text:
    Chaney v. Missouri Pacific Railroad Company.
    Opinion delivered January 12, 1925.
    1. Judgment — time for filing motion for judgment. — In an action in which special statutory damages are recoverable in addition to wages due, a motion for judgment therefor, notwithstanding verdict for wages due, must be made before judgment is entered on the verdict.
    2. Appeal and error — conclusiveness of verdict. — While a trial court may grant a new trial if the verdict is against the weight of the evidence, the Supreme Court may not, unless the evidence against the verdict is practically conclusive.
    Appeal from Pike Circuit Court; B. E. Isbell, Judge;
    affirmed.
    STATEMENT of facts.
    This was an action by D. O. Chaney to recover the sum of $25, alleged to: be due him for wages, and the penalty provided by § 7125 of Crawford & Moses’ Digest. Chaney recovered judgment before a justice of the peace, and the Missouri Pacific Railroad Company appealed to the circuit court.
    D. O. Chaney was a witness for himself.
    According to his testimony, he was hired to work as night guard for the Missouri Pacific Railroad Company in North Little Rock, Arkansas. He was to receive $5 per day, and worked from the 27th day of August to the 9th day of September in 1922. He was discharged by the agent of the company who employed him, and his wages were not paid to him. He directed his wages to be sent to him at Delight, Arkansas, which was the station on the defendant’s line of railroad nearest to him. About, the first of October, 1922, Chaney went back to Little Rock with some prisoners. He again applied to the railroad company for his wages, and was told that a check for the amount had been sent to the station agent at Delight, Arkansas. On the 23rd day of -September, 1922, Chaney went to the station agent at Delight and demanded payment of his wages. He again requested them- to send his wages to Delight, Arkansas, and, after his return home, again made demand of the station agent for his wages, and was refused payment. The present suit was filed before a justice of the peace on October 26, 19'22.
    Other witnesses corroborated the testimony of Chaney, and it was proved by them that the check for his wages was not received by the station agent at Delight until the 27th day of November, 1922.
    According to the evidence for the defendant, the check for the wages of the plaintiff was received by the agent -at Little Rock on September 11, 1922, and, if the plaintiff had called at the office, it would have been delivered to him. The plaintiff did not request that the check be sent to Delight, Arkansas, until October 2, 1922.
    The jury returned a verdict for the plaintiff in the sum of $50, and judgment was entered upon the verdict. Thereupon the plaintiff filed a motion for judgment in the sum of $300-, notwithstanding the verdict. The circuit court denied the motion, and the case is here on appeal.

      T. W. Rountree and W. T. Kidd, for appellant.
    Upon his discharge and the failure to pay his wages until seven days appellant was entitled to recover as penalty, wages at the rate specified up to the time he was finally paid. Section 7125, C. & M. Digest. Such recovery is also allowed by 58 Ark. 408; 70 Ark. 226; 55 Ark. 547; 106 Ark. 74. It was error to deny judgment for less than tbe full amount. 153 Ark. 233; Í00 Ark. 47; 113 Ark. 221.

      E. B. Kinsworthy and R. E. Wiley, for appellee.
    Appellant should have asked for judgment for penalty before the entry of judgment on the verdict. 44 Ark. 265; 15 R. C. L. 608, No. 47; 142 Mo. 283; 45 Am. Dec. 280; 70 Wash. 210; 44 L. R. A. (N. S.) 338; 32 Ky. L. R. 791; 122 Ky. 413; 11 Ky. L. Rep. 607; 64 Minn. 136; 101 N. W. 1124; 24 Oh. Cir. Ct. 714. Relief is sought 'by appellant under ■§ 6271, C. & M. Digest, but, in construing this statute, § 6272-75 must also be considered. All acts in pari materia are to be taken together, as if they were one law. 3 Ark. 556; 5 Ark. 349; 45 Ark. 387; 60 Ark. 124; 151 Ark. 428; 23 Ark. 304. That the common-law rule as to time for such motion was embodied and intended to be embodied in the statutes is clearly shown by the opinion in 100 Ark. 47. See also 113 Ark. 221. Under the instruction asked by appellant, the verdict was right. 116 Ark. 514; 95 Ark. 214.
   Hart, J.,

(after stating the facts). At common law, judgment notwithstanding the verdict could only be granted before judgment was entered upon the verdict, and the motion was based upon the record proper alone. The granting or denying the motion therefore depended upon the pleadings, but it is claimed that, by judical relaxation of this rule in this State, if the evidence is undisputed, and shows as a matter of law that judgment should be granted, the court will grant the judgment notwithstanding a verdict in favor of the other party. Scharff Distilling Co. v. Dennis, 113 Ark. 221, and Coleman v. Utley, 153 Ark. 233.

Reliance is placed by counsel for the plaintiff upon § 6275 of C. & M. Digest, providing that, where special damages are given by statute, and it appears by the verdict of the jury that such special damages are recoverable, the court shall render judgment for them. We do not deem it necessary to decide whether or not this statute is applicable to cases of this sort. Even if it should be held applicable, the statutory damages must have been asked for before judgment was entered upon the verdict of the jury. In the instant case the motion was not made until after judgment was entered upon the verdict of the jury, and it was therefore too late, even if the statute is applicable.

We now come to the question of whether a new trial should have been granted under the general rules of practice. This cannot be done by the appellate court unless the evidence is practically conclusive against the verdict. It is the duty of the circuit court to grant a new trial where it is of the opinion that the verdict of the jury is contrary to the weight of the evidence.

On the other hand, it is the duty of this court to uphold the verdict if there is any evidence to sustain the verdict under any view of the law applicable to the case. St. L. S. W. Ry. Co. v. Ellenwood, 123 Ark. 428. Now it cannot be said that the undisputed evidence showed that the plaintiff was entitled to a verdict of $300. There was no dispute between the parties as to the amount of wages due the plaintiff and as to the fact that he was discharged by the defendant without being paid; but there was a sharp conflict in the evidence as to whether he asked for his wages to be sent to Delight, Arkansas, at the time he was discharged from the employment of the defendant. It is true that he so testified and that his testimony was corroborated by that of other witnesses.- On the other hand, the witnesses for the railroad company testified that he made no such request, and that the money was in due time sent to the station agent at North Little Rock, where the services were performed by the plaintiff, and that his wages would have been paid him if he had come there and requested payment. In other words, it appears from the testimony introduced by the defendant that he was not entitled to the penalty or statutory damages provided by § 6275 of Crawford & Moses’ Digest.

The circuit court denied the plaintiff’s motion for a new trial, and, for aught we know, may have done so on the ground that the weight of the evidence showed that the plaintiff was not entitled to recover anything except the amount of the wages due him. In this view of the matter it could not have made any difference that the jury returned a verdict for the plaintiff in an amount greater than his wages; for this was a matter which did not work to his prejudice and of which he could not complain.

It follows that the judgment of the circuit court must he affirmed.


source: Caselaw Access Project

author: Hart, J.

license: Public Domain

text:
    Road Improvement District No. 4. v. Burkett.
    Opinion delivered December 22, 1924.
    1. Highways — act barring claims against district. — The provision in Special Acts 1923, p. 1143, § 2, repealing the act creating a highway improvement district, which barred all claims against the district not presented within six months thereafter, was reasonable; the word “claim” embracing every species of legal demand.
    2. Highways — presentation op claim.. — Under Special Acts 1923, p. 1143, § 2, barring claims against a dissolved road improvement district unless presented within six months from the approval of the act, the institution of a suit against the district within six months thereafter and continued prosecution thereof to judgment was a sufficient presentation of the claim on which the suit was founded.
    3. Judgment — conclusiveness.—A decree against a road improvement district is not open to collateral attack upon the ground 'that the claim on which the judgment was based was not presented to the commissioners within six months from the approval •of the act, as it was the duty of the commissioners in the former suit to interpose all defenses which they had.
    Appeal-from Johnson Chancery Court; W. E. Atkinson■, Judge;
    affirmed.

      Jesse Reynolds and G. O. Patterson, for appellant.
    Among other things it is admitted by the demurrer that appellee did not file his claim with the commissioners in the time and in the manner provided by the act, No. 533, Acts 1923, p. 1143, § 2. This right of action is therefore barred. The statute in question is one of non-claim, and not a statute of limitation. The limitation on the presentation of claims is not unreasonable. 78 Ark. 392; 154 Ark. 420; 158 Ark. 578. It is not possible for a claim barred by the statute of nonclaims to be revived. For distinction. between a statute of limitation and a statute of nonclaim, see 23 Ark. 604; 112 Ark. 15.

      J. N. Saye, for appellees.
    This suit had been instituted and was pending at the time the act, No. 533, of 1923, was passed by the Legislature and approved by the Governor. Following that approval, the case went to judgment in favor of appellee in the chancery court, was appealed to the Supreme Court, where it was affirmed in April, 1924. At no time prior to rendition of judgment did the district interpose as a defense that appellee had not presented his claim to the commissioners. The latter had in fact rejected his claim in 1921, before appellee brought his suit, and, both before and after the passage of the act, the claim was treated by all parties as having been rejected by the commissioners. Appellants’ contention is frivolous. The law does not require the doing of a vain and useless thing. 36 Ark. 483. The judgment rendered in this case could be attacked only in a direct proceeding to vacate such judgment in the manner and for the cause or causes prescribed by the statute, O. & M. Digest, §§ 6290, 6292. The defense of nonclaim now sought to be interposed is res judicata, since it was appellants’ duty to interpose that defense as well as all other defenses, both legal and equitable, in the original suit. 135 Ark. 47; 80 Ark. 309; 77 Ark. 194; 79 Arlu 194; 70 Ark. 203. The demurrer properly raised this question. 141 Ark. 453. This court’s decision in Mcllroy v. Baird, 157 Ark. 268, is decisive of the question here.
   Hart, J.

On the 2d day of August, 1924, appellants instituted an action in the chancery court against appellees to enjoin them from attempting to collect a decree against them.

According to the allegations of the complaint, Road Improvement District No. 4 of Johnson County, Arkansas, was created by a special act of the Legislature at its special session in 1920. On the 23d day of February, 1920, the road commissioners named in the act entered into a contract with the Hight-Burkett Engineering Company as engineers for said district, and said engineers, after making a preliminary survey, duly filed their plans and specifications with the commissioners, as provided by the contract. The road district abandoned the improvement on account of the high cost of construction.

On the 9th day of June, 1923, Carl C. Burkett, who had succeeded to all the rights of the Hight-Burkett Engineering Company, brought suit against the road district for the sum of $7,825.77 for making a preliminary survey of the road to be improved.

By an act approved March 21, 1923, the act creating said improvement district was repealed. Special Acts of 1923, p. 1143.

Section 2 of the act provides that all claims against said district must be presented to the commissioners thereof, duly verified as required by law in actions of account, and, if not presented within six months from this date, they shall be forever barred.

Section 3 provides that, if the commissioners reject any claim presented to them, the holder thereof shall be barred unless he shall, within sixty days after notice of the rejection thereof, proceed to enforce the same by suit.

Burkett did not file his claim with the commissioners, but proceeded with his suit in the chancery court against them, and recovered judgment on the 8th day of December, 1923.

The commissioners appealed to the Supreme Court, and the decree of the chancery court was affirmed on April 14, 1924. Road Improvement District No. 4 v. Burhett, 163 Ark. 578.

The chancellor sustained a demurrer to the complaint of appellants, and, appellants refusing to plead further, their complaint was dismissed for want of equity.

The commissioners have duly prosecuted an appeal to this court.

It will ¡be seen that the repealing act referred to in our statement of facts requires all claims to be presented to the commissioners within six months from the date of the approval of the act, which was March 21, 1923, and that the claim in question was not presented to the commissioners. Statutes of this kind have been sustained as reasonable, and the word “claim” has been construed to embrace every species of legal demand. Western Randolph County Road Improvement District v. First National Rank, 159 Ark. 578. Therefore we think that there should be an actual presentation of the claim within the time prescribed, or something done by the claimant equivalent to it. The bringing of a suit on the claim against the commissioners is, under the circumstances of this case, equivalent to an actual presentation.

The suit by the engineers against the road improvement district to recover for preliminary expenses was brought before the repealing- act was passed. The commissioners refused to pay the claim, and the suit was prosecuted until a recovery was had in the chancery court in December, 1923. The commissioners continued to fight the claim, and appealed to the Supreme Court. The decree of the chancellor was affirmed in April, 1924.

Thus it will be seen that the road commissioners were informed of the nature of the demand of the engineers and that the latter were insisting upon its payment. They could not be more effectually advised of both these facts if the claim had been formally presented to them and payment demanded. Therefore there was, to all intents and purposes, a compliance with the statute.

We are of the opinion that the commencement of the suit by the engineers against the district within the statutory period and its continued prosecution operated as a presentment of the claim on which the suit was founded. This is in accord with our holding in the case of MclIroy v. Baird, 157 Ark. 288. In that case it was held that, where all the parties have treated a claim against a defunct road improvement district as if it had been rejected by the commissioners, it is too late, after judgment, to raise the question that it had not been passed on by the commissioners, and rejected by them.

Moreover, there is a presumption in favor of the validity of the decree in the chancery suit of the engineers against the road improvement district to recover their fee for making a preliminary survey, which must prevail in a collateral attack on the decree. When the suit was brought by the engineers against the district to recover their fee, it was the duty of the commissioners to interpose all defenses, both legal and equitable, which they might have to the suit, and this included the defense that the claim had not been filed with them within the time prescribed by statute. Livingston v. New England Mortgage Security Co., 77 Ark. 379, and Taylor v. King, 135 Ark. 43.

It follows that the decree will be affirmed.


author: Hart, J.,

text:
    Bolden v. Grayson.
    Opinion delivered December 22, 1925.
    1. Mortgages — construction op instrument. — Whether a particular instrument constitutes a mortgage or a sale with a contract of purchase depends upon the intention of the parties, as shown upon the face of the instrument or as disclosed by extrinsic evidence.
    2. Mortgages — parol evidence. — Parol evidence is admissible to show that a deed, absolute was intended as a mortgage, but such evidence must be clear, satisfactory and convincing.
    3. Evidence — declarations of grantor. — Declarations of a grantor as to his interest in the land conveyed by him' are admissible against all who claim under him.
    4. Mortgages — insufficiency op evidence. — Evidence held insufficient to show a deed absolute was intended as a mortgage.

      Appeal from Nevada Chancery Court; C. E. Johnson, Chancellor;
    affirmed.
    STATEMENT OE FACTS.
    Appellants brought this suit in equity against appellee, and asked that a deed from Missouri Bolden to 120 acres of land to appellee be declared a mortgage, and that they be entitled to redeem said land from said mortgage upon the payment of the mortgage indebtedness. Appellee answered setting up title in himself, and, by way of cross-complaint, asked for possession of said land.
    Appellants are the children and sole heirs-at-law of Missouri Bolden, deceased, who died intestate in Nevada County, Arkansas, on January 15, 1923. Walter Bolden was the principal witness for appellants. According to his testimony, his mother, Missouri Bolden, was indebted to P. C. Grayson, and in 1913 gave him a mortgage on a part of the land involved in this suit to secure said indebtedness. He resided on the land with his mother, and she. continued to get deeper in debt to Grayson from year to year. On the 27th day of May, 1921, Missouri Bolden executed a deed to P. C. Grayson to the 120 acres of land in question, which is situated in Nevada County, Arkansas. The consideration recited in the deed was the sum of $1,000. The deed was-duly acknowledged before J. B. Smith, a notary public, on the same day. P. C. Grayson told Walter Bolden and his mother that the latter was indebted to him in the sum of $1,546.74. He allowed Missouri Bolden to continue in possession of said land, and she resided there at the time of her death. Her husband originally owned the land, and, after his death, the children conveyed the land to her in order that she might mortgage it to obtain supplies with which to run the farm. P. C. Grayson never demanded or received any rent for the place after the execution of said deed. His mother paid the taxes on the land in 1921 and in 1922. Witness has cut and removed from the land about $800 worth of pine timber since the execution of the deed. The witness understood that his mother was merely executing- a mortgage on the property for the purpose of securing her indebtedness to Grayson. The witness was building a house when his mother died, and went to town to see Grayson about a settlement of her indebtedness. Grayson told him to come back the. next week. "Witness then went on home, and worked on the house until the next week, but he never did get an itemized statement of the account. He heard some talk right after his mother signed the deed to the effect that Grayson claimed title to the land; but Grayson never claimed to him that this was the fact until after his mother’s death. On the other hand, Grayson promised to convey the land back to him whenever the indebtedness was paid.
    W. W. Drake was a witness for appellants. According to his testimony, the land was worth $20 per acre on the 27th day of May, 1921.
    . Jones Jack testified that, a year or two before, Gray-son had told him that, when appellants paid him, he would surrender the deed and give them both the land. On cross-examination he stated that this conversation between him and Grayson took place three or four years ago. His testimony was given on the 19th day of May, 1923.
    P. O. Grayson was the principal witness for himself.
    According to his testimony, Missouri Bolden traded with him, and her account grew from year to year until, in 1920, he deemed himself insecure. She had been mortgaging the land to him prior to that time. In the fall of 1920 he agreed to give Missouri Bolden $1,000 for the land in controversy, and she agreed to take it. She told him to have a deed prepared and she would execute it when she again came to town. She came back in May, 1921, and told Grayson that she had come to execute the deed. Her son Walter was with her. P. W. Grayson, the brother of P. C. Grayson, was present. The witness did not tell her or her son that he would convey the land back to them when they paid off their indebtedness. Both the witness and Missouri Bolden understood this to be an absolute sale. She was already on the land, and he agreed to let her stay on the place that year if she wonld pay the taxes. In the year 1922 Grayson told her that he would let her have the place for that year for $40. She paid the rent for 1922. The land is very low grade for farming purposes, and she never made more than two bales of cotton on it per year. At the time witness obtained the deed to the land it had no value for oil oi-gas at all. Subsequently, in the spring of 1922, witness sold an oil and gas lease on part of it for $1,900.
    L. B. Turley was a witness for appellee.
    According to his testimony, in May, 1922, he went to see Missouri Bolden to get her to put in a small portion of her farm to aid in drilling a well, and she told him that P. C. Gray-son owned the land.
    Fred L. Young, a witness for appellee,
    testified that he went to see Missouri Bolden to obtain an oil lease from her, and that she told him that she had sold the land to P. O. Grayson. Young was the attorney and secretary of the Columbia Oil & Gas Company, and testified that the lease value for oil and gas on this land was very small until about the 15th of October, 1921.
    P. W. Grayson, a brother of the defendant,
    was present when Missouri Bolden agreed to convey the land in question to his brother. He corroborated the testimony of P. C. Grayson in every respect.
    J. B. Smith, the notary public who took the acknowledgment, was the cashier of the Bank of Stephens. According to his testimony, he had no personal recollection about the circumstances under which the acknowledgment was taken. He testified unequivocally, however, that he never let a woman sign an instrument without letting her know exactly what it was.
    Walter Bolden testified, in rebuttal for appellants,
    to the effect that his mother did not tell Turley that she had sold the land to Grayson.
    Nellie McDowell, one of the appellants,
    testified that she heard P. C. Grayson tell her mother that he did not want her land, and that all he wanted was his money.

      Martin Gulley testified that Grayson told him that, when his indebtedness was paid, he would deed the land back to Missouri Bolden.
    C. "W. Harrison testified that, while getting up some acreage for oil leases, P. C. Grayson told him that. Missouri Bolden had signed a warranty deed to the land under the impression that it was a deed of trust. P. O. Grayson denied that he had any conversation attributed to him in which he stated that he would deed the land bach to Missouri Bolden when his debt was paid.
    The chancellor found the issues in favor of appellee, and a decree was entered of record in accordance therewith. The case is here on appeal.

      G. R. Hay me, for appellants.

      Tompkins, McRae <& Tompkins, for appellee.
    The finding of the chancellor should not be disturbed on appeal, unless found to be clearly against the preponderance of the evidence. 160 Ark. 516; 157 Ark. 618. The instrument is presumed to be what it purports to be — a deed, and not a mortgage; and, before a court of equity can declare the instrument a mortgage and not a deed, the appellants must meet the burden of showing that it was intended to be a mortgage by evidence that is clear, unequivocal and decisive. 163 Ark. 157.
    The declarations of Missouri Bolden against interest were admissible in evidence in this case. 150 Ark. 60.
   Hart, J.,

(after stating the facts). It is the settled doctrine of this court that, whether any particular transaction of the kind involved in this suit amounts to a mortgage, or to a sale with a contract to repurchase, must, to a large extent, depend upon its own facts and circumstances. The question turns upon the real intention of the parties as shown upon the face of the deed or as disclosed by extrinsic evidence. In all cases parol evidence may be introduced to show that a deed absolute on its face was intended as a mortgage; but the evidence must be clear, satisfactory and convincing. Matthews v. Stevens, 163 Ark. 157, and cases cited. In this connection it may be stated that the declarations of the grantor as to Ms interest in the land are admissible against all who claim under him. Jefferson v. Souter, 150 Ark. 55.

Tested by these well settled principles of law, we do not think that the chancellor erred in holding that appellants had not established their case by clear, satisfactory and convincing evidence. The testimony is in direct and irreconcilable conflict.

Counsel for appellants point out that, while Gray-son is corroborated by the testimony of his brother, by virtue of their relationship both are interested parties. The same thing is true of the testimony of Walter Bolden. He is directly interested in the result of the lawsuit, and the record shows that he was the moving party in bringing the suit. It is true that his testimony is corroborated by two or three witnesses, who said that Grayson had told them he had promised to convey the land back to Missouri Bolden and her children when the mortgage indebtedness was paid off. One of these witnesses, however, placed his conversation with Grayson in this respect at a time one or two years before he gave his testimony in his direct examination; but, in his cross-examination, he stated that the conversation had been had three or four years ago. Now this testimony was given in May, 1923, and the deed in question was executed in May, 1921. Thus it will be seen that, in his cross-examination, he laid the time of the conversation with Grayson at a period of time a year or more before the deed in question was executed.

On the other hand, several witnesses for appellee testified that Missouri Bolden had told them that she had conveyed the land to Grayson. She did not die until January 15, 1923, and there was some oil excitement in the neighborhood during the fall of 1922, and leases began to be of some value during that fall. Notwithstanding this fact, Missouri Bolden did not make any claim to the land during her lifetime. The record shows that she was in bad health at the time she executed the deed in question, and that the land had no value at that time for oil and gas leases. The land was of small value for agriculture, and it is fairly inferable, from all the facts and circumstances, that Grayson intended to let Missouri Bolden live on the land as long as she would pay the taxes and a small rental for it. The deed was not executed to him until the 27th day of May, 1921, and he agreed to let her stay there that year in consideration that she would pay the taxes on the land. He testified further that he agreed to let her stay there during the year 1922 at a rent of $40, and that she paid the rent in the fall of 1922. His testimony in this respect is not contradicted.

The result of our views is that the finding of fact made by the chancellor is not against the preponderance of the evidence, and the decree will be affirmed.


author: Smith, J.

text:
    Washa v. Harris.
    Opinion delivered December 22, 1924.
    1. Contracts — failure of consideration — jury question. — In an •action on a note in which defendant testified that it was given in consideration of a guaranty that a well drilled for the maker would furnish a certain flow of water per minute, and that, while the test showed a fulfilment of the guaranty, the well never again flowed as guaranteed, whether the consideration for the note failed held for the jury.
    2. Appeal and error — conflict of testimony — conclusiveness of verdict. — Where the testimony would support a verdict either way, the jury’s verdict will be treated as conclusive on appeal.
    3. Appeal and error — when instruction harmless. — In an action on a note given in consideration of a guaranty that a well drilled for the maker would furnish a certain flow of water during 1920, an instruction that there was no breach of guaranty if the well produced the required amount in 1920 or at a later date held not prejudicial to the plaintiff.
    4. Trial — specific objection to instruction. — A specific objection should foe taken to an instruction which was as capable of a construction favorable to appellant as of an unfavorable one.
    5. Appeal and error — conclusiveness of verdict. — A verdict that is supported by evidence will not be set aside because it is not consistent with the theory of either side.

      Appeal from Prairie Circuit Court, Southern District ; George W. Clark, Judge;
    affirmed.

      Chas. A. Walls, for appellant.

      Gregory & Holteendorff and Cooper Thweatt, for appellee.
    Failure of consideration is a valid defense to an action on a promissory note. 22 C. J. 1164; 118 Ark. 548; 105 Ark. 281. The remarks of the court, appearing after the second instruction requested by appellee, were favorable to the appellant, and he therefore cannot complain that they were erroneous. 86 Ark. 26; 88 Ark. 99; 109 Ark. 72. Instructions which it was thought to be susceptible of construction as an expression of opinion of the court as to the facts in the case should have been met by specific objections. 111 Ark. 196, 203; 110 Ark. 117, 120. The testimony shows damages suffered 'by appellee in excess of the face of the note, and this is not even disputed by appellant. Appellee is therefore entitled to recoup in this action the damages suffered by reason of the breach of guaranty or warranty. 81 Ark. 550; 53 Ark. 159; 23 S. W. 707 (Ark.).
   Smith, J.

Appellant Washa brought this suit to recover on a note dated May 14, 1921, for $1,102.50, executed by appellee Harris to the order of Krumpen Machine Company, and indorsed by the payee, “without recourse,” to appellant.

Harris owned a rice farm, and, on July 21,1919, contracted with Washa to drill a well to irrigate his land, for the contract price of $4,000, of which $3,000 was to be paid in cash upon the completion of the well and the balance of a thousand dollars one year thereafter. There was a guaranty that the well would furnish a flow of a thousand gallons of water per minute, and the contract provided that, if the well did not furnish this amount of water, Washa should, within five days, remedy the trouble, and, failing to do so, should drill another well, and, if the second well also failed to furnish the guaranteed amount of water, the cash payment should be returned.

The well was completed in November, 1919, and the latter part of that year or the first, part of 1920 Harris paid Washa the $3,000 in cash and executed two notes ol’ $500 each for the balance. The well was used in irrigating the 1920 crop, and the testimony shows that it did not furnish the guaranteed quantity of water, as a result of which fact Harris lost a considerable part of that year’s crop.

The contract contained a provision-as to what the measure of damages should be in the event the well failed to furnish the guaranteed amount of water; but we need not consider this provision, as it is unimportant on this appeal.

Washa was engaged in drilling wells, and bought the material used by him for that purpose from the Krumpen Machine Company, and he bought from that company the material used in drilling the well in question.

On May 14, 1921, Mr. Krumpen, of the Krumpen Machine Company, Washa and Harris met to test the well, a weir was put in, and the test was made. According to Washa, the test then made showed a flow of slightly more than a thousand gallons per minute, and Harris accepted the well, and, in payment thereof, executed the note in suit, and included in the note a year’s interest then due on the two five-hundred-dollar notes which evidenced the balance of the thousand dollars due on the well, and the price of a pulley amounting to $42.50. This note was made payable to the Krumpen Machine Company, because Washa was indebted to that company for supplies which he had used in drilling the well in question and other wells. Later Washa drilled wells for the machine company, and the note was then indorsed over to him.

The testimony is in irreconcilable conflict as to the purpose for which the note was given. Harris testified that Krumpen was anxious to close the matter up, and. on behalf of his company, guaranteed that the well would thereafter flow a thousand gallons per minute, and the note was executed in consideration of this guaranty. Harris admitted that the well was made to flow practically a thousand gallons during the test, hut he says this result was accomplished only by speeding the engine up to its highest capacity, a speed which could not be maintained, and that the well never again was made to flow as guaranteed. Harris further testified that he offered to give a check in payment of the pulley, but Krumpen said, “No, include it in the note,” and that Krumpen accepted the note in consideration of his express guaranty that the well would thereafter meet the contract requirement.

Washa testified that he offered to drill a new well, but Harris stated that he preferred to keep the old one, although it did not meet the guaranty, because he had placed his engine, and did not wish to incur the expense of moving it. Harris denied this, and testified that he requested that a new well be drilled, but Washa said he was unable to do so, as he did not have the money. .

Harris denied liability on the note, and filed a counterclaim in which he prayed judgment for the $3,000 cash which he had paid.

Numerous exceptions were saved to the giving and to the refusal to give instructions, and, upon the submission of the case to the jury, the following verdict was returned: “We, the jury, find a verdict in favor of defendant, with the understanding that none of the $3,000 be refunded to the defendant.” A judgment was rendered in accordance with this verdict, and Washa has appealed.

It is insisted that this verdict was not responsive to the testimony offered by either side, and that the jury should have found for the plaintiff the amount of the note, or have found for the defendant the amount of cash paid on the well.

Appellant insists that a verdict should have been directed in his favor, for the reason that the note sued on. was based on the original notes executed in 1920 for the balance of a thousand dollars due on the well, and in further consideration of the satisfactory test made on the date the note was executed, and that no.promise on the part of Krumpen entered into the consideration. But, as we have said, the testimony is in sharp dispute on this question. Harris testified that he declined to execute the note until Krumpen, acting for his company, guaranteed the well, and that this guaranty was the consideration for the note, without which he would then and there have demanded the return of the money he had paid. If this testimony is true, it made an issue for the jury whether the consideration for the note had failed. It is true the machine company is not a party to this suit, hut, if Harris ’ testimony is true, Washa was fully advised of the circumstances under which and the consideration for which the note was executed, and it was to Washa himself that the $3,000 cash had been paid.

The instructions given submitted to the jury the. question whether there had been a test and acceptance of the well, and, as the testimony would have supported a verdict either way on that question, we must treat the verdict of the jury as decisive of the fact that the well had not been accepted as complying with the contract specifications.

The court submitted the question of the well’s capacity to the jury in an instruction which recited that Washa had warranted the well he was to drill would produce a thousand gallons of water per minute, during the pumping season of 1920, and he told the jury that “if you find that said well did not produce that amount of water in 1920 or at any later date, then the plaintiff has breached his warranty * * * . ” And the instruction further declared the law as follows: “So, if you find that said well did not produce 1,000 gallons of water in 1920, and that plaintiff did not, after 1920, cause it to produce said required amount of water, # # * ” to find for the defendant on that issue.

It is insisted that this instruction is erroneous because the guaranty related only to the capacity of the well during the year 1920. It is true the guaranty applied to the capacity of the well during 1920 only; but we do not think the instruction was erroneous on that account. In fact, as we read this instruction, the jury was told that there was no breach of the guaranty if the well produced the required amount of water in 1920 or at a later date, the court evidently having in üiind the test made in 1921, and, as thus construed, the instruction was not unfavorable to appellant. If it was thought that the instruction imposed that requirement, that the well flow a thousand gallons per minute during 1920 and should continue to do so thereafter, a specific objection should have been made, as we think the court did not intend to so construe the contract of guaranty.

An unnecesary number of instructions were given in the case, but, when they are considered as a whole, we think they impose the requirement on appellee to show that the consideration for the note had failed, and to sustain this defense he was required to show (1) that the well did not flow a thousand gallons per minute during 1920, and was not later made to do so; (2) that there was no complete settlement of the controversy between the parties which was consummated and evidenced-by the execution of the note in suit; and (3) that this note had been executed in consideration of the guaranty of the payee of the note that the well would thereafter comply with the specification of the construction contract, which the well had previously failed to meet.

It must be conceded that the verdict does not appear to be consistent with either theory of the case; but we cannot say that it is unsupported by the testimony. The testimony in Harris’ behalf would have supported a verdict for the entire amount in controversy, except the price of the pulley, which was only $42.50, which would, of course, have included the $3,000 paid in cash, yet the verdict of the jury included only so much of the $3,000 as was necessary to extinguish the note and the price of the pulley, and we will not therefore disturb the verdict, because the jury’s finding on the facts against appellant sustains the verdict, and would support a larger recovery against him than the mere extinguishment of the note. McGough v. State, 119 Ark. 57.

Appellant insists that he is at least entitled to judgment for the price of the pulley, as this was a separate transaction. It is true the price of the pulley was due directly to the machine company, and was included in the note in suit, hut Washa became owner of this note by the indorsement of it to him, 'and the jury found by their verdict that he was not entitled to recover anything at all.

There was a cross-appeal, but appellee appears to be content to have the judgment affirmed, and, as no prejudicial error appears, it is so ordered.


text:
    Vestal v. Moore.
    Opinion delivered December 22, 1925.
    1. Mines and minerals — ratification of joint purchase. — In an action for accounting against a trustee, brought by the persons for 'whom he bought an oil and gas lease, evidence held to sustain the chancellor’s finding that plaintiffs did not ratify the acts of the defendant.
    2. Mines and minerals — liability of trustee. — Where a trustee for joint purchasers of an oil and gas lease represented that he paid $12,000 for the lease, of which sum he paid one-third, when, in fact, he paid $8,000, all of which was furnished by his associates, upon the venture proving a losing one he will be required to account to his associates for one-third of $8,000.
    Appeal from Union Chancery Court, First Division; J. Y. Stevens, Chancellor;
    affirmed.

      R. W. lime, for appellant.
    The real agreement both in law and in fact was that each would own an interest in proportion to the actual amount of money invested. Vestal did not invest anything and never in fact owned any interest or share whatever. The law of trusteeship fixed the status of all parties at the time the lease was bought and paid for. The fund he held was a trust fund, pure and simple. The parties who furnished the money to the trustee .for the purpose of buying tbe lease are the real owners of the lease. 243 S. W. 812 (Ark.). The case of Jones v. Kinney, 146 Wis. 130, Ann. Cases 1912C, p. 200, relied on by appellees, is not in point, for in that case the parties jointly agreed beforehand that each should pay a certain fractional part of the purchase price, regardless of what the purchase price might be, whereas, in this case, each party agreed to put in a certain fixed sum of money.

      McMillan S McMillan, for appellees.
    The chancellor was justified in finding that Vestal agreed to take an interest in the lease and pay money for his interest just like the others, by Vestal’s own testimony, and in finding that the interest he agreed to take was one-third. His finding that Vestal is estopped to deny that he agreed to take a one-third interest is in accordance with the preponderance of the testimony. If the contract had been carried out without fraud, Vestal would have paid for his interest- one-third of the total amount, and the plaintiffs would have had the benefit of that, and would have been entitled to have their proportion of the $440 that remained unexpended. The chancellor’s finding on this branch of the case is sustained by the law of joint adventures. 33 C. J. 857, § 50, et seq.; 4 Crawford’s Digest, p. 3918, cases cited; 106 Am. St. Rep. 336; Ann. Cases, 1912C, p. 200.
   Smith, J.

A. J. Vestal resides in Arkadelphia, and is engaged in the real estate business there. Upon the coming in of the Busey oil well at El Dorado, which was the discovery well, he extended his operations to that field, and acquired oil leases lying south, east and west of that well. He learned that an oil lease could be obtained on a forty-acre tract of land lying north of the Busey well, and he was anxious to purchase this lease, but he did not have available tlie funds to do so. He took up the question of the purchase of this lease with certain of his acquaintances in Arkadelphia, and they became interested in the proposition and authorized Vestal to buy it. Pending these negotiations, this lease was sold, but Vestal learned that a lease on another forty-acre tract, also lying north of the Busey well, could be purchased, and Vestal’s associates authorized him to buy it. It was not known just what this lease would cost. Vestal stated that he wanted to have the controlling interest, and would reserve that interest for himself, but that his associates might pay in such sums as they pleased, and that the lease would he purchased as cheaply as possible, and each person paying in money should have such proportionate part of the lease as the sum of money he paid in bore to the total cost of the lease. Dr. Moore advanced Vestal $1,500, and so did H. H. Heard, and other parties advanced different sums of money, making a total of $8,500.

Vestal took an assignment of the lease to the forty acres in his own name as trustee. The lease recited a consideration of a dollar paid and other good and valuable considerations, and it is certain that, at the time the assignment of the lease to Vestal was taken, all of his associates, except Heard, thought the lease had cost $12,000.

After the lease had been assigned to Vestal he advised his associates that he had only paid $8,000 for the lease, and that he had $500 to return to them proportionately, less the expense he had incurred, and in the letter communicating this information he offered to continue to execute his trust on the basis of ten per cent, of such profit as might be realized out of the transaction. This offer was rejected, and Moore and his other associates, except Heard, demanded the return of their money on the ground that Vestal had deceived them as to the cost of the lease. Vestal offered to assume the transaction individually, provided his associates would accept his note for the amounts they had paid into the venture. Moore and the others who were demanding the return of their money declined to accept Vestal’s note, and demanded cash, which Vestal admitted he was unable to pay. But, before Vestal made the disclosure to his associates that the lease had not cost $12,000, he suggested that some one else take the title as trustee, and it was agreed that the lease should be assigned to Moore, and this was done. It appears that the lease was assigned to Moore about sixty days before Vestal’s disclosure was made concerning the cost of the lease.

There is some conflict in the testimony as to the purpose of this assignment, and Vestal testified that he suggested the assignment because he had no beneficial interest in the transaction, and he contends that, when this assignment was made, his associates were given, not only what they thought they had bought, a two-thirds .interest, but a larger interest, to-wit, the whole interest, and that they were therefore not damaged by his false representations in regard to the cost of the lease.

The testimony of Moore and his associates is to the effect that, shortly after the lease was assigned to Vestal, the fact had been developed, through drillings for oil 'by other parties north of the Busey well and the failure?to find oil in that direction, that the lease had lost much of its value, and this fact was known to all parties when the lease was assigned to Moore; but it was not known even then that it had not cost $12,000, and the testimony of Moore and his associates is to the effect that, as soon as they were apprised of the deception which had been practiced upon them, they demanded the return of their money, and that Vestal offered to take over the lease for his own individual account by giving his note for the various sums which the investors had paid in, but they were unwilling to accept his note, as they regarded it as of no value.

After the assignment of the lease to Moore, the testimony shows that he attempted to sell it, and that he assigned ten acres thereof to induce a driller to drill a well, which came in as a dry well. On behalf of Vestal it is insisted that this conduct shows a ratification; but the testimony on behalf of Moore and Ms associates is that this was done with the consent of all parties in interest and for the purpose of making the best of a bad bargain.

The controversy between the parties culminated in this litigation, which was brought by the respective investors to compel Vestal to account for his misrepresentations. These suits were consolidated, and the court granted the relief as prayed. Heard declined to join in these suits, as he stated that Vestal had told him, before he paid in his money, that the lease had only cost $8,000, and that he knew what he was getting when he paid in his money. But, as we have said, this information was not possessed by any of the plaintiffs when their money was paid in.

The court found the facts as alleged in the complaints, and, in effect, found that the parties had entered upon a joint purchase whereby they were to buy an oil lease for $12,000, of which the defendant Vestal was to own and pay for one-third, and that each investor’s interest in the lease was determined by the proportion which his payment bore to the total cost, after Vestal was charged with the cost of a third interest which he represented he had bought for himself.

The court further found that “the title of the lease was to be taken in the name of one of the joint owners for the benefit of all the parties, and in proportion to the amount of money each agreed to pay, and the court finds that all of the parties paid in what they agreed to, except the defendant, Vestal, and that he represented that he was putting in one-third of the purchase price, and the court further finds that, after the lease was purchased and during the time when it had its highest value, the defendant continued to claim one-third interest, and that the lease only cost $8,000, and the defendant spent $60 for expenses, and has $440 left, and that the total amount paid out for the lease and expense was $8,060, and that Vestal ought to have paid in $2,'686.66, and owes to the plaintiffs $2,565.73, for which they are entitled to a judgment against him, to be distributed as follows.”

Hpon this finding the court rendered judgment against Vestal in favor of each investor for his proportionate part of the $2,686.66 which Vestal should have paid in, and ordered that the sum so adjudged should be declared a lien on the equitable interest of Vestal in the thirty acres undisposed of.

We think the testimony warranted the finding of fact made; indeed, it is an undisputed fact that Vestal misrepresented the cost of the lease to all his associates except Heard, and that they went into the venture on the assumption that Vestal had bought and paid for a one-third interest in the lease for himself.

The testimony is conflicting on the subject of ratification, but we think the finding of the court on that issue is not clearly against the preponderance of the evidence, and that the lease was assigned to Moore, not in ratification of the transaction, but for the purpose only of substituting trustees, and that Moore took the.title as trustee for the same persons, and for the same interest, for which Vestal had been trustee. In other words, there was a mere substitution of trustees, and no change of beneficial interest. And we are also of the opinion that the efforts of Moore to sell the lease and his action in assigning ten acres of it was not a ratification of the purchase of the whole interest for the plaintiffs in the suits, as the preponderance of the testimony shows that Moore was acting with the consent and on behalf of all the original investors, including Vestal, in what he did in that behalf.

Appellant Vestal insists that the decree is erroneous for the reason that the investors got what they bought, got even more than they thought they had bought, and that they are in no position to complain that they were damaged.

It is easy to surmise that Vestal would have assumed a very different attitude had oil been found on this lease. At any rate, we see no injustice in requiring him to account for his trusteeship on the basis on which he induced the investors to intrust him with the investment of their money. He represented that he had bought a third interest for himself, and that the lease had cost-$12,000. On this basis, he should have paid in $4,000, but the decree of the court only required him to do what he represented to his associates he had done, that is, to pay a third of what the lease actually cost, for it was on the strength of this misrepresentation that he induced his associates to invest their money. Vestal had no right to speculate on the possibilities of this lease at the expense of his associates, and without risk to himself.

The undisputed evidence shows that Vestal agreed to take an interest in the lease and pay proportionately for his interest, just as his representations induced the others to do, and the interest he had agreed to take was one-third of the whole, and n.ow that the venture has resulted in a loss, there is no injustice in requiring him to share this loss in the proportion he would have shared if he had not deceived his associates, and by his misrepresentations induced them to invest their money.

We think the testimony does not show a ratification of the purchase by the investors, and there is no error in compelling Vestal to execute the representations made by him to his associates, on the faith of which they entered into the enterprise.

The decree of the court below is therefore affirmed.


author: Humphreys, J.

text:
    Old American Insurance Company v. Perry.
    Opinion delivered December 22, 1924.
    1. Equity — premature entry op decree. — A decree rendered in defendant’s absence before the expiration of 90 days after the pleadings were completed was premature and erroneous, under 'Crawford & Moses’ Dig., § 1288.
    2. Equity — premature entry op decree — remedy.—After adjournment of the court, tbe remedy to correct a decree which was prematurely rendered is by appeal, and not by motion to vacate the decree.
    3. Judgment — vacation after term. — A decree will not be set aside after expiration of the term in which it was rendered except for the grounds specified in Crawford & Moses’ Dig., §§ 6290-6296.

      4. Judgment — vacation for fraud. — Mere entry of a judgment which was erroneous under Crawford & Moses’ Dig., § 1288, because prematurely rendered, was not a fraud within §§ 6290, 6296, Id. so as to entitle the defendant to have the decree set aside after expiration of the term, in the absence of a showing •that the court was imposed upon in rendering the decree.
    Appeal from Conway Chancery Court; W. E. Atkinson, Chancellor;
    affirmed.

      Neill Bohlinger, for appellant.
    The decree was void for the reason that it was taken by default before the time allowed by statute for completion of the testimony. O. ■& M. Digest, § 1288. The settlement shown by the release was a compromise of a disputed claim, and valid. 145 Ark. 481.

      A. J. Gilmer, for appellee.
    Appellant lost the benefit of his motion by his own negligence in not presenting same to the court. 66 Ark. 184; 114 Ark. 493; 145 Ark. 502'. The decree was not void, as appellant never pressed his case in' court, contenting himself with filing motion. 102 Ark. 252. Conceding that the. judgment was erroneous after the expiration of the term at which the decree was rendered, the court has no power to set it aside or vacate it. 86 Ark. 504; Black on Judgments, p. 329; 97 Ark. 314.
   Humphreys, J.

On March 28, 1923, appellee instituted suit against appellant in the chancery court of Conway County to set aside a settlement of a claim, based on a life insurance policy, upon the alleged ground that said settlement was procured through false and fraudulent misrepresentations, and to recover the face value of the policy, less the amount of $25 paid as a consideration for the settlement.

On the 11th day of April, 1923, appellant filed an answer denying all the material allegations in the bill. On April 25, 1923, in the absence of appellant, the. court heard the cause upon the pleadings and the oral testimony .of appellee, and rendered a judgment against appellant for $175, the balance due on the policy after deduct ing $25 which had been paid as a consideration for the settlement.

At a subsequent term of the court, on January 28, 1923, appellant filed a motion to vacate the decree upon the ground that it had been rendered before trial day under the pleading and practice act.

On October 25, 1923, at an adjourned term, the court overruled the motion to vacate the decree, but failed to make a record thereof, so, at the following January term of court, on application of appellant, the order was rendered nunc pro tunc.

An appeal from the order overruling the motion to vacate the decree has been duly prosecuted to this court.

Appellant contends that the trial court should have set aside the decree, canceling the settlement and adjudging it to be indebted to appellee in the sum of $175, because said decree was rendered before the expiration of ninety days after the pleadings were completed. The premature rendition of the decree was erroneous. Crawford & Moses’ Digest, § 1288; Harnwell v. Miller, 164 Ark. 15. The remedy to correct the error was by appeal and not by motion to vacate the decree after the adjournment of court.

Courts have no jurisdiction to set aside decrees after the expiration of the term at which they are rendered, except upon grounds specified in §§ 6290 to 6296, inclusive, of Crawford & Moses’ Digest. None of the grounds specified in said sections exist in the instant case. It is true that appellant’s motion to vacate the decree contains an allegation that the decree was rendered through a fraud practiced against appellant by the entry of the decree prematurely. The mere entry of the decree could not be characterized as the practicing of fraud upon appellant. The entry thereof was error, but not a fraud. No other facts are alleged as constituting a fraud, and no proof was offered as tending to show that the court rendering the decree was imposed upon. Appellant has not brought himself within the terms of the statutes aforesaid, either by allegations or proof.

No error appearing, the judgment is affirmed.


text:
    Culberhouse v. Fischer Lime & Cement Company.
    Opinion delivered December 22, 1924.
    1. Corporations — failure of officers to file annual certificate — construction.—In so far as Crawford & Moses’ Dig., §,§ 1715, 1726, requiring the president and secretary of a domestic corporation annually to file a certificate showing its financial condition and rendering them personally liable for debts contracted during the period in which they neglect to do so, relate to civil liability, they are remedial in character and should be liberally construed.
    2. Corporations — annual certificate — construction of statute. —Under Crawford & Moses’ Dig., §§ 1715-1726, requiring the president and secretary of a domestic corporation annually to file certificate showing the financial condition of such corporation on 1st day of January or July next preceding, such certificate to be filed on or before February 15 or August 15, held that the statute requires a yearly filing, and, where a domestic corporation was organized- on February 5, 1920, and no certificate was filed until June 11, 1921, the officers were personally liable for debts contracted during the period of their default.
    Appeal from Craighead Circuit Court, Jonesboro District; G. E. Keck, Judge;
    affirmed.

      Horace Sloan, for appellant.
    The statute should be strictly construed in favor of appellants, and they should not be held in default unless they are clearly so under the words of the statute. See 123 Ark. 266; 38 Ark. 519; 40 Ark. 97; 43 Ark. 413; 79 Ark. 517; 68 Ark. 34. The word “annually” means yearly, or “once a year.” 107 Fed. 188. A corporation cannot file a statement showing its -condition for a year until a year has elapsed from the date of its creation.

      Cooley, Adams & Fuhr, for appellees.
    The statute (§§ 1715 and 1716, C. & M. Dig.) is not final but a remedial one, and should not be governed by the construction of criminal statutes. 68 Ark. 433; 95 Ark. 327; 123 Ark. 226; 126 Ark. 122; 180 Fed. 543; 26 Gra. 299; 146 N. S.'657. Even in the case of statutes falling strictly, or in a general sense, under the head of penal laws, the intention of the Legislature will be permitted to prevail oyer the rigid application of the rule. 112 Mich. 410; 162 Wis. 32, Ann. Cas. 1918C, 9'22. The word “annually” means not “once a year” but rather “once in each year.” 107 Fed. 188 (191 U. S. 119), 48 L. ed., 119. See also 24 N. E. 993.
   Humphreys, J.

This appeal involves the sole question of when a newly organized domestic manufacturing or mercantile corporation must file the first annual certificate of its financial condition under §§ 1715 and 1726 of Crawford & Moses’ Digest, which are as follows:

“'Section 1715. The president and secretary of every corporation organized under the provisions of this act shall annually make a certificate showing the condition of the affairs of such corporation, as nearly as the same can be ascertained, on the first day of January or of July next preceding the time of making such certificate, in the following particulars, viz.: The amount of capital actually paid in; the cash value of its real estate; the cash value of its personal estate; the cash value of its credits; the amount of its debts; the name and number of shares of each stockholder; which certificates shall be deposited on or before the fifteenth day of February or of August with the county clerk of the county in which said corporation transacts its business, who shall record the same at length in a book to be kept by him for that purpose.
“Section 1726. If the president or secretary of any such corporation shall neglect, fail or refuse to comply with the provisions of § 1715, and to perform the duties required of them respectively, the person or persons so neglecting,, failing or refusing shall jointly and severally be liable to an action founded on this statute for all debts of such corporation contracted during the period of any such neglect or refusal, and shall be deemed guilty of a misdemeanor, and, upon conviction, shall be fined in any sum not to.exceed five hundred dollars, and each and every day such person or persons shall so neglect to comply with the provisions of said §1735, or fail or refuse to perform said duties, shall constitute a separate offense.”

Appellants were respectively the president and secretary of the Arkansas Brick & Lumber Company, a domestic corporation, organized on the fifth day of February, 1920. The president and secretary had not filed the first annual statement of the corporation until June 11, 1921.

Appellees were four creditors of said corporation, who brought separate suits upon their claim against appellant in the circuit court of Craighead County, Jonesboro District, seeking to hold them personally responsible for failure to file a certificate of the financial condition of said corporation, either between July 1 and August 15, 1920, or between January 1 and February 15, 1921. Said corporation was adjudged a bankrupt on August 1, 1921, prior to the institution of this suit. The undisputed testimony shows that the indebtedness sued upon in each of the four consolidated cases was incurred between February 15, 1921, and June 11, 1921.

The trial court construed the statutes aforesaid as requiring the defunct corporation to have filed its first certificate showing its financial condition not later than February 15, 1921, and that appellants were in default and liable personally for having failed to comply with the requirements of the statute.

Appellants contend that, under a strict construction of the statutes, they were not required to file a certificate showing the financial condition of said corporation until the first period fixed by the statute after the expiration of the corporation’s fiscal year. They base this contention upon the use of the word “annually” in the statutes, arguing that the intent of the Legislature was that the certificate should embrace a full year’s business of a corporation as of either January 1 or July 1. It is pointed out that this corporation was not organized until February 5, 1920, and that the certificate could not have been filed as of July 1, 1920, or January 1, 1921, embracing a full year’s business, because upon either date the corporation had not been in existence for a full year. The construction placed upon the statutes by appellants would permit corporations to actually engage in business for a much greater period than a year before filing its first certificate containing a statement of its financial condition. In this particular instance it is contended that, under the statutes, the president and secretary had until August 15,1921, to file the first statement of said corporation, or more than a year and one-half after it was organized for the transaction of business.

Appellants are mistaken in their premise that these statutes are penal in whole, and for that reason should be strictly construed. In so far as the statutes relate to civil liability they are remedial in character, and should be liberally construed. McDonald v. Mueller, 123 Ark. 226; Taylor v. Dexter, 126 Ark. 122. Irrespective, however, of whether a strict or liberal rule of construction is applied, we think the intent of the Legislature, as gleaned from the language of the statutes, was to require the officers of a corporation to file a certificate showing its financial condition either on July 1 or January 1 during each year of its existence, and not later than February 15 or August 15, as the case may be. We think the word “annually” used in the statutes relates to the time at which the certificate may or must be filed. It may be filed either on January 1 or July 1, but must be filed not later than February 15 or August 15, as the case may be, during the calendar year of the existence of the corporation. The word “annually” as used in the statute was construed in the case of Continental Bank of Memphis v. Bradford, 107 Fed. 188, to mean that the certificate showing the financial condition of the corporation must be filed by the president and secretary yearly, or once a year. We think this construction correct.

No error appearing, the judgments are affirmed.


author: Smith, J. Smith, J.

text:
    Joy Rice Milling Company v. Brown.
    Opinion delivered January 12, 1925.
    1. Factors — bad faith — liability.—Where a milling company, in selling rice milled by it for the owners, was not acting in good faith, and sold at a price less than its market value, it was accountable to the owners thereof for its fair market value, whether it was authorized to sell or not.
    2. Factors — bad faith — evidence.—In an action by the owners of rice against a milling company to recover the market value of plaintiff’s rice sold by defendant, evidence held to support a finding that defendant had not obtained the fair market value.
    3. Factors — duty in making sale. — It is the duty of a factor to exercise a sound and honest discretion to sell for the fair value or the market price of the goods, and, when a sale is made recklessly or in a manner to show that an honest effort was not made or reasonable diligence was not used to obtain the fair market value, the factor is held to account for the actual or fair market value.
    4. Accord and satisfaction — estoppel.—Where the owners of rice in the hands of defendant for milling cashed checks mailed to them in payment of (the proceeds of sale of the rice, they had a right to assume that, even though the defendant had, without authority, assumed the function of factor in selling the rice, that duty had ¡been faithfully discharged, and, upon learning to the contrary they were not estopped to demand the amounts legally due them.
    5. Factors — milling charge. — Where all the rice mills in the vicinity had a uniform charge for milling, all customers of defendant mill will be liable for such charge whether agreed to or known by them or not, regardless of the depreciation in value of the rice.
    6. Factors — contract to pay dues. — Where a contract between a rice growers’ association and a milling company for milling the rice of members of the association provided that the members should pay so much per bushel to the company as dues of the association, such agreement was binding on members of the association, but not on those rice growers who were not members.
    7. Factors — deduction of advertising fees. — Where a contract of a rice growers’ association with a milling company provided for the collection of a small sum per bushel from members of the association to be used in advertising purposes, the mill company, on accounting ifor the value of the rice sold, should be allowed to deduct items which it had been required to account to the receiver of the association, which had became bankrupt.

      8. Appeal and error — evidence considered. — Where several cases were consolidated by consent, and evidence, so far as relevant, considered in all cases, it will be so considered on appeal.
    Appeal from St. Francis Chancery Court; A. L. Hutchms, Chancellor;
    reversed in part.

      Bogle & Sharp, for appellants.
    The notes signed by these parties were the final contract between the owners of the rice and the mill company. It is the only contract that is binding between the appellant and the appellees. 63 U. S. 22; 64 U. S. 23; 96 U. S. 544; 1 Greenleaf on Evidence, § 275; 104 Ark. 476; 83 Ark. 283; 125 Ark. 502. There is no merit in appellees’ contention that, since the notes were made payable on demand, and appellant failed to make demand for their payment before it sold the rice pledged to 'Secure the same, appellant was thereby precluded from enforcing the obligations or receiving benefits provided by the terms of the notes. O. & M. Digest, § 7836; 4 Ark. 210; 24 Ark. 359; 143 Ark. 498; 146 Ark. 192. There can be no question but that appellee, Geo. S. Heuckle, ratified the sale of his rice by accepting the benefit thereunder after being advised of the same. The acceptance by him of the cheek was a full and complete settlement of his account. 94 Ark. 158; 46 Ark. 217; 56 Ark. 37; 98 Ark. 269 ; 114 Ark. 559; 112 Ark. 219; 134 Ark. 36. As to the Smith cases: While he claims that he did not authorize the mill to sell the rice in which he was interested, there is positive proof on the part of the company that.he did give positive instructions to sell all of his rice. After the sale the company prepared statements of the account of each of the plaintiffs with whom Smith was interested, and sent them to him with a check covering the balance due according to each statement, on the face of which was written “Payment in full for all rice tolled and sold,” and also on the face thereof the number of each particular lot that was covered by the statement. Smith had' this check certified by the bank on which it was drawn. Appellant was thereby discharged from all further liability thereon. C. & M. Digest, $ 7954; 116 Ark 1; 5 R. C. L. 44; 7 C. J. 705; 94 IT. S. 343; 7 Bliss (U. S.) 193; 8 Fed. Case No. 4532; 10 Wall. (TJ. S.) 604; 77 Ala. 168; Am. Rep. 50; 117 111. 106; 7 N. E. 601; 57 Am. Rep. 855; 123 Ind. 78, 24 N. E. 173; 79 Me. 312; '29 Atl. 527; 156 Mass. 458, 31 N. E. 489 ; 82 N. Y. 1; 37 111. App. 475; 52 N. Y. 350; 206 Pa. St. 611, 56 Atl. 76. The certification of the check was therefore payment in full of all that appellant owed appellees, and their complaints should have been dismissed. New Orleans was the nearest market for rice to Wheatley, and the evidence shows that, at the time appellant sold appellees’ rice, it was worth from 17/8 cents to 3 cents per pound at that place. What a few pockets of rice, sold locally, would have brought afforded no criterion by which the market price could be determined. Where there is no adequate local market for a commodity, the market price at the nearest available market will control. 53 Ark. 17; 121 Ark. 150'; 139 Ark. 302; 134 Ark. 284.

      G. F. Greenlee, for appellees Murphy-Legg Land-Co. et al.

      Trimble & Trimble and Mann é Marni, for appellees Smith et al.

    The bankruptcy proceeding in the matter of the Southern Rice Growers’ Association, whether voluntary or involuntary,'was equivalent to a breach of the contract between appellant and that association, and between appellant and the members of the association. 240 17. S. 581; L. R. A. 1917B, 580. The charge for association fees and advertising was therefore properly denied the milling company. Appellees are not estopped' from recovering an additional sum above that represented by the check which Smith had certified. Accord and satisfaction is a mixed question of law and fact. In determining whether there has been an accord and satisfaction in any particular case, all the facts and circumstances affecting the case must be taken into account. As to what constitutes an accord and satisfaction, see 1 C. J. 523. There is no accord and satisfaction unless the facts, show that the minds of the parties have met upon the new agreement, and that the same,has been carried into execution. Id. A written receipt' is only prima facie evidence of its own recitals, and may be contradicted by parol testimony. 123 Arle. 24, 26 • 56 Ark. 37; 90 Ark. 426. The question whether the creditor agreed to accept the amount offered in full satisfaction of the claim, is a mixed question of law and fact. 94 Ark. 158, 162. See also 14 L. R. A. (N. S.) 443 and notes; 1 R. C. L. 197, § 32; 16 Am. & Eng. Ann. Cases, 194, notes; 20 L. R. A. 785 and notes; 56 Ark. 130; 33 Ark. 572; 111 Ark. 529; 45 Ark. 290; 51 L. R. A. (N. S.), 315.
   Smith, J.

In 1920 appellant, Joy Rice Milling Company, hereinafter referred to as the company, was engaged in the milling of rice at Wheatley, Arkansas, and appellees were engaged- in growing rice in that vicinity during that year. Some time prior to 1920 there had been formed an association known as the Southern Rice Growers’ Association, hereinafter referred to as the association, the purpose of which was to advance the interest of rice growers by putting rice on the market most advantageously and by advertising and other propaganda to increase the consumption of rice as an article of diet.

The members of this association gave over, to the officers thereof the control of their rice for purpose of sale, and the association itself, for the benefit of its members, entered into a contract with the company whereby the rice of the members should be milled by the company for a dollar per bushel and the by-products, and it was agreed that the company should collect for the association eight cents per bushel as membership dues, and should also collect five cents per bushel, which was to be expended by the association and the company for advertising and propaganda purposes. The contract between the company and the association required the company to make certain advances on the rice of the members which had been delivered to and milled by the company, and in consideration of this obligation, the right was given to the company to sell the rice of the owners to whom advances of money had been made. The contract between the association and the company contained the provision that the rice was to be sold only by and with the consent of the association, acting through its duly authorized agents, but the company reserved the right to sell the rice belonging to the members of the association and that of other owners to whom advances of money were made. Pursuant to the provisions of the contract, advances were made by the company to certain of the members of the association. The company also made advances to certain persons who were not members of the association, and these advances were evidenced by the promissory notes of the owners of rice to whom advances were made, and these notes conferred on the company authority to sell the rice of such owners at the best price obtainable and to deduct such advances and the interest thereon, and to account thereafter for any balance remaining due to the owner. There were a number of other rice owners, who were not members of the association and who had not borrowed money from the company, whose rice had been milled and was stored by the company.

The rice market was sluggish, and the price had depreciated during April and May, 1921, and the company had a large quantity of rice on hand at that time, and made sale of all the rice owned by the parties to this litigation. Indeed, the company appears to have sold all the rice on hand, and, about thirty days thereafter, rendered to each owner a statement showing the sale of his rice, and this statement was accompanied in each instance by a check payable to the owner, which recited that it was in full of the proceeds of the sale.

The sale thus made was not satisfactory to the owners, and they soon thereafter brought separate suits to recover the alleged market value of their rice. There were forty-six of these suits, but they were eonsolidated and tried together, and there was a general finding for the plaintiffs that the rice had not 'been sold for the market value thereof, which the court found to be three and one-half cents per pound, and that the members of the association who had been charged with the items which the contract between the company and the association required the company to collect for the association should not be charged to the members thereof, for the reason that the association had, prior to April 15, been adjudged a bankrupt and had ceased to function, and there was no showing that the company had paid to the association these items, and the company, by its appeal, questions the findings of the court adverse to it.

It was contended by the plaintiffs in all the cases that an exorbitant milling-' charge had been made, that the charge of a dollar per bushel should not be allowed in stating the account; but the court found against all the plaintiffs on this issue, and charged a milling fee of a dollar per bushel against each of the plaintiffs, and they have prayed and perfected a cross-appeal on that question.

There are certain issues common to all the cases, and these we proceed first to consider.

It is first contended by the company that it had authority to sell the rice, and that it obtained the best market price therefor; and it further contends that, even though the testimony supports an adverse finding to it on those issues, there was an accord and satisfaction as to all the owners who accepted and cashed the checks tendered in payment of the sales made by it for the account of the owners.

After a careful consideration of the testimony we have reached the conclusion that, in the case of one or more of the owners, express authority to -sell was conferred -by written direction to that effect, and that authority to sell was conferred on the company in the notes which had been executed to it by the owners who had borrowed money from it directly. It is earnestly contended that authority existed to sell the rice of the owners who were members of the association, and that this authority was conferred by the contract between the company and the association for its membership. But we do not think this contract conferred that authority, as sales could be made only by and with the consent of the officers of, the association acting for its members, and it is not contended that the consent of the officers of the association was obtained.

As to the owners who were not members of the association and who had executed no notes to the company, it is insisted, on behalf of the company, that authority to sell had been expressly conferred. The testimony on this issue is. sharply conflicting, although, as we have said, it does appear that certain owners conferred this authority. As to the majority of the owners, we have concluded that the sale was made without authority so to do. Indeed, as to one of the largest owners of the rice sold by the company, one who was not a member of the association and who had borrowed no money from the company, the testimony shows that the sale was made over the protest of the owner, and at á much smaller price than the owner had contracted to' sell a portion of his rice.

We have further concluded, however, that it is unimportant to differentiate between these owners, as we have concluded that the sale made by the company was not made in good faith, and was made at a price less than the market value of the rice, and, this being true, the company should be held accountable for the rice at its fair market value. This was the view of the trial court, as evidenced by the decree in the case, and we have concluded that this finding is not clearly against the preponderance of the evidence. On no -other theory could judgment have been rendered in favor of all the plaintiffs, as there was authority to sell expressly conferred by some owners, and, in the cases of the makers of the notes, authorization to sell was there conferred, yet judgment was rendered in favor of those plaintiffs as well as in the eases of those who clearly had granted no such authority.

One of the largest owners testified that, a few days before the company claimed to have made the sale, he obtained samples of his rice, and stated at the time that he desired these samples to enable him to sell the rice in Chicago, to which city he was going-in a few days for the purpose of selling his rice. This owner was in Wheatley,' where the mill was located and the rice was stored, on the day his rice was sold, which was on Sunday. This owner represented himself and twenty others in whose rice he was interested, a fact known to the company, and the transaction involved many thousands of dollars, yet he was not notified that a sale of this magnitude was impending, and he testified that he rode from Wheatley to Memphis on the afternoon of the day of the sale with the manager of the mill and the purchasers of the rice, yet no intimation was given him that his rice had been sold, and he was not advised of that fact until after his return from 'Chicago. These purchasers were ■shown to have arrived in Wheatley on the noon train and to have left for Memphis on the afternoon train, between four and five in the afternoon, between which hours the alleged sale was consummated.

It is true this plaintiff admitted that the company had previously sold some of his rice; but he also testified that no sale had ever been made previously until the offer of the purchaser had been submitted to and approved by him.

On behalf of another of the largest owners, the Murphy-Legg Land Company, it was shown that a sale of two cars of rice, at a price of four cents per pound, had been made, and that the owner had given orders to the company to ship out that quantity of rice, yet these instructions were disregarded. This owner was not a member of the association, had borrowed no money, and the testimony shows very satisfactorily that this owner was selling its own rice, and had never authorized the company to make any sale on its account, and it was not advised of the sale of any .of its rice until after it had ordered cars placed for the shipment of rice which had been sold in Kansas City and Chicago. Upon being advised of the sale of its rice ¡by the company, this owner filed suit in the chancery court to restrain the company from disposing of its rice, and obtained from the chancellor a temporary restraining order forbidding the company from disposing of the rice or from shipping it out. Although the company claimed to have shipped the rice before this order was obtained, a representative of the owner who went to the mill to demand the surrender of the rice discovered there rice belonging to his principal.

This is a circumstance which weighs heavily with us in considering whether the finding of the chancellor, that a grossly inadequate price was obtained, and one much less than might have been obtained, is clearly against the preponderance of the evidence. The owner had sold part of the rice for nearly twice the price at which the company sought to account for it, and, if the market price had been received, it would have been a matter of but little difficulty for the company to have replaced the rice the possession of which the owner was demanding. In settlement of this sale the company remitted the owner a check for $3,212.34 in full settlement of the proceeds of the rice; but this check was returned uncashed, and, when the owner brought suit to recover what the alleged to be the true market value of the rice, the company filed an answer admitting an indebtedness of $4,575.12.

We have concluded therefore that the finding of the court below that the company had not obtained the fair market price for the rice is not clearly against the preponderance of the evidence. . We think there was such a reckless disregard of the rights and best interest of the rice owners as warranted the court in charging the company with the actual market value of the rice. The testimony shows that the company had apparently decided to dispose of all the rice on hand, and it did so rather summarily, and a portion of the rice was sold to another rice company, whose president was also the president of the appellant company.

The testimony is conflicting as to what the market value of the rice was; but the testimony shows that the screenings from the rice, which were used for feeding stock, sold at two cents per pound. The court found that the market value of fancy rice at the time of the sale was three and one-half cents per pound, and stated the account ¡between the parties on this basis, and we have concluded that this finding is not clearly against the preponderance of the evidence.

As we have said, certain of the plaintiffs were members of the association, and the contract entered into by that association on their behalf with the company provided that the rice should be sold only by and with the consent of the association, acting through its duly authorized agent. Other owners had borrowed money and had executed notes, which conferred authority on the company to sell the rice of such owners; and still other owners had, by written direction, authorized the company to sell their rice; while other owners came within none of these classes, and their rice was sold without authority, and in one instance, as we have stated, over the protest of the owner and in violation of an order of the court forbidding that action.

We have-concluded that it is unimportant to distinguish those cases, for the reason that the company should be required to settle with each owner on the basis of the actual market value of the rice, rather than on the basis of the price received.

The duty of a factor under the circumstances was stated by this court in the case of Wynne v. Schnabaum, 78 Ark. 402, to be to exercise a sound and honest discretion, and that, when this is done, the factor has discharged his duty, the measure of the duty being to sell for the fair value or the market price. But, when the sale is made recklessly or in a manner to show that an honest effort was not made and reasonable diligence was not used to obtain the fair market value, the factor is held to account to his principal for the actual or fair market value of the article sold. Burke v. Napoleon Hill Cotton Co., 134 Ark. 580; Wynne, Love & Co. v. Bunch, 157 Ark. 395.

What we have just said also disposes of the defense interposed hy the company that certain of the owners cashed the checks which had been mailed them in payment of the proceeds of the sale of the rice. The checks mailed were for an undisputed amount due the respective owners. The money sent them was their own money, and the owners had the right to assume that, even though the company had, with or without authority, assumed the function of factor in selling the rice, that duty had been faithfully discharged, and, upon being advised to the contrary, the owners were not estopped to demand the respective amounts legally due them.

The court below allowed the company to charge the account of each of the plaintiffs with a milling charge of a dollar per bushel, and the plaintiffs have cross-appealed from that part of the decree. The testimony shows that, at the time when the price of the rice was high, the association had contracted on behalf of its members to pay a milling charge of a dollar per bushel, together with the by-products, and this was the price charged by all the mills, and was the price charged against the association members and all others. The testimony shows that this charge resulted in what appears to be an exorbitant profit to the company, in view of the depreciated price of the rice and the reduced cost of operating expenses of the mill. But this was the company’s price to all persons, and it was the price charged by all other mills. It was the contract price agreed upon by many of the plaintiffs, and known to others, and the owners who had not agreed to pay this price, or were not advised what the price was, would have no right to demand that their rice be milled at less than the company’s established price when the company did nothing to induce the belief on their part that they would be charged less than the customary price charged by the company and other mills engaged in the same business.

The company insists that it had the right to charge all owners with the association fees of eight cents per bushel and the fee of five cents per bushel for advertising purposes. As we have said, the contract between the association and the company did require the company to deduct for the association eight cents per bushel for association dues. This agreement was, of course, binding as to the members of the association, but it is not binding as to the owners who were not members of the association and who had not agreed to pay it.

The contract between the company and the association also required the company to collect from each member of the association five cents per bushel, to be expended in advertising purposes to extend the use of rice, and to expend itself, out of its own funds, a sum corresponding to the amount so collected from the members. But what we have said about the association dues is equally applicable to this item.

But the association became bankrupt on April 15, 1921, and it is urged that this fact terminated that contract, as the sales out of which litigation arose were made at a later date. The company insists, however, that it should be allowed to collect these fees, because it has been charged with them and will be held to account for them to the receiver of the association; that the association had, pursuant to the purposes'of its organization, and in anticipation of realizing revenues which would be derived-from its contract with the company and other similar contracts with other mills, expended money in advertising and -operating expenses prior to the bankruptcy of the association, and that it will be called upon to account to the association for these items, which its contract with the association required it to collect from the members of the association.

If, in fact, the association did incur obligations upon the faith of the collections which the company agreed to make from the members of the association, the company may be required to account to the receiver of the association for the -fees and dues which it should have collected on the rice milled by it during the time the contract between the company and the association was effective, and, for this reason, the company should have credit for such sums of money as it will be required to account for to the receiver of the association, and the decree of the court disallowing these items will therefore be reversed.

Of course, the company should not be allowed to collect these items unless it has been required to account for and pay them over to the receiver of the association, and any recovery on this account against those owners from whom this collection should have been made will be limited to such sums as the company is held liable for to the receiver of the association.

It follows, from what we have said, that the decree must be affirmed on the cross-appeal of the plaintiffs, and would be affirmed in its entirety but for the failure of the court to take into account the membership fees and the advertising charges which the company claims it will have to pay over to the receiver' of the association, and the decree will be reversed for the purpose only of adjudicating those items, and in all other respects it is affirmed.

OPINION ON REHEARING.

Smith, J.

In the petition for rehearing it is pointed out that no testimony was offered in support of the allegations of the complaint in the suit filed by R. E. Short, and it is insisted therefore that this case at least should be reversed and dismissed. It appears, however, as has been said, that all these cases were consolidated and were tried together, and the evidence of the various witnesses was considered, so far as it was relevant, in all of the cases. This being true, the testimony should be considered in the Short case, and the testimony which establishes the cases of the other plaintiffs also established the case of the plaintiff Short. There was no question as to the quantity of his rice or its classification as made by the report of the appellant company in the account of sale, and the general finding made by the court below, and affirmed by us, inures to Short’s benefit.

We have been asked to designate specifically the plaintiffs who should be charged with the association dues and the advertising fees if it be found, on the remand of the cause, that the company is entitled to recover on this account, and we do so.

The following persons were members of the association: O. W. Hewitt, Henry Schaefer, George Heuckle, C. C. Brown.

In addition, it appears that R. E. Short and the Goodwin Rice & Stock Farms borrowed money from the company and executed notes which directed and authorized the company to mill their rice in accordance with the terms of the contract between the company and the association, and these plaintiffs will therefore be classed in this respect with the association members.

It appears also that the Murphy-Legg Company executed in writing an agreement for a toll charge in accordance with the association contract, and that the rice of the Gates estate was ordered milled in accordance with that agreement. These two plaintiffs will therefore be also classed with the association members -in respect to those items.

In all other respects the petition for rehearing will be overruled.