author: McHaNey, J.,

text:
    Hodges v. Harrell.
    Opinion delivered March 7, 1927.
    1. Mines and minerals — waiver op forfeiture of lease’. — A provision in an oil lease for forfeiture for failure of lessee or assignee to drill a well within 5 years was waived where the lessor allowed the assignee to enter upon the lease and begin drilling a lease after the five-year period without taking any steps to prevent drilling.
    2. Mines and minerals — waiver of provision in lease. — A lessor can waive a provision in the lease for his benefit.
    3. Dismissal and nonsuit — refusal, of plaintiff to proceed.— Where a suit in' equity, which involved merely a matter of damages, was properly transferred to the law court, and the plaintiff, demanding a retransfer, refused to proceed further in the law court, the case was properly dismissed.
    Appeal from Union Circuit Court, Second Division; W. A. Speer, Judge;
    affirmed.
    STATEMENT BY THE COURT.
    On the 24th day of November, 1924, the appellant, J. L. Hodges, and his wife, 'Birdie Hodges, filed a suit in the Union Chancery Court against B. Harrell, Humble Oil & Refining Company, O. A. Gilliland and W. H. Gilliland, in which they charged, in substance, that they were the owners of three separate and segregated tracts of land in Union County, Arkansas, and described as follows : The northwest quarter of the southeast quarter of section 6, township 16 south, range 16 west; lots four (4) and five (5) in the northeast quarter of section 1 (Ibeing the south half of the northeast quarter of said section 1, 80 acres), and the south half of the northeast quarter of section 12, township 16 south, range 17 west, or a total of 200 acres altogether; that, on the first day of October, T919, they executed and delivered to 0. Alexander an oil and gas lease on said land, which said oil and gas lease reads as follows:
    ‘ ‘ This agreement, made and entered into on this the first day of October, 1919, by and between J. L. Hodges and Birdie Hodges, his wife, of._., party of the first part, hereinafter called lessor (whether one or more), and 0. Alexander, party of the second-part, hereinafter called lessee, witnesseth:
    “That said lessor, for and in consideration of twenty -dollars ($20) cash in hand paid, the receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained on the part of the lessee to be paid, kept and performed, have granted, conveyed, demised, leased and let, and by these presents do grant, convey, demise, lease and let unto said lessee, for the sole and only purpose of mining and operating for oil and gas, and laying of pipe lines, and of building tanks, towers, stations and structures thereon to produce, save and take care of said products, and all that certain tract of land situated in the county of Union and State of Arkansas.
    “Northwest quarter of the southeast quarter of section 6, township 16 south, range 16 west, and lot 5 in the northeast quarter of section 1, township 16 south, range 17 west, and lot 4 in the northeast of section 1, township 16 south, range 17 west, and containing 200 acres more or less.
    “It is agreed that this lease shall remain in force for a term of five years from this date, and as long thereafter as oil or gas, or either of them, is produced from said land by the lessee.
    “In consideration of the premises the said lessee covenants and agrees:
    “1st. To deliver to the credit of the lessor, free of cost, in tanks or pipe line to which it may connect its wells, the equal one-eighth part of all oil produced and saved from the leased premises.
    “2nd. To pay the lessor thirty dollars each year, in • advance, for the gas from each well where gas only is found, while the same is being used off the premises, and lessor to have gas free of cost from any such well for all stoves and all inside lights in the principál dwelling-houses on said land during the same time, by making his own connection with the well, at his own risk and expense.
    “3rd. To pay lessor for gas produced from any oil well used off the premises at the rate of.dollars per year for the time during which said gas shall.be used, said payments to be made each three months in advance.
    “If no well be commenced on said land on or before the.day of ., 19., this lease shall terminate as to both parties, unless the lessee, on or before that date, shall pay or tender to the lessor, or to the lessor’s credit in the Merchants’ & Planters’ Bank of Camden, Arkansas, or its successors, which shall continue as the depository, regardless of changes in the ownership of said land, -the sum of.dollars, which shall operate as a rental and cover the privilege of deferring the commencement of a well for.from said date. In like manner and upon like payments or tenders the commencement of a well may be further deferred for like periods in the same number of months successively. And it is understood and agreed that the consideration first recited herein, the down-payment, covers not only the privilege granted to the date when said first rental is payable as aforesaid, but also the. lessee’s option of extending that period as aforesaid and any and all other rights conferred.
    “Should the first well drilled on the above described ■ ' land he a dry hole, then, in that event, if a second well is not commenced on said land within twelve months from the expiration of the last rental period for which rental has been paid, this lease shall terminate as to both parties, unless the lessee, on or before the expiration of said twelve months, shall resume the payment of rentals in the same amount and in the same manner as herein-before provided. And it is agreed that, upon the resumption of the payment of rentals, as above provided, the last preceding paragraph hereof, governing the payment of rentals and the effect thereof, shall continue in force just as though there had been no interruption in the rental payments..
    “If said lessor owns a less interest in the above described land than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided shall be paid the lessor only in the proportion which .interest bears to the whole and undivided fee.
    “Lessee shall have the right to use, free of cost, gas, oil and water produced on said land for- its operation thereon, except water from wells of lessor.
    “When requested by lessor, lessee shall bury its pipe line below plow depth.

      “No well shall be drilled nearer than 200 feet to the house or barn now on said'premises, without the written consent of the owners.
    “Lessee shall pay for damages caused by its operations to growing crops on said land.
    “Lessee shall have the right, at any time, to remove all machinery and fixtures placed on said premises, including the' right to draw and remove casings.
    “If the estate of either party hereto is assigned, and the privilege of assigning in whole or in part is expressly allowed, the covenants hereof shall extend to their heirs, executors, administrators, successors, or assigns, but no change in the ownership of the land or assignment of rentals or royalties shall be binding on the lessee until after the lessee has been furnished with a written transfer or assignment or a true copy thereof, and it is hereby agreed that, in the event this lease shall he assigned as to a part or as to parts of the above described lands, and the assignee or assignees of such part or parts shall fail or make default in the payment of the proportionate part of the rents due from him or them, such default shall not operate to defeat or affect this lease in so far as it covers a part or parts of said lands upon which the said lessee or any assignee thereof shall make due payment of said rentals.
    “Lessor hereby warrants and agrees to defend the title to the lands herein described, and agrees that the lessee shall have the right at any time to redeem for-lessor, by payment, any mortgages, taxes or other liens on the above described lands, in the event of default of payment by lessor, and be subrogated to the rights of the holder thereof.
    “And I, Bertie Hodges, wife of the said J. L. Hodges, for and in consideration of the said sum of money and the covenants and agreements above mentioned, do hereby release and relinquish unto the said lessee all my right of dower and homestead in and to the said lands for the purpose aforesaid.
    “Witness our hands and seals on this 1st day of October, 1919.
    “ J. L. Hodges (Seal)
    “Bertie Hodges (Seal)”
    That on October 21, 1922, the lessee, 0. Alexander, and his wife assigned the northwest quarter of the southeast quarter of 6-16-16 to B. Harrell for a consideration of $1, and $7,000 to he paid out of 7/16th of the first oil produced on said tract of land; that on the 18th day of September, 1923, the lessee, Alexander, conveyed by assignment to 0. A. Gilliland, for a consideration of $1 and other good and valuable consideration, all the right, title and interest which he owned in said 40-acre tract; that on the 23rd of November, 1922, B. Harrell assigned to the Humble Oil & Refining Company, for a consideration of $1 and other good and valuable considerations, all his rights in and to the same 40-acre tract; that on the 24th day of October, 1924, the Humble Oil & Refining Company conveyed to W. H. Gilliland an oil and gas lease to the same 40-acre tract. They further alleged that, by the covenants, terms and conditions of said original lease to said Alexander, each and all of the appellees who purchased a part of the original lease became responsible to carry out the covenants arid conditions of the original lease, “that is, to drill for oil On each individual parcel or tract of land which they had purchased, or to pay annual rentals thereon each year after the first year, in order to hold said lease in force and effect for the term of five years, which payments are here admitted having be.en made, which kept said lease in force for»a period of five years.” They further alleged that appellees had failed or refused to drill on said 40-acre tract within five years, as provided in said original lease, and that, said full five years having expired on the first day of October, 1924, without any producing oil or gas well or wells on said land, their right to do so had expired, and that appellants’ title was thereby clouded, to their damage in the sum of $24,000.
    They further allege that, since the first day of October, 1924, they have notified the defendants of -the expiration of their rights on said land, and demanded releases, which appellees refused to do, to their damage as aforesaid; that they have been deprived and hindered from leasing -said land to other parties, who had offered to pay them $12,000 for same in oil, and to drill two wells on «aid land at once; that said land is proved oil land, and that, by reason of their failure to drill offset wells .to producing wells near said land, they have been damaged in the further sum of $10,000. They ask for a cancellation of the lease and all assignments and for judgment of $22,000 damages.-
    On January 14, 1925, the court, upon petition of appellees, entered an order requiring appellants to make their complaint more definite and certain. On January '21, 1925, appellee, W. H. Gilliland, filed a petition for a receiver, alleging that, before the institution of the suit, he entered upon this 40-acre tract and began the drilling of a well in search of oil and gas; that, at the time the suit was filed, said well was practically completed, and that, since the institution of the suit, he had completed said 'well and that same was producing approximately 400 barrels of pipe-line oil per day, and that he had been notified by the pipe-line companies they would be unable to continue running the oil produced from said well, due to the uncertainty of title, and that he was unable to erect storage tanks to care for the oil, and that, unless a receiver was appointed with authority to operate the well and protect the property from drainage, both appellants and he would suffer great injury. O^l the 22d day of January the court entered an order appointing a receiver, who qualified and took charge of said well.
    By agreement of'counsel on oral argument in this court, the record was amended to include a pleading called “amendment to complaint in equity,” which was filed on February 2, 1925, but not included in the transcript, and 'which, with slight exception, is a repetition of the original complaint. By it they allege that they had been damaged in the sum of $50,000 for failure to drill offset wells to protect said land, and $24,000 for failure to clear the records of said lease and assignments.
    On February 3, 1925, in compliance with the order ’of court to .make more definite and certain, appellants filed an amendment to their complaint, describing all the land covered in said original lease, and alleging that a well — known as Hodges No. 1, had been completed on the southwest 14 southwest 14 northeast % section 1,16,17, on August 1, 1923, with an initial production of 300 barrels. This well was located upon the 80-acre tract covered by the original lease in section 1, 16, 17; that Steel Oil Compan3r and Gilliland drilled Hodges No. 1 on the northeast quarter southeast quarter northeast quarter section 12, 16, 17, beginning on July 24, 1923, and completing same on December 30, 1923, with an initial production of 15 barrels, and that said well has been abandoned, and that other wells, describing them, had been drilled on other land covered by the lease; that W. H. Gilliland drilled Hodges No. 1 on the land in controversy, permit for same having been issued on November 15, 1924, and was drilled after the term of the lease had expired.
    They further allege that two parties had offered them $12,000 to be paid in oil for the 40-acre lease in question, provided the title was cleared. They further allege that a number of wells had been drilled on land near by the land in controversy, which had been in operation and producing oil for from ten days to two years; that there were about ninety-five (95) producing wells within one mile from the 40 acres in controversy, which had been producing for more than a year, and that the plaintiffs had been damaged in the sum of $10,000 for the royalty which they should have received, and which they have been deprived of receiving by reason of the fact that the oil on his land has been drained to these various other wells. •

      Appellees, on February 5, filed an answer admitting the ownership of the land and the making of the leases and assignments as set out in the complaint, but deny that it became the duty of any of the appellees to drill for oil on each of the individual parcels of land described in the original lease, but state that, within said five (5) year period, seven wells were drilled for oil and gas on the premises described in the original lease, and that, at the expiration of the said five (5) year period, five wells were producing oil on said premises, as set out in the amendment to the complaint filed herein, and that, by reason thereof, said lease, by its terms, continued in full force and effect, and will so continue so long as oil and gas, or either, is produced from said premises, or any part thereof. They deny that, by reason of the failure to produce oil on the said 40 acres within the five (5) year period, said lease expired on the first of October, 1924, and deny that the lease and assignments are a cloud on appellant’s title. They deny that appellants have, at any time, before the filing of the suit, notified them that said 40-acre' lease had forfeited or expired by virtue of the five (5) year period; that they were notified to execute-releases thereto, and deny that appellants requested them or any of them to release same on the margin of the records; that appellants suggested and encouraged them to purchase the 40-acre lease in question, and that they were present at all times when preparations were being made to drill said well,' which was commenced about October 8, 1924; encouraged the drilling of same, and that he continued until said well had been almost completed, when he filed this suit, without notice to either of them of his intention to do so. They enter appropriate denials to all the material allegations set out in the original and amendments to the complaint.
    The action was set for trial on the 11th day of February, 1925, and on that date appellees filed a motion to transfer this cause to the law docket, for the reasons as alleged,‘(I), that this court is without jurisdiction to hear the only material issue raised by the pleading, which is the alleged damages to the 40-acre tract in controversy, on account of the alleged failure to drill offset wells; (2), that only a partial breach of the original contract from appellants to Alexander is alleged, and that this court is without jurisdiction to determine that issue; and, (3), that the appellant had a complete and adequate remedy at law.
    On February 13, 1925, the court made ap order directing the receiver to file an accounting within 30 days, and to transfer the case to the law docket as soon as the receiver had accounted for all his acts, and'appellants excepted.
    Thereafter, on the 9th day of March, 1925, the receiver filed his report, which, over the objection of the appellants, was approved, and the cause was transferred to the law docket.
    On March ll, 1925, appellants filed in the circuit court a motion to retransfer this cause to the court of equity, which motion was, on May 13, overruled by the court, and on November 27, 1925, appellants renewed their motion in the law court to retransfer this cause to equity, which was overruled, and counsel for appellants announced in open court that they would stand upon their motion and refuse to proceed further with the case. Thereupon the court ordered plaintiffs’ complaint dismissed. From which comes this appeal.

      Attyn Smith, for appellant.

      Marsh, McKay é Marlin and Powell, Smead <£ Knox, for appellee.
   McHaNey, J.,

(after stating the facts). Counsel on both sides of this case, in their very able briefs, have presented for our consideration some very interesting questions. Appellants contend that, where a lease is executed to several tracts of land by the terms of which the lessee is required to drill a well on said lands within a certain specified time, and thereafter the lessee assigns one' of said tracts to another person, the assignee or the original lessee is bound, either by the express or implied covenants contained in the original lease, to drill a well on such tract within such time, regardless . of the fact that the original lessee or his assignees has drilled one or more wells on the other portions of the land contained in the original lease.

Appellants further contend that, in such a case, they may maintain an action in a court of equity to cancel such portion of the lease and the rights of all assignees claiming thereunder after the expiration of the time limited in the lease contract for drilling a well, on the ground that such tract has been segregated from the original lease by assignment, and is in the same situation as if such tract had been covered by a separate lease agreement between the .lessor and original lessee.

■Counsel for appellees contend that this is not true; that the drilling of a well by the original lessee or any assignee on any part of the lands originally leased, within the time limited in the lease, protects the whole of the leased premises and every part thereof, from forfeiture and cancellation for failure to drill on any other part of the leased premises that may have been assigned by the original lessee, and that therefore a suit in equity to cancel the 40-acre lease in controversy here, same being one of the three tracts originally leased, containing 200 acres, cannot be maintained, as it is a suit to cancel a part of the lease, and that therefore appellants’ suit states no cause of action cognizable in equity, and that whatever cause of action he had remaining would be one at law for damages.-'

But we find it unnecessary in this case to decide these interesting questions. 'In the plaintiff’s amended complaint filed on Febrfiaiy 3, 1925, in compliance with the order of the court requiring the complaint to be made more, definite and certain, it is alleged “that W. II. G-illiland drilled ITodges No. 1 on the northwest quarter of the northeast quarter of the southeast, quarter of section 6, township 16 south, range 16 west, permit having been issued on November 15, 1924, and same having been drilled after the term of the lease had expired,” which is on the land in controversy.

It will therefore be seen that the appellants themselves say, on the face of their complaint, that the appel-lee, W. H. Gilliland, had drilled a well on the 40-acre lease in question after it is claimed by the appellants that the lease had expired. Without deciding in this case whether, under the terms of the lease, the appel-lee, W. H. Gilliland, who claimed title theretq through mesne conveyances from the original lessee, 0. 'Alexander, was required to drill a well on this particular 40 ac-res within the five-year period limited in the lease, we think it would be manifestly unjust and inequitable for appellants to stand by, after October 1, 1924, and permit appellee Gilliland to enter upon the land and drill a well under the belief that he had the 'right to do so. The original complaint in this case was filed on November 24, 1924, nine days after they say the permit for the drilling of said well was issued, and manifestly after the drilling of a well on said 40 acres had been begun by Gilliland.

The lease was dated October 1, 1919, and the five-year period for drilling a well, if he was required to drill one on this particular 40 acres within that period of time, expired October 1, 1924. This was a provision in the lease for the benefit of the lessor, and one which he could waive. By permitting appellee, Gilliland, to enter upon said lease and begin the drilling of a well without taking any steps to prevent him from doing so, we hold that appellants waived the right to insist upon a forfeiture and a cancellation of the lease as to this particular 40 acres.

In the case of Friar v. Baldridge, 91 Ark. 137, 120 S. W. 991, this court said: ‘ ‘ The law will strictly enf orce the agreement of the parties as the3r have made it; but, in order to find out the scope and true effect of such agreement, it will not only look into the written contract which is the evidence of their agreement, but it will look also into their acts and conduct in the carrying out of the agreement, in order to fully determine their true intent. It is a well-settled principle that equity abhors a forfeiture, and that it will relieve against a forfeiture when the same has, either expressly' or by conduct, been waived. The following equitable principle formulated by Mr. Pomeroy has been repeatedly approved by this court: ‘If there has been a breach of the .agreement sufficient to cause a forfeiture, and the party entitled thereto, either expressly or by his conduct, waives it or acquiesces in it, and he will be precluded from enforcing the forfeiture, and equity will aid the defaulting party by relieving against it, if necessary.’ 1 Pomeroy Eq. Jur. 452; Little Rock Granite Co. v. Shall, 59 Ark. 405; Morris v. Green, 75 Ark. 410; Banks v. Bowman, 85 Ark. 524; Braddock v. England, 87 Ark. 393.” And this rule applies to- lease contracts. The case of Wales-Riggs Plantations v. Banks, 101 Ark. 461, 142 S. W. 828, was a suit to cancel a lease contract entered into between the parties on the alleged ground of breach of various covenants in the lease between appellant and appellee. This court quoted from Little Rock Granite Co. v. Shall, supra, as follows: “Where there has been a breach of a contract of lease sufficient to cause a forfeiture, and the party entitled thereto, either expressly or by his conduct, waives it, equity will relieve the defaulting party from a forfeiture, unless the violation of the contract was the result of gross negligence, or was willful and persistent. ’ ’

Inasmuch as the decision of this case rests upon the matters stated in the complaint, we have examined same carefully and failed to find any allegation that appellants notified appellee Gilliland that, unless he drilled a well on this 40-acre lease prior to October 1, 1924, he would declare the lease forfeited. Nor is there any allegation in the complaint that, prior to the time that appellee began drilling a well upon said lease, he warned him against doing so, on the ground that the time had expired, or any other ground. Appellants content themselves by alleging that, since the first day -of October, 1924, they have notified the appellees that their right to said lease had expired and notified them to execute proper releases to be filed and recorded, or to enter proper releases on the margins of the records upon which said leases and assignments had been recorded, and that defendants refused to do so. ■ But this is far from saying that they gave them any notice prior to the beginning of drilling operations. The complaint was filed on November.24, and they may have given them notice the day the complaint was filed, as the allegation does not state any date the notice was given, except that it was since October 1, 1924.

But, even if appellants had given the notice prior to the expiration of the lease, or prior to the beginning of the drilling of a well, and thereafter, with knowledge of the fact, suffered the appellee, G-illiland, to enter upon said lease and begin the drilling of a well without doing anything more to prevent it, they should be held to a waiver of the right to insist upon a forfeiture.

The complaint therefore stated no cause of action cognizable in equity. ■ It was a suit for damages in the law court. The chancellor properly transferred the cause to the circuit court, and the circuit court was correct in refusing to remand it to chancery, and, when appellants refused to proceed with the prosecution of their ease in the circuit court, the court was right in dismissing the cause for want of prosecution.

The judgment of the circuit court is correct, and it is therefore affirmed.

Mr. Justice Kirby dissents.


source: Caselaw Access Project

author: McHaney, J., McHaney, J.,

license: Public Domain

text:
    Tays v. Johnson.
    Opinion delivered March 7, 1927.
    1. Infants — age—evidence.—Evidence held to show that a female plaintiff seeking to cancel deeds executed during minority was only 14 years old at the time first deed was executed.
    2. Infants — removal of disabilities — invalidity.—Under Crawford & Moses’ Dig., § 5744, providing that disabilities of a female minor under the age of 16 years cannot be removed, held that, where the evidence showed that-plaintiff was less than 16 years of age when she executed two deeds, a previous order of court removing her disabilities was unauthorized, and she had a right to rescind and disaffirm the deeds at her majority.
    3. Infants — Restoration of consideration. — A female minor seeking to cancel deeds executed by her when she was under 16 years of age need not restore the consideration received by her.
    4. Infants — disaffirmance of deeds — recovery of rents. — In a suit by a minor to disaffirm her deeds executed during minority, she is entitled to rents from date of disaffirmance, which was the commencement of the suit.
    5. Infants — disaffirmance of deeds — right of grantee to taxes and improvements. — -In a suit by a minor to cancel deeds exe- ‘ cuted during minority, the grantee was entitled to set off taxes, repairs and improvements against plaintiff’s' claim for rents, and if the amount of such taxes, repairs and improvements is in excess of the rents, the grantee will be entitled to a judgment for the excess.
    6. Infants — disaffirmance of deeds — value of improvements.— The measure of the Value of betterments is not their actual cost but the enhanced value they impart to the land, without reference to the fact that they were desired by the owner, or could not be profitably used by him.
    Appeal from Woodruff Chancery Court, Southern District; A. L. Hutchins, Chancellor;
    reversed.
    STATEMENT BY THE COURT.
    Appellant is the daughter of W. Y. Watson, who died intestate on or a short time prior to the 24th day of December, 1907, and is his only child and heir at law. •Her mother died prior to the death, of her father, in January, 1907. Her father was the owner of a house and ten acres of land in the Southern District of Woodruff-County, which appellant inherited on his death. In her complaint she states that she was born on June 3, 1904, near Cotton Plant, Arkansas, and that, after her father’s death, she lived with one T. J. Hanley, until a short time before she married her husband, Eodney Tays; that the appellee, P. S. Johnson, on the 21st day of June, .1918, when she was hut fourteen years of age, procured her to execute to him a warranty deed to the lands which she inherited from her father, and that the appellee, on the 18th day of August, 1920, when she was but sixteen years of age, procured her to execute another deed to him to the same lands; that there was no consideration for same, and that she was a minor when she executed each of said deeds, and that same are void and a cloud upon her title. She asks for a cancellation of the deeds and judgment against appellee for the use of the lands in the sum of $500 per year from June 21, 1918. The defendant entered a general denial, and alleged that the appellant, was born on the 3d day of June, 1902; denied that appellee procured the execution of the deed in 1918, but that appellant solicited and procured the defendant to purchase the property under certain conditions set out in the answer; that, prior to the execution of said deed on June 21, the appellant secured the removal of her disabilities before the circuit court in the Eastern District of Craighead County, at Lake City, on petition of appellant, setting up all the necessary allegations to secure an order of removal of disabilities; that the court granted the petition and removed her disabilities as a minor and clothed her with authority to transact- business, and that thereafter she executed the deed to the property in controversy for a consideration of $3,000, which was actually paid to her; that the appellant, if her complaint is true, practiced a fraud upon the appellee, and, through such fraud, procured from him the sum of $3,000 which was paid to her. Appellee made his answer a cross-complaint, and states that the property purchased by him was in a bad state of repair, and that the rental value thereof would barely pay the taxes and keep up the repairs; that, for the years he has been in possession as owner of the property, he had paid out approximately the sum of $450 in taxes, and that he has expended by way of improvements on same-not less than $1,500, making a total of $1,950,- which he is entitled to recover from appellant in the event she is successful in this suit.

      •Later appellee filed an amendment to Ms answer, which is not necessary to set out here.
    Appellant was adopted by Mr. and Mrs. T. J. Hanley shortly after her father’s death, and lived with them until she was married to a man named Tays. She was' not related.to the Hanleys, and, being very young when they took her, she apparently had no recollection of what transpired prior to her adoption by these people. The principal question presented for decision in this case is, was the appellant born on June 3, 1904, or June 3, 1902? Since this is to be determined only from an examination of the evidence, we will now proceed to do so.
    Appellant testified that she was horn on June 3, 1904, basing her statement upon what others had told her, including her uncle and aunt.
    Mrs. Donnie Mitchell, the widow of Doc Mitchell, who was an uncle of appellant, testified that appellant’s mother had died prior to the death of her father, and that appellant was born on June 3, 1904; that she was living about two miles from Mr. Watson when appellant was born, and that she had a daughter, Bessie, who was born just two months later, on the 3d of August; that she was at appellant’s home a few hours after her birth, and naturally remembered that her daughter, Bessie, was born just two months to a day later; that both families were living on the York place, near Cotton Plant, at the time of her birth, about two miles apart; that her daughter, Bessie, was 20- on the 3d of August; that she has a family record of the birth of that daughter which shows her age; that they had a family Bible in which her husband, who had been dead about five years, had written the names and ages of their children; that, before appellant’s father died, he sent them his family Bible, and that her husband wrote in this Bible the names and ages of appellant and her brothers and sisters; that these pages show that Bessie- Lee Mitchell was born August 3,1904, and that Birdie Lou Watson, appellant, was born June 3,1904.

      It is not denied -that Doc Mitchell wrote the names and ages of these children in the Bible, and his handwriting was identified, nor that he had been dead about five years,
    Mrs. R. R. Terry testified that she is the widow of J. M. York, on whose plantation appellant’s father was married and appellant was born. She says that she knew appellant’s father intimately before his marriage, as he was working there on the place for her husband, and he continued to live on the place after he was married; that, at the time appellant was born, she had rented the place to Mr.- Watson, and was living in Forrest City; that she was not present at the birth, but was there a short time later, and spent two weeks. She testified positively, in answer to a question if she remembered when she'was born, that “she was born in June, I don’t know the day of the month, it was in June, 1904.”
    Carrie Williams, appellant’s aunt by marriage, .states that she had been living near Cotton Plant for many years, and that, at the time appellant was born, she was living on the York place about one mile from the Watsons; that appellant was born on June 3, 1904, and she remembers the date because her aunt had a daughter born two months to the day later. Her aunt was Mrs. Donnie Mitchell, the wife of Doc Mitchell, with whom she lived, and that she remembered the date of Bessie’s birth to the hour; that she has seen the handwriting of Doc Mitchell in the family bible, and knows that he wrote the names and ages of his children and of Will Watson’s, as shown therein.
    Mark Carter testified that the appellant was born in 1904, in the spring or summer; that he does not remember the day or day of the month; that he was able to remember on account of his oldest boy being born in the fall after she was born in the spring; that he was. living on the Squire Davis farm at the time of her birth, about five miles from Will Watson’s home.
    D. I. Carter testified that he had been living around Cotton Plant for the last thirty-five years, worked for Will Watson for three years before appellant was born, and worked for him shortly afterwards; that appellant was born in 1904; that he made a crop there in 1903, left and moved up in Monroe County, came back to Cotton Plant and worked with his father, and went down to Mr. Watson’s house in July, 1904, to get a job with him, which he did, and that appellant was a small baby, about a month old, at that time.
    In addition to this, on the 24th day of April, 1911, T. J. Hanley filed a petition to be appointed as guardian for Birdie Lou Watson, in which he stated that she was six years of age, and in the bond accompanying the petition is the statement that Birdie Lou Watson was six years of age. This petition was filed on the 24th day of April, 1911, in the office of the clerk of the Woodruff Probate Court, and approved on that date. There is in evidence another petition signed by T. J. Hanley to be appointed guardian of appellant, dated the 16th day of. April, 1908, in which he swore that she was only three years of age. It also appears in evidence that letters of guardianship were issued by the clerk of the Woodruff probate court to M. Z. Mitchell, in which it is stated that appellant was under five years of age, and this is dated January 6, 1908.
    The testimony of appellee on this question, first by T. J. Hanley, who testified that he had known appellant since 1907, was living at Hunter at the time he obtained her from Doc Mitchell, and that Doc Mitchell told him at the time he got her she would be five years old the 3d day of June, and that Col. Decatur .York went with him to Mitchell’s to get her, and told him she was five years old on her birthday; that, about two years after this, he was appointed her guardian; that she went to schodl two years, two seasons, and after that he moved to Monette, where she went to school four straight years, and after that went to' Paragould,' where she went to school two years, and from Paragould to North Little Rock, where they stayed only four months, and from North Little Rock they went to Faulkner, Mississippi, and stayed three months, and then bought a place and stayed there nearly four years; that he went from Paragould to Tuckerman, where she went to school eight months, and went back to Paragould, where she finished up her schooling, the last‘time, a year; that he moved to Mississippi in December, 1918, from North Little Rock, and from Mississippi back to Monette, and visited around about a year from one place to another. Appellant went to school at Faulkner, Mississippi, one year, and after» she got out of school there she went to Calgabet Agricultural School, where she went three years, graduated, and received her diploma. After this she went to normal at Corinth one time, and at Booneville one time. These normals were six weeks.
    Mrs. T. J. Hanley testified that they were living at Hunter at the time appellant came to live with them, and that, apparently, when she came there, she was five years old; she looked to be five, anyway, and that she was large enough to go to school one year from the time they got her. With respect to her schooling and the different places they lived, her testimony is somewhat corroborative of that of her husband, T. J. Hanley.
    On cross-examination she testified that Col. York told them appellant was five or six years old about the time they took her; that, after they took her, they kept her two years behind her actual age because they wanted to keep her as long as they could, and never told her her age until this lawsuit came up; that she always thought she was born in 1904 until this matter came up.
    Mr. O. H. Hurst, an attorney at' Monette, testified that he was employed by Mr. Hanley to have appellant’s disabilities removed, so that she could execute a deed to the appellee to the lands involved in this action, which was in 1918; that the data upon which he based the petition, which he later filed, was given by members of the family. She said at the time she was 16, but, at the time her petition was filed, she was past 16. When the petition was filed the appellant, Mr. and Mrs. Hanley, were all present. The court examined all of them, and the petition was granted and her disabilities were removed by the order of the court. Witness thought she was telling him her correct age when she stated she was 16.
    Appellee, P. S. Johnson, testified that he knew Will Watson, father of appellant, and that he rented the place in controversy from him and moved on the property on the 18th day of March, 1907, and at that time appellant was a good-sized child running around the place, and That he would judge her to have been five or six years old.

      Bogle & Sharp, for appellant.

      Roy D. Campbell, for appellee.
   McHaney, J.,

(after stating the facts). This is substantially all the evidence on either side regarding the age of appellant, and we are convinced that the over- ■ whelming weight of the evidence shows that appellant was born on June 3, 1904, and that therefore appellant was only fourteen years of age when she signed the first deed in question, June 21, 1918, and that it is voidable at her instance, unless the circuit court had the right to and did remove her disabilities.

Section 5744 of Crawford & Moses’ Digest provides that circuit courts shall have the power to remove the disabilities of a female person who is a resident of the county, and above the age of sixteen years.

The judgment of a circuit court removing the disabilities of a female minor under the age of fourteen years is void and is open to collateral attack. Doles v. Hilton, 48 Ark. 305, 3 S. W. 193.

Referring to the decision in Doles v. Hilton, supra, this court, in Dalton v. Bradley Lumber Co., 135 Ark. 392, 205 S. W. 695, said: “The necessary effect of this decision is that no testimony could have been heard or showing made which would have authorized the court to remove the disabilities of these minors, and the action of the court in doing so was coram non judiee. The proceeding is as void as if there had been no statute on the subject, because the statute has no application to minors under the age of fourteen,”

The statute has, since this decision, been changed to fix the age limit of females at sixteen years, at which their disabilities may be removed.

We cannot therefore agree with appellee in stating, that the facts and circumstances shown by the testimony in this case, when viewed from any reasonable and impartial standpoint, disclose conclusively that the appellant was not less than sixteen years of age when her disabilities of minority were removed, but, on the contrary, we are convinced that the overwhelming weight of evidence was to the effect that she was only fourteen years' of age, and that the act of the circuit court in removing her disabilities at such age was “coram non judice.”

If therefore the act of the circuit court in making an order removing her disabilities, when she was only fourteen years of age was void, which we now hold, it follows- that the deed she executed on the 21st day of June, 1918, was voidable, as was also the second deed she executed on the 18th day of August, 1920, for on that date she was only sixteen years, two months and fifteen days old, and that therefore she had the right to rescind and disaffirm her deeds to said property, which she did by the bringing of this action -within the time prescribed by law, after arriving at her majority.

The next question for determination is whether appellant must restore the purchase price of $3,000 on the cancellation' of her deeds. We hold, under'the evidence in this case, she is not required to do so. This court, as was said in the ease of Arkansas Reo Motor Car Co. v. Coodlet, 163 Ark. 35, 258 S. W. 975, is firmly committed to the rule “that an infant may disaffirm his contracts, except those made in the course of his necessities, notwithstanding the other parties may be unaware of the infant’s disabilities, and-without requiring the infant to return the consideration received, except such part as may remain in specie in his hands. ”

In the case of Bickle v. Turner, 133 Ark. 536, 202 S. W. 703, this court said: “It is insisted, however, that, even if the court erred in this respect, the relief asked for by appellant should not be granted unless there is a restoration of the consideration. The evidence shows that the infant had spent the money received by him for the land, and if he should be required, under such circumstances, to restore the consideration as a prerequisite to avoid the contract, the protection given to an infant by the disabilities of minority would be seriously impaired and might often be destroyed. The reason that the contracts of a minor are voidable is because he is supposed to be improvident and likely waste what he has received.” Beauchamp v. Bertig, 90 Ark. 531, 119 S. W. 75, 23 L. R. A. N. S. 659; St. L. I. M. & S. R. Co. v. Higgins, 44 Ark. 239; Stull v. Harris, 51 Ark. 294, 11 S. W. 104; Fox v. Drewry, 62 Ark. 316, 35 S. W. 533; Tobin v. Spann, 85 Ark. 556, 109 S. W. 534, 16 L. R. A. N. S. 672; Barker v. Fuestal, 103 Ark. 312, 147 S. W. 45.

The only remaining question for consideration, in addition to the cancellation of the deeds executed by her while she was yet a minor, is the matter of an accounting between appellant and appellee as to the rents and profits due to her, and the taxes, repairs and improvements paid out by him. As was said by this court in Tobin v. Spann, 85 Ark. 556, 109 S. W. 534: “The contract of an infant is not void, but only voidable. He is therefore only entitled to ¡a judgment for rents from the date of his disaffirmance of the c'ontract. Tu this case the disaffirmance was-the date of the commencement of the action.”

This is likewise true in this case. Appellant is only entitled to the rents from the date of her disaffirmance of the deeds, which was the date of the commencement of this action. Brown v. Nelms, 84 Ark. 404, 112 S. W. 373; Beauchamp v. Bertig, 90 Ark. 371, 119 S. W. 75; Arkansas Reo Motor Car Company v. Goodlett, 163 Ark. 39, 258 S. W. 975.

As was also held in Tobin v. Spann, and in numerous other cases, under the betterment act, appellee is entitled to taxes, repairs and improvements, and he may offset these with rents accruing since the bringing of this suit.

The decree of the chancery court is therefore reversed, and the cause is remanded with directions to enter a decree canceling the deeds executed by appellant on the 21st day of June, 1918, and'upon the 18th day of August, 1920, and to determine the amount of rents accruing since the bringing of this action, and to offset same with the taxes, repairs and improvements expended by him on said property.

McHaney, J.,

(on rehearing). We adhere to our original opinion in this case, but counsel suggests that the opinion should be so modified as to more clearly state the rule governing the right of appellee to recover for repairs, taxes and improvements.

We thought, we had made it definite and certain in the original opinion, but, in order that there may.be no misunderstanding, we state it here again, that the appellant is entitled to recover rents from the date of her dis-affirmance of the deeds, which was the date of the commencement of this action; and that the appellee is entitled to recover all Of the taxes he has paid, repairs and improvements; and if the amount, of taxes, repairs and improvements is. iu excess of the rents, appellee would be entitled to a judgment against appellant for the excess. As to what is meant, by the term “repairs and improvements,” this court has said, in the case of Greer v. Fontaine, 71 Ark. 608, 77 S. W. 57, that “the measure of the value of betterments is not their actual cost, but the enhanced value they impart to the land, without reference to the.fact that they were desired by the true owner, or could not be profitably used by him.” Bouvier’s Law Dictionary. Continuing, the court said: “This definition is that given substantially in all jurisdictions having statutes like ours. Sometimes we say the improvements must be permanent, and not merely temporary. The idea seems to pertain that the improvements are such as will add to the value of the 1-and as it shall come into the occupancy and use of the true owner, for he is the person required to pay for them, although they have been made without his consent.”

The lower court will therefore determine the amount appellee is entitled to for taxes, repairs and improvements, and subtract from that the amount appellant is entitled to for rents,'and render judgment for appellee for the excess.

The petition for rehearing is denied.


author: MoIIanby, J.

text:
    State ex rel. Attorney General v. Chicago Land & Timber Company.
    Opinion delivered March 7, 1927.
    1. Corporations — regulation by state. — The State has the right to prescribe the terms on which foreign corporations may do business in the State by making them subject to regulations, limitations and liabilities imposed on domestic corporations, as provided by Const., art. 12, § 11.
    2. Taxation — validity of corporation franchise tax. — A foreign corporation authorized to do business in the State may be required to pay a franchise tax in a suit by t^e State, though the corporation was not actually doing business in the State.
    3. Taxation- — franchise tax not property tax.- — The franchise tax upon foreign corporations doing business in the State, being based on the proportion of their capital stock represented by property owned and used in business transacted in this State held not a tax upon corporate property.
    4. Taxation — foreign corporation — amount of franchise tax.— A foreign corporation, having a capital stock of $450,000, may be taxed on the basis of such capital stock, though its total property was of the market value of $92,500, where all of its property was situated within the State, 'under Crawford & Moses’ Dig., § 9804,- imposing a franchise tax based on the amount of subscribed and outstanding capital stock of the corporation represented by property owned and used in business transacted in the State, and it is immaterial that the capital stock exceed the value of the corporation’s property.
    Appeal from Saline Chancery Court; W. R. Duffie, Chancellor;
    reversed.

      II. W. Applegate, Attorney General, W. II. Childers, and Sam M. Wassell, special counsel, for appellant.

      Brouse & McDaniel, for’ appellee.
   MoIIanby, J.

This is an action by the State of Arkansas, on relation of her Attorney General, to recover the amount of franchise tax due the State by appellee for the years 1920, 1923, 1924 and 1925. .The complaint alleges that the defendant is a foreign corporation organized under the laws of the State of Illinois; that, many years ago, the defendant was authorized to transact business in this State as a foreign corporation, and paid all the corporation franchise taxes up to and including the year 1919; that the defendant filed its report for the year 1920, and was assessed with a franchise tax of $450 for that year, but did not pay same; that for 1921 and 1922 the tax was paid; that for the years 1923, 1924 and 1925 the defendant failed and refused to file a report, failed-to pay the amount of tax, and that a penalty of twenty-five per cent, on the amount of tax- due, $450 for each of said years, has attached by reason of the failure to pay, and as provided by law, for which it asks judgment, and that same be declared a lien on the property of the defendant, that same be foreclosed, and the charter of the defendant revoked.

Appellee filed an answer, denying that it was a foreign corporation under the laws of the State of Illinois, but it admits that, some years ago, it was authorized to do business in the State of Arkansas, and it admits that it paid all franchise taxes except for the years 1920, 3923, 1924 and 1925, as alleged in the complaint, but denies that it was doing business in the State of Arkansas during said years, or that there were any' franchise taxes due to the State for said years.

Further answering, the defendant stated that it is a corporation organized under the laws of the State of Delaware, and that all of the property owned by it in the State of Arkansas did not, for any of said years, exceed in value the sum of $92,500, and that the taxes sought to be imposed are excessive, without authority of law, would amount to a confiscation of defendant’s property without due process of law, and is in violation of both the Constitution of the State of Arkansas and of the United States; that its capital stock has been reduced by payment of dividends and expenses so that its only property in this State and its only assets of any character outside of this State consist of lands .in Grant, Jefferson and Cleveland counties, Arkansas, not exceeding $92,500, so that its capital stock is now only worth said sum, and that to impose taxes as asked would deprive defendant of its property without due process, in violation of article 5, and § 1 of article 14, of the amendments to the Constitution of the United States, and § 31 af article 5 of the Constitution of Arkansas, and to annul its license or collect such tax would do it. an injustice, in violation of § 6, article 12, of the Constitution of Arkansas, and such tax would also violate § 5 of article 16 of the Constitution of Arkansas, all of which are pleaded in bar of plaintiff’s action; that the taxes sought to be Imposed are not equal and uniform throughout'the State, and are in violation of § 5, article 16, of the Constitution of the State of Arkansas; that the defendant erroneously paid the franchise taxes for the years 1921 and 1922 in the sum of $450 each year, when it did not owe the State such taxes, or, if it did, the taxes for said years should not have exceeded $92.50 each, and, on account of that, the State is indebted to the defendant in the sum of $357.50 for each of said years, for which defendant is entitled to a credit upon whatever taxes it may owe, if any, or to a judgment against the State. It prays that the complaint be dismissed for want of equity, for an offset as aforesaid, if the court, should find that there is a franchise tax due by it on the value of its property, and for a judgment against the State upon any amount found to be due by virtue of its overpayment.

The case was tried on agreed statement of facts, which is as follows :

“That the Chicago Land & Timber Company is a foreign corporation organized and existing under the laws of Delaware and domesticated in this State in 1915 ; that its authorized capital stock for the years 1920, 1923, 1924 and 1925 is and has been $450,000. The amount of capital stock subscribed $450,000, amount of capital stock, issued and outstanding $450,000, the amount of capital stock paid up $450,000; that all of the assets of the defendant are located in the State of Arkansas. The market value of all the property of the defendant is $92,500. It is further agreed that the defendant has not been actively engaged in business, and its property consists largely of cutover land lying and being situated in Cleveland, Grant and Jefferson counties, and said land is for sale by the defendant, and that the company has no agents in Arkansas authorized to sell said lands, and the lands which have been sold were sold and conveyed from Chicago, Illinois.

“It is agreed that the defendant filed franchise tax report for the year 1920, land the tax was assessed by the State Tax Commissioner at the sum of $450, which has not been paid (and) it became delinquent. That for the years' 1923,1924 and 1925, the defendant has failed to make the franchise tax report. That for the years 1923 and 1924 the tax is assessed at the rate of one-tenth of one per cent.- of the issued and outstanding stock, and for the year 1925 the statute prescribes tax of eleven hundredths of one per cent, on the capital stock issued and outstanding for the year 1925. That on February 24, 1917, the defendant sold the timber from its land at $267,500, and the timber was thereafter cut and the proceeds of said timber were distributed among the stockholders of the defendant company. The defendant also made a few other minor sales from time to time since then, which sales were consummated at Chicago, Illinois, at or about the same time of the timber sale in the year 1917. The defendant also sold the sawmill, the railroad and equipment which it had acquired, and since that time its actual assets have been said amount of $92,500, and since that time, where reports have been filed, the property has been valued at said sum of $92,500. That for the years 1915, 1916, 1917 and 1918 the defendant paid tax, and. settlement was had in 1920 covering the franchise tax for all of said years; that the defendant filed reports for 3920, 1921, and the tax was assessed at $450 for each year, and the tax paid for 1921 and 1922.

“Copy of charter introduced in evidence.”

The court found that the defendant was a foreign corporation under the laws of Delaware, and domesticated in this State in the year 1915; that the defendant is not engaged in business in the State of Arkansas, and therefore is not required to file reports or pay any franchise tax whatever in the State of Arkansas, and has .not been so required during any of the periods set out in the complaint herein. A decree was entered dismissing the plaintiff’s complaint for want of equity, from which comes this appeal.

It is the contention of appellee that this appeal presents two questions: (1) Was the appellee doing- business in the State of Arkansas? (2) If so, what amount of tax is due ?

It admits that it had a franchise or authority to do business in this State for the years mentioned, but denies that it did any business under said franchise within the meaning- of the act .requiring- foreign corporations to make report and pay the tax.

Section 9802 of Crawford & Moses’ Digest reads as follows:

“Each foreign corporation doing business in this State, for profit, and owning or using a part or all of its capital or plant in this State, and subject to compliance with all other provisions of law, and, in addition to all other statements required by law, shall make a report in writing to the Arkansas Tax Commission annually, on or before June 1. Act March 3, 1913, p. 518, No. 4.”

This section was amended by § 5 of act 236, in 1925, so as to require the making of the report on or before March 1, instead of June 1. By § 9803 the form of the report is provided for. By § 9804 the Railroad Commission is directed to determine from the report the proportion of the authorized capital stock of the corporation represented by its property and business in this State on or before July 1, and shall report the same to the Auditor of State, or shall charge and certify to the Treasurer of State on or before July 10, for collection, “annually from said corporation, in addition to the initial fee otherwise provided by law, for the privilege of exercising its franchise in this State, a tax of one-tenth of one per cent, each year upon the proportion of the subscribed, issued and outstanding capital stock of the corporation represented by property owned and used in business transacted in this State. Act February 15, 1917, p. 392, § 2.”

By § 9810 it is provided that such tax shall be due and payable on or before August 10, each year. It is further provided in said section that, if any corporation shall refuse to pay, on or before, the 10th of August, the taxes assessed against it, the Treasurer shall certify a list of the delinquents to the Auditor of State, who shall add to the tax a penalty of twenty-five per cent, thereon, and certify same to the Attorney General, who shall proceed forthwith to collect the same.

By § 9812 the taxes and penalties required to be paid by the provisions of this act shall become a first lien on all the property of the corporation, and by § 9813 it is provided that “if a corporation organized under the laws of Arkansas, or any foreign country authorized to do business in this State foi profit, and which is required to file the record (report) and pay the tax as prescribed in this act, fails or neglects to make any such report, or to pay such tax, for thirty days after the expiration of the time limited by this act, and such default is willful and intentional, the Attorney General * * *' shall bring an action in the circuit court of Pulaski 'County, or any other county in this State, * * * to forfeit and annul the charter of such corporation. If the court is satisfied that such default is willful and intentional, it shall revoke and annul such charter. ’ ’

It will thus be seen that a foreign corporation is required, “for the privilege of exercising its franchise in this State,” to pay a franchise tax of “one-tenth of one per cent, each year upon the proportion of the subscribed, issued and outstanding capital stock of the corporation represented by property owned and used in business transacted in this State.”

Section 11 of article 12 of the Constitution of the State of Arkansas provides: “Foreign corporations may be authorized to do business in this State, under such limitations and restrictions as may be prescribed by law. Provided, that no such corporation shall do any business in this State except while it maintains therein one or more known places of-,business and an authorized agent or agents in the same, upon whom process may be served; and, as to contracts made or business done in this State, they shall be subject to the same regulations, limitations and liabilities as like corporations of this State, and shall exercise no other or greater powers, privileges or franchises than may be exercised by like corporations of this State, nor shall they have power to condemn or appropriate private property.”

The State has the right to prescribe the terms and conditions upon which foreign corporations may be authorized to do business in this State, “subject to the same regulations, limitations and liabilities as like corporations of this State, and shall exercise no other or greater powers, privileges or franchises than may be exercised by like corporations" of this State.” Hartford Insurance Co. v. State, 76 Ark. 312, 89 S. W. 42.

In the case of St. Louis S. W. Ry. Co. v. State, 106 Ark. 326, 162 S. W. 112, this court said: “Our court has held that a corporation owes its existence to the State, and the right to enjoy this privilege is a subject of taxation, and that upon the power of the Legislature to impose such a tax there exists no restriction in our Constitution. In the case of a foreign corporation, the fax or license is paid for the privilege of exercising its corporate powers in the State;” citing Baker v. State, 44 Ark. 138, and cases cited therein.

It is not contended by the appellee that the act authorizing and directing the collection of a franchise tax is unconstitutional, but its contention is that it is not doing business in the State, and therefore is .not subject to the tax. The answer to that proposition is that the tax is not based upon the doing of business in the State, but the right or privilege of doing business in the State. And it is further urged by the appellee that it is a tax upon its corporate property. In the case just cited the court said: “In the case of Standard Underground Cable Company v. Attorney General, 46 N. J. Eq. 270, 19 Am. St. Rep. 394, the question as to whether a certain license tax imposed upon the corporation was a tax upon corporate property was involved. The corporation insisted that the tax was a violation of that provision of the Constitution of New Jersey which provides ‘that all property shall be assessed for taxation under general laws and by uniform rules according to its true value.’ The court said: ‘ The fault of this position is the assumption that this tax is one upon property. Such, manifestly, is not the case. The law in question imposes a tax on certain corporations by way of a license for exercising corporate franchises. It is declared to be such tax by the act, and, although it is laid on this class of corporations with respect to the capital stock, the tax possesses the legal quality of a license or franchise tax;’ ” citing cases.

We are therefore of the opinion that the tax in question was a valid exercise of the powers of the State, and was intended to be a tax on “the privilege of exercising its franchise in this State” and is to be based on “the proportion of the subscribed, issued and outstanding capital stock of the corporation represented by property owned and used in business transacted in this State.” It is agreed that the issued, outstanding and paid-up capital stock of appellee was, at all times, $450,000, and that it was all invested in property in the State of Arkansas, and that no part of its capital was invested outside of the State of Arkansas. Therefore the appellee was liable to pay the State a franchise tax based upon this amount of capital stock.

Appellee urges that, since it is agreed that the total value of its property owned in this State is the sum of $92,500, its franchise tax, if any should be assessed, should be based upon this amount, and not upon the amount of its authorized, issued- and outstanding capital as shown by its articles of incorporation. But the answer to this is -that the State has fixed another basis for the determination of its franchise tax, and it is immaterial to the State whether its property is of the value of its capital stock. The State cannot be required to appraise the property holdings of a corporation to determine whether the value of its holdings is equal to or in excess of its capital stock. ' '

If the appellee desires to avoid the payment of its franchise tax in this State, it may do. so by surrendering to the State its franchise or right to do business herein, and either hold its property in its own name, or transfer it in trust to another to be held for it. But, so long as .it holds its franchise and has'from the State of Arkansas the right to do business herein, it is liable for the tax. Having failed to pay same within the time provided by law, it became liable to the State therefor, plus the the penalty of twenty-five per cent, as provided in the statute, and the State has a lien upon all of its property in this State to enforce the collection of same. „

The decree of the chancery court is therefore reversed, and remanded with directions to enter a decree in accordance with the prayer of the complaint. It is so ordered.


author: Hart, C. J.,

text:
    Harriman National Bank v. Pope County.
    Opinion delivered March 14, 1927.
    1. Counties — warrants not negotiable. — County warrants are evidences of the indebtedness of a county, being orders on the county treasurer to pay out of county funds, but are not negotiable instruments in the sense of the law merchant, and the transferee takes them 'subject to defenses existing-in the hands of the.payee.
    2. Counties — effect of cancellation and reissuance. — Since county warrants are not negotiable instruments, the cancellation of warrants originally issued and substitution of others therefor do not change their character.
    3. Counties — face of warrant as notice. — The face of a county warrant is notice to the holder that its validity depends upon the validity of its issue.
    4. Counties — effect of allowance of claims. — A county court, in . the allowance of claims against the county, acts judicially, and its judgments are not open to collateral attack except for fraud or lack of jurisdiction.
    5. Counties — warrants iN payment of interest. — County warrants issued in payment of interest on debts of the county, evidenced by county warrants, were issued contrary to Const., art. . 16, § 1, prohibiting issuance of interest-bearing evidences of debt, and were illegal and void.
    6. Countie's — -warrants—innocent holder. — There can be no innocent holder of paper issued by a county in violation of'law, or where the county was without power to issue it.
    Appeal from Pope Circuit Court; J. T. Bulloch, Judge;
    affirmed.
    STATEMENT OP PACTS.
    Pursuant to an order, of tlie county court of Pope County, calling- in all outstanding warrants for reissuance, the Harriman National Bank presented county warrants Nos. 47 and 48, each for the sum of $1,000, for reissuance. These warrants were disallowed and ordered canceled by the county court, and th'e Harriman National Bank duly prosecuted an appeal to the circuit court.
    According to the testimony of the county judge of Pope County, holders of county warrants of Pope County, of the face value of $48,000, presented the same to the county court to be reissued on November 2,1923. Forty-five' thousand dollars of these warrants were reissued by the county court as being valid claims against the county. "Warrants of the face value of $3,000 were ordered canceled on the ground that they had been illegally issued in the first place. Warrants in the sum of $3,000 had been issued as a payment of interest for one year on the warrants of the face value of $45,000 which had been legally issued. The "warrants for $2,000 involved in this suit are a part of the warrants issued for interest on the $45,000 indebtedness of Pope County. The warrants in question are Nos. 47 and 48, and. the county judge knew that they were two of the warrants given as a payment of interest on the $45,000 indebtedness.
    The circuit court found the facts substantially as above stated, and held that the county was not liable. Judgment was accordingly rendered in favor of the county, and the claim of the Harriman National Bank was dismissed. To reverse that judgment the Harriman National Bank has duly prosecuted an appeal to this court.

      Abner McGehee, for appellant. .

      Rays, Priddy £ Rorex, for appellee.
   Hart, C. J.,

(after stating the facts). The judgment of the circuit court was correct. Under article 16, § 1, of our Constitution, counties are expressly prohibited from issuing any interest-bearing evidence of indebtedness except in certain cases which are not necessary to a decision of the issues raised by the present appeal. County warrants are evidences of the indebtedness of a county. They are orders upon the treasurer of the county to pay out of its funds for county purposes, not otherwise appropriated, the amount specified. They are not negotiable instruments in the sense of the law merchant, and the transferee takes them subject to all legal and equitable defenses which exist to them in the hands of such payee. The cancellation of the warrants originally issued and the substitution of others in their place does not change their character. The face of the warrant is notice to the holder that its validity depends upon the legality of its issue. Vale v. Buchanan, 98 Ark. 299,135 S. W. 848; Wall v. Monroe County, 103 U. S. 74; and Bank of Commerce v. Huddleston, 172 Ark. 199, 291 S. W. 422. This court has also held that a county court, in the allowance of claims against the county, acts judicially, and its judgments are not open to collateral attack, except for fraud or lack of jurisdiction. Monroe County v. Brown, 118 Ark. 524, 177 S. W. 40.

The circuit court was justified, under the evidence adduced, in finding that the warrants- involved in this appeal were issued in payment of interest on the $45,000 indebtedness of the county, evidenced by county warrants. The warrants in question were therefore issued in contravention of the section of the Constitution above referred to, and were illegal and void. Under the authorities cited there can be no innocent holder of paper issued by a county without power or in violation of law. The reason for the rule is that counties derive all their powers from public law, and persons taking their paper must, at their peril, ascertain the extent of their contracting powers and the limitations upon-them.

The result of our views is that the warrants in question were illegal and void, and the circuit court properly sustained the judgment of the county court refusing to reissue them. The judgment will therefore be affirmed.


author: Hast, C. J.,

text:
    Selz v. Paving District No. 1 of McGehee.
    Opinion delivered March 21, 1927.
    1. Municipal corporations- — preliminary petition for improvement. — The foundation of a municipal improvement district is a petition of ten owners of real property situated in the proposed district, and the provisions of the statute relative thereto are mandatory.
    2. Municipal corporations — validity of preliminary petition.— A proceeding for a paving improvement was not rendered invalid because the first petition asked that the cost of the improvement be assessed by the front foot rule, as such request was surplusage.
    3. Municipal corporations — necessity of preliminary petition for improvement. — The statutory requirement that the preliminary petition for a municipal improvement district be signed by ten owners of real property and describe the boundaries of the district, so- that it may be easily distinguished, is essential to the jurisdiction of the city council".
    4. Municipal improvement — mode of assessing benefits.' — Assessment of benefits for paving- improvements cannot be made by the front foot rule, but all proper elements of benefits, including frontage of the property, should be considered by the assessors.
    5. Municipal corporations — improvement district — notice ’ to property owners. — A proceeding for an improvement is not void because the notice to the property owners of the filing of the sec-’ ond petition'was signed by the mayor and attested by the recorder, instead of being signed by the recorder alone.
    Appeal from Desha Chancery Court; E. G. Hammock, Chancellor;
    affirmed.
    STATEMENT OP PACTS.'
    Appellants brought a suit in equity against Paving District No. 1 of McGehee, one of the appellees, to enjoin it from proceeding further in the matter of the sale of bonds or with the work of constructing, the improvement. Appellants brought a similar suit against the Curb and Gutter, Storm Sewer and Street Crossing District No. 1 of McGehee. The same issues are involved in the two suits, and they were consolidated for the purposes of. trial.
    It is alleged that the establishment of the improvement district was void because the first, or preliminary, petition contains the provision that the cost be assessed against the real property in the district on a front-foot basis. It is further alleged that the notice to the property owners required to be given by the statute was signed as.follows: “P. L. Neville, mayor. Attest: Mrs. E. E.. Durain, recorder,” when it should have been signed merely by the recorder or city clerk. Each appellee admitted in its answer these allegations of the complaint. They also set up a state of facts showing that they had complied with, the statutes in all substantial respects in forming the improvement districts. It further alleged a state of facts showing that all proper elements of benefits were given due consideration in the assessment of benefits.
    ' Appellants filed a demurrer to the answer, which was overruled. Thereupon appellants announced that they would stand upon their demurrer, and refused to plead further. Whereupon the court found that the complaint in each of said cases should be dismissed for want of equity. It was decreed that the complaint in each case should be dismissed for want of equity, and the case is here on appeal.

      Charles Jacobson, for appellant.

      P. 8. Seamans, Robinson, Rouse & Moses and A. A. Poff, for appellee. .
   Hast, C. J.,

(after stating the facts). This court has held that the foundation of the improvement is the petition of ten owners of real property situated in the proposed district, and that the provisions of the statute are mandatory and jurisdictional. Board of Improvement District No. 60 v. Cotter, 71 Ark. 556, 76 S. W. 552; Kraft v. Smothers, 103 Ark. 269, 146 S. W. 505; Smith v. Imp. Dist. No. 14 of Texarkana, 108 Ark. 141, 156 S. W. 455, 44 L. R. A. N. S. 696; and Bell v. Phillips, 116 Ark. 167, 172 S. W. 864.

Under the averments of the answer, which are admitted by the demurrer, the provisions of the statute with regard to the filing of the preliminary, or first, petition were complied with, but it is contended that the proceed-' ing was rendered void because the first petition asked that the cost be assessed against the property on a front-foot basis, which is contrary to our Constitution on the subject, as construed in Little Rock v. Katzenstein, 52 Ark. 107, 12 S. W. 198, and later decisions of this court. We do not agree with counsel in this contention. It is true that the provision of the statute requiring the preliminary petition to be signed by ten owners of real property and to describe the boundaries of the district, so that it may be easily distinguished., is essential to the jurisdiction of the council in laying out the district, and that these facts must appear or the proceedings will be void. The provisions of the- statute are in the nature of conditions precedent to the right to lay off the improvement district, and must be obeyed or the proceedings will be adjudged invalid, when properly brought before the courts for review. The statute under consideration does not contain any requirement as to how the assessment of benefits shall be made. Under our Constitution, the assessment of benefits cannot be made on what is commonly called the front-foot rule, but all proper elements of benefits, including the frontage of the property, its valuation, including the valuation of the buildings, etc., must be considered by the, assessors in compliance with the principles of law laid down in Kirst v. Street Imp. Dist. No. 120, 86 Ark. 1, 109 S. W. 526, and later decisions of this court.

According to the averments of the answer, in assessing the benefits, the fact that the first petition asked that the benefits be assessed according to the front-foot rule should be treated as surplusage. It had no proper place in the first petition, and urns not in any sense essential to be alleged in order to give the council jurisdiction to lay out the improvement district. It was the duty of the council to lay out the district when the preliminary, or first, petition required by the statue was filed with it. It knew that the Constitution provided in what manner the benefits should be assessed, and that the provision of the Constitution could not be disregarded in assessing benefits. Therefore the provision of the Constitution would be considered as controlling in the premises, and the allegation of the petition that the benefits should be assessed according to the front-foot rule would be of no avail. It had no proper place in the preliminary petition for the improvement, for the reason that the statute prescribed what its contents should be, and anything not required to be stated should be treated as surplusage. Deane v. Moore, 112 Ark. 254, 165 S. W. 639.

Again, it is insisted by counsel for appellants that the decree should be reversed because the notice to the property owners was signed by the mayor and attested by the recorder, when the statute provides it should be given by the recorder. The object of the statute in giving notice to the property owners that the second petition, which is required to be signed by a majority in value of the owners of real property in the district, is for the benefit of the property owners. It notifies them that the second petition will be presented to the council, and gives them an opportunity to oppose it. The requirement of the statute that the city clerk or recorder shall publish the notice was doubtless made because it was the duty of such clerk to keep the records of the city council, and, as the custodian of such records, he would be the proper person to give the notice. In the case at bar, the notice was signed by the mayor and attested by the city clerk. This was a substantial compliance with the statute. It was not necessary for the mayor to sign the notice, but the fact that he did sign it did not vitiate it, and it should be treated as surplusage. The notice was mandatory and jurisdictional, as held in Crane v. Siloam Springs, 67 Ark. 30, 55 S. W. 955, hut it was substantially complied with when it was signed by the clerk. When it was so signed, this imported verity to it, and the property owners would be bound by what it contained, notwithstanding the fact that it was also signed'by the miavor.

The result of our views is- that the decree of the chancery court in each case was correct, and it will therefore be affirmed.


text:
    Bacharach v. Spriggs.
    Opinion delivered March 21, 1927.
    1. Executors and .administrators — power to sell land. — An executor derives his power from the will, and, if it authorizes him to sell lands, he may do so without an order of the probate court.
    2. Executors and administrators — authority op foreign executrix. — An executrix qualified and acting under authority of a will executed in another State held authorized to sell land in Arkansas as directed by the will.
    3. Specific performance — when denied.- — When a foreign executrix exercised a power under the will to sell Arkansas lands, the chancellor properly dismissed, for want of equity, a complaint for specific performance of a contract made -by a local administrator for the sale of such lands.
    4. Dismissal and nonsuit — retaining jurisdiction for complete relief.- — Where parties, suing for specific performance of a local administrator’s contract to sell real property, secured a deed from the administrator, which constituted a cloud on defendant’s title, the court properly retained jurisdiction, on dismissing the complaint, to cancel such deed as prayed in the cross-complaint.
    5. Cancellation of instruments. — Devisees, conveying their interest in realty by'warranty deed, could proceed with a cross-bill for cancellation of an administrator’s deed from a local administrator, in a suit for specific performance of the latter’s contract of sale.
    Appeal from Phillips Chancery Court; A. L. Hutch-ins, Chancellor;
    affirmed.
    STATEMENT OE FACTS.
    E. M. Bacharach and L. K. Grauman brought this suit against Ed Spriggs, as administrator with the will annexed of the estate of W. L. Scott, deceased, Laura Walton, Charlotte Tyler and Ruby Lee Scott, for the purpose of obtaining specific performance of a contract for the sale of real estate situated in the city of Helena, Phillips County, Arkansas. The defendants, Laura Walton, Charlotte Tyler and Ruby Lee Scott, filed an answer, in which they asserted.title in themselves, and, by way of cross-complaint, asked to cancel and set aside a deed of conveyance from Ed Spriggs, administrator as aforesaid, to the plaintiffs in the suit.

      The record shows that W. L. Scott died testate in the State of Colorado, and, at the time of his death, owned certain real estate in the city of Helena, Phillips County, Arkansas. Under § 4 of his will, his property in the city, of Helena, in Phillips County, Arkansas, is specifically described, and the section concludes as follows: “It is my will that all of this property be sold to the best advantage, and that my beloved wife, Ruby Lee Scott, have one-third of the net proceeds in money, and' that my sister, Charlotte Tyler, have one-third of the net proceeds in money, and that my stepdaughter, Laura Walton, have one-third of the net proceeds in money.” The fifth clause of the will is as follows: “I hereby make, constitute and appoint my beloved wife my executrix in this my last will and testament, and authorize her to act in the same without having to give any bond.”
    Ruby Lee Scott was the wife, Laura Walton the daughter, and Charlotte Tyler, the sister, of W. L. Scott, deceased. Ruby Lee Scott, his widow, qualified as executrix under the will- in the State of Colorado, and is still acting as such executrix. Subsequently to the filing of this suit, Ruby Lee Scott and Charlotte Tyler, for a valuable consideration, conveyed their interests in the Helena property to George Walton, husband of Laura Walton.-
    Ed Spriggs was appointed administrator with the will annexed of said estate -by the probate court of Phillips County, Arkansas, and duly qualified as such administrator. He entered into a written contract, as such administrator, with E. M. Bacharach and L. K. Grauman, whereby he gave them an option to purchase the Helena property in question for the sum of $4,000, and they paid him the sum of $50. Subsequently, within' the life of the option, Bacharach and Grauman demanded a deed in accordance with the terms of their optional contract, and, upon the refusal of Spriggs to execute the deed, they brought this suit against him and the devisees under the will for specific performance of the optional contract. "When they demanded the deed, they tendered the balance of the purchase price, as provided in the optional contract. Subsequently Ed Spriggs, as such administrator, executed a deed to the plaintiffs to said property. The facts above stated were established by evidence, as well as admitted by the pleadings.
    E. M. Bacharach was the principal witness for himself. According to his testimony, the conditions and terms specified in the optional contract signed by Ed Spriggs, a.s administrator with the will annexed of the estate of W. L.. Scott, deceased, -were agreed to by Ruby Lee Scott over the telephone. Bacharach also knew that A. M. Coates, an attorney, who represented Spriggs, as administrator, had a power of attorney from Charlotte Tyler, authorizing him to sell and convey her interest in said property. His testimony was corroborated by that of Ed Spriggs. Spriggs also testified that he had a letter from Ruby Lee Scott authorizing him to sell the property on the terms stated in the contract. Spriggs also saw a letter from Laura Walton to Ruby Lee Scott, stating that she would accept the offer as set forth in the optional contract. A. M. Coates testified that he agreed to the contract for Charlotte Tyler, ¿aid knew that the contract was satisfactory to Ruby Lee Scott, for the reason that she came to his office many times and signified her willingness to sell the property to Bacharach and Grauman for $4,000. Laura Walton lived in Denver, Colorado, and denied writing a letter to Ruby Lee Scott giving her consent to the sale of the property. After the present suit was brought, her husband, George Walton, bought the undivided interest of Ruby Lee Scott and Charlotte • Tyler. Ruby Lee Scott testified that she never told Ed Spriggs unconditionally that she would sell her interest in the property. She testified that she told him that she would sell her interest provided Laura Walton would sign the deed: She admitted visiting Coates’ office and asking for her part of the money, but she did this upon the condition that Laura Walton would sign the deed. Other facts will be stated or referred to in the opinion.

      The chancellor found that the defendant, Ed Spriggs, neither as administrator with the will annexed, nor as agent, nor as attorney in fact for the defendants, Ruby Lee Scott, Charlotte Tyler and Laura Walton, had the authority to bind said defendants by the optional contract entered, into by him as such administrator with E. M.. Bacharach and L. K. Grauman. It was therefore decreed that the complaint of the plaintiffs be dismissed for want of equity, and that the warranty deed executed by Ed Spriggs, as administrator with the will annexed of the estate of W. L. Scott, deceased, to E. M. Bacharach and L. K. Grauman, be canceled and set aside.
    To reverse that decree the plaintiffs have duly prosecuted an appeal to this court.

      W. G. Dinning, for appellant.

      Moore, Wallter & Moore, for appellee.
   Hart, C. J.,

(after stating the facts). The record shows that W. L. Scott died testate in the Stale of Colorado, owning property in the city of Helena, in Phillips County, Arkansas. By the terms of his will he directed that this property be sold to the best advantage and the net proceeds be divided equally between his wife,. Ruby Lee Scott, his daughter, Laura Walton, and his sister, Charlotte Tyler. No one was appointed by the terms of the will to make the sale, but the fifth clause of the will appointed his wife as executrix and authorized her to act without giving any bond.

An executor derives his powers from the will, and, if it authorizes him to sell lands, he may do so without the order of any court. Ludlow v. Flournoy, 34 Ark. 451. In Heiseman v. Lowenstein, 113 Ark. 404, 169 S. W. 224, Am. Cas. 1916C, 601, it was held that no particular form of words is necessary to create a power to sell in the will, and that, if the executor is directed by will or bound by law to see to the application of the proceeds of the sale, then such power of sale is conferred on the executor by implication. In a case-note to 32 L. R. A. (N. S.), at page 679, it is said that an executor named in a ’will which either expressly or impliedly directs real estate to he sold, and the proceeds distributed in a certain manner, by necessary implication has power to sell and convey the real 'estate without express powers having been conferred. Numerous cases from numerous State courts of last resort are cited which support the text. To the same effect see 24 C. J., page 157, § 637 (b); and 11 R. C. L., page 398, § 480.

In the application of this principle of law to the facts presented by the record, it may be stated that Ruby Lee Scott, as executrix of the last will of W. L. Scott, deceased, alone had the authority to sell the property in question and distribute the proceeds as directed by her testator in his will.

But it is insisted that she qualified and was acting as executrix under the will in the State of Colorado, and could not sell property situated in the State of Arkansas. In Apperson v. Bolton, 29 Ark. 418, this court expressly held to the contrary, as will appear from the following quotation: “Wade H. Bolton, by his will, appointed Apperson his executor, and empowered him to sell his real estate in Tennessee or in other States. When the will was properly probated in Tennessee and letters granted to him, the will was his authority to sell land there, and not his letters; they were merely evidence of his authority to execute the power conferred upon him by the will, but he could not sell Arkansas land by the power conferred upon him by the will until the will was admitted to probate in this State under our laws, and, when so admitted to probate and recorded, it ivas not necessary for him to take out letters here in order to sell the Arkansas land.”

Counsel for the plaintiffs contend that this case is not applicable because in that case no administrator with the will annexed was appointed and qualified under the laws of the State -of Arkansas, and that for this reason it was held that the executor in Tennessee had , the authority to convey the title. It is plainly apparent from the authorities above cited that such is not the case. The authority to sell, as we have already seen, arises hy necessary implication. In 11 R. C. L., page 405, § 490, it is said that an executor appointed in one State has no authority, as such, to make a sale of land in another State, but may do'so in virtue of a power given in the will, and in so doing he acts as donee of a power and not under an authority conferred by the probate court. Newton v. Bronson, 13 N. Y. 587, 67 Am. Dec. 89, is cited to support the 'text.

Hence it is apparent that, if the executrix named in the will had refused to carry out the power of sale conferred hy implication upon her hy the terms of the will, the administrator with the will annexed in the State of Arkansas could not have sold the land without an order of the probate court, and, as a necessary consequence, could not have made a binding executory contract for the sale of it. The record not only shows that the executrix under the will, appointed by its terms, did not refuse to execute the power to sell, but, on the contrary, did exercise it by selling her own interest and causing another of the devisees to sell her interest to the husband of the third devisee, who had agreed to the sale and who did not-wish her interest in the property sold. Under these circumstances the chancellor properly held that the complaint of the plaintiffs should be dismissed for want of equity.

But it is insisted by counsel for the plaintiffs that the chancery court erred in granting relief to the defendants on their cross-complaint. This contention is based upon the fact that plaintiffs had asked for their complaint to be dismissed before a trial of the case. This was not done, however, until the plaintiffs had secured a deed to the property in controversy from Ed Spriggs, as administrator with the will annexed of the estate of W. L. Scott, deceased. This deed cast a cloud upon the title of the defendants, and the court properly retained jurisdiction of the case in order to cancel this deed, if, under the facts established, it should be warranted in so doing. The court properly held that this deed was a cloud upon the defendants’ title, and should be canceled. It is true that Ruby Lee Scott and Charlotte Tyler conveyed their interest in the property to George Walton, the husband of Laura Walton, but they executed a warranty deed to him, and, for this reason, had a right to proceed with'the suit. This sale and conveyance was made pursuant to an agreement with Laura Walton, who wished to retain her interest in the property, and who did so in lieu of receiving one-third of the proceeds derived from the sale of it. Hence, in any event, she would have had a right to have the administrator’s deed from Spriggs to the plaintiffs set aside; and, if set aside at fier instance, it would inure to the benefit of her codefendants, and the plaintiffs, having failed in their suit, could not be prejudiced by this action of the court. Therefore the decree will be affirmed.