author:
Phillip Carroll, Special Chief Justice.
      William J. Wynne, Special Justice,

text:
    Marcus D. FAVER, Albert FAVER And Jack FAVER, Co-Executors of The Estate of Marcus C. FAVER and Individually v. Pearl FAVER
    78-156
    583 S.W. 2d 44
    Opinion delivered July 2, 1979
    (In Banc)

      Drake, Bynum & Dennis, Ltd., and Bridges, Toung, Matthews & Davis, for appellants.

      Coleman, Gantt, Ramsay & Cox, for appellee.
   Phillip Carroll, Special Chief Justice.

In September, 1967, Marcus D. Faver, 69, a widower and father of three adult sons, proposed marriage to Pearl Hughes, 66, a widow and mother of three adult daughters. Mrs. Hughes, having completed the 9th grade in school, had married Bedy Hughes, a farmer, in 1919 and they had lived in the England, Arkansas area for 46 years before Mr. Hughes’ death in 1965. Mr. Faver’s wife, Louise, had died in February, 1967. Pearl and Louise had been schoolmates as girls, and after their marriages, the two couples maintained some social contact through the years.

Marcus Faver’s courtship of Pearl Hughes was short. He was a farmer, and his proposal of marriage was conditioned upon the signing of an agreement that his land would not be taken away from his boys. Initially, Mrs. Hughes refused, but she testified that Mr. Faver assured her that she would be provided with money and she agreed to sign an agreement. Furthermore, she testified that she was motivated to sign by her understanding that Mr. Faver’s son, Albert, who had built a new home, had said he would move if his father’s new wife claimed an interest in the land. Mrs. Hughes’ own estate at that time consisted of 106 acres of farmland, a savings account of about $1,000, and another account containing a moderate sum. She had executed a Will following the death of Mr. Hughes leaving all of her property to her three daughters. She disclaimed any knowledge of laws relating to dower, curtesy, homestead, or statutory allowances for widows.

On October 18, 1967, Marcus Faver took his fiancee to the office of his lawyer, Ralph Ray, for the purpose of signing an antenuptial agreement drafted by Ray at the request of Mr. Faver. The sole testimony concerning the events that transpired in Ray’s office came from the appellee, Pearl Faver, who said that only the three of them were present and that no explanation was given concerning the nature, extent, or value of Mr. Faver’s property nor of the nature or extent of the legal rights which she was surrendering. She said she did not read the agreement nor was it read or explained to her, and that the paper was folded on Mr. Ray’s desk as she signed it so that only the signature line was exposed to view. After the signing, Mr. Ray folded it and gave it to Mr. Faver. Mrs. Faver explained her conduct by stating that she trusted her fiance, and she said that she was unaware that the agreement provided that she was to receive the sum of $2,500 in consideration of her waiver of dower, homestead, statutory allowances, or other rights in her future husband’s estate. A party’s testimony is not treated as undisputed, Raiborn v. Raiborn, 254 Ark. 711, 495 S.W. 2d 858 (1973). This does not mean, however, that the Chancellor, who had the advantage of observing Mrs. Faver’s demeanor, was obligated to disbelieve her testimony.

The antenuptial agreement also provided that Mr. Faver waived all claims including curtesy in his wife’s estate, in the absence of this provision, it would only have been necessary for Mrs. Faver to execute a new will following her marriage in order to divest her husband of his curtesy. Ark. Stat. Ann. § 60-501. (See compiler’s notes showing the language of this statute prior to the 1970 amendment.) Mrs. Faver contended that a day or so later her fiance gave her a $2,500 check which was dated October 18, 1967. This check was received in evidence and marks on it show that it cleared the bank on October 26.

It was stipulated that on the date of execution of the antenuptial agreement Marcus Faver was the owner of a one-half interest in 80 acres in Jefferson County, a two-thirds interest in another 52 acres, and that he owned outright another 700 acres of which 600 acres were used for farming. The farmland had an estimated value of $375 per acre. It was also stipulated that the 106 acres then owned by Mrs. Hughes were worth approximately $375 per acre. The stipulation was silent as to the ownership of personal property by either party.

The Chancellor excluded as a violation of the parol evidence rule Mrs. Faver’s testimony that the tender of the $2,500 was accompanied by Mr. Faver’s oral assertion that he was giving the money to her and that she should take it and use it as she pleased, and that when the crop was gathered, more money would be given. The ruling of the court on this evidentiary issue is assigned as error on the cross-appeal. Appellee argues that the statement was admissible because it was made subsequent to the execution of the contract. It is true that the parol evidence rule creates an impediment only to the introduction of prior or contemporaneous oral agreements or prior written agreements offered to contradict or vary a written agreement. Scope and Operation of the Parol Evidence Rule in Arkansas, 4 Arkansas Law Review 168 (1950); Restatement, Contracts §237 (1934); American Southern Trust Co. v. McKee, 173 Ark. 147, 293 S.W. 2d 50 (1927). We do not understand that the statement purportedly made by Mr. Faver when he delivered the $2,500 check to his fiancee was offered to contradict or vary the prior written agreement. If it had been, then it is at least arguable that in the context of the particular circumstances, the delivery of the check was effectively contemporaneous even though a day or two late in time. We see the proffered evidence as being relevant to a different issue. If Mrs. Faver’s testimony concerning the events that occurred in Mr. Ray’s office is to be believed, then the statement made by Mr. Faver upon delivery of the check was admissible in further support of the designed concealment that was presumed to exist when credible evidence was introduced to show a substantial disproportion between the $2,500 and the size of his estate as well as a lack of disclosure. The evidence was admissible to throw light on the circumstances of the making of the contract. The statement attributed to Mr. Faver could be construed as an attempt on his part to avoid any further question with regard to the written contract that his fincee had signed but had not read.

Mr. Faver and Mrs. Hughes were married on November 4, 1967. Sometime later, Mrs. Faver sold 51 acres of her farmland and bought a $41,500 house in England into which she and her husband moved, but the property was deeded to her alone. Mr. Faver gave her $1,500 to get settled in the new house. She testified that she considered it a loan, but when she offered to pay it back, he refused, suggesting that it was equal to the amount he had just spent to buy the boys a new disc. At other times, Mr. Faver gave his wife $3,000 and $4,-100. Mrs. Faver said, “I just figured Mr. Faver was giving it to me. ” Mr. Faver turned over to his wife his social security checks, which she deposited along with her own in a joint bank account and she would give him money whenever he asked for it. Mrs. Faver developed a serious medical problem for which she sought treatment in California, and Mr. Faver would send her $100 per month while she was there. Mrs. Faver said she purchased clothes and gifts for her husband out of her own money.

Four or five years after their marriage, Mrs. Faver read the antenuptial agreement aloud to Mr. Faver and she testified that he commented that he did not tell Ralph Ray to fix those papers in that condition and “. . . that wasn’t the way he wanted them drawn up.” The evidence does not suggest that on this occasion he disclosed the extent of his estate or the amount she had surrendered in return for the $2,-500 she had received.

Mrs. Faver testified that until a divorce suit commenced in 1977, she never learned the amount of property that was owned by her husband. She acknowledged that she knew when she was contemplating the marriage that Mr. Faver was a man of some means — that he owned at least a part interest in more than 40 acres. She said she never quizzed him except that on one later occasion, she asked how many acres he owned with Miss Sadie (his brother’s widow) at Swan Lake, and he said he didn’t know and that he “would have to figure.” According to Mrs. Faver, at different times during their marriage, her husband told her that she would be taken care of — that he wanted the boys to have the land to farm and that Mrs. Faver would receive her part in cash money. On the other hand, he told her he did not have a will because wills were made to be broken.

On February 23, 1977, approximately ten years after their marriage, Mr. Faver executed a will leaving his entire estate to be divided equally between his three sons. In the late spring of 1977, Mr. and Mrs. Faver became estranged and they separated on May 26, 1977. On June 8, 1977, Marcus Faver filed suit for divorce. Pearl Faver answered and counterclaimed. Mr. Faver died unexpectedly on December 7, 1977 at the age of 79 before any action had been taken in the divorce proceeding. Mrs. Faver then brought the action from which this appeal lies seeking cancellation of the antenuptial agreement and an award to her of her statutory rights in the property of her deceased husband.

Ralph Ray, though living in England at the time of the trial, was neither deposed nor called as a witness by either party. When the Chancellor proposed that Mr. Ray be called as a witness of the court pursuant to Rule 614, Uniform Rules of Evidence, the appellants made no objection and stated that any attorney-client privilege was waived. Pearl Faver’s attorney, on the other hand, objected, stating that the court should not try to defend the lawsuit but should leave it up to the defendants to call witnesses to prove that the antenuptial agreement was validly entered into. He preferred to take safe advantage of appellant’s failure to call Mr. Ray and argued that an inference unfavorable to appellants arose when the attorney who was within the subpoena power of the court and who was employed to prepare the agreement was not called to testify in its support. Cf. Canal Ins. Co. v. Hall, 259 Ark. 797, 536 S.W. 2d 702 (1976); Phillips Const. Co. v. Williams, 254 Ark. 824, 496 S.W. 2d 417 (1973); Ark. State Highway Comm. v. Phillips, 252 Ark. 206, 478 S.W. 2d 27 (1972); Reliable Life Ins. Co. v. Elby, 247 Ark. 514, 446 S.W. 2d 215 (1965). The Chancellor then commented that he wanted to get the truth, and he instructed the bailiff to phone Mr. Ray at England, a driving distance of only 45 minutes from the Jefferson County Courthouse. When it was reported that Mr. Ray could not be reached, no further effort was made to produce him nor did either party ask for a continuance or other remedy. In McCormick’s Handbook on Evidence, 2d Ed. (1972) §272, caution is suggested in allowing the inference. Among other things, it is there stated that conjecture or ambiguity of inference is often present, and the availability of modern discovery procedures serves to diminish both the justification and need for the inference. Here there is no compulsion to decide whether or not an inference adverse to appellants arose upon their failure to call Mr. Ray. Where the provision in an antenuptial agreement is disproportionate to the means of the intended husband, a presumption of designed concealment is raised, which throws the burden upon those claiming in his right to prove that there was full knowledge on the part of the intended wife of all that materially affected the contract. Davis v. Davis, 196 Ark. 57, 116 S.W. 2d 607 (1938); Burnes v. Burnes, 203 Ark. 334, 157 S.W. 2d 24 (1941); Wylie v. Wylie, 249 Ark. 316, 459 S.W. 2d 127 (1970); Arnold v. Arnold, 261 Ark. 734, 553 S.W. 2d 251 (1977). This presumption needed no adverse inference to support it where there was no preponderating proof that Mrs. Faver knew the nature and extent of her husband’s property. In Arnold v. Arnold, supra, it was noted that the attorney who prepared the two drafts of the antenuptial agreement at the request of Floyd Arnold and with whom both parties consulted was not called as a witness even as to the conferences. There the court pointed out that the presumption of designed concealment must be overcome by a preponderance of the evidence. See generally Rule 301 (a) Uniform Rules of Evidence, providing that a presumption imposes on the party against whom it is directed the burden of proving that the nonexistence of the presumed fact is more probable than its existence. The disproportion between a widow’s dower in the land owed by Mr. Faver in 1967 and the sum of $2,500 is apparent. The stipulation covered only Mr. Faver’s landholdings and no effort was made to prove the extent of his personal property. He must have possessed some personal assets because he made substantial cash gifts to Mrs. Faver during their marriage. The burden of proof was upon the appellants to prove by a preponderance of the evidence that Mrs. Faver had full knowledge of all that materially affected the contract.

The only witnesses produced by appellants were Sadie Faver, a sister-in-law to Marcus Faver; Kay Faver, a daughter-in-law of Marcus Faver; and Albert Faver, the middle son of Marcus Faver and co-executor of his estate. Sadie Faver said that after the death of her husband, E. C. Faver in 1961, she discussed with Pearl Hughes how E. C. Faver had disposed of his property. Marcus Faver had inherited 135 acres from E. C. Faver’s estate. She had no knowledge of the value of Marcus Fayer’s estate nor the extent of his landholdings on October 18, 1967. She said that Marcus Faver wasn’t noted for telling his business. She acknowledged that both Pearl and Marcus Faver were known to her to be truthful persons. Kay Faver stated that within a month after the marriage of Marcus and Pearl Faver, Pearl had stated that she wanted nothing that Louise [Faver] had saved and worked for during their life and that her own estate was for her children and that is what the marriage agreement was for. Kay Faver knew nothing about the number of acres owned by Marcus Faver or the value of his estate. She had been present when Marcus Faver had discussed the marriage agreement with his sons, but she did not recall that Pearl Faver was present. Albert Faver denied that he had ever made a statement to the effect that he would move off of the property if his father did not get a marriage agreement with Pearl Hughes. He should know, so there was apparently no detrimental reliance on his or his father’s part on this account although Pearl had understood that he made the threat.

Appellants contended that Pearl Faver was estopped to deny the validity of the antenuptial agreement because she had accepted $11,100 from Mr. Faver following execution of the agreement and that she had in addition drawn $990 from the joint bank account of the parties after her separation from her. husband. We find nothing in the record to suggest that this money was accepted by her as her share of the estate. The Chancellor found that the original payment of $2,500 and the three subsequent payments totalling $8,600 were not gifts but that all of these sums were given in consideration for signing of the antenuptial agreement as amended by subsequent oral modification, in other words, the Chancellor found that the written agreement was amended by Marcus Paver’s action in making subsequent gifts to his wife so that when the agreement was voided, the total sum of $11,100 should be returned to the estate to place the parties in the same condition they were in before the contract was signed. There is no evidence to suggest that the gifts of $8,600 made subsequent to the marriage were in fulfillment of an amendment to the written contract and therefore that portion of the Chancellor’s Order which required the return of this sum to the estate is reversed. On the other hand, the $2,500 given to Mrs. Faver soon after the agreement was signed should be credited to her share of her husband’s estate, since the agreement is invalid. The Chancellor made no order concerning the sum of approximately $990 withdrawn by Pearl Faver from the joint bank account after their separation but left this matter for appropriate adjudication in the Probate Court proceeding. No contention is made that this ruling was erroneous.

In support of their estoppel argument, appellants cite Comstock v. Comstock, 146 Ark. 266, 225 S.W. 621 (1920). There the parties entered into an antenuptial agreement wherein the wife agreed to take a child’s interest in lieu of dower since the husband had six children by a prior marriage. After the parties had lived together for about five years, the husband paid $2,000 to his wife in settlement of the antenuptial contract. Later, the wife refused to release her dower interest in certain real estate and an action was filed against her to confirm the antenuptial contract and the settlement. The testimony was conflicting, but the court held that it was convinced from the evidence that the antenuptial agreement was a just and reasonable one. The $2,000 that was paid to the wife was in lieu of the provisions made for her in the antenuptial agreement. No charge of fraud was made. Since the contract was fair and reasonable, it was upheld and since the wife had accepted the $2,000 as her share of her husband’s estate, she was held to be estopped from claiming that the agreement by which this settlement was consummated was invalid. On the other hand, Mrs. Faver should not be estopped merely because she accepted $2,500 particularly since she said she was promised her share in cash and the appellants failed to produce a preponderance of the evidence to overcome the presumption of designed concealment.

Appellants contend that appellee could reasonably have acquired knowledge concerning the extent of her husband’s estate, citing Hughes v. Hughes, 251 Ark. 63, 471 S.W. 2d 355 (1971). There, Ethel H. Hughes, an experienced real estate broker who was familiar with most of the property of Judge Hughes, her fiance, examined the antenuptial agreement about two weeks before she signed it. She admitted that she had an opportunity to take it to one of the several attorneys with whom she had previously consulted on real estate matters on at least half a dozen occasions. The agreement was upheld in a subsequent divorce proceeding where no contention was made that Judge Hughes had set a value on his properties which was less than actual, and there was no evidence of designed concealment nor of fraud in any respect. The opinion states that Mrs. Hughes could reasonably have had, or acquired, a knowledge of the value of the properties before the agreement was executed, so that a mere disproportion between Judge Hughes’ means and the provisions made for his wife was insufficient to void the agreement. The circumstances in Hughes do not compare with the events that transpired in Mr. Ray’s office as described by Mrs. Faver, nor with the promise of Mr. Faver that his boys would get his land but his widow would get her share of his estate in cash. Even if Mrs. Faver had been given an opportunity to search out Mr. Faver’s real estate holdings, it would be difficult, to say the least, for her to ferret out the extent of his personal property estate. She was not required to do so. All that was required to make the antenuptial agreement final and binding was for Mr. Faver to employ the frankness and candor that married people have the right to expect of one another and which usually leads to a successful marriage. Senior citizen though he was, he assumed the obligation to love, honor, and support his bride, and to honor her dower rights until she voluntarily surrendered them in a knowing way. On the other hand, Mrs. Faver was free to divest her husband of curtesy in her estate at any time after their marriage.

Pearl Faver is entitled to have all rights in the estate of her deceased husband, Marcus C. Faver, afforded to widows under the law, diminished oply by the sum of $2,500, plus interest thereon at 6% from October 18, 1967 to December 7, 1977 (the date of Mr. Faver’s death) amounting to $1,520.54.

Harris, C.J., and Fogleman and Holt, JJ., not participating.

Special Justice Thomas B. Burke joins in the majority opinion.

Special Justice William J. Wynne and Byrd and Hickman, JJ., dissent.

William J. Wynne, Special Justice,

dissenting. My dissent is based on the fact that appellee by her own testimony clearly understood that the lands owned by Marcus D. Faver were to go to his three sons upon his death and that the agreement which she signed some seventeen days prior to her marriage to him was for that purpose. She further testified Mr. Faver told her that unless she signed such agreement they could not get married.

The principle that antenuptial agreements must be freely entered into, must not be unjust or inequitable and must not be tainted with fraud has been announced in many prior decisions of this Court. Wylie v. Wylie, 249 Ark. 316, 459 S.W. 2d 127 (1970); Hughes v. Hughes, 251 Ark. 63, 471 S.W. 2d 355 (1971). Here the appellee testified that Marcus Faver did not force her to do anything so that the contract between the parties would appear to have been freely entered. Neither is any contention made that such contract be tainted with fraud. If the same is to fail, then it must be struck down as being unjust or inequitable based upon the presumption of designed concealment arising solely because the provision for the intended wife is disproportionate to the means of the intended husband.

It would appear that the marriage between these parties resulted primarily from their desire for compansionship. He was 69 and she was 66. The prior marriage of each party had been terminated by the death of their previous spouse. Similarly, each had three children as a result of their earlier marriage and both naturally thought of the interests of their children when remarriage was considered.

It is difficult to understand how Marcus Faver could have been any more straight forward or candid with appellee. She testified he made it clear that unless she signed the agreement so that his boys could keep the lands, they could not get married. Appellee therefore clearly understood prior to the time she signed the agreement that Mr. Paver’s three sons would keep the farm and farm it. Under these circumstances it seems unjust and inequitable to declare invalid the antenuptial agreement between the parties which the majority here says must fail.

I would further take this occasion as did Justice Conley Byrd in his concurring opinion in Arnold v. Arnold, 261 Ark. 734, 553 S.W. 2d 251 (1977) to point out that our laws on antenuptial agreements especially among persons beyond the childbearing age need to be substantially revised.

Byrd, J., dissents.


source: Caselaw Access Project

author: George Rose Smith, Justice. Darrell Hickman, Justice,

license: Public Domain

text:
    Joyce D. DeCROO v. Eddie J. DeCROO
    78-338
    583 S.W. 2d 80
    Opinion delivered July 9, 1979
    (In Banc)

      Gean, Gean & Gean, for appellant.

      Way land A. Parker, for appellee.
   George Rose Smith, Justice.

In this divorce suit, brought by the appellant, each party sought a divorce on the ground of indignities, and each sought the custody of the couple’s two children. The chancellor awarded the husband both the divorce and the custody of the children. The appellant’s points for reversal relate to the granting of the divorce, custody of the children, and property division.

First, the chancellor’s award of the divorce to the husband is not clearly against the weight of the evidence. At the trial the conflicting testimony related principally to charges and countercharges of drinking and infidelity. The appellee adduced substantial proof of the appellant’s asserted misconduct, with corroboration that we find to be sufficient in a contested case. The appellant’s proof of her husband’s misconduct, however, was somewhat deficient. In fact, in her brief the appellant argues, as the only ground for the award of a divorce to her, that her husband’s unsubstantiated charges of misconduct on her part amounted to personal indignities. We see no need to detail the testimony, which does not clearly preponderate in favor of the appellant.

Second, when the issue of child custody is considered in all its aspects, we find the chancellor’s award of custody to the father to be clearly against the weight of the testimony. One child is a 13-year-old girl, the other a 3-year-old boy. Even though we recognize that the right of each parent to custody is of equal dignity, it is often in the best interest of the children, especially when they are very young, that they be awarded to the mother. Self v. Self, 222 Ark. 82, 257 S.W. 2d 281 (1953). (See also Act 278 of 1979, which had not yet been passed when this case was heard below.) Here there is no intimation that it would be best to separate the sister and brother. The boy, 3, is too young to express an opinion in the matter. His sister, 13, testified that she was closer to her mother and wanted to be with her. Such an expression of preference is not entirely without weight. State ex rel. Rosenstein v. Hoover, 148 Ark. 164, 229 S.W. 15 (1921). Despite the appellee’s proof, we do not find the appellant unfit to have the care of her children.

There are also living conditions to be taken into account in determining custody. The parties jointly own a home in Greenwood, a few blocks from the residence of the appellee’s parents. The chancellor awarded possession of the home to the father, but in fact it is seldom used by him and the children. Instead, all three occupy one bedroom in the home of the paternal grandparents (with some lack of privacy for the 13-year-old girl). In addition, the appellee works daily from 4:30 p.m. to 1:30 a.m., so that his opportunity to be with his children in the parties’ own home is limited. On the other hand, if custody of the children and possession of the home are both awarded to the appellant, which we find to be proper, there will be adequate living quarters for the mother and the children. We therefore reverse the decree as it relates to custody and remand the cause to the chancery court for a determination of such matters as visitation, child support, and responsibility for the payment of taxes, insurance, and mortgage installments upon the home.

Third, during the marriage the husband accumulated, by deductions from his pay at his place of employment, one hundred and fourteen $50 U.S. bonds, payable to him or his wife. After the parties’ separation the appellant re-entered the family home and, as the chancellor found, took possession of the bonds without her husband’s knowledge or consent. The chancellor held that the bonds were the husband’s property, but in the division of the couple’s property the court ordered that the wife be given a one-third interest in the bonds.

The wife, citing only a sentence from our opinion in Biddle v. Biddle, 206 Ark. 623, 177 S.W. 2d 32 (1944), insists that she is entitled to a half interest in the bonds. The quotation from Biddle, however, merely states that when a husband buys land and takes the deed in the name of his wife, there is a presumption of a gift in her favor. Her, however, title was not taken in the wife’s name. The bonds were payable to Eddie Joe DeCroo or Joyce D. DeCroo. Federal regulations provide that either may cash the bonds, but in a case of this kind the disposition of the bonds, as far as we can ascertain, is governed by state law. Here the husband paid for the bonds and, until after the separation, had possession of them. They were his property. The chancellor was not required to award any of the husband’s property to the wife, since it was the husband who was granted the divorce. In the circumstances, when the property division (which included three cars and other assets) is considered as a whole, we cannot say that the appellant was entitled as a matter of right to a half interest in the bonds.

Affirmed in part, reversed in part, and remanded.

Byrd and Hickman, JJ., dissent.

Darrell Hickman, Justice,

dissenting. I would affirm the judgment in this case because the chancellor was in a position after two hearings to decide what was in the best interest of the children. While the majority gives lip service to our rule regarding the custody of children, that is, the best interest of the children controls, there is an effort on the majority’s part to recognize a principle of law which we have in recent years rejected, that is, women are to be given preference over men in matters of custody. While the majority falls short of stating that such a principle of law still applies, I am disturbed that it is being revived however indirectly.

Custody cases are the most difficult cases for chancellors and the decision quite often rests on matters which are not evident on the printed page, which is all we have before us. This was a bitter case with serious charges of misconduct made against the mother. The father was providing a stable home and a good influence on the children, and after two hearings I am satisfied the chancellor did what he felt would be in the best interest of the children. In such a case I would not substitute my judgment for that of the trial judge.

I would affirm the judgment of the chancellor.

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


author: John A. Fogleman, Justice.

text:
    SWINK & COMPANY, INC. v. CARROLL McENTEE & McGINLEY, INC.
    78-87
    584 S.W. 2d 393
    Opinion delivered July 9, 1979
    (In Banc)

      Davidson, Plastiras, Home, Hollingsworth & Arnold, Ltd., for appellant.

      Wright, Lindsey & Jennings, for appellee.
   John A. Fogleman, Justice.

This litigation arose from dealings in securities in the form of interest-bearing obligations issued by federal agencies in the form of bonds or notes guaranteed by the United States. Carroll McEntee & McGinley, Inc., to which we will refer as McEntee, a corporation with its principal office in New York, is engaged in the purchase and sale of those securities. Swink & Company, Inc., an Arkansas corporation, to which we will refer as Swink, is licensed as a broker-dealer to engage in the sale of municipal and United States government agency issues. McEntee brought this suit against Swink, alleging breach of contract by Swink in three different transactions. When the case was tried to a jury, a verdict was rendered in favor of Swink on two of the transactions and in favor of McEntee on the other. McEntee did not appeal from the judgment against it, but Swink took this appeal from the judgment against it for $33,391.52.

McEntee alleged that Swink sold $2,500,000 in bonds ©f the Bank for Cooperatives to it by means of a telephone conversation on October 1, 1975, but failed to deliver the bonds on October 2, 1975, in accordance with the agreement. McEntee asserted that it had sent a written confirmation slip to Swink following the telephone conversation, as customary in the trade. Swink contends that the sale never occurred and that, if it did, McEntee is barred from enforcing it by the statute of frauds applicable in cases of purchase and sale of investment securities. Swink denied that the oral conversation ever took place and further denied that any confirmation of such a transaction was received.

Swink first contends that a verdict should have been directed in its favor, asserting that McEntee failed to produce evidence sufficient to establish an enforceable contract under the applicable statute of frauds. Transactions of this sort are usually initiated over the telephone, but the oral agreements made are reduced to writing. The normal practice is for both the purchaser and the seller to produce a confirmation and transmit it to the other. The applicable statute, Ark. Stat. Ann. § 85-8-319 (Addendum 1961), insofar as relied upon by the parties, reads:

STATUTE OF FRAUDS. A contract for the sale of securities is not enforceable by way of action or defense unless
(a) there is some writing signed by the party against whom enforcement is sought or by his authorized agent or broker sufficient to indicate that a contract has been made for sale of a stated quantity of described securities at a defined or stated price; or
* * * *
(c) within a reasonable time a writing in confirmation of the sale or purchase and sufficient against the sender under paragraph (a) has been received by the party against whom enforcement is sought and he has failed to send written objection to its contents within ten [10] days after its receipt; or
(d) the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract was made for sale of a stated quantity of described securities at a defined or stated price.

Swink contends that McEntee failed to show compliance with either (a) or (c). On the other hand, McEntee contends that the evidence shows that the transaction is not barred by this statute of frauds because there was compliance with subsections (a) and (d). McEntee also contends that appellant is es-topped from relying on the statute of frauds on the basis of equitable estoppel.

Robert Polk was employed by Swink as its trader in government securities. Herman Jordan was a salesman and branch manager in the Dallas office of McEntee. James Rúñalo was vice-president and treasurer of McEntee, who supervised the accounting operations of the company at its principal office in New York. Thomas Christman was president of McEntee. Ralph Shay was systems manager of Landart Systems, a wholly owned subsidiary of McEntee, which did data processing for McEntee and others in the Wall Street community. His sole responsibility was for the processing of the business of McEntee. Lauren Boykin was head trader at Swink. He bought and sold municipal and government bonds for the firm and supervised others who did so. Katie Woods (formerly Downs) was manager of the operations section of Swink. Jim Swink was chairman and chief executive officer.

In considering the question of sufficiency of the evidence, it must be viewed in the light most favorable to appellee and all reasonable inferences musí be drawn in its favor. State Farm Mutual Automobile Ins. Co. v. Traylor, 263 Ark. 92, 562 S.W. 2d 595. Only the evidence favorable to appellee is to be considered. Milburn v. State, 262 Ark. 267, 555 S.W. 2d 946; Neal v. State, 259 Ark. 27, 531 S.W. 2d 17. Treated in that manner, the evidence was:

Herman Jordan testified: In transactions of the type involved, a firm like McEntee would be called by a firm like Swink by telephone for a bid or offer on a particular security. A salesman in McEntee’s office would call its New York office where its traders would state a bid or offer which would be relayed to the inquirer. If a sale to McEntee was proposed, the customer would indicate his acceptance or rejection. If the offer is accepted, the McEntee salesman would then notify the trader in the New York office. In the trade it is considered that there is an oral contract at that time. The market is so volatile, that prices change from minute to minute, so all dealings are conducted by telephone and all contracts are oral. At the time of the acceptance of the offer, the salesman and the representative of the buying firm agree on a settlement date, i.e., the date the securities will be paid for and delivered. Customarily, that is the day following the acceptance. Each dealer has a clearing bank through which the securities are delivered. Worthen Bank in Little Rock was Swink’s clearing bank. Worthen uses the Federal Reserve Bank’s wire system to notify purchasers of bond deliveries. Prior to the transaction involved here, Jordan had handled 35 to 40 such transactions with Polk, all of which had cleared satisfactorily. Jordan did not recall having dealt with anyone else at Swink. On the afternoon of October 1, 1975, Polk called Jordan and asked for a bid on $2,500,000 in bonds of the Bank for Cooperatives. Jordan obtained a bid from a trader in McEntee’s New York office and relayed it to Polk, who accepted and agreed upon a settlement date of October 2, 1975. The bonds were not delivered in New York as agreed, so the New York office of McEntee asked Jordan to check on the transaction. Jordan called Polk, who did not know whether there was a problem, but promised to check. Polk later advised Jordan that Swink was being failed by Swink’s customer. The New York office advised Jordan daily that the bonds had not been delivered, and Jordan continued to call Polk, who continued to say that Swink was being failed. Eventually Polk promised Jordan that he would talk with Swink’s customer to see if partial delivery could be made, and the trade cleared up. Polk did advise Jordan that he was trying to get a partial delivery, but it never took place. Polk later advised Jordan that he had entered into an agreement with Ruffalo to settle the matter by a pair-off. Jordan received from McEntee through the mail a written confirmation of the original transaction with Polk on these bonds. McEntee sends written confirmation of all purchases and sales of bonds from the New York office. In the normal course of business, Swink sent written confirmation to McEntee. Jordan had received some from Swink, but did not in every transaction. Polk never denied that the original trade was made as Jordan stated it, in any conversation with Jordan. McEntee’s Dallas office never received a confirmation of this transaction from Swink. Jordan had no further involvement in a trade he made unless there was a fail. All of the mechanics of the trade, after the oral contract, are handled in McEntee’s New York office.
James Ruffalo testified: an exhibit he identified was a written documentation of the original offer in this trade by Swink, and the purchase by McEntee. This record is the starting point for the computer processing of a trade in McEntee’s New York computer. It shows the date, price, settlement date, seller, purchaser and other details of a trade and bears an identifying trade number (this documentation recorded the trade exactly as Jordan had stated it.) In the normal course of business, this document or trade ticket is written by McEntee’s trader ira the Mew York office as soon as the trade is made. One copy of this trade ticket is sent to Landart Systems for computer processing. McEntee’s New York office received a copy of a written confirmation of the transaction from Landart. It included a computation of the amount due Swink on the trade. In the normal course of business, Landart would have sent the copy of the written confirmation to McEntee’s New York office on October 1, the day of the transaction. McEntee stood wiling, at all times, to pay Swink the amount due on the tirade upon delivery of the bonds. Landart furnishes McEntee with a history report, which records all of McEntee’s transactions during the preceding month. This report included the trade in question, giving all the pertinent details. Ruffalo became involved Ira the matter ora October 10. After talking with Jordan, he called Polk, who said he knew the transaction and assured Ruffalo that there was no problem with it. ¿hiring the next week, Ruffalo talked with Polk daily. Ira the early part of the week, Ruffalo suggested to Polk that partial deliveries be made. On Friday of that week, October 17, no delivery had been made. The following Monday, Ruffalo talked with McEntee’s head trader, wSio was also chairman of its board of directors, arad a decision was reached that a pair-off should be negotiated with Swink. Ruffalo made that proposal to Polk, who agreed to it. Ruffalo agreed with Polk to sell the bonds bade at a price that was actually lower than the price at which the bonds were being traded. Payment is made Ira such cases by the purchaser (¡Swink), advising its bank to remit the difference ira the sale prices ira the transactions paired off, to the account of the seller (McEntee). A trade ticket was made out fey Ruffalo ora this transaction. On the designated settlement date, October 22, the remittance had not been received at McEratce’s clearing bank. On October 23, Ruffalo called Swink arad talked to Katie Woods, who assured him that she knew nothing about the transaction. McEntee had never received any written confirmation of the transaction from Swink. Later that day, Ruffalo arranged to tape record a telephone conversation with Polk, in order to have a record that the transaction was known. He had never done this before and McEntee has no special equipment for recording telephone conversations. He used a tape recorder belonging to McEntee’s sales manager. The telephone conversation was conducted in the chairman’s office on a device used for conference calls. It was a “squawkbox,” i.e., a device in which a telephone is placed on a speaker, so that several persons may participate in the conversation with a person on the other end. Ruffa-lo then called Polk, and recognized the voice of the person who was called to the telephone at Swink’s office as Polk’s. During the course of the recorded conversation, Polk assured Ruffalo that all three of the persons at Swink who could complete the transaction by approving the wire transfer of money were aware of that transaction. When Ruffalo advised Polk of the conversation with Woods Polk said that she had nothing to do with it and when Rúñalo said that Swink didn’t send a confirmation, Polk assured Mm nothing was awry. Polk assured Ruffalo that he knew both the trade on October 1, and the other trade, and guaranteed Ruffalo that everybody was aware of them. Polk promised to call Ruffalo back. 'Ruffalo asked Polk to tell one of the three principals at Swink to authorize the transfer that afternoon. McEntee never had a written confirmation from Swink. Ruffalo obtained Boykin’s name from Worthen Bank and assumed he was a principal of Swink because he had authority t@ wire funds on behalf of Swink. Ruf-falo called Boykin on October 23, after the telephone conversation had been recorded, but did not reach him until the following day. Boykin said that no transaction had occurred and Ruffalo got McEntee’s president into the conversation.
Thomas Christmas testified: When Christman learned of the sequence of evesits, he asked Ruffalo to use extreme precaution because Swink had not sent a confirmation. At RufFal©’s request, he talked to Boykin and Boykin denied knowledge of the transactions. Christman spoke to Boykin about the seriousness of the situation and suggested that Boykin think about the matter and call him back la two hours. In one hour Swink called Christman and said that there must be some confusion about the matter. Christman related the sequence of events, as he knew them, to Swink. Christ-man said the amount of the pair-off was $45,000. Swink indicated that it was 135,000, according to confirmations he had. Christman told Swink that he understood that Swink did not have confirmations and Swink replied that he was talking about the difference confirmation. Christman said that McEntee had sent no difference confirmation. Both confirmations would have been needed in order to come up with the figure of approximately $35,000. That was the approximate difference in the two transactions.
Ralph Shay testified: “Month to date” reports are furnished to McEntee daily. They list all trades up to the date the reports are furnished. Landart has a runner who goes back and forth between McEntee and Landart picking up and delivering trade tickets. They are key punched continuously during the day. When a day’s trading is completed, the cards are fed into a computer. The resulting “month to date” report is furnished to McEntee the next morning. Confirmation tickets are also produced by the computer on a continuous form. The printout on each confirmation is a four-part form. The individual pieces of paper are separated into four piles. The last two are taken for delivery to McEntee on the following day. The forms are separated according to McEntee’s branch office numbers, so all copies that go to one branch can be mailed to that branch. The original confirmation form is taken by one of Landart’s operators and stuffed into a window envelope so that the address of the customer shows. The Landart operators run the envelopes through a machine which seals them and puts stamps on them. When the night’s work is finished, these envelopes are hand-carried by them to the post office and mailed to the branches and to the customers.

The denial of receipt by Swink was based on Boykin’s testimony that he checked the records in the office of Swink and found no confirmation from McEntee and found no record that Swink had issued a confirmation, as is usually done in the regular course of Swink’s business. Polk said that he kept a legal pad on which he wrote purchases he made and a girl would take this record of a purchase to the back office, where a confirmation would be processed. He admitted that he never denied the trade in telephone conversations with representatives of McEntee and did not take the matter seriously until Ruffalo suggested a pair-off. Not until then did he check on the transaction, but he found no confirmation in the back office when he inquired of Katie Woods. Katie Woods testified that she did all the record keeping at Swink. She said that she was responsible for getting the mail and that she had picked up the mail the first five working days in October. She said that she personally opened every letter and reviewed each confirmation. She said that no confirmation of the purchase of these bonds was ever received from McEntee and that Swink had not issued any confirmation of their sale. She said that sometimes the men at Swink failed to make out a confirmation. Jim Swink testified that he also checked the records with Woods’ help and found no confirmation of this transaction. He admitted that his concern had received two confirmations from McEntee on smaller transactions, and stated that Swink had settled these two transactions by pair-offs.

Appellee seeks to avoid the statute of frauds through the tape recording of the conversation between Ruffalo and Polk, contending that it constituted compliance with § 85-8-319 (a). Assuming, without deciding, that the tape recording is a writing, as an intentional reduction to tangible form, under Ark. Stat. Ann. § 85-1-201 (46) (Supp. 1977), there is still no compliance with Ark. Stat. Ann. § 85-8-319 (a), because the tape recording was not signed by Swink, the party against whom enforcement is sought, or by any authorized agent of Swink. Appellee also contends that the evidence showed compliance with § 85-8-319 (d). Again, it relies on the tape-recorded conversation with Polk, along with Polk’s conversations with Jordan and Ruffalo in which he admitted the transaction and excused performance only on the ground that Swink had been failed by a customer. The mere conversations were out-of-court statements, whether tape recorded or not. They simply cannot constitute an admission or testimony in court, so they are not evidence sufficient to avoid the statute of frauds. Appellee, however, contends that Polk’s in-court testimony that he made such statements takes the case out of the statute of frauds under § 85-8-319 (d). There is considerable question about the sufficiency of these statements as to the details of the transaction, i.e., the quantity of the securities and the defined or stated price. Assuming, however, that they meet this test, Polk was not a party against whom enforcement is sought. It is quite true that he was Swink }s agent and that he had considerable authority. Even assuming that he had authority to make admissions against the interest of Swink, however, the admissions must have been made in court in order to be effective under § 85-8-319 (a). Polk certainly did not have any authority to make such admissions at the time he testified. His employment by Swink was terminated in February, 1976. This suit was filed one year later. He certainly was not a “party” or an agent for a party when he testified. Western Union Telegraph Co. v. Scanlon, 115 Ark. 515, 171 S.W. 916. See also, Arkansas Anthracite Coal & Land Co. v. Dunlap, 142 Ark. 358, 218 S.W. 839; Campbell v. Hastings, Britton & Co., 29 Ark. 512.

This brings us to a much more difficult problem. That is the question of the sufficiency of the evidence to show that written confirmation of the sale by Swink and the purchase by McEntee was received by Swink. Swink denies having received it, so the answer to the question turns upon the sufficiency of the evidence to show receipt. It is well settled that receipt may be shown by circumstantial evidence. The Travelers Insurance Co. v. Thompson, 193 Ark. 332, 99 S.W. 2d 254.

There is a presumption of fact that, when a letter, properly and sufficiently addressed and stamped, is mailed, it and its contents were received by the addressee in due course of mail, which ceases to exist, and becomes a question of fact, when the addressee denies receipt. The W. T. Rawleigh Co. v. Moore, 196 Ark. 1148, 121 S.W. 2d 106; The Travelers Insurance Co. v. Thompson, supra; Dengler v. Dengler, 196 Ark. 913, 120 S.W. 2d 340; American Fidelity Fire Ins. Co. v. Winfield, 225 Ark. 139, 279 S.W. 2d 836; Old Republic Ins. Co. v. Martin, 229 Ark. 1065, 320 S.W. 2d 266; Click v. Sample, 73 Ark. 194, 83 S.W. 932. A mere denial that a properly mailed letter was not received is not sufficient, as a matter of law, to rebut the presumption; it simply leaves the question of receipt to the jury. Southern Engine & Boiler Works v. Vaughan, 98 Ark. 388, 135 S.W. 913.

The evidence is sufficient to show that the original confirmation was properly addressed. Copies of it were introduced, and all copies were the product of a single operation. The question is whether the testimony of custom and habit was sufficient to show that the address appeared on the envelope, whether it was properly stamped and whether it was placed in the mails. We have previously considered the question of the sufficiency of the evidence of mailing. In Southern Engine & Boiler Works v. Vaughan, supra, we said:

o o 'The word “mailed,” when applied to a letter, means that it was properly prepared for transmission in the due course of mail, and that it was placed in the custody of the officer charged with the duty of forwarding the mail. When, therefore, the witness testified that this letter had been mailed to the plaintiff, it was sufficient evidence that it had been properly directed, stamped and delivered to the officials of the postal department for proper transmission through the mails; and from this the presumption arose that the plaintiff, to whom the same was addressed, received it. This presumption could be rebutted by testimony that it was not in fact received, but the positive denial by plaintiff that same was received would not be sufficient, as a matter of law, to nullify the presumption of its receipt. Such testimony simply left the question as to the receipt of the letter for the determination of the jury, under all the testimony adduced at the trial. * * *

See also, Burlington Ins. Co. v. Threlkeld, 60 Ark. 539, 31 S.W. 265; Click v. Sample, supra. On the other hand, we held in Runyan v. Community Fund of Little Rock, 182 Ark. 441, 31 S.W. 2d 743, that testimony that statements were mailed was not sufficient to show receipt of them or give rise to a presumption in the absence of testimony to show that the envelopes containing them were properly addressed and deposited in the mail.

It is true that the employee who actually mailed the confirmation did not testify, either that the confirmation was actually mailed, or as to his practice. Some years ago, the Court of Appeals for the Eight Circuit speculated, by way of dictum, that this court might share its view, and that of Professor McCormick, that the mailclerk’s testimony would be only cumulative, since, considering the modern volume of corporate correspondence, he could not be expected to remember posting a particular letter or emptying the mail tray on a particular day and probably could only reiterate the executive’s description of the office practice. See Leasing Associates, Inc. v. Slaughter & Son, Inc., 450 F. 2d 174 (8 Cir., 1971).

Whatever the rule may have been heretofore, Ark. Stat. Ann. § 28-1001, Rule 406 (Supp. 1977) governs the admissibility of evidence on the subject. It provides:

Rule 406. Habit — Routine practice. — (a) Admissibility. Evidence of the habit of a person or of the routine practice of an organization, whether corroborated or not and regardless of the presence of eyewitnesses, is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice.
(b) Method of Proof. Habit or routine practice may be proved by testimony in the form of an opinion or by specific instances of conduct sufficient in number to warrant a finding that the habit existed or that the practice was routine.

The testimony of Shay was admissible under that rule. The evidence clearly shows that the confirmation was printed. The routine practice was followed sufficiently that McEn-tee’s Dallas office received its copy. The routine included Tuning the envelopes containing the confirmations through a machine that insured that the proper postage was placed on the envelope. Swink received at least two confirmations mailed to it through this process. The reliability of Swink’s processing of confirmations on receipt must not have been foolproof, because there was a great deal of uncertainty on their part about the receipt of those two. We consider the evidence sufficient to have presented a jury question on delivery and receipt of the confirmation. There was no requirement that the mailing of the confirmation be shown by the person who performed that part of the procedure. Tabor & Co. v. Gorenz, 43 Ill. App. 3d 124, 1 Ill. Dec. 868, 356 N.E. 2d 1150 (1976); Milros-Sans Souci, Inc. v. Dade County, 296 So. 2d 545 (Fla. App., 1974). See also, Leasing Associates, Inc. v. Slaughter & Son, Inc., supra. In both the Illinois case and the Florida case, evidence similar to that here was held sufficient to show mailing and receipt.

Appellant contends that the trial court erred in giving instructions to the jury. We agree that there were errors in the instructions which require reversal.

The court gave McEntee’s requested instruction No. 1. It was a binding instruction, directing the jury to find for McEntee, if it found that there was a contract between the parties, if Swink, acting through its agent, breached the contract and if the breach resulted in damages to McEntee. Swink’s attorney objected that the instruction in that form was defective because the issue as to the statute of frauds was omitted. In order to be entitled to recover, McEntee had the burden of proving that the contract between McEntee and Swink fell within one of the provisions of that statute. A binding instruction which ignores a material issue which is an element of the defense to the action is erroneous, prejudicial and incurable: Davis v. Self, 220 Ark. 129, 246 S.W. 2d 426; Miller v. Ballentine, 242 Ark. 34, 411 S.W. 2d 655.

Appellee contends that the court’s denial of appellant’s motion for a directed verdict was, in effect, a holding that, as a matter of law, the statute of frauds was not an issue. This argument is totally meritless. The statute of frauds was the principal issue, and the denial of the directed verdict was simply a holding that there was substantial evidence that would, if accepted by the jury, take the contract out of the statute of frauds. Of course, appellee’s argument that appellant could not object because it offered no evidence that Arkansas has a statute of frauds is equally meritless.

Appellee also argues that appellant cannot complain because it did not offer a correct instruction. This was not really necessary, because appellant made a proper objection to the binding instruction. In referring to the instruction offered by appellant, appellee points out that it was erroneous because it would have confused the jury on the issue of existence of a contract because it referred to requirements of law concerning the existence of a contract. It is doubtful that a jury would be misled by the language in appellant’s instruction. Appellee is correct in its contention that one of the issues was enforceability of the contract, and not its existence. The language of the statute is couched in terms that make this clear. See also, Betnar v. Rose, 259 Ark. 820, 536 S.W. 2d 719. The very fact that the evidence clearly shows that, in the business of buying and selling securities, a transaction entered into by telephone is considered as an oral contract, demonstrates the significance of the omission of the issue on the statute of frauds from the binding instruction given. The giving of a later instruction, even if it had been correct, did not cure the omission. Whaley v. Crutchfield, 226 Ark. 921, 294 S.W. 2d 775.

The instruction upon which appellee relies to cure any error in the binding instruction was itself erroneous. By that instruction, the jury was told that, if it found from a preponderance of the evidence that McEntee caused the mailing of a confirmation slip within an envelope on which there was placed the proper postage, addressed to Swink at its proper address, the law presumes that it was delivered to Swink in due course and the burden was on Swink to show that it was not received. This is not a correct statement of the law, because it gives the presumption of delivery the same effect, regardless of a denial of delivery by Swink. Once the delivery is denied, and it was in this case, the presumption is no longer effective as such and the question of delivery is one of fact, on which the burden remains on the party seeking to establish delivery by circumstantial evidence.

There was also error in the giving of McEntee’s requested instruction No. 2. By it, the jury was told that, in the three transactions involved in the case, McEntee had the burden of proving that Polk was acting within the scope of his authority as agent of Swink, and that if it so found, any agreement made by Polk within the scope of his authority would be binding. The question of Polk’s authority to sell and purchase the securities involved in the three alleged transactions was not in issue. If the instruction was intended, as appellee now argues, to be directed to the question whether Polk had the authority to enter into a pair-off, it should not have been directed to the “time of the three transactions involved.”

Appellant also objects to the instruction (No. 7) given on the measure of damages. That instruction fixed the measure of damages as the difference between the contract price for the bonds and their fair market value when it became apparent that Swink was not going to deliver the bonds. Appellant says that the true measure is the difference in market value on the day of the trade and the promised date of delivery.

Appellant relies on Brace v. Oil Fields Corp., 173 Ark. 1128, 293 S.W. 1041. The question in issue in that case, however, was different from the issue in this case. There, a geologist was employed upon a contract under which he would be given a bonus of $10,000 a year in stock of the corporation by which he was employed, in addition to his monthly salary and expenses. He contended that the measure of damages for the breach of the contract to pay a fixed sum in a particular commodity should prevail and that his measure of damages should be the sum stated. The receiver for the employer contended that the proper measure of damages was the value of the stock at the time of the breach. We held that the employee was entitled to recover the value of the stock at the time of the breach. This was not a transaction in securities such as we have involved here. The time of the breach was clearly fixed in Brace. In this case, the situation is somewhat different. Boykin testified that in trades such as are the subject of this litigation, deliveries are occasionally deferred for two or three days after the date agreed upon. The testimony on behalf of McEntee tends to show that there was no renunciation of the contract or refusal to perform until Ruffalo talked with Boykin. In the intervening period, Polk was giving assurances that there was no problem. If McEntee could have known that Swink did not intend to perform, it could have bought bonds in the market on the day of delivery to protect itself. There was no reason for doing so, if there was reason to expect a tardy delivery. Where there is a breach of a contract involving dealings in securities, the usual measure of damages for breach of a contract for delivery of personal property is not always appropriate. See James Wood General Trading Establishment v. Coe, 191 F.S. 330 (S.D.N.Y., 1961), reversed on other grounds, 297 F. 2d 651 (2 Cir., 1961); Mekrut v. Gould, 16 Mise. 2d 326, 188 N.Y.S. 2d 6 (1959).

Under the peculiar facts of this case, we cannot say that this instruction was erroneous.

We have not considered appellee’s argument on estoppel against appellant’s pleading the statute of frauds. Estoppel was not pleaded and it does not appear to have been mentioned during the trial until Swink had moved for a directed verdict. We point out, however, that the facts in this case are unlike those in White v. White, 254 Ark. 257, 493 S. W. 2d 133, relied on by appellee. In that case, the party who was es-topped had, with knowledge of the contract, agreed to its terms and actively participated in activities relating to performance of it. She had also written a letter to one of the contracting parties, referring to the agreement.

The judgment is reversed and the cause remanded.

Hickman, J., concurs in the result.

George Rose Smith and Byrd, JJ., dissent as to instruction No. 7.

Purtle, J., did not participate.

      A fail in the business of dealing in these securities in this context is a failure to make delivery according to contract.

      By a pair-off, the traders agree upon a resale of the securities by the purchaser in the original transaction to the seller in that transaction, at a current price agreed upon by them. As a result, the non-delivering seller in the original transaction would pay the purchaser in that transaction, only the difference in the price agreed upon in the first transaction and that agreed upon for the resale. No securities are delivered by either party.

      In the trade, this meant that he was aware of the transaction.


text:
    Narciso FRIGILLANA v. Natividad M. FRIGILLANA
    78-97
    584 S.W. 2d 30
    Opinion delivered July 9, 1979
    (Division I)

      Gean, Gean & Gean, for appellant.

      Thompson & Paddock, for appellee.
   John A. Fogleman, Justice.

The parties in this case were married for 29 years. On December 13, 1968, they entered into a “Property Settlement Agreement,” reciting the existence of marital differences, making it impossible for them to continue to live together. The agreement was signed in the Panama Canal Zone, where they resided. On January 10, 1969, an interlocutory decree of divorce was entered in the United States District Court for the Canal Zone. The court confirmed and approved the agreement between the parties in this decree. On July 30, 1969, a final decree was entered and the husband, Narcisco Frigillana, appellant here, was directed to pay $275 per month for support of the wife, Nati-vidad Frigillana, appellee here.

Both parties were near retirement age when the agreement was signed. The agreement was entered into as a final settlement of all property rights. By it, each party released the other from any and all claims and demands, including all claims of either party upon the other for support and maintenance. Specific items of property were allocated to the respective parties. The following clause of the agreement gives rise to this litigation:

FOURTEENTH: The parties, in contemplation of the time subsequent to the retirement of the husband and his death thereafter, agree that the husband will execute whatsoever documentation as may be required by the United States Civil Service Commission to carry out the specific desire and will of the husband and the agreement of the parties hereto that the wife, the party of the second part hereto, will receive one half of all benefits which may then accrue and one half of such benefits to the husband’s then widow, if any, or if no widow, then all to the wife, party of the second part herein. It is further agreed as a part of this agreement that the husband will take the necessary steps to carry out the provisions herein concerning the said Commission and will in no way change the above designation of the wife as beneficiary with the said Commission.

Appellant retired in March 31,1972, at the age of 69. He was unmarried at the time, but subsequently remarried the woman to whom he had been married before his marriage to Natividad. (In order to avoid misunderstanding, we will use her first name.) He did not execute any document which would have carried the agreement as to survivor’s benefits under civil service retirement into effect. Instead, he took a full annuity, without survivor’s benefits, and as a result, he received higher monthly benefits as long as he lived than he would have received if the agreement had been carried into effect. Appellant admits that appellee was never informed by appellant that he had failed to effectuate this part of the agreement.

Appellee filed her petition in the chancery court, asking that appellant be required to furnish some security in lieu of the annuity with survivor’s benefits, because he had failed to provide her with these benefits at the time of his retirement. On October 4, 1977, the chancery court entered the decree from which this appeal is taken. By that decree, the court gave appellee judgment against appellant for $8,405.15, which the court found to be the present value of the retirement benefits to which appellee would have been entitled had the agreement been carried into effect.

Appellant seeks reversal of the decree on the ground of impossibility of performance. This defense does not seem to have been raised by the pleadings, but it does appear from the record as a whole that it was an issue in the trial court. The chancery court rejected the defense of impossibility of performance, holding that appellant could have provided her with survivor’s benefits as one having an insurable interest.

In order to properly evaluate the action of the chancery court, it is necessary that we consider the nature of the agreement between the parties, of which the quoted paragraph was a part. More particularly, we must determine what consideration was given by Natividad. She released Narciso from any and all claims and demands, including all claims upon him for support or maintenance, except as provided in the agreement. She assigned to him all right, title and interest in 80 acres of land. She released any interest in an automobile registered in Dr. Frigillana’s name. There was a division of household goods. He received a savings account in a savings and loan association. There was a division of United States savings bonds in her possession. The agreement of the husband for support of the wife by the payment of $275 per month beginning January 5, 1969, and continuing until the death or remarriage of the wife or the sooner death of the husband was “in consideration of the promises and mutual covenants and agreements.” There were other benefits to the husband and wife. She received an automobile registered in her name, certain savings accounts, and other benefits, including being named as irrevocable beneficiary in a life insurance policy.

Thus, it clearly appears that the provisions of the agreement are interdependent, that the undertaking of appellant in regard to his retirement benefits was only one of his obligations under the contract and that appellee gave consideration therefor. It seems plausible that this clause was in lieu of increased support or in satisfaction of other demands the wife might have made for other property. Thus the portion of the agreement appellant failed to perform was dependent upon other undertakings and obligations on the part of both parties and the other undertakings and obligations were dependent upon that agreement. As appellant points out, this section is only one of 15 sections.

The educational background of appellant is pertinent to the subject of our inquiry. At the time of the agreement, he had received the following degrees: Bachelor of Commercial Science, Southeastern University, Washington, D.C.; Bachelor of Laws, 1933, Southeastern University, Washington, D.C.; Master of Laws, 1934, Southeastern University, Washington, D.C.; Master of Patent Law, 1935, National University, Washington, D.C.; Doctor of Juridical Science, 1935, National University, Washington, D.C. He had been admitted to practice by the United States Supreme Court. Dr. Frigillana testified that, when he retired he knew, and knows now, that he had an obligation under the property settlement agreement to provide for this survivor’s benefit for appellee. He freely admitted that he had bound himself under this agreement to take a reduced annuity upon his retirement, with a survivor’s benefit in favor of appellee. He stated that he was willing to do anything in accordance with the regulations that will permit a divorced spouse to do what was necessary and required to have provided appellee with survivor’s benefits. He testified that when he retired, in April, 1972, he was unmarried. He said that he wanted to make an application for a survivor’s benefit for Natividad, but when he asked “them” when he retired whether he could execute a form to carry out the agreement, “they just said, nothing.” He said that when he asked the orientation officer, he received the reply, “Well, Buddy, here’s the regulations, single . . . According to Dr. Frigillana, at the time of retirement he had a choice of civil service annuities, and, by electing to take an annuity without survivor’s benefits, he is receiving a higher monthly retirement than he would if he had taken an annuity with survivor’s benefits. Dr. Frigillana justifies his failure to perform his admitted contractual obligation only on the statement that “it was impossible to perform.”

The burden of proving impossibility of performance, its nature and extent and causative effect rests upon the party alleging it. 18 Williston on Contracts [3rd (Jaeger) Ed.] 272, § 1978B; Ocean Air Tradeways, Inc. v. Arkay Realty Corp., 480 F. 2d 1112 (9 Cir., 1973); Paddock v. Mason, 187 Va. 809, 48 S.E. 2d 199 (1948); Great American Ins. Co. of New York v. City of Boulder, 476 P. 2d 586 (Col. App. 1970); Smith v. Zepp, 173 Mont. 358, 567 P. 2d 923 (1977). He must show that he took virtually every action within his power to perform his duty under the contract. Kama Rippa Music, Inc. v. Schekeryk, 510 F. 2d 837 (2 Cir., 1975). It must be shown that the thing to be done cannot be effected by any means. Standard Oil Co. of New York v. Central Dredging Co., 225 App. Div. 407, 233 N.Y.S. 279 (1929). Resolution of the question requires an examination into the conduct of the party pleading the defense in order to determine the presence or absence of fault on his part in failing to perform. Lowenschuss v. Kane, 520 F. 2d 255 (2 Cir., 1975).

It is at least doubtful that appellant met his burden. He was rejected without any real effort on his part. It appears that his rejection was by an orientation officer. The application was to be made to the Civil Service Commission, and it was the only agency that could reject the application. But appellant never filed one and accepted this “rejection,” even though the question was at least arguable. Under the federal regulations introduced in evidence on the subject, it appears that an unmarried employee retiring may elect an annuity with survivor’s benefits to a named person having ah insurable interest. They did not permit more than one person to be named and a contingent survivor annuitant was not acceptable. Dr. Frigillana stated flatly that appellee had no insurable interest. The chancellor held that she did. The question is at least debatable. In oral argument, appellant’s attorney took the position that, while Natividad had an insurable interest, insofar as the legal definition of the term is concerned, under civil service regulations she did not have such an insurable interest as entitled her to a survivor’s benefits.

There is respectable authority supporting the chancellor’s view that appellee had an insurable interest. Begley v. Miller, 137 Ill. App. 278 (1907); Lynch v. Bogenrief, 237 N.W. 2d 793 (Iowa, 1976); Tromp v. National Reserve Life Ins. Co., 143 Kan. 98, 53 P. 2d 831 (1936). In considering insurable interest in the life of another in Home Mutual Benefit Association v. Keller, 148 Ark. 361, 230 S.W. 10, we quoted liberally from Warnock v. Davis, 104 U.S. 775, 26 L. Ed. 924 (1881). A part of that quotation is:

* * * But in all cases there must be a reasonable ground, founded upon the relations of the parties to each other, either pecuniary or of blood or affinity, to expect some benefit or advantage from the continuance of the life of the assured. Otherwise the contract is a mere wager, by which the party taking the policy is directly interested in the early death of the assured.

Since appellee was receiving $275 per month from appellant as long as he lived, she could expect a benefit or advantage from his continued living. It was also recognized in the quotation in the above Arkansas case that a creditor has an insurable interest. Appellee would fall into both the category of creditor and that of one who has an advantage in the continued life of her divorced husband. Lynch v. Bogenrief, supra; Tromp v. National Reserve Life Ins. Co., supra.

We need not decide whether the chancellor was wrong, because the most important obstacle to appellant’s position is the fact that impossibility of performance by one contracting party does not necessarily bar a recovery by the other party who was entitled to expect performance. There is a quasi-contractual obligation owing by the party whose performance has become impossible to pay the other party the net value of the advantage the defaulting party has derived from the nonperformance of his impossible promise. 18 Williston on Contracts (3rd Ed.) 212, § 1969. Where the other party has partly or wholly performed without receiving compensation from the party whose performance is impossible, justice requires the imposition of a quasi-contractual obligation on the party receiving such performance to pay its fair value. 18 Williston on Contracts 226, § 1972. See Martz v. Continental Casualty Co., 141 Pa. Super. 187, 14 A. 2d 863 (1940).

An excellent summary of the appropriate treatment of recovery where there is partial impossibility of performance of a contract that has been partially performed is found in an annotation appearing in 144 ALR at p. 1317. At p. 1326, the annotator states:

The law governing the question under annotation in the United States is stated in American Law Institute Restatement, Contracts, Vol. 2, § 468 (2) (See also American Law Institute Restatement, Restitution, § 108 (c) ), as follows: “Except where a contract clearly provides otherwise, a party thereto who has rendered performance for which the other party is excused by impossibility from rendering the agreed exchange, can get judgment for the value of what he has rendered, less the value of what he has received, unless what he has rendered can be and is returned to him in specie within a reasonable time.”
This rule applies irrespective of whether the party claiming under the rule has performed fully or in part (see American Law Institute Restatement, Contracts, Vol. 2, § 468, Comment b); and irrespective of whether the claimant has paid money or performed in values other than money (see Am. Law Inst. Restatement, Contracts, Vol. 2, § 468, Comment c, Illustration 5). The rule embraces situations involving either a total or a partial failure of consideration; that is, situations in which the party whose performance is excused by the supervening impossibility, and who is sought to be held liable, has, or has not, performed in part, prior to the occurrence of the event which constitutes the supervening impossibility.

The matter is one failing within the scope of the judicial doctrine of restitution, v/hich is succinctly stated at 77 CJS Restitution 322, viz:

Restitution, in legal nomenclature, is an equitable principle, and is founded on the equitable maxim that he who seeks equity must do equity, and one of the grounds on which the doctrine is based is that when one person confers a benefit on another through mistake, whether of fact or law, the other is liable to make restitution. It is sometimes considered to be the modern designation for the older doctrine of quasi contracts.
A cause of action for restitution is a type of the broader cause of action for money had and received, and generally the object to be attained in proceedings for restitution is the prevention of unjust enrichment of defendant and the securing for plaintiff of that to which he is justly and in good conscience entitled. A person who has been unjustly enriched at the expense of another is required to make restitution to the other, and if one obtains the property or the proceeds of property of another, without a right to do so, restitution in a proper case can be compelled. It has been said that restitution, properly speaking, is made only to a defendant whose money or property has been taken from him by the erroneous order of a court, and it is not available to third parties.
It is not necessary, in order to create an obligation to make restitution, that the party unjustly enriched should have been guilty of any tortious or fraudulent act; the question is: Did he, to the detriment of someone else, obtain something of value to which he was not entitled? In such cases the simple, but comprehensive, question is whether the circumstances are such that equitably defendant should restore to plaintiff what he has received.
At common law the word “restitution” was employed to denote the return or restoration of a specific thing or condition, but in modern usage restitution may go beyond the act of returning the thing taken, and, in its broad sense, is not confined to the return of something of which one has been deprived, but includes compensation for loss, damage, or injury done to another.
Restitution is not of mere right, but is ex gratia, resting in the exercise of a sound discretion, and the court will not order it where the justice of the case does not call for it or where the process is set aside for a mere slip.

The general scope note to the Restatement of the Law, Restitution, states that it deals with situations in which one person is accountable to another on the ground that otherwise the former would unjustly benefit or the latter would unjustly suffer loss. The authors continue by stating that, while the subject includes the rules usually classified under the heading of quasi-contracts, which is limited to actions at law to secure the payment of money, it also extends to actions for similar equitable remedies.

Thus, it is clear that principles applicable to the doctrine of unjust enrichment are applicable to a situation such as this. The doctrine had its origins in the action for money had and received, which was based upon the theory that there was an implied promise to pay. We spoke of the theory in Patton v. Brown-Moore Lumber Co., 173 Ark. 128, 292 S.W. 383 (1927), saying:

* * * The action is not dependent upon an express promise, and, as many authorities say, not even upon one implied in fact, but it is maintainable in all cases where one person has received money or its equivalent under such circumstances that, in equity and good conscience, he ought not to retain it, and, ex aecuo et bono, it belongs to another. And it is said that this is so, irrespective of whether the money was received from the plaintiff or from a third person. 2 R. C. L. 778.
The authorities are practically unanimous in holding that, if one has money belonging to another, which, in equity and good conscience, he ought not to retain, it may be recovered, although there was no privity and no express contract or agreement. * * *

We have approved definitions of the doctrine that state that an action based upon it is maintainable in all cases where one person has received money or its equivalent under such circumstances that, in equity and good conscience, he ought not to retain it. Fite v. Fite, 233 Ark. 469, 345 S.W. 2d 362. According to Restatement of the Law, Restitution, a person who has been unjustly enriched at the expense of another is required to make restitution to the other. (See p. 12, § 1.)

Not only did Dr. Frigillana receive the benefit of the property settlement agreement, the casual, abject surrender of this well educated lawyer to an orientation officer’s edict on the question of Natividad’s eligibility for survivor’s benefits left him free to make an election not to name a survivor and to reap substantial benefits through higher retirement benefits to himself, an election he saw fit to make without offering any alternative to Natividad or even notifying her that he could not carry out his admitted obligation under the contract. To permit him to retain these benefits without securing to Natividad that to which she was justly and in good conscience entitled is an unjust enrichment of Dr. Frigillana which violates all principles of equity and good conscience and which requires that he be required to compensate her by an equivalent to his performance of the contract.

This the chancery court endeavored to do upon the basis of the testimony of W. Keith Sloan, Chief Actuary of the State Insurance Department, who stated that the present value of a monthly benefit of $358.05 to a female, presently age 66, whose date of birth was October 1, 1911, at the death of a male, presently age 74, whose date of birth is October 25, 1902, assuming 6% interest, was $19,776.82. The decree recites the following:

* * * After applying the reductions required by law to arrive at a survivor’s benefit under the facts of this case and after considering the testimony of W. Keith Sloan, Life and Health Actuary with the Insurance Department in Little Rock, Arkansas, his testimony being undisputed, the Court finds that the present value, applying 6% interest, of the survivor’s benefit in this case is $16,810.30. The Court further finds that paragraph 14 of the agreement of the parties states that if the Defendant should leave a widow upon his demise this sum should be divided evenly between the widow and the Plaintiff. The Defendant has a wife at the present time. Accordingly, the Plaintiff is entitled to and should be awarded judgment against the Defendant for $8,405.15 for all of which execution should immediately be permitted to issue as upon a judgment at law.

This was certainly an equitable approach to restoration to Natividad that to which she was entitled under the agreement. The value of the increased payment to Dr. Frigillana on an actuarial basis was not shown, and he offered no alternative to this compensation to Natividad for her loss.

Appellant argues that the chancery court should not have awarded appellee a money judgment, because, if Natividad dies before Narciso, she would not be entitled to any survivor’s benefit, even if the performance of the contract had been possible. Appellant says the court should have ordered him to purchase an annuity which would afford appellee an income equivalent to that she would have received if he could have carried out the terms of the contract. This is probably what appellant should have done when he retired in April, 1972, and he had had ample opportunity to do so, but chose to rest upon the impossibility of his performance. Even when he testified during the trial, Dr. Frigillana testified that he was resisting Natividad’s effort to ask for the present value of such a benefit because it proved that it was impossible for him to perform that part of the property settlement agreement.

The testimony of Sloan was based on a question which took into consideration the respective ages of the parties. But the court’s judgment was far less than the figure given by Sloan because the court applied reductions at 6% interest. The award has not been shown to be in excess of the additional benefits appellant has received and will receive during a normal life expectancy by electing to take the full retirement annuity. As appellee suggests, it might be difficult for Dr. Frigillana to obtain such an annuity at his present age of 74 years.

The decree is affirmed.

We agree. Harris, C.J., Byrd and Hickman, JJ.