author: Jim Johnson, Associate Justice.

text:
    Strasner v. Strasner.
    5-2182
    338 S. W. 2d 679
    Opinion delivered September 26, 1960.
    [Rehearing denied October 24, 1960]

      Digby <& Tanner, for appellant.

      Jack L. Lessenberry, for appellee.
   Jim Johnson, Associate Justice.

This appeal concerns a separation and property settlement agreement between L. M. Strasner, Sr., appellant, and his wife, Mildred E. Strasner, appellee.

The parties were married on July 14, 1941. They are the parents of one child, a son who was 18 years of age and a freshman at the University of Arkansas at the time of the trial. On February 10, 1959, the parties separated and have not resumed their marital relationship. On that date, appellee, with her cousin as a witness, followed appellant and at about 7:30 in the evening they observed appellant in the company of another woman. Appellant was inside an apartment house in the lighted living room, and appellee saw them through the door. She stated that they were preparing to leave on a date. Appellee confronted them as they came out of the building and told them they would hear from her lawyer. This was the only instance of alleged infidelity of the appellant. On February 13, 1959, appellant went back to the home to get his clothes and personal effects. At that time appellee told him she was going to sue the other woman for alienation of affections. A couple of weeks later, appellee’s attorney contacted appellant in regard to the separation and domestic situation of the parties and a settlement of their property rights. Negotiations continued for a couple of weeks between appellant and appellee’s attorney which culminated in the execution of a property settlement agreement, which is the subject matter of this action. No action for divorce has ever been instituted by either party.

This agreement, dated March 13, 1959, awarded appellee the unencumbered home of the parties worth approximately $12,000 to $15,000; the household furniture ; title to an automobile worth approximately $2,000; a bank account of approximately $360; and in addition, appellant agreed to pay appellee $200 a month for her lifetime and $50 a month for the support and maintenance of their son until he completed his education. The only property which appellant retained was a savings account of $124. However, the agreement provided that: in the event either party instituted a divorce action, the property settlement agreement would constitute a full and complete settlement of all property rights in such action, and that neither party would have the right to obtain, any part of the property of the other; neither party would claim or demand suit money, alimony or attorney’s fees should either party institute an action against the other (except any proceeding made necessary to enforce the terms o f the agreement); appellee would not prosecute any legal cause she may have acquired prior to the date of the agreement except any action she may have acquired against appellant; each party would have the right to enjoy all property they now owned, or which they might acquire, independent of any claim or right of the other party with the right to dispose of the same; each party would have the right to dispose of by last will and testament property now owned or which either might acquire, independent of any claim of the other; each party would execute whatever documents were necessary to promptly carry out the terms of the agreement.

At the time of the settlement, the parties possessed a washing machine which was not paid for. Appellee declined to make monthly payments upon the indebtedness existing against the washing machine and appellant contends he was told by appellee’s attorney that he was required to do so, and he has continued to make these payments. Appellant executed proper deed of conveyance to real property to appellee and transferred title to the automobile to appellee and performed all other conditions and covenants incumbent upon him to perform until August 15, 1959, at which time he ceased making the monthly payments specified in the agreement to appellee. On August 19, 1959, appellee instituted this action in Chancery Court seeking specific performance of the written property settlement agreement. A trial on the merits was held on October 19, 1959, the only witnesses being the appellee, appellee’s attorney and the appellant. The execution of the instrument was not disputed and the sole issue presented to the court for consideration was the validity of the instrument sued upon. The Chancellor ruled in favor of appellee, decreed specific performance of the property settlement agreement, awarded judgment for delinquent payments and ordered appellant to make fntnre payments in accordance with the terms and provisions of the property settlement agreement. The decree was rendered by the Chancellor on November 20, 1959, and this appeal was duly prosecuted and perfected.

For reversal, appellant relies upon the following points:

1. Court lacked jurisdiction of subject matter; 2. Trial Court was biased and prejudiced; 3. Instrument sued upon is invalid for lack of consideration; 4. Appellee has breached the agreement.

We will discuss the points in the order in which they are raised.

Jurisdiction. Appellant eloquently argues that the breach of the contract, if any, of the appellant’s refusal to make monthly payments as provided in the agreement was compensable by damages and that appellee had a plain, complete and adequate remedy at law. Appellant further argues that the criterion for suits for specific performance is whether or not there is an adequate remedy at law and cites in support of his argument the leading case of McDaniel v. Orner, 91 Ark. 171, 120 S. W. 829. Except for the nature of the agreement here involved, ordinarily the theories pursued by appellant are sound law. However, in the instant case our research reveals that the Legislature settled the matter of jurisdiction by the passage of Act 290 of 1941, the pertinent part of which is as follows:

“Courts of equity may enforce the performance of written agreements between husband and wife made and entered into in contemplation of either separation or divorce and decrees or orders for alimony and maintenance by sequestration of the defendant’s property, . . . or by such other lawful ways and means, including equitable garnishments or contempt proceedings as are in conformity with rules and practices of courts of equity.” (Emphasis supplied.)

This act follows the general rule as set out in 17A Am. Jur., Divorce and Separation § 919; and 81 C. J. S. Specific Performance § 86, and 42 C. J. S. Husband and Wife § 606. In addition, this Court in McCue v. McCue, 210 Ark. 826, 197 S. W. 2d 938, relative to alimony which is applicable here, reasoned as follows:

‘ ‘ It was recognized in Shirey v. Hill, 81 Ark. 137, 98 S. W. 731, that a husband’s contract for separate maintenance of his wife is binding. Mr. Justice Wood, in disposing of the argument that Lawrence Chancery Court was without jurisdiction, cited Wood v. Wood, 54 Ark. 172, 15 S. W. 459. Effect of the decisions is that enforcement of a contract for alimony is an action for alimony, as distinguished from an action on debt, although the debt, as such, is recognized as subsisting by reason of agreement between the parties. ’ ’

Prejudice-. Appellant forcefully urges that the trial court was biased and prejudiced, and that the appellant did not receive a fair and impartial trial. Appellant further contends that “It is apparent from the examination of the remarks in the record by the trial court that the court was sympathetic to the appellee, and that the appellant did not receive fair consideration of his presentation of the facts.” Even though we noted a number of remarks in the record which would have been best left unsaid, upon careful examination we cannot say that such remarks indicated such a personal bias toward the appellant as a matter of fact which would justify our agreement with the contention of appellant under the law. This Court has repeatedly said, even in criminal cases, that “There is no provision of our Constitution or statutes that disqualifies a judge for prejudice.” See: Jones v. State, 61 Ark. 88, 32 S. W. 81. In considering an application for a change of venue, this Court in Hudspeth v. State, 188 Ark. 323, 67 S. W. 2d 191, very aptly said:z

‘‘ That personal bias . . . toward the defendant . . . must be shown as a matter of fact, and not as a matter of opinion of the defendant or any other person. The words ‘bias’ and ‘prejudice’, as used in the law of the subject under consideration, refer to the mental attitude ... of the judge towards a party to the litigation, and not to any views that he may entertain regarding the subject matter involved.”

Consideration: Appellant, in support of his contention that “The instrument sued upon is invalid for lack of consideration, ’ ’ cited the case of McCue v. McCue, supra, as follows:

“Courts generally enforce covenants and promises respecting wife’s maintenance and spouses’ property in separation deeds, if based on sufficient consideration, fair and equal, reasonable and not the result of fraud or coercion, and if separation actually occurred before agreement was made or immediately follows it.” (Emphasis supplied.)

The briefed contents of the property settlement agreement as heretofore set out renders unnecessary our quoting verbatim the lengthy instrument. A casual reading of the agreement in its entirety reveals that at least seven paragraphs contained therein are beneficial to appellant. Even the appellant on cross-examination admitted that there were “a few” provisions which are advantageous to him. We therefore cannot say that the findings of the Chancellor that the agreement was based upon sufficient consideration was against the weight of the evidence.

Breach: The last point relied upon for reversal is that the appellee has breached the terms of the contract. Included among the personal property and household furniture and furnishings awarded to the appellee under the property settlement agreement was a washing machine, upon which an indebtedness existed, payable in deferred monthly payments of $26 each. Both parties testified that the washing machine had been purchased in the name of the appellant. This item was not specifically mentioned in the written contract, but there is no dispute as to the appellee being entitled to same. After the execution of subject contract, the question arose as to whose liability it was to make future payments upon this indebtedness. Appellant asked appellee’s attorney for information and was told at first that it was not his obligation. Appellant testified as to a later conversation with appellee’s attorney as follows:

“Q. Did I say you would have to pay for it?
“A. You said that she insisted on it or words to that effect, so I paid it then.” (Emphasis supplied.)

As we view this conversation it amounted to appellee’s interpretation and not a requirement which would constitute a breach of the entire agreement.

Prom what we have said above on the whole case it necessarily follows that the Chancellor’s opinion being supported by the weight of the evidence, the decree is affirmed.

Affirmed.

       Emphasis ours.


source: Caselaw Access Project

author: J. Seaborn Holt, Associate Justice.

license: Public Domain

text:
    Allstate Insurance Company v. Mathis.
    5-2188
    339 S. W. 2d 132
    Opinion delivered October 3, 1960.
    [Rehearing denied November 7, 1960]

      Barber, Henry, Thurman & McCaskill, for appellant.

      Pope, Pratt & Shamburger, by Richard L. Pratt and Joseph L. Buffalo, Jr., for appellees.
   J. Seaborn Holt, Associate Justice.

Rachel Anderson was the named insured in an assigned risk automobile liability insurance policy issued by the appellant, Allstate Insurance Company. Dee Mathis and two of his children were injured when an automobile owned by Rachel Anderson collided with the Mathis car. At the time of the collision the automobile was not being driven by Rachel Anderson but by Harry Davidson, a friend of Rachel Anderson’s brother, James Vines. James Vines lived in the home of his sister Rachel Anderson. The present suit was commenced by Mathis against Allstate to enforce the policy provisions which Mathis claims covered Davidson, and which Allstate denies. A jury trial resulted in a verdict in favor of appellee, Mathis, and Allstate has appealed.

For reversal appellant relies on the following points:

(1) That the trial court erred in refusing to instruct a verdict in favor of appellant, Allstate Insurance Company, and

(2) In giving certain instructions requested by appellee, and in refusing to give Defendant’s requested instructions No. 2 and No. 4 and

(3) Erred in allowing appellee an attorneys’ fee of $2,000.00.

The insurance policy here involved, contained this provision:

“With respect to insurance for bodily injury liability and for property damage liability the unqualified word 'insured’ includes the named insured and, if the named insured is an individual, his spouse if a resident of the same household, and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or such spouse or with the permission of either.”

The evidence discloses that Rachel Anderson had expressly told her brother, James Vines, on several occasions not to let Davidson drive the car, however, on the Saturday preceding the collision on the following day, Sunday, Davidson came to the home of Rachel Anderson and asked for her car to go to his mother’s home. Miss Anderson testified that she allowed him to have the car but did not let him drive alone but accompanied him to his mother’s home. While at his mother’s home Miss Anderson allowed Davidson to take the car to a nearby store to procure medicine for his mother. Later that day, Rachel Anderson gave permission to her brother, James Vines to use the car. Vines and Davidson left in the car and drove by to pick up their girl friends. After picking the girls up, it was decided to drive to Louisiana. They drove all night to Louisiana and arrived back in Little Rock Sunday morning. The boys drank beer and Vodka during the trip and they both drove the automobile. After arriving back in Little Rock, they went to a motel where Vines registered and remained with his date. Vines instructed Davidson to take the other girl to work. While Davidson was gone on this trip to town, after delivering the girl to her work, the collision occurred.

After a careful review of the evidence presented, viewed in the light most favorable to appellee as we must, we do not agree with appellant’s contention that the Court should have instructed a verdict in its favor. We hold that there was some substantial evidence sufficient to take the case to the jury, and if it had been properly instructed, to have sustained the jury’s verdict.

Among the instructions given were the following:

Plaintiff’s Instruction No. 3

“You are instructed that if you find from a preponderance of the evidence that James Vines had permission of Rachel Anderson to use the automobile in question, and further that at the time the automobile was involved in the accident it was being used for a benefit, advantage or purpose of James Vines, then you are advised that the automobile was being used within the permission given and yonr verdict will be for tbe Plaintiffs. Unless yon find that Harry S. Davidson had actually been forbidden to drive the automobile by Rachel Anderson and that such refusal had not been revoked. ’ ’

This instruction was correct.

Plaintiff’s Instruction No. 2

“You are instructed that if you find from a preponderance of the evidence that Harry Steve Davidson was told by the named insured, Rachel Anderson, not to use the automobile in question, if at all, and further that after such refusal of permission was made, if at all, she knowingly permitted Harry Steve Davidson to drive said automobile, then you are instructed that her previous refusal of permission to the said Harry Steve Davidson, if at all, was thereby revoked and in determining whether or not there was implied permission for Harry Steve Davidson to use the automobile in question, you should consider all of the facts and circumstances of the case relating to that particular matter.”

We would affirm but for the error in giving, over appellant’s general objections, appellee’s instruction No. 2. The vice in this instruction is in the use of the phrase:

“... then you are instructed that her previous refusal of permission to the said Harry Steve Davidson, if at all, was thereby revoked.”

Whether Rachel Anderson’s permission to Davidson to drive the automobile after she had previously refused him permission, automatically revoked her previous refusal of permission to Davidson, was a question of fact for the jury under a proper instruction.

Accordingly, the judgment is reversed and the cause remanded.


author: Ed. F. McFaddin, Associate Justice. Jim Johnson, Associate Justice,

text:
    Wonder State Mfg. Co. v. Howard.
    5-2165
    338 S. W. 2d 682
    Opinion delivered October 3, 1960.

      Frierson, Walker S Snellgrove, for appellants.

      Howard A. Mayes, for appellee.
   Ed. F. McFaddin, Associate Justice.

This is a Workmen’s Compensation case in which the Commission denied recovery and the Circuit Court reversed the Commission. The decisive question is, whether there is substantial competent evidence to sustain the Commission: if so, the Circuit Court was in error in reversing the Commission. Such is our well established rule. Lundell v. Walker, 204 Ark. 871, 165 S. W. 2d 600; J. L. Williams & Sons v. Smith, 205 Ark. 604, 170 S. W. 2d 82; Moore v. Long-Bell Lbr. Co., 228 Ark. 345, 307 S. W. 2d 533; and Chapman v. Finkbeiner, 230 Ark. 655, 324 S. W. 2d 348. In J. L. Williams ds Sons v. Smith, supra, we said:

‘ ‘ The circuit court cannot go into the question of the weight of the evidence. The only issue confided, by the act, to its determination is whether there is sufficient evidence as a matter of law to warrant an honest and reasonable trier of facts in making the finding which was made. There was sufficient competent evidence to warrant the finding of fact of the commission and the circuit court erred in setting it aside.”

With the foregoing rule in mind, we examine the case at bar. The claimant, Henry H. Howard, was employed as a sheet metal worker for the Wonder State Manufacturing Company in Paragould on August 28, 1958. Howard went to work at 7 A. M. and after about 25 minutes’ work he became ill and went to the hospital, where his condition was diagnosed as peptic ulcer and myocardial infarction. He was unable to resume work until October 30,1958, and this is a claim for total temporary disability. The Commission found that the claimant had failed to establish any connection between his work and his disability, and disallowed the claim. We quote at length from the Commission’s opinion:

“There is little, if any, controversy with respect to facts relating to claimant’s employment and his becoming disabled on August 28,1958. He had previously had great discomfort either as a result of a stomach ulcer or from pains resulting from a heart condition. The Surgeon’s Report following claimant’s treatment in the hospital at Paragould described the nature of claimant’s injury as ‘acute anterior myocardial infarction.’ Dr. Andrews testified that X-ray reports indicated that the claimant had a stomach ulcer of long standing duration. An electrocardiogram was made and claimant gave a history of hard work for the past few days and Dr. Andrews stated that as a basis of the electrocardiogram and the history of very heavy work, he could not say with certainty that the work caused the heart attack, but he was of the opinion that it did.
‘ ‘ On cross-examination, Dr. Andrews stated that such a heart condition as claimant had is often brought on by hardening of the arteries and that heart attacks are less common among hard working people than people who have sedentary work. After considerable cross-examination, Dr. Andrews made the following statement: ‘Well, as I understand it, the man started having symptoms the day before and on the day he left work he had only been there a little while and, in other words, I see no connection between the work on the morning that he left work and any possible heart attack that morning.’ Then follow the following questions and answers:
“ 'Q. Then as far as the work he was doing on the morning when he quit, you see no relation between that work and his heart attack? A. I see no strong relation as far as heavy work causing a heart attack, no sir. Q. Nothing to indicate to you that that work he was doing that morning produced that heart attack? A. None in the history, no, sir. Q. Now, from what you know of this case from the history that has been given, Doctor, isn’t it a fact that it would be impossible for you to put your finger on the time that this man had his heart attack? A. That is true.’
“We shall now dwell on the testimony given by Dr. Stern. The claimant was examined by Dr. Stern on January 20, 1959. He closed his report on this examination with the following paragraph:
‘ ‘ The degree to which the heart attack is related to the work is difficult to assess. The underlying disease or coronary .arteriosclerosis was present previously, was the basic cause of the attack and has no relationship to his work. It is quite possible that the exertion of his work was the precipitating incident that caused the attack to occur at the time it did. These attacks, of course, will occur spontaneously at rest, so that it cannot be proven that the work was the precipitating cause; on the other hand, since the attack did come on while working, there must be a presumption that the work contributed to the initiation of the attack.’
" Counsel for claimant is of the view that Dr. Stern’s report supports the claim of a compensable injury in this paragraph, wherein it is stated that there must be a presumption that the work contributed to the initiation of the attack. With reference to this statement in his report, Dr. Stern testified as follows:
“ 'A. I would like to change that sentence to read: It may have contributed to the initiation of the attack. It may, in other words, have contributed theoretically, and there is no way of telling which particular piece of physical exertion will contribute to the attack. There is a theoretical way in which an expenditure of energy can precipitate an attack, some movement may have contributed to the starting of the heart attack. Q. It is a fact, is it not, Doctor, that these attacks occur in all stages of one’s life? A. That is correct. It may occur without any precipitating cause. Q. Quite frequently occur in sleep? A. Yes, sir. Q. And it would be absurd to say that sleep contributed to it? A. It may be entirely coincidence, and one cannot say about that. Q. Confining it to reasonable medical certainty, can you make any statement as to whether or not it may have caused or contributed towards causing the heart attack? A. I can say with reasonable medical certainty that it probably did not precipitate the attack, but I cannot say with medical certainty that it absolutely did not.’
“In view of this testimony, the Commission is unable to find that the claimant has furnished sufficient proof to establish his contention that he received an accident that arose out of or in the course of his employment.”

The claimant urges that the case at bar is ruled by such cases as Simmons Natl. Bank v. Brown, 210 Ark. 311, 195 S. W. 2d 539; Scobey v. Southern Lbr. Co., 218 Ark. 671, 238 S. W. 2d 640; Triebsch v. Athletic Mining Co., 218 Ark. 379, 237 S. W. 2d 26; Bryant Stave Co. v. White, 227 Ark. 147, 296 S. W. 2d 436; and Bettendorf v. Kelly, 229 Ark. 672, 317 S. W. 2d 708. The employer urges that this case is ruled by such cases as Moore v. Long-Bell Lbr. Co., 228 Ark. 345, 307 S. W. 2d 533; Ark. P. & L. Co. v. Scroggins, 230 Ark. 936, 328 S. W. 2d 97; Shipp v. Tanner, 229 Ark. 815, 318 S. W. 2d 821; and Chapman v. Finkbeiner, 230 Ark. 655, 324 S. W. 2d 348. We conclude that the case at bar is ruled by such cases as J.L. Williams & Sons v. Smith, supra, wherein we held that the findings of the Commission must be sustained if supported by substantial competent evidence. There is evidence in the record which would have sustained an award in favor of the claimant: likewise, there is evidence in the record that sustains the Commission’s finding in favor of the employer. The claimant admitted that he was sick all the night before August 28th, with pressure in the upper part of his stomach and in his chest. From that evidence, and from the medical evidence, the Commission could have found that the heart attack suffered by the claimant had already occurred before he reported for work on the morning of August 28th. Such a finding would have been in line with Chapman v. Finkbeiner, supra. Without further detailing of the evidence, we conclude that the Commission’s findings should not have been reversed by the Circuit Court.

The Circuit Court judgment is reversed and the cause is remanded to the Circuit Court with directions to affirm the Commission.

Johnson, J., dissents.

Jim Johnson, Associate Justice,

dissenting.

I do not agree with the majority for two reasons: (1) The majority state the decisive question is whether there is substantial competent evidence to sustain the Commission. I believe this is one of two decisive questions involved, the other being whether the triers of fact have forgotten, in this instance, that the Workmen’s Compensation Law is remedial legislation and should be liberally construed with doubtful cases resolved in the claimant’s favor.

■ This is a doubtful case, with the evidence on both sides based only on medical theory. The claimant has been required to prove that which cannot be proven, that is, the effect of exertion on the pre-existing disease arteriosclerosis. By any measuring device, the evidence is equal and a finding in keeping with the spirit of the Act would have allowed compensation. (2) In order for a decision of an administrative tribunal to be constitutional, a disappointed litigant must be allowed to appeal to some part of the judiciary. A disappointed Workmen’s Compensation claimant may appeal to the Circuit Court of his county. Under the decisions of this Court, particularly that of Reynolds Metal Co. v. Robbins, 231 Ark. 158, 328 S. W. 2d 489, wherein it was said the strongest rule in Workmen’s Compensation Law was that the Commission would be affirmed if there was any substantial evidence to support their findings, the Circuit Judge has been relegated to a position which could not have been intended by the framers of the Act.

The findings of the Workmen’s Compensation Commission are accorded the same weight as a jury verdict, J. L. Williams & Sons v. Smith, 205 Ark. 604, 170 S. W. 2d 82.

A Circuit Judge may set aside a jury verdict because it is not sustained by sufficient evidence. Ark. Stats. Sec. 27-1901.

A Circuit Judge’s rejection of a jury verdict involves judicial discretion, which will not be interfered with on appeal in the absence of the abuse thereof. Texas & Pacific Railway Co. v. Stephens, 192 Ark. 115, 90 S. W. 2d 978.

It is, therefore, apparent that in all areas except Workmen’s Compensation Law, the Circuit Judge has broad powers in weighing the evidence, yet this Court, in the field of Workmen’s Compensation Law, has taken this discretion away from the Circuit Judge. Under our holdings the Circuit Judge must affirm the Commission if there is any substantial evidence to support their findings and is not allowed to exercise his own knowledge of the weight and sufficiency of evidence.

As previously stated, in order to provide due process of law, a litigant before an administrative tribunal must be allowed to appeal to the Judiciary. Under the decisions of this Court, I am unable to distinguish a situation where a litigant is not allowed to appeal and a situation such as we have where a Circuit Judge must affirm the Commission and cannot exercise discretion on the matter of sufficiency of evidence. The Circuit Judges are elected by the people and are answerable to them whereas the Workmen’s Compensation Commissioners, with all respect to them, are political appointees, which, under the aforementioned decisions of this Court is not now but could be a dangerous situation.

It is my opinion that when we require a Circuit Judge to affirm the Commission if there is any substantial evidence to support their findings, then we relegate him to a position inferior to that of the Workmen’s Compensation Commission, a quasi-judicial administrative tribunal.

Against my position in attempting to show the inconsistency involved when a Circuit Judge is allowed to set aside a jury verdict for lack of substantial evidence and his being bound by the decision of the Workmen’s Compensation Commission on the question of substantial evidence, it might be argued that the Circuit Judge only has a cold record before him whereas the Commission sees the witnesses. The answer to this is that in this case, as in many others, the Full Commission reached their decision on the record without the introduction of new evidence. As I view it, it is no argument to say that the Commission affirmed a single referee who did see the witnesses because had they reversed a single referee the situation would be the same since the appeal to the Circuit Court is from the Full Commission and not a referee.

Therefore, I reach the inescapable conclusion that by court decision we have made the findings of the Commission superior to a jury verdict in direct conflict with our repeated holdings that the findings of the Workmen’s Compensation Commission are to be accorded the same weight as a jury verdict.

For the reasons stated above, I would affirm the findings of the Greene County Circuit Court.


author: George Rose Smith, J.

text:
    Ark. La. Gas Co. v. Evans.
    5-2148
    338 S. W. 2d 666
    Opinion delivered October 3, 1960.

      Daily & Woods, by James E. West, and Blanchard, Goldstein, Walker & O’Quin, Shreveport, La., for appellants.

      Sexton & Holland, by Sam Sexton, Jr., for appellee.
   George Rose Smith, J.

The basic question here is whether the lessee of an oil and gas lease is estopped to deny the title of the lessor, especially when the lease contains a clause requiring payment of royalties to the lessor only to the extent of his mineral ownership. The chancellor held that the ordinary rule of estoppel as between landlord and tenant is applicable to oil and gas leases. Upon that premise he required the appellants, as lessees, to pay royalties to the appellee, their lessor, who holds only a void tax title to the minerals within the 120 acres covered by the lease.

The facts are these: In 1935 the Missouri-Pacific Railroad Company owned the minerals in question and paid the taxes for that year in the Charleston district of Franklin county, where the land is located. By mistake, however, the same mineral rights were also assessed on the tax books in the Ozark district of the county and were erroneously sold and certified to the State for nonpayment of the taxes. It is settled, of course, that a tax sale is void if the taxes have actually been paid. Spradling v. Green, 226 Ark. 420, 290 S. W. 2d 430.

In July of 1947 the appellee, for a consideration of $3.92, purchased the State’s tax title, which, as we have indicated, was void. Two months later the appellee executed an oil and gas lease to one of the appellants, Arkansas Louisiana Gas Company, purporting to cover these minerals. In December of 1947 the lessee conveyed a half interest in the lease to Arkansas-Oklahoma Gas Company, and in 1954 the latter’s interest was acquired by Stephens Production Company, a partnership composed of the appellants W. R. Stephens, J. T. Stephens, and Vernon Giss. In 1955 the original lease was superseded by a new lease that was executed by the appellee to Arkansas Louisiana Gas Company and Stephens Production Company. It may be observed in passing that under the two leases the appellee has collected a total of some eight hundred or nine hundred dollars, as delay rentals.

Both the leases executed by the appellee were for a term of ten years and as long thereafter as oil or gas is produced, and both leases contained this reduction clause: “Lessor hereby warrants and agrees to defend the title to said land .... Without impairment of Lessee’s right under the warranty in event of failure of title, it is agreed that if Lessor owns an interest in said land less than the entire fee simple estate, then the royalties and rentals to be paid Lessor shall be reduced proportionately. ’ ’ The 1955 lease was still in force when the present suit was filed by the appellee on October 2,1958.

Not only do the appellants hold a lease from the appellee; they also hold a lease from the real owner of the minerals. In 1952 Arkansas-Oklahoma Gas Company acquired an oil and gas lease from the Missouri-Pacific, covering extensive acreage including the land now in controversy, and later that year Arkansas-Oklahoma conveyed a half interest in the lease to the appellant Arkansas Louisiana Gas Company. In 1954 Arkansas-Oklahoma’s half interest was acquired by Stephens Production Company. Thus the appellant lessees hold two leases upon these minerals, one from the appellee, whose tax title is invalid, and one from the Missouri-Pacific, which was the true owner when it leased the property.

In May of 1958 Stephens, Inc., a corporation owned by the two Stephenses, purchased from the Missouri-Pacific more than 2,900 acres of mineral rights in and near Franklin county, including the 120 acres now in dispute. The purchase price of $112,251 was based upon an independent appraisal previously procured by the Missouri-Pacific, and according to that appraisal $9,000 of the total value was allocated to these 120 acres. In making the purchase Stephens, Inc., took the title in the name of the remaining appellant, J. A. Carter, as trustee.

It was not until 1958 that the lessees began drilling operations. The acreage now in controversy was unitized with other lands, and in August of 1958 the lessees completed a producing gas well upon other land within the unitized block. The appellee then filed this suit, asserting that the lessees are estopped to deny his title and must therefore pay him royalties upon that part of the gas production that is attributable, under the unitization agreement, to the 120 acres in question. The chancellor upheld the theory of estoppel and entered a decree requiring the lessees to account to the appellee for his share of the royalties. The practical effect of the decree is to compel the lessees to pay full royalties to both lessors.

Counsel for the appellee opens his brief by contending that the issue of estoppel is to be determined by the law of Louisiana, because the appellee’s lease to the appellants was executed and delivered in that state. We are inclined to believe that the Louisiana courts do not consider an oil and gas lessee to be estopped to deny his lessor’s title, so that the Louisiana law is actually unfavorable to the appellee. See Nabors Oil & Gas Co. v. La. Oil Ref. Co., 151 La. 361, 91 So. 765; Powell v. Rapides Parish Police Jury, 165 La. 490, 115 So. 667; and Gulf Ref. Co. of La. v. Glassell, 186 La. 190, 171 So. 846, as later explained in Serio v. Chadwick, La. App., 66 So. 2d 9. We do not, however, rest onr decision upon the law of Louisiana, for we think it plain that the issue is to be determined by the law of Arkansas, where the land lies.

‘ ‘ Covenants to pay royalties run with the land so that an assignee of a royalty interest is entitled to receive the royalty from the lessee or his assignee.” Standard Oil Co. of La. v. Craig, 202 Ark. 168, 150 S. W. 2d 744. It is an established principle that covenants which run with the land are governed by the law of the state where the land is. Beauchamp v. Bertig, 90 Ark. 351, 119 S. W. 75, 23 LRANS 659; Rest., Conflict of Laws, § 341. As Leflar explains in his work on Conflict of Laws (1959), § 144: “Those [covenants] which run with the land . . . create more than an in personam right, since they attach themselves to the land and are transferred as a part of the ownership of the land to all subsequent takers thereof. For that reason their existence, nature and effect are all determined by the law of the place where the land is located.”

The rights and the duties that arise from a covenant to pay royalties are not personal to the contracting parties; they run with the land and apply with equal force to successors in interest of either the lessor or the lessee. If the rule of estoppel as between landlord and tenant applies to this situation it has a substantive effect upon the rights of the parties and thus really determines the extent of their interest in the land. The law rightly holds, both as a matter of logic and as a matter of convenience and uniformity, that such questions are governed by the law of the place where the land lies.

Coming then to the principal issue, which is a matter of first impression in Arkansas, we are firmly of the view that the doctrine of estoppel does not apply in the present case.

The inability of an ordinary tenant to deny his landlord’s title ultimately goes back to basic considerations of good faith and fair dealing. Thompson gives the reason for the rule in his work on Beal Property (Perm. Ed.), § 1735: “On becoming tenant of land under another, the tenant, in contemplation of law and on grounds of public policy and in maintenance of sound morals and good faith, undertakes to preserve the possession of the landlord and redeliver it, and he can not do otherwise without a violation of faith. ’ ’ Later on the author adds: ‘ ‘ The rule that a lessee holding possession by virtue of a lease can not dispute the title of his lessor does not apply to an ordinary mining lease, which is more like a sale than a lease.” Ibid., § 1745.

There are compelling reasons for recognizing a distinction between the two situations. In the usual case a tenant of business property or farm land is not concerned with any question of title. All he pays for is the right of possession, and if his occupancy is undisturbed he has no ground for complaint. To permit him to question his landlord’s title would prevent the latter from bringing an action to collect the rent except at the risk of placing his title in jeopardy. See Tiffany, Real Property (3d Ed.), § 135. On the other hand, if the lease should give the tenant an option to purchase the property it cannot be doubted that he would be allowed to question his landlord’s title to the extent of insisting that a merchantable title be conveyed.

A mineral lessee is unquestionably more in the position of a purchaser than in that of a mere occupant of the land. By our law an oil and gas lease conveys to the lessee an interest in the land. Clark v. Dennis, 172 Ark. 1096, 291 S. W. 807. Unlike an ordinary tenant a mineral lessee is not concerned with possession alone. He does not merely undertake, as Thompson observes, supra, “to preserve the possession of the landlord and redeliver it. ’ ’ Instead, both parties to the lease intend and hope that the lessee will redeliver the premises only after the oil, gas, coal, or other minerals have been removed, with payment of royalties to the lessor. Thus the lessee is a purchaser as well as an occupant, and in this situation considerations of good faith and fair dealing require that the lessor have good title to the minerals for which he is receiving a royalty.

If we had any feeling of doubt in the case at bar that doubt would be set at rest by the fact that the appellee’s lease contained the reduction clause quoted above. “In the cases involving this type of clause it has been uniformly held that if there is a failure of the lessor’s title he is entitled only to a proportionate interest in the rents and royalties and that the lessee is not estopped from taking leases from adverse claimants on the theory that a lessee cannot deny his landlord’s title.” Summers, Oil & Gas (Perm. Ed.), § 609.2. It is plain enough that the parties, by inserting the reduction clause in the lease, recognize the lessee’s right to question the lessor’s title, and thus they eliminate by contract any possibility of estoppel. Indeed, counsel for the appellee recognizes the controlling force of this clause and merely argues that it should not be applied where, as here, the lessor has no title whatever. In short it is contended that if the appellee owned only one per cent of the fee simple he would be entitled to only one per cent of the royalties, but since he owns no valid interest at all he should be entitled to one hundred per cent of the royalties. This argument does not require an extended answer.

Only one other matter need be mentioned. The appellants requested, in substance, that the appellee admit that the appellant Carter, as trustee, is the owner of the minerals in question. The appellee, by failing to answer the request, admitted the truth of the appellants’ assertion. Ark. Stats. 1947, § 28-358; Brown v. Lewis, 231 Ark. 976, 334 S. W. 2d 225. The record also shows that the appellee’s tax title is void, as the taxes for 1935 were paid in the Charleston district. It follows that the appellants are entitled to a decree dismissing the appellee’s complaint for want of equity and canceling his tax deed as a cloud upon Carter’s title to the minerals. The cause will therefore be remanded for the entry of a decree to that effect.

Reversed and remanded.


author: Paul Ward, Associate Justice.

text:
    Waller v. Rhyne.
    5-2179
    338 S. W. 2d 670
    Opinion delivered October 3, 1960.

      J. Allen Eades, for appellant.
    No brief filed for appellee.
   Paul Ward, Associate Justice.

Testator gave his widow the rents and profits each year during her natural life from 80 acres of land with the remainder to go to his two sons. The sons deeded their interest to one Williams through whom such interest was acquired by the appellee, Ed Rhyne. The widow (by her guardian) filed suit to cancel the deed to appellee. Prom a decree adverse to the widow comes this appeal. There are no disputed questions of fact.

U. Gr. Waller executed Ms will in 1934 and died in 1935, leaving Ms widow Nonnie Waller and two sons, Royal Waller and Everett Waller. The deceased’s will, which was duly probated, contained this pertinent paragraph: “I hereby give and bequeath to my beloved wife Nonnie Waller, the rents and profits each year from my farm during her natural life . . . after having first paid the taxes, and upkeep of the farm. Said rents for her support and benefit. It is my will that my lands be not sold until my wife’s death. ’ ’ Paragraph 4 of the will reads: “It is my will and desire that after the death of my wife that my land be divided equally between my two sons Royal Waller, and Everett Waller, share and share alike. ’ ’

In 1938, Parker C. Craig was appointed guardian of Nonnie Waller, who was incompetent. As such guardian he executed a farm lease to J. A. Williams (who at the time was executor of U. Gr. Waller’s estate) for a period of five years. Under the terms of this lease Williams was to pay all taxes and pay $42.50 a year to the guardian for the use of the land. Later the two sons above mentioned executed a warranty deed to Williams. Thereafter Williams executed a deed and assigned the farm lease to Dimon Sparks. Sparks and his wife in turn assigned the farm lease and executed their warranty deed conveying said lands to appellee, Ed Rhyne. On April 3,1958, Rhyne and his wife executed an Oil, Gas and Mineral Lease to L. S. Youngblood, wherein Youngblood was to pay $1.00 per acre per year to Rhyne.

On August 31, 1959, Nonnie Waller, incompetent, by Parker C. Craig, Guardian, filed a complaint in equity against Ed Rhyne in which, among other things, the facts above related were set forth. The prayer was £ £ that the deed executed to Rhyne be cancelled, set aside and held for naught and that he be required to pay to the guardian, Parker C. Craig, the sum of $160 . . . ” which was the amount of rentals alleged to have been paid by Young-blood to Rhyne.

After a full hearing the chancellor refused to cancel the deed to appellee, refused to order the oil and gas rentals paid to appellant, and dismissed the complaint. We think the chancellor must be sustained.

As set forth by the chancellor, the deed to appellee in no way affects or detracts from the rights of appellant to receive the rents and proceeds from the farm which still go to the widow. Appellant’s contention that the widow alone had the right to execute the oil and gas lease on the land under the provisions, Ark. Stats. 53-302 et seq., cannot be sustained. Said statutes clearly apply to one who holds property in fee tail, which is not the position of the widow in this case. The two sons as remainder-men, had a right to convey their interest, hence no reason is shown which justifies the cancellation of the deed to appellee.

It is argued by appellant that the five year farm lease to Williams (with the option to renew) was invalid because it was not executed in accordance with the provisions of Ark. Stats. § 62-427, which limits such lease to a period of one year. As again pointed out by the Chancellor, appellant has all this time accepted the rentals without objection. Whether this constitutes a waiver or an estoppel we need not decide at this time. The reason being that appellant did not in this litigation ask for a cancellation of said lease. Neither was the lessee made a party to this suit. Likewise, the oil and gas lessee was not made party to this litigation.

The record discloses that Williams (the farm rental lessee) was the Executor of the U. G-. Waller estate at the time the lease was executed. Whether or not this fiduciary relationship affected the validity of the lease cannot be resolved at this time for the reason this was not an issue raised by the pleadings.

Our conclusion therefore is that the decree of the chancellor must be, and it is hereby affirmed, but without prejudice to further litigation relative to the above mentioned issues and parties not involved in this litigation.

Affirmed.


text:
    Ark. Racing Commission v. Hot Springs Kennel Club, Inc.
    5-2177
    339 S. W. 2d 126
    Opinion delivered October 3, 1960.
    [Rehearing denied November 7, 1960]

      Conway <& Webber, for appellant.

      Warren & Bullion, by Eugene Warren, for appellee.
   Jim Johnson, Associate Justice.

The question for decision is: Did the Racing Commission act contrary to the law and the evidence in cancelling the temporary franchise of the Hot Springs Kennel Club, IncJ

A general review of the events leading up to the cancellation of appellee’s temporary franchise will, we believe, lead to a better perspective of the issues here involved. Yery briefly they are as set out below.

March 8, 1957, Act 191 of 1957 (Ark. Stats. §§ 84-2801 to 84-2842) was approved, authorizing dog racing in Arkansas under the supervision of the Arkansas Racing Commission.

December 6, 1957, the Hot Springs Kennel Club, Inc., was incorporated. Eleven days thereafter the articles of incorporation were amended to issue 500,000 shares of promotional stock.

February 6, 1958, the Kennel Club filed with the Racing Commission its application for a temporary franchise. It was known by everyone at that time that dog racing would first have to be approved by the electors in G-arland County.

On May 6, 1958, an election was held. It was not known whether the results of the election were favorable to dog racing until the decision of this court became final on May 20, 1959 — holding that dog racing had been approved.

By July 1, 1959, it had become known that there were disputing factions existing in the Kennel Club. The directors appeared before the Commission where these disputes were examined by the Commission. Ned Stewart, as chairman and spokesman for the Racing Commission, warned the Kennel Club that it must get its house in order or their franchise would be revoked.

On August 12, 1959, it appearing to the Commission that the Kennel Club had not heeded the warning of the Racing Commission, the Kennel Club’s temporary franchise was revoked.

On September 4, 1959, after the Kennel Club had requested a hearing, a full hearing was held before the Racing Commission, and the revocation was sustained and made permanent.

Following the revocation, the Kennel Club filed a petition for a Writ of Certiorari in the Circuit Court of Pulaski County. Upon that hearing before the Circuit Court the record made before the full Commission on September 4th was reviewed, and the order of the Racing Commission (revoking the temporary franchise) was reversed. From that decision of the Circuit Court an appeal is now prosecuted by the Racing Commission.

The Judgment of the Circuit Court. This judgment was based on two propositions, both of which we think were erroneous. One, the order of the Commission is void because no notice was given to the Kennel Club. Two, the order of the Commission was void because it amounted to the taking of the Kennel Club’s property without due process of law.

One. While it is true that the revoking order issued on August 12,1959, might be subject to the charge that no notice was given, however, it must be remembered that some 40 days previously the Kennel Club was warned that it must set its house in order or its franchise would be cancelled. The record reflects aboundingly that this warning was not complied with. Regardless of whether the above amounted to notice, it is undisputed that a full hearing was held on September 4, 1959, at the request of the Kennel Club. At this hearing a voluminous record was made, containing the testimony of officers of the Kennel Club and specific findings by the Commission. This record was the basis of seeking redress in the Circuit Court and it is the basis of this appeal. Appellee has had its day in court with ample notice.

Two. What we have said above also refutes the finding of the Circuit Court that property was taken from the Kennel Club without due process of law. It is well recognized by all authorities that a franchise granted by the State to conduct dog racing, just a franchise to sell liquor, is a privilege and not a property right. The State gives the privilege and it can take away that privilege by the same token. In this instance it appears from the record that the Kennel Clnb had spent approximately $70,000 at the time its temporary franchise was revoked. This, of course, does constitute a loss of money by the Kennel Clnb, however, Ark. Stats. § 84-2826 (A) makes it very clear that if the law is not complied with the Kennel Clnb could have its franchise cancelled after it had spent approximately a million dollars. The Kennel Club had access to ‘‘due process of law” when it had a full hearing before the Racing Commission, before the Circuit Court, and now before this Court.

However, regardless of the reasons assigned by the trial court for reversing the Commission, it still remains to be considered whether the Commission was justified, under the law and the facts, in cancelling the temporary franchise. The several arguments presented by appellee to sustain the judgment of the Circuit Court in reversing the order of the Commission are included under the f ollowing groupings: (a) The franchise could be revoked only for one of the canses contained in the statutes and, in the alternative, (b) the testimony given at the hearing did not justify the Commission in revoking the temporary franchise.

(a) We cannot agree that the temporary franchise could be revoked only for one of the two causes mentioned in the statute. The statute referred to is Ark. Stats. § 84-2826. In substance, this statute provides that the temporary franchise shall be forfeited if appellee fails to acquire a site and commence construction of buildings and facilities within 90 days after notification of the result of the election. It further provides if such construction is begun and appellee fails to complete it and be open for business within one year after the end of the aforesaid 90 day period, in accordance with the plans and specifications, the Commission shall cancel the temporary franchise. In the first place it will be noted, and we think it is significant, that in these instances the Commission has been given no discretion. To so limit the power of the Commission to cancel a temporary franchise would make it an automation, and would not he in harmony with other provisions of the dog racing statute. Ark. Stats. § 84-2819, which defines the power and duty of the Commission, among other things, provides that the Commission shall “hear and determine all matters properly coming before the Commission, and grant rehearings thereon. Take such other action, not inconsistent with law, as it may deem necessary or desirable to supervise and regulate, and to effectively control in the public interest, Greyhound Racing in the State of Arkansas.” (Emphasis supplied.)

It is not disputed that the Commission has the right and duty to investigate thoroughly in selecting the character of people who propose to conduct dog racing before a temporary franchise is issued. This is in line with the Commission’s duty to protect the public interest. If, after the Commission had selected proper personnel and had issued a temporary franchise, the personnel should be changed to include undesirable characters, it would be almost ridiculous to say that the Commission was powerless to revoke the franchise. To accept appellee’s contention in this matter would amount to eliminating all distinction between the words ‘ ‘ temporary franchise ’ ’ and “permanent franchise”, and would leave the Commission powerless to protect the public interest.

(b) Was the Commission Justified by the Evidence. Having arrived at the conclusion that the Commission has the power to exercise discretion, we now proceed to consider whether or not it was justified in this instance in revoking appellee’s temporary franchise. However, before proceeding to this discussion it is necessary to determine the rule by which the Circuit Court must review the findings of the Commission on a Writ of Certiorari.

If the Circuit Court in this instance was authorized and empowered to try the issue de novo, this fact would lend support to an affirmance of its judgment reversing the Commission, but even then, we think, it would not be a justification. However, the Circuit Court in this instance had no right to try the case de novo. In the case of Merchants & Planters Bank v. Fitzgerald, 61 Ark. 605, 33 S. W. 1064, among other things, said: “but it does not follow that the court, on hearing the writ, proceeds de novo and tries the case as if it had never been heard in the inferior court . . . the office of the writ . . . is merely to review for errors of law. ’ ’ See also Hall v. Bledso, 126 Ark. 125, 189 S. W. 1041; Dixie Downs, Inc. v. Arkansas Racing Commission, 219 Ark. 356, 242 S. W. 2d 132, and North Hill Memorial Gardens v. Hicks, 230 Ark. 787, 326 S. W. 2d 797. In the Hicks case the Cemetery Board, pursuant to Act 250 of 1953, issued a permit to one Russell to construct and maintain a cemetery near North Little Rock. Aggrieved parties applied to the Chancery Court to enjoin Russell. Following a hearing the Chancellor revoked the Board’s permit. On appeal this Court reversed the Chancellor and in doing so approved this rule: “It has been uniformly held by this Court that where Boards are lawfully appointed and charged with the duty to investigate and determine certain facts, the court cannot substitute its judgment for the judgment of the Board, and the judgment of the Board provided for the purpose of ascertaining the facts is controlling unless there is evidence that it was arbitrarily exercised.” (Emphasis Supplied) In addition to the above, this Court in that same case also said: ‘ ‘ The burden of proving that the Board’s action in granting appellants’ permit was arbitrary rested on the appellees.” In applying the above announced rules to the case under consideration, it is in order to see whether the Commission was justified by the testimony in revoking the temporary franchise. This question we now proceed to examine.

A careful reading of the voluminous testimony taken before the Commission on September 4, 1959, reveals, in substance, the following situation with reference to the Kennel Club at the time of the hearing. When the application for a temporary franchise was filed February 6,1958, the Kennel Club had been incorporated. The application showed that among others the directors included Charles S. Harriman, Alex T. Jamieson and Milan S. Creighton. It developed later that these were the main promoters of the organization. Included among the directors also were J. O. Bennett of Lonoke, Leo Kuhn of Texarkana, W. P. Davis of Newport, James J. Dowds of Hot Springs, J. Bruce Streett of Camden and Jim Evans of Hot Springs. It is noted here that the last six directors later resigned or were deleted from the board, and their testimony in this connection will be set out later. It was stated in the application that two million shares had been authorized and that sufficient stock had been sold to promote the purposes of the corporation.

It appears further that a stockholders meeting was held in December 1951, (prior to the filing of the application) at which time, and after objections, the directors authorized the issuance of 500,000 additional shares (of which one-half carried no voting privileges) for promotional purposes. None of this was shown in the application which was filed February 6, 1958. Following that the election was held resulting in an appeal to this Court. Almost immediately after the decision of this Court became final, the latter part of May 1959, authorizing dog racing, there was another meeting of the Board at which time there arose the controversy which resulted in the action of the Commission. At this meeting it seems that four promoters, headed by Creighton, wanted the Board to give them 59,000 additional shares for promotional purposes. The promoters refused to tell the other members of the Board exactly the reason for this additional stock. In somewhat hazy phraseology, Creighton contended that it was necessary to pay promotional expenses. Also, at this meeting there was a proposal to hire Mr. Harriman at a salary of $18,000 per year plus an unlimited expense account. The controversy that arose over these and other matters apparently caused the removal of the above mentioned six directors, and it apparently brought on and engendered much litigation which finally resulted in a warning from the Commission on July 1,1959, that if things were not straightened out the Commission would revoke the temporary franchise. A summary review of the testimony given at the hearing is sufficient, we think, to justify the action of the Commission.

J. O. Bennett. Mr. Bennett testified that when Mr. Creighton approached him about stock in the Kennel Club that he asked Mr. Creighton “. . . if this was going to be for the benefit of the people of Arkansas, and be governed by the people of Arkansas, and he assured me it was, and I said in a case like that I will be glad to go along with you, but if it’s going to result in two or three hogging it up, and be in court like this West Memphis track, then I didn’t care to get into it. ’ ’ He said that Creighton assured him that he and Mr. Harriman would take approximately 20% of the entire issue to promote the deal. He further stated that: “We find now that there was very little stock that had been used for promotion.” Q. “Now what was the purpose in asking for the additional 50,000 ? ” A. “ Something they promised somewhere, they wouldn’t tell us. Wé asked if they would give us the names it was going to and they wouldn’t give us the names.” Bennett further testified that he objected to hiring Mr. Harriman at $18,000 a year plus an unlimited expense account. He also stated: ‘ ‘ Personally I can’t go along with that and I will resign and you can get someone in my place . . . and that is the last meeting I attended.” The witness stated that he still owned 5,000 shares of stock for which he paid $2,500, although his name apparently did not appear on the books (a partial explanation of this was offered).

BRUGE STREETT. This witness has 5,000 shares of stock for which he paid $2,500. He testified, “I do not agree with the policies of Mr. Creighton and Harriman . . . and very openly and perhaps rather bluntly expressed my disagreement.” He stated that he was testifying merely because he had been given a subpoena, and that he held no ill will toward anyone. Mr. Streett further stated that he was astonished when Mr. Creighton first made the proposition that he and the other three promoters wanted 500,000 shares. He stated that when Creighton first talked to him about it he asked him this question: “Creighton, is the thing going to be eaten up with, a lot of promotional stock which happened in West Memphis, or is it to be operated by Arkansas stockholders and controlled by Arkansas people, and he assured me only a nominal amount of organizational or promotional stock would be required. ’ ’ He further stated that Creighton told him that the stock would be worth a minimum of $2.00 per share shortly after it got on the market. Witness stated that this would give the four promoters a million dollars and that he “thought it represented a rather high price tag on the value of the services of these men.” In speaking of the stockholders meeting, the witness said: “Some changes were made in the minutes. I never attended a stockholders meeting, but at that time I said, according to my memory, the minutes of the stockholders meeting did not speak the truth . . . ” Witness further stated that according to his recollection, “Mr. Creighton said that that stock was to be voted for not only services rendered up to then, but services they would continue to render, these four men, in carrying through the election period and any litigation which might follow . . . ” Streett is no longer a member of the Board.

JIM EVANS. This witness ’ testimony was similar to that given by Mr. Streett. He also owned 5,000 shares of stock for which he paid $2,500. He likewise objected to the issuance of 59,000 shares of stock to the four organizers for promotional purposes, and is no longer on the Board.

LEON KUHN. This witness owned 5,000 shares of stock for which he paid $2,500, and likewise objected to the issuance of the promotional stock and particularly the extra 59,000 shares heretofore mentioned. In speaking of what occurred at one of the directors meetings the witness had this to say: “Well, of course, there was some discussion . . . and then something come up there about we need some more stock to be issued to take care of some things we had to do to get this thing done and, of course, that’s when I hit the ceiling and a few more of us in the same bunch sitting on that side of the table hit the ceiling, and that’s what brought the fly in the ointment, and from then on step by step it went from bad to worse.” Kuhn is no longer a member of the Board.

RICHARD W. HOBBS. This witness was originally the attorney for the organization and was paid $5,000 for his services. He stated that when he filed the application on February 6, 1958, for a temporary franchise that he made it out like Mr. Creighton told him to, and no mention was made of promotion stock. He testified that the application stated that: “The present stockholders have purchased and fully paid for a sufficient amount of stock so as to enable the corporation to proceed with its corporate purpose and by agreement no stock will be sold to anyone other than the original stockholders unless the original stockholders do not fully subscribe to all of the authorized issue. In any event whatever stock remains unsold will be offered to the citizens of Arkansas.” In speaking of the directors meeting the witness stated that: ‘ ‘ Mr. Creighton was then questioned as to why they had used such a small proportion of the half a million shares when they were supposed to use the stock and why they in turn used the corporate cash rather than the stock in getting the election over and for promotional purposes, and they had no explanation other than they had used that much and that was all.” In speaking of what occurred at the directors meeting, the witness further stated: “I told them I didn’t want to have any part of that (referring to promotional stock). I had rather not even listen to it, and I asked to be excused, and I left the room.” Q. “Well, why didn’t you want to know!” A. “I will say I think I discussed it with Mr. Streett at the time and I told him I didn’t like the smell of it.”

Mr. Creighton testified at length and although he was pressed to do so he failed to give the Commission any explanation of what use he had made of the promotional stock or the money paid into the corporation by the stockholders relative to the expense of the election and the litigation. The record reveals that over $50,000 had been paid for stock and that less than $11,000 was in the treasury. Also, this appears in his testimony: Q. “Mr. Creighton, there has been some litigation filed against this Kennel Club with which the Commission is familiar. Let me ask you this, what percentage of the stock does your group represent?” A. “Our group represents in excess of, I believe it’s in excess of 90 per cent; might be 1 or 2 points either way, but approximately.”

So the picture before the Commission was that Creighton and his group, who were supposed to have 20% of the stock to get the “show on the road” now has 90% of the stock, and the treasury is nearly depleted; large sums of money had been and were still to be expended for suspicious and unexplained purposes, and; the activities of Creighton and his group were such that some of the original stockholders felt obliged to sever their connections with the Board even at the risk of losing the money they had invested.

In view of that picture, this Court is unable to say the Commission acted arbitrarily or even that it acted against the weight of the evidence. Consequently the judgment of the Circuit Court should be, and it is hereby reversed.

George Rose Smith and Robinson, JJ., dissent.


author: Carleton Harris, Chief Justice.

text:
    Naylor v. Goza, Judge.
    5-2151
    338 S. W. 2d 923
    Opinion delivered October 10, 1960.

      Lightle & Tedder, for petitioner.

      James C. Cole and Gerald W. Scott, for respondent.
   Carleton Harris, Chief Justice.

This is an action wherein petitioner, Wanda A. Naylor, seeks a Writ of Mandamus, directed to the Grant County Chancery Court.

On January 2,1958, G. C. Naylor filed suit for divorce in the Grant Chancery Court against Wanda A. Naylor, on grounds of three years continuous separation. Mrs. Naylor, a resident of Baltimore, Maryland, employed Mr. Sid Reid, an attorney of Sheridan, to represent her, and Mr. Reid filed an answer and moved for an order allowing attorney’s fees and suit money. In compliance with this motion, the court entered its order allowing a total of $50. Mr. Reid subsequently died, and Mrs. Naylor employed her present attorneys to represent her. Thereafter, the discovery deposition of Naylor was taken, and Mrs. Naylor filed a cross-complaint, seeking a decree of separate maintenance; also, she sought temporary maintenance, suit money, and attorneys’ fees pendente lite. The Court, on May 8, 1959, entered an order allowing $100 as suit money and $100 as attorneys’ fees. Depositions of Mrs. Naylor and four others were taken in Baltimore.

On September 17, 1959, Naylor entered a voluntary non-suit, and on the same day, filed a new complaint for divorce, based upon the same grounds, but designating a different period of time in alleging the three years separation. On October 9th, attorneys for the two parties (following a letter written by petitioner’s attorney in which he advised Naylor’s counsel that he would be present in court on that date) appeared before Judge Goza, and according to the petition for writ filed by petitioner,

“requested the court to hear the merits of the cross-complaint, that being the only undisposed matter remaining in the original suit. In support thereof, Mrs. Naylor offered in evidence the deposition in chief of herself, her daughter, Mrs. Carolyn Alice Hoare, and three others. The court orally refused to allow the introduction of any evidence and declined to hear the merits of the cross-complaint. * * *
‘ ‘ That the court has refused to enter a formal order in accordance with its rulings allowing the plaintiff’s nonsuit or its refusal to hear the cross-complaint, or to set a date certain for a hearing of the merits thereon.
“Asa result of the action of the court, Mrs. Naylor has been unable to obtain a hearing of the merits of the cross-complaint, to obtain a specific setting for such a hearing, or to obtain an order of the court setting forth its rulings from which, an appeal conld be taken, and has, therefore, been deprived of her legal and equitable rights.”

The court apparently did enter an order requiring Mr. Naylor to pay into the registry of the court $35 per week temporary maintenance, though this order does not appear in the transcript.

In her brief, petitioner states the issues to be:

“ (a) whether or not plaintiff could effectively dismiss his complaint and thereby deprive the court of jurisdiction of defendant’s cross-complaint and, at the same time, deprive cross-complainant of a hearing in that case, and (b) whether or not the plaintiff could effectively dismiss his complaint in the original cause of action, and file an identical cause of action, before the cross-complaint had been disposed of and before the court had acted upon the plaintiff’s attempt to dismiss.”

The record does not reflect that respondent considered the nonsuit taken in the first case (No. 1533), to be applicable to the cross-complaint, and in fact, as already pointed out, an order for temporary support was apparently entered in this ease, and such order was made after Naylor’s taking of the non-suit. As to point (b), we are not here concerned with this question in the proceeding before us. The sole question is whether mandamus will lie, and the prayer of the petition is that this Court issue a writ of mandamus directing the Chancellor “to execute and cause to be filed orders in conformity with his oral rulings ’ ’ made on October 9th.

As stated in Corpus Juris Secundum, Yol. 55, § 114, p. 183:

“The general rules governing mandamus apply in actions for divorce. Mandamus may lie to compel the court in divorce proceedings to hear and decide the cause and enter a decree unless there is an adequate remedy by appeal; * *

Also, in § 53, p. 88:

Since * * * the purpose of a writ of mandamus is not to establish a legal right but to enforce one which has already been established, it is essential to the issuance of the writ that the legal right of plaintiff or the relator to the performance of the particular act of which performance is sought to be compelled must be clear, specific, and complete, or, as otherwise stated, plaintiff or the relator must have a clear and certain legal right to the relief or remedy sought by the writ; and, according to some decisions, the right to the writ must be clear, undoubted and unequivocal, so as not to admit of any reasonable controversy.”

See also State v. Board of Directors, School District of Ashdown, 122 Ark. 337, 183 S. W. 747. The record before us is rather incomplete, i. e., many pertinent questions remain unanswered. For instance, the petition states that certain oral rulings were rendered; if these rulings were recorded by the court reporter, then, of course, there is a record, and petitioner is afforded the remedy of appeal. On the other hand, if the rulings were not recorded, a writ from this Court directing the Chancellor to reduce his findings and orders to writing, would be improper, since the then Chancellor recently passed away, and the present occupant of this judicial office would have no way of knowing the nature of the rulings rendered by his predecessor. The petition of Mrs. Naylor further states that her attorneys prepared precedents, embodying their interpretation of the court’s rulings on that date, and forwarded same to the court for its approval; though petitioner states that copies of these proposed orders are attached to the petition, a search of the transcript fails to reveal these copies. Be that as it may, we have no right to direct the Chancellor to sign a particular precedent unless it be clearly established that such precedent correctly reflects that court’s rulings. Certainly, there is no “clear, undoubted, and unequivocal” right to the writ shown by this record.

Actually, from remarks of counsel during oral argument, it appears that petitioner is really complaining that she is unable to obtain a trial. While it is true that the cause has been pending for some time, there is nothing in the petition or accompanying exhibits which suggests that petitioner has sought to have the ease set for hearing on its merits, other than the oral request which was made on October 9th. The proceedings on that date were not at the direction of the court; i.e., the matter was not set for hearing, and Naylor’s counsel was only present because of the notice from petitioner’s attorney, advising that the latter would seek some sort of relief at that time. Courts, of course, and properly so, set their dockets and arrange dates for contested matters that will not conflict with other court business.

As was stated in the citation from Corpus Juris Secundum, mandamus will lie to compel the court to hear, and decide the cause in divorce proceedings, but there is nothing contained in the record before us which establishes that the court has arbitrarily refused to hear the case. Of course, Mrs. Naylor is entitled to a trial, and we are confident that if counsel for petitioner will request the Grant Chancery Court to set this cause down for hearing on its merits, on a day certain, the request will be complied with, and the litigation can be disposed of promptly and expeditiously.

Writ denied.

       The petition indicates that Naylor had, at least part of the time, paid this amount voluntarily.


author: J. Seaborn Holt, Associate Justice. George Rose Smith, J.,

text:
    Adkins v. Morgan.
    5-2202
    338 S. W. 2d 921
    Opinion delivered October 10, 1960.

      D. D. Panieh, for appellant.

      Frank H. Cox, for appellee.
   J. Seaborn Holt, Associate Justice.

This is a suit to foreclose a mortgage. For reversal of the decree appellant says: “(1) This is a simple foreclosure action, (2) A deed must be construed most strongly against the grantor, and (3) The agreement between the plaintiff and defendant was for sale by the acre.”

Appellee, Ava Morgan, on May 4, 1953, borrowed $7,500 from appellant, Merle Adkins, giving as security for the loan a mortgage on some business property known as the “Rock-A-Way Court”. This property is described in the mortgage by metes and bounds description. On August 11,1955, Mrs. Morgan borrowed $1,200 additional from appellant which was also secured by the above mortgage (of May 4, 1953). Sometime in September, 1958, appellee began, negotiations with appellant to sell to her this business property, and on October 17* 1958, appellant’s written offer to purchase the business property for $45,000 was accepted in writing by Mrs. Morgan, the appellee, and a deed drawn up describing the property by metes and bounds and stating that it contained 2.5 acres and a down payment of $5,000 would be required. The record reflects that a part of the down payment and consideration to be paid by the purchaser, Mrs. Adkins, to the seller, Mrs. Morgan, was the cancellation of the debt that Mrs. Morgan owed to the purchaser, Mrs. Adkins, upon the property, and on October 20,1958, Mrs. Adkins satisfied the mortgage record and when it subsequently developed that the property did not contain 2.5 acres, but only 2.13 acres, Mrs. Adkins brought the present suit to foreclose the mortgage, alleging that cancellation was procured without any consideration and was void.

On the facts presented, about which there appears little if any dispute, we think the evidence shows that there was ample consideration for the satisfaction of the mortgage by Mrs. Adkins which she now seeks to foreclose. She admitted execution of the contract to purchase the mortgaged property from Mrs. Morgan, and also that her act of satisfaction of the mortgage on the margin of the record was “part of the down payment for the property”. This was ample consideration. Mrs. Morgan testified that she was ready and willing to complete the sales contract but that Mrs. Adkins has failed and refused to perform.

We said in the recent case of Baker v. Taylor & Co., 218 Ark. 538, 237 S. W. 2d 471:

“. . . where the vendor is in no default, and is ready and willing to perform the contract on his part, the vendee cannot recover back money paid by him on the contract. . . ”
“. . . It may be asserted with confidence, that a party who has advanced money, or done an act in part performance of an agreement, and then stops short, and refuses to proceed to the ultimate conclusion of the agreement, the other party being ready and willing to proceed and fulfill all his stipulations according to the contract, has never been suffered to recover for what has been thus advanced or done ... It would be an alarming doctrine to hold, that the plaintiffs might violate the contract; and, because they chose to do so, make their own infraction of the agreement the basis of an action for money had and received. Every man who makes a bad bargain, and has advanced money upon it, would have the same right to recover it back that the plaintiffs have.”

On the contention of appellant that appellee misrepresented the amount of property she owned in acreage, i.e., that she represented she owned 2.5 acres when in fact she only owned 2.13, was sufficient alone to set aside the sales contract, we do not agree. In the first place the sale involved here was not made by the acre but by a metes and bounds description. It appears well settled by our own decisions that when property is described by metes and bounds or definite lines as in the present case, the inclusion of any words indicating acreage is a matter of the description and not of the essence of the contract.

We said in Glover v. Bullard, 170 Ark. 58, 278 S. W. 645:

" The general rule on this question is clearly stated in Weart v. Rose, 16 N. J. Eq. 290. It is there said that the general rule as laid down by Chancellor Kent is that where it appears by definite boundaries, or by words of qualification, as ‘more or less’, or as ‘containing by estimation,’ or the like, that the statement of the quantity of acres in the deed is a mere matter of description, and not of the essence of the contract, the buyer takes the risk of the quantity, if there be no intermixture of fraud in the case.
‘ ‘ On the other hand, where the sale is by the acre, and the statement of the quantity of acres is of the essence of the contract, the purchaser, in case of a deficiency, is entitled in equity to a corresponding deduction from the price.”

And in Hays v. Hays, 190 Ark. 751, 81 S. W. 2d 926, we find this language:

“The mention of quantity of acres, after a certain description of the subject by metes and bounds, or by other known specifications, is but matter of description, and does not amount to any covenant, or afford ground for the breach of any of the usual covenants, though the quantity of acres should fall short of the given amount. . . .”

On the whole case, finding no error, the decree is affirmed.

George Rose Smith, J.,

concurring. I add these words of concurrence, perhaps needlessly, to mention one further point which the majority have not thought it necessary to discuss.

That point is this: There is no inflexible rule of law which invariably prevents a vendee from recovering his down payment after he has breached the contract by refusing to go through with his purchase. “. . . The right of a contractor, who is himself vitally in default, to some compensation of a restitutionary character, has been recognized and enforced in too many cases to deny such a right to a purchaser merely because he is in default. As in other cases, we must consider why he is in default, and the terms of the contract, and the amount that he was paid, and the extent of injury that his breach has caused.” Corbin on Contracts, § 1129. Williston’s statements to the same effect, appearing in § 1473 of his treatise on Contracts (Rev. Ed.), were quoted by us with approval in Williams Mfg. Co. v. Strasberg, 229 Ark. 321, 314 S. W. 2d 500.

Thus it is not the bare fact of default that prevents the appellant from recovering what amounted to her down payment under the contract of purchase. Her difficulty lies in her failure to offer any proof showing the damages suffered by the appellee as a result of the appellant’s unjustified refusal to complete the purchase. The appellant’s situation falls precisely within the following excerpt from Corbin’s text:

“Whether the vendor has ‘rescinded’ for the purchaser’s breach or not, and whether there is an express provision for forfeiture or not, it is clear that the purchaser in default should in no case be given restitution of inoney paid unless it affirmatively appears that the money so paid is in excess of the injury caused to the vendor by the breach. The purchaser sues because he asserts that retention of the money is unjust enrichment; but there is no injustice if the defendant is retaining no more than the amount of injury caused by the plaintiff’s breach. In cases where the plaintiff may have a right of restitution, he should be permitted to show that the defendant’s injury is less than the instalments paid; but unless he successfully shows this, he should recover nothing. ’ ’ Corbin, supra, § 1132.