text:
    Catlin v. C. E. Rosenbaum Machinery Company.
    Opinion delivered December 23, 1929.

      Jonas F. Dyson, for appellants.

      Chas. A. Walls, for appellee.
   Mehaeey, J.

The appellee began this action in the Woodruff Circuit Court for the recovery of certain machinery described in the complaint, alleging that it was the owner, and that the defendants were in possession and unlawfully detained the same. Appellee had delivered the machinery to the purchaser under a conditional sales contract, and the notes given for the purchase money provided that the property should remain the property of the O. E. Rosenbaum Machinery Company. In other words, the seller retained title to the property; it was a conditional sale.

The appellants answered, denying that appellee was the owner and entitled to possession of the property; admitted that N. E. Catlin had possession, but denied that he was unlawfully detaining same. They also denied that appellee had been damaged, and denied that appellee had the notes mentioned in plaintiff’s complaint. Appellants alleged that N. E. Catlin was the owner, and that plaintiff’s cause of action Avas barred by the statute of limitations. The only evidence introduced was the foll'OAving agreed statement of facts:

“It is agreed by and between Chas. A. Walls, attorney for plaintiff, and Jonas F. Dyson, attorney for defendant N. E. Catlin, that on the first day of March, 1920, plaintiff sold and delivered to defendant W. P. DaAvson one 80 H. P. Muncie oil engine, No. 7 CNA-081, with standard fixtures, for the sum and consideration of $6,134, $2,000 of which was in cash paid, and the balance divided into notes, the first for $2,067, due on or before the first day of January, 1921,' and the second for the sum of $2,067, due on or before the first day of January, 1922, each bearing interest from date until paid at the rate of 8 per cent, per annum, and specifically retaining title to the property sold until paid for in full; the original notes being attached to this agreement as exhibits A and B, respectively, and made a part hereof. That said engine is a stationary one, and was, immediately after delivery, as aforesaid, firmly affixed and attached to the earth on the north side of the northeast quarter of section 28, in township 5 north, range 1 west, Southern District of Woodruff County, Arkansas, by being firmly placed and bolted to a concrete foundation larger than the base of said engine in length and width, and extending about five feet in the earth, and connected to the pump on said location by means of belts and pulleys, and connected with several oil tanks on said land by iron tubes and pipes, and was so connected that it became a part of the rice well pumping plant on said land, and was housed in a building containing the entire pumping plant. Said engine is now the only engine on said land, or that has been on said land since it was erected thereon. That the tax records of Woodruff County, Arkansas, do not show said engine assessed in an}r year that it has been thereon located, as personalty, but the said northeast quarter of section 28, with said engine and entire pumping plant, is assessed as realty. That the plaintiff’s agent superintended the erection and placing, as aforesaid, of said engine, and at all times thereafter knew of its being so placed on said land. That said notes, or any evidence of same, were never recorded or filed for record by either clerk or recorder of Woodruff County, Arkansas, in either county site of said county. That said engine is now in the same bed or foundation in which it was placed as aforementioned, and has never been moved therefrom since it was placed there in the early part of 1920.
“It is admitted that the last credits paid on said notes were $1,000 on note No. 1, March 5, 1925, and $500 on note No. 2, on March 12,1926.
“That, some time shortly prior to the 22d day of May, 1923, the agent of the American Investment Company, of Oklahoma City, Oklahoma, a loan company, upon the written application of the said W. P. Dawson for a loan of $6,000 on said land and premises, made an inspection of said land and premises for the purpose of making-said loan, and at the time of making said inspection said engine was located on said premises in the condition and affixed to the soil as aforementioned. Neither he nor the company was at that time, or any time thereafter, informed or notified of the existence of such notes, or that any part of the purchase price of said engine was then unpaid, or that this plaintiff claimed any interest or title to said engine. That said land was represented to the said American Investment Company as being a rice farm, and was not used for any other purpose, and would have been valueless as such but for the engine to pull said pump.-'
“That, 'by reason of the value being placed upon said land equipped with said pumping plant, which included said engine, said loan was made by the said American Investment Company and said land and premises taken as security therefor; and on the 22d day of May, 1923, the said W. P. Dawson and Armenta Dawson, his wife, executed their mortgage thereon to the said American Investment Company, securing- note for said sum of $6,000, which said mortgage is now in the files of chancery suit No. 1277, in the office of the chancery clerk within and for the Southern District of Woodruff County, Arkansas, and was recorded on the 18th day of June, 1923, in mortgage record No. 12, at page 120, Woodruff County, Arkansas.
“That the American Investment Company, for a valuable consideration, assigned said mortgage and note secured thereby to R, II. Shumway. on the 2d day of July, 1923, which assignment was recorded on the 31st day of December, 1923, in mortgage record No. 12, at page 172, in the office of the recorder of deeds within and for the Southern District of Woodruff County, Arkansas, at Cotton Plant.
‘ ‘ That on the first day of February, 1927, said mortgage and note secured thereby were assigned by the executor of R. IT. Shumway to N. E. Catlin, which assignment is now a part of the pleadings and proof in the files of chancery court suit No. 1277, in the office of the chancery clerk of the Southern District of Woodruff County, Arkansas, which was a suit by N. E. Catlin against W. P. Dawson and wife, to foreclose said mortgage, of date of May 22, 1923.
“That default was made by the said W. P. Dawson in the payment of said note and interest coupons, and a legal foreclosure was had on mortgage, and sale under the decree in the Southern District of Woodruff County, Arkansas; and the sale thereof was made by N. N. Cain, commissioner in said decree, on the 10th day of March, 1928, and said N. E. C'atlin, being- the highest bidder at said sale, purchased said land for the sum of $5,000, which sale was properly confirmed by the chancery court on the 21st day of May, 1928, and deed ordered and made, and is now of record in deed record 'book No. 19, at page 28, in the office of the recorder of deeds within and for the Southern District of Woodruff County, Arkansas.
“That at said sale the said N. N. Cain announced that, by the request of Chas. A. Walls, attorney for plaintiff in this action, C. E. Rosenbaum Machinery Company claimed title to said engine herein sued for. Said announcement was made before any bid was made on said land and premises.”

The case was submitted to the court on the pleadings and the agreed statement of facts and the notes as copied in the complaint, and the court found in favor of appellee, and gave judgment accordingly against the appellants, and this appeal is prosecuted to reverse said judgment.

The only question for our consideration is whether the property involved was attached to the freehold in such a manner as to deprive the seller of the right to retake the property. After the property was purchased, and while it was on the land belonging to the purchaser, he execute.d a mortgage, and there was a foreclosure and sale of the mortgaged property, the machinery being on the land at the time. It is the contention of the appellant that it was a fixture, and, since appellant had no notice that the seller had retained title, that the purchaser at the foreclosure sale is an innocent purchaser, and that the cause should be reversed for that reason. It is true that the purchaser had no notice of the conditional sales contract or that the seller of the property retained title.

It is conceded by appellants that, before the law of innocent purchase can be applied in a case of this kind, the chattel must take on the nature and character of a fixture. Appellants rely on the case of Continental Gin Co. v. Clement, 176 Ark. 864, 4 S. W. (2d) 901. In that case the appellant had sold certain machinery, and had retained title as in this case. The purchaser in that case, after putting the property in place, and while it was not actually attached to the gin stands, placed it directly over them and it was held in position by joists resting on the floor and nailed and screwed to the building housing the gin. It could be removed without physical damage to the gin stands and without material damage to the building. In that case the chief thing relied on was that of innocent purchaser. There was no dispute in that case, and none in this, that, as between the original vendor and vendee, the property remained a chattel, but we said in that case, quoting from Salmon v. Boyer, 139 Ark. 236, 213 S. W. 383: ‘ ‘ This instruction excludes the idea that it was the duty of appellant, in order to bring himself within the doctrine of innocent purchaser, to make inquiry concerning the ownership' of fixtures of this character, and, even though substantially fastened into the soil. * * * In the instant case appellee does not seem to have made inquiry of any one. It is a matter of common knowledge that property of the character of that involved in this suit is purchased in this country on time, and that contracts for this kind of property are constantly made wherein the title is retained until paid for.”

The same is true in this case. While the appellants were not notified, this court has repeatedly held that it is their duty to make inquiry. The evidence in this case does not show that they made inquiry of anyone. Doubtless the original purchaser would have told them, if inquiry had been made, but it would have been an easy matter for the appellants or the original mortgagee to have inquired, not only of the mortgagor, but of the person from whom the property was purchased. This he did not do. In another case relied on by appellants, the case of Salmon v. Boyer, 139 Ark. 236, 213 S. W. 383, the court also held that it was the duty of appellant, in order to bring- himself within the doctrine of innocent purchaser, to make inquiry concerning the ownership of fixtures of that character, even though substantially fastened into the soil. The court in the above case laid down certain tests, among which it mentioned the intention of the parties, and stated that the tendency of the times is to attach the most importance to the test of intention. In the instant case of course there can be no question about the intention.

In another case referred to the court held, with reference to certain personal property, that the attachment would not operate to make a fixture of stoves, if such was not the intention of the parties. Anderson v. Southern Realty Co., 176 Ark. 752, 4 S. W. (2d) 27. See also Choate v. Kimball, 56 Ark. 55, 19 S. W. 108.

It would serve no useful purpose to review the authorities further on this question. The rule with reference to innocent purchaser, where there is a conditional sale of the property, the vendor retaining title, is that the mortgagee, or person who acquires the property from the original purchaser, is bound to make inquiry with reference to the property. This is especially true where it is known that property is of such a character as is universally sold on time, the vendor retaining title.

In another case relied on by appellant the court said:

“According to the testimony of Suckle, no reservation of the ceiling fans was made by Stone when he made the sale of the hotel property. .According to the undisputed evidence the fans were necessary and adapted to the use of the property for hotel purposes. Hence it was a question for the jury whether or not the ceiling fans were so attached to the electric wiring of the house as to become a part of it and pass with a deed to the realty, and we do not think the court erred in giving these instructions.” Stone v. Suckle, 145 Ark. 387, 224 S. W. 735.

The finding of the circuit judge in this case is the same as the finding of a jury. It was tried before the judge sitting as a jury.

Judgment of the circuit court is affirmed.


source: Caselaw Access Project

author: Mehaety, J.

license: Public Domain

text:
    McGregor v. Cain.
    Opinion delivered December 23, 1929.

      Ross Mathis, for appellant.

      Roy D. Campbell, for appellee.
   Mehaety, J.

In October, 1928, the county judge of Woodruff County, acting under § 5775 of Crawford & Moses’ Digest, appointed a board of visitors, consisting of six members, men and women. Two of the members were to serve one year, two for two years, and two for three years. After the board was appointed, they -met at the courthouse at McCrory, on the 5th day of November, 1928, and unanimously recommended to the county judge the appointment of Mrs. Ida Cain as chief probation officer for the coming year. Their report and recommendation was filed with the county judge, and thereafter, on the 12th day of November, 1928, the time fixed by law for the convening of the quorum courts of the State, the quorum court made an appropriation to pay the salary of the chief probation officer of the county. The resolution adopted by the quorum court is as follows:

“Resolution to pay salary of probation officer. Whereas the county judge of Woodruff County, under the provisions of § 5775 of Crawford & Moses’ Digest of the Laws of Arkansas, has appointed six reputable women and men to constitute a board of visitation; and whereas said board of visitation so appointed has duly convened in the courthouse at McCrory, Arkansas, on the 5th day of November, 1928, and, after being duly organized as provided by law, unanimously agreed upon the chief probation officer of Woodruff County and recommended her appointment as such to the county judge; and whereas the said board of visitation has also recommended that the salary of the chief probation officer be fixed at the sum of $150 per month for the ensuing year of 1929, now therefore be it resolved by the quorum court of Woodruff County, that the sum of $1,800 be and is hereby appropriated from the revenues of the fiscal year of 1929 to pay the said salary of the chief probation officer of Woodruff County, Arkansas, as selected by the board of visitation of Woodruff County.”

The next day after the quorum court had passed the resolution and made the appropriation, an order was entered upon the records of the county court appointing Mrs. Ida Cain as chief probation officer of the county until the 13th day of November, 1929, at a salary of $150 a month. The order of the county court is as follows

“In the matter of a probation officer of Woodruff County. In pursuance to a recommendation made by the board of visitation and an appropriation made by the quorum court, recommending the appointment of Mrs. Ida Cain to the office of probation officer of Woodruff County, Mrs. Ida Cain is hereby appointed as such probation officer for Woodruff County, to serve for a term of one year beginning from this date, November 13,19'28, at a salary of one hundred per month and fifty dollars per month for expenses, payable on this date monthly. The county clerk is hereby ordered and directed to issue to the said Ida Cain, as probation officer, a warrant on the county g’eneral fund for the amount of one hundred and fifty dollars each and every month until her commission expires, November 13, 1929.”

The probation officer entered upon and continued the discharge of her duties, and on the 13th day of November a warrant for the sum of $150 was issued to her, and also on the 14th day of January another warrant was issued for $150, payable to Mrs. Ida Cain.

On the 12th day of February, 1929, Alex O. Mc-Gregor, as a citizen and taxpayer of Woodruff County, filed his affidavit and bond for an appeal from the order of the county court appointing Mrs. Cain as probation officer and fixing her salary. The appeal was allowed, and transcript filed in the 'circuit court.

On the first day of January, 1929, Alex O. McGregor assumed the office of county judge of Woodruff County, and thereafter caused the following order to be entered upon a record of the court:

“And now on this day, it appearing to the court that the clerk of this court on January 14, 1929, issued warrant No. 1138 in favor of Mrs. Ida Gain, in the sum of $150, which warrant had not been authorized by this court, the treasurer is hereby directed not to honor said warrant, and the clerk of this court will make and certify to the treasurer a copy of this order. ’ ’

From this order Mrs. Ida Gain prosecuted an appeal to the circuit court. The two' oases were consolidated in the circuit court, and on February 28, 1929, the following order was entered in the circuit court:

“That the appointment of Mrs. Ida Gain as chief probation officer of Woodruff C'ounty was justified under the law, and that the quorum court had a right, under the condition of the revenues of the county, to make the appropriation. ('Clause No. 146). As to cause No. 145, the court finds that the order of the county judge made on the 24th day of January, 1929, canceling the warrant issued to Mrs. Ida Cain in the sum of $150, be vacated and set aside.”

To reverse this judgment of the circuit court this appeal is prosecuted.

Appellee states: “It seems to us the only matter for consideration in the case is whether or not the appointment of the -appellee as chief probation officer of the county was authorized by law; if so, the county is liable for the payment of her salary for the time in question.” County courts in the several counties of this State are authorized by statute to appoint probation officers. S-eetion 5766, Crawford & Moses’ Digest.

There is no constitutional or statutory provision fixing a definite term for the probation officer appointed by the county court. The appointment of the appellee to serve for a term of one year beginning on the 13th day of November, 1928, was not a valid appointment, because the term of the county judge who made the appointment expired December 31, 1928. The appointment of a county probation officer extending beyond a term of the county judge is invalid except for the balance of the term of the county judge who made the appointment.

We said in a recent case: “It is a rule of universal application that, where an office is filled by appointment, and no definite term of office is fixed by a constitutional or statutory provision, the office is held at the pleasure of the appointing power, and the incumbent may be removed at any time. But the power of removal is not incident to the power of appointment where the extent of the term of office is fixed by Constitution or statute.” Beasley v. Parnell, 177 Ark. 912. See also Patton v. Vaughan, 39 Ark. 211; Ex parte Hennen, 13 Peters (U. S.) 230 ; Blake v. United States, 103 U. S. 227.

The county probation officer is a county officer, and the case is wholly unlike the cases where the county judge or the county court is authorized to make a contract. In such cases the expiration of the term of the individual who was county judge at the time the contracts were made does not invalidate the contract. This, however, is not true of officers where the county judge or county court is authorized to make the appointment and the law fixes no term. Of course, if the appointment was invalid, as we hold that it was, the warrants issued would be without authority. And, holding as we do that the appointment could not extend 'beyond the term of the county judge, it becomes unnecessary to discuss or decide the other questions discussed by counsel.

The judgment of the circuit court is reversed, and remanded with directions to enter a judgment in accordance with this opinion.


author: McHaney, J.

text:
    Burnette v. Elsesser.
    Opinion delivered December 23, 1929.

      Robertson >$ Gathings, for appellant.

      Brewer & Cracraft, for appellee.
   McHaney, J.

Appellee, a young man about twenty-three, being the owner by inheritance from his father of the south part of lot 18 and all of lot 19 in Elsesser’s subdivision to the city of Helena, contracted in writing, May 10, 1927, to sell the south part of lot 18 to Jean T. Brown for a consideration of $350. A conveyance was not immediately consummated, as the parties agreed to postpone it until the lapse of one year after the death of appellee’s father1 for the filing of claims against his estate. Thereafter, on October 2, 1927, which was Sunday, appellee executed and delivered a warranty deed covering ’both lot 19 and the south part of lot 18 to appellant, the deed being dated October 1, 1927. There were valuable improvements on lot 19, same being rented to appellant at the time, and was incumbered by a mortgage for $3,000 to the Guaranty Loan & Trust Company, executed by appellee’s father. The agreed consideration for this conveyance was the assumption by appellant of the $3,000 mortgage, the payment of the acprued interest of $120, insurance premium, and, according to appellant, $350 in cash, but according to appellee, $150 in cash, neither of which sums, however, was ever paid. The proof showed the equity in the property to he worth from $3,000 to $5,000 above the mortgage, and that appellee, while not an incompetent, was young, inexperienced in real estate matters, knew nothing about the value of his inheritance, and was without funds to pay the semiannual interest then due on the mortgage. He was advised by appellant that, unless the interest was paid, the mortgage would be foreclosed, he would lose the property to the loan company, and might involve other of his property. This deed, prepared by appellant’s counsel, recited a consideration of $10 and other good and valuable considerations. In it appellant did not assume or agree to pay the mortgage indebtedness, but the conveyance was made subject thereto.

On February 20, 1928, Jean T. Brown brought suit against appellee and appellant for specific performance of her contract, and thereafter appellee brought suit against appellant to cancel said deed on account of the matters above stated, and the additional ground that the deed was void as a Sunday contract. Appellee admitted that he was bound by his contract to convey to Mrs. Brown, but could not do so because of his deed to appellant, and that the south part of lot 18 was fraudulently included in the deed to appellant, without his knowledge or consent.

A decree was entered canceling the deed to appellant on the ground that all negotiations leading up to its execution, as well as the actual execution and delivery of the deed itself, occurred on Sunday. The suit of Mrs. Brown was dismissed for want of equity, as appellee' offered to convey to her in the event his deed to appellant was canceled. Although Mrs. Brown has appealed, she is not interested if the decree is affirmed.

We think the court correctly canceled the deed to appellant. The evidence is practically undisputed that the deal was agreed to on a Sunday, and is wholly so that the deed was executed and delivered on Sunday. This being so, the deed was void, unless it was subsequently ratified on a week day. Davis v. Murphy, 177 Ark. 183, 5 S. W. (2d) 936. Appellant says he went into possession, made valuable improvements, and that appellee ratified the conveyance. None of these defenses were pleaded, but, even though they had been, they cannot be sustained. He was already in possession as tenant, and no new possession was taken under the deed. He paid appellee nothing; therefore no restoration could be made. Appellee merely acquiesced in the conveyance for about six months before -seeking to cancel, which is insufficient to constitute ratification.

True, appellant paid the interest on the mortgage and made some repairs, all of which the court offset against the rents -due appellee. We do not think this sufficient to constitute ratification. Moreover, the consideration was grossly inadequate, and, when this fact is coupled with the other inequitable conduct of appellant, such as failure to assume the indebtedness in the deed, the inclusion therein of the south part of lot 18, which was already under contract to Mrs. Brown, to appellant’s knowledge, failure to pay any part of the cash consideration to appellee, together with appellee’s youth and inexperience, was sufficient to justify the court in canceling the deed.

We find no error, and the decree is accordingly affirmed.


author: McHaniey, J.

text:
    Taylor v. Gordon.
    Opinion delivered December 23, 1929.

      W. P. Strait, for appellant.

      Edward Gordon, for appellee.
   McHaniey, J.

Appellants brought separate actions against appellees, Gordon and Lucas, to recover from Gordon on a promissory note $1,907.65 and interest, and from Lucas $2,400 and interest, both notes being dated January 12, 1926, and given to the Bank of Morrilton in renewal of previous notes given to said bank in July, 1925, in payment for 40 shares each of said bank’s stock of the par value of $1,000'. In the case of Gordon $500 was paid to said bank in cash by check as part of the purchase price, and note given for $2,000, while in the case of Lucas no cash payment was made, and his note was for $2,500. In January, 1926, a dividend was declared and paid, and credited on these notes, thereby reducing them to the amounts above stated.

This stock was bought under the following circumstances: Loid Rainwater, president of the 'Bank of Morrilton, was, in July, 1925, appointed State Bank Commissioner. ILe desired to dispose of his stock in said bank, and induced appellee Stover to take it over and dispose of it to others. He advised the Echols heirs, children of his sister, who were also stockholders, and are appellees here, to dispose of their stock, which they did, acting through Rainwater 'and Stover, at a price of $2.40 on the dollar. Stover called upon Gordon and Lucas, advised them the hank had some stock for sale, that it was worth three or four for one, was a good buy at $2.40 on the dollar; that they desired to place same with friends of the hank, and urged them to buy. He told them the bank would take their notes for same, and that the dividends would in time pay it out. Each of them agreed to purchase $1,000 par, for which Gordon gave his check to the bank for $500 and his note for $2,000, -and Lucas gave his note for $2,500 as above stated. The Echols stock had already been surrendered and paid for by Stover, apparently by taking the bank’s money and charging same to his account, without any authority from the board of directors to do so. When he received Gordon’s check and the'two notes, they were turned over to the bank, and his account credited therewith.

On March 18, 1926, Gordon executed his note to the bank for $431.20 for money borrowed. In December, 1926, the Bank of Morrilton was found to be wholly insolvent, and was placed in the hands of appellant Bank Commissioner for liquidation. Its assets, including said notes, were sold to appellant First State Bank, and this suit involved not only said notes but an assessment of 100 per cent, against all stockholders.

'There was a decree canceling- said stock purchase notes, permitting Gordon to offset his liability on the note for borrowed money and a small overdraft against his cash payment for stock, and denying a recovery against Gordon and Lucas on account of the 100 per cent, stock assessment. There was an alternative prayer in the complaint that, in the event no recovery was had against Gordon and Lucas, judgment might be had against Stover and the Echols heirs, both for the money of the hank unlawfully used in the purchase of the stock and the 100 percent, assessment. The trial court made no disposition of this latter prayer.

We think the court correctly denied a recovery against Gordon and Lucas. If the bank’s money was used to acquire the Echols stock, and we think the evidence sufficient to justify the holding that it was, then the bank became the owner of the stock, and, when it was sold, the evidence is sufficient to sustain the finding- that it was sold as the bank’s property. Gordon and Lucas both say it was sold to them 'by Stover as the stock of the bank; and, while this is denied by Stover, the circumstances support Gordon and Lucas. The cash payment 'by Gordon was a check made payable to the bank, and not to Stover; both notes were made to the bank, and not to Stover; the Echols stock transferred to Gordon and Lucas was never in 'Stover’s name, but was transferred from Echols directly to them. The bank, having furnished the money to pay for the stock, became at least the equitable owner thereof, and, through its cashier, attempted to make a sale of same to Gordon and Lucas by talking- their notes for the purchase price, in violation of law. Section 8, article 12, Const. 1874; Bank of Commerce v. Goolsby, 129 Ark. 416, 196 S. W. 803; Bank of Dermott v. Measel, 172 Ark. 193, 287 S. W. 1017; Bank of Manilla v. Wallace, 177 Ark. 190, 5 S. W. (2d) 937.

Nor do we think there has been a ratification of the sale. The stock was never -actually delivered, but was issued and retained by the bank. No meetings of stockholders were attended by them, and, while a dividend was credited on their notes and renewal notes executed, they did not know a dividend had been paid. They re-' pudiated the transaction as soon as they discovered the true situation.

We decline to pass upon the liability of Stover or the Echols heirs, as the chancery court has not done so. If Stover, without authority, wrongfully took the money of the bank and used it to purchase or take up outstanding- stock, he and all those participating in the fraud with knowledge thereof, either directly or through an agent, would he liable to make restitution to the bank, and, if it were in fact insolvent at that time, equity would require them to bear the burden of the statutory liability of stockholders.

The decree will therefore be affirmed as to Gordon and Lucas, but as to all others will be remanded for further proceedings.


author: Butler, J.

text:
    Northwest Arkansas Farmers’ Mutual Tornado Insurance Company v. Osborn.
    Opinion delivered December 23, 1929.

      John Mayes, for appellant.

      John Hale and. John W. Nance, for appellee.
   Butler, J.

The appellee brought suit against the appellant insurance company on a policy insuring his house in Washington County against destruction by tornado and lightning for the sum of $1,500, alleging that the house covered by the policy, while the same was in full force and effect, was on the............day of April, 1928, totally destroyed by a cyclone, and the contents of the building, including’ the papers, insurance policy and checks and receipts for payment of assessments. The appellant defended, denying- that plaintiff ever insured his property with it, or that any policy was ever issued covering said property, or that plaintiff had ever paid any premiums or assessments to it. There was a trial, which resulted in a verdict and judgment for the appellee for the sum named in the policy, with interest.

Appellee testified that he procured a fire insurance policy, and at the time of the issuance of it requested tornado insurance. He was informed that the company .could not at that time write such a policy, but that arrangements were being made by which tornado insurance could be issued, and that, later on, he was informed by the local agent, Mr. Rogers, who had received his application for fire insurance, that tornado insurance could then be written, and that he (appellee) went to the office of the agent, situated in the back part of a bank, where he made application' for tornado insurance, paid the premium of $5.25, which included the local agent’s fee of $1.50, and received in due time a policy in the appellant company, the same being the one sued on. He testified that his fire insurance policy was issued in 1924, and the tornado policy in 1925, and that it was in full force and effect at the time of the loss; that he had kept his policy in a box at the local bank, but, after the bank failed, he had taken his policy and other papers to his home, where they were at the time of the destruction of his house and property.

M. O. Rich testified that he visited the appellee during the year 1928, and, while discussing- his own insurance, he examined the insurance policies of the appellee and found that he had two policies, one for fire insurance and the other for tornado insurance, and that the tornado insurance policy was written by the appellant company.

Mr. Rogers, the local agent, testified that he was the ag-ent for the appellant company in 19’24 and 1925; that Mr. Letch “was president of both concerns. Earl Weir was secretary of one, and Mr. Hartley was secretary of the other. The company was divided into two branches. They wrote two policies, one for fire and the other for tornado. The fire policy covered the county and the tornado policy covered five counties, as I understood it. I received my instructions from Mr. Letch, the president, and I wrote both fire and tornado.” Witness further testified that he wrote a fire policy for the appellee, and that at the time tornado insurance was wanted, but witness told him that the “company did not write it, but would come out with it before a great while, and Mr. Letch had told me they were going to org-anize and take in a bigger territory, and would come out later, and it was a good bit later. ’ ’. Witness stated that he had written a number of fire policies to persons who also wanted tornad'o insurance, and that, as soon as'he could write the tornado insurance, he notified the policyholders to that effect, and a great many came in and brought their fire policies, from which he made application for tornado insurance upon which policies were later issued; that he sent some of the applications to Mr. Weir and some to Mr. Hartley and some to Mr. Letch; that Mr. Letch’s office was at his house, and that he had no filing cabinets; “Just took care of them just like an ordinary home — just his tables and things like that. ’ ’ Witness could not remember whether he took appellee’s application for tornado insurance or not, but stated “the next day after the tornado, people got to ‘phoning just as soon as it was over, you know, asking me if so and so had any policy, and they ’phoned me about Mr. Osborn’s, and I couldn’t remember, and then somebody ’phoned me and says, ‘Dee says you wrote that in the back end of the bank,’ and I says, ‘Well, now, by the way, there is where I wrote them all, and undoubtedly I may have done it.’ ”

It appears from the testimony of the witnesses for the appellant that there were two insurance companies operating in Washington County, one known as the Washington 'County Mutual Fire Insurance Company and the other as the Northwest Arkansas Farmers’ Mutual Tornado Insurance Company; that Mr. Letch was the president of both companies, and some of the officers are the same in each company, but they were separate organizations, kept separate funds, and one company was not liable for any loss occurring to the other. H. E. Hartley was the secretary of the appellee company, and had been since its organization. He testified that he had charge of the books of appellee company, and that no policy was ever issued, except application had been made, in which the description of the property was given; that his records disclosed that there had been 1,081 policies issued at the time of appellee’s loss; that they were issued serially, without any break in the numbers from one to 1081, and none of these policies had been issued to the appellee,” and all were in exact copies of the application; that if a policy was lost it would appear on the books of the company; that he would hot issue a policy until he had first got the application. He further testified positively that he had not issued any policy to the appellee, but that he did not 'know whether the appellee was a policyholder or not until he consulted his records.

Mr. Weir testified that, as secretary of the company, he had issued to the appellee a fire insurance policy in April, 1924, and that the records of the appellee company, of which he was a director, did not show the issuance of any tornado policy to the appellee.

Mr. Seller testified that he was a director in both companies, and that he had examined the books of the appellee company, and Osborn’s name did not appear therein.

After the verdict, and within apt time, the appellant filed its motion for a new trial, alleging, among other things, that after the trial it had discovered new evidence, which was vital and material, and which conld not have been, with the exercise of diligence, discovered prior to the trial, and in support of this allegation filed the affidavit of John Mayes, in which the affiant in substance stated that he had read the motion for a new trial, had personal knowledge of the contents thereof, and “that said newly discovered evidence was not known to him, nor any member of the defendant company until after the trial of said cause; that said evidence could not have been discovered by the exercise of any degree óf diligence prior to the trial of said cause; that same is vital and material, and would have changed the verdict of the jury if same had been introduced at said trial; that said facts were well known to the plaintiff prior to and on the date of said trial, and that he purposely concealed said facts in order to obtain a fraudulent judgment in this cause, and that such was the effect thereof; that the contents of the affidavit and motion for a new trial are true and correct to the best of my knowledge, information and belief.” The affiant was the attorney of record for the defendant (appellant).

There was also filed the affidavit of F. S. Baedels, who stated that he was a local Bed Cross director at Fayetteville, Arkansas, and “that he has personal knowledge of the fact that no relief is given to any storm sufferer if any tornado insurance is carried; that a representative of this relief unit made a personal and careful investigation of the loss sustained by Dee Osborn of Lincoln, Arkansas, growing out of the storm disaster which visited that locality; that the said Dee Osborn reported to him, and represented that he had no tornado insurance on Ms property wMeh had been blown away by said storm, and made said statement for the purpose of securing a donation from said relief unit; that, by reason of said statement that he carried no tornado insurance on his home or contents, he obtained funds from said unit sufficient to rebuild Ms home, together with other relief. He further states that it is the settled policy of said 'disaster unit’ to pay no loss to any sufferer who carries insurance to cover the same, and that therefore, had Dee Osborn not made the representations that he did not carry any insurance, he -could not have obtained the funds with which to build and furmsh Ms home. He further states that the said Dee Osborn obtained judgment in the circuit court of Washington County for the sum of $1,500' by alleging and swearing that he did carry insurance in the Northwest Arkansas Farmers’ Mutual Tornado Insurance Company, and that the loss for which said judgment was recovered was the same loss and on the same property the Bed Cross aforesaid rebuilt and refurnished for him on his statement that he did not carry any tornado insurance upon the same.”

The court, after hearing the motion for a new trial, overruled the same, and on this appeal the appellant relies, as grounds for reversal, first, upon the fact that the verdict of the jury and the judgment of the court are not supported by any competent testimony; and second, that the court erred in not granting appellant a new trial on the ground of newly discovered evidence.

On the first ground the appellant relies on the rule announced in the case of St. Louis Southwestern Ry. Co. v. Ellenwood, 123 Ark. 428, 185 S. W. 768, where it is said: "Appellate courts take notice of the unquestioned laws of nature, of mathematics, of mechanics and of physics; and where, by the application of such laws to the facts in evidence, it is demonstrated beyond controversy that the verdict is based upon what is untrue and what cannot be true, this court will declare as a matter of law that the testimony is not legally sufficient to warrant the verdict.” The appellant argues that the application of this rule to the evidence introduced on behalf of the appellee will show that such testimony is impossible, and untrue. We do not think that any of the unquestioned laws of nature or of science are involved in the testimony in this case. 'There was a mere dispute as to whether or not the tornado policy had been issued. The appellee testified that such policy had been' issued, and was corroborated by the testimony of other witnesses, while, on the other hand, the witnesses for the appellant testified with equal emphasis that the policy had not been issued, and they were corroborated by the books of the appellant company. This was a disputed question of fact which was dependent upon the memory and conduct of human being’s, neither of which is infallible. The appellee might have been mistaken, or there might have been an error in the books of the appellant company. There were circumstances presented by the testimony to cast doubt upon the accuracy and credibility of appellee’s testimony, but this was a matter solely within the province of the jury. They were the sole judges of the credibility of the witnesses and the weight to be given to their testimony, and, though this court might differ with the jury and trial court as to the correctness of the conclusions reached on issues of fact, it can onlv determine whether there be any substantial evidence to sustain the verdict. It was for the jury, and not for us, to weigh the evidence and determine the credibility of witnesses and to reconcile all real or apparent conflicts, and if there is substantial evidence to support the verdict, when viewed in the light most favorable to the appellee, and given its highest probative value with all inferences reasonably deducible therefrom, the verdict must stand. St. Paul Fire & Marine Ins. Co. v. McElvaney, 175 Ark. 1170, 300 6. W. 448; Home Life & Accident Co. v. Scheuer, 162 Ark. 600, 258 S. W. 648; Standard Oil Co. of La. v. Hydrick, 174 Ark. 813, 296 S. W. 708. Applying this rule to the evidence, viewed in the light most favorable to the appellee, it is apparent that there was substantial evidence to sustain the verdict of the jury.

On the second ground for reversal, it may be said that courts are reluctant to grant a new trial on the ground of newly discovered evidence. A case where a showing made requires a new trial is unusual, and applications for a new trial for this cause are not favored, especially where the newly discovered evidence consists largely of conclusions and hearsay. 46 C. J. 216. This court early adopted the rule that the action of the trial judge in refusing to set aside a verdict on these grounds would not be disturbed unless there was a clear abuse of his discretion. In the case of Olmstead v. Hill, 2 Ark. 346, at page 352, the reason is given in the following language: “The reasons and principles upon which they rest are so obvious and conclusive that it seems almost impossible to overlook the essential requisites that the law requires to entitle a party to a new trial. He must have been guilty of no neglect or laches in preparing his case for trial. It must have been out of his power to procure the newly discovered evidence upon the former trial by due diligence and exertion to obtain it; and he must show to the court that the newly discovered evidence is material and important, by the affidavit of the witnesses, or by some other legal means; so that the court may judge of its materiality and sufficiency; and it must not be cumulative in its character and consequences. It is the duty of the parties to come prepared upon the principal points, and new trials would be endless if every additional circumstance bearing upon the facts in litigation were a cause for new trial.”

In the case of McFadden v. A. B. Richards Med. Co., 170 Ark. 1011, 282 S. W. 353, the court said: “The party asking a new trial for newly discovered evidence should not only state in his motion that he did not know of the existence of the testimony in time to produce it at the trial, but should also show facts from which it will appear that he could not have ascertained or obtained such evidence by reasonable diligence.”

It will be noted in the affidavits introduced that much of the statements contained therein are mere conclusions. In the affidavit of S. F. Raedels the statement relative to Dee Osborn reporting and representing to the representative of the Red 'Cross that he had no tornado insurance on his property is clearly hearsay, and in neither of the affidavits nor in the motion itself is there a compliance with the rule requiring a statement of facts from which it would appear that the evidence could not have been obtained by reasonable diligence; nor was there any showing or allegation that the testimony of the representative of the Red Cross, to whom the alleged statement of Dee Osborn regarding his having no tornado insurance on his property, could have been obtained. “It has been repeatedly held by this court that applications for a new trial upon the ground of newly discovered evidence are left largely within the discretion of the trial court. Unless such discretion has been manifestly abused, the appellate court will not disturb the action of the trial court.” McDonald v. Daniel, 103 Ark. 593, 148 S. W. 271. We cannot say that the trial court abused its discretion in its refusal to grant a new trial in this case.

The judgment is therefore affirmed.


text:
    Arkansas Fuel Oil Company v. State ex rel. Attorney General.
    Opinion delivered December 23, 1929.

      Trieber <$ Lasley, for appellant.

      Hal L. Norwood, Attorney General, and George Vaughan, for appellee.
   Butler, J.

This is the second appeal in this case. The State had sought to collect ¡back taxes on the oil and gas leases of the Arkansas Fuel Oil Company for the years 1924,1925 and 1926, to which the defense was made that the leases and rights thereunder were not subject to taxation separate from the fee in the lands for either of said years, and that all of said leases and rights were assessed and taxes for each of said years paid as part and parcel of and as entered into the value of the fee of the lands covered thereby, and that no property right or interest in and to the oil and gas in situ in the lands covered thereby passed to the lessee, and there was no such separation of the title to the mineral rights in the fee simple as to authorize a separate assessment, the only rights under the leases being incorporeal hereditaments taxable only in the domicile of the oil company. The further defense was made that the taxing authorities acquiesced in, and never opposed or corrected, the assessments made by the county and township assessing officers, and they refused to assess separately from the fee the leasehold interests, and the Attorney General has given an opinion to the effect that the leases were not taxable separately from the land, and, following the opinion of the Attorney General and the instructions of the taxing authorities, the county and township officers intentionally and systematically failed and neglected and refused to separately assess the leases from the fee in the land.

The State interposed a demurrer to this defense, which was overruled by the trial court, and judgment was entered in conformity with the prayer of the oil company.

On appeal to this court the decree otf the court below was reversed, and the cause remanded with directions to sustain the demurrer, and to take such further proceedings as necessary to a determination of the issues in the case not inconsistent with the opinion. State ex rel. Attorney General v. Arkansas Fuel Oil Co., 179 Ark. 848. On remand, the plaintiff amended its complaint to include the taxes of 1927 and 1928, so that, as amended, the complaint alleged that the taxes for the years 1924 to 1928, both inclusive, were due and unpaid, and prayed for the determination of the amount of the overdue taxes due the State and its several subdivisions on account of said leases for said years, and for .judgment therefor.

The appellant, in its answer to the amended complaint, admitted that the leases involved were not assessed or taxed in any form for the years in question, and amended its answer by reciting the history of the discovery and development of oil and g’as in this State, and that oil and gas leases from the beginning of the industry until the present time are of the same tenor and effect as the form of the leases involved in this suit, and that the State Tax Commission, during all the years named, was vested with general and complete jurisdiction which it exercised to supervise the assessment and collection of all taxes, and that during said years the Commission and township and county assessors were vested with power to assess all property subject to taxation; that, before the opening of the Union County oil field, there was no fixed policy on the part of the taxing authorities with respect to the taxation of oil and gas leases, and in fact no such leases were ever separately assessed for taxes and no taxes paid thereon; that the county assessor of Union 'County, in which these leases are situate, acting upon the advice of the prosecuting attorney, the Attorney General, the Arkansas Tax Commission and the decisions of this court in former cases, specifically named in the answer, during all the years involved, intentionally and continuously and uniformly failed and refused to assess for taxation, separate from the fee in the lands, all oil and gas leases, even in instances where the owners tendered the same for separate assessment, and, as a result, oil and gas leases in Arkansas have entirely escaped taxation for each of the years involved in this suit, irrespective of whether they were or are owned by corporations or others; that during these years from thirty to fifty per cent, of all oil and gas produced in Arkansas came from leases not corporately owned; that the only oil and gas leases on which 'back or overdue taxes can be collected are those which were corporately owned when the tax accrued or when suit is filed, and that those not owned by corporations cannot be proceeded against for the collection of back taxes; that all oil and gas leases, whether corporately or individually owned, have for the years mentioned alike escaped taxation and to the same extent, by reason of the intentional, systematic and continuous neglect and failure of the taxing authorities to assess the same currently, and that the enforcement of the back-tax statute in this case, under the facts set forth, will be an intentional and systematic violation of the principles of uniformity in taxation, and will result in intentional and unjust discrimination against the appellant’s leases and those owned by other corporations during said years in favor of leases of like form, tenor and effect not corporately owned, and will be an arbitrary classification of oil and gas leases for the purpose of taxation as between the owners thereof which are corporations and those who are not, in violation of the equal protection clause of the Fourteenth Amendment to the Constitution of the United States.

We can see no essential difference in the allegations of the amended answer and those of the answer ühder consideration by this court in State ex rel. Attorney General v. Arkansas Fuel Co., 179 Ark. 848. There the allegation was made, as here, that the township officers, acting upon the advice of the Attorney General and the instructions of the taxing authorities, systematically failed and refused to list, value and; return, separately from the fee in the lands for the purpose of taxation, any of said leases or rights thereunder. In that case the court said:

“It is * * * contended, however, that the statute is unconstitutional because it permits the collection of back taxes on corporately owned oil and gas leases, and intentionally exempts property owned by individuals. As to the statute authorizing the levy and collection of taxes from oil and gas leases there is no discrimination. * * * The statute authorizes the assessment and collection of taxes on leases, whether owned by individuals or corporations.
“But it is contended that the statute violates § 5 of article 16 of the Constitution of the State of Arkansas and the equal protection clause of the 14th Amendment to the Constitution of the United States. "We cannot agree with appellee in this contention. * * * And as to the statute authorizing suits for back taxes, we call attention to the following case, which settles the question against appellee’s contention: White River Lumber Co. v. State, 175 Ark. 956, 2 S. W. (2d) 25. In that case the court said: ‘In upholding the right of the State to sue for these back taxes, it was stated by Mr. Justice Holmes, speaking* for the court, that it was within the power of the State, so far as the Constitution of the United States is concerned, to tax its own corporations in respect to the stock held by them, in other domestic corporations, although unincorporated stockholders are exempt from such tax, and that a discrimination between corporations and individuals in regard to such a tax could not be pronounced arbitrary, although the precise ground of policy which led to the distinction did not appear.’ It was there further said: ‘The same is true with regard to confining the recovery of back taxes to those due from corporations. It is to be presumed, until the contrary appears, that there were reasons for more strenuous efforts to collect admitted dues from corporations than in other cases, and we cannot pronounce it an unlawful policy on the part of the State.’ ”

' As the amended complaint did not change the issues between the parties in so far as it related to the construction of the leases in question, the appellant is concluded by the holding of this court in State ex rel Attorney General v. Arkansas Fuel Oil Co., supra. The rule that the decision of an appellate court is controlling upon the court below after the case has been remanded and is equally controlling of the appellate court on the second appeal is so universal, and has been so many times declared by this court that the citation of authorities is deemed unnecessary.

It follows, therefore, that the decree of the court below must be affirmed. It is so ordered.