text:
    Kirkham v. City of North Little Rock.
    4872
    301 S. W. 2d 559
    Opinion delivered May 6, 1957.

      J. Harrod Berry, for appellant.

      Reed W. Thompson and G. Byron Smith, Jr., for appellee.
   Carleton Harris, Chief Justice.

Appellant was convicted of violating Section 3 of North Little Rock city ordinance No. 490, approved April 8, 1918, which provides as follows:

“It shall he unlawful for any person or persons to keep, store, pile, erect, maintain or permit upon any premises owned, occupied by, or. under the control of him or them, or upon any street, alley, or sidewalk adjacent thereto, any inflammable or combustible material such as hay, straw, shavings, rags, wool, packing cases, packing materials, inflammable waste materials, lumber or other substance in such a manner as to endanger from fire any building or structure within the city limits.”

Under this language of the ordinance, appellant was charged with “creating a fire hazard on May 21, 1956.” After conviction, in a trial before the court only, á new trial was granted, and the cause set for jury trial. On hearing the evidence, the jury returned a verdict of guilty, and appellant was fined $25, from which he appeals. Appellant’s principal argument for reversal is that the city ordinance, and more particularly Section 3, is unconstitutional and void: (1) For'vagueness and uncertainty; (2) For being, as a penal law, too indefinite; (3) For being an improper delegation of authority to the City Fire Department; (4) As an unreasonable restraint on a proper, legitimate business operation.'

The Section (quoted above) provides that it is “unlawful * * * to keep, store, pile, erect, maintain or permit upon any premises owned, occupied by, * * * an inflammable or combustible material such as * * * lumber or other substance in such a manner as to endanger from fire any building or structure within the city limits.” It is true that the ordinance does not “spell out” specific acts that would violate the phrase “in such a manner, ’ ’ and appellant accordingly contends that the ordinance is vague and uncertain. We do not concur with this argument. Actually, in dealing with this particular subject (fire hazards) it would be extremely difficult to specify each act that would constitute a hazard. This is true because many conditions and circumstances must be considered in determining whether particular premises create a hazard . . . the location or neighborhood of the business, the age and type of the material, the method of maintenance, etc. The same material which might well constitute a fire hazard in one location might well be permissible in another location. The same lumber, neatly stacked, might well prove hazardous if carelessly piled or thrown upon a heap. As every camper and outdoorsman knows, wood will burn more easily and quickly when loosely arranged, because of the circulation of oxygen.

Cases cited by appellant in support of his contention do not apply here. State v. Bryant, 219 Ark. 313, 241 S. W. 2d 473, dealt with what constituted a “small farm vehicle.” Green v. Blanchard, 138 Ark. 137, 211 S. W. 375, 5 A. L. R. 84, dealt with construction of an act regulating the practice of dentistry. Both of those cases involved statutes, the provisions of which, average men might well disagree upon. We do not think that true in the instant cause. The Supreme Court of Michigan, in the case of People v. Sarnoff, 302 Mich. 266, 4 N. W. 2d 544, 140 A. L. R. 1206, said:

“Sarnoff contends that Section 2969 of the Ordinance No. 131-D amending Ordinance No. 354-C of the City of Detroit, known as the Building Code, is unconstitutional, because the provision requiring a dwelling and the parts thereof to ‘be kept in good repair by the owner’ is too broad and indefinite and therefore, fails adequately to inform the. owner of the particular act or acts prohibited. * •* *”

“However, the words ‘good repair’ have a well known and definite meaning. * * * They sufficiently inform the ordinary owner that his property must be fit for the habitation of those who would ordinarily use his dwelling. It would be difficult, if not impossible, to lay down a rule of conduct in more exact terms which would at the same time cover the varying conditions presented in each individual case. * * *” (Emphasis supplied)

The Supreme Court of Tennessee, in the case of Mayor and Aldermen of Town of Jonesboro v. Kincheloe, 148 Tenn. 688, 257 S. W. 418, in a very lengthy opinion, aptly discussed a similar situation. There, the Court was considering a municipal ordinance, which, in part, provided'" as follows:

“That it shall be unlawful for any person, firm or corporation to keep, or allow to be kept on his, their or its premises, within the corporate limits of said town, calves overnight, for the purpose of sale or shipment, in such way or manner as that they will disturb the residents thereof by their noises.”

We quote in part from the decision.

“The municipal codes of all of our cities contain numerous illustrations of ordinances enacted for the purpose of preserving public peace, which necessarily leave to the enforcing officials a very large discretion, such as those making it an offense to disturb public worship, or schools, to use abusive or insulting language in public, and broadly, to conduct oneself in a ‘disorderly’ manner in any public place to the annoyance of others. Sueh ordinances are all subject in a sense to the general charge of indefiniteness, but their validity is not questioned on this account. What constitutes disorderly conduct is always a question of fact under the particular circumstances. The particular ordinance under discussion is directed at the offense of bringing the animals described into the corporate limits and keeping them overnight in such a manner as that they disturb the peace and quiet of the community. If they can be brought in and kept in such condition, and under such supervision and control, as that they do not disturb the community by their noises, no offense arises under the ordinance. No disorder has resulted and the ordinance has not been violated. This question of fact would be the one to be determined in every case presented. * * *

‘ ‘ The court will determine whether or not the calves have been kept in such a way as to ‘disturb’ the residents of the town, just as whether or not any person had conducted himself in such a way as to ‘disturb’ an assemblage.

“Again, by § 2857, Shannon’s Code, it is made an offense to ‘overdrive, overload’ etc., any animal, and it is left to the discretion of the authorities to determine whether or not, on the facts of the given case, the offense has been committed. With respect to all such laws there is some degree of indefiniteness in defining the offense, but these laws are nevertheless valid and enforceable.

“Both statutes and ordinances are in force in some of the states and cities of the country regulating the speed of automobiles without fixing a limit of certain miles per hour, but providing in general terms that the driver shall not move at such a speed as under the conditions will endanger life, and the test of violation is one of fact as to whether or not the defendant was driving recklessly. # * *

“The necessity for definiteness is founded upon the principle that one may not be lawfully punished for a violation of a statute or ordinance which does not by its terms give notice of the nature of the offense. It must be ‘certain and definite, so that the average man may with due care after reading the same, understand whether he will incur a penalty for his actions or not.’ Otherwise it is void for uncertainty. 19 R. C. L. 810.

“The ordinance before us is sufficiently certain in the definition of the offense, and also with regard to the penalty. Any average man reading it will readily understand that he commits an offense under this ordinance whenever he keeps, or allows to be kept, at night, on his premises within the .corporate limits, calves for the purpose of sale or shipment, without so handling or controlling them as to keep them from disturbing the residents of the'community by the noises which calves thus kept, in places strange to them and removed from their accustomed surroundings, as wont to make. * * *” We consider the ordinance to be sufficiently clear as to apprise an individual of acts that would be prohibited under the Section.

It is also contended that the ordinance gives an improper delegation of authority to the city fire department. Ark. Stats. § 19-2401 which act was passed in 1875, provides: ‘ ‘ Municipal corporations shall have the power to make and publish, from time to time, bylaws or ordinances, not inconsistent with the laws of the State, for carrying into effect or discharging the powers or duties conferred by the provisions of this act, and it is hereby made the duty of the municipal corporation to publish such bylaws and ordinances as shall be necessary to secure such corporations and their inhabitants against injuries by fire, * * * and they shall have power to make and publish bylaws and ordinances, not inconsistent with the laws of this State, as to them shall seem necessary to provide for the safety, preserve the health, promote the prosperity and improve the morals, order, comfort and convenience of such corporations and the inhabitants thereof.” Thus, there was clear legislative authority for the enactment of the ordinance. Subsequent legislative acts gave authority to the State Insurance Commissioner and State Fire Marshal to enforce all laws in the state regarding the prevention of fires. Section 8 of Act 115 of 1927 provided that chiefs and assistant chiefs of all fire departments, along with certain other officials, should be assistants to the Commissioner and State Fire Marshal, and Section 9 authorized any such assistants to enter any building or premises within their jurisdiction for purposes- of inspection. The law was subsequently changed by Act 254 of 1955, known as the “Fire Prevention Act.” This act empowers the Director of the Arkansas State Police to create and maintain a division of fire prevention in said department, and Section 4 provides that “All mayors, members of fire departments, and peace officers shall be ex-officio deputies to the Director. * * *” Section 5 requires the Director “ * * * and his officers and deputies to enforce all laws and ordinances with regard to the following: (1) The prevention of fires; * * *” Section 7 gives the authority to the Director or deputies to “ * * * inspect all buildings and premises within their jurisdiction, and issue orders for the compliance with such regulations. * * *” It is obvious that the authority to determine what conditions constitute a fire hazard would have to be placed in some designated official, and we know of none better qualified than an official of the fire department, for certainly this is in conjunction with his ordinary duties. Smith v. Twin State Gas and Electric Co., 83 N. H. 439, 144 A. 57, 783, 61 A. L. R. 1015. It should be pointed out that a finding by such an official that a hazard does exist, is not conclusive. The one charged is not “automatically guilty” because of such determination. He still has the right of trial and may offer his evidence, including that of expert witnesses, that the condition complained of does not create a fire hazard. It then becomes a matter for the jury, as it properly should.

Appellant argues that the ordinance is an unreasonable restraint on a legitimate business. We do not agree. Under the police power, the municipal corporation has full authority to protect the health, safety and general welfare of the citizenry. Geurin v. City of Little Rock, 203 Ark. 103, 155 S. W. 2d 719. Springfield v. City of Little Rock, 226 Ark. 462, 290 S. W. 2d 620. We conclude that the ordinance is valid.

It is also contended the court erred in refusing to instruct the jury that before they could find appellant guilty, they must first find that his “acts or omissions, if any, were willful.” Webster’s New International Dictionary, Second Edition, in defining the word “willful”, includes “intentional.” In Yol. 45, Words and Phrases, page 198, it is said, “In Statutory offense, created under police power, unless wrongful intent or guilty knowledge, commonly designated by words ‘willfully’ or ‘maliciously’, is made essential element of prohibited act, intent to disobey law is immaterial.” The ordinance herein involved does not include the word “willful.” From 14 Am. Jur., § 24, 784: “* * * A criminal intent is not a necessary element of offenses which are merely malum prohibitum or of prohibitive statutes which cover misdemeanors in aid of the police power where no provision is made as to intention. * * *” As stated by the Supreme Judicial Court of Massachusetts in Commonwealth v. Closson, 229 Mass. 329, 118 N. E. 653, “* * * It is immaterial that he was not actuated by any criminal intent. In prosecutions for misdemeanors created by statutes under the police powers, proof of a guilty mind or corrupt purpose is not essential to a conviction. * * * The use of the streets by travelers of every description is not prohibited. It is only the mode of operation by drivers of vehicles which is regulated * * * and their violation is punishable as a criminal offense. * * *” Likewise, in City of Hays v. Schueler, 107 Kans. 635, 193 Pac. 311, the Supreme Court of Kansas passed upon the validity of a city ordinance requiring a red rear light to be displayed between certain hours. The defendant contended that the ordinance was invalid because willfulness or wrongful intent was not made an element of the offense, and that a light might go out without willfulness or intentional fault, and in spite of the utmost care. Relative to this argument, the Court said: “* * * If it were necessary to validity of an ordinance that conditions of the character indicated .in .the motion to qnasli should be inserted, the full protection which the regulation is designed to afford could not he secured, and evasion would he so easy the regulation would practically, if not utterly, fail. The regulation falls, therefore, within the numerous class in which diligence, actual knowledge, and bad motives are immaterial, and the fact of noncompliance entails penalty. * * # > J

It is next argued that the evidence was insufficient to support the verdict. Captain John Finn of the North Little Rock fire department testified he talked with appellant on March 8, 1956, and again on May 9, 1956, advising that the condition of his (appellant’s) premises constituted a fire hazard, and directing that same he “cleaned up.” He described to the jury the conditions that existed, and testified that the hazard still existed at the time of obtaining the warrant. Captain Earl Eller testified that a fire hazard existed, and explained the conditions. Certain photographs were introduced which very clearly showed a condition that needed correction. We conclude the evidence was sufficient to justify the jury in reaching their verdict.

Appellant contends that the photographs (heretofore mentioned) were improperly admitted because (1) they did not correctly reflect what was purported to be shown, and (2) the photographs were taken on May 9, 1956, while the offense was charged to have been committed on May 21,1956. In regard to the first contention, it was clearly explained to the jury by the photographer that the camera could not record depth; that in certain instances there would he space between lumber and the fence (subject matter of some pictures) not shown by the photograph because of the flatness of the pictures. These facts were made clear to the jury through cross-examination by appellant’s counsel, and he was not prejudiced thereby. It is immaterial that the pictures were taken on May 9th, though the offense was charged as of May 21st. The rule announced in the cases of Medlock v. State, 18 Ark. 363, and Scoggins v. State, 32 Ark. 205, to the effect that the day on which the offense, as charged, is alleged to have been committed, is not, in general, material, has been many times reiterated by this Court. It is sufficient if the actual offense was committed prior to the finding of the indictment and on any day within the statute of limitations.

It is contended that the court erred in permitting Captains Finn and Eller to testify regarding the condition of appellant’s premises in earlier years, and that they had talked with him relative to same. We consider this evidence admissible to show that appellant was familiar with the nature of conditions considered a fire hazard, and which would subject him to a charge of violation of the ordinance; nor was he prejudiced, since the court instructed the jury, at the request of the appellant, as follows:

“The jury is instructed that this case arose out of a warrant obtained by Captain John Finn of the North Little Rock Fire Department, the prosecuting witness, on May 21, 1956. You are further instructed that the date of the obtaining of the warrant fixes the date on which the defendant is charged with having committed the alleged offense, and that in determining whether or not Mr. Kirkham has violated the law you must therefore consider the circumstances as they were on said date, May 21, 1956.”

While this instruction was erroneous, as heretofore mentioned, it was given at the request of appellant, was to his advantage, and he could have been helped by it. Certainly, his rights were not prejudiced.

Finding no reversible error, the cause is affirmed.

       The 1925 legislature abolished the office of State Insurance Commissioner and State Fire Marshal, and the duties were then placed upon the Commissioner of Insurance and Revenues. Act 115 of 1927 recreated the office of Insurance Commissioner and State Fire Marshal.

       Section 1, ordinance No. 490, designates the Chief of the Fire Department as Fire Warden of the City, and empowers him to require owners or occupants of premises which he considers unsafe to correct such conditions so as not to be dangerous in promoting or causing fires. Section 2 empowers the Chief or any member of the Fire Department appointed by him to “enter any * * * place for the purpose of inspecting the same or in the performance of any duty pertaining to the Fire Department."

       Exceptions to the rule include instances where a special day is essential, or where time is the essence of the offense.


source: Caselaw Access Project

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

license: Public Domain

text:
    Norton v. Norton
    5-1163
    302 S. W. 2d 78
    Opinion delivered May 6, 1957.
    [Rehearing denied June 10, 1957]

      Dinning & Dinning, for appellant.

      D. S. Heslep, for appellee.
   J. Seaborn Holt, Associate Justice.

This litigation involves the validity of two deeds. Appellant, Mary G. Norton, a widow, and the mother of Richard D. Norton, appellee, and four other sons, on June 18, 1955, executed and delivered two deeds to her son, Richard, in one of which she conveyed to him 480 acres of farm land in Phillips County for consideration of $7,000 and other valuable consideration, and described as follows: “Northeast Quarter (NE %) of Section Eleven (11) and the North Half (N %) of Section Twelve (12) all in Township Two (2) South, Range One (1) East, containing 480 acres more or less,” and in the other she conveyed town property (residence) in Marvell, Arkansas, for a consideration of $1,000 and other valuable consideration and described as follows: ‘ ‘ One Hundred Twenty Two and one-half (122 y2) Feet off of the West End of Lots Number One (1), Two (2), and Three (3) of Mayo’s Subdivision of the Town of Marvell, Arkansas.” In both deeds she reserved a life estate.

\ On September 22, 1955, Mrs. Norton filed suit against her son Richard and wife, (residents of Jackson, Tennessee) to cancel and set aside the two deeds on the grounds that they were fraudulently obtained from her through intimidation and false representation; that no part of the consideration named in each of the deeds was ever paid, and was grossly inadequate. On October 20, 1955, Richard, by his then attorney, — who later withdrew from the case, — answered with a general denial. With the issues thus joined, trial was begun February 21, 1956. Mrs. Norton testified at length. Her testimony on direct and cross-examination covered some 54 pages of the record. At the close of her testimony and after a thorough cross-examination by Richard’s then attorney, Mrs. Norton rested her case and Richard’s then attorney asked permission to withdraw from the case, since he felt that he should become a witness. This permission was granted and an adjournment was taken until February 28, 1956. At the conclusion of the trial, at which the attorney, over appellant’s objections, was permitted to become a witness and testify on behalf of appellee, Richard, there was a decree in favor of appellees, and this appeal followed.

For reversal appellant contended that “1. The testimony of the attorney was privileged and inadmissible for any purpose for the reason that he was then, and had been for ten years, the regular attorney of the appellant (Mrs. Norton). 2. The burden of proof under the facts in this case rested upon the defendant and this was overlooked by the Chancellor in making his finding of law that the burden rested upon the plaintiff to prove by clear, cogent and convincing testimony that fraud or undue influence was exercised in procuring the execution of the deeds. 3. The clear preponderance of the competent testimony in this case rests with the appellant and the court erred in basing his decision upon testimony that was clearly incompetent.”

Mrs. Norton, as indicated, is the mother of five sons including appellee, Bichard. It appears undisputed that neither of the sums named in the two deeds was ever paid by Bichard. The Chancellor found, and we think the testimony supports this finding, that the 480 acre farm conveyed in one of the deeds was worth $75,000 and the town property $15,000. It was appellant’s primary contention that when she signed the two deeds she thought she was signing a will. Her testimony was to the following effect: She testified that before the instruments were executed she sold a few acres of land adjoining the 480 acre tract with the idea of building a home in Marvell. That Bichard, who lived in Jackson, Tennessee and was an experienced contractor,' volunteered to build the house for her without any charge for his services and that she paid for the cost of material and labor used in building the house, which amounted in the aggregate to $12,271.68. That she had a savings account of $3,000 in Helena, a checking account of some $1,000 to $2,000, and in a building account $10,000, or a little more. At the time she was suffering with cancer and needed medical and hospital care. Bichard told her he loved her and realized that she was sick and was giving his services that she might be taken care of in her old age. Bichard partly built the house, spent the $12,000 for labor and materials. In building the house Bichard charged her with items that he promised to give her, and at the end, in order to keep him from losing she told him she would make a will and that it would be prepared in the office of her attorney. I told him, “At my death you will get the house, but I want the rest of my property to be equally divided with the rest of the boys.” He told her that the other boys wanted to take over the property and send her to the insane asylum, “I think the thing for you to do, Mama, is just turn the property over to me and I will take care of you as long as you live.” I said, “No, I will have to investigate that and find out about it, I will go in and see Mr. Cracraft about it.” The firm represented me. at that time. She was so ill, she forgot all about it. She further testified that the only thing she undertook-to do was to make a will for Richard covering the house, which he had helped her to build. Sometime in September or October she went with Richard to Florida to see her brother and when she returned home she found for the first time, that she had executed deeds conveying all the property, that she thought it was her will when she signed the deeds. That these two deeds had been prepared by Richard’s attorney of Jackson, Tennessee; that Richard, in company with his attorney, brought the deeds to Marvell for Mrs. Norton’s signature. She suggested that the instruments be executed in the office .of her attorneys, who had represented her for some ten years. That at the time she signed the two instruments she inquired of Richard why there were two and he informed her that one of them was for her and the other one for him; that it was a will and one was a copy of the other, and she believed what he told her to be true. She did not read them. She signed the two instruments in the presence of her attorney who took her acknowledgment.

Following their return from Florida and as she was leaving Richard’s home to return to Marvell, he (Richard) followed her to the car and told her he wanted to buy the farm, and that she replied, “Richard, I have told you and told your wife, Carolyn, that I would never sell that farm as long as I live. That is my security.” He put his arm around her and said, “I am your security, honey.” I replied, “You can’t talk to me about the farm. ’ ’ He said, ‘ ‘ It won’t hurt if I talk to the other boys about it,” and I replied, “You can talk to the other boys about it after my death.” At that time she didn’t realize that she had signed deeds conveying to him the property, which stripped her of everything in the world she had, and left her without means to secure hospital and medical treatment. That she had been going to a hospital in Little- Rock, but that her son, Earl, who lives in Marvell has been bearing all the expenses, along with a son, Gaines, who lives in Little Rock. That she was so ill she did not recall the date when the house was finished hut following its completion and after she learned that she had executed the deeds and not a will (as she intended) she telephoned Richard and asked to see him, that she had cancer and had to go to a hospital in Little Rock, but that he replied that he didn’t have time to fool with her. From the time he got the deeds and since the completion of the house he has never been to see her.

Her son, Earl, testified that Richard did not put any money in the house, that he (Earl) was not present when the instruments were signed in the attorney’s office. “I didn’t know that she was signing any deeds, I knew that she was going to fix a will for Richard to get the house.”

Richard testified at length in his own behalf. He positively denied the material parts of his mother’s testimony and brazenly asserted in his testimony that she had testified falsely on material matters. We think the testimony of this son, who, in trying to hold fast to an alleged gift of some $90,000 worth of property, for which he paid nothing, and who testified, in effect, that he did not believe his own mother on oath, shows a great disregard of the filial love and respect a child should have, and tends to discredit him.

Richard’s wife, Carolyn, one of the appellees and vitally interested, testified that Mrs. Norton was with her, Richard, their two children, and a friend on a trip to Florida, and that Mrs. Norton on several occasions on the trip stated that she wanted Richard to have all the property including the farm. That one of these statements was made in the presence of Mrs. Norton’s brother, D. F. Gaines, in whose home Mrs. Norton visited during their stay in Florida. Mr. Gaines (a retired businessman) tended to contradict this testimony of Richard’s wife. “. . . it was the first time I had seen my sister in several years and her statements were that her money had paid for the labor and materials for the new house and that she intended to will this home to Richard after her death but never was any statement made by her that she had deeded it or would deed it to him. ’ ’

We consider now the testimony of the above attorney, which the trial court admitted, over the objections of appellants, as proper, and which it appears largely influenced the court’s findings and decree. Its findings contained this recital: “The court has reached the conclusion that if the testimony of Mr. Cracraft is accepted as being true then there can be no question but that at the time of the execution of the instruments Mrs. Norton knew what she was doing and that her acts in so doing were done freely and without any compulsion or undue influence or under any misapprehension as to the effect of her acts. The sympathy of the court is with the plaintiff and it has a deep regret that it cannot find some legal means by which the relief sought by plaintiff can ... be granted. There is no question that she now regrets the execution and delivery of these deeds by which she deprives herself and her other sons of any hope on inheritance to the fee in this property. Certainly the defendant and his wife have not filled the offices of devoted children toward the mother in her time of trouble and terrible sickness, but the court is not able to find that plaintiff has met the burden the law places on her to cancel the deeds in this action. ’ ’

The attorney had testified, in effect, that he took Mrs. Norton into his private office, took her acknowledgment and gave her advice as to the nature and effect of the instruments, and further testified as to what Mrs. Norton told him during this conference. The firm, of which this attorney, Cracraft, is now a member (before he became a member) had probated the will of Mrs. Norton’s late husband, secured the appointment of an executrix, and, as indicated, had represented her as her attorney for some 10 years. We emphasize that Mr. Cracraft at all times acted in a fine and upright manner, and nothing herein is a reflection on him in any way. We have concluded, however, in the circumstances that the testimony of the said attorney was in the nature of privileged communication between attorney and client and should not have been admitted in evidence. § 28-601 Ark. Stats. 1947 provides: ‘ ‘ The following persons shall be imcompetent to testify: * * * An attorney, concerning any communication made to him by his client in that relation, or his advice thereon, without the client’s consent.” “The rule as to privileged communications between attorney and client extends to statements of each to the other. It is not material whether the evidence relates to what was said by the attorney, or what was said by the client, in their private conversation on the business in which the attorney is professionally employed,” 58 American Jurisprudence, § 483, p. 270. The Circuit Court of Appeals, the 9th Circuit, in the case of Baldwin v. Commissioner of Internal Revenue, 125 F 2d 812, 141 A. L. R. 548, wherein it was insisted that a deed in question had been executed for publicity and that there was no confidential relationship existing between the attorney and client, the court said: “But this argument overlooks the true nature of attorney Cosgrave’s testimony. His testimony, and the testimony on which the Board based its decision, was as to the legal reasons for the execution of the deeds. He testified that he had advised the mother to deed the property rather than leave it by will and thus avoid probate expenses. It is our opinion and we hold that it was error for the Board to admit the testimony of Cosgrave concerning the exchange of deeds between the mother and the son. Without the attorney’s testimony there is no testimony in support of the Board’s decision that the transfer was one intended to take effect in possession or enjoyment at or after death, nor is there evidence to support a finding that it was in contemplation of death.”

When all the competent testimony in this record is considered, we hold that appellee has failed to meet the burden of proof required, in the circumstances, in the present case, which is between the mother and son, where the most intimate and confidential relationship existed, where there was no money consideration and nothing* more than a gift was intended by the instruments in question. The duty rested on appellee, Richard, to show that these instruments were freely and voluntarily executed. Our oft repeated rule running 'through our decisions is stated in Young v. Barde, 194 Ark. 416, 108 S. W. 2d 495, in this language: ‘ ‘ The general rule is that where special trust and confidence exists between the parties to a deed, the gift to the party holding the dominant position is prima facie void. In Gillespie v. Holland, 40 Ark. 28, 48 Am. Rep. 1, cited by appellees, the court announces the doctrine from which there has been no deviation, as follows: ‘It has been the well-established doctrine in equity that contracts, and most especially gifts, will be scrutinized with the most jealous care when made between parties who occupy such confidential relation as to make it the duty of the person benefited by the contract or bounty, to guard and protect the interests of the other and give such advice as would promote those interests. And this is not confined to cases where there is a legal control . . . They are supposed to arise wherever there is a relation of dependence or confidence, especially that most unquestioning of all confidences which springs from affection on one side and a trust in a reciprocal affection on the other. The cases for the application of the doctrine can not be scheduled. They pervade all social and domestic life. The application may sometimes be harsh, and one might well wish that an exception could be made, but there is a higher policy which demands that it should be universal. The language of Lord Kingsdowne, in Smith v. Kay, 7 H. of Lords Cases 750, has been considered striking. He says that relief in equity will always be afforded against transactions in which ‘influence has been acquired and abused, in which confidence has been reposed and betrayed’.”

Accordingly, the decree is reversed and the cause remanded with directions for further proceedings consistent with this opinion.

Chief Justice Harris and Mr. Justice Ward concur.

Paul Ward, Associate Justice

(concurring). I concur in the result reached by the majority, but I think the reason on which that result rests is wrong, or at least very misleading.

At the beginning of the next to the last paragraph in the opinion this language is found: “Whén all the competent testimony in this record is considered, we hold that appellee has failed to meet the burden of proof required, in the circumstances, in the present case, which is between the mother and son, . . .”

I am at a loss to understand (for the opinion does not explain) just at what point in the trial of the case the burden shifted to appellee. Does the majority mean to say or imply that the burden shifted from the plaintiff (appellant) to the defendant (appellee) when the relationship of mother and son was shown? Frankly, I can think of no other testimony that could remotely tend to shift the burden. If it is meant that the showing of the mother and son relationship cast the burden of proof on appellee, then I submit that there is a grave possibility that thousands of similar transactions in this state are in jeopardy. It is common knowledge that quite frequently a parent will deed property to a child, or vice versa. It has never been my understanding that such a transaction cast a cloud of suspicion on the grantee which he might some day he called upon to explain away.

And how can the burden of explaining away the cloud he met? The majority opinion sheds some interesting light on that point, for it says: “The duty rested on appellee, Richard, to show that these instruments were freely and voluntarily executed.” This poses a novel situation, for how can a grantee he expected to make positive proof that his grantor acted “freely and voluntarily.”

I feel that those making the majority opinion have misapplied the rule they rely on. In this case there is no showing of any special confidential relationship existing between the parties other than parental, and it is not shown that any positive duty rested on the son to advise his mother. To the contrary, the mother actively sought and obtained the advice of a law firm of her own choosing.

The time honored rule is that the burden rests on the one seeking to set aside a deed, and I think it would be much safer to apply it here, especially where it can be done and reach the same result.

Harris, C. J., joins in this concurrence.


author: Ed F. McFaddin, Associate Justice.

text:
    Wilson v. Harris.
    5-1260
    302 S. W. 2d 86
    Opinion delivered May 6, 1957.
    [Rehearing denied June 10, 1957]
    J. R. Wilson, for appellant.

      W. C. Medley and Joe H. Schneider, for appellee.
   Ed F. McFaddin, Associate Justice.

The question posed is, the right of persons — not parties to original litigation — to intervene in the case after the final decree has been rendered. The Chancery Court denied the right; and we affirm the holding under the facts here shown.

On October 24, 1952 McGrew Harris, et ad., filed suit No. 1588 in the Calhoun Chancery Court against “ Unknown Trustees of C. E. Harris Company and Newark Oil Corporation”, seeking (a) to have half of the mineral interest in certain lands quieted in the plaintiffs; and (b) to obtain certain money in the registry of the Court to the credit of the named defendant companies. An attorney ad litem was appointed and made his report ; a warning order was published; and proof of publication was made. On November 24, 1952 the Calhoun Chancery Court, being regularly in session, rendered a decree in the cause, giving the plaintiffs the prayed relief; and this decree was filed on November 25, 1952.

Thereafter, on December 29, 1952, the present appellants, Miss Sallie Lou Wilson and Mrs. Iszora Wilson (hereinafter designated as interveners), filed a pleading-in the said case No. 1588. The pleading was entitled: “Intervention of Sallie Lou Wilson and Mrs. Iszora Wilson, and Petition to Quiet Title and Prayer for Partition when and if Title is Quieted and the Ownership legally determined”. In the said pleading (which is referred to as “intervention”) the interveners claimed to own all of the surface and half of the minerals in and under the SE % NW % and NW i/4 SW % Sec. 23, Twp. 15 S., E. 14 W., in Calhoun County. This 80 acre tract was a portion of the land concerning which the Court— by the decree of November 24, 1952 — had quieted the title to one-half of the minerals in McGrew Harris, et al. In their said pleading the interveners: (a) deraigned their title to the surface and half the minerals; (b) alleged that on April 4, 1949 the interveners and Carter Oil Company had conducted a proceeding against the Newark Oil Corporation in the Calhoun Chancery Court under the provisions of § 53-401 et seq. Ark. Stats.; (c) alleged that in the 1949 proceedings an oil and gas lease on the interest of the Newark Oil Corporation had been duly authorized and executed; (d) alleged that the money in the registry of the Calhoun Chancery Court belonged either to the Newark Oil Corporation or to the State of Arkansas under the law of escheat; and (e) denied that McGrew Harris, et al, were entitled to any relief in the case No. 1588.

McGrew Harris, et al., moved that the said inter-, vention be dismissed as filed too late, and this motion was granted by the Court on September 7, 1956. From the said dismissal the interveners prosecute this appeal, making seven points as to alleged irregularities or illegalities in the proceedings leading up to the decree of November 25, 1952. But we conclude that our holding in Ferrell, Admx. v. Holland, 205 Ark. 523, 169 S. W. 2d 643, precluded the intervention in the case No. 1588 by the interveners after the decree had teen entered. In Holland v. Ferrell we said:

“The cause was submitted to the chancery court on June 6. The decree was rendered on August 16. The petition of Wyatt to intervene was not filed until September 3. Section 1318 of Pope’s Digest provides: ‘Where, in an action for the recovery of real or personal property, any persQn having an interest in the property applies to be made a party, the court may order it to be done.’

“This was § 37 of the Civil Code; and cases construing this section are cited by Mr. T. D. Crawford in his annotated volume of the Civil Code of Arkansas. In 39 Am. Jur. 943, the rule is stated: ‘. . . the general rule is that after litigation has progressed to final judgment or decree it is too late for third persons to be allowed to intervene as parties to the litigation. Ordinarily, intervention is not allowed after a final judgment or decree has been entered, or when an appeal therefrom is pending.’

“An annotation on this point may be found in 127 A. L. R. 668. The rule as announced in American Jurisprudence was impliedly recognized by this court in Files v. Watt, 28 Ark. 151.”

These interveners were not named as defendants in the original suit No. 1588: so they cannot invoke the provisions either of § 27-1907 Ark. Stats, (as to time to set aside judgment rendered on constructive service), or of § 29-404 Ark. Stats, (as to essentials of valid judgment on constructive service). If these interveners feel that the decree, entered in case No. 1588 in the Calhoun Chancery Court in November, 1942, casts a cloud on their title, then they are free to file a separate suit to remove such cloud. They are also free to file any plenary suit they desire, and the holding in the present case is in no sense res judicata against them. But, in a case in which they were not parties, they do not have the right to intervene after the decree and have the entire case reopened, as they have attempted to do.

Affirmed.

       The decree recites, inter alia: “And the Court proceeds to a hearing of this cause upon the complaint of the plaintiffs heretofore filed, the affidavit for Warning Order herein, the Proof of Publication of Warning Order, the Response of the Attorney ad Litem, and other evidence adduced for the consideration of the Court.”

       The time lag from 1952 to 1956 is not explained in the briefs but is mentioned merely to show that we have not misstated the years. The order dismissing the intervention recited, inter alia: “And the Court finds upon hearing of this matter that a Final Decree was entered in the above entitled cause of action November 24th, 1952 and filed with the Clerk of the Calhoun Chancery Court on November 25th, 1952 and entered of record. That the Intervention of the Interveners was not filed in the Calhoun County, Arkansas Chancery Court until December 29th, 1952, more than one month after final decree had been entered of record in this action. That after litigation has progressed to a final judgment or decree it is too late for third persons to be allowed to intervene as parties to the litigation. That the Motion of Plaintiffs for the Intervention to be dismissed and struck from the file in this action, should be granted and sustained by the Court.”


author: Minor W. Millwee, Associate Justice.

text:
    Commr. of Revenues v. Transcontinental Bus System, Inc.
    5-1257
    301 S. W. 2d 569
    Opinion delivered May 6, 1957.

      Herrn Northcutt, for appellant.

      Bailey, Warren & Bullion by Bruce T. Bullion, for appellee.
   Minor W. Millwee, Associate Justice.

This appeal involves separate suits by two interstate passenger bus companies to recover income tax payments made under protest in compliance with deficiency assessments by the Arkansas Revenue Department based on the statutory formula prescribed in such cases. The cases were consolidated and the Commissioner of Revenues has appealed from a decree granting the relief prayed.

Appellees, Continental Southern Lines, Inc. and Transcontinental Bus System, Inc., operate general passenger bus services partly within and partly without Arkansas. Continental operates in 9 states and Transcontinental in 14 states. In their corporate income tax returns filed with appellant, Continental reported a net loss on its Arkansas operations of $50,517.73 for the year 1951 while Transcontinental claimed similar losses as follows: For 1950, $90,789.92; 1951, $64,287.86; and 1952, $52,107.78. However, each company reported a very substantial net income on its system-wide operations during the same periods. Upon examination of said returns, the appellant found that the statutory method of determining taxable income for Arkansas had not been followed by appellees. Pursuant to recomputations in accordance with the statutory formula appellant made deficiency assessments against Continental of $1,214.80 plus interest for 1951 and against Transcontinental in the total amount of $2,832.61.

The formula under which the appellant made the deficiency assessments is set forth in Ark. Stats., Sec. 84-2003 (d) and (e). Subsection (e) reads in part: “When the business of such utility is partly within and partly without the State, their net income within the jurisdiction of this State shall be ascertained by taking their gross ‘operating revenues’ within the State, including in this gross ‘operating revenues’ within the state the equal mileage proportion within the State of their interstate business and deducting from their gross ‘operating revenues’ the proportionate average of operating expenses or operating ratio for their whole business as shown by the Interstate Commerce Commission standard classification of accounts.

“To the net operating revenues thus determined shall be added revenues from miscellaneous operations within the State and other nonoperating income from sources within the State, together with a proportionate part based upon the ratio of gross operating revenues from sources within the State to their entire gross operating revenues of all non-operating income from sources other than within this State and deducted therefrom miscellaneous operating expenses within the State and a proportionate part of all deductions from gross income as set forth in the Interstate Commerce Commission classification of accounts based upon the proportionate average of operating expenses for their whole business.”

Now it is conceded that the amounts of the deficiency assessments made by the Commissioner are correct if the statutory formula is properly applicable. Nor do appellees find any fault with the formula except as it may be applied in determining the deductible item of operating expenses allocable to Arkansas. In making the assessments, the Commissioner accepted the returns made by appellees as to gross operating revenues and expenses for the years in question and arrived at a net operating income by determining the operating expenses allocated to Arkansas in accordance with the various factors prescribed in the statutory formula. Appellees used a different method and determined the operating expenses allocated to Arkansas upon a “system cost per bus mile” basis by dividing tbe total number of miles into total operating expenses to ascertain the average cost per bus mile and multiplying this by the number of bus miles driven in Arkansas.

In passing on the validity of state income tax statutes which provide a method or formula for allocating to the taxing state a portion of the total income of a business that extends into other states, where the business within the state is not separable, the courts generally hold that such formula, if fair on its face, will be upheld unless the taxpayer sustains the burden of showing that it produces an arbitrary and unreasonable result as applied in the particular case. 130 A. L. R. 1209. One of the leading cases which involved a statutory formula identical with our own is Norfolk & W. R. Co. v. North Carolina, 297 U. S. 682, 80 L. Ed. 977, 56 Sup. Ct. 625. In sustaining the validity of the statute as there applied, Justice Cardozo pointed out that both the taxpayer and the state would be swamped with administrative difficulties if left to struggle through every case without the aid of a formula of ready application. He also indicated that a formula, though valid on its face, or in its general operation, may be unworkable or unfair when applied in particular conditions to a particular carrier. In reference to the instant formula, he said: “The statutory formula is not framed on an assumption that gross operating revenues are uniform actually for every mile throughout the system. It is not framed on an assumption that for every mile of the system there is uniformity of expense. Such assumptions, if made, would be contrary to notorious facts. What the formula does assume is this, that barring exceptional conditions there will be throughout the system such an average relation between revenues and expenses as will cause the net income of a party to vary, in proportion to the mileage, with the net income of the whole.”

Appellees earnestly contend that their own “direct accounting” method of allocating operating expenses is fairer than the statutory formula which they say is based on the false premise that operating expenses have a definite relation to the percentage that Arkansas revenues hear to system expenses; that there is actually no need for the use of a formula in the instant case; and that due to the comparatively low traffic density in Arkansas and other less important “cost factors” involved here, use of the statutory formula produces an unrealistic, arbitrary and unconstitutional result. Similar contentions were thoroughly considered and determined against the carrier under facts and circumstances perhaps more favorable to it than those involved here in Cook, Commissioner of Revenues v. Kansas City Southern Railway Company, 212 Ark. 253, 205 S. W. 2d 441. Certiorari was denied by the U. S. Supreme Court in 333 U. S. 873, 92 L. Ed. 1150, 68 Sup. Ct. 902. In that case deficiency income tax assessments were made and sustained against the railway by the same accountant using the same formula as in the case at bar and we reversed the trial court’s holding that the carrier was entitled to substitute a different method along the lines advocated by appellees in this case. There, as here, the state’s comparatively low traffic density together with certain less important factors prompted the attempted deviation from the statutory formula. The principles announced there are controlling here and in harmony with those laid down in Norfolk & W. R. Co. v. North Carolina, supra. We accordingly conclude that appellees failed to sustain the burden of proving the statutory formula oppressive and discriminatory, or that they have been deprived of any constitutional right by reason of its application in the instant case.

The decree is, therefore, reversed, and judgment will be entered here in favor of the appellant for the deficiency assessments.


author: George Rose Smith, J.

text:
    Altschul v. Martin.
    5-1263
    301 S. W. 2d 571
    Opinion delivered May 6, 1957.

      Brockman & Brockman, for appellant.

      Pat H. Mullís and Lloyd B. McCain, for appellee.
   George Rose Smith, J.

This is an action by the appellee, who does business as Martin Chevrolet Company, to collect $428.49 assertedly due upon a conditional sales contract by which Martin sold a used truck to the two appellants, Altschul and Rose. The defense is a plea of usury. In appealing from a judgment for the plaintiff the appellants contend that the contract was usurious as a matter of law and that the court’s instructions to the jury were erroneous.

The testimony of the three litigants is substantially in agreement. Rose originally owned the truck in question and wanted to sell it for $900 to Altschul, who was a laborer on Rose’s farm. Rose sought Martin’s assistance in arranging a credit sale so that Altschul could pay for the truck by working for Rose. Martin at first refused to take part in the transaction, but he finally agreed to an arrangement by which he was to be paid $100 for his trouble. He explained that he could not transfer the contract to General Motors Acceptance Corporation, the finance company with which he did business, unless he was the seller of the vehicle. To meet this difficulty it was agreed in substance that Rose would sell the truck to Martin and that Martin would resell it to Altschul. There is a dispute as to why Rose signed the conditional sales contract as a copurchaser with Altschul, but that point is immaterial.

There was no concealment of the facts from Altschul, who understood that he was to pay Rose $900 for the truck and Martin $100 for his services. The two sales were completed at the same time, on April 6, 1955. Martin first handed Rose a check for $900, representing the purchase price that Martin was paying to Rose for the truck. Rose in turn gave Martin a check for $600, which was understood to be a loan to Altschul which the latter was to repay by working for Rose. This $600 was credited as a down payment of $500 to Martin as seller, with the other $100 being Martin’s profit.

A conditional sales contract was prepared, by which Martin sold the truck to Altschul and Rose for a cash price of $900. The purchasers were credited with the down payment of $500, leaving a balance of $400 to be paid on December 6, 1955, together with an insurance charge of $1.68 and an interest charge of $26.81. Martin endorsed the contract, with recourse, to GMAC. "When the purchasers failed to make the payment of $428.49 that was due on December 6 Martin paid that amount to GMAC and brought the present suit upon the contract.

It is contended by the appellants that the contract is usurious even if the $100 payment to Martin is disregarded. "VYe do not agree with this argument. The seller was legally entitled to charge interest at the rate of ten percent per annum on $401.68 from April 6 to December 6. Excluding the first day but not the last, this is a period of 244 days. The maximum legal interest would therefore be $26.85 (244/365ths of 10% of $401.68). The interest charge was actually $26.81; so the legal rate was not exceeded if the contract is considered without reference to the $100 payment to Martin.

The testimony as a whole presents several possible issues of fact as to the exact legal nature of the $100 payment. According to some of the statements in the record, this money was paid to Martin for his services in arranging to have the unpaid balance financed by GMAC. In this view Martin was a loan broker or intermediary between the borrowers and the lender. It is settled by our decisions that if such a broker is the borrower’s agent his fee is not treated as interest on the loan, but the rule is otherwise if the broker is the lender’s agent. Jones v. Phillippe, 135 Ark. 578, 206 S. W. 40; Smith v. Eason, 223 Ark. 747, 268 S. W. 2d 389. The decisive question is that of agency.

This is actually the only question of fact that was submitted to the jury. At the plaintiff’s request the court gave an instruction to the effect that if Martin acted as the agent of Rose in the transaction the verdict should be for the plaintiff. The court quite properly gave on its motion a companion instruction to the effect that if Martin acted as the agent of GMAC and not of Rose the verdict should be for the defendants. We do not think that these instructions were inherently erroneous as being in conflict with each other or as disregarding the defense of usury. Both instructions were directed to that defense, and together they submitted the issue of the presence or absence of usury. If the defendants thought that the wording of the charge could be improved it was their duty to make a specific objection.

Other possible questions of fact were not submitted to the jury and, with the evidence open to several interpretations, cannot be decided by this court on appeal. It is of course true that if Martin received $100 merely for lending money to Altschul and Rose the loan would be void for usury. But this is not the only inference to be drawn from the evidence; the payment might have been for his services as a broker or might have been part of the purchase price in a bona fide sale of the truck. Such issues are not before us for review in the absence of a request at the trial for correct instructions on the subject. The defendants’ requested instruction number 9 was not correct, for it would have told the jury in effect that the $100 payment to Martin rendered the transaction usurious as a matter of law.

Affirmed.


author: Paul Ward, Associate Justice.

text:
    White v. Avery.
    5-1173
    302 S. W. 2d 88
    Opinion delivered May 6, 1957.
    [Rehearing denied June 10, 1957]

      Melvin E. Mayfield and Surrey E. Gilliam, for appellant.

      G. E. Snuggs, for appellee.
   Paul Ward, Associate Justice.

On January 13, 1941 Robert Avery and Ms wife Will (often referred to as Willie) Avery, executed a regular quitclaim deed, conveying 120 acres in Union County, Arkansas, to G-. E. Van Hook, administrator of tbe estate of Joe WMte. The consideration recited in the deed was $10. Immediately after the execution of said deed appellants took possession of said property (with the exception hereafter mentioned) and have remained in possession of and paid taxes on said lands until the present time. At the time the deed was executed Robert Avery and Willie Avery, his wife, were living in a small house located on said lands and continued to do so until Robert Avery died the following year and Willie has continued to live there until this time.

On September 26, 1952, some eleven years after the above mentioned deed was executed and delivered to the said grantee, Willie Avery (widow of said Robert Avery) and the children of Robert and Willie Avery filed a complaint against the heirs of Joe White, deceased, and the administrator of his estate. In this complaint it was alleged in substance: That the recited consideration was never paid; that although Robert and Willie Avery were or had been indebted to the estate of the said Joe WMte deceased yet the lien securing that indebtedness was barred by the statute of limitation and also the said administrator agreed to sell the mineral rights on and under said lands to pay said indebtedness; That when this was done he would deed the lands back to the grantors, that it was with this understanding that the deed had been executed and delivered, and; That the said administrator has sold timber, oil and gas leases for which no accounting has been made. The prayer was that the said deed be cancelled as a cloud on plaintiffs’ title, and that an accounting be made, and any indebtedness due the administrator be paid.

Answering the above complaint the administrator and the heirs of Joe White entered a general denial to all material allegations; they admitted they had sold a small amount of timber from the lands and that they had executed an oil and gas lease thereon but deny that the plaintiffs were entitled to any accounting or any of the proceeds; they claim title by virtue of the deed described above and by virtue of seven years adverse possession and payment of taxes.

Upon the issues above joined both sides introduced testimony together with exhibits. Based thereon the trial court, on February 21, 1956 found that the plaintiffs’ complaint should be dismissed for the want of equity and that a life estate should be vested in the plaintiff, Willie Avery, and, subject thereto, that title to the 120 acres of land be quieted and confirmed in the defendants. The court adjudged that the plaintiffs should pay two-thirds of the costs and that the defendant should pay one-third thereof.

On direct appeal the heirs of Joe White deceased and the administrator of his estate contend that the trial court was in error in decreeing a life estate in said lands to Willie Avery. On cross-appeal Willie Avery and the heirs of Robert Avery deceased contend that the court committed error in refusing to cancel the deed and to order an accounting.

We agree with appellants that it was error for the trial court to decree a life estate to Willie Avery. In the first place there is no contention on the part of Willie Avery or any of the heirs of Robert Avery that she was to have a life estate in said lands. Their contention was that the deed should be cancelled and the fee simple title vested in them. The allegations of the complaint filed by appellees amount, in substance, to a charge that they were induced by fraud to execute the deed.

It would serve no useful purpose to set forth and comment on the voluminous testimony contained in the record, but it suffices to say that there is no testimony from which the chancellor could have found that Willie Avery was to retain a life estate when she and her husband executed the quitclaim deed to the administrator of Joe White’s estate. The testimony shows that Robert Avery and Willie Avery were indebted to the White estate in the sum of approximately $1,700 and that this amount was a consideration for the execution of the deed in question. The trial court could not have dismissed appellees’ -complaint without having first found, as it did, that no fraud or misrepresentation was practiced upon Robert Avery and his wife in connection with the execution of the deed to the administrator, and we cannot say that the court’s finding was against the weight of the testimony.

However the administrator G. E. Van Hook, and he alone did testify that at the time of the execution of the said deed he told Robert Avery and his wife that they could live in the small house situated on said lands as long as they lived. This assurance of the privilege of living in the house does not amount to the granting of a life estate in the 120 acres of land involved.' It is not denied that" appellants had possession of the lands, sold timber, executed oil and gas leases and paid the taxes for more than eleven years. All of which is inconsistent with the life estate in Robert and Willie Avery. See 33 Am. Jur. 820, § 313 where, among other things, it is said:

“A life tenant of real estate is entitled to the issues and profits of the property during the period of the life estate. A life tenant of realty, for example, is usually entitled, under the doctrine of emblements, to the crops sown on the land, and if he dies before maturity of such crops thus sown, they go to his personal representative. He may be entitled to certain mineral rights, or the use or income of money received from their disposition, under particular fact situations, and also, under some circumstances, is entitled to the proceeds derived from the sale of timber.”

While appellee, Willie Avery, is not entitled to a life estate in all of the property involved in this case yet it is just and right, and not against the wishes of appellants apparently, that she should be accorded the right to live in the house and to use so much of the ground adjacent thereto as is reasonably necessary for domestic purposes, during her lifetime.

What we have already said heretofore leads to the obvious conclusion that appellees cannot prevail on their cross complaint. As indicated above the chancellor found that appellees had not established the allegations in their complaint, and after a careful examination of the record we cannot say that the chancellor’s finding was against the weight of the testimony.

We cannot agree with appellees that appellants withdrew or failed to file an answer in this case. Appellees’ contention is based on this situation. On October 8, 1952 the several defendants filed a full and complete answer to which we have previously referred. Later certain of the defendants filed what is designated as “Amended and Substituted Answer. ’ ’ This document consisted of only one page and refers to the fact that one of the named defendants was dead at the time the suit was filed and that two of them had already disposed of their interest in the lands, etc. It is appellees’ contention, citing authorities, that the Amended and Substituted Answer took the place of the original answer. To take advantage of this fact appellees, on February 21, 1956, filed a “Motion for Summary Judgment” setting forth the facts and contentions referred to above. This motion was overruled on the same day that it was filed. We think the court was justified in overruling appellees’ motion and in refusing to strike appellants’ original answer for the reason that on the same day appellants filed a motion to amend the title designation of their second pleading mentioned above on the ground that it was the result of an error. The record shows that this motion was granted by the court.

We have considered and rejected appellants’ contention that the trial court should not have required them to pay one-third of the costs. This was a matter which addressed itself to the discretion of the trial court, and an abuse of discretion does not appear.

It follows from what we have said that this cause is and should be affirmed on cross-appeal, and that, on direct appeal, it is reversed with directions to the trial court to enter a decree in conformity with this opinion.


author: Sam Robinson, Associate Justice.

text:
    Whiddon v. Universal C. I. T. Credit Corp.
    5-1195
    301 S. W. 2d 567
    Opinion delivered May 6, 1957.

      Melvin T. Chambers, for appellant.

      Wright, Harrison, Lindsey <3 Upton, for appellee.
   Sam Robinson, Associate Justice.

The issue here is whether a usurious rate of interest was charged on the balance owed on the purchase price of an automobile. Appellant, Glen Whiddon, purchased from Dolly Parker Motors, Inc., of Magnolia, Arkansas, an automobile for the price of $2,201.98. Whiddon was- allowed $1,501.98 on his old car, leaving a balance of $700. He bought, through the automobile dealer, collision insurance, for which he was charged a premium of $210. He was also charged $143.36, which included the premium for a life insurance policy, the premium on a disability policy, and the interest on the entire balance owed. The contract, as finally consummated, showed a balance owed of $1,053.36, payable in twenty-four monthly instalments of $43.89 each. The contract was transferred by the dealer to Universal C. I. T. Corporation. Whiddon made five monthly payments, and then filed this suit to void the contract on the alleged ground of usuiy. Both the dealer and the credit company were made defendants.

At the trial, the defendants introduced evidence to the effect that when the credit company bought the contract it was discovered that Whiddon had been charged a premium of $210 for collision insurance, whereas he should have been charged $51 less than that amount; and the defendants introduced evidence to the effect that Whiddon was given credit for the $51 overcharge, plus $8.04 interest thereon, and that he was notified of such credit. Whiddon denies receiving any information about being given a credit.

This case turns on the point of whether the $51 charged excessively as a premium on collision insurance, plus interest thereon, was an honest mistake or whether it was a subterfuge to cover up an illegal rate of interest. The circumstances arouse suspicions of usury. In the first place, the purchase contract is prepared on a form furnished by the defendants, and the collision insurance premium is not referred to as a premium for insurance, but is designated “territorial differential.” There is no way of determining from the contract that territorial differential means collision insurance, and we have found no other way of making such determination from any other source of authority.

But another item arousing even greater suspicions is the manner in which the defendants handled the interest charge, and the premiums on the life insurance and disability insurance. These three items were lumped together, and a charge made of $143.36, in the contract prepared on defendant’s form. From the evidence introduced in the case, but not from the contract, it can be determined that $42.13 was for life insurance and $2 was for personal accident insurance, which would leave $99.23 charged as interest. The $143.36 charge appears as Item 7 in the purchase contract, as follows: “7. Finance Charge (including insurance not in Item 4).” It will be recalled that Item 4 was “territorial differential”. It is impossible for the purchaser or his lawyer to examine the contract of purchase and determine the amount of interest charged. In fact, Mr. Ramsey, an employee of the finance company, a witness for defendants, testified that the $143.36 item was taken from a rate chart furnished by the finance company, and it was impossible for the dealer to determine from the chart the amount that was interest and the amount that represented insurance.

The interest charged on 'the transaction, after the $8.04 credit on interest, totals $91.19, which does not amount to usury if the excessive premium charged and the interest thereon was a mistake and was not a part of a scheme and device to hide a usurious charge. .There is no showing that the premiums finally charged on the insurance are exorbitant and there is no showing that the appellees made a practice of charging an excessive amount as an insurance premium. In other words, there is nothing here to show that the situation presented is anything other than an isolated instance of its Mnd.

Mr. T. J. Patterson, who lives in El Dorado, and is district manager for the credit company, testified that the overcharge was a mistake; that Mr. Whiddon was due the rebate on the premium because the car was not used in business and no one under twenty-five years of age drove it; that he personally wrote Whiddon informing him he was being given credit for the overcharge, and that this letter was written just two days after the credit company purchased the contract. The trial court had an opportunity to observe the witness and was in a much better position than this court is to judge his credibility. W.e cannot say the trial court reached the wrong conclusion, notwithstanding the suspicious circumstances above mentioned. In deference to the trial court’s conclusion as to the veracity of the witness, the decree is affirmed.

Millwee, J., dissents.


author: J. Seaborn Holt, Associate Justice.

text:
    McIlvenny v. Horton.
    5-1210
    302 S. W. 2d 70
    Opinion delivered May 13, 1957.

      Rea W. Perkins and E. J. Ball, for appellant.

      Wade & McAllister, for appellee.
   J. Seaborn Holt, Associate Justice.

This was a suit by William M. Horton and wife, sellers, against Michael Mcllvenny and wife, buyers, to recover $1,200 for an alleged breach of contract for the sale of real estate in Washington County. Trial was had in the Washington Chancery Court July 18, 1956, and at the close of appellees’ proof, appellants demurred, challenging the sufficiency of appellees’ evidence, — under the provisions of § 27-1729 Ark. Stats. 1947. The court overruled the demurrer. Appellants elected to stand on this demurrer, refused to offer proof or to plead further, whereupon the court entered a decree in favor of appellees for the full amount claimed, $1,200, plus interest and costs. This appeal followed.

For reversal appellants rely on two points: “1. The Chancery court lacks jurisdiction over the subject matter of the cause ... 2. The Vendors are not entitled to recover deposit made with escrow agent by vendees where vendee- breached contract, vendors accepted breach, and showed no damage nor agreement that the deposit was liquidated damages.”

No. 1

The answer to appellants’ contention that the court lacked jurisdiction is that they did not question jurisdiction. The record reflects that they did not ask that the cause be transferred to law, in fact, it appears that they asked affirmative relief in their answer, in which they prayed: “. . . that the plaintiffs complaint be dismissed; that the $1,200 be paid over to these defendants and that they have judgment against said plaintiffs in the sum of $500 for compensatory damages, and $500 for punitive damages.” Clearly, we think, they have waived any right to ask for a transfer to law. We said in the case of Love v. Bryson, 57 Ark. 589, 22 S. W. 341, “Conceding, without deciding, that the defendant in this case had a constitutional right to a trial by jury of an issue of fact, it is sufficient to say that he waived it by voluntarily submitting to a trial of all the issues by the court sitting in equity, without making an effort to obtain a jury trial.” Also, in Hayes v. Bishop, 141 Ark. 155, 216 S. W. 298, we said: “. . . no request to have the cause transferred was made, and, in the absence of that request, appellant will be held to have waived the right to ask for a trial at law of the issues raised.”

No. 2

On May 14,1955, appellees, Horton and wife, and appellants, Mcllvenny and wife, entered into a written contract under the terms of which appellees for a consideration of $7,500 agreed to sell to the Mcllvennys certain real estate in Washington County. This contract, among others, contained these provisions: “The buyers (appellants) promise to deposit Twelve Hundred Dollars ($1,200) of the purchase price and promise and agree to deposit the balance of the said purchase price in the sum of Sixty-three hundred Dollars ($6,300) within thirty (30) days after date. . .

“In the event of a default by the seller (Hortons) to fully perform this agreement, the Escrow Agent shall return the money deposited hereunder to the Buyer, but said return of money so deposited shall not release the said Sellers from their liability for breach of contract.

“In the event of a default of performance of this agreement by the buyers the said deed, together with the abstract of title shall be returned to the seller and the money deposited hereunder shall be returned to the sellers and this contract shall become null and void.” (initialed) B.M.H., M.P.Mc, A.Mc

It appears that appellants (buyers) did not question the title to the property, but after placing the $1,-200 in escrow with the bank as earnest money breached the contract and refused to go through with the deal. Appellee, Horton, testified that appellees (sellers) had fully complied with all the terms of the contract and were ready, able and willing to deliver possession to the buyers upon payment of the balance of the purchase price. He further testified that the initials on the contract opposite the provision striking out the word “buyers” and substituting “sellers”, along with other signatures on the contract, were already on it when he signed the contract. Appellants offered no testimony to contradict Mr. Horton.

"Was the provision, that the $1,200 deposit be made by appellants, intended to be a penalty or a stipulation for liquidated damages'? If the former, it was not enforceable. This question is one of fact, and must be determined by the facts presented. The test in a situation such as is presented here is announced in Wait v. Stanton & Collamore, 104 Ark. 9, 147 S. W. 446, in this language: “Usually, the surest test of liquidated damages is where the actual damages caused by the breach would be uncertain and difficult of proof, and the sum stipulated appears to be reasonable compensation for the injury occasioned by the failure to perform the contract. The purpose for permitting such stipulation for damages as compensation is to render definite and certain that which appears to be uncertain and not easily susceptible of proof. But the damages so stipulated for must be such as to amount to compensation only, and not so excessive or unreasonable as to amount purely to a penalty without being confined to the elements of fair compensation.

“The authorities, however, show that where the intention to liquidate the damages is not obvious, the stipulated sum will be given the effect of a penalty if it exceeds the measure of a just compensation and the actual damage sustained is capable of proof (citing authorities). But where the contract is of such a nature that the damage caused by its breach would be uncertain and difficult of proof, the sum named by the parties is generally held to be liquidated damages if the form and language of the instrument are not unfavorable to that construction and the magnitude of the sum does not forbid it.

“Upon the whole, the general observation we can make is that in each case we must look at the language of the contract, intention of the parties as gathered from all its provisions, the subject of the contract and its surroundings, the ease and difficulty of measuring the breach in damages, and the sum stipulated, and from the whole gather the view which good conscience and equity ought to take of the case.

“Guided by the principles above announced, it will be seen that each case must be decided according to its own peculiar facts.”

We think that here it was intended by the parties, and that the contract, in effect, provided for a penalty. The damages sustained, however, by appellees are ascertainable and when all facts are considered the amount agreed upon ($1,200 — 16% of the purchase price) to be paid as a penalty or forfeiture was out of all proportion to the probable damages, ánd, as indicated, should be construed as a penalty and not liquidated damages. The undisputed testimony, however, shows that the Hortons, as a result of appellants’ breach of the contract, have been required to expend $460, itemized as follows: Greer Abstract Company $46.25, Revenue Stamps $8.25, E. J. Ball $5.00, Escrow Pee $3.50, Ovid Hiveley $375 (real estate agent), Survey $22. Total $460.

Although, as indicated, the case was decided on demurrer to the evidence, it was incumbent on the plaintiffs to prove, as an essential part of their cause of action, that the contractual provision sued upon represented liquidated damages and not a penalty. As indicated by the Wait case, supra, the test is whether the sum stipulated bears a reasonable relationship to the actual damages sustained. This is a matter that lies peculiarly within the plaintiffs’ knowledge and means of proof. To require the defendants to assume the burden of proving that the plaintiffs’ actual damages do not bear a reasonable relation to the stipulated sum would impose upon them the difficult, if not impossible, burden of proving the negative.

Despite the fact that the contract provided for a penalty, the appellees are entitled to recover their actual damages. Stillwell v. Paepcke-Leicht Lbr. Co., 73 Ark. 432, 84 S. W. 483, 108 A. S. R. 42; Dilley v. Thomas, 106 Ark. 274, 153 S. W. 110. Viewing the evidence in its light most favorable to the plaintiffs, as we must (Werbe v. Holt, 217 Ark. 198, 229 S. W. 2d 225), the proof shows that the appellees’ recovery must be limited to their actual damages of $460. The chancellor correctly overruled the demurrer to the evidence, for the plaintiffs did not entirely fail to establish a cause of action, but there is no substantial evidence to support a recovery in excess of $460. The judgment is therefore reduced to that amount, plus six per cent interest from July 18,1956, and as so modified is affirmed. Costs of this court and the trial court are assessed against appellants.


author: Ed. F. McFaddin, Associate Justice.

text:
    Arnold v. City of Jonesboro.
    4874
    302 S. W. 2d 91
    Opinion delivered May 13, 1957.
    [Opinion amended and rehearing denied June 10, 1957]

      W. B. Howard and Frank Sloan, for appellant.

      Gerald E. Pearson, for appellee.
   Ed. F. McFaddin, Associate Justice.

The question posed is the validity of an ordinance of the City of Jonesboro (hereinafter called “City”) which makes illegal the erection and use of business buildings in a district restricted exclusively to residences.

In 1956 appellant, Arnold, applied to the City for a permit to build a restaurant building in a residential district. Even though the City denied the permit, Arnold erected the building and proceeded to operate a restaurant therein until arrested for violation of the city ordinance, No. 828, adopted April 16, 1951 (amendatory of an earlier 1931 ordinance) which reads in part:

“It shall be unlawful for any person ... to hereafter build, construct or erect . . . for business purposes any . . . building, or to open or establish any business of any kind . . . within the residence district, . . .”

It was conceded that the appellant’s restaurant building was and is within the residential district described in the ordinance; and it was shown that the ordinance No. 828 was amendatory as to territorial limits of Ordinance No. 604 adopted on August 3, 1931. Both in the municipal court and in the circuit court on appeal, Arnold was convicted of violating the Ordinance No. 828; and on appeal here he urges the same defense made in the lower court: that both the 1931 ordinance and the 1951 ordinance are void because the City failed to pursue the procedure required by the zoning Act, which is Act No. 108 of the General Assembly of Arkansas of 1929. This brings us to a consideration of the several legislative enactments involving the power of cities to restrict buildings in certain described areas.

(a) The Third Extraordinary Session of the 44th General Assembly was in session from June 23rd to June 30, 1924, and is referred to as “Third Extra Session of 1924”. At the said Extraordinary Session, the General Assembly adopted Act No. 6 (approved July 1, 1924), captioned: “An Act to Confer on Cities of the First Class the Power of Regulating the Character of Buildings”. The act provided in part:

“SECTION 2. Cities of the first class are hereby authorized to establish zones limiting the character of buildings that may be erected therein, and that such zones may be of three classes: first, portions of the city where manufacturing establishments may be erected or conducted ; second, portions of the city where business other than manufacturing may be carried on; third, portions of the city set apart for residences.

“SECTION 3. When the city council shall have laid off such zones it shall not be lawful for anyone to construct or carry on within a given zone any business not authorized by the ordinance of such city establishing the same, unless with special permission granted by the council of said city . . .”

Jonesboro is, and was at all times here, a city of the first class; and on August 3, 1931 adopted Ordinance No. 604, which in all matters here concerned is the same as the Ordinance No. 828 previously quoted. It is clear that this Ordinance No. 604 was passed under the authority granted cities of the first class by the said Act No. 6. Inherent in appellant’s contention here is the question whether Act No. 108 of 1929 impliedly repealed the said Act No. 6 and destroyed the power of cities to have ordinances restricting buildings except and unless the cities followed all the procedure stated in the Act No. 108 of 1929.

(b) So we come to a consideration of Act No. 108 of 1929. This Act was captioned: “An Act to Provide for City Planning, Zoning and Sub-division Control and the Creation of a Planning Commission, in Cities of the First and Second Class; and For Other Purposes”. By it any city was empowered to adopt a general zoning-plan ordinance. This was not a law merely empowering cities to regulate the character of buildings: It went into the entire matter of zoning'. Neither repeals by implication nor amendments by implication are favored in construing statutes. (Pruitt v. Sebastian County C. & M. Co., 215 Ark. 673, 222 S. W. 2d 50). The Legislature will not be held to have changed a law it did not have under consideration while enacting a later law, unless the terms of the subsequent act are so inconsistent with the provisions of the prior law that they cannot stand together. Without detailing all of the reasons for such holding, we conclude that the powers given cities of the first and second classes by the zoning- ordinance (Act No. 108 of 1929) were in addition to, and not superseding of the powers given cities of the first class by the Act No. 6 of 1924.-'

(c) One of the reasons for onr conclusion stated immediately above is the existence of Act No. 312 of 1949. That Act clearly shows that the Legislature of 1949 did not consider Act No. 6 of 1924 to have been repealed: because by the Act No. 312 of 1949 the Legislature amended the Act No. 6 of the Third Extra Session of 1924 so as to include cities of the second class, as well as cities of the first class. The said Act No. 6 had become § 10056 of Pope’s Digest; and the Act No. 312 of 1949 stated:

“That Section 10056 of Pope’s Digest of the Statutes of the State of Arkansas is hereby amended to read as follows: ‘ Cities of the first and second class are hereby authorized to establish zones limiting the character of buildings that may he erected therein. Such zones may he of three classes: first, portions of the city where manufacturing establishments may he erected or conducted ; second, portions of the city where business other than manufacturing may he carried on; third, portions of the city set apart for residences.’ ”

Thus, the legislature, by Act No. 312 of 1949, reenacted a law that gave cities of the first class the power to regulate the character of buildings, and extended that power to cities of the second class. After the passage of Act No. 312 of 1949, Jonesboro, on April 16, 1951, by its Ordinance No. 828, re-enacted (with territorial changes immaterial in this case) the restrictions on business buildings in residential districts. Certainly after Act No. 312 of 1949, all possible questions were answered as to the power of the City of Jonesboro to adopt its Ordinance No. 828. The power had been originally granted by Act No. 6 of the Third Extra Session of 1924, had not been impliedly repealed by Act No. 108 of 1929, and had been affirmatively sanctioned by the Act No. 312 of 1949. The Ordinance No. 828 was valid and the uncontradicted evidence shows that appellant acted in violation of the ordinance.

Affirmed.

       This Act was within the purview of the call of the said Extra Session: it was the third item in the Governor’s Proclamation calling the Special Session.

       The Ordinance No. 828 changed some of the boundary lines of the residential district. The appellant’s business was within the residential district as described in either or both of the ordinances.

       In Little Rock v. Pfeiffer, 169 Ark. 1027, 277 S. W. 883, it was stated that the City of Little Rock had adopted an ordinance under the power granted by said Act No. 6. The ordinance involved in Gammill v. Blytheville, —Ark.—, 291 S. W. 2d 503, was apparently adopted under the power granted cities by the said Act No. 6.

       The Act No. 108 (now found in § 19-2811 et seq. Ark. Stats.) has many times been before this Court. In Gammill v. City of Blytheville, 226 Ark. 572, 291 S. W. 2d 503, we listed some such cases, although that case involved a restrictive ordinance and not a zoning ordinance.


text:
    Jones v. Jones.
    5-1281
    301 S. W. 2d 737
    Opinion delivered May 13, 1957.

      Teel Goldman and Chas. C. Wine, for appellant.

      Shaver, Taclcett & Jones, for appellee.
   George Rose Smith, J.

This is a suit by the appellee to cancel an asserted^ usurious contract by which he bought a car from the appellant, an automobile dealer. The appellant contends that he did not intend to charge excessive interest and merely made a mistake in the amount of the premium for insurance on the vehicle. The chancellor found the agreement to be void for usury and ordered its cancellation.

The net price for the car, after an allowance for the value of a mortgaged truck that was traded in by the buyer, was $957. By the contract the buyer was required to pay $1,200 in twenty-four equal monthly installments. It is conceded that the difference of $243 was intended to represent nothing except interest and insurance. The actual insurance premium was at the rate of $118 for the two years, which leaves an apparent interest charge amounting to more than ten per cent per annum. The appellant insists, however, that by mutual mistake the contract was prepared upon the erroneous assumption that the insurance premium would be $140, which would bring the amount attributable to interest within the legal limit.

The chancellor’s rejection of this contention is not against the weight of the evidence. The appellant testified that before preparing the contract he telephoned an insurance agent and was told that the premium would be $140. He says that he passed this information on to the appellee. The latter denies that the amount of the premium was ever mentioned. He says that he signed the contract in blank upon the understanding that the seller would insert the correct charge for the insurance on the car. Upon either of these versions the mistake, if it actually occurred, would evidently be a mutual one.

The appellant’s testimony is corroborated only by the fact that the correct premium would have been $140 if the purchaser had meant to use the car in his business as a plumber. There is at least some evidence to support the view that the vehicle was to be so used, and we are asked to find that the premium should in fact have been $140. This request is beside the point, for the question is whether the parties agreed to a contract affording the lender an excessive rate of interest. If the evidence requires an affirmative answer to that question, it is plain that the agreement cannot be purged of usury by the extraneous fact that the insurer might have charged a greater premium if it had chosen to do so.

There are several circumstances tending to rebut the appellant’s insistence that a genuine mistake occurred. First, the supposed error is attributed solely to the incorrect information that the appellant says he received from his insurance agent. That this agent was not called as a witness, nor his absence accounted for, suggests that his testimony would not have been favorable to the appellant. Rutherford v. Casey, 190 Ark. 79, 77 S. W. 2d 58.

Second, the written contract contains no statement whatever of the amount to be paid either as interest or as the premium for insurance. On its face the agreement appears to be usurious, for it recites only the factors making up the net price of $957 and the buyer’s obligation to pay $1,200 in twenty-four installments of $50 each. When, as here, the lender writes the contract he has the opportunity to put down in black and white an intelligible description, and the exact amount, of every charge that is being added to the principal of the debt. Last week we pointed out that the practice of attaching meaningless labels to such charges weakens the lender’s position when usury is asserted. Whiddon v. Universal C. I. T. Credit Corp., 227 Ark. 824, 301 S. W. 2d 567. The same criticism can fairly be made of a contract that gives the borrower no information at all about the deferred charges being exacted by the lender. In either case the trier of the facts is justified in assuming, until he is convinced by proof to the contrary, that the difference between the principal of the loan and the face amount of the contract represents interest on the debt.

Third, the appellant paid the insurance premium within four or five days after the sale of the car and must then have known with certainty that an overcharge had been made. Unlike the lender in the Whiddon case, supra, the appellant made no effort to inform the borrower of the overcharge until after this suit had been filed, some months later. It is indicated by the appellant’s testimony that he considered himself entitled to the windfall resulting from his mistake, as he assumed that he could not have collected from the borrower if the mistake had been in the latter’s favor. To accept this explanation as a basis for upholding the contract would establish, a precedent giving every lender unlimited freedom to make similar mistakes without risking the penalty of usury.

Affirmed.