, but where it did not receive its money, its name being forged by Eicon. This amount was included in Graybar’s judgment against Starkey, and Starkey was given judgment for said sum against First State Bank of Conway; First State Bank was in turn given judgment for the amount against First National Bank of Little Rock. The basis of judgment was, of course, the fact that Graybar’s endorsement had been forged.

We agree that if Graybar had been deprived of its money because of the forgery, this appellee would be entitled to the judgment, but we think, and find, that the preponderence of the evidence reflects that the forging of its name on the progress payment checks had nothing to do with Graybar’s failure to be paid monthly. To the contrary, it appears that Mr. Lanigan of Graybar voluntarily extended credit to Eicon with frill knowledge of the progress payment checks that were being issued to Eicon by Starkey.

Jerry Lee testified that he had done business with Graybar since 1961 or 1962, and he further stated that he had always followed the practice of endorsing Gray-bar’s name on any check in which that company was a payee. He said that Mr. Lanigan knew that this practice was being followed, and the reason for not getting the company to endorse the check was that the Graybar checks had to be sent to St. Louis for endorsement; this would require a week or ten days before a check could be endorsed and returned, and Lee said that he just could not wait that length of time to receive his own money from a check. The witness testified that Lanigan told him that he could not give any authorization to sign the checks, but that what Lee did with the checks was his own business. The Eicon president said that he had endorsed such checks in Lanigan’s presence (on other occasions) more than once. Lee also testified that Lanigan would permit him to pay Graybar less than the amount due under a particular check, provided that the Eicon arrearage did not exceed $5,000.00 for over ninety days. He said that Lanigan knew within a few days each time that Eicon received a check; that the two had conversations almost weekly, and that the crux of the matter was that his account had to be kept within the $5,000.00 within a ninety day period.

Lanigan denied that he knew any progress payments were being made to Eicon until April 12, when Lee came to his office with a check made payable to Eicon, Graybar, and three other suppliers. Lanigan said that Lee asked him to endorse that check since the latter had to have it to meet his payroll that day, but the witness testified that he told Lee that he (Lanigan) had no authority to endorse the check. He said that it was not unusual to carry job accounts and progress payments for from 60 to, at times, 120 days, and that the Eicon account was always in that category because of a lack of working capital, but toward the end of a job, Eicon would catch up, since it would receive its 10% retainage at that time. He said that he had made no inquiry of Starkey to see if progress payments had been made. After first denying any knowledge that Lee had, on some previous occasions, endorsed Graybar’s name to a check, the witness admitted that about four years previously, this had happened, but Lanigan said he did not quarrel about the matter after Lee made the check good. Lanigan also agreed that it was unusual for a job to have been in progress since October without progress payments being made. He concurred with the testimony of Lee that Graybar policy required a separate report to New York if an account totaled over $5,000.00 for more than 90 days.

“We have to make a separate report to New York, and up to that time I decided if I could get that and get out from making this extra report, it was just a lot of work and get that down, that was the main reason we arrived at these figures.”

Lanigan said that he had the authority without consulting anyone else to make the decision whether to accept payments on an account rather than payment in full. Graybar’s answer to the testimony of Lee is principally that the latter is an “admitted forger”, but irrespective of that fact, we think the evidence substantiates the contentions of the two bank appellees.

What are the facts which support this contention? Graybar opened a separate account for the Arkadelphia job on October 23, 1967, and the first charge was made to Eicon on that date. On October 25, before any progress payments had been made, Lanigan wrote Starkey Construction that his company was handling the electrical materials on the Arkansas Power 8c Light building at Arkadelphia for Eicon, stating “we would appreciate it if you make the checks co-payable to Graybar 8c Eicon covering the material as billed. Thank you,” It is thus apparent that Lanigan knew the job was under way, and it will be noted that he did not request a check upon completion of the job, but rather upon material “as billed”. Of course, the purpose of a request to be included in the progress payment checks is to assure the supplier that it will be paid for its supplies furnished on the job as the job progresses.

Counsel for the banks- correctly list the dates of the progress payment checks and the status of Eicon’s account with Graybar on the- corresponding dates. Seven progress payment checks were issued by Starkey on the Arkadelphia job including Graybar as a payee, beginning in December, 1967, and continuing-monthly thereafter through June, 1968. The first check was issued on December 5, 1967, for the November estimate, and was in the amount of $3,895.00; payees were Eicon, Plumbers Supply, and Graybar Electric. The Eicon account with Graybar, as of the monthly cutoff (25th of the preceding month) was $106.04. Gray-bar neither requested nor received money from this check, nor did it advise Starkey or First National that it had not received its money or that it had not endorsed the check. The second progress payment check, for the December estimate, was issued on January 12, 1968, in the amount of $16,478.00. Again, Eicon, Plumbers Supply, and Graybar Electric, were listed as payees. Graybar neither requested nor received any amount from this check, and again, did not advise Starkey or the bank that it had not received its money-, or that its signature had not been placed on the check. The third progress payment check, for the January estimate, was issued on February 12, 1968, in the amount of $4,633.00. Again, the same three payees were listed. At that time, the Graybar account, as of the cut-off date, was $3,-005.35. Here, it will be observed that the account is more than ninety days old; however, it is not greater than $5,000. Graybar did not request, nor did it receive, any amount from this check. Again, Starkey or the bank was not advised that Graybar had not received its money and had not endorsed this check. The fourth progress payment check, for the February estimate, was issued on March 11, 1968, in the amount of $8,866.12. Payees were the same three previously listed, together with Barber-Coleman. The amount of -the account had now risen to $5,810.14, and $106.04 was more than ninety days old. At this point it becomes necessary to discuss other testimony that was offered.

Lanigan admitted that at the time he called Starkey on June 28, after all progress checks had been issued, he had denied- seeing any progress payment checks. However, the witness admitted that he had seen the April 12 check, hereafter discussed, although he did not examine it, and subsequently he admitted that J. C. Burton, estimator for Eicon during March, 1968, came to his office with the Starkey March check asking that Lanigan endorse it. He said he really didn’t remember seeing the check, but- that if Burton testified to the contrary, the witness wouldn’t deny it. Burton testified that Lanigan refused to endorse it,- but commented, “He told me that Jerry knew how to handle the check”. Lee testitfied that he discussed the matter with Lanigan, and was told by the latter that he needed $596.65 to apply to Eicon- accounts; that on March 15, a check in that amount was issued by Eicon to Gray-bar and cashed by that company. Lanigan denied knowing of this check. This payment, according- to Lee, eliminated that portion of the account that was more than ninety days old. The April progress payment check was $18,905.88, and from this amount, Graybar received a total of $7,530.31; However, Graybar was only entitled to $408.15 for supplies furnished on the Arkadelphia job during the previous 30 days. The banks argue that Graybar was only entitled to this amount, rather than $5,810.14. In other words, the argument is that $7,122.16 should have been credited forward to apply to subsequent billings rather than permitting this amount to apply to previous billings, Graybar having had the opportunity to receive that total amount in previous progress payments, but refusing it without notifying Starkey.

Concluding this point, we are of the opinion that a look at Graybar’s conduct during the seven month period of this job (along with the testimonies of Starkey and Lee), establishes that it would -be inequitable to permit Graybar to, in effect, go back and collect each successive progress payment check at the expense of First State and. First National for the reason that the forgery of Graybar’s name was not the cause of Gray-bar’s failure to receive its money from the progress payment checks; rather, the cause was the conduct of Graybar in improvidently carrying Eicon’s account. Likewise, Graybar’s judgment against Starkey cannot stand in the present amount. Starkey complied with Graybar’s request by including its name in progress payment checks. Not once in the period of December 5, 1967, to June 26, 1968, did Lanigan advise Starkey that it was not taking its money. We think this conduct operates as an estoppel, and Graybar should not be permitted to recover any amount which it had the opportunity to receive from progress payments.

In Degen v. Acme Brick Co., 228 Ark. 1054, 312 S. W. 2d, 194, a case bearing some similarity to the one at bar, we said:

“The parties recognize the fact that a materialman may estop himself from asserting the lien that would otherwise be available to him. (citing case) * * *”

“Without enumerating the familiar elements of estoppel, we think it enough to observe that the appellants’ proof satisfies every requirement. The Brick company represented to Degen that it would collect the money as the title was delivered and gave receipts indicating that this practice was being followed. Although the company’s manager had stated in effect that no credit would be extended to Bell, the unreasonable delay in the depositing of the contractor’s checks was equivalent to an extension of credit. If the checks of early September had been- presented promptly and found to be worthless, it would evidently have been the company’s duty to notify Degen, which could and should have been done long before he settled his account with Bell in October.”

This holding is in accord with the general rule stated in 57 C. J. S. Mechanics’ Liens, Section 229, p. 803, as follows:

“As a general rule a person entitled to a mechanic’s lien may be estopped to assert or enforce it in equity by any act which will render it inequitable for him to do so.”

IV

We agree with the trial court in its holding that Starkey was not entitled to stop payment on the June 26, 1968, check of $6,287.00. It will be remembered that the bank had given value for the check without knowing of any defense available to Starkey. Appellant’s argument is based on the fact that the name of Mike Matula had been forged and, says appellant, the forged signature destroyed the negotiability of the check. We have already somewhat discussed this issue under Point I.

We agree that that is generally true, but the name of Mike Matula had been placed on this check through mistake, and the record clearly reflects, in fact, almost without contradiction, that Matula was not due any money at that time from the Arkadelphia job. As stated in 11 Am. Jur. 2d, Section 321:

“The rule that indorsement of all joint payees is essential to negotiation has been held inapplicable in regard to a joint payee whose name had been mistakenly inserted or left on the paper, or to one who refused to be a payee to it and who was treated by the drawer or promisor and other parties, both in the delivery of the instrument and in its transfer or negotiation, as no party and as having no interest in it. Accordingly, it has been held that real payees can transfer the ownership of an instrument without obtaining the indorsement of a payee whose name is thus upon the paper.”

Of course the actual reason why Starkey stopped payment on the check was that he had just learned that Eicon had not been paying its material bills and that the check should not have been issued, and we agree with the position taken by the banks that - the unauthorized endorsement had nothing to do with stopping payment on the check, and appellant cannot be permitted to take advantage of the immaterial unauthorized endorsement to the detriment of the bank, which had purchased the instrument in good faith.

Summarizing, we affirm the trial courts decree as to points I, II, and IV. As to point III, our holding has been fully stated. Starkey’s judgment against First State- Bank and its judgment against First National Bank, are hereby reversed, set aside, and held for naught. However, it is difficult to ascertain from the briefs the exact amount that Graybar’s judgment against Starkey should be reduced. Certainly, it should be reduced by as much as the amount of the judgment Starkey had obtained against the banks, i. e., $6,818.41, and it would appear that this is the proper amount; however, the figures are quite confusing and it is felt that the case should be remanded to the Chancery Court for the purpose- of properly determining this amount, i. the sole question on remand accordingly is, “What amount of money did Graybar have the- opportunity to receive but did not accept- (or demand payment) from progress payment checks issued by Starkey, and bearing the name of Graybar at its request?”

Affirmed in part; reversed in part and remanded.

It is so ordered.

Brown, J., concurs.

Fogleman, J., dissents in part;

John A. Fogleman, Justice,

dissenting in part. I must dissent in part, because I feel that the decision as to the liability of First State Bank to Starkey Construction, Inc. (hereinafter referred to as- Starkey), and consequently that of First National Bank to First State Bank, is contrary to the provisions of the UCC. Although the majority recite the applicable provisions at length, along with appropriate committee comments, it seems to me that the opinion then seeks to justify bypassing the governing section by resort to decisions predating the code. I recognize that pre-existing principles af law and equity are to supplement the code, where they are not displaced by its particular provisions. Ark. -Stat. Ann. § 85-1-10S (Add. 1961). We must always, however, keep in mind that basic purposes of the code were to simplify, clarify and modernize the law governing commercial practices, and to make uniform the law among the various jurisdictions. § 85-1-102. When we resort to precode law to circumvent an effect of the code that may seem harsh at first blush, we tend to subvert its salutary purposes.

As I read the UCC, I find that the .first point of appellant Starkey has merit. Under Ark. Stat. Ann. § 85-3-419(l)(c) (Add. 1961) the forged checks were converted by First State Bank. First State Bank’s liability is set out in subsection (2) of that section, i. e., “The measure of the drawee’s liability is the face amount of the instrument.” Comment 4 to § 85-3-419 provides as follows: “In the case of the drawee, however, the presumption is replaced by a rule of absolute liability.” First State Bank was not entitled to urge as a defense that the various joint payees had received the proceeds of the forged instruments; hence, Starkey should have been awarded judgment against First State Bank for $93,337.89, the sum of the face amounts of the forged instruments. First State Bank should have been awarded judgment against First National Bank in the same amount under First National’s guarantee of endorsements.

It is not controverted that there was a general assignment of Eicon’s rights under the contract by Eicon to First National. The question then arises whether First National could enforce Eicon’s rights under the contract, having been forced to assume its liability. First National could enforce Eicon’s rights under the contract and would be entitled to judgment against Starkey as to those checks which bore forged endorsements but were ratified by the payees whose endorsements were forged. The unauthorized endorse-merits were ratified by persons or companies whose names had been forged whenever these payees accepted payments due them from the proceeds of the checks. For purposes of this action, under Ark. Stat. Ann. § 85-3-404 (Add. 1961) and Comments, the endorsements would be treated as valid and the instruments enforceable. To the extent that Eicon did not perform the contract or to the extent that the- forged endorsements were not ratified, First National would not be entitled to recover since its rights as assignee are subject to the terms of the contract between Eicon and Starkey. Ark. Stat. Ann. § 85-9-318(l)(a) (Add. 1961). The effect of a recovery by Graybar or other payees against Starkey for unpaid proceeds would be to reduce any recovery by First National Bank.

Starkey actually recognizes First National Bank’s rights in this regard by stating in its brief that this bank would be entitled to whatever amount remained out of the $93,337.89, after Starkey’s payment of Eicon’s unpaid material bills, the cost of completion of the job and the claim of Graybar. They calculate this amount at $76,767.31, less any judgment in favor of Graybar.

Of course, if all of the suppliers named as payees had been paid, and there was no recoverable loss to Starkey by reason of Eicon’s default, First National would probably be entitled to the face amount of the checks, which would offset any recovery by Starkey.

I would reverse the decree on Point I.

      After the trial was over, the Cook judgment was likewise satisfied.

      Counsel for the banks give their version of the intent of Sec. 85-3-419, as follows:
      “The drafters of the Code were addressing themselves to the problem of the value to be placed on a converted instrument, in view of the fact that many instruments are worthless because of the inability of the obligor to make the instrument good even if it had not been converted. Because of the difficulty in establishing that an obligor would have been able to pay had the instrument not been lost, the Code wisely provides that the instrument is 'presumed’ to be worth its face value. Evidence may be introduced, however, to show otherwise. (Ark. Stats. § 85-1-201) In the case of conversion by a drawee (payment on an unauthorized endorsement) the measure of the drawee’s liability is stated to be the face amount of the instrument. Certainly a bank should not be able to argue that the instrument was worthless when it has charged the customer’s account the full face value of the check. Without the Code, the point would have been obvious. It was so obvious that the Uniform Negotiable Instruments Law did not even deal with the point.”

      Such a ratification does not of itself affect any rights of the person ratifying against the actual signer.

      Some of the funds which wore used by Eicon to repay First National Bank loans were monies received from other jobs. It is interesting to note that total deposits made during the period December 1, 1967, to July 1, 1968, to the Eicon account were $180,729.82, and of this amount, only $96,748.89 was deposited from Starkey funds; the balance of $83,980.93 came from other sources, $42,000 of this last amount being deposited in the account by First National Bank.

      The total judgment for Graybar against Starkey and Maryland Casualty was in the amount of $19,648.17, $11,199.51 being admittedly duo for materials furnished on the Conway job, and $8,448.56 on the Arkadelphia job.

      A similar letter was sent to Starkey by Lanigan on November 13, with reference to the Conway job.

      The reason for the payment of this particular amount is not at all clear in the record. Whether this included some materials sold subsequent to February 25, or whether the check constituted partial payment on some account other than the Arkadelphia job, is difficult of determination.

      This included $1,720.17, which Graybar credited to another Eicon job, but the court held that this amount should be credited to the Eicon Arkadelphia job.

      (Footnote mine.)
      The committee here speaks of the presumption, as to other parties, that the measure of liability is presumed to be the face amount of the instrument. It adds that as to all except the drawee evidence is admissible to show that the instrument is worth less, or is without value. The idea that this section is intended to replace existing law is clearly expressed by the committee’s designation of the pertinent subsection as new, indicating a change from the provisions of the Uniform Negotiable Instrument Law. The purpose of the drafters to put the burden of forged endorsements on the bank and to eliminate the necessity for the drawer of a check to make just such proof as required by the majority opinion seems to me to be beyond doubt.


author: Carleton Harris, Chief Justice.

text:
    Charles C. TUCKER v. STATE of Arkansas
    5510
    455 S. W. 2d 888
    Opinion delivered June 15, 1970
    [Rehearing denied August 3, 1970.]

      Laws ir Schultze, for appellant.

      Joe Purcell, Attorney General; Mike Wilson, Asst. Atty. Gen., for appellee.
   Carleton Harris, Chief Justice.

Appellant, Charles C. Tucker, was charged under four separate Informations with the crime of Grand Larceny and the charges were-consolidated for purposes of trial. The jury found Tucker guilty on all four counts and set his sentence at one and one-half years on each count. After the jury was discharged, and on waiver by the -appellant, the court entered sentence in accordance with the jury verdict, the court ordering that said sentences run consecutively for the total of six years. In due time, Tucker filed a motion for a new trial alleging several grounds, and the court conducted a hearing, at which time evidence was heard that one of the jurors had been found guilty of burglary and grand larceny in 1955, and had never been pardoned; it was contended that this fact entitled appellant to a new trial. At the conclusion of the hearing, the court overruled the motion and granted appellant sixty days in which to perfect his appeal. From the jury verdict, Tucker brings this appeal. For reversal, two points are asserted. It is first contended that-the court erred in not granting-a new trial when it was discovered-after the verdict was entered that one of the jurors was disqualified by statute from acting as a juror, in that he was a convicted felon who had not been pardoned. It is also asserted that the court erred in refusing to answer a question from the jury foreman as-to whether the sentences on the several counts charged would run concurrently or consecutively, and further, error was committed in informing the foreman of the jury that any recommendation for a suspended sentence would have to be unanimous. We proceed to discuss these contentions.

We do not agree that the court committed error in not granting a new trial on the basis of the first contention. Actually, there are several answers that could be made to this assertion under the particular facts in the case before us, though Sub-Section (e) of Ark. Stat. Ann. § 39-102 (Supp. 1969), provides that a person who has been convicted of a felony, and has not been pardoned, is disqualified to act as a grand or petit juror.

However, it is sufficient to point out that under the facts, the juror involved, John Woddard, was not a convicted felon. The record reflects that Woodard entered a plea of guilty to burglary in 1955, at which time he was thirteen or fourteen years of age, and was sentenced to the Arkansas Boys’ Industrial School, the sentence however being suspended by the circuit court. In the case of State Medical Board v. Rodgers, 190 Ark. 266, 79 S. W. 2d 83, Rodgers was convicted of a crime involving moral turpitude and was sentenced to serve three years in a federal reformatory. His license to practice medicine was suspended by the State Medical Board upon ,the premise that he had been convicted of a crime involving moral turpitude. The Pulaski Circuit Court vacated, set aside, and held for naught, the order of the board revoking the license, and from that judgment, the board appealed to this court. In upholding the circuit court, we said:

“In view of the fact that appellee has not been required to suffer the punishment prescribed in the judgment and sentence above-mentioned, the question naturally arises as to whether he has- been convicted within the meaning of § 8242, Crawford & Moses’ Digest. It is true that he pleaded guilty to a crime involving moral turpitude, and that he was sentenced to serve three years in the reformatory, but the court before whom that case was tried saw proper to set aside the sentence and put him on probation for a period of five years. On November- 21, 1933, the execution of the sentence, imposed was suspended until March 1, 1934, and on the latter date it was-further suspended for five years; therefore at the time appellant held its meeting and revoked appellee’s license, January 10, 1934,- the sentence theretofore imposed had been suspended and something still remained to be- done before he could be said to have been convicted within the meaning of the statute.” [citing case]

We said that notwithstanding a conviction, either by the verdict of a jury or a plea of guilty, “the accused does not become a convict until there has been a judgment and sentence by the court.” We then stated:

“We think this case very much in point and decisive of the question here presented. There has been no conviction within the meaning of the statute. There has been no final judgment entered because the sentence has been suspended, and the appellee has not been required to surrender himself in execution of such judgment.”

It follows that since Woodard had not been convicted of a felony, appellant’s contention is without merit, and there is no need to further extend the discussion.

The record reflects that the jury, after retiring to consider a verdict, returned to the courtroom where the foreman asked the court whether the sentence reached by the jury would be concurrent or consecutive. They were informed, “That is in the province of the Court”. Subsequently, the jury again returned, the foreman stating that a decision had been unanimously reached concerning the guilt or innocence of the defendant, but he added:

“However, we are unable to come to a consensus on the number of years to be recommended or whether to recommend a suspended sentence or not. Do we have a consensus on those two questions?”

The court advised that there would have to be unanimity also on the recommendation for a suspended sentence. Thereafter, the jury again returned, finding Tucker guilty on all four counts, the foreman stating that they were unable to arrive at a unanimous decision concerning the penalty to be given, and adding that they were also unable to reach a unanimous decision with reference to recommending a suspended sentence. The jury was -then told that the court has the authority under the law to assess the sentence itself, provided that a defendant has been found guilty, and the jury “leaves it” to the court to assess the punishment; “Then you may retire and bring such a finding back into court and your orders will be carried out”. After retiring, the jury returned and the verdicts were read. Counsel for appellant then requested permission to poll the jury on two points, viz, whether the verdict should run concurrently or consecutively, and further, how many members of the jury favored a suspension of the sentences given. The court refused to grant permission and counsel duly noted objections and exceptions to the Court’s ruling. It is now contended that the court erred in rendering this ruling, and as previously mentioned, it is asserted that error was committed when the court refused to say whether sentences would run concurrently or consecutively; also, appellant suggests error on account of the court’s telling the jury a recommendation for a suspended sentence would have to be unanimous.

We do not agree with these contentions. As far ns the question of successive sentences is concerned, we have held that the matter of determining whether the sentences given a- defendant shall run concurrently or consecutively, is within the discretion of the trial court. Hayes v. State, 169 Ark. 883 S. W. 36, this case also cites the statute, passed in - 1923, presently Ark. Stat. Ann. 43-2312 (1964 Repl.), which clearly provides that it is the business of the court to determine if a sentence shall run concurrently or consecutively. In Higgins v. State, 235 Ark. 153, 357 S. W. 2d 400, we said,

“The jury, in fixing the punishment, found that the sentences should be served consecutively. We take this occasion to point out that this finding can only be considered advisory, much in the same nature as when a jury recommends a suspended sentence, inasmuch as the question of whether sentences shall be served concurrently or consecutively lies solely within the province of the court.”

Of course, there can be no error in failing to-convey this information to the jury since they were without power to act.

The second part of appellant’s contention is likewise without merit for the same reason, vizT that the granting of a suspended sentence 4s entirely within the discretion of the trial court. Ark. Stat.- Ann. 43-2324 (1964 Repl.). Our decisions support the wording of the statute. See Higgins v. State, Supra, specifically the section just quoted. Of course, if the recommendation by a jury of a suspended sentence is only advisory, even where it is the recommendation of the full jury, there can be-no error in refusing a poll of the jury on -this point where admittedly, the members of the jury were divided on the question.

Finding no reversible error, the judgment is affirmed.

It is so ordered.

      The court had already, on September 15,1969, entered its judgment, and had ordered Tucker committed before the motion for a new trial was heard; however, the court set aside this judgment of conviction and order for commitment.

      Actually, the court simply reinstated the judgment which had previously been rendered on September 15, 1969.


author: George Rose Smith, Justice.

text:
    John Ashley WASHAM, A Minor v. FIRST NATIONAL BANK, Administrator et al
    5-5288
    455 S. W. 2d 96
    Opinion delivered June 15, 1970

      Pickens, Pickens ir Boyce, for appellant.

      Hodges, Hodges ir Hodges, for appellees.
   George Rose Smith, Justice.

This case, like many earlier ones, involves a joint bank account that was not set up either in compliance with the statute or in a form precisely similar to any account that we have considered in a previous decision. Here the litigation is between the estate of Don-Washam, Jr., deceased, and his son, the appellant, now eleven years old. This appeal is from a probate court judgment- holding that the plaintiff-appellee First National Bank, as administrator of the elder Washam’s estate, is entitled to the entire account.

The facts are comparatively simple and wholly undisputed. On June 10, 1968, Don Washam, Jr., opened the savings account in question by-depositing $29,524.40 in the First National Bank of Newport. On the signature card the title of the-account was listed as “John A. Washam, a minor” (who was then nine years of age). However, the only authorized signature entered on the card was that of Don Washam, Jr., after which the bank typed the word “father.”

Ten months later, on April 9, 1969, Don, Jr., had the bank add his name to the title of the account, which thereafter appeared as “John A. Washam, a minor or Don Washam, Jr.,” Both before and after that change Don, Jr., made withdrawals freely — some by signing withdrawal slips and some by telephoning -instructions to the bank. Usually the withdrawal was simply transferred to Washam’s personal checking account, but in one instance he had $4,700 transferred to an account designated as “Buddy’s Used Cars,” explaining to the bank that “we are getting into the used car business.” At Washam’s death on July 18, 1969, the amount remaining in the account was $17,412.76. The bank then allowed the minor’s guardian to withdraw the whole account, but in this litigation the probate court awarded it to Washam’s estate.

We agree with the trial court’s decision. At the outset counsel for the appellant candidly concede that no right of survivorship was created pursuant to the controlling statute, because Washam failed to “designate in writing” that the account should be so held. Ark. Stat. Ann. § 67-552 (Repl. 1966), as construed in Cook v. Bevill, 246 Ark. 440 S. W. 2d 570. Nor did Washam attempt to designate in writing a tenancy in common, as contemplated by subsection (c) of that statute.

Absent survivorship, counsel perforce argue that their youthful client acquired title to the account during his father’s lifetime. One suggestion is that the older Washam completed a gift to his son either when he opened the account originally or when he added his own name to the title of the account. The fatal defect in that theory is that the father retained complete control over the account from- its inception until his own death. Hence there was lacking the essential requirement that a valid gift be unconditionally delivered to the donee. Umberger v. Westmoreland, 218 Ark. 632, 238 S. W. 2d 495 (1951); Bennett v. Miles, 212 Ark. 273, 205 S. W. 2d 451- (1947). In fact, we have rejected the notion of a gift where the depositor reserved the right to draw against the account and freely exercised that right. Peters v. Goodwin, 190 Ark. 24, 76 S. W. 2d 980 (1934).

Alternatively, it is suggested that Washam’s original deposit in his son’s name created a tentative trust under the doctrine announced in Matter of Totten, 179 N. Y. 112, 71 N. E. 748, 70 L. R. A. 711 (1904). That doctrine, however, recognizes the creation of a trust only as a result of a savings deposit made by one person in his name as trustee for another. The transaction in the case at bar did not meet the minimum requirements for such a trust. Restatement, Trusts (2d), § 58 (1959).

Affirmed.


text:
    Ralph STEWART v. STATE of Arkansas
    5514
    455 S. W. 2d 100
    Opinion delivered June 15, 1970

      Bethell, Stocks, Callaway & King, for appellant.

      Joe Purcell, Attorney General; Mike Wilson, Asst. Atty. Gen., for appellee.
   George Rose Smith, Justice.

The appellant, age 45, was charged with the larceny of a used Volkswagen automobile. He was found guilty and sentenced to four years imprisonment. The only point raised in his motion for a new trial is the sufficiency of the evidence to support the conviction. The argument is that the proof established embezzlement rather than larceny.

On February 19, 1969, Stewart went to a Fort Smith automobile dealer’s place of business and inquired about buying the car in question. A salesman first accompanied Stewart upon a trial ride in the vehicle. Then the salesman, satisfied with Stewart’s driving ability, allowed him to take the car out by himself. Stewart stated that he was just going to try the car out and would be back shortly.

Stewart actually drove off in the car and kept it for almost six weeks. He was apprehended with the vehicle in his possession at Clarksville on April 1. At that time Stewart was living in Russellville and working there. He testified that he intended to go back to Fort Smith and buy the car when he had raised enough money to do so.

Upon the facts as we have outlined them the jury could properly have found what is usually called larceny by trick, which the judge explained in his instructions to the jury. As we pointed out in Hall v. State, 161 Ark. 453, 257 S. W. 61 (1923), if one hires a horse with the present intention of stealing it, he is guilty of larceny. In the case at bar the jury could certainly have found that from the outset Stewart had the requisite intent to commit larceny.

Stewart’s court-appointed attorneys also argue two contentions not preserved in the motion for a new trial and therefore not available on appeal. Counsel insist in their reply brief that the requirement that each point be carried forward in the motion for a new trial is highly technical and should not be insisted upon, especially with respect to attorneys who customarily handle civil cases only.

We find no merit in that contention. We are not at liberty to disregard our statutes, which for more than a hundred years have required motions for new trial in criminal cases. Ark. Stat. Ann., Title 43, Ch. 22 (Repl. 1964). In fact, a - similar requirement was applicable to civil cases at law until the passage of Act 555 of 1953, only seventeen years ago. Our reports contain hundreds of cases, both civil and criminal, in which a contention has been rejected on appeal- because it was not included in the motion for -a new trial. In the case at hand counsel certainly knew that such a motion was required, for the-y promptly filed one on the very day that the verdict was returned. We are not prepared to say that counsel who appreciate the necessity for filing a motion should nevertheless be excused- for not knowing, or for not attempting to find out, what the motion should contain.

Affirmed.


author: Lyle Brown, Justice.

text:
    NORTHWESTERN NATIONAL CASUALTY CO. v. Arthur THOMAS
    5-5258
    455 S. W. 2d 87
    Opinion delivered June 15, 1970

      Williams & Gardner, for appellant.

      Mobley, Bullock ir Harris, for appellee.
   Lyle Brown, Justice.

Appellee E. Arthur Thomas sustained damages in a vehicular collision. He obtained judgment against his insurer, appellant Northwestern National Casualty Company, for his medical bills and car repairs. It is appellant’s contention that it had validly cancelled the policy prior to the accident. Whether or not the attempted cancellation was effective is the question on appeal.

Appellee was a distributor for the Arkansas Gazette in the Russellville area and owned two automobiles, a Ford and an Opel. He purchased a Northwestern passenger automobile policy through a local agency. The policy was for six months beginning September 23, 1968. It included comprehensive and collision coverage on the Opel but not on the Ford. Appellee utilized the company’s budget plan of payment whereby he paid one-half the premium with the issuance of the policy and agreed that he could be billed for the balance sixty days thereafter. On November 5 of the same year, appellee ordered a rider for his policy in order to add comprehensive and collision coverage on the Ford; he had that protection with another company but that policy expired. The additional premium was $19.00, which appellee agreed to pay when the endorsement was delivered.

Payment for the endorsement was not timely made (allegedly due to an oversight of appellee’s wife), whereupon appellant purportedly sent notice to appellee by certified mail advising him that unless it received the $19.00 fee by 12:01 a.m. on December 6, his policy would thereafter be ineffective. Appellee testified he did not receive the notice; be that as it may, he did not remit within the time fixed in the notice. On that same day, December 6, at approximately 5:00 p.m., appellee was involved in an accident which gave rise to the injuries and damages. He was driving his Opel station wagon. Appellant denied liability, contending the policy had lapsed for appellee’s failure to remit the premium for the Ford endorsement. The additional installment payment on the original policy was not yet due and played no part in the cancellation. In fact the initial payment was sufficient to keep the original policy in force for at least three months.

Appellant advances three arguments to support its contention that the cancellation was in all respects valid; however, it is our view that the notice of intent to cancel did not comply with the cancellation clause and therefore the policy was in effect at the time of the accident. Our view in that respect requires that we discuss only the one point of appellant namely, that cancellation occurred at 12:01 a.m. on December 6.

The determinative provision in the cancellation clause in the policy reads: “This policy may be can-celled by the company by mailing to the insured * * * written notice stating when not less than ten days thereafter such cancellation shall be effective.’’ When we interpret that clause, particularly in a light most favorable to the insured, the sensible conclusion is that he had ten days after the mailing of the notice within which to pay for the endorsement of November 5. In other words his policy remained in force for an additional ten calendar days. The notice is said to have been mailed on November 26. That date is not to be counted in computing the ten-day grace period allowed by the contract. Couch on Insurance 2d § 67-162 states the rule thusly:

Where the cancellation notice is not to be effective as of a specified date but as of a period of time after the notice, questions arise as to the manner of calculating or computing the beginning and end of the notice period, and it has been held that the first day should be excluded and the last day included in computing time under a notice of cancellation. And this means midnight of the last day, where the policy reads ‘five days from the receipt of notice,’ even though the policy itself runs from noon to noon. So, it is held that the cancellation will take effect in 5 days after receipt of the notice, although noon of the fourth is specified as the expiration of the time.

The same rule is found in 157 A. L. K., page 1156, and in Massachusetts Bonding & Ins. Co. v. Home Life & Accident Co., 119 Ark. 102, 178 S. W. 514 (1915), we computed the time by excluding the first day and including the last day. Excluding November 26 and counting ten full days following, the notice could not affect appellee’s policy before midnight, December 6.

There was another proviso in the cancellation clause which provided that “[T]he effective date and hour of cancellation stated in the notice shall become the end of the policy period.” Pursuant to that provision the insurer inserted in the notice that the policy would be considered cancelled as of 12:01 on December 6. That insertion would reduce the grace period to nine days and to that extent is of course in conflict with the ten-day recited provision. Appellant cannot use the “effective date and hour” provision to reduce the ten-day grace period.

We allow an additional attorney’s fee of $250.

Affirmed.


text:
    Charles Eugene HENSON v. STATE of Arkansas
    5516
    5516
    455 S. W. 2d 101
    Opinion delivered June 15

      Thomas Pitts, for appellant.

      Joe Purcell, Attorney General; Milton Lueken, Asst. Atty. Gen., for appellee.
   Lyle Brown, Justice.

Appellant Charles Eugene Henson was convicted of burglary and grand larceny. He was also found guilty of violation of the habitual criminal statute. The jury fixed his punishment at six years for burglary and at four years for grand larceny. On appeal it is urged (1) that Instruction No. 10 was prejudicial; (2) that the State’s evidence of a previous conviction was insufficient; and (3) that Henson was entitled to a directed verdict for insufficiency of the evidence.

Because of the attack on the sufficiency of the evidence we shall summarize somewhat in detail the State’s proof. (The defense offered no testimony.) On the night of September 3, 1969, Ike Hall parked and locked his car and walked two blocks to the sports arena in Fort Smith to attend the night’s program of wrestling. Russell Howell, a funeral home employee, left the wrestling matches about nine o’clock and walked near the parking lot. At that point he observed three white boys acting suspiciously. When he approached and asked them to stop they ran away. At the trial he was unable to identify either them or the object one of them was carrying, but said he did observe that the object resembled a tape recorder.

Mr. Howell returned to the arena and reported the incident. An announcement was made to the audience and that was how the prosecuting witness learned his car has been burglarized. Officer John Etter was on patrol and observed a car driving in a reckless manner. That was about nine-thirty o’clock. The officer caused the vehicle to be stopped. While checking the driver’s license Officer Elkins observed appellant lean over and try to cover a stereo tape player located on the floor of the back seat. The officer contacted headquarters and ascertained that such a player had been reported stolen, whereupon the boys were taken to the police station. The prosecuting witness had already arrived at the station and he witnessed the officer bring the three young men into the station and also identified the tape player as being his property. (Mr. Hall had recorded the model and serial number of his player.) At the trial Officer Elkins identified Charles Eugene Henson, David Selman, and Carl Ray Elkins, as being the persons he apprehended in possession of Howell’s tape recorder. Selman and Elkins, having entered pleas of guilty, testified for the State and implicated appellant.

In attacking the sufficiency of the evidence to support the verdict, appellant says that absent the testimony of the accomplices there is nothing more than a suspicion that appellant was guilty. In felony cases a defendant cannot be convicted upon the testimony of an accomplice "unless corroborated by other evidence tending to connect the defendant with the commission of the offense.” Ark. Stat. Ann. § 43-2116 (Repl. 1964); Froman v. State, 232 Ark. 697, 339 S. W. 2d 601 (1960). When we eliminate the testimony of the accomplices in order to test the remainder, of the evidence, we find no difficulty in concluding that the other evidence established the commission of the crime and standing alone made a jury question of this appellant’s connection therewith.

We now consider Instruction No. 10, which appellant urges was prejudicial. That instruction first advised the jury of the forms of verdicts, both as to a finding of guilty or not guilty; of course the forms contained no provisions for punishment because that phase of the case would be considered separately in the event a verdict of guilty was returned. Then the instruction concluded with this sentence: "When you return either of those verdicts into court, then you may or may not have another verdict to consider.” Appellant complains that the quoted language "told the jury that the defendant had heretofore been convicted of a previous, offense.” That interpretation is clearly without any reasonable basis. Apparently the court was trying to explain to the jury, in an impartial manner, the absence of any provision in the form of verdict for the fixing of punishment, which only recently had been changed. Ark. Stat. Ann. § 43-2330.1 (Supp. 1969). Of course the explanation was really not necessary and was of dubious value; however, we in nowise interpret it as telling the jury that appellant had been previously convicted. Additionally there was no objection by appellant’s trial attorney to the wording of the instruction.

Appellant’s final point concerns his conviction as an habitual criminal. The State introduced a certified copy of a judgment and sentence from the circuit court of Pope County, Arkansas. It was styled “State of Arkansas vs. Charles Haggard a/k/a Charles Henson.” The text of the judgment carried the same designation. Appellant contends that the recited evidence of prior conviction was insufficient to show that he is one and the same person as the defendant who was convicted in Pope County.

It is provided by statute that the certified copy of a record of former conviction and judgment against the person indicted may be. introduced in a subsequent trial of that party; and that it shall be prima facie evidence of a prior conviction and judgment of imprisonment. Ark. Stat. Ann. § 43-2330 (Repl. 1964). It is true that Pope County records showed that the defendant there was known by two names; however, that fact did not destroy the efficacy of the document for the jury’s consideration. It recited that a person known as Charles Henson had lately been convicted of a felony in a neighboring county. We have previously pointed out that “there is nothing to prevent a defendant from tendering proof to the effect that he is not the person referred to in the record.” Higgins v. State, 235 Ark. 153, 357 S. W. 2d 499 (1962). As a practical matter appellant could have easily rebutted the evidence, if it was . incorrect, without personally taking the witness stand. We are unable to say that the jury’s finding of a previous conviction is not supported by substantial evidence.

Affirmed.