author: Hart, J., McCulloch, C. J.,

text:
    Sharp v. Drainage District No. 7.
    Opinion delivered May 5, 1924.
    1. Pleading — admission by demurrer. — The allegations of a complaint are conferred by a demurrer.
    2. Pleading — presumption in favor of pleading — Under the Code, every reasonable presumption is to be made in favor of a pleading, and a complaint will not be set aside on demurrer unless it be so fatally defective that, taking all the facts to be admitted, the court can say that they furnish no cause of action.

      3. Pleading — sufficiency.—A demurrer will not lie to a complaint if it sufficiently, though imperfectly, states a cause of action; the remedy in such case being a motion to make more definite and certain.
    4. Levee and drainage districts — unity..—Projects for the protection of river valleys from overflow by building levees and draining them by constructing' ditches may be united in one improvement district.
    5. Eminent domain — flooding land by levee. — A drainage district, after building levees on each side of a river, has no right to build a dam at the outlet of the basin between the lower ends of the levees, so as to cause flood waters to flow back and destroy the use of plaintiff’s land for agricultural purposes, and for injuries so caused plaintiff is entitled to compensation.
    6. Eminent domain — taking of land for levee. — One whose land is taken for constructing a levee is entitled to compensation therefor.
    Appeal from Poinsett Circuit Court; G. E. Keck, Judge;
    reversed.
    STATEMENT OP PACTS.
    This is an appeal by A. L. Sharp, a landowner, from a judgment of the circuit court sustaining a demurrer to his complaint in a proceeding to recover compensation for lands taken or damages in constructing a drainage ditch. The complaint is as follows:
    “Comes the plaintiff, and for his cause of action alleges that he is the owner of the following lands in Poinsett County, Arkansas, all of which are located in the defendant Drainage District No. 7, to-wit: (Description omitted).
    “That the defendant is a drainage district, organized and existing by virtue of an act of the General Assembly of Arkansas for the year 1917, being act No.'193, and approved by the Governor on March 9, 1917, the purpose of said act being to invest the commissioners thereof with power and authority to do such construction work necessary for the reclamation of the wet and overflowed lands in said district by a system of ditches, drains and levees.

      “That the defendant commissioners are the duly qualified and acting commissioners of said district.
    “Plaintiff further alleges that included in said district is the St. Francis Biver, from the northern boundary of Poinsett County south to the Cross County line. That said river, from the northern boundary line of said county to a point about nine miles south thereof, traverses a large area of swamp and overflowed land, containing many thousand acres located in a low basin.
    “Said river, in and through said basin, while having well-defined banks and a channel, during certain periods of high water overflows a large portion of the lands situated within said basin.
    “This condition exists from the northern boundary line of Poinsett County to a point in said county and defendant district about two miles north of Marked Tree, at which point the waters of said river again enter a well-defined channel with sufficient banks to carry the water at all times without much overflow.
    “Plaintiff’s land herein described is located in said basin, and covered in many places with valuable timber, consisting of oak, gum, hickory, cypress and other species of hardwood usually found growing in wet and overflowed lands. .A large portion of said basin and of plaintiff’s land is subject, more or less, to periodical overflow, but not to an extent so as to make said lands unfit for cultivation, and that, in a large portion of said basin and of plaintiff’s land, crops of cotton, corn, hay and other farm products have been annually grown and harvested.
    “Plaintiff further alleges that the defendant district has filed and adopted plans for the construction of an immense levee, fifteen feet or more in height, along both sides of said basin and along and across the outlet thereof, thus converting said basin into an immense reservoir, with said levees as retaining walls, for the purpose of storing the water entering said basin and retarding its flow, and in this way enabling said water to enter a floodway to the south in such a way as to protect the lands to the south from overflow. By so confining said water defendant has totally destroyed the value of plaintiff’s land and all timber thereon.
    “Plaintiff further alleges that written notice was served on said defendant board of commissioners, in the time and manner as by law required, within thirty days after said plans for said improvement were filed with the county clerk of Poinsett County, but that defendant refused to bring suit in condemnation, as by law required, and to submit the ascertainment of damages caused to plaintiff’s land to a jury, but, on the contrary, has built and completed said levee over and across plaintiff’s land, using many acres of plaintiff’s land in the construction of said levee and for right-of-way purposes, and throwing into said reservoir about 120 acres of said land, thereby destroying all of said land and timber thereon.
    “Plaintiff further alleges the reasonable value of land and timber to be the sum of $50 per acre before the building of said levee; that 25 acres were taken for right-of-way purposes and used in the construction of said levee; that 120 acres are totally destroyed, being in said reservoir, as herein alleged, being a total damage to plaintiff in the sum of $7,250.
    “Wherefore plaintiff prays judgment against said defendant district in the sum of $7,250, for costs, and all other proper relief.”
    The court sustained a demurrer to the complaint, and, the plaintiff electing to stand upon his . demurrer, it was adjudged that the complaint be dismissed; and from a judgment in favor of the defendants the plaintiff has duly prosecuted an appeal to this court.

      Robert Ruhr and J. M. Rutrell, for appellant.
    The appellee district has taken appellant’s property within the meaning of § 22, article 2 of the Constitution. 10 R. C. L. 60, p. 68; Id. 58, p. 66; Id. 59, p. 67; Id. 61, pgs. 70-71; Id. 63, pgs. 72, 73; 13 Wall. 166, 20 L. ed. 557; 188 TJ. S. 444, 47 L. ed. 539. Our own court goes farther than these decisions and holds that private property shall not be damaged for public use, See 119 Ark. 166; 113 Ark. 239'; 128 Ark. 250; 45 Ark. 429. See also 146 Ark. 14 on taking property. The damages claimed by appellant are within the express terms of the act creating the district. See § 9 thereof. Such a provision was not contained in the act in the cases reviewed in 149 Ark. 285, and 95 Ark. 345, on the subject of surface water, do not apply, nor has such doctrine ever been applied where the lands were within the improvement district as here. Appellant is entitled not only to damages for the land taken, but for damages done to other land. 78 Ark. 83; 51 A,rk. 330.

      N. F. Lamb and G. D. Frierson, for appellee.
    Appellee had the right to build its levees as it did, and to leave lands unprotected by a levee in such case is not a taking within the meaning of the Constitution. 95 Ark. 345, 29 L. E. A. (N. S.) 396; 149 Ark. 285, 20 A. L. R. 296, and cases cited there. See also 230 U. S. 1, 57 L. ed. 1363; 230 U. S. 24, 57 L. ed. 1374; 241 TJ. S. 351, 60 L. ed. 1041; 204 Fed. 299; 249 U. S. 587; 254 TJ. S, 608; 9 So. (Miss.), 351; 85 Sou. (Miss.), 312; 207 Fed. 338. The Arkansas cases cited by appellant either do not concern flood water or refer to land taken in the construction of the improvement, hence are not applicable.
   Hart, J.,

(after stating the facts). Counsel for the defendants have attached to their brief what they claim is a map of the proposed drainage district, which shows the location of the levees referred to in the complaint.

Counsel for the plaintiff, in their reply brief, claim that it is the purpose of the district to build a dam across the St. Francis River, from the lower end of one of the proposed levees to the other, and to let out the water • thus impounded by a lock or a gate, which may be closed at will. We cannot consider these matters.

The court sustained a demurrer to the complaint, and rendered judgment accordingly. The allegations of the bill, which are confessed by the demurrer, control in this case. Contrary to the common-law rule, under our Code every reasonable intendment and presumption is to be made in favor of a pleading, and a complaint will not be set aside on demurrer unless it be so fatally defective that, taking all the facts to be admitted, the court can say they furnish no cause of action whatever. Ferrell v. Elkins, 159 Ark. 31.

A demurrer will not lie to a complaint if it states sufficiently but imperfectly a cause of action; but the remedy in such case is by motion to make the complaint more definite and certain. Williams v. Memphis, Dallas & Gulf Railroad Co., 133 Ark. 188.

Tested by the rule laid down above, construing pleadings, the question in this case is whether the commissioners of a drainage district, duly organized under the statute, may erect a levee and dam which obstruct the flow of the waters of the St. Francis Eiver in Poinsett County, and thereby injure the lands of another, and the district incur no liability.

Our Constitution provides that the right of property is before and higher than any constitutional sanction, and that private property shall not be taken, appropriated, or damaged for public use, without just compensation therefor. Article 2, § 22, of the Constitution of 1874.

■ It is claimed, however, that the constitutional provision that private property shall not be damaged for public use except on due compensation, does not contemplate damages resulting without legal injury, as in the case at bar. The rule is invoked that a levee district may .rightfully construct a levee across sloughs, swales and other low places, which'help to absorb the flood waters of a river, without liability to a riparian owner, whose lands are left between the levee and the river, and which -are damaged as- a result of the levee’s raising the height .of the flood waters. McCoy v. Bd. Dir. of Plum Bayou Levee Dist., 95 Ark. 345, and City Oil Works v. Helena Imp. Dist. No. 1, 149 Ark. 285. The rule there announced ■depends upon the two legal maxims that one may use his own property as he will, and that he must not so use his ■own as to interfere with the legal rights of others. The .-sea-was regarded as-a common enemy to the adjacent landowners, and any owner of land exposed to its inroads might protect himself by erecting barriers against its encroachment, and what each landowner might do for himself, the commissioners- of a levee district, acting for all the landowners within the boundaries of the district, might do for them. So it was held that they might erect such defenses for the lands under their care as the necessity of the case required, leaving the other landowners in like manner to protect themselves against the common enemy.

This court applied this principle to the waters of large navigable rivers subject to extensive overflows, like the Arkansas and the Mississippi. The object in such cases is to confine the roaming flood waters of the navigable river within the confines of the levees, which, so to speak, establish new banks for the river. But, as levees are constructed for the sole purpose of protecting the lands from overflow, and, in order to do this, must prevent the ingress of water upon the adjacent lands, the raising of the depth of the flood waters upon the lands left outside the levee is a damage which must be borne by the landowners.

Assuming that the principle laid down above applies to the waters of the St. Francis River in Poinsett County as well as to the large navigable rivers of the State, the majority of the court is of the opinion that the facts alleged in the complaint, though defectively stated, take the case out of the general rule and bring it within one of the well-known exceptions, which is that the waters of a stream may not be obstructed by dams or other embankments so as to throw the water back upon the upper .proprietors and thereby damage or destroy entirely tlie use of their property. In the very nature of the case the danger of ruin by floods, against which levees are' intended to guard, renders it imperative that the board should have the fullest latitude in establishing the lines of levees. But, in establishing’ the lines of the levees, it must be borne in mind that they are erected -for-- the purpose of confining the flood waters within the limits of the levee and thereby protecting the adjacent lands from the encroachment of such flood waters.

It is a matter of common knowledge, however, that there are valleys or bottoms which are rich and fertile along all the rivers of this State, and that the width of these bottoms varies greatly. Therefore we recognize that projects having for their purpose the protection of such lands from overflow by building levees, and of draining them by constructing ditches, may be united, and one improvement district may be organized for both levees and drainage ditches.

If the commissioners had erected levees along both banks, at some distance therefrom, for the purpose of preventing the waters of the St. Francis River from overflowing the adjacent lands, the fact that the lands of the plaintiff were left outside of the levees would bring him within the rule above announced, and he could not recover compensation for his lands thereby damaged or taken. It is fairly inferable from the complaint, however, that something more than this was done. In order to prevent the waters within the banks of the levees from spreading out and overflowing the lands below the levees, a dam or embankment was constructed at the lower end of the levees, so as to impound the waters and let them out through a floodgate or floodway, at the will of the commissioners. This caused an obstruction to the flow of the waters, and threw them back upon the lands of the plaintiff, so as to destroy their use for agricultural purposes.

According to the allegations of the complaint, the St. Francis River enters Poinsett County from the north, and, for about nine miles south thereof, traverses a large area of swamp and overflowed lands, containing many thousand acres located in a low basin. The plaintiff’s lands are located in the basin, and, while subject, more or less, to periodical overflows from the St. Francis River, nevertheless he was able to grow cotton, corn, hay, and other farm products, annually on his land.

The complaint alleges, further, that the drainage district has adopted plans for the construction of a levee 15 feet in height along each side of the -basin and along and across the outlet thereof, thus converting the basin into an immense reservoir, with said levees as retaining walls, for the purpose of storing the water entering said basin and retarding its flow, and, in this way, enabling-said water to enter a floodway to the south in such a way as to protect the lands to the south from overflow.

It is further alleged that, by so confining said water, the defendant has totally destroyed the lands of the plaintiff and the timber thereon.

This the commissioners had no right to do. They only had the right to construct the levees and to confine the waters within the banks of the levees as they flowed towards the south. Any damages which might result to the plaintiff by reason of this increasing the depth of the flood level on his lands would be a loss which the plaintiff must suffer within the rule above announced. The commissioners had no right, however, to build an embankment across the outlet of the basin between the lower ends of the levees, and thereby obstruct the flow of the flood waters and cause the same to flow back on the plaintiff’s land, and destroy its use for agricultural purposes, and to destroy the timber growing on it.

The complaint alleges that a floodway was left in the southern embankment. It is fairly inferable that, by this, was meant a floodgate which could be opened or lowered at the will of the commissioners. If it did not mean this, a motion to make the complaint more definite should have been made, instead of interposing a demurrer to it.

The building- of the embankment across the outlet of the basin between the lower end of the levees, in the opinion of a majority of the court, constitutes, under the allegations of the complaint, a taking or damage of the plaintiff’s lands within the meaning of the provision of the Constitution above mentioned. Such act constitutes an independent cause producing damages. The principle was realized in the ease of City Oil Works v. Helena Improvement District No. 1, 149 Ark. 285. In that case a new leyee was constructed along the banks of the Mississippi River, and the plaintiff’s oil mill was left outside of the levee. The court held that the plaintiff could not recover for the damage caused by its mill being left outside the levee, but that it could recover for damages caused by the new levee, being built across its industrial tracks.

In the application of the same principle the Supreme Court of Mississippi held that the owner of land lying between an inner and outer levee, erected to protect a district from the overflow of a river, is entitled to compensation for property destroyed by the cutting, by the levee commissioners, of the outer levee in order to use the water covering the space between the two as a cushion to protect the inner one, the result of which was to devastate the land of the claimant. Jones v. Bd. of Mississippi Levee Commrs. (Miss.), 66 So. 413, L. R. A. 1916F, p. 1294.

In short, a majority of the court is of the opinion that the building of an embankment at the outlet of the basin, between the lower end of the levees, and thereby confining the water so as to cause it to flow back upon the plaintiff’s lands and destroy them, constituted ■ an independent cause which damaged or appropriated the plaintiff’s lands, and for which he was entitled to compensation, under the provision of the Constitution above set out.

It is true that, under the allegations of the complaint, a floodway was left in the embankment across the outlet of the basin between the lower end of the levees; but, as above stated, it is fairly inferable that by this was meant a flood-gate, by which the commissioners could control the flow of the water to the south, and which did obstruct its flow. This is shown by the great quantity of land which was left within the confines of the banks of the levees. As we have seen, the object of constructing levees is to confine the flood waters within the course of the stream, and they cannot be constructed in such way as to obstruct the natural flow of the waters and cause them to flow back upon the lands of the upper proprietors and thereby damage or destroy them for the use for which they are adapted, without compensation. It may also be stated that, under the allegations of the complaint, a part of the lands of the plaintiff was actually used for the purpose of constructing the levees, and all of us are of the opinion that the plaintiff is entitled to compensation for so much of the lands as were actually taken and used in the construction of the levee.

If the court thought that the complaint was in any wise defective or indefinite, it should have treated the demurrer as a motion to make it more definite and certain.

The result of the views of a majority of the court is that the circuit court erred in sustaining the demurrer to the complaint, and for that error the judgment must be reversed, and the cause will be remanded, with directions to overrule the demurrer and for further proceedings according to law.

McCulloch, C. J.,

(dissenting). The ■allegations of the complaint are, in substance, that the land of plaintiff is situated in a low basin which is subject to overflow from the waters of the St. Francis Eiver, and that the drainage district is about to construct a levee along both sides of the basin for the purpose of confining the waters and preventing their spread to other lands on the south. It is true that there is a further statement in the complaint that the construction of the levees, in effect, converts “said basin into an immense reservoir, with said levees as retaining walls, for the purpose of storing water entering said basin and retarding its flow.” But this is a mere statement of a conclusion, and means no more than that the effect of the levees in preventing the spread of the overflow waters to other lands on the south necessarily confines the water within the levees and raises it higher on the lands in the basin. This language does not take the case out of the operation of our former decisions (McCoy v. Board of Directors of Plum Bayou Levee District, 95 Ark. 345; City Oil Works v. Helena Improvement District, 149 Ark. 285), for the facts in those cases were that the construction of the levees which prevented the spread of overflow waters necessarily-raised the height of the overflow on lands between the levee and the river. There is no allegation here that the St. Francis River, from which the overflow comes, is about to be dammed up or its waters disturbed further than to prevent them from spreading beyond the basin. The statement in the complaint that the levees are to be built on both sides of the basin “and along and across the outlet thereof” is not open to the construction that the river is to be dammed, and means no more than that the waters are to-be confined within the levees so as to prevent their spread. The allegations simply present a case where there is sought to prevent the spread of waters from a stream and thereby the height -of the water is raised -on the land between the stream and the levee, but this is the very principle that was settled' in the cases cited above, contrary to the contention of plaintiff’s counsel in the present case.

Mr. Justice Smith concurs in these views.


source: Caselaw Access Project

author: McCulloch, C. J.

license: Public Domain

text:
    Fayetteville Mutual Benefit Association v. Tate.
    Opinion delivered May 19, 1924.
    1. Insurance — false statement in application.— An insurance association cannot escape liability on the ground of false statements inserted in insured’s application by its soliciting agent if the insured correctly stated .the facts.
    2. Trial — repetition of instructions. — Refusal of an instruction covered by one given by the court is not error.
    3. Insurance — misrepresentation as to insured’s age. — A policy of life insurance is not invalidated by a misstatement of insured’s age if the misrepresentation was made by the insurer’s soliciting agent without participation on insured’s part.

      4. Insurance — benefit insurance — circle insurance. — Under a benefit certificate limiting the amount payable to the amount paid in by the whole membership of insured’s class or circle, the recovery could not exceed such amount.
    5. Appeal and error — reversal of judgment. — On reversal of a judgment for the maximum amount of a benefit certificate limiting recovery to the amount of the last assessment before insured’s death, where the amount was undisputed, the cause will not be remanded for new trial, but the judgment will be modified.
    6. Insurance — negligence of insured’s officers.— The amount payable under a benefit certificate limiting it to the proceeds of one assessment cannot be augmented by the negligent failure of defendant’s officers or agents to use reasonable diligence to keep the class or circle in which deceased was insured up to its full membership.
    Appeal from Washington Circuit Court; W. A. Dickson, Judge;
    modified.

      John Mayes, for appellant.
    1. An insurance company will not be estopped by the knowledge of the agent who negotiated the policy to set up the falsity of answers in the application, if the assured himself was a party to the deception. That is the situation here. 65 111. 415; 76 Md. 293; 25 Atl. 227; 80 Tex. 518; 16 S. W. 316; 149 Mich. 467; 14 L. R. A. (N. S.) 270; 117 Mich. 421; 24 C. C. A. '243; 47 U. S. App. 329; 117 U. S. 519; 6 Sup. Ct. Rep. 837; 129 Ark. 450, 459; 244 S. W. 719; 123 Ark. 450.
    2. Under the terms of the certificate and the bylaws and regulations governing the association made a part thereof, „the amount of recovery could in no event be greater than, the amount paid in by the whole membership of the class to which the assured belonged, the last assessment prior to his death. 143 Ark. 369; 65 Ark. 295, 298; 92 Ark. 276, 283; 112 Ark. 219; 244 S. W. 719.

      H. L. Pearson, for appellee.
    There is no evidence showing what answers the assured made to questions propounded by the application, and that he made false answers is a mere assumption on the part of appellant. The agent had before him the record of his birth as shown in the family Bible, at the time he took the application,- and he saw the assured’s physical condition. Appellant is bound by his knowledge and information. 155 Ark. 450; 71 Ark. 242; 67 Ark. 584; 7 Ark. 72; 27 Ark. 539; 52 Ark. 11; 53 Ark. 215; 103 Ark. 146; 126 Ark. 360; 81 Ark. 508; 147 Ark. 563. This is true, unless it is shown that there was a collusion Or conspiracy between the agent and the insured, in which case the knowledge of the agent would not be imputed to the company; but, in this case, no such collusion is pleaded, and there was no testimony offered to prove it. It was incumbent on the appellant to prove the fraudulent collusion. 155 Ark. 450.
   McCulloch, C. J.

Appellant is a fraternal benefit society, doing business on the assessment plan, the members being grouped together in circles, and when the death of a member occurs an assessment is levied on the members of the particular circle to which the deceased belonged, and the fund thus raised is used in paying the next death claim, the claim arising on the death of the member at that time being paid out of the funds raised on the preceding assessment. The by-laws provide that the maximum amount of the benefit is to be the sum of one thousand dollars and that the value of a benefit certificate shall be ‘ ‘ contingent on the full and prompt payment of all assessments by the members of the class to whioh the applicant belongs, and in no event shall said certificate have a greater intrinsic value than the amount paid in by the whole membership of said class on the last assessment, after deducting the actual cost of collecting said assessments, and the applicant hereby expressly agrees to this basis of settlement in the event of his death.”

Appellee is the widow of Joseph D. Tate, who became a member of appellant association by certificate duly issued to him, dated September 23, 1916, and the amount named in the certificate was made payable to appellee. Joseph D. Tate died in the year 1920, having paid all the assessments due under the by-laws, and appellee made her claim for payment under the certificate of policy. A check was forwarded to appellee by appellant for the amount that appellant had determined to be due under the benefit certificate, $400.29, but before the check was collected appellant stopped payment on it, and this suit was instituted by appellee against appellant to recover the sum of one thousand dollars, alleged to be due thereunder. There was a trial of the cause before a jury, which resulted in a verdict in favor of appellee for the recovery of one thousand dollars, and judgment was rendered accordingly.

Appellant defended' on the ground that there was a breach of warranty by the member, Joseph D. Tate, in that he falsely misrepresented his age to be sixty-five, whereas he was seventy years of age at the time he made his application, and that he was in ill health and suffering from disease at the time of his application, whereas he represented himself to be in good health and free from disease.

The application of Joseph D. Tate, which was introduced in evidence, showed that his age was represented to be sixty-five years, and it was established beyond dispute that his age at that time was seventy years. There was also testimony to the effect that at the time the application was made Joseph D. Tate was an invalid, that, he was confined to his room in a wheel-chair, that he had been a sufferer from rheumatism for many years, but that his general health was good. The application was taken by a solicitor, who visited Tate at his home in Eureka Springs, Arkansas.

Appellee testified as a witness, as did other members of Tate’s family who were present at the time the application was taken by appellant’s soliciting agent. The agent who solicited and took Tate’s application died before the trial of this cause, therefore the only testimony as to what occurred between the two persons at the time the application was taken was that introduced by appellee, and this testimony shows that the soliciting agent was apprised of Tate’s true age, and also of his physical condition. The evidence shows that the application was written by the soliciting agent and presented tó Tate, and one witness testified that it was read to him, bnt she did not remember the contents as read by the «solicitor. There is no affirmative testimony as to who signed Tate’s name to the application. The testimony of the witnesses was that Tate was helpless at the time .and conld not nse his hands, and the inference is that some one else signed the application for him, bnt the testimony does not disclose precisely who wrote the signature for Tate.

The testimony shows beyond dispute that appellant’s agent was false to his trust in sending in an application containing false statements with reference to the age of the applicant, and the testimony warranted a finding that Tate himself participated in the fraud. But we cannot say that the testimony, or at least the inferences to be drawn therefrom, was undisputed. If Tate himself participated in the fraud, then his beneficiary cannot recover on the certificate. Mutual Aid Union v. Blacknall, 123 Ark. 377. On the other hand, if Tate, the applicant, did not make any false statements with reference to his age or state of health, but, on the contrary, correctly stated the facts with regard to those matters, and the false statement was made by the agent, liability of appellant cannot be escaped on that ground. That question was properly submitted to the jury in an instruction given by the court. One of the assignments of error relates to the refusal of the court to give an instruction on that subject at appellant’s request, but the answer to the contention is that a similar instruction was given by the court on its own motion, and therefore there was no error in refusing appellant’s requested instruction on the same subject.

Error is also assigned iu the court’s refusal to give instruction No. 2, requested.by appellant, whicli reads as follows:

“I charge you that if Joseph D. Tate gave his age to defendant’s agent at 65 years, when as a matter of fact he was over that age, then the plaintiff cannot recover, although the said Joseph D. Tate made said statement in good faith and believed same to be true.”

This instruction was erroneous in that it ignored the contention of appellee that appellant was liable if the agent was apprised of Tate’s age notwithstanding an error in the statement. The undisputed evidence shows that the soliciting agent was apprised of Tate’s correct age. Some of the witnesses testified that at the time the application was taken the family Bible, in which Tate’s age was recorded, was shown to the agent, and apprised him of the fact that Tate at that time was seventy years of age. That being true, the policy was not voided by the misstatement of age if it was made by Tate in good faith and without participation in the fraud perpetrated by the soliciting agent. The court was therefore correct in refusing to give this instruction. .

Our conclusion is that there is no error in the record so far as relates to the question of appellant’s liability under the certificate, and that the evidence was sufficient to warrant a verdict in favor of appellee. Different questions arise, however, in determining the extent of appellant’s liability. Appellant asked the court to give the following instruction, which was refused:

“If you find for the plaintiff, you should fix her recovery at any sum not to exceed the amount realized on the last assessment prior to the death of Joseph D. Tate, less the reasonable cost of collecting said assessment. ’ ’

This instruction stated the precise terms of the contract with respect to the liability of appellant, and the instruction should have been given. The court not only refused to give this instruction, but permitted the jury to return a verdict for the sum of one thousand dollars, which was directly contrary to the terms of the policy or certificate. These terms were stated in the face of the certificate itself, and the recovery could in no event exceed “the amount paid in by the whole membership of said class on the last assessment.” This error of the court calls for a reversal of the judgment, but we think that the testimony is undisputed as to the amount recoverable, and it is unnecessary to remand the case for a new trial. The undisputed testimony is that the amount of the last assessment preceding the death of Tate was $475, and this is the limit of the amount recoverable on this certificate. Home Mutual Benefit Assn. v. Rowland, 155 Ark. 450.

Appellee contends that the officers and agents of appellant were negligent in failing to use reasonable diligence to keep the class, or circle, in which deceased was insured up to the full capacity of .membership (1,000), and the court gave an instruction on that subject at the request of appellee. The amount payable under the policy or benefit certificate could not be augmented by negligent omissions of the officers or agents of appellant. If the officers were negligent in that regard, they were responsible to the corporation, whose creatures they were, but a policy-holder could not claim any additional amount by reason of the negligence of those officers or ag’ents.

The judgment of the circuit court is therefore modified so as to reduce the amount recovered to the sum of four hundred seventy-five dollars, with interest from February 2, 1921, as per stipulation of the parties concerning the time from which interest shall begin to run. It is so ordered.


text:
    Payne v. Malone.
    Opinion delivered May 19, 1924.
    Highways — power op county court to remove commissioners.— Crawford & Moses’ Dig., § 5405, as amended by Acts 1921, p. 303, providing that the county court may appoint highway commissioners and remove them for cause, has no application to commissioners of a road improvement district organized under special act (Road Acts 1919, p. 1025).
    Appeal from Conway Circuit Court; J. T. Bulloch, Judge;
    affirmed.

      Edward Gordon, for appellants.
    At the time the district was created by act 245, vol. 1, Road Acts, 1919, p. 1025, there was a general law in force, C. & M. Digest, § 5420, under which the county court had authority to remove assessors of road districts. By the act 245 the commissioners of the district were made the board of assessors. .Since the Legislature knew the general law authorized the removal of assessors for any good reason, it must be presumed that it intended that the commissioners of this district should be subject to removal. See 143 Ark., at page 70. It cannot bo doubted that the passage of act 228, Acts 1921, p. 303, providing for the removal of commissioners, was brought about by the decision in Taylor v. Wallace, 143 Ark. 70; and the passage of that act definitely shows that the Legislature intended that the board of commissioners should, be removed. To hold that the commissioners could not be removed because the district was created by a special act would be adopting a principle that towns and cities raised to second and first class by special act would not be governed by the general laws controlling such cities.

      Calvin Sellers and Strait & Strait, for appellees.
    The general statute has no application to special road districts created by a special act in which, as in this instance, the whole subject-matter of the organization and construction of the contemplated improvement is covered by the special act itself. The amendment to the general road law, act 228, Acts 1921, amending C. & M. Digest, § 5405, applies to districts organized under the general law, and excludes all other road districts not created or operating under that law. Taylor v. Wallace, 143 Ark. 67, we think, settles every issue raised on this appeal in favor of appellees. The act amending § 5405, C. & M. Digest, is plain and unambiguous. There is no call for judicial interpretation. The court will not extend its provisions by reading into it a meaning not justified by the language employed. 104 Ark. 583; 109 Ark. 556; 71 Ark. 556; 115 Ark. 194; 120. Ark. 288. That the amendment of the general law should be read into and amend the provisions of the special act is refuted in the case of Roberts v. District, 156 Ark. 248.
   McCulloch, C. J.

Appellees, Malone, Mitchell and Scroggins, are the commissioners of Road Improvement District No. 2 of Conway County, an improvement district which was organized by special statute enacted by the General Assembly of 1919, Road Acts 1919, p. 1025. The statute creating the district authorized the county court of the county to appoint the commissioners of the district and to fill vacancies by appointment, but there is no provision in the statute for the removal of the commissioners by the county court or by any other tribunal. Appellants are taxpayers in the district, and they commenced this proceeding in the county court of Conway County to cause the removal of the commissioners, from office on account of alleged misconduct in attempting, without authority, to change the route of the road through the town of Plumerville. The county court made an order in accordance with the prayer of the petition of appellants, removing appellees as commissioners, but, on appeal to the circuit court the petition of appellants was dismissed on the ground that there was no authority for the county court, or the circuit court on appeal, to remove the commissioners. An appeal has been prosecuted from that judgment of the circuit court.

In the case of Taylor v. Wallace, 143 Ark. 67, we decided that the county court had no authority to remove commissioners of road improvement districts formed pursuant to the general statute enacted in 1915 (act 338 of the session of 1915), the reason being that the statute authorizing the creation of the district and the appointment of commissioners by the county court contained no authority for the removal of the commissioners. The decision in that case is conclusive of the question that the county court has no right to remove commissioners unless the statute confers that power. After the decision in that case, the General Assembly in 1921 (Acts 1921, p. .303) amended the section of the general statute so as to authorize the county court to remove commissioners for cause, but the authority was limited to the removal of commissioners appointed under that statute. Section 5405, Crawford & Moses’ Digest, is the section of the act of 1915, supra, relating to the appointment of commissioners, and the amendatory act of 1921, supra, amends that section by adding authority for the county court to remove commissioners for cause. The title to the act states that its purpose is to amend Crawford & Moses’ Digest, § 5405, and the body of the act reads as follows:

O'Section 1. That § 5405 of Crawford & Moses’ Digest of the Statutes of Arkansas be amended so as to read as follows:
“Section 5405. Appointment. The county court at the same time shall also appoint three persons, owners of real property in said district and men of business ability, to act as commissioners for said district; and the county court, at all times, shall have the power and authoxfity, when complaint has beexx lodged with said court against any commissioner, to remove, fur good cause, any such commissioner heretofore appointed under the provisioxis of this act, or aixy commissioxxer or commissioxiers that may hereafter be appoixxted under the provisions of this act; provided, that notice of the complaint shall be served upon such commissioner complained against, and he shall have a right to ibe heard before any such order shall be entered against him.”

It is contended by counsel for appellants that this statute is broad enough in its terms to authorize the county court to. remove commissioners of any district, whether formed under the gexxeral statutes or not, but we think that counsel is ixx error, for it is clear from the language used in the new statute that it was ixxtended to be confined ixx its operation to the removal of comxnissioners appointed under the general statute. That is the plain, language of the statute itself. Aside from the peculiar language of the amendatory statute, according to settled principles it became a part of the original statute to wbicb it related as an amendment and “in its relation to the other sections of the act stood with reference to future transactions as though the act had originally been enacted in the amended form.” Mondschein v. State, 55 Ark. 389. It is clear, therefore, that the act of 1921, supra, is confined in its operations to commissioners appointed under general statute and not to those appointed under special statutes.

The circuit court was correct in its decision, and the judgment-is affirmed.


author: Smith, J.

text:
    Missouri Pacific Railroad Company v. Toll.
    Opinion delivered May 19, 1924.
    Carriers — disposition of freight. — Where a carload of freight was shipped to the consignor’s order, and on its arrival the carrier’s agent by telegram requested advice as to disposition, a reply that the car was for a designated person did not authorize its delivery to such person without production of the hill of lading; Crawford & Moses’ Dig., § 909, requiring a carrier to notify the consignor of the consignee’s refusal to receive freight, whereupon the consignor should direct disposition of the freight, having no application.
    Appeal from Lonoke Circuit Court; George W. Clark, Judge;
    affirmed.

      Thos. B, Pryor and Samp Jennings, for appellant.
    Where goods are billed “straight” to the consignee, and the railway company has no notice of the intention of the consignor to retain ownership, the carrier has a right to deliver tlie goods without the surrender of the bill of lading. See 64 Ark. 169; 79 Ark. 456; 229 Fed. 975; 279 Fed. 382. The proper way to give a carrier notice is by taking an “order” bill, in which event delivery could not be made without the surrender of the bill. 77 Ark. 48'2; 112 Ark. 110. The general rule holding the carrier liable for delivery to the wrong person does not apply where the delivery is due to the negligence of the consignor. 4 R. C. L., § 298, p. 846. If the carrier is misled, by some act of the shipper or consignee as to the person to whom delivery should be made, the carrier will be excused. 6 Cyc. 473; 10 C. J. 255, § 36i8. The telegram was certainly an authorization to deliver the goods to the person for whom they were intended.

      Emerson & Bonham, for appellee.
    Whether or not the agent had notice of the draft attached to the bill is immaterial; the circumstances were such as to put him upon notice that this was not a straight bill of lading, and to protect his principal he should have made demand for the bill. 64 Ark. 169; 77 Ark. 487. See also 4 R. C. L. No. 294; 39 L. R. A. (N. S.) note, 309; 112 Fed. 86; 120 Pac. 39; 51 S. E. 695; 6 Cyc., p. 480-b. A misdelivery from fraud or mistake will not relieve the carrier. 90 Ark. 528, and cases cited; 115 Ark. 14. The telegram was not authority for delivery of the hay without the bill of lading. It merely advised for whom the hay was intended.
   Smith, J.

On November 10,1920, C. F. Toll, trading as the Four Generations Hay Company, sold a car of hay to N. O. Ellis, and on the 20th of that month the hay was shipped from Roe, a station on the St. Louis Southwestern Railway Company, to C. F. Toll at Alexander, Arkansas, a village having a population of less than a hundred on the line of the Missouri Pacific Railroad. The hay arrived at Alexander two days after it was loaded, and the agent of the railroad, who knew there was no such person at Alexander as C. F. Toll, wired the consignor as follows: “Hay billed C. F. Toll is here. Advise disposition.” In response to this tel’egram the consignor answered bjr wire as follows: ‘ ‘Gar hay billed C. F. Toll is for N. O. Ellis.” Upon receipt of this telegram, Ellis was notified that the car had been received, and it was delivered to him, and he proceeded at once to unload it.

It is stipulated that Ellis is insolvent, and this suit was brought by the consignor to recover the value of the hay from the Missouri Pacific Railroad, the delivering carrier.

When the hay was loaded, the consignor took, in the name' of the Four Generations Hay Company, a bill of lading, which named C. F. Toll as the consignee, and the bill of lading was attached to a draft drawn on Ellis and sent to his banking town for collection, but the draft was not paid by Ellis upon presentation for payment, and the bill of lading was never delivered to Ellis.

The case was by consent submitted by the court sitting as a jury, and there was a general finding and judgment in favor of the plaintiff, from which the company has appealed.'

It is first insisted that the telegram of the company’s agent was sent pursuant to § 909, C. & M. Digest, and that the answer to this telegram discharged the company from liability under the provision of- that section. By that section of the statute it is provided that if the consignee shall refuse to accept freight tendered in pursuance of the bill of lading, the carrier charged with the duty of delivery shall give notice to the consignor of such refusal, and it is made the duty of the consignor, upon receipt of this advice, to give directions in regard to the disposition to be made of the shipment.

This section has no application because the consignee had not refused to accept the shipment and the consignor Was not so notified. It appears from the agreed statement of facts that the station agent knew there was no such person there as C. F. Toll, and it was for this reason that he sent the telegram.

It is stipulated that the station agent had no knowledge that the consignor had drawn on Ellis with bill of lading attached to the draft, and an instruction was asked which declared the law to be that if the agent did not have this information he was not required to. hold the hay until the bill of lading was delivered to him, but that he had the right to deliver the hay to Ellis.

A declaration of law was asked to the following effect; “That if by considering the two telegrams and evidence together, without any knowledge that the draft and bill of lading had been placed in the bank for collection, a reasonably prudent man in position of defendant’s agent at Alexander at the time he received the answer to his telegram might have been reasonably expected to infer from said telegram that the plaintiff was authorizing him to deliver said hay to Ellis, then plaintiff cannot recover. ”

Another declaration was asked which declared the law to be that the agent under the circumstances was authorized to deliver the hay to Ellis.

The court refused to make the declarations requested, and this refusal is assigned as error.

It is insisted that the declarations requested should have been made upon the authority of the cases of Nebraska Meal Mills v. St. L. S. W. Ry. Co., 64 Ark. 169, and Templeton v. Equitable Mfg. Co., 79 Ark. 456. The argument is that the contract of shipment was complied with when a delivery was made to the designated consignee as directed by the telegram.

This court did hold in the case of Nebraska Meal Mills v. St. L. S. W. Ry. Co., supra, and has reaffirmed that doctrine in later cases, that where freight was hilled “straight” to the consignee and the railroad company had no notice of the intention of the consignor to retain the ownership and control of the property it is justified in presuming that, the consignee is the owner thereof and is discharged from liability as a carrier by a delivery to the consignee at the place specified in the bill of lading.

But that doctrine has no application here because the delivery was not made to the consignee. Toll — and not Ellis — was the consignee, yet the delivery was made to Ellis, and this was done without Ellis having surrendered or ever having had possession of the bill of lading*. The consignor did not bill the hay to. itself but employed a different name, yet, upon the receipt of the telegram set out above, the carrier delivered the hay to one not named as consignee in the bill or lading.

It is obvious that tbe real question in the case is the effect of the telegram, for, if it did not authorize the agent’s action, then the carrier is liable for the misdelivery of the shipment.

It will be observed that the telegram did not advise the agent to deliver the hay to Ellis, but stated merely that the hay was for him, and we think, under all the circumstances, the court was warranted in finding that the telegram was not an authorization to make a delivery contrary to the terms of the bill of lading.

It is a matter of common knowledge that shipments are frequently made by one person to another with direction in the bill of lading to notify still another, and that the purpose of the direction to so notify is that the consignee may have notice of the shipment and may take the necessary action to obtain a delivery of it, and we think the court was warranted in finding that such was the purport of the telegram from the consignor.

At § 294 of the article on Carriers in 4 R. C. L. p. 482, it is said: ‘‘ The fact that a bill of lading contains a direction to notify a certain person of the arrival of the goods is no indication that he has any interest in them, for, as is well known, the practice of ‘notifying’ a person of the arrival of goods is generally resorted to by the vendor who, while consigning goods to himself or to his own order, wishes at the same time to have the vendee notified of the arrival so that he may be afforded an opportunity of receiving them on payment of the draft drawn on him and the delivery of the bill of lading thereto attached. Therefore, in such a case, the carrier has no authority to make a delivery to the person so to be notified without the production of the bill of- lading properly indorsed, or without being otherwise ordered by the shipper so to do, and if he does make such a delivery he becomes liable for the full value of the shipment.”

If the consignor had intended a delivery to Ellis without the surrender of the bill of lading, it would have billed the shipment to him direct. The agent knew there was no such person at Alexander as C. F. Toll, yet he knew Toll was named as consignee. The shipment was not, ..therefore, on a “straight” bill of lading to Ellis, for he was not the consignee at all, and the telegram did not direct that delivery be made to him.

:' The facts known to the agent, that the hay was billed to an unknown and, perhaps, fictitious party, and that the shipper had advised that the hay was for a person not named as consignee, were sufficient to put the agent on notice that this was not a “straight” bill of lading, and if he knew it was not, or should have known this as an inference from the facts which he did know, then he should have demanded the production of the bill of lading before the delivery of the hay, at least we think the court might have so concluded from the facts stated.

We do not hold that the consignor could not, by a telegram, have directed that delivery be made to Ellis, without the surrender of the bill of lading. Upon the contrary, we are of opinion that, had this been the meaning of the telegram, the delivery to Ellis would have been á completion of the contract of carriage. But what we do hold is that, under the circumstances stated, the court' was justified in finding that such was not the purport of the telegram; that it should have been interpreted by the agent as a mere direction to notify Ellis, a direction which might have been contained in the bill of lading itself without converting it from a “shipper’s order” bill of lading to a “ straight ’ ’ bill of lading. The bill of lading in question was not a'“straight” bill of lading, and the hay was not delivered to the consignee therein named, and, if the telegram did not confer authority to make delivery to a person other than the consignee, then no such authority existed, and, as we think the court was warranted in finding that such was not the purport of the telegram, the judgment must be affirmed, for the reason that the carrier failed to discharge its duty to deliver the hay to the proper party, and it is so ordered.


author: Humphreys, J.

text:
    Allison v. Chicago, Rock Island & Pacific Railway Company.
    Opinion delivered May 19, 1924.
    Master and servant — changing condition of place of work — instruction.' — In an action ior injuries to a repairer of a caboose, in which the pleadings and evidence predicated liability solely on the alleged negligence of a fellow-servant, instructions that no recovery could be had if injury resulted from the changing condition of the place of work, were erroneous.
    Appeal from Lonoke Circuit Court; George W. Clark, Judge;
    reversed.

      Harry H. Myers and Reed S Beard, for appellant.
   Humphreys, J.

Appellant, an employee, instituted suit against appellee, employer, in the circuit court of Lonoke County, to recover damages for an injury which occurred' through the alleged negligence of a fellow-servant. The substance of the allegation of negligence contained in the complaint is that, while engaged in repairing the roof of a caboose with two fellow-servants, one in the capacity of carpenter and the other a tinner, appellee was told by the tinner, who was working on the opposite side of the cupola, which obstructed his view, that he had finished the work and was ready for him on that side; that, believing that the tinner had left the place in a safe condition, he stepped around the corner of the cupola to pursue the work, and, instead of stepping on the sheeting of the roof, which he expected to, he stepped upon some loose tin, concealed from his view by the cupola., which had been carelessly and negligently left there by the tinner; that the tin gave way and caused him to lose his balance and fall from the top of the caboose about sixteen feet to the ground, seriously and permanently injuring himself.

Appellee filed an answer, denying the allegation of negligence and the extent of the injury, and pleading contributory negligence on the part of appellant.

The cause was submitted to a jury upon the pleadings, testimony introduced by the respective parties, and instructions of the court, which resulted in a verdict and judgment in favor of appellee, from which is this appeal.

Appellant contends that the court submitted the case to the jury upon the erroneous theory that there could be no recovery if the injury resulted from the changing condition of the place where appellee and his fellow-servants were working. The trial judge seemed to be laboring under that impression, as evidenced by instructions Nos. 4 and 5 which were given. They are as follows:

“No. 4. The jury are instructed that, where the condition of the man’s place of work is being constantly changed, as in the course of tearing down the place or repairing the- place, the employer does not owe the employee, in such circumstances, any duty to make such a place reasonably safe, and the employee assumes the risk of any injuries which he must suffer as a result of such changing conditions.
‘ ‘ No. 5. The jury are instructed that, if the character of work which a person is employed to perform is such that the condition of the working place is being constantly changed, as where it is being torn up, or is undergoing repair, the employee assumes the risk of any injury resulting to him ordinarily incident to such changing conditions, and is not entitled to recover damages -from his employer if he gets hurt on account of some changing condition in his place of work ordinarily incident to its being torn down or being repaired. ’ ’

These instructions' wholly ignore the issue presented by the pleadings and testimony of whether the injury was occasioned through the negligent act or omission of the fellow-servant, over whom appellant had no control, and of which lie had no knowledge, in the exercise of due care for his own safety.

We deem it unnecessary to set out or discuss the other instructions, given or refused, further than to say that the appellee’s duty to furnish appellant a safe place in which to work was not -an issue in the case, and should not have been brought into the case by instructions.

On account of the error indicated the judgment -is reversed, and the cause is remanded for a new trial.


author: Hart, J.,

text:
    Missouri Pacific Railroad Company v. M. M. Cohn Company.
    Opinion delivered May 12, 1924.
    1. Bills and notes — drawer op check delivering to impostor.— Where the drawer of a check delivered it to an impostor, believing him to be the payee, and the impostor negotiates .it to an innocent third party for value, the drawer is liable to the latter.
    2. Estoppel — two innocent persons. — Where two parties to a fraudulent transaction are equally innocent, the loss should fall upon the one who, in law, most facilitated the fraud.
    3. Bills and notes — delivery op check to impostor. — Where a railroad company delivered its check in payment of an employee’s wages to an impostor who forged the employee’s name and indorsed it to ■ an innocent purchaser, the company was liable to the indorsee for the amount of the check, notwithstanding Crawford & Moses’ Dig., § 7789, making forged signatures inoperative unless defendant is precluded from setting up the forgery.
    4. Estoppel — negligence.—The maker of a check is estopped by its own lack of caution in delivering a check to a person intended by it as the payee of the check, although he turned out to be an impostor.
    5. Bills and notes — duty op purchaser to make inquiry. — If a purchaser of a check for value possessed facts sufficient to put him on notice that the person presenting the check was an impostor, he would be required to make further inquiry concerning his personality; otherwise not.
    Appeal from Pulaski Circuit Court, Third Division; Marvin Harris, Judge;
    affirmed.
    STATEMENT OF FACTS.
    M. M. Cohn Company sued the Missouri Pacific Railroad Company in the municipal court in the city of Little Rock, Arkansas, to recover $51.60 upon a cheek issued by said railroad company to G. W. Graham and indorsed by him in that name to the M. M. Cohn Company for a valuable consideration: The plaintiff recovered judgment in the municipal court by default, and the railroad company appealed to the circuit court. The case was tried in the circuit court upon an agreed statement of facts.
    It appears from the record that the Missouri Pacific Railroad Company, during the month of May, 1922, had an employee in its dining-car service by the name of G. W. Graham, and on May 31, 1922, it issued its check to the order of G. W. Graham for $51.60 for services rendered during the month of May, 1922. The check was given to a person who said his name was G. W. Graham, and who was believed by the railroad company to be the G. W. Graham to whom it owed the amount named in the check as wages, but who was not in fact such G. W. Graham. The impostor to whom the check was delivered took it to M. M. Cohn Company, a dry-goods store in the city of Little Rock, and indorsed it to said company in payment for goods purchased from it, and received the difference in cash. The impostor indorsed it, “G. W. Graham,” and the M. M. Cohn Company took the check in good faith, believing him to be the payee named therein. The railroad company refused to pay the check; hence this lawsuit.
    The case was tried before the circuit court without a jury, and, from a judgment in favor of the plaintiff for the amount sued for, the defendant has duly prosecuted an appeal to this court.

      E. B. Kinsworthy and B. E. Wiley, for appellant.
    1. Title to commercial paper, negotiable only by indorsement, does not pass by a forg’ed indorsement. O. & M. Digest, § 7789; 51 N. E. 602; 82 N. Y. 1; 131 Mass. 281; 136 Am, St. Rep. 1071, 1074; Daniel on Negotiable Instruments, 5th ed., § 1469; 178 S. W. 211; 101 Ark. 7; 148 Ark. 11; 127 S. W. 302; 134 Pac. 883; 28 Am. Dec. 233; 38 Am. Dec. 204; 49 Am. Dec. 315.
    2. Appellant is not precluded from setting up the forgery. When appellee purchased the check payable to the order of the payee therein, it devolved upon appellee to ascertain that the indorsement was genuine, and took the check at its own peril when it failed to identify the person who presented the check as the real payee therein. The Cureton case, 147 Ark. 312, is not applicable, neither is the .Southern Trust Go. case, Id. 288, applicable on the facts. The parties here were equally negligent, and should therefore be left where the court finds them.

      John F. Clifford, for appellee.
    1. Some form of delivery is essential to place a. negotiable instrument into circulation. The delivery may be by mistake, but, if it is an intentional delivery, ■whether to the right or wrong person, it is such delivery as starts the instrument on its career into the business world. The intention in parting with the instrument is the test. C. & M. Digest, § 7782; 8 C. J. 204; 120 Ind. 162. Here the railroad agent intentionally and voluntarily delivered the draft in question, with manifest intention to relinquish all power and control over it, placing it into the hands of another, and it is not material whether he mistook this party, thinking him some one else, or not.
    2. Is the appellant precluded by its own act from setting up the forgery? C. & M. Digest, § 7789. The negligence of the railroad company is clear. The very act of placing upon a new clerk, recently employed, the responsibility of paying its employees, was an act of negligence, and the failure of this clerk to require identification was also negligence. The burden was on the railroad company to overcome the prima facie presumption of valid delivery. Where the drawer of a check delivers it to .an impostor, believing him to be the payee named in the check, the indorsement thereof by the impostor is not a forgery, and the drawer is liable to any subsequent bona fide holder. Whitley 0n Bills, Notes and Checks, Negotiable Instruments Law, p. 186, and authorities cited; 147 Ark. 312; Modern Law of Banking, 717, and authorities cited; 27 Utah 222, 228; 90 N. W. Ill; 45 Fed. 164; 97 N. E. 395; 61 N. E. 596; 86 Pac. 165; 115 N. Y. Supp. 78.
   Hart, J.,

(after stating the facts). The judgment of the circuit court was right. This case is ruled by the principles of law decided in Cureton v. Farmers’ State Bank, 147 Ark. 312. In that case Cureton drew checks payable to A. J. Carmon and delivered them to H. Y. Carmon, believing him to be A. J. Carmon. H. Y. Carmon forged the name of A. J. Carmon on the checks, and gave them to some merchants in payment of goods purchased from them. The checks were presented by the merchants to the bank upon which they were drawn, and were paid by it out of funds on deposit to the credit of Cureton. Cureton sued the bank to recover the aggregate amount of the checks, and the circuit court rendered judgment in favor of the bank. It was there insisted that the bank ought to be held liable as for a negligent payment on a forg’ed indorsement. The court held that this rule should not apply when a check is issued to one whom the drawer intends to designate as- the payee, and there was no negligence on the part of the party cashing the check. The court adopted the rule that, where a drawer of a check, draft, or bill of exchange has been induced through fraud to deliver it to an impostor, believing him to be the person named in the check, draft, or bill of exchange, and the impostor negotiates the instrument, and receives payment thereon from an innocent third party, as between bona fide holder and drawer, the latter must stand the loss. This is an application of the rule that, when both parties to a transaction are innocent, and the loss must fall upon one, it should be upon the one who in law most facilitated the fraud. In the application of this rule, the railroad company, having issued and placed in the hands of an impostor a negotiable instrument, which in good faith is cashed by a dry-goods company in payment of goods purchased from it by such impostor, ought not to be permitted to repudiate it and compel the dry-goods company to stand the loss which was made possible by the railroad company’s failing to recognize its own employee, and delivering his wages to another person representing himself to be such employee.

It is claimed, however, by counsel for the railroad company that it is not liable under the provisions of § 7789 of Crawford & Moses’ Digest, Avhich is as follows': “When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority.”

We cannot agree with counsel in this contention. The statute is not absolute in its terms,, but recognizes the rule laid down above in the concluding part of the section. The right to be relieved where the signature is forged does not obtain under the statute, where the drawer is precluded from setting up the forgery or want of authority.

In the present ease the undisputed facts show that the railroad company is estopped by its own lack of caution from denying liability on the check which it issued and put in circulation by delivering it to a person intended by it as the payee of the check, although he turned out to be an impostor.

It cannot be claimed that the plaintiff was negligent in failing to make inquiries about the personality of the party presenting the check. He was the same man to whom the railroad company delivered the check, and, if an agent of the plaintiff had gone with the impostor to' the agent of the railroad company, who delivered the check to him, such agent would doubtless have identified, the impostor as the payee of the check. In other words, the plaintiff was only required to see that the person presenting the check was the one to whom, the railroad company had delivered it as the payee. Of course, if the plaintiff had been in possession of facts sufficient to put it on inquiry that the person presenting the check was an impostor, it would have been its duty to have made further inquiry about the matter.

There was nothing in the present case, however, tending in the remotest degree to warn the plaintiff that the person presenting the check was an impostor. On the contrary, the undisputed facts show that the plaintiff believed him to be the payee of the check. There is some division in the authorities of the courts of last resort of the different States on this question, and counsel for the plaintiff have cited many of them in support of the holding of the circuit court.

Inasmuch as this court lias already settled the question under the principles of law decided in the case above cited, we need not review or cite these cases.

It follows that the judgment of the circuit court must be affirmed.


author: Hart, J.

text:
    Davis v. Ferguson.
    Opinion delivered May 12, 1924.
    1. Mortgages. — A recital in a foreclosure decree that service of summons was had upon defendants as required by law is prima facie evidence of that fact.
    2. Judgment — application to set aside default — burden of proof. —In a direct action to set aside a ■ default foreclosure decree, the burden is on the applicants to prove want of service of summons upon them or fraud in procuring service.
    3. Judgment — application to set aside — evidence.'—In an action to set aside a default foreclosure decree, evidence held insufficient to prove want of service, as against recitals of decree showing such service.
    Appeal from Union Chancery -Court, First Division; J. Y. Stevens, Chancellor.

      Beits ■& Betts and Sa/ye é Saye¿ for appellant.
    1. There was no defense to the action brought to foreclose, and there could not have been any meritorious defense thereto, since the debt was a valid and subsisting obligation, and past due. The record discloses that the proper decree was rendered in 1914, and that the same decree would have been entered had all the parties been properly before the court, except that personal judgment should not have been entered ag-ainst defendants in that case. This error, however, was not prejudicial, as there was no deficiency judgment remaining against the defendants after the sale of the property. 15 R. C. L. § 148; Id. 698, § 149; Id. 717, § 169.
    2. Before the defendants would be entitled to relief against the decree for want of service, they must aver and prove that, if relief is granted, a different result will be attained from that reached by the decree complained of. 50 Ark. 458; C. & M. Dig. §§ 6292, 6293; 140 Ark. 447; 101 Ark. 142; 157 Ark. 464; 123 Ark. 447 ; 84 Ark. 527; 136 Ark. 537. The position of the minors in the case is no better than that of the adults. 90 .Ark. 44; 133 Ark 97; 49 Ark. 397; 124 Ark 377.
    3. The appellees are guilty of such laches as ought to preclude them from relief in this case. 15 R. O. L. 694, § 146; 135 U. S. 304; 37 Ark. 450.
    4. All of the appellees, except Tobe and Linzy Junior, who had no defense to the original suit, are barred by the statute of limitations.. C. & M. Dig. ^ 6946; 76 Ark. 146; 72 Ark. 339; 52 Ark. 132; 46 Ark. 25; 47 Ark. 558; 61 Ark. 541; 53 Ark. 400; 56 Ark. 460; 27 Ark. 178; 22 Ark. 483; 77 Ark. 242; 82 Ark. 51; 68 Ark. 449.

      Wilson & Martin, for appellees.
    1. The decree was void. C. & M. Dig. §§ 6238, 6261, 1113, 1114,1146; 152 Ark. 232.
    2. The purported service on the minors was invalid. 49 Ark. 397; 81 Ark. 450-465. The lower court rendered judgment in personam against all of the defendants, and they would be entitled to come in and have that judgment set aside. The Fergusons were tenants in common. Such of them as were not parties to the foreclosure suit would have the right to redeem for all the co-tenants. 35 Ark. 67; 31 Ark.'91; 74 Ark 143; 84 Ark. 525; 37 Ark. 643; 100 Am. Dec. 222; 14 Minn. 289; 30 Mo. 439; 50 Am. Dec. 37; 1 Smead 87; 60 Am. Dec. 137; 95 Am. Dec. 767, notes; 21 Am. St. Rep. 248; 19 R. O. L. 647; 35 So. 357; 100 Am. St. Rep. 42; 46 Am. Dec. 595.
    3. Plaintiffs are not barred by laches nor by limitation. 8 Wash. 652. A plaintiff in a foreclosure suit is not an innocent purchaser at the sale, when he knows he has not served the defendants with process. 20 la. 161; 89 Am. Dec. 520; 27 la. 381; 12 Col. 46; 13 Am. St. Rep. 204; 6 How. 163; 4 Dak. 360, and note; 42 Mich. 362; 43 N. J. Eq. 52; 66 Tex. 548; 15 111. 33; 45 Kan. 510; 35 Minn. 207; 48 Cal. 592; 16 L. J. Ex. 204; Mechera on Agency, § 810. The rale as to showing a meritorious defense has no application in a case of this kind, where the applicant for relief does not seek to be discharged from the burden of his obligation, but merely asks that his property, which was taken from him without any process of law of which he had notice, be returned to him upon his satisfaction of the lien created by the mortgage. 95 Mich. 581; 35 Am. St. Rep. 586, and note; 12 Col. 46; 75 Am. Dec. 146, note. The five-year statute of limitation applicable to judicial sales cannot apply here. 61 Ark. 329; 31 Ark. 272; 71 Ark. 310; 63 Ark. 1.
   Hart, J.

This was an action in the Union Chancery Court by appellees against appellant to set aside a decree foreclosing a mortgage on their land, and to allow appellees to make defense to said foreclosure suit.

The foreclosure decree was obtained by default, and the complaint alleges that there was no service of summons upon appellees, who were defendants to the action.

Appellant was the plaintiff in the foreclosure suit, and purchased the land at the sale, and, in his answer, alleges that the foreclosure proceedings were regular and that service of summons was had upon appellees.

It appears from the record that Ned Ferguson owned the land in controversy, which comprised 180 acres, situated in Union County, Arkansas. On February 20, 1911, Ned Ferguson executed a mortgage on said land to R. A. Hilton to secure the sum of $250.75, evidenced by a note of the same date as the mortgage, due and payable on the first day of November, 1911, with interest at the rate of ten per cent, per annum from date until paid. Pat McNalley was named as trustee in the mortgage, or deed of trust. Ned Ferguson died intestate on May 29, 1914, without having paid any part of the indebtedness mentioned above, and left surviving.him, as his sole heirs-at-law, appellees, who are his children and grandchildren.

On the 22d day of March, 1911, R. A. Hilton sold and transferred the said note and mortgage to B. R. Braswell for value received. On the 11th day of November, 1911, B. R. Braswell sold and transferred said note and mortgage to the plaintiff, B. Davis, for a valuable consideration. On the 7tli day of July, 1914, Pat MaNalley, as trustee, and B. Davis, as beneficiary, instituted1 an action in the Union Chancery Court against appellees as the sole heirs-at-law of Ned Ferguson, deceased, to foreclose said mortgage.

The prayer of the complaint was that judgment be rendered in favor of the plaintiffs in the action against the estate of Ned Ferguson, deceased, in the sum of $250.75 principal, with interest thereon at 10 per cent, per annum from February 20,1911, and that said deed of trust be foreclosed.

A decree of foreclosure was duly entered of record at the September term, 1914, of the Union Chancery Court. The decree recites that the plaintiff filed the original note and deed of trust sued upon, and aslced for it to be foreclosed; also proof of publication of warning order for the nonresident defendants, and the report of the attorney ad litem for the minor defendants was filed and approved.

The chancellor found that certain of the defendants had been, in due time, summoned by publication of a warning order, and that service of summons had been duly had upon the other defendants to the suit.

The chancellor also found that the sum of $344.18 was due upon said mortgage indebtedness, and, the defendants having made default, a decree of foreclosure was duly entered of record in accordance with the findings of the chancellor.

Pursuant to the decree of foreclosure, there was a sale of the land by a commissioner appointed for that purpose, and B. Davis became the purchaser at the sale for the sum of $410. On the 3rd day of March, 1915, a deed was executed by the commissioner to said B. Davis to said land. The deed was duly approved by an order of the court, and B. Davis took possession of the land on March 3, 1915, and1 has been in possession of it ever since.

The complaint in the present action to set aside the decree in the foreclosure suit was filed on April 14, 1921. The case came on for final hearing on the depositions introduced in evidence on March 15, 1923, in the Union Chancery Court.

The chancellor found the issues in favor of appellees, who were plaintiffs in the court below, as against appellant, B. Davis, who was the defendant in the court below. The decree further recites that appellees tendered to appellant the amount found due him by the chancellor' under the mortgage or deed of trust, and appellant refused to accept the tender. The money was then paid, into the registry of the court by appellees. A decree was entered in accordance with the finding of the chancellor, and to reverse that decree appellant prosecutes this appeal.

It appears from the record that the appellees are negroes, and either lived in Union County or in adjoining counties at the time Ned Ferguson died. They all testified upon the trial of the case.

Tim Ferguson was one of the children of Ned Ferguson, deceased, and was a witness for appellees. According to his testimony, he is forty-two years of age, and lives in Calhoun County, Arkansas. His father died in 1914. He never had any notice of the suit foreclosing the mortgage on the land. He was never served with any summons to that suit. On cross-examination he admitted that he knew that B. Davis had been claiming the land for about six years. He doesn’t know why he waited six years before taking steps to try to recover the land. He tried to employ Mr. Pat McNalley, and he claimed to he working for them in the matter. In 1916 his brother-in-law, John Smith, told him about the foreclosure suit and about Mr. Davis buying the land in that suit. John Smith employed Mr. McNalley to try to get the land hack.

Sterling Bell, a grandson of Ned Ferguson, was a witness for, appellees. According to his testimony, he is twenty-seven years old, and his mother, who was a daughter of Ned Ferguson, died in February, 1913, without making a will. He was her only child. He was never served with summons in the foreclosure suit. His first knowledge of that suit was when the present suit was commenced. On cross-examination, at the request of counsel for appellant, he wrote his name.

In this connection it may be also stated that there was introduced in evidence a paper showing that Sterling Bell had acknowledged service of summons in the mortgage foreclosure suit. Several witnesses testified that the signature to that paper and the signature written by Sterling Bell while he was giving his testimony were not written by the same person.

On the other hand, several other persons testified that the two signatures were written by the same person.

Susan Smith, a daughter of Ned Ferguson, deceased, was also a witness for appellees. She denied signing any acknowledgment of service of summons in the mortgage foreclosure suit. On cross-examination she admitted that she heard about the foreclosure suit being brought.

John Smith, her husband, was also a witness for appellees. According to his testimony, Sterling Bell was at the funeral of his grandfather. The witness went to Mr. McNalley, and spoke to him about the adjustment of the mortgage, after Ned Ferguson had died, and McNalley told him that he would attend to it. McNalley told witness he would notify them before the mortgage was foreclosed, but did not do so.

Andrew Ferguson was also a witness for appellees. He knew that Mr. Davis had a mortgage on the land, and went to see him about paying it off after his father died.

The other children also testified that they knew about the land being mortgaged by their father, and that the mortgage indebtedness was unpaid at the time of his death. They denied having been served with summons in the mortgage foreclosure suit, or that they had acknowledged service of summons in that suit.

According to the testimony of a deputy sheriff, he served the summons on two of the minors in the mortgage foreclosure suit. Another deputy sheriff testified about serving the summons on Andrew Ferguson, one of the sons of Ned Ferguson.

R. B. Braswell was a witness for appellant. According to his testimony, the land in question was worth about $2 an acre at the time he transferred the mortgage to B. Davis. Braswell bought the note and mortgage in question from Hilton for the amount of the mortgage indebtedness. The land was very poor, and was not worth more than the mortgage indebtedness at the time he sold and transferred the note and mortgage to B. Davis. In December, 1914, he bought three forty-acre tracts adjoining the land in question for $2.50 an acre, and they had better timber than that on the land in question.

Other witnesses testified that the land was not worth more than $2 or $2.50 per acre at the time it was sold under the foreclosure decree. On the other hand, several witnesses for appellees testified that the land was worth' between $6 and $10 an acre at that time. A short time before the present suit was instituted oil and gas were discovered in the territory in which the land is situated, and this caused it to increase in value.

Pat McNalley was also a witness for appellant. According to his testimony, the children and heirs-at-law of Ned Ferguson spoke to him about redeeming the land from the mortgage. He told them that he was going to bring a foreclosure suit, and it was agreed that he should write out an acknowledgment of service on the ■summons to be signed by the heirs-at-law of Ned Ferguson so that the cost of serving the summons would be saved them in case they redeemed the land from the mortgage. This was done, and the purported signature of the defendants to the acknowledgment of service was returned to him by one of them, and the foreclosure decree was taken upon the belief that the signatures were genuine. He denied that the heirs spoke to him about bringing suit to set aside the foreclosure decree. He says that he left El Dorado in February, 1915, and did not return until November,. 1920. In the intervening time he was not engáged in the practice of law, and was not a resident of the State.

B. Davis was a witness for himself. According to his testimony, he paid Mr. Braswell the face of the note, including interest for it, and the mortgage was also transferred by Braswell to him. In 1914 land was very cheap in Union County, Arkansas, and the land in question was worth 'but little more than he paid for the note and mortgage.

The recital in the mortgage foreclosure decree that the defendants to that suit were regularly served with process is, under our statute, prima facie evidence of that fact, and must be taken as true unless there is testimony showing to the contrary. In a direct action by defendants in a foreclosure proceeding to vacate the decree, the burden is upon them to show that there was a want of service upon them. Williams v. Alexander, 140 Ark. 442; Crawley v. Neal, 152 Ark. 232, and First Natl. Bk. v. Dalsheimer, 157 Ark. 464.

Tested by this rule, we think the chancellor erred in finding that there was a want of service upon appellees in the foreclosure suit. It is true that each of the childreu of Ned Ferguson and one of his grandchildren testified that they were not served with summons in the foreclosure suit; but, when all the surrounding’ circumstances are considered, it does not appear to us that their testimony overcomes the prima facie case against them. In this connection it may be stated that the evidence showed a service of summons upon Andrew Ferguson. There was also service upon two of the minor defendants by a deputy sheriff. There appears in the record the acknowledgment of service as to some of the adult defendants in the foreclosure suit. Each of them denied that he had signed the acknowledgment of service, but their testimony is contradicted in so many respects that it is not. worthy of credence. They all admit that they knew that their father had executed a mortgage on the land, and that it was due and unpaid at the time of his deatii. They either knew that the foreclosure suit was brought, or knew that B. Davis had bought the land in at that suit for the mortgage indebtedness. They claim that, in 1916, they attempted to hire Pat McNalley to set aside the decree, but in this respect they are flatly contradicted by McNalley. He testified that, at the time they claimed to have employed him, he was a nonresident of the State, and did not return to the State for several years thereafter. He explains that they talked to him about redeeming the land from the mortgage, and knew that the foreclosure suit had been filed. Some of the children of Ned Ferguson made arrangements with him to write on the summons an acknowledgment of service, to be signed by the other heirs, in order to save costs, if they could get up the money with which to redeem the land from the mortgage. The fact that Hilton sold and transferred the note and mortgage to Braswell for the face of it shows that he did not regard the land as worth much more than the mortgage indebtedness. This would be also true of the transfer from Braswell to Davis. In fact, Braswell testified that the land was not worth much more than the amount of the mortgage indebtedness, and that he bought other land in the same vicinity with better timber on it for $2.50 per acre, about the time the land in suit was sold under the foreclosure decree. Other witnesses testified that the land was worth but little more than the mortgage indebtedness at the time it was sold in the foreclosure suit.

It is true that appellees introduced witnesses who testified that the 180 acres of land in question was worth from six to ten dollars an acre at that time; but this evidence is contradicted by the attending circumstances. Appellees could not raise the money with which to redeem the land from the mortgage. If it had been worth so much more, it would seem that they might have done so. The fact that they waited until oil and gas were discovered in that territory before taking any action in the matter tends to contradict their testimony. They admit that they knew of the foreclosure suit, and do not give any excuse for waiting five or six years before taking action except the flimsy one that they had employed Mc-Nalley to act for them. He was - a nonresident of the State at the time they claimed to have employed him, and the most reasonable explanation of the matter is that the land was not worth redeeming until oil and gas were discovered in the adjacent territory.

In addition to this, in the case of Sterling Bell, we think the preponderance of the other evidence shows that he signed the acknowledgment of service of summons. It is also claimed that the acknowledgment of the service of summons was not accompanied with the formalities required by the statute. As we have already seen, the burden of proof was upon appellees in this respect. It may be that there was an amendment to comply with the statute, and the presumption is that such was the case. Under our statute the recital in the decree that service of summons was had upon the defendants in the manner required by law makes a prima facie case in favor of the plaintiff, and the burden is on the defendants to show a want of service or fraud in procuring service on them.

In the light of the attending circumstances, we think the learned chancellor erred in finding for the appellees in this respect, and, for that error, the decree will be reversed; and, inasmuch as the case seems to have been fully developed, upon remand the chancellor will be directed to dismiss the complaint of appellees for want of equity. It is so ordered.