text:
    Cumnock v. City of Little Rock.
    Opinion delivered July 3, 1922.
    1. Municipal corporations — powers.—Municipal corporations can exercise no powers except those conferred upon them by the statute by which they are constituted, or such as are necessary to the performance of their corporate powers and duties.
    2. Hospital — power op city to erect. — Under Crawford & Moses’ Dig., § 7494, authorizing municipal corporations to make and publish such by-laws, not inconsistent with State laws, as seem necessary to preserve the health and improve -the comfort of such corporations, and the inhabitants thereof, a city may by ordinance provide for the erection of a city hospital.
    Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor;
    affirmed.
    STATEMENT OE EACTS.
    Frank Cumnock, a citizen and. property owner in the city of Little Rock, Ark., brought this suit against the city of Little Rock and all the officers thereof, including the members of the city council, to restrain them from issuing any warrants or certificates of indebtedness or in any wise proceeding further with the erection of a city hospital.
    The complaint alleges that the common council of the city of Little Rock passed an ordinance appropriating the sum of $200,000 for the purpose of completing the new city hospital, and that the 'mayor and other city of-' ficials are proceeding to let a contract for the' completion of á new city hospital.
    •-Agéneraldemurrer-was filed to this complaint upon the ground that the city of Little Rock-had the authority to construct á city hospital and to incur indebtedness therefor, and that on this account the complaint does state a cause of action.
    The chancery court sustained the demurrer, and, the plaintiff having declined to plead further, his complaint was "dismissed' for want of equity.
    The pláiiitiff has duly prosecuted an appeal to this - court.

      Rogers, Barber S Henry, for appellant.
    A municipal corporation has no powers except those expressly conferred by the Legislature and those necessarily or fairly implied as incident to or essential for the attainment of the purposes expressly declared. 130 Ark. 337; C. & M. Digest, sec. 7494; 58 Ark. 270; 121 Ark. 606; 116 Ark. 125; 70 Ark. 4.

      John F. Clifford, for appellees.
    A city has those powers which, first, are granted in express words; second, those necessarily or fairly implied, and, third, those essential to the declared objects and purposes of the corporation'. 58 Ark. 270.
    It is not possible to argue that because the word hospital is not employed in some statute now in force, the power does not exist to build or maintain one. The course of legislation as appears in the statute books as well as the custom of this and other cities in the State since the Civil'war, all lead to the conclusion that the city has the right to erect and maintain such institutions to care for the poor when ill, and to protect the other inhabitants against those who are diseased. C. & M. Digest, $$ 7458, 7490, 7744, 7752, 7593. See also 10 N. W. (Mich.) 133; 100 Ark. 587; 67 Ark. 530; McQuillin on Ordinances, par. 439; Id. par. 445; 70 Ark. 463.
   Hart, J.

(after stating the facts). The sole issue raised by the appeal is whether or not the city of Little Rock has the power to build a city hospital.

' In Spaulding v. City of Lowell, 23 Pick. (Mass.) 71, Chief Justice Shaw, speaking of municipal corporations, said: “They can exercise no powers but those which are conferred upon them by the act by which they are constituted, .or such as are necessary to the exercise of their corporate powers, the performance of their corporate duties, and the accomplishment of the purposes of their association. This principle is fairly derived from the nature of corporations, and the mode in which they are organized, and in which their affairs must be conducted.”

In Ottawa v. Carey, 108 U. S. 110, the Supreme Court of the United States, speaking through Chief Justice Waite said: “Municipal corporations are created to aid the State Government in the regulation and administration of local affairs. They have only such powers of government as are expressly granted them, or such as are necessary to carry into effect those that are granted. No powers can be implied except such as are essential to the objects and purposes of the corporation as created and established. 1 Dill, on Mun. Corp., par. 89, 3rd Ed., and cases there cited. To the extent of their authority they can bind the people and the property subject to their regulation and governmental control by what they do, but beyond their corporate powers' their acts are of no effect.”

On the same point in Dillon on Municipal Corporations, 5th Ed.-vol. 1, par. 237 (89), it is said: “It is a general and undisputed proposition of law that a municipal corporation possesses and can exercise the following powers, and no others: First, those granted in express words; second, those necessarily or fairly implied in or incident to the powers expressly granted; third, Ihose essential to the accomplishment -of the declared objects and purposes of the corporation, not simply convenient, but indispensable. Any fair, reasonable, substantial doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied.”

The principle laid down above is one of universal application throughout the United States and has been recognized and applied by this court in several cases according to the particular facts of each case.

■ Sec. 7529 of Crawford & Moses’ Digest contains a specific enumeration of powers granted by the Legislature to municipal corporations. It is conceded that there is no express power given by the statute to municipal corporations to construct and maintain city hospitals.

Sec. 7493 of Crawford & Moses’ Digest provides that municipal corporations shall have the power to make and publish ordinances not inconsistent with.the laws of the State for carrying into effect or discharging the powers or duties conferred by the provisions of the act.

Sec. 7494 of the Digest concludes as follows: “And they shall have power to make and publish such by-laws and ordinances, not inconsistent with the laws of this State, as to them shall seem necessary to provide for the safety, preserve the health, promote the prosperity, improve the morals, order, comfort and convenience of such corporations and the inhabitants thereof.”

This clause, or a similar one, is contained in the statutes of many of the States and is usually called the “general welfare clause.” Reliance is placed upon this clause to sustain the decree of the chancery court.

Counsel for the plaintiff insist that this contention is against the authority of Tuck v. Town of Waldron, 31 Ark. 462, but we do not agree with them. In that case the ordinance prohibited the sale of ardent or vinous liquors in any quantities, and by any person without a corporate license. Under the section of the statute then in operation, corresponding to section 7529 of Crawford & Moses ’ Digest, municipal corporations were only authorized to license, regulate, tax, or suppress tippling houses. The court held that the particular enumeration of powers granted under the statute excluded the idea of greater powers of the same character which were granted under the “general welfare clause.”

This is an application of the rule that where the statute specifically enumerates various powers which the common council may render effectual by means of ordinances, this enumeration is an implied exclusion of the right to act otherwise than as specifically directed. In other words, the statute having prescribed what powers the common council might exercise with regard to intoxicating liquors, additional powers could not be implied from the “general welfare clause.”

■ If municipal councils could exercise no authority except with regard to the particular things enumerated in sec. 7529 of Crawford & Moses’ Digest, it is manifest that no useful purpose could be served by enacting the general welfare clause. The purpose of the general welfare clause was to extend the powers of the city in addition to those specifically enumerated to other things which are necessary to accomplish the purposes of municipal government as explained above in the quotations from Dillon and the decisions of the Supreme Court of the United States and of the Supreme Court of Massachusetts.

As we have already said, the principles announced by those authorities have been expressly upheld and applied by this court according to the peculiar facts of each case.

In the Town of Jacksonport v. Watson, 33 Ark. 704, in the application of the principle, it was held that municipal corporations have no authority to expend the corporate funds in establishing and operating free ferries without the limits of the corporation, to promote trade, commerce, etc. No argument is necessary to show the correctness of this decision. The establishment of a free ferry was not necessary to accomplish any purpose of municipal government.

Again, in Russell v. State, 52 Ark. 541, it was held that a municipal council has no power to appropriate money to help erect a county courthouse. The reason is that a county courthouse is a building provided for the use of the county officers in discharging their duties and for keeping and preserving the public records of the county. Such a building is not devoted to any purpose of municipal government, and for that reason the city could not appropriate money to help erect it.

Again, in Newport v. Railway Company, 58 Ark. 270, it was held that an incorporated town has no power to contract for the construction of a levee, nor to bind itself to pay therefor. The building of a levee is not indispensable to the purpose for which municipal corporations are organized in this State, and for that reason it would be necessary for an express grant of power to enable a municipal corporation to construct a levee for the purpose of protecting its inhabitants from high waters.

In Torrent v. Common Council of Muskegon, 47 Mich. 115, 41 Am. Repts. 715, it was held that, unless forbidden by its charter, a city may not be enjoined from erecting a suitable city hall. Judge Campbell, who delivered the opinion of the court, said: “If cities were new inventions, it might with some plausibility be claimed that the terms of their charters, as expressed, must be the literal and precise limits of their powers. But cities and kindred municipalities are the oldest of all existing forms of government, and every city charter must be rationally construed as intended to create a corporation which shall resemble in its essential character the class into which it is introduced. There are many flourishing cities whose charters are very short and simple documents. Our verbose charters, except in the limitations they impose upon municipal action, are not as judiciously framed as they might be, and' create mischief by their prolixity. But if we should assume that there is nothing left to implication, we should find the longest of them too imperfect to make city action possible.”

“ We have had occasion several times to refer to the historical character of municipal institutions, and to the duty of courts to read all laws and charters in that light. ’ ’

In discussing the subject in Clark v. Inhabitants of Brookfield, 81 Mo. 503, 51 Am. Repts. 243, the Supreme Court of Missouri said: “From these, as well as other, provisions of the statutes it will be seen that a vast number of powers and duties are imposed upon the trustees, which contemplate the various officers and departments of administration and business, incident to a complete and efficient municipal organization, having charge of and conducting its affairs for the benefit of the inhabitants. A building suitable for the accommodation of the town officers and records, and for the preservation of its necessary property, is a reasonable want, resulting from the fact of its corporate existence as a town. The right to erect such a structure is incidental to the powers expressly granted, or essential to carry out the objects of the corporation. State v. Haynes, 72 Mo. 377. Accommodations of some sort for.the departments of the town government must, at all times, be possessed and maintained, as disclosed in the evidence of this case. The board must have lawful authority to erect suitable buildings for the conduct and transaction of its necessary affairs, on land which it is authorized to purchase and hold for the benefit of the town, otherwise it would be not only without the power to provide for its-daily wants,'but without the power incident to the proprietorship of realty, that is, of improving and devoting it to its own use and benefit. (Citing authorities).” To the same effect see Eastman v. Meredith, 36 N. H. 284, 72 Am. Dec. 302; Bates v. Bassett, 60 Vt. 530, 1 L. R. A. 166; Wheelock v. City of Lowell, 196 Mass. 220, 12 Ann. Cas. 1109 and note; 19 R. C. L. par. 85, p. 780 and note; and 26 L. R. A. (N. S.) 426, 427.

•In Spaulding v. Lowell, 23 Pick. (Mass.) 71, and Wartman v. Philadelphia, 33 Pa. 202, it was held that cities and towns by virtue of their general powers have authority in their corporate capacity to build a market house and to appropriate money therefor.

Without approving these last-two decisions, it is undoubtedly true that a municipal corporation may erect a city or town hall and appropriate its money therefor under the general welfare clause of sec. 7494 of the Digest quoted above.

We are also of the opinion that the power to erect a city hospital is a necessary incident of municipal life. In a growing city, a city hospital may be necessary for the preservation of the public health and the care of sick paupers. We can see no difference in principle between the right of a city to erect and maintain a hospital and to erect and use city halls, jails, and the like. Most cities of any considerable magnitude have city hospitals subject to the regulation of its own local authorities. It is true there is express statutory authority to erect them in many of the States, but we are also of the opinion that such authority is essential to carry out the object' and purpose of organizing municipal corporations.

A municipality is a governmental agency, and in cities the erection of hospitals to preserve the public health and to care for indigent people within its borders is highly essential and may be absolutely necessary.

It results from the views we have expressed that the city had the power under the general welfare clause to erect a city hospital, and the decreee of the chancery court must therefore be affirmed.


source: Caselaw Access Project

author: McCulloch, C. J. Humphreys, J.

license: Public Domain

text:
    St. Louis-San Francisco Railway Company v. Lewis.
    Opinion delivered July 10, 1922.
    1. Public service commissions — review op orders. — Though the Railroad Commission is an administrative body, its actions in the regulation and control of public utilities are quasi judicial, and the circuit court on appeal acts judicially in the determination of the correctness of the orders made by the commission.
    2. Railroads — -depot—reconstruction.—Evidence heard by the Railroad Commission, on petition under Acts 1921, No. 124, for the construction of a new railway depot, held to establish that the plans for the reconstruction of the old depot submitted by the railway company were sufficient to provide adequate facilities, unless it was necessary to remove the depot to another location.
    3. Public service commissions — necessity op removal op depot.— Where the Railroad Commission rejected the railway company’s plans for reconstruction of its depot, without determining whether the removal of the depot to another place was necessary, the court, on reversing the order of the circuit court affirming the order of the Commission because the plans for reconstruction were sufficient unless removal was necessary, will not determine the question of removal, leaving that question to be determined in the first instance by the Railroad Commission.
    Appeal from Pulaski Circuit Court, Third Division; Archie F. House, Judge;
    reversed.
    ■ W. T: Evans and Warner, Hardin & Warner, for appellant.
    The Railroad Commission is a ministeral body. In order to sustain the order made, it must appear that the facilities offered by the company are inadequate and unreasonable. 85 Ark, 12; Id. 284; 170 IT. S. 269; 200 IT. S. 562. The Commission cannot act arbitrarily. Cases supra. The facilities proposed by the company are in every way adequate and reasonable, and far better than those , in some cities of three times the population of Fayetteville.
    The reasonableness of the order is a question for the court to determine. 206 IT. S. 1.
    The order of the Commission is repugnant to the Fourteenth Amendment to the Constitution of the United States, and to sec. 8, art. 2 of our Constitution.

      J. V. Walker, for appellee.
    The Commission had power to order the construction of a new building and to prescribe the kind and capacity thereof, and the material to be used in the construction. St. L. S. W. By. Go. v. Stewart, ms. op.
    The findings of the Commission are supported by the evidence. A comparison of the earning by the company at Fayetteville with cities much larger emphasizes the reasonableness of the findings of the Commission. Judicial notice of the population of cities will be taken. 31 L. R. A. 726; 16 L. R. A. 836; 15 L. R. A. 561; 47 L. ed. 346.
   McCulloch, C. J.

This appeal involves a controversy which arose in a proceeding instituted against appellant before the Railroad 'Commission of Arkansas concerning the building of a new station at Fayetteville. Appellees, citizens of Fayetteville, filed a petition before the Railroad 'Commission asking that appellant be required to construct and maintain an adequate building as a depot and station house for passengers and freight. Appellant appeared and responded to the petition, proposing to remodel the building now in use as a station and to improve and enlarge the facilities in that respect.

Appellant furnished plans and specifications of the improvements to be made, which contemplated the use of the walls and foundation of the old building, so far as the same could be used, and extensive enlargements of the building. The estimated cost of the contemplated improvements was shown to be about $68,000.

The Commission, after hearing the evidence and viewing the premises, made an order rejecting the plans proposed for repairing and improving the present passenger station at Fayetteville, and directing that appellant “file with this 'Commission'on or before the first day of January, 1922, plans for the erection of a new passenger station at Fayetteville, Arkansas, said station to be constructed of brick and the plans to provide for suitable and adequate waiting-rooms for white and colored passengers, with a modern heating plant, said station to be in keeping with the importance of the city of Fayetteville and the business transacted by the railroad company at said station.”

The order of the Commission concluded with a recital that jurisdiction of the matter was retained by the Commission “for the purpose of making a final order, or orders, for the erection of said passenger station after the plans have been submitted and approved, and for ■such further orders as may appear just and necessary.”

The company appealed from this order to the circuit court of Pulaski County, and the cause was there heard on the record made before the Commission, the trial resulting in a judgment of the circuit court affirming the order of the Commission.

These proceedings were instituted and prosecuted before the Commission pursuant to the statute (act No. 124, Acts of 1921) giving jurisdiction to the Railroad Commission and providing for an appeal to the circuit court from the orders of the Commission, and also an appeal from the circuit court to this court.

The Railroad Commission is an administrative body, but its actions in the regulation and control of public utilities are ^¿«si-judicial, and the circuit court on appeal acts judicially in the determination of the correctness of the orders made by the Commission. St. L. S. W. Ry. Co. v. Stuart, 150 Ark. 586.

There is no conflict in the statements of the witnesses in regard to the facts, though different deductions may be drawn from some features of the evidence.

Fayetteville is a city of about 5,500 inhabitants, and the State University is located in the western side of the city, the business part of the city being situated on the east side. Dickson Street, running east and west, is the one principally traveled between the University and the business district, and the railroad station is situated at the intersection of appellant’s railroad tracks with this street, the station being on the east side of the tracks and on the north side of Dickson Street. There is a considerable residential section west of the railroad, and the travel along Dickson Street is heavy.

The undisputed testimony shows that there is considerable congestion in travel at the railroad crossing on account of the numerous tracks and frequent passage of trains — main line trains, and freight cars being switched.

There are six side-tracks crossing ‘Dickson Street east of the station.

The present building is about forty years old, and is constructed of brick with stone foundation. It is thirty feet wide and one hundred seventy-two feet long, sixty-seven feet on the south end being devoted to passenger facilities, and the remainder to freight. There is a platform twenty feet wide on the west side of the station, running its full length, but a bay window extending out from the building narrows the space so that it is difficult for passengers to pass along there when trains are receiving or discharging passengers.

One of the side-tracks east of the station runs parallel with the building and cuts off the approach to the east side of the building. This situation is caused by the fact that the building is- used for freight purposes, and it is necessary to have a track running close to the platform of the freight station to receive and unload freight.

Most of the testimony introduced by the petitioners was directed to the state of congestion on account of the numerous tracks and the amount of traffic along Dickson Street, and also the insufficient approaches to the station building and the insufficiency of the platform.

It is not contended, on behalf of appellant, that the present facilities are adequate or suitable to the necessities of the railroad traffic and business at the city of Fayetteville. The contention is that the plan of reconstructing and enlarging the old building, separating the freight station from the passenger station and changing the location of the tracks, will be amply sufficient to afford adequate and convenient facilities in keeping with the railroad business at that place, and that the construction of a new building is entirely unnecessary and will cost the company nearly double the amount of the cost of reconstructing the old building in accordance with the proposed plans.

It is shown that the ground owned and occupied by the railroad company at the station in Fayetteville fronts 250 feet on Dickson Street and runs north over 600 feet, narrowing down to a shorter distance about midway of the length of the lot.

The nrcDOsal of the company is to rebuild the passenger station, using the stone foundation and walls, with certain changes, converting the whole of the present station building into a passenger station, and remodel it from one end to the other. The plan contemplates the construction of a new freight house 140 feet long by 30 feet wide, north of the passenger station, with a platform on the west side along the main track extending the full length of both buildings, which would give a platform about 600 feet long, parallel with the main track, which is to be removed westward five feet so as to give that much additional platform space. The bay window referred to is to be eliminated, and this will make a platform of unobstructed width of twenty-five feet between the walls of the building and the main track. The sidetrack running along the platform on the east side of the station is to be removed eastward from the passenger station so as to give space for a driveway of macadam sixty feet wide and two hundred feet in length, unobstructed by any of the side-tracks.

Specifications for the size and inside arrangements of the remodeled building are shown in detail, and it is not contended in any quarter that the canacity of the building is insufficient for the volume of railroad travel and business at that place.

The evidence shows beyond question that, unless the station is to be removed from the exact spot where the old building is located, the proposed plans for remodeling the old building and the construction of a new freight house are entirely adequate, and the construction of a new building at increased cost is unnecessary. In other words, our conclusion is, leaving out the question of removal of the station, that the order of the Eailroad Commission is not supported by evidence. If the station is not to be removed from that spot, then the company should be permitted to carry out its proposed plans.

It will be noted from the language of the Commission’s order that it did not pass on the question of removal, though most of the testimony introduced by the petitioners was, as before stated, directed to the question of inconvenience to travel along the street and to the station. The Commission, according to the language used in the order, merely decided that a new building must be constructed, and, as we understand, the question nf location is to be hereafter decided. Now, this was not the proper order to make, for, as we have already seen, there is no necessity for a new building unless there is to be a removal. Of course, if the removal of the station is ordered, then a new building is necessary, for the old one would be abandoned, but until the question of removal or non-removal is settled, the railroad company could not be bound by an order to construct a new building.

It would not be proper for us to decide, in the first instance, the question of the necessity for the removal, as the parties are entitled to have this question primarily passed on by the Commission. In speaking of the question of removal, it is not necessarily meant a removal to a distant location, but refers, as well, to the question of removal to another spot on the same property now occupied by the company for station purposes.

The present order is erroneous, but the matter is still before the Commission, and there may be a further hearing upon the original petition of the property owners and the plans proposed by appellant to determine the whole question whether or not there should be a removal from the spot on which the present building is located.

This inquiry will then draw into question the location as well as the building or remodeling* of the station at Fayetteville, and the reversal of the judgment and quashing of the present order of the Bailroad Commission will be without prejudice to a further hearing of the whole matter.

What we now hold is that, without a decision upon the question of removal, the order requiring the abandonment of the old building and the construction of an entirely new building is unnecessary, and that the proposed plans for remodeling and changing the old facilities are adequate unless a removal is necessary.

The judgment of the circuit court is therefore reversed and the cause remanded, with directions to quash the order of the Bailroad Commission, without prejudice to further hearing before the Commission, upon all the questions relating to improved station facilities at Fayetteville.

Humphreys, J.

(dissenting opinion). According to the plat filed in the case the depot is without ingress or egress on the west, north and east, the only entrance for passengers being from Dickson street on the south. This street runs east and west and the old depot is close to the street, so close, in fact, that all incoming and outgoing trains, in stopping at the depot, block the street. This street is the main thoroughfare, and when blocked causes much congestion and great inconvenience to the general public. The testimony reflects that those passing from the east to the University, and vice versa, are frequently delayed from five to fifteen minutes. The situation, as reflected by the testimony, may be more clearly described as saying that the depot is “bottled up.” The testimony also reveals the great extent of the passenger traffic and the enormous income received by the company from it. This is due to the fact that trains from four directions center there. The income for a number of years far exceeded the income in larger cities. The testimony reflects that the congestion in and immediately around the depot causes great confusion and inconvenience. The repair of the old depot necessarily means the retention of the present site and the use of more space immediately around it for building purposes. It is true the proposed plan contemplates the removal of the west track a few feet to the west, and of the track east of the depot entirely, so as to give more platform space and a driveway on the east. The driveway, however, is to have no outlet to the north, so the changed situation will necessarily be the same, with only one street entrance. The depot, including the driveway and platforms, will be “bottled up.” It is apparent, from the record made, that the congestion and dangers incident to the situation will not be relieved by the repair of the old depot in the manner suggested. The trend of the major part of the testimony was in this direction, so I am convinced that the controlling issue in the case was, whether practical to repair the depot where it now sits. The order of the Commission was to build a new depot, necessarily determining, in the light of the testimony, that it should be located at a more convenient place on tire lot owned by the company. It is quite apparent that the building could he constructed on the east side of the lot, which would give two street entrances; and far enough toward the north so that incoming and outgoing trains could stop without blocking Dickson 'Street. The physical facts are undisputed,- and the testimony tending to show the congestion and inconvenience were fully developed. It is therefore unnecessary to remand the case for further evidence upon that issue. The additional testimony would necessarily he cumulative in nature. .It seems to me that the record made fully sustains the order of the Commission. Mr. Justice Wood desires to he noted as- -concurring in the views thus far expressed.

In addition to the views expressed, I am of the further opinion that the plans presented by the company for repairing the depot are not commensurate with the income from passenger traffic and the importance of the city shown by the testimony.


author: McCulloch, C. J.

text:
    Sovereign Camp Woodmen of the World v. Barnes.
    Opinion delivered July 10, 1922.
    1. Insurance — proof of by-laws of fraternal association. — Under Crawford & Moses’ Dig., § 6097, requiring fraternal benefit societies to file with the insurance department a certified copy of amendments of their by-laws, but making copies of the constitution and by-laws as amended when certified to by the secretary of the society prima facie evidence of the legal adoption, an amended by-law properly certified is admissible in evidence without proof that a copy thereof had been filed in the insurance department.
    2. Insurance — filing of amended by-law. — Under Crawford & Moses’ Dig., § 6097, requiring fraternal benefit societies to file copies of all amendments to their by-laws within 90 days after their enactment, but not making such filing a prerequisite to the taking effect of the by-laws, the by-law is not prevented from taking effect until it is filed.
    3. Insurance — member op society bound by constitution and bylaws. — Where the constitution and by-laws of a fraternal benefit society are made part of the contract by a statement in the application or policy, each member must take notice of the provisions of the constitution or by-laws, and is bound by an amended bylaw, though he was not notified of its adoption.
    4. Insurance — reinstatement—acceptance op dues. — The requirement of the by-laws of a certificate of good health as a condition to reinstatement after forfeiture for nonpayment of dues is not waived merely by the acceptance of the dues and assessments by a local officer.
    5. Insurance — reinstatement.—Proof that a fraternal benefit society had permitted the reinstatement of other members after forfeiture of their certificates for nonpayment of dues does not entitle a member to reinstatement without compliance with the bylaws, even if such proof established a general custom to that effect.
    Appeal from Ashley Circuit Court; Turner Butler, Judge;
    reversed.

      T. E. Helm, for appellánt.
    Each and every beneficiary certificate is issued upon the conditions stated in and subject to the constitution and laws then in force or thereafter enacted. 104 Ark. 538; 183 U. S. 308; 180 Pac. 2; 188 S. W. 941; 153 Wis. 223. The failure of William E. Barnes to comply with the requirements of reinstatement prevented a recovery. 133 Ark. 411; 136 Ark. 355; 85 S. R. 827; 180 Pac. 2; 144 Pac. 223; 125 N. W. 49; 170 S. W. 937; 172 S. W. 687. The court erred in refusing to sustain defendant’s objections to the introduction of evidence as to reinstatement. 99 Ark. 547; 55 Ark. 567; 71 Ark. 197; 11 C. J. 176. The court erred in ruling that the testimony of John K. Barnes and Ned P. Atkins was competent. 104 Ark. 538; 133 Ark. 411, The court erred in holding that the change in the constitution was not 'binding upon the assured because the defendant had not complied with section 6097 of C. & M. Digest. See also secs. 6086, 6087 and 6090, C. & M. Digest; 104 Ark. 538; 133 Ark. 411; 151 N. W. 692; 87 Mo. 458. The certificate was not in effect and his beneficiary is not entitled to recover. 114 N. Y. S. 480; 89 Atl. 301; 63 So. 571; 80 So. 545; 47 Atl. 257; 188 111. App. 131; 32 Incl. App. 273; 69 N. E. 707.

      G. P. George and Compere £ Compere, for appellee.
    The verdict of the jury was supported by the evidence. 233 S. W. 708. If the assured was not a member, and ceased to be such before January 3d, when the dues were sent in, then defendant has waived such defense by holding the dues. 233 S. W. 280. Such question was a question of fact for the jury to determine. 233 S. W. 280. No' question was raised at the time he received the money as to the time it had been paid. 99 Ark. 204. It was a question for the jury to determine whether defendant had held it an unreasonable length of time before returning it. 233 S. W. 412. Any agreement, declaration or course of action on the part of the insurance company, which leads the insured to believe that by conforming thereto, a forfeiture of his policy will not be incurred, constitutes a waiver. 36 U. S. Law Ed. 496. The rules were not properly proved. 87 Ark. 115; C. & M. Dig., sec. 6087. The law does not favor forfeitures. 67 Ark. 506; 230 S. W. 576.
   McCulloch, C. J.

Appellant is a fraternal insurance society operating in Arkansas,' and formerly had a subordinate branch, or camp, at Parkdale, in Ashley County. W. E. Barnes became' a member of the camp at Parkdale in the year 1910, and kept up his membership by the payment of dues and assessments until September or October, 1920. His policy, or benefit certificate, in the sum of $2,000 was made payable to his wife, Maggie Barnes.

The camp at Parkdale was ordered disbanded for certain reasons, and the members who had preserved their membership were transferred to the camp at Omaha, Nebraska, and W. E. Barnes was one of the members so transferred. It is undisputed that he was suspended for nonpayment of assessments, either in September or October, 1920. There is a dispute in the testimony as to which of the assessments he failed to pay, whether his suspension occurred on account of the nonpayment of the assessment in .September or in October. At any rate, it is undisputed that he was suspended not later than the first part of October, 1920, for nonpayment of assessments.

On January 3,1921, a son of W. E. Barnes mailed to the clerk of the camp at Omaha, of which W. E. Barnes was a member, a postoffice money order for the sum of $16.20, which was the amount of three assessments, accompanied by a letter stating the fact that the money order was inclosed for the sum named, “ covering three months’ dues.”'The clerk made no reply to this communication until January 27, 1921, when he mailed the uncashed money order back to the address of Barnes, calling attention to the fact that another assessment was due before reinstatement could'be effected, and that under the constitution and laws of the order a certificate of good health must be furnished.

Barnes died on January 19, 1921, and upon refusal of appellant to pay the amount of the benefits, this action was instituted to recover the sum named in the certificate. There was a verdict in favor of appellee, from which an appeal has been prosecuted.

The suspension of Barnes as a member of the fraternity being admitted, the only questions involved in the controversy are, whether or not he was duly reinstated, and whether the noncompliance with certain conditions of the by-laws with reference to the method of reinstatement were waived.

The application and policy state, in substance, that the by-laws of the order constitute part of the contract. The jury mig'ht have found from the conflicting testimony that at the time the remittance was made to the secretary of the camp at Omaha on January 3, 1921, the suspension for nonpayment of assessments had occurred within three months before that date, therefore the following by-law is the one which is applicable to the case;

“Sec. 66 (a) Should a suspended member pay all arrearages and dues to the clerk of his camp within ten days from the date of his suspension, and if in good health at the time and continue in good health for thirty days thereafter, and not addicted to the excessive use of intoxicants or narcotics, he shall be reinstated and his beneficiary certificate again become valid.
“(b) After the expiration of ten days, and within three months from date of suspension of a suspended member, to reinstate he must pay to the clerk of his camp all arrearages and dues and deliver to him a written statement and warranty, signed by himself and witnessed, that he is in good health at the time, and continue in good health for thirty days thereafter, and not addicted to the excessive use of intoxicants or narcotics, as a condition precedent to reinstatement, and waiving all rights hereto if such written statement and warranty be untrue.
“(c) Any attempted reinstatement shall not be effective for that purpose unless the member be in fact in good health at the time, and continue in good health for thirty days thereafter, and if any of the representations or statements made by said applicant are untrue, then said payments shall not cause his reinstatement nor operate as a waiver of the above conditions.”

The by-laws put in evidence were properly certified by appellant’s supreme secretary, and it is shown that the by-law as it now appears was adopted at a regular session of appellant in the year 1919, but the court refused to permit it to be introduced in evidence for the reason that it was not shown that it had been filed with the insurance department in accordance with the provisions of the following statute:

“Every society transacting business under this act shall file with the insurance department a duly'certified copy of all amendments of or additions to its constitution and laws within ninety days after the enactment of the same. Printed copies of the constitution and laws as amended, changed or added to, certified by the secretary or corresponding officer of the society, shall he prima fade evidence of the legal adoption thereof.” Crawford & Moses’ Digest, sec. 6097.

The record is silent on the subject whether or not the amendment to the by-laws had been filed with the insurrance department, bnt the statute itself provides that the certificate of “the secretary or corresponding officer of the society shall be prima fade evidence of the legal adoption thereof,” and under the statute this certificate is competent evidence of the adoption of an amendment, whether shown to have been filed with the insurance department or not. The Supreme Court of Mississippi announced this view in construing an identical statute of that State in the case of Sovereign Camp W. O. W. v. Garner, 125 Miss. 8, and our conclusion is that the Mississippi court was correct. In reaching that conclusion the court said:

“Section 22 of the act provides that printed copies of the constitution and laws as amended, changed, or added to, certified by the secretary or corresponding officer of the society, shall be prima fade evidence of the legal adoption thereof. Under this provision the society may introduce such certified copy, and this shall be sufficient evidence of the legal adoption thereof, which, in the purview of this statute, includes filing, unless this prima fade evidence is rebutted. In the instant case the appellant introduced the evidence required under this section to show prima fade the legal adoption of the by-law, and the burden was thereby shifted to appellee to overcome this prima fade evidence, if, in fact, the by-law had not been filed and legally adopted in this State.”

It will be observed that the statute we have quoted contains no condition or statement that the amendment shall not be in force until it is filed with the insurance department. It merely requires that this be done.

A society doing business here is amenable to the laws, and may be excluded from doing business here without complying with the laws, but this statute does not, as long as the society is doing business here, require the filing of an amendment with the insurance department before it goes into effect. On the contrary, the statute expressly provides that the certificate, not of the insurance department, but of the secretary or corresponding officer of the society, shall be prima facie evidence of the legal adoption of the amendment.

It was contended-by counsel for appellee in the trial below, and is so contended here, that the member was not bound by this by-law for the reason that he was not notified of its adoption. It has long been the rule adhered to in this court that the constitution and by-laws of a fraternal order constitute a part of the contract where it is so stated in the application or policy, and that each member must take notice of the provisions. The eases on this subject are collated in the recent case of Sovereign Camp W. O. W. v. Newsom, 142 Ark. 132. This being true, the member was bound by the by-laws with reference to the method of securing reinstatement, and it is undisputed that this by-law was not complied with.

It is next contended that there was a waiver of the requirement concerning a certificate of good health by the retention, for a time, of the remittance and until after the death of the deceased. We decided this question against the contention of appellee in the case of Woodmen of the World v. Jackson, 80 Ark. 419. That was the point expressly raised and decided in the case, and we held that there was no waiver of the noncompliance with the provisions of the by-laws merely by the acceptance by a local officer of the dues or assessments. The question of waiver under the same circumstances arose in the case of Sovereign Camp W. O. W. v. Anderson, 133 Ark. 411. Following the Jackson case, supra, we held that there was no waiver under -those circumstances.

Appellee was permitted, over the objection of appellant, to introduce proof to the effect that reinstatement of members in this and some other subordinate branches of the fraternity had been permitted without furnishing health, certificates. The proof was not sufficient to show a general custom of accepting reinstatements in disobedience of the express terms of the by-laws, but, even if sufficient for that purpose, it is not competent to show an abrogation of the by-laws by that method. The acceptance of reinstatement of other suspended members at different times did not entitle this member to reinstatement in the same manner in disregard of the express terms of the by-laws.

Each party in the trial below requested a peremptory instruction, and the court gave such an instruction in favor of. the appellee.

The material facts are undisputed, and show that the deceased member, W. E. Barnes, was suspended from the fraternity and forfeited his benefit certificate, and that he was never properly reinstated, and was not a member at the time of his death.

The judgment against appellant was therefore erroneous upon the undisputed facts, and it is reversed and judgment will be entered here in favor of appellant.


author: Wood, J.

text:
    State v. Cox.
    Opinion delivered July 3, 1922.
    1. Highways — transfer of war material to state. — Under Acts of Congress of Feb. 28, 1920, providing for distributing war material suitable for use in the improvement of highways, and act of Congress of March 15, 1920, fixing the amount to be paid therefor to the United States by the States and providing that the title thereto shall be vested in the State for use in improving highways, the State had title to such property so donated, provided the State under its statutes had the right to accept the donation.
    2. Highways — highway commissioner authorized to receive donations. — Under Crawford & Moses’ Dig., §§ 5165, 5168, creating the State Highway Department and the State Highway Commission, and §§ 5198-9, Id., relative to the receipt of Federal aid, the State Highway Commissioner had power to apply for and receive, on behalf of the State, donations of war material from the United States.

      3. Highways — funds derived from sale of war material. — Under Crawford & Moses’ Dig., § 5199, funds derived from the sale or rental of property donated by the Federal Government for aid in road building is not payable into the State Treasury, but is to be kept by the Commissioner of Highways in a separate account.
    4. Highways — right to dispose of war material donated to state. —The donation of war material by the United States, when accepted by the State through the Commissioner of Highways, constituted a present gift and vested the State with the absolute power of disposition, through its Highway Department.
    5. Highways — authority of state to sell unserviceable war equipment. — Under act Cong. March 15, 1920, § 5, providing that vehicles and equipment in serviceable condition donated to the States for road-making purposes shall not be sold to any individual, company or corporation, the State has authority to sell equipment which, though virtually new, is not serviceable for the building of highways in the State.
    6. Highways — authority of highway commissioner. — -The State is bound by the act of the Commissioner of State Highways in selling road-making equipment donated by the Federal Government under Acts of Cong, of Feb. 28, 1919, § 7, and of March 15, 1920, when not in a serviceable condition.
    7. Highways — authority of state as to disposition of war material. — While the title to machinery and equipment donated by the Federal Government under Acts of Cong, of Feb. 28, 1919, and March 15, 1920, is held absolutely by the State, and not in trust, and its power of disposition is unrestricted, it must see that the property so received is administered for road-building purposes, and may repudiate the acts of its highway officers as ultra,.vires and void if they fail to dispose of the property in accordance with the Acts of Congress.
    Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor;
    affirmed.

      J. S. Utley, Attorney General, Elbert Godwin and Wm. T. Hammock, Assistants; George Vaughan, special counsel.
    1. Plaintiff is the owner, and entitled to the immediate possession of the property in controversy. Congress by express enactment (§ 7 of postoffice appropriation act of February 28, 1919) authorized the Secretary of War in his discretion to' transfer to the Secretary of Agriculture “all available war material and supplies
      * * * * suitable for use in the improvement of highivays * * * # of the several States to be used on roads constructed in whole or in part by Federal-aid.” 40 Stat. L. 1201.
    The Wadsworth-Kahn act of Congress, approved March 15, 1920, expressly provided a restriction in keeping with the policy of the first act to the effect that “no more * * *■ * material, equipment and supplies * * * * shall be transferred * * * than said Department of Agriculture shall certify can be efficiently used for such purposes within a reasonable time after .such transfer.” Express authority was contained in section 2 for the transfer of certain specific units to which the item now in dispute belong. Section 4 provided for reimbursement of the War Department by the department to which the property is transferred, of freight charges and expense of loading, and further provided that “any State receiving any of said property for use in the improvement of pubUc highivays” shall pay 20 per cent, of its estimated value, against which the State may set off the freight charges paid by it on the shipment. Section 5 fixes the title of such allotment in the State, for use in the improvement of public highways, etc.
    The record affirmatively shows a request for the items now in suit by the State Highway Commissioner to the bureau of public roads, war materials division, Department of Agriculture, and specific shipping instructions issued by the chief-of the bureau of public roads covering these items.
    ' There is therefore no question but that the disputed units of material and equipment became the lawful property of the State. It is not material in this inquiry whether the property was impressed with a trust, or whether the right of disposal was absolute- or qualified. Special ownership is sufficient to support the action of replevin. C. & M. Digest, § 8640; 37 Ark. 64; 67 Id. 135; 53 S. W. 678; 34 Cyc. 1390; Id. 1468; 23 E. C. L. 864, § 14.

      2. The attempted transfer by the highway commissioner was unauthorized and unlawful, and vested no title, either legal or equitable, in the defendants. By the limitations placed upon the use to which the materials should be put, and the condition under which it might be alienated, Congress may well be said to have created a trust estate in the beneficial allottees. 39 Cyc. 17; 12 N. Y. S. 815. The subject-matter of trusts is not limited to real property. 31 Ark. 119; 25 E. C. L. “States,” 389, § 22; 1 Perry on Trusts, 6th Ed., § 67; 37 Cyc. 36; Id. 51; 26 E. C. L. 1171, § 6 ; Perry on Trusts, § 41.
    Although there is no affirmative acceptance of a trust, yet acceptance may be implied. 3 Pomeroy, Equity, §§ 1007, 1060. The language of the Acts of Congress and that of the certificate of the Highway Commissioner that the property would be used for the purpose intended, together with the acceptance of the consignor and consignee, are sufficient to create a trust. 26 E. C. L. 1179-1180. That authority to enforce a Federal statute or a national policy, of the nature involved here, may be conferred upon State officers as such, and that such officers may execute the same unless prohibited by the Constitution or statutes of the State, is no longer open to question. 16 Pet. 539, 622; 10 L. Ed. 1060; 197 U. S. 169, 174; 25 S. C. 422; 49 L. Ed. 709.
    Only the Legislature may authorize the sale or transfer of public property. 36 Cyc. 870; 25 E. C. L. “States”, 392-3. 25, 26.'
    The State Highway Department is not one operated for gain. It is a creature, and within the exclusive' control, of the Legislature, charged with the performance of a definite assignment of the manifold functions of State government. In view of the Federal aid laws, this department operates as an indispensable cog in coordination with the National Government in promoting the cause of good roads. 151 Cal. 797; 91 Pac. 740; 154 Cal. 119; 97 Pac. 144, 148.

      The State may hold title to property in two distinct capacities — one as proprietary, and the other in a sovereign or governmental role. 157 Pac. 1097-8.
    Not only must express authority exist for disposing of public property, but statutory procedure must be strictly pursued. 24 Minn. 332; 76 Ark. 167, 88 S. W. 888.
    The State is liable only to the extent of the powers actually given to its officers, and not to the extent of their apparent authority. All who deal with a public agent must at their peril inquire into his real power to bind his principal. 39 Ark. 508-3; 42 Id. 118; 66 Id. 48, 52; 51 S. W. 68; 70 Ark.'568, 578; 69 S. W. 559; Throop, Public Officers, p. 523 § 551; 44 Ark. 437; 47 Id. 205; 7 Wall. (U. S.) 666; 25 Ark. 261; Id. 273.
    The language of section 5 of the Wadsworth-Kahn Act excludes the possibility of alienation except in two-.contingencies, viz: if unserviceable, sale may be made to any “individual, company or corporation”; otherwise by rental to a “State agency or municipal corporation” at not less than the cost of upkeep-, 'but this use must be “for the purpose of consructing or maintaining public highways.” If the language of the Acts of Congress, which are the source, of the State’s title, are to be strictly construed, then due import must be given to the word “serviceable” therein employed. Georgia courts have construed the term. 25 S. E. 428; 132 Ga. 445, 64 S. E. 475; 91 S. E. 771.
    3. The defendants are not entitled to any relief on their cross-complaint, as against the State. Const, art. 5, § 20; C. & M. Dig., § 9294; Id, % 9303; 19 Ark. 559, 562.
    Defendants ’ • pleadings nowhere ask relief against the State. A suit to compel the State to perform its contract cannot be maintained. 1Ó8 Ark. 60, 67; 156 S. W. 839 45 L. R. A. (N. S.) 731; note 68 Am. St. Rep. 753; 6 Pomeroy, Eq. Jur. § 759. See also 106 Ark. 174; 121 Id. 489. Our statute expressly forbids the allowance of any debt or claim by way of set-off in a suit on behalf of the State. C. & M. Dig., § 9303. It has been held that no principle of direct set-off or recoupment will authorize the allowance of a claim of a defendant for damages, liquidated or unliquidated, against a claim of the State. 18 Md. 193; 59 Hun.-299; 12 N. Y. S. 936; 128 N. Y. 640, 29 N. E. 147; 51 N. Y. S. 747; 156 N. Y. 693; 51 N. E. 1093; 56 Cal. 401; 65 N. C. 406; 14 S. C. 135; 16 S. C. 533; 87 Tenn. 725; 11 S. W. 935; 10 Am. St. Rep. 712; 2 Tex. 616; 31 Md. 344; 46 La. Ann. 431; 15 So. 174. See also 33 L. R. A. (N. S.) 378; 91 Ark. 527; 98 Id. 525;-35 Id. 565; 161 U. S. 10; 40 L. Ed. 599; 202 U. S. 473; 50 L. ed. 1113; 123 U. S. 443; 31 L. ed. 216; 263 Fed. 410; 117 IT. S. 52; 140 U. S. 1; 172 U. S. 516; 105 Fed. 459; 107 U. S. 711; 33 L..R. A. (N. S.) 376, Note; Id. p. 379, note.
    Equity follows the law in matters of set-off. 34 Cyc. 635. Defendant cannot avail himself of a set-off, because the demand is uncertain in its nature, and it is no justification of a tortious act that the plaintiff is indebted to the defendant. Waterman on Set-Off, Recoupments and Counterclaim, 2nd Ed. 169, § 42; Cobbey on Replevin, 2nd ed., §§ 791, 792; Shinn on Replevin, § 589; Morris on Replevin, 165; Wells on Replevin, § 630.

      Mehaffy, Donham & Mehaffy, for appellees.
    1. The State is not the owner of the property and not entitled to possession. Appellees are not bound by the provisions of the Wadsworth-Kahn act, since this property may be sonie of the equipment acquired under the postoffice appropriation act of February 28, 1919. If it was so acquired, it was an absolute gift on’the same basis as money given to the State under the Federal aid road act of July 11, 1916, and Commissioner of State Lands, Highways, etc., was the proper person to receive and dispose o.f the same and apply the funds obtained to work of his department in road building.
    If the property came to the State under the act of February 28,. 1919, plaintiff is not entitled to relief .under the provisions of the Wadsworth-Kahn , act,. and the burden is on the State to show that the property came to it under the later act.
    The term “serviceable condition” in section 5 of the Wadsworth-Kahn act must be given its ordinary and commonly accepted meaning. Under no rule of construction could it be made to mean “new” or “unused.” The three Georgia eases cited 'by appellant sustain appellee’s contention on this point.
    If it be true that the property came to the State under the later act which provided that no equipment in serviceable condition could be sold, then the donation of this equipment was a grant in praesenti, and when it came into possession of the State it became a gift absolute. 31 Ark. 119; Id. 833; 54 Id. 251; 24 Id. 431.
    The State, through its Legislature, had designated the Commissioner of State Lands, Highways and Improvements as the proper person to receive payments from the United States Government. C. & M. Digest, § 5199. There is no question but that he had full authority under the above section to receive this property, sell the same, and apply the proceeds to the building of highways. And it is clear that there is no necessity for money so derived to go into the State Treasury.
    Since, by virtue of the foregoing-legislative enactment, the commissioner was the proper person to receive and dispose of the property, his acts were the acts of the State, and the latter cannot question them. The Federal Government alone could complain if the money was not spent, or the property not handled, in accordance with its regulations. In the absence of a showing of fraud, the commissioner’s action in disposing of the property is presumed to have been legal and proper. He is presumed to have performed his duty. 22 E. C. L., §§ 143, 145, 146, pp. 472-4 ; 38 Pa. Sup. Ct. 437; 74 Atl. 392; 123 Pac. 8; 88 Ark. 37; 4 Id. 251; 96 Id. 424.
    2. If the State is the owner and entitled to possession, it cannot obtain the relief sought without reimbursing the defendants. She comes into court divested of her sovereignty, and is bound by the same equitable rules that govern a private suitor. 45 Ark. 88; 57 Ark. 480; 98 Id. 125; 52 Id. 157; 1 Pomeroy, Eq. Jur. 4th ed., § 385; Id. 388. See also 114 Ark. 289.

      J. H. Carmichael and Rowell & Alexander filed separate briefs as amici curiae.

   Wood, J.

This is an action of replevin begun in the Pulaski Circuit Court, Second Division, and afterwards, by consent of parties, transferred to the Pulaski Chancery Court. The action is to recover the possession of certain articles of industrial machinery and supplies therefor. The description and value thereof are set forth in the complaint. The facts, so far as it is necessary to set them out, are substantially as follows:

The property in controversy had been transferred by the War Department to the Federal Department of Agriculture, under the authority of section 7 of the Postoffice appropriation act of Congress, approved February 28, 1919. Upon the requisition of William B. Owen, the then Commissioner of Highways in Arkansas, the Secretary of Agriculture forwarded the property to the Highway Department of the State of Arkansas. In his requisition the Commissioner of Highways certified that the property would be used in the improvement of the public highways in this State, in accordance ■with the provisions of § 5 of the act of Congress, March 15, 1920, known as the Wadsworth-Kahn act. Acting under the authority of a resolution of the State Highway Commission, passed January 31, 1920, Commissioner Owen on October 15, 1920, executed to Hot Spring County, Arkansas, what is designated as a “lease” whereby the Commissioner leased to Hot Spring County the property in controversy for the period of twenty years, the consideration named being the rental price of $9,250 cash. On the 18th of November, 1920, C. F. Berry, county judge of Hot Spring County, under a written instrument undertook to “transfer and donate” to the defendants, residents of Malverh, Hot ¡Spuing County, Arkansas, all of the right, title and interest to Hot Spring County to the property in controversy. No consideration was named for this transfer, hut it was in proof that the real consideration were certain checks of the defendants, aggregating the sum of $9,250, payable to W. B. Owen, Commissioner of Highways, which were deposited and passed to his credit in a special account or “war equipment fund” controlled and maintained by him with the People’s Savings Bank of Little Bock, Arkansas. These funds never reached the State Treasury.

In 1921 the Federal Government demanded an accounting of the State of Arkansas of the war surplus equipment allotted to it. Growing out of the investigation by the agents of the Federal Government, in collaboration with the Highway Department and the office of Attorney General, incident thereto, the present action was instituted by the State through her Attorney General to recover possession of the property.

The defendants, in their answer, set up that they were in lawful possession of the property as bona fide purchasers at a valid sale thereof made by the Commissioner of Highways. By way of cross-complaint they set up that they were innocent purchasers, and that the present Highway Commission, composed of the Commissioner and his two associates, were necessary parties to the action; that in order to protect the defendant, if it were decided that they were not innocent purchasers and not entitled to the possession of the property, the Highway Department should in equity be required to return the money paid to it by the defendants for the property.

At the hearing the court found that the disposal of the property by the State Highway Commission was unauthorized, contrary to law, and that therefore no title passed to the defendants; that the plaintiff was entitled to the possession of the property upon the payment to the defendants of the sum of $9,250, which they had paid to the Highway Department for the property. The court entered a decree according to its finding, and directed that the State of Arkansas have until April 1, 1923, to arrange for the payment of the sum of money decreed to reimburse the defendants, and that upon the payment of such sum by the plaintiff to the defendants the possession of the property should be delivered to the plaintiff. From that decree the plaintiff prosecutes this appeal, and the defendants have prayed here and been granted a cross-appeal.

. 1. The first question to be determined under the issues and facts presented by this record is whether or not the State is entitled to the possession of the property in controversy. A proper solution of the question involves a construction of the acts of Congress under which the Highway Department of the State of Arkansas received the property in controversy, and the statute of the State governing the disposition of such property by such department. It is conceded that the United States Governmént is the source of title to the property in controversy. Sec. 7 of the act of Congress of February 28, 1919, entitled “An act making appropriation for the services of postoffice,” etc, 40 Statute Laws, p. 1201, authorized the Secretary of War, in his discretion, to transfer to the Secretary of Agriculture “all available war material * * * suitable for use in the improvement of highways, * # * * the same to be distributed among the highway departments of the several States to be used on roads constructed in whole or in part by Federal aid.”

An act of Congress approved March 15, 19'20, entitled “An act to authorize the Secretary of War to transfer certain surplus motor-propelled vehicles and * * road-making material to various services in departments of the Government and for the use of the States ’ ’, 41 Public Laws, p. 530, authorizes the transfer of the property of the kind here in controversy from the War Department to the Department of Agriculture. That act contains a provision that “any State receiving any of said property for use in the improvement of public highways shall, as to the property it receives, pay to the Department of Agriculture the amount of 20 per centum of the estimated value of said property, * * * * against which sum the said State may set-off all freight charges paid by it on the shipment of said property, not. to exceed, however, said twenty per centum.” And the further provision: “Sec. 5. That the title to said vehicles and equipment shall be and remain vested in the State for use in the improvement of the public highways, and no such vehicles and equipment in serviceable condition shall be sold or the title to the same transferred to any individual, company, or corporation: Provided, that any State Highway Department to which is assigned motor-propelled vehicles and other equipment and supplies, transferred herein to the Department of Agriculture, may, in its discretion, arrange for the use of such vehicles and equipment, for the purpose of constructing or maintaining public highways, with any State agency or municipal corporation, at a fair rental, which shall not be less than the cost of maintenance and repair of said vehicles and equipment.”

It is in proof that the Highway Commissioner of Arkansas obtained the property in controversy according to the methods prescribed by the Federal Department of Agriculture. Therefore, unquestionably, under the above acts of Congress the State had title to the property at the time it was disposed of by the Commissioner of Highways of the State, provided the State under our statute had the right to accept the donation.

2. • Did the State Highway . Commissioner have authority to dispose of the property in the manner adopted by the State Highway Commission and pursued by him as above set forth? The State Highway Department and the State Highway Commission were created by the act of March 31,1913, secs.-5165 and 5166, C. & M. Digest. • Act 105, entitled An act'to provide-that the •State of Arkansas shall .accept aid from the..Federal Government for the construction of rural post roads * * * * and for other purposes,” approved February 20, 1919, provides, among other things, a method of procedure for the State to pursue in procuring Federal aid for constructing or improving State roads. See secs. 5198 and 5199, C. & M. Digest. The latter section reads as follows:

“The Commissioner of State Lands, Highways and Improvements is hereby designated as the proper officer to receive payments as they shall be made by the Secretary of the Treasury of the United States; said Commissioner shall keep a separate set of books showing all such payments made by the United States and the road or the road improvement district to which it is to be applied, showing all disbursements of money so received from the United States Government. The moneys shall be paid out of this fund received from the United States in accordance with the regulations prescribed by the proper authorities of the United 'States Government. And provided, further, the State Highway Commission is authorized, for and on behalf of the county judge, to enter into all necessary agreements with the Department of Agriculture of the United States, for carrying out the rules and regulations of the Secretary of Agriculture in granting aid to any county or road improvement district for the building of rural post roads.”

It will -be observed that the Commissioner of State Highways is designated by the above statute to receive payments and make disbursements of moneys received from the United States under the Federal aid road law of July 11, 1916, according to the regulations prescribed by the proper authorities of the United States, and that the said highway commission is authorized to enter into all necessary agreements with the department of Agriculture of the United States for carrying out the rules and regulations of the Secretary of Agriculture in granting aid for the building of rural post roads. The State. Highway Department must disburse all moneys received from the United States government in accordance with the regulations prescribed by the proper authorities of the Federal Government.

Under the broad powers conferred upon the Commissioner of State Highways and upon the State Highway Commission it was unnecessary for the Legislature to pass a special act authorizing the acceptance by the State of the donation by the Federal Government of its surplus war material and supplies suitable for use in the improvement of highways and to be used on roads constructed in whole or in part by Federal aid. The Federal aid road act of July 11, 1916, expressly provides that “the Secretary of Agriculture is authorized to cooperate with the States, through their respective State Highway Departments, in the construction of rural post roads.” Under the authority of the above laws, State and Federal, already existing, it was within the power of the Commissioner of Highways acting for the State Highway Department, to apply for and receive the donation of the property in controversy, to be used on roads that were being constructed in whole or in part by Federal aid. Under the State and Federal statutes the Commissioner of State Highways had the authority to receive the property in behalf of the State and to use the same or the proceeds thereof for the purpose of constructing and maintaining public roads as contemplated by the acts of Congress and the State statute above mentioned. It is clear that the funds derived from the sale or rental of property received by the State through the munificence of the Federal government for aid in road-building is not to be paid into the State treasury, but a separate account thereof is to be kept by the Commissioner of State Highways, showing the amount received and the amounts disbursed of the funds received direct, or the proceeds of property donated under the Federal aid laws for the construction of public highways. If the State Highway Department, under the existing statute, siopra, did not have authority to dispose of the property after the same had come into its possession, then she had no authority under that act to accept the property in the first instance, and consequently had no title, either general or special, thereto, and hence could not maintain this action.

But we are convinced that, under a proper construction of the State statute and the Federal aid laws, the donation of the property in controversy and its acceptance thereof by the Commissioner of State Highways in compliance with the provisions of the Federal statutes, constitutes a donation or gift in praesenti to the State and vested the absolute title in the State, with the unlimited right of disposition' through its Highway Department and the Commissioner thereof, when duly authorized so to do by the State Highway Commission. The donation of money or property under these Federal aid road building statutes is analogous to the grants of land by the United States Grovernment to the State for school and other purposes. See Myers v. Burns, 19 Ark. 308; Branch v. Mitchell, 24 Ark. 331; Ringo v. Rhoton, 29 Ark. 56; L. R. & F. S. Ry. Co. v. Howell, 31 Ark. 119; Hendry v. Willis, 33 Ark. 833; Chisholm v. Price, 54 Ark. 251; Hibben v. Malone, 85 Ark. 584.

It does not follow, however, that, because the State had the absolute title and the unlimited right to dispose of the property that the act of her Commissioner in disposing of the property was binding upon the State unless he was authorized by law to make a lease or sale thereof in the manner indicated. As we have seen, the Commissioner of Highways, under the law, was the proper person to receive for the State the road aid funds donated to it by the Federal Grovernment and to dispose of the same, and, as we have said, the power conferred upon him by this statute is ample to authorize him also to receive the donation of war materials such as the property in controversy, for use in the improvement of highways being constructed in whole or in part under the Federal aid laws. The uncontroverted testimony shows that the Staté Highway Commission authorized the Commissioner to operate and handle the property in controversy. The testimony of the Commissioner and other witnesses as to the method of procedure and the facts relating thereto by which appellant obtained possession of the property, and showing the various steps taken by the Commissioner in disposing of the same to the appellees, is too voluminous to set forth and discuss in detail. It shows that, acting under authority of a resolution of the Highway Commission authorizing him so to do, the Commissioner leased the property in controversy to Hot Spring County, Arkansas, for a period of twenty years for the consideration of $9,250, and the county judge of Hot Spring County in turn, without any additional consideration, transferred and donated the property contained in the lease to the appellees. The appellees, in fact, paid the consideration mentioned, which was received by the Commissioner and the property delivered to the appellees. The uncontroverted testimony shows that the transaction was nothing more nor less than a sale of the property in controversy by the Commissioner to the appellees, and that the funds paid by them and received by him for the sale of the property went into the funds maintained by the Highway Department for the benefit of the highways. The law as to the receiving and disbursement of the funds was fully complied with. The Commissioner had a survey made of the property, and a preponderance of the evidence shows that the property in controversy at the time of its sale to the appellees was unserviceable and not suitable for general road building purposes in this State. The equipment was entirely too heavy,' not of standard gauge, and was impractical to be used in building highways in the State of Arkansas. While the proof shows that the equipment Was virtually new, nevertheless it was not serviceable for the building of highways in this State.

It will be observed that sec. 5 of act No. 159, approved March 15, 1920 (Wadsworth-Kahn act, supra) provides that “no such vehicle and equipment in serviceable condition shall be sold or the title to the same transferred to any individual, company, or corporation.” The language quoted necessarily implies that the State shall have authority to sell the property if it is in an unserviceable condition. From the proof in this record the Highway Commissioner was justified, as we have seen, in concluding that the property in controversy at the time of the sale thereof to the appellee was not in a serviceable condition. In coming to such conclusion he acted for and on behalf of the State, and the State is bound by his act. There is no proof of any fraudulent conduct by the Commissioner in the sale of the property.

Now, while the State does not hold the title in trust and while the jus disponendi is unrestricted, nevertheless the State cannot do wrong. Therefore she will see, and has the right to see, that her Highway Department through its State Highway Commission and its Commissioner duly constituted and authorized to receive and disburse the Federal aid to the building of highways, shall so administer the fund derived from the Federal Government as to carry out the intention of Congress in making the donation. The State therefore must see that the property received for road building purposes in this State is duly administered for such purposes. If therefore the officers of the State charged with the administration of such aid failed to dispose of the property received from the Federal Government in accordance with the acts of Congress making the donation to the State, their acts will be ultra vires and void, and the State may repudiate the same. But, as we have already shown, the acts of the officers of the Highway Department, its Commission and the Commissioner, were strictly in accord with the regulations of the Federal Government in the disposition of such property. Our conclusion, therefore, is that the learned chancellor erred in holding that the sale of the property by the State Highway Commission was unauthorized and contrary to law and that no title passed to the appellees by virtue of snch unauthorized aet.

Having reached this conclusion, the other question passes out, and we do not decide whether, if the sale were void, the State would have to return to the appellees the consideration paid by them as a condition precedent to the recovery of the possession of the property. The decree is therefore reversed, and the complaint is dismissed for want of equity.

Mr. Justice Humphreys not participating.


author: Smith, J.

text:
    Sledge-Norfleet Company v. Matkins.
    Opinion delivered July 3, 1922.
    1. Execution — wrongful judgment — remedy at law. — Where appellant took default judgment against appellee on an account on immature service, which was set aside on appellant’s motion under agreement that appellee execute and deliver his note secured by mortgage, which was done, and at a succeeding term of court appellant, without further service, took a second default judgment on the same account, in violation of the above agreement, appellee, suing to enjoin the levy of an execution on the latter judgment, had an adequate remedy at law under Crawford & Moses’ Digest §§ 4291, 5788, 6290, by procedure to have the judgment set aside.
    2. Execution — complaint alleging payment. — In a suit to restrain a sheriff from levying an execution, based on a judgment upon an account, a complaint alleging payment of the account by executing a note and mortgage held not demurrable.
    3. Trial — wrong forum — remedy.—Under Crawford & Moses’ Dig., § 1041, bringing a suit in equity, when the remedy at law was adequate, is not ground for dismissal of the suit, the remedy being a motion to transfer to the law court.
    4. Trial — wrong forum. — Under Crawford & Moses’ Dig., § 1041, where a motion is properly made to transfer a suit in equity to the law court, it is reversible error to proceed with the case in equity.
    5. Trial — wrong forum. — Where, in a suit brought in equity which should have been brought at law, defendant elected to stand upon a demurrer, and made no motion to transfer the cause, it was not error to proceed in equity; the relief sought being within that court’s jurisdiction,

      6. Equity — belief against judgment at law. — While equity will not order a new trial in a case tried at law, it may decree that unless the opposite party submits to a new trial, his judgment at law will be enjoined.
    Appeal from Woodruff Chancery Court, Northern District; A. L. Hutchins, Chancellor;
    affirmed.

      Roy D. Campbell, for appellant.
    The chancery court was without jurisdiction. C. & M. Dig., sec. 5788; 55 Ark. 454; 133 Ark. 256; 79 Ark. 289.
    The appellee had a complete remedy at law and should have proceeded in the law court. C. & M. Dig., sec. 6285 and sec. 6290; 33 Ark. 454; 97 Ark. 314; 138 Ark. 408. ■
    The complaint of appellee did not state facts sufficient to constitute a cause of action. Sec. 6293, C. & M. Digest.

      R. M. Hutchins, for appellee.
    The complaint stated a cause of action. In assuming jurisdiction the equity court did not undertake to exercise supervisory or appellate jurisdiction over the circuit court. 61 Ark. 348.
    In a proper case a court of equity may make a decree that unless the judgment holder should submit to a new trial, his judgment at law would be enjoined. 73 Ark. 566; 61 Ark. 348; 51 Ark. 343; 35 Ark. 123; 61 Ark. 348; 120 Ark. 156.
    The complaint stated a cause of action and was not demurrable. 61 Ark. 341; 48 Ark. 510; 93 Ark. 266; 75 Ark. 507; 74 Ark. 297; 50 Ark. 458; 52 Ark. 80; 48 Ark. 331; 94 Ark. 111.
    The judgment was taken by fraud.and was properly set aside. 23 Cyc. pp. 1024, 1028, 1037, also pp. 1000 to 1005. Injunctive relief was properly granted on the following grounds: Payment, 15 R. C. L. p. 759; fraud, Id. p. 760; violation of agreement, Id. 765; misrepresentation, Id. 764; showing of meritorious defense, Id. p. 735.
   Smith, J.

Appellee Matkins, plaintiff below, brought this suit in equity, and for his cause of action alleged that a default judgment upon an open account was taken against him on immature service, and thereafter this judgment was set aside on motion of the plaintiffs in that case. That action was taken pursuant to an agreement between the parties whereby it was agreed that the cause of action upon which the judgment had been obtained would be disposed of in the following manner: Matkins was to execute and deliver to his creditor “a certain mortgage and note, said note being due November 15, 1921, which would liquidate the cause of action set forth in the above mentioned lawsuit upon which default judgment was had,” and the note and mortgage were executed and delivered pursuant to said agreement. That at the following term of court defendants here (plaintiffs there), without further service took a default judgment upon the account, which had been paid by the execution of the note and mortgage, and that this was done in violation of the agreement pursuant to which the note and mortgage had been executed. Plaintiff here made no defense to that suit, as he had discharged the demand sued on, and his first knowledge that said judgment had been rendered came when the sheriff advised him that he had an execution issued thereon for service. There was an allegation that plaintiff was without adequate remedy at law and a prayer that the sheriff be restrained from levying the execution, and that on final hearing the injunction be made perpetual.

A demurrer to this complaint was -filed upon the grounds, (1) that the chancery court had no jurisdiction;

(2) that plaintiff had a complete remedy at law; and

(3) that plaintiff’s complaint did not state a cause of action.

The decree recites that the demurrer was overruled, and that the defendants “desire and elect to stand upon their demurrer,” and it was by the court ordered that “the defendants be restrained -and enjoined from proceeding under the judgment further until said defendants shall consent to a new trial of the cause of action they may have against the plaintiff herein, at which the parties hereto shall be afforded, an opportunity to be heard and present any and all defenses and equity to which they may be entitled; and, in the event that said defendants shall refuse to submit to a new trial of the said action, then this injunction shall be made perpetual.” This appeal is from that decree.

The plaintiff was mistaken in his allegation that he had no remedy at law. He had a full, complete and adequate remedy at law. Sections 4291, 5788, 6290, C. & M. Digest; Wood v. Stewart, 81 Ark. 51; Shaul v. Duprey, 48 Ark. 331; Gorman v. Bonner, 80 Ark. 339; Dale v. Bland, 93 Ark. 266; Knight v. Creswell, 82 Ark. 330; Wingfield v. McLure, 48 Ark. 510; Arkadelphia Lbr. Co. v. Asman, 79 Ark. 284; Hunton v. Euper, 63 Ark. 323; Driggs’ Bank v. Norwood, 49 Ark. 136; Walker v. Files, 94 Ark. 457; Chambliss v. Reppy, 54 Ark. 539.

The defendants insist that the complaint was demurrable because it alleged no defense to the cause of action sued on. But such is not the case. A valid defense, that of payment, is alleged. The allegation of the complaint is that the demand sued on was liquidated by the execution of a note and mortgage. If this is true, some innocent holder of the note might demand payment thereof, even if the judgment were satisfied by a levy and sale under the execution ■ which issued upon the judgment.

As has been said, plaintiff had a complete and adequate remedy at law, and should have proceeded there. But the failure to do so was not ground for dismissing his complaint as prayed in the demurrer. Section 1041, C. & M. Digest. Had it been asked that the cause be transferred to law, it would have been error calling for the reversal of the judgment to have proceeded with the case in equity. Cole v. Burnett, 119 Ark. 386; Farmer v. Towers, 106 Ark. 123; Cribbs v. Walker, 74 Ark. 104; Goodrum v. M. & P. Bank, 102 Ark. 326; Kampman v. Kampman, 98 Ark. 328; Gerstle v. Vandergriff, 72 Ark. 261; Burke v. St. L. I. M. & S. R. Co., 72 Ark. 256; Organ v. Memphis & L. R. R. Co., 51 Ark. 235; Harris v. Townsend, 52 Ark. 411; Love v. Bryson, 57 Ark. 589; Smith v. Pinnell, 107 Ark. 185; Horsley v. Hilburn, 44 Ark. 458; Gaither v. Gage, 82 Ark. 51; Brown v. Norvell, 74 Ark. 484; Weaver v. Ark. Nat. Bank, 73 Ark. 462; Newman v. Mountain Park Land Co., 85 Ark. 208; Rowe v. Allison, 87 Ark. 206; L. R. & F. S. Ry. Co. v. Perry, 37 Ark. 164; Berry v. Hardin, 28 Ark. 458; Grooms v. Bartlett, 123 Ark. 255.

In the case of Organ v. Memphis & L. R. R. R. Co., 51 Ark. 235, Mr. Justice Battle, for the court, said: “In Talbot v. Wilkins, 31 Ark. 411; Moss v. Adams, 32 Ark. 562; Hammond v. Harper, 39 Ark. 248; Dorsey County v. Whitehead, 47 Ark. 208, and Catchings v. Harcrow, 49 Ark. 20, it was held that an error as to the kind of proceedings adopted is not a good cause for dismissal, but only for a transfer of the cause to the proper docket; and that where no motion is made to correct the error, the court may either transfer on its own motion, or may proceed to a trial upon its merits.

The latter rule is more in harmony with the spirit and letter of the Code of Practice in Civil Cases. The code abolished all form of actions, and provides that there shall be but one form of action for the enforcement or protection of private rights, and the redress or prevention of private wrongs, which shall be called a civil action; and that the proceedings in a civil action may be of two kinds; first, at law, and second, in equity; that the plaintiff may prosecute his action by equitable proceedings in all cases where courts of chancery, before the adoption of the code, had jurisdiction, and must so proceed in all cases where such jurisdiction was exclusive; and that in all other cases the plaintiff must prosecute his action by proceedings at law. It further provides: ‘An error of the plaintiff as to the kind of proceedings adopted shall not cause the abatement or dismissal of the action, but merely a change in ■the proper proceedings by an amendment in the pleadings and a transfer of the action to the proper docket.’ Such error may be corrected at the instance of either party, but is waived by a failure to move for its correction. Mansfield’s Digest, secs. 4914-4928. In this case the action was dismissed, because, in the opinion of the court, the remedy of the plaintiffs was at law. If legal and equitable remedies were required to be administered in separate forms of action, this ruling would be correct. But under the code there is but one form of action for all kinds of civil remedies. All that the plaintiff is required to do in the statement of his cause of action is to state in his complaint facts to show that he is entitled to the relief demanded; and it is the duty of the court to treat his complaint as valid without stopping to speculate upon the name to be given to his action. If he states facts which entitle him to relief, either legal or equitable, it is not demurrable on the ground that it does not state facts sufficient to constitute a cause of action. If an error in the kind of proceedings adopted be committed, it should not be dismissed oh that account, but the issue in the action should be tried according to the principles involved, and the relief he is entitled to should be granted without regard to such error. Trulock v. Taylor, 26 Ark. 54.”

The complaint in this cause recited facts entitling plaintiff to the relief of having the default judgment set aside, and, while he should have proceeded as provided by the statute, this is not a case of which equity, under no circumstances, could have assumed jurisdiction. There are circumstances under which equity will relieve against judgments at law. Kansas & A. V. R. Co. v. Fitzhugh, 61 Ark. 341; Valentine v. Holland, 40 Ark. 338; Harkey v. Tillman, 40 Ark. 551; Johnson v. Branch, 48 Ark. 535; State v. Hill, 50 Ark. 458; Whitehill v. Butler, 51 Ark. 341; Jackson v. Woodruff, 57 Ark. 599; L. R. & H. S. Ry. Co. v. Newman, 73 Ark. 555; McLaughlin v. State, 120 Ark. 156; Wingfield v. McLure, 48 Ark. 510; Dale v. Bland, 93 Ark. 266; Knight v. Creswell, 82 Ark. 330; Fuller v. Townsley-Myrick D. G. Co., 58 Ark. 314.

As was said in the case of Cribbs v. Walker, supra, this “is not a case where there is such a lack of jurisdiction of either the parties or subject-matter as the parties cannot waive. Where a suit is improperly brought in equity, it should not, on that account, be dismissed, but should be transferred to the law court; and if no motion is made to transfer the cause, the objection is waived.” (Citing cases). "

By electing to stand upon the demurrer, defendants took the position that a case was not made entitling plaintiff to relief; but, as we have said, they were wrong in this assumption. Under the allegation of the complaint the demand sued on had been discharged, and it was therefore improper to have rendered judgment upon it. Had plaintiff proceeded at law, he would have been entitled, under the allegations of his complaint, to have had the judgment set aside; and while equity will not order a new trial granted in a case tried at law (and has not done so here), yet in a proper case a court of equity might make a decree that unless the opposite party would submit to a new trial, his judgment at law will be enjoined, and this is the relief granted here. L. R. & H. S. Ry. Co. v. Newman, supra; Kansas & A. V. R. R. Co. v. Fitzhugh, supra.

By the operation of the decree Eipon the parties to the judgment at law, the defendant in that suit (the plaintiff in this) has been given, in effect, the relief which he woEild have obtained had he proceeded at law, and as, under the pleadings, that decree was a proper one, it is affirmed.