author: Hart, C. J.,

text:
    Meyer v. Equitable Credit Company.
    Opinion delivered June 27, 1927.
    1. Sales — reservation of title. — When a chattel.is sold with a reservation of title in the seller, the title remains in the seller until the condition is performed, and a purchaser from the buyer acquires no title, though he buys in good faith for a valuable consideration and without notice of the condition.
    2. Sales — reservation of title — removal of chattel to another state. — 'When an automobile is sold with a reservation of title in the seller, the title remains in him until the condition is performed, though the automobile was removed to a neighboring State and mortgaged, without the mortgagee having notice of the conditional sale, unless the seller consented to the removal.
    3. • Conditional sale — removal of automobile to another state— burden OF proof. — Where an automobile sold under a conditional sales agreement was removed to another State, and there mortgaged, a mortgagee has the burden of proving that the seller or ■his assignee consented to the removal of the automobile into the neighboring State.
    Appeal from Miller Circuit Court; James H. McCol-lum, Judge;
    affirmed.
    STATEMENT OE FACTS.
    On September 30, 1925, the Equitable Credit Company, Inc., brought a suit in replevin against Paul Morrison, in the Texarkana Municipal Court, to recover a Ford automobile. Sol Meyer and Sol Kiser, partners as Meyer & Kiser, were allowed to file an intervention and claim the automobile under a mortgage executed to them by Paul Morrison. The plaintiff recovered judgment in the municipal court, and Meyer & Kiser duly prosecuted an appeal to the circuit court.
    According to the evidence for the plaintiff, on October 27, 1924, Arthur Wills executed a written conditional sales agreement to the Stamps Motor Company of Stamps, Arkansas, whereby he agreed to pay said company $468 for a Ford automobile. Two hundred dollars of the purchase price was paid in cash, and the balance was payable in twelve monthly installments of $22.84, evidenced by promissory notes. The agreement expressly provided that the title to the automobile should remain in the seller or its assignee until the purchase price was fully paid. On November 3, 1924, the notes and agreement above referred to were duly assigned for value to the Equitable Credit Company, .Inc., by the Stamps Motor Company. The notes for the balance of the purchase price of said automobile have not been paid.
    According to the evidence for the interveners, on or about December 23, 1924, the automobile in question was sold to Redding-Voelker Motor Company in Texar-kana, Texas. This company sold the automobile to Paul Morrison in Texarkana, Texas, and he gave a mortgage on said automobile to Meyer & Kiser to secure the payment of $346.53, and said mortgage was duly recorded in Bowie County, Texas, where the automobile was located and where Morrison resided at the time the mortgage was executed. Neither Morrison nor his mortgagees knew of the conditional sales agreement above stated and referred to until this suit was brought. The mortgage indebtedness has not been paid. Morrison left the automobile in Texarkana, Texas, from the date he purchased it until the 30th day of September, 1925, when he drove it temporarily into the town of Texarkana, Miller County, Arkansas, where it was taken from him under a writ of replevin in a suit filed against him by the Equitable Credit Company, Inc., in the Municipal Court of Texar-kana, Arkansas.

      The case was tried before the circuit court sitting as a jury, and a finding was made by.it in favor of the plaintiff. Judgment was accordingly rendered in favor of the plaintiff, and Meyer & Kiser have duly prosecuted an appeal to this court.

      John N. Cook, for appellant.
   Hart, C. J.,

(after stating the facts). The record shows that, prior to the execution of the mortgage by Morrison to Meyer & Kiser, Arthur Wills purchased the automobile in question from the Stamps Motor Company at Stamps, Arkansas, for the sum of $468. He paid $200 in cash and gave twelve installment notes for the balance of the purchase money. He executed a written contract for the purchase of the automobile in which it is expressly stated that the title to the car shall remain in the seller or its assignee until the purchase price has been fully paid. The balance of the purchase price had not been paid at the time the present suit was instituted. The plaintiff in the present case became the purchaser of the notes for the balance of the purchase money of said auto- . mobile for value before date of maturity, and the conditional sales contract was also transferred to it. Thus it will be seen that whatever rights it had under the conditional sales agreement attached before the mortgage was executed by Paul Morrison to Meyer & Kiser. It is the settled law of this State that, when a chattel is sold with a reservation of title in the seller, the title remains in it until the condition is performed, and a purchaser from the vendee acquires no title, though he buys in good faith for a valuable consideration and without notice of the condition. McIntosh & Beam v. Hill, 47 Ark. 363, 1 S. W. 680; Garner Mfg. Co. v. Cornelius Lbr. Co., 165 Ark. 119, 262 S. W. 1011; and Hachmeiser v. Power Mfg. Co., 165 Ark. 469, 264 S. W. 976.

But it was argued that this rule does not apply because the automobile was carried from the State of Arkansas into the State of Texas and there mortgaged to a person who had no knowledge of the conditional sales agreement or the rights of the plaintiff thereunder. This does not make any difference, if it is not shown that the seller of the automobile or the plaintiff knew that the automobile bad been carried from the Slate of Arkansas into the State of Texas, or that a mortgage was executed upon it in the latter State. In Fairbanks, Morse & Company v. Parker, 167 Ark. 654, 269 S. W. 42, it was held that, in conditional sales of personal property in which the title is retained, by the seller until the purchase price is paid, the buyer acquires an interest which he may sell or mortgage without the seller’s consent, but the seller’s right to recover the property, if not paid for, is not prejudiced by such sale or mortgage. Under our laws, in a.conditional sales agreement the seller is not required to file his agreement of record, and his rights aré fixed under the terms of the agreement, and are not affected by the subsequent sale or mortgage of the property by the buyer without his knowledge or consent. The burden of proof was upon the interveners to show that the seller or its assignee consented to the removal of the automobile to the State of Texas before its rights, which had become vested under the conditional sales agreement, could be affected by the subsequent mortgage of the property in the ' State of Texas,

It follows that the judgment of the circuit court was correct, and it will therefore be affirmed.


source: Caselaw Access Project

author: Kirby, J.,

license: Public Domain

text:
    American Farm Mortgage Company v. Ingraham.
    Opinion delivered June 27, 1927.
    1. Usury — what law governs. — Notes payable in Oklahoma and •secured by mortgagees on land in Arkansas are governed by the law of Oklahoma.
    2. Usury- — intent to take excessive interest.----In order to constitute usury there must be an intent knowingly to take excessive interest, proved by clear and satisfactory evidence.
    3. Usury — when loan not usurious. — A loan governed by the laws of Oklahoma held not usurious where the total of the interest and commission did not exceed 10 per cent, on the loan for the entire time.
    4. Usury — innocent purchaser of note. — Where notes for commission for obtáining a loan which were claimed to make the loan usurious were separate from the notes for the loan, and these notes for the loan bear lawful rate of interest, the purchase of the notes and mortgage by an innocent purchaser before maturity will not be affected by any taint of usury.
    Appeal from Chicot Chancery Court; E. G. Hammock, Chancellor;
    reversed.
    STATEMENT BY THE COURT.
    This suit was brought by appellants, American Farm Mortgage Company, a partnership, composed of EL D. Price and Guy Y. Busenburg, against defendants, H. C. Ingraham et al., to foreclose a mortgage on lands in Chi-cot County, given to secure the payment of the four notes sued on for $337.50 each, executed June 1, 1921, due on December 1, 1921 to 1924, inclusive, with interest from maturity at 10 per cent.
    It was alleged that the notes contained an acceleration clause, all becoming due upon the failure to pay either, and that the mortgage was subject 'to the lien, of a prior mortgage executed-by the Ingrahams to the Virgil It. Coss Mortgage Company, of Muskogee, Oklahoma, which had been assigned by- it to the Rutland Trust Company of Vermont.
    The Ingraham answer admitted the execution of the notes and mortgage sought to be foreclosed, and, by cross-complaint, alleged that they and the first mortgage and the notes secured thereby given to the Virgil R. Coss Mortgage Company were all one transaction, and were' usurious, being given to secure an-indebtedness bearing a rate of interest in excess of 10 per cent., and prayed the cancellation of the mortgages.
    The Rutland Trust Company adopted the answer of the American Farm Mortgage Company to the cross-complaint, and alleged that it was a bona fide purchaser of the $4,500 note and mortgage ;• denied that same was usurious; pleaded specially the provision in the mortgage that, if any excessive interest was charged, it was done inadvertently and should be credited on the debt.
    Ingraham and wife filed a supplemental answer and cross-complaint, stating that, if the contract was held to be performed in Oklahoma and construed under its laws, they were entitled to a counter-claim or set-off against the claim of the plaintiff in twice the amount of the interest charged and collected, and alleged that the notes and mortgage all evidenced a contract to be performed in the State of Arkansas and construed by its laws.
    The Rutland Trust Company filed a supplemental answer and cross-complaint, alleging that the appointment by the Ingrahams of the American Farm Mortgage Company for procuring the loan as their agent, the execution by Ingraham and wife, on the first day of June, 1921, to the Virgil R. Coss Mortgage Company, of Muskogee, Oklahoma, farm loan brokers, of the first mortgage on the lands to secure an indebtedness of $4,500, payable on June 1, 1931, with 7 per cent, interest, that Ingraham and wife also, on the first day of June, 1921, executed their two promissory notes for $2,000 each, payable June 1, 1931, and a third note of that date, payable at the same time, for $500, with interest coupons-attached for 7 per cent, interest, “all of said notes being payable to the said Virgil R. Coss Mortgag-e Company, at its office in Muskogee, Oklahoma,” and the American Farm Mortgage Company transmitted the notes and mortgage to the said Virgil R. Coss Mortgage Company and authorized it to negotiate a loan for Ingraham and wife as their agent; that the papers were presented to it at its office in Vermont, and it agreed with the Virgil R. Coss Mortgage Company to, and did, make the loan, and, on the 14th day of November, 1921, advanced the sum of $4,500 to said company, which was paid by the American Farm Mortgage Company to Ingraham, under the direction of Ingraham and wife, discharging the liens existing against their property. That the $4,500 was furnished in accordance with the agreement to take the loan made with the Virgil R. Coss Mortgage Company, as agent for Ingra-ham, and that the mortgage and notes were then assigned to it by said Yirgil R. Ooss Mortgage Company. Denied that it purchased the notes and mortgage, and alleged that.-it made the loan direct to the Yirgil R. Coss Mortgage Company for Ingraham and wife, without any knowledge of any commission charged by the American Farm Mortgage Company, or the Yirgil R. Coss Mortgage Company; denied that either of said companies was its agent, it having only agreed with the Yirgil R. Coss Mortgage Company to lend the money to Ingraham and wife; filed copies of the notes and mortgage; alleged the failure of the mortgagors to pay $162.81 taxes, and asked judgment for its debt and taxes and a foreclosure of the mortgage.
    The assignment of the mortgage to the Rutland Trust Company was made December 5, 1921.
    The Ingrahams denied the allegations of the cross-complaint of the Rutland Trust Company and that the money was loaned them by the Rutland Trust Company, and alleged that it was the purchaser of the mortgage from the Yirgil R. Coss Mortgage Company, and estop-ped, and alleged again that the execution of the notes and mortgages was but one transaction, and was usurious.
    The chancellor found that the Yirgil R. Coss Mortgage Company made the $4,500 loan to the Ingrahams and paid for- the same on the 3rd day of October, 1921, and sold the loan to the Rutland Trust Company in December of the same year; that the American Farm Mortgage Company was the agent of the Virgil R. Coss Mortgage Company in the making of the loan; that the notes and mortgages were executed at the same time for but one consideration, and constituted but one transaction, which was held to be usurious under the laws of Arkansas and Oklahoma, but that the contract was made to be performed in the State of Arkansas and must be governed by its laws; canceled the mortgages and notes as a cloud on the title of the Ingrahams; and from this decree the American Farm Mortgage Company and the Rutland Trust Company appealed.

      Robert A. Zebold and Rose, Hemingway, Cantrell & Loughborough, for appellant.

      John Baxter, R. W. Wilson and W. W. Grubbs, for appellee. ' *
   Kirby, J.,

(after stating the facts). While we think the preponderance of the testimony shows that the loan was, in fact, made by the Rutland Trust Company, at its offices in Vermont, under its agreement with the Virgil R. Coss Mortgage Company upon its presentation of the application and the papers there, it is undisputed that the principal notes for the $4,500 loan were payable to the Virgil R. Coss Mortgage Company, at its office in Muskogee, Oklahoma, and that they only bear 7 per cent, interest, which is not usurious either in Arkansas or Oklahoma, and that, if the whole transaction can be considered as but one, necessarily the place of performance of the principal contract, the payment of the notes, must be controlling so far as the application of the law is concerned, since such a contract is not usurious under the laws of that State.

It is expressly declared in the mortgages that there is no intention to exact usury, and if there is an excessive charge of interest it is made inadvertently and will be credited upon the indebtedness. The testimony shows no intention to charge or take excessive interest for the use of the loan, unless it can be inferred from considering all the notes and mortgages one transaction.'

This court has repeatedly held that, in order to constitute usury, there must be an intent knowingly to take excessive interest, proved by clear and satisfactory evidence. Gregory v. Buley, 9 Ark. 22; Jordan v. Mitchell, 25 Ark. 258; Citizens’ Bank v. Smith, 83 Ark. 31, 102 S. W. 697; Jones v. Phillips, 135 Ark. 578, 206 S. W. 40; and Briant v. CarlLee Bros., 158 Ark. 62, 249 S. W. 577.

The parties will be presumed to have contracted with reference to the place of payment, where the obligation is valid under the laws of that jurisdiction, land, the notes being payable in Oklahoma, it must be held to be an Oklahoma contract, controlled by its laws. Dupree v. Virgil R. Coss Mortgage Co., 167 Ark. 18, 267 S. W. 586, 1119; Whitlock v. Cohn, 77 Ark. 83, 80 S. W. 141; 39 Cyc. 891; 2 Wharton’s Conflict of Laws, § 510D, and 39 Cyc. 899-902.

This case is ruled by the opinion in Smith v. Brokaw, supra, where it is held that, under the laws of Oklahoma, the rule for testing a contract for usury requires computing the interest for the entire time the-loan has to run, if the contract is performed, and that, if the whole amount reserved or exacted as interest for use of the money, spreading the payments over the entire time of the contract, does not exceed a charge of 10 per cent, for the amount loaned, the contract or note is not usurious.

Since the amount reserved or exacted in this case, both for interest and commissions, regarding the whole transaction as one, does not exceed the 10 per cent, interest on the loan for the entire time, it is not usurious, and, even if the whole contract could be regarded as usurious under the laws of that State, the undisputed testimony shows the Rutland Trust Company an innocent purchaser of the principal note, bearing only 7 per cent, interest and the mortgage securing same, and its rights could be in no wise affected by any taint of usury in the entire transaction. Boston Mutual Life Insurance Co. v. Newton, .ante p. 547.

It follows that the'chancellor in holding otherwise erred, and the decree will be reversed and the cause remanded, with directions to enter judgment for the parties at interest for the amounts due them respectively, with foreclosure of the mortgages for payment thereof and priority of payment out of the proceeds realized from the sale of the lands of the claim of the Rutland Trust Company, under its first mortgage and the amount of the taxes paid by it, necessary to the protection of its lien, and for further proceedings according to the principles of equity and not inconsistent with this opinion. It is so ordeted. ' .


author: Mehaffy, J.

text:
    Stockton v. State.
    Opinion delivered June 27, 1927.
    Embezzlement — sufficiency of indictment. — An indictment for embezzlement which fails to charge facts showing that defendant had possession of the bond alleged to have been embezzled as a bailee is insufficient, under Crawford & Moses’ Dig., §§ 2500, 2502, in failing to. allege defendant’s fiduciary capacity.
    Appeal from Franklin Circuit Court, Ozark District; J. 0. Kincannon, Judge;
    reversed.

      J. P. Clayton and Evans & Evans, for appellant.

      H. W. Applegate, Attorney G-eneral, and Darclen Moose, Assistant, for appellee.
   Mehaffy, J.

The appellant, Finis E. Stockton, was indicted in the Franklin Circuit Court of the Ozark District in two counts. The first count charged the larceny of a Government bond of one thousand dollars, belonging to J. S. Turner. The second count in the indictment charged the defendant with embezzling the same bond.

The defendant demurred to the indictment on the ground that it did not state facts sufficient to constitute the crime of larceny or embezzlement. The court overruled the demurrer, and appellant filed a motion in arrest of judgment, which was also overruled, and exceptions saved. The appellant filed a motion for a new trial, which was overruled, exceptions saved, and appeal taken to this court.

The charge of embezzlement in the indictment is as follows:

“The grand jury aforesaid, in the name and by the authority aforesaid, further accuses Finis E. Stockton of the crime of embezzlement, committed as follows :
“That the said Finis E. Stockton, in. the county, district and State, and at the time aforesaid, and having then and there in his custody and possession one United States one-thousand dollar Liberty bond of the value of one thousand dollars, and the property of J. S. Turner, did unlawfully, fraudulently and feloniously make away with and embezzle and convert to his own use the said one-thousand dollar United States Government Liberty bond, as aforesaid, without the knowledge and consent of the aforesaid J. S. Turner.”

Appellant contends that the indictment is insufficient to charge the crime of embezzlement. The indictment was drawn under § 2500 of Crawford- & Moses’ Digest, which is as follows: '

“If any clerk, apprentice, servant, employee, agent or attorney of any private person, or of any copartnership, except clerks, apprentices, servants and employees within the age of sixteen years, or any officer, clerk, servant, employee, agent or attorney of an incorporated company, or any person employed in any such capacity, shall embezzle or convert to his own use, or shall take, make way with, or secrete, with intent, to embezzle or convert to his own use, without the consent of the master or employer, any money, goods or rights in action, or any valuable security, or effects whatsoever, belonging to any other person, which shall have come to his possession, or under his care or custody, by virtue of such employment, office, ag’ency or attorneyship, he shall he deemed guilty of larceny, and, on conviction, shall be punished as in cases of larceny.”

This section of the Digest was read to the jury as the section under which the indictment was drawn. The other section of the Digest discussed is § 2502 of Crawford & Moses’ Digest, and it reads as follows

“If any carrier or other bailee shall embezzle, or convert to his own use, ór make way with, or secrete with intent to embezzle or convert to his own use, any money, goods, rights in action, property, effects ' or valuable security, which shall have come to his possession, or’ have been delivered to him, or placed under his care or' custody, such bailee, although he shall not break ahy trunk, package, box or other things in which he received them, shall be deemed guilty of larceny, and, on conviction, shall be punished as in cases of larceny.”

It will be observed that the indictment does not charge anywhere that the appellant had possession of the bond or received it as clerk, apprentice, servant, employee, agent or attorney, and does not allege that be was bailee, and a majority of tbe court are of tbe opinion that tbe indictment does not state facts sufficient to constitute the crime of embezzlement. To constitute embezzlement under this statute it is necessary to charge that the bond came into possession of tbe appellant as bailee or agent, etc., or tbe indictment must contain allegations sufficient to show tbe fiduciary capacity of the appellant.

This court held, in passing upon an indictment for embezzlement, where the indictment charged the embezzlement of a horse and buggy, and also charged that the defendant was then and there bailee, that the indictment did not state facts constituting a public offense and did not state facts sufficient to constitute the offense of embezzlement. “To constitute embezzlement of the horse and buggy, it was necessary to charge that same came into possession of the appellant as bailee. The indictment does allege that the appellant was bailee of Reiman and Wolfort, and this was sufficient to show his fiduciary capacity. But nowhere is it alleged that the horse and buggy came into his possession as such bailee, nor is it alleged that the horse and buggy, being in his possession as bailee, were converted to his own use. In other words, no facts are stated in the indictment to show that appellant had possession of the horse and buggy of Louis Reiman and L. Wolfort as their bailee. This was essential to the validity of the indictment.” Tally v. State, 105 Ark. 28, 150 S. W. 110:

We think the case at bar is ruled by the above case. In the case at bar, however, it is not- even charged that the appellant was bailee. There is nothing in the indictment to indicate the fiduciary capacity. See State v. Scoggins, 85 Ark. 43, 106 S. W. 969.

As we have said, the case of Tally v. State, above mentioned, rules this case, and in the Tally case there is a thorough discussion of the law, and numerous authorities are cited, and it would be useless to repeat them here.

Since we have reached the conclusion that the indictment does not state facts sufficient to constitute the crime of embezzlement, it becomes unnecessary to discuss the other questions discussed by attorneys in their briefs. This case is reversed, and remanded with directions to sustain the demurrer to the indictment.


author: Mehaeey, J.

text:
    Hicks Company, Ltd., v. Federal Reserve Bank of St. Louis.
    Opinion delivered June 27, 1927.
    1. Banks and banking — negligence in forwarding checks for collection. — A correspondent bank in forwarding checks sent to it by the owner’s depository bank for collection is not.negligent in sending the checks to the bank on which they are drawn, under the provisions of Acts 1921, p. 514.
    2. Banks and banking — negligence in collecting check. — A correspondent bank in forwarding checks sent to it for collection by the depository bank held not negligent' in accepting from the bank on which the checks were drawn a draff instead of money, where, in so doing, it followed the banking custom, and was without notice of the drawee bank’s insolvency.
    Appeal from Pulaski Circuit Court, Second Division; Richard M. Mann, Judge;
    affirmed.

      McKay & Smith, for appellant.

      James G. McConkey, Ashley Gockrill and Henry M. Armisteacl, for appellee.
   Mehaeey, J.

The appellant, plaintiff below, filed the following complaint:

“The plaintiff, for its cause of action against the defendant, alleges:
“First. That the plaintiff is a corporation organized and existing under and by virtue of the laws of the State of Louisiana, and is engaged in the wholesale grocer business in said State, with its principal office in Shreveport, Louisiana, and branch office at Minden, Louisiana.
“Second. The defendant is a banking corporation organized and existing under and by virtue of the laws of the United States, with its principal office in St. Louis, Missouri, and was, at all times hereinafter mentioned, and is now, under and by virtue of the laws of the United States, operating a branch bank, known as the Little Rock Branch Federal Reserve Bank of St. Louis, in Little Rock, Arkansas.
“Third. That on or about the.day of December, 1923, H. T. Dickens of Bussey, Columbia County, Arkansas, was indebted to the plaintiff upon account in the sum of $897.44, and mailed his check, drawn on the Bank of Taylor, of Taylor, Columbia County, Arkansas, for the sum of $897.44, in settlement of said account; that said cheek was mailed by the said H. T. Dickens at Bussey, Arkansas, to the plaintiff at Minden, Louisiana, and was received and the amount credited to the account of H. T. Dickens by the plaintiff, on or about the.day of December, 1923.
“Fourth. That on or about the.day of December, 1923, Gr. W. Brown, of Taylor, Columbia County, Arkansas, was indebted to the plaintiff upon account in the sum of $806.47, and mailed his check, drawn on the Bank of Taylor, of Taylor, Columbia County, Arkansas, for the sum of $806.47, in settlement of said account; that said check was mailed by the said Gr. W. Brown at Taylor, Arkansas, to the plaintiff at Minden, Louisiana, and was received and the amount credited to the account of Gf. W. Brown by the plaintiff on or about the...day of December, 1923.
“Fifth. That on or about the.day of December, 1923, as soon as said checks were received by the plaintiff, it deposited said checks in the Bank of Minden, of Minden, Louisiana, for collection; that the First National Bank of Shreveport immediately indorsed and transmitted said checks for collection to the defendant at Little Rock, Arkansas; that, on or about the.day of December, 1923, the defendant transmitted the aforesaid checks, together with other checks, to the Bank of Taylor, Taylor, Arkansas, for collection and return.
“Sixth. That on the.day of December, 1923, the said Bank of Taylor received said checks drawn on it las aforesaid, and stamped said checks ‘Paid,’ and charged to the accounts of H. T. Dickens and Gr. W. Brown, the said Dickens and Brown each having more to their credit in the Bank of Taylor than the amount of each of said checks, and on the same day the said Bank of Taylor transmitted to the defendant its draft on the Bankers’ Trust Company of Little Rock, Arkansas, for the aggregate amount of the checks, including the two checks sued on herein; that the defendant, immediately upon its receipt, presented said checks to the Bankers’ Trust Company of Little Rock, Arkansas, for payment, and payment was refused, the Bank of Taylor having been placed in the hands of the State Bank Commissioner, notice of which had been received by the Bankers ’ Trust Company; that the plaintiff does not know whether the payment of said checks was refused on account of insufficient funds or whether it was on account of having received notice that said bank had been taken in charge by the .State Bank Commissioner. That the defendant thereafter charged the amount of said checks to its immediate correspondent, First National Bank of Shreveport, and the First National Bank of Shreveport immediately charged the amount of said checks back to the Bank of Minden, who in turn charged the amount of said checks hack to this plaintiff.
“Seventh. Plaintiff alleges that the defendant was negligent in not requiring the Bank of Taylor to pay the amount of said checks in money and in accepting in payment of said checks a draft drawn on the Bankers ’ Trust Company of Little Rock, Arkansas, which proved to he worthless; that the plaintiff, by reason of said negligence, suffered damages in the sum of $1,703.91, the amount of said checks.
“Wherefore, premises considered, plaintiff prays judgment against said defendant for its damages aforesaid in the sum of $1,703.91, together with interest, cost, and all other and proper relief.”

Appellee, defendant below, filed demurrer and answer, which are as follows:

“The defendant demurs to the complaint herein beeaúse the same does not state a canse of action, and, in no wise waiving said demurrer, but specially reserving and standing upon the same, defendant, by léave of court, answers and says:
“1. Defendant is not liable to the plaintiff because, at the time the checks in question were forwarded by the defendant to the Bank of Taylor, upon which they were drawn by H. T. Dickens and G. W. Brown, the said Bank of Taylor was insolvent.
“2. The defendant denies,that it is liable to the plaintiff, and says that it has no contractual relations with the plaintiff; that there is no privity of contract between the • plaintiff and defendant, as the defendant received such checks through the Federal Reserve Bank of Dallas, such cheeks being direct routed to the defendant by the First National Bank of Shreveport by the consent only of the Federal Reserve Bank of Dallas, with directions to defendant to transmit the proceeds of the checks, if collected, to the Federal Reserve Bank of Dallas. Defendant is responsible therefore, if liable at all, .which it denies, only to the Federal Reserve Bank of Dallas.
“3. Defendant is not liable in any event, because it was agreed between the First National Bank' of Shreveport and the Federal Reserve Bank of Dallas that all checks for collection, such as those involved in this action, might be forwarded to the drawee bank and a bank draft accepted therefor in payment. That the Federal Reserve Bank of Dallas published a notice to this effect to all of its correspondent and member banks, including the First National Bank of Shreveport, which directly assented thereto and was bound by such regulation, and all the customers of the First National Bank of Shreveport, forwarding checks for collection through the Federal- Reserve Bank of Dallas, and, by its permission, direct routing checks to its correspondent banks, were bound by such regulation. Thai the defendant, on its own part, had given notice to all of its correspondents, including the Federal Reserve Bank of Dallas, that it would forward checks for collection to the drawee bank and accept in payment therefor a bank draft, and that the Federal Reserve Bank of Dallas, the First National Bank of Shreveport, and all banks for whom defendant, undertook to collect checks, assented to and were bound by such notice.
“4. Defendant, saving and reserving all of its defenses heretofore set. up, says that it is not liable to the plaintiff in any event on account of the allegéd negligent act complained of, because, after such checks had been forwarded to the Bank of Taylor, and after the Bank of Taylor had remitted to pay the same by a bank draft drawn on the Bankers’ Trust Company of Little Rock, and after. such .draft was dishonored by the Bankers’ Trust Corhpany of Little Rock because of the insolvency of the Bank of Taylor, and after notice of such fact had come to the knowledge of the plaintiff, the plaintiff elected to hold the Bank of Taylor, and ratified the act of the defendant by filing claim with the State Bank Commissioner against the Bank of Taylor, seeking to collect the proceeds of such check from such drawee bank. The defendant pleads such ratification in bar of the plaintiff’s claim hereunder.”

Thereafter the defendant filed the following amendment to its answer:

“The defendant only undertook to collect checks or forward the. same for collection under the lawful conditions set forth by regulations published by the Federal Reserve Board and in force and effect at the time of the transactions complained of, particularly regulation J, series of 1920, and the .conditions and terms for the collection of checks set forth in Circular No. 6, series of Í922, dated December 20, 1922, lawfully published by the defendant, and the terms and conditions in Circular No. 19, series of 1923, dated September 24,1923, lawfully published by the Federal Reserve Bank of Dallas, all of which regulations, terms and conditions fully bound the plaintiff, and by which it is provided that checks received by the defendant might be forwarded for collection to the drawee bank and an exchange draft accepted therefor and the checks released to the drawee bank, all of which the defendant pleads in defense of the plaintiff’s 'cause of action.”

This case was submitted upon an agreed statement of facts and certain evidence. The agreed statement of facts is as follows:

“The following statement is agreed upon as the facts upon which this case may be submitted. (In the event of an appeal by either party, only relevant portions of the publications and circulars attached as exhibits hereto will be carried into the record; such relevant portions will be indicated by underscoring those parts of such documents as are read in evidence by either party at the trial hereof).
“The plaintiff, the Bank of Minden and the First National Bank of' Shreveport, are domiciled in the district of the Federal Reserve Bank of Dallas. The First National Bank óf' Shreveport is a member bank of the Federal Reserve System, Dallas District. The bank of Minden is not a member.
“If forwarded for collection through a Federal Reserve Bank, the checks involved in this action would have been cleared through the Dallas Bank, unless, under regulations published to member and non-member banks, permission had beeu obtained from the Dallas Bank for direct forwarding through a Federal Reserve Bank of another district, in which latter event the proceeds would be. cleared through the Dallas Bank' and the collection made under terms and conditions'governing the clearance and collection of checks published by the Dallas bank.
“The Bank of' Taylor was in the district of the Federal Reserve Bank of St. Louis. The checks involved in-this action were sent direct to the Little Rock Branch of the Federal Reserve Bank of St. Louis, by permission obtained by tbe First National iBank of Shreveport from the Federal Reserve Bank of Dallas. The Federal Reserve Bank of St. Lonis and the Federal Reserve Bank of Dallas had published regulations governing the terms and conditions upon which either of them would collect checks or forward the same for collection. These regulations were known to the First National Bank of Shreveport, and no collection business was accepted by either of the Federal Reserve Banks, or any branch thereof, except subject to the conditions of such regulations. The officers of the Bank of Minden would testify that these regulations were unknown to them.
“A copy of the regulations in force by the St. Louis Bank, designated as circular No. 6, series of 1922, dated December 20, 1922, is attached and made a part of this agreement as Exhibit 1, and a copy of the regulations in force by the Dallas Bank, designated as circular No. 10, series of 1923, dated September 24, 1923, is attached and made a part of this agreement as Exhibit 2. A copy of the regulations adopted by the Federal Reserve Board, .series of 1920, is attached and made a part of this agreement as Exhibit 3.
“After the failure of the Bank of Taylor, defendant was authorized by the Federal Reserve Bank of Dallas to file claims with the receiver of the failed bank in behalf of its indorsers, which authorization included the sum claimed by Hicks Company, Ltd. A copy of this authorization, dated February 27,1924, is attached to this agreement as Exhibit 4. The items of $806.47 and $897.44, representing the checks which had been deposited for collection by the plaintiff with the Bank of Minden and forwarded by that bank to the First National Bank of Shreveport, a member bank of the Dallas Federal Reserve District.
“The First National Bank of Shreveport was authorized by the Bank of Minden to file a claim with the receiver of the failed bank as to the above two items. This was by letter dated February 8, 1924, as shown by letter of the First National Bank of Shreveport, dated September 17, 1925, attached hereto as Exhibit 5.
.• “Correspondence between Hicks Company, Ltd., and the defendant occurred as shown by letters dated May 12, 13, and 14, 1924, attached hereto as Exhibits 6, -7, and 8.
.“Direct forwarding of checks for collection from banks in the Dallas District to the Federal Reserve Bank of St. Louis was authorized by the Dallas Bank, April 20, 1922, as shown by letters attached hereto as Exhibits 9 and 10.
“A claim on behalf of its indorsers was filed with the receiver of the Bank of Taylor by the defendant, copy of which is attached as Exhibit 11, the claim of Hicks Company, Ltd., being covered by the two items shown on the. list attached to the claim in the respective amount of the checks.
“The. form of deposit ticket in use by Bank of Taylor and used by Hicks Company, Ltd., in depositing the two checks, is attached hereto as Exhibit 12.'
“The Bank of Taylor forwarded a bank draft drawn oh its balance at the Bankers’ Trust Company, Little Rock, which was not paid because of insufficient funds. The balance of the Bank of Taylor with the Bankers’ Trust Company on December 13, 1923, was $1,582.43. '
■ ‘ ‘ The defendant has made payments to the plaintiff out of proceeds it received from the Bank Commissioner in the liquidation of the assets of the Bank of Taylor, as follows:
September 3, 1925.$164.30
September 28, 1925..$154.41
February 27, 1926.$154.41
Total .I.i...:..$473.12
“The Bank of Taylor was the only bank at Taylor, Arkansas,- the nearest other bank being at Stamps, about ten miles distant from Taylor. The last published statement of the Bank of Taylor is exhibited herewith as Exhibit No.” ’ •

Numbers of exhibits were introduced, including circulars, letters and copies of regulations, wbicb we do not think necessary to set out here.

W. A. Hicks testified, in substance, as follows:

“He is vice president of the American Southern •Trust Company of Little Bock, which is engaged in general commercial banking business. His bank does business generally all over Arkansas, and a large amount of business over the United States; does a general commercial banking business, the collection of checks, drafts and items of that character. The capital of the bank is one million dollars, and a surplus of two hundred thousand dollars. The average deposit is about sixteen million dollars. Witness has been in the banking business in Little Bock for 15 years. Until its merger with certain other banks, this bank was the largest bank in Arkansas. I am familiar with the universal custom of Federal banks in this Federal Beserve District and in the United States in collecting checks drawn on out-of-town banks. The general custom is to send the checks direct to the paying banks. It is the custom to accept drafts drawn by the drawee bank on their correspondent, which is usually located in the town in which the sending bank is located. It is not the custom to demand currency from the drawee bank for checks being collected.'
“Cross-Examination. — This has been the custom since I have been in the banking business. It is not generally the custom to ascertain the financial condition of the bank before sending. If it should be brought to our direct attention that the bank is in.an insolvent condir tion, we would route our items to another bank. We never make any special investigation as to the condition of .a bank. We do not make any investigation as to the amount of the capital stock, or the size of the bank. Every State bank is required to publish a statement, and our bank receives these statements. We receive statements from .every bank in Arkansas. We make it our special business to get them, to keep in touch with the situation, and to find out whether or not the bank is getting along all right, if it is doing business with us in a borrowing way. The published statement of the bank does not indicate its condition as being solvent. A bank may be over-extended, and may be solvent and in good condition according to the published statement. It is very hard to tell from the published statement as to whether the bank should be considered as being in a shaky condition. The published statement might indicate that it is in an overextended condition,, but not that it was insolvent. If the bank showed that it had twelve and a half thousand dollars capital stock, seven and a half thousand surplus, $2,250 undivided profits, deposits of about $54,000, loans for more than $130,000, and loans and discounts and bills payable of $53,000, I would not call it in absolutely first-class condition, but I would not call it in an insolvent condition. It depends entirely upon the assets in the way of bills receivable. If the assets were worth dollar for dollar just like it stated, and absolutely good, it would not be insolvent, but if the assets were not worth that much money, which is usually the case, it would not show a very good report, but that is a thing that could be determined only by an intensive examination of its assets. In 1921 and 1922 our bank, known as the German National Bank, had deposits of $6,900,000, and we were borrowing seven and one-half million dollars, and our bills receivable were twelve million dollars. "We were not insolvent, but our statement indicated that we were rather in an over-extended condition. In the year 1923 many banks in Arkansas were still in an over-extended condition. We have had less bankruptcies of banks in Arkansas than in any State surrounding us over a period of five years, but I am not saying that this over-extended condition was a very good sign. As I stated before, it depends on the value of the assets of the bank, and the assets cannot be determined without an extensive examination by one who knows the value of their paper. It is possible that their cash may be low today and collections tomorrow bring up their resources. It does not indicate entirely that the bank is insolvent, but indicates that the bank is trying to take care of its community, and has gotten itself in that condition during hard times, and has not yet been able to recover. When we loan money to country banks we do not require individual indorsement of directors, but we require collateral — that is, the pledging of their bills receivable; in some cases we require individual indorsement.
“Redirect examination. — I examined the published statement stipulated in the agreed statement of facts in this case, and we see nothing in the statement that ivould keep us from sending items direct to the bank of Taylor for collection.
“Re-cross examination. — There is nothing in the statement to indicate that we would not send items for more than $4,000 direct to the bank. The statement shows that the entire capital stock was taken up in banking house, furniture and fixtures, banking house and other real estate was $12,000, the capital stock $12,500, the surplus $7,500, the undivided 'profits $2,234, making approximately $10,000 margin in their capital stock, surplus and undivided profits above their furniture and fixtures, banking house and other real estate. It is reasonable to expect, in analyzing a statement of this character, that the banking house, furniture and fixtures are of some value. That would have to be determined, of course, on a sale of the assets. Tn my way of analyzing this statement I would decrease that 50 per cent., banking house, furniture and fixtures, and other real estate worth approximately $6,000, which, added to the surplus, capital stock and undivided profits, would make a net amount of better than $6,000. We would not hesitate to send items direct to the Bank of Taylor for colléction. They did owe the $53,000 and the $130,000. Not knowing the value .of the paper, I cannot say whether, subtracting the loan $53,000 and the $130,000 from the loans and discounts, the usual amount of bad paper, whether that would leave the bank insolvent. I will say that this statement indicated that the bank was in very extended condition, but' the over-extended condition does not indicate insolvency. It might be insolvent and it might not- — that depends entirely on its assets.”

F. A. Coe testified, in substance, as follows:

“I am manager of the Little Rock Clearing House Association, which is an association of the banks of Little Rock for making settlements on Little Rock checks, and in addition we run a country department for the collection of so'me out-of-town checks. I have been secretary of this association since August last year. I was with the Little Rock branch of the Federal Reserve Bank of St. Louis since January 1, 1919, until August 1, 1923. I am acquainted, with the universal custom of blanks handling checks drawn on out-of-town banks for collection. I understand the universal custom to be as stated by Mr. Hicks, whose testimony I have heard.
‘ ‘ Cross-examination. — I was assistant cashier of the Federal Reserve Bank at this place when the items in question were sent to the Bank of Taylor. Mr. A. F. Bailey was in charge, lie is not here. It is the universal custom to send checks to these country banks without making investigation'.of their financial condition. The Bank of Taylor is not a member of the Federal Reserve Bank or the Federal Reserve System: It was the custom of the Federal Reserve Bank to send these items to nonmember banks without making any investigation as to their financial standing.
“Redirect-examination. — It is also the custom of the Little Rock Clearing House Association to do the same thing. This is a commercial custom which is the outgrowth of business conditions.”

The above was. all the evidence introduced, and. the court, after hearing the evidence, found the law and facts in favor of the defendant, and rendered judgment accordingly. The plaintiff saved its exceptions, filed its motion for a new trial, which was by the court overruled, prayed an appeal to the Supreme Court, which was granted..

The appellant’s contention is that it has a right to sue the Federal Reserve Bank, and that it is not bound by the regulations of the Federal Reserve Bank. Appellant alleges that the Federal Reserve Bank was negligent in accepting the draft of the Bank of Taylor, and that because of that negligence it is liable in this case.

The Bank of Taylor, to whom the checks were sent, was the payee bank, and this court had, prior to' the act of the General Assembly of 1921, held that it was negligence to send a check for collection to the payee bank. But, after the passage of that act, this court held that that act changed the rule, and, in the decision eonstruing the act of the Legislature, the court said that there are two conflicting lines of decisions, one originating in New York and the other in Massachusetts. Under the first rule a bank was responsible for all of the correspondent banks through whose hands the check passed for collection, unless there was an express contract to the contrary between the customer and the initial bank, and the other rule holding that the correspondent banks were agents of the customer, and the initial bank is not responsible for their negligence.

The act of the Legislature of 1921 is set out in full in the case of Farmers’ and Merchants’ Bank v. Ray, 170 Ark. 293, 280 S. W. 984. The court in that case said: “The evidence in this case was sufficient to warrant the jury in, finding that appellant wias not guilty of any negligence in the selection of its correspondents and. that it was not negligent itself in forwarding the check for collection. ’ ’

The case relied on chiefly by appellant is the case of Federal Reserve Bank v. Malloy, 264 U. S. 160, 44 S. Ct. 296, 68 L. ed. 617, 31 A. L. R., 1261. That case not only announces the two rules, the New York rule and the Massachusetts rule, but the case annotated, and many authorities are collected. Among other things it-announces as one of the reasons for its decision, that the checks were delivered to a bank in Florida for collection, and stated that the relation of the payee to the initial bank'of deposit was controlled by the Florida statute, with respect to which it must be presumed they dealt with each other, and that this statute had the effect of importing the Massachusetts rule into the contract, with the result that the initial bank had implied authority to intrust the collection of the check to a subagent and the subagent in turn to another, and the risk of any default or negligence on their part rested on. the owners.

In that case it was urged that the acceptance of the drawee’s draft instead of money was justified by custom. And the United States Supreme Court said, with reference to the custom:

“The business of check-collecting is handled by the Federal Reserve Bank in a way very similar to that in which it is handled ¡by collecting banks throughout the country. When one bank receives checks on another in a distant city, it usually sends them to the bank on which they are drawn, or to some other bank in that city, and receives settlement by means of an exchange draft drawn by the bank to which the checks are sent upon some one of its correspondents. When checks are sent with the expectation that the bank receiving them will remit at once, we call it sending for collection and return. When this is done, the bank upon which the checks are drawn is expected to cancel the checks and charge them to the accounts of the drawers, and to remit by means of its exchange draft, or by a shipment of currency. An exchange draft is used more frequently than a shipment of currency. ’ ’ -

_ The court then said, after quoting the, above evidence :

“It thus appears that the custom, if otherwise established, does not fix a definite and uniform method of remittance. When checks are sent for collection and return, the bank is expected to cancel the checks and charge them to the account of the drawers, and remit by means of its exchange draft, or by shipment of currency, the former being used more frequently than the latter. Whether the choice of methods is at the election of the drawee bank or the collecting bank does not appear.”

The court then stated that the custom was not known to plaintiff, and, all other reasons aside, by its uncertainty and lack of uniformity, it furnishes no definite standard by which the terms of the implied consent sought to be established thereby can be determined. The court, continuing, said:

‘ ‘ It furnishes no rule by which it can be ascertained when an exchange draft shall be remitted and when currency shall be required, or who is to exercise the right of election. A custom to p.ay 2 pence in'lieu of tithes is good; but to pay sometimes 2 pence, and sometimes 3 pence, as the occupier of the land pleases, is bad for uncertainty. * * * A custom to do a thing in either one or the other of two modes, as the person relying upon it may choose, can furnish no basis for an implication that the person sought to be bound by it had in mind one mode rather than the other.” Federal Reserve Bank v. Malloy, 264 U. S. 160, 44 S. Ct. 296, 68 L. ed. 617, 31 A. L. R., 1261.

It will be observed that the testimony in that case .showed the custom to be to send either a draft or cash. But the testimony in this case shows that it is the universal custom to send the checks direct to the payee banks, and that it was the custom to accept drafts drawn by the drawee bank on their correspondent, which is usually in the town in which the sending bank is located. It is not the custom to demand currency from the drawee bank for the checks being collected.

The above was the testimony of Mr. W. A. Hicks, vice president of the American Southern Trust Company, and Mr. F. A. Coe testified that he was the manager of the Little Rock Clearing House Association, and acquainted with the universal custom of banks handling checks drawn on out-of-town banks for collection, and he understood the universal custom to be as stated by Mr. Hicks, whose testimony he had heard.

The difference between the case relied on by appellant and the case at bar is, as to custom, that, in the case of Federal Reserve Bank v. Malloy, supra, the testimony showed the custom was to receive either money or drafts, one or the other. The testimony in this case shows that the custom was to receive drafts and not money, so there was' no uncertainty aibout it.

It is contended that the appellee was negligent in sending to the payee hank and negligent in receiving a draft instead of money. But the allegation in the complaint is that it was negligent in not requiring the Bank of Taylor to pay the said checks in money, and in accepting in payment a draft drawn on the Bankers’ Trust Company. This is the only act of negligence alleged.

As we have already said, the statute itself authorized the appellee to send the check to the Bank of Taylor, and hence this could not be negligence, and the appellant, in its complaint, alleges that the appellee received the checks, transmitted them to the Bank of Taylor, Taylor, Arkansas, and that the Bank of Taylor received the checks, stamped them paid, and charged them to the account of Dickens & Brown, and that on the same day the said Bank of "Taylor transmitted to the defendant its draft on the Bankers’ Trust Company of Little Rock, and that the defendant, appellee here, immediately presented said checks to the Bankers’ Trust Company.

According to the allegations in the complaint and the proof in the case, the appellee was not negligent in forwarding the check for collection, nor was it guilty of any negligence in any- other way. And, under the rule announced by this court since the act of 1921, the Federal Reserve Bank, the appellee here, was not negligent. See Bank of Hunter v. Gros, 171 Ark. 859, 268 S. W. 1032; Rainwater, Bank Commissioner, v. Federal Reserve Bank of St. Louis, 172 Ark. 631, 290 S. W. 69; Federal Land Bank of St. Louis v. Goodman, 173 Ark. 489, 292 S. W. 659; Bank of Keo v. Bank of Cabot, 173 Ark. 1008, 294 S. W. 49.

In the view that we have taken of this case, it is unnecessary to discuss the other questions mentioned in the briefs of counsel. We have reached the conclusion that the appellee was not guilty of any negligence, and the case must therefore be affirmed.


text:
    Standard Oil Company of Louisiana v. Goodwin.
    Opinion delivered June 27, 1927.
    1. Appeal and ekror — conclusiveness of verdict.- — As the credibility of witnesses and the weight of their testimony are matters for the determination of the jury, the Supreme Court will not disturb a verdict which is supported by substantial evidence.
    2. Damages — measure of damage to land. — Where damage to land is permanent, the measure of damages is the difference between its market value before the injury and its market value afterwards; ¡but where the damage to land is temporary, the measure of damages is the difference between the rental value of the land before the injury and its rental value afterwards.
    3. Appeal and error — change of theory on appeal. — -In an action to recover damages against an oil company for polluting plaintiff’s land, where the case .was tried on the theory that the injury was permanent, and the measure of damages was the difference in the market values before and after pollution, that theory cannot be changed on appeal by argument that the injury was temporary only, and that the measure of damages was the difference in rental values.
    4. Waters and watercourses — damages from pollution of stream. — Where there was substantial evidence in an action against defendant oil company for pollution of a stream running through plaintiff’s land, plaintiff was entitled to- more than nominal damages, and the amount of damage to the land was a question for the jury.
    Appeal from Union Circuit Court, Second Division; W. A. Speer, Judge;
    affirmed'.

      T. M. Milling, T. J. Gaughcm, J. T. Sifford, J. E. Gcmghan and Elbert Godwin, for appellant.

      McNalley & Sellers, for appellee.
   Mehaffy, J.

The appellee, who was the plaintiff below, is the owner of an 80-acre tract of land in Union County, Arkansas, and he brought this suit against the appellant, who' was defendant below, alleging that the defendant stored oil in pits by excavating the dirt in certain places and building embankments or levees, and that, when it rained, the water accumulated in the pits or tanks; and that from said pits or tánks portions of crude oil and basic sediment esieaped and was carried on to plaintiff’s land, and damaged and injured same.

The defendant answered, denying all the material allegations of the complaint.

The plaintiff testified, in substance, that he had been the owner of the land since 1913 or 1914; that it was practically all cultivable. The Standard Oil Company of Louisiana owns and operates a tank farm near plaintiff’s land, and the tanks were formed by throwing up a levee. Pie also testified that there was a natural watercourse upon his land that passed up within the vicinity of the oil tanks. The oil tanks are between the forks of the said stream. When they turn the valve the water and basic sediment from the tanks run into the streams and pass into the stream and across plaintiff’s land. The tanks have been there about two years. The water in the stream is not fit for the stock to drink or for any other use around the farm. The stream dries up in dry weather, except in holes. There are about 15 acres of plaintiff’s land that have been covered with sediment. Twelve acres of it would be termed fertile land. Prior to the time the sediment was deposited upon his land grass would grow; now it will not. Timbers have begun to die a little. The reasonable market value of the land would be $100 per acre if it was not for this pollution. It is now worth about half value. The amount of the land covered by the sediment is only estimated. It is all under fence, and cleared. A man can jump across the branch in most places. It is a very crooked branch. The northeast corner of plaintiff’s land is right on the channel. It then leaves his land, and touches it again at the northwest corner. The channel’s average depth is four or five feet. The timber in this branch bottom is all small timber. Plaintiff has not lived on the land for four years, but has rented it for $150 a year. Has never offered it for sale, but had been offered $100 an acre for his land, and refused it. It is now worth about half that value.

Other witnesses testified to substantially the same facts about the value of the land, and some of them put the value considerably lower.

Defendant’s witness testified that there was between seven and eight acres of the land that had some deposit on it, but that the water had no taste of salt in it. The seven acres were not covered with oil, hut just scattered over it, and some places it was bare.

There was testimony about other lands near there selling for $55 an acre, and there was a pretty sharp conflict in the testimony as given by the plaintiff and defendant’s witnesses, hut the weight of testimony and credibility of witnesses were matters to be determined by the jury, and the rule of this court is that, if there is any substantial evidence supporting a verdict, it will not be disturbed.

The first contention of appellant is that the court erred in instructing the jury on the measure of damages. The instruction given by the court was as follows: “If you find for the plaintiff, you will award him such damages as will fully compensate him for the difference in the market value of his land without the pollution of the stream which crosses his said land and the deposit of sediment thereon from defendant’s tanks, and the market value of said lands with such pollution and deposit of sediment, if any.”

It is urged that this instruction is erroneous, and that the correct measure of damages is not the difference in the. market value of the land before and after the stream was polluted, but that the proper measure is the difference in the rental value of the land, and this would be the correct rule where the damages to the land are temporary, but, if the damage to the land is permanent, the measure of damages, of course, would be the difference in market value.

The appellant, however, did not ask any instruction at all on the measure of damages and did not make any specific objections to the instruction as given, but its objection was general. Both parties seemed to have tried the case on the theory that the measure of damages was the difference in the market value of the land. That is evidently the theory adopted, not only by the appel-lee, but by the appellant. ' This is shown, not only in the cross-examination of the witnesses for the plaintiff, but it also appears in the testimony of the witnesses for the defendant itself.

Deering, a witness for the defendant, testified that the land with the oil on it was not worth anything now, and before the oil got on it it was worth from $5 to $25 an aere.

Another witness testified .on behalf of the defendant, testifying that he bought land as good as this, six or seven years ago, for $15 per acre. And it appears all through the testimony that the case was tried on the theory that the measure of damages was the difference .in the market value of the land before and after the injury.

Again, it may be said that the testimony shows the damage to the land to be permanent. Witnesses testify that it was worth a certain price before the pollution of the stream and a less price per acre after the pollution of the stream. Whether that was temporary or permanent is not only not shown by the testimony, but there seems to have been no effort on the' part of appellant to ascertain from any witnesses whether they meant that that was the difference in the price now and for a short time, or permanently.

Appellant says that one of the best-considered cases is Sussex Land & Live Stock Co. v. Midwest Refining Co., 34 A. L. R 249 (C. C. A.) 294 F, 597. In the case referred to the court said:

“We may well enter an examination of this subject with the observations of the great Chief Justice, made in an historic case (Marbury v. Madison, 1 Cranch 137, 163, 2 Law ed. 60, 69) that the Government of the United States has been emphatically termed a government of laws and not of men. It will certainly cease to deserve this high appellation if the laws furnish no remedy for the violation, of a vested legal right.”

And the court calls attention to many things that one may do to violate another’s vested legal right, _ and, among other things, says: “Here, the evidence is clear and the court found that the water was rendered partially unfit for stock purposes. Where the rights of priority are as above shown, and the pollution is shown, the authorities are that an actionable wrong has occurred, and it is no defense that the cause of the pollution was a natural user of land in a careful manner.”

In that case the court also said, in speaking of the remedy of the landowner:

“The injury shown here is not complete destruction of the land for' all reasonable natural user. It is not .even complete destruction of the user (stock gracing) particularly affected. * * * The character of the injury is, as found by the court and as apparent from the evidence, not permanent. When the cause thereof ceases to be active, the effects will, from the nature of the matter and as shown in the evidence, become negligible within a reasonable time thereafter, through subsequent floods and the natural decay and disappearance of annual vegetation. The cause may and probably will continue as long as this oil field is actively productive. The life of this oil field is estimated at twenty years. * * * It would seem that both justice to the parties concerned and public policy would seek some solution of the matter which would permit neither landowner to have the complete use of its land to the entire prevention of use by the other of its land. * * * If this use by one destroyed all beneficial use by the other of its land permanently or for any considerable time, another situation would be present.”

The above case was really a suit for an injunction, and the lower court itself adopted the rental value as the measure of damages, and the circuit court of appeals held that that was a correct rule in that case. It would have been a correct rule in this case if the parties had tried the case on that theory. The plaintiff, however, undertook to show that his damages were so much, and the defendant undertook to show that they were less, and both parties introduced evidence in an effort to show the damages; that the land was worth so much before the pollution and a certain less sum after the pollution.

The appellant cannot change its theory after appeal to this court, and we do not think that the case relied on sustains the contention of appellant here. The case relied on by the appellant is annotated, and one of the notes is as follows: “Damages for permanent injury may be recovered for destruction of- the productive power of land by discharging thereon oil and salt water from an oil well, although the continuance thereof may be abated. ’ ’

No objection to the testimony tending to show the difference in market value was made by the appellant, and the appellant cannot complain that the measure of damages which was adopted, and which was justified by the evidence introduced, was not the correct rule, when practically all of the evidence on the question of damages both by the plaintiff and defendant assumed that the injury was permanent.

Appellant’s next contention is that the appellee is entitled to nominal damages only. Witnesses testified that the value of the land before the pollution was from $100 down to a very much smaller sum, and that the value of the land after the pollution was much less. We think there was substantial evidence that the market value of the land was considerably less after the injury than it was before. As to how much the land was damaged was a question of fact for the jury to determine from the evidence, and the evidence of this damage was introduced without objection. And, since there was substantial evidence upon which to base the verdict, and no request for instructions made by appellant and no objections argued to instructions given by the court, except the one to which we have referred, it folloivs that the judgment must be affirmed.


text:
    Smith v. Brokaw.
    Opinion delivered June 27, 1927.
    1. Usury — what law governs. — A loan secured by real estate in Arkansas, prepared at the office of the lender in Oklahoma, and mailed to its representative in Arkansas for signature of the mortgagors, and returned to the lender, held to constitute an Oklahoma contract and governed by the laws of that State relative to usury.
    2. Usury — brokerage charge. — A brokerage charge of $400 for procuring a loan of $1,000, drawing 6 per cent, interest, held to exact more than 10 per cent, allowed to be paid, and to constitute a usurious contract.
    3. Usury — enforcement op foreign contract. — A contract made in Oklahoma, where it was not void for usury, will be enforced and adjudicated by the courts of Arkansas as it would be adjudicated in the courts of Oklahoma.
    4. Usury — when loan not usurious.- — Under Comp. St. Okla. 1921, §§ 5097, 5098, a contract executed in Oklahoma, exacting a bonus besides interest on loan for a period of years, wherein the interest did not exceed 10 per cent, per annum computed on the basis for the whole term, was not usurious.
    Appeal from Faulkner Chancery Court; John E. Marti-neau, Special Chancellor;
    reversed.
    STATEMENT BY' THE COURT.
    John V. Brokaw, assignee of a note for $1,000 made by E. L. Smith and wife, Mary C. Smith, on February 2, 1921, to F. B. Collins, and secured hy a mortgage on their lands in Faulkner County, brought this suit to foreclose the mortgage, the mortgagees having defaulted in the payment of interest due on the note, which contained an acceleration clause authorizing the plaintiff to declare the note due upon the failure to pay any interest installments. T. M. Miller and the Faulkner County Bank & ’Trust Company were made parties defendant, upon the allegation that they claimed some interest or right in the land subsequent to the right of plaintiff and subject to his lien thereon.
    The defendants, Smith and wife, admit the execution of the note, the interest coupons and mortgage sued on, and that default had been made in the payment of the interest coupons, and plead usury as a defense. The answer alleged that, at the time they executed the note and mortgage sued on, and as a part of the same transaction, they also executed a second mortgage upon the same lands, securing three bonus or commission notes, the first for $40, due December 1, 1921, the second for $180, due December 1, 1922, and the third for $180, due December 1, 1923, or a total of $400 paid as-a bonus to secure the loan. That the second mortgage and notes secured thereby are payable to T. M. Miller, and not to F. B. Collins, but that the payees of both said notes were officers and agents of the F. B. Collins Investment Company, and that both the first and second mortgages and the notes thereby secured were made for the benefit of the said F. B. Collins Investment Company and to its said respective officers merely for its convenience. That the notes and mortgages were executed in Faulkner County, Arkansas, being given an Oklahoma dating, and are payable in New York.
    The case was tried on an agreed statement of facts, and the chancellor found the first note for $1,000, secured by a first mortgage executed to F. B. Collins, and the second mortgage securing an indebtedness of $400 to T. M. Miller, constituted an Oklahoma contnact, was but a single transaction, and the second mortgage notes were given as a bonus to the agent of the lender, that the contract was usurious, and the penalty therefor, under the Oklahoma law, forfeited the interest in twice the amount actually paid; that the defendants were entitled to the cancellation of the second mortgage notes and mortgage and the unpaid interest upon the principal note, and entitled to recover as a counterclaim or set-off a credit upon the principal note in the sum of $215, twice the amount of interest paid by defendants, and that defendants were indebted to the plaintiff, Brokaw, in the sum of $785, balance on the $1,000 principal note, and entered a decree of foreclosure accordingly for said amount, with 6 per cent, interest from date thereof; from which judgment this appeal is prosecuted.

      The facts substantially are as follows: The F. B. Collins Investment Company, an Oklahoma corporation, with its principal place of business in Oklahoma City, of that State, is authorized to do business in the State of Arkansas, and actually engaged in lending money on farms in Arkansas and elsewhere. F. B. Collins was president of the said investment company and T. M. Miller vice president thereof. Both lived in Oklahoma City, and were engaged, as agents of said corporation, in the business of negotiating and consummating loans for said company. All first mortgages securing loans for the said investment company were taken in the name of F. B. Collins, and the second mortgages in the name of T. M. Miller. The appellants, Smith and wife, are residents of Faulkner County, Arkansas, and owners of the land described in the mortgages. "W. S. Cazort, a real estate and loan agent, was a representative in Faulkner County, Arkansas, of said F. B. Collins Investment Company, and, on the 21st day of January, 1921, Smith and wife made written application through him for a $1,000 loan upon their land, said application being made upon the regular forms furnished by F. B. Collins Investment Company. The application was forwarded to the investment company, and R. S. Cox, its inspector and examiner, was sent to appraise the Faulkner County lands before making the loan, and approved the application therefor, after examination. The Collins Investment Company prepared, at its home office in Oklahoma City, a first mortgage bond for $1,000, under date of February 2,1921, due December 1, 1930, payable to F. B. Collins, bearing interest at 6 per cent, from February 15, 1921, to maturity, payable annually, according to the tenor of 10 interest coupons attached thereto, one for $47.50 and the other 9 for $60 each, one of said coupons to become due on the first of December each year from 1921 to 1930, both inclusive, the note or bond and the interest coupons bearing 10 per cent, interest after maturity, the holder being given the option to declare the whole amount due upon default in payment of any sum due, either principal or interest. On the same date Collins Investment Company-prepared, at its home office, a first mortgage on the lands to secure the payment of the loan and interest, at the same time the said company prepared a second mortgage on the lands to secure the payment of $400, which it charged as a commission or brokerage on the said loan, which 'sum was evidenced by three notes, the first for $40, due December 1, 1921, the other two for $180 each, due December 1, 1922 and 1923, respectively, all payable to ■T.. M. Miller, and bearing 10 per cent, interest after maturity. Said notes and mortgages so prepared by the F. B. Collins Investment Company were mailed to its representative, W. T. Cazort, at Conway, Arkansas, and, on the 4th day of February, 1921, were duly executed by E. L. Smith and wife, Mary C. Smith, in Faulkner County, Arkansas, and returned to F. B. Collins Investment Company, which then sent them the sum of $1,000, the full amount loaned, by check on a bank in Oklahoma City, payable to their order. On February 25,1921, F. B. Collins duly assigned the $1,000 note, coupons and first mortgage to John Y. Brokaw, plaintiff herein, and nothing has been paid on said indebtedness, except the sum of $47.50, the first interest coupon due, and one of the $60 interest coupons due December 1, 1922.

      J. G. & Wm-. J. Clark, for appellant.

      Dean, Moore & Brasil, for appellee.
   Kirby, J.,

(after stating the facts). The chancellor correctly held the transaction to be an Oklahoma contract and governed by the laws of that State. The application for the loan was made through the representative at Conway, Arkansas, of the F. B. Collins Investment Company of Oklahoma City, where it was approved and the papers evidencing the loan and mortgage securing same were prepared, the notes and bonds bearing date of that place. The papers were forwarded to Conway, Arkansas, where they were executed by Smith and wife, and .returned to the investment company in Oklahoma City, which sent its check on an Oklahoma bank to the mortgagees in Arkansas for the $1,000 loaned them. Dupree v. Virgil R. Coss Mortgage Co., 167 Ark. 18, 267 S. W. 586, 1119, and Virgil R. Coss Mortgage Co. v. Jordan, 167 Ark. 36, 267 S. W 590.

The F. B. . Collins Investment Company, an Oklahoma corporation, authorized to do business in Arkansas, was engaged in the business of lending money upon farms in this State and elsewhere, negotiating and consummating its loans through its officers, F. B. Collins, president, and T. M. Miller, vice president. Its representative in the State of Arkansas procured the application of Smith and wife for the loan of $1,000, which was made, the prin-, cipal note for the $1,000 loan being made payable to F. B. Collins, bearing interest at the rate of 6 per cent.' per annum till due, and with the interest coupons bearing 10 per cent, after due till paid. This company charged a commission or brokerage, for making said loan, of $400, evidenced by three notes, one for $40 and two for $180 each, due on December 1, 1921, ’22 land ’23, respectively, all of said notes bearing interest at 10 per cent, from maturity and payable to T. M. Miller. The first and second mortgages were executed to secure the payment of said notes. This was all one transaction, and, notwithstanding the application made by the borrower, through its Arkansas representative, appointed the F. B. Collins Investment Company of Oklahoma City his agent to procure the loan, and authorized it, as his attorney, to do so, the investment company itself made the loan and charged the brokerage through its officers, taking the loan and brokerage notes, the note for the loan payable to F. B. Collins, who was its president, and the note for the brokerage to T. M. Miller, its vice president, and in doing so was not the exclusive agent of the borrower, and necessarily acted as the agent of the lender, since the investment company could not act otherwise than through its said officials in making the loan and charging the brokerage. McHenry v. Vaught, 150 Ark. 162, 234 S. W. 995, and Dupree v. Virgil R. Coss Mortgage Co., supra.

The brokerage charged for procuring the loan by the agent of the lender with the 6 per cent, interest reserved for the use of the money, the amounts exacted were about $228 more than the ten per centum allowed to be paid, and constituted a usurious contract under the laws of this State. Green v. Conservative Loan Co., 153 Ark. 219, 240 S. W. 13, and Virgil R. Coss Mortgage Co. v. Jordan, supra. This is not relieved against by the provision that usury was not intended to be charged, since no mistake is claimed or was made in the amount exacted, which is more than the law allows to be charged.

The contract being made in Oklahoma, where it is not void for usury, will be enforced and adjudicated by the courts of this State precisely as it would be adjudicated in the courts of that State. Dodd v. Axle-Nut Sign Co., 126 Ark. 14, 189 S. W. 663; Matthews v. Payne, 47. Ark. 58, 14 S. W. 463.

The appellants recognized that the contract might be held to be an Oklahoma contract, and, in the amendment to their answer, alleged, as a counter-claim or set-off, that, under the laws of that State, the contract being usurious, they were entitled to recover twice the amount of the total interest charged or carried by the principal note, and prayed in the alternative judgment for $1,200 as a set-off.

The Oklahoma statutes relative to the legal and contract rate of interest and the forfeitures for a charge of excessive interest provide:

“The legal rate of interest shall not exceed six per cent, in the absence of any contract as to the rate of interest, and by contract parties may agree upon any rate not to exceed ten per cent, per annum. Said rates of six and ten per cent, shall be, respectively, the legal and the maximum contract rate of interest.
“The taking, receiving, reserving or charging a greater rate of interest than is provided by the preceding section shall be deemed a forfeiture of twice the amount of the interest which the note, bill.or other evidence of debt carries with it, or which has been agreed to be paid thereon. In case a greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover from the person, firm or corporation taking or -receiving the same, in an action in the nature of an action of debt, twice the amount of the entire interest paid; provided, that such action shall be brought within two years after maturity of such usurious contract; provided further, that, when any suit is brought ■upon any note, bill or other evidence of indebtedness or to foreclose any mortgage or lien given to secure such indebtedness, when a greater rate of interest has been collected, reserved, charged or received than is provided for in this act, the defendant, or his legal representatives, may plead as a set-off or counter-claim in said action twice the amount of the entire interest collected, reserved, charged or received in said transaction or in all of such transactions between the same parties.” (Act 1916). Sections 5097 and 5098 of the Oklahoma Compiled Statutes, 1921.

Although, under the territorial government, the maximum contract rate of interest was twelve instead of ten per cent., as now, according to the rule for the calculation of interest for testing a contract for usury, recognized as correct from territorial times by the courts of that State, the contract herein is not usurious, the $1,000 loan for 10 years at 6 per cent, only reserved $600 interest, while the three brokerage or commission notes, one for $40 and two for $180 each, secured by the second mortgage, when considered as a charge for the money loaned, only amount to $400, if paid in accordance with their terms, and the interest reserved for the loan with the commission notes only amounts to a charge of $1,000 interest on the amount of the loan for the 10 year period, and is not usurious, not exceeding the full legal contract rate, the 10 per cent, allowed to be charged, over the whole term, by the laws, of Oklahoma.

In the case of Metz v. Winne, 15 Okla. 179 Pac. 224, wherein the mortgagors borrowed $600, payable in 10 years, with interest at 7 per cent, executed one note for the principal and ten notes for $42 each, representing the interest, and alsp one note for $150, which was additional interest and claimed to have made the loan usurious, the court held otherwise, saying:

“The law of this Territory prohibits the taking or contracting for any higher rate of interest than twelve per cent, per annum, and makes it unlawful to deduct more than one year’s interest from the loan in advance, hut it is not unlawful to compute the interest for the entire time the loan is to run, and contract to pay such sums in installments of such sums and at such times as the parties may by contract agree.
“We know of no law that will prevent a borrower from paying all the interest on a loan at the end of one year, or in such installments as he may desire and the parties may agree upon, so long as the person making the loan does not exact over 12 per cent per annum, or deduct more than one year’s interest from the amount of the loan in advance. The courts do not undertake to make contracts for individuals, nor to relieve them from burdensome obligations voluntarily assumed and entered into. We are unable to discover any error in the ruling and judgment of the district court in this case.”

In Covington v. Fisher, 22 Okla. 214, 97 Pac. 618, the court says:

“It is true that in that case the interest was not taken out of the principal sum, but the case holds that the mortgagee had a right to contract for the payment of a part of the interest covering ’the entire period of the 10-year loan at the end of the first year, and for such á sum to be paid at that time as would be largely in excess of the maximum legal rate, if computed only for the period of a year; but the court holds it proper to make the computation for the entire time, and the principle to be drawn from the opinion is that the contracting for the payment of interest in advance does not make the transaction usurious. ’ ’

In Garland v. Union Trust Co., 63 Okla. 243, 165 Pac. 197, in a learned and exhaustive ’opinion the court held the contract not usurious, saying:

“There was no usury in this transaction. * * Computing the interest for the entire time the loan had to run, does the interest reserved exceed the legal rate? If so, the loan is usurious; otherwise, not. In other words, the test is as laid down in J. I. Case, etc., v. Tomlin, 174 Mo. App. 512, 161 S. W. 286. There, referring to Taylor v. Buzzard, 114 Mo. App. 622, 90 S. W. 126, the court said: ‘In that case the test of usury in a contract is said to be whether it would, if performed, result in securing a greater nate of profit on the sulbject-matter than is allowed by law.’ We are therefore of the opinion that there is no merit in defendants’ contention, in effect, that the $2,325 deducted as interest in advance, together with the exaction of a note for $2,750, with interest thereon at 8 per cent, for a year, and the further exaction of $1,572.22 as interest on the loan up to December, 21, 1912, or in all, $6,822.22, was the exaction of usury at the rate of 27 per cent, for a loan of $50,000 from the date of the mortgage up to that time. This for the reason that, although such rate seems excessive, computed, as it is, for a part only of the time the loan had to run, the same is not excessive when those payments are spread out over the entire time the contract, if performed, had to run, as we have seen.”

In Balter v. Pittsburg Mortgage Investment Co. 67 Okla. 311, 171 Pac. 24, the court held the case rightly decided by the trial court upon the authority of Metz v. Winne, supra, saying:

“The opinion in Metz v. Winne, supra, was handed down by the territorial Supreme Court in September, 1904, and the proposition of law stated in the first paragraph of the syllabus has been approved at least twice by the Supreme Court of the State since statehood. Covington v. Fisher, 22 Okla. 207, 92 Pac. 615; Garland v. Union Trust Co., 49 Okla. 654, 165 Pac. 197. In the latter case, after a very full examination and review of the authorities, the court adheres to the doctrine- announced in Metz v. Winne and Covington v. Fisher, supra.”

The rule is reaffirmed in Clements Mortgage Co. v. Johnston, 83 Okla. 153, 201 Pac. 247; see also Finerty Investment Co. v. Athey, 89 Okla. 284, 215 Pac. 611, and also American Investment Co. v. Lyons, 29 N. M. 1, 218 Pac. 183, where the 'Supreme Court of New Mexico has reached the same conclusion about the rule for testing a contract for usury under the Oklahoma law as that expressed herein.

Having reached the conclusion that the loan involved in this transaction is not usurious under the laws of Oklahoma, by which the contract must he construed and enforced, it is not necessary to consider and determine the rights of John Y. Brokaw as an innocent purchaser of the note in due course of business.

The chancellor having erred in holding the contract usurious, the decree is reversed, and the cause remanded with directions- to enter a decree for John Y. Brokaw, owner of the notes, secured by the first mortgage for the amount due thereon, with foreclosure of the lien and sale of the lands for payment, and all other necessary proceedings according to the principles of equity and not inconsistent with this opinion.


text:
    GREENE COUNTY v. KNIGHT.
    Opinion delivered July 4, 1927.
    1. Eminent domain — condemnation of land for ditch — notice.— .An order condemning Land for a ditch to drain the roadbed of a highway, made without notice to the owners, held void.
    2. Eminent domain — necessity of compensation.’ — An order condemning land for a ditch to drain the roadbed of a highway, without providing for compensation to the owners, held void.
    Appeal from Greene Circuit Court, Second Division; W. W. Bandy, Judge;
    affirmed.
    STATEMENT OE EACTS.
    A highway improvement district was legally formed under what is known as the Alexander Road Law and the amendments thereto . for the purpose of constructing a highway from Paragould, Arkansas, eastward to what is known as Hopkins Bridge or the line between the States of Arkansas , and Missouri, to be called Paragould and Hopkins Bridge Highway. A petition in the name of the State Highway Department was filed in the county court of Greene County, Arkansas, asking for'a right-of-way for a ditch twenty feet wide and about 2,000 feet long across the lands belonging to Joe Knight and "W. Collison, in Greene County, Arkansas. It was alleged that the construction of said drainage ditch was necessary to properly drain the roadbed for the Paragould and Hopkins Bridge Highway. The county court made the order as required. The judgment of the county court recites that a right-of-way or easement is condemned twenty feet wide along the line described in the order, and the order shows that the length of the proposed drainage ditch was about 2,000 feet and that it wais outside of the road right-of-way. The order was- made without any notice to J. E. Knight, over whose land the proposed drainage ditch was to be constructed. Joe Knight duly appealed from the judgment of the county court to the circuit court. Joe Knight also filed a petition for a writ of certiorari in the circuit court to quash said order of the. county court condemning said strip of land as above set forth for said drainage district for the purpose of draining the Paragould and Hopkins Bridge Highway.
    In the circuit court both cases were consolidated for the purpose of trial, and were heard and determined upon the record above set forth. The circuit court was of the opinion that the judgment of the county court was void, and rendered a .judgment setting aside and quashing said order of the county court. In the judgment it was provided that the clerk of the circuit court should certify to the county court of Greene County, Arkansas, a true copy' of the judgment, to the end that the same might be entered upon the records of Greene County as the order of the county court. The case is here on appeal.

      M. P. Huddleston, for appellant.'

      Jeff Bratton, ior appellee.
   Hart, 0.-J'.,

(after stating the facts). In Browning v. Waldrip, 169 Ark. 261, 273 S. W. 1032, it was held that certiorari lies to quash a void judgment even though the judgment might have been vacated and set aside on appeal. In Miller v. Tatum, 170 Ark. 152, 279 S. W. 1002, it was held that a judgment that is not void cannot be quashed on certiorari, but, if held erroneous, it may be reversed on appeal. It was further held that an application for certiorari to quash a judgment that is not void will be treated as an appeal, where the time for appeal has not expired. Again, in Taylor v. Bay St. Francis Dramage District, 171 Ark. 285, 284 S. W. 770, it was held that an appeal might be taken from a void order or judgment of the county court to the circuit court. Hence, for the purpose of this appeal, it need not be determined whether certiorari was the proper remedy to be resorted • to by the landowner in this case. He adopted that remedy and also took an appeal from the order of the county court within the time provided by statute. Both cases were consolidated and tried together in the circuit court.

The circuit court held that the order of the county court was void. It was then directed that the judgment of the circuit court be certified to the county court and become the judgment of that court. In any event, under the undisputed facts, the judgment of the county court was erroneous. The record shows affirmatively that a strip of land twenty feet wide and about 2,000 feet long was ordered to be condemned over the land of Joe Knight and A. W. Collison, without notice to them, for the purpose of draining the roadbed of the Paragould-Hopkins Bridge Highway. The land was outside the limits of the highway. The condemnation order of the county court did not make any provision for the payment of compensation to the landowners, and shows on its face that no notice of the application was given the landowners whose land was made the subject of the condemnation order. The record also shoAvs that the proposed ditch was not part of the original plans for the construction of the highway, but that it was made afterwards upon the suggestion of the State Highway Department.

In Road District No. 6 v. Hall, 140 Ark. 241, 215 S. W. 262, it was held that the Legislature might provide such a method as it sees fit for ascertaining the compensation of land condemned for the construction of improved highways, provided only that the tribunal is an impartial one and that the landowners have an opportunity to be heard. In that case it was further held that, where the lands were not taken or damaged at the time the assessment of benefits was made, compensation must be paid to the landowners out of the funds of the district. The reason is that the assessors could not have taken into consideration, in assessing the benefits, the damages to the land which had not been taken and which was not intended to be taken at the time thé assessment of benefits was made. In that respect it was differentiated from the case of Dickerson v. Tri-County Drain. Dist., 138 Ark. 471, 212 S. W. 334, for the reason that in that case the statute provided for the payment of damages for lands taken at the time the assessment of benefits was made, and the record shows that the damages had accrued and must have been considered by the assessors in assessing the benefits to the land.

Again, it may be said that no provision was made for compensation. to the landowner in the order condemning the land, and, in this respect, the case must be governed by Independence County v. Lester, 173 Ark. 796, 293 S. W. 743. In that case it was expressly held that the county had no right to enter upon land taken for a State and Federal highway under Crawford & Moses’ Digest, § 5249, providing for the opening of new highways, and making changes in existing highways, without paying the owner compensation therefor. As we have just seen, compensation in the present case could not have been awarded the owner in assessing benefits for the reason that at that time the construction of the proposed ditch for the purpose of draining the roadbeds of the highways was not a part of the plans for the improved highway and could'not have been taken into consideration by the assessors in assessing the benefits to the land.

The result of our views is that the judgment of the circuit court was correct, and it will therefore be affirmed.