author: Mehaffy, J.

text:
    Patton v. Brown-Moore Lumber Company.
    Opinion delivered March 28, 1927.
    .1. Money received — implied promise. — An action on an implied promise is maintainable where one person has received money or its equivalent, which, in equity and good conscience, he ought not to retain, although there is no privity between the parties, and whether the money was received from the plaintiff or from •a third person.
    2. Logs and logging — right to recover for timber cut. — Where the owners of land sold to a lumber company timber owned by them and received payment for less than the amount of their own timber which was cut, held that they were under no obligation to pay for timber cut from the land of another by the lumber company.
    Appeal from Conway Chancery Court; Hugh Basham, Chancellor;
    affirmed.

      J. F. Koone, for appellant.

      Strait d¿ Strait, for appellee.
   Mehaffy, J.

The appellant, plaintiff below, filed a complaint in the Conway Chancery Court which, omitting the caption, is as follows:

“The said plaintiff is, and has been in all times hereinafter mentioned, the owner in fee of the north half of the northeast quarter and the northeast quarter of the northwest quarter of section 33, township 10 north, range 16 west, in Yan Burén County, Arkansas, together with all timber of whatsoever kind standing and growing thereon.

“During the year 1921 the G-roblebe Lumber Company, a nonresident corporation, and the said Brown-Moore Lumber Company, a .corporation organized and existing under and by virtue of the laws of the State of Arkansas, as agents of the said Q. A. Morgan, W. W. Barrett and E. R. Barrett, with their knowledge and- consent, and without the knowledge or consent of plaintiff, wrongfully cut and removed from' said lands 500,000 feet of pine timber of the value of $2,500; and said timber has been removed by said corporations beyond the reach of said plaintiff.

“The defendants, Q. A. Morgan, W. W. Barrett and E. R. Barrett, are nonresidents of the State of Arkansas, and have received and not accounted to plaintiff for the sum of $2,500 as the purchase price of said timber, said sum having been paid to said defendants jointly by said corporations as agents aforesaid.

“Said corporations are insolvent, not owning sufficient property subject to execution to satisfy the claim of the plaintiff; and the said Brown-Moore Lumber Company is a reorganization and continuation of the said Groblebe Lumber Company.

“Wherefore, plaintiff prays that the court declare that the said Q. A. Morgan, W. W. Barrett and E. R. Barrett are indebted jointly to plaintiff in the sum of $2,500; that the property held under attachment herein be ordered sold and the proceeds of said sale be declared a trust fund for the benefit of plaintiff and applied in satisfaction of his claim; and that he have all other and further equitable relief. ’ ’

Q. A. Morgan, W. W. Barrett and E. R. Barrett filed the following answer:

‘ ‘ Come the defendants, Q. A. Morgan, W. W. Barrett and E. R. Barrett, and, for their separate answer to the complaint of the plaintiff filed herein as to them, say:

“That they have no knowledge or information upon which to base a belief and therefore-cannot say whether or not the plaintiff is the owner in fee of all or any part of the lands so alleged and described in this complaint, and has no knowledge or information and therefore cannot say whether or not the Groblebe Lumber Company or the Brown-Moore Lumber Company cut, took or removed from said lands 500,000 feet of pine timber of the value of $2,'500, or any other amount of timber or any other value, or that said timber was removed beyond the reach of said plaintiff, but deny that, if either the Groblebe Lumber Company or the Brown-Moore Lumber Company cut or removed any of said timber, same was done as the agent of Q. A. Morgan, W. W- Barrett, E. R. Barrett, or with their knowledge or consent. And deny that they or either of them have any connection with it or received anything for said timber or had any knowledge that same had been cut, and deny that either the Groblebe Lumber Company or the Brown-Moore Lumber Company had any authority for them to cut or remove said timber.

“Wherefore, defendants having answered as to them, pray that plaintiffs ’ complaint be dismissed for the want of equity, and for all other proper relief.”

There was no dispute about S. K. Patton owning the tract of land from which he claimed the defendants had taken the timber. The plaintiff waived his right to any judgment against the Brown-Moore Lumber Company and the Groblebe Lumber Company, and the case as to them was dismissed.

The testimony showed that Morgan and W. W. and E. R. Barrett sold their timber to the Groblebe Lumber Company for $100,000, and that said lumber company was indebted to Morgan and the Barretts, in January, 1922, in the sum of $35,000; that Morgan, who was at one time stockholder in one of the companies which was now insolvent, heard, some time in 1920, of a discrepancy in the description of the land, and wrote to the lumber company. The Brown-Moore Company purchased the interest of the other corporations and, after all the timber had been cut by the two companies, Morgan was informed by Patton that he owned one tract of the land and Morgan wrote to the corporations advising them of this fact. He also wrote Barrett that Patton claimed the land.

About' one-half of all the timber taken from section 33 was taken from the land owned by Patton. Testimony also showed that, in the suit of Morgan and others against the Brown-Moore Lumber Company, the suit was for the entire amount of timber cut by both companies ; that Morgan and the Barretts sold the timber in Van Burén and Conway counties to the lumber company and furnished it a blue-print. The blue-print showed Patton’s a part of that to be cut. Morgan and the Barretts owned about 8,000 acres. Tbe reports of tbe cutting made to Morgan and the Barretts did not particularly describe the 120 acres belonging to Patton. Morgan and the Barretts owned section 33, except the 120 acres of Patton. Morgan and the Barretts were informed that Patton’s timber had been cut before their suit against the Brown-Moore Lumber Company, but not until after the timber had been cut and removed.

An accounting was made to Morgan and the Barretts of the Patton timber just as other timber was accounted for. It was thought to be the property of Morgan and’ the Barretts until after it was cut and removed. The contract provided for the lumber company to pay one-fourth of the amount of timber on any section when they began cutting, at the rate of $5 a thousand for the estimated amount. Parts of section 33 which did not belong to Morgan and the Barretts were included in the cruises furnished by Morgan and the Barretts. The contract of the lumber companies with Morgan and the Barretts referred to the deed for a description of the lancls on which the timber was located. Morgan, W. W. and E. It. Barrett were tenants in common and owned a large tract of land which they contracted to sell to the lumber company. The company made payments under the amounts due under the contract in the total sum of about $40,000. The lumber company at first made reports when it started to cut, but later discontinued to make reports, but the reports only showed that it would start cutting upon a certain section, without showing or indicating what part of the section. They had land in sections where they did not own the whole section, and it was impossible to tell from the reports what part of the section they were cutting on. The lumber companies made payments to Morgan and the Barretts. ■ . ■ '

It appeared that, after the litigation began, the. payments made were according to estimate on 520 arres when Morgan and the Barretts only owned 400 acres in that section. They simply accepted the payments that were made by the lumber companies. The lumber companies never had authority from Morgan or the Barretts to cut timber on any lands not included in the description of the deeds, which were recorded and referred to in the contract. The sale of the timber was set at the price of $100,000 and $5 a thousand feet mentioned to be paid when they began cutting, but, if they had paid $5 for all of it, it would have amounted to $180,000 instead of $100,000, which was the contract price for the timber.

The appellees said: “The first payment was made to us for the privilege of cutting on section 33, and this was. before any timber was cut. We did not know until after this litigation came up that any timber had been cut on the 120 acres belonging to Patton.”

The appellees learned this after the litigation began. If the payments came from timber cut on section 33, it would only be 50 per cent, of the estimated timber on 520 acres, and Morgan and the Barretts owned 400 acres. The lumber companies are still indebted to Morgan and the Barretts in the sum of more than $30,000, mostly for timber cut from sections that had not been reported to them. G-roblebe wrote to one of the appellees that the cruise furnished and the abstract were not the same, and requested a careful check. Barrett wrote the lumber company, after checking* carefully the land, directing its attention to the fact that Morgan and the Barretts only owned 400 acres in section 33. They again wrote to the lumber company that they did not convey it all the lands covered by the blue-print and cruise and offered to accept pajunent on section 33 as á basis of an average of the timber on the amount of land owned by appellees in said section. The only description ever furnished the lumber companies was referred to in the recorded deeds and the abstract furnished said company. They did not sell or attempt to' sell the lumber companies the land owned by appellant, and no authority was given the companies -to take timber from the lands owned by Patton. The appel-lees' never received the full number of payments for the right to cut the timber on section 33.

The appellant seeks to recover in this case on an implied promise to pay. ' There is no contention that there was an express promise, and, on the other hand, there is no contention or dispute about appellant’s owning the land. So that really the only question in the case is whether the appellees are liable under an implied promise. Appellant cites many authorities to the effect that, when one has in his possession money belonging to another, an action may be maintained against the person who has the money, and that an express promise is unnecessary. The action is not dependent upon an express promise, and, as many authorities say, not even upon one implied in fact, but it is maintainable in all cases where one person has received money or its equivalent under such circumstances that, in equity and good conscience, he ought not to retain it, and, ex aequo et bono, it belongs to another. And it is said that this is so, irrespective of whether the money was received from the plaintiff or from a third person. 2 R. C. L. 778.

The authorities are practically unanimous in holding that, if one has money 'belonging to another, which, in equity and good conscience, he ought not to retain, it may be recovered, although there was no privity and no express contract or agreement. Under such circumstances the law implies a promise to pay, and if the appel-lees in this case had received money from the corporations that belonged to the appellant, which, in good conscience, they ought not to retain, plaintiff would be entitled to recover. But we do not think that the proof in this case justifies a finding or conclusion that appellees have any money belonging to appellant under such circumstances as the law requires in order to make them liable.

The appellees entered into a contract with the corporations on May 28,1919, by which they sold the Groblebe Lumber Company certain timber. It is true that a blueprint was furnished which showed appellant’s land as well as appellees’. But there was also an abstract and deed furnished, and this record shows .that the abstract was ail abstract of appellees’ lands, and there is no suggestion even that it included appellant’s land. Moreover, the contract itself provided “timber upon said lands owned by said first parties situated in Conway and Van Burén counties, Arkansas, and completely described in a. certain deed executed by Lloyd England of Little Rock, Arkansas, in favor of Q. A. Morgan and now recorded in the said counties of Conway and Van Burén, Arkansas, and conveyed approximately 8,300 acres of land.”

It is perfectly clear that the appellees did not intend to sell any timber except what they owned and what was described in the deed to which the contract referred. ■The undisputed proof shows that appellees did not know that any timber had been cut on appellant’s land until after the litigation began. The undisputed proof also shows that the corporations are still indebted to the appellees for timber in a sum very much larger than appellants claim, and there is no proof in the record showing that appellees received any money for appellant’s timber. In fact, they did-not receive pay for all of their own timber. Therefore it cannot be said that appellees had in their possession money which, ex aequo et bono, belonged and ought to have been returned to appellant, as was shown in the case of Porter v. Roseman, 165 Ind. 255, 74 N. E. 1105, 112 Am. St. 222, 6 Ann. Cas. 718.

Our own court has held that, in order to maintain a suit of this kind, the plaintiff must prove that the 'defendant actually received the money, and this, we think, he failed to do, and a promise to pay is never implied where it would be unjust to the party to whom it would be imputed, and such promise will be implied only where, in equity and good conscience, the duty to make such promise exists. That is, the law implies a promise only when, under the circumstances and proof, it would be the duty of the defendant to make such a promise. We do not think the proof in this case justifies the conclusion that there was any implied promise to pay. The decree of the chancellor is. affirmed.


source: Caselaw Access Project

author: McHaney, J.

license: Public Domain

text:
    Ashcraft v. Jerome Hardwood Lumber Company.
    Opinion delivered March 28, 1927.
    1. Death — rao may sue. — Under Crawford & M-oses’ Dig., § 1075, the administrator of a deceased employee may recover for his death against his employer for the benefit of everybody concerned, including the next of kin.
    2. Death — wrongful employment of minor — right of parent.— A father cannot maintain an action against the employer of his deceased son for damages on account of loss of the son’s earnings, where he consented to the son’s wrongful employment in violation of the statute.
    S. Master and servant- — negligence—jury question. — In an action against a lumber company for the death of a minor employed in unloading logs, evidence held sufficient to take the case to the jury.
    4. Master and servant — safe place to work — jury question.— Whether a minor employed in unloading logs had a safe place in which to work held for the jury, where stakes which held the logs had been removed and the cars were put in motion, causing a log to roll off on such minor.
    5. Death — conscious suffering. — In an action for the wrongful killing of an employee, evidence that he was “gasping and struggling and groaning” thirty minutes after the accident, was sufficient to take to the jury the question whether there was conscious suffering.
    6. Trial — -direction of verdict. — It is never proper to direct a verdict against the plaintiff except in cases where, conceding the credibility of the witnesses and giving full effect to every legitimate inference that may be deduced from their testimony, it is plain that he has not made out a ease sufficient in law to entitle him to a verdict and judgment thereon.
    Appeal from Drew Circuit Court; Turner Butter. Judge;
    reversed.

      D. E. Waddell and D. D. Glover, for appellant.

      Henry & Harris and Williamson & Williamson, for appellee.
   McHaney, J.

Appellant, J. J. Ashcraft, brought this suit in his own right and as administrator • of the estate of Guy Ashcraft, deceased, against the appellee to recover damages on account of the death of Guy Ashcraft, a minor, under the age of sixteen years, who was the son of appellant, and for whose estate appellant had been appointed administrator.

Appellant’s intestate was killed on the 19th day of June, 1925, while in the employ of the appellee as a tong hooker in the unloading of logs from flatcars brought into appellee’s plant over the Missouri Pacific railroad and set on the unloading track of appellee. An unloading machine consists of a steam-engine, two drums, several gears and a crane that extends out thirty feet from the machine with a cable properly attached, is operated by steam, and on this cable there are two hooks which the tong hookers attach to each end of the log and then, by an operation of the machinery, the log is lifted from the car and deposited on the ground, or on a little car that takes the log up into the mill, and appellant’s intestate was one of the boys used by appellee in attaching the hooks to the logs and disengaging them therefrom when deposited on the little car, and was so engaged at the time of his death. It was his duty to set the brakes on the car, when the car was moved, to stop it, and he was required to remain on the car to perform his duties, except when he got off to unhook the tong hooks from the log when it was loaded on the little car to he taken up into the mill.

Appellant alleged in his complaint that, when the logs were loaded on the train, stakes or standards were placed on either side of the car for the purpose of holding the logs, and that they were piled up on the cars between the stakes and then were wired over the top of the logs to hold them in place. And it is further alleged “that, when said train of logs was brought into its mill, the defendant company, through its agents, servants and employees, negligently removed the standards or stakes that fastened them together, and, after so doing, negligently moved said car from its position that it was stopped in by the use of the steam-loader, and the deceased, Guy Ashcraft, was negligently ordered by his foreman to hold the ear by setting the brakes when it reached a certain place. Plaintiff alleges that the defendant company was negligently operating said flatcars with defective brakes, which it knew or, by the exercise of ordinary care, could have known, and which was unknown to the deceased. Plaintiff alleges that, when the deceased was ordered to apply the brakes and stop said car, the brakes on said car failed to hold, and the deceased was again negligently ordered to scotch it and'stop it, and deceased, in obedience to said order, attempted to scotch the wheels of said car to stop it, and, when the wheels of said car struck the scotch applied by the deceased, it caused said logs to roll off of said car and one of which fell on the deceased,” from which he died.

Damages were prayed in the sum of $10,000 for the benefit of plaintiff, and $15,000 for deceased’s pain and suffering. Later, appellant amended his complaint, charging a violation of the child-labor law, claiming that the deceased was under the age of sixteen years and was allowed to work around dangerous machinery in violation of the law. Appellee demurred to the complaint and amendment to the complaint, which was overruled, and answered, denying all of the material allegations of the complaint. At the conclusion of the testimony, the court, at the request of appellee, directed the jury to return a verdict for appellee on the whole case, but directed a verdict for $1 as nominal damages. Appellant objected, excepted, and prayed an appeal to this court, which was granted, and appellee prayed and was granted' a cross-appeal from the direction of the court to the jury that plaintiff was entitled to recover nominal damages.

The first question arising on this appeal is whether appellant may maintain an action in his own right for •loss of services of his minor son when he, as personal representative of the deceased, or administrator, is suing for the benefit of the estate. By § 1075 of C. & M. Digest it is provided: “Every such action shall be brought by and in the name of the personal representatives of such deceased person, and, if there be no personal representatives, then the same may be brought by the heirs at law of such deceased person.”

In this case the suit is brought by the father in his own right and as the administrator of the estate. The administrator can recover for the benefit of everybody concerned, and, if the prayer in his complaint is not broad enough to recover for the benefit of the next of kin, it may be amended to cover same.

We have reached the conclusion in this case that the father cannot maintain an action in his own behalf for his damages on account of the loss of earnings of his son for the reason that he himself consented to the 'employment of his minor son in the work in which he was engaged, and thereby consented to the wrongful employment of such child under the age of sixteen years, if it be said to be in violation of the statute against the employment of minors, and he will not be allowed to profit by his own negligence or wrongful act in such case. Nashville Lumber Co. v. Buzbee, 100 Ark. 87, 139 S. W. 301, 38 L. R. A. N. S. 754; Kansas City & Texas Coal Co. v. Gabsby, 70 Ark. 434, 66 S. W. 915.

We have also reached the conclusion that the court erred in taking this case from the jury and in directing a verdict against the appellant. Appellant’s witness, A. E. Nave, testified that, at the time of the injury to appellant’s intestate, they were unloading five cars; that they would run five cars in on the track, and, when they would unload a half car, they would move the string of cars up a distance; that they would unload them by having the boys hook the tong's in the end of the log, pick it up by the machinery and lift it around to where they desired to place it.

“Q. When you had unloaded one-half of this car, Avhat did you do at the time to release the cars and put them in motion? A. When I unloaded this one and a half car I went to pull doAvn, pull the cars doAvn — saves a little Avork to pull them down, and then the ears started, I just picked this log up and came on around and laid it doAvn and I called, ‘Hold the ‘brake’ and they never did. Q. You picked up a big log on that car you were moving? A. It was moving when I picked it up. Q. Picking up this big log and getting it out started the cars moving? A. Yes sir, I suppose so.”

Again the witness said .that the stakes were out of the car when he went down .there, and he discovered that the stakes were out of the car; that he had instructed them not to take them out.

“Q. The stakes were not in there ? A. They took them out after I picked that up — I couldn’t pick up the log next to the stakes. Q. You mean to say they took the stakes off while the car was running? A. Ño sir, they had taken them out. They had them all unloaded except about two and a half cars. I had taken two off this car and they had taken the stakes out.” -

It will be seen therefore that the witness 'knew it was dangerous to unload the cars with the stakes out. He was the person in charge of the unloading, operating the unloading machine under whose immediate direction the tong hooker boys were- working; and the jury might have concluded, had they had an opportunity to pass upon the question, that it was negligence to proceed with the unloading of such cars with the stakes pulled. The witness had instructed the boys not to pull the stakes from the sides of the cars, and, while he does not testify who did pull them, he testifies that he proceeded with the unloading of the cars, knowing the stakes to be out, and knowing that the logs might roll and cause injury to appellant’s intestate.

The jury might have found from the evidence that, when the witness picked up the last log before the accident, appellant’s intestate got off the car to go down to the little ear where the log was being placed for the purpose of unhooking the tongs, and that, while he was getting down, the log rolled off the car and fell on top of him because there were no stakes on the car to hold it. The jury might also have found that it was negligence on the part of appellee for its employee to move the string of cars by starting them in motion with the unloading machine, and then calling on the hoys to stop the cars. Whether or not appellant’s intestate had a safe place in which to work with the stakes removed from the cars, and the cars put in motion by tlie steam loading machine, when the logs were liable to roll and cause injury to the boys who were working thereon, was certainly a question for the jury.

But it is insisted that there can be no recovery for the benefit of the estate because there was no evidence of conscious pain and suffering. We differ with counsel in this contention. According to the evidence, no one saw the accident and does not know exactly how it happened. Appellant testified that his first information of the accident was given to him by Mr. Longley, who told him that Huy had been hurt. He said:

“I stopped my work and went to where he was, and when I got there he was gasping and struggling and groaning. Q. Did they have the log off of him when you got there? A. They had taken the log off and had laid him back and he was lying on his back, gasping and struggling. From the time it happened until I got there it must have been twenty or twenty-five minutes, from the time they could get the doctor and for us to get there. Q. How long did he live after you got there ? A. Five minutes; he lived from the time he was hurt probably thirty minutes. Q. He had been taken out from under the log and laid out to the side and was gasping and groaning when you got there, at the time you got there? A. Yes sir.”

John Ashcraft, Jr., brother of deceased, said that he arrived at the scen'e of the accident shortly after the doctor got there, and that his brother was living at the time, and he saw him gasp for breath three or four times after he got there, and some blood came out of his mouth, but none out of his ears.

While the testimony is very meager as to whether the deceased suffered any conscious pain and suffering, yet, when it is viewed in the light most.favorable to appellant and giving it its strongest probative force in his favor, we cannot say as a matter of law that the deceased' immediately became wholly unconscious and remained so until death. It was a question for the jury, and should have been submitted under appropriate instructions.

In the ease of St. Louis-San Francisco Rd. Co. v. Pearson, 170 Ark. 841, 281 S. W. 910, this court said: “The court is never justified in directing* a verdict except in cases where, conceding the credibility of the witnesses, and giving full effect to every legitimate inference that may be deduced from their testimony, it is plain that the party has not made out a case sufficient in law to entitle him to a verdict and judgment thereon.”

In the Pearson case, the deceased lived only about ten minutes after the accident. The testimony showed that there were some signs of life, that he was gasping for breath but could not speak, and on this point the court said: “It is true that the length of time was short, but, when the testimony is considered in the light most favorable to plaintiff, it cannot be said that it was not legally sufficient upon which to predicate an instruction on conscious pain and suffering.” Stamps v. St. Louis I. M. & Sou. Ry. Co., 84 Ark. 241, 104 S. W. 1114.

For the error indicated the judgment will be reversed, and the cause remanded for a new trial.


author: McCulloch, C. J.

text:
    Silbernagel v. Taliaferro.
    Opinion delivered January 17, 1927.
    Landlord and tenant — liability op mortgagee, for. rent. — Where a crop subject to a landlord’s lien was turned over to persons having a mortgage thereon, on their promise to pay the rent, they could not relieve themselves • oí liability by turning the property over to a receiver in a foreclosure proceeding; their act constituting a wrongful conversion.
    Appeal from Jefferson Chancery Court; PL. R. Lucas, Chancellor;
    affirmed.

      Reinberger £ Reinberger, for appellant.

      Grawford £ IPooher, for appellee.'
   McCulloch, C. J.

There are two appeals in separate cases, now under consideration, which have been consolidated in this court, the facts being conceded to be substantially identical so far as they affect the decision of the court.

Appellants are copartners, conducting a mercantile business in the city of Pine Bluff, and appellees are the respective owners of farm lands in Jefferson County. The lands were rented to certain tenants of the year 1923, and the tenants mortgaged their crops to appellants for supplies. The tenants, with one exception, consisted of a copartnership composed of three persons, who, during the crop-gathering season, became insolvent and were adjudged bankrupt. It does not appear in the abstract of the record when this adjudication of bankruptcy occurred, but it seems to have been before the institution of this action, which was commenced by appellees against appellants on November 20, 1923, to recover the amount of the rent due to them from their respective tenants.

It was alleged in each of the complaints that the crops of cotton and corn raised by the tenants on the lands rented from appellees had been delivered to appellants upon express promises of appellants to pay the rent due the appellees, and that the market value of the crop so delivered was more than sufficient to pay the rent, but that appellants, after having received the cotton, appropri ated same to their own use and refused to pay the rent.

Appellants filed an answer containing denials of all the allegations of the complaint. On the trial of the cause, appellees introduced testimony establishing the fact that the cotton was gathered by the tenants, and appellants demanded delivery of the crop to them, and the crop was delivered to appellants upon the express promise that they would pay the rent to appellees. The . decided preponderance of the evidence was to this effect, and the court found that appellants received the corn and cotton into their possession and promised to pay the rent, but, after appropriating the crop to their own use. they refused to pay the rent.

Appellants defended on the sole ground that they had not converted the crops, but that same had been delivered to a receiver appointed by the chancery court of Lincoln County; that the receiver had sold the crop by order of the chancery court; that the only remedy of appellees was to intervene in that suit for the enforcement of their respective liens. In other words, the contention is that appellants did not convert the crop, and therefore are not liable for the rent. The proof in the case does not sustain the defense of appellants. It appears from the testimony in the case that, on December 13, 1923, appellants instituted an action in the chancery court of Lincoln County against the tenants, their mort: gagors, foreclosing their mortgages, and that a receiver was appointed. Appellants offered testimony to the effect that the crop, at least most of it, was delivered, not to them, but to the receiver. They admitted, however, that a portion of the crop was delivered to them and that they in turn delivered it to the receiver, when all of the crop was sold by the receiver under an order of the court and the proceeds were turned over to them.

If, as contended by appellants, they never received the crop into their possession, but, on the contrary, the crop was turned over to the court’s receiver, who sold the same, the liens of the landlords could not be enforced against them, and the only remedy of the landlords would be to intervene in the case in which the receiver was appointed. The proof in the case, as we have already said, does not support this contention, because, from a preponderance of the testimony, the crops were turned over to appellants on the promise that they would pay the rent, and, if they received the crop, which was subject to a statutory lien, with notice of the existence of the lien, they could not relieve themselves of liability by turning the property over to the receiver. Rose City Merc. Co v. Miller, 171 Ark. 872, 286 S. W. 1010. This constituted a wrongful conversion of the property, which rendered appellants liable for the rent. The decree of the court in each case was correct, and the same is affirmed.


author: Kirby, J.

text:
    Corning Motor Company v. White.
    Opinion delivered February 14, 1927.
    Sales — retention of title of automobile — repairer’s lien. — The lien of the seller of an automobile for the balance of the unpaid purchase price under a contract retaining title held superior to that of an automobile repairer, under Crawford & Moses’ Dig., § 6874.
    Appeal from Randolph Circuit Court; John C. Ashley, Judge;
    reversed.

      Oliver '& Oliver, for appellant.
   Kirby, J.

Appellant motor company made a conditional sale of a Ford automobile to one Ben Godfrey, retaining the title until paid for, and the purchaser took the car to the shop land garage of appellee for repairs, and, upon his-failure to pay the charges therefor, appellee retained possession of the car, claiming a lien thereon for repairs. The purchaser failed to pay for the car, and appellant did not know of its whereabouts until the 20th day of May, 1925, when áppellee notified him he had it in his possession, and claimed a lien for repairs and for storage thereon.

After demand made, appellant brought suit in replevin, on the 22d day of. May, for the car. Appellee denied that plaintiff was entitled to the possession of the car, that he wrongfully detained same, and that plaintiff was damaged by such wrongful detention, and, by way of cross-complaint, set up a claim for $45.45 for labor and repairs on said automobile and $25 for storage. Appel-lee retained possession of the car, giving bond for performance of the judgment of the court.

A trial in the justice court resulted in defendant’s favor, and, on appeal, the judgment was rendered in appellant’s favor for the car or its value, specifying the amount thereof, and against appellant on the cross-complaint for $25 for storage, and from this judgment the appeal is prosecuted.

Appellant contends that there is no testimony to support the verdict on the cross-compláint, and that the court erred in submitting the question of the recovery to the jury. This contention is correct. There is no testimony whatever showing that appellant knew that its car was in the possession of appellee, or in his storage room, until he was notified of that fact by appellee the day before he brought replevin, after appellee had refused to surrender the possession of the car on demand. Appel-lee also stated that he would not have released the possession of the car upon demand any time before, except upon payment of the amount due for repairs for which he claimed a lien.

In Lowe Auto Co. v. Winkler, 127 Ark. 433, 191 S, W. 927, in an action for replevin to recover possession of an automobile held by a garage company for payment of repair bill, the court held the owner entitled to the possession of the car, regardless of any lien defendant-might have on it'for repairs, saying: “In Shelton v. Little Rock Auto Co., 103 Ark. 142, 146 S. W. 129 we held that the act of 1899, supra, was repealed by act 147, p. 259, of April 15, 1903, and that the remedy prescribed in the latter statute must be pursued. The decision in the case just cited related only to the remedy, but it necessarily follows that, if the remedy prescribed by that statute was swept away by the subsequent enactment of the Legislature, the lien itself, which arose under the common law, was also superseded by the statutory lien. It was said in the opinion in the case just cited that the act of April 15,1.903, covered the whole subject, and is inconsistent with the provisions of the former statute, and it necessarily follows from that conclusion that the lien created by the common-law was superseded by the one created by the statute.”

In Webber Implement & Auto Co. v. Pearson, 132 Ark. 101, 200 S. W. 273, it was held as stated in the first paragraph of the syllabus: “ A repair man who performs labor and does repair upon an automobile has a lien for hi-s labor which takes precedence over the rights of a conditional vendor.” The court cited Gardner v. First National Bank of DeQueen, 1.22 Ark. 464, 184 S. W. 51, where it was held a blacksmith or wheelwright, who had made repairs on the wagons and shod the horses mortgaged, but allowed by the mortgagee to remain in the possession of the mortgagor and be used by him, had a lien superior to the lien of the mortgage.-

Since this decision was rendered, act approved February 27, 1919, was passed, and § 9 thereof has become § 6874, C. & M. Digest of the Statutes. This act provides for liens of blacksmiths, wheelwrights and automobile repairers, the enforcement of such liens covers the whole subject, and, in so far as it is inconsistent with the provisions of former laws and decisions construing same, repeals them. It still recognizes the superiority of the lien over mortgages, where the property is permitted to remain in possession of and be used by the mortgagor, but expressly provides that the lien upon automobiles for repairs shall be subject to the lien or claim of the vendor of automobiles, trucks, tractors and all other motor-propelled conveyances retaining title thereto for any claim or balance of purchase money due thereon, necessarily repealing statutes and constructions thereof in conflict therewith.

Appellee had no right therefore to retain the possession of the car against the demand of the vendor for possession under the unconditional sale, the purchase money therefor not having been fully paid, and the undisputed testimony shows that the appellant demanded possession of the automobile immediately after he ascertained that appellee had it. There was no testimony warranting the submission of the question of liability for payment for repairs and storage to the jury, and none supporting the verdict rendered therefor on the cross-complaint.

The judgment is reversed accordingly, and the cause dismissed as to the cross-complaint.


author: Mehaeey, J. Mehaeey, J.,

text:
    American Southern Trust Company v. McKee.
    Opinion delivered February 14, 1927.
    1. Banks and banking — good faith in loan AGREEMENT. — The fact that a 'bank’s condition'was such that collections could not he made without great difficulty and disastrous results to borrowers does not tend to show that the bank acted in bad faith in agreeing to employ a certain agent to look after its collateral for creditor banks which were to make further advances.
    2. Banks and banking — loan agreement. — Creditor banks had a right to enter into a contract with a debtor bank whereby they agreed to lend it additional money if it would employ a certain agent to look after the making of loans and collecting collateral.
    3. Banks and banking — loan agreement. — A bank heavily indebted to two other banks was authorized to agree to carry its cash balance .with such other banks, in consideration of their making additional loans to it.
    4. Banks and banking — loan agreement. — A contract whereby creditor banks made further advances to a debtor bank, sent their agent to protect their interests, and required the debtor bank to keep its cash deposits with them, cannot be construed as authority to take over the debtor bank, or to control and manage same.
    5. Contracts — merger of oral into written agreement. — Prior oral agreements forming a part of the negotiations for a contract became merged in a subsequent written contract, and are incompetent in evidence for the purpose of enlarging the scope of such written agreement.
    6. Evidence — parol evidence rule. — A written contract, free from doubt and ambiguity, cannot be altered or contradicted by parol evidence, except for fraud or mistake.
    7. Contracts — modification.—Parties to a written contract may, subsequent to its execution, modify it and substitute a valid oral agreement therefor.
    8. Principal and agent — proof of agency. — Neither agency nor the extent of an agent’s authority can be proved by his declarations or actions.
    9. Principal and agent — authority of agent. — Acts and declarations of an agent which were beyond his authority as contained in a written contract, are not binding on his principal.
    10. Principal and agent — apparent authority of agent. — A principal is liable for the acts of an agent, though not authorized, if they were within the apparent scope of his authority, which the principal knowingly permits the agent to exercise or holds him out as possessing.

      11. PRINCIPAL AND AGENT — DUTY TO INQUIRE AS TO AUTHORITY. — One dealing with an agent without inquiring of the principal as to his authority does so at his peril, unless he knows of acts and declarations of the principal determining the agent’s authority.
    12. Principal and agent — estoppel op principal by agent’s acts. —A' principal will not be estopped to deny his agent’s authority unless he knows of the acts and declarations of the agent in excess of his express authority and not within his apparent authority.
    13. Principal and agent — general and special agents. — The powers of general and special agents are governed by the same principle, to-wit, they can do anything within the scope of their agency so as to bind their principal, though there may be secret instructions limiting their powers; but, whether the authority be general or limited, they cannot charge their principals if they exceed it.
    14. Principal and agent — authority op general agent. — -A general agent, unless he acts under special and limited authority, impliedly has power to do whatever is usual and proper to effect such purpose as is the subject of his employment.
    15. Principal and agent — implied power. — The implied power of an agent, however general, must be limited to such acts as are proper for an agent to do, and cannot extend to acts clearly adverse to the principal’s interests or for the benefit of the agent personally, nor to acts not usually done by agents in that sort of transaction.
    16. Principal and agent — authority of special agent. — The authority of a special agent must be strictly pursued, and those dealing with him must, at their peril, determine the extent of his authority,
    17. Principal and agent — scope of authority. — Where a principal permits a special agent so to act as reasonably to induce others to credit him with broader powers than he possesses, he will be estopped to deny the existence of as broad an authority as he permitted the special agent to exercise.
    Appeal from. Arkansas Chancery Court, Southern District; H. R. Lucas, Chancellor;
    reversed in part.

      Bryan, Williams & Cave, Coleman & Gcmtt and Coleman <& RÁddñch and G. W. Botts, for appellant.

      Floyd Wingo, Buzbee, Pugh $ Harrison, Geo. C. Lewis, John L. Ingra/m, John W. Moncrief, Cohn, Clayton & Cohn, Peyton D. Moncrief and Rogers, Barber & Henry, for appellee.
   Mehaeey, J.

This suit was begun in the Arkansas Chancery Court against the American Southern Trust Company of Little Eoclc, and others, seeking to recover against them for amounts due depositors, and also other creditors of the Bank of Gillette at the time said hank was closed. ' - •

The plaintiffs allege that the Bank of Gillette, on June 24, 1921, and for some years prior thereto, was engaged in the hanking business in Gillette, State of Arkansas. H. S. Jones was president of the said bank; William Moll, J. W. A. Norden, A. H, Bichter, J. I. Devore and Henry ■S. Jones constituted the board of directors, and J. W. A. Norden was -secretary, and Boy Koen, cashier. It is alleged that the Bank of Gillette, on June 4, 1921, and for some time prior thereto, was largely indebted to the American Bank of Commence & 'Trust 'Company and the First National Bank of St. Louis, Mo., and that the Bank of Gillette was insolvent, and that .said insolvency was known by the American Southern Trust Company -and the St. Louis 'bank, and that said Blank of Gillette was unable to pay indebtedness to said-banks, and, in order to prevent the loss of said indebtedness, the American bank and St. Louis bank, in order to attain their preference over the other creditors of the Bank-of Gillette, entered into a conspiracy with the president and boiard of directors of the Bank of Gillette, and entered into the following illegal agreement with the president and. board of directors of the Bank of Gillette:

“Minutes of special meeting of the board of directors of Bank of Gillette.

“ Gillette, Ark., June 4, 1921.

“At a meeting of the board of directors, being a special meeting called by the president, the following resolution was read and adopted:

“Wh'ereas, it becomes necessary that a certain agreement between the American Bank of Commerce of Little Bock, Ark., the First National Bank of St. Louis, Mo., the Bank of Gillette, Gillette, Ark., and Geo. F. Walz (a copy of ■which'agreement is attached hereto and made.a part of these minutes) he entered into.

“Therefore "be it resolved: That the president and secretary of this bank are hereby directed and authorized to enter into 'and execute the above mentioned agreement for and on behalf of this bank.

“Be it further resolved: That we, the undersigned officers and members of the board of directors, waive all formal and legal notice of this special meeting.

“Henry S. Jones, President.

“Wm. Moll, Director.

“ J. W. A. Norden, Director.

“A. H. Richter, Director.

“A. J. Devore, Director.

“Attest: J. W. A. Norden, Sec..

“Approved this the 29th day of June, 1921. Henry S. Jones, president.

“Attest: J. W. A. Norden, Sec.

“Agreement between the First National Bank of St. Louis, Mo., and the American Bank of Commerce and Trust Company, Little Rock, Ark., concerning the handling of the Bank of Gillette, as arranged between Mr. Coffman of the First National Bank and W. A. Hicks of the American Bank of Commerce & Trust Co.

“It is understood between the two banks mentioned above that the Bank of Gillette is to employ Mr. Geo. F. Walz at a salary of $350 per month, Mr. Walz to serve as trustee for the two banks and represent them as the two banks may have agreed with the Bank of Gillette, expenses of Mr. Walz’s employment to be paid by Bank of Gillette.

“It is agreed that the First National Bank of St. Louis, Mo., and the American Bank of Commerce & Trust Company, Little Rock, Ark., are to lend to the Bank of Gillette, during the year 1921, if it becomes necessary, an additional aggregate sum of $75,000, two-thirds of which is loaned by the American Bank of Commerce & Trust Company and one-third by the First National Bank.

“The Bank of Gillette is to carry its cash balances on deposit with the First National Bank of St. Louis and with the American Bank of Commerce & Trust Company of Little Bock, and with no other banks; balances to be carried on the basis of one-third with the St. Louis bank and two-thirds with the Little Bock bank. Mr. Walz, in representing the two banks, is to obtain from the Bank of Gillette all of .the collateral which they own in the way of notes, etc., to secure money already advanced and money to be advanced by the two banks in question.

“It is also understood by the present officers of the Bank of Gillette and Mr. Walz is to have absolute authority in the g’ranting of loans and accepting of collateral. No loans are to be made by the Bank of Gillette without first obtaining the approval of Mr. Walz.

“Notes for the money loaned to the Bank of Gillette are to be made payable to the banks advancing the money, and are to carry a maturity of ‘on demand,’ and, if not demanded, then Oct. 1, 1921.

“All collateral obtained on loans made to the Bank of Gillette is to be held in trust for the two banks advancing money as referred to above, and, in collecting the collateral, all money collected is to be applied on the indebtedness owing the two banks in proportion to the money advanced by the two banks, that is, one-third of the collections to. go to the First National Bank and two-thirds to the American Bank of Commerce & Trust Company, as the collections are made. For matter of protection, however, the collateral is to be held in separate envelopes, one containing collateral securing the loan of the First National Bank of St. Louis, Mo., and other securing the loan of the American Bank of Commerce & Trust Company of Little Bock, Ark., it being understood that the margin of collateral over the amount of money loaned is to be the same, as nearly as possible. Should it occur, in making collections, that more of the collateral as held by one is paid than that as held by the other bank, it is understood that the payments will be distributed as referred to above, on the one-third and two-thirds basis, and collateral transferred from one envelope to the other of sufficient amount to offset collateral that has been paid, so as to make the same proportion of margin.

“It is also understood that no contract has been entered into with Mr. Walz as to definite time of employment, but it is understood with the officers of the Bank of Gillette that Mr. Walz will be retained by them just as long as we desire him to remain, or until the indebtedness of the Bank of Gillette to the First National Bank of St. Louis, Mo., and the American Bank of Commerce & Trust Company of Little Rock, Ark., is paid in full.

“The above outline is hereby acknowledged to be understood and agreed to by all parties mentioned in .this contract, viz., the First National Bank of St. Louis, Mo., the American Bank of Commerce & Trust Company of Little Rock, Ark., Geo. F. Walz, trustee for -the First National Bank of St. Louis and the American Bank of Commerce & Trust Company of Little Rock, and the Bank of Gillette, by its president and cashier.

“First Nat’l. Bank of St. Louis,

“Frank A. Hicks, Y. P.

“American Bank of Commerce & Trust Co.

“By W. A. Hicks, V. P.

“Bank of Gillette,

‘ ‘ Gillette, Ark.

“Geo. F. Walz.”

Plaintiffs alleged that the object of the agreement was to secure the American and St. Louis banks an unlawful and illegal preference of: other said creditors of the said Bank of Gillette; that, iu pursuance of the said conspiracy to procure said illegal preference, the agreement and contract was kept secret, and that the other creditors had no knowledge of it. They allege that, in pursuance of said agreement, George F. Walz, as agent of the American and St. Louis banks, took charge of the entire assets of the Bank of Gillette, consisting of notes, cash, and other securities, and exercised absolute and exclusive control of the Bank' of Gillette and its assets until some time in January, 1923, when the Bank of Gillette was closed by the Bank Commissioner. They alleged that, at the time the bank was closed, their entire assets, except the fixtures, were in the hands of Walz as representative of the American Southern Trust Company and the St. Louis bank, and have not been delivered to the Bank Commissioner for the use and benefit of creditors of the Bank of Gillette; that the president and board of directors of the Bank of Gillette permitted said Walz to have complete and absolute control and absolute management of said Bank of Gillette from the 29th day of June, 1921, up to the time the Bank of Gillette was closed by the Bank*Commissioner, and that said president and board of directors neglected and refused to exercise the care, supervision and control of the "management of the said Bank of Gillette as are required of them as president and board of directors of said bank; that from June 29, 1921, until the time the bank closed, the Bank of Gillette was insolvent, and that its insolvency and the fact that its assets were turned to said Walz as agent for said banks were not divulged to the public at large, but that it was held out that said bank was solvent, was held open for deposits, although, as soon as deposits were made in said bank, they were immediately transmitted-by Walz to the American Southern Trust and St. Louis banks, and that cash from' all notes whs transmitted, and that nothing was left in possession of the president and board of directors of the Bank of Gillette.

The First National Bank of DeWitt alleges that, relying on representations as to the solvency of the Bank of Gillette, as made and held out to the public by the defendants, it did advance to one Wm. Moll the sum of $4,329.12; that it was made to Moll with the understanding and agreement of the Bank of Gillette that said bank would guarantee the payment of funds so advanced to Moll for the benefit of said Bank 'of Gillette; that said advances are evidenced by promissory notes of Wm. Moll and the guaranty of the- Bank of Gillette, signed by Henry S. Jones, president, and Norden,'secretary; that no part of said sum has been paid, and that Moll is insolvent; that judgment has been taken against Moll, and that it is nncollectable. The Bank of DeWitt states that it would not have advanced said snms except :by guaranty of repayment by the Bank of Gillette, and ‘that said -guaranty would not have been accepted except for the fact that the defendants had represented the Bank of Gillette as being solvent; that, if it had known of the control of the American and St. Louis banks, it would not have advanced the funds; that all legal means had been used for collecting said sums from Wm. Moll, and that payment had been refused by the Bank of Gillette; that, during the time said George F. Walz had charge, large sums of money were collected and transmitted to the American and St. Louis banks, and that said banks were holding the funds under the illegal contract above set out. They state that the amount of $350 a month paid to Walz, under the terms of the illegal contract, were illegal and ultra vires; that, under the terms of the contract, Walz was the agent of the American and St. Louis hanks, and had no right to divert the funds to pay himself; that the president and hoard of directors of the Bank of Gillette had no legal right to enter into the contract.

Suit was filed for ' the depositors of the Bank of Gillette, setting forth specifically the amount due each. Interventions of other creditors were filed. The American Bank of Commerce & Trust Company filed separate answers to the original complaint, and to the complaints of all other parties, and also answer to the interventions. The American Bank & Trust Company denied specifically the allegations in the complaints and interventions, and pleaded the statute of limitations, and admits that it entered into the written agreement set out in plaintiff’s complaint, but denied that, under said agreement, it took charge of the Bank of Gillette, or that it ever assumed the complete supervision, direction and control of the collateral of the Bank of Gillette, its assets, business and affairs, to the exclusion of legal officials. It denied that it assured the Bank of Gillette that it would stay with it and take care of it and pull the bank through; denied that they operated the hank or caused it to be operated; denied that it kept said bank open, by continuing and receiving deposits; and denied that it knew that the Bank of Gillette was unsafe for depositors; denied that it executed any outline agreement or arrangement to take charge of and operate and conduct the. Bank of Gillette.

The directors of the Bank of Gillette filed answers and cross-complaints, but the real contentions of all of the parties seeking to recover against the American Southern Trust 'Company are that the contract authorized the American bajik and St. Louis hank to take charge of and conduct the affairs of the Bank of Gillette, and that they were, in fact, operating it as a branch bank, and also that Hicks and Coffman told the directors of the Bank of Gillette that they would see them through, and that, under the contract entered into and these statements of Hicks and Coffman, the American Bank became liable to all depositors and- all other creditors ' as if the Bank of Gillette had been operated by it as a branch bank, and that Walz assumed complete control of the Bank of Gillette and its affairs, to the exclusion of the board of directors of said bank, and that, if they were not liable because of these things, they still would be liable, it is contended, because they caused the Bank of Gillette to be kept open to receive deposits, and that this was unlawful, and deceived the public, and caused them to extend credit to the Bank of Gillette when they would not otherwise have done so. Testimony was taken by the plaintiffs aiid inter-veners for the purpose of showing that Walz was the representative of the American and St. Louis banks, and that, under their direction, and representing them, he exercised complete control of the Bank of Gillette and its affairs.

Some witnesses testified that they supposed Mr. Walz was managing the Bank of Gillette, and others testified about his conduct there, and about his declarations and action. Mr. Sanders testified that, after he becamó director, he supposed that Mr. Walz was managing the bank, and he testified at some length about Mr. Walz’s conduct and statements. It is also alleged that, not only Mr. Walz, but Mr. Sam Poe, was sent down to represent the American land St. Louis banks. The defendants introduced testimony then to show that Walz was not sent for the purpose of taking charge of the bank, but because the Bank of Gillette owed the American and St. Louis banks large amounts of money; that he was sent there, as the contract provided, to look after the loans and collateral; that, before they made the contract, they told the directors that they were inclined not to lend any more money, and that they had a conference with Mr. Jones, Mr. Norden and Mr. Koen, and stated to them that they would be willing to lend the bank more money under the arrangement suggested. The agreement was afterwards reduced to writing in the form of the contract set forth in the plaintiffs’ complaint; that when Mr. Norden stated that, “We are at your will”, Mr. Hicks stated to him, “I don’t want you to feel that way. It is nothing to us whether you borrow from us or some one else. If the .arrangement is not satisfactory, we don’t want you t.o enter into it.”

Mr. Norden then said it would be satisfactory. They then discussed the terms, and the Bank of Gillette was to give them all collateral, and they were to advance an additional $75,000, or as much thereof as was needed. That Hicks was to prepare the contract, and the said Nor-den asked him if Walz was to have charge of the bank or to have anything to do with reference to the bank, except the loans, and Hicks says he told him plainly that Walz was to have nothing to do with the operation of the bank; that, “of course, Mr. Walz is down there, and if he has the time, and you gentlemen want him to do anything, that is entirely up to him, but he is not going down there with that intention.”

It appears that, after Walz Avent down to Gillette, there was some dissatisfaction, and Mr. Norden, Mr. Jones and Mr. Sanders called on Mr. Hicks, and said that Walz was not satisfactory to the directors. Hicks told them that, if Walz was not satisfactory, they would get somebody else who was. Hicks saw Walz, and told him about the complaint, and afterwards wrote the bank that Walz knew that he did not own the-bank, but was only acting as our trustee, and we thought this action would be satisfactory to the directors. These directors afterwards wrote a letter in which they stated they were getting along just fine with Mr. Walz, and were pulling together for the interest of the bank’s affairs, thanking Mr. Hicks for his attention in the matter, and stating ' that no doubt his talk helped them to get together; stated also in the letter that, if any time something needed attention, they would keep Hicks advised.

Mr. Norden testified that their verbal contract was not reduced to writing at all; that they received the written agreement later. Norden testified that they did not put in there they were going to see us through if it took them from one to five years. Norden said he did not agree to the contract until they said they were going to see us through. There can be no controversy, of course, about the written contract. It is introduced in evidence, and speaks for itself, and it is the only contract entered into between the parties, and the plaintiffs contend that, under that contract, the American Bank became liable to the creditors of the Bank of Gillette.

At the time the contract was entered into, the Bank of Gillette was largely indebted to the American and St. Louis banks. The condition of the country was such that the Bank of Gillette could not make collections. Many of its loans had been made to rice farmers, and it is said that they were holding rice for a better price, and, for that reason, the Bank of Gillette could not collect, and therefore wanted additional loans from the American and St. Louis banks. Doubtless all parties thought at that time that, if it could get additional loans from these banks, it would tide it over until it could make collections from the rice farmers, and then could pay all of its obligations. .

We do not think that-the fact that the conditions were such that the collections could not be made without great difficulty and without disastrous results to the borrowers, tends to show that the parties were in bad faith. When money is loaned by a bank at any time to persons who depend on rice crops or any other crops to make payments, the lender necessarily takes some chances, becaúse no one can tell in advance whether there will be a good crop or a poor crop, nor can any one tell whether the price will be high or low, and the ability of the producer to pay is influenced 'by both the amount of crop raised and the price the producer can get for it.

We think it appears from the record in this case that a reasonable, prudent business man would have been justified in believing that the debtors of the Bank of Gillette, if given a little time, could pay their obligations •and, if so, th.e Bank of Gillette would have been in prosperous condition. This was evidently the belief of the American and St. Louis banks when they agreed to advance additional sums of money to the Bank of Gillette, and, if this is true, they had the right to have somebody present at the bank to look after the collateral, loans, and collections, and for protection. It is not unreasonable, since the Bank of Gillette was alréady indebted to them largely, that they would want to look after their interests, if they were going to advance them additional sums of money.

There can be no doubt, if the American bank and the St. Louis bank had authorized Walz to do what the witnesses swear that he did do in connectioiTwiththeBankof Gillette, they would have been, liable. If the American and the St. Louis banks had authorized Walz to take charge of the Bank of Gillette, or if these banks had used the Bank of Gillette as an instrument through which to carry on their business, or had operated it as a branch bank, or had taken the management and control of the same, their liability would have been the same as if they had done the business in their own name; but, whether these hanks became liable depends, not upon what Walz said or did, unless what he said and did was either authorized by them or the knowledge of these things brought home to them, but their liability depends upon the contract entered into. The contract provides for the employment of Walz as a trustee for the two banks, to represent them as they had agreed, with the Bank of Gillette. The two banks certainly had the right to enter into a contract with the Bank of Gillette that, if the Bank of Gillette would employ Walz so that he might look after the loans and the collateral, they would be willing to lend $75,000 additional to the Bank of Gillette.

The assets of the Bank of Gillett at the time were in excess of its liabilities, but the condition of the country was such that it could not collect immediately, and needed more money, because it could not at that time collect from the rice growers, or, rather, it was thought inadvisable to try to collect at that time, and, since the Bank of Gillett was already largely indebted to these two banks, it would have authority to agree to carry its cash balances with these two banks. Certainly there could not have been anything wrong, if they were going to lend the money that it needed, to require it to keep its cash balances with them, rather than with some other bank. They could also lawfully require Walz to obtain all the collateral to hold in trust to secure them, and give him absolute authority in accepting loans and collateral. The notes taken from the Bank of Gillette for the money advanced were to be made payable on demand, and the collateral to be held in trust for the banks advancing the money.

We do not think that any of these things, or all together, could be construed as authority to take over the Bank of Gillette, or to take control or management of the same. This contract could not be construed to mean that the two banks were operating it as a branch bank or as an instrument through which to carry oii their business, and that is the important question, so far as the liability of the banks is concerned. If they managed it, operated it, and controlled it, we have already said they would be liable, or if the contract could be construed as authorizing Walz to assume control; his authority and duties are those prescribed by the contract. It is earnestly insisted that there was an oral contract or agreement. In answer to that, however, it is sufficient to say that, whatever discussion or statements there may have been prior to the consummation of the written contract, the agreement of the parties was finally reduced to writing, and the oral statements made prior to that time were merged in that contract, and the written contract became binding on all parties.

This court has said: “Antecedent propositions, correspondence, and prior writings, as well as oral statements and representations, are deemed to be merged into the written contract whióh concerns the subject-matter of such antecedent negotiations, when it is free from ambiguity, and complete.” D. K. & S. Rd. Co. v. M. & N. A. Rd. Co., 104 Ark. 475, 149 S. W. 60.

Again it is said: ‘ ‘ Prior oral agreements and antecedent writings forming a part of the negotiations for a contract become merged in the subsequent written contract, and are incompetent as evidence for the purpose of enlarging the scope of such written contract.” Harrower v. Insurance Co. of North America, 144 Ark. 279, 222 S. W. 39.

There can be no doubt in this case that the oral agreement, if there was any, was merged in the written contract, and it is universally held that a written contract, free from doubt and ambiguity, cannot be altered or contradicted by parol evidence except for fraud or mistake. It therefore follows that, unless the appellant is liable under the written contract, it would not be liable.

“It is true, of course, that the parties to a written contract may, subsequent to its execution, modify and substitute an oral agreement therefor.” Cook v. Cave, 163 Ark. 407, 260 S. W. 49.

But the parties in this case did not claim that, after the execution of the written contract, it was in any way modified, or that an oral contract was substituted for it. They claim to have called on Mr. Hicks because of the alleged misconduct of Mr. Walz. They evidently thought that Walz was exercising authority that he did not pos sess under the terms of the agreement. After their interview wiili Mr. Hicks, tliey wrote a letter stating', in substance, that Mr. Walz’s conduct was satisfactory.

It thus appears that the directors of the bank did not themselves think that Mr. Walz had authority to do what he was doing. In fact, they’knew what his authority was, because they had a copy of the contract themselves, which expressly stated the authority of the agent. There was a great deal of testimony introduced with reference to the acts and declarations of Mr. Walz, and it is earnestly argued that these show that the Little Rock and St. Louis banks had taken charge of the affairs of the Bank of Gillette. There is, however, no principle of law better established than the principle that you can neither prove agency nor the extent of an agent’s authority by his declarations or actions. The principle is well stated in Meehem on Agency, vol. 1, § 285. The rule is stated there as follows:

“The authority of an agent, and "its nature and extent, where these questions are directly involved, can only be established by tracing it to its source in some word or act of the alleged principal. The agent certainly cannot confer authority upon himself or make himself agent merely by saying that he is one. Evidence of his own statements, declarations or admissions, made out of court, therefore (as distinguished from his testimony as a witness), is not admissible against his principal for the purpose of establishing, enlarging or renewing his authority? nor can his authority be established by showing that he acted as agent or that he claimed to have the powers which he assumed to exercise. His written statements and admissions are as objectionable as his oral ones, and his letters, telegrams, advertisements and other writings cannot be used as evidence of his agency. The fact that the agent has since died does not change the rule. Where his authoritv is in writing, he cannot extend its scope by his own declarations. His acts and statements cannot 'be made use of against the principal until the fact of the agency has been shown by other evidence. ’ ’

This court has many times held that the acts or declarations of one does not prove that he is an agent, and that the agent' cannot hind his principal beyond the limits of his authority. It therefore follows necessarily • that the acts and declarations of Walz, that were beyond his authority as contained in the written contract, are not binding on the bank. This brings to us a consideration of the contract itself, and to the question as whether, under the contract, the banks took such charge and control of the Bank of Gillette as would make them liable to the creditors of the bank in this suit.

We think that the contract is close to the border line, but, after a careful consideration of the contract itself, together with all the testimony in the case, and the very able arguments of learned counsel on both sides, we have reached the conclusion that, under the contract, the American Southern Trust Company is not liable to the creditors of the Bank of Gillette. We think that, under the contract, they did not take such control and management of the Bank of Gillette as would make them liable.

Of course, it is true that a principal is liable for the acts of his agent, ¡although they might not be authorized, if they were within the apparent scope of his authority.

Apparent authority is that which, though not actually granted, the principal knowingly permits the agent to exercise, or holds him out as possessing.

In the view we have taken of this case, Walz had no apparent authority beyond the authority given to him in the written contract, because there is no evidence of the banks’ holding him out as having any other additional authority. Such authority cannot be proved by his acts or declarations,' unless the principal authorized his acts or declarations, or knew of them.

“Apparent authority in an agent is such authority as the principal knowingly permits the agent to assume, or which he holds the agent out as possessing, such authority as he appears to have by reason of the authority which he has; such authority as a reasonably prudent person, using diligence and discretion in view of the principal’s conduct, would naturally suppose the agent to possess.” Ozark Mutual Life Association v. Dillard, 169 Ark. 136, 273 S. W. 378.

It will he observed that the court has held in the above cited case that the principal is bound only when he knowingly permits the agent to act for him, or when he holds the agent out as possessing power to act; that is, his acts are within the apparent scope of the authority of the agent if the principal knowingly permits his agent to do certain things or assume certain authority, or such authority as he appears to have by reason of the authority which he actually has.

There is no testimony in this case tending to show that the principal held out Walz as having authority to do anything except what was authorized under the written contract, and it is a well-established principle of law that one dealing with an agent, without inquiring of the principal of his authority, does so at his peril. It is not sufficient that he knows of the acts and declarations of the agent, or that he makes inquiry of the agent; he must make inquiry of the principal, or he must know of the acts or declarations of the principal in order to determine the authority of the agent. Counsel discuss not only the principle of apparent authority, but also the question of estoppel. There could be no estoppel, of course, unless the principal kiiew of the acts or declarations of the agent and the things that the agent did, and, as we have already said, the principal is not bound by either the acts or declarations of its agent unless within the apparent scope of his authority. If they had authorized Walz to take charge of the affairs of the bank, to run the bank for them, or to displace the board of directors or officers of the bank, the appellant bank would have been liable in the same way that it would if it had taken charge of the bank and operated it in its own name, but, under the authority in the contract, Walz had no right to do the things it is alleged that he did, and the officers and board of directors had no right to permit him to do these things. If the bank is not liable, it follows, of course, that George F. Walz is not liable under the contract, and, as he was not a director or an officer of the hank, we think he is not liable under the proof in this case.

There are several cross-appeals; the cross-appeal of the Atlas Oil Company and of the Mente & Company, Inc. The claim of the Atlas Oil Company was disallowed by the chancellor, and it is argued that there is no evidence to sustain the chancellor’s findings. The chancellor had before him all of the evidence in th$ case, a portion of which showed the business in which the oil company was engaged, also the evidence of dealing in oil by Sam T. Poe, and this is true also of the claim of Mente & Company, Inc., and we think there was sufficient evidence before the chancellor to justify his findings, and that he was correct in his findings, unless the claimants had introduced proof to show that their claims were for money deposited.

As to the findings of the court below on the claim of the First National Bank of DeWitt and L. A. Black, we cannot say that the finding was against the preponderance of testimony. It follows from what we have already said that the decree against the American Southern Trust Company and Geo. F. Walz must be reversed and dismissed, and the decree in all other respects should be affirmed. It would be useless to set out or discuss all the testimony in the case. After a careful examination of the entire record, we have reached the conclusion above set forth, and the decree of the chancery court against the American Southern Trust Company and George F. Walz is reversed and dismissed, and the decree in all other things is affirmed.

Kirby, J., disqualified.

Mehaeey, J.,

(on rehearing). It is insisted by the appellee, in its argument on petition for rehearing, that the court in its opinion wholly overlooks two major contentions of appellee. First, that appellant was cooperating with the officers of the Bank of Gillette in keeping it open and holding it out to the public as a solvent institution, when it was insolvent, and known to ibe so by the 'officers and directors’ and appellant; that this constituted fraud on the depositors who put their money in the institution, and was a wrongful act, rendering all persons and corporations participating in it jointly and severally liable to the persons damaged thereby. The second is that the court ignored the contention of appellee that loans were made to Crandall, to Wm. Molls, to Simmons and Brock and others in excess of 30 per cent, of the capital stock, and that, as a result of such loans, more than $50,000 of this excess was lost; that such loans were made in violation of the banking laws of the State.

The appellee, in his argument on the petition for rehearing, take's up, first, the proposition that Walz was a general agent of appellant, and that appellant is liable to third persons dealing with the Bank of Gillette through Walz, and argues that .the court, in its opinion, laid down a rule which applies only to cases of special agent and is never applied to the acts of a general agent.

“While the courts have very often defined and distinguished general and special agents, the great trouble is that they are totally unable to define general and special agents in terms which make the distinction applicable to each particular case. Their powers, when properly analyzed, however, are governed by the same general principle, to-wit, they can do anything within the scope of their agency so as to bind the principal, notwithstanding there may be some secret instructions limiting their powers; and, whether the authority be general or limited, they cannot charge their principals if they exceed it. They are of course more likely to transcend the bounds of a narrow than of an extended power; but the principle in either case is the same.” 31 Cyc. 1338.

“A general agent; unless he acts under a special and limited authority, impliedly has power to do whatever is usual and proper to effect such a purpose as is the subject of his employment. Hence, in the absence of known limitations, third persons dealing with such a general agent have a right to" presume that the scope and character of the business he is employed to. transact is the extent of his authority. This rule, as already stated, does not apply when limitations upon the authority of the agent have been brought home to the knowledge of the third person dealing with him, nor when the third person fails to make such inquiry as conditions demand, especially if the facts and circumstances are such as to suggest inquiry. Furthermore, the implied power of any agent, however general, must he limited to such acts as are proper for an agent to do, and cannot extend to acts clearly adverse to the interests of the principals, or for the benefit of the agent personally. And an agent has no implied authority to do acts not usually done by agents in that sort of transaction, nor to do them in other than the customary manner. The most general authority is limited to the business or purpose for which the agency was created.

“The authority of a special agent must be strictly pursued, and those dealing with him must, at their peril, determine the extent of his authority; for, as in the case of acts and transactions of a general agent, a special agent cannot hind his principal by acts outside the scope of his authority. . A special authority, like a general authority, confers by implication all powers necessary for or incident to its proper execution, and secret instructions or restrictions do not limit the special, agent’s authority, so far as innocent third persons are concerned; and if a principal has permitted a special agent so to act as reasonably to induce others to credit him with broader powers than he actually possesses, he will he estopped to deny the existence of as broad an authority as he permitted the special agent to exercise.” 31 Cyc. 1340. •

The above is a general statement of the law with reference to general and special agents, and, we think, a correct statement, and we do not think there is any conflict with the general rule and the rule announced by this court in its original opinion.

Walz was authorized, under the written contract, to deal with loans and collaterals. In other words, he was to have absolute authority in the granting of loans and accepting collateral. No loans were to be made by the Bank of 'Gillette without first obtaining the approval of Walz. And we hold that he would hind his principals in doing anything within the apparent scope of his authority as to loans and collateral. This would be true whether he was a general or a special agent. He would, however, have no implied authority to take charge of and run the Bank of Gillette, and for depositors, creditors or any other persons to act on the assumption that Walz had authority would not be justified, but would be ■assuming that he was acting in violation of law. The statute provides that the affairs of and business of the bank shall be managed and controlled by a board of directors of not less than three, who shall be selected from the stockholders at such time and in such manner as may be provided in its by-laws. Crawford'& Moses’ Digest, § 683.

The board of directors of the Bank of Gillette, in the management and control of its affairs, made the contract, doubtless believing, at the time they made it, that it was the best' arrangement they could make at the time in the management of the affairs of the bank. And, assuming that Walz was a general agent, he was a general agent with reference to loans and collaterals only, and he had no implied authority to take charge of the affairs and manage and control the affairs of the bank when the law expressly provides that the directors must do this. He had authority to do anything with reference to loans and collaterals, and his principal was bound by his acts, but, as to the other acts complained of, unless he was held out by his principal as having authority to do them, or was authorized, or his acts were ratified, the principal would not be bound.

We have not overlooked the distinction between the powers and authority of a general and special agent, and we have not overlooked the rule stated in R. C. L., which is as follows : ‘ ‘ There is a marked, distinction between the power and authority of a general and a special agent to bind his principal. A general agent is usually authorized to do all acts connected with the business or employment in which he is engaged, while a special agent is only authorized to do specific acts in pursuance of particular instructions, or with restrictions necessarily implied from the act to he done. Where it appears that an agent has done an act for the benefit of his principal and that the latter has not questioned the authority of the agent to bind him, it will be presumed, until the contrary appears, that the agent was duly authorized. Although the agent exceeds' his authority, the principal will he hound to the extent that he has acted within the powers conferred on him. In other words, the authorized acts of the agent are valid, and only those in excess of his authority are invalid. A person dealing with an agent must not act negligently, but must use reasonable diligence to ascertain whether the agent acts within the scope of his powers. He is not authorized, under any circumstances, blindly to trust the agent’s statements as to the extent of his powers. * * * Very obviously, the principal is liable for all such acts and statements of his agent as he may have expressly authorized; and this includes, by implication, whether the agency be general or special, all such powers as are necessai-y and proper as a means of effectuating the purposes for which the agency was created. Being clothed with power to do a particular act, the agent will be deemed to have also whatever authority attaches to the doing of the act or is necessary to its performance.” 21 R. C. L. 853-4.

One of the cases decided by this court, to which attention is called by the appellee, is Liddell v. Sahline, 55 Ark. 687, 17 S. W. 705. The court in that case said:

“A person dealing with a general agent can hold the principal, if the acts of the agent are within the general scope of the business intrusted to him.”

All the other cases decided are practically to the same effect. We do not think there is anything in the above case that contradicts the rule announced by the court in the original opinion. Walz was appointed with reference to loans and collateral, and everybody dealing with him had a right to -assume that any thing or act within the general scope of his authority with reference to those matters was authorized by his principal. We have not overlooked the testimony of Jones, Norden and Koen, nor can there be any question or do'ubt that the contract entered into gave Walz authority as to loans and collateral.

Appellees contend that the letter of April 15, 1922, shows that Walz had authority to employ attorneys for the Bank of Gillette and to make contracts for it. That it was stated that there would possibly be cases where he and the directors would not agree, but that in such cases the voice of the directors was not to prevail, but the matter was to be referred to Walz’s principals, and his principals would make their decision as to which way the matter should be handled.

They then argued that the learned chancellor deemed that sufficient to support a finding that appellant did authorize AValz to do the things which the witnesses swear that he did do. And they add that, unless it can be said that the chancellor’s finding is against the reasonable construction to be placed upon this evidence, Ms finding should not be reversed by this court. The letter referred to not only does not justify the conclusion that Walz had authority to employ attorneys for the bank, but the letter expressly states that the writer called to the attention of Mr. Coffman and Mr. AValz the complaint registered. And the writer of the letter adds: “We considered the entire proposition at length. So we have agreed that you can do just as you like about the employment of an attorney, which will be perfectly satisfactory with Mr. AValz. If you decide to employ the attorney at DoWitt in addition to the attorney at Stuttgart, there is no objection to that.”

AVe think also that the testimony of Mr. Hicks as to the agency contradicts the construction placed upon the letter by appellees. Mr. Hicks testified: “Mr. Norden himself raised that question in onr conference as to whether or not Mr. Walz was to have supervision of the bank, and I told him positively no, that we did not want Mr. Walz to have anything to do with the operation of the bank. All that we wanted him to do was to represent ns as our trustee in the handling of the collateral and loans, ’ ’ etc.

The above is the testimony of Mr. Hicks with reference as to what was said in the conference, and this' testimony is not denied by any of the parties in the conference.

Mr. Hicks also said'in his testimony: “I told Mr. Walz very plainly at that time that all we wanted him to do was to act as our trustee in the handling of the collateral; that we wanted him to obtain all the collateral on the notes that the Bank of Gillette had, keep them under his supervision; to assist them in collecting those notes, to assist them in getting better collateral on the notes that they had, and supervise in an advisory capacity the granting of new loans, and he was not to make any new loans without the approval of the directors, and he was to have nothing to do whatever with the inside operation of the bank.”

Mr. Sanders himself testified that he did not say that the bank was wrongfully handled, and that Mr. Hicks said that the American Bank desired to assist them in their financial troubles, and that if Walz could not get along he would give us a man that could.

We have already held, in the original opinion, that the authority of Walz was limited by the written contract. Appellees, in their brief for rehearing, say that, unless the finding of the chancellor is against the reasonable construction to be placed upon the evidence, his finding shall not be reversed by this court. That is true, but that means his finding of facts, and we have held that the statements and acts of Walz are not competent to prove the extent of his authority. It is also insisted that the appellant knew that Walz was running the Bank of Gillette. We think the testimony of Mr. Hicks, above quoted, to the effect that he made the statement at the conference, is sufficient to show that the appellant did not know that Walz was running the hank, but instructed him that.he was not to and could not run the bank. Mr. Hicks also told them that, if Walz’s conduct was-not satisfactory, they would get them another man and send down there.

The statement in the letter above referred to, that Mr. Walz was willing’ to submit to the board of directors any contract that he has made, etc., evidently meant con: tracts that he had authority to make. And the deck cisión referred to that would be made by the creditor banks necessarily meant decisions with reference to the loans and collaterals. Really what the directors objected to in Walz was his manner and the way he talked to people.

It is next insisted that the appellant aided the Bank of Gillette to keep open and receive deposits while said bank was insolvent and known to the appellant to be insolvent. If there were no evidence in the case as to the condition of the country at the time the contract was made, such condition was matter of common knowledge. Many institutions and persons would have failed if they could not have got help, and apparently it was thought that, by lending the Bank of Gillette $75,000 additional money, that additional money would enable the bank, not only to pay its debts, but to assist the farmers to make another crop, and at that time it appears that everybody was of the same opinion.

Mr. Maxwell was Bank Commissioner, and had supervision over all the banks of the State. The Bank of Gillette filed its statements as required by law, and the department made special investigation of the affairs of the bank. He discussed the matter with Mr. Hicks, and learned that Mr. Hicks or the American Southern Trust Company was willing to extend further credit in conjunction with the First National Bank. Mr. Maxwell further says that, in 1920 and .1921, not only banks but financial institutions in general were needing’ all the assistance they could get to • preserve their existence; that the condition was brought about by the deflation oí values in commodities; and that we had no forewarning of it; that, as a result of this condition, many banks in the State were suddenly placed in a condition where they were over-extended; that he had a conference with répre-sentativess of the Little Bock banks for the purpose of obtaining cooperation of the larger institutions in Little Bock in assisting the country banks throughout the State. He said the reports filed by the Bank of Gillette during his administration did not indicate insolvency, and, if he had thought it was insolvent, he would have required it to restore any impairment of gts capital by levying an assessment on its stockholders, if necessary. He further said if there had been any indication of insolvency he would have closed the bank. It therefore appears that the Bank Commissioner, whose duty it was, under the law, to know, did not believe it was insolvent, and the appellant did not believe it was insolvent. The Bank Commissioner was told about the contract. It has been suggested by some of the appellees that the contract was kept secret. It was made known to the banking department • it was spread on the records of the Bank of Gillette, and every time the Bank of Gillette was examined by the banking department it was known, and we do not think there was any effort to keep it secret.

Petitioners call our attention to a statement in the opinion with reference to lending money on crops, and states that the court evidently overlooks the proof that new money had to be loaned to persons already indebted to the bank before they could start making rice crops. As we have already said, the situation was bad. It was necessary to furnish the rice farmers with money to make crops, or they could not make them, and doubtless everybody thought at the time that that was not only the best, but the only, way by which they could collect what the rice growers already owed.

Ill addition, to this, the proof was that the American Bank loaned on real estate approximately $50,000, and thereby enabled the Bank of Gillette to pay $50,000 of its indebtedness with money received loaned on real estate which was not, prior to that time, pledged to the Bank of Gillette. That the Bank of Gillette was hard pressed and needed to borrow more money was, of course, known to all the parties. But, if a bank in that condition could not borrow money because the lender would become liable for all its debts if he advanced money, then, if a bank should happen to get where it did not have money to meet its obligations, it would have to fail, no matter bow much property it had. If lending money by one bank to another when the borrowing bank needed it would make the lender liable for all the debts, and liable, as appellees argue, for fraud in keeping the. bank open, then no bank could afford to lend another money.

It is next contended that the appellant is liable fob loans made by its agent, Walz, in excess of the statutory limit, and lost. The liability referred to by appellees is a statutory liability, but there certainly could be no liability on the part of the bank because of the loans made to Crandall, Moll and others. These parties were already indebted to the Bank of Gillette before Walz- went there. And Mr. Norden says in his testimony that the bank had a large number of loans outstanding when Walz came. Crandall’s debt was reduced while Walz was there. Walz held the borrowers down, and that made some of them sore. But the lending money to these parties men-tiohed by appellees was evidently for the purpose of collecting the debt these parties already owed.

After a careful reexamination of the entire record we have reached the conclusion that the original opinion was correct, and the petition for rehearing is therefore denied.