author: Hart, C. J.

text:
    Kerby v. Feild.
    Opinion delivered April 6, 1931.

      Carmichael S Hendricks and R. P. Taylor, for appellant.

      J. A. Watkins, for appellee.
   Hart, C. J.

Appellant prosecutes this appeal to reverse a decree of the chancery court refusing to declare certain deeds, absolute in form, to be mortgages, and to allow Mm to redeem from same, and to declare certain tracts of said real estate to be held in trust by appellee for appellant; and also to reverse a decree settling an account between the parties extending over several years.

Appellant became contractor for a road improvement district in Saline County, Arkansas, and appellee became surety on his bond. They had litigation with the road district for the collection of certificates of indebtedness issued by said road district to appellant, wMch extended over a period of several years. The association between the parties led to the transactions involved in this suit.

A master was appointed to state an account between the parties. Voluminous testimony was taken on both sides, and it would unduly extend the opinion to set it out m extenso. For the sake of brevity and of clarity, we shall follow the lines of the brief of appellant and discuss the several transactions separately and shall only set out the substance of the evidence on each point as it impressed us after a careful consideration of the whole matter. Three tracts of real estate are involved in the chancery suit which are termed, respectively, the Cabot farm, the Ferndale Apartments, and the McAlmont place. On the accounting branch of the case, the principal items relate to the road certificates assigned by appellant to appellee, the attorney’s fees alleged to be due from appellee to appellant, and charges against appellant for livestock on the Cabot farm.

According to the allegations of the complaint of appellant, in December, 1922, he owed C. W. Watson and the Union Trust Company something over $6,000, on the purchase price of 400 acres of land in Lonoke County, Arkansas. On the 31st day of January, 1922, C. W. Watson and J. P. Kerby executed an agreement relating to this tract of land. The agreement recited that it was conditioned on the setting aside of the order of sale of a bank in St. Louis against Watson and Kerby and the reinstatement of the loan to the bank secured by a mortgage on the land. Kerby agreed to give a warranty deed to Watson to the land, and Watson agreed to give Kerby an option to repurchase at any time on or before December 15, 1922, upon the conditions set out in the agreement. The instrument was duly signed and acknowledged on the 31st day of January, 1922. Kerby failed to comply with the terms of the agreement and made a verbal agreement with Watson and Feild for the execution of a deed by the former to the latter which was to be considered as a mortgage for the security of the indebtedness of Kerby. According to the evidence given by Kerby, the rents on the place were worth $1,000 per year. Kerby considered his interest in the farm worth $15,000. Kerby considered that he had complied with the condition of the contract and redeemed the property when he persuaded Feild to pay his indebtedness to Watson and allowed him to receive an absolute deed from Watson. There was a verbal understanding at the time of the execution of the deed from Watson to Feild on December 8, 1922, that Kerby should be allowed to repurchase the land upon the payment of the indebtedness to Watson which had been paid by Feild. Feild was his client, and had financed several deals for him, and Kerby, on that account, had absolute confidence in him. He kept the deed in his possession and never had it recorded. Feild never demanded possession of the deed until about a year ago. Other witnesses testified that at various times they had heard Feild make a statement about Kerby having an interest in the farm.

O. B. Feild was a' witness for himself. According to his testimony, Kerby had no interest in the Cabot farm. Kerby interested him in the purchase of the farm from Watson, and it was understood that the deed should be executed from Watson to Feild because Kerby was not able to carry out his contract wdth Watson. Kerby did not withhold the deed from Watson to Feild from record because he had any interest in the property. Kerby told Feild that he would have the deed recorded, and Feild supposed that he had done so until the present litigation came np. The Cabot farm was in road district litigation and was heavily assessed for betterments. The taxes, including- the betterments, amounted to more than the crops raised on the place were worth.

According- to the testimony of C. W. Watson, he conveyed the 'Cabot farm to Kerby in 1918 or 1919. Early in 1922 he learned that the land was delinquent for taxes, and also that Kerby had failed to pay an installment of interest due to a bank in St. Louis, and that a foreclosure suit was imminent. Watson paid all the taxes, rents, and interest due on the mortgage on the land with the understanding that Kerby would reconvey the land to him. At the same time, he signed a written agreement permitting Kerby to redeem the land, which he failed to do. After Kerby failed to redeem the land, he interested Feild in the matter; and the latter took over all the indebtedness in consideration that Watson should execute a deed to Feild or Kerby, but he recollects that Feild became the owner and was to receive the deed.

Counsel for appellant rely on the case of Dicken v. Simpson, 117 Ark. 304, 174 S. W. 1154, where it was held that when a deed not absolute on its face and a contract, drawn contemporaneously, when construed together, do not show a sale, the proof, in order to show that a mortgage was intended, need not be as clear and unequivocal as when the deed is absolute on its face. We do not think that case is applicable.

It is not disputed that Watson executed a written contract whereby Kerby was allowed to repurchase or redeem the land by the payment of the indebtedness due on it to Watson in December, 1922.

According to the testimony of Kerby he failed to carry out his contract, and he then entered into a verbal contract whereby Watson was to execute a deed to the land to Feild, and that Feild entered into a verbal agreement with Kerby to allow him to redeem or to repurchase the land upon the payment to Feild of the amount of the indebtedness which Feild had assumed and paid to Watson for Kerby. Appellee testified to the contrary.

Pursuant to this contract, in December, 1922, Watson executed a deed to the land called the 'Cabot farm to Peild. This calls for an application of the established rule in this State that a court of equity will treat a deed absolute in form as a mortgage when executed for a loan of money or as security for a debt. The court looks beyond the terms of the instrument to the real transaction and will give effect to the actual contract of the parties. The evidence that the instrument was intended only to secure a debt and operate only as a mortgage must be clear, unequivocal and convincing, or the presumption that the instrument is what it purports to be must prevail. Since the equity upon, which the court acts arises from the general character of the transaction, any evidence, written or oral, tending to show this, is admissible. Hays v. Emerson, 75 Ark. 554, 87 S. W. 1027; Snell v. White, 132 Ark. 349, 200 S. W. 1023; Nail v. Kirby, 162 Ark. 140, 257 S. W. 735; Matthews v. Stevens, 163 Ark. 157, 259 S. W. 736; Bolden v. Grayson, 167 Ark. 180, 266 S. W. 975; and Bailey v. Frank, 170 Ark. 610, 280 S. W. 663.

Tested by this rule, which is well settled here as elsewhere, we do not think that appellant has established his case with that clear, unequivocal, and convincing testimony that the law requires. Kerby was given every opportunity by Watson to redeem the land before it was conveyed to Peild. It seems that Peild only became interested in the land because of his association with Kerby in other matters, and it does not appear that Kerby ever had or offered to pay him what the undisputed evidence shows that Peild had paid out on the land. Therefore, we think the chancellor was .justified in holding against Kerby on what is called the Cabot farm.

The complaint of appellant alleges that on May 24, 1923, he caused to be transferred to Peild three lots in Perndale Addition to Little Kock, worth $10,000, which were encumbered to the amount of $2,400. The complaint alleges that said property was to be held in trust for appellant, and that he had the beneficial ownership in it. Feild admitted that the property was conveyed to him, bnt denied that it was of the value claimed by appellant. He alleges that the revenue of the property has not been sufficient to pay taxes, interest, insurance and upkeep. Appellee further alleges that, if appellant will pay the amount of money which he has expended on the property, he is ready and willing to reconvey it to him.

According to the testimony of Kerby, his equity in the property is worth $7,500. There was an indebtedness of $2,400 against the property, and Feild took over the property for Kerby and borrowed $2,500 to pay on the purchase price. Kerby later made payments on the indebtedness which reduced it to $1,700. He is corroborated by the testimony of George Spencer. The latter testified that he understood at the time the property was conveyed to Feild that he was taking the property over for Kerby. He knew that Kerby and Feild had been closely associated in business for several years.

According to the testimony of Feild, he took over the property for about $2,400 and put out $900 in repairs. He borrowed $2,500 on it. There was no understanding, when he bought the property, that he was buying it for Kerby; and Kerby had never offered to pay him any money that he had put into it. He was solicited to buy the property for a whole year. Spencer had a mortgage on the property; it was a losing proposition. The holders of the mortgage indebtedness had foreclosed their liens on the property.

In order to constitute a resulting trust, the purchase money or a specified part of it must have been paid by another or secured by another at the same time, or previously to the purchase, and must be a part of the transaction. In other words, the trust results from the original transaction at the time it takes place and at no other time, and it is founded upon the actual payment of money and upon no other ground. Red Bud Realty Co. v. South, 96 Ark. 281, 131 S. W. 340; and Reeves v. Reeves, 165 Ark. 505, 264 S. W. 979. This rule is so well settled in this State that no further citation of authorities to support it or reasons for its adoption need he discussed.

In the application of it to the facts of this case, it cannot be said that the chancellor erred in holding in favor of appellee.

The testimony to establish a resulting trust must be clear, satisfactory, and convincing. Stacy v. Stacy, 175 Ark. 763, 300 S. W. 437. There was no part of the purchase money of the Ferndale Apartments paid by appellant before or at the time of the conveyance to appellee. Appellee offered to convey the property to appellant at any time that he would reimburse him for the amount paid for it. This, together with the other circumstances attending the transaction, tended to show that appellee gave full value for it. At any rate, appellant has not offered to comply with the terms upon which he might repurchase the property. No useful purpose would be served by decreeing that the beneficial ownership was in appellant when he is refusing to carry out the terms upon which he claims the beneficial ownership. In other words, he could in no event have the legal title vested in him without reimbursing appellee for the amount paid out for appellant by him in the purchase of the Ferndale Apartments.

The complaint of appellant alleges that on April 18, 1924, he purchased from W. B. Smith certain lands in Pulaski County, known as the MeAlmont place, which Feild was to assist in. buying. Appellant alleges that the wife of appellee Feild holds this tract of land in trust for appellant. Appellee alleges that he was persuaded by appellant to execute a bond for the purchase money of this tract of land at a foreclosure sale, and that appellant was unable to pay the purchase price. On this account the commissioner’s deed was executed to the wife of appellee, and full value was paid for the land. Appellee alleges that he paid $16,000 for the MeAlmont place, and that appellant has no interest therein.

According to the testimony of appellant, Ms equity in the place is worth $4,000. A mortgage was foreclosed on the property which was bid in by the son of appellant. Feild signed the purchase money bond. Later, the title was taken in the name of wife of appellee, and appellee agreed to hold the same in trust for appellant. They had an understanding that the land should be held in trust for appellant. This agreement was a verbal one.

According to the evidence for appellee, the purchase of the McAlmont place in the name of Ms wife was not for the benefit of appellant. The purchase price has been paid, and appellant has no interest in it. Appellant’s son bid in the property at the foreclosure sale, and appellee signed his bond for'the purchase money. Appellant and his son were unable to pay the purchase money, and appellee took over the property.

The chancellor found this issue in favor of appellee; and, under the rule announced above, it cannot be said that he erred in so doing. In no sense can it be said that a resulting trust was established by appellant by clear, satisfactory, and convincing evidence.

We now come to the accounting between appellant and appellee which may be divided into three general heads, being amounts claimed by appellant from appellee on road certificates; for attorney’s fees; and for the value of live stock charged against appellant on account of the Watson mortgage, which appellant claims should have been charged against appellee.

Appellant claims that on December 15, 1923, he turned over to appellee road improvement district certificates of the par value of $10,894.85, which had been issued to Mm for construction work by a road district in Saline County. Appellant alleges that these certificates were turned over by him to appellee as collateral security for an indebtedness which appellant owed appellee. Appellee averred that appellant had assigned these certificates to him absolutely for the consideration of $7,915.67. The contract of assignment, which was executed in December, 1923, reads as follows:

“I, J. P. Kerby, ° * * for and in consideration of $7,915.67 to me in hand paid by O. 'B. Feild * * * do by these presents sell, assign and convey to the said O. B. Feild, his heirs and assigns, any and all claims against Road Imp. Dist. No. 4, * * * and am transferring all amounts due or to become due from said Road Imp. Dist. No. 4, Saline County, Ark., to said O. B. Feild in order to secure the above amount in cash or loan. In the event that the said O. B. Feild shall, from any cause fail to collect and receive the above amount assigned, then I give him, his agents or assigns, the right to collect for any amount that may hereafter be due me from said Road Imp. Dist., Saline County, or from any other person, corporation or firm.”

According to the testimony of J. P. Kerby, on December 15, 1923, he turned over to appellee, as collateral security, road certificates of the par value of $10,894.85. These road certificates had been issued to him for construction work by a road district in Saline County, Arkansas, and were worth par. It was not the intention of the parties to assign the road certificates absolutely, but they were assigned by appellant to appellee as collateral security for an indebtedness owed by the former to. the latter. The assignment was made because Feild was trying to negotiate the certificates, and the assignment would enable him to show his right to do so. On April 18, 1924, before.the present litigation began, appellant said that he submitted to appellee an account concerning their business transactions in which he charged him with the road warrants at par and that appellee made no objection to any item in the statement.

According to the testimony of appellee, appellant was indebted to him in an amount of something over $14,000. Appellee had signed the bond of appellant on some road construction work in Saline County, and the indebtedness grew out of appellee signing that bond for appellant. In part settlement of Ms indebtedness, appellee agreed with appellant to credit him with $7,915.67 for the $10,894.85 in road certificates. Appellee conld not dispose of these road certificates or use them as collateral until they were validated by litigation, which was something over two years later. At the time the certificates were assigned by appellant to appellee, the latter had been trying to negotiate them to third parties. The best price offered was seventy-five cents on the dollar with the indorsement of appellee on the certificates. The agreement whereby the certificates were assigned by appellant to appellee was not intended to be as collateral security, but it was intended to be an absolute assignment. Litigation lasting over a course of several years was pending between the road improvement district and appellant as contractor and appellee as surety on his contractor’s bond, and the road district certificates were not regarded of much value until this litigation was determined. Under these circumstances, it cannot be said that the finding’ of the chancellor in favor of appellee was against the weight of the evidence.

. The oral testimony of the parties did not fall under the ban of the well known rule that parol evidence is not allowed to contradict or vary a written instrument. This rule is only applied when the parol evidence tends to vary or contradict the language used in the instrument. Pugh v. Davis, 96 U. S. 332. Here the evidence did not tend to vary the language of the written assignment, but only tended to explain the terms of it which were ambiguous. Therefore we hold that there was no reversible error on the part of the chancellor in finding for appellee on this item.

It is next insisted that the court erred in not allowing the appellant attorney’s fees in the sum of $8,400.

According to the testimony of appellant, he served appellee as attorney from May, 1920. to July, 1927, and his services were worth $1,200 a year. He testified that appellee for the consideration of $200 had signed his bond as contractor for the Saline County road district. There were twenty-one cases in the municipal court at Little Rock añd two cases in the circuit court growing out of the fact that appellee had signed the bond, and appellant appeared in his defense in all the cases. He did other work in the road litig’ation which he testified to in detail. Appellant also testified as to other suits in which he appeared for appellee. The testimony of several attorneys'was also adduced By appellant in which they stated that they had offices' near that of appellant and that, judging from the number of times they saw appellee going in and coming out of appellant’s office, his services were well worth $1,200 a year. Appellee was a witness for himself. According to his testimony, he never received any compensation for signing the contractor’s bond for appellant, but that he soon became involved in litigation with the road district because he had signed the contractor’s bond for appellant. His visits to the offices of appellant were almost daily, but all of them were in the interest of the road litigation which was for the benefit of appellant and incidentally to him because he was surety on the contractor’s bond of appellant. He testified that the other legal services performed by appellant for him were in small matters and were of but little value. On this branch of the case, the court allowed attorney’s fees to appellant in the sum of $3,545.66. We do not think that it can -be said that the chancellor’s finding in this respect was against the weight of the evidence. It is true that several attorneys testified that, considering the frequent and almost daily visits of appellee to office of appellant, his services were worth the sum of $1,200 a year, but, when we consider that perhaps all of these visits were in the interest of appellant as principal and appellee merely as surety on his contractor’s bond, we do not think that the court erred in allowing appellant as attorney’s fees $3,545.66, instead of $8,400, as claimed by him.

It is next insisted that the court erred in charging appellant in stating the account between him and appellee with the value of certain live stock in a chattel mortgage given by appellant to Watson. Here again the testimony of the parties is in irreconcilable conflict. The undisputed evidence shows that there was a mortgage given by appellant to Watson on certain personal property which was on the Cabot farm. According to the testimony of appellant, this personal property was not included in the deed from. Watson to appellee and was not to be accounted for by him. On the other hand, according to the testimony of Watson, he never released his mortgage on the personal property on the Cabot farm, and it was intended by him that the personal property included in the mortgage should go to appellant or appellee in the deed to the farm. Watson stated that he did not remember whether he made the deed to appellant or to appellee, but does recollect that the personal property was to be included in the grant of the land. The undisputed evidence shows that the deed was made to appellee, and appellee corroborated the testimony of Watson to the effect that the personal property in the mortgage was to go with the purchase of the land. The chancellor found this issue in favor of appellee, and it can not be said that his finding* in this respect is contrary to the preponderance of the evidence.

We have carefully considered the evidence in the case and the findings of the chancellor based upon the exceptions made to the master’s report. We are of the opinion that the finding of the chancellor was correct, and the decree will be affirmed.


source: Caselaw Access Project

author: Kirby, J.

license: Public Domain

text:
    Sellers v. Bowie.
    Opinion delivered April 6, 1931.

      II. G. Wade, for appellant.

      Hayme, Parks $ Westfall, for appellee.
   Kirby, J.

This suit was begun in the justice court for enforcing a landlord’s lien for rent against the crop produced by appellant upon certain lands.

The affidavit was made by one H. H. Bowie, who brought the suit as “agent for the Bilcie Yancy estate,” and was in form of the affidavit required by the statute in such cases. A bond was given as required for general attachments, and either a general attachment or an order for delivery was issued and levied upon the property. The pleadings at first did not contain the name of appellant, but were later amended to do so. Ed Sellers, appellant, executed a bond to discharge the attachment, agreeing to perform the judgment of the court, with H. H. Wade and A. J. Watts as sureties and retained possession of the cotton. He also filed a motion to quash the writ in the justice court, which later was renewed by him on appeal in the circuit court and overruled. The affidavit was treated as amended before the trial in the justice court changing the agency of the plaintiff H. H. Bowie to show that he was “the agent of the heirs of Dilcie Yancy,” rather than of her estate. The death of Bowie was later suggested, and the suit continued in the name of the real parties in interest.

The circuit court rendered judgment against appellant, Sellers, and the bondsmen from which appellant only prosecutes this appeal.

Only two assignments of error are urged for reversal; first that appellees, having failed to file in the first instance the bond required for specific attachments under the landlord’s lien statute and not having filed the affidavit required for the issuance of a general attachment, were entitled to neither a specific nor a general attachment, and that the court erred in not so holding and quashing the' writ.

The pleadings and affidavit were so amended as could he and was done to include the name of appellant before the trial. Rogers v. Cooper, 33 Ark. 406; § 565, Crawford & Moses’ Digest. See also O’Donnell v. Magnolia Petroleum Co., 163 Ark. 357, 258 S. W. 981; Hurley v. Bryan, 160 Ark. 277, 254 S. W. 694.

There was a writ issued for enforcement of the lien after bond made, and upon the levy of which the bond to discharge the attachment was given. There is no contention made that the amount sued for and claimed as rent due had been paid or was not due, nor that the order of attachment or writ issued was not properly executed against the property, upon which the lien was sought to be enforced, and it is conceded that the bond to perform the judgment of the court was given, the attachment discharged, and the property upon which the writ had been levied restored to the possession of the appellant.

Upon the execution of this bond the attached property was retained by appellant, and it is not disputed either that the grounds for the attachment did not exist or that the amount claimed to be due, and for which the attachment was issued, was not owed by appellant, as Ihe jury found, and the obligors of the bond became bound to pay the judgment recovered in the action. Ferguson v. Glidewell, 48 Ark. 195, 28 S. W. 711.

Proper affidavit for attachment against the specific property for enforcement of the lien was made, and there was no levy or attempted levjr of the writ made against any other or the general property of appellant, as was done in the case of Edwards v. Cooper, 28 Ark. 466, which has no application here.

Affirmed.


author: Smith, J.

text:
    Burnett v. Modern Woodmen of America.
    Opinion delivered April 20, 1931.

      Coulter <£ Coulter, for appellant.

      Rose, Hendngicaij, Cantrell Loughborough, for appellee.
   Smith, J.

This cause was tried in the court below upon an agreed statement of facts, and it appears therefrom that the Modern Woodmen of America, a fraternal beneficiary society, organized under the laws of the State of Illinois, issued a benefit certificate to Jud Watson in 1921, payable, upon the death of the insured, to his uncle, R. P. Burnett.

The monthly assessments were regularly paid until April, 1930, in March, 1922, Watson, the insured, left the State and went to Oklahoma, where he was last heard from directly in 1923. The subordinate lodge at Beebe, of which AVatson was a member, knew of his disappearance, but accepted assessments and dues from Burnett, the beneficiary, until April, 1930, at which time demand was made upon the insurer for the payment of the face of the benefit certificate. Inability was denied, however, because of § 78 of the by-laws of the insurance order, which provides that no presumption of death shall arise from disappearance which does not continue for a period equal to the life expectancy of the insured.

The briefs of opposing counsel contain an interesting discussion of the validity of this by-law, it being insisted by the plaintiff that it is void, as being contrary to § 4111, Crawford & Moses’ Digest. This section reads as follows: “Any person absenting himself beyond the

limits of this State for five years successively shall be presumed to be dead, in any case in which his death may come in question, unless proof be made that he was alive within that time.”

We do not decide the question of the validity of the by-law, quoted above, for the reason that the statute, which we have also quoted, does not apply under the facts of this case.

Exhibited with the agreed statement of facts was the correspondence between the plaintiff beneficiary and the insurance order. One of these letters reads as follows:

“Beebe, Ark., 7/30/26
“Mr. Truman:
“Dear Neighbor and Sir: In answer to yours just received in regards to neighbor Jud Watson will say that he lef hear 4 years ago this past March, and that was the last time I have seen or hear of him only through a woman here. She said she heard from him about one year later, and that he was in Tulsa, Oklahoma, and that he was going under the name of Jack Mete. ITis reason for leaving hear was a woman trouble, and he gave some bad o’ks, not enough to amount to anything, in regard to his war business. He enlisted here with Company B at Beebe, Ark. I can’t at this time give.you Major, but can later if necessary, Co. B Infantry 153; can’t say whather or not he was caring any war insurance, but think he was as the bonas bill was about all he would talk about. Now in my last letter to you I tol you that he had one sister living in England, Arkansas, but I failed to give you her name, her name is Magie Jackson. She gets her mail at England, Arkansas, Rout 1. The last I seen or heard of him was when he lef hear, and he was working for me at that time as delivery boy and helper in store, so any information yon can give me in locating him will be appreciated. With kind regards, will close.
“Respectfully,
“R. P. Burnett.”

A reply to this letter was written, which reads as follows:

“Warsaw, Illinois, August 2, 1926.
“Mr. R. P. Burnett,
“Beebe, Arkansas.
“Dear Sir:
“Yours of July 30th regarding Jud Watson received. You say that you heard through a woman that she heard from him about one year after he disappeared, which would have been three years ago. That he was then in Tulsa, going under the name of Jack, and I am not able to make out the last name. Is it Metz"? Will you please give them the name and address of this woman, or, if she is in Beebe, find out from her how she came to hear from him, whether or not it was b3r letter or otherwise.
“I enclose an envelope for your reply.
“Yours truly,
“Truman Plantz, General Attorney.”

Indorsed upon this reply and as an answer to the questions which it contained was the following notation:

“Answer this woman died about one and one-half years ago, and the reason she come to hear from him he was courting her, and after he left he corresponded with her, and he gived his name as Jack Metz.
“Respectfully,
“R. P. Burnett.”

The case of Wilks v. Mutual Aid Union, 135 Ark. 112, 204 S. W. 599, was one in which the beneficiary in a membership certificate or polic3T of insurance sought to recover thereunder upon the presumption of death which § 4111, Crawford & Moses’ Digest, creates in the cases to which it applies. We there said:

“The phraseology of the statute is somewhat ambiguous, but the trial court correctly interpreted its meaning in its instruction No. 2. ‘Any person’ as used in this statute means any person who is a resident of this State, and who absents himself from his home or residence beyond the limits of the State for a period of five successive years and who has not been heard from by near relatives, friends, or neighbors, those who would naturally make inquiry concerning his whereabouts and who would most likely receive communication from him and be in position to know whether or not he was living. If he has not been heard from by these or others, his death will be presumed unless there is proof to the contrary.
“In view of the nomadic habits of H. M. Wilks, as disclosed by the eiddence, it cannot be said as a matter of law that he had anything like a permanent home or residence in this State. It was a question for the jury, under the evidence adduced, as to whether or not IT. M. Wilks was a resident of the State in the first place, and in the second place as to whether or not, if a resident, he had been absent from the State for a period of five successive years without being heard from by those who would most likely hear from him.”

The statute, as thus construed, applies only to residents of the State, and does not apply to a resident who had ceased to be such at the time of his final disappearance. The purport of the correspondence, set out above, is that the insured had ceased to be a resident of this State and had become a resident of Oklahoma. It was recited that his reason for leaving this State ivas “a woman trouble,” and that “he gave some bad c’ks.” These circumstances fully sustain the contention of the insurance order that the insured did not have anything like a permanent home or residence in this State, and that the statute therefore did not apply.

There was therefore no sufficient proof of death, and the cause was properly dismissed, and that judgment must he affirmed, and it is so ordered.


author: Kirby, J.,

text:
    St. Louis-San Francisco Railway Company v. State.
    Opinion delivered April 20, 1931.

      E. T. Miller, E. L. Westbroohe, Jr., and E. L. Westbroohe, for appellant.

      Ilal L. Norwood, Attorney General, Pat Mehaffy, Assistant, Hugh U. Williamson, Pace <& Davis, and Tom W. Campbell, for appellee.
   Kirby, J.,

(after stating the facts). The statutes providing- fees for prosecuting attorneys in misdemeanor cases read as follows:

“Prosecuting attorneys, when present and prosecuting cases, either in person, or hy his deputy in justice court:
For each judgment obtained on complaint, information or otherwise, in the name of the State or any county................................................................................................-■$ 5
For each conviction on indictment, presentment or information for misdemeanor or breach of the peace .......................*......................................................................................$10
* * * Prosecuting* attorney shall be entitled to the same fees for prosecuting in cases of misdemeanors before justices of the peace as in the circuit court.” Section 4571, Crawford & Moses’ Digest.
“Upon the affirmance of a judgment on the appeal of the defendant, an attorney’s fee of twenty dollars to be paid to the prosecuting’ attorney shall be taxed as part of the costs of the appeal.” Section 3429, Crawford & Moses ’ Digest.

The statutes also provide for consolidation of causes of action, rules concerning the proceedings therein and the costs to be recovered. Sections 1080-81 and -82, Crawford & Moses’ Digest.

It is conceded that the prosecuting attorney is entitled to a fee of $10 in each of the two hundred cases filed in the justice court, although they were consolidated and disposed of at one hearing. It is insisted, however, that on appeal to the circuit court the cases were regularly consolidated, and that the prosecuting’ attornej^, if entitled to any fee for the prosecution at all, was only entitled to a fee of $10 as for the prosecution of one case. The circuit court found, however, that the appeals had been taken and transcripts in each of the 200 cases filed and separately docketed in the circuit court, and the majority is of opinion that within the authority of Goad v. State, 73 Ark. 458, 84 S. W. 638, the prosecuting attorney was entitled to a fee of $10 for his services in each of such cases there. It is true that in that case the prosecution was begun by the deputy in filing information in the justice court, but necessarily he was acting- as the representative of and for the prosecuting- attorney, and the court in affirming- that case held that the double fee allowed the prosecuting- officers in such cases was designed and operated as a part of the punishment. No error was therefore committed in overruling the motion to retax the costs in the circuit court.

Appellant’s contention that the court erred in taxing any but one fee of $20 for the prosecuting attorney upon the affirmance of the judgment upon the appeal of the case to the Supreme Court must be sustained. The cases in the circuit court could be consolidated for trial under the statute, and this was done, as appears from the judgment therein, which recites that the defendant prayed an appeal to the Supreme Court, which was granted, and “this cause having been heard with like causes, all of which are identical with the informations filed in this case, it is by the court further ordered that but one bill of exceptions be prepared, presented and filed herein.” In accordance with this direction, but one case was appealed, and one transcript filed in the Supreme Court'and one judgment of affirmance upon the appeal made in St. Louis-San Francisco Railway Co. v. State, supra. The statute only authorized the taxation of one fee of $20 to be paid to the prosecuting attorney as part of the costs upon the affirmance of such judgment on appeal. The statutes have been so construed in the per curiam opinion by our own court in Ashcraft v. State, 141 Ark. 361, 222 S. W. 326, where the prosecuting attorney was held entitled to a single fee upon the affirmance of a judgment in the Supreme Court, and not to a separate fee for each of the convictions in the judgment affirmed.

It is strongly urged that the construction of the statute by the court in said opinion was wrong, and the case should be overruled; but, as said there, the prosecuting attorney is not required to follow up appeals in criminal cases and services performed in that regard are voluntary, the Attorney General alone being required to represent the State in causes pending in the Supreme Court; and the statute only allows the prosecuting attorneys a docket fee on each judgment of affirmance of misdemeanor eases in the Supreme Court not for services performed, however, since none are required of that officer.

We do not review cases cited from other jurisdictions construing- similar statutes, our own court having construed the statute under consideration, without regard to whether another or different construction should have been placed upon it, and we decline to reconsider the matter, finding no sufficient justification therefor.

It follows that the court erred in not granting the motion to retax the costs to the allowance of only one fee of $20 for the prosecuting attorney for the judgment of affirmance in the Supreme Court, and its erroneous judgment allowing* a fee of $20 in 200 cases must be modified accordingly and as modified will be affirmed. It is so ordered.

Justices Humphreys, Mehaeey and McHaney dissent as to modification.


author: Hart, C. J.,

text:
    Arkansas Tax Commission v. Crittenden County.
    Opinion delivered April 27, 1931.

      Nal L. Norwood, Attorney General, and Walter L. Pope, Assistant, for appellant.

      A. B. Shafer, for appellee.
   Hart, C. J.,

(after stating the facts). This appeal involves the correctness of the assessment made by the Arkansas Tax Commission of the railroad of the St. Louis-San Francisco Railway Company, which is an interstate railroad, having a part of its line in the State of Arkansas. Prior to the year 1929, said railway company used a bridge crossing the Mississippi River from the Arkansas side to Memphis, belonging to the Kansas City & Memphis Railway &. Bridge Company. While belonging to said bridge company, the Arkansas Tax Commission assessed the taxes to said bridge company. On September 1, 1929, said bridge company having sold the bridge to said St. Louis-San Francisco Railway Company, the Arkansas Tax Commission assessed it as a part of the line of railroad of said railway company, and there has been no separate assessment of the bridge to said bridge company or to said railway company. The question in the ease is whether said bridge across the Mississippi River can be separated from the balance of the line of railway of the St. Louis-San Francisco Railway Company and separately assessed for the purpose of taxation and subjected to a different tax rate. In making the assessment of the property of said railway company, the Arkansas Tax Commission followed what it conceived to be the requirements of act 129 of the Acts of 1927, and adopted the general rule of assessing railroad property as a unit substantially as it had heretofore been followed in this State.

Section 5, article 16, of the Constitution of 1874 provides that the value of property for taxation shall be ascertained in such manner as the General Assembly shall direct, making the assessment equal and uniform. By article 17, § 3, of the Constitution, all railroads are declared to be public highways, but the public are entitled to use them upon the condition of paying toll.

The Legislature is not allowed to discriminate between different classes of property in the imposition of taxes. The only discrimination with which it is vested is in the ascertainment of values so as to make the assessment equal and uniform throughout the State. Therefore, the Legislature has the power to classify railroad property as a separate class for purposes of taxation, and this is necessary from the inherent nature of the property. When the entire line of railroad is assessed as a unit, the constitutional requirement of equality and uniformity then presses the burden of taxation upon the whole mass alike, and prevents the possibility of legislative action oppressing one part for the benefit of the rest, or favoring one at the expense of the others. Little Rock & Fort Smith Ry. v. Worthen, 46 Ark. 312.

In the case of St. Louis, Iron Mountain & Southern Ry. Co. v. Worthen, 52 Ark. 529, 13 S. W. 254, 7 L. R. A. 374, the court expressly held, that under article 16, § 5, of the Constitution, the Legislature lias power to classify property for purposes of taxation and to provide for the valuation of different classes by different methods. It was further held that the separate classification of railway property for taxation and its assessment by an instrumentality different from that employed in the valuation of other property are justified by its peculiar nature and uses. Upon the subject the court said:

“Prom the peculiar nature of railroad property, its dissimilarity in use and value from the mass of other property, and its continuous extent through different localities, it is commonly regarded by the State that it cannot, in justice to the owners, be as fairly and uniformly valued by the numerous local instrumentalities provided for assessing other property, as by a S-tate board created for the purpose. The industry of the Attorney General has furnished us references to the statutes of a large number of States showing that the practice of assessment of railways as units by State boards is almost universal. ’ ’

In Railway v. Williams, 53 Ark. 58, 13 S. W. 796, it was held that, where a bridge corporation owning a railway toll-bridge grants the nse thereof for a period of its corporate existence to a railway company, preserving its corporate franchise and the right to contract with other parties for the use of the bridge, the bridge should be assessed by the county assessor as the property of the bridge company, and not by the State Board of Railway Commissioners as the property of the railway company. In that case, however, the court said that bridges which are on the line of the railway and are railway property are to be assessed as an integral part of the railway. The court said that they fall within the exclusive jurisdiction of the State board, .and the increased revenue which is derived from the railroad on account of them is allocated to the several counties through which the railroad runs. This comes from the legislative policy of taxing each railroad as a unit. The court recognized that the question depends upon the ownership of the bridge. If it be railway property used in connection with the operation of a railroad, it is then assessable as railroad property.

This rule has been adopted by the Court of Appeals of Kentucky in Board of Equalization v. Louisville & Nashville Rd. Co., 139 Ky. 386, 109 S. W. 303, where it was held that, where a railroad owned and maintained a bridge as a part of its railroad system, such bridge was assessable for taxation by the railroad commissioner and not by the local authorities of the county in which it was located. To the same effect see State of Missouri v. La. & Missouri River Rd. Co., 196 Mo. 523, 94 S. W. 279; and Pittsburgh, etc., Ry. Co. v. Backus, 154 U. S. 430, 14 S. Ct. 1114. In the latter case the court said:

"When a road runs through two States, it is, as seen, helpful in determining the value of that part within one State to know the value of the road as a whole.' It is not stated in this statute that, when the value of a road running in two states is ascertained, the value of that within the State of Indiana shall be determined absolutely by dividing the gross value upon a mileage basis, but only that total amount of stock and indebtedness shall be presented for consideration by the State board. Nevertheless, it is ordinarily true that, when a railroad consists of a single continuous line, the value of one part is fairly estimated by taking that part of the value of the entire road which is measured by the proportion of the length of the particular part to that of the whole road. This mode of division has been recognized by this court several times as eminently fair. Thus, in State Railroad Tax Cases, [92 U. S.] on page 608, it was said:
“ ‘It may well be doubted whether any better mode of determining the value of that portion of the track within any one county has been devised than to ascertain the value of the whole road, and apportion the value within the county by its relative length to the whole. ’ ’ ’

It is claimed, however, that this rule has been changed by the act of the Legislature of 1927, referred to above. See Acts of 1927, p. 400 This act created the Arkansas Tax Commission and defined its powers and duties. The act contains thirty-seven sections; and among the numerous regulations set out is one in § 16, which provides that, in the case of all corporations and other associations, the commission shall take into consideration the value of all the property as a unit whether all or only a part of it is in the State.

Section '22 of the act is the particular section relied upon by appellees to change the rule above announced. It reads as follows:

“The commission shall assign or apportion the assessed value of the property of all persons, firms, companies, co-partnerships, associations and corporations, which it is required to assess, in the following manner;
“There shall be deducted from the true market or actual value of the entire property, tangible and intangible, ascertained as in this act provided, the true market or actual value, as ascertained from the information furnished by report, or otherwise, of all real and personal property of such company not used in its business as a public utility, and the remainder shall be treated as the true market or actual value of all its property, tangible or intangible, actually used or employed in its public utility business.
“The commission shall then ascertain and fix the value of the total utility operating property, tangible and intangible, in this State, by taking such proportion of the true market or actual value of the entire operating property, tangible and intangible, of such company, actually used in its public utility business, as its total lines within and without this State, or as its total receipts or income from operation both within this State bear to its total receipts or income from operation, both within and without this State, or by using such other recognized method, or combination of methods, as will, in the judgment of the commission, result in a just and equitable apportionment to this State of its due proportion of the value of the total utility operating property.
“When the value of the total utility operating property, tangible and intangible, in this State has been determined; or when the property and operations of such company is wholly within this State, there shall be assigned or apportioned to the several counties, towns, school districts and other taxing districts through or in which sucii company operates the value of all real estate and all tangible personal property which had a fixed situs therein on the first day of January of the current tax year; and the remaining paid of the assessment, if any, shall be assigned or apportioned among the several taxing districts in proportion to the value of the tangible property assigned or apportioned thereto. Provided, that the value assigned to rolling* stock of street, suburban or interurban railroad, railroad and bus line companies shall be apportioned among the several counties, towns and school districts through or in which such company operates in proportion to the mileage operated therein, and provided further, that the value of the personal property of any express or sleeping* car company shall be apportioned among the several counties, towns and school distracts through or in which such company operates in proportion to the mileage operated therein.”

It is earnestly insisted that the latter part of the section, which provides that, when the value of the total utility operating property in this State has been determined, there shall be apportioned to the several counties, towns, school districts and other taxing’ districts, through or in which such company operates, the value of all real estate and all tangible personal properly of a fixed situs. It is claimed that rolling- stock is the only element of value apportioned upon a mileage basis, and that the bridge has a fixed situs and should be apportioned to the school district and other taxing districts in which it is situated. They say that it possesses a local value easily determinable ; and that, by the method of assessment used by the Tax 'Commission, they have refused to apportion such value to the taxing district where the bridge is located.

We do not agree with this contention. In the first place, statutes are to be construed with reference to the public policy they are designed to accomplish. Harris v. State, 169 Ark. 627, 276 S. W. 361; Miller v. Tatum, 170 Ark. 152, 279 S. W. 1002; and Turner v. Ederington, 170 Ark. 1155, 282 S. W. 1000. In the last case cited, it was said that the intention of a statute is to be collected either from the words, the context, the subject-matter, the effects and consequences, or from the spirit and reason of the law, and from other acts in pari materia.

This is but another way of expressing a well-settled rule of statutory construction which leads to the same conclusion; and that is, that uncertain or ambiguous words of a statute should always be construed so as, if possible, to produce a reasonable and just result. State ex rel. v. Louisiana & M. R. R. Co., 215 Mo. 479, 114 S. W. 956.

Under our Constitution and laws, a railroad company could not acquire a bridge except for railroad use. When a bridge was purchased by the railroad company and used by it for the purpose of operating its trains on the tracks laid across the bridge, then the bridge became a part of the line of the railroad, and was to be assessed according to the mileage rule. The value of the bridge would be taken into consideration by the Arkansas Tax Commission as one of the elements which go to make up the total market value of the railroad; and when the total value is divided by the number of miles the railroad is in length, the value of the bridge is equally distributed along the entire length of the railroad. Then, when the railroad company pays its taxes, each county and taxing district through which it passes receives its proportional part of the taxes, instead of allocating the entire taxes assessed against it to the county in which the bridge is located. It is apparent that, if the bridge is to be only used for railroad purposes, it has no intrinsic or commercial value apart from being used as so much of the line of railroad. "When the bridge was purchased by the railroad company, it became an integral part of the railroad, and, as such, should be assessed as a part of it and not as a separate and independent structure by the local authorities. It is manifest from the statute that it was the intention of the lawmakers to classify railroads separately for the purposes of taxation and to have them assessed by the Arkansas Tax Commission, instead of by the local authorities in the counties through which the line of railroad extends in this State. No equality or uniformity in taxation, such as is required by our Constitution, would be obtained if the bridges across navigable streams a.re to be assessed by the local authorities or if the taxes are to be apportioned by them instead of being valued as a unit by the Arkansas Tax Commission and apportioned by it according to the mileage in the various counties through which the railroad extends.

We are of the opinion that the statute, when construed as a whole, intended that the property of railroads reasonably necessarv to be used, and in fact used, in the performance of its duty to the public, as a public carrier, is an entirety, and that bridges which become an integral part of the railway are not to be separated for the purpose of taxation. Therefore we think that the Arkansas Tax Commission properly assessed the railroad as a unit, and that this included the bridge in question across the Mississippi River, and that the Commission also properly apportioned the taxes according to mileage, including the valuation of the bridge as an integral part of the railroad.

It follows that the court erred in overruling the demurrer to the petition. For that error the judgment will be reversed, and the cause will he remanded with directions to the court to sustain the demurrer and for further proceedings according to law and not inconsistent with this opinion.


text:
    Home Building & Savings Association v. Shotwell.
    Opinion delivered April 27, 1931.

      Ilardin $ Barton, for appellant.

      A. M. Dobbs and Pryor \& Pryor, for appellee.
   Hart, C. J.,

(after stating the facts). When a bona fide sale of land is intended, the vendor may charge a much higher price for his property on a credit than he would have done for cash for the element of lending and borrowing money is absent from the transaction; but if the sale is not bona fide, and there is an intent under its form, by excess of price, to receive more than lawful interest, the transaction will be usurious. Heytle v. Logan, 1 A. K. Marsh (Ky.) 529; Quackenbos v. Sayer, 62 N. Y. 344; Barr v. Collier, 54 Ala. 39; Collier v. Barr, 64 Ala. 543; and Ford v. Hancock, 36 Ark. 248. Our later decision have adhered to this rule and have been applied according to the facts in the particular case. Tillar v. Cleveland, 47 Ark. 287, 1 S. W. 516; Ellenbogen v. Griffey, 55 Ark. 268, 18 S. W. 126; Blake Bros. v. Askew & Brummett, 112 Ark. 514, 166 S. W. 965; Smith v. Kauffman, 145 Ark. 548, 224 S. W. 978; and Edwards v. Wiley, 150 Ark. 480, 235 S. W. 54.

In this connection, it may be stated that parol evidence is admissible to show that the contract, although legal upon its face, was in fact- an illegal agreement or cover for usury. Otherwise the very purpose of the law in forbidding the taking of usury under any kind of trick would be defeated. Houghton v. Burden, 228 U. S. 161, 33 S. Ct. 491; Tillar v. Cleveland, 47 Ark. 291, 1 S. W. 516; and Roe v. Kiser, 62 Ark. 92, 34 S. W. 534, 54 Am.

In Ellenbogen v. Griffey, 55 Ark. 268, 18 S. W. 126, the court, speaking through Mr. Justice Hemingway, said:

“In a bona fide sale of land or chattels usury cannot enter, for the element of lending and borrowing is absent ; but, if the sale is a mere device to cover a loan and exact excessive interest, it will not be protected by its false cover. Davis v. Garr, [6 N. Y. 124] 55 Am. Dec. 387, 393, and cases cited; Struthers v. Drexel, 122 U. S. 487 [7 S. Ct. 1293]. In the cases in this court relied upon by appellee, the transactions were found to be in fact loans of money, put in the form of sales to evade the statutes against usury; and the court held that they were usurious loans, and that the false color given them could not defeat the statute. Ford v. Hancock, 36 Ark. 248; Driver v. Driver, 46 Ark. 50; Tillar v. Cleveland, 47 Ark. 291, [1 S. W. 516].”

This court has uniformly recognized that borrowing and lending money is indispensable to constitute usury; but that, no matter what the form of the contract may be, no device or shift intended to evade the usury laws will be upheld. The court has also recognized that, while an exhorbitant price will not of itself constitute usury, yet it is a circumstance to be considered in determining whether the transaction was a bona fide sale of property or was intended for a cover for usury. It has been frequently judicially stated that one of the most usual forms of usury is a pretended sale of goods or other property.

It seems to us that the transaction in question was a buying of land at an exhorbitant price to obtain a loan, and was therefore usurious. Shotwell wished to buy the lots in controversy; and Norman, who was the agent of his father-in-law, the owner of the lots, was authorized to sell them for $650 and was willing to sell them for that price. Webb represented a real estate loan company and arranged that Shotwell should execute a note to his company for $1,200 before he would lend him the money. Shotwell never got any of the $1,200, and it was not intended that he should get any of it. The plaintiff in this case and the company represented by Webb occupy the same offices and had the same president. It was never intended that the plaintiff should furnish any one $1,200. They only agreed to furnish to Norman, the agent of the owner of the property, $650, which was his price for it. $500 of this was paid in cash, and $150 of it was the purchase price of a second-hand automobile which was owned by the Commercial Loan & Investment Company, whose agent Webb was.

As was stated in the case of Jones v. Phillips, 135 Ark. 578, 206 S. W. 40, usury laws are enacted to protect the weak and necessitous from oppression; and the lender of money, by no device or deception, is allowed to deceive the borrower so as to conceal the fact that he is taking usury. When the real transaction is a loan of money, and the lender attempts to receive from the borrower more than the amount actually advanced, no matter under what pretext, it contravenes the policy of our usury law, and such contract can not be enforced. As aptly said in Heytle v. Logan, 1 A. K. Marsh (Ky.) 529: “In the language of Lord Mansfield on a like occasion, it may be truly said, £it is impossible to wink so hard as not to see, ’ what was expected by this contract — that its end was more interest on the money advanced than the law authorized.”

Under the facts stated in the record, we are of the opinion that the chancellor was justified in finding that the real transaction was the borrowing and lending of money, and that the contract contemplated a greater charge of interest than allowed by law, and that it was a mere device or shift to avoid our usury laws. It follows that the decree will he affirmed.


author: Mehaffy, J.

text:
    Taylor v. Corning Bank & Trust Company.
    Opinion delivered April 27, 1931.

      Sam- Noresc and Nat B. Hughes, for appellant.

      Oliver \& Oliver, Edward B. Downie and Shields M. Goodwm, for appellee.
   Mehaffy, J.

This action was begun in the Pulaski Chancery Court by the Corning Bank & Trust Company against Walter E. Taylor, Bank Commissioner in charge of the American Exchange Trust Company, an insolvent banking institution. The appellee asked that its claim against the American Exchange Trust Company be decreed to be a prior claim to the extent of $32,365.70 and paid in full with interest at two per cent., and that the balance of petitioner’s claim in the sum of $11,667.30 be ordered to be allowed as a general claim.

The American Exchange Trust Company became insolvent on November 17, 1930, and five days thereafter Walter E. Taylor, State Bank Commissioner, took charge of its affairs. Corning Bank & Trust 'Company became insolvent about the same time, and its assets were later purchased from the Bank Commissioner by appellee, the Corning Bank & Trust Company.

Corning Bank & Trust Company had been a customer of the American Exchange Trust Company for a number of years. Between November 1, 1930, and November 5,1930, the Corning Bank & Trust Company sent to the American Exchange Trust 'Company certain drafts amounting to approximately $32,000. These drafts with bills of lading attached were sent for collection and credit, and the American Exchange Trust Company credited the Corning Bank & Trust Company with the amount “subject to final payment” and forwarded the drafts to .South Carolina and Alabama for collection.

On the 7th of November the Coming Bank & Trust Company wrote a letter to the American Exchange Trust Company as follows: ■

“November 7th, 1930
“American Exchange Trust Co.,
“Little Bock, Ark.
“Attention Mr. J. J. McGrath.
‘ ‘ Gentlemen: All drafts with bills of lading attached that are now in transit and all that are forwarded to your bank in the future are for collection only. Kindly advise us by wire as fast as these items are paid that we may advise you disposition of the funds.
“Tours very truly,
“Cashier.”

The American Exchange Trust Company, when it received the drafts, gave credit to the Corning Bank & Trust Company subject to final payment and immediately sent the drafts to other banks for collection and credit. All drafts were paid to the collecting banks, and bills of lading surrendered before the failure of the American Bank. The drafts in question were drafts of the Clay County Cotton Company upon W. A. Handley Manufacturing Company of Boanoke, Alabama, and Cooper & Griffin of Greenville, South Carolina.

The appellant answered and denied that any part of appellee’s claim should be decreed as a prior or preferred claim and alleged that appellee had only a general claim ag’ainst the American Exchange Trust Company. All these claims were collected by the collecting banks and were afterwards received by the American Exchange Trust Company.

After the letter of November 7 was written the president of the Corning Bank & Trust Company called Mr. Covey, who was in charge of country bank connections for the American Exchange Trust Company by telephone, and also Mr. McGrath, and told them as soon as the drafts were paid to wire the Corning Bank & Trust Company and they would give instructions as to how to dispose of the funds collected. On the 12th of November the president of the Corning Bank & Trust Company again called Mr. Covey and informed him that as soon as the items had been paid to inform them so they might instruct the American Exchange Trust Company as to the disposition of the funds as soon as they were collected.

The cashier of the Corning Bank & Trust Company produced a carbon copy of the letter which had been written on the 7th of November and he testified that he placed the letter in an envelope, properly addressed, to the American Exchange Trust Company, Little Rook, Arkansas, sealed the letter, stamped it with United States postage stamp, and deposited it in the United States Post Office at 'Corning. The envelope had return card on it but was never returned.

On November 14, 1930, the American Exchange Trust Company charged the Corning Bank & Trust Company $5.44, being the cost of collecting W. A. Handley Mfg. Co. draft and forwarded a memorandum of the charge to the Corning Bank & Trust Company on that date.

It appears from the books of the American Exchange Trust Company that this charge was made by it on the 14th. On the 10th of November the American Exchange Trust Company charged the Corning Bank & Trust Company with $4.01, cost of collecting draft at Roanoke, Alabama, and on the 12th of November a charge was made of $3.14 for collecting another draft.

Beall Hempstead, vice-president of the American Exchange Trust Company, testified to receiving the drafts sent by the Corning Bank & Trust Company, and that they were notified by the bank at Atlanta, Georgia, on the 13th of the collection of certain drafts and by the bank at Charlotte, N. C., on the 12th of November as to certain other drafts, and all the amounts in controversy here were received by the appellant.

This witness also testified,that he had looked through the files and had been unable to find the letter of November 7, and had no record of receiving such letter. Before these transactions, this witness testified that the American Exchange Trust Company had been giving the Corning Bank & Trust Company credit for items sent like these, and that they were subject to check immediately upon giving credit, just like any other open account. When the drafts were collected at Charlotte, N. C., they were credited to the Union Trust Company of Cleveland, Ohio, and by it were credited to the American Exchange Trust Company. All of these drafts were paid before the insolvency of the American Exchange Trust Company. The American Exchange Trust Company suspended on November 15, 1930, and five days thereafter it was placed in the hands of the State Bank Commissioner.

This witness testified also if the bank had received the letter of November 7 the bank would make the items just collection items. If one wanted an item for collection, it was charged to his account and entered for collection if it had been previously credited to his account. It was admitted that the Corning Bank & Trust Company had several thousand dollars to its credit in excess of the amount of these drafts, and this condition continued from the 5th of November until the bank closed.

They were not obligated to pay this amount until the drafts were collected. If a depositor deposited an item for collection, they would not permit cheeking against it.

Mr. McGrath was the head of the collection department and had direct charge of these items. Shortly after the bank closed, it was discovered that McGrath had absconded with some of the bank’s money.

The material facts are practically undisputed. There is no dispute about the fact that the drafts mentioned in appellee’s petition with bill of lading attached were sent to the American Exchange Trust Company for collection and credit. Although there is some conflict in the authorities, the general rule is that the title to commercial paper received for collection by a bank and forwarded to its correspondent in the usual course of business does not vest in the bank to which the paper is sent, but remains in the sending bank until the collection has been made. After the collection is made, then the relation of debtor and creditor exists. Before collection, however, if loss occurred, it would be borne by the sending bank and not the bank to which the papers were sent. Prior to collection the relation of principal and agent exists.

After these drafts were sent, the appellee proved that the letter above referred to was written and mailed to the American Exchange Trust Company.

‘ ‘ The rule is well settled that, if a letter is properly mailed, it is presumed that it reached the party to whom it was addressed and was received by him in the due course of mail.’’ Southern Engine & Boiler Works v. Vaughan, 98 Ark, 388, 135 S. W. 913, Ann. Cas. 1912D, 1062.

“Where a letter has been property mailed, the law raises a presumption that it was duty received by the person to whom it was addressed, but as was said by the Supreme Court of the United States in Rosenthal v. Walker, 111 U. S. 193 [4 S. Ct. 386], ‘the presumption so arising is not a conclusive presumption of law, but a mere inference of fact founded on the probability that the officers of the government will do their duty.’ As was declared by our court in Planters’ Ins. Co. v. Green, 72 Ark. 305, 80 S. W. 151, ‘the presumption, in the absence of evidence to the contrary, is that it was received, but this presumption may be rebutted.’ ” Bluthenthal v. Atkinson, 93 Ark. 252, 124 S. W. 510.

The rule is well established that, if a letter is properly mailed, it is presumed that it reached the party to whom it was addressed and was received by him in the due course of mail. This presumption may be rebutted, but, if not rebutted, it is sufficient to support a finding that the letter was received.

In this case the undisputed evidence shows that the letter was mailed. It was directed “The attention of Mr. McGrath.” Mr. McGrath did not testify. The evidence shows that he had taken some of the bank’s money and absconded, but was, at the time this case was tried, in the Hospital for Nervous Diseases. Mr. Hempstead testified that J. J. McGrath was in charge of the collection department of the American Bank and he was informed that he was in the Hospital for Nervous Diseases.

The evidence also shows that Mr. McG-rath had committed some forgeries, and that some of the letters were blurred so that the persons in charge of the bank could not tell what they meant, and they telephoned to the Corning Bank for information.

Mr. Hempstead, one of the vice-presidents of the bank, stated that he had looked through the files and could not find any such letter as the one mailed on the 7th. He said that, if they had received the letter, they would immediately have charged the drafts back to the account and handled it as a collection.

The evidence also showed that some of the letters had been lost. In addition to the letter, Corning Bank officials testified that they telephoned on different occasions to officers of the American Exchange Trust Company, giving practically the same instructions that were given in the letter, and this testimony is undisputed. When the Corning Bank changed its instructions, the American Exchange Trust Company was then the agent of the Corning Bank & Trust Company for collection, and it was its duty to notify the Corning Bank in accordance with instructions, and it was not, and never thereafter became, the owner of the paper or the proceeds.

Appellant calls attention to numerous authorities by this court. It has said: “It is likewise well established that a bank receiving a draft for collection merely is the agent of the remitter, drawer or forwarding bank, and takes no title to the paper or the proceeds when collected, but holds same in trust for remitting.” Darragh Co. v. Goodman, 124 Ark. 532, 187 S. W. 673; Rainwater v. Fed. Reserve Bank of St. Louis, 172 Ark. 631, 290 S. W. 69.

Act 107 of the Acts of 1927 provides in substance among other thing’s that the owner of the proceeds of a collection, when said collection was paid in cash, thereby increasing the assets of the bank, has preference.

Here the Corning Bank, as we have already said, was the owner of the proceeds of the collection. The collection was paid in cash. It increased the assets of the bank. The bank at the time the remittance was sent to it, and at all times thereafter until the Bank Commissioner took charge, had on deposit to the credit of the Corning Bank sums in excess of the amount of these drafts, and had, when the bank closed, between $200,000 and $300,000 cash in the bank.

Appellant cites and relies on the cases of Hawaiian Pineapple Co. v. Brown, 69 Mont. 140, 220 Pac. 1114. and California Packing Corp. v. McClintick, 75 Mont. 72, 241. Pac. 1077, and says that these cases announce the correct rules as follows:

“1. That the transaction created relation of principal and agent, not creditor and debtor, between itself and the bank, so that the bank would be deemed to hold the amount collected from the company in trust for the plaintiff as beneficiary.
“ 2. That by the transaction the assets of the banks were augmented.
“3. Ability to trace the trust funds into the possession of the bank.”

Under the evidence in this case the relation of principal and agent, and not of creditor and debtor, existed. The undisputed proof shows that by the transaction the assets of the American Exchange Trust Company were augmented. The undisputed evidence also shows that the funds were traced into the hands of appellant.

Appellant, however, contends that the relationship of debtor and creditor could not have been changed without the consent of the American Bank because the account of the Corning’ Bank would have been overdrawn almost $12,000.

The evidence, as well as the stipulation of counsel, shows this contention to be incorrect. As to whether the letter of November 7 was written and received by the American Exchange Trust Company changing the directions, was a question of fact, and the finding of the chancellor is sustained by the evidence.

Appellant contends that after this letter, or after it was claimed to have been written, other items were sent by the Corning Bank in the usual way and the proceeds placed to the credit of the Corning Bank by its consent. The evidence, however, shows that the instructions contained in the letter above referred to applied to drafts with bills of lading attached, and that all of the items that were thereafter sent to be collected and credited were items that had no bills of lading attached.

The undisputed proof shows that the assets of the American Exchange Trust Company were increased and also shows that the proceeds of the collections of these drafts came to the American Bank.

The chancellor held that the claim for $32,365.70 was a preferred claim, and that of this amount $30,748.02 had been specifically identified in its original or traceable form as the property of the Corning Bank & Trust Company, and that it came into the hands of the Bank Commissioner, and it was ordered and decreed that this sum should be paid in full out of any assets of the American Exchange Trust Company available after the administration. It was also decreed that the $1,617.68 should be allowed as a preferred claim, but, appellee having failed to identify this amount in its original or traceable form, coming into the hands of the Commissioner, it should be paid on the basis as other like prior claims. It was also decreed that $11,667.30 be allowed as a general claim.

The finding of the chancellor on the questions of fact are supported by the preponderance of the evidence, and the decree is affirmed.


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    Wald v. State.
    Opinion delivered May 4, 1931.

      Cochran ■£ Arnett, for appellant.

      Hal L. Norwood, Attorney General, and Pat Mehaffy, Assistant, for appellee.
   Hart, C. J.

Ben AVald prosecutes this ajipeal to reverse a judgment of conviction against him for manufacturing ardent, vinous, spirituous and fermented liquors.

Wayne Cook, city marshal of Paris, Logan County, Arkansas, and Tobe Riley were witnesses for the State. According to their testimony, they went with the sheriff of Logan County to the house of Ben Wald in the Northern District of Logan County and made a search for intoxicating liquor. They found one bottle of home brew, about two gallons of some kind of fruit juice fermenting in a five-gallon crock, which smelled like intoxicating liquor. They also found a keg hidden in the grass which smelled as if intoxicating liquor had been in it. The sheriff took the fruit jar full of fruit juice, and a bottle cap-per, and carried them home with him. Before the day of trial, the sheriff had died; and the town marshal went to his house and brought a fruit jar full of some kind of liquor which was exhibited to the jury. Both of the witnesses testified that the fruit jar looked like the one the sheriff brought back at the time he made the raid on the defendant’s house. They testified that it smelled like intoxicating liquor.

It is earnestly insisted by counsel for the defendant that the court erred in allowing the jar of liquor to be exhibited to the jury because it had not been properly identified as the jar of liquor or fruit juice which had been taken by the sheriff from the defendant’s house, and in this contention we think counsel is correct. In prosecutions for violations of the liquor laws, liquors which are found on the premises of the defendant are admissible in evidence, if properly identified as having been in the possession of the accused. 16 C. J., par. 1229, page 620. Before the evidence is admissible, the container with the liquor in it must be identified and traced to the defendant. If the identification of the fruit jar with the liquor in it had been complete, as being* the one captured in the raid on the defendant’s house, then the action of the court in allowing it to be exhibited to the jury would be correct.

In Oliver v. State, 120 Ark. 188, 179 S. W. 366, it was held that in a criminal prosecution for burglary, it was error to admit in evidence a knife alleged to have been taken from the defendant when it was not identified by any witness as being the one taken from the person of the defendant when he was arrested. In that case a deputy sheriff of the county in which the defendant was tried testified that, when he went into another county where the defendant had been arrested, the sheriff of that county told him in the defendant’s presence that he had taken a pocket knife from the defendant’s person at the time of making his arrest and would send it to him later through the mail. He testified that the defendant had since asked him whether the sheriff had sent the knife. The deputy sheriff was then permitted to exhibit to the jury a pocket knife which he testified was sent to him by mail from the sheriff of the county in which the defendant had been arrested. This court said that the trial court erred in admitting* the testimony, and that the error was prejudicial. It was said that error was committed by the admission of the knife in evidence before the jury since it was not identified by any witness as being the knife which was taken from the person of the defendant when he was arrested. It was elsewhere stated in the opinion that the fact that the sheriff had told the witness in the defendant’s presence that he had taken a knife from his person and would send it to him was not an identification of the knife as the one taken from the person of the defendant when he was arrested.

The same rule was recognized by the court in Whaley v. Vannatta, 77 Ark. 238, 91 S. W. 191, 7 Ann. Cas. 228. In that case, in an action to recover the price of hay sold, where the defendant claimed that the hay was of a grade inferior to that required by the contract, it was held not to be erroneous to refuse to permit him to exhibit to the jury two bales of hay, in the absence of evidence identifying such bales as the bales of hay purchased by him from the plaintiff.

In both the cases cited, the evidence tending to identify the article which was offered'in evidence was as strong if not stronger than the evidence of identification introduced in the present case. 'Because the identification of the fruit jar containing iiquor was not sufficient to show that it was the jar of liquor taken from the defendant’s house, the court erred in allowing it to be submitted to the jury as evidence in this case. The evidence was necessarily prejudicial to the defendant because the jury might have found from the appearance and smell of the liquor that it was intoxicating liquor. Hence the jury, from the appearance and smell of the liquor, in connection with the other evidence, might have found the defendant guilty, when in truth and in fact the liquor in the fruit jar which was exhibited to the jury was not identified as the jar of liquor which had been taken by the sheriff from the defendant’s house. The mere fact that the town marshal went to the sheriff’s house and got a fruit jar of liquor was not sufficient to identify it as being the one taken from the defendant’s house. It is a matter of common knowledge that all fruit jars look alike; and in the absence of evidence identifying the fruit jar and the liquor in it as being that taken from the defendant’s house, it must be held that the court committed reversible error in allowing it to be introduced in evidence. For this error, the judgment must be reversed-; and the cause will be remanded for a new trial.


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    New Home Sewing Machine Company v. Westmoreland.
    Opinion delivered May 4, 1931.

      George F. Ilartje, for appellant.

      J. G. $ Wm. J. Glarh, for appellee.
   Mehaffy, J.

This suit was begun by appellant, a Massachusetts corporation, in the Faulkner Circuit Court. It alleged that on October 19, 1928, it delivered to the appellees, W. W. Westmoreland and Priddy Westmoreland, various goods, wares, and merchandise purchased by them, of the value of $571.95; that no part of said indebtedness had been paid, and that it was long past due. It prayed judgment against appellees in the sum of $571.95, together with interest and costs.

Appellees filed answer in which they denied that they purchased any goods, wares, or merchandise, and denied that they were indebted to appellant in any sum whatever. They alleged that about October 19, 1929, they were negotiating with one :Bert H. Hower, agent of appellant, for the conditional purchase of certain sewing machines of the value of $558; that they had made out an order for said machines but had not delivered said order and were not to deliver same until a'resale contract was entered into; that the said Bert H. Hower, while the ax)pollees were absent from their place of business, took said order without their knowledge or consent and sent same to appellant. They had not delivered the order to the agent nor authorized any person to deliver same to him nor the appellant; that Hower, after having procured said order, immediately left the city and did not leave with appellees a copy of the resale contract which was to be executed by appellant before the order for said goods was to be delivered. They alleged that appellants obtained possession of said order through fraud, and that they are not bound thereon. They further alleged that the appellant, having obtained said order through fraud, shipped the machines to appellees; that they had notified appellant to take up the machines, and they are now holding said machines subject to the order of appellant. They asked that appellant’s complaint be dismissed, and that they have judgment for storage of said machines and costs.

The order introduced in evidence contained the following: “The undersigned agrees that the New Home sewing machines above described and all the New Home sewing machines purchased hereafter will be sold only at retail, and will not be sold below the established retail prices, unless allowance is made for old machine, or discount made for cash. It is understood that no conditions agreed to by any salesman or agent and not embodied herein will be in any way binding on the New Plome Sewing Machine Company, and it is understood and agreed that the New Home Sewing Machine Company shall not be in any way liable under any separate or collateral agreement made between the undersigned and its salesman.”

Immediately under this paragraph were the signatures of the appellees and the salesman, Bert H. Hower.

According to the deposition of C. Haile, the credit and collection, manager of appellant, all orders go to the desk of witness for acceptance or rejection, and he received the above order from the Westmorelands on October 23, 1928; the order was sent in by Bert Hower, who -was soliciting wholesale orders in the State of Arkansas; the order appeared to be regular, and he put his O. K. on it, sent it to the shipping department, and the eleven machines were shipped to appellees; the terms of sale were two per cent, for cash within thirty days, net sixty days, or the privilege of settlement by es, due three, six, and nine months after date; that irte- order was signed by the appellees. The order above set out was 1he basis for the sale of the goods and constituted the only terms and conditions of the sale.

The- -'bciting agent, was not] authorized to make agreement aside from the terms, and conditions contained in the .older; if he made any other agreement, it was not authorized. Witness had no knowledg-e that any change was nm.de in the regular contract, and if there had been any fue machine.-would-not have been shipped; the machines Ind not been paid for, and the sum of $571.95 -was past due.

Several letters written by the parties were introduced in evidence, \ppellees claimed that they bought the machines on condition of guaranteed resale. The agent was not authorized to make any verbal agreement or other agreement outside of the original order; he was merely an order-taker; he could not hind the company in any kind of an agreement without submitting the agreement in writing to the company and having it accepted by the company. Ho was a special agent, not a general one.

The agent is not now in the employ of appellant, and witness does not know where he is. Witness testified that he was familiar with the market value of the machines, and the price for which they were sold was the fair market value. The company had never, in the knowledge of the witness, done business in Arkansas other than solicit orders on a wholesale basis; had never maintained an office in Arkansas. Witness had no personal knowledge of the transaction that took place when the contract was signed, and did not know what'was said.

Priddy ’Westmoreland, one of the partners of Westmoreland & Son, testified that; the appellees never purchased outright any sewing machines from the appellant; that he signed the contract or order introduced by appellant, but that did not express the agreement reached by the parties; that he signed the order and left the store to go to lunch; left the agent in his office to fill out the contract, and he said he would do that and leave it^pc, witness’ desk. The contracts were not filled out as agieed upon. The agreement above the signature was jiot in accordance with the copy left with witness. Thají clause was not in the contract. The contract introduced is not now as it was when he left it in the office; thg clause was marked out hv the agent. Mr. Hower, the agent, was not authorized to make the contract out of the office. Witness was not present when the agent hacl finished filling out the contract, but had gone to lunch. The agent came to the store in the early morning with his resale agreement and explained how it would be harailed and how the resales were to he paid and how much net profit there would be, etc.

Witness told a geni that he would under no circumstances consider buying any machine outright, and the agent told him not to worry, they had a good resales crew. Does not have copy of resale contract, and had not seen it since the agent left. The agent left and did not leave a copy of the resale contract. The prior resale contract was not canceled by the company, but was canceled by Westmoreland & Son.

Witness wrote the company that the machines were here subject to its orders, and they are still held subject to appellant’s disposal and have never been uncrated; did not agree to pay for the machines on three, six and nine months, and did not authorize the ag’ent to write anything on the face of the contract to show that it was to be paid on that basis. That was written without appellee’s knowledge or consent. The clause just above the signatures of appellees was to be stricken out. Under the resales contract, appellant was to send a crew of salesmen to sell the machines. The agent was to fill out the contract and leave a copy on witness’ desk, but he did not do so; did not deliver agent the original contract and was not in the store but gone to lunch when agent took the contract. The only agreement made was upon the resale contract. The clause just above appellee’s signature was struck out of the copy left on witness’. desk, and there was no ag’reement in it as to the terms, and no agreement to be paid in three, six and nine months.

Witness testified that the terms vrere written in by the agent without authority after it was signed.

Mr. Ligón testified that he heard the conversation about the contract, and his testimony on this was substantially the same as Westmoreland’s.

Bert H. Hower, the agent, did not testify.

There was a verdict and judgment for the appellees, and appellant prosecutes this appeal.

Appellant first contends that the court erred in refusing appellant’s request for a peremptory instruction, and contends that there was no testimony authorizing the court to submit the case to the jury. This argument is based on the fact that the appellees signed the order introduced in evidence. The appellant says that the appellees admit the delivery of the contract to the salesman. They do not, however, admit its delivery for the purpose of being forwarded to appellant, but the undisputed proof shows that it was not delivered, and that the contract was not completed when the agent, in the absence of appellees, and without their knowledge or consent, took the order and left the city and sent the order to the appellant.

The evidence of the appellees shows that they refused to buy machines outright, but that the agent struck out the statement immediately above the signatures in one copy and agreed to strike it out in the other, and this evidence also shows that the agent had a resales contract, and was to fill that out, and that they left these orders and agreements on their desks when they went to' lunch with the agreement and understanding that the agent would strike out the paragraph immediately above the signatures of appellees on the order and fill out the resales contract, but he left appellee’s place of business while they were absent, took the resales contract with him, and did not strike out the paragraph that he had agreed to strike out. There is no question about the authority of the agent.

The appellees do not contend that the agent had any authority to make any contract and the evidence- shows that he was merely an order-taker and had no authority to bind the appellant by any contract, and the question of the agency or the extent of his authority is not involved. The only question involved is whether the appellees entered into the contract sued on or whether the agent took it without their knowledge or consent before the terms were agreed upon and inserted the words and figures that appellees testified were inserted after they signed the order.

The court instructed the jury as follows: “The jury is instructed that, if you find from the testimony that the agent of the sewing machine company took this contract from the place of business of the defendants without their knowledge or consent before the terms of said contract were agreed upon between the parties and inserted the ivords and figures in the contract complained of by defendants, then in that event the defendants Avould not be bound by the contract unless he later, by his words or acts, ratified it. ’ ’

This, we think, clearly stated the issues to the jury. This court recently said: “According to the allegations of the answer and the proof made by the defendants, the traveling representative of the plaintiff was trusted to reduce the contract for the purchase of the goods to writing, and he was bound to do it truly. In such cases this court has recognized that, where the party who was trusted to write the contract omits some of its terms, or inserts provisions not agreed to by the parties, such conduct constitutes fraud and makes the contract void." Pictorial Review Co. v. Rosen, 171 Ark. 719, 285 S. W. 385; Barton-Parker Mfg. Co. v. Taylor, 78 Ark. 586, 94 S. W. 713; Main v. Oliver, 88 Ark. 383; Wm. Brooks Medicine Co. v. Jeffries, 94 Ark. 575, 114 S. W. 917, 129 Am. St. Rep. 110; White Sewing Machine Co. v. Atkinson & Son, 126 Ark. 204, 190 S. W. 111; J. C. Case Threshing Machine Co. v. S. W. Veneer Co., 135 Ark. 607, 205 S. W. 978; Standard Sewing Machine Co. v. Rainwater, 146 Ark. 81, 225 S. W. 326.

The decision of Pictorial Review Co. v. Rosen, supra, is controlling here.

It is next contended by appellant that the court erred in the admission of certain testimony.

The rule is well established that oral testimony can not be admitted for the purpose of varying or contradicting the terms of a written contract, but this order did not become a contract according to the evidence of appellees, because the paragraph was to be stricken out, and also because other things not agreed to were added to it. It was not delivered, but left on the desk of appellees, and the evidence shows that the agent, without authority, took it, failed to strike out the paragraph, and without authority inserted terms not agreed to.

The testimony of both Westmoreland and Ligón was clearly admissible, not as contradicting a written contract, but to show that no contract was ever made.

The court clearly and fairly submitted the issue to the jury on the instructions given and committed no error in refusing the instructions offered by appellant. Ail of appellant’s instructions are with reference to the agent’s actual or apparent authority, and, as these questions are not involved in the case, the court correctly Refused to give them.

As to whether the contract was made or not was a question of fact properly submitted to the jury, and the verdict of the jury, where there is substantial evidence to support it, will not be set aside on appeal.

If the appellees’ evidence is true, as the jury must have found, no contract was ever entered into. This court does not pass on the credibility of the witnesses nor the weight to be given to their testimony.

Since there was substantial evidence to support the verdict, the judgment will be affirmed.