author: Wood, J.

text:
    Hutson v. T. M. Dover Mercantile Company.
    Opinion delivered April 19, 1926.
    1. ' Payment—acceptance of check.—Where plaintiffs sold cotton to defendant, and accepted checks on a certain bank in payment thereof, and left the purchase money with the bank, relying upon its promise to pay same, and the bank thereafter became insolvent, plaintiffs became creditors of the bank, and. could not hold defendant liable.
    2. Frauds, statute of—guaranty.—An agreement by one to guarantee the debt of another must be in writing signed by the party to be bound.
    Appeal from Polk Chancery Court; G. E. Johnson, Chancellor;
    affirmed.

      Lake, Lake & Carlton, for appellant.

      Norwood ■& Alley, for appellee.
   Wood, J.

Several years ago T. M. Dover was engaged in the mercantile business in the town of Hatfield, Arkansas. After his death his wife and children incorporated the Dover Mercantile Company, in 1917, at Hatfield, with a capital stock of $30,000, each subscribing and taking the amount of stock in the corporation that each was entitled to upon a division of the assets of the estate. The estate was wound up without administration. The Bank of Hatfield was organized at the town of Hatfield in 1910 with a capital stock of $10,000. Prior to, and on September 15, 1921, the Bank of Hatfield was in financial straits. The T. M. Dover Mercantile Company had no interest in the Bank of Hatfield as a corporation except that it was a creditor of the bank, having on deposit on 'September 15, something like $50,000, and Mark Dover, the manager of the Dover Mercantile Company, had some years before executed a bond in his individual capacity to indemnify depositors in the bank in the sum of $50,000. The State Bank Commissioner, on September 15,1921, had ordered an assessment.of 300 per cent, against the stockholders of the bank, and also a bond for $15,000 was executed, Mark Dover being one of the •signers, in order to enable the bank to charge off $36,000 of bad paper and to release the bond that had been executed in the sum of $50,000. The sum of $10,500 was paid in cash, and Mark Dover gave the bank a check for $19,500 against the amount of deposit of the Dover Mercantile Company, which covered the balance of the 300 per cent, assessment. This left $6,000 to be charged off, $5,000 of which sum was taken care of by charging off an apparent surplus in that sum and the remainder was carried on the books of the bank as other assets. To compensate Dover for the amount advanced by him for them to meet the assessment, some of the stockholders transferred their stock and others executed note to a trustee for the amounts assessed against them. These notes later came into the' possession of the bank to cover a deficit of $6,000 which appeared upon the hooks. After these assessments had been made and thus arranged, the bank was reorganized, and on October 15,1921, Dover was elected president thereof and continued as president until January 1, 1923. In February, 1922, $40,000 on deposit to the credit of the Dover Mercantile Company in the Bank of Hatfield was transferred from the credit of the Dover Mercantile Company and placed to the credit of what was denominated the “T. M. Dover Surplus Account. ’ ’ On December 14,1922, as shown by the report of the Assistant Bank Commissioner, the Bank of Hatfield was still in’ an unsatisfactory financial condition and remained so, and the Bank Commissioner required an additional assessment of 100 per cent, to be levied on the stock, or that an additional bond in the sum of $7,500 be executed, and directed that doubtful assets be disposed of and that an additional 100’ per cent, assessment be levied against the stock, or in lieu thereof, a bond in the sum of $7,500 be executed to the 'Commissioner for the protection of the creditors of the bank. Immediately thereafter Mark Dover and one D. E. Myers executed a bond in the sum of $7,500. In January, 1923, Myers was elected president of the Bank of Hatfield, but, according to one of the witnesses, after Mark Dover went out of office he continued to act as manager—“he was still running things.” In February, 1923, Mark Dover borrowed $20,000 from the Merchants’ National Bank of Fort Smith, for which he executed the note of the Dover Mercantile Company. He had this amount deposited in the Fort Smith bank to the credit of the Bank of Hatfield. The amount was credited on the books of the Bank of Hatfield to the Dover Mercantile Company’s Surplus Account, and, at the instance of Mark Dover, this amount was changed on the books of the Bank of Hatfield from the Dover Mercantile Company’s Surplus Account to the Dover Estate Account, in order that no one mig’ht draw against the account except Mark Dover himself. On May 16, 1923, the State Bank Commissioner wrote the officers of the Bank of Hatfield, calling their attention to the fact that the bank was still carrying assets that were worthless, and telling them that it was the purpose of the Bank Commissioner to have the undesirable assets taken out of the bank before the first of January, 1924, and that the officers and directors should work with that in mind. After receipt of this letter, Mark Dover, on June 14, 1923, wrote acknowledging receipt of the above letter of the Bank Commissioner by the Bank of Hatfield, and caused the Bank of Hatfield to remit to the Merchants’ National Bank of Fort •Smith the sum of $10,000' to be credited on the $20,000 note that Mark Dover had borrowed from the Fort Smith bank. This $10,000 check was drawn in the name of the Dover Mercantile Company, by M. J. Dover, in favor of the Bank of Hatfield. The Bank of Hatfield got credit for the check at Fort Smith and the Dover Mercantile Company got credit for the check on its account with the Bank of Hatfield. This $10,000 in the Bank •of Hatfield was part of what Dover had borrowed from the Fort Smith Bank for the benefit of the Bank of Hatfield. Dover himself sent the check instead of the cashier of the Bank of Hatfield, for the reason that the Bank of Fort Smith had Dover’s signature.

In the fall of 1923, as soon as the cotton season opened, Mark Dover began buying cotton. He stated to some of the sellers of the cotton that he was paying from a cent to a cent and a half above the market price in order to induce people from whom he bought to patronize the Bank of Hatfield. He paid for the cotton purchased by giving the seller a check in the name of the Dover Mercantile Company, by Mark Dover, on the Bank of Hatfield, or else sent the seller with the weigher’s ticket and price of the cotton bought to the bank for settlement. In this manner the balance of over $10,000 to the credit of the Dover Mercantile Company in the Bank of Hatfield was converted into an overdraft for more than $16,000. This was the condition on October 16,1923, when the bank closed its doors. Instead of honoring the checks drawn by Mark Dover in the name of the Dover Mercantile Company, the cashier and officers of the Bank of Hatfield induced the sellers of the cotton to leave the amount of their checks or weigher’s tickets on deposit in the hank, and, if the farmer insisted upon his money, he was given a cashier’s check, the excuse for not paying the money being that the bank had just run out of money, but was expecting more on the evening train. But the money was not forthcoming, and the farmers who sold their cotton to the Dover Mercantile Company were not paid. Such was the procedure of the bank officers and of Mark Dover for the Dover Mercantile Company during the cotton season in 1923 and until the bank closed its doors, the bank at no time paying the money for the cotton which represented an overdraft of some $12,000 which Mark Dover gave for the purchase of cotton to the farmers of the community around Hatfield. After the bank closed its doors the Dover Mercantile Company, through Mark Dover, paid $7,100 to some of the farmers who had sold their cotton to the mercantile company through Mark Dover prior to the closing of the bank, leaving a sum of more than $6,000 unpaid. After the bank closed its doors the Bank Commissioner had a conversation with Mark Dover, in which he asked Dover why he permitted the bank to close and why he withdrew the funds of the Dover Mercantile Company while its president, Myers, was out of town. To this Dover replied that he thought it was time to clean up the bank. Two days before the bank closed its cashier and vice president made an urgent appeal to Mark Dover to give the bank a draft on the Merchants’ National Bank of Port Smith to meet' the pressing- requirements of the Bank of Hatfield. To this request Mark Dover replied, advising the vice president that, if he had any money in the bank, he had better take it out; that he (Dover) was not going to do anything to relieve -the. bank’s distressed condition. He gave the vice president who was making the request to understand that he was going to let the bank close and reorganize.

On October 16, the day before the bank closed, Dover called the Merchants’ National Bank at Port Smith and had that bank to charge the Bank of Hatfield’s account with $10,000, which $10,000 was carried on the hooks of the Bank of Hatfield as a cash reserve, that is, an amount on deposit with the Merchants’ National Bank of Fort Smith to the credit of the Bank of Hatfield. This act on the part of Mark Dover left the Bank of Hatfield without any cash reserve whatever. After the overdraft of the Dover Mercantile Company’s account with the Bank of Hatfield was created by Mark Dover as above mentioned, the cashier of the Bank of Hatfield notified Mark Dover from time to time of such overdrafts, and the only suggestion received from him was a direction to the cashier to charge the Dover estate with an amount to cover it. He never offered to give the cashier a check to cover it. When Mark Dover told the cashier of the Bank of Hatfield that he had drawn down the credit of the Bank of Hatfield with the Merchants’ National Bank of Fort Smith, this left the Bank of Hatfield without any cash reserve, and the cashier closed its doors.

It was shown that the Bank of Hatfield was insolvent from the time of its reorganization in September, 1921, until it closed its doors; that Mark Dover knew that fact. He stated to several people that he knew the bank was insolvent three months before it closed its doors. On one occasion, while he was president of the Bank of Hatfield, he stated to one of its customers, who asked him what he was doing there, that he was there to get his $25,000'. As early as the spring of 1923 Dover contemplated buying the mercantile business of one G. G. G>off at Cove for $25,000. The deal was abandoned when Dover requested Goff to accept a time deposit for $25,000 on the Bank of Hatfield, payable in the fall. Goff refused to accept without the indorsement of the Dover Mercantile Company, which indorsement Mark Dover refused to make.

This action was instituted in the chancery court of Polk County by the plaintiffs against the State Bank Commissioner as trustee and the T. M. Dover Mercantile Company to recover the several amounts claimed by the plaintiffs, amounting in the aggregate to something more than $5,000. Plaintiffs alleged that the amounts claimed by them respectively were evidenced by checks of the Dover Mercantile Company on the Bank of Hatfield, of which Mark Dover was at the time a director and of which he had been president; that Dover at the time of the execution of these checks knew that the account of the Dover Mercantile Company with the Bank of Hatfield was largely overdrawn and that the bank was wholly insolvent.

The plaintiffs alleged, among other things, that Mark Dover^ conceived a plan of buying cotton of the farmers in the surrounding territory and giving checks or weighers ’ tickets O. K.’d by him, showing the price to be paid, and sending the holders to the Bank of Hatfield for payment, knowing at the time that the T. M. Dover Mercantile Company had no funds on deposit in the bank with which to pay for said cotton, and that the bank was without the means of paying for same; that thus there would be created an overdraft against the T. M. Dover Mercantile Company in said bank, and in the expectation that said overdraft would be charged on the books of the bank against the account of T. M. Dover estate, and the sellers of the cotton would be substituted as creditors to the bank instead of the T. M. Dover estate. That, pursuant to such plan, Mark Dover advertised extensively in the surrounding territory offering to pay in advance of the market price for cotton, and purchased of each of the plaintiffs cotton in the amount, at the time and for the prices shown on the list attached to the complaint and made an exhibit to the complaint. That, in payment for cotton so purchased, Mark Dover, acting for the T. M. Dover Mercantile Company, g-ave to the sellers a check on the Bank of Hatfield for the amount of the purchase, or O. K.’d the weighers’ tickets, noting the price thereon to be paid for the cotton and sending the seller to the Bank of Hatfield for payment; that he knew at the time of making said purchases that the T. M. Dover Mercantile Company had no funds on deposit in the Bank of Hatfield with which to pay the checks so drawn and the weighers’ tickets so given, and that the checks and weighers’ tickets were given with the design and intent of Mark Dover to create an overdraft in the hank against the T. M. Dover Mercantile Company sufficient for and to be used as a charge against the account of the T. M. Dover estate with the bank, and thus substitute the plaintiffs and others who sold him cotton as creditors of the bank instead of the T. M. Dover estate.

It was further alleged that the overdrafts in the Bank of Hatfield against the T. M. Dover Mercantile Company cannot be, either in law or in equity, used as a set-off against what the bank is owing the T. M. Dover estate, or vice versa, and that Charles McKee, as Bank Commissioner, will require the T. M. Dover Mercantile Company to pay into the Bank of Hatfield a sum equal to such overdraft, if he has not already done so, and the funds so paid will become a common fund of the bank to be paid and distributed among the ordinary creditors of the bank, whereas such fund, if paid into the bank, should be treated and held as trust fund to the extent of the several claims of the plaintiffs, and that their claims should be ordered paid out of such fund before any part thereof is distributed among the common creditors of the bank. They alleged that, if the amount of the T. M. Dover Mercantile Company’s overdraft had not already been paid into the bank, the plaintiffs should be remitted to their rights against the T. M. Dover Mercantile Company to the extent of their respective claims, and the T. M. Dover Mercantile Company should be required to pay to the several plaintiffs the sums respectively due them, and the amounts so paid should be entered as a credit against the overdraft of the T. M. Dover Mercantile Company on the books of the bank. They prayed, among other things, that, if the Dover Mercantile Company had not already paid into the bank funds to cover its overdraft, the court require it to pay into said bank an amount sufficient to cover such overdraft, and that the fund thus created be treated and held as a trust fund for the payment of the claims of plaintiffs, and that Charles McKee, as Bank Commissioner, be required to pay to the plaintiffs the several amounts. And, in the alternative, that the plaintiffs have judgment for the respective amounts claimed by them against the T. M. Dover Mercantile Company, and that said amounts be credited against the overdraft of the T. M. Dover Mercantile Company with the Bank of Hatfield.

The defendants filed separate answers, in which all the material allegations of the complaints were denied. The T. M. Dover Mercantile Company, after denying all the material allegations of the complaints, also set up that there was a misjoinder of parties in that the right of each plaintiff, if any, was independent and separate of the others, and the facts with reference to each were different. We do not set out the answer of the Bank Commissioner for the reason that the appellants do not contend here that the Bank Commissioner is liable and do not ask for any decree against him.

The above are substantially the issues and facts upon which the trial court entered a decree dismissing the complaints for want of equity, and for costs against the plaintiffs, from which is this appeal.

1. We have set out the testimony upon which the appellants rely to recover decrees against the T. M. Dover Mercantile Company substantially as it is stated by learned counsel for the appellants. It is not sufficient to establish their right to decrees in their favor. The testimony does not prove that Mark Dover told each of the appellants, while he was purchasing their cotton and giving them checks of the Dover Mercantile Company in payment for same, that, if these checks were not paid by the Bank of Hatfield, the Dover Mercantile Company would guarantee their payment. True, Mark Dover stated to one witness for the appellants from whom he purchased cotton that the Dover Mercantile Company was behind the bank, and if the witness would deposit the check with the bank he would not lose a penny. He also told this witness that he would guarantee that the witness got his money. This witness did get his money, and is not one of the plaintiffs in this action. Another witness for the appellants testified that he was working for Mark Dover individually and not for the Dover Mercantile Company,--and was paid by Mark Dover as an individual. Mark Dover told him, when he talked to witness, to deposit his money with the Bank of Hatfield—that he would guarantee it and that the Dover Mercantile Company would back it up. When this witness took his cotton checks to the Bank of Hatfield he went there with the intention of putting the money on deposit and accept deposit slips for the money. He did this on the strength of what Mark Dover told him. This witness is one of the plaintiffs and one of the appellants, and is suing the Dover Mercantile Company for a balance due him by the Bank of Hatfield in the sum of $142.70.

Another witness testified that he sold cotton to Miark Dover in. September and October, 1923, in the. sum of $346.81, and took in payment therefor a check of the Dover Mercantile Compány on the Bank of Hatfield. The witness was not advised of the condition of the 'Bank of Hatfield at the time. Mark Dover had told witness, in 1922, about a year previous to that, when he was working in the bank, that the Dover Mercantile Company was behind the bank. Therefore it will be seen that none of the above testimony is sufficient to justify the conclusion that Mark Dover, at the time he purchased the cotton' of the appellants, and as a part of that transaction, represented to the appellants that the Dover Mercantile Company would guarantee the payment of the cheeks by the Bank of Hatfield and would pay those checks if the bank failed to pay the same. The preponderance of the evidence does not show and does not warrant any finding that Mark Dover, for the Dover Mercantile Company, guaranteed the appellants, in purchasing their cotton, that, if the Bank of Hatfield did not pay the checks of the Dover Mercantile Company, the latter company would guarantee payment of the same by the Bank of Hatfield. If the appellants, upon the failure or refusal of the Bank of Hatfield to pay the checks of the Dover Mercantile Company when presented, had returned the checks to the mercantile company and demanded óf it payment for their cotton, then unquestionably the mercantile company would be liable. But the undisputed testimony is to the effect that the appellants did not refuse to accept the promise of the Bank of Hatfield to pay these checks, but, on the contrary, left the same with the bank and accepted the promise of the bank to pay the same. Some of the appellants, in lieu of the cash on their checks, left the checks with the bank and accepted cashier’s checks instead. This condition obtained without payment on these cashier’s checks until the bank closed its doors. The inescapable conclusion therefore is that the appellants accepted the Bank of Hatfield as their debtor and became creditors of the Bank of Hatfield for the amount of the checks given to them by the Dover Mercantile Company in payment for their cotton when they deposited these checks in the Bank of Hatfield, and in lieu of the cash accepted the cashier’s checks of the bank. They thus became creditors of the bank, like any other creditors having a general deposit at the time the bank closed its doors. The mercantile company is not liable as a guarantor of debts of the defunct Bank of Hatfield. As we have seen, the testimony does not warrant the conclusion that the Dover Mercantile Company became a guarantor for the debts of the insolvent bank. The remarks made by Dover above were not sufficient to constitute the mercantile company a general guarantor of the debts due the Bank of Hatfield by the appellants at the time it closed its doors; and there is no proof in the record to show that the mercantile company purchased and obtained the cotton from the appellants with the understanding that, if the Bank of Hatfield did not pay the checks of the Dover Mercantile Company, the mercantile company itself wouldjpay these checks.

“A corporation, not expressly authorized to do so, cannot ordinarily contract to become a surety for, or lend its credit to, another person or corporation.” Richardson v. National Bank of Mena, 96 Ark. 594; Simmons National Bank v. Dilley Foundry Co., 95 Ark. 368; Arkansas Stave Co. v. State, 94 Ark. 27. “It is ultra vires of a corporation to enter into contracts of guaranty or surety-ship not in furtherance of its business, unless given express authority to do so. The fact that the corporation may reap some indirect benefit from becoming a surety or guarantor .for another does not confer upon it implied power to do so. * * * It is not however ultra vires for a corporation to enter into contracts of guaranty or suretyship where it does so in the legitimate furtherance of its purposes and business.” 7 B. C. L., § 599.

We do not find any testimony in the record to justify us in holding that it was within the scope of the authority of Mark Dover, as manager and president of the Dover Mercantile Company, to guarantee the debts of the Bank of Hatfield. Moreover, even if it had been shown that Mark Dover had authority, as the manager of the Dover Mercantile Company, to guarantee the debts of the Bank of Hatfield, in order to bind the corporation by such guaranty it would have been necessary for him to sign some writing to that effect. Section 4862, C. &. M. Digest.-This he did not do. A preponderance of the testimony does not show that there was any collusion between the Dover Mercantile Company and the officers of the Bank of Hatfield to induce the appellants to deposit their checks in the bank for the benefit of the Dover Mercantile Company and not for the benefit of the Bank of Hatfield. It appears that what the officers of the bank said and did in this connection was for the benefit of the bank rather than the Dover Mercantile Company. Therefore it occurs to us that there is an entire failure of proof to show that the Bank of Hatfield and'the Dover Mercantile Company were in a collusion to defraud the farmers and did defraud them in the purchase of their cotton by the mercantile company, and the failure of the Bank of Hatfield to pay the checks of the mercantile company. The decree of the trial court was in all things correct, and it is therefore affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    Brookfield v. Beamon.
    Opinion delivered April 19, 1926.
    Deeds—condition that land be used for church.—Where the owner of a block in a town donated the entire block to be used by a church as a building site for a house of worship, on condition that the title should revert when the block was not so used, the title to the entire block remains in the church so long as it has its house of worship on the block, although the church building does not cover the entire block.
    Appeal from Cross Chancery Court; A. L. Hutchins, Chancellor;
    affirmed.

      8. A. Gooch and Norfleet Norfleet, for appellant.

      Giles Bearing, for appellee.
   Wood, J.

On November 15, 1886, Nannie E. Brook-field, by warranty deed for a consideration of $1, conveyed to B. B. Merryman, J. W. Frazier, G. N. Sparks, John Graham and-A. J. Harrell, trustees, “for securing and holding a lot for religious purposes, the west end of block 20, beginning forty feet east of the southeast corner of block 3, east 185 feet, thence north 65 feet, thence west 185 feet, thence south 94 feet to point of beginning, the said lot being situated in the Brookfield Division of the town of Wynne, now on file in the office of recorder of Cross County, Arkansas.” The habendum, clause recites as follows: “To have and to hold the same unto the said trustees or their successors, for evangelical purposes forever, with all appurtenances thereunto belonging. And I hereby covenant-with the said trustees that I will forever warrant and defend the title to said lands to the said trustees'so long as used for church purposes, and, when no longer so used, to revert to original owner.”

On February 22, 1890, Nannie E. Brookfield, for the consideration of $1, conveyed by warranty deed to A. J. English, E. J. Newsom and John King, as trustees for the Wynne Baptist Church and unto the deacons of said church as their successors forever “lot No. 20 in Brook-field’s Addition to the town of Wynne, and block 5 in Brookfield’s Second Addition to the town of Wynne, all in S% section 16, T. 7, R. 3 E., lot No. 20, to be nsed as a building site for a house of worship, and block 5 in Brookfield’s Second Addition to the town of Wynne, to be used as a site for a parsonage, and, when ceasing to be so used, the title to revert to me or my heirs ’ and assigns.” The habendum clause is as follows: “To have and to hold the same unto the said A. J. English, E. J. Newsom and John King, as such trustees, and unto their successors in office forever, with all appurtenances thereunto belonging. And I hereby covenant with the said trustees and their successors in office that I will forever warrant and defend the title to said lands against all lawful claims whatever.”

This action was instituted by J. C. Brookfield on October 22, 1922, in the Cross Chancery Court, against O. C. Beamon et al. ■ The complaint alleged, in substance, that J. C. Brookfield was the owner of a certain lot, being a part of block 20, and that the defendants, acting under a contract with the First Baptist Church, were trespassing upon his lot; that they were piling material thereon and were proposing to erect a building thereon; that plaintiff has,no adequate remedy at law; that the lot in controversy had been conveyed by Nannie E. Brookfield to the plaintiff by warranty deed; that Nannie E. Brook-field, under whom plaintiff claimed, had executed a deed on November 15, 1886, and also an additional deed in 1890, to the lot, the conditions being that, when the land leased or conveyed by the additional deed ceased to be used as church property, it should revert and belong to Nannie E. Brookfield; that thereafter the church that had been erected upon said lot was sold and removed therefrom and the lot had been abandoned by the church and used as a cow pasture; that, because of such fact, the title conveyed by Nannie E. Brookfield in the deeds above mentioned to the lot in controversy reverted to Nannie E. Brookfield, plaintiff’s grantor. Plaintiff alleged that, unless the defendants were restrained, they would proceed to erect a building regardless of the rights of plaintiff, and that plaintiff had no adequate remedy at law. He alleged that the deeds above mentioned were void for want of equity, and that the title, by reason of the abandonment of the property for the purposes mentioned in the deeds, had reverted to Nannie E. Brook-field, plaintiff’s grantor, and that plaintiff now had the title to same.

Plaintiff prayed that the defendants be enjoined from proceeding with the erection of the building and that the conveyances above mentioned be removed as a cloud upon plaintiff’s title.

While the record does not show that there was any formal answer filed in the action, the recitals of the court’-s decree show that the cause was heard as if there had been an answer filed denying all the material allegations of the complaint. The judgment recites that “the cause was heard upon the pleadings, the depositions of the plaintiff and the testimony of J. E. Harris, J. W. Williams, Hr. R. Longest and J. C. Brookfield, taken in open court, by order of the court, and transcribed and made a part of the record herein, [and] the court being fully advised in the premises, doth find for the defendants, and doth dismiss plaintiff’s cause of action for want of equity.” Then follows the formal decree dismissing the complaint for want of equity, and in favor of the defendants against the plaintiff for costs, from which decree is this appeal.

To sustain his cause of action, the plaintiff introduced the deed above mentioned, and also a quitclaim deed from Nannie E. Brookfield, dated Jariuary 27, 1906, to J. E. Harris, J. W. Williams and R. H. Mitchell, as trustees for the Wynne Baptist Church, in which she granted, sold and quitclaimed unto the parties named as trustees and unto their successors forever “all of her interest, remainder, or equity of redemption in and to the west 100 feet of block 20 in Brookfield’s original'survey of the city of Wynne.” The habendum clause to this deed recites as follows: “To have and to hold the same unto the said J. E. Harris, J. W. Williams and T. H. Mitchell, as said trustees, and unto their successors and -assigns forever, with all appurtenances thereunto belonging. ’ ’

In June, 1907, the Baptist Church at Wynne, through its trustees, executed an instrument in the nature of a mortgage to the Home Mission board of the Southern Baptist -Convention to secure it in the sum of $1,000, which the board advanced for the purpose of enabling the church to erect a house of worship on the lot described in the quitclaim deed above mentioned from Nannie E. Brookfield to the trustees of the Baptist Church.

On the 17th day of June, 1924, Mrs. Nannie Brook-field executed a deed to J. C. Brookfield by which she conveyed “all my right, title and interest and reversionary interest in and to the land laid out and platted by me as streets and alleys of the city of Wynne, whether so.used or not * * *. This deed is for the purpose and in lieu of a deed between the same parties, conveying the same land, and for the same consideration and purposes, dated about January 27, 1906, and said to have been lost or mislaid. To have and to hold the same unto the said J. C. Brook-field and unto his heirs and assigns forever, with all appurtenances thereunto belonging. And I hereby covenant with said J. C. Brookfield-that I will forever warrant and defend the title to the said lands against all claims whatever.”

J. -C. Brookfield testified, among other things, that these new deeds were copies of deeds that were executed by his mother, which he had lost. He filed and identified a plat showing the location of the -church which had been built on the west end of block 20, extending back about 85 feet from the front or extreme- west end of the block. The defendants were proposing to build an annex which would extend some 25 feet further, and six feet over the street line on the north, or 100 feet from the west end of the block. He further testified that the contract had been let for this building, that considerable material had been placed on the ground, and the excavation therefor had begun when the suit was filed, and the building had since been carried to completion, consisting of ,a two-story brick building, with a cellar extending 25 feet east of the 100-foot lot on which the church was built in 1906, and six feet over the street line on the north. There is nothing on block 20 east of this annex. Witness owned the property, and lived just across the corner to the northwest of the church. The defendant Beamon was the contractor who built the building, and B. B. Merry-man, J. W. Frazier, John Graham, A. J. Harr el, A. J. English, E. W. Newsom, John King and R. H. Mitchell, mentioned in the pleadings and exhibits, are all dead.

Harris testified that he was one of the members of the Wynne Baptist Church, and had been a member for many years. He had held the official capacity of trustee, and also had been a deacon. His recollection was that the first church building was wood. In order to build the brick building it was necessary for the church to borrow money from the bank, and that was the reason Mrs. Brookfield executed the quitclaim deed of January 27, 1906. The church never relinquished any right to the property in controversy during the 25 years witness had been a member thereof. Witness didn’t know of any improvements that had been made on the lot in controversy. A coal-house was on the lot, and a fence was built by Dr. Harris for the benefit of his own property. He also put out some trees. Witness didn’t know of anything being done to keep cattle off of the property. While the church had no particular use for the lot in controversy, it was not costing anything to hold it, and witness saw no reason why the church should release it. The church was paying no taxes on it. Witness stated that the present brick church stands on the same site as the old building. It had to be removed before the new building could be built. 'Some of the material was on the ground and the excavation was begun. Witness had never heard that the plaintiff or his mother were claiming any interest in any part of the lot, and didn’t remember that the question had ever been discussed until after this suit was instituted.

Williams testified that lie had been a member of tbe cbnrcb since 1896, and was made a trustee thereof about two years after he joined, and had been a trustee twenty-five years. He recalled the quitclaim deed given by Mrs. Brookfield to the west 100 feet of block 20. Nothing was said and done by the church at the time this deed was executed to indicate that the church relinquished any claim to any part of said block '20. The first time witness had any knowledge or information that Brookfield or any one for him was claiming an interest in the lot in controversy was when the annex was started, and that was about two years or less before the giving of witness’ testimony. Witness could not say that they had no use for the property in controversy as church property. They thought at one time about building a parsonage on the property, but it was too small for that. Nothing had been done with it, but it was not costing anything in taxes and other ways, and there was no need to relinquish it. When Dr. Harris put the trees out, he first asked permission of the officers of the church to do so.

Dr. Longest testified ■ that he lived twenty years adjoining block 20, just across the street from the church property in controversy. A fence was put around the balance of the block that the church was not on about ten or twelve years ago. It ran up to within about twenty feet of the main brick church. The vacant lot was not used for anything except there was a coal-house built about fifteen or twenty feet from the east end of the brick church and used by the church for storing its coal. Witness remembered that Dr. Catlett’s family used the lot as a pasture for two years.

Brookfield further testified that the church wanted a quitclaim deed to block 20 for the purpose of disposing of the east part of the block, which was about 300 feet in length, and witness told the trustees that he and his mother did not intend to give the church any property to mortgage or sell. The purpose, as told by all the parties engaged in the transaction, was to dispose of this part of the block to one W. W. Black, who was expected to pay the church a considerable amount of money. Witness gave Dr. Harris permission to put a fence around the lot. Witness didn’t know whether the church gave Mrs. Harris permission or not. They did use it to some extent as a cow pasture. Witness gave Mr. and Mrs. Catlett permission to use it as a pasture. The church had no use for the lot, and never would have any use for it for church purposes.

The deeds in the record show that Mrs. Nannie E. Brookfield, the common source of title, first executed a deed to 185 feet off of the west end of block 20 in the town of Wynne, Cross County, Arkansas, and afterwards executed a deed to trustees for a lot to be used for religious purposes, the title to same to revert to her when the property ceased to be used for church purposes. In the deed executed in 1890 she conveyed specifically to the' trustees, naming them, of the Wynne Baptist Church, all of block 20, to be used as a building site for a house of public worship, and, when it ceased to be so used, the title to same should revert to her or to her heirs and assigns. Construing these deeds together, we are convinced that it was the purpose of the grantor, Mrs. Brookfield, to convey all of block 20 to be used for religious purposes and specifically to the Wynne Baptist Church, and that the title thereto should not revert to the grantor so long as the church was using the same for such purposes. While the deed of February 22, 1890, conveys block 20 to the Wynne Baptist Church to be used as a building-site for a house of worship, it is manifest that the grantor intended that, so long as the church used any part of block 20 as a site for a church building, it was to have the title to the entire block. The only reasonable construction to be given to the language is that the grantor intended that block 20 should be dedicated or donated to the Wynne Baptist Church to be used as a building site for its house of worship, and such portions of the lot as remained after the house of worship was erected thereon to be used by the church in connection therewith and for such purposes as the church might desire. It occurs to us that the purpose of the grantor or donor was cleai' to donate the entire block to the Wynne Baptist Church, even though only a small portion thereof was actually occupied by the church building. She' had already donated 185 feet of block 20 for evangelical purposes, and therefore when she gave to the Wynne Baptist Church the entire block she must have anticipated that this church would, or at least might, need the entire block for church purposes. If such had not been her purpose she would undoubtedly have limited the grant and donation by metes and bounds to the specific area necessary to be used only for building the churchhouse.

It is a matter of common knowledge that, in the activities of church life, much more ground than that which is actually occupied by the church building is often devoted to church purposes, such as arbors or tents for outdoor gatherings, rooms and houses, etc., in addition to the regular churchhouse, for the use and convenience of the various subsidiary organizations and societies in connection with and under the supervision of the church itself. The burden was upon the appellant to prove that the condition obtained by which the title to the block in controversy reverted to the grantor, her heirs or assigns, which condition was that the Wynne Baptist Church had ceased to use block 20 as a building site for .its house of worship. This the appellant has wholly failed to prove. The uncontradicted testimony is to the contrary. The Wynne Baptist Church still has its house of worship on block 20 in the town of Wynne, Cross County, Arkansas, although the church building does not cover the entire block.

The decree of the trial court therefore, dismissing the appellant’s complaint for want of equity, is in all things correct, and it is affirmed.


text:
    State use of Prairie County v. Leathem & Company.
    Opinion delivered April 19, 1926.
    1. Judgment—kes judicata.—A judgment in a prior case between the same parties that a contract made by the county court, when there was no appropriation available to meet the expense involved, was ratified by the quorum court subsequently making an available appropriation, is not res jud&cata, as to the question of the validity of warrants subsequently issued in excess of such appropriation.
    2. Counties—warrants in excess op appropriation.—Under Crawford & Moses’ Dig., § 1976, providing that “in no event shall any county court or agent of any county make any contract in excess of any such appropriation made,” etc., h&ld that warrants issued under a contract of the county court for an amount in excess of the appropriation available for payment thereof are void.
    3. Counties—auditing op accounts.—Under the general powers conferred-by Const., art. 7, § 28, and Crawford & Moses’ Dig. § 2279, the county court is authorized to enter into contracts to have the books of the county and the accounts of its officers audited.
    4. Counties—auditing op accounts—appropriation.—It is not necessary that a specific appropriation be made to defray the expense of auditing the books and accounts of county officers, in order to justify the county court in entering into a contract for that purpose.
    ■Appeal from Prairie Chancery Court, Northern District; John E. Marbineau, Chancellor;
    reversed.

      W. J. Waggoner, W. H. Gregory and Murray O. Reed, for appellant.

      Coleman, Robinson £ Rouse, for appellee.
   Wood, J.

On October 11, 1924, the county court of Prairie County entered into a written contract with an accountant to audit the books of all county officers. The contract specified the amount and terms of payments to be -made by the county as compensation for the services rendered. A citizen and taxpayer of Prairie County instituted an action in the chancery court to restrain the county officers from performing the contract, on the ground that the contract was void because, at the time it was entered into, there was no unexpended appropriation for the payment of general county expenses. That cause wa(S heard on an agreed statement of facts, in which it was stated that there was no specific appropriation made ¡by the quorum court for the purpose of paying for the audit of the books of county officers, and that the appropriation for general county purposes for the current fiscal year had been entirely expended. The trial court dismissed the complaint for want of equity, and on appeal to this court an additional record was lodged here, showing that the quorum court of Prairie County at its regular session had made an appropriation for general county purposes, which appropriation’ was unexpended, and that the county court, on October 30, 1924, the same being a day of the regular term of that court, entered an order ratifying and approving the original contract of October 11, 1924. This court, in passing upon the above facts, said: “Conceding, without deciding, that the contract was void and unenforceable at the time of its execution because of the fact that there was no unexpended appropriation of funds, the county court had full power, after the appropriation had been made, by the quorum court, to enter into a contract with the accountant to audit the books of the several county officers, and the ratification, of the original contract was .valid for the reason that it was tantamount to making a new contract.” Craig v. Grady, 166 Ark. 344. The court further found that, under authority of § 1982, C. & M. Digest, providing for an appropriation for “such other expenses of county government as are allowed by the laws of this State,” an appropriation under that head would be sufficient to authorize the ratification, of the contract of October 11, 1924, which was tantamount tó the making of a new contract. The court thereupon dismissed the appeal, holding that the contract of October 11, 1924, was valid, and entered a decree denying the petition for injunction. Thereafter, on January 23, 1925', this action, was instituted by the State for the use of Prairie County against E. F. Leathem & Company and the treasurer and collector- of Prairie County. It was alleged in the complaint, among other things, that the contract entered into by the county court with Leathern & Company for the audit of the accounts of the officers of Prairie County was fraudulent and void for various reasons; among others, because county warrants had been issued to Leathem & Company under the contract in the sum of $7,134.99, which sum was far in excess of the appropriation made by the quorum court; that such was the situation at the October term, 1924, of the county court, when the contract of October 11,1924, was ratified. The plaintiff prayed that the collector be enjoined from accepting any of the warrants issued under the contract in payment of taxes, and that the treasurer be enjoined from paying any of said warrants, and that the contract, upon a final hearing of the cause, be canceled, and the outstanding warrants issued thereunder be also canceled.

The defendants, in their answer, denied the material allegations of the complaint, and pleaded the former decree of the Prairie Chancery Court and of this court, on appeal above mentioned, as res judicata of the present action. The undisputed facts in the record are to the effect that the quorum court of Prairie County had duly appropriated the sum of $5,000 on October 22, 1924, for general county purposes. This was the amount of the appropriation for general county purposes when the county court, on October 30, 1924, entered an order ratifying the contract of October 11, 1924. Warrants have been issued under the contract as ratified amounting in the aggregate to the sum of $7,134.99. It was shown that warrants in the sum of $2,551.20 were ordered issued by the county court to Leathem & Company after the general appropriation had been wholly expended.

The view we have reached makes it unnecessary to set forth any of the testimony except that bearing upon the issue of whether or not the warrants issued under the contract to the extent of the excess over the appropriation made to defray county general purposes are void. The trial court found that the contract and warrants issued thereunder were valid, except certain warrants for which the county received credit, and not in dispute here, and rendered a judgment dismissing the complaint .for want of equity, from which is this appeal.

1. The case of Craig v. Grady, 166 Ark. 344, and the judgments of the trial and Supreme Court in that case, are not res judicatae of the issues joined in the present action. The only issue raised in the case of Craig v. Grady, supra, was whether or not the contract of October 11, 1924, was invalid because at the time it was entered into there was no appropriation to meet the expenses that would ¡be incurred under the contract. This court held that the contract, after it was made, was ratified by the county court, and that at the time of the ratification, there was an appropriation to meet the expenses of county government, and that such ratification made the contract valid. While in legal effect the parties to that action were the same as in this, that is, the interests of the county on one side and that of Leathern' & Company on the other, in determining the validity of the contract, nevertheless the issue was not the same, and, so far as this record discloses, there is nothing to show that the contract was then assailed, or that it could have been attacked, because of the fact that at the timé of its ratification the appropriation for general county purposes had been exhausted. There is nothing in this record to show that at the time the contract of October 11,1924, was ratified, warrants had been issued in excess of the appropriation for general county purposes in the sum of $2,551.20.

In Craig v. Grady, supra, it appears that, at the time the contract was ratified, there was an unexpended appropriation for general county purposes, and there is nothing in this record to show that at that time the warrants in controversy had been issued. To be sure, if the warrants now in controversy had not been issued at the time of the ratification of the contract then the contract was not subject to challenge on that ground. So the issue here as to the validity of these warrants was not raised in Craig v. Grady, supra, and could not have been raised, and the judgments in that case are not res judicatae of the issue here raised as to the validity of the warrants issued in excess of the appropriation.for county general purposes.

2. Section 1976 of C. & M. Digest provides that: “No county court or agent of any county shall hereafter make any contract on behalf of the county unless an appropriation has been previously made therefor and is wholly or in part unexpended, and in no event shall any county court or agent of any county make any contract in excess of any such appropriation made, and the amount of such contract or contracts shall be limited to the amount of the appropriation made by the quorum court. ’ ’ This section is an amendment of § 5 of the act of March 18, 1879, which provides as follows: “No county court or agent of any county shall hereafter make any contract on behalf of the county unless an appropriation has been previously made therefor and is wholly or in part unexpended.”

In Durrett v. Buxton, 63. Ark. 397, and Hilliard v. Bunker, 68 Ark. 340, we held that it is not essential to the validity of contracts for the building of county courthouses and jails that there should first be an appropriation made therefor, because these are covered by special statutes upon the subjects; but in all other cases, not covered by special statute, and involving the expense of county general government, we have held that it is a prerequisite to the validity of such contracts that there shall first be an appropriation therefor. See Fones v. Erb, 54 Ark. 657; Wiegel v. Pulaski County, 61 Ark. 77. While it was a prerequisite to the validity of contracts involving the general expense of county government, except those named, that there be first an appropriation for such expense, such contracts, before the amendment to the act of March, 1879 (§ 1976, C. & M. Digest), were not invalid because they were not limited to the amount of the appropriation for the purposes named. But, under the express language of the above amendment, “in no event shall any county court or agent of any county make any contract in excess of any sncli appropriation made, and the amount of such contract or contracts shall be limited to the amount of the appropriation made by the quorum court. ’ ’ Before this amendment was enacted we said that it was the purpose of the act of 1879 -‘to prevent the county court from making unnecessary, improvident and ruinous contracts.” Durrett v. Buxton, supra. Such being the purpose of the original act, certainly the amendment was intended to more completely effectuate that object. We conclude therefore that the warrants issued under the contract in excess of $5,000, the amount .of the appropriation made for general county purposes, are absolutely void.

In Scott County v. Advance-Rumley Thresher Co., 288 Fed. 739, at page 747, the Circuit Court of Appeals, passing on an Arkansas contract made by the county court for the purchase of a tractor for road work, when there was no appropriation by the quorum court for road work, and when the amount exceeded the sum appropriated for other expenses of county government, referring to § 1976, C. & M. Digest, supra, said: ‘‘Before the amendment to the act referred to it had been held by the courts of Arkansas and by the Federal courts that, where a contract had been made, if there was any appropriation, the contract could exceed the appropriation, but the amendment of 1917 to the original act seems to have been for the particular purpose of preventing that in the future.” The court held that the action of the court in making the contract under these circumstances was void.

We have held in quite recent cases that it is within the jurisdiction of the county court to enter into contracts to have the books of the county and the accounts of its officers audited. Leathem & Co. v. Jackson County, 122 Ark. 114; Buron v. Little River County, 165 Ark. 535. But we do not hold In those cases, and have not held in any case, that it is within the power of the county court to enter into such contracts either where no appropriation has been made or where the appropriation for general county expenses has .been exceeded in the amount of the consideration of such contracts. It is not necessary that a specific appropriation be made to defray the expense of auditing the books and accounts of officers of the county in order to justify the county court in entering into a contract for that purpose. This does not fall within the category of objects for which special appropriations must be made, under the acts of May 31, 1909, § 2, p. 902, § 1982, C. &. M. Digest, subdiv. sixth, (1-6). But it does come within the category of (7), to-wit: “to defray other expenses of county government as are allowed by the laws of this State.” Craig v. Grady, supra. There is no special statute making it the duty of the county court, in specific terms, to employ an auditor to audit the accounts of the officers of the county. Hence we do not have before us the question of the validity of a contract which the officer was specifically directed by special act of the Legislature to enter into. Therefore the case of Nevada County v. Printing Co., 139 Ark. 502, upon which counsel for appellees rely, has no application. That case, however, is authority for holding that a claim on a contract cannot be allowed and warrants issued thereunder and paid where no appropriation has been made for its payment: But, as we have already stated, the county court has power, under the general powers conferred upon it by our Constitution and laws, to enter into contracts for the auditing of the accounts of county officers. See § 28, article 7, Constitution; § 2279, C. & M. Digest.

As we have seen, the case of Craig v. Grady, supra, is res judicata as to the validity of the contract and warrants issued thereunder in all particulars to the extent of the appropriation made for general county purposes when the contract was ratified. But it follows from what we have said that the contract for an amount exceeding this appropriation and the warrants issued and directed to be paid in excess of such appropriation are null and void. The learned trial court erred in. not so holding. The decree is therefore reversed, and the cause will be remanded with directions to cancel' the outstanding warrants in favor of the appellees in the sum of $2,551.20, and to perpetually enjoin the collector from receiving, and also the treasurer from receiving and paying, such warrants.


author: Hart, J.,

text:
    McFadden v. A. B. Richards Medicine Company.
    Opinion delivered April 19, 1926.
    1. Appeal and error—exceptions saved how.—Exceptions to the giving or refusal of instructions must be made during the trial and brought into the record by bill of exceptions, and it is not sufficient merely to assign such matter as ground for a motion for a new trial.
    2. New trial—newly discovered evidence—evidence.—A party asking a new trial for newly discovered evidence should not only state in his motion that he did not know of the existence of the testimony in time to produce it at the trial, but should also show facts from which it will appear that he could not have ascertained or obtained such evidence by reasonable diligence.
    3. New trial—new evidence—diligence.—Defendant, sued for a bill of drugs, could.not rely upon the fact that his order had been materially altered, in a motion for new trial for newly discovered evidence, where at the time of trial he had had the carbon copy of the original order and neglected to produce it.
    Appeal from Miller Circuit Court; J. H. MoGollum, Judge;
    affirmed.
    STATEMENT BY THE COURT.
    * This suit was brought in a municipal court by A. B. Richards Medicine Company against J. W. McFadden to recover the sum of $38.60, the balance alleged to be due for the purchase price of a bill of drugs.
    There was a judgment in favor of the defeudant in the municipal court, and the plaintiff - appealed to the circuit court.
    O. H. Woodrow, secretary and treasurer of the A. B. Richards Medicine Company, a corporation engaged in doing business at Sherman, Texas, was the principal witness for the plaintiff. According to his testimony, the defendant, J. W. McFadden, through a traveling salesman of the plaintiff, sent in a written order for a bill of drugs, which was accepted by the plaintiff, and the drugs were shipped to the defendant at Texarkana, Arkansas, under the contract. The drugs invoiced $38.60, and were shipped by express to the defendant. The plaintiff was notified by the express company that J. W. McFadden refused to accept the drugs, and that it would sell the same for transportation charges. To prevent this action on the part of the express company, the plaintiff took possession of the drugs and stored them in its warehouse, subject to the orders of the defendant. The contract was in writing, and was also introduced in evidence by the plaintiff. The contract contained this notation, ‘ ‘ freight allowed.” This meant that the buyer should pay the transportation charges and that he would receive credit for the same when he paid the purchase price.
    J. W. McFadden was a witness for himself. According to his testimony, he gave an order for the goods sued for with the understanding’ that they were to be delivered at his place of business in Texarkana, Arkansas, and at the time of signing the order he advised the salesman of the plaintiff that he would not receive the goods or pay for them unless so delivered. He was notified by the express company that the goods were at its office, and admitted that he could have gotten the goods by paying the drayage from the express office to his place of business, but that this was not according to contract. The express company refused to deliver them unless he p,aid the transportation charges.
    The' jury returned a verdict in favor of the plaintiff in the sum of $38.60, and from the judgment rendered the defendant has duly prosecuted an appeal to this court.

      J. D. Cook, for appellant.

      John N. Cook, for appellee.
   Hart, J.,

(after stating the facts). The first assignment of error is that the court erred in one of its instructions to the jury, which is specifically referred to in the defendant’s motion for a new trial. We do not deem it necessary to set out this instruction or to decide whether or not it was error to give it. No objection was made or exceptions saved to the action of the court in giving the instruction complained of. It is well settled in this State that exceptions to the action, of the trial court in giving or refusing instructions must be made during the trial and brought into the record by bill of exceptions. It is not sufficient to merely assign the giving or refusing of instructions as grounds for a motion for a new trial. DeQueen & Eastern Rd. Co. v. Pigue, 135 Ark. 499; and Martin v. Duke, 156 Art. 54.

Another ground of the defendant’s motion for a new trial is for newly discovered evidence. The party asking a new trial for newly discovered evidence should not only state in his motion that he did not know of the existence of the testimony in time to produce it at the trial, but should also show facts from which it will appear that he could not have ascertained or obtained such evidence by reasonable diligence. McDonald v. Daniel, 103 Ark. 589; Huckaby v. Holland, 150 Ark. 85; and Caddo Central Oil & Refining Corp. v. Boatright, 159 Ark. 305.

The newly discovered evidence is a carbon copy of the original order signed by the defendant, and it is claimed that, by comparison of it with the original order which was introduced in evidence, the original order had been changed by writing in the words ‘ freight allowed. ’ ’ The defendant knew that his failure to pay the freight was the'cause of the lawsuit. When the original order with the notation on it, “freight allowed,” was introduced in evidence, this should have put him on notice that these words had been added after he sent in the order, if such was the case. His failure to have a carbon copy at the trial was due to his own negligence in the matter. In this connection it may be noted that the trial was had in the town where the defendant’s place of business was situated. Hence, under the rule announced in the case above cited, the court did not err in refusing to grant a new trial for newly discovered evidence.

No error is relied upon for a reversal of the judgment, and it will be affirmed.


author: Smith, J.

text:
    Tankersley v. Fortner.
    Opinion delivered April 19, 1926.
    Assault and battery—self-defense—instruction.—In an action for assault and battery, an instruction that “anger and abusive language will in no event justify an assault and battery or an assault; language, however insulting or slanderous, does not justify an assault or an assault and battery, unless you further find that the plaintiff was the aggressor, and then only in mitigation of damages,” held erroneous, since the fact that plaintiff was the aggressor would have been an absolute defense, provided defendant used no more force in repelling plaintiff’s assault than appeared to him to be reasonably necessary.
    Appeal from Sebastian Circuit Court, Fort Smith District; John E. Tatum, Judge;
    reversed.

      Warner, Hardin & Warner, for appellant.
   Smith, J.

Appellee, who was the plaintiff below, alleged in his complaint that appellant had assaulted and beaten him, and prayed judgment for damages, both compensatory and punitive. At the trial from which this appeal comes the jury returned the following verdict: “We, the jury, find for the plaintiff in the sum of $500 actual damage,” thus indicating that punitive damages were not assessed, and from the judgment rendered upon this verdict is this appeal.

Appellee testified that he went to a dairy operated by appellant and appellant’s sons to advise them that their chickens were depredating on his .lots, and to ask that the chickens be put up. He testified that he communicated the information and request in a civil manner, but appellant became angered, and assaulted him with a rock, with which he struck appellee over the eye, and that as a result of this blow appellee had lost the sight in the eye.

On the contrary, appellant and his sons testified that appellee came to their barn, where they were milking their cows, and cursed and abused them about allowing their chickens to run over appellee’s premises, and that they ordered appellee to leave, and he refused to do so, and assaulted appellant. Appellant was asked: “Did you hit him (appellee) with a brick or anything?” and answered: “No sir, he hit at me, drawed back and hit at me; he was coming back toward me; he started off, and turned and came back and called ine a son-of-a-bitch, and drawed back and hit at me, and I knocked his lick off, and popped him just one lick.”

The court, over appellant’s objection, gave an instruction on the measure of damages which authorized the jury, in the event they found for appellee, to assess such sum as damages as would compensate appellee for future pain and suffering and for future medical services, if it were found that appellee would probably suffer future pain and would require additional medical treatment. There was testimony on which to predicate this instruction, and these are recoverable elements of damage.

Appellant also insists that the verdict is excessive under the undisputed evidence; but we do not think this can be said to be true as a matter of law, and certainly not if appellee’s injuries are as serious as he stated they were, including the loss of the sight in one of his eyes.

The court gave, over appellant’s objection, an instruction numbered 5, reading as follows: “You are instructed that anger and abusive language will in no event justify an assault and battery, or an assault; language, however insulting or slanderous, does not justify an assault or an assault and battery, unless you further find that the plaintiff was the aggressor, and then only in mitigation of damages.”

We think there was error in this instruction. It appears to mean that language will in no event justify an assault and battery, however slanderous or abusive, unless the person using such language is also the aggressor, and that even when this is true these facts can be considered only in mitigation of damages.

The law is that insulting and abusive language will not justify an assault, or an assault and battery, but may be considered only in mitigation of a claim for damages; but if one is assaulted, he may prove the aggression of his adversary, not only in mitigation of damages, but as an absolute defense against liability for any damage, provided he used no more force in repelling the assault than appeared to him to be reasonably necessary for that purpose. This is true in a prosecution for a violation of the law as well as in a civil suit for damages.

The instruction does not conform to this view of the law, and it was error therefore to give it.

No other error appears, but, for the error indicated, the judgment must be reversed, and the cause remanded for a new trial, and it is so ordered.


author: Humphreys, J.

text:
    Geyer & Adams Company v. Bank of Central Arkansas.
    Opinion delivered April 19, 1926.
    1. Garnishment-—time of filing answer—discretion of court.— Where the answer of a garnishee was filed before a default judgment was obtained against the- debtor and within a -short time after the return day of the writ, it was within the court’s discretion to refuse to strike the answer from the files.
    2. Trial—right to transfer cause to equity.—A law case was properly transferred to equity where the case involved the priority of liens, one of which was equitable in nature and cognizable in equity.
    3. Banks and banking—restricted deposit—diversion.—A bank deposit made for a specific purpose is not subject to diversion by garnishment or other process, but must be used for the purpose specified.

      Appeal from Lonoke Chancery Court; John E. Martineau, Chancellor;
    affirmed.

      Charles Q. Kelley and Henry E. Spitzberg, for appellant.

      Trimble & Trimble, for appellee.
   Humphreys, J.

This suit was originally brought in the circuit court of Lonoke County against O. E. Hicks and H. H. Hicks upon two promissory notes executed by them to R. M. Tippett & Company and by said company indorsed to appellant without recourse. A writ of garnishment was sued out and served upon appellee on July '27, 1923, the date the suit was instituted.

Appellee, garnishee, filed an answer to the complaint and interrogatories on August 18, 1923, denying that it was indebted to O’. E. Hicks in any sum or that it had any property in its possession belonging to him, but admitting that it had $21 belonging to H. H. Hicks, which it tendered into court.

By way of further answer it admitted that O. E. Hicks had a balance to his credit in the bank which it had advanced to O. E. Hicks and H. H. Hicks to grow a rice crop on their farm in 1923, which was secured by a chattel mortgage executed to it by them on the 24th day of March, 1923, under a distinct understanding that O. E. Hicks would check it out for no other purpose than for expenses incurred in growing the crop. It asserted an equitable lien upon the fund paramount to that claimed under the garnishment, and requested that the cause be transferred to the chancery court, which was done during the trial of the cause, over the objection and exception of appellant. The trial in the chancery court resulted in a rendition of a judgment by default against the defendants, O. E. Hicks and H. H. Hicks, for $1,303.18 in favor of appellant, and a dismissal of the garnishment proceedings against appellee. Appellant has duly prosecuted an appeal to this court from the decree dismissing the garnishment proceedings.

The facts in the case are undisputed and, in substance, are as follows: O. E. Hicks and H. H. Hicks were rice farmers, who lost so heavily in the year 1920 that they were compelled to mortgage their farm for $28,000 to cover their losses and to raise money to grow their annual crops .by pledging all their personal property, together with their growing crops. They were really insolvent, but had not taken the benefit of the bankrupt law. The unsecured paper upon which appellant sued them was given for supplies furnished in 1922 and up to February, 1923. In accordance with the custom existing for several years, they executed a mortgage on March 24, 1923, covering their personal property and the 1923 crop, to appellee to secure advances to grow the crop, which was placed to the credit of O. E. Hicks in the bank from time to time, with the distinct understanding that it should be checked out by him to pay the expenses of raising the crop, and for no other purpose. It was agreed that appellee might cancel or refuse to cash any cheek or checks drawn on the account for other purposes. The account was not designated on the books of the bank as a special account or deposit, and it was referred to by the witnesses as a general checking account or general deposit, when questioned upon that point.

Appellant’s first contention for a reversal of the decree is that appellee did not answer the interrogatories exhibited against it on or before the return day of the writ, in accordance with § 4916 of Crawford & Moses ’ Digest. The answer of appellee was filed before the default judgment was obtained .and within a short time after the return day of the writ. The court, in the exercise of its discretion, refused to strike the answer from the files, and we cannot say, under the circumstances, that there was any abuse of discretion on the part of the court. This was a discretionary matter with the court. 28 Corpus Juris, § 422, p. 289; 20 Oye. p. 1082.

Appellant next contends for a reversal of the decree because the cause was transferred to the chancery court. The real issue involved was the priority of liens, one of which was equitable in nature and cognizable in equity. It was proper therefore to transfer the cause to that court.

Appellant’s last and chief contention for a reversal of the decree is that appellee had no lien whatever upon the general deposit of O. E. Hicks, and- that none could be acquired under the doctrine of offset after the service of the writ of garnishment. There would be much in this contention if the deposit was general, growing out of the relationship of debtor and creditor between O. E. Hicks and the appellee bank. This unconditional relationship did not exist, for, under the agreemeiit, O. E. Hicks could not draw checks upon the fund for any purposes except to pay debts incurred in growing the 1923 rice crop. It is immaterial that the witnesses referred to the fund as a general deposit, for, under the agreement, it was deposited to the credit of O. E. Hicks by appellee for a special purpose, so neither O. E. Hicks nor his general creditors had any right to divert it. Certainly the garnisher, who is the appellant and plaintiff in this action, gained no greater right to or over the deposit than O. E. Hicks, and he was given authority to use it for one purpose only. A restricted deposit is not subject to diversion by garnishment or other process, but must be used for the purpose made. In short, the fund was not subject to garnishment by the general creditors of O. E. Hicks. No lien was acquired upon it by the service of the writ, hence the court correctly dismissed the garnishment proceedings.

The decree is affirmed.


text:
    Bauer v. Wade (two cases).
    Opinion delivered April 19, 1926.
    1. Usury—intent of lender.—Under Const, art. 19, § 13, providing that all contracts for a greater rate of interest than 10 per cent, per annum shall he void as to principal and interest, and that the General Assembly shall prohibit the same by law, held that a mutual agreement to give and to receive unlawful interest is not necessary to constitute usury, but there must have been an intention on the part of the lender to take or receive more than the legal rate of interest.
    2. Usury—burden of proof.-—The burden of proof is upon the party pleading usury to establish it.
    3. Usury—sufficiency of evidence.—A finding of the chancellor that a certain transaction was free from usury held, sustained by the evidence.
    4. Mortgages—foreclosure sale—inadequacy of consideration.— While a foreclosure sale will not be set aside for inadequacy of consideration merely, equity will seize upon any other ground which tends to show unfairness in the conduct of the sale, or that the defendant in the case or other parties were prevented by unavoidable casualty from attending the sale.
    5. Mortgages—confirmation of sale for inadequate price.—The defendant in a foreclosure suit executed a supersedeas bond which he was advised would stop a sale of the property, and he so informed persons who might have purchased at the sale; without his knowledge the bond was not accepted, and the property was purchased by plaintiff for one-fourth of its value. Held that the court erred in confirming the sale.
    Appeal from Benton Chancery Court; Sam Williams, Chancellor;
    reversed as to case Ño. 9373; affirmed as to case No. 8990.
    STATEMENT BY THE COURT.
    These two cases were heard and determined separately in the chancery court, but have been briefed together on appeal.
    The appeal in the first case involves the correctness of a decree foreclosing a mortgage on real estate and denying the defendant’s plea of usury.
    The appeal'in the, second case involves the correctness of a decree of the chancery court refusing to set aside the sale in the foreclosure proceedings on account of gross inadequacy of price coupled with unavoidable casualty.
    H. K. Wade and Katie Wade, his wife, brought, suit in equity against Gottlieb Bauer and Catherine Bauer, his wife, to foreclose a mortgage on real estate. The defendants pleaded usury as a defense to the action.
    On the 5th day of March, 1923, Gottlieb Bauer and Catherine Bauer, his wife, executed a mortgage on 640 acres of land in Benton County, Arkansas, to H. K. and Katie Wade, to secure an indebtedness of $5,500, evidenced iby note of even date, and due six months after date, with interest at the rate of 10 per cent, per annum from date until paid. The mortgage was duly acknowledged on the 8th day of March, 1923, before a notary puj^c, and was filed for record on the'16th day of March, 1923. A mortgage was also executed on certain personal property to secure said indebtedness.
    The defendants, in order to sustain their plea of usury, first called as a witness H. K. Wade, one of the plaintiffs in the suit. He was asked if, at the time the promissory note and the two mortgages sued on were executed, there was any other contract in writing between the parties, and answered, “No.” He was then asked what other deeds or conveyances were executed by the defendants to him, and replied, “None, except the mortgage. ’ ’ He was then asked if a deed to 40 acres of land had not been executed to him by Bauer, and answered, “No.” The witness stated further that the first time he ever heard of the deed to the 40 acres of land to himself was when he was asked on the witness stand if Bauer had not executed such a deed to him.
    Gottlieb Bauer was the principal witness for the defendants. He admitted that he executed the mortgage on the lands described in the complaint, and stated that he lived on the 140 acres adjoining these lands. Mr. C. A. Owenby had a mortgage on the 640 acres of' land in question to secure an indebtedness of four thousand three hundred and twenty-odd dollars. The mortgage indebtedness became due, and tbe mortgagee had been threatening to foreclose it. Bauer went to Wade two or three times, and talked to him about borrowing the money with which to pay off the mortgage to Owenby. Bauer told Wade that he had a contemplated purchaser for the lands, but he did not want to sell them if he could avoid it. He wanted to borrow enough money to discharge the mortgage indebtedness to Owenby in order to give him time to dispose of the lands to a better advantage. Wade agreed to let him have $4,500 with which to pay off the Owenby mortgage, but required him to sign a note for $5,500 and to deed him 40 acres of land in order to-get the $4,500. He executed a note for $5,500 payable to H. K. and Katie Wade, bearing .interest at ten per cent, per annum from date until paid. The additional thousand dollars was a bonus to Wade in order to induce him to lend the witijgss $4,500. Earl Blansett, the attorney of the witness, prepared the deed to the 40 acres of land which was conyeyed by Bauer to Wade. Wade agreed that, if Bauer should pay him $5,500, he would reconvey to him the 40 acres of land. A contract to this effect in writing was executed by the parties and left with Mr. Blansett. The witness does not know what has become of this contract. The 640 acres of land were timber lands situated about four and a half miles from the town of Lowell and an equal distance from Springdale, which is on a railroad. Wade lived at Fayetteville, and sent the mortgage to Bauer to be executed. Bauer turned over the papers to his attorney for examination. Blansett asked the witness if he had bought any land from Wade, and told him that there was a deed from Wade to Bauer to 40 acres of land, but did not tell the witness where the land -was situated. The witness never examined the land and never accepted the deed from Wade to the 40 acres of land in Washington County, Arkansas. He executed the mortgage to Wade, and then got the $4,500, which Wade had deposited to his credit in the bank, and used all of it, except $178, in paying'off the .Owenby mortgage, and checked out the $178 for his own benefit.

      Earl Blansett was also a witness for the defendants. According to his testimony, he went with Bauer to Fayetteville to arrange with Wade about borrowing the $4,500. The agreement was entered .into verbally between the parties, and Wade was to have the mortgage drawn up by his own attorney and sent to Bauer for execution. Nothing was said about the purchase of any land. The first information the witness had that Bauer was to receive a deed from Wade to 40 acres of land was when Bauer brought it to his office at the time he brought the mortgage for examination. Bauer had executed a deed to 40 acres of land and acknowledged it in the office of the witness, and then sent the deed to Mr. Wade at Fayetteville. The witness had prepared a written contract to be signed by Wade and Bauer, but the contract is now lost. It bore the signature of H. K. Wade, and the substance of the contract was that H. K. Wade would deed back to Bauer a certain 40 acres of land that Bauer had deeded to Wade upon the condition that Bauer would pay $5,500 to Wade.
    Other witnesses were introduced by the defendants, who testified that the 40 acres of land in Washington County were situated in a canyon, and were not worth more than $50. It had on it a fairly good one-room log house, a small smokehouse, and a small barn. Another witness testified that he had sold the land for $100.
    H. K. Wade became a witness for the defendants. According to his testimony, he had been cashier of the Mcllroy Banking Company at Fayetteville, Arkansas, for thirty years. Bauer came to him and wanted to borrow $4,500 to pay off a mortgage on 640 acres of timber lands owned by him in Benton County. He got to talking about land deals, and Wade told Bauer that he had 40 acres of timber land that he had never seen which he would like to sell to him. Bauer said that he would buy the land, provided that he could get a loan on his own lands to take care of the purchase price. Wade proposed to sell the 40 acres to Bauer for $1,000 and lend him enough on the 640 acres to take care of the two debts. Wade liad not seen the 40 acres .in controversy, and did not know what it was worth. He had bought it at a foreclosure proceeding. Wade did not charge Bauer a bonus of $1,000 for making the loan and did not require him to purchase the 40 acres of land before he would lend him thé $4,500. He never saw any deed from Bauer to himself for 40 acres of land, and did not execute a contract with Bauer to deed him back 40 acres of land when he should pay off the mortgage indebtedness of $5,500. Bauer told Wade at the time he was seeking to'arrange for the loan that he was going to sell his 640 acres of land in 40 and SO'-acre tracts.
    The chancellor found that the deed executed by Wade to Bauer to 40 acres of land in Washington County in consideration *of a thousand dollars had never been legally received nor accepted by Bauer, and it was decreed that it should be canceled and the title to the same vested in the plaintiffs. On this point the court found further that $1,000 should be deducted from the mortgage indebtedness on account of the cancellation of this deed.
    The court further found that the defendants understood that they were to convey to the plaintiffs a deed to 40 acres of land in Benton County, and that they after-wards executed a deed to it to the plaintiffs, together with a written contract providing for the redemption of the said lands upon the payment of a thousand dollars.
    The court further found that said deed had been lost, and had never been delivered to the plaintiffs or accepted by them, and that no contract had been entered into by the parties with regard to this 40 acres of land. In this connection, it may be stated that this 40 acres was in eluded in the lands embraced in the mortgage.
    It was decreed that the mortgage should be foreclosed for the payment of the $4,500 and the accrued interest.
    An appeal to this court was taken by the defendants from this decree within six months after its rendition.
    ‘In the second case the record shows that there was a sale according to the provisions of the foreclosure decree, and that H. K. Wade bid in the lands for $2,500, which was only one-fourth ■ of their' market value. Other facts relating to this case will be stated under an appropriate heading in the opinion.
    The chancery court refused to set aside the bid of H. K. Wade at the foreclosure sale, and confirmed the sale made to him. To reverse that decree the defendants have also prosecuted an appeal to this court.

      John W. Nance and Earl G. Blansett, for appellants.

      John Mayes and W. N. Ivie, for appellees.
   Hart, J.,

(after stating the facts). Article 19, § 13, of our 'Constitution provides that all contracts for a greater rate of interest than 10 per cent, per annum shall be void as to principal and interest, and that the General Assembly shall prohibit the same by law. In construing this section of the Constitution and the statutes passed pursuant to its directions, it had been held that a mutual agreement to give and receive unlawful interest is not necessary to constitute usury, but that there must have been an intention on the part of the lender to take or receive more than the legal rate of interest. Garvin v. Linton, 62 Ark. 370, and Jones v. Phillippe, 135 Ark. 578.

In this connection it may be also stated that, under this case and other eases decided by this court, the burden of proof is upon the party pleading usury to establish it. Briant v. CarlLee Brothers, 158 Ark. 62, and Hollan v. American Bank of Commerce & Trust Co., 159 Ark. 141.

In the case at bar, we have a specific finding of the chancellor in favor of the plaintiffs on the question of usury, and, after due consideration of the whole matter, we are of the opinion that it cannot be said that a clear preponderance of the evidence is against his finding on this question.

In the first place, counsel for the defendants seek to sustain their plea of usury on the facts established with regard to the conveyance of the 40 acres of land in Washington County by Wade to Bauer. The preponderance of the evidence 'shows that' this land was of but little value, and it is insisted that the fact that Wade conveyed it to Bauer in consideration of a thousand dollars shows that it was intended as a cover for usury. On this point, Wade testified that all the lands embraced in the mortgage were timber lands, and that, when Bauer applied for the loan, he told him that he had a 40-acre tract he had never seen which he would sell him for a thousand dollars, and that there was no intention whatever to use this as a cloak for usury. In other words, according to his testimony, it was a bona fide sale of the 40-acre tract of Bauer for one thousand dollars.

On the other hand, Bauer testified that, at the time the arrangement was made for him to borrow the money, nothing whatever was said about Wade deeding him 40 acres of land for a thousand dollars. According’ to his testimony, the additional thousand was put in the mortgage on an entirely different ground, which will be separately discussed in this opinion.

Bauer further states that, when his attorney explained the deed to the 40 acres of land in Washington County to him, he refused to accept it on the ground, that it was not in the contemplation of the parties when the agreement for the loan was made and was no part of that transaction. If his version be accepted as true, there was no usury on this account, because the deed from Wade to him to the 40 acres in Washington County did not enter into their original transaction at all, and anything done by Wade subsequently which was not a part of the original transaction could not now be used by the defendants as a predicate for usury.

According to the testimony of Bauer, he based his defense of usury entirely upon the fact that Wade required him to convey to him 40 acres of land in Benton County as a bonus before he would make the loan. As a part of the same transaction, Wade agreed to reconvey this 40 acres to Bauer when he should pay off the mortgage indebtedness of $4,500 and the thousand dollars additional which were to be considered as a bonus for making the loan. According to the testimony of Bauer, he executed a deed to Wade to this 40 acres of land, and at the same time signed the contract, and that he delivered the deed and the contract to his attorney to he sent to Wade. In this respect he is corroborated by the attorney, who says that the contract has been lost, and that after diligent search he has been unable to find it.

On this point, Wade denied that he ever executed any such contract or that he ever received a deed to 40 acres of land from Bauer. In this connection, it may be stated that the 40 acres of land to which it was claimed that he was to receive a deed was a part of the 640 acres embraced in the mortgage.

The chancellor made a specific finding in favor of the plaintiffs on this phase of the case, and it cannot be said that his finding is not sustained by the evidence. As we have already seen, the burden of proof was upon the defendants to establish their plea of usury by a clear preponderance of the evidence, and the chancellor did not err in holding that they had not fairly met the burden of proof in this respect.

The chancellor did allow a credit of $1,000 on the mortgage indebtedness; but this was upon the ground that the minds of the parties never met upon the trade for the 40 acres of land in Washington County. As we have already seen, Wade testified that this was a separate transaction from the mortgage, and that the thousand dollars which was to be the purchase' price of the land was embraced in the mortgage as additional security. On this point the defendants denied that any such trade had been made, and, the court being of the opinion that, the minds of the parties having never met, the contract in this respect should be annulled and set aside. Hence it was decreed that the title to the 40 acres of land in Washington County should be quieted in the plaintiffs, and that the defendants should receive a credit on the mortgage indebtedness for a thousand dollars. According to the testimony of Wade, the sale by him of the Washington County land to .Bauer was separate and apart 'from the loan of the $4,500, and it was embraced in the mortgage merely so that he might have additional security for the payment of the $1,000. Oh the other hand, according to the testimony of Bauer, there was no trade whatever for the Washington 'County land. Hence the court did not err in eliminating it entirely from the foreclosure proceedings. This left the foreclosure decree for $4,500 and the accrued interest, which was the amount of money actually received by the defendants from the plaintiffs.

It follows that the decree in the’ foreclosure proceeding should be affirmed.

We now come to a consideration of the decree refusing to set aside the bid of H. K. Wade for the lands embraced in the mortgage at the foreclosure sale. The record shows that he became the purchaser of the lands for $2,500, and that they were worth at least $9,000. Some of the witnesses placed the value of the lands at $10,000 and upwards. In áddition to this, the defendant had executed a supersedeas bond, as he understood it, in the foreclosure suit for the purpose of preventing a sale of the land under the foreclosure decree.' He was informed by his attorney that this would stop the sale under the foreclosure decree, and so informed the people in his part of the county who might be prospective purchasers at the sale. On this account the prospective bidders for-the property did not attend the sale, and the defendant Bauer himself failed to attend it. The bond was not accepted, but Bauer did not know of this fact until after the property had been stricken off to Wade.

Under this state of the record we are of the opinion that the court should have rejected the bid of Wade and have resold the lands under the foreclosure decree. While this court is committed to the rule that a judicial sale will not be set aside for inadequacy of consideration merely, still a court of equity will seize upon any other ground which tends to show unfairness in the conduct of the sale, or that the defendant in the case or other parties were prevented by unavoidable casualty from attending the sale, in connection with inadequacy of consideration, to set aside the sale. Stevenson v. Gault, 131 Ark. 397; Moore v. McJudkins, 136 Ark. 292; and Chapin v. Quisenberry, 138 Ark. 68.

In the case at bar, H. K. Wade, one of the plaintiffs, purchased the property, and, while he was not guilty of fraud in connection with the purchase, he did purchase it at a grossly inadequate price. This fact, together with the other circumstances, was sufficient to have caused the court to set aside the sale and order the property resold. The defendants executed a bond-in good faith, which they were informed would stop- the sale. Bauer told his neighbors and prospective purchasers of the lands that the sale would not take place, and was not informed that the bond had not been accepted until after the sale was made. He was guilty of no negligence in the premises. The sale was not complete until it was confirmed by the chancery court.

For the error in confirming the sale to H. K. Wade the decree will be reversed,'and the cause remanded with directions to reject his bid and to order a resale of the property according to the terms of the foreclosure decree, and for such other proceedings as may be necessary and not inconsistent with this opinion; and the foreclosure decree will be affirmed.

Humphreys, J., not participating.