author: Kibby, J.

text:
    Ætna Casualty & Surety Company v. Etoch.
    Opinion delivered June 13, 1927.
    1. Insurance — indemnity contract. — Parties to a contract of automobile indemnity insurance can make any contract not prohibited by law.
    2. Insurance — liability on indemnity contract. — An insurer on an indemnity insurance contract covering a truck, held liable, though the policy stipulated against liability if the truck was driven by a person under the age of 16, where the truck at the time of the accident was driven by an 11-year-old boy, left in charge but not authorized to drive the truck while .the driver was in a building.
    Appeal from Phillips Circuit Court; E. D. Robert-so», Judge;
    affirmed.

      Bevens & Mundt, for appellant.

      W. G. Binning, for appellee,
   Kibby, J.

The only question presented by this appeal is whether or not the indemnity insurance company is liable on the policy for the payment of damages incurred by the insured in the operation of his automobile truck being driven, at the time of the injury, by a boy eleven years of age.

The material parts of the policy are:

“The Ætna Casualty & Surety Company does hereby insure the assured, subject to all special provisions contained herein and the general provisions indorsed herein, which are hereby referred to and made a part of this policy. G-eneral provisions: 9. Limitation of use: Unless otherwise provided by an agreement in writing contained herein, or added hereto, the company shall not be liable under this policy for any loss or damage: *' * * (c) while being’ operated in any race or speed contest, or while being- operated by any person in violation of law as to age, or by any person under the age of- sixteen years.”

It appears from the testimony' that the truck was being operated on the day of the injury by Harry Smith, appellee’s regular driver, who was an experienced driver of full age; that he had some duty to perform inside of the Cleburne Hotel, and left Zack Williams, an eleven-year-old boy, in charge of the truck, to guard the contents and keep any one from getting anything out of it. Some one came along and ordered the boy to move the truck, and he undertook to do it,- and drove or backed it into a store and broke the plate glass front thereof. The boy had not been employeed by appellee and had no authority from him or the driver to move the truck.

In reporting the accident to the insurance company, appellee stated * * * “Person operating it, Zack Williams, age 11. * * * Describe fully place and cause of accident or loss: Truck had been parked on Porter Street next to postoffice, by Harry Smith, driver, and left boy in truck while he went in barbershop. The boy was- told by some one passing to move the truck, and when he started it he couldn’t stop it, and ran into plate-glass window in building owned by B. L.-Lyford, at No. 212 Porter Street.” * * *

The owner of • the building recovered judgment against appellee for the damage for breaking the glass, $119- and costs, and appellee in this suit recovered judgement against the insurance company for the amount of the said damages and costs, $131.20, from which this appeal is prosecuted.

It is earnestly urged by the insurance company'that it is not liable in any event under its policy to indemnify appellee for damages caused by his truck while being operated by a person under 16 years of age. The policy does expressly provide that the- company shall not be liable under it for any loss or damage while the automobile truck described therein is operated by any person under the age of 16 years.

It will not be questioned that the parties can make any contract of insurance not prohibited by law, and there appears to be good reason why an indemnity company would not be willing to assume the risk for damages resulting from cars being driven or operated by persons under 16 years of age.

The testimony shows that, although the truck was being operated on the day of the injury by appellee’s employee, an experienced driver of full age, it was left by him in charge of the boy, who attempted to move it, at the suggestion of some other person, and who did start the truck and drive or back -it into the store, causing the damage thereto. Such action was necessarily operating the truck at the time of the injury, within the apparent and obvious meaning of the policy exempting or excusing the company from liability for damages caused while the truck was being operated by any person under 16 years of age, in the opinion of the writer, concurred in by Justices Wood and Smith Brock v. Travelers’ Ins. Co., 91 Atl. 279, 35 A. & E. Ann. Cas. 635, 88 Conn. 308, and Hoosley v. Union Indermnty Co., 102 So. 561, 137 Miss. 561. The majority of the court is of the opinion, however, that, since the insured had employed a skilled and experienced driver of full age to operate the truck, and had no information that he had left it in care of the eleven-year-old boy while in the discharge of his regular duties, he should not be held responsible for any damag'es resulting from the moving of the truck by the boy, who had no authority from him to either watch the truck or move it.

The purpose in taking out the insurance was to provide indemnity against damages caused by the operation of the truck, of course, and, since it was left standing temporarily by the regular driver, while he went into the hotel or barber shop to attend to some duties there, and since the boy who was requested to watch the truck had no authority whatever from him or his employer to move it, the owner of the truck is no more liable to the payment of damages caused by its unauthorized movement, nor the insurance company any less liable to the payment of indemnity therefor, than if the truck had been accidentally started by some other car bumping against it and the damage thereby caused; in other words, that, within the meaning of the provisions of the policy, the truck, while standing at the curb until the driver could discharge the necessary duties inside the building, was being operated by him within the meaning of that clause in the policy. Commonwealth v. Henry, 118 N. E. 224, L. R. A. 1918B, 827, 229 Mass. 19.

The judgment is accordingly ¡affirmed.


source: Caselaw Access Project

author: Mehaeey, J.

license: Public Domain

text:
    Miles v. Scales.
    Opinion delivered June 13, 1927.
    1. Frauds, statute of — contracts for sale of land. — Under the Statute of Frauds (Crawford & Moses’ Dig. § 4862), a contract for the sale of lands or any interest therein, to be valid,- must be in writing*.
    2. Money lent — sufficiency of complaint. — A complaint alleging purchase of an interest in an oil lease on named land, that the • price was. prorated equally between plaintiff and defendant and ■ two others, that plaintiff advanced defendant’s part of the purchase money, and that, on a sale of the interest, defendant was credited with a pro rata -amount of the sale price, leaving a balance due from him to plaintiff, held to state a cause of action for money loaned.
    3. Limitation of actions — when defense raised by demurrer.-— The statute of limitations cannot be taken advantage of by demurrer, unless the complaint shows that the action is barred.
    Appeal from Union Circuit Court, Second Division; W. A. Speer, Judge';
    reversed.

      Kitchens &' Harris, for appellant.

      Mahony, Yocum é.Saye and Patterson & Rector, for appellee.
   Mehaeey, J.

On November 24, 1925, the appellant, plaintiff below, filed in the circuit court his • complaint, alleging that, on the-6th day of November, 1922, plaintiff, together with E. L. Pye, H.- M. Johnson and the defendant, J. L. Seales, purchased an undivided one-sixteenth interest in and to all of the oil, gas and other minerals, covering 160 acres of land located in section 3, township 16 south, range 16 west, Union County, Arkansas, the title to said interest so acquired being taken in the name of H. M. Johnson as trustee; that the purchase price paid for said property was $11,160, same being pro-rated equally between said H. M. Johnson, E. L. Pye and this plaintiff and defendant; that on the 6th day of November, 1922, the day upon which said purchase money was paid, it was understood and agreed between this plaintiff and defendant that the amount owing by defendant as his part of the purchase price, to-wit, the sum of $4,790, would be advanced for him as a loan by. plaintiff in payment of his interest -in said property; that, pursuant to said understanding and agreement, plaintiff then and there paid said sum of money for and on behalf of defendant; that thereafter, on the 28th day of November, 1922, an undivided one-fourth interest of the aforesaid one-sixteenth interest in said property so acquired by this plaintiff and. defendant together with the said E. L. Pye and H. M. Johnson, was sold for the sum of $5,000, and the part due the defendant therefor, to-wit, $1,250, was, by agreement between defendant and plaintiff, duly credited. on the sum .of $2,790 loaned: by plaintiff to defendant in the -manner-hereinabove alleged; that there now remains due. this plaintiff the sum of $1,540, and no part thereof has been. paid. Plaintiff states that on the 20th day of October, 1925, and at numerous times subsequent thereto, he has demanded said sum of $1,540 from this defendant, but he has not repaid the same. Wherefore, premises considered, plaintiff prays judgment against defendant in the sum of $1,540, and for all proper relief. ” . . . * .

The appellee, who was defendant - below, filed a motion to require plaintiff to make his complaint more specific and- certain, which is as follows:

“Comes the.defendant, J. L. Scales,' and moves the court to require plaintiff to make his complaint more specific and certain in this:
“First. Whether the contract of November 6, 1922, alleged as between plaintiff and defendant for the sale and purchase of an interest in land, was in writing; and, if said alleged contract be in writing, that plaintiff he required to amend his complaint so to state, and also to attach to the complaint the original or a copy of said contract as exhibit thereto.
‘ ‘ Second. Whether the alieg'ed agreement of November 28, 1922, as between plaintiff and defendant, under which it is alleged that defendant agreed with plaintiff that a payment of $1,250 be credited on the sum of $2,790 alleged to have been loaned by plaintiff to defendant was in writing; and, if in writing, that plaintiff be required to so allege and attach a copy of said written contract or agreement to his complaint and make same part thereof. And that the defendant have his costs herein.”

The plaintiff thereafter, in response to said motion, filed the following:

“That there was no contract of sale and purchase between this plaintiff and defendant of an interest in the land -described in plaintiff’s complaint, as stated in defendant’s motion. That the only contract or agreement between plaintiff and defendant related to defendant’s part :of the consideration paid for his interest in-said land, which, as stated in the' complaint,- was loaned to defendant by plaintiff at the time- said interest was purchased, and said agreement as to said loan being an oral one-. In further response to that part of defendant’s' motion requiring plaintiff to state as to whether the credit of $1,250 on said loan made by plaintiff to defendant was in writingyplaintiff states that said agreement as to said credit was an oral one.”

Defendant tlien tiled a demurrer, which is as follows:

“Comes the defendant and demurs to the complaint, and for .grounds states-:
“First. . The complaint does not state facts-sufficient ■to constitute a cause’ of action against the defendant.
“Second. The complaint • shows ’ on its face that there was no lending of money by plaintiff, nor borrowing of money by defendant^ but, if there was a contract or agreement of any kind between plaintiff and defendant as alleged, it was a contract of sale and purchase of an interest in land,- and within the statute of’ frauds,' aiíd fob that réason void.- - ’ '
“Third. That the complaint shows cm its face that,.if. there was such a contract as alleged by plaintiff between him and defendant, plaintiff’s causé of action is barred by the three-year statute of limitation. . ,‘ '
‘“Wherefore defendant prays that plaintiff’s, complaint be dismissed and that he have his costs herein.” '

The court found that the demurrer to the complaint should be sustained and the complaint dismissed, unless plaintiff should amend.. ■ The plaintiff refused to amend or plead further, and the complaint was dismissed, to which finding, order and judgment of the court the plaintiff excepted, and prayed an appeal to the Supreme Court, which was granted. ■ ■ ■

If this was a suit alleging a verbal contract for the sale of lands or any interest in or concerning them, it would be void under the statute of frauds, for such contract, to be valid, must be in writing. But we think the suit is simply an action to recover money, and, as we view it, therefore it is wholly unnecessary to discuss the statute of frauds or whether there was any resulting trust or any other questions discussed by the attorneys, for the reason that we think the complaint shows that it is simply a suit to collect money which plaintiff alleges he loaned to the defendant.

If the defendant loaned any amount of money to the plaintiff and plaintiff paid the money for an interest in the land, and the deed was made to a trustee, or ii! defendant had borrowed the money from plaintiff and used it for this or any other- purposes, plaintiff would have a right to maintain a suit for the borrowed money. And if the money was actually loaned, it would make no difference whether the lender handed the money to the borrower or paid it for the borrower. In either event it would simply be a loan of money.

It is alleged in the complaint that the property was afterwards sold for a less sum than the plaintiff and others gave for it, and that, by agreement, defendant’s part of the amount received was applied on the debt that he owed plaintiff, leaving a balance due plaintiff of $1,540. We think this states a cause of action for money loaned by plaintiff to defendant, and that the court erred in sustaining the demurrer.

We held in a recent case that, in actions at law, the statute of limitations cannot be taken advantage of by demurrer unless the complaint shows that the action is barred, and, among other things, said:

“Asa rule, the statute of limitations cannot be taken advantage of by a demurrer to the complaint in an action at law, unless the complaint shows that a sufficient timé had elapsed to bar the action and the non-existence of any ground of avoidance.” Brown v. Ark. Central Power Co., ante p. 177, 294 S. W. 709.

The case is therefore reversed, and remanded with directions to overrule the demurrer. •


text:
    Marten v. Jirkovsky.
    Opinion delivered June 13, 1927.
    MORTGAGES — CONFIRMATION OF FORECLOSURE SALE. — Where due and legal notice of the time/terms and place of a judicial sale of land has been given, and there is no fraud or unfairness in the conduct of the sale, confirmation of it will not he refused on account of its being at a grossly inadequate price.
    Appeal from Saline Chancery Court; W. B. Duffle, Chancellor;
    affirmed.

      Avery M. Blount, for appellant.

      Ernest Briner, for appellee.
   Mehaeey, J.

This is an appeal from an order of the chancery court confirming a sale of - lands under decree of -foreclosure. The attorney who broug'ht the Suit to-foreclose the mortgage lived at Séarcy, Arkansas, and learned from the clerk of the chancery court in Saline County that no answer had been filed, and that the court would meet on December 18, 1925. He prepared a decree and mailed it to the clerk, and wrote to the chancellor that he would not be present when the chancery court met at Benton, but that he had prepared and sent a decree to the clerk, and, if no answer had been-filed on the 18th, to let the decree be entered.

The decree prepared by the appellant’s attorney provided for the sale of the land if the amount due was not paid within ten days. The attorney stated in his letter to the chancellor that he expected to leave for California about the 15th of December, and therefore would not be present when court met on the 18th. When court met on the 18th of December a decree was rendered, and the court appointed the clerk commissioner to make the sale, and, among- other things, the decree provided that, unless the amount was paid within ten days, the property should be advertised and sold, and, following the directions in the ■ decree, which, as we have ■ said, was prepared by the attorney for the plaintiff, the commissioner advertised and sold the land, and it was purchased by appellee for $200.

Tlie undisputed testimony sliows that the attorney had had other foreclosure suits an Saline County, and, when he did not attend the sale himself, he communicated with the clerk to hid -the property in for' his client, the plaintiff. But in this instance nóthing was said to the clerk about it, and all he knew about the wishes of the attorney for the plaintiff was what.he learned from the decree prepared by plaintiff’s attorney.

There was some testimony that the land was worth $5 an acre. There were 71 acres, and, at $5 an acre,' it would have brought $355. The testimony, however,- also showed that the witnesses, did not know of any sales of lands like this, and the undisputed testimony showed that farms in that section of the county had depreciated in value and many of them had been abandoned.

Plaintiff’s attorney was not only out of the State, but the plaintiff. was a nonresident • and knew nothing about the sale. In the attorney’s letter to the chancellor he did hot make any request to postpone the sale and did not make any to the clerk, nor did he make any suggestion that his client wanted to buy or that the clerk should bid it in for his client. In fact he made no request or suggestion either to the chancellor or to the clerk about a postponement of the sale or a purchase or bid by his-client. He had asked in the same letter for' the postponement of several other cases, but made no suggestion about this ease.

The court, of course, had a right to assume that, when he had prepared the decree, providing* for a sale within ten days, had suggested the postponement of his other cases, and had' given no direction at all about this sale, except' what was in the decree prepáred by him, he desired the sale made' if the payment was not made within ten days. If there hád been any misfortune or any unforeseen thing* that prevented him from being present, or if there was any evidence of fraud on the part of the defendant or the purchaser, the chancellor would have been justified in setting aside the sale, but there was nothing* of this sort. The .chancellor heard the testimony and confirmed the sale, although the testimony shows that. the. price was probably somewhat smaller than the actual value. The land was advertised and exposed .to. .sale by the commissioner in accordance with the decree of the court. .■ ...

This court has said:

“When a sale is made in all respects according to the terms of the decree, and neither fraud, mistake nor misrepresentation can be alleged'against it, the faith of the court is pledged to ratify and perfect it. • * *■ * There is a uniform current of decisions settling that official sales will not be opened on mere representations that more may be obtained for the property. This well-known practice is in accord, with the policy of our law respecting such sales, which are required to be made after advertisement sufficient to give publicity, by public outcry, to' the highest bidder. It is. of the greatest importance to encourage bidding by giving to every bidder the benefit of bids made in good faith and without collusion or misconduct, and at least when the price offered is not unconscionably below the market value of the property. Nothing could more evidently tend to discourage and prevent bidding than a' judicial' determination that such a bidder may be deprived of the advantage of his accepted bid whenever any person is willing to give a larger price. The interest of owners in particular cases must give way to the maintenance of a practice which, in general, is in the highest degree beneficial. ” George v. Norwood, 77 Ark. 216, 91 S. W. 557, 113 Am. St. Rep. 143, 7 Ann. Cas. 171.

It has been repeatedly held by this court:

“That, where due and legal notice of the time, terms and place of a judicial sale of land has been given and there is no fraud and unfairness in the conduct of the sale, confirmation of it will not be refused on account of its being at a grossly inadequate price.” Frye v. Street, 44 Ark. 502; Wells v. Lenox, 108 Ark. 366, 159 S. W. 1099, Ann. Cas. 1914D, 11; Hershy v. Duvall, 47 Ark. 93, 14 S. W. 469.

Again it has been held by this court:

“Mere inadequacy of price is not ground for setting aside a judicial sale, unless it is so gross as to raise a presumption of fraud or unfairness.” Gleason v. Boone, 123 Ark. 523, 185 S. W. 1093.

The attorney for the plaintiff very probably intended to communicate with either the chancellor or the clerk, and either request that a bid be put in for his client or that the sale be postponed, but he neglected to do this. He says it was his usual practice, but does not give any reason why he failed to let the chancellor or clerk know what his wishes were in this case. He says that he thought the sale would not be made until he returned, and, although he did not say so, he probably overlooked the fact that he himself had provided in the decree he prepared for a sale within ten days from the date of the decree. If there had been any fraud or any unfairness proved it would have justified a refusal on the part of the court to confirm the sale. But, as there was none, the chancery court was correct in refusing to set aside the sale, and the decree is therefore affirmed.


text:
    Arkansas & Memphis Railway Bridge & Terminal Company v. State ex rel. Attorney General.
    Opinion delivered June 13, 1927.
    1. Taxation — bridge company doing business in state. — A bridge company incorporated in Tennessee, constructing a bridge across the Mississippi River under authority of the act of Congress of July 20, 1912 (37 Stat. 195), held to be doing business within the State, so as to be subject to the franchise tax imposed upon corporations doing business within the State.
    ■ 2. Corporations — basis op franchise tax. — The franchise tax on foreign corporations is not based on doing business in the State, but .on the right or privilege of doing business in the State.
    3. Commerce — liability of bridge company to franchise tax. — A bridge company which constructed a bridge across the Mississippi River, and leased it to'interstate commerce'carriers, held not engaged solely in interstate commerce, .or solely in the maintenance, ownership, and operation of an instrumentality of such commerce, in a suit by the State to collect the franchise tax.

      L Taxation — tax on federal franchise. — A franchise tax upon a company building a bridge across the Mississippi River under authority of the act of Cong. July 20, 1912 (37 Stat. 195), held not a tax on a Federal franchise, where the company received its corporate franchise from ithe State of Tennessee and the Federal authority was secondary and permissive, being granted merely because the stream is navigable.
    Appeal from Pulaski Chancery Court; Frank If. Boclge, Chancellor;
    affirmed.

      J. W. Canada, for appellant.

      E. B. Dillon, H. W. Applegate, Attorney General, and Robinson, House & Moses, for appellee.
   Mehaeey, J.

This is a suit by the State of Arkansas against the bridge company to collect a franchise tax from the bridge company. The bridge company, a corporation organized under the laws of the State of Tennessee, was authorized by act of Congress, approved July 20,1912, to construct, maintain and operate a bridge and all approaches thereto across the Mississippi River at Memphis, Tennessee, in accordance with the provision of the act entitled ‘‘An act to regulate the construction of bridges over navigable waters,” approved March 23, 1906. The act of July 20 was amended by act of Congress of August 23, 1912, but the amendment to the act is not important, we think, in determining whether or not the bridge company is liable for the franchise tax sued for herein.

The complaint alleged that the bridge company, though a foreign corporation, organized under the laws of Tennessee, was doing business for profit in the State of Arkansas, and has a capital stock of $1,260,000 actually engaged in business in Arkansas, and it is also alleged in the complaint that the Arkansas Tax Commission had assessed the defendant with a one-tenth of 1 per cent, tax on that amount of its capital stock operating and doing-business in Arkansas, for the privilege of exercising- its franchise in the State of Arkansas. ■

The defendant alleged that it received its franchise from Tennessee and not from Arkansas, and that therefore the State of Arkansas had no right to impose a franchise tax unless it was doing business within the State of Arkansas of such a character that the State could impose and collect a tax for that privilege. It alleged that the sole business in which it was engaged was the maintenance, ownership and operation of- an interstate bridge across the Mississippi River, one end and the approaches thereof being located on the Tennessee shore and the other end and the approaches thereto b.eing located on the Arkansas shore, and that said bridge was leased to three interstate carriers, which three owned the; entire capital stock of the bridge company and paid, as a rental for the use of the bridge, only such sum as was necessary to take care of maintenance, taxes and other fixed charges, and that therefore the defendant was not engaged in any sort of business in the State of Arkansas. That, if engaged in business, it was engaged exclusively in interstate commerce, or in maintaining an instrumentality of such commerce. That it did not engage in any sort, of intrastate commerce in Arkansas. That it constructed the bridge under special license and franchise óf the Congress of the United States, and that for Arkansas to impose a franchise tax was á tax upon this Federal franchise, as it had no franchise from the State, of Arkansas, and needed none. That the franchise tax imposed by the State of Arkansas was necessarily a tax upon interstate commerce, as the defendant whs not in any manner, shape or form engaged in intrastate' commerce within the State of Arkansas.

There was no proof taken, but the parties entered into a stipulation which provided, among other things, that, if the bridge , company should be held liable for the 1918 tax, the taxes for subsequent years would be controlled by the décree of the court, and therefore, upon an adverse decree being entered against the bridge company, it included taxes for the year 1918 and the taxes for all subsequent years down to the date of the decree, making a total of $17,408.49. '

The Pulaski Chancery. Court entered a decree on January 21, 1927, holding the bridge' company liable for the franchise tax, and gave judgment for the above amount. Prom this decree the bridge-company prayed an appeal, which was granted. ,, . ¡

Appellant’s first contention is that it is engaged in no sort of business in the State of Arkansas. The- stipulation, however, entered into between the parties provides that the bridge company is a corporation chartered, organized and existing under the laws of the State of Tennessee, authorized tó do business- in thé State of Arkansas for the-purpose of constructing, owning, controlling and maintáining a railway bridge, approaches and terminals over and- across the Mississippi River. The stipulation further provides that, after filing the proper papers and making the proper: showing pursuant to the statutes of the State of Arkansas, it was admitted into the State of Arkansas on May 27, 1927, and since that time has been authorized to do business in the State of Arkansas. On that date Thomas S. Buzbee.,;was appointed as agent for service, pursuant to the; statutes of Arkansas, and said appointment has not been canceled, and said bridge company paid its franchise tax .for the year 1917. It is also stipulated that 66 per cent, of the entire structure is in Arkansas and the track .and approaches of the said.bridge in Arkansas are' 4.39 miles. It still has authority -to do business- in the State of Arkansas. While the bridge company does not use the bridge' itself, but leases it to others, it is leasing it, maintaining it, keeping it and its approaches repaired,, and constantly employing labor and capital in' thé State of Arkansas, and in this way is-doing business in Arkansas.

This court has -repeatedly-held that, in case of a foreign corporation, the-tax or license is paid for exercising its corporate powers within the State. The bridge company in this case has the privilege of exercising its corporate powers in this State, and is daily- engaged in business in repairing-and maintaining the bridge and aimroaches. ' ■ ■ . . ■ . •

But this court has recently held that the tax is not based upon the doing of business in the State, but the right or privilege of doing business in the State. State ex rel. Attorney General v. Chicago Land & Timber Co., 173 Ark. 234, 292 S. W. 98. The above case discusses the constitutional questions and the statutes, and collects many of the authorities which are applicable in this case. It was also stated in the case last referred to:

“It will thus be seen that a foreign corporation is required, ‘for the privilege of exercising its franchise in this State,’ to pay a franchise tax of one-tenth of 1 per cent, each year upon the proportion of the subscribed, issued and outstanding capital stock of the corporation represented by property owned and used in business transacted in this State.
“It is stated generally that, to render a foreign corporation subject to the jurisdiction of a State, the business done by the company in the State must be of such a character and extent as to warrant the inference that the company has subjected itself to the jurisdiction and laws of the State. There is no precise test of the nature or extent of the business that must be done. All that is requisite is that enough be done to enable the court to say that the corporation is present in the State. The business which a foreign corporation is conducting in the State, in order to give the courts of the State jurisdiction over it by proper service of process, must be a part of the business for which it was organized. Some courts take the view that it is essential that the foreign corporation transact a substantial part of its ordinary business in the State. Other courts, while recognizing that the transaction of an ordinary portion of the business of the corporation by authorized agents in the State is sufficient to render the corporation subject to the jurisdiction of the courts of the State, hold that it is not necessary that the transactions in the State of the foreign corporation shall be the performance of those particular acts which constitute the characteristic feature of the business for which it was organized, or that the chief or principal part of the business of the corporation shall be transacted in the State. A continuous course of business, as distinguished from a singie transaction, conducted by authorized agents within the State, constitutes a doing of business so that the corporation may be fairly said to be present in the State and amenable to the process of the courts.” 14A C. J. 1372 et seq.

The section of the law above quoted is sustained by authorities, many of which are cited under the section. We think there is no question but what the bridge company is doing business in the State .of Arkansas, and not only that, but the bridge company itself recognized the fact that it must do business in Arkansas and, for that reason, complied with the laws of the State of Arkansas entitling it to do business in this State.

Appellant’s next contention is that, if engaged in business in Arkansas, it is engaged solely in interstate commerce or solely in the maintenance, ownership and operation of an instrumentality of such commerce. According to the stipulation and agreements in this case, the bridge company is not only not engaged in interstate commerce, but it is not engaged in any kind of commerce. It does not operate the bridge and does not carry either passengers or goods. In fact, it does nothing in the way of commerce, either intrastate or interstate. It owns, leases, repairs and maintains the bridge across the Mississippi Elver, and, while the bridge may be an instrumentality of interstate commerce so far as the carriers are concerned, the bridge company has nothing whatever to do with carrying either freight or passengers, and therefore does not use the bridge as an instrumentality for interstate commerce or any other kind of commerce.

Appellant calls attention to the case of Norfolk & Western Ry. Co. v. Penn., 136 U. S. 115, 10 S. Ct. 958, 34 L. ed. 394, and states that this is a conclusive case. The difference between that case and this is that the Norfolk & Western Bailway Company was actually engaged in interstate commerce itself, and, for that reason, the court held that the tax on keeping an office in Philadelphia was a tax on interstate commerce. The- railway company in that cáse was eng-aged in commerce exclusively, was a common carrier, and engaged in interstate commerce, and we think that the case has no application here at all, and the same may he said of other cases cited with reference to interstate commerce.' .

As we have said, the bridge company merely owns the' bridge,- leases it and maintains it. If a company owned a-boat or a number of boats,- and-leased them to a carrier- or to any person or corporation who used the boat in- carrying persons or freight in interstate commerce, the boat would be used in interstate commerce, the carrier-would be engaged in interstate commerce, but the owner of the boat would have no connection whatever with interstate commerce. And we therefore think that the bridge company in this' case is not engaged in interstate commerce,, and it is not engaged in the operation of an instrumentality used in interstate commerce.

Appellant’s next contention is that, if the maintenance of á bridge in Arkansas is carrying on business, it is - interstate commerce.' We think that what we have ■already said answers this contention and that the authorities cited by appellant ‘in support of this contention have no application. Of-course, if the bridge company was á carrier, then whatever was done by the carrier with reference to the bridge, in relation to its business as carrier, would be in interstate commerce, but we have no’ such casé here. - ■

The appellant next contends that'the tax is a tax on a Federal: franchise. The'bridge company received its franchise from the State of Tennessee and riot from the Federal Congress, or, if the authority to build the bridge granted by Congress can be called a franchise at all, it is not ¡a. primary franchise, but a secondary. The act granting authority 'to build the bridge expressly states that the bridge : company -is á Tennessee corporation, :and grants the authority to build the bridg'e to a corporation already 'created under the laws of the State of Tennessee. The same requirement would have been necessary for any person who desired to build a bridge across a navigable stream, whether the stream was between two states or wholly within one State. The grant of authority is necessary in all cases where a bridge is built across a navigable stream, and it is just as necessary where there is no interstate commerce passing over the bridge as where it is between two states and all the commerce going over it is interstate. It is merely permission and authority necessary to be granted.because the stream is navigable, and the tax here is not in any sense a tax on a Federal franchise and is not a burden on interstate commerce. The bridge company is- not engaged in commerce. :

The act granting authority provides as follows:

“Be it enacted by the Senate and House of Bep-resentatives of the United States of America in Congress assembled, that the Arkansas & ■ Memphis Bailway •Bridge & Terminal Company, a corporation organized under the laws of the State of Tennessee, its successors and assigns, be and are hereby authorized to construct, maintain and operate a bridge and all . approaches thereto, across the Mississippi Biver at Memphis, Tennessee, ’ ’ etc.

The word ‘ ‘ authorized’ ’. used in-the- act evidently means- clothed with authority, warrant or legal power. It gives a right to the bridge company to act, empowers it to build the bridge, and does not mean that it is required to build it — it is simply permissive. ■

We take it that no one would contend that, even after the act was passed and the authority granted, there was any obligation on the bridge company to build the bridge. It could build it or not, as it wished, but, if it desired to build a bridge, it would have the authority to do so.

The appellant has not only complied' with the laws of Arkansas authorizing it to do business in this .State, but it has never withdrawn from the State in the manner provided by law. Whether its failure to do so is because it would thereby subject itself to the penalties for doing business in the State without complying with the law, or for any other reason, is immaterial. The fact is that it is authorized upon its own application to do business in Arkansas and is continuing to do business under that authority.

The decree of the chancery court is correct, and is therefore affirmed.


text:
    Caddo River Lumber Company v. Rankin.
    Opinion delivered June 13, 1927.
    1. Private roads — injunction against interference. — In a suit by a lumber company to restrain the owner of land from closing' a private road or interfering with the company’s use thereof, evidence showing that use of the road had not been adverse held to warrant a denial of the injunction.
    2. Trespass — damages. — In a suit to restrain the owner from closing a private road or interfering with the use thereof by a lumber company, evidence held to justify the chancellor’s finding that ,$100 would fully compensate the owner for damages to the land by the use of the road.
    3. Trespass — evidence — damages.—In a suit to restrain the owner from closing the road, or interfering with the use thereof by a lumber company, evidence held insufficient to justify an award . of damages to the owner for injury to a spring on the land and for timber cut and removed.
    4. Highways — presumption as to use of road. — Where the public use a road across open and uninclosed lands without a court order, making it a public road, and without any attempt to exercise authority over it as a public highway, the presumption is that the use is by consent of the owner of the land, and not adverse.
    Appeal from Montgomery Chancery Court; W. R. Duffie, Chancellor;
    modified.

      G. II. Herndon„ and McRae & Tompkins, for appellant.

      J. R. Long, for appellee.
   Mehaeey, J.

The appellee wag the owner of certain land in Montgomery County, Arkansas, across which an old road ran, and the Caddo River Lumber Company, in carrying out its .operations, used said road for about two Aveeks in hauling loga. Appellee forbade tliem to use the road further, and threatened to close the road. The lumber company then. brought suit to enjoin the appellee from closing the road or interfering Avith its use of the same. . • «

The lumber company alleged in its complaint that, bn account of the .Ouachita River, it and several other residents in the community had no other Avay of getting into any public highway without using the road and crossing the lands of the appellee. There had been an old road across the land in question for more than 30 years, and the said road had been used by. the residents of the Qualls land, the Pike lands, and the Martha Rankin lands, and the public, in getting out to the Mount Ida highway, and such use of the road had been open, notorious, adverse and uninterrupted as against. the owners of the lands traversed by the road, and, as a result of such long-continued and adverse user, the residents of the farms in question and the public in general have acquired a right by prescription. That, at the time the’ appellee forbade the company haulers to use the road further, the company had doAvn in the woods adjoining defendant’s land a large quantity of timber, for which it had no outlet other than the road in question, and that, unless it was permitted to use said road, its down timber would be a loss and its remaining timber would be of no value. That the usé of the road did not damage the lands.

The defendant demurred to the complaint, which demurrer was overruled by the court. He then filed answer, and denied the long-continued and adverse user of the road in question, and denied that it was the only accessible outlet to the Mount Ida highway. Defendant alleged that the use of the road had at all times been permissive, and that the. land through which the road ran was open, wild, unimproved and uninclosed; The ,.. answer further alleged that the company had, without fe; right, used said road Avith heavily loaded eight-wheeled ■¡¡wagons, to defendant’s damage in the sura, of $225. •Alleged that the use of. the road damaged liis lands, and that the company haulers stopped their teams and shod their mules near a certain spring, to his damage in the sum of $50, and that the haulers further damaged him in the sum of $25 by cutting and removing timber from his lands.

The chancellor found' that the road was private -and not public, and that the use had been permissive and not adverse, and that defendant should have judgment for $100 for damages ■ caused by the use of said ■ road, $25 for damages-to the spring, and $8 for damages for timber cut and removed. ' ■ ' .■ ' •

The lumber company excepted and prayed an appeal ■to this court, which was granted. ' '; ■ '

There is very little dispute about the: testimony, and we think it unnecessary to set it out in full. There was no controversy about the land through which the road ran being open, wild, unimproved and uriinclosed. There, is no testimony tending.to show that the public or any one else had ever claimed any adverse right or any right at all against the objections of 'appellee. ■ The road had been there for probably more than 30 years, and a few neighbors had been using thé roád, 'bút not only the public, but those neighbors who used that road, so far as the proof shows, had never claimed any right adverse to the owner of the land. The testimony showed that the defendant had used five eight-wheeled wagons for about a week and that they later used thirteen wagons for about a week. The testimony also shows that there was some damage resulting from the use of the road, and, while there is no testimony that' any' timber was out or used, there is testimony showing that' small'timber had been skinned and bruised, and also testimony showing that the road had been 'made wider and at one place the road hád been changed about 25 feet from the old road. ■ ’ :

' We think the chancellor was clearly correct in holding that the lumber company 'had no right to use it against the objections of the' owner of the land. Testimony shows that the 40-acre tract of land was worth approximately $600, and practically the only testimony with reference to the amount of damages was that of the plaintiff, who testified that he figured he had been damaged $300. But the evidence as to what was actually done shows that the damage was rather slight, and, from the testimony, there was very little damage to the spring. In fact, the proof showed that it would only have taken an hour or two to clean the spring out, and the other damage about shoeing mules close to the spring shows not only slight damage hut that the damage could be repaired for a nominal sum. There is no testimony in the record showing the amount of damage either done to the spring or to the timber, and, from the evidence in the case, we are of the opinion that the- $Í00 awarded by the chancellor for damage to land is full compensation for all fhe damage done by the lumber company, and that there is no evidence in the record as to the amount of damage done to the spring or the amount of damage to the timber.

It is unnecessary to set out the testimony more fully. We have examined it all carefully, and are thoroughly convinced that the chancellor was correct in finding that the use of the road had not been adverse, and that the appellee was entitled to an injunction.

This court has said in a case where the facts were very similar:

“It is unnecessary to. set out more of the testimony. We have examined it all and are thoroughly convinced that the finding of the trial court to-the effect that the use of the roadway by the public had not been adverse but permissive is not against the preponderance of the evidence.” Brumley v. State, 83 Ark. 236, 103 S. W. 615.

Among other things we said:

“When the public use a road running through open and unfenced lands, without any order of the county court making it a public road and without any attempt to work it or exercise authority over it as a public highway, the presumption is that the use of the road is not adverse to the rights of the owner of the land, but by his consent. When he needs the land, he. may withdraw his consent, fence the land, and exclude the public without violating the law.”.

In Sharp v. Mynatt, 1 Lea (Tenn.) 375, it is held, (quoting syllabus):

“Mere user by permission of landowner of a way over his land cannot establish a right to a public way, unless such user is shown by facts and circumstances showing the user by the public under a claim of right, and not simply by permission, actual or tacit, of the owner. The fact that the road had never been woi’ked, repaired, taken control of by the public, or overseers appointed, is an important element of evidence against such claim of right, though not conclusive.” Merritt Mercantile Co. v. Nelms, 168 Ark. 46, 269 S. W. 563.

There is no evidence in this case tending to show that there was ever any order of court making this a public road or any attempt to work it or exercise authority over it as a highway, and there is no evidence either, of facts or circumstances showing that the public used it under claim of right.

The decree will therefore be modified and affirmed for $100. It is so ordered.


author: McHaNey, J.

text:
    Kilgo v. Cook.
    Opinion delivered June 13, 1927.
    1. Waters and watercourses — non-navigable stream as boundary. — Where the Government survey took no notice of a non-niavigable stream running through it, but surveyed it all as land, under a deed conveying land to defendant to the shore line of the stream, the grantee acquired no title to the bed of the stream as a riparian owner.
    2. Waters and watercourses — land bordering non-navigable Stream. — Owners of land bordering on a non-navigable stream or lake acquire title only to the middle or thread of such lake or stream, where the Government survey .meandered the boundary line thereof.
    WATERS AND WATERCOURSES — NON-NAVIGABLE STREAM AS BOUNDARY. — Where a non-navigable stream is the boundary line between two landowners, and there is no agreement, grant or conveyance to the contrary, each shall own to the middle of the stream.
    Waters and watercourses — title to bed op stream. — Where the title to the bed of a non-navigable stream was conveyed to plaintiffs prior to defendant’s acquisition of title to land to the shore line, defendant took with notice of such prior gránt, and knew that his boundary line was the bank of the stream, and that he acquired no title beyond the bank.
    .Appeal from Benton Chancery Court; W. S. Floyd, Special Chancellor;
    reversed.

      Rice ■& Rice and Joe Reasley, for appellant.

      John W. Nance, for appellee.
   McHaNey, J.

War Eagle Creek or river is a non-navigable stream running through the eastern side of Benton County, and for more than 50 years there has been maintained and operated on said stream and on the land in controversy a water-power mill known as the War Eagle Mill. On or about May 15, 1924, the mill was destroyed by fire, and has never been rebuilt. Appellants are the owners of 12 acres of land in sections 3 and 34, section 3 being in township 18 north, range 28 west, and section 34 being in township 19 north, range 28 west, and all of said 12 acres being in the bed of War Eagle Creek, except two or three acres on which the millsite and other buildings are situated. The original Government survey of this land took no notice of War Eagle Creek, as all of it was surveyed as land. Appellee, G. S. Cook, is the OAvner of 30 acres of land east of War Eagle, his west boundary being the east bank of War Eagle. Both parties deraign title from a common source, A. E. Crossman, who acquired title to this land in 1902, and later, in 1908, mortgaged the 12 acres of land now belonging to appellants to W. H. Allred, Avhich was foreclosed, sold, reported, deed made, confirmed and delivered to appellant, J. B. Kilgo, in 1915, who, in December,. 1915, sold and conveyed same to B. B. Kilgo and H. R. Crossman, and in 1917 said Crossman conveyed Ms half interest therein to J. B. Kilgo. Said tract is described as follows: “Beginning at an iron stake driven in the ground about six feet north of a maple tree at the northeast corner of the blacksmith- lot, thence west across "War Eagle Creek to a point just south of the county road and west of War Eagle Creek, thence south and with War Eagle Creek to the south line of the north half ;of the northeast quarter of section 3, township 18, range 28, thence east across War Eagle Creek to the east bank of same, thence northerly with said bank to a maple tree three feet in diameter, thence northeast with a row of maple trees to the place of beginning,.in section 34, township' 19, range 28, and containing twelve acres, more or less, and being the lands upon which the War Eagle Mill property is located;”

Appellee, Cook, acquired his land adjacent to appellant’s land on War Eagle from the executor of the will of Samuel Burks, who acquired. title from said A. E. Crossman, to the following described tract: “Part of the north half of the northeast quarter of section 3, township 18 north of range 28 west, and a part of the south half of the southeast quarter of section 34 in town-: ship 19 north of range 28 west, beginning 3 chains and 32' links-; north and 8 chains and '64 links west of the southeast corner, of section 34, township 19 north of range 28 west,, running thence south'8 dégrées with'the plank fence now on said land to the south line of the northeast quarter of the-northeast quarter of section 3, in township 18 north of range 28 west-, running thence west to War Eagle Creek, thence down War Eagle Creek to. a large sycamore tree 100 feet, more or léss, south of the War-Eagle mill;- running thence in.a northeasterly direction to the south maple tree in a-row of maple trees; thence northeast with said row of maple trees to a rock riprap; thence east to the county road; thence east with said county road to the northwest corner of a tract of land formerly owned by Evaline Sharp, now owned by Mr. Fitzsimmons; thence south to the old Burks tract of land; thence west to the.place of beginning;-except a lot of said land heretofore sold to G. S. Cook by Samuel Burks, leaving a balance of thirty acres, more.or-less.” His deed to this land is dated June, 30, 1917. . •

This controversy arises, over, the rights of piscary, boating, swimming, and, in general, commercializing, the waters in War Eagle Creek oyer the land of appellants by appellee, who has erected a number of cottages on his land for.rent to tourists and others, who are'attracted thereto by the excellent -fishing, boating, bathing and swimming facilities afforded by thewaters of War Eagle, forming the lake above the mill-dam on the lands of appellants. This suit was brought by appellants to enjoin the commercializing of the waters .over their land by appellee, and, on a hearing, the court dismissed the complaint for want of equity, from which is this appeal.

- The only question for decision- in this case by this court is, did appellee, by virtue of his deed of: June .30, 1917, conveying to him the 30: acres of land by the executor of Samuel Burks,, the west boundary of which was the east shore line of War Eagle, acquire any title to the bed of the stream as a riparian owner? . We are of the opinion, and therefore .hold,, that, he did not. ■Appellee is not a riparian owner. War Eagle- Creek was not meandered by the Government survey, and, as heretofore stated, no notice of it was taken by the surveyors as water, but it was included in the survey as land. Of course,.if appellee, was a riparian owner on an unsur-veyed or a meandered: non-navigable stream, he would take title to the middle or; thread of the stream. Chapman & Dewey Land Co. v. Bigelow, 77 Ark. 338, 92 S. W. 534; Rhodes v. Cissel, 82 Ark. 367, 101 S. W. 758 Little v. Williams, 88 Ark. 37, 113 S. W. 340; Glasscock v. National Box Co., 104 Ark. 154, 148 S. W. 248; Barboro v. Boyle, 119 Ark. 377, 178 S. W. 378. It may be stated as' a proposition of law, well settled by the former decisions of this court, that owners of land• bordering on a non-. navigable stream or lake, -where the Government survey meandered the boundary lines thereof, making fractional sections along the bed or shore line of such stream or lake, such owners acquire title only to the middle or thread of such lake or stream. Chapman & Dewey Land Co. v. Bigelow, supra, and cases above cited.

As is said in 40 Cyc. 552,- “When a stream is the boundary line between the two landowners, and there be no agreement, grant or conveyance to the contrary, each shall own to the middle of the stream.” But in this case, at this place, War Eagle Creek is privately owned, not meandered, and the title to its bed passed by deed of the owner just the same as the adjacent land. The stream is not the boundary between appellants and appellee. There was a prior conveyance to appellant to the very land over which appellee seeks to trespass, and he has no more right to trespass on the water over appellant’s land than he would on the land not covered by water. And, even though it could be said that appellee is a riparian owner with title to the middle of the stream, he would have no right to exercise acts of ownership beyond such dead-line, or license others to do so against the wish and will of appellant. The title to the bed of the stream having been conveyed to appellant prior to appellee’s acquisition of title, appellee took with notice of the prior grant, and must be held to have known that his western boundary line was the brink of the east bank of War Eagle Creek, and that he acquired no title beyond the ripa.

It necessarily follows from what we have said that the decree dismissing the complaint for want of equity is error. The cause will be reversed, and remanded with directions to enter a decree in accordance with the prayer of the complaint and not inconsistent with this opinion. It is so ordered.


author: Smith, J.

text:
    Louisville Silo & Tank Company v. Thweatt.
    Opinion delivered June 20, 1927.
    1. Limitation of actions — breach of warranty. — Crawford & Moses’ Dig. § 6955, providing that actions on instruments in writing shall be commenced within five years, applies to a ■buyer’s action for damages for breach of warranty arising from a written contract of sale. ■
    2. Limitation of actions — when statute begins to run. — The commencement of the limitation period is contemporaneous with the origin of the cause of action.
    3. Limitation of actions — breach of warranty. — Ordinarily, a cause of action for breach of warranty on the sale of personal property accrues upon the delivery of the property, and the statute of limitations runs from the date of delivery.
    4. Limitation of actions — statute tolled when. — While the statute of limitations ordinarily begins to run against an action for breach of warranty on the sale and delivery of a chattel which does not comply with the warranty, yet the statute is tolled so long as the vendor insists that the defect can be repaired and is attempting to do so.
    5. Pleading — admission by demurrer. — In an action for breach of warranty on the sale of a chattel, allegations of the complaint that it was without value and that return thereof had been tendered, were admitted by defendant’s demurrer.
    6. Sales — measure of damages for breach of warranty.— The measure of damages for breach of a warranty in a sale of a granary was the price paid, where the article was without value and the buyer had tendered its return.
    7. Limitation of actions — accrual of cause of action. — In an action by a buyer against a seller for damages to rice arising from defects in the granary sold, the statute began to run from the time when damage to the rice was discovered, as the cause of action for damages accrued at that time.
    8. .Limitation of actions — parol agreement. — The statute of limitations applicable to a verbal promise of the seller to repair a granary, and a verbal warranty that the attempt to make such repairs would be successful, was the statute applicable to parol agreements, though the sale contract was in writing.
    9. Limitation of actions — when statute not tolled. — The right of a 'buyer to sue for damages to rice, caused by the defective condition of a granary sold, was not affected by the seller’s promise that damage would not occur in the future, so as to prevent the running of the statute.

      .Appeal from Prairie Circuit Court, Southern District ; George W. Clark, Judge;
    affirmed.

      M. F. Elms, for appellant.

      W. A. Leach, for appellee.
   Smith, J.

Appellee filed a complaint on February 9, Í925, against appellant, which contained the following allegations:

That, on or about September 3Ó, 1918, he purchased from the defendant a steel granary, to be used by him in storing his rice crop. Said granary was warranted to be fit and suitable for the purpose for which it was sold and to be so constructed as to keep rice stored therein perfectly dry and prevent any damage on account of excessive moisture. The granary was installed in the fall of 1918, and, in October of that year, plaintiff stored Ms 1918 rice crop therein, where it remained until the early part of 1919,' and, upon removing the rice from the granary, it was found that said granary had permitted such a large inflow of water that 250 bushels of the rice were destroyed. The defendant, upon being notified, attempted to repair the granary, and assured plaintiff that it had been repaired and would not leak, and that rice could be stored therein without loss or damage. Belying on this representation, and believing that the granary would no longer leak, plaintiff stored his 1919 rice crop in the granary in the fall of that year, but, upon removing it in January, 1920, it was found that 300 bushels of the .rice had been totally destroyed and was unfit for market by reason of having become wet. The defendant was notified of this damage, and again undertook to repair the granary and to put it in such condition that it would prevent the inflow of water, and, after making such repairs, again informed plaintiff that rice could be stored in said granary safely and without any fear of loss or damage on account of leakage. Belying On defendant’s assurance that such granary was in such condition that rice could be stored therein with safety, plaintiff stored his 1920 crop therein in the fall of that year, Tout, when removed in tlie following spring, it was found that 300 bushels of the rice had been totally destroyed. Said granary was purchased for the price of $769, of which $300 was paid upon its installation. The balance of $469- was evidenced by a promissory negotiable note, which had passed into the hands of an innocent purchaser for value before maturity, and plaintiff was required to pay it. Said granary was wholly unfit for the purpose for which it was sold, and is entirely without valúe, and plaintiff offered to return it, and made tender thereof. "Wherefore plaintiff prayed judgment for the purchase price of the granary, and for damages to his crops of rice.

To each of these causes of action the defendant interposed a demurrer upon the ground that it affirmatively and necessarily appeared from the face of the complaint that each cause of action was barred by the statute of limitations.

The court overruled the demurrer to the paragraph of the complaint" in which judgment for the purchase price of the granary was asked, but sustained the demurrer to the three paragraphs praying damages for the loss of the rice. The defendant stood upon its demurrer, and declined to plead further, and judgment was rendered against it for the purchase price of the granary, and the complaint was dismissed as to the claims for damages to the rice. From this judgment the defendant has appealed, and the plaintiff has prosecuted a cross-appeal.

Appellant insists that all the causes of action sued upon are barred, and that the court erred in not so' holding, while appellee insists that none are barred except the action for the damage to the rice stored in the granary in the fall of' 1918.

Section 6955, C. & M. Digest, reads as follows: “Actions on promissory notes, and other instruments in writing, not under rseal, shall be commenced within five years after the cause of action shall accrue, and not afterward.” ' ■ ' :

The granary was sold under a written contract, and the applicable statute of limitations to the action for damages for its breach is the statute quoted. Sims v. Miller, 151 Ark. 377, 236 S. W. 828.

Appellant insists, however, that, as more than five years expired between the installation of the granary and the institution of this suit, the cause of action to recover-for the breach of the warranty is barred.

Ordinarily a cause of action for breach of warranty in the sale of personal property accrues upon the delivery of the property, the warranty being- broken when made, and the. statute of limitations runs'from the date of delivery. This is true because the commencement of the limitation is contemporaneous with the origin of the cause of action. Woodland Oil Co. v. Byers & Co., 132 Am. St. Rep. 737, 223 Pa. 241, 72 A. 518.

A well-considered case, which supports appellant’s contention, is that of Fairbanks, Morse & Co. v. Smith, 99 S. W. 705, which was affirmed by the Supreme Court of Texas in 102 S. W. 908, 101 Tex. 24. The syllabus in that case reads as follows:

“Where there was a breach of a warranty that a gasoline engine would develop 34 horsepower-and would be suitable for pumping water to irrigate a crop of rice, the statute commenced to run against the buyer’s right of action and counterclaim for damages when the engine was installed, and not subsequently, when consequential damages arose in the loss of his crop, without regard to when he discovered the breach, and though the seller, after installing the engine, undertook to render it effective.”

The authorities, however, are divided on this question. The case of P. H. Sheehy Co. v. Eastern Importing & Mfg. Co., 44 App. D. C. 107, is extensively annotated in L. R. A. 1916F, 810. The syllabus in that case reads as follows: ’

“The statute of limitations upon an action for breach of warranty upon a sale of canned goods to a wholesaler for resale does not begin to run until the breach is discovered, or should have been discovered, by t.he retailers, where it was not practicable for the wholesaler to open the cans for inspection. ”

In the annotator’s note to the case last cited a number of cases in harmony with it are reviewed. Among other cases reviewed is that of Felt v. Reynolds Rotary Fruit Evaporating Co., 52 Mich. 602, 18 N. W. 378, in which the opinion was written by Cooley, C. J. ■ In that case a fruit evaporator had been sold under a warranty, which was broken, and the manufacturer made an effort to fix the machine so as to make it comply with the warranty, but the attempt failed. . After keeping the evaporator for some months the purchaser tendered it back and demanded the return of the cash payment made and the surrender of notes given for the balance of the purchase money. When the offer was declined, suit was brought, and the statute of limitations was pleaded, it being insisted there, as it is here, that the statute of limitations against the action for the breach of the warranty began to run from the date of the 'delivery and installation of the machine. The contract of sale contained no provision for a test to be made of the machine before the sale thereof should be complete, but Judge Cooley said that the contract contemplated - that a test should be made both as to the capacity of the machine and the quality of fruit turned out by it, these being matters covered by the warranty, and that, if suit had been brought at any time before the test, it would apparently have been a defense to the suit that there had not been, as yet, a reasonable time for testing the result of its workings, “for the parties respectively were continuing their experiments with it for some time longer; the one trying it and the other endeavoring to perfect it; and their acts are the best criterion as to the time required for these purposes.” It was there held' that the statute of limitations did not begin to run "against the cause of action for the breach of the warranty until there had been a failure, after test, to make the machine comply with the warranty.

In the annotator’s note, sufra, the annotator says, after reviewing the Michigan-ease, that ‘-a decision somewhat in conflict, however, with the above Michigan case, and seemingly not so much in accord with reason and justice, is that of Fairbanks, M. & Co. v. Smith (Tex. Civ. App. 1907), 99 S. W. 705, affirmed in 101 Tex. 24, 102 S. W. 908.”

Other cases are cited in the annotator’s note which are in accord with the views expressed by Judge Cooley;

In the ease of Dyke v. Magdalena, 171 Ark. 225, 283 S. W. 374, a refrigerator had been sold under the warranty that it would preserve meats. It failed to do this, and the manufacturer attempted by repairs to make it do so. The attempt failed, and the purchaser sued for the breach of the warranty and for the damage to the meats which had been placed in the refrigerator. It was insisted that the purchaser was in default in failing to sue' promptly for breach of the warranty, but we held that such was not the case because of the attempts which were made to remedy the defects.

We hold therefore that, while the statute of limitations ordinarily begins to run against an action for breach of warranty upon the sale and delivery of a chattel which ■ does not comply with the warranty, yet the statute is tolled so long as the vendor insists that the defect can be repaired and is attempting to do so. It follows therefore that the suit to recover the purchase money was brought before the bar of the statute had fallen, and, inasmuch as the complaint alleges and the demurrer admits that the granary was without value, and the return thereof had been tendered, the measure of damages was the price paid, and the judgment rendered for that amount will be affirmed. • ■

We are of the opinion that the court was correct in sustaining the demurrer to the counts of the complaint praying damages for the loss of the rice. . When the rice was damaged a complete cause of action accrued. The first damage was sustained in Í919, the next in 1920, and the last in 1921, and more than three years intervened after the last damage was sustained before tbe institution of this suit. ■ ' • -

Tbe attempts to repair were made pursuant to a verbal promise so to do and a verbal warranty that tbe attempts would be successful. Any rights growing out of these promises to repair and the attempts to make tbe repair rested upon a parol agreement, and tbe applicable statute of limitations against such contracts is threé years. Had tbe attempts to repair tbe granary "been successful, so that thereafter it would have complied with the warranty, this would not have satisfied tbe claim for damages which bad already accrued. In any event, the suit for the damages to the rice accrued when the damage to the rice was discovered, and any promise that the damage would not recur in the future could not affect the right to sue for damages which had already been sustained. Suits for the damage to the rice should therefore have been brought within three years after its occurrence, and, as this was not done, the court below properly held that the suits therefor were barred. .

• - The judgment of the court below appears to be correct upon both propositions, and it is therefore affirmed.


author: Hart/C. J.

text:
    Nash v. Griffin.
    Opinion delivered June 20, 1927.
    1. Quieting title — sufficiency of evidence. — Evidence in a suit to quiet title held to sustain a chancellor’s finding that a disputed strip of land was not intended to be embraced in a deed from the parties’ common predecessor in title and subsequent deéds in defendants’ chain of title.

      2. Guardian and ward — validity of sale of land. — A probate sale of land by a guardian of minor children of an intestate, who had conveyed the land before her . death, vested no title in persons from whom defendants, in a suit to quiet title, received quitclaim deeds.
    Appeal from Union Chancery Court, First Division ; J..Y. Stevens-, Chancellor;
    affirmed.

      Powell, Smead & Knox, Marsh, McKay & Marlin and E. W. McGough, fox* appellant.

      Mahony, Yocum & Saye, for appellee.
   Hart/C. J.

This is an appeal by L. M. Nash and Mrs. Jessie L. Nash to reverse a decree of the chancery court quieting the title of P. A. Griffin as to them to a certain parcel of land abutting on Mount Holly Street, in the city of El Dorado, Union County, Arkansas, approximately 150 feet in length north and south and approximately 100 feet in width east and west, off of the west side of the east half of the southwest quarter of the southwest quarter of the northeast quarter of section 29, township 17 south, range 15 west.

Both the plaintiffs and the defendants claim title from a common source. Hattie E. Robinson owned the land in controversy, and, on the 27th day of February, 1904, she conveyed by deed to R. A. Hilton a large body of land in Union County, Arkansas, including the parcel of land iix dispute. On the 8th day of December, 1904, R. A. Hilton conveyed certain lands in Union County, Arkansas, to J. M. Whatley. Among the lands described in the deed is the northwest quarter of the southwest quarter of the northeast quarter of said section 29. On the 11th day of January, 1906, J. M. Whatley and wife conveyed said land by the same description to M. G. Murphy, Jr. On the first day of March, 1919, M. G. Murphy, Jr., conveyed said land to Jessie L. Nash. It is described in the deed as follows: “All that part of the southwest quarter of southwest quarter of northeast quarter, section 29, township 17 south, range 15 west, lying north of the El Dorado and Mount Holly public load as now located, and being in the city of El Dorado, Union County, Arkansas, containing 10 acres more or less.”

The record shows that the parcel of land in controversy is now situated in the city of El Dorado and in the western part of the fo'rty acres of land in section 29 3‘eferred to' above. What was formerly known as the Lisbon Road and is now known as Mount Holly Street runs through the southwest corner of said forty acres of land. R, A. Hilton is now dead, but, when he conveyed the land to Whatley, he pointed' out the boundary line to Whatley. There was a fence running north and south on the east side of said parcel of land, and this old fence was pointed out as the east boundary of the land described in the deed. Whatley took possession of the land conveyed to him, and never claimed any land in the quarter section above described east of the old fence. When Whatley sold the land to Murphy, he conveyed it by the same description as conveyed in the deed from Hilton .to himself. He pointed out to Murphy the old fence as the boundary line on the east side of the strip of land, and never claimed any part of the quarter section east of that old fence. None of these parties claimed any of the land south of the old Lisbon Road, or what is known as Mount Holly Street, and east of the old fence. The strip of land contains about eight and one-half acres, and they did not claim to own any more of the quarter section than that part of it north of the old Lisbon Road or Mount Holly Street and west of the old fence running north and south through the west part of said quarter section. Possession of this eight and one-half acres of land under claim of ownership was held by Whatley and Murphy from the time of the purchase by Whatley from Hilton in December, 1904, until the conveyance by M. G. Murphy, Jr., to Jessie L. Nash in January, 1921. The contest over the strip of land arose after oil was discovered in that territory.

Without reviewing and commenting at length upon the evidence, we are satisfied from the testimony of Whatley and Murphy, which is corroborated by that of other witnesses, that it was the intention of Mrs. Hattie E. Robinson to convey to Dr. R. A. Hilton and of Dr. Hilton to convey to Whatley approximately eight and one-half acres of the land north of the old Lisbon Road or Mount Holly Street and west of the old fence in the west part of the quarter section above referred to and described. The evidence clearly shows that a mistake was made in describing the strip of land, and we are of the opinion that the chancellor correctly held, that only eight' and one-half acres, as above indicated, were intended to be embraced in the deed from Mrs. Hattie’E. Robinson tó Dr. Hilton, and that the same mistake which was 'made in her deed to Dr. Hilton was made in the subsequent déeds.

Mrs. Hattie E. Robinson died intestate, leaving her husband and several minor children. An attempt was made by her husband, as guardian for her minor children, to sell said land at probate sale and in that way vest title in persons from whom Mrs. Jessie L. Nash and L. M. Nash have subsequently received quitclaim deeds. But little-need be said on this branch of the case. Mrs. Hattie E. Robinson had already conveyed the land prior to her death. Consequently there was nothing left to be conveyed by the guardian’s sale, and the probate sale by the guardian of Mrs. Robinson’s minor children could not avail appellants anything. The decision of the case depends almost entirely upon the facts, and we are of the opinion that it is established by clear and convincing-testimony that it was only intended by Mrs. Hattie E. Robinson to convey eight and one-half acres to Dr. Hilton, and' this was that part, of the quarter section north of the old Lisbon Road and west of the old fence above referred to. The mistake was made in the original deed and-was continued in the subsequent deeds, and, for that reason, appellants only acquired title to the eight and one-half acres. Conceding this to be true, the paper title to the land in controversy is in P. A. Griffin, and he was entitled to have his title quieted against Mrs. Jessie L. Nash and L. M. Nash. - •:

It follows that the decree of the chancellor was correct, and it will "therefore be affirmed.


author: McIIaney, J.

text:
    Kansas City Southern Railway Company v. First National Bank of Ft. Smith.
    Opinion delivered June 13, 1927.
    1. Bills and notes — bank receiving check prom insolvent bank. —A bank whose title tp a check received, from a correspondent bank was defective because of. the fraud of the correspondent bank in issuing its exchange; in payment theréfor during insolvency, was not entitled to recover from the indorser 'after pay- • ment had been stopped and the cheek protested, on a mere show-ingthat the insolvent bank'was credited with the. amount of the check before knowledge of its insolvency, unless plaintiff bank actually parted with value.
    2.. Bills and notes — charging back check of.insolvent bank;.— A bank which received a check from a correspondent bank by negotiation, crediting the amount thereof, could, on -learning of correspondent bank’s insolvency, charge the amount back and return the chéck to the examiner while the bank had possession . of the check, or after the check was returned protested.
    3. Bills and notes — right to charge back the check op insolvent bank. — A bank which paid out cheeks received from an insolvent bank, and charges the amount to the account of an insolvent bank, after knowledge of its insolvency, does so ■ at its own peril, as respects its claim of bona fide purchase -by crediting proceeds of the cheek.
    4. TriAl — abstract' instructions. — An instruction which' assumes •a state of facts not supported by the-evidence is erroneous.
    .5. Bills and notes — fraudulent check — burden of proof. — A .bank whose title to a cheek was defective because of fraud perpetrated by correspondent bank, of which the check was received, had the burden, in an action against the indorser, to prove that it acquired title as holder in due course.
    6. Bills and' notes — ^fraudulent check. — A bank which purchased a check with exchange'drawn by it on another, bank at the time when -the drawer bank was hopelessly insolvent was guilty of fraud on an indorser, rendering the title of the drawer bank to the check, which ,it transferred by the negotiation, defective as respects the burden of proof.
    Appeal from Sebastian Circuit Court, Fort Smith DistrictJo 1m E. Tatum, Judge;
    reversed.

      James B. McDonough, Jr., Joseph R. Broion and James B. McDonough, for appellant.

      Daily S Woods, for appellee.
   McIIaney, J.

On April 32, 1924, the George F. Collins Company, an OMalioma Corporation, being’ indebted to appellant in the sum of $776.12, on account for freight, drew its check on the American National Bank of Sapulpa, Oklahoma, for said amount, payable to appellant, and delivered same to it. On April 21, 1924, appellant’s agent at Poteau, Oklahoma, took this check and others to the First National Bank of Poteau, and purchased exchange in the form of a draft for the total amount of said checks, on the Drovers’ National Bank of Kansas City, Mo., payable to appellant, and remitted same to appellant’s treasurer at Kansas City. On April 22, 1924, the First National Bank of Poteau closed its doors on account of insolvency, and a national.bank examiner took charge of its affairs, and, when said draft was presented to the Drovers’ National Bank in Kansas City, payment was refused on account of the failure of the First National at Poteau. The check of the George F. Collins Company and others were forwarded for collection and credit to the appellee, correspondent of the First National at Poteau, on April 21, where it was received and credited to the account of the Poteau bank on the morning of April 22, at a time prior to the receipt of information by appellee of said failure. About one or two o’clock on said date, after the receipt and credit of said check, appellee was officially notified by wire, by the examiner in charge, of the Poteau bank’s failure, and instructed not to credit or charge any additional items to its account. Appellee at this time still had said check of the George F. Collins Company in its possession, indorsed by appellant and the Poteau bank, and, instead of charging same back to Poteau and returning same to the examiner, it forwarded same to its correspondent in Oklahoma City, who, in turn, sent it to the bank on which it was drawn in Sapulpa, where payment was refused, the check protested, account payment stopped by the drawer at the request of appellant. Said check then went back the route from whence it came, dishonored, and finally reached appellee, whereupon it brought suit against the George F. Collins Company, as drawer, and appellant as indorser, of tlie check to recover the amount thereof. The Collins Company deposited the amount in court, and was discharged. A trial resulted in a verdict and judgment against appellant, and it has .appealed.

The first assignment of error urged for reversal of this case is that the court erred in giving appellee’s instruction No. 2 over appellant’s objection, which instruction is as follows:

“If you find that the check which has been introduced in evidence was indorsed and delivered by the First National Bank of Poteau, Oklahoma, to plaintiff in due course of business, and that the Poteau hank received credit therefor on its account with plaintiff, your verdict will be for the plaintiff; unless you further find that the plaintiff had knowledge of the fact, if it be a fact, that the said Poteau bank was insolvent at the time the check was deposited by defendant, the Kansas City Southern Railway Company, and knew that the Poteau bank had perpetrated a fraud on defendant, or that plaintiff had knowledge of such facts as would render the1 taking of the check an act of bad faith.”

We agree with appellant that this instruction is erroneous. It will he noticed that it -permits a recovery against appellant from the mere fact that it credited the amount of this check to the account of the Poteau bank, provided it had no knowledge of the insolvency of the Poteau bank at the time it acquired the check from appellant. In addition to this, it must have parted with value to the amount of the credit, else it could not be hurt, had lost nothing, and would be in no position to maintain an action against appellant for the amount of the check. It is true, as was said in Cox Wholesale Grocery Co. v. The National Bank of Pittsburgh, 107 Ark. 601, 156 S. W. 187, that, “when a check is taken to a bank, and the bank receives it and places the amount to the credit of the customer, the relation of creditor and debtor between them subsists, and not that of principal and agent; ’ ’ but it is also true that, if the check which haá been credited in the depositor’s account is'unpaid, the bank has the legal right to charge the amount of it back to 'the depositor’s account, where a sufficient credit still remains to cover it. By merely entering credit in the depositor’s account the bank has parted with nothing of value. Of course, if the. depositor checks out the amount of his credit in the bank, then the bank has parted with value and becomes a holder in due course for value of the instrument. In the case of Little v. Arkansas National Bank, 113 Ark. 72, 74, 167 S. W. 75, 76, this court said:.

“Appellants insist that a verdict should have been directed in their favor, and, in support of this position, they cite cases holding that, when a bank simply discounts a note and credits the amount thereof to the indorser’s account without paying to him any value for it, the transaction does not constitute the bank a pur: chaser for value- of the note. This appears to be a correct statement of the law, but this issue does not appear to have been raised in the, court below and no specific instruction to that effect was asked. ’ ’

While this statement may be obiter as to that case, it appears to us that it is a correct statement of the law. In the case of Ala. Groc. Co. v. First Nat. Bank, 158 Ala. 143, 48 So. 340, 132 Am. St. Rep. 18, it is said:

“So long as that relation (relation of debtor and creditor) continues, and the deposit is not drawn out, the bánk is held subject to the equities of the prior parties, even though the paper has been taken before maturity and without notice. ’ ’

In City Deposit Bank v. Green (Ia.), 103 N. W. 96, it is said:

“By giving credit to the indorser of the note on his deposit account, the bank, in effect, agrees to pay him that amount of money on- demand by check or order, and parts with nothing of value. When it receives notice nf defenses to the note, it is still in a situation, provided the amount thus- credited has remained undrawn hy the depositor, to return the note to him, and cancel - the credit.’.’

In the case of Union National Bank v. Winsor, 101 Minn. 470, 112 N. W. 999, 119 Am. St. Rep. 641, Ann. Cas. 204, it is said:

“ When a bank discounts paper for a depositor, and gives him credit upon its hooks for the proceeds of such paper, it is not a bona fide purchaser for value so as to he protected ag'ainst infirmities in the paper, unless, in addition to the mere fact of crediting the depositor with the proceeds of the paper, some other and valuable consideration passes. Such a transaction simply creates the relation of debtor and creditor between the. hank and the depositor, and, so long as that relation continues and the deposit is not drawn out, the hank stands in the same position as the original party to whom the . paper was made payable. By giving credit to the indorser on his deposit account the hank, in effect, agrees to pay him that amount of money on demand hy check, or order, and parts with nothing of value.- As long as the amount thus credited remains undrawn by the depositor,, the' bank, if it receives notice of the fraud, is still in a position to return the note to the depositor and cancel the credit. ’ ’

In the case at bar appellee had given the Poteau bank credit in its account for this- check. On the same date, and shortly after the credit had been made, it received notice of the insolvency of the Poteau bank, at a time prior to parting with possession of said check. At that time this and other similar checks had increased the Poteau bank’s credit balance, to $1,700. It had the legal right, at that time, to charge same back to said account and to return said' check’ to the examiner in charge of the Poteau bank. At that time it had notice of the probable infirmity of the title of the Poteau bank to said paper. It also had the right to forward said check to its correspondent in Oklahoma City to be presented by it to the bank on which it was drawn for collection. Blit, when it was returned to it, protested for nonpayment, it still had the right to charge the amount thereof back to the account of the Poteau bank, and if, in the meantime, it paid out any checks and charged same to the Poteau bank’s account, after knowledge of its insolvency, it did so at its own peril. The above instruction was therefore erroneous, because it allowed appellee to recover by merely crediting the Poteau bank’s account with the amount- of the check, without taking into consideration whether it had actually parted with value.

Appellee’s instruction No. 4 is erroneous for the same reasons that apply to instruction No. 2 just disposed of. We do not set this instruction out, as it embodies the same error as instruction No. 2.

Appellee’s instruction No. 5 was also erroneous in telling the jury that, if they found from the evidence that appellee credited the amount of the check on indebtedness to it by the Poteau bank and was authorized to do so, they should find for the plaintiff, unless it knew of the insolvency of the Poteau bank at the time. This instruction is abstract, as there was no evidence to support it.

Appellee'\s instruction No. 6 is also assigned as error. It is as follows:

“You are instructed that, as a matter of law, it is presumed that any person who is the holder of a negotiable instrument indorsed to him, acquired such instrument for. value; and in this case the burden of proof is upon the defendant, Kansas City Southern Bailway Company, to prove by a preponderance of the evidence that the plaintiff did not pay value for the check involved in this suit; and in this connection you are instructed that value, as used in this instruction, may include a credit on an existing indebtedness, or credit on a mutual account, or an advancement of extension of new credit, or a general credit to indorser’s checking account. ’ ’

This instruction placed the burden of proof on appellant to show that appellee did not pay value for the check. This was error, being contrary to § 7825, C. & M. Digest, which is § 59 of the Negotiable Instrument Law. This section is as follows:

‘ ‘ Every holder is deemed prima facie to be a holder in due course; hut, when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as holder in due course. But the last mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title.”

It is not disputed that, at the time the Poteau bank acquired this check from appellant, it was hopelessly insolvent, and therefore perpetrated a fraud on appellant in accepting the check, knowing at the time that it was insolvent. Therefore, by negotiating the instrument to appellee, its title was defective, which placed the burden on appellee to prove that it acquired the title as holder in due course.

Section 52 of the Negotiable Instrument Law, § 7818, C. & M. Digest, is as follows:

“A holder in due course is a holder who has taken the instrument under the following conditions: (1) That it is complete and regular upon its face; (2) that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.”

Subdivision 3 of this section requires that, in order to be a holder in due course, a person must show “that he took it in good faith and for value.” In Huff v. Iowa City State Bank, 134 Ark. 495, 204 S. W. 306, quoting from the syllabus, it is said:

“In an action on a note by a bona fide purchaser thereof for value, it appeared that the note was procured by fraud; held, it thereafter became the duty of the bond fide holder to establish by proof the sum paid for the note before he could recover, which sum would be the measure of his recovery.”

The last limitatidn in the above quotation was because of the statute of Iowa to this effect, which was the law of that case. In that case the court quoted from Tabor v. Merchants’ National Bank, 48 Ark. 458, 3 S. W. 805, 3 Am. St. Rep. 241, as follows:

“The production of the note and proof that the indorsement was made before maturity raised the presumption that the,. plaintiff had paid value for the note, that it was an innocent holder, and had acquired it in due course of business; but, if the proof subsequently offered by the defendant to establish their defense shows that the note, in its inception, was so infected by fraud as to destroy the title of the original-holder, the presumption of the payment of value was thereby overcome, and the burden of proof was shifted to the plaintiff to show that value was given for the note.”

For the errors indicated the judgment will be reversed, and the cause remanded for a new trial. It is so ordered.