author: Butler, J.

text:
    Branch v. Veterans’ Administration.
    4-3549
    Opinion delivered October 1, 1934.

      W. M. Hall, James G. Coston and J. T. Coston, for appellants.

      Cleveland Cabler, for appellee.
   Butler, J.

Prior to August 1, 1927, Tliad Branch, the appellant, was appointed guardian of Bert Branch, an insane person. The guardian took possession of the estate of his insane ward which was derived from the Federal 'Grovernment through the Veterans’ Administration on account of services rendered by Bert Branch as a member of the military forces of the United States during the World War. The guardian had in his hands surplus funds not needed for the support and maintenance of his ward and, on August 1, 1927, filed a petition with the probate court for authority to loan the sum of $3,000, alleging that the security proposed was one hundred acres of land favorably located in the Osceola District of Mississippi Oonnty, in a high state of cultivation and worth $100 per acre, but which was then incumbered by a mortgage in the sum of $3,000 due the Southwest Mortgage Company. On the same day the court granted the prayer of the petition and made and entered an order finding that the security was adequate and authorizing the guardian to lend the money taking as security a mortgage on the land subject to that of the mortgage company.

In November, 1931, the. guardian filed his settlement in which he credited himself with the aforesaid loan of $3,000 and two other loans made by him as guardian, one to O. P. Whitson in the sum of $250 and one to R. C. Allensworth in the sum of $125. To this settlement exceptions were filed by the Veterans’ Bureau. The probate court sustained the exceptions, holding that the loan of $3,000 made to one Isadore Branch was not made on the security provided by law, that the two small loans mentioned were without any authority of the court having been obtained, and that the guardian had further failed to account for a sum of $272.58. The court adjudged him to be liable for all of these sums with interest thereon at six per cent. On appeal to the circuit court the action of the probate court in sustaining the exceptions was sustained, from which judgment this appeal has been prosecuted.

The appellants contend that, since the statute regulating the guardianship of insane persons places the management of their estates under the control of the probate court, that court had jurisdiction to make the order of A/ugust 1, 1927, authorizing the guardian to make the $3,000 loan to Isadore Branch, from which no appeal was ever prosecuted, and that, as the judgment of the probate court cannot be attacked collaterally, it protects the guardian in the loan made.

The finding of the probate court that the loans to Whitson and Allensworth, aggregating $375, were unauthorized does not appear to be contested. It is insisted, however, that the finding that the sum of $272.58 has not been accounted for is not supported by any evidence and that the judgment finding the guardian liable for this sum should he reversed, and this contention is conceded hy appellee.

It is the contention of the appellee that § 5061 of Crawford & Moses’ Digest limits the power of the probate court to make an order authorizing the loan of an insane ward’s money, and that, since the loan was not made on the security named in that section, the order of the probate court was corain non judice and so may be attacked in a collateral proceeding. Section 5061, supra, is as follows: “Guardians and curators shall loan the money of their wards at the highest rate of interest prevailing in the community that can be obtained on unincumbered real estate security, and then not more than to the extent of one-half of the value thereof. The interest in all cases shall be paid annually, and if not then paid shall become part of the principal and hear interest at the same rate.” The order of the probate court of August 1, 1927, shows on its face that the security was not on unincumbered real estate, but it is the contention of the appellants that the statute quoted has no application. In this we find the appellants to be correct. The section is a part of chapter 78 of Crawford & Moses’ Digest relating to guardians of minors and prescribing how a guardian shall administer their estates. The statute relating to insane persons providing how guardians shall handle the estates of such is wholly independent and distinct from that relating to the guardianship of minors, and has been since the earliest legislation in this State on those subjects. In 1838 the Legislature dealt with both subjects. In chapter 72 of the Devised Statutes the Legislature dealt with the subject of minors and their guardians, which statute was approved February 14 of that year. On February 20 following, chapter 78 of the Devised Statutes, dealing with insane persons and the guardianship of their persons and estates, was adopted and approved. That act remains unchanged except in some unimportant details and now appears as chapter 92 of Crawford & Moses’ Digest.

In 1873 the Legislature considered anew the subject of minors, the appointment of their guardians and the administration of their estates, and enacted a comprehensive statute relating to this subject, being act No. 78 of that 3ear, without, however, repealing or altering parts of chapter 72 of the Revised Statutes which now with that act is chapter 78 of Crawford & Moses’ Digest. Section 40 of that act provided for the lending by the guardian of the money of his ward. That section was digested in Gantt’s Digest as § 3076', and was amended by act No. 69 of the Acts of 1879 which became § 3514 of Mansfield’s Digest. This section was further amended by act No. 73 of the Acts of 1893' and is now § 5061, Crawford & Moses’ Digest. As a reason for reading § 5061 into the statute dealing with the estates of insane persons, counsel for the appellee suggests: “Some parts of the original act No. 78, approved April 22, 1873, concerned only estates, of minors, whereas other sections of that act concerned the administration of estates of both minors and insane persons, and as the major part of said act concerned minors, the Digester brought forward act No. 78 of 1873 to form a part of chapter 78 of Crawford & Moses ’ Digest, which probably was the proper place for act No. 78; however, the fact that the Digester placed it in that manner does not in any way change the provisions of that law or the intent which the lawmaking body had, as it is not an uncommon thing for our lawmaking body to incorporate as a part of a measure, a provision which, although it is related to the subject-matter, does not in fact strictly come under the general subject of the measure as enacted.” Counsel does not point out the sections of the act which, in his opinion, relate to insane persons and the estates of such, and we cannot agree with him that any such exist. A careful reading of that statute leads to the inescapable conclusion that it relates to minors and the guardianship of their persons and estates, and to these alone.

This court in the case of Fleming v. Johnson, 26 Ark. 421-438, had under consideration the original acts contained in the Revised Statutes — one relating to minors and their guardians and the other relating to insane persons, drunkards, spendthrifts, and their guardians, and held the two acts to be independent of each other. In that case, a father had been appointed guardian of his son, a minor child, and, acting- under the order of the court as such, sold to the appellee, Johnson, a parcel of land which was the property of said minor. Shortly afterward, the mother was appointed guardian of the minor on account of his insanity and brought an action to set aside the conveyance of the first-named guardian. In passing on the points thus raised, this court held that the probate court had jurisdiction of the subject-matter when it made the order for the sale of the real estate, and that it was not subject to collateral attack. The court said:

“Another point raised by the appellants is, that the court erred in excluding the proof that the ward of the guardian was insane from the time he was six years of age down to the time, of the trial. It appears that the appellant, William Warren Fleming, was born April 14, 1842. His father, William W. Fleming, was -duly, appointed guardian by the probate court on the 15 of January, 1856, when he, the son, was under the age of fourteen years. The order for the sale of the lot was made at the same term of the court, and the report of the sale was made, approved, and the sale confirmed at the April term following.

“The matter in issue on the trial was the validity of the sale; and it was immaterial and irrelevant whether the appellant was sane or insane, when his father was appointed his guardian, or when the order of sale was granted, or when the sale was made, confirmed, etc., he being all the while, an infant. The probate court appoints a guardian for an infant, solely because of the infancy, and no inquiry is made as to sanity. The law regards the infant, whether sane or insane, as incapable of acting for itself, and provides for it to be placed under a guardianship, which continues until it is of age, and then this guardianship ceases. Gould’s Digest, chap. 83, p. 570. The law also provides for the appointment of guardians for adult persons, when found, upon proper inquest, to be insane, etc., Gould’s Digest, chap. 89, p. 605. The two kinds of guardianship are as distinct as the two statutes which provide for them. The latter begins where the former ends, after the infant is of age.”

■ In Baker v. Loveland, 174 Ark. 262, 295 S. W. 20, a daughter was appointed guardian of her aged and mentally incompetent mother. During the last two years of the mother’s life she was an invalid and required much attention. The daughter guardian nursed her mother under a tentative agreement with the other members of the family that she Avould be compensated for her services. After the death of the insane ward, the guardian filed her claim in the probate court for the sum of $1,037 as compensation for her services. This was found to be reasonable and the claim allowed. After disposing of other questions in favor of the claimant, the court said: “Neither do we find any merit in appellant’s contention that the claim for services rendered could not be allowed against the estate of the deceased, under the statute (§ 5058, Crawford & Moses’ Digest) providing that the guardian shall not be alloAved in any case, for the maintenance and education of the ward, more than the clear income of the estate, unless upon an order first made permitting such expenditure. This statute has no application to the guardianship or estates of insane persons.” Thus it will be seen that we have held the íavo statutes distinct, both before and after the passage of the Acts of 1873 and the amendments in 1879 and 1893, and held the provisions governing the guardianship of minors has no application to the guardianship and administration of the estates of insane persons.

It is well settled that a guardian of an insane person at common law had no power except to hold intact and preserve the estate of his ward. Since the power to invest the insane ward’s money does not exist at common law and is not given by § 5061, supra, if it exists at all, it must be found in the statute dealing with insane persons and the administration of their estates. This is the point which presents the greatest difficulty. We find no express grant to the probate court of the power to order the lending by a guardian of money belonging to his insane ward. The sections which deal with the administration of an insane person’s estate are §§ 5852 and 5853 of Crawford & Moses’ Digest, which are §§ 43 and 19 of chapter 78 of the Revised Statutes. Section 5853 impowers the probate court, where an insane person is committed by it to guardianship, to make the necessary orders with respect to the person of. the ward, and “for the management of his estate and the support and maintenance of his family and the education of his children out of the proceeds of his estate.” Section 5852 places in the court the control of the guardian in the management of the person and estate of the ward and the settlement of his accounts, with power to enforce its orders in the same manner as a court of chancery.

We are of the opinion that the authority given the court to make orders for the management of the estate of an insane person and to control the guardian of such in the management of the estate by necessary implication confers the authority to make all necessary orders affecting the surplus money of the ward which, in the judgment of the court, would be to the best interest of the ward and of his estate. Therefore, the court is authorized to order a guardian to lend the surplus money of his ward.

The conclusion reached is supported by decisions construing the term “management of estates, property, etc.,” as used in conveyances, wills and statutes. “Management” is defined as government, control, superintendence, physical or manual handling or guidance — the act of managing by direction or regulation, or administration, as the management of a family, or of a household, or of servants, or of great enterprises, or of great affairs. In re Sanders, 53 Kan. 191, 36 Pac. 348, 23 L. R. A. 603.

A statute giving the management of a certain fund to a certain commission implies the power to control the fund. “It allows the exercise of discretion. It could not be managed without the power to do so and by requiring the one the other was conferred.” Commissioners of Sinking Fund v. Walker, 7 Miss. 143, 38 Am. Dec. 433.

A will constituting certain persons trustees of the estate * * * and directing that said trustees have the entire management of the estate * * means the control of the property to the end that income and profit should be derived from it such as leasing, investing, securing, collecting, etc. Watson v. Cleveland, 21 Conn. 538-41.

“Management,” within the statute giving finance commissioner management of city finances, means control, superintendence, or physical handling or guidance. Topeka v. Independent Indemnity Co., 130 Kan. 650, 287 Pac. 708.

A power of attorney, after mentioning certain specific powers, authorized the agent to act generally in the sale and management of the principal’s personal property. This impowered the agent to execute in his principal’s name a note for the price of corporate stock purchased by him for the principal, and did not limit the agent’s power in executing notes to execute notes for indebtedness existing at the time the powers were executed, since to take entire management of an estate necessarily implies the power to invest the income and collections, and to manage money means to employ or invest it. Keyes v. Metro. Trust Co., 220 N. Y. 237, 115 N. E. 455.

In Sencerbox v. First National Bank of Idaho, 14 Idaho 95, 93 Pac. 369, in construing a statute giving to the husband the management and control of the separate property of the wife during the continuance of the marriage, the court held that the words “management” and “control” have a well-defined meaning, that the power to manage implies the power to control, and that to manage money is to employ or invest it.

Sections 5853 and 5852, supra, therefore, impliedly authorize the court to order the investment by the guardian of surplus funds of a ward. The terms upon which a loan may be authorized and the security required is left to the. discretion of the court, the presumption being that no improvident loans will be made or such as would not be well secured. In dealing with the estates of insane persons, the court ought never to authorize a loan except where there can be no reasonable doubt that the security is such that out of it payment could be secured without delay, and in the case at bar the court abused its discretion in authorizing a loan secured by property already incumbered with a mortgage which could, and would, have been corrected on direct appeal. However, probate courts are superior courts within the limits of their jurisdiction, and where, as in this case, jurisdiction is had of the subject-matter, a judgment of such court is impervious to collateral attack. This doctrine is so well settled by numerous decisions of this court that a citation of authorities is deemed to be unnecessary. .

In view of the conclusions reached, it follows that the trial court erred in sustaining the exceptions as to the $3,000 loan. As heretofore noted, it appears that the action of the court in sustaining the exceptions as to the loans of $250 and $125 is not questioned. Indeed, this could not be, for the duty rests upon the guardian to administer the estate of his ward under the orders of the court and to affirmatively show that any loan made by him was so authorized.

The judgment of the lower court is therefore affirmed as to the $250 and $125 items, and reversed as to the $272.58 item, and, as to the “loan to Isadore Branch of $3,000,” the cause is remanded with directions to overrule the exceptions as to those items, and certify its action to the probate court.

McHaney, J., dissents.


source: Caselaw Access Project

license: Public Domain

text:
    Campbell v. Anderson.
    4-3533
    Opinion delivered October 1, 1934.

      Owens & Ehrman and Herschell Bricker, for appellants.
   Butler, J.

This action was begun by Anderson and certain other persons to enforce a laborers’ lien upon crops grown by J. L. Kestle on lands owned by the Winooski Savings Bank. At the conclusion of the testimony a judgment was directed for the plaintiffs over the objection of the defendants, which action of the court is assigned as error.

The lease agreement under which Kestle operated was executed on March 29,1930, between A. W. Campbell, agent, as lessor, and J. L. Kestle, as lessee. By this agreement the lessor leased for the crop year of 1930 certain lands in Arkansas County for the purpose of the lessee raising a crop of rice thereon. The lessee agreed to prepare the soil for planting, to plant, irrigate and harvest the crop, furnish all necessary work for said purposes, and for the threshing of the crop and hauling the same to market. He was also to furnish all necessary implements and to pay all other expenses incident to making the crop, including binder, twine, etc. The lease further stipulated that, “in consideration of lessor’s leasing said lands to the lessee, lessee agrees to deliver for the account of the lessor one-half of the rice grown on said lands to the cars or mill at Almyra, DeWitt, or Stuttgart, at the option of the lessor.” The lessor agreed to furnish the seed rice, electric power for the irrigation plant, to make necessary repairs thereon, to keep said plant in good working order during the year, and was to furnish lessee a “reasonable” amount of money with which to make the 1930 crop.

There is practically'no conflict in the evidence. It was proved that the plaintiffs performed the work for Kestle in thrashing the rice, and that he was due them the amounts claimed, payment for which had not been made. It was admitted by them that they had no dealings with the Winooski Savings Bank or with its agent, Campbell. It is also undisputed that the appellants furnished reasonably sufficient money with which to make and gather the crop, and that, after the proceeds derived from Kestle’s half of the crop has been credited to his account, there remains a considerable balance still due.

The contract, the substance of which has been set out, establishes the relation between the Winooski Savings Bank and Kestle of landlord and tenant under the rule announced in Hammock v. Creekmore, 48 Ark. 264, 3 S. W. 180, followed and restated in Barnhardt v. State, 169 Ark. 567, 275 S. W. 909. From the terms of the. contract, it is apparent that Kestle was not to receive a part of the crop from the landlord as wages for his work, but that he had dominion over the lands and controlled the processes of agriculture unhampered by interference on the part of the landlord, and was to pay one-half of the crop grown for the seed, use of the land and irrigation equipment, using his own farm equipment and furnishing the labor.

“If the share-cropper raises a crop for the landlord, and is to receive a part of the crop from the landlord as wages for his work, the title to the crop grown vests in the landlord, and the share-cropper has a lien thereon for his labor. If the share-cropper is to pay one-half the crop for the use of the land, with the tools and team and feed therefor, then the title to the crop is in the tenant, and the landlord has a lien thereon, and, in addition, the landlord has a lien for any necessary supplies of money or provisions to enable the tenant to make the crop, but the title to the crop is in the tenant.” Barnhardt v. State, supra.

The statutes give a landlord a lien on crops raised by his tenant or employee for the rent of the land and for advances of money, or other supplies necessary to enable the tenant or employee to make and gather the crop. Section 6864, Crawford & Moses’ Digest, which is § 1 of act No. 35 of the Acts of 1895, gives laborers an absolute lien on the thing, material, or property upon which they have performed work for the amounts due for such work, subject to the landlord’s liens for rent and supplies. The respective rights and conflicting claims of landlords for rent and advances made and those who perform work for a tenant or share-cropper in making or gathering a crop is discussed in Burgie v. Davis, 34 Ark. 179. In that case it appears that one Armistead was a laborer on the farm of Burgie. He was to make and gather the crop furnishing only his labor, food and clothing, and was to receive one-half the crop as his wage. Burgie was to, and did, furnish the supplies necessary to make the crop for which Armistead was to pay out of his half. The latter made a contract with others to work for him for which work he was to pay out of his half of the crop a certain part thereof. Burgie took possession of the crop when gathered, and Armistead’s laborers brought suit to recover the value of the cotton agreed to be paid to them by Armistead as wages. It was held that they had a lien upon Armistead’s half of the crop, but that it was subordinate to that of the owner for supplies furnished.

In Cotton v. Chandler, 150 Ark. 368, 234 S. W. 165, it was held, quoting headnote that: “Where a landowner employed a share-cropper to raise a crop on land, and made advances to him' to be repaid out of his share of the crop, the landowner’s right to a lien for such advances is superior to the rights of third persons who assisted the sharecropper in making the crop under an agreement with the latter that they should receive onetliird of the latter’s crop.”

From the undisputed evidence in this case, with the statutes and decisions cited supra applied thereto, it is evident that the trial court erred in any view of the case in directing a verdict for the plaintiffs, but should have directed a verdict in favor of the defendant as requested by it. The judgment is therefore reversed, and the case is dismissed.


author: Baker, J., Smith, J.,

text:
    Fort Smith Gas Company v. Wiseman.
    4-3548
    Opinion on rehearing delivered October 1, 1934.

      Miles, Armstrong & Young, for appellant.

      Trieber é Lasley, for appellee.
   Baker, J.,

(on rehearing). Upon the rehearing in this cause, we hold that the original opinion is erroneous, and that this opinion should be substituted for the one rendered on June 18, 1934.

There was passed at the 1933 session of the General Assembly (Acts 1933, p. 203) act 72, entitled, “An Act to Create a Fact-Finding Tribunal in the Corporation Commission.” This tribunal was given the power, and it was made its duty, to investigate and make a finding of all facts entering into or forming the basis of rates to be charged for any service supplied by any public utility “furnishing gas, water,.light, heat or power; producing, generating, transmitting or distributing gas, water, light, heat or power; or furnishing telephone, telegraph or street railway service. ’ ’

To raise funds to defray the expenses, of this tribunal, it was provided in § 8 of the act that each public utility subject to the provisions of the act shall file with the tribunal “a sworn statement showing its gross earnings from property in this State for the preceding calendar year, and at the same time shall remit to the State Treasurer the sum of $2 for each $1,000 of such gross earnings as a fee for the fact-finding facilities afforded by this act, which fee shall be in addition to all property, franchise, license or other taxes, fees or charges now or hereafter prescribed by law. * # * The tribunal is hereby authorized to inspect the income tax return of any public utility for the purpose of checking up its gross earnings. ’ ’

The Fort Smith Gas Company is engaged in the distribution of natural gas in the city of Fort Smith. The gas which it distributes is purchased from various pipe line companies. As required by the act from which we have quoted, the Fort Smith Gas Company made report of its gross earnings for the year 1932, from which it appeared that gas which had been furnished by the pipe line companies to the Fort Smith Gas. Company at a cost of $214,769.01 had been distributed to the consumers for the price of $407,588.83. The Fort Smith Gas Company reported its gross earnings, to be the difference between what it had paid for the gas and the price received for it, and made a tender of the tax imposed by § 8 of the act on that basis. The tender was declined by the Commissioner of Revenues, who insists that the tax should be paid on the whole amount for which the gas was sold, and not on the difference between the purchase and the sale price. The court below sustained that contention, and entered a .judgment accordingly, from which is this appeal.

The question presented here for our determination and decision is whether the term “gross earnings,” as used in act 72, was intended by the Legislature to be synonymous with “gross receipts.” In attempting to decide what the Legislature meant by £ £ gross earnings, ’ ’ as the same appears in § 8 of said act, we think recourse should be had to the act itself, and with whatever authority we may be able to find, to aid in a determination of the legislative intent.

Act 72, appearing on page 203 of the Acts of Arkansas of 1933, is a regulatory statute, whereby the fact finding tribunal, organized as a bureau of the corporation commission, is empowered, by the act, to make investigations under the prescribed methods and procedure as set forth in said act, to determine and fix a basis upon which rates may be charged by utility companies doing business in the State. This investigation, for purposes of regulation, as will appear from § 2 of the act, is such that a person, firm, association, corporation, trustee, receiver or lessee, furnishing gas, water, light, heat, power; producing, generating, transmitting, or distributing any of the said products, or furnishing telephone, telegraph, or street railway service, may be made the subject of such investigation for the purpose of finding facts necessary to determine rates that may be charged. It will be observed in reading § 2 that the Legislature had in mind that one selling or distributing any of the products mentioned was supplying a service in the same sense that a service is supplied by telephone, telegraph, or street railway. Whether the utility sells commodities or transportation, the utility is treated as supplying services” to the public. It was certainly not the purpose of the Legislature to discriminate as between one generating electricity or producing gas from its own wells or plants, and one who also renders a service by selling transportation on the street car system, or provides means for communication by telephone and telegraph. The rates to be charged for the rendition of this service, whether in the distribution of a commodity or in the production and sale of it, and the service rendered by a street railway company, or a telephone or telegraph company, come under the same regulatory power of the Fact Finding Tribunal.

The purpose of the Fact Finding Tribunal, the power or authority granted to it, the method of procedure provided, demonstrate that its function is purely regulatory, and that it is brought into being in the exercise of the police power of the State.

In order that it might become operative or effectual, it was necessary that money, or funds be raised, with which to pay expenses, including salaries, and this is provided for under § 8 of the act, and it is in this section that the term “gross earnings” is used.

Section 8 provides that: “Each public utility subject to the provisions of this act shall file with the tribunal a sworn statement showing its gross earnings from property in this State for the preceding* calendar year, and at the same time shall remit to the State Treasurer the sum of $2 for each $1,000 of such gross earnings as a fee for the fact-finding facilities provided by this act, which fee shall be in addition to all property, franchise, license or other taxes, fees or charges now or hereafter prescribed by law.”

It will be observed that the word “fee” is used instead of “tax,” and we think that word is used in the sense that it is a “charge fixed by law for services of public officers or for the use of a privilege under the control of the Government. ’ ’ The charge made is of the same kind and class as that usually made, as authorized by statute, in municipalities for license fees, which are assessed or fixed by city councils, not as revenue charges, but in order that the regulations, inspections, etc., may be had without expense to the municipality. The law in such matters is too well known and recognized to require citation of authorities.

The principal case relied upon by learned counsel for appellant is District of Columbia v. Georgetown Gaslight Co., 45 Appeals, District of Columbia, 63. We think that this case is not applicable and furnishes us no aid in the determination of the question involved here.

This District of Columbia case arose under an act of Congress of July 1,1902, and the act itself shows that the words, “gross receipts” and “gross earnings” were not intended to be used as meaning the same thing. We agree with learned counsel that it is a well-reasoned case, but that court also recognized the fact that the terms “gross receipts” and “gross earnings” are very frequently regarded as equivalents.

A careful reading of the above case will disclose the fact that the act under consideration was a tax for revenue upon the “gross earnings,” and not a fee for regulation. Each national bank was required to pay 6 per cent.; each gas company 5 per cent.; each electric lighting and telephone company 4 per cent. It provided also that street railway companies should continue to pay 4 per cent, per annum on “gross receipts,” and insurance companies 1 y2 per cent, from premium receipts. The court followed the principle that our court has also approved — that an act imposing a special tax should be construed strictly against the State, and in favor of the taxpayer, and to the effect that the gas company was permitted to take from its “gross earnings” the amount expended or invested by it in the purchase of raw materials in the production of its commodity, in order to arrive at the basis for the tax. If we follow the same principle, as announced in the District of Columbia case, and treat the act as one of taxation, for the mere purpose of producing revenue, and not a fee, which the act calls the charge, then necessarily the authorities are ample to support the contention that earnings cannot be determined except by taking from the gross income, or “gross receipts,” all of the expenses of the production of said commodity, and necessarily this would include whatever investments of capital were made in raw material, incidental to the production of the commodity from which the gross income was derived.

It is true that this court has held that a law imposing a special tax is to be construed strictly against the Government and favorably to the taxpayer. McDaniel v. Byrkett, 120 Ark. 295, 179 S. W. 471.

While we recognize the justice of that argument and would not impair the effect of the decision in the last cited case, we cannot concede that it is authority to defeat what we believe to be the legislative intent in the case under consideration.

Counsel for appellant in this case agree that the Fort Smith Gas Company should pay on the amount remaining, after deducting the cost of the gas purchased by it, and without any deduction of any cost of operation, or any return on its investments, or any tax or other charge of any kind. This is a fair concession in order to present its real contention to this court, but, if the District of Columbia case is authority, and if it should be followed by this court, it is also authority for deductions that should be made for cost of operation, etc.

But this question as to cost of operation, as we think, is conceded by all the parties, is settled in the case of Railway Co. v. Shinn, 52 Ark. 93, 12 S. W. 183. Quoting Chief Justice Cockrill, the statement of the case is as follows:

“The company is known as the Dardanelle & Russellville Railway Company, and sells tickets to passengers and issues bills of lading for freight from the town of Dardanelle to Russellville and from Russellville to Dardanelle. It maintains .a passenger ticket office, and a warehouse for the receipt of freights in the latter town. To facilitate the transaction of its freight and passenger business, it entered into a written agreement with Shinn, by the terms of which the latter agreed (to quote from the contract) ‘to ferry all passengers, freight, baggage, mail, express matter, live stock and other kinds of freight, presented for ferriage by the party of the second part (the company) in the course of transportation by it, together with such conveyances, as may be necessary to convey and transfer the same with dispatch and safety across the Arkansas River. * * * For and in consideration of which ferriage, and the services in regard thereto, the party of the second part hereby agrees to pay to the party of the first part (Shinn) one-fifth of the actual gross earnings of the railway, the party of the second part, on all passengers, freight, mail, express or other matter of every kind and nature whatsoever, carried across the said river either way.’
“Under the agreement the company transported its freights from the terminus of its track, across the ferry to its destination in Dardanelle, and from Dardanelle to the railway at its own cost, and accounted to Shinn for one-fifth of the gross amounts earned thereby, and for the same proportion of the gross receipts for mail and express matter. It let the contract to haul its passengers, to a transfer company; which ostensibly charged twenty-five cents for transporting each passenger to or from the terminus of the track and points in the town of Dardanelle. The passenger vehicles were carried over the ferry without charge by 'Shinn under the impression that they were acting for the railway company, as a continuation of its line. The railway company sold the hack tickets, and out of the proceeds paid the transfer company twenty cents for their services, and retained five cents as a commission for selling such tickets, and as pay for the transfer company’s ferriage for their hacks. The fare of the railway proper, between Dardanelle and Russellville, was fifty cents, which sum added to the hack fare made seventy-five cents for a complete ride between the two towns. Passengers were not required to purchase the hack tickets, and the railway fare entitled them to free ferriage without transportation from the terminus of the track to the ferry. The railway company accounted to Shinn for one-fifth of the amount collected by them as railway fare, that is, ten cents on each passenger and one-fifth of the five cents retained by them on the sale of each hack ticket. ’ ’
“'Shinn contended that he was entitled to five cents for each hack ticket sold, as being a part of the gross earnings contemplated by the contract. The railway company insisted that the transfer company was not a part of its system, and what it earned was a matter of no concern to Shinn. The latter instituted this suit to recover the difference between the amount he received and what he claimed. The cause was tried without a jury before the circuit judge, who heard testimony establishing the facts above detailed, and found therefrom that Shinn was entitled to recover. The only ground assigned for a new trial is that the finding is not sustained by the facts.”

In this case it is stated that the railroad company paid four-fifths of the expense for crossing the river and retained one-fiftli, and in its settlement with Shinn was willing* to pay him the one-fifth part of the five cents retained, claiming that the five cents was its “gross earnings,” because of the fact that it had paid twenty cents of the twenty-five-cent charge for transfer across the river. The controversy arose because of the fact that the railway company construed the term “gross earnings” to be the one-fifth part of the charg'e, five cents, which it retained, and Shinn contended that “gross earnings” meant the full amount received, or the twenty-five cents.

In the consideration of this case, it should be kept in mind that the railroad company had nothing to sell, except its service, transportation; that it actually received, as between it and Shinn, only the five cents, but from the passengers it received twenty-five cents, though it paid to the transfer company twenty cents of that amount. The railroad company bought a part of the transportation, part of the service it sold, the part that was in dispute, just as the. gas company in this case bought the gas that it resold to its consumers.

This court, in deciding that issue, held that the term “gross earnings” meant all that the railroad company had received, including this twenty-five-cent charge for each passenger transported. This case was decided at the May term of the Supreme Court in 1889, and, by its decision, gave to the term “gross earnings” the exact meaning contended for, of the same expression by the appellee in this suit. This particular case has never been overruled or modified, nor has the legal definition given 'by this court to the words “gross earnings” been changed in any particular.

Moreover, act 72 of Acts of 1933, shows the Legislature knew approximately what the work of regulation would cost. The fixing of the charges and appropriation determines, that fact, and we think we can correctly assume it had some information in regard to the amount of fee or charge to make or place, so that payment by the utilities for the functioning of this regulatory plan, to which they were to be subjected, would be just.

It is apparent the fee fixed was intended to rest ratably and equitably upon such utilities. We cannot believe it proposed to fix a charge on a street railway which sells service only upon a basis of the gross amount of money received, and upon a gas company upon a basis of the gross profits only.

A street railway system might conceivably be organized with a million dollars capital stock, and use it all in its equipment to render the service for which it charges. T,he gas company organized, for a like sum, could spend one-half or three-fourths of its capital in a distribution system, and employ the remainder of its capital in the purchase of gas for distribution, and the total intake or receipts of the two corporations be the same. The two have employed the same capital, but in a different manner. The Legislature certainly meant they should pay equally. If one received or took in but a third part of what the other got, it should pay ratably. This construction eliminates expenses of bookkeeping, the costs of tax experts, controversies as to proper charges and deductions.

The court is of the opinion that the term “gross earnings,” used in act 72 of the Acts of 1933, meant the entire receipts, without deduction for any expenditure, or any cost of operation, or other expense or cost of the service.

The act employs the expression, “gross earnings” as synonymous with “gross receipts,” as in the case of Railway v. Shinn, supra.

The rehearing should be granted, and the judgment of the circuit court should be affirmed.

It is so ordered.

Smith, MoHaney and Butler, JJ., dissent.

Smith, J.,

(dissenting). There was passed at the 3933 session of the General Assembly (Acts 1933, page 203) act 72, entitled, “An Act to Create a Fact-Finding Tribunal in the Corporation Commission. ’ ’ This tribunal was given the power, and it was made its duty, to investigate and make a finding of all facts entering into or forming the basis of rates to be charged for any service supplied by any public utility “furnishing gas, water, light, heat or power; producing, generating, transmitting or distributing gas, water, light, heat or power; or furnishing telephone, telegraph or street railway service. ’ ’

To raise funds to defray the expenses of this tribunal, it was provided, in § 8 of the act, that each public utility subject to the. provisions of the act shall file with the tribunal “a sworn statement showing its gross earnings from property in this State for the preceding calendar year, and at the same time shall remit to the State Treasurer the. sum of $2 for each $1,000 of such gross earning’s as a fee for the fact-finding facilities afforded by this act, which fee shall be in addition to all property, franchise, license or other taxes, fees or charges now or hereafter prescribed by law. *' * * The tribunal is hereby authorized to inspect the income tax return of any public utility for the purpose of checking up its gross earnings.”

The Fort Smith Gas Company is engaged in the distribution of natural gas in the city of Fort Smith. The gas which it distributes is purchased from various pipe line companies. As required by the act from which we have quoted, the Fort Smith Gas Company made report of its gross earnings for the year 1932, from which it appeared that gas which had been furnished by the pipe line companies to the Fort Smith Gas Company at a cost of $214,769.01 had been distributed to the consumers for the price of $407,588.83. The Fort Smith Gas Company reported its gross earnings to be the difference between what it had paid for the gas and the price received for it, and made a tender of the tax imposed by § 8 of the act on that basis. The tender was declined by the Commissioner of Eevenues, who insists that the tax should be paid on the whole amount for which the gas was sold, and not on the difference between the purchase price and the sale price. The court below sustained that contention, and entered a judgment accordingly, from which is this appeal.

As appears from the facts stated, the question presented for decision is whether the term “gross earnings” should he construed as being synonymous with the term “gross receipts.”

The question here presented was thoroughly considered by the Court of Appeals of the District of Columbia in the case of District of Columbia v. Georgetown Gaslight Co., 45 Appeal Cases Dist. of Columbia, page 63. An act of Congress directed the collector of taxes of the District of Columbia to collect a tax on the gross earnings of banks, electric lighting, telephone, and gas companies doing business in the' District of Columbia. The act required all street railway companies to pay a tax on their gross receipts, and insurance companies to pay on their gross premium receipts. The 'Georgetown Gaslight Company filed a report with the assessor of the district showing its gross earnings to be $97,719.58, and the assessor called upon the company for a statement as to how it arrived at the sum returned. The company furnished a statement showing that the total sales from gas and its byproducts were $160,939.99, and the cost of the raw material actually entering into the manufacture of the gas was $63,220.41, and that by deducting the cost of the raw material from gross receipts the company found and reported its gross earnings as $97,719.58, which was refused.

A demurrer was filed, which presented to the trial court the question whether the Gas Company should have been allowed the deduction of the cost of the raw material used in the manufacture of the gas in determining what were its gross earnings. The District of Columbia appealed from a ruling favorable to the Gas Company, and the synopsis of the brief filed by its counsel on its appeal to the Supreme Court of the District of Columbia indicates that an exhaustive investigation of the authorities had been made, and the opinion on appeal showed the cases cited were carefully considered and properly distinguished.

It was insisted there, as it is here, that gross receipts and gross earnings are in a broad sense equivalent terms, and that a tax on gross earnings and on gross receipts is one and the same thing.

It was pointed' out -in the opinion cited that with certain sorts of business concerns gross earnings and gross receipts constitute precisely the -same sum of money, and it was there said that: “A railroad company engaged entirely in the rendition of services for which it received compensation, and neither producing nor furnishing any tangible commodity to persons as an incident to the rendition of the services, may have as its ‘gross receipts’ and its ‘gross earnings’ precisely the same moneys.” But it was pointed out very clearly that it would be an economic fallacy to -assert their identity in all cases or in any case where the revenue or income was derived from purchases and sales or from manufacturing and selling. There the taxpayer manufactured and sold gas, and it was there said: “It is engaged in selling a commodity, gas, which it produces by processes of manufacture by converting raw materials which have been purchased by money from its capital and its net surplus of earnings of former years which has been added to its capital. Large sums are used to buy those raw materials; and when the gas which is made from them is sold, there comes back to the company as a part of the money received from such sales the capital used in the original purchase of raw material, and when it thus comes back to the. company it is returned to capital. ’ ’ This is equally true of gas bought and resold as in the case before us.

Among numerous other cases there cited and quoted from was the case of People ex rel. Brooklyn Union Gas Co. v. Morgan, 114 App. Div. 266, 99 N. Y. Supp. 711, where, upon facts identical to those involved in the District of Columbia case, the Supreme Court of New York, in the Appellate Division, said: “The comptroller has thus fixed the tax, not on the ‘gross earnings’ of the relator, as required by the statute, but on its gross receipts. Capital of a corporation which must first be invested before it begins to earn anything cannot be said to be a part of the earnings of such corporation merely because it is turned into cash, and thus in one sense becomes a receipt of the corporation. Earnings do not in-elude capital, but are. tlie productions or outgrowth of capital. ’ ’

If the gas was not. sold for something more than its cost, there would be “gross receipts,” but not “gross earnings.” If sold for more than it cost, the difference between the cost price and the sale price would be the gross earnings. If, for any reason, it was important to determine, as would be necessary in an income tax return, what the net earnings or net profits were, it would, be necessary to know what the operating expenses had been, and to deduct these also.

If a merchant buys goods for a thousand dollars, and sells them for two thousand dollars, the gross receipts would be two thousand dollars, but his gross earnings would be only one thousand dollars, and his net profits or net earnings would be this thousand dollars less the operating expenses, and this is as true of gas as it is of goods or other merchandise.

These, terms are explained and defined in our Income Tax Act (act 118, Acts 1929, vol. 1, page 573'), under which income tax returns are made, to which the Fact-Finding Tribunal is given access by § 8 of the act of 1933 for the purpose of checking up the gross earnings of the utilities subject to the tax here sought to be collected. See also Sims v. Ahrens, 167 Ark. 557, 271 S. W. 720.

There is nothing to indicate that the General Assembly did not use the term “gross earnings” in the. sense in which it is ordinarily employed and as ordinarily understood, and, if this is true, it cannot be interpreted as meaning the collection of invested capital used to purchase an article bought for resale, which it would be if the Gas Company is required to pay a tax on the purchase price of the gas which it bought to distribute and resell.

The case of Railway v. Shinn, 52 Ark. 93, 12 S. W. 183, is cited as holding to the contrary. But such is not its effect. There a short line railroad operating between two towns only a few miles apart agreed to pay the operator of a ferry, which the railroad was required to use, one-fifth of the actual gross earnings of the railroad as ferriage. It was held that the railroad should pay the sum agreed without deduction for hack fare incurred in completing a journey between the two towns. .In other words, the operating expense could not be considered in determining the gross earnings. The Gas Company here asks no deduction for operating expenses, but has offered to pay on its gross earnings without credit for that expense.

It will not do to say that the Legislature said one thing, but meant another. We must ascertain the legislative intent from the language employed. Act 493 of the Acts of 1921 (General Acts 1921, page 472), imposing a tax on the gross receipts of certain insurance companies, clearly indicates that, when the General Assembly wishes to tax gross receipts, it says so, and we may not interpolate that intention when the language employed indicates an intention to the contrary.

We conclude therefore that the State Revenue Commissioner should have accepted the tender made by the Gas Company in payment of the tax on its gross earnings.

This opinion, when delivered, expressed the views of the majority of the court as it was then constituted. Through a change in the personnel of the court, it does not express the views of the majority of the court as now constituted. It is therefore no longer the opinion of the court. But, inasmuch as it does express the views of Justices McHaney, Butler and myself, the remaining members of the court who originally made it, it is now filed as a dissenting opinion.


author: Smith, J.

text:
    Hix v. State.
    Criminal 3887
    Opinion delivered September 24, 1934.

      Boy Hix and Otis Crosser were convicted of murder in the second degree, and have appealed.

      W. M. Thompson, I. J. Malheney and J. Paul Ward, for appellant.

      Hal L. Norwood, Attorney General, and John H. Caldwell, Assistant, for appellee..
   Smith, J.

Appellants were jointly indicted, along with Essie Fulbright, for the murder of W. P. Ford, which crime was alleged to have been committed by striking Ford with a rock and thus killing him.

There was a severance by Essie Fulbright, and upon her trial she was convicted of murder in the second degree, and has duly appealed. Appellants were also convicted and given each a sentence of ten years for murder in the second degree.

It was the theory of the prosecution that these parties had robbed Ford, and that the homicide was committed either in the commission of that crime or as the result of a fight after the robbery resulting from Ford’s attempt to recover the money stolen from him.

The appeal of Essie Fulbright has been disposed of in an opinion handed down this day by the Chief Justice, which reviews the testimony in that ease. The testimony heard at the trial of appellants was not substantially different from that offered in the case of Essie Fulbright, and it will not, therefore, be repeated. Certain other questions which were raised at each of the trials are also disposed of by the opinion in the Fulbright case.

It is very earnestly insisted, for the reversal of the judgment from which this appeal comes, that the testimony does not support the verdict. The insistence is that appellants should have been convicted either of murder in the first degree or of voluntary manslaughter or should have been acquitted.

It is argued that, if Ford was killed in an attempt to rob him, the crime of murder in the first degree was committed, whereas if. he was killed in a subsequent fight which Ford brought on in an attempt to recover the money which he claimed had been stolen from him, the homicide would have been only voluntary manslaughter, and that in no event were appellants guilty of murder in the second degree, the. crime for which they were convicted and sentenced. It is insisted, therefore, that it was error for the court to give an instruction numbered 12, which defined the crime of murder in the second degree. It is not argued that this instruction erroneously defined that crime, but the insistence is that it was error to submit the question of appellants’ guilt of that crime to the jury.

For the reason already stated, the testimony will not be reviewed in this case; but it may be said that the testimony in the instant case is as conflicting as was the testimony in the Fulbright case. According to the testimony offered on appellants’ behalf, they did not kill Ford or participate in his murder, and they should therefore have been acquitted. Will Parish was one of the principal witnesses for the State, and he admitted having made, prior to the trial, statements conflicting with his testimony at the trial. He testified that he was a partisan of Ford’s during the fight, and that after the fatal blow had been struck Ford’s assailants debated what they would do with him. He testified that he was placed on the floor of the car between the seats and that “They were on top of me between the seats, like I was hog tied, ’ ’ and he was carried for some miles from the scene of the encounter, where he was dumped out of the car with the warning that if he told what had happened he would be killed.

There were conflicts in the testimony which it was the peculiar province of the jury to consider and to reconcile if they could be, and, as there was testimony legally sufficient to have supported a conviction of the highest degree of homicide, there was no error prejudicial to appellants in charging upon the lower degrees of that crime. Arnold v. State, 179 Ark. 1066, 20 S. W. (2d) 189, and cases there cited. A general charge upon the law of homicide and the distinctions between the degrees thereof was given, and no insistence is made that the law was not correctly declared in the instructions.

Subsequent to the adjournment of the term at which the trial was had and the sentence pronounced, a motion for a new trial was filed on the ground of newly-discovered evidence. On this motion appears the notation of the trial judge that it was overruled as having been filed out of time, and for the additional reason that it alleged no facts entitling appellants to that relief. We concur in this ruling for both reasons assigned by the trial court. Incorporated Town of Corning v. Thompson, 113 Ark. 237, 168 S. W. 128; Thomas v. State, 136 Ark. 290, 206 S. W. 435; Collatt v. State, 165 Ark. 136, 262 S. W. 990. The testimony set out in this motion is either cumulative of other testimony heard at the trial (Dillard v. State, 174 Ark. 1179, 298 S. W. 27) or tending to impeach such testimony (Hayes v. State, 169 Ark. 883, 277 S. W. 36).

No error appearing, the judgment must be affirmed, and it is so ordered.


author: Johnson, C. J.

text:
    Bridge Tire Company v. Massachusetts Bonding & Insurance Company.
    4-3532
    Opinion delivered October 1, 1934.

      Warner & Warner, for appellants.

      Joseph R. Brown and Beloate & Beloate, for appellees.
   Johnson, C. J.

This action was instituted by appellants, Bridge Tire Company, Boy M. Johnston and Ben B. Johnston, against appellees, Massachusetts Bonding and Insurance Company and B. E. Patterson, to enforce an alleged liability for dishonest use and misapplication of funds, merchandise and personal property belonging to appellants and to establish liability against a fidelity bond executed by appellee, Bonding & Insurance Company, by the terms of which appellants were indemnified against dishonest misuse of funds and property by Patterson amounting to larceny or embezzlement. The fidelity bond provides:

“Whereas, Bay E. Patterson, Fort Smith, Arkansas, hereinafter called the ‘employee,’ has been employed as manager by Bridge Tire Company, Fort Smith Arkansas, hereinafter called the ‘ employer, ’ and has been required to furnish a bond for his honesty in the performance of his duties in the said position.
“Now, therefore, in consideration of a premium paid for the period from the 1st day of March, 1928, to the 1st day of March, 1929, at twelve o ’clock noon, it is hereby agreed that, subject to the conditions set forth in this bond, the Massachusetts Bonding & Insurance Company hereinafter called the ‘ surety, ’ shall within three months next after proof of loss has been furnished to it, as hereinafter set forth, reimburse the employer to an amount not exceeding five thousand and 00/100 dollars ($5,000), for such pecuniary loss as the employer shall sustain of money, securities or other personal property belonging to the employer or for which the employer is responsible, by any act or acts of larceny or embezzlement on the part of the employee while in the performance of the duties of the office or position in the service of the employer as hereinbefore stated, and which shall have been committed during the life of this bond and discovered within six months after the expiration or cancellation thereof, or within six months after the death, dismissal or retirement of the employee from the service of the employer prior to such cancellation, subject to the following express conditions, which shall be conditions precedent to any recovery hereunder. ’ ’

The chancellor, after hearing the evidence, found as follows:

“The court finds that there was no effort of defendant, Patterson, to cover up or disguise any of his acts or transactions; that he was negligent and exercised poor judgment, but that not one of the items of shortage sued for is impressed sufficiently with dishonesty or fraudulent intent on defendant Patterson’s part to constitute either larceny or embezzlement, as used in the terms of the bond sued on. It is therefore considered, ordered, adjudged and decreed that plaintiff’s complaint be dismissed for want of equity, and that defendants recover their costs herein.”

The undisputed evidence reflects that, beginning in the year 1928, Mr. Patterson, the manager of appellants business in Fort Smith, began paying" his personal obligations from his employer’s funds. For instance, on January 23, 1929, he paid to Sutton Chevrolet Company, out of his employer’s funds, $33.50' and charged this item upon the books of his employer to “service auto expense,” when the fact was and is that this was a payment on his personal automobile and a discharge of his individual liability. On January 4, 1929, Patterson paid to Stein Wholesale Dry Goods Company $6 out of his employer’s funds and charged it upon his employer’s books as “sundry expense,” when the fact was this item represented the purchase price of one pair of blankets purchased for Patterson’s personal use. On December 12, 1928, Patterson paid out of his employer’s funds to Morris Morton Drug Company, $16,50 and charged same on his employer’s books to “sundry expense,” when in truth and fact this item represented the purchase price of one tea set purchased for Patterson’s individual use. On August 10,1931, Patterson paid out of his employer’s funds the sum of $13.55 to Armour & Company and charged-same on his employer’s books to “sundry expense, ’ ’ when in truth and fact the charge was for a bill of groceries purchased and used by Patterson personally. On May 17,1932, Patterson deducted $9.10 from his gross pay roll and charged this item to cash disbursements and never accounted to his employer therefor. The items just referred to will serve to show the trend of all transactions complained of and the kind and character of testimony which the chancellor construed as being insufficient to warrant a finding of liability against the fidelity bond.

The fair and reasonable construction of the fidelity bond is that the bonding company guaranteed the honesty and fidelity of- Patterson in performance of his duties as employee to his employers against furtive or dishonest misuse for his own benefit of funds or property placed in his custody amounting to larceny or embezzlement. Equitable Surety Co. v. Bank of Hazen, 121 Ark. 422, 183 S. W. 743; U. S. F. & G. Co. v. Bank of Batesville, 87 Ark. 348, 112 S. W. 957; Fidelity & Deposit Company of Maryland v. Cunningham, 177 Ark. 638, 7 S. W. (2d) 332; Fidelity & Deposit Company of Maryland v. Cunningham, 181 Ark. 954, 28 S. W. (2d) 715; 19 Cyc. 518, and cases there cited.

It is true we held in U. S. F. & G. Company v. Bank of Batesville, supra, and other subsequent cases that fidelity bonds restricted by their terms to larceny or embezzlement of the employee did not cover every loss which might he sustained by their employer, but when the loss is due to dishonest misuse or dishonest misapplication of the funds or property by such employee which amounts to larceny or embezzlement when used in their generic sense as distinguished from a criminal technical sense, liability should and does f ollow.

Neither can we agree that this fidelity bond does not cover the losses due to Patterson’s dishonest misuse of the funds, because he was a partner and interested in the business, because the insurer was fully advised of this fact prior to executing the bond, and it will not now be heard to say that it is not liable thereon, thereby nullifying its obligation from its inception. American National Ins. Co. v. Hale, 172 Ark. 958, 291 S. W. 82; Travelers’ Protective Ass’n of America v. Stephens, 185 Ark. 660, 49 S. W. (2d) 364; Metropolitan Ins. Co. v. Minton, 188 Ark. 456, 66 S. W. (2d) 627; 14 R. C. L., p. 1166, and cases there cited.

Next appellees urge that the chancellor’s finding of no liability against appellees should not be disturbed because not against the preponderance of the evidence. As heretofore pointed out, Patterson’s liability for practically all, if not all, the items in controversy were admitted by him, but he seeks to avoid responsibility therefor by showing that he reimbursed his employers for the funds and merchandise dishonestly misused and misapplied. The burden of showing reimbursements was upon Patterson and the insurer, and, after most careful consideration of all the testimony introduced, we have come to the conclusion that appellees have not discharged this burden. True, Patterson and his wife say they have reimbursed the employer for all misused and misapplied funds and merchandise, but no receipts, vouchers, proof, canceled checks, book entries or other corroborating facts dr circumstances are offered in support of their general statements of reimbursements, and we are unwilling to accept their general statements as proof sufficient to overcome the prima facie case made by appellants.

We now proceed to the only remaining question, the amount to which appellants are entitled to recover. The general course of dealings by Patterson with the property and funds intrusted to his care and management is exemplified by the items heretofore set. out, and we shall deal with all remaining items in a general way only tested by the rules of law heretofore stated. The aggregate of all items falling within the rule stated is $3,413.67, and judgment should have been rendered for this sum in the lower court.

For the reason stated, the cause is reversed, and judgment will be entered here in favor of appellants, and against appellees for the amount indicated.


text:
    Adams v. Mitchell.
    4-3507
    Opinion delivered October 1, 1934.

      F. G. Taylor, for appellant.

      G. O. Raley and G. B. Oliver, Sr., for appellees.
   Smith, J.

Appellant brought suit in ejectment to recover the possession of the southeast quarter of the southwest quarter of section 35, township 20 north, range 4 east, and pleaded as the source of his title a deed from the -State based upon a tax sale to the State for the nonpayment of the 1926 taxes thereon. Before the trial he amended his complaint to allege the ownership of the southwest quarter of the southwest quarter of the same section under a deed to him from M. S. Smith and wife.

The transcript does not contain the answer filed in the cause, but it does contain a pleading entitled “amendment to the answer,” and it contains also an answer to the cross-complaint filed by the defendant, but it does not contain the cross-complaint itself. The case is briefed, however, as if all the questions herein discussed had been put in issue by proper pleadings, and we shall so treat them.

As to the tract of land last described in the amended complaint, the following facts were developed. Smith had mortgaged the land to Henry Lepp, and, while Smith was confined in the State penitentiary, suit was brought against him to foreclose the mortgage. A decree of foreclosure was rendered as prayed, pursuant to which the commissioner appointed to execute the decree sold the land to Lepp, the mortgagee, and upon the confirmation of the report of sale a deed was executed to Lepp, which was duly approved by the court.

Attack was made on this foreclosure proceeding, and the deed executed pursuant to it on the ground that the decree had been rendered upon improper and insufficient service. We do not discuss the facts upon which that contention-is based, for the reason that the court found that no defense against the foreclosure, suit was shown. Smith admitted that he owed the debt which the mortgage was given to secure, and the court therefore properly refused.to vacate the decree of foreclosure and the proceedings thereunder. This action must be affirmed, as the rule is well established that, before one many question the service upon which a .judgment or decree was rendered, he must show the existence of a defense to the suit which terminated in the judgment or decree. More- land v. Youngblood, 157 Ark. 86, 247 S. W. 385; King v. Dickinson-Reed-Randerson Co., 168 Ark. 112, 269 S. W. 365; Minick v. Ramey, 168 Ark. 180, 269 S. W. 565; C. A. Blanton Co. v. First Nat. Bank, 175 Ark. 1110, 1 S. W. (2d) 558.

There was a proceeding to amend the original decree, and an amended decree was rendered, which we must accept as reflecting the final action of the court. This amended decree adjudicated the fact that the plaintiff acquired no title to the land described in the deed to him from Smith, for the reason that Smith had lost his interest in the land through the foreclosure proceeding hereinabove referred to, which the court refused to vacate for the reason that “no defense to the original suit by Henry Lepp against said M. S. Smith is set up or shown.”

As to the tract of land first described in the original complaint, it may he said that the record is somewhat confused, and two writs of certiorari have been sued out and returned to clarify the record. The last return of the clerk upon these writs shows certain errors in the original transcript, and we must take the final certificate of the clerk as to the record made at the trial from which the appeal comes as correct.

There was filed with the original complaint, and as an exhibit to it a deed from the State “for forfeited lands sold” to plaintiff, which recites that the land there described was forfeited to the State for the nonpayment of the taxes for the year 1926. The exhibit of this deed to the complaint shows that it is a copy of the deed as recorded in deed record book 28, page 380, and the original of the deed does not appear to have been offered in evidence. As thus exhibited, the deed recites that it was based upon a forfeiture to the State for the nonpayment of the taxes due for the year 1926.

There appears, however, in response to one of the writs of certiorari, what is now certified to he a correct copy of the deed as recorded in deed record book 28, at page 380, which shows that the State’s deed was based upon a forfeiture for the nonpayment of the 1924 taxes. But it was shown at the trial from which the appeal comes that the taxes on the entire southwest quarter, which embraces the land herein described, have been paid, as evidenced by tax receipt No. 860, issued on March 31,1925, for the year 1924. As the taxes had been paid, the sale to the State for their nonpayment was, of course, void, and the deed based thereon from the State conveyed no title.

Upon this showing the court correctly refused to award the possession of the land to the plaintiff; and also correctly refused to render judgment in plaintiff’s favor for the sum paid by him to the State for his deed from the State.

The cause had by consent been transferred to equity, where the deed from the State was canceled and held for naught, and, as the decree dismissing the complaint as being without equity is correct, it must be affirmed, and it is so ordered.


text:
    Riggs v. Buckley.
    4-3545
    Opinion delivered October 8, 1934.

      G. L. Grant, for appellants.

      James B. McDonough, for appellees.
   Smith, J.

A complaint containing two counts was filed on December 14, 1932, against J. H. and A. M. Buckley by the City National Bank of Fort Smith, for itself individually and as agent and trustee for certain named plaintiffs, among whom were J. A. Riggs and P. L. Riggs, Ms wife, who filed an answer and cross-complaint against the bank and against I. H. Nakdimen as its president. This pleading- filed by Riggs and his wife contained allegations which will be later discussed. Testimony was heard upon the issues thus joined, and the court made certain findings, which are set out in the decree from which this appeal comes, which are supported either by the undisputed testimony or by what we conceive to be the preponderance thereof, to the following effect.

On February 14, 1931, J. H. Buckley and A. M. Buckley, who are brothers, borrowed from the City National Bank, as agent, the sum of $5,000 for the specific purpose, then made known to the bank, of buying certain property then about to be sold under a partition proceeding. The Buckleys became the purchasers of the property and obtained the loan from the bank to pay for it. The loan was evidenced by five notes, each for the sum of $1,000, all dated 2-14-1931, and all falling due 2-14-32, and to secure their payment the Buckleys executed to the bank, as agent, a deed of trust covering the property thus purchased. This deed of trust recited that it was given to secure, not only the $5,000 thus loaned, but also “any and all other indebtedness that may be due or owing to the mortgagee from the mortgagor. ’ ’ The court found that after the execution and delivery of the notes and the deed of trust securing them, the notes — -all of them- — were sold by the bank to one Hank Voile, who is now the owner of the notes, and that the bank has no interest in them.

It was further found that A. M. Buckley had acquired the interest of his brother, J. H. Buckley, in the lots, and had paid the interest on the notes and had otherwise complied with the terms of the deed of trust, and that Voile, the owner of the notes and the deed of trust, is not a party to this proceeding and is not asking the foreclosure of the deed of trust or other relief, but that the bank is asking its foreclosure to secure the “other indebtedness” due it at the time the deed of trust was executed. The court found that, when said five notes and deed of trust securing them were executed on 2-14-31, J. H. Buckley was at that time indebted to the bank in the sum of $25,900, evidenced by two notes, one for $10,000, and the other for $15,900. The court also found that when the two notes last mentioned were executed Buckley was worth a sum of money so greatly in excess thereof that security was not regarded as necessary, and none was taken, but because of the decline in values, then in progress, the bank, on August 1, 1931, took a mortgage from J. H. Buckley on a large amount of real property.

The court found that, as the bank had no interest in the five notes of J. H. and A. M. Buckley owned 'by Yolle, it had no right to foreclose the deed of trust given to secure them in satisfaction of other indebtedness due by J. H. Buckley to the bank, and that the count praying its foreclosure for that purpose should be dismissed for want of equity. There is no appeal by any one from that part of the decree.

It was further found that on August 1, 1931, J. H. Buckley, being indebted to the bank in the sum of $10,000, evidenced by ten notes each for $1,000, all dated August 1, 1931, and all due August 1, 1932, executed a mortgage to the bank upon six parcels of real estate. The bank sold all ten of these notes except note No. 7, which it still owns. Note No. 5 was sold to J. A. Biggs and his wife, and the decree ordered the foreclosure of the mortgage to enforce the payment of all ten notes. The bank had made a collection of $587.80, hereinafter referred to, and it was ordered that this sum be credited upon the ten notes ratably.

It was further decreed that the balance due the bank from J. H. Buckley, then unpaid, amounting to $18,400, but which was not specifically named in the mortgage as being secured by it “is subordinate-to the claim of the plaintiffs above named whose notes are named in the mortgage. ’ ’ In other words, the holders of the ten notes for a thousand dollars each had a lien upon the land described in the mortgage to secure their payment which was superior to any lien which the bank might have for any other debt due it, and it was provided that the owner of each of these ten notes “has the right to bid at said sale [foreclosure sale by the commissioner] and to purchase the property, and, in the event that the property is purchased by any of the plaintiffs, said plaintiff will not be required to give bond for the proportionate -amount of the said plaintiff’s judgment against said property.”

The cross-complaint filed by Riggs and wife against the bank and Nakdimen contained allegations to the following effect: They had for a number of years been depositors of the bank, and were accustomed to advise with Nakdimen about their investments, and had on a number of occasions bought notes owned by the bank on Nakdimen’s recommendation. They bought note No. 5 for $1,000, hereinabove referred to, for its face value and accrued interest, upon the representation of Nakdimen that it was secured by a first mortgage, lien upon valuable lands located in Fort Smith, when it was not in fact so secured. They allege the insufficiency of security to pay all ten of the thousand dollar notes, and they pray judgment against the bank and Nakdimen for the amount of their note No. 5.

It will be remembered that there has been no sale under the decree of foreclosure, and we do not, therefore, know to what extent, if any, the owners of note No. 5 will be damaged by reason of their purchase thereof. J. H. Buckley testified that the fair -market value of the lands described in the mortgage dated August 1, 1931, was on that date $37,000, and a real estate dealer who has no interest in the litigation placed the value on the same date at the sum of $56,600. It does not appear just when note No. 5 was sold, it being alleged that it was sold on the........................day of..............................................., 1931.

Dr. J. H. Buckley testified that he had been adjudged a bankrupt at the time his deposition was taken. He also testified that on August 1, 1931, he owned stock in a corporation then worth $16,000, which he could have sold a year earlier for $28,000, but which was worthless at the time of giving his testimony, -but he thought he was worth fifty to sixty thousand dollars net on August 1,1931.

The ten one thousand-dollar notes were written on blank forms across the back and face of which there was printed the words “Real Estate First Mortgage Coupon Note,” but these words were not written into the body of the note. J. A. Riggs testified that he supposed the mortgage was a first lien upon all the lands which it described, but he did not testify that Nakdimen made that representation. He did testify that Nakdimen “told me there was a mortgage on all Dr. Buckley’s property, and I accepted it on that recommendation.”

Riggs made no inquiry or investigation as to whether the mortgage was a first lien on all the property which it described until after Buckley had been adjudged a bankrupt, when he “ran the records,” as he expressed it, and found that upon parcel No. 4 of the land there was a first mortgage to Charlie Jewett, securing a loan-of $10,500, and that the land had been sold at the foreclosure sale of that mortgage to Jewett for $5,000, and that as to parcel No. 6 Buckley owned only an undivided one-fifth interest, which was sold with the other interests at a partition sale, and'that Buckley’s interest brought at this sale only $587.80. This is the sum above referred to which the court ordered credited upon the ten notes ratably.

In testifying about the mortgaged property and its value, the witnesses referred to the various lots as parcels Nos. 1, 2, 3, 4, 5 and 6, and we shall employ the same descriptions. Parcel No. 6 was not valued by Dr. Buckley in his estimates of value, but he placed a value of $14,000 on parcel No. 4, which, if deducted from his total estimate, would leave a remaining value of $23,000, and witness Little valued parcels 4 and 6 at $35,000, and, if these values are deducted from his total estimate, $21,600 remains.

It is not contended that Nakdimen made any specific representation as to the extent of Buckley’s interest in any of the parcels of land, but only that he represented that the mortgage covered all of Dr. J. H. Buckley’s land. This representation was not false, but was true. Nor is it contended that Nakdimen made any representation that the mortgage constituted a first lien on all the parcels of land which it described. Riggs’ impression that it did appears to have been based upon the printed words appearing upon the face and back of the note reading “Real Estate First Mortgage Coupon Note.”

Riggs and his wife do not own any of the five notes referred to in count No. 1 of the original complaint, and are not, therefore, interested in that mortgage. But the circumstance of. its execution does tend to show the good faith of the bank and its president, for that loan was made only about six months before the mortgage dated August 1, 1931, was taken, and no security for the five thousand dollar loan was given except only a mortgage upon the land which that money was borrowed to buy.

In this connection, it may be said that, while the adjudication of Dr. J. H. Buckley to be a bankrupt is conclusive evidence of his insolvency, it does not follow that Riggs and his wife will sustain a loss by reason of their purchase of the note. It was decreed that the mortgage of August 1, 1931, secured first the ten notes of a thousand dollars each, and that any security for the remaining debt due by Buckley to the. bank was subordinate thereto, and the bank has not appealed from that decree, and if the property shall sell at the commissioner’s sale for even half what its market value was represented to be on August 1, 1931, all ten of the thousand dollar notes will be paid in full. There is therefore no showing that the note owned by Riggs and his wife is worthless, or that it is worth less than its face value, and for this reason, if for no other, the court was justified in dismissing —as it did — the cross-complaint of Riggs and his wife against the'bank and Nakdimen as being without equity. May v. Dyer, 57 Ark. 441, 21 S. W. 1064.

Moreover, we do not think there was shown to exist any such confidential relation between Riggs and Nakdimen as the representative of the bank which would justify Riggs in failing to exercise an intelligent judgment in purchasing the note. Cherry v. Brizzolara, 89 Ark. 309, 116 S. W. 668. A reading of the note itself would have shown that it did not recite that it was secured by a first mortgage on all the lands described in the mortgage. On the contrary, the recital of the note in this respect, which appears just above the signature of the makers, is that “This note is secured by property in the city of Fort Smith,” which recital was true. Nakdimen was not asked and did not state that the mortgage here sought to be foreclosed was a first mortgage upon all of the lands described therein, but stated only that the mortgage described all the lands which Dr. Buckley owned, and that statement was not shown’ to be -false.

There is no contention that there was any guaranty of the payment of the note. On the contrary, when the note was sold to Riggs and his wife, it was indorsed as being transferred “without recourse.”

It appears to be a fact that the mortgage was a first lien upon five of the six parcels of land, and this lien, under the decree of the court, secures first the ten one thousand dollar notes, and none of the proceeds of the foreclosure sale may be credited to the other indebtedness due the bank until these notes have been first paid.

We find no testimony in the record to sustain an action for deceit by showing a lack of good faith and the making of false and fraudulent representations, and the decree of the court must therefore be affirmed, and it is so ordered.


author: Humphreys, J.

text:
    Boling v. State.
    Crim. 3900
    Opinion delivered October 8, 1934.

      Oscar Fendler and W. A. Jackson, for appellant.

      Sal L. Norwood, Attorney General, and Pat Mehaffy, Assistant, for appellee.
   Humphreys, J.

Appellant was indicted for murder in the second degree in the Chickasawba district of Mississippi County for shooting and killing Paul Cody, and, upon a trial of the cause, was convicted of voluntary manslaughter, and adjudged to serve a term of four and one-half years in the State penitentiary, from which judgment he has duly prosecuted an appeal to this court. -

The only assignment of error insisted upon by appellant for a reversal of the judgment is that the court permitted the jury to separate for the night after the cause had been submitted to them. Upon the conclusion of the arguments, the court ordered that the jury be kept together, over the objection of appellant, who had filed a motion requesting that they be permitted to separate. The sheriff in charge of the jury reported to the court that it was impossible to obtain accommodations over night for the jury in a body; whereupon, by and with the consent of Mr. Cooper, one of appellant’s attorneys of record, an order was made permitting them to separate. The appellant, who was out on bond, was not present when this order was made. Some three hours after the jury had rendered its verdict of conviction, the appellant entered his objections and exceptions of record to the order of the court allowing the jury to separate the night before.

As authority for his contention that the court committed reversible error in allowing the jury to separate for the night, appellant cites § 3136 of Crawford & Moses’ Digest, which reads as follows: “If the indictment be for a felony, the defendant must be present during the trial. If he escapes from custody after the trial has commenced, or if on bail shall absent himself during the trial, the trial may either be stopped or progress to a verdict, at the discretion of the prosecuting attorney, bul judgment shall not be rendered until the presence of the defendant is obtained.”

The statute, of course, was passed for the benefit off defendants, but there is nothing in the statute preventing a defendant from waiving his presence when substantive steps are taken in the progress of his case. When one of appellant’s attorneys consented to the order for the separation of the jury over night, it, in effect, was a waiver of appellant’s presence. The record does not show to the contrary, so the presumption must be indulged that the attorney had the right to waive appellant’s presence. Scruggs v. State, 131 Ark. 320, 198 S. W. 694.

No error appearing, the judgment is affirmed.


text:
    Louisiana Oil Refining Corporation v. Scroggins.
    4-3547
    Opinion delivered October 8, 1934.

      Ingram & Moher and Buzbee, Harrison, Buzbee <& Wright, for appellant.

      M. F. Elms, for appellee.
   Butler, J.

This suit was begun in the justice of peace court on the account and affidavit filed by Everett Scroggins for balance of wages alleged to be due him by the Louisiana Oil Refining Corporation. A written an-' swer was filed to the affidavit in which the corporation denied that it was indebted in the sum claimed or in any sum, or that the plaintiff was ever employed by it. The answer averred that the plaintiff was employed as a track driver by one A. R. McKewen, that the corporation was not a party to this contract of employment, and that plaintiff had never performed any services for it.

The ease was tried anew in the circuit court on appeal from the judgment rendered in the justice court, which, trial resulted in a verdict and judgment in favor of the plaintiff. From that judgment is this appeal.

The amount sued for is not in dispute, hut on the trial of the case it developed that the plaintiff based his right to recover from the defendant corporation on two propositions; first, that he was an employee of the corporation and that the amount claimed was for unpaid wages, and, second, that if he was not an employee of the corporation, but in fact the employee of McKewen, the defendant was nevertheless liable because it had agreed to pay for the services then rendered and to be rendered by plaintiff. The defense interposed was, as stated in the answer filed in the justice court, a denial that plaintiff was an employee of the defendant and that defendant was not bound by any promise to pay the debt because its agent who made the alleged promise had no authority to act for and bind the defendant in that regard, and that, even though the agent might have had such authority, the oral agreement was void and in violation of the statute of frauds.

On the evidence adduced, these issues were submitted to the jury on instructions, the correctness of which is not challenged, but we are asked to reverse the judgment and dismiss the case on the ground that the court erred in failing to direct a verdict for the defendant at its request. The contention is that, if an agreement was made by a representative of the appellant to pay the salary due appellee or to thereafter become due, such agreement was required to be in writing by the statute of frauds, and, being oral, is void; that the evidence fails to show that there was in fact any such promise.

Appellant relies on ■% 4862, Crawford & Moses’ Digest, which provides that no action shall be brought to charge any person upon any special promise to answer for the debt of another unless the agreement or promise shall he made in writing, and signed by the party to be charged or some person authorized by him. Zimmerman v. Holt, 102 Ark. 407, 144 S. W. 222; Patten v. Robbs, 175 Ark. 784, 300 S. W. 388. The rule announced in these cases is not different from that early announced by this court in Kurtz v. Adams, 12 Ark. 174, which rule has been consistently followed in subsequent cases. Chapline v. Atkinson, 45 Ark. 67; Gale v. Harp, 64 Ark. 462, 43 S. W. 144; Jonesboro Hdw. Co. v. Western Tie Co., 134 Ark. 543, 204 S. W. 418; Becker, etc., Co. v. Parker Hdw. Co., 146 Ark. 539, 226 S. W. 177; Oil City Iron Works v. Bradley, 171 Ark. 45, 283 S. W. 362; Lesser-Goldman Cotton Co. v. Merchants’ & Planters’ Bank, 182 Ark. 150, 30 S. W. (2d) 215. The principle announced in those cases may be thus stated: Where there is a primary debt which has been antecedently contracted, the promise to pay such debt is original when based on a new consideration moving to the promisor and beneficial to him. When such is the case, the promisor comes under an independent duty of payment, irrespective of the liability of the principal debtor. This rule has been applied in a case where one agreed, in consideration of work to be done, for another to pay the promisee what was then due under her employment by the person for whom she had been working and she accepted the promisor as her debtor. Jewett v. Warriner, 237 Mass. 36, 129 N. E. 296. The rule has also been applied in a case where the defendant, being interested in effecting’ the consolidation of two newspapers, verbally agreed to pay indebtedness for printing done by the plaintiff for one of the papers as well as future indebtedness if plaintiff continued printing. Washington Printing Co. v. Osner, 99 Wash. 537, 169 Pac. 988.

In Oil City Iron Works v. Bradley, supra, the plaintiffs were employed by R. C. Houston to drill an oil well. Houston fell behind in the payment of their wages and plaintiffs notified him that they were going to quit work. An agent of the iron works told them that said works had sold Houston the drilling rig for which he owed a balance on the purchase price, and that,- if they would continue work and finish the well, the Iron Works would see that they were paid for their labor. It was contended, in a suit brought by plaintiffs against the Iron Works, that the proanise, being to pay the debt of another and verbal, was void under the statute, of frauds. The court held that these facts were sufficient to take the promise from within the inhibition of the statute, and warranted the jury in finding that the Iron Works was primarily to be benefited by plaintiffs’ continuing in the work of drilling the well and brought the case within the principles laid down in the decisions heretofore cited.

In the case at bar, there was testimony to the effect that McKewen was the general agent of the corporation which was engaged in selling its products, consisting of gasoline, motor oil, etc., in the city of Stuttgart. The corporation owned the station and retained title to all products handled by it until sold and delivered. For his services in the general supervision of the work, McKewen was to receive a certain commission out of which he was to pay his helpers. Scroggins, one of the helpers, was an experienced salesman and not only drove the truck which delivered the oil and gasoline, but it was also his duty to make sales of such products on a credit or for cash and to collect therefor. He had been engaged in that service at Stuttgart for two years or more. When sales were made on credit, he would deliver the invoice of the corporation, and, when collections were made, he would take checks made payable to the corporation and deliver them to McKewen. McKewen would indorse the name of the corporation upon these checks and deliver them to the bank. Through a period of time McKewen had been falling behind in paying his employees, and was due Scroggins and another employee a considerable sum for past-due wages. Conditions became such that these two visited the division manager of the corporation at his office, in Little Rock, who, after some conversations, the details of which are not given in the testimony, agreed that, if they would continue to work, he would see that they were paid. He told them not to take any action until the Monday following when the matter would be straightened out. On that day an auditor of the corporation went to Stuttgart and took up the matter of adjustment of the balances due the employees and found the sum of $158.05 due them. He told them to “go on back to work, and everything would be fixed up all right. ’ ’ They continued to work until McKewen was let out by the corporation and a,temporary agent was installed in his place, under whom they continued to work for a time.

Under the circumstances surrounding this transaction, there are sufficient facts to justify a finding that it was to the interest of the corporation for Scroggins to continue selling the products of the corporation and to collect therefor, for by this the corporation would be directly benefited, and the promise therefore not void as a collateral undertaking but enforceable as a primary obligation.

It is next argued by appellant that there was no testimony to the effect that appellant ever agreed to pay the back salary of the appellee Scroggins, or any future salary he might earn. In order to constitute a promise, no specific words are required. It is merely a declaration of an intention to do or to forbear from doing at the request of, or for the use of, another, and may be inferred without the use of the word “promise.” The particular language which was used by the agent as an inducement for Scroggins to return to work is that “he would see they got their money.” One of the principal definitions of the word “see” is “to bring about — to effect,” and in ordinary conversation it is used as an equivalent of the word ‘ ‘ guarantee. ’ ’ In this sense it was used by the agent of the Oil City Iron Works (Oil City Iron Works v. Bradley, supra) when he told the plaintiffs that the Iron Works “would see they got paid for their labor.”

In Housely v. Strawn Merc. Co., (Tex. Civ. App.) 291 S. W. 864, and in Lesser-Goldman Cotton Co. v. Merchants’ & Planters’ Bank, supra, it was held that an oral promise to “guarantee” was equivalent to a promise to pay a debt. Our conclusion is that there was sufficient evidence to establish a promise on the part of the agent of the corporation to pay Scroggins his wages, and that under the authority of the cases cited there was a sufficient consideration for tlie promise to bring it from within the inhibition of the statute.

The judgment of the trial court will therefore be affirmed.