author: Smith, J.

text:
    Honea v. Federal Land Bank of St. Louis.
    4-3140
    Opinion delivered June 19, 1933

      L. F. Monroe, for appellant.

      E. F. McFaddin, for appellee.

      Trieber & Lasley, amici curiae.

   Smith, J.

Appellants owned a tract of land, which was ordered sold under a decree of the Hempstead Chancery Court, foreclosing a mortgage thereon which they had given to appellee. There was a sale of the land as directed by the decree, and the report of the commissioner who had made the sale came on for confirmation at the ensuing term of the court. Appellants filed objections to the confirmation of the report reading as follows:

“The defendants admit the indebtedness, and admit the foreclosure decree was validly rendered, and the sale validly conducted, and that the plaintiff bid the full debt, interest and costs, and that there is no deficiency judgment, and that the property brought its fair value.
“But the defendants except and object to the approval of this sale at this time because of act 21 of the Acts of the General Assembly of the State of Arkansas of 1933, which act was duly and validly passed, and had a due and valid emergency clause, and became the law of Arkansas immediately upon its passage and approval, and signing by the Governor; and that the said law was validly passed, approved, and signed by the Governor of Arkansas on the 9th day of February, 1933.
“These defendants state that under the said act of the Legislature it is provided in § 2 that decree confirming sales shall only be rendered during the first three days of the regular term of court as fixed by law; that the regular term of the Hempstead Chancery Court was on the first Monday in March, 1933, which day was the 6th day of March, 1933; and that the Hempstead Chancery Court was duly in session that day, and on that day duly adjourned until May 5, 1933, and was not in session in Hempstead County on March 7th or March 8th, 1933; and that now this sale comes on to be approved on the 5th day of May, 1933, which is an adjourned day of that court; and therefore the sale should not be approved at this time.
“Wherefore, defendants except and object to the approval of the sale.”

Section 2 of act 21, above referred to, reads as' follows : ‘ ‘ Section 2. On account of the- congestion of court dockets by foreclosure suits, and to provide time for trying other cases, foreclosure decrees, and decrees confirming foreclosure sales shall only be rendered during tlic first three days of the regular term of the court as fixed by law. ’ ’

Upon hearing the objections to the confirmation of the report of sale, the following facts were made to appear : The regular March, 1933, term of the Hempstead Chancery Court convened on the first Monday in March, which was March 6, 1933, and the day appointed by law for the convening of that term of court. After being in session the day of March 6th the court adjourned until May 5, 1933. On March 7th the chancellor of the district held an adjourned session of the Nevada Chancery Court, and on March 8th an adjourned session of the Clark Chancery Court was held. On May 5th the court returned to continue the March term of the Hempstead Chancery Court, pursuant to the adjourning order above mentioned, and on that day the commissioner’s report of the sale of appellant’s land was heard and confirmed, over the objections and exceptions of appellants.

For the reversal of this decree, it is insisted that May 5th was not one of the first three days of the regular term of the Hempstead Chancery Court within the meaning of § 2 of act 21 of the Acts of 1933. Appellee insists, for the affirmance of the decree, not only that May 5th was one of the first three days of the regular term, but it is insisted also that it is immaterial whether this is true or not, for the reason that the entire act, of which § 2 is a part, is unconstitutional, as impairing the obligation of the contract evidenced by the mortgage which the decree had ordered foreclosed.

Very interesting and able briefs were filed on the question of the constitutionality of the act by opposing counsel; but we do not find it necessary to decide that question to dispose of this appeal. It has long been the rule of this and other courts not to pass on a constitutional question unless a decision on that point is necessary to a determination of the case. The rule and the reason therefor was stated in the case of Smith v. Garretson, 176 Ark. 834, 4 S. W. (2d) 520, as follows: “In Ry. Co. v. Smith, 60 Ark. 221-240, 29 S. W. 752-754, Judge Battle, speaking for the court, quoted from Judge Cooley on Constitutional Limitations, p. 231, paragraph 2, as follows: ‘Neither will a court as a general rule, pass upon a constitutional question, and decide a statute to be invalid, unless a decision upon that very point becomes necessary to the determination of the cause. While courts cannot shun the discussion of constitutional questions when fairly presented, they will not go out of their way to find such topics. They will not seek to draw in such weighty matters collaterally, nor on trivial occasions. It is both proper and more Respectful to a coordinate department to discuss constitutional questions only when that is the very lis mota. Thus presented and determined, the decision carries a weight with it to which no extra judicial disquisition is entitled. In any case therefore where a constitutional question is raised, though it may be legitimately presented by the record, yet, if the record also presents some other and clear ground upon which the court may rest its judgment, and thereby render the constitutional question immaterial to the case, that course will be adopted, and the question of constitutional power will be left for consideration until a case arises which cannot be disposed of without considering it, and when consequently a decision upon such question will be unavoidable.’ Such has been the unvarying practice of this court. See also Martin v. State, 79 Ark. 236, 96 S. W. 372; Sturdivant v. Tollett, 84 Ark. 412, 105 S. W. 1073; Road Imp. Dist. No. 1 v. Glover, 86 Ark. 231, 110 S. W. 1031.”

It is not essential to the decision of the question presented on this appeal to determine whether act 21 of the Acts of 1933 is valid and constitutional, for the reason that there has been no violation of its provisions in the confirmation of the report of the commissioner’s sale. May 5, 1933, was one of the first three days of the session of the March term, 1933, of the Hempstead Chancery Court, being the second day thereof. March 7th the court was in session in other counties in that chancery district on those days.

Appellants cite § 1208, Crawford & Moses’ Digest, as sustaining their contention that May 5, 1933, was not a day of the regular March term of the court. This section reads as follows: “The- defense to any complaint or cross-complaint must be filed before noon of the first day the court meets in regular or adjourned session after service:

“First. Where the summons has been served twenty days in any county in the State.
“Second. Where the' summons has been served thirty days outside of the State.
“Third. In the case of constructive service, where publication of the warning order has been made as required by law and thirty days has elapsed since the making of the order and the appointment of the attorney ad litem.”

We do not interpret this statute as furnishing any support to appellants’ contention. This section provides the time within which service becomes complete, depending upon the manner of service, the obvious purpose thereof being to permit the court to hear any cause in which the service has ripened and become complete, whether before a regular or an adjourned session of a term of court. Section 2112, Crawford & Moses’ Digest, reads as follows: “Special adjourned sessions of any court may be held in continuation of the regular term, upon its being so ordered by the court or judge in term time, and entered by the clerk on the record of the court. ’ ’

The record in this case shows affirmatively that the court ordered a session of the March term to be held on May 5th, and that day was the second day of the term. We do not interpret the phrase, “first three days, ’’ appearing in § 2 of act 21 to mean the first three calendar days, but, rather, to mean the first three days the court is in session.

It was held in the case of Dunn v. State, 2 Ark. 229, (to quote a headnote in that case) that: “All courts unless restrained by some statutory provision, have the right of adjourning their sittings to a distant day; and the proceedings had at the adjourned session will be considered as the proceedings of the term so adjourned.”

In the subdivision, “Terms and Sessions,” of the chapter on Courts in 15 C. J., page 875, it is said at § 219 thereof: ‘ ‘ Terms of court are very generally classified into regular terms and special terms. A regular term of court is one held at a time and place fixed once and for all; and a special term is one called or appointed for a particular purpose, being a term separate and distinct from the regular term and not a continuation thereof after adjournment. A special term is distinguished from the regular or general terms only in the date or time that it is convened or held, unless the expression has some other local significance. As a general rule, when a statute speaks of terms of court, the terms constituted by law, and not special terms, are meant, although it has been held that a statutory provision requiring issues of fact in criminal actions to be tried at a ‘regular term’ did not intend to discriminate between a regular term and a special or called term at which a jury was convened.”

Numerous definitions of the phrase “Regular Term” appear in Words and Phrases, First, Second and Third Series, and, among others, the following: “A regular term of court is ‘a term begun at the time appointed by law, and continued at the discretion of the court to such time as it may appoint, consistent with the law.’ Wightman v. Karsner, 20 Ala. 446.” Words and Phrases, First Series, volume 7, p. 6040.

“When the court reconvenes after a recess of a few days or weeks, it is a regular, and not a special, session, distinct from the regular term. Carter v. State, 80 S. E. 533, 534, 14 Ga. App. 242.
“ ‘Regular’ terms of court are those beginning at certain dates fixed by law, or by the judge in conformity with authority of law,'as distinguished from ‘special terms,’ which are held at other times than those fixed by law, or which may be called by the judge in his discretion. Glebe v. State, 183 N. W. 295-296, 106 Neb. 251.” Words & Phrases, Third Series, volume 6, page 650.

We conclude therefore that May 5, 1933, was the second day of the March, 1933, term of the Hempstead Chancery Court, and that there was and is no inhibition in § 2 of act 21 prohibiting the court from hearing and confirming a commissioner’s report of sale at that time.

The decree must therefore be affirmed, and it is so ordered.


source: Caselaw Access Project

license: Public Domain

text:
    American Company of Arkansas v. Wilson.
    4-3046
    Opinion delivered June 19, 1933

      Roberts & Stubblefield, for appellant.

      Sam Rorex and Owens & Ehrman, for appellee.
   Smith, J.

This appeal questions the action of the Pulaski Circuit Court in setting aside default judgments which appellant recovered against appellees, the order appealed from having been made after the expiration of the term at which the judgments were rendered.

Appellant filed suit on August 12, 1932, to collect an account alleged to be due it by appellees as partners under the firm name of Wilson & Currie. Summonses were served on each defendant, but no answer was filed, and on September 7,1932, judgment was rendered against Wilson, and on- September 12, 1932, judgment was also rendered against Currie. More than twenty days had expired after service of summons upon the respective defendants.

The testimony shows that Wilson had stated to Currie, his partner, that he would attend to the case, and the latter relied on the former to do so, and gave the matter no personal attention. The testimony is conflicting as to whether Wilson had employed and directed an attorney to file an answer in the case, bnt it appears certain that Wilson was under the apprehension that he had done so and that he was relying on the attorney to file the answer. The attorney in question testified that he did not understand that he had been employed and directed to file the answer, but on September 14, 1932, which was prior to the adjournment of the term of court at which the judgments had been rendered, the attorney conferred with the judge who had rendered the judgments, and the following statement of the judge as to this conversation appears in the record: “Court. As I recall it, he (the attorney) came over here, a short time after the default judgment was rendered, all out of breath — he was excited about it, and I told him he had better file his motion (to vacate the judgment) in the regular way and take it up.”

On the following day, which was still prior to the adjournment of the court for the term, Wilson and his attorney conferred with the attorney for the plaintiff in regard to the judgments, and there is an unfortunate but irreconcilable conflict in the testimony as to the agreement then reached. There was clearly a misunderstanding as to the agreement then made. According to the testimony of both Wilson and his attorney, the representation was then made that Wilson did not owe any part of the account, which involved shipments of calcium arsenate in carload lots extending over a period of years except the shipment made in the year 1929. That the transactions had been handled by a Mr. Anderson, representing the plaintiff, and that Anderson would so testify. Anderson had left the State, and his whereabouts were then unknown, and a few weeks’ time was asked and given for Wilson to get in touch with Anderson, who could and would explain the transaction and make it appear that Wilson & Currie owed for only one shipment, which had been closed by a note to the plaintiff’s order, which the defendants offered to pay.

No motion was filed to vacate the judgments during the term at which they were rendered, because Wilson and his attorney relied upon this agreement; believing that time had been given to make a showing to plaintiff that an error had been made.

Plaintiff’s attorney admitted that he had a conversation with Wilson and "Wilson’s attorney before the expiration of the term, but testified that the extent of his agreement was that he would postpone the issuance of an execution for a few weeks for Wilson to make the suggested investigation and to make report thereof to the plaintiff, but that he did not agree that the judgments themselves might be vacated.

Testimony was offered in support of the motion to vacate the judgments to the effect that Wilson & Currie did not owe the account, or any portion of it, except the shipment in the year 1929, and that the account had been closed by the execution of a note for the shipment made that year, which Wilson offered to pay. He renewed this tender of payment with his motion.

The judgments were vacated by the presiding judge who rendered them, and his statements, appearing in the record, indicate that this action was induced, in part, at least; by the judge’s own recollection of the facts. The court made, among others, the following findings of fact: “6-a. That this understanding caused, the plaintiffs and their attorney to think that they were to have two or three weeks after September 14th in which to file some kind of a proceeding to have the judgments set aside, which time ran over the expiration of the -term, and the court is therefore treating this proceeding to set aside the said judgments as if it were filed during the same term the judgments were rendered.”

The court found, and the testimony establishes very clearly, that no fraud was intended or was practiced by the plaintiff’s attorney, but the testimony also establishes the fact, as found by the court, that, at a time when a motion could and would have been entertained to vacate the judgments, an agreement was reached, as understood by Wilson and his attorney, that the judgments would be vacated for the purpose of filing an answer putting in issue the liability of the defendants for the debt sued for, and that because of this agreement, as ■understood by Wilson and his attorney, a motion to vacate was not filed until after the expiration of the term at which the judgments had been rendered.

The case is sufficiently like that of Wrenn v. Manufacturers’ Furniture Co., 172 Ark. 599, 289 S. W. 769, to be governed by it. That case, like this, was one in which a motion was made to vacate a judgment after the expiration of the term at which it had been rendered. It was there said: “In a recent case, where a defendant relied on conversations and statements of attorney for plaintiff, this court said: ‘There was such a misunderstanding as constituted unavoidable casualty or misfortune which prevented the defendant from appearing and defending. There is no room to suspect — and the lower court did not find — that plaintiff’s attorney had intentionally misled the defendant, but the defendant and her husband, who was her representative in the matter, did testify that they were misled, and, because of that fact, had not arranged with the attorney they intended to employ to file an answer presenting a defense which, if true, would defeat a recovery, and had not furnished the attorney the information needed to prepare the answer.’ McElroy v. Underwood, 170 Ark. 794, 281 S. W. 368.”

We think the showing made was sufficient to justify the court, under the seventh paragraph of § 6290, Crawford & Moses’ Digest, to find that an unavoidable casualty or misfortune had prevented the defendants from appearing and defending- when they might and would otherwise have done so.

The judgment of the court vacating the original judgments is therefore affirmed.


author: Humphreys, J.

text:
    Commonwealth Building & Loan Association v. McHugh.
    4-3051
    Opinion delivered June 19, 1933

      John Sherrill, for appellant.

      Gladish & Young, for appellee.
   Humphreys, J.

This suit was brought by appellant against appellee in the chancery court of Mississippi County, Osceola District, to cancel two certificates of investment stock issued and delivered to him by appellant, one for $500 and the other for $300, with alternate prayers that appellee be required to pay $800 for them or for their return. It was alleged in the complaint that appellee had not paid for the stock.

Appellee filed an answer admitting the delivery of the two certificates of stock to him, but denying that he had failed to pay for same.

The cause was submitted to the chancery court upon the pleadings and testimony, from which the court found that appellee had paid for the stock, and, based upon that finding, rendered a judgment dismissing appellant’s complaint, from which is this appeal.

The facts responsive to the issue of payment are undisputed and, in substance, are as follows:

On December 12, 1931, appellee made written applications through appellant’s agent, W. W. Prewitt, to appellant for the paid up certificates of investment stock and drew his check in favor of appellant on the Bank of Osceola, where the agent and appellee resided, for $800 and delivered same to the agent. The agent had no'authority to indorse or cash the check, so he attached the check to the applications and mailed them'on the same day to appellant in Little Rock. Appellant received the cheek on the 14th and immediately issued the stock certificates to appellee and mailed them to its agent, who delivered them to appellee on the 15th. On the same day, it deposited the check in the Bankers’ Trust Company at Little Rock for collection and took credit for same on its account. The Bankers’ Trust Company forwarded the check directly to the Bank of Osceola, on which it was drawn, for payment, there being no other bank in the city of Osceola. The Osceola bank received the check on December 15, stamped same “Paid” on that date, and charged same to the account of appellee. The Bank of Osceola remained open and transacted all kinds of business until December 18. On the 17th it forwarded its draft to the Bankers ’ Trust Company for the amount of $800 to cover the item it had charged appellee’s account on the 15th. The Bankers’ Trust Company received the draft for $800 drawn on the Union Trust Company, where the Bank of Osceola had sufficient funds on deposit to pay same, but it refused to cash the draft because it was reported on the morning of the 18th that the Bank of Osceola had closed its doors. Appellee had on deposit in the Bank of Osceola more than enough to pay the check it drew on said bank to appellant in payment of the stock certificates, and, when the check was charged to his account and stamped paid, it still left a balance in the bank in his favor. After the Bank Commissioner took charge of the Bank of Osceola, the Bankers’ Trust Company returned the draft to him, and he returned the check to the Bankers’ Trust Company and reversed the entry of payment and charged the check back to the account of appellee. The Bankers’ Trust Company reversed its entries on its 'books and returned the check to appellant.

Under the law, appellant became a creditor of the Bank of Osceola and the Bank of Osceola, a debtor to it, because the Bankers’ Trust Company did not send the check to the Bank of Osceola for collection but for payment out of the account of appellee. The check was promptly paid, and the relationship of creditor and debtor was established between them. It was a closed transaction between the Bank of Osceola and appellee. He passed out of the picture, his only duty being to have money in the Bank of Osceola to pay the check if it arrived within a reasonable time. The principle thus announced and applicable to the facts in the instant case may be found in the cases of Taylor v. Dermott Grocery & Commission Company, 185 Ark. 7, 45 S. W. (2d) 23, and Bank of Conway v. Hiegel, ante p. 313.

No error appearing, the decree is affirmed.


author: Kirby, J.,

text:
    Hull v. Hull.
    4-3027
    Opinion delivered June 19, 1933

      Festus O. Butt, for appellant.

      Claude A. Fuller and A. J. Russell, Jr., for appellee.
   Kirby, J.,

(after stating the facts). It is insisted that the chancellor’s findings and decree are contrary to the preponderance of the testimony. Although the court incorrectly announced in its findings that the burden of proof was upon appellant, he having failed to produce the original deeds in evidence when demanded, to show the alleged forged deeds were genuine (Hildebrand v. Graves, 169 Ark. 210, 275 S. W. 524; Miles v. Jerry, 158 Ark. 314, 250 S. W. 34), it is also true that such failure to produce the original deeds created a presumption that such deeds, if produced, would favor the claim of plaintiff. Ramey v. Fletcher, 176 Ark. 196, 2 S. W. (2d) 84; Lynch v. Stephens, 179 Ark. 118, 14 S. W. (2d) 257.

Appellant’s explanation of Ms failure to produce the deeds when demanded was evidently not satisfactory to the court, nor sufficient to overcome the presumption.

The majority is of opinion, after a careful examination and analysis of the testimony, in which the writer does not concur, that the chancellor’s findings and decree are supported by the preponderance of the testimony ; and no useful purpose would be served by setting out the testimony more fully as the matter.is largely a question of fact, which has been found in the appellee’s favor upon testimony sufficient to support the decree.

We find no prejudicial error in the record, and the decree is affirmed.


author: Mehaffy, J.

text:
    Meyers Store Co. v. Colorado Milling & Elevator Co.
    4-3041
    Opinion delivered June 19, 1933

      W. P. Smith and G. M. Gibson, for appellant.

      H. L. Ponder, for appellee.
   Mehaffy, J.

On June 23, 1930, the appellee, Colorado Milling & Elevator Company, sold to the appellant, Meyers Store Company, 2,000 barrels of flour. The flour purchased was shipped to the appellant in three shipments, on October 13th, October 16th and October 21st. They were shipped to shipper’s order with bill of lading- and directions to notify Meyers Store Company at Walnut Ridge, Arkansas, a draft for the amount of each shipment being attached and payable to Planters’ National Bank of Walnut Ridge, Arkansas, and being drawn through that bank.

The purchaser ivas permitted to take the bill of lading and get possession of the flour without paying* the drafts.

On May 8, 1931, the Colorado Milling & Elevator Company filed its complaint in the chancery court for the Eastern District of Lawrence County against Meyers Store Company for $2,121.66, the amount due on the flour together with protest fees and interest.

It was alleged in the complaint that the bank officials and the Meyers Store Company conspired to defraud the Colorado Milling & Elevator Company by surrendering the bills of lading without the drafts being paid; that on November 7, 1930, the appellant knew or had reasonable cause to believe that the bank was insolvent, and drew its check on said bank for the sum of $2,121.71, payable to the Planters’ National Bank, purporting- to be given for the amount of the drafts covered' by the shipments; that the check was stamped “Paid” November 5th, but was not actually made or stamped until November 7th. The appellant, knowing the insolvency of the bank, knew it would not be paid, and fraudulently dated the check November 1, 1930; that the appellant was at that time engaged in transferring the greater portion of its deposits to a bank in St. Lonis, believing that the Planters’ National Bank was about to fail; that the Planters’ National Bank drew its draft on the Franklin-American Trust Company of St. Louis in the sum of $2,118.41. This draft was mailed direct to the appellant and received by the St. Louis bank on November 8th, the Planters’ National Bank having closed its doors on November 7th. The draft was not paid, and the protest fees were $3.25. The appellant had designated the Planters’ National Bank as the collecting bank. The prayer of the complaint was for judgment against the Meyers Store Company for $2,121.66, with interest.

The appellant filed demurrer, which was overruled; and then filed answer in which it denied the allegations of the complaint, except as to purchasing the flour, and the amount of the indebtedness.

As a defense, appellant alleged that the Planters’ National Bank should be made a party, and be. required to pay said money to the appellant or appellee, as a preferred claim. Thereafter it filed an amendment to its complaint, alleging the giving of its check in payment of the amount due appellee. It asked that J. W. Armstrong, receiver of the Planters’ National Bank, be made a party. The receiver was made, a party and filed petition and bond for removal to the Federal court, and the cause was removed to the Federal court.

In the Federal court the receiver filed his answer, in which the allegations in the complaint against him were denied. The Colorado Milling & Elevator Company filed motion in the Federal court to remand the cause, and the Meyers Store Company also filed motion to remand the cause to the Lawrence Chancery Court. The Colorado Milling & Elevator Company did not sue- the receiver of the Planters’ National Bank, and did not ask that he be made a party, and no judgment was asked against him.

The appellant asked that he be made a party, but did not ask any judgment against him. It alleged that the money- was a trust fund, and that the receiver be required to hold it as a trust fund to be paid either to the appellant or appellee, as the court might decide.

After the ease was remanded, the receiver moved that the cause be dismissed as to him, and this motion was granted, and the cause as to him dismissed. This appeal is from the order dismissing the cause as to the receiver, and no other questions are presented for our determination.

Where a cause is removed from a State court to the Federal court, and remanded by the latter court, the order of the Federal court remanding the cause is final, and will not be reviewed by the State court. K. C. Sou. Ry. Co. v. Wade, 132 Ark. 551, 201 S. W. 787; St. L., I. M. & S. R. Co. v. Neal, 83 Ark. 591, 98 S. W. 958; Mo. Pac. Rd. Co. v. Tompkins, 157 Ark. 16, 247 S. W. 54; German National Bank v. Speckert, 181 U. S. 405, 21 S. Ct. 688; Pac. Livestock Co. v. Lewis, 241 U. S. 440, 36 S. Ct. 637; M. P. Rd. Co. v. Fitzgerald, 160 U. S. 556, 16 S. Ct. 389; McLaughlin Bros. v. Hallowell, 228 U. S. 278, 33 S. Ct. 465; Lewis on Removal of Causes, 499.

When a case has been remanded, it is the duty of the State court to proceed as though no removal had ever been attempted. Lewis on Removal of Causes, 503.

When the cause was remanded and reached the Lawrence Chancery Court, it was the duty of the court to proceed just as if no petition for removal had ever been filed, and the chancery court had jurisdiction of the person of the receiver, and not only had the authority, but it was its duty, to dismiss the cause against the receiver unless the receiver was a necessary party. The plaintiff in the case would have had the right to sue the receiver and the Meyers Store Company, or either of them, and if either had been sued by the plaintiff, the other could not complain.

Our statute provides that the defendant may file a cross-complaint against persons other than the defendant when the defendant has a cause of action against a codefendant or a person not a party to the action and affecting the subject-matter of the action, when he may make Ms answer a cross-complaint against the defendant or other person. Section 1204, Crawford & Moses’ Digest.

In the suit against the appellant, it either owed the appellee or it did not, and no cause, of action that the appellant may have against the receiver in any way affects the subject-matter of the original action in this case.

“Where two or more persons are jointly bound by a contract, the- action thereon may be brought against all or any of them at the plaintiff’s option.” Section 1100, Crawford & Moses’ Digest. That is, the plaintiff in a suit may sue one person or all that are bound, but the plaintiff himself determines whether he will do this, and the defendant cannot bring in another party defendant unless the defendant files a cross-complaint against such party and states facts showing that the cause of action against such third party affects the subject of the original action. Lamew v. Wilson-Ward Co., 106 Ark. 340, 153 S. W. 261; Fluhart v. W. T. Rawleigh Co., 126 Ark. 307, 190 S. W. 118.

A plaintiff not only has the right to sue any one or all of the persons signing a contract, but he also has the right to proceed against any one or all of joint tortfeasors. McCulla v. Brown, 178 Ark. 1011, 13 S. W. (2d) 314; Coats v. Milner, 134 Ark. 311, 203 S. W. 701.

“In the absence of statute, it is not permissible to amend at the instance of the defendant, by adding new plaintiffs or defendants, although it is permissible for plaintiff to add them after objection by the defendant. Under statutes, however, a defendant may cause one against whom he has a right of action to be made a party.” Standard Ency. of Procedure, vol. 20, 956. The statute above cited requires the third person against whom the defendant files a cross-complaint to have- an interest affecting the original suit.

In the case at bar, it was not claimed that the receiver had any interest affecting the original suit. If the original defendant had a defense, it was complete, and he could avail himself of it without making the receiver a party.

One cannot be made a defendant who has no interest in the canse of action sued on, and against whom no relief is sought. Whatever defense the appellant may-have had in this case was available to it without maldng any other person a party. Therefore the receiver was not a necessary party.

The decree of the chancery court is affirmed.


author: McHaney, J. Butler, J., Mehaffy, J., Mr. Justice Butler,

text:
    Adams v. Spillyards.
    4-3087
    Opinion delivered June 19, 1933

      Rowell & Rowell, for appellant.

      Coy M. Nixon, for appellee.

      J. R. Crocker, amicus curiae.

      Tricher & Lasley, amici curiae.

   McHaney, J.

Appellants are the owners and holders of certain past-due promissory notes executed by appellees, secured by a deed of trust on certain real estate in Jefferson County. Suit was filed April 6, 1932, to foreclose, which was met by demurrer. The court overruled the demurrer January 31, 1933, and thereafter an answer was filed, admitting the execution and delivery of the notes and deed of trust. There was no dispute as to the facts. On February 25, 1933, act 57 of the Acts of 1933 became a law, and its provisions were invoked by appellees. The court, in accordance with the requirements of § 2 of said act, refused to enter a decree of foreclosure to which he found appellants were entitled, unless and until they would enter into and file a stipulation that they would bid at the sale the amount of the judgment, interest and costs. Appellants refused to do this, and filed a motion to have the decree entered without such requirement. The court overruled the motion, and this appeal followed.

We think this was a final order from which an appeal lies.

The only question presented is the constitutionality of said act 57 of 1933. We copy it in full as follows:

“Section 1. In any foreclosure, in any court in the State of Arkansas in which real estate is involved, the real estate securing the loan sought to be foreclosed shall be considered to be the value of the loan made, irrespective of the amount which may be realized from the sale of such real property.
“Section 2. When any such foreclosure suits are •brought, the plaintiff shall not be entitled to a decree of foreclosure until and unless said plaintiff shall file a stipulation in said cause that he will bid the amount of the debt, interest and costs.
“Section 3. Where any such suits are now pending and sale of said property has been made under decree of courts foreclosing same, and the sale has not been confirmed by the court, the chancellor is hereby directed and it is made his duty to inquire into the amount that said property sold for, and hear testimony thereon in order to ascertain whether or not the purchaser bid the fair market value of said property, and said sale shall not be confirmed until after said hearing, and the Supreme Court of this State shall review the findings of said chancellor on appeal, even though no fraud or inequitable conduct is attributed to any person conducting said sale or any party interested therein.
“Section 4. Where any such suits are filed after the effective date of this act and real property is sold under foreclosure decree, said sale shall not be confirmed by the court until and unless said court has inquired into the amount that said property sold for, and hear testimony thereon in order to ascertain whether or not the purchaser bid the fair market value for said property, and said sale shall not be confirmed until after said hearing, and the Supreme Court of this State shall review the findings of said chancellor on appeal, even though no fraud or inequitable conduct is attributed to any person conducting said sale or any party interested therein.
“Section 5. When any suit seeking the foreclosure of real estate is filed and application is made for the appointment of a receiver, the court shall have the power to appoint the owner of said property as such receiver, and the fact that he is the owner in itself shall not disqualify him to serve in such capacity.
“Section 6. If any part, sentence, section, or paragraph of this act is held to be unconstitutional, the remaining valid parts shall not be affected.”

The attack made on the validity of the act is based on art. 1, § 10, Constitution of the United States, and art. 2, § 17, Constitution of Arkansas, both prohibiting the State from passing any law impairing the obligation of contracts. It is of course well settled that the Constitution of this State is “not an enabling, but a restraining act (Straub v. Gordon, 27 Ark. 629), and that the Legislature may rightfully exercise its powers subject only to the limitations and restrictions of the Constitution of the United States and of the State of Arkansas,” as we said in Bush v. Martineau, 174 Ark. 214, 295 S. W. 9, and that an act of the Legislature is presumed to be constitutional and will not be held by the courts to be otherwise unless there is a clear conflict between the act and the Constitution, and that all doubt should be resolved in favor of the act. Bush v. Martineau, supra, and cases there cited. It is equally well settled that, if an act runs counter to the plain provisions of the Constitution, the courts should not hesitate to so declare and hold the act invalid. Another rule which is not open to dispute and is well settled both in this court and the Supreme Court of the United States is thus stated in Robards v. Brown, 40 Ark. 423: “The laws which are in force at the time when, and the place where, a contract is made and to be performed enter into and form a part of it. This is only another mode of saying that parties are conclusively presumed to contract with reference to the existing law. ’ ’ And in Walker v. Whitehead, 16 Wallace (U. S.) 314, it is said: “The laws which exist at the time of the making of a contract and in the place where it is made and to be performed enter into and make a part of it. This embraces those laws alike which affect its validity, construction, discharge and enforcement. Nothing is more material to the obligation of a contract than the means of its enforcement. The ideas of validity and remedy are inseparable, and both are parts of the obligation which is guaranteed by the Constitution against impairment. The - obligation of a contract ‘is the law which binds the parties to perform their agreement.’ Any impairment of the obligation of a contract — the degree of impairment is immaterial — is within the prohibition of the Constitution.”

It becomes material then to inquire as to the rights of mortgagees of real estate, at the time and prior to the effective date of said act 57 in foreclosure proceedings in chancery courts. They had the right under existing law to have a judgment on the obligation in default after service and issue joined after 90 days or any day court was in session after default in pleading, and a condemnation of the real estate covered by the mortgage to be sold and applied to the payment of the debt, interest and costs. If not sold for a sufficient sum to cover, there was a deficiency judgment upon which execution could issue as at law. Foreclosure sales of real estate could not be set aside and confirmation refused for mere .inadequacy of consideration, but only for fraud or other inequitable conduct in the matter of the sale, coupled with gross inadequacy of consideration. Nor could sale be postponed more than six months. There was no provision of law declaring that “the real estate securing the loan sought to be foreclosed shall be considered to be the value of the loan made, irrespective of the amount which may be realized from the sale of such property, ’r nor that the plaintiff should “file a stipulation in said cause that he will bid the amount of the debt, interest and costs,” until act 57 was enacted. It frequently happens, though not the general custom, that loans are made and real estate security taken when both parties knpw that the security is of less value than the loan, and it frequently happens that loans are made on both real and personal property as security. In either event, under act 57, in order to foreclose on the real estate, in the chancery court, the mortgagee would have to relinquish the personal responsibility of the mortgagor as well as the personal property covered by the mortgage, for “the real estate * * * shall be considered to-be the value of the loan made,” and he must file a stipulation that he will bid for it the full amount of the judgment, interest and costs. This too in the face of the fact that the loan was made more on the moral risk than on the real estate security in the one case, and more on the personalty securing the loan than the real estate in the other. The undisputed effect of §§ 1 and 2 of the act is to prohibit deficiency judgments in mortgage foreclosures in chancery courts, a legal possible right inherent in all existing Arkansas mortgages at the effective date of the act, which was a part of the mortgage contracts themselves. This personal liability was a part of the contract because authorized by law at the time of execution and in the place .of performance. The principal object of act 57 was to take, away from the mortgagee that right, and of necessity violates the obligations of all existing mortgage contracts. Sections 3 and 4 undertake to change the rule many times announced by this court, and of long duration, that the court cannot refuse to confirm a judicial sale for mere inadequacy of consideration except for fraud, unfairness or some other inequitable conduct of the sale. See Marten v. Jirkovsky, 174 Ark. 417, 295 S. W. 365; Free v. Harris, 181 Ark. 647, 27 S. W. (2d) 510. This was the law as to all existing mortgages, became, a part of them, and related to a substantial remedy to collect the debts for which they were given. Section 5 attempts to make the owner'or mortgagor eligible- for appointment as receiver, in the event a receiver is sought. Such was not the law theretofore. By § 8613, Crawford & Moses’ Digest, “No party or attorney, or person interested in an action shall be appointed receiver therein.” This section has long been the law for a time the memory of man runneth not to the contrary, for this court held in Cook v. Martin, 75 Ark. 40, 87 S. W. 625, that it was declaratory of the common law. We think this section, as well as §§ 3 and 4, would not have been adopted without §§ 1 and 2, and the act is therefore not sever-able, and we cannot sustain any part thereof, as provided in § 6.

We think this case is ruled by that of Robards v. Brown, 40 Ark. 423. In that case Scott and wife and Robards and wife in 1874 executed to one Ward as trustee a deed of trust on lands to secure the payment of sundry debts. Power was given the trustee in the instrument to sell the lands and distribute the proceeds on certain contingencies. In 1880 the trustee advertised and sold the lands under the power contained in the deed of trust to Brown who paid his bid and received his conveyance. The sale wras made without regard to the act of March 17, 1879, which provided that at such sales the property, real or personal, should not be sold for less than two-thirds of the appraised value; provided it should not apply to sales of property for the purchase money thereof; and if real property was not sold at the first offering, another offering might be made twelvemonths thereafter, and sold to the highest bidder without reference to the appraisement; and provided further that real property so sold might be redeemed by the mortgager at any time within one year from the- sale by payment of the sale price with 10 per cent, interest and costs of sale. It also provided for appointment of appraisers. Within one year fronqthe date- of sale Robareis sought to redeem by tendering the amount required by the act. Brown refused the money tendered, Robareis withheld possession, and Brown brought ejectment. Robareis defended under the act of 1879 on the ground that it was not appraised and sold in compliance, therewith, and that he had the right thereunder to redeem. This court denied the right as did the lower court. It was there said: “As this raises a federal question, the interpretation which the Supreme Court of the United States has placed upon that clause of the Constitution which prohibits the States from passing laws impairing the obligation of contracts is of controlling influence, with us. And we find that in Bronson v. Kinzie, 1 Howard 311, this precise question was presented. It was there decided, after the most mature deliberation, Chief Justice Taney delivering the- opinion of the court, that both the appraisement and the redemption clause of a similar act, passed by the Legislature of Illinois, were unconstitutional, as applied to mortgages previously executed.” McCracken v. Haywood, 2 Howard 608; Gantly’s Lessees v. Ewing, 3 Howard 707; Howard v. Bugbee, 24 Howard 461, were cited to the same effect. The court in the Robards case continued: “The Constitution forbids all laws alike which affect the validity, construction, discharge and enforcement of contracts. The State may change legal remedies, forms of action, of pleading and of process, the times of holding courts, etc., and may shift jurisdiction from one court to another. And such changes may have the incidental effect of delaying the collection of debts. But the Legislature cannot, under the guise of legislating upon the remedy, in effect, impair the obligation .of contracts. The idea of right and remedy are so intimately associated as often to be inseparable. Now any legislation which deprives a party of a remedy substantially as efficient as that which existed at the making of the contract does impair its obligatory force.” Citing a number of cases from the Supreme Court of the United States.

We cannot see any distinction in principle between that case and this. ,There the subsequent statute required appraisement and sale for two-thirds the appraised value; whereas here the statute arbitrarily says the land shall be considered to be the value of the loan, without regard to sale price, although it might in fact be many times more or less than the loan. In that case the land must be sold for two-thirds the appraised value; whereas here it is required to bring the amount of the loan regardless of all other considerations. In that case one could finally, after one year from the first offering, if it failed to bring the required amount, have a sale to the highest bidder without regard to appraisement; whereas, here, if the mortgagee is unwilling to file the stipulation required by § 2, he can never have a decree of foreclosure or of sale, and can never realize anything from the security under foreclosure in court. In that case it was held that the right to redeem within one year rendered the statute unconstitutional and void, the court saying: “Common sense and observation teach us that the right to sell at once the entire fee simple in lands and to give the purchaser immediate possession is worth more and will be more likely to produce the mortgage debt than the restricted right of selling a conditional interest in lands. Thus the law, if extended to previous mortgages, would curtail and materially embarrass the creditor’s right to subject the entire interest of the debtor in the property to the payment of the debt intended to be secured.” So this court held that because the act denied the right to sell the entire interest, and withheld from sale the equity of redemption for one year, the act was void as to existing mortgages, and correctly so. Here the act prohibits any decree for sale, except plaintiff stipulate to pay the full amount of the debt, etc., and prohibits any confirmations, even for the amount of the debt, interest and costs, until after the court has ascertained from evidence on a hearing that such amount was “the fair market value of the property.” In other words, if the court should determine that the amount bid at the sale was not “the fair market value of the property,” it would have the right and power to disapprove the sale, “even though no fraud or inequitable conduct is attributed to any person conducting said sale or any party interested therein,” and even though the plaintiff filed the required stipulation and did bid the amount of the judgment, interest and costs. Sections 3 and 4 so provide. This comparison of the act under consideration with that discussed in Robards v. Brown, supra, is made for the purpose of showing, which it does, that the former presents a clearer case of violation of the Obligation of existing contracts than did the latter, and we desire to say that we again approve what was said in Robards v. Brown, and that it is supported by many decisions of the Supreme Court of the United States, both prior aud subsequent thereto. We therefore hold that said act 57, as applied to existing contracts, is void.

Now, as to its application to future contracts, or to mortgages and deeds of trust on real estate executed subsequent to the effective date of the act, we think a careful examination of the act itself discloses that it has no application to the foreclosure of such contracts or mortgages. It does not in express terms apply to foreclosures on mortgages and deeds of trust on real estate to be hereafter executed, but apparently to foreclosures on contracts already in existence. In fact, the words “mortgage” or “deed of trust” are nowhere used in the act. Foreclosures on real estate are several times mentioned, and foreclosures on mechanics’ liens and purchase money liens are covered as well as mortgages and deeds of trust. The evident purpose of the Legislature was to relieve, a present condition by applying the poultice of the act to the sore spot of deficiency judgments in foreclosures of mortgages, caused by decline in realty values. They made it expressly applicable to cases of foreclosure now pending and sales already made but not confirmed, which could not possibly have reference to future contracts, (section 3); and also to “suits filed after the. effective date of this act and real property is sold under foreclosure decree of courts foreclosing same, said sale shall not be confirmed,” etc. The whole context, we think, shows the Legislature was dealing with what it deemed a temporary emergency. Another matter, not without force in determining this question, is that House Bill No. 270, by Gates, of Cleveland, was introduced and passed both Houses almost simultaneously with the Senate bill, which became act 57, which prohibited deficiency judgments in mortgage foreclosures, but by its express terms in § 2, applied only to future contracts. It was introduced in the House January 26 and finally passed both Houses on February 13. Whereas act 57 was introduced in the Senate January 18, and finally passed both Houses February 10. The former was vetoed by the Governor, and the latter became a law without his signature. Evidently the Legislature thought the provisions of the bill, which became act 57, were not broad enough to prevent deficiency judgments on future contracts, and introduced and passed House Bill 270 to cover the apparent defect.

Before concluding, we desire to call attention to the case of Dennis v. Moses, 18 Wash. 537, 52 Pac. 33, holding unconstitutional an act of that State, entitled, “An act relating to deficiency judgments.” We cannot review this case, nor the many others in both this State and the Supreme Court of the United States, sustaining, as we view them, the present holding. Suffice it to say that we have carefully considered the matter from every legal viewpoint, and have reached the conclusion that the act applies only to foreclosures on existing contracts, and is unconstitutional and void.

The judgment will therefore be reversed, and the cause remanded with directions to enter the decree of foreclosure and sale of the property without reference to act No. 57 of the Acts of 1933.

Butler, J.,

(concurring). The case- before the court involves the question of procedure in the foreclosure and sale under a mortgage executed prior to the passage of act No. 57 of the General Assembly of 1933. Therefore, this act could have no other than a retroactive application to the case at bar. The majority hold that such an application violates the contract clause of the Federal Constitution. I agree that this question is concluded by the decisions of the Supreme Court of the United States and of this jurisdiction, although it would appear that the authority of these decisions has been somewhat shaken by later decisions of the Supreme Court of the United States in the cases of Block v. Hirsch, 256 U. S. 135, 41 S. Ct. 458, and Marcus Brown Holding Company v. Feldman, 256 U. S. 170, 41 S. Ct. 465. I therefore concur in the judgment of the majority in so far as it holds that the act, supra, can have no application in the instant case, for to so apply it would violate the contract clause of the Federal Constitution as construed by our own decisions and thos<? of the United States Supreme Court. But to that part of the opinion which declares the act under consideration indivisible, and, if one section be found to be unconstitutional, the whole act must fall, I cannot agree. Neither can I agree to the conclusion that the act has no application to the foreclosure of deeds of trust and mortgages executed after it became effective.

In the first place, I observe that these questions were not before the court, and the declarations relating to them were unnecessary in disposing of the real question involved. They are, therefore, obiter dicta and not binding upon this court in any subsequent case. In the second place, the construction, I submit, can be justified in no other way than by reading into the act something that is not there and which from its language is clear the lawmakers never intended, a proceeding which is plainly an invasion by the judiciary of legislative powers.

If any special provision of an act be unconstitutional and can be stricken out without affecting the validity of the residue of the act, it will be done and the remainder of the act will be allowed to stand. This is the general rule announced by many of our decisions, among the later of which is Stanley v. Gates, 179 Ark. 886, 19 S. W. (2d) 1000. In the opinion of the majority act No. 57 is copied. It will be seen from an examination of it that all of its sections except § 3 are general in their terms, and might, except for the presumption that all acts are to be given a prospective effect except where a contrary intention clearly appears, be both retroactive and prospective. Section 1 relates to “any foreclosure”; section 2 to “any foreclosure suits”; section 4 refers to “any such suits filed after the effective date of this act”; section 5 provides: “When any suit seeking the foreclosure, of real estate is filed.” Section 3, the one sought to be applied in the instant case, is not general in its terms, but limited and special, and relates to only such suits as had been instituted and were pending before and at the time of the passage of the act, and provides that no sale of real estate shall be confirmed unless and until the chancellor had ascertained that its fair market value had been bid. Its effect is plainly limited to suits to foreclose mortgages which had been executed prior to the passage of the act and is therefore so unconnected with the remaining provisions of the act, with a different purpose to be accomplished, that it may be stricken out without injury to §§ 1, 2, 4 and 5. If there was any doubt on this subject, it is removed by the expressed will of the Legislature. Section 6 provides: “If any part, sentence, section or paragraph of this act is held to be unconstitutional, the remaining valid parts shall not be affected.” Courts have no right to ignore such provisions in legislative acts. This court, in the case of Snetzner v. Gregg, 129 Ark. 542-8-9, 196 S. W. 925, referring to a similar provision, stated the duty of the court in these words: “But for the provision just quoted, it would follow that the whole statute is void, because the Legislature had determined it was appropriate and just to tax all of the property, both real and personal, for the construction of the improvements, and we could not see that the Legislature would have passed the statute with the authority to tax personal property eliminated.” (This had been eliminated by the court from the statute because in excess of the constitutional power of the Legislature.) Continuing, the court further said: “This declaration incorporated by the lawmakers into the statute presents an altogether different question, for it expresses the purpose of the lawmakers to effect that, even if the personal property cannot be taxed, it is not only practicable to construct the improvement out of the taxation or benefits accruing to real estate, but that it is just to do so. We have then in the statute two legislative determinations; one, that it is just and fair to include the benefits to personalty in the scheme of taxation; and also that, if that cannot be done under the law, it is equally just to pay for the construction of the improvements with funds derived from the taxation on benefits accruing to real property alone. This is not the delegation of legislative authority to the courts, nor is it an inconsistent alternative. It is a positive declaration of the purpose of the Legislature to put the law in force to the full extent of its constitutional power. * * * Under a statute like that, a part of the law which is not swept away by the courts as being in conflict with the Constitution is declared to be in force, and there is no mistaking the legislative will in that respect.” Here it seems certain the Legislature intended the law to apply to the foreclosure of all mortgages, both those' executed in the past and those which might be in the future. The language in all the sections, except § 3, is all-embracing and provides for certain procedure in “any suits” without limitation as to the time when the instrument sought to be foreclosed was made. The necessary effect of § 3 could relate only to contracts then existing. Therefore, there appear two purposes sought to be accomplished, and by § 6 the Legislature makes plain its intent that, if one purpose be unattainable because of constitutional restrictions, the other should be carried into effect.

Among the fundamental rules governing the construction of statutes all must admit the following to obtain; the duty of the court to arrive at the legislative will to be determined primarily from the language of the. statute itself and to sweep aside all obstacles in accomplishing it; that statutes are to be construed as having only a prospective operation Unless the purpose of the Legislature to give them a retroactive operation is expressly declared or necessarily implied from the language used. Applying these rules to the act, with § 3 eliminated, how can any ingenuous view of it or just interpretation justify the statement in the majority opinion: “Now, as * * * to future contracts, or to mortgages * * * subsequent to the effective date of the act, we think a careful examination of the act itself discloses that it has no application to the foreclosure of such contracts or mortgages.” To support this statement, reference is made to tiie action of the Governor in vetoing a certain other bill and the subsequent passage of act No. 57 as persuasive of the interpretation that the latter act was intended to be retroactive only. This argument seems to me to be far-fetched, for it can make no difference what the Governor thought or did, as an application of the rule stated to the language of-the statute makes plain the legislative intent without reference to extraneous sources. Section 3 of the act can appty to nothing save suits on mortgages, etc., executed prior to its passage. Included in the comprehensive terms of the remainder of the act are all suits to foreclose any mortgage. So that it might be both retroactive and prospective.- In its retrospective effect, like § 3, it i's in conflict with the provisions of the Federal Constitution prohibiting legislation by the States which impair the obligation of existing contracts. In its prospective application it is not open to that objection and is constitutional. Ogden v. Saunders, 12 Wheat., page 295. This result is reached also by the application of the rule that where any doubt about the constitutionality of a statute exists it must be resolved in favor of its validity and the language given a construction which makes it constitutional, if it is reasonably susceptible to such construction (Dobbs v. Holland, 140 Ark. 398, 215 S. W. 709), and it will be. sustained if there is any reasonable doubt of its unconstitutionality (Little River County Board of Education v. Ashdown Special School District, 156 Ark. 549, 247 S. W. 70); and where two constructions may be placed on the language of the act the construction will be adopted which will render the statute valid. Booe v. Simms, 139 Ark. 595, 215 S. W. 659. This rule, with that by which a statute is construed to have a prospective effect rather than a retroactive one (Elrod v. Board of Imp., 171 Ark. 848, 298 S. W. 965), makes the statute effective as it relates to suits on mortgages executed after the passag-e of the act.

Learned counsel appearing as friends of the court, and who contend for the unconstitutionality of the act in its entirety, to my mind recognize the weakness of their position when they evoke- visions of economic disaster which may result by reason of its enactment, and when they contend that it has practically dried up the streams of credit, so that home owners are unable to find relief from Federal agencies which, but for the provisions of the act, would lend money in order that the distress of the home owner might be relieved. This is an argument with which we have no concern. It is common school-boy knowledge that questions of policy are for legislative and not for judicial determination. It is possible that it was unwise to enact the law; it may be that good results might flow therefrom. But whether wise or foolish, good or ill, if this court remains within the restrictions placed by the Constitution on its powers, it can do nothing. The argument made should be addressed to those authorities having the power to redress the wrong, if there be one, and not to us. This court, and all others has always recognized its limitations in these regards and has always refused to encroach on the domain of the Legislature.

Mehaffy, J.,

(dissenting). I cannot agree with the majority, either in holding that the act has no application to future contracts, or in holding that the act is unconstitutional as to existing contracts.

The one statement in the majority opinion, however, to which we may all agree is the following: ‘ ‘ The evident purpose of the Legislature was to relieve a present condition by applying the poultice of the act to the sore spot of deficiency judgments in foreclosures of mortgages caused by decline in realty values.”

While the decline in realty values was partly the cause of the sore spot, it was not the whole cause. It is a matter of common knowledge that many loans were made in this State on real estate in 1920, and the years immediately following 1920, where the amount of the loan was fifty per cent, or less of the value of the property. In many instances the mortgage was on the homestead.

Many persons paid on these mortgages until 1930. In 1930 prices were so low that the price the farmer received for his crops was, in many instances, not more than the cost of producing’ the crop. It was therefore impossible for them to pay during that year. Many mortgagees took advantage of the accelerating clause in the contract, declared the entire amount due, foreclosed, purchased the property at foreclosure sale for less than twenty-five per cent, of its value, and secured a deficiency judgment for the balance. The money lender, therefore, in these instances, collected approximately half the money that he had loaned, took the farmer’s home, and had a judgment against him for the balance. This is evidently the sore spot mentioned in the majority opinion.

I think, when conditions as described above existed, and the mortgagee took advantage of the accelerating clause in the contract, and, being the only bidder, purchased the property at less than twenty-five per cent, of its" normal value, that this constitutes inequitable conduct, and should justify the court in ordering another sale where the mortgagee is the only bidder at the first sale. This court, however, has held to the contrary.

The court is bound to know the conditions. A court cannot blind its eyes to the knowledge of a fact which is notorious throughout its jurisdiction. There is no one of ordinary intelligence who does not know that since 1922 land values have gone down, until in 1931 it was practically impossible to sell lands in this State for one-fourth of their value in normal times. See Federal Land Bank of St. Louis v. Ballentine, 186 Ark. 141, 52 S. W. (2d) 965.

I think it was to relieve the people who were oppressed, as above described, that this act was passed.

Mr. Justice Butler,

in a concurring opinion, has in my judgment shown' very clearly that act 57 applies to future contracts. I agree with what he has said on this subject, and shall not discuss that feature of it at length. I think the entire act is valid.

The majority opinion cites and relies on the case of McCracken v. Haywood, 2 Howard 608. That case was decided nearly 100 years ago, and is based largely on the case of Bronson v. Kinzie, 1 Howard 311. In the last case mentioned, the court said:

“If the laws of the State passed afterwards had done nothing’ more than change the remedy upon contracts of this description, they would be liable to no constitutional objection. For, undoubtedly, a State may regulate at pleasure the modes of proceeding in its courts in relation to past contracts as well as future. * * * Begulations of this description have always been considered, in every civilized community, as properly belonging to the remedy, to be exercised or not by every sovereignty, according to its own views- of -policy and humanity. It must reside in every State. to enable it to secure its citizens from unjust and harrassing litigation, and to protect them in those pursuits which are necessary to the existence and well-being of every community. And, although a new remedy may be- deemed less convenient than the old one, and may in some degree render the recovery of debts more tardy and difficult, yet it will not follow that the law is unconstitutional.”

It therefore appears to me that the very cases relied on by the majority hold acts affecting the remedy constitutional.

It was also said in the case of Bronson v. Kinzie, supra: “Mortgages made since the passage of these laws must undoubtedly be governed by them; for every State has the power to prescribe the legal and equitable obligations of a contract to be made and executed within its jurisdiction.”

But the majority says that act 57 does not apply to future contracts. It says that the act does not, in express terms, apply to foreclosures on mortgages and deeds of trust on real estate to be hereafter executed.

The act is copied in the majority opinion and discussed at length by Mr. Justice Butler, but what the majority opinion says about the act not in express terms applying to future contracts may be said of seventy-five per cent, of the laws enacted in the last fifty years.

I am unable to understand how the court could reach the conclusion that act 57 applies to existing contracts only. The same reasoning would lead to the conclusion that most of the acts passed by the Arkansas Legislature apply to existing conditions and not to the future.

While the authorities are not entirely uniform, I think the great weight of authority is to the effect that one can have no vested right in a remedy, and that changing the remedy or depriving one of a remedy does not impair the obligation of a contract if it leaves him an efficient remedy.

“To deprive a person of the only legal remedy he has by which to enforce his rights is either to impair the obligation of a contract or deprive him of property •without due process of law. One may have a vested right to a remedy on. contracts. He has no vested right to a particular remedy. A statute which said that he shall have, no remedy whatever for the enforcement of an existing right is essentially different in its operation from one which withholds some particular pre-existent remedy and leaves him to the choice of those which remain to him. The decisions are almost uniform that, though a law which deprives one of all remedy is a law impairing the obligation of a contract, or one taking private property without due process of law, it is equally true that any particular remedy may be abrogated at the pleasure of the lawmaker, provided it leaves a substantial means of enforcing the right.” Wade on Retroactive Laws, 201.

In the case of Conkey v. Hart, decided by the Court of Appeals of New York, 14 N. Y. R. 22, the court said:

“Between the execution of the lease and the issuing of the warrant the Legislature had passed an act entitled, ‘An act to abolish distress for rent, and for other purposes,’ the first section of which is in these words: ‘Distress for rent is hereby abolished.’ The Supreme Court held that this act in its application to a lease like the present, existing at the time of its passage, was in violation of that clause in the Constitution of the United States which forbids any State to pass a law impairing the obligation of contracts. The correctness of this determination is therefore to be considered.
“It is not to be overlooked that the stipulations of parties, with which the statute is supposed to interfere, relate to the remedy for a breach of the principal provision of the contract which provides for the payment of the rent. That obligation the statutes does not interfere with, but it may be enforced by all the means which the State furnished for the enforcement of other contracts. In this particular the question presented in this case differs from that in any of the'cases which have been considered in the Supreme Court of the United States. * * * All the cases recognize the obvious distinction between impairing the oblig’ation of the contract, and altering the remedy for a breach of it, and acknowledge the power of the State over the latter, while maintaining its want of power to impair the obligation of the contract. ’ ’

It was stated in the case of People v. La Fetra, 230 N. Y. 429, 130 N. E. 601, 16 A. L. R. 152, that a State may establish regulations reasonably necessary to secure the general welfare of the community by the exercise of its police power, although the rights of private property are thereby curtailed and freedom of contract thereby abrogated.

The Legislature evidently knew the conditions existing in this State at the time of the passage of this act, and passed this act for the purpose of giving some relief.

The Supreme Court of Arizona said: “We understand the rule, to be that parties have no vested right in particular remedies or anodes of procedure, and that Legislature may change existing remedies or prescribe new modes of procedure without impairing the obligation of contracts, provided an efficacious remedy remains for its enforcement.” Brotherhood of American Yoemen v. Manz, 23 Ariz. 610, 306 Pac. 403.

The Court of Appeals of Kentucky, in discussing the statute changing the remedy as to liability of stockholders, said:

“The statutes bear upon the remedy only.. The liability of the stockholders remains the same as it was prior to their passage. * * *
“Thus where, at the time of the insolvency, the only remedy against the shareholders was by proceedings in equity on the part of the bill holders, and subsequently, pending the liquidation of the affairs of the bank, a new statute was passed creating the machinery of the Bank Commissioner, and providing a simple and expeditious means whereby they could enforce collections from shareholders, it was held that the shareholders in the already insolvent bank could not object to the application of this new statute to their own case. It bore on the remedy only, not upon the liability.” Hughes v. Marvin, 216 Ky. 190, 287 S. W. 561.

The Supreme Court of Arizona held a law valid which contained the following paragraph: “All mort gages of real property and all deeds of trust in the nature of mortgages shall, notwithstanding any provision contained in the mortgage, he foreclosed by action in a court of competent jurisdiction.”

The court said: “This is a remedial statute, and it is well settled that laws changing the remedy or substituting another and different remedy are valid, so long as they do not impair the obligation of contracts.” Schwertner v. Provident Mut. Bldg.-Loan Ass’n, 17 Ariz. 93, 148 Pac. 910.

“Modes of procedure in the courts of a State are so far within its control that a particular remedy existing at the time of the making of a contract may be abrogated altogether without impairing the obligation of the contract if another and equally adequate remedy for the enforcement of that obligation remains or is substituted for the one taken away.” Ry. Co. v. La., 157 U. S. 219, 15 S. Ct. 581.
“It is well settled that while, in a general sense, the laws in force at the time a contract is made enter into its obligation, parties have no vested right in the particular remedies or modes of procedure then existing. It is true the Legislature may not withdraw all remedies, and thus, in effect, destroy the contract; nor may it impose such new restrictions or conditions as would materially delay or embarrass the enforcement of rights under the contract according to the usual course of justice as established when the contract was made. Neither could be done without impairing the obligation of the contract. But it is equally well settled that the Legislature may modify or change existing remedies or prescribe new modes or procedure, without impairing the obligation of contracts, provided a substantial or efficacious remedy remains or is given, by means of which a party can enforce his rights under the contract." Oshkosh Waterworks Co. v. Oshkosh, 187 U. S. 437, 23 S. Ct. 234; Nat. Surety Co. v. Architectural Decorating Co., 226 U. S. 276, 33 S. Ct. 17; Wright v. Wimberly, 94 Ore. 1, 184 Pac. 740.

Act 57 was evidently passed by the Legislature with a view of relieving the people of Arkansas from an intolerable condition. While- I might cite many other cases, the above citations are sufficient to show how the courts generally hold on questions of this kind.

The obligation of the contract is not impaired by the act, and the mortgagee is not deprived of a remedy by which he can enforce the collection of his debt. He may bring a suit at law on the note or bond, obtain a judgment, sell the mortgaged property,' and, if it does not sell for enough to pay the debt, he can sell any other property belonging to the debtor. If he does not want to go into court, he may advertise and sell under the power of sale in the mortgage, purchase the property himself, make a deed to himself, and then sue at law for the difference between the amount of the debt and the amount for which the property was purchased.

The enactment of this law did not deprive the- mortgagee of the right to bring his suit at law, nor deprive him of the right to sell under the power of sale in the mortgage, and, by the great weight of authority, act 57 does not impair the obligation of a contract.

I think the act is valid and should be upheld. Mr. Justice Humphreys agrees with me that the act should be upheld.


author: McHaney, J.

text:
    Blackburn v. Turner.
    4-3044
    Opinion delivered June 19, 1933

      Buzbee, Pugh & Harrison, for appellant.

      Partain & Agee and Vincent M. Miles, for appellee.
   McHaney, J.

Only a question of fact is involved in this appeal. Appellee was a guest in appellant’s car, with others, when she was injured, as alleged by her, when “about four miles west of the town of Ozark, the defendant carelessly and negligently drove said automobile at a high, negligent, dangerous and unlawful rate of speed and in a careless and negligent manner and thus caused said automobile to skid and turn over several times. ’ ’ A trial resulted in a verdict and judgment against appellant in the sum of $3,000.

Appellee testified that she did not know what caused the accident; that the car skidded and went in the ditch and turned over a time or two; that she did not know how fast appellant was driving. Appellant testified that he was not a fast driver, was driving at the time about 20 miles per hour, around a curve on a wet road about 40 feet wide, and that the car skidded about 75 to 100 feet before going into the ditch. He was an experienced driver. The mechanic who went to get the car after the wreck testified there were no skid marks; that it seemed to him, from an examination of the situation shortly afterwards, that appellant simply failed to take the curve and drove off the highway and into the ditch. We think this evidence was sufficient to take the case to the jury as to whether appellant was driving in a careless and negligent manner, whether he was giyiag- to the driving of the car the attention necessary at ihe time. The court instructed the jury that,' if the accident was’ caused solely by the skidding of the automobile and appellant was not at fault in that respect, the verdict should be for appellant.

Since the evidence was sufficient to take the case to the jury, and no other error being assigned or relied upon, the judgment must be affirmed.


author: Butler, J. Mehaffy, J.,

text:
    Maryland Casualty Company v. Davenport.
    4-3110-11-12-13
    Opinion delivered June 19, 1933

      Brewer & Cracraft, for petitioner.

      A. M. Coates, for respondent.
   Butler, J.

Pour suits were instituted in the Phillips Circuit Court against the Maryland Casualty Company to recover the value of work done and material furnished by the plaintiffs to Lynch Bros., while they were engaged in the construction of a portion of the levee system along the right bank of the Mississippi River near Helena. The Casualty Company demurred to the jurisdiction of the court, and, the demurrer being overruled, filed its application for a writ of prohibition in each case, alleging the sole and exclusive jurisdiction of the United States District Court over the subject-matter, and making as a part of its several petitions a copy of the complaints filed in the cases, the original contract entered into between Lynch Bros, and the United States Government, the bond executed by the Casualty Company, and a supplemental agreement later entered into between the Government, Lynch Bros, and the Casualty Company.

It is the contention of the petitioner that the liability of the Casualty Company is predicated upon the bond first executed to guarantee the performance by Lynch Bros, under their contract to build the levees and to pay the laborers and materialmen. The respondent contends that the several causes of action are grounded on the supplemental agreement by the terms of which, it is insisted, the Casualty Company became primarily liable for all of the debts incurred by Lynch Bros, without regard to the terms of the bond executed by it.

It appears from the petition and the exhibits that Lynch Bros, entered into a contract with the United States Government on October 31, 1931, to build a certain portion of the levee system along the Mississippi River in Phillips County, Arkansas. At that time the Casualty Company executed a bond as provided by the Federal statute, now § 270, title 40, of the United States Code Annotated, generally designated as the “Hurd Act.” This bond was executed in the penal sum of $15,000, conditioned that the contractors should perform the work as specified, and that they should promptly pay all persons supplying labor and material in the prosecution of the work provided for in the contract. The contractors began the performance of the contract and continued until July, 1932, when the Government, becoming dissatisfied with the manner in which the contractors were performing the work, exercised the right given it in the contract and notified the contractors that they had failed to exercise proper diligence, and that it would take over the contract, finish the work, charging to the contractors and the surety any excess costs that might be occasioned. The surety thereupon expressed the desire to take over the contract and complete the work. This was acceded to, and a writing was executed designated as a “supplemental agreement.”

The petitioner insists that the obligation of the casualty company to pay the debts incurred by Lynch Bros, during the time they were engaged in the performance of the work and before the Casualty Company took it over arises out of the bond which it executed to the United States Government, and that, because of this, the jurisdiction to hear and determine the controversy is in the United States District Court under the terms of the Hurd Act, supra. This act provides that, if the general government does not bring suit within six months from the completion of the work, those supplying labor and material will be furnished a certified copy of the contract and bond by the department of the Government under whose direction the work is done, and “he or they shall have a right of action and shall be and are hereby authorized to bring suit in the name of the United States, in the district court of the United States in the district in which said contract was to be performed and executed, irrespective of the amount in controversy in said suit and not elsewhere, for his or their use and benefit against said contractor and his sureties.” The act further provides that there shall be only one suit in which all creditors must intervene and have their rights adjudicated upon proper notice.

The- respondent does not question the propriety of the remedy invoked, and concedes that, under the provisions of the statute referred to, supra, as construed by the Supreme Court of the United States in Texas, etc., Co. v. McCord, 223 U. S. 157, 34 S. Ct. 550; Miller v. American Bonding Co., 257 U. S. 247, 42 S. Ct. 98, and United States v. Congress Construction Co., 222 U. S. 199, 32 S. Ct. 44, in suits to enforce liability arising out of the obligations of a bond given under the provisions of that act, jurisdiction is lodged in the United States District Courts and not elsewhere. Respondent contends, however, as previously noted, that the suits filed in the Phillips County Circuit Court are not based upon the bond executed by the casualty company, but upon the contract of July 23,1932, in which it is claimed the Casualty Company agreed with Lynch Bros, to assume their place in the original contract and to complete the same, paying the debts incurred by them while they were engaged in constructing the levee; that this had the effect of substituting the Casualty Company as the principal contractor and subjected it to suits in any courts of superior general jurisdiction.

Article 9 of the original contract between Lynch Bros, and the United States Government provides: “If the contractor refuses or fails to prosecute the work, or any separable part thereof, with such diligence as will insure its completion within the time specified in article I, or any extension thereof, or fails to complete said work within such time, the Government may, by written notice to the contractor, terminate his right to proceed with the work or such part of the work as to which there has been delay. In such event the Government may take over the work and prosecute the same to completion by contract or otherwise, and the contractor and his sureties shall he liable to the Government for any excess cost occasioned the Government thereby. If the contractor’s right to proceed is so terminated, the Government may take possession of and utilize in completing the work such materials, appliances and plant as may be on the site of the work and necessary therefor. If the Government does not terminate the right of the contractor to proceed, the contractor shall continue work, in which event the actual damages for the delay will be impossible to determine, and in lieu thereof the contractor shall pay to the Government as fixed, agreed and liquidated damages for each calendar day of delay until the work is completed or accepted the amount as set forth in the specifications or accompanying papers and the contractor and his sureties shall be liable for the amount thereof. ’ ’

By the terms of the bond, the Casualty Company undertook to guarantee that the contractors would perform and fulfill all of the undertakings, covenants, etc., of the contract, and that they should promptly make payment to -all persons furnishing labor and material in the prosecution of the work. The supplemental agreement refers to the contract first entered into between the Government and Lynch Bros., reciting the execution of the bond with the Casualty Company as surety, and makes said contract and said bond a part of the agreement as “if. physically attached and copied herein.” It further recites the inability of Lynch Bros, to complete the work within the time limited in the contract, and that “it is to the manifest interest of the United States of America, to the contractor and to the surety on the contractor’s bond, that arrangements be made immediately to put on sufficient forces to complete the work called for by said contract within the time therein limited.” It further recites the willingness of the contractor and the United States Government to permit the surety to take over and complete the said contract, and, continuing, provides:

“Now therefore it is mutually understood and agreed by and between James and Leo Lynch, partners doing business as Lynch Brothers, hereinafter designated ‘Contractor,’ and the United States of America, hereinafter designated ‘Government,’ and Maryland Casualty Company of Baltimore, Maryland, hereinafter designated ‘Surety’ as supplemental to said original contract between said government and contractor as follows, to-wit:
‘ ‘ 1. That effective at six o ’clock p. m., July 23, 3932, by and with the consent of the Government, said aforesaid contract for construction of earthwork in the White River Levee District is turned over by said contractor to the said Maryland Casualty Company, its surety, and by these presents the said surety company hereby agrees to perform all the work called for by said contract according to the terms thereof and the plans and specifications made a part thereof.
“2. It is further agreed that the surety shall receive payment for all work performed and materials furnished pursuant to the terms of said original contract of October 31, 1931, between the contractor and Government, and that the surety shall be paid all retained percentages of labor and/or materials thereto before furnished by and due to said contractor under the terms of said original contract, and all sums due said contractor, payment of which is withheld by the Government pursuant to the terms of said original contract, it always being understood and agreed that the government shall have, the right to retain any payments due to it as deductions under the original contract in accordance with the terms and provisions thereof until due thereunder.
“3. The surety agrees and undertakes that it will take over said original contract as of six o ’clock p. m. Saturday, July 23, 1932, and to perform and fulfill all the undertakings, covenants, terms, conditions and agreements of said contract during the original term of said contract as therein stipulated.
“4. The surety further agrees, on final approval of the work by the contracting officer designated in said original contract and receipt by it of final payment of sums due thereunder, to pay or cause to be paid, under direction of said contracting officer, any balance due said original contractor, after payment of costs of completion and all outstanding bills for labor and/or materials, and/or services performed or rendered and/or amounts chargeable against the carrying Out of the contract of the original contractor and the performance of the work undertaken by it under said original contract.”

When, the original contract, the bond and the supplemental agreement are considered together, as they must be, it is clear that the contention that the casualty company took the place of the original contractors can be sustained only as to its operation after the execution of the supplemental agreement, and its liability extended only as to such indebtedness as might be incurred in the prosecution of the work after that date, its relation to the principals in the original contract remaining unaltered as the liability under the first contract and bond to secure its performance is expressly recognized and incorporated in the agreement. Its liability for the payment of all material which had been furnished or work done in the prosecution of the construction before the date of the supplemental agreement was already fixed and the payment guaranteed up to an amount specified in the bond. The argument advanced as a reason for the extension of the liability of the casualty company to the effect that it received a valuable consideration for entering into the supplemental agreement in that it received some six or eight thousand dollars already earned by Lynch Bros, is without merit, as it is apparent under the terms of the agreement that - whatever sums it received, earned by the original contractor, were paid to it only for the purpose of being disbursed in payment for material or labor, and any sums earned above the actual cost of the construction were, by the express terms of the agreement, to be paid to the original contractor.

We are of the opinion therefore that the claims sued on are liabilities of the casualty company only because of its undertaking in the bond, for it is stated and not denied that they are for material and labor furnished to Lynch Bros, before the' Casualty 'Company took over the contract under the supplemental agreement. The provisions of the Hurd Act are therefore applicable, and the claimants must have their rights adjudicated in the United States District Court, the Phillips Circuit Court is without jurisdiction over the subject-matter, and the petitioner is entitled to the relief prayed. Let the writ be granted.

Mehaffy, J.,

(dissenting). I cannot agree with the majority in granting a writ of prohibition against the judge, thereby preventing him from trying the case brought by the plaintiffs against the Maryland Casualty Company.

Section 270 of title 40, U. S. Code, Annotated, provides for persons who enter into contracts with the United States for certain purposes, giving a bond with good and sufficient securities. The section also provides that persons furnishing labor or materials shall have a right to intervene and be made parties to any action instituted by the United States on the bond of the contractor. The section also provides that, if suit is not brought by the United States within six mbnths, persons supplying the contractor with labor or materials shall have a right of action and are authorized to bring suit in the district court of the United States, and not elsewhere.

It will be observed that this provides for a suit on the bond of the contract. The suits in this case were not on the bond. The facts are stated in the majority opinion, and will not be restated here.

One of the sections of the supplemental contract is as follows: “The surety agrees and undertakes that it will take over said original contract as of six o’clock p. m., Saturday, July 23, 1932, and to perform and fulfill all the undertakings, covenants, terms, conditions and agreements of said contract during the original term of said contract as therein stipulated. ’ ’

In section 4 the surety company agrees to pay or cause to be paid any balance due the original contractors after payment of costs of completion and all outstanding bills for labor or materials. It is therefore expressly agreed that it will take the place of the contractor, and not only complete tlie work, hut pay all outstanding- hills, bills that were outstanding- at the time it took over the contract. It was upon this agreement, and upon the taking over the contract by the surety company, that these suits were based. They were not based on the bond, and the Federal Court would have no jurisdiction, and there is no authority under the Hurd Act for bringing a suit of this kind in the Federal Court. The Hurd Act authorizes suits brought in the Federal Court where the suit is on the bond. ■

A suit was brought in the State court in New York on an agreement of the contractor to give bond. He had entered into the contract and promised to give the bond required by the Hurd Act, but had failed to do so. The city court held that there was no remedy whatever. The case was then appealed, and the appellate term took the view that the contractors’ obligation was independent of the bond, which was important only as fixing the obligation and defining the procedure in an action against the surety. The judgment of the city court was reversed, and the cause was then tried in the appellate division, which reversed the judgment of the appellate term holding that the proper remedy was an action in the Federal Courts, the procedure to be the same as if the bond were in existence.

The Court of Appeals in New York held that the judgment of the appellate term must be affirmed, that is, that the contractors’ obligation was independent of the bond, and that the suit was properly brought in the State court.

As I have already said, this suit was not brought on the bond, but was brought on the supplemental contract. Whether the plaintiffs were entitled to recover on that contract is not involved. Certainly the bond was not in any way involved, and, that being true, the circuit court had jurisdiction. It is wholly immaterial whether the plaintiffs could have recovered, but, under the pleadings, the suit, I think, was unquestionably within the jurisdiction of the circuit court.

When the contractor failed and the surety took the place of the contractor, it became liable as a contractor, without any regard to whether it had signed a bond or not. Besides that, it expressly agreed to pay all claims. It was not liable for all claims under bond, but was only liable for $15,000. The surety took over the contract for its protection. It received a considerable sum of money that was due the contractors, and received the retained percentages, and whatever profit it made by completing the work.

I think the effect of the majority opinion is practically the same as the holding of the city court in New York in the case above cited. This is, that the material furnishers and laborers were without remedy.

A contract was made for the construction of a courthouse in Lenawee County, Michigan, and bond was given with sureties for the due performance of the contract. The contractors proceeded, for a time, just as Lynch Bros, did in this case, and then failed, and the sureties for their own protection took an assignment of the contract and went on with the work. The claims sought to be collected were claims against the original contractors, and not contracted after the sureties took charge. The court said:

“In our opinion that is an immaterial fact. The relators step into the shoes of the contractors.” Knapp v. Swaney, 23 N. W. 162; United States to use of Zambetti v. American, Fence Const. Co., 15 Fed. (2d) 449.
“The claims and demands of the casualty company, the plaintiff in this action, are based in large part upon the provisions of the contracts made by the Board of Water Commissioners with the Loyd Company, for which the bonding company was surety. All the facts lead to the conclusion that what happened in this case was that the surety company elected to complete the contracts of its principal. When it did so, it took the place of the contractor.” Maryland Cas. Co. v. Bd. of Water Com’rs, 43 Fed. (2d) 418.
“The surety was already engaged in carrying out the original contract, and it continued therein to the end. * * * When the surety elected to complete the contract, it took the place of the contractor. The law is not that it thereby only took the possible benefits of that position. Its position was no different to that of an assignee of the contract. Such assignee would take subject to all prior mechanics’ liens; and so did the surety.” Harley v. Mapes-Reeve Const. Co., 68 N. Y. S. 191.
‘‘When contractor-stopped, surety simply took its place and went on to finish the work. What its rights may have been if it too had declined to finish, and commissioners had completed, are matters and questions not before us. What did happen was that the surety stepped into the contractor’s shoes and finished the work, and neither surety nor commissioners were in any different position than if contractor had itself finished the work and called on the commissioners to settle.” Fidelity & Deposit Co. of Md. v. Hay, 9 Fed. (2d) 749.

I think it would be unjust and unreasonable to hold that the surety company could take over the work when the contractors failed, in the manner that the surety company did in this case, and then be relieved from liability or require the parties to go into Federal court, where they would only get their proportionate share of the $15,000, if they could, in fact, recover anything.

I think the writ should have been denied.