text:
    West Twelfth Street Road Improvement District No. 30 v. Kinstley.
    4-3447
    Opinion delivered April 23, 1934.

      John D. Shackleford, for appellant.

      Carl E. Bcáley and Murray O. Reed, for appellee.
   Butler, J.

The basis for appellant’s petition for mandamus is set out therein and abstracted in an opinion of this court, West Twelfth Street, etc., Dist. v. Kinstley, 188 Ark. 77, 63 S. W. (2d) 980. Reference is made to that opinion for a statement of the facts, and such other facts as are necessary for an understanding of the issues involved will he hereafter stated.

In that opinion we said: “In support of the action of the circuit court sustaining the demurrer, the appellee contends that the orders of the county court upon which the petition was based were void for the reason that such orders were made without any appropriation having been made by the county levying court. It is argued that the petition of appellant does not show that there was ever an appropriation made by the quorum court for the county court to enter into any kind of contract with .the appellant district by which the county should assume the payment of 25 per cent, of the outstanding bonds of the district.”

In discussing that contention, it was held that the county court was dealing with a subject within its jurisdiction, and therefore it must be presumed, in an absence of a showing to the contrary, that all necessary steps were taken in the exercise of its jurisdiction; and, if an appropriation must have first been made by the levying ccrurt to confer jurisdiction upon the court to make the order giving aid to the Improvement District, that this was done where there was nothing in the record or proof adduced showing to the contrary. We also called attention to the allegation of the petition that the question involving the validity of the orders of the county court had been settled by a final judgment of the circuit court of Pulaski County.

One of the contentions in support of the action of the lower court on demurrer was that from an exhibit to the petition, which, was a decree of the Pulaski County Chancery Court rendered October 30, 1931, there was-then due by District No. 30 to Pulaski County the sum of $17,750 less $3,232.76, and adjudged a recovery by the county for that amount. This court held'that the decree of the chancery court was conclusive only of the fact that the indebtedness named • existed at that time, but not, as contended, that it remained unpaid.

We held that all the questions above mentioned were such as must be determined by the proof, and reversed the judgment sustaining the demurrer and remanded the case for further proceedings. On remand evidence was adduced by petitioners and respondent, upon consideration of which the court rendered judgment, which, omitting formal parts, is as follows:

“(1) That the petition of the plaintiff, West 12th Street Road Improvement District No. 30, be, and the same is, hereby dismissed, to which action the plaintiff, West 12th Street Road Improvement District No. 30, saves its exceptions and causes same to be noted of record.
“ (2) That the plaintiff, Annex No. 1 to West 12th Street Road Improvement District No. 30, Pulaski County, Arkansas, do have and recover of and from the defendant, Roy E. Kinstley, as treasurer of Pulaski County, Arkansas, a judgment in the sum of $1,475; that the defendant, Roy E. Kinstley, is hereby commanded and directed to pay said judgment, together with such portion of the costs as may hereinafter be adjudged to be due by the defendant as treasurer of Pulaski County, out of funds now in his hands to the credit of the Pulaski County Road District, to which judgment of- the court for plaintiff, Annex No. 1 to West 12th Street Road Improvement District No. 30, the defendant saves his exceptions and causes same to be noted of record.”

The parties have properly prosecuted their appeals to this court.

At the hearing, the petitioners introduced in evidence the original orders of the county court made by Judge Sibeck on May 18, 1931, granting aid to Improvement District Annex No. 1 of District No. 30, and on June 15, 1931, in aid of District No. 30; the orders of the count]7 court made by Judge Lawhon, October 4, 1932, revoking and setting aside as invalid the aforesaid orders. Petitioners further introduced two judgments of the Pulaski Circuit Court, rendered May 26, 1933, on appeal from the order' of the county court, revoking the orders made in May and June, 1931. The judgment relating to District No. 30, omitting the style, is as follows:

“On this day this cause comes on to be heard, and, the same having been reached upon call of the calendar, and the appellant, West 12th Street Road Improvement District No. 30, appearing* by its attorney, John D. Shackleford, and the appellee, R. A. Cook, County Judge of Pulaski County, Arkansas, successor to Ross L. Law-hon, appearing by his attorney, Carl E. Bailey, Prosecuting Attorney, and interveners, Austin-Western Road Machinery Company et al., appearing by7- their attorneys, Barber & Henry, and all parties announcing ready for trial, the cause is submitted to the court de novo upon the pleadings, records, agreed state of facts, and oral testimony of John D. Shackleford, and county court records as exhibits to his testimony;
“And the court, being well and sufficiently advised as to all matters of fact and of law, and the premises being fully seen, doth find:
“(1) That on June 15, 1931, the county court of Pulaski County made an order pledging Pulaski County to the payment out of the county’s road revenues of 25 per cent, of the principal and interest maturities on each of two bond issues of West 12th Street Road Improvement District No. 30, Pulaski County, Arkansas, one for $93,000 and the other for $66,000, which said order was in due course properly recorded by the clerk of the county court and a certified copy transmitted to the county treasurer of Pulaski County as provided for in said order;
“(2) That on October 4, 1932, the county court of Pulaski County made an order providing for the annulment of the order made by said county court on June 15, 1931;
“(3) That said order made .by the Pulaski County •Court on October 4, 1932, is coram non judice and therefore null and void and without force or effect.
“It is therefore considered, ordered and adjudged by the court that the intervention, of the interveners be, and the same hereby is, dismissed, and the aforesaid order made by said county court on October 4, 1932, attempting to vacate and annul the aforesaid order of the county court made on June 15,1931, be, and the same hereby is, annulled, set aside, and for naught held; and the clerk of this court hereby is ordered and directed to transmit a certified copy of this judgment to the clerk of the county court of Pulaski County to be by said clerk entered upon the records of the county court of Pulaski County as and for judgment of said county court.
The judgment relating* to Annex No. 1 is identical with that relating to District No. 30, except the first paragraph, which is as follows:
(1) That on the 18th day of May, 1931, the county court of Pulaski County made an order pledging* Pulaski County to the payment out of Pulaski County’s road revenues of 25 per cent, of the principal and interest maturities on bonds issued by said Annex No. 1 to West 12th Street Road Improvement District No. 30, which said order was in due course properly recorded by the clerk of the county court, and a certified copy thereof transmitted to the county treasurer of Pulaski County as provided in said order.”

On the part of the respondent there was offered in evidence the decree of the chancery court heretofore referred to and proof was made that the indebtedness therein adjudged to be due by District No. 30 to Pulaski County remained unpaid. It was further proved by respondents, and admitted by the petitioners, that there had been no appropriation by the levying court for the aid of the improvement district prior, or subsequent, to the orders of the county court of May 18, and June 15, 1931, granting aid to the same.

The defenses by respondents to the petition for mandamus set up in their answer and relied upon here are, (1) as to both districts, that no appropriation having been made prior, or subsequent, to the order of the county court which are relied upon by petitioners as the basis for the relief prayed, said orders were and are void and subject to attack in a collateral proceeding; and (2) as a further defense to the claim of District No. 30 that it is indebted to Pulaski County in a sum in excess of any funds in hands of the respondent due in any event to said District, and therefore, for that reason, it is not entitled to the relief prayed.

Referring* to the first point raised by respondent as a defense to the petition for mandamus, the petitioners contend that the judgment of the county court, being of a court of superior jurisdiction having jurisdiction of the subject-matter, is entitled to the same credit as judgments of a superior court of general jurisdiction, and its judgments are conclusive on collateral attack where no want of jurisdiction is apparent of record. The respondent contends that the appropriation was the ground on which the jurisdiction rests, and, that being wanting, the judgment was a nullity, and that this might be shown as a defense to any action based on the void judgment.

We pass the questions presented in the first proposition above stated for the reason that these are not now properly before us. These matters have been concluded by the judgments of the Pulaski 'Circuit Court made on May 26, 1933, set out heretofore at length. No appeal was takbn from those judgments, and they have now become final.

Appellee (respondent) makes the argument that these judgments do not make the question res judicata, because, in making the orders of October 4, 1932, revoking those formerly made, “no notice was given the petitioners * * * and the county court in 1932 simply had no jurisdiction,” and that “the validity of the orders made by Judge Sibeck in 1931 could not be determined by Judge Lawhon. Respondent asserts that the merits of the case or the validity of the orders made in 1931 were not before the county court in 1932, and that the court was not a court of competent jurisdiction in passing upon those orders.” The recitals of the judgments of the circuit court do not support the assertions made or the argument quoted supra. On the contrary, they show affirmatively that the court had all the parties interested before it and tried the questions “de novo” and determined the same on the “pleadings, records, agreed statement of facts, oral testimony of John D. Shackle-ford, and county court records as exhibits to his testimony.” The validity of the Sibeck orders made in 1931 was properly a question within the issue, whether formally litigated or not.

The settled rule of this jurisdiction supported by the weight of authority is that a judgment of a court of competent jurisdiction is conclusive of all questions, legal or equitable, which were raised in the cause or which, being within the scope of the issue, could have been interposed. Church v. Gallic, 76 Ark. 423, 88 S. W. 979; Fourche River Lbr. Co. v. Walker, 96 Ark. 540, 132 S. W. 451; Howard, etc. District v. Hunt, 166 Ark. 62, 265 S. W. 517; Newton v. Altheimer, 170 Ark. 366, 280 S. W. 641; Akins v. Heiden, 177 Ark. 392, 7 S. W. (2d) 15.

The fact that the validity of the Sibeck orders (May and June, 1931) may not have been formally litigated in the cause resulting in the judgments of the circuit court does not prevent those judgments from being res judicatae. That proceeding was a direct attack upon the Sibeck orders in which each party was bound to make the most of his case or defense, “bringing forward all his facts, grounds, reasons or evidence in support of it on pain of being barred from showing such omitted matters in a subsequent suit.” Ederheimer v. Carson D. G. Co., 105 Ark. 488, 152 S. W. 142, and Newton v. Altheimer, supra.

As an additional defense to the. petition for mandamus of District No. 30, respondent alleged and proved that the district was indebted to Pulaski County in a sum much greater than that demanded of the county in the present proceeding. The appellant district argues that this fact was no concern of respondent and could only be asserted by the county, and, since it did not intervene, that question cannot be raised. We do not agree to this. The treasurer is the custodian of the county’s money and as such was clothed with the duty to see that the same was not improperly expended, and he therefore, with propriety, could raise the question as to whether or not he should be required to pay to the district the sum demanded when the district was in fact indebted to the county in a greater sum. To raise this question, the formal intervention of the county through its county judge was unnecessary, since for that purpose the treasurer is to be deemed agent of the county and acting in that capacity.

From.the views expressed it follows that the judgment of the trial court should be and is affirmed, both on appeal and cross-appeal.

Humphreys, Mehapey and McHaney, JJ., concur.


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    Patton v. State.
    Crim. 3879.
    Opinion delivered April 30, 1934.

      Hal L. Nonvood, Attorney General, and Robert P. Smith, for appellee.
   Smith, J.

Three brothers, Cleadus, John and Ohelton Fields, attended a dance in a hall owned and operated by Arthur Peck. Oral and Carrol Patton, who were brothers, also attended the dance. Cleadus Fields purchased a bottle of whisky, as he supposed, from á person whom he thought was -one of the Patton boys. When opened it was found that the bottle contained urine, and not whisky, whereupon Cleadus Fields approached the Patton boys and demanded the return of his money, expressing, at the same time, in rather forcible, though somewhat inelegant, terms, his opinion of the person who would play such a trick as had 'been played upon him. One of the Patton boys, after denying that he had made the sale, said to Fields: “If you want to live long, you had better keep your mouth shut. ’ ’ The parties commenced fighting. It was dark, and they were out-of-doors, and the testimony is in irreconcilable conflict as to who actually began the fight. At any rate, John Fields, who was standing by, jumped at one of the Pattons to seize a pistol which he saw the latter draw, but he failed in the attempt to seize it and was shot and killed. Peck, owner and operator of the dance hall, hearing the shooting, came to the front door to see what was happening, and was himself shot and killed as he appeared in the door. Peck lived long enough to make a dying declaration to the doctors who attended him, and they testified that in this declaration Peck stated that “When he opened the door, the Patton boy was standing just outside the door, and he just laid his hand on his shoulder and he told him. to stop that, and he wheeled and shot him.” Peck did not state which one of the Patton boys shot him.

Oral Patton escaped and has not been arrested. Carrol Patton was arrested the night of the shooting, and at the trial for killing Peck from which this appeal comes, the testimony offered in his behalf was to the effect that he was unarmed, and that he did none of the shooting, and that all of the shots were fired by his brother Oral. The sheriff testified that when he arrested Carrol he found him lying across a bed with his clothes on, and that he had a pistol and scabbard in the bed with him. This pistol was a .38 calibre revolver, and a deputy sheriff who assisted in making the arrest testified that he was an expert in fire arms, and that he examined the revolver at the time of the arrest and found that three chambers had been very recently fired — within less than twenty-four hours. Some .32 calibre shells were found at the place of the shooting. The deputy sheriff testified that an automatic pistol ejects the shells as fired, but that the shells must be removed from a revolver by hand. One of the doctors who attended Mr. Peck testified that the wound received by him and which caused his death appeared to have been inflicted by a hard bullet, and not a lead bullet, because the wound was not jagged or irregular, and that the wound, from its appearance, could have been inflicted by either a .32 or a .38 calibre pistol. The deputy sheriff testified also that the pistol found in Carrol’s possession was loaded with two lead bullets and two copper jacket bullets, and that the latter were harder than the former and would make a less jagged wound.

These facts appear to answer the assignment of error that the testimony is insufficient to support the verdict of the jury, which imposed a sentence of ten years in the penitentiary for murder in the second degree. The evidence is sufficient to sustain the conviction upon either of two grounds, (1) that appellant may actually have fired the fatal shot, or (2), if not, that he was present, aiding, abetting and encouraging his brother in firing it. It was not questioned that one or the other did fire the fatal shot, and that they were acting in concert is sufficiently established to sustain the conviction. This is made certain by testimony to the effect that the Patton brother who fired the first shot was advised by the other to “Shoot him!” Simmons v. State, 184 Ark. 373, 42 S. W. (2d) 549.

In support of the motion for a new trial testimony was offered to the effect that a member of the jury had failed to pay his poll tax, and because of this failure was not a qualified elector. The verdict and the judgment pronounced thereon were not void on this account. It was held, in the case of James v. State, 68 Ark. 464, 60 S. W. 29, (to quote the headnote) that: “Objection that a juror has not paid his poll tax, if available at all, comes too late after verdict,” and that holding was reaffirmed in the case of Teel v. State, 129 Ark. 180, 195 S. W. 32.

A different question is presented where the juror is interrogated as to the payment of his poll tax, and falsely answers that he had paid, when, in fact, he had not. In such a case the juror, through his fraud and false testimony, imposes himself upon the court as a competent juror, when he is, in fact, ineligible to serve as such. But if the defendant in a criminal case, or either party to a civil case, wishes to raise the question of a juror’s eligibility, he must ask the specific question upon the voir dire examination, and, if he does not do so, the right to raise the question is waived, and cannot be raised after the jury has been sworn or a verdict has been returned. It appears that the juror, with certain others, was summoned as a bystander, all of whom were asked by the court the general question if they were qualified electors, but no specific question was asked by the court, or by counsel in the case, whether these special jurors had paid their poll tax. This being true, the objection that they had not done so comes too late and cannot now be raised. Section 6343 Crawford & Moses’ Digest; Fones Bros. Hdw. Co. v. Means, 182 Ark. 533, 32 S. W. (2d) 313; Lynch v. State, 188 Ark. 831, 67 S. W. (2d) 1011.

It was assigned as error that the verdict had been arrived at by lot, and in support of this assignment of error the foreman of .the jury testified as follows: All of the jurors had voted that defendant was guilty of murder in the. second degree, and all had voted to fix his punishment at some term of years allowed by law, but they had not agreed on the punishment. The witness testified that, after agreeing that defendant should be found guilty of murder in the second degree, they first voted whether he should be given the maximum punishment of twenty-one years, and, the vote not being unanimous, it was then agreed that, the vote should be taken on the. question whether he should be given a sentence of seven years, and this vote was not unanimous. The witness then proceeded to say: “After these first two (votes) were taken, there was another one Taken. Each one was going to put on a piece of paper how much they were going to give him; they were trying to get at how we stood. There were three for seven years; two for twelve; one for five; three for fifteen, and three for ten.” There was offered in evidence the quotient of this verdict made in the jury room, which gave the result of ten and one-half years. The witness was asked, however: “Did you agree beforehand that you would take that result?”, and he answered: “No, sir, that would just give us an idea of how we stood.” Another ballot was then taken, and all of the jurors voted, not for ten and one-half years, but for ten years.

It thus appears that (.he verdict was not even a quotient verdict. However, we prefer to put the decision upon the ground — and we do put it upon the ground— that it was not competent for the juror to thus impeach the verdict.

The statute (subdivision third of § 3219, Crawford & Moses’ Digest) provides that a new trial may be granted “where the verdict has been decided by lot, or in any other manner than by a fair expression of opinion by the jurors.” But the statute also provides that: “A juror can not be examined to establish a ground for a new trial, except it be to establish, as a ground for a new trial, that the verdict was made by lot, ’ ’ Section 3220, Crawford & Moses’ Digest.

In the case of Speer v. State, 130 Ark. 464, 198 S. W. 113, we said: “Lot involves an element of chance. The quotient verdict is not the result of a lottery.” We there also said that: “Verdicts of juries cannot be impeached by the evidence of jurors except where the verdict was reached by lottery. ’ ’

In the case of Snow v. State, 140 Ark. 9, 215 S. W. 3, it was insisted that the judgment, sentencing the defendant to a term in the penitentiary, should be reversed because it had been rendered upon a quotient verdict. In overruling that contention, we there said: “Again, it is urged that the judgment should be reversed because the jury fixed the verdict by the - quotient method. This charge is not sustained by evidence, except by the affidavit of a juror, which is inadmissible to impeach the verdict. Speer v. State, 130 Ark. 457, 198 S. W. 113.”

There appears to be no error in the record prejudicial to appellant, and the judgment must therefore be affirmed, and it is so ordered.


text:
    Bankers’ Trust Company v. Arkansas Rice Growers’ Co-operative Association.
    4-3448
    Opinion delivered April 30, 1934.

      Trieber \S Lasley and Frauewbhal & Johnson, for appellants.

      Ma/rm <db Mann, for appellee.
   Smith, J.

This cause was tried in the court below upon the following agreed statement of facts:

‘ ‘ Stipulation.
“It is hereby stipulated between the parties hereto, through their respective solicitors, that this cause may be submitted upon the following Agreed Statement of Pacts.
“Agreed Statement of Pacts.
“The Rice Growers’ Co-Operative Association had a general deposit with the Bankers’ Trust Company, and had maintained a general deposit in said bank for sometime prior to the transaction herein complained of, and on October 2,1931, had on deposit $25,084.31, in the form of a general checking account.
“That the Rice Growers’ Co-Operative Association deals in buying and marketing rice and, in making sales of rice, it was its custom to draw drafts on the consignees of the rice, with bills of lading attached, and would deposit these drafts, with the bills of lading attached, in the Bankers’ Trust Company and take credit therefor on its general checking account.
“That the Bankers’ Trust Company, through its officers, suggested to the Rice Growers’ Co-Operative Association that some security or margin he placed with said bank to protect the bank from any losses that might occur by reason of the bank giving immediate credit for such drafts and the consignees failing or refusing to pay the face value of the drafts.
‘‘ That, at the suggestion of the bank, the Rice Growers ’ Co-Operative Association authorized the bank to charge its general checking account with the. sum of $3,000, for the purpose of securing the bank against loss on the draft collections. Thereupon the bank, of its own motion, made out the following charge ticket against the association’s general checking account, to-wit:
“BANKERS’ TRUST COMPANY,
“Little Rock, Ark., October 2, 1931.
“CHARGE
“Arkansas Rice Growers’ Co-Operative Ass’n., “Stuttgart, Ark.
“Covering Certificate of Deposit payable to ‘Ourselves Account Margin'Arkansas Rice Growers’ Co-Operative Assn, drafts.’ $3,000
“Charge made by BB (Signed) BB.
“A copy of this charge ticket was transmitted, in due course, by the bank to the association, and the association accepted and retained the same.
“On the said October 2, 1931, the Bank issued a certificate of deposit, as follows:
“CERTIFICATE OF DEPOSIT.
“Little Rock, Ark., October 2, 1931. No. 3587 “BANKERS’ TRUST COMPANY $3,000
81-25
“Ourselves account margin Arkansas Rice Growers’ Co-Operative Assn, draft has deposited with the Bankers’ Trust Company $3',000 & 00 cts. dollars in current funds, payable to the order of themselves, demand after date with interest to maturity only at the rate of 2 per cent, -per annum, but subject to thirty days’ prior notice of withdrawal and the return of this certificate properly -indorsed. If at the request of the owner hereof and with the consent of said bank this certificate shall be paid before maturity, no interest shall be paid thereon.
“J. L. Spence, Tr.
‘ ‘ Countersigned: ‘ ‘ Assistant Cashier.
“D. Majors. Auditor.
' “Not subject to check.
“On February 27, 1933, the Little Rock Clearing House Association, of which the Bankers’ Trust Company was a member, took action, with the approval of the Governor and the Bank Commissioner, whereby all deposits of the members of the Clearing House Association were forthwith to be restricted, as to withdrawal thereof, so that the only part of any deposit thereafter withdrawable was 5 per cent, or $15, respectively, thereof, whichever was the larger, such action being taken pursuant to § 7 of act 60 of the Acts of Arkansas of 1933. The said restriction of withdrawals was validated by § 1 of act 96 of the Acts of 1933.
“On May 1, 1933, at the .request of the board of directors of the Bankers’ Trust Company, the Bank Commissioner duly took charge of its affairs, for purposes of management, under act 88 of the Acts of 1933. On said May 1, 1933, also pursuant to said act 88, the Bank Commissioner reorganized the said Bankers’ Trust Company by the creation of a new bank at Little Rock, Bankers’ Commercial Trust Company, to which certain of the assets of the Bankers’ Trust Company were sold and transferred, in consideration of Bankers’ Commercial Trust Company assuming 50 per cent, of the then remaining restricted balances of Bankers’ Trust Company’s deposits.
“All drafts of the Rice Growers’ Association for which it had received credit from Bankers’ Trust Company prior to the said May 1, 1933, were paid in full in due course, and the said $3,000 security has ceased to be necessary for the protection of the Bankers’ Trust Company. The Rice Growers’ Association was entitled to withdraw $150, as the 5 per cent, permitted to be withdrawn by the Clearing House Association action, and was furthermore entitled to 50 per cent, of the difference between $3,000 and said $150, by reason of the assumption of Bankers’ Commercial Trust Company 50 per cent, of such difference amounting to $1,425. The Rice Growers’ Association has not, in fact, withdrawn the said $150 or the said $1,425, but both said amounts are available to it, so that the actual amount in controversy in the within suit is $1,425. The failure of the Rice Growers’ Association to withdraw the $150 and the $1,425 assumed by the Rankers’ 'Commercial Trust Company was due to the fact that some of its drafts were, until recently, outstanding.
“It is agreed that the Rice Growers’ Association will not estop itself in this suit by accepting the $150 and $1,425 admittedly available deposit.”
Upon this statement of facts it was ordered and decreed that the claim of plaintiff, Arkansas Rice Growers ’ Co-Operative Association “he and it hereby is allowed as a prior claim (against the Bankers’ Trust Company and Marion Wasson, as Bank Commissioner in charge thereof) in the sum of $1,425, * *

This appeal is from that decree, and appellants state the sole issue in the casé to be whether this $1,425 should be allowed as a common or general claim or should he allowed as a prior claim.

The question presented for decision involves a consideration and construction of a portion of § 1 of act 107 of the Acts of 1927, page 297, which, in our opinion, has previously been so construed as to require the affirmance of the decree here appealed from.

Section 1 of act 107 classifies the creditors of a bank of which the Bank Commissioner has taken charge as “secured creditors, prior creditors or general creditors,” and proceeds to define each of these classifications. This section defines those creditors who are to he classed as “prior creditors.”

Paragraph 4 of this section reads as follows: “The owner of a special deposit expressly made as such in said bank, evidenced bv a writing’ signed by said bank at the time thereof, and which it was not permitted to use in the course of its regular business.”

Paragraph 5 reads as follows: “The beneficiary of an express trust as distinguished from a constructive trust, a resulting trust or a trust ex maleficio of which the said bank was the trustee, and which was evidenced by a writing signed by said 'bank at the time thereof.”

It is further provided in § 1 of this act that these prior creditors shall be paid in full, with certain exceptions not important here to consider, as the Bank Commissioner has in hand sufficient funds to pay the claim in question in full, notwithstanding the exceptions, if it is, in fact, a prior claim. As has been said, it has been stipulated that the only question for decision is whether the claim is a ‘‘prior claim,” within the meaning of § 1 of act 107.

In our opinion, the case of Royal Arch Benefit Association v. Taylor, 187 Ark. 531, 60 S. W. (2d) 915, and the cases there cited and reviewed, are decisive of this question. In that case the facts were that a bank, having in hand a general deposit, issued a memorandum, reciting that it had set aside a sum from this general deposit to purchase government bonds for the depositor. The memorandum recited that the bank, which later became insolvent, had charged the depositor’s account with the sum named as an advance payment on the bonds which the bank had undertaken to purchase for the depositor. Upon the failure of the bank, its assets were taken over for -purposes of liquidation by the 'State Bank Commissioner, and the question arose whether the sum mentioned in the memorandum had become a prior claim within the meaning of act 107 of the Acts of 1927. It was held that the writing was a sufficient memorandum to evidence an “express trust,” entitling the depositor to the preference given by paragraph 5 of the act, above quoted, and that it should be paid as such.

In so holding we said that the memorandum was not ambiguous, but clearly indicated the purpose for which the sum named had béen withdrawn from the general deposit, and that the ease was not altered 'because the money 'set aside for the purpose indicated'was already in the bank at the time, of the direction given for its use by the depositor and the application to be made of it by the bank. This statement was made upon the authority of the case of Grossman v. Taylor, 185 Ark. 64, 46 S. W. (2d) 12, in which case we held that the instrument issued by the bank was as effectual to create an express trust as though the money had been checked out and redeposited. In the Boyal Arch Benefit Association case, after stating the above holding in the Grossman case, we said: “There is no particular form of writing prescribed by the statute, nor any manner pointed out therein, in which the same shall be signed, and, while this might be .called a ‘charge ticket,’ as contended for by the appellee, it was something more. It was both a charge ticket and a contract and entitled the appellant to a preference over the general creditors and to share with the other preferred or prior creditors pro rata, and to have the balance, if any, classed as a common claim.” See also Albright v. Taylor, 185 Ark. 401, 47 S. W. (2d) 579.

We find it unnecessary to determine, under the facts as recited in the stipulation hereinabove copied, whether the $3,000 deposit was a special deposit under paragraph 4 of act 107, as defined in Albright v. Taylor, supra, or was an express trust under the provisions of paragraph 5, as interpreted in the Taylor case, supra, for, if not one, it was the other, and in either case it is given priority by the statute.

The $3,000 was a part of an existing deposit, but it was held in both the Grossman case and the Taylor case, supra, that this fact was unimportant and did not alter the character of the transaction. The $3,000 was withdrawn from and set apart from the general deposit. It was no longer subject to the check of the depositor, and his general deposit was reduced by the amount thereof. The memorandum accorded the right to the bank to hold this money for the use agreed upon, to-wit, its indemnification. The memorandum created either a special deposit for this purpose, or an express trust for that purpose, and as a right of priority is given by and exists under the statute in either case, the decree according priority is correct and must be affirmed, and it is so ordered.

Humphreys, J., dissents.


author: Smith, J. 'Butler, J.,

text:
    Refunding Board of Arkansas v. State Highway Audit Commission.
    4-3467
    Opinion delivered April 30, 1934.

      Hal L. Norwood, Attorney General, and Robert F. Smith, Assistant, for appellant.

      Paul E. Gutensohn, Horace Sloan and Walter L. Pope, for appellee.

      Donham <S Fulk, amici curiae.

   Smith, J.

The State Highway Audit Commission filed a complaint in the Pulaski Chancery Court against the Refunding Board of Arkansas, which contained the following allegations: After alleging the creation of the Highway Audit Commission, and also that of the Refunding Board, and the functions of each, it was alleged that the People’s National Bank had presented to the Refunding Board a certain Auditor’s warrant in the sum of $2,500, which had been issued to a firm of contractors operating under the name of Altman-Rodgers Company. The warrant was dated April 30, 1932, and was directed to the State Treasurer. The complaint alleged that the warrant was issued to the contractors for construction work performed under a valid contract, upon a voucher duly and legally issued 'by the Arkansas State Highway Commission, and was on the same date of its issuance indorsed and delivered to the People’s National Bank, in the due course of business and for value.

It was alleged that, although the warrant constituted a valid obligation on the part of the State, it should not be refunded, because the State has a claim against the Altman-Rodgers Company, which arose as follows: On August 27, 1930, a contract was entered into between the said Altman-Rodgers Company and Dwight H. Black-wood, at that time chairman of the State Highway Commission, whereby said Altman-Rodgers Company undertook to do and perform certain road construction work there described. The Altman-Rodgers Company performed said construction 'work and furnished material at an actual cost of $801.13. That contract was alleged to be invalid and without legal and binding effect because it involved the payment of more than a thousand dollars, and was not advertised or let on competitive bidding, nor was it executed by at least three members of the Arkansas State Highway Commission, as required by law, nor was it attested by the Secretary of the Commission, as required by law, and for each and all of these reasons was unenforcable as a contract.

The Altman-Rodgers Company was paid by the State, upon voucher issued by the State Highway Commission and warrants issued thereon by the State Auditor, in the sum of $1,411.62. By reason of the fact that the fair and reasonable cost of the labor done and material furnished on said contract was only $801.13, the said Altman-Rodgers Company was overpaid in the amount of $610.49. Final estimate was made by the State Highway Engineer of the work on November 6, 1930, on which date the State Highway Commission approved the work and accepted it, and on said date paid the full amount of $1,411.62 under said irregular and invalid contract. By reason of this overpayment the Altman-Rodgers Company was indebted to the State in the sum of $610.49 on the date on which it received the $2,500 warrant, and is still so indebted, which said indebtedness the State is entitled to setoff against said $2,500 warrant.

It was alleged that, although the Bank had received the $2,500 warrant without actual knowledge of the facts here recited, it was charged with knowledge of the set-off in favor of the State and took said $2,500 warrant charged with all equities, defenses and set-offs in favor of the State against it.

It was alleged that the State Refunding Board is about to allow the full amount of said $2,500 warrant to the People’s National Bank, under the provisions of act 11, passed at the Extraordinary Session of the General Assembly and approved February 14, 1934, and is about to authorize the payment of fifty per cent, of said warrant in cash and issue 'bonds, under the terms of said act, for the remaining fifty per cent. Special Session Acts 1934, page 28.

Complainants alleged that they constitute a Commission created by law and charged with the duty of detecting irregularities in connection with the operation of the State Highway Commission, and as such, and also as citizens and taxpayers, are interested in the action -about to be taken by the Refunding Board, and that they have no adequate remedy at law to prevent the action the said Board is about to take.

Wherefore they pray that the Refunding Board be prohibited, and enjoined from permitting said $2,500 warrant to be refunded until there is definitely decided by the Audit Commission, or by a. court of competent jurisdiction, the amount of overpayment, if any, made by the State/on the invalid and irregular contract entered into between the State. Highway Commission and Altman-Rodgers Company on August 27, 1930.

: A demurrer to this complaint was filed, upon the ground that it did not state facts sufficient to constitute a cause of action, or to entitle the complainants to the relief prayed, or to any relief. The demurrer was overruled, and, respondent announcing that no further pleadings would be filed, it was ordered that the Refunding Board be prohibited and restrained from allowing the $2,500 warrant until it is determined, either by the State Highway Audit Commission, or a court of competent jurisdiction, what amount, if any, the State is entitled to recover from Altman-Rodg’ers Company by reason of the irregular and invalid contract entered into between said company and the State Highway Commission on August 27, 1930.

It is unnecessary to review the legislation creating the State Highway Audit Commission and the Refunding Board of Arkansas, as their respective functions are not called into question. Other questions are decisive of the issue raised by the demurrer.

The recent case of State of Arkansas v. Rogers & Jones, cited and relied upon by appellant decided by the Supreme Court of Tennessee, does not appear to have yet been officially published. In that case' the complaint alleged that a contract had been let to repair the approach to the Harahan Bridge over the Mississippi River, at the contract price of $393,706.57, whereas the actual and reasonable value of the work done and services performed under the contract was only $167,688.93. The complaint alleged that the contract had been let in violation of act 65 of the Acts of 1929, page 264, which act provided that all contracts in excess of a thousand dollars should be let on a competitive basis, after advertisement, to the lowest responsible bidder, and should be signed by at least three members of the State Highway Commission, whereas the contract there in question had been undertaken and signed by the Engineer of the Highway Commission alone, and had not been advertised for letting on a competitive basis to the lowest responsible bidder, as the act required should be done. An amendment to the complaint was filed which recognized the right of the defendant contractors to retain, by way of quantum meruit, the reasonable value of the services performed in the repair of the approach to the bridge.

The Supreme Court of Tennessee recognized and stated that the case was controlled by the law of this State, but interpreted certain decisions of this court, there cited, as holding that the contract, having been fully performed, and the agreed consideration having been paid upon the work being accepted by the commission, there could be no recovery in the absence of specific allegations of fraud in letting the contract. The court said that: “To be regarded as a badge of fraud, the consideration for a contract must be so grossly excessive or so grossly inadequate as to shock the conscience of the court,” and the allegation that $393,706.57 had been paid to perform work reasonably worth only $167,689.93, in the absence, of other or specific allegations of fraud, was not regarded as sufficient to meet the test stated.

The court cited as the basis of its decision the following Arkansas cases: Leonard v. State, 185 Ark. 998, 50 S. W. (2d) 598; Arkansas State Highway Commission v. Keaton, 187 Ark. 306, 59 S. W. (2d) 481 ; Forrest City v. Orgill, 87 Ark. 389, 112 S. W. 891; Shackleford v. Thomas, 182 Ark. 797, 32 S. W. (2d) 810.

It was held by this court, in the case of Forrest City v. Orgill, supra, that, although a purchase by municipal officers of machinery for waterworks, which was not authorized by an ordinance, resolution or order of the city council, wherein the yeas and nays were called and recorded, and which was not ratified by any formal action of the city council, was not binding upon the city, yet, the city could not retain such machinery, which could have been purchased in a proper manner, and at the same, time defeat a recovery for the contract price thereof.

In the case of Shackleford v. Thomas, supra, it was held that a school district, having made payments under a contract not executed in the mode prescribed by law, was estopped from recovering back such payments.

The other two cases will be later referred to and discussed.

It will be observed that, in the two cases first above cited and quoted from, the governmental agencies held to be estopped by the acceptance of services or the subject matter of the contract were, in one case, a city of the State, and, in the other, a school district, but the State itself was not a party to either case. We are of the opinion that a wholly different rule is to be applied when the State itself is a party, for the reason that the doctrine of estoppel is not applicable to and cannot be applied against the State.

With all deference to the great court and the able members thereof who failed to recognize this distinction, we may say that all the members of this court are of the opinion that the distinction exists. Upon this point we are all agreed. Our difference arises out of the question to be later discussed.

At % 993 of Bishop on Contracts (Second Enlarged Edition), page 419, it is said: “The government is never estopped, as an individual or private corporation may be, on the ground that the agent is acting under an apparent authority which is not real; the. conclusive presumption that his powers are known rendering such a consequence impossible. So that the government is bound only when there is an actual authorization. And this principle may extend to the agent of a municipal corporation and his contract, but it does not necessarily; as to which, the distinctions in the differing cases will be obvious.”

The authorities on this subject were reviewed in the case of State v. Chilton, 49 W. Va. 453, 39 S. E. 612, in which it was sought to invoke the doctrine of estoppel against the State.. It was there said: “A public officer cannot ratify expressly his own unauthorized act, and surely cannot do so by mere implication. State v. Hays, 52 Mo. 578; Dalafield v. State, 26 Wend. 192. Having no power to make credit sales, by his own knowledge that he did make them, neither he nor his predecessors could by that knowledge ratify the acts to protect themselves against the State demands. Estoppels do not generally bind a State; that is, estoppel by conduct of its officers. ‘ Clearly, the State cannot be estopped by unauthorized acts of its officers/ Bigelow, Estop. 341; U. S. v. Kirkpatrick, 9 Wheat. 735, 9 L. Ed. 199.”

In the case of Leonard v. State, supra, a suit was brought to enjoin the .State Auditor from issuing and the Treasurer of the State from paying, certain vouchers issued by the State Highway Commission, in payment of contracts in excess of a thousand dollars, which had been let without advertising for bids, as required by act 65 of the Acts of 1929, volume 1, acts 1929, page 264. It was there held that the authority of the State Highway Commission to let contracts for construction or maintenance of highways is statutory, and any contract not let in the prescribed manner is unauthorized and voidable at the State’s election. It was there also held, in a suit to enjoin the issuance and payment of vouchers based upon such illegal contracts, that relief might be. granted without joining the claimants as parties to the suit.

Much of the relevant legislation was reviewed in the case of Arkansas State Highway Commission v. Keaton, supra. In that case a suit was brought and a judgment recovered against the State Highway Commission for the value of certain labor performed and materials furnished in the. construction of bridges which were a part of the State highway system. The contract was similar to the one sued on in the case of Leonard v. State, supra, and upon the authority of that case we held that it was unenforcible- as such, for the reason that it had not been let in the manner and form prescribed by law. We held, however, as had been previously held in the case of State Highway Commission v. Dodge, 186 Ark. 640, 55 S. W. (2d) 71, that the State, having accepted and being in possession of the results of a performed contract, could be held liable, on a quantum meruit basis, for the value of the materials furnished or the services performed, this right being conferred by act No. 2 of the Special Session of 1928. Acts Special Ses-' sion 1928, page 2.

It was pointed out in the Keaton case, supra, that at the time of the rendition of the opinion in the Dodge case, supra, it had not been decided whether § 17 of act No. 15, passed at the Second 1932 Extraordinary Session of the General Assembly (page 34), was valid legislation or not, as 'being within the call of the Governor convening that session. But, before the rendition of the opinion in the Keaton case, it had been decided, in the case of State Note Board v. State ex rel. Attorney General, 186 Ark. 605, 54 S. W. (2d) 696, that the act 15 was within the Governor’s call, and that § 17 thereof authorized the maintenance of these suits on a quantum meruit basis. But it was said in the Keaton case that: This § 17 recognized that there- were outstanding many claims against the highway commission which had not been adjudicated or paid, and authorized the State Note Board to issue notes in payment, with the proviso, however, that * * this act shall not validate any claim, voucher or warrant or other evidence of indebtedness issued under or pursuant to an illegal contract, and provided further, that no note or notes shall be issued in lieu of any such claim in excess of $150 where such claim is based on a cost plus contract or a contract not let on competitive bidding until such claim is approved and the issuance of such notes are [is] authorized by the State Highway Audit Commission, or until the validity of such claim is finally adjudicated and determined by a court of competent jurisdiction.’ ”

We there also said that we were unaware of any legislation which had repealed § 17, from which we quoted, either expressly or by necessary implication, although the provisions of that section, with respect to the manner of payment of those claims appear to have been changed by the provisions of act No. 167 of the Acts of the 1933 Session of the General Assembly, which was approved March 28,1933, and, having an emergency clause, became a law on that date.

These-.cases — the Dodge and the Keaton cases — appear to decide very definitely that a recovery might be had on these various claims and warrants on a quantum meruit basis-, hut on that basis only.

It appears with equal clearness to the majority that the legislation there reviewed did not operate to waive the State’s right to set-off against any claim, or voucher, or warrant, or other evidence of indebtedness, issued under or pursuant to an illegal contract, such as the one here involved and sought to be set-off is alleged to be, a fact which the demurrer concedes.

Now, if the original contractors, to whom the warrant here in question was issued, had brought suit to enforce their demand, it is certain that § 1197, Crawford & Moses’ Digest, confers the right to apply any set-off which the State might have against it. This section reads as follows: “A set-off may be pleaded in any action for the recovery of money and may be a cause of action arising either upon contract or tort. Civil Code, § 119, as amended by act March 21,1917, p. 1441.”

In construing this section in the case of Futrall v. McKennon, 187 Ark. 377, 59 S. W. (2d) 1035, we said of it: “Act 267 of the Acts of 1917 (vol. 2, Acts 1917, page 1441) is the most comprehensive legislation on the subject of counterclaim and set-off of which we have any knowledge. It is there provided that a counterclaim ‘may be anjr cause of action in favor of the defendants, or some of them, against the plaintiffs, or some of them, ’ and that ‘a set-off may be pleaded in any action for the recovery of money, and may be a cause of action arising either upon contract or tort.’ We think this statute is sufficiently broad to admit a defense against one,- not being the holder of a note in due course, that there were credits which should be applied against the note.”

It will be observed that it was there held that the right of set-off, under this statute, was sufficiently broad to admit a defense against one, not being the holder of a note in due course, that there were credits which should be applied upon a note of which the holder thereof had not received the benefits.

The bank, which is alleged to be the holder for value of the warrant here in issue, is in no better attitude than was the holder of the note there sued on. Indeed, the concession is here expressly made that warrants, orders, and certificates of indebtedness issued by the. State, or, for that matter, by a county or a municipality, are not negotiable in the sense of the law merchant so as to cut off, in the hands of a bona fide purchaser for value or holder in due course, any defense which might have been made against them had they remained in the hands of the original holder. That this is the law is definitely settled. Vale v. Buchanan, 98 Ark. 299, 135 S. W. 848; First Nat. Bank v. Whisenhurst, 94 Ark. 583, 127 S. W. 968; Harriman Nat. Bank v. Pope County, 173 Ark. 245, 292 S. W. 133.

So, therefore, the bank has those rights — and those only — which Altman-Rodgers Company might now assert if they had never assigned the warrant or voucher, or if it were reassigned to them, and we conclude, therefore, that the right of set-off, which the State seeks to assert, exists and should be accorded.

It is insisted, however that the State may ratify, and has ratified, these unauthorized contracts to the extent that they cease to be the subject of a set-off and has directed its agents to pay all claims otherwise valid, and the correctness of this contention is the controlling point of difference between the majority and the minority of the court. The majority concedes that the State may ratify these contracts and direct the payments of warrants issued under them, but we insist that it has not done so.

It is the opinion of the majority that this has not been done, and that the State has only authorized the payment of valid claims. If it was intended that all claims, whether valid or not, should be paid, the Audit Commission has been deprived of one of its chief functions. Why audit a claim if it must be paid, whether valid or not! It appears that the legislation was not so construed in the Keaton case, supra, where we said, as has been stated, that § 17 of act 15 of the Special Session of 1932 recognized that there were outstanding many claims against the Highway Commission which had not been adjudicated or paid, which that section authorized to be adjudicated and paid, provided that “this act shall not validate any claim, voucher or warrant, or other evidence of indebtedness, issued under or pursuant to illegal contracts.” And we there said also that we were aware of no legislation repealing that section, expressly or by necessary implication, except only with respect to the manner of payment of such claims as were adjudged to be valid. We held, in the Keaton case, that the claim there sued on did not have to be presented to the Refunding Board, not because the State had ratified all such contracts and had ordered them all paid, whether valid or not, but because a court of competent jurisdiction had, prior to the passage of act 167 of the Acts of 1933, passed upon its validity, and for that reason — but for that reason only — the Refunding Board had only the ministerial duty to perform of certifying the claim foi: allowance and exchange for a State bond.

Later legislation on the subject, which, it is insisted, evidences the intention of the State to ratify and to authorize. payment of this warrant excluding the right of set-off, are act 18 of the Special Session of 1933, page 69, and act 11 of the Special Session of 1934, page 28.

We do not so construe this legislation, and we think that construction is not authorized when these acts are read in their entirety. Section 2 of act 18 authorizes the payment to be made “to the legal holders of valid claims against the Highway Commission,” but § 1 of this act authorizes the Refunding Board, created by act 16 of the Acts of 1933, “to compromise or settle any suit or claim, either on behalf of the. Arkansas State Highway Commission or against the Arkansas State Highway Commission, growing out of any contract between the Highway Commission and any person, firm or corporation for work, labor, materials, supplies or services, or arising out of any transaction between the Highway Commission and any member or employee thereof. ’ ’ And, as indicating that the State had not relinquished its right to continue the prosecution of any such claims as the one here involved, and in anticipation that some of these cases might be decided in favor of the State, it was further provided, in § 1 of act 18, that “Any funds due the Highway Commission from any settlement or compromise shall be paid into the State Treasury to the credit of the Bond Refunding Fund.” And, finally, as if to make certain what might otherwise be doubtful, it was provided in § 4 of act 18 that: ‘ ‘ This act shall not validate any claim, voucher or warrant, or other evidence of indebtedness issued under or pursuant to an illegal contract, and no note except as provided in § 2 hereof shall be issued in lieu of any claim of $100 or more where such claim is based on a cost plus contract or a contract not let on competitive bidding until such claim is approved and the issuance of the notes authorized by the Refunding Board or until the validity of such claim is finally adjudicated and determined by a court of competent jurisdiction.”

The only other act cited as sustaining the contention that the State had ratified these illegal contracts and warrants is act 11 of the Special Session of 1934, page 28. This is a most comprehensive act, consisting of fifty-five sections, and supersedes much of the prior legislation. It is entitled: “A Bill for an Act to be entitled: ‘An Act to Refund Highway and Toll Bridge Obligations of the State and Road Improvement District Obligations; to Provide for the Payment and/or Funding of Certificates Issued in Aid of Municipal Improvement Districts; to Provide for the Funding and/or Payment of Claims Against the State Highway Commission, and for Other Purposes.’ ”

This act deals in minutest detail with the various obligations arising out of the State’s entire road-building program. Section 15 of the act authorizes the Refunding Board, “in cases in which in the judgment of the board the best interest of the State will be served thereby, to refer to the Highway Audit Commission any note, bond or obligation presented to it for refunding hereunder, or any account or claim against the Highway Commission growing out of any contract between said Commission and any person, firm, or corporation, for work, labor,'material, supplies or services, or arising out of any transaction between the Highway Commission, or any member or employee thereof, presented to the Refunding Board for payment or refunding under the provisions of this act.” It is there further provided that; “It shall be the duty of the Highway Audit Commission to investigate and make a full and complete report as to the validity of any such item referred to it by said Refunding Board; provided, however, that when a court shall determine the validity or invalidity of any such note, bond, obligation, account or claim, or whether or not it comes within the provisions of § 2 of act No. 11 of 1927, or of § 19 of act No. 65 of 1929, such adjudication shall be final and conclusive.”

But, before conferring' the authority to investigate and adjudicate all such claims, it had been provided, in § 10 of act 11, that: “This act shall not validate any claim, voucher, warrant or other evidence of indebtedness issued under or pursuant to any illegal contracts; no payments thereon or notes or bonds therefor shall be issued until such claim, voucher or warrant is approved by the Refunding Board or until its validity is finally determined by the Highway Audit Commission or by a court of competent jurisdiction. Provided that this act shall not affect the full termination of any litigation now pending in any of the courts as to the validity of any bonds now in litigation.”

Anticipating that the discharge of these duties would entail an expense, act 141 of the Acts of 1933, page 453, appropriated funds for protecting the State’s interests in controversies arising- by reason of the Highway Audit. In the preamble to this act it is recited that:

“Whereas, As a result of the. Highway Audit there now exists a great many controversies between the State of Arkansas and contractors who dealt with the State Highway Commission prior to January 1, 1933, and a great many controversies growing out of payments of money on orders of the State Highway Commission to various and sundry persons, and
“Whereas, There are now pending suits brought by the State of Arkansas to recover such funds and other suits on behalf of contractors against the State Highway Commission, and
“Whereas, It is necessary for the State’s interests to be properly protected that a fund be made available with which auditors and engineers may be used as witnesses, and
“Whereas, There is an unexpended balance to the credit of the appropriation made for the benefit of the State Highway Audit Commission in the sum of Thirty-three Thousand Nine Hundred Ninety-nine and no/100 ($33,999.00) Dollars.”

In anticipation of this litigation, and in order that the State’s rights might be fully protected, the sum of $33,999 was appropriated for these purposes. .

We conclude therefore that while provision has been made for the payment of all valid demands against the State, the right of set-off has not been abandoned, and that the warrant here in suit is valid only to the extent of its face — as its validity is not questioned— less the State’s right of set-off against it:

It is our opinion, therefore, that the decree of the court below is correct, and should be affirmed. It is so ordered.

Mehaeey, McHaney and Butler, JJ., dissent.

'Butler, J.,

(dissenting). The majority opinion erroneously states: “It is insisted, however, that the State may ratify and has ratified these unauthorized contracts to the extent that they cease to be the subject of set-off, and has directed its agents to pay all claims otherwise valid, and the correctness of this contention is the controlling point of difference between the majority and minority of this court. The majority concedes that the State may ratify these contracts and direct the payment of warrants issued under them, but we insist that it has not done so.

“It is the opinion of the majority that this has not been done and the State has only authorized the payment of valid claims. If it was intended that all claims, whether valid or not, should be paid, the Audit Commission has been deprived of its chief function. ’ ’

Later on the opinion refers to the subject-matter of this suit and the supposed contention of the minority in this way: “The only other act cited as sustaining that the State has ratified these illegal contracts, ’ ’ etc.

It is upon this premise that the majority bases its contention and found its argument in support of the conclusion “that, while provision has been made for the payment of all valid demands against the State, the right of set-off has not been abandoned. ’ ’

With deference, I submit that the opinion misstates the position taken by the minority, misunderstands the contention of the appellant and rests upon a wholly false premise. The minority do not contend that the State “has ratified unauthorized contracts and has directed its agents to pay them.” Neither do we admit that the warrants should be classed with “other illegal contracts,” as the opinion seems to imply. On the contrary, we insist that the State has not attempted to ratify unauthorized contracts or warrants issued thereunder, but has only protected frown fide holders for value of valid warrants properly issued for just claims on legal contracts. That it, acting through its Legislature, has done this four times, we maintain.

It is apparent that the excerpts, from the several acts quoted in the majority opinion are not persuasive of the contrary view, but support and affirm our contention. The purpose for the creation of the Audit Commission, with respect to that part of its duties relating to demands against the State, was to inquire into and audit those which were questionable, either as to amount or validity. Surely its services are not required with respect to a warrant issued for the correct amount and based upon a claim arising out of a valid contract when there is no contention otherwise but which is expressly admitted.

Section 1 of act No. 18, p. 69, of the acts of the first extra session of 1933, quoted in the majority opinion, authorizing the Refunding Board “to compromise or settle any suit or claim, etc. * * * growing out of any contract between the Highway Commission and any person * * *, ” can only relate to disputed matters and clearly has no reference to those admittedly correct. How this provision, or the one in the same section referred to by the majority, providing that funds due the Highway Commission on any settlement or compromise shall he paid into the State Treasury for credit of the Bond Be-funding Fund, gives any support to the conclusion reached, I do not understand. The opinion, after ■ citing these above provisions, cites as conclusive of the conclusion reached, section 4, act 18, supra, which provides that “this act shall not validate any claim, etc. # * * issued under, or pursuant to any illegal contract * * V’ In what manner is this authority? I insist that, notwithstanding repeated intimations in the opinion to the contrary, the warrant involved is expressly admitted to be regular and valid in every particular, and therefore all the provisions quoted have no application, for they deal with claims, the validity of which are brought in question. "What I have just said is apposite to section 15 of act No. 11, supra, quoted and relied upon by the majority opinion. The provisions 'quoted are those which empower the Befnnding Board to refer claims to the Audit Commission growing out of any contract between the Highway Commission and any person, to the end that the Audit Commission may investigate, and report “as to the validity of any such item.” Later in the opinion, section 10 of act No. 11 is quoted and cited, this being in effect the same as the provisions of section 4 of act No. 18, which I have already noted. The majority cite and quote in full the preamble of act No. 14 of the Acts of 1933 as persuasive of the .position taken. It will be seen from this preamble that the appropriation provided by the act relates only to the contest of invalid claims or those which may be thought to be such and which are being contested in the courts.

From the whole argument made inr the majority opinion and from an examination of the provisions of the statute cited, it seems obvious that the majority have misconceived both the nature of the subject-matter of this suit and the view entertained by the minority. We emphasize again that there has never been any contention that the State .has validated claims otherwise invalid, nor has any one ever thought, except the majority, that the warrant involved should be classed with “other illegal contracts.” It is expressly admitted in the complaint, as quoted in the majority opinion, that “the complaint alleged that the warrant was issued to the contractors for construction work performed under a. valid contract upon a voucher duly and legally issued by the Arkansas State High-way Commission and was, on the same date of its issuance, indorsed and delivered to the People’s National Bank in due course of business and for value.”

The minority merely insist that, since the warrant was properly and regularly issued, based upon a valid contract, the State has on four occasions by legislative enactment guaranteed to the holders of that class of claims the right to have the same refunded in the manner prescribed by law. By section 17 of act No. 15 of the Acts of 1932, by sections 1 and 5 of act No. 167 of the Acts of 1933, by section 2 of act No. 18 of the Special Session of 1933, and by section 39 of act No. 11 of the Special Session of 1934, the settled policy of the State has been declared in unequivocal language to be (section 9, act No. 11, Special Session 1934, the latest. expression of the legislative will) that “the legal holders of all valid claims against the Highway 'Commission growing out of contracts for the construction and maintenance of highways shall be entitled, upon presentation to the Refund-' ing Board of such short term notes, State bonds, or other evidences of said claims, to receive in exchange therefor funding notes of the character hereinafter provided for in this section in an amount equal to so much of the face value of such short term notes, State warrants, or claims presented, payment of which is not otherwise provided for by this act. ’ ’ The language just quoted was but a re-enactment and re-statement of the privilege given to legal holders of valid warrants provided for in the acts cited, supra, dealing with that subject.

The overpayment under an invalid contract -which is' sought as a set-off to the warrant involved -was made at leást a year and six months before the issuance of the warrant held by the People’s National Bank. The State therefore had ample opportunity to determine the amount of overpayment before the issuance of the $2,500 warrant, admittedly valid, which is sought to be refunded. The State ought not, by reason of the dereliction of its officers, to insist now on having the set-off against a valid warrant in the hands of an innocent purchaser. The moral obligation rests upon it, as well as individuals, to do justice. This obligation has been recognized by its Legislature in the provision of the acts last above referred to, and no judicial interpretation ought to refine away its express purpose. To do so, I submit, turns the law awry and violates principles of natural justice.

I am authorized to say that Justices Mehaeey and McHaney join in the dissent, and concur in the views I have expressed.


author: Humphreys, J.

text:
    Leech v. Missouri Pacific Railroad Company.
    4-3385
    Opinion delivered April 30, 1934.

      W. B. Donham, for appellant. •

      B. E. Wiley, B. Byan and Henry Donham, for appellee.
   Humphreys, J.

Appellant brought suit in her representative capacity against appellee and L. N. Graham for damages in the sum of $45,000 for the benefit of herself as widow and her son and for $5,000 for the 'benefit of the estate of her deceased husband, Ivan E. Leech, on account of Ms death caused by the collision of appellee’s train and Graham’s automobile at the road crossing between Owosso Manufacturing Company plant and the station at Benton, through the alleged concurrent negligence of Graham and appellee’s employees. The alleged negligence on the part of appellee was its failure to blow its whistle and ring its bell as it approached said crossing and the failure of Graham to effectually look to see if the train was approaching as he drove upon the crossing.

Graham filed no answer. Appellee filed an answer denying the material allegations of the complaint and pleading that Graham’s negligence was imputable to deceased, who was riding as a guest in his car.

The submission and trial of the cause resulted in the following verdict:

“We, the jury, find for the plaintiff against both defendants and assess her damages for the benefit of the estate of the deceased in the sum of $3,750.
“Jos. R. Curland, Foreman,” and nine others.

A judgment was rendered in accordance with the verdict, and the amount thereof was declared a lien upon the railroad of appellee, as provided by statute. The judgment contained the following paragraph: “It is further considered’, ordered and adjudged that no finding was made by the jury upon the cause of action for the benefit of the widow and child of the. deceased. It is therefore considered, ordered and adjudged that the plaintiff take nothing upon her cause of action for the benefit of the widow and child of the deceased.”

Appellant appealed from that part of the judgment precluding a recovery by appellant for the benefit of herself as widow and the benefit of her five-year-old son.

No exception was filed to the judgment by appellee, no motion for a new trial was filed by it, and no appeal prayed from the judgment by it when the judgment was entered.

After the transcript of the cause was filed by appellant in the Supreme Court and more than six months after the rendition of the judgment, appellee prayed and was granted a cross-appeal.

When the verdict was returned into court, the record reflects the following occurrence: “Mr. W. B. Donham: Is that for the benefit of the estate and nothing for the benefit of the wife at all? A Juror: No, sir. The Court: The jury, will 'be discharged and be back in a few minutes; we want to start another case. Mr. W. B. Don-ham : Let the record show that, upon returning the verdict and upon the verdict’s being read by the foreman of the jury, W. B. Donham, counsel for the plaintiff, arose and propounded the following question: ‘Did the jury not intend to find any amount of damages for the benefit of the widow and child of the deceased?’ To which the foreman replied in the presence of all the jury and in open court, ‘No, sir.’ Mr. B. M. Byan: Let the record show no exceptions were saved in the presence of the jury. Mr. W. B. Donham: I am saving them now. I want the record to show I object and except to the form of the verdict. The Court: All right. Mr. W. B. Don-ham: The plaintiff requests that the jury be recalled and sent back to the jury room for further deliberations and that they be instructed that if they return a verdict against the defendants jointly for the estate they must necessarily also return a verdict for the benefit of the widow and child of the deceased. The Court: Motion overruled. To which ruling and action of the court the plaintiff at the time excepted and asked that her exceptions be noted of record, which was accordingly done.”

Appellant contends that two causes of action were alleged, which is conceded by appellee, and that she was entitled to a verdict as well upon her cause of action for the benefit of herself and son as upon her cause of action for the benefit of the estate, and that it was error not to require the jury to return a verdict for a substantial amount for the benefit of herself and son. It is argued that in order to find a verdict for the benefit of the estate it was necessary for the jury to find that appellee and Graham were negligent and that deceased was not. This is true, and the verdict on behalf of the estate is supported by sufficient evidence, as there was testimony tending to show these facts. It does not follow, however, that because two separate and distinct causes of action are tried by the same jury the finding of facts in one cause is binding on the jury in the other cause of action if there is a dispute in the testimony. Although there was evidence tending to show concurrent negligence on the part of Graham and appellee and no negligence on the part of deceased, yet there was evidence tending to show no negligence on the part of appellee, and the jury was at liberty to so find in the cause of action on behalf of appellant for the benefit of herself and son, as much so as if the two causes of action had been tried separately instead of together. Notwithstanding the causes of action may be tried together under the provisions of the statute, they are wholly independent of each other, and the finding of the jury in one is not binding upon the jury in the other if the facts are in dispute, as they were in this case.

The main contention of appellant, however, is that, according to the judgment and record made, the jury returned no verdict either for or against her on her cause of action for the benefit of herself and son. A majority of the court, not including Mr. Justice Mehaeey and the writer, are of opinion that the questions propounded to the jury and answered by the foreman, elicited the information and verdict to the effect that the jury intended to find appellant was entitled to nothing on her cause of action for the benefit of herself and son.

Mr. Justice Mehaeey and the writer are of opinion that the queries and answers elicited the information that the jury made no finding at all on appellant’s cause of action for the benefit of herself and son, which view is supported by the above quoted recital in the judgment appealed from.

There being no proper cross-appeal or appeal by appellee, the questions raised thereon are not before us for determination.

No error appearing, the judgment is affirmed,


author: Kirby, J.,

text:
    National Life & Accident Insurance Company v. Threlkeld.
    4-3431
    Opinion delivered April 30, 1934.

      Barber $ Henry, for appellant.
    Johni L. Sullivan, for appellee.
   Kirby, J.,

(after stating the facts). Appellant insists that the policy of insurance was avoided because the insured in his application therefor wilfully and knowingly made misrepresentations with the intent to deceive the company as to his physical condition. There is no evidence here, however, directly tending to show any such representations, or that such misrepresentations had been wilfully and knowingly made as to his physical condition. Three witnesses, two of them disinterested, testified that insured was in apparent good health both at the time the application for insurance was made and at the time of the delivery of the policy; that the insured weighed at that time from 165 to 170 pounds. The agent of the company who delivered the policy also stated that insured was in apparent good health at that time.

A misrepresentation will not avoid the policy unless wilfully or knowingly made with intent to deceive. Wilbon v. Washington Fidelity National Ins. Co., 182 Ark. 57, 29 S. W. (2d) 680; Metropolitan Life Ins. Co. v. Johnson, 105 Ark. 101, 150 S. W. 393.

The burden was upon appellant to show that false and material representations, which induced the issuance of the policy, were made to it by the insured knowingly and wilfully and with the intent to deceive the insurer; but appellant not only failed to discharge the burden, but the preponderance of the testimony appears to support the proposition that insured was in good health at the time of the making of the application and the delivery of the policy.

No error was committed in excluding the testimony of Helen Robinson of the general hospital and Elizabeth Kellogg of the county hospital about the records of deceased in both these hospitals. Both testified that they were merely custodians of the records in the respective hospitals; that the records were made by the doctors and nurses; and that their duty consisted in placing them in the files. No reason was given why the doctors and nurses were not able to testify, and they were the proper parties to do so, and the records were properly excluded. The excluded evidence, if admitted, would have been merely cumulative, to the testimony of Drs. May and Whitehead, whose testimony was introduced, and would have served merely to bolster it up. If the records were admissible, they should have been introduced by the parties who made them, so that appellee could have the opportunity to cross-examine the witnesses upon the items therein. Roberson v. Roberson, 188 Ark. 1018, 69 S. W. (2d) 275.

The waiver signed by the insured, relative to the production of testimony by physicians and nurses, did not remove tlje restrictions imposed upon the above witnesses under § 4149, Crawford & Moses’ Digest, since they were neither physicians nor nurses and made no records of any kind in the case.

There is no testimony or evidence showing that the insured knew that he. had tuberculosis before making the application and receiving the policy from appellant company; and it was a question for the jury to determine whether fraud was practiced on the appellee in securing the release, and same has been decided against the appellant. Harper v. Bankers’ Reserve Life Co., 185 Ark. 1082, 51 S. W. (2d) 526.

The settlement was obtained by taking the beneficiary by surprise and requiring her to act at once, without having the. policy in her possession or learning' its provisions and without an opportunity to take legal advice or ascertain the facts. Order of Commercial Travellers v. McAdam, 125 Fed. 358, 61 C. C. A. 22.

The case was submitted under instructions to which there were no objections; the testimony is amply sufficient to support the verdict; and, finding no error in the record, the judgment is affirmed.