text:
    Dent v. Adkisson.
    Opinion delivered November 30, 1931.

      George F. Eartje and Patterson «3 Patterson, for appellant.

      R. W. Robins, for appellee.
   Butler, J.

The appellants, R. E. Dent and wife, on December 30, 1927, were the owners of a plantation in Faulkner and Pulaski counties containing approximately 4,200 acres, more than half being fertile lands situated in the Arkansas River bottoms, with a total of approximately 3,000 acres under cultivation upon which was a ginnery and other improvements. The appellants owned, in addition to the plantation, 41 mules, 2 head of horses, 31 head of grown cattle, 31 calves, 57 head of hogs, and farming machinery necessary for the cultivation of the plantation. On the date mentioned, they executed two promissory notes to the appellee, one for $10,000 due October 1, 1928, and the other for $60,000 due December 30, 1928. To secure these notes and such further advances of money as the appellee might make to them, they executed a real estate mortgage on their plantation and also a chattel mortgage covering the property above referred to, together with the crops to be grown during the year 1928.

On January 22, 1929, the appellee, G. W. Adkisson, brought suit to foreclose these mortgages, and on the 26th of January following made application for a receiver to take charge of the property. Thereupon W. W. Bishop was appointed as receiver, who, on. February 1, 1929, with the approval of the court, delivered all the said property into the possession of the appellee. Of the original amount loaned and for the moneys advanced during the year 1928 there remained a balance unpaid of $56,473.94, for which sum judgment was rendered and a decree of foreclosure entered on February 13, 1929, and an order for the sale of the property embraced in the mortgages. The commissioner appointed by the court to make the sale advertised the property for sale on the 12th of September. On the 11th of September the appellants paid to the appellee $10,000, in consideration of which payment the sale was extended to the 12th day of December following. On December 12th the appellant paid the appellee the sum of $5,000, and the sale was extended to March 14, 1930. On that date $5,000 more was paid with an extension of the sale to April 14th, on which date another $5,000 was paid by the appellants and an extension of sale given. On September 3, 1930, the court made an order further extending the sale of the property until November 3,1930, at which time the appellants paid to the appellee a further sum of $5,000. In other words, the date, of sale was postponed from time to time in consideration of cash payments, the total of which amounted to $30,000' from September 11, 1929, to September 3, 1930. The rents collected by the appellee during and for the years 1929 and 1930, not all being accounted for on October 21, 1930, the appellants waived claim for the balance of these rents, and entered into a written agreement with the appellee by which it was agreed that no further postponement of the sale would be asked, and that at the sale the appellee should bid an amount equal to the balance due in his favor, and that the hearing of the report of sale be postponed until December 15th, at which time confirmation of sale would be made unless the indebtedness should on or before that date be paid. The agreement concluded as follows: “In event the defendants shall, on or before December 15, 1930, pay to the plaintiff the amount that should be then due on the indebtedness, including interest up to that date, and costs, mentioned in and covered by the decree in this case, then plaintiff will join with the defendants in asking the court to refuse to confirm the said sale, or, if the defendants prefer, and shall so direct the plaintiff in writing, upon the payment to the plaintiff of the amount which should then be due on said indebtedness,- including interest up to date and costs, the plaintiff will assign and transfer without recourse from him the decree and .judgment in this case in his favor to such person or corporation as the defendants may direct in writing. ’ ’

For some reason no action was taken by the court on December 15th, but on December 29th report of sale was made showing that the property had been purchased by the appellee for the balance due him in the sum of $39,659.01, and the report came up for confirmation, when the appellant filed a petition, which, omitting formal parts, is as follows:

“Come the defendants in the above-entitled cause and respectfully represent to the court: That on the day of....._....., 1930, they consented that the decree obtained in the above-entitled cause should be executed by the commissioner by selling the property mentioned therein; that their consent was obtained and given by the representation of the said plaintiff to said defendants that, if they procured the money due him before the confirmation of the sale, that he would satisfy said decree; that at the time these defendants gave their consent to a sale of the property they told the plaintiff, G. W. Adkisson, that they had made arrangements with the City National Bank of Fort Smith, Arkansas, whereby said bank would make the loan if the tenants to whom he had rented said place would make and execute a surety bond for the payment of the rents for the year 1931; that these defendants procured the agreement of the tenants to execute a surety •bond fon the- payment of the rents, and one of them had signed said bond and the other was on his way to Lamar, Arkansas, to sign said bond when the plaintiff got in touch with him and made false and fraudulent representations to said tenant, and with promises to rent said place to said tenant at a cheaper price, caused said tenant to refuse to sign said surety bond; that said representations so made to the said tenant of the defendant was made for the purpose of defeating defendant’s loan on said place and for the purpose of getting the place of the defendants at a very low and unfair price. That these defendants have already paid said plaintiff more than forty thousand dollars; that he has collected the rents from said place for the past two years and has failed to account for same, and that said plaintiff is doing everything possible to defeat the rights of the defendants in paying off said amount due. That the defendants have the original lease and surety bond signed by one of the party’s tenants and attaches the lease and surety bond hereto as Exhibits A and B, respectively.
“That these defendants would have had said money to have tendered into court in full and complete settlement of the decree rendered in the above-entitled cause, had it not been for the false and fraudulent representations made by the plaintiff to the prospective tenant of the defendants, and had said plaintiff not connived with the tenant of the defendants, whereby he would rent said lands involved in this suit at a much cheaper and lower price, and had said plaintiff not procured the tenant of these defendants not to deal with said defendants and to wait until he had his deed confirmed and that he would rent to him cheaper; that, if the defendants are given a reasonable length of time from this date to procure a loan on said property, that the defendants can and will procure a loan on said property and pay the plaintiff all that is due him, including interest at the rate of ten per centum per annum; that these defendants were hindered in procuring the loan within the time- given them by the court heretofore for the purpose of redemption of said property by the false and fraudulent representations of the plaintiff and by said plaintiff conniving with the tenant of the defendants for the purpose of getting their said lands at a low and cheap price, and that said lands are easily worth more than four times the amount that is now due plaintiff; that, if plaintiff had not interfered with defendants’ -business, as above mentioned, that these defendants would have had the money due plaintiff at this time, and the above matter settled and fully paid off, including the amount due plaintiff with interest and all court costs of the suit.”

A demurrer was filed to this petition which was sustained by the court, and an order to that effect made and entered. In the order confirming .the sale, reference is again made to the filing of the petition by the appellant for postponement and to the demurrer interposed and the overruling of it. After reciting the report of the commissioner, the order of confirmation concludes as follows: “And said report coming on to be heard is submitted to the court along with a written agreement entered into between the parties on October 21, 1930, and along with the proof as to notices, etc., and, being well and sufficiently advised, it is by the court considered, ordered and adjudged that said report of sale be, and the same is hereby, approved, and that said sale be, and the same is, hereby in all things approved and confirmed. ’ ’

From the order sustaining the demurrer, this appeal is prosecuted, and the appellants here insist that, as the demurrer for the purpose of the hearing admitted the allegations of the petition, the court erred in sustaining it for the reason that the facts alleged showed that they were prevented from carrying out their contract of October 21, 1930, because of the fraudulent practices of the appellee.

The appellee takes the position that, even if the allegations of the petition are to be taken as true, this would not entitle appellants to the relief sought, on the theory that, as there had been, a judicial sale of the lands, it ought not to be disturbed in the absence of a showing, in addition to the inadequacy of the purchase price, that there was fraud oar misconduct which would affect the validity of the sale; and cites the cases of George v. Norman, 77 Ark. 216, 91 S. W. 557; Johnson v. Baum, 158 Ark. 441, 250 S. W. 354; and Doyle v. Maxwell, 155 Ark. 477, 244 S. W. 732. The principles announced in those oases have become the settled law in this State, and it is argued that application of those principles to the ease at bar defeats the relief sought and .justifies the chancellor’s action because there was no fraud, misconduct or irregularity charged as to the conduct of the sale. The answer to this contention is that the appellants do not seek relief because of any irregularity in the sale, but for a fraud practiced by the appellee which prevented them from carrying out the agreement of October 21.

It is next insisted that the appellants may have no relief here because the order of confirmation recites that proof was taken, and, as the appellants have failed to incorporate this testimony in the record, the conclusive presumption must be indulged tha.t the testimony was sufficient to authorize the order of the lower court. It is not to be doubted that on any issue made in the trial court, where testimony is taken and not preserved, the conclusive presumption arises that the evidence was sufficient to sustain the finding and decree of the court. Price v. So. Lbr. Co., 98 Ark. 366, 135 S. W. 908; Dierks Lbr. & Coal Co. v. Cunningham, 81 Ark. 427, 99 S. W. 693; Remmel v. Collier, 93 Ark. 394, 130 S. W. 167. The appellants, however, have not challenged the regularity of the sale, and the order does not indicate that any proof was heard except that relating to the notice and other matters relative to the sale. ,No fair interpretation can be placed upon the language of the order of confirmation which would justify the inference that testimony was heard regarding the truth or falsity of the allegations contained in the petition. For the purpose of the hearing on the demurrer, these were admitted to be true, and all that the record justifies us iu concluding is that the chancellor heard no testimony, but, treating the allegations as true, held them insufficient to show such conduct on the part of the appellee as would justify the relief asked.

It remains, then, for us to inquire whether or not any facts were specifically averred which would constitute fraud, and, if so, if it can be said that the fraud practiced •worked such injury to the appellants as would entitle them to the relief prayed.

What is, or is not, actionable fraud depends largely upon the circumstances of each particular case. Fraud is protean in its aspect and assumes many forms which are often 'difficult to distinguish and to' point out with exactitude wherein they work harm. It may be well that no exact definition of fraud can be formulated, for, if so, those disposed to take advantage of the necessitous or confiding could use the definition advantageously to further their dishonest intentions. For, as is said by Mr. Parsons, quoted with approval in Winters v. Bandell, 30 Ark. 362: “It is the very nature and essence of fraud to elude all laws and violate them in fact without appearing to break them in form, and-if there were a technical definition of fraud, and everything must come within the scope of its words before the law could deal with it as fraud, the very definition would give to the crafty just what they wanted, for it would tell precisely how to avoid the grasp of the law.” It is evident that the property mortgaged' exceeded many times in value the amount of the debt it secured. It is also apparent that the appellee was by no means an indulgent creditor, for within a few weeks after the debt became due, although it had been reduced materially, he brought his action to foreclose the ■mortgage. Forbearance is not given, but his indulgence, purchased by payment within a space of shortly more than a year of sums aggregating $30,000, which reduced the indebtedness approximately one-half. Having been able to raise these large sums by which the debt was thus reduced, it is not to be questioned that, when appellants made the agreement of October 21, 1930, there was a reasonable certainty in tbeir minds that they would be able to- secure and pay off the remainder of the debt. It can be scarcely imagined that, had the appellants appealed to the chancellor upon a showing of the large payments made, he would not have given them a reasonable time to raise the balance due, and doubtless a much •greater length of time than that which was asked and granted under the agreement of October 21st. Treating the allegations of their petition as true, the appellants had what they believed the means by which the debt could be paid in time for them to repossess the plantation and make arranagements for its operation through another year; they had the assurance of one of the large banks of the .State that, if they could secure tenants for a three-year period with the rent of the first year guaranteed, the money would be advanced to them. They confided their plans to the appellee, and he deliberately took a sure means to prevent them from raising the money and redeeming the property. He learned who the tenants were and the annual sum they were to give for the rent of the property, and then went to these tenants, knowing the need and the plans of the appellants, and that it would be too late for them to devise another plan by which the money could be raised by the date agreed upon, and while the agreement between the appellants and the tenants was in the course of consummation, and offered the tenants the plantation for a lesser sum. Of course, appellee knew, if the tenants accepted his offer, what the result would be to the appellants, and it must be inferred that he intended such result to occur. It was an act of craft and unfairness which should have no countenance in the court. While he was under no legal oblig-ation to aid the appellants, he was certainly bound by every sentiment of honor not to interfere with the consummation of the plans which they had confided to him. The inadequacy of the price bid by the appellee at the mortgage sale is not complained of, nevertheless the reason for this is apparent, as the contract by which he was to bid that amount was with the understanding that it was to be repaid to him. This agreement lulled the appellants into security, and it was not to their disadvantage that such price be inadequate. The sum bid, however, should be considered, and this, together1 with the alleged conduct of the appellee, is sufficient, if it be established by proof, to warrant a court of conscience in setting aside the sale so that a reasonable time might be given the appellants to discharge their debt, or at least an opportunity that the lands might bring more nearly their value. Union & Planters’ B. & T. Co. v. Pope, 176 Ark. 1023, 5 S. W. (2d) 330.

We have been referred to no' case where the facts' resemble the facts in this case, but we are of the opinion that an application of the general doctrine of fraud supports the conclusion reached. As we have said, because of the multiplicity of forms which fraud assumes, whether or not it exists must be1 determined from all the surrounding circumstances of each case as it arises. Turner v. Huggins, 14 Ark. 21; White v. Smith, 63 Ark. 513, 39 S. W. 555; Bugg v. Wertheimer-Swartz Shoe Co., 64 Ark. 121, 40 S. W. 134; Cross v. Bouck, 175 Calif. 253, 165 Pac. 702; Mudsill Min. Co. v. Watrous, 61 Fed. 163; Bellevue State Bank v. Coffin, 22 Ida. 210, 125 Pac. 876; Kronfield v. Missal, 87 Conn. 491, 89 Atl. 95.

Our conclusion is that the court erred in sustaining the demurrer and in confirming the sale. The decree is therefore reversed, and the cause remanded with directions to set aside the order of confirmation and to overrule the demurrer to the petition, and for further proceedings, according to the principles of equity, and not inconsistent with this opinion.


source: Caselaw Access Project

author: Habt, C. J.,

license: Public Domain

text:
    Public Utilities Corporation of Arkansas v. Cordell.
    Opinion delivered December 7, 1931.

      Mahony <cé Yocum, for appellant.

      McNalley \& Sellers, for appellee.
   Habt, C. J.,

(after stating tbe facts). It is earnestly insisted that the court erred in admitting as a part of res gestae tbe testimony of Mrs. Arthur Lang to tbe effect that she got to tbe home of Albert Lang and asked him how tbe accident occurred, and be replied that be struck a match to light a cigarette in tbe bathroom and this caused tbe explosion. Tbe record shows that Albert Lang was very severely burned. One witness testified that bis hair and eyelids, bis face, bis arms, and bis bands were burned. He was in severe pain and died as a result of bis injuries. Tbe skin was blown off of bis bands, and be was mangled and' burned all over. Under these circumstances, we think tbe testimony of tbe witness was admissible as part of res gestae.

No bard and fast rule on tbe subject can be laid down, and each case, in tbe very nature of things, must depend upon tbe accompanying facts. Various elements for consideration must be looked into. Tbe declaration need not be strictly coincident with tbe act which caused tbe injury, but it must stand in immediate casual relation to that act and be a part of it. Tbe declaration must be so near in point of time as to grow out of and explain tbe character and quality of tbe main fact, and must be so closely connected with it as to practically constitute but one entire transaction. Tbe evidence offered as part of res gestae must not have tbe earmarks of a device, or an afterthought, or be merely a narrative of a past transaction. Clinton v. Estes, 20 Ark. 225; Carr v. State, 43 Ark. 104; Little Rock, Mississippi River & Texas Ry. Co. v. Leverett, 48 Ark. 333, 13 S. W. 50, 3 Am. St. Rep. 230; Little Rock Traction & Electric Co. v. Nelson, 66 Ark. 494, 52 S. W. 7; Itzkowitz v. P. H. Ruebel & Co., 158 Ark. 454, 250 S. W. 535, and Kansas City So. Ry. Co. v. Morris, 80 Ark. 528, 98 S. W. 363.

Many other cases on the subject from this court might be cited, but the rule is so well settled that the only difficulty is in the correctness of its application to a given state of facts. A good statement of the rule may be found in the case of Kansas City Sou. Ry. Co. v. Morris, 80 Ark. 528, 98 S. W. 363, 10 Ann. Cas. 618, in the following language:

“Was the statement made by the deceased to Daniels admissible? It was made within a few feet of where he had been mortally injured, and four or five minutes after the accident occurred, and while the excitement caused by the injury was unabated and in all probability controlled and dominated his mind. The injury was overwhelming and appalling, and sufficient at the time to drive from his mind all hope of surviving many hours < — to bring him in the presence of immediate dissolution —and to drive from his mind any intention or desire to manufacture evidence for his benefit, and to force him to speak the truth, and to make his statement an emanation of the accident, £so connected with the cause of his injuries as to preclude any idea that it was the product of calculated policy’.”

As we have just seen, Albert Lang was badly burned, and shortly afterwards died as a result of his injuries. His first conscious act after the unfortunate accident was his remark to his sister-in-law, within five minutes after the explosion occurred. When we consider the severity of his burns and the condition under which he answered the question, it is practically certain that there was no time or thought of manufacturing evidence, nor was there any element of a device or afterthought. His sister-in-law ran to the scene of the accident when she heard the explosion and immediately called an ambulance. In an excited manner, she asked him how the accident occurred, and it is reasonably certain that his answer was made with the excited' feeling which had lasted from the moment of the accident until the question was asked him. Therefore, we do not consider this assignment of error to he well taken.

It is next urged that the court erred in admitting the testimony of the witness, Escoubas, to the effect that there was a reduction of the gas pressure on the morning of the accident at his place of business because his place of business was situated in the fire zone or low-pressure district, and the house was situated in the residential district, which had a different degree of pressure. According to the evidence of the manager of the defendant company, who was a witness for the plaintiff, there might have been some relation between the pressure in the two districts because both came from the intermediate lines. At any rate, the testimony was competent for what the jury might think it to be worth as tending to show that there was a reduced pressure of the gas throughout the city on the morning of the accident.

It is also earnestly insisted by counsel for the defendant that the evidence is not legally sufficient to support the verdict; but, while this may be regarded as a close question of fact, we think the evidence for the plaintiff, when considered in its most favorable light, was sufficient to show negligence on the part of the defendant. In the first place, it can .make no difference in the defendant’s liability for negligence that it purchased the gas from another company. The reason is that it must answer for its own negligence in the distribution of the gas to the same extent as though it had produced the gas from its own fields. Martin v. Camden Gas Co., 179 Ark. 481, 17 S. W. (2d) 309. In the same case, following our earlier decisions on the question, it was held that a gas company must use a degree of care commensurate with the danger which it is its duty to avoid, and, if it fails to exercise such degree of care and injuries result from such negligence, it is liable. To the same effect see Little Rock Gas & Fuel Co. v. Coppedge, 116 Ark. 334, 172 S. W. 885.

According to the evidence adduced by the plaintiff, the jury might have found a state of facts as follows: The morning of the 20th of December, 1929, was the coldest in the year and caused a reduction in the pressure of gas throughout the city of M Dorado because more gas was required to meet the demands of the consumer. Mrs. Lang as usual got up on the morning in question and lit the fire in the bathroom and turned it down so that the room would be ready for her son and a roomer, who both worked at night and were accustomed to get up along about noon. She went along about her business and heard nothing further until the explosion. It seems from the statement of Albert Lang that he went to the bathroom and struck a match to light a cigarette and this caused the explosion. The jury might have inferred that, because of the low pressure of the gas, about which the occupants of the house were not notified, the fire in the bathroom went out; and, when the gas pressure was increased without notifying the occupants, it escaped into the room and filled it so that when the lighted match came in contact with the gas, the explosion occurred. It is suggested that the remaining stoves in the house continued to burn, but this was explained by one of the witnesses for the plaintiff, who said that they would continue to do so because the flame had not been turned down in them. It is true that, according to the evidence for the defendant, the escaping gas was caused by a loose or defective connection in the stove, for which the plaintiff was responsible. But it is fairly inferable from the evidence for the plaintiff that the flame went out in the bathroom because of the reduced pressure of the' gas, and that it was afterwards turned on by the gas company without notifying the occupants of the house so that, when Albert Lang went into the bathroom and lit a match the explosion naturally resulted.

Therefore the judgment will be affirmed.


author: Smith, J.

text:
    Purvis v. Walls.
    Opinion delivered December 7, 1931.

      June P. Wooten, for appellant.

      Trieber d Lasley, for appellee.
   Smith, J.

Tbe United States Government issued to Tim Walls while be was a soldier in tbe army two life insurance policies, each for five thousand dollars. Amy Walls, tbe wife of tbe insured, was tbe beneficiary in one policy and Ed Walls, a brother of tbe insured, was the beneficiary in the other. The insured died, and on February 26, 1928, his beneficiaries employed appellant, a practicing attorney, to render such legal services as were deemed necessary to aid them in presenting and prosecuting their claims for the collection of the policies in which they were named as beneficiaries, and it was agreed that appellant would receive therefor only such compensation as is provided by the laws of the United States for such services.

Pursuant to this employment appellant made investigations, conducted correspondence, and negotiated with the Veterans’ Bureau in the attempt to compromise and settle the claims. These negotiations terminated in a disagreement, and appellant was preparing to bring suits for the face of the policies and certain disability benefits in addition which had accrued before the death of the insured, but before the suits were brought the beneficiaries in each of the policies made full and final settlement with the bureau and surrendered the policies. The settlements were made for less than the face of the policies and without disability benefits.

The proceeds of these settlements were.deposited in a bank in Little Rock, and were garnished by appellant in this suit which he brought to recover damages for the breach of his contract of employment. Upon a final hearing, the garnishment was discharged, and damages were assessed in a sum equaling the interest on the money during the time it had been impounded, and appellant’s suit was dismissed.

Before the institution of this suit appellant was paid $17.50 in cash, and, after its institution, a tender of $2.50 additional was made, this tender being upon the theory that appellant was entitled to a compensation of $10 in each case, and no more.

It is provided by § 445, United States Code, Annotated, title 38, that, in the event of a disagreement as to a claim under a contract of insurance issued by the government between the Veterans’ Bureau and the claimant, suit may be brought against the United Stages to determine the controversy. By § 551, United States Code, Annotated, title 38, it is provided that, when a judgment or decree shall be rendered in an action brought pursuant to § 445, supra, the court, as a part of the .judgment, shall determine and allow a reasonable fee for the attorney for the successful party, “said fees not to exceed 10 per centum of the amount recovered and to be paid by the bureau out of the payments to be made under the judgment or decree at a rate not exceeding one-tenth of ¿ach of such payments until paid.”

Appellant is not entitled to recover here under this § 551, supra. It is not alleged that he had recovered judgment on the policies in question. It was only alleged that he had a contract under which he would have brought suit, had his clients not compromised their claims for a sum less than they were entitled to demand from the United States Government.

It is settled law that an attorney cannot compel his client to continue litigation, and that the client may dismiss or settle the cause of action without consulting his attorney. Davies v. Patterson, 135 Ark. 22, 205 S. W. 118. Of course, in ordinary litigation such settlement would be subject to the contractual rights of the attorney in the proceeds of the settlement. St. L., I. M. & S. R. Co. v. Blaylock, 117 Ark. 504, 175 S. W. 1170, Ann. Cas. 1917A, 563; St. L., I. M. & S. R. Co. v. Kirtley & Gulley, 120 Ark. 389, 179 S. W. 648; Davis v. Webber, 66 Ark. 190, 49 S. W. 822, 45 L. R. A. 196, 74 Am. St. Rep. 81.

But here the plaintiff alleges a contract under which he “would receive therefor only such compensation as was provided by the laws of the United States for such services.” Indeed, he could not otherwise contract, as the federal statute fixes the compensation which may be paid attorneys. Margolin v. United States, 269 U. S. 93, 46 S. Ct. 64. Under this § 551, supra, it is provided that, except in the event of legal proceedings under § 445, supra, no claim agent or attorney can charge a fee as attorney or agent for services before the bureau in excess of $10 in any one case. This is the section which fixes appellant’s compensation, and under it his compensation is $20, as he was concerned in two cases. As he has been paid $17.50 and tendered the balance of $2.50, he has no right to receive anything additional.

We are also of the opinion that damages were properly assessed upon the dissolution of the garnishments, and that damages were assessed in the proper amount, to-wit, the interest at six per cent, on the money while it was wrongfully impounded.

It was expressly held in the case of Wilson v. Sawyer, 177 Ark. 492, 6 S. W. (2d) 825, that money due from the government under the World War Veterans’ Act was not subject to the claims of creditors, and the writ of garnishment which had been sued out in that case was quashed because such funds were not subject to garnishment.

Appellant concedes that, under § 454, title 38, USCA, the funds were not subject to garnishment; but he insists that this section is unconstitutional, in that it enlarges the exemptions of citizens of this State to a sum in excess of that fixed by the Constitution of this State.

This contention is sufficiently answered by saying that the holding in Wilson v. Sawyer, supra, is to the contrary. The money was not subject to the demands of creditors, even after it had come into the hands of the beneficiaries of the policies or into the hands of another for their benefit. The Wilson v. Sawyer case so expressly held. Damages were therefore properly assessed for the wrongful garnishment of the money. The judgment of the court below dismissing appellant’s cause of action is correct, and is therefore affirmed.


text:
    Moss v. Bushmaier.
    Opinion delivered December 7, 1931.

      Starbird <& Starbird, for appellant.

      Partam<$ Agee, for appellee.
   Smith, J.

Appellant recovered a judgment against W. A. Bushmaier, hereinafter referred to as the defendant, and levied upon certain bank stock and a bank deposit as the property of defendant. An intervention was filed by W. A. Bushmaier, Jr., hereinafter referred to as the intervener, who claimed to be the owner of the stock and also of the deposit. Testimony was heard upon the intervention, from which the court found that the intervener was the owner of the bank stock, but not of the deposit, and a decree was rendered accordingly, from which all parties have appealed.

In response to a writ of garnishment which appellant had sued out and caused to be issued, the Citizens’ Bank & Trust Company, of Van Burén, answered that defendant, W. A. Bushmaier, had on deposit in his name in said bank the sum of $507.83, and that he “also owned $500, par value, of the capital stock of this corporation, evidenced by its stock certificate now in the possession of said defendant.” In addition to the levy made upon the stock alleged to be owned by the defendant in the Citizens’ Bank, a levy was also made upon twenty shares of the capital stock of the First & Crawford County Bank, of Van Burén. The ownership of these shares of stock in the two banks and that of the deposit in the Citizens’ Bank is the subject-matter of this litigation.

The following facts were developed in the testimony heard by the court. Intervener is the son of the defendant, and has his father’s full name and is known as W. A. Bushmaier, Jr., and so signs his name. His father— defendant — appears to have been known as W. A. Bushmaier, and did not conduct his business as W. A. Bushmaier, Sr.

The bank deposit represents the proceeds of the sale of certain cotton grown on a farm owned by defendant, the title to which intervener claims. Intervener claims to have advanced the money used by defendant in growing the cotton. But we think the testimony sustains the finding of the chancellor, that the cotton and the proceeds thereof represented by the bank deposit belonged to the defendant, and the decree upon that branch of the case is therefore affirmed.

Intervener claimed to have owned the farm upon which the cotton was grown; but the testimony shows that he had no deed to it, and that defendant was in possession and grew the crop. Intervener appears to have paid • off a mortgage on this farm which his father had given, and to have taken an assignment thereof to himself, but the defendant operated the farm and made in his own name the original, deposit of which the balance herein garnished was a part, and this account was at all times subject to the check of defendant.

Intervener testified that he advanced the money, a thousand dollars, with which the stock in the Citizens’ Bank was purchased, and that he paid two for one for the stock. The stock certificate, however, was issued and delivered to defendant, although intervener testified, and so did the defendant, that, after the stock had been so issued to defendant, it was delivered to the intervener, and that it has since at all times been in intervener’s possession.

Intervener admitted that his father was the original owner of $500 of the capital stock of the Crawford County Bank, but claims to have purchased this stock from his father, and to have paid $1,500 for it. The testimony shows that the Crawford County Bank was consolidated with the First National Bank of Van Burén, and that, on account of the difference in value of the stocks of the consolidated banks, intervener was required to pay, and did pay $137 additional in order to retain $500 of the stock of the consolidated bank. Mr. Izard had been the president of the Crawford County Bank, and became the president of the consolidated bank, known as the First & Crawford County Bank. He testified that the certificate for the $500 of stock in the Crawford County Bank originally owned by defendant was surrendered to the consolidated bank by intervener, and that, in a conversation between defendant and intervener, it was stated that the stock in the new bank was to be issued to the intervener, and that the intervener paid the difference in value by a check upon his own account, and that the stock in the consolidated bank was issued to W. A. Bushmaier. This stock, upon its issuance, was delivered to intervener, and was receipted for by him, and has since at all times been in his possession.

Defendant testified that he subscribed for $500 of the capital stock of the Citizens’ Bank, for which he paid a thousand dollars, and that he had the transaction with Mr. Bryan, the president of that bank, but that he did not tell Mr. Bryan for whom he was purchasing- the stock, and that, while the stock was issued to W. A. Bushmaier, it was paid for by W. A. Bushmaier, Jr., but witness signed the receipt for the certificate, which certificate he gave to his son, who has since been continuously in possession of it.

When asked if he was insolvent, defendant answered: “I expect I would be bankrupt if you pushed me down to bed rock,” and he also stated that intervener liad acquired title to practically all the property he had owned. He also admitted that the checking account of which the deposit with the Citizens’ Bank was apart was kept in his name.

Mr. Izard, the president of the consolidated bank, testified that he had been president of the Crawford County Bank before the consolidation, and that upon the consolidation stockholders of the consolidated bank were allowed to pay the difference in value between the old and the new stock and retain the same amount of stock in the new bank; but, if this was not done, stockholders were issued their pro rata stock in the new bank and were given a participation certificate showing they had an interest in the assets of the old Crawford County Bank. This plan appears to have been adopted because of the impairment of value of the assets of the Crawford County Bank.

Mr. Bryan, the president of the Citizens’ Bank, testified that the account with his bank, of which the deposit garnished is the balance, was made originally by defendant and was carried in his name, and was subject to his check except for the garnishment, and that he sold the stock in his bank to defendant, W. A. Bushmaier, and issued it to him, and that defendant receipted for the stock, and that the subsequent dividends thereon had been paid to defendant. On his cross-examination, Mr. Bryan testified that his impression was that the stock was paid for with a check signed by W. A. Bnshmaier, Jr., sheriff and collector, but all the transaction was with defendant, and that the stock was issued to him.

We are of the opinion, under this testimony, that defendant was the owner of the deposit in the Citizens’ Bank, as found by the court, and was also the owner of the $500 stock in that bank outstanding in his name.

Defendant admits his insolvency, and, while he and his son both testified that intervener paid the value of the stock by assuming and paying certain of defendant’s obligations, the stock in the Citizens’ Bank has been permitted to remain in the name of defendant. Had that bank become insolvent, it is not likely that any stockholder’s liability would have been asserted against intervener, and it is reasonably certain that no such liability could have been enforced.

The statute provides how bank stock may be transferred. Section 21 of the original banking act of 1913 (Acts 1913, p. 462), which provides how bank stock may be transferred, was amended by act 496 of the General Acts of 1921 (General Acts 1921, page 514), and by this amendatory act of 1921 § 21 of the original act of 1913 was amended to read as follows: “The stock of every bank shall be deemed personal property, and in case of sale shall be transferred only on the books of such corporation in such form as the commissioner shall prescribe, and whenever any stockholder has sold and may wish to transfer his stock, a certificate of such transfer, signed by the president and cashier, or secretary, and setting forth the name and residence of the transferrer and the transferee, shall be deposited by said transferrer with the commissioner, who, after he has indorsed it as having been filed with him, shall return it for filing with the county clerk of the county in which the said bank is located. The said county clerk shall note the time of the filing thereon and record it in a book to be kept for that purpose, for which the clerk shall be entitled to a fee of twenty-five cents. No sale or transfer of stock shall be valid as against creditors of the transferrer until such certificate so filed with, and indorsed and returned by, the commissioner has been filed for record with said county clerk. ’ ’

The purpose of this statute was to put at rest just such questions as we have here, and to furnish a conclusive evidence of the ownership, of bank stock so far as creditors of the transferrer of certificates of bank stock are concerned. Transfers of such stock are not valid as against creditors unless the statute governing the manner of transfer has been complied with.

It may be true that the stock of the Citizens’ Bank was paid for by a check drawn by intervener and signed by himself as sheriff and collector; but it is also true, as Mr. Bryan, the president of the bank, testified, and as the records of the bank show, that the stock was sold to defendant and was issued to him, and the receipt for the certificate therefor was signed by him and the subsequent dividends thereon were paid to him, and there is no record as required by law that he ever transferred the stock in the Citizens’ Bank to his son, the intervener.

It was held in the case of Taylor v. McKennon, 178 Ark. 223 [10 S. W. 260], (to quote the syllabus in that case) that, “Where defendant transferred bank stock certificates to another stockholder before its insolvency, both parties being solvent, and authorized a change to be made on the books, defendant was relieved from the stockholders’ statutory liability under Crawford & Moses’ Digest, § 702, though the transfer was not made on the bank’s books and was not indorsed by the bank commissioner, as required by Acts 1921, c. 496, § 3.” That was a case in which there was an attempt to enforce a stockholder’s statutory liability, which relief was denied because both parties were solvent and had authorized a change to be made on the books of the bank, which was solvent when the stock was transferred; whereas no attempt was made here to show that defendant was solvent or had authorized and directed a transfer of the stock tó be made as required by the act of 1921.

We conclude therefore that the defendant was the owner of the stock outstanding in his name in the Citizens’ Bank. But we are also of the opinion that the act of 1921, supra, does not apply to the stock in the consolidated bank. The stock 'originally owned by defendant in the Crawford County Bank was never transferred to intervener, nor was there a reissuance of the stock of that bank. This bank passed out of existence by consolidation with another bank, and the consolidated bank became known as the First and Crawford County Bank, and became the successor of both the First National Bank.and the Crawford County Bank. The stock in the consolidated bank was originally issued to intervener, and this transaction does not appear to have been in fraud of creditors, but was bona fide, as the intervener paid to the Crawford County Bank an indebtedness due it by defendant, his father, exceeding the value of the stock owned by defendant in the Crawford County Bank. There has therefore been no transfer of the stock of the First and Crawford County Bank, and the act of 1921, supra, has no application.

We conclude therefore that the chancellor was correct in holding that intervener was the owner of the stock in the new or consolidated bank, and it was- therefore not subject to a levy by defendant’s creditors.

The decree of the court below will be modified to the extent of holding that the stock in the Citizens’ Bank was subject to levy and sale, and in all other respects it will be affirmed.


author: Humphreys, J.

text:
    Foust v. Blevins.
    Opinion delivered December 7, 1931.

      Oscar E. Ellis, W. F. Smith and F. W. Benbrooh, for appellant.

      J. Paul Ward and T. R. Wilson, for appellee.
   Humphreys, J.

The judgment of dismissal appealed from in this cause was rendered by the circuit court of Izard County, sitting as a jury on appeal from the court of a justice of the peace. Appellant alleged that she traded a mule to appellee for a note executed to him or bearer, by Owen Hively and Jeff Hively, in the sum of $33, which he delivered to her without indorsement, before maturity, upon which he was and is liable as a warrantor under subdivision 3 of § 7831, Crawford & Moses' Digest, which, in part, reads as follows: “Every person negotiating an instrument by delivery or by a qualified indorsement, warrants: * * * (3) That all prior parties had capacity to contract.”

Appellee denied liability under said subdivision of said section.

Upon the trial of the cause, it was developed by the undisputed evidence that, at the time the note was executed, Jeff Hively was under the age of twenty-one years, and that he signed the note as security for his brother, Owen Hively. The development of this fact entitled appellant to a judgment against appellee as warrantor of the payment of the note under the statute referred to as construed by this court in the case of Commercial Credit Co. v. Blanks Motor Co., 174 Ark. 274, 294 S. W. 999.

The distinction contended for by appellee between the case at bar and the case cited is not tenable. The instant case is controlled by the principle therein announced.

On account of the error indicated the judgment is reversed, and the cause is remanded with directions to enter judgment in favor of appellant.


text:
    American Railway Express Company v. Thompson.
    Opinion delivered December 7, 1931.

      E. L. Westbroohe, Jr., and E. L. Westbroohe, for appellant.

      Franh G. Douglas and W. D. Gravette, for appellee.
   Humphreys, J.

Swann-Abram Hat Company, Incorporated, of Louisville, Kentucky, brought suit against appellant and appellees to recover the value of a lot of hats which it sold to appellees and shipped by express from Louisville to Luxora, Arkansas, but which were never delivered to appellees at Luxora by appellant. Appellees filed an answer, denying that they received the hats, and a cross-complaint against appellant for the value of the hats for failure to deliver them, in case Swann-Abram Hat Company, Incorporated, should recover judgment against them. Appellant defended against the cross.-complaint on the ground that the receipt which it gave for the hats provided that it should not be liable for failure to deliver same unless presented with a written claim for their value within six months and fifteen days after the date of the shipment. The cause was submitted upon the issues joined, the evidence adduced and the instructions given by the court, resulting in a judgment in favor of Swann-Abram Hat Company against appellees, from which there is no appeal, and a judgment for $97.50, and interest, in favor of appellees on their cross-complaint against appellant, from which is this appeal.

The shipment of hats was made October 23,1925, and, so far as the records kept by appellant in its office at Luxora disclose, the hats were not received, but the waybill for same was. This waybill, with several others, was lost by appellant’s driver, and, upon his statement that he had delivered the goods, the agent at Luxora made him pay the express charges on the several shipments. In December following .appellant sent tracers from its office in Louisville for the lost waybills covering these various shipments, which tracers were received at Luxora but never presented to the several consignees for their signature showing the delivery of the shipments. The agent signed and returned the tracers under his own signature, .stating that the original waybills had been lost, but that the goods had been delivered, and did this without first going to the appellees, or other consignees, to see whether the deliveries had been made. The hats were sold to appellees on six months’ time, or on what was called a six months’ dating’, and they knew nothing about the shipment of the hats, nor how they were shipped, until an attempt was made to collect for them, and more than six months and fifteen days after date of shipment. And after considerable correspondence they ascertained that they had been shipped by-express in October, 1925. They then went to see the express agent, who stated that they had receipted for the hats. They denied having received them, and the agent agreed to take the matter up and make an investigation. A request was sent by the agent for the original receipt, which disclosed that the original waybill had been lost and that the agent had signed the tracer sent for the lost waybill himself, and he admitted that appellees had never signed any receipt for same.

The investigation was as full and complete as if appellant had received written notice of the non-delivery of the hats, and it disclosed that its own agent was at fault from the very beginning in handling the original waybill and tracer sent out in December, 1925. By making the investigation on verbal notice and thereby discovering the true facts with reference to handling the shipment, appellant waived its right to written notice of failure to deliver the hats. In mailing the investigation and reporting to appellees that the failure to deliver the shipment was due to the negligence of its own agent, appellant led appellees to believe that there was no necessity for a written notice of non-delivery, and thereby waived the clause in the original receipt providing for written notice in case of non-delivery of the shipment.

The facts in the instant case do not bring it within any case cited by appellant to support its contention that it was entitled to written notice of non-delivery of the hats.

No error appearing, the .judgment is affirmed.


author: Hart, O. J.,

text:
    Miller v. Oil City Iron Works.
    Opinion delivered December 7, 1931.

      Coulter & Coulter, for appellant.

      J. R. Wilson and Compere & Compere, for Oil City Iron Works, appellee.

      Graham Moore, for Pelican Well Tool & Supply Company, appellee.
   Hart, O. J.,

(after stating the facts). It is earnestly insisted by counsel for appellant that the circuit court erred in not dismissing the appeals of the creditors of the estate who filed exceptions to the account of the administratrix in the probate court. It is conceded that affidavits for appeal were filed by the creditors, and that the appeals were duly granted by the probate court, but it is claimed that the appeals were not perfected in the time required by the statute.

Section 2258 of Crawford & Moses’ Digest provides when and how appeals may be taken to the circuit court from the probate court; and, as construed by this court, the filing of the affidavit and the order of the probate court granting the appeal is a prerequisite to the right of the circuit court to exercise jurisdiction. Tharp v. Barnett, 93 Ark. 263, 124 S. W. 1027; Speed v. Fry, 95 Ark. 148, 128 S. W. 154; and Walker v. Noll, 92 Ark. 148, 122 S. W. 488.

Section 2262 of the Digest provides that all appeals from the probate court allowed ten days before the first day of the term of the circuit court next after the appeal allowed shall be determined at such term unless continued for cause. The appeals in this ease were allowed by tbe probate court "within ten days before the first day of the next term of the circuit court. In the case of Carter v. Marks, 140 Ark. 331, 215 S. W. 732, the court expressly declared that § 2262 is directory, but that it should not on that account be ignored, and should be followed by persons appealing from a judgment of the probate court.

In the case at bar, the record shows that the circuit court overruled the motion of administratrix to dismiss the appeals. The record does not show whether or not any evidence was introduced on the motion in the circuit court; and, in the absence of such showing from which this court might determine whether or not the circuit court abused its discretion in overruling the motion to dismiss, every presumption that it was correct must be indulged. Such is the effect of the reasoning of this court in Huffman v. Sudbury, 117 Ark. 628, 174 S. W. 1149. Many other cases might be cited tending to show that the probate court is a court of superior jurisdiction, and that the same presumption of the correctness of their judgments must be indulged as in the case of judgments of circuit and chancery courts. Therefore we hold that the court properly overruled the motion to dismiss the appeals from the probate court.

The court correctly allowed the widow one-third of the personal estate under the provisions of § 3'535 of the Digest, and also an additional $300 under the provisions of § 80 of the Digest.

The circuit court also correctly allowed the administratrix credit by the amount paid Haynes and Rice in the sum of $1,522.65. The record shows that these persons probated a claim for that amount which was for the expenses of the last illness of the decedent, including fees for nurses, sanitorium and doctor’s bills, and also sums advanced to the deceased in his lifetime by the physician. The claim was duly classified as a second-class claim by the probate court.

Under § 112 of the Digest, the probate court has the power to determine all demands against the estate and the order of allowance has the same force and effect as a judgment. In Jackson v. Gorman, 70 Ark. 88, 66 S. W. 346, it was held that the allowance of a claim in the prohate court is a .judgment which is final after the expiration of the term at which it was rendered and cannot be attacked collaterally. The allowance and classification of the claim was conclusive after the expiration of the term, and the court then had not the power to set it aside. The allowance or disallowance of a claim against an estate in the probate court is a judgment by ’which all parties are bound unless fraud be shown in its procurement. Stover v. Robinson, 146 Ark. 262, 225 S. W. 315. Many other cases might be cited to the effect that probate courts in this State in the allowance and classification of demands against the estate are upon the same footing with other courts of record, and the same presumption of validity attaches to their judgments. Hence a judgment allowing and classifying a claim .against an estate, unappealed from within the time prescribed by statute, is a final judgment, and is res judicata as to all-issues upon which the judgment is based.

The circuit court also properly allowed the funeral expenses of decedent. Yarborough v. Ward, 34 Ark. 204; and Security Bank & Trust Co. v. Costen, 169 Ark. 173, 273 S. W. 705.

The circuit court properly allowed the administratrix the amount paid for her administratrix’s bond made with a surety company in compliance with § 6144 of Crawford & Moses’ Digest.

The circuit court also properly disallowed the claim of the administratrix for a large sum paid in defending oil leases which she claimed belonged to the estate of decedent in the State of Texas. It is true that she secured an order of the probate court allowing her to employ counsel and to make expenditures of money, but the court had no jurisdiction to make such order. In the first place, letters of administration have no legal force or effect beyond tbe territorial limits of tbe State granting them. Woerner on Administration, (3d ed.) vol. 1, pp. 548-549; 23 C. J. 1014; 24 C. J. 1120; 11 R. C. L., § 532, p. 432, and § 551, p. 447.

In Overby v. Gordon, 177 U. S. 214, 20 S. Ct. 603, it was held that the sovereignty of one State and the jurisdiction of its courts at the time letters of administration are granted do not extend to or embrace assets of the decedent’s estate within the jurisdiction of another State. This principle of law was also recognized in Brown v. Fletcher’s Estate, 210 U. S. 82, 28 S. Ct. 702, where it was held that every State has exclusive .jurisdiction over property within its boundaries, and, where the testator has property in more than one State, each State has jurisdiction over the property within its limits, and can, in its own courts, provide for the distribution thereof in conformity with its law. The same principle was recognized in Greer v. Ferguson, 56 Ark. 324, 19 S. Ct. 966, where it was held that, on the death of a defendant pendente lite, the suit cannot be revived against his executors appointed in another State so as to render a judgment against them binding upon his estate. The court there expressly recognized the rule to be.that every grant of administration is strictly confined in its authority and operation to the limits of the State which granted it, and does not extend to other states. Hence we are of the opinion that the probate court could not confer upon the administratrix any authority to employ counsel and to prosecute suits on behalf of the estate of the decedent in the State of Texas. Ancillary administration would have been necessary in the State of Texas to have accomplished that purpose.

In the next place, the record does not show that it was necessary for the administratrix to take charge of the land belonging to the estate for the purpose of paying-debts. The record in this case shows that the personal assets were amply sufficient to pay the probated claims against the estate, together with all proper costs of administration. It is well settled in this State that an administrator does not represent heirs when the title to land is involved unless they are needed to pay debts; Jones v. Jones, 107 Ark. 402, 155 S. W. 117; Miller v. Watkins, 169 Ark. 60, 272 S. W. 846. In the last case-cited, it was held that an administrator of an estate cannot sue to establish title to land and to recover possession thereof without showing that the land was needed to pay debts.

In this connection, it may be stated as settled in this State that the probate court has jurisdiction to disallow credits claimed by administrator for illegal expenditures, although they were ordered by- the court to be paid. Burke v. Coolidge, 35 Ark. 180; and Boyd v. Duncan, 178 Ark. 772, 12 S. W. (2d) 395. In these cases the court expressly recognized that, when an administrator presents an account and claims credit for expenditures in preserving the estate, parties interested in the estate may except to the items included in the account, and, if they are ill-founded or based upon an illegal demand, it is the duty of the probate court, notwithstanding its previous order, to disallow and reject siich expenditures.

The circuit court also properly disallowed two aggregate items which had been allowed by previous orders of the probate court in the course of administration, but which had not been embraced in any account current. The items of one of these amounted in the aggregate to $3,-754.66. They included sums which the administratrix had paid out to the minors as their guardian; which she had paid for attorneys’ fees and traveling expenses for certain attorneys and other matters relating to what she called expense of administration. The other claim amounted in the aggregate to $1,667.27, which was also for expenses in settling a matter against the estate for attorneys’ fees, and various traveling expenses which she claims were incurred in looking after the affairs of the estate. Except for funeral expenses, no debts can be created against an estate after death. The debts must be existing at the time of death or arising out of obligations incurred by decedent. Only such claims can be presented for allowance, classification and payment out of the assets found in the hands of the representative after settlement. Yarborough v. Ward, 34 Ark. 204; and Bomford v. Grimes, 17 Ark. 567. These cases recognize that costs of administration are necessary and useful to the estate. They do not come within the ordinary scope of the administrator’s personal duties, and the practice is not to allow them as debts against the estate and classify them, but to present them with the account of the administrator so that they may be passed upon and allowed by the court and exceptions taken thereto, if deemed necessary by those interested in the estate. The reason is that expenses of administration are entitled to payment before the debts of the estate because they are incurred for the very purpose of securing the payment of debts. If creditors and distributeés of the estate could not except to them, great confusion and injustice would arise in their allowance by previous orders of the probate court, and the whole capital of the estate might be wasted or lost before creditors or distributees would be entitled to anything, or have their day in court.

It would unduly prolong this opinion to take up each of these items and discuss them separately. We need only lay down the general principles of law applicable to them.

The circuit court properly refused to allow the administratrix the amount claimed to have been expended by her for the support and education of the minor children of the intestate. The reason is that the administratrix had nothing to do with the support and education of such minor children. Alcorn v. Alcorn, 183 Ark. 342, 35 S. W. (2d) 1027.

There are several matters connected with the estate which do not fall under the head of the personal duties of the administrator, and for such expenses reasonably incurred in taking care of and preserving the estate and collecting its assets, the administrator should be allowed a reasonable sum as expenses of the administration upon filing his account. Scroggins v. Osborn Company, 181 Ark. 424, 26 S. W. (2d) 95; and James v. Echols, 183 Ark. 826, 39 S. W. (2d) 290.

It is next insisted that the oircnit court erred in the allowance of attorney’s fees in favor of the administratrix. This question arises upon the cross-appeal of appellees. Sums paid to attorneys for conducting litigation for the benefit of the estate, when properly authorized, are a part of the expenses of administration. So, too, attorneys may be employed and paid reasonable sums for advising the administrator in the affairs relating to his office, and for giving proper legal assistance in the conduct of the administration. No hard and fast rule can be laid down in each particular case, and each must be governed to a large extent by its own particular facts. Jacoway v. Hall, 67 Ark. 340, 55 S. W. 12; Carpenter v. Hazel, 128 Ark. 416, 194 S. W. 225; Gilleylen v. Hallman, 141 Ark. 52, 216 S. W. 15; Triplett v. Chipman, 153 Ark. 12, 240 S. W. 23; Souter v. Fly, 182 Ark. 791, 33 S. W. (2d) 408.

The record in this case shows that the decedent had $20,000 life insurance which was collected without suit, and that oil and gas royalties to the amount of $819.31 were collected by the administratrix, and that she had the aid of attorneys in both of these matters. Claims were presented and allowed by the probate court in the sum of $13,659.69. She had the advice of attorneys in this matter. Claims in the amount of $2,351.39 were presented and allowed as fifth-class claims. Claims in the sum of $6,321.90 were disallowed, and the administratrix had the advice and assistance of attorneys in the premises. According to her testimony, she also had their advice in various other matters pertaining to the collection of assets and the establishment or disallowance of claims. Then, too, her good fáith in trying to establish the claim of the estate to the Texas land is not disproved, although her attempt was wholly unsuccessful. The circuit court allowed one of the attorneys $500, and the other the sum of $2,000; and, without reviewing the evidence in detail on this branch of the case, we are of the opinion that the allowance in favor of E. M. Hutch-ins for $500 should he allowed to stand,- and that the allowance to Barney, Keeney & Barney, which was allowed in the sum of $2,000, should be reduced to the sum of $1,000, which we consider ample compensation for all services performed by them.

We are of the opinion also that the circuit court properly disallowed the claim of the administratrix in the sum of $535, for the payment of a note to the Vivian State Bank under claim that it was secured by a mortgage. There is no showing that administratrix received any assets belonging to the estate in consideration of this payment, and the debtor should have presented its claim and have been paid in the same proportion as other creditors of the estate. Of course, if it elected to do so, the bank might have foreclosed its mortgage; but no showing is made that it was prudent or necessary in the management of the estate for the administratrix to pay off this mortgage and take up the mortgage indebtedness as expenses of administration.

We are of the opinion that the principles of law above announced will make it unnecessary to take up and consider the remaining items of the account separately. It follows that the judgment of the circuit court must be reversed, and the cause will be remanded with directions to the circuit court to restate the account in accordance with this opinion and to certify its judgment down to the probate court for its guidance in the premises. It is so ordered.


author: Kirby, J.,

text:
    Townes v. Krumpen.
    Opinion delivered December 7, 1931.

      J. A. Tellier, for appellant.

      Raymond Jones, Louis Cohn, Tom F. Digby, Graham R. Hall, Barber Henry, Geo. C. Lewis and Busbee, Pugh '& Harrison, for appellees.
   Kirby, J.,

(after stating the facts). Our statute, under the provisions of which appellees recovered judgments, reads as follows:

“It shall be lawful for any married woman, by herself and in her name, or in the name of any third person, with his assent, as her trustee, to cause to be insured, for her sole use, the life of her husband, for any definite period, or for the term of his natural life; and, in case of her surviving her husband, the sum or net amount of the insurance becoming due and payable by the terms of the insurance shall be payable to her and for her use; and, in case of the death of the wife before the decease of her husband, the amount of said insurance may be made payable to Ms or her children, for their use, and to their guardian, for them, if they shall be under age, as shall be provided in the policy of insurance; and such sum or amount of insurance so payable shall be free from the claims of the representatives of the husband, or of any of his creditors; but such exemption shall not apply where the amount of premium annually paid out of the funds or property of the husband shall exceed the sum of three hundred dollars.” Crawford & Moses’ Dig., § 5579.

The statute has not been construed by this court, except having been referred to once in the case of Davis v. Cramer, 133 Ark. 224, 202 S. W. 239, where the court held that the policy of insurance had been transferred during the lifetime of the insured to defraud his creditors.

It is contended by appellant that said statute, § 1 of the act of April 29; 1873, (§ 5579, Crawford & Moses’ Digest), has been repealed by § 7, article 9; of the Constitution of Arkansas of 1874, and by acts 159, approved March 19, 1915, and 66, amending said act, approved February 11, 1919. This provision of the Constitution and 'these statutes have removed all common-law disabilities of married women to contract, acquire and hold property, leaving their status in such regard that of an unmarried woman or feme sole.

Our said statute was obviously borrowed from the laws of New York, being in the identical language of its statute of 1840, which had not been construed, so far as we can ascertain, by any of its courts before its enactment here in 1873, and any later construction of the statute by the courts of that State is not presumed to have been adopted in its enactment here, and is in no wise controlling upon our courts. Wallis v. State, 54 Ark. 611, 16 S. W. 821; Nebraska National Bank v. Walsh, 68 Ark. 433, 59 S. W. 952, 82 Am. St. Rep. 301; Brickhouse v. Hill, 167 Ark. 513, 268 S. W. 865; 25 R. C. L., Statutes, § 294.

Most of the New York cases cited were in construction of its amended statutes. The only case construing the act of 1840) as existed at that time and identical with our statute, is Whitehead v. New York Life Ins. Co., 102 N. Y. 143, 6 N. E. 267, 55 Am. Rep. 287, decided in 1886. The question raised here was not in that case, nor attempted to be determined therein. It was held there that the wife had a vested interest in the policies at the moment of their delivery to the insured, and also that the husband was the agent of the wife in making the contract of insurance and paying the premiums thereon. All amendments to the said New York statute of 18401 and the statute itself were repealed in 1896 by laws relating to insurance on the life of a husband taken for the benefit of his wife, in which it was provided that such insurance should be “free from any claim of a creditor or representative of her husband, except where the premiums actually paid annually out of the husband’s property exceeded $500, that portion of the insurance money which is purchased by excess premiums above $500 is primarily liable for the husband’s debts, * * (Laws N. Y. 1896C 272, § 22); and the courts of that State have held that such portion of the insurance money as was purchased by annual premiums in excess of $500 was impressed with a lien for the debts of the deceased in favor of all his creditors ratably. Kittel v. Domeyer, 175 N. Y. 205, 67 N. E. 433. Certainly the construction placed by the New York court in 1903 on a law passed in that State in 1896 granting an express lien to the creditors on the insurance purchased by the expenditure of money for premiums for insurance on the husband’s life in excess of $500 yearly can have no weight in a construction of our statute.' The eases hold in the construction of statutes of this kind that the contract of insurance is a contract with the wife, although procured by the husband for her benefit, and he is held to have been acting as her agent representing her, acquiring no interest in or power of disposition over the policy, his relation being that of life insured while hers was that of the legal holder in whom solely was the vested interest. Felrath v. Schonfield, 76 Ala. 199, 52 Am. Rep. 319; Stilwell v. Mutual Life Ins. Co., 72 N. Y. 386; Gremes v. Travers, 87 Misc. Rep. 644, 148 N. Y. S. 200; Huston v. Maddux, 179 Ill. 377, 53 N. E. 599; Davis v. Cramer, supra.

No allegation of fraud is made that the insurance was purchased for the benefit of the wife by the payment of more than $300 yearly for premiums, to cheat, hinder and delay creditors. Under our laws, the husband can make valid gifts of his property to his wife or any one else, provided he is not insolvent at the time, and has left enough property to pay his debts. It is also true that, in order for a subsequent creditor to impeach an otherwise valid conveyance by a debtor prior to the creation of his debt, he must show an actual intention to defraud. Buchanan v. Williams, 110 Ark. 335, 160 S. W. 190. There is no evidence in this case conducing to show any such actual intention at the time these policies of insurance were procured, and, so far as his creditors, prior or subsequent, are concerned, the testimony shows that the insured was carrying insurance policies in the sum of $15,000, payable to his estate, and continued to carry such insurance until his death, although he had borrowed a substantial amount upon the policies, leaving, however, something like $10,000 thereof to his estate. There was no actual intent to defraud subsequent creditors shown, nor any circumstances from which such intention would necessarily arise at the time of taking the policies of insurance in controversy, nor is there any testimony conducing to show that at that time the insurance payable to his estate would not have satisfied all prior debts, and no inference necessarily arises from the testimony in the case that, according to appellant’s manner of living and earnings or accumulation of property, there would not have been sufficient money realized from the insurance payable to his estate to satisfy the claims of his creditors.

The wife had a vested right in these policies of insurance upon their issuance and delivery, and to the proceeds thereof upon the death of the insured. No steps were taken by the creditors to subject the proceeds of these insurance policies to payment of their debts, eveli if they had had the right to do so, before the death of the insured, when the proceeds of the policies became her separate property, not subject to the payment of the debts of her husband.

It follows that the court erred in its finding and judgment holding otherwise, and the cause will be remanded with directions to enter a decree in accordance with this opinion, giving to the appellant the proceeds of said insurance free from all the claims of appellees herein, and denying them any rights therein. It is so ordered.

Smith, J., dissents.