text:
    Deason & Keith v. Rock.
    Opinion delivered June 27, 1921.
    Appeal and error — reversal of chancery case — new trial.' — -Unless a direction for a new trial is specifically made upon a part or all of the issues involved, a direction for further proceedings according to law and not inconsistent with the opinion means nothing more than to render a decree in accordance with the record made.
    Appeal from Benton Chancery Court; B. F. McMa-han, Chancellor;
    affirmed.

      SulUns & Ivie, for appellants.
    The mandate in this case was filed in the Benton Chancery Court, and appellees filed motion for judgment. upon the mandate alone in the sum of $283.50 with interest, to which motion appellants filed a response asking for further hearing and such proceedings as might be necessary in determining the rights of the parties which were not inconsistent with the mandate of this court, and the court sustained a demurrer of appellees to said response and rendered judgment for $283.50 with interest. There is only one question at issue on this appeal, and that is, whether or not, under the opinion and mandate in the former appeal, the appellee was entitled to judgment for the amount sued for, or whether the cause was remanded for further proceedings, in order for the chancery court to ascertain what the loss or damage the appellee had sustained. The latter was the clear intention of tills court in remanding the cause. 225 S. W. 317.
    Under the order and opinion in the former case the difference in the contract price and the resale of the 105 barrels of flour and feed sued for was only a. part of the car of flour ordered or contracted for, and this fact should he taken into consideration in ascertaining the loss suffered by appellees, if any, by the breach of the contract by appellants.
    Where a cause is reversed and remanded for further proceedings, the lower court can only carry into effect the mandate of this court, so far as its directions extend, but the chancery court is left free to make any orders or directions in the progress of the case, not inconsistent with the decision of this court, as to any question not presented .or settled by such decision. 16 Ark. 181. Where the remanding of a cause for further proceedings is general and no specific directions are made by this court to the lower court in the mandate, the lower court may proceed further with any matter in the cause which was not inconsistent with the opinion of the court on appeal. 54 Ark. 278. Where the record shows that the court below did not dispose of an issue raised by the complaint, and there is no showing that it was abandoned by plaintiff, who on other issues obtained judgment which was not sustained on appeal, the cause will bé reversed, not with directions to dismiss the complaint, but to proceed, if plaintiff so desires, to pass upon the undetermined issues. 76 Ark. 162. A chancery case will not be affirmed on appeal for insufficiency of the evidence if it appears that the case was not fully developed on account of an error of the court or mistake of the party when the interest of justice requires that the whole case be more fully developed. 75 Ark. 415; 77 Id. 156; 82 Id. 51; 102; Id. 542; 88 Id. 318. Where, on account of the court’s misconception of the law, a chancery case is not fully developed, on reversing it this court will remand with directions to reopen the case and hear testimony. 88 Ark. 318.

      While, ordinarily, chancery cases are tried de novo, yet, where the chancellor has decided a case upon a question of law, upon which he is hound to he in error and leaves undecided questions of fact, this court should remand the case upon such issues of facts. 99 Ark. 500; 110 Id. 39. Nothing in our Code prohibits this court from directing a new trial in a chancery case as well as in a court of law. 135 Ark. 201. It is not the practice of this court to pass upon the questions of damages, where the lower court made no finding on the question. 136 Ark. 63. When a cause is reversed and remanded “for further proceedings,” this is a remand for further proceedings or a new trial on the issues presented. 122 Ark. 500. The mandate here was general, without any specific directions to the lower court. The opinion of this court upon the facts is not binding or final where the case is remanded for further proceedings. 52 Ark. 473; 124 Id. 545; 188 S. W. Rep. 310.
    The learned chancellor misinterpreted' the former opinion and erred in refusing to proceed further with the case and in rendering judgment for the amount sued for upon the mándate of the Supreme Cuort. 52 Ark. 473; 124 Id. 545; 18i8 S. W. 310.

      McGill & McGill, for appellee.
    It was the duty of the defendants to make all the defenses they had, and his denials should be specific, and where a sentence or paragraph in a complaint contains several facts alleged conjunctively, it is not sufficient to make a denial following the language of the complaint, as it can not be determined which specific allegation is intended to be put in issue, and such denial will put in issue only those allegations that are necessary to sustain the cause of action and those that may be covered by the proof. 31 Cyc. 205; 72 Ark. 62; 84 Id. 409; 120 Id. 603-4.
    This court in its opinion has settled all questions raised, and if, through negligence, ignorance or carelessness, one seeking affirmative relief, one has neglected to set up his defenses or introduce evidence to support them, the question can not be raised here again. 16 Ark. 168; ■ lb. 181; 45 Id. 177; 54 Id. 273; 76 Id. 162; 77 Id. 156; 88 Id. 318; 94 Id. 329; 98 Id. 595; 110 Id. 39; 122 Id. 491; 135 Id. 201; 142 Id. 339; 75 Id. 415; 102 Id. 543.
    The cases in 80 Ark. 563 and 136 Id. 63 are not in point.
   Humphreys, J.

This is the second appeal in this case. On the first appeal, the decree, dismissing the bill of appellees against appellants, was reversed and the cause remanded for further proceedings, according to law and not inconsistent with the opinion. That case was styled “Rock et al. v. Deason & Keith,” and is reported in 146 Ark. 124. Upon remand of the cause to the Benton Chancery Court, appellants on former appeal, who are appellees herein, moved for a judgment of $283.50. A response to the motion for judgment was filed by appellees on former appeal, who are appellants herein, denying that appellants herein were entitled -to a judgment under the mandate of the Supreme Court on former appeal, but, on the contrary, alleging that the mandate, in substance, directed a new trial of the cause. A demurrer was filed to the response, and, upon the issue joined, the chancery court held that the direction was for a judgment of $283.50, upon the mandate, as a loss 'Sustained by breach of the contract which formed the basis of the original suit. In accordance with this interpretation of the mandate, the chancery court rendered a decree against appellants herein for said sum, together with interest and costs. From that decree an appeal has been duly prosecuted to this court.’ New trials are seldom directed by this court upon a reversal of chancery decrees; and, when new trials upon the whole case, or any part thereof, are intended, it has become the established practice of this court, in equity cases, to give special directions to that effect. On the first appeal in the case of Rushing v. Horner, 130 Ark. 21, the case was reversed with directions “for a new trial with the privilege to either party to make further proof.” In discussing what was meant by that' direction on the second appeal to the Supreme Court, this court said, in the case of Rushing v. Horner, 130 Ark. 201, that “when a cause is remanded broadly for a new trial, all the issues in the case are open for trial anew the same as if there had been no trial. On a.reversal of a cause by this court, it seldom occurs that the same is remanded for a new trial; but when such is the direction by this court, then the case stands for trial precisely the same as if there had never been any trial.” It follows, therefore, from this expression of the court that, unless the direction for a new trial is specifically made upon a part or all of the issues involved, a direction for further proceedings according to law and not inconsistent with the opinion can mean nothing more than to render a decree in accordance with the record made. It was said in the case of Gaither v. Campbell, 94 Ark. 329, that, upon a reversal of a chancery decree with special directions, which was followed by the words: “And for further proceedings to he therein had according to the principles of equity and not inconsistent with the opinion herein delivered,”! these words added nothing in the way of directions to the special directions given.

We think a direction to a trial court, upon reversal and remand of a chancery decree for further proceedings according to law and not inconsistent with the opinion means nothing more than to render a decree in accordance with the record made. In the instant case, upon motion, a decree was rendered upon the remand without reference to the record made, hut no prejudice resulted to appellant on this account,, for, under the issues and evidence in the case, the only evidence adduced showed a breach of the contract for the sale and purchase of 105 barrels of flour and a resultant damage to appellee in the sum of $283.50.

The decree rendered is responsive to the record made, and is therefore affirmed.


source: Caselaw Access Project

author: McCulloch, C. J.

license: Public Domain

text:
    Webb v. Shea.
    Opinion delivered July 4, 1921.
    1. TRUSTS — GOOD FAITH REQUIRED OF trustees. — Where defendant was not only one of the promoters of an unincorporated association, but also was a trustee or the shareholders and was designated in their advertising matter as president of the company, he thereby essumed a relation of trust and confidence toward those who were invited to join in the enterprise by purchasing stock, and that relation required good faith on his part in making full disclosure of all matters that might affect the interests which they were purchasing.
    2. Trusts: — sale by trustee. — The existence of a trust relation does not preclude the trustee from s~!ling property to others with whom he is interested, but such relation does call for the utmost good faith, and the sale is voidable where any advantage is taken or there is a failure to disclose the fact that the person so making the sale is interested in the transaction.
    3. Trusts — sale by trustee--right of cestui que trust to rescind. —-Where a sale of an oil lease by trustees of an unin cor oorated association is void because of their failure to disclose to the other members of the association the fact that they were financially interested in such sale, the contract being voidable at the election of the stockholders, they could elect u> ko?o the property and sue for the excessive profits derived by such trustees in the transfer of the lease, or they could rescind f-e contract for fraud end recover the price paid for the stock.
    Appeal from St. Francis Cliancery Court; A. L. Hutchins, Chancellor;
    affirmed.

      8. S. Hargraves, for appellant.
    1. The contention of plaintiffs that defendants concealed form them the fact that Webb was interested in the oil lease as owner and that he sold same to the Rainbow Division Oil Company at a profit is not sustained by the proof. The transfer and assignment of the lease was placed in escrow in a hank at Little Rock, and any prospective shareholder might have examined it. The declaration of trust showed that Webb was one of the lessors. There was nothing concealed. See 1 Thompson, Corporations, §§ 459, 460,

      2. Where a secret profit is wrongfully obtained from a corporation by one sustaining’ a fiduciary relation to it, the measure of recovery is the amount of money lie made as a profit in the transaction. 71 Ark. 283. The chancellor erred in requiring appellant to repay to the company all of the purchase, price paid by the company for the lease.

      Cnl L. Pearce, Bruncliclge & Neelly; Mann, Bu,ssey & Maim, and Coleman, Robinson & House, for appellees.
    1. Promoters are required to make a full disclosure of all material facts, and are not permitted to make a secret profit. 71 Ark. 281; 331 Ark. 386; 176 U. S. 204; 188 Mass. 315; 149 Pac. 595; 16 S. W. 390; 35 Pae. 444; 18 L. E. A. (N. S.) 1106; 32 Pac. 600; 72 N. W. 745; 35 Pac. 444.
    It is not true that the trustees, directors and officers of the’company were apprised of the facts and dealt with a full knowledge of them. Defendants fraudulently misrepresented facts to them.
    2. When promoters organize a company or corporation for the express purpose of taking over property owned by the promoters, the law requires them to make a full disclosure of material facts, and to create an independent board that will be in a position to deal with the promoters at arms’ length. 1 Fletcher, Cyc. Corp., ]). 233; 7 E. C. L. 70; Thompson on Corp., § 457; 3 App. Cas. H. L. 1218.
   McCulloch, C. J.

This is an action instituted by appellee against appellant D. C. AVebb and certain parties to cancel the transfer of an oil lease and to recover the amount paid by appellees for shares in an unincorporated association organized for the purpose of producing and selling oil. Eugene AVilliams and E. E. Priddy were made defendants, but they were nonresidents of the State, and there was no service on them, so the cause proceeded against appellant D. C. AVebb alone. Appellant resides in St. Francis County, Arkansas, and Priddy and Williams live in Memphis, Tennessee, where they were copartners in the business of buying and selling bonds, and they bad a branch office in Little Bock.

Appellant and Priddy and Williams purchased an oil lease on ten acres of land in what is known as the Burk-Burnett oil fields in the State of Texas, paying therefor the sum of $20,000 in cash, each of the parties contributing one-third. They conceived the plan of organizing an association of some kind and selling the lease to such association and then selling sufficient stock therein to raise funds to pay for the lease. Pursuant to this plan, the above, named parties interested R. R. Kelly and W. S. Madden in the plan which was carried out by a written contract creating a common-law trust whereby appellant, Kelly and Madden, were made trustees for all persons who should acquire shares in the association. The association was given the name of Rainbow Division Oil Company, but it ^as never incorporated. It was agreed that appellant, Priddy and Williams should sell the lease to the association for the price of $95,000, of which $20,000 was to be paid in shares in the association and the remainder in cash. It was further agreed that the transfer of the lease would be placed in escrow in one of the banks of Little Rock for delivery upon the completion of the payment of the price. Pursuant to this plan, the lease propery assigned was so deposited, and the trustees proceeded to sell stock in the association, employing for that purpose certain agents and solicitors, and they paid a commission of fifteen per centum on the sales. The trustees adopted a rule or resolution, which was pursuant to the agreement with the holders of the lease, that 80 per cent, of the proceeds of the sale of stock should be paid over to the bank on the price of the lease and that 15 per cent, should be paid to the agents and solicitors as commissions on sales of stock and the other 5 per cent, should be used in paying overhead expenses, such as office rent and other like expenses. Stock was sold. aggregating $89,000. and these sales were made by various solicitors and the parties interested, including appellant himself, and also one of the appellees. A little later appellees T. A. Shea and B. W. Moore were elected trustees by the other three, but the testimony shows that they did not taken any action in the management of the concern except that they sold some of the stock to other persons. Out of the proceeds of the sale of stock $70,400 was paid to appellant and Priddy and Williams on the price of the lease and commissions in the sum of about $13,000 were paid. Appellees are all shareholders in the association and joined in this suit as such, and appellees, Shea and Moore also sue as trustees of the association.

The charge in the complaint is that appellant concealed from the shareholders the fact that he was interested in the sale of the lease to the association; that’ the lease was practically worthless, and that the value, thereof was grossly misrepresented by the trustees, including appellant, in selling stock in the association and advertising the stock for sale, and that the sale of the stock under those circumstances constituted a fraud,, for which a court of equity should grant relief by canceling the transfer of the lease and by restoring the consideration paid for the stock. We are of the opinion that the charge in complaint is established by the evidence and that appellees are entitled to the relief which the court granted. The testimony warrants the finding that, at the time of the purchase of the lease by appellant and Priddy and Williams in May, 1919, and the resale thereof shortly thereafter to the association, the lease was not worth more than the amount appellant and his associates paid for it, which was $20,000, and that the price at which it was resold to the association was grossly exaggerated, and that at the time of the institution of this action the lease was practically worthless. The testimony warrants the conclusion that these parties, i. e., appellant and his associates, Priddy and Williams, conceived the plan of unloading this lease upon the association for the purpose of obtaining a grossly exaggerated price, and that appellant failed to disclose the fact to the public that he was interested in the sale of the lease. They adopted a very pretentious name, .and advertised it extensively in the

newspapers as being’ a good investment, and represented the fact to be that the lease was worth a great deal more than the association had agreed to pay for it. We think that the testimony was, as before stated, sufficient to warrant a finding that the conduct of appellant and his associates was fraudulent, and that it was calculated to deceive and did deceive the persons who purchased shares in the association. Appellant was not only one of the promoters of the association, but he became a trustee for all the shareholders and was designated on the literature published at large as president of the company. He thereby assumed a relation of trust and confidence toward those who were invited to join in the enterprise by purchasing stock, and that relation required good faith on his part in making full disclosure to the shareholders of all matters that might affect their several interests which they were purchasing. Tegarden v. Big Star Zinc Co., 71 Ark. 281; Porter v. Morris, 131 Ark. 386; Old Dominion Co. v. Bigelow, 188 Mass. 315; Dickerman v. Northern Trust Co., 176 U. S. 204; Erlander v. New Sombrero Phosphate Co., 3 App. Cas. H. L. 1218, 36 Law Times Rep. 222. Such a relation does not absolutely preclude a person who occupies it from selling property to others with whom he is interested, but his relation does call for the utmost good faith, and the sale is voidable where any advantage is taken or where there is a failure to disclose the fact that the person so making the sale is interested in the transaction. The same rule applies as in the case of a corporation. 1 Thompson on Corporations, § 457; 7 Ruling Case Law, 70.

It is also contended that the relief granted by the chancery court was erroneous in its extent, for at most it should only have been granted against appellant for the amount of profit which he is alleged to have secretly obtained. The contract being voidable at the election of the shareholders, they might have elected to keep the property and sue for the recovery of the excessive profits derived by appellant and his associates in the transfer of the lease, but they had a right to rescind the contract for fraud and recover the price paid for the stock. In other words, they had a right to set aside the transfer of the lease, being appellant and his associates to whom in the purchase of stock.

There was an expense of about $900 for erecting a derrick on the land, and it is also argued that this amount should have been deducted from the amount recovered. Since the lease was cancelled, the benefit, if any, from the erection of the derrick on the land will inure to the holder of the lease, being appellant and his associates to whom the lease reverts upon the cancellation of the transfer to the association. Our conclusion is, therefore, that the chancellor was correct in his decree, and the same is affirmed.


author: Wood, J.

text:
    Flanagan v. Ray.
    Opinion delivered July 4, 1921.
    1. Pleading — sufficiency of complaint — description of land.— A complaint seeking the recovery of land which describes it as the west part of the northwest fractional quarter of a certain section is not sufficient to identify the land.
    2. Limitation of actions — demurrer raising defense at law.— As a rule, the statute of limitations can not he taken advantage of by a demurrer to the complaint in an action at law, unless the complaint shows that a sufficient time had elapsed to bar the action and the nonexistence of any ground of avoidance.
    3. Limitation of actions — demurrer raising defense in equity.— A defense of the statute of limitations may he interposed in equity by demurrer where the cause of action appears upon the face of the complaint to he barred and does not disclose facts sufficient to remove such bar.
    4. Judgment — description of land. — Where a decree contained an incorrect general description of certain land, followed by a correct, specific description, the particular description restrains and limits the general description.
    Appeal from Sebastian Chancery Court, Greenwood District; J. V. Bourland, Chancellor;
    affirmed,

      J. E. London, for appellant,

      1. It was error to transfer the cause to chancery. Plaintiff (appellant) set up a title in ejectment. No equitable defense was set up.
    2. It was error to refuse to make McFarlane a party to the action. Defendant made the issue turn upon transactions with McFarlane, who was an indispensable party. See 49 Ark. 87; Kirby’s Dig., § 600; 74 Ark. 414; 86 Ark. 304.
    3. The judgment relied on is invalid for failure to show that defendant therein (appellant) was summoned or was present.
    4. The judgment relied on was satisfied. The court erred in holding that the matter was res judicata.

    5. We ask that defendant be required to pay $500 with interest, and restored to his home, or that the cause be transferred to a master with instructions to state an account, making McFarlane a party, and to treat the defendants as mortgagees in possession.
    Appellee, pro se.

    1. Appellant waived objection to the transfer to equity. 83 Ark. 1; 80 Ark. 65. An action at law may be transferred to equity because of the equitable nature of the defense. 91 Ark. 464; Ward v. Blythe, 92 Ark. 208. No exception was saved to the order of transfer.
    2. The demurrer to the complaint should have been sustained, as the description of the land was insufficient. 80 Ark. 458. Also because the complaint shows defendant’s adverse possession for the past eight years. 46 Ark. 438; 39 Ark. 158. Under Crawford & Moses’ Digest, § 6946, the action to set aside a judicial sale should be brought within five years.
    3. The plea of res judicata was properly sustained. 79 Ark. 210.
   Wood, J.

This action was instituted by the appellant against the appellee in the Sebastian Circuit Court. The appellant alleged that he was the owner and entitled to the possession of the west part of section 30, township 8 north, range 30 west, in Sebastian County, Arkansas, containing 37 2/3 acres. Appellant deraigned title through Abram Smith and his wife, who acquired title through Albert Schular. The deed, which was exhibited with his complaint, described the land as follows: West part of the northwest fractional quarter of section 30, township 8 north, range 30 west, containing 37.94 acres, more-or less. Appellant alleged that the appellee was in the wrongful possession of the land, and had been for more than four years, to appellant’s damage in the sum of $500.00. The prayer was for possession and damages in that sum.

The appellee moved to transfer the cause to the chancery court. He alleged in his motion that the present suit was the third for the determination of the title, and the right to possession of the land described in appellant’s complaint; that the two former suits were between the appellant and E. W. McFarlane; that the ap-pellee deraigned title through McFarlane, who acquired title through a decree and sale of the land by the chancery court. ;

The appellant replied to the motion to transfer and alleged that this was an action in ejectment, and that the appellant must recover upon the strength of his own title, and that the motion to transfer does not set out any equitable defense; that the allegation that the suit had been before determined in the chancery court, if true, would not entitle the appellee to attack a decree or judgment of the chancery court in this action; that the issue here raised by the plaintiff’s complaint was purely one at law, which, on the issues of fact, called for the intervention of a jury. There is no record entry showing that the cause was formally transferred to the chancery court; but there is an entry showing that a “reply and cross complaint” was filed in the chancery court, and the cause proceeded to a decree in that court, from which comes this appeal.

We must presume, therefore, that the cause was duly transferred to the chancery court, and, in the absence of any showing in this record that the appellant excepted to the ruling of the court in transferring the cause, we must assume that he waived any objections that he might have to such transfer. The so-called ‘‘reply and cross complaint,” which in reality is but an amended complaint, -alleged in substance that the appellant executed a note to John H. Holland for the sum of $500; that a mortgage on the land was prepared and given appellant to execute, but it is not true that the mortgage executed by appellant was on the land involved in this suit, as the record will show; that of the proceedings had in the chancery court appellant’s information is of the most meager kind,but he is inf ormed that a judgment was entered against him in favor of E. W. McFar-lane; that an execution was issued and levied on the lands described in the decree, which was the east part of the northwest fractional quarter of section 30, township 8 north, range 30 west, in Sebastian County; that these lands were sold; that a writ of possession was issued by the clerk without notice to the appellant and without an order of the court, and that under this writ of possession McFarlane wrongfully took possession, not of the land above described in the decree, but of the west part of the northwest fractional quarter of section 30, township 8 north, range 30 west, in Sebastian County, and also of the southeast quarter of northwest quarter of section 29, township 8 north, range 30 west, in Sebastian Coupty; that McFarlane took possession of the lands and sold them to one Pittman and Pittman sold them to- the ap-pellee, Eay. Appellant reiterated his source of title to the first-named tract, and also deraigned title to the last-named tract through a deed from F. E. Pence and wife. Appellant alleged that the decree and conveyance thereunder did not have the effect of divesting appellant of title to the lands. The appellant then alleged that the land had. been in the wrongful possession of the appellee and those under whom he claimed for the past eight years; that the rental value on the land in section 30 was $150 per year, or a total of $1,200 for the eight years, and the rental value of the land in section 29 was $100 per year, or $800 for the eight years. The appellant concluded his “reply and cross complaint” with a prayer for an accounting, and that the appellee be treated as a mortgagee in possession; that appellant have judgment for possession, for damages, and that the commissioner ’s deed be cancelled aS a cloud on his title. The appellant then asked that R. W. McFarlane be made a party defendant.

The appellee' filed a general demurrer to the effect that the complaint did not state facts sufficient to constitute a cause of action, and also an answer. In his answer he admitted that McFarlane was in possession of the land in controversy, and had sold the same to Pittman,, and that Pittman sold the same to the appellee. He alleged that he had been in peaceable, notorious, continuous and adverse possession of the land described in the appellant’s complaint for more than eight years, and had paid the taxes thereon. He denied all the other allegations of the complaint and set up that he w'as a bona fide purchaser of the lands under the decree of the chancery court of Sebastian County, which had never been appealed from; that the appellee filed a bill of review seeking to set aside the decree and the- issue was decided against the appellant. Appellee filed as an exhibit to his answer the decree, of the chancery court, entered on the first day of July, 1910, which showed a decree in favor of R. W. McFarlane against the appellant, awarding him the possession of the land described therein as follows: (<•**# Also the fractional east part of the northwest quarter of section 30, township 8 north, range 30 west, containing 37.67 acres, and more particularly described as follows: Beginning in section thirty, township eight north, range thirty west, at a corner 23 chains west of center of section thirty * * *, thence running west * * * 2.00 chains to the east bank of Vache Grasse Creek, thence north 47% degrees west 6.00 chains; thence north 48 degrees west 7.00 chains; thence north 77% degrees west 11.10 chains; thence north 3 degrees west 6.00 chains; thence north 59 degrees east 5.00 chains; thence north. 68% degrees east 6.50 chains; thence north 77 degrees east 2.50 chains; thence north 57% degrees east 10.00 chains; thence north 63 degrees east 5.18% chains * * * thence running sonth 27.78 chains to the point of beginning, being all the land owned by E. T. Flanagan in said quarter section.”

The appellant moved to strike the answer from the files because it was not filed in the time' allowed by law and because it did not state a defense to the allegations of the appellant’s cross-complaint and set up new matter. The court overruled this motion, to which the appellant excepted. Appellant offered to testify that property of the aggregate value of $1,240, according to an itemized list, was taken from him by the sheriff under a process at the instance of McFarlane; that certain parties had paid McFarlane the sum of $500 for the appellant; that the rents on the lands taken from him under the decree of the chancery court were worth $2,000, and that a. certain tenant had paid McFarlane the sum of $125 rent. He offered to introduce two executions in favor of McFarlane showing that a large amount of property had been taken from appellant. The court refused to permit this testimony to be introduced,-to all of which the appellant excepted. The appellant introduced the deed from Smith and wife in which the land was described as in his original complaint, and also introduced a mortgage from appellant to Holland conveying real and personal property and, among other lands, the following: “* * * Also the fractional east part of the northwest quarter of section 30, township 8 north, range 30 west, containing 37.67 acres, being all of said quarter section owned by me. ’ ’

The court found that the title to the land had been previously litigated in a decree, and also in a proceeding to review a former decree of the court. The court, thereupon entered a decree dismissing the appellant’s complaint for want of equity, from which is this appeal.

There are at least three reasons why the judgment of.the court must be affirmed. In the first place, the description of the land in the complaint is not sufficient to identify the land. The complaint therefore does not state a cause of action. Evans v. Russ, 131 Ark. 335-341; Smith v. Smith, 80 Ark. 458-461. See, also, Peters v. Priest, 134 Ark. 161-165.

In the second place, the complaint, on its face, shows that the appellee had acquired title through the statute of limitations, for it is alleged “that said lands-have been, in the possession of the defendant for the past eight years;” that .the defendant wrongfully took possession of the lands under a decree which did not describe the lands in controversy, but described the east part of the northwest fractional quarter of section 30, township 8 north, range 30 west, in Sebastian County, etc.” Other facts alleged in the pleadings show that the appellee and those under whom he claimed had been holding the lands in controversy, continuously, openly and notoriously claiming to own the same for eight years. - In Dowell v. Tucker, 46 Ark. 438-452, we said: “As a rule the statute of limitations cannot be taken advantage of by a demurrer to the complaint in an action at law, unless the complaint shows that a sufficient time had elapsed to bar the action and the nonexistence of any ground of avoidance. That is done 'by the complaint in this case.” So here. Rogers v. Ogburn, 116 Ark. 233. See also, Earnest v. St. Louis, Memphis & S. E. Ry. Co. 87 Ark. 65.

Furthermore, although this action was begun- at law, it was transferred to chancery, and must be-treated as a cause of action in equity. “A defense of the statute of limitation may be interposed by demurrer m equity where the cause of action appears upon the .face-of the complaint to be barred and does not disclose facts sufficient to remove such bar.” Mueller v. Light, 92 Ark. 522; Evans v. Pettus, 112 Ark. 572-580. See, also, Riley v. Norman, 39 Ark. 158. The court, therefore, might have sustained the demurrer to the complaint .which fails to state a cause of action.

In the third place, the court was correct in finding on the trial from the pleadings, exhibits, and testimony-in the case that the title to the tract of land in controversy had been previously adjudicated. The erroneous description of the land contained in the decree under which the appellee claims title, which described the land as the east part of the northwest fractional quarter of section 30, township 8 north, range 30 west, is followed by a specific description. This particular description, which embraces the land in controversy, restrains and limits the general description. Doe v. Porter, 3 Ark. 18.

The decree is therefore in all things correct, and it is affirmed.


text:
    Johnson v. Missouri Pacific Railroad Company.
    Opinion delivered July 4, 1921.
    1. Attorney and client — right to discharge attorney. — A client has an unqualified right to control'her litigation and to discharge her attorney, but she could not discharge his lien by his wrongful discharge after the action was instituted to recover on the claim.
    2. Attorney and client — commencement op lien. — An attorney’s lien on his client’s cause of action, under Crawford and Moses’ Dig. § 629, begins only from the institution of the action; and, unless there is an action instituted' by authority of the client or upon ratification by the client, there is no lien.
    3. ' Trial — discretion to refuse additional instruction. — In the, absence of any showing of its abuse, the trial court had a discretion to refuse to give an additional instruction after the argument of the case had begun.
    4. Trial — instructions — weight op evidence. — Instructions requested by the plaintiff which imposed upon the defendant the burden of establishing her defense by a “fair” preponderance of , the evidence were properly modified by striking out the word “fair”
    6. Attorney and client — degree op diligence. — Failure of an attorney to exercise reasonable diligence in prosecuting his client’s cause will justify the client in discharging him, and an instruction which based the client’s right to discharge on the exercise of gross negligence on the attorney’s part was properly refused.
    6. Trial — special verdict. — Refusal of the trial court to require a special verdict in a case will not be ground for reversal unless there has been a clear abuse of the court’s discretion.

      Appeal from Baxter Circuit Court; John B. Baker, Judge;
    affirmed.

      Allyn Smith, for appellant.
    (1) Intervener, as attorney for Mrs. Rung, bad a right to control the course of action, and, in absence of direction to the contrary, may take a nonsuit. 11 Ark. 232.
    (2) It was error to refuse to instruct that intervener’s negligence in the prosecution of the claim in controversy must be established by the “fair” preponderance of the evidence or beyond a reasonable doubt. 11 Ark. 228.
    (3) It was abuse of discretion to refuse to submit requests for a special verdict.

      Thomas B. Pryor and Samp Jennings, for appellee.
    A client is justified in dissolving the relation with his attorney whenever he 'ceases to have confidence in his integrity or judgment. 136 Cal. 170; 155 Iowa 312; 219 N. Y. 170; 205 N. Y. 398. Mrs. King had control and disposition of this lawsuit. 66 Ark. 197; 117 Ark. 104; 120 Ark. 389.
   McCulloch, C. J.

James E. King, a locomotive engineer employed by appellee, was killed while serving in the line of his duty as such engineer for appellee, and his widow was appointed administratrix of the estate and instituted suit to recover damages for the benefit of herself, as widow, on account of the alleged negligence which caused the death of said decedent; and she entered into a written contract with appellant as her attorney to prosecute the litigation and agreed in the contract to pay him as compensation for his services one-half of the amount recovered after deducting expenses incident to the prosecution of the litigation.

Appellant instituted an action for his client, Mrs. King, as administratrix, first in Lawrence County, on October 31,1917, and dismissed it on March 13, 1918, and brought a second action in the circuit court of Independence County on the same day or the day thereafter.

This action was dismissed by the Independence Circuit Court for want of prosecution, and appellant on April 23, 1918, brought a new action for Mrs. King in the circuit court of Marion County. This action was also dismissed, and appellant on June 3, 1918, instituted a new action for Mrs. King in the circuit court of Baxter County. Mrs. King subsequently dismissed this action, claiming that she liad previously discharged appellant from her employment and employed other attorneys through whom a settlement was negotiated and consummated whereby appellee paid to Mrs. King as such administratrix the sum.! of $8,500 as a compromise of her claim. Appellant filed his intervention at the next term of the Baxter Circuit Court in which he set forth his claim, for one-half of the amount of the compromised settlement between áppellee and his quondam client and prayed that the dismissed action be reinstated, and that he have judgment against appellee under the statute which gives a lien to attorneys. Crawford & Moses’ Digest, § 628. Appellee filed a demurrer to the intervention, which was sustained by the trial court, but on appeal to this court it was held that the demurrer was improperly sustained, and the cause was remanded for further proceedings. Johnson v. Missouri Pacific Railroad Company, 144 Ark. 469. Oh the remand of the cause appellee answered setting forth, in. substance, that appellant had been ' discharged by Mrs. King ón áccount óf negligence in failing to prosecute her claim with diligence', and that the action instituted by appellant for Mrs. King in the Baxter Circuit Court was without authority from lier, and that therefore the court had no jurisdiction to entertain appellant’s; claim. Appellant filed a demurrer to the answer and also a motion to make more definite and certain and to strike out certain portions, of the answer, all of which were overruled by the court, and the cause proceeded to a trial, before a jury, which resulted- in a verdict in favor of appellee.

'.The' ¿áse Was tried below on the theory that appellant was entitled to recover one-half of the amount of the compromise settlement between appellee and Mrs. King according to the terms of the contract, unless he was rightfully discharged by Mrs. King on account of negligence in failing "to prosecute her claim with diligence, or unless the action in the Baxter Circuit Court was unauthorized.

Appellant requested certain peremptory instructions on the ground that the evidence was insufficient to justify a submission of the issues to the jury, and, after those instructions were refused, he requested the following instructions, which the court gave:

“1. Gentlemen of the jury, this is an action by the plaintiff, Kathern King, as administratrix of the estate of James E. King, deceased, against the defendant, Missouri Pacific Railroad Company and Jo Johnson as in-tervener, in which the intervener, Jo Johnson, alleges that the plaintiff, Kathern King, employed him to represent her as her attorney in the collection of her claim for damages against the defendant railroad company for the death of her husband, James E. King, agreeing to pay him for his services as such attorney one-half of the amount recovered after deducting the expenses incurred in the collection of said damages; to these allegations the defendant’s answer and its response admits that the plaintiff employed the intervener as alleged and as set forth in the contract attached to his petition as exhibit 1 A’, but deny that intervener performed his duty as such attorney in the settlement of such claim, as a diligent, prudent and careful attorney should; and that, by reason of his carelessness and neglect in the diligent prosecution of said claim to final settlement, plaintiff discharged said intervener as her said attorney and employed other attorneys. These allegations and denials raise the issues to be determined by you.”
“2. You are instructed that it is admitted that the intervener was employed as such attorney by the plaintiff, Mrs. Kathern King, that he was later discharged by such plaintiff, and that thereafter the cause of action was settled through other attorneys, and upon these admissions your verdict should be for the intervener unless you further find that the discharge of the„ intervener was justified as hereinafter set out.”
“4. You are further instructed that, unless you believe from a fair preponderance of the evidence that the intervener was negligent and careless in the prosecution of the claim in controversy to settlement as alleged in defendant’s response, and that he failed to prosecute the same as a prudent, careful attorney should, then your verdict should he for the intervener. However, the burden in the whole case is upon the intervener.”
“5. You are further instructed that under the law when an attorney accepts a contract of employment from a client, he impliedly agrees,,to prosecute the cause with due and reasonable diligence; and if you believe from a fair preponderance of the evidence in this cause that the intervener, Jo Johnson, failed and neglected to diligently prosecute the claim in controversy to settlement, and that by reason of such neglect and failure the plaintiff discharged him as her attorney, of that at the time of the filing of the suit against the defendant railroad company in the Baxter Circuit Court by said intervener, that he was acting without authority of employment from plaintiff, then your verdict should he for the defendant. ’ ’

The court modified instructions number 4 and 5 by striking out the word fair as it appears in each instruction preceding the words “preponderance of the evidence.” Other instructions were given by the court of its own motion in harmony with those copied above.

The first contention is that the evidence was insufficient to sustain the verdict. Appellant and Mrs. King were each introduced as witnesses and testified concerning the transactions and correspondence between them. There was a conflict in their respective statements. Mrs. King testified that when she met appellant at Yellville while the cause was pending in the circuit court of Marion County and the court was then in session, she discharged appellant from her service and also testified that the action in the Baxter Circuit Court was instituted by appellant without her knowledge or consent. Appellant testified that he had a conversation with Mrs. King at the railroad station at Yellville upon his arrival there to attend court, hut he denied that she discharged him from her service. He testified that the action then pending in that court was dismissed hy the court on motion of counsel for appellee on account of it being in violation of an order issued by the Director General of Railroads, and that, pursuant to agreement with Mrs. King and with her knowledge, he brought the action in the circuit court of Baxter County. He also testified to the receipt thereafter of letters from Mrs. King, which established the fact that she approved and ratified the institution of that action, even though she had no knowledge at the time of the institution of the action that it was to be begun. It is argued that these letters which were introduced in evidence show conclusively that Mrs. King ratified the institution of the action in the Baxter Circuit Court. Mrs. King at first denied that she wrote the letters, but later, when they were presented to her on cross-examination, she qualified this statement by saying that she did not remember whether she had written them or not. These letters tend to show that Mrs. King still regarded appellant as having authority to proceed with the collection of her claim against appellee, but nowhere in either of the letters is there any reference to the pend-ency of the suit in the Baxter Circuit Court or elsewhere, and Mrs. King testified positively that she had no knowledge of the institution of that action. Those letters were dated respectively June 18,1918, and June 25, 1918. On July 15, 1918, and on a still later date Mrs. King wrote to appellant notifying him that he was not authorized to represent her in any litigation for the collection of the claim. We are of the opinion that it was a question for the jury to decide whether or not Mrs. King knew of the institution of the action in the Baxter Circuit Court or whether she subsequently ratified the institution of the action. The testimony was sufficient to warrant a submission of the issue whether or not appellant’s discharge by his client was rightful, and whether or not he was guilty of negligence in failing to prosecute her claim with proper diligence. Mrs. King had an unqualified right to control her own litigation and to discharge her attorney (St. L., I. M. & S. Ry. Co. v. Blaylock, 117 Ark. 504; St. L., I. M. & S. Ry. Co. v. Bays & Ward, 128 Ark. 471), but she could not displace the attorney’s lien by his wrongful discharge after the action was instituted to recover on the claim. The statute provides that the compensation of an attorney shall be governed by agreement, and that the attorney who appears for a party has a lien on the cause of action, from the commencement of the action “which attaches to a verdict, report, decision, judgment or final.order in his client’s favor and the proceeds thereof in whosesoever hands-they may come; and the lien can not be affected by any settlement between the parties before or after judgment or final order.” Crawford & Moses Digest, § 628. The statute also provides that the lien created by the act shall be determined and enforced by the court “before which said action was instituted, or in which said action may be pending at the time of settlement, compromise or verdict.” Crawford & Moses’ Digest, § 629.

It will be observed that the lien begins only from the institution of the action, and unless there is an action instituted by authority of the client or upon ratification by the client there is no lien. Thus the two issues were submitted to the jury in this case, whether appellant’s discharge was rightful or wrongful, and whether or not he was authorized to institute the action in the Baxter Circuit Court. Appellant complains now that the court failed to submit to the jury the issue of ratification by his client of the institution of the action in the Baxter Circuit Court. He did not ask the court at the proper time to give such an instruction. Instruction number 5, quoted above, was given at the instance of appellant after the word “fair” was stricken out, and appellant has no right to complain of the failure of the court to incorporate in'that instruction the issue of alleged ratification. It is true that the record shows that appellant during the argument of the case before the jury asked the court to give an instruction on that subject. The record recites that during the argument of the case appellant’s attorney made the following request: “In view of the argument of counsel for defendant that Jo Johnson, in-tervener herein, was discharged at Yellville and that the court was without jurisdiction, we ask this court to instruct the jury that a client may approve and ratify the action of her attorney, even though such act is without the knowledge of .the client; and such act of the attorney when approved and ratified has all the validity .of an act, which, when performed, has the approval and direction of the client.” There is nothing in the record to show what use was being made by counsel for appellee of the instructions of the court. According to the words of appellant’s counsel, they were merely arguing that the court was without jurisdiction, which they clearly had a right to do under the issues presented to the jury, and this does not show abuse of discretion by the court in refusing to give new instructions at that stage of the trial. Statement of counsel, however, does not make a record of what actually was said by the opposing counsel. The court does not certify in the bill of exceptions what the argument of counsel was. That which is quoted above is merely the statement of attorneys for appellant, and if the opposing counsel were in fact making an illegitimate argument upon the instructions given by the court or were making an argument which was calculated to mislead the jury and cause it to ignore the question of ratification, they ought to have shown this by a proper recital in the bill of exceptions. We have nothing before ns except the statement of counsel themselves. ' The court may have refused the instruction on the ground that no such argument had been made by counsel. At any rate it was a question of discretion with the court as to whether or not the additional instruction should be given in the midst of the argument, and we can not say there whs any abuse of that discretion in this respect.

It is insisted that the court erred in striking out the word “fair” from the instructions requested by appellant in regard to the preponderance of the evidence, but we are of the opinion that there was no error in that regard.

It is also contended that the court erred in refusing to give an instruction which would have told the jury, in substance, that the neglect of duty or want of diligence which would justify an attorney’s discharge was “that degree which the law designates as gross negligence, that is, such management on his part must show a reckless disregard of his duties as an attorney or a dense ignorance of the law governing the conduct of such litigation.” Counsel for appellant claim that this requested instruction was given under the rule announced by this court in Pennington v. Yell, 11 Ark. 212. That was an action instituted against an attorney by his client to recover damages on account of alleged negligence in prosecuting the client’s cause and the court laid down the following rule: “Reasonable diligence and skill constitute the measure of an attorney’s engagement with his client. He is liable only for gross negligence or gross ignorance in the performance of his professional duties; and this is a question of fact to be determined by the jury * # In the present case the trial court followed this rule substantially in the statement to the jury that the client’s right to discharge appellant as her attorney was dependent upon the question whether or not he was prosecuting her cause Svith diligence or was guilty of negligence in failing to do so. In the fifth instruction which the court gave at appellant’s request the law was stated to be that an attorney when be accepts employment from bis client “impliedly agrees to prosecute tbe canse with due and reasonable diligence; and if you believe from fair preponderance of tbe evidence in tbis ease that tbe intervener, Jo Johnson, failed and "neglected to diligently prosecute tbe claim in controversy to settlement, and that by reason of sucb neglect and failure tbe plaintiff discharged him as her attorney, or. that at the time of the filing of tbe suit against tbe defendant railroad company in tbe Baxter Circuit Court * * * that be was acting without authority of employment from plaintiff, then your verdict should be for defendant.”

Whatever tbe degree of diligence may be found necessary to establish the liability of an attorney to bis client for damages, there can be no doubt of tbe right of a client to discharge an attorney who fails to prosecute tbe cause with reasonable diligence, for that is clearly tbe measure of an attorney’s duty to bis client. Any other rule would require a client to retain an attorney who was neglecting tbe cause and failing to proceed with proper diligence. We think that there was no error of tbe court in refusing to apply the rule of gross negligence as a condition upon tbe right of Mrs. King to discharge her attorney.

Appellant requested tbe court to direct tbe jury to return a special verdict upon six separate interrogatories, some of which related to questions of law and tbe others related to matters of fact. Tbe statute (Crawford & Moses’ Digest, § 1303) provides that tbe court may require a jury to return a special verdict and to find specially upon particular questions of fact to be stated in writing. It is discretionary with tbe court whether or not sucb special verdict shall be required, and tbis court will not disturb tbe exercise of that discretion by tbe trial court unless there has been a clear abuse of it. Little Bock & Fort Smith By. Co. v. Panlttmrst, 36 Ark. 371. Certainly it can not be said in tbis instance that there was an abuse of discretion where tbe request contained interrogatories which related to matters which were not in any event proper to be submitted to the jury.

There are other assignments of error which we do not. deem of sufficient importance to discuss. After careful consideration, we are of the opinion that there was no error committed in the course of the proceedings below, and that there was evidence legally sufficient to sustain the findings in the verdict. The judgment is, therefore, affirmed.

Wood and Humphreys, JJ., dissent.


text:
    Norton v. Hall.
    Opinion delivered July 4, 1921.
    Automobile — family car — son’s negligence — A complaint which alleges that plaintiff, while walking along a street, was struck by an automobile belonging to defendant and driven by her son, who was a member of defendant’s family, without alleging that the son was defendant’s agent, fails to state a cause of action against defendant.
    Appeal from Lawrence Circuit Court, Eastern District; Dene H. Coleman, Judge;
    affirmed.

      W. E. Beloate and J. E. Anderson, for appellant.

      Smith & Gihson, for appellee.
   McCulloch, C. J.

There are two consolidated cases involving the same question in this appeal. Each case was instituted to recover damages for personal injuries resulting from an automobile collision caused 'by the negligence of the driver of the car. A demurrer to the complaint was sustained in each case. It is alleged in the complaint in each case that the plaintiff, while walking along a street, was struck by an automobile “belonging to the defendant, Mrs. L. F. Hall, and driven by Bill Huddleston, or Clara Huddleston, wife of the said Bill Huddleston, the said Bill Huddleston being the son of the defendant, Mrs. L. F. Hall, and residing with and being a member of the family of the said defendant, Mrs. L. F. Hall, the said automobile being at the time under the care and control .of the said Bill Huddleston, defendant herein.” There is a further allegation that the automobile “was the property of the said Mrs. L. P. Hall, and by her at that time furnished for the use and entertainment of the family,” and after describing the injury of the plaintiff it was alleged that ‘ ‘ said injuries were caused by the negligence of said defendants, their servants, and members of the family of. said defendant, Mrs. L. F. Hall. ’ ’ The demurrer was filed by Mrs. Hall alone and not by the other defendants, so the appeal relates only to the question of Mrs. Hall’s liability under the allegations of the complaint.

There is no charge of negligence on the part, of Mrs. Hall herself in permitting the use of the automobile by her son or his wife. Nor is there any specific allegation that either Huddleston or his wife were the agents or were servants .of Mrs. Hall in operating the automobile. Plaintiffs rely solely for recovery on the charge that the automobile was the property of Mrs. Hall which was. provided for the use of her family, the members of which were permitted to use it, and that her son, Bill Huddle-ston, and his wife, Clara Huddleston, were members of the family, residing with her.

This involves the application of what has become to be termed the “family purpose” doctrine, which is of comparatively recent origin. The substance of the doctrine is that when the father or other head of a family supplies an automobile for the use and pleasure of the family, permitting the members thereof to use it at will, those members thus using the automobile become "the agent of the head of the family, and that each one using it, even for his sole personal pleasure, is carrying out the purpose for which the automobile is furnished, and is the agent or servant of the head of the family, so that the latter is liable for injuries resulting from negligence, under the doctrine of respondeat superior. The cases which uphold and apply this doctrine do so apparently in recognition of the principle that the parent is not, as such, liable for the torts of the child, nor liable merely because of permission to use the car, but they hold that liability rests upon the principle of master and servant, or principal and agent, and that the furnishing of the car for family use creates that relation between the head of the family and each member who operates the car by permission. There is great contrariety of judicial opinion upon this subject. The courts of last resort in New York, Missouri, North Carolina, Maine, Alabama, Utah, New Jersey, Massachusetts, Virginia, Kansas, California, Ohio, Illinois, New Hampshire, Mississippi, and Michigan, have refused to apply this doctrine in its broadest sense, so as to impose liability merely because the car is used by a member of the family. Hays v. Hogan, (Mo.) 200 S. W. 286; L. R. A. 1918 C. 715; Van Blaricom v. Dodgson, 200 N. Y. 11, L. R. A. 1917 F. 363; Linville v. Nissen, 162 N. C. 95; Parker v. Wilson, 179 Ala. 361; Doran v. Thomsen, 76 N. J. L. 756; Missel v. Hayes, 86 N. J. L. 348; Smith v. Jordan, 211 Mass. 269; McFarlane v. Winters, 75 Utah 598; Blair v. Broad-water, 121 Va. 301; Watkins v. Clark, 103 Kansas 629; Spence v. Fisher (Calif.), 193 Pac. 255; Elms v. Flick (Ohio St.), 126 N. E. 66; Arkin v. Page, 287 Ill 420; Dan-forth v. Fisher, 75 N. H. 111; Woods v. Clements (Miss.), 74 Sou. 420; Loehr v. Abell, 174 Mich. 590; Pratt v. Clothier, 110 Ala. 353, 10 A. L. R. 1434; Farnum v. Clifford, 118 Maine 145.

On the other hand the courts .of last resort in Minnesota, Iowa, Georgia, Oklahoma, New Mexico, North Dakota, Wisconsin, Washington, Colorado, Montana, South Carolina and Tennessee have announced in more or less broad terms the application of this doctrine. Dircks v. Tonne (Iowa), 167 N. W. 103; Plasch v. Pass, 144 Minn. 44, 10 A. L. R. 1446; Griffin v. Russell, 144 Ga. 275; Boes v. Howell, 24 N. M. 142; L. R. A. 1918 F. 288; McNeal v. McKain, 33 Okla. 499; Lindeman v. Lindeman (N. Dak.), 76 N. W. 25, 10 A. L. R. 1440; Birch v. Abercrombie, 74 Wash. 486; Hutchin v. Hafner, 63 Col. 365; Lewis v. Steele, 52 Mont. 300; Davis v. Littlefield, 97 S. C. 171; King v. Smythe (Tenn.), 204 S. W. 296; Denison v. McNorton, 228 Fed. 401. The United States Circuit Court of Appeals for the Sixth Circuit, in the case of Denison v. McNorton, 228 Fed. 401 should also be classed in that list.

It will thus be seen that there is a sharp division in the authorities. By no means all of the cases cited above as applying the doctrine do so unqualifiedly in holding that any member of a family to which an automobile is furnished by the father becomes the agent of the latter so as to make him liable for injury done to strangers. A few of the cases hold that a member of the family using the automobile for his or her own personal pleasure or convenience makes the father liable for injuries to a stranger, but most of the cases are those where the injury to a stranger resulted while one of the members of the family was using the car for the pleasure of other members of the family, and it was held that this was sufficient to create an agency so as to make the head of the family liable. Those cases do not hold that liability exists because of the fact that the automobile was being operated by a member of the family, but they seem to hold that where one member of the family is operating the car for the 'benefit of the others an inference of fact may or may not be drawn from the circumstances that agency existed and that the person so using the automobile for the benefit of the other members of the family was acting pursuant to the purposes of the head of the family in furnishing the automobile for family use and therefore became the agent of the latter in using it for the benefit of the others. Such seems to be the effect of the decision of the United States Circuit Court of Appeals, supra, and also the Oklahoma court and the Iowa, Michigan, Minnesota and Massachusetts courts in the cases referred to.

We think the better reasoning lies with those courts which hold that there is no agency merely because of the fact that the automobile was furnished for family use. In other words, we reject the so called £‘family purpose” doctrine as stated by some .of the courts in its broadest sense, though we do not mean to hold that there may not be circumstances under which it would be a question of fact for the jury to determine whether the person so operating the car was the agent of the head of the family or was agent of the particular member or. members of the family for whose pleasure and benefit the car was then used. This doctrine is clearly recognized by the Massachusetts court in the case of Smith v. Jordan, supra, and also in the New Jersey cases cited above. In those and some of t'hé other cases it was held that where an automobile was furnished by the father for family use and the son was driving the car for the benefit of his mother, there was an inference that he was the agent' of the f ather in operating the car.

In the complaint.in this case, as before stated, there is no specific allegation of agency or of facts which would constitute an agency. The substance of the' charge is that the car, though furnished by Mrs. Hall, was being used and operated by her son and his wife for their own pleasure, and this does not constitute an allegation that the relation of master and servant or principal and agent existed between Mrs. Hall and her son and daughter-in-law.

We are therefore of the opinion that the circuit court was correct in holding that there was no cause of action stated against Mrs. Hall in the complaint.

Hart, J., concurs; Smith, J., dissents.


author: Hart, J.,

text:
    Sternberg v. City National Bank of Fort Smith.
    Opinion delivered July 4, 1921.
    1. Bankruptcy act — powers of trustee. — Prior to the amendment of § 47 a-2 of the Bankruptcy Act!in 1910, a trustee in bankruptcy was vested with no better right or title to the property of the bankrupt than the latter had when the trustee’s title accrued; but since that amendment the trustee .is vested with the rights, remedies and powers of a creditor holding a lien by legal or equitable proceedings as against an unrecorded transfer.
    2. Sales — conditional sales. — A vendor of a chattel may deliver possession on condition that the title shall not pass to the vendee until the purchase price shall be paid in full, and a subsequent purchaser without notice acquires no title as against the original vendor.
    3. Sales — conditional sales — ORAL sales. — Contracts for the conditional sale of personal property with reservation of title in the seller are not required to be in writing.
    4. Sales — conditional sales. — Where a bank, at the request of a local dealer, advanced to a manufacturer of automobiles the price of cars shipped to be sold, and took separate notes reciting that the cars were deposited as collateral security, but the evidence showed that the cars were delivered to the local dealer with the understanding that title was retained in the bank until the money advanced on it was paid, the transaction constituted a conditional sale with reservation of title.
    Appeal from Sebastian Chancery Court, Fort Smith District; J. V. Bourlcmd, Chancellor;
    affirmed.
    STATEMENT OE FACTS.
    On application of a creditor, the chancery court at Fort Smith, Arkansas, appointed a receiver to take charge of the property of the Adams-Cooper Sales Company as an insolvent corporation. The company was engaged in selling automobiles at retail in the city of Fort Smith at the time the receiver was appointed. The receiver took charge of certain automobiles owned by the company and sold them under direction of the court and ■ held the money subject to the further orders of the court.
    Subsequently the Adams-Cooper Sales Company was adjudged a bankrupt in the Federal court and M. Stern-berg, trustee in bankruptcy, filed an intervention in the chancery court claiming the money derived from the sale of the automobiles by the receiver.
    The City National Bank of Fort Smith, Ark., also filed an intervention claiming said money. The issue raised by tbis appeal is as to which of said parties is entitled to the proceeds of the sale of the automobiles by the receiver.
    I. H. Nakdimen, president of the City National Bank of Fort Smith, was a witness for the bank. According to his testimony, the Adams-Cooper Sales Company was engaged in selling automobiles by retail in the city of Fort Smith. The company bought its cars from the manufacturers. According to an agreement with the manufacturers, the sales company and the bank, whenever a car of automobiles was ordered, the bill of lading with the draft for the purchase money attached was sent to the bank. The sales company was notified when the car arrived. Before delivering the bill of lading to the sales company, the bank required the company to make a note for each car, giving the description of the car and everything. The bank did not let the sales company pay for the bill of lading, but the bank itself paid the cost of the automobiles to the manufacturer. The note given to the bank by the sales company specified the number of the car, the engine and so on, and when the car is sold the company brings the money to the bank and pays the note off.
    One of the notes in question is as follows:
    “Fort Smith, Ark., Oct. 2, 1918.
    “No. 18941.
    “Thirty days after date, without grace, we or either of us, promise to pay to the order of ‘The City National Bank of Fort Smith, Fort Smith, Arkansas,’ five hundred dollars, at the City National Bank of Fort Smith, with interest at ten per cent, per annum, payable annually, from maturity, until paid. Value received. Having deposited herewith, as collateral security for payment of this, or any other liabilities of.to said bank due, or to become due, or which may be hereafter contracted, the following property, viz:
    “One Chevrolet touring car No. 43641, which I hereby authorize the holder of this note to sell at public or private sale, without demanding payment of this note or debt due thereon and without further notice by advertising or otherwise, and apply proceeds, or as much thereof as may be necessary, to the payment of this note, and all expenses and charges, together with ten per cent, commission on all sales, holding myself responsible for any deficiency. Should there be any depreciation in value of said security prior to the maturity of this note, such an amount of additional security shall be furnished as will be satisfactory to said The City National Bank, and if the additional security is not furnished within two days after demand is made, either in person or by written notice put in postoffice, said bank may proceed at once to sell security as above specified.
    “Demand, notice and protest waived.
    “Adams-Cooper Sales Go. Inc.
    “Troy Adams.”
    Every other note was like this except as to date, amount and description of the car. In other words, they were all written on the same form. The company had an agreement with the bank that when it ordered a car of automobiles the automobiles should be shipped with a draft - and bill of lading attached for the purchase money to the bank.
    The draft was drawn by the factory against the sales company and sent to the bank. The bank had an under-, standing that the title of the cars should be in it. Nakdi-men said: “I want to explain the entire circumstance. Adams & Cooper has borrowed money from us. He had an understanding with us whenever he orders a carload of cars that we should loan him money when the carload of cars comes in. They generally come all alike, no exceptions, they come with a bill of lading attached to a draft for the amount of the cars.
    “Q. Who was the draft on? A. The draft is drawn by the factory against the seller. Q. In this case? A, In' this case Adams & Cooper. When the draft comes in, • it is sent to ns, before we paid for it, we have an understanding- tliat. tbe title of these cars goes to ns.
    . ‘ ‘Mr. Dcriley: I object to him saying before he pays for it. Mr. McDonough: That is a matter of cross-examination. The Court: Be a little more specific in your statement.
    “A. Well, when the bill of lading and draft comes, ■ and when the car arrives, the understanding is that we loan him money to take that up, advance him money on it, and we take a lien on the cars until they are sold. We pay the draft to the company, and we take notes for those cars, and when he sells the car the understanding is, when he sells the cars, he takes up one of the notes.
    “Q. How did you do that? Mr, McDonough: I object to the cross-examination pending the statement. I think it is proper to let him get through. Q. Did you do that in each instance, Mr. Nakdimen? A. Yes, sir.”
    Again we quote from thé testimony of Nakdimen the following:
    “Q. What did(you do with the bill of lading when you marked the draft paid? A. Grave it to them. Q. To whom? A. Adams-Cooper Sales Company. Q. Then after you gave them the bill of lading they went down to the railroad company and took the cars out? A. Yes, sir. Q. They unloaded them and took .them to their place of business? A. Yes, sir. Q. And sold them there in the ordinary course of trade? .A. I suppose so; I couldn’t keep them in the vault in the bank. Q. But they took . them out and sold them in the ordinary course of trade? A. Yes, sir. Q. They were in the automobile business? A. Yes, sir. Q. They were selling Chevrolet and Chal-mers cars? A. Yes, sir.”,
    Redirect examination by Mr. McDonough:
    “Q.' In vour testimony you referred to the- title to the property being in the bank, and about a lien. I wish you would explain exactly the agreement between you and the Adams-Cooper Sales Company in that matter? Mr. Dcáley: I don’t think he can explain an agreement. The Court: He can testify what he said and what they said was done. If you can’t remember the exact language, give it as near as you can. Q. Just state what the facts are with reference to that agreement, the agreement relating to the method of handling cars? A. The agreement was just like the note says, and the only reason why the collateral in this case is not attached is because it is too bulky, and we have no room for it, and we give him the power to take it to his house and sell it, otherwise we would have had it attached to the note as collateral, because every car or cars we loaned money with the understanding we have got a lien on it until it is sold. The note shows for itself, and the only distinction is we can’t take a car and keep it in the vault and put it in the note case.”
    Again we copy from the testimony of the witness the following:
    ‘ ‘ Q. Now did they make any contract with you with regard to helping them handle their business? If so, what was that contract? A. Well, they made a contract with us, whenever they buy a carload of cars, they are willing to give us a lien on it provided we pay for it, and when the car comes the contract was to make a note for each car. There was generally three or four cars in a car, and they make a note for it; and when they sell a car they come and pay the money, and in the meantime .when the carload arrives they will come in the bank and make the notes and take credit for it, and then make a check for the draft, in order to have a record for all the .transactions for their benefit, and as well for the bank. That was a standing contract. Q. Were they buying from the manufacturer of the cars? A. Yes, sir. Q. Who did the ordering, you or them? A. They ordered from them to be sent through us. Q. Was there anything in your contract, and if so state what it was, which induced the manufacturer to send the bill of lading and draft-to your bank? Was there anything in the contract about that, that you know of? If so, state what it was? If there was anything in the contract what was it? A. That we have a lien npon the cars. Q. If there was anything in yonr contract to induce the bill of lading to be sent to your bank, rather than somebody else’s bank. A. The inducement is the factory knows that we take care of it. Q. How do .they know it? A. .Every time that an automobile agent, every time they order the car, the agent used to some down; the agent of the factory comes down frequently and visits them and visits the bank they do business with, so the factory is aware of the bank. Q'. Did you have arrangements with this company whereby you or they one would notify the factory to send the bill of lading to your bank? A. Yes, sir. Q. Now when it came to your bank what was the contract with reference to how you dicharged the thing, how would you pay it? A. By making notes for the car and we pay the factory. Q. Who would do that? A. Take the note and specifying the car, off the bill .of lading and off the invoice. Every time, Judge, the factory sent a bill of lading there was an invoice and there was a draft. The bill of lading has to be delivered to the railroad company in order for them to deliver the car of automobiles to Adains-Cooper. The invoice was to them, so we copy it from the invoice the number of the car and the cost of it. That is the only way we could ascertain the number of the car and what it cost.”
    The chancellor found the issues in favor of the bank and a decree was entered accordingly. To reverse that decree the trustee in bankruptcy has duly prosecuted an appeal to this court.

      Dailey & Woods, for appellant.
    (1) The only question here is as to which has priority, the unrecorded lien of the bank or the lien given to the trustee by § 47a (2) of Bankruptcy Act as amended in 1910.
    (2) The bankrupt was a dealer in automobiles. Bills of lading for the cars came through the bank for collection. The bankrupt would borrow from the bank on each car. The lower court found that the bank retained a lien not a title. The notes recited the pledge of the cars for payment. The notes are what are called “collateral pledge notes. ” These notes were not recorded. To make valid such pledges, possession of the cars should have been delivered. 98 Ark. 384. An unrecorded chattel mortgage is not good as against strangers. 9 Ark. 112; 41 Ark. 186; .54 Ark. 179; 130 Ark. 287; 240 U. S. 642; 41 Am. B. R. 698.
    (3) The title of the trustee is fixed as of date of the petition in bankruptcy. 129 Ark. 364; 34 Am. B. R. 80.
    (4) The lien of the trustee in bankruptcy prevails over an unrecorded conditional sales contract. 34 Am. B. R. 75.

      Fadjo Cravens & Ira D. Oglesby and James B. Mc-Donough, for appellees.
    The transaction either amounted to a pledge or a verbal mortgage with possession in pledge, or the bank is entitled to an equitable lien for the unpaid purchase money advanced by it. The cars never left the possession of the appellee. The lower court so found. It was the understanding that the title of the cars went to ap-pellee. The transfer of the bill of landing to appellee transferred the possession. 117 Ark. 180. Payment of the purchase money and transfer of bill of lading gave the hank title. Crawford & Moses’ Dig. § 792; 64 Ark. 244. There was a sufficient symbolical delivery. See 98 Ark. 379.
    The trustee’s lien cannot take away from the hank its vested rights in the property. 43 Ark. 236; 58. Ark. 289; 23 Law. Ed. U. S. S. C. 64.
    When the hank paid the draft, it became the absolute owner and possessor of the property. 90 Ark. 439; 117 Ark. 180; 92 Ark. 472.
    The title never passed to the bankrupt. The bankrupt -could not sell the bank’s interest. 47 Ark. 363; 48 Ark. 160; 82 Am. St. 284.
    The transaction was a conditional sale, in which the title did not pass. 101 Ark. 469. A similar question was decided in 137 A.rk. 40. Giving of the notes was not inconsistent with retention of the title. 205 U. S. 340.

      The claim of the appellee is an equitable lien, superior to the claim of the trustee. 153 Fed. 503; 234 IT. S. 399.
    If the pledge contract was void, the bank was entitled to the proceeds because of its advances to pay the purchase money. 267 Fed. 606; 263 Fed. 254; 262 Fed. Ill; 260 Fed. 321; 256 Fed. 871; 105 Atl. 328; 174 N. T. S. 375; 169 Pac. 964; 207 Fed. 535.
   Hart, J.,

(after stating the facts). It may he stated at the. outset that, prior to the amendment of the bankruptcy act in 1910, the trustee in bankruptcy was vested with no better right or title to the property of the bankrupt than the latter had when the trustee’s title accrued. York Mfg. co. v. Cassell, 201 U. S. 344.

Section 47a-2 of the bankruptcy act, as amended in 1910, gives to a trustee in 'bankruptcy “the rights, remedies and powers to a creditor holding- a lien by legal or equitable proceedings thereon.” See, also, Fairbanks Shovel Company v. Wills, 240 U. S. 642. In that case the court said:

“Since the amendment of section 47a-2 of the bankruptcy act by the act of June 25, 1910 (ch. 412, § 8; 36 Stat. 838, 840), trustees have the rights and remedies of a lien creditor or a judgment creditor as against an unrecorded transfer. ’ ’

If the transaction between the bank and the sales company constituted a conditional sale, it is manifest that under our decisions the bank is entitled to the proceeds arising from the sale of the automobiles by the receiver.

In Starnes v. Boyd, 101 Ark. 469, it was said that this court has uniformly adhered to the rule that the vendor of a chattel may deliver possession on condition that the title shall not pass to the vendee until the purchase price shall be paid in full, and that a subsequent purchaser without notice acquires no title as against the original vendor. In that case under a contract for the sale of timber whereby it was agreed that tbe seller’s brother “is to receive all tbe lumber and funds for tbe same” until tbe seller is. paid in full for all bis logs delivered at tbe price stipulated, it was beld that tbe contract constituted a- conditional sale with tbe reservation of title, and not an absolute sale with tbe reservation of a lien.

In Bryant v. Swofford Bros., 214 U. S. 279, it was held that tbe validity of conditional sales depends upon tbe law of tbe State where made, and in bankruptcy proceedings tbe construction and validity of such a contract must be determined by the local law of the State. Following tbe decisions of tbe State of Arkansas, the court held that the sale of a stock of dry goods under a contract by which the articles sold were to remain tbe property of tbe seller until paid for, with provision for substitution of other goods and that tbe proceeds of the goods sold should also belong to tbe seller, constituted a conditional sale.

It is true that the contracts of sale in those cases were written ones, but this court has beld that contracts for the conditional sale of personal property with tbe reservation of title in tbe seller are not required to be in writing. Jones v. Bank of Commerce, 131 Ark. 362, and Estes v. Lamb & Co., 149 Ark. 369.

This brings us to a consideration of tbe question of whether under the facts as disclosed by. the re,cord, the transaction under investigation was a conditional sale or a contract for an equitable mortgage. It is often difficult to decide whether in a given case the contracting parties intended to make an absolute sale and to give the seller a lien on the property for tbe purchase money, or whether the transaction was intended as a conditional sale.

It is certain that when the property arrived at Fort Smith the title and possession were in the bank. A draft for the purchase money with a bill of lading attached was sent by the manufacturer and seller of the automobiles to tbe bank. In each instance the bank took the note of the sales company for the price of the automobile before it was turned over to the sales company. The bank itself transmitted the purchase money directly to the manufacturer of the automobiles. It is true that the note given by the sales company to the bank recites that the automobile is deposited as collateral security, and that Nakdimen in his testimony speaks of having a lien on the automobiles for the purchase money, yet, when the whole substance of the transaction is considered, we think it was a conditional sale. We attach no importance to the recitation in the note of the automobile being deposited as collateral security.

The record shows that the note was written on the printed form of the bank, and the form was the one generally used when notes were deposited with the note filled out as collateral security. It is plain that the automobile could not be deposited with the note as collateral security. There is much circumlocution in the testimony of Nakdimen due in part to the way he was examined and cross-examined. While he speaks in one place of having taken a lien on the automobiles for the purchase price thereof, in another portion of his testimony he speaks of retaining title in them until the purchase price was paid. This view of the transaction is borne out when we consider that a separate note was given for each automobile, and that it was considered a separate transaction. The bank became responsible to the manufacturer and seller of the automobiles at the time it permitted the sales company to take them from the possession of the railroad company. The acts and conduct of the parties indicate that it was. the intention of the bank to retain the control of each automobile until it was sold and the proceeds applied to the payment of the purchase price. The fact that the sales company was allowed to have the possession of the automobiles and dispose of them does not under the authorities cited above prevent the transaction from being a conditional sale.

We think that when the testimony of Nakdimen, which is all the testimony there is on the question, is read and considered in connection with the note given by the sales company to the bank for the purchase money, the substance of the transaction is a conditional sale.

It follows that the decree of the chancellor was correct and must he affirmed.


author: Hart, J.

text:
    Ford v. Miller.
    Opinion delivered July 4, 1921.
    Frauds, statute of — parol surrender of lease for years. — While, under the statute of frauds, a written lease for a term of years cannot he cancelled or surrendered by a .parol agreement alone or by destruction of the -writing witnessing the lease, such a parol agreement becomes effective when performed by the parties, in which case the conduct of the parties operates by way of estoppel.
    Appeal from White Chancery Court; John E. Mar-tinecm, Chancellor;
    affirmed.
    STATEMENT OP PACTS.
    John E. Miller brought this suit in equity against T. J. Ford to cancel an oil and gas lease executed by his grantor, E. J. Nalley, to Ford. The lea.se was sought to be canceled on the ground that the parties to it had by parol agreement surrendered it, and that their agreement in this regard had been executed.
    T. J. Ford defended on the ground that there had been no surrender of the lease, and that it was still in force..
    According to the evidence adduced for the plaintiff, E. J. Nalley and F. B. Nalley, his wife, conveyed the land, which is the subject-matter of this lawsuit, to John E. Miller by warranty deed for the sum of $2,500 in hand paid and the assumption by said Miller of a mortgage on the land amounting to $1,100. On the 3d day of May, 1919, E. J. Nalley and F. B. Nalley, Ms wife, executed an oil and gas lease to T. J. Ford for the period of ten years under certain conditions set out in the lease contract. On the 14th day of June, 1919, T. J. Ford, J. E. Miller and T. J. Bowers entered into a written contract whereby Miller became interested in certain oil and gas leases owned by T. J. Bowers and T. J. Ford. Among the leases was the one referred to above from E. J. Nalley and wife to T. J. Ford.
    According to the testimony of E. J. Nalley, T. J. Ford and T. J. Bowers had made an oral agreement with him to purchase the land set out in the lease contract under consideration. Nalley had previously leased the land to Bowers and Ford, and they had verbally agreed with him to cancel, the lease at any time that he wished to sell the land. Pursuant to this oral agreement, they delivered the lease to Nalley, and the understanding was that the lease was canceled. The lease had been filed for record, but the lessees had never gone into possession of the land. Nalley held possession of it all the time.
    According to the testimony of John E. Miller, Bowers and Ford first intended to purchase the land from Nalley. They applied to him for assistance in making the purchase, and he agreed with them to advance- one-third or even one-half of the purchase money and take a corresponding interest in the land. When the time to complete the contract arrived, Ford and Bowers could not raise the money, and they agreed that Miller might purchase the land from Nalley and further agreed that they would surrender the oil and gas lease on the land which they held. They did actually surrender to Nalley the lease contract and told Miller that they had done so. The plaintiff then purchased the land from Nalley and paid him the purchase price thereof. Nalley corroborated the testimony of Miller to the effect that the lease contract had been surrendered to him at the time he completed his contract with Miller and executed to him a warranty deed to the land.

      According to the testimony of T. J. Ford, Bowers and himself were interested in buying oil and gas leases. Subsequently they took Miller in with them. Ford surrendered the lease in question to Nalley because he thought Nalley was about to sell the land to a man at Helena, Arkansas, and he had verbally agreed with Nal-ley at the time the lease contract was executed to surrender the lease contract to Nalley at any time Nalley had a chance to sell the land. Nalley agreed to return the lease to Ford if he did not make the sale to the Helena man. Before Ford surrendered the lease to Nalley, he asked Miller about it, and Miller told him that it was all right to surrender the lease in the manner indicated because it was on record.
    Bowers corroborated the testimony of Ford. Bowers acted as agent for Nalley in the sale of the land to Miller.
    According to the testimony of Nalley and Miller, they, understood that there was an absolute surrender of the lease contract by Ford and Bowers to Nalley before Miller completed his contract for the purchase of the land' from Nalley and paid the purchase money and received a deed therefor.
    The chancellor found that there had been an exe- - cuted oral contract for the surrender of the lease between Ford and Nalley, and that Miller purchased the land upon the faith of it, and that Ford was therefore estopped from claiming that there was no valid cancellation of the lease.
    From a decree entered in favor of the plaintiff Miller, the defendant, Ford, has duly prosecuted an appeal to this court.

      Brundidge & Neely, for appellant.
    (1) It was error to admit parol testimony to show that no consideration was paid and to show agreement between Nalley and Bowers. Parol evidence is ihadmis-sible to vary written contract. 113 Ark. 517; 95 Ark. 135; 7 A. L. E. 836; 22 C. J. 1129; 145 Ark. 310. Tbe lease was good between Ford and Nalley’s successor. A partner cannot derive benefit from tbe relation against bis co-partners. 20 R. C. L. 880; 53 Ark. 154.
    (2) Tbe lease was not void for want of mutuality. 145 Ark. 310. As to when misrepresentations affect tbe validity of contracts, see 143 Ark. 592.
   Hart, J.

(after stating tbe facts). Tbe lease contract between Ford and Nalley covered a period of ten years under tbe conditions and terms recited in tbe contract.

Section 4866 of Crawford & Moses’ Digest provides, in effect, that no lease for a term of years except a lease for a term not exceeding one year shall be assigned, granted or surrendered unless it be by deed or notice in writing signed by tbe party so assigning, granting or surrendering tbe same, or by bis agent lawfully authorized by writing or by operation of law.

There was no written surrender or assignment of tbe lease in question. On that account counsel for tbe defendant claims that tbe attempted cancellation or surrender of tbe lease is void under the section of our statute of frauds just referred to.

Under tbe statute of frauds it is settled that a written lease can not be canceled or surrendered by parol agreement alone, but it is equally well settled that an executed parol agreement for tbe surrender of a lease will effect such cancellation. Tbe rule of law invoked does not prohibit parol proof of a verbal agreement to surrender, which is effective when executed;. but only' goes to tbe extent of bolding that such parol agreement does not of itself constitute a surrender and cancellation of tbe lease. 24 Cyc. 1327; Taylor’s Landlord and Tenant, (9 ed.), vol. 2, par. 511-516. Because tbe written contract for tbe lease is not tbe essence of tbe contract, but only tbe evidence of it, tbe destruction of the written instrument does not of itself effect the surrender or the cancellation of the contract.

In addition to the text writers cited above, it is well settled that a written contract.for the lease of land may be canceled or surrendered by a subsequent, distinct and independent parol agreement between the parties performed by them. In such cases the conduct of the parties operates by way of estoppel. Phelps v. Seely, 22 Gratt. (Va.) 573; Jordan v. Katz, 89 Va. 628; Goldsmith v. Darling, 92 Wis. 363; Brewer v. National Union Building Association. (Ill.), 46 N. E. 752; Auer v. Penn., 92 Penn. St. Eepts. 444; Stotesbury v. Vail, 13 N. J. Eq. 390; Williams & Davis v. Jones (Ky.), 1 Bush 621, and Coe v. Cassidy, 72 N. Y. 133. This rule has been recognized and applied by this court in Hayes v. Goldman, 71 Ark. 251, and Williamson v. Crossett, 62 Ark. 393.

In the instant case, according to the testimony of Nalley, there was an absolute surrender of the lease by the delivery of it by Ford to Nalley for the purpose of cancellation. Nalley was at that time in possession of the premises and continued in the possession thereof. According to the testimony of Nalley and Miller, Miller paid the purchase price of the land and received a warranty deed therefor from Nalley upon the faith of the surrender of the lease. Upon the completion of the sale Nalley turned over the possession of the property to Miller.

Thus it will be seen that the verbal contract for the surrender of the lease was fully performed, and the court was right in holding that this operated as a matter of fact to cancel the lease. It is true that the testimony of Miller and Nalley was disputed by the testimony of Ford and Bowers, but the chancellor found the facts for the plaintiff.

There is nothing in the record tending to show that the finding of the court was against the preponderance of the evidence. Under the settled rules of this court the finding of fact made by a chancellor will not he disturbed on appeal unless it is against the preponderance of the evidence. We do not find that to be the case here, and the decree will be affirmed.