author: McHaney, J.

text:
    Southwestern Gas & Electric Company v. Patterson Orchard Company.
    Opinion delivered October 14, 1929.

      Abe Collins and Arnold $ Arnold, for appellant.

      Lake, Lake & Carlton, for appellee.
   McHaney, J.

The principal facts involved in this controversy, as well as the history of this litigation, are well stated in the recent case of Patterson Orchard Co. v. Southwest Arkansas Utilities Corporation, 179 Ark. 1029, 18 S. W. (2d) 1028, and we will not repeat them here, except as may he necessary to a proper understanding of the issues here decided.

Appellant, Southwestern Gas & Electric Company, is a foreign corporation, hut for some years has been doing business in this State in compliance with all laws regulating the admission of foreign corporations into this State. It is engaged in the business of supplying electricity to consumers, owning, constructing and operating high tension lines and distributing systems. In the construction of one of its high tension lines, it sought a thirty-foot right-of-way over and across the orchard lands of appellee, which it was unable to obtain by negotiation. It thereupon, on March 17, 1928, filed with the clerk of the circuit court of Sevier County its petition to condemn said right-of-way, and thereafter, on the same day, presented same to the circuit judge, and obtained an order directing a deposit with the clerk of a, certain sum of money, and giving authority to enter upon said land and construct its lines. No notice was given appellee of this application. On March 20, on application of appellee, the judge made another order holding in abeyance his first order, which was served on appellants at a time when the line was practically completed across the orchard. This second order was made by the judge for the reason that the Southwestern Company is a foreign corporation, and not authorized under the Constitution to condemn property. The Southwest Arkansas Utilities Corporation was then organized, and brought its action in the circuit court to condemn the same right-of-way across the orchard. On motion of appellee the cause was transferred to the chancery court, which proceeded to decree in plaintiff’s favor, conditioned as follows: “Conditioned, however, upon the payment to the defendant by the plaintiff * * * one thousand dollars, covering all damages sustained by the defendant on account of the taking of said right-of-way by the plaintiff,” etc.

The defendant in that action is the appellee here. That decree was affirmed by this court on July 8, 1929, as above stated, both on the appeal and cross-appeal, appellee contending in that case that the damages assessed were excessive.

In the original action by appellant, the Southwestern Company, appellee filed an answer and cross-complaint, alleging that said appellant had no authority to condemn its property, and that it had been damaged on account of the wrongful entry upon its lands in the sum of $500 actual damages and $5,000 punitive damages. On a trial to a jury there was a verdict and a judgment in favor of appellee for $700.

The Southwestern Company will be hereafter referred to as appellant, although there are several other appellants against whom the judgment was obtained.

The first question presented is whether a foreign corporation, having complied with our foreign corporation laws, may condemn private property. Section 11 of article 12 of the Constitution of this State reads as follows:

“Foreign corporations maybe authorized to do business in this State under such limitations and restrictions as may be prescribed by law. Provided, that no such corporation shall do any business in this State except while it maintains therein one or more known places of business, and an authorized agent or agents in the same upon whom process may be served; and, as to the contracts made or business done in this State, they shall be subject to the same regulations, limitations and liabilities as like corporations of this State, and shall exercise no other or greater powers, privileges or franchises than may be exercised by like corporations of this State, nor shall they have power to condemn or appropriate private property. ’ ’

The Legislature of this State has never undertaken to extend the power of eminent domain to foreign corporations. By an act approved March 22, 1887, act No. 80, p. 110, entitled, “An act to prohibit foreign corporations from operating railroads in this State,” it was made unlawful for any citizen or corporation of another State to “build, lease, own, maintain or operate a railroad within this State,” and all such persons or corporations were required to organize domestic corporations for this purpose. By act 34, Acts of 1889, p. 42, certain sections of the act of 1887 were repealed, and other sections added which provided, among other things, that when a foreign railroad company complied with the law by filing with the Secretary of 'State a certified copy of its articles of incorporation or ¡charter, it thereby “became a corporation of this State, anything in its articles of incorporation or charter to the contrary notwithstanding.”

In Russell v. St. L. S. W. Ry. Co., 71 Ark. 451, 75 S. W. 725, this court held that: “Upon a compliance with the act of 1889 a railroad corporation of another State becomes a corporation of this State, with all its rights and powers, and subject to all its duties and obligations,” including the power or right of eminent domain. The opinion in that case is based upon the language of the act of 1889, which provides that, upon doing the things heretofore stated, a foreign corporation becomes a domestic corporation. This statute stood unamended and unchanged as § 8424, C. & M. Digest, until 1925, when, by act 254, Acts 1925, p. 745, it was amended to' include pipe lines, but not power lines.

Of course, by complying with said statute, the foreign corporation does not surrender its identity as a foreign corporation, but continues for jurisdictional purposes to be a corporation of the State of its creation, and may remove proper cases to the Federal courts. It is, however, domesticated in thisi State, and, to all intents and purposes, in connection with its business in this State, is a corporation of this State. It becomes the adopted child of this (State. -But not so as to all other foreign corporations. Nowhere do we find in our foreign corporation laws any language that malees them corporations of this ¡State. Upon compliance with our laws they are given all the powers of domestic corporations, except such as are prohibited by the Constitution. The power of eminent domain is expressly extended to traction, light and power companies organized in this State by § 4042 et seq., C. & M. Digest, but not to foreign companies, the Legislature evidently considering that it had no power to do so without first requiring them to become domesticated.

The Russell case, supra, was cited in L. & N. W. Rd. Co. v. State, 75 Ark. 435, 88 S. W. 559, 5 Ann. Cas. 637, and on page 441 this language is used: “This court held in Russell v. St. L. S. W. Rd. Co., 71 Ark. 451, 75 S. W. 725, ¿hat a foreign railroad corporation complying with the iws of this State becomes a domestic corporation, an . capable of exercising eminent domain, which can only be exercised by domestic corporations.” We therefore conclude that a foreign corporation, such as appellant, cannot exercise the power of eminent domain because prohibited by the 'Constitution of this State.

The next question for our determination is, was appellee entitled to recover any damages from appellant, a requested peremptory instruction having been refused it? It contends that appellant was a trespasser on its property; that counsel for appellant obtained the order from the circuit judge permitting it to enter in bad faith; and that fraud was practiced on the judge in procuring the order in that the fact that it is a foreign corporation was concealed from him, the allegation in the petition being that it was a corporation authorized to do ¡business in this State, without stating that it was a foreign corporation. It is further said that the petition was not filed with the clerk until the 20th, when appellant was ready to enter on the land, and that this is an evidence of bad faith. We do not agree with appellee. Mr. Collins, counsel for appellant, testified quite positively that he did file the petition with the clerk on the 17th, and before the matter was presented to the judge; that he did not know why it showed filed on the 20th; that he gave appellee no notice for the reason the statute does not require it. The clerk says he thinks the petition was handed him a few days before the 20th, the day it was actually marked filed; that he swore Mr. Leighton to the complaint on the 17th, and the complaint or petition was in his office at that time. His memory was uncertain as to what actually happened. This question is only material in determining whether the matter was before the judge. No question of the jurisdiction of the court is raised. The order was obtained by . eminent counsel, who, in good faith, tried out the question as to the right of a foreign corporation, such as appellant, to condemn private property, both in the lower court and in this court. The argument made in this court is of such persuasive force that Mr. Justice Kirry and the writer are not entirely satisfied they are not right about it. And, while we are holding that they are wrong in this contention, it does not follow that they are not in good faith in making it. Having obtained the order in good faith, 'and haying constructed the line pursuant to it, appellant could not have been guilty of such a willful and malicious wrong by entering under a void order as to justify a recovery of punitive damages. It in good faith believed it had the right to enter, and there is a total lack of evidence of malice, either express or implied, which is necessary to support a recovery for punitive damages. Texarkana Gas & Electric L. Co. v. Orr, 59 Ark. 215, 27 S. W. 66, 143 Am. St. Rep. 30; St. L. 1. M. & S. R. Co. v. Wilson, 70 Ark. 136, 66 S. W. 661, 91 Am. St. Rep. 74; Ry. Co. v. Stroude, 77 Ark. 109, 91 S. W. 18, 113 Am. St. Rep. 130; Moore v. Wilson, ante p. 41.

Neither can there be any recovery for actual damages in this case. The decree in the case of Patterson Orchard Co. v. S. W. Ark. Utilities Corp., supra, specifically recites that the $1,000 paid shall cover' “all damages sustained by the defendant (appellant here) on account of the taking of said right-of-way by the plaintiff.” There is no showing that appellant did any damage to appellee’s property outside of the thirty-foot right-of-way, and only slight damage to it, which was paid for by the Southwest Arkansas Utilities Corporation. The principal damage was the value of the property taken, and that, as well as all other actual damages, was recovered in the former suit. Manifestly appellee is not entitled to recover twice for the same property.

Nor is appellant entitled to recover from appellee the damage done by it in cutting down two of its structures after they were constructed on the land without authority of law. It sold its line in its then condition to the Southwest Arkansas Utilities Corporation, and its right to maintain such action passed to the latter. The court properly refused to submit this question to the jury-

The judgment will be reversed, and the cause dismissed. It is so ordered.

Mehaffy and Butler, JJ., dissent.


source: Caselaw Access Project

author: McIIaney, J.

license: Public Domain

text:
    Unionaid Life Insurance Company v. Powers.
    Opinion delivered October 14, 1929.

      J. V. Walker, Bullion <& Harrison, Creed Caldwell and Duty é Duty, for appellant.

      George H. Holmes, for appellee.
   McIIaney, J.

These are eight separate cases involved in separate appeals, which have been consolidated and briefed together as one case in this court. As regards the venue of the actions, they are all ruled by the recent case of Unionaid Life Ins. Co. v. Smith, 179 Ark. 164, 15 S. W. (2d) 321, where a like state of facts existed, like procedure followed, and conclusions of law reached, a/fter analysis of the applicable statutes, contrary to the contentions of appellant, both in that appeal and in these. We are asked, however, to reconsider that casé, and overrule it. We have given careful consideration to the argument of learned counsel for appellant, and decline to do so.

Another question is presented in these cases, “that the judgments were void because the suits were for claims for unliquidated damages for an alleged breach of contract, and there was no evidence offered or submitted to sustain the allegations.” But the judgment of the court recites that the ease was submitted to it on “the complaint filed, the exhibits thereto, and .the summons issued thereon, and the evidence adduced by the plaintiff. ’ ’ The complaint alleged that the certificate of insurance was attached thereto as Exhibit A. This exhibit does not appear in the transcript, and ‘ the evidence adduced by the plaintiff” is not brought into the record by bill of exceptions. W& must, therefore, indulge the presumption that the complaint stated a cause of action on the certificate of insurance, and that the evidence adduced was sufficient to sustain the judgment. There was no demurrer or other pleading to the complaint, and, even though the cause of action declared upon were defectively •stated, there is a conclusive presumption that the evidence sustains the judgment, and this court will treat the complaint as being amended to conform to the proof. Rowe v. Allison, 87 Ark. 206, 112 S. W. 395; Dumas v. Crowder, 178 Ark. 489, 10 S. W. (2d) 43.

The record does not show that the court impaneled a jury to assess the damages. This was not necessary under § 6248, O. & M. Digest.

We find no error, and the judgment is affirmed.

Butler, J., disqualified.


author: Butler, J.

text:
    Butler v. Johnson.
    Opinion delivered October 14, 1929.

      A. D. Murphy and T. O. Abbott, for appellant.

      Herbert V. Betts and N. A. Cox, for appellee.
   Butler, J.

An illiterate negro man, Abe Johnson, purchased from one J. W. Young, in 1894, an eighty-acre tract of land in Union County, Arkansas, and went into possession thereof under his purchase, which was evidenced by the following instrument:

“Articles of agreement made the 19th day of....................., 1894, between J. W. Young of Lisbon, Union County, Arkansas, party of the first part, and Abe Johnson of Lisbon, Union County, Arkansas, party of the second part, witnesseth: That the said party of the first part, for............... in consideration of the sum of one dollar, to him in hand paid, has contracted and agreed to sell to the said party of the second part all that certain piece or parcel or lot of situated in Union County and above said State, and described as follows: Northeast southwest section 28, township 16, range 17, 40 acres; southeast northwest section 28, township 16, range 17, 40 acres.
“And the said party of the first part agrees to execute and deliver to the said party of the second part a warranty deed for said land described above, provided and upon condition, nevertheless, that the said party of the second part, his heirs or assigns, pay to said party of the first part, his heirs or assigns, for the said land the sum of forty-two dollars ($42), to be paid on the first day' of November, 1894, in lawful money, and forty dollars ($40) to be paid on the first day of November, 1895, to be paid to J. W. Young, of the first part. If the second party should fail to meet his payment, or his heirs or assigns, he then forfeits his claim on said land as described above. Then, and in such case, the said party of the first part, his heirs and assigns, shall be at liberty to consider the contract as forfeited and annulled, and to dispose of said land to any other person in same manner as if this contract had never been made.
“In witness whereof they have hereunto set their hands and seals, and delivered.
“J. W. Young, his
“Abe X Johnson.’’ mark

At the time of the institution of the suit, both Young and Abe Johnson had been dead for some years. On the 23d of April, 1928, the appellees, Sylvester Johnson and others, as the heirs at law of Abe Johnson, deceased, brought suit in the Union Chancery Court to have their title quieted to the aforesaid lands, and for certain deeds, held by the appellants, A. J. Butler and A. W. Friend, to be canceled as clouds upon their title. The appellants, Butler and Friend, and one R. L. Edwards, who was joined as a party defendant, answered, denying the title of the appellees, and setting up title in themselves, A. J. Butler claiming the south forty acres of the land in controversy by virtue of a deed from the Ouachita Valley Bank, executed and delivered November 1, 1917, which bank claimed title under a deed from J. W. Young, dated May 8, 1916; and A. W. Friend claimed title to the north forty acres under a deed from J. W. Young, dated December 30,1920.

R. L. Edwards was sued for the value of the timber out from the land, and answered, admitting the cutting of the timber, but denying the quantity and value as alleged by plaintiffs, and alleging that he purchased same without any knowledge of plaintiffs’ claim to said land or timber.

There was a decree for the appellees, canceling the deeds of Butler and Friend, and awarding judgment in their favor against the defendant Edwards for the sum of $195 for the timber cut by him on said land.

The appellants assert, as grounds for reversal, that the preponderance of the testimony failed to show that appellees or their ancestor had paid the consideration named in the instrument supra; 'that said instrument was not such color of title as to extend the occupancy of appellees to the boundaries of the land named therein; that the evidence failed to show adverse possession of the appellees or their ancestor for the statutory period; and that the decree of the chancellor as to all these particulars was against the preponderance of the testimony.

It is undisputed that Abe Johnson went into possession of the land in controversy in 1894, and remained in continuous possession until his death in 1921, and that since that time appellees’ children have remained and are now in possession thereof. The facts disclosed by the testimony relative to the payment by Johnson of the purchase price are meagre, but we think, from a careful consideration of all the testimony introduced, that the preponderance of the testimony tended to establish the fact of payment, and the chancellor was correct in his finding in this respect. Johnson cleared and put in cultivation, a short time after his purchase, a small tract of land on the north forty, and kept the same inclosed and cultivated for many years. He built his cabin and outbuildings on the south forty soon after his purchase, and lived there until he died, and his children (appellees) still live there. The chancellor has found that the purchase price was paid by Abe Johnson, and that his possession, after the payment of the purchase price, was open, notorious, continuous, and adverse to the rights of the appellants and all others, which possession has remained uninterrupted from the date of purchase until the institution of this suit, an interval of some thirty-two years.

As suggested by the appellants, this court has held in White v. Stokes, 67 Ark. 184, 53 S. W. 1060, and Beasley v. Equitable Securities Co., 72 Ark. 601, 84 S. W. 224, 228, that a bond for title is not color of title. But those were cases passing upon the right of the occupant to recover the value of improvements placed in good faith upon the land purchased and held under a bond for title the right to the improvements being based upon the statute, now § 3703, Crawford & Moses’ Digest, giving those in possession of land under color of title and claiming title in good faith right to recover for improvements when ousted by a paramount title. - In Beasley v. Equitable Securities Co., supra, the court, among other things, said: “It does not appear in this case that the occupant, Beasley, who made the improvements, was or is entitled toa conveyance or title, according to the conditions of his bond. 'So it is not necessary to say what would have been the effect of his bond if he had complied with its conditions.” But, as the facts in the case at bar and the claim of the appellees are different from that of the cases cited, the same are not in point. In this case the claim is ownership under a purchase, the consideration for which was paid, and the instrument executed by J. W. Young to Abe Johnson, heretofore set out in this opinion, is but one of the links in the evidence showing the purchase from J. W. Young", and it is immaterial whether it of itself would constitute a color of title; for the title claimed by the appellees does not rest upon the aforesaid instrument, but upon the payment of the purchase money and the possession taken by virtue of the purchase and continuing uninterruptedly from the time of the payment of the purchase price agreed upon. The sale and payment of the purchase price, perfected by possession for more than seven years, gave Johnson legal title (Brown v. Norvell, 74 Ark. 484, 86 S. W. 306), and where this possession has been open, peaceable, continuous and adverse for a long period of time, as in this case, the presumption arises that a deed to the property has been executed. Garter v. Goodson, 114 Ark. 62, 169 S. W. 806; Carter v. Stewart, 149 Ark. 189, 231 S. W. 887.

It follows that the title, having vested in the ancestor of the appellees, the possession of only a portion of each of the forties included in the purchase is extended to the boundaries of the lands described. Brown v. Norvell, 96 Ark. 609, 96 S. W. 609; Connelly v. Dickinson, 81 Ark. 258, 99 S. W. 82.

In this case, as to the south forty, on which was located the dwelling of Abe Johnson, the appellant Friend, who is the claimant of that tract, contends that whatever title Johnson had to it was divested by reason of a sale for the taxes of 1918, and the deed made pursuant thereto, executed May 18, 1920, in which J. W. Young, his grantor, was named as the party grantee. It is insisted by the appellees that the tax deed was void on its face, and therefore conveyed nothing. It is not necessary to set out the deed or to discuss its validity, for the reason that, after its execution, the appellees and their ancestor remained in actual and adverse possession of the lands for more than seven years. McCrary v. Joiner, 64 Ark. 547, 44 S. W. 79; Moorehead v. Dial, 134 Ark. 548, 204 S. W. 424.

Appellant R. L. Edwards admitted cutting and converting the timber. He only questioned the amount and value, and the title of appellees. The evidence justified the finding of the chancellor as to the value of the timber; and, as the title was found to be in appellees, it follows that the judgment against him was correct.

There appearing no error, the decree is affirmed.


author: Hart, C. J.,

text:
    Norfleet v. Stewart.
    Opinion delivered October 21, 1929.

      Robinson, House <& Moses and C. W. Norton, for appellant.

      Coleman & Riddick, for appellee.'
   Hart, C. J.,

(after stating the facts). The theory of appellee was that appellant was a member of the firm of Norfleet & Norfleet, who had been employed as attorneys by Pugh in the civil damage suit, and that, under the terms of the employment, the firm would continue to represent the appellee in the damage suit until the case was settled or decided in the Supreme Court of the State of Arkansas.

On the other hand, it was the contention of appellant that he was not a member of the firm of Norfleet & Nor-fleet, and that it was distinctly agreed that he should receive the sum of $1,000 for his legal services in effecting a compromise and settlement of the judgment against appellee in the damage suit.

Thus it will be seen that the record presents for our consideration the question of whether or not appellant was one of the attorneys for appellee in the damage suit, and, if so, what duties he owed to his client in effecting the settlement. The chancellor made a general finding of fact in favor of appellee, and this included the finding that appellant was a member of the firm of Norfleet & Norfleet, and was one of the attorneys for appellee at the time the compromise and settlement were effected. Appellant admits that his father was to continue as attorney for appellee if the case was carried to the Supreme Court. He denies, however, that he was a member of the firm.*

We are of the opinion that the chancellor was justified in finding him to be a member o'f1 the firm of Norfleet & Norfleet. They had a common reception room, and private offices opening' into it. Appellant admitted that they were employed in some cases together, and that he did all of his father’s typewriting. Their stationery carried the name of Norfleet & Norfleet as a firm, with the names of the individual members on each side of the firm name. Appellant did some work in connection with the trial of the damage suit. He went with the other attorneys in the case to Memphis to see about a continuance of the case. The firm name was signed to the pleadings in the case. Appellant was present for a part of the time at the trial. He was understood to be a member of the firm, and was, on that account, called into conference about preparing the brief, and later acting for appellee in trying -to effect a compromise and settlement of the judgment. He accepted the payment of $750 fee in the name of Norfleet & Norfleet as a firm, and carried on all the correspondence about the matter as if he was a member of the firm of Norfleet & Norfleet. Under these circumstances, it was natural for appellee to understand that he was a member of the firm of Norfleet & Norfleet and consequently one of the attorneys in the case. All the attendant facts tended to show that he was a member of the firm, and the chancellor was justified in so finding.

This brings us to a consideration of what were his duties about effecting the settlement and compromise. A fiduciary relation exists between attorney and client, and the confidence which the relationship begets between the parties makes it necessary for the attorney to act in the utmost good faith. He must not only not misrepresent any fact,to his client, but there must be an entire absence of concealment or suppression of any facts within his knowledge which might influence the client, and the burden of establishing the fairness of the transaction is upon the attorney. This rule is of universal application, and is recognized by all of the text-writers on the subject.

The question was the subject of a thorough discussion and review of the authorities in the case of Thweatt v. Freeman, 73 Ark. 575, 84 S. W. 720. The court quoted with approval from other decisions that all transactions between attorney and client, to be upheld in a court of equity, must be in the utmost good faith, and the burden is on the attorney to show not only that no advantage was taken, but that he gave his client all the information and advice about the matter that was necessary to enable the client to act understandingly. In such cases the attorney must show that the transaction was perfectly fair and that it was entered into with such an understanding of the matter as would enable the client to know thoroughly the scope and effect of it. In other words, the attorney must show the transaction to have been the “pure, voluntary, and well-understood act of the client’s mind, otherwise a court of equity will undo it as having been unduly obtained.”

In the earlier case of Jett v. Hempstead, 25 Ark. 462, this court recognized that it was the duty of an attorney to advise the client promptly whenever he has any information to give which it is important that his client should receive.

The rule is on the ground of public policy, and prevails though the attorney may not intend to deceive, and acts- in good faith. Actual fraud in such cases is not necessary to give the client a right to redress. A breach o'f duty is constructive fraud, and is sufficient. Baker v. Humphrey, 101 U. S. 494.

This rule was recognized and applied in Maloney v. Terry, 70 Ark. 189, 66 S. W. 919, 72 S. W. 570, where it was held that chancery has jurisdiction of a suit by a client to have his attorney declared a trustee, where the attorney, in settling a claim against the client, fraudulently procured and retained a greater sum than was paid to settle the claim, although an action at law for money had and received would also lie.

The reason for the rule is clearly and comprehensively stated in Baker v. Humphrey, 101 U. S. 494, as follows:

“The legal profession is found wherever Christian civilization exists. Without it, society could not well go on. But, like all other great instrumentalities, it may be potent for evil as well as for good. Hence the importance of keeping it on the high plane it ought to occupy. Its character depends upon the conduct of its members. They are officers of the law, as well as the agents of those by whom they are employed. Their fidelity is guaranteed by the highest considerations of honor and good faith, and to these is superadded the sanction of an oath. The slightest divergence from rectitude involves the breach of all these obligations. None are more honored or more deserving than those of the brotherhood who, uniting ability with integrity, prove faithful to their trusts and worthy of the confidence reposed in them. Courts of justice can best serve both the public and the profession by applying firmly upon all proper occasions the salutary rules which have been established for their government in doing the business of their clients. ’ ’

The instant case calls for an application of the rule. According to the testimony of the appellant himself, he misconceived his duty to his client, and thought he could deal with them at arm’s length. He admits that lie was aslced wliat lie was going to do with the $1,000, but stated that it would have to be paid to him for his legal services before he would effect the settlement. This condition he had no right to impose. Under the authorities above cited, it was his duty to have effected the settlement without asking or imposing as a condition therefor that he should be paid an additional compensation. It does not make any difference whether he intended to defraud his client or not. Equity treats the case as one of constructive fraud, and it was his duty to have made a full and fair disclosure of everything connected with the settlement to his client, and to advise his client that the settlement could be made without the payment of an additional fee to Miry His employment kept him from imposing such a condition to effect the settlement.

In this view of the matter no useful purpose could be served by a further discussion and review of the testimony. We deem it sufficient to say that it becomes our duty, in the application of the well-settled rule on the subject above announced, to declare that the decree of the chancellor was correct, and it will therefore be affirmed.


text:
    Home Life Insurance Co. of New York v. Masterson.
    Opinion delivered October 21, 1929.

      Bloch $ Kirsch and G. T. Bloodworth, for appellant.

      F. G. Taylor and M. P. Huddleston, for appellee; Oliver & Oliver, for interveners.
   Hart, C. J.,

(after stating the facts). The first question which we shall .consider is whether or not the $9,000 policy was a wager contract. This court is committed to the rule that the issuance of a policy of life insurance to one who has no insurable interest in the life of the insured, but who pays the premium for the chance of collecting the policy, is invalid, as the contract is a wager, and against public policy. McRae v. Warmack, 98 Ark. 52, 135 S. W. 807, 33 L. R. A. N. S. 949. In that case it was also held that the assignment of a policy of insurance to one having no insurable interest in the life of the insured, although issued to one having such interest, is invalid if made in pursuance of an agreement made at the time of the issuance of the policy.

Again, in Page v. Metropolitan Life Insurance Company, 98 Ark. 340, 135 S. W. 911, it was held that the assignment of a life insurance policy to one not having an insurable interest in the life of the insured is not objectionable as being by way of cover for a wager policy, unless, at the time the policy was taken out, the insured intended to make such assignment.

This court has adhered, steadily to this ruling, and it has been uniformly held that a wagering contract of insurance is contrary to public policy, and void. Cotton v. Mutual Aid Union, 132 Ark. 458, 201 S. W. 124; Southern Mutual Life Ins. Co. v. Perry, 144 Ark. 512, 222 S. W. 1067; American Insurance Union v. Manes, 150 Ark. 315, 234 S. W. 496, 18 A. L. R. 1161; and Mutual Aid Union v. White, 166 Ark. 467, 267 S. W. 137.

The assignment of a policy to a party not having an insurable interest is as objectionable as the taking out of a policy in his name, where this is done as a cover for the true transaction. The intention of the parties determines the character of the transaction, which the courts will unhesitatingly declare in accordance with the facts, reading the policy and the assignment together, in connection with the attendant circumstances, as forming part of one transaction. Cammack v. Lewis, 15 Wall. (U. S.) 643; Warnock v. Davis, 104 U. S. 775; and Steinback v. Diebenbrock, Executrix, 158 N. Y. 24, 52 N. E. 662, 44 L. R. A. 27.

It is true that the $9,000 policy was applied for on the 26th day of November, 1924, and' was not assigned to B. F. Masterson until June 27, 1926, but the attendant circumstances indicated that it was one transaction. While Dr. Blackwood denied that he was interested in the policy, the evidence shows that he paid the first premium, and that he and Masterson were intimate friends. Masterson lived in the country, and never went to town without visiting him. He had no business except that of farming, and took the assignment of the policy to himself for a debt of $99. This of itself tended to show that the transaction was a mere wager. Masterson admitted that he knew at the time that Hays had a yellow, jaundiced look, and was not in very good health. He Icnew that Hays was in poor financial condition, and said that he would not lend him much money without security. In detailing the circumstances of the transaction, he said that he met Hays accidentally, and that the latter had the policy with him, and that he acted on his own judgment in taking the assignment. He did not ask Hays whether he had paid the first premium or how he obtained the money to do so. At this time Hays owed him a small amount of money, and had been unable to pay him. Hays at the time looked like he was full of malaria, or had liver trouble. He had nothing to do with making up the proof of death of the insured. This was done by Dr. Black-wood. He did not know that Gilbert Hays had made him a beneficiary in his will until after his death.

Under these circumstances the policy is none the less a wagering contract because of the form of it. It does not make any difference that the policy was payable to the estate of the insured, and that the assignment was made several months after the issuance of the policy, where the attendant circumstances show that it was the intent of the parties to evade the law, and that the assignment was by way of cover for a wager policy. The transaction was so out of the ordinary and so contrary to business experience that the circumstances attending the transaction point to the fact that it was the intention of the insured and Hr. Blackwood and Masterson to take out a policy payable to the estate of the insured, and afterwards to have it assigned to Masterson as a cover for a wager policy.

Another policy for $5,000 had already been assigned to Dr. Blackwood, and both of these policies had been issued to a man whom the undisputed evidence shows not to have been able to make a living for his family. He was conducting a small barber shop, and was assisted by his father and brothers in supporting his family, because he was not able to do so on account of his bad health. The undisputed evidence shows that he came out of the war with a jaundiced look, and had either malaria or a bad case of liver complaint. Dr. Blackwood himself admitted that he had advanced him considerable sums of money for living expenses, and had been his physician without pay. Therefore we are of the opinion that the chancellor was correct in holding that the $9,000 policy was a wagering contract, but that he erred in holding that there was not sufficient evidence to connect the plaintiff with the transaction.

It is next insisted that the policy became incontestable after one year from the date of its issuance. Reliance is placed by counsel upon the case of Missouri State Life Ins. Co. v. Cranford, 161 Ark. 602, 257 S. W. 66, 31 A. L. R. 93, where it was held that a life insurance policy containing a provision that it shall be incontestable after a stipulated time cannot be contested by the insurer on any ground not excepted in that provision. We do not think that case, however, is applicable under the present facts. There the court was talking about provisions inserted in the policy for the benefit of the insurer, such as false representations and other matters of that sort, Which the company might waive. The court said that the parties to a contract may provide for a shorter statute of limitations thereon than that fixed by law, and that such an agreement is in accord with the policy of statutes of that character. Wager insurance policies, however, are void on the ground of public policy. The rule of law which avoids such contracts is not in the interest of the insurer, but has its foundation in sound public policy. The insurer cannot by an agreement change the policy of the law. Since it is the law which, upon grounds of public policy, pronounces the policy to be void, the doctrine of estoppel has no application. Anctil v. Manufacturer’s Life Ins. Co., A. C. 604, affirming Can. S. C. 103.

This distinction has been recognized by the Court of Appeals of Kentucky. In the Cranford case we cited the case of Kansas City Life Ins. Co. v. Whitehead, 13 Ann. Cas. 301, where the Court of Appeals of Kentucky held that an incontestable clause is valid, and that such clause, in depriving the insurer of benefits based upon the fraud of the insured, is not void as against public policy. That case is also reported in 123 Ky. 21, 93 S. W. 609.

In the case of Bromley v. Washington Life Ins. Co., 122 Ky. 402, 5 L. R. A. N. S. 747, 121 Am. St. Rep. 167, 12 Ann. Cas. 685, the court held that a policy of life insurance, void because contrary to public policy as a wagering contract, was not rendered actionable by an incontestable clause. The court said that, if this were allowed, then the law might be evaded in all such cases, and the aid of the court might (be secured in enforcing a contract which was illegal and void because against the public policy of the State. The contract being one that was contrary to public policy, the defense that it was void is allowed, not for the sake of the defendant, 'but for the law itself. As said by the Supreme Court of the United States, the principle in such cases is indispensable to the purity of the administration o'f the law.

The Kentucky court quoted with approval from Hall v. Coppell, 7 Wall. (U. S.) 599, the following: “The defense is not allowed for the sake of the defendant, but of the law itself. The principle is indispensable to the purity of its administration. It will not enforce what it has forbidden' and denounced. The maxim, Ex dolo malo non oritur actio, is limited by no such qualification. The proposition to the contrary strikes us as hardly worthy of serious refutation. Whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralize its effect. A stipulation in the most solemn form to waive the objection would be tainted with the vice of the original contract, and void for the same reasons. Wherever the contamination reaches it destroys. The principle to be extracted from all the cases is that the law will not lend its support to a claim founded upon its violation.”

The result of our views is that the decree of the chancery court as to the $9,000 policy will be reversed, and the cause remanded, with directions to the chancery court to dismiss the complaint of the plaintiff Masterson on the $9,000 policy, and to dismiss the intervention of Annie Hays, administratrix, on the same policy for want of equity.

On the $5,000 policy suit by the First National Bank of Corning, but little need be said. The principles of law announced above apply equally to the suit of the bank in that ease, and the intervention of the administratrix of the estate of Gilbert Hays, deceased, but the facts call for an application of the principles in a different way. According „to the testimony of Dr. Blackwood, which was not disputed, and which was found by the chancery court to be true, he had advanced Gilbert Hays something over $1,800 in medical services, and in money given to liim for living expenses. TMs amount was not so disproportionate to the amount of the insurance policy as to indicate that it was a mere wager. There was an absolute assignment by the insured of this policy to Dr. Blackwood, but the chancellor held that, under the circumstances, the assignment was not an absolute one, but was intended as collateral security to insure him against the indebtedness owed him by the insured. We think this view of the matter is reasonable. The policy was made payable to the estate o'f the insured. Dr. Blackwood was his friend and medical adviser. He was bound to have known that the insured was in bad health, and that his financial condition was not such as to warrant him in making a gift to any one. The entire attendant circumstances indicated that it was only the intention of the insured to transfer the policy to enable Dr. Blackwood to be secured in the indebtedness which the insured owed him and for any further advances he might make him during his lifetime. No doubt both parties realized that the state of health of Gilbert Hays' was such that he would not live many years, and this proved to be the case.

When all the attendant circumstances are considered together, we think the court properly held that the assignment to the bank was to be used by it to collect that part of the proceeds of the policy which was equal to the amount owed by Gilbert Hays to Dr. Blackwood at the time of his death. When we consider that Hays owed Dr. Blackwood for medical services for a period extending over several years, and for advances made at different times during the same period of time for living expenses, it is reasonably certain that the only object of Hays in executing the assignment of the policy was to invest Dr. Blackwood with entire control of it, to the end that the insurance company might deal directly with him in collecting the premiums, and that upon the death of the assured he might have full authority to collect the policy, and apply so much of the proceeds thereof as might he necessary for the repayment of snch sum or sums as he had advanced to Hays upon the security of the policy. Any other view of the matter would place Dr. Blackwood in the position of being pecuniarily interested in the death of Hays, and we will not presume that he had any desire to speculate upon the life of Hays or to do more than secure the repayment of what Hays might owe him at the time of his death. Page v. Burnstine, 102 U. S. 664.

We think, however, that the court erred in holding that the balance o'f the proceeds of the policy should be held by the bank as executor under the will of Gilbert Hays, deceased, for the reason that we find that the execution of the will was secured by the undue influence of Dr. Blackwoo'd, and that the will was not a valid and binding one.

The court referred this branch of the case to the circuit court for this issue to be tried out there, but we are of the opinion that the chancery court erred in so doing. We have held uniformly that when chancery takes jurisdiction of a case for one purpose it will retain the case to administer the legal after the equitable relief. McGaughey v. Brown, 46 Ark. 25; Hortsmann v. LaFargue, 140 Ark. 558, 215 S. W. 729; Rose City Bottling Works v. Godchaux Sugars, Inc., 151 Ark. 269, 236 S. W. 825; Tollman v. McGahhey, 164 Ark. 205, 261 6. W. 306; and Short v. Thompson, 170 Ark. 931, 282 S. W. 14.

In the instant case all of the parties in interest agreed to transfer the cases to the’ chancery court, and thereby agreed that all the issues raised by the pleadings might be decided in that couif. .Some of the issues raised were equitable in their nature; and, in order to avoid .a multiplicity of suits, .and to do justice to every one, the court had a right to decide and should have decided all the issues raised by the pleadings. The question as to the legality of the will of Gilbert Hays was so interwoven with the other issues raised by the pleadings that it was almost indispensable to decide that question along with the other issues. The will itself purports to give the $9',000 policy to R. F. Mastersou and the $5,000 policy to the Bank of Corning-. It was executed at a time when Hays was in extremely bad health, and when he had been so for several years. He was bound to have known that he would live but a few days, and this proved to be the fact. The whole will was made in the interest of third parties, and his wife and child were cut off with a mere nominal provision. This shows that the execution of the will was procured by the interested parties in aid of the prior transactions, one of which we find to have been intended as an evasion of the law against issuing* wag-ering policies of insurance. Without recounting in detail the testimony, when the ill health of the insured for a period of six or eight years is considered, coupled with the fact that he was not during- that time able to make a living for his wife and child, and when read in the light of the other circumstances, we think the chancellor should have held that the will was procured by the undue influence of Dr. Blackwood, and that it was null and void..

It follows that the decision of the chancery court in holding that the bank was entitled to recover the sum of $1,648.86 and the accrued interest on the $5,000 was correct, and should be affirmed. The balance of the proceeds of that policy, however, should have been adjudged to have belonged to Annie Hays, as administratrix of the estate of Gilbert Hays, deceased, and as guardian of their minor child. For the error in not so holding the decree in this respect must be reversed.

The court also erred in allowing the statutory penalty and attorney’s fee on the $9,000 policy. The statutory penalty, and a reasonable attorney’s fee should have been allowed in the suit on the $5,000 policy.

The result of our views is that the decree must be reversed, and the consolidated cases will be remanded with directions to render a decree in accordance with the views'of this opinion, and not inconsistent with the principles of equity. It is so ordered.


author: Smith, J.

text:
    Barber v. Whitaker Manufacturing Company.
    Opinion delivered October 21, 1929.

      Jume P. Wooten, for appellant.

      Carmichael & Hendricks, for appellee.
   Smith, J.

The Turner-Shannon 'Company, a corporation engaged in the mercantile business in Little Bock, made an assignment on January 12, 1928, for the benefit of its creditors. The Whitaker Manufacturing Company, of 'Chicago, was the largest commercial credit- or, and, upon being advised of the assignment, sought to recover certain specific merchandise then on hand. The court sustained the creditor’s intervention, but an order was made that all the goods be sold, and that the Whitaker Company be paid the sum of $1,000 out of the proceeds of the sale in satisfaction of this demand. The assignee resisted the creditor’s demand for the return of its merchandise, and has appealed from the order of the court awarding it -$1,000.

In the intervenltion filed by the Whitaker Company it was alleged that its debtor had on hand certain merchandise which it could and did identify, and it alleged that the sale of these goods had been induced by the false and fraudulent representation of the debtor that it was solvent when the goods were bought and shipped, when, in truth and in fact, it was hopelessly insolvent, and known so to be by the managing officers of the debtor.

The Turner-Shannon Company, hereinafter referred to as the assignor, had been for several years a customer of the Whitaker Company, hereinafter referred to as the creditor, and had bought goods from the creditor on the customary commercial credit. The assignor had been slow in its payments, but, after some delay, had always made them, except that, at the beginning of 1927, there was a small balance overdue and unpaid, which consisted principally ó'f interest which had accrued on the delayed payments.

On January 28, 1927, the assignor placed an order for merchandise amounting to $6,103.55, which ivas a very much larger order than any of the previous orders had been. Upon investigation the creditor found that the assignor’s rating in the commercial reporting agencies had been withdrawn, and the assignor was called upon for a financial statement as a condition precedent to filling the order. A lengthy correspondence ensued, during the course of which the creditor wrote letters dated as follows: February 12, February 23, March 19, April 19, and April 26, 1927. E^rly in the correspondence the creditor sent a commercial blank, which, if filled in with appropriate answers, would have conveyed specific and required information as to the assignor’s financial condition and solvency. No response was made to this request, and in a subsequent letter a second blank was -forwarded, with the request that it be-filled in and returned.

Without setting out the correspondence, which is somewhat lengthy, it may be said that the point had been reached when it was apparent that the order would not be filled without the required showing being made. The correspondence had then covered a period of about four months, and on April 30,1927, the assignor wrote a letter, which, as it is pivotal, is quoted from somewhat extensively :

“I have your communication of the 26th, and in reply wish to give you the following information: You shipped us our requirements in repairs in 1925, also 1926, and our financial condition was no better in 1926 than 1925, and yet in 1927 you have refused to supply us because we cannot furnish you a financial statement of our present condition. We take inventory during the month of June, and our year is from July 1 to June 30. - Our financial condition is a great deal better by about $45,000 now than it was July 1, 1926, yet our contract is being held up, because we cannot give you a financial statement of our affairs. We cannot close our house and go to taking inventory now. We will give you a statement between July 1 and 10, and see no reason in the world why you should not okeh our order for repairs and let them come forward. ’ ’

After explaining that assignor’s commercial rating had been withdrawn on account of some trouble which had arisen with the manager of a branch business in another city, in which the assignor was interested, the writer proceeded to say:

“I failed to find their reason for so doing (withdrawing the rating). Believe, however, if you will correspond with Mr. Howard Tune, city manager here for Bradstreet’s, he will be glad to give you any satisfactory information about this concern you want. As to the small balance due you, we will be able to pay this in the next thirty days.”

The writer then explained that an unprecedented flood had brought great damage in the assignor’s trade territory, and had delayed expected collections. The letter concluded with the following statement:

“If you cannot okeh all the contract, will you okeh half o!f it? We are almost out of repairs. Or would you think it best to order as we need the merchandise, and pay for it as we get it? We perhaps could manage it this way. We are willing to do anything in the world that is fair, and see no reason why you should not be willing to do the same thing, and feel that you are. ”

The president of the creditor company testified that the previous dealings of his company with the assignor had been of such character as to induce the belief, which was, in fact, entertained, that the statements of the writer of the letter conld be relied upon, and that, relying upon this letter as reflecting the financial condition of the assignor, he ordered the goods shipped, and they were forwarded in due course. Payments were made on this order and on the balance due when the order was filled, which reduced the account to $4,724.27.

When the assignment was made, the creditor sought to recover certain merchandise shipped in this last order, for the reasons heretofore stated, but the order was resisted by the assignee upon the ground that to permit the recovery of these goods would operate to give a preference over other creditors, and it was insisted that all the goods on hand should be sold for the benefit of all the. creditors, and the proceeds of the sale divided pro rata.

The assignee insists that the assignor made no material or untrue representation upon the faith of which the sale was made, and that the testimony does not show any intention on the part of the assignor, existing at the time the order was given and filled, not to pay for the goods. In support of this contention it is argued that the credit- or, in filling the order, was “taking a chance,” and that knowledge that a chance was being taken will be imputed from the facts that the assignor’s commercial rating had been withdrawn, and that a formal statement was refused and never furnished, although this requirement was the subject-matter of the correspondence which was conducted for about four months.

A representative of the creditor testified that after the assignment he called upon the managing officer of the assignor and discussed its affairs, and that in the course of the conversation it was admitted by the writer of the letter of April 30 that it was known when the letter was written that the assignor was then insolvent. This conversation was denied. But, whether it occurred or not, we think it certain that the debtor was then insolvent, and this fact must have been known to any one cognizant of the assignor’s affairs. It was hopelessly insolvent when the assignment was made less than a year later, and no great change occurred in its financial condition, although it became gradually worse.

The report of the assignee, when filed, showed an indebtedness of about $135,000, and assets of various kinds, including the accounts, were supposed to be worth about $35,000. At the first offering of these assets for sale by the assignee a bid of only $3,500 was received, and they were later sold for $5,000, although the assignee testified that they were worth $15,000, and could have been sold privately for that amount.

The president of the creditor company testified that, before filling, the order, he examined the last commercial agency report on the assignor, which showed a surplus of $23,000, but, as no current report was available, he did not rely upon the report which he examined, and was only induced to fill the order by reason of the statement contained in the letter of April 30, and, as this letter contained the statement that the assignor’s affairs had been improved to the extent of $45,000, he assumed that a surplus of $68,000 then existed or was claimed. We think this inference was fairly deducible from the letter, and we find nothing in the record which would warrant us in disregarding the testimony of the creditor’s president that he let the order be filled in reliance thereon.

The statement contained in the letter in regard to the $45,000 was not a candid one, and, its implication was false, and caused an erroneous impression, whether that result was intended or not. The facts in regard to the $45,000 are these: The president of the company, who had ceased to be a resident of Little Rock, and was not active in the assignor’s affairs, was advised of its distress, and he advanced $10,000 in cash. He agreed to assume personally $15,000 of its obligations, but it was not shown that he had done so. Another stockholder, who was not active in the management of the assignor’s affairs, agreed to and did assume personally the payment of the interest account due a bank of $20,000. Had the president assumed the $15,000, these transactions combined would not have operated to reduce the assignor’s liabilities as the letter implied had been done. The only effect of these transactions would have been to transfer that much of the assignor’s indebtedness to more indulgent creditors.

The assignor’s managing officer testified that there was no intention to defraud, and it is earnestly insisted that there was no testimony to the contrary, as it was sincerely believed that if indulgence were extended the debts could and would be finally paid.

We do not make the finding that any intent to defraud was shown, but it is not essential that such intent be shown to affirm the decree here appealed from. We do find the facts to be that the assignor was insolvent when the order was given and filled, and that an untrue statement as to the assignor’s finances was made, which was relied upen and which induced the extension of the credit.

The law of the case stated is well settled by numerous decisions of this and other courts.

The case of In re Epstein, 109 Fed. 874, was one in which it was alleged that a bankrupt had knowingly made false statements of his assets and liabilities in his report to a commercial agency, upon the faith of which a wholesaler had extended credit. Suit was brought by the wholesaler to rescind the sale and to recover the goods, and, in declaring the law applicable to these conditions, Judge Trieber said:

“Had the intervener relied solely on the fact that these goods were obtained by the bankrupt with the fraudulent intent not to pay for them, perhaps this contention would be correct; but, as rescission is also asked upon the ground that the goods were obtained upon the misrepresentations of the bankrupt, who concealed the fact that at the time he was indebted to his father and children in the sum of $5,500, the question to be determined is whether such misrepresentations, although not made in bad faith, nor with a fraudulent intent,, are sufficient to entitle the vendor, who acted promptly upon the discovery of the true facts, to a rescission. There is no pretense that the bankrupt did not know of this indebtedness at the time, nor is it contended that the amount of these debts was not very material, in view of the real assets of the bankrupt. In such case the intent is immaterial. If a buyer knowingly makes false representations concerning material facts, and thus induces the seller to part with his goods, the seller may elect to avoid the sale, and this without regard to whether the buyer intended to pay for the good§ or not. The fraud in such case consists in inducing the vendor to part with his goods by false statements to the buyer, known to be false when made, or made by him when he has no reasonable ground to believe that they are not true. When the bankrupt made his statements to the commercial agencies, he knew that they were intended to be furnished to the wholesale trade for the purpo|e of determining a basis of credit for him. Intervener, before filling the orders of the bankrupt, Obtained copies of these statements, and, no doubt, in reliance upon the truth of these statements, the goods were sold and delivered. That a sale induced by such false representations may be rescinded, although the purchaser made them with no fraudulent intent, is well settled.”'

Among the Arkansas cases cited 'by the learned jurist, along with the cases from other jurisdictions, in support of the statement of the law there made, were those of Bugg v. Shoe Co., 64 Ark. 12, 40 S. W. 134, and Johnson Co. v. Triplett, 66 Ark. 233, 50 S. W. 455. These cases fully sustain the rule announced.

In the Bugg case Mr. Justice Riddick said: “Nor can we sustain the contention of appellant that to entitle the vendor to avoid a sale after delivery it must in all cases be shown that the vendee did not intend to pay for the goods. That is, as above stated, one ground on which the sale may be avoided, but not the only one. If the vendee knowingly makes false representations concerning material facts, and thus induces the seller to part with his goods, the seller may elect to avoid the sale, and this without regard to whether the'buyer intended to pay for the goods or not. The fraud in such case consists in inducing the vendor to part with his goods by false statements of the buyer, known to be false when made, or made by him when he has no reasonable ground to believe that they are true.”

Further citation of authorities is unnecessary, as the cases are both numerous and harmonious.

The decree is correct, and is affirmed.


text:
    Simpson v. Simpson.
    Opinion delivered October 21, 1929.

      W. B. Sorrels, for appellant.

      Rowell <& Alexander, for appellee.
   Smith, J.

A decree of divorce was given Mrs. Bernice Simpson from her husband, Sherwood Simpson, who was therein directed to pay her $12.50 per week for the support of herself and their infant children. After making these payments for several weeks, default was made, which continued until $100 was due under the decree. A citation for contempt issued, and upon hearing thereof a bond was executed, and the proceeding dismissed. This bond reads as follows:

“Know all men by these presents, that we, Sherwood Simpson, principal, and ¥m. H. Simpson, as sureties, are held and firmly bound unto the State of Arkansas for the use of the plaintiff, Bernice Simpson, in the penal sum of three hundred dollars, to the payment of which well and truly to be made we hereby bind ourselves, our heirs, executors and administrators, jointly and severally, firmly by these presents: The condition of the above obligation is such that the defendant, Sherwood Simpson, will promptly pay all sums due the plaintiff, Bernice Simpson, for the support of his children, as required by an order of the Jefferson Chancery Court, dated January 28, 1928, and now due from December 10, 1927, and all sums, to-wit, $12.50 each and every week, until said order is changed by said court. Now therefore, if the said Sherwood Simpson shall well and truly pay said sums as above set out, then this obligation to be null and void; otherwise to remain in full force and effect.
“This January 28,1928.
(Signed) “¥m. H. Simpson,
(Signed) “Sherwood Simpson.”

After the execution of this bond the $100 was paid, and subsequent installments of alimony were paid in the sum of $200, making a total of $300, which was the amount of the bond. But there was no showing that W. H. Simpson, as surety, had paid this money, or any part of it. Thereafter for two consecutive months default was made in the payment of the alimony, and a motion was filed in the original cause for judgment on bond for the amount of the default.

The surety filed a response, setting up the facts herein recited, and alleged that, inasmuch as $300 had been paid since the execution of the bond, the penalty thereof had been discharged. The binding obligation of the bond is not questioned. Ex parte Coulter, 160 Ark, 550, 255 S. W. 15. It is insisted only that the obligation thereof has been discharged by the payment of the sum of $300 since its execution. The court overruled this plea, and rendered judgment for the amount of the alimony then in arrears, and this appeal has been duly prosecuted to reverse that decree.

For the reversal of the decree cases are cited in which it was held that the surety on a bond cannot generally be held liable for any sum greater than the penalty thereof, and that a surety who has bound himself under a fixed penalty for the payment of money or for the performance of some other act by a third party has marked the utmost limit of his liability. The principle announced has been recognized in numerous cases, but is not applicable here. The original decree directed that the weekly payments be continued until otherwise ordered, and the condition of the bond was “that the defendant, Sherwood Simpson, will promptly pay all sums due the plaintiff, Bernice Simpson, for the support of his children, as required by an order of the Jefferson Chancery Court, dated January 28, 1928, and now due from December 10, 1927, and all sums, to-wit, $12.50 each and every week, until said order is changed by said court. ’ ’

The order for the payment of the money was not changed by the court, but remained in full force, and had continuing effect, and the court, in requiring the bond, no douibt contemplated future defaults in payment, and it was to insure ag’ainst such defaults that the bond was required. It was not the purpose of the court’s order, or that of the bond executed pursuant to it, merely to collect $300 for the benefit of the children; the purpose was to enforce continued payments of the weekly allowance until the court otherwise ordered, and it was only by the execution of the bond that the defendant purged himself of the contempt charge which resulted from his default. To prevent recurrence of the delinquency, the bond was required, and the surety became obligated to pay when his principal made default, and there was no obligation to pay until there was a default. Of course the bond imposed a maximum liability on the surety of $300, but a liability was assumed for the payment of each delinquent installment until this maximum was reached.

We conclude, therefore, that the court correctly construed the bond executed pursuant to its order, whereby the defendant was discharged in the contempt proceedings, and the decree is therefore affirmed.


author: Humphreys, J.

text:
    Coca-Cola Bottling Company v. McBride.
    Opinion delivered October 21, 1929.

      Edward B. Klewer, Sam, Gosten and Wils Davis, for appellant.

      W. B. Scott, for appellee.
   Humphreys, J.

This is an appeal from a judgment for $750, rendered in the circuit court of Crittenden County in favor of appellee against appellant, in an action based upon the alleged negligence of appellant in bottling and selling coca-cola which contained a poisonous suibstance.

Appellant contends for a reversal of the judgment upon the alleged ground that there is no substantial evidence in the record showing that appellant was negligent in bottling the coca-cola.

Appellee, wlm was clerking in a store owned by David Swartz, in the town of Earl, at the instance of her employer went to David Haddad’s cold drink stand, about 150 feet from the Swartz store, to buy several bottles of coca-cola, which, by agreement of the parties to the suit, had been manufactured by appellant at its bottling plant at Wynne, Arkansas. She bought two or three bottles, which were opened by Haddad and handed to her, whereupon she immediately returned ydth them to the store. Appellee testified that, when she returned to the store, she drank a part of one bottle, and stopped, because she swallowed a hard substance; that, looking into the bottle, she saw an open safety pin, and something black; that she poured the balance of the coca-cola out into her hand, and found that it contained a black sediment; that what she drank poisoned and nauseated her in a few moments; that a physician was called, who took her home in his car; that, .after being helped out of the automobile and assisted into the house and ordered to bed by the physician, she entered the bathroom, became dizzy, fell, and injured her back; that the following two or three days she suffered greatly from nausea, and more or less from the same cause for a week; that thereafter she was very nervous, and that since the fall she had suffered continuously with pains in her back.

She was corroborated in the testimony in all particulars by Mr. Swartz until the physician took her away from the store, and by the physician who took her home, in the remainder of her testimony, except as to the fall in the bathroom.

Appellant introduced testimony to the effect that the safety pin would not have poisoned the coca-cola, and that it and the black substance or sediment could not have been in the old bottle before being refilled under the system employed by it in cleansing, sterilizing and inspecting its bottles before refilling them, nor could have entered the bottle during the process of refilling and inspection thereof, under the period and plan used by them.

If the theory of appellee and the testimony introduced by her in support thereof were true, the only opportunity for the safety pin and black substance to have entered the bottle was either before the bottle was refilled or during the process of refilling same before the bottle was capped.

If the theory of appellant and testimony introduced by it in support thereof were true, then the safety pin and black sediment either dropped in or was put in the bottle by some one after it was opened. This presented an issue of disputed fact for the jury to determine, and, according to the verdict, the .jury necessarily found that the safety pin and black sediment were either in the bottle when refilled, on account of the negligence of appellant’s employees to properly cleanse or inspect it, or else that both the safety .pin and sediment found their way into the bottle during the process of refilling same, through the negligence of its employees engaged in the work, or their failure to properly inspect the bottle before putting it on the market.

The testimony introduced by appellee was sufficient to make a prima facie case, and shifted to appellant the burden of proving that there was no negligence in cleansing and refilling the bottle with coca-cola. The law imposed the duty upon appellant to clear itself of the charge of negligence by showing that ordinary care was observed in cleansing and refilling the bottle with coca-cola, and proof that the most modern machinery was used in the process of cleansing and refilling the bottles, and that its plan and system was to exercise every precaution in doing so, and to inspect every bottle, was not sufficient alone to meet the burden and overcome the prima facie case. If the plan for and system of cleansing and refilling bottles was perfect, as testified to by appellant’s witnesses, who were experts in the business, then the only way for the safety pin and the dark substance to have got into the bottle was on account of the negligence of its employees in cleansing or refilling same, provided that it did not get into the bottle after the cap was' removed. The .jury, as stated above, necessarily found by their verdict that the safety pin and dark substance did not drop in and were not put in after the cap was' removed, and, having done this, they might have drawn the reasonable inference, and doubtless did, that the foreign substances 'found their way into the bottle before or during the time same was being refilled, through the neglect or oversight of some employee or employees of appellant.

Appellant also contends for a reversal of the judgment because the injury to appellant’s back was not the immediate or direct result of drinking a part of a bottle of the coca-cola in question. According to the testimony of appellee, the coca-cola she drank poisoned her to such an extent that she became nauseated and very sick, resulting in a dizziness that caused her to fall and injure her back, immediately after reaching home, where she had been taken by the physician who attended her. No great length of time elapsed after appellee felt the effect of drinking the coca-cola, and before she fell. Only the necessary time intervened for her to be taken from the store to her home in an automobile. The record is silent as to any intervening cause that produced the dizziness which resulted in the fall and injury. The fall and consequent injury seem to have been the ordinary and natural result of drinking the coca-cola, and cannot be reasonably attributed to any other cause. We think the testimony in the case warranted the jury in finding that the proximate cause of the injury complained of was the result off drinking part of the bottle of coca-cola in question.

No error appearing, the judgment is affirmed.


text:
    Morton v. State.
    Opinion delivered October 21, 1929.

      Hal L. Norwood, Attorney General, and Robert F. Smith, Assistant, for appellee.
   Humphreys, J.

Appellant was indicted, tried and convicted in the circuit court of Miller County for the crime of assaulting John Morton, his brother, with intent to kill him, and, as a punishment for the crime, was adjudged to serve a term of five years in the State Penitentiary, from which judgment an appeal has been duly prosecuted to this court.

Appellant assigns as reversible error the insufficiency of the evidence to support the verdict. The record of the testimony introduced by the State reflects that on the 3d day o!f June, 1929, appellant, in company with his brother Joe, came to the house of Prank Morton, another brother, and accused him and his wife of saying they were going to turn him (appellant) in for selling whiskey, and, when Mrs. Prank Morton confirmed the report, he hit her twice, the second blow knocking her senseless; that, when Prank interposed to protect his wife, he (appellant) drew his pistol on him and chased him across the street into Prank Comutt’s home, and shot into the house several times; that about that time John Morton drove up in his car and inquired of Joe what was wrong, and, upon being informed that Allen (appellant) had been shooting into C'omutt’s house, he turned on John, accused him of reporting him to the officers, threatened to kill him, and proceeded to strike him over the head with his pistol, and, when John knocked the second kick off, appellant shot John twice, once in the hand and once in the leg, and was attempting to shoot him again, when Joe interfered and prevented him from doing so; that John was unarmed at the time, and said and did nothing to cause appellant to shoot him.

The testimony thus detailed is of a substantial nature, and sufficient to support the verdict and judgment.

Appellant also assigns as reversible error certain remarks by the prosecuting attorney relative to what occurred in the home of Prank Morton, and across the road at the home of Frank Cornutt, a few minutes before he struck and shot John Morton, and the subsequent introduction of testimony in support of the statement. The evidence was admissible to show appellant’s abandoned disposition, his purpose in being there, and his motive for shooting John Morton. According to the 'State’s testimony, appellant came to Frank Morton’s house to administer punishment to him and his wife 'for threatening to report him to the officers for selling liquor, and, in carrying out his purpose, knocked Mrs. Frank Morton down, chased Frank across the road into Cornutt’s home, and fired into the Cornutt house, after which he turned upon John Morton, and, for the same declared reason, struck him and shot him twice. The whole affair occurred in the space of about fifteen minutes, and was really one broil resulting from the, same cause. As the testimony was admissible, it was proper for the prosecuting attorney to outline same in his opening statement.

Appellant also' assigns as reversible error the exclusion of W. B. Thorpe’s testimony, to the effect that appellant was an expert shot with rifle and pistol, and the testimony of other witnesses to the effect that Mrs. Cornutt cursed officers who made a liquor raid, some' time prior to this occurrence, on their home, and concerning an accusation iby Frank Cornutt, Frank Morton and their wives that appellant, gave officers information that led to the raid.

Appellant’s purpose in offering testimony relative to being an expert shot was to show that he could have killed instead of wounding John Morton, had his intent been to kill him. This does not follow as a necessary conclusion, for, in his excitement, he may have missed his mark. Appellant and his brother John were so close together that a nonexpert could have killed him as easily as an expert shot. We do not think the testimony was admissible as tending to show the intent with which appellant fired the shots.

The other pieces of testimony were collateral and immaterial, as they related to a liquor raid made on Frank Morton’s home quite awhile'before this occurrence.

Appellant also assigns as reversible error the action of the court in allowing the prosecuting attorney to ask certain witnesses whether they had not espoused his cause and sided with him. The questions were permissible to disclose the bias of the witnesses, and to test their credibility.

Appellant also assigns as reversible error the action of the court in allowing the prosecuting attorney to introduce Dr. Robison to show that the wounds inflicted upon John Morton were of such nature that one bullet could not have caused them both. The State introduced witnesses to show appellant fired two shots, one piercing the hand and one the leg of John Morton. Appellant testified that he only fired one shot at John Morton, which struck him in the hand, and that his purpose in firing, it was to prevent him'from drawing his pistol, which John was attempting to do. Dr. Robison’s testimony was introduced to rebut this testimony of appellant, and was properly admitted as rebuttal testimony.

Appellant also assigns as reversible error the court’s action in giving instructions numbers 1, 5 ,6, 7 and 8, and in refusing to give appellant’s requested instructions numbers 12, 15 and 19.

It would extend this opinion to great length should these instructions be set out in full herein. Suffice it to say that we have carefully read the instructions, and determined that those given by the court were correct declarations of law applicable to the facts in the case, and that the instructions requested by appellant and refused by the court were fully covered by other instructions which the court gave.

No error appearing, the .judgment is affirmed.


author: Kirby, J.

text:
    Stokes v. Landrem.
    Opinion delivered October 21, 1929.

      Holifield <0 XJpton and Arthur Sneed, for appellant.

      Ward <0 Ward, for appellee.
   Kirby, J.

This appeal is prosecuted from a decree in effect surcharging the account of appellant, F. M. Stokes, as guardian, and canceling a deed made to him by the commissioner under a decree of foreclosure against lands mortgaged by his former ward, Josie Landrem, to him, as guardian of her minor sister and brother, to secure a loan of money belonging to them in his hands as guardian.

It appears from the testimony that M. A. Palmer died intestate about the 6th day of December, 1908, leaving surviving him his widow and Josie Palmer Landrem, Rufus Palmer and Frank Palmer, his children by a former wife, and Elsie Palmer, his child by his surviving widow, who did not long survive her father, and no question is raised as to her interest here. Palmer owned and occupied a homestead consisting of about 63 acres, particularly described in the complaint, at the time of his death.- Josie Palmer Landrem was born on the 10th day of September, 1893, and on the 25th day of May, 1908, F. M. Stokes was duly appointed guardian for her, Frank, Rufus and Elsie Palmer. Elsie Palmer died, and her guardian paid off her estate to her mother, Mollie Palmer. The widow lived upon the homestead until the 15th day of April, 1911, when she died, leaving surviving her Ardell Simpson, a son by a former marriage. Josie Palmer married E. E. Landrem on the 10th day of December, 1909, and four children were born to them, and on the 18th day of July, 1911, appellant Stokes, as guardian for her, filed his final settlement, which was approved by the probate court on the 15th day of December, 1911, the amount found to-be due the ward in the settlement being $195.03, which was paid to her by the guardian, who was discharged. She was 18 years old on the 10th day of September, 1911, and 21 years old on the 10th day of September, 1914, and was the owner of an undivided one-third interest in her deceased father’s homestead. She, with her husband, R. E. Landrem, executed a mortgage on the 13th day of April, 1915, to F. M. Stokes, appellant, as guardian of Frank and Rufus Palmer, conveying her one-third interest in the homestead land to secure the payment of a $300 note given by her and R. E. Landrem to F. M. Stokes, as guardian, for money borrowed from the estate of said minors. She died on the 7th day of December, 1916, and on the 14th day of September, 1918, F. M. Stokes, as guardian of Frank and Rufus Palmer, brought suit to-foreclose the mortgage given by her and her husband to secure the borrowed money. A decree of foreclosure was rendered, and on the 4th day of September, 1919, Stokes, guardian, filed suit in the chancery court against the heirs at law of Josie Landrem and R. E. Landrem, as guardian, to correct an error in the description of the land in the mortgage ordered foreclosed in the former suit. In the last suit constructive service was had, the two suits were consolidated, a guardian and attorney ad litem was appointed for the minor defendants, a decree was entered reforming the mortgage and ordering a sale of the property to pay the said indebtedness, and the lands were sold by the commissioner in chancery, and purchased by F. M. Stokes for $583.62, the sale being confirmed by the court and a deed executed to the lands. On the 20th day of August, 1924, R. E. Landrem, guardian for minor children of himself and Josie Landrem, deceased, brought suit against F. M. Stokes and his son, Francis E. Stokes, to whom he had deeded the lands purchased at the foreclosure sale, for an accounting and for cancellation of the deed.,

A master was appointed, an account stated, showing that, at the time of the execution of the mortgage by Josie Landrem and her husband to secure the sum of $300 borrowed from F. M. Stokes as guardian of her brothers, the said F. M. Stokes was in fact indebted to the said Josie Landrem in the sum of the amount of the money alleged to be loaned, and for security of which the mortgage was given. The court approved the master’s'findings, and, while he held there was no intentional fraud in any of the transactions on the part of the guardian, F. M. Stokes, it was also held that the relation had not been severed for a sufficiently long time to relieve his former ward against his influence, and that he stood to her in such a fiduciary relation, because of being in possession of the homestead lands of her father and her minor brothers, that he must account for her portion of the rent of the lands. A decree was rendered accordingly, and the deed executed to him under the mortgage foreclosure sale canceled, as was also his voluntary deed to his son, the other appellant, and from this decree the appeal comes.

Appellants insist that the decree is not supported by the testimony, and that the court erred in denying his plea of the statute of limitations against the claims of his former ward, Josie Landrem. It will suffice to say that the court, after a careful consideration of the entire record, is of opinion that the findings of the chancellor are not contrary to the preponderance of the testimony as to the principal facts, and as to the facts showing the trust relation, and warranting the denial of the plea of the statute of limitations under the doctrine announced in our cases of Haynes v. Montgomery, 96 Ark. 573, 132 S. W. 651; Sconyers v. Sconyers, 141 Ark. 256, 216 S. W. 1045; Sorrells v. Childers, 129 Ark. 149, 195 S. W. 1 L. R. A. 1917F, 430; Oil Fields Corporation v. Dashko, 173 Ark. 533, 294 S. W. 25, 17 R. C. L. 749.

Francis E. Stokes was not an innocent purchaser for value of the lands for which F. M. Stokes paid only $583.62 at the foreclosure sale, and which the testimony shows he had afterwards contracted to sell to his wards for something over three times the amount he paid therefor.

No error appearing in the record, the decree will be affirmed, and it is so ordered.