author: Wood, J.

text:
    Stacy v. Stacy.
    Opinion delivered December 12, 1927.
    1. Witnesses — competency of wife as witness. — In an action by a husband to quiet title, where the pleadings, depositions and decree show that his wife was treated as a party plaintiff, she was competent as a witness, though there was no formal order entered of record making her a party.
    2. Quieting title — necessary parties.. — Where the deposition of a plaintiff in an action to quiet title showed that his wife owned a half interest in the purchase money of the land in controversy, she was a necessary party, and making her a party plaintiff did not substantially change the cause of action.
    3. Trusts — evidence.—An allegation that plaintiff’s son purchased the land in controversy in his own name, and that plaintiff furnished the cash payment and became liable for deferred payments with the understanding that the son should hold the legal title for plaintiff’s use and benefit, held to justify the introduction of testimony to prove either an express or an implied trust.
    4. Trusts — establishment of express trust. — To establish an express trust, it is necessary to show that, before or at the time land was purchased, the one holding title executed and delivered some writing declaring that he held it in trust.
    5. Trusts — proof of implied trust. — The term “implied trust” includes resulting trusts and trusts ex maleficio or constructive trusts, and arises or results by implication of law, and may be proved by oral testimony, under Crawford & Moses’ Dig., § 4868.
    6. Trusts — resulting trusts defined. — Resulting trusts arise where the legal estate is disposed of or acquired, not fraudulently or in violation of any fiduciary duty, but where the intent appears or is inferred or assumed from the terms of the disposition, or from the accompanying facts and circumstances, that the beneficial interest is not to go with the legal title.
    7. .Trusts — when constructive trust not established. — Where a son acquired property in his own name, using his father’s money, but expressly recognized that his' father was entitled to a quitclaim deed, no constructive trust arises.
    8. Trusts — proof of resulting trust. — While it is necessary that proof to establish a resulting trust should be clear, satisfactory and convincing, it is not essential that it be undisputed.
    9. Trusts — when resulting trust established. — In order to constitute a resulting trust, the purchase money or a specified part of it must be paid by another or secured by another at the time or previous to the purchase, and must' be a part of that transaction.
    10. Trusts — sufficiency of evidence. — Evidence held sufficient to support a finding that parents, by advancing the purchase price of land and allowing the son to take title, did not intend the gift by way of advancement, but that a resulting trust in their favor should be created.
    11. Descent and distribution — effect of advancement. — Advancement, which is a gift by the parent to a child in anticipation of what the child will be entitled to on parent’s death, is an irrevocable gift.
    12. Descent and distribution — presumption of advancement.— Purchase of land by father and mother and direction by them that deed should be made in the name of the son, held to raise a presumption of advancement.
    13. Estoppel — evidence.—In a suit to quiet title to land, evidence held not to establish that parents were estopped from showing that their son held land for them as a resulting trust.
    Appeal from Crittenden Chancery Court; J. M. Futrell, Chancellor;
    affirmed.

      L. Neill Reed, for appellant.

      Davis, Costen & Wallace, for appellee.
   Wood, J.

This is an action by E. A. Stacy and his wife, Lizzie Harvey Stacy, against Zoe D. Stacy, widow of John Latham Stacy, John Latham Stacy, Jr., Rose Elizabeth Stacy, Jean Stacy and Allen Dodson Stacy,' minor children of John Latham and Zoe D. Stacy. John Latham Stacy hereafter, for convenience, will be referred to as J. L. Stacy. It is alleged, in substance, in the complaint that E. A. Stacy and wife are parents of J. L. Stacy, deceased; that J. L. Stacy purchased in his own name a certain tract of land in Crittenden County, described in the complaint, consisting of about one hundred' acre®; that the purchase money to make the cash payments was furnished by the plaintiffs, and they became liable also for the deferred payments; that it was the understanding between them and J. L. Stacy, their son, that he should' hold the legal title to the property for the use and benefit of the plaintiffs; that neither the purchase money nor the land was intended as a gift or advancement to their son, J. L. Stacy. The prayer of the complaint was that the defendants be declared to hold the legal title in trust for the plaintiffs and that plaintiffs’ title be quieted as against the defendants.

All of the material allegations of the complaint which the defendants desired to controvert were denied, and properly put in issue by answers filed for the defendants. Mrs. Zoe D. Stacy, the widow, admitted the purchase by her husband of the lands in controversy, but denied that the plaintiffs furnished the cash payments and that they became liable for the further payments on the land. She denied that any money furnished by the plaintiffs to her husband, J. L. Stacy, was not intended as a gift or advancement. She alleged that, by the death of her husband, she was entitled to dower and homestead in the lands in controversy, and that their minor children were seized in fee of the lands in controversy, subject to her dower and homestead rights. By way of cross-complaint the defendants alleged that plaintiffs had converted the rents and profits of the lands for the years 1924 and 1925, and they prayed for all proper relief.

E. A. Stacy testified, in substance, that he lived at Piedmont, California, and also at Dell, Arkansas. His occupation had been that of a planter. He was the father of John Stacy, deceased, who died in March, 1924, leaving surviving him his widow and the minor children named, his only heirs at law, the defendants herein. The oldest of the children was born in 1916 or 1917 and the others about one year apart thereafter. On February 6, 1922, J. L. Stacy entered into a contract with Mrs. Shell Gleason for the purchase of her homestead and dower interest in the lands in controversy, by the terms of which Stacy was to pay Mrs. Gleason $300 cash as earnest money and the further sum of $1,000 in the event that he 'succeeded in purchasing at a probate sale the interest of the two minor heirs of Shell Gleason, for which he was to pay a Btun not in excess of $5,000. If he succeeded in making the purchase at the probate sale he was to execute his note in the sum of $700, balance of the purchase money, to Mrs. Shell Gleason, payable December 1, 1922, at six per cent, per annum from date. In the event Stacy failed to make the purchase at the probate sale, he was to have the rental of the property for the year 1922 in consideration of the earnest money already paid. That contract was the beginning of the negotiations which afterwards resulted in the consummation of the purchase of the lands, in controversy by J. L. Stacy. Witness had sold the Green River place belonging to his wife, consisting of about 900 acres, to one Jennings, and was living in Piedmont, California. His son, Latham, continued to superintend the River place for Jennings. As soon as his son informed witness that Gleason had died and the Gleason place would have to be sold, witness suggested to his son that this was the place witness wanted, because it would be a good harbor for them from the River place in case of overflow, as this Gleason land, consisting of about 100 acres, was behind the levee. Witness instructed his son. to begin negotiations for the purchase of it at once, and the above contract with Mrs. Gleason was the line adopted by his son for the purchase. Witness’ suggestion to purchase the place came from witness, as witness was to supply the money. His son did not have any money. Witness furnished the money to pay Mrs. Gleason. The sale was afterwards made to J. L. Stacy, witness paying the necessary money. Witness paid both the money that went to Mrs. Gleason and also the other part of the purchase money. His son, J. L. Stacy, would advise witness of the amounts owing, and witness would pay the same through his son. "Witness sent checks, and they came hack canceled. When witness bought the land through his son, the deed was taken in J. L. Stacy’s name because it was the purpose of witness and his wife to give their -son, J. L. Stacy, when witness died, that part of the estate known as the Green River place. They wanted to give J. L. Stacy that place because it would afford him a substantial income for the support of his large and growing family. Witness did not know how long his son would work for Jennings, and it was time for him to be embarking in some enterprise of his own and getting a start in life. That is the reason why witness had spent $7,000 through his son, J. L. Stacy, in an effort to clear up the River place. When Gleason died, witness saw the opportunity of acquiring the land in controversy, and he took up the purchase thereof through his son and ‘£ put the thing in his name that he might have the chance of setting out in life, ’ ’ with that place in view. However, nothing at all was ever said about giving him that place before witness and his wife died. They had no idea of dividing their estate before death. They wanted him to have that place as a part of their inheritance at their death. They expected to leave him that in their wills, and wanted to make it as productive as possible when they left it. The place was bought for the estate of witness and wife. Witness and his wife each owned one-half of the purchase money that was furnished to purchase the place. Witness acted as his wife’s agent in making the purchase. J. L. Stacy held the particular tract of land in controversy in trust for the use and benefit of witness and wife. J. L. Stacy offered by letter to convey the land. Witness received a letter from his son, J. L. Stacy, to the effect that he would make witness a deed. That letter was thrown away, witness, having no idea at the time that this controversy would arise. In the fall before J. L. Stacy died he visited witness and his mother in California. At that time, after recounting his' discouragements - under which he had labored in getting* a start, lie wanted to turn back the Green Elver place and all the other property he had been handling since witness left for California, including* the Gleason property. Witness encouraged his son to go back, telling him that everything would turn out all right; thajt witness would hack him and give him a chance. His son went back very much relieved, and told witness that he was ready to resume his work. At the time the purchase was made of the land in controversy, witness had an understanding with his son that the title should go in the name of his son, J. L. Stacy, but that the property should inure to the benefit of witness and his wife. Witness was not giving away his property during his lifetime. He had no idea of doing that, and often so stated to his boys. All proceeds from the Gleason place and the River place were managed in the same way by witness’ son. When a final account was made for the year the whole place was included in it. Witness just let his boys use the money for both places.

Further along in his testimony witness stated that it was an express agreement between himself and son, J. L. Stacy, that the latter should hold the land in controversy in trust for witness; that agreement was not in writing, but grew out of the relation between the eldest son and his father trying to help his son start in life without giving him his property before his death. At one time, as shown by a letter to his mother, he wanted to quitclaim the particular property in controversy to witness, but witness told him to keep it; and then, at the time when he was in extreme difficulty, he wanted to turn it all back, as witness, presumed, because he did not want the estate to be jeopardized. Witness did not accept it. The son, J. L. Stacy, paid all the taxes and interest up to the time of his death.

On being recalled, witness further testified that when his son, J. L. Stacy, made a 'contract with Mrs. Gleason to purchase her dower interest in the property, he wired his son to purchase all of the interest; Witness paid on the purchase .price the sum of $3,000. Besides this, he introduced three cheeks amounting to $1,400. If witness paid any other money on that place he did not have record of it, hut he instructed his son to put it in a farm loan. The balance due of thirty-odd hundred dollars came due in October or November, 1922, and J. L. Stacy consummated the loan on December 1,1922, and witness was ■sure that he applied that money on the payment of the purchase price, because that was witness’ instruction. A deed from W. B. Rhodes, curator of the minor children of Gleason, was introduced, showing that the lands were purchased from the curator for the total consideration of $5,000, $1,683.34 in cash, and the balance due October 15, 1922, evidenced by note.

-Mrs. Lizzie Harvey Stacy testified that she was named as one of the plaintiffs in the cause, .and was the wife of E. A. Stacy, the other plaintiff, and the mother of J. L. Stacy, deceased. She lives at Piedmont, California. She identified a. letter which she received from her son, J. L.. Stacy, about June 2, 1923, written from Dell, Arkansas. She stated that she owned a half Interest in the lands in controversy. Her son, J. L. Stacy, bought it for his father and witness. Witness knew that J. L. Stacy wrote to his father in regard to buying the place for them. The place was bought by J. L. Stacy through the instructions of her husband, E. A. Stacy, Sr. It was not the intention of witness or E. A. Stacy, Sr., to permit J. L. Stacy to keep the place for himself, and J. L. Stacy did not invest his own money in it. Witness and her son, J. L. Stacy, did not consider-that the Gleason place belonged to J. L. Stacy. The letter which witness identified was introduced in evidence. It is too long and would unduly extend this opinion to set it forth, and we deem it unnecessary to do so. That portion of the letter relevant here is the following-excerpt: “When I bought the Gleason place, I wrote Father that, while I was buying in my name, I would make out a quitclaim deed to him, just as soon as the sale was cleared up. He wrote me back to keep it in my name, and since that time I have invested some of my own money in it. In case he should want his money out of that, with interest, I feel confident that I could sell it tomorrow and get it for him.”

The trial court found that the land in controversy was purchased with the funds of plaintiffs by J. L. Stacy and that the legal title was taken in the name of J. L. Stacy; that the beneficial title to the land belongs to the plaintiffs, who paid the consideration therefor. The court thereupon entered its decree divesting the defendants of all right, title and interest in the land, and vesting* the same in the plaintiffs. From that decree is this appeal.

1. It is first contended by learned counsel for appellants that Mrs. Lizzié Harvey Stacy is not a party to this action, and that her testimony was therefore incompetent, and that the letter above mentioned, which she identified and which' was introduced in evidence, was also incompetent. There is no merit in this contention. The transcript of the record wherein the pleadings are set forth contains a pleading which was filed by the clerk of the chancery court of Crittenden County, February 10, 1926, which is as follows:

“Come now the plaintiffs, and would respectfully show to the court that Lizzie Harvey Stacy is the owner of an undivided one-half interest in and to the property described in the original complaint filed herein by E. A. Stacy, Sr.; that the plaintiff, E. A. Stacy, Sr., as the agent of said Lizzie Harvey Stacy, managed and controlled her interest and the money with which the interest in said land was purchased, and in fact carried on all the negotiations, in so far as same pertained to the interest of the plaintiff, Lizzie Harvey Stacy, and the plaintiff, Lizzie Harvey Stacy, hereby adopts the original complaint filed by plaintiff, E. A. Stacy, Sr., as her complaint. The plaintiff, E. A. Stacy, Sr., by leave of court first had and obtained, amends his original complaint herein filed by making Lizzie Harvey Stacy a party thereto.”

The record shows that, on the 9th day of January, 1926, the deposition of E. A. Stacy, Sr., was taken by consent. While the original deposition appears to have been taken on that day by agreement of counsel for all the parties, the certificate of the notary shows that thereafter, on the 2d day of March, 1926, certain exhibits called for by certain questions in the original deposition were added to the deposition. Thereafter, on the 8th of March, 1926, the deposition of Mrs. E. A. Stacy was likewise taken by agreement of all the parties. These depositions were styled “E. A. Stacy, Sr., and Lizzie Harvey Stacy, plaintiffs, v. Zoe D. Stacy, John Latham Stacy, Jr., Rose Elizabeth Stacy, Jean Stacy and Allen Dodson Stacy, defendants,” and were filed in that cause on October 18, 1926. ' The decree is styled in the same manner as the depositions, and it recites that the cause came on to be heard at the October term of the court, plaintiffs being present by their attorney, and defendants being present by their respective attorneys. While there was no formal order entered of record showing that Mrs. Lizzie Harvey Stacy was made a party plaintiff, yet the above record entries clearly show that the court and the parties treated her as a party plaintiff. These entries are ás conclusive of the fact that the original complaint was amended to make her a party plaintiff and that she adopted the original allegations of the complaint in asking the relief prayed therein as if there had been a record entry showing a formal order of the court making her a party plaintiff. Such formal order was not essential to her becoming a party plaintiff in the cause when the orders and recitals of the record show that she did, in fact, by consent'of the court and parties, become a party plaintiff. After the deposition of E. A. Stacy, Sr., disclosed the fact that his wife owned a half interest in the purchase money, which, according to his testimony, was furnished to J. L. Stacy to purchase the land in controversy, it was essential that she be made a party, and the court and the parties very properly treated her as one of the necessary parties plaintiff to the action. See §§ 1089, 1101, 1102, and 1239, C. & M. Digest. The making of her a party plaintiff did not change substantially the cause of action, but only icon-firmed the facts proved. See § 1239, C. & M. Digest; also Bloom v. Home Insurance Agency, 91 Ark. 367, 121 S. W. 293; Rucker v. Martin, 94 Ark. 365, 126 S. W. 1062; Citizens’ Fire Ins. Co. v. Lord, 100 Ark. 212, 139 S. W. 1114; Oak Leaf Mill Co. v. Cooper, 103 Ark. 79, 146 S. W. 130. Since Mrs. Stacy was a party plaintiff, her testimony was competent, and likewise the letter from J. L. Stacy to her concerning the purchase of the land in controversy.

2. The complaint alleged that J. L. Stacy purchased the land in controversy- in his own name and that E. A. Stacy, Sr., furnished the cash payment and became liable for the deferred payments, with the understanding* that J. L. -Stacy should hold the legal title to the property for the use and benefit of E. A. Stacy, Sr. The above allegation would justify the introduction of testimony to prove either an express or an implied trust. To establish an express trust it was necessary for the appellees to show that J. L. Stacy, before or at the time he purchased the property, and before or at the time the deed thereto was executed and delivered to- him, had executed some writing declaring that he held the property in trust for the appellees. This the appellees have wholly failed to do.

Our statute, § 4867 of O. & M. Digest, provides: “All declarations or creations of trusts or confidences of any lands or tenements shall be manifested and proved by some writing signed by the party who is or shall be by law enabled to declare such trusts, or by his last will in writing, or else they shall be void,” etc. We find no proof whatever in the record of an express trust.

The next question is whether or not the appellees have proved that J. L. Stacy held the land in controversy under an implied trust, which term includes constructive trusts, or trusts ex maleficio, and resulting trusts. These implied trusts, which arise or result by implication of law, may be proved by oral testimony. Section 4868, C. & M. Digest; Bray v. Timms, 162 Ark. 247, 271 and 272, 258 S. W. 338. In the above case, at page 271, we approved Mr. Pomeroy’s definition of a resulting trust as follows:

“Resulting trusts arise where the legal estate is disposed of or acquired, not fraudulently or in the violation of any fiduciary duty, hut the intent, in theory of equity, appears or is inferred or assumed from the terms of the disposition, or from the accompanying facts and circumstances, that the beneficial interest is not to go with the legal title. In such case a trust results in favor of the person for whom the equitable interest is thus assumed to have been intended, and whom equity deems to be the real owner.”

And on page 274 (258 S. W. 346) we further said, quoting from the learned author: “Second well-settled and even common form of trusts ex maleficio occurs whenever a person acquires the legal title to land or other property by means of an intentionally false and fraudulent verbal promise to hold the same for a certain specified purpose, as, for example, the promise to convey the land to a designated individual, or to reconvey it to the grantor, and the like, and, having thus fraudulently obtained the title, he retains, uses, and claims the property as absolutely his own, so that the whole transaction by means of which the ownership is obtained is in fact a scheme of actual deceit. Equity regards such a person as holding the property charged with a constructive trust, and will compel him to fulfill the trust by conveying according to his engagement. ’ ’

Now, the excerpt from the letter which we have set forth shows conclusively that J. L. Stacy, in buying the property in his own name, did not do so with the intention of holding the same against the appellees; but, on the contrary, he expressly recognized that his father was entitled to a quitclaim deed to the property. At no time prior to his death did J. L. Stacy express any desire or' intention to hold the property against his father’s wishes. Therefore we would not be warranted, under any view of the evidence, in concluding that J. L. Stacy was holding the property as a trustee ex maleficio. The proof exonerates him entirely from even the slightest imputation of fraud in acquiring the property in his own name instead of that of his father.

Having reached the conclusion that there is no testimony to establish an express trust and none to establish a constructive trust, the only remaining question is whether or not the appellees have established a resulting trust in their favor to- the land in controversy. In Murchison v. Murchison, 156 Ark. 403-407, 246 S. W. 499, 500, we said: “While it is necessary that the proof to establish a resulting trust should be clear, satisfactory and convincing, it is- not essential that it be undisputed. ’ ’ In Reaves v. Reaves, 165 Ark. 505, 264 S. W. 979, we held, quoting syllabus: “In order to constitute a resulting trust, the purchase money or a specified part of it must be paid by another, or secured by another at the same time or previously to the purchase, and must be a part of that transaction.”

We'have set forth all the salient features of the testimony, and it could serve no useful purpose to review the same in detail, by way. of argument, to sustain the conclusion reached. Let it 'Suffice to say we are convinced that the only reasonable conclusion that can be drawn from the testimony is that J. L. Stacy purchased the land in controversy under the direction, and acting as the agent, of his father and mother; they furnished the money to make -the necessary original cash payment of the purchase price, and the place itself was mortgaged for the balance of the purchase money. The negotiations were conducted through J. L. Stacy because he was on the ground and they were in California, and the contract for the deed and purchase were made in his name because of convenience, and because it was their purpose that the property in -controversy, together with 900 acres, designated as the “River Place,” should go to J. L. Stacy by will, or inheritance, as his part of their estate. A1Í this is fully and clearly explained by the testimony of E. A. Stacy, Sr. The excerpt from the letter of J. L. 'Stacy to his mother concerning the purchase corroborates the testimony of his father, and, it occurs to us, shows conclusively that, when he purchased the property in controversy, he did so for his father and mother.

In Holland v. Bonner, 142 Ark. 214-222, 218 S. W. 665, 667, 26 A. L. R. 1101, we said: “An advancement is a gift by a parent to a child in anticipation of that which it is supposed the child will be entitled to on the death of the parent. The question as to whether or not a conveyance or transfer of money or property is regarded as a simple gift, or advancement, or a sale, is to be determined by the intention of the parent. The question as to what was the intention is generally purely one of fact to be ascertained from the circumstances of the transaction. The donor’s intention is the controlling principle, and, if it can be said from all the circumstances surrounding a particular ease that the parent intended a transfer of property to a child to represent a portion of the child’s supposed share in the parent’s estate, such transfer will be treated in law as an advancement. Conversely, if it appears that the ancestor intended that a gift to his child should not be treated as an advancement, such intention will prevail.” See authorities there cited.

“A complete advancement is an irrevocable gift, and once it has been made the donor has no right or power to revoke the same.” -1 R. O. L. § 1, page 653; § 29, page 672.

Now, at the time the deed was executed to the land in controversy the same evidenced either a gift outright or a gift by way of advancement to J. L. Stacy. Although the appellees may not have known at the time the deed was executed that title was being taken in the name of J. L. Stacy, yet they were afterwards informed thereof, as appears from J. L. Stacy’s letter to his mother, and, when he proposed to make a quitclaim deed to his father, he was told by his father to keep the title in his name. Therefore the transaction was tantamount to a purchase of the land by E. A. Stacy and wife and direction by them that the deed should be made in the name of J. L. Stacy. The purchase, under these circumstances, raised the presumption of an advancement. Robinson v. Robinson, 45 Ark. 481; Bogey v. Roberts, 48 Ark. 17, 2 S. W. 186, 3 Am. St. Rep. 211; Chambers v. Michael, 71 Ark. 374, 74 S. W. 516; Poole v. Oliver, 89 Ark. 580, 117 S. W. 747; Doyle v. Davis, 127 Ark. 302, 192 S. W. 229. But it occurs to us that this presumption is overcome by the undisputed proof in this case of facts existing before and at the time of the execution of the deed and so soon thereafter as to form a part of the transaction, which facts show that it was not the intention of the parents to give their son, J. L. Stacy, an absolute title to the property in controversy by way of advancement. The only proof in the recoiA is by the testimony of the parents and the excerpt from the letter of J. L. Stacy to his mother. B'ottomed alone upen this,, as already stated, it seems to us it is impossible to escape the conclusion that the deed to the land in controversy was intended by the parents not as a gift by way of advancement to their son, but as creating a resulting trust to him for their benefit. It is clear beyond reasonable controversy, we believe, that it was not the intention of Mr. and Mrs. Stacy to place the irrevocable title to the Grleason place, the land in controversy, in their son, J. L. Stacy, any more than it was their intention to so place the River place. It was their intention that he should have the Grleason place and also the River place by way of a will, or inheritance, but not as an irrevocable gift during their lifetime. J. L. Stacy himself, in the excerpt from his letter to his mother, clearly recognized the fact that his parents would be entitled to a quitclaim deed from him to the land in controversy at that' time. And that is certainly the only conclusion to be reached from the testimony of his parents.

3. The appellants contend that the appellees are estopped from maintaining the action. But neither- the pleadings nor proof justify this contention. The appellants predicate this contention upon the statement contained in tlie letter of J. L. Stacy to his mother, to the effect that, after writing his father that he would make a quitclaim deed to him as soon as the sale was cleared up, his fathetr replied, telling him to keep the place in his name, and that, since that time, he had invested some of his own money in the place. This testimony is entirely too indefinite and uncertain to warrant the court in declaring that the appellees are estopped from maintaining their action. There is nothing to show the amount of money J. L. Stacy spent, and nothing to show that it was spent in the belief that his parents had made him an irrevocable gift of the place' in controversy; and nothing to show that whatever money he did spend on the Gleason place was with the assurance from them that the place was his own. The fact that he stated that he was ready to .sell the place if his father wanted his money tends strongly to prove that he recognized his parents’ right to the beneficial control of the property, and that he was ready to sell if they so desired.

The decree is therefore correct, and it is affirmed.


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    Poinsett Lumber & Manufacturing Company v. Duncan.
    Opinion delivered December 12, 1927.
    1. Appeal and error — conclusiyeness of verdict. — The jury’s finding that an employee’s injury resulted from the negligence of an employer, held supported by evidence.
    2. Master and servant — assumed risk. — Where an employee of a lumber and manufacturing company was injured at his work by falling over broken pieces of veneering, which it was the duty of another employee to remove, the risk was not one that was assumed by the injured employee.
    Appeal from Crittenden Circuit Court; G. E. Keck, Judge;
    affirmed.

      N. F. Lamb, for appellant.

      ■T. II. Caraway and C. T. Carpenter, for appellee.
   Smith, J.

Appellee recovered judgment in the court below for damages to compensate an injury which he sustained while employed by the appellant lumber and manufacturing company, a corporation, hereinafter referred to as the company.

At the time of appellee’s injury he was working at a veneering machine, and his injury, according to the testimony offered in his behalf, was occasioned in the following manner. Bolts, which had been previously “steamed,” were placed upon a revolving lathe, and, as the lathe turned, the bolts were cut into strips 3/16 of an inch thick, and it was the duty of appellee anda fellow-servant named McCullough to carry these strips from the lathe down a table adjacent to the lathe, and, when the strips had been cut to the desired length, another employee broke the strip by striking it with a stick, and the strip was then spread out its full length on the table. In spreading the strip of veneering on the table it was necessary for the employee carrying it to walk backward from the lathe towards the end of the table, the speed ■at which he walked being measured by the rapidity with which the lathe revolved. When one strip of veneering was placed in position the next strip cut was placed on top of it, and a pile of veneering was thus accumulated, and as the employee carried each strip he walked on top of this pile. As the employee was compelled to walk backward in carrying the strip, it was not possible or practicable for him to look back as he walked, and he would not therefore know whether any knots or slivers from the veneering had fallen in his path from the preceding piece of veneering placed in position by his fellow-servant. He could observe the strip he was carrying, and. if hcsaw a knot or sliv.er on that piece it was his duty to remove it, so that the path of the employee carrying the next strip would be clear. It was necessary to do this to prevent the thin strips from buckling, and for the protection of the men 'carrying the strips, as the testimony showed that these strips were very slick, and it was dangerous to step on a S'liveir or knot as the employee walked .backward. •

Appellee testified that McCullough had carried and placed one of these strips in position, but, in doing so, had failed to remove a sliver from the veneering on that strip, as his duty required him to do, and that when he (appellee) started from the lathe with the next strip, he stepped on this sliver, which slipped from under him, and he was thrown on the table with such force that his hip was broken in the fall.

It was the theory of the company that it was the duty of both, appellee and McCullough to watch for any particle from the blocks of wood which might be thrown on the strips of veneering as they were cut and to remove these particles, and, as these particles were likely to be thrown out at any time, the danger arising from their presence was one of the assumed risks of the employment, and also that it was appellee’s duty to watch for these particles, whether they were on the strip carried by him or by his fellow-servant, and, if he failed to do so and to remove the particle upon which he slipped, he was guilty of contributory negligence.

It appears therefore that the issues in the case are very simple. The court defined negligence, contributory negligence and assumption of risk, in instructions to which no objection was made. The court gave an instruction which stated the issues, iii which the jury was told that appellee contended that his injury was due to the failure of McCullough to remove the broken piece of veneering upon which appellee slipped, whereas the company contended that appellee’s injury was caused by his own negligence in failing to properly clear the table himself, and that appellee’s injury was the result of a risk and danger ordinarily incident to the employment which did not result from any negligence of the company.

Another instruction required the jury to find that it was the duty of McCullough to remove the broken piece of veneering before convicting the company of negligence, but that the company would be negligent if McCfillough was under this duty, and failed to perform it, and this failure resulted in appellee’s injury.

It is o.f course not contended that appellee assumed the risk of injury from McCullough’s negligence, so that the real question in the case is, who was responsible for the presence of the broken piece of veneering and the failure to remove it which caused appellee to fall!

The jury has found, under instructions submitting that question, that this duty rested upon McCullough, and not upon appellee. Therefore this was a risk which appellee did not assume, arid, as the testimony supports the finding that appellee was injured as a result of the company’s negligence, the judgment must be affirmed, and it is so ordered. No complaint is made that the judgment is excessive.

Judgment affirmed.


author: Humrhrevs, J.

text:
    Purvis v. Elder.
    Opinion delivered December 12, 1927.
    1. Mortgages — division op rent as against mortgagee. — Where a receiver was appointed under' a foreclosure decree and ’had possession for three months of the year, the mortgagors having retained possession for nine months, the latter and their assignee were entitled to three-fourths of the rents as against the mortgagees.
    2. Landlord and tenant — .when rents mature. — A rental contract, providing that rents should be “one-fourth of the cotton or the proceeds thereof when marketed” held to cover one-fourth of the cotton raised, so that the rents matured before the cotton was marketed.
    S. Fraudulent conveyances — bona fide purchaser, — One who took an assignment of a rent contract, agreeing to pay a specified sum for it, and having advanced a portion "of such sum for that purpose, held to be a bona fide purchaser of the rent contract for value, with a valid claim for the rent as against a mortgagee claiming under Crawford & Moses’ Dig., § 8612, in the foreclosure proceeding.
    Appeal from Prairie Chancery Court, Northern District; Frank II. Dodge, Chancellor;
    affirmed.

      Emmet, Vaughan and W. P. Biggs, for appellant.

      Daggett & Daggett, for appellee.
   Humrhrevs, J.

This is an appeal from the decree rendered in the chancery court of Pirairie County in favor of appellees for three-fourths of the rents for the year 1925 on a large plantation, upon an intervention of said appellees in a suit of foreclosuire brought in said court by appellants on a second mortgage upon said lands, which mortgage was owned by them.

According to the statement and abstract of appellants, they filed a foreclosure suit on the 8th day of June, 1925, and obtained a decree of foreclosure in the month of July following. They requested the appointment of a receiver to take charge of the lands and collect the rents at the time they instituted the suit,- but did not secure his appointment until 'September '29, and he did not qualify until September 30 following. The record reflects that, according to- the undisputed evidence, a part of the $10,000 Mrs. A. J. Elder, one of the appellees, agreed to advance in consideration of an assignment of the rent contract, was an agreement or obligation on her part to pay $5,000 to lawyers in Memphis and $1,000 to Daggett & Daggett; that her son, one of the mortgagors, owed them for services rendered and to be rendered. This obligation was incurred prior to the institution of the foreclosure suit, and, pursuant to the agreement, she paid the attorneys in Memphis $2,500 before the receiver was appointed and qualified.

On February 7, 1925, A- M. White leased 900 acres of the land from the owners thereof, who were the mortgagors in appellant’s mortgage, for the year 1925. On April 23, 1925, said mortgagors assigned to Mrs. A. J. Elder, the mother of one of the mortgagors, and her co-appellees, the rent contract in consideration of an agreement on her part to advance the said mortgagors the sum of $10,000, and a consideration on the part of her co-appellees to accept the assignment as part compensation for legal services theretofore and to be thereafter performed. The rent contract was “one-fourth of the cotton, or the proceeds thereof when marketed, ’ ’ and “one-fourth of the cotton seed, or the proceeds thereof when sold.” Neither the first nor the second mortgage covered the rents upon the land. At the foreclosure sale the equity in the land brought $100,000', leaving a deficiency judgment of over $15,000 against the mortgagors ; and, in order to collect the deficiency judgment, a sequestration of the rents was attempted under receivership proceedings, according to § 8612 of Crawford & Moses’ Digest.

Appellants first contend for a reversal o,f the decree on the ground that the rents were not payable in money, and could not therefore be apportioned according to the time mortgagors remained in possession of-the land. We see no difficulty in apportioning the rents because not payable in kind. One-fourth of the cotton raised on the place could be divided as easily as money. The receiver obtained possession of the premises on September 30, 1925, and retained possession thereof for three months, October, November and December, or one-fourth of the year 1925. . The mortgagors retained possession thereof by tenants for nine months, or three-fourths of the year. This is the proportion adopted by the trial court in dividing rents. He adjudged three-fourths of the rent cotton to the interveners and one-fourth to appellants, according to the time that each had possession and control of the property. The division was made according to the rule announced by this court in the case of Deming Investment Co. v. Bank of Judsonia, 170 Ark. 65, 278 S. W. 634, las follows:

“Where a foreclosure decree appointed a receiver and directed him to rent the land to a lessee who had given rent notes to -the mortgiagor, but the receiver did not qualify or interfere with the lessee’s possession until after the land had been sold, there was. no sequestration of the rents until the receiver qualified, and the holder of the rent notes was entitled to the rent up to that time. ’’ See also Wofford v. Young, 173 Ark. 802, 293 S. W. 725.

Appellants next contend for a reversal of the decree upon the alleged ground that the rents had not matured on September 30, the day the receiver was, appointed, upon the assumption that they would not mature until marketed.

We do not think appellants’ interpretation of the rental contract is in accordance with the intention of the parties. The correct construction of the language quoted above from the rental contract is that the lessors should have one-fourth of the cotton raised upon the place as rent, but, in case of a sale, thereof while being gathered, the lessors should receive one-fourth of the proceeds. This interpretation is reflected 'by subsequent language used in the contract as follows - ‘ ‘ The intent of the parties being, the lessors shall have one-fourth of all cotton raised on the entire place.” The rent was necessarily for the use of the place for the entire year and not for any particular month in the year or for .rent during the harvesting period.

Appellants’ next and last contention for a reversal of the decree is that Mrs. Elder was not a bona fide purchaser of the rent contract for value. We do not agree with them in this position. She agreed to pay $10,000 for the rent contract, and assumed and agreed to pay $6,000 of that to attorneys who had been- employed by her son, one of the mortgagors, and actually paid the Memphis firm of lawyers $2,500, which she borrowed from the bank for that purpose.

The assignment of the rent contract was in no sense a voluntary assignment.

No error appearing, the decree is affirmed.


author: Humphreys, J.

text:
    Patten v. Robbs.
    Opinion delivered December 12, 1927.
    1. Principal and agent — evidence..—Agency cannot be established by declarations and acts of an agent at the time or subsequent to the transaction.
    2. Frauds, statute op — promise to pay another’s debt. — A promise by a third person to pay the pre-existing debt of another must be in writing in order to bind the obligor, unless the promise is made for a new consideration.
    Appeal from Clark Circuit Court; J. H. McCollum, Judge;
    reversed..

      McMillan & McMillan, for appellant.

      Joseph Callaway, for appellee.
   Humphreys, J.

'This .suit was .commenced in the magistrate’s court by appellee against appellant to recover the value of a suit of clothes charged to appellant by direction of appellant’s son-in-law, Cecil Varne, who made the purchase.

Appellant denied that he authorized the purchase of the suit, and pleaded the statute of frauds. Upon the trial of the cause in the magistrate’s court and in the circuit court, where the case was carried on appeal, judgment was rendered against appellant in favor of appellee for $31. An appeal has been duly prosecuted to this court from the circuit court’s judgment. .

Appellee brought the suit upon the theory that he could establish authority of Cecil Varne to buy the suit on account of appellant, by the statement of Cecil Varne when he made the purchase; or, if not, that he could recover on the subsequent oral agreement of appellant to pay the account. Appellee was allowed, over the objection land exception of' appellant, to testify that Cecil Varne told him that appellant said for him to buy the suit and he, appellant, would pay for it when he returned from Camden. He lalso testified that, after .sending-several -statements- of account to appellant, to which he received no response, he called -on appellant, and was told by him that he had brought a suit ag-ainst the railroad company for killing his son-in-law (Vlarne), and if lie collected anything from the company he would pay him, and if he failed to collect anything, he would pay him anyway.

Appellant testified that he gave his son-in-law mo authority to fouy the suit of clothes on his account, and that he did not ¡afterwards agree to pay for it.

• The court sent the case to the jury upon appellant’s theory under the following instructions:

Instruction A given ¡by the court:

“If you find from a preponderance olf the evidence that the defendant authorized his son-in-law to purchase the goods in controversy from the plaintiff and to have them charged to the defendant, or if you find from a preponderance of the evidence that the defendant did not authorize his son-in-law to purchase the goods from the plaintiff and have them charged to him, 'but you further find that, after he had purchased them and had them charged to him, the defendant was informed that he had, and he ratified his act in purchasing and. having them charged to him, then you are told the plaintiff is entitled to recover.”

Instruction B given by the court:

“You are further instructed that, if you find from the evidence the defendant did not authorize his son-in-law to purchase the goods from the plaintiff and have them charged tó him, and never ratified his act in doing so, then you will find for the defendant.”

These instructions were erroneous and prejudicial, for agency cannot be established by declarations and acts of an agent at the time or subsequent to the transaction. Latham v. First National Bank, 92 Ark. 315, 122 S. W. 992; Arkmo Lumber Company v. Cantrell, 159 Ark. 445, 252 S. W. 901; DeCamp v. Graupner, 157 Ark. 578, 249 S. W. 6. And a subsequent promise by a third person to pay the pre-existing debt of another must be in writing and signed in order to bind the obligor, unless the promise is made for a new consideration. Zimmerman v. Holt, 102 Ark. 407, 144 S. W. 222.

Under appellee’s own evidence it was the duty of the trial court to instruct a verdict for appellant.

On account of the error indicated the judgment is reversed, and appellee’s complaint is dismissed.


author: Kirby, J.

text:
    Humpolak v. State.
    Opinion delivered December 12, 1927.
    1. Witnesses — impeachment by contradictory statements. — The right to impeach a witness by showing that he had made contradictory statements does not depend on his denial of having made such statements, but proof thereof is admissible where the witness states that he does not remember, or has no recollection of having done so.
    2. Witnesses — admission of contradictory statements. — Where a witness admitted having made previous contradictory statements about the circumstances of the killing, admission of such statements was erroneous, since there could not have been necessity for impeachment purposes, and they were not admissible for any other purpose.
    3. Homicide — threats by defendant. — In a prosecution for murder, proof of threats made by defendant against deceased after connecting him with the crime by the introduction of other facts and circumstances, held admissible.
    Appeal from Grant Circuit Court; Thomas E. Toler, Judge;
    reversed.

      D. E. Waddell and E. W. Brockman, for appellant.

      II. W. Applegate, Attorney General, and Darden Moose, Assistant, for appellee.
   Kirby, J.

'The appellant was indicted for the crime of murder in the first degree for killing one Michal Bush, and was tried thereon and found guilty of murder in the second degree, and his punishment fixed at seven years’ confinement in the State Penitentiary, land prosecutes this appeal from the judgment of conviction.

It appears from the testimony that the deceased was killed in the field of one 'Semelka, by whom he was employed, and whose field joined that of the defendant. That, on the morning of the killing, Semelka and 'Bush were plowing in the' field, and, when Bush* reached the south end of the field land was turning around, some one, lying in wait on the outside of the fence, shot him at close range with a shotgun loaded with No. 4 shot, killing him almost instantly. The weeds and brush were trampled at the spot where the assassin was supposed to have been concealed, and where a blue shotgun shell was found. There were some fresh tracks appearing to have been made that morning, and identified as made by appellant, leading across his potato patch to the strip of woods extending to the Semelka field, where the shot was fired. The same tracks also showed leading back across the potato patch, but could not Ibe discovered after the person making them had gone into the woods.

The officers were notified, came to the scene of the killing, made an examination of the ground, and went to appellant’s house, where they found a shotgun, one barrel of which had been recently fired, and a blue shotgun shell loaded with No. 4 shot of the same kind as the empty shell picked up at the scene of the killing. Upon examination, a piece of green oak leaf was found on one of the hammers of the gun.

Appellant and his 13-year-old son, Andy Humpolak, were both arrested, and the boy was first taken to Pine Bluff and put in jail there, and later was carried to Malvern and put in jail there.

The officers at Pine Bluff said he told them that his father had shot Bush, and, if they would take him home, he would show them exactly the way he went and the way it was done. They took him down there, and he told them that his father had come down across the potato patch with the gun that morning, had first gone to the fence of Semelka’s field, above where the shot was fired, in order to locate Bush, and then had gone around to the end of the field, where he shot him when Bush started to turn around at the end of the rows. He also said that his father had tied the horse he was plowing to the fence and then gone to the house and got his shotgun. When the people had assembled at the killing, and some screaming and crying could be beard down there, appellant told his boy, Andy, to go down and -see what the trouble-was about. He did not go himself.

The testimony given by Andy Humpolak in the examining court was reduced to writing immediately after-wards, and signed by him in the presence of the -magistrate -and -other witnesses, in which he stated that his father had killed Bush, and, after shooting him, said, “The son-of-a-biteh ain’t going to report anybody any more. ”

Upon the trial in the circuit court this 'boy testified that .his father had not killed Bu-sh, and had not gone away from his home or out of his field that morning; and that he and his father were plowing in his father’s field when the shot was fired. He was asked by the State, which claimed to be surprised at the change of his testimony, if he had testified differently and had stated that his father had shot Bush from the edge of the woods by the field where he was lying in wait; the latter testimony, which was signed by him, being presented along with the question. He admitted that he had made this different statement in the examining court virtually as written, b-ut stated that it was not true, and he was afraid not to make it after having- been put in jail and talked to by the officers.

The prosecuting attorney was. allowed, over the objection of appellant, to read the written statement, which witness admitted he had made and testified was untrue. The court, answering the objections, said: “Yes sir. It will be for the jury to determine along with the other statements made by the witness Humpolak and others.” Objections were also saved to this remark of the court.

It is also complained of as error in the grounds for the motion for a new trial that the -court erred in permitting the pro-secuting attorney to question- -the witness, Andy Humpolak, relative to his oral statement to the various officers investigating the crime, out of the presence of defendant, and to iask him if he had not made certain statements to John Matthews, Nathan Nall and John McClellan, the prosecuting attorney, and if it had not been agreed among them all that the written statement of his testimony made in the examining court Was a true report of it; and if he had not said in the written ¡statement, as shown there, that at the time his father shot he made the remark: “The son-of-a-bitch ain’t going to report anybody any more”?

The witness, when questioned, admitted that he had made the statements attributed to him and about which he was' questioned, to each of the individuals, as it was claimed that he had made, but said the statements were not true.

Appellant complains of the error of the court in refusing to exclude from the jury the testimony of witnesses Frank'Stewart, W. 0. Thompson and John Matthews and others, reciting statements made to them by witness Andy Humpolak, which were contradictory of his testimony, but which he admitted on the stand having-made to said witnesses, ¡and denied the truth thereof.

The court instructed the jury, refusing to give appellant’s requested instruction No. 1, and modified it and gave it over his objection as amended, the amendment being shown in parentheses, reading as follows:

“You are instructed that the affidavit and statements made by the witness, Andy Humpolak, prior to the time he was called as witness in this case, if you find that he did in fact make .such affidavit and statements, can be considered by you for the purpose only of contradicting his testimony (or such parts of his affidavit and statement as are contradictory to ‘his testimony in this case), and you cannot consider them as'testimony of the facts related in such affidavit and statements. ’ ’

It is urged that the court erred in allowing the written statement of the testimony in the examining court of the witness, Andy Humpolak, to be read to and considered by the jury, over appellant’s objections, the witness oil the stand having admitted, upon inquiry, that he had made such statement and denied the truth of it.

Our statutes provide that a witness may be impeached 'by the party producing him, under certain conditions, as - well as by the party against whom he is produced, iby contradictory evidence showing he has made statements different from his present testimony. Sections 4186-88, O. & M. Digest. The right to impeach a witness by showing that he had made statements different from his testimony and the admissibility in testimony of the different statements does not depend upon his denial of such .statements, but if, on being asked if he made them, he answers that he does not remember or has no recollection of having' done so, proof that he made the contradictory statements is admissible. Billings v. State, 52 Ark. 303, 12 S. W. 574.

In 28 R. C. L. 224, it is said:

“But the great weight of authority is to. the effect that a witness may be impeached 'by proof of prior contradictory statements, where he merely testified that he does -not remember, or has no recollection of making the statements referred to. Of course, if the witness admitted that he made the contradictory statements there is no necessity for proving them, and they are therefore not admissible in evidence. ’ ’

Although it is not necessary that the witness deny having made the statements in order to the admissibility in evidence of contradictory statements for his impeachment, which may be introduced, where he testifies that he does not remember or has no recollection of having-made the statements referred to, yet, when the witness admits, upon inquiry that he made the contradictory statements, there is no necessity for proving them, and they are therefore not admissible in evidence. R. C. L., supra; Shands v. State, 118 Ark. 460, 177 S. W. 18.

The witness, when inquired of concerning the different and contradictory statements made by him about the circumstances of the killing, admitted that 'he made them all without any denial or equivocation, and there could have been no necessity for proving them for impeacbmeot purposes, land, since tbey were not admissible for any other purposes, tbe court erred in allowing them to be introduced.

These statements were damaging, and necessarily highly prejudicial, so much so that it is doubtful if the prejudicial effect'could have been removed iby the giving of a correct instruction to the jury for their consideration, which was not done.

We do not think any error was committed in allowing the introduction of the proof of threats made by appellant against deceased at the time, there having already been introduced other facts and circumstances connecting appellant with the commission of the crime. McElroy v. State, 100 Ark. 301, 140 S. W. 8 ; Lewis v. State, 155 Ark. 205, 244 S. W. 458.

For the errors designated the judgment is reversed, and the cause remanded for a new trial


text:
    Wallin v. Donnahoe.
    Opinion delivered December 12, 1927.
    1. Mortgages — lease by a mortgagor. — A mortgagor has the right, without the mortgagee’s consent, to lease the land mortgaged subject to the lien of the mortgage, and the mortgagee had the right to foreclose on default in payment of the money secured.
    2. Landlord and tenant — covenant of quiet enjoyment. — A covenant of quiet enjoyment was necessarily implied in a contract for leasing lands covered by a mortgage.
    3. Mortgages — right of purchaser at foreclosure sale. — A purchaser at a mortgage foreclosure sale of leased premises became entitled to the subsequently accruing rents from the lessee and had a right to require the rents to he paid to himself.
    4. Bills and notes — innocent purchaser. — One who took notes in payment of existing indebtedness due from the payee, knowing that the consideration therefor had failed, since they had been given for rent to become due, and the mortgage on the leased land had been foreclosed before the rent became due, was not a bona fide holder, being charged with notice of such defenses.
    5. Bills and notes — bona fide holder. — One who took notes under circumstances charging him with notice of defenses thereto was in no better position than the first holder of the notes against the defense of failure of consideration.
    6. Bills and notes — failure of consideration of notes — cancellation. — Where the consideration for notes given for rent to become due in the future failed because a mortgage on the land had been foreclosed before the rent became due, and a transferee took the notes in payment of existing indebtedness with knowledge of the circumstances showing, that the consideration for the notes had failed, held that the notes were subject to cancellation in the hands of such transferee.
    Appeal from Crittenden Chancery Court; J. M. F-wbrell, Chancellor;
    reversed.

      8. V. Neely, for appellant.

      B. V. Wheeler, for appellee.
   Kirby, J.

Appellants brought suit to cancel two notes executed by them to S. D. Donnahoe, one of the appellees.

It was -alleged that on December 15', 1923, they leased from Donnahoe certain lands in Crittenden and Cross counties for a period of five years, beginning January 1, 1924, at a yearly rental of $320. That they paid the first three years’ rent in cash in advance and executed two promissory notes, each for the sum of $320, payable, one January 1, 1927, and the other January 1, 1928, for the rent for the years 1927 and 1928. That, at the time of the execution of said lease and notes, the Missouri 'State Life Insurance Company held a deed of trust on the lands included in the lease as security for a $25,000 loan; that, since the execution of the lease contract, default has been made in payments due to the said Missouri State Life Insurance Company, which had filed suit to foreclose the deed of trust; that said Donnahoe was insolvent,- and had stated to appellants that he would make no attempt to pay the amount due the insurance company, but would allow the lands to sell; that appellants had requested him to return the notes given for the rent for the years 1927 and 1928, appellants having been deprived of the possession of the lands by the foreclosure of- the mortgage, but he had refused to do so, and alleged that the notes were in his possession and under his control, and prayed that they he canceled.

Defendants answered, admitting the execution of the lease contract and the payment of the money, hut denied that the payments were for any particular period. Admitted that the lands were incumbered by the deed of trust, and alleged that appellants were informed about it and agreed to make the necessary payments to continue the appellees in possession of the premises; admitted that the lands included in the deed of trust were insufficient to pay the insurance company, and that he was insolvent and unable to pay the company; denied that he had been requested to return the notes to appellees and that he could have returned them, for the reason that he had, on August 15, 1924, transferred said notes to H. Blair in payment of an existing indebtedness, which had been previously incurred for legal services, and that appellee, Donnahoe, was not then the owner or holder of the said notes. Also filed a cross-complaint, stating that appellants were informed about the deed of trust when the lease contract wias made and took it subject to the rights of the mortgagee, and agreed to pay all the money becoming due on said mortgage, if not paid by appellee, as part of the consideration of the lease contract, and that, by mutual mistake, the clause in said contract expressing said agreement was not correctly drawn, and prayed reformation of same to express the agreement actually made.

Appellants answered the cross-complaint on October 31, 1924, denying that defendant had transferred the notes to H. Blair, and alleged that, if they were in fact transferred to Blair, it was without consideration and with full knowledge cn the part of Blair of the failure of consideration for said notes and of the lease contract between the appellants and Donma'hoe, under which they were executed, and alleged that said Blair was not an innocent purchaser of the said notes for vialue, and denied all the other allegations of the cross-complaint.

The court found that the notes were not subject to cancellation in the hands of Blair, unless he- was holding same for the said Donnahoe, and that appellants were not entitled to the cancellation of the entire notes, but only of the amount thereof in excess of $500, with interest from August 1, 19-25, -at six per cent, per 'annum, and decreed accordingly, requiring appellants to pay all costs, and this appeal is prosecuted from this decree.

The undisputed testimony ¡shows that all the parties had' notice of the mortgage of the Missouri State • Life Insurance Company covering the lands leased, when the lease contract was made, and also that H. Blair, the attorney of Donnahoe, to whom the notes were transferred, had knowledge of the mortgage or deed of trust of said insurance company, knew what lands were included in it, and told his clients that they could not lease the lands without the consent of the insurance company. . He also wrote the insurance company what was decided to be done in the way of leasing the lands, 'but .stated that lessee only wanted to pay a nominal consideration therefor, and the company refused to consent to the leíase.

The lease contract was made, and appellants also purchased some timber, Donnahoe not knowing it was included in the mortgage at the time, and being told by turn that he wanted the purchase money of the timber to pay on the mortgage debt.

Wallin, an appellant, testified that no mistake was made in drawing the lease contract; that he made no agreement in consideration of the lease to p-ay any amount due the mortgagee if Donnahoe made default in payment, but he was given the right to make such payment, if he oared -to exercise it, as provided in the lease; -stated that in February, 1924, prior to filing the suit, he had several conversations with S. D. Donnahoe and his -son, F. C., relative to the notes in question, and, when he ascertained that the insurance company was going to foreclose its mortgage, he asked Donnahoe about it, and he told him it was a fact. He then said: “Now, in the event -of the foreclosure you fellows have some of my notes. In fact, I have already paid you three years in advance, given you cash for three years, and you got the notes for the fourth and fifth years. If you are going to be foreclosed, I think you will agree that it would be nothing but right to give me these notes. And he, Forrest, said that was all right, they would fix that up all right. Then I got hold of the old man and we talked about it, and he said, ‘I do not want to give those notes up right now, but do not worry about the notes, because you have already paid uis the cash, and if they foreclose you will lose two years, and you need not worry about the notes; if they foreclose we will not worry you about the notes.’ I asked him if they had the notes, and he said, ‘Yes, we have them, they are all right; you need not worry about the notes.’ I went back to them the second and third time, and talked to both of them the last time, and never got the notes, but they admitted they had the notes lat that time, and I did not file this suit until after they told me they had the notes and refused to give them back to me.” Said the timber contract and the lease were entirely, separate matters, neither dependent upon the other, and that Donnahoe, after showing him a letter from the mortgagee insurance company relative to the lease, said he would take the money paid by him, $1,§20 cash, and pay it on the interest and loan due.

The trade ivas made in the fall of 1923. Witness did mot talk with Donnahoe nor his son about returning the notes until the foreclosure suit.was filed, and never had a conversation with Blair about them. That Davis, his partner, never had anything to do with any of the negotiations. Stated his conversations about the contract were with Donnahoe and his son, sometimes with each and sometimes with both. That, after the foreclosure of the mortgage, he leased the lands from the Missouri State Life Insurance .Company, which purchased them under the sale, and paid them the same amount of rent yearly that he 'had agreed to pay Donnahoe. .

Donnahoe testified that he had had two or three talks about the (business with Wallin, and first told him he could not let him have the lands, as the insurance company would not consent to the lease, and he told Wallin it could not 'be done. “Later we talked about it again, and he went to an attorney and had the contract fixed up to suit himself,” and witness -said: “Get a lawyer, I want it done right.” He also told him he was to take his place if he fell down. Said he showed the insurance company’s letter to Wallin, and told him that there was a way they could fix this, and to go see a lawyer and make a contract, and he did that. He employed W. B.. Scott. Said he regarded the two papers as one contract, and they called for some notes, which he had delivered to Blair some time the latter part of July, 1924. That he had had a conversation with Wallin shortly after he made the contract, and told him that he might have to use the two notes, and he replied “All right, my notes are good.” Said the timber contract had nothing to do with the lease contract. That he read them over and signed both, and did not know of any misunderstanding. “I saw Mr. Blair before making- the contract. * * * He advised me about the contract. * * # I suppose he knew at the time I traded him the notes that they were the anotes Wallin gave on the lease. * * * The consideration Mr. Blair paid' for the notes was that he had been attending to my business for a long time. We bad had no settlement, and he was pushing me and wanted a settlement, and I told him I was not able to pay anything, and was a sick man, and he said he could take the notes and wait longer, and that was how we traded. I do not know if Mr. Blair has ever rendered me any statement. Probably he has mentioned some debts that have been running along that I owed him.” Witness could not remember the amount of any particular service charged for nor any particular service rendered, nor how much he had ever paid Blair, his attorney, nor that he had ever been furnished a statement of the charges by Mr. Blair.

The lease contract shows the consideration to be paid as $320 a year; that $960 cash wias paid for the first three years c!f the term of the contract, beginning January 1, 1924, rent for the years 1924, 1925 and 1926, the balance to be paid yearly in advance for the remaining two years by two notes 'being given for the balance of the rent. ,

F. C. Donnahoe testified that he had been attending to his father’s business for about 25 years; knew of the contract with Wallin and Davis, and when it was made. Told Wallin to see his father about it. Witness went to see Mr. Blair to see if they had a right to do this, because there was a loan on the place, and Mr. Blair said we could not, and witness had him to write the loan company a letter, and showed the reply to Wallin and his father, both of whom said it looked like they had a right to do it. His father said he wanted to get a contract that would take care of him and the company, and that, if he should fail, Luther Wallin would back the proposition up. The timber and the lease contract was one trade. “Mr. Wallin had the contracts drawn by W. B. Scott. It was one entire contract that was made for the timber and another for the lease and right-of-way.” Told Mr. Wallin that Blair had advised they had no right to sell the timber or lease the right-of-way. Showed him the letter 'from the insurance company written to Mr. Blair; could not find the letter now. . The letter was shown to Wallin prior to the execution of the contracts. Admitted signing'the contracts in the name of his father. Said there were two notes signed, which they traded to Mr. Blair between the first and tenth of July, 1924. He had heard a conversation in which his father told Mr. Wallin that they might have to use the notes. Said he transferred the notes to Mr. Blair because they awed him $500 for attending to his father’s business, and- he was pushing them. Blair had been attending to his father’s business ten or twelve years, and “had never paid him anything-, except $'25 at one time. We have had no statement that Mr. Blair ever rendered, but knew that we owed him something’.” Witness was not able to specify any particular 'business attended to by Blair. Said “Mr. Blair told us we could not lease that place. We submitted the contracts to Mr. Blair as they were written. He looked them over and told us they were all right. Saw the contracts about five hours after they were signed.”

Blair stated that he was attorney for S. D. Donna-hoe, and had been for several years. Was consulted by him about the contract with-Wallin and Davis, and knew of the mortgage of the Missouri State Life Insurance 'Company on the land. Advised Mr. Donnahoe that he could not make a contract that would be good without the consent of the company, and wrote them a letter about it. Denied ever having seen the lease and timber contract until after the suit was filed. Said that Donna-hoe was mistaken about showing them to him. Could not tell exactly the amount Donnahoe owed him for services; had never kept a strict book account, Donnahoe being la good friend of his. Knew the condition, of his business, and had been paid very little money, $25 atone time. Had no certain recollection of particular transactions, but said that he agreed to pay him the $500 in June or July, 1924, and traded him the Wallin notes about the last of June or the first of July, before this suit was filed.

Cross-examination: “I knew all about the contracts. I never did render Donnahoe a statement of his account, but told him from time to time. I knew they were hard pressed, and they were good friends of mine, and I was not pressing them, but, when I saw he was going down, I tried to get some compensation for my services, and I think $500' was a very small amount. ’ ’

The sale of the timber had been discussed with him, but he -could not remember whether it was before he had written the letter to the insurance company, in December, 1923.

* * * “I was not in Earle the day the contract was drawn. I presumed the contract would be recorded, and it would be an act which would warrant the loan company in foreclosing the mortgage. Mr. Wallin wanted the timber, and did not want the loan company to know. That is the reason I took the notes; I did not think he would come into a court of equity and ask that this contract be canceled. Mr. Donnahoe told me about the lease contract.”

The appellee had the right, of course, to lease the lands to appellants, subject to the lien of the insurance company’s mortgage, and it had the right to foreclose in default of the payment of the money secured, and the parties certainly intended, as shown by the terms of the lease, that it should run for the full term, as it would necessarily have done, had the mortgagor, Wallin’s lessor, paid the amounts due to the mortgagee, as agreed.

A covenant of quiet enjoyment was necessarily implied in the contract for leasing the lands, and there is no question but that the mortgage was foreclosed and the tenant, deprived of the possession under the lease, which was determined by the foreclosure, the purchaser becoming entitled to the subsequently accruing rents from the lessee, requiring them to be paid to it, as it had the right to do. Pickett v. Ferguson, 45 Ark. 177, 55 Am. Rep. 545; Fitzgerald v. Beebe, 7 Ark. 310.

The undisputed testimony shows that the lessee was deprived of the lands for two of the years for which he had paid the cash rent in advance, and had to pay the purchaser for their use for the two years 1927 and 1928, for which he had given rental notes to Donnahoe at the time the lease was made.

The testimony is also undisputed that all of the parties, Blair included, knew the terms of the lease, and all knew of the foreclosure of the mortgage and sale and purchase of the lands by the insurance company, which took possession of .same long before the expiration of the three years of the five-year term for- which the rent was actually paid in advance in cash.

The testimony shows- that Blair knew the terms of the lease, the eviction of the tenants under the foreclosure

salo long- prior to the time the two last mentioned notes became due, and of the failure of the consideration of these notes on that account, before he traded for them in payment of a past due indebtedness, the items constituting which he seemed to have a very hazy recollection of. Having this knowledge -of both the terms of the lease and the notes, he took them because, as he said, Wallin wanted the timber and did not want the loan company to know it, land he did not think that he would come into a court of equity and ask that this -contract be canceled. Blair admitted he knew for what the notes were given and that the mortgage had been foreclosed, depriving Wallin of the possession under the old lease, compelling him to pay rent to the-new owner and landlord. In other words, ho took the notes knowing -all of the circumstances 'at the time showing that the consideration therefor had failed, and wa-s not a bona fide holder, since he must be charg-ed with the notice of the defenses- thereof. Tiedeman on Commercial Paper, §§ 279-299; Old National Bank of Ft. Wayne v. Marcy, 79 Ark. 149, 95 S. W. 145, 9 Ann. Cas. 339; Jones v. Jackson, 86 Ark. 191, 110 S. W. 215; Hogg v. Thurman, 90 Ark. 93, 117 S. W. 1070, 17 Ann. Cas. 383; and Bank of Monette v. Hale, 104 Ark. 388, 149 S. W. 845.

In Simmons National Bank v. Dilley Foundry Co., 95 Ark. 368, 130 S. W. 162, the court s-ai-d: “Before one can become a bona fide and innocent purchaser of commercial paper, it must appear that it was acquired without notice or knowledge of defenses or circumstances which would put him on inquiry.” See also Morehead v. Harris, 121 Ark. 634,182 S. W. 521, and Little v. Arkansas National Bank, 113 Ark. 72, 167 S. W. 75.

“T'hi-s notice of a defense to the note or its infirmity affects the good faith of the purchaser, and deprives him of the vantage ground and security of an innocent purchaser. ” Thompson v. Love, 61 Ark. 81, 32 S. W. 65.

“One who purchases a note with notice that his assignor is under obligation to make- title to certain land when a -series of notes for purchase money is paid, takes subject to such obligation.” Cunningham v. Toye, 97 Ark. 537, 134 S. W. 962.

Blair, having (become the holder of these notes under such conditions and circumstances as to be charged with notice of the defenses thereof, is deprived of the vantage ground land security of an innocent purchaser, and is in no better position than the first holder of the notes would have against the defense of failure of consideration.

The chancellor erred therefore in holding that the notes were not subject to cancellation in the hands of Blair, unless he wias holding the same as the property of Donnahoe, and should have decreed a cancellation of both notes in the entire amount thereof, because of the established defense of failure of consideration, instead of a partial cancellation.

For the error designated the decree is reversed, and the cause remanded with directions to render a decree for the cancellation of the notes in full, in accordance with this opinion.


author: Mehaeey, J.

text:
    Caldwell v. Fitzhugh.
    Opinion delivered December 12, 1927.
    1. Ferries — franchise to operate ferry .between counties. — In order to obtain a license or franchise to operate a ferry across a river which is the boundary between two counties, under Crawford & Moses’ Dig., § 4697, the applicant must get permission from the county court in each county.
    2. Ferries — jurisdiction to grant franchise. — Where a river is the boundary between two counties, the granting of a ferry franchise is not wholly within the jurisdiction of either county.
    3. Ferries — effect of denial of franchise by one county. — Where a river is the boundary between two counties, and the county court of one of such counties decides against the granting of ferry privileges, such decision becomes res judicata, and petitioner’s application for a ferry franchise cannot be heard by the county court on the opposite side of the river.
    Appeal from Independence Circuit Court; 8. M. Bone, Judge;
    affirmed.

      8. M. Casey, for appellant.

      W. K. Rucldell and Coleman é Reeder, for appellee.
   Mehaeey, J.

The appellant states that the sole question presented by this appeal is whether or not the action of one county in refusing’ to grant a ferry franchise is conclusive or res judicata on the other county adjoining to grant a ferry franchise at the same point, where the river is the boundary line between the two counties.

The appellee states that the sole question presented by this appeal is the question of res judicata.

The appellant owns land on the Jackson County side of the river, and has control from C. P. Vaughan, the owner of the land on the Independence side of the river. Appellant filed a petition in the Jackson County Court asking the court to grant him a ferry franchise to operate a ferry at a point on Black Biver. Black River is the boundary between Jackson and Independence counties, at the point where appellant asked for the franchise. The county court of Jackson County decided against him, and he appealed to the circuit court, where the case was again decided ag’ainst him: No appeal was éver taken from the finding and judgment of the circuit court.

On January 3, Í927, appellant filed his petition in the Independence County Court for a franchise to operate a ferry at the same point on Black River that was described in his petition theretofore filed in the Jackson County Court. The Independence County Court found in his favor. An appeal was taken to the Independence Circuit Court, which court found against him on the ground that the judgment of the Jackson Circuit Court was a bar to his right to prosecute this suit.

The only question therefore for the consideration ofi this court is whether the judgment of the Jackson Circuit Court was a bar to this suit.

We deem it unnecessary to either set out or discuss the provisions of the law with reference to the right of the county courts to grant a license or franchise, except that section which regulates the practice where the river is the boundary between two counties. That is § 4697 of Crawford & Moses ’ Digest, and reads as follows:

“If any navigable stream or lake shall form a portion of the boundary of any county so that one bank shall be in one county and the other in a different county, at the place where it is proposed to erect a ferry, then a license shall be had from the county court for the ferry on the respective banks or shores.”

It will be observed from the reading of the above section that, in order to get a license or franchise to operate a ferry across a river that is the boundary between two counties, the applicant must get permission from the county court in each county.

The authorities are not in entire harmony, some holding that, when the opposite sides of the river are within the jurisdiction of different boards, there is usually a concurrent jurisdiction delegated to them of the matter of ferries. Of course, if the courts had concurrent jurisdiction, the judgment of one court would bar any right of the party to have the matter determined by the other court. If the courts had .concurrent jurisdiction, the applicant for ferry privileges would have the right to apply to either. But, when he had done that, when he had selected the forum, a decision of that court would be binding on him — would be res judicata.

This court said, in a recent case in discussing article 7, § 28, of the Constitution:

“This undoubtedly includes the regulation of ferry rates, because it is a part of the control of ferries. .It was the plain purpose of the framers of the Constitution to place within the jurisdiction of the county court all control and regulation of ferries. The jurisdiction was exercised by the county court without objection in the case of Covington v. St. Francis County, 77 Ark. 258, 91 S. W. 186; Ark. Railroad Commission v. Bovay, 174 Ark. 1057, 298 S. W. 331.

This court also said, in speaking of the jurisdiction of county courts where the river was the boundary line, in the case of Fulton Ferry & Bridge Co. v. Blackmood, 173 Ark. 645, 293 S. W. 2, decided April 11, 1927:

“In making- the orders granting appellant the franchise heretofore mentioned, they each provided that said bridge should be located at the point .where the improved road from Texarkana to Hope now crosses the river at the town of Fulton.”

The court also said in the above case:

“It is left entirely optional with the county courts of the two counties whether or not the control of the bridge shall be taken over, and this provision leaves unimpaired the jurisdiction of the county court of the bridge when it has .seen fit to exercise this .jurisdiction. This conclusion leaves out of consideration the fact that the bridge is to span a navigable river which is the boundary between two counties, and that it is not and cannot be wholly within the jurisdiction of the county court of either county.”

It will be seen therefore that this court has held that, where the river is the boundary between two counties, the bridge could not be wholly within the jurisdiction of either county. The saíne is true with reference to ferry privileges. The privileges on one side of the river in this case are under the jurisdiction of the county court of Jackson County and on the other side of the river in Independence County.

The Alabama court stated, as said by appellant:

“As the State is intersected by numerous rivers, most of which constitute the boundaries of counties, it is very improbable that the difficulty supposed to exist in this case was not foreseen. In a case where either of two counties would have an equal right to establish a ferry, the right is given to both, and when the power is exercised by either it is exhausted. It is in the nature of concurrent jurisdiction, the proper exercise of which by. one tribunal necessarily ousts all others.” Jones v. Johnston, 2 Ala. 746.

The Alabama court in another ease said:

“It is contended by counsel for the plaintiffs in error, the river .being the dividing line between the two counties of Shelby and Talladega, each county has a right to establish a ferry on its side; and that in snch a ease, the prohibition that no ferry shall be established within two miles, by water, of another, does not apply. We cannot yield to the force of this reasoning. The licensing and use of a ferry necessarily require the use of both banks of the river; and, if one is established on one side, it excludes the idea of the legitimate establishment of another on the opposite side, or within two miles, by water, on either side.” 3 Porter’s Reports, 412.

It therefore appears that, whether the courts have concurrent jurisdiction as held by the Alabama court or whether the jurisdiction is confined to the county in which the court is held, in either event, the judgment of the Jackson County Court would be a bar. If the courts had concurrent jurisdiction, appellant’s right would be barred for the reasons given by the Alabama court. And, in order to be res judicata, it is only necessary that a court of competent jurisdiction has decided the question. It is immaterial whether it decided it right or wrong. If the decision was wrong, it could be corrected by appeal, and in no other way. But, if it had jurisdiction to try the case, that necessarily means that it had the power to decide it either way, and whatever decision was reached by the court was binding.

Under our statute, which we have quoted above, it appears that one desiring ferry privileges, where the river divides two counties, must apply to each county, and, that being' true, neither county court would have jurisdiction except to the center of the stream. But, since it would be impossible to operate a ferry from one bank of the river to the other unless a franchise was granted by both counties, when one county has passed on the question and refused to grant the license, it would be useless for the other county to grant it, because the ferry could not be operated, and the decision of the county court, then, on either side of the river, would be as effective in barring further proceedings as if the courts had concurrent jurisdiction.

The appellant in this case owned the land on the Jackson County side of the river. He applied to the Jackson County Court, and that court decided against him. On appeal to the circuit court, the circuit court of Jackson County decided against him, and appellant, having selected the forum, the county court of the county in which his land was situated, a decision of that court settles the question and disentitles the appellant to apply to the court in the other county, where, if a franchise was granted him, it would be perfectly useless.

The judgment of the circuit court is therefore affirmed.


author: McIIaney, J.

text:
    Hal H. Peel & Company v. Hawkins.
    Opinion delivered December 12, 1927.
    1. Principal and 'agent — scope of authority. — One dealing with an admitted agent has the right to presume, in the absence of notice to the contrary, that he is a general agent, clothed with authority coextensive with its apparent scope.
    2. Insurance — conditional contract. — Where, in order to write a life insurance policy, an agent working for a principal, who wrote insurance and-made loans, promised the applicant that, if he would give his note and take an insurance policy, the agent’s principal woud make a loan to him, but the loan was not made as promised, held, in a suit iby the principal on such premium note, that the failure to make the loan was a defense to the note, the insurance and loan contract being indivisible.
    3. Insurance — fraudulent contract — ratification. — Whether defendant, in an action on a premium note given for a life insurance policy, ratified the agent’s fraudulent acts in inducing the contract by keeping the policy after discovering fraud in the agent’s promise to make a loan, if defendant would take a policy, held for the jury.
    4. Estoppel — retention of policy. — Defendant, sued on a life insurance premium note, held not estopped as a matter of law to urge fraud as a. defense by reason of having retained the policy after discovery thereof, where he tendered the policy within.a reasonable time.
    Appeal from Poinsett Circuit Court; G. E.'Keclc. Judge;
    affirmed.

      Cooley, Adams é Fuhr, for appellant.

      John 8. Mosby and J. G. Waskom, for appellee.
   McIIaney, J.

This is a suit on a promissory note executed hy appellee to the Cotton States Life Insurance Company, on the 5th day of September, 1922, for $176.46, with 8 per cent, interest per annum, which was assigned by the payee to appellant. This note was executed and delivered to appellant under the following conditions: .

Appellant is engaged in the business of soliciting life insurance, with its principal office at Jonesboro, Arkansas, and was at the time the general agent for the Cotton States Life Insurance Company, for whom it had made a few farm loans, and had also made some loans for the Denver Investment 'Company, but that the loan business was not its main business. Lynn "Warren was the agent of appellant, whose authority was limited, according to Mr. Peel, to that of soliciting life insurance only. Warren solicited insurance from appellee for the Cotton States Company. Appellee did not want any life insurance, but wanted a loan of $5,000 on certain land owned by him. Warren advised' him that, in order to get the loan, he would have to take out an equal amount of life insurance. He thereupon gave Warren an application for the $5,000 life insurance, and in a few days he returned with the policy, telling appellee that he could pay the premium in the above amount out of the loan when it was received, and pay the balance of his debts out of the amount of the loan. Under this agreement, he executed the note for the premium and turned over his deeds and abstract to Warren, who took them off with him, and, a few days later, appellant sent them back to Mr. Simms, who was the cashier of the Bank of Lepanto, but did not make any loan. Appellee is a man without education, not being able to read or write, and, upon demand being made on him to pay his note, refused, for the reason that the loan he desired had not been granted to him. He did not return the policy to the company, but, immediately upon receipt of his abstract and deeds by the Bank of Lepanto, he went to his attorney, Mr. Scobey, and told Mr. Scobey to write the company for him, 'but does not know whether this was done or not. Pie also told Warren he would give him the policy, or he could come and get it, and Warren said he did not want it; that he offered to go get it, but did not have it in his pocket; that he did not surrender the policy, as no one came to get it, and he thought no more about it.

Appellee kept his abstract and deeds in the safe of Mr. Stuckey, who testified that appellee and Warren came to him about this matter, and that Warren agreed to write, the insurance, and get the loan, and, at appellee's request, he got the abstract and deeds to the property, and delivered them to Warren, who said that the premium could be paid out of the loan.

The case was submitted to the jury under instructions from the court, and a verdict and judgment was rendered for appellee, from which is this appeal.

Appellant urgently insists, for a reversal of this case, that Warren had no authority to make the representation that the company would make a loan as an inducement to write the policy of insurance, and that therefore the plaintiff is not bound by such representation. He cites a number of authorities to the general effect that a principal is not bound by the acts of his agent, unless done within the actual or apparent scope of his authority. While this is true, it is equally well settled, as was said in the case of Three States Lumber Co. v. Moore, 132 Ark. 371, 201 S. W. 508, that: “One dealing with an admitted agent has the right to presume, in the absence of notice to the contrary, that he is a general agent clothed with authority co-extensive with its apparent scope.” This case was cited with approval in the case of Arkadelphia Milling Co. v. Green, 142 Ark. 565, 219 S. W. 319, where it was said: “A person dealing with a special agent must do so at his peril, and, if the special agent was without authority,- the principal cannot be held. Not so, however, in dealing with a general agent. A person dealing with a general agent can hold the principal if the acts of the agent are within the general scope of the particular kind of business intrusted to him.” .In that case, one Carr was employed by appellant, and was sent 'by it to the mill of one Brown semimonthly for the purpose of checking up the bolts, staves and labor incurred in making them and for paying therefor by drawing checks against appellant to settle the labor accounts, and to pay Brown, or others at Brown’s directions, with whom appellant had a contract for the output of the mill. The court held in that case that: Carr’s employment was not a special one and confined to a single transaction, but was a general employment to transact a particular kind of business for appellant. He was therefore a general agent, under the rule announced in the case of Liddell v. Sahline, 55 Ark. 627, 17 S. W. 705.” In this case it is admitted that Warren was appellant’s agent for the soliciting of insurance, and it is undisputed that, in soliciting insurance from the appellee, who did not want the insurance, but who did want a loan, he promised to get the loan through appellant’s agency, and it is undisputed that appellant did procure farm loans, and that the premium for which the note was given could be paid, out of such loan: It was therefore one indivisible contract, the insurance being applied for and taken as a necessary incident to the procuring of the loan. We therefore hold, under the authority of the above-cited case, that, since Warren was admitted to be the agent of appellant, appellee had the right to presume, in the absence of notice to the contrary, that Warren was appellant’is general agent, clothed with authority to make a contract with appellee for the loan and the insurance. Furthermore, it is undisputed that the abstract and deeds to the property appellee desired to pledge for a loan were delivered to appellant, and by it returned to the Bank of Lepanto some three or four days after having received same, and it therefore must have known at that time that appellee was desirous of procuring a loan, else he would not have sent in his abstracts and deeds. While it is true that the'loan business is not appellant’s principal business, it is undisputed, in fact testified to (by Mr. Peel, that his company had procured farm loans, not only for the Cotton States Company, but for another company, and it cannot therefore be said that it was not engaged in that kind of business.

It is. further insisted that there wia-s no surrender of the policy by appellee, and that, having kept same, he is now estopped from setting up the defense of fraud in the procurement of the note sued upon. In other words, it is insisted that, if a party who has been defrauded, after discovering the fraud, ratifies the acts of which he complains, he cannot thereafter rescind the contract. That is undoubtedly true and a correct statement of the law, but we do not think the evidence justifies the assumption that appellee ratified the contract. At least we cannot say that he did as a matter of law. The facts which have heretofore been stated made it a question for the jury, and the court submitted this question to the jury under this instruction: “If you should find that, if the contract is as the defendant claims it to be, but should find that, within a reasonable time, he did not notify them of the rescission of the contract and tender or offer back to them the policy, then your verdict would be for the note for the amount sued for.” The jury found for the defendant, and necessarily found that he did tender, or offer back to appellant, the policy within a reasonable time. We think there was substantial evidence upon which to base this instruction, as appellee testified positively that he told Warren that he could have the policy back, or he would go and get it for him, not having it in his pocket at the time, but that Warren told him he did not want it back, that he could do with it what he pleased, or something to that effect, and this ivas within a few days after the return to him by appellant of his abstract and deeds.

The case Avas submitted to the jury under correct instructions, and, finding no prejudicial error, the judgment is affirmed.