author: Humphreys, J.

text:
    Troyer v. Cameron.
    Opinion delivered October 15, 1923.
    1. Bills and Notes — innocent PURCHASER. — Where the payee of notes has transferred them as collateral security for a loan, he could not, by a separate written assignment, transfer his interest in them to another, so as to constitute the latter an innocent purchaser under the negotiable instrument law.
    2. Fraud — representations relied upon.- — In order that representations may he fraudulent in law, they must he made by one who either knows them to be false or else, not knowing, asserts them to be true, and -made with intent to have the other party to act upon them to his injury, and such must be their effect.
    S. Fraud — representations not relied upon. — A party to a land transaction cannot contend that he was injured by false representations made by the other party as to the market value of the land if he did not rely upon such representations, but made independent investigations concerning the property.
    47““ Fraud — representations—damages.—Where a vendor of land represented part of it as river bottom land, free from overflow, and the rest as a good grade of upland, when in fact the bottom land was subject to overflow and the other infested with Bermuda grass, the purchaser, relying upon such representation, was entitled to have his purchase notes credited with the difference between the value of the land as represented and as it actually'was.
    Appeal from Sevier Chancery Court; James D. Shaver, Chancellor;
    reversed.

      Abe Collins, for appellants.
    It is not sufficient to show that the representations complained of were false. It must also be shown that they were made with intent to have the other party act upon them to his injury, and that the party making them did not honestly believe to be true when he made them. 30 Ark. 419; 11 Ark. 378.

      Lake & Lake, for appellees.
    1. The chancellor found that the weight of the evidence brought the case within the application of the rule recognized by this court in numerous eases, viz: (1) that the fraud related to some matter of inducement to the making of the contract; (2) that it wrought injury to the party complaining; (3) that the relative position of the parties was such, and their means of information such, that the vendee must be presumed to have contracted upon the faith reposed in the statements of the vendor, and (4) that he did rely on them, and had the right to rely upon them in the full belief of their truth. 47 Ark. 148; 112 Ark. 499; 113 Ark. 81; 119 Ark. 100; 101 Ark. 613; 123 Ark. 278; 125 Ark. 576; 127 Ark. 383. Fensler’s advertisement was a statement of fact, purporting to be based upon his personal knowledge. He cannot be heard to say that he was merely repeating something that a third party had told him. 26 C. J. 1131.
    2. The judgment is not excessive. The rights of the parties to the transaction were fixed as of the date the deal was consummated. 123 Ark. 275; 125 Ark. 573. Tested by the rule laid down in Matloch v. Reppy, 47 Ark. 148, as to the measure of damages, the finding of the chancellor is fully supported by the evidence.
    3. Instead of being an innocent holder of the note sued on, as insisted by appellant, Lillian Troyer is not, and never has been, a holder of the note, innocent or otherwise. The attempted assignment thereof while in the possession of Moore was' non-effective. C. & M. Digest, <§§ 7796-7-8.
   Humphreys, J.

Appellees purchased the Grlen-wood Stock Farm, one mile from DeQueen, containing 217 acres, from Gr. W. Fensler for $13,450, and in payment thereof conveyed their equity in California property for $7,900 and executed their notes to him for $5,500, secured by a mortgage on the Grlenwood Farm. The deal was made in December, 1917, and the notes and mortgages were dated February 1, 1918. The notes were for $1,000 each, except the last one, which was for $1,550; and all bore interest at the rate of 7 per cent, per annum from date until paid. They matured in one, two, three, four and five years. Fensler assigned the notes to Henry Moore to secure an indebtedness of $1,500 for borrowed money, and on January 29, 1920, undertook to assign his equity in them in a detached, written intrument, to his sister, Lillian M. Troyer, for a valuable consideration, while same were in the possession of Moore.

Appellees failed to pay said notes at maturity, and appellant, Lillian M. Troyer, and Henry Moore instituted this suit in the chancery court of Sevier County to enforce the payment of the notes, alleging that they were innocent purchasers of them.

Appellees filed an answer denying that said appellant and Moore were innocent purchasers. They also interposed the further defense that they purchased the G-lenwood Farm through fraudulent misrepresentations of Gr. W. Fensler to the effect that the bottom land of 180 acres was above overflow and that the balance was a good grade of upland, when in truth the bottom land was subject to overflow and the upland infested with Bermuda grass, to their damage in the sum of $7,000, being the alleged difference between the value of the land as it is and as it was represented. They asked that their answer be taken as a cross-bill, and that Gr. W. Fensler be made a party defendant, which request was granted.

G. W. Fensler filed a separate answer 'denying seriatim the allegations of the answer with reference to the alleged misrepresentations made by him, cr that he did not sell the notes sued upon in good faith. He also alleged that misrepresentations were made by appellees to him concerning the market value of the California properties, to his damage in the sum of $8,800, for which he prayed judgment.

Lillian M. Troyer and Henry Moore filed a reply denying the allegations of the answer seriatim.

The cause was submitted to the court upon the pleadings and testimony, which resulted in a decree in favor of the representative of the estate of Henry Moore for the sum of $1,500 principal, and $104.52 interest, which was paid by appellees on the day the lands were to be «old for the satisfaction of the judgment; and a judgment dismissing tlae bill of Lillian M. Troyer and cross-bill of G-. W. Fensler, for the want of equity. From the decree dismissing the bill and cross-bill an appeal has been duly prosecuted to this court, and the cause is before us for trial de novo.

It is first insisted that the decree should be reversed because the trial court refused to hold that Lillian M. Troyer was an innocent purchaser of the notes. The notes were payable to order, and to have negotiated them it was necessary for Fensler to indorse them by writing his name on the instrument itself, or upon a paper attached thereto, and to deliver them. Section 7796-7798, Crawford & Moses’ Digest. This was not done. At the time of the attempted assignment the notes were in possession of Henry Moore, who held them as collateral security. Fensler was not in possession of them, and could not negotiate them within the meaning of the negotiable instrument law. Parts of negotiable instruments cannot be transferred, nor can such instruments be negotiated by transferring them to two or more indorsees separately. Section 7798, Crawford & Moses’ Digest. The detached written assignment of the notes by Fensler to his sister could not operate as a negotiation of them-to her, as Moore held them at the time under assignment from Fensler.

It is next insisted that the decree should be reversed because the trial court found that the sale of the farm was induced by fraudulent misrepresentations. Fensler advertised the farm for sale in “The Western Salesman,” published at Minneapolis, over his name. The lands were described in the advertisement as follows: “217 acres one mile from DeQueen, Sevier County, Arkansas. 180 acres bottom land, above overflow, and the other a good grade of upland. 35 acres timber.”

The Camerons, who resided in Bosedale, California, saw the advertisement, and wrote to Fensler. A correspondence ensued which resulted in an exchange of the lands without inspection of either property by the respective parties. The correspondence and advertisement revealed that Fensler represented the bottom lands on his farm to be above overflow and the upland of a good grade. Appellees testified that they informed Fensler of the impossibility of either of them coming to Arkansas on account of the ilhiess of Mrs. Cameron, and that they were unacquainted with the land or country, and on that account would rely entirely upon his representations as to the character of the land in making the purchase. Fensler did not deny these statements, contenting himself with saying that the representations he made were based upon information he had received from others, and that his meaning in making the representations was that the land would not overflow during crop seasons. The great preponderance of the evidence is to the effect that the land is subject to overflow during any extended rainy spell, in or out of crop season; ■ and much of the testimony tended to show that he was fully cognizant of this fact when he represented otherwise. He lived upon the farm long enough to have known the conditions. The testimony also showed that the upland was infested with Bermuda grass, which impaired it, to-some extent, for ag’ricultural purposes. Fensler represented as a -fact that the bottom lands were above overflow, and that the upland was of a good grade. The representations were false, but it is really immaterial whether he knew them to be false, or not. They were made with intent to have the Camerons act upon them to their injury, and they had that effect. This court has laid down the following rule governing actionable misrepresentations: “In order that representations may be fraudulent in law, they must be made by one who either knows them to be false, or else, not knowing, asserts them to be true, and made with the intent to have the other1 party to act upon them to his injury, and such must be their effect.” Ryan v. Bachelor, 95 Ark. 375; First National Bank of Newark v. People’s National Bank of Springfield, 97 Ark. 15; Jarratt v. Langston, 99 Ark. 438; Brown v. Lemay, 101 Ark. 95. We think the chancellor’s findings as to actionable misrepresentations made 'by Fensler are supported by the weight of the evidence. It is suggested by appellants that appellees 'misrepresented the value of the California properties, and that the court ignored this fact in arriving at the amount of damages suffered by appel-lees. It is true that Fensler realized little out of those properties, but that can make no difference, for Fensler did not rely upon the representations made by the Cam-erons concerning their property. He made independent investigations concerning the market value thereof. Bep-resentations, in order to be actionable, must have been relied upon by the injured party. Arkadelphia Lumber Co. v. Thornton, 83 Ark. 403.

The last insistence for a reversal of the decree is that the judgment for damages was excessive. The measure for damages for actionable misrepresentations ■announced by this court is as follows: “In actions of deceit, the injured party may insist on having his damages measured by the differences in the value of the property purchased as it really was, and what it would have been had the representations made concerning it been true.” Matlock v. Reppy, 47 Ark. 148. According to the weight of the testimony, the market value of the land at the time of the exchange was about $65 an acre, had it been free from overflow and not infested with Bermuda grass. There were thirteen witnesses who testified relative to the actual value of the farm at the time the deal was made in December, 1917, seven on the part of appellants, and six on the part of appellees. Those on behalf of appellants placed the value at $50 to $70 an acre, and those on behalf of appellees at $20 to' $25 an acre. All of these witnesses were acquainted with the particular tract of land, and most of those who testified on behalf of appellants were familiar with land values in that vicinity. Some of them formed their opinions from market values as a basis, while others formed them upon intrinsic values as a basis. The improvements upon the farm were good, having cost about $2,500. Appellees took up their residence on the land in 1918 and lived there until this suit was instituted, without serious complaint as to any misrepresentations having been made to them. During the time of their residence they refused to entertain a trade for the land upon the value basis of $9,000. They listed the land for sale with E. D. Stuart, a real estate agent, in November, 1921, for $13,000, and with H. S. Shaw, another real estate agent, for $150 an acre in the summer of 1918, and with J. T. Carleton for $100 an acre in 1921. In view of the fact that a number of witnesses, all of whom are familiar with the farm, have taken the wide range of $20 to $70 per acre as to its value in December, 1917, we have concluded, in the light of the whole evidence, that $50 an acre would have been a fair market value of it at that time. In other words, $15 per acre would be a fair and reasonable damage to appellees on account'of the bottom land being subject to overflow and the upland being infested with Bermuda grass. According to this finding, the total damage sustained was $3,255. This amount only should have been deducted from $5,500, the face of the notes, and a judgment .should now be rendered aginst appellees and the land for that difference, less $1,640.52 which they paid the representative of the estate of Henry Moore.

For the error indicated the decree is reversed, and the cause is remanded with directions to render a judgment against appellees for $604.48, and to decree a foreclosure against the land for said amount.


source: Caselaw Access Project

license: Public Domain

text:
    Halliburton v. Cannon.
    Opinion delivered October 15, 1923.
    1. Appeal and error. — conclusiveness op verdict. — If the verdict of a jury or the finding of the court sitting as a jury is supported by legal and substantial evidence, it will not be disturbed on appeal; and in determining whether evidence was legally sufficient to sustain a verdict, the evidence must be viewed in the light most favorable to the verdict.
    2. Bills and notes — parol evidence op conditional signature.— Where a promissory note, made payable to plaintiff, was signed by defendant as accommodation maker upon express condition that two other persons should sign the note before it should become binding on defendant, and defendant notified plaintiff of such condition before the note was delivered to him/ it was not. error to permit defendant to prove the condition on which he signed the note, though plaintiff was not present when the note was signed.
    . Appeal from Cleburne Court; J. M. Shinn, Judge;
    affirmed.

      M. E. Vinson, for appellant.
    Cannon signed the note and placed it in the bands of the principal, McIntosh, thereby constituting the latter his agent for the purpose of negotiating the note. 48 Ark. 454; 69 Ark. 332; 99 Ark. 319. The note carried no condition on its face, and the only condition that could have attached to it would have been notice to the payee before delivery. Such notice was not given. Cannon is estopped. 48 Ark. 454; Id. 426 and cases cited. The note in suit was a renewal of the note for which it was given, and Cannon was a surety on the original note. The renewal note was therefore not a new obligation. 96 Ark. 268; 106 Ark. 156. The note sued on being taken in renewal of another on which Cannon was liable as a surety, made plaintiff a holder in due course of business. 88 Ark. 97; 96 Ark. Ill; 65 Ark. 210; 102 Ark. 49; Id. 426. Its delivery for value and in due course o'f business is conclusively presumed. C. & M. Digest, § 7782.

      Lawrence Neill Reed, for appellee.
    The court, sitting as a jury, found the facts to he that Cannon signed the note upon condition, and that the plaintiff had notice of this fact before its acceptance by him. The court’s finding should not he disturbed. 126 Ark. 578; 115 Ark. 607; 171 S. W. 924; 114 Ark. 170.
   Humphreys, J.

This suit was brought in the circuit court of Cleburne County, by appellant against appellee and a number of others, upon a note for $653 and interest, executed by them to hind The note was given in evidence of an indebtedness of the amount owing by W. R. McIntosh to appellant, including $475 and accumulated interest, evidenced by a note theretofore given to appellant by W. R. McIntosh with appellee as security.

Appellee interposed the defense that he had signed the $653 note upon condition that E. G-. Mitchell and O. P. McIntosh should sign it before he would be bound, and that he notified appellant of the condition before the note was delivered to him.

The cause was. submitted to the court, sitting as a jury, upon the issue joined and testimony adduced by the respective parties, which resulted in a finding and judgment for appellee, from which is this appeal.

The first contention for a reversal of the judgment is the alleged insufficiency of the evidence to support the verdict. The rule is that, if a verdict of a jury, or of the court sitting as a jury, is supported by any legal, substantial evidence, it will not be disturbed by this court on appeal. Gilchrist v. State, 100 Ark. 330; Cherry v. Peay, 115 Ark. 607; and in determining whether there was evidence legally sufficient to sustain a verdict the evidence must be viewed in the light most favorable to the verdict. St. L. I. M. & S. R. Co. v. Coleman, 97 Ark. 438.

Appellee testified that he signed the note at the • request of W. R. McIntosh, with whom he had an understanding, in the absence of appellant, that he should not become liable thereon until E. Gr. Mitchell and O. P. McIntosh signed it; that, immediately after signing it, and before delivery, he told appellant of the understanding, and that, unless said parties signed it, not to count on him. Neither E. G-. Mitchell nor O. P. McIntosh signed the note.

Appellant testified that appellee did not tell him about the understanding he had with W. E. McIntosh until after W. E. McIntosh had delivered the note to him and after he had returned the old note of $475 to W. E. McIntosh.

Each party is supported in his statement by other testimony in the case. Applying the rules heretofore announced by this court to the facts recited, the verdict cannot be disturbed, as it is supported by legal evidence of a substantial nature.

The second and last contention made by appellant for a reversal of the judgment is because the court admitted proof of the agreement appellee had with W. E. McIntosh, in the absence of appellant, to the effect that E. G-. Mitchell and O. P. McIntosh would sign the note before it should become binding on appellee. The notice Cannon testified he gave appellant was based upon the agreement. The agreement was the very thing' about which the notice was given. Had appellant been present when the agreement was made, it would have been unnecessary to notify him of it, as he would have been bound by it without further notice. Not being present, it was necessary to notify him of it before delivery of the note in order to bind him by it. It would have been impossible to testify intelligently about the notice without telling of the agreement. The agreement, being a necessary part of the transaction, was clearly admissible in evidence, although made in the absence of appellant.

No error appearing, the judgment is affirmed.


author: Humpheeys, J.

text:
    Bohannon v. State.
    Opinion delivered October 15, 1923.
    1. Jury — mode of selection. — Where the deiendant in a felony case waived a drawn jury, it was unnecessary to have a full panel of 24 jurors; and where she accepted the first 12 jurors presented, she could not complain because the court failed to have additional jurors summoned.
    2. Witnesses — cross-examination of accused. — Where one accused of uttering a forged check testified in her own behalf, it was competent, on cross-examination, to permit the prosecution, for the purpose of impeaching her credibility, to ask her whether the man who gave her the check was a married man; it appearing that she had been traveling and associating freely with the man.
    3. Criminal law — evidence—possession of other forged checks. —It was not error, in a prosecution for forgery, to admit evidence that at the time defendant cashed the alleged forged check she had four other similar checks in her possession.
    4. Criminal law — sufficiency of evidence. — Where a verdict is supported by any substantial evidence, it will not be disturbed on appeal.
    5. Criminal law — instruction—opinion as to defendant’s guilt. —An instruction to the effect persons under 18 convicted of felonies may be sent to a reform school if, in the judgment of the trial judge, such course may be expedient, was not erroneous as an expression of the court’s opinion of defendant’s guilt.
    6. Criminal law — instruction—specific objection. — Objection to an instruction that it is ambiguous and calculated to mislead the jury should be pointed out to the court specifically.
    Appeal from Sebastian Circuit Court, Fort Smith District; John E. Tatum, Judge;
    affirmed.

      Chew & Ford, for appellant.
    The defendant was entitled to have twenty-four jurors from whom to select the jury to try the case before being compelled to exercise any of her challenges. C. & M. Digest, §§ 3144-45, 3146. The giving by the court of a part of C. & 'M. Digest, § 804, over appellant’s objections, was reversible error. It was not only equivalent to an expression of opinion by the court that the defendant was guilty, but this court has expressly declared that the disposition to be made of a defendant, if convicted, is not determined, nor intended to-be known, until after Ms conviction. 84 Ark. 292. See also 155 Ark. 479; 154 Ark. 297. The court volunteered this instruction. 156 Ark. 592.
    J. S. Utley, Attorney General; John L. Garter, Wm. T. Hammock and Barden Moose, Assistants, for appellee.
    1. Appellant was not prejudiced by the failure to comply with 0. & M. Digest, 3144-3145, ip that her failure to exercise any peremptory challenges was an implied admission that the twelve jurors on the regular • panel were unobjectionable. 93 Ark. 173; 50 Ark. 492; 91 Ark. 585; 97 Ark. 132; 133 Ark. 88; 125 Ark. 282.
    ' ■ 2. There was no prejudice in permitting the prosecuting attorney to inquire of appellant, when testifying as a witness, whether or not Raymond Mitchell was a married man, and whether she knew of that fact at the time he gave her the check to cash. It went to her credibility. 152 Ark. 380; 146 Ark. 206; 53 Ark. 387'; Clayton v. State, 159 Ark. 592; 156 Ark. 525; 141 Ark. 504; 150 Ark. 220; 114 Ark. 239; 153 Ark. 1. .
    • 3. The testimony as to the four other checks of $25 each found in possession of appellant, was admissible as tending to show guilty knowledge or' intent. 72 Ark. 597. See also 75 Ark. 433; 81 Ark. 81; 87 Ark.'22; 92 Ark. 482; 94 Ark. 210; 110 Ark. 229; 130 Ark. 127; Id. 363.
    4. There was no error in giving instruction 2, by the court, being that part of C. & M. Digest, § 804, which was pertinent. See rehearing opinion in Pittman v. State, 84 Ark. 292; 156 Ark. 597.
   Humpheeys, J.

Appellant was indicted, tried, and convicted in the Sebastian County Circuit .Court, Fort Smith District, for uttering a forged check on the First National Bank of Yan Burén, Arkansas, to Hunt Dry Goods Company, and, as punishment therefor, adjudged to servo a term of two years in the State Penitentiary. Prom the judgment of conviction slie lias prosecuted an appeal to this court;

Appellant’s first assignment of error for a reversal of the judgment is the trial court’s refusal to order the sheriff to summon twelve bystanders, so as to complete a full panel of twenty-four men from which to select a jury to pass upon her guilt or innocence. When her case was called, there were only twelve men in the jury-box from the regular panel. Appellant'insists that, under §§ 3144-3146 of Crawford & Moses’ Digest she had the right to be confronted with a full panel of 24 men, before she could be called upon to exercise any one of her twenty peremptory challenges. Our construction is that it is only necessary-to have twenty-four names .in the box when a drawn jury is not waived. In this case appellant waived a drawn jury. The waiver was tantamount to saying to the court that there was no necessity for filling up the panel until the qualification of each of the twelve jurors in the box was passed upon, and until the State and appellant should exercise such number of their peremptory challenges as each might desire. The refusal of appellant to challenge any one of the twelve was an implied admission that each was unobjectionable. It would have been a useless thing to have summoned twelve additional men to serve as jurors where the twelve already in the box were unobjectionable.

Appellant’s next assignment of error for a reversal of the judgment was in permitting her to be asked, on cross-examination, whether Eaymond Mitchell, who gave her the check to cash, was a married man. It is true this was a collateral matter not tending to show whether the check was a forgery, and, if so, whether appellant knew it; but, even so, the question was permissible as a test of her credibility as a witness, as she had been traveling and associating freely with him. This court said, in the case of Bogue v. State, 152 Ark. 380, “it is within the well established rule to inquire of an accused, on cross-examination, touching his illicit relation as a test of his credibility.” This procedure is a well recognized method of impeaching a witness. Pearrow v. State, 146 Ark. 206; Turner v. State, 153 Ark. 41.

Appellant’s next assignment of error for a reversal of the judgment is the admission of evidence showing .that appellant had four other checks of $25 each, similar to the check uttered, in her possession at the time she cashed the check in question. As the evidence failed to show that appellant attempted to cash either of the four checks, it is contended that the .admission of the evidence was tantamount to proving another -and separate offénse in order to secure a conviction of uttering a forged instrument. "We do not think so. The checks were similar, and she had possession-of all of them at the time she uttered one of them. Guilty knowledge or intent was essential to the crime charged against appellant, and her possession of four other checks, similar to the one uttered, was admissible to show whether she uttered the check in question in good or bad faith. In the case of Howard v. State, 72 Ark. 597, this court said: “Possession of other like counterfeits or forgeries more or less distinctly implies knowledge, and is admissible in evidence against the defendant.” The rule thus announced is supported by the following authorities: Greenleaf, Ev. § 53; Wharton, Crim. Ev. (8th ed). §§ 31-46; Clark, Cr. Pro., p. 518; 1 Bishop, New Cr. Pro., § 1126.

Appellant’s next assignment of error for a reversal of the judgment is the alleged insufficiency of the evidence to support the verdict. J. T. Mitchell’s name was signed to the check, and it was uttered by appellant. She had four other checks similar to it in her possession at the time. The payee in the check was Raymond Mitchell, the grandson of J. T. Mitchell. There is testimony in the record to the effect that appellant represented herself to be the payee named in the check when she cashed it. J. T. Mitchell and his wife, Elenor Mitchell, testified that Raymond had no authority to issue the check, and that the handwriting was not that of Raymond. This evidence was substantial, and sufficient to justify the inference that appellant uttered the check with knowledge that it was a forgery. The rule is that, if the verdict is supported hy any substantial evidence, it will not he disturbed on appeal to this court. Fields v. State, 154 Ark. 191.

Appellant’s next assignment for a reversal of the judgment is giving instruction No. 2 by the court, which is as follows: ‘ ‘ The court instructs you that all convicts in the penitentiary now and all persons hereafter sentenced to the penitentiary under the age of eighteen years, and all present and future penitentiary convicts under eighteen years of age, shall be committed to a place in said reform school by said board, provided said persons under eighteen years of age convicted of a felony may be sent to the penitentiary if, in the judgment of the trial judge, such course may be expedient.”

Appellant contends that the instruction was tantamount to telling the jury that appellant, in the opinion of the court, was guilty.- We do not so interpret the instruction. It does not contain an indirect assumption of appellant’s guilt by saying how she would be punished in case of conviction, as suggested by learned counsel. The instruction simply apprised the jury that it was optional with a trial judge, in -the exercise of his sound discretion, whether persons under eighteen years of age convicted of a felony should he sent to a reform school or State Penitentiary. The instruction followed the language of the statute. Section 804, Crawford & Moses’ Digest. It contained no intimation whatever as to which place appellant would he sent in case of her conviction. All of that part of the statute pertinent to the question of punishment was read to the jury. No error was committed in giving the instruction.

Appellant’s next and last assignment of error for a reversal of the judgment is that the court erred in giving instruction No. 1-A, which is as follows: “If you believe from the evidence, beyond a reasonable doubt, that the defendant, Mabel Bohannon, in the Port Smith District of Sebastian County, Arkansas, and within three years next before filing this indictment, unlawfully, fraudulently, and feloniously did utter and pass and exhibit as true to the Hunt Dry Goods Company, of Fort Smith, Arkansas, a partnership composed of R. T. Hunt, T. L. Hunt and Henry Ayres, a certain forged and counterfeit writing on paper, purporting to be a blank check on the First National Bank of Van Burén, Arkansas, as set out in the indictment, the said forged and counterfeit writing on paper being then and there uttered and published as true to the said Hunt Dry Goods Company, as aforesaid, by the said defendant, Mabel Bohannon, with the intent then and there unlawfully, fraudulently and feloniously to obtain possession of the money and property of the said Hunt Dry Goods Company, she, the said Mabel Bohannon, then and there well knowing said writing on paper to be forged and counterfeit, then you should convict the defendant.”

The instruction is assailed upon the alleged ground that it assumes to tell the jury that the check in question was a forged and counterfeit writing. When the second clause of the instruction is read in connection with the first, it is plain the court left the question of whether the instrument was a forged paper to the jury. If there is any ambiguity in the instruction calculated to mislead the jury, the attention of the court should have been called to it by a specific objection, as the instruction contained no inherent defect. Griffin v. State, 141 Ark. 43; Sandlin v. Bailey, 146 Ark. 23.

No error appearing, the judgment is affirmed.


author: McCulloch, C. J.

text:
    Columbia Compress Company v. Reid.
    Opinion delivered October 22, 1923.
    1. Corporation — dissolution—suit to enforce CLAiM.^-Where, in the voluntary dissolution of a corporation,' the stockholders sued on a claim in favor of such corporation, it was not necessary to appoint a receiver to collect the claims; all the parties being before the court.
    2. Trial — jurisdiction.—Where the officers of ■ a warehouse corporation, on its dissolution, transferred to the purchaser of the warehouse five untagged bales of cotton subject to outstanding receipts and subsequently paid for such bales and took up the receipts, an action against the .purchaser of the warehouse to recover the value of such bales is cognizable exclusively at law.
    3. Trial — wrong forum — remedy.—The error of bringing a law action in chancery cannot be reached by demurrer, and is waived where no request for a transfer to the law court is made.
    4. Warehousemen — failure to deliver property — liability.— Where a warehouseman held five bales of cotton on which the identifying tags had been lost, and the holders of five warehouse receipts, for which there were no corresponding tags, presented same to the warehouseman and demanded their cotton, which was refused, the warehouseman immediately became liable for the value of the cotton, and the fact that the cotton was subsequently destroyed by fire without negligence on the warehouseman’s part did not relieve it from liability.
    Appeal from .'Columbia. Chancery Court; J. Y. Stevens, Chancellor;
    affirmed.

      McKay & Smith, for appellant; G. A. Cunningham of counsel.
    The court erred in overruling appellant’s demurrer to the jurisdiction. The action should have been brought at .law. Two methods for dissolving a corporation are provided in C. & M. Digest, §§ 1820-Í824. When the Magnolia Compress Company saw fit to surrender its charter as it did, it elected to vest jurisdiction in the chancery court for the purpose of paying its debts, distributing its assets, and for no other purpose. Or, in other words, it elected to cancel any debts due it. In construing a statute the court must give effect, where it can, to the plain meaning of the statute, to each and every section, sentence and phrase thereof. 133 Ark. 491 ; 137 Ark. 280; 149 Ark. 183; 150 Ark. 486. A receiver should have been appointed to take charge of the property and wind up the corporation. Had that been done, this suit would have had to be brought in the law court, where it was properly triable before a jury. 48 Ark. 426; 141 Ark. 332. After dissolution, the stockholders cannot ordinarily sue on behalf of the corporation to reach corporate assets. Fletcher’s Cyc. of Corp., art. 5624. As to two bales of cotton, the payment by the Magnolia Compress Company, was voluntary, with full knowledge of the facts, and as to them the transaction is closed. 77 Ark. 552; 86 Ark. 175; 102 Ark. 152. No proper demand was made for the “no tag” cotton, in accordance with C. & M. Digest § 10352. If no demand was made for the five bales of “no tag” cotton, defendant cannot be held liable unless it is -shown that the cotton burned as the result of defendant’s negligence. 134 Ark. 76; 150 Ark. 8. The burden of proof is upon the plaintiff. 9 Am. Law Repts. 561. Appellant, being a gratuitous bailee, is only liable for gross negligence. 10 L. R. A. 481; 3 R. C. L. 99, art. 24; 21 R. C. L. 824-25 art. 9; 4 A. L. R. 1197; 103 Ark. 12; Id. 37; 39 L. R. A. (N. S.) 643.

      Wade Kitchens, for appellee.
    Section 1824, C. & M. Digest, vests jurisdiction in the chancery court to make provision for the payment of debts and distribute the assets of a dissolved corporation. 116 Ark. 78. A dissolution of a private corporation entirely changes the character of the property interest of its stockholders; it destroys the stock as such and substitutes the thing which it represents, that is, an interest in the corporate property. 7 R. C. L. § 745; 72 Am. Dec. 685. The stockholders properly brought the suit. C. & M. Dig., §§ 10352 and 10402. Appellant did not ask for a receiver, and the chancellor must have deemed one unnecessary. The submission of the question to a jury was within the discretion of the chancellor. However, no jury was -asked for. 48 Ark. 436. Where a warehouseman transfers the property stored with him and his business to another, the latter is subject to the same liability as the one who issued the receipts. 40 Cyc. 463; 40 Cyc. 470. Failure to comply with demand for delivery renders the warehouseman liable, notwithstanding his declaration of an intention to deliver. 13 Ark. 442; 40 Cyc. 437. The loss of marks of identification do not divest the owner of his title. 40 Cyc. 406. Destruc-lion by fire subsequent to a demand for delivery and refusal is not sufficient excuse. 31 Iowa 160; 40 Cyc. 441-442.
   McCulloch, C. J.

Appellees, fourteen in number, were all of the stockholders of the Magnolia Compress Company, a domestic corporation, owning and operating a compress at the town of Magnolia, in Columbia County. The corporation was dissolved on March 17, 1921, by the voluntary act of the stockholders by surrendering the charter in the method prescribed by statute (Crawford & Moses’ Digest, § 1823), and, there being no debts, all of the assets of the corporation, except the claim which is the subject-matter of the present action, were distributed among the stockholders. The reason for the dissolution of the corporation was that it had sold and conveyed the compress property and business on July 1, 1919, to A. J. Matthews, who in turn sold to appellant, Columbia -Compress Company, a domestic corporation. The sale was really made to appellant, but for convenience the conveyance was made to Matthews, who was the manager of appellant’s business.

At the time of the sale by the Magnolia Compress Company there were on hand for storage 3,408 bales of cotton, for which warehouse receipts were outstanding in the hands of the owners of the cotton, each receipt giving the number and weight of the bale and the name of the holder, and specifying that the cotton was to be delivered “only on return of this receipt and payment of charges.” All of the cotton, except eight bales, bore tags which corresponded with the numbers on the warehouse receipts so that they could be identified and delivered to the owners on presentation of the receipts, but there were eight bales from which the tags had been lost. The tag on still another bale had been lost, but it was identified by another tag bearing the name of J. B. Wilson, the person to whom the warehouse receipt had been issued. When the sale was made this cotton was turned over to Matthews, and he in turn delivered it to appellant, to be held in storage and delivered on presentation of the receipts.

In the usual course of business most of the cotton was withdrawn from the warehouse as sold by the owners, but there were three receipts presented for which they could find no corresponding tags on.bales of cotton in the warehouse. The owner of these receipts turned them over to the secretary of the Magnolia Compress Company, who presented them to appellant’s manager, and three of the bales of cotton in the warehouse which were without tags were delivered as the cotton, or in place of the cotton, which was represented by those three receipts. The evidence in this case tends to show that the cotton was weighed, and that the three bales delivered were substantially the same weight, and this was treated as sufficient identification.

This left five bales of cotton in the warehouse without tags, besides the other bale with Wilson’s name on it. Subsequently five other warehouse receipts were presented, for which there were no corresponding tags shown, and demand was made on the Magnolia Compress Company for payment of the price. The officers of the company, conceding liability on account of the failure to deliver the cotton, paid the value, or price, of those bales, and made demand on appellant for delivery of the cotton. There was no delivery made in response to this demand, and later the warehouse and all the cotton which was left on hand were destroyed by fire.

This action was instituted by the stockholders, after the dissolution of the corporation, against appellant to recover the value of the missing five bales of cotton. It is alleged .that demand was made for surrender of the cotton, and that there was a failure to deliver. It is also alleged that the five bales of cotton which were represented by the warehouse receipts in question were delivered to appellant under the conveyance to Matthews, and by him to appellant, being the same bales which were without tags. The warehouse receipts for the° Wilson bale of cotton was among the ones involved in this suit, and appellant offered to confess judgment for the value of that bale. The action was instituted in the chancery court, and appellant demurred to the complaint on the following grounds:

“First. That there is a defect of parties plaintiff in this: The Magnolia Compress Company has been dissolved, and is not made a party plaintiff hereto; and that the stockholders have no right or authority to maintain this suit.

“Second. That the complaint does not state facts sufficient to constitute a cause of action, either in equity or law.

“Wherefore, premises considered, the defendant prays that the complaint of the plaintiff he dismissed, and that it have judgment for its costs in this action.”

.The court overruled the demurrer, and appellant answered, denying the allegations of the complaint with respect to the receipt of the missing bales of cotton, except the Wilson bale, and also denied that there had been any demand for the delivery of the cotton. The cause was heard on oral testimony, and the court rendered judgment in favor of appellees against appellant for recovery of the value of the five bales of cotton shown by undisputed testimony.

The first contention of appellant is that this is merely an action to recover the value of the -cotton, which should have been brought at law, and that appellee could not maintain an action for the recovery. Counsel rely oh the statute (Crawford & Moses’ Digest, §1824), which provides that, on dissolution of a corporation by surrender of its charter, “the chancery court shall have jurisdiction to pay its debts and to distribute its assets among the stockholders according to their several interests.” If there be a proceeding in the chancery court under this statute to collect and distribute the assets, it is, of course, essential to the procedure that the court appoint a receiver for that purpose, who would be authorized by the court to maintain an action for recovery of such assets for the purpose of distribution. We need not determine whether or not this statutory method is exclusive, for the reason that this action was instituted in chancery, and, the court having before it all of the parties to this controversy, it would have been a useless formality to appoint a receiver. It would be putting form above substance to turn the parties out of court merely because there was no receiver appointed to maintain this suit, when all of the parties were before the court, so that a complete remedy could be afforded. In other words, the answer to appellant’s contention would have been made by the court appointing a receiver, and this formality would have added nothing to the effectiveness of the relief granted nor to the protection to the appellant from further litigation. It is true that the cause of action is one which is exclusively cognizable in a court of law, and appellant would have been entitled to a transfer of the cause to the law court if appropriate request had been made for that purpose. A demurrer did not reach to that point (Sledge-Norfleet Co. v. Matkins, 154 Ark. 509), and there was no request made for a transfer of the cause. The failure to make such a request constituted therefore a waiver of the erroneous institution of the action in the wrong court, and this question cannot be raised for the first time in this court.

It is next contended that the evidence is not sufficient to sustain the decree, in that the cotton represented by the warehouse receipts in question was not identified as being among the bales of cotton turned over to appellant for safekeeping. "We think it is shown to a reasonable certainty that the disputed bales of cotton were among those which were turned over without tags on them. There is no dispute about the Wilson bale of cotton, and that leaves only four bales of the missing cotton to be identified among the five untagged bales. This case was tried about three years after the cotton was turned over to appellant, and it is a significant circumstance that, according to the evidence, no other warehouse receipts have ever turned up for missing or untagged cotton. There were eight bales of untagged cotton in the warehouse besides the Wilson bale, and eight warehouse receipts have turned up for which there were no corresponding tags, and it is too strong a circumstance to be ignored that tlie number of untagged bales corresponded with the number of warehouse receipts for which there were no tagged bales to correspond. This warranted the inference that these untagged bales were the very bales which were represented by these warehouse receipts. There is testimony that these could have been verified with substantial accuracy by weighing the untagged bales and comparing the weights on the warehouse receipts. This method would not have identified the bales to an absolute certainty, but, taken in connection with the fact that there were no other warehouse receipts presented for these bales, it would, from a practical standpoint, have been reasonably certain that these were the bales.

Again, it is contended that the evidence fails to make out a case for the reason that, when the manager of the Magnolia Compress Company -demanded the last five bales of cotton, he did not demand that the untagged bales be delivered. It is true that the evidence does not show that a specific demand was made at that time for the untagged bales, when it was found that there were no corresponding tags on any bales in the warehouse, but it is reasonably inferable that such was intended to be the nature of the demand, and that all parties so understood it. The proof is to the effect that when the first three bales were demanded and delivered they were delivered from among the untagged bales, and, when demand was made for the other five bales, it is reasonable to assume that the parties understood that a demand was made for the same process of identifying the bales of cotton by reweighing untagged bales, _ and, if found to substantially correspond with the weights on the receipts, deliver them in fulfillment of the receipts. We are therefore of the opinion that, under all of the circumstances of this case, the cotton was sufficiently identified to justify the court in deciding that the bales of cotton on hand without tags were the bales which were represented by the warehouse receipts.

Tlie proof shows that the Magnolia Compress Company paid for this cotton and took np the receipts, and they thereby became the owners for all purposes, and were authorized to sue for the value on failure to deliver. After appellant had failed or refused to make delivery of the cotton on demand, it became immediately liable for the value, and the fact that the cotton was subsequently destroyed by lire, even without negligence on the part of appellant, does hot exonerate it from the liability which had already accrued.

The decree is therefore affirmed.


author: McCulloch:, C. J.

text:
    State v. Western Union Telegraph Company.
    Opinion delivered October 22, 1923.
    1. Gaming — cotton putuees — transmission op telegram. — An indictment of a telegraph, company for receiving for transmission a telegraph message to a certain addressee, relating to the purchase and sale of cotton futures “knowing the contract made in such message was not entered into in good faith for the future delivery of cotton with the actual intention of fulfillment,” held not defective in failing to set out the message, either by its tenor or substance, nor in failing to show where and by what means the message was received.
    2. Indictment and information — statutory crime; — sufficiency. —It is sufficient to charge a statutory offense in the language of the statute which creates it, unless a more particular statement of facts is necessary to make the charge definite and certain, so as to apprise the accused of the facts with which he is confronted.
    3. Gaming — receiving unlawful message for transmission.— Under Crawford & Moses’ Dig., § 2653, making it unlawful to deal in futures, and § 2660 and 2661, making'it unlawful for telegraph companies knowingly to transmit messages relating to the purchase and sale of such futures, an indictment stating that defendant telegraph company received a message for transmission relating to the purchase of cotton futures, and creating a contract to that effect, “knowing that the contract made in such message was not entered into in good faith for the future delivery of the cotton,” etc., sufficiently set forth the substance of the charge in language equivalent to that used in the statute.
    4. Gaming — unlawful transmission of telegram — indictment. —An indictment of a telegraph company which alleges the receipt of an unlawful message concerning the purchase of cotton futures “in Jackson County over wire leased to a (named) cotton exchange,” a corporation of Newport, Ark., sufficiently charges the place where and the means by which the message was received.
    5. Gaming — unlawful transmission of message — oral or written. — Under Crawford & Moses’ Dig., § 2661, making it unlawful for telegraph companies to receive for transmission messages relating to the purchase or sale of futures, knowing that no bona fide intention to deliver exists, the message may be oral or written, in the absence of a statutory requirement of delivery in any particular way.
    6. Gaming — cotton futures.- — An indictment of a telegraph company for receiving for transmission a telegraph message relating to the purchase and sale of cotton futures is not defective in failing to specify the name of the person who delivered the message.
    7. Gaming — receipt of message relating to futures — indictment. —Under Crawford & Moses’ Dig., § 2661, making it unlawful for telegraph companies to receive for transmission messages relating to the purchase or sale of futures, an indictment alleging that a prohibited message was “to be delivered beyond the borders of the State of Arkansas to (a named person) of New Orleans” sufficiently named the addressee and apprised the defendant of the nature of the offense.
    8. Gaming — receipt of unlawful message — indictment.—Under Crawford & Moses’ Dig., § 2661, making it unlawful for telegraph companies to receive for transmission messages relating to the sale and purchase of futures, knowing that a bona fide delivery was not intended, a general allegation that the message related “to the purchase or sale of cotton futures” was sufficient.
    9. Gaming — receipt of unlawful message — “relating to purchase or sale.” — Under Crawford & Moses’ Dig., § 2661, making it unlawful for telegraph companies to receive for transmission messages “relating to the purchase or sale” of futures, it is not necessary that the message contain a consummated contract, but it may contain either an offer or acceptance.
    10. Gaming — receipt of message as to past sale. — Under Crawford & Moses’ Dig., § 2661, making it unlawful for telegraph companies to receive for transmission messages relating to a purchase or sale of futures, knowing that a bona, fide delivery was not intended, a message relating to a past sale is not within the purview of the statute.
    Appeal from Jackson Circuit court; Dene E. Coleman, Judge;
    reversed.

      J. S. Utley, Attorney General; John L. Carter, W. T. Ham/moch and Darden Moose, Assistants, and E. U. Williaonson, for appellant.
    The court erred in sustaining' the demurrer. The indictment meets all the requirements of the statute. C. 6 M% Digest, § 2661.

      Francis R. Stark and Jno. W. Stayton, for appellee.
    The indictment was insufficient for the reason it failed to set out the message. 19 Ark. 617. When a written document is relied on to sustain the prosecution, the written document must be set out. 17 Fed. 145; 10 Ind. 404; 57 Fed. 382; 2 East P. C. 1122; 127 Fed. 309:131 Fed. 137; 135 la. 499; 45 Ala. 26; 14 Tex. App. 332; 10 Ga. 47; 97 Mass. 5i83; 9 N. J. L. 26; 2 Cow. (N. Y.) 522; 12 Bush. 342; 13 Bush. 267; 96 N. Y. 40; 3 Tex. App. 605; 7 Tex. App. 183; 9 Tex. App. 20; 16 Tex. App. 189; 17 Tex. App. 125; Bishop’s New Crim. Proc. 1733; Wharton’s Crim. Law, § 1982; 25 Cyc. 577, subdiv. 8, note 38. Any allegation which narrow and limits that which is essential is descriptive, and must be proven. 31 Ark. 49.
   McCulloch:, C. J.

Appellee was- indicted by the grand jury of Jackson County for violation of the statutes of this State which make it unlawful for persons or corporations to contract for the purchase or sale of certain commodities for future delivery without intention to make actual delivery, and which make it unlawful for any telegraph or telephone company to knowingly receive for transmission any messages relating to such purchase or sale. The court sustained a demurrer to the indictment, and the State appealed.

The charging part of the indictment reads as follows: “The said Western Union Telegraph Company, in the county and State aforesaid, on the 4th day of December, 1922, unlawfully, knowingly and wilfully did receive for transmission a telegraph message relating to the purchase and sale of what is known as futures in cotton, and creating a contract to said effect, said message to be delivered beyond the borders of the State of Arkansas to H. & B. Beer Company of New Orleans, La., and did transmit said message, after receiving same, over a wire leased to the Newport Cotton Exchange, a corporation, of Newport, Arkansas, knowing the contract made in said message was not entered into in good faith for the future delivery of said cotton with the actual intention of fulfillment, against the peace and dignity of the State of Arkansas.”

The statute on which the indictment was based is as follows:

“Section 2653. Every contract or agreement, whether or not in writing, whereby any person or corporation shall agree to buy or sell and deliver, or sell with an agreement to deliver,, any wheat, cotton, corn, or other commodity, stock, bond, or other security, to any person or corporation, when in fact it is not in good faith intended by the parties, or either of them, that an actual delivery of the article shall be made, is hereby declared to be unlawful, whether made or to be performed wholly within this State or partly within and partly without the State; it being the intent of this act to prohibit any or all contracts and agreements for the purchase or sale and delivery of any commodity or other thing of value, on margin, commonly called dealing in futures, when the intention or understanding of the parties, or either of them, is to receive or pay the difference between the agreed price and the market price at the time of settlement; and any person violating the provisions of this section for each transaction shall be deemed guilty of a misdemeanor, and, upon conviction, shall be fined in any sum not less than five hundred nor more than five thousand dollars, and, upon conviction for a second offense, in addition to said fine, the defendant shall be imprisoned in the county jail not exceeding twelve months.

“Section 2661. It shall be unlawful for any telegraph or telephone company to knowingly receive for transmission within the State of Arkansas any telegraph or telephone message relating to the purchase or sale of any commodity, the punishment for which is provided for in this act, notwithstanding the fact that the delivery of said message may be beyond the borders of the said State of Arkansas, and any telegraph or telephone company so violating the provisions of this act shall be punished as provided in § 2660.” Crawford & Moses’ Digest, 2653, 2661.

Learned counsel for appellee defends the ruling of the court in sustaining the demurrer on several grounds, which will be discussed.

In the first place, it is contended that the indictment is fatally defective for the reason that it fails to set out the message, either by the tenor or substance. It is true that the indictment does not contain the exact language of the telegraphic message, but we do not think that is essential. It is not necessary to set out the identical language of the instrument, for the substance of the message is the gist of the offense, and not its particular form. This is a statutory offense, and the rule often announced in this court is that it is sufficient to charge a statutory offense in the language of the statute which creates it, unless a more particular statement of facts is necessary to make the charge definite and certain so as to apprise the accused of the facts with which he is to be confronted. State v. Graham, 38 Ark. 519; Holland v. State, 111 Ark. 214; Clevenger v. State, 136 Ark. 46; State v. Bond, 151 Ark. 203. The substance of the charge is, we think, sufficiently set forth in this indictment in language equivalent to that used in the statute. The charge is that the message received for transmission related to the “purchase and sale of what is known as futures in cotton, and creating a contract to said effect,” and that the accused received the message “knowing the contract made in said message was not entered into in a-ood faith for the future delivery of said cotton with the actual intention of fulfillment.” The effect of the statute is to prohibit contracts which deal in futures where there is no intention to make actual delivery, hut the intention is to settle by paying the difference between the agreed price and the market price at the time of the settlement. The indictment is sufficient to charge that the message related to a transaction of that character.

It is also argued that the indictment is too indefinite in regard to the receipt of the message, in that it does not show with certainty where and 'by what means the message was received. The indictment expressly charges that the message was received in Jackson County, and that it was received “over a wire leased to the Newport Cotton Exchange, a corporation, of Newport, Arkansas.” Now, it is unimportant how the message was received, provided that, in order to conform to the language of the. indictment, it was one delivered to appellee in Jackson County “over a wire leased to the Newport Cotton Exchange.” There is no statute requiring the delivery of a message to a telegraph company in any particular way or in writing. Such messages may he received by word of mouth or by message over the telephone, and yet it is a violation of the statute to receive for transmission a message such as is prohibited in the statute now under consideration.

Again, it is contended that the indictment is defective in failing to specify the name of the person who delivered the message and the name of the addressee. We think that the language does in fact name the addressee in stating that the message was “to be delivered, beyond the borders of the State of Arkansas, to H. '& B. Beer Company of New Orleans, Louisina.” Counsel argue that this might mean a message to be addressed to some other person in care of H. & B. Beer Co., but we think that it is a strained construction of the language to say that it could be interpreted to mean anything else than that H. & B. Beer Co. was the addressee. We do not think that the -omission of the name of the sender is essential. It is only necessary, as before stated, in charging a statutory offense, to use the language of the statute and such further information as is necessary to apprise, the accused of the particular offense he is called upon to defend against. The message itself, or a copy, is in the possession of ■ the telegraph company, and, where the indictment names the place of receipt of the message for transmission and. the name of the addressee, with a fair statement of the substance of the message, this certainly ought to be deemed to be sufficient to apprise the accused ' of the particular nature .of the offense and to enable it to prepare for its defense. It is no answer to say that the name of the sender of the message ought to be given, for the reason that, on the trial of the case, the State may rely upon any message sent within twelve months before the finding of the indictment.. The accused is apprised by the language of this indictment that it' is called upon to defend any message delivered over the leased wire at Newport, in Jackson County, sent to H. & B. Beer Company of New Orleans, and relating to a sale of cotton futures.

It is contended also that the language of the indictment is indefinite and insufficient in that it fails to set out the language of the. message so as to show, that it related to a purchase or sale of cotton futures.. The argument is that the general statement in the indictment that the message related “to the purchase and sale of what is known as cotton futures” was a mere statement of a conclusion. Counsel cite in support of their contention cases holding that an indictment charging- the sending of obscene literature or letters must set forth the language alleged to constitute obscenity. That rule does not apply, however, to an-indictment under the present statute-, for the charge that the message related to the •sale of cotton- futures necessarily means that it was a part of the negotiations or consummation of such a pur^-chasp or sale. In this connection it is earnestly insisted that the indictment is defective because it fails to affirmatively state that there was involved in the transaction a contract or agreement such as is prohibited by the statute. We are not certain that the indictment does not, at least inferentially, .allege that there was a contract, for, according to the words of the indictment, the message was one “creating a contract to said effect,” and that the accused received the message, “knowing the contract made in said message was not entered into in good faith,” etc. However, we think.that, in order to constitute a charge under this statute, it is not necessary to allege that the purchase or sale was consummated. The words of the statute, “relating to a purchase or sale,” are very broad, and are not confined to cases where there is an actual contract made. Of course it means that the message must contain either an offer or acceptance in order to relate to such a sale, but we think that a message either containing an offer or an acceptance comes within the statute. A mere message containing merely a narrative of a past sale would not be either within the spirit or the letter of the statute, for it would not relate to an unlawful sale merely by giving information that there had been such a transaction. But where the message constitutes an acceptance or offer it necessarily relates to a purchase or .sale, whether there be a consummation of the deal or not.

This discussion covers all of the objections made to the indictment, and we conclude by saying that we find the indictment to be sufficient, and that the court erred • in sustaining the demurrer.

The judgment is therefore reversed, and the cause is remanded with directions to overrule the demurrer.

Hart and Smith, JJ., dissent.


author: Woon, J.

text:
    White Construction Company v. Arkansas-Louisiana Highway Improvement District.
    Opinion delivered October 22, 1923.
    1. Contracts — construction.—Courts may acquaint themselves with the persons and circumstances that are the subject of the statements in the written agreement, and are entitled to place themselves in the same situation as the parties who made the contract, so as to view the circumstances as they viewed them and to judge of the meaning of the words and of the correct application of the language to the things described.
    2. Highways — construction op maintenance bonds. — The commissioners of a road improvement district adopted plans for the improvement and issued forms of proposals which were submitted to prospective bidders, advising them that they would be required to execute maintenance bonds to guaranty all work for a period of five years and at the end of that period -to “deliver the work in as good condition as when accepted, ordinary wear and tear .excepted, without any additional allowance or compensation,” and that “the cleaning of ditches, berms, slopes and waterways shall not be considered as defects to be corrected under the guaranty,” and contracts were let accordingly. Held that, with the exceptions expressly mentioned, it was the intention of the parties that the work 'done under the contract should be delivered to the district in as good condition as when the work was completed and accepted.
    Appeal from 'Chicot Chancery Court; E. G. Hammock, Chancellor;
    affirmed.

      Winston, Strawn & Shaw, and Coleman, Robinson & House, for appellants.
    To determine the meaning of the bond in this case, reference must be made to the contract. 116 Ark. 212. The bond does not guarantee the road, but only.aZZ work performed by the contract, that is, materials and workmanship. The plans and specifications were not guaranteed. Unless specifically guaranteed, an interpretation of a contract to so hold would be harsh, unnatural and unfair. For eases so holding see 113 N. E. 703; 54 N. E. 661; 73 Wis.- 650. Of course a contractor may guarantee the plans themselves, as in the case of 116 Ark. 212, but the court will not find such an absolute guaranty unless plain and explicit language in the contract requires it. The following eases are directly in point: 196 Pac. 1091; 136 Minn. 288, 161 N. W. 593; 97 S. W. 1; 107 S. W. 244, 14 L. R. A. (N. S.) 1216; 41 N. W. 338.
    J. B. Parker and Bose, Hemingivay, Cantrell & Loughborough, for appellee.
    In the last analysis the situation of the parties, what they did and the plain terms of the maintenance bonds, show the intent that the contractors should keep all of the work in repair and maintain it for a period of five years. If the bonds do not mean this, they mean nothing. Cases arising under similar bonds, where they have been construed to mean an absolute undertaking to keep in repair, are found as follows: 89 Ark. 95; 224 Fed. 842; 171 Fed. 29; 134 Ill. 203; 35 S. W. (Ky.) 1125; 38 S. W. (Mo.) 458; 101 N. E. (N. Y.) 162; 60 Ñ. J. L. 394; 46 N. Y. 444; 29 App. D. C. 506. The case so strongly relied upon by appellant at 135 N. E. 702 did not contain a guarantee clause similar to the case at bar. There was no provision that, at the end of the five-year period, the work should be in as good condition as when completed — a feature -on which the court commented in distinguishing the cases. The other cases cited by armel-lant are either not in point or are easily distinguished from the case at bar.
   Woon, J.

The Arkansas-Louisiana Highway Improvement District (hereafter called appellee) instituted three separate suits, two against the White Construction Company and its surety, the United States Fidelity & Guaranty Company, and one against the Bryant Paving Company and its surety, the National Surety Company. The construction companies will hereafter be referred to as the appellants and the surety companies as the guaranty companies. As the suits are identical in purport, they were consolidated for hearing. The suits are on maintenance bonds executed by the appellants, pursuant to their respective contracts to construct certain portions of the road. The complaints alleged, in substance, that defects in the road work had appeared in sections covered by tlie bonds; which the respective contractors and their sureties had failed to repair as required by the respective maintenance bonds; that demand had been made for such repairs, and that the appellants had failed and refused to make them. The amounts necessary to make the repairs in the respéctive sections and the amounts of the maintenance bonds covering such sections are set forth in the complaints.

The appellants, in their answer, admitted the defects complained of, and admitted that there had been a demand to repair, and that they had refused to do so because, as they alleged, none of the defects complained of were due to inefficient workmanship, or material supplied by them, but to unskilful and insufficient plans .and specifications prepared by the engineer of the appellee. They further alleged that all the work was done by them in accordance with the plans and specifications, under the direction of the engineer of the appellee in charge of the work, and according to the method of construction called for by the contracts and directed by the engineer; that the contractors knew all the time that the plans were defective and that their deficiencies would eventually produce the very conditions which have developed, and that the contractors so advised the engineer of the appellee before and during the progress of the work. 'But the appellee did not change its plans, and the contractors were- required by the engineer, as well as by the contracts, to carry them out to the letter.

The testimony in the record is quite voluminous, and was evidently taken with a view of placing the trial court as near as possible in the situation of the parties to the contracts and the maintenance bonds, in order that the court might construe them with reference to the precise situation and circumstances of the parties at the’ time the contracts were entered into in order to effectuate their intention in making them. Such of the testimony as we deem necessary will be set forth as we proceed.

The commissioners of the appellee were ten landowners in the district. They employed an engineer to make plans and specifications for the work. They issued a circular letter containing general information to bidders for tbe work to be done under tbe plans and specifications, wbicb included approximately one hundred and fifty-five miles of roadway in tbe district, divided into five sections, corresponding to the work in tbe counties embraced in tbe district. Among other things this circular contained tbe following recitals :

“All things herein contained, tbe proposal, plans, and general information for bidders, are hereby made a part of these specifications and contracts, and are to be considered one instrument. Tbe intent is to make' them explanatory one of tbe other. Should any conflicting statements be found, the bidder, or contractor, shall accept the interpretation of the engineer, whose decision shall be final and conclusive. ’ ’

“No contract will be awarded except to responsible bidders capable of performing the class of work called for by these specifications. Bidders must examine carefully the plans, specifications and contract and proposal forms before submitting proposals. ’ ’

“Bidders who have submitted proposals will be considered as having examined the location of the proposed work and as being familiar with the conditions to be encountered and with the requirements of these specifications. ”

This circular specified the kind of work that the plans and specifications contemplated in the respective counties. The foundation and wearing surfaces of certain types were specified for certain counties. For instance, for Chicot, Desha and Drew counties a mixed method asphalt wearing surface, of types designated “A,” “B” and “C,” was to be placed on either a cement concrete base, a roll-stone base, a bituminous roll-stone base, or upon a rock mac base. And it further recited; “A five-year maintenance guaranty will be required, including the foundations, as specified on types of wearing surfaces ‘A,’ ‘B’ and ‘C,’ and in case bidders do not desire to give such a guaranty on any of the foundations specified, tlliey will leave such, base items blank as they do not care to guarantee with the surface laid thereon.”

The bids by the contractors were on .printed forms-of proposals, in which the contractors state that they have carefully examined the plans and specifications' and form of contract to be entered into, and by personal examination and investigation had satisfied themselves of the nature of their obligations. These proposals showed bids on concrete headers and on four-inch, concrete base and on five-inch concrete base and on the asphalt top. The proposals showed no bids on either the four- or five-inch “roc mac” base, on the five-inch “roll-stone” base, or either the four- or five-inch “bituminous” base. Nor did either proposal show a bid on type “B” or “C” wearing surface. There Avas a note in the proposals which stated that on the work in Desha, Chicot and Drew counties a five-year maintenance guarantee will be required on items 28, 29 and 30-,. types “A,” “B” and “C,” as also will be required on items 21 to 27 inclusive. It was further stated in the proposal: “Price bid for items 28, 29 and 30 contemplates the use of Trinidad Lake asphalt, and includes maintenance guaranty for five years.” The- proposal for work in Lincoln County was for water-bound trap rock macadam, and in Ashley County for gravel mac- ■ adam, and covering the work in these counties a bond containing a maintenance guaranty of one year- was required. Work done in Lincoln and Ashley counties was not involved in this controversy, but the difference in the character of the work in those counties and. the maintenance bonds required for that work is mentioned, because it throws some light on the correct interpretation of the contracts and bonds here under review. With the information contained in the- above circular and proposal form, the appellee and the appellants entered into contracts for the construction of the AVork. and the appellants executed the bonds upon which these actions are based. We will not set forth al-1 of the contracts and bonds in detail, but will give m substance such of tbeir provisions as we deem pertinent.

The contractors were required to furnisli the material, equipment and labor, and to construct certain roads (describing them) according to plans and specifications prepared by the appellee, for the price named in the proposal for contracts. The work was to be completed in approximately five-mile sections, as designated by the engineer of the appellee. The retained percentages were to be paid to the contractors on their completing such sections of the work, and on their furnishing a maintenance bond, on the terms provided in the specifications for such completed sections. The payment of the retained percentages and the giving and acceptance of the maintenance bonds did not constitute an acceptance of the work as having -been done in accordance with the specifications, but the acceptance was to be postponed until final acceptance of the entire work. There was a provision in the contracts to the effect that the contractor was to do the work in exact accordance with the plans and specifications, under the supervision of inspectors and assistant engineers employed by the engineer of the appellee, and any deviation from the plans and specifications was sufficient cause for suspension of the work if the engineer so desired it. The engineer was to determine all questions in relation to the work and the construction thereof. The contractors guaranteed all work from date of acceptance by the board and engineer for a period of one year, except on such road improvements as their proposal and contract provided for a guaranty of five years. The cleaning of ditches, berms, slopes and waterways was not to be considered as defects to be corrected under the guaranty. Contractors were to repair any inequalities, settlements, or other unsatisfactory conditions that might occur in any portion of the work. If the contractor failed to make repairs within the time specified by the board in writing, the board had authority to make the repairs and charge the expense thereof against the surety bond given the board by tbe contractor. Before tbe final acceptance of tbe work, at tbe end of tbe guaranty period, an inspection was to be made of tbe entire work. If disintegration, depressions, or other defects existed in tbe work under guaranty, sucb portion or portions were to be repaired to tbe satisfaction of tbe board by tbe contractor and at bis expense. In tbe original specifications showing the stipulations as to repair work, “cracks” were included, but tbe testimony shows that tbe word “cracks” was eliminated from tbe specifications before the contract was signed, and was not therefore embraced in tbe contract or maintenance bonds. Tbe contractors were to supply all necessary materials and do all necessary work, and, at tbe end of tbe specified period, “deliver tbe work to tbe appellee in as good condition as when accepted, ordinary wear and tear excepted, without additional allowance or compensation.” A maintenance bond was required in tbe sum of 25 per cent, of tbe contract cost for the making of the repairs for tbe period of one or five years, as specified in tbe contract. Tbe bonds were to be furnished tbe board at tbe time of tbe payment of tbe final estimate and before tbe final payment was made to tbe contractor. The maintenance period could be dated from January 1 for all work completed in tbe previous calendar year.

Tbe appellants performed the work under their contracts, in accordance with tbe plans and specifications, under tbe inspection and supervision of tbe'engineer of tbe appellee and his assistants, which work was approved by him and accepted by tbe appellee. On the completion of each five-mile section, maintenance bonds, as required by tbe contracts, were executed by the appellants and the guaranty companies. Tbe guaranty companies were paid a money consideration for executing the bonds. These bonds recite the inducements and conditions upon which they were executed, following closely tbe provisions of the contract above referred to. Tbe bonds contained a provision to tbe effect that “tbe said contract and specifications thereunder are expressly referred to as showing the true intent and meaning of this obligation.” All bonds contained the same provisions, except the bonds of the appellant Bryant Paving Company, which contained the additional provision that any damage done to the completed work by flood waters from the Mississippi River is not within the obligations of its bond. The bonds conclude with a paragraph to the effect that, if the construction companies should well and truly perform the provisions of their contracts, as set forth in the bonds, in regard to the maintenance of said work and the repairs thereunder, for a period of five years beginning October 10, 1921, and ending five years thereafter, then their obligations should be void, otherwise to remain in full force and effect. Rights of action under the bonds were to accrue and be enforceable immediately at any time the construction companies failed or .refused to- comply with the obligations of their bonds.

Much testimony is brought into the record concerning the issue as to the defects in the improvement and the causes thereof, but this testimony it is unnecessary to set forth and discuss in detail. Suffice it to say that, so far as appellants are concerned, they introduced testimony tending to show that the defects in the improvements were caused not by faulty construction, but because of defects in the plans and specifications prepared by the engineer of the appellee. At the conclusion of the testimony the court entered decrees in . favor of the appellee against the appellants for substantially the amounts claimed in the respective complaints, from which decrees are these appeals.

1. In Wood v. Kelsey, 90 Ark. 272-277, we said: “Courts may acquaint themselves with the persons and circumstances that are the subject of the statements in the written agreement, and are entitled to place themselves in the same situation as the parties who made the contract, so as to view the circumstances as they viewed them and so as to judge of the meaning of the words and of the correct application of the language to the-tilings described.” Applying this important principle to the facts of this record, we find here that the commissioners of the district were ten landowners, who, under the law, were intrusted with the duty of constructing a great improvement, which, as the record shows, involved an expenditure of a little more than two and a half million dollars-. The board employed its engineer to prepare the plans and specifications, and when this was done it advertised for bids and issued forms of proposals on which the contractors were to make the bids. The bidders were advised that they must examine carefully the plans, specifications and contracts, and proposal forms, all of which were made a part of the contract, before submitting their bids, which were to be submitted on the written forms for proposals issued by the board. By these proposal forms bidders were advised that a five-year maintenance guaranty would be required on certain types of asphalt surface, designating these types by the letters A, B and C, in items 28, 29 and 30 of the proposal forms, when laid on any of the rock, bituminous, or concrete bases described in items 21 to 27 inclusive. These items designated the specifications for the different bases, items 21 and 22 being respectively 4- and 5-inch concrete base, items 23 and 24 being respectively 4- and 5-inch roc mac base, item 25 being 5-inch roll-stone base, and items 26 and 27 being respectively 1- and 5-inch bituminous base, each in place, per square yard.

The bids sent in by the appellants showed that they carefully examined and discriminated between these different types of surface and base. They were willing to bid and execute maintenance bonds on their work if the asphalt was of type “A” -and laid on either a 4- or 5-inch concrete base, as specified in items 21 and 22. But they were not willing to bid and execute maintenance bonds if the asphalt surface were of the types “B” and “C” and bases of roc mac, roll-stone, or bituminous. Bidders were advised in the proposal forms that the bids on the asphalt surface also included maintenance guaranties for five years, and there was testimony in the record to the effect that there was an added price of five cents per square yard in the bids for asphalt surface to cover the cost of the five years’ maintenance.

The commissioners of the district employed an engineer to prepare the plans and specifications, which was done in the most minute detail, and seemingly every precaution was taken by them to complete the improvement in a manner that would insure a road of very high type, at least in the counties of Desha, Chicot and Drew. They doubtless contemplated that maintenance bonds executed for the preservation of the' work as thus completed under the plans- and specification's would insure the permanency of the project, and show that the contractors had, in good faith, carried out their contracts and completed the improvement as was intended by the parties to the contracts. It is but reasonable to- conclude that the commissioners, as- landowners' of the district, did not have that minute special skill and experience in such undertakings as would enable them' to determine whether the plans and specifications, if followed, and the terms of the contracts, if fully complied with by the contractors, would produce the results they contemplated. On the other hand, the magnitude of the undertaking was such that none but skilled and experienced contractors would have entered upon a task involving the outlay of so much money and the tremendous financial obligations incident thereto. The commissioners might not, and doubtless- did not, know whether there would be defects of the character shown in the construction work when done under the plans and specifications, and necessarily had to rely in these particulars' upon the ability and judgment of their engineer and his assistants. • But the-contractors, from their observation and experience in such matters, would know whether the faithful execution of the work according to the plans and specifications would result in the useful and enduring improvement which, they must have known, was contemplated by the commissioners.

Such, is the situation, and such were the circumstances of the parties at the time they entered into the contracts and used the language of the guaranty clause as follows: “The contractor guarantees all work performed under these plans and specifications and contract for a period of one year from the date of acceptance by the board and engineer, except on such roads as his proposal and contract provide for a guaranty period of five years; The cleaning- of ditches, berms, slopes and waterways shall not be considered as defects to be corrected under the guaranty. 'The' contractor shall repair any inequalities, settlements or other unsatisfactory conditions that may occur or. develop in' any portion of the work performed by him, and do all necessary work, and, at the end of the specified period, shall deliver the work to the district in as good condition as when accepted, ordinary wear and tear excepted, without any «additional allowance or compensation.” And further1:' ‘ ‘ Should the contractor fail ' to make repairs of unsatisfactory work, the board shall have the authority to have same made at contractor’s expense.” And again: “Just previous to the expiration of the guaranty period an inspection shall be made of the entire -Work, and if disintegrations, depressions, or other defects -’exist in the work under guaranty, such portions shall be repaired immediately}” etc.

It 'Will be observed that the contractor guarantees all-work performed under these plans and' specifications, and guarantees -that, at the end of the specified period, he will “deliver the work to the district in as good condition as when accepted, ordinary wear and -tear excepted.” The contract mentions that the cleaning-of ditches, berms, slopes and waterways shall not be considered as defects to be corrected under the- guaranty.

While the question is by no- means free' from, difficulty, we are convinced, after considering the above and the other language of the contract - in its- entirety, in the-light of the situation and circumstances- of the parties thereto,' that it was the intention of the parties that the work done by the appellants, under the plans and specifications and contract, at the end of the guaranty period should be delivered to the appellee in as good condition as when the work was completed and accepted by the engineer of the appellee, ‘ ‘ ordinary wear and tear” excepted. In short, it was the intention of the appellee and the appellants that the latter should do the work according to the plans and specifications, and keep the work as thus done in the same condition for five years that it 'was in when accepted by the appellee, ordinary wear and tear excepted. This necessarily refers to all work that was done by the appellants, except the cleaning of ditches and other items specified not to be considered as defects. The very mention of these items that were not to be considered as defects shows that all other defects, of the character mentioned, except those caused by “ordinary wear and tear,” were to be considered as defects in the work and as coming under the guaranty to repair.

Learned counsel for the appellants reason with much plausibility that, while the above language was a guaranty of the work performed, it was not a guaranty of the plans and specifications; that it was a guaranty of workmanship, but not of design. As one of the principal cases to sustain their contention, counsel for appellants rely upon that of R. F. Conway Company v. Chicago, 113 N. E. 703. In that case the contract provided, among other things, as follows: “As a guaranty of the faithful performance of these specifications, the quality of the materials furnished, and the proper construction of said improvement, the contractor hereby agrees to keep and maintain said improvement, without additional charge or cost to the city of Chicago, in such order and condition as will be satisfactory to the board of local improvements, for a period of five years from and after the first day of December next following the completion and acceptance of the same, which keeping and maintaining shall include repairs or the entire reconstruction of the same.” In that case the contraer tors built a roadway or pavement along Lincoln Avenue in the city of Chicago. While the improvement was going on the street railway company laid a new track along the avenue, the railway gang going ahead of the construction gang that was laying the roadway and pavement. The construction company complied with all the plans and specifications, and there was no claim of any defective material. The work was done as directed by the city authorities, and was accepted and approved by them. The principal point decided is reflected by the syllabus, as follows: “Where a contractor for street paving, as a guaranty of faithful performance, agreed to maintain the improvement in satisfactory order for five years, the city designing the type of pavement and of the track construction in rehabilitating the street railway tracks, the contractor not being consulted in regard to either, such contractor was liable only for defects in the pavement resulting only from faulty character or quality of the materials used or the workmanship employed, and was not liable for defects caused solely by the operation of heavier • street-cars than were used when the pavement was first laid, since a guaranty of the propriety of design or plan could not be inferred in the absence of clear expression in the contract.”

In the course of the opinion the court said: “It is plain, from the uncontradicted testimony in this record, that at the time this contract was executed the experience of the men most expert in the construction of street-car tracks and in putting down this class of pavement was not of such nature as to make it possible for them to determine with any certainty whether the specifications for constructing this pavement or for rehabilitating thfe street railway tracks and right-of-way were of such a character as to prevent the injury to this pavement from the causes described in the record. The proof tends strongly to show that, in 1907 no one connected with preparing or executing the contract and specifications had any reason to anticipate that the vibration of the rails, caused by the heavier' cars, would force the saud from the cushion to the surface* or into the depression caused by the sinking of the rails, or in heaps under the blocks. * * # In the light .of the testimony in this record, we cannot see how the cause of this injury tó the pavement could have been reasonably anticipated at the time the contract was entered into.”

It will thus be seen that not only the provisions of the guaranty clause -of the contract in that case weró entirely different from that of the case at bar, but the injury was of such a character that it could not have been reasonably anticipated. Construing the particular language of the guaranty clause in the above case with reference to the facts there stated, the court held that it was a guaranty-only that the materials furnished and the workmanship were according to plans and specifications. In the case at bar the defects and injuries to the roadway were such as might have been, and were, id the reasonable contemplation of the parties at the timé they entered into the contract, and the guaranty clause contains a guaranty not only of the materials furnished and of the workmanship in accordance with the plans and specifications, but it contains more. It is a guaranty of all the work as done under the plans and specifications, and that all work as thus done will be in as good condition at the end of the five-year period as it was when completed and accepted, except as to ordinary wear and tear. The language of the guaranty clause of the contract in the case at bar is tantamount not only to a guaranty of workmanship and materials, but that the plans and specifications, when complied with, would result in an improvement that would last for a period of five years and be in the same condition at the expiration of that period as it was when originally completed and accepted, ordinary wear and tear excepted. In order that this guaranty might be realized, the •contractors convenanted that they would repair any •“inequalities, settlements, or other unsatisfactory conditions, disintegrations, depressions,- -or o their defects” that may occur or develop in any .portion of the work necessary to be done in order to place the work in as good condition as it was when completed and accepted by the appellee., excepting only such defects as the “ cleaning of ditches, berms, slopes and waterways,” and ordinary wear and tear. In other words, the effect of the guaranty clause, as a. whole, was to guarantee the quality and durability of the improvement as completed under the plans and specifications, and to impose upon the appellants the obligation of making such guaranty good for a period of five years by making such repairs as were necessary to that end, ordinary wear and tear excepted. See Osborne v. Lyons, 73 N. W. 650.

It would unduly extend this opinion to review the other authorities cited to sustain the contention of learned counsel for the appellants in their excellent brief. We have examined them, and find that the differences in the wording of the guaranty clauses of the contracts, and other facts, are sufficient to distinguish all these cases from the case at bar. Each case, in the last analysis, must depend, for proper construction of the contract, upon its own particular facts. It occurs to •us that the only correct interpretation that can be put upon the language of the guaranty clause of the contract in the case at .bar, viewed in the light of the situation and circumstances of the parties, as evidencing their intention at the time the contracts were entered into, is that which we have given it. As supporting in principle .this interpretation, see the following authorities cited in brief of counsel for the appellee: Barber Asphalt Paving Company v. St. Paul, 224 Fed. 842; Akron v. Barber Asphalt Paving Company, 171 Fed. 29; Lake View v. MacRitchie, 134 Ill. 203, 208, 25 N. E. 663; Fahler v. Gosnell, 35 S. W. (Ky.) 1125; Barber Asphalt Paving Co. v. Ullman, 38 S. W. (Mo.) 458, 463; Cameron-Hawn Realty Co. v. City, 101 N. E. (N. Y.) 162; Wilson v. Trenton, 60 N. J. 394, 38 Atl. 635; Reilly v. Brooklyn, 46 N. Y. 444; McFarland v. Barber Asphalt Paving Co., 29 App. D. C. 506.

2. It follows from whát we have said, that the appellants violated the terms of their contracts and the obligations of their bonds in refusing to remedy the defects, and in failing to redress the resultant injury to the appellee of which it herein makes complaint. These defects were clearly within the contemplation of the parties. The appellants and the sureties on their maintenance bonds are liable for the amounts for which decrees were rendered in the chancery court. These decrees were correct, and they are affirmed.