author: Hab.t, C. J.

text:
    Howell v. Miller.
    Opinion delivered April 11, 1927.
    1. Courts — effect op recital op appeal. — A judgment of the circuit court, reciting that the judgment of the prohate court appealed from is vacated and held for naught, is prima fade evidence that the appeal from th^ probate court was taken in the manner provided by law, and must be taken as true, unless by bill of exceptions or otherwise the record contains evidence to contradict the recital of the judgment.
    2. Appeal and error — presumption in payor op court’s finding. —Every presumption must be indulged in favor of the court’s findings, which competent evidence would warrant.

      3. Wills — competency op testator. — A testator has sufficient mental capacity to make a will, notwithstanding great bodily weakness from sickness, or extreme distress of mind, if he is capable of understanding the conditions and extent of his property, his relations to the persons who are entitled to be considered as objects of his bounty, and the scope and bearing of the provisions of his will, without prompting.
    4. Wills — evidence of unnatural disposition. — In a wi'l contest evidence of an unnatural disposition of his property by a testator is admissible as a help to be considered with other evidence as tending to show an unbalanced mind or mind, easily susceptible to undue influence.
    5. Wills — right to dispose of property. — The right of a person to dispose of his property by will is a property right, which is guaranteed by law.
    6. Wilts — conclusiveness of jury's finding. — In will contests, the finding of the jury cannot be disturbed if there is any substantial evidence to support it.
    7. Wills — mental capacity — evidence.—In will contests, great latitude is allowed in the introduction of testimony on the issue of mental capacity.
    8. Wills — want of mental capacity — evidence.—In a will contest evidence held to support a finding of want of capacity to make a will.
    Appeal from Miller Circuit Court; Jamen II. McCol-lum, Judge;
    affirmed:

      J. ili. Carter and B. E. Carter, for appellant.

      Wade Kitchens, W. E. Arnold, W. E. Arnold, Jr., and David C. Arnold, for appellee.
   Hab.t, C. J.

This was a proceeding to contest a will. Georgia A. Mitchell, a colored woman, died in Miller County, Arkansas, in 1925, at the age of fifty-two years. Her will was offered for probate by her executor, and was contested by her sister, Mollie Miller. It was executed on the 27th day of August, 1923, and W. C. Howell was appointed executor. After giving several small legacies to various persons, she left the residue of her estate to W. C. Howell. The probate court found the issues in favor of Ihe executor, and ordered the will admitted to probate. Mollie M-iller gave notice of her intention to appeal from ilie order of the probate court admitting the will io probate, and duly filed her affidavit for appeal.

The record shows that, upon a triai anew in the circuit court, a verdict was returned in favor of the contestant, Mollie Miller. The judgment of the circuit court, after reciting this fact, continues as follows: “It is therefore ordered and adjudged by the court that the will of Georgia A. Miller, deceased, he and the same is hereby annulled, set aside, canceled, and forever held for naught, and the decree of the probate court of Miller County, Arkansas, is hereby reversed and set aside, and the letters testamentary issued to the said W. C. Howell are set aside and.held for naught, and the order and judgment of the county court appealed from is vacated and set aside and held for naught.” The executor has duly prosecuted an appeal to this court.

Counsel for appellant invoke the general rule laid down in Walker v. Noll, 92 Ark. 148, 122 S. W. 488, and other decisions of this court, to the effect that it is necessary, in order to invest the circuit court with jurisdiction, that it appear from the record that the affidavit and prayer for appeal were presented to the probate court and that the appeal was granted. In the case of Thomas v. Thomas, 150 Ark. 43, 233 S. W. 808, it was held that the granting of the appeal by the probate court is sufficient to confer jurisdiction upon the circuit court- and that the entering of the order granting the appeal upon the order of the probate court is merely evidence that the appeal has been granted. In the present ease the record of the circuit court recites that the order and judgment of the probate court appealed from is vacated and held for naught. When the whole of that part of the judgment of the circuit court quoted above is considered, it is apparent that the circuit court found that the judgment of the county court sitting as the probate court in the probate of the will of Georgia A. Mitchell, deceased, should he vacated and held for naught. This constituted a finding on the nart of the circuit court that an appeal had been taken from the order of the probate court in the maner provided 'by law. Otherwise the circuit court would not have bad any jurisdiction in the case. If the judgment of the circuit court bad not contained !an express finding that tbe judgment of the probate court appealed from should be set aside, counsel for appellant would have been right in contending that the judgment of the circuit ourt should ¡be reversed for want of jurisdiction.

It is well settled in this State that, where a judgment or decree contains a recital of the facts, this court can review the judgment for errors manifest upon the face of the record. Strode v. Holland, 150 Ark. 122, 233 S. W. 1033. The judgment of the circuit court, having contained a recital that the judgment of the probate court appealed from .should be vacated, constitutes prima facie evidence that an appeal was taken in the manner provided by law, and must be taken as true, unless, by bill of exceptions or otherwise, the record contains evidence to contradict the recital of the judgment. First National Bank v. Dalsheimer, 157 Ark. 464, 248 S. W. 575. This is in application of the well-known rule that every presumption must be indulged in favor of the court’s finding which competent evidence would warrant.

This brings us to a consideration of the case on the merits. At the outset it may be stated that it is well settled in this State that, if a testator has sufficient mental capacity to understand the conditions and extent of his property, his relations to the persons who are entitled to be considered as objects of his bounty, and the scope and bearing of the provisions of his will, without prompting, then he has sufficient mental capacity to make a will, notwithstanding great bodily weakness from sickness, or extreme distress of mind. Tobin v. Jenkins, 29 Ark. 151; McCulloch v. Campbell, 49 Ark. 367, 5 S. W. 590; Taylor v. McClintock, 87 Ark. 243, 112 S. W. 405; and Mason v. Bowen, 122 Ark. 407, 183 S. W. 973, Ann. Cas. 1917D, 713.

It is also inferable from these cases, and expressly decided in Tobin v. Jenkins, 29 Ark. 151, that evidence of an unnatural disposition of his property by a testator is admissible as a help to be considered with the other evidence as tending to show an unbalanced mind or a mind easily susceptible to undue influence. In other words, it is a help which the jury may consider in connection with the other evidence in passing upon the soundness of mind of the testator. This is in accordance with the general rule upon the question. Case-note to 13 Ann. Cas., at page 1044.

This brings us to a consideration - of the evidence in the case as applied to these well-settled principles of law. It will be impossible, within reasonable limits, to set forth and discuss in detail the evidence introduced at the trial. We shall therefore state our conclusions, up on the evidence and confine our discussion to the more salient features of the evidence which we think sustain our holding. We recognize that the right of a person to dispose of his property by will is a property right which is guaranteed by law, yet, as pointed out in the cases above cited, in a will contest the finding of the jury cannot be disturbed on appeal if there is any substantial evidence to support it.

Substantial evidence tending to show lack of testamentary capacity is sufficient to carry the case to the jury, however strongly it may be controverted. In this view of the matter, it will not be necessary to abstract the evidence for the proponent of the will. It will suffice to state that the evidence for the appellant shows that the testator, although weak in body, had a mind which was unimpaired and was stronger than most women in her condition in life. We must test the verdict, however, upon the evidence for the contestant viewed in the light most favorable to her. It is extremely difficult to adopt an absolute or fixed rule as to what will constitute mental capacity to make a will in all cases. Each case must depend in a large degree upon its own peculiar facts. Circumstances, nervous force and physical organization of different persons affect their mental powers in varying degrees. Hence great latitude is allowed in the introduction of testimony.

The testator, at the. time of lier death, was lifty-two years of age. Her family history in regard to insanity is bad. Her mother and younger sister committed suicide ; one cousin had died in an insane asylum, and another had left home, and was found drowned. The testator had been in ill health since her girlhood. She had had several operations, and had passed several stones from her kidneys. She had had a tumor in her womb, tuberculosis of the luilgs, and leakage of the heart. She had had “spells” all her life, and during them she would be out of her head; and the older she got the more forgetful she became, and, in the opinion of witnesses who had known her all her life, or for many years, she 'was menially unbalanced land incapable mentally of making a will. Mollie Miller had inherited apart of her mother’s estate and had deeded it to her sister when her husband was in-trouble, for the purpose of helping them. She never got. anything for doing this. Great affection existed between the sisters at the time the testatrix’s husband died. Some time after'the death of her husband Georgia Mitchell became infatuated with "VY. C. Howell, a negro preacher, and became associated with him in business. The will in question was executed on the 27th day of August, 1923. Mollie Miller visited the testatrix in a ip.anita.rium during that month. The testatrix told her sister there was a little bird coming to her window, and that it came from the cemetery and was coming, after her. She begged Mollie Miller to take care of her when she was dismissed from the sanitarium. After her husband’s death the testatrix had been in the habit of passing much time at his grave. At one time, when she was ill, she asked them to shoo the chickens from the foot of hei bed. She had various hallucinations of that sort. According to the testimony of Mollie Miller and other persons who were associated with the testatrix closely, she had no reason to disinherit Mollie Miller, and never intended to do so. Her mind had become so clouded, from bodily illness during her whole life and from distress at her husband’s death, in her weakened condition, that she was not capable mentally of making a will. It was the opinion of several persons who had known her all her life that, when she had the spells which she had been accustomed to having since her girlhood, she was mentally unbalanced. They told various things which she said and did while in this condition which tended to show that she did not know what she was doing. The jury might have inferred from the testimony of Mollie Miller that the will was executed during one of these spells and that she did not appreciate what she was doing, and that her mental condition was such that she was not capable of making a will in the application of the principles of law to the facts as presented in the record. When the evidence is viewed in its entirety and in the light most favorable to appellee, it cannot be said that it is not legally sufficient to support the verdict.

The evidence introduced and the instructions given by the court to the jury were in conformity to the rules of law announced above. The case was fairly submitted to the jury upon competent evidence, and, under our settled rules of practice, we are not at liberty to disturb the verdict of the jury, even though we might think it contrary to the weight of the evidence.

It follows that the judgment will be affirmed.


source: Caselaw Access Project

author: Wood, J.

license: Public Domain

text:
    Oil Fields Corporation v. Dashko.
    Opinion delivered April 11, 1927.
    1. Joint-stock companies and business trusts — construction op contract. — A trustee under a common-law trust agreement held to have acquired oil property for the association for which he was trustee.
    2. Joint-stock companies and business trusts — construction op contract. — A common-law trust agreement for the purpose of holding, developing and dealing in oil and gas properties held to impliedly prohibit the trustee from doing on his individual account any of the things for which the association was organized.

      3. Lis pendens — comMON-law and equity bule. — The common-law and equity rule as to lis pendens has been superseded in Arkansas by Crawford & Moses’ Dig., § 6979.
    4. Lis pendens — effect of filing. — Under Crawford & Moses’ Dig., § 6979, filing for record a lis pendens notice does not deprive bona fide purchasers of property purchased before notice was filed.
    6. Lis pendens — effect of filing. — Failure of a bona fide purchaser of real estate from the defendant in an action to record the evidence of his title before a Us pendens notice was filed will not have the effect of depriving him of his title or give plaintiff in such action superior right or title.
    6. Vendor and purchaser — notice.—A party claiming real estate as against a purchaser thereof for value has the burden of showing that such purchaser had notice, either actual or constructive, of such claimant’s rights.
    7. Lis pendens — payment of consideration by purchaser. — A bona fide purchaser paying a valuable consideration for land before notice of lis pendens was filed will be protected.
    Appeal from Ouachita Chancery Court, Second Division; George M. LeCroy, Chancellor;
    affirmed.

      Albert L. Wilson, for appellant.

      Powell, Smead, (& Knox, for Dashko; Mahony, Yocum & Saye, for Southern Crude Oil Purchasing Co., appellee.
   Wood, J.

This appeal is by the Oil Fields Corporation, hereafter called appellant, against John S'. Dashko, T. P. Noviek, Olga Novick, Anna B. Ingalls, G. W. Ferguson, Laura Ferguson, E. C. Alley, Granville Alley, John Alley, as Alley & Son, and the Southern Crude Oil Purchasing Company (hereafter called purchasing company). The question to be determined is whether or not the appellant is the owner of an oil and gas lease covering the east half of the southwest quarter of the northwest quarter of section 34, township 15 south, range 15 west, Ouachita County, Arkansas, and the oil and gas produced therefrom since October 12,1923.

The appellant claims to be the owner of the oil and gas lease by assignment from John S. Dashko, as trustee of the Business Men’s Royalty Association. The assignment was executed and delivered October 12, 1923, and was filed for record with the clerk of the circuit court and ex-officio recorder of Ouachita County, Arkansas, July 24, 1924, at 5 o ’clock p. m., and was duly recorded in his office in hook 45, page 121. The purchasing company claimed to he the owner of the lease and the production thereof since May 8, 1925, under a conveyance executed that day hy T. P. Noviek to the purchasing company. On April 22, 1922, John S. Dashko organized a common-law trust under the name of the Business Men’s Royalty Association, hereafter called royalty association. John S. Dashko is designated in the trust instrument as the trustee of the estate. The trust instrument wias recorded in Union County, Arkansas, May 8, 1922, but was not recorded in Ouachita County, where the land in controversy is situated. Three similar trusts were also organized with other parties designated as trustees. The trust instruments consist of 21 articles. The purpose of these trusts is similar, and it is defined- in article 8 of the instrument under which the royalty association was created as follows:

“The purpose of this trust shall be to hold the above and foregoing described oil and gas lease and any other oil and gas leases or property, real and personal, that may be acquired by this trust estate, and further to do all the necessary and incidental things for the operation, maintenance and development of such properties, consisting of the following acts: (2) To drill for, produce, refine and market petroleum and its products, and natural gas. (b) To buy, sell, lease, exchange and barter oil.and gas leases, royalties and mineral rights, (c) To buy, sell and barter crude and refined oil and petroleum products, (d) To buy, sell and barter and exchange chattels and personal property of every kind and character, necessary and incident, remote or proximate, for the effective execution and accomplishment of the purposes above mentioned, (e) To buy, sell, trade and exchange real estate and chattels real necessary and incident to the above and foregoing purposes, and by these articles the trustee is authorized and empowered to do any act and thing authorized by law, in order to promote, effect and procure the purposes of this trust, as heroin enumerated. ’ ’

The money with which the property was acquired for the trust estate was raised by soliciting the public to invest therein in amounts of $10, and multiples thereof, paid to' the trustee, and, as evidence of such investment, the trustee issued certificates to the beneficiaries showing the amount of the investment in the trust estate. The sum of $1,789,223.75 Avas invested by the public in this manner in the four trusts. They were all operated from the same office in El Dorado from May 8, 1922, until October 12,1923, at which time they Avere legally merged into the Oil Fields Corporation, the appellant, Avhich had been previously organized for that purpose.

Article 16 of the trust instrument provides that all conveyances to the trustee of the estate shall read in the name of Business Men’s Royalty Association, in the name of the trustee therefor, and all conveyances from such trustee shall read “Business Men’s.Royalty Association,” by the trustee therefor, and likewise all written instruments pertaining to this trust shall be so executed. Almost unlimited poAver is given to the trustee. He had the sole management-and control of the entire trust estate, having the power to sell or pledge the same and to distribute the proceeds demmd from its operation among the beneficiaries in a manner ivholty within his discretion. He received such compensation for his services as trustee at snch times as, in his discretion, he elected to receive, and Avas to be reimbursed for any expenses incurred by him in the conduct of his duties as trustee of the estate. In addition to such reasonable compensation as he might elect to aAvard himself, the instrument also provides that the trustee shall be entitled to 10 per cent, of all the profit made from the sale' of any lease or leases, or of the profits made from' the production of any oil'Avcll or Avells Avhich nuiy be brought in during the fife of this estate. There is a further provision in the trust instrument to 1 lie effect that the purpose of the articles Avas to create an express and active trust, the management ancl execution of wliicli was wholly within the discretion of the trustee, without voice and control by any cestui que trust whomsoever, but it is also expressed that there was a fiduciary relation created and existing by virtue of the articles; that the beneficiaries vTere non-associated with the trustee and with each other. There was a provision also to the effect that, if any article of the trust should be declared invalid, such adjudication should not affect the rest of the trust declaration, nor should any construction be placed upon the instrument which should curtail the right of the trustee to manage the trust estate independent of the beneficiaries.

On May 16, 1922, T. 0. Joyce.executed an oil and gas lease to M. P. Morton, trustee, covering the property in controversy. On August 12, 1922, Morton, trustee, assigned the oil and gas lease to John S, Dashko, in his individual capacity. This assignment was duly recorded, on August 18, 1922. On November 15,1923, Dashko executed an assignment of the lease, in controversy to T. P. Noviek, his brother-in-law. This assignment was filed for record on March 7, 1924. On May 12, 1925, Noviek executed an assignment of the lease to the purchasing company, which instrument was filed for record at 3:45 p. m. of that day.

The merger instrument signed by John S. Dashko, trustee of the royalty association, for the consideration therein named, conveyed unto the Oil Fields Corporation “all of the property and assets of every kind and description of the trust estate, including oil and gas leases and the equipment, wherever situated, and all funds on hand, oil in storage, and all sums due or to become due and payable to the said John S. Dashko, as trustee of the said trust estate, and hereby agrees to execute all necessary assignments and conveyances to convey all the said property unto the said Oil Fields Corporation in exchange for a sufficient amount of its capital stock, at par, to equal the par value of the beneficial certificates, known as .trustee’s certificates, now issued and outstanding.” On October 20, 1923, John S. Dashko, in compliance with the merger instrument, executed two specific assignments, in one of which he conveyed to the appellant all the property of the royalty association situated in Ouachita County, Arkansas, and in the other all the property situated in Union County, Arkansas. But in neither of these is the property in controversy mentioned or described. No property is conveyed in these specific assignments as belonging to the royalty association except a royalty interest, or an overriding royalty interest. One of these assignments was filed for record on November 6, 1923, and the other on November 8, 1923.

Out of this voluminous record of more than twelve hundred pages we deem it unnecessary, and it would unduly extend this opinion, to set forth in detail either the pleadings or the testimony. Suffice it to say it is only necessary to discuss and decide two issues presented by the record. First, was John S. Dashko the owner of the oil and gas lease in controversy at the time the same was assigned to the purchasing company? Second, if, as between the appellant and Dashko, the appellant, in equity, was the owner of the property in controversy at the time of the assignment thereof to the purchasing company, nevertheless was the purchasing company an innocent purchaser thereof?

1. Was Dashko the owner of the property in controversy? We have set forth the essential provisions of the trust instrument under which the appellant deraigns title. Even if the trust instrument should be construed as not to prohibit Dashko from acquiring gas and oil leases in his individual capacity while he was conducting the business of the trust, still we are convinced that a preponderance of the evidence shows that he acquired the property in controversy for the royalty association of which he was the trustee. But, while the trust instrument does not in express terms prohibit Dashko, as an individual, from doing the things set forth in article 8, nevertheless it occurs to us that the instrument should be construed as prohibiting him from doing any of the things therein specified on his individual account and for Ms individual advantage and profit. An analysis of the various separate provisions of the trust instrument and of the instrument as a whole shows that, while the trustee had unlimited power and discretion in the matter of the acquisition, management and disposition of the trust property, and the distribution of the proceeds thereof, independent of any voice or control of the beneficiaries of the trust, nevertheless the trust instrument itself declares that a fiduciary relation was created and existing by virtue of the trust articles, and that Dashko was the trustee of an express and active trust and was to conduct, manage and control the estate to the best interests of the beneficiaries of the trust.

Without reiterating the various provisions of the trust instrument and. going into a critical analysis thereof, we are convinced that it was the intention of the trustee, Dashk6, in the creation of this trust, to impress the public who might invest funds in the enter- ■ prise that, from the time of the execution and recording of the instrument, he was to be engaged, as set forth in article 8, for the exclusive and sole benefit of those who might invest their money and procure certificates evidencing- their interest and ownership in the trust estate. Certainly those who became beneficiaries under the terms of the trust instrument had the right to expect the trustee, so long as he was engaged in the character of 'business set forth in article 8 of the trust instrument, to conduct same not for his individual and private account, but solely for the beneficiaries. In other words, the trustee, Dashko, was the agent and trustee of the beneficiaries under this instrument to do the things set forth in article 8 of the trust instrument for them. The beneficiaries furnished the capital with which Dashko was to conduct the business set forth in article 8 for them, and for which he was to receive compensation for his services in the discharge of his duties as such trustee, as set forth in article 17 of the instrument. The clear implication from that article (17), as well as others, is that the trustee is not to expend any money for his own profit and advantage in conducting tlie business of the trust as set forth in article 8. After making the provision for necessary overhead expenses, such as maintenance of offices, hiring of labor, hiring of necessary legal counsel, article 17 further provides.that he shall be entitled to reimbursement to the extent of any reasonable expense incurred in the conduct and discharge of his duties as trustee. It is clearly implied that, if the trustee expended any of his individual funds in the conduct of the business of the trust, he was lo he reimbursed out of the trust fund.

In the case of Haskell v. Patterson, 165 Ark. 65, 262 S. W. 1002, there was a provision in the trust instrument to the effect that the trustees should keep all conveyances running to them for the benefit of the syndicate in a separate receptacle and that they should designate in red ink the documents or property of the trustees individually. In that case we held that, under the above provision, the trustees were not prohibited from investing their own funds in the acquisition of property, because the trust instrument, at least by implication, permitted it. It will be observed that there is no such provision in the trust instrument under review here. In the absence of some such provision we are convinced that it Avas in the contemplation of the parties to this instrument that the trustees should not have such authority, and it is impossible to escape the conclusion that he could not exercise such authority Avithout being disloyal to his trust. In the case of Haskell v. Patterson, supra, speaking of the trust instrument, AAre said: “It is certain that it AATas not the intention of any of the parties to create a tAvilight zone of uncertainty in the management of the affairs of the syndicate, in ndiich it might he difficult to discern just AAdien H.askell Avas representing the syndicate and AAdien he was representing himself. The instrument as a Avhole sIioavs clearly that it was the intention of all parties that the trustees should give their first thought to the interests of the syndicate. The trustees Avere to devote their time and services to the syndicate, in consideration of the funds placed in their hands for inAmstment and manage-nient and tlie opportunities tlius afforded them to make money both for themselves and the syndicate. * * * While, under the trust instrument, there was nothing to inhibit Haskell from acquiring leases individually, yet it must be held, under all the facts of this record, that he did not do so.” We further said: “Wo regard the proof as clear, decisive and convincing . that Haskell acquired the properties in controversy undei: circumstances which constitute a constructive trust, and it would be a fraud on the members of the syndicate to allow him to hold them in his individual right. Under the doctrine announced by Mr. Pomeroy above, the law superimposes upon his transactions the trust relation, and' he holds title to the leases in controversy in trust for the syndicate, and must account to the syndicate for his dealings in the premises.”

We reach the same conclusion here as to Dashko, and regard the facts of this record even stronger to justify that conclusion than were the facts in the case of Haskell v. Patterson, supra. In the absence of language authorizing it, certainly no instriuñent of the character of that under consideration should ever he so construed as to permit a trustee, in the conduct of the business of his trust, to elect to make a good bargain for himself, when, by fidelity to his trust, he could make the same good bargain for the benefit of the beneficiaries of the trust. The law removes the trustee from such temptation to cupidity and unfaithfulness while in the conduct of the business of his trust by requiring him to serve only the one master — the beneficiaries in the trust — and not himself. Mr. Pomeroy says:

“The duty not to accept any position or enter into any relation, or do any act inconsistent with the interests of ■ the beneficiary, is a rule of wide application and extends to every variety of circumstances. It rests upon the principle that, as long as the confidential relation lasts, the trustee or other fiduciary owes an undivided duty to his ‘beneficiary, and cannot place himself in any' other position which would subject him to conflicting duties or expose him to the temptation of acting contrary to the best interests of his original cestui que trust. The rule applies alike to agents, partners, guardians, executors and administrators, directors and managing officers of corporations, as well as to technical trustees. The most important phase of this rule is that which forbids trustees and all other fiduciaries from dealing in their own behalf with respect to matters involved in the trust, and this prohibition operates irrespectively of the good faith or bad faith of such dealing. It is therefore a gross violation of his duty for any trustee or director, acting in his fiduciary capacity, to enter into any contract with himself connected with the trust or its management. Such a contract is voidable, and may be defeated or set aside at the suit of the beneficiary.” 2 Pomeroy Eq. Jur. 2473, § 1077. We conclude therefore that, as between John S. Dashko and the appellant, the title to the property, in equity, was in the appellant, and not in Dashko, at the time Dashko entered into the escrow contract by which the property was to be conveyed, and was conveyed, from Novick to the purchasing company.

2. Such being the casé, we come now to the issue of whether or not the appellee purchasing company was an innocent purchaser of the oil and gas lease in controversy. On the 13th of February, 1924, an action was instituted in the chancery court of Ouachita County by Frank W. Lowe, one of the beneficiaries of the common-law trust, against Dashko et al. and the appellant. The complaint charged, in substance, that the trustees of the common-law trust had fraudulently organized the appellant and fraudulently conveyed it all the properties of the four trusts. The prayer was for a receiver to take charge of the properties and that the same be sold to satisfy the claims of the beneficiaries. Summons was issued on the day the complaint was filed against all the defendants in that action. The appellant, in its answer- of July 21, 1924, denied the allegations of the complaint, and set up, in substance, that it had been duly incorporated and was authorized to do 'business in Arkansas, and that the common-law trusts and all their properties had been consolidated and merged into the appellant and all of their properties conveyed to the appellant; that, if any properties had not been conveyed by specific assignment, same should have been so conveyed, and the defendant corporation prayed that all the property belonging to the trusts be decreed as property belonging to. the appellant.

On May 12, 1925, the appellant filed what is designated its “supplemental answer and cross petition,” in which it set up, among other things, in substance, that, under the merger agreement, all the properties of the trust were to be conveyed to the appellant by specific assignments executed by the trustees; that the property in controversy was the property of the Business Men’s Royalty Association, and that John S. Dashko, with the intent to defraud the appellant, omitted the same from the specific assignment, and that he did, on November 15, 1922, transfer the property in controversy to T. P. Novick without any consideration, and that T. P. Novick received the assignment with full knowledge that the property in controversy had belonged to the Business Men’s Royalty Association. In short, the appellant charged that Dashko had conveyed the property in controversy to his brother-in-law, T. P. Novick, with the intent to defraud the appellant, and the appellant prayed that the court direct the receiver to take possession of the property in controversy and the oil and gas produced therefrom, and that, upon final hearing, the title thereto be declared in appellant. On the same day, at 3:30 p. m., the appellant filed in the office of recorder of deeds of Ouachita County a lis pendens notice that the property in controversy was being claimed by the appellant. On May 21,1925, the appellee purchasing company filed its motion praying the court to permit it to intervene and setting up that it was the owner of the property in controversy by purchase thereof from T. P. Novick for a valuable consideration, without notice of any claim of the appellant, and that the appellant was in the hands of a receiver and liad no power to prosecute the action to determine tlxe validity of the intervener’s title in the receivership proceedings, and that the receiver had not done so; that . T. P. Novick, from whom it purchased, had been in possession of the property since November 15, 1922, and had expended large sums of money in developing that property, without notice of any claim of appellant. The purchasing company moved the court to require the receiver to institute an action to determine the title of the land in controversy, and prayed the court to strike the supplemental answer and cross-petition of the appellant. A similar intervention and motion was filed b}r T. P. Novick on June 12, 1925, and, on the same day, the appellant filed its response to these motions, denying their allegations and reiterating its claim of ownership as set forth in its supplemental answer and cross-petition.

The court heard these motions on June 12, 1925, and exitered an order directing that the supplemental answer and cross-petition of the appellant be severed and that same should be treated as a complaint in an independent action ixi which the receiver should join to determine the ownership of the property in controversy. The court thereupon directed that the purchasing company, T. P. Novick, J. S. Dashko and all the other defendants mentioned in the supplemental answer and cross-petition be required to file their answer thereto within twenty days.. After this, further lengthy pleadings were filed by the purchasing company, Dashko, and Novick, and a reply .thereto by the appellant, all of which raised the issues as set forth above, only in greater detail.

Wo have already determined the issue as between the appellant and Dashko — that appellant was, in equity, the owner of the property in question — and have set forth above so much of the pleadings as is necessary on that issue and also on the remaining issue of whether or not the purchasing company ivas an innocent purchaser of the property in controversy. It will be noted that, while the appellant and Dashko were parties defendant in the action by Lowe to have a receiver appointed for appellant, appellant, in its answer to that action, filed July 21, 1924, does not make its answer a cross-bill against Dashko and ask that the deed conveying the title to him in his individual capacity to the property in controversy be canceled; nor did the appellant on that day ask that T. P. Novick be made a party defendant and that the deed of Dashko to Novick be canceled. Appellant did not on that day, in its answer, describe the property in controversy and pray for a cancellation of the record title in Dashko and Novick and that the appellant, as against them, be declared the owner of the property. Nor did the appellant, when it filed its answer on July 21, 1924, to Lowe’s action against it and Dashko, file a lis pendens notice concerning the property in controversy. Our Us pendens statute provides, in substance, that, to render the filing of any suit at law or in equity, affecting the title of real estate or personal property, constructive notice to bona fide purchasers, it is necessary for the plaintiff, his attorney or agents, to file for record with the recorder of deeds of the county in which the property to be affected is situated a notice of pendency of such suit, setting forth the title of the cause and the general object thereof, together with a correct and full description of the property to be affected thereby and the names of the parties to the suit and the style of the court where the suit is pending. Section 6979, C. & M. Digest. The common-law and equity rule of Us pendens has been abrogated in this State by the above statute. Since then an action in this State affecting the title is not lis pendens until a notice has been filed in compliance with the statute. Henry Wrape Co. v. Cox, 122 Ark. 445, 183 S. W. 955; Steel v. Robertson, 75 Ark. 228, 87 S. W. 117; Hudgins v. Shultice, 118 Ark. 139, 175 S. W. 726; Jones v. Ainell, 123 Ark. 532-536, 186 S, W. 65.

Under the Us pendens statute and our cases construing it, the appellee purchasing company had no constructive notice that the record title of Dashko and Novick to' the lands in controversy was being challenged or disputed by the appellant until the filing of the Us pendens with the recorder of deeds at 3:30 p. m. o’clock oil May 12, 1925. The effect of filing for record of the lis pendents notice, under the statute, is to protect the rights of the plaintiff in the action against those who may accpiire title to or liens on the property from the defendant after the lis pendens notice has been filed for record. The filing for record of the Us pendens notice cannot have the'effect to deprive bona fide purchasers of the property purchased before notice of lis pendens was filed for record. If one in good faith purchases real estate from a defendant in an action before the filing for record of the lis pendens notice, a failure to record the evidence of his title thus accpiired until after the Us pendens notice has been filed for record will not have the effect to deprive him of his title or give the plaintiff in the action superior right or title. The plaintiff in the action, by recording the Us pendens notice, cannot acquire any greater right in the property than the defendant had therein at the time the Us pendens notice was filed. In other - words, a lis pendens operates prospectively to preserve all the-rights of the plaintiff as against the defendant in the litigation from the time the Us pendens notice is filed for record. But it cannot operate retroactively to divest the title of one to whom the defendant had conveyed the property prior to the filing of the Us pendens notice for record, even though such person has not recorded his'muniment of title until after the filing for record of the Us pendens notice.

The above is necessarily the effect of Us pendens in the light of our decisions interpreting the meaning of the statute. In Jones v. Ainell, supra, we said: “A suit affecting- the title' or any lien on real estate is not lis pendens until notice qf the pendency of the action is filed in accordance with the statute.” The doctrine of Us pendens had its origin in the common law. It was a rule of the common law that, if the defendant in a suit-affecting his real property, aliened the same during the pendency of a suit, the judgment at law or decree in chancery. overturned the alienation. In 17 J¡. C. L., at pasro. 1011, § 3, it is said: “The doctrine of lis pendens'hm\ its origin in the civil law, and ivas pungently stated in the legal maxim, pendente lite nihil innovetur. The doctrine, as it prevails at this time, seems to have had its origin in the common-law rule which obtained in real actions, where, if the defendant aliened during the pendency of the suit, the judgment in the real action overreached the alienation. The rule is thus older at law than in equity, and ivas adopted from the common-law courts by Lord Bacon , as one of his ordinances for the better and more regular administration of justice in the court of chancery. This ordinance provides ‘that no decree bindeth any that cometli in bona fide by conveyance from the defendant, before the bill is exhibited, and is made no party by bill or order; but, when he comes in pendente lite, and while the suit is in full prosecution, and without any color of allowance or privity of court, there regularly the decree bindeth.’ ” It is further said, at page .1036, § 32: “When a defendant in an action by a cross-complaint sets up affirmative rights and prays for affirmative relief .against the plaintiff, the lis pendens begins from the filing of such cross action or cross-complaint, and not from the commencement of the plaintiff’s action. ’ ’

In Cherry v. Dickerson, 128 Ark. 572-578, 194 S. W. 690, we said : “The statute of this State on the subject of lis pendens is but declarator}' of the common law, restricted to written notice of the pendency of the action which must be filed wiih the recorder of deeds.” See also Bailey v. Ford, 132 Ark. 203, 200 S. W. 797.

It is further stated in 17 R. C. L., at page 1.009, § 2: “If any of the parties, after the lis pendens has become operative, attempts any transfer of the subject-matter of the litigation, or to create any incumbrance or charge against it, or to enter into any contract affecting it, ci-to deliver possession of it to another, the action or suit may proceed without taking any notice whatever of such transfer, incumbrance or change in possession and the final judgment or decree, when entered, may be carried into effect, notwithstanding the attempted dealing with the subject-matter thereof.”

The undisputed testimony shows that negotiations for the purchase of the property in controversy by the purchasing company were 'begun by its attorney, J. K. Mahony, with Dashko on the night of May 8, 1925, and were concluded on the morning of May 12, 1925. A contract of sale and purchase of the property in controversy had been entered into between Dashko and Novick and the purchasing company. Novick had executed a conveyance or assignment of the property in controversy, and these papers were left in the hands of J. 3L Mahony. On the morning of May 12,1925, Mahony delivered to Hamp Smead, attorney for Dashko and Novick, the check of the purchasing company for $185,000 and placed the assignment in the hands of his partner, Saye, who carried the same to Camden, where it was filed for record at 3:45 p. m. of that day. The consideration specified for the assignment was the sum of $185,000 in cash and $65,000 payable out of seven-sixteenths of the oil produced from the lease. The testimony of Mahony shows that the check and the assignment were delivered and the agreement for the completed purchase was made at 11 o ’clock a. m. on May 12, 1925. Upon the above facts, and under the above authorities, we conclude that the purchase of the property in controversy by the purchasing company of T. P. Novick, who held the record title, was consummated before the appellant filed its Us pendens.

In its pleadings the purchasing company alleged that it was a bona fide purchaser of the property in controversy without notice. The appellant denied this, and alleged that the purchasing company had notice, both constructive and actual, that the appellant was the owner of the property in controversy at the time of the purchasing company’s pretended purchase. As we have seen, the purchasing company had no constructive notice of appellant’s title, but, to constitute the purchasing company an innocent purchaser for value, it must also appear that, at the time it paid the consideration and completed tlie purchase of the property, it had no actual notice of appellant’s claim of title. In Jennings v. Bouldin, 98 Ark. 105, 109, 134 S. W. 948, we said:

"One who purchases, having actual notice of the pendency of the suit, cannot avail himself of the failure to give the lis pendens notice required by the statute.”In Henry Wrape Co. v. Cox, supra, we said, at page 448:

"If the plaintiff took the quitclaim deed from its immediate grantor without notice of an outstanding conveyance or obligation respecting the property, or notice of facts which, if followed up, would have led to knowledge of such outstanding conveyance or equity, it was entitled to protection as a bona fide purchaser, upon showing that the consideration stipulated had been paid and that such consideration was a fair price for the claim or interest designated.”

n In Osceola Land Co. v. Chicago Mill & Lbr. Co., 84 Ark. 1-10, 103 S. W. 609, we said:

"But a further consideration of the case has convinced us that the statement that the burden is on the party claiming to be a bona fide purchaser to show want of notice is not correct as a general rule; for, when the party relies on the defense of being a bona fide purchaser,, and shows that he has paid a valuable consideration, the burden of showing that he purchased with notice is on the party alleging it or who relies on the notice to defeat the claim of bona fide purchaser.” ■ (Citing cases).

In Jones v. Ainell, supra, we said, at page 537:

‘ ‘ The plaintiff in his complaint alleg’ed that he was a bona, fide purchaser of the land, and it is shown that he paid a valuable consideration for it. The burden of showing that he purchased with notice-was on the party alleging it or who relies on the notice to defeat the claim of bona fide purchaser.”

Since the purchasing company proved that it purchased the property and. paid a valuable consideration therefor, and since'the appellant relies on notice to defeat such claim of bona fide purchaser, it devolved upon the appellant to show that the purchasing company had notice. As already seen, appellant has failed to prove constructive notice, and we are now7 to determine whether it has proved that the appellee purchasing company had actual notice.

In Richards v. Billingslea, 170 Ark. 1100, 1104, 282 S. W. 985, we said: “This court has held that whatever puts a party on inquiry amounts to notice where the •inquiry becomes a duty and would lead t-o'knowledge of the requisite facts by the exercise of ordinary diligence and understanding.” Citing Jordan v. Bank of Morrilton, 168 Ark. 117, 269 S. W. 53; Walker-Lucas-Hudson Oil Co. v. Hudson, 168 Ark. 1098, 272 S. W. 836.

Now' there is no testimony in thé record tending to prove that the appellant gave any actual notice to the appellee that the property in controversy' was claimed by the appellant. The only' inquiry', then, is whether or not the appellee, prior to its purchase, had notice of sufficient facts to put it upon inquiry', which, if pursued with due diligence, w'ould have advised the appellee of appellant’s claim. What course would a prudent person take before he purchased the property in .controversy'? The first step would be to have an abstract made of the record title. This was done. The appellee employed the law' firm of Mahony, Yocum & Saye to procure and pass upon the abstract of title, and they' approved the same. The undisputed testimony show's that they' were justified in such approval, for the record of deeds showed a complete record title in Novick. If it could be said that prudent attorneys, under the circumstances, should have looked to the court records to determine whether the property' in controversy' was involved in any litigation in which appellant was claiming the same, what would these records have show'll? They' w'ould have disclosed that an action was pending in which Dashko and the appellant were parties defendant, the purpose of which w'as to place all of the gas and oil leases and the products thereof belonging to the appellant in the hands of a receiver, and that appellant, in answering- the complaint in that case, had not made its answer a cross-action against Dashko, claiming, as against him, to be the owner of the property in controversy and asking affirmative relief against Dashko. Prudent attorneys, upon examination of the pleadings in that action, might have well concluded that, if the appellant, had intended to challenge the title of Dashko and of Novick, it would have set up and declared its rights as against Dashko and Novick, and that, since it’had not done so, the record title of Dashko and Novick was not questioned in that litigation by appellant. If it could be said that prudent attorneys would and should have gone further and inquired of those in possession of Ihe property in controversy as to the title, such inquiry would have discovered, so far as Dashko was concerned, that he had claimed to own the property in his own right from the time that he had purchased the same in August, 1922; that he had assigned the lease to Novick as early as November 15,1923; that. Novick had been in possession of the property and began drilling operations thereon as early as May 4, 1924; that a producing well had been brought in on the propérty on July 4, 1924; that Novick and Dashko were still in possession of the property, which was producing large quantities of oil; in short, that they were claiming the ownership, and had complete possession and control of the property and the production thereof. Inquiry of them would only have elicited the information that their rights to own and control the property in controversy and the production thereof had not been called in question by the appellant tln;ough its local director and attorney, nor by the receiver who had been appointed to take charge of its property. It occurs to us that prudent attorneys,under these circumstances,' had Ihe right to conclude and to advise their client., the appel-lee purchasing company, that the title in Novick, as evidenced by the record, was perfect. Our conclusion therefore is that the appellee purchasing company, at the time of its purchase of the property in controversy, had neither actual nor constructive notice of the claim of the appellant thereto.

The appellant contends that the appellee was not an innocent purchaser because' the $65,000 payable out of seven-sixteenths of the oil to be produced had not been paid and that the $185,000 was by check, payment on which could have been stopped after lis pendens notice was filed for record. These contentions are untenable, for the reason that the undisputed evidence shows that the check was cashed before the lis pendens was filed for record, and this payment of $185,000 in cash was «by far the greater part of the consideration. That part of the consideration payable only out of oil to be produced could not have been paid before the purchase was completed and might never 'be paid at all. It was not contemplated and-not essential that it should be paid before the purchase could be consummated. To be sure, there must not only be a valuable consideration in fact, but there must be an actual payment of valuable consideration before the filing- of the lis pendens. 2 Pomeroy, Eq. Jur. 750-751. The payment of $185,000 in cash before lis pendens notice was filed for record constituted a valuable consideration. The case of Marchbanks v. Banks, 44 Ark. 48, has no application, because in that'ease the purchaser had not paid the greater part of the consideration.

It is contended that, because Dashko was the trustee of the Business Men’s Royalty Association in conformity with the declaration of trust, he had no title which he could convey. But the undisputed evidence shows that, when Dashko, purchased the land in controversy, he took title thereto in his individual name and that record title at the. time he sold the same to Novick was in Dashko as an individual and not as a trustee. The record title to the land in controversy therefore was in Novick at the time appellee purchased the same. The case of Murphy v. Steele, 169 Ark. 299, 274 S. W. 6, upon which counsel for appellant relies to sustain this contention, has no application here, for the reason that, in that case, we held that “the beneficiaries under a deed conveying the legal title to a trustee can have no greater rights or equities against'the grantor than their trustee who holds the legal title.” That case is wholly unlike the case at bar. There the legal title was conveyed to the trustee as such. '

We pretermit any discussion or decision of the issue as to whether or not appellant would be barred by laches from obtaining a personal judgment against Dashko and Novick, or both of them, for the amount of the consideration received by either or both of them as the purchase price of the property in controversy. Appellant did not, in its pleadings,' ask for such specific relief against Dashko and Novick in the event that this court should uphold the purchase by the appellee purchasing company, and the trial court was not asked to award to the appellant any such alternative relief, and such relief has not been asked here.

We have not overlooked the other contentions so elaborately and ably argued by learned counsel for the appellant. We have carefully considered all of them, and do not concur in the views of counsel that appellee purchasing company is a monopoly and for that reason could not maintain this action; nor do we agree with counsel in the contention that the appellee, at the time of the purchase of the property in controversy, had not complied with the laws of this State permitting foreign corporations to transact business in this State, and therefore could not maintain this action. Because of the already too great length consumed in the consideration of what we deem to be the vital issues of this lawsuit, we refrain from discussing those issues raised and urged which we have found unimportant and unnecessary to a decision of the cause.

Our conclusion upon the whole record is that the appellee is an innocent purchaser for value of the property in controversy. Therefore the decree of the trial court dismissing the appellant’s complaint against the purchasing company for want of equity is affirmed,


author: Smith, J.

text:
    North Little Rock v. Kirk.
    Opinion delivered April 11, 1927.
    1. Municipal corporations — publication of ordinance — burden OF proof. — In a prosecution under a city ordinance, the burden of showing that there was no publication of the ordinance, as required by Crawford & Moses’ Dig., §§ 7494", 7499, is on the person accused who interposes that defense.
    2. Municipal corporations — publication of ordinance — proof.— The fact that the records of the city as to publication of its ordinances failed to show publication of a particular ordinance held insufficient to show that it was n'ot published.
    3. Licenses — validity of revenue act. — A city ordinance requiring an annual license of $50 from persons dealing' in real estate or collecting rents thereon, without provisions as to regulation, inspection or supervision of real estate agents, passed before the enactment of a statute authorizing cities of the first and second class to impose occupation taxes, held void as a revenue ordinance.
    Appeal from Pulaski Circuit Court, First Division; . 1 buer McGehee, Judge;
    affirmed.

      Tom F. Dig by, for appellant.

      W. R. F. Payne, and Frank Strangways, for appellee.
   Smith, J.

Appellee was convicted in the municipal court of North Little Rock for violating- ordinance No. 324 of that city, and duly prosecuted an appeal to the circuit court, where he was tried upon an agreed statement of facts. The court found that the ordinance had not been properly published and was void for that reason, and dismissed the prosecution, and the city has appealed.

Sections 1 and 2 of the ordinance read as follows:

“Section 3. That it shall be unlawful for any person, firm or corporation to engage in selling or buying real estate or lo collect rent or rents on property located within the city limits of the city of North Little Rock, unless he or they be the owner or owners thereof, without first having obtained and paid for a license therefor from the proper city authorities.

“Section 2. That said license shall be issued annually, and the cost thereof shall be $50 per annum, in advance, and all such licenses shall expire on the 31st of December in the year in Avhicli they Avere issued. ’ ’

Section 3 makes the failure to comply Avith §§ 1 and 2 an offense punishable by a fine.

In the agreed statement of facts it Avas stipulated “that the city ordinance record book introduced in oau-dence contained statements on the margin of some of the ordinances recorded therein to the effect that such ordinances had been published on certain dates, but Avas Avliolly silent and contained no entry as to'Avhetlier ordinance No. 124 had been published, and that the records mentioned above, to-Avit: the minute-book of the city council and the ordinance record book, Avere the only records of the city pertaining in any Avay to the passage, recording or publication of said ordinance.” Publication Avas not affirmatively sIioavii in either of these records.

We think this stipulation insufficient to support the finding that the ordinance in question had not been published. By § 7494, C. & M. Digest, it is made the duty of a municipal corporation to publish its ordinances, and by § 7499 it is provided that it shall be deemed a sufficient defense in a prosecution for the violation of an ordinance to sIioav that no publication Avas made. But the burden of shoAving that there Avas no publication devolves upon the accused avIio interposes that defense. There aauis no testimony upon that question, except the stipulation quoted above, and Ave think this alone Avas not sufficient, to sIioav there had been no publication.

However, Ave are of the opinion that the judgment of fhe court Avas correct upon another ground and must, for that reason, be affirmed.

The ordinance in question is dated January 1, 1905, Avhicli is prior to the statute authorizing cities of the first and second class to impose occupation taxes. The ordinance contains no provisions for the regulation, inspection or supervision of real estate agents, and it Avas obviously passed, not for the purpose of regulating that business, but to raise revenue.

In tlie case of Stamps v. Burke, 83 Ark. 351, 104 S. W. 153, the court commented upon tlie decision in tlie case of Arkadelphia Lumber Co. v. Arkadelphia, 56 Ark. 370, 19 S. W. 1053, in which a license fee of $25 per annum for the privilege of keeping a ferry within the corporate limits of the city was held reasonable and valid, and it was pointed out that the license required was for the operation of a ferry within the town limits and that the operation of a ferry might require ia considerable amount of inspection and supervision to see that the ferry was kept in good condition, and not allowed at times to be overcrowded, and to see that prompt service was rendered, and that navigation was not disturbed.

But, after thus approving an ordinance where the license fee charged bore some fair proportion to the cost of the regulation which might be required, the court held invalid an ordinance which required persons selling fresh meats in the town to take out a license, and pay $12.50 therefor quarterly. In holding the last-mentioned ordinance void the court said: “That the purpose of the license fee in this case was to raise revenue is plain when the amount of the fee is considered in connection with the fact that the ordinance does not attempt in any way to regulate the- business beyond requiring a license fee. There is no provision against the sale of unwholesome meats, or any other provision tending to regulate the business or which would require some inspection and supervision on the part of the town authorities. There is nothing but a bald provision that butchers and other dealers in meat shall take out a license and'pay $12.50 therefor quarterly.”

The case of Texarkana v. Hudgins Produce Co., 112 Ark. 17, 164 S. W. 736, reviews the authorities dealing' with the right of a city to impose a license fee for the purpose of regulating* the business licensed. It was there said:

“Upon consideration of the decisions in various cases of our own, as well of other courts, we think the test of the reasonableness of an ordinance imposing a license for the purpose of regulation may be said to be that, if it is such a sum as is so manifestly excessive and out of proportion to the regulation which will probably be required to make the ordinance effective, so that' it is certain the city will derive a profit from the enactment of the ordinance, then in all such cases it may be said that the purpose of the ordinance is to raise revenue, and such ordinances are void when no statute authorizes their enactment for the purpose of raising revenue.

<£On the other hand, if'the amount of the regulation is uncertain, aid its cost is indeterminate, depending upon circumstances, which may vary, and it does not appear that the license imposed is so out of proportion to the probable' cost of its enforcement as that the ordinance will necessarily be the source of income to the municipality, such ordinances should not be declared invalid, as having- been passed for the purpose of raising revenue, rather than the purpose of regulation, although they may in fact prove to be the source of profit to the municipality.” '

Applying this test to the ordinance in question, it may be said that it obviously appears that its purpose is to raise revenue, and not to regulate, and, not having been passed pursuant to a statute authorizing its enactment for the purpose of raising revenue, it is void.

The court therefore properly dismissed the cause, and that judgment is affirmed.


text:
    Schichtel v. Uda.
    Opinion delivered April 11, 1927.
    1. Constitutional law — proper designation of amendment. — The constitutional amendment providing for referendum elections in the State, counties and municipalities, held to be properly designated as No. 7.
    2. Municipal corporations — referendum of ordinance. — A petition for a referendum election on a town ordinance, under Amendment No. 7, was properly filed with the recorder of the town.

      3. Municipal corporations — effect of referendum of ordinance. —Under Const. Amendment No. 7, providing that any measure referred to the people by referendum petition shall remain in abeyance until a vote is taken, and that the word “measure” includes ordinances, held that, where electors have filed a proper petition for a referendum, the operation of the ordinance is suspended until the election is ordered and held.
    Appeal from Pulaski Circuit Court, Second Division; Richard M. Mann, Judge;
    reversed.

      John D. Shackleford, for appellant.

      Mehaffy é Miller, for appellee.
   Smith, J.

Appellant brought suit in replevin to recover possession of a cow which had been taken up by the marshal of the incorporated town of Alexander, while at large upon the streets of the town, in violation of an ordinance requiring stock to be inclosed and kept off: the streets. The question presented is whether the ordinance was in effect as such at the time appellant’s cow was taken up. The court below held that it was, and, upon this theory, directed the jury to return a verdict against appellant.

Certain citizens of the town who opposed the ordinance undertook to have a referendum ordered upon it, and, as a means to that end, filed with the recorder of the town a petition, the form and sufficiency of which is not questioned, praying that an election be held as is provided for in Amendment to the Constitution No. 7.

The case of Wright v. Ward, 170 Ark. 464, 280 S. W. 369, involved the identical ordinance here under consideration. There was la petition for mandamus to require the mayor, recorder and alderm&u of the town of Alexander to hold an election on the referendum of the ordinance, and we there held that the amendment was self-executing and supplied a sufficient rule by means of which the right of the electors of the town to have a referendum ordered against the ordinance might be enjoyed and protected, and the duty to hold an election be enforced, and it was there ordered that the writ of mandamus he. issued as prayed. It appears that, at the time appellant’s cow was taken up, an election had not been ordered, although the petition therefor had been duly filed with the recorder of the town. The question now for decision is therefore whether the ordinance was suspended upon the filing of the petition, although the election had not been ordered.

The amendment in question is commonly referred to as Amendment No. 13, and was so designated in the opinion the case of Wright v. Ward, supra. The confusion as to its number arises from the fact that it was voted on at the general election in 1918 as Amendment No. 13', and, although declared lost by the Speaker, January 15, .1919 (House Journal, page 45), it was later declared adopted in the ease of Brickhouse v. Hill, 167 Ark. 513, 268 S. W. 865. This amendment superseded original Amendment No. 7, and should therefore bo designated by the same number, although, as republished at page 1076 of the Ads of 1925, it is there designated as Amendment No. 9.

By the Amendment No. 7 the power of referendum .is reserved to the people of the municipalities of the State, and the requisite number of electors to exercise the power is there designated. It is unnecessary here to discuss the extent of this power. The .amendment is in one section, divided into numerous paragraphs, treating of various subjects under different titles. Under the subtitle of the sufficiency of the petition it is provided that:

“Sufficiency. The sufficiency of all statewide petitions shall be decided in the first instance by the Secretary of State, subject to review by the Supreme Court of the State, which shall have original and exclusive jurisdiction over all such causes. The sufficiency of all local petitions shall be decided, in the first instance, by the county clerk or the city clerk, as the case may be. subject to review by the chancery court.”

The amendment does not expressly state where the petition for the referendum of ordinances shall be filed, but. inasmuch as it is provided that the sufficiency of the petition shall be decided in the first instance bv the city clerk, who is the recorder of the town, we conclude that the petition should be filed with that official.

The petition to refer the ordinance here in question was filed with the recorder of -the town of Alexander, and, when this was done — the form and sufficiency of the petition not being questioned — the duty to call the election arose, and in Wright v.. Ward, supra, we held that the performance of this duty could be compelled by-mandamus.

In the paragraph of the amendment entitled “Referendum,” it is provided that:

“Any measure referred to the people by referendum petition shall remain in abeyance until such vote is taken. ’ ’

In the paragraph entitled “Local for Municipalities and Counties, ” it is provided that:

“The initiative and referendum powers of the' people are hereby further reserved to the legal voters of each municipality .and county as to all local, special and'municipal legislation of every character in and for their respective municipalities and counties, but no local legislation shall be enacted contrary to the Constitution or any general law of the State, and any general law shall have the effect of repealing any local legislation which is in conflict therewith.”

Other provisions of the amendment touch certain emergency legislation, which need not be here considered further than to say that the ordinance in question did not have the emergency clause.

Another paragraph of the amendment reads as follows.

“Definition. The word ‘measure’ as used herein includes any bill, law, resolution, ordinance, charter, constitutional amendment or legislative proposal or enactment of any character.”

By the express language quoted an ordinance is a “measure” within the meaning of-the amendment.

We conclude therefore that, when electors have sufficiently petitioned for the referendum of an ordinance, and have so far complied with the provisions of Amendment No. 7 that nothing remains but the ministerial act of calling’ the election (a duty the performance of which may be coerced by mandamus), the operation of the ordinance is suspended, and ■ remains suspended until the election is ordered and held. It is immaterial therefore that the ministerial duty of ordering the election was not performed. The operative effect of the ordinance was suspended, and will remain suspended until the election is held and the ordinance adopted by the electors of the town.

It follows therefore that the ordinance under which appellant’s cow was taken up was not in force at that time, and the marshal’s action was therefore unauthorized. The judgment»of the court below will therefore be reversed, and the cause remanded for further proceedings in accordance with this opinion.

Mehaeey, J., disqualified and not participating.


text:
    Tribble v. Tribble.
    Opinion delivered April 11, 1927.
    1. Wills — form of instrument. — An instrument by which a grantor conveys his undivided half interest to his wife and children, reserving to himself the use of the land for life, held a deed as to form, and not a will.
    2. Mortgages — -parol proof. — Parol evidence is admissible to establish that an instrument in form a deed was intended to be a mortgage.
    3. Mortgages — instrument in form of deed — Where evidence is clear and convincing to the effect that an instrument in form a deed was intended to secure payment of an indebtedness due by the grantor, a court of equity will declare the real intent and effect of the instrument as a mortgage.
    4. Mortgages — purpose of execution of deed. — In an action to cancel a deed to the grantor’s wife and children, reciting a consideration of love and affection, it was admissible to show that he had no love and affection for them, and that the real purpose of the instrument was to secure a loan from his wife’s father.

      Appeal from Garland Chancery Court; W. B. Duf-fle, Chancellor;
    reversed.

      A. B. Belding, James E. Rogue and Gibson Wilt for appellant.

      Martin, Wootlon é Martin, for appellee.
   Smith, J.

This suit was brought to cancel a deed and a deed of trust, and, in support of the complaint praying that relief, the following testimony Avas offéred: W. 0. Tribble, the plaintiff, was forty-nine years old at tlie time his deposition was taken, and had been a chronic sufferer and unable to -work for many years. He described his ailment as ossification, and his condition is pitiful. He is dying constantly, and yet lives in helpless misery. He is unable to perform the smallest service for himself, and one of his sisters testified that he required the almost constant care of one person, and has been in a rolling-chair for about six years. Plaintiff married a daughter of Y. A. Pearson, and two children were born to this union, one a married daughter named Ollie May Aldridge and the other a daughter named Annie.

Idle testimony of the wife and married daughter leaAms the distinct impression that neither had any affection and but little sympathy for the husband and father. Tribble testified that he Avas compelled to leave his home and to go to the home of his sisters to receive the attention his condition required, and that neither his AAdfe nor his daughter, Mrs. Aldridge, Avould have anything to do Avith him or come to see him, and that Mrs. Aldridge refused to answer his letters. His little girl came to see him occasionally. Mrs. Aldridge admitted that she had never done anything for her father, hut stated that her physical and financial condition did not permit her to do so.

On July 27, 1918, Tribble brought suit for divorce against his wife in Clay County, Mississippi, where they both- resided, and alleged cruelty and neglect and physical violence as grounds therefor. His Avife ansAvered, au'd denied these charges, and filed a cross-complaint in which she prayed a divorce on grounds similar to those alleged in tlie complaint of lier husband. This suit was compromised and settled through the intervention of Mr. Pearson, plaintiff’s father-in-law. Mr. Pearson appears to have been a man of wealth and of dominating personality, and to have had considerable influence over Mr. Tribble. Under the settlement effected, Mrs. Tribble executed to her husband a contract releasing all claim to his Hot Springs property, and received from him a deed to other property in Mississippi and Texas. Tribble referred to this settlement as>an equal division of his property with his wife. The divorce suit ivas dismissed.

Mrs. Tribble brought suit for divorce, and Tribble wrote a letter to the presiding judge, in which he stated that, if his wife was asking only a divorce, he would not file an answer, but, ifc“ she prayed alimony, he asked a postponement until he could employ an attorney. A divorce only was prayed, and no answer ivas filed, and a divorce was granted. This decree was rendered November 15, 1921.

Tribble and Pearson owned a lot as tenants in common of equal interests in the city of Hot Springs, and, on February 2, 1921, Tribble borrowed from Pearson $300, and gave as security therefor a deed of trust on his undivided one-half interest.

Tribble had heard of a doctor in Ohio who, he thought, might give him some relief, and he borrowed the money to get this treatment. His proposition was to pay the money back at the rate of $100 a year, and, to secure this money, he first proposed to assign to Pearson his half of the rent until the debt was paid. Pearson stated that he did not regard this as sufficient security, and the deed of trust here sought to be canceled was executed, and, at the same time and for the same consideration, and as further and additional security, Tribble executed a deed to his wife and two children to his undivided half interest in the Hot Springs property. The deed and the deed of trust' described the same property. By this deed Tribble conveyed his undivided half interest to his wife and children, reserving to himself the control, use, profit and right of occupancy for his life. This is the deed which Tribble seeks to 'cancel.

Tribble testified that he did not read this deed, and that he understood it was in effect a will, and that it was agreed between himself and Pearson that neither the deed of trust nor the'deed should be recorded, and that both instruments would be canceled and’ surrendered to him when the $300 loan, with the interest thereon, was repaid, and that, in violation of his agreement, Pearson caused both instruments to be recorded á few days after their' execution. This deed was defectively acknowledged, and it appears to be conceded that it was not entitled to be recorded on account of this defect.

Pearson died October 11, 1923, and this suit was not brought until after his death. Tribble explained this delay by saying that he did not commence the suit earlier because the indebtedness secured by the deed and the deed of trust had not been fully paid in the lifetime of Pearson.

Tribble also testified that he executed the instruments which he here seeks to cancel because he had confidence in Pearson and believed that he would do as he agreed, and, as he expected to repay the money, he did not hestitate to give any security required, and that both instruments were executed to secure the $300 loan. His necessities were pressing, and he hoped for surcease from further suffering, if not complete relief. Since the execution of these instruments Tribble has paid the taxes each year in his own name on his own undivided half interest.

When Pearson died, both the deed and the deed of trust were found with his papers, and the administrator of his estate testified that he mailed the deed to Mrs. Aldridge. Tribble testified that Mrs. Aldridge admitted to him that she and her mother knew nothing about this deed until after Pearson’s death. Both Mrs. Tribble and Mrs. Aldridge denied that they were not advised of the existence of the deed. They testified that they knew it was to be executed, and had been executed and was in the possession of Pearson. Mrs. Tribble admitted that she kept other valuable papers of her own in a safety deposit box in Clarksdale, Mississippi.

Tribble removed to the home of his sisters in 1918, and has since resided with them. He and they both testified that he desired to give them some compensation for their attention to him, and that, having agreed that services already rendered were worth $2,500, he executed to them a deed to his own undivided half interest in' the Hot Springs property. The consideration for this deed was service already rendered and the continued care of appellant, and, in addition, these sisters deeded to their brother-an undivided third interest in their home in Mississippi, where they lived.

These sisters filed an intervention in this suit, in which they claimed title to the lot in question, and they testified that, when the deed to them from their brother was executed and delivered, they were unaware of the prior deed from their brother to his wife and children.

There was offered in evidence an affidavit which Tribble made, which reads as. follows:

“State of Mississippi, Clay county. This is to certify that I signed and delivered a deed to my Hot Springs property to my former wife and children, which deed was recorded in book 112, page 378, of the land records in Hot Springs, Arkansas, and later I executed a conveyance to my two sisters covering the same property, which deed was signed under compulsion when I was very ill.

“It is my desire that the deed recorded in book Vol. 112, page 378, remain on record, and the one to my sisters canceled, same having been obtained against my will, the consideration claimed in it being already paid.

“W. Ó. Tribble.

“Sworn to and subscribed before me this the 7th day of January, A. D. 1922. T. J. "Watson, J. P. Dist. 4.”

Much testimony was offered concerning this affidavit. Tribble and his sisters testified that Mr. Aldridge came to their house one day and stated that his wife wanted Tribble to spend the day with them. It was raining, and the sisters protested against Tribble being carried to Aldridge’s home that day, but Aldridge persisted aud prevailed, and Tribble was carried to Aldridge’s home. Tribble testified that, when he arrived at Aldridge’s home, his daughter proposed that she would take him and take care of him for the remainder of his life if he would sign an agreement that, in consideration therefor, she might have his property after his death, and that he signed- what he supposed was a contract to that effect. What he supposed was a contract proved to be the affidavit set out above. Tribble was carried home that afternoon after signing the affidavit, and the sisters testified that he Avas in high spirits on his return, and stated that he had made a contract Avith his daughter Avhereby she had agreed to take care of him for the remainder of his life. Tribble and his sisters all testified that the sisters agreed to this arrangement, but Mr. Aldridg'e refused to take appellant into his home. The execution of this affidavit Avas the last transaction betAveen Tribble and Mrs. Aldridge, and she did not at any time offer to take him into her home.

Mr. and Mrs. Aldridge denied .that any deception had been practiced upon Tribble to induce him to sign the affidavit, and that he had signed it with full knoAvl-edge of its purport.

The clerk of the chancery court of Clay County, Mississippi, who certified to the authority of the justice of the peace A\dio took the acknoAAdedgments to the deed and the deed of trust, testified that, AAdien he made the certificate, Mr. Pearson, for AAdiom he made it, remarked that he had gotten Tribble to do Avhat he Avanted him to do for some time, and that Tribble had executed these instruments only because he Avas very anxious to get some money.

The justice of the peace Avho took the acknoAvledg-ments testified that they were taken at the home of Pearson, and that Pearson stated at the time that he was loaning Tribble $300 to go off and get cured. The witness further testified that Pearson remarked to him, in Tribble’s presence, that Tribble wanted to provide fur-tlier for liis children after his death, and that Tribble made no objection to this statement. Mrs. Tribble had not obtained her divorce at that time. Witness did not know whether Tribble read the deed before signing it or not. Peai’son made the remark that he was letting Tribble have $300 to go olí and take treatment. Witness understood from the conversation at the time that Tribble was executing an instrument intended as a will to provide for his children in case of his death. Tribble and his wife were separated at the time, and the divorce suit was commenced a few mouths later. The papers had already been prepared before witness arrived at Pearson’s home, and the only thing that Tribble spoke about was his trip.

Mrs. Tribble, admitted she had made a settlement with her husband concerning a division of his property with him, and that this wTas done when the first divorce case was dismissed. She testified that she knew about the loan, and that the deed had no connection with it and was not given as security for it, and that her father kept the deed in his possession with her knowledge and consent and for her.

After this suit had been commenced, Tribble and his sisters, without consulting the attorney who represented them, and who resided in Hot Springs, conceived the idea that it might be advantageous for the sisters to execute a deed to Tribble reconveying the property to him, and they executed a deed to Tribble, which they sent to the attorney with directions to file it for record if the attorney thought the deed would improve Tribble’s chance to recover the land. The attorney was of the opinion that the deed would not have this effect, and destroyed it, as he ivas authorized to do by the letter transmitting the deed to him.

As has been said, Tribble’s sisters filed an intervention, and it is contended by them that their deed is superior to the deed from Tribble to his wife and children, for two reasons. First, that, as the deed from Tribble to his wife and children was defectively acknowledged, the record thereof did not constitute constructive notice to them of its existence, and they had no actual notice thereof. Second, the deed from Tribble to his wife and children was executed without consideration, and its effect was to render him practically insolvent, and it operated therefore as a fraud upon them as existing creditors.

The court found, the fact to be that the deed from Tribble to his wife and children was not executed as a result of fraud or collusion on the pare of Pearson, and was in all respects a valid conveyance and passed the title to- the parties named, and, although defectively acknowledged, was valid and binding between the parties thereto. The court also found that any right, title or interest which the interveners acquired by the deed from Tribble passed back to him by the deed from them to him, and that this after-acquired title inured to the benefit of Mrs. Tribble and her children. The court found that Tribble had paid the debt secured by the deed of trust, and that Tribble was not indebted to the estate of Pearson.

Upon these findings the court canceled the deed of trust and divested the title out of appellant and the inter-veners and vested it in Mrs. Tribble and her children, and confirmed their title thereto, subject to the reservation in the deed of the use of the land by Tribble for his life. Plaintiff and interveners have appealed.

It may first be said that the instrument executed by Tribble to his wife and children was in form a deed, and not a will. It is true it reserved to the grantor the use thereof during his life. But it was a conveyance of the fee to take effect upon his death.

In the case of Bunch v. Nicks, 50 Ark. 367, 7 S. W. 563, Mr. Justice Battle, speaking for the court, said: “To determine the character of an instrument, as to its being a will or deed, it is necessary to ascertain the intention of the maker from the whole instrument, ‘read in the light of surrounding circumstances.’ If the intention, at the time of the execution of the instrument, was to convey a present estate, though the possession be postponed until after his death, it is a deed; but, if the intention was it should not convey any vested right of interest, but should be revocable during his life, it is a will. Jordan v. Jordan, 65 Ala. 301; Williamson v. Tolbert, 66 Ga. 127.” Gee also Field v. Tyner, 163 Ark. 373, 261 S. W. 35; King v. Slater, 96 Ark. 589, 133 S. W. 173; Lewis v. Tisdale, 75 Ark. 321, 88 S. W. 579; Cribbs v. Walker, 74 Ark. 104, 85 S. W. 244; Galloway v. Devaney, 21 Ark. 526; Hershey v. Clark, 35 Ark. 17, 37 Am. Rep. 1.

But, while the instrument is in form a deed, it is well settled that parol evidence is admissible to show that it was in fact a mortgage. To accomplish that result the evidence must be clear and convincing, but, if the evidence measures up to that standard and it is clearly shown that it was intended for the instrument only to secure the payment of an indebtedness due from the grantor, a court of equity will not hesitate to declare the real intent and effect of the instrument. Wimberly v. Scoggin, 128 Ark. 67, 193 S. W. 264; Bays v. Emerson, 75 Ark. 551, 87 S. W. 1027; Snell v. White, 132 Ark. 349, 200 S. W. 1023; Brewer v. Yancey, 159 Ark. 257, 251 S. W. 677.

Appellees argue that, inasmuch as the deed of trust had been taken to secure the loan, an additional con-, veyance by way of security would have been fruitless. This would, ordinarily, be true, but this case has some unusual features. Pearson knew the strained relations between Tribble and his wife, and he knew that Tribble’s sisters were giving him attention, and he may have contemplated the possibility of a conveyance from Tribble to these sisters. He knew also the physical condition of Tribble, and may have contemplated Tribble’s death, in which event a foreclosure would be unnecessary if Pearson determined to allow the title to pass to his daughter.

The deed and the deed of trust were executed simultaneously, and the consideration for both appears to have been the loan of $300. It is true, as appellees contend,' that the deed recites that it was executed in consideration of the love and affection of the grantor for the grantees, his wife and children, and that this is a sufficient consideration, it is true also, as contended by appellees, that, while one may show the actual consideration of a deed, this cannot be done for the purpose of invalidating' the conveyance. Tribble cannot show that he had no love or affection for his wife and children for the purpose of defeating' the conveyance as being void for the Avant of consideration, but he had the right, to show that the instrument, though a deed in form, Avas in fact a mortgage, and, as tending to establish that fact, he had the right .to sIioav the circumstances under which and the purpose for Avhich the instrument Avas executed, not to defeat or invalidate it, but to establish its true character.

Tn the case of Mewes v. Mewes, 116 Ark. 155, 172 S. W. 853, it Avas said that the AArell-settled rule of law is that tire only effect of a consideration in a deed is to estop the grantor from alleging that the deed was executed Avithout consideration. For every other purpose ill's 'open to explanation and may be varied by parol proof. See also Sutton v. Sutton, 141 Ark. 99, 216 S. W. 1052; Hampton v. Haneline, 125 Ark. 441, 189 S. W. 40; Armstrong v. Union Trust Co., 113 Ark. 509, 168 S. W. 1119.

The deed from Tribble tn his AAdfe and children cannot therefore be declared void as being without consideration, because Tribble had no love or affection for them, but avc may inquire A\diat the purpose and intent of the instrument was, and avc are convinced, after doing so,' that its sole purpose Avas to afford additional security for the loan Avhich Pearson demanded, and, as it Avas intended only to secure the loan of money, it is in fact a mortgage.

When this instrument Avas executed, Tribble audios Avifc Avere openly hostile to each other. He had already made a settlement Avith her of her-marital rights in his estate by conveying to her A\diat Avas considered to be one-half of the Amine of the property. Mrs. Tribble admitted that, in addition to this, she had kept all the household furniture and fixtures AAdien Tribble left home, but «lie said most of the property was liers, as she and luir husband had bought it together.

There is uo reason to believe that Tribble intended 1o give his wife any additional portion of his estate, yet the effect of - the deed in question is to divest him of all his property save only the income therefrom during the remainder of his life. The rent was only about $55 per •month, and this deed, if permitted to stand as such, denudes him of all other property and deprives him of " the means of compensating his sisters or other persons for the attention he so urgently needs and which his wife and children had refused to give.

Having reached the conclusion that the deed was in fact a mortgage, it becomes unnecessary to determine whether, if a deed, it would have been in fraud of the rights of his sisters as existing creditors; and it is also unnecessary to consider whether there was such a delivery of the deed to Tribble from his sisters as operated to roconvey to him the title which he had previously conveyed to them and‘which, as the court found, passed, as an after-acquired title, to Mrs. Tribble and her children.

The decree of the court below appears to have been ba.'-'ed upon the application of this principle. .But, as wo have said, we do not find it necessary to determine whether that principle is applicable here or not, because, in our opinion, the instrument, in form a deed, was executed to secure the payment of money, and was therefore a mortgage.

The decree of the court below "will therefore be reversed, and the cause remanded with directions to enter a decree conforming to this opinion.