text:
    Western Union Telegraph Company v. Fleming.
    Opinion delivered October 27, 1924.
    1. Telegraphs and telephones — requirements as to piling claim. —A requirement in a contract for delivery of a telegram that the addressee should present his claim of damages to the telegraph company is complied with where he dictated his claim to the agent of the company.
    2. Telegraphs and telephones — damages for delay in delivery op message. — Where a telegxam offering to buy apples stipulated no price, and there was no contractual relation between the sender and the addressee, damages for delay in delivery were too remote and conjectural to form the basis of a right to recover.
    Appeal from Washington Circuit Court; W. A. Dickson, Judge;
    reversed.

      Francis R. Stark, Granvb & Neal, and H. C. Mechem, for appellant.
    The telegram did not constitute a contract between the sender and sendee. 58 Ark. 29; 133 Ark. 184; 92 Miss. 849; 47 So. 412. It was merely an initial step looking to the negotiations of a contract. 136 Ark. 63; 65 Ark. 537.
    Profits cannot be recovered, unless they are such as grow out of a contract perfected. 47 So. 412.
    The plaintiff erred in not presenting his claim in writing within sixty days after the message was filed for transmission. 80 Ark. 562. Where an agent varies from the authority given him, the acts will not bind the principal. 8 Ark. 227; 92 Ark. 315; 94 Ark. 301; 100 Ark. 360.
    A person dealing with an agent is bound to ascertain the nature and extent of his authority. 92 Ark. 315; 94 Ark. 301; 155 Ark. '224; 140 Ark. 306; 132 Ark. 155.
   McCulloch, C. J.

Appellee instituted this action against appellant to recover damages laid in the sum of $108.70, and alleged to have been sustained by reason of the negligent failure to deliver a telegraphic message. Appellant filed an answer denying the allegations of the complaint, and also pleading failure of appellee to present his claim for damages within the time specified by the contract. There was a trial of the issues before a jury, which resulted in a verdict in appellee’s favor for the amount of damages claimed.

■ Appellee is a farmer .and apple-grower near Spring-dale, in Washington County. In addition to marketing his own apple crop, he is engaged in the business of buying and -selling apples, and, previous to the sending of- the telegram which forms the basis of this controversy, appellee had had dealings with J. B. Sturdy, who lived at the town of Beebe, in White County. On October 31, 1922, Sturdy delivered to appellant a telegraphic message, addressed to appellee at Springdale, in words as follows: “Send me car of apples to Beebe, a few wine-saps, quick. Answer. Wire. Will mail draft today.” The message was transmitted to and received at appellant’s office in Springdale, but was not delivered for four days, but the proof shows it could have been delivered, for appellee resided only a short distance from town, and had a telephone in his home.

According to the testimony, appellee did not have on hand any apples from his own orchard, but he had made an .arrangement with another dealer, McClinton by name, to take from the latter a carload of apples at the prevailing price of $1.40- per bushel. If the telegram had been promptly delivered, appellee would have, according to his own testimony, sold to Sturdy the carload of apples he had engaged from McClinton, but, on account of the delay, McClinton sold the car of apples to another person, and apples advanced from $1.40 to $1.75 per. bushel from the day on which the telegram was received at Springdale to the time of its delivery, four days later. When the message was delivered to appellee, he went into the market and purchased a carload of apples at the prevailing price of $1.75 per bushel, and sold them to Sturdy, but the evidence does not show what price he received for them. Appellee testified that he incurred an additional expense of $24 in handling the carload of apples.

It is first contended that the evidence does not establish appellee’s right to recover, for the reason that he did not file his claim with the company’s agent in •accordance with the terms of. the contract. Appellee testified that, as soon as he received the message and discovered the delay in delivery, he went to McClinton to get the carload of apples which he engaged, but, finding that McClinton had sold the apples to another, he went to appellant’s office in Springdale and there presented his claim for damages. He testified that he informed the agent of the details, and, not having his reading-glasses with him, he dictated the claim to the agent, who wrote it down. This was, we think, a substantial compliance with the terms of the contract, and appellee’s right to recover is not defeated on account of the irregularity in failing to make out the claim himself.

It is next contended that the evidence is not sufficient to show any damages resulting from the negligent failure to deliver the message, and we think that this contention of counsel for appellant is sound. The delayed telegram did not, of itself, constitute a contract between the sender and sendee, but it was merely the initial step in negotiations for a contract of sale. The message stipulated no price, nor is there any proof that there was any contractual relation between appellee and Sturdy for a sale of. apples. As a mere proposal to purchase, the damages for loss were too remote and conjectural to form the basis of a right to recover. Western Union Tel. Co. v. Caldwell, 133 Ark. 184. There being no proof of a contract for the sale at any given price, the parties may or may not have been able to agree on terms. The fact that they did subsequently agree upon terms and consummate a sale, presumably at a profit to appellee, does not form a basis for the recovery of damages. If appellee had been deprived, by the non-delivery of the telegram, of the opportunity to purchase the apples from McClinton so as to take advantage of the advance in the market, or if it had been shown that he had been deprived of the opportunity to consummate a sale with Sturdy, then he would be entitled to recover damages (Western Union Tel. Co. v. Love Banks Co., 73 Ark. 205), but no such state of facts appears in the proof. Our conclusion therefore is that the evidence fails to establish the right to recover.

Reversed and remanded for a new trial.


source: Caselaw Access Project

author: McCulloch, C. J. Hart, J., Hart, J.,

license: Public Domain

text:
    Baldwin v. Brown.
    Original opinion delivered March 3, 1924.
    1. Appeal and error — conflict between decree and clerk’s certificate. — Where there is a conflict between the recital of the decree appealed from and'.the certificate of the clerk, the former must prevail.
    2. Appeal and error — presumption from absence of testimony.— Though the evidence in a chancery case on appeal is so conflicting that the court is unable to determine where the preponderance lies, yet, where a portion of the testimony heard by the chancellor is not in the transcript, it will be presumed that the decree is correct.
    3. Appeal and error — admission of incompetent evidence.— Though incompetent evidence was admitted in a chancery case, it will be presumed that the court gave consideration only to competent and revelant evidence.
    4. Equity — relief granted. — The statement of facts, and not the prayer for relief, constitutes the cause of action, and the court may grant any relief that the. pleaded facts warrant under a prayer for general relief, or without any prayer at all; but the court will not suffer the plaintiff to take a decree that is' not responsive to the issues nor justified by a full development of the case by the testimony.
    5. Cancellation of instrument — removal of incumbrance.— Where plaintiff sued to cancel a deed of land as procured by fraud, and made a party thereto one who in good faith held a mortgage on the land, she was entitled to recover from her grantee the amount required to redeem the land from the mortgage, without first paying the mortgage debt.
    6. Appeal and error — limitation—cross-appeal.—Where certain defendants appealed in the lower court from a decree canceling as fraudulent a deed executed by plaintiff, but foreclosing a mortgage executed by one of the defendants to an innocent mortgagee, and plaintiff -prayed a cross-appeal in the lower court from the decree of foreclosure, hut the transcript was not filed in the Supreme Court within 90 days, as required by Crawford & Moses’ Dig., § 2135, the subsequent granting of an appeal to defendants under § 2140, Id., did not operate to perfect plaintiff’s cross-appeal against the mortgagee-defendant who did not appeal.
    7. Appeal and error — time por appealing. — While a cross-appeal, under C. & M. Dig., § 2166, may be granted to an appellee against an appellant, or any co-appellee, at any time before the trial of the cause in the Supreme Court, an appeal by an appellee against a party who has not appealed is in effect an original appeal and must be prayed within six months from the rendition of the judgment.
    8. Fraud — remedies.—One induced to sell his land by false representations may sue for a rescission of the contract, or for damages sustained, or for rescission and damages where complete relief cannot be given by rescission alone.
    9. Equity — decree under general prayer. — In order to entitle the plaintiff to a decree under the general prayer different from that specially prayed, the allegations relied on must not only be such as to afford a ground for the relief sought, but they must have been introduced in the bill for the purpose of showing a claim to relief, and not for the mere purpose of corroborating the plaintiff’s right to the specific relief prayed, otherwise the court would take the defendant by surprise.
    10. Cancellation of instruments — relief under general prayer. — Where a vendor, suing to cancel a deed to his vendee for fraud, joined as parties third persons alleged to-have participated in the fraud, but asked only that her deed be canceled and for general relief, she was not- entitled to personal judgment against such third persons.
    Appeal from Washington Chancery Court; Ben F. McMahan, Chancellor;
    affirmed.

      W. N. Ivie and J. V. Walker, for appellants.
    1. The alleged false and fraudulent representations, both under the allegations of the complaint and under the proof, .all relate only to the value of the seven gold bonds of the Southwest Oil and Live Stock Association given as a consideration for the purchase of lands. There is no allegation or proof of confidential relationship between Baldwin and appellee, nor of any superior knowledge on his part as to the market value of the bonds. Representations that relate merely to the value of property, even if untrue, do not give the person to whom made a cause of action for damages against the party making them, nor a cross-action by way of recoupment or set-off. Smith on Law of Fraud, § 30; 76 Me. 223; 46 Minn. 463. Not only did Baldwin give appellee, as she herself admits, the opportunity to investigate the value of the bonds, but advised her to make such investigation. 3 Wyo. 356; 163 111. 17; Smith, Law of Fraud, § 34; 82 S. W. 433; 99 Ark. 438, 442; 11 Ark. 58; 19 Ark. 522; 46 Ark. 337; 47 Ark. 148; 95 Ark. 375.
    2. There was no justification in the pleadings, even as finally amended, nor in the proof, for a personal judgment against Hurst, F; L. Bradley and Josephine Bradley. Josephine Bradley was a bona fide purchaser for a valuable consideration. 132 Ark. 158; 145 Ark. 121.
    J. W. Grabiel, for appellee.
    1. It is seldom that fraud can be proved by direct evidence, because of the difficulty arising from its nature, and circumstances enter largely into the proof. 130 la. 513, 114 A. ,S. R. 443; 4 Wall. 463. But the allegations of fraud in this case were proved as completely as could be, short of a full and complete confession.
    2. To render one liable for damages in an action for deceit, it is not necessary that he shall have derived any benefits from the deception, or have colluded with the person who was so benefited, nor that he should have any interest in the contemplated transaction, or the subject-matter thereof, or in making the representation, or expected any benefit. 12 R. C. L. 394, par. 143.
    3. The liability 'of each of the defendants, Bradley, Hurst and Baldwin, is clearly established. Even if Baldwin had made no misrepresentations, he would be liable, because he is bound by what the others said. 21 Yt. 129, 52 Am. Dec. 46; 12 R. C. L. 403, §§ 150,151; Id. 402; Id. 429, § 176. Hurst, when Mrs. Brown was insisting that he disclose all the information he had relative to the bonds and the company that issued them, was bound to do so, and he could not avoid responsibility by stating only those things that were favorable to the matter in hand; Any concealment of facts which he knew would cause her to distrust his opinion or advice rendered him liable for fraudulent misrepresentations. 12 B. C. L. 310; 229 Mo. 27. While an express stipulation or warning may purge silence of its fraudulent import, yet there must be neither active concealment nor representations calculated to throw the other party off his guard. 9 Conn. 107. The rule that one may not rely upon representations of value or cost, but rather must .exercise his own judgment, does not apply where the parties do not stand on an equal footing, especially where there is a relation of confidence or trust between them, or where one is fraudulently prevented from making inquiries. 12 B. C. L. 381, § 132; Id. 283, § 47. For rule as to whether statements relative to the value of property are mere expressions of opinion, or are material representations, see 99 Ark. 438; 162 111. 417. The fact that Baldwin told Mr. and Mrs. Brown that they should investigate, which occurred after they suggested a time to investigate, does not remove the taint of fraud from his dealing with them. It is significant that he told them what they should do, where they should investigate, and directed their inquiries to the parties who were working with him. And the fact that these parties made reference to the source of their information does not remove the taint. 12 B. C. L. 441, § 186; 2 Pomeroy, Eq. Jur., 4th ed., 1856, §§ 895, 896.
   McCulloch, C. J.

The appellee, Mrs. Almyra O. Brown, was, on February 9, 1921, the owner of a farm in Washington County, containing 285 acres, which is the subject-matter of this controversy, and on that day she conveyed it to Thomas E. Baldwin, the sum of $7,000 being recited in the deed as the consideration for the conveyance. This consideration was in fact paid by the delivery to Mrs. Brown by Baldwin of seven so-called gold bonds of the 'Southwestern Oil & Livestock Association, of Fort Worth, Texas, an unincorporated concern doing business as a common-law trust. The b'onds were- each of the denomination of $1,000, bearing interest at eight per centum per annum, payable annually. Baldwin conveyed the land to Josephine Bradley, wife of F. L. Bradley, by deed dated February 12, 1921, but which was not filed for record until February 28, 1921; and on the last-mentioned date Mrs. Bradley mortgaged the land to Mrs. Lucy Wilson to secure a loan of money in the sum of $1,200. This mortgage was filed on the same date. On that date (February 28, 1921) Mrs. Brown instituted this action in the chancery court of Washington County against Baldwin to-cancel the conveyance on account of alleged misrepresentations concerning the value -of the -bonds which were delivered as the consideration for the conveyance. S. K. Leskey was joined as defendant in the suit, on an allegation that he claimed a lien on the land, but it does not appear that Leskey was ever served with process, and he has passed out of the -suit. Appellee filed a lis pendens under the statute -on the day that the suit was instituted. At that time appellant was not apprised of the conveyance from Baldwin to Mrs. Bradley, nor of the mortgage executed by Mrs. Bradley to Mrs. Wilson. Subsequently appellee amended her complaint and joined as defendants Mrs. Bradley. and Mrs. Wilson, alleging that neither of them were innocent purchasers for value, and also bringing in, as parties defendant, F. L. Bradley and George A. Hurst, alleging that they participated in the fraudulent misrepresentations by aiding Baldwin in inducing appellee to convey her land for the consideration named. Mrs. Wilson filed an answer, denying that she had knowledge of the fraud alleged to have been perpetrated on appellee, and she asked that appellants, Baldwin, Bradley and Hurst, be made parties, and that, if the court canceled her mortgage, she have judgment over against appellants for the amount of her debt.

The cause was heard by the court upon the pleadings and exhibits and the depositions -of numerous witnesses, whose names were set forth in the decree, and the court found in favor of appellee upon the charge of fraudulent misrepresentations, and canceled her deed to Baldwin and the deed from Baldwin to Mrs. Bradley, but found that Mrs. Wilson was an innocent mortgagee, and the decree vested title to the land in appellee, subject to Mrs. Wilson’s lien as mortgagee. The court also rendered a decree in favor of appellee for the recovery from Baldwin, Bradley and Hurst of the amount of Mrs. Wilson’s mortgage debt, with interest.

Baldwin, Bradley, Mrs. Bradley and Hurst prayed .an appeal, which was granted by the chancery court, and appellee also prayed an appeal from the decree in favor of Mrs. Wilson. This decree was rendered on November 23, 1922, and none of the appeals were perfected within ninety days, as required by statute, but on May 7,1923, Baldwin, Bradley, Hurst and Mrs. Bradley filed an authenticated copy of the record with this court and prayed an appeal, which was granted by the clerk of this court. Appellee obtained a cross-appeal on November 11, 1923.

There is a conflict in every phase of the testimony, and w.e are unable to determine where the preponderance lies, for the reason that the deposition of one of the witnesses, J. C. Barthell by name, is omitted from the’transcript. The record entry of the decree recites the name of this witness as one of the deponents in the trial of the case, but his deposition is not in the record. The clerk certifies that the record is complete, but,' there being a conflict between the recital of the decree and the certificate of the clerk, the former must prevail. Weaver-Dowdy Co. v. Brewer, 129 Ark. 193; Massey v. Kissire, 119 Ark. 222. The absence from the transcript of part of the testimony in the case raises the presumption that the decree was correct. It is therefore unnecessary, to discuss the testimony in further detail.

.It is insisted by appellant that some of the testimony of the witnesses was incompetent, but we must indulge the presumption that the court only gave consideration to such testimony as was competent and relevant. Niagara Fire Ins. Co. v. Boon, 76 Ark. 153.

It is .also contended that the personal decree in favor of appellee for recovery of the amount of Mrs. Wilson’s mortgage debt is erroneous on its face, for the reasons, (1) that appellee’s complaint contained no prayer for such relief, and (2) that appellee had no right of action for such recovery until she was compelled to pay the debt.

It is true that the complaint contained no specific prayer for such relief, but it contained a prayer for general relief, in addition to the specific prayer for cancellation of all the deeds, including the mortgage to Mrs. Wilson.

The rule established by decisions of this court is that the statement of facts, and not the prayer for relief, constitutes the cause of action, and that the court may grant any relief that the pleaded facts warrant under a prayer for general relief, or without any prayer at all. Kelly’s Heirs v. McGuire, 15 Ark. 555; Chaffee v. Oliver, 39 Ark. 531; Sannoner v. Jacobson & Co., 47 Ark. 31; Ashley v. Little Rock, 56 Ark. 391; Waterman v. Irby, 76 Ark. 551. An exception to this rule is that “the court will not suffer the defendant to be taken by surprise and permit the plaintiff to take a decree that is not responsive to the issues and which is not justified by a full development of the case by the testimony.” Mason v. Gates, 90 Ark. 241. This case falls within the rule and not within the exception. Appellants were made parties at the request of Mrs. Wilson to answer for alleged fraud in inducing her to accept a mortgage on the land. They were also made parties by appellee, and the question of their conduct in obtaining the deed from appellee and in obtaining the loan from Mrs. Wilson were issues directly raised by the pleadings. For that reason there could have been no surprise in granting relief on the general prayer. In fact, a personal decree for recovery of the amount of the incumbrance wrongfully placed on the land was the only available relief against appellant Hurst, for he was not an actual party to the conveyance and was not a proper party to this litigation for any other purpose.

. The right of action was not prematurely sustained, even though appellee had not paid the mortgage debt, for the recovery of this amount was a part of appellee’s damage in having her land wrongfully incumbered by the mortgage to Mrs. Wilson. She could not obtain a cancellation of the mortgage for the reason that Mrs. Wilson was an innocent party, but she was entitled to the only available reparation, which was to allow her to recover the amount necessary to redeem from the mortgage — otherwise she is without relief.

Appellee 'did not perfect her original appeal from the decree in favor of Mrs. Wilson within ninety days after the rendition of the decree, as required by statute (Crawford & Moses’ Digest, § 2135); in fact, she did not perfect the original appeal at all. If the transcript had been filed by any of the appellants within the prescribed time, this would have been sufficient to perfect all of the appeals which had been granted by the court below, but no transcript was filed by any of the appellants within the prescribed time. The present appellants — Baldwin, Bradley, Hurst and Mrs. Bradley— abandoned their original appeal, and, within six months, took a new appeal as provided by statute, Crawford & Moses’ Digest, § 2140. The granting of this appeal to the appellants did not have the effect of perfecting the original appeal granted to the appellee by the lower court. The statute (Crawford & Moses’ Digest, § 2166) provides that a cross-appeal may be granted to an appellee against an appellant 'or any co-appellee at any time before the trial of the cause in the Supreme Court. Appellee was not entitled to a cross-appeal against Mrs. Wilson, for the reason that the latter was not an appellant in the case, nor a co-appellee. The controversy between appellee and Mrs. Wilson 'Concerning the foreclosure of the latter’s mortgage was distinct from the controversy between appellee and the appellants, therefore appellee was not entitled to a cross-appeal. Shapard v. Nixon, 122 Ark. 530; Meyers v. Linebarger, 144 Ark. 389. It has been the practice here, in instances where a cross-appeal was improperly granted within the period of six months allowed by statute for obtaining original appeals, to treat the cross-appeal as an original appeal, but, in the present instance, the cross-appeal was not granted until after the expiration of six months from the date of the rendition of the judgment. Therefore it was too late to operate as an original appeal.

Opinion delivered April 21, 1924.

It follows from what we have said that the cross-appeal of appellee must be dismissed and that the decree of the chancery court against appellants must be affirmed. It is so ordered.

Hart, J.,

(on rehearing). The majority of the court is of the opinion that, under our decisions, the chancery court erred in rendering a personal judgment against George A. Hurst under the pleadings, and that his motion for rehearing in this respect should be granted.

The original bill filed by Mrs. Brown contains a specific prayer asking that the deed from herself to Thos. E. Baldwin be canceled for fraud and the contract for the sale of her land be rescinded. The bill also contains a prayer for general relief. Subsequently the plaintiff filed an amendment to her complaint. In it she stated that Thos. E. Baldwin, F. L. Bradley, and George A. Hurst had conspired together to defraud her out of her land, and asked that Bradley and Hurst be made defendants to the suit.

■■She further alleged that, in order to carry out their conspiracy, Baldwin had conveyed the land to Josephine Bradley, the wife of F. L. Bradley, and that she had mortgaged the land to Lucy Wilson for $1,200, and that she had placed the mortgage of record by the procurement of said 'Baldwin, Bradley and Hurst; that Lucy Wilson' had full knowledge of all the facts set out in the complaint, and that her mortgage is null and void as against the rights of the plaintiff.

The prayer of the amendment to the complaint is that, upon final hearing of the case, the deed from Baldwin to Josephine Bradley and the mortgage from Josephine Bradley to Lucy Wilson be by the court canceled, and the title of the plaintiff be quieted against all these parties. Josephine Bradley was also made a party defendant, and there was also a prayer for general relief.

One who has been induced to sell his land by false representations may sue for a rescission of the contract or may sue for damages sustained by reason of the false and fraudulent representations, or upon proper allegations may sue to rescind the contract and to recover damages where complete relief could not be granted in a suit for a rescission of the contract. Matlock v. Reppy, 47 Ark. 148.

The plaintiff, as she had a right to do, specifically asked for a rescission of the contract, and claimed that Mrs. Wilson was not an innocent holder of the mortgage. It is true that her complaint contained a prayer for general relief, but that did not entitle her to a personal judgment against Hurst for damages.

This court has approved the statement of the rule by Mr. Daniell in his work on Chancery Pleading & Practice, w¡hich is as follows: “It is to be observed that, in order to entitle the plaintiff to a decree under the general prayer, different from that especially -prayed, the allegations relied upon must not only 'be such as to afford a ground for the relief soug’ht, but they must have been introduced into the bill for the purpose of showing a claim to relief, and not for the mere purpose of corroborating the plaintiff’s right to the specific relief prayed; otherwise, the court would take the defendant by surprise, which is contrary to its principles. ” Cook v. Bronaugh, 13 Ark. 183; Rogers v. Brooks, 30 Ark. 612; and Mason v. Gates, 90 Ark. 241.

In the case first cited the plaintiff brought suit for the specific performance of a contract for the purchase of certain slaves. The bill also contained a prayer for general relief. The proof showed that the plaintiff was a lawyer, and professional services by himself for the defendant were proved as a consideration for the contract for the purchase- of the slaves, which was sought to be specifically enforced. The circuit court, sitting in chancery, refused to decree the specific performance of the contract, but rendered judgment in favor of the plaintiff against the defendant for the value of his professional services. The Supreme Court held that the court below correctly refused to decree the specific performance of the contract, but erred in rendering a judgment in favor of the plaintiff for his professional services. The rule laid down by Mr. Daniell above was quoted with approval.

This court, however, held that the circuit court went beyond the state of the case before it, and said that, if the plaintiff Was doubtful about his right to recover upon the state of the case presented, he should have set forth the facts to entitle him to recover compensation for his services and have made his prayer in the alternative, so that, if relief should be refused him upon one of the grounds alleged, he might be decreed relief upon the other.

The court further said that, instead of relying solely upon the right of specific performance to his contract, if the plaintiff had set forth his claim to compensation for special services and made a specific alternative prayer for relief, or even under the general prayer, the court would not say that he should not recover. In the case before us the plaintiff relied alone upon her right of rescission; and the granting of other relief might tend to surprise the-defendant. ' .

In the second case cited, W. H. Rogers, as administrator of the estate of Mary Rogers, brought' ejectment against Broo-lcs for certain land. Brooks filed an answer* and equitable counterclaim. He alleged that fhe land had been purchased under an agreement that the plaintiff and defendant should share equally in it. ■ The prayer of the answer was that the deed to the land which had -been taken in the name of Mary Rogers be declared to be a' fraud upon the rights of the defendant; that she be declared a trustee of the land for her husband, .William H. Rogers, and that the defendant, Brooks, have an accounting of the partnership matters between the plaintiff and the defendant; that the payments made by the defendant to the plaintiff be applied to the payment of the purchase money for one-half of the land, and that defendant have judgment against the plaintiff for the balance due him on said accounting and for other proper relief. It was proved at the trial that Brooks had furnished $2,000 to be applied towards the purchase price of the land in question, and that Rogers had purchased another tract of land with it. The court below charged this sum as a lien upon the outside tract. The court held that there was nothing in the pleading to warrant this decree.

In the last citéd case, Gates brought suit in the chancery court against Mason to quiet his title to, certain lots which were asserted to be in the possession of the plaintiff, and the defendant answered and denied that the plaintiff had been in possession of the lots claimed by him. His answer was made a cross-complaint, and contained a prayer that the .suit of the plaintiff be dismissed for want of equity, and for such other and further relief as might be necessary. This court held that, under the general prayer of the answer, the defendant was not entitled to have his title to the lots quieted. The rule laid down by Mr. Daniell, as above stated, was quoted with approval; but the court said that, inasmuch as the defendant did not ask that his title be quieted, this issue was not made by the pleadings, and was in effect inconsistent with the relief asked. It was also said that the testimony was not developed along this line, and ■that this court on appeal could not make a proper finding thereof. In discussing the question the court said: “But while, in modern procedure, a great liberality is given to the construction and effect of pleadings, so that the substance may take the place of form and the true rights of the parties enforced as they can be actually seen, yet it is necessary that each party be given full knowledge of what the issues are, so that he can develop and present the evidence of his side of the case, to the end that the full truth can be brought before the court. The deficient relief may be supplied under the prayer for general relief, but the court will not .suffer the defendant to be taken by surprise, and permit the plaintiff to take a; decree that is not responsive to the issues and which is not justified by a full development of the .case by the testimony.”

The result of these decisions is that, if a plaintiff asks for a particular relief, and other relief, he can have no relief inconsistent with such particular relief, although founded upon the complaint. See also Norris v. Johnson, 151 Ark. 189, where it was held that, where liability for the rents upon lands of an estate was not made an issue in a suit to construe a will, and was not fully developed in the evidence, it was error to render judgment for such rents.

It is conceded that the rendering of a personal judgment against Hurst in favor of the plaintiff is not the special relief sought by her, and, if the decree in this respect is-to be sustained, it must be under the general prayer for relief. As we have just seen, under a general prayer the relief given must be agreeable to the case made by the complaint and not different from it or inconsistent with it.

In the case of Cook v. Bronaugh, supra, the court said that, although it may from the proofs be apparent that the plaintiff is entitled to other relief, yet, unless the bill is so framed as to put such facts at issue, the court will not decree such further relief; for it would be decreeing upon an issue not before the court and to which the proofs could not properly apply, and would tend to surprise the defendant.

No personal judgment is asked against Hurst. The mortgage of Mrs. Wilson is specifically alleged to have been given in fraud of the rights of the plaintiff, and Mrs. Wilson is alleged to have participated in the fraud. It cannot be supposed that the court understands what •relief the plaintiff desired better than she did' herself; or that the rendition of the personal judgment could not occasion any surprise to Hurst.

Under the allegations of the bill, Hurst was not required to make any proof as to the amount of damages suffered by the plaintiff. He had a.right to meet her on the issues which she presented in her pleadings. There is no bill of exceptions or other method of bringing in the record the testimony, and the presumption is that the fact would only sustain a decree within the scope of the pleadings. Hurst might have found out that he himself had been deceived by Baldwin and was willing that Mrs. Brown should have the contract of sale rescinded and her deed to Baldwin canceled. In any event, the state of the pleadings did not apprise him that any personal judgment would be asked against him, and we think that to grant this relief was inconsistent with the relief asked in the bill.

As above stated, if the plaintiff was doubtful about what her rights were, she would have asked alternative relief in her prayer. She alleged in positive terms that Mrs. .Wilson was a party to the alleged fraud. If she was in any doubt about this matter, she could have asked alternative relief in the way of a personal judgment against the other defendants, in case the court should find that Mrs. Wilson had advanced the money in good faith' and had taken the mortgage to secure it. Having planted herself upon the issue that Mrs. Wilson was a party to the fraud, and that her mortgage should be canceled, we do not think it would be consistent with the state of the pleading to render a personal judgment against Hurst for damages. There should have been something in the pleadings- to apprise him that this would be an issue in the case, so that he might meet it with' the nroof. Otherwise, it will be presumed that the proof introduced was such as to meet the issues made by the pleadings.

Opinion delivered December 1, 1924.

It follows that a rehearing will he granted to Hurst with respect to the personal judgment against him in favor of the plaintiff, and this part of the decree will be reversed, and the action against him in this respect dismissed.

Although the other , defendants have not joined Hurst in his motion for rehearing, what we have said with respect to Hurst also applies to the personal judgment in favor of the plaintiff against Thos. E. Baldwin, P. L. Bradley and Josephine Bradley, and that part of the decree in which a personal judgment against them is rendered is also reversed, and the action against them in this respect is dismissed.

The Ohief Justice and Mr. Justice Smith dissent.

Hart, J.,

(on second rehearing). The opinion in this case on the former rehearing held that the plaintiff, under a prayer for general relief to cancel her deed to Baldwin for fraud, was not entitled to recover a personal judgment for damages against Hurst and the other defendants.

Counsel for appellee then represented to the court that he had asked and obtained leave of the court to amend1 the prayer of her complaint by interlineation, to show that she had asked judgment for damages against the defendants. This court then made an order to continue the case to enable the parties, or either of them, to obtain from the chancery court, “in accordance with the decisions of this court in Hagerman v. Moon, 68 Ark. 279, a correction of the record, if any error is found therein, with respect to the interlined words in appellee’s amendment and supplement to her complaint, and to bring into this court on certiorari any order made by said chancery court, with respect to such correction. ’ ’

In Hagerman v. Moon, supra, this court held that parties aggrieved by errors in the record of the court below, and desiring to have them corrected, should apply to that tribunal for correction, and not to this court. There it was contended in this conrt by the defendant that the action was not submitted npon the amendjnent ■ of the complaint, bnt upon the complaint and exhibits and the answer and exhibits. The record1, however, showed that the defendant was in error, and that the case was submitted upon the amendment in the court below, and this court held that it should be governed by the record.

In the exercise of our lawful discretion in the premises, however, we set aside the submission in this court and continued the matter, in order that the parties, or either of them, could apply to the chancery court for a correction of the record1, so as to show that the case was submitted to the chancery court on an amendment to the complaint allowing the plaintiff to ask for personal judgment for damages against Hurst and the other defendants.

The record shows that the chancellor who originally tried the case was dead when the application to amend the record was made. His docket showed that the plaintiff was given permission to amend her complaint by interlineation, but it does not show in what respect. Parol evidence was introduced by appellee tending to show that the interlineation granted by the court was to permit the plaintiff to ask for personal judgment for damages against Hurst and the other defendants.

On the other hand, the evidence for the appellant tends to show that no such amendment was asked for or máde by the plaintiff to her complaint. The evidence for appellant tends to show that the interlineation which the chancery court granted by the notation in question on his docket was asked for because the contention of the plaintiff was that the allegations of the complaint were sufficient to connect Bradley and Hurst with the issues óf fraud involved in the case, and that the only thing mentioned in the argument of the matter was that the complaint did not even contain a prayer for any relief against these parties.

I am of the opinion that the only amendment that was intended to be made to the record in the court below was to allow a nunc fro tunc entry, if the facts should warrant that course, on the record1, to show that the plaintiff was permitted to amend her complaint so as to ask a judgment for damages against Hurst and the other defendants.

In Bobo v. State, 40 Ark. 224, this court held that parol evidence of a judgment which was omitted from the record is sufficient to authorize a nunc fro tunc judgment; hut that such correction, after the term at which the original judgment was rendered, should be made with caution and after satisfactory evidence. This rule has been steadily adhered to ever since.

Tested by this rule, I do not think that the evidence is of that clear, convincing and decisive character that is necessary to establish a nunc fro tunc order. No doubt all the parties are testifying honestly as to their recollections about the matter, but the testimony of the witnesses is flatly contradictory, and they are of equal credibility. Hence it cannot be said that the fact that the court granted the plaintiff leave to amend her complaint by interlineation so as to show that she asked a personal judgment against Hurst and the other defendants was established by clear and satisfactory evidence. Then the case must stand before us as it did when the original opinion on rehearing was delivered, and, no specific relief of that character having been asked against Hurst and the other defendants, the court was not warranted in rendering a personal judgment against them under the prayer for general relief.

I do not think that the question of whether or not the interlineation was in the complaint when the transcript was first filed in this court and was left out of the transcript by mistake is controlling. Even if the interlineation had been there, if the plaintiff was not given leave to make it, it could not be availing here. Unless the amendment was made by leave of the court, it could not have influenced the court in the premises. In other words, if the court did not give the plaintiff leave to amend her complaint in the respect in question, it is manifest that the court rendered a personal judgment against Hurst and the others under the belief that it had the power to do so under the prayer for' general relief.

Judge Humphreys concurs with me in the views expressed above. Therefore we are of the opinion that the motion of appellee for a rehearing should be denied.

Jud'ge Wood thinks it should be denied because a preponderance of the evidence shows that the interlineation in question was not in the complaint at the time the transcript was filed in this court.

Thus it results that the majority of the court, for different reasons, are of the opinion that the motion of appellee for rehearing should be denied, and it is so ordered.

McCulloch, C. J., and Smith, J., dissent.


author: Smith, J.

text:
    City National Bank v. DeBaum.
    Opinion delivered July 7, 1924.
    1. Licenses — violation op blue sky law. — Failure of a domestic corporation selling its own stock to comply with the Blue Sky law (Crawford & Moses’ Digest, § 751 et seq.) renders notes given for such stock invalid and noncollectable, except by an innocent purchaser for value.
    2. Licenses — application op blue sky law. — The Blue Sky law applies to domestic as well as to foreign corporations selling their own stock..
    3. ' Bills and notes — invalid note — estoppel.—The fact that the maker of a note, invalid because the transaction involved a violation of the Blue Sky law, assured a purchaser of the note that it would be paid, will not estop him from setting up such invalidity when sued upon the note.
    4. Contracts — violation op law — validation.—Contracts made in violation of law are not rendered valid by renewals or by subsequent promises to perform them.
    5. Bills and notes — invalid note — innocent purchaser. — The right of an innocent purchaser to recover on a negotiable . instrument cannot ¡be defeated merely because it is based on an illegal transaction or one' prohibited by law, unless the statute makes such instrument absolutely void.
    Appeal from Sebastian Circuit Court, Fort Smith District; John E. Tatum, Judge;
    affirmed.

      James B. McDonough, for appellant.

      Warner, Hardin •& Warner and Gallaher & Gean, for appellees.
    Appellees were entitled to an instructed verdict, because the notes sued on were illegal and void, having been given for stock issued and sold in violation of the statutes, the Blue Sky law, and of the Constitution, art. 12, § 8, by a domestic corporation. C. & M. Digest, §§ 750 et seq.; 147 Ark. 402; '217 Fed. 904; Ann. Cas. 1916A, 701.

      Cravens é Cravens and James B. McDonough, in reply.
    The Blue Sky law does not apply to a glass manufacturing company. This company was not organized under that law but under C. & M. Digest, §§ 1700 et seq. The Blue Sky law is directed against the sale of contracts, stocks and securities of fly-by-night concerns, and not against the issuance of stock by an operating manufacturing corporation. The capital stock of the glass company is not a security within the meaning of the Blue 'Sky law, and the definition of an investment company under C. & M. Digest, § 751, does not include a corporation organized to manufacture glass. In this case, DeBaum and Fentress were in the attitude of subscribers for part of the residue of the capital stock remaining unsubscribed by the corporators, the authorized capital stock being $100,000, and the incorporators having subscribed $51,000. C & M. Dig., § 1714; 54 Ark. 316; 161 Ark. 294; 123 Ark. 575; 242 IT. S. 539; L. R A., 1917F, 524, note;-217 Fed. 904; 110 Ark. 269; 218 Fed. 482; 37 Neb. 197; 149 Wis.;631; 88 N. E. 879.
   Smith, J.

The’ City National Bank brought suits on the promissory notes of appellees DeBaum and Fen-tress, which were consolidated and tried together. The notes were payable to the Crystal Glass Company, and had been indorsed and delivered by that company to the bank as collateral to a loan made the company by the bank. 'The Crystal Glass Company, hereinafter referred to as the company, was .organized as a manufacturing corporation with an authorized capital of $100,000. Fifty-one thousand dollars of this stock was subscribed for, of which $10,000 was paid in cash and $41,000 in property. After the company had received its certificate of incorporation, stock was sold to DeBaum and Fentress, in payment of which they executed their notes to the company. We think this so clearly appears that it may be treated as an undisputed fact. The articles of agreement and incorportation of the company do not show that either DeBaum or Fentress were among the original incorporators or that either of them were subscribers for stock in said company at the time of its incorporation in August, 1920.

The notes first given for this stock were not paid, but were renewed after a payment had been made on one of them, and before the renewal notes matured the company was adjudged a bankrupt, and, when DeBaum and Fentress refused to pay the notes on their maturity,'this suit Avas brought to enforce payment.

It was shown on behalf of the bank that it accepted the notes in the usual course of business, for value, and before maturity, and without knowledge of the consideration for which they had been given, and as to one of the notes the bank offered testimony to the effect that one of its officers asked the maker of the note about it before accepting it and was assured that the note would be paid by the maker. It Avas not shown, however, that any question was asked about the consideration for the note, or that the maker made any misrepresentation concerning it. The bank therefore insists that the maker of this note is estopped to question its validity on that account.

It is admitted that the company did not comply with the provisions of the statute known as the Blue Sky law ('§§ 751 et seq., C. & M. Digest), and the notes are voidable for that reason.

It is insisted that it was not shown that the stock was actually issued; but we regard this, as unimportant, as the consideration for the notes was the agreement on the part of the company to issue the stock upon the payment of the notes, so that the consideration for the notes was in fact the agreement to issue the Stock. The company had therefore agreed to issue stock for a note, and it had made this contract without complying with the requirements of the Blue Sky law.

The case of Randle v. Interstate Grocer Co., 147 Ark. 402, appears to be decisive of this case, unless the bank is an innocent holder of the note sued on. There the corporation had sold Randle shares of its stock and had taken renewal notes in payment, and, upon his refusal to pay his note, the corporation sued him. The provisions of 751 and 762, C. & M. Digest, were set out in the opinion, and the court held that the sale, having been made in violation of law, was void, and the corporation’s right to recover was denied. We quoted from the case of Compagionette v. McArmick, 91 Ark. 69, as follows: “A sale is illegal where the statute expressly declares it to be so, or where it prohibits its execution; and a sale is equally invalid where the statute only imposes a penalty upon the party for making it.' It is not necessary that the statute should expressly declare the contract of sale to be void; but the infliction of a penalty upon what is declared as an offense implies a prohibition of such act, and thereby renders void any contract founded on such act. In this State it is the well settled doctrine that ‘every contract made for or about any matter or thing which is prohibited and.made unlawful by statute is void.’ ” Following this quotation we said: “So here the statute makes it unlawful for a person, firm or corporation of another State to come into this State and sell stocks without obtaining permission from the Bank Commissioner, in accordance with the statute. The plaintiff sold the stock without complying with the statute, and thereby rendered the contract void.”

It is- true that the sale in the Randle case was made by a foreign corporation, while in the instant case the contract. of sale was made by a domestic corporation. But this fact is unimportant, for the reason that the statute imposes the same requirements on the domestic corporation in the matter of the sale of its stock as is imposed upon a foreign corporation.

Section 751, C. & M. Digest, reads as follows: “Every person, corporation, copartnership, company, or association (except those exempt under the provisions of this act), organized or which shall hereafter be organized in this State, whether incorporated or unincorporated, which shall either himself, themselves or itself, or by or through others, sell or negotiate for the sale of any contract, stock, bonds or other securities issued by him, them, or it, within the State of .Arkansas, shall be known for the purposes of this act as a domestic investment company. Every such person, corporation, copartnership, or association a resident of or organized in any other State, territory or government shall be known, for the purposes of this act, as a foreign investment company. ’ ’

It will be observed that this section designates every •person, corporation, copartnership, company, or association (except those exempt under the provisions of this act), organized or which shall hereafter be organized in this State, whether incorporated or unincorporated, which shall sell or negotiate for the sale of any contract, stock, bonds or other securities issued by him, them, or it, as a domestic investment company. And that every such person, corporation, copartnership, or association a resident of or organized in any other State, territory or government shall be known for the purposes of the act as a foreign investment company. No distinction is made therefore between domestic and foreign corporations, except that the first is designated as a domestic investment company, while the latter is designated as a foreign investment company.

As no other distinction is made between domestic and foreign corporations, the same rule mnst be applied to each, and, if a foreign corporation cannot sell or contract to sell its stock without complying with the statute, it necessarily follows that a domestic corporation must likewise comply with the statute before offering its stock for sale.

The statute is very comprehensive in its terms, and applies to all sales of stocks and securities except those exempted from the provisions of the act by § 752, C. & M. Digest. There are eight of these exemptions, which need not be enumerated' here, as it very clearly appears that the stock for which the notes sued on were given is not embraced in these exemptions.

Under the statutes of this State governing the organization of manufacturing and other business corporations (§§ 1700 et seq., C. & M. Digest), it is provided that three or more persons may, by articles of agreement in writing, assume - any name agreed upon, and become a body politic and corporate. The statute requires that, before the corporation shall commence business, the president and directors thereof shall file their articles of association, and also a certificate setting forth the purposes for which the corporation was formed, the amount of its capital stock, the amount actually paid in, with the names of its stockholders and the number of shares owned by each, with the clerk of the county in which the corporation is to have its principal place of business, and shall thereafter file said articles and certificate, bearing the indorsement of the county clerk, in the office of the Secretary of State, and, after this certificate has been recorded in the office of both the county clerk and the Secretary of State, and the fees paid which are required by law, the Secretary of State issues to the incorporators a certificate, which is commonly designated as a charter, and the organization then becomes a corporate entity.

The Blue Sky law, appearing as §§ 751 et seq., C. & M. Digest, does not apply to these steps preliminary, to the organization of a corporation. The statute relating’ to the organization of corporations does not require that all the stock authorized shall he subscribed before the Secretary of State shall issue the certificate of incorporation, but, after the corporation is organized and has become an entity, it comes within the operation of the Blue Sky law, and cannot sell its unsubscribed stock without first complying with the laws of the State governing such sales.

As we have said, the notes sued on were executed for the stock of a corporation, and, upon the authority of the Randle case, su/pra, the transaction was void, unless the bank acquired them as an innocent purchaser.

Upon the proposition that one of the makers of the note had said that it was his note and would be paid, it suffices to say that the law is, as stated in 13 C. J., § 451, p. 506, that “a party to an illegal contract cannot, either at the time of the execution of the contract or afterward, waive his right to set up the defense of illegality in any action thereon by the other party.” And at § 453 of the same authority it is said: “An agreement void as against public policy cannot be rendered valid by involdng the doctrine of estoppel.”

It was said in the case of Embrey v. Jemison, 131 U. S. 336, that contracts made in violation of the law were not rendered valid by renewals or by subsequent promises to perform, and that this defense was not for the benefit of the party to such a contract, but to maintain the policy of the law. Numerous cases to the same effect are cited in the brief of counsel for appellee. See also Faircloth v. DeLeon, 7 S. E. 640; Dunham v. Presby, 120 Mass. 285, 289; Cardoze v. Swift, 113 Mass. 250; American Mfg. Co. v. Crescent Drug Co., 73 Sou. 883; Wilde v. Wilde, 56 N. W. 724: Barton v. Port Jackson, etc., Co., 17 Barb. (N. Y.) 397; Cansler v. Penland, 48 L. R. A. 441; Pullman Palace Car Co. v. Central Transportation Co., 171 U. S. 138, 149; Coppell v. Hall, 7 Wall. 542; Wheeler v. Wheeler, 5 Lansing (N. Y.) 355; Hardy v. Smith, 136 Mass. 328, 331; Carter v. Bradley County Road Imp. Dists. 1 and 2, 155 Ark. 288.

The bank cannot therefore recover on these notes unless the showing is made that it acquired them as an innocent purchaser.

Testimony was offered by the bank tending to show that it acquired the notes in the usual course of business, for value, and before maturity, and without knowledge that they had been executed in violation of the Blue Sky law; but the court refused to submit this issue, upon the theory that they were void even in the hands of an innocent purchaser, inasmuch as they were executed in payment of stock which had been issued in violation of law.

In the case of German Bank v. DeShon, 41 Ark. 331, Judge Battle said: “It is true, as a rule, that a bona fide holder, who has received negotiable ‘paper in the usual course of business,’ as said by Mr. Daniel in his work on Negotiable Instruments, ‘is unaffected by the fact that it originated in an illegal consideration, without .any distinction between cases of illegality founded in moral crime or turpitude, which are termed mala in se, and those founded in positive statutory' prohibition, which are termed mala prohibita. The law extends this peculiar protection to negotiable instruments, because it would seriously embarrass mercantile transactions to expose the trader to the consequences of having the bill or note passed to him; impeached for some covert defect.’ But there is one exception to this rule, and that is, when a statute declares a contract void, it gathers no vitality by its circulation in respect to the' parties executing it, but it and the instrument evidencing it are void in the hands of every holder.” (Citing numerous cases).

It appears therefore that the right of an innocent purchaser of a negotiable instrument to recover cannot be defeated because the note originated in an illegal consideration, and that it is immaterial whether the illegality is founded in moral crime or turpitude, or in violation of a positive statutory prohibition, unless the statute prohibiting the act shall also declare that the contract on which the transaction was based is void.

It appears somewhat anomalous that a note may be based on an illegal or immoral consideration, or executed in. violation of a positive statutory prohibition, and yet be enforceable when held by an innocent purchaser, unless there is an express declaration that such a contract is void; while, on the other hand, a recovery will be denied, even to an innocent purchaser, if there is an express statutory declaration that the contract forming the consideration for the note is void, or that the maker thereof may make defense to the collection of the same in the hands of any holder, as in case of notes for patent rights, etc., .although the execution of such contracts themselves may not be either a crime or a misdemeanor. But the case of German Bank v. DeShon so declares the law. That was a suit on a note yoid for usury, and the right to recover was denied an innocent holder because usurious contracts are declared void-by the Constitution, although they are not made either crimes or misdemeanors.

. It follows therefore from the decision in the Randle case, supra, that the payee in a note executed in violation of the Blue Sky law cannot recover; but it also follows from the case of German Bank v. DeShon, supra, that the right to recover on such a note will not be denied an innocent holder because the Blue Sky law does not contain the declaration that contracts executed in violation thereof are void.

The judgment of -the court below will therefore be' reversed, with directions to submit to the jury the issue whether the bank is an innocent-holder thereof.

If, upon the retrial here ordered, testimony should be offered that the notes sued on were not in fact executed in violation of the Blue Sky law, as that statute is herein interpreted, that issue may also be submitted to the jury.

For the error indicated the judgment of the court below is reversed, and the cause is remanded for a new trial.

Hart and Humphreys, JJ., concur.


author: Humphreys, J.

text:
    Koehler v. Hunter.
    Opinion delivered July 14, 1924.
    1. Partnership — accounting;—In a suit for dissolution of a partnership and an accounting, evidence held to support a finding that defendant was indebted to plaintiff for an advancement for joint purchase of a gold mine.
    2. Partnership — advancement to partner — interest.—Where one of two partners made an advancement to the other, he was entitled to interest at the legal rate from date of the written contract acknowledging the indebtedness.
    3. Partnership — division of assets. — Upon a dissolution o'f a partnership, where the assets were insufficient to repay the amounts advanced by the partners toward the enterprise, the court properly divided the assets in proportion to the advancements made by the partners.
    4. ' Partnership — salary of managing partner. — A partnership agreement covering a gravel business which provided that the managing partner should not receive a salary until “the company is ready to begin the actual business of mining gravel” contemplated that he should receive a salary when the actual operation of the gravel plant should begin.
    5. Partnership — salary of managing partner. — A partner who managed the business without agreement as to the amount of his salary, but with the understanding that he was to be paid, was entitled to the reasonable value of his services.
    Appeal from Craighead Chancery Court, Western District; Archer Wheatley, Chancellor;
    reversed in part.

      J. F. Gmtney, for appellant.
    The court erred in refusing to grant Koehler a salary. Where there is an express agreement to pay a salary or where it can be fairly and justly implied, from the course of dealing between the partners, that one partner is to be compensated for his services, his claim will be sustained. 64 Wis. Ill; 54 Am. Rep. 593. Where one partner is intrusted with the management of the partnership business, and, ¡at the instance of his copartners, devotes his whole time and attention to it, the case is taken out of the general rule, and the law implies an agreement to pay the active managing partner for his services. 166 Pac. 235; L. R. A. 1917F, 571; 162 N. W. 118; 33 S. E. 289. Where one agrees to pay a certain sum from profits realized through the performance of a contract, the failure to realize profits relieves the promissor. 29 App. (D. C.) 571; 6 Hun. 264; 25 Ark. 64.

      L. G. Going, for appellee.
    A court of equity may dissolve a partnership where all confidence between the partners has been destroyed. 20 R. C. L. § 182; 5 Ark. 270; 40 S. W. 342; 9 Kan. 435; 68 N. W. 980; 4 Ann. Cas. § 180. There was no error in the court’s refusal to allow Koehler a salary for his services. 119 Ark. 148; 117 S. W. 915.
   Humphreys, J.

This suit was brought on November 12, 1921, in the chancery court of Craighead County, 'by appellee against appellant for the dissolution, accounting, and division of the assets of a partnership organized on December 10, 1919, for the purpose of mining and selling gravel. ■ The opening and operation of the gravel pit involved the construction of a mile and one-half of railroad and the purchase of expensive machinery. It was provided in the articles of copartnership that appellant and appellee should advance money for this purpose not to exceed $33,000, in the proportion of one-third by appellant and two-thirds by appellee. Each advanced more than the maximum provided for in the contract. The venture was unsuccessful, so, when this suit was brought, a receiver was appointed to take charge of the concern and operate it during the pendency of the suit. At the receiver’s sale the assets sold for $22,500 and the assumption by the purchaser of the unpaid commercial debts of the concern amounting to $15,500. • The proceeds derived from the sale of the assets were insufficient to repay .appellant and appellee the respective amounts advanced by* them, so, after ordering the receiver to pay the costs of the receivership and adjusting the various items of debit and credit between the partners, the trial court ordered that the excess be divided between them in the proportion of two-thirds to Hunter and one-third to Koehler. In the audit of the account between them the court refused to allow appellant, as an overpayment on his contribution- to the partnership, the $6,800 claimed by him as a salary at $400 per month from Jjune 1, 1920, to November 1, 1921, for managing the business, and allowed appellee an item of $8,165.10 for an interest which he claims to have sold appellant in the Gold Dust Mining Claim in Colorado. An appeal has been prosecuted to this court for the purpose of challenging the correctness of the ruling of the trial court as to these items and the proportion in which the assets were divided between the partners.

Appellant contends that the finding of the trial court, to the effect that he was indebted to appellee in the sum-of $8,197 or the interest in the Gold Dust Mining Claim, is contrary to the weight of the evidence.

Appellant testified that appellee owned a two-thirds interest and he a one-third interest in a gold mine- at Breckenridge, Colorado, and that he agreed to pay appellant $8,197 for a full one-half interest therein, so as to make them equal owners, in case he made it out of the gravel pit; that he was not to take a half interest in said gold mine unless he could pay for it out of the profits derived from the operation of the gravel pit.

Appellee testified that he and appellant purchased the gold mine togéther, and that he advanced $8,197 to appellant on his part of the purchase price, for which amount he executed a note; that on December 24, 1919, the note was surrendered, and that he and appellant entered into a contract in which the indebtedness was admitted, and whereby one-half of the profits to be realized in the operation of the gravel pit was pledged to secure the payment of the amount.

The contract referred to contains the following recitals:

“Whereas, C. W. Hunter and Paul Koehler, of Memphis, Tennessee, jointly owned what is known as'the Gold Dust Mining Claim, located near Breckenridge, Colorado, and, while the ownership is intended to be in equal shares, said C. W. Hunter has advanced and put in said business the sum of twenty-one thousand and four hundred sixty-two and 30/100 ($21,462.30) dollars, while the said Paul Koehler has advanced and put in said business the - sum of five thousand one hundred thirty-two and 10/100 ($5,132.10) dollars, and,
“Whereas, it is the intention and desire of said Paul Koehler to secure to the said C. W. Hunter the payment of excess advancements made by said Hunter in said business, and, for the purpose of so securing the said C. W. Hunter, the said Paul Koehler hereby transfers and assigns to said C. W. Hunter one-half of all profits which become due him under a certain contract entered into between Paul Koehler, C. W. Hunter, D. A. Pelton, J. W. Reid1, and J. P. Gautney, dated December 10, 1919.”

. We think the recitals in the written- contract strongly corroborate appellee’s version of the agreement, and that the finding -of the chancellor, to the effect that appellant was indebted to the appellee in said sum, is supported by the weight of the testimony. It was proper also to allow interest on this amount, at the legal rate, from the date of the written contract acknowledging the indebtedness.

Appellant next contends that the trial court committed reversible error in not dividing the excess, after deducting the overpayment by the partners, equally between them. The copartnership' agreement provided for an equal division of the profits between the partners, but this provision had no application in the audit of the account, for there were no profits. The gravel pit was opened and operated at a great loss.

The copartnership agreement contained the following paragraph: “It is mutually agreed that there shall be no division of profits amongst the several copartners until the earnings of the company shall be sufficient to repay to the copartners herein all moneys which they or either of them may have advanced for the purchase of machinery, construction of railroads, tramways, buildings, purchase of leases, real estate or other things necessary for the successful conduct of said copartnership, together with interest thereon at the rate of six per cent, per annum from tbe date of such advancement until paid. ’ ’

The assets did not sell for enough to repay appellant and appellee advances which they made, hence the court properly applied the clause quoted above in auditing the account.

Appellant’s last contention is that the trial court erred in disallowing the salary item claimed by him for operating the gravel pit. He claimed $400 per month as salary from June 1, 1920, until November 1, 1921. On June 1,1920, the plant was completed and put into operation. At that time appellant assumed the entire control and management thereof, which required a great deal of his time. Appellee did not participate in the management of the business at all, and claimed he did not know that appellant had drawn a salary of $400 per month until the books were audited in the early summer of 1921, else he would have objected. He also denied that appellant mentioned the matter of salary to him or the amount thereof in the office at Memphis or in J. F. Gahtney’s office in Jonesboro.

Appellant testified that, when they began to mine gravel, he informed appellee in the office at Memphis that he was going to charge a salary of $400 per month for operating the plant, and that later the matter was discussed in the office of J. F. Gautney in Jonesboro, and that no objection was made to the salary or the amount thereof by appellee.

The copartnership agreement contains two paragraphs relating to the services of appellant in connection with the construction and operation of the gravel plant. They are as follows:

“It is further mutually agreed that, until the plant is constructed and the company is ready to begin the mining of gravel on the property hereinbefore mentioned, Paul Koehler ¡shall have the management and control of said business, purchase in the name of the company such machinery, equipment, employ and discharge such laborers, agents and other persons as may be necessary for the conduct of said business, and keep the books of said company.
“That, until such time as the company is ready to begin the actual business of mining gravel, said Paul Koehler shall not receive any salary or other compensation for his services, save and except actual expenses incurred by him while managing said business.”

A reading of these two paragraphs convinces us that it was contemplated by the contract that appellant should draw a salary when the actual operation of the plant should begin. The amount was not specified in the contract, and the evidence is in sharp 'conflict as to whether any amount was thereafter agreed upon. If no amount was agreed upon, appellant should have been allowed a reasonable salary for his services from June 1, 1920, until November 1, 1921. According to the weight of the evidence, appellant devoted most of his time to the management and control of the business, and it was contemplated between the parties that he should be recompensed for his services. The record fails to show what his -services were reasonably worth. The decree must be reversed for the error in refusing to allow appellant a salary, and, as the evidence was not fully developed on this point, the cause will be remanded, with permission to each party to introduce evidence as to the reasonable value of his services and for a restatement of the account after determining this issue.

In all other respects the decree is affirmed.


author: McCulloch, C. J.

text:
    Herdison v. State.
    Opinion delivered October 20, 1924.
    1. Criminal law — consolidation of cases — harmless error.— Consolidation of criminal prosecutions is not ground for reversal where no objection thereto was made, and no prejudice resulted therefrom.
    2. Criminal law — sufficiency of assignment of error.— An assignment in a motion for new trial that the evidence is insufficient to support the verdict raises the question of the sufficiency of proof of the venue.
    3. Criminal law — proof of venue. — Venue may be proved by circumstances as well as by direct testimony.
    4. Criminal law — sufficiency of proof of venue. — Circumstantial evidence held sufficient to establish venue.
    5. Criminal law — judicial notice of geographical facts.— Courts will take judicial notice of location of county lines and of towns.
    6. Intoxicating liquors — transportation.-—Evidence held to sustain conviction of transporting intoxicating liquors.
    7. Obstructing justice — resisting officer. — Since a justice of the peace has no authority to make an arrest, the act of one in resisting an attempted arrest by a justice of the peace does not constitute -the offense of resisting an officer.
    Appeal from Sebastian Circuit Court, Greenwood District; John E. Tatum, Judge; reversed as to resisting an officer,
    affirmed in all other respects.

      I. S. Simmons, for appellant.

      J. S. Utley, Attorney General, and John L. Garter, Assistant, for appellee.
   McCulloch, C. J.

The three appellants, Herdison, Ladd and Butler, were arrested and, on a trial before a justice of the peace of Sebastian County, were each convicted of the offense of transporting intoxicating liquor, and appellant Herdison was also convicted of the offense of resisting an officer. There was an appeal prosecuted to the circuit court from each of the judgments of conviction, where all -of the cases were tried together, and the trial resulted in a verdict of guilty in each case.

In the first place, it is insisted that the judgment against appellant Herdison should be reversed because the ease was improperly consolidated with and tried with the other cases. The record is silent as to any order of court consolidating the cases, and merely recites that all of the parties in the cases appeared and announced ready for trial. Appellants concede in their brief that all of the cases involving the transportation of liquor were joined by consent, but insist that there was no joinder with the other cases of the case ag-ainst Herdison for resisting an officer. The record does not show that appellant Herdison made any objection to the consolidation of his case with the others, and, as no prejudice "•esulted from the consolidation, he is in no attitude to urge that as grounds for reversal of the judgment. Silvie v. State, 117 Art. 108.

It is next insisted that the venue was not proved. The Attorney General answers this contention' by the suggestion that this question was not raised in the motion for a new trial, but there is an assignment in the motion that the evidence is insufficient to support the verdict, and that raises the question properly of the sufficiency of the proof of venue. It is true that there is no direct testimony as to venue, but this, like any other essential fact in the case, may be proved inf erentially by circumstances as well as by direct testimony. Forehand v. State, 53 Ark. 46; Scott v. State, 75 Ark. 142; Bell v. State, 93 Ark. 600. The State’s witness who testified directly concerning the commission of the offenses by appellants stated that he was a justice of the peace of Sebastian County, and lived at Central City, and that he saw appellant with the whiskey near his (witness’) house. Courts will take judicial knowledge of the location of county lines, and also the location of towns. Central City is situated on a railroad which traverses the Greenwood District of Sebastian County, and is several miles distant from the county line. It therefore sufficiently appears from the testimony, inferentially at least, that the offenses of which appellants were'convicted occurred in the Green-wood District of Sebastian County.

The legal sufficiency of the evidence is challenged, but we are of the opinion that the evidence is sufficient to sustain the conviction for the offense'of transporting liquor, charged against each of the appellants.

The State’s witness, H. H. Times, testified that, on a certain day, he was standing in the front yard of his home at Central City, and saw 'two automobiles coming down the road, appellant Herdison being the driver of the front car, and the other two appellants being in the rear car, the two cars -being close together. He testified that both cars stopped by the side of the road, and that all of the three appellants got out and went over into a field; that Herdison, after taking a few steps away from the car, came back to the car and got something out of it that res'embled fruit jars, and that all -of the parties then went over into the field, and, after staying there a short time, came out and got into the cars and drove away. He testified that, after the party left, he went over into the field where he had seen the appellants go, and found two fruit jars full of “choc” beer lying in the weeds, and that he then went into town, looking for an officer to make an arrest, and, finding none, he returned home, and, later in the day, he saw the same cars, occupied by the three appellants, drive up and stop, and that the three appellants again went over into the field where the fruit jars had been left. He testified that he then went over into the field and 'found appellants squatting down by the fruit jars, the lid of one of the jars having been removed, and that the jar was about half full of beer, the other jar being empty; that he asked appellants what they had there, and that one of them replied that they had been caught red-handed, and asked what the fine would be; that, as witness reached down and picked up the jar that contained the beer, appellant. Herdison knocked it out of his hand, and the jar fell on the ground and the contents were spilled. The witness testified that he knew the character of the liquid by the -odor, and that it was intoxicating. He said that he ordered the appellants to submit to arrest, and that Herdison began cursing him, and declared that he would not submit to arrest, and that he struck the witness, and refused to submit to arrest.

The contention is that this evidence is not legally sufficient to show that the liquor was intoxicating or that it was being transported from one place to another. The testimony of witness Times is positive to the effect that the liquor was intoxicating, and we are also of the opinion that it is sufficient to show that the parties were transporting the liquor from one place to another. Whatever may have been the intention of the parties with respect to the disposition of the liquor, it is certain that, when they stopped the car, they transported.it from the car over into the field, which was sufficient to constitute the offense under the statute. Allen v. State, 159 Ark. 663; Fly v. Fort Smith, 165 Ark. 392.

We are of the opinion, however, that the evidence in the case does not establish facts which constitute resisting an officer within the meaning of the statute. Crawford & Moses’ Digest, § 2585 et seq. The Constitution (art. 7, § 40) provides that justices of the peace shall be “conservators of the peace within their respective counties, ’ ’ and it seems that at common law such officers were clothed with authority either to make arrests themselves of persons committing offenses in their presence, or to “verbally command any person to take them in custody.” 1 Chitty’s Cr. Law, 25. However, the statutes of this State defining the authority of conservators of the peace with respect to making arrests read as follow's:

“Section 290,6. A magistrate or any judge may orally order a peace officer or private person to arrest any one committing a public offense in the magistrate’s or judge’s presence, which order shall authorize the arrest.” Crawford & Moses’Digest. '

We perceive no reason why the Legislature cannot define the duties of such officers, and this statute operates' as a definition of such duties and powers, and is exclusive. It follows therefore that a justice of the peace has. no authority to make arrests himself, but may order others, either peace officers or private persons, to make arrests for offenses committed in his presence. -There was no attempt to show that the arrest said to have been resisted was being made by-any one clothed with authority to make-the arrest. Appellant Herdison may be guilty of the offense of- assault and battery, but not of the offense with which he is charged. The case was properly sent to the jury as to the offense of transporting liquor.

There are assignments of error with respect to the court’s charge, but these assignments are all without any foundation. Instruction No. 4, requested by appellant,- and for the refusal of which error is assigned, was, we think, argumentative in form, and properly refused.

The judgment against each of the appellánts for transporting liquor is affirmed, but the judgment against Herdison for resisting an officer is reversed, and the -cause is dismissed.


author: Wood, J.

text:
    Doles v. State.
    Opinion delivered October 20, 1924.
    1. -Criminal law — divorce decree as evidence. — In a prosecution for carnal abuse, the record of divorce proceedings in which prosecutrix’s mother was a party, and in which it was decreed that prosecutrix was of certain -age, held incompetent to establish her age.
    2. Criminal law — presumption of prejudice. — In the absence of an affirmative showing to the contrary, it will be presumed that incompetent evidence was prejudicial.
    Appeal from Sebastian Circuit Court, Fort Smith District; JohnE. Tatum, Judge;
    reversed.

      Holland, Holland & Holland, for appellant.

      J. S. TJtley, Attorney G-eneral, and John L. Garter, Assistant, for appellee.
   Wood, J.

This is -an appeal from a judgment of the Sebastian Circuit Court, Fort Smith District, sentencing the appellant to imprisonment in the State Penitentiary for a period of one year, on conviction of the crime -of carnal abuse. The prosecutrix was Bernice Montgomery.

It was an issue .before the jury as to whether or not the prosecutrix was under sixteen years of age at the .time of the .alleged sexual intercourse. On this issue the court, oyer the objection of appellant, permitted the State to prove that, in a divorce proceeding in the Sebastian -Chancery Court in which the mother of the prosecutrix was a party, it was decreed that the prosecutrix was four years old at the time the decree was rendered. This record was incompetent to establish the age of the prosecutrix at the time of the alleged sexual intercourse. -It was a record of the proceedings in an action for divorce, in which neither the State, the appellant, nor the prosecutrix were parties. It had no relevancy to any issue involved in this prosecution. White v. Hudson, 165 Ark. 232; Doss v. Long Prairie Levee District, 96 Ark. 451; Wilson v. Gaylord, 77 Ark. 477; 22 C. J. 814. See 22 C. J. 814, § 926. .

In overruling the motion to exclude this testimony, the court announced that the record was a judicial, determination of the age of the prosecutrix. The appellant duly excepted to the remarks of the court. In the absence of an affirmative showing to the contrary, it must be presumed that the incompetent testimony was prejudicial to the rights , of the appellant.

There are many other assignments of error in appellant’s motion for a new trial, but the above is the only reversible error we discover in the rulings of the court, and the questions raised by the other assignments may not .arise in a new trial of the cause. .Therefore it is unnecessary to discuss the same. For the error indicated the judgment is reversed, and the cause remanded for a new trial.