author: McHaney, J. Butler, J.,

text:
    Jefferies v. Wasson.
    4-3096
    Opinion delivered May 29, 1933.

      Fred A. Isgrig, for appellant.

      Trieber & Lasley and Sam Rorex, for appellee.
   McHaney, J.

Appellants are depositors in the insolvent American Exchange Trust Company of Little Rocky hereinafter called the bank, now in process of liquidation by the Bank Commissioner, under the jurisdiction of the Pulaski Chancery Court. They filed an intervention in the liquidation proceedings pending in said court, seeking an order of sale of the remaining assets of said bank, in which they alleged that they were depositors therein when its doors were closed in November, 1930, and its affairs taken over by the Bank Commissioner for liquidation; that since said time dividends have been paid at irregular intervals, totaling 35 per cent.; that $428,000 has been borrowed from the Reconstruction Finance Corporation, and the bank’s assets pledged to secure said loan, which is a prior lien and must be paid before any further dividends can be paid depositors; that, at the present rate of liquidation, it will require two or three years to repay said loan; that the interest and expense of liquidation amount to $5,000 per month; that an offer to purchase the remaining assets of said bank has been made on these terms. To pay the R. F. C. loan at once and an additional amount in cash equal to 5 per cent, of all deposits, and in one year an additional 5 per cent, or a total for depositors of 10 per cent., one-half in cash and the other half within one year, both of which would be paid before any further dividends could be expected under liquidation; that they believe this to be a fair offer and is the full value of the assets; and that to decline the offer would work injury and damage to the depositors. Other allegations of the intervention are: “That the Bank Commissioner has rejected said offer, and at the time thereof stated that he personally believed that the offer was fair and reasonable, and that it is to the best interest of depositors that same be accepted; that depositors would, in his opinion, receive more under said sale than they probably would receive under the liquidation; and that, if he personally owned said assets, he would be glad to accept said offer; that, if he were an investor in that class of securities, he would not be willing to participate in the offer; that he had had an appraisal made of the assets of said bank by his assistants, and that the total value of said assets as shown by the appraisal was not in excess of the amount offered as stated above; and that his refusal to accept the offer is based entirely on the ground that the depositors, in his opinion, are opposed to the sale; that he had previously given notice in the newspapers that the offer had been made, and that he wanted the views of depositors, and that he would abide by the decision of the depositors, and in response to said notice had received many more letters against the sale than in favor of it, and that he therefore would reject the offer.

“That said statements of the Bank Commissioner are his views and findings as to the value of the assets of said bank. That the Bank Commissioner has wholly failed and refused to give the depositors the benefit of this information; that less than one per cent, of the total number of depositors and much less than one per cent, in amount of deposits have expressed their wishes to the Bank Commissioner on the subject; and that, if depositors had the benefit of the information that he had and which it is his duty to convey to them, petitioners verily believe that the depositors would by a great majority favor said sale.
“Your petitioners state that they have requested the Bank Commissioner of the State of Arkansas to approve of said sale, and that said Commissioner has failed and refused tó do so, although the said Commissioner knows that the acceptance of the offer at this time is for the best interests of these depositors and all other depositors of said bank.
“Your petitioners further state that to delay the sale of the said bank will be to deprive the depositors and these petitioners of their pro rata part for a great length of time, and that it will continue the heavy expense of liquidating to such a point and time that the depositors will not receive anything upon their deposits.
“Wherefore your petitioners pray that the court enter an order of sale authorizing and directing the sale of the said bank and its assets, and that the funds received from said sale be immediately disbursed pro rata among the depositors, according to their deposits.”

The Bank Commissioner filed the following motion to dismiss the intervention: “That all of the assets of said American Exchange Trust Company are now in possession, ownership and control of this movant for liquidation and are being liquidated by him under the authority vested in him by the statutes of the State of Arkansas with respect to the liquidation of the assets of insolvent banks; and said assets are not in any sense in custodia legis.

“This court has no jurisdiction of, power or control over a sale of said assets at the instance of said interveners and can only act with respect to a sale of said assets at the instance of and upon the petition of this movant, who has heretofore rejected the purported offer set out in said intervention, and now rejects the same.”

The court sustained the motion and dismissed the intervention “on the sole ground that the court has no jurisdiction.” This appeal followed.

It is the contention of appellants, based on our statutes as construed by this court, that the chancery court has plenary power and supervision over the liquidation of insolvent banks; ‘ ‘ that it has the power, either on application of interested parties, or on its own motion, to require an advantageous sale to be made, and is not limited in its power to merely approving or rejecting recommendations for sale made by the Bank Commissioner.” On the other hand, .it is contended by appellee that liquidation proceedings are administrative in character; that the Bank Commissioner, being the person designated by statute as the administrator of insolvent banks, is charged with the duty of determining, at least in the first instance, whether a sale of assets should be made; that the chancery court also acts administratively and not judicially in approving or rejecting applications of the Bank Commissioner to sell assets; and that the court may not substitute its discretion for that of the commissioner by directing a sale which is not recommended by him.

This latter contention is based on the theory that our statutes on the subject, beginning with act 113 of 1913, § 53, and ending with act 61 of 1933, § 1, were borrowed from the National Banking Act (USCA, Title 12, § 192), and that the construction given the latter by the Federal courts was necessarily adopted. The applicable part of our statute, § 1, act 61, of the Acts of 1933, provides: “Upon taking charge of any bank, the Commissioner shall proceed to liquidate its affairs, to institute, maintain and defend suits and other proceedings in the courts of this State or elsewhere, to enforce in this State or elsewhere if necessary the liabilities of the stockholders, and, upon the order hereby empowered to be made of the chancery court of the county wherein the said bank had its place of business, or of the. chancellor thereof in vacation, to sell, compound or exchange any or all bad or doubtful debts of the said estate, and, on like order, to sell pr exchange any or all of the property, real, personal or mixed, of the said estate, in such manner and upon such terms and considerations as to any such sale, composition or exchange as specified in the said order. Any such sale shall be public or private as specified in the order therefor, and any such sale or exchange of real property shall be subject to confirmation respectively bj' the said court or chancellor.”

The applicable portion of the National Banking Act above mentioned reads as follows: “Such receiver, under the direction of the Comptroller, shall take possession of the books, records, and assets of every description of such association, collect all debts, dues, and claims belonging to it, and upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on a like order, may sell all the real and personal propeiiy of such association, on such terms as the court shall direct; and may, if necessary to pay the debts of such association, enforce the individual liability of the stockholders.”

Under this statute the Federal courts have held that the. receiver of a national bank is not an officer or arm of the court, but is an officer of the Comptroller who appoints him, and that its assets are not m custodia legis. Also that the order mentioned under which the receiver may sell assets is merely a condition upon the receiver’s power to sell. That “it is the exercise of the visitatorial power, given to the court by the statute and limited to that function. It is an administrative check upon the otherwise unconditional powers of the Comptroller,” as said in Hulse v. Argetsinger, 18 Fed. (2d) 944. And as said in Fifer v. Williams, 5 Fed. (2d) 286: “There is no suit, no parties in the legal understanding of the term; no process must issue; no one is authorized to appear on behalf of the receiver or any one else, or to subpoena witnesses. It is an ex parte proceeding, and, though by the will of Congress put into judicial cognizance, it is not by its nature a judicial controversy.”

While there is similarity of language used in both the State and National statutes, we cannot agree that the chancery courts of the State are so limited in the State ¡Banking Act, as are the Federal courts.under the National act, nor that they act in merely administrative capacities in the liquidation of insolvent banks. In other words, they are not mere rubber stamp courts, with authority merely to place the stamp of approval on the action or non-action of "the commissioner. When we examine our State act, we find many provisions that lead to the contrary view. For instance, the Commissioner is Empowered to appoint one or more special deputies to take charge of an insolvent bank, but he is required to file a copy of the certificate of appointment with the chancery clerk. Section 721, Crawford & Moses’ Digest. The first thing required to be done on taking charge is to make an inventory of the bank’s assets and file same with the chancery clerk, who shall thereupon give the administration of the affairs of said bank in said court a number on the court’s docket; that the Commissioner shall make a complete list of all claims presented to him, whether allowed or rejected, and file same with said clerk; and that each item of expense of liquidation shall be fixed by him, subject to court approval. Section 2, act 61, Acts 1933. Dividends can be paid to creditors, but only to such persons, in such amounts and upon such notice as the court may direct. Section 724, Crawford & Moses’ Digest. The court has plenary power over the allowance and classification of claims, or the rejection of claims by the commissioner. And the allowance or disallowance by the court has always heretofore been considered to be a final order or judgment from which an appeal will lie to this court. Cases in this court involving claims in recent years are too numerous to mention. In Taylor v. Moose, 185 Ark. 856, 49 S. W. (2d) 1043, we held that a contract made by the Commissioner with an attorney fixing his compensation in advance for his services in the liquidation of a bank was void without the approval of the chancery court, a matter resting in its sound discretion, and a recovery for services based on such contract was denied. We there said:. “The matter of fixing compensation for counsel finally rests in the sound discretion of the trial court, and we are of the opinion that the court did not abuse its discretion.”

In Citizens’ Bank & Trust Co. v. Raines, 125 Ark. 17, 187 S. W. 932, this court said: “It clearly appears that it was not to the best interest of those who were directly concerned in the manner of the disposition of the bank’s assets to approve this sale. On the contrary, instead of husbanding the resources of the bank, so as to preserve and protect the interests of those who are directly concerned, the order of the court approving this sale would have precisely the opposite effect. The court therefore abused its discretion in confirming the report of the Commissioner with reference to the sale of the lands as a completed sale to the appellee.” See also Aber v. Maxwell, 140 Ark. 208, 215 S. W. 389. In Krumpen v. Taylor, 183 Ark. 1046, 40 S. W. (2d) 775, we said: “The order of approval of the chancery court is a prerequisite before any sale of the assets of a bank in the hands of the State Bank Commissioner for liquidation can be made. The Commissioner may negotiate the terms of sale, but it is the decree of the chancery court which gives effectiveness to the contract. In so far as the assets and property of the insolvent bank were concerned, the State Bank Commissioner must act under the order of the chancery court, and is, in this respect, the arm of the court' as though acting as receiver under the appointment of the court.”

Again, in the same case, it was said: “It was the duty of the chancellor to consider all the facts and circumstances attending the sale in order to determine whether it was a provident or improvident sale. Otherwise the whole matter might just as well have been placed exclusively in the hands of the State Bank Commissioner. If the approval of the chancery court was absolutely required for a valid sale of the assets and. property of the insolvent bank, it necessarily follows that the chancery court is vested with some discretion in the matter. The Bank Commissioner may negotiate the terms of the sale, but it is the order of the chancery court which gives effectiveness to the contract.”

It seems to follow as a necessary consequence that if the chancery court has the power and the duty to refuse to approve an improvident sale, even though made by the Commissioner (Krumpen v. Taylor, supra) it would have the like power to order a provident one, without the approval of the Commissioner, on the petition of creditors, or on its own motion, after a hearing on due and proper notice. Here the allegation in the petition is that the Commissioner thinks the proposed sale an advantageous one, arid that he would approve it, but for the objection of certain depositors. If in fact it would be for the best interest of the depositors to make the sale, and if the court is powerless to act except at the request of the Commissioner who refuses to make the request for a captious reason, the depositors would suffer a grievous wrong and be without any remedy. We cannot agree that such is the law, for, as said in Krumpen v. Taylor, supra, the “Commissioner must act under the order of the chancery court, and is, in this respect, the arm of the court as though acting as receiver under the appointment of the court.” No substantial step may be taken by the Commissioner in the liquidation of insolvent banks, except on approval of the court. In all essentials he is the receiver of the court. The assets in his hands are in Gustodia legis, just as are the assets of an insolvent National bank in the custody of the Comptroller. Yeargain v. Shull, Bank Comm., 149 Okla. 221, 300 Pac. 303; Kidder v. Hall, 113 Tex. 49, 251 S. W. 497.

We do not mean to hold that this sale should be made, or that the court should substitute its discretion for that of the Commissioner, but we do hold that the court has the power and jurisdiction to hear and determine the matter presented by the intervention of appellants.

The decree of dismissal will be reversed, and the cause remanded with directions to overrule the motion, and for further proceedings according to law and the principles of equity and not inconsistent with this opinion.

Butler, J.,

(dissenting). Article 12, § 6, of the Constitution provides: ‘ ‘Corporations may be formed under general laws, which laws may, from time to time, be altered or repealed. The General Assembly shall have the power to alter, revoke or annul any charter of incorporation now existing and revocable at the adoption of this Constitution, or any that may hereafter be created, whenever, in their opinion, it may be injurious to the citizens of this State, in such manner, however, that no injustice shall be done to the corporators.”

Under the above provisions, ample authority is found for the action of the Legislature in passing the banking act (act No. 113 of the Acts of 1913) and subsequent statutes amendatory thereof. The argument is made that the statute, in attempting to authorize the Bank Commissioner to take char.°'e of insolvent banks, is an invasion of the ancient jurisdiction of courts of chancery and therefore invalid. The answer to that is the section of the Constitution quoted above, and this court, in the case of Greer v. Merchants’ & Planters’ Bank, 114 Ark. 212, in answering a similar contention, said: “We think that the original jurisdiction of the chancery court as preserved by our Constitution does not prevent the Legislature from entering upon the supervision of any matters which fall within the police power. This act does not attempt redistribution of judicial power, but it provides for a system of supervision which has nothing to do with the judicial function.

In the case of State, etc., v. Huxtable, 178 Ark. 367, 12 S. W. (2d) 1, we said: “The police power of the State extends to the regulation of banking business and even to its prohibition except on such conditions as the State may prescribe.” This doctrine was recognized in Noble State Bank v. Haskell, 219 U. S. 104, 31 S. Ct. 186. Continuing in the Huxtable case, we said: “The business of banking is of a public nature and therefore is subject to statutory regulation for the protection of the public. The power to regulate the business necessarily carries with it the power to provide adequate machinery for winding up its affairs when insolvent.”

It is clear, from the authorities referred to, that the Legislature had the power to provide for the organization and functioning of banks and for the method of their liquidation when insolvent without any reference to courts of equity or any other court, and the Legislature might provide an agency for the supervision of banks and banking and the liquidation of insolvent banks to act wholly independent of the courts.

Davis v. Moore, 130 Ark. 129, 197 S. W. 295, was a case construing our banking act, and in that this court held that language of the particular section under consideration as well as many other provisions were copied from the National Banking Act, and under settled rules of construction we adopted the. statute with the interpretation placed upon it by the Federal courts. The section involved in that case was the one authorizing the assessment of the statutory liability on the stockholders of an insolvent bank and to bring suit to enforce, the same; the claim being made that the commissioner could only bring such suit when ordered by the chancery court. This claim was by the court denied, which held that, under the construction placed upon similar provisions in National Banking Act, the enforcement of the stockholders double liability was not dependent on the orders of the court. Continuing in that case, we said: “The further question is raised whether or not the action of the Bank Commissioner in levying the assessments for the stockholders is. conclusive as to the necessity for the call and the amount thereof. * * * That question is, we think, concluded under the doctrine of the effect of borrowing a statute, with its interpretation, from, another jurisdiction. The provisions of our statute are almost identical with the National Banking Act with regard to the enforcement by the Bank Commissioner of the double liability of the stockholders. Neither of the statutes provides in detail how the liability shall be enforced but each of them do provide that it shall be enforced, under our statute by the Bank Commissioner, and under the National Banking Law by the receiver appointed by the Comptroller.”

In Easton v. Iowa, 188 U. S. 238, 23 S. Ct. 288, the court said: “Our conclusions, upon principal and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers that should be conferred upon said banks, and has the sole power to control and regulate the exercise of their operations; that Congress has directly dealt with the subject of the insolvency of such banks by giving control to the Secretary of the Treasury and the Comptroller of the Currency, who are authorized to suspend the operations of the banks and appoint receivers thereof when they become insolvent, or when they fail to make good any impairment of capital.”

In Hulse v. Argetsinger, 18 Fed. (2d) 944, the court said: “The receiver of a national bank, appointed by the Comptroller, is his officer, not an qfficer of the court. Nor are its assets while in his hands in custodia legis; they do not become such by an order confirming a composition of debts made by him. Such an-order is merely a condition upon the receiver’s power to compound the debt; it is not made in any suit, nor does it adjudicate any rights inter partes. * * * It is the exercise of the visitatorial power, given to the court by the statute and limited to that function. It is an administrative check upon the otherwise unconditional powers of the Comptroller. ’ ’

In the case of Liberty National Bank v. McIntosh, 16 Fed. (2d) 906, the court said: “Ample authority will be found to make clear the purposes of the National Banking Act, and to fully and clearly show the power and authority of those charged with its administration. His jurisdiction with respect to all matters properly within his discretion is exclusive, and he is in respect thereto in no manner amenable to any court, nor is his action subject to review therein.”

The effect of these decisions is that the Comptroller of the Currency, acting through his receivers, has complete and exclusive direction of the liquidation of the assets of insolvent banks, subject only to the limitations placed upon his authority by the statute itself. He is not an officer of the court, nor are the assets of insolvent banks while in his hands in custodia legis. The entire proceedings are administrative in their nature and not judicial, including the duties imposed by the statute on the chancery court. Applying the same rule as the Federal courts, this court in White v. Taylor, ante p. 1, held in effect that the courts had no power to intervene where the Bank Commissioner had determined that it was necessary to levy an assessment on the stockholders of insolvent banks, and that the chancery court would have no jurisdiction.

In order to escape the effect of these decisions, it is necessary for the court in the case at bar to hold that the sections of our act involved and of the National Banking Act on the same subject are unlike, and therefore to that extent our statute is not a “borrowed one.” These sections are set out in the opinion of the court. I believe that to all eyes except those of a casuist they are alike in all substantial particulars. Both provide that the officer named in the statute shall take charge of the insolvent institution, and both provide for sale by him of the assets under the supervision of the courts. It seems to me that under any just and reasonable interpretation that the powers of the Commissioner and of the Comptroller are for all practical, purposes identical as to the disposition of the assets of insolvent hanks, and that the rules declared by the Federal courts and stated above, under the decision in Davis v. Moore, supra, govern in this case, and justify the conclusion reached by the chancellor.

I therefore respectfully dissent.


source: Caselaw Access Project

author: Butler, J.

license: Public Domain

text:
    Royal Arch Benefit Association v. Taylor.
    4-3022
    Opinion delivered May 29, 1933.

      Scipio A. Jones, Sam Rorex and Leon B. Catlett, for appellant.

      John Baxter, for appellee.
   Butler, J.

Beginning- with the year 1919 the appellant association, acting through its treasurer D. R. Perkins, began to deposit a part of its funds in the Wilmot Bank, continuing its business with this bank until 1930 when it had on time deposit between fifteen and sixteen thousand dollars. Perkins was a resident of the town in which the bank was located and was authorized by the appellant to purchase with the funds on hand aforesaid $10,000 of government bonds. A warrant was issued to Perkins by the association in the sum of $10,600 for that purpose and to pay whatever premium and other expenses necessary and incident to the purchase. Perkins surrendered to the. bank time certificates of deposit, and the bank in turn placed the entire deposit to the checking account of the association in order to facilitate the purchase of the bonds, undertaking to obtain the bonds as speedily as possible. From time to time Perkins made inquiries regarding the purchase and finally informed the bank that the appellant was becoming impatient and contemplated obtaining the bonds through a bank in Forrest City where it maintained its home office. On being informed that negotiations for the purchase of the bonds were then in progress and would soon be consummated, Perkins was induced to defer this action for a time.

On October 8, 1930, the bank issued the following statement:

“WILMOT BANK
“Wilmot, Arkansas.
“Charge. Wilmot, Arkansas, 10/30/1930
“D. B. PEBKINS., Treas.
“We today charge your account as follows: Advance payment on bonds $10,215.”

This statement was delivered to Perkins at the end of the month and was noted on the bank’s statement issued at the end of each month to the customer showing the items of debit and credit for the month then ending with vouchers attached. At this time Perkins was informed that the bonds had been purchased, that they were in Washington for the purpose of being registered, and would be received in some two or three weeks. Perkins did not receive the bonds within the time specified. He made inquiries at the bank and was put off by various excuses until the bank closed on December 11,1930, when he discovered that the bonds had never in fact been purchased.

By proper proceedings the appellant sought to have its claim allowed as a preferred claim in the insolvency proceedings, and from a decree of the chancellor denying the same this appeal is prosecuted.

The evidence is not in dispute, and we conclude it justified the appellant’s contention.

Appellee cites and relies upon the cases of Taylor v. Whaley, 183 Ark. 598, 37 S. W. (2d) 702, and Taylor v. Dierks Lumber & Coal Co., 183 Ark. 937, 39 S. W. (2d) 724, to sustain the decree of the lower court. Neither of these cases however is authority for the position assumed. In both cases there was nothing between the bank and the depositor to create a trust relationship, and there was no writing evidencing any such intention. In the case at bar the action of the bank in informing the depositor that it had set aside from the general deposit the sum of $10,215 for the purpose of procuring bonds and the issuance by it of the memorandum aforesaid constituted this sum a trust fund, and the memorandum was a sufficient writing to bring the transaction within subdivision 5, § 1 of act No. 107 of the Acts of 1927. “A prior creditor shall be * * * the beneficiary of an express trust * * * which was evidenced by a writing signed by the bank at the time thereof. ” The memorandum is not unlike the one under consideration in the case of Albright v. Taylor, 185 Ark. 401, 147 S. W. (2d) 579. In that case the collector had deposited a sum of money sent him by A. Guthrie & Company with which to pay their taxes, and the bank issued to him the following receipt:

“D. J. Nance, Col.
Spec. Acct.
“Held in escrow to cover 1930 taxes A. Guthrie and Company, St. Paul, Minnesota. Subject to check of collector upon issuance of 1930 tax receipts.”

We there held that under the circumstances the deposit became impressed with a trust, and that the memorandum issued by the bank was ‘ ‘ a writing signed by the bank at the time thereof,” within the meaning of the statute.

In the instant case the memorandum is not ambiguous, but clearly indicates the purpose for which-the money was accepted, and it does not alter the case that the money set aside for the purpose indicated was already in the bank at the time of the direction given for its use by appellant and its purported application on the part of the bank. As was held in Grossman v. Taylor, 185 Ark. 64, 46 S. W. (2d) 12, the instrument issued by the bank was as effectual to create an express trust as though the money had been checked out and redeposited. There is no particular form of writing prescribed by the statute, nor any manner pointed out therein, in which the same shall be signed, and, while this might be called a “charge ticket,” as contended for by the appellee, it was something more. It was both a charge ticket and a contract and entitled the appellant to a preference over the general creditors and to share with the other preferred or prior creditors pro rata, and to have the balance, if any, classed as a common claim.

The decree of the trial court is therefore reversed, and the cause remanded for further proceedings according to law and not inconsistent with this opinion.


author: Johnson, C. J.,

text:
    Gentry Hardware Company v. Gray.
    4-3030
    Opinion delivered June 5, 1933.

      W. A. Dickson, for appellant.
   Johnson, C. J.,

(after stating the facts). From the foregoing statement of facts it appears that appellant affirmatively pleaded that appellee had voluntarily surrendered the property in controversy to it in satisfaction of its debt. The testimony on behalf of appellant was amply sufficient to have sustained a verdict in its behalf on this issue, but the trial court refused to submit this issue to the jury under appellant’s requested instruction No. 4, which has been copied in the statement of facts. We think this is reversible error. Appellant’s instruction No. 4 was not covered by any other instruction given by the trial court, and the case must be reversed because of this error.

In view of the fact that this case must be remanded for a new trial, it is proper to express our views in reference to certain testimony offered on the trial of the case in behalf of appellee. This testimony was to the effect that his apple crop had been damaged because appellant had taken his spray rig away from him, and he was thereby deprived of spraying his orchard. This testimony was incompetent and inadmissible on the trial of this case and should not have been introduced.

Other errors are argued in appellant’s brief, but we do not deem them of sufficient importance to discuss in this opinion, and they will probably not occur on a retrial of the case.

Let the judgment be. reversed, and the case remanded.


author: Humphreys, J.

text:
    Wasson v. State ex rel. Jackson.
    4-3104
    Opinion delivered June 5, 1933.

      Sam Rorex and Leon B. Catlett, for appellant.

      J. M. Jackson, Lake, Lake & Carlton, Abe Collins, E. K. Edwards and B. E. Isbell, for appellee.

      J. H. Black, George M. Gibson and Walter L. Pope, amici curiae.

   Humphreys, J.

This is an appeal from a final order or judgment of the chancery court of Pulaski County, requiring appellant, State Bank Commissioner, to pay appellee, Sevier County, an unpaid balance due it of $16,-268.39 on a judgment it recovered against appellant for $33,649.69 as a preferred claim on June 21, 1932, which was affirmed on appeal by this court on December 5,1932.

At the time of the rendition of said judgment and the affirmance thereof, all claims which might have been filed in the insolvency proceeding against the American Exchange Trust Company, the assets of which were, being administered by appellant Bank Commissioner, had been filed, and most of them allowed as general or preferred claims.

When the American Exchange Trust Company closed its doors, there was sufficient cash in the' bank which was received by appellant to pay all preferred claims, including appellee’s claim. The time for filing claims against said bank had then expired under the provisions of § 54, act 113, of the Acts of 1913, as amended by § 5, act 627, of the Acts of 1923, which is as follows:

“No claim shall be allowed unless proof has been presented to the commissioner within one jmar from date on which commissioner takes over the assets of the liquidated bank. ’ ’

The only defense interposed to the payment of the balance due Sevier County on its preferred judgment claim is act 277 of the Acts of 1933, which, omitting formal parts, is as follows:

“Section 1. In all cases where banks in the State-of Arkansas are being liquidated by the Bank Commissioner and the one year given by § 54 of act 133 of the Acts of 1913, as amended by act 627 of the Acts of 1923, for presenting claims to the commissioner has expired, the time for filing claims with said Commissioner is hereby extended to all persons having claims of any character until July 3, 1933, unless the liquidation of such banks should be closed before said date; provided that no claims can be presented after the liquidation of such bank is closed.”

The purpose of this act was to revive and validate claims which had been barred for failure to file same within the time required by law. This purpose and intent rendered the act void. The general rule of law applicable is well stated in 6 R. C. L., p. 309, as follows:

“In most jurisdictions it is held that, after a cause of action has become barred by the statute of limitations, the defendant has a vested right to rety on that statute as a defense, and neither a constitutional convention nor the Legislature has power to divest that right and revive the cause of action. Where title to propert3r has vested under a statute of limitation, it is not possible by an enactment to extend or revive the remedy since this would impair a vested right in the propeiiy.”

The rule announced above was approved by this court in Rhodes v. Cannon, 112 Ark. 6, 164 S. W. 752.

No error appearing, the decree is affirmed.


author: Mehaffy, J.

text:
    Oliver v. Western Clay Drainage District.
    4-3050
    Opinion delivered June 5, 1933.

      Oliver & Oliver, for appellant.

      J. L. Taylor, for appellee.
   Mehaffy, J.

The Western Clay Drainage District was formed by special act of the Legislature in 1907. The directors were authorized to divide the territory included in said district into subdistricts, and it was divided into five subdistricts. Suibdistrict five began suit in Clay County against numerous persons to foreclose its lien for annual assessments.

Gr. B. Oliver, one of the appellants, owned considerable property in subdistrict 5, and the partnership of Oliver & Oliver, composed of Gr. B. Oliver, Sr., and Gr. B. Oliver, Jr., owned one-half of a judgment which was rendered against the district April 29, 1929, the other half of said judgment having been settled. Nothing had ever been paid on the half of the judgment belonging to Oliver & Oliver, and there was a balance due them of $10,018.53 at the time the suit was filed.

The appellants filed a cross-complaint, alleging that they owned the judgment against the district, and asked that the amount of taxes due the district from Oliver be credited on the judgment.

They alleged in the cross-complaint that one W. R. Brown, doing business as Clay County Dredge Company, entered into a contract with subdistrict 5 for the construction of drains and levies in said subdistrict; that, under the contract, estimates of the work done were to be made from time to time as the work progressed, and that Brown was to be paid the amount of estimates, less 15 per cent, until the work was completed. When the work was completed, this Í5 per cent, was to be paid to Brown.

On the completion of the work, the district refused to pay Brown, giving as a reason that the work had not been completed within the time prescribed. Brown assigned his cause of action to W. D. Polk. Polk brought suit and recovered a judgment for Polk and Brown for $16,559.67, with interest at 6 per cent, from April 29, 1929, to date of judgment.

Appellants further alleged in their cross-complaint that one-half of the judgment had been sold by the receiver who had been appointed to take charge of Polk’s property, and that, under an order of the chancery court, one-half of the judgment was assigned to the appellants, and that nothing has been paid on said judgment; that the subdistrict sold bonds of the face value of $110,000, receiving therefor $106,000 in cash; that $140,000 of benefits was assessed against the property in the sub-district. The act authorized the subdistrict to sell bonds for the purpose of the construction of the improvements, and it is alleged that they sold bonds sufficient to pay for the construction work and all incidental expenses, but that the district, without the knowledge of appellants, or their privies, wrongfully and unlawfully transferred $10,-679.44 of the funds received for construction, and wrongfully and unlawfully used the same to make payments to the bondholders of subdistrict 5; that the amount of taxes collected from the lands in subdistrict 5 amounted to $107,380.56, but that the subdistrict paid to the bondholders $118,060, and the district has paid for construction, maintenance, and all expenses only the sum of $91,000; that they also collected by lending the proceeds of the sale of its bonds a large sum of money; that said district has no means with which to pay the judgment of appellants, except from the annual taxes collected.

They ask that the taxes due from G. B. Oliver, Sr., to the district be credited on the judgment owned by appellants ; that the treasurer and directors of the district be restrained from receiving in payment of taxes anything except money until appellants have been paid in full, and that the directors be ordered to restore to the construction fund and pay to appellants all money received until their judgment is fully satisfied, and that they be restrained from paying any money to the bondholders until said judgment is paid.

Appellees demurred to the cross-complaint of appellants, and the court sustained the demurrer, except he found that the taxes due on the lands should be credited on the judgment. The case is here on appeal.

The appellees contend that the bondholders should be made parties. This question was not raised in the court below, and § 1189 of Crawford & Moses’ Digest provides that the defendant may demur to the complaint where it appears on its face that there is a defect of parties plaintiff or defendant.

Section 1190 provides: “The demurrer shall distinctly specify the grounds of objection to the complaint; unless it does so, it shall be regarded as objecting only that the complaint does not state facts sufficient to constitute a cause of action.”

The appellees filed a general demurrer, but did not specify, as required by the statute, the grounds of objection to the complaint, except to state that the cross-complaint did not state facts sufficient to constitute a ground for the relief prayed. Sullivan v. Arkansas Valley Bank, 176 Ark. 278, 2 S. W. (2d) 1096; Fitzhugh v. First National Bank of Batesville, 177 Ark. 328, 6 S. W. (2d) 308.

A general demurrer to a complaint admits the facts properly pleaded therein. Ritchie Grocer Co. v. Texarkana, 182 Ark. 137, 30 S. W. (2d) 213; Tyler v. Citizens’ Bank, 184 Ark. 332, 42 S. W. (2d) 385; Boone County Bd. of Ed. v. Taylor, 185 Ark. 869, 50 S. W. (2d) 241.

The act creating the Western Clay Drainage District authorizes the directors of the district to contract for the construction of the improvements provided for in the act, and authorizes the district to borroiv money, and issue its interest-bearing certificates of indebtedness for any of its current obligations, and also authorizes the district to issue bonds in order to make present payment of all expenses authorized by this act. Section 12, act 368, of the Acts of 1907.

Bonds could not have been sold by the district for any other purpose, and it ivas therefore known by the district at the time it sold the bonds, and also by the purchasers of the bonds, that the money received from the sale of the bonds was to be used for the payment of the expenses authorized by the act. It could not be lawfully used for any other purpose.

The act also provides for the assessment of benefits annually for the purpose of paying the bonds, and the act pledges to the payment of any bonds issued all unpaid installments of the assessments.

In other words, the act authorizes the sale of bonds for the special purpose of paying for the improvements authorized, and pledges the assessments for the purpose of paying the bonds. The act does not pledge any other property of the district to the payment of the bonds.

The money received from the sale of bonds is a special fund for the purpose of paying for the improvements authorized to be made, and the purchasers of the bonds had no lien or claim on this fund. On the contrary, the purchasers knew that this fund was to be used to pay for the improvements, and their debt was secured by a mortgage on the assessments.

Bonds and contracts authorized by statute and executed as required by the statute, are to be construed, as respects the rights of all parties to such contracts, as though the law requiring and regulating them were, written in them.

The statute becomes a part of the bond and a part of the contract for the improvements the same as if written into the contract, and the statute provides, among other things: “The said corporation may issue bonds in order to make present payment of all expenses authorized by this act. ’ ’

Therefore the money received from the sale of the bonds was to make payment for all expenses authorized by the act, and neither the purchasers of the bonds, nor any other person, had any right to this fund except in payment of the expenses incurred under the provisions of the act.

Appellees call attention to the case of Kochtitsky v. Mercantile Trust Co., 16 Fed. (2S) 227. The statute construed by the court there, however, contained the following provision:

“To the payment of both the principal and interest of the bonds to be issued under the provisions of this act, the entire revenue of the district arising from any and all sources, and all the real estate, railroads and tramroads subject to taxation in the district, are by this act pledged; and the- board of directors are hereby required to set aside annually, from the first revenues collected from any source whatever, a sufficient amount to secure and pay the interest on said bonds, and a sinking fund.” Crawford & Moses’ Digest, § 3634.

The court, in commenting on this provision of the statute, said in substance that no discretion was left the officers of the district; that they were required to make the specific disposition annually of the funds. The court also said that this provision applied without exception or qualification to the payment of interest on such bonds. The court also said, to make such assurance more complete, that requirement attaches to revenues collected from any source whatever.

There is no such provision in the statute creating the Western Clay Drainage District, nor is there any such provision in the amendment of 1909.

The law construed by the federal court in the case above mentioned of course became a part of the contract. Our attention has not been called to any case that would authorize a district to take a fund specially provided by the sale of bonds to pay for the improvement and apply it to the. payment of bonds. It would be manifestly unjust and inequitable to procure a fund for the payment of the improvement and permit the purchasers of the bonds, who held a mortgage on all the assessments, to take the fund provided for paying the expenses and then take all the assessments on which they had a lien and prevent the contractors from being paid at all.

Taking a sufficient amount of the assessments to replace the money wrongfully taken from the construction fund and paid to the purchasers of the bonds will not prevent the bondholders from getting their money. It will simply be taking from the assessments the amount of money paid to them that should have been paid to the contractors, and will not deprive them of anything to which they were entitled under the law. They still have a lien on all the assessments, and there is ample provision in the law to compel the collection of the assessments.

Taking this fund out of'the assessments collected will simply be returning to the construction fund the amount wrongfully taken from it, and will in no way reduce the amount that the bondholders are entitled to under the law.

Numerous authorities are referred to by the parties, but we think the statute itself is plain and unambiguous.

Appellees prosecute a cross-appeal to reverse the decree of the chancellor giving credit to appellants for the amount of taxes due on Oliver’s land. What we have already said disposes of this question.

It follows also that the holders of bonds cannot defeat appellant’s claim by paving the taxes in past-due bonds.

The only real question in the case is whether the (ross-complaint states facts sufficient to constitute a cause of action, and we hold that it does.

The decree of the chancellor is therefore affirmed on cross-appeal and reversed on appeal and remanded, with directions to overrule the demurrer.

Johnson, C. J., and Smith and McHaney, JJ., dissent.


author: McHaney, J.

text:
    Edwards v. Edwards.
    4-3028
    Opinion delivered June 5, 1933.

      Martin, Wootton & Martin, for appellant.

      Leo P. McLaughlin and William G. Bouic, for appellee.
   McHaney, J.

This is an appeal from an order of the Garland Chancery Court refusing to set aside and vacate a divorce decree in appellee’s favor, on the motion of appellant, charging fraud practiced upon the court in procuring said decree by him. Appellee established a residence in Garland County, Arkansas, more than 60 days prior to the 18th day of January, 1932, on which date he filed in said court an action for divorce, in which he alleged that appellant abandoned and deserted him on the 14th day of April, 1926, and had continued to abandon and desert him without any reason whatever since that date. He further alleged that appellant was guilty of such personal indignities toward him as to render his condition intolerable. Appellant being a nonresident, warning order was issued and published for the time required by law. An attorney ad litem was appointed, who made a report, stating that he mailed a notice by registered letter to her notifying her of the pendency of the. action at her last known place of residence, at Huntington, West Virginia, and that said letter was returned to him by the postal authorities marked “unclaimed,” and that he appeared as such attorney at the taking of depositions on behalf of appellee and cross-examined the witnesses. He attached to his report the envelope in which the letter was sent bearing the stamp of the post office authorities “unclaimed,” as also a copy of the letter addressed to “Mrs. Ida May Edwards.” The letter reads as follows: “Tour husband, C. F. Edwards, has instituted suit against you for divorce in the chancery court of Garland County, Arkansas; and I have been appointed attorney • ad litem therein. Tou are hereby notified that said suit has been filed and is now pending.” It was signed by Geo. P. Whittington. A divorce decree was granted appellee on the 23d day of February, 1932, on testimony amply sufficient to warrant the court in granting the decree. Appellee married again in March following, and on April 30, 1932, appellant filed her petition and motion in Garland Chancery Court to vacate and set aside the decree of divorce granted, appellee alleging that fraud had been practiced by him in the procurement thereof as follows: That she had no knowledge or information regarding the institution, pendency or adjudication of this cause prior to the decree of divorce; that appellee knew that she was in attendance on their daughter in Rye, N. Y., who had been seriously injured in an automobile accident; that she had written him regarding the condition of their daughter ; that he had written to said daughter indicating that he knew her whereabouts and where any communication addressed to her would, reach her; that the letter addressed to her in the name of “Ida May Edwards” by the attorney ad litem was not the name under which she was well and familiarly known in Huntington, W. Va., but was so known under the name of “Mae McCormick Edwards ” and was never known by any other name since their marriage; that for several years she has been living at 1680 3d Ave., Huntington, W. Va., which fact was also well known to appellee; that if said communication by the attorney ad litem had been addressed to said number or to her in care of their daughter, she would have received it; that he failed and refused to give either of said addresses for the purpose of practicing a fraud upon the court and upon her; and that appellee and his witnesses were guilty of perjury in testifying that she deserted him without cause, whereas they well knew that appellee had been living in adultery with one Esther Watson for several years and knew that this fact was the cause of their separation. Other allegations are made in the petition, but we do not deem it necessary to set them out, including the allegation that she has a good and meritorious defense to the complaint of the plaintiff which she set up in detail in an answer which she sought by leave of the court to file if her petition'were granted. Appellee filed an answer or response to the motion to set aside the decree in which he denied all the allegations thereof. He denied that her name is “Mae McCormick Edwards” and not “Ida May Edwards,” or that he knew that she was at the bedside of their daughter during the pendency of this suit. He admitted that he knew that she was in New York, but did not know the duration of her visit there or that at all times he knew her whereabouts. He alleged that he had every reason to believe that she would receive any letter addressed to her at Huntington, W. Va., under the name of “Ida May Edwards,” same being her last known place of residence. He further alleged that she was christened under the name of “Ida May,” and that he married her under that name.

After hearing the testimony of both parties, the court refused to set aside the decree and dismissed appellant’s motion. This appeal is from that order.

The parties to this lawsuit are not strangers to the divorce courts of the State of West Virginia. It appears from a reading of the case of Edwards v. Edwards, 145 S. E. (W. Va.) 813, that they were married the first time-in 1903, were subsequently divorced, and were remarried in 1908. Their domestic difficulties resulted in a separation in April, 1926, when the appellant here sued the appellee for divorce and alimony on a charge of cruelty, desertion and adulteiy. He filed an answer and cross-complaint seeking a divorce from her on the ground of desertion and adultery. Trial in the lower court resulted in a decree in her favor for a divorce and substantial al-imony. An appeal to the Supreme Court of Appeals of West Virginia resulted in a reversal of the judgment granting her a divorce and alimony on the ground that the proof showed her to be guilty of adultery also, and that the courts would leave them where they found them. Other and more recent litigation related to the allowance made in appellant’s favor by the trial court in West Virginia for separate maintenancé and on his cross-complaint for divorce. Relief was denied him on his cross-complaint, from which no appeal was prosecuted. She appealed from the inadoquacj^ of the allowance made her, which was raised by the Supreme Court of Appeals, reported in 167 S. E. (W. Va.) 97.

The testimony presented on the motion in this case is in hopeless conflict. Appellant testified to facts and circumstances which, if believed by the- trial court, were sufficient to justify it in setting aside the decree. As to lier name, the undisputed facts show that her real name is “Ida May.” She was married to appellee in that name. She did not like the name “Ida” nor the spelling’ of “May,” so, when she moved to town, she apparently dropped the name of “Ida” and assumed that of “Mae McCormick Edwards,” McCormick being her maiden name, under which name she was known to many of her friends. The litigation she had with appellee was under the latter name. Other undisputed facts are that, in October, 1931, she went to the bedside of her daughter in Rye, N. Y., to the knowledge of appellee, and that she was there to his knowledge as late as the Christmas holidays. He knew, however, that her visit there was temporary in character and that her permanent address was Huntington, W. Va. A disputed fact is that he knew her street address in said city. For six years the parties had not lived together, and the whole record shows them-to be very unfriendly. He testified positively that he did not know her street address in Huntington, W. Va., or that she was in Rye, N. Y., at the time suit was filed; that he furnished the attorney ad litem all the information he had regarding her address; that he knew that she had lived at a certain hotel in Huntington, but knew that she had left that hotel some years ago; that he had never communicated with her at the address mentioned and that he had sought on all occasions to avoid contact with her because of the enmity existing between them.

We think appellee properly sued appellant in her real name, caused the warning order to be published in her real name, and caused the attorney ad litem to communicate with her under her real name. The matter that has given us most concern is whether he furnished to the attorney ad litem a sufficient address. Huntington, W. Va., -was her permanent residence. If in fact he did not know her street address, he gave the attorney ad litem her last known address. The trial court has found on disputed evidence that no fraud was practiced on the court in the procurement of this decree, and we are unable to say that his finding is against the clear preponderance of the evidence. Another matter that ap.pears to be undisputed and' is not without weight in determining this matter is that appellant knew, immediately after the divorce was granted, that it had been granted. She took no step at that time to have the decree set aside, but waited for more than 60 days, until after appellee had married again, before taking any action in the premises. She gave no explanation as to why she thus delayed.

Assuming, for the sake of argument, that false testimony was introduced in the procurement of the decree, that would not be sufficient to warrant the court in setting aside the decree. Failure to notify the attorney ad litem of her address, if it were known to him, would amount to fraud sufficient to warrant the court in setting aside the decree. Stewart v. Stewart, 101 Ark. 86, 141 S. W. 193.

Having reached the conclusion that the action of the court in refusing to set aside the decree is not against the clear preponderance of the evidence, the decree must be affirmed. It is so ordered.

Smith, Mehaffy and Butler, JJ., dissent.


text:
    Pyles v. Holland.
    4-3029
    Opinion delivered June 5, 1933.

      Hughes & Davis, for appellant.
    C. M. Buck, for appellee.
   Butler, J.

On July 3, 1931, the appellees filed their petition in the chancery court for the Chickasawba District of Mississippi County, Arkansas, alleging that the appellants were indebted to them for an attorney’s fee which had been earned and refused to be paid. Judgment was prayed for the amount of the fee, that the same be declared a lien on certain lots in the city of Blytheville, and that, if the judgment was not paid within a time to be fixed by the court, the property be sold to satisfy the judgment. Summons was duly issued on this petition and served upon the appellants upon said July 3d.

On the 19th day of November following, the petition came on for hearing, but the defendants (appellants here) filed no answer or other pleading, and the cause was thereupon submitted on the petition, proof of service thereon, and oral testimony. The court found that the petitioners were entitled to the sum prayed and to a lien on the lots, and that, if the judgment was not paid within the time specified, the lots be sold to satisfy the same. The judgment remained unpaid, and the commissioner appointed by the court proceeded to sell the property on the notice, manner and terms prescribed by the court, and on the 26th day of September, 1932, reported said sale to the court for confirmation.

The appellants filed exceptions to the sale on the ground that the decree on which the sale was based is void because the petition and decree show on their face that the petitioners had no lien, in that there was no recovery of property in the cause. The appellants had also in July, 1932, preceding filed a bill to review the proceedings resulting in the decree, the allegation which is the basis of the relief prayed being practically the same as that contained in the motion.

To the bill of review the appellees filed a general demurrer, which was sustained by the court, and the bill and motion dismissed by the court for want of equity.

It appears that the motion and bill were .treated as one proceeding, and on appeal it is the contention that error is apparent in that the petition of the appellees and the decree based thereon show on their face without the aid of evidence that there was no recovery of the lots for the appellants, hut only a successful defense interposed in the proceeding out of which the claim for attorney’s fee grows, and that in that state of case a decree fixing a lien on the lots was improper and void.

The appellees present three reasons why the decree of the lower court should be affirmed: first, that the bill* of review was not filed in apt time; second, that, before obtaining a review ojf: the decree adjudging a lien for the attorney’s fee, the appellants must have offered to do equity by paying, or securing the payment of, the attorney’s fee adjudged to be due, and that this had not been done; and, third, that there is no error apparent upon the face of the record.

We deem it unnecessary to set out in detail the petition of the appellees and the decree based thereon which is sought to be set aside or discuss the second and third points, for the. reason that, in our opinion, the bill of review was not filed in apt time. In Jacks v. Adair, 33 Ark. 173, this court held that bills of review were not abolished by the Code, and might still be invoked in a proper case. We have no statute limiting the- time in which a bill of review may be filed. The bill under consideration is for error apparent, and the rule is that “a bill of review for error apparent on the record must be brought within the time allowed for an appeal or writ of error except in case of plaintiff’s disability.” 3 Ency. Plead. & Prac., p. 583, § 6, note 1, and cases cited therein.

“In a bill of review brought for error of law, the rule is that the error must be apparent on the face of the record, that is, in this country, upon the bill, answer and other pleadings and proceedings and the decree. It is not allowable to look into the evidence to establish it; that can only be done by appeal. But errors on the record in matter only of form or abatement are not considered sufficient grounds for reversing a decree.
“A bill of review for error apparent may be brought without leave of court, but it will not lie after the- time when a writ of error could be brought, or an appeal taken, or in some jurisdictions when a new trial could be liad if the decree were a verdict in an action at law. In a few States the codes set a definite time limit within which bills of review must be brought.” Whitehouse, Equity Practice, vol. 1, p. 280, § 144.
“The period within which a bill of review may be brought to reverse a decree for error apparent on the face of the record is ordinarily limited to the time allowed by statute for the taking of an appeal, or the bringing of a writ of error. Very generally this limit is not fixed by statute, nor by any of the equity rules, but it has been adopted as proper on equitable, principles, and is based on the analogy of the statute limiting the period of appellate relief.” 10 R. C. L., p. 572, § 360.

The reason for the rule stated in the cases on this subject is that courts of equity, as originally constituted, had no legislative authority, and no time of bar could be fixed by positive rule of law; but these courts, acting on the maxim, “Equity follows the law,” adopted as a bar to proceedings before them the period of limitation fixed in similar cases arising at law. This .reason applies with peculiar emphasis in this State to bills of review because the Legislature has fixed the limit of time within which appeals may be taken in causes of equity, thus creating an analogy between the two remedies, as is said in Thomas v. Brockenbrough, 10 Wheat. 146, “so apparent that the court is constrained to consider the latter as necessarily comprehended within the equity of the provision respecting the former. ’ ’ In that case the. court pointed out that, if the rule were otherwise, and if a bill of review to reverse a decree on the ground of error apparent on its face might be filed at a period of time beyond that limited for an appeal, it would follow that an original decree might in effect be brought before the Supreme Court for re-examination after the period prescribed by law for an immediate appeal from such decree. by appealing from the decree of the court below upon the bill of review. In other words, the party complaining of the original decree would, in this way, be permitted to do indirectly what the statute has prohibited him from doing directly. We have made diligent search and have been unable to find any decision holding contrary to the rule announced by the authorities supra.

An appeal or writ of error shall not be granted beyond six months after the rendition of the judgment order or decree sought to be reviewed, except as to persons under disability. Section 2140, Crawford & Moses ’ Digest. We therefore hold that, since the proceeding by which the decree sought to be reviewed was filed beyond six months from the date of the decree, the rule above announced applies, and the lower court properly sustained the demurrer and dismissed the complaint, although its decision was based on other grounds.

The decree is accordingly affirmed.


text:
    Hixon v. School District of Marion.
    4-3107
    Opinion delivered June 5, 1933.

      R. H. Berry, for appellant.

      R. V. Wheeler and S. V. Neely, for appellee.
   Chas. T. Coleman, Special Chief Justice.

Act No. 271 of the Acts of 1933 creates an old age pension commission, composed of the Governor, the Auditor of State and the Treasurer of State, and appropriates $3,000,000 for old age pensions during the current biennium. To provide a fund for the payment of such pensions, the act requires the State Treasurer and the county treasurers to deduct one per cent, of the face value of all warrants paid by them, and deposit the amounts so deducted in the State treasury to the credit of the Old Age Pension Fund. The validity of the act, in so far as it levies a tax on warrants, is challenged on constitutional grounds.

Section 5 of article 16 of the Constitution provides as follows: “All property subject to taxation shall be taxed according to its value, that value to be ascertained in such manner as the General Assembly shall direct, making the same equal and uniform throughout the State-No one species of property from which a tax may be collected shall be taxed higher than another species of property of equal value.”

The tax imposed by the act is not levied on all property subject to taxation, but only on the particular species of property represented by State and county warrants. If therefore it is a tax on property, it obviously violates the uniformity requirement.

The tax is plainly not a privilege tax. The right to collect debts, whether from municipalities or from individuals, is not a privilege in the legal acceptation of the term. Moreover, the power to tax privileges implies the power to destroy them, and, since the Constitution prescribes no limit on privilege taxes, the tax levied by this act, if it were a tax of that character, could be increased to any per cent, of the face value of the warrant without encountering constitutional restriction.

A tax on warrants has none of the characteristics of an excise tax. There is no exact definition of excises, but ordinarily they are duties laid on the manufacture, sale or consumption of commodities, or upon certain calling's or occupations, and are generally referable to the police power of the State. Pollock v. Trust Company, 157 U. S. 429, 15 S. Ct. 673.

In substance and in legal effect, the tax is a tax on property.

No definition of property can be framed which does not include the right of ownership. Property therefore, in its broad and legal sense, is not only the physical thing which may be the subject of ownership, but is the ownership itself. The essential attributes of ownership are the rights of dominion, possession, enjoyment and disposition (1 Blackstone, Com. 138; Buchanan v. Warley, 245 U. S. 60, 38 S. Ct. 16; Braceville v. People, 147 Ill. 66, 35 N. E. 62, 22 L. R. A. 340, 37 Am. St. Rep. 206); and these rights are included within the protective provisions of the Constitution to the same extent as the physical things to which they pertain. Terrace v. Thompson, 263 U. S. 197, 44 S. Ct. 15. A tax on one of these essential attributes is therefore a tax on ownership, and a tax on ownership is a tax on property. Thompson v. Kreutzer, 112 Miss. 165, 72 So. 891.

A warrant represents a certain value in money. Ownership of the warrant involves the right to receive and possess the money. This right is an attribute of ownership, and therefore of property; and a tax on its exercise or enjoyment is a tax on property.

When a State or county warrant is paid in money, the money itself is. subject to the ordinary taxes applicable to all other property. If the right to convert the warrant into money is taxed, and the money itself is also taxed, the ownership of the -warrant is subjected to an unequal burden, and uniformity of taxation is destroyed. Barnes v. Jones, 139 Miss. 675, 103 So. 773; City of Brookfield v. Tooey, 141 Mo. 619, 43 S. W. 387; Malin v. County, 27 N. D. 140, 145 N. W. 582; Fatjo v. Pfister, 117 Cal. 83, 48 Pac. 1012; Cook County v. Fairbank, 222 Ill. 578, 78 N. E. 895; Spokane Company v. County, 70 Wash. 48, 126 Pac. 54; Reser v. County, 48 Ore. 326, 86 Pac. 595.

The tax sought to be imposed by the act contravenes § 5 of article 16 of the Constitution, and is void. Judgment affirmed.

Basil Baker, S. Brundidge, C. M. Buck, S. M. Casey, O. A. Graves and J. D. Head, Special Justices, concur.


text:
    Missouri Pacific Railroad Company v. English
    4-3033
    Opinion delivered June 12, 1933.

      Thos. B. Pryor and W. L. Curtis, for appellant.

      Partain & Agee, for appellee.
   Johnson, C. J.,

(after stating the facts). The principal cause of complaint is that the court erred in refusing to direct a verdict in behalf of appellant. This is based upon the theory that Lydia English was a trespasser or at most a licensee, and the case of Barnett v. St. L. & S. F. Ry. Co., 140 Okla. 19, 282 P. 120, is relied upon to sustain this theory.

The facts in the Barnett case were that plaintiff was walking along a pathway near the track of the defendant which had been used by the public for a long number of years with the knowledge and acquiescence of the railroad company, and that while he was on this pathway the defendant wrongfully backed one of its trains against the plaintiff and thereby injured him. On the trial of the case, plaintiff abandoned this theory and introduced testimony only to the effect that he was a deputy United States marshal and rightfully upon the premises. This testimony was objected to at the time of its introduction, and the trial court sustained a demurrer to this evidence, which was affirmed by the Supreme Court of Oklahoma. It will thus be seen that the Barnett case, cited supra, is no authority for the position here assumed by appellant under the laws of Oklahoma.

It is next insisted on behalf of appellant that this ease is ruled by Texas O. & E. R. Co. v. McCarroll, 80 Okla. 282, 195 Pac. 139. The facts in this case were that appellant was riding on the pilot step of an engine by invitation of the watchman. The undisputed testimony showed that the watchman had no authority to invite appellant to ride upon the pilot step. The Supreme Court of Oklahoma held that appellant was neither a licensee or invitee but a trespasser, and therefore plaintiff could not recover. Certainly it cannot be seriously contended that this case is authority for the position here assumed by appellant.

It is next insisted that this case is ruled by A. T. & S. T. Ry. Co. v. Cogswell, 23 Okla. 184, 99 Pac. 923, 20 L. R. A. (N. S.) 837. The facts in this case were that plaintiff went to the depot of the defendant to meet a passenger and while upon the platform he stepped through a hole in the platform and was injured. Plaintiff had no business with the company, but went there merely to meet a passeng'er on private business. In this case the company contended that plaintiff was a mere licensee, but the Supreme Court of Oklahoma held that under these facts the jury was warranted in finding that there was an implied invitation on the part of the railroad company and that the jury was warranted in finding in favor of the plaintiff.

No Oklahoma case has been cited on this appeal which should control, as a matter of law, the finding of the jury in this case.

The doctrine applicable to the facts of this case is stated concisely in the case of Bennett v. L. & N. Ry. Co., 102 U. S. 577, 26 Law Ed. 235, wherein the court held: “That the owner or occupant of land who by invitation, expressed or implied, induces or leads others to come upon his premises, for any lawful purpose, is liable in damages to such persons, they using due care, for injury occasioned by the unsafe condition of the land or its approaches, if such condition was known to him and not to them, and was negligently suffered to exist without timely notice to the public or to those who were likely to act upon such invitation.”

Again, in 20 R. C. L., par. 57, page 64, the rule is stated as follows: “While an invitation to go upon premises will not be implied, ordinarily, from the. fact that the owner or occupant has acquiesced in or tolerated trespasses thereon, many decisions have recognized an exception in case of a way across lands or structures thereon. If the owner or occupant has permitted persons generally to use or establish a way under such circumstances as to induce a belief that it is public in character, he owes to persons availing themselves thereof the duty due to those who come upon premises by invitation. ’ ’

In the recent case of Louisville & N. Ry. Co. v. Snow, 235 Ky. 211, 30 S. W. (2d) 85, the Kentucky Court held: “The decedent was not an invitee in the technical sense that one going upon the premises of another to their mutual advantage is an invitee, but the facts of this case bring it within the class of cases in which the doctrine has been recognized and applied that, when the owner, by his conduct, has induced a party to use a private way in the belief that it is open for the use of the public, the duty is imposed upon him of maintaining' the way in a reasonably safe condition. Where one by his conduct has induced the public to use a way in the belief that it is a street or public way, which all have a right to use, and where they suppose they will be safe, the liability should be co-extensive with the inducement or implied invitation.”

The doctrine, as announced in the case cited supra, has been applied by this court in the case of St. L. I. M. & S. Ry. Co. v. Dooley, 77 Ark. 561, 92 S. W. 789, wherein the court held: “The bare permission of the owner of private grounds to persons to enter upon his premises does not render him liable for injuries received by them on account of the condition of the premises. But, if he expressly or impliedly invites, induces, or leads them to come upon his premises, he is liable in damages to them (they using due care) for injuries occasioned by the unsafe condition of the premises, if such condition was the result of his failure to use ordinary care to prevent it, and he failed to give timely notice thereof to them or the public. This principle is applicable to the case before us. If the appellant constructed the steps and expressly or impliedly invited, induced or let. persons to cross the same, it is liable in damages to them for injuries occasioned by the unsafe condition thereof, if it was the result of the failure to use ordinary care to keep the same in safe condition. If it was unwilling to incur this liability, it could have avoided it by removing the steps or giving timely notice of the condition to such persons or the public.”

The rule as announced in the Dooley case cited, supra, is supported by the great weight of American authority. No Oklahoma case has been cited announcing any different rule. The jury in the instant case was fully warranted in finding that the maintenance of the foot bridge by the appellant for a long number of years and its constant and perpetual use by the public, as a way, with full knowledge and. tacit acquiescence of appellant, was an implied invitation for its continued use, and that appellant was required to use ordinary care in keeping and maintaining same for such purpose. Therefore, we conclude that the case was properly submitted to the jury for its consideration, and its findings that Lydia English was an invitee is supported by the evidence.

The jury-returned a verdict in favor of Lee English, the father of Lydia English, for $200; it also returned a verdict in favor of appellee, Lydia English, for $3,000. It is insisted on this appeal that these awards are excessive. We cannot agree. The testimony shows that Lee-English expended for doctor’s bill, medicine, etc., almost $100; therefore, unquestionably, a verdict for $200 in his behalf would not be excessive. The testimony in behalf of appellee, Lydia English, was to the effect that her injury was -serious and probably permanent. We cannot say, as a matter of law, that $3,000 was an excessive award.

Let the .judgments be affirmed.


text:
    Arkansas Power & Light Company v. Curlin.
    4-3119
    Opinion delivered June 12, 1933.

      S. V. Neely, for appellant.

      A. B. Shafer and R. V. Wheeler, for appellee.
   Johnson, C. J.,

(after stating the facts). The sole question presented on this appeal for determination is, will mandamus lie to compel a collector to accept school district warrants in payment of past-due district school tax due to the district -issuing the warrants? Appellant insists that it will, and appellees deny the right.

Section 10,045 of Crawford & Moses’ Digest reads as follows: “The collector shall receive county warrants- in payment of county taxes, the orders or warrants that may be payable on presentation of any town, city or school district for their respective taxes, and the state treasurer’s certificate of indebtedness, of date not prior to July 23, 1868, for State taxes, levied to defray the general expenses of the State. Provided, this section shall not be so construed as to compel the acceptance of any order or warrant that by the laws of this State was required to be funded.”

Appellant insists that this section affords the authority. Appellees insist that § 10,045 of Crawford & Moses’ Digest was impliedly repealed by amendment No. 11 to the Constitution of 1874 adopted in 1927, wherein it was provided:

“The General Assembly shall provide by the general laws for the support of common schools by taxes, which shall never exceed in any one year three mills on the dollar on the taxable property in the State, and by an annual per capita tax of one dollar, to be assessed on every male inhabitant of this State over the age of twenty-one years. Provided, that the General Assembly may, by general law, authorize school districts to levy by a vote of the qualified electors of such districts a tax not to exceed 18 mills on the dollar in any one year for the maintenance of schools, the erection and equipment of school buildings and the retirement of existing indebtedness for building’s. Provided, further, that no such tax shall be appropriated for any other purpose nor to any other district than that for which it is levied.”

This court in construing Amendment No. 11, in the case of Horne v. Paragould Special School Dist. No. 1, 186 Ark. 1000, 57 S. W. (2d) 568, held:

“The electors of any school district may vote a tax at any rate they wish for any or all said purposes, provided the tax voted for all does not exceed 18 mills. For instance, they might vote 6 mills for bond and 12 mills for school purposes, as they did in this case, and, when so levied and collected, neither sum could ‘be appropriated for any other purpose * * * than that for which it is levied.’ In other words, the 12 mills voted for school purposes could not lawfully be appropriated for payment of bonds or the interest thereon, nor could the 6 mills voted for bond purposes be appropriated for schools. Such is the plain language of the amendment. No other construction can be given, and any other in the present case would probably work disaster to both parties. For, since the voting of any tax for any purpose is optional with the district’s electors, the taking of the 12 mills voted for general school purposes to pay bonds would close the schools and keep them closed for many years, it would seem reasonably certain the electors would not vote a tax on themselves and have no schools. The bondholders would lose the 6 mill tax now being received, a substantial loss to them, and the district would be without a free public school for years to come, which would be disastrous to it and its people.”

Since, under the amendment, the voters of a school district may or may not vote a tax; since the voters of such district may appropriate any part of the levy which they may desire to either of three purposes set forth in the amendment, and since the Legislature and the courts have no power or control over such appropriations so made by the voters, it necessarily follows that § 10,045 of Crawford & Moses ’ Digest was impliedly repealed by the amendment. This, because, if appellant can coerce the collector to accept the warrants in payment of past-due taxes, it would nullify and destroy the constitutional mandate giving to the voters the right to make appropriation of the tax levy.

It is insisted in this case that no appropriation of the tax levy was made by the voters, therefore mandamus in the instant case would not nullify or destroy the right of the voters to appropriate. This argument is beside the question. If in any event the statute conflicts with the constitutional mandate, the Constitution must prevail. This is perfectly evident because, had the voters made the appropriations as they had the right to do, and should mandamus issue to give effectiveness to § 10,045, Crawford & Moses’ Digest, it would destroy and nullify the constitutional mandate.

Judgment affirmed.

Smith and McHaney, JJ., dissent.


author: Smith, J.

text:
    Periman v. Rogers.
    4-3015
    Opinion delivered June 12, 1933.

      Robert Bailey, for appellant.

      Ward & Caudle and R. F. Smith, for appellee.
   Smith, J.

J. G. Butler & Sons executed to J. G. Rogers a written lease of a filling station in the city of Russellville for the term of five years, for a rental of $6,000, to be paid in monthly installments of $100 each. The date of the contract is August 17, 1925.

There was executed on the same day in connection with this contract a guaranty which reads as follows:

“We, the undersigned, by these presents bind ourselves to pay any damages lessors may sustain during the first five year period of this lease resulting to lessors by reason of the failure of lessee to comply with its provisions in the payment of the rent stipulated therein. Witness our hands this the 17th day of August, 1925.
“J. A. Rankin,
“Jerome Wright,
“Hedge McClanahan.”

Rogers became ill after occupying the premises for some months and went to a hospital. The leased property was taken possession of by one Ladd, who was in possession when the leased property was sold by the lessors to C. W. Hays and John H. Periman. The testimony is in conflict as to the authority under which Ladd took possession, whether as tenant of Butler & Sons or as tenant of Rogers. Ladd defaulted in the payment of rent, and Hays and Periman brought suit against Rogers and his guarantors to recover the arrears of rent. Rogers and Rankin filed no answer, and judgment for the want of an answer was taken against them. Answer was filed by McClanahan and the administratrix of Wright, who had died, the cause having been revived against Wright in the name of his administratrix. Upon the final submission of the cause against McClanahan and the administratrix of Wright’s estate, judgment was rendered in their favor by the court sitting, by consent of parties, as a jury, and from that judgment is this appeal.

The guaranty here sued on is, in our opinion, special, and not general, and inured to the benefit of the lessors, and to no other person. Its obligation is “to pay any damages lessors may sustain,” and does not run to their heirs or assigns.

At § 52 of Stearns on Suretyship (3d ed.), page 64, it is said: “A guaranty is special when it is addressed to a particular person, firm or corporation, and, when so addressed, only the promisee named in the instrument acquires any rights under it.” Numerous cases are cited in the note to the. text quoted which support the author’s statement of the law.

At § 16 of the chapter on Guaranty in 28 C. J., page 897, it is said: “A special guaranty is one which is addressed to a particular person who alone can take advantage of it, and to whom only the guarantor can be held responsible; it usually, hut not necessarily, contemplates a trust or reposes a confidence in the person to whom it is addressed.”

See also Brandt, Suretyship & Guaranty, vol. 1 (3d ed.), § 133, page 282; Childs, Suretyship & Guaranty, page 258; Pingrey on Suretyship & Guaranty, (2d ed.) § 340, page 350.

Our case of Killian v. Ashley, 24 Ark. 511, is cited as holding to the contrary, but we think this is not its effect. The writing there sued upon, referred to in the opinion as “a writing obligatory,” was evidently a negotiable promissory note. The instrument was executed by W. B. Easley to the order of J. O. Ashley, and assigned by the latter to J. B. Keatts, who in turn assigned to Killian, the plaintiff. It was indorsed in blank before assignment by W. E. Ashley. Suit was brought against J. O. Ashley as indorser and W. E. Ashley as guarantor.

The opinion recites that “W. E. Ashley is declared against as guarantor; and, as the indorsement was made in blank, without date, it is not certain whether he should have been declared against as security or guarantor,” and it was there, also said that: “By indorsing the obligation in blank, he (W. E. Ashley) gave to the payee or assignee an implied power to write above it the most absolute terms of guaranty.” What these terms of guaranty were do not appear, but the opinion does state that: “If William. E. Ashley had desired to limit or qualify the terms of his guaranty, he should have done so when he made the indorsement; but when he sent forth the instrument with his name upon it, he is held to have given his implied consent to be bound by such terms as the holder of the obligation might fix upon him, in his character as guarantor.”

It was there contended that, although W. E. Ashley was liable as guarantor to the payee named, the contract of guaranty did not pass by the assignment of the writing obligatory to the plaintiff for lack of privity between those parties, and that consequently the plaintiff had no right, of action against the indorsing guarantor. The court said that, while there were authorities to that effect, there were other and later decisions “which hold differently upon reason and authority, which accord with the rights of parties, holders of negotiable paper,” and that: “It was evidently the intention of the Legislature to facilitate their circulation, as a species of exchange, by vesting in the assignee the same interest which the assignor had.” In other words, one who indorsed a negotiable promissory note in blank was liable upon such indorsement to any one acquiring title to the paper. The facts here recited make plain the distinction between that and the instant case. ■

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