text:
    Schwegman v. Richards.
    Opinion delivered December 14, 1931.

      Scott <áb Goodier, for appellant.

      Wilson \& Wilson, for appellee.
   Kirby,'J.,

(after stating the facts). The testimony is virtually undisputed that Boyce and his wife were both old andinfirm, that they invited appellees to come to their home, live with and take care of them the remainder of their lives, agreeing to leave them their property at their death, in consideration of the service, and that the agreement was performed by appellees. It has been frequently held that, upon the showing of the performance of such an agreement, the persons performing’ it are entitled to a specific performance of same against the heirs of the decedents. Hinkle v. Hinkle, 55 Ark. 583, 18 S. W. 1049; Naylor v. Shelton, 102 Ark. 30, 143 S. W. 117, Ann. Cas. 1914A, 394; Fred v. Asbury, 105 Ark. 494, 152 S. W. 155; Williams v. Williams, 128 Ark. 1, 193 S. W. 82; Speck v. Dodson, 178 Ark. 549, 11 S. W. (2d) 456.

There is no merit in the contention that the decree is contrary to the weight of the evidence, which is, as already said, virtually undisputed. Appellees moved from their home upon the written request and invitation of the Boyces, Taylor Boyce having legally adopted Nettie Richards in her infancy, under the agreement that they should have what property the Boyces owned at their death, and, pursuant to the contract and agreement, lived with, took care of and help support them throughout the remainder of their lives. The decree is not only not contrary to the weight of the testimony, but meets the requirement of the rule, being clear, convincing and satisfactory.

We find no error in the record, and the decree is affirmed.


source: Caselaw Access Project

author: ■Mehaeey, J.

license: Public Domain

text:
    Democrat Printing & Lithographing Company v. Van Buren County.
    Opinion delivered December 14, 1931.

      Garner Fraser and Roy D. Campbell, for appellant.

      Opie Rogers, for appellee.
   ■Mehaeey, J.

During the fiscal years of 1926, 1927, 1928 and 1929, the appellant furnished the county officers of Yan Burén County most of the records and office supplies used in the conduct of the business of the county. These were furnished from time to time, and the accounts were filed with the county clerk for allowance against the county.

On January 20, 1930, the claim of appellant was allowed in the sum of $1,519.45. On February 8, 1930, the same term of court at which the claim was allowed, the county court entered an order vacating and setting aside its order of January 20, 1930.

An appeal was prayed from this order of February 8, to the circuit court, but when the case came on for trial- in circuit court, the appellant filed a motion to quash the judgment entered by the county judge on the 8th day of February, 1930. The motion recited the judgment of January 20,1930, allowing the claim of appellant, and stated without any just cause, the court, on the 8th day of February, 1930, vacated and set aside the order of January 20, 1930, and directed the treasurer not to pay the warrant if issued. ■ The motion alleged that the order of January '20, 1930, was executed and a warrant delivered to the appellant, and had been in its possession since January 20, 1930, and that the court, on February 18, 1930, was without power to enter the order setting aside the order allowing the claim. The prayer of the motion was that the order of the county court made on February 8,1930, be set aside, and that the order made on January 20, 1930, be in all respects upheld, for the reason that there was no just cause, reason or provocation for setting aside said order, and that the county court was without authority to vacate the order of January 20, 1930, because said order had been fully executed, and that the county court had no authority to amend or vacate its order which had been fully carried out and executed.

The motion of appellant to quash the order of February 8th was denied. Appellant then filed its motion for a new trial which was by the court overruled, and to reverse the judgment of the circuit court, this appeal is prosecuted.

There was considerable evidence introduced, but we Chi-nik- it unnecessary to set it out, since we hold that the county court had authority to set aside its judgment during the same term of court. The judgment which appellant seeks to have quashed, simply set aside a former order allowing the claim of appellant, but it did not enter any order disallowing the claim.

Appellant contends first that no notice was given appellant that such order would be entered, and' that the county court had no authority to vacate the order of January 20, 1930, without just cause or reason.

Appellant calls attention to many authorities, among which are the following. Underwood v. Sledge, 27 Ark. 296. The court in that case said: “It is well settled in this Btate that a court has control over its orders and judgments during the term at which they are made and for sufficient cause may modify or set them aside. * * * It is certainly good policy in the law to allow courts an hour’s reflection; time to revise hasty actions, correct mistakes, and review such error as they may have fallen into for want of sufficient consideration, and to this end they have, during their respective terms, to make up their records and fully consider the propriety of their judgments, and to review and correct any mistakes, errors or indiscretions into which they may have fallen during the term, and, when such revision is had, the action of the court and the record stands precisely as if no such former mistake or erroneous judgment had ever been given or entered.”

The court further said in that case that if, during the term the court, for sufficient cause or even without cause, sees fit to set aside such judgment, its benefits are lost to him in whose favor it was rendered. The court was speaking of an action of debt.

The court simply held in an action for debt, like the one here, that the court could set aside its former judgment with or without cause. It was also held in the above case that the record stands precisely as if no such former .judgment had been entered.

When the county court, on the 8th of February, set aside its former order, wherein it had allowed appellant’s claim, the record stood just as if the order of January 20th had never been made. Appellant’s claims were filed, and it would be the duty of the court to pass on them, and, if the county court should refuse to either allow or disallow the claims, it could be required by mandamus to do so.

The next case to which appellant calls attention is Wells Fargo & Co. v. W. B. Baker Lbr. Co., 107 Ark. 415, 155 S. W. 122. The court in that case held that, during the whole of the term at which a judgment is rendered, it remains subject to the control of the court, and may be vacated, set aside, modified, or annulled.

Appellant calls attention to Midyett v. Kerby, 129 Ark. 301, 195 S. W. 674. In that case it was held that the court might, during the term, vacate its judgment, and that it might do so without notice, although it said the exercise of the power without notice was not to be encouraged.

The next case referred to by appellant is Dawson v. Mays, 159 Ark. 331, 252 S. W. 33, 30 A. L. R. 1463. That was a divorce case. The wife had sued for and obtained a decree for divorce, and, after the husband’s death, sought to have the decree set aside in order to permit her to have dower in her deceased husband’s estate. The opinion in that case has no application to the facts in the present case.

The next case relied on is T. J. Moss Tie Co. v. Miller, 169 Ark. 657, 276 S. W. 686. The court in that case said: “It is the settled public policy of this State that, during their respective terms, courts of record have complete control over their judgments and decrees, and may review and correct any mistakes or errors into which they may have fallen during the term.” The court also holds in the last-named case that the record stands precisely as if no such mistaken or erroneous judgment had ever been entered. The claims of the appellant are filed in the county court, and the court will have to pass on them just as if the order of January 20, 1930, had never been entered.

The next case relied on is Martin v. Street Improvement Dist. No. 349, 178 Ark. 588. The court again announced and approved the rule that the court, during- the term, had complete control over their judgments and decrees and might set them aside when good cause was shown.

Appellant calls attention to a paragraph in 15 R. C. L. 688, and quotes at length from the paragraph. The beginning of the paragraph, however, is as follows: “All courts of record have inherent power to vacate or set aside their judgments or orders during the term at which rendered. This is a power of daily exercise by courts, and its existence within proper limitations of time and propriety cannot be questioned.”

It would, of course, be improper, without notice to the other party, to set aside a judgment and enter a different judgment, but in the instant case the court did not do this; it simply set aside the order allowing- the claim, and left the parties just as they were before the judgment of January 20, 1930, was entered.

The court ordered that, if the clerk had issued his warrant, the county treasurer should refuse to pay it. That meant the warrant, of course, issued on the order of January 20th.

The judgment of the county court of January 20th was set aside, and this court said in Underwood v. Sledge, supra: “When an order or judgment of a court is set aside at the same term of court at which it was rendered, the whole suit or matter stands precisely as if no such consideration had been had or entered on record, and all parties interested are remitted back to such rights and remedies as they had before the making of the orders or judgments so vacated.”

The appellant therefore had no right to appeal from the order of the county court setting aside its former judgment. There was no judgment there to appeal from, because, as stated by this court, the parties were remitted back, that is, they stood in the same situation that they did before the judgment of January 20th was ever entered. The appellant has its claims filed and may have them passed on by the court. If the decision should be adverse to the appellant, it has the right then to appeal.

This court said, in determining whether a judgment setting aside a former judgment was final order from which an appeal might be taken: “Preliminary to'a determination of this question, it may be said that this court is committed to the doctrine that courts of general jurisdiction have inherent power during the term at which judgments or orders are rendered to set aside, vacate, and annul them. * * * A motion to set aside a default judgment at the judgment term is not an independent action and, when set aside, does not determine the rights of the parties. It leaves the case in the condition it was before the default judgment was rendered with an opportunity to try the case upon its merits.” Hawkeye Tire & Rubber Co. v. McFarlin, 146 Ark. 491, 225 S. W. 632.

This court also said: “It must be conceded that an order vacating a judgment or granting a new trial made in the term at which the judgment was rendered is not appealable except on the terms prescribed by the statute.” McPherson v. Consolidated Casualty Co. of Ark., 105 Ark. 324, 151 S. W. 283.

It is contended, however, by the appellant that, upon delivery of a warrant to the appellant, the judgment became fully executed, and that therefore the county court had no further control. It appears in this case that the warrant was issued by the clerk on January 20, 1930, the same day the judgment was entered. It appears also that the appellant still had the possession of the warrant.

In the case of Murphy v. Garland County, 99 Ark. 173, 137 S. W. 813, a judgment was entered by the county court, and the warrants were issued. This court said:

‘ ‘ The judgment of the circuit court disallowing the claim rendered invalid the warrants previously issued under the judgment of the county court; and, when they were presented to the county court for reissuance, the court properly rejected them,”

The judgment of the county court of Van Burén County was not executed. When the judgment was entered on January 20, 1930, the appellant was bound to know that any taxpayer might prosecute an appeal to the circuit court, and that, if the judgment was reversed, the warrant would be void. The action of the county court on February 8, 1930, was a long while before the time for appeal expired. McLain v. Miller County, 180 Ark. 828, 23 S. W. (2d) 264.

Appellant’s remedy is to prosecute his claim in the county court. We find no error, and the judgment is affirmed.


author: Mehaeey, J.

text:
    American Insurance Company of Newark, New Jersey v. Brannan.
    Opinion delivered December 14, 1931.

      Verne McMillen, for appellant.

      George W. Clark, for appellee.
   Mehaeey, J.

The appellant issued its policy of insurance to appellees insuring against loss in the sum of $2,500. The policy was dated August 26, 1929. On December 8, 1930, the property insured was destroyed by fire. Notice of the loss was immediately given, and the company advised that its adjuster would make an investigation in the near future, and, in order that the adjuster might not be delayed, the appellant requested that the insured get some reliable contractor to make an estimate to repair or replace said building. The adjuster did not make the investigation until 54 days after the property was destroyed.

There was some controversy as to whether there was a total loss and as to what the cost of replacing the building would be.

There was quite a good deal of correspondence between the appellant and the insured and his attorney, and on the third of March appellees filed with the company proof of loss. On April 3, 1931, appellees filed suit in the Faulkner Circuit Court alleging the contract of insurance, the destruction of the property, and the refusal of the appellant to pay.

It was alleged in the complaint that proof of loss was furnished the company, and that it acknowledged the same on December 16, 1930. This allegation was denied by the defendant.

The amount named in the policy, $2,500, less premium note of appellees, was paid, and there is therefore nothing-claimed in the suit now except damages and attorney’s fees.

There was nothing said in the complaint about a waiver of proof of loss, but the issue made by the pleadings was whether or not proof of loss was made on December 16th.

A jury was waived, and there was a trial before the circuit judge sitting as a .jury. At the trial, the appellees did not introduce any evidence that proof of loss was made on December 16th, as alleged in the complaint, but introduced evidence to prove that the appellant had Waived proof of loss.

The appellee, Brannan, and his nephew testified in substance that they came to Little Rock to the office of Bennett, the adjuster, and that he refused to pay the amount of the policy, and denied liability for the loss, but offered to pay a sum somewhat less than the amount named in the policy; that at that time there was a waiver of proof of loss. The appellant objected to this testimony on the ground that it changed the issues and it was not prepared to meet this proof; that appellant had not been informed and did not know that appellees claimed that there had been a waiver, but was prepared to try the issues made by the pleadings; that is, as to whether proof of loss had been made on December 16th.

Appellant’s request for postponement to enable it to g*et its witnesses was denied, and the case proceeded to trial over the objections of the appellant.

The court found that the appellee, Brannan, complied with the request of the adjuster and completed the estimate and called on the adjuster, Bennett, and that said adjuster made an offer of settlement, deducting- more than 10 per cent, of the amount due under the policy, which the insured declined to accept; and that the adjuster refused to pay more.

The court further found that the entering into negotiations for settlement, offering a less sum than was due, and a refusal to pay the face of the policy, constituted a denial of liability and likewise a waiver of defendant to require proof of loss.

The court gave judgment for appellees in the sum of $2,361.64 with interest, and judgment canceling the ,premium notes amounting to $138.36; found also in favor of appellees a penalty of 12 per cent, and $200 attorney’s fees, and adjudged the cost agvainst appellant.

Motion for a new trial was filed, overruled, and the case is here on appeal.

There is no controversy about the amount of insurance, but the appellant insists that it should not be required to pay 12 per cent, damages and attorney’s fees.

Appellee’s witnesses testified to facts which, if true, constituted a waiver of proof of loss as well as denial of liability. The testimony of Bennett, the adjuster, is in conflict with this evidence.

When a case is submitted to the trial judge, his finding of facts is as conclusive as the finding of a jury. If there is any substantial evidence to support the finding of the trial judge, it is conclusive here.

This court has said, in speaking of the finding of the circuit-court sitting without a jury: “On this question of fact, the circuit court sustained the finding of the county court, and, under settled rules of this court, where circuit courts are required by law to pass upon questions of fact, the findings are as conclusive on appeal as the verdicts of juries.” Little River County v. Buron, 165 Ark. 535, 265 S. W. 61; Mo. Pac. Rd. Co. v. Sloan, 176 Ark. 179, 2 S. W. (2d) 15; Johnson v. Spangler, 176 Ark. 328, 2 S. W. (2d) 1089, 59 A. L. R. 899; Plunkett-Jarrell Grocer Co. v. Huie, 175 Ark. 1148, 2 S. W. (2d) 1.

The finding of facts by the trial judge is conclusive here. The appellant, however, insists that there was an entire change of issues, and that, while the issue, as made by the pleadings, was whether proof of loss had been made on December 16th, the issue that it was required to try was a totally different issue; that is, it was required to try the question of whether there had been a denial of liability and waiver of proof of loss.

Appellant alleged that it was not prepared to try this issue, and, since no such issue was made by the pleadings, it could not be expected that the appellant could try this issue without some time to get ready.

The appellees were permitted, without amending their pleadings, to introduce evidence on an issue not made by the pleadings. It was, in fact, a wholly different lawsuit. This, we think, was error.

This court has said: “The court refused to confine the plaintiff in the introduction of evidence to the issues joined by the pleadings, by admitting the evidence objected to, and to confine itself to the issues by an instruction based in part upon such evidence, but tried the case in part outside the same, and, in so doing failed to confine itself to the rules adopted to maintain orderly procedure and to protect parties. Upon the objection to evidence, the plaintiff could have so amended its complaint as to have made it admissible, upon such terms as would have been just, but without such amendment the court should have rejected the testimony and instructed the jury accordingly.” Bryant Lumber Co. v. Clifton, 85 Ark. 322. 108 S. W. 216.

The court, in holding that certain evidence was not objectionable on the ground of surprise, said: “The new issue in fact only related to the number of logs which had been cut and stacked at Worden’s Spur; and no new or additional testimony was necessary. ’ ’ Brown & Hackney v. Loveless, 152 Ark. 540, 239 S. W. 21.

In the instant case there was new evidence, and evidence, we think, which could not have been anticipated by the appellant, because the issues tried were totally different from the issues made by the pleading, and the variance was material.

This court quoted with approval the following from Pomeroy: “If the divergence is total, that is, if it extends to such an important fact, or group of facts, that the cause of action or defense as proved would be another than that set up in the pleadings, there is plainly no room for amendment.” Railway Co. v. State, 59 Ark. 165, 26 S. W. 824; Shaituck v. Byford, 62 Ark. 431, 35 S. W. 1107.

This court said in another cáse where it was insisted that the judgment must be reversed because there were elements of damages not claimed in the complaint: “This would follow if they had objected to the introduction of evidence as to the added element of damages, and saved their exceptions thereto.” Young v. Stevenson, 75 Ark. 181, 86 S. W. 1000.

Our conclusion is that the court erred in permitting .appellees to introduce the evidence of waiver and denial of liability without giving appellant an opportunity to prepare to try this new issue.

For the error indicated, the judgment is reversed, and the cause remanded for new trial.


author: Butler, J.

text:
    Andrews v. Southwestern Hotel Company.
    Opinion delivered December 14, 1931.

      Joseph B. Brown and James B. McDonough, for appellant.

      Daily <& Woods, for appellee.
   Butler, J.

The Goldman Hotel is one of the leading hotels in Fort Smith, Arkansas. It has no garage for the accommodation of automobiles of its guests, but usually notifies a nearby garage of the arrival of such cars which are desired to be stored, such notice being given by an electric bell connected with the garage from the clerk’s office and operated by a push button. No one had access to this push button except the clerk on duty and the telephone operator at the hotel. When a guest arrived with a car which was desired to be stored, it was the custom to notify the garage by means of the push button, and it would send one of its employees to- the hotel for the ear. None of the employees of the hotel had any authority to transport automobiles of guests to the garage, and the bell boys (bell hops) were expressly forbidden from doing this, and it was ground for discharge for any one of them to violate this rule.

Judge Thomas G. Andrews, appellant here, is a resident of Oklahoma City, Oklahoma. On June 30, 1930, he left that city in his automobile, accompanied by his wife and mother, on a journey to one of the Carolinas, and on that trip reached Fort Smith at about 10 o ’clock at night, and drove to the front door of the Goldman Hotel on its driveway and there stopped, He and his companions alighted and went into the hotel leaving the hey in the transmission (ignition). Judge Andrews went to the desk of the hotel where he registered himself and his companions as guests. One of the bell boys took the car, ostensibly to carry it to the garage of Yantis & Harper just around the corner from the hotel. The appellant went to his room and was notified about eleven o’clock that night that the automobile had been found practically destroyed at a point in the city about a mile from the hotel. No one was in the car when it was found, but there was a coat in it belonging to the bell boy. This bell boy has never been seen in Fort Smith since that time. Judge Andrews carried insurance upon his automobile covering such instances as this with the Fidelity Union Casualty Company. On being notified on the following day, the insurance company authorized Judge Andrews to purchase a new car, which he did,.and assigned in part his claim for damage against the hotel company to the insurance company.

Suit was brought for damage to the car, and from an adverse verdict the plaintiffs have appealed.

There is no question as to the amount of damage, the only question being that of liability. After the verdict was returned in the court below, the plaintiffs moved the court for a judgment in their favor for the amount of the damage, notwithstanding' the verdict, and, on the motion being overruled, a motion for a new trial was duly filed alleging, among other things, that upon the undisputed evidence the plaintiffs are entitled to a verdict in their favor.

It is insisted here that the court should have rendered judgment for the plaintiffs, notwithstanding the .verdict in the court below, and that this court ought now to reverse the .judgment of the trial court and render a verdict here for the amount of plaintiff’s claim. They base their contention oh.the theory that the car at the time it was taken by the bell boy was infra hospitium, and that the rule- announced in 2 Parsons on Contracts, at page 158, approved by this court in the case of Pettit v. Thomas, 103 Ark. 593, 148 S. W. 501, 12 L. R. A. (N. S.) 122, Ann. Cas. 1914B, 726, is applicable to the instant case and establishes liability on the undisputed facts. That rule, referring to an innkeeper’s duty to his guest, is as follows: “He is an insurer of the safety of whatever baggage or other things he receives into his inn for his guest, whether in fact negligent in their keeping or not, except against the two overwhelming forces termed the acts of God or of the public enemy. For example, if they are stolen or burned without the fault of either the guest or the landlord, the latter must be liable for them.”

This rule was abolished by act No. 217 of the Acts of the General Assembly of 1913, now found in Crawford & Moses’ Digest in §§ 5564-5573, both inclusive. In Turner v. Weitzel, 136 Ark. 503, 207 S. W. 39, this court, referring to the case of Pettit v. Thomas, supra, said: “That case was decided in the year 1912, but since that time the law on that subject has undergone a material change by the enactment of the act of March 29, 1913. (Act No. 217, supra.) * * * It makes the keeper of a hotel liable as a bailee for hire and abrogates the common-law liability as insurer. * * * The law requires ordinary care and diligence on the part of the bailee and makes him responsible only for ordinary neglect. And this is the extent of his duty and liability, even though he may be so interested in the property as to make him a bailee for hire. In such case the bailee is liable only for negligence; and such negligence must be proved by the party seeking to make him responsible therefor. The mere loss of the property does not ordinarily fix a liability for the loss upon him, but it must be further shown that said loss arose by reason of his negligence.” See also Huckins Hotels v. Smith, 151 Ark. 167, 235 S. W. 787; New York Hotel Co. v. Palmer, 158 Ark. 598, 251 S. W. 34; Fant v. Arlington Hotel Co., 170 Ark. 440, 280 S. W. 20.

It is insisted by the appellants, however, that the statute becomes applicable only when a copy of § 1 of said act is posted within the hotel in the manner prescribed by that section, and that this compliance on the part of the innkeeper must be affirmatively shown before the benefit of the act may be invoked. That section relates only to the safeguarding of valuables of small bulk, such as money, personal ornaments, negotiable or valuable papers and bullion, to be kept within a safe or in the sleeping room used by guests and has no relation whatever to the safe care of automobiles. The court therefore did not err in its refusal to grant the motion of the appellants in the respects mentioned.

Besides, liability is not sought to be established in this case upon any statutory or common-law duty resting upon the innkeeper. The cause of action declared upon is an express agreement of bailment. Boiled down, the complaint alleges that the plaintiff, Judge Andrews, after registering as the guest of the hotel, made inquiry of the clerk on duty as to whether or not a garage was nearby where his car could be stored in safety. The clerk informed him that there was such a garage, and thereupon the plaintiff asked if some of the employees of the hotel would take charge of the automobile, and the clerk authorized and directed a negro man in the employ of the hotel to take the automobile and place it in the nearby garage. Acting- on the invitation of the defendant and' its employees, the plaintiff delivered the car to the negro to be taken to the garage, and the defendant, through its servants, officers, clerk and employees, assumed and took upon itself the duty and obligation to store said automobile in a safe garage.

The testimony adduced by the plaintiffs tended to establish these allegations, but this testimony was disputed by that of the clerk who, while admitting that Judge Andrews inquired about a safe garage in which his car might be stored and that he gave him the information requested, and that he did not communicate with the garage, denied that he told Judge Andrews that any one of the negro employees who happened to be bell boys would take the car to the garage. He stated that, after he gave Judge Andrews the information, the latter turned and walked away from the desk, and that 'he did not know where the judge went. Judge Andrews testified that, after he was told by the clerk that one of the negro boys would take charge of the car, he turned and walked from the desk and met three of the bell boys about ten feet from the desk in the lobby of the hotel, and that he said, addressing them, “‘Which one of you boys will take the car,” and one said, “I will”; that he then accompanied the boy to the car and the latter got in and drove it away.

It is argued here that, as the conversation between Judge Andrews and the bell boys occurred so near the clerk’s desk, the clerk could have overheard the same. There is no positive testimony to show that he did, and he might or might not have done so. This question of fact was submitted to the jury in the following instruction requested by the appellants, embodying their theory of the case: “This is a suit by the plaintiffs against the defendants to recover damages sustained by the plaintiffs because of damage to the automobile of plaintiff, Thomas G. Andrews. If you find from the evidence that the clerk, or the employee acting as clerk at the time said Thomas G. Andrews registered at the Goldman Hotel, authorized said Andrews to turn his automobile over to a bell boy, or employee, of said hotel to drive to a garage, and, pursuant to said authority, Andrews turned said car over to a bell boy or employee, and said employee or bell boy took a ride in said car and damaged same by his negligence, it is your duty to find for plaintiffs.” The only other declaration of law requested by appellants was that relating to the measure of damage, which instruction was given by the court.

At the request of the appellee, the court gave instructions (e), G, á and 5, to which objection was duly made and exceptions saved, and errors here assigned and argued. These instructions are as follows:

“ (e) You are instructed that, under the evidence in this cause, the clerk in charge of the desk of the defendant ’s hotel had actual authority to cause Judge Andrews ’ car to be stored at the Yantis-Harper garage and to call an employee of the Yantis-Harper garage to take charge and drive said automobile to storage, but you are further instructed that the bell boy who drove said car and wrecked the same had neither real nor apparent authority to take charge of said car and drive the same, unless you further find from the evidence that the clerk directed said bell boy to take charge of said car, or that said clerk directed Judge Andrews to turn said car over to the bell boy; so, if you find from the evidence that the clerk directed the bell boy to take charge of said car, or directed Judge Andrews to turn said car over to the bell boy, your verdict will be for the plaintiff. On the other hand, if you find that the clerk did not tell Judge Andrews to turn his car over to the bell boy, and that the clerk gave no instructions to the bell boy with reference to said car, then your verdict must be for the defendant.
“G. The burden of proof is upon the plaintiff to make out his case by a preponderance of the evidence.
“4. You are instructed as a matter of law under the evidence in this case that the bell boy had no authority to take the car of the plaintiff and store the same, or to have it done, unless you further find from the evidence that the clerk, Kenneth Newman, authorized or directed the bell boy to take charge of said car, or directed the plaintiff, Andrews, to turn the same over to the bell boy for that purpose. And in this connection you are instructed that, if you find from the evidence in this case that the clerk, Kenneth Newman, did not authorize or direct the bell boy to take charge of said car, or did not authorize or direct the plaintiff, Andrews, to turn his car over to the bell boy, then in that .event your verdict will be for the defendant.
“5. You are instructed as a matter of law that the plaintiff, by his mere act of registering at the defendant’s hotel, was not justified in turning his car, or the keys thereto, over to a bell boy, or instructing him to store his car in a garage. Before you can find for the plaintiffs in this case, they must show by a preponderanee of the evidence that the clerk, Kenneth Newman, either authorized or directed the bell boy to take charge of the plaintiff’s car, or that he authorized or directed 'the plaintiff to have the bell boy do it. Unless the plaintiffs establish one or both of these facts by a preponderance of the evidence, your verdict will be for the defendant. ”

That part of instruction (e) objected to is' the language used relating to the bell boy who drove and wrecked the car, of whom it is said, he “had neither real nor apparent authority to take charge of said car and drive the same, unless you further find from the evidence that the clerk directed .said bell boy to take charge of said car.” It will be noticed that instructions Nos. 4 and 5 are in effect the same as instruction (e), and it is argued that the language complained of disregarded the allegations of the complaint, which allegations based the right of recovery “upon the conduct of other servants of the hotel,’'’ and refers to that paragraph of the complaint which, after alleging with particularity the alleged special agreement, continues as follows: “In addition, said plaintiffs allege that defendant, through its servants, officers, clerk and employees, assumed and took upon itself ' the duty and obligation. to store said automobile in a safe garage nearby.” The answer to this contention is that this allegation was but a mere statement in general terms of what had already been particularly alleged, and this is the way in which it was interpreted by the appellants themselves, as the instruction they asked grounds the case solely on the special agreement. It is argued as to these instructions that they erroneously declare as a matter of law that the bell boy was without authority, real or apparent, to store the car, in the absence of instruction to do so from the clerk. This, in effect, is what the appellants themselves requested the court to tell the jury. Instruction No. 1 assumes that the authority of the hell boy was derived from the language and conduct of the clerk in his conversation with Judge Andrews. Therefore, the true effect of these instructions is but to state the converse of the instruction requested by the appellants. Western Union Tel. Co. v. Cowardin, 113 Ark. 160, 168 S. W. 1133; Pine Bluff S. & S. Ry. Co. v. Leatherwood, 117 Ark. 524, 175 S. W. 1184.

It is next insisted that the court wrongfully placed the burden of proof upon the plaintiffs by instruction “Gr.” The appellants base their argument upon the erroneous assumption that, under the facts as proved the innkeeper was the insurer of the automobile under the rule announced in Pettit v. Thomas, supra, whereas, as we have seen, the liability, if any, is based upon a special agreement which, if established, would create no greater responsibility than that of a bailee for hire, and the instruction correctly placed the burden of proof. Bertig v. Norman, 101 Ark. 75, 141 S. W. 201, Ann. Cas. 1913D, 943; Union Compress Co. v. Nunnally, 67 Ark. 284, 54 S. W. 872; Turner v. Weitzel, supra.

The scope of this court’s inquiry must be limited to the case tried in the court below. There the case, as we have seen, was whether or not there was an agreement as pleaded and as expressed in the instruction given at the request of the appellants. The theory now contended for is different and may not be allowed. White County v. Bragg, 168 Ark. 670, 273 S. W. 7; American Ry. Express Co. v. Cole, 183 Ark. 557, 37 S. W. (2d) 699.

It follows from what we have said that the judgment of the trial court is in all things correct, and it must therefore be affirmed. It is so ordered.

Kirby, J., dissents.


text:
    Thomason v. Hester.
    Opinion delivered December 14, 1931.

      George W. Emerson, for appellant.

      Charles A. Walls, for appellee.
   Butler, J.

After, consider able negotiation, a contract was entered into between the appellees and one W. R.. Cargile, which contract is as follows:

“This agreement, made and entered into this 26th day of May, 1930, by and between W. R. Cargile, party of the first part, and Luther Hester and Orrie Hester, parties of the second part, witnesseth:
“That the party of the first part agrees to convey to the parties of the second part the following described lands in the city of El Dorado, Union County, Arkansas, to-wit: (Here follows description), free and clear of all incumbrance except a building and loan mortgage, at this time not exceeding $6,000, which the parties of the second part are to assume and agree to pay. In payment for the above lands, the said parties of the second part are to sell and convey to the party of the first part the property which they agree to convey herein to the party of the first part.
“That the parties of the second part hereby agree to sell to the party of the first part the following described personal property, to-wit: (Here follows description.)
“That all of said lands the parties of the second part agree to convey and the personal property are to be free of any incumbrance except Federal land loan and fifteen hundred dollars owing to Dr. Hemphill, all not to exceed the sum of four thousand dollars.
“That it is hereby expressly agreed that each party is to furnish to the other good and sufficient abstracts of title to the lands agreed to be exchanged, the title to be approved by competent attorneys before title shall pass; that possession is to.be delivered of the property not later than the first day of June, 1930, whether the titles shall have been approved at that time or not.
“That the parties of the second part agree to secure manner of payment of the Dr. Hemphill indebtedness satisfactory to the party of the first part.
‘£ That the party of the first part is to assume and to pay the indebtedness against the property to be conveyed to the party of the first part by the parties of the second part, provided same does not exceed in the aggregate the sum of four thousand dollars.
“That the deeds conveying the respective parcels of land shall be by warranty deed with rtelinquishment of dower and of homestead of the wives of any of the parties who may be married at the time of the execution of the deeds.”

The above contract was never carried out, for, on the 28th of May, 1930, two days after its execution, the appellees disavowed the same, and advised of the withdrawal of their property from the market. The appellant thereupon brought this suit against the appellees, alleging that he was the broker with whom the lands of appellees were placed for sale; that he had negotiated the contract aforesaid, and that he had procured a purchaser for the property, ready, willing and able to purchase the same on terms acceptable to the appellees, and was entitled to his commission. The appellees- answered, denying the allegations of the complaint, and asserted by way of defense certain misrepresentations and false statements of the appellant made to them, upon which they relied, and which induced them to enter into the contract. The case was. submitted to the jury upon the pleadings and evidence adduced at the trial, and a verdict was returned in favor of the appellees. From that judgment is this appeal.

There wás testimony tending to show that the appellant procured Cargile to enter into the contract, and that the latter was ready, willing and able to carry out his agreement; that the contract was breached by the appellees upon the discovery that certain representations made to them by the appellant which induced them to make the contract were false, so that, if the liability of appellees depended upon the enforceability of the contract between them and Cargile, it seems as if they would be liable for the broker’s fees claimed, as it appears that the contract was disavowed, not because any defects in Cargile’s title to the property were ascertained or that he had failed in any particular to carry out his agreement (although these things might he shown in a suit by Cargile to enforce the contract). Cargile has withdrawn from the picture, and is not asserting any rights under the contract.

The court erred in giving instruction No. 2, requested by the appellees. The undisputed evidence shows that the appellant brought Cargile and the appellees together. It was shown that Cargile was worth from forty-five to fifty thousand dollars, was receiving a salary of $300 per month, and that immediately after the signing of the contract he deposited with an attorney in Little Rock a deed duly executed, by which he conveyed the property in El Dorado in conformity with the contract, and with this deed deposited his abstract of title for appellees’ inspection, and, in so far as the evidence discloses, did everything that he was required to do under the contract to carry into effect its terms, and there is no testimony to the effect that appellees did not fully understand the terms of the contract, or that they were laboring under any disability. The instruction requested is as follows: ‘ ‘ The court instructs the jury that the burden is on plaintiff in this case to show by a preponderance of the evidence that he found a purchaser who was ready, willing, and able to purchase their land according to the terms agreed upon; and if you find that there was no final agreement or meeting of the minds of the said W. R. Cargile, the prospective purchaser, and the defendants, then your verdict will be for the defendants.”

There is nothing in the evidence, either from an inspection of the contract or the testimony relative to its execution, tending to show that there was no final agreement or meeting of the minds of Cargile and the appellees. On the contrary, the evidence in this case shows that it was a completed and binding contract, and the court erred in giving the instruction.

It does not follow, however, that the instructions requested by the appellant were improperly refused or that he is entitled to a reversal of the judgment of the trial court and a judgment here for the amount of his claim. The appellant requested two instructions. Instruction No. 1 was for a directed verdict for the amount sued for, and instruction No. 2 directed the jury to find for the plaintiff if the evidence showed the procurement by him of a purchaser for appellees ’ property, and that a ■ contract was entered into between them for the purchase and sale thereof. The testimony adduced on the part of the appellees tended to show that the appellant had discussed with them for a considerable period of time the question of the sale of their property, which was a farm consisting of 636 acres of land in Lonoke County; that they first placed a price of $20 per acre cash upon it, and later reduced this price somewhat. The appellant finally persuaded them to consent to an exchange of prop.erty with Cargile, representing to them that the property in El Dorado was being rented for $200 per month. At this time there was a debt of only $2,200 against the appellees ’ farm, and appellant represented to them that he had made arrangements with Dr. Hemphill, who at that time had a loan of about $1,500 secured by a mortgage on. the farm, that he (Hemphill) would make an additional loan of 17 or 18 hundred dollars, bringing the amount of indebtedness on the farm up to $4,000, the payment of which Cargile would assume. The appellees would obtain in exchange for their farm the property in El Dorado and the 17 or 18 hundred dollars in cash. There was evidence further tending to show that the appellees relied upon these statements of the appellant, and that these induced them to sign the contract; that soon thereafter they discovered that the property in El Dorado was not being rented for $200 per month, but for about $100, and that Hemphill had not agreed with the appellant that he would make the additional loan, but, although approached by the appellant for that purpose, stated that he would not do so.; and that upon discovery of these facts the appellees declined to complete the transfer under the terms of the contract or to pay the appellant his commission.

A real estate broker owes to his principal the utmost good faith and loyalty, and he may not by deception or fraud induce his principal to enter into a contract for the sale of the principal’s property and claim his commission although he has procured a prospective purchaser who is ready, willing and able to buy from.the principal on the latter’s terms. Taylor v. Godbold, 76 Ark. 395, 88 S. W. 959; Reich v. Workman, 110 Ark. 140, 161 S. W. 180; Worthen v. Stewart, 116 Ark. 294, 172 S. W. 185; Lasher-Morris B. & T. Co. v. Jones, 131 Ark. 576, 199 S. W. 900; Wright v. Bennett, 150 Ark. 154, 233 S. W. 1089; Davis & Metcalf v. Haley, 157 Ark. 232, 247 S. W. 1052; Carnahan v. Lyman Real Hstate Co., 170 Ark. 519, 280 S. W. 5.

The testimony raises an issue of fact within the rule announced, and presents a case for the determination of a jury. The judgment is therefore reversed, and the cause remanded for a new trial.


author: Per Curiam.

text:
    Knight v. State.
    Opinion delivered December 14, 1931.

      T. A. Gray, for petitioner.
   Per Curiam.

Petition of appellant for mandamus to require clerk to prepare a complete transcript of the record, including* the indictment and all papers on file in his office, is granted. Petition for mandamus to require stenographer to transcribe his notes is denied, it being the duty of the circuit court to do that.

Mandamus from this court in aid of its appellate jurisdiction is an appropriate remedy to spur the clerk to the performance of his duty to prepare a complete transcript of the record in his office in order that the case may be reviewed here. In re Barstow, 54 Ark. 551, 16 S. W. 574; Bell v. Rice, 183 Ark. 105, 35 S. W. (2d) 88.

This court has no jurisdiction to compel the stenographer to perform his duties. He is accountable to the circuit court which appointed him, whose duty it is to compel him to perform the duties required of him. Reynolds v. Union Bank & Trust Co., 182 Ark. 495, 30 S. W. (2d) 218; and Bell v. Rice, supra.


author: Hart, J.,

text:
    Milsap v. Holland.
    Opinion delivered December 21, 1931.

      W. A. Dickson, II. A. Dinsmore and Price Dickson, for appellants.

      John Mayes, for appellees.
   Hart, J.,

(after stating the facts). The formation of a new school district by consolidating an old district with it is held to be within the sound discretion of the county board of education. Unless it appears from the testimony that its order is arbitrary and unreasonable, it is not proper to vacate it. Bledsoe v. McKeowen, 181 Ark. 584, 26 S. W. (2d) 900.

While a notice of a petition to dissolve a school district under the statute is jurisdictional, yet it is not necessary that the notice be signed by all of the petitioners. The reason is that the only purpose which a notice serves is to -inform interested parties of the nature of the proceeding and the date upon which it would be submitted. Hence it has been held that the petitioners who sign the notice do'so for themselves and all other signers. Rural Special School Dist. No. 21 v. Common School Dist. No. 87, 35 S. W. (2d) 587; and Nathan Special School Dist. No. 4 v. Bullock Springs Special Sch. Dist. No. 36, 183 Ark. 706, 38 S. W. (2d) 19.

In the latter case, it was also held that, after the petition had been filed with the county board of education, something more than a mere change of mind is necessary before the petitioners are allowed to withdraw their names from the petition. The court said that, before the filing of a petition, a signer would be privileged to have his name taken from the petition, but that after the petition had been filed this would be done only where the signature had been procured by some improper method, whereby the signer was deceived and a fraud perpetrated upon him,

Tested by these principles of law, we think the circuit court erred in finding for the remonstrants. The undisputed evidence shows that the certified list of qualified electors in Mt. Zion Common 'School District No. 2 amounted to thirty-six persons. The undisputed evidence also shows that twenty-five of these persons signed the original petition. Proof was introduced in the circuit court tending to show that four of these signers had not authorized their names to be signed to the petition, and had not signed it themselves. Hence this would leave twenty-one persons signing the petition, which would still constitute a majority of the qualified electors in said school district. But it is insisted that at least seven of these persons signed the remonstrance to the petition and testified that they wished their names erased from the original petition. They all testified that the only reason they had signed the remonstrance was because, after more mature investigation, they had concluded that it would not be best to consolidate their district with Farmington Special School District No. 6. None of them testified that they had been induced by fraud or deceit to sign the original petition. The only excuse they gave was that they had perhaps signed it too hastily. The person who carried the original petition to the signers testified that he made no false representations to induce the qualified electors of the district to sign the petition, and that each of them signed of his own free will and accord. The proof does not show that any of the parties asked that their names be taken from the original petition before it was filed. On the other hand, the undisputed proof shows that no such step was taken until after the petition had been filed with the county board of education.

Therefore the circuit court erred in holding that a majority of the qualified electors of said common school district did not sign the petition for consolidation, and erred in adjudging that the petition for consolidation should be dismissed for want of jurisdiction. Inasmuch as the undisputed evidence shows that a majority of the qualified electors of Common School District No. 2 signed the petition for consolidation, and inasmuch as the case has been fully developed, the judgment will be reversed, and the cause will be remanded with directions to the circuit court to affirm the judgment of the county board of education consolidating the two districts, and to certify its judgment down to the county board of education to the end that it may be entered of record there.


author: Hart, C. J.,

text:
    Mitchell v. Mason.
    Opinion delivered December 21, 1931.

      Harrison, Smith .& Taylor, for appellant.

      Holland <& Barham, for appellee.
   Hart, C. J.,

(after stating the facts). This court has held that the sale of mortgaged property by the mortgagor without the knowledge or consent of the mortgagee constitutes a conversion of the property, and that both the mortgagor and the purchaser are liable to the mortgagee for a conversion of the mortgaged property. Sternberg v. Strong, 158 Ark. 419, 250 S. W. 344.

On the other hand, if a mortgagee consents to a sale of the property by the mortgagor, the purchaser takes title free from the lien. In such cases, the waiver on the part of the mortgagee may be established -by oral evidence, which may be direct and positive, or may be established by circumstances surrounding the transaction. Fincher v. Bennett, 94 Ark. 165, 126 S. W. 392; and Vaughan v. Hinkle, 131 Ark. 197, 198 S. W. 705. In these cases, the court expressly held that, where a mortgagee verbally authorizes a mortgagor to sell the property and the property is sold to a bona fide purchaser for value, the latter acquires a good title, whether he knew of the existence of the mortgage or not.

In the present case, the mortgage was duly recorded, and this gave Mitchell & Bollard constructive notice of its existence. Actual knowledge may be imputed to them from the facts and circumstances in the case, which it is not necessary to state because they had constructive knowledge of the mortgage and were hound thereby. The Masons executed a written power of attorney to Pyles which was very broad in its scope. We have not copied it in full in the record on account of its length, and we deem such course unnecessary for the reason that we are of the opinion that, although it authorized Pyles to waive the mortgage in favor of Mitchell & Bollard, yet we- are of the opinion that Pyles did not waive the mortgage or consent to the sale of the mortgaged cotton.

On the one hand, Pyles denied having given Dickerson the right to sell the mortgaged cotton; on the other hand, Dickerson was equally positive that Pyles gave him the right to sell the cotton. It is claimed that the testimony of Dickerson is corroborated by the tickets given by the ginner for the said cotton when he purchased it. There were sixteen of these tickets for sales, amounting in the aggregate to something over $1,297.66, commencing on the 22d day of November, 1927, and ending on the 14th day of January, 1928. These tickets or orders, however, were shown in each instance to have been given to Pyles and indorsed by him before the proceeds were paid to Dickerson. The indorsement of Pyles in each case amounted to a consent of the sale of that much of the property, but it did not establish such a course of dealing as would give Mitchell & Bollard the right to think that Pyles had waived the mortgage on the remainder of the cotton. On the other hand, it would rather notify them that he did not intend to do so because his signature indorsing the order was secured by Dickerson before the proceeds were delivered to him by Mitchell & Bollard. Imperial Valley Savings Bank v. Huff, 126 Ark. 281, 190 S. W. 116.

We do not think that the evidence as disclosed by the record establishes any system or course of dealing between the parties which would warrant a belief that Pyles had by such course waived the rights of the mortgagee in the premises in favor of Mitchell & Bollard. A straight rental contract was entered into between the parties for each year, and the mortgage in question in this case was executed in April, 1927, and contains the usual clause prohibiting the mortgagor from selling or removing the property.

According to the decree, the chancellor made a general finding of fact in favor of appellees, and it cannot be said that his finding is against the preponderance of the evidence. Therefore the decree will be affirmed.


author: Smith, J.

text:
    Taylor v. Nelson.
    Opinion delivered December 21, 1931.

      G. T. Gotham, for appellant.

      D. D. Glover, for appellee.
   Smith, J.

The appellant bank made E. A. and Walter Nelson a loan of $3,000, which was secured by a deed of trust on a lot to which the Nelsons had the record title. At the time the loan was made an abstract of the title showed a perfect unincumbered title in the Nelsons. Default was made in the payment of the debt secured by the deed of trust, but, before filing suit to foreclose it, the hank caused the abstract to be brought down to date, and it was then disclosed that a warranty deed from the Nelsons to Dewey Roberts and his wife had been placed of l’ecord. The deed of trust to the hank was executed February 24, 1930, and it was filed for record the following day. No one was occupying the mortgaged property at that time, although Mr. and Mrs. Roberts moved into it a few days later. The deed to the property from the Nelsons to the Roberts was dated February 10, 1930, but was not filed for record until April 19, 1930.

The bank filed suit to foreclose its deed of trust, and being advised by the abstract of the existence of the deed to the Roberts, they made the latter parties defendant. It was alleged by the bank that it had taken its deed of trust without notice or knowledge of the deed to the Roberts.

An answer was filed by the Roberts in which they admitted that the bank had taken its deed of trust without notice or knowledge of their deed, and that their deed was therefore subject to the deed of trust, but they filed a cross-complaint against the Nelsons in which they prayed judgment for damages for the breach of the warranty of their title.

The original complaint was filed May 28, 1930, and the Roberts filed their answer and cross-complaint on June 23, 1930. On July 30, 1930, a decree was rendered in favor of the bank for its debt against the Nelsons, and the mortgaged property was ordered sold. There was a sale pursuant to this decree, at which the bank was the purchaser, and this sale was later confirmed by the court.

On November 3, 1930, the Roberts filed a motion to set the decree aside and to impound a certain lien note alleged to be wrongfully held by the bank and to require the bank to account to them for the note or its proceeds.

Testimony was heard in support of and in opposition to this motion. The court declined to set aside the decree of the sale of the land and the sale thereunder, but did' enter a decree requiring the bank to deliver up to or account for the note referred to in the motion, and this appeal is from that decree.

In support of this motion, it is insisted that the decree was prematurely rendered, in that ninety days had not elapsed after issues joined, nor had application been made or notice thereof been given to opposing counsel to try the cause sooner, as is required by act 37 of the Acts of 1929 (page 67, vol. 1, Acts 1929). See Sisk v. Becker Roofing Co., 183 Ark. 101, 34 S. W. (2d) 1078.

This objection to the decree is answered by saying that the Nelsons filed no answer and were in default when the decree was rendered. The answer and cross-complaint filed by the Roberts raised no issue against the bank and did not question its right to the relief prayed. The decree did not undertake to adjudicate the matters set up in the Roberts cross-complaint, but these were reserved. We are of the opinion, therefore, that the decree of foreclosure was not prematurely rendered.

After having heard testimony on the motion to vacate the decree, the court made the following finding of fact: “The court finds from the preponderance of the evidence in this ease that Walter Nelson and E. A. Nelson are insolvent, and were so insolvent when they transferred said note to the Community Bank & Trust Company as collateral on a past-due indebtedness due said bank.” Upon this finding the court directed the bank to deliver the note in question to the Roberts and to account to them for any collections made on it.

It is apparent that this motion raised an issue not suggested by the original answer and cross-complaint of the Roberts. The testimony heard by the court on this motion is to the following effect. The Roberts owned a house and lot in the city of Hot Springs, which they sold for $3,250, and in payment therefor took the note of their purchaser dated 12-6-1929, and payable in installments of $31 each. This note was secured by a vendor’s lien, and was drawn to include the interest in the monthly payments. After making this sale the Roberts contracted with the Nelsons, who were building contractors, to build them a house on the lot embraced in the original foreclosure suit. Under this contract the Nelsons were to bnild the house and deliver possession thereof with an abstract of the title to the lot showing an unincumbered title. In payment therefor the Roberts paid $500 in cash, and were to pay $281 additional in cash upon the delivery of the abstract, which, however, was never delivered, and, in addition, they assigned to Nelson their purchase-money note given to them upon the sale of their lot.

The Roberts assigned this note to Walter Nelson by the following' indorsement: “January 8, 1930. We hereby assign all our right, title and interest to the within note to Walter Nelson. (Signed) W. D. Roberts and Ollie Roberts.” After receiving this note, Nelson deposited it with the bank for collection, and there was indorsed thereon the notation to, “credit all future payments to account of Walter Nelson.”

In addition to. the $3,000 note secured by the deed of trust herein foreclosed, Nelson was otherwise indebted to the bank, and he also desired additional credit, for which he applied and which was extended, and a new note covering the old balance and the new advance was made, and, as security therefor, Nelson assigned Roberts’ note to the bank on April 3,1930, by the following indorsement on the note: “For value received, I hereby assign and transfer the within note to the Community Bank & Trust Company, Hot Springs National Park, Arkansas, as collateral security for note of even date executed by me to said bank. [Signed] Walter Nelson.”

This is the note referred to in the Roberts’ motion to vacate the foreclosure decree, and the subject-matter of this appeal is the good faith of this transfer.

The court found that the Nelsons were insolvent when the assignment to the bank was made, although the motion contained no allegation to that effect. The testimony does show insolvency of the Nelsons at the time the testimony was taken, which was after the motion to vacate the decree had been filed, but does not show whether the Nelsons were insolvent when the note was assigned on April 3, 1930.

This, however, is unimportant except as it bears upon the question of the good faith of the bank in taking the note as collateral to the new note which the bank took from Nelson upon lending him an additional sum of money. It may be said that this note of Nelson’s to the bank was not paid, and, under the power there conferred, the bank sold Roberts’ note, which had been deposited as collateral, for the full face value of the Roberts ’ note. The proceeds of this sale, which was made to the bank itself, were not sufficient to pay the note for which the Roberts’ note was collateral.

It is insisted that the transaction whereby the Roberts’ note was deposited with the bank as collateral to the loan to Nelson was fraudulent, in that the bank knew that Nelson was not the owner and had no right to so use the note.

The testimony establishes the fact very clearly that Nelson acquired this note as a payment on the house which he had built for the Roberts, but that Nelson was unable to convey an unincumbered title thereto, because he had mortgaged the lot on which the house stood, this being the mortgage which the original suit was brought to foreclose.

Without setting out the rather voluminous testimony, which we have carefully considered, upon this issue of fact, we announce our conclusion to be that the bank was not party to any fraudulent purpose of Nelson. It is true the consideration for the assignment of the note by the Roberts, which had been given them in payment for their home, has failed. They made this assignment in partial payment of the house and lot which Nelson had built for them, but which he had mortgaged to the bank, but it does not appear from the testimony that the bank was party to or was aware of this fraud. On the contrary, the cashier testified that, when Nelson proposed to use the Roberts’ note, which had been assigned to bim as herein shown, he declined to accept it unless a notation of the assignment was made upon the margin of the deed record where the deed had been recorded in which the vendor’s lien had been reserved which secured the purchase-money note, and on March '22, 1930, in the absence of any representative of the bank, Mr. and Mrs. Roberts made assignment of this lien to Nelson by indorsement to that effect upon the margin of the deed record. Thereafter, on April 3, 1930, Nelson executed the assignment hereinabove copied of the note to the bank.

If this transaction is what it appears to be, the bank took this note for value, before maturity, and without notice that Nelson did not have the title thereto, and, this being true, the bank acquired title to the note, however fraudulent the conduct of Nelson may have been in his dealings with the Roberts.

It is unnecessary to determine what the existing indebtedness of Nelson to the bank was, or what additional credit was extended when the collateral note was taken, as the law is settled that the indorsee of negotiable, paper, taken before maturity, as collateral security for an antecedent indebtedness, in good faith and without notice of defenses which might have been available as between the original parties, holds the same free from such defenses. Newell Construction Co. v. McConnell, 156 Ark. 562, 246 S. W. 854.

The original cross-complaint filed by the Roberts did not question the good faith of the bank in the acquisition of the collateral note, and we think the testimony shows it was acquired in the usual and ordinary course of business, in good faith, for value, and before maturity. This being true, the decree directing the bank to surrender the collateral note to the Roberts is reversed, and the cause will be remanded with directions to dismiss the motion praying that relief. It is so ordered.


author: Hart, C. J., (Butler, J.

text:
    State ex rel. Attorney General v. Chicago Mill & Lumber Corporation.
    Opinion delivered December 21, 1931.

      Hal L, Norwood, Attorney General and John M. Bose, for appellant.

      W. B. Statterfield and Daggett & Daggett, for appellees.

      J. G. Williamson, Lamar Williamson and Adrian Williamson, amici curiae.

   Hart, C. J.,

(after stating the facts). The correctness of the decree of the chancery court depends upon the proper interpretation to be given to what is commonly known as our “back tax statute.”

Our original back tax act was passed by the Legislature of 1887, and its title recites that it is “An act to provide for the collection of overdue taxes from corporations doing business in the State.” Acts of 1887, p. 33; Kirby’s Digest, §§ 7204-7213, inclusive. This act was amended by the Legislature of 1911 so as to fix the com-' pensation to be paid to special counsel employed to assist the Attorney General in the enforcement of the act. Acts of 1911, p. 324. This act came up for construction by the court in the case of State v. Kansas City Memphis Ry. & Bridge Co., 106 Ark. 248, 153 S. W. 614, where it was held that, under the provisions of the act, the State could not recover back taxes for undervaluation made in assessing property, and that a review by the courts was only permitted when the assessing officers had proceeded on a wrong basis of valuation in omitting some property or element of value, or in adopting the wrong basis of estimating value.

In order to correct this supposed defect in the act, the Legislature of 1913 amended the former act by inserting a provision for the recovery of back taxes where an assessment was made on an inadequate valuation or undervaluation of the property. The amended act also provided that it shonld be construed as retrospective as well as prospective in operation. This amended act came before the court for construction in State v. K. C. & Memphis Ry. & Bridge Co., 117 Ark. 606, 171 S. W. 248.

The first section with the word “or” inserted in brackets is copied in the statement of facts by the court, and reads as follows:

“Where the Attorney General is satisfied from his own investigation, or it is made to appear to him by the statement in writing of any reputable taxpayer of the State, that, in consequence of the failure from any cause to assess and levy taxes, or because of any pretended assessment and levy of taxes upon any basis of valuation other than the true value in money of any property hereinafter mentioned, or because of any inadequate or insufficient valuation or assessment of such property or undervaluation thereof, or from any other cause, that there are overdue and unpaid taxes owing to the State, or any county or municipal corporation, or road district, or school district, by any corporation, (or) upon any property now in this State which belonged to any corporation at the time such taxes should have been properly assessed and paid, that it shall become his duty to at once institute a suit or suits in chancery in the name of the State of Arkansas for the collection of the same in any county in which the corporation owing such taxes may be found, or in any county in which any part of such property as may have escaped the payment in whole or in part of the taxes, as aforesaid, may be situated, in which suit or suits the corporation owing such 'taxes, or any corporation (or person) claiming an interest in any such property as may have escaped taxation as aforesaid, shall be made a party defendant, and the Governor is authorized to employ any attorneys that may be necessary to assist the Attorney General in such suits; provided, that this act shall be construed as retrospective as well as prospective in operation.”

Although there is no express declaration of the court to that effect, it is apparent from the insertion of the word “or” in brackets by the court, and from its reasoning in the case, that the court considered that the word “or” had been left out of the act as amended by the Legislature of 1913 by inadvertence or clerical mistake. With the word “ or ” omitted, the terms of the act would be restricted or limited to property in existence in the State at the time of the bringing of the back-tax suit instead of enlarging its provisions so as to provide for the recovery of back taxes where the property had been grossly undervalued in making the original assessment. ’With the word “or” omitted, it is plain that the statute would give the Attorney General the right to bring suit for back taxes where they were due by any corporation upon any property now in the State which belonged to the corporation at the time such taxes should have been properly assessed, the word “now” being used as contemporaneous with the thing to be done, which was the bringing of the back-tax suit. It is manifest from the title of the act, and from the context, that the Legislature did not intend to omit the word “ or ” in the act as amended in 1913, because the amended act provides that suit may be brought in any county in which the corporation owing-such taxes may be found, thereby indicating- that a personal judgment might be rendered against the corporation owing the taxes. It further provides that suit might be broug’ht in any county in which any part of such property might be located.

In such event, a corporation owing- the taxes or any corporation claiming an interest in the property shall be made a defendant, thereby indicating that a subsequent sale of the property should not defeat an action for the recovery of back taxes. The section concludes with a proviso that the act shall be construed as retrospective as well as prospective in operation.

It is a well-settled principle of statutory construction that statutes should receive a common-sense construction, and, where one word has been erroneously used for another, or a word omitted, and the context affords the means of correction, the proper word will be deemed substituted or supplied. This is but making the strict letter of the statute yield to the obvious intent of the Legislature. Lewis’ Sutherland Statutory Construction (2d ed.), vol. 2, pp. 796, 797.

It is the office of judicial construction to supply such omitted words as give effect to the act, if this can be done within the reasonable scope of language used by the Legislature, when read in connection with the purposes of the act. Croze v. St. Mary’s Canal Mineral Land Co., 153 Mich. 363, 117 N. W. 81.

In order to determine whether the omission of a word in an amended act was a mere inadvertence, the prior and subsequent legislation on the same subject may be sought to establish that fact. Hutchins v. Commercial Bank, 91 Va. 68, 20 S. E. 950.

This court, in numerous cases, has announced the same principle as to substitution, elimination or supplying words in conformity to the obvious spirit and purposes of the act in attempting to carry out the obvious intention of the Legislature. Haney v. State, 34 Ark. 263; Bowman v. State, 93 Ark. 168, 129 S. W. 80; and Williams v. State, 99 Ark. 149, 137 S. W. 927, Ann. Cas. 1913A, 1056, and cases cited.

The view that the word “or” was omitted in the amended act of 1913, through inadvertence or clerical mistake is manifest by the reasoning of the court in the case of State v. K. C. Memphis Ry. & Bridge Co., 117 Ark. 606, 174 S. W. 248. In that case the court said that, taking into consideration the origin and history of the legislation on the subject and the language of the different provisions, and particularly of that provision which restricts the operation of the act to property “now in this State,” that is, within the jurisdiction of the courts of the State at the time, it was evident that the statute was intended to afford a complete remedy for the collection of back taxes, and operated retrospectively as well as prospectively, independent of any express declaration to that effect.

It is insisted, however, that the statute does not provide for the collection of back taxes on personal property, but we think that this view is opposed to our later decisions on the subject. In State v. Bodcaw Lumber Co., 128 Ark. 505, 194 S. W. 692, the court expressly held that our back-tax statute refers not only to tangible property omitted from former assessments, but also back taxes omitted from assessments on capital stock of a corporation. The same principle was reaffirmed in State v. Fort Smith Lumber Co., 131 Ark. 40, 198 S. W. 702, where it was held in a back-tax suit that a domestic corporation in returning its capital stock for taxation cannot deduct investments of its surplus in shares of stock in other corporations in this State. In this case an application for a writ of certiorari was denied by the Supreme Court of the United States. Fort Smith Lbr. Co. v. State, 251 U. S. 513, 40 S. Ct. 304.

In the later case of White River Lumber Co. v. State, 175 Ark. 956, 2 S. W. (2d) 25, the court held that the provisions of our back-tax statute act do not entitle the State to personal -judgment against a corporation, en-forcible against its general assets in a suit for back taxes on lands undervalued, but merely authorize the court to find the amount due, declare same a lien on the lands, and order each tract sold for back taxes, unless paid within three months after the decree. The court, however, in its opinion in construing the statute, said that it gave the State a right to enforce its claim for back taxes against any corporation whose property might be of such a character that its payment might be enforced merely by the rendition of a personal judgment. Therefore we are of the opinion that the statute was intended to give the State the right to recover back taxes where there had been a gross undervaluation of the property in the hands of the corporation, whether it was real or personal property.

In this connection, it may be stated that in White River Lumber Co. v. State, 279 U. S. 692, 49 S. Ct. 457, it was held that our back-tax statute is not invalid under the equal protection clause of the Fourteenth Amendment because it is limited to the recovery of such additional taxes on lands of corporations and does not extend to the recovery of such additional taxes on lands of natural persons, which may likewise have been assessed at an -inadequate valuation.

In the case of personal property, which has gone out of existence, the only remedy of the State in the collection of back taxes would be to take a personal judgment against the corporation which should have assessed the property as its owner for the years in which it was omitted or in which there had been a gross undervaluation of it within the meaning of the statute. As we have already seen, where the property was still in existence, a lien might be attached to the property of the corporation which owned it at the time the back-tax suit was brought.

In Weyerhaueser v. Minnesota, 176 U. S. 550, 20 S. Ct. 485, it was said by the court that it agreed with the Supreme Court of the .State of Minnesota that a gross undervaluation of property is within the principle applicable to an entire omission of property. The reason given was that otherwise the power and duty of the Legislature to equalize their burdens might be defeated by the fraud of public officers, perhaps induced by the very property owners who afterwards claimed its illegal advantage. Continuing, the court said that, if an officer omits to assess any property or grossly undervalues it, he violates his duty, and the property and its owners escape their just share of the public burdens.

In construing the back-tax statute of the State of Wisconsin, the Supreme Court of that State, in State v. Pors, 107 Wis. 420, 83 N. W. 706, 51 L. R. A. 917, said that the general purpose of legislation of this class is to provide means for enforcing’ the obligations of corporations to contribute to the existence of government according to the taxable property owned by them whenever they shall have escaped or avoided that obligation. The court also said that this purpose would in a large measure fail, if a disposal, consumption, or removal of personal property after the time when assessments should have been made, prevents its reassessment. The principle at the foundation of these reassessment laws is that the owner of property is under obligation to the State to pay a sum in taxes in proportion to other taxed property. This case was cited with approval in Cooley on Taxation, (4th ed.) vol. 1, § 59.

In summing up, it may be said that our statute provides for the collection of back taxes on personal property by personal judgment against the corporation which owned it at the time it was omitted from taxation or was so grossly undervalued as to amount to an evasion of taxation; or if such property had gone into the hands of a subsequent purchaser, he might be made a party to the action, and the lien of the State enforced against the property itself.

In the application of these principles of law to the present ease, it may be said that the court properly held that the suit against the Paepcke Corporation should be dismissed for want of jurisdiction. It is true that, under the allegations of the complaint, back taxes for the years 1927 to 1930 are sought to be recovered, and that the Paepcke Corporation owned such property for at least one year during said period of time, but it is equally true from the allegations of the complaint that the Paepcke Corporation is a foreign corporation and is not now doing business in the State. The act expressly provides for the collection of back taxes in any county in which the corporation owing such taxes may be found. In this connection, we quote from the complaint the particular allegations on this point: .

“The defendant, Chicago Mill & Lumber Corporation, is a foreign corporation organized and existing under the laws of the State of Delaware, said company having been incorporated on October 19, 1928, and is authorized to do business in Arkansas. The Chicago Mill & Lumber Company was organized prior to the year 1926, under the laws of the State of Illinois. On October 23, 1928, said company changed its name to Paepcke Corporation,” and on February 26, 1929, the Paepcke Corporation filed with the Secretary of State of the State of Arkansas a certificate of withdrawal from this State. Neither the Chicago Mill & Lumber Company nor the Paepcke Corporation is authorized to do business in Arkansas, and neither of said companies has designated an agent in Arkansas upon whom service of process can be made, although the said Paepcke Corporation is doing business in the State,
“The capital stock of the said Chicago Mill & Lumber Corporation and Paepcke Corporation is, and has always been, owned by the same stockholders, and the business of said companies is conducted by the same individuals constituting the board of directors of said companies. Plaintiff is informed and believes, and therefore alleges, that the said Chicago Mill & Lumber Company (now Paepcke Corporation) owned the machinery and stock of lumber hereinafter referred to at West Helena and Blytheville until the incorporation of the Chicago Mill & Lumber Corporation-on October 19, 1928, and that since that date the latter company has owned said properties.”

It will be noticed that the complaint specifically alleges that the Paepcke Corporation, on February 26, 1929, filed with the Secretary of State a certificate of withdrawal from this State, and that it is not authorized to do business in the State of Arkansas. Hence, under the very terms of the act, it is not subject to be sued for back taxes because it is not found within the State in the construction of the act.

In the next place, it is essential to the maintenance of a suit in personam against a foreign corporation that the corporation be subject to the jurisdiction of the courts of the State in which the suit is brought, or that it consent to the jurisdiction. 14A, C. J., p. 1368.

In St. Louis, S. W. Ry. Co. of Texas v. Alexander, 227 U. S. 218, 33 S. Ct. 245, it was held that, in order to hold a corporation personally liable in a foreign jurisdiction, it must appear that the corporation was within the jurisdiction, and that process was duly served on one of its authorized agents. Numerous other decisions of the Supreme Court of the United States to this effect are cited in a case note to 14A C. J. p-. 1368.

In our view of the matter, it does not make any difference what caused the Paepcke Corporation to withdraw from the State. Under the allegations of the complaint itself, it is a foreign corporation, and is not authorized to do business in this State. Neither does it have an agent in this State upon whom service of process can be made. Therefore, under the allegations of the complaint itself, we think the court was without jurisdiction to render a personal judgment against the Paepcke Corporation, and properly so held. It will he noted that the corporation did not enter its appearance to the action, but moved to quash the service of summons upon it for the reason that it was a foreign corporation and appeared for no other purpose.

The case against the Chicago Mill & Lumber Corporation stands upon a different footing. According to the allegations of the complaint, which are admitted by the demurrer, the Chicago Mill & Lumber Corporation was organized under the laws of the State of Delaware on October 19, 1928, and was authorized to do business in the State of Arkansas. It does not make any difference that its capital stock and that of the Paepcke Corporation have always been owned by the same stockholders, and that the business of said companies is conducted by the same individuals, constituting a board of directors of said company. Under the allegations of the complaint, the Paepcke Corporation was organized in the State of Illinois, and the Chicago Mill & Lumber Corporation was organized under the laws of the State of Delaware, and the courts of this State would have no jurisdiction in this suit to inquire into the reason for the organization of these corporations. As we have construed our back tax statute, no personal judgment can be rendered against a corporation except for the years it has omitted or underassessed its own property. It can not he made liable for the failure in this respect of another corporation to whose property it has succeeded. In such cases relief can only he had by proceeding against such property of the defunct corporation as now may be in existence in this State.

Acording to the allegations of the complaint, the Chicago Mill & Lumber Corporation, which was organized under the laws of the State of Delaware on October 19, 1928, has since that date owned the property which formerly belonged to the Paepcke Corporation. The Attorney General has sued to recover back taxes against it for the years 1927 to 1930, both inclusive. Under the principles of law above announced, it could not do this; but could only recover back taxes for undervaluations for the time during which the Chicago Mill & Lumber Corporation controlled the property, which, under the allegations of the complaint, was for the years 1929 and 1930.

The court properly held that the Chicago Mill & Lumber Corporation could not be proceeded against personally for gross undervaluations made by any other corporation, and that it might be made a party to a suit for undervaluations for such other corporations, provided the complaint alleged that such property was still in existence in this State. In that event the property itself might be proceeded against for the collection of the back taxes, although it was in the hands of the Chicago Mill & Lumber Corporation. The court erred, however, in holding- that a personal judgment could not be rendered against the Chicago Mill & Lumber Corporation for undervaluation of its property in assessments during the years 1929 and 1930.

The record, shows that the Chicago Mill & Lumber Corporation has complied with our statutes relative to foreign corporations doing business in this State; that its principal office is maintained in "West Helena, Phillips County, Arkansas; that said office is in charge of P. W. Schatz, vice-president and general manager, who is the legally designated agent for service of process. Section 1151 of Crawford & Moses’ Digest provides that, where the defendant is a foreign corporation having* an agent in this State, the service may be upon such agent. Section 1826 of the Digest, which is a part of our act prescribing- the terms upon which foreign corporations may do business in this State, provides, among other things, that such corporation shall designate its general office or place of business in the State, and shall name an agent upon whom process may he served. Section 10,204 of the Digest, which is a part of our hack-tax statute, provides that the suit may he brought in any county in which the corporation owing such taxes may be found. Therefore we are of the opinion that, for all back taxes owed by the Chicago Mill & Lumber Corporation, it was properly sued in Phillips County.

As the pleadings now stand, it could not be made a party defendant, as having in its hands property which another corporation had failed to properly assess for-certain years, for the reason that it is not alleged in the complaint that such property is still in existence in this State. It will be noted that the act provides that suit may be brought in any county in which the corporation owing such taxes may be found, or in any county in which any part of such property may be found or may be situated.

For the errors indicated, the decree will be reversed, and the cause will be remanded for further proceedings in accordance with the principles of equity, and not inconsistent with this opinion.

(Butler, J.

(dissenting). I respectfully dissent from that part of the opinion of the majority in which the following statement is made: “The court properly held that the Chicago Mill & Lumber Corporation could not be proceeded against personally for gross undervaluation -made by any other corporation.”

I am of the opinion that the allegations of the complaint, if established by proof, entitled a recovery against the Chicago -Mill ■& Lumber Corporation for back taxes for gross undervaluation made by the Paepoke Corporation for the years 1927 and 1928, for the reason that these allegations, if established, show a mere reorganization both in law and in fact, and that the corporations were in no wise changed except in name.

I am authorized to state that Justices Humphreys and Mehaeey agree with me in this dissent.


author: Humphreys, J.

text:
    Missouri Pacific Railroad Company v. Kirten Gravel Company.
    Opinion delivered December 21, 1931.

      R. E. Wiley and Henry Donham, for appellant.

      Rose, Hemmgtvay, Cantrell >& Loughborough and J. W. Barron, for appellee.
   Humphreys, J.

This is a suit for double damages in the sum of $3,000 sounding in tort by appellee against appellant, a common carrier, for discrimination between appellee and its competitors, similarly situated and doing business under like conditions, by allowing said competitors rebates or absorptions of $2.50 per car on intrastate shipments of gravel from their respective pits for switching cars to and from their pits to the track of appellant, and refusing to allow it like rebates or absorptions on cars shipped from its pit for similar services rendered by it, in violation of §§ 848, 849, and 1007, of Crawford & Moses’ Digest, and § 917 as amended by act No. 513, approved March 26,1921. The suit was brought in the circuit court of Pulaski County, and the issues joined by tbe pleadings were whether the circuit court had jurisdiction of the cause of action, and, if so, whether appellee and its competitors were similarly situated and doing business under like conditions, and whether the rebates or absorptions allowed its competitors were for substantially the same services rendered by appellee to appellant, and, if so, whether the cause of action was barred by the one year statute of limitations.

It is contended by appellant that the circuit court had no jurisdiction of the action because the rebates it paid to appellee’s competitors were fixed by the Railroad Commission for services rendered it in switching their cars to and from their respective pits to the tracks of appellant, and that appellee’s remedy, if it had any, was to apply to the Railroad Commission for a cancellation of the order allowing its competitors the rebate or absorptions. This might be true if the suit were an attack upon the allowance or the reasonableness of the allowance for services rendered to appellant by its competitors. The suit presupposes the reasonableness of the allowance for the services thus rendered, and alleges that the refusal to allow it like rebates or absorptions is an unlawful discrimination under the statutes of this State. The question at issue is judicial and not administrative, and is therefore one for determination by the courts, and not by the Railroad Commission. The authority to award reparations for unlawful discriminations of common carriers between shippers has not been conferred upon the Railroad Commission by the Arkansas Legislature as was done by Congress upon the Interstate Commerce Commission. For this reason, the authorities cited by appellant are not in point.

It is also contended that the circuit court had no jurisdiction of this action because the damages sought to be recovered for unlawful discrimination were $2.50 on each car and not sufficient in amount to be originally brought in the circuit court. The suit was for actual damages in the sum of $1,500 and double damages under the statute for unlawful discrimination covering a certain period of time, and constituted one action. The damages claimed exceeded $100' and were within the jurisdiction of the circuit court. This identical point was adjudged against appellant’s contention in the case of Cohn v. St. L., I. M. & S. R. Co., 181 Mo. 30, 79 S. W. 961.

It is also contended by appellant that the trial court both improperly and incorrectly. submitted the issues of whether appellee and its competitors were similarly situated, and conducted their business under like conditions; and whether appellee performed substantially the same services as its competitors in switching cars to and from the pits to appellant’s main line or shipping point. Appellant argues that it was improper to submit these issues because the undisputed testimony reflects that the situations and business conditions, as well as the services performed by appellee, were different from those of its competitors. We have carefully read the evidence and find it conflicting, and for this reason think it was properly sent to the jury to determine the issues of fact. Appellant argues that the instructions were incorrect in many particulars, but, after a very careful examination of them, we think they correctly charged the law applicable to the facts, and fully present the respective theories of both appellee and appellant. We are unable to see that it could serve any useful purpose to set out the substance of the testimony of each witness and the instructions given and refused.

Appellant also contends that the action of appellee for double damages was barred because not prayed for until more than one year after its action accrued. It is true that appellee did not specifically pray for double damages on account of unlawful discrimination until February 4, 1931, more than a year after its action accrued, and then by amendment to the original complaint; but the original complaint itself alleged the similarity of conditions prevailing at the plant of appellee and its competitors, the absorption allowed the competitors for services similar to those rendered by appellee to appellant, the duty of appellant to make it a similar allowance, its refusal to do so, together with a prayer for damages, which brought it within the statute allowing double damages to the shipper who had been discriminated against through the process of rebates. The original suit was instituted within a year from the time appellee’s action accrued.

Since appellee was entitled to double damages for a violation of the statute, the court correctly allowed appellee’s attorney a fee under § 851 of Crawford & Moses’ Digest.

No error appearing, the judgment is affirmed.