text:
    Durrett v. Harris.
    Opinion delivered March 14, 1921.
    1. Fraudulent conveyances — election to treat lands as belonging TO debtor’s WIFE. — Where a creditor, having bought in his debtor’s land on execution, sale, knowingly permitted the debtor’s wife to redeem the land in her name with her husband’s funds, the creditor can not thereafter subject the proceeds of the land upon its subsequent sale by the wife.
    2. Bankruptcy — powers of trustee. — Under Bankruptcy Act, § 70, authorizing a trustee in bankruptcy to “avoid any transfer by a bankrupt of his property which any creditor might have avoided,” where a creditor of a bankrupt was not entitled to avoid a transfer of property to the debtor’s wife by reason of having elected to treat it as purchased with her funds, the trustee can not attack the conveyance for the creditor’s benefit.
    Appeal from Union Chancery Court; J. M. Barker, Chancellor;'
    affirmed.

      W. E. Patterson, for appellants.
    1. It was not contended below, and we presume it will not be contended here, that the trustee in bankruptcy has not the right to pursue the claim of any creditor or is not “clothed with plenary power to sue to avoid any transfer made by the bankrupt of her property which, any creditor may have avoided, whether made within four months prior to the adjudication of bankruptcy or not.” Brandenburg on Bankruptcy (3 ed.), p. 738, sub-div. (e), § 70; 75 Ark. 562; 103 Id. 105; 7 C. J., p. 247, § 387 (b) and notes.
    2. Appellees pleaded in their answers as a defense to this action the discharge in bankruptcy of D. F. Harris, and he made his motion to dismiss on that ground. The motion was properly overruled. The discharge of a debtor in bankruptcy in no way precludes the trustee from recovering the property of the bankrupt which has been fraudulently transferred. 103 Fed. 64. The discharge is personal to the bankrupt, and does not release his fraudulent grantees from liability for the fraud committed by them. 103 U. S. 301; 168 Ala. 363; Ann. Cases 1912 B 249 and note.
    The effect of a discharge is personal to the bankrupt. It does not release property owned by the debtor at the time he became bankrupt, although standing in the name of another, * * * and does not preclude the trustee from recovering the property from the bankrupt’s estate which has been fraudulently transferred nor affect the right of creditors to have a fraudulent conveyance made by the debtor before his bankruptcy set aside-. 7 C. J., p. 395-6, § 704 (1). The rights of the creditors against third parties liable jointly with the bankrupt or secondarily for him are not impaired by the bankrupt’s adjudication nor his discharge. - 2 Remington on Bankruptcy (2 ed.), § 1510; 118 Ark. 441.
    3. The property here, 200 acres in land, the proceeds of which are involved here, was purchased and paid for wholly with funds procured and made wholly by the knowledge, skill, labor, time and efforts of the husband, D. F. Harris, and the placing it in his wife’s name was a fraud upon creditors. 73 Ark. 179; 101 Id. 573; 106 Id. 237; 129 Id. 396; 121 Id. 383; 132 Id. 268; 134 Id. 241; 135 Id. 115; 86 Id. 225; 91 Id. 394; 108 Id. 164; 68 Id. 102; 55 Id. 116; 56 Id. 18O; 50 Id. 46; 45 Id. 520; 218 S. W. 177; 12 R. C. L., p. 668.
    Transactions between bnsband and wife affecting tbe rights of creditors, especially when the bnsband is insolvent, are closely scrutinized with care, and tbe burden is upon tbe wife to show good faith, or they will be set aside. 134 Arle. 241; 218 8. W. 177; 86 Ark. 225; 89 Id. 77; 75 Id. 562; 110 Id. 335.
    4. Tbe evidence shows fraud. All tbe facts and circumstances show taking tbe deed in tbe wife’s name was a fraud on creditors. 110 Ark. 347; 113 Id. 100; 113 Id. 104-8.
    It was a fraud to invest tbe earnings of tbe husband in tbe wife’s name so as to defeat creditors. 20 Cyc. 355-8-9 ; 13 S. W. 78; 21 Cyc. 1429. Such earnings are subject to tbe husband’s debts. 12 R. C. L. 509-524; 13 Id. 524,1161.
    Courts of equity will always subject tbe husband’s earnings and property to bis debts, where"placed in the wife’s name. 23 L. R. A. (N. S.) 1124; 21 Ky. L. R. 931. See, also, 14 Ky. L. R. 667; 48 8. W. 355; 91 Am. Dec. 98; 38 Am. St. Rep. 30; 16 S. E. 570; 39 W. Ya. 567; 26 L. R. A. 537; 20 S. E. 599; 67 Ill. App. 274; '21 L. R. A. 623; 9 Ala. 933; 12 Graft. 74; 16 Ohio St. 509; 91 Am. Dec. 98; 53 Iowa 470; 81 Iowa 302; 30 Am. Rep. 500; 55 Miss. 60; 90 Me. 376; 38 L. R. A. 190; 26 L. R. A. 537; Bump on Fraud. Convey., p. 250. These decisions are sustained by our own court. 66 Ark. 419; 67 Id. 110; 75 Id. 562; i89 Id. 77; 135 S. W. 78. Tbe husband clearly furnished tbe means and paid for the lands, and, though in tbe wife’s name, they are clearly subject to tbe debts of existing creditors, and tbe court erred in its decree.

      Neill C. Marsh, ■Callaway & Huie and Gaughan & Sifford, for appellees.
    1. Authority is found in tbe American decisions for any one of tbe three following propositions:
    (1) If tbe wife of an insolvent debtor conducts a business depending upon tbe skill and labor of her hu§-band, and they, acting together, have the intent of accumulating property in her name for the purpose of defeating the husband’s creditors in the collection of their debts, the property may be subjected to the payment of his debts.
    (2) While the insolvent debtor has the right to provide for the necessary wants of his family, whatever he earns over and above that amount goes to his creditors; so that, should his wife own a business or own property, he can only devote to her business or her property a reasonable amount of his time and shill, and whatever accumulation resulting from his labor and shill may come to her separáte estate, over and above a reasonable contribution thereto, is subject to his debts and may be subjected by his creditors.
    (3) The creditor is entitled to all the property of his debtor except exemptions given by law, and only after the creditor has tahen all the debtor’s property and applied it to the payment of debts, is the debtor himself free. He is under no legal obligation to worh for the creditor, nor to accumulate anything for the creditor. 67 Miss. 710; 19 Am. St. Eep. 344; 55 Pa. St. 432; 99 Am. Dec. 769; 98 N. W. Eep. 486; 78 Am. Dec. 632.
    Equity has no jurisdiction to compel men to worh for their creditors when they prefer to work for their wives and children. 78 Am. Dec. 632; 12 Am. St. Eep. 641; 44 N. Y. 343; 21 IT. S. (Law. Co. Ed.) 269; 28 Fed. 819; 89 Ark. 77; 75 Id. 562.
    2. The suit of the bank against D. F. Harris is a stale claim and inequitable.
   McCulloch, C. J.

D. F. Harris, one of the appel-lees, was for many years prior to the year 1911 engaged in the sawmill business, and became heavily indebted to creditors; the Merchants’ & Farmers’ Bank of Junction City, Arkansas, one of the 'appellants in this action, being one of them. He owed the bank three notes, one for $1,000, one for $1,973 and the other for $2,500. Harris resided in Junction City and owned an undivided half interest in a tract of land in that (Union) comity, containing 424 acres; Ms brother, C. A. Harris, being the owner of the other half interest. The bank instituted an action at law in the circuit court of Union County against Harris to recover on the said note for the sum of $2,500, and sued out an order of general attachment, which was levied on the Union County land. Judgment was rendered in favor of the bank in that action, the attachment was sustained, and the land was ordered sold. At the sale, which was held on January 6, 1912, the bank became the purchaser of Harris’ undivided half-interest in the •land for the sum of $1,800, which was credited on the judgment, and received from the sheriff a certificate of purchase. A few days prior to the expiration of the period allowed for redemption from the sale, Mrs. C. D. Harris, the wife of D. F. Harris, paid to the bank the sum of $2,080, and the latter assigned to Mrs. Harris the certificate of purchase, upon which the sheriff executed to her a deed conveying the land attached and sold. Mrs. Harris and the other tenant in common subsequently divided the land and a part of the tract containing 200 acres was conveyed to her in severalty. She sold forty acres of the land to another person and then purchased forty acres more, which gave her the amount of acreage she received in the division. Mrs. Harris continued as the owner of the 200 acres, which was a farm partly in cultivation, until November, 1918, when she sold and conveyed it to S. E. Bass for the consideration of $5,000, of which $1,500 was paid by check on another bank in Junction City, the remaining sum of $3,500 being evidenced by note executed by Bass to Mrs. Harris.

The present action was immediately instituted by the Merchants’ & Farmers’ Bank in the chancery court of Union County against D. F. Harris and his wife to subject the proceeds of the sale to Bass (check and note) to the payment of the remainder of the debt still owing by D. F. Harris to the bank, the basis of the action being the charge that the funds used by Mrs. Harris in payment to the bank of the consideration ($2,080) for the assignment of the certificate of purchase were really the funds of Harris himself, fraudulently accumulated and held in the name of liis wife for the purpose of hindering the bank and other creditors in the collection of these debts. Shortly after the institution of this suit, D. F. Harris filed his petition in bankruptcy, and was duly adjudged a bankrupt, and appellant Durrett was elected trustee of the estate and intervened in this action, asking that the funds in controversy be decreed to be the property of the estate of the bankrupt. The chancery court, on the final hearing of the cause, dismissed the original complaint of the bank, as well as the complaint of the trustee as inter-vener for want of equity.

The testimony adduced in the case establishes the fact that the funds used by Mrs. Harris in paying the bank for the purchase of the land were accumulated in the business operations of D. F. Harris in the name of his wife, and that such operations were so conducted in the name of Mrs. Harris for the express purpose of putting the proceeds beyond the reach of Harris’ creditors. When Harris became insolvent in the year 1911, he divested himself of all of his property, except this undivided half-interest in the Union County land which he held with his brother. He had no other property left, nor did his wife-own any property. She was not a business woman, and gave her entire time and attention to housekeeping. Harris himself seems to be a capable business man, and he found an opportunity to secure contracts with the Federal government to furnish timber for use in constructing locks and dams in the Ouachita River at Camden and in the Sunflower River in the State of Mississippi. He availed himself of this opportunity, and, in 'order to prevent interference from creditors, he took the contracts in the name of his wife and operated the business in her name. No capital was required, and the skill and efforts of Harris were substantially all that were involved in the enterprise. Harris managed the business openly and entirely, using his wife’s name in the contracts and in his dealings with the proceeds arising from those business operations. Mrs. Harris had nothing to do with the business except to permit the use of her name. This state of affairs seems to have been well known and a matter of notoriety in the community where the business was carried on, and where the Har-rises resided, where the bank operated its business and its officers resided. The business was profitable, and from the accumulated profits the sum of $2,080 was used to purchase from the bank for Mrs. Harris the tract of land which the bank had acquired at the attachment sale. Learned counsel for appellants say that, since the holding of the funds in the name of Mrs. Harris was colorable and in fraud of the rights of creditors, the purchase of the certificate amounted to no more than a redemption of the land from the sale. Conceding that to be true as to other creditors of Harris, it ought not to be so treated as to the bank which received the funds as a payment by Mrs. Harris for the purchase of the land. The bank made its election to accept the funds in purchase of the land. It accepted the funds, not as the property of Harris, the debtor, but as the property of Mrs. Harris. The bank knew or could have known then as well as now the source of those funds and how they were accumulated. In order to escape the effect of its election at that time to treat the funds as being those of Mrs. Harris and to accept the same from her in purchase of the land, it devolves on the bank to show that it accepted the funds in ignorance of their source. It is inconceivable that the bank did not know or have abundant opportunity to ascertain at that time the true state of affairs in regard to those funds. Mrs. Harris had no property, and was apparently not engaged in any business whereby there could be accumulated e'arnings. Her husband attended to the business, and he also made the purchase of this land from the bank for his wife.

We tliink that the hank is bound by its election and can not now be heard to say that the funds used in the purchase of the land should, in equity, be treated as the property of Harris and followed through the land to the proceeds of the sale to Bass, so as to subject those proceeds to payment of the debt of Harris to the bank. Under such circumstances, a court of equity will not lend its aid to uncover an alleged fraud. Whatever the rights of other creditors of Harris might have been, the bank is not in an attitude to set up the fraud for the purpose of subjecting the proceeds of the sale of the land to the payment of their debt.

The trustee is in no better attitude as the representative of the bank, a creditor of the bankrupt. A trustee in bankruptcy may, under section 70 of the National Bankruptcy Statute, “avoid any transfer by the bank-rapt of his property which any creditor of such bankrupt might have avoided,’’ and this is the extent of his rights and authority. Boyd v. Arnold, 103 Ark. 105.

Since appellant bank is not in the attitude to avoid the transfer by. Harris, the trustee can not do so for it. There is no proof in this record to show that there" are other creditors who are entitled to avoid the conveyance.

Decree affirmed.


source: Caselaw Access Project

author: Hart, J.

license: Public Domain

text:
    Bank of Black Rock v. B. Johnson & Son Tie Company.
    Opinion delivered March 14, 1921.
    1. Banks and banking — fogged check. — Payment of a forged check by the bank upon which it is drawn is made at the hank’s peril, under Crawford & Moses’ Digest, § 7789, and the bank is not justified in charging it against the depositor’s account unless the latter is precluded from setting up the forgery or want of authority.
    2. Banks and banking — question for jury. — In an action by a depositor against a bank to recover the amount of a forged check charged against his account, where the bank cashed the check and returned it with others to the depositor, who kept it for seven days without making complaint that it had been forged, and permitted the bank to charge the forged check to its account, it was error to direct a verdict for plaintiff, as the court should have submitted to the jury the question whether or not plaintiff had exercised ordinary care in examining the checks and discovering the forgery and reporting it to the bank.
    3. Banks and banking — forgery of check — negligence of depositor. — If a depositor is guilty of negligence in not discovering and giving notice of a forged check, the bank might thereby be prejudiced by being prevented from taking steps by the arrest of the criminal or by attachment of his property or other proceeding to compel restitution.
    Appeal from Lawrence Circuit Court, Western District; D. II. Coleman, Judge;
    reversed.
    STATEMENT OF FACTS.
    Appellee sued appellant before a justice of the peace to recover $295, being the amount of a forged check purporting to have been drawn by appellee, which was cashed by appellant and charged to appellee. Judgment was there rendered in favor of appellant, and the case was carried to the circuit court by appellee, where there was a trial de novo.

    The facts, briefly stated, are as follows:
    “The B. Johnson & Son Tie Company is a foreign corporation doing business in the State of Arkansas, and W. M. Prater is its State manager. W. N. Pruett was one of appellee’s agents, who had authority to sign checks for appellee in payment of ties. Appellant is a bank doing business at Black Bock, Arkansas. Appellee had furnished the bank with Pruett’s signature on a card and the bank had been cashing his checks for two or three years. The check in question was for $295, dated May 22, 1919, and payable to J. Jones at the Bank of Black Bock. It was signed, “B. Johnson & Son Tie Company, per W. N. Pruett, Inspector.” The check was cashed by the bank on May 26, 1919, and was sent by it to appellee and received by it on June 4, 1919. Appellee kept the check until June 11,1919, when it took it up and the bank charged its account with it. Appellee closed out its account with appellant on June 11th, and placed it with another bank. At that time nothing was said about the check sued on being a forgery. Subsequently appellee found out that the check in question was a forgery. Ap-pellee gained the information in this way. It received another check drawn on another bank purporting to have been signed by its agent, W. N. Pruett. It discovered that this check was a forgery and immediately sent to both the banks with which it did business for all checks purporting to have been issued by it and cashed by the banks. The checks were about 800 in number. Among them was the check sued on,'and it was discovered to be a forgery. Appellee then notified appellant of the fact that the check was a forgery and demanded payment of appellant, which was refused. This was about thirty days after appellee had taken up the check after it had been cashed by appellant.
    A verdict for appellee was returned, and to reverse the judgment rendered this appeal has been prosecuted.

      R. C. Waldron, for appellant.
    The court erred in directing a verdict for appellee. 115 Ark. 166. Appellees did not give notice of the forgery of the check in time. 4 N. H. 457; 49 Ark. 45. The testimony was conflicting and a jury should have passed on the case.

      Cohn, Clayton & Cohn and L. B. Poindexter, for appellee.
    The check was a forgery, and appellant was negligent. Appellant was not prejudiced by the failure to give notice earlier. Whenever a bank receives money on deposit, it agrees that it shall only be paid out on the order of the depositor, and it can not charge a depositor, with money paid out on a forged check. 142 Ark. 414-18; 7 C. J. 683. See, also, Negotiable Inst. Act, §§ 23, 185; C. & M. Digest, §§ 7789, 7951; 205 S. W. 96-8-9.
    Where a check forged has been paid through the negligence of the bank’s employee the bank is liable, even if the depositor is neglectful in notifying the bank of the forgery. 76 Hun (N. T.) 475; 27 N. Y/Supp. 1070; 10 Mise. ¿80; 171 N. Y. 219; 57 L. R. A. 529, 533-4; 20 L. R. A. (N. S.) 79-80; 16 Id. 593, 600; 141 Ark. 414-18; 73 Id. 561-7-8; 115 Id. 326.
    Even if appellant bad not been negligent, delay on the part of the depositor to notify the bank of the forgery is immaterial where the bank fails to allege or prove damage or prejudice growing out of such failure. 92 Cal. 4; 27 Pac. 1100; 14 L. R. A. 320; 5 Utah 504; 18 Pac. 43; 69 Tex. 38; 6 S. W. 171; 51 Md. 562; 39 Mo. App. 72; 191 Mass. 159; 77'N. E. 693; 76 Hun. 475; 27 N. Y. Supp. 1070; 10 Mise. 680; 31 N. Y. Supp. 790; 171 N. Y. 219; 57 L. R. A. 529-33-4; 20 L. R. A. (N. S.) 79, 80, and note; 141 Ark. 414, 418; 73 Ark. 561-7-8; 115 Id. 177.
   Hart, J.

(after stating the facts). The undisputed evidence shows that the signature of appellee to the check in question was forged.

Section 7789 of Crawford & Moses’ Digest relative to the effect .of a forged signature is as follows:

“When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party, against whom it is sought to enforce such a right, is precluded from setting up the forgery or want of authority. ’ ’

Under this section payment upon a forged check by a bank upon whom it is drawn is made at the bank’s peril, and it is not justified in charging it against the depositor’s account unless the latter is precluded from setting up the forgery or want of authority. This brings us to a consideration of what facts or circumstances will preclude the person, whose signature has been forged, from' setting up the forgery.

In Leather Manufacturers’ Bank v. Morgan, 117 U. S. 96, it was held that a depositor is bound personally or. by his agent, and with due diligence, to examine the passbook and vouchers, and to report to the bank, without unreasonable delay, any errors which may be discovered in them; and if he fails to do so, and if the bank is thereby misled to its prejudice, he can not afterward dispute the correctness of the balance shown it in the passbook.

In Citizens Bank & Trust Co. v. Hinkle, 126 Ark. 266, the court held that it is the duty of a depositor to examine his returned checks and to make complaint to the bank if they furnish notice that improper charges have been made against his account.

In Weinstein v. National Bank of Jefferson, 69 Tex. 38, the court held that a bank is not liable to a depositor, when money has been paid out by it on forged checks, if the depositor, after receiving a statement of his account by which he is enabled to ascertain the forgery, neglects to inform the bank thereof in reasonable time, and thereby loses the opportunity of recovering the money, which it could have secured if promptly informed.

In Janin v. London & San Francisco Bank (Cal.), 14 L. R. A. 320, it was held that a depositor owes to the bank the duty of examining his checks within a reasonable time after they are returned to him in order to discover and give notice of any forgery. See, also, Dana & Dana v. National Bank of the Republic, 132 Mass. 156; Shipman v. Bank of the State of New York (N. Y.), 12 L. R. A. 791; Hardy v. Chesapeake Bank (Md.), 34 Am. St. Repts. 325; Morse on Banks and Banking (5 ed.), vol. 2, §§ 472-473; First National Bank of Birmingham v. Allen (Ala.), 27 L. R. A. 426, and Robinson v. Security Bank & Trust Co., 141 Ark. 414. These authorities hold that the depositor must not only use due diligence in giving the bank notice or knowledge of the forgery, but must also exercise due diligence in discovering it. The depositor can not require the bank to correct a mistake to its injury from which it might have protected itself, but for the negligence of the depositor. So it is held that where the latter fails to complain within a reasonable time after the checks have been returned to him the banker would have the right to consider that there was no objection to the checks, and that by the depositor’s failure to speak in proper time he virtually admits the correctness of the items charged.

In the case of State v. Abramson, 57 Ark. 142, this court recognized that under the rules of commercial law it is the duty of a payer of commercial paper to give notice to the payee of the forgery within a reasonable time after its discovery, or to lose his right of recovery against the payee as a penalty for the failure to do so.

In the application of this principle the court held that where forged county warrants are paid in discharge of a debt to the county, laches will not be attributed to the county in failing to apprise the payer of the.forgery until such time as the county court has had opportunity to examine and pass upon the genuineness of the-warrants.

In discussing the question of notice in that case the court said that what is a reasonable time depends upon the reason for requiring the notice, and that what is a sufficient notice must depend in a great measure upon the effect produced by the lapse of time upon the remedies of the payee.

The court further said that the notice should be given in a time reasonably sufficient to enable the payee to effectually use his remedies for reimbursement, if it can be done.

In the course of dealing between appellant and ap-pellee, appellant, after it had cashed the check in question along with other checks, returned them to appellee, and appellee held them for seven days without making any complaint that the check in question had been forged and then permitted appellant to charge the checks along with the forged one to its account. As we have already seen, it became its duty to examine the checks when returned to it and exercise reasonable care to see whether any of them liad been forged and, if so, to notify the bank of that fact.

Under the. circumstances, wo think the court erred in directing a verdict for appellee, and that it should have submitted to the jury the question of whether or not ap-pellee had exercised ordinary care in examining the checks and discovering the forgery and reporting it to the bank.

But it is insisted by counsel for appellee that the court did not err in directing a verdict in its favor because no injury was shown to have resulted to the bank on account of the delay in reporting the forgery to it. They insist that there is no evidence in the record tending to show that any pecuniary benefit would have accrued to appellant if reasonable notice of the forgery had been given it by appellee. Hence they claim there was no testimony in the record to justify the submission of any question of fact to the jury in this case.

While the authorities are divided on this question, we think the better view is stated in the case of Leather Manufacturers’ Bank v. Morgan, 117 U. S. 96, where it was held that if the depositor was guilty of negligence in not discovering and giving- notice of the forgery, the bank might thereby be prejudiced because it was prevented from taking steps by the arrest of the criminal or by attachment of his property or any other form of proceedings to compel restitution. The arrest of the forger may afford means for the restoration of the money, or it may disclose ways by which the injured party may recover the money paid out, and we think it is .for the jury to say whether the injured party has been deprived of or delayed in the exercise of any rights, the practical effect of which would be to enable him to protect himself.

Therefore, we are of the opinion that the court erred in directing a verdict for appellee, and for that error the judgment will be reversed and the cause remanded for a new trial.


author: Smith, J.

text:
    Carroll v. Texport Oil Company.
    Opinion delivered March 14, 1921.
    1. Justices of the peace — notice to set aside defaults. — Crawford & Moses’ Digest, § 6448, providing that judgment by default may be set aside by a justice at any time within ten days after being rendered, does not apply where the parties appeared and had a trial; § 6449 applying in such case and requiring ten days’ notice of the motion for new trial or rehearing.
    2. COURTS — RETAINING JURISDICTION AFTER MOTION TO GRANT NEW TRIAL. — Although it is necessary to file a motion for a new trial within ten days in municipal courts, in which the general law as to practice before justices of the peace is -made applicable, where the motion is made within time, the court does not lose jurisdiction by failure to act within the ten days; hut, if action on the motion is not invoked on the motion within ten days, the court loses jurisdiction.
    3. Stipulations — in contravention of statute. — An agreement between counsel that a motion for a new trial in a municipal court may be taken up at any time when it is mutually convenient is void, being in contravention of the statute, which requires that action of the court be invoked within ten days.
    Appeal from Miller Circuit Court; Geo. B. Hay me, Judge;
    reversed.

      Pratt P. Bacon and John N. Cook, for appellant.'
    1. Appellee alleges fraud in procuring tlie judgment, which was not denied by appellant, and no- proof was offered or introduced to sustain it. One who seeks to vacate a judgment by default for fraud assumes the burden of proving it. 93 Ark. 462.
    If the order setting aside the judgment was void, then the judgment was not affected thereby and remains in full force and effect, and all proceedings subsequent thereto are void. 24 Cyc. 597 and note 59.
    2. The court erred in not sustaining the demurrer to appellee’s petition for certiorari, and both parties are bound by the record of the municipal court, as far as the same may extend. Kirby’s Digest, § 1316. The judgment of the municipal court in favor of appellant was rendered by consent on the day set for trial and is regular on its face. The municipal court is a court of record. Acts 1917, p. 735, § 1. All statements of the position of appellee outside of these records are immaterial and irrelevant. 30 Ark. 17. The municipal court was without power to set the judgment aside except “within ten day after being rendered,” and appellee was bound to know that any order made by said court setting aside the judgment was void if same was made after ten days from the rendition thereof. Having permitted the days to expire, after it had the right of appeal it has no remedy by certiorari. 37 Ark. 318; 131 Id. 215. Appellee was not entitled to the writ of certiorari, hut appellant was, and the order of the municipal court made on August 18, 1920, setting aside the judgment should be quashed, as the court had no jurisdiction to make it.
   Smith, J.

On May 22, 1920, appellant filed suit against appellee company in the municipal court of Tex-arkana, and summoned the State National Bank of that city as garnishee. A bond was given, and the attachment was dissolved and the garnishee discharged. On June 18, 1920, appellee filed its answer, and, by consent, the cause was set for trial on July 1, 1920. The cause was continued and reset for trial on July 20. On that day appellant appeared by his attorney, and appellee failed to appear, and judgment was rendered against it for the amount sued for.

On July 29 appellee filed its motion to set the default judgment aside, and as grounds therefor alleged that the junior member of the firm of attorneys which had charge of the case was confined in a hospital, and that the senior member of the firm did not know the case had been set for trial. This motion was granted on August 18, 1920, the default judgment was set aside, and the case reset for trial on September 1, 1920. On this last-named day appellant appeared in the municipal court and moved the court to set aside the order vacating the default judgment. This motion was granted on September 3, and the order of August 18 was vacated and set aside, and appellee appealed from that order to the circuit court. On September 6 appellant filed in the circuit court a motion to dismiss appellee’s appeal. This motion was granted, and the appeal was dismissed.

On September 14 appellee filed in the circuit court its petition for certiorari, alleging the facts set out above, and further that at the time the original default judgment was rendered appellant had appeared by his attorney, who represented to the court that he believed the defendant (appellee) had no defense, that the answer and bond had been filed to release, money to 'meet a payroll, and that this representation was false and had misled the court and induced it to render judgment by default. That, after filing this motion to set aside the default judgment, appellee’s attorney had asked appellant’s attorney when the motion could be taken up in the court, and appellant’s attorney answered that they would present the motion at any time that was convenient to both parties. That, relying upon said statement, appellee allowed said motion'to remain on file without being acted upon by the court until August 17, on which date he was' advised that the motion would be heard the next day, and on that day the default judgment was set aside. It was further alleged in the petition for certiorari that the order of the court made on September 3, setting aside its order of August 18, was void, for the reason that the court was without jurisdiction to make it, as the judgment, .by the order of August 18 had ceased to exist, and that the petitioner (appellee) had a valid defense to said suit, but the nature of the defense was not alleged.

On September 21, 1920, appellant filed his petition in the circuit court for certiorari to quash the order of the municipal court made on August 18, 1920, setting aside the default judgment rendered July 20, 1920. This petition alleged that the order which it seeks to quash was void because more than ten days had elapsed after the default judgment had been rendered before the court was asked to set it aside, and the court was thereafter without jurisdiction to make that order. It was there alleged that petitioner for this second writ of certiorari (appellant) had never been advised of the filing of the motion to vacate the dfefault judgment and had no notice of its pendency until it had been granted. An answer was filed to this petition by appellee, in which it reiterated the facts alleged in its own petition for certiorari.

The two petitions were heard together, and the court overruled a demurrer filed by appellant to appellee’s petition, and granted appellee’s petition for certiorari, and quashed the order of the municipal court made on September 3 vacating and setting aside the order of August 18, and remanded the case to the municipal court for trial. The court denied appellant’s petition for cer-tiorari to quash the order of August 18. A motion for a new trial was filed in which the orders of' the court were assigned as error.

The municipal court of Texarkana was created by act 138 of the Acts of 1917 (Acts 1917, p. 734), and section 7 thereof makes all provisions of the general law applying to justices of the peace and not inconsistent with the act applicable to that court.

The proceeding sought to be reviewed by this appeal is not one to set aside a judgment as having been obtained by fraud, but is a proceeding by certiorari to quash an alleged void order of the municipal court. The validity or invalidity of the order sought to be quashed depends upon the construction of section 6448, C. & M. Digest. This section reads as follows:

“Judgment of dismissal for want of prosecution, or judgment by default may be set aside by the justice at any time within ten days after being rendered, if the party applying therefor can show a satisfactory excuse for his default, and -a meritorious cause of action or a meritorious defense, whereupon a new day shall be fixed for trial, and notice given to the opposite party; and any execution which may in the meantime have been issued shall be recalled in the same manner as in cases of appeal, and the canse shall proceed to trial as though no such judgment had been taken. ’ ’

This section does not deal with the practice in a case where the parties appeared and a trial was had before .the court. Section 6449, C. &. M. Digest, governs in that case, and requires a notice of ten days of the motion for a new trial or a rehearing.

This court, in the case of Frizzell v. Willard, 37 Ark. 478, held that no notice was required of the filing of a motion under section 6448 until the default judgment had been set aside and a new day fixed for trial. Notice of that fact is required by the statute. It thus appears that it was the legislative will that the parties seeking the benefit of this statute should move expeditiously and within the time limited. This section 6448, under which appellee proceeded, is a special statutory proceeding. It was not intended to deprive one of his right to have a judgment set aside as having been obtained by fraud, nor was it intended to affect one’s right of appeal. It was designed to afford relief to the litigant whose suit was dismissed for want of prosecution or against whom a judgment by default had been taken where the litigant could show a satisfactory excuse for his delay and that he had a meritorious cause of action or defense. But this relief can be granted only where the litigant proceeds within the time limited by law, towit, ten days after the rendition of the judgment. This means that the party must file his motion and invoke the order of the court thereon within ten days. If this is done, and for any reason the court does not act thereon, jurisdiction of the motion is still retained by the court.

This is the construction which the Supreme Court of California gave to a somewhat similar statute of that State in the case of Spencer v. Branham, 41 Pac. 1095, 109 Cal. 336. There a judgment by default was entered on April 20 against Leonard by a justice of the peace. Within the ten days allowed by law, Leonard filed a motion to set the judgment aside, and alleged an excuse for liis neglect. The motion was set for hearing on May 8, and was heard and granted on that day, and the cause f-ct down for trial. Thereafter a proceeding was brought to prohibit the trial on the ground that the justice liad no jurisdiction to grant the motion because it was not made within ten days of the trial. The court there said: “The question then is, when a motion must be made upon notice within a given period, can a party extend liis own time by filing a written motion within the period, and giving notice of a hearing of the motion at a time after the period has expired? To ask the question is to answer it. The application for relief must be by motion, and ‘making and not filing a written application for such rule or order is not sufficient. The attention of the court must be called to it, and the court moved to grant it.’ People v. Ah Sam, 41 Cal. 645. Here, although the attention of the court may have been called to it, no present action was requested.” The court added, however: “If the motion had been made, had the court continued the hearing for argument, or for further evidence, it would not have lost jurisdiction, for in such case the application would have been made in time. ’ ’

In this case, as in that, the motion to vacate was filed within the time limited by law, but in this case, as in that, the ruling of the court was not invoked within the ten days. This fact appears from the recitals of ap-pellee’s petition for certiorari. Appellee seeks to excuse that failure by alleging an agreement with opposing counsel to take the motion up at any time when it was mutually convenient. But the court made no order in regard to this motion, and was not asked to rule thereon, within the ten days, and appellee relied upon the agreement at its peril. The agreement was in contravention of the statute, and the parties could not thus enlarge the time for invoking the action of the court, which the statute provided.

It follows, therefore, that the municipal court should not have set the default judgment aside, and the circuit court shotüd not have set aside the order of the municipal court vacating its order which set aside the default judgment.

The judgment of the court below is therefore reversed, and the cause will be remanded with directions to the circuit court to enter an order directing the municipal court to vacate its order which set aside the judgment rendered on July 20.


author: McCulloch, C. J.

text:
    Brown v. State.
    Opinion delivered March 21, 1921.
    1. Seduction — corRoboRation op prosecutrix. — In a prosecution for obtaining carnal knowledge of an unmarried female by a false promise of marriage, under Crawford & Moses’ Digest, § 2414, though sexual intercourse was admitted, it was necessary that the testimony of the prosecutrix be corroborated as to the alleged promise of marriage.
    2. Seduction — corroboration op prosecutrix. — In a prosecution for obtaining carnal knowledge of an unmarried female by a false promise of marriage, evidence held to corroborate the testimony of the prosecutrix as to the promise of marriage.
    3. Seduction — instruction.—In a prosecution for seduction an instruction that social attention on defendant’s part was not of itself corroboration of the testimony of the prosecutrix as to the ' promise of marriage unless such attention was exclusive and such as to raise a presumption that an engagement existed was properly refused as being on the weight of evidence.
    4. Criminal law — repetition op instructions. — The refusal of a requested instruction was not error when it was covered by others given.
    Appeal from Johnson Circuit Court; A. B. Pricldy, Judge;
    affirmed.

      G. 0. Patterson and Jesse Reynolds, for appellant.
    1. The testimony is not sufficient to support the verdict, as the evidence of the injured female is not corroborated with respect to the alleged promise of marriage. The promise to marry and the fact of intercourse must be proved, either directly or inferentially, by other testimony than the prosecutrix’s. 42 Ark. 482; 77 Id. 16; 101 Id. 45. Here there is no direct evidence relating to the promise of marriage except that of the prosecutrix; the letter in evidence can not be regarded as adding additional proof, either directly or inferentially, for it is identified solely by the prosecutrix. The only evidence offered by the State in corroboration .of the promise was that of defendant’s social attentions to the prosecutrix. This was not legally sufficient. 77 Ark. 472; 102 Pa. St. 208; 104 Mo. 644; 45 Tex. Co. 290; 63 S. W. 317; 48 Id. 192; 31 Id. 366.
    2. Instruction 4 asked by defendant should have been given. It was also error to refuse No. 5. Their refusal was prejudicial error. 24 R. C. L. 61; 110 N. W. 380.

      J. 8. Utley, Attorney General, and E. E. G-odivin, Assistant, for appellee.
    1. The testimony of the prosecutrix was sufficiently corroborated as to alleged promise of marriage. Appellant admits sexual relations with the prosecutrix, and her testimony as to relations does not have to be corroborated. 130 Ark. 149; 132 Id. 92.
    2. The promise of marriage is fully proved and sufficiently corroborated. The letter of defendant to the girl is sufficient corroboration of appellant’s promise of marriage. 135 Ark. 221; 130 Id. 149.
    3. There was no error in refusing the instructions asked, Nos. 4 and 5. They are not the law and were properly refused. 24 R. C. L. 779.
    The jury evidently believed the girl’s testimony, and the verdict is amply sustained by the testimony.
   McCulloch, C. J.

Appellant was convicted in the circuit court of Johnson County of the statutory crime of obtaining carnal knowledge of a certain unmarried female, by virtue of ‘ ‘ a false or feigned expressed promise of marriage.” Crawford & Moses’ Digest, § 2414. The principal contention here is that the testimony is not sufficient to sustain the verdict, in that the testimony of the injured female was not corroborated with respect to the alleged promise of marriage.

Bertha Ketcheside, who at the time of the commission of the offense was a girl of about eighteen years of age, resided with her widowed mother near the town of Knoxville, in Johnson County, and appellant, a young unmarried man, lived in the same community. According to the testimony of the girl, she and appellant became acquainted with each other in December, 1917, and from that time until' the first act of sexual intercourse between them he visited her frequently and his attentions to her were marked. He visited her every Saturday night and 'Sunday and occasionally other nights during the week. They became engaged to be married in May, 1919, and the first act of intercourse occurred on the night of the second Saturday in October, 1919. On that day, according to the girl’s testimony, they set the date for their marriage, which was to take place at the county fair to be held on October 16, 1919. The act of sexual intercourse was repeated a number of times after the first act, and a few months later it was found that the girl was pregnant, and appellant ceased to visit her. They met at the county fair at Clarksville on October 16, for the purpose, as the girl supposed, of being married, but appellant asked for a postponement until the following Sunday, and when they returned home that night he declared to her that he would not marry her at all. The baby was horn on April 7, 1920. This is the girl’s narrative of her relations with appellant, who admitted on the witness stand that he had intercourse with her at the first time and place which she described, and frequently thereafter as late as in December, 1919, but he denied that he had ever promised to marry the girl.

The alleged acts of sexual intercourse being admitted, corroboration of the testimony of the injured girl-on that issue was not essential to a conviction. It was, however, essential that her testimony should be corroborated as to the alleged promise of marriage, and we are of the opinion that there was sufficient corroborating testimony. She testified that appellant visited her weekly and at times of tener than that for a period of about a year, and that about the time of their engagement in May, 1917, his attentions to her were almost entirely exclusive of the attentions to her of any other young man. The girl’s mother corroborated her testimony in this respect and stated that appellant visited the girl frequently — always as often as once a week and sometimes oftener — and that during the summer of 1919 no other young men were visiting her. This is sufficient to constitute corroboration of the testimony of the injured girl, and was a circumstance which warranted the inference that there was an engagement between them to marry. Lasater v. State, 77 Ark. 468. In addition to those circumstances, we are of the opinion that corroboration is found in the contents of a letter shown to have been written by appellant to the injured girl on August 10, 1919, in which he referred to the arrangement for them to be married at Clarksville on October 16. The girl produced the letter at the trial and testified that it was one that she received from appellant, and that she kept it in a drawer at her mother’s house with other letters from him and had burned the others, but by accident this one had not been burned. The girl’s sister testified that this letter was in the same handwriting as the other letters which she had seen in the drawer. Appellant admitted that he had been carrying on correspondence with the girl. This testimony, when taken together, warranted the jury in finding that the letter produced was written by appellant, and, if so, there can be no question that the language of the letter constituted abundant corroboration of the girl’s testimony with reference to the promise to marry.

Error of the court is assigned in refusing to give the following instruction:

“You are instructed that social attention on the part of defendant is not in itself corroboration, unless you find that such attention was exclusive, and was such as to raise the natural presumption that an engagement existed. In other words, to amount to corroboration, social attention must he such as usually exists, or is practiced, between parties who are engaged to he married. ’ ’

This instruction was erroneous in telling the jury that the social attentions on the part of appellant to the girl could not be taken as corroboration unless such attentions were exclusive. This amounted to an instruction on the weight of the evidence, for it can not be said as a matter of law that the testimony of marked social attentions by a young man to a girl is without force as a circumstance indicating a promise to marry merely because such attentions were not exclusive. There may be cases where visits and social attentions of young men are so infrequent that it should be said as a matter of law they were not sufficient to carry any force as testimony to establish a promise of marriage, but it would be going too far to say that, because the attentions were not exclusive of the attentions of the man to other females, or of the attentions of other men to the injured female in question, they are without probative -force as indicating-promise of marriage. The court therefore properly refused to give this instruction.

Counsel also insists that the court erred in refusing to give instruction number 5, which told the jury that there must be corroboration of the promise of marriage as well as of the alleged act of intercourse, but this was fully covered by another instruction given on the court’s own motion, and it was not error therefore to refuse the instruction requested by appellant, even though it was correct in form.

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


text:
    Beard v. Beard.
    Opinion delivered March 21, 1921.
    DOWER — DYING without CHILDREN — ancestral estate. — Under Crawford & Moses’ Dig., § 3536, providing that a widow shall he endowed in fee simple in one-half of the real estate of her husband dying without children where said estate is a new acquisition, and not an ancestral estate, held that where a husband, in taking a grant from his father, assumed a portion of a mortgage indebtedness, the huscand’s estate was a new acquisition, though he died without paying such assumed indebtedness, and the widow’s dower was in fee; there being no children.
    Appeal from Mississippi Chancery Court, Chicka-sawba District; Archer Wheatley, Chancellor;
    affirmed.

      Driver & Simpson, for appellant.
    There is only one question before this court, and that is the nature of the estate acquired by Don P. Beard from his father. If it was ancestral, appellee is entitled to dower in the lands for life; if the lands were a new acquisition, she is entitled to dower in said lands in fee. Kelley’s Heirs v. McGuire settles the principles of this case. 19 Ark. 401. This case falls within the rule in 107 Ark, 504. See, also, 97 Ark. 568; 98 Id. 568; 69 Id. 237.
    When appellant, the father of appellee’s husband, conveyed to him the lands in question with the burden of a $6,000 mortgage, the assumption of payment of same by appellee’s husband could not in any way or manner render the estate held by her husband any other than an ancestral estate, and the case should be reversed.

      Buck & Lasley, for appellee.
    The only question is whether the deed executed by appellant to Don P. Beard, the husband of appellee, was a deed of purchase or of gift. If a deed of purchase, the land was a new acquisition, and appellee, the widow of the grantee, was entitled to dower in fee; if a deed of gift, the estate was ancestral, and appellee was only entitled to dower for lifetime. In determining whether it was a deed of purchase or of gift, we may look to its recitals, and a recital in the deed that the conveyance is made for a valúa-ble consideration is of the essence of the contract or deed, and it was not competent to show by parol evidence that such conveyance was a deed of gift. But the decree is correct for other reasons. The deed contains in the covenant clause this provision “and.we covenant with Don P. Beard that we will forever warrant and defend the title to said lands against all claims whatever, except for a deed of trust amounting to six thousand dollars which .the grantee, Don M. Beard, assumes and agrees to pay.” Under this language and upon delivery of the deed, Don P. Beard became personally liable for this six thousand dollars against the land and could have been sued thereon and a judgment taken on foreclosure, and further if the appellant had been required to pay any part of this debt he would have had a cause of action against Don P. Beard for the amount of'the debt so paid by him. 42 Ark. 197; 110 Icl. 70. The deed was delivered, and the lower court was right in its findings. 110 Ark. 70; 128 Id. 320; 113 Id. 289. After accepting the deed, the grantee is bound by the conditions in the deed. 2 Devlin on Real Estate, pp. 175-8; 47 Ark. 317; 50 Id. 433. The execution and delivery of the deed, in view of the language therein contain d, is sufficient to make the conveyance one of purchase. In addition, the proof shows a valuable consideration was paid by the son, Don P. Beard, other than the assumption of the debt mentioned in the deed. The consideration was a mixed one, part a consideration for value and part love and affection. 98 Ark. 93; Walker’s Am. Law (4 ed.), p. 409. See, also, 15 Ark. 555; 49 N. E. 479; 8 R. C. L. 965. The lower court properly found the issues for appellee. It was a purchase and not one of blood.
   McCulloch, C. J.

Appellee is the widow of Don P. Beard, deceased, who was the owner of a tract of farm land in Mississippi County, and the only question involved in the present controversy is whether the decedent held the lands as a new acquisition by purchase, so as to give his widow a title in fee to her dower interest, or as an ancestral estate, so as to limit the widow’s dower interest to an estate for life.

There is no substantial dispute concerning the material facts of the case. The lands in question were originally owned by appellant, "W. A. Beard, the father of Don P. Beard, and the former conveyed the lands to the latter by deed of conveyance dated June 16, 1917, reciting a consideration of “one dollar and other valuable considerations,” and also containing the following recital: “It is expressly understood that this deed is made subject to a deed of trust now on the lands conveyed herein, amounting to six thousand dollars, held by the Mississippi Vfdley Trust Company of St. Louis, Missouri, * * * and which this grantee, Don P. Beard, a'ssumes and agrees to pay.”

Coincident with the execution of the deed, W. A. Beard voluntarily executed to Don P. Beard a declaration in writing to the effect, that he, the said W. A. Beard, would “pay for the said Don P. Board to the Mississippi Valley Trust Company of St. Louis, Missouri, or its assigns, five, years after date of the certain deed of trust, at which said deed of trust becomes due, the sum of three thousand ($3,000) dollars to apply as against the indebtedness evidenced by said deed of trust, *. * * provided title, to said real estate is held by the said Don P. Beard, and provided, that said real estate is owned by the said Don P. Beard in person.” It appears from the testimony in the case that the mortgage debt to the Mississippi Valley Trust Companv did not fall due for five years, and before its maturity Don P. Beard died without having paid any of the debt.

There was oral testimony to the effect that the con-vevanee from W. A. Beard to his son was intended as a gift. But the deed of conveyance itself contained the recital of a consideration moving from the grantee to pay one-half of the mortgage debt which he assumed by the acceptance of the conveyance. The proof shows that the land was of value largely in excess of the mortgage debt, and it is undisputed that the father intended to make a gift to his son of the land at least to the extent of the value in excess of one-half of the mortgage debt. Bui. it is equally undisputed that the son obligated himself by the acceptance of the deed to pay one-half of the debt, and to this extent he received the title by purchase.

It has become the -settled rule in this State, as announced in the decisions of this court, that an estate can not, legally speaking, come partly by gift and partly by purchase, and that, “in order to constitute a gift from a parent to a child an ancestral estate, within the meaning of our statute, the conveyance must be made entirely in consideration of blood and without any consideration deemed valuable in law; and if such deed is executed partly for a valuable consideration, the estate acquired is a new acquisition.” Martin v. Martin, 98 Ark. 93; Hill v. Heard, 104 Ark. 23; McElwee v. McElwee, 142 Ark. 560; Earle v. Earle, 145 Ark. 559.

Counsel for appellant attempts to bring this case within the rule announced in Howard v. Grant, 107 Ark. 504, where the ancestor has become the equitable owner of land under a title bond, and the purchase price was paid by the personal representative after the death of the ancestor, and we held that the estate taken by the heirs was ancestral, notwithstanding that purchase price was thus paid. This case does not, however, fall within the rule announced in that case, for here there was an obligation on the part of the grantee to pay one-half of the mortgage debt in consideration of the conveyance. This imposed an enforceable obligation on him (Felker v. Rice, 110 Ark. 70; Walker v. Mathis, 128 Ark. 317), and constituted a valuable consideration for the conveyance. The fact that the consideration was inadequate or was only in part a consideration for the conveyance does not alter the rule that an estate acquired under such circumstances is a new acquisition. Nor does the fact that the grantee had not in fact paid the consideration affect the application of the rule, for, the obligation being a valid one, it could be enforced against his estate.

The chancery court was correct in holding that the estate of Don P. Beard in the land was a new acquisition, and that the widow was entitled to an estate in fee simple in the portion allotted to her as dower.

Affirmed.


author: Wood, J.

text:
    Greene County v. Smith.
    Opinion delivered March 21, 1921.
    1. Taxation — trust estate. — Where, under an instrument designated as a “declaration of trust,” a trust estate was created for the purpose of acquiring oil and gas leases in a foreign State, the interest of the beneficiaries in leases so acquired was not subject to taxation in this State, under Crawford & Moses’ Digest, § 9853, providing that investments in bonds, stocks, joint-stock companies, or otherwise, of persons residing in this State shall be subject to taxation; the term “or otherwise” referring to investments of the same class to which the specific words belong.
    2. Taxation — oil and gas leases in another state. — An interest in oil and gas leases in another State must be deemed an interest in real property, and not taxable in this' State, under Crawford & Moses’ Dig., § 9792.
    Appeal from G-reene Circuit Court; R. H. Dudley, Judge;
    affirmed.

      Jeff Bratton, for appellant.
    The finding and judgment of the circuit court is contrary to the law and 'the evidence. Under the Constitution 1874, art. 16, pars. 5, 6, 7, all property in this State is subject to taxation except certain specified exceptions and stock or shares in a trust estate like this one are not exempt from taxation. See Kirby’s Digest, § 6873; lb., § 6872; 87 Ark. 484; act 147, Acts 1919, § 4; 43 Ark. 527. As to what is property, see 37 Cyc. 781, and as to the place of taxation, 37 Cyc. 805. The stock was subject to taxation. 41 Ark. 517. And in this State. 60 Ark. 473-4; 33 Id. 195; 24 Cyc. 1074; 119 Ark. 369.

      It. P. Taylor, for appellee.
    1. There is no bill of exceptions in the case; it was not filed in time. lliS Ark. 6; 103 Id. 46; 58 Icl. 110; 42 Id. 488, C. & M. Digest, § 1323.
    2. Appellants’ failure to abstract the petition and evidence is fatal. The stocks, in the declaration of trust were not subject to taxation. The doctrine of “ ejusdem generis” forbids. 95 Ark. 114-16; 73 Id. 600-2; 105 Mass. 519. Appellee was exempt from paying taxes in Arkansas on property in Texas. 249 U. S. 223; C. & M. Digest, § 9702; 64 Ark. 136. A lease of coal beneath the surface is taxable. 105 Pa. 469. See, also, C. & M. Digest, § 9856. The lands were exempt. 97 Ark. 254; C. & M. Dig., §§ 750 to 771. The land was taxable only in the State of the domicile of the owner. The judgment is right.
   Wood, J.

Under a certain instrument designated as a ‘‘Declaration of Prust” a trust estate was created known as the “Commercial Lease Syndicate,” with offices under that name in Paragould, Arkansas, and such other places as the trustees might designate. The object of the trust, as declared in the instrument, was “to provide a trust in which various persons may have ownership rights, the assets of the trust to be managed by trustees, who shall be free from the direction of said persons having ownership rights, or any of them. The persons having ownership rights shall be trust beneficiaries only, unaffected by any such relation as that of partnership or joint stock association.” It is declared that the property acquired shall be in the name of the Commercial Lease Syndicate as trustees, the property to be held for the benefit of the holders of trust certificates. Two persons are named in the instrument as trustees, and it is declared, among other things, that they “shall have full power to do all things which in their judgment are necessary and prudent in the management and conduct of this trust.” It is declared that the business of the trust shall be the purchase, sale and exchange of oil, gas or mineral leases or lands, or interests or rights in such, leases and lands, and the development of such leases or lands. To this end the trustees are specifically authorized and empowered to buy, sell and exchange such oil, gas and mineral leases and lands and to develop such leases or lands. They (the trustees) “may sell and dispose of any part or portion of all the trust estate free and clear of any claim of any beneficiary of this trust or holder of trust certificates.” The holders of trust certificates have the right “to receive the profits that may be apportioned and paid over by the trustees and to receive a proportionate part of the corpus of the trust estate at the time of the dissolution of the trust.” The trustees have the power under the instrument to appoint a substitute or substitutes who shall succeed to the powers and duties of the persons named as trustees. The instrument was signed by the two persons named as trustees. The trust estate was valued at $14,000, and the interest of each beneficiary is to be represented by certificates showing that he is the owner of such proportion of the estate represented by the ratio of his share, which shall be $100 or some integral multiple thereof to $14,000. The instrument contains various other provisions which it is unnecessary to set forth.

The trustees issued to Griffin Smith a certificate showing that he was the owner of shares in the syndicate to the amount of $3,000. Before issuing the certificates of shares, the trustees named in the declaration of trust applied for and received from the State Bank Commissioner authority to sell shares in the property held in trust under the declaration. The board of assessors of Greene County assessed the certificate issued to Smith at $1,500. Smith instituted this action in the county court under the provisions of act 147 of the Acts of 1919, § 11, to have the assessment set aside. The cause was heard upon an agreed statement of facts in which it is set forth, among other things, that the property rights of Smith which he seeks to have exempted from taxation were evidenced by the declaration of trust above mentioned. The agreed statement of facts contains this recital: “The only property in which the said Smith holds any beneficial interest or ownership whatever by reason of said declaration and certificates consists of oil and gas leases on real estate in the State of Texas. ’ ’ Other recitals are set forth in the agreed statement of facts, and the declaration of trust is made an exhibit to the agreed statement.

The county court sustained the assessment, and the circuit court, on appeal, entered a judgment setting aside and vacating the same, from which judgment Greene County prosecutes this appeal.

1. The instrument under review, designated as a “Declaration of Trust,” is unique, but the beneficiaries under it are not stockholders in any corporation or joint stock company within the meaning of any of the provisions of chapter 38 of Crawford & Moses’ Digest. The business arrangement set forth in the instrument between the beneficiaries and the trustees was one by which the trustees were to have the legal title to, and the sole right of management of, certain oil and gas leases on lands in the State of Texas, which the beneficiaries were to furnish the money to buy. These leases, when purchased, were to be held, developed, and otherwise managed by the trustees for the benefit of those who had invested their money therein. It is manifest, when the language of the trust instrument is considered as a whole, that it was not the purpose of the trustees or the beneficiaries to create anything like a joint stock corporation or company, or other artificial entity separate and apart from the real owners.

We conclude, therefore, that the individual interest or share of each beneficiary in the estate created by the declaration of trust, as evidenced by the certificates issued, is not subject to taxation under section 9853 of Crawford & Moses’ Digest. See Hoadley v. County Commissioners, 150 Mass. 519; Cropper v. Malley, 249 U. S. 223.

Section 9853,' supra, provides: “All property, whether real or personal, in this ptato, and all moneys, credits, investments in bonds, stocks, joint stock companies, or otherwise, of persons residing therein, etc. * * * shall be subject to taxation.” The words “or otherwise,” as used in that section under the rnle of ejusdem eneris, refer to the same class to which the specific words preceding’ belong. Hempstead County v. Harkness, 73 Ark. 600; C., R. I. & P. Ry. Co. v. State, 95 Ark 114-116.

2. The estate in which the appellee, under the trust declaration, owns an equitable interest is real estate situated in the State of Texas and is, therefore, not taxable in this State. Section 9792 of Crawford & Moses’ Digest provides: “The term ‘real property and lands,’ wherever used in this act, shall be held to mean and include not only the land itself, whether laid out in town lots or otherwise, with all things therein contained, but also all buildings, structures and improvements, and other fixtures of whatever kind thereon, and all rights and privileges belonging or in anywise appertaining thereto.” For the purpose of taxation, a lease on land in Texas for oil and gas production is real property and not subject to taxation in this State. See Union Compress Co. v. State, 64 Ark. 136; Consolidated Coal Co. v. Baker, 12 L. R. A. (Ill.) 247.

The judgment of the circuit court is therefore correct, and it is affirmed.


text:
    Mitchell v. Lindley.
    Opinion delivered March 21, 1921.
    1. Evidence — opinion as to pahty’s finances. — On the trial of a claim of a father for money alleged to have been loaned to his deceased son with which to buy land, where a bank cashier was permitted to testify as to the amount of decedent’s deposits on the day he purchased the farm and the amount drawn out by him on that day, the question whether his finances or accumulations were such that he could carry as much as $1,500 in cash at any time was properly excluded, as usurping the function of the jury.

      2. EXECUTORS AND ADMINISTRATORS — BURDEN OP PROOF OF CLAIM.— One presenting a claim against a decedent for an alleged loan not evidenced by writing had the burden of proving the debt.
    3. Executors and administrators — claim-—sufficiency of evidence. — On trial of a claim for an alleged loan to decedent, a verdict for the administrator held supported by the evidence.
    Appeal from Jackson Circuit Court; D. E. Coleman, Judge;
    affirmed.
    STATEMENT OE EAOTS.
    B. F. Mitchell presented Ms claim to J. W. Bindley, administrator of the estate of J. C. Mitchell, deceased, for money alleged to have been loaned decedent with which to purchase a farm.
    The probate court disallowed the claim, and B. F. Mitchell appealed to the circuit court. The evidence- adduced in the circuit -court was substantially as follows: On the 25th day of June, 1919, J. C. Mitchell purchased a farm in Jackson County, Arkansas, for $1,925, which was paid in cash.
    According to the testimony of Oscar Mitchell and Lillian Mitchell, the brother and sister of J. C. Mitchell, the latter told them at the time he purchased the farm that he had borrowed $1,500' from his father with which to pay for it. After he had purchased the farm, J. C. Mitchell again told them that he had paid for the farm by borrowing $1,500 from his father and with $500 of his own money. J. C. Mitchell had rented some land on the shares in 1918, and there were twelve bales of cotton of the share crop that had been shipped to Memphis, and Mitchell had drawn $100 a bale on this cotton. On the 25th day of June, 1919, lie had about $500 on deposit in the bank and had drawn out the balance.
    According to the testimony of E. B. H<?lt, he was cashier of the Bank of Tuckerman, and J. C. Mitchell had done business with the bank for two or three years. He paid the purchase price of the land in question on the 26th day of June, 1919, in cash. He made the payment through the bank and delivered to Holt three packages of currency containing $500 each and a check for $500. B. F. Mitcliell carried, an account with the bank, and about a year before this had withdrawn more than $1,500. B. F. Mitchell at the time be drew out his money was given three packages of $500 each and $100 in gold. The $500 packages given to B. F. Mitchell were similar to the ones paid in by J. C. Mitchell at the time he purchased the land. On the 15th day of May, 1919, J. C. Mitchell deposited in the bank $900 which had been advanced him on his cotton which he had shipped to Memphis. Up to the 24th day of June, 1919, J. C. Mitchell had drawn out about $350, and on the 26th day of June, 1919, he had on deposit in the bank about $550. He was then asked: ‘ ‘ Was his finances such, or his accumulation's such, that he could carry as much as $1,500 in cash at any time?” A. “I think not.” Upon objections made by the administrator, the answer was withdrawn from the jury, and it was instructed not to consider it. Counsel for B. F. Mitchell saved exceptions to the ruling of the court.
    According to the evidence adduced by the administrator, J. C. Mitchell bought and paid for the land on June 26, 1919. Tie died on the 19th day of September, 1.919. No note or other evidence of indebtedness signed by J. C. Mitchell was presented to the administrator by B. F. Mitchell.
    According- to the testimony of Dan Pierce and John IT. Pierce, B. F. Mitchell told them, before the death of his son, J. C. Mitchell, that the latter had bought the farm and paid for it with his own money.
    On cross-examination they stated that B. F. Mitchell told them that his son had the money of his own to pay for the farm. B. F. Mitchell denied that he had had the above conversation with Dan and J. H. Pierce.
    The jury found for the administrator, and the case is here on appeal.

      John W. & Jos. M. Station, for appellant.
    1. The court erred in excluding the testimony of Mr. Holt from the jury regarding the lnancial condition of J. C. Mitchell, deceased. Evidence of the probability of a loan, being made was certainly competent. 168 Ill. 419; 85 Id. 611; 109 Ill. App. 358; 129 Id. 96; 66 Atl. 1049; 1 Wigmore on Ev. 38.
    Failure to make claim when occasion therefor exists has some tendency to prove the invalidity or nonexistence of the claim. 81 Mich. 172 and notes. See also to same effect. 33 Vt. 639; 104 Ala. 222; 129 Mich. 429; 31 Ind. App. 151; 58 Md. 442; 11 Conn. 375; 109 Me. 537. It was therefore error to exclude the evidence of Mr. Holt as to the financial condition of the deceased, and the error is prejudicial.
    2. The evidence is not sufficient to justify the verdict.
   Hart, J.

(after stating the facts). It is first contended by counsel for appellant that the court erred in excluding from the jury the testimony of Holt with regard to the financial condition of J. C. Mitchell, deceased, as follows: “Was his finances such, or his accumulations such, that he could carry as much as $1,500 in cash,, at anytime?” A. “I think not.” Counsel contend that the above testimony was competent as tending to show that the financial condition of J. C. Mitchell was such that he was not likely to have had $1,500 at the time he purchased the farm. !

We can not agree with counsel in this contention. The cashier was permitted to state the amount of money J. C. Mitchell had on deposit in the bank during the year 1919, the amount he drew out, and the amount he had on hand on the day he purchased the farm. This was all that the witness knew about the financial condition of J. C. Mitchell. The testimony was conflicting as to whether or not he had the money with which to pay the whole' purchase price of the farm, and it was a question for the jury to determine whether or not he borrowed the $1,500 from his father with which to pay a part of the purchase price of the farm. The witness could only state the facts within his knowledge relating to the financial condition of J. C. Mitchell and his ability to pay cash for the farm at the time he purchased it. It would not be competent for him to give his opinion as to his ability to pay cash' for the farm. That was the precise question for the jury to determine. To allow the witness to express his opinion as to whether or not J. C. Mitchell had $1,500 in cash would be to allow the witness to usurp the functions of the jury. The court allowed the witness to testify as to all matters within his knowledge relating to the financial condition of J. C. Mitchell and properly excluded from the jury the opinion of the witness with regard thereto.

It is also insisted by counsel for appellant that the evidence is not sufficient to justify the verdict. We can not agree with counsel in this contention. Appellant did not introduce in evidence any note or other instrument of writing signed by J. C. Mitchell in which he promised to pay appellant $1,500 or any other sum. The burden was upon appellant to prove his debt. He only did this by the testimony of witnesses who said that J. C. Mitchell told them that he had borrowed $1,500 from his father with which to pay for the land in question.

On the other hand,two witnesses for appellee testified that appellant had admitted to them that his son had paid for the land with his .own money. Therefore, the evidence was sufficient to support the verdict, and the judgment must be affirmed.


text:
    Wilmot v. West.
    Opinion delivered March 21, 1921.
    1. Contracts — substantial performance. — In a suit on a building contract, the finding of the chancellor that there had been a substantial compliance with the contract held not against the preponderance of the evidence.
    2. Arbitration and award — agreement.—Where, in a suit on a building contract, the parties agreed that the court might appoint two disinterested persons to examine the work and ascertain its actual value, the contractor could not complain that the value of the work was ascertained in that way.

      Appeal from Garland Chancery Court; J. P. Henderson, Chancellor;
    affirmed.
    STATEMENT OE EACTS.
    E. 0. West brought suit in equity against S. G. Wilmot for $1,884.35, alleged to be due him for materials furnished and labor performed in making certain improvements upon a two-story frame dwelling house in the city of Hot Springs, Arkansas, belonging to S. G. Wilmot, and also to have the amount recovered declared to be a lien on the house and the lot upon which it is situated.
    E. B. Mooney also brought suit in equity against S. G. Wilmot to recover $300 for materials furnished and labor performed upon the same house under a sub-contract with West and to have the amount recovered declared a lien upon said house and lot. The two suits were consolidated and tried together upon a state of facts substantially as follows:
    Mrs. S. G. Wilmot owned a two-story frame house situated on a lot in Hot Springs, Arkansas, which she had purchased for $5,000. She wished to have material alterations and repairs made on the property, and in September, 1917, entered into a written contract with E. O. West for that purpose. The contract provided that the repairs should be constructed in- accordance with the specifications accompanying the contract, and that all the materials furnished and the labor done should be furnished and executed in a first-class and workmanlike manner. The consideration recited was $2,655. The specifications provided for the excavation for front steps and a driveway on the lot. It provided for a concrete retaining wall, a concrete walk, and other concrete work. It also provided for a cobblestone fence, 120 feet long, 12 inches thick, and not to exceed 2y2 feet high. It provided that the contractor might use all the materials taken out of the building available to be re-used and furnish the rest of the materials except as specified in the contract. The owner was to furnish shingles for the roof of tlie porcli and the garage. The garage was to be one-story and of the size and specifications provided in the contract. The contract also provided for a butler’s pantry, a kitchen, and a sleeping porch of the kind and character designated in the specifications. It provided for an extension of the front porch and the kind and character of materials to be used in constructing and roofing it.
    Subsequently Mrs. Wilmot made additional agreements with West for material changes and alterations in her plans for repairing the dwelling house. The sleeping-porch was changed into a room, and the front porch was altered so as to make it two stories high with a sleeping-porch on the second story. The plans for the garage were changed so as to make it two stories high. The roofs of the garage and of the front porch were changed from shingle to some sort of composition roofs. This was done because the change of the front porch from one story to two stories and of the garage would make the roof so flat that it was not practical to have a shingle roof on either of them. Numerous other changes in the plans for the repairs of the interior of the house were agreed upon between the parties.
    When the repairs were near completion, Mrs. Wilmot called in F. J. W. Hart, an architect of thirty years ’ experience, to inspect the work which had been done by Mr. West. Mr. Hart testified that the hardwood floors put in by West were better than the average, but that the general character of the work done by West on the remainder of the building was of very common grade. He stated in detail the defects in the work.
    Mrs. Wilmot also testified in detail about the defects in the materials furnished and the work done by Mr. West on the house. Her husband was her agent in making the contract, and he also testified that neither the materials nor the workmanship came up to the specifications required by the contract.
    E. B. Mooney was a sub-contractor under E. 0. West and did the stone work required by the contract for West. Certain changes in the stone work were agreed upon by the parties during the progress of the work. West and Mooney were witnesses for each other. Each testified that the work strictly came up to the specifications of the original contract except where alterations were agreed upon between the parties, and that where alterations were agreed upon, the work both in regard to workmanship and materials came up to the specifications of the contract. They also testified that, after the contract had been completed, Mrs. Wilmot went with them to the building and examined the repairs in detail, and admitted to them that the work done and the materials used came up to the specifications of the contract and that she owed them respectively the amounts claimed. Each claimed the amount sued for in this action.
    During the progress of the trial the chancellor appointed, with the consent of the parties, two persons to make an examination of the work and materials used and to make a report to him thereof. The men appointed were empowered to take additional testimony if necessary. They made their report to the court of the amounts which should be allowed West and Mooney, and the court substantially followed their report in making its finding of the amounts due by Mrs. Wilmot to West and Mooney.
    Two witnesses testified that it would be difficult to tell whether the materials came up to specifications after they had been put into the building. One of them said that'it was not a first-class job, and the other stated that it looked to be a fair job. Two other witnesses testified that the reputation of Hart in the community for truth was bad. Other testimony will be stated or referred to in the opinion.
    The chancellor was of the opinion that E. 0. West should recover of Mrs. S. 0. Wilmot the sum of $1,154.18, and that E. B. Mooney should recover of her the sum of $300. It was decreed that these sums should be a lien upon the lot and dwelling house in question, and that the house and lot should he sold for' the purpose of paying the amounts found to be due West and Mooney respectively, if payment was not made to them within thirty days after the date of the decree.
    To reverse the decree, Mrs. S. (x. Wilmot has duly prosecuted this appeal.

      C. Floyd Huff and James E. Hogue, for appellants.
    Appellee was entitled to recover nothing under any of his contracts. There was a failure to comply with them all and an open disregard of their provisions. There can he no recovery where there is an entire contract with a stipulated price for the whole work, and only a part thereof is performed.
    The words “workmanlike manner” have been judicially construed. 64 Ark. 34-7; 58 Mo. 146; Wright (Ohio) 229, 230. Appellee was not entitled to recover under any of his contracts as he failed to comply with them. 102 Ark. 152 and cases cited; 86 Ark. 570. And he had no lien on the building erected. 133 Ark. 277. Where there is a lack of substantial compliance by a contractor, he can not recover or establish a lien. 86 Ark. 570; 133 Icl. 277; 100 Id. 166; 79 Id. 506. Neither the work nor the materials were first-class, and the work was not done in a workmanlike manner in accordance with the contract. They violated the contract in many respects, and the work was never accepted as satisfactory or in compliance with the specifications and contract. In the Mooney ease the same claim is made and he never filled his contract.
    It was error to allow a recovery on a quantum mer-uit, as no deductions were made for defective work or materials.

      A. B. BeldÁng and A. J. Murphy, for appellees.
    All the work except the garage was passed on and approved by Mrs. Wilmot and Hart, also the prices .on everything. All the matters were passed on by the commissioners and all proper credits allowed. The contracts were plain, definite and unambiguous and well understood by both, parties. Mrs. Wilmot was not deceived, and she knew what the cost of the alterations would be, and the price was agreed upon. Mrs. Wilmot was not deceived, and a definite and fixed price was fixed and agreed upon. The burden of proof was on appellants to sustain their contention, and they have failed. The findings of the chancellor are sustained by the evidence, and the decree in both cases should be affirmed.
   Hart, J.

(after stating the facts). To reverse the decree, counsel for appellant invoke the rule laid down in Harris v. Graham, 86 Ark. 570, and later cases to the effect that where there has been a lack of substantial performance of a contract by a contractor, he can not establish a lien upon the property. We can not agree with counsel for appellant in their contention. The chancellor found that there had been a substantial compliance with the contract by both West and Mooney. It cannot be said that his finding of fact in this respect is against the preponderance of the evidence.

The record comprises five hundred and thirty-four pages of type-written matter, and it will therefore be impractical to set out an abstract, or even a synopsis of all the testimony. Indeed, to do so would serve no useful purpose. The testimony is in direct and irreconcilable conflict, and we deem it sufficient to say that we have given all of it careful consideration.

In the first place, it may be stated that West and Mooney both testified that after the work had been finished Mrs. Wilmot went to the house and examined the work in detail. She expressed herself to them as being satisfied with the work done by them as well as the materials used in doing it. She said that she had.been caused some dissatisfaction by her husband’s employing Mr. Hart, an architect, to look over the work, and his report; but that she had great confidence in Mr. West, and after examining the house she was satisfied that he had made the repairs in accordance with his agreement.

It may be noted here that numerous changes were made in the plans during the progress of the work. This indicates that Mrs. Wilmot was present and examined the work as it progressed. She made no complaint during all this time concerning the workmanship or the materials used. It is true that Hart, the architect, stated that the general character of the work was bad. But in this respect he is directly contradicted by the two men appointed by the chancellor to examine the work and to make a report thereon to him.

J. I). Brock and Eugene Patton were appointed by the court with the consent of the parties to make an examination of the work done by West and Mooney for Mrs. Wilmot. They were directed to ascertain the actual value of the work as per prices charged for such work at the time the 'same was done and were empowered to hear evidence of witnesses as to the same. The order provided that the parties to the suit might be present at the examination of the work. Patton and Brock examined the work and filed a detailed report to the court of the results of their examination. They reported that they had inspected and appraised the work done and the materials used in repairing the house. They further reported that where all risk is assumed by the builder, and the contractor only charges a commission for superintending or carrying on the work, ten per cent, of the cost of the labor and materials is the usual amount allowed him. West and Mooney testified that their profits were no greater than ten per cent, of the cost of the labor and the materials.

It is true that two carpenters employed by Mrs. Wii-mot testified that it was impossible to ascertain what kind of materials went into the building; but, if their testimony should be accepted as true, it would not help Mrs. Wilmot any, for it would with equal force lessen the credit which should be given to Hart’s testimony. This would leave West and Mooney testifying that they had performed the contract in accordance with their contract, and Mrs. Wilmot and her husband testifying to the contrary. Brock and Patton were appointed by the court as disinterested persons with the consent of both parties for the express purpose of examining in detail the work done and materials used in'the repair of the house and premises. Their report showed that they made a careful and detailed examination as they were ordered to do. Their report also shows that Mrs. Wilmot was indebted in the respective amounts found by the chancellor, and, as above stated, tvhen all the surrounding circumstances are considered, we do not think it can be said that the finding of the chancellor, in this respect, is against the preponderance of the evidence.

E. O. West has taken a cross-appeal, and it is earnestly insisted by his counsel that he is entitled to the amount sued for, instead of the amount’allowed him by the chancery court. He bases his contention upon the fact that the parties made a contract, and that the evidence shows that West is entitled to the amount sued for under his contract. But little need be said on this branch of the case. As we have just seen Brock and Patton, with the consent of the parties to this lawsuit, were appointed to inspect the work and make a report as to its value. Brock and Patton made a detailed report in accordance with the order appointing them, and it can not be said that their finding is against the express contract made by the parties. The parties agreed that they should ascertain the actual value of the work done by West as per prices charged for such work at the time same was done, and they are in no attitude to complain now that this was done.

Therefore the decree will be affirmed.