text:
    Road Improvement District No. 4 v. Southern Trust Company.
    Opinion delivered March 13, 1922.
    1. Highways — authority of road improvement district to borrow money. — Under a statute authorizing the hoard of commissioners of a road improvement district to borrow money at a rate of interest not exceeding 6 per cent., and to issue negotiable bonds therefor, and to pledge, assign and mortgage all assessr ments for the repayment thereof, the board was authorized to issue a negotiable note for borrowed money.
    2. Bills and notes — negotiability.—A promissory note payable to a designated payee without either the words “or order,” or the words “or bearer”, is not negotiable.
    3. Highways — authority of district to execute note. — Where the board of commissioners of a road improvement district passed a resolution authorizing its president and secretary to borrow money and execute a “note” therefor, the resolution empowered these officers to execute a negotiable note.
    4. Bills and notes — when negotiable. — Where the board of commissioners of a road improvement district was impowered and intended to execute a negotiable note, but by mistake the words “or order” were omitted, but before the note was negotiated the board by letter authorized the payee to insert the omitted words, the omission was cured, and the note will be treated as a negotiable instrument.
    5. Bills and notes — construction with another writing.— Where the commissioners of a road improvement district, in executing a note for borrowed money, by mistake omitted the words “or order”, but, before the note was negotiated, by letter authorized the payee to insert the omitted words, the note and letter should be construed as parts of the same instrument.
    6. Bills and notes — bona fide purchaser. — Where the makers of a note, before its negotiators, by letter, authorized the payee to insert the omitted words “or order”, so as to make the instrument negotiable, a purchaser of the note for value before maturity and with notice of the authorization, was a bona fide purchaser.
    7. Bills and notes — when note not payable on contingency.— A note executed by the commissioners of a road improvement district “payable thirty days after date, with the express understanding and agreement that whenever the bonds of the district are sold, whether before or after maturity of the said note, the amount owing thereon shall be deducted from the purchase price of the bonds upon the surrender of the note”, was not payable upon a contingency, either as to time or manner of payment.
    8. Bills and notes — rights of bona fide purchaser. — Where a bank purchased a negotiable note in good faith before maturity, it acquired the instrument freed from any claims which the makers had against the payee.
    9. Garnishment — priority.—Where a road improvement district, after completing the improvement, was unable to pay all of its debts, a creditor first bringing suit in equity to subject a fund in bank belonging to the district to its claim was entitled to priority over, other simple contract creditors who intervened.
    Appeal from Pulaski 'Chancery Court, John E. Martmeau, Chancellor;
    affirmed.

      Powell & Allen, for appellants, road district and National Bank of Arkansas.
    Appellee is not a bona fide holder of the note. The note was not negotiable nor was it rendered so by the letters of Buster and Mosley. C. & M. Dig., § 7767. The time of payment was indefinite in that it depends on the sale of the bonds to S. R. Morgan & Co., which contingency never happened. C. & M. Dig., § 7770. The two contemporaneous writings, i. e., the resolntion of the board and the note, must be construed as one and the same instrument. 8 C. J. 196; 3 R. C. L. 883; 5 Ann. Cas. 151, note; 28 Ark. 387. The resolution provided for the payment of the note by deducting the amount from the price of the bonds. 134 Ark. 374. The promise to pay out of a particular fund is a conditional promise which renders the note non-negotiable. C. & M. Dig., § 7769.
    The issuance of the note as drawn was authorized by the board, but the attempted change therein was only authorized by two of the three members of said board, without a regular, or specially called meeting, which could not be done. 64 Ark. 489; 64 Ark. 159; 109 Ark. 125; 110 Ark. 262; 127 Ark. 310 ; 89 Ark. 173; 128 Ark. 324.

      The damages sustained by the district by reason of Morgan’s breach of contract should be offset against the judgment against the district.
    No judgment should have been rendered against the National Bank of Arkansas. The funds of the district were not subject to garnishment if the district was solvent. 230 S. W. 17.

      Caldwell, Triplett & Boss, for other appellants.
    The attempt on the part of two of the commissioners to make the note negotiable, without notice to the third member, could not bind the district. 185 S. W. 455; 110 Ark. 262.
    The signatures of Buster and Mosley did not bind the district. The district’s name was not signed to the note attested by them as president and secretary, and their signatures can not be held to be anything more than their individual signatures in a personal and not an official capacity, and the designation “commissioners” etc., as purely descriptive of who they are. 7 Oye. 549, 550; 36 Ark. 293; 47 Neb. 585, 66 N. W. 649; 3 W. Ya. 285 ;■ 78 Me. 390, 6 Atl. 11; 36 111. App. 107; 141 Mass. 587; 54 Ind. 260; 3 Wend. 94, 20 Am. Dec. 664.
    Appellee should have been required to marshal the assets of Morgan it holds, before seizing the funds of the district, as otherwise these appellants, who are also claimants against the district, will be defeated in the collection of their claims. 18 R. C. L. 456.

      Carmichael é Brooks, for appellee.
    Appellee is a bona fide holder of the note executed by the district. 102 Ark. 451; 94 Ark. 387. The act creating the district authorized the board to borrow money on its note or bond, and it was within the power of the board to issue such note. 79 Ark. 229. The word “note” means a negotiable note. 6 Conn. 108.
    The claim of want of power in two commissioners -to make the note negotiable without a meeting of the board to expressly authorize this action has nothing to support it. 91 Ark. 367; 86 Ark. 287; Id. 225; 74 Ark. 190; 91 Ark. 378; 89 Ark. 95. Having accepted the benefits, the action was ratified. 98 Ark. 38.
    Notes and bonds are treated as interchangeable terms. Rapalje & Lawrence’s Law Diet. Joyce on Defenses to Commercial Paper. §§ 394-5, 426, 441;’ 88 Am. St. Rep. 640.
    At cause of action which may be offset against a note must exist at the giving of the note.
    The district was insolvent and appellee was not required to marshal the assets. 143 Ark. 446; Henslee v. Mobley, 148 Ark. 141.
    The work had been completed, and the public had no interest therein. 56 Ark. 457. Appellee was the first .creditor to bring suit, and was entitled to priority over other creditors.
   Wood, J.

Road Improvement District No. 4 of Cleveland County, Arkansas, (hereafter called district) was created and organized under act No. 618 of the General Assembly of Arkansas, .2 Road Acts of 1919, p. 2286, approved April 2, 1919. The district was created and organized for the purpose of building a certain highway in Cleveland County, Arkansas. E. R. Buster, T. E. Mosley and J. A. Griffin were named in the act as the board of commissioners of the district. Under the terms of the act (section 4) the board elected E. R. Buster president and T. E. Mosley secretary and treasurer of the district. On the 5th of May, 1919, the district entered into a contract with S. R. Morgan & Co. (owned by S. R. Morgan and hereafter for convenience called Morgan), wherein the district agreed to sell and Morgan agreed to buy bonds of the district at the price of 102 cents on the dollar. The bonds were to bear six per cent, interest per annum, payable semi-annually, with an option to the purchaser to convert the 'bonds into five or five and a half per cent, bonds. The contract, among other things, provided that Morgan should pay 15 per cent, of the purchase money in cash upon the delivery of the bonds, and there were other provisions relating to the mapner of the payment of the bonds.

Among other, provisions of the contract was one to the effect that the bonds were subject to the approval of Rose, Hemingway, Cantrell & Loughborough, attorneys of Little Rock; that the district was to adopt such resolutions and execute such pledges and other instruments, the precedent for which was to be prepared by the attorneys. The contract contained other provisions which it is unnecessary to set forth. • There was a verbal understanding between Morgan and the district at the time the contract was entered into that, if the district needed funds before the bonds could be approved by Morgan’s attorneys, he was to advance such funds. While the bonds were being printed, the district through its board passed resolutions, prepared by the attorneys of Morgan, setting forth that it needed cash to do the work it was authorized to do under the act incorporating it, and which resolutions, among other things, provided as follows: “Now, therefore, be it resolved, by the board of commissioners of said district, that the president of the district be authorized to borrow from the said S. R. Morgan & Company the sum of money aforesaid, and to execute to the said S. R. Morgan & Company a note in the name of the district, by him as president, to be attested' by the secretary, for the sum of fourteen thousand dollars, payable thirty days after date, with the express understanding and agreement that whenever the bonds of the district are sold, whether before or after maturity of the said note, that the amount owing thereon shall be deducted from the purchase price of the bonds, upon the surrender of said note. The note to bear interest at the rate of 6 per cent, per annum from maturity.”

The resolutions were adopted at a meeting of the board of commissioners of the district at which all the commissioners were present in person, and in pursuance of that resolution the following note was executed:

“Kingsland, Arkansas,
“December 15, 1919.
“$14,000.00
“Thirty days after date, for value received, the undersigned, Road Improvement District Number Four of Cleveland County, Arkansas, promises to pay to S. R. Morgan & Company at its office in Little Rock, fourteen thousand dollars ($14,000), with interest thereon from maturity until paid at the rate of six per cent, per annum.
(Signed) “Road Improvement District Number Four of Cleveland County, Arkansas.
“By E. R. Buster, President.
Attest:
(•Signed) “T. E. Mosley, Secretary.”
After the execution of the above note Morgan applied to the Southern Trust Company (hereafter call trust company) to borrow the sum of $14,000, offering the above note as collateral security. The trust company noticed that the note on its face was not negotiable and called Morgan’s attention to that fact. Morgan directed the attention of E. R. (Buster, the president of the board, to the fact that the note was not negotiable in form, and on the 18th of December, 1919, Morgan received the following letter: ‘ ‘ Gentlemen: Referring to our note given you,' amounting to $14,000 for Road Improvement District No. 4 of Cleveland County, beg to advise that we omitted in said note, to insert the words “or order”, and this will be your authority to insert the words “or order” in the note.
“Tours very truly,
(Signed) “E. R. Buster,
“T. E. Mosley,
“Commissioners Road Improvement District No. 4, Cleveland County.”
On the 17th of December, 1919, Mr. J. R. Vinson, the president of the trust company, wrote a letter to the commissioners of the district, saying in substance that the trust company was loaning to Morgan the sum of $14,000 secured by the note of the district; that the note as executed on its face was not negotiable, and that a new note negotiable in form was being forwarded for their signature. He concluded the letter by saying: “If for any reason it is not entirely agreeable with your commissioners to handle this note in the way indicated above, I would be glad for you to let us hear from you.”

In reply, Vinson received the following letter:

“Dear Sir: In answer to your letter of the 17th inst. beg to advise that it will be entirely satisfactory with us to pay you the $14,000 note, transferred by S. B. Morgan & Co., provided of course you hold the note at maturity, and we are today writing S. B. Morgan & Co. to insert the words ‘or order’ in the note- In other words, the note should read: ‘S. B. Morgan & Co. or order. ’
“Yours very truly,
(Signed) “E. B. Buster,
“T. E. Mosley,
“Commissioners Boad .Improvement District No. 4, Cleveland County.”

There was no meeting of the board of the district at which resolutions were passed- authorizing Buster and Mosley to write the above letters. The other commissioner, Griffin, had no knowledge of the above letters.

Upon receipt of the above letters Morgan exhibited the letter received by him to the trust company, and that company accepted the $14,000 note above set forth as collateral security on a note executed by Morgan to the trust company for that amount advanced to him. Morgan exercised his option to have the district under its contract with him issue 5 1-2 per cent, bonds- Between the time of the printing, issuance, and tender of the bonds to Morgan he had advanced to the district the sum of $14,000 less a discount of 6 per cent, per annum for thirty days and received its note therefor as above set out. The 5 1-2 per cent, bonds were duly issued, and about the time of the maturity of the note of the district above mentioned, these bonds were formally tendered to Morgan for acceptance, and he refused to accept the same and continued, on subsequent tenders, to refuse to take the bonds, and thereby defaulted in his contract with the district. Thereupon the district offered the bonds for sale in open market. In,the meantime there had been a decline in the bond market, and the district was finally forced to sell the bonds for $106,710, which amounted to $13,367.88 less than the price which Morgan agreed to pay the district for the bonds. After the maturity of the $14,000 note executed by Morgan to the trust company, to which the $14,000 note of the district was collateral, Morgan increased his indebtedness to the trust company on the 14th of September, 1920, executing his note to the trust company in the sum of $20,000 due Nov. 1, 1920, secured by the $14,000 note of the district and by certain shares of the capital stock of the Bank of Okalona and shares of the capital stock of the Bryant Dry Goods Co. of El Dorado and other collateral. The trust company thereupon canceled the original note of Morgan to it for $14,000 and returned the same to him.

On the 22nd day of January, 1921, the trust company instituted this action in the chancery' court against Morgan, the district, the National Bank of Arkansas at Pine Bluff (hereafter called National Bank), in which it prayed judgment against Morgan in the sum of $20,-000 with interest, and against the district in the sum of $14,000, and against the National bank for whatever judgment might be rendered against the district, and that, if the judgment against Morgan were not paid, the other collateral, except the note of the district, be sold, and for all proper relief.

After setting up the note of Morgan and setting out the collateral, it was alleged in the complaint, among other things, that the proceeds derived from the sale of the bonds, that had been deposited in the National Bank, constituted a trust fund out of which the $14,000 note executed by the district should be paid. Morgan, in a separate answer, virtually admitted all the allegations of the complaint. The Bank of Okalona intervened and set up that Morgau was indebted to it in considerable sums, and it prayed that the Trust Company be required to marshal the securities of Morgan in its hands, and that the shares of the capital stock of the Bank of Okalona be resorted to last by the trust company to enforce the payment of Morgan’s note. Interventions' were also filed by certain parties who alleged that they were contractors and had performed work on the road which had been completed, for which the district was due them, in the aggregate, over $26,000; that the district had raised and had on deposit in the National Bank the sum of $17,000 as a trust fund, and that the district had no other funds with which to pay the retained percentages under their contracts which were due the interveners as contractors for work on the road. They also prayed that the trust company be required to resort to the other' securities in its hands for the payment of Morgan’s debt to it.

The district answered, admitting the execution of the note, but alleged that it was not authorized by the act creating- the district to execute the note. It set out the resolution under which the note was executed, and, among other things, set up that the note was not negotiable; that the trust company was not a bona fide holder ; that it had a complete defense to the note in that Morgan had breached its contract with the district for the purchase of bonds to the damage of the district in the sum of practically the amount of the note; that the funds belonging to the district on deposit with the National Bank were funds derived from the sale of the bonds, and were no part of the proceeds of the $14,000 note issued by the district; that these funds were deposited in the bank to meet the retained percentages due the contractors; that the work for which these funds were raised had not been completed. It denied that the funds on deposit in the National Bank were specific funds for the purpose of paying the $14,000 obtained by the district from Morgan as evidenced by its note for that snm. The district prayed that, in the event judgment be rendered against the district on the $14,000 note, it be allowed to offset the same by its claim for damages against Morgan.

The National Bank demurred to the complaint of the trust company on the ground that it did not state a cause of action against it, and that the court had no jurisdiction over the subject-matter. There was testimony in the record to the effect that the National Bank, on the day summons was served on it, had on deposit to the credit of the district the sum of $19,755.62. The allegations of the interventions that the district had on deposit in the National Bank no other funds with which to pay their claims, or other claims, were not denied. These allegations, taken in connection with the other testimony in the case, show that the district did not have on hand sufficient funds to pay its outstanding indebtedness. These allegations of the interventions and the testimony also showed that the improvement contemplated in the creation of the road district had been finished, and that the road had been accepted by the Federal engineer, because, under the contract, the retained percentages which the interveners were claiming in payment for their work were not due, and could not be paid until the improvement had been completed.

Upon substantially the above issues and facts, the trial court rendered a decree in favor of the trust company against Morgan in the sum of $20,493.33 with interest, and a judgment against the district for $15,030.54 with interest, and against the National Bank for the same sum with interest, and directed that the trust company have execution or garnishment of the judgment against the National Bank, and that, when the judgment in favor of the trust company against the district or the National Bank is paid, the. judgment against Morgan should be credited with the amount so paid. The court also rendered a decree dismissing the interventions of the contractors without prejudice' to any claims they might have against the district. From the decree the appellants prosecute this appeal.

1. The answer of the district set up that “it was not authorized to execute said note under the provisions if the act creating it.” The first question therefore for our consideration is: Did the district have the power to issue the note1? Section 5 of the act creating the district vests the board of commissioners named therein with power and authority, and makes it their duty, to build the road. Section 15 of the act provides in part as follows: “In order to do the work, the board may borrow money at a rate of interest not exceeding six per centum per annum, may issue negotiable bonds therefor signed by the chairman and secretary of the board, and may pledge, assign and mortgage all assessments for the repayment therefor.” The resolution of the board under which the note was executed set forth that the amount was needed to do the work authorized by the act. The testimony shows ithat the district received the money for which the note was executed, and that same was expended in doing work for which the district was created. While the act does specify that the board may “borrow money’ ’ and may issue £ £negotiable bonds, ’ ’ yet the fact that the resolution designated the instrument to be executed for the money borrowed as, a “note,” instead of a negotiable “bond”, and the fact that the instrument took the form of a “note” instead of a “bond,” can make no difference. Where the indebtedness which the instrument represents is for money borrowed, a technical compliance with the law as to the form of the instrument evidencing the debt, whether by negotiable note or negotiable bond, is wholly immaterial. Either would be evidence of indebtedness of the district for the money borrowed,'and in the eyes of the statute “note” and “bond” would be but convertible terms. Joyce on Defenses to Commercial Paper, p. 106, § 87; 1 Rapalje & Lawrence Law Dictionary, p. 142 — “Bonds of Companies,” etc.; Manhattan Savings Inst. v. N. Y. National Exchange Bank, 170 N. Y. 58, 88 Am. St. Rep. 640; see also Arkansas Foundry Co. v. Stanley, 150 Ark. 127.

2. Was the instrument under review a negotiable note? A negotiable promissory note is a Avritten unconditional promise by one person to pay to another person therein named, or order, or bearer, a certain sum of money on demand, or at a time specified therein, or at a fixed or determinable future time. C. & M. Dig., § 7767; 3 R. C. L. p. 833 § 6, 5 Words & Phrases, 4836 — “Note. (In commercial Law)” and cases there cited; Blevins v. Blevins, 4 Ark. 441; Huyck v. Meador, 24 Ark. 191. The note in controversy meets all the requirements of negotiability under our negotiable instrument law, except it does not contain' the words “or order” or “or bearer.” Neither of these terms has been inserted in the note. Therefore the note on its face is non-negotiable. The question then arises whether or not as between the district, the maker, Morgan, the payee, and the trust company the holder, the note must be treated as a negotiable instrument. That must be considered as done which it was within the power of the parties to do and which they should have done. Under the act, as we have seen, the board had the power to borrow money and issue negotiable bonds or notes as evidence of its indebtedness. In commercial as well as common parlance, the word “note” evidencing indebtedness in a business transaction means a negotiable note. That is the well understood and general meaning of the term as defined by lexicographers, law-writers and. law-makers when using’ the term “note” or “notes,” as referring to evidence of indebtedness in business transactions.

“The term ‘note’ as used in the negotiable instrument law means negotiable promissory note.” 5 Words & Phrases, 4837, citing the codes of several States; 1 Randolph on Commercial Paper. £ 7, Promissory Notes,” and definitions thereof in note; 1 Daniel on Negotiable Instrnménts, §§ 28; New International Dictionary, “Note” 16. It cannot be doubted therefore that when the board of the district passed its resolution authorizing its president and secretary to borrow money from Morgan and to execute to him a “note” therefor in the name of the district, it used the word “note” in its commercial sense as meaning a negotiable instrument. The purpose of the lawmakers, of course, was to facilitate the borrowing of money by the district for making the improvement; hence, it clothed the board with the authority to issue and send into the business world “couriers without luggage”— negotiable instruments — as evidence of its indebtedness. The resolution of the board must be read in the light of the statute which was the source of its power to borrow money. We conclude, therefore, that the resolution Empowered the president and secretary of the board to execute a negotiable note to Morgan. They failed to make the note negotiable by omitting the words ‘1 or order”, but their letters unmistakably show that such was the purpose of the resolution, and such was their intention at the time the note was executed. Having the authority to insert these words in the note by resolution of the board in the first instance, they had the power to alter or change the note in this respect without any new or additional resolution of the board. It was a mere mistake or oversight on their part which they had the power to correct, and the note must be treated as having been so corrected by mutual consent of the parties. Joyce on Defense to Comercial Paper, § 135; Camden Bank v. Holt, 14 N. J. Law, 583; Whitehead v. Emerick, 87 Pa. 790. While they have not in person actually made the correction, nevertheless, as between the trust company, Morgan, and the district, the letters of the president and secretary of the board must be considerd as a part of the note in the hands of the trust company. The resolution of the board, the notes, and the letters of the president and secretary should be regarded as contemporaneous writings relative to the same subject-matter and 'parts of the same transaction. The note and letters were intended to accomplish the one general object, and should be construed as parts of the same instrument. McDonough v. Williams, 77 Ark. 261-272; Mann v. Urquhart, 89 Ark. 239-247; Richardson v. Thomas, 28 Ark. 387; 8 C. J. 196, § 327; 3 R. C. L. 883.

3. Was the trust company an innocent holder of the note? Since the note on its face did not contain the words “or order”, or “or bearer”, it bore its own death wound as a negotiable instrument, and if the trust company had taken it in this shape without inquiry and without explanation from the president and secretary of the board as to why these words were omitted, and without their direction to insert the same as shown by their letters, of course, the trust company under such circumstances, would not be a bona fide holder. But, as is shown by the undisputed testimony, the trust company did make investigation and ascertained and elicited facts which rendered the note negotiable, and before the maturity thereof it advanced to Morgan the amount of money named therein. As we have shown, the only defect in the note was that it omitted the words ‘ ‘ or order ’ ’ or “or bearer” and this omission was óured by the letters signed by the president and secretary of the board, The note should therefore be read as if it contained these words. The omission of these words put the trust company upon notice. It made inquiry, and the facts developed proved that the note was executed by the president and secretary of the district in pursuance of a resolution of its board of commissioners under authority of the statute giving the commissioners the power to borrow money, and to issue “negotiable bonds” (or notes) therefor.

The resolution of the board contained a provision authorizing the president and secretary to execute a note to Morgan in the name of the district “for the sum of $14,000 payable thirty days after date, with the express understanding and agreement that whenever the bonds of the district are sold, whether before or after maturity of said note, that the amount owing thereon shall be deducted from the purchase price of the bonds upon the surrender of the note.” The appellant district contends that this provision of the resolution, of which the trust company had to take notice, shows that the note was to be paid when, and not until, the bonds of the district were sold, and that the note was payable only upon the contingency that the bonds be sold and delivered to Morgan, which contingency never happened. We cannot concur with learned counsel for appellants in this contention. Certainly the note on its face does not show that the payment thereof was to be based upon any contingency, and the note, when read in the light of that part of the resolution quoted, does not show that the note was payable upon a contingency, either as to time or manner of payment. As we construe the note in connection with the provision, there was no uncertainty in the time of payment, nor was the note payable only upon the contingency that the bonds were to be sold and delivered to Morgan. The time for the payment of the note was fixed and certain, and the note was to be paid whether any bonds were sold or not. But when the bonds were sold, whether before or after maturity of the note, if the note had not already been paid, then the amount due on the note should be deducted from the purchase price of the bonds upon the surrender of the note, no matter who purchased the bonds.

The resolution sought to provide for certain payment of the note out of the proceeds of the bond sale, but it does not justify the conclusion that the note was not to be paid unless the bonds were sold. On the contrary, it occurs to us that a proper construction excludes that idea. We conclude that the trust company took the note before maturity for value, in good faith, without notice of any defense thereto in the hands of the payee, and in the usual course of business. It is therefore a bona fide holder thereof.

Having so concluded, the issue “that the alleged damages sustained by the district by reason of Morgan’s alleged breach of the contract should be offset against any judgment rendered against the district on the note,” passes out of the case. According to the undisputed testimony, the trust company took over the note before any defenses of any kind or any equities had arisen in favor of the district against Morgan growing out of the alleged breach by Morgan of the contract between them concerning the purchase of the bonds.

5. Did the court err in rendering judgment in favor of the appellee against the National Bank impounding the funds in its hands belonging to the district for the payment of appellee’s judgment against the district; and, did the court err in dismissing the interventions asking that the appellee be required to marshal the securities in its hands and resort to other securities for the satisfaction of its judgment against Morgan before resorting to the funds of the district in the hands of’the National Bank? The allegations of the petitions of the interveners (which were duly verified and not denied), taken in connection with the other testimony in the case, show conclusively that the district, at the time of the institution of this action, did not have sufficient funds on hand to pay its outstanding indebtedness. The allegations of these interventions and the other testimony in the record also show conclusively that the improvement for which the district was created had been completed. In this state of the record, we see no reason why the appellee was not entitled to have its judgment against the district satisfied out of the funds belonging to the district in the hands of the National Bank, for two reasons:

(a) It was the first creditor of the district to bring its action and to subject these funds belonging to the district to the payment of any judgment that it might obtain against the district. There is no principle of equity that would postpone the appellee in the collection of its judgment out of the funds of the district and give precedence to the claims of the contractors. On the contrary, the trust company was entitled to priority over the interveners. Because in the race between creditors of the district to subject its funds in the hands of the National Bank for the payment of their claims, the trust company was the first to reach the goal by instituting its action to impound such funds.

(b) This is a direct action against the district to recover on its note, and since the work has been completed and the public is no longer interested in the preservation of the funds of the district for the completion of the improvement, and since the district has no other available funds besides those in the hands of the National Bank, the appellee' had the right to resort to a court of equity to obtain a decree against the district on its note and to have equitable garnishment against the National Bank to subject the funds in its hands belonging to the district to the payment of the decree.

The funds in the hands of the National Blank belonging to the district was a trust fund, and the public interest was no longer involved in the administration of the fund. A court of equity was the proper forum for creditors to enter in order to have these funds subjected to the payment of their claims against the district. The appellee and the interveners were simple contract creditors of the district. Therefore, ¡appellee, being prior in time with its suit, had the prior lien on the funds by equitable garnishment. See Riggin v. Hilliard, 56 Ark. 476; Plummer v. School Dist. of Marianna, 90 Ark. 236; Bayou Meto Drainage Dist. v. Chapline, 143 Ark. 446; Henslee v. Mobley, 148 Ark. 181. where principles controlling this branch of the case are announced.

The decree is in all things correct, and it is affirmed.


source: Caselaw Access Project

author: Hart, J.,

license: Public Domain

text:
    Tallman v. Heuck.
    Opinion delivered March 13, 1922.
    Judicial sale — rights to rent during redemption period. — A purchaser at a mortgage foreclosure sale is not entitled to recover from the mortgagor in possession the rents and profits accrued during the year allowed for redemption where he gave the mortgagor no notice to quit, and made no demand for rents and profits.
    Appeal from Arkansas Circuit Court, Northern District; George W. Clark, Judge;
    affirmed.
    STATEMENT OF FACTS.
    Appellant sued appellee to recover the sum of $325, the value of one-third of the hay cut on a certain tract of land in Arkansas County, Ark. Appellant purchased the land on which the hay was grown at a mortgage foreclosure sale on July 31,1919. There was a confirmation of the sale by the chancery court on October 7, 1919. The hay was cut and removed from the land by a tenant of the mortgagor between those dates.
    The chancellor found the issues in favor of appellee, and the case is here on appeal.

      George C. Lewis, for appellant.
    After a judicial sale has been confirmed, the ownership begins at the date of sale, and not from the confirmation thereof. 99 Ark. 324; Rorer on Judicial Sales, § 122; 17 Am. & Eng. Ency. of Law, 993; 80 Ark. 1; 56 Ala. 295; 33 W. Va. 299.

      Edwin Pettit, for appellee.
    A purchaser is entitled to possession on the issuance of a commissioner’s deed. 99 Ark. 329. A deed absolute on its face conveys all the grantor’s interest in growing crops. 10 Ark. 14; 14 Ark. 290.
    A purchaser is not entitled to the rents between the date of sale and the date of confirmation, but is liable for interest on the purchase money. 170 Ky. 657; 186 .S. W. 503; 3 Ky. Law Rep. 466; 3 Ky. Law Rep. 469; 65 S. W. 439; 23 Ky. Law Rep. 1497; 78 Ky. 496; 80 Ky. 501; 56 S. W. 504; 22 Ky. Law Rep. 9; 140 Ky. 80; 130 'S. W. 953; Ann. Cas. 1912-B, 395.
    A purchaser is entitled to possession of the property and also to the rents after confirmation. 140 Ky. 80; 130 S. W. 953.

      A mortgagor in possession is entitled to receive and apply to his own nse the income of the mortgaged estate. 2 Jones on Mortgages, (7th Ed.) § 670.
    In a mortg-age foreclosure sale the purchaser does not acquire title to the premises nor right of possession until a delivery of the deed by the officer making t’he sale. Wiltsie on Mortgage Foreclosure, vol. 2, § 718; 51 N. Y. 447; 52 Barb. (N. Y.) 319; 106 Iowa 287; 76 Nr W. 708; Kan. App. 383; 51 Pac. 924; 62 Kan. 850; 62 Pac. 655; 4 Abb. (N. Y.) N. C. 200; 11 Paige Oh. (N. Y.) 436; 43 Am. Dec. 766; 5 Sandf. (N. Y.) 477; 9 N. Y. Weeks Dig. 468; 78 Ky. 496.
    A purchaser is not entitled to possession nor to rents and profits until he has añade demand under his deed for possession. Wiltsie on Mortg-ag-e Foreclosure, § 718; 53 N. Y. 447; 52 Barb. (N. Y.) 319;'ll Paige, Oh. (N. ’Y.) 436; 43 Am. Dec. 766; 5 Sandf. (N. Y.) 447; 134 N. Y. Supp. 78.
    Where rent becomes due and payable between the day of sale and the time when the purchaser is entitled to possession, it belongs to the owner of the equity of redemption and not to the purchaser. Wiltsie on Mortgage Foreclosures, § 719; 90 111. App. 31; 46 Ore. 308; 114 Am. St. Rep. 871; 80 Pac. 209; 92 111. App. 377; 144 Fed. iSlO; 75 C. C. A. 540; 11 Paige, Oh. (N. Y.) 436; 43 Am. Dec. 766; 25 N. Y. 462; 11 Abb. (N. Y.) Pr. N. S. 347; 42 How. (N. Y.) p. 33; 33 N. Y. Sup. Ct. (1 J. & S.) 67; 5 Sandf. (N. Y.) 447.
    A purchaser at foreclosure sale is not entitled to rents or profits accruing before foreclosure or during the pendency of the proceedings. 3 Jones on Mortgages, § 1659.
    The relation back doctrine does not apply to rents accrued and crops severed aaid removed prior' to the order of confirmation. 3 Jones on Mortgages, § 3653; 4 Heisk. 80; 7 Heisk. 131; 11 Lea 267; 9 Heisk. 681; 1 Swan ■484; 99 Ark. 328; 123 Ark. 20; 86 Ark. 255.

      Even a tresspasser obtains title to crops raised by him on lands of another after severance and removal. 140 Ark. 281.
   Hart, J.,

(after stating the facts). The ruling of the trial court was correct. In North American Trust Co. v. Burrow, 68 Ark. 584, it was held that one who purchases at a sale under a mortgage is not entitled to recover from the mortgagor in possession the rents and profits accrued during the year allowed for redemption, where he gave the mortgagor no notice to quit, and made no demand for rents and profits.

Again in Deisch v. Moore, 97 Ark. 262, the court held that a purchaser at a mortgage sale is not entitled to recover from the mortgagor in possession the rents and profits during the period allowed for redemption. The court said that the mortgagor in possession during the period allowed for redemption is a tenant by sufferance, and is not required to pay rent until after notice to quit or eviction.

In the instant case it does not appear that the purchaser at the mortgage foreclosure sale had acquired possession of the land or had given the mortgagor notice to quit. Hence the purchaser at the foreclosure sale was not entitled to the rents sued for and could not maintain a suit for the conversion of the crops.

The case of Brasch v. Mumey, 99 Ark. 324, relied upon by counsel for appellant, has no application. The point involved in that case was whether the right of redemption under sale for delinquent assessments ran from the date of the sale or from the confirmation thereof.

It follows that the judgment must be affirmed.


author: Smith, J.

text:
    Loose-Wiles Biscuit Co. v. Jolly.
    Opinion delivered March 13, 1922.
    1. Pleading — -negative pregnant. — -Where a complaint alleged that defendant was a corporation organized under the laws of Missouri, and the answer denied that defendant was a corporation organized and doing business under the laws of Missouri, the effect of this denial is not to deny that defendant is a foreign corporation, -but to deny that it is organized and doing business under the laws of Missouri, and plaintiff was not called on to prove that defendant was a foreign corporation.
    2. Evidence — res gestae. — In an action against a master for the acts of a servant in wilfully and wantonly driving an automobile against plaintiff’s buggy, overturning it and seriously injuring her,-it was competent to prove that the servant, after the injury, suggested that they try to hitch plaintiff’s horse up so that she could go to town in her buggy, and that a witness asked the servant to take her to town in the automobile, whereupon the servant answered that he would do so if plaintiff would clean up a little and would wash her baby’s face; such testimony tending to prove a conscious indifference on the servant’s part to the consequences of his acts.
    3. Pleading — sufficiency.—Where a complaint alleges facts which, if proved, would show that the acts complained of were negligent or wrongful, it is unnecessary for the pleader to so designate them.
    4. Election — when not required. — Where the circumstances of an injury were such as to leave it in doubt whether the injury resulted from wantonness or from mere negligence, the plaintiff would not be required to seek redress on one theory alone, but was entitled to have a single jury pass upon the inferences to be drawn from the circumstances of the injury.
    Appeal from Crawford Circuit Court, James Cochran, Judge;
    affirmed.

      Cravens, Oglesby & Cravens, for appellant.
    There is no allegation of negligence in the complaint, and the action is simply one for punitive damages, and appellant’s demurter should have been sustained. 135 Ark. 621; 98 Ark. 261; 70 Ark. 226; 58 Ark. 407.
    A verdict should have been instructed for appellant, as there is no evidence that the injuries were inflicted wilfully and wantonly and maliciously. The action is not grounded on negligence but wantonness, wilfulness and malice. Shearman & Red. Neg. 5th Ed. vol. 1, par. 7; 20 N. E. 147; 94 Ind. 46; 49 N. E. 445; 88 111. 431; 106 Am. St. Rep. 199; 19 So. 395. See also 9 So. 509; 79 Ala. 436; 23 So. 231; 13 So. 130; 39 S. E. 351; 42 S. E. 427.
    Wilfulness does not consist in negligence, and the two terms are incompatible. 23 L. R. A. 552.
    Plaintiff failed to prove appellant’s corporate existence after having alleged same, which is fatal. 28 Ark. 261, and cases cited.
    Instructions 1 and 2 upon the question of negligence are not based upon any allegation in the complaint, and were erroneous. 9 So. 509; 39 S. E. 351. Instruction No. 7 covering compensatory damages was error. Cases cited above.

      George G. Stochard, for appellee.
    The form of denial of the corporate existence of appellant was ambiguous, and has been frequently condemned both at common law and under the Code. 77 Ark. 139; 54 Ark. 546; 58 Ark. 39; 84 Ark. 409; 77 Ark. 66. The return on the summons, standing unchallenged, is an admission that defendant is a foreign corporation. If failure to prove corporate existence' was error, it was harmless.
    Even though the complaint was unskillfully drawn, if it alleged facts which, if proved, would show that the acts complained of were negligent or wrongful, it is unnecessary for the pleader to so designate them. 58 Ark. 136; 136 Ark. 456; 93 Ark. 393; 20 Stand. Proc. 308, 323; 74 Ark. 93.
    The facts of this case, under 84 Ark. 241, would have justified a finding for both compensatory and punitive damages, although there is nothing in the verdict to indicate that the jury awarded punitive damages.
   Smith, J.

The complaint in this cause contained allegations to the following effect: That the defendant is a corporation organized and doing business under the laws of the State of Missouri; that on January 4, 1921, plaintiff was driving a single horse, in a one-seated-buggy, accompanied by her two infant children; that she was driving along the public road and across a certain bridge, when one of defendant’s servants and agents drove up behind her, in one of the company’s automobiles, on the company’s business, at a high and dangerous rate of speed; that when she became aware of the approach of the car she drove off the bridge and quickly guided her horse to the right hand side of the road, thereby making and leaving ample room for the automobile to pass without striking her buggy; that the road was perfectly straight, and the situation was apparent to defendant’s servant and agent who was driving the automobile, yet said servant and agent wilfully and wantonly drove the automobile into the rear end of her buggy, thereby overturning the buggy and throwing the buggy over a high embankment and plaintiff, to the ground, and the automobile thereafter ran over the plaintiff and inflicted serious injuries on her, and as she was pregnant at the time she sustained a permanent injury. There was an allegation that the horse was injured, and that “the buggy in which plaintiff was driving was damaged by reason of defendant’s carelessness and negligence in the sum of $30.” Mrs. Jolly, the woman injured, and her husband joined as plaintiffs; and there was a prayer for damages, both compensatory and punitive.

The answer denied “that the defendant is a corporation organized and doing business under the laws of the State of Missouri,” and further denied each and every allegation of the complaint, and alleged the fact to be that, as the automobile approached the buggy, Mrs. Joily indicated that she would give the automobile space to pass, but, without warning, she suddenly and carelessly stopped her horse and backed her buggy a slight distance so that the collision became inevitable, although the automobile was not being driven at the time at a higher rate of speed than about five miles per hour.

Mrs. Jolly gave testimony which fully supported the allegations of the complaint; and Varnadore, the driver of the automobile, gave testimony which supported the allegations of the answer. One Mitchell, a bystander, gave testimony supporting Mrs. Jolly’s version of the incident. .Mitchell further testified that, after overturning the buggy and running over Mrs. Jolly with his car, Varnadore was proceeding on his way without stopping, when witness compelled him to stop and return to the assistance of the woman who had been injured.

The case was submitted on instructions which authorized a verdict for the plaintiffs upon a finding either of negligence or of wilfulness upon the part of the chauffeur. Objections were made to these instructions upon the ground that the complaint did not charge negligence, but had only charged wilfulness; and the insistence is that the right of recovery should have been limited to that allegation.

Error is assigned in the refusal of the court to give certain instructions requested by the defendant, which are set out in the brief. But, inasmuch as all the instructions are not set out, we must assume that the points raised in the instructions which were refused were covered in the instructions which were given.

Exceptions were saved to the admission of the evidence of Mitchell and a Mrs. McCurdy, to the effect that after the injury Varnadore first suggested that they try to hitch the horse up so that Mrs. Jolly could go to town in her buggy, when Mitchell asked Varnadore to take her on to town in the automobile, and Varnadore answered that he would do so if Mrs. Jolly would clean up a little and would wash the baby’s face.

There was a verdict and judgment for $1,100 in favor of the plaintiffs, from which is this appeal.

It is first insisted that the plaintiff failed to prove that the defendant was a foreign corporation. It will be observed that the answer denies that defendant is a “corporation organized and doing business under the laws of the State of Missouri.” The effect of this allegation is not to deny that defendant is a corporation, but to deny that it is organized and doing business under the laws of the State of Missouri. 21 R. C. L. 560; 1917-A Ann. Cas. 672; M. K. & T. Ry. Co. v. Elliott, 51 S. W. 1067; C. R. I. & P. Ry. Co. v. State, 84 Ark. 409; St. L., I. M. & So. Ry. Co. v. Cooper & Ross, 120 Ark. 595; 1 Sutherland, Code Pleading, § 417. It was immaterial in what State defendant was organized. It was sued as a foreign corporation and served as such, and no motion was made to quash the service. The court did not err, therefore, in refusing to direct a verdict for the defendant on that ground.

No error was committed in admitting the testimony of Mitchell and Mrs. McCurdy as to statements made by the chauffeur, Varnadore, after the collision. The allegations of the complaint are that the driver of the automobile ran into the buggy wantonly and wilfully. The testimony objected to tended to show a conscious indifference on the part of Varnadore, and, if not a part of the res gestae, the statement tended to show the mental attitude of Varnadore toward the consequences of his acts.

The chief insistence for the reversal of the judgment is that the court erred in refusing* to limit the plaintiff’s right of recovery to the allegation that the'collision resulted from the wilful and wanton act of the driver of the automobile. But we think no error was committed in submitting the question of negligence, as well as that of wilfulness, to the jury. In our opinion, the testimony is legally sufficient to support a recovery upon either theory.

It is conceded that the complaint charges wilfulness and wantonness; but it is insisted that it does not charge negligence. We do not' agree with counsel in this contention. It is true that, in the court in which damages are prayed for the injury to Mrs. Jolly herself, defendant was not specifically charged with negligence, but it was not essential that the chauffeur’s conduct should have been so designated. If the allegations of the complaint are such as that, if true, they would support a recovery for a negligent injury, then the failure to designate such conduct as negligent is unimportant.

In the case of Heinemann v. Barfield, 136 Ark. 464, we said: “Where a complaint alleges facts which, if proved, would show that the acts complained of were negligent or wrongful, it is unnecessary for the pleader to so designate them.” The allegations of the complaint here are such that a recovery might be had upon a showing either of wantonness or negligence.

Appellant cites cases which hold that a plaintiff should be required to elect between the allegations of wilfulness and of carelessness, and insist, upon the authority of these cases, that error was committed in submitting the case to the jury under instructions which permitted a recovery if the existence of either was established by the testimony.' This question was thoroughly considered by the Supreme Court of Wisconsin in the case of Austin v. C., M. S St. P. Ry. Co., 143 Wis. 477, 128 N. W. 265, 31 L. R. A. (N. S.) 158. The Code of that State is not substantially different from that of our own, and it was there held that, if the circumstances of an injury were such as to leave it in doubt whether the injury resulted from wantonness or from mere negligence, the plaintiff would not be required to seek redress on one theory alone, but was entitled to have a single jury pass upon the inferences to be drawn from the circumstances of the injury.

The court in that case considered the same sections from Shearman & Bedfield on Negligence which are pressed upon us for approval. The court was of the opinion, however, that the liberal provisions of the 'Code of that State, authorizing and requiring one to state his whole cause of action in a single suit, led to the view there announced. It was there said: “We do not overlook the fact that it is given in Shearman & Redfield on Negligence that where the facts of a case like' this are of doubtful construction, and plaintiff, by not understanding his case, has predicated it on the wrong theory of actionable misconduct, he may amend and stand on the right one, keeping in mind that the final choice will necessarily ibe binding so as to waive any other cause of-action. If the writer intended by that to say that the party, when the facts of his case are susceptible of a double construction, cannot, under any circumstances, have it submitted to the jury to draw the proper inference, he confuses the matter with those situations where the doctrine of election, strictly so-called, applies, and the courts cited do not bear out the text, as has been seen.”

See also Thompson on Negligence, § 1858; Gorton v. Harmon, 116 N. W. 443; Neary v. N. P. R. Co., 110 Pac. 226.

Our own case of St. L., I M. & So. Ry. Co. v. Stamps, 84 Ark. 244, is against the view that an action for a wilful injury cannot be joined with one for a negligent injury. The pleadings in that case are not set out in the opinion, but it is fairly inferable from the discussion that both negligence and wilfulness were alleged in the complaint in that case; and the same thing is true of the case of Heinemann v. Barfield, supra.

No error appearing, the judgment is affirmed.


author: Humphreys, J.

text:
    Federal Lumber Company v. Harris.
    Opinion delivered March 13, 1922.
    Evidence — parol testimony to vary written contract. — Parol testimony cannot be introduced to vary, add to or contradict the terms of a written contract. Thus, where a bill of sale of a sawmill was executed and a draft given to cover the cash payment, and notes were executed for the balance of the purchase money, parol evidence was inadmissible to prove that the seller had agreed to deliver a specified number of feet of logs or lumber on the mill-site.
    Appeal from Sevier Chancery Court, James D. Shaver, Chancellor;
    affirmed.

      Lake & Lake, for appellant.
    The findings of the chancellor are against the weight of the evidence. 346 Ark. 87; 106 Ark. 583; 102 Ark. 383.
    Appellant, as the undisclosed principal or beneficiary of the deal, had the right to maintain the suit. 117 Ark. 372; 78 Ark. 241; 120 Ark. 472, and cases cited.
    The delivery of a part of the timber contracted for was sufficient to take the case out of the statute of frauds. 135 Ark. 31; 79 Ark. 338; 128 Ark. 434; 19 Ark. 473.

      E. K. Edwards, B. E. Isbell, for appellee.
    Oral testimony is inadmissible to vary or contradict an unambiguous written contract.
    The findings of fact of a chancellor will not be disturbed on appeal when supported by competent evidence.
   Humphreys, J.

This suit was commenced in the Sevier Circuit Court by appellant against appellee to recover damages in the sum of $4,728, for the breach of an alleged partially performed oral contract to deliver to appellant at its sawmill 800,000 feet of sawlogs. It was alleged in the complaint that appellant purchased from appellee a mill and planer located near Lockesburg, for $2,500, and 800,000 feet of sawlogs at $9 per thousand feet to be delivered at the rate of 100,000 feet per month at said mill; that the primary consideration for the purchase of the mill was the agreement by appellee to deliver the logs at the mill; that appellant paid $500 in cash and executed three notes, two for $500 each and one for $1,000, secured by a mortgage on the mill and planer for the balance of the purchase money for the plant; that it afterward paid the two $500 notes, but had not paid the note for $1,000; that appellee delivered 8,000 feet of logs, for which appellant paid $10 per thousand, but failed and refused to deliver any more; that, on aocount of the failure to deliver the logs as per contract, appellant suffered damages in the sum stated above; that appellee was about to institute foreclosure proceedings and subject the plant to the payment of the $1,000 note; that, if permitted to do so, on account of the insolvency of the appellee, appellant would be compelled to pay the note and receive no remuneration from the damages sustained on account of the breach of the contract. The prayer' of the complaint was for judgment for damages in the amount claimed, and for a restraining order against the transfer of the note and foreclosure of the mortgage.

Appellee filed an answer, denying that he entered into the alleged oral contract, and that the primary consideration for the sale of the mill was an undertaking on his part to deliver sawlogs on the millsite; but alleged that he entered into a written contract with Phil T. Stevenson for the sale and purchase of the sawmill and planer for $2,500, $500 cash and $2,000 upon deferred payments, evidenced by three promissory notes, two being for $500 each and one for $1,000, which were secured by a chattel mortgage executed by Phil T. Stevenson himself; that when he sold the sawmill and planer he executed a bill of sale for same in the usual form to Stevenson; that the notes were indorsed by K. E. Hicks for appellant; that appellant paid the two $500 notes, but refused to pay the $1,000 note when same matured. The prayer of the answer was that appellant take nothing by reason of his complaint, and that appellee have judgment for his costs. Appellee asked that Phil T. Stevenson be made a party and filed a cross-bill against him and' appellant, embodying the necessary allegations for a judgment upon the note and a foreclosure of the mortgage, and obtained a transfer of the cause to the chancery court.

The cause was submitted upon the pleadings and evidence, which resulted in the dismissal of appellant’s complaint and a decree in favor of appellee upon his cross-complaint, from which is this appeal.

The testimony adduced by appellant tended to show that it was unwilling to purchase the sawmill and planer from appellee unless assured of sufficient timber to operate the plant; that therefore it entered into a contract with appellee for' the sale and purchase of the mill and planer and 800,000 feet of logs or timber to be delivered at the millsite at the rate of 100,000 feet per month; that the prime consideration for the contract was the procurement of the timber. Appellant contends that it is shown by a great preponderance of the evidence that it entered into such a contract with appellee. The testimony shows that, after the terms of the contract had been discussed and agreed upon, the parties repaired to the law office of E. K. Edwards and requested him to prepare a bill of sale, notes and mortgage covering the sale and purchase of the sawmill and planer. Edwards asked them to state the terms of the contract to him, giving the particulars. Appellee stated that he was selling his mill and planer to Stevenson, including the lumber1 on the yard, but that it was unnecessary to include the lumber in the bill of sale because it was ready for the market and would be shipped away before the notes were due. The attorney asked whether K. R. Hicks was a party to the contract. Hicks replied that he was an officer in the appellant company and was going to sign the notes as surety for Stevenson, as appellant would handle the output of the mill. The attorney had made a memorandum of the particulars from which to draft the bill of sale, notes and mortgage, then propounded this question to the parties, “Now, does this cover it all?” One of them, in the presence of the others, said “Yes.” A bill of sale for the mill and planer, in the usual form, was prepared by the attorney, signed by appellee and delivered to Stevenson. A draft was drawn in favor of appellee by Hicks to cover the cash payment of $500 and delivered to appellee. Three notes covering the balance of the purchase money, and a mortgage to secure them, were executed by Stevenson upon the plant and delivered to appellee. None of the written instruments embodied or even referred to an undertaking on the part of appellee to deliver 800,000 feet of logs or timber- on the millsite at the rate of 100,000 feet per month for $9 per thous- and feet, or that such an undertaking was a part of the consideration or inducement for the sale of the mill and planer.

We deem it unnecessary to set out the substance of and analyze the oral evidence to ascertain where the weight thereof lies, as it was inadmissible. It tended to vary the written contract, consisting of the bill of sale, notes and mortgage. These instruments constituted a complete contract on their face; and, in addition to this fact, one of the three parties, in the presence of the others, stated to the attorney who drafted the instrument that they covered the transaction. The oral evidence offered by appellant tended to burden appellee with obligations, contractual in nature, different from those expressed in the writings constituting the contract.

The rule that parol testimony cannot be introduced to vary, add to or contradict the terms of a written contract has been often announced and applied by this court. Delaney v. Jackson, 95 Ark. 131; Outcault Advertising Co. v. Bradley, 105 Ark. 50; Armstrong v. Union Trust Co., 113 Ark. 509; Brown & Hackney v. Daubs, 139 Ark. 53.

The decree is affirmed.


text:
    McGraw v. Berry.
    Opinion delivered March 13, 1922.
    1. Estate by entireties — wipe’s property — partition.—An estate hv entireties is not created by a conveyance to husband and wife, for purposes of partition, of an interest in real estate which' had descended to the wife by inheritance.

      2. Partition — effect of deed. — A deed in partition operates upon the possession, converting common possession into possession in severalty, but it does not invest each tenant with a new or different title.
    3. Judgment — conclusiveness.—Where plaintiff claimed certain land as heir of his mother it can not be maintained that the land belonged to his grandmother, instead of his mother, where the contrary had been adjudged in a suit to which plaintiff’s mother and grandmother were parties.
    4. Adverse possession- — possession of grantee of life tenant.— During the life of a tenant by the curtesy, neither his possession nor that of his grantee is adverse to the reversioners.
    5. Appeal and error — transcribed notes of stenographer as part of record.- — In order for the transcribed notes of a stenographer “ to become part of the record in a chancery case, under Crawford & Moses’ Dig., § 1269, it is not sufficient for the court at the end of the trial to order the stenographer -to transcribe and file his shorthand notes; such order must be made at the beginning of the trial.
    6. Appeal and error — transcribed notes of stenographer. — Before the transcribed notes of a stenographer can become part of the record, under order of the court and without the consent of the parties, they must be transcribed and filed in court during term time.
    7. Appeal and error — -transcribed notes of stenographer. — The fact that by the court’s order a stenographer’s fee was, by consent of the parties, taxed as part of the costs did not amount to a consent by the parties that the stenographer might transcribe his notes and file same as part of the record after adjournment of the court.
    Appeal from Franklin Chancery Court; C. A. Star-bird, Special 'Chancellor;
    affirmed.
    J. J. Montgomery, Partam é Garter, Hayes & Ward and A. A. McDonald, for appellants.
    1. The deed from the other heirs of William Russell to Martha J. Roberts, also one of his heirs, vested in her the fee title, and her deed together with the -three of her children conveying to Allen H. Berry and Russella Berry, his wife, a one-fourth undivided interest in the land, created in them an estate by the entirety. The proceedings had in partition, and the deeds growing out of the same, were had and done at the instance of Buss ella Berry, and the deeds made to them as husband and wife, conveyed to them an estate by the entireties, which at her death went to Allen H. Beiry and gave him fee simple title to the whole, which he could, and did, dispose of at will. 124 Ark. 390; 29 Id. 202; 66 Id. 305; 63 Id. 289; 47 Id. Ill; 61 Id. 388; 27 Id. 166; 87 Id. 369; 61 Id. 388.
    2. If appellants are to recover, it must be upon some other grounds than that of mistake, inadverrence, or to secure Allen H. Berry in his rig’ht of curtesy. As to the last, if he had a right of curtsey, the law gave that to him. There is no proof of inadvertence or mistake. 96 Ark. 589, 593; 125 Id. 441, 448 ; 89 Id. 182; 132 Id. 227. The controlling feature of the case is that the deed was made with the knowledge and consent of Bussella Berry and was acquiesced in by her for many years without complaint on her part,- and evidence of statements by Allen H. Berry, while in possession of the land, in apparent conflict with the deed, was inadmissible. 96 Ark. 171; Id. 589; 90 Id. 149; 87 Id. 496; 77 Id. 309; 128 S. W.; 11 Ark. 249. She having deliberately chosen to have the deed made to herself and husband, it amounted to a gift to her husband. 101 Ark. 459; 96 Id. 589; 11 Id. 249; 83 Id. 131; 71 Id. 617; 75 Id, 75; 81 Id. 420.
    3. Surely the plaintiffs’ own laches ought to bar this claim. “The law wisely holds that there shall come a time when even the wrongful possessor shall have peace, and that it is better that ancient wrongs should go unredressed than that ancient strife should be renewed.” 83 Ark. 132; 103 Id. 60; 137 IT. S. 556; 195 Id. 309; 95 Ark. 178; 75 Id. 312; 72 Id. 451; 73 Id. 130; 83 Id. 131; 103 Id. 60.
    4. Appellants are innocent purchasers for value without notice of appellees claim. 95 Ark. 582, 586. 2 Pomeroy, Equity, 3d Ed. § 745; 84 Ark. 10; 29 Id. 563; 115 la. 360; 94 Ala. 576; 75 Id. 400; 17 Am. St. 281, note; 2 Pom. Eq. 3d. Ed., § 759, note.

      On the question of estoppel, if appellants as privies in estate to Allen H. Berry are estopped to deny that the title to the land vested in Russella B'erry by purchase, or from her mother, and not by descent from her father, it must also be true that appellee is estopped to deny that the decree and deed of the commissioner vested a fee simple title in his father and mother as tenants by the entireties. 225 TJ. S. 11, 56 Law, Ed. 1009. Privies in estate, vendor and vendee; see 15 R. C. L. 503; 33 Miss. 653, 69 Am. Dec. 375 ; 4 Wheat. 213, 4th Law Ed. 5533.
    5. A judgment in partition, especially where all join and hold, or claim to hold, under the same title, has no effect but to divide the land, and does not affect the title unless it has been put in issue by the pleadings. 63 Am. <St. 292. See also 15 R. >C. L. § 435; Id. § 486, notes. 2 and 8; 104 Wis. 349; 76 Am. St. 881; 31 Id. 105; 89 Me. 103.

      Willard Pendergrass and Evans <& Evans, for appellee.
    1. The decree makes it plain that there was oral testimony and documentary evidence on which .the decree in large measure was based, which does not appear in the transcript. The decree ought therefore to be affirmed, unless there is error appearing on the face of the record. 83 Ark. 424 and cases cited; 114 Ark. 167. It cannot be maintained that the oral testimony was taken pursuant to statute, C. & M. Dig. § 1269. There was no order that the oral testimony be taken down by the stenographer, nor any stenographer designated for that purpose. 136 Ark. 376; 144 Id. 436.
    2. The effect of deeds antedating the decree of May 20, 1880, and the kind of estate conveyed, is not material to the decision of this case. All the parties to the suit instituted April 10, 1880, and all their privies are conclusively bound and estopped by that decree from maintaining that Jeremiah H. Roberts did not die seized and possessed of the lands in survey No. 2348, and estopped from denying that Martin J. Roberts had only dower for life in one-third thereof and that their children inherited the fee in said lands, subject to her dower rights. 20 Ark. 85; 43 Id. 439; 97 Id. 456. The court in that decree held that Allen H. Berry acquired no title to any portion of the land by any of the deeds or proceedings, and that he held only an estate. by> the curtesy. In that holding the court was correct. 20 R. C. L. 780 § 53, title, Partition. “The legal effect of a partition deed from the other tenants in common to their co-tenant and his or her spouse is not to create an estate by the entirety, but merely to designate the share of the tenant, so that it may thereafter be held in severalty, and this rule applies even if the spouse is included as a grantee by directions of the co-tenant” 159 Mo. 14, 59 S. W. 961, 81 A. S. R. 339; 108 N. O. 215, 12 g. E: 993, 23 A. S. R. 57, 11 L. R. A. 722; 149 N. C. 223, 63 S. E. 910, 25 L. R. A. (N. g.) 167 and note; 108 Tenn. 191, 65 g. W. 397, 91 A. g. R. 748, 57 L. R. A. 337. See also 98 Ark. 100; 66 Id. 155; 183 S. W. (Mo.) 562; 18 Am. Dec. 383; 217 S. W. (Mo.) 520; 77 S. E. 1000; 48 S. E. 571; 30 S E. 974. ■
    3. The doctrine of laches cannot apply, because appellee had no right to bring suit for possession of the lands until the death of his father, and adverse possession could not occur during the continuance of the life estate. 98 Ark. 30; 148 Ark. 216.
   Humphreys, J.

Appellee instituted suit on the 9th day of October, 1919, in the chancery court of Franklin County, Ozark district thereof, against appellants to recover certain lands in survey No. 2348, in said county, and for an accounting of rents and profits and the value of coal removed from said lands. He alleged that he became the owner of said lands by inheritance, as the sole heir, from his mother, who died intestate, subject to the curtesy of his father, Allen H. Berry, therein; that his father died in January, 1919; that appellants claimed the lands from his father through mesne conveyances, beginning with a conveyance by R. J. Butts to Henry Russell.

Appellants filed an answer, denying appellee’s ownership of the lands by inheritance from his mother, alleging that his father and mother owned said lands in entirety, and that upon his mother’s death the entire fee vested by succession in his father, through whom appellants claim title under mesne conveyances. Appellants also interposed the defenses of limitations' and laches.

The cause was submitted upon the pleadings and evidence, which resulted in a finding and decree in favor of appellee, from which is this appeal. *

The findings of fact upon which the decree is based appear as recitals therein. The questions, therefore, presented on this appeal are determinable on the face of the record.

The court found that Jeremiah H. Roberts owned the lands in fee simple in survey 2348, and at his death his four children, one of them being Russella Berry, the mother of appellee, inherited same, subject to the dower interest of Martha J. Roberts, the surviving wife of the said Jeremiah H. Roberts; that subsequently the lands were partitioned,- and that portion inherited by Russella Berry was conveyed, with her consent, by a commissioner appointed for the purpose, to herself and her husband, Allen H. Berry, who was' the father of appellee; that after the death of Russella Berry the lands so conveyed to her and her husband were conveyed by Allen H. Berry to Butts & Russell, who are grantors in the chain of appellants’ title. It is insisted by appellants that the conveyance to Russella Berry and her husband, Allen H. Berry, vested an estate by the entirety in them, and that, upon the death of Russella Berry, Allen H. Berry succeeded to the fee, and that through mesne conveyances, originating with him, appellants are the owners of the lands. This must depend upon the legal effect of a deed in partition which includes the husband or wife of a co-tenant as a grantee at the co-tenant’s instance. According to the weight of authority, the rule is that such a conveyance does not create an estate by the entirety, its only effect being to designate or separate the share of the tenant. A deed in partition operates upon the possession of an estate, converting the common possession of each in the whole into a possession in severalty, and does not operate upon the title by investing each tenant with a new or different title from what the tenant had before. Whitset v. Wamack, 159 Mo. 14, 81 A. S. R. 339; Harrison v. Ray, 108 N. C. 215, 11 L. R. A. 722; Sprinkle v. Spainhour, 149 N. C. 223, 25 L. R. A. (N. S.) 167; Cottrell v. Griffiths, 108 Tenn. 191, 91 A. S. R. 748.

Again, appellants contend that if Allen H. Berry did not acquire an estate by entirety with his wife under the partition deed, he did acquire such estate under a deed from Martha J. Roberts and others, which was re-r corded on April 20, 1880. According to the face of the record, this deed was made during the pendency of a suit in the Franklin Chancery Court brought by Russella Berry, the mother1 of appellée, against Martha J. Roberts and others, to establish title to an undivided one-fourth interest in said real estate as an heir and child of Jeremiah H. Roberts, subject to the dower interest therein of Martha J. Roberts, the surviving wife of Jeremiah H. Roberts. A decree was rendered in that case on May 20, 1880, in which it was determined that Jeremiah H. Roberts died intestate, seized and possessed of said lands, leaving him surviving Martha J. Roberts, his widow, and four children, including Russella Berry, the mother of appellee, his sole and only heirs, who took said real estate by inheritance. The decree in partition above referred to was rendered at the November term, 1880, of the same court. In that decree it was ascertained and adjudged that the four children of Jeremiah H. Roberts, one of whom was appellee’s mother, owned the real estate in fee, subject to the dower interest of the said Martha J. Roberts. The insistence of appellants is that, under proper construction of certain deeds, the said Martha J. Roberts acquired the title in fee to said lands partly by inheritance from her uncle, William Russell, and partly by purchases from other nieces and nephews of the said William Bussell. It is unnecessary to construe the deeds referred to, for they antedate the decree of May 20, 1880, and must necessarily have been construed and given effect in that decree. It was adjudicated in that decree that Martha J. Boberts owned a dower interest only in the real estate. She and the other parties to the suit and all their privies were bound by the adjudication. Appellants are the privies in estate of the parties to that -suit and cannot again put in issue matters which were determined therein. One of the issues determined in that case was the interest owned by appellee’s mother in the real estate in question, as well as the interest owned by Martha J. Boberts.

The defenses of limitation and laches interposed by appellants have no application in this case, because, according to the face of the record, appellee’s father, Allen H. Berry, acquired an interest by curtesy in the lands upon the death of Bussella iBerry, his wife, and did not himself die until February, 1919. This suit was instituted in October, 1919, only a short time after appellee’s father died.

Appellee insists upon an affirmance of the decree because the oral and documentary testimony taken in open court was not preserved and incorporated in the record in the manner provided by law. Having determined the questions presented on this appeal upon the findings of fact incorporated in the decree itself, it is unnecessary to decide whether the oral and documentary testimony was properly brought into the record, but, as the question is in the case and involves a matter of practice, we will decide it. It appears from the decree that oral and documentary testimony was introduced in the trial of the cause. No attempt was made to bring the testimony into the record by bill of exceptions. Neither was it reduced to writing and embraced in the decree. The method adopted was to insert an order in the body of the decree, ordering the stenographer to transcribe the evidence and file the same as a part of the record within one hundred and twenty days. In corn eluding the decree the court made'the following order: “The taking of the testimony by the stenographer at the trial, by consent of the parties, is taxed as a part of the expense and costs of the suit.” It does not appear that the court made any order at the beginning of the trial for the court stenographer, or one specially designated by him for the purpose, to take down the evidence in shorthand. "What purports to be a copy of the oral and documentary testimony appears in the transcript, without identification other than the certificate of the clerk in the usual form at the end of the transcript, save an unattached certificate of Walter Myers, public court stenographer, certifying to this record in response to a writ of certiorari issued after the transcript had been lodged here and briefs in the case had been filed. In the case of Fletcher v. Simpson, 144 Ark. 436, this court said, with reference to making up records in chancery proceedings under the practice acts, that “a case in equity is heard de novo by the appellate court on the record made below. Under our practice, oral evidence introduced in chancery cases may be made a part of the record by having it taken down in writing in open court and filed with the papers in the case, by bill of exceptions, or by reducing the testimony to writing and embodying it as a recital in the record of the decree.” None of these methods was adopted in the instant case in making up the record. The method adopted was to order the stenographer, at the conclusion of the cause, to transcribe and file the evidence taken down by him in shorthand, within one hundred and twenty days. A majority of the court are of opinion that the practice act of 1915 contemplates that the court shall make an order, before the evidence is taken down, that the court stenographer, or one especially designated by the court for the purpose, shall take down the testimony in shorthand. Any other1 construction would prevent the parties from objecting to any particular stenographer, and would permit the court to adopt the -stenographic notes of any stenographer present who took down the evidence, and order the record made up from them. The court is also of the opinion that, in order for the transcribed stenographic notes to become a part of the record, under order of the court and without the consent of the parties, they must be transcribed and filed in court during the term at which the case is tried, and not at a time beyond the adjournment of the court. A majority of the court is also of opinion that the concluding order, taxing the stenographer’s fee as costs of the suit, by consent of the parties, did not amount to a consent by the parties that the stenographer might transcribe his stenographic notes and file same after adjournment of court as part of the record in the case. The purported oral and documentary testimony has not been brought into the record in accordance with our practice.

No error appearing, the decree is affirmed.


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    Lashbrook v. Tri-County Highway Improvement District.
    Opinion delivered March 13, 1922.
    1. Equity — jurisdiction to administer complete relief. — Where property-owners in a road improvement district brought suit in equity to enjoin the commissioners from proceeding with the contemplated improvements upon the ground that the cost of the improvement would exceed the benefits to the lands embraced within the district, and the court ordered the work stopped, it also had jurisdiction to wind up the affairs of the district and to adjudicate claims against the district.
    2. Judgment — decree adjudicating claims against highway district. — A decree adjudicating claims against a highway improvement district which had been enjoined from prosecuting the improvement work is binding on all parties in collateral attack, save for fraud in its procurement:
    3. Fraud — mode of pleading. — Acts constituting fraud must be specifically pleaded in order to charge fraud.

      4. Pleading — admissions by demurrer. — General allegations of fraud are not admitted to be true by demurrer.
    Appeal from Craighead Chancery Court, Western District; William F. Kirsch, Special Chancellor;
    affirmed.

      H. M. Mayes, for appellant.
    If the allegations of a complaint are sufficiently but imperfectly stated, a demurrer will not lie, the remedy being by motion to make more definite and certain. 133 Ark. 188; 146 Ark. 227. The acting commissioners were not qualified commissioners and were without authority to make the allowances. Plaintiffs had a right to question the commissioners allowing the engineer excessive and unreasonable compensation. 227 S. W. 988.
    The court had no power to dissolve the district and to bind the lands therein for invalid or fraudulent claims. 231 S. W. 522; 231 S. W. 197; 232 S. W. 596; 142 Ark. 21; 120 Ark. 212; 119 Ark. 166; 115 Ark. 88; 94 Ark. 381; 114 Ark. 366.
    Had the Legislature authorized the settlement of the affairs of the district, even then the commissioners ’ settlements would not be final. 232 S. W. 434.
    It is within the jurisdiction of a court of equity to restrain illegal expenditures and unlawful actions by commissioners. 146 Ark. 494. 144 Ark. 169.
    The only expenses for which a lien can be fixed are for preliminary expenses. 127 Ark. 1; 119 Ark. 188.

      Frierson & Penix, A. P. Patton, Fiohr '& Futrell, D. K. Hawthorne, Hawthorne & Hawthorne and Lamb <& Frierson, for appellee.
    The allegations of fraud were general, and a demurrer would lie. 5 Ark. 395; 24 Ark. 459; 34 Ark. 63; Id. 291; 35 Ark. 555; 17 Ark. 603; 14 Ark. 360; 20 Ark. 526 ;77 Ark. 355; 121 Ark. 261.
    There was no fraud upon the court in the procurement of the decrees of Aug. 24 and Nov. 30, 1920, and March 21,1921.

      The acting commissioners were qualified commissioners. 134 Ark. 109; 52 Ark. 356; 22 R». C. L. 398, sec. 38; 6 Cal. 94; 129 N. Y. 360, note.
    There was no attempt to dissolve the district. The course pursued by the court was proper. 142 Ark. 21; 232 S. W. 596.
    Exhibits to a complaint are a part thereof and control, but the filing of a demurrer does not admit the truth of any allegation in a complaint shown by an exhibit to be untrue, nor the truth of a mere declaration of law. 34 Ark. 722; 72 Ark. 119; 39 Miss. 214; 29 R. C. L. p. 506, see. 70; 31 Cyc. 337 (e); nor any fact that is not well pleaded. 7 Ark. 282; 5 Ark. 661.
   Humphreys, J.

This is an appeal from a decree of the chancery court for the Western district of Craighead County, sustaining demurrers to appellants’ amended bill and dismissing same for want of equity. The purpose of the bill was to cancel decrees rendered by said court on August 24, 1920, November 30, 1920, and the-day of March, 1921, and to contest the claims allowed against the Tri-County Highway Improvement District in the decree of November 30, 1920, upon the grounds, first, that the chancery court had no jurisdiction to wind up the affairs of the district and allow claims; and, second, that the allowance of the claims was procured through the fraud of the claimants.

(1). The appellants in the instant case were parties plaintiffs to the suits in which the decrees referred to were rendered, the second and third decrees referred to being supplemental decrees to the decree rendered on August 24, 1920. The purpose of that suit, as indicated by the decree of August 24,1920, filed as an exhibit to appellants’ bill in the instant case, was to restrain the commissioners from proceeding with the construction of the improvements in said district, upon the ground that the cost of the improvements to be made would exceed the benefits to the lands in the district. The property owners in the district had a right to enjoin the 'commissioners from proceeding with the contemplated improvements upon the ground alleged, namely, that the cost of the improvements would exceed the benefits to the lands embraced within the district, and, having taken jurisdiction for this purpose, the court acquired jurisdiction for all purposes relating to the subject matter in litigation. In upholding the validity of a statute conferring jurisdiction upon the chancery court of Jackson County to wind up the affairs of a road district and adjudicate the claims against it, the court said, in Bowman Eng. Co. v. Arkansas & Missouri Highway District, 151 Ark. 47, that “this power could rightfully be conferred as a part of the general jurisdiction of chancery courts over the enforcement of liens on real estate.” This was upon the principle that the matters related and incident to subject-matters within the jurisdiction of the court are necessarily drawn into the litigation for adjudication. We think, therefore, when appellants instituted suit in the chancery court to enjoin the commissioners from proceeding with the work upon alleged grounds within the jurisdiction of the court, and the court ordered the work stopped, as an incident thereto the court acquired jurisdiction to bring in creditors and adjudicate claims against the district. In the exercise of its power the court directed the commissioners, in the decree of August 24, 1920, to investigate and r'eport all claims against the district to the court for approval. In the decree rendered on November 30, 1920, with all necessary parties, including appellants in the instant case, before the court, and after a full hearing, according to the recitals therein, the court allowed the claims sought to be contested in this case. The court having acquired jurisdiction of the parties and the subject-matter, the decree became final and binding upon all the parties thereto, and impervious to collateral attack by any of them, except for fraud in the procurement of same.

(2). Appellants have assailed the decrees on the ground that they were procured by the creditors through fraud, but the allegations of fraud contained in their bill do not meet the requirements of the law. It is a well established rule in the law that acts constituting fraud must be specifically pleaded in order to charge fraud. In other words, that a general charge of fraud amounts to no charge, and is demurrable. Nelson v. Cowling, 77 Ark. 355, and eases therein cited to the point. The charge of fraud in appellants’ bill consisted in allegations, in substance, to the effect that the creditors procured the allowance of illegal and non-enforceable claims by acting commissioners who were not qualified, and the subsequent approval thereof by the court in the decrees sought to be canceled. The facts as to why the claims are illegal and non-enforceable, or why the acting commissioners were disqualified, are not pleaded. The allegations are general and not specific, and on that account the demurrer to the bill was properly sustained. Appellants contend that the demurrer to their bill admitted the claims were illegal and non-enforceable, and that the commissioners allowing them were disqualified, and that the decrees approving the allowances were fraudulently procured. This is not correct, for matters not properly and correctly pleaded are not admitted by a demurrer. Only matters which are properly pleaded can be said to be admitted by demurrer.

No error appearing in the record, the decree is affirmed.


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    R. & J. Dick Company v. Blue Trap Rock Company.
    Opinion delivered March 13, 1922.
    1. Partnership — construction of contract. — A contract between the owner of a rock-crushing plant and quarry and a third person whereby the latter leased the plant and quarry, and agreed to sell the output to the owner at a price named, the operation to be entirely in the latter’s hands, and the latter to be personally liable for all expenses in connection therewith, held on its face to be a contract of lease and not of partnership.

      2. Appeal and error — conclusiveness op verdict. — A verdict sustained by substantial evidence will not be set aside on appeal.
    3. Partnership — evidence.—Evidence held to sustain a finding that a partnership did not exist between the lessor and the lessee of a rock quarry.
    Appeal from. Pulaski Circuit Court, Third Division; Archie F. House, Judge;
    affirmed.

      Emerson, Donham & Shepherd, for appellant.
    The court erred in refusing to hold that Fulton and appellee were partners, and that their agreement as well as their dealings with third parties constitued such a relation. 44 Ark. 423; 80 Ark. 29. An agreement may constitute a partnership as to third parties, when it creates no such relation between the parties themselves. 2 Ark. 354. Partnership may be proved by circumstantial evidence. 5 Ark. 61; 32 Ark. 740; 145 U. S. 611; 63 Ark. 518; 93 Ark. 524.
    Appellee is estopped by its own conduct to deny the partnership as it acted in such manner as to mislead third parties. 29 Ark. 512; 80 Ark. 23; 95 Ark. 1; 32 Ark. 733.
    The belt, when installed, became a fixture and a part of the realty and is not removable as personal property. 73 Ark. 227; 120 Ark. 252; 119 Fed. 438; 128 Fed. 355; C. & M. Dig., sec. -6906; 63 Ark. 369.
   Humphreys, J.

Appellant instituted suit against appellee in the Pulaski Circuit Court to recover .$541.40, the sale price of 85 feet of machine belting which it is alleged appellant sold to (George B. Fulton and appellee, and which was attached by George B. Fulton as a part of the machinery constituting a rock plant owned by appellee. Appellant sought to hold appellee liable as a partner of George B. Fulton, who ordered and received the belting from appellant and attached same to said machinery. Appellee filed an answer denying the indebtedness, and the case proceeded to a trial before the court, sitting as a jury, upon evidence responsive to the issue joined, as to whether George B. Fulton and appellee were partners in the operation of the rock plant belonging to appellee at the time the belting was purchased and attached to the machinery. The belting was ordered during the operation of the rock plant by George R. Fulton, under the following contract (omitting formal parts):

“1. This agreement, made and entered into at Little Rock, Arkansas, this 1st day of April, 1919, by and between the Blue Trap Rock Company, a corporation incorporated under and by virtue of the laws of the State of Arkansas, hereinafter called the first party, and George R. Fulton, hereinafter called the second party, witnesseth:
“2. In consideration of the sum of one dollar ($1) in hand paid the first party by the second party, the receipt of which is hereby acknowledged, and for the further consideration hereinafter set forth, the first party hereby grants to the second party the right and privilege of operating for a period of one year from date, the crushing plant and quarry, with all buildings, machinery, tools, wagons, appurtenances, together with sufficient land contiguous thereto, formerly the property of Chas. M. Newton Trap Rock Company, necessary for the operation of said crusher and quarry, also the railroad track, the property of the Mining Railway Company, all situated in Pulaski County, Arkansas, upon terms and conditions as follows:
“3. The second party agrees to operate the plant, quarry and crusher at his own expense and supervision and to make all needed repairs at this time for putting same in proper condition for operation, and at the expiration of this lease to return all buildings, machinery, crusher, tools, etc., to the first pary in as good condition as when taken over by him, or in better condition.
“4. As a further consideration for the execution of this lease and agreement, the second party agrees to furnish and crush rock and deliver same f. o. b. cars at said quarry at and for the price of ninety cents (90) per ton of 2,000 pounds. The basis of settlement between the parties is to be determined' and governed by the net weight of the loaded cars at the quarry, according to railroad weights as a basis of freight charges.
“5. The first party agrees to pay for said stone the sum of ninety cents per ton, as aforesaid, advances to be made weekly, and final settlement on the 10th of each month for all stone loaded during the previous month.
“6. The stone to be furnished under this agreement shall be merchantable stone, in sizes known as one, two and three. And where any stone is rejected and the first party is unable to make satisfactory adjustment with the buyer, such stone is to be turned over to the second party or held subject to his orders, and he shall be liable for the transportation, demurrage and handling thereof.
“7. This agreement does not contemplate screenings, but the first party will endeavor to dispose of same when possible to the best advantage, and upon any sales thereof to allow the second party sixty (60) per cent, of the gross amount received from such sales, provided same shall not exceed ninety (90) cents per ton.
“8. As a further consideration for the payment of rent, the second party agrees to pay the first party two-thirds (2-3) of the net profits from the operation of the quarry and the sale of rock at the aforesaid price of ninety (90) cents per ton. The other one-third (1-3) shall be retained by the second party. In addition to the necessary .operating expenses, including necessary expenditures in the operation of the quarry, said second party shall be permitted to make a charge for his salary of not exceeding three hundred dollars ($300) per month.
“9. The second party agrees to operate the quarry continuously to the very best of his ability, and agrees to turn out not less than fifty thousand (50,000) tons per annum, and the first party agrees to take the output, not to exceed ninety thousand (90,000) tons per annum, but it is agreed that, in the event the first party is at any time unable to secure a sale for stone, that it shall be bound only to store thirty days ’ production, after which production shall cease until further orders from the first party.
“10. It is understood that this contract is drawn for the mutual benefit of both parties and is a memorandum of an agreement for the purpose of permitting the second party to operate the said quarry and crushing plant. The operation and supervision thereof is to be entirely in the hands of the second party, and he shall be personally liable for all expenses in connection therewith, and he is not authorized and he agrees not to attempt to bind the first party for any obligations whatever, nor to represent to any one that the second party is interested with him in the operation thereof, it being clearly understood that all the first party is to do is to take the rock produced, as aforesaid, at and for the price of ninety (90) cents per ton on cars, and shall be entitled, as rent, to share in the profits as aforesaid. The second party shall not offer for sale, nor sell any rock produced from this quarry or crusher, ■ to any person, firm or corporation other than the first party.
“11. The parties hereto mutually agree that they will keep an accurate accounting of their separate operations, covering the transactions contemplated herein, in books, in a business-like manner, and same shall be open for the inspection of the other party at all reasonable times.”

The belt was not delivered until the term provided in the contract had expired. George R. Pulton continued to operate the plant for about a month after the expiration thereof, and it was during this period that the belt was delivered and attached to the machinery.

In addition to the introduction of the contract, testimony was introduced by appellant tending to show that the plant was operated by George R. Pulton and appellee as partners, and by appellee tending to show that said plant was operated by George R. Pulton as lessee of appellee, and not as a partner with it.

Appellant’s first contention is that the written contract or agreement itself, between George R. Fulton and appellee, constituted a partnership between them as to third parties dealing with them. An analysis of the contract reflects that essentials tending to show a partnership relation between the parties are wanting. The plant was the individual property of appellee. No community of property existed in the plant between appellee and George R. Fulton. Appellee was exempted, under the provisions of the contract, from any loss incident to the operation of the business, and participated in the profits, if any, as rent for the use of the plant, and not as profits. The contract provided that appellee should receive a certain proportion of the profits as rent for the use of the plant by George R. Fulton. Section 10 of the contract, in very specific language, provided that the operation of the plant should be the individual business, and conducted upon the personal responsibility, of George R. Fulton. It specifically exempted appellee from any obligation whatever incident to the conduct of the business, and provided that George R. Fulton should not represent to any one that appellee was interested in the operation of said business. The contract throughout embodied the idea that it was intended as one of lease, and not of partnership. The contract in the instant case is quite similar in form and substance to the contract construed in the case of Mehaffy v. Wilson, 138 Ark. 281, as not constituting the relation of partnership.

Appellant makes the further insistence, however, that the contract, when construed in connection with the dealings of George R. Fulton and appellee with third parties, constituted a partnership relation between them. The testimony is in sharp conflict concerning their dealings with third parties. That adduced in behalf of appellee tends to show that methods were adopted to keep the business of operating'the rock plant separate and distinct from other business conducted by appellee, and that when creditors of the rock plant sent bills directly to the appellee they were immediately returned and the creditor notified that the rock plant was being operated by George R. Fulton upon his own responsibility. Separate 'bank accounts were kept, and all bills against the rock plant were paid by the individual checks1 of George R. Fulton, drawn upon his individual account. In short, there was substantial evidence tending to show that the operation of the rock plant was the separate business of George R. Fulton, and not the partnership business of Fulton and appellee.

It is unnecessary for the court to analyze the evidence to ascertain where the weight lies, since the verdict is sustained by some substantial evidence.

No error appearing, the judgment is affirmed.