author: Wood, J. Smith, J., McCulloch, C. J.,

text:
    Crawley v. Neal.
    Opinion delivered February 6, 1922.
    1. Process — conclusiveness of officer’s return. — The recital of the return of an officer showing service of summons on defendant’s wife, she being a member of the family at his usual place of abode and over the age of fifteen years, and the recital to the same effect in the decree, were merely prima facie evidence, and placed the burden upon the defendant to show to the contrary, in a direct action by him to vacate the decree.
    2. Witnesses — husband and wife. — Where an officer made return of service of summons on defendant’s wife at his usual place of abode, she being a member of his family over the age of fifteen years, the statute (Crawford & Moses’ Dig., § 1144) makes her an agent of her husband for the purpose of such service, and in such capacity she may, under Id., § 1446, testify that no such service was ever had upon her.
    3. Judgment — vacating for want of service of process. — In a suit to vacate a foreclosure decree obtained by a building and loan association against a member-borrower where the officer’s return of service recited service on the member’s wife, the officer testified that the return was correct, but that he had no recollection of having made it; the member’s wife offered to testify that no such service was had on her, but the testimony was excluded; after the service was alleged to have been made the association treated the member as in good standing by accepting dues. Held that the testimony was sufficient to show that there was no service.
    4. Building and loan association — estoppel.—Where a member of a building and loan association was in default in his payments as a stockholder and borrower, the association had a right to treat him as in default and to institute foreclosure proceedings against him; but it could not do this and at the same time treat him as a stockholder in good standing by accepting payment of dues and interest on his loan and fines for defaults, and by giving him credit for dividends earned on his stock.
    5. Judgment — vacation—meritorious defense. — Where a building and loan association procured a decree of foreclosure of a mortgage given by a member, and the latter, in an action by a purchaser under the foreclosure decree, filed a cross-bill, seeking to vacate the decree, alleging that the association was estopped to rely upon such decree because, after the suit was brought, it accepted dues from him as a member, and the evidence tended to sustain such allegation, a meritorious defense against the foreclosure decree was alleged and proved.
    6. Judgment — fraud in procurement. — -Where a building and loan association, after instituting a proceeding to foreclose a mortgage given by a member, accepted payment of dues, thereby treating the member as in good standing, its conduct in subsequently taking a decree of foreclosure and procuring the member’s property to be sold, constituted “a fraud practiced by the successful party in obtaining the judgment or order” within the fourth subdivision of Crawford & Moses’ Dig., § 6290.
    7. Judicial sale — notice.—A party purchasing at its own foreclosure sale takes with notice of all the defects in the decree.
    8. Vendor and purchaser — notice.—One who purchases land in another’s possession takes with notice of the latter’s rights and equities.
    Appeal from Sebastian Chancery Court, Ft. Smith District; J. V. Bourlamd, Chancellor;
    reversed.

      Hill & Fitzlmgh, for appellant.
    1. The return of the officer in an action to vacate a judgment, as also a recital in the record of due service, is only prima facie evidence of service, and may be overcome by proof, the burden resting on the plaintiff in the action to vacate. 32 Cyc. 514; 102 Ark. 252; 63 Id. 513; Id. 323; 72 Id. 265; 138 Id. 403. Appellant has met this burden. The wife was competent to testify touching' the question of substituted service upon her for her husband. C. & M. Dig., § 4146; 32 Cyc. 461, 462; 39 Ark. 182.
    2. A valid defense is shown: (1) The evidence sustains the fact that an excessive judgment was rendered. The computation of the amount due was not in accord with the rule perscribed by this court in foreclosures of building and loan mortgages. 62 Ark. 572; 125 Id. 192. (2) Crawley has proved a good defense in that the conduct of the association amounted to a waiver of his delinquency. 21 Corpus Juris. 1115; 87 Ark. 393.

      (3) The association and its grantors are estopped by the conduct of the association in treating Crawley as a stockholder, after the institution of the suit and before taking judgment, accepting dues, crediting him with dividends, collecting fines and interest, and after it had obtained title under the decree in collecting dues from him and knowingly permitting him to pay taxes and assessments and make lasting and valuable improvements, without disclosing to him that it claimed title to the property. 69 Ark. 211. At all times since 1903 Crawley was in open, notorious and adverse possession of the property. The grantees of the association took with full knowledge of infirmities existing in its title, and Crawley’s adverse possession put them on notice of his equities. 34 Ark. 391; 76 Id. 25; 82 Id. 455; 94 Id. 141.
    4. Since Crawley was a bona fide occupant of the property under the claim of ownership, it was error to deny him a recovery for the value of improvements placed on the property after the association acquired title. 19 Corpus Juris, 1247.

      Geo. F. Youmans, and Warner, Hardin & Warner, for appellee.
    1. The answer and cross-complaint were only a collateral attack upon the foreclosure decree, and demurrable 23 Cyc. 1063-4; 118 Ark. 449; 123 Id. 213 ; 92 Id. fill; 50 Id. 188; 136 Id. 289; 113 Id. 449; 104 Id. 187; 20 Pac. 82; L. R. A. 1918-D, pp. 470-476, notations at pp. 474 and 475.
    2. Crawley’s wife, was not a competent witness in his behalf. The substituted service provided for in § 1144, O. & M. Digest, cannot be explained on the theory of agency. Its explanation rests in the 'community of feeling and interests by which the members of a family are 'bound together. The fact alone that the statute imposes no duty upon the member of the family to whom the copy of the summons may be delivered, negatives the idea of agency.

      3. No meritorious defense is shown. It is not possible to determine from the record that, the judgment was excessive, or that the rale for computing the amount due as prescribed in 62 Ark. 572, and 125 Ark. 192, was not complied with; and the .mere allegation in the cross-complaint that the judgment was excessive, is not sufficient. 50 Ark. 458. A valid defense must not only be alleged but proved. Icl.; 102 Ark. 252; 54 Id. 451; 83 Id. 21; 94 Id. 347; 104 Id. 449.
    4. The question of waiver is raised here for the first time. It was not raised below in the pleadings or by the proof. 142 Ark. 47; 46 Id. 96; 53 Id. 213; 74 Id. 72; 76 Id. 509. Waiver, if a defense at all, does not touch the merits of the case. Crawley’s indebtedness to the association is not disputed, but is admitted. A waiver of his defaults could only accomplish a delay in the proceedings for a short time. As a defense it is purely technical and affords no ground for vacating the decree. 96 Ark. 520.
    5. The association is not estopped from relying upon the judgment in the foreclosure suit. Crawley was not misled by the association. Ill Ark. 205. In the payment of taxes and for improvements, he was not induced thereto by any act of the association, but was a mere volunteer. 102 Ark. 159.
    6. Crawley was not entitled to receive credit for improvements. 51 Ark. 46.
   Wood, J.

On April 30, 1906, A. C. Crawley, a negro, residing at Fort Smith, Arkansas, borrowed $225 from the People’s Building & Loan Association of Fort Smith, and to secure the loan executed to the association a mortgage of even date on lot 2, block 58, in the city of Fort Smith. His wife, Annie, joined him in the mortgage, relinquishing her rights of dower and homestead. On October 18, 1909, Crawley borrowed from the association an additional sum of $750 and executed a second mortage on the same lot to secure that loan, in which his wife joined, relinquishing dower and homestead. Crawley also executed 'bonds to the association of even dates with the mortgages in which he bound himself to pay all dues upon his shares of stock in the association which might be assessed against him under the constitution and by-laws. He bound himself to pay these dues on the second and fourth Tuesday of each month and to pay all fines assessed against him under the constitution and by-laws of the association for falure to promptly pay the dues. Upon making the second loan the two loans were by consent of thve parties consolidated and carried as one loan. While the mortgages and bonds specified that the loans were to-be paid semi-monthly, they were in fact paid monthly. The total dues on both loans amounted to the sum of $13.85 as monthly payments.

Crawley was not in default in making payments of his dues on the first loan. His first default occurred October 25, 1909, when he failed to pay the full amount of his monthly dues, and from July 31, 1910, while he made regular monthly payments, many of these payments were for the amounts less than the full amount due. During all of this time that he was in default, fines were being entered against him on the books of the association. On May 2, 1913, the association filed its complaint in the Sebastian Chancery Court against Crawley and his wife to foreclose the mortgages executed by them to the association, and on that day summons was issued for Crawley and wife and placed in the hands of the sheriff, and the same was returned and filed with the clerk of the chancery court May 12, 1913. The return was made by the deputy sheriff, who specified therein that on May 6, 1913, he served Annie Crawley by delivering a copy of the summons to her, and that he served “A. C. Crawley by delivering a copy of the same to Annie Crawley, his wife, she being a member of the family, at his usual place of abode, and over the age of sixteen years.” On October 14, 1914, the cause was called for hearing, and Crawley and his wife did not a-p-pear, and a decree pro confesso was entered against them in favor of the association in the sum of $1,041.07 together with interest thereon at the rate of 6 per cent, per annum from October 14, 1914, and the mortgages were foreclosed. The special commissioner appointed for the purpose was directed to sell the property unless the amount of the decree was paid within thirty days. The decree was not satisfied by Crawley, and on the 10th of April, 1916, the property was sold by the commissioner at public sale and was bid in by the Association for the sum of $1,100. The sale was reported by the commissioner to the chancery court and the report of sale was confirmed, and the deed to the association was duly approved by that court on the 12th of April, 1916.

On April 6, 1920, the association for the consideration of $1,100 sold and conveyed the property to Caroline Davidson, and on the 14th of April, 1920] Caroline Davidson for the consideration of $1,500 sold and conveyed the property to Pelly Neal.

During all the time covered by the above transactions Crawley remained in possession of the property, and he refused to deliver the same to Pelly Neal. On the 3rd of February, 1921, Pelly Neal instituted an action in the circuit court of Sebastian County against A. C. Crawley for the possession of the property. Neal alleged in his complaint that he was the owner of the property, deraigning his title from the foreclosure sale under the mortgages. Crawley answered and alleged that the association was a necessary party, and asked that it be made a party, which was done. He made his answer a cross-complaint against Neal and the association, and alleged that the decree under which Neal claimed the title was void for want of service upon him in the foreclosure suit. He alleged that no summons was delivered to him or to his wife, and that he knew nothing of the pendency of that suit until the property had been conveyed to Caroline Davidson, who did not assert title to the property until after April 6, 1920. He further alleged that,if he or his wife were served with summons,the association was estopped from relying upon the decree, for the reason that it thereafter accepted dues from him on the mortgages, which it was seeking to foreclose, and without notifying him that it intended to foreclose. He alleged that there was no sum duo on the $225 mortage, that sum having been fully paid by the payment of dues prior to the rendition of the decree. He alleged that at the time of the rendition of the decree and tito execution of the deeds from the association to Davidson and from Davidson to Neal he was in possession of the property, and for many years prior thereto had been in the open, notorious, and adverse possession, claiming it as his own and exercising ownership over it; that Davidson and Neal obtained their deeds with full knowledge of these facts. He alleged that, by the conduct of the association as above set out in permitting* him to remain in the possession of the property after the alléged foreclosure, in permitting him to continue to make his payments of dues on the mortgages under the terms of the constitution and by-laws of the association, in accepting* these payments as such, and in permitting him to continue as the owner by paying* taxes and improvement assessments on the property, and also in making valuable improvements thereon, the association was estopped from claiming title to the property under the foreclosure decree. He admitted that there was a balance due the association on the mortgages, but alleged that same could not be ascertained without an account. His prayer was in the alternative. He prayed that the foreclosure decree of October 14, 1914, be declared null and void, a cloud upon his title, and that the cause be transferred to equity and the deeds from the association to Davidson and from Davidson to Neal be canceled. He further prayed that, if the foreclosure decree were held to be valid, he have judgment against the association for taxes and for improvement assessments and for the value of the improvements placed upon the property as well as all payments lie had made as clues to the association since the rendition of the alleged judgment of foreclosure.

The cause was transferred to equity, and Neal answered the cross-complaint, admitting that Crawley was in possession at the time Neal purchased from Davidson, hut alleged that lie (Neal) was advised that Crawley was in possession as tenant paying rent for the property. He alleged that he paid a full and :valid consideration for the property. Other allegations of the cross-complaint were denied hy him.

The association answered the cross-complaint, denying its allegations as to the payment of taxes and improvement assessments. It alleged that service was duly had upon Crawley and his wife in the foreclosure proceeding's, and that such decree was valid. It denied the facts alleged as an estoppel against the association. It alleged that Crawley occupied the property from the time of the foreclosure suit until the date of the decree without paying rent; that after the suit was instituted Crawley made promises to pay up his dues, and the association, relying on these promises, did not press the suit to an immediate conclusion, but permitted it to remain in court and received small payments at intervals, but that the delinquent dues were not paid; that, after waiting until October 14, 1914, the association took a decree directing the sale of the property; that after the decree was rendered the association postponed the sale of the property and permitted Crawley to remain in possession thereof under his promises to pay off the judgment and under his agreement that he in the meantime would pay a. fair rental value for the use of the property; that he did at various times pay small sums for the use and possession of the property, which sums were not equal to the reasonable rental value and were not made upon the mortgages, but were received and accepted hy the°association as rent. It alleged that since the decree Crawley had paid the sum of $200 as rent, hut that a fair rental value exceeded that sum in the sum of $880, for which it prayed judgment against him and also prayed that his cross-complaint be dismissed. The testimony at the trial was taken ore tenus, and is brought into the record 'by a ¡bill of exceptions.

1. The first question presented for our consideration in the briefs of counsel is whether or not there was valid service upon Crawley and his wife in the suit by the association against them to foreclose the mortgages. On this issue Cooper testified that he was deputy sheriff and wrote the return on the summons and signed it. He stated that he did not recall the facts and circumstances in connection with the service of the summons. He would not be positive that he knew Annie Crawley, but he had known A. C. Crawley some ten or fifteen years —knew him at the time he served the summons. He had no recollection of the facts relating to the service of the summons, and his testimony concerning the service of it is based entirely upon the fact that he had made the return. The notation in pencil of the street address of Crawley was placed on the summons before it was served. He probably got it from the directory or probably from the attorney for the appellee. Witness saw Annie 'Crawley on the -morning he testified, but was not positive that she was the woman upon whom he served the summons. The facts stated in the return are true. He would not have made the return if he had not served the summons as stated therein. Witness could not now recall how he did it, but satisfied himself in his own mind that he was making a true return, and the facts stated in the return are true, provided Annie Crawley did not misrepresent herself as being the right party. [Witness had no personal recollection of serving the summons.

The appellant offered to prove by the witness Annie Crawley that she was the wife of A. C. Crawley at the time the summons is alleged to have been served upon her; that there was no summons ‘-upon her personally nor upon her for her husband in the original foreclosure suit, and that the return of the officer to that effect was not true. The court held that such testimony was incompetent. Crawley testified that he was not served with summons in the case, and never knew that such a suit was pending; that the deputy sheriff Cooper did not know him, and he did not know Cooper. The return shows that the service was had on the 6th day of May, 1913, but judgment was not rendered until October 14,1914, over seventeen months after the alleged service. Two terms of the chancery court had intervened— one in October, 1913, and the other in April, 1914. After the alleged service of summons the association accepted building and loan dues or payments in full for the months of May, June and September, 1913, and April, 1914, and also accepted partial payments for other months. They charged appellant under these rules with fines for default in payments. At least two of these fines in the sum of $1.95 each were accepted. They also accepted, under their building and loan plan, interest on appellant’s loan in two different payments of $47.97 each, and on June 30, 1913, under their rule for computing credit balances, they gave him a credit for $46.37, and credit for a dividend in the sum of $2.15. The first of the year 1914 they brought forward a stock credit on dues in the sum of $38.20 and a credit of $1.90 on dividends, and they accepted a payment of $10.00 on his dues in August, 1914, after the alleged service and before taking judgment in the sum of $1,041.07 on the original complaint and the alleged service had thereon.

The court has reached the conclusion that the testimony of Annie Crawley was competent and should have been admitted to prove that there was no service. When admitted and considered in connection with the testimony as to the conduct of the association toward Crawley after the alleged service, a majority of us are of the opinion that it was sufficient to show that there was no service. The recital of the return of the officer showing service and the recitals in the decree were merely prima facie and placed the burden upon the appellee to show to the contrary, in a direct action by him to vacate the decree. Holman v. Lowrance, 102 Ark. 252; White v. Smith, 63 Ark. 513; Hunter v. Euper, 63 Ark. 323; Love v. Kaufman, 72 Ark. 265; Little Rock Chamber of Commerce v. Reliable Furn. Co., 138 Ark. 403. The return of the officer was never more than prima facie evidence of service in this case, because the officer who made the return testified in substance that, while the return was true, he had no personal recollection of having made the service except the fact that he indorsed the return on the summons.

Treating the testimony of Annie Crawley as competent, it shows that she was not served personally, nor was service had upon her for her husband. The testimony of Crawley shows that he was not notified of the pendency of the suit to foreclose. The conduct, of the association toward Crawley after the alleged service and before the decree was rendered tends to corroborate the testimony on behalf of appellant that no service was had. The conduct of the association at least shows that it was dealing with the appellant as if it had not instituted any foreclosure proceedings against him. Assuming that the testimony of Annie Crawley is competent, the appellant has fully met the burden cast upon him and has .proved by a preponderance of the evidence that there was no service.

The testimony of Annie Crawley was competent for the following reasons: The statute renders incompetent the testimony of husband and wife for or against each other or concerning any communications made by one to the other during marriage, but provides that either may testify for the other in regard, to any business transactions by one for the other in the capacity of agent (§ 1446, C. & M). Section 1144, Crawford & Moses’ Digest, provides for a substituted service on a defendant in an action by leaving a copy of such summons at the usual place of abode of the defendant with some person who is a member of his family over the age of fifteen years. Construing these two sections of the statute, we are convinced that the lawmakers intended by the latter statute to constitute the member of the family of the defendant over the age of fifteen years with whom the summons is left an agent for such defendant. Since a lawsuit generally is a -matter of serious concern to the litigants engaged therein, the purpose of the lawmakers in allowing substituted service was to constitute the member of the defendant’s family over the age designated as his agent in the service of summons. As was said in Duvall v. Johnson, 39 Ark. 182: “The statute wisely supposes that the member of his family may be relied upon in ordinary -cases to advise him in a matter seriously affecting his interest and the welfare of all.” The meaning of these statutes is that when the service of summons for the husband is left with a wife over fifteen years of age she must be deemed his agent for the transaction of the business of obtaining service upon him and as competent to testify concerning that matter. The only way that substituted service could be had upon a defendant is to constitute one his agent for that purpose, which-the statute (§ 1144) does by necessary implication.

But, even if the trial court were correct in holding that there had been a valid service upon the appellant in the foreclosure proceedings, we are convinced that the conduct of the association toward the appellant after alleged service was tantamount to an abandonment of such foreclosure proceedings and a waiver of its right to take judgment pro confesso upon the original complaint and summons. At the time the alleged foreclosure action was instituted, appellant was in default in his payments as a stockholder and borrower in the association, and the association therefore had the right to treat him as in default and to institute foreclosure proceedings against him, but it could not do this and at the same time treat him as a stockholder in good standing in the association. The positions are wholly antagonistic. To pursue one course is a necessary abandonment of tbe other. Here the undisputed evidence shows that, after the alleged institution of the action to foreclose the mortgages, the association continued to treat the appellant, at least up to the time of the taking of the decree, as a stockholder and borrower having all the rights as such under the rules of the association. Having accepted his payment of dues, although not paid promptly and for the full amount, to the time of the decree, and having accepted his interest on the loan and fines for his defaults and given him credit for the dividends earned on his stock, certainly by this conduct it was treating him as a stockholder in good standing. ' The association by this conduct led the appellant to so believe, and he acted upon such belief in making his payments. Therefore, the association must be held to have waived any default or forfeiture of any of the rights of appellant and is estopped from proceeding to judgment under the original complaint and summons.

The association, under the undisputed facts of the record, was in no attitude to take a judgment as on the original complaint and summons. It should at least have amended its complaint and brought the appellant’s default and the amounts due the association down to date and given the appellant new notice of its intention to proceed to foreclose the mortgages. In other words, the association should have done this or else have brought a new suit against the appellant based upon the conditions as they then existed and given the appellant an opportunity to defend that suit if he was so advised and in default thereof to have taken its decree of foreclosure, computing the amount due it under the rules and plans of the association, according to the law announced in Roberts v. American Building & Loan Assn., 62 Ark. 562, and which is repeated with the modification indicated in Abrams v. Citizens’ Bldg. & Loan Assn., 125 Ark. 192. A majority of the court has reached the conclusion that the appellant is entitled to have the decree in favor of the association against him rendered October 14, 1914, vacated and set aside, provided he had a meritorious defense to that suit.

2. Among other defenses the appellant alleged in his answer and cross-complaint that “the 'association was estopped from relying upon the decree herein in that, after suit was brought and after said purported summons upon him and his wife, the association accepted dues from him on the mortgages which it was seeking to foreclose.” This pleading could have been more aptly phrased, but the facts are sufficiently set forth, and they are tantamount to an allegation that the association by its conduct had waived any default of the appellant by accepting dues from him after the alleged foreclosure proceeding was instituted, and that by so doing it had estopped itself from proceeding to judgment in that action. There is an allegation in appellant’s answer and cross-complaint to the effect that the association after obtaining its judgment did not attempt to exercise its purported rights thereunder until the 10th of April, 1916; that from the second of May, 1913, until the 10th of April, 1916, when the assocation caused the property to be sold, the appellant was in possession of the property, paying his dues to the association and fulfilling the terms of his mortgages, paying taxes and improvement district assessments upon the property; that after the property had been deeded to the assocation by the commissioner, the appellant remained in possession and still continued to pay his dues to the association and the State and county taxes and improvement assessments upon the property and also placed improvements thereon; that the association by this conduct had estopped itself from claiming title to the property. It would unduly extend this opinion to set forth all the facts which were in evidence tending to support these allegations. It suffices to say the facts we have already set forth and other facts that were in evidence tended to sustain these allegations of appellant’s answer and cross-complaint. The appellant, in our opinion, has alleged and proved that he had a meritorious defense to the decree which he asked to have set aside. He has met every requirement of the law in this respect. See Holman v. Lowrance, supra; Chambliss v. Reppy, 54 Ark. 541; Knights of Maccabees v. Gordon, 83 Ark. 21; Simpson Co. v. Moore, 94 Ark. 347; Quigley v. Hammond, 104 Ark. 449.

In Knights of Maccabees v. Gordon, supra, it is said: “But, as the truth of the defenses are not finally tried in the proceedings to vacate the judgment, enough evidence to make a prima facie showing of the truth or existence of the defenses would be sufficient to authorize the court to vacate the judgment.” Under this rule the appellant has certainly alleged and proved a meritorious defense.

3. The allegations of the answer and cross-complaint were sufficient to justify the trial court in setting aside this judgment, either under1 the provisions of § 6238, C. &• M. Digest, on the ground that the judgment was obtained without notice, or, if we are mistaken in holding that there was no Service, then the allegations of the answer and cross-complaint were sufficient to bring the appellant’s cause of action against the association under subdivision fourth of § 6290 of C. & M. Digest. For' the obtaining of the judgment under the circumstances disclosed in the evidence, although not so intended, was nevertheless in law a fraud practiced upon the court. It is obvious that the main purpose of the cross-complaint of the appellant against the assocation was to vacate the decree of October 14, 1914. The allegations were sufficient to constitute a cause of action as a direct attack upon that decree under the above provisions of the statutes.

The appellee, Neal, in his complaint sets up the foreclosure decree and the purchase of the association under that decree and the sale of the property by the association to Caroline Davidson and his purchase from Caroline Davidson. In liis answer to the cross-complaint of the appellant he admits that appellant was in possession of the property at the time of his purchase from Caroline Davidson, hut alleges that he was advised that ap- ■ pellant was at that time in possession as tenant paying rent therefor. He alleges that Caroline Davidson paid a full and valid consideration for the property, and that he in turn paid a valid consideration for the same. Taking all of these allegations together, they are hardly sufficient to set up that the appellee, Neal, was claiming to he an innocent purchaser of the property. Indeed, if such were the effect of the allegations, the proof was not sufficient to show that he was an innocent purchaser. The appellee association purchased at its own foreclosure sale, and, of course, had notice of all the defects in its decree; and, as we have seen, acquired no rights under that decree. The appellant had been in the open, notorious and adverse possession of the property since 1903. A purchaser from the association, with appellant in possession and holding adversely against all the world, acquired no greater title than the association acquired. Neal admitted that he had notice of the appellant’s possession, and nowhere in the testimony is his allegation established that he was informed at the time of his purchase that appellant was the tenant of either the association or Caroline Davidson. It cannot he held under the allegations and proof in this case that either Davidson or Neal were innocent purchasers. The association was a purchaser with knowledge that it was purchasing under a void decree. Neither Davidson, nor Neal, was in any better attitude than the association. The association is, therefore, estopped from claiming any benefits under the decree, and the vendees of the association are likewise estopped. See Sisk v. Almon, 34 Ark. 391; Thalheimer v. Lockert, 76 Ark. 25; Sproull v. Miles, 82 Ark. 455; Allen v. Daniel, 94 Ark. 141.

The decree is therefore reversed, and the cause is remanded with directions to vacate and set aside the decree of October 14, 1914, and to cancel tbe deed executed thereunder of the commissioner to the association. Inasmuch as the appellant and the association are now in court, the chancery court is further directed to allow the parties, if they so desire, to amend, or to file further pleadings, to make Caroline Davidson a party, to take further testimony, and such other and further steps as may be necessary to adjust and settle the rights of all parties, according to the rules of equity and not inconsistent with this opinion.

Smith, J.,

concurring.

McCulloch, C. J.,

(dissenting). Annie Crawley did not testify in the trial below, but appellant offered to prove by her that she was not served with process. The court erred in rejecting the offer. The issue as to service ought to be tried over again with the testimony of Annie Crawley admitted. She may or may not testify according to the offer made by counsel, or her testimony may be broken down and discredited on cross-examination.

With the testimony of Annie Crawley excluded, the finding- of the chancellor was not against the preponderance of the testimony. On the remand, of the case, appellant should be allowed to introduce Annie Crawley as a witness, and appellees then should be allowed to cross-examine her and introduce other witnesses in impeachment or contradiction. We assume, merely for the purpose of testing the correctness of the trial court’s ruling, that the witness would testify according to the offer of counsel, but in remanding the cause for further proceedings we should not indulge that assumption, but should merely give an opportunity for appellant to introduce the offered witness. I think the majority are in error in sending’ this ease back and treating the issue of service as settled, because testimony which was offered but not actually introduced appears now to give the preponderance in favor of appellant on that issue.

The trial of the cause on the remand should be confined to the adjustment of the account between appellant and the building and loan association.

The reversal of the decree does not affect the validity of the sale thereunder, and the purchaser should be protected. Boyd v. Roane, 49 Ark. 397; Evans v. Davis, 146 Ark. 595. It is true that the property was purchased at the sale by the association, 'but appellee, Neal, a stranger to the proceedings, became the purchaser, from the association and is entitled to the same protection as if he had purchased at the sale by the commissioner under the decree. The possession of Crawley was notice only of such equities as might have arisen after the confirmation, and no such equities are asserted. The decree was conclusive of all equities which might have existed prior thereto. If the decree be vacated, appellant is only entitled to restitution from the association of all funds received in excess of the amount now found to be due under the mortgage.


source: Caselaw Access Project

author: McCulloch, C. J.

license: Public Domain

text:
    Kaucher, Hodges & Company v. Buckeye Cotton Oil Company.
    Opinion delivered February 27, 1922.
    1. Contracts — construction op building — cost.—Where a contractor was employed to erect a building during the war .for certain percentages of the construction cost, the employer undertaking to pay for all material and labor, and the contractor executed a guaranty bond that the entire cost would not exceed an estimated sum, but stipulated that the guaranty “is made during existing conditions and does not apply should the work be interfered with or cost increased by any act of Government or any unforeseen elements or acts of God,” held that the contract contemplated that there might be a change of conditions in respect to the cost of labor, and that to such increased cost should be added the percentages specified.
    2. Contracts — construction.—Under a contract which named a unit price for concrete work at 30 cents per yard, held, under the evidence that the price for concrete work did not include compensation for forms.

      3. Contracts — construction op building — cost plus plan. — Where a building- was constructed on the basis of construction cost plus certain percentages, and the contractor guaranteed the entire cost not to exceed a sum named, but stipulated that the guaranty was made during existing conditions, and. did not apply in -case the work was interfered with or the cost increased by any act of Government or any unforeseen elements or acts of God, the exceptions in the guaranty did not cover additional cost occasioned by inefficiency of labor.
    Appeal from Pulaski Chancery Court, J. E. Martmecm, Chancellor;
    affirmed.

      W. M. Hall and Rose, Hemingway, Cantrell <& Lough-borough, for appellant.

      Covlcrill S Armisteacl and John W. Newman, for appellee.
   McCulloch, C. J.

Appellants are building contractors, and in March, 1918, entered into a written contract with appellee for the -construction of a reinforced concrete building near the city of Little Rock. They agreed with appellee to “furnish the detailed plans, the building for a compensation equal to eight per cent, of the actual construction cost.” ■ Appellee was,, under the contract, to furnish and pay for all material anil labor. Appellants’ estimate of the cost of the building, including their own compensation, was the sum of $76,463, and in the contract appellants gave a 'guaranty that the cost would not exceed that sum, -but the guaranty was qualified by a clause in the contract as follows:

“It is further understood that this guaranty is made during existing conditions and does not apply should the work be interfered with or cost increased by any act of Government or any unforeseen elements or acts of God.”

Appellants gave a bond, executed by a surety company, which contained the following clause!:

“Fifth. It is hereby understood and agreed that this bond is executed by the surety and accepted by the obligee with the understanding that the contract which it guarantees is made in contemplation of the existing conditions as to the cost of labor, material, equipment, and supplies, and the cost of transportation, and the total cost of $76,463 named in said contract shall not apply, but shall be increased proportionately to the increased cost of completing the contract in the event of an increase in the cost of labor, material, equipment, supplies or transportation, or in the event of the work being interfered with or the cost increased by any act of the Government or any unforeseen elements, or act of God, or for any other reason for which the principal is not responsible.”

There was a provision in the contract for extra work as follows:

“Miscellaneous: In case additional excavation work and concrete is needed, unit prices on same to the owner to be as follows:
“Excavation at 75e per cubic yard.
“Concrete at 30'c per cubic yard.”

The building was completed in accordance with the terms of the contract, but the cost thereof was more than $20,000 in excess of the amount guaranteed by appellants, in addition to the cost of added work falling within the specification for extras. Appellee instituted this action against appellants and the surety on their bond to recover the additional cost of the building over the amount of the guaranteed cost, and appellants defend on the ground that the increased cost resulted from changed conditions with respect to prices of material and labor and inefficiency of labor.

There is also a disputed item in the account between the parties with respect to the cost of furnishing “forms” for extra concrete. This item amounted to $3,827.97, and it is the contention of appellants that this was not included within the unit price of 30 cents per cubic yard as specified in the contract. The contention of appellee is that the specified price for concrete was intended to include the cost of the “forms,” and that that clause of the specification should 'be construed to mean the price of concrete in place.

The action was instituted in the circuit court of Pulaski 'County, and by consent of parties was transferred to the chancery court, and proceeded there to a final decree. -After the testimony was introduced, the parties entered into a written stipulation in which it was agreed that the aggregate of the items of increase of cost of labor 'Claimed by appellants in the construction of the building amounted to $7,032.16, and that the cost, including labor and material, was the sum of $3,827.97, as stated in appellants’ account. Appellants claim that to the item of increased cost of labor there should be added the regular commission of 8 per cent, specified in the contract and also the 11.70 per cent, commission to cover overhead expenses, but appellee disputed the right of appellants to include these percentages in the increased estimate of cost. The stipulation was, further, that if the court allowed those claims of appellants, but disallowed their claim for increased cost alleged to be due on account of inefficiency of labor, the amount of the decree in favor of appellee should be $11,-076.38. The court in its final decree refused to charge appellants with the items of increased cost of labor as set forth in the stipulation, including the percentages referred to for compensation and overhead expenses, but charged appellants with the sum of $11,076.38, increased cost that appellants contend was caused by inefficiency of labor, and rendered a decree against appellants for that sum on its contract of guaranty. The court allowed appellants a credit for the sum claimed as the cost of furnishing “forms” for concrete. Appellants prosecuted their appeal from that part of the decree adverse to them, and appellee has cross-appealed.

There was evidence adduced which supports the finding of the court that the aggregate amount in the stipulation of counsel was expended for increased cost of labor.

The contract provides that the guaranty “is made during existing conditions and does not apply should the work be interfered with or costs increased by any act of Government or any unforeseen elements or acts of God.” Counsel for appellee contend that according to the proof the cost of labor was not increased by the act of Government in pursuing its war preparations in and about Little Roclc, but the answer to this contention is that the exception is not based entirely on interferences or increases by “act of Government,” but it provides that the guaranty does not apply to changed conditions “'from any unforeseen elements,” and the proof is abundant that there was a change of conditions with respect to the cost of labor, both skilled and unskilled, after the contract was entered into and before the build-, ing was completed. We are of the opinion also that the court was correct in adding to this increased cost the percentage specified for compensation to the contractors and overhead expenses. The contract provided for the payment of these percentages, and this applied to the percentages on such part of the increased cost as did not fall within the scope of appellant’s guaranty.

We are also of the opinion that the court was correct in allowing appellants credit for the cost of furnishing the “forms” for the extra concrete. This part of the contract appears in the specifications, which also contains a specification for the concrete work called for in the plans. There was a separate specification for “concrete work” and for “forms.” One specification provided how the concrete should be mixed, and the kind of cement to be used, and the kind of sand and rock.’ The other specification provided how the forms should be constructed, and where the lumber therefor should be delivered. The specification for extra concrete work must be read in the light of these separate specifications, and, when this is done, it seems clear that it was not intended to include the cost of making the “forms” in the specified unit price for extra concrete. Moreover, the cost of making the forms amounts to so much in comparison with the price for the extra concrete work that it does not seem reasonable that it was to be included in the unit price of 30 cents per cubic yard, as specified, for this is only 5 cents per cubic yard above the estimated cost specified in the contract, ■■which did not, of course, include the cost of the forms. Another thing which appears to make it plain that the parties did not intend to include the cost of forms in the price specified is that at that time it could not be known what amounts of extra concrete would call for the use of forms and the kind of forms that would be called for. Upon the whole, we are convinced that the chancellor was correct in his construction of this feature of the contract.

We are also of the opinion that the court was correct in charging appellants with the additional cost of $11,076, which appellants claim was caused by inefficiency of labor. Counsel for appellants argue that, under the terms of the contract, the guaranty did not apply at all if there was any change in the conditions which caused an increase in the cost of the building, and that since there was an increase in . cost, at least to the extent of the increased cost of labor, this completely displaces the guaranty, so that it does not apply. This is not, we think, a proper interpretation of the contract. It does not mean that there shall' be no guaranty if there was an increase, but that the guaranty should not apply to the extent caused by changed conditions; in other words,.that the guaranty should not apply to the increase in cost caused “by reason of unavoidable interferences or by the act of-Government or other unforeseen elements, or the act of God.” It would thwart the obvious meaning of the parties to hold that this language meant that there should be no guaranty if there .was increased cost at all from the causes stated in the exception. What the language means is that if there was any increase in the cost of the building aside from those causes stated in the exception, appellants should be responsible for it under their guaranty. Now, the language of the exception does not, we think, include any estimated increased cost by reason of the inefficiency of labor. The increased'cost of labor and material was easily ascertainable and was -within the contemplation of the parties at the time the contract was entered into. It was their manifest intention to exempt appellants’ liability on account of increased cost of the building from those causes. But the question of the inefficiency of labor is a thing so vague that it could not have been within the contemplation of the parties that an estimate should be taken of the degree of inefficiency of labor during the construction of the building. In fact, that was one of the things appellants undertook to do, and were paid to do, in selecting the right kind of labor, and there is no proof in this case which would justify the finding that they could not have done that so as to reduce to a minimum in degree the inefficiency of labor. The proof does, indeed, show that at that time conditions were such, not only in Little Rock but everywhere, that labor as a whole was inefficient, but it does not show that efficient labor, both skilled and unskilled, could not be obtained at the prevailing schedule of prices. The proof also shows beyond a doubt that this lowering of the efficiency of labor began more than a year before this contract was entered into, and if it increased after that time it was only in degree. At any rate, we think that under the contract the selection of efficient labor was one of the things that appellants undertook, and it was not exempted from its guaranty on account of losses from that cause. The interpretation of the contract must be drawn from its own language, and the peculiar circumstances of the case. It is therefore unnecessary to cito authorities announcing general principles of law on this subject.

The conclusion therefore is that the decree of the chancery court was correct, and the same is, both upon the original appeal and the cross-appeal, affirmed


text:
    Lozier v. St. Louis Southwestern Railway Company.
    Opinion delivered February 27, 1922.
    Railroads — injury to horse — liability.—Where plaintiff’s horse was injured while racing ahead of defendant’s train, but was cured of that injury and died of a kidney disease not shown to have been connected with the alleged injury, and there is no proof that plaintiff lost the value of the horse’s services during the time he suffered from the injury, it was not error to direct a verdict for the defendant, even though the trainmen were negligent in causing the injury.
    Appeal from Arkansas Circuit Court, Northern District; George W. Clark, Judge;
    affirmed.

      E. H. Timmons, for appellant.
    The court erred in directing a verdict for the defendant. 105 Ark. 294; 124 Ark. 376. It was a question for the jury to say from the testimony whether or not the operatives of the train were negligent in not stopping the train before the injury occurred. 81 Ark. 35; 57 Ark. 18.

      Daniel Upthegrove and Bridges & Wooldridge, for appellee.
   McCulloch, C. J.

This is an action to recover damages on account of alleged injury to a horse. At the conclusion of the plaintiff’s testimony on the trial of the cause the court gave a peremptory instruction in favor of the defendant.

The injury is alleged to have occurred in Lonoke County, where plaintiff resided, and is said to have been caused by the horse running over a cattle-guard. The horse was on or near the track when a freight train came along, and the horse became frightened and ran down the track and across the cattle-guard. According to the testimony adduced by plaintiff, the train was running at a very low rate of speed — not over 4 miles an hour— and the whistle was being continuously sounded and steam was let off to frighten the horse from the track. The horse continued to run down the track, away from the approaching train until it crossed the cattle-guard and then left the track. The right-of-way was fenced along there, and there were pools of water on each side of the track. The evidence does not show the distance the train followed the horse after it began running down the track, bnt one of the witnesses testified that the horse ran something over 100 yards down the track before it reached the cattle-guard, and that the train was within about 120 yards of the horse when it crossed the cattle-guard. The contention of plaintiff is that the train followed the horse down the track far enough for the engineer to have seen that the danger signals would not frighten the horse from the track, and that he ought to have brought the train to a stop, instead of following the horse until it ran into the cattle-guard.

The only testimony tending to show that the horse was injured by running over the cattle-guard was that, after passing over the guard, the horse seemed to limp, and that thereafter he became lame in the foot. There was testimony that the horse became very lame, and that there was inflammation in the frog of the foot. Witnesses testified that the foot became sore, and that on opening it blood and matter ran out.

The injury occurred on February 20, 1921, and the horse died about the first of April. The suit is prosecuted on the theory that the horse died as a result of the injury, but we find no evidence tending to support that theory. All of the witnesses, even the plaintiff himself, testified .that the horse died of kidney trouble, and that his foot had gotten entirely well ten days before he died. There is a conflict in the testimony as to the condition of the horse prior to the injury. One witness testified that the horse was in good condition, but one or two of plaintiff’s witnesses testified that the horse was practically worthless before the injury — that it was afflicted with kidney trouble at that time and was nearly starved to death. The testimony tends to show that the sore place under the foot was merely local, and there is nothing to indicate that it caused the horse’s death or that it superinduced the disease which caused the death. Nor is there any proof that plaintiff was injured by reason of losing the value of the services of the horse during the time that his foot was sore. He was not working the horse at the time of the injury, and later when he tried to work him he found he was afflicted with kidney trouble and hadn’t sufficient strength to give service.

Our conclusion, therefore, is that there is no proof of substantial injury to the horse, and the plaintiff is not entitled to recover any damages. It is unnecessary, therefore, to inquire whether, under the circumstances, the jury might have inferred negligence on the part of the train operatives in their failure to stop the train before the horse reached the cattle^guard.

Affirmed.


author: McCulloch, C. J. Smith, J. Humphreys, J.,

text:
    American Railway Express Company v. Davis.
    Opinion delivered February 27, 1922.
    1. Removal op causes — diversity op citizenship. — An action instituted in a State court within a Federal district other than that of the residence of either the plaintiff or the defendant cannot be removed on the ground of diversity of citizenship.
    2. Death — action for wrongful killing — what law governs.— Where an injury resulting in death was caused in another State, the right to -recover and the measure of recoverable damages must be tested by the laws of that State.
    3. Master and servant — liability for tort by servant. — The test of a master’s liability for a tort committed by a servant is whether the act complained of was done in the prosecution of the master’s business, and not whether it was done during- the existence of the servant’s employment.
    4. Master and servant — liability for negligence op fellow-servant. — To render a master liable for injury to a servant caused by the negligence of a fellow-servant in handling a pistol intrusted to him by the master, the injury must have occurred while the fellow servant was engaged in the master’s service, and not in his own private undertaking.
    5. Master and servant — negligence of fellow servant — liability. —A master is not liable for an injury to a servant caused by the negligence of a fellow-servant in using a pistol in play with his co-employees unless the master was aware of such practices and was guilty of negligence in failing to prevent them.
    6. Master and servant — safe place to work. — The rule requiring a master to furnish a reasonably safe place for its servant to work has no application to a case where a servant was injured at a time when he was not in his proper working place or engaged in the performance of his duties.
    Appeal from Little Biver Circuit Court, James S. ' Steel, Judge;
    reversed.

      Gottingham, Hawes, Green £ Mclnnis, and June B. Morrell, for appellant.
    1. On appellant’s petition the cause should have been removed to the Federal court. Both parties are non-residents of this State, the jurisdictional amount is involved, and there is a diversity of citizenship between the plaintiff and the defendant. 265 Fed. 715; 245 Id. 169; 251 Id. 337; 256 Id. 882; 261 Id. 697.
    2. Appellant cannot properly be held liable, and the court should so have instructed, the jury, if Garrison and Davis, at the time the injury was inflicted, were engaged, not in the service of the master, but in play or sport, since in that case, the act of Garrison in inflicting the injury was not within the scope of his employment. Neither can it be held liable if, while working for the appellant, these parties entered into a frolic or play, and Garrison, in order to bring the play to an end, pointed the pistol in fun to scare Davis and accidentally discharged the same and thereby injured and killed Davis. 115 Ky. 447, 74 S. W. 171; 84 Kan. 19, 113 Pac. 386; 110 Atl. (Conn.) 540; Sherman & Bedfield on Negligence, 6th Ed. by Street, § 148; Clark & Skjdes on Law of Agency § 502; 2 Cooley on Torts, 3d Ed. by Lewis, § 627; Wood, Law of Master & Servant, 2d Ed., 585 § 307; Id. p. 586; 185 Pac. 694.
    It was erroneous to instruct the jury to the effect that if the company placed the pistol with Garrison in connection with the performance of his duty, and the latter was carelessly and negligently handling the same, even though not in connection with the performance of cmy of the duties for which it had been placed with him, and the pistol was accidentally discharged and injured Davis, the company would 'be liable. 77 Ark. 606, 92 S. W. 861; 230 S. W. (Ark.) 598; 84 Ark. 193; 93 Id. 397; 111 Id. 208; 115 Id. 288; 132 Id. 282; 100 Tex. 136, 96 S. W. 1073.
    3. There is no proof to sustain the allegations of the complaint that the servant, Garrison, was lacking in maturity of judgment, and that ho was of a more than ordinarily playful and prankish nature and unsafe on that account. The evidence wholly fails to show negligence on the part of the company in. this respect, or that it \vas the proximate cause of the injury. 91 Ark. 260; 120 S. W. 984; 255 Fed. 665; 92 Ark. 138; 122 S. W. 113.

      Stephenson <& Holloway and Reynolds <§> Steel, for appellee.
    1. Garrison, as custodian of the pistol, a dangerous instrumentality, owed the same duty to Davis in using it, as he would in using it for the purpose for which it was placed with him by the company, and his default in that respect was the default of the master. Labatt, Master & Servant, $ 2503; 8 L. R. A. 464; 60 L. R. A. 158; 56 L. R. A. 748 and cases cited; 70 L. R. A. 503; 85 Miss. 426 and cases cited. A pistol is a dangerous instrumentality. 18 R. C. L. 790; 70 L. R. A. 503; 10 L. R. A. (N. S.) 375, note; 110 Ark. 495.
    2. The case was not removable to the Federal court. 51 Law. Ed. 264; 209 U. S. 440; 52 Law. Ed. 990 ;°219 IT. S. 363; 55 Law. Ed'. 252.
    3. Tiie right to maintain an action to recover for acts causing death or bodily injury is to be determined by the statutes and-judicial decisions where the cause of action arose. 62 Ark. 254; 79 Id. 488; 82 Id. 96; 54 S. W. (Ark.) 865; 154 IT. S. 190, 38 Law. Ed. 958.
    4. The character and measure of damages recoverable in an action for tort are governed by the law of the State in which the canse of action arose, and not by the law of the forum. 5 R. C. L. 1041; 56 L. R. A. 312, note; 40 L. R. A. (N. S.) 1097; 50 Ark. 155; 154 U. S. 190; 38 Law. Ed. 958; 54 S. W. 865.
    Under the Oklahoma decisions, where this case originated, a plaintiff may recover for damages that might be suffered beyond the majority of a minor child. 41 Okla. 454. See also, for construction of Oklahoma statutes adopted from Kansas, 86 Pac. 391; 6 L. R. A. (N. S.) 861; 48 L. R. A. (N. S.) 688, note, and Kansas cases there ■sited. See also 55 Okla. 287 and cases cited; 48 Ark. 833.
   McCulloch, C. J.

Elmer Davis, a boy 16 years old, the plaintiff’s son, was shot and killed on the premises of the defendant express company at Hugo, Oklahoma, the shot being accidentally fired from a revolver in the hands of Clyde Garrison, one of the employees of the company. Elmer Davis was himself an employee of the company at that time. This is an action instituted in the circuit court of Little River 'County against the company by the next of kin of Elmer Davis to recover damages resulting to them from the loss of the services of said decedent.

It is alleged in the complaint that Garrison was employed by the company as station agent or money clerk at Hugo, and that he had been furnished with a pistol' for use in the course of his employment to protect the money and other valuables of the company; that Elmer Davis was employed by the company to serve at said station of Hugo under the direction and supervision of Garrison, and that on May 9, 1920, Garrison, at a time when he was not required by his duties to use or handle said pistol, wrongfully and negligently did so handle the pistol as to cause it to be discharged, and that the load took effect in the body of Elmer Davis and inflicted a wound, from which he shortly thereafter died.

The complaint also contains an allegation that Garrison, on account of his youth and immature years, was lacking in judgment and proper understanding to discharge the duties of his position and to be the custodian of a deadly weapon, and that the company had knowledge of such immature judgment, and was guilty of negligence in putting the pistol in his possession and charge. There was no effort, however, to prove the charge that the company was guilty of negligence in employing an incompetent or negligent servant, and this feature of the case seems to have passed out in the trial below.

The company answered the complaint, denying any act of negligence on its part or on the part of its ágent while in the discharge of his duty, and alleged that the accidental killing of young Davis occurred while Garrison was using the pistol for his own purposes, outside of and beyond the line of his duties.

The case was tried before a jury, and the verdict was in favor of the plaintiff for the recovery of damag'es in the sum of $15,000. The defendant in apt time presented its petition and bond for removal to the Federal court on account of diversity of citizenship. The court overruled this petition, and this ruling is the subject-matter of the first assignment of error, on this appeal. The case in that respect falls within the decision of the Supreme Court of the United States in Ex parte Wisner, 203 U. S. 449, to the effect that an action instituted in a Federal district other than that of the residence of either the plaintiff or defendant cannot be .removed on the ground of diversity of citizenship. We have followed that rule in numerous cases. See the recent case of C. R. I. & P. Ry. Co. v. Cobbs, 151 Ark. 207.

There is little, if any, conflict in the testimony of the witnesses. The killing was accidental, and it was caused by the negligent act of Garrison, committed, however, without any bad motive or ill feeling. The two young men were good friends, and were in play with each other immediately before and at the time of the accidental killing. The testimony of Garrison tends to show that he had the pistol in his hand for the purpose of bringing the play to a close at the time the pistol was accidentally discharged. Garrison and Davis were nearly the same age, and were both employed by the express company at Hugo. Garrison had been working there about two years, and Davis had been working there four or five months. Garrison occupied the position designated as depot agent and also as “money clerk,” and Davis was employed to fill the position of “platform man,” his duties being to line-up the trucks for the arrival of trains, to help upload the express matter on trucks and drive the delivery wagons in gathering and distributing the express matter. The office was under the general management of Mr. Talkington, who had an office up town and usually visited the office at the depot every day for the purpose of giving general directions in the operations of the business at that office. There was another man — Snow— filling the same position at the station as Garrison filled, and they worked in shifts. They had charge of the station in the absence of Talkington and handled money and other valuables received for transportation, and there was evidence tending to show that Davis worked under the direction of the one of these station agents on duty at the time.

The company furnished, the depot agent with a pistol to use while on duty in the protection of valuables, and the pistol was used by the agent in meeting trains and in transporting valuable matter about the city for the purposes of delivery. The pistol furnished on this occasion was a .45 calibre Smith & Wesson, and printed instructions were given to the agents with respect to careful use of the weapon.

The killing of young Davis occurred about noon, or just after the noon hour, on Sunday, May 9, 1920. The young men were g’ood friends and met up-town during the morning and rode together down to the station, and just before noon they lunched, at a near-by restaurant. As they returned from the restaurant to the railroad station, in which the express office was located, they engaged in play, which continued after they reached the station building. The time for the arrival of a passenger train was approaching, and, after tlie play had progressed for awhile, Garrison desired to bring it to an end and went to his office, where he occupied a desk, and told Davis to “line-up tlie trucks.” Garrison went to his room and sat down at his desk to make out' some bills, but Davis persisted in carrying on the frolic. There was a window partially raised in front of Garrison’s desk, and Davis procured a rug, rolled it up and was pushing it through the window at Garrison. Garrison testified that he knew that Davis was afraid of pistols and could be easily frightened with one, so, in order to end the play and cause Davis to go to his work, he took tlie pistol from the place where it lay on the top of the safe, and, after unbreeching it and revolving the cylinder so as to make the hammer rest, as he thought, on an empty cylinder, he presented the pistol at the window, and it was accidentally fired while in his hand. Garrison could not say whether he pulled the trigger or not and was not sure whether he had raised the hammer of the pistol. His testimony was vague and uncertain on this point, but it is clear and undisputed that he took the pistol and presented it toward the window where Davis stood in mimic offensive, and that it was in some way accidentally discharged. There can be no doubt but what he inadvertently left the pistol cocked and pulled the trigger, for he did not drop the pistol, and there was no other way in which the hammer could have been -brought in contact with the shell. The statement of Garrison in his testimony was that he knew Davis was afraid of a gun, “so I just raised the gun up at the window so as to scare him and let him go on with his work.” When the pistol was discharged, Davis cried out in fright and pain, and on examination it was found that the bullet had struck him in the side. He lived a few days, and died from the effects of the wound.

The case was submitted to the jury on instructions given at the instance of the plaintiff, over the objections of the defendant, which told the jury, in substance, that if the defendant furnished the pistol to its agent, Garrison, for use in connection with the performance of his duties, and Garrison, while in the station or express office, was guilty of negligence in handling the pistol and thereby caused the injury and death of Davis, the company was liable, even though the use of the pistol was not in connection with the performance of any duty for which it had been placed in the hands of the agent. The court refused to give to the jury instructions requested by the defendant, which would have declared the law to be that the defendant was not responsible for the negligent act of Garrison if the latter was acting beyond the line of his duty and for his own private purposes while in play with a fellow employee.

The injury having occurred in the State of Oklahoma, the right to recover and the measure of recoverable damages -must be tested by the laws of that State. Carter v. Goode, 50 Ark. 155; St. L. & S. F. Ry Co. v. Brown, 62 Ark. 254. Aside from the statutes conferring a right of action when death results from wrongful act of another, no statute of Oklahoma nor decision of the courts of that State fixing the basis of liability in cases of this character has been (‘ailed to our attention, therefore the case must be determined according to general principles of law as declared in the adjudicated cases in this and other States.

We have frequently announced and steadily adhered to the rule that ‘ ‘ the test of liability of a master for a tort committed by a servant is whether the act complained of was done in the prosecution of the master’s business — -not whether it was done during the existence of a servant’s employment.” The cases on this subject are reviewed in the recent case of American Railway Express Co. v. Mackley, 148 Ark. 227. The facts of that particular case are radically different from the facts of the present case, and the decision in that case has little, if any, bearing on the present one, further than it declared and adhered to the above stated rule so often announced by this court.

The instructions upon which the court submitted the present case to the jury are diametrically in conflict with the rule announced above, and the court refused to submit the case, at the request of defendant, upon instructions in harmony with that rule.

Counsel for plaintiff rested their case solely upon the theory that the defendant intrusted to its agent the care and custody of an inherently dangerous instrumentality — the pistol — and that the duty of safeguarding and protection from danger, was that of the master, and that the master is liable for any failure or omission in that regard, even though the injury to another resulted while the servant was engaged, not in the service of the master, but in his own private undertaking. That theory has no application to the facts of the present case, even though in the abstract it be treated as a sound doctrine to the extent stated by counsel. It is certainly not correct to state the rule to be that merely because a substance or instrumentality is dangerous the master is responsible for any use which the servant makes of it. In order to render the master liable, the substance or instrumentality must be in use 'by the servant while discharging his duties to the master, or the injury must result from the inherent dangers lurking in such substances or instrumentality, and not from the voluntary act of the servant in using it for his own purposes. In the present case, if it can be said that a pistol is a thing inherently dangerous, the injury to Davis was not inflicted' on account of the inherent danger, but because of the negligent act of a servant wile using the pistol for his own private purposes. It is charged that the pistol was defective, and, conceding that the proof establishes that fact, it does not alter-the questions of law applicable to the case, for’ even though the pistol was rendered dangerous by the defects, still, if the injury was caused by the servant’s use of it for his own private purposes, the defendant is not responsible.

Counsel for plaintiff rely on a few decisions holding the master liable to an injured child for the negligent failure to guard explosives. Two of these cases are decisions of the Supreme Court of Ohio in the cases of Harriman v. Pittsburg, C. & St. L. Ry. Co., 45 Ohio St. 11, and Id. v. Shields, 47 Ohio St. 387. These two cases grew out of the same injury, and separate suits were instituted by two children, almost of tender years, to recover for injuries received. The facts were that torpedoes were furnished to members of a train crew for signal purposes, and one of the members of the crew placed one of the torpedoes on the track, expecting to frighten the passengers when it exploded. It seems that the place where the torpedo was left was near a path traveled by the public, and that when the train moved there was a failure to explode the torpedo and it was afterwards picked up by the children, who were injured in exploding it. Those decisions were based entirely on the ground that the master was responsible where a servant unnecessarily exposed a dangerous substance of that kind so that careless and meddlesome children were injured. We cited the Harriman case with approval in the opinion in the ease of Pittsburg Reduction Co. v. Horton, 87 Ark. 576. We distinguished the case then under consideration from the Harriman case on the ground that the intervening act of negligence of the parent of the child in allowing it to continue to handle and use the explosive was the proximate cause of the injury, rather than the negligence of the servant of the defendant in leaving the explosive exposed at a place where it would likely be picked up by a child. The Harriman case was again cited with approval by this court in St. L. & S. F. Ry. Co. v. Williams, 98 Ark. 72, where torpedoes were put out for signal purposes, and we held that, if there was negligence in putting out the torpedo where it would be exposed to any intermeddling child, the company would be liable for the act of its agent, but that the use of even an explosive substance in a careful maimer, for necessary purposes, would not create liability. Tbe Harriman case was decided on demurrer, and it did not appear in that case that the agent was acting* beyond his authority and for his own private purposes in putting out the torpedo, but that fact was pleaded in the later Shields case, and the Supreme Court of Ohio upheld the liability of the railroad company, notwithstanding the fact that the agent was not acting in the scope .of his employment. The court put the decision on the ground that it was the duty of the company to carefully guard the dangerous substance so that others would not be injured by exposure to it. There was language used in the opinion in the Shields case that has some tendency to support the theory of' counsel for plaintiff in the present case, but that language does not accord with our views of the law, and we do not approve it. In fact, that decision was very much circumscribed by a later decision of the Supreme Court of Ohio in the case of Cleveland T. & V. R. Co. v. Marsh, 63 Ohio St. 236 (52 L. R. A. 142), where it was held that a boy who was invited on the premises of the company by an employee for the latter’s own private purposes could not recover for an injury sustained by reason of exposure to a dangerous substance (torpedo) negligently put out by servants of the company.

The application of the doctrine insisted on by counsel for the plaintiff is out of harmony with the great weight of authority. Railway Co. v. Bolling, 59 Ark. 395; Sweeden v. Atkinson Improvement Co., 93 Ark. 397; St. L. I. M. & S. Ry. Co. v. Robinson, 95 Ark. 39; St. L. & S. F. R. Co. v. Rie, 110 Ark. 495; Robinson v. St. L. I M. & S. Co., 111 Ark. 208; Galveston, H. & S. A. Ry. Co. v. Currie, 100 Texas 136, 96 S. W. 1073; Johnson v. C. R. I. & P. Ry. Co., 141 N. W. (Iowa) 430; Overton v. Boston & Maine R. Co., 186 Mass. 481; Sullivan v. Louisville R. Co., 115 Ky. 447; Figone v. Guisti, 185 Pac. (Cal.) 694.

"We are thoroughly convinced that there is no liability on the part of defendant under this theory of the case, and that the court erred in submitting it to the jury.

There is no liability on the theory that the servant who used the pistol was known to be incompetent or of immature judgment, or that he habitually engaged in play with his co-employees, unless it be shown that the company was aware of such practices and was guilty of negligence in failing to prevent them. Barrentine v. Henry Wrape Co., 105 Ark. 485. Moreover, the case was not submitted to the jury on that theory.

The master owed its servants the duty of exercising ordinary care to make the working place reasonably safe, but the company cannot be held liable in the present case on that theory, for the reason that Davis was not, at the time he was injured, in his proper working place or engaged in the performance of his duties. St. L. I. M. & S. Ry. Co. v. Rie, supra.

If Garrison used the pistol in the discharge of his duties for the purpose of compelling compliance with his directions to Davis to return to work and used excessive force, there would be liability under the doctrine of our decisions in St. L. I. M. & S. Ry. Co. v. Grant, 75 Ark. 579, and Bryeans v. Chicago Mill & Lbr. Co., 132 Ark. 282; but the case was not submitted to the jury on that theory. The instructions entirely ignored the requirement that the act must have been done while Garrison, the servant, was engaged in the master’s work in order to create liability, even though Garrison was at the time using the pistol as part of his play with his companion and for the purpose of bringing the play to a close.

The judgment is therefore reversed, and the cause remanded for a new trial.

Smith, J.

concurs.

Humphreys, J.,

(dissenting). I cannot agree with the majority in their interpretation of the evidence. As I read it, tlie depot agent, Clyde E. Garrison, drew the pistol upon the deceased, who was an employee of the appellant under the immediate direction of Garrison, for the purpose of making him go to work for the express company. Garrison had ordered Davis two or three times to go to work, but Davis persisted in playing with him. Garrison knew he was afraid of a gun, and in order to require the deceased to go to work, drew the gun upon him. No one. knew' the purpose for which the gun was drawn better than Garrison himself. The following interrogatories and answers appear in his evidence:

‘ ‘ Q. Why did you raise the gun up there at the win'dow? A. I knew Elmer (referring to deceased) was scared of a gun, so I just raised the gun up at the window so as to scare him to let him go on and go to his work.
“Q. What did you say, if anything, when you pointed the gun up there? A. Nothing at all.
“Q. Your purpose was to bluff him or frighten him into making him go ahead with his work? A. Yes.”

The majority are of the opinion that the evidence presents a disputed question as to whether the pistol was drawn to prevent deceased from further playing or whether to make him go to work. It seems to me that the declared purpose of the agent should settle this question and take it out of the realm of doubt. The undisputed evidence shows that the agent drew the pistol to compel an employee of the company under his immediate direction and control to do the company’s work. Excessive force was used to bring about such result. Under the undisputed facts, according to my construction of the evidence, appellant was liable to appellee in damages under the doctrine announced by this court in St. Louis, Iron Mountain & Southern Ry. Co. v. Grant, 75 Ark. 579; Bryeans v. Chicago Mill & Lumber Co., 132 Ark. 282.

It is immaterial whether the cause was submitted to the jury upon a correct theory, as, according to my view, the undisputed facts, under the law, fixed liability upon' appellant. Tliere being no conflict in the evidence upon the decisive issue in the case, and the judgment being correct upon the whole record, it is immaterial that it was submitted upon an incorrect theory or upon erroneous instructions. Burton & Townsend v. Baird & Bright, 44 Ark. 556; Her shy v. Latham, 46 Ark. 542; Arkadelphia Lumber Co. v. Whitted, 81 Ark. 247; K. C. So. Ry. Co. v. Skinner, 88 Ark. 189.

In my opinion, therefore, the judgment should have been affirmed.


author: Hart, J\,

text:
    Quinn v. McLendon.
    Opinion delivered February 27, 1922.
    1. Corporations — surrender of franchise. — The attempted surrender of a corporate charter by virtue of a resolution adopted at a special meeting of which one of the stockholders had no notice and at which he was not present was void.
    2. Corporations — dissolution.—A corporation is dissolved where one of its stockholders purchased the shares of stock of all the other stockholders.
    3. Corporations — dissolution—liability for debts. — The dissolution of a corporation does not extinguish its liabilities, and creditors, including the Government, may pursue its assets into the hands of any person not a bom fide purchaser.
    4. Corporations — sale of stock — mistake.—Where all of the shares ' of a corporation were purchased by one of the stockholders, thereby dissolving the corporation, and all the parties overlooked the fact that taxes were due to the Government by the corporation, the purchaser of the stock was not entitled to hold the other stockholders liable for their proportionate share of such taxes.
    Appeal from Cleveland Chancery Court; John M. Elliott, Chancellor;
    affirmed.
    STATEMENT OF FACTS.
    Appellant brought this suit in equity against appellees to recover from them their proportionate part of the income in excess profit taxes, which he alleges are due, because lie lias paid the same to the United States, for a corporation of which they were all stockholders.
    According to the allegations of the complaint, in January, 1917, appellant and appellees organized the Sand Creek Land & Timber Company, with its principal office at Bison, Ark. The authorized capital stock of said corporation was ten thousand dollars, divided into four hundred shares of twenty-five dollars each. Appellant subscribed for eighty shares and paid therefor the sum of $2,000. Appellees subscribed for the balance of the stock and paid in $6,000, making a paid-up capital of $8,000. The corporation was formed for the purpose of purchasing a certain tract of timber land in Jefferson County, Arkansas, containing .1,240 acres, and to sell the same and divide the proceeds according to the respective interests of the shareholders. Said tract of timber was purchased for $8,000, and in August, 1917, the corporation sold' the timber on it for $7,000, which was divided among the stockholders as profits. They all forgot that tliere would be due income and excess profit taxes to the United States by reason of the sale of said timber.
    On the 22nd day of December, 1917, at a special meeting of the stockholders, a resolution was adopted surrendering the charter of the corporation to the State. Appellant had no notice of this special meeting, and did not attend the same. Sometime afterwards, while still ignorant of the attempted surrender of the charter, the appellant purchased the stock of the other shareholders with the view of obtaining title to the land of the corporation. Appellant paid the other shareholders the full value of their shares, which was estimated to be the value of the land of the corporation. The land was all the property the corporation dwned at that time. On the 8th day of January, 1918, the corporation, through its president and secretary, executed a deed to appellant conveying to him said land. Appellant and appellees forgot about the income and excess profits taxes due the United States, and took no account of the same in making the sale of the land of the corporation to appellant. Subsequently in May, 1918, appellant was compelled to pay to the United States the income and excess profit taxes of the corporation, amounting to $2,281.06 on account of the profits received by the corporation from the sale of the timber on its land in August, 1917. Appellant called upon appellees to pay their proportionate part of said taxes, and they have refused to pay the same. Hence this lawsuit.
    The court sustained a demurrer to the complaint, and, the appellant refusing to plead further, his complaint was dismissed for want of equitjr. The appellant has duly prosecuted an appeal to this court.

      Woodson Mosley, for appellant.
    The act of some of the stockholders in holding a special meeting without notice to appellant at which they dissolved the corporation constituted a breach of trust, which would justify a court in compelling them to refund to appellant their pro rata part of taxes paid by him. 145 F. 103, 76 O. C. A. 73; 107 Me. 137; 118 Ga. 362; 31 Mont. 526; 159 N. O. 612; 93 Neb. 68; 69 Ark. 11.
    There was also a mutual mistake when all parties overlooked the payment of taxes due the Government, which calls for restitution on the part of appellees. 18 Ann. Cas. 670; 119 Cal. 429; 121 Iowa 27; 190 Mass. 581.
    A transfer of stock after dissolution of a corporation is invalid as a transfer of stock. It was valid only as an assignment of the transferor’s right to praticipate in the dissolution of the assets after all creditors are paid. 39 Wash. 57; 82 Mass. 581; 43 Col. 90; 74 N. J. Eq. 546.
    Under the above facts each stockholder was liable for his proportionate part of the tax. 10 dye. 1321. See also 18 Ann. Cas. 670.

      M. Danaher and Palmer Danaher, for appellees.
    There was no dissolution of the corporation, and appellant concedes this when he accepted a deed from the corporation signed by its proper officers.
    There was no mutual mistake.

      The complaint is defective because it contains no offer on the part of plaintiff to place the defendants in statu quo. 14 C. J. 698 and 708.
   Hart, J\,

(after stating the'facts). It is true, as contended by appellant, that the corporation itself was liable for the income and excess profit taxes due by it to the United States by reason of the sale of its timber in August, 1917, and the 'Government had a lien upon the property of the corporation for the amount of said taxes. It is also true that the attempted surrender of the charter of the corporation by some of the stockholders in December, 1917, was null and void because the resolution-was 'adopted at a special meeting of which appellant had not been notified, and at which he was not present. Dierks Special School Dist. v. Van Dyke, ante p. 27.

The Government lien still obtained when appellant purchased the shares of stock of all the other shareholders and thereby dissolved the corporation. The dissolution of a corporation does not extinguish its liabilities, and through courts- of'equity creditors, including the Government, may pursue its -assets into the hands of any person who is not a bona fide purchaser. Holmes, Federal Taxes, 1922 Ed., p. 267.

See too, in Arlington Hotel Co. v. Rector, 124 Ark. 90, the court held that the debts or liabilities of a corporation existing at the time of its dissolution are not extinguished thereby, and in equity they may be -collected out of the assets of the defunct corporation in the hands of the shareholders, or any parties receiving the same except the innocent purchasers.

In recognition of this rule, appellant paid the taxes to the United States Government after he had purchased the shares of the other shareholders and had received a deed from the corporation to the land which it owned. This was all the property of the corporation left after the sale of the timber. Having paid the taxes, appellant claims that he is entitled to be reimbursed by the other shareholders for their proportionate part of the taxes. Appellant claims this right on the ground of mutual mistake in the sale from the other shareholders to him. According to the allegations of the complaint, appellant and appellees had overlooked the fact that any taxes would be due the United States on account of the sale of the timber by the corporation, and these taxes were not taken into account by the parties at the time appellant purchased the land from the other shareholders and had them to transfer their shares of stock to him. This did not amount to a mutual mistake. If it be assumed that the power of courts of equity to afford relief from the consequences of the mutual mistake of parties extends to questions of law in exceptional cases, yet its jurisdiction will bo exercised with caution and only in cases where it is clear that the mistake arose from a mutual misapprehension of facts, or of the legal operation of the instrument under consideration.

In the instant case the parties did not make any mistake about what their rights were. They simply overlooked the fact that the corporation would owe the United States certain taxes when the timber was sold, and that the Government would have a lien on the assets of the corporation for the taxes. Appellant acquired all the property of the corporation by purchase and paid the taxes in order to satisfy the lien of the United States, and, while it is unfortunate for him, yet he has no relief against the other shareholders, because he purchased their interests in the corporation. There was no mistake either of fact or law in the purchase. All the parties simply overlooked the fact that any taxes were due the Government and made no provision whatever concerning them. If the parties had entered into a contract 'in mutual mistake as to their relative and respective rights, either of them would have been entitled in equity to have it set aside. Here the appellant understood what he was buying from appellees, and they understood what they were selling him. They simply overlooked the matter of taxes to the United States. There was no mistake as to the legal effect of the contract between the parties and no mistake of fact in making it. The fact that they overlooked the taxes dne to the United States, and made no provision for their payment, does not justify either the reformation or rescission of the contract so as to impose upon appellees obligations which they never intended to assume.

Therefore the decree will be affirmed.