text:
    Hunt vs. Gaines et al.
    Tax Sale : Purchase by one receiving rents.

    A purchase of lands at tax sale by one who is receiving the rents and profits, and ought to keep down the taxes, can never strengthen his title.
    APPEAL from Chicot Circuit Court in Chancery.
    Hon. T. E. Sorrells, Circuit Judge.

      Valentine, and Street and Garland, for appellant.

      Rose, contra.

   STATEMENT.

Eakin, J.:

On the 4th day of December, 1858, Frances M. Terry, her trustee, Abner Gaines, and her husband, George G. Terry, sold and conveyed to William F. Smith and Daniel W. Adams, for $20,000 in cash, and a balance secured by notes, a plantation designated as the “Yaucluse Place,” with all the stock, corn, fodder, hogs, horses, thirty average mules, farming implements, one-half the sheep, and all other property on the place.

The credit payments, for which a lien was reserved, were secured by five several notes, for $12,954.75 each, payable at one, two, three, four and five years, with interest at 6 per cent, from the 1st day of January, 1859. The lands were set forth by the usual descriptions of the government surveys.

On the 5th of December, 1860, Wm. F. Smith, executed to his own order, endorsed and delivered to J. J. Persons & Co., of New Orleans, twenty promissory notes for $5000 each, due respectively, October 9tb, 1861; October 30th, 1861; November 12th, 1861; November 20th, 1861: November 24th, 1861; December 8th, 1861; December 18th, 1861; December 31st, 1861; January 8th, 1862 ; January 30th, 1862 ; March 21st, 1862 ; March 25th, 1862 ; March 27th, 1862 ; March 30th, 1862 ; March 31st, 1862 ; April 6th, 1862 ; April 12th, 1862 ; April 17th, 1862 ; April 23d, 1862 ; April 30th, 1862 ; all to bear interest at the rate of 10 per cent, per annum, from maturity.

To secure their payment he executed to Daniel W. Adams and James H. Duncan, of New Orleans, and the survivoi’s of them, a deed of trust of the plantation then known as the “Vaucluse Plantation,” setting forth lands by the government surveys, together with other lands not included in the description of said plantation, in the original conveyance. Also 105 negro slaves, and the horses, mules, stock, cattle, and farming utensils on the place. They were authorized to sell on default, pay the notes, and reconvey the balance of the lands, property or proceeds, to the grantor. This was- duly filed for record, December 24th, 1860.

A large portion of these lands were sold for taxes of 1866, as delinquent, on the 15th of April, 1867, and bid off by Chapman & Carlton. No deed appears to have been executed to them. The lands were allowed to become delinquent again for taxes of 1867, and on the 29th day of May, 1868, they were again sold, and bid off by A. L. Gaines, a tax deed for said lands so purchased was not. executed until March 12th, 1873, when one was executed by the Clerk of the Court.

On the 19th of December, 1866, in a suit, by attachment, of Jno. Cate v. Wm. F. Smith, a part of the same property, with other lands not included in either mortgage, was attached. The lands were subsequently sold under order of court in the attachment suit, on the 20th December, 1869, and purchased by Abner L. Gaines, who obtained the Sheriff’s deed.

At the April Term, 1867, suit to foreclose the first mortgage was brought in the Chicot Circuit Court, in the name of “The Crescent City Bank,” for the use of herself and of James B. Johnson and Thomas S. Serrills, who severally held the last four notes of the first mortgage. At the December Term, 1867, the lands were condemned to be sold for the lien, and a Commissioner appointed. The sale was duly made, and the lands purchased by Abner L. Gaines, for the sum of $500, to whom the Commissioner executed a deed on the 8th day of Juno, 1868. The debt, as ascertained by the decree, upon all four of the notes, amounted to $51,819 of principal, and $27,774 96-100 of interest. In this suit said Smith, Adams, Duncan, and the members of the firm of J. J. Persons & Co., were made defendants, and order of publication made against them as non-residents.

Out of these complications arose the present suit, which was begun on the 12th day of August, 1870, and is brought by Thomas H. Hunt (under the firm name of Thomas H. Hunt & Co.), and other creditors of William F. Smith, against said Smith, Abner L. Gaines, “The Crescent City Bank,” Jas. B. Johnson, Thos. S. Serrill, Dan. W. Adams, James H. Duncan and the firm of J. J. Persons & Co.

Complainant alleges that he is the owner of two of the notes of Smith, secured by the second mortgage (due November 21st and December 28th, 1861), and that he believes all the others have been paid ; or, if not, are held by ¡parties unknown, whom he desires to make defendants, when discovered.

He charges that said Gaines and Smith, in pursuance of a fraudulent agreement, made an arrangement with the Crescent City Bank, and others holding the paper of Smith, secured by the first mortgage, ostensibly for the benefit of Gaines, but with money furnished by Smith, whereby the payment of a large sum in cash, and a further payment upon time, the mortgage notes were transferred to said Gaines. That Gaines, having co.me into possession of the four notes, brought the suit in the name of the Crescent City Bank, for her use and that of Johnson and Serrill, without the knowledge of either of them, and bought in the property, upon the sale for foreclosure.

That in further pursuance of the fraudulent design, Smith omitted to pay the taxes for 1866, and the lands were purchased in by Gaines as delinquent; and that doubting the validity of the sale, he allowed them to be again sold for the taxes of 1867, and to be again purchased by Gaines. That in each case the lands were bought for the benefit of Smith and paid for with his means. The proceedings in Cate’s attachment suit are recited and the purchase of the lands under that sale by Gaines for the sum of $1500.

Further he alleges that Gaines falsely pretends that Smith owes him money, but that in fact he is indebted to Smith in a large sum, and that these proceedings were designed to hide Smith’s property from his creditors ; that Gaines in all these proceedings was the trustee of Smith; that the decree of foreclosure of the first mortgage was fraudulent, inasmuch as the notes had been in a great part paid by money furnished by Smith, and that complainant was not a party to the first mortgage suit, and knew nothing of the fraudulent intent. He prays that all these deeds to Gaines may be cancelled ; that an account be taken of what is due on the first mortgage notes, and also of the amount due from Gaines to Smith, and a decree for that against Gaines, as well as for the rents and profits of what he made, or should have made, on the plantation, and that the residue, if more than the first mortgage notes, be paid to complainants, and that his lien'be declared on the bind and personal property, subject to any unpaid portion of the first mortgage ; and for foreclosure and sale.

A decree pro confesso was entered against Smith, Adams, Duncan and J. J. Persons & Co.

Gaines, answering, denies all fraudulent arrangement regarding the purchase from the bank, but says that with his own money he bought from the bank an interest in the mortgage note it held, to the extent of $4500 with the privilege of purchasing the remainder on the same terms. He admits that he did so at Smith’s request, as an act of friendship, but with his own money, without fraudulent intent. He denies that he came into possession of the four notes sued on, or caused the suit. He merely recommended an attorney to the bank, and had no connection with Serrill and Johnson; sajes that his purchase at the foreclosure sale was fair, legal and without fraud. He bought the land at the tax sales with his own money, and without any understanding with Smith, intending the purchase as a security for his claim, and so with regard to the purchase under attachment. He denies his indebtedness to Smith, denies all fraud and collusion, and prays that his answer be taken as a cross-bill, and his title to the property confirmed.

James B. Johnson, answering, says that he was the holder of one of the first mortgage notes, which he had placed in the hands of Hays & Adams, of New Orleans, for collection. Through these attorneys and Gaines, acting for Smith, it was agreed, that upon the payment of 25 per cent, in cash, and a credit payment to be made on the 1st of .Tune, 1867, Smith was to be released from the balance. The credit payment failed, and the mortgage notes were forwarded to Johnson Chapman, Esq., for foreclosure. Gaines never had any interest in the notes or the suit. He joins in the prayer of the bill for relief.

Serrill, answering, says he owned two of the first mortgage notes, which were forwarded to Chapman for foreclosure. G-aines had no interest in them at all nor right to sue. He ' also joins in the prayer of the bill.

The bank, answering, says it placed one of the first mortgage notes in the hands of Hayes & Adams. These attqrneys agreed with Gaines, acting for Smith, that upon a cash payment of $4500, and a future payment of a further sum amounting in all to 50 per cent., Smith was to bereleased. The cash payment was made, and on the failure of the other, which was to have been made on the 1st of January 1867, the note was forwarded to Chapman for foreclosure. Gaines never had any i’ight or title to. it. The bank joins also in the prayer of the bill.

Wm. F. Smith does not answer the original bill, but answering the cross-bill of Gaines, denies all fraudulent collusion as to the purchase of the notes. He says that he was a discharged bankrupt, and furnished the money to purchase an interest in the notes for his (Smith’s) benefit. The whole agreement was for his benefit and was not intended as a purchase, but a payment. The arrangement, if carried out, would have been with his money. Any assignment to Gaines was without his knowledge, and would have been a fraud on him. Gaines did not furnish the money, and had no right to the lands purchased. Did not know of any fraud on Gaines’ part until he found him claiming the lands as his own. He says he paid the purchase money of the lands bought at the sale under the decree, and that Gaines bought the tax titles with intent to defraud him. Ho himself furnished all the moneys expended,, and says that Gaines owes him about $4500, and denies that Gaines had been in possession of the lands for a year, or any period of time, before filing his cross-bill. He says also that the purchase under attachment was made for his benefit.

Upon these pleadings, and a mass of exhibits and depositions, the cause was submitted to the court, which decreed that the title of the lands (describing them) be confirmed to Gaines, and that he recover costs. Complainant appealed.

OPINION.

The testimony in this case is, on both sides, vague and unsatisfactory ; and between Gaines and Smith hopelessly irreconcilable. The onus of the proof of fraud lies upon the complainant and appellant, otherwise the parties must stand upon their rights as shown by their deeds, and the records of the courts.

Upon this point it is sufficient to say, that whilst the evidence indicates that the whole action of Gaines was prompted, originally, by a desire to assist Smith in keeping his property, and working through his embarrassments, there is no preponderance of evidence that he intended to do so fraudulently, or at his own expense, without retaining securities for moneys advanced; or that he ever used funds of Smith in such manner as to raise a resulting trust in any of the lands in Smith’s favor.

He was the friend of Smith and disposed to indulge him. It would have been to Smith’s advantage during the continuance of these friendly relations, that Gaines should purchase and hold the first mortgage notes, and the second mortgagees were not interested in the amount to be paid for them. It is very plain that the first mortgage notes were not worth their face value, as their amount largely exceeded the value of the lands which constituted their principal security. It was absolutely hopeless, that any of the property embraced in the first mortgage would become available for the notes secured by the second. The utmost right of the cestuis que trust under the second mortgage, was to redeem the land by paying off the first mortgage notes, a thing which they never offered to do— nor do not now — and obviously cannot, since the amount acknowledged to -be due and uupaid, admitting all credits, claimed — quadruples the value of the lands. It is a matter of indifference to them whether the lands, under the decree of sale, brought $500 or the full amount of the debt. Even if the second incumbrancers were not made parties, so as to cut off their equities of redemption, they could only redeem from the purchaser by paying the full amount of the actual balance due from Smith, when the foreclosure was made. If they were made parties, their rights, as to the lauds bound by the first lien, are entirely gone — unless there were fraud in obtaining the decree. The exhibit of the proceedings in the former suit shows that, by the bill, both the trustees in the second mortgage, and J. J. Persons & Co., the beneficiaries, were made parties defendants. If they were served, this was enough, inasmuch as it is not shown that the complainants were aware at the time that the present complainants had any interest in the notes secured, and would, perhaps, be enough to bind all the beneficiaries of the second mortgage in any case. (See Pindall et al. v. Trevor & Colgate, 30 Ark., p. 250.) The transcipt of the record shows that publication against them as non-residents in that case was duly prayed, and the decree recites that afterwards proof of publication was duly made. No contest is made as to the validity of the proof, and we may well hold that the trustees and J. J. Persons & Co., were parties to the former decree, and that it would bind all assignees of the notes — especially when it is not shown that they were known to the complainants in that suit, and had peculiar equities requiring their presence.

The question is not important in this cuse. There is no offer to redeem. The validity of the sale rests wholly on the question of fraud. The proceedings were regular and contain nothing on their face, or in connection with matters in pais, to show any fraud or mal-practice calculated to affect the material right of the present complainant. The credits were not allowed for the sums paid by Gaines to the Crescent City Bank, and, through Adams, on the note held by Johnson. It is not plain from the proof that such credits were intended to have been made. Gaines, then, was evidently endeavoring to support Smith, and to carry him through his embarrassments, but it cannot be inferred that he meant to lay out his own money for the purpose, without security for advances. The proof conduces to show that he contemplated a subrogation to the rights of the creditors, to the extent of re-imbursement— meaning to give Smith the benefit of the discount. In that view, which, to say the least, consists with the proof, there was no fraud in foreclosing for the full amount, which the subsequent incumbrancers could complain of. If there had been any fraud in the purchase from the Commissioner, at the sale, at an inadequate price, of which there is no proof, it would only affect the lights of the complainants in that suit. They were represented by attorneys and made no complaint. With regard, therefore, to all the lands sold by the Commissioner in that suit to Gaines, the decree of the Chancellor in this case, confirming his title, was correct.

It remains to consider of the rights of complainants as to lands included in the second mortgage, and not embraced in the Commissioner’s deed.

Some of these were purchased by Gaines for the taxes of 1866 and 1867. This was evidently do íe by the'joint consent and concurrence of Gaines and Smith, whilst they were in amity. It was done to strengthen title. It cannot ever have that effect with those who are taking the profits and ought to keep down the taxes. This was Smith’s case, and Gaines bought by understanding with him. It gave Gaines no other right against Smith, or the encumbrancers, than that of simple re-imbursement for cash actually paid (or scrips at currency-value), with 6 per cent, interest, upon the particular tracts soly in gout side the Commissioner’s deed. Subject to this burden,, which should be allowed Gaines out of the sales, the lands are subject to the second mortgage. It is not necessary to determine the validity of the tax sales. The taxes were due and were paid, and the lands disburdened.

The lands bought at the sale under attachment, should also-be held subject to complainant’s debt. The second mortgage-lien is superior.

The Chancellor erred in refusing the relief sought with regard to all the lands embraced in the second mortgage (or trust) deed, and notin the lien retained upon the sale to Smith and Adams. Let the decree be reversed and the cause remanded for further proceeding, consistent with this opinion.


source: Caselaw Access Project

author: SMITH, Sp. J.: Eakin, J.:

license: Public Domain

text:
    State of Arkansas vs. Newton et al.
    1. Agency.

    The State Treasurer and his bondsmen are liable for the official conduct of his deputy.
    2. State Treasurer; Duty and Liability as to funds of the State.

    It is the duty of the State Treasurer to receive from his predecessor in office the moneys and securities of the State in his hands ; and to receive from the Collectors of revenue the balances certified by the Auditor to be due from them, and if he accepts in lieu thereof the receipt or check of a depository, with whom the same was left by the officer, he becomes liable therefor on official bond.
    3. Evidence . Balances.

    In an action on the official bond of the State Treasurer, a copy of his accounts from tl e Auditor’s books, properly certified, is prima facie evidence of the state of his accounts; and the jury should be instructed not to go into the accounts, but to take the balance certified by the Auditor, unless the accuracy of the items are impeached.

      4.-: As affecting sureties.

    A copy of accounts rendered by the State Treasurer, being statements made by him to the State in the performance of his official duties, is prima facie evidence against him and his sureties, in an action on his official bond; the surety is bound by the acts and declarations of the principal, when they are within the scope of the business, and a part of the res gestae.

    APPEAL from PulasM Circuit Court.
    Hou. J. W. MautiN, Circuit Judge.
    Henderson, Attorney General, for the State.
    - Gontra.

   SMITH, Sp. J.:

This was an action against Eobert C. Newton and the sureties on his official bond as Treasurer of the State, in which the defendants had the verdict. The breaches assigned are :

First — That during his term Newton had received $14,557.86 in United States currency, and $32,525.73 in]Arkansas treasury certificates, the property of the State, which he had suffered to be kept in the bank of Stoddard Brothers & Co., who, afterwards, and before the funds were drawn out, suspended payment and became bankrupts, and so the said funds were never paid out and disbursed by him, nor delivered to his successor, nor otherwise accounted for, but on the contrary became lost to plaintiff.

Second — That knowing said funds to be in the hands of said bankers, he had neglected to demand and receive the same of them.

The answer denied the receipt of the funds and the acts of negligence complained of, and averred performance of the condition of the bond. ,*

Newton was Treasurer from May 23d, 1874, to November 12th, 1874. Before entering upon his office, the defendants •executed this bond, the condition of which is, that Newton shall faithfully perform the duties of his office. He gave no personal attention to his office, but entrusted the management of it to a deputy, one James A. Martin. In the time of his-predecessor, Henry Page, many of the County Collectors had fallen into the habit of paying the revenue through Stod-dard Brothers & Co, The course of business seems to have been thus: The Collectors deposited in the bank the State-taxes collected by them. By settlement with the Auditory they ascertained the exact balance against them. Stoddard Bros. & Co. then procured from the Treasurer acquittances-for the balance by giving him checks upon themselves. These instruments were nothing more than memorandum checks,, although it does not appear that the word “memorandum” was written across the face of them. They were in the ordinary form of bank checks, not intended, however, for immediate presentation, but simply as evidences of indebted-by the drawer to the holder.

As a consequence of this pernicious practice, when Page retired from office, there were $18,000 belonging to the general revenue funds which should have been in thp treasury, but. for which checks drawn by Stoddard Brothers & Co. on themselves, had been substituted. Newton’s deputy took these checks and receipted to Page for the whole revenue fund. About $7000 were afterwards paid on account of these-checks. Of the residue, payment seems never-to have been demanded, although the bank continued to be a going concern,, and apparently solvent until after Newton’s term had expired.

Martin kept up the evil system which he found established in the office. In this way $600,000 or $700,000 of the State’s-revenue were allowed to pass through this devious channel. Stoddard deposes that he settled for nine-tenths of the revenue —perhaps for nineteen-twentieths of it. Martin says that he saw not one of these Collectors, nor any representative of them, except Stoddard. He gave receipts to Stoddard to be delivered to the several Collectors, and accepted checks in payment of their dues. Upon the checks so taken there was a further loss of $36,088.59.

We think it would be a reproach to the administration of justice if, upon this state of facts, the plaintiff could not recover.

We shall speak of Martin’s acts as the acts of his principal, for, in contemplation of law, they are his acts. Martin was the servant of Newton, and not the agent of the State ; Newton selected him and put him in his place. The State did not even pay Martin’s salary. Gantt’s Dig., secs. 2798, 2799. The above cited statute expressly makes the Treasurer responsible on his official bond for the conduct of his deputy. The deputy is the mere shadow of the officer. The moral responsibility for this defalcation doubtless rests upon Martin and not upon Newton ; but as regards civil liability, their acts cannot be discriminated. It is proper to remark, however, that the evidence shows that Newton was not aware of what was going forward in his office.

The substantial ground upon which a recovery was resisted is, that the funds for which the Treasurer receipted, never actually came to his hands. If this was not a good defense, or if it was one which the defendant could not interpose, then it must be conceded that the verdict and judgment below were wrong.

This precise question came before the Supreme Court of the United States in Girault’s cas®, 11 Howard, 22. Girault was a Eeceiver of public moneys. An action was brought on his official bond against him and his sureties. The condition of that bond Avas the same as the one before us. The breach assigned was the receipt and non-payment of public moneys. The second plea alleged that after the making of the bond, Girault, as Eeceiver, gave receipts for moneys paid on the entry of certain lands therein specified, and returned the same to the Treasury Department, and that no part of said moneys was paid to or received by Girault. The third plea was the same, except it alleged the receipts to have been given for lands entered by Girault for his own use. The District Court adjudged these pleas to be sufficient on demurrer; but the Supreme Court say that they are bad and that the principle on which they are founded is indefensible. We quote their language, “ The condition of the bond is that Girault shall faithfully execute and discharge the duties of his office as Receiver of Public Moneys. The defendants have bound themselves for the fulfillment of these duties, and are of course responsible for the very fraud committed upon the government by that officer, which is sought to be set up here in bar of the action on the bond. As Girault would not be allowed to set up his own fraud for the purpose of disproving the evidence of his indebtedness, we do not see but that upon the same principle they (the sureties) should be estopped from setting it up as committed by one for whose fidelity they have become responsible.”

This case is distinguishable from United States v. Boyd, 3 Howard, 29. There a Receiver had entered government lands in his own name, and in the name of others for his benefit, without paying for them, except by charging himself in his account with so much money received, and had permitted another party to make entries, taking, instead of money, checks on a bank which proved to be worthless.

The court say that these acts made Boyd a defaulter to the Government, and would have subjected his sureties to liability, if there had been an official bond covering the period when the acts were done. But by some oversight the Receiver had been permitted to enter upon the duties of his office without a bond ; the acts, out of which the defalcation arose, had been committed before the bond was executed, and the language of the bond not being retrospective, the sureties could not be held for past misconduct.

The same principle, that sureties are not responsible for the previous delinquences of their principal, unless they expressly so stipulate, runs through the cases of United States v. Giles, 9 Cranch., 212; Farrar v. United States, 5 Peters, 373; and United States v. Eckford’s Executors, 1 Howard, 250. So in Bryan v. United States, 1 Black, 140, it was ruled that the surety was not liable for money received by his principal after the expiration of his term of office. But it is plain that the acts here complained of occurred while Newton was in office, and after the making of the bond. And that bond is broad enough to cover the faithful performance of all his official duties. The condition of it might be broken by acts of omission or commission, by a failure to do what a reasonable and prudent person would ordinarily have done under the circumstances, as well as by doing what such a person would not have done. Wharton on Negligence, sec. 1; Railroad Company v. Jones, 5 Otto, 439.

The paying over of the moneys that come into the Treasury is only a part of the Treasurer’s duty. It was Newton’s duty, upon his accession to office, to receive the public moneys, evidences of debt due the State, and other securities and papers of value that were in the hands of his predecessor. It is provided by the law that he shall receive and keep all moneys of the State not expressly required to be kept by some other person. Gantt’s Digest, sec. 2803. It was also his duty to receive from the County Collectors the State’s revenue shown to be in their hands by their settlements with the Auditor. These amounts he was required to receive in certain specified funds. It was his further duty to keep these funds after they were received, in the vault for that purpose provided by the State, and he was expressly prohibited from depositing any portion of them in any bank or banking-house, or with any firm or corporation. Gantt’s Digest, sec. 2814.

How have these duties been performed? Instead of demanding and exacting the funds prescribed by law, the Treasurer has taken the obligations of individuals. These are at his own risk. Board of Justice v. Fennimore, 1 Coxe (N. J.) 190 and 242. He is certainly in no better position than if he had taken counterfeit money. In that case it could not be said that he had reeoived the money, or that there had been any valid payment by Page or by the collectors. Yet his liability on his official bond would be unquestionable. United States v. Morgan, 11 Howard, 154 and cases there cited.

This case cannot be distinguished in principle from the common case of a Sheriff who receives in satisfaction of an execution something else than money. In so doing he exceeds his authority, and it is no payment unless the plaintiff chooses to consider it so. The judgment creditor still has his remedy against his debtor, and may proceed against him, disregarding the attempted payment. But it has never been doubted, so far as we are aware, that the Sheriff is liable for a breach of official duty. Randolph v. Ringgold, 10 Ark., 279.

The reception of these checks were an accommodation to Page and the collectors. It was the same in effect as if Newton had advanced so much money for them at their request, and had applied it for their benefit. Conceding the illegality of the transaction, it was for the State to object. Miltonberger v. Cooke, 18 Wall., 421. The State had her election to treat these checks as so much money received by Newton. He so treated them himself, as is manifested by his retention of them during his whole term of office, and by his charging himself with the amount of them in his quarterly statements to the Auditor. The State was ignorant of the true situation of affairs, and had not the same means of knowledge that Newton possessed. By his conduct she was deceived and misled to her injury. If the State had known that Page was a defaulter, she would have pursued him upon his bond. But his sureties may now be dead, may have left the State or may have become insolvent. Against these collectors the State had a summary remedy in case they failed to pay their balances into the Treasury within fifteen days after settlement with the Auditor. In this event the delinquent collector forfeited his commission and incurred a penalty of 25 per cent, on the amount so wrongfully withheld, besides interest on the same at the rate of 5 per cent, a month until payment was made; and to enforce collection of the debt and of these enormous penalties, the State could, without submitting her claim to any judicial tribunal, have her distress warrant and levy upon and sell the goods and chattels, lands and tenements of such delinquent and his sureties. Gantt’s Dig. secs. 5247, 5248. Furthermore the non-payment by a collector of the amount found due from him upon settlement is by statute made embezzlement and a felony. Gantt’s Dig. sec. 1371..

But according to the system pursued by Newton, it did not appear that there was any default. Page had his receipt; the collectors their quietus ; and the books showed that the whole revenue had been paid in. Thus the State, influenced by the acts and declarations of Newton, has altered her position with regard to these debtors. It would operate as a fraud upon her for Newton to be now permitted to deny what he has heretofore affirmed. He cannot relieve himself from liability by showing that his deputy violated the law. This would be to take advantage of his own 'wrong. Nor are his sureties in any better attitude; for they have undertaken for the fidelity, not only of Newton, but of his subordinates.

To reach this conclusion, we are not constrained to hold to the doctrine of Baker v. Preston, 1 Gilmer (Va.) R. 235 and State v. Grammar, 29 Inch, 530, that the entries made by an officer in his books are conclusive evidence of the state of his accounts. It is well settled that they are open to explanation and consideration. United States v. Boyd, 5 Howard, 29; Hatch v. Attleborough, 97 Mass., 537.

Receipts likewise are generally examinable, especially when they have not been acted upon by third persons. Cases of duress, fraud, mistake, accident or surprise may be readily imagined when it would work the grossest injustice to hold otherwise. Nor is there anything conclusive in the certified transcript from the Auditor’s office. The statute provides that “when a debt due to the State appears upon the books of the Auditor, or any other public officer, whose duty it shall be to audit and keep an accurate account of such debt, a copy of the balance due upon the books of such Auditor or other officer, certified by him to be a correct and true balance, shall be sufficient evidence of such indebtedness.” Gantt’s Dig. sec. 2452. The word “sufficient” must be interpreted ‘■‘■prima facie.” C. & F. R. R. Co. v. Parks, 32 Ark., 131. The production of a copy of the account from the Auditor’s books, properly certified, made a prima facie case for the plaintiff, and dispensed with other proof of the same facts and results. The Auditor makes up the Treasurer’s account, adjusts the same on his books, and the account thus stated stands as and for the sum for which the Treasurer is liable. The defendants might then show any errors, mistakes or omissions of credit in making up the account which prejudiced them, subject to the restriction contained in sec. 5687, Gantt’s Dig. which prohibits the allowance of any set off, except such as has been exhibited to and allowed by the Auditor, unless upon proof that the defendant is nowin posession of vouchers which could not be produced to the Auditor when the account was made up.

There is no occasion to decide, and we do not decide, that Page and the Collectors are released. There is both reason and authority for saying, that a public debtor is never discharged until the money which he owes gets into the hands of an officer entitled to receive it. Taylor v. Auditor, 2 Ark., 174; United States v. Patterson, 7 Cranch., 575. It may be that the State can resort to the bonds of each and every one of these officers for injuries, to which their own official wrong and negligence have in any degree contributed, though evidently she can have but one satisfaction.

Nor is it for us to determine whether or not Newton may have his action against the former Treasurer and the several collectors ; although it is probable that the maxim ’■’■in pari delicto,” etc., would not bar a recovery against them. In Miltinberger v. Cooke, supra, an Internal Eevenue Collector for a district in Mississippi, whose duty it was to collect the cotton tax, received, instead of currency, drafts on a commission merchant in New Orleans, who had previously promised to accept. And notwithstanding the unlawfulness of the ar rangement was urged upon the court, it' was held the Collector might recover of the drawer.

All that we decide is, that it is futile for these defendants to say that Newton or his deputy falsely pretended to have received money, gave his receipts therefor, and charged himself therewith, when in fact he had not received it. Such acts themselves constitute a malfeasance in office for which the defendants are liable.

The case of Edwards v. Taylor, 4 Bibb., 353, cited as in point for appellee, has to our minds no just analogy. There the deputy of an incoming Sheriff receipted to the retiring Sheriff for the amount of the fee bills, delinquent taxes and uncollected fines, remaining in the office when the new officer took possession. And it was held that the principal and his securities were not bound by this act of the deputy. But upon what grounds? Because, by the law of Kentucky, the new Sheriff was under no obligation to receive from his predecessor such fee bills, taxes and fines, for collection. We have already shown that by the'laws of this State, it is the Treasurer’s duty to receive from his predecessor the moneys and securities of the State in his hands, and to receive from the Collectors the balances certified by the Auditor to be due from them.

The argument, that the officer and his sureties are not responsible for the illegal and unauthorized acts of the deputy, prove too much. We believe it to be one of the considerations which induced the policy of requiring bonds of the officers to protect the public against such acts. And as a matter of abstract justice, it is more in consonance with reason and right that the defendants should suffer for the neglect and unfaithfulness of Martin than the State, who was not responsible for his appointment, and had no means of controlling his actions, because this was directly within the condition of their bond.

And the argument that the defendants should not be held for this miscarriage, because the funds never actually came into the Treasury, would release Page as wellasNewton, and show that no one was really liable, for there is no doubt that the $18,000 deficit was incurred by the same method of settling the revenue through Stoddard Brothers & Co., that was pursued during Newton’s term. Such a result would be no objection, if it was the law, but we have taken a different view.

Counsel for the appellees have discussed elaborately the doctrine of the appropriation of payments in this class of cases. We are not sure that we correctly apprehend the drift of their argument on this subject. It appears from a somewhat confused record, in which the statements of the witnesses are sometimes contradictory and sometimes unintelligible, that at the time Newton took office, there were in Stoddard’s Bank about $88,000, of which $70,000 belonged to the Industrial University, and the remainder to the State. Of this University fund a portion was afterwards collected, say $34,000. Add this last amount to the $7000 collected on account of Stoddard’s checks given to Page and transferred to Newton, and it reduces Stoddard’s indebtedness to the extent of $41,000, which is more than the $30,083.59 afterwards lost by Martin in settling with the Collectors. Now assuredly the collections on account of the University fund ought not to be credited upon the amount due to the State. This fund is raised by the sale of the lands, or of agricultural scrip, donated by the Act of Congress, approved July 2, 1802. The State has no beneficial interest in this fund, but holds it as the trustee of an express trust, and under a guaranty that it shall never be lost or diminished. The Treasurer is her financial agent to receive this fund and to disburse the annual interest thereof, under the direction of a Board of Trustees for said University.

Nor was any injustice done the defendants by the application of the $7000 collected by Newton on the checks received by him of his predecessor. According to the view we have taken it makes no practical difference to the defendants in what manner this payment is applied. If applied to the reduction ■of Newton’s indebtedness arising out of his deputy’s dealings with the Collectors, his indebtedness on account of his transactions with Page will be increased to a corresponding amount, and vice versa. In point of fact the credit seems to have been •applied according to the wishes, or at least with the acquiescence of all parties who had any interest in the matter, and it is now too late to disturb it.

It would serve no useful purpose to examine in detail the ■various grounds of the motion for a new trial, or to criticise the numerous prayers for instructions granted and refused in the trial court. Suffice it to say, that the Judge at Circuit tried this case upon a wrong theory, to-wit: That defendants wére liable only for such sums as actually came into the State Treasury. Hence he erred in the admission and rejection of testimony, and in his directions to the jury; and especially erred in not granting the plaintiff a new trial. If the jury had found a special verdict embodying the facts proven by the witnesses for the defendants, and upon which they relied for their discharge, it would have been the duty of the court to enter judgment for the plaintiff, for, conceding all that the evidence for defendants tends to prove, it fails to show any thing that will excuse them. There is no substantial controv-ers}r about the principal facts in the case.

We shall only discuss such of the matters raised by the record as we think will be of assistance to the court and counsel upon a second trial.

And first with regard to the pleadings ; "it has been a matter of doubt whether the pleader, by his original complaint, intended to assign one or two breaches. • It avers the receipt and non-payment .of certain funds and deposit of the funds in a place forbidden by law, whereby they were lost. The complaint was not divided into paragraphs. It may be advisable to amend the pleadings by stating the facts as they really occurred.

The amended complaint is seriously defective in that it does not show how the funds came into the hands of Stoddard Brothers & Co., or that Newton had any control over them. We cannot say that it is the business of the Treasurer to hunt up the property of the State that may be lying around loose.

All the testimony tending to show turbulance and civil commotion in the State, and disaffection of some of the collectors to the existing State governments in the months of May and June, 1874, should have been excluded. Such a state of affairs, if it existed, would not vary the duties of the Treasurer, nor enlarge his discretion.

It was error to exclude from the jury the copy of the certified balance as taken from the Treasurer’s books. No reason has been assigned in support of this ruling, and we imagine no plausible reason can be suggested. The balance seems to have been properly certified.

Sections 2451, 2452, Gantt’s Digest, expressly make such a transcript competent and legal evidence. And it was pertinent to the issues. A copy of the accounts rendered by the Treasurer, being statements made by him to the State in the performance of his official duties, is evidence not only against him, but his sureties. They are entries made against the interest of the parties making them, and the surety is bound by the acts and declarations of his principal, being within the scope of the business as part of the res gestae. See United States v. Gaussen, 19 Wallace, 198.

The court should have told the jury not to go into the accounts, but to take the balance certified by the Auditor, unless the accuracy of the items was impeached ; and that it was no error to charge Newton with the amount of his receipts to Page and the collectors. The circumstance under which the receipts were executed being undisputed, the propriety of charging Newton with their aggregate amount was a question of law.

The judgment of the Pulaski Circuit Court is reversed and this case remanded, with directions to give the plaintiff a new trial and to proceed in conformity to this opinion.

SEPARATE OPINION.

Eakin, J.:

Whilst I concur in remanding this cause to the Circuit Court for a new trial, I am unable to assent, in all respects, to the reasons giren-by the majority.

The record presents but one valid issue. Did Newton, as Treasurer, receive the funds charged to have come to his hands? Upon this issue the jury found for the defendants. The errors complained of in the motion for a new trial may be classed:

First — In permitting parol proof to go to the jury, to contradict the balance as shown against Newton on the Auditor’s and Treasurer’s books, and to show that he never had the funds in hands as Treasurer, and also parol proof to show the turbulent condition of the country at the time of the transactions.

Second — In refusing to admit, as evidence, the certificate of the succeeding Treasurer, as to the balance due from Newton, on .the Treasurer’s books.

Third — In giving and refusing instructions.

Fourth — That the verdict was contrary to instructions, and

Fifth — That it was contrary to evidence.

These points, presented by the record, are to be considered with reference to the sole issue, that is, the receipt of the funds by the Treasurer.

The evidence tended to show that Newton entrusted the whole management of the office to his deputy, Martin, and knew nothing, personally, of the business; that Martin, as such deputy, when he went into office took from Page, the former Treasurer, checks of Stoddard’s bank upon itself for a balance of $18,000, then said to be on deposit there; that he receipted to Page for the funds represented by said checks, with the understanding that if the funds were not paid, the receipt should not stand good; that about $7000 was paid by the bank and about $11,000 lost. That Martin had meantime, m pursuance of the course of business used by the former Treasurer, settled with divers county collectors, by taking from them checks of the same nature upon the same bank, for the sums which appeared from their settlements with the Auditor to be due the Treasury, and giving them receipts, and charging the Treasurer with them on the Treasurer’s books. It is not shown what use was made of these receipts either by Page or the collectors. The receipts themselves are not given in evidence, but proved orally. Stoddard testifies that this course was pursued for convenience and dispatch of business. That he was in the habit of taking up these checks from the treasury from time to time, in large quantities, and that they were given in the hurry of business. There is no positive proof that it was done to defraud the State, nor that Martin ever derived any pecuniary benefit therefrom. Every cent which actually came into the treasury was accounted for. The bank failed before all the checks had been taken ■ up, leaving the deficit for rvhich Newton is sued. During the transactions.;the bank was solvent.

Evidence of the disturbed condition of the country, and the contest then going on between two State governments in Arkansas, was admitted against the plaintiff’s objections. This evidence had no bearing upon the Treasurer’s duties, although it may have had some upon the question whether, or not, he acted in good faith in continuing this mode of receiving through Stoddard’s Bank, in contravention of the law. This element of intention often enters into the consideration of an equitable estoppel. But, upon the whole, it is not apparent that this evidence had any influence upon the verdict, under the instructions. If an error at all to admit it, it was not such an error as to require reversal.

• I think it was error to refuse to admit, on the part of the plaintiff, a certificate of the Treasurer, showing from his books a statement of the balance due the State from Newton. It seems admissible under sec. 2452 of Gantt’s Digest. But the same state of account was shown by the certificate of the Auditor, and by the original books of the Treasurer, and the present Treasurer’s evidence taken in court. The State does not seem to have been prejudiced by the refusal. There is no controversy about any fact which the certificate would have proved, if admitted.

The main, and indeed only important question arising on the record is : Was Newton positively estopped from denying, or explaining, the receipts so proved to have been issued, in order to rebut the prima facie case they made of money received. This leads us to discuss the nature of equitable estoppel, as applied1 to receipts.

Certainly, to take these checks for money was a plain violation of the statute, and a breach of the bond. This much goes of course, but that is not the issue — which is, did Newton receive the funds into his hands as Treasurer ? It is rather in the nature of a misfeasance than a non-feasance. There is no proof that Martin declined to receive any money or effects tendered by Page or the Collectors, nor does it appear, except from inference, that when they sent the checks to the Treasury by Stoddard, or carried them there, they had moneys in hand which they would have paid over if the checks had not been taken. The Treasurer took the checks in the confident expectation that the bank would send and take them up — as it did a large amount of them. They may have regarded them as mere memoranda. In any case, he had no authority to take them, and it was, in effect, as if the Treasurer had received nothing. Unless his receipts estop him from this defense, neither he nor his sureties could be held responsible in this action.

Receipts are acts, not contracts. They are memorials of facts : and, as a general rule susceptible of oral explanation or contradiction. The exceptions to this rule are of two classes :

First — and by far the most numerous, are receipts which embody a contract, such as to repay, or account, or redeliver, or do some other thing. The exclusion of evidence to vary or contradict these, stands on the same grounds with contracts. It is a question of law for the court.

Second — Those which aie designedly and intelligently, or even carelessly, given under circumstances calculated to mislead third persons as to their rights ; and where, if repudiated or varied, the rights of others would be prejudiced, from having relied upon the receipts as true. As against those so liable to be prejudiced, the maker is estopped from denying them. Whether in any given case such an equitable estoppel arises, must always be a mixed question of law and fact, and should be left to a jury, with instructions as to the application of the law, if the fact be found. Whether the circumstances, surroundings, and conduct of the maker exist as facts which create the estoppel, is for the jury. Whether, if found to exist, they are to be taken as effective to make an estoppel, seems more properly a question of lawT for the court.

In this regard, the instructions actually given, refused, or modified by the court below, taken as a whole, are unsatisfactory, and may have misled the jury to suppose that, in any case, without regal’d to the circumstances under which the receipts were given, or to the action of other State officers with regard to these receipts, they might be explained to show that the money and effects were not actually received, and that because in a ..literal sense they had never gone into the Treasury, the Treasurer could not be held accountable for them as effects received.

The instructions are defective and misleading, rather in what they fail to express, than in actual language. The whole case should have been given to the jury-, with instructions to the effect that if they should find the receipts had been given by-Martin without mistake or fraud inducing him thereto, with the intention to mislead, or put off their due guard those officers of the State whose duty it was to have prosecuted the claims against the former Treasurer and the Collectors: or given with such careless and culpable negligence, as to amount to-constructive fraud, and that other officers relied upon those-receipts, and were diverted from their duty to the detriment of the State, then they should hold the defendants to the prima facie case made by the receipts, and consider the effects as having been actually received into the Treasury. But if otherwise, to find according to the facts.

I perceive no other material error in the record, and on these grounds alone concur in the order to reverse, and remand for a new trial.

Hon. Elbert H. English, Chief Justice, did not sit in this case.


author: ENGLISH Ch. J.:

text:
    Livingston, adm’r. vs. Cochran, et al.
    1. Administration; Confirmation of sale; what amounts to.

    An order of the Probate Court directing an administrator to make a deed to> lands sold under a previous crier, is a virtual confirmation of the sale.
    2. Same : Prolate Judge not allowed to purchase at probate sales.

    A Probate Judge should not be allowed to purchase lands at a sale ordered by himseli.
    3. Bona Fide Purchaser.
    The purchaser of the bid of a Probate Judge, with knowledge that he was-Judge, and had made tl.e order of tale, and purchased for his own benefit, is not an innocent purchaser.,
    4. Specific Performance: Party seeking must be blameless.

    A party seeking the aid of chancery to compel specific performance of a contract for the sale of lands, must come with'-'clean hands, and there must be no fraud or breach of trust in the sale. . ., ■

      5. Dower : Not barred by probate sale.

    A widow’s dower in the lands of her deceased husband, Í9 not affected by a probate sale of them for payment of his debts.
    <5. Same: When barred by limitation.

    While the heirs of a deceased husband are in possession of his lands, 'the statute of limitation does not run against the widow’s claims for dower: Otherwise, where a purchaser is in possession holding adversely.
    APPEAL from Fulton Circuit Court.
    Hon. Wm. Byees, Circuit Judge.

      Henderson and Caruth, for’appellant.

      Hose, contra.

   ENGLISH Ch. J.:

It appears that the original bill and exhibits in this case, filed in the Circuit Court of Fulton County, 15th of March, 1870, were destroyed, and at the March Term, 1871, by order of court, and waiver of notice by defendant, substituted.

The bill was filed by Thomas Cochran against Lorenza DÍ Bryant, as-executor of Harrison Dunham, deceased, to correct an error in the description of one of three tracts of land sold by defendant under an order of the Probate Court of Fulton County, and to compel him to make a deed to plaintiff for the thi’ee tracts.

On their application the widow and heirs of Dunham were made defendants, and filed answers and cross-bills.

The Probate Court having revoked the letters of Bryant, and appointed W. T. Livingston, public administrator of Dun-ham, ivith the will annexed, he was substituted as defendant at the May Term, 1876, and answered the bill, ■

On the final hearing, upon the pleadings and evidence, the cross-bills of the widows and heirs of Dunham were dismissed, and a decree rendered in favor of Cochran, in accordance with the prayer of the bill, from which Livingston, administrator, and the widow and heirs of Dunham appealed.

It appears that Harrison Dunham made his will 2d March, 1857, by which he appointed Lorenzo D. Bryant, his executor; that he died sometime in the year 1858, and that his will was probated, and letters of executorship granted to Bryant at the May Term, 1858, by the Probate Court of Fulton County. The probate records having been destroyed, the probate of the will, and the grant of letters were proven by secondary evidence.

It also appears that Dunham owned at the time of his death, the northeast quarter of section 10, southeast quarter of section 3, and the southwest quarter of northeast quarter section 3, in township 20 north, range 8 west; contiguous tracts, situated near Salem in Fulton County, which are the lands in controversy in this suit.

In November, 1859, Bryant, as executor of Dunham, applied to the Probate Court for an order to sell lands to pay debts, representing .the personal property to have been exhausted, and it is reasonably certain from the pleadings and evidence in this suit, that he intended to apply for an order to sell the lands above described, and that they were in fact sold under the order of sale made by the court, and in the return of the sale they were described thus : Northeast quarter section 10, southeast quarter section 7, and southwest quarter of northeast quarter section 3, township 20 north, range 8 west — ■ 360 acres.

The southeast quarter of section seven is not contiguous to the other two tracts, and the evidence conduces to show that it was not owned by Dunham, but that the southeast quarter of section three was owned by him, is contiguous to the two other tracts, and that its misdescription was a.clerical error.

The lands were sold on the 16th December, 1859, on a credit of twelve months, for $390, and returned as purchased by S. W. Cochran; but it appears that he transferred his bid to Thomas Cochran, the complainant in this suit, who gave his note for the purchase money, with Samuel W. Cochran and E. C. Hunter, as sureties, payable twelve months after the day of sale, with interest at ten per cent, from maturity, and took possession of the lands.

In the year 18(56, the note not having been paid, Bryant, as executor of Dunham, sued Cochran upon it, and before judgment, he paid the debt and interest to Bryant’s attorney, on a promise that a deed would be made to him for the lands. After payment he was informed that the above error in the description of one of the tracts had been discovered, and on subsequent application to the Probate Court, an order was made correcting the error, and directing Bryant, as executor of Dunham, to make him a deed, which he failed to do, and hence this suit was brought.

I. We think upon all of the facts and circumstances disclosed in the pleadings and evidence, appellee, Cochran, made a case for the correction of the error in the description of the tract of land in question, under repeated decisions of this court. Stewart et al. v. Pettigrew, 28 Ark., 373. Blackburn et al. v. Randolph et al. MS. The error, however, had been corrected by an order of the Probate Court, before the bill in this case was filed, as more particularly shown below.

II. It is submitted by counsel for appellants that the order of the Probate Court for the sale of the lands should be treated in this suit as null and void, because it is not made to appear that Bryant, as executor of Dunham, gave public notice of the intended application for the order of sale, as required by sec. 175,.chap. 4, Gould’s Digest, then in force.

The bill does not allege that the notice was given, nor does the answer and cross-bill of Dunham’s heirs allege that it was not given, and the depositions are all silent on the subject.

It was certainly the duty of. the executor to give notice as required by the statute, and it was the duty of the Probate Court to see that the notice had been given before making the order of sale, and the granting of ,an order of sale without such notice would be an error and ground for reversal of the order on appeal. But when the order comes in question collaterally, as in this case, and not in a direct proceeding to review it, it cannot be treated as null and void because such notice is not shown to have been given, as repeatedly held by this court. Rogers et al. v. Wilson et al., 13 Ark., 507; Montgomery et al. v. Johnson et al., 31 Ib., 83; Gwyn et al. v. McCauley et al., 32 Ark., 107; Sturdy et al. v. Jacoway, 19 Ib., 499.

III. It is objected by counsel for appellants, that the sale was not confirmed by the Probate Court.

It appears that the sale was made in accordance with the order of the court, as to time, place, terms, etc., and reported to the court by the executor. It is also shown that Enos GL Hunter, who was Probate Judge at the time the order of sale was made, and at the time the sale was reported, endorsed upon the return of the sale “approved,” and signed it officially. He also swears in his deposition that the sale was regularly made ,and reported,, and approved by him as Probate Judge, etc. He was, however, a bidder at the sale, and speculated upon his bid, as will be shown below, and we are not disposed, on that account, to attach any value to his approval of the sale.

But it appears that before the burning of the court house, and the probate records, etc., and after appellee had paid his note for the purchase money of the lands, and after the error in the description of one of the tracts had been discovered, and after JEJnos O. Hunter had ceased to be Probate Judge, and another person had become presiding judge of the court, appellee filed a petition in the Probate Court to have the error in the description of the land corrected, to which Bryant, executor of Dunham, appeared by his attorney,' and the court, upon the evidence adduced, made an order of record at the May term, 1867, correcting the mistake, and directing the executor to make appellee a deed for the lands.

This order is not subject to the objection that the judge who made it was interested in the matter, and may be treated as a virtual confirmation of the sale. But the purpose of the application was to correct the mistake in the description of the land, and no other matter seems to have been inquired into or passed upon by the court. Whether there was fraud or unfairness in the sale does not appear to have been the subject of inquiry. The executor refused or neglected to make a deed under the order, and appellee had to resort to chancery for specific performance, and the court below was not precluded by the order, nor is this court thereby precluded, from enquiring whether there was fraud in the sale.

IV. In the answer and cross-bill of Dunham’s heirs, it is alleged that the lands were worth at the time of the sale $1500 ; that Enos C. Hunter, the Judge of the Probate Court, Samuel W. Cochran, J. Shelby Shaver, and Lorenzo D. Bryant, executor of Dunham, in furtherance of a previous conspiracy (they being the principal land-buyers in the vicinity of Salem) procured the order of sale, and so planned that the lands were not appraised, in order that they might more effectually be sacrificed, and agreed and confederated not to bid against each other, Bryant to get the proceeds of sale, and the others to divide profits. That Hunter bid off the lands at the sale at the nominal sum of $390, and had the sale reported in the name of Samuel W. Cochran, .and in furtherance of said scheme and conspiracy, Thomas Cochran, with full knowledge of said conspiracy, paid to Hunter, Samuel W. Cochran and Shaver, $100 each immediately after the sale, and executed his note to the executor for the amount bid by Hunter for the the lands, with Samuel W. Cochran and Hunter as sureties.

It is also alleged that the personal property was sufficient to pay the debts of the estate, that they had in fact been paid at the time the order of sale was procured, and that there was no necessity for selling the lands to pay debts, but these allegations were denied, and not proven ; nor was it proven that the order of sale was procured in pursuance of the alleged conspiracy to purchase the lands ; and it was proven, by the deposition of Hunter, that the lands were appraised before the sale, and brought over two-thirds of their appraisment value.

It was proven by several depositions that after the lands were advertised, Hunter, Shaver and Samuel W. Cochran made an agreement to purchase them at the sale in partnership ; that Shaver and Samuel W. Cochran failed to get to Salem until the sale was over ; that Hunter, being the highest bidder, became the purchaser of the lands at the sum above stated, and that the lands were returned by the executor as sold to Samuel W. Cochran. That shortly after the sale, Thomas, Cochran paid Hunter, Shaver and Samuel W. Cochran $100 each, profits on their purchase ; the bid was traded to him, and he gave his note to the executor for the amount of Hunter’s bid; with Samuel W. Cochran and Hunter as sureties.

Hunter states in his deposition that he thought the lands were worth more than he bid for them, or he would not have purchased them.

Appellee denies, and it was not proven, that he was a party to the agreement made between Hunter, Shaver and Samuel W. Cochran, to purchase the lands. He states that the lands sold for their full value at the sale, but ascertaining that he could trade them advantageously to John L. Miller for lands owned by him, he was induced on that account to advance to Hunter, Shaver and Samuel W. Cochran, $100 each upon their bid.

All of the witnesses who testified in relation to the value of the lands, except Hunter, deposed that the lands bi-ought their full value at the sale.

A Probate Judge shoufd not be permitted to purchase lands at a sale ordered by himself, for he might be tempted to order a sale to the prejudice of persons interested in the estate.

Moreover, it is his duty to see that the sale has been conducted fairly, and in accordance with law and the order of sale. When the land is sold upon credit, as in this case, it is incumbent on him to see that the sureties of the purchasers are responsible, aud finally to confirm the sale if properly made, or to set it aside and order a re-sale, if illegal or improvidently made.

In this case the Probate Judge, who made the order of sale, entered into an agreeement with two other persons to purchase the lands on speculation ; he bid them off at the sale, and disguised his bid by causing the lands to be returned as sold to one of his partners, and he and his two partners soon after the sale sold the bid to appellee for a profit of $300, and he signed appellee’s note as surety for the amount bid for the lands at the sale. He deposes that he approved the sale as Probate Judge. But he was not an impartial judge. He was interested in the sale. Had he disapproved the sale, set it aside, and ordered a re-sale, he and his partners would have been obliged to refund to the appellee the profit which they had made upon their bids. In approving the sale, he also passed upon his own solvency as a surety upon appellee’s note for the purchase money, which was indelicate.

We quote with approbation, the following remarks of Lord Campbell, in Dimes v. Grand Junction Canal, 3 House of Lords Cases, 793, where a decree was held voidable because the Lor-d Chancellor, who was disqualified from interest, sat as judge in the causa: “I take exactly the same view of this case as do my noble and learned friends, and I have very little to add to their observations. With respect to the point on which the learned judges were consulted, I must say that I entirely concur in the advice which they have given to your Lordships. No one can suppose that Lord Cottenham could be in the remotest degree influenced by the interest he had in this concern, but, my Lords, it is of the last importance that the maxim that no manís to be judge in his own cause, should be held sacred. And that is not to be confined to a cause in which.he is a party, but applies to a cause in which he has an interest. Since-1 have had the honor to be Chief Justice of the Court of Queen’s Bench, we have again and again set aside proceedings in inferior tribunals, because an individual, who had an interest in a cause, took part in the decision. And it will have ,a most salutary influence on these tribunals, when it is known that this high court of last resort, in a case in which the Lord Chancellor of. England had an interest, considered that his decree was on that account a decree not according to law, and was set aside. This will be a lesson to all inferior tribunals to take care, not only that in their decrees they are not influenced by their personal interest, but to avoid the appearance of laboring under such an influence.”

The Honorable Enos C. Hunter may have been as innocent of any wilful or intentional wrong in the matter now before us, as-Lord Cottenham was in the case before the House of Lords, but as matter of law, and for example, we feel constrained to condemn his conduct.

In Imboden v. Hunter, 23 Ark., 622, Hunter, through another, purchased property at a trust sale, made by him as trustee,- and a bill was brought to set aside the sale. Justice Compton, delivering the opinion of the court said: “It is a stern rule of equity, that a trustee to sell for others, is not allowed to purchase,.either directly or indirectly for his own benefit, at the sale. He cannot be both'vendor and purchaser. As a vendor it is his duty to sell the property for the highest price, and as a purchaser it is his interest to get it for the lowest, and these relations are so essentially-repugnant — so liable to excite a conflict between self-interest and integrity, that the law positively forbids that they shall be united in the same person. And it matters not, in the application of the rule, that the sale was bona fide and for a fair price. The inquiry is not, whether there was fraud in fact. In such a case the danger of yielding to the temptation is so imminent, and the securit3r against discovery so great, that a court of dquity, at the instance of the cestui que trust, if he applies in a reasonable time, will set aside the sale, as of course. The rule is not intended to remed}r actual wrong, but is intended to prevent the possibility of it. The situation of the party, itself, works his disability to purchase. **.*** The rule is not confined to persons who are trustees within the more limited and technical signification of the term, or to any particular class of fiduciaries, but applies to all persons placed in a situation of trust or confidence with reference to the subject of purchase. It embraces all who come within the principle ; permitting no one to purchase property and hold it for his own benefit, when he has a duty to perform in relation to such property, which is inconsistent with the character of a purchaser on his own account and for his individual use.”

All that is above said in relation to trustees purchasing at sales made by them, applies, on principle, to the case of a Probate Judge purchasing at a sale made upon his own order, and which he is obliged to have conducted fairly, and for the benefit of creditors, legatees or distributees of the estate.

Appellee traded for the bid of Hunter and his partners, paid them a profit of $300 upon it, and became the purchaser' of the lands, by substitution, with a full knowledge that Hunter was Probate Judge, that be made the order of sale, that he bid off the lands at the sale for the benefit of himself and his partners, and was speculating upon his bid. Appellee cannot be treated as an innocent purchaser.

Upon the above state of case, appellee applied to the court below, sitting in chancery, for specific performance of the sale — to compel the executor of Dunham to make him a deed for the lands so purchased; and against the protest of the heirs of Dunham, the relief which he prayed was granted ; and we are asked to confirm that decree, and thereby sanction the misconduct of the Probate Judge.

A party seeking the aid of chancery to compel the specific performance of á contract for the sale of lands, must come into court with clean hands, and there must be no fraud or breach of trust in the sale. Bispham’s Equity, sec. 372.

The appellee does not appear in court with clean hands. The conduct of the Probate Judge in relation to the sale was, in the eyes of the law, fraudulent, and involved a breach of public trust, and such a sale cannot be enforced for the benefit of appellee, who purchased his bid with the full knowledge of the facts.

It was afi error in the court below to decree to appellee title to the lands, and so much of the decree must be reversed, and his bill dismissed.

Y. It appears that shortly after the probate sale, appellee sold the lands in controversy to John L. Miller, who went into possession of them, made valuable improvements on them, and continued in possession until after the institution of this suit, and died pending the suit, and before Dunham’s heirs filed their cross-bill. One witness states that the improvements made by him were worth from $1200 to $1800.

The cross-bill of Dunham’s heirs was filed on the 27th of April, 1875, over fifteen years after the probate sale.

It seems that Dunham left some heirs, sons and daughters, five of whom, with the husbands of the married females, joined as complainants in the cross-bill. It is alleged that one of the sons, William M., died in 1872, leaving Cynthia Dun-ham, his mother, his heir, and she joins in the cross-bill, claiming his share in the lands. One of the heirs, Adaline, is alleged to be a minor, and sues by Cynthia Dunham, her mother, as her next friend. Drucilla, one of the heirs, and her husband, John Richardson, did not join in the cross-bill; they were made defendants therein, but no process appears to have been issued against them, and their appearance was not entered.

The cross-bill, after alleging fraud in the probate sale of the lands as above shown, avers that John L. Miller died since the commencement of the suit in possession of the lands, and that John M. Chestnut, who became his administrator, permitted the lands to be sold for taxes in May, 1872, bought them in the name of Miller’s heirs ; and afterwards procured.a Clerk’s deed therefor in the name of said heirs. That Chestnut died, and R. R. P. Todd succeeded him in the administration of Miller’s estate.

The cross-bill.prays that Todd, as administrator of Miller, be made defendant, and required to bring into court said tax deed to be cancelled, that the probate sale of the lands be set aside, that an account of the rents and profits of the lands be taken, and decreed to complainants in the cross-bill, and that they have possession of the lands, etc. They do not offer to refund to appellee the purchase money he paid to Bryant, as executor of Dunham, for the lands, nor make the heirs of Miller defendants to the cross-bill.

Todd, as administrator of Miller, entered his appearance October the 1st, 1875, but filed no answer.

To his answer to the cross-bill, appellee added a demurrer.

The case was submitted at the May term, 1876, and the decree rendered at the November term following.

When the adult heirs of Dunham became of age, is not alleged in the cross-bill, nor shown by the depositions.

What the rights of Miller’s heirs may be in the premises as against the cross-complaints, the court below could not adjudicate, nor can we, on this appeal, because they were not made defendants.

Whether the application of the cross-complainants, or such as were adults, to sec aside the probate sale for fraud, was made in apt time, or whether their remedy was barred bjr limitation, we cannot determine upon the pleadings and evidence before us.

So much of the decree of the court below as dismisses the cross-bill of Dunham’s heirs, must therefore be affirmed, with the modification that it bo dismissed without prejudice.

YI. On the 8th of May, 1876, Cynthia Dunham, widow of Harrison Dunham, filed a cross-bill claiming dower in the lands in controversy, alleging that no provision was made for her by the will of her deceased husband, that she had not assented thereto, that she had not relinquished dower in the lands, and that dower had not been assigned, to her. She makes no defendants to her cross-bill for dower, and none of the parties appear to have answered it.

Her right of dower was not affected by the probate sale of the lands, by the executor, to pay the debts of her deceased husband.

Had there been no sale of the lauds, and had the heirs of Dunham remained in possession of them after his death, the statute of limitations would not have run against her in their favor, because it would have been their duty to assign her dower in the lands. But shortly after appellee purchased the lands at the probate sale, he sold them to John L. Miller (by ■exchange for other lands) who entered upon and improved them, and it appears held them adversely for the full period of limitation before she filed her cross-bill claiming dower in the lands, and Miller’s heirs were not made defendants to her •cross-bill.

Her right of dower appears to have been barred by limitation, and for that reason, perhaps, the court below dismissed her cross-bill. See Danley v. Danley et al., 22 Ark., 263; Stedham and Wife v. Matthews et al., 29 Ark., 660.

So much of the decree of the court below as dismisses her -cross-bill for dower is affirmed, with a modification that the -dismissal be without prejudice.


author: ENGLISH, Ch. J.:

text:
    Robinson vs. Woodson, et al.
    1. Evidence : Must be confined to the pleadings.

    Where there is no plea of payment, proof of it is not admissable.
    ■2. Save: Not admissable against admission of pleading.

    If a defendant would introduce proof contrary to the admissions of his answer, he must first apply for leave to amend it, and accompany the application with his affidavit that the admission was made by mistake or inadvertance.
    5. Vexdok’s Lien : When waived.

      A vendor executed a deed, expressly reserving a lien on the land for the purchase money, and afterwaris executed a second deed to the same vendee, acknowledging payment of the purchase price, when, in fact, it was not paid. Held, that the lien in the first deed was a contract lien like a mortgage, which was in effect convej-ed to the vendee by execution of the second deed, and under the second the vendor had the same equitable lien as if the first had never been made.
    APPEAL from Jefferson Circuit Court in Chancery.
    Hon. J. A. IVilliaMS, Circuit Judge.

      Bell and N. T. White, for appellant.

      U. Carlton, contra.

   ENGLISH, Ch. J.:

The bill in this case was filed in the Jefferson Circuit Court, by J. Alexander Woodson against David A. Eobinson, to enforce a vendor*s lien for purchase monejr of Lots 3 and 4, in Block 4, Drew White’s Addition to the City of Pine Bluff,, sold and conveyed by Woodson to Eobinson, February 20th,. 1873, for $900, of which $500 was paid in cash, and a note-executed by Eobinson to Woodson for $450, payable 1st of February, 1874, with interest at 10 per cent.

Before the hearing the court permitted the bill to be amended, so as to make Yirginius D. Wilkins, who held the note as collateral security for money, etc., advanced by him to Woodson, a co-complainant, and a decree was rendered for his use for the amount of the note, and the lots condemned to be sold for its satisfaction, from which Eobinson appealed.

I. It was proven that the note sued on, at the time of its. execution, or within a few days after, was placed in the hands of Wilkins by Woodson, as collateral security for a debt-which the latter owed the former, and for money advanced upon it, and that he held the note continuously from that time-to the commencement of the suit. Upon these facts, Wilkins-might have brought the bill to enforce the lien, and made Woodson, as well as Eobinson, defendants (Crawly v. Riggs et al., 24 Ark., 563); or he might have joined in the bill as co-complainant with Woodson when it was filed, as he was permitted to do by amendment before the hearing. Reynolds, Adm’r, et al. v. West, 32 Ark., 244.

The appellant was not prejudiced by the allowance of the amendment making Wilkins a party.

II. Appellant does not allege in his answer that he had paid the note, or deny the allegation of the bill that it had not been paid. On the contrary, he states that he had “ always been ready to comply with his part of the contract, and to pay said money if said note was cancelled.”

In bis deposition be swore that be had paid the note in money to Woodson in March or April, 1873, long before it was •due, and further on he swore that he had paid it to Woodson in County scrip.

Woodson swore that the note had not been paid to him in money or scrip, and Willdns swore that appellant promised him to pay the note after its maturity. Both Wilkins and Woodson deposed that at the time the note was placed in the hands of Wilkins as collateral security, appellant was notified •of it.

There was no allegation in appellant’s anawer on which he could predicate proof of payment of the note before suit.

If after the sworn answer was filed, he desired to make proof that he had paid the note before suit, he should have applied to the court for leave to amend his answer and accompanied the application by affidavit that the admission in the answer •of his willingness to pay the debt was made by mistake or in-advertance in the drafting of the answer. Reynolds, Adm’r, et al. v. West, 32 Ark., 249.

There is some confusion in the depositions about the note sued on, and one deposited for keeping in the safe of August Blum, but it is not necessary to attempt to clear up this confusion. The preponderance of the evidence is that appellant •did not pay the note sued on, and the court so found.

III. The defense made by appellant’s answer was that Woodson had waived his lien on the lots for the unpaid purchase money.

It appears that at the time of the sale of the lots, Woodson made appellant a deed, reserving alien on its face for the payment of the note for balance of purchase money, which deed was not recorded, and a few day» after he made him a second deed, acknowledging the payment of the purchase money, and making no reference to the note for $400, which was recorded. Appellant relied upon the execution of the second deed as a. waiver of Woodson’s lien upon the lots for the payment of the-note. The object of executing the second deed seems to have-been that it might not appear upon the public records that appellant was indebted to Woodson for the lots, and hence the-first deed showing the indebtedness was not recorded, and the-second deed which did not show it, was recorded.

By thp first deed, Woodson conveyed title to the lots to appellant, reserving in the face of the deed a lien for the payment of the note for balance of purchase money, which was a contract lien, and like a mortgage. This lien was all the interest which Woodson had in the lots after the execution of the first deed. By the second deed, this interest was in effect conveyed to appellant — that is, Woodson divested himself of the contract lien which he had reserved upon the lots by the first, deed. After the execution of the second deed he had no contract lien upon the lots. But he had just such lien, and no-other, as he would have had if the first deed had not been made, and he had in the outset executed to appellant a deed acknowledging the payment of the purchase money, when in fact $400 of the purchase money had not been paid, which is. an equitable vendor’s lien — that is, a lien which does not-depend upon stipulation or contract, but is the creature of a. court of equity (Swan v. Benson, 31 Ark., 729), and based upon a principle founded in morals and good conscience, that the vendee should not be permitted to keep the vendor’s land and not pay for it.

Appellant swears that Woodson intended, by the execution of the second deed to waive and abandon all lien upon the lots* but Woodson swears to the contrary. We have stated above the legal effect of the execution of the second deed, and if the conflicting oaths of the parties be regarded as of equal value and balancing each other, just such effect should be given to the execution of the second deed as the law attaches to it.

Decree affirmed.


author: HarrisoN, J.:

text:
    McGill vs. Dowdle, Gibson & Co.
    1. Statute oe Limitation : Promise to pay debt of another.

    A note was executed by one partner in tbe name of the partnership. After-wards the other partner, on presentation of the note to him, promised to pay it, not denying that it was a partnership note. In a subsequent suit on it, be denied by answer that it was a partnership note, alleging that it was executed for the separate debt of the other partner, without his knowledge or consent. Held that the execution of the note was the only master in issue, and that the promise to pay was admissible to prove it, andwasnotinadmis-sible a» a parol promise to pay the debt of another, under the statute of frauds.
    2. Partners: Who are.

    If parties, after they become partners, have a common interest in the unsettled business of a former concern, or in its profits and losses, they are between themselves partners in that business.
    APPEAL from Little River Circuit Court.
    Hon. L. J. JoyNer, Circuit Judge.

      Williams & Battle, for appellants.
   HarrisoN, J.:

This was an action by Dowdle, Gibson & Co. against John M. McGill aud A. J. McGill, upon a note purporting to have been executed by them in their partnership and firm name of J. M. McGill & Bro., for $400, dated October 20th, 1875, and payable one day after date.

A. J. McGill made no defense, and judgment was taken against him by default.

John M. McGill in his answer averred that the note, though given in the firm name, was given by A. J. McGill for his several and individual debt, without his knowledge and consent, and denied that it was his note.

The issue was tried by the court, which found as conclusions of fact, that the note was made by A. J. McGill, personally, for goods purchased in his name by John M. McGill, ostensibly as his agent, from the plaintiffs, but in fact for the use and benefit of both defendants, and in respect to which they were partners : and that it was their joint note.

John M. McGill moved for a new trial, which motion was overruled, and judgment was entered against him ; whereupon he appealed.

The appellant testified in his own behalf; that A. J. McGill, gave the note in settlement of a debt of his own to the plaintiffs for goods purchased from them whilst he was merchandising and doing business alone, and before the partnership between him and the appellant was formed. The goods he said were purchased for A. J. McGill, who was his brother, by himself, as his agent, but he was not then his partner, and had no interest whatever in his business. The note was given after they became partners, but in the absence of the appellant from home, and without his knowledge, and without any authority from him ; and when he returned and learned from A. J. McGill that he had given the firm’s note for his debt to the plaintiffs, he expressed his dissatisfaction, and told him he had done wrong.

On cross-examination he admitted that the note was presented to him shortly after it was given by the plaintiff’s attorney, and said, he may have promised to pay it, but did not remember distinctly whether he did or not; and he admitted, that after the suit was brought, he requested the attorney of the plaintiffs’ to take no further proceedings in it, until he should return from St. Louis, where he was then going; and that, he told him he would stop over at Little Rock, and would see and settle with the plaintiffs. He also admitted that he never at any time informed the plaintiffs’ attorney that A. J. McGill did not have authority from him to give the firm’s note for the debt — or denied his liability on it.

He had before the goods were purchased, he said, filed his petition in bankruptcy, and had not then obtained his discharge, and that their partnership was not formed until after he had obtained it. That A. J. McGill, when the partnership was formed, had a small remnant of goods on hand, which with whatever other assets of his business and property he had, went into the firm. He had no knowledge, he said, of any liabilities of A. J. McGill, except the debt to the plaintiffs ; if there were any they were not assumed or paid by the firm, and he was in no way liable for them.

William D. Hawkins, the plaintiffs’ attorney testified for the plaintiffs, that about the date of the note an agent of the plaintiffs called at his office in Rocky Comfort, and showed him an account or note of A. J. McGill, and asked his opinion in regard to its collection. He told him it would be a better claim, if it was against J. M, McGill & Bro. The agent then left and went to the store of J. M. McGill & Bro., and soon after returned with the note sued on, which he left with the witness for collection, and told him that A. J. McGill had promised to pay it on the first of December. John M. McGill was then absent, but returned in a day or two, when he went to see him, and asked him if the note would befpaid on the first of December. He replied that he could not pay it then, but would by the first of March. About the first of March he called on him again for payment of the note. He asked further time, and promised to pay it as soon as he was able. He was afterwards instructed by the plaintiff to bring suit on the note, and did so.

After the suit was commenced, John M. McGill came to him and requested that nothing further should be done in it, until his return from St. Louis, and promised that he would stop over at Little Rock, where the plaintiffs did business, and would settle with them ; and he accordingly took no further step in the suit until after his return. At no time did he deny to the witness his liability on the note, or intimate anything of the kind, and he never heard of his denying it until he filed his answer, which was done shortly after his return from St. Louis.

He had lived in Rocky Comfort, where the defendants did business, several years, and was living there when A. J. Mc-Gill was carrying on business in his own name, and knows when the change in the business from A. J, McGill to J. M. McGill & Bro. took place. When A. J. McGill was conducting business in his own name, John M. McGill was usually about the store. There was no change of store or house, and the business was conducted by the same parties and, as appeared, in the same way as before, and thé change, so far as he was able to see, was in name only.

An exception was taken by the appellant to the ruling of the court compelling him, upon his cross-examination, to testify concerning the promises made by him to the plaintiffs’ attorney to pay the note, and also in allowing the plaintiffs’ witness to testify to the same facts ; and the admission of this evidence is the first ground of the motion for a new trial.

It is insisted that these were promises to pay the debt of another, and not being in writing, were within the statute of frauds, and parol evidence of them inadmissible.

The action was on the note, of which he appeared on its face to be one of the joint makers, and against him as an orig inal promissor, and not as promising to pay the debt of another.

The execution of the note was the only matter in issue, and this his promises very directly tended to prove.

The evidence was competent, and the ruling of the court in respect to its admission correct.

The second ground of the motion was that the court erred in its declarations of law. There were two, to which the appellant excepted. The first, was a statement of the evidence, and not of the facts, which it tended to prove — followed by a conclusion therefrom, which was nothing more than a conclusion of facts. As an instruction to a jury, it would have been improper, as instructing them as to the weight of the evidence, but inasmuch as the trial was by the court, which had itself to weigh the evidence, it amounted to nothing.

The second was as follows :

“If A. j. McGill and John M. McGill had a community of interest in the losses and profits of the business conducted by A. J. McGill, after the firm of A. J. McGill & Bro. was formed, the court should find for the plaintiffs ; and this fact may be arrived at from the facts and circumstances of the whole case, if they warrant such a conclusion, although the said John M. McGill may have denied it.

This declaration, we think, was unobjectionable. If the defendants had, after they became partners, a common interest in the unsettled business of the former concern or in its profits and losses, as there stated, they were between themselves partners as to that business also. Sto. Part. secs. 16-18.

The remaining ground was, that the finding of the court was contraxy to the evidence.

The testimony of the appellant was direct and positive, that the note was given for the sole debt of A. J. McGill, and as direct and positive in the denial of any authority to him to give such joint note. But, on the other hand, the evidence for the plaintiffs tended to prove that he had an interest in the goods, the purchase of which was the consideration for the note, and the authority of A. J. McGill from the appellant, in its execution.

It was the province of the court sitting as a jury, to determine the weight to be given to the evidence, and there was no want of evidence to warrant its finding.

The judgment is affirmed.