text:
    Ashton Glassell Company, Inc., v. Mansfield Lumber Company.
    Opinion delivered May 25, 1931.

      James B. McDonough, for appellant.

      A. M. Dobbs, for appellee.
   Mehaffy, J.

This action was begun in the Sebastian Circuit Court by appellee to recover from the appellant on a breach of contract. There were two counts in the complaint, in one of which it was alleged that the appellant entered into a contract Avith appellee to purchase from appellee all form lumber used in the construction of the Ward Hotel at Fort Smith. In the other count it was alleged that the appellant agreed to purchase from appellee all the cement required by the said appellant in the construction and building of the said hotel at a price of $2.75 per barrel, less 10 cents per barrel discount, and a deduction of 10 cents per sack on the return of the sacks used.

Appellee alleged that this was a verbal contract, and that appellant afterwards forwarded to appellee a written statement accepting the proposals and agreeing to purchase from appellee said materials, and that this writing* consummated the verbal contract.

The following is the written statement referred to:

“March the 30th, 1929.
“Mansfield Lumber Company,
“Ft. Smith, Arkansas.
“Att. Mr. Caldwell
“Gentlemen: This will serve as an acceptance of your proposal to furnish us with the necessary form lumber for the Ward Hotel, Ft. Smith, at the price of $27.50 per M f.o.b. job, delivered as ordered by our job force. It is further understood that the cement is to be handled through you as dealer on a basis of your quotation of $2.75 less 10 and 40 delivered to us if there when needed.
“Please sign and return one copy for our files.
“Yours very truly,
“The Ashton Glassell Co., Inc.
“ AG :WEM “By Ashton Glassell,
“President.”
“Accepted: Mansfield Lumber Co.,
“By A. B. Caldwell.”

Appellee alleged that there was a breach of contract, and that it was damaged thereby 20 cents per barrel on 5,000 barrels.

Appellant demurred to appellee’s complaint. The demurrer was overruled, and appellant then filed answer denying* the material allegations in the complaint.

There was a trial by jury and a finding in favor of appellant as to the lumber, but the jury returned a verdict in favor of appellee for $250 for a breach of the cement contract.

Motion for new trial was filed, overruled, and exceptions saved, and the case is here on appeal.

The evidence showed that A. B. Caldwell, yard manager for appellee, had a conference with Ashton Glassell, president of the Ashton Glassell Company, Inc., and that the price of lumber and cement was discussed, and the witnesses, on the part of the appellee, testified that there was a verbal agreement entered into under which appellant was to purchase through appellee the cement to be used in the Ward Hotel; that Caldwell told Glassell that they handled Dewey cement, and that Dewey cement would be furnished; that Glassell said he had one car of Marquette cement en route, but would not buy any more. These witnesses testified that the parties agreed on Dewey cement.

The appellant’s testimony tended to show that appellant agreed to take Dewey cement if Hutto and Caldwell would sell $5,000 worth of stock in the hotel. This is denied by appellee’s witnesses.

The evidence of Glassell was to the effect that he did not at any time authorize appellee to buy Dewey cemeirl. On April 23, 1929, appellant wrote a letter to appellee stating that it seemed impossible to get appellee to handle Marquette cement, but that it was its custom to use the material that it purchased rather than use some particular brand that it was customary for appellee to handle, and that, as explained to the writer, the only cement that appellee would handle was the Dewey cement. The letter closed with the statement: “Since the above conditions exist, we feel that this action is the only one to take. It will save both of us embarrassment and is a happy solution, and we are taking this step.” The letter ivas signed by the president of the company.

It is first contended by appellant that the instrument sued on is not a contract between appellant and appellee for the purchase and sale of cement. A contract may he defined as an agreement between two or more persons upon sufficient consideration to do or not to do a particular thing. The letter introduced in evidence states that it will serve as an acceptance of appellee’s proposal to furnish necessary lumber, etc., and the letter then states: “It is further understood that the cement is to be handled through you as dealer on a basis of your quotation. ’ ’

This letter is signed by the appellant and accepted by the appellee. It clearly shows that appellee made a quotation of prices, and that the appellant stated that it was the understanding that the cement was to be handled through appellee and delivered to the appellant. That necessarily means that the appellee was to deliver the cement to the appellant at the price or quotation named in the letter.

The appellant states in its brief that it contended in the lower court and contends now that the writing became a contract, but that it did not bind it to buy any cement from appellee. It is contended that it contained no obligation on the part of the appellant to purchase the cement. We do not agree with appellant in this contention. The writing introduced shows an agreement on the part of the appellant to purchase the cement at the price named, and on the part of the appellee to deliver it to appellant when needed. We therefore think that the writing constituted a contract of purchase and sale.

Appellant cites to support its contention Slayden v. Augusta Cooperage Co., 163 Ark. 638, 260 S. W. 741, and the court said: “The contract, as alleged, left it entirely optional with the appellant as to whether he would put out any logs for the appellee. There was nothing to bind him to put out any amount of timber etc.”

In the instant case, under the contract in evidence, the appellant was bound to purchase, and the appellee was bound to deliver, the cement. The appellant argues that the agreement was to handle through the appellee as dealer, and that that leaves the appellant the right to select the cement, and that it was not a contract to buy from the appellee. The contract merely provided for cement and did not specify the kind of cement to be used. But, under the contract, appellant agreed to take and appellee agreed to deliver the cement.

We do not agree with the appellant that the evidence of Caldwell, Hutto and McConnell was inadmissible. We think this testimony was competent. It is a well-settled rule that parol evidence is not admissible to contradict or vary the terms of a written contract, but it is equally well settled that parol evidence is admissible to identify the subject-matter of a contract where it does not contradict the terms of the writing. Little Rock Cooperage Co. v. Gunnels, 82 Ark. 286, 101 S. W. 729, 12 Ann. Cas. 293; Kelley v. Carter, 55 Ark. 112, 17 S. W. 706; Dollar v. Knight, 145 Ark. 522, 224 S. W. 983; Moore v. Exelby, 170 Ark. 908, 281 S. W. 671; Bigelow v. Casper, 145 Mass. 270, 13 N. E. 896.

The parol evidence in this case does not vary or contradict the terms of the written agreement; it is entirely consistent with the written agreement. The written agreement is for cement, but it does not identify or name the kind of cement. The evidence tending to show the kind of cement is not repugnant to the terms of the writing, but is consistent with and explanatory of them. 10 R. C. L. 1019.

“The terms of an instrument may in some cases be clear except that there may exist an uncertainty as to the subject-matter to which the writing relates and which it is necessary to, in some way, identify in order to give effect to the document with a proper degree of certainty. In such cases parol evidence will be received to enable the court to apply the writing to its subject-matter, and its admission is in no way a violation of the parol evidence rule.” 5 Chamberlayne on Evidence, 4973.

The evidence clearty shows that the parties discussed the kind of cement to be used, and appellee’s testimony clearly shows that the cement agreed on was Dewey cement, and that appellee had already ordered the cement when it was notified by appellant that it intended to use Marquette cement. As to whether the kind agreed on by the parties was Dewey cement was a question of fact for the jury.

What we have already said answers the contention of the appellant that the contract was oral and void because of the statute of frauds.

We have carefully examined the instructions given as well as those requested by appellant, and have reached the conclusion that there was no error in giving or refusing instructions, and that the questions of fact were properly submitted to the jury, and that the jury’s verdict is sustained by substantial evidence.

The judgment is affirmed.


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    Bates v. Bates.
    Opinion delivered June 1, 1931.

      Evans <& Evans and Tom W. Campbell, for appellant.

      Cravens <& Cravens, for appellee.
   Smith, J.

The parties to this litigation are brothers, and on May 13, 1921, they entered into a partnership agreement for the purpose of manufacturing and selling vinegar at Fort Smith under the firm name of Ozark Fruit Company. In March, 1929', B. C. Bates, the elder brother, who resided in Little Rock and had conducted in that city an independent business as a manufacturer and dealer in vinegar, brought this suit to dissolve and settle the partnership business with his brother, John D. Bates. The complaint recites numerous advances made to the firm by plaintiff, and judgment therefor was prayed.

An answer was filed, in which the existence of the partnership was admitted, but it was alleged that the partnership was dissolved on April 30, 1923, at which time plaintiff had withdrawn all advances made to the firm and had become largely indebted to it.

Each party presented a complicated account against the other, the one by the plaintiff being to the effect that he had made advances to the firm which had not been repaid him. According to the accounts kept by the defendant, the plaintiff had withdrawn his advances to the partnership, and had, in addition, borrowed a large sum of money from the partnership.

The court below did not undertake to state this account, but did find as a fact that the partnership had been dissolved, and that the defendant “has paid the plaintiff for his former share in it long ago, * * and the complaint was dismissed as being without equity.

We are unable to say that this finding of fact is against the preponderance of the evidence. But, without regard to the state of the accounts between the partners, the testimony appears to fully sustain the finding-made by the court that the partnership was dissolved in 1923. According to the testimony of the defendant, John D. Bates, the partnership was then insolvent, and had been made so by the withdrawals of his brother and partner, but defendant took control of the business as owner in his individual capacity and assumed and paid the partnership debts. If this is true — and that finding does not appear to be contrary to a preponderance of the evidence — it is unimportant whether B. C. Bates had with-' drawn all his advances or not. The agreement to take charge and become the owner and assume the debts was sufficient consideration to support the dissolution agreement which the court found was made between the parties in 1923.

The testimony is in irreconcilable conflict as to whether there was such an agreement, and, while we have carefully considered the testimony, we think no useful purpose would be served in setting it out and discussing it. There are numerous contradictions in the testimony, but it must be remembered that a period of nearly sis years intervened between the date of the alleged dissolution of the partnership and the institution of the suit for its dissolution and an accounting, and, after considering all the testimony, we have concluded that the chancellor’s finding, that there was a final dissolution in 1923, is not against the preponderance of the evidence.

As we have said, the court found that, upon a final statement of the account between the parties, the balance would be against the plaintiff, but the court did not attempt to state the account and ascertain this balance. It does not appear, however, that appellee, the defendant below, complains of that action.

In the decree from which this appeal comes it was recited that “the action on the part of the plaintiff was for the dissolution of a partnership between the plaintiff and the defendant, and for judgment for a considerable sum of money, and also for a restraining order enjoining the defendant from the use of certain trade names, * # which were stated, which had been used by the plaintiff in his individual business at Little Rock before the formation of the partnership and since that time by him.

The court found that “plaintiff is entitled to a remedy, however, injunctive and prohibitive, against the defendant against the use of various trade names Herein-before mentioned, or any of said trade names. ’ ’ Because of this finding it is insisted by the plaintiff below, the appellant here, that the entire costs of the cause should not have been assessed against him, as was done, for the reason that he obtained partial relief.

The court also found that the defendant had not used these trade names since the dissolution of the partnership, and that the defendant asserted no right to use them. The court did find that £<!* * * plaintiff has no assurance that he (defendant) may not yet use them, and while the plaintiff makes no claim to any federal copyright to said names, yet the proof shows that he had given to those names value to him in branding and labeling his products long before the partnership, which were used by agreement during the partnership, and are still used by the plaintiff in his business. * * *”

We think the court was correct, notwithstanding this finding, in imposing all the costs upon the plaintiff. The right to the use of these trade names was only incidentally involved in the litigation, and was not contested by the defendant, and we think no abuse of the discretion was shown which chancery courts have in apportioning costs. Spencer v. Johns, 180 Ark. 441, 21 S. W. (2d) 961.

The decree will therefore be affirmed, and it is so ordered.


author: Mehaffy, J.

text:
    Taylor v. Jonesboro Trust Company.
    Opinion delivered June 1, 1931.

      Sam Borecc and Lamb £ Adams, for appellant.

      Horace Sloan, for appellee.
   Mehaffy, J.

On July 17, 1927, the American Trust Company and the Jonesboro Trust Company, banking institutions, in Jonesboro, Arkansas entered into a contract which provided, among other things, that the Jonesboro Trust Company sold, part absolutely and part in trust, all its assets to the American Trust Company.

The American Trust Company assumed the payment of all bills payable, depository liability, unpaid operating expenses for July, .1927, of the Jonesboro Trust Company, the payment of all taxes, and local assessments on the Jonesboro Trust Company property that the committee of that company might direct and to advance money for insurance premiums on said property; to advance moneys not in excess of $5,000 to pay any contingent liabilities of the Jonesboro Trust Company not then shown on the books of that company, if approved and ordered paid by the committee of the Jonesboro Trust Company, and to loan annually during the years 1927-1931, both inclusive, sums not exceeding in the aggregate $10,000 for the purpose of furnishing mortgagors in financing the operation of lands mortgaged to the Jonesboro Trust Company for the purpose of protecting the security of the said company.

The Jonesboro Trust Company sold absolutely to the American Trust Company its banking house and fixtures, its insurance department, $335,000 in bills receivable at par, and to be selected by the buyer, and in addition the American Trust Company took at par all cash on hand and bank deposits in correspondent banks due the Jonesboro Trust Company. The residue of the property of the Jonesboro Trust Company consisted principally of bills receivable, stocks and bonds, and real estate. The contract provided that these assets should be held in trust by the American Trust Company and disposed of as rapidly as possible with the approval of the committee of the Jonesboro Trust Company and the proceeds applied as collected to reduce the remainder of the obligations assumed by the Jonesboro Trust Company.

The contract entered into was quite lengthy, containing 32 separate paragraphs. We deem it unnecessary to set out the entire contract. The contract was properly signed by the Jonesboro Trust Company and the American Trust Company, and was approved by the Bank Commissioner in the following words: “The foregoing contract has been examined by the Arkansas State Banking Department, and same is hereby approved.” The statement was signed by Walter E. Taylor, State Bank Commissioner.

It was stipulated that the cause might be finally tried in vacation upon the stipulations and the pleadings; that the plaintiffs named in the complaint as stockholders of the Jonesboro Trust Company are in fact stockholders of said company; that the following copies of documents with their exhibits shall be treated as evidence:

Exhibit A. Copy of minutes of special stockholders’ meeting of Jonesboro Trust Company on July 25, 1927.

Exhibit B. Copy of minutes of meeting of directors of American Trust Company on July 9, 1927.

Exhibit C. Copy of minutes of meeting of directors of American Trust Company of July 12, 1927.

Exhibit D. Copy of minutes of meeting of directors of American Trust Company, July 15, 1927.

Exhibit E. Copy of minutes of meeting of stockholders of American Trust Company, August '2,1927.

Exhibit P. Copy of document executed as an amendment to articles of agreement and incorporation of American Trust Company recorded in Corporation Record 3, page 319, in the office of the county clerk, Jonesboro District, Craighead County, Arkansas.

Exhibit Gr. Copy of document executed as an amendment to articles of agreement and incorporation of Merchants’ & Planters’ Bank & Trust Company, recorded in Corporation Record 3, page 319, in the office of the county clerk, Jonesboro, Arkansas.

Exhibit H. Copy of document executed as an amendment to articles of agreement and incorporation of Jonesboro Trust Company, recorded in Corporation Record 3, page 320, in the office of the county clerk, Jonesboro District of Craighead County, Arkansas.

Another stipulation is that the contract actually executed bears the date July 17, 1928.

After1 the contract was entered into, the American Trust Company assumed possession of the banking house, fixtures, and furniture, insurance agency," cash, deposits in other banks and notes receivable of the Jonesboro Trust Company taking outright the items called for in the contract, and holding in trust the remainder of the assets of the Jonesboro Trust Company. The American Trust Company either paid or substituted its own notes for the outstanding bills payable of the Jonesboro Trust Company, and all the depository liabilities of the Jonesboro Trust Company were changed so that thereafter each depositor was either paid his deposit or had a similar deposit account with the American Trust Company. Sundry outstanding small bills of the Jonesboro Trust Company were paid by the American Trust Company with the result that under the said contract the American Trust Company became the sole creditor of the Jonesboro Trust Company. To pay off the balance due the American Trust Company (i. 'e., the difference in liability assumed by the American Trust Company and the agreed value of the assets purchased outright from the Jonesboro Trust Company by the American Trust Company), effort was made, as outlined in the contract between the two companies, to reduce assets held in pledge to cash and apply same on the said balance, this being done in co-operation between the American Trust Company and the Jonesboro Trust Company, as provided in the said contract, and the liquidation of the Jonesboro Trust Company has proceeded since then up till November 1, 1930, in the manner provided by the said contract, with the knowledge of the State Bank Commissioner.

Prior to November 1, 1930, the date of the closing of the American Trust Company and its taking over by the State Bank Commissioner, the validity of the contract in providing for such method of liquidation was not questioned by the State Bank Commissioner or any party to the contract. However, on January 27, 1931, Walter E. Taylor, State Bank Commissioner, without notice of any kind to any one connected with the Jonesboro Trust Company, declared that he was taking exclusive charge of the affairs of the Jonesboro Trust Company, and appointed the defendant, George A. Knox, as his special deputy, for such purpose, a true copy of order appointing said George A. Knox is hereto attached as Exhibit I. No stockholder, officer or any other person connected with the Jonesboro Trust Company, knew, or had any information, as to any intention of the State 'Bank Commissioner to make or to file the order for his taking over the affairs of the Jonesboro Trust Company until January 27, 1930, the date of the filing of the order appointing Geo. A. Knox.

After the making of the contract between the Jonesboro Trust Company and the American Trust Company, the Jonesboro Trust Company maintained no office or place of business of its own, but the business of liquidation was transacted either at the office of the American Trust Company, or at the headquarters of the liquidation committee of the Jonesboro Trust Company, at the office of Horace Sloan, attorney at law, Jonesboro, Arkansas; that after said date the said Jonesboro Trust Company did not hold itself out as transacting a banking business, it received no deposits of any kind whatever, but was engaged solely and exclusively to reduce its assets to cash, as contemplated in the agreement between it and the American Trust Company.

On July 25, 1927, a meeting of the stockholders of the Jonesboro Trust Company ratified the contract made on July 17, and above referred to. On the 9th day of July, 1927, a meeting of the directors of the American Trust Company was held and a committee was appointed and given full authority to close the deal with the Jonesboro Trust Company. Before the contract was executed the signatures of holders of more than two-thirds of the capital stock of the American Trust Company had been secured. Amendments to articles of agreement, showing the approval and filing with the committee on March 29, 1928, were introduced in evidence. Other documents were introduced showing a compliance with the law in the execution of the contract.

The appellees brought this suit in the chancery court to enjoin and restrain the Bank Commissioner and special deputy from taking over or keeping in their possession any of the assets of the Jonesboro Trust Company, except so far as the American Trust Company would be entitled to do under its contract with the Jonesboro Trust Company, and to cancel the appointment of Geo. A. Knox as special deputy, and to enjoin and restrain the Bank Commissioner from appointing any person to take charge or attempt to take charge of the assets of the Jonesboro Trust Company, and to enjoin Walter E. Taylor, Bank Commissioner, from personally taking charge or interfering in any way with the contract.

Appellants filed answer denying all the material allegations of the complaint. The chancellor entered a decree in favor of the appellees, enjoining and restraining- the Bank Commissioner and deputies from taking over any of the assets of the Jonesboro Trust Company except in so far as the American Trust Company would have been entitled to do under the contract of July 17, but permitting- the Bank Commissioner to exercise and enforce such control over the disposition of the assets and the liquidation of the Jonesboro Trust Company as was given to the American Trust Company under the terms of the contract to the end that the terms of the contract shall be carried out in their entirety. The case is here on appeal.

Appellants first contend that all contracts, such as the one involved here, are to be limited and construed by the legal status of banking institutions as fixed by statutory regulation and judicial construction when the contract was executed. It is contended that our statute is a borrowed statute; that is, that it is practically a copy of the national banking law, and that when wo adopted this statute we adopted its construction by the federal court. This is true, but this does not mean that when we adopt a statute we will follow decisions thereafter rendered by other courts; but we know of no decision by the federal court handed down, either before or since the adoption of this statute, that prohibits the making or holds invalid a contract like the one here involved.

Appellant has called attention to numerous decisions of the federal court, and none of these hold that a contract like the one here involved is invalid, and we know of no decision to that effect. Some of the decisions to which appellant calls attention are to the effect that a contract made in contemplation of insolvency, or made for the purpose of giving a preference, is invalid, but these questions are not involved in this case. The contract was not made for the purpose of giving a preference.

The original statute in Arkansas provided only for reorganization or consolidation, and did not provide for purchase or acquisition by one bank of the assets of another. The act of 1923, however, provided that any bank may effect such reorganization, purchase, or acquisition or consolidation, etc. This act expressly provides that banks may do the things provided for in this contract. It provided that one bank may purchase all or any part of the assets of another. Acts 1923, p. 515, ^ 4.

This section of the statute was complied with, and there is no contention that there was failure to do any of the things provided for in this statute. The contract therefore was expressly authorized by statute.

This court, in approving a contract similar in some respects to the one involved, said: “They agreed with the appellant that they would take over the assets of the Valley Bank and pay into such bank the money necessary to discharge its obligations and assume the risk of whatever loss might be involved in the transaction.” The court also said: ‘ ‘ The doctrine applicable to the facts of this record is announced in the case of Schofield v. National Bank, 97 Fed. 282, and expressed in syl. No. 3 as follows: ‘A contract by a national bank to assume and pay the liabilities of another bank in consideration of the transfer to it by the other bank of its office furniture and lease and its cash and cash assets, and the further assignment to a trustee for its benefit of bills receivable and securities, is not ultra vires, but is within its powers conferred by statute to conduct a general banking business.’ ” Nakdimen v. First National Bank, 177 Ark. 303, 6 S. W. (2d) 505; Barham v. Crittenden County Bank, 170 Ark. 77, 278 S. W. 636.

This court upheld the validity of a contract of the purchase of the assets of one bank by another in the case of State use Crawfordsville Special School Dist. v. Huxtable, 178 Ark. 361, 12 S. W. (2d) 1.

The appellant says that no established rule of law, whether statutory or common law, can be abrogated or to any extent modified by contract. It is also true that no valid contract can be abrogated or to any extent modified without the consent of both parties. It is argued that the statute under which the contract was made does not contemplate the assumption by a solvent banking institution of the debts of an insolvent bank. No one knew at the' time of the making of this contract that either of the banking institutions was insolvent. Both banks had been examined by the State Banking Department and were not only thought to bo solvent, but the Bank Commissioner actually approved the contract. This was not a reorganization or a consolidation, and, under the original act and the Acts of 1917 (p. 748) no authority existed to make a contract of purchase, but, under the Acts of 1923, a purchase by one bank of the assets of another was expressly authorized.

It is contended that the rights, remedies, and procedure under the banking act are exclusive. The remedy or procedure in this case was under the provision of the banking act, a provision which expressly authorized the kind of contract here involved. But it is contended that, when both banks became insolvent, the Bank Commissioner automatically became the liquidating agent, armed with all the power and authoxity under the banking statute. He had no more authority and could have had no more than the American Trust Company itself had. As we have already said, it was a valid contract, and cannot be abrogated withoxit the coxxsent of both parties.

The statute axxthorizes the Bank Commissioner to take charge of a bank, and, if fouxxd to be insolvent, he shall have full power and axxthority to hold and retain possessioxx of all the money, rights, credits, assets, and property of every descxiption. Section 711, Crawford & Moses’ Digest.

Section 719' of Crawford & Moses’ Digest provides for taking possession of the property of axxy bank and § 720 authorized the sale of axxy property, but the Jonesboro Trust Company has no property; it had no assets: it sold all of its assets, with the approval of the Bank Commissioner, to the American Trust Compay, part of the property beixxg sold outright, and part of it ixx trxxst, but all of its property was said, axxd it has no propexdy that the Bank Commissioner could take charge of.

We deem it unnecessary to review the authorities cited by counsel, because tlxe contract involved here is authorized by statute, the requix’ements of the statute were complied with, tlxe Jonesboro Trust Company sold all of its property as it liad a right to do, and the contract was approved by the Bank Commissioner.

One of the authorities cited and quoted from by appellant in its reply brief was Derscheid v. Andrew, 34 Fed. (2) 884. In that case the court said: “However, a contract as here made is valid, and the state bank a creditor to whom the stockholders are liable if made while the national bank was still in active operation and not thought to be insolvent.”

The contract in this case was made when it was not thought that either bank was insolvent. Moreover, in the case above quoted from the suit was to collect from stockholders, and that question is not involved here.

The decree of the chancellor is affirmed.

Mr. Justice Kirby dissents.


author: Butler, J.

text:
    Casteel v. Yantis-Harper Tire Company.
    Opinion delivered June 1, 1931.

      Simmons é Lister, for appellant.

      Daily <& Woods, for appellee.
   Butler, J.

At about seven p. m. on Tuesday, November 12,1929, the appellant was standing in the safety zone at 11th Street and Garrison Avenue in the city of Fort Smith waiting for a street car. Several other persons were there also, among these being Walter Hager, who became a witness in plaintiff’s behalf. While standing in this safety zone, through which automobiles were not supposed to drive, a car ran around another car, and, traveling at a speed of from 25 to 30 miles an hour, negligently drove through the safety zone, striking the appellant, seriously injuring her as well as a number of other persons.

Appellant brought suit against S. B. Harper and Marshall Yantis, partners in business, operating under the firm name of Yantis-Harper Tire Company, and Bobert Tolliver, a colored employee of the firm, on the theory that the car inflicting the injuries belonged to the partnership and was driven by the defendant, Tolliver, while engaged in his employment as the servant of the partnership. Tolliver denied striking the appellant, and, in addition to this defense, Yantis-Harper Tire Company defended upon the ground that Tolliver was not in their service at the time of the injury, i'f in fact he caused such injury.

On the trial of the cause in the court below a verdict was returned under the direction of the court against the appellant, the plaintiff, in favor of defendants, Yantis and Harper. After the direction of the court, and before the submission, plaintiff took a nonsuit as to Tolliver and prosecutes her appeal from the verdict and judgment in the court below, assigning as error the action of the court in directing a verdict against her.

The action of the court was doubtless predicated on the theory that the evidence failed to show either that the car causing the injury was operated by Tolliver, or, if so, that, Tolliver at the time was in the employ of the defendant partners. In testing the correctness of the court’s conclusion under our settled rule, the testimony must be viewed in the light most favorable to the plaintiff, together with all the inferences properly deducible therefrom, and the allegations of the complaint should have been submitted to the jury, if there was in the entire testimony any substantial evidence, either direct or circumstantial, tending to support the same.

The testimony on the part of the defendant was to the effect that Tolliver was regularly employed by Yantis-Harper Tire Company and had been so employed for several years; that he worked by the day and was paid by the day, and only paid when he worked. Tolliver testified that he was not employed on the day of the injury to the appellant, and his testimony was corroborated by that of the cashier and timekeeper of the partnership, who gave testimony to the same effect as did other employees of the company. Their testimony was also to the effect that, shortly before the occurrence in question, Tolliver was loaned the use of one of Yantis-Harper’s cars for the sole purpose of permitting Tolliver to go to his home to get a raincoat which he wanted for his own use, and that the use of the car had no relation whatever to any sendee performed for Yantis-Harper Tire Company, or any connection'with their business, and had no relation to any duty of Tolliver as an employee of the partnership. In addition to the testimony relative to Tolliver’s employment and his nse of the car, Tolliver testified that the car in which he was driving was not the one which caused the injury, and that he was traveling in a careful manner and had injured no one.

It was upon the testimony above narrated that the action of the court was based in directing a verdict for the defendants, Yantis and Harper. In testing the weight and sufficiency of this evidence to support the action of the trial court, as stated in the case of Skillern v. Baker, 82 Ark. 86, 100 S. W. 764, 118 Am. St. Rep. 52: “It may be said to be the general rule that where an unimpeached witness testifies distinctly and positively to a fact and is not contradicted, and there is no circumstance shown from which an inference against the fact testified to by the witness can be drawn, the fact may be taken as established, and a verdict directed based as on such evidence. But this rule is subject to many exceptions, and where the witness is interested in the result of the suit, or facts are shown that might bias his testimony, or from which an inference may be drawn unfavorable to his testimony, or against the fact testified to by him, then the case should go to the jury.”

Now, the evidence stated above was not all the evidence in the case. There was evidence to the effect that Tolliver was a regular employee of the partnership, and had been such for a number of years; that a part of his duties was to deliver gasoline, tires and other commodities and to answer service calls over the city; that for the performance of these duties he was furnished a service truck, the property of the partnership, and that his negligent operation of this vehicle caused the injury to the plaintiff. The law applicable to this state of facts has been so frequently considered by us that it may be treated as settled. In the recent cases of Hunter v. First State Bank of Morrilton, 181 Ark. 907, 28 S. W. (2d) 712; Andrews v. Boone, 181 Ark. 1061, 29 S. W. (2d) 284, and Mullins v. Ritchie Grocer Company, ante p. 218, the authorities from our own and other jurisdictions are reviewed. No useful purpose would be served by again reviewing them. In Mullins v. Ritchie Grocer Company, supra, it was said: ‘ ‘ The doctrine is settled in this State that, if the automobile causing the accident belongs to the defendant and is being operated at the time of the accident by one of the regular employees of the defendant, there is a reasonable inference that at such time he was acting within the scope of his employment and in the furtherance of his master’s business. The inference or presumption of fact, however, may be rebutted or overcome by evidence adduced by the defendant during the trial. Where the evidence on this point is contradictory, the question is one for the jury. Where the facts are undisputed and uncontr.adieted, it becomes a question for the court. ’ ’

It is argued, however, that the inference or presumption which may have arisen from the fact that the car causing the injury was the property of appellee and driven by one of its regular employees was overcome by the testimony on behalf of the defendants, that the testimony of their witnesses was uncontradicted, and that the verdict based on this evidence was properly directed. But, as we have often said, the presumption arising which we are now considering is not one of law but of fact to be deduced from all the testimony, and the question as to whether it has, or has not, been overcome is equally a question for the jury. The vehicle which caused the injury was identified a few minutes after the accident in the place of business of the partnership by a witness, one Hagar, who followed the car immediately as it left the scene of the accident to the place of business of the appellees, and there met Tolliver, the driver, who came out on the walk as witness arrived, and asked, “What’s the matter — did I hit some one down there "1” Witness stated that Tolliver made the further statement that he had been away to get or deliver a package. The testimony concerning the remarks of Tolliver was objected to as being incompetent as against Yantis and Harper. It is admitted, however, that the testimony concerning the statement made by Tolliver was admissible against him, but it is insisted that it was not admissible and should not be considered in connection with the liability of Yantis and Harper for the reason that it was not a part of the res gestae, and that it was improper to prove any act or declaration of Tolliver as tending to show his agency or employment.

The rule is settled that the declarations of an employee as to who was responsible for an injury, made after its occurrence, is incompetent as against his employer for the reason that his empknunent docs not carry with it authority to make declarations or admissions at a subsequent time as to the manner in which he had performed his duties of emplovment. River R. & H. Const. Co. v. Goodwin, 105 Ark. 247, 151 S. W. 267; Stetcher Cooperage Works v. Steadman, 78 Ark. 381, 94 S. W. 41; Caldwell v. Nichol, 97 Ark. 420, 134 S. W. 622; Pfeifer Stone Co. v. Shirley, 125 Ark. 186, 187 S. W. 930; Williams v. Elrod, 128 Ark. 207, 193 S. W. 514; Webb v. K. C. So. Ry. Co., 137 Ark. 107, 208 S. W. 301; Frolich v. Hicks, 143 Ark. 565, 222 S. W. 373; St. L.-S. F. Ry. Co. v. Vernon, 162 Ark. 226, 258 S. W. 126. But that rule does not render this testimony incompetent. It is to be remembered that one of the issues in the ease was the question of fact as to whether or not Tolliver was the driver of the car causing the injury. He denied that he was. The testimony therefore was competent to identify him, and no error was committed in admitting such testimony, even when it is assumed that it was so remote in time after the happening of the event as not to be a part of the res gestae.

It is also to be observed that the witnesses testifying as to the facts upon which the appellees relied were all employees of the partnership, and in their examination, while all testified on a certain date which they named Tolliver was not employed by his co-defendants, that date, as fixed by some of the witnesses, did not correspond with the date of the injury to the appellant. _ From these facts the jury might have found that the testimony of these witnesses was biased by the relationship they sustained to the partnership, and from the discrepanei.es in their testimony and the attendant circumstances of the injury, the jury might have drawn an inference unfavorable to their testimony and against the facts testified to by them. We therefore think that, under the rule announced in Skillern v. Baker, supra, and Mullins v. Ritchie Grocer Company, supra, there was a case made which should have gone to the jury. It follows that the judgment of the trial court must be reversed, and the cause remanded for a new trial. It is so ordered.


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    Rockford Trust Company v. Purtell.
    Opinion delivered June 1, 1931.

      Lake, Lake & Carlton, for appellant.

      Jas. 8. McConnell, for appellee.
   Smith, J.

The facts out of which this litigation arose, while somewhat complicated, are practically undisputed, and are to the following effect.

The Rockford Trust Company, as administrator of the estate of Mrs. Martha Smith, brought suit to foreclose a mortgage executed on March 13, 1924, by O. P. Purtell and wife to the Guthrie Mortgage Company. The mortgage was given to secure a loan of $1,'200, evidenced by a principal note for that amount, due December 1, 1933, with 10 per cent, interest coupons attached thereto. The mortgage was upon the usual conditions, and contained an accelerating clause, giving the holder of the note the right to declare it due upon the failure to pay any installment of interest. The mortgage was duly filed and recorded March 25, 1924.

The mortgage company made an assignment of the note by an indorsement in blank on the back thereof. There was also executed a separate assignment of the mortgage to an assignee named as......................... The date of the assignment of the mortgage was June 16, 1924. This assignment was not acknowledged, and was never recorded.

The indorsed note, together with an abstract of the title to the lands embraced in the mortgage brought down to June 20, 1924, and the original application of Purtell to the mortgage company for the loan, came to the hands of Fred J. Sovereign in the city of Rockford, Illinois, and he, on February 4, 19'25, sold and assigned the note to Mrs. Martha Smith and delivered it to her with the other instruments referred to. She paid the face of the note and the accrued interest thereon for the note, and had it in her possession at the time of her death February 20, 1929. Interest payments were made up to December 1, 1927, when default was made, and as subsequent payments had not been made, the administrator of the owner has exercised the option of declaring the entire debt due. There was a prayer for a judgment for the amount of-the note, with interest, ancPfor a decree of foreclosure. Certain persons were made parties defendant whose interests were acquired in the following manner.

On February 27, 1924, Purtell, the grantor in the mortgage which the trust company sought to foreclose, executed and delivered to J. F. Cannon a mortgage whereby he conveyed to Cannon the lands described in plaintiff’s mortgage, to secure a note payable to Cannon for $832.42. Thereafter, to-wit, on June 20,1924, the Guthrie Mortgage Company executed and delivered to Cannon its promissory note for $1,200, due forty-five days after date, and also executed and delivered to Cannon at the same time an assignment of the Purtell mortgage, which is the same mortgage that plaintiff trust company sought to foreclose by this suit. In consideration of the execution and delivery to Cannon of the mortgage company’s note and the assignment of the Purtell mortgage, Cannon released the mortgage which Purtell had executed to him in February, 1924, by a release deed dated June 20, 1924, which was filed for record on the same date. This release deed was shown in the abstract of title which was delivered by the mortgage company to Sovereign, and by Sovereign to Mrs. Smith.

The assignment to Cannon of the Purtell mortgage by the Guthrie Mortgage Company, which was dated June 20, 19'24, and recited the consideration to be $1,200 cash in hand paid, was duly acknowledged, and was filed for record July 1,1924. Cannon received only the assignment of the mortgage and did not receive the note which it secured.

No indorsement of any kind was ever made upon the margin of the record where the mortgage here sought to be foreclosed was recorded.

Cannon brought a suit, in which he alleged that the execution of the release deed, whereby he canceled the mortgage executed to him by Purtell, had been procured by fraud, and that the consideration therefor had failed, and he prayed that his release deed be canceled, and that the original mortgage from Purtell to him be foreclosed. An intervention was filed in this cause by C. E. Coleman, who had become the owner of a Second mortgage which Purtell had executed. There were no parties to this suit except Cannon, plaintiff, Purtell, defendant, and Coleman as intervener. In that cause it was decreed on June 2, 1927, that the release deed had been obtained without consideration, and it was canceled, and the foreclosure of the original mortgage from Purtell to Cannon was ordered. Pursuant to this decree of foreclosure, a commissioner of the court sold the land to one L. B. Hill, who, upon the approval of the sale by the court, received a commissioner’s deed, and Hill and his vendees were made parties defendant to the foreclosure suit brought by the trust company, it being prayed that the conveyances to them be canceled as clouds upon the title.'

Upon the filial submission of the cause a decree was entered, from which is this appeal, to the effect that the plaintiff trust company, as administrator of Mrs. Smith’s estate, should have .judgment against Pnrtell for the amount of the note, bid that the cause should otherwise be dismissed as being without equity, and that the lien of the mortgage sought to be foreclosed should be canceled, thus leaving in full force and effect the decree and the proceedings thereunder whereby Cannon canceled his release of the mortgage to himself from Purtell and obtained a decree of foreclosure of that instrument.

The action of the court in refusing to decree the foreclosure of the mortgage bought by the plaintiff’s intestate, and in canceling it is defended upon the authority of § 4 of act 374 of the Acts of 1917 (page 1805), which appears as § 7394, Crawford & Moses’ Digest.

Act 374 of the Acts of 1917 is entitled, “An act to regulate the manner of renewing or extending time of payment of debts secured by mortgages, deeds of trust, or vendor’s liens the operation of the statute of limitations thereon, and prescribing the manner in which transfers of mortgages and liens and satisfaction thereof shall be noted of record.”

The history of act 374, and the purpose of its enactment, is recited in the opinion in the case of Kinney v. North Memphis Savings Bank, 178 Ark. 716, 11 S. W. (2d) 486.

By § 1 of the act of 1917, which became § 7382, Crawford & Moses’ Digest, it is provided that no agreement for the extension of the date of maturity of a note secured by a mortgage or other liens there named, whether in writing or not, shall, so far as it affects the rights of third pai’ties, operate to extend the statute of limitations unless a memorandum showing such extension be indorsed on the margin of the record where such instrument is recorded.

Section 2 of the act, which became § 7399, Crawford & Moses’ Digest, gives to any person who, according to the face of the record, is the owner of any of the liens mentioned the right to satisfy the liens of record by indorsement on the margin of the record where the instrument is recorded, and provides that when this is done a subsequent purchaser, mortgagee or judgment creditor is protected against such liens “unless there shall appear on the margin of the record where such instrument is recorded a memorandum showing that the said mortgage, deed of trust, vendor’s lien, lien retained in deed or note, or other evidence of indebtedness secured thereby has been transferred or assigned, which said memorandum shall be signed by the transferrer or assignor, giving the name of the transferee or assignee, together with the date of such transfer or assignment, said signature to be attested and dated by the clerk.” There follows in this section the proviso that when this memorandum is indorsed upon the margin of the record, satisfaction of the record can only be made by the transferee.

Section 3 of the act of 1917, which became § 7400, Crawford & Moses’ Digest, provides the manner in which the liens there named may be discharged and satisfied of record.

Section 4 of the act, which appears as § 7394, Crawford & Moses’ Digest, is in the nature of a proviso to the preceding’ three sections, which imposed certain duties and provided certain hazards for noncompliance therewith. Section 4 recites that nothing in the preceding sections shall prevent the sale, transfer, or assignment of the liens mentioned by a separate instrument, duly acknowledged and recorded, and imposes upon the clerk and recorder, at the time of recording such separate instrument the duty of noting, on the margin of the record of the original instrument, a memorandum showing that the lien contained in such instrument and the notes or other instruments evidenced thereby have been transferred, and to -whom transferred, with the date of the transfer and the book and page where such instrument was recorded, but to this is added the proviso that the failure of the clerk to make such marginal entry or notation shall not invalidate the sale, transfer or assignment recorded as therein jmovided.

In other words, as applied to the facts of this ease, § 7394, Crawford & Moses ’ Digest, does mean that a lien holder, by a separate instrument, duly acknowledged and recorded, may transfer the lien, and that, while it is the duty of the recorder to indorse, upon the margin of the assigned instrument, the date of the transfer and the name of the party to whom transferred and the book and page where such assignment has been recorded, the failure of the clerk to discharge this ministerial duty shall not invalidate the transfer. But" the act does not undertake to change the law on the subject of the assignment of negotiable instruments.

Here Cannon took, by a separate instrument, an assignment of the mortgage, which did recite that the debt secured by the mortgage was also assigned, but it is to be remembered that this debt was a negotiable note, which was not indorsed or delivered to Cannon. The note was not therefore transferred, the recital of the assignment to the contrary notwithstanding. There is nothing in § 7394, Crawford & Moses’ Digest, to change the law in regard to the transfer of title to a negotiable note. The law on that subject appears in the Negotiable Instrument Act. Sections 7796 and 7797, Crawford & Moses’ Digest.

Section 7796 reads as follows: “An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer, it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder completed by delivery.”

Section 7797 of the same chapter provides how an indorsement shall be made, and it reads as follows: “The indorsement must be written on the instrument itself or upon a paper attached thereto. The signature of the indorser, without additional words, is sufficient indorsement. ’ ’

Cannon did not take the note which the assigned mortgage secured by indorsement or by delivery. On the contrary, the note was indorsed in blank by the payee and in due course was delivered to plaintiff’s intestate. She, and not Cannon, took title to the note. Of course as she did not require the performance of the provisions of the act of 1917, she held the note subject to the peril of having her lien defeated by a satisfaction thereof entered on the margin of the record by the mortgage company, the owner of record of the lien, but this was not done.

The question for decision is therefore just this, who is entitled to the benefit of the mortgage lien? Does it inure to the benefit of the legal holder and owner of the note which the mortgage secures but who did not have the fact of her purchase noted upon the margin of the record ? Or does it inure to the benefit of one who took an assignment reciting that the mortgage and the debt it secures was transferred, yet who did not take the instrument evidencing that debt, to-wit, a promissory note?

In the case of Troyer v. Cameron, 160 Ark. 421, 254 S. W. 688, the payee in certain negotiable notes had transferred them as collateral security for a loan, and, while they were so held, he undertook, by a separate written assignment, to transfer his interest in the notes to another, so as to constitute his assignee an innocent purchaser under the Negotiable Instrument Act. It was there said: “The notes were payable to order, and to have negotiated them it was necessary for Fensler” (the payee) “to indorse them by writing his name on the instrument itself, or upon a paper attached thereto, and to deliver them. Section 7796-7798, Crawford & Moses’ Digest. This was not done. At the time of the attempted assignment the notes were in possession of Henry Moore, who held 'them as collateral .security. Fensler was not in possession of them, and could not negotiate them within the meaning of the negotiable instrument law.”

Here the debt secured was a twelve hundred dollar note, with interest coupons attached, payable to the mortgage company; and, while the mortgage company’s assignment to Cannon íeeited that it had transferred this debt, to him, it did not do so in fact, because that debt was a negotiable note, which the mortgage company did not indorse or deliver to Cannon.

The writing which evidenced the debt, a negotiable note, was acquired by plaintiff’s intestate before its maturity and for full value by indorsement and by delivery, and, as an incident to the ownership thus acquired, there was also acquired the benefit of the mortgage which secured the note, subject, however, to the hazard of having that right destroyed by a satisfaction of the lien by the record owner thereof, no indorsement having been made upon the margin of the record of the transfer of the note.

In the case of Carpenter v. Longan, 83 U. S. 313, 21 L. Ed. 271, Mr. Justice Swayne, speaking for the Supreme Court of the United States, said: “The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity. Jackson v. Blodget, 5 Cow. 205; Jackson v. Willard, 4 Johns. 43.” It was there further said: “The transfer of the notes carries with it the security, without any formal assignment or delivery, or even mention of the latter. If not assignable at law, it is clearly so in equity. When the amount due on the note is ascertained in the foreclosure proceeding, equity recognizes it as conclusive, and decrees accordingly. Whether the title of the assignee is legal or equitable is immaterial. The result follows irrespective of that question. The process is only a mode of enforcing a lien.

‘ ‘ All the authorities agree that the debt is the principal thing and the mortgage an accessory. Equity puts the principal and accessory upon a footing of equality, and gives to the assignee of the evidence of the debt the same rights in regard to both. There is no departure from any principle of law or equity in reaching this conclusion. There is no analogy between this case and one where a chose in action, standing alone, is sought to be enforced. The fallacy which lies in overlooking this distinction has misled many able minds and is the source of all the confusion that exists. The mortgage can have no separate existence. When the note is paid, the mortgage expires. It cannot survive for a moment the debt which the note represents. This dependent and incidental relation is the controlling consideration, and takes the case out of the rule applied to choses in action, where no such relation of dependence exists. Accessorium non ducit, sequitur principóle.”

Our own cases are to the same eifect. In Pullen v. Ward, 60 Ark. 90, 23 S. W. 1034, after quoting in part with approval the language above quoted from the Carpenter case, Mr. Justice Battle said: “In this case the note and lien stand in the same relation. They are as inseparable as the note and mortgage. As in the latter case, the note is the principal and essential thing, and the lien the accessory and incident. The lien passes with the transfer of the note, and expires when it is paid. The lien (a vendor’s) is, in effect, a mortgage, and, like it, passes to the assignee of the note, it being negotiable, freed from any defense the maker (Pullen) had against it in the bands of the vendor. ’ ’ See also Smith v. Butler, 72 Ark. 350, 80 S. W. 580; Hebert v. Fellheimer, 115 Ark. 366, 171 S. W. 144; Graves v. First National Bank of Bentonville, 126 Ark. 177, 189 S. W. 664; Beard v. Bank of Osceola, 126 Ark. 420, 190 S. W. 849; Hankins v. Merchants’ & Planters’ Bank, 161 Ark. 221, 255 S. W. 916.

We conclude therefore that plaintiff’s intestate acquired tbe benefit of tbe mortgage lien by her purchase of the debt which it secured, and that, as Cannon did not acquire the note which the mortgage secured, neither he nor those claiming throug’h him are entitled to enforce the lien of the mortgage. Therefore the right of the plaintiff’s intestate to enforce the lien of this mortgage is not affected by the decree wherein it was adjudged that Cannon’s release deed be canceled and the mortgage to him from Purtell be foreclosed, as plaintiff’s intestate was not a party to that litigation.

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


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    State ex rel. Latta v. Marianna.
    Opinion delivered June 1, 1931.

      Smith & Fitzsimmons, for appellant.

      John L. Daggett and Mann d McCulloch, for appellee.
   Butler, J.

The State of Arkansas on the relation of B. F. Latta, the appellant, filed its petition for mandamus in the Lee County Circuit Court, which petition, after alleging that Marianna was a city of the first class, that certain named persons were the mayor and aldermen of said city, that the petitioner, Latta, was a taxpayer of the city and an owner of valuable property fronting on Main Street, which was one of the principal thoroughfares and business districts of Marianna running east and west, and bisected by Poplar Street, which streets, with their sidewalks, had been public streets for more than twenty years, no private ownership or interest in any portion of said streets having existed for that length of time, further alleged: That "W. S. McClintock was the owner of a lot located on the southwest corner of Main and Poplar streets, near the business property aforesaid, belonging to the petitioner; that at some time prior to October, 1929, McClintock asked and obtained permission of the city council to tear down the buildings then located on said property and to erect a two-story brick building on the site of the old one; that, in order to remove the debris, it would be necessary to use a part of the street and all of the sidewalk, and asked and obtained permission to make this obstruction. The council voted “to grant all of Mr. McClintock’s requests, and he was informed that he was at liberty to proceed according to his own plans,” that, pursuant to the request and permission aforesaid, MoClintock proceeded with the demolition of the old building and caused to be erected on its site a modern two-story brick building with a basement; that, as a means for gaining entrance to the basement, he appropriated one-half of the eight-foot sidewalk abutting on said building and caused to be cut through the same an aperture of sufficient width to permit private passage; that in this aperture he caused to be constructed a series of concrete steps as a means of ingress and egress, and on the north side of the opening was placed a heavy iron railing about 34 feet long spiked on top; that the contact of said aperture with the sidewalk is at all times open at the east end and unprotected; that the said Mc-Clintock caused to be cut through the sidewalk a second opening to the west of that before mentioned, similar in width and approximately 30 feet long, and unprotected on the west; that said appropriation of the sidewalk was unauthorized and deprived the public of the use of one-half of the same, leaving an insufficient space for pedestrian traffic; that the petitioner, a taxpayer and citizen, was inconvenienced, harassed, and his business conducted on the property aforesaid damaged because of the maintenance of the purprestures and apertures, and that the public, as a class, is inconvenienced and, without the authority of law, is deprived of the free and uninterrupted utility of the sidewalk for a distance of sixty feet where traffic is heaviest, and that such obstructions constitute a public nuisance and are a nuisance ■per se.

The petitioner further alleged that, on the first of October, 1929, on notice to McClintock, he petitioned the city council for an abatement of the nuisance, and that upon presentation of the petition it was denied. The prayer of the petition was for an issuance of a writ of mandamus directing the mayor and aldermen to abate the nuisance. To this petition a demurrer was interposed on the grounds, (1), that there was a defect of parties defendant; (2), that the petition does not state facts sufficient to constitute a cause of action, and, (3), that the court was without jurisdiction over the subject-matter. The court sustained the demurrer and dismissed the petition, from which judgment is this appeal.

It is the contention of the appellant that the language of § 7606 of Crawford & Moses’ Digest places an imperative duty on the part of the city council to keep open and in repair the streets and sidewalks, and, since the admitted allegation of the petition shows that there was an obstruction of the sidewalk, the city council was without authority to authorize or acquiesce in the obstruction, was without discretion in the matter, and therefore mandamus was the proper remedy. Section 7607, supra, is as follows: “The city council shall have the care, supervision and control of all the public highways, bridges, streets, alleys, public squares, and commons within the city; and shall cause the same to be kept open and in repair, and free from nuisance.

The city council indubitably has the power to supervise and control the streets and sidewalks of the city, with authority to cause to be removed any structure which encroaches upon the same, nor is this power lost because of inaction of the city governing body for a long period of time. Section 7748, Crawford & Moses’ Digest; Helena v. Wooten, 98 Ark. 158, 135 S. W. 828. Neither can the municipal authorities alienate or authorize a use inconsistent with the right of the public to the reasonable use and enjoyment of these public ways. Beebe v. Little Rock, 68 Ark. 39, 56 S. W. 791; Lester v. Walker, 177 Ark. 1101, 9 S. W. (2d) 323. It follows that the city council might, if it saw fit, cause the obstruction complained of to be abated. Sander v. Blytheville, 164 Ark. 434, 262 S. W. 23.

By § 7748, Crawford & Moses’ Digest, power is given municipalities, such as the city of Marianna, to regulate the construction and use of street and sidewalks within its limits. That portion of the section pertinent to the issue here presented is as follows:

“In order to better provide for the public welfare, safety, comfort and convenience of the inhabitants of cities of the first class, the following enlarged and additional powers are conferred upon cities of the first class, viz., to regulate the use of sidewalks and all structures and excavations thereunder, and to require the owner or occupant of any premises to keep the sidewalks in front or alongside of the same, free from obstruction, and to build and maintain suitable pavement or sidewalk improvements therealong, whenever the same may become necessary to the safety or convenience of travel, and to designate the kind of sidewalk improvement to be made and the kind of material to be used by such owner or occupant at the time within which such improvement is required to be completed. Provided, the kind and character of sidewalk improvement for the same street and block shall be uniform. * * *
“Third, to alter or change the width or extent of streets, sidewalks, alleys, avenues, parks, wharves, and other public grounds and to vacate or leave out such portion thereof as may not for the time being be required for corporate purposes, and where lands have been or may be required or donated to such city for any object or purpose which has become impossible or impracticable, the same may be used or devoted for other proper public or corporate purposes, or sold by order of the city council and the proceeds applied therefor.
“Fourth, to punish, prevent or remove encroachments or obstructions upon any of the streets, sidewalks, wharves or other public grounds of said city, by buildings, fences, or structures of any kind, posts, trees, or any other matter or thing whatsoever, and no statute of limitation or lapse of time that any such obstruction or encroachment may have existed or been continued shall be permitted as a bar or defense against any proceeding or action to remove or abate the same, or to punish for its continuance, after an order has been made by the city council or the police court for its removal or abatement.”

Such are the varied uses and conflicting interests of city life that, as is said in Ex parte Foote, 70 Ark. 12, 65 S. W. 706: “Much must necessarily be left to the discretion of the municipal authorities, and their acts will not be judicially interfered with unless they are manifestly unreasonable and oppressive, or unwarrantably invade private rights or clearly transcend the powers granted them.” In the case of Sander v. Blytheville, supra, the court said: ‘ ‘ The city council, likewise, has a similar discretion in determining what character of structure may be erected and maintained up, over, or under, the streets, alleys and sidewalks of the city so long as such structure does not constitute per se a common nuisance. ” In the case of Ruffner v. Phelps, 65 Ark. 412, 46 S. W. 728, it is said: “A purpresture is an encroachment upon the street which the municipality may or may not tolerate at its option, if the same be not also a public nuisance.”

On a consideration of the statutes and decisions above cited, we conclude that the correct rule is that the governing body of municipalities may, within its discretion, permit an encroachment upon the streets or sidewalks where such encroachment is not of such nature as to necessarily prevent the reasonable and proper use by the public, and which does not of itself constitute a common nuisance. The facts, as presented by the petition in this case, do not show a complete obstruction of the sidewalk, but only a partial obstruction, nor does it show any special damages suffered, and the allegation that it is a nuisance per se states but a conclusion of law which is not supported by the facts alleged. We are of the opinion that the allegations sufficiently show that the obstruction was made with the assent of the city council, and its refusal to abate such obstruction is a proper exercise of its discretion.

If the council erred in the exercise of its power, mandamus is not the remedy to correct the same. It is not a writ of right and can never be issued to control the discretion of an officer whose action or duty depends upon tlie exercise of official discretion. Jones v. Adkins, 170 Ark. 298, 280 S. W. 389; Huie v. Barkman, 179 Ark. 772, 18 S. W. (2d) 334.

While the petitioner alleges that he has been damaged, no facts are stated as a basis for this statement; but if he has suffered special damages, mandamus is clearly not his remedy, but he may proceed in the manner pointed out in the case of Lincoln v. McGehee Hotel Co., 181 Ark. 1117, 29 S. W. (2d) 668.

Other questions are raised by counsel which, in view of the conclusion reached, it is unnecessary for us to discuss or determine. It follows from the views expressed that the judgment of the trial court is correct, and it is therefore affirmed.


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    Leonard v. Taylor.
    Opinion delivered June 1, 1931.

      Hal L. Norwood, Attorney General, and Walter L. Pope, Assistant, for appellant.

      Sam Bor ex and Nat B. Hughes, for appellee.
   Butler, J.

On November 17, 1930, the American Exchange Trust Company, being' insolvent, closed its doors. At that time, and for a considerable period previous thereto, it held a, note for $10,000 executed in its favor by J. E. Shroll and Ben C. McFerrin, evidencing a loan of $10,000 in money, which had been made to Shroll to aid in the construction of bridges in Newton County, Arkansas, in road improvement No. 6. This improvement was begun prior to the passage of the Harrelson Road Law, act No. 5 of the acts of the General Assembly of 1923. In aid of the construction, Newton County undertook to pay for the construction of certain bridges, the builder of which was J. E. Shroll, and issued its warrants in the sum of $25,545.55, delivering the same to the said Shroll on completion of the bridges. These warrants, at the time of the execution of the note, were delivered to the American Exchange Trust Company as collateral security for the payment of the note aforesaid, and before November 17, 1930. Under authority of the Harrelson Road Law, the State Highway Commission took over and undertook to complete improvement No. 6, incorporating the same in its highway No.........., and said improvement No. 6 delivered to the commission the cash on hand, amounting to the sum of $38,600, which was paid into the State Treasury to the credit of the said commission.

It was claimed that, under the terms of act No. 153 of the Acts of 1929, as construed in the case of Grabiel v. Blackwood, 180 Ark. 311, 22 S. W. (2d) 41, the State was obligated to pay the outstanding indebtedness of improvement No. 6, including the amount represented by the scrip aforesaid, and Shroll made application to the State Highway Commission for the payment of the amount represented by said warrants. Action by the commission was not taken on said claim until February 18, 1931, at which time the claim was approved and ordered paid by voucher, directing the Auditor of State to issue his warrant to the American Exchange Trust Company and J. E. Shroll for the sum of $25,545.55, the amount of said Newton County warrants, on condition that the said warrants be surrendered to the Highway Commission. As has been noted, between the time of the application to the commission for the payment of the warrants and the favorable approval thereof by the commission in February, 1931, the American Exchange Trust Company closed its doors, and at that time and now is indebted to the State of Arkansas for sums the latter had on deposit in said bank amounting to more than $600,000. This was secured by a bond executed by the Home Accident Insurance Company, an insolvent corporation, the assets of which are insufficient to pay a large portion of the deposit, and there will be left an amount greatly in excess of $10,-000 unsecured. Upon presentation by McFerrin, the representative of the American Exchange Trust Company, of the warrant of the Auditor of State, the State Treasurer refused to pay to the bank the amount represented by the note with accrued interest, but offered to credit the same on the State’s claim for the amount owing to it by said bank.

These are the facts out of which this lawsuit arose, and the question presented for our determination is whether or not the State has a right to offset the demand of the American Exchange Trust Company out of its deposits in said bank. Counsel for the American Exchange Trust Company argue that there was no valid claim against the State until the highway commission ascertained whether the claim was valid, and the amount thereof, and, as the commission did not do so until February 18, 1931, after the Exchange Trust Company became insolvent, such claim could not be used as an offset under the rule announced in Sloss v. Taylor, 182 Ark. 1031, 34 S. W. (2d) 231. In this contention we are of the opinion that the appellee is mistaken. If the indebtedness evidenced by the Newton County warrants was such as to come within the purview of act No. 153 of the Acts of 1929, the obligation of the State attached on the passage of said act and not on the date when the commission became satisfied of its authenticity and validity. Therefore, the only question was whether or not the American Exchange Trust Company was the owner of this obligation before it closed its doors. If it was such owner, the State was indebted to it for the same, and it was indebted to the State for the amount of the State’s deposit, and there would be mutual claims entitling the State to set-off its deposit against the same.

The effect of our decisions is that the holder of the pledge has a special ownership therein to the extent of the debt secured thereby and may proceed to enforce it if it be a chose in action, a negotiable instrument, or any of a like nature. Turner v. Stroud, 37 Ark. 556; Barnes v. Bradley, 56 Ark. 98, 19 S. W. 235; Plunkett v. State National Bank, 90 Ark. 86, 117 S. W. 1079, which decisions are in line with the general rule cited by appellant from 21 R. C. L. 660-666. Therefore, when Sliroll delivered the Newton County warrants to the American Exchange Trust Company, he transferred all the right he had therein to the pledgee, the effect of which act was to transfer the State’s obligation directly to the pledgee, and from that time the State became indebted to the American Exchange Trust Company, regardless of when, or by whom, demand was made for the payment thereof. The fact that Shroll filed the claim with the commission in October, 1930, would be immaterial, for it is apparent that the American Exchange Trust Company’s rights were recognized as the voucher was ordered drawn so that those rights would be protected and the condition made that the scrip in its hands be delivered to the commission. As is pointed out in Burton v. Blytheville Realty Co., 108 Ark. 411, 158 S. W. 131, the statute on setoff does not define it nor undertake to limit the right to pleading except in the particular named in the statute, § 1197, Crawford & Moses’ Dig'., and the courts in applying this statute have liberally construed it so as to arrive at a true balance where mutual demands exist. Funk & Son v. Young, 138 Ark. 38, 210 S. W. 143.

It follows that the judgment of the trial court will lie reversed, and the cause remanded with directions to allow the offset as pleaded by the State.


author: Hart, C. J.,

text:
    Taylor v. Dierks Lumber & Coal Company.
    Opinion delivered June 8, 1931.

      Steel '(& Edwards, for appellant.

      Abe Collms and Lake, Lake $ Carlton, for appellee.
   Hart, C. J.,

(after stating the facts). It has been uniformly held by this court that a general deposit of money in a bank passes the title immediately to the bank and establishes the relation of debtor and creditor between the bank and the depositor.' The bank is bound by an implied contract to honor the checks of the depositor to the extent of his deposit and becomes liable on its refusal to do so. Himstedt v. German Bank, 46 Ark. 537; Carroll County Bank v. Rhodes, 69 Ark. 43, 63 S. W. 68; Bank of Hatfield v. Chatham, 160 Ark. 530, 255 S. W. 31; and Arkansas Valley Bank v. Kelley, 176 Ark. 387, 3 S. W. (2d) 53. This rule of law was also recognized and stated in Darragh Company v. Goodman, 124 Ark. 532, and other Arkansas cases were cited in support of the general rule.

The court also said that it was well settled that a bank receiving a draft for collection merely is the agent of the drawer or forwarding bank and takes no title to the paper or the proceeds when collected but holds same in trust for remitting it. The difference is that, when a bank receives a general deposit, it takes the title in itself and is in no sense the agent of the depositor for collecting the amount of the check or draft deposited. From the time of the delivery of the draft or check from the customer to the bank, the latter became the owner of the check. It might make any disposition of it that it saw fit. The bank becomes absolutely the owner of it, subject only to the condition that, in case the check or draft is dishonored and not paid, the depositor would become liable to the bank on his indorsement made on the check or draft' when deposited. In such cases, the bank is collecting' the check or draft for itself as owner and not as agent of the owner as in cases where the check or draft is deposited for collection. This difference is clearly pointed out in Darragh Company v. Goodman, 124 Ark. 532, 187 S. W. 673. See also, as establishing the same rule, Burton v. United States, 196 U. S. 283.

As said by Mr. Justice Davis in Bank of the Republic v. Millard, 10 Wall. (U. S.) 152:

"It is an important part of the business of banking to receive deposits, but when they are received, unless there are stipulations to the contrary, they belong to the bank, become part of its general funds, and can be loaned by it as other moneys. The banker is accountable for the deposits which he receives as a debtor, and he agrees to discharge these debts by honoring- the checks which the depositors shall from time to time draw on him. The contract between the parties is purely a legal one and has nothing of the nature of a trust in it. This subject was fully discussed by Lords Cottenham, Brougham, Lundhurst and Campbell, in the House of Lords, in the case of Foley v. Hill, and they all concurred in the opinion that the relation between a banker and customer, who pays money into the bank, or to whose credit money is placed there, is the ordinary relation of debtor and creditor, and does not partake of a fiduciary character, and the great weight of American authority is to the .same effect.”

In the present case, when appellee, through its agent, carried the cash and checks to the bank and the bank received it as a deposit and placed the amount to the credit of appellee in the pass book, the relation of creditor and debtor subsisted between them and not that of principal and agent. The relation was in legal effect a transfer of the money and checks by the customer to the bank upon an implied contract on the part of the cashier to repay the amount of the deposit upon the checks of the depositor.

The bank acquired title to the money and checks on an implied agreement to pay an equivalent consideration when called upon by the depositor in the usual course of business. The transaction was completed when the customer tendered the cash and checks to the bank for deposit, and the president of the bank received them without any restriction. When the president credited the customer’s pass book with the amount of the deposit, the title passed to the bank; and the items constituting the deposit were not again subject to the control of the customer.

Thus, it will be seen that the relation of debtor and creditor is a voluntary one, and a general deposit made with a bank is a contractual relation. Like other contracts, it is necessary that there should be a meeting of the minds of the parties, and the assent of both parties is essential to a deposit to create a privity of contract between the bank and the depositor. The relationship cannot end without the consent and knowledge of both parties. In our opinion it follows from an application of this well-known rule that no secret intention on the part of the officers of the bank could change the transaction from a general deposit to a deposit in trust. It is manifest that the transaction, considered in the light of What was done by the parties themselves, without considering the secret mental reservation on the part of the officers of the bank constituted the transaction a general deposit. Such being the nature and character of the deposit, it cannot be changed by any secret mental reservation on the part of one of the parties.

But it is contended that the relation is changed by the notice on the pass books which was copied in our statement of facts. We do not think so. Reference to the language used in the notice will show that it does not in any way change the character of the contract between the parties. If the checks, as we have held, were passed to the credit of the bank unconditionally and without any special understanding, then the title to the checks was in the bank, and the only liability of the customer was on his indorsement, if the bank on which the check was drawn did not honor it. The liability of the customer as indorser was the same as the liability imposed upon him by the terms of the notice. It will be remembered that the agent of appellee testified that appellee indorsed all of the checks which were deposited by him for it. Burton v. United States, 196 U. S. 283.

The same principle is set forth in Taft v. Quinsigamond National Bank, 172 Mass. 363. In that case the court said:

“So, when, without more, a hank 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 hanker.”

As we have already seen, the checks were placed to the credit of the customer on the pass book without any special understanding between the parties. The custom of the bank was to forward such checks for collection as for itself, and the customer was only liable on its indorsement if payment was not made.

Counsel for appellee also seek to uphold the decree by invoking the general rule in a case note to 20 A. L. R. 1206, to the effect that acceptance of general deposits by a bank hopelessly insolvent constitutes a fraud such as will entitle the debtor to rescind the contract and recover back the deposit or give him a preferential claim or create a trust ex maleficio.

We do not think the principle there announced has any application because this question is settled by our statute. Acts of 1927, p. 297. The Legislature of 1913 created the State Bank Commission and provided rules and regulations for the organization of banks, the conduct of their business, and their liquidation when they became insolvent. The object of the statute was to protect the public in its dealing with banks and to provide a fair, .just and expeditious manner of winding up their affairs when they became insolvent. The plain purpose of the act of the Legislature of 1927 above referred to was to define the relation between creditors of banks, in charge of the State Bank Commissioner and to set out how they should be settled with. We have held that the State Bank Commissioner is the statutory assignee of an insolvent bank and, like a receiver, takes the funds in the same condition they were held in by the bank immediately prior to his taking possession. Sloss v. Taylor, 182 Ark. 1031, 34 S. W. (2d) 231.

We have already placed a liberal interpretation upon the provision of the act of 1927, above referred to, to promote its plain purpose of defining the relation of the creditors of the bank with the State Bank Commissioner when he takes charge of it as an insolvent bank. The evident purpose of the statute was to define the relation of the creditors of the bank as of the formal date of its insolvency, which was the date when it was taken charge of by the State Bank Commissioner under the statute. In the case of Taylor v. Whaley, ante p. 598, it was held that the rule as to preference to the effect that in case public funds are acquired by a bank unlawfully and wrongfully, the beneficial depositor would be entitled to recover same in preference to general creditors of the bank, was abrogated by the enactment of act 107 of the Acts of 1927, which provides that the beneficiary of an express trust in writing, signed by the bank, as distinguished from a constructive trust, a resulting trust or a trust ex maleficio, shall have preference over general creditors; and also provides that all creditors not classed as secured or prior creditors, including the State of Arkansas, and any of its subdivisions, shall be general creditors thereof.

This same rule would apply to private creditors because there is nothing in the statute to indicate otherwise. While § 1 of act 107 of the Acts of 1927, purporting to amend our State Bank Act, is somewhat long and involved, as construed by the court, there can be no preference or trust relations between the creditors and the insolvent bank except as allowed by the statute. We have carefully considered the language of the statute, and find that there is nothing in it Avhich would warrant us in allowing the claim of appellee herein as a preferred claim or to show that there was any trust relation, within the meaning of the statute when the deposit was made.

It follows, therefore, that the decree must be reversed, and the cause will be remanded with directions, to dismiss the complaint of appellee, plaintiff in the court below, for want of equity. It is so ordered.