author: McCulloch;, C. J.

text:
    Fort Smith, Subiaco & Rook Island Railroad Company v. Moore.
    Opinion delivered December 1, 1924.
    1. Master and servant — negligence—questions for jury. — Evidence in an action for negligent killing of a locomotive fireman, held to warrant submission to the jury of the issue of negligence on the part of the engineer in backing the train at unusual speed so as to cause an unusually severe impact and to cause the fireman to fall from the tender; also.of the issues whether the fireman assumed the risk or was guilty of contributory negligence.
    2. Master and servant — instruction—submission of improper issues. — In an action for a negligent killing of a fireman, where there was no evidence that the engineer was unskilful or that the brakemen were negligent, it was prejudicial error to give an instruction submitting those issues to the jury.
    3. Railroads — liability for negligence of connecting road. — The fact that a railway company permitted another railway company to use a portion of its track did not render the former liable for the death of an employee of the latter killed by negligence of a fellow-servant.
    Appeal from Logan Circuit Court, Northern District; James Cochran, Judge;
    reversed.

      Jas. B. McDonough, for appellant; E. H. McCulloch, of counsel.
    Deceased and the railway company at the time were engaged in interstate commerce, and the case is controlled by the Federal Employers’ Liability Act. 201 N. Y. S. 242; Fed. 760; 192 N. W. 439; 119 Atl. 88; 284 Fed. 262, and other cases cited in appellant’s brief. Deceased assumed the risk, and assumed risk is a defense under the Federal law. 233 U. S. 492, lliS Ark. 304. Plaintiff’s evidence failed to make an issue to go to the jury on of negligence on the part of appellant. There is no presumption of negligence. 100 Ark. 467. The deceased was actually engaged in the running of the train, and, under the authority just cited, there is no presumption of negligence as against the defendant. 117 Ark. 504; L. R. A. Ann. Cas. 1917, p. 81. Verdicts cannot be based on conjecture or guess. 113 Ark. 353; 116 Ark. 82; 174 S. W. 547; 117 Ark. 638. There must be substantial evidence to support a verdict. 122 Ark. 445; 114 Ark. 112. It was error to give instruction No. 2. Neither the complaint nor the evidence warranted the giving of same, as there was no evidence to show the incompeteney of the engineer or the negligence of the brakeman. 156 Ark. 465.

      Boht. J. White, for appellee.
    If the court should hold that the defendants were engaged in interstate commerce, then the case reported in. 241 S. W. 365 is controlling • here. The instructions given fully comply with the law there laid down, and the verdict was amply sustained by the evidence.
   McCulloch;, C. J.

Appellant’s intestate, "William Moore, came to Ms death while working as a fireman in the service of appellant, Fort Smith, Suihiaco & Eock Island Eailroad Company, and this is an action against said appellant and also the other appellant, Chicago, Eock Island & Pacific Eailway Company, to recover damages arising to the next of kin as well as to the estate of the decedent. There was a withdrawal of the claim for damages for the benefit of the estate, and the case proceeded1 to’trial on the claim of damages for the benefit •of the next of kin, and the trial resulted in a verdict in favor of appellee.

Appellant, Fort. Smith,- Subiaco. & Eock Island Eailroad Company, operates a short line of railroad from Ola, a point on the line of the Chicago, Eock Island & Pacific Eailway, to Paris, Arkansas, and, by agreement, it used the station facilities and switch tracks of the Eock Island at Ola. At that place there is a sidetrack running parallel with the main track on the north and another track on the south, called the house track. The switches of each of these two sidetracks are near,together at a viaduct over the tracks west of the station.

The decedent was a fireman, and his train was being made up about 6:30 o’clock on the morning in question. In mailing up the train, both of these sidetracks, as well as the main track, were used in assembling the cars, and there was testimony that the train was being worked hurriedly on account of the expected arrival of the westbound passenger train on the Eock Island. It is undisputed that there were interstate cars in the train being made up, and that the trainmen were therefore engaged in interstate commerce, which brings the question of liability within' the operation of the Federal Employers’ Liability Statute.

Shortly before the expected arrival of the passenger train, the engine of Moore’s train headed, but of thenorth sidetrack, pulling three or four cars, and Went onto the. main track of the Eock Island, and thence backed in on the house track for the purpose of coupling to a car or string of cars on that track. There is a little uncertainty in the testimony as to what particular cars were to be coupled into the train, but there is testimony that there was a string of twelve cars' standing on the track, and that Little, the rear brakeman, was standing on that string of cars, giving signals. Scott, the head brakeman, was standing on the ground receiving signals from Little and transmitting them to Eeed, the engineer, who moved the train on signals from the brakemen. The conductor was in the caboose, or baggage car, at the time, and did not supervise any of the movements of the train.

There is a water tank at Ola, which stands between the main track and the north sidetrack, and water can be taken by engines on either of those tracks. There is some testimony to the effect that Moore’s engine was to take water at that tank after it came out of the house track and backed in on the north passing track, and there is also evidence that it was the duty of the fireman to prepare a certain compound to be placed in the water, as it was transferred from the tank to the tender, in order to soften it — the water being considered injurious to the boilers. The theory of appellee is that Moore was standing on the top of the tender, with a bucket, mixing the compound, preparatory to taking water at the tank, and that he was thrown from the engine by a violent impact of the cars attached to 'the engine and against the cars standing, on the sidetrack. It is not certain that any one •saw Moore fall from the engine, but the engineer, Eeed, testified that, as he backed in on the house track and about the time that he made the coupling with the other cars, he saw something disappear from the rear end of ■ the tender, and at once threw on the emergency brake and stopped the train within three or four feet. As soon as the train was stopped, one of the brakemen found Moore’s body under the rear trucks of the tender, and • he was dead as soon as they could back the engine from off his body. Two of his fingers were cut off, and they wére found back about twenty feet, as well as his gloves, and several witnesses testified that there was blood on the track for a considerable distance in front of the engine, one of the witnesses said a distance of seventy-five feet.

The engineer and the brakeman testified that the train was backing in at a speed of about two miles an hour, and that there was no unusual jar or jerk, and that the impact against the other cars was slight and not unusual.

In the complaint several charges of negligence were made, particularly the charge of negligence on the part of the engineer in backing in at an unusual speed and in bumping against the other cars -so as to make a violent impact which caused Moore to fall from the train. It is also alleged that the company was guilty of negligence in employing Reed, an unskillful engineer. It is also charged that the brakemen were guilty of negligence in failing to give proper signals. The suit is against both of the railroad companies, and liability against the Chicago, Rock Island & Pacific Railway Company is sought to be established on account of the fact that it permitted its track to be used by the other company.

It is earnestly insisted, in.the first place, that the judgment should be reversed and the cause dismissed, on the ground that the case is fully developed and that .the evidence is not legally sufficient to sustain the verdict. The contention is that there is no evidence that the train was backed in on the house track at an unusual rate of speed or that there was an unusual jerk or impact, or that there was any other negligence. It is •also contended that there is no evidence that Moore was thrown from the train. It is also contended that the undisputed evidence shows that Moore assumed the risk.

Upon a careful analysis of the testimony we have reached the conclusion that there is sufficient to warrant submission to the jury of the issue of negligence on the part of the engineer in backing the train on the house track at an unusual speed, so as to cause an unusually severe impact and cause Moore, the fireman, to fall from the tender, and we are also of, the opinion that there is sufficient evidence to show that Moore was standing on the tender, in the performance of his duty with respect to mixing the compound, and that he did not assume the risk, and was not guilty of contributory negligence. It is true that the engineer and the two.brakemen testified that the train was 'backed in at a speed of only two miles an hour, that there was no sudden or unusual jerk or impact, but tlie engineer testified that he saw an object disappear from the top of the tender, and that he at once applied the emergency brake and stopped the train, whereupon the body of Moore was found under the tender. Now, the jury might properly have drawn the inference that it was Moore’s body that disappeared from the top of the tender as he was thrown off, and the jury might have found, from the statement of the witness, that this was at the time of the impact when the coupling was made.- 'To this extent the jury might have credited the testimony of Eeed, the engineer, but they-might also have rejected his testimony to the extent of the statement that there was no unusual impact or jerk, and that he was able to stop the train within three or four feet. The testimony of other witnesses showed that Moore’s body was* dragged as far as seventy-five feet, and, if that were true, it operated as a contradiction of. the testimony of Eeed in his statement that he stopped the train within a distance of three or four feet after he saw the object disappear from the top of the tender. The jury might therefore have found that Moore was standing on the top of the tender, in the performance of his duty, that the engineer was guilty of negligence in moving the train at an excessive rate of speed, and that Moore was thrown from the tender on account of.the unusual impact, and his body dragged a considerable distance. It was also a question for the jury to determine whether or not Moore assumed the risk or • was guilty of negligence in standing on the top of the tender.

■ There was much testimony adduced by appellant to the effect that it was customary for the fireman to- mix the compound on the deck of the locomotive, ¡but this did not make a case of negligence as a matter of law for the fireman t'o stand on top of the tender to perform that duty. It was a question for the jury, after, all., to determine that issue. The bucket of compound was found, mixed, on top of the tender, and there is evidence that the trainmen were getting ready to go in on the other track to take water, and that, together with the testimony of the engineer that he saw an object disappear from the top of the tender, is sufficient to warrant the inference that Moore was standing there, performing the duty mentioned above, when he was thrown from the train. There was no error therefore in submitting the issue to the jury on this charge of negligence.

We are of the opinion, however, that the court erred in submitting the issue as to negligence of the company in employing an unskillful and incompetent engineer, and that the court also erred in submitting the issue as to negligence on the part of the brakeman in failing to give the proper signals. There is no testimony in the record to warrant a submission of either of those issues to the jury, and appellants objected to the instructions submitting those issues, and saved proper exceptions.

According to the testimony of Reed himself, he had served an apprenticeship as a fireman for about two and a half years on the main line of the Chicago, Rock Island & Pacific Railway Company, and, when he left the service of that company and took service with the Fort Smith, Subiaco & Rock Island Railroad Company, he was examined as to his qualifications as an engineer on that road. He ran extra for a while, and made several trips, and had been a regular engineer on the railroad for some time before the occasion now under consideration. • There is no testimony to contradict this, and no testimony that Reed had ever been guilty of any negligent act, unless it be found that he was negligent on this particular occasion. In order to render the company liable on this issue, it is necessary to show that it negligently employed an unskillful and incompetent servant, and there is no testimony at all to show that Reed was incompetent and that such incompetency was known to his employer, or should, by the exercise of reasonable care, have been known. This could not be proved by the mere occurrence of a negligent act on this particular occasion. Nor is there any testimony in the record tending to establish negligence on the part of either of the brakemen. They testified that they were in their proper places, giving signals, and there was absolutely no contradiction of their testimony. It was error to submit these issues, and the error was prejudicial, for there is no way of determining what influence it may have had upon the verdict of the jury. St. L. I. M. & S. Ry. Co. v. Kimbrell, 111 Ark. 134; Hight v. Sharp, ante, p. 424.

There are numerous assignments of error with respect to the court’s charge, but, as the same questions may not arise on another trial, we deem it unnecessary to discuss them.

There is no liability on the part of the Chicago, Rock Island & Pacific Railway Company, for the reason that it had no connection with the employment or with the service of Moore, who was an employee of the other railroad company. The fact that the Fort Smith, Subiaco & Rock Island Railroad Company was permitted to use the track of the Chicago, Rock Island & Pacific Railway Company does not render the latter responsible for damages to servants of the former company on account of negligence of its own servants.

The judgment against both companies is therefore reversed, and the cause will be dismissed as to the Chicago, Rock Island & Pacific Railway Company and remanded for a new trial as to the Fort Smith, Subiaco & Rock Island Railroad Company. It is so ordered.


source: Caselaw Access Project

author: Wood, J.

license: Public Domain

text:
    Mutual Aid Union v. White
    Opinion delivered December 1, 1924.
    1. Insurance — validity of contract when made. — If a contract between an insurance company and the insured is not void because contrary to a sound public policy when made, it does not 'become void because of subsequent conditions, not expressed in the contract, which would have rendered the contract void if in existence at the time it was made.
    2. Insurance — wagering contract. — A contract, made in good faith, insuring the life of a debtor for the benefit of the creditor, is not a wagering contract, and is enforceable by the creditor at the debtor’s death, though the debtor had previously discharged the debt.
    Appeal from Ashley ■Circuit Court; Turner Blotter, Judge;
    affirmed.

      Duty & Duty, for appellant.
    The -son-in-law had no insurable interest in the life of the mother-in-law. 148 Ark. 361; 150 Ark. 315; 132 Ark. 458; 104 U. S. 775. The issuance of a policy to one who has no insurable interest in the life of the insured who pays the premiums is invalid because it is a wagering contract and against a sound public policy. 98 Ark. 52; 15 Wall. 643; 94 U. S. 457; 104 U. S. 775. The assignment of a life insurance policy to a creditor, even though absolute, only entitles him to the amount of his debt and the premiums paid. 98 Ark. 52; 76 Ala. 183; 129 Ala. 602; 100 Ky. 606; 76 Tex. 383; 104 U. S. 775.

      Compere Compere, for appellee.
    The policy was valid at its inception and was not a wagering contract. 145 Ark. 335; 14 R. C. L. 924, § 101; 116 Ark. 527 ; 25 Cyc. 706, 203 -S. W. 332; 16 Am. & Eng. Enc. of Law (2d ed.) 843; 94 U. S. 457; 24 L. ed. 251; 86 Ohio St. 213; 1913D Ann. Cas. 607; 32 Hun. 306; 222 U. S. 149; 56 L. ed. 133; 99 Fed. 64; 39 C. C. A. 625 ; 94 U. S. 561; 24 L. ed. 251. In the absence of any controlling provision in the contract, the holder of a policy, valid at its inception, is entitled to recover the full amount of the insurance without reference to. subsequent diminution or cessation of insurable interest. 25 Cyc.' 712.
   Wood, J.

The Mutual Aid Union, hereafter called appellant, is a mutual insurance association organized under the laws of Arkansas, with its principal office at Rogers, Arkansas. On the-first of March, 1915, Burl J. White, hereafter called appellee, made an application to appellant for a certificate of insurance on the life of Mrs. Martha J. Denton. Appellee signed the application, and named himself as beneficiary. A certificate of insurance was issued on the life of Mrs. Denton, in which the appellee was named as beneficiary. The insured died 'on the 29th of September, 1922. Under the terms Of the certificate the amount due thereon was $1,000. The appellant refused to pay this sum to the appellee, and he instituted this action against the appellant to recover same. The appellant defends the action on the ground that the appellee had no insurable interest in the life of Mrs. Denton. The appellee was not related by blood to the insured, but was her son-in-law. When the benefit certificate was issued, Mrs. Denton was indebted to the appellee in the sum of $200. She was living with appellee at the time the certificate was issued, and had a son about seventeen years old, who also lived'with the appellee. She had a bunch of cattle, and she and her son had to be fed. She had a farm of her. own, and appellee advanced her money to feed herself and boy and the cattle, and to farm her place. When appellant’s agent solicited the instirance, he was informed of the circumstances in regard to appellee’s mother-in-law, and that she was indebted to the appellee. .Mrs. Denton repaid what she owed appellee in the fall of 1915.

The above facts are undisputed. The appellant asked the court to instruct the jury to return a verdict in its favor, and also presented other prayers for instructions, to the .effect that appellee would not be entitled to recover under the policy unless, at the time of the death of the insured, she was indebted to the appellee and the appellee held the certificate as collateral security for such indebtedness; that the relation of son-in-law was not sufficient in itself to give appellee an insurable interest in, the life of Ms mother-in-law, Mrs. Denton, and would not entitle him to recover in this action, although he had paid the assessments due on the certificates for a period of more than seven years, which payments had been accepted by the appellant; that the certificate in controversy, under the facts adduced, was a wagering or gambling contract, on which appellee could not recover anything.

The court refused to instruct the jury as prayed for by the appellant, to which ruling the appellant duly excepted. At the instance of the appellee, the court gave instructions to the effect that, if the jury found that the agent of the appellant soliciting the insurance knew at the time of taking the application that Mrs. Denton was indebted to the appellee, and was so indebted at the time of the issuance of the policy, the appellee had an insurable interest in her life, and that the policy was valid, and continued so, and was in force, at the time of her death, although the insured had, in the same year after the issuance of the policy, paid her indebtedness to the appellee; that the liability of the appellant depended on whether the appellee was a creditor of the insured at the time of the application for and issuance of the policy; that the mere fact that the appellee was her son-in-law would not entitle him to recover. The appellant duly excepted to the rulings of the court in the giving of these instructions. The jury returned a verdict in favor of the appellee in the sum of $1,000. Judgment was entered in his favor for that sum, from which is this appeal.

The verdict of the jury settled the issue that, at the time of the taking of the application for insurance and the issuance of the policy, appellant’s' agent who solicited the insurance had knowledge of the fact thát the insured was indebted to the appellee, and that he also knew that the insured was the mother-in-law of the appellee. ‘ . !

This court is'thorougMy committed to the doctrine that “the issuance of a policy to one who has no insurable interest in the life of the insured, but who pays tne premiums for the chance of collecting the policy, is invalid because it is a wagering contract, and against a sound public policy •* * * ; that the assignment of a policy of insurance to one having no insurable interest in the life of the insured, though issued to one having such insurable interest, will be ineffective and invalid if such assignment was made in pursuance of an agreement made at the time of the issuance of the policy.” McRae v. Warmack, 98 Ark. 52-56, and cases there cited.

The appellant contends that the doctrine of the above case and cases there cited rules the case in hand. But not so. In the above case Warmack was the nephew of Boswell, and was in no way dependent on Boswell. They entered into a. verbal agreement by which Boswell was to insure his life, upon which Warmack was to pay the premiums and take an assignment of the policies, one of which was to be paid to Warmack and the others to the estate of Boswell upon the latter’s death. In that case the agreement between Warmack and Boswell that the former should pay the premiums and take an assignment of one of the policies at the time of the issuance of same rendered the contract void from its inception. Warmack, being the nephew of Boswell, and in no way dependent upon Boswell, had no insurable interest .in ■Boswell’s life, and the issuance of a policy on the life of Boswell with Warmack as the beneficiary, or the assignment of such policy under agreement at the time that Warmack should pay the premium and receive the proceeds of the policy, was but a wagering contract, and void when made, because contrary to sound public policy. But in the above case we said: ‘ There are a great many authorities which hold that a policy which is valid at its inception is assignable like any other chose in action, and one should be permitted to dispose of a valid policy of insurance effected in good faith upon his own life.” We did not hold in the above case that a policy or contract of insurance, valid when made, would become void because of some subsequent condition or occurrence which, the parties, at the time of the making of the contract, did not have in mind, and did not express as a condition subsequent upon the happening of which the contract would be invalidated. Whatever may be the rule in other jurisdictions, our court is unmistakably committed to the doctrine that a contract of insurance, valid in its inception, is not afterwards rendered invalid 'because the beneficiary, after the assured ceased to pay the premiums, continued to pay the same until the death of the assured. Langford v. National, etc., Ins. Co., 116 Ark. 527-536.

In Atkins v. Cotter, 145 Ark. 326, we held that a partner has an insurable interest in the life of his copartner, and this interest does not terminate upon the. dissolution of the partnership. At page 335 we quoted from 2 Joyce on Insurance, § 902, as follows: “Althoug’h it was held at one time that in insurance on lives the insurable interest must exist at the time of the loss, it is now sufficient that there existed a valid interest át the time of effecting the insurance. The fact that such interest ceased before the death of the assured is immaterial, on the question of the right to recover, unless such be the necessary effect of the provisions of the. instrument itself.”

In Gordon v. Ware National Bank, 132 Fed. 444, 67 L. R. A. 5501, it is held: “A creditor has an insurable interest in the life of his debtor, and a policy on the latter’s life issued to him, or issued to one who has an insurable interest in the life of the debtor and subsequently assigned to him, is valid and enforceable in his hands.”

In 14 R. C. L., p. 924, § 101, it is said: “A creditor has .an insurable interest in the life of his debtor, and the better view seems to be that 'where, by a valid contract, a debtor insures his life, making his creditor beneficiary, the creditor paying all premiums, under no agreement for repayment, the creditor may hold the whole proceeds.” Numerous cases are cited in notes 10 and 11 to sustain the- doctrine of the text.

In Fitzgerald v. Rawlings, 114 Md. 470, 79 Atl. 915, 1912 Ann. Cases, page 650, it is said: ‘ ‘ The law is well settled in this .State that a creditor who, in pursuance of a bona fide effort to secure a payment of his debt, insures the life of his debtor and takes the policy in his own name, or for his own 'benefit, is entitled to the proceeds of the entire policy.”

In Amick v. Butler, 111 Ind. 578, a debtor owing $600 had his life insured for the benefit of his creditor in the sum of $2,000, the creditor paying all expenses, premiums and assessments. It was agreed that, if the debtor paid the debt and the expenses of the insurance, the policy should be made over to him. He died in about two years, without having paid anything. The creditor received the full amount of the insurance, and the administrator'of the debtor sued to recover the surplus over the amount of the debt. In holding that the creditor was entitled to the full amount of the policy, the court, among other things, said: ££It is universally allowable that a creditor may, in good faith, take insurance upon the life of his debtor, either.by procuring a policy in which he is designated as the beneficiary, or by assignment. We know of no authority to the contrary of this.”

The rationale of the doctrine of all these cases is that, if there be nothing in the circumstances surrounding the making of the contract of insurance to indicate that it was a speculative or wagering contract, which is condemned by.a sound public policy, then the parties to the contract have the right to make it, and, if it is valid when made, it does not become invalid because thereafter some contingency may arise which contingency would have rendered the contract void if it had existed at the time the contract was made. If a contract between an insurance company and the insured is not void because contrary to a sound public policy when it is made, then it does not become so because of- subsequent conditions, not expressed in the contract, which conditions would have rendered the contract void if in existence at the time it was made. ' ■ ' •

The undisputed facts show that, at the time this policy was issued, the amount thereof was not out of proportion to the amount of Mrs. Denton’s debt to the appellee, and also that there was no understanding between Mrs. Denton and the appellee that she was to reimburse him for the amount of the assessments or premiums paid by him. In short, there was nothing in the circumstances, or in the language of the policy itself, to indicate that it was a wagering contract or that it was not entered into in good faith between the parties. Therefore it occurs to us that, both upon principle and authority, the appellant is bound t-o fulfill its contract, which was valid in its inception, notwithstanding the debtor upon whose life it ran paid her debt to the appellee several years before her death. Appellee, during all these years that he kept the policy alive by the payment of assessments, received nothing from Mrs. Denton to reimburse him, and the policy was not issued .to him under a contract of indemnity or collateral security for his debt and the amount of the assessment paid by him. It was a straight contract to pay him the full amount that had accrued under the policy at the time of Mrs. Denton’s death. We see no sound reason why the appellant should not be required to perform its part of the contract. The appellee has performed his. In addition to the authorities cited, see American Ins. Co. v. Manees, 150 Ark. 315-318; People v. Columbian Woodmen, 111 Ark. 435; 25 Cyc. 702, 706-, 711 and 712; Ferguson v. Mass. Mutual Life Ins. Co., 32 Hun 306; Wurzburg v. New York Life Ins. Co., 203 S. W. 332; and other authorities cited in brief of appellee.

There is no error in the record, and the judgment is therefore affirmed.


author: Smith, J.

text:
    Live Stock State Bank v. Forrest City Grocer Company.
    Opinion delivered December 1, 1924.
    1. Banks and banking — deposit of drafts — evidence.'—In an action toy a buyer of hay against the seller, in which the proceeds of drafts for the hay were garnished toy the seller, and an intervening bank claimed the proceeds, testimony that the bank gave the seller credit for the face of the drafts and permitted the seller to check against the deposit was admissible.
    2. Evidence — parol evidence concerning writing. — In an action by a buyer of hay, in which the ¡proceeds of drafts for hay were garnished, and the bank with which the seller had deposited the drafts intervened, claiming the proceeds thereof, it was competent for intervener to show toy parol evidence how and for what purpose it acquired the drafts; and it was error to charge the jury that the contract consisted of the drafts and deposit slips and that it could not toe varied by parol testimony.
    3. Banks and banking — evidence as to ownership of drafts. — • Under Crawford & Moses’ Dig., §§ 7796, 7815, relating to negotiation and transfer without indorsement, in an action by a buyer of hay against the seller, in which the proceeds of drafts drawn to pay for the hay were garnished, evidence as to ownership of proceeds thereof by intervening ¡bank with which the drawer had deposited such drafts, neither drawn to such bank nor indorsed to it, held sufficient tó go to the jury on the question whether the bank was the absolute owner of the draft.
    Appeal from St. Francis Circuit Court; E. D. Robertson, Judge;
    reversed.

      W. J. Lanier and Stubenrauch <£ Hartz, for appellant.
    Instruction 1A given by tbe court was in total disregard of tbe bills of lading, wbicb were indorsed and transferred to appellant for full value, with the drafts attached and an inseparable part thereof. There was no attempt to vary the terms of either the two deposit slips or drafts; but appellant assuredly had the right to explain the circumstances surrounding the execution of both. It had purchased the draft's and was entitled to the proceeds thereof. 90 Ark. 439; 64 Ark. 224; 96 S. W. 1051; 79 Ark. 356; Ray on Negligence of Imposed Duties of Freight Carriers, § 25; 120 Ark. 491. Appellant having purchased the drafts, it was entitled to an instruction to the effect that, even though it had, on the 12th day of May, 1923, on deposit money belonging to the Midwest Hay Company, that would not entitle the plaintiff to judgment against appellant. 107 Ark. 603; 124 Ark. 536, and cases cited; 46 Ark. 537; 48 Ark. 267; 127 Ark. 545; 113 Ark. 72; 101 Ark. 281; 48 Ark. 454; 147 Ark. 319.
    . G. W. Norton, for appellee.
    The drafts were not indorsed by Midwest Hay Company, though drawn to its order. This fact is not only a strong circumstance indicating that the bank’s receipt of the drafts was as a collecting agent merely, but it also leaves the legal title to the paper in the payee, without regard to what the intention of the parties may have been. C. & M. Dig., §§ 7796-97 ;■ 160 Ark. 421.
   Smith, J.

The testimony in this case is sufficient to support a finding that the Midwest Hay Company, a copartnership engaged in selling hay and grain in Kansas City, was indebted to the Forrest City Grocer Company. While so indebted, the grocer company ordered two cars of hay from the hay company. These cars were shipped from Kansas City on May 3 and. May 4, and in due course reached Forrest City.

The bills of lading were made in the name of the hay company, and were indorsed by it. Separate drafts were drawn by the hay company for each car of hay, and the drafts were identical, except as to date and amount. The draft covering the first car of hay reads as follows: “Midwest Hay Company No. 5571. Kansas City, Mo., May 3, 1923. On demand pay to the order of Midwest Hay Company $312.33, three hundred twelve and 33/100 dollars, with exchange. Midwest Hay Company, Thos. M. Brandon, Jr.. To Forrest City Grocer Co., Forrest City, Ark. Accept original paid freight bill as part -payment.” There was stamped on the back of each draft, with a rubber stamp, the following indorsement: “Pay to the order of any bank or banker. Previous indorsements guaranteed. Live ¡Stock State Bank,. Kansas City, Mo., May 4, 1923.” On the face of each draft the following notation was stamped: “Hold draft until arrival of car. Documents attached to be delivered only on payment of draft.” The document attached to each draft was the bill of lading for the car of hay, to collect the price of which the draft was drawn. These drafts, with bills of lading attached, were sent by the Live Stock State Bank, of Kansas City, hereinafter referred to as the bank, to the First National Bank of Forrest City.

Upon the arrival of the cars of hay in Forrest City, the. grocery company paid the drafts, took up the bills of lading, and unloaded and stored the hay, and commenced suit against the hay company for the debt due it, and garnished the proceeds of the drafts in the hands of the First National Bank of Forrest City as the property of the hay company.

The suit was begun in the court of a justice of the peace, and the hay company made no defense, and judgment was rendered against it by default, and no appeal was prosecuted by the hay company from that judgment. The bank, however, intervened in the justice court, and alleged that it was the owner of the proceeds of the drafts, and it appealed to the circuit court from a judgment adverse to it. ■

Upon the trial in the circuit court before a jury the following testimony was offered: It was shown that the hay company was a depositor and customer of the bank, and carried an active account there. The first draft was deposited on May 3 and the second on May 4, and each draft was deposited along with a number of other drafts. Each deposit was made on a deposit slip, which contained,..at its top, the following recitals: “Out of town items credited subject to final cash payment. This bank will observe due diligence in its endeavor to select responsible agents, but will not be liable in case of their failure or negligence or for loss of items.”

The officers of the bank testified that these deposits were made in the usual course of business, and that the bank became the absolute owner of each draft upon its deposit; that the bank gave the hay company full credit for the face of the draft, and permitted the hay company to check against the deposit, as would have been done had the deposit been in cash. This was the practice observed with all solvent depositors and customers,, although it was understood that, if any item so deposited was not collected, it was charged back to the account of the depositor. The hay company became insolvent and ceased to do business with the bank, and the account was inactive after May 8, at which time the hay company’s balance was $105.30, and this sum was checked out on June 1, thereafter.

Objection was made by the plaintiff grocer company to the admission of the testimony showing the circumstances under which the bank came into possession of the drafts. But this testimony was properly admitted. After admitting this testimony, the court gave, over the objection of the bank, the following instruction: - “No. 1A. The contract between the Midwest Hay Company and the Live Stock State Bank with regard to these drafts consists of the drafts themselves and the two deposit slips. This contract cannot be varied by parol testimony. ’ ’

There was a verdict and judgment for the grocer company, from which is this appeal. -

The instruction set out above was erroneous, and the judgment must be reversed on that account.' It was competent for the bank to show how and for what purpose it acquired the drafts, whether, when they were deposited, they were received' merely for collection or as an absolute'deposit of money, and the effect of this instruction" was to exclude the testimony on the part of the bank tending to" show that it did not receive the drafts for collection merely, but had received them as an absolute deposit of money.

It is insisted on behalf of appellant bank that the judgment of the court below should be' reversed ánd judgment rendered here in its favor, for the reason that the undisputed testimony shows that it received' the drafts as deposits of money and not for collection merely. We do not think, however, that this conclusion, and no other, must be- drawn from the testimony in this case. This case is in many respects similar to the very recent case of Merchants’ Bank of Kansas City v. Searcy Wholesale Grocery Co., ante p. 153, in which the law of the subject was declared. But a very important distinction is that, in the case cited, the draft was drawn to the bank itself, and the'bank was there attempting- to collect the draft for its own account. In the instant base the drafts were not drawn to the bank which remitted for collection, nor were they indorsed to it. Indeed, the drafts were not indorsed at all. Sections 7815 and 7796, C. & M. Digest; Johnson v. T. M. Dover Merc. Co., 164 Ark. 371.

In the case of Cox Wholesale Grocery Co. v. National Bank, etc., 107 Ark. 601, the court quoted as follows from the case of Burton v. United States, 196 U. S. 283: “When a check is taken to a bank, and the bank receives it and places the amount to the credit of a customer, the relation of creditor and debtor between them subsists, and not that of principal and agent.” And from the case of Taft v. Bank, 172 Mass. 363, the court quoted as follows: “■So when, without more, a bank receives upon deposit a check indorsed without restriction, and gives credit for it to the depositor as cash in a drawing- account, the form of the transaction is consistent with and indicates a .sale, in which, as with money so deposited, the check becomes the absolute property of the banker.” After approving the law as thus stated, the court said, in its application to the facts of that case, that there was nothing in the record of that case to contradict the fact that the bank had become the absolute owner of the check, and that the only liability of the drawer was upon his indorsement in case the check was not paid. But it was there also said: “Of course, it would have been competent to prove that, notwithstanding the indorsement, the check was delivered merely for collection.”

Here the’bank admitted that it would have charged the drafts back to the account of the hay company if that company had not become insolvent and had not transferred its account to another bank; but the reservation of this right, pursuant to the custom of banks so to do, would not divest the bank of its character as owner, if there was nothing else in the case to contradict the testimony of the officials of the bank. But there were other circumstances in evidence tending to refute this testimony. The drafts were not indorsed by the hay company; there was nothing on them to indicate the bank’s ownership; there was an indorsement on them which authorized the collecting bank to allow a credit for the freight, which was an unknown sum when the drafts were deposited in Kansas City. It is true, the bank received them on a deposit slip which gave credit for their face, but it was known and understood that a credit for a then unknown amount would be allowed. The recitals on the deposit slips would indicate that the items out of town were received only for collection, and that the bank’s relation to the drafts was that of an agent, whose responsibility was limited to the selection of another reliable agent to consummate the collection. Of course, this recital was subject to explanation in a particular case, but it is a circumstance to be considered in determining what, in fact, was the bank’s relationship to the drafts. The bank officials admitted that, although it was their custom to credit the account of any customer with the face of any draft or other item deposited, they yet reserved the right, in cases of irresponsible depositors, to treat their relation to the depositor as that of agent, instead of that of debtor.

. Under the facts stated, we think there is a question for the jury as to the bank’s absolute ownership of the drafts; but, for the error in giving the instruction set out above, the judgment must be reversed, and the cause will be remanded for a new trial.


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    McKee v. American Trust Company.
    Opinion delivered December 1, 1924.
    1. Statutes — enacting clause. — Where an act contains the enacting clause .prescribed by Const. 1874, art. 5, § 19, it is not necessary that the separate sections of the act should likewise contain such enacting clause.
    2. Statutes — amendment of act by reference to title. — Acts 1923, No. 627, § 6, amending Acts 1913, No. 113, relative to hanks, by' adding an additional complete section thereto, is not void as amending the latter act by reference to its title.
    3. Banks and banking — deprivation op property without due process. — Acts 1923, No. 627, § 6, which prohibits unauthorized corporations from doing business under the name of a “trust company,” is not void, as a deprivation of property without due process, within Const. 1874, art. 2, § 8, or of the Fourteenth Amendment to the Constitution of the United States, in view of art. 12, § 6, authorizing the General Assembly to alter or repeal the general laws under which corporations may :be organized.
    4. Constitutional law — ex post facto law. — Acts 1923, No. 627, § 6, which prohibits unauthorized corporations from using the words “trust company” as part of- their names, is not an ex post facto law. as it has no retroactive effect.
    5. Jury — injunction suit.. — In a suit to restrain an unauthorized corporation from using the words “trust company” as part of its name, in violation of Acts 1923, No. 627, § 6, the defendant . is not entitled to a trial by jury.
    6. Banks and banking — authority of bank commissioner.— Under Acts 1923, No. 627, § 6, the Bank Commissioner is expresly authorized to bring suits to restrain corporations from doing business under a name prohibited by that act.
    Appeal -from Union Chancery Court, First Division; J. Y. Stevens, Chancellor;
    reversed.'

      John M. Bose,, for appellant.
    1. The use of the words “trust company” by appellees is a -clear violation of the statute, § 6, art. 627, Acts 1923. No other construction can be placed on the clear and explicit language of the statute.
    2. Before there can be a violation of the due process clause of the Constitution, there must be some “property” sought to be taken. Appellee has no property right in a trade name which is in fact a misrepresentation to the public. R. C. L., §-14, ‘ ‘ Trade Marks, Trade Names,” etc. In determining in this case whether there has been a violation of art. 2, § 8, Constitution, it must be considered in connection with art. 12, § 6, from which it appears that the due process clause does not apply in the case of corporations, unless injustice is done to the corporators. As to what constitutes an injustice, see 130 Ark. 128; 54 Ark. 101; 58 Ark. 407; 64 Ark. 83; 69 Ark. 521; 87 Ark. 587 ; 94 Ark. 27; 148 Ark. 504. It was within the rights of the Legislature to enact this bill, as being within the police powers of the State. R. C. L., § 182,190, 192, 193, 194; 123 U. S. 623; 31 U. S. (L. ed.) 205; 85 Ark. 464; 6 R. C. L. 208-210; Id. 219; Id. 222.
    3. The act is not an ex post facto law. The acts prohibited by the statute are such only as may be committed after its passage. The objection that it is ex post facto is particularly inapplicable in this case, since it is an injunction suit, and not in any sense a criminal prosecution. 23 Ark. 587; 1 Ark. 21.
    4. The act 627 of 1923 is not within the inhibition of the Constitution, art. 5, •§ '23, with respect to amendment by reference only, either as to § 1700 of Crawford & Moses’ Digest, relating to the formation of corporations, or as to the general banking act of 1913. 29 Ark. 252; 31 Ark. 236; 49 Ark. 131; 52 Ark. 290; 120 Ark. 165; 52 Ark. 326; 64 Ark. 83; 133 Ark. 380 ; 103 Ark. 298; 133 Ark. 157.
    5. This case is an injunction proceeding, purely equitable, and the remedy prescribed by the statute. The right of trial by jury therefore does not exist. Art.'2, § 7, Constitution; 32 Ark. 553.
    6. That the State Bank Commissioner, and not the Attorney General, is the proper party to maintain this action is clearly shown by the language of the act 627 of 1923, § 6.
   Smith, J.

This suit was brought by the State Bank Commissioner against the American Trust Company, its officers and stockholders, to enjoin them from further violating § 6 of act 627 of the Acts of the 1923 General Assembly (General Acts 1923, page 515). Act 627 is an act entitled “An act to amend act 113 of the Acts of the General Assembly of 1913, entitled ‘An act for the regulation and control of banks, trust companies and savings banks’ as amended.”

The act is a very comprehensive one of twenty sections, and amends the State banking laws in many important particulars, especially act 113 of the General Assembly of 1913.

After amending act 113 of the Acts of 1913 in several particulars, § 6 of act 627 provides that act 113 “be further amended by adding thereto an additional section reading as follows:

“All persons, firms, associations and corporations, except such as discharge the burden of proving their authority under the laws of another.State or of the United States, and except those organized under the .provisions of act 632 of the Acts of the General Assembly of 1921, or except such as are subject to the supervision of and have authority from the Bank Commissioner to engage in the business, or a substantial part thereof, of a bank, trust company, savings bank, * * *, are prohibited from using in this State, as a portion of or in connection with their place of business, their name or title, or in connection with their office or other place of business, or in reference to themselves in their stationery or advertising, any of the words, or phrases, along or in combination with any other word or phrase, of ‘bank,’ ‘banks,’ ‘banker,’ ‘bankers,’ ‘banking,’ ‘Federal reserve,’ ‘trust company,’ ‘trust,’ * * *, or any other word or phrase which tends to induce the belief that the party using it is authorized to engage in the business of a bank, trust company, savings bank, * * *; and all person, firms, associations and corporations, under whatever name or title, and in whatsoever form, except mutual or cooperative banks * * * and other corporations organized under the provisions of act 632 of the Acts of the General Assembly of 1921, with the other exceptions as aforesaid, are prohibited from doing or soliciting business in this State, substantially in the manner, or so as to induce the belief that the business is that, in whole or part, of a hank, savings bank, trust company, * * * either by the sale of contract, or of shares of its capital stock, upon partial or installment payments thereof, or by the receipt of money, savings, dues or other deposits, or by the issuance of certificates of deposit or certificates of deposit or certificates of investment of money, savings or dues * # * M

It is further provided in § 6 that a violation of the provisions of that section shall constitute a misdemeanor, and be punishable by a fine of $25 for each day “during which it is committed or repeated.” And that section further authorizes and directs the Bank Commissioner “to institute and prosecute in his own name, as such, in any court of competent jurisdiction, in civil suit in the nature of quo warranto, or for an injunction, or for any other appropriate remedy, in order that thereby the violation of any provision of this or said other acts, or ultra vires action, or the usurpation or threatened usurpation or misuse of any of the powers conferred by this or said other acts upon banks, trust companies, savings banks, or building and loan associations, may thereafter be prevented. ’ ’

The complaint alleged that the defendant, American Trust Company, was violating this act, in that it was doing business under a name which implied that it was a trust company, when, in fact, it was not, and there was a prayer that the defendant be enjoined from further using the words “trust company” in connection with its business.

A demurrer to the complaint was filed, and overruled, whereupon an answer was filed setting up numerous defenses.

Among other defenses set up was that the act which the Bank Commissioner sought to enforce was void for the following reasons:

(1). Tbe act was not read upon three separate days in each house; nor were the rules suspended by a two-thirds vote of the members of each house, as required by22 of article 5 of the Constitution.
• (2). The ayes and nays on the final passage of the bill were not recorded, as required by § 22 of article 5 of the Constitution.
(3). The act did not have the necessary enacting clause, as required by § 19’ of article 5 of the Constitution. An examination of the journals of the Senate and House of the 1923 General Assembly shows that the first and second objections to the act are not well taken.

Section 19 of article 5 of the Constitution provides that “the style of the laws of the State of Arkansas shall be: ‘Be it enacted by the General Assembly of the State of Arkansas.’ ” An examination of act 627 shows that it contains this enacting clause. The separate sections of that act do not contain this clause; but the Constitution prescribes no such requirement.

Another objection to § 6, set up in the answer, is that it is, in fact, an amendment of a statute by reference to its title only. This objection is not tenable, as § 6 does not purport to amend act 113 by reference to its title, but amends this act, as amended, by adding a new section to it, and this additional section is a complete enactment in itself.

Other defenses set up in the answer are:

(a) . That there has been no violation of the statute.
(b) . That to require defendant to discontinue the use of the words “trust company” in the corporate name would deprive it of its property without due process of law.
(c) . The act is void as an ex post facto law.
(d) . Defendant is deprived of its right of trial by jury, in violation of the Constitution.
(e) . The Bank Commissioner has no authority to maintain this suit.

In support of the allegations of the answer the following testimony was offered: Defendant is a domestic corporation, having its principal place of business at El Dorado; was duly organized under the laws of this State on August 16,1922, under the name of the American Trust Company, and the words “Trust Company,” are a part of the corporate name under which it has, since its organization, conducted its growing business. The defendant company commenced operations with an investment of $28,000, and its business has been enormously successful, and the president of the company estimated the value of all its assets at several million dollars. It has an enormous correspondence, which it has conducted under its corporate name, by which it has become known to these correspondents, to whom it has sent many thousands of letters and circulars, and has stationery and literature bearing its corporate name, which cost several thousands of dollars. Much of this literature was propaganda designed to sell stock in a concern known as “Money-Back Oil Company,” for which defendant was acting as agent and trustee. There were follow-up letters having the letterhead1 “American Trust Company, Incorporated,” intended to be sent to persons on the mailing lists who had not replied to the first letters. This literature insured the bringing in of two “gushers,” or to refund one-half the money paid for stock, and promises to return all money so paid if there was a failure to bring in one gusher, and there are representations calculated to arouse in the prospective investor the hope of “a clean profit of 120 to 1, or better.” Upon reading this literature, one marvels at the generosity which would assure such prospects of profit upon terms so free from risk of loss, yet, according to the testimony of the president of the defendant company, its operations have been so successful in acquiring oil leases that it has fulfilled all representations made, and is prepared to continue to do so.

Defendant admits it is not authorized by its charter to do business as a bank .or trust company, but denies that it has ever made any representation that it was so authorized, or was, in fact, engaged as such. Its business is that of buying and selling oil leases and developing oil fields.

There was a general finding in favor of the defendant, and the complaint was dismissed, from which decree is this appeal.

Appellee insists that it has become known to its correspondents by its present corporate name, and that it has valuable stationery and literature so stamped, and it insists that it would be deprived of valuable property rights if it were deprived of the right to continue to use its present corporate name.

Appellee further insists that the decree of the court below was correct, as being in accordance with § 8 of article 2 of the Constitution, which provides that “no person shall be deprived of life, liberty or property, without due process of law.”

This provision of the Constitution must be read, however, in connection with § 8 of article 12 of the Constitution, which.reads as follows: “Corporations may be formed under general laws, which laws may, from time to time, be altered or repealed. The General Assembly shall have the, power to alter, revoke or annul any charter of incorporation now existing and revocable at the adoption of this Constitution, or any that may hereafter be created, whenever, in their opinion, it may be injurious to th'e citizens of this State, in such manner, however, that no injustice shall be done to the corporators. ’ ’

This provision of the Constitution has been frequently construed by this court, and a late case interpreting it is that of Davis v. Moore, 130 Ark. 128, in which we quoted from Judge Battue’s opinion in:the case of Leep v. Railway Co., 58 Ark. 407, as follows: “Natural persons do not derive the right to contract from the Legislature. Corporations do. They possess only those powers or properties which the charters of their creation confer upon them, either expressly or as incidental to their existence; and these may be modified or diminished by amendment, or extinguished by the repeal of the charters.”

In the case of Woodson v. State, 69 Ark. 521, Mr. Justice Riddick, speaking for the court, said: “The citizen does not derive his right to contract from the Legislature. The corporation does, and it possesses only such powers as may be conferred upon it by thé legislative will, and these, under our Constitution, are liable to be altered, revoked or annulled by the power that granted them. Article 12, § 6, Const, of Ark. The plain purpose of this constitutional reservation was to keep corporations under legislative control. The only limitation on this power of the Legislature contained in our Constitution is that the alteration, revocation or annulment of the corporate powers must be made ‘in such manner that no injustice shall be done to the corporators.’ ”

In the case of Ozan Lbr. Co. v. Biddie, 87 Ark. 587, Mr. Justice Battle, again speaking for the court, said: “The reserved power to amend a charter, in the. absence of an express limitation, must be exercised upon terms that are just and reasonable. In Shields v. Ohio, 95 U. S. 319, 324, Mr. Justice Swayne, in delivering the opinion of the court, says: “It is urged that the franchise here in question was'property held by a vested right, and that its sanctity, as such, could not be thus invaded. The answer is, consensus facit jus. It was according to the agreement of the parties. The company took the franchise subject expressly to the power of alteration or repeal by the G-eneral Assembly. There is therefore no ground for just complaint against the State. * * *' The power of alteration and amendment is not without limit. The alterations must be reasonable; they must be made in good faith, and be consistent with the scope and object of the act of incorporation. Sheer oppression and wrong cannot be inflicted under the guise of amendment or alteration.’ ” After reviewing other authorities to the same effect, Judge Battle continued: “It is obvious that this power to amend charters of corporations is in force under the Constitution of this State with'the same limitation. It was virtually so held' in Leep v. Railway Co., 58 Ark. 435. In that case, after a review of author-ties, it is said: ‘It is obvious that the Legislature cannot, under the power to ámend, take from corporations' the right to contract; for it is essential to their existence.It can regulate it when the interest of the public demands it, but not to such an extent as to render it ineffectual or substantially impair the object of incorporation.’ St. L. I. M. & S. R. Co. v. Paul, 173 U. S. 404; Union Sawmill Co. v. Felsenthal, 85 Ark. 346.”

There is no attempt here to deprive appellee company of its right to contract; nor is there any attempt to confiscate the property which it has accumulated under its present corporate name. Its ownership of this property, consisting principally of oil leases, will not be impaired by requiring it to change its present corporate name. The State, in the exercise of its police power, has, through its General Assembly, directed that no one shall assume to do business under a name which carries the implication that it is a bank or a trust company, when it is not 'such in fact. It was thought wise to afford the public protection from possible imposition by such a course of business, and we think it is no injustice to a corporation, within the meaning of § 6 of article 12 of the Constitution, quoted above, to prohibit a corporation from doing business under a corporate name which might be misleading to the investing public as to its corporate character.

It 'is also insisted in the answer that the act of the General Assembly in question is violative of the due process of law clause of the Federal Constitution, which provides that no State shall deprive any person of life, libertv, or property, without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws. ‘Section 1 of Amendment 14, Federal Constitution.

Of this defense but little need be said. In 6 R. C. L., title “Constitutional Law,” beginning with § 198, the scope and objects of enactments under the State’s police power are dealt with, and this section and those following cite annotated cases which collect an almost limitless number of cases on the subject. It will suffice to quote what Mr. Justice Harlan said, in speaking for the Supreme Court of the United States, in the case of Mugler v. Kansas, 123 U. S. 623, 31 L. ed. 205. This was the case in which the validity of the prohibition law of the State 'Of Kansas was involved, and, in upholding that statute, Justice Harlan said: “Under our system that power is lodged with the legislative branch of the ■ government. It belongs to that department to exert what are known as the police powers of the State, and to determine, primarily, what measures are appropriate or needful for the protection of the public morals, the public health, or the public safety.”

As to the contention that act 627 is void as an ex post facto law, it may be said that the act is not subject to this objection. It does not make any action taken before its passage unlawful.

The other defenses raised in the answer require but little discussion.

Appellee was not entitled to a trial by jury, as this was not a suit to enforce the criminal features of the act, but was one to enjoin its continued violation. Hickey v. State, 123 Ark. 180; Marvel v. State, 127 Ark. 595; Adams v. State, 153 Ark. 202.

The Bank Commissioner has authority to maintain this suit. The act imposed upon him the duty of enforcing its provisions, and expressly authorizes him to bring an injunction suit when necessary.

Appellee’s violation of the act is obvious. Its present corporate name indicates that it is a trust company, possessing the powers conferred by law on such corporations, and its answer admits that its charter confers no such power.

We conclude therefore that the court below erred in dismissing the Bank Commissioner’s complaint as being without equity, and that decree is reversed, and the cause will be remanded with directions to enter a decree in accordance with this opinion.


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    Arkansas State Life Insurance Company v. Allen.
    Opinion delivered December 8, 1924.
    1. Insurance — authority of agent. — An insurer is bound by the conduct of its soliciting agent within the apparent scope of his authority, and charged with the knowledge or information acquired by him in the course of his employment.
    2. ' Insurance — warranty as to health — trivial ailments. — Trivial ailments of temporary duration, not affecting insured’s general health, are not in contemplation of the parties, and do not affect the risk assumed, and are not a breach of the - warranty that insured has not been treated or advised by a physician within the ¡past two years.
    3. Insurance — defense not pleaded. — Though the policy provided that insurer was not liable for an amount greater than the amount paid in by a certain class within the month preceding insured’s death, defendant’s offer to prove such amount, offered after plaintiff’s testimony was completed, was properly excluded on the ground that there was nothing in the answer to put plaintiff on notice of such defense.
    4. Appeal and error — nature of excluded evidence not shown.— Where the record does not disclose what the excluded evidence would show, prejudice to appellant by the court’s ruling is not shown.
    5. Appeal and error — exclusion of evidence — prejudice.—Where the record did not show that the constitution and by-laws of insurer, offered in evidence, were duly -authenticated, but did show that provisions thereof which defendant sought to introduce were covered by provisions of the policy, no prejudice resulted from their exclusion.
    6. Appeal and error — objection available to appellant. — In an action against an insurance company and its bondsmen, wherein judgment was rendered against the company and bondsmen, defense that process was never served on the bondsmen is not available to the company, which alone appealed.
    Appeal from Prairie Circuit Court, Southern District; George W. Clark, Judge;
    affirmed.

      Arthur D. Chavis, for appellant.
    The policy sued on is void because of false representations made in the application. The application and policy, forming one transaction, are read together with the by-laws as the éntire contract. The falsity of the insured’s answer to the question whether she had been treated within two years by a physician is established beyond doubt. 105 Ark. 101; 72 Ark. 620; 84 Ark. 57; 89 Ark. 368; Id. 378; 103 Ark. 404; 52 Ark. 11; 53 Ark. 215; Id. 494; 65 Ark. 581;'71 Ark. 298; 58 Ark. 528; 72 Ark. 620. There was clearly a question of' fact for the jury in this case, and the court erred in directing the verdict. 301 Ark. 201; 65 Ark. 581. Also the court erred in refusing permission to introduce in evidence the conditions in the by-laws, and to introduce the company’s ledger.

      Cooper Tfoweatt, for appellee.
    1. The evidence is undisputed that neither the insured nor the beneficiary had1 any knowledge that the statement that the insured had- not been treated by a physician within two years appeared in the application. It is also undisputed that the agent alone had ■ this knowledge. The company is estopped to plead a breach of the warranty. 113 Ark. 174, 184; 81 Ark. 508; 111 Ark. 435; 129 Ark. 450; 147 Ark. 563; 71 Ark. 295. Treating the question and answer as . a • warranty, it was not intended to embrace treatment by a physician for trivial ailments, 'but only such as-might affect the risk to be assumed. 58 Ark. 528; 89 Ark. 230; 71 Ark. 295; 65 Ark. 588. There is no evidence of collusion between the agent and the appellee; but, if there was any fraud, it was that of the agent, who' was acting within the scope of his authority. 113 Ark.-174. And the company is- bound by his knowledge-. 129 Ark. 450.
    2. The company’s ledger was properly excluded, because it did not plead its financial condition, nor even suggest it in its answer, and, since there was no written amendment, and none permitted to be filed, such evidence would have been irrelevant.' 24 Ark. 375; 57 Ark. 512; 33 Ark. 307. It is not disclosed in the record what the contents of the ledger were, that it was sought to p'rove. -There is nothing therefore for -the court to review. 97 Ark. 564; 101 Ark. 555; 123 Ark. 548. It was within the court’s discretion to refuse leave - to amend. 68 Ark. 374; 88 Ark. 181; 60 Ark. 526; 104 Ark. 276.
    3. The document purporting to be the constitution and by-laws of the company, when offered without identification and no evidence whatever of authenticity, was quite properly excluded. It could not have been prejudicial to exclude it, since the very paragraphs sought to be introduced were set out in the policy. 95 Ark. 443; 105 Ark. 230; 87 Ark. 52.
   Wood, J.

On the 23rd of December, 1922, Arkansas State Life Insurance Company, hereafter called appellant, issued its certificate, or policy of insurance, on the life of Angelene Allen. Austin Allen, her husband, was named as the beneficiary in the policy. The appellant was engaged in the life- insurance business on the .assessment or mutual plan. It is specified in the policy that the application and the constitution and by-laws shall be the basis, and form a part of, this contract.

The insured died on the 20th of March, 1923. The value of her policy at the time of her death, if valid, was $235. She paid one quarterly premium of $5.30. The appellee instituted this action' against the appellant and its bondsmen setting up the policy and the amount due thereunder, the payment of the premium, the death of the assured, notice to the company of the death, demand of payment, and prayed judgment in the sum of $235.30, and for attorney’s fee of $75 and 12 per cent, penalty.

The appellant, in its answer, denied the material allegations of the complaint except as to the issuance of the policy and filing- of the bond, and set up by way of affirmative defense that there was a breach of warranty as to the condition of the health of the insured at the date of the policy, in that the statements of the insured in the application on which the policv was issued were false and fraudulent, by which all rights under the policy were forfeited.

The appellant also, in response to the motion to make its answer more definite, alleged that the assured stated in her application for insurance that she had not been treated or advised by a physician during the past two years, and that the plaintiff stated in his claim for death benefit, and swore to same, that the assured died with la grippe.

' The appellee denied that there were any misrepresentations.

The cause was tried before a jury, and, after the evidence was adduced, the appellee prayed the court to instruct the jury to return a verdict in its favor, which prayer the court granted over appellant’s objection and exception. From a judgment rendered on the verdict in favor of the appellee is this appeal.

1. "We will consider the assignments of error'in the order presented by counsel for the appellant. It is stated in the application, which was made December 23, 1922, and signed by the assured, as follows: “I have not been treated or advised by a physician in the past two years, except * * * no, my family physician is doctor.” The application contains the following provision: “I understand and agree that each of the foregoing statements are warranties; that I made them to induce the issuance of a policy of insurance for which I made this application, and to that end I warrant them to-be true.” There is also a' statement in the application to the effect that the insured made the application subject to all the conditions and agreements in the policy; that the application is a part of the policy.

Dr. Odom testified that he was called to see Angelene Allen in 1921;.that she had a slight case of influenza-or la grippe, with some fever; that it was a temporary attack, and her general health was not affected. He also stated in .the proof of death that he thought the sickness for which he treated the insured the year before had no connection with the cause of her death.

The appellee testified that, when the agent took the application, he asked witness if his wife was well, and witness told him that she was. The agent had never seen the insured in his life, and did not ask the witness whether his wife had been treated by a physician in the past two years. The witness answered all questions truthfully, which the agent asked him, and the agent wrote the answers down. This testimony of the appellee was corroborated by another witness, and there is no testimony to the contrary in the record.

It is the doctrine of this court that an insurance company is bound by the contract of its soliciting agent acting within the apparent scope of his authority. Any knowledge or information given to.him during the course of his employment will bind his principal, the society, and it will be estopped from denying that which its own agent had asserted to be true. Mutual Aid Union v. Blacknall, 129 Ark. 450-55, and cases there cited. Maloney v. Maryland Cas. Co., 113 Ark. 174.

It is not alleged by appellant in its answer that there was any collusion on the part of the appellee and appellant’s soliciting agent to defraud the appellant. • The soliciting agent was acting within the scope of his authority in writing the answers and taking the application, and there is no proof whatever that any fraud was perpetrated upon him by the appellee.

Moreover, if the above statement had been made by the assured, It would not have rendered the policy void for the reason that the testimony of the physician showed that his treatment of the assured within two years prior to the issuance of the policy was for a trivial ailment of temporary duration, which did not affect her general health. Such ailments were not in the contemplation of the parties, and did not affect the risk assumed by appellant, and were not a breach of the warranty. Providence Life Assurance Society v. Reutlinger, 58 Ark. 528; Mutual Reserve Fund Life Assn. v. Farmer, 65 Ark. 588; Des Moines Life Ins. Co. v. Clay, 89 Ark. 230.

2. There is a provision in the policy to the effect that the company shall in no instance be liable for an amount greater than the amount paid in by the whole series in which the insured was classified on the last month preceding the death or disability of the insured, and the value of this policy is dependent on this condition One of the grounds of the motion for a new trial is that the court erred in refusing to allow the appellant to introduce in evidence its ledger showing the amount of receipts and expenses of said company for the month prior to the death of the insured. This testimony was offered after the appellee’s testimony was all adduced. The trial court refused to allow this testimony on the ground that there was nothing in the answer to put the appellee on notice that this defense would be pleaded on trial of the cause. There was no error in the court’s ruling, as the issue was not raised. It was within the discretion of the court during the progress of the trial when this evidence was offered, to refuse to allow the appellant to amend its answer to raise this issue. Amer. Bonding Co. of Baltimore v. Morris, 104 Ark. 276, See also St. Louis, I. M. & S. Ry. Co. v. Holmes, 88 Ark. 181.

The ruling of the court was correct for the further reason that the record does not disclose what the contents of the ledger were, and it does not therefore appear that the appellant was prejudiced by the court’s ruling. Fort Smith Light & Traction Co. v. Ward, 123 Ark. 548; New Hampshire Fire Ins. Co. v. Blakely, 97 Ark. 564.

3. The appellant offered a document purporting to be the constitution and by-laws of the appellant. The court refused to allow the document on the ground that there was no evidence offered to authenticate it as the constitution and by-laws of the appellant, and that all these things are set forth in the policy and is a part of the contract sued on here in the case. The ruling of the court was correct. There is nothing in the record to show that the document was duly authenticated, and the record discloses that the provisions of the by-laws, which the appellant asked to be introduced, were covered by the provisions of the policy. Therefore, it is. manifest that no prejudice resulted to the appellant in the court’s ruling. Crawford County Bank v. Baker, 95 Ark. 443; Fletcher v. Freeman-Smith Lumber Co., 105 Ark. 230.

4. The appellant contends that the directed verdict resulted in a judgment against two of the bondsmen of appellant, to-wit: J. W. Simpson and L.- Mayfouz, upon whom no service was had in the action. These parties were named defendants in the complaint, and the answer states, ■ ‘ ‘Come all the defendants named herein who have 'been served with summons, and for their answer herein state,” etc. There is nothing in'this statement to show that the answer was not intended to be the answer of J. W. Simpson and L. Mayfouz, as well as the appellant and the two other individuals named as defendants, and the record does not show that they were not served with process. They are not appealing, and, if it be a fact that they were not served, then they are not bound by the judgment.

5. The judgment of the trial court is in all things correct, and it is therefore affirmed.


author: McCulloch, C. J.

text:
    Berger v. Kohler & Romer.
    Opinion delivered December 15, 1924.
    Sales — acceptance op clothing. — The rule that acceptance of early installments of goods purchased under an indivisible contract does not bind the purchaser to pay the price until delivery of all the installments is not applicable to an article such as a suit of clothes, the acceptance and use of which renders the purchaser liable though the seller failed to furnish trousers as agreed.
    Appeal from Craighead Circuit Court, Jonesboro District; G. E. Keck, Judge;
    affirmed.

      Horace 81ooa%, for appellant.
    The contract was indivisible. The extra pants were never furnished. Appellant would not have accepted a part of the order if he had known the entire order was not forthcoming. 3 Williston on Contracts, § 1474; 6 R. C. L. p. 859; 56 N. Y. Supp. 1032. In contracts involving matters of fancy, taste or judgment, when one party agrees to perform to the satisfaction of the other (as in this case to make the suit fit),-he renders the other party the sole judge of his satisfaction without regard to the justice or reasonableness of his decision, and a court or jury cannot say that -such party should have been satisfied, when he asserts he is not. 13 O. J. p. 675, § 768; 37 App. Div. 536, 56 N. Y. Supp. 326; 113 Mass. 136.

      Cooley, Adams é Fuhr, for appellee.
    Contracts ordinarily entire may be treated as severable if the parties so elect. 81 A(rk. 549; 76 Ark. 74; 2 A. L. R. p. 638. Acceptance may be implied from conduct. 6 R. C. L. 992. The use of property operates as an acceptance. 6 R. C. L. 993.
   McCulloch, C. J.

Appellees are merchant tailors, doing business in the city of St. Louis, and this is an action instituted by them against appellant to recover the sum of $150, the alleged price of a suit of clothes made by them for appellant, who resides in Jonesboro, Arkansas.

It is the contention of appellees that the contract between them and appellant was that they would make and furnish a suit of clothes, consisting of a' coat, vest and trousers, and would, if they could secure enough of’the material, furnish an extra pair of trousers, and- that the price would be $150. They contend that they made and delivered the suit to appellant,- but were unable to secure enough of the material to furnish the extra pair of trousers.

Appellant contends that appellees made an absolute contract with him to furnish a suit of clothes and an extra pair of trousers, and also undertook to make the suit to fit to his satisfaction, and that they have not furnished the extra trousers and that the fit is not to his satisfaction. The trial jury returned a verdict in favor of appellees for the sum of $100.

The testimony introduced by the parties supported their respective contentions, and there was- a conflict as to the particular contract between them as to whether or not the garments constituted a suitable fit. Appellees testified that the suit was returned to them for alterations, and showed considerable wear. Appellant admitted that he had worn the suit several times in order to try it, and that there were perspiration marks under' the sleeves of the coat. The suit was exhibited to the jury.

The court gave, over appellant’s objection, the following instruction:

“1. If you find from the. evidence that the defendant Berger, on the receipt of the suit of clothes, wore same longer than was reasonably necessary to determine whether they fitted him properly, such act of the defendant operated as an acceptance of the said suit, and you will find for the plaintiff in the sum of $150, unless you find that plaintiff agreed to furnish two pairs of trousers for a consideration of $150, in which event you will find for the plaintiff for the sum of $150 less the value of the extra pair of trousers.”

The objection to this instruction is based principally upon the contention that the contract, according to appellant’s own testimony, was indivisible, and that he was not bound to accept the suit without the extra pair of trousers being furnished also. Counsel invoke the principle of law that, where a contract is indivisible, the delivery of all the installments is a condition precedent to the obligation to pay, and that acceptance of an early installment does not bind the purchaser to pay the full price. 3 Williston on Contracts, § 1474. Conceding this to be a correct principle of the law, it is not applicable to the sale of an article such as a suit of clothes, which deteriorates in value' on partial use, for, under these circumstances, the acceptance and use of the article constitutes an election to treat the contract as divisible. The evidence in the case is sufficient to warrant the finding that appellant did accept the suit of clothes and wore it sufficiently to materially diminish its market value. This being true, he is liable for the price. Our conclusion therefore is that there was no error in giving this instruction.

Error is also assigned in the court’s giving the following instruction of its own motion:

“1. The word ‘fit’ as used in the agreement of purchase means the same fit that an ordinary man of careful dress would require in buying a suit of like kind and character.”

This instruction was given in connection with others requested by appellant to the effect that, if the suit did not fit appellant, and appellees were given an opportunity to make alterations so as to constitute a fit, and they did not properly make the alterations, they could not recover the price.

The court gave still another instruction, at appellant’s request, on another phase of the case, which his testimony tended to support, namely, that the contract was that the suit should be made to fit appellant “to his entire satisfaction,” and the two instructions were not in conflict. They were given to meet different phases of the case, according to the facts the jury might find.

We think there is no prejudicial error in the record, and that the verdict was supported by sufficient testimony.

Affirmed.


text:
    State v. Moore.
    Opinion delivered December 15, 1924.
    1. Criminal law — time op piling bill op exceptions. — -A bill of exceptions not filed in time will not be considered.
    2. Criminal Law — absence op bill op exceptions. — In the absence of a bill of exceptions, unless the judgment roll presents error, it will be presumed that the court’s rulings were correct, and the judgment will be affirmed.
    3. Criminal law — -absence of motion for new trial. — Where there is no motion for new trial, only errors appearing on the face of the record will be considered on appeal.
    4. Criminal law — liability por costs. — One indicted for a felony and convicted for a misdemeanor included in the indictment was properly relieved of the costs under the felony charge if he did not have property to pay them.
    5. Criminal law — liability for costs. — Where no bill of -exceptions was filed on appeal by the State from a judgment relieving accused of the costs of a felony prosecution on his conviction of a misdemeanor included in the felony charge, it will he presumed on appeal that the court found that he did not have property to pay such costs.
    ■ Appeal from Scott Circuit Court; Jolm E. Tatum, Judge;
    affirmed.

      J. Sam Wood, for appellant.

      Bates & D%mcao%, and Evans & Evans, for appellee.
   Wood, J.

The appellee was indicted for the crime of assault with intent to kill. He was tried for that offense and convicted of an aggravated assault, and his punishment was fixed at a fine of t$500 and an hour in prison in the county jail. The appellee moved the court to retax the cost, alleging in his- motion that he was acquitted of the felony charge in the indictment and convicted of a misdemeanor; that the costs incident to the misdemeanor charge amounted in the aggregate to $16.70, and alleged that all costs above that sum were incident to the felony charge, and should be taxed against the county and not against the appellee. He prayed that he be required to pay as costs only the sum of $16.70.

The record recites that “the motion is, after due consideration by the court, sustained,” and the court proceeded to render judgment against the appellee in the sum of $500 asa fine and the sum of $16.70 as costs. The State, through her district attorney, excepted to the ruling of the court, and prayed an appeal from the decision relieving the defendant of the costs in the felony prosecution, and the court granted the State 45 days in which to prepare and file its bill of exceptions.. The State filed no motion for a new. trial. Judgment was rendered on August 19, 1924. What purports to be a bill of exceptions bears a filing mark of October 4, 1924, and has indorsed on it “O. K. this the 14th day of October, 1924. John. E. Tatum, Judge of the 12th Judicial Circuit of Arkansas.” It thus appears that what purports to be the bill of exceptions was not signed by the trial judge and filed within the time allowed. There 5-? therefore no bill of exceptions in the record, and the record does not show that there was a motion for a new trial. Unless therefore the judgment roll presents an error, we must presume that the ruling of the trial court was in all things correct, and affirm its judgment.

It is a well settled rule of this court' that, where there is no motion for a new trial, only errors appearing on the face of the record will be considered on appeal. Smith v. Wallis-McKinney Coal Co., 140 Ark. 218; Free v. Adams, 148 Ark. 654. The same rule applies in regard to the bill of exceptions. Crow v. Cox, 158 Ark. 641. There is no error appearing on the face of the record itself. A motion for a new trial and a bill of exceptions would be unnecessary if the court’s finding of fact entered in its judgment disclosed an error in the court’s ruling in retaxing the costs. Vaughan v. Hinkle, 146 Ark. 149. But the court’s findings of fact are not set forth in the record, and there is- nothing to disclose- any error in the judgment of the court. In-the absence of a bill of excep - tions, and the error not appearing' on the judgment roll, this court will presume that the trial court found the existence of every fact essential to the correctness of its judgment. Rogers v. Meyers, 143 Ark. 490.

In Boone County v. Mitchell, 64 Ark. 125, and Smith v. State, 105 Ark. 58, we held that, where defendants were indicted for felony and acquitted of the felonies and convicted of misdemeanors included in the indictment, “if they shall not have the property to pay the costs, the same shall be paid by the county.” In' the absence of a bill of exceptions it will be presumed that the court found the fact to be, in this case, that the appellee Moore did not have property to pay the costs. Such being the case, under the doctrine -of the above cases, appellee Moore was not liable for the costs accruing under the felony charge, and the court did not err in so holding.

The judgment is affirmed.


author: Hart, J.,

text:
    Gray v. Independence County.
    Opinion delivered December 15, 1924.
    1. Officers — suspension from office — right to salary. — A county officer suspended from office, under Crawford & Moses’ Dig., § 10335, on being indicted for criminal conduct amounting to a felony, is not entitled to the salary of the office during the -period of suspension, though he was acquitted.
    2. Officers — effect of suspension of' officer. — Where a public office is vacant because of suspension, it becomes as to him for the time being as if it did not exist, and, if another is appointed to -fill the vacancy, he is the sole incumbent of the office.
    Appeal from Independence Circuit Court; Dene H. Coleman, Judge;
    affirmed.
    STATEMENT OP PACTS.
    T. A. Gray appealed to the circuit court from a judgment of the county court disallowing his claim in the sum of $225 for salary due him as county judge while he was .suspended from office. There the case was tried before the court sitting as a jury, upon an agreed statement of facts. ■
    T. A. Gray was elected county and probate judge of Independence County, and was acting as such judge on the 6th day of November, 1922, when he was indicted for the crime of embezzlement, which was in no way connected with the duties of his office.
    The circuit court suspended him’from office during the pendency of the indictment, and his claim is for salary from the 6th day of November, 1922, until the end of his term, being the period of time he was suspended from office.
    From an adverse judgment of the circuit court, T. A. Gray has duly prosecuted an appeal to this court.

      T. A. Gray and I. J. Matheny, for appellant.
    Section 10335, C. & M. Digest, only applies to acts in office for which an officer may be suspended. The emoluments follow the legal title to the office. 23 A. & E. Enc. (2d ed.) 398; 10 A. .S. R. 283; 31 A. S. R. 198; 3 Mo. App. 6.

      W. M. Thompson and Samuel M. Casey, for appellee.
    The statute makes no provision for allowance of salary to a suspended officer, without which no claim can . be allowed. 57 Ark. 487; 102 Ark. 106. 'Section 10338, C. & M. Dig., provides for the temporary appointment of some one to serve in the place of the suspended officer, and naturally the appointee is entitled to the emoluments of the office. Appellant during this time was neither a de facto nor a de jure officer, hut, had he been a de jure officer, the following authorities hold against his right to collect his salary düring the time the de facto officer served: 24 L. E. A. (N. S.) 475; L. E. A. 1918C, 370; 16 L. E. A. (N. S.) 794; A. & E. Ann. Cas. 671.
   Hart, J.,

(after stating the facts). In the case of Allen v. State, 32 Ark. 241, this court held that our statute providing for the suspension from office by the circuit court of any county or township officer against whom an indictment has been found for any of the crimes mentioned in the statute, until the charge is tried, is not unconstitutional.

In Sumpter v. State, 81 Ark. 60, an earnest effort was made to induce the court to overrule its decision in that case. The court declined to do so, and, in a well considered opinion, reaffirmed the rule established by its former decision.

Section 10335 of Crawford & Moses’ Digest provides that, when an indictment shall be filed against any county or township officer for certain crimes, including e criminal conduct amounting to a felony,’ such circuit court shall immediately suspend such officer from his office until the indictment is tried, provided the suspension shall not 0 extend beyond the next term after the indictment shall be filed, unless the cause is continued on application of the defendant.

This court had this section of the statute under consideration in the case of Jones v. State, 104 Ark. 261, where it was held that the indicted officer may be suspended for any criminal conduct amounting to a felony, whether ' amounting to official misconduct or not. In short, the court held that the phrase, “criminal conduct amounting to a felony, ’ ’ may also be applied to individual and personal acts not connected with the office. In that case the suspended officer was indicted for murder in the first degree, and the judgment of .suspension was affirmed.

It will be noted that the defendant was acquitted of the felony charge against him, and it is urged that, on this account, he is entitled to recover his salary during the period of time he was' suspended from office. "We think it is clear that he cannot recover.

In the case of Allen v. State, supra, the court said: “Offices are not regarded in this country as grants or contracts, the obligation of which cannot be impaired, but rather as trusts or agencies for the public. They .are within the power of the Legislature, except so far as the Constitution may forbid interference with them. Coffin v. State ex rel. Norton, 7 Ind. 157.”

In the case of Sumpter v. State, supra, the court quoted with approval from a decision of the .Supreme Court of the United States, to the effect that the nature of the relation of a public officer to the public is inconsistent with either a property or contract right, and that the salary is not compensation for services secured by contract, but compensation for services actually rendered. The general rule is that, if the office is vacant, it becomes, as to the suspended person, for the time being, as though it did not exist, and as to the public, the person appointed to fill the last vacancy is the sole incumbent of the office. Steubenville v. Culp (Ohio), 43 Am. Rep. 417; Shannon v. Portsmouth, 54 N. H. 183; Westberg v. Kansas City, 64 Mo. 493; Howard v. St. Louis, 88 Mo. 656, and Barbour v. U. S., 17 Ct. of Claims (U. S.) 149.

It follows that the judgment will be affirmed.