author: Hart; C. J.,

text:
    Brace v. Oil Fields Corporation.
    Opinion delivered May 2, 1927.
    1. Corporations — contracts op promoters. — The general rule is that, since the promoter® of a corporation are not in any legal sense its agents before it comes into existence, a contract made by them is not binding on it when formed unless it is then ratified.
    2. Corporations — contracts of promoters. — Where the formation of a corporation was in contemplation, and the promoters of the corporation were talcing steps to perfect its organization, and obtain a charter, and provide the means necessary for its successful operation, contracts made by such promoters for the benefit of the corporation, which were reasonable and proper to put it into operation, and the benefits of which were afterwards accepted by the corporation, become binding- on the corporation without any form of contract.
    3. CORPORATIONS' — contract OP promoter. — Employment of a geologist by the promoter of an oil company which was being organized, held binding upon the corporation subsequently organized.
    4. Evidence — matter op common knowledge. — It is a matter of common knowledge that an association of persons for the purpose of locating the oil and gas territory cannot operate successfully without a geologist.
    5. Damage^-breach ■ of contract. — The measure of damages for an oil company’s breach of its contract to pay its geologist a bonus of $10,000 in stock, was the value of the stock at the time of the breach.
    6. Frauds, statute op — contract to pay salary. — A verbal agreement to pay a geologist a stated salary and bonus in stock for services for one year was not invalid under the statute of frauds.
    7. Frauds, statute of — employment for more than year. — An oral agreement for more than one year, whereby a corporation agreed to pay to a geologist a certain amount of money and stock at the end of each year in consideration of services, would be enforceable by the geologist at the end of the first' year as to services performed, the statute not being applicable thereto.
    8. Appeal and error — conflict in record. — In the case of a conflict between the recitals of a decree and those' of the bill of exceptions, the former will prevail.
    Appeal from Ouachita Chancery Court, Second Division; George M. LeCroy, Chancellor;
    reversed in part.

      STATEMENT OP PACTS.
    Frank Lowe brought this suit in equity against Gordon Ingalls and Oil Fields Corporation to ask for an-accounting and the appointment of a receiver to take charge of and wind up the affairs of four trusts which were operated by the defendant, Gordon Ingalls, as trustee for himself and others beneficially interested. After the receiver was appointed, O. L. Brace filed a claim for services performed by him as geologist for the benefit of the trust property.
    O.-L. Brace is a petroleum engineer by profession, and had worked in practically all of the oil fields in the western part of the United States and in Mexico before he was employed by Gordon Ingalls for himself and the various syndicates which he operated. Brace first-commenced to work for Ingalls on the 3d- day of March, 1923, at the sum of $250 a month and what he termed a ‘ ‘ carried interest” and his expenses. Ingalls and Brace agreed that the “carried interest” 'should be $10,000 worth of stock a year in addition to his salary during the time in which he was with the organization. His salary was raised on November 1, 1923, to $450 a month. After Brace began work with Ingalls, he received an offer from a company in Mexico to work for it as geologist at a salary of $12,000 per year and expenses. There had been no definite time beyond the period of one year that Brace was to work for Ingalls. It was then agreed that Brace should work for Tng-alls for five years, and that he should have a bonus of $10,000 a year in stock in the Oil Fields Corporation, which was being organized to take over the other companies in which Ingalls was interested. This was in addition to his monthly salary and expenses. Geologists employed by promotion companies are paid larger salaries ■ than those working for the large companies, because, where a geologist associates himself with a promotion company, he runs the risk of losing his reputation if he makes mistakes in locating oil and gas territory.

      A receiver was appointed, for the companies represented before the written contract between Brace and Ingalls was executed, and the receiver notified Brace that his services were ended about the 11th or 12th of .March, 1924. During the year he worked for Ingalls and his associates Brace gave his entire time to this work. He filed a claim with the receiver for something over $2,000, and he has been paid $500 on the claim. The testimony of Brace is corroborated by that of Grordon Ingalls and contradicted by that of the attorney for the company.
    Other evidence will be stated and discussed in the opinion.
    The chancellor allowed the claim of Brace for salary in the sum of $1,566.59, but found that his claim for $10,000 on account of the alleged stock bonus was not a proper charge, and that he was not entitled to recover anything on it. Brace has appealed from that part of the decree refusing to allow his claim on account of the alleged stock bonus.

      Gaughan S Sifforcl, for -appellant.

      Albert L. Wilson, for appellee.
   Hart; C. J.,

(after stating the facts). The record shows that O. L. Brace was employed as a geologist by Grordon Ingalls in behalf of himself as trustee for those who were beneficially interested with him in locating and developing oil and gas leases and selling interests in the same. After the employment of Brace, he devoted his entire time to his work as geologist for Ingalls and his associates. It was finally determined to organize the Oil Fields Corporation to take over the interests of Ingalls and his associates in all the companies which he was representing. Before the organization of that corporation Brace had performed most of his services as geologist. He did not know whether the terms of his employment had ever been stated by Ingalls to his associates or whether or not they had ever ratified his employment. He relied entirety upon the word of Ingalls in the premises, Ingalls testified that he informed his associates and the directors in the Oil Fields Corporation after it was organized that he had employed Brace as geologist and of the terms upon which he had employed him. This was denied by the attorney for Ingalls and his associates. He testified that they knew nothing whatever about the employment of Brace as geologist, and that his employment was never ratified at all. The attorney was himself a director and was present at all meetings of the board. Under these circumstances it is earnestly insisted that Brace was not entitled to any bonus whatever. His right to the amount allowed by the chancellor is not contested, and it is only sought to uphold the decree of the chancellor in the matter.

It is true the general rule is that, since the promoters of a corporation are not in any legal sense its agents before it comes into existence, a contract made by them is not binding on the corporation when formed unless it it'is then ratified. To prevent fraud and imposition and in order to do substantial justice, courts of equity have ingrafted an exception on the. general rule, which, as stated in Little Rock and Fort Smith Railway Co. v. Perry, 37 Ark. 164, amounts to this: “That, where the formation of a corporation was in contemplation and the promoters of the corporation were taking initiatory steps to perfect its organization and obtain a charter, and provide in advance the means necessary for its successful operation, all contracts made by such promoters, for the benefit of the future corporation, and which were reasonable and proper to put it in operation,-and the benefits of which were afterwards accepted by the corporation, became binding on the corporation without any formal contract to pay.”

In Perry v. Little Rock & Fort Smith Ry. Co., 44 Ark. 383, the court said:

“The services performed must be intended at the time to inure to the benefit of the future corporation, must be made or done in its behalf, and with the expectation and confidence that the company will be bound, and not the credit of the individuals.”

To the same effect see Bloom v. Home Insurance Agency, 91 Ark. 367, 121 S. W. 293. In that case the court said that, where all parties, after the organization of the corporation, recognized and acted on the original contract, all parties to it are bound by its terms.

In the application of this principle to the facts as disclosed by the record, we think the chancery court erred in not allowing Brace what he calls his stock bonus of $10,000. It is a matter of common ialowledge, as well as implied from the circumstances in evidence in this case, that an association of persons for the purpose of locating oil and gas territory suitable for their purpose cannot operate successfully without a geologist. The attorney of the company recognizes that his services inured to the benefit of the company and were necessary in behalf of the promoters. He contends, however-, that the -services of the geologist were not necessary and should not be paid.

It is apparent, from the very nature of the business, that the companies could not operate at all, with any degree of success, if they did not have some one with sufficient experience to advise them as to whether the territory selected by them could be successfully explored for oil and gas. The companies were organized for this very purpose, and, unless they intended to act in a fraudulent manner, the promoters could not act with any intelligence without the services of a geologist or some one who had practical knowledge of the surface indications of oil and gas. Besides this, Ingalls testified that he made known to the directors of the Oil Fields Corporation the fact that he had employed Brace, and they ratified his action. According to t'he testimony of Brace, it was the custom of those promoting ventures of this sort to give the geologist a bonus in the way of an interest in the property. This was done because the geologist stood a chance to lose his’ reputation if he could not successfully locate oil and gas territory for those who employed him.

It is next insisted by counsel for appellees that, even if the stock bonus of $10,000 be allowed Brace, he should only be entitled to recover its value. On the other hand, it is the contention of Brace that the measure of damages for breach of the contract to pay a fixed sum in a particular commodity should prevail, and that his measure of damages would be the sum stated, and that the value of the property at the time of the breach would not be material. We do not agree with counsel for Brace in their contention, which, we think, is contrary to the settled rule of this court on the subject under the particular facts of this case.

In Johnson v. Dooley, 65 Ark. 71, 44 S. W. 1032, 40 L. R. A. 74, and in Burnside v. Union Sawmill Co., 92 Ark. 118, 122 S. W. 98, it is held that, where the contract is not for a sum stated in property but for a specific property, the measure of damages is the value of the property at the time of the breach.

Without reviewing the testimony on this point or stating it in detail, we are of the opinion that it was the intention of the parties that Brace was to be paid a bonus of $10,000 in the stock of the companies which he represented. As stated by him, it was all a speculative venture and promotion scheme, and a bonus was usually given to geologists in cases of this sort because they stood a chance of injuring their reputations if they did not successfully locate oil and gas territory for those whom they represented. In other words, Brace was to exchange his work for stock, and monetary terms were necessarily used, not for the purpose of expressing value, but as the only mode of expressing quantity. The amount of stock to be given to him was not a money indebtedness, but was a stock indebtedness. Consequently he would benefit from any increased value of the stock and would suffer loss bv its depreciation. When Ingalls and-his associates failed or refused to issue him the stock, he became entitled to recover the value of it, and, according to the evidence in the record, at the time of the breach the value of the stock was only fen cents on the dollar. Hence tlie chancellor should, have allowed his $1,000, for he had worked for Ingalls and his associates for one year and was to receive an extra compensation in stock of $10,000 for each year he had worked for the company.

It is next contended that the agreement was for five years, and was void under the statute of frauds. According to the testimony of Brace and of Ingalls, it was contemplated that the employment should be for five years, and a contract to that end, which was to be reduced to writing, was agreed upon. It was never entered into because of the appointment of the receiver. However, Ingalls had already made a verbal agreement with Brace to work for him and his associates as a geologist for one year, and was to pay him a stated salary per .month for that work and to give him a bonus of $10,000 in stock for that year. Under this verbal agreement, Brace was entitled to recover. Besides, even if the agreement had been for a longer period of time and void under the statute of frauds, it had been completely performed for the first year. Brace had performed the contract for one year and was entitled to the remuneration for his services agreed upon for one year. In this respect the contract was completely executed, and the statute of frauds would not apply. The services performed by Brace called for payment of stock in the sum of $10,000 for each year’s work. The substance of the transaction was an exchange of work for stock, and the contract provided for a certain amount of money and stock to be paid Brace at the end of each year, and the contract had been completely performed between the parties for one year at the time the receiver was appointed. Hence appellees could -not rely -upon the statute of frauds to defeat the contract in so far as it had been fully executed between the parties.

• It is next insisted that the evidence is not properly in the record, and for this reason the decree must be affirmed. The transcript shows that the decree in the main case was entered of record on the 27th day of November, 1925, and that the decree allowing the claim of O. L. Brace was entered of record on the 18th day of December, 1925. It is true that the chancellor, in signing the bill of exceptions, recites that the intervention of 0. L. Brace was heard on the 27th day of November, 1925, but this amounted to nothing more than a clerical mistake. Where there is a conflict between the decree itself and the bill of exceptions, the recitals of the decree will prevail. Kansas City S. Ry. Co. v. Akin, 138 Ark. 10; 210 S. W. 350, and Rural School Districts Nos. 2, 3 and 4 v. Lake City Special School District, 144 Ark. 362, 222 S. W. 732; 223 S. W. 381.

The record inferentially shows that the evidence was heard orally by the chancellor by agreement of both parties, and was reduced to writing by a stenographer appointed for that purpose. The bill of exceptions seems to have been filed as a precautionary measure in the matter. In this view of the case it will not make any difference whether the special practice act of the chancery court in question was complied with or not.

Finally, it is insisted that the appeal should be dismissed on account of the failure to serve appellees with summons. As we, have already seen, the decree was entered on the 18th day of December, 1925, and the decree recites that the appeal was prayed in and was granted by the chancery court. The transcript was filed on February 23, 1926, with the clerk of this court. Hence this contention is without merit.

The result of our views is that the chancellor erred in not allowing Brace the value of the $10,000 in stock as damages for the breach of his contract. Under the proof in the case the value of the stock should have been fixed by him at $1,000. The decree will therefore be reversed, with directions to the chancery court to allow Brace the sum of $1,000 additional, and in all other respects it will be affirmed. It is so ordered.


source: Caselaw Access Project

author: Wo on, J.

license: Public Domain

text:
    Mills Novelty Company v. Millsaps.
    Opinion delivered May 2, 1927.
    1. Pleading — refusal to strike paragraphs. — Refusal of the. court to strike paragraphs in answer and cross-complaint, which were merely statements of matters of defense in greater detail than necessary, held no error.
    2. Sales — MEETING of minds. — In an action on a contract of sale whether there was a meeting of minds as to the terms of payment was a question for the jury.
    3. Appeal and error — conclusiveness of verdict. — A verdict upon conflicting evidence is conclusive.
    4. Principal and agent — authority of agent as question for jury. — Whether an agent, who inserted a clause in the contract of sale as to payment from receipts was acting within the scope of his authority held for the jury.
    5. Trial — repetition of instructions. — It was not error to refuse correct instructions fully covered by other instructions given by the court.
    6. Replevin — cross-complaint.—Under Crawford & Moses’ Dig., § 1195, a defendant may recover by way of counterclaim only when plaintiff’s action is for the recovery of money, but a counterclaim cannot be asserted where a plaintiff’s cause of action is merely for the recovery of specific property.
    Appeal from Garland Circnit Court; Earl Witt, Judge;
    affirmed.

      Sydney S. Taylor, for appellant.

      O. T. Gotham, for appellee.
   Wo on, J.

The Mills Novelty Company, plaintiff, instituted this action against R. L. Millsaps, the defendant, to recover the possession of a musical instrument called a violano. The plaintiff alleged that it had a special ownership in the instrument, having retained title under a sales contract made with the defendant. It was alleged, in substance, that the plaintiff entered into a contract with the defendant to sell the latter the musical instrument for the sum of $3,000, the sum of $250 to be paid in cash, $200 on installation of the instrument, and the balance of $2,550 in twenty-five installments of $102 each, the first payment to be made on September 25, 1924, and the balance on the 25th of .each month thereafter until the full amount was paid. The plaintiff was to retain title until the full amount of the purchase money was paid. The. instrument was delivered under the contract of purchase, and the sum of $450 was paid, and a note for $2,550 was executed on May 15, 1924, by defendant to the plaintiff, to be paid in installments .'as indicated. The plaintiff set up the contract and note, alleged that the defendant had failed to make the payments in accordance with his contract, and, after repeated demand made upon him so to do, upon failing to make the first payment all deferred payments became due, and that, under the terms of the contract, the plaintiff had the right to the possession of the instrument, and to retain all payments that had been made to cover the expense of repossession, wear and tear on the instrument. ’ The plaintiff made the sales contract and note exhibits to his ■complaint. The plaintiff prayed judgment for the possession of the instrument.

The defendant, in his answer, admitted that he had executed a written contract for the purchase of the violano as alleged in the complaint, hut denied that the exhibit attached to the complaint was a true copy of the contract. He admitted that he had refused to pay the account demanded of him by the plaintiff, and he refused to return the violano. He alleged that he had made a total payment on the deferred purchase money note of $1,034.38, and had tendered the balance due of $27.25, according to the contract, on January 1, 1926, which the plaintiff refused to accept. He denied other allegations of the complaint, and alleged, by way of' cross-complaint, that he did not enter into the contract, a copy of which he exhibits, hut alleged-that the agent of the plaintiff gave him a copy of the contract, Avhich he signed, and a., copy of which he made an exhibit to his answer. He stated that the, contract he signed contained, among other things, the following: ‘ ‘ This instrument is to take in sufficient money to meet monthly payments, or wTe to cut monthly rate to conform with the receipts.”

In four paragraphs of his answer and cross-complaint the defendant set up certain correspondence with plaintiff and certain negotiations with W. H. Biclcett, the soliciting agent of plaintiff, prior to and leading up to the contract which was executed between the plaintiff and the defendant. Defendant stated that, if plaintiff had accepted defendant’s tender of January 1, 1926, the defendant would have paid the sum of $18.63 -in excess of the receipts taken in by the machine since the same ivas installed in the defendant’s place of business. He alleged that the plaintiff, on March 5, 1926, wrongfully took possession of the instrument and thereby destroyed the market value of thirty-two rolls of music, valued at $128, which the defendant had purchased to be used in connection with the machine; that he had been compelled to employ an attorney to defend the action of plaintiff ag’ainst him, and had been deprived of the use of the machine at the height of the season in Hot Springs, when he would have realized a profit from the use of the machine, all to his damage in the sum of $500; that, by the wrongful act of plaintiff in taking the machine, he has- been damaged in the further sum of $1,5-24.38, being the amount which he had paid the plaintiff on the purchase price of the machine; that the total amount of his damage by reason of plaintiff’s wrongful act in taking his machine amounted to $2,152.38, for which sum he prayed judgment.

The plaintiff moved to strike from the answer and cross-complaint those paragraphs relating to the preliminary negotiations between the defendant and Biekett, plaintiff’s agent, before the execution of the contract, on the ground that these were merged in the written con-„ tract and were irrelevant and immaterial. The court ■’overruled the motion, and the plaintiff'duly excepted. The plaintiff answered the cross-complaint, and alleged that Biekett, its soliciting agent, had no authority to bind plaintiff by any contract. His' authority was limited to taking orders, and the contract sued on specifically stated that it was subject to the acceptance of the plaintiff. The plaintiff entered a general denial to the other allegations of the cross-complaint.

Mrs. Chalder, the auditor of the plaintiff, testified that the plaintiff' received the order of the defendant for the violano through the mail from W. H. Bickett, together with the note as set out in the complaint and the cash payment of $250; that ¡Bickett was a salesman of the plaintiff to solicit orders on a commission basis. Witness introduced and exhibited the original contracts and the note which are set forth in the complaint. She introduced the report of Bickett on the defendant, and his letter accompanying the order, and also, by request of defendant, a letter of the defendant of May 22, 1924, to the plaintiff, in which the defendant states that he had received the letter of plaintiff accepting defendant’s order for the violano through the plaintiff’s agent, Bickett, and further states: “I presume you are aware of Mr. Bickett’s representation with reference to service which I am to have on this instrument for two years.” Also defendant’s letter of May 28, 1924, in reply to plaintiff’s letter of May 26, in which the defendant states that plaintiff’s letter practically covers the guaranty as to the instrument, which is satisfactory; also defendant’s letter of June, 1924, in which defendant states that the note should be dated June 14, 1924, and the first payment due July 14, 1924, and that the instrument had not been properly adjusted, and requested plaintiff to send its agent to correct the trouble, and concluded the letter, “when this matter is attended to and the note is changed to conform with Bickett’s agreement, I will adhere to my part of the contract.”

On July 7, 1924, defendant wrote to the plaintiff, in which letter he stated: “You had better send your Mr. Bickett here at once, as I want to see him in reference to statements he made to me before making this final payment” (referring to the payment of $200 to be made at installation). In another letter of the same date the defendant stated that he expected the plaintiff to live up to Mr. Biekett’s agreement, provided defendant fulfilled his part. In a letter of August 15, 1924, the defendant wrote, in reply to plaintiff’s letter of August 5, in which the defendant stated that plaintiff’s Mr. Biekett had made a “bunch of promises” which plaintiff was inclined to ignore; that Biekett first promised to give free service on the instrument for two years; that the receipts of the instrument were guaranteed to take care of the notes. In this letter is the further statement that defendant wanted a thorough understanding with the plaintiff with reference to Biekett’s agreement, and asking plaintiff if it was going to adhere to that agreement, and stating, among other things, “I want your good will, and my good will certainly ought to be worth something to you — at least worth enough for you to adhere to your agent’s agreement.” Defendant further stated that, upon receiving a reply, he would finish up final payment and remit receipts since the instrument was fully installed.

On August 27, 1924, defendant, in answer to plaintiff’s letter of August 23, refers to differences that had arisen between them, and reiterates the agreement that he had with Biekett, and said: “It seems that the contract sent you by Mr. Biekett must have been changed after leaving my hands. I will also state, fqr your information, that the writing in my contract by M,r. Biekett states that the receipts of the instrument must take care of monthly payments.” In his letter of September 13, 1924, defendant, in answer to letter of plaintiff and a telegram, stated that he was not going to send the contract in his possession to the plaintiff, but that plaintiff was at liberty to have some one come down and inspect it, if plaintiff doubted what defendant stated. Defendant reiterated that he was willing to fulfill his part of the contract and pay the balance of $200 and what the instrument had taken in since installation, and that he had kept a correct account of the monthly receipts. On December 1, 1924, the defendant wrote that plaintiff’s agent had been down and left a paper showing that the defendant owed a balance of $2,500, and protesting that defendant only owed $2,450. Tn this letter defendant inclosed a check for $102.50, and stated: “I am not inclined to send anything further until you change your records accordingly.” Other letters followed with reference to orders for music, etc., which are immaterial to this controversy, and on June 5, 1925, the defendant wrote the plaintiff as follows: “Referring to your letter of June 2, we regret that it is again necessary to call your attention to the fact that our violano contract clearly specifies that payments on the notes shall not be demanded except as receipts from the instrument are sufficient to take care of said notes. Since mailing you a check on May 1 our violano has taken in only $38.60.” And again, on June 15, defendant wrote, in answer to a letter of plaintiff of June 10: “We are pleased to call your attention to the fact that there, is a clause in our contract reading as follows:. ‘This instrument is to take in sufficient money to meet its monthly payments, or we to cut monthly rate to conform with receipts. ’ If your copy of our contract does not contain this clause it is because it was erased after leaving our hands.”

The further testimony 'of plaintiff was to the effect that it received the order as set forth in its complaint; that the original order was in the same condition as when it was received through its salesman, Bickett; that Bickett had no authority to grant any special terms, and the plaintiff’s contract with him provided that all orders taken by him were not binding on the plaintiff until accepted by plaintiff; that the plaintiff had never sold a machine bn the terms claimed by defendant. -

It was further shown by the plaintiff that the defendant made no other claim in regard to a definite agreement than that set forth in plaintiff’s sales contract until August 15, 1924. When defendant began to fall behind on his installments and declined to make further payments, and plaintiff made all reasonable efforts to adjust the claim without litigation, upon the defendant failing to make further payments, the plaintiff declared the whole amount clue under the contract. There was testimony by a witness for the plaintiff to the effect that plaintiff sent its agents in the fall to adjust the differences with the defendant, if possible, and at that time, after plaintiff exhibited its contract to the defendant, defendant was to pay from October 21, 1924, on, the sum of $102 a month. In other words, he was to comply with the full conditions of the contract. Witness stated that he did not know why the defendant changed his attitude at that time with reference to the contract, unless it was because the instrument was paying and defendant wanted it, and the only way he could get it was to comply with the contract that witness laid down in front of him. It was further shown that the plaintiff sent the defendant a sworn statement on December 29, 1925, showing the payments that had been made by him and the balance due; that the defendant refused to pay, and the plaintiff demanded the return of the machine, and the defendant refused to deliver the same.

The defendant testified, in substance, that he became interested in the purchase of a violano through correspondence with the plaintiff, and that the plaintiff wrote defendant that its salesman, Bickett, would call on him, which Bickett did, and, after discussing the matter of the contract, he refused to make a contract unless Bickett would guarantee the receipts so that all the money he would pay out would be the original $450. The salesman made out two contracts, and left one copy with the defendant. Over the objection of the plaintiff, the defendant introduced the contract, which was precisely the same as the contract set forth in the complaint, except, after the order for the violano, describing same and giving its price and the $200 first payment to be made upon the installation of the instrument, is this clause: “This instrument to take in sufficient money to meet its monthly payments, or we to cut monthly rate to conform with receipts. ’ ’ The contract, as thus signed by the defendant, was sent to the plaintiff and accepted by it. The salesman wrote the order which the defendant has in his possession first, and wrote the one he sent the plaintiff second. Both contracts, at the time witness signed the same, were precisely like the one the defendant offered in evidence. The contract which the plaintiff offered in evidence contained the defendant’s signature, but defendant did not sign it as it is. Defendant was asked if he meant to say that the contract in suit had been changed, and answered, ‘‘Well, I mean to say that the instrument I signed had the same writing as mine, because I stood right over the man and saw him put it in there; it is not any supposition on my part. ’ ’ Witness-had never received a copy of the contract from the plaintiff since he signed it, and had not asked for one, as he thought the plaintiff’s was like the one defendant had»

Another witness testified for the defendant to the effect that he was present and saw Bickett fill out the contract offered in evidence by the defendant, and that the other instrument signed by the defendant was identical with it.

The plaintiff presented prayers for instructions which, in effect, would have told the jury that the burden was on the plaintiff to establish the contract on which the suit is based, and that, if the plaintiff established the contract and the defendant failed to comply with its terms, the plaintiff would have the right to retake the property. Also, that the defendant was bound to ascertain the nature and extent of the authority of Bickett, and that the contract on its face showed that Bickett had authority merely to solicit orders, and that the contract did not become complete until accepted by the plaintiff; that all negotiations preliminary to the signing of the contract were merged in the contract, and plaintiff would not be bound by any parol contemporaneous agreements not incorporated therein; that, if the defendant executed the contract in suit, he would be bound by its terms, even though the agent made a copy containing a different provision. on the ground that the loss must fall on the one who contributed most to produce it; that, if the defendant signed the contract introduced by the plaintiff, the burden would be upon the defendant to show that it contained other provisions at the time he signed the same.

The plaintiff further asked the court to instruct the jury that, if the erasures were made by its agent Bickett without any authority, such an act on his part would be a mere spoliation, and would not be binding on the plaintiff ; and, further, that, if the defendant, with knowledge of the previous alteration, made payments under the terms of the contract, such action on part of defendant would be a waiver of any claims of alteration and a ratification of the contract; and, further, that, under the terms of the contract, the plaintiff was entitled to retain all1 payments made to it by the defendant to cover usage, wear and tear on the machine.

The court refused plaintiff’s prayers for instructions, and instructed the jury, on its own motion, to the effect that the issue is, what was the contract entered into by the plaintiff and the defendant, the only issue being the right to the possession of the instrument; that, if the contract was as claimed by the plaintiff, the plaintiff would have a right to the possession of the instrument, and the burden was on the plaintiff to establish the contract as alleged in its complaint; that, if the defendant did not execute the contract as alleged in the. complaint, then plaintiff would not be entitled to the possession of the instrument.

The court further instructed the' jury that the plaintiff would not be bound by the contract made by its representative if the representative exceeded his authority as plaintiff’s agent; that the defendant, however, would have a right to rely upon the authority of the agent to enter into a, contract and to make provisions as to how the instrument would be paid for, if that agent had been held out to him as being the agent of the plaintiff with authority to act for it in the matter of the purchase of the instrument; that it was for the jury to determine from the evidence whether the agent did have authority to represent the plaintiff and to make the stipulation a part of the contract which the defendant says was made at the time he agreed to purchase the instrument.

The court further instructed the jury that, if the agent of the plaintiff exceeded his authority in making a contract that he was not authorized to make, the plaintiff would he required to rescind the action in that respect within .a reasonable time after it had information that he had exceeded his authority, and, if the plaintiff waited an unreasonable time to rescind the action of its agent, it would be estopped to deny his authority to make the contract which the defendant claims he made.

The court further instructed the jury that, if the defendant, knowing that the contract was not as ■ he claimed, afterwards ratified the same by making payments thereon, he would be bound on the contract as contended by plaintiff. ' On the other hand, if the plaintiff, knowing that the contract was as claimed by the defendant, afterward entered into an agreement with the defendant by which he could go ahead and make the payments on the instrument as the defendant claimed he had a right to do under the contract, then the plaintiff would not be entitled to recover.

The verdict was in favor of the defendant, and from a judgment entered in the defendant’s favor the plaintiff duly prosecutes this appeal, and the defendant cross-appeals from the judgment of the court dismissing his cross-complaint.

1. There was no error in the ruling of the court in refusing to strike certain paragraphs of the defendant’s answer and cross-complaint. These paragraphs were merely a statement in greater detail than was necessary of the appellee’s contention that he did not enter into the contract as set up in appellant’s complaint, and setting forth appellee’s own version of the contract between him and the appellant.

2. We have set forth fully the substance of the material testimony in the case, and we are convinced, from a consideration of this testimony, that it was an issue of fact for the jury, under the evidence, as to whether or not there was a meeting of the minds of the parties upon the instrument which is the foundation of this action, and which, appellant claimed, evidenced the contract between it and the appellee. The issue was submitted to the jury under correct instructions. The jury might have found, from the testimony for the appellee, that, although- the instrument upon which the action was based -bore his signature, nevertheless, at the time he signed the same it was not the instrument introduced in evidence by the appellant. On the contrary, that it contained the additional clause above set forth as testified by the appellee and an eye-witness who corroborated his testimony.

Even if it be conceded that the' appellant’s agent, Bickett, exceeded his authority in inserting the clause in the contract which the appellee claims was inserted therein before he signed the same, still the fact remains that, if appellee told the truth, he demanded that this clause be inserted in the contract, and it was inserted therein before he signed the same. Appellee testified that the contract containing this clause was sent to the appellant and that the violano was shipped on this order —the only order signed by him. If the appellant accepted the order as thus written, then it approved and ratified the contract as thus written by Bickett, even though he did not have authority to insert the clause. If the appellee told the truth, and the order or contract, when it was sent by Bickett to the appellant, had been altered so as to eliminate the clause which appellee claims jt contained when he signed it, then there was no meeting of the minds of the contracting parties on the instrument which is the foundation of this action. The jury believed the testimony of the appellee, and its verdict is conclusive here.

Moreover, it occurs to us that it was likewise an issue for the jury, under the evidence, as to whether or not Bickett, as the agent of appellant, if lie inserted the clause in the contract as stated by the appellee, was acting within the scope of his authority as agent. The court likewise submitted that issue to the jury, under correct instructions applicable to the facts of this record, in harmony with the familiar principles of law often announced by this court. See American Southern Trust Co. v. McKee, ante, p. 147, 293 S. W. 50, where the authority of general and special agents is discussed. Likewise the issue, as to whether or not there was a ratification by either' of the parties was correctly submitted to the jury. Indeed, we are convinced that all issuable facts presented by the testimony in this record were fully and fairly submitted to the jury by the court’s charge. Such of appellant’s prayers as were correct and were refused by the court were fully covered by instructions given by the court on its own motion.

3. The appellee is not entitled to recover in this action on its cross-complaint, and the court therefore did not err in sustaining the appellant’s demurrer thereto. The appellant did not ask for any money ,judgment against the appellee. It only set up the alleged contract of purchase and alleged its breach by the appellee, and prayed for judgment, under the terms of the contract, for the recovery of the violano. Under § 1195, C. & M. Digest, the defendant in an action may recover by way of counterclaim on any cause of action arising either upon contract or tort, where the action by the plaintiff against the defendant is for the recovery of money; but a counterclaim cannot be asserted where the cause of action by the plaintiff against the defendant is merely for the recovery of specific property. Smith v. Glover, 135 Ark. 531, 205 S. W. 981; Coates v. Millner, 134 Ark. 311, 203 S. W. 701; Crawford v. Slayton, 155 Ark. 283, 244 S. W. 32. See also Commercial Credit Co. v. Stanley, 164 Ark. 473, 262 S. W. 318.

The court correctly instructed the jury that the only issue for it to determine was the right to the possession of the violano. The testimony adduced on the trial of that issue developed ancillary issues, such as alteration, spoliation and ratification, but these were only subsidiary and subordinate to the main issue. The appellee, in its cross-complaint, did not ask for any damage by reason of injury to the property by the appellant while in the latter’s possession under the writ of replevin. The verdict of the jury and the judgment of the court awarded the appellee the right to the possession of the instrument. We find no errors prejudicial to the appellant in the rulings of the trial court, and its judgment is therefore affirmed.


author: Wood, J.

text:
    J. T. Fargason Company v. Dudley.
    Opinion delivered May 2, 1927.
    1. Trial — transfer to equity. — In an action for a balance due on an account refusal to transfer the case to chancery was not error where the amount was not in dispute,’but the issue was whether the plaintiff had guaranteed a certain price.
    2. Principal and agent — authority of agent. — A cotton factor, as a matter of law, held not to have guaranteed the owner of cotton a certain price where the owner relied on representations of the factor’s soliciting agent, since such representations would not be within the apparent scope of the agent’s authority.
    3. Principal and agent — authority of agent. — One dealing with ■an agent without ascertaining his authority does so at his peril.
    Appeal from Poinsett Circuit Court; G. E. Keck, Judge;
    reversed.

      Horace Sloan, for appellant.

      C. T. Carpenter, for appellee.
   Wood, J.

This action was begun in the chancery court of Poinsett County b}^ J. T. Fargason & Company, a corporation at Memphis, Tennessee, against W. A. Dudley and Robert Dudley, individually, and as a copart-nership under the name of W. A. Dudley & Brother. It was alleged that, in March, 1920, during the existence of the partnership, it shipped to the plaintiff, cotton factors at Memphis, Tennessee, twenty-one bales of cotton to be sold by the plaintiff for the defendant; that the partnership was afterwards dissolved and the business continued in the name of W. A. Dudley. Plaintiff alleged that it advanced to the defendant on such cotton the sum of $1,700 and that certain charges had accrued against the cotton in the way of interest, freight, storage and insurance, amounting in the aggregate to $376.70. It was alleged that the plaintiff sold the cotton during 1921 and received from the sale the sum of $595.41, which amount deducted from the amount due the plaintiff by defendant left a balance of $1,481.29, for which the plaintiff prayed judgment.

The cause, on motion of the defendant, was trans-ferrod to the circuit court, where the defendant, Robert Dudley, answered, disclaiming gny interést in the partnership at the time of the alleged transaction between the plaintiff and W. A. Dudley, defendant. W. A. Dudley answered, denying all the allegations of the icomplaint except that the plaintiff was a corporation. He made his answer a ci'oss-eomplaint, and alleged that he shipped the cotton to the plaintiff under a strict guaranty that the same should be sold by the plaintiff for at least 26 cts. per pound; that he was influenced by this guaranty to ship the cotton to the plaintiff. He alleged that the twenty-one bales of .cotton shipped to the plaintiff contained 8,930 pounds; that, under the terms of the contract by which the cotton was shipped, the plaintiff was indebted to the defendant in the sum of $621.80, being the difference between the amount for which the cotton was actually sold and the guaranteed price. Defendant prayed that plaintiff be required to account to him for the surplus sum which would have been obtained by selling the cotton at the guaranteed price, amounting to $621.80, for which the defendant prayed judgment.

The plaintiff answered the cross-complaint of W. A. Dhclley, denying its allegations. A motion was made by the plaintiff to remand the cause to the chancery court, which was granted. A motion was then made by the defendant to retransfer the cause to the circuit court, which was granted, to which last motion the plaintiff duly excepted.

The testimony of plaintiff’s bookkeeper during the transaction was to the effect that Dudley Brothers shipped to the plaintiff, in 1920, twenty-one bales of cotton. The plaintiff advanced to W. A. Dudley on this cotton $1,700, and the interest on this, together with the freight, storage and insurance charges, amounted to $2,076.70. The plaintiff sold the defendant’s cotton during the year 1921 for the sum of $595.41, leaving a balance due the plaintiff in the sum of $1,481.29. The cotton was shipped to the plaintiff by the defendants to be sold by the plaintiff as a cotton factor; the plaintiff was not buying the cotton, but merely acting as a commission merchant or factor. The witness explained in detail the method of cotton factors in handling cotton, which we deem unnecessary to set forth.

W. A. Dudley testified that one C. C. Deyerle came to his place of business at Truman, Arkansas, in 1920, representing the J. T. Fargason Company. Witness shipped cotton on his solicitation to that company. Witness told Deyerle that he had some cotton that he wished to dispose of, and asked Deyerle what cotton of that grade would bring, and Deyerle stated from thirty cents up. Witness told Deyerle that he could get 26 cents for it, and Deyerle replied, “You ship that cotton to J. T. Fargason & Company and I guarantee that you get 26 cents or better for-it.” The plaintiff moved to exclude this testimony of Deyerle on the ground that there had been no showing that Deyerle had any authority to solicit cotton for the Fargason Company on which to make any price, or to guarantee any'price. The court overruled the motion. The witness identified and introduced in evidence the correspondence between himself and the plaintiff. In a letter of defendant to the plaintiff dated February 24, 1920, the defendant stated, “as per conversation with your Mr. Deyerle, we are shipping you today eight bales of cotton as per the attached bill of lading, and we are drawing on the Bank of Truman for $600. Please sell tills cotton for our account and render statement.” Plaintiff answered this letter on February 27 in which it thanked the defendant for the shipment and stated that the defendant’s draft would be paid on presentation, and that, when the cotton arrived, it would place the samples on plaintiff’s tables and sell the cotton as soon as possible. -Witness further testified that Deyerle had solicited shipments of cotton from witness for the Fargason Company numbers of times before, and again told witness that, if the witness would ship this cotton to the plaintiff, he would guarantee that plaintiff would get 26 cents for the lower grade and more for the other. The plaintiff renewed its objection to the testimony, which objection the court overruled. Witness further testified that he was in Memphis in July, 1920, saw the plaintiff, and informed it that witness did not ship its cotton over there to keep — that he wanted it sold. Witness wrote plaintiff letters to that effect. He did not write th'em objecting to their holding it, but simply told the plaintiff that he shipped it to sell and not to hold. Later, in September, plaintiff sent witness a statement for storage and freight, which witness paid in October, 1920. Witness did not raise any question or say anything about the fact that the cotton was not sold, because witness was relying on his agreement with Deyerle. Witness received several reports of sales, beginning March 24, 1920, showing that plaintiff had sold his cotton at six cents per pound; after receiving several reports, witness wrote plaintiff a letter on June 9,1921, in which he stated that the sales were not satisfactory; that he had advised the plaintiff at the time of shipment of his cotton to sell the same, and that, if plaintiff had sold when notified to do so, the cotton would have brought a much greater price, and he could not accept the sales as reported. In reply to the above the plaintiff wrote to the defendant stating, in effect, that it was impossible for it to sell the cotton at the time defendant wrote for it to sell, and that it had not been able to move it until the present time. It stated that defendant’s letter had reached plaintiff in time to stop the sale of one bale, and that the part of the cotton' of defendant which plaintiff had sold had been delivered and placed to defendant’s credit. The letter concluded as follows: “If yon will send us your check to pay your account, we will hold the cotton as long as you say. We cannot hold cotton indefinitely, and especially so when there is no prospect of immediate advance in the market. Please write.us what you want to do and what you want'us to do. We are always glad to cooperate with you to the best interest of all concerned.’’

The witness further testified that he did not offer to pay the account and take the cotton because he did not have the money. The witness’ testimony further shows that his brother had withdrawn from the partnership and had no interest -in the business at the time this cotton was shipped and sold. Witness stated that the balance sued for by the plaintiff had not been paid by the witness, because witness did not owe the plaintiff.

Gr. E. Deyerle testified for the plaintiff, in rebuttal, to the effect that he was the son-in-law of D. B. Fargason, who was the vice-president and secretary of the plaintiff. Witness was in the employ, at one time, of the plaintiff. His duties were to solicit cotton shipments and attend to the outside business. Witness had had ten or twelve years-’ experience in the business of cotton factor, and knew the customs and usages of the business. Over the objection of the defendant, the witness testified that cotton solicitors for cotton factors in this territory ordinarily do not have authority, and it is not within the scope of their duties, to guarantee the price for which cotton is to be sold by the factors which such soliciting agents represented. The witness further testified that he did not state to the defendant that he would guarantee that Ms cotton would bring 26 cents or better. He had no such conversation with the defendant. Witness never attempted to guarantee the price of cotton to anybody. He would be very foolish to do such a thing. A conversation-he had with the defendant was in the usual routine of the trade. Defendant agreed to ship the cotton to the plaintiff, and there was no special agreement about it one way or the other. Witness did have the authority to tell the defendant how much the plaintiff would advance on his cotton, hut that was as far as witness had any authority and as far as witness made any trade with him at that time, or tried to make any trade. Witness had no official position with the firm of plaintiff; he was just an employee.

D. B. Fargason testified that he was vice president and one of the managing officers of the plaintiff in 1920. Deyerle was employed by plaintiff to solicit shipments of cotton and to visit different places where the plaintiff liad advanced money to see how the farmers were getting along with their crops and to make reports- about those things. His authority and duty in the matter of soliciting shipments of cotton was simply to see the people and ask them to ship their cotton to the plaintiff to he sold on a commission basis. That was the extent of his authority. The plaintiff would tell him from time to time that he could advance certain amounts to shippers of the cotton.

Over the objection of the defendant, the witness testified that it was not the usual, ordinary or customary practice for soliciting agents of cotton factors to make any guaranty' as to the price which would be obtained on a subsequent sale of cotton shipped. In witness’ entire experience in the cotton business he had never heard of a case of that kind until the present case came up. Witness had never heai’-d of the soliciting agent for a cotton factor guaranteeing the price for which cotton would be sold. The plaintiff did not_give its soliciting agent, Deyerle, any power or authority to guarantee prices on cotton shipped. Witness had been in the cotton business for fifty years, and was thoroughly familiar with the usages and customs of the trade. Over the objection of the defendant, the witness stated that, in all his experience, he had never heard of a single case of a cotton factor guaranteeing the price of cotton on a shipment of cotton in the Memphis territory. Deyerle had no authority to buy cotton for the plaintiff. Plaintiff never bought cotton. It simply sold cotton on a commission basis. There is no difference practically in buying cotton and making a guaranteed price on it. It would be better to lury cotton than to guarantee the price, because, if you bought and there was a profit by increase in the value, the buyer would get the profit, but, under a guaranteed price, there would be no profit and the factor would only suffer a loss.

The defendant, on being recalled, testified that, at the time Deyerle solicited the shipment of cotton, he did not inform witness what his authority was. Witness did not know anything about limitation on his power or duties. Witness relied absolutely on Deyerle’s agreement for a guaranteed price, and supposed that Deyerle had explained to plaintiff. Witness never knew anything that led witness to believe there were any limitations on Deyerle’s authority.

At the conclusion of the testimony the plaintiff and the defendant both prayed the court to instruct the jury to return a verdict in their favor. The court refused these prayers, and instructed the jury as follows: “The question for you to determine in this case is on the counterclaim. There are. no issues of fact on the original claim of the plaintiff. The plaintiff says that this man, Deyerle, did not make any such contract of guaranty whereby he guaranteed to the defendant, Dudley, that he would get 26 cents a pound for the cotton, and further says that, if Deyerle did make such a contract, he had no authority to do it, and that it was without the apparent scope of his authority, and that therefore they are not bound by it, and that is one of the material questions you will have to determine in this case — whether or not the acts of this man Deyerle were within the apparent scope of his authority.”

The court further instructed the jury, in effect, over the objection of plaintiff, that, if the jury found that the plaintiff had guaranteed the defendant that if the latter would ship the cotton in controversy to plaintiff it would guarantee a price of not less than 26 cents per pound, their verdict should be in favor of the defendant for such sum as the jury found to be the difference between' the actual price received for the cotton as credited on the account and 26 cents per pound.

The court further instructed the jury that there was no testimony to warrant submission to the jury of the issue as to whether or not Deyerle had actual authority, hut that the question for the jury to determine was whether or not his actions were within the apparent scope of his authority.

The court further instructed the jury that “by the apparent scope of authority of an agent is meant such authority as the principa] knowingly permits the agent to assume, or which he holds the agent out as possessing; such authority as he appears to have by reason of the actual authority he does have; such authority as a reasonably prudent man, using diligence and discretion, in view of the principal’s conduct, would naturally suppose the agent to possess.”

The court further instructed the jury that, unless they found that Deyerle was acting within the apparent scope of his authority when he made the guaranty, if he did make it, the defendant would not be entitled to recover on his cross-complaint, and, further, that the burden was on the defendant to establish the allegations of his cross-complaint by a preponderance of the evidence.

The jury returned a verdict in favor of the defendant in the sum of $561.68. Judgment was entered in favor of the defendant against the plaintiff for that sum, from which is this appeal.

1. The trial court did not err in refusing to transfer the case to the chancery court. There were no such complications of accounts as to justify the appellant in invoking the jurisdiction of the chancery court. There was really no dispute over the amount of appellant’s account. The controversv was'whether or. not the appellant guaranteed the appellee a certain price for his cotton. The simple issue raised by the pleadings was whether or not the appellee and the appellant had entered into such contract, and that issue of fact was one proper to be submitted to a jury and one which a jury could without difficulty determine. The undisputed testimony shows that the partnership between the Dudleys had been dissolved before the transactions involved arose. The appellant’s remedy was adequate and complete at law, and we find nothing- in the record that would have justified the trial court in transferring the action to the chancery court, and its ruling in refusing to do so is correct. See Arkadelphia Milling Co. v. Barker, 109 Ark. 171, 159 S. W. 208; Cherry v. Kirkland, 138 Ark. 33, 210 S. W. 344.

2. On the issue of fact as to whether or not the appellant guaranteed that the appellee should receive 26 cents per pound for the cotton shipped'by appellee to the appellant for sale by the appellant, the testimony was not sufficient to support the verdict. The testimony of the appellee himself on this issue was that Deyerle said in the first conversation he had with appellee, “You ship that (cotton) to J. T. Fargason Company and I’ll guarantee that you get 26 cents or better for it.” Concerning another conversation Deyerle had with appellee, appellee testified as follows: “He (Deyerle) told me it was bringing around thirty cents for- low grade,- and I told him I -would like to dispose of it, but wanted to realize as much as I could from it. Now, he solicited shipments from me numbers of times, and asked why I didn’t ship cotton to Fargason & Company this time, and said, ‘If you ship this cotton to J. T. Fargason Company I’ll guarantee that you will get 26 cents for the lower grades and more for the other ’ ’ ’

The undisputed testimony was to the effect that Deyerle was employed by the appellant as soliciting agent to solicit cotton for shipment to the appellant to be sold by appellant as a factor. There was also testimony tending to prove that De.verle had axithority to promise those who, at his solicitation, shipped cotton to the appellant for sale by the latter as a factor, certain sums of mouej'' by way of advancement to them on cotton shipped. There was further testimony tending to prove that it was within the scope of Neyerle’s duties to make collections from customers and to look after and report the condition of the crops of farmers. But none of this testimony tended to prove that it was within the express, implied or apparent scope of Neyerle’s duty and authority as an agent to guarantee that appellant, his principal, would sell his cotton for at least a certain fixed price. Therefore the testimony on the part of the appellee wholly failed to prove that it was within the scope of Neyerle’s agency to guarantee the appellee that the appellant would pay him 26 cents a pound for his cotton, whether appellant sold the cotton for that price or not. On the other hand, the uncontradict eel testimony of the witnesses for the appellant shows that Neyerie had no such authority, real, implied or apparent. The uncon-troverted proof in the record is that it was the custom of the trade of cotton factors not to guarantee the price of cotton sent to them for sale as factors. The undisputed testimony shows that the appellee, sent his cotton to the appellant and constituted the latter his sales agent to sell the cotton for him. The appellee,- in his letter of February 24 to the appellant, among other things said, “Please sell this cotton for our account and render statement,” and the appellant, in answer to this letter, said, “As soon as this cotton arrives we will place samples on 'our tables and sell as soon as possible.” The testimony of Fargason and of Neyerle shows conclusively that the appellant, as a cotton factor, was the sales agent of the appellee. Appellant, as such sales agent, was to sell the appellee’s cotton on a commission basis. Appellant was to receive compensation for its services by commission and not out of profits of the sale. Appellant did not buy appellee’s cotton. Tt was not in the business of buying cotton. •

Learned counsel for the appellee relies upon the doctrine announced by this court in a long line of cases to the effect that “a principal is not only bound by the acts of an agent done under express authority, but be is also bound by all acts of a general agent which are within the apparent scope of bis authority, whether they have been authorized by the principal or not, even if they are contrary to express directions;” and further, “in the absence of notice to the contrary, a person dealing with an admitted agent has a right to presume he is a general agent and that he is acting within the scope of his authority.” See Oakleaf Milling Co. v. Cooper, 103 Ark. 79, p. 86, 146 S. W. 130, 133, See also on the general subject of agents’ authority American Southern Trust Co. v. McKee, ante, p. 147.

The doctrine of these cases is not applicable to the facts of this record and cannot be invoked by the appel-lee to sustain his contention that it was within the apparent scope of the authority of the soliciting agent, Deyerle, to guarantee that his principal, the appellant, would pay to the appellee at least 26 cents per pound for his cotton. Deyerle was only the soliciting agent of the appellant, and, if it be conceded that the appellee, in dealing with Deyerle, had' a right to presume that he was clothed with the powers of a general agent for the purpose of soliciting shipments of cotton to appellant for sale, still this would not .justify the appellee in assuming that Deyerle had authority, as such soliciting agent, to guarantee the appellee 26 cents per pound for the cotton shipped by appellee to appellant, because such guaranty was not within the apparent scope of Deyerle’s authority. If the appellant had been engaged in the buying of cotton and Deyerle had been employed by appellant to purchase cotton and had agreed with appellee, as the agent of the appellant, to buy appellee’s cotton and to guarantee at least 26 cents per pound for such cotton if appellee shipped and sold same to appellant, then such guaranty on the part of Deyerle would have been within the apparent scope of his authority, even though appellant had given him express directions to -the contrary. But such is not this case, and such a case has no analogy to the facts of this record. Here the appellant was not buying the cotton of the appellee, hut was appellee’s sales agent for the purpose. of selling the same. Appellee knew that Deyerle was soliciting his cotton for shipment to the appellant as factor and to he sold by appellant for the appellee.. Therefore the appellee, in dealing with Deyerle as the soliciting agent of the appellant, had no nglrt to presume that Deyerle had express or impliea authority to guarantee appellee 26 cents per pound if hb would ship his cotton to appellant, nor did the appellee have the right to assume that such guarantee was within the apparent scope of his authority as soliciting agent for the appellant.

The facts bring the case within the general rule announced by the court in United States Bedding Co. v. Andre, 105 Ark. 111-115, 150 S. W. 413, 414, 41 L. R. A. (N. S.) 1019, Ann. Cas. 1914D 800, where we said:

“A person dealing with aivagent is at once put upon notice of the limitations of his authority, and must ascertain what that authority is. Such person cannot presume that such authority exists; he cannot rely upon the representations of the agent as to what his authority is; he must make inquiry and use due diligence to learn the nature and extent of such authority. If he does not, he deals with the agent at his own risk; and if the authority of such agent is disputed, it devolves upon him to prove it.”-

In First National Bank v. Farson, 226 N. Y. 218-224, 123 N. E. 490, 492, the Court of Appeals, through Mr. Justice Collier, said:

“It is a general rule that the power of an agent to bind the principal in contracts of guaranty or suretyship can only be charged against the principal by necessary implication, where the duties to be performed cannot be discharged without the exercise of such power, or where the power is a manifestly necessary and customary incident of the authority bestowed upon the agent, and where the power is practically indispensable to accomplish the object in view.” See also 2 Corp. Jur., p. 6.

Our conclusion is that there is no testimony in the record to warrant the court in submitting* to the jury the issue of whether or not JDeyerle was acting in the apparent scope of his authority in making the alleged guarantee upon which the appellee relied. It follows that the court erred in instructing the jury on its own motion, and in not granting the prayer of the appellant for a directed verdict in its favor for the amount claimed in its complaint. The judgment is therefore reversed, and, the cause having been'fully developed, the clerk of this court is directed to enter judgment in favor of the appellant. in the sum of $1,481.29, with interest thereon from March 1, 1923, at 6 per cení, per annum until paid. It is so ordered.


text:
    Trice v. People's Loan & Investment Company.
    Opinion delivered May 2, 1927.
    1. Appeal and error — absence of bill of exceptions. — Where there is no bill of exceptions, the Supreme Court can consider only whether or not there are any errors appearing on the face' of the record.
    2. Bills and notes — negotiability.—The negotiability of a note is not affected by a reference which is simply a recital of the condition upon which the paper was g'iven, or a statement of the origin of the transaction, or that it is given in accordance with the terms of a contract of even date between the same parties.
    3. Bills and notes — parties.—The payee of a negotiable note is not a necessary party to an action thereon by an assignee against the maker.
    4. sales — judgment IN replevin. — Where plaintiff in a replevin action obtained possession of property sold under a conditional sale contract on which defendant had defaulted, judgment, under Crawford & Moses’ Digest, § 8654, should be rendered against defendant and bondsmen for the total amount due, to be credited with the amount received on sale of the property.
    5. Appeal and error — modification of judgment. — Where the judgment in a replevin action rendered against defendant’s bondsmen was merely for the value of the property as found by the jury, instead of the amount of the debt due, which was greater than the value of the property, the error will be cured and judgment corrected to conform to the verdict by eliminating from the judgment the value of the property and allowing a money judgment to stand as rendered.
    Appeal from Crawford Circuit Court; James Cochran, Judge;
    judgment modified.

      George Siochard, for appellant.

      Pryor, Miles & Pryor, for appellee.
   Wood, J.

This is an action brought by the plaintiff against the defendant to recover possession of a certain automobile and for a money judgment in the sum of $610. ' The instrument evidencing the contract of sale and purchase of the automobile, upon which the action is founded, is designated “Conditional-Sale Agreement.” It sets forth the terms of sale, ’describes the automobile, and recites the consideration and the amount of the cash payment, and then sets forth that the buyer agrees to pay to the seller, or order, a balance of $610, to.be evidenced by a promissory note to be paid in twelve equal monthly installments of $50.83 after date. The seller retained title until all the purchase money was paid. The buyer agreed to operate and control the car in conformity with all the laws and ordinances and to indemnify and save harmless the seller from any or all loss or damage to person or property caused -by said car or b}7- the use and operation thereof to which the seller might be subjected. There was a provision in the contract to the effect that any extension or assignments of the contract of sale, or of the note, should not waive any condition therein contained. There were various other conditions set forth in the agreement, and there was a provision to the effect that, if the buyer failed to keep and perform any or all of the conditions imposed upon him, or failed to make the payments promptly, the seller could take possession of the property, and thereupon all of the deferred payments would become due, and the seller would have the light to .institute action to enforce the payment of the note and to take possession of the car.

The contract is an exceedingly long one, and it is unnecessary to set forth any more of its provisions. It was signed by the Sengel Motor Company, the seller, and by Joseph B. Trice, the buyer, March 1, 1925. After the signatures was the following recital: “Dealers must sign assignments on reverse side. Detach note before recording.” Then follows a dotted line and after that the following:

“For value received; at the time or times stated in the schedule of payments herein, I, we, promise to pay to the order of Sengel Motor Company six hundred ten and no/100 dollars, with exchange, at the office of People’s Loan & Investment Company, Fort Smith, Arkansas, with interest after maturity at the highest legal contract rate. This note, including all installments thereof of even date herewith, is identified with conditional sale agreement covering a certain motor vehicle and certain personal property and equipment thereon. Failure to pay this note or any of the installments thereof when due shall, at the option of the holder hereof, mature all of said installments then unpaid. In the event that an attorney be employed to collect or attempt to collect this note or any installment thereof, by suit or otherwise, or to preserve or protect the property described in the aforesaid conditional sale, the parties hereto agree to pay all costs incurred, including a reasonable attorney’s fee, which shall not be less than 15 per cent, of the amount then due, consenting that a suit be brought herein in any county in the State wherein the holder hereof might elect to sue. The parties hereto, whether maker, surety, or indorser, hereby waive presentment, demand, protest and notice of nonpayment, and also waive all rights' of exemption which they have or may have under the Constitution and laws of this or any other State, or of the United States, and the indorsers and sureties hereby agree to extensions of the time of payment hereof without notice to them of such extension.” Signed Jos. B. Trice. Then follow assignments of the instrument, signed by the Sengel Motor Company, assigning the property and all the right, title and interest of the Sengel Motor Company to the plaintiff, People’s Loan & Investment Company.

The complaint alleged that the defendant had failed to make the payments when due and that the plaintiff had exercised its option to declare all due, and prayed for a writ of replevin directing the sheriff-to take possession of the car and a judgment against the defendant in the sum of $610, with interest as provided in the note, and for damages for the unlawful detention of the car. There was a demurrer, which set up that the plaintiff had failed to file the affidavit in replevin as required by law, and that the complaint did not. state facts sufficient to constitute a cause of action, and that there was a defect of parties defendant in that the Sengel Motor Company of Fort Smith, Arkansas, was a necessary party defendant in the action to determine all the issues involved. The demurrer was overruled.

There was an answer, in which the defendant admitted the execution .of the contract made an exhibit to the complaint, but denied that he purchased the car described in the complaint. He admitted that he executed his note for the balance of the purchase price for a 1925 model car. He denied the assignment of the instrument by the Sengel Motor Company to the plaintiff. He admitted the balance due on the purchase price as made by him of $508.34, provided car purchased was a 1925 model Durant Roadster. The defendant alleged that the Sengel Motor Company, by false pretenses and fraud, sold him the car as a 1925 model and a new car, which was not true; that the Sengel Motor Company, knowing that it had perpetrated a fraud upon the defendant, collusively assigned the note in controversy to the plaintiff, and that plaintiff knew, when it accepted the assignment, that the car purchased was not a 1925 model Durant Roadster, and knew that the seller had warranted it as such to the defendant at the time it accepted the assignment. He denied that the plaintiff was entitled to possession of the car and to the amount claimed in its complaint.

The judgment recites that the cause was tried by a jury and that the jury returned the following verdict: “We, the jury, find for the plaintiff for the sum of $508.34 and the possession of the ear, and value the car at $375.” The court rendered the following judgment:

“On this 25th day of November, 1925, the above cause coming on to be heard, comes the plaintiff by its attorneys, Pryor & Miles, also comes the defendant by his attorney, George G.- Stockard, and, both parties announcing ready for trial, whereupon a jury was impaneled to try the issues of - fact in this cause, and the jury, after hearing'the evidence, the instructions of the court and the argument of counsel, retired to deliberate on their verdict,-and on the same day returned into court the following verdict, to-wit: ‘We, the jury, find for the plaintiff for the sum of $508.34 and the possession of the car, and value the car at $375. B. W. Chitwood, foreman. ’

“It is therefore considered, ordered and adjudged by the court that the plaintiff have and recover of and from the defendant and the" sureties on his bond, to-wit: George Stockard, T. L. Wallace, O. H. Whittington, S. D. Kirkland, Mrs. W. W'. Ocker, Mrs. Sadie Lewis, J. L. Jacobs, John L. Smith, Addis Bryan and F. 0. McCullough, the sum of $375, which was the value of the car at the time this suit in replevin was brought, and a judgment for the possession of said car, and that, if said cal-is returned to the plaintiff by defendant, it is the order of the court that said car be sold and the proceeds of said sale be applied to the payment of said judgment of $375. The plaintiff to further have and recover of and from the defendant, J. B. Trice, the sum of $508.34, the said sum of $375, when paid, to be a credit on the judgment for $508.34 in favor of the plaintiff and against the defendant, J. B. Trice.”

The defendant and the parties named in the judgment as the sureties on his bond filed the following instrument: “Come the defendant, J. B. Trice, and his bondsmen, George G. Stockard. T. L. Wallace, O. H. Whitting-ton, S. T). Kirkland, Mrs. W. W. Ocker, Mrs. Sadie Lewis, J. L. Jacobs. John L. Smith, Addis Bryan and P. 0. McCullough, and each and severally and conjointly protest against the entry of the judgment herein, and for cause they say: 1. It is not responsive to the issues herein. 2. It is not a judgment in replevin. 3. It is not based on the findings of the .jury herein. 4. It is contrary to the ,law, and is not a judgment on the undertaking of the sureties herein. Wherefore petitioners pray that said judgment he set aside and held for naught, afid that a proper judgment be entered herein, directing and ordering that the property sued for, to-wit, one Durant Roadster, seized under replevin herein, be returned to the plaintiff, or its value, as found by the jury, paid to plaintiff if return'cannot be had.”

The plaintiff filed the following: ‘ ‘ Comes the plaintiff, People’s Loan & Investment Company, and reports to the court that it sold at public auction on March 1,1926, the car in controversy in the above suit, and asks that the judgment be credited with thirty ($30) dollars, that being the highest bid and the price the car brought at said sale, the sale being made to Lee Carnage.”

Prom the judgment of the court is this appeal.

1. There is no bill of exceptions, and' we can only consider whether or not there are any errors appearing on the face of the record. The appellant first contends that the instrument on which the appellee bases its' action is not a negotiable instrument. Appellant predicates its contention upon the following language contained in the note, to-wit: “This note,, including all installments thereon of even date herewith, is identified with conditional sale agreement covering a certain motor vehicle and certain personal property and equipment thereon.” It occurs to us that the above language was not intended to burden the note with the conditions in that part of the instrument designated “'Conditional sales agreement. ’ ’ The language , quoted was only intended to signify the' origin of the note. It is only a reference to the transaction out of which the note arose.

The law on this subject is correctly declared in 3 R. C. L., page 918, as follows: “The reference in a bill or note to some extrinsic agreement, in order to destroy its negotiability, must be such as indicates that the piaper is to be burdened with the conditions of that agreement. Accordingly, the negotiability of a note is not affected by a reference which is simply a recital of the consideration for which the paper was given, or la statement of the origin of the transaction, or by a statement that it is given in accordance with the terms of a contract of even date .between the same parties. * * * The negotiable instruments law declares that an order or promise to pay is unconditional, although coupled with a statement of the transaction which gives rise to the instrument. ’ ’

Section 7770 of Crawford & Moses’ Digest reads, in part, as follows

“An instrument payable upon a contingency is not negotiable, and the happening of the event does not cure the defect. ’ ’ And section 7771 reads:

“An instrument which contains an order or promise to do an act in addition to the payment of money is not negotiable. But the negotiable character of «an instrument otherwise negotiable is not affected by a provision which (1) authorizes the sale of collateral securities in case the instrument be not paid at maturity, or * * * (4) gives the holder an election to require something to be done in lieu of payment of money.”

A critical examination of the instrument discloses that it is an absolute and unconditional promise to pay a definite sum of money at all events and without any contingency, and a.t. the fixed time therein designated for the installments to be made.

Counsel for appellant relies upon the case of Murrell v. Exchange Bank, 168 Ark. 645, 271 S. W. 21, 41 A. L. R. 1391, to sustain his contention. In th'at case the note under review, in addition to a provision for a retention of title, provides that the payee may declare the note due at any time that he deems himself insecure before maturity and sell same at public or private sale. Passing upon this instrument we said:

“This clause renders a note not only payable upon a contingency, but renders the time of payment uncertain. ’ ’

No such provision is contained in the note now under consideration, and what we said in the ¡ahove case is in accord with our holding in the instant case. That case, in fact, supports the present holding. We conclude therefore that the note upon which the appellee bottoms his action for a money judgment is a negotiable instrument.

2. It follows from what we have already said that the court did not err in overruling the appellant’s demurrer. Since the note was a negotiable instrument, the payee in the note was not a necessary party-to the action. The complaint contained the necessary allegations, if true, to constitute a cause of action against the appellant, and to entitle the appellee to recover a money judgment in the sum of $610. The complaint for the money judgment was not verified, but there was no motion made by the appellant to require the same to be verified. There was an affidavit in the record by Lee Gr. Simms which was sufficient, if true, to meet the requirements of the law to entitle the appellee to recover possession of the automobile.

3. The judgment was not in harmony with the verdict. The jury did not return any verdict for damages for the- detention of the car. That was in issue by the pleadings. The appellee alleged that it had been damaged in the sum of $100 for the unlawful detention of the car, and the appellant in his answer denied the allegation. The appellee obtained possession of the car. The jury, in its verdict, merely placed a valuation upon the car; it did not find that the appellant owed the appel-lee as damages for the unlawful detention and use of the car the sum of $375. The court therefore erred in rendering a .judgment against the appellant and Ms bondsmen in favor of the appellee in the sum of $375, the value of the car as found by the jury.

“In an action to recover possession of personal property, judgment for the plaintiff may be for the delivery of the property, or for the value thereof, in case a delivery cannot be had, and damages for the detention. ’ ’ Section 8654, C. & M. Digest.

“In replevin the delivery of the property is the primary object of the action, the valne is to be recovered in lieu of it as an alternative only in case a delivery cannot be had of the specific property.” Swants v. Pillow, 50 Ark. 300, 7 S. W. 167, 7 Am. St. Rep. 98. See also Spear v. Arkansas National Bank, 111 Ark. 29, 163 S. W. 508, Ann. Cas. 1916A, 735.

Since the appellee was in possession of the property, judgment should have been rendered in favor of the appellee against the appellant arid his bondsmen in the sum of $508.34, and directing that the appellee, as the owner, retain possession of the car, and that the same be sold to satisfy the judgment. There is a report of sale in the record showing that the car was sold under the directions of the court’s judgment for the sum of $30. This'amount should therefore be entered as a credit upon the judgment.

The judgment in favor of the appellee against the appellant and his bondsmen should have been in the sum of $508.34, but the judgment actually rendered against appellant’s bondsmen was for only $375. The bondsmen are therefore not in an attitude to complain of the error of the court in the form of the judgment. Such error may be cured and the same corrected so as to conform to the verdict by eliminating the judgment in favor of the appellee against the appellant in the sum of $375 for the value of the car, and in allowing the money judgment for $508.34 against him to stand as rendered, the same being credited with the sum of $30, the proceeds of the sale of ■the car.

The judgment of the trial court therefore will be modified so as to allow the same to stand as a .judgment in favor of the appellee against the appellant in the sum of $508.34, less a credit of $30 entered as of March 1, 1926, with interest thereon at the rate of six per cent, per annum from date of the rendition of the judgment, and a judgment in favor of the appellee against the appellant’s bondsmen in the sum of $375 as the extent of their liability on the judgment in favor of the appellee against the appellant and his bondsmen. As thus modified, the judgment will he affirmed.


author: Hart, C. J.

text:
    Hudson v. State.
    Opinion delivered May 9, 1927.
    CRIMINAL law — former jeopardy. — Under Crawford & Moses’ Digest, § 3311, providing- that “conviction before a police or mayor’s court or before a justice of the peace shall he a bar to further prosecution for the same offense, or for any misdemeanor embraced in the act committed, defendants, convicted of gaming on Sunday under § 2739, cannot be prosecuted for gaming growing out of the same transaction, under § 2639; the latter offense being-included in the former.
    Appeal from Clay Circuit Court, 'Western District; G. E. Keck, Judge;
    reversed.

      Haley & Ashbaugh, for appellant.

      H. W. Applegate, Attorney General, and John L. Carter, Assistant, for appellee.
   Hart, C. J.

Appellants prosecute this appeal to reverse the judgment against them for the crime of gaming. .

The record shows that, on Sunday the 19th day of October, 1924, officers came upon appellants while they were engaged in a poker game in Kilgore Township, in ihe Western District of Clay County, Arkansas. The appellants promised the officers to appear before a justice of the peace in the township on the next morning to answer to the charge of gaming. On that same night an affidavit for the. arrest of the appellants, charging them with “gaming on the Sabbath day,” was sworn out before a justice of the peace, and the appellants appeared before said justice of the peace on the same night and entered a plea of guilty to the crime of “gaming on the Sabbath day.” They -were fined $25 each, and, upon the payment of the fine and costs -adjudged against them, 'they were all cliseharg’ed.

Subsequently the appellants were arrested and brought before another justice of the peace, charged with the crime of gaming. They interposed a plea of former conviction. It being shown that the charge of gaming was the same transaction as the charge of “gaming on the Sabbath day” to which they pleaded guilty, the appellants were discharged. Later they were indicted for the crime of gaming, and interposed a plea of former conviction in the circuit court for that offense. It was shown that the offense of gaming for which the appellants were indicted in the circuit court was the same transaction as that for which they' were convicted before the justice of the peace on the plea of guilty.

The punishment for gaming, under § 2639 of Crawford & Moses ’ Digest, is a fine in any sum not less than $10 nor more than $25. The fine of each of the appellants was fixed by the circuit court at $10. The punishment for gaming on Sunday is a fine in any sum not less than $25 nor more than $50. Crawford & Moses’ Digest, § 2739.

The Attorney General seeks to uphold the judgment under the authority of Sparks v. State, 88 Ark. 520, 114 S. W. 1183. In thát case it was held that a former conviction for the offense of gaming does not bar a prosecution for gaming with a minor, though the two offenses grow out of the same transaction, the two offenses being distinct. The lowest penalty provided by the statute for gaming is $10 and for gambling with a minor $50. On this account the court held that § 3311 did not apply. That section was construed in Champion v. State, 110 Ark. 44, 160 S. W. 878, where it was held that a town ordinance directed against selling liquor by the “blind tiger” device and the statute of the State against selling liquor without license are the same, and the conviction under one will, for the same offense, bar a prosecution under the other.

Section 3311 reads as follows: “Whenever any party shall- have been convicted before any police or mayor’s court or before any justice of the peace or circuit court, said conviction shall be a bar to further prosecution before any police or mayor’s court, or justice of the peace or circuit court, for such offense or for any misdemeanor embraced in the act committed; provided, no such conviction before any police or mayor’s court shall be a bar unless the penalty imposed is at least the minimum penalty prescribed by State laws for the same offense or act.”

Under that section we are of the opinion that the plea of former conviction interposed by appellants should have been sustained. They entered a plea of guilty in the justice court to the crime of gaming on the Sabbath, and their punishment was fixed at a fine of $25. The question of collusion in that prosecution does not arise here, for no attempt has been made by the State to set it aside. Appellants are simply charged with gaming under another section of the statute which provides a lower punishment. The sole reliance of the State to uphold the judgment and sentence of conviction is that gaming, under § 2639, and gaming on Sunday, under § 2739, are distinct and separate offenses. As we have already seen, the punishment for gaming on Sunday is a-fine not less than $25 nor more than $50, while betting on cards carries a fine in any sum not less than $10 nor more than $25. Hence we are of the opinion that the crime of gaming is embraced in the crime of gaming on Sunday, and that the conviction for the latter .crime operates as a bar to the conviction of the former, which is a misdemeanor embraced in the act committed, and for which the appellants entered a plea of guilty.

It follows that the judgment will be reversed, and, inasmuch as the facts are undisputed, the cause will be dismissed here. It is so ordered.