author: Smith, J.,

text:
    General Talking Pictures Corporation v. Shea.
    4-3031
    Opinion delivered June 12, 1933.

      Zeiger & Berliner, George D. Hester and Coleman & Riddick, for appellant.

      J. G. Williamson, Lamar Williamson and Adrian Williamson, for appellee.
   Smith, J.,

On May 8, 1930, the General Talking Pictures Corporation, hereinafter referred to as the company, instituted a replevin suit against T. A. Shea, to recover the possession of a talking motion picture machine, which the latter had operated at McGehee, Arkansas, under a lease contract from the company. The company had leased the machine to Shea for a period of ten years, under a license contract dated February 4, 1929. The license fee for the ten years period was $5,680, payable as follows: $1,250 when the lease was signed; $750 when the machine was ready for shipment; $3,180 in twelve monthly payments of $265 each, beginning April 20, 1929, and $50 on the 1st day of January of each year during the term. •

The lease was executed on a printed form, by filling in the blank spaces for the date, the name of the lessee, the place of installation of the talking picture machine which was the subject-matter of the contract, the approximate date of installation, and the amounts and time of payments.

Motion talking pictures had not come into general use when the lease above referred to was executed. Shea had for some time been in the moving picture business before executing the lease, and had a place of business used for that purpose, but he was required by the lease contract to make numerous changes in his building to adapt it to the exhibition of talking moving pictures. The lease contract required Shea, at his own cost and expense, to make these changes and alterations, and these were made under the supervision of the company’s representative.

The contract provided that “The company will service the equipment from time to time at the expense of the exhibitor,” and, further, that: “The exhibitor shall not obtain any additional, renewal or spare or assembled parts for the equipment otherwise than through the company. ”

The lease contract was divided into paragraphs, which were numbered, and opposite each paragraph there was printed, in capital letters, the subject of the particular paragraph. Paragraph 11 was entitled: “private showing,” and reads as follows: “No public showing of any sound-film on the equipment shall be had until a private test shall have been made in the theatre to insure satisfactory adjustment and operation thereof and the exhibitor agrees to telegraph the company immediately if the equipment fails to operate satisfactorily at that time, in the absence of which notification satisfactory functioning shall be conclusively presumed.”

Paragraph 15 was entitled: “liability for injury, etc., ’ ’ and reads as follows:

“The company shall not be liable for
“(A) Any breakdown, defect or change of condition in the theatre or equipment, any interruption of service, any loss or damage to any persons or property in or about the theatre or elsewhere nor for any damages direct, special or consequential, for any reason whatsoever. The exhibitor agrees to indemnify the company and save, it harmless from any liability or injury to workmen or others resulting from negligence or otherwise or arising out of the installation or use of the EQUIPMENT.
“(B) Any loss, damage or delay caused by strikes, riots, fire, insurrection, war, elements, embargoes, failure of carriers, inability to obtain transportation facilities, acts of God, or of the public enemy, or any other cause beyond the company’s control, whether or not similar to the foregoing.”

The concluding sentence of the lease was that it should be construed in accordance with the laws of the State of New York.

The complaint in the replevin suit alleged that Shea had made default in his payments, and had thereby forfeited the right to retain possession of the machine. There was a prayer for the recovery of the machine, and for damages for its detention. Shea had, before the institution of the suit, abandoned the use of the machine, and did not resist the.recovery of its possession, but he filed an anwer and cross-complaint, in which he prayed damages in a large sum against the company.

Upon the allegation that the company was a foreign corporation and had done business in this State without complying with the laws thereof authorizing it so to do, the trial court heard only the testimony offered by Shea upon the allegations of his cross-complaint, and there was a verdict and judgment in his favor for $12,500. Upon an appeal to this court, it was held that the lease contract was interstate commerce, and that the company had the right, although it had not been authorized to do business in this State, to maintain a suit to recover the machine and damages for its detention. Upon remanding the cause, it was said: “Appellee argues, however, that, if the court erred in dismissing the complaint of appellant, it was not prejudicial error. The contention of appellee that the only issues in the case were covered by the cross-complaint and the answers thereto is not sound. The issue tendered by appellant’s complaint that appellee had breached the contract, and that by reason thereof it was entitled to the balance of the rentals and to $1,000 damages, was not included in the cross-complaint and answer thereto. Had appellant’s contract been treated as valid, it might have proved that same was breached by appellee, and recovered the balance of the rents and any damages on account of the breach, and have set off: them against any damages appellee might have recovered.” General Talking Pictures Corporation v. Shea, 185 Ark. 777, 49 S. W. (2d) 359.

Upon the remand of the case there was a trial anew in the court below, which resulted in a verdict and judgment for the identical amount of the first judgment which Shea had recovered. The testimony upon the issues raised in the answer and cross-complaint was substantially the same at both trials.

It Avas alleged by Shea in his pleadings that, while there Avas no express Avarranty in the lease contract of the fitness of the machine for the use for which it Avas intended, there was a warranty implied by law to that effect, and that there had been a breach thereof. There Avas an allegation also that there had been a breach of the company’s obligation to ‘ ‘ sendee the machine, ’ ’ that, is, to make it operate, and that, for these reasons, Shea had sustained a large loss, the items of Avhieh will be later discussed.

The company sent its representative to install the machine after the building had been altered in accordance with the directions of its sound expert, and a preliminary or private test of the machine was had which the contract required. Shea testified that he was not present at -that time, but that he was present when the first public exhibition of the pictures was given. After this exhibition Shea sent the following telegram to the company: “Open tonight to sell-out business. We find Phono film all that you represent it to be and more. Regards.” Tn ansAver to this telegram, the company sent the folloAving reply: “We thank you for your very encouraging wire of April 1 advising us that you opened to a sell-out business, and that the DeForest Phonofilm has met with your every expectation. Pass the good Avord along to your fellow exhibitors. If avo can be of further service to Arou, please command us.”

It is very earnestly insisted that, under the provisions of paragraph 11 of the lease contract, copied above, the telegram furnished and is conclusive evidence of the satisfactory functioning of the machine, but that, if not so, the failure to immediately advise the company that the machine had not functioned and did not function satisfactorily raised a conclusive presumption that it did function satisfactorily.

Numerous cases are cited upon the question of the failure to send the telegram as required by paragraph 11 of the lease contract, our own case of Carle v. Avery Power Machinery Co., 185 Ark. 799, 49 S. W. (2d) 599, being among the number. The effect of the Carle case, supra, and of the other cases cited, is that a warranty in a sale (and the rule would be the same in a lease), conditioned upon a test of the machine sold or leased, and giving notice of any defects within a time specified for that purpose, if the machine proved defective, is binding, and the purchaser or lessee of the machine who fails to give the notice of defects as required by the contract will not be entitled to resist the payment of the purchase money or rent on account of defects. The rule is not different in New York, according to the laws of which State the contract must be construed.

The telegram from Shea to the company set out above, read by itself or unexplained, would appear to be conclusive that the machine, upon test, had functioned satisfactorily. But the testimony, while conflicting, abundantly supports the finding that the machine did not then or at any later time function saisfactorily. The testimony on the part of Shea was to the effect that the sound was harsh and grating and not easily understood, and that there was a lack of co-ordination of sound and motion, the result being that the exhibition excited the derision of the spectators, and that the continued attempt to use the machine and make it function resulted in an almost total loss of patronage and destroyed the remunerative business which Shea had built up with his motion pictures.

Shea’s explanation of the telegram was to this effect. The test was not satisfactory, even to Levy, who had charge of the installation of the machine for the company, but Levy represented that adjustments would make it so, and that he would remain until the adjustments had been made, and that he could and would make the adjustments. Levy explained, so Shea testified, that the telegram was desired by the company for advertising purposes, and that the representation as to the pictures would be made truthful in a short time. The representation as to the size of the audience was true when made. The testimony on the part of Shea was to the further effect that Levy endeavored for several days thereafter to make the machine function, as he had said he could and would do, but, failing to do so, Levy left without advising Shea that he was going.

Shea also testified that promptly after Levy abandoned the attempt to malee the machine function he wrote the company at its New Orleans office, where the contract had been negotiated, asldng the attention of Mr. Harrison, who had represented the company in making the contract, requesting that a service man be sent him to make the machine function, and that he wired and wrote the New York office to the same effect, and that he finally wrote a personal letter to an executive vice-president of the company, whom he had previously met, but nothing came of these notices and requests in the way of making the machine function.

There was a conflict in the testimony as to the time and manner in which notice was given to the company; but this issue of fact was submitted to the jury in the instructions on behalf of the company, one of which reads, in part, as follows: “If you find from the evidence therefore that the machine, when installed, privately tested and publicly shown, did not operate satisfactorily, and was unsuitable for the exhibition of talking pictures, and that the defendant did not immediately, that is, within a reasonable time, notify the company that the machine failed to operate satisfactorily, or that it was unsuitable for the exhibition of talking pictures, the court charges you, as a matter of law, that the defendant is not entitled to recover any damages on the ground of an alleged breach of an implied warranty of fitness.”

The verdict of the jury, under the above and other instructions, is conclusive of this issue of fact.

One of the points most strongly urged for the reversal of the judgment of the court below is 'that the court erred in instructing the jury that there was an implied warranty of the fitness of the machine for the use intended. This question must, of course, like all others relating' to the construction of the contract, be decided according to the laws of the State of New York, as the parties had agreed that it should be.

Upon the question of the existence of an implied warranty, numerous cases are cited to the effect that, in order to imply a warranty from the language, of the contract, an intention to warrant must be found in the contract, and it is argued that, not only is such intention absent, but that the paragraphs 11 and 15, set out above, when read together, expressly exclude that intention, and that these provisions negative an implied warranty, because they leave no field in which it could operate.

From what has already been said, it will appear .that the jury was warranted in finding that there was no conclusive presumption that the machine had functioned satisfactorily arising out of the failure of Shea to notify the company to the contrary; nor do we think it was the purpose of the first section of the first subdivision of paragragh 15, set out above, to accomplish that result. This entire paragraph must be read together to correctly interpret any portion of it.

The title of the paragraph, as has been said, is: “liability for injury, etc.” In the first sentence of the first subdivision of paragraph 15, after first contracting for an exemption to itself against any breakdown, defect or change of condition in the theatre or equipment, or through any interruption of service, there follows an exemption from liability “to any persons or property in or about the theatre or elsewhere” for any reason whatsoever. Further and more conclusive effect is attempted to be given to this exemption of liability in the sentence following, where the obligation is imposed upon the exhibitor “to indemnify the company and save it harmless from any liability or injury to workmen or others resulting' from negligence or otherwise or arising out of the installation or use of the equipment.”

Subparagraph (B) of paragraph 15 deals with the liability of the company to the exhibitor, the other contracting party, and contains certain exemptions from liability to him, to which there would be no point and for which there could be no necessity, if the. company had, in the previous subparagraph, exempted itself from liability “for any damages direct, special or consequential for any reason whatsoever.”

We think a fairer and more reasonable construction of subparagraph (A) is that it relates only to the subjects mentioned and has no purpose to exempt from liability for a breach of warranty implied by law.

This appears to be an appropriate place to say that, under the laws of New York, as we understand them, there was an implied warranty of the suitability and fitness of the machine, unless the parties have contracted against, a warranty, which, as we have said, they did not do.

The case of Hoisting Engine Sales Co. v. Hart, 237 N. Y. 30, 142 N. E. 342, is extensively annotated in 31 A. L. R. 536. A headnote in that case reads as follows: “A warranty of fitness is implied in leasing machinery for performance of specified work for which it was designed.” In the opinion in that case by the Court of Appeals of New York, Justice Crane, who delivered the opinion of the court, quoted with approval from Hals-bury’s Laws of England (vol. 1, § 3117) the following statement of the law: “ ‘The owner of a chattel which he lets out for hire- is under an obligation to ascertain that the chattel so let out by him is reasonably fit and suitable for the purpose for which it is expressly let out, or for which, from its character, he must be aware it is intended to be used; his delivery of it to the hirer amounts to an implied warranty that the chattel is, in fact., as fit and suitable for that purpose as reasonable care and skill can make it’.”

It must be remembered that the contract related to a machine about which Shea had no knowledge whatever, but for the use of which he was required to pay $2,000 before its installation was commenced, and that he was also required to incur expense preparatory to the installation of the machine, which, if it did not satisfactorily display talking moving pictures, was valueless. Under these circumstances we think it would not be a fair and reasonable construction of the contract to say that there was no implied warranty of the fitness and suitability of the machine for the purpose for which it had been leased, this being the only thing which gave it any value at all, when the contracting parties had not stipulated that there was no warranty, either express or implied.

We conclude therefore that the court did not err in telling the jury, as a matter of law, that there was an implied warranty of the suitability of the machine for its intended use.

It is insisted very earnestly that the judgment of the court below should be reversed because of error in an instruction on the measure of damages given to the jury at Shea’s request and over the objection of the company. It has been said that the cross-complaint alleged, as a basis for recovering damages, that there had been both a breach of an implied warranty of the fitness of the machine and a breach of the obligation to service the machine by making it operate and perform the functions for which it was intended.

The instruction on the measure of damages, given at the request of Shea, apparently does not distinguish the damages resulting from one cause or the other, and many cases are cited to the effect that the same rule to measure the damages cannot be applied in both cases. As an abstract proposition, the company appears to be correct in this contention; but we think the error was not prejudicial, for reasons which we proceed to state.

According to the testimony on Shea’s behalf, he did not rescind the contract, as he had' the right to do, but he continued, for more than two months, in an endeavor to operate the- machine. During all this time he was insisting that the company “service it” and make it operate. lie bought from the company new parts and equipment, and paid two of the $265 notes. The number of admissions dwindled rapidly until finally there was no appreciable patronage. Shea testified that he repeatedly warned the company that he would refuse to pay additional notes and would discard the machine unless it was made to function, and finally Mr. Buch, a representative of the company, was sent to McGehee. But this representative was a collection agent, and not an engineer. Shea testified that he asked Buch if he could make the machine function, and Buch said he could do so, and Shea said to him, “There won’t be any question about Amur money if you mil put the equipment in condition to function.” This conversation appears to have occurred over the telephone, Shea being in Louisiana and Buch in McGehee. Shea left Louisiana at 11 p. m. Saturday night, driving to McGehee, where he arrived early Sunday morning, but he found later that morning that, instead of fixing the equipment, Buch had Avrecked it by removing the optical system, which action put the machine entirely out of commission. Later this suit was brought to recover the machine.

Numerous instructions submitted the question whether this action of Buch was authorized on the part of the company, this right being made dependent on the question whether Shea had failed to comply with his obligations under the contract.

One of these instructions reads as follows: “On the issue of whether or not the plaintiff breached the contract by a failure to furnish service requested by the defendant, the court charges you that, if you find from the evidence that prior to such request the defendant himself had breached the contract bjr a failure to pay any note at its maturity, without a prior and unwaived breach by plaintiff, and that such default existed at the date of the request for service, the plaintiff was not required to furnish service while such default continued, and would not be liable to the defendant for damages on account of such failure to service the equipment.”

The instructions on the measure, of damages permitted a recovery, if warranted by the testimony, of the following items: (a) The consideration paid for leasing the machine; (b) money paid the company for spare parts and replacements; (c) expense for labor and material in the installation of the machine. Prom this last-named element of damages the jury was directed to exclude the items which were or could have been utilized in connection with the installation of another and different talking motion picture machine which Shea later installed; (d) expense incurred in a reasonable effort to make the machine function properly, together with (e) such additional amounts, if any, “as you may find from the preponderance of the evidence that the' defendant. lost in the operation of his motion picture business in llie city of McGehee due. to failure of such machine to function properly, while defendant was, in good faith, acting as a reasonable and prudent person, trying to use said machine for the purpose for which it had been leased”; and also (f) such net profits as the jury might find had been shown with reasonable certainty that Shea would have earned, “but did not earn because of plaintiff’s breach of contract relative to installation, or breach of implied warranty of the reasonable fitness of said machine for the purpose for which it was intended.” The net profits, if any, were limited “to the period from the time said machine, was installed in defendant’s theatre in McGehee to the time when you find from the evidence the defendant could and should, as a reasonable and prudent man, have- discarded said machine,” and have secured another “to perform the function for which said machine was leased. ’ ’

Numerous instructions were given, which we do not set out, but, when read together, required the jury, before finding for Shea in any amount, to find that the company had first breached the contract by furnishing a defective machine, which it later refused and failed to put in working order, and the verdict of the jury reflects that this finding was made. This being true, inasmuch as the machine had been repossessed by the company, we think there was no prejudicial error in failing to have the. jury find, separately, the damages accruing under each cause of action; indeed, under the facts of this case the causes of action appear to coalesce.

There was testimony sufficient to support a recovery on the items of damage enumerated in the instruction on the measure of damages far in excess of the damages recovered. These items included the original and subsequent payments, expenditures for spare parts and replacements, for labor and material and other costs of installation, for expenses in attempting to make the machine function, and for loss of profits.

It is insisted that the instruction permitted Shea to recover profits earned, and also expenses incurred in earning the profits. But the instruction does not appear to be open to that objection. A recovery of only net profits was authorized. The items above mentioned are not operating expenses, but were necessary expenses incurred in the attempt to make the machine operate and which would not have been incurred had such a machine been furnished as the contract contemplated.

The case of Beeman v. Banta, 118 N. Y. 538, 23 N. E. 887, 16 Am. St. Rep. 779, was a suit for damages for breach of warranty to construct a refrigerator, and the Court of Appeals of New York there said that “Gains prevented, as well as losses sustained, are proper elements of damage” in suits of that character.

In our own case of Harmon v. Frye, 103 Ark. 584, 148 S. W. 269, in which a building and apparatus for operating a moving picture show were leased for the purpose of operating the. picture show, the lessee was wrongfully evicted from the building and deprived of the picture machinery. It was there held that the lessee was entitled to recover as damages the amount of profits of which he had been deprived and which had been established by the proof.

We think no element of damage was submitted to the jury which was not warranted by the testimony, and, upon a consideration of the entire record, we find no prejudicial error. The judgment must be affirmed, and it is so ordered.


source: Caselaw Access Project

author: Humphreys, J.

license: Public Domain

text:
    Moon v. Gilliam.
    4-3024
    Opinion delivered June 12, 1933.

      F. M. Pickens and J. N. Hout, Jr., for appellant.

      Hawthorne, Hawthorne Wheatley and Erwin & Erwin, for appellee.
   Humphreys, J.

This is an appeal from a judgment of the circuit court of Jackson County approving and allowing a claim of $3,725.88 against the estate of Joseph Leroy Moon, which had been presented to and allowed by the probate court of said county. The appellee herein was the mother and appellant the widow of the deceased.

In September, 1917, appellee executed a deed to deceased for certain real estate in Jackson County, in which she owned the dower and homestead right. The deceased owned the fee therein by inheritance from his father. The consideration recited in the deed was $1.

Appellee and other witnesses in her behalf testified that the real consideration for the deed was an oral agreement by the deceased to pay appellee $50 a month during her. lifetime. The amount of the claim is based upon her expectancy according to the mortuary tables.

The testimony is conflicting as to what the real consideration was.

(1) The court found against appellant on this issue, and she is bound by the verdict unless the oral testimony was inadmissible to establish the real consideration or contract. A deed cannot be defeated by evidence of this character, but oral evidence is admissible to show the entire contract or real consideration. Davis v. Jernigan, 71 Ark. 494, 76 S. W. 554; St. Louis & North Arkansas Ry. Co. v. Crandall, 75 Ark. 89, 86 S. W. 855; Carwell v. Dennis, 101 Ark. 603, 143 S. W. 135.

(2) Appellant contends, however, that, if such a contract was made, it was within the statute of frauds and void. This contention is contrary to the rule announced by this court in the case of Hampton v. Caldwell, 95 Ark. 387, 129 S. W. 816, in the folloAving language:

“The death of the obligor within a year might have brought the contract to an end; therefore it might haAm been fully performed in a year.”

LikeAvise, the contract in the instant case might have been performed within a year and does not come Avithin the statute of frauds.

(3) Appellant also contends that reversible error was committed in allowing appellee to testify to statements made by deceased to her concerning the. contract made the basis of her claim against the estate, and in support of the contention cites § 4144 of Crawford & Moses’ Digest. An examination of the record discloses that the court sustained the objection made by appellant and excluded statements made by deceased to her. There-was ample evidence to sustain the verdict Avithout these statements. The- verdict is Avarranted under the Mav and the evidence.

No error appearing', the judgment is affirmed.


author: Kirby, J.,

text:
    Morgan v. Johnson County.
    4-3008
    Opinion delivered June 12, 1933.

      Robert Bailey, for appellant.
   Kirby, J.,

(after stating the facts). It is not disputed that the county judge had told the advance, agent of appellant upon his inquiry that the license for the exhibition would cost $50; that advertisement of the show had been extensively made throughout the adjacent territory before the show arrived; and that the county judge had then, on his own motion, told the agent the license fee would be. $100 per day when it was too late to arrange for an exhibition at any other place. ' The appellant insists that the county court was without authority to fix the license or require the payment of it, and that it was an unwarranted exaction wrongfully imposed, which she was entitled to recover.

The statute, § 9833, Crawford & Moses’ Digest, provides: “* * * Third. The county court of each county shall fix the amount of county tax for each and every public exhibition given by any person or persons in any county in this State, any part of the proceeds of which is for his or personal profit, and such licenses may be fixed for each exhibition, or monthly, quarterly or annually, in the discretion of the county court. Provided, that this section shall not apply to theatres and opera houses in cities of the first and second class and incorporated towns where no liquor is sold by the management or on the premises. Provided further, that in cities of twenty thousand inhabitants and over the license for theatres and opera houses where no liquor is sold on the premises shall be one hundred dollars for county purposes. The exceptions in this act shall not be construed to apply to what is generally known as theatres comique or variety theatres. ’ ’

The county court made the order fixing the license under authority of this statute, and appellant claims that there is no authority for his fixing the license, insisting that any authority granted under the statute had been abrogated by the later statute called “The Omnibus Bill,” act 63 of 1929, § 4 of which required that shows and exhibitions of the same kind as that of appellant shall pay a license of $25 per day, etc., which act was later repealed by act 119 of 1929, no provision being made therein for the levy and collection of such tax.

The statute grants the county court authority to fix the amount and require the collection of licenses for such exhibitions and performances as were made by appellant, and such grant of power was not withdrawn by the Legislature in enacting a general statute covering the subject and fixing the amount of the license fee to be paid for exhibitions of the kind made by appellant, nor by the later repeal of such general statute, no such provision being made in either statute.

It is true that when a statute is repealed and the repealing statute is afterwards repealed, the first statute is not thereby revived unless by express words (§ 9757, Crawford & Moses’ Digest), and that there are no such express words of revival in the last statute; but neither was there an express repeal of the first grant of authority nor one necessarily implied, but only a fixing of the amount of the licenses by the Legislature which it could do without any withdrawal of authority already granted to the county court, the exercise of such authority by it being only limited to conform to the later statutes made so long as they were in force.

The county court had the authority to fix and require the license paid, and could do so without regard to the county judge’s apparent bad faith in telling the appellant’s agent on the street what the amount of the license fee would be and misleading him to his injury in putting him to the expense of the advertisement of the show and later disregarding his agreement and fixing the fee at a much greater amount. The court, of course, was in no wise estopped to fix the fee under the statute at any sum without regard to what the judge might have told the agent of appellant on the street would be done. The fact that other courts in other counties had fixed smaller or different fees for licenses required paid for exhibitions of such nature as that of appellant affords no ground of objection to the fee fixed by the Johnson County judge, it not being a regulatory charge for a particular service rendered as in some cases requiring inspection but a tax authorized to be levied in accordance with the statute.

No error was committed in denying the claim of appellant, and the judgment is accordingly affirmed.


author: Kirby, J. Johnson, C. J.,

text:
    Walker v. McMillen.
    4-3109
    Opinion delivered June 12, 1933.

      Rouse & Moses and W. H. Holmes, for appellant.

      Geo. A. McConnell and Shields M. Goodwin, for appellee.
   Kirby, J.

The question involved in this appeal is whether the circuit court'at the suit of the Attorney General under the direction of the Commissioner of Insurance has the exclusive right or jurisdiction to appoiut a receiver for an insolvent insurance company.

Appellant was appointed receiver for the Southern Surety Company of New York by the Pulaski Circuit Court on the 7th day of June, 1932, on the application of the Attorney General under the direction of the Commissioner of Insurance of the State, the corporation being insolvent.

Appellee had previously been appointed receiver for the company by the chancery c ourt of Pulaski County on March 25, 1932, on the petition of a general creditor of the Southern Surety Company. The company was insolvent, and the question to be determined is which of the two receivers should be recognized for liquidating its assets.

Appellant, after being appointed receiver and proceeding with the duties, was enjoined by the Pulaski Chancery court from continuing to act as such, and he then filed a petition asking that the chancery court dissolve the injunction, to which appellee filed a reply and appellant demurred thereto. The chancery court overruled the demurrer*, and this appeal was taken from such order.

In Franklin v. Mann, 185 Ark. 993, 50 S. W. (2d) 606, this court held that a proceeding to dissolve an insolvent insurance company should be brought in the circuit court by the Attorney General under direction of the Insurance Commissioner under the statute providing therefor, § 5951, subdivision 8, Crawford & Moses’ Digest, holding such proceeding an exclusive remedy, and that no creditor or policyholder was authorized to bring suit anywhere in the State for the purpose of taking charge of an insolvent insurance company. It was further said there:

“It was manifestly the intention of the Legislature, in creating the office of Commissioner of Insurance and prescribing his duties, to protect all the policyholders and persons interested in an insurance company, and for this reason provided a State officer whose duty it is to supervise all insurance companies in this State, and to see that all laws are faithfully executed, to the end that every one interested in an insurance company may have protection.
“It was evidently thought that this would be a greater protection to the policyholders and interested persons than to permit any creditor or policyholder to bring suit anywhere in the State for the purpose of taking charge and management of an insolvent insurance company. * * *
“This is a special proceeding provided for by statute for the purpose, among other things, as we have said, of protecting the interests of policyholders and the property of the company.”

It is insisted for appellee that under the statute, which was adopted from the State of New York, that it should not exclude the rights of a creditor to have a receiver appointed by the chancery court, which, having acquired jurisdiction by such proceedings, would have the right to continue to administer the affairs of the corporation for the purposes for which the suit was brought.

His chief insistence, however, is that the statute has no relation to anything but life and fire insurance companies, and does not affect the jurisdiction of the chancery court to appoint a receiver for winding up the affairs of an insolvent casualty and surety company organized under the laws of the State of New York, and duly authorized to do business in the State of Arkansas.

In adopting this statute, it was made general, its provisions applying to “any insurance company of this State, etc.,” and has been construed to include all insurance companies authorized to do business in the State. Franklin v. Mann, supra.

Appellee insists, however, that the Southern Surety Company of New York was not an insurance company within the meaning of this statute, but sets up in his written petition for appointment as receiver upon which the chancery court acted that the Southern Surety Company of New York is a casualty and surety company organized and doing business under the laws of the State of New York and duly authorized to do business under the laws of the State of Arkansas, etc., and that it had filed a bond with the Insurance. Commissioner and otherwise complied with the laws of this State with reference to casualty and surety companies. It was doing both a casualty insurance business and a surety bond business, and comes within the regulatory power of the State, under the terms of the statute providing that “when any insurance company of the State is insolvent, etc.”

It is argued that the statute applies only to life and health insurance companies, since such was the case in the State of New York, from which it was adopted and where it had received such construction in the courts of that State, but such construction had not been given to said act before its adoption here., and our statute is broader and more comprehensive than that of New York relating to any insurance company, as already said; and the fact that it was copied exactly from the New York statute, so far as providing for determination of the question of insolvency of the insurance company by the Supreme Court, or a judge of the Supreme Court, was evidently inserted inadvertently and has no effect to confer jurisdiction on our Supreme Court for that purpose. Where, a court exercising a general jurisdiction under the Constitution has been given special statutory jurisdiction in certain matters and the manner in which such jurisdiction is to be exercised is pointed out in the statute, the record of such court must show the. jurisdictional facts, the statute in such cases must be strictly pursued, and the. jurisdiction must be made to appear in the manner pointed out in the statute. Wallace v. Hill, 135 Ark. 353, 205 S. W. 699; Freeman on Judgments, § 119.

The chancellor erred in holding that the Pulaski Chancery Court had jurisdiction to appoint a receiver herein, and the cause will be reversed and remanded with directions to sustain the demurrer to the response of appellee, dissolve the injunction against appellant receiver and leave him to proceed with the winding up of the affairs of the insolvent insurance company without any interference from the receiver wrongfully appointed by the chancery court who should be directed to make immediate final settlement of the receivership and turn the assets over to the appellant receiver. It is so ordered.

Johnson, C. J.,

(dissenting). The majority opinion gives to the circuit court of Pulaski County exclusive jurisdiction to determine and wind up the affairs of insolvent life, fire, casualty and all other insurance companies doing business in this State. This is done without any authority of law cited in the. opinion or that I have been able to find on my own investigation. The only semblance of authority cited is subdivision 8 of § 5951 of Crawford & Moses’ Digest, which reads as follows:

“Whenever the Insurance Commissioner shall have reason to believe that any insurance company of this State is insolvent or fraudulently conducted, or that its assets are not sufficient for carrying on the business of the same, or during any noncompliance with the provisions of this chapter, he shall communicate the fact to the Attorney General, whose duty it shall then become to apply to the Supreme Court or the circuit court, or, in vacation, to any of the judges thereof, for an order requiring said company to show cause why their business should not be closed; and the court or judge, as the case may be, shall thereupon hear the allegations and proofs of the respective parties, or appoint some suitable person as examiner to perform such duty and report upon the facts to said court or judge. If it appear to the satisfaction of said court or judge that such company is insolvent, or that the interests of the company, so require, the said court or judge shall decree a dissolution of such corporation, and a distribution of its effects; but, in case it shall appear to said court or judge that said corporation is able to comply with the provisions of this act, and that it is not insolvent, a decree shall be entered annulling the act of the Insurance Commissioner in the premises and authorizing such company to resume business.”

The majority opinion upholds the authority of the Pulaski Circuit Court to displace a receivership theretofore determined in the Pulaski County Chancery Court after insolvency adjudged.- It will be noted that the subdivision of the statute heretofore quoted does not authorize the appointment of any receiver by the circuit court. The fact is, this subdivision of the statute only authorizes the circuit courts of Pulaski County or any judge thereof in vacation or any member of the Supreme Court in vacation, to make an investigation and determine whether or not the insurance company is in fact insolvent. When this adjudication is made, the jurisdiction of that tribunal ends, so far as the statute is concerned. Not only is the majority opinion in this case without statutory law to support it, but it is in direct violation of the ancient jurisdiction of courts of equity.

Just how the circuit court of Pulaski County, or any member of this court under like circumstances, would wind up and finally settle the affairs of an insolvent insurance company is not pointed out in this majority opinion. I do assert without fear of contradiction that whatever orders and judgments may be entered iby the Pulaski Circuit Courts or the judges in vacation, referred to in the statute, will be without authority of law and in strict violation of the jurisdiction of chancery courts.

The majority opinion cites Franklin v. Mann, 185 Ark. 993, 50 S. W. (2d) 606, in support of its present position. This case is like the one here decided. It has no authority to support it. The section of the statute cited to support the present opinion was cited in the Franklin case and no other authority was cited. It is not necessary to undertake to argue the merits or demerits of the case of Franklin v. Mann, because it has no statutory or common-law authority to support it and should be overruled. The proposition of the circuit courts of this State, or the judges of the Supreme Court, appointing receivers had never been heard of until the announcement in Franklin v. Mann, and just how the court reached the conclusion that any such authority was granted under subdivision 8 of § 5951 is beyond my power of comprehension.

Just how this circuit court receiver is expected to perform his duties is not divulged in the opinion. Receivers appointed by courts of equity in this State are subject to the- rules, orders and directions of the courts of chancery.

Section 8600 of Crawford & Moses’ Digest, provides in part: “Whenever it shall not be forbidden by law and shall be deemed fair and proper in any case in equity, the court, judge or chancellor shall appoint some-prudent and discreet person as receiver, etc.” This section of the statute grants an exclusive remedy in the appointment of receivers and the manner in which the}’ may and shall operate.

Section 8601 of Crawford & Moses’ Digest, provides in effect: “When it appears to the court, judge or chancellor, that such appointment should be made additional bonds may be required in behalf of the receiver. ’ ’

Section 8603 of Crawford & Moses’ Digest provides in effect that, after this statutory receiver shall have taken the oath of office and filed a bond, “he shall possess all the- powers which a receiver in a court of chancery can possess, unless otherwise provided in this act.”

Section 8604 of Crawford & Moses’ Digest provides that he may institute and maintain suits subject to the orders of the court, judge or chancellor, etc.

Section 8606 of Crawford & Moses’ Digest provides, in effect, subject to the further order or decree of the court, judge or chancellor, such receiver shall have full possession, custody and control of all property in his hands.

Section 8609 of Crawford & Moses’ Digest provides in effect, that receivers may be removed any time by the court, judge or chancellor.

Section 8610 of Crawford & Moses’ Digest provides, in effect, that receivers shall make reports of their proceedings every six months or oftener, if required by the court, judge or chancellor.

It will thus be seen that all the statutory law in this State in reference to receiverships vests the jurisdiction thereof exclusively in the courts of equity or the chan-, cellor thereof in vacation. These positive statutory laws are nullified and destroyed by the receivership herein created. There is no rule of conscience, law or equity that will circumscribe the performance of his duties after he once gets possession of the property.

A serious mistake has now been made in judicial procedure in this State. This court has now read into a statute, wherein no such language is. employed, that tjie circuit courts in this State may appoint receivers, but it has prescribed no rules for such receiver to be guided by after he shall have taken the oath of office. No limitation is prescribed on his authority. I take it, he can sell the property, with or without notice, which may come into his hands. He may account for the proceeds or he may not at his election. Certainly, he is not required to report to any court in reference to his actions. This circuit court receiver is not an officer of any court and is not required to pay allegiance to any forum.

It must be admitted by all that this circuit court receiver is a hybrid, so far as law and the rules of equity are concerned.

Since when, and until now, was it ever dreamed by the most idealistic judicial tribunal that the great Story would be desecrated on the altar of judicial legislation?

“The appointment of a receiver is a part of the jurisdiction of equity, etc.” So says § 3, article “Receivers,” 23 R. C. L., page 9, and up to the opinion of this court in Franklin v. Mann it was thought by the profession to state a universal rule of law in reference thereto — but, alas, there seems to be no end to this unwarranted desecration.

This court, in the early case of Hempstead v. Watkins, 6 Ark. 317, held that the Legislature of this State was without authority to limit or abridge the powers or authority of courts of chancery. This rule has been adhered to by this court without exception until the pronouncement in Franklin v. Mann.

It must be seen, therefore, that under our statutory larvs, when construed according to their plain language, the circuit courts of this' State have no semblance of 'authority to appoint receivers and wind up insolvent corporations. On the other hand, had the Legislature passed a statute, as held by this court in Franklin v. Mann, such statute would be absolutely null and void as limiting and abridging the ancient jurisdiction of chancery courts. Taking either horn of the dilemma, the majority opinion in this case is without authority to support it.

The statute cited as authority gives the same jurisdiction to a judge of the Supreme Court that it 'gives to the circuit courts. Can it be imagined a judge of this court having half a dozen receivers operating under his direction and control throughout the State? Would any lawyer in the State believe his eyes and ears were he to see a receiver operating under the direct jurisdiction of the Supreme Court?

A construction of this kind would absolutely nullify and abrogate the plain mandate of the Constitution, wherein it vests the Supreme Court of this State with appellate jurisdiction only. The fallacy of the argument and logic sufficiently appears without further elaboration.

I therefore respectfully dissent.


author: Mehaffy, J.

text:
    Petty v. Ozark Grocer Company.
    4-3010
    Opinion delivered June 12, 1933.

      Williams & Williams, for appellant.

      Karl Greenhaw, for appellee.
   Mehaffy, J.

The Ozark Grocer Company, a corporation with its principal place of business in Fayetteville, Arkansas, and a branch house at Siloam Springs, Arkansas, between September 17th and October 9, 1931, sold to the appellant, B. M. Petty, merchandise, the total amount of which was $921.01.

On October 27, 1931, the appellant gave to Gene Trahin, a representative of the Ozark Grocer Company, two checks, payable to the Ozark Grocer Company, for the sum of $921.03. One check was drawn on the Producers’ State Bank of Siloam Springs, for $308.99, and the other check was drawn on the Hutchings First National Bank of Siloam Springs for $612.02.

Tlxe check on the Producers’ State Bank was paid, but the check drawn on the Hutchings First National Bank was not paid. It was given on October 27, and the Hutchings bank was insolvent and closed on October 30, 1931.

Thereafter, in May, 1932, the appellee began this suit in the Benton Circuit Court, alleging that the merchandise sold to appellant was $921.01, and that appellant had paid thereon $308.99, leaving a balance due of $612.02.

The appellant filed answer, admitting the purchase of merchandise, and the amount thereof, and alleging that Gene Trahin was the agent and manager of appellee, and that appellant expressly told him that it did not make any difference about the $308.99 on the Producers ’ State Bank, but that he wanted the check on the Hutchings First National Bank cashed immediately.

It was also alleged in the answer that the appellee did not cash the check as Trahin was instructed to do at once, but mailed the cheek to Fayetteville for deposit; that the appellee, being notified that appellant desired the check to be cashed at once, and under the circumstances surrounding the banks of Siloam Springs, the appellee was negligent in not cashing the check as instructed; that at the time the check was given the bank was open, and appellee was told to cash it at once, and agreed to do so, being notified by appellant that he desired said money be drawn from said bank.

It is then alleged that the bank closed on October 30th, and that, if appellee had used due diligence under appellant’s instructions, it would not have suffered loss. He alleges that the appellee carelessly and negligently refused and failed to cash the check, and held the same until the failure of the bank, and that by reason thereof the appellee is not entitled to recover because the loss was occasioned solely by its negligence.

The appellant’s evidence tended to show that he told Trahin, the representative of the appellee, he wanted him to get the check cashed immediately. This testimony was contradicted by the agent. The undisputed evidence shows that Trahin had no authority to indorse the check. The undisputed evidence, also shows that appellant’s children had money deposited in the Hutchings National Bank, and that appellant had approximately $80 of his own money left, and he made no effort to withdraw any of this before the bank closed.

The only question in the case is whether the appeltee was guilty of negligence in presenting the check to the Hutchings First National Bank for payment.

The appellant’s first contention is that the evidence did not warrant the finding of the verdict. It was a question of fact as to whether the appellee was guilty of negligence, and this was submitted to the jury under proper instructions, and the jury found against appellant.

The next contention is that the court erred in refusing to instruct the jury in the three instructions offered by the appellant, and refused by ihe court. These instructions are as follows:

“No. 1. The court instructs the jury that a check must be presented for payment within a reasonable time, and what is a reasonable time will depend upon the circumstances in each case. In the absence of special circumstances excusing delay, the reasonable time for presenting a check, when the person receiving the same, and the bank on which it is drawn are in the same place is not later than the next business day after it is received, and when they are in different places, reasonable diligence requires the check to be forwarded to the place of payment not later than the. next business day after it is received by the payee, and presented not later than the day after it is thus received. Inexcusable delay may discharge the drawer from liability if he is injured by ihe delay.”
“No. 2. You are instructed that it-was the duty of the plaintiff on the next day after receiving the check to forward the check for presentation to a suitable agent in the town where bank is located upon which the. check was drawn, and if you find that the plaintiff failed to do so, and that, if plaintiff had done so, that said check would have been paid, and that, if plaintiff’s failure to do so, and the defendant was injured thereby, you will find for the defendant.”
“No. 3. You are instructed that, if you find that Gene Trahin was the agent of the plaintiff, that knowledge of the agent is knowledge of the principal.”

The first instruction, among other things, tells the jury that a reasonable time for presenting a check, when the person receiving the same and the bank on which it is drawn are in the same place, is not later than the next business day. after it is received, and when they are in different places, reasonable diligence requires the check to be forwarded to the place of payment not later than the next business day after it is received by the payee.

Section 7952 of Crawford & Moses’ Digest reads as follows: “A check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay.”

Section 7763 of Crawford & Moses’ Digest provides: “In determining what is a ‘reasonable time’ or an ‘unreasonable time,’ regard is to be had to the nature of the instrument, the usage, of trade or business, if any, with respect to such instruments, and the facts of the particular case.”

But these facts are to be determined by the jury, and not by the court. The appellant’s defense is based wholly on negligence, and whether the appellee was negligent was a question of fact to be determined by the. jury.

It would have been improper for the court to have told the jury that reasonable diligence required the check to be presented on the day after it was given. It was not a question of law for the court, but a question of fact for the jury.

There is another reason, however, why the instruction was properly refused in this case. The instruction says that when a person receiving the check and the bank are in the same town, it shall be presented for payment on the following day. The person receiving this check was not the payee, and had no authority to indorse the check. The payee received the check at Fayetteville, and it was drawn on a bank in a different town. The one receiving the check in this instance properly sent it to the payee, and the payee sent the check immediately to the Federal Reserve Bank in St. Louis, which was the nsnal custom in handling checks drawn on banks outside of Fayetteville.

Instructions numbers 2 and 3' requested by appellant were properly refused for the reason that whether the appellee exercised diligence was a question of fact for the jury, and not a question of law for the court.

The court instructed the jury at length, and the instructions given by the court fairly submitted the only issue in the case to the jury, and the jury’s finding is conclusive here.

The judgment is affirmed.


text:
    Leonard v. Luxora-Little River Road Maintenance District No. 1.
    4-3118
    Opinion delivered June 12, 1933.

      Jesse Taylor and W. Leon Smith, for appellant.

      James G. Coston and J. T. Coston, for appellee.
   Mehaffy, J.

This is an appeal from a decree of the Pulaski Chancery Court finding and holding that act 159 of the Acts of the General Assembly of the State of Arkansas for the year 193-3 is a local law and therefore unconstitutional and void, and perpetually enjoining the State Treasurer from enforcing or attempting to enforce said law.

Section 1 of act 159 reads as follows: ‘ ‘ That paragraph ‘F’ of § 1 of act No. 63 of the Acts of the General Assembly for the State of Arkansas for the year 1931 be amended to read as follows: ‘F.’ On January 1, April 1, July 1, and October 1 of each year, it shall be the duty of the State Treasurer to divide all revenue in the ‘county highway funds’ among all counties of the State; one-third on a population basis, based on the most recent Federal census; one-third on a car license revenue basis, based on the amount received from each county for the previous year from motor vehicle license fees; one-third based on area of the various counties of the State; provided, however, that in the counties having more than one judicial district and a population of not less than 65,000 as shown by the most recent United States census, the funds allowed to those counties shall be divided between the judicial districts on the basis of the mileage of the county maintained roads.”

The act provides that in counties having more than one judicial- district and a population of not less than 65,000 as shown by the most recent United States census, the funds allowed to those counties shall be divided between the judicial districts on the basis of the mileage of the county maintained roads.

There are 75 counties in the State of Arkansas, and only 12 counties that have more than one judicial district, and of these 12, only one, Mississippi County, has a population of 65,000, as shown by the most recent United States Census. ■ This act therefore applies to Mississippi County only.

Amendment 11 to the Constitution of .the State of Arkansas provides: “The General Assembly shall not pass any local or special act. This amendment shall not prohibit the repeal of local or special acts.”

Act 159 of the Acts of 1933 is clearly violative of this amendment to the Constitution because it is a local act applying to Mississippi County alone. The fact that it applies to counties having more than one judicial district and a population of 65,000 or more, is arbitrary, and a county having two judicial districts and 65,000 population has no reasonable relation to the purposes and object to be attained by the statute.

“The rule is that a classification cannot be adopted arbitrarily upon a ground which has no foundation in difference of situation or circumstances of the municipalities placed in the different classes. There must be some reasonable relation between the situation of municipalities classified and the purposes and objects to be attained. There must be something which in some reasonable degree accounts for the division into classes.” Street Imp. Dists. Nos. 481 and 485 v. Hadfield, 184 Ark. 598, 43 S. W. (2d) 62; Simpson v. Matthews, 184 Ark. 213, 40 S. W. (2d) 991.

In the present case, there is no reason given and none is apparent to us for the distinction in legislation of this kind between counties having two judicial districts and 65,000 population, and those counties that have only one judicial district and have more than 65,000 population.

There is nothing in the terms of the act to distinguish Mississippi County from other counties in the State that have either a greater or less population, and have one or more judicial districts. There is no reason in the nature of things why an act of this kind should apply to Mississippi County and not to other counties in the State. It is therefore an arbitrary and unnatural classification, and there is no natural connection between counties having more than one judicial district and 65,000 population, and the division of the county highwav funds. The act therefore cannot be upheld on the ground of classification.

This court has repeatedly held, since the adoption of amendment No. 14 to the Constitution, that an act which exempts one county is a local act. It would serve no purpose to review the authorities so holding. As we have already said, this act is clearly in violation of amendment No. 14, because it is a local act.

There is no change in the law except as it applies to Mississippi County. Section 1 of act 159 is a copy of paragraph “F” of § 1 of act No. 63 of the Acts of 1931, except the part that applies to Mississippi County.

The decree of the chancery court is therefore affirmed.


author: McHaney, J.

text:
    Sun Life Assurance Company of Canada v. Coker.
    4-3016
    Opinion delivered June 12, 1933.

      Hays & Smallwood and Pryor & Pryor, for appellant.

      R. M. Priddy and Sam T. & Tom Poe, for appellee.
   McHaney, J.

Appellee recovered a verdict and judgment against appellant in the sum of $1,864.36 with interest from January 4, 1933, at 6 per cent., 12 per cent, penalty and attorney’s fee of $250, alleging a breach of a certificate of insurance issued to him and a group policy issued to his employer, Missouri Pacific Railroad Company, dated November 1, 1931, by which he was insured against total and permanent disability, in which event appellant agreed to pay him $36 per month for 60 months. The sum recovered was the then present value of the sum agreed to be paid monthly over said period.

A number of errors are assigned and argued for a reversal of the judgment as follows:

(1). That if appellee were disabled within the meaning of the policy, his disability accrued before and existed at the date of the policy, November 1,1931, and that, therefore, he had no health or ability to be insured. In other words, that a fraud was practiced on appellant in obtaining insurance, since no physical examination Avas required. This argument is based on the fact that appellee suffered an amputation of his right leg between the ankle and knee in 1926, and that he has had considerable trouble AATith the stump thereof since that time, and on the testimony of his physicians that for a number of months prior to April 28, 1932, the date he- finally quit work, and from AAThich he cláims total disability, he should not have done heavy Avork. On the other hand, the undisputed proof shows that appellee did actually work and Avas engaged in a gainful occupation for a long period of time prior to the issuance of the policy in this case and subsequent to the loss of his leg in 1926, as also since NoArember 1, 1931. Under this state of facts, the court, submitted this question to the jury in instruction No. 8, requested by appellant, which told the .jury that the burden was on him “to prove by a preponderance of the evidence that he became disabled under the terms of the insurance contract ‘while such assurance was in full force and effect’ and not before or after the term of insurance coverage,” and if he failed to do so, the jury should find for appellant. The jury found that he had discharged this burden, and we cannot say there is no substantial evidence to support the finding, (lenerally, it is a question for the jury to determine whether the insured is disabled, the nature of the disability, when it commenced and its duration, whether total and permanent or otherwise. Mutual Ben. H. & Acc. Ass’n v. Hunnicutt, 181 Ark. 892, 28 S. W. (2d) 703; 29 C. J. 284.

(2). It is next argued that appellee failed to prove a breach of the contract of insurance, and that he cannot maintain this action for a breach thereof. This argument is based on the fact that suit was begun on September 30, 1932, a date less than six months from the date of alleged total disability, April 28, and that under the contract the first monthly payment of $36 was not due to be paid until the expiration of six months from date of total disability, or three months from date of satisfactory proofs, whichever is the later date. A sufficient answer to this argument is that appellant denied liability within that time, and we think did so within the rule announced in Mutual Life Ins. Co. v. Marsh, 186 Ark. 861, 56 S. W. (2d) 433. When demand was made on appellant to pay and perform the contract, it declined to do so, and in two letters to counsel for appellee stated that their records showed the coverage to be canceled on April 30, 1932, or had lapsed. This was tantamount to a denial of liability. Furthermore, it was shown that a representative of appellant called upon counsel for appellee and had a conversation with him in which he declined to pay. Moreover, it filed an answer in this case long after the expiration of the six months’ period denying liability. All of which amounted to a renunciation of the policy. Ætna Life Ins. Co. v. Phifer, 160 Ark. 98, 254 S. W. 335. And, as we said in National Life & Acc. Ins. Co. v. Whitfield, 186 Ark. 198, 53 S. W. (2d) 10: “The breach of the contract, the appellant company’s refusal to pay under its terms and denial of any liability thereunder, gave the insured the right to sue for gross damages for such breach of contract, and the court has held that the measure of such damages is the present cash value of the past and future installments of the weekly indemnity based on the life expectancy of the insured.” So, when appellant denied liability because lapsed and refused to perform, a present right of action arose as for breach, and it was not necessary to await the expiration of the six or three months’ period. This issue was also submitted to the jury, and its finding is against appellant.

(3). It is next contended that there is no proof that appellee’s employer, the railroad company, had paid the. premium to appellant on the group or master policy. It is not disputed that appellee’s premium was paid to his employer who deducted it from his wages, and two premiums were paid by him after April. Without entering into a discussion of the question of whether the employer was the agent of appellant in this regard, we are of the opinion that this assignment is without merit; that failure of the employer to pay is a matter of defense, and no such defense was interposed or suggested. Appellee’s certificate was in good standing on April 28, 1932, and appellant does not suggest that it lapsed or was canceled until two days later. Nor can we agree that the insurance contract - was not established. The certificate itself stated the terms and conditions of the group policy in this regard, and the original policy was never in his possession, nor had he access to it.

The only other error assigned for reversal which we deem of sufficient importance to disbuss is that of the allowance, of penalty and attorney’s fee. It is argued that this is not a suit on the contract, but for damages for breach, and that, therefore, the statute, § 6155, Crawford & Moses’ Digest, does not apply. We have frequently held that the statute is highly penal and should be strictly construed. National Fire Ins. Co. v. Knight, 185 Ark. 386, 47 S. W. (2d) 576. We are of the opinion, however, that the statute applies, and that the court did not err in assessing penalty and attorney’s fees. By its denial of liability appellant made it possible for appellee to sue for the present value of all the monthly payments agreed to be paid, instead of suing for the past-due installments. The measure of damages in either event is based on the contract. It is only the remedy that is changed by the breach. The appellee sustained a loss covered by the policy which appellant agreed to pay monthly. When it refused to perform the contract by making payment monthly, the law provides a remedy based on the contract to avoid a multiplicity of suits. In either event the statute applies; else the power would lie with the- insurance companies in such cases to nullify the statute by refusing to pay and breaching the contract. As said by the late Chief Justice Hart in American Liberty Ins. Co. v. Washington, 183 Ark. 497, 36 S. W. (2d) 963: “The statute becomes a part of the contract of insurance, and is cost to reimburse the plaintiff for expenses incurred in enforcing the contract.”

Other assignments are argued which we have carefully considered, but find them without substantial merit. We think no useful purpose could be served by discussing them, and to do so would unduly extend this opinion. The complaints made of the giving and refusing to give instructions are covered in what we have'already said.

Affirmed.


author: Butler, J.

text:
    Blaylock v. State.
    Crim. 3838
    Opinion delivered June 12, 1933.

      Hal L. Norwood, Attorney General, and Robert F. Smith, Assistant, for appellee.
   Butler, J.

Tlie appellant was indicted, tried and convicted for selling alcoholic liquors. The testimony on behalf of the State was to the effect that about two and a half miles from a small town was a cedar thicket near the road in which it was the custom of those coming to town and having liquor, to hide it. On a certain day two officers went into the thicket and hearing voices approached to a place where two men were in conversation, who upon seeing the officers began to run but were halted and captured and found to have liquor in their possession. The appellant was not with them at this time.

The two men who were arrested testified that on the day of their arrest they saw the appellant in town and asked him if he knew where they could get any liquor, and he told them he thought he did. They got into appellant’s car with him and started out toward the cedar thicket, and when they had gone about half way some car trouble developed. They got out and went on foot to the thicket leaving the appellant at the car. They began to look for whiskey and found some behind a rock. They did not know to whom this whiskey belonged but took possession of it or a part of it just before the officers appeared. They did not purchase the liquor from the appellant and did not tell the officers that they had.

The appellant testified that he had been told that people peddling liquor would hide it in the cedar thicket and when he was asked if he knew where any liquor was he started with the two men to the thicket, but that he had not placed any liquor there and did not in fact know that there was any at that place.

One of the officers was called in rebuttal by the State and, without any objection being interposed, testified to the effect that the two men who were arrested by the officers and who testified in the -case told him that they had bought the liquor from the appellant.

The only evidence which tends to establish a sale of the liquor by the appellant was the rebuttal testimony of this officer and in this state of case the Attorney General has confessed error on the ground that no evidence of a substantive nature was introduced at the trial of the case tending to establish the guilt of the appellant. We have examined the record and are of the opinion that the position of the Attorney General is well taken. The rebuttal testimony was admissible for the purpose of testing the credibility of the witnesses by showing that they had made contrary statements, but was admissible for no other purpose. Although there was no request made by the defendant, the court should have so cautioned the jury, and in the state of the evidence should have directed a verdict of acquittal. The rebuttal testimony was a purely hearsay statement and was in no sense substantive proof of the fact charged. The cases cited by the Attorney General sustain his position. Thomas v. State, 72 Ark. 582, 82 S. W. 202; Doran v. State, 141 Ark. 442, 217 S. W. 485; Murray v. State, 151 Ark. 331, 236 S. W. 617; Burgess v. State, 179 Ark. 785, 18 S. W. (2d) 336.

Reversed and remanded.


author: Butler, J.,

text:
    Haden v. Haden.
    4-3034
    Opinion delivered June 12, 1933.

      L. A. Hardin, for appellant.

      Roberts & Stubblefield, for appellee.
   Butler, J.,

Prior to July 2, 1928, the legal title to a small farm situated near Little Rock known as the Valley View Farm was in the appellant, Mrs. Nannie Haden, the mother of the appellee, H. M. Haden. On that day Mrs. Nannie Haden conveyed this farm to her son by warranty deed for the express consideration of $1, reserving however in the habendum clause for herself and assigns “the full possession, benefit and use of the above-described property as well as the rents, issues and profits thereof for and during my natural life.”

This suit was instituted by the appellant to cancel the above deed and revest the fee in her. The allegation upon which her prayer for the relief named is grounded is that she was' induced to execute the deed because of an agreement made by her son, the grantee, at that time to the effect that he would support her during the remainder of her life; that he had breached this agreement by failing to provide anything for her maintenance, and that he at the time still refused to pay her anything therefor; that he had taken possession of, and was then occupying, the farm and was refusing to pay to her any of the rents and profits arising therefrom. She further alleged that the appellee was not financially able to carry out his contract with her, and that “if he was ever able to do so his wife would not permit him to carry the same out,”

The appellee answered denying some of the allegations of the complaint which we deem it unnecessary to set out and denied that the consideration for the execution of the deed was that the defendant should furnish a home and support and maintain the plaintiff during her natural life, but that the defendant,, due to his love for the plaintiff, his mother, has in the past furnished, and does now, and will in the future, furnish a home for the plaintiff and maintain and support her.

By agreement of the parties the testimony in the ease was taken orally at the bar of the court, and, after having considered the case on the pleading’s and testimony adduced, the court found that a certain other deed executed on July 2, 1928, was executed and recorded through error and mistake, but that the deed first mentioned ought not to be canceled, but that according to its tenor and effect the plaintiff was entitled to the possession and to the rents and profits arising therefrom for the year 1932 for which defendant was- required to account. The court further found that as to the rents preceding the year 1932 the defendant had accounted to the plaintiff except for balance due on a rent note, which note was ordered delivered to the plaintiff or to her attorney, and possession of the premises decreed to her, and as to all other matters the complaint was dismissed for want of equity.

The appellant insists on appeal that a preponderance of the testimony establishes, first, the consideration for the execution of the deed as alleged in her complaint, and, second, that the same has failed because of the refusal of the defendant (appellee) to support and maintain her as he had agreed.

Another question arose incidentally during the progress of the trial which has been discussed somewhat by counsel for the respective litigants, namely, that as a part consideration there was a promise by the appellee made to the appellant, his mother, that he would not marry. It seems however, from a careful analysis of the testimony of Mrs. Haden, the mother, that this was not any part of the alleged consideration for the execution of the deed, and, while the chancellor did not make any finding of fact regarding what was indeed the consideration for the conveyance, the conclusion reached by him necessarily carries with it the finding that the question of appellee’s marriage was not in the mind of either party at the time of the conveyance, or that it was a moving cause therefor. We therefore will discuss this phase of the case no further.

The real questions are, was the consideration as alleged by Mrs. Haden, and, if so, has it failed? As stated, the chancellor made no finding of fact, but his decree necessarily results from the findings that either the consideration was not as alleged or that the promise had not been broken. We think the findings of the chancellor in the negative on both of these questions is not against the preponderance of the testimony.

As contended by appellant, under the settled rules in this jurisdiction, where land is conveyed upon the consideration that the grantee will support, maintain and care for the grantor during his life and the grantee neglects or refuses to comply with the contract, a court of equity will cancel the conveyance and reinvest the grantor with title to the estate. Edwards v. Locke, 134 Ark. 80, 203 S. W. 286; Owen v. Owen, 185 Ark. 1069, 51 S. W. (2d) 524. The facts do not warrant the application of this rule.

The facts established by the proof in the case are that the grantor in the conveyance was at the time of its execution, about seventy-four or five years of age. The grantee was her youngest son, and had never been married. He and his mother had lived together since 1918, in which year the husband and father died. Their association had been of the most intimate and affectionate nature. Appellee was admittedly a dutiful son and manifested for his aged mother great love and solicitude. She, on her part, adored her son. In the summer of 192,8 they were both taken sick at about the same time and required the services of a professional nurse. During the convalescence of the mother the question came up as to the situation in which the son would have been left had the mother died, and she told her son to request a Mr. Britton who was in the employ of the Central Bank in its real estate department, and an old friend of hers, to come to see her. Mr. Britton did so, and they discussed the question of what provision she should make for the appellee. She told Britton of the kindness of her son, that what they had was the result of their joint efforts, and that she wanted him at her death to have all she had. She suggested the making of a will to that effect. After some discussion, it was decided between the two that, instead of making a will, she would convey the property to her son by deed. In furtherance of this, Mr. Britton on his return to the bank, drafted a warranty deed conveying the Valley View Farm to the appellee for the express consideration of $1. In the meantime the appellee had been discussing the question with the trust officer at the bank informing him of his mother’s intention, and caused Mr. Britton to draw the deed first mentioned in this opinion, the one in which there was a reservation to the mother of the possession and income derived from the farm during her life. Both of these deeds were taken or sent, by Mr. Britton to Mrs. Haden and read to her and explained and left in her possession for some two or three weeks, when Mr. Britton’s secretary, who was a notary public, accompanied by Mr. Brit-ton, visited Mrs. Haden, and she then signed and acknowledged both deeds and both were placed of record. This seems to have been done by some one connected with the bank, but it is clear that it was not the intention of the son for the mother to convey the present possession and revenue of the farm to him during her lifetime. During the year preceding the execution of the deed and until the latter part of 1929, the mother and son lived on the Valley View Farm, and she supposed that during* 1929 he was still unmarried, but discovered sometime in November of that year that her son had married without her knowledge, and that he had been married for about nine months.

It is quite evident that this fact, when learned by the mother, grieved and angered her very much. It is not very clear when the son brought his wife home, but at any rate the mother determined to move to Kentucky where she had been born and reared, and where two of her sisters lived at a little town called Bandana. Just about this time the son wrote to one of his aunts at Bandana indicating to her the trouble in which he found himself. The mother remained with her sister in Kentucky for three, or four months during which time the son converted a house he owned in the city into two apartments making out of it what is called a “duplex.” It was his intention that he and his wife should occupy one apartment and his mother the other. When his mother returned, this arrangement was made and proved satisfactory for a.while, hut the mother was not happy, and a sister came to visit with her for a time. The mother complained of neglect on the part of her son and of her daughter-in-law. She decided to go again to Kentucky where she remained until sometime in the year 1932, when she returned and instituted this suit.

At the time of her testimony she lacked but two months of being seventy-eight years old. Her son at that time was about forty-five. She testified at considerable length to the effect that before the execution of the deed her son promised to provide a home for her and to support her as long as she lived; that this was one of the reasons for the execution of the deed. She also stated that her son had failed to provide for her and had made it so disagreeable for her at home that she could live with him no longer, and that since her removal he had failed to provide for her maintenance. During the times the mother was in Kentucky the son wrote to her from time to time and these letters, appellant’s counsel insist, corroborate her testimony and show of (hemselves that the appellee had virtually driven the appellant from his home and had refused to further support her.

On the question of whether or not there was a promise made by the son for future support, and that this was the inducing cause for the execution of the deed and contradictory of the testimony of the appellant, is the testimony of the appellee corroborated by that of Mr. Britton and one other witness and also by the recitals in the deed itself. The appellee testified -that there was no mention made as to the support of his mother in the future because that was taken for granted; that he had done this since the death of his father, and that his mother knew that he would always do so.

Mr. Britton testified that, in discussing the question with the mother, nothing was said about the support that her son was to give her, but that the reason, as expressed by her for the act on her part, was that her son had been faithful to her, and that her present property was the result of his thrift and industry. It is also clear that the reservation in the deed was occasioned by the forethought of the appellee to protect his mother in the event of some financial misfortune occurring to him in the future. This, of itself, tends to negative the, idea that the consideration was the promise of the son to support his mother in the future.

On the question of the son’s support of the mother and how the Valley View Farm was acquired, there is but little substantial conflict in the testimony. In 1918, when Mr. Haden, the father, died, Mrs. Haden’s sole property was a small farm of eighty acres about sixty of which were in cultivation and on which there was a poor farm house. Appellee owned forty acres of land adjoining this farm which also had a small house upon it and about fifteen acres in cultivation. With the consent of his mother he traded the entire 120 acres of land for property in Memphis worth about $3,500. The value of the eighty acres was about $2,500 and of his forty acres about $1,000. At this time he was a bookkeeper drawing a salary, and he remained constantly employed until about the time of the beginning of the disagreement between him and his mother.. During- these years he made frequent trades, improving each property as he acquired it with his own resources, and at all times keeping- enough property in his mother’s name to represent the value of the land owned by her in the beginning. During this time they lived together, she keeping house and he providing for all the necessary expenses. The title to the Valley View Farm was taken in the mother, and upon it the son expended a great deal in improvements making it much more valuable than when he purchased it.' He stated, and the testimony warrants the conclusion, that, although the title was in the mother, in reality he owned a considerable interest in it. About the time the conveyance in question was made to the appellee the Valley View Farm was leased to a tenant for $500 a year for a period of five years. This tenant kept the farm about three years, but when values fell he found it impossible to continue and so abandoned his lease. For a part of the time after the mother left for Kentucky, the appellee sent to her each month about $40. This was approximately the rental value of the farm for each month. About the time the tenant abandoned his lease the appellee lost his position and suffered in common with the community at large great financial reverses. For a while he sent his mother $30 a month. While they were in the apartments living together he furnished the apartment and the groceries for his mother and gave, her $20 a month. After his mother left he found it necessary to reduce her remittance to $15 a month. She was boarding with her sister in Bandana and paying $10 a month board which appears to have been sufficient to take care of her part of the expense.

The mother complains that there was not enough furnished her to live on, but the fact remains that out of the sums furnished she. was able, through a short period of'time — whether it. was one or two years is not clear — -to save $200 which sum she brought back to Arkansas and had at the time she began this lawsuit. The letters that were mitten and. which counsel contend fortify the appellant in her contention that she was virtually driven away from home, that appellee ceased to maintain her and refused to support her longer, were not so interpreted by the chancellor, nor do we thus construe them. The appellant, vexed by the intrusion of another woman in the affections of her son, dethroned from the supreme position she had long maintained in the household, and unable to comprehend the great losses sustained by her son and the decrease in his earning power, was hurt, angry and dissatisfied. The letters to us seem to express a plea for patience and understanding, and all the implications justly to be drawn from them are assurances to the mother of continued love of the son and an avowal of the purpose to provide for all her wants to the utmost extent of his ability.

Therefore, in any view of the case, we are of the opinion that the evidence justifies the judgment and decree of the chancellor. It is not to be doubted from the character of the appellee, as disclosed by this record, that he will continue to do everything in his power to make the life of his old mother happy and easy.

The decree is affirmed.


author: Johnson, C. J.,

text:
    Federal Land Bank of St. Louis v. Floyd.
    4-3130
    Opinion delivered June 19, 1933

      J. B. Crocker, J. Sam Rowland and J. B. Ready, for appellant.
   Johnson, C. J.,

(after stating the facts). It is first sought to uphold the order of the chancellor directing* a resale of the property because of act 21 of 1933. This act in effect authorizes the respective chancery courts of the State to refuse to confirm commissioner’s sales, irrespective of fraud or inequitable conduct in effecting the sale.

Section 4 of act 21 of 1933, cited and relied upon by appellee, reads as follows: “Section 4. Before confirming a sale, the court shall ascertain whether or not, on account of economic conditions, or the circumstances attending the sale, a fair price with reference to the intrinsic value of the property was obtained. If it is made to appear to the court that a better price could be obtained at a resale, or if any one agrees to bid a substantially higher amount at a resale, the court shall order a resale on such terms as the court may require.” This act was approved February 9, 1933.

On December 22, 1932, the date on which this sale was effected, act 21 of 1933, had not been passed, therefore, if it has application to this sale, it must be construed as retroactive in scope.

This court held in Smith v. Spillman, 135 Ark. 279, 205 S. W. 107: “A purchaser at a drainage tax sale, even before confirmation, acquires a vested right to the land purchased which cannot be affected by a statute passed before confirmation extending-the power of redemption.” Therefore, it seems that this court is committed to the doctrine that a purchaser at a commissioner’s sale takes a vested interest by reason of the purchase, and confirmation follows as a matter of right, unless it be found that fraud entered into the transaction or else the price bid and offered was so grossly inadequate as to shock one’s sense of justice.

Since appellant took a vested interest in the property by reason of its bid and purchase on December 22, 1932, the Legislature was and is without authority to pass a statute impairing its vested right. Therefore, the provisions of act 21 of 1933 cannot be given a retroactive effect so as to impair appellant’s vested interest in the property.

Since the provisions of act 21 of 1933 have no application to the facts in this case, the chancery court’s power to refuse to confirm the report of sale and to order a resale, as was here done, must be measured by the rules of law in force and effect in this State on December 22, 1932.

Up to the passage and approval of act 21 of 1933 the rule in reference to the confirmation or rejection of reports of sale for inadequacy of price was as follows: “Mere inadequacy of consideration, however gross, unaccompanied by fraud, unfairness or other inequitable conduct in connection with a judicial sale, is, of itself, insufficient to justify the court in setting aside the sale and refusing confirmation thereof.” Southern Grocery Co. v. Merchants’ & Planters’ Title & Investment Co. 186 Ark. 615, 54 S. W. (2d) 980.

A great preponderance of the testimony introduced on the exceptions to the report of sale establishes the fact that $5,000 was the fair market value of the mortgaged lands on December 22, 1932, and the chancellor’s findings otherwise is against the preponderance. of the testimony.

The order of the Marion County Chancery Court refusing to confirm the sale-of the mortgaged land to appellant is reversed, and the cause remanded with directions to approve and confirm the sale.