author: Smith, J. Hart, C. J.,

text:
    England Loan Company v. Campbell.
    Opinion delivered February 2, 1931.

      Buzbee, Pugh Harrison, for appellant.

      Trieber S Lasley, for Campbell; W. P. Strait, for Laster, appellees.
   Smith, J.

J. H. Laster died intestate in Pulaski County on July 15, 1923. At the time of his death he owned a large plantation, some personal property, and some city property, and he owed a large amount of money. He was survived by his widow and six adult children and one grandson, a minor, the only child of a deceased daughter.

On August 11, 1923, the England Loan Company, an Arkansas corporation, and Charles E. Laster, the eldest son, were appointed administrators, and qualified by giving bond, conditioned as required by law, in the sum of $100,000, with the New Amsterdam Casualty Company of New York as surety.

The inventory showed personal property of the value of about $10,000, and the indebtedness against the estate amounted to $167,008.09, of which $31,330 evidenced by unsecured notes and about $6,000 evidenced by open accounts, were probated against the estate. The balance of the indebtedness was secured by mortgages on the plantation.

The loan company and O. E. Laster acted as joint administrators until the death of Laster January 16, 1926, and thereafter the loan company acted as sole administrator until October, 1926, when an order was made by the probate court removing* the loan company as administrator and ordering* it to make a final settlement of the administration.

At the time of the death of J. H. Laster there was an ungathered crop, in which many tenants were interested, and who themselves owed their landlord various sums of money. The affairs of the estate were in such condition that it was thought advisable to continue the operations in which the intestate had been engaged, but it was realized that the administrator did not have this authority, and that it could not be conferred upon them by the probate court in the manner desired. A plan was therefore devised, whereby the administrators were constituted trustees to continue the intestate's business. This trust agreement was signed by the widow and all the adult heirs except Mrs. Grace Laster Graupner. No one signed for the minor grandson. This agreement provided that the trustees should have all the powers vested in them as administrators, and, in addition, should have plenary power to continue the intestate’s business at the risk of the parties executing the trust agreement. Power was given to sell, rent, lease, pledge, mortgage, or hypothecate any and all of the property, real and personal, for such prices and upon such terms as the trustees thought best and “to continue to operate, at the risk of the trust estate, and not at the risk of said trustees, any agricultural, industrial, or business enterprise which they may receive as a part of said estate.” The powers granted were broad enough to authorize all of the subsequent operations of the trustees which they conducted so far as the parties to the trust agreement were concerned.

Under the powers thus conferred the trustees continued the farming operations just as the deceased had doné in his lifetime, and very large sums of money were thus lost.

On October 13, 1924, the administrators filed their first settlement covering the period of their administration to July 1, 1924, and this settlement was later approved by the- probate court. A second settlement was filed covering the period from July 1, 1924, to December 31,1924, and this settlement was also approved. After the order removing the loan company as administrator had been made, a final settlement was filed by the loan company, but this was never acted upon or approved.

On October 20, 1926, C. M. Connor was appointed administrator in succession after the removal of the loan company as administrator. Connor took charge of all the personal assets and made an inventory thereof, but he made no attempt whatever to ascertain the balaiice due by the loan company to the estate, and made no effort to enforce its payment. On June 20, 1927, Connor filed a final settlement of his administration, in which he reported “that, by proper order of this court and the Pulaski Chancery Court, Charles R. Case has been appointed as receiver of said estate on the petition of all the heirs of said estate, and that the receiver is ready to take charg'e of all the assets of said estate and to give his receipt therefor to the administrator.” The heirs had, by a mortgage on their equity of redemption in the plantation, secured money with which to pay all the demands which, had been, probated against the estate. It being shown that all the debts which had been probated had been paid, the probate court directed Connor to turn over all the assets in his hands to the receiver, and, upon this being done, the administrator was discharged without having required the loan company to settle its administration and pay over to him the amount it owed the estate.

The third settlement filed by the loan company as administrator upon its removal appears to have been lost without having been acted upon or approved, and no action designed to compel a settlement was taken until July 19, 1929, when Boy L>. Campbell was appointed administrator in succession. On September 6, 1929, Campbell filed a petition in the probate court, alleging the facts herein recited, and that the loan company and C. E. Laster had failed to make final settlement of their administration of the estate of J. H. Laster, and it was prayed that citation issue against the administrators and the surety on their bond requiring them to make settlement.

Citation issued, and separate responses and demurrers were filed by the loan company and its trustee in bankruptcy, by the executrix of the estate of C. E. Laster, and by the surety on the administrators’ bond, which raised the issue hereinafter discussed.

The demurrers to the petition of Campbell as administrator in succession were overruled in the probate court, and a hearing was had, which resulted in a finding by the probate court that the original administrators of the Laster estate were indebted to it • in the sum of $127,713.98, which, with interest, amounted to $166,399.57, and it was ordered that this sum be paid over to. Campbell as administrator in succession. An appeal was duly prosecuted to the circuit court, where the judgment was rendered from .which this appeal comes.

There was a stipulation of counsel in the court below reciting as true the following facts: C. E,. Laster died January 12, 1926, and his wife qualified as executrix January 19, 1926, and no claim was made or presented to her or to the probate court for allowance against his estate except this proceeding.

The England Loan Company was adjudged a bankrupt in November, 1926. A trustee in bankruptcy was appointed, and the bankrupt was discharged and the trustee in bankruptcy was discharged, and no claim was ever filed in that proceeding by any representative of the estate of J. H. Laster, or b}r any of his heirs, based upon the loan company’s connection with the estate of J. H. Laster, either as administrator or trustee.

The circuit court held that any claim or demand ag’ainst the estate of C. E. Laster was barred by the statute of nonclaim, but the discharge of the loan company did not bar the prosecution of this suit against it, and the court charged the loan company as administrator with the following items:

(a) Cash shown by inventory.........................................$ 1,052.43

(b) Cash on hand, second settlement........................ 517.42

(c) One-half of amount shown by inventory to be due decedent by his tenants at his death ................................................................................................ 623.48

(d) Balance of proceeds of $80,000 mortgage on land ............................................................................... 38,600.00

(e) Proceeds of sale of lots 7 and 8, block 247, Little Bock, less mortgage on said property at the time of sale................................................... 2,500.00

These items aggregate...................................................$43,293.33

And it was ordered that this sum bear interest from October 19, 1926, until paid at six per cent. From this order and judgment the administrator and its surety have appealed, and the administrator in succession has prosecuted a cross-appeal.

It is conceded that a very large loss was sustained by the trustees in their operation of the Laster plantation, but it may also be said that there is not even a suspicion of any fraud on the part of the loan company or C. E. Laster, acting either as administrators or as trustees. They undertook, as trustees, to operate the plantation, and they did this only because they were without authority to do so as administrators.

It is first very earnestly insisted that the present administrator in succession is without authority to sue his predecessor for an accounting, for the reason that an intervening administration has been had, and that administrator has made final settlement of his administration and has been discharged.

In the case of Beckett v. Whittington, 92 Ark. 230, 122 S. W. 633, it was held that, where the probate court confirms the final settlement of the administrator and closes the administration, it is a conclusive finding that all the assets of the estate have been reported and administered, and that all matters of the accounting have been fully and finally made, and that the jurisdiction of the probate court over the estate is at an end. Other cases there cited were to the same effect, but this Beckett case gives the reasons for the rule stated. These are that the probate courts are superior courts, and that the orders of these courts are judgments and are final and conclusive, like the judgments of other superior courts; that the final settlement is the last accounting of the assets of the estate, and, in conjunction with the prior settlements, presents the issues that are to be determined by the probate court when it renders its judgment thereon, these issues being in conjunction with the previous settlements, “all assets of the estate have been duly reported and accounted for; that all the assets of the estate have been duly administered. And when the probate court confirms the final settlement and closes the administration, it finds that all the assets have been reported and administered, and that all matters of the accounting have been fully and finally made, and that the jurisdiction of the probate court over the estate is at an end. And such judgment is conclusive of these findings.”

It was there further said that “if, through fraud, accident or mistake, any property of said estate has not been actually reported, accounted for or actually administered, a chancery court has .jurisdiction to investigate such charge and to set aside such judgment confirming the final settlement closing the administration. When that is done, the chancery court will remand the administration, if deemed necessary to the probate court to be proceeded with. (¡Citing cases). But, until such judgment confirming the final settlement is set aside by the chancery court, the probate court has no further jurisdiction over the estate. And it cannot, therefore, after confirmation of the final settlement and the judgment closing the administration, appoint an administrator in succession, unless the same shall be set aside by the chancery court. Under such circumstances the order of the probate court appointing an administrator in succession AVould he a nullity.”

The probate practice is Avell-defined, and has long been settled, and AAre do not intend to impair the authority of this and other cases to the same effect. But, when the facts herein stated are recalled, it appears that the rule of practice which we have quoted and here reaffirmed has no application. There has never been any final settlement by the original administrators, to become a final judgment of a superior court of record.

The loan company did file a final settlement, but it was never acted upon or approved by the probate court, and there was therefore no order or judgment of the probate court to become final. It is true that Connor, as administrator in succession, did file a final settlement of his administration, and that this settlement was approved and he was discharged as administrator, but it is also true that Connor did not require his predecessor to account to him, as he should have done, and that his settlement covered only the assets which had actually come into his hands, and he referred not at all to the assets which should have been accounted for to him by the loan company in its final settlement, but were not. Beckett v. Whittington, supra, does not apply, because tbe final settlement of Connor, in conjunction with the previous settlements of the loan company, did not present the issue whether all the assets of the estate had been fully reported and accounted for. It could not have done so, for the last settlement of the loan company ha<jl not then been, nor has it yet been, approved.

It follows, therefore, that, so far as the loan company and C. E. Laster are concerned, the settlement of their administration is just where it was when Connor was appointed, because he did not require them to account to him, as he should have done. That duty on the part of the administrator in succession remained undischarged until the institution of this proceeding, and we think §§ 44 and 45, C. & M. Digest, afford full authority for this proceeding. These sections read as follows:

“■Section 44. The preceding executor or administrator shall account for and turn over to such executor or administrator in succession all money and property administered or unadministered remaining in his hands and not before accounted for; and it shall be the duty of the executor or administrator in succession to compel his predecessor in office, or, if he be dead, his personal representative, to account for and pay over all money and property administered or unadministered remaining in the hands of his predecessor in office, and for this purpose he may cause such former executor or administrator, or his personal representative, to be notified to appear in the probate court and make settlement.
“■Section 45. If the sum found due upon settlement is not paid, the executor or administrator in succession shall sue the former executor or administrator and his bondsmen therefor, or any of them, or if such former executor or administrator be dead, he may sue his personal representatives and bondsmen, or any of them, and shall recover the full sum due, with interest and costs.”

Campbell is now undertaking- to compel Ms predecessors to make settlement of their account, and that is the sole purpose of the proceeding. Connor should have done this, hut his failure to do so did not and does not deprive the probate court of its jurisdiction to compel the original administrators to settle, and the court has proceeded in the manner provided by law to accomplish that result. The statutes quoted as construed in the case of Wilson v. Hinton, 63 Ark. 145, 38 S. W. 338, not only give Campbell, as administrator in succession, authority to require the loan company to make settlement of its administration, but requires him also to compel C. E. Laster’s personal representative to make settlement of his administration.

We think the court properly held that the discharge of the loan company in bankruptcy did not absolve its liability to the Laster estate, for the reason that the bankruptcy act specifically provides that a discharge does not release a bankrupt from a liability “created by his fraud, embezzlement, misappropriation or defalcation while acting as an officer or in any fiduciary capacity.” Section 35, title 11, United States Code Annotated.

An administrator acts in a fiduciary capacity, and, while no fraud or embezzlement is charged, the failure to account and pay over to his successor is a defalcation of an officer acting in a trust capacity within the meaning of the statutes quoted. It was so expressly held in the ease of Morris v. Covey, 104 Ark. 226, 148 S. W. 257.

We are of the opinion that the court was in error in holding that the cause of action against the estate of C. E. Laster was barred by the statute of nonclaim. In the case of Statham v. Brooke, 140 Ark. 107, 215 S. W. 739, it was held that an administrator in succession must proceed in the probate court against the former executor or administrator for a settlement or accounting, and must obtain an order to pay over the sum found due to him before he can sue the bondsmen of the former executor or administrator, and that it is the failure to pay over to the administrator in succession which constitutes a breach of the executor’s or administrator’s bond and fixes liability on the bondsmen. A number of cases to this effect are cited in the Statham case, supra. Until the institution of this proceeding there had been no final settlement of the account of C. E. Laster as administrator. There was no ascertained demand which could be presented to his administrator, and, therefore, the statute of nonclaim did not apply.

We have said that the circuit court, on the appeal from the order of the probate court, found that the administrators were indebted to the estate in the sum of $43,293.33, and that an appeal and a cross-appeal have been prosecuted from that .judgment.

This opinion would be almost interminable if we were to discuss the numerous items which the administrator in succession seeks to charge against his predecessors, but we find it unnecessary to do so, for the reason that practically all these items relate, to the management of. the Laster estate by the trustees.

As we have said, the trust agreement was entered into for the reason that the administrators did not have authority to continue Mr. Laster’s business as the parties desired and as was subsequently done, and the business was conducted by the trustees, and not by the administrators. The circuit court recognized this fact and, therefore, charged the administrators with only such money as it found they had received as administrators and for which they had not accounted.

Items (a) and (b) are of this class and we think were properly charged against the administrators. Item (c) relates to accounts of the tenants and is a part of the business of which the trustees took charge and we think, therefore, should not be charged against the administrators. We think item (d) is a proper charge. Under the orders and direction of the probate court the administrators borrowed $80,000 for the purpose of paying a mortgage on the lands and the probated demands. The mortgage with interest was paid, but the balance, amounting to $38,600, was not used for the purpose for which it was borrowed, and the probated unsecured demands were not paid, as it was intended they should be, and the administrators turned the money over to themselves as trustees and used it for purposes connected with the trust. This action was unauthorized, and the administrators should therefore be charged with this item. We think item (e) is not a proper charge. The facts in regard to this item are as follows. The intestate owned two lots, upon which there was a mortgage for $5,000. The administrators negotiated a sale of the lots for $7,500, of which amount the purchasers paid $500 as earnest money. The administrators were under the impression that the lots had to be sold for cash, and, anticipating that the sale would be completed, they reported a sale for cash, which report of sale was approved by the probate court. The purchaser made no payment in addition to the $500, but forfeited this payment and later reconveyed thé lot to the administrators. Still later the mortgage was foreclosed, and the lots sold for $5,000, which was, of course, $2,500 less than the amount for which the administrators had reported they had sold them. We do not think it equitable to require the administrators to sustain this loss; in fact, there was no loss. The administrators made a report which was incorrect, in that, the sale was not for cash, but no loss was sustained on this account, and there was no bad faith in the transaction. On the contrary, $500 was gained. Item (e) is therefore disallowed. •

Upon the cross-appeal we do not allow any of the items claimed, for the reason that they relate to the administration of the trust bjr the trustees as such.

After striking out items (c) and (e), amounting to $3,123.48, the balance with which the administrators should be charged is $40,169.85.

The circuit court ordered the defendant administrators to pay over to the administrator in succession the sum found to be due, and this ordinarily would be the proper order to make in regard to the sum with which we find the administrators should be charged, hut we do not make that order for the following reasons. Mrs. Graupner, the daughter who did not sign the trust agreement, is the only person interested in the sum to be recovered from the administrators and their surety. This fact appears from the stipulation of counsel. All the other heirs, except the minor grandson, joined in the execution of the trust agreement, and thereby authorized the trustees to conduct, at their risk, the business .in which the trustees lost much money. The three items which we have charged to the original administrators also went into the trust business, and this was done without the consent of Mrs. Graupner or the grandson, and we find nothing in their conduct to estop them from insisting that the administrator in succession be allowed to recover. It further appears, however, that the guardian of the grandchild has, under the authority of the probate court, made a full and what appears to be a fair, settlement of any interest he may have in the sum recovered, so that, of all the heirs, Mrs. Graupner alone is interested in the sum sought to he recovered against the original administrators.

We see no reason, therefore, why the administrators should be required to pay over a sum which no one would have the right to claim and appropriate, and as Mrs. Graupner is one of seven heirs, it is ordered that there he paid over to the administrator in succession only one-seventh of the amount for which the original administrators are herein held liable. As thus modified the judgment of the court below is affirmed, and the cause will be remanded to the circuit court with directions to certify it to the probate court, for enforcement.

Hart, C. J., dissents.

Mehaeey and McHaney, JJ., disqualified and nonparticipating.

Hart, C. J.,

(dissenting). As I understand the majority opinion, it was necessary to appoint an administrator in succession before a suit could be maintained against a former administrator for waste or conversion of the assets of the estate in favor of one of the distributees of the estate. This is made manifest by the concluding part of. the opinion which holds that Mrs. Graupner, one of the distributees, alone was entitled to recover her share of the proceeds recovered. This was because the debts had been paid by the former administrator, and none of the other distributees had any right to the proceeds except the minor, and he had been settled with.

Under the common law, the extent of the power and authority, as well as the duty of an administrator de bonis non, was simply to collect and administer such property and effects of the deceased, not administered by the former representative, as remained in specie, and were capable of being ascertained and identified as the specific property or estate represented by him. Hence, it has been held that an administrator de bonis non cannot maintain a suit at law, or a bill in chancery, against a former executor or administrator, or his representatives, for effects of the estate wasted or converted by him, though such suit or bill may be brought by creditors, distributees, or legatees. Finn v. Hempstead, Admr., 24 Ark. 111; State v. Rottaken, 34 Ark. 144; Ludlow v. Flournoy, 34 Ark. 451; Williams v. Cubage, 36 Ark. 307; and Stewart v. Smiley, 46 Ark. 373.

This rule of the common law has been changed by statute, and an administrator de boms non or in succession is empowered to call a former administrator to a settlement of his accounts to recover from him for1 waste and conversion, as well as the assets remaining in specie in his hands; and this I understand to be the effect of the decision in Wilson v. Hinton, 63 Ark. 145, 38 S. W. 338. I do not understand that case to hold that the statute giving an administrator de bonis non the right to maintain an action for waste or conversion took away the rights of distributees or legatees to maintain the action where there were no asseis unadministered, and all that remained to be done was to recover a fund alleged to be converted by the original administrator and to pay it to the distributees. If the majority opinion had held that, while the probate records show that there was no real necessity for the appointment of an administrator de bonis non, through the adjudication of the probate court, the necessity by making the appointment is conclusive here because this is a collateral attack, as held in Stewart v. Smiley, 46 Ark. 373, and Lambert v. Tucker, 83 Ark. 416, 104 S. W. 131, I would have concurred in the result.

It seems to me that it is fairly inferable from Beckett v. Whittington, 92 Ark. 230, 122 S. W. 633, that the only object of the statute under consideration was to enlarge the powers of the administrator de bonis non or in succession, and that it does not and did not intend to take away the right of distributees or legatees to sue an administrator for waste or conversion where no rights of creditors are involved; and no necessity existed for the appointment of such administrator.

This court has uniformly held that where a fund has been recovered in any court from the original executor or administrator, it shall be paid to the administrator de bonis non as assets of the estate to be accounted for in due course of administration; and in such cases where there would be necessity for the appointment of an administrator in succession, he would have authority to sue for waste or conversion by the administrator in chief.

But where, as here, it can be ascertained from the records of the probate court that the fund is ready for distribution, there is no need for further administration, and the fund may be recovered by the party entitled to it, and it may be distributed in the court where recovered, unincumbered by the costs and delay of administration in the probate court.


source: Caselaw Access Project

author: Humphreys, J.

license: Public Domain

text:
    Sunlight Produce Company v. State.
    Opinion delivered February 2, 1931.

      Shouse <<& Rowland, for appellant.

      Jach Holt and V. D. Willis, for appellee.
   Humphreys, J.

This suit was brought in the circuit court of Boone County against appellant by the prosecuting attorney of the 14th Judicial Circuit in the name of the State of Arkansas, for the benefit of said county, to recover the penalty prescribed by § 1832 of C. & M. Digest for appellant’s failure to file with the Secretary of State a copy of its charter or articles of incorporation as prescribed in § 1826 of O. & M. Digest.

It was alleged in the complaint that appellant, a foreign corporation, had engaged in intrastate business in Boone County in violation of said statutes.

Appellant filed an answer admitting it was a foreign' corporation, but denying that it had engaged in intrastate business in said county.

The cause was submitted to a jury, and at the conclusion of the testimony the court instructed a verdict against appellant for the minimum penalty after which judgment was rendered for $1,000, from which is this appeal.

The sole question presented by the appeal for determination is whether the undisputed testimony reflects that appellant was engaged in any intrastate business in Boone County, Arkansas. It lias been ruled by this court that a foreign corporation comes within the purview of the statutes referred to in case they do any intrastate business, so far as that character of business is concerned, even though also engaged in interstate commerce or business. Western Union Tel. Co. v. State, 82 Ark. 309, 101 S. W. 748, 12 Ann. Cas. 82. A foreign corporation cannot avoid or circumvent the statutes by engaging in interstate business along with local or intrastate business. In other words, the courts will not permit a foreign corporation to camouflage an intrastate business with interstate business so as to evade or avoid the penalty imposed by the statutes for doing an intrastate business without complying with the law.

Adverting to the issue of whether appellant was engaged partly in intrastate business, we think the manner in which it conducted its business at Bellefonte and at Harrison reflects that it was doing in large part a iocal or intrastate business. At Bellefonte it rented a house, put out a sign “'Sunlight Produce Company,” employed a manager who was assisted a part of the time by a field agent, both of whom drew a salary for purchasing milk and produce of various kinds for shipment to its headquarters or domicile in Neosho, Missouri. The milk and produce were paid for by checks signed, Sunlight Produce Company, by its field agent or manager drawn on its bank in Neosho. The products purchased by it were sometimes shipped in original packages immediately after purchase, but were generally stored in the building rented by it and shipped two or three times a week by truck or rail to its place of business at Neosho. "When the 'branch house of appellant was established at Bellefonte, appellant entered into a contract with its manager, W. B. Hawkins, to buy poultry, eggs and cream for it. A part of the time the manager was paid a commission on his'purchases for his services, but relative to the purchase of cream the basis of pay was changed to that of the number of tests he should make of the cream. The more tests lie made the more he received for his services. At Harrison the business of appellant was conducted by Lee Wallis as manager at an established place. The business consisted of buying poultry, eggs and cream which were stored in the place of business, and when a sufficient quantity was accumulated same was shipped by truck or rail to appellant’s place of business in Neosho. The manager received a salary for his services, and when he bought the products he paid the owner in a check drawn by himself on appellant’s Neosho bank to which he signed appellant’s name by him as manager.

We do not think the business conducted by appellant in this State constituted interstate commerce. If such business were exclusively interstate, it must be upon the theory that the products were bought to be shipped out of the State and not for sale in the State. Every other ear-mark indicates that the business as conducted was intrastate. Appellant did the business in a rented house in this State with a sign thereon indicating what its business was. It was conducted part of the time by the manager who was paid a salary and other times was paid a commission dependent upon the quantity he bought and upon the tests he should make of the product. The products purchased were paid for in this State; the checks in payment thereof were drawn, signed and delivered in this State at the time the products were received from the vendors. The goods were stored in a rented house and shipped out at a later date than when purchased. We do not think that all of these ear-marks indicating that the business was local and intrastate can be converted into an exclusively interstate transaction by the mere fact that at a later date the goods purchased would be shipped to the purchaser at its headquarters in another State.

Appellant cites a number of cases, among them the case of W. T. Raleigh Medical Co. v. Rose, 133 Ark. 505, 202 S. W. 849, to the effect that the statute does not apply to foreign corporations engaged in interstate commerce and ruling that in the particular cases cited the facts reflected that the corporations were engaged strictly in interstate commerce. None of these cases have the ear-marks the instant case has tending to show that the business conducted was a local or intrastate business. We do not think the cases cited applicable to the instant case.

No error appearing, the judgment is affirmed.

Mr. Justice Kikby dissents.


text:
    Donaghey v. Remmel & McCarroll.
    Opinion delivered February 2, 1931.

      Barber \& Henry and, Frauenthal, Sherrill <fb Johnson, for appellant.

      Fred A. Isgrig and Elmer Schoggen, for appellee.
   Humphreys, J.

Appellees brought this suit in the circuit court of Pulaski County, Third Division, against appellant to recover a commission of $7,500 for procuring a loan of $200,000 for appellant with which to construct a loft building on certain real estate on the southeast corner of -Markham and Main Streets in the city of Little Rock; and $1,200 as anticipated commissions on fire insurance to cover said building for a term of ten years. The claim for the recovery of said commissions is based upon a written loan contract of date February 7, 1927, a written application of same date and accompanying letter for a loan of $27-5,000, a letter of date February 15, 1927, a letter of date March 1, 1927, and a letter of date March 3,1927. The instruments of writing referred to are as follows:

“IjOAN contract.
“Remmel & McCarroll,
“Little Rock, Ark.
“I hereby agree to make through you, in name of Massachusetts Mutual Life Ins. Co., Spring-field, Mass, whom you represent, a loaxi of two hundred and seventy-five thousand ($275,000) dollars for a term of ten years, principal payable 5% amt. loan annually beginning at end of fourth year. It is further understood that interest on the loaxx herein accepted shall commexice with the date of the check or draft sent in settlement or on account of loaxx, to bear interest at the rate of 5% per cexit. per annum, payable semi-annually, to be secured by a first mortgage on real estate hereinafter described, principal and interest to be payable at such place and in such manner as the lender may direct. The real estate upon which I desire this mortgage loan is as follows, to-wit:
“West half of lots, oxie, two and three ixi block two, city of Little Rock, Ark., more particularly described as follows: Beginning at a poixit at the northwest corner of said block, running south oxie hundred and fifty feet on Main Street, thence east sixty-nine feet, thence north one hundred and fifty feet, thence east sixty-nixie feet to the place of beginning, with the following exceptions: 30 feet on East Markham Street by 70 -feet on Main Street, which is included in a 99-year lease, a copy of which is herewith attached. See attached plat of ground, Pulaski County, State of Arkansas.
“In addition to the interest above agreed upon, I agree to pay you as a commission for negotiating the loan the sum of $10,000 (ten thousand dollars).
“I further agree to pay all expenses for abstract of title to the property offered as security in my application; also the fee for recording the mortgage and each and every instrument necessary to clear the title of all incumbrances and perfect title in me. I also agree to pay for a photograph of the premises and an attorney’s fee for examination of the title.
“I hereby agree to pay such actual expenses as you have incurred in the negotiation of the loan and examination of the property and title, if I do not obtain said loan, by reason of defects in the title or by reason of my being unable to remove all incumbrances from said property, and if you or any one whom you may designate shall notify me of your acceptance of said loan and I am unable or refuse to complete said loan, then I agree to pay the above commission and all expenses you or the assignee of this contract may have incurred, for such refusal or inability to complete said loan.
“I hereby authorize you to pay off all liens and incumbrances of whatsoever kind now on my property above described, and if the loan hereby applied for should not be sufficient to pay off all prior liens, I agree to pay the deficiency within ten days after being notified of same.
“I agree to insure, with fully paid policies, the buildings on said premises, in the sum of at least $275,000 with loss, if any, payable to the lender as his interest may appear, all new and renewal policies to be placed by Remmel & McCarroll, in companies acceptable to them.
“In event proceeds of loan are to be paid out before building is completed or as work on building progresses, I agree to furnish the usual surety bond protecting lender against all mechanics on other statutory liens, said bond to be placed by Remmel & McCarroll in companies acceptable to them.
“In witness whereof I have hereunto set my hand this 7th day of February, 1927.
“ [Signed] George W. Donaghey.
‘ ‘ State of Arkansas, County of
‘ ‘ Subscribed and sworn to before me, a notary public, in and for said county and State this 7th day of February, A. D. 1927.
“[■Signed] Robbie L. Wood, Notary Public [Seal]
“My commission expires October 21, 1930.”
“application.
“Massachusetts Mutual Life Insurance Company,
“Springfield, Mass.
Business and Apartment Property
“Gentlemen: Application is hereby made for a loan of $275,000 for ten years at 5y2 per cent, per annum, payable semi-annually, on the following described real estate in'the city of Little Rock, County of Pulaski, State of Arkansas:
“West half of lots one, two and three in block two, city of Little Rock, more particularly described as follows: Beginning at a point at the northwest comer of said block, running south one hundred and fifty feet on Main Street, thence east sixty-nine feet, thence north one hundred and fifty feet, thence east sixty-nine feet to the place of beginning, with the following exceptions: 30 feet on East Markham Street by 70 feet on Main Street, which is included in a 99-year lease, a copy of which is herewith attached. See attached plat of ground. And the folio-wing statements and answers to questions are made as an inducement to you for the approval of this application. * * *
“'The subscriber agrees to furnish at his own expense a complete and satisfactory abstract of title to the premises, or a title policy, at the option of the said company, and to pay all charges for recording all deeds, and all other instruments required by the company, and if this application is approved and the loan completed, the abstract or title policy shall remain in the custody of the said company until the said loan is fully paid; and it is further understood and agreed that all loan papers shall be on such forms as may he required by said company. And it is agreed that said company shall not be required to make any settlement of the loan or any advance on account thereof unless the title to the premises shall be satisfactory to it at the time such settlement or advance is requested. The company may at its convenience make settlement of this loan by its check drawn upon New York, Boston or Chicago; and it is further understood that interest on the loan herein applied for shall commence Avith the date of the check sent in settlement.
“Dated this 7th day of February, 1927.
‘ ‘ [Signed] George "W. Donaghey, Applicant. ’ ’
“accompanying letter.
“Little Rock, Arkansas, February 7,1927.
“Messrs. Remmel & McCarroll, Agents,
“Mass. Mutual Life Ins. Co. of Springfield, Mass.,
“1308 Donaghe}^ Building, Little Rock, Arkansas.
‘ ‘ Gentlemen: I am herewith filing. Avith you, attached to this letter, an application on the regular form of said company for a loan of $275,000 on the property at the southeast corner of Markham and Main Streets, Little Rock, Arkansas, all of Avhich is more particularly described in said application; the loan to be made, at five and one-half per cent, per annum interest, payable semi-annually, Avith a commission to be paid for said loan in the amount of ten thousand dollars; the time of the loan to be ten years -with the principal payments of five per cent, per annum to commence at the end of the fourth year from the time the loan is made.
“I am also attaching to said application properly filled out one of your loan contract forms stipulating the terms a.nd conditions of the loan together with the amount of commission to be paid you Avith. other formal stipulations therein noted; and it is distinctly agreed between us and is made a part of this loan contract with the Massachusetts Life Insurance Company application that, if an agreement be not effected within thirty days from, this date by the Massachusetts Mutual Life Insurance Company to make this loan and advance the installments as the building progresses, then, in that event, this application and the loan contract shall be void and of no effect.
"Very truly yours,
GWD-GW "[Signed] George W. Donaghey.”
"letter.
"Springfield, Massachusetts, February 15, 1927.
"Mr. Theo. W. Pinson, Manager,
“907 Republic Bank Building, Dallas, Texas.
"Dear sir: This is to advise you that the application of George W. Donaghey, et al., for a loan of $275,000 to cover property in Little Rock, Arkansas, will be approved for a loan of $200,000 only, subject to satisfactory title, plat of survey showing the building to be within the lot lines and with the understanding that the new building on the premises is to be completed and paid for free from mechanics ’ lien claims in accordance with the plans, specifications and representations made to us at a cost of not less than $400,000.
"We are of the opinion that such an approval will be,all that we can possibly loan on this property considering that the building is to cover also the lot which is held by the applicant under a ninety-nine-year lease. We shall probably require an assignment of the lease to as at the time of the closing of the loan.
"If such an approval will be satisfactory you may forward the abstract of title and plat of survey for examination.
"Yours truly,
“ [Signed] O. E. Fifield,
"Superintendent of Loans.”
“letter.
“Little Rock, Arkansas, March. 1, 1927.
“Messrs. Remmel & McCarroll,
“1308 Donaghey Building-, Little Rock, Arkansas.
“Gentlemen: With reference to the loan from the Massachusetts Mutual. Life Insuraaice Company, I wish to say while I shall need, at least $25,000 more money than the amount named in Mr. Fiiield’s letter, yet I shall accept the $200,000 therein named, trusting that upon completion of the building if I should then need an additional $25,000, the company will, if it thinks I am entitled to it, lend me said additional $25,000, this, however, to be left entirely to the judgment of the company at the time. This acceptance is conditioned upon the securing of a permit from the city of Little Rock for the construction of the building at the location named and the approval of the plans by the lessor of that part of the land subject to the 99-year lease. I contemplated no trouble respecting these matters.
“It is agreed that I am to pay $7,500 commission on the $200,000 loan herein named, and that all other conditions named in my application of the 7th day of February, 1927, are to remain the same. I shall prepare and forward plat of ground and abstract of title as quickly as this can be made up.
“Very truly yours,
“ [Signed] George W. Donaghey.”
“letter.
“Dallas, Texas, March 3, 1927.
“Remmel & McCarroll,
“Donaghey Building, Little Rock, Arkansas.
“Gentlemen: I am pleased to receive your letter from Governor Donaghey accepting the commitment of $200,000. You state that, since the loan is approved with the understanding that the improvements cost not less than $400,000, it would appear that we are not recognizing any value whatever for the ground. •
“You have evidently overlooked the fact that the choicest portion of this ground is a leasehold, and a substantial part of the building is on the leasehold, and, as you know, we are not inclined to lend liberally on leaseholds. I think that if you took the value of the ground apart from the leasehold, and the value of the building which is not on the leasehold, you 'would see that we are making a rather large loan under the circumstances, I am very glad, however, that Governor Donaghey was able to accept a loan of this amount, and I trust that there will be no trouble which might arise from the building cost falling below the minimum.
“When you receive the abstract and plat of survey I would be very glad if you will forward them direct to Mr. Fifield.
“With kindest regard, I am,
“Yours very truly,
“ [Signed] Theo W. Pinson, Manager.”

Appellee filed an answer interposing the following defenses to the alleged cause of action, to-wit:

Fii'st: That the instruments in writing did not constitute a complete or consummated contract for the procurement of a loan in the amount of $200,000 because the letter of date March 1, 1927, contained conditions which were never accepted by the Massachusetts Mutual Life Insurance Company relative to procuring a permit from the city of Little Rock to construct the building, and procure the approval of the plans for the building by the lessor of that part of the land subject to the ninety-nine-year lease.

Second: That the instruments in writing did not constitute the entire contract, but were executed and delivered upon an oral condition that no commission would be charged unless the money was actually paid to and received by appellant from the Massachusetts Mutual Life Insurance Company.

Third: That the alleged contract set forth in the complaint of appellees was mutually abandoned after March first, 1927.

The cause was submitted for trial upon the pleadings, testimony and instructions of the court which resulted in a verdict and consequent .judgment for $7,500 for commissions on loan with interest at six per cent, from May 1, 1927, and $743.60 for commissions on fire insurance, from which is this appeal.

The first contention of appellant for a reversal of the judgment is that no mutual binding agreement was entered into between the Massachusetts Mutual Life Insurance Company and appellant for making the loan. The argument in support of this contention is that the written instruments do not coustitute a complete contract, because there was no acceptance by the Massachusetts Mutual Life Insurance Company of the conditions in appellant’s letter of date March 1, 1927, relative to his procurement of a permit from the city of Little Rock to construct the building and the procurement of the approval of the plans for the building by the lessor of the property covered by the lease. No duty was imposed by the letter upon the Massachusetts Mutual Life Insurance Company to procure the permit or approval. That duty rested solely upon appellant, just as the duty to furnish the abstract rested upon him. An acceptance of those conditions on the part of the Massachusetts Mutual Life Insurance Company was necessarily implied, for the parties knew the building could not be constructed without the procurement of both. The acceptance of the Massachusetts Mutual Life Insurance Company of those conditions being implied, it was not necessary for it to formally accept the conditions in order to complete the contract. The writings and necessary implications therefrom constituted a complete and enforceable contract. As the written instruments constituted a complete contract, the court correctly refused to peremptorily instruct a verdict for appellant, and also correctly refused to give instruction number 6 requested by appellant submitting the issue to the jury of whether the contract was complete. It was the duty of the court, and not the jury, to determine -whether the writing’s -within themselves constituted a complete and enforceable contract.

Appellant’s next contention for a reversal of the judgment is that the court erred in refusing to give his requested instruction number 7 to the effect that he would not be liable for a commission unless the loan was actually made and the money actually paid to him. Appellant testified that when the loan contract was signed and delivered it was upon the sole and only condition that he would not be required to pay a commission unless the loan was actually made and the money actually paid by the Massachusetts Mutual Life Insurance Company to him. This testimony was inadmissible because it was in conflict with the following written paragraph of the written contract, to-wit:

“If I am unable or refuse to complete said loan, then I agree to pay the above commission and all expenses you or the assignees of this contract may have incurred, for such refusal or inability to complete said loan.”

As the requested instruction was based upon incompetent testimony, it was properly refused by the court.

Appellant’s next contention for a reversal of the judgment is that the court erred in excluding two letters, one from appellant to John F. Boyle, lessor of the leased lot, and the other the answer he received thereto. These letters related to the construction of a building on the leased lot. The letters were properly excluded as they antedated the contract for the loan, and had no reference thereto.

Appellant’s next and last contention for a reversal of the judgment is the refusal of the court to permit appellant to introduce letters passing between him and Mr. Pinson and the appellees, from January 27,1928, to April 8, 1928, relative to the building of a hotel on said property. Appellant pleaded as one of the defenses, and testified in support thereof, that the loan under his application of February 7, 1927, and all transactions pertaining thereto, were mutually abandoned by all parties concerned after March, 1927. The letters referred to above were offered in evidence in support of appellant’s testimony relative to the mutual abandonment of all transactions relative to the loan under his application of February 7, 1927. The majority of the court is of the opinion that the letters referred to, and excluded by the court, being between appellant and Theo. W. Pinson concerning a different character of building upon the same property, tended to show that there had been an abandonment of all negotiations relative to the original loan, and that, had they been admitted in evidence, they would have corroborated the testimony of appellant to that effect. Mr. Justice Butler and the writer do not concur in this view, but are of the opinion that the letters were inadmissible because they concerned a different and wholly independent transaction.

On account of the error indicated in excluding the letters referred to, the judgment is reversed, and the cause is remanded for a new trial.


author: Kirby, J.

text:
    Veach v. Merchant.
    Opinion delivered February 2, 1931.

      Bice <& Dickson, for appellant.

      W. O. Young, for appellee.
   Kirby, J.

J. F. Merchant and Allie Merchant brought this suit in the chancery court for an alleged balance of purchase money claimed to be due from A. C. Veach, trustee, and for the enforcement of a vendor’s lien therefor against the northwest quarter southwest quarter, section 1, township 18 north, range 31 west, Benton County.

It was alleged that they had conveyed the lands to A. C. Veach as trustee for the Oklahoma Park Association for a consideration of $2,000; that only $1,425 was paid in cash and the balance of $575 was to be paid in 30 days; that the deed was delivered, but the deferred payment had never been paid. They alleg'ed that defendants were nonresidents; asked that the amount due should be adjudged and a lien fixed against the land for the collection of the balance of the purchase money.

Appellant filed a general demurrer to the complaint and suggested the death of J. F. Merchant since the filing of the suit, and that no cause of action had been stated against him by Allie Merchant. Without waiving his demurrer', he answered admitting the purchase of the land on the 20th day of July, 1926, for $2,000, $1,160 of which was paid in cash, and that the balance was to be paid out of proceeds of the sale of 22 lots in block 5, according to the plat of the 40-acre tract containing the block, the sales to be made by plaintiff or his agent, B. P. Alley, and the deeds to be executed by defendant, appellant; that he had been at all times since ready and willing to execute the deeds to the said purchasers of the said 22 lots in block 5, and allow appellees to keep the full amount of the purchase price in the sums for which the lots were sold; that five of the lots were sold by the plaintiff or his agent, and deeds executed therefor and the proceeds of the sales were paid over to plaintiff and accepted by him under the terms of the agreement. The answer denied that plaintiff had a lien on the lands for any of the alleged balance of the purchase-money; alleged that the purchase money was paid -in full, and that a warranty deed had been executed by the grantor conveying same with acknowledgment of the payment in full of the purchase price. The answer offered to convey all the unsold portions of block 5 in the 40-acre tract to the plaintiff or any one designated by them.

It appears from the testimony that the contract of sale was made with. $100 paid as earnest money, and the deed was put in the bank in escrow to be delivered upon the payment of the balance of the $2,000 consideration. $1,160 was paid in cash, and the deed delivered to the appellant by the escrow bank. Déeds for the lots in block 5 were executed in blank and left with the bank to be filled in with the names of the purchasers thereof by the agent of plaintiff, who agreed to make the sales, and the money derived therefrom to be delivered to the plaintiff. Five of the lots were sold and the deeds made accordingly, the $175 realized therefrom being placed to the credit of Mr. Merchant, the grantor in the deed.

The cashier of the bank testified that, after the deed had been put in the bank in escrow, the grantor returned the same day and directed him to deliver the deed, which recited full payment of the purchase money to appellant, which was done. $1,170 in cash was paid, and the proceeds of the sale of five of the lots, $175, placed to the credit of the grantor in the bank, $1,345 in money. The cashier understood that the balance of the unpaid money was to be paid by the sale of the lots, five of which were in fact sold and the money put to the credit of the grantor. He did not understand that there was any specified time for the sale of the lots and said Mr. Alley agreed to sell the lots in the block reserved and turn the purchase money over to the grantor. He also testified that he was administrator of Mr. Merchant’s estate, and prior to his death he had given all his property and holdings to his wife, Allie Merchant; that he made no claim of any interest in the balance alleged to be due for the estate.

Mrs. Merchant testified that her husband died on April 15; that there was about $1,160 or $1,175 paid in cash of the consideration and some lots sold; that she supposed that Mr. Alley was to sell the lots for appellant, but did know that there was no note given for any amount of the purchase money. She stated she was not present when the sale of the lands was made, and had got her understanding of it from her husband and Mr. Butler, the cashier’

Alley testified that he had suggested the sale of the 40-aere tract of land and had introduced Mr. Yeach to the owner; that $100 was paid down to 'bind the bargain; that he knew of no written agreement of sale -between the parties. The deed was placed in escrow to be delivered upon the payment of the $2,000 according to the original contract; that he had heard of a second contract about 22 lots in one block of the tract of land platted to be sold and the proceeds turned over to the grantor; that Mr. Merchant told him that if he would agree to sell the lots, he would make the trade; that he did agree with Mr. Merchant to sell the lots, and thought it could be done in 30 days and the trade was made. The deeds to the 22 lots were executed in blank and left at the bank with the cashier, Mr. Butler, to insert the names of the purchasers of the lots, and he was further instructed to place the money derived therefrom to the credit of Mr. Merchant; said that Mr. Merchant was to accept the purchase money for the 40' acres, the proceeds from the sale of the 22 lots and the $1,160' or whatever amount was paid down, and said to- him, “I want you to sell these lots;” that he later secured an extension of 30 days for the sale of the lots, and that Mr. Yeach had paid him nothing whatever, as he was representing Mr. Merchant only in the sale of the lots.

The court rendered a decree against appellant for the alleged balance of the purchase money due, and from such decree this appeal is prosecuted.

The appellant insists that the decree is contrary to the great preponderance of the testimony, and the contention must be sustained.

The facts, as stated by the witnesses who knew of the transaction, are virtually undisputed. Mrs. Merchant, who was the owner of any claim for purchase money, if any had been due for the conveyance of the lands, knew nothing about the transaction of her own knowledge, and the deed, first placed in escrow and later delivered to appellant by direction of the grantor, J. F. Merchant, recited the full consideration paid. The three witnesses, who knew of the transaction, stated that the agreement required the payment of the certain amount of cash that had been received and the proceeds of the sale of the lots in the particular block of land, which were to be turned over by the agent appointed by Merchant to make the sale, the deeds to said lots being executed in blank and left with the cashier of the bank to fill in the names of the purchasers thereof, and the money deposited to the credit of the grantor.

Appellee insists that the testimony of the witnesses relative to the transaction was incompetent, because of the death of the grantor before the trial of the case, but his administrator was not a party to the suit, and such objection cannot be sustained. Nolen v. Hardin, 43 Ark. 317, 51 Am. Rep. 563; Stanley v. Wilkerson, 63 Ark. 556, 39 S. W. 1043; Blackburn v. Thompson, 127 Ark. 438, 193 S. W. 74.

The court erred therefore in the decree rendered, and at most could only have required the conveyance of the lots remaining unsold in the block of lands, the proceeds of the sale of which were agreed to be turned over in payment of part of the purchase money, which appellant offered to convey. The decree is accordingly reversed, and the cause remanded with directions to dismiss the complaint for want of equity upon the conveyance of the remainder of the lots agreed to be conveyed in settlement of the balance of the purchase money. It is so ordered.


author: Mehaffy, J.

text:
    Evans v. Cheatham.
    Opinion delivered February 2, 1931.

      J. B. Milham, for appellant.

      W. D. Swam and A. F. Auer, for appellee.
   Mehaffy, J.

Appellants, Charles Appleton and Cordie Appleton, his wife, were the owners of lots 17 and 18 in block 39, Mineral Heights Addition to the town of Mineral Springs, Arkansas. The Appletons had been indebted to appellee, :B. D. Cheatham, since 1924-, the indebtedness being’ secured by chattel mortgage. Only a small amount of this indebtedness had been paid when in 1928 a renewal note was given, and to secure the payment of this renewal note, the amount of which was approximately $64:0, the Appletons executed and delivered to appellee Cheatham a mortgage on the above described lots. «Cheatham delivered this mortgage to Ajppleton, who agreed to take it to the clerk’s office, have- it recorded, and pay the expenses for having it recorded. However, after the execution of the mortgage, the Appletons executed a mortgage to the Georgia State Loan Association and had it put on the record before Cheatham’s mortgage was recorded.

When the note of the Appletons to Cheatham became due, it was not paid, and Cheatham -brought suit in the Howard Chancery Court to foreclose his mortgage.

After suit was «brought, it was agreed between the Appletons and Cheatham that the Appletons would give Cheatham a quitclaim deed to the two lots covered by his mortgage, subject to the mortgage to the Georgia State Loan Association, for approximately $900. The Appletons claim that the lots were worth about $1,800.

On the same day that this quitclaim deed was made and delivered to Cheatham, the Appletons executed a deed of trust to the appellant, C. N. Evans. These conveyances were executed in the city of Hot Springs on the second day of December'. Cheatham mailed his quitclaim deed to the clerk of Howard County, and it was recorded on the fourth day of December. Appleton did not deliver the deed of trust to Evans, but immediately took it to the clerk’s office in Howard County, and had it put on record ahead of the quitclaim deed to Cheatham. This suit was brought by Cheatham to have the deed of trust to Evans canceled, alleging that it was a fraudulent conveyance and a cloud on his title.

The Appletons and Evans filed answer, denying that there was any fraud, and alleging that they were indebted to C. N. Evans in the sum of $500 and to Evans’ mother in the sum of $200, and that this deed of trust was givén' to secure this indebtedness.

The appellant, Evans, is a brother of Mrs. Cordie Appleton, and it was claimed that they owed her brother $500 and her mother $200.

At the time of the execution of the quitclaim deed Appleton told Cheatham that there were no mortgages or liens on the property or no indebtedness except $800 which they owed the Georgia State Loan Association and an insurance bill due of $24 and two back payments to the loan association of $26. This evidence is undisputed.

Appleton testified, however, that he told Cheatham he was going to secure his brother-in-law, Evans, but that he was going to pay this off. This is denied by Cheatham.

The Appletons do not undertake to show by the evidence what they owed Mrs. Appleton’s mother the $200 for. Appleton and Evans, however, testify that when they lived in Hot Springs Evans had a small grocery store and turned it over to Appleton, and Appleton operated it, agreeing to pay Evans for it sometime, but they don't say when. They testify also that they estimated the value of the groceries to be about $500. This deal for the grocery store, if made at all, was made sometime before the quitclaim deed, and there is no reason given why they had not given note and mortgage to Evans before this.

The indebtedness to the Georgia State Loan Association, together with the debt due Cheatham, was probably as much or more than the lots could have been sold for at the time.

The contention of appellants is that Cheatham gave up his security, delivered his mortgage and papers to Appleton, and agreed to take a quitclaim deed subject not only to the Georgia State Loan Association, but subject also to the deed of trust to Evans. In other words, that, when he had the security and a suit to foreclose was pending, and no defense to it, and the property of sufficient value to pay Cheatham’s debt and the debt of the loan association, without any reason he gave this up, dismissed his suit, and accepted a quitclaim deed subject to the indebtedness of both the loan association and the Appletons.

There is some conflict in the evidence, but it would serve no useful purpose to set it out at length.

The chancellor found in favor of the appellee and entered a decree canceling the mortgage from the Apple-tons to Evans, and this appeal is prosecuted to reverse the decree of the chancellor.

Appellants cite and rely on the case of Hempstead v. Johnson, 18 Ark. 123. It is true the court said in that case the circumstances of mere suspicion leading’ to no certain result would not be sufficient to establish fraud, but it was also said in that case that neither the law court nor the chancery court insisted upon positive and express proof of fraud; that courts of equity would grant relief upon the ground of fraud established by presumptive evidence.

They next call attention to the ease of Davis v. Jones, 67 Ark. 122, 53 S. W. 301. The chancery court in that case, however, found that the transaction was free from fraud, either actual or constructive, and the finding of the chancellor was affirmed by the Supreme Court.

The appellants call attention to a number of other cases which we do not deem it necessary to discuss. These questions have been discussed and determined by this court so often that we do not deem it necessary to refer to all of them or discuss them.

If the deed of trust in this case was not set aside, there is no question but what it would hinder, delay, and defeat Cheatham in the collection of his debt. Our statute provides that every conveyance made or contrived with the intent to hinder, delay, or defraud creditors or other persons, shall be void. Section 4874, C. & M. Digest.

“While the general rule is that a fraudulent intent on the part of the grantor is necessary to bring conveyances within the terms of the statutes, it is well settled that fraud may arise as an inference of law, and that, when a conveyance is made under such circumstances that the result must necessarily be to hinder and delay creditors, it will be presumed that such was the intent of the transferor in making it.12 R. C. L. 537.

As to whether the deed of trust in the instant case was fraudulent is a question of fact, and the finding of the chancellor is conclusive here unless contrary to the preponderance of the testimony. Mente & Co., Inc., v. Westbrook, 181 Ark. 96, 24 S. W. (2d) 976; Pattison Orchard Co. v. S. W. Ark. Utilities Corp., 179 Ark. 1029, 18 S. W. (2d) 1028; Sternberg v. Blaine, 179 Ark. 448, 17 S. W. (2d) 286; Cain v. Mitchell, 179 Ark. 556, 17 S. W. (2d) 282.

There is no other disputed question in the case. It is undisputed that the Appletons owed Cheatham; that the debt was secured by mortgage; that suit had already been brought for the purpose of foreclosing the mortgage ; that there was an indebtedness of $800 or $900 to the Georgia State Loan Association; that the property was insufficient to pay appellee after the payment of the Georgia State Loan Association if Evans’ mortgage is valid. In fact there is no dispute in the evidence except as to whether the conveyance to Evans was fraudulent.

The chancellor found that this conveyance was fraudulent, and his finding is not against the preponderance of the evidence. The decree is therefore affirmed.


text:
    Missouri Pacific Railroad Company v. Fowler.
    Opinion delivered February 2, 1931.

      B. E. Wiley and Bichará M. Byan, for appellant.

      Oscar Barnett, for Pruitt, and John L. McClellan and Verne McMillen, for Fowler et al., appellees.
   Mehaffy, J.

Appellees George W. Fowler and Westchester Fire Insurance Company instituted this action in the Hot Spring Circuit Court against appellant, Missouri Pacific Railroad Company, to recover damages for the alleged setting out of fire which destroyed appellee’s property.

The appellee, George W. Fowler, was the owner of a dwelling house in Barnett’s Suburban Addition to the city of Malvern. The value of the house was alleged to be $762.09. The appellee alleged that the fire originated from sparks from a locomotive engine operated by appellant on its track a short distance from said house.

The appellee, Westchester Fire Insurance Co., on January 20, 1928, issued its policy of fire insurance whereby it agreed to indemnify appellee Fowler against loss or damage by fire for a period of one year.

The fire occurred on November 23,1928. On the 13th day of July, 1929, the Westchester Fire Insurance Company paid George W. Fowler the sum of.$380 in settlement of its liability under its policy, and Fowler assigned and transferred to the Westchester Fire Insurance Company his claim against the Missouri Pacific Bailroad Company in the sum of $380.

The appellant,' on January 20, 1930, filed answer denying all the material allegations in the complaint, and alleged that the house burned by the negligence of plaintiff in not protecting it from fire hazards, and in not keeping the premises clear of fire hazards, and in not looking at and inspecting said building, and keeping same in a safe state from fire hazards, and in the condition in which the property was being’ kept. Appellant also alleged that Fowler and his agents and servants were negligent in not extinguishing the fire after discovering same, and in not using ordinary care in extinguishing same; and alleges that this was contributory negligence which barred appellees’ right to recover.

Appellees, on the 22d day of July, 1930, filed a demurrer to paragraph 2 of the answer in which it was stated that the allegations in reference to contributory negligence in said paragraph do not allege facts constituting a legal defense, and that said paragraph attempts to plead as a defense to this action the contributory negligence of the plaintiff which is not a bar to plaintiff’s right, and which is no defense to the allegations of the complaint. The court sustained the demurrer, and appellant excepted.

On the 7th day of April, 1930, appellee, Adam Pruitt, filed an intervention asking’ for damages ag’ainst appellant in the sum of $382.09, alleging that Fowler had settled with the insurance company and made the assignment to the company without authority. He also asked damages in the sum of $350) for destruction of household goods and personal property which was in the house at the time it was destroyed by fire.

Appellees, George W. Fowler and Westchester Fire Insurance Company, filed motion to dismiss intervention of Pruitt, and tlic court granted said motion in part, to which order the intervener excepted.

On the same day the appellant filed motion for continuance. Thereafter on April 8, 1930, plaintiff was permitted to withdraw his motion to strike intervention, and the defendant was given until next term of court to file another and supplemental answer to the intervention, and the cause was continued on motion of defendant and set for trial July 22, 1930.

On April 8, 1930, appellant filed answer to Pruitt’s intervention, denying the allegations in said intervention and pleading negligence of intervener and the owner. The Westchester Fire Insurance Company introduced the certificate of the Insurance 'Commissioner and the State Fire Marshal showing that it was a corporation under the laws of the State of New York and duly authorized to do business in Arkansas. George W. Fowler owned the dwelling house which burned, and Adam Pruitt was living in the house at the time. At the time of the fire there was insurance on the building, but Fowler had no interest in the household goods which were in the dwelling. These -belonged to Pruitt, the intervener.

The insurance company had paid Fowler $380, and Fowler had executed an assignment to the Westchester Fire Insurance Company. The railroad was about 40 steps from the house that was burned.

Appellee Fowler, the owner of the house, was not at the fire, and did not know how the fire originated.

Appellee Pruitt, who lived in the house, worked for the owner and did not pay any rent on the house. The house was burned in November, 1928, and the owner wrote to the appellant about January 4, 1929.

Adam Pruitt, the intervener, who lived in the house at the time it was destroyed by fire, said the house was about 30 or 35 steps from appellant’s tracks. When the fire caught, Pruitt and his wife had not gone to bed. When he discovered a light shining in the yard, he went out of the house and looked, and there was a blaze on the top of the house on the southeast corner. The wind was high, and shingles were old and dry. Witness knocked a window out and got some of his things out of the house. The house was totally destroyed. This witness testified that they did not have any fire in the house that night; that it was not cold that night. He and his wife were sitting in the hall, and there was no fire in the hall. There had not been any fire in the heating stove but had been a fire in the kitchen earlier in the night. The freight train passed about 20 or 25 minutes before he discovered the fire. There was not any fire between the house and the railroad track, and the wind was blowing in the direction of the house. Witness lost nearly all of his household goods. The fire damage was $460. The fire caught somewhere between nine and eleven o’clock p. m. witness thought.

Other witnesses testified that the fire was discovered about 30 minutes after the train passed.

Witnesses for appellant testified that the engines that passed the house which was destroyed that night were equipped with wire netting spark arresters; that the spark arresters were in good condition, and that sparks could not have been thrown from the engines on to the house and set it afire.

The freight train which passed the place a short while before the fire was discovered, the train dispatcher said, left Malvern at 11:18 and had 66 cars in the train pretty heavily loaded.

A number of witnesses testified that there was no fire between the house and the railroad track; that the spark arrester was in good condition; that it could not throw live sparks the distance from the track to the house; and the engineer and fireman operating the train testified that it was not throwing sparks.

There was a verdict and judgment for Fowler and the Westchester Fire Insurance Company for $650 and a verdict and judgment in favor of Adam Pruitt for $250. Motion for a new trial was filed, overruled, and exceptions saved, and tlie case is here on appeal.

The question, whether appellant was negligent in the operation of its train is not involved. If the evidence is sufficient to warrant! the jury in 'finding that the fire that destroyed the property was caused by sparks from a locomotive, the defendant would be liable.

“All railroads which are now or may be hereafter built and operated either in whole or in part in this State shall be responsible for all damages to persons or property under such regulations as may be prescribed by the General Assembly.” Section 12, art. 17, 'Constitution of Arkansas.

The statute provides that when fire from a locomotive destroys property, the defendant cannot plead or prove that it was not the result of negligence or carelessness.- It is only necessary under the statute to show that the fire which resulted in the injury originated or was caused -by the operation of the railroad. Section 8569, C. & M. Digest.

The house owned by Fowler, which was destroyed by fire, was 40 or 50 steps from the railroad track. Somewhere near eleven o ’clock in the nighttime a freight train of 66 cars passed this house where Pruitt lived, heavily loaded and the fire was discovered on the roof of the building next to the railroad track about 20 or 301 minutes after the freight train passed. The engine pulling the freight train was a coal burner. There was a strong wind blowing from the railroad tracks in the direction of the house. There was no fire in the building and had not been that day except the fire in the kitchen, which had been out some time. Pruitt and his wife had not g’one to bed, and they discovered the fire on the roof as stated, shortly after the freight train passed.

It is earnestly contended by the appellant that there is no evidence that the fire which destroyed the dwelling house and household goods was caused by the negligence of the appellant. Of course, it is immaterial whether the appellant was guilty of negligence or not. But appellant argues that there is not a single witness who even comes close to testifying that the fire originated from sparks thrown from appellant’s locomotive. It is true that no witness testified that the engine was throwing sparks. The evidence, however, is undisputed that the heavily loaded freight train passed on the track near the house, and that shortly thereafter a portion of the roof on the side of the house next to the railroad was discovered to be on fire, and there was no other way, according’ to the evidence, in which this fire could have originated.

Appellant correctly contends that the burden was upon the appellees to show by some fact or circumstance that the fire originated from the locomotive.

Appellant calls attention to and relies on Blanton v. Mo. Pac. Rd. Co., 182 Ark. 543, 31 S. W. (2d) 947. In that case we said: “When the evidence established the fact that a train has passed and shortly thereafter a fire was discovered burning nearby, it is sufficient to .justify a finding that the train put out the fire, but it does not justify the court in telling the jury that there is a presumption that it did. The jury are to find from the evidence, direct and circumstantial, whether the railroad company set out the fire. ’ ’

“We have steadily adhered to the rule that, fin the absence of direct and positive testimony as to the origin of the fire which consumes inflammable property situated near a railroad track soon after the passing of a locomotive, the inference might be drawn that the fire originated from sparks from the passing locomotive.’ ” Reeves v. St. Louis-San Francisco R. Co., 171 Ark. 1176, 287 S. W. 166; Chicago, R. I. & P. Ry. Co. v. National Fire Ins. Co., 151 Ark. 218, 235 S. W. 1006; St. Louis-San Francisco R. Co. v. Dodd, 59 Ark. 317, 27 S. W. 227.

When passing on the sufficiency of the evidence to support the verdict, we must give the evidence which tends to support the verdict its highest probative value.

When fire is discovered shortly after a train has passed, and the proof does not establish some other origin of the fire, the jury is justified in finding that the fire originated from sparks from the engine. Helena Southwestern Ry. Co. v. Coolidge, 169 Ark. 552, 275 S. W. 896; Chicago, R. I. & P. Ry. Co. v. Cobbs, 151 Ark. 207, 235 S. W. 995.

The evidence in this case was sufficient to justify the jury in reaching the conclusion that the fire originated from the locomotive.

It is next contended by appellant that the court erred in sustaining the demurrer of appellees to the second paragraph of appellant’s answer as to the plea of contributory negligence.

Appellant cites and relies on Clark v. St. L. I. M. & S. R. Co., 132 Ark. 257, 201 S. W. 111. In that case this court said that the instruction on contributory negligence was proper, but the court said in that case: “For the destruction of, or injury to, property caused by such omissions on the part of servants and employees of railway companies, such companies would be liable, provided such omissions constituted negligence upon the part of such employees, but in that case the companies would be liable, not under the statute, but under their common law liability for injury and the consequent damage caused by their negligence.”

In that case the negligence charged against the railroad company was that its servants and employees carelessly and negligently kindled the fire on the right-of-way and negligently allowed it to spread and. burn and consume plaintiff’s property. The railroad company contended that the plaintiff had an agent to look after his mill, and that he knew of the fire burning near the mill, and knew, or should have known, that the mill was exposed to destruction by fire, and that he failed to use ordinary care to prevent same.

There is no question of negligence in the instant case. In the last case referred to the court also said, speaking of the act making railroad companies liable for fires originating from its locomotives: “Yet, when construed as a whole, it shows that'the intention of the Legislature to make the railway company liable absolutely in damages for injury to or destruction of property caused by such extraordinary hazards as the operation of a locomotive engine, machinery, trains, cars, or other things, when used or operated upon the railroad, or by any of their servants or employees in the operation of such machinery upon the railroad tracks, or by the positive affirmative act of the servants or employees of railway companies in the operation of the railroad.”

As stated in the case relied on by appellant, the statute makes the railroad company absolutely liable for the destruction of property caused by the operation of its locomotive. Moreover, the plea of contributory negligence did not state any facts constituting the negligence of the appellee, but mere conclusions. The answer to the intervention had the same plea of contributory negligence, and no demurrer was filed to it.

If the fire originated, as contended by appellees, from sparks from the engine, we are unable to see how any act of the appellees could in any way contribute to setting out the fire.

It is true appellant also claims that appellees were guilty of contributory negligence in their failure to prevent the destruction of the property after the fire was discovered, but the evidence not only does not show this, but it shows there was no contributory negligence.

At the time the fire originated, the roof of the house was dry and evidently caught very easily, but, when appellee, Pruitt, discovered it, he could not extinguish it, and the evidence shows that he saved all of his property that he could save.

The rule stated in Elliott on Railroad, vol. 3, 775, is as follows: “Where there are statutes in force imposing an absolute liability upon a railway company for fires set by its locomotives, the question of the owner’s contributory negligence is generally held to be immaterial and to have no effect on his right to recover. We do not believe, however, that such a strict rule, even where there is an absolute statutory liability, is entirely just. There may be cases where, after the property is set on fire by the railway company, the owner could by slight effort save the property from destruction, and in such cases it seems to us that it would be unjust to compel a railway company to pay an owner damages notwithstanding an absolute statutory liability.”

There is in this case, however, no question of contributory negligence, and the 'undisputed proof shows that the property owner did what he could after he discovered the fire.

In one of the cases cited by Elliott on Railroads it is said: “ ‘~We are at a loss to see how the doctrine .of contributory negligence can be invoked as a defense where there is no law requiring precautionary action on the part of the party damaged, and no question of negligence on the part of the corporation can be made or adjudicated.’ Of course, if'a party should knowingly or purposely place his property in a situation where sparks from a passing engine would be likely to ignite and burn it, he could not recover in case of its destruction; but such an act would scarcely come within the definition of contributory negligence.” Union Pac. D. & G. Ry. Co. v. Williams, 3 Colo. App. 526, 34 Pac. 731.

■ If thé owner of property should stand by and wilfully or purposely permit his property to be destroyed by a fire set out by a locomotive, he could not recover, but, as' stated by the Colorado court, this would scarcely come within the definition of contributory negligence. Of course, the property owner’s1 conduct could be such that it would be his fault altogether that it was destroyed, but it would not be contributory negligence. Contributory negligence means negligence on the part of the injured party which contributes to the injury caused by the negligence of the other party. In this case it is wholly immaterial whether the railroad company .was guilty of negligence or not. If it set out the fire, it is liable for damage done by the fire.

It is next contended by the appellant that the court erred in permitting the owner to testify as to the value of the personal property destroyed. Any person, owner of personal property, may testify as to its value. Witnesses testifying to the value of property merely give their opinion. There was no error in permitting the owner to testify as to the value of his property.

It is next contended that the case should be reversed because the court permitted Pruitt to testify to a conversation and an offer to compromise. It is contended that this testimony was highly prejudicial; that the section foreman was not an officer or agent of the company, and had no right to make any offer of settlement or to bind the railroad company in any manner. It is contended that the effect of this testimony was to tell the jury that the appellant had admitted liability. We do not agree with appellant in this contention.

The witness, U. Gr. Heath, testified that he was the section foreman at Malvern, and had been employed in that capacity for five years; that he went down to Pruitt’s next morning- after the fire; that it was his duty to report fires along- his section; and that he measured to the railroad track from the nearest point of the house; that he does not remember anything- that was in his report, but he knows he made it because it was his duty to do so. He denied all the statements made by Pruitt with reference to the conversation, but Pruitt’s statement does not tend to prove any offer of-compromise, and, of course, would not be objectionable as evidence of an offer of compromise. There is no claim on the part of Pruitt that the section foreman offered him anything, and we do not think the evidence of Pruitt was prejudicial.

It is next contended by appellant that the court erred in permitting- Mary Pruitt, the wife of Adam Pruitt, to testify in the case. "When Mary Pruitt was offered as a witness, objection was made because she was the wife of Adam Pruitt, one of the parties to the suit, and the court stated she might testify as to Fowler, but stated that, being the wife of Adam Pruitt, her testimony could not be considered only as it would relate to the claim of the plaintiff, George Fowler. /Certainly, the appellant could not deprive the plaintiff of the use of a witness because the witness happened to be related to the intervener. Pier testimony was incompetent for or against Pruitt.

It is next contended that it was error to permit witness Plardy Hill to testify as to the replacement value of a new house. This testimony was competent, not as showing that the house was of the value that a new house would cost, but was one of the means of proving the value, and it was evidently not understood by the party or the jury as establishing the cost of a new house as the value of the old one. The evidence showed that the house had been built five or six years, and, of course, nobody believed that it was of the same value that it would cost to build a new house, and the value fixed by the jury was very much less than the evidence of Hill showed a new house would cost.

Appellant argues that instruction one, given at the request of the appellee, was erroneous because it told the jury railroad companies were liable for damages to property caused by fire from the operation of locomotives, regardless of whether said fire was the result of negligence on the part of the company or not. There is no question of negligence involved in this case. If the railroad company set out the fire by the operation of its locomotive, it is liable whether it was guilty of any negligence or not. Another objection appellant urges to the instruction is that it left out the defense of contributory negligence. What we have already said answers this objection.

Appellant’s objection to instruction No. 2 is that there is no evidence that the fire was caused by defendant’s locomotive.

Appellant objects to instruction No. 3, given at the request of appellee, and urges that it was an instruction on the weight of evidence. In this instruction the court simply told the jury that the setting out of the fire might be proved by circumstantial evidence if they believed from all the facts and circumstances that the fire was set out by sparks, etc., and told them in this instruction that they did not have to prove this by an eyewitness. This was a correct instruction. If it had to bo proved by an eyewitness, then one could not recover for the destruction of his property unless some person saw the fire originate.

To support its contention with reference to this instruction, appellant cites and relies on Blanton v. Mo. Pac. R. Co., 182 Ark. 543, 31 S. W. (2d) 947. We held in that case that it was sufficient to show that the train passed and shortly thereafter a fire was discovered burning nearby, but we held that it was improper for the court to tell the jury that there was a presumption that the fire was set out by the railroad company.

In the instant case the court did not tell the jury there was any presumption, but told the jury that the setting out of the fire might be proved by circumstantial evidence.

It is next contended that the court erred in refusing to give appellant’s instruction No. 7a. This instruction was on the question of contributory negligence, and there is no evidence upon which to base this instruction.

The same is true with reference to instruction No. 8a. It in effect told the jury that appellees could not recover if they were guilty of contributory negligence. There is no evidence in the record justifying an instruction on contributory negligence. The evidence in the case shows on the part of appellees that the freight train of 66 cars, heavily loaded, passed the house shortly before the fire was discovered, and that the wind was blowing from the railroad tracks toward the house.

Appellant’s witnesses testified that the engine was equipped with a wire netting- spark arrester in good condition, and that it could not throw out sparks and set fire to the house. These were questions of fact properly submitted to the jury, and the verdict of the jury, where there is any substantial evidence to sustain it, cannot be disturbed by this court.

The judgment of the circuit court is affirmed.


author: McHaney, J.

text:
    Smith v. State.
    Opinion delivered February 2, 1931.

      J. D. Benson, for appellant.

      Hal L. Norwood, Attorney General, and Pat Mehaffy, Assistant, for appellee.
   McHaney, J.

Appellant was convicted on a charge of manufacturing liquor and sentenced to one year in the penitentiary. For a reversal of the judgment and sentence against him he urges the following assignments of error:

1. That the court erred in permitting the State’s witness Jacobs to testify that appellant had testified in the examining trial that he had boug'ht the liquor (home brew) and did not make it. Conceding that it was erroneous, it was harmless, as appellant so testified himself in the circuit court. We fail to see -where appellant was prejudiced by the testimony of witness Jacobs.

2. That the court erred in refusing to permit his witness, Dr. Higgins, to testify that he had prescribed home brew for appellant’s wife. No error was committed in so ruling. Appellant’s defense was that he bought the home brew and did not manufacture it, and we are unable to see how the fact that Dr. Higgins had prescribed it for appellant’s wife would throw any light on his guilt or innocence of the charge.

3. That the court erred in permitting the prosecuting attorney to ask appellant’s witness Burns, on cross-examination, about the number of times he had been arrested, and about the raiding of his father’s house by the officers. There was no error in this regard as the prosecuting attorney had the right to ask the witness about these matters on cross-examination as they tend to test his credibility as a witness. Wilson v. State, 177 Ark. 885, 7 S. W. (2d) 969.

4. That the court erred, in refusing to permit appellant to prove that witnesses for the State had caused him to be arrested bv Federal authorities on the same charge, and that a prosecution was then pending against him in the Federal court. This offered evidence was inadmissible. The circuit court had jurisdiction of appellant, and the fact that a case was pending against him in the Federal court for the same offense did not tend to show or prove his innocence of the charge, but rather that other prosecuting officials believed in his guilt. Both jurisdictions may try, convict and punish for the same offense. Kyser and Lackey v. State, 178 Ark. 1167, 13 S. W. (2d) 603.

5. Finally, that the verdict is not supported by the evidence. It is undisputed that the officers found 10 or 12 gallons of home brew in appellant’s house,-that it was about ready to bottle, that about 60 quart bottles were found freshly washed, ready to receive the brew, that a number of bottle caps and a capping machine were also at hand. When appellant was arrested, he admitted that he made the brew for his sick wife. He now says that he bought it, and produced some witnesses who say they were present and saw him buy it. The jury did not believe appellant and his witnesses. The above evidence was amply sufficient to support the verdict, and this court does not pass on the weight of the evidence nor the credibility of the witnesses. Affirmed.


text:
    Sisk v. Becker Rooking Company.
    Opinion delivered February 2, 1931.

      M. R. Perry, for appellant.

      H. B. Stidbblefield and W. R. Morrow, for appellee.
   McHaney, J.

The only question presented for our determination by this appeal is whether an action pending in the chancery court may be set for trial and tried by the court before the expiration of 90 days, after issues joined, on the application of either party, with notice to opposing counsel. Section 1, Acts 1929, p. &7 provides: “Actions prosecuted by equitable proceedings shall stand for trial on any day that the court meets in regular or adjourned session, where the issues have been joined for ninety days, but where they had not been so joined, though by the provisions of §§ 1208 and 1209 they should have been, the party in default, as to time, shall not be entitled to demand a trial; provided, however, that in all actions now pending or hereafter brought, upon application of any party, after issues joined, the court or chancellor in vacation may, on notice to opposing counsel or guardians ad litem, set the action for trial, or if the court finds that the proof has then been completed it may try the action on any earlier date.”

The proviso in the above section authorizes the very thing that was done in this case. The court found that the issues were joined, and, on application of appellees, with notice to counsel for appellants, set- the case for trial within 90 days. We must indulge the conclusive presumption that the evidence heard justified the court in all orders made, as the evidence is not brought into the record by bill of exceptions or otherwise. The act under consideration was passed for the purpose of eliminating delay, and making it possible for either party to get a trial without waiting 901 days after issue joined. This will be readily seen to be one of the purposes of the act by reading the emergency clause, § 3.

Affirmed.