author: Mkhaffy, J.

text:
    Eason v. Simon.
    Opinion delivered January 20, 1930.

      Mahony, Yocrnn & Saye, for appellant.

      Poiuell, Smead S Knox, for appellee.
   Mkhaffy, J.

On the 24th day of January, 1928, Sol Simon, one of the appellees, entered into an agreement with certain landowners in Union County, Arkansas, for the purpose of drilling for oil and gas on certain lands, and the landowners, above mentioned, executed leases to the oil, gas and mineral to Sol Simon. Simon agreed to begin actual drilling- on some part of the land described in the leases within 40 days.

On the 4th day of April, Simon entered into an agreement with A- A. Eason, leasing from Eason a drilling rig. This contract provides that Simon was to pay Eason $500 at the setting of the surface casing, and he was to have the use of the rig for 45 days, after the 24th day of' April, 1928. 'Simon agreed to make a further payment of $500 when the casing had been set, and when a depth of 1,000 feet had been reached. The contract provided that, if the sums were not paid promptly, under no consideration should the rig be held by Simon without the payment of said moneys. The contract also provided that, iif drilling’ operations were not completed within 45 days from the 24th day of April, 1928, all of said payments woiild be due and payable, and that the rig should be returned to Eason. The contract, however contained the following additional paragraph:

“As an additional consideration, the said first party herein obligates himself, and hereby agrees to execute to the second party herein, an assignment of an oil and g4as lease covering the N% of the NW% °f the SE% of section 21, township 17 south, range 14 west, being- land now owned by Davidson, now held by J. K. Mahony and Asa Morrison, in escrow, pending the drilling- of said well; the second party giving, however, as a consideration, back to the first party herein, an oil payment of $10,000 out of 7/32 of the first oil when, as, and if, produced from said lease. The assignment of said lease to be made by the second party herein to the' first party herein as quickly as the same shall be released from escrow.”

Simon was unable to drill the well, and, on the 26th day of April, 1928, entered into a contract with the Boot Befineries, Inc., whereby the Boot Befineries, Inc., undertook to drill the well, and carry out the contract with Eason. The Boot Befineries, Inc., however, did not complete the well within the time specified, but kept the drilling rig some days longer, and Eason claimed that he had entered into a contract with the Root Refineries, Inc., whereby he let them have the drilling rig for a certain number of days, but that they had kept it a longer time, and that its rental value, during the time they kept the rig in excess >of the time specified, was $750.

After the Root Refineries, Inc., entered into the contract with Simon,, it paid Eason the $1,000. Eason seeks to recover in this suit against 'both the Root Refineries, Inc., and Simon, $20,000 for failure to assign to him the lease of the land, described in the last paragraph of the contract, between Simon and Eason. That is, the N% of the NW1/! of SEi/4 of section 21, township 17 south, range II west.

The only controversy is about the one-fourth interest in said lease owned by W. Gr. Grace. W. G. Grace was one of the landowners that had executed a lease to Simon. Grace was the owner of one-fourth interest in the 20 acres, above described.

There was a great deal of evidence introduced, both documentary and oral, but it is unnecessary to set it out, because there are only two questions involved in this appeal. The first is, whether appellant was entitled to have the Root Refineries, Inc., and Simon to convey to him or assign to him the lease from Grace, and the other question' is, whether Eason is entitled to recover from the Root Refineries, Inc., for keeping the drilling rig longer than the time specified in the contract. As to whether Eason is entitled to recover for the failure of the other parties to convey to him, or assign to him, the lease above mentioned depends upon a consideration óf the contract. This is not at all free from doubt. '■ •

The cardinal rule in the interpretation of contracts, as this court has many times held, is to ascertain the intention of the parties, and give effect to that intention, if it can be done consistently with the legal principles. It is a well established rule that parties should be bound f or*'what they intended to be' bound for, and no; more. To hold any one bound further would be to impose on him an obligation which he never assented to, never intended to take upon himself; and would be unjust and unwarranted. The intention of the parties, however, and the meaning of the contract, is determined from the contract itself, if unambiguous.

The leases by Grace and other landowners had already expired before the contract was entered into between Simon and the Root Refineries, Inc., and no one had any rights under these contracts or leases at all. Eason and .Simon both knew this, and the Root Refineries, Inc., knew it. All of them knew that, to proceed with the drilling, it was necessary to obtain from the landowners an extension of time. All of them agreed to this, and granted the extension, except Grace, who owned a one-fourth interest in the '20 acres! Grace did not agree.

It is the contention of the appellant that his contract called for the absolute conveyance of the mining lease on the above-described property, and he also contends that he is entitled to receive a conveyance, or title, that he can hold against all adverse comers, and without reasonable apprehension of its being assailed. There is no dispute about this principle of law, but the question here is the proper interpretation of the contract entered into between Eason and Simon. The parties knew that leases had been made by the landowners, because the contract between Eason and Simon showed that the land was owned by Davidson and held by J. K. Mahony and Asa Morrison, and all of the parties knew of the condition of said leases, and the paragraph providing for an additional consideration recites that, the assignments are held by Mahony and Morrison in escrow, pending the drilling of said well. That means, of course, that they are held in suspense during the pendency of the drilling of the well, or while awfaiting, or until the conclusion of, the drilling of said well. It was known at the time the contract was entered into between Simon and the Root Refineries, Inc., that the conveyance by Simon to Eason of the Grace lease was impossible. That eonld not ¡be done, and a contract will not be so construed as to impose an absurd ¡or impossible condition on either of the parties. It will be so construed and interpreted as the parties must be supposed to have understood the conditions at the time. All of the contracts and leases must be taken into consideration, and all the circumstances, and, when they are all considered, as they must be, we think the conclusion that it was not the intention of the parties to require this impossibility is proper.

The contract entered into between Simon and Eason was subject to the agreement between the landowners and Simon, and our conclusion is that the decree of the chancery court, holding that Eason was not entitled to recover against Simon or the Root Refineries, Inc., because of the failure to convey the property described, is correct.

Appellees have prosecuted a cross-appeal, and contend that the decree of the chancellor for $750, in favor of Eason against the Root Refineries, Inc., should be reversed. We do not agree with appellees in this contention. There is no controversy about the Root Refineries, Inc., using the drill longer than the time specified in the contract; 'but it is contended by appellees that Eason sold the rig to another party, and that the other party gave the. Root Refineries, Inc., the right to use it, without paying anything- therefor. The evidence is in conflict. The Root Refineries, Inc., if it made an agreement with the party who purchased from Eason, did it after it had made the agreement with Eason. Then Eason testifies that when he sold it he was to have the rental from the Root Refineries, Inc. The finding of the chancellor on this proposition is not contrary to the evidence.

We have carefully considered all of the evidence, both oral and documentary, and it would serve no useful purpose to set it out here. 'We have reached the conclusion that the chancellor’s findings are correct, and the decree is affirmed, both on direct and cross-appeal.


source: Caselaw Access Project

author: McHaney, J.

license: Public Domain

text:
    Parker v. Vaughn.
    Opinion delivered January 20, 1930.

      John M. Parker é Son, for appellant.

      Hays, Pridcly <$> Por ex, for appellee.
   McHaney, J.

Appellant sued appellee in unlawful detainer, and in attachment for rent for the year 1928. There was a verdict and judgment on both canses of action for appellee for -$'27.85 on appellee’s cross-complaint. The facts, briefly stated, are substantially as follows: Appellant rented appellee her farm in Tell County for 1928, containing about 66 acres, under a written contract of lease providing* for payment of money rent of a stipulated sum per acre, on or before-October. 15, 1928. The lease farther provided that, if appellee complied with all the terms of the lease contract, and paid all ¿lis rent by November 1, he should have the option to rent the same property on the same terms for 1929.

In the spring of 1928, an overflow came, destroying a portion of the crops, and the parties mutually agreed to modify the contract, so as to provide for the payment of rents in a portion of the crops, instead of money rent. Appellee delivered to appellant her portion of the crops, as same were gathered, hut failed to completely harvest his crops by November 1. In December, he was notified to surrender and deliver up possession of the land on January 1, 1929, which he refused to do, on demand. This demand to quit was made on the ground that he had not paid all his rent by November 1, and that he was not, therefore, entitled to exercise his option to hold over for 1929.

The case depends almost entirely on a question of fact, and the facts were in dispute. The jury has settled this question against appellant. Had the jury accepted her testimony she would have been entitled to possession. They chose, however, to accept the testimony of appellee, as reflected in the verdict. This court is not at liberty -to set aside a verdict on a disputed question of fact, even though it should find it to be against the preponderance of the evidence.

Some considerable complaint is directed against the instructions given by the court, as well as those refused.

The record discloses that 23 instructions were given, a majority of which were at appellant’s request, and ten more requested 'by her were refused. We think the court fully instructed the jury as to the law, and that the instructions were as ¡favorable to her as she was entitled to. The court correctly told the jury that, if they found that the written contract was afterwards verbally modified so as to substitute a part of the crop for money rent, then the rent would be due as the crops were gathered, according to custom of the country. Of course if the crop was not gathered by November 1, the rent conld not be paid in kind by that time. We do not tiiink this ¿had the effect of destroying the option for 1929. We cannot take np and discuss each instruction, about which complaint is made, as it would take too much space and serve no useful purpose.

Judgment affirmed.


text:
    Carter Motor Company v. Davis.
    Opinion delivered January 20, 1930.

      Roy D. Campbell, for appellant.

      Ross Mathis, for appellee.
   McHaney, J.

This is an action in replevin, brougiit by appellant against appellee, in the Woodruff Circuit Court to recover one Buick roadster automobile, or its value. On motion of appellee, the cause was transferred to the chancery court, ever appellant’s objections. No motion appears to have been made in the latter court to remand, but the cause was there tried, and proceeded to judgment for appellee. The facts are substantially as follows: Appellee purchased the oar from appellant, under a written contract, which referred to it as a new automobile. The purchase price was $1,100, of which $350 was paid in cash. The remainder, $750, was to be paid in ten equal monthly installments of $75 each, and title was retained in appellant, until all deferred payments had 'been made. Failure to pay any installment when due made all future installments immediately due and payable. One provision was that there were no warranties made 'by the seller, unless same were indorsed on the contract, and none were so indorsed. While the contract referred to the car as “new,” as a' matter of fact it-was a used automobile, having previously been sold to another!, and been driven 432 miles, and had stood some eight or ten days in the overflow water at Dixie. After it was retaken by appellant from the first purchaser, a new top was put on it, all mechanical parts, including the motor and body, were thoroughly cleaned and washed out. Appellee knew these facts, and had ample opportunity to, and did, examine the car before buying it. The appearance of the car was good, and the motor was in perfect condition. Appellee paid two of the $75 installments, and defaulted on the third. In the meantime, he discovered that the right door was out of adjustment, or that the handle on this door was loose, because the screws had pulled out of the wood frame, either from strain or from the decayed or rotten condition of the wood, and that there was a small split or break in the steel or turtle back over the rumble seat. The car was, at appellant’s direction and at its expense, taken to the Buick agency in Memphis, and there repaired, apparently to the satisfaction of appellee.

Appellee defended on the ground that he was induced to purchase by the false and fraudulent representations of appellant, to the effect that said car was a new car, and without defects; that the defects were hidden, and not open to ordinary observation by a person without experience; and that he would not have purchased but for such representations. He further alleged that the car was not worth more than he had paid, and prayed a cancellation of the contract. The court took appellee’s view of the matter, denied a recovery, and dismissed appellant’s complaint with costs.

Without determining whether the circuit court erred in transferring the case to equity, we think the appellant waived objection to the jurisdiction by proceeding to trial there, without moving to transfer back to the law court, and without making any other objection to the jurisdiction of the chancery court. Hemphill v. Lewis, 174 Ark. 225, 294 S. W. 1010, and cases cited.

We are of the opinion, however, that the court erred in not granting appellant the relief prayed. No fraudulent representations by appellant were proved. Appellee was fully advised, and knew the entire history of the car; that it had been sold to another; that it had stood in the water some days, that it had been cleaned up, and a new top put on, and that it had been repossessed after use. He is therefore in no position to insist on a contract referring to the car as new, and especially when the contract specifically provides that no warranties are made regarding it. Mitchell Mfg. Co. v. Kempner, 84 Ark. 349, 305 S. W. 880.

Appellee says appellant’s agent, Hopkins, represented the car to be as good as new, and, conceding this to be true, it is also true that Hopkins told him all he knew about the car that would tend to lessen its value, or show deterioration from a new car. There is nothing to show bad faith, or a lack of good faith. Appellee sought appellant, and desired to purchase the car, and was given all the facts regarding its condition. He purchased at a reduced price on favorable terms. The proof shows the car was worth $600 at the time suit was brought. Appellee gave bond and kept possession of the car. At the time of trial, some two years later, it had been run about 19,000 miles, and was still running. Under these circumstances, we think appellee should be required to pay appellant the value of the oar at the time replevin was instituted, which was $600.

The judgment will be reversed, and judgment ordered here for $600.


author: Butler, J.

text:
    Supreme Life and Casualty Company v. Walls.
    Opinion delivered January 20, 1930.

      John A. Hibbler, for appellant.

      H. B. Mixon, for appellee.
   Butler, J.

The appellant compány, on the 17th day of January, 1926, issued to David Wall a life insurance policy, insuring his life for the sum of $1,000, to be paid at his death to Chas. Wall, Rosa Wall and Louisa Wall, jointly. 'Chas. Wall was the father, and Rosa and Louisa were the sisters, of David Wall, who, at the time of the issuance of the policy, was an unmarried ¡man. Later David Wall married the appellee, Carrie Wall.

The insurance policy in controversy contained the following clause: “If there is no existing assignment of this policy made as herein provided, the insured at any time during' its continuance may designate a new beneficiary by filing written notice at the home office of the company, accompanied by the policy for a suitable indorsement thereon.”

The testimony introduced on behalf of the appellee tended to show that John Gay, who had at one time been the ag’ent of appellant company, and who took the application of the insured, David Wall, and procured for him the policy sued on, at the request of the said Wall on December 10, 1928, wrote a letter addressed to the appellant company at its home office, in which letter it was stated that the insured desired to change the beneficiaries in his policy from those originally named to the appellee, Carrie Wall, wife off the insured, and Charles Wall, his father, the proceeds of the policy to be paid one-half to each of the two persons substituted as benefieiaries; that in this letter was inclosed the policy; that it was sent by registered mail and was delivered to the appellant at its borne office on December 15, 1928. One or more witnesses testified that, the insured had stated that it was his intention to give his wife an interest in his insurance. At the time the above letter was written, Wall was in good health, but shortly thereafter he sickened, and died on the 4th day of January, 1929.

On March 23, 1929, a letter was written at the instance of Carrie Wall, notifying- the company of her claim as one of the substituted beneficiaries. Oil May 14th, folio-wing, the appellant company, ignoring the letter of March 23d, paid the proceeds of the policy to Rosa Wall, Chas. Wall, and to J. F. Hunter, administrator of the estate of Louisa Wall, deceased. On July 3, 1929, Carrie Wall gave notice to the appellant company that, she would move the court to require it to produce the original letter written by Gay, as agent of David Wall, on December 10, 1928, signed, “David Wall by J ohn R. Gay, ’ ’ and on the 8th day of July, 1929, filed this suit. On the 9th day of July, 1929, the court made an order directing the - appellant company to produce the life insurance policy involved in this case, and the letter of December 10, 1928, signed by David Wall by J ohn R. Gay, his agent. The appellant filed the original policy, on which no notation of change of beneficiary had been made, but did not file the original letter, but a purported copy of the same. No explanation was made by any one in the home office, as to why the original letter was not produced, but a witness for the company, one Luther W. Moore, a resident of Little Rook, and State manager of appellant for Arkansas, testified that he was familiar with the files and correspondence relative to the policy in question, and identified the purported copy of the letter of December 10, 1928, as a true copy of the letter sent to him, together with the policy. This copy was offered in evidence, with the exnlanation that he did not get the original letter, because the home office kept few of the originals, as they were written -by illiterate people, and were very hard to decipher, so that it was the system oif the company to make copies of same, and to file them. This is all witness appeared to 'know about the matter. The court refused to permit the introduction of the purported copy of this letter, and we think properly.

At the hearing of the case on July 15, 1929, the chancellor found that on the 10th day of December, 1928, David Wall caused a letter to be written by his agent, John R. Gay, to the appellant company, and in said letter requested the company to change the beneficiaries named in his- policy, so that, at his death, the proceeds should be paid to Carrie Wall and Chas. Wall jointly, and that said letter was delivered to the company at Columbus, Ohio, on December 15, 1928; that proof of death was duly given, and that the company refused to pay any part of the proceeds of the policy to Carrie Wall, but paid the sums of $333.33, respectively, to Chas. Wall, Rosa Wall, and the administrator of the estate of-Louisa Wall, deceased; that such administrator, by order of the probate court, had paid the plaintiff, Carrie Wall, the sum of $111, as her dower interest in the sum paid to such administrator, and the court found for the plaintiff, Carrie Wall, in the sum of $500, less $111, received by said plaintiff, as aforesaid, and judgment was entered against the defendant company for the sum of $389, with twelve per cent, penalty and attorney’s fee of $50, together with costs.

It is argued by the appellant company that there was no proof that Carrie Wall was the widow of David Wall, deceased, and that such allegation in the complaint was specifically denied in the answer. We think the evidence is sufficient to show that the appellee was the wife of David Wall, as reference to her, as such, is made from time to time in the testimony.

Appellant also assigns as error the refusal of the court to permit the introduction of the purported copy of the letter of December 10, 1928. As we have seen, there was no explanation given as to why the original letter could not be produced by any one who had the matter in charg'e, and, we think the court properly excluded the purported copy from the consideration of the jury.

The third assignment of error, pressed by the appellant, is for alleged error in the court’s finding* that the letter of December 10, 1928, requesting change of beneficiaries, was received by the home office of the company. The appellee proceeded for the production of the original letter as provided in § 4142 of Crawford & Moses’ Digest, which section is as follows: “The court, in an action by equitable proceedings, shall have power, on sufficient cause shown by affidavit, due notice of the application having been given to the adverse party, to require the parties, or either of them, to produce books, deeds or other writings in their power, which are alleged to contain evidence pertinent to the matter in controversy.” Having made the required affidavit, after appellee had given notice of its application, she was entitled to the order made by the court on July 9, 1929. As we have seen, the appellant failed to comply with that order, and gave no explanation for its failure to do so.

Section 4143 of Crawford & Moses’ Digest provides-that, where the party fails to produce the document called for, without satisfying the court that it is not within its power, “the court may take the allegations in regard to the books, deeds and writings not produced, as confessed.” It follo-ws, therefore, that the court was justified in making the finding in accordance with the allegation of the complaint filed in this action.

There is no merit in appellant’s fourth contention, namely, that John R. Gay was not the agent of David Wall, for the purpose of writing the letter of December 10, 1928. The evidence is sufficient to show that the writing of the letter must be considered as the direct act of David Wall, for lie was píesent directing how the letter should be written, and the letter was signed, “David Wall per John it. Day,” in Wall’s presence, and at his direction. “The rule is well settled both in England and in the United States that an act done by one person in the presence of another, and by his direction or with his consent, as the signing or execution of a written or sealed instrument, for example, is not regarded as an act of an agent, but is the direct act of the person by whose direction it was done.” 21 R. C. L. 1 (Principal and Agent). See also Clark v. Latham, 25 Ark. 16; Chipman v. Perdue, 135 Ark. 559, 205 S. W. 892.

It is lastly contended by the appellant that the court erred in assessing penalties and attorney’s fee against the appellant, because the judgment was for less sum than the sum demanded by the appellee before suit was filed. The rule is well settled that, where demand is made under an insurance policy which upon a trial is ’found to be unjust, no penalty can be exacted or attorney’s fee assessed against the insurance company. This is the effect of the statute and our decisions, but from the testimony in this case it is conclusive that $500 was demanded in March, and that the demand at that time was correct. That was the amount for which suit was brought on July 8,1929, and, if nothing had been paid to the appellee before that time, certainly, in view of the holding of the chancellor that was the sum to which she was entitled. The evidence shows that appellee had been paid $111 by the administrator of the estate of Louisa Wall, but in no place does the record disclose when such payment was made. If it had been made before July 8, 1929, of course, the appellee sued for more than she was entitled to, but, if payment was made after that date, then she only demanded what was her just due. Since the chancellor has determined that the statutory penalty and attorney’s fee should be assessed against the appellant, indulging the presumption that his judgment was supported by the evidence, when the record is silent, we must conclude that the payment of the $111 must have taken place between the date of the filing of the suit and that of the decree.

On the whole case, we think the finding's of the 'chancellor are not against the preponderance of the evidence, and that the conclusions reached are justified. The decree is therefore affirmed.


text:
    O’Neal v. Bank of Parkdale.
    Opinion delivered January 20, 1930.

      Y. W. Etheridge, for appellant, O’Neal.
   Butler, J.

Mrs. Laura D. Fitzhugh and her two sons, Davis and Thomas B. Fitzhugh, conveyed by their warranty deed to M. M. O’Neal a farm owned by them situated in Ashley County, Arkansas, in which deed there was the following reservation: “The grantors reserve a one-sixteenth interest in all oil, gas and other mineral rights and properties in said lands for a period of ten years from tills date.” After the execution of this deed, O’Neal and his wife executed an oil and gas lease on said lands to Howard W. Morris; Laura D. Fitzhugh, Davis Fitzhugh and Thomas B. Fitzhugh, joining in the execution of this lease. The same was the ordinary “unless” lease used in this State, by the terms of which the usual one-eighth royalty was reserved by the lessors, the lessee agreeing to begin drilling operations on the land for oil and gas on or before February 16, 1929; a failure to begin operations within that time working a forfeiture of the lease “unless” the lessee, on or before that date, should pay to the lessor’s credit in the Parkdale Bank the sum of $400, which sum, when paid, should operate as a rental, and confer the privilege of deferring the commencement of a well for twelve months from said date. In-like manner, and upon like payments, the commencement of a well might be further deferred for the same period for a given number of years.

The Texas Company, assignee of Howard W. Morris, having failed to begin the drilling of a well upon the land on or before the date named, paid to the designated depository $400 for an extension of time as stipulated. The bank being doubtful to whom the money should be paid, M. M. O’Neal instituted this action claiming the entire sum. The Texas Company and Bank of Parkdale were made parties, and the Fitzhug'hs answered, claiming a one-half interest in the funds deposited. The case was heard by agreement of the parties on the complaint, its exhibits, and the other pleadings filed therein, which were the answer of the Fitzhug'hs, the separate answer of the Bank of Parkdale and a demurrer of the Texas Company. The court sustained the demurrer of the Texas Company, directed the Bank of Parkdale to pay the sum in its hands into the exchequer of the court, saving it harmless of costs, and decreed that the clerk of the court pay out of said funds the cost incurred, and one-half of the balance to O’Neal and one-half to* the Fitzhughs. O ’Neal has appealed from that part of the decree awarding ona-half of the Ifnnds to the Fitzhnghs, and the Fitzhnghs have appealed from that part of the decree taxing one-half -of the costs against them.

Since petroleum is the only mineral for which exploration has been made in Ashley 'County and southern and southeast Arkansas, and one-eighth of that mineral produced is the customary royalty retained, it is clear that this was the mineral in the minds of the parties at the time of the execution of the deed from the Fitzhughs to O'’Neal. No oil has as yet been produced and discovered in the locality in which the demised premises are situated, and the territory is what is denominated by oil prospectors as “wild-cat” territory. In such territory the cost of drilling oil wells is much larger than in proved territory, and the discovery of oil in paying quantities is a mere possibility only. As has been well stated by the learned chancellor, “To employ the idiom of the oil fields, this part of the State is ‘wild-cat’ territory, as distinguished from proved fields. The explorer hazards as much, or more, financial "outlay in his efforts to discover oil or gas in an unproved field as one who wagers his money on a hundred-to-one shot in a horse race, and the agony of suspense is much greater prolonged. To induce one to expend the money and labor incident to sinking a well in search of oil and gas, the explorer exacts a contract of the owner of the prospective or hoped for mineral, whereby the explorer takes seven-eighths of all he discovers, with one-eighth to the owner. This should fix the value af such minerals in place to both explorer and owner, and furnish a basis for transactions therein. Of course, in the first instance, all of such mineral in place belongs to the owner, but it has no actual value while in place, and costs seven-eighths in volume and value to produce it.”

It is therefore reasonable that one having only the right of one-sixteenth of the oil discovered on a farm in wild-cat territory could have no intention of exploring same, but could only hope for the exploration to be made by another. This, when it appears from the language used, in the deed that there was not an exception of the oil and gas, or any portion thereof, from the conveyance of the fee simple estate, but a reservation only of an interest in the same for a limited time, malíes it apparent that the right reserved was not an estate in fee, but in the nature of a chattel real to become vested when the oil and gas has been discovered and reduced to possession. Therefore, the extent of appellee’s right under the reservation in her deed would be one-sixteenth of the oil and gas, whenever discovered and the product secured, providing, such discovery and production should be made within the time limit named in the reservation.

Attorney for the appellant cites the case of Jackson v. Dulaney, 67 W. Va. 309, 67 S. E. 795, as applicable to the instant case. In that case it is held (quoting syllabus) : “The legal effect of a provision in a deed excepting and reserving- out of and from the grant at all times thereafter and forever unto the grantor, his heirs and assigns, one-tenth of all the mineral oil that may be obtained by the grantee, his heirs and assigns from the land granted, * * * is to except and reserve in such grantor, his heirs and assigns, to be delivered as stipulated, a royalty of one-tenth of all the oil produced. * * * If the owner of the land subject to such an exception and reservation lease the same for oil and gas reserving a one-eighth royalty, without stipulating how the one-tenth of all the oil reserved in such prior grant is to be discharged, his lessee will be entitled to deduct the same from the one-eighth royalty oil reserved in the lease. ’ ’

The distinction between that case and the instant case is that in that case the exception from the original conveyance was an interest in the fee, whereas, in the ease at bar, there was a reservation for a limited time of an interest therein. The chancellor, in his precedent for a decree,.used the expression, “when the Fitzhughs and O’Neal, joint owners of the real value of the prospectiv'e mineral property supposed to lie beneath the ^Ashley 'County property, leased the land for exploration, they became co-adventurers in an operation designed to yield to each of them one-sixteenth of any production, or one-eighth between them,” so that he doubtless inferred that said parties were joint owners in the mineral property. In this we think he was mistaken. By virtue of the deed O’Neal became the owner of the title in fee simple to the property conveyed, and included in the lease thereafter executed, subject only to the limited reservation of a one-sixteenth interest in the mineral. He was the unconditional owner, when the lease was executed, otf fifteen-sixteenths of the mineral, and of the entire surface of the land, and he could only be injured by entry upon the surface, and had the right to grant on any terms he might choose and for any purpose the privilege to enter thereon. 'The joining of Mrs. Fitzhugh and her sons in the lease was therefore unnecessary, as her rights were limited to a one-sixteenth interest in the minerals below the surface to become her property, when any such might be discovered and raised to the surface.

The Texas Company, present owner of the lease, in consideration of seven-eighths of the total production, has obtained the privilege of entering upon the lands with the necessary equipment and drilling wells for the discovery of oil. Not having begun its operations within the time agreed, it has, as provided in the lease, paid $400 for an extension of the privilege.

In an analogous case, Caruthers v. Leonard, 254 S. W. (Tex.) 779, one Evans made an “unless” lease, similar to the one in the instant case, in which the lessor agreed, if drilling was not begun within a stipulated time, to pay a certain sum for the privilege of deferring operations for twelve months, and, after the execution of the lease, Evans conveyed to Leonard an equal one-half undivided interest in and to all the oil and gas and other minerals in the property contained in the lease. In a suit by Leonard ag'ainst Oaruthers, who had sueceeded to the rights of Evans for one-half of the rent paid to defer the privilege as stipulated in the lease, the court held that Leonard had no right to any part of the money because “this money was paid for the privilege of drilling anywhere on the surface of the land; it did not arise from gas,.oil, or other mineral.”

The case of Guess v. Harmonson, 4 S. W. (2d) 124, was a case where the plaintiff, the owner of a tract of land, executed an “unless” oil and gas lease reserving one-eighth of the oil as royalty. As is customary, there was a stipulation that, if drilling should not be commenced on or before a certain date, the lease should terminate unless the lessee on or 'before that date should pay to a designated trustee a fixed sum of money, but upon the payment of which the lease should' be extended for a period of six months, and that thereafter, upon payment of same amount, the time limit might be further extended for an additional. six months, for a period of five years. During the life of this lease, the plaintiff sold a one-half interest in the oil and gas interest reserved by him to the defendant. The lease above mentioned having expired and having been terminated, plaintiff and defendant executed another lease of like character, which toy assignment became the property of another and different company than the one to which the first lease was made. The lessee, not being able to begin drilling within the time limit first named, paid to the designated trustee the sum agreed upon for extending the period for drilling operations. Suit was instituted by the plaintiff against the defendant and the depository to' determine the rights of the parties, the contention of plaintiff being that he was the owner of the fee simple title to the land, and the conveyance to the defendant was only for a one-half interest in the royalties to be obtained from oil and gas;, when and.after they were severed from the land, and did not entitle him to share in any of the rentals arising from the lease made at any time. The defendant on his part claimed one-half of the rentals from the lease made any time on the lands. 'The court held that the defendant was not entitled to any rent, but only to his part of the royalties.

As we have seen, the reservation in this case is a one-sixteenth interest in all oil, gas and other mineral rights and properties in said lands for a period of ten years from the date of the execution of the deed. Our conclusion is that this reservation co-uld not avail the Fitzhughs anything unless and until oil and gas might be discovered and reduced to possession, and that the rentals in no sense arise from the oil and gas, but are in payment for the privilege to enter upon the surface and drill for oil, which surface, being the exclusive property of O’Neal, entitles him only to the rent money. The chancellor properly sustained the demurrer of the Texas Company, and that part of the decree as to the Bank of Parkdale is correct. But we are of the opinion that the chancellor erred in ordering the payment of one-half of the $400 to the Fitzhughs, and think he should have found and decreed that O’Neal was the owner of the entire sum.

The decree of the Ashley Chancery Court is reversed, and the cause remanded with directions to enter a decree ordering that said $400 be paid to O’Neal, and the costs of the 'case adjudged against the Fitzhughs. The decree in all other respects is affirmed.


author: Hart, J.,

text:
    Rogers v. Sangster. Rogers v. Fairley.
    Opinion delivered January 27, 1930.

      A. F. Barhaon, for appellants.

      L. P. Biggs, and Coleman '& Bicl&ich, for appellees.
   Hart, J.,

(after stating the facts). The chancellor held that the ordinance whereby the mayor and a majority of the board of aldermen were authorized to take over the waterworks plants and the electric light plant and operate and maintain the same was void, because they were interested parties. The decision of the chancellor was correct-, and the contract was void as against public policy. The rule is of general application, and is based upon principles of reason and of public policy.

In 2 Dillon on Municipal Corporations, (5th ed.), § 773, a clear and comprehensive statement of the rule is made, which reads as follows:

“At common law, and generally under statutory enactment, it is now established beyond question that a contract made by an officer of a municipality with himself, or in which he is interested, is contrary to public policy, and tainted with illegality; and this rule applies whether such officer acts alone on behalf of the municipality, or as a member of a board or council. Neither the fact that a majority of the votes of a council, or board, in favor of the contract are cast by disinterested officers, nor the fact, that the officer interested did not participate in the proceedings, necessarily relieves the contract from its vice. The facts that the interest of the offending officer in the invalid contract is indirect, and is very small, is immaterial. The statutory prohibition is frequently so wide in its terms as to prohibit any officer from contracting with the municipality, whether he takes part in the making of the contract or not.”

To the same effect see McQuillin on Municipal Corporations (2d ed.), vol. 2, §§ 531, 629, and vol. 3, § 1354.

Municipal officers are held by the courts to a strict accountability in their dealings with or on behalf of the municipal corporation; and in recognition of their incapacity to serve two masters, as an incident to the frailty of human nature, public policy has placed a disability to make a contract for the city where they are interested in it in any degree. The rule is so inflexible that no inquiry into their good or bad intention or to the fairness or unfairness of the contract is permitted. Our own court has sustained the principle in the following cases: People’s Savings Bank v. Big Rock Stone & Construction Co., 81 Ark. 599, 99 S. W. 836; Tallman v. Lewis, 124 Ark. 6, 186 S. W. 296; Gould v. Toland, 149 Ark. 476, 232 S. W. 434; and Sloss v. Turner, 175 Ark. 994, 1 S. W. (2d) 993.

Section 7520 of Crawford & Moses’ Digest reads as follows:

“Nor shall any alderman or member be interested, directly or indirectly, in the profits of any contract, or job, or services, to be performed for the corporation.”

The -statute is merely declaratory of the common law, and the reason for it is well stated in 13 Cyc. p. 425, as follows:

It is perhaps correct to say that public policy is that principle of law which -holds that no person can lawfully do that which has a tendency to be injurious to the public, or against the public good, which may be designated, as it sometimes has been, the policy ’of the law, or public policy, in relation to the administration of the law. Where a contract belo-ng's to this class, it will be declared void, although in the particular instance no injury to the public may have resulted. ’ ’

Some reliance is placed by counsel for appellants on act 322 of the Acts of 1923, which authorizes the lease or sale of waterworks, gas or electric works belonging to, or operated by, municipal corporations or improvement districts. General Acts of 1923, p. 252.

In the first place, under the provisions of that act, the sale could be made by the officers of the municipal corporation in cases only where that corporation owned the plant. Even in such, cases, it would be contrary to public policy for the officers of the municipal corporation to lease or sell the plant to themselves.

In this case, however, the improvement districts own the plants themselves, and, under the statute just referred to, the sale of them would have to be made by the board of commissioners of the district.

Therefore it follows that the decree of the chancery court in each case was correct, and it will be affirmed.


author: Hart, C. J.,

text:
    Chicago, Rock Island & Pacific Railway Company v. Robinson & Company.
    Opinion delivered January 27, 1930.

      Thos. S. Buzbee, II. T. Harrison, Geo. B. Pugh and Hays, Pridcly, Borex $ Madole and Hill, Fitzhugh <& Brizzolara, for appellants.

      D. H. Howell, for appellees.
   Hart, C. J.,

(after stating the facts). It is earnestly insisted by counsel for appellant, Central Railway Company, that the judgment against it should be reversed, and the cause of action as'to it dismissed. In this contention we think counsel are correct. The shipment of potatoes was an interstate one, and the 'Central Railway of Arkansas was the initial carrier. It issued a- 'bill-of-lading to plaintiffs for the two cars of sweet potatoes consigned from Plainview, a station on its line, to shipper’s order at Kansas City, Missouri. Thirty-five hours after the potatoes reached their destination at Kansas City, plaintiffs applied for and received a reconsignment or diversion order from the ag’ent of the Rock Island Railway. Company at Dardanell-e; but the Central Railway Company did not have any knowledge of the reconsignment or the diversion order issued by the Rock Island Railway Company. Shipment was made and bill-of-lading issued by the 'Central Railway of Arkansas, on the 12th day of December, 1925; and, the shipment being an interstate one, the case is ruled by the provisions of the Carmack amendment and the decisions of the Supreme Court of the United States construing it.

The rights of the parties in the present case accrued before the Carmack amendment to the Interstate Commerce act was amended by the Cummins act in 1926.

In Gulf, Colorado & Sante Fe Ry. Co. v. Texas Packing Co., 244 U. S. 31, 37 S. Ct. 487, it was held that, by request of the shipper and by action of the carriers in dealing- with the freight accordingly, a shipment g-overned by the 'Carmack amendment and bills-of-lading thereunder might be diverted from the original destination, and the original bills-of-lading be continued in force as applicable to the new destination. There, however, the poultry which was the subject of the shipment was sold while it was in transit to1 Chicago, and, while the cars were in S‘t. Louis on the side track, the shipper called upon the agent of the initial carrier to divert the shipment to Chicago. It promised to do so, and its agent told the shipper that he would wire a representative of the railway company in St. Louis to divert the cars. No new bills-of-lading were issued, and the shipper was told that the carrier would make proper notification on the original bills-of-lading. Hence the court said that it was fairly inferable from this evidence that the bill-of-lading originally issued was continued in force by action of the parties changing the destination and remained a binding contract when the initial carrier accepted the diversion of the shipment from St. Louis to Chicago-. Here the initial carrier did not accept the- diversion or reconsignment of the shipment of sweet potatoes from Kansas City, Missouri, to Ogden, Utah. The initial carrier was not consulted in the matter, and did not know anything about the diversion or re-consignment of the sweet potatoes until sometime after it had been made. The purpose of the Carmack amendment was to create in the initial carrier unity of responsibility for transportation to destination. For the purpose of fixing the liability, the several carriers must be treated, not as independent contracting parties, but as one system; and the connecting lines become, in effect, mere agents, whose duty it is to forward the goods under the terms of the contract made by their principal, the initial carrier. Missouri, Kansas & Texas Ry. Co. v. Ward, 244 U. S. 383, 37 S. Ct. 617.

The initial carrier’s liability arises out of its own bill-of-lading-; and, while the connecting carriers are the agents of the initial carrier, they do not continue to he so when the transportation has been completed and the shipment reaches its destination. There is nothing in the law as to interstate shipments which would justify the holding that the Rock Island Railway, as connecting carrier, was the agent of the 'Central Railway Company, as initial carrier, in the making of a new and different contract of transportation, after the original contract had been performed. So far as we are advised or have been informed, at the time the contract of shipment was made there was nothing in the tariff or rules of the Interstate Commerce Commission which required the initial carrier to divert the shipment after it had reached its destination ; and certainly, if it could not have been required to divert the shipment, a diversion or reconsignment by one of the connecting carriers would not create a new or binding obligation on it. Southern Produce Co. v. Norfolk Southern Rd. Co., (Supreme Court of Appeals of Virginia) 144 Va. 422, 132 S. E. 360 ; Clark v. Louisville & Nashville Rd. Co., 216 Ala. 637, 114 So. 295; Wilson v. American Railway Express Co., 204 App. Div. 59, 197 N. Y. Supp. 600; affirmed in 239 N. Y. 562, 147 N. E. 196; Rice v. Oregon Short Line Co., 33 Idaho 565, 198 Pac. 161; Yazoo & M. V. R. Co. v. Norman, 125 Miss. 636, 88 So. 174; and Barrett v. Northern Pacific R. Co., 29 Idaho 139, 157 Pac. 2016. See also Roberts’ Federal Liabilities of Carriers, (2d ed.) vol. 1, § 389.

While the statutes of the United States and the construction pf the same by the Supreme Court of the United States are conclusive, we think it is clear from the authorities cited above that, when the shipment in question was made, appellant, Central Railway Company, was only required to carry the shipment of sweet potatoes to the destination named in the contract, and, on their arrival there, could not be required to divert the cars of sweet potatoes to another point, and that it was not bound by a new contract reconsigning them to a point made by one of its connecting- carriers without its knowledge or consent.

Upon the question of damages against the Central Railway Company, but little need be said. The evidence of the employees of the initial carrier shows that the two cars of sweet potatoes were properly loaded, and were in good condition when received by the initial carrier. The evidence of the conductor of the train, on which they were carried from Plainview to Ola, shows that there was no delay or negligence in handling the train or in delivering the potatoes at Ola to the Rock Island, as a connecting carrier. The evidence of the employees of the initial and connecting' carriers shows that the potatoes were carried from Ola to Kansas City, Missouri, without delay, and without any negligence in the handling of the train in which they were carried. They were carried promptly and were placed on the .side-track at Kansas City, subject to the shipper’s order. They were allowed to remain there thirty-five hours before the shipper attempted to divert or to reconsign them. There is no evidence in the record tending to show that there was any damage to them thus far. The testimony of the operatives of the train as to how the train was handled, and as to there being any delay in the carriage to the point of destination, was reasonable in itself. It was not contradicted in any respect, and no attempt was made to contradict it by either evidence of facts or circumstances which would tend to show that it was untrue. Hence the ease seems to have been fully developed as to the Central Railway Company, and the judgment will he reversed, and the cause of action as to it will be dismissed here.

The appeal of the Rock Island Railway Company stands on a different footing. When it made the contract of diversion or reconsignment of the two cars of potatoes from Kansas City, Missouri, after their arrival there, to Ogden, Utah, this was tantamount to a new contract by it, and it became liable, as initial carrier, from Kansas City, Missouri, to the point of destination. The diversion of 'the two cars of potatoes from Ogden, Utah, to points farther west was made two days before the shipment arrived at Og'den. Hence, the transportation under the new bill-of-lading or reoonsignment by the Rock Island had not been completed before the diversion at Ogden was requested by the shipper. This request for a diversion, from Ogden to points further west was made by telegram, and, having’ been made before the cars of sweet potatoes reached their destination at Ogden in written form, and having been accepted and the cars diverted by the Union Pacific, the Rock Island, the initial carrier, under its new contract, would be liable for all damages accruing by the negligence of any Connecting carrier until the cars of sweet potatoes reached their final destination.

In its motion for a new trial, the Rock Island Railway Company claims that the court erred in not directing a verdict in its favor. For the reasons above given, the court did not err in this respect. By the issuance of a new bill-of-lading -which reconsigned the two cars of potatoes from Kansas City, Missouri, to Ogden, Utah, the Rock Island became the initial carrier, and became liable as such. The diversion having been requested before the two cars of sweet potatoes arrived at Ogden, the shipper had a right to have them diverted to other points upon the payment of the proper tariff rate.

The only other ground assigned as error in the motion for a new trial by the Rock Island Railway Company is to the form of verdict returned against it, and in this contention we think it is correct. The verdict of the jury found for the plaintiffs against both the defendants for damages caused while the shipment was on the Rock Island Railroad in the sum of $760. As we have already seen, under the testimony of the trainmen there was no damage done to the potatoes while they were being carried on the line of the Rock Island Railway Company. According to the evidence of the trainmen, the train was handled carefully, and there was no delay in the shipment. The ventilators on the cars were kept in such condition as was required by the weather. Hence there was no evidence upon which to base a verdict for damages against the Rock Island caused while the shipment was being carried over its own line. The judgment against it will be reversed, and the cause will be remanded for a new trial.

It follows that the judgment as to the Central Railway Company is reversed, and the cause of action is dismissed, and the judgment against the Rock Island Railroad Company is reversed, and the cause of action is remanded for a new trial. It is so ordered.


author: Kirby, J.

text:
    Davis v. Patterson.
    Opinion delivered January 20, 1930.

      McKay $ Smith, John Bruce Cox and C. E. Wright, for appellants.

      G. Earl Shaffer, AlvinD. Stevens and Joe Joiner, for appellees.
   Kirby, J.

(after stating the facts). Appellants insist that the court erred in limiting the terms of the drilling contract -between Haskell and Hoffman, assigning one-half of seven-eighths of the oil produced to the payment of the specified consideration for drilling* the wells to a period of two years. The provisions of the contract relating’ to the payment of the consideration are as follows:

“In consideration of the drilling of the above described wells, and each of them, the party of the first part agrees to assign, and does hereby assign, to the party of the second part one-half of seven-eighths of all the oil that may be produced and saved from the wells to be drilled under this contract, except the well located in the E% of E14 of SE1/^, section 23, township 15 south, range 20 west, to this extent, to-wit:
“In consideration of the drilling of the above described wells, except the two wells located in section 22, township 18 south, range 19 west, and in section 19, township 14 south, range '22 west, the party of the first part agrees to pay the party of the second part the sum of $10,500 for each of said wells, and agrees and binds himself to furnish and deliver at the location of said wells all necessary 10-inoh and 6 5/8-inch, and all other necessary casing, and to erect the derricks for wells, for which he shall have credit upon the price of any such wells, the sums thus accruing to P. L. Hoffman for each of said wells to be paid out of one-half of seven-eighths of the first oil produced and saved from said wells, and the party of. the first part agrees to assign to the party of the second .part, and does by these presents assign to the party of the second part, one-half of seven-eighths of all oil that may be produced and saved from said wells located in section 24, township 15 south, range 20 west, until the said party of the second part shall have been paid out of such oil $10,500 for each iof said wells, less any amount credited to the party of the first part for casing and derricks furnished under this contract.”
“As a further consideration for the drilling of said wells, the party of the first part agrees that, in the event the party of the second part has not received full payment for all wells drilled under this contract out of one-half of seven-eighths of the first oil produced and saved from said wells, as above provided, within two years from this date, to pay to the party of the second part the amount then remaining due or unpaid on the price of said wells under this contract.”

Appellant Davis, assignee of the drilling contract, took the place of, and succeeded to, all Hoffman’s rights to receive the compensation agreed to be paid for drilling the wells. There is no need for the application of rules of construction for ascertaining the intention of the parties from the contract made, when the meaning of the contract is clear and unambiguous. This contract provides the amount that shall be paid for the drilling of the wells, makes an assignment of one-half of seven-eighths of the oil produced for the payment of the amount of the consideration specified for drilling the wells, and in its last clause provides: “As a further consideration for the drilling of said wells, the party of the first part agrees that in the event the party of the second part has not received full payment for all wells drilled under this contract out of one-half of seven-eighths of the first oil produced and saved from said wells, as above provided, within two years from this date, to pay to the party of the second part the amount then remaining due or unpaid on the price of said wells under this contract.”

It is conceded that full payment had not been made to Hoffman of the amount agreed to be paid for drilling the wells out of the part of the oil produced and saved within two years from the date of the contract, as provided therein, and it is not claimed that he or his assignee had been paid the; amount earned for drilling the wells under the terms of the contract, but only that his right to payment out of the production of such oil was limited to two years, and thereafter he could only recover the balance due from the parity of the; first part in the contract, or his successors to the leasehold. There is no expression in the contract disclosing the intention to limit the payment for the wells out of specified portions of the; oil produced and saved to any particular time, the contract providing only for payment of one-half of seven-eighths of all the oil produced and saved from the wells drilled, until the said party of the second part shall have been paid out of such oil $10,500 for each of said wells.

The last clause of the drilling contract provided no forfeiture or limitation of the right of the contractor to the consideration agreed to be paid, but only an additional method for payment of the balance due him for drilling the wells, as a further consideration for the drilling, if the full amount earned had not been received or paid by one-half of seven-eighths of the oil produced and saved from the wells at the end of two years. It is true that the party of the first part, the owner of the leases, had the right to pay the contractor or his assignee the amount remaining due on the price of the wells under the contract, if it had not been paid out of the oil produced and saved at the end of the two years, and the contractor could have insisted upon such payment at that time without losing his right to continue to receive one-half of seven-eighths of the oil produced from the wells drilled until he was fully paid the amount still due. It was the payment of the consideration for the wells drilled as agreed that terminated the contractor’s right to receive payment under the contract, in accordance with its terms, and the undisputed testimony shows that the balance had not been paid.

Neither do we find anything1 in the record to support appellee’s contention that the conduct of Hoffman, or his assignee, had given the contract a particular construction inconsistent with or different from its plain meaning, as expressed therein. Nor is there any merit in appellee’s claim that the chancery court had construed the contract in accordance with their contention here as a limitation on the contractor’s right to receive the portion of oil in payment for the drilling iof the wells to a period of two years, or that the question is concluded or res judicata by the decree not appealed from. He recites the decree rendered on another judgment of that court, appointing another receiver as follows:

“And it appearing to the court that under the terms of said contract that said P. L. Hoffman was to receive one-half of seven-eighths of the oil produced and saved from certain lands described in said contract for a period iof two years, and said two years have already expired, and there still being an indebtedness due the said Hoffman under said contract, it is hereby adjudged and decreed by the court that the said P. L. Hoffman shall continue to receive one-half of seven-eighths of the oil produced and saved from the premises and leases described in said contract until he has received the amount adjudged to be due him by the court, or until further orders iof this court.”

The decree does recite that under the terms of the contract that it appeared that Hoffman was to receive one-half of seven-eighths of the oil produced and saved from certain lands described in the contract “for a period of two years, and said two years have already expired,” but it also recites, “and there still being an indebtedness due the said Hoffman under said contract, it is hereby adjudged and decreed by the court that the said Hoffman shall continue to receive one-half of seven-eighths of the oil produced and saved from the premises and leases described in said contract until he has received the amount adjudged to be due him by the court or until further orders of this court.” The court did not, however, indicate, and certainly did not hold in this statement, that the contract provided the contractor should only receive one-half of seven-eighths of the oil produced and saved from the lands for a period of two years, but did say the two years had already expired. It also finds an indebtedness still due Hoffman under the contract, and adjudged and decreed that Hoffman shall continue to receive one-half of seven-eighths of the oil produced and saved from the premises and leases described in said contract until he has received the amount adjudged to be due him by the court. There is not only nothing inconsistent in this decree with the contractor’s right to receive the oil in payment of the amount due for drilling the wells, but it is an express adjudication that he shall continue to receive the oil produced and saved from the premises until he receives the amount adjudged to be due him, regardless of the fact that the two years had already expired, being an adjudication, in fact that the two years was not a limitation of his right to continue to- receive the oil until he was fully paid for the drilling. It follows that the court erred in construing this contract otherwise than in accordance with its plain meaning, as expressed therein, adjudging that the contractor’s assignee had no right to,receive the consideration due under the contract after the two years had expired, nor any right of preference in the disposition of the proceeds of the lands sold for payment of the debts. The parties all being before the court, it had the right to order a sale of the property, free of all claims, liens and incumbrances, for disposition of the proceeds among- the parties entitled thereto upon proper adjudication of their rights. Then, too, appellant Davis asked a sale of the property, subject to his rights however. 2 Tardy’s Smith on Receiver’s, 1798; State v. Superior Court of King County, 128 Wash. 253, 222 Pac. 492; Pilliod v. Angola R. & Power Co., 46 Ind. App. 719, 91 N. E. 829; First Natl. Bank v. Powell Bros., 128 La. 961, 55 So. 590; In re Gimbel, 294 Fed. 883.

The court erred also in holding the balance of the compensation due under the Hoffman contract to be a common claim and not entitled to preference. He had the right to receive under the terms of the contract, of which he was assignee, one-half of seven-eighths of all the oil produced and saved from the wells drilled until he was fully paid the amount agreed to be paid as -consideration therefor, and this without deduction for any expense of producing and saving the oil, so far as is disclosed by the record. He was entitled therefore to have the property sold to- satisfy his claim, if the appellees had ceased to operate the leases and produce oil, and to the satisfaction of this indebtedness against the property of the appellees, from which the oil wa,s produced by the drilling of the wells under the terms of the contract, and, necessarily, the right to preference in payment of his claim out of the proceeds realized from the sale of the property free from all other claims, liens and incumbrances,'and the court erred in holding otherwise. The appellant, Davis, could have protected his rights by bidding on the property sold enough to provide for payment of his claim, or have received the whole property from which the oil was to be produced, if others had not increased the bid, and would in no wise have suffered injury from the- sale order.

The decree will be reversed for the errors designated, and the cause remanded with directions to render a decree for payment first of appellant’s claim for balance of compensation due for drilling the wells under the driller’s contract assigned to him, and for distribulion of the remainder of the proceeds of the sale in accordance with, the principles of equity and not inconsistent with this opinion. It is so ordered.


author: Smith, J.

text:
    Philpot Construction Company v. Danaher.
    Opinion delivered January 27, 1930.

      Wooldridge $ Wooldridge, (for appellant.

      A. F. 'Triplett, for appellee.
   Smith, J.

An improvement district was organized to pave and resurface a portion of Barraque Street in the city of Pine Bluff. It was believed by the property owners and the commissioners of the district that the portion of the street which they sought to improve would be made á part of one of the State’s roads running through the city, and that if this were done a contribution on the part of the State Highway Commission would be made under the authority of act No. 184 of the Acts of 1927 (Acts 1927, p. 645), and it was determined to make the construction of the improvement contingent upon this contribution being made.

With this end in view, the chairman of the board of commissioners of the improvement district submitted the matter to the State Highway Commission, and, on July 20, 1928, the State Highway Engineer wróte the chairman of the board a letter, in which there was inclosed a copy of the resolutions adopted by the commission, defining the policy of the Highway Commission under act li84. This act is entitled, “An act to provide for the permanent improvement of continuations of State highways within the corporate limits of cities of the first and second class.” This act authorized State aid, to the extent of fifty per cent., of the cost of improvements which should be designated as extensions of State hig'hways through cities of first and second class.

The resolutions of the Highway Commission referred, to contained a preamble, which recited that act 184 was ambiguous, and contained no appropriation to meet the expenditures there authorized, and that, as many cities were seeking to take advantage of the provisions of the act, an amount of mone> so large would be required that the finances of the department would •be embarrassed if these payments were made within a two-year period, and that the ITiglrwa}'' Commission would advise the Legislature at its 1929 session -why it had not complied with act 184. This resolution further recited that “The State Highway Commission will recommend amendments to act No. 184 or a .substitute act that will carry out the purposes of act No. 184, but provide for the payment over a period of years by issuing certificates of indebtedness of the Highway Department to such district on completion of the work, so as to give the same relief as was intended under act No. 184 and at the same time not cripple the finances of the Highway Department at the very time when roads are most in need. .Such certificates of indebtedness to bear 4% per cent, interest, to be payable jointly to the district, and the trustee named in the bond issue of such town or city paving district, and to be non-negotiable, so as to prevent any district discounting same at higher interest rate.”

In the letter from the State Highway Engineer to the chairman of the board of commissioners, transmitting a copy of these resolutions, the engineer stated: “You understand that it is not practical for us to designate a street as a highway prior to the issuance of your bonds, as the bond attorneys would refuse to approve your bonds. We will, however, designate this street after the bonds are sold and the money is in your hands.”

With this assurance, proper steps were taken to complete the organization of the improvement district, and betterments were assessed, against which bonds were issued in the sum of $17,500. These bonds were negotiated and sold under a contract, which constituted the Merchants’ & Planters’ Bank & Trust Company of Pine Bluff, as trustee, and gave the improvement district the right to repurchase all of the bonds in excess of the amount required to pay one-half of the cost of the improvement, and this option was exercised, and the trustee now holds for the benefit of all parties in interest the bonds so repurchased.

Competitive bids were invited under the circumstances stated, and the Philpot Construction Company, hereinafter referred to as the company, became the successful bidder, and the improvement was constructed under the contract let to it, and this suit was brought to enforce payment of the balance alleged to be due under this contract.

The cause was submitted to the court sitting as a jury, and a general finding of facts was made, upon which the court declared that there was no right to recover, and this appeal is from that judgment. This finding of facts was based largely upon an agreed statement of facts filed by the parties, and is fully supported by the testimony as to facts found, but not agreed upon.

After the completion of the work, the improvement district paid the company the amount which the district admitted was due, and there was received from the State Highway Commission a certificate for the balance, which was made payable in installments extending over the same period of time required for the maturity and payment of the bonds issued by the improvement district, the amount thereof being payable in equal annual installments, with interest on the clef erred' installments at 4% Per cent, per annum. The first installment was paid by a voucher drawn by the State .Auditor, which the bank, as trustee, placed to the credit of the account of the company, whose commercial account was carried at this bank. When the company was advised of this action, it repudiated tins payment on the ground that, having* completed its contract, the balance due should be paid in cash out of the proceeds of the sale of the district’s bonds, and it was insisted that the improvement district was required to accept the certificate of the Highway Commission and use the proceeds thereof, as the installments matured, in the payment of these bonds. There was written upon this certificate the indorsement that it was nonnegotiable and nontransf eraible.

The court found the facts to- be that All parties were advised that the improvement district was unwilling to enter into any contract, obligating itself to pay more than approximately one-half the total construction cost of the improvement, and that it was not the intention of 'the parties, in entering into the contract, to place any obligation upon the district in excess of the difference between the total construction cost and the anticipated aid, and that the contractor had been paid the difference between the construction cost, as shown by the final estimate of the engineer of the district, and the amount of State aid, figured at the time of such final estimate, and agreed upon at such time, as the amount of State aid to be anticipated, according to the rules and regulations of the State Highwaj7' Commission.

This finding appears to be sustained by the express terms of the construction contract, from which we copy as follows: £<It is understood and agreed between the parties hereto that said Paving District No. 101 is anticipating aid from the State Highway Department of the State of Arkansas under the provisions of act No. 184 of the General Assembly of 1927 and the act of the Special Session of 1928 amendatory of said act No. 184, which aid, if given, will be in the form of certificates issued by the State Highway Department in an amount equal to approximately one-half of the cost at above prices of the improvement above required to be done on the portion of Barraque Street, which would lie between Walnut Street and Mulberry Street, and between the curb lines on the north and south sides of Barraque Street, if said curb lines should be extended straight through the entire district across the intersecting streets, such portion being* parallelogram 32.5 feet in width, and extending from Walnut Street to Mulberry Street in length, which amount is hereby stated to be $7,790.42. These certificates, so expected to be issued by the State Highway Department, will hereinafter be called highway certificates. The expectation on the part of the district for such State aid is based solely upon a letter dated July 20, 1928, addressed to M. Danaher, chairman of said board of commissioners by C. S. Christian, State Highway Engineer, which letter has been read to the party of the first part.

“The commissioners are unwilling to enter into a contract for the making of the improvement embraced herein, unless they know that the total cost thereof to be paid 'by the district out of assessments to be collected from its property owners will not exceed the difference between the total construction cost of such improvement according’ to the proposal of the contractor accepted by the board and the face value of the highway certificates above referred to, which difference is hereby stated to be $7,475.96. The contractor is willing to, and hereby does, assume all risk of failure of the district to obtain such State aid, and agrees that, if such State aid ■be not given to the district, then the total amount to be paid to the contractor for all work done and materials furnished in making the improvement hereby contracted for shall be the difference between its worth, figured at the unit prices in the contractor’s proposal, and said sum of $7,790.42, anticipated State aid.

“The contractor hereby agrees to construct the improvement completely, even if no aid be given to the district by the State Highway Department, at the net cost to the district set out above.

“If such State aid be given to the district in the sum now expected, or in a lesser sum, the commissioners may turn over to the said contractor the certificates of indebtedness issued to it by the said State Highway Commission, or may assign bo> the contractor all of its rights and interest in said certificates, or, if it prefers to do so, may pay the said contractor the amount of said aid in cash.”

The act No. 8, here referred to, was passed at the Extraordinary Session of the General Assembly in 1928 (Acts Special Session 1928, page 31), and is entitled, “.An act to amend act No. 184, approved March 22,1927.”

This act amends the defects which were thought to exist in act No. 184, and by § 5 of the act No. 8 it is provided that “Said commission shall determine the amount to be refunded to the (improvement) district, and the installments into which it shall be divided, and shall issue certificates of indebtedness for the respective installments, payable to the district, if the district has no outstanding bonds, or payable jointly to the district and to the trustee for the bondholder, if the district has outstanding bonds. The certificates shall be nonnegotiable, and shall so state on their face, and shall bear interest at the rate of four and one-half per cent, per annum, payable semi-annually.”

It appears from the facts stated, that the improvement districts were required by the State Highway Commission to proceed as if no State aid were expected; indeed, the street could not be designated as a part of the State Highway system until it had 'been improved, in accordance with plans approved by the Highway Commission. It was in accordance with this requirement that the district issued bonds in an amount equal to the cost of the improvement, and the bonds were not issued to. provide a fund to pay the contractor anything more than one-half of the cost under any condition. It appears, therefore, that the extent of the interest of the contractor in the proceeds of the bond sale was to receive from this source one-half of the contract price of the cost of the improvement.

It appears from the agreed statement of facts that the “total payments to be made under the State Highway certificate, including interest, is the .sum of $11,430.65. To provide the amount of the State certificate in cash, the defendant district would have to sell not less than $8,200 of five per cent, bonds, and such bonds matured in the same amount per year, as provided for the maturities of the State Highway certificate would total the sum of $12,555.47, including interest, or $1,124.82 more than the total principal and interest payments under the State Highway certificate bearing’ four and one-half per cent, interest. ’ ’

We think the court below was fully warranted in finding that the payment of this sum of $1,124.82 was an obligation which the improvement district did not assume.

In regard to this certificate, the answer alleged:

“And such district again hereby tenders such certificate to plaintiffs, offers to assign or transfer to the plaintiffs all of its right, title, interest and claim thereunder, or to leave said certificate in the said Merchants’ & Planters’ Bank & Trust Company to be collected for the use of plaintiffs, or to take such other steps as plaintiffs may desire to vest the legal title of such certificate, or the proceeds therefrom, in plaintiffs.”

It is contended, in effect, that the contract should be construed to mean that the company was to do the work for half price in the event only that the State aid was not forthcoming, and that, while it was in fact given, yet, when given, it was in a form not available in the manner contemplated by the parties, and that, as the aid was received, the district should be required to pay in money, as it cannot pay in the manner contemplated. We think this risk was not assumed by the district, but was, on the contrary, expressly imposed on the company, and that it was not the intention of the district to be liable for more than one-half the cost under any circumstance. The language of the contract is that the commissioners, contracting for and on behalf of the district, “are unwilling to enter into a contract for the making of the improvement, unless they know that the total cost thereof to he paid by the district out of assessments to he collected from its property owners will not exceed the difference” between the total construction cost and the anticipated State aid, and it has already been stated that, if the district were required to pay the entire cost of the improvement and take the highway certificate, a loss of $1,124.82 would he sustained, which would, of course, have to he repaid by the district out of assessments to be collected from the property owners in excess of the difference between the total construction cost and the anticipated aid, and it was expressly provided in the contract that this -should not occur.

It is argued that the contract imposes the alternative obligation to either transfer the certificate or pay in cash, and that, as one alternative has become impossible-, the other ;is obligatory; hut such is not, in our opinion, the effect of the contract. The district does have the right to pay in cash, but this was at its option, and it has not elected to exercise the option. It could also pay by the use of the State aid in whatever form it might he received, and this it has elected to do. All parties were familiar with the resolutions of the State Highway Commission and the statute pursuant to which the resolutions were passed, and these were expressly taken into account in the construction, contract, and the company must he he^d to have known that the State aid would not he payable in cash, hut in a nonnegotiable certificate made payable to the joint order of the improvement district, and the trustee for fid bondholders, and that such certificate would be issued for such amounts of annual maturities as would be equivalent to approximately fifty per cent, of the annual bond maturities of the district, and that such certificate would bear interest at the rate of only 4y2 per cent.

It is true the certificate, when issued, was not only nonnegotiable, as the statute provides it should be, but was also made nontransferable, but upon this subject the court declared the law as follows: ‘ ‘ That it was not the intention of the board of commissioners to guarantee the form of the certificate or that the same should be negotiable or transferable; that the fact that as it is such certificate is marked on its face nontransferable is not due to any act, neglect or default on the part of such district, and that any loss occasioned thereby must be borne by the plaintiffs as one of the risks assumed by them in agreeing without qualification to accept such certificate, and that even if it should be conceded, which, however, is not necessary to a determination of this case, that the commissioners are now prohibited by law or regulation of the State Highway Department from transferring such certificate, this cannot affect the obligation of the district to the plaintiffs. ’ ’

We do not inquire by what authority the State Highway Commission made the certificate nontransferable, or whether such authority exists. It suffices, so far as the district is concerned, to say that it was the State aid given, and if the Highway Commission has, in fact, exceeded its power in making the certificate nontransferable, that action would not enlarge the obligation assumed by the district. The contract required it to pay only one-half of the cost, if State aid had been entirely withheld.

The contract contained the provision that “payments will be made the contractor between the'first and tenth days of each month, upon estimates rendered by the engineers for work done during the preceding month. Eighty-five per cent, of the amount of work done according to such estimates will ¡be paid at the time such estimates are approved, and the remaining- fifteen per cent, will be retained by the board pending the faithful completion of the contract.’’

It is argued that this provision shows the intention of the parties to be that the contractor should be paid in cash upon completion of the contract, provided State aid was awarded. This appears, however, to be a stipulation found in contracts of this character, and we think it should be construed with reference to other provisions of the contract in regard to payments, and that, when so construed, it means only that the district obligated itself I» pay as the work progressed, the stipulated eighty-five per cent, of the amount -which it had agreed to pay at all. Certainly, this provision would not require the district to pay the entire cost of the improvement in view of the other provisions on the subject if no State aid had been received.

It is earnestly insisted that the contract, when construed as a whole, means that the company should be paid in cash, or its equivalent, if State aid was obtained; but we think that such was not its meaning. And it is also insisted that, if such is not the meaning of the contract, the last paragraph of the contract is void as being unilateral and without consideration. This is the paragraph which authorizes the commissioners to turn over to the company the certificate of the Highway Commission, or to pay in cash. Upon this question the trial court declared the law as follows: “Such provision is not void for lack of mutuality by reason of the option thereby conferred upon the commissioners, since the law does not require that every clause of a contract shall contain reciprocal obligations, and it is sufficient if there was a consideration for the promise, which consideration is plainly evident in this case in the award of the contract to the plaintiffs with the obligation imposed upon the paving district to pay plaintiffs the difference between the construction cost and anticipated State aid. The wording of the contract to the effect that the commissioners may turn over or assign the certificate to the contractor is ¡but another way iof stating that the plaintiffs agree that this may be done.”

We think the court was correct in this declaration, and that it is sustained by the following authorities cited in the brief of counsel for appellee: 6 R. C. L. 686-689; 13 C. J. 336; Williston on Contracts, 314-317.

Upon a consideration of the whole case, we are of the opinion that the judgment of the court below, dismissing the suit of the company against the district, is correct, and it is therefore affirmed.


text:
    Urquhart v. State.
    Opinion delivered January 27, 1930.

      Pace & Davis and Tom W. Campbell, for appellant.

      Hal L. Norwood, Attorney General, and Walter L. Pope, Assistant, for appellee.
   Smith, J.

The General Assembly, at its regular 1929 session, passed an act No. 120, entitled “An Act to provide for the quieting* -of the title of the State of Arkansas to the Cummins and Maple Grove plantations in Lincoln County, and for other purposes.” Volume 1, Acts 1929, page 620.

The act is preceded by a preamble -which recites: On November 21, 1902, the Board of Commissioners of the Arkansas 'State Penitentiary entered into a contract with Edmond Urquhart, on behalf of the State, to purchase two adjoining plantations, known as the Cummins plantation and the Maple Grove plantation, to be used as a State convict farm. That all the purchase price except a small balance has long since been paid, and the State is ready and willing to pay the balance upon the execution and delivery to the State of a good and sufficient deed conveying said lands. That Urquhart, since the execution of said contract, has died, leaving his widow and two daughters as his sole heirs and sole devisees, under his last will and testament. That said widow and heirs and devisees, on 'September 28, 1910, tendered a deed conveying said lands, in which the descriptions of the lands differed slightly from those appearing* in the original contract of sale (the difference being stated), and the penitentiary board refused to accept said deed, or to pay the balance of purchase price, on account of this difference in the descriptions of the lands. That, upon the refusal of the board to accept the deed, the Urquhart heirs and devisees brought suit in the chancery court to reform and correct the contract, alleging that a clerical error had been made in the draft of the contract (the error being recited); that the chancery court, after hearing testimony, granted the relief prayed, and directed the reformation of the contract of sale, and an appeal was prosecuted from this decree to the Supreme Court, where the decree of the chancery court'was reversed. Jobe v. Urquhart, 98 Ark. 525, 136 S. W. 663. That, on account of the failure to hear the matter on its merits, the controversy has never been adjusted, and the State has never received a deed to any of the lands.

After this preamble, it was enacted that the attorney general of the State be authorized and directed to institute suit against the widow and heirs and devisees of Urquhart, to quiet and confirm the title of the State to these two plantations, and the duty was imposed upon the court to find and determine whether there remained unpaid 'by the State any balance of either principal or interest, and the amount thereof, if any. A right to appeal was given both parties from any decree that the court might enter.

By § 2 of the act, the sum of $27,000, or so much thereof as might be necessary, was appropriated out of the penitentiary fund in the State treasury, to pay the widow and heirs and devisees of Urquhart “any balance, of principal or interest, that the said court may find to remain unpaid under the contract of purchase, * * * according to the terms and tenor of said contract. ’

Section 3 of the act contains what is declared to be a correct description of the lands, comprising, in the aggregate, 8,136.78 acres, less certain portions of the lands described, which had caved into the Arkansas river, and including the accretions to other lands. This section fur - ther provided that, after the court had ascertained the balance of principal and interest due, the widow and heirs and devisees of Urquhart might, at any time after ninety days, but within one year, exhibit to the Auditor of the State of Arkansas a certified copy of such decree, and a deed to the lands described, whereupon the Auditor was directed to draw his voucher upon the State treasurer for the amount of the principal and interest so found due.

Section 4 contained provisions for putting the decree into effect, but 'barring the widow and heirs and devisees of Urquhart, if they did not, within one year after the rendition of the decree, present the deed as there directed.

Suit was brought by the Attorney General pursuant to the authority of this act; and an answer was filed by the widow and heirs and devisees of Urquhart, in which they tendered a deed conforming to act 120 of the Acts of 1929, upon compliance with the act by the State officials charged with the duty of executing its provisions.

Testimony was heard, and the court found that there remained unpaid a balance on the principal of the purchase money in the sum of $10,416.64, and a balance of interest upon said purchase price of $17,470.53, making an aggregate balance of $27,887.17. Upon this finding of fact, the court held that the balance of the purchase money should be paid in the manner provided by act 120, but that the interest could not be lawfully paid out of said appropriation for the reason “that said act, purporting to make said appropriation, undertook to appropriate money for the purpose of paying any unpaid balance upon the principal of said purchase price of said lands, and also money for the purpose of paying any unpaid balance of the interest upon the purchase price of said lands, said balance of principal being a part of the ordinary expense of the executive department of the State, and the said balance of interest not being a part of the ordinary expenses of any department of the State, for that reason no appropriation for the payment of said interest could have been lawfully made, except in a separate bill, under the provisions of § 30, art. 5, of the Constitution of the State of Arkansas.” Upon the court finding that the balance of principal and interest due was in excess of the appropriation, the widow and heirs and devisees of Urquhart remitted the excess, and offered to deliver a deed conforming to act 120, if the amount of the appropriation was paid to them, and they have appealed from so much of the decree as holds the balance of interest upon the purchase price of said lands cannot be lawfully paid out of the appropriation contained in said act 120.

The legislation and litigation here under review covers a period of time, which began June 4, 1897, when the act was passed under the authority of which the plantations were purchased from Urquhart. The penitentiary board, as then constituted, comprised the chief executive officers of the State, including the Governor, and the Attorney General, and these officers, in the name of, and on behalf of, the State, entered into a contract whereby the State agreed to pay interest on the unpaid purchase money. It is true the court held in the case of Jobe v. Urquhart, 102 Ark. 470, 143 S. W. 121, Ann. Cas. 1914A, 351, that the agreement to pay interest was in excess of the power conferred by the act under which the lands had been purchased; but it is also true that this agreement imposed a moral — if not a legal — obligation upon the State, for the reason that, had it been known that interest could not be paid on deferred payments, the owner would probably have taken that fact into account in fixing the price for which he would sell his lands.

The case of Jobe v. Urquhart, 102 Ark. 470, 143 S. W. 121, Ann. Cas. 1914A, 351, arose under act 21 of the Acts of 1909 (Acts 1909, page 1218), which was an act entitled, “An Act making an appropriation to pay the balance owing the estate of E. Urquhart on the State Convict Farm.” The Urquhart heirs had, in that case, attempted, by mandamus, to compel the Auditor of State to audit and adjust the account, and the circuit court awarded the writ, but the judgment was reversed on the appeal. In the opinion, while it was held that the act of June 4,1897, did not authorize the board of penitentiary commissioners to contract to pay interest, it was held that the Legislature had the power to bind the State to pay interest upon a claim which, according to the pre-existing law, bore no interest.

It was also held in that case (to quote one of the headnotes) that “Under Const. 1874, art. 5, § 26, pro.vidiug that no money shall be appropriated or paid on any claim, the subject-matter of which shall not have been provided for by pre-existing laws, unless allowed by bill passed by two-thirds of the members elected to each branch of the General Assembly, an act in effect authorizing- the Auditor to calculate the amount of interest due by the State to a claimant, not passed by two-thirds of the members of both branches of the Legislature, is void.”

It appeared, from the recital of facts in that case, that it was shown by the journal of the House of Representatives that the bill did not receive a two-thirds vote of all the members of the House elected, as required by the Constitution, and it was therefore held that the part of the act attempting- to appropriate a sum of money to pay interest, for which the State was not legally bound, was void. But the court expressly recognized this as a claim, for which an appropriation could be made to pay by a vote of two-thirds of the members elected to each branch of the General Assembly.

For a further discussion of the law on this subject, see Grable v. Blackwood, ante p. 311, 22 S. W. (2d) 41.

Here it is conceded that the act of 1929 received the vote which the court said, in Jobe v. Urguhart, 102 Ark. 470, 143 S. W. 121, Ann. Cas. 1914A, 351, was required under the Constitution; in fact the vote was unanimous in both House and .Senate, except that one negative vote was cast in each body, but it is insisted that the act did not conform to the requirements of § 30 of art. 5 of the Constitution, in that, as the payment of the purchase money was an ordinary expense of government, which might have been passed by a majority vote, the appropriation for interest was not such an expense, and should have been provided for in a bill making a separate appropriation for this purpose only.

Section 30 of article 5 of the Constitution reads as follows: “The general appropriation bill shall embrace nothing but appropriations for the ordinary expense of the executive, legislative and judicial departments of the State; all other appropriations shall be made by separate bills, each embracing but ope subject.”

The appropriation here involved was not made in the general appropriation bill, but was in fact made in a separate bill, which embraced but one subject, this being an adjudication of the controversy between the State and the Urquhant heirs. The Legislature itself might have ascertained the amount, both of principal and interest, and have made an appropriation accordingly, but it elected to constitute another agency to make this finding of fact, and made an appropriation in what was assumed to be a sufficient amount to pay both the principal and the interest, and, under the remittitur which has been entered, the appropriation is sufficient.

In the case of State v. Sloan, 66 Ark. 575, 53 S. W. 47, 74 Am. St. Rep. 406, it was held (to quote a headnote) that “Under the- provision of the Constitution that all appropriations, other than for the ordinary expenses of the government, 'shall be made by separate bills, each embracing but one subject’ (Const. 1874, art. 5, § 30), the unity of the subject oif an appropriation bill is not broken by appropriating several sums for several specific objects, which are necessary or convenient to the accomplishment of one general design, notwithstanding other purposes than the main design may thereby be sub-served.”

We conclude, therefore, that act 120 does not offend against § 30 of art. 5, and that the court was in error in so holding.

The question is raised here that act 120 is in violation of the amendment to the Constitution, which provides that “The General Assembly shall not pass any local or special act. This amendment shall not prohibit the repeal of local or special acts.”

Act 120 is neither a local nor special act within the meaning of this amendment. It is an exercise of the State’s sovereignty in settling a controversy with one of its citizens, and such acts are neither local nor special. State v. Crawford, 35 Ark. 237. See also other cases cited in the opinion on rehearing in the case of Webb v. Adams, ante p. 713.

At § 34 of the chapter on States, in 25 R. C. L., page 402, it is said: ‘ ‘ The Legislature has a right to appropriate the public funds in discharge of the State’s duty, whether the duty be legal or only moral. And the discharge of such an obligation is always regarded as a legitimate exercise of governmental power. An appropriation, made in discharge of a moral obligation resting upon the State, must be regarded as being for a public purpose, and within the constitutional powers of the Legislature, and the fact that a private person may receive the benefit of such an appropriation does not constitute the act of appropriation a private one.”

The decree of the court below will therefore be reversed, and the cause is remanded, with directions to enter a decree conforming to the provisions of act 120, which we hold to be valid in all respects.