text:
    Oliphant v. Oliphant.
    Opinion delivered June 18, 1928.

      C. M. Martin and Gcrnghaov & Sifford, for appellant.

      Pat McNally and Jordan* Sellers, for appellee.
   Wood, J.

This is an action for divorce instituted by the plaintiff, O. C. Oliphant, against his wife, Helen Oli-phant. In his original complaint the plaintiff sets up personal indignities by the defendant toward the plaintiff such as to render his condition in life intolerable, specifying same, and in an amendment to his complaint he alleged that the defendant was guilty of acts of adultery, as, follows: First, that on the 20th day of April, 1927, the defendant, in company with a male person about thirty-eight years, of age, whose name is unknown to the plaintiff, occupied a room in the Sylvia Hotel, in the town of Smackover, from 10:30 in tlie forenoon nntil about noon of the same day; that they were alone in said room, the door to the room being locked, and that the bed of the room had been used. Second, that on or about the fifteenth day of March, 1927, the defendant left the city of Camden, Arkansas, at about 9 o’clock p. m. of said day, in plaintiff’s car, in company with a male person about thirty years of age, weighing 135 pounds, having light hair, and being a tall and slender person; that they drove out of Camden on the .Stephens Highway, and parked said car near the covered bridge across Two Bayous, and, after parking said car, this defendant, in company with said male person, whose name to this plaintiff is unknown, left the car by the roadside and went into the woods near by and stayed for about one hour, after which time they came back to the oar and drove into the city of Camden. ’ ’

Plaintiff alleged that he had been twice married to the defendant; that, as the issue of the first marriage, there was a daughter eight years of age. The plaintiff prayed for an absolute divorce from the defendant and for the care and custody of their daughter.

The defendant, in her answer, denied specifically the indignities charged in the .complaint and the acts of adultery. She alleged that, during their first marriage and after the birth of their daughter, she had procured a decree of divorce from the plaintiff; that, while this divorce proceeding was pending, the plaintiff and the defendant agreed that she would take $1,000 as alimony, and that, in lieu of support and maintenance for their child, he would take custody of the child and support the same until they were remarried; that plaintiff promised to remarry the defendant, but, after the former decree of divorce was granted, had refused to comply with this agreement, telling the defendant that the decree of divorce had given him custody of the child, and she should not have the same. Defendant alleged that she and plaintiff were remarried in January, 1927, and that she had been a dutiful wife at all times. By way of cross-complaint defendant alleged that, on the 30th of April, 1927, the plaintiff drove defendant from their home at the point of a pistol, without any cause whatever. She further set up that he had repeatedly cursed her and threatened to kill her, and had beaten her several times. She specifically alleged other acts of indignity and cruel treatment. She set up that the plaintiff was of immoral character, and not a fit person to have custody of their child. She alleged that she could and would furnish á good Christian home for the child, if given the custody thereof. She averred that the plaintiff possessed valuable property, describing same. She prayed that she be granted an absolute divorce from the plaintiff, and be given the care and custody of their daughter, Grace, who was then seven years of age, and that of the personal property and real estate of the plaintiff she be given as the law provides.

In his answer to the cross-complaint the plaintiff denied specifically the allegations of the defendant as to his ill treatment of her, and alleged that at all times, he had treated her with proper respect and kindness. He renewed the allegations of his amended complaint as to the acts of adultery of the defendant and also as to other indignities heaped upon him by her. Answering her cross-complaint for support and maintenance, the plaintiff alleged that on January 23,1927, plaintiff and defendant entered into a prenuptial contract by which each agreed that, in the event they separated, the defendant would not ask for alimony or any other expenses from the plaintiff, which contract the plaintiff filed and made an exhibit to his complaint. Plaintiff, in a further amendment to his original complaint, set up that the decree of the Drew Chancery Court granting a divorce to the parties was still in force and effect, and therefore that the last marriage, on January 23, 1927, was void.

The defendant moved to strike this last amendment from the files, which motion the court granted, to which ruling the plaintiff duly objected and excepted.

The cause was heard upon, the pleadings and upon the testimony adduced in the form of depositions and also oral testimony, which has been properly brought into the record. The trial court found as follows:

(1) That the appellant failed to establish a single charge'of adultery; (2) that appellant was guilty of such cruel and barbarous treatment to appellee that she was entitled to a divorce from him, and the custody of the child. (3) That the antenuptial contract was executed on Sunday, had never been ratified, and is void; and that appellee is entitled to dower in all of the property of appellant. (4) That, in addition to dower, she is entitled to recover from appellant $100 per month for seven months as alimony, and $50 per month thereafter for the support of the child. (5) That appellee is also entitled to recover, in addition to the alimony in paragraph 4, one-third of all of appellant’s property, both real and personal.

The court entered a decree according to its findings, from which is this appeal.

1. All the judges have read the abstract of the appellant’s counsel. After thus carefully examining the entire record, a majority of the judges, have reached the conclusion that the finding of the trial court on the issue as to whether or not the appellee had been guilty of the acts of adultery as set forth in the pleadings and also the other acts of adultery not set forth in the pleadings, hut upon which testimony was adduced by the respective parties, is not clearly against a preponderance of the evidence. The testimony is exceedingly voluminous, and a discussion of the facts giving the reason for the conclusion we have reached would serve no useful purpose as a precedent.

In Leonard v. Leonard, 101 Ark. 528, 142 S. W. 1135, we quoted from 14 Cyc. 693-696, as follows:

“The charge of adultery may be sufficiently proved by evidence of circumstances leading to an inference of guilt. It is impossible fully to indicate the circumstances which will lead to such a conclusion, because they may be infinitely diversified by tbe situation and character of the parties and by many other incidental matters which may be apparently slight and delicate in themselves, but which may have most important bearings in the particular case. While the circumstances need not be such that an inference of guilt is the only possible conclusion that can be drawn therefrom, yet the facts must be such as to lead a just and reasonable man to the .conclusion of guilt. They are not sufficient if they merely justify a suspicion of guilt, in the absence of other incriminating circumstances. * * # So, where the circumstances adduced in support of the charge are capable of two interpretations, one of which is consistent with innocence, the divorce should not be granted. If an adulterous disposition on the part of defendant and the alleged paramour is. shown, and it appears that there was an opportunity for them to commit the offense, these facts are sufficient to establish adultery. * * * To have this effect, the opportunity must occur under incriminating circumstances. * # * Adultery may be established by the fact that the parties occupied the same room at night, or the same bed, in the absence of an explanation of the incriminating circumstances.”

The great law writer, Mr. Bishop, in his excellent work on Marriage and Divorce, vol. 2, p. 520-521, §§ 1360 and 1361, says: £ ‘ Then, remembering that the burden of proof is on the accuser, not the accused, we should be able to discern clearly that adultery, not simply a suspicion of it, is the true solution of all: * * * The inference of guilt or innocence to be drawn from the proven circumstances does not depend on technical rules.” The author then quotes what is said by one of the ecclesiastical judges of England, Lord Stowell, in Loveden v. Loveden, 2 Hag. Con. 1, 4th Eng. Chy. 461-462, and also to the same effect from the eminent Chief Justice Shaw of Massachusetts, in Dunham v. Dunham, 6 Law Reporter, 139-141, as follows:

“Nor can this course of inquiry and process of reasoning and judging be much aided by technical and artificial rules, or by what are considered established presumptions of fact from other facts. These rules are useful and convenient in their way, in suggesting general considerations, which are applicable to many cases; but, after all, they are to 'be taken with so many exceptions and so much allowance that in the result each case must depend mainly upon its own peculiar circumstances. It is impossible therefore to lay down beforehand, in the form of a rule, what circumstances shall and what shall not constitute satisfactory proof of the fact of adultery, because the same facts may constitute such proof or not, as they are modified and influenced by different circumstances.”

See also Keezer on Marriage and Divorce, p. 196, § 242,- Schuyler on Marriage and Divorce, Separation and Domestic Relations, p. 179, § 1567; 19 C. J., p. 128, § 2.

When the facts of this record are considered in the light of the above authorities, we are convinced that the trial court was correct in finding that the appellant failed to establish a single charge of adultery against the appellee. The appellee, in her answer, denied the specific acts of adultery charged in the complaint, and she sufficiently rebuts in her testimony the testimony brought forward by the appellant to sustain these charges. The other supposed acts of adultery not alleged, but which the appellant sought to prove by the testimony adduced, the appellee also specifically refutes by her own testimony and corroborating testimony, which was sufficient to convince the chancery court, and is sufficient to convince us, that the charge of adultery has not been established.

2. We are likewise convinced that the trial court was correct in finding that the appellant was guilty of cruel and barbarous treatment of the appellee, and ruled correctly in granting her a divorce on such ground. The appellee testified to acts of violence committed by the appellant upon appellee’s person, and to profane, abusive and insulting language used by the appellant toward her. She was sufficiently corroborated by the testimony of other witnesses as to this conduct to justify the trial court in finding that the appellant was guilty of such cruel and barbarous treatment of the appellee as to entitle her to a divorce on the ground that such conduct offered such indignities to the person of appellee as to render her condition intolerable.

3. The court did not err in giving to the mother the care and custody of her daughter, who, at the time of the rendition of the decree, was only eight years of age. If the appellant had succeeded in proving the charge of adultery on the part of the appellee, as set up in his amendment to the original complaint, we would not hesitate to reverse the decree of the trial court awarding the care and custody of the child, Helen Grace, to her mother, the appellee. But, since we have concluded that the appellant has failed to prove that the appellee is an adulteress, it occurs to us that the decree of the trial court was correct- in awarding- the custody of the child to its mother. The appellant argues that this should not have -been done, .for the reason that the chancery court of Drew County, in a former decree granting the appellee a divorce from the appellant, had awarded the custody of their child to the appellant, citing the cases of Wetherston v. Taylor, 124 Ark. 574, 187 S. W. 450; Nelson v. Nelson, 146 Ark. 362, 225 S. W. 619; Jackson v. Jackson, 151 Ark. 9, 235 S. W. 47. These cases hold that where, in a decree of divorce, the custody of the (child is awarded to one of its parents, such decree is final, unless there has been in the meantime a change of circumstances justifying the court in giving the award to the other parent. But those cases have no application to the facts of this record, for the reason that there has been a change in the circumstances justifying the decree of the trial court in this action in awarding the custody of the child to its mother. Since the former decree of the chancery court the appellant and the appellee have remarried. That, of itself, wrought an entire change in the status of the appellant and appellee toward each other and the circumstances that existed at the time the former decree was rendered and at the time the decree was rendered from which this appeal comes. The remarriage of the parties after the first decree had the effect of establishing the status of the parties as husband and wife and restoring their relation as. such to the child, the same as if there had been no former divorce. The relation of the child to its parents after the second marriage was precisely the same as if the child had been born after the second marriage. The child was the offspring' of the first marriage. When the parents were divorced by a decree of the Drew Chancery Court, the custody of the child was changed from their joint custody to the custody of the father, and when the parents were remarried the joint custody of their child necessarily was re-established. See Acts of 1921, p. 317, Castle’s 'Supplement to C. & M. Digest, § 4980 (a). Then, when the appellant sought by this action a divorce from the appellee, he thereby necessarily put in issue the matter of the custody of the child. The appellant recognized that the care and custody of the child was in issue, because he set up in his complaint that the appellee was “an immoral character, and an unfit person to have the custody of their said minor child, and that she is unable to support, maintain and educate said minor,” and prayed that he be granted “the care and custody of their said minor child.”

In our very latest case changing the custody of a child, which had been fixed by former decree of divorce in one of its parents, to the other parent, we cited Weatherton v. Taylor, supra, which case cited and quoted 9 R. C. L., p. 476, concluding the quotation as follows: “ A decree fixing the custody of a child is, however, final on the conditions then existing, and should not be changed after-wards, unless on altered conditions since the decree, or on material facts existing at the time of the decree but unknown to the court, and then only for the welfare of the child.” Hamilton v. Anderson, 176 Ark. 76, 2 S. W. (2d.) 673.

Section 3508, C. & M. Digest, provides: “When a decree shall be entered, the court shall make such order touching the alimony of the wife and care of the children, if there be any, as, from the circumstances of the parties and the nature of the case, shall 'be reasonable.”

In Hamilton v. Anderson, supra, we held: “The custody of a child or children is not awarded for the purpose of gratifying the feelings of either parent, or with an idea of punishing or rewarding either, hut, ■under the statute as well as from considerations of equity, for the best interests of the child or children, and keeping his or their best interests primarily in view. ’ ’ Other cases of our court announcing this doctrine are cited in the opinion in that case. .Such is the policy of our law as recognized, not only by the decisions of our Supreme Court, 'but now also by statute. See Acts of 1921, p. 317, § 3.

We will not incumber the record by setting out and discussing the facts, but simply announce our conclusion to be that the trial court correctly appraised the evidence in this record when it found that the appellee was a fit and proper person to have the custody of her daughter, who, at the time of the rendition of the decree, as we have stated, was eight years of age; and the court ruled correctly in rendering a decree awarding such custody to the appellee. The conditions that existed at the time the decree was rendered unquestionably proved that the mother was the proper one to have the care and custody of this little girl. The conduct of the appellee showed that she loved her ’child as only a mother can love; the proof shows that the mother and child will have a good home, with far better environment for the daughter than she had at the time of the rendition of the decree. The mother testified that she was in good health and physically able to care for the child; that she was going to live with her father and mother. Here the child would have better home surroundings than she had under the former decree, when the appellant was awarded custody of the child.

4. The trial court found that the prenuptial contract made and entered into by and between the plaintiff and defendant and introduced as evidence in the cause was executed on the Sabbath, and had never been ratified since its execution, and that same was therefore void. The appellant contends that in so finding’ and holding the court erred.

The antenuptial contract entered into between the appellant and appellee was executed on Sunday, January 23, 1927. It set forth in substance that the parties had been previously ma.rried and divorced, and that the custody of their daughter, Grace Oliphant, by the decree of the court, had been awarded to the appellant; that it was the desire of the parties to reunite in marriage in order that the child might have the love and personal care of both parents; that each had certain personal property, and were desirous, in contemplation of their remarriage, to settle their property rights; that, in consideration of $1 and mutual advantages of the marital relation to themselves and to their daughter, they agreed that the appellant would bear the family expenses, and, if the appellee should die first, the appellant would not claim any curtesy in her property, real or personal, which she then had or might acquire; and they further agreed that appellee, in lieu of her dower and homestead, would accept the above considerations, and would not claim, either before or after appellant’s death, any dower or homestead in the property thereafter acquired, but that same, in case of his death, should belong to his estate.

The appellant testified with reference to this contract that he and the appellee were married on the day the contract was executed. Appellant didn’t know that the appellee had no property — never gave it a thought. The reason he had appellee sign the contract was that he was trying to establish confidence in her, and, if she acted as she had before, he wanted to keep her from getting his property. He wanted her to come back and raise his child, and told her that, if she would be the right kind of a wife, he would destroy the papers. Appellant gave appellee a copy of the contract. The appellee told the appellant that she didn’t have a copy, but appellant was convinced that she had a copy.

The appellee testified concerning this contract that she had been in Camden a week before the contract was executed — she went there for the purpose of getting married. She was in appellant’s cafe on January 23, and appellant said to her, “I am ready for us to go to For-dyce and be married.” They left for Fordyce about 1:30, and, when they got about three miles from Fordyce, appellant stopped the car and said* to appellee, “You must sign this paper, or I won’t marry you,” and appel-lee replied, “I don’t want your property — it is you and the baby I want.” Appellee wanted the baby, and she signed both of the contracts, and gave them back to the appellant, and he took both of them and kept them, and knew that she didn’t have any property. The contract was executed on Sunday. Appellant suggested to the appellee that she could not have her baby unless she signed the contract. The consideration for signing of the contract was that appellant would marry appellee and she would- thereby get possession of her little child. The marriage was performed by a Methodist minister.

Learned counsel' for the appellant contend that, although the contract was executed on Sunday, it was ratified by the conduct of the parties to the contract in marrying and in continuing their marital relations until they separated some months later. The contention o,f counsel as to the ratification of the contract is sound, and, if the contract be otherwise valid, then the court erred in not enforcing same. Counsel claim that the contract should be held binding upon the parties as to the disposition of the property under the authority of Comstock v. Comstock, 146 Ark. 266, 225 S. W. 621. In that case, among other things, we said: “Marriage was a sufficient consideration for the antenuptial contract. Where such contracts are freely entered into and are not unjust or inequitable, and there is no fraud, they should be liberally construed to effectuate the intention of the parties, and should be looked upon with favor and enforced accordingly.” The facts in that case clearly differentiate it from the case at bar, but, under the doctrine of that case, this contract cannot be enforced for the reason that, on its face, it shows that the principal consideration of the contract was that the appellant and appellee should reunite in marriage in order that their child should have the love and personal care of both parents. A further consideration, as stated, was the “mutual advantages of the marital relation to each of the parties hereto as well as the advantages of the said union to our said daughter.” These considerations failed when the parties to the contract were divorced; and the contract was breached by appellant when he so conducted himself toward appellee as to entitle her to divorce. See 1 Bishop on the Law of Married Women, § 426. Such considerations are legal, and will uphold an antenuptial contract where entered into in good faith, that is, where the parties at the time of marriage intend to live together until they are separated by death. But an antenuptial agreement in which the parties, or either of them, at the time of entering into such agreement and at the time of their marriage, intend such disposition of the property as is agreed upon only in case there should he a divorce, is void and unenforceable, because such contract is against public policy. See 13 C. J., § 406; 19 C. J., § 585. Ante-nuptial contracts, to be valid, must be made in contemplation of the marriage relation subsisting until the parties are separated by death. See Peck, Domestic Relations, § 43. If such an agreement is made in contemplation, at the time of its execution, that the parties, or either of them, expect to be divorced, then such an agreement is void ab initio. According to the appellant’s own testimony, he entered into the antenuptial contract with the appellee because he “was trying to build up a confidence in her.” He wished “to deprive her of any of his estate because he didn’t think, if she acted as she had before, that she would be entitled to it. ’ ’ At the time he entered into the contract he “didn’t believe she woul'd act like she did before,” as strong as he believed it at the time he gave his testimony. “He wanted the appellee to come back and live with him and raise their child, and told her that if she would be the right kind of a wife he would destroy the antenuptial contract. ’ ’

The antenuptial contract, as interpreted by the appellant himself, was absolutely void, because such a contract would be unjust, inequitable, unconscionable, and without mutuality of obligation. He thus placed upon his confiding spouse the brand of his suspicion and held over her head, so to speak, the antenuptial contract as a club to enforce her good behavior, for he says himself, “I told her if she would be the right kind of a wife I would destroy these papers” (meaning the antenuptial agreement). But there is nothing in the contract, as he interpreted it, that also binds him “to be good” and to “destroy the papers” —the contract — in case he so conducted himself as to render her condition intolerable. The contract, construed as appellant himself says he intended it, was a fraud on appellee’s statutory rights. Section 3511, 0. & M. Digest. Under such a contract it was within his power, by his own wrongdoing, to deprive his wife of all her statutory rights of property. Such an unfair, unreasonable and unconscionable contract no court will enforce. 1 Bishop, Married Women, §§ 424, 426. We conclude therefore that the trial court ruled correctly in declaring the contract void, although an erroneous, reason was assigned for the ruling.

5. It follows, since the decree was in favor of the appellee, that the trial court did not err in awarding to the appellee one-third of her husband’s personal property absolutely and one-third of his real estate as designated in the decree. Section 3511, C. & M. Digest. But the court erred in rendering a decree for alimony in the sum of $100 per month for seven months. The trial court evidently entered its decree for this sum on the theory that the appellant had obtained this sum from the appellee during the marriage, and in consideration or by reason thereof. But such is not the fact, because at the time the appellee let the appellant have the sum of $700 they were not married.

A majority of the court has concluded that the sum of $50 per month allowed for the support, maintenance and education of Helen Grace Olipbant, their child, while liberal, is not extravagant.

6. There is no merit in appellant’s contention that the court erred in striking from the files, the amendment to the appellant’s complaint, in which he pleaded that the divorce decree of the Drew Chancery Court was still in full force and effect, and that the subsequent marriage of appellant and appellee was therefore void. As authority for this contention, appellant relies upon § 3513, C. & M. Digest, which reads as follows: “The proceedings for annulling a final judgment for a divorce from the bonds of matrimony shall he a joint petition of the parties, verified by both parties in person, filed in the court rendering the judgment, upon which the court may forthwith annul the divorce. ’ ’ A divorce a vinculo matrimonii dissolves the marital bonds absolutely and restores each spouse to all . rights, privileges and immunities of unmagried persons, just as though there had never been a marriage between them. 'The effect of such decree, of course, is to place the parties in a situation where they are free to contract marriage with each other again, or with any one else. The statute has no application in cases where there has been a reunion of formerly divorced parties by a remarriage.- It evidently applies to cases where the parties become reconciled - to each other, and, for this reason, desire to proceed by joint petition under the authority of the above statute to have the former decree of divorce vacated without remarrying. See Chase v. Chase, 191 Mass. 166, 77 N. E. 782; Thomas v. James, 69 Okla. 285, 171 Pac. 854. In these cases the courts construe statutes similar to the statute under review, and hold that such statutes do not prohibit persons who have been divorced from remarrying. In these cases it is held that the law favors settlement of domestic difficulties and reconciliation between husband and wife, and that such reconciliations might be effected without a remarriage, and that statutes of this nature were not enacted to prohibit remarriage of persons who liad been formerly divorced, and tliat such remarriages were not void.

The decree of the trial court -will therefore he reversed and modified in so far as it allows the appellee alimony in the sum of $100 per month for seven months, beginning’ November 1, 1927, and this allowance will be eliminated. In all other respects the decree is correct, and, as modified, it will be affirmed.

Smith, Kirby and Mehaffy, JJ., dissent.


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    Faulkner v. Bank of McCrory.
    Opinion delivered June 18, 1928.

      Walter J. Terry, E. R. Parham and W. R. Morrow, for appellant.

      Roy D. Campbell, for appellee.
   Smith, J.

This appeal is from a judgment of the Woodruff Circuit Court, Central District, and the errors complained of for the reversal of the judgment are such that could only be made to appear by a bill of exceptions.

A motion for a new trial was filed August 25, 1927, and was by the court overruled on that day, and 120 days allowed for the filing of the bill of exceptions. The court adjourned for the term on August 2,6. The bill of exceptions was approved by the trial court on December 27, 1927, which was, of course, more than 120 days after the order of the court had 'been made allowing that time for filing the bill of exceptions. It does not appear when the bill of exceptions was filed with the clerk of the circuit court, but, since the briefs were filed on the appeal to this court, opposing counsel have filed a stipulation which contains the following agreement:

“We hereby specifically agree that no question shall he raised or considered in relation to the time allowed for the filing of motion for a new trial and the court’s order overruling said motion, and the time allowed for the filing of the transcript and the hill of exceptions, and the court’s order thereon. We further agree that the inadvertent date of the judgment misled the appellant; otherwise said bill of exceptions would have been filed within the time allowed by the court, and the same shall be treated as having been so filed. Both parties hereto do not desire to file additional briefs, and the cause may be submitted.”

It will be observed that the parties have not stipulated that the bill of exceptions was filed within the time allowed for that purpose, but that it should be treated as having been so filed.

It has been held in numerous cases by this court that the bill of exceptions must be filed within the time allowed by the trial court for filing it, and that it will not be considered by this court unless so filed. This' rule is based upon the statute (§ 1318, C. & M. Digest), which provides that “the party objecting to the decision (of the court made during the progress of the trial) must except at the time the decision is made, and time may be given-to reduce the exception to writing, but not beyond the succeeding term; * * *” and this statute has always been construed as requiring that the bill of exceptions be filed within the time limited for that purpose.

It is not permissible for the parties litigant to dispense with this statute. Yol. 4 'Standard Encyclopedia of Procedure, page 368.

In the case of Davis v. Union Trust Co., 154 Ind. 46, 49 N. E. 817, a longhand manuscript of the evidence heard at the trial of the cause was not filed in the office of the clerk of the trial court until after it had been incorporated in the bill of exceptions, and the parties undertook by stipulation to waive this requirement of the statute. In holding' that this stipulation was ineffective to confer jurisdiction, the Supreme Court of Indiana said:

“As a general rule, this tribunal derives its powers o,r rights to consider and determine a case according to methods prescribed by the law, and not by virtue or reason of any agreement of the parties to the appeal. All cases in this court are tried by the record. It furnishes the only evidence to sustain the alleged errors of the trial court of which a party complains. * * * A bill of exceptions containing the evidence in a case, when filed with the clerk of the lower court, unquestionably is a part of the record of that court. If a certified transcript thereof, under the circumstances in this case, can be dispensed with by the agreement or .stipulation of the parties herein, certainly the entire record below may be made up and brought to this court when incorporated into and made a part of the written agreement of the parties. That this is not authorized by the law no one will controvert. We have no power, under the law, to accept the agreement in question and consider it as serving the purpose for which it is intended. ’ ’

See also Blair v. Curry, 154 Ind. 99, 49 N. E. 908, and 46 N. E. 672; Ryan v. State, 6 Ind. App. 196, 33 N. E. 222; John Church Co. v. Spurrier, 29 Ind. App. 93, 50 N. E. 93.

As there is no bill of exceptions which we may consider, and no error is assigned which could otherwise be considered, the judgment of the court below must be affirmed, and it is so ordered.


text:
    Holcomb & Hoke Manufacturing Company v. Fish.
    Opinion delivered June 18, 1928.

      A. R. Cooper, for appellant.

      Patrick Henry, for appellee.
   Smith, J.

Appellant is a corporation engaged in the manufacture and sale of machines used in popping corn and roasting peanuts, and sold appellee two machines, one being a popcorn machine, for the sum of $337.50, the other a combination machine intended to pop com and roast peanuts, for the price of $895. This suit was brought bv appellant to collect the balance alleged to be due on each of the machines.

Appellee did not question the balance due on the popcorn machine, but as to the other machine it was alleged that there had been a breach of the implied warranty under which it was sold that it was adapted to its intended nse. It was also alleged that, in an attempt to repair and adjust and nse the machine, a large expense had been incurred and much electricity wasted, as the machine was an electrical one. It was also alleged that the machine was worth $450 less than its purchase price or the sum it would have been worth had it been in good condition.

Notwithstanding the fact that the plaintiff offered testimony to the effect that both machines were tested at the factory before they were shipped and were found to he in perfect condition, the jury was fully warranted, under the testimony in the case, in finding that the combination machine was in >a defective condition. The testimony was conflicting as to the extent of these defects, but that on the part of the defendant was to the effect that repeated attempts were made to repair and adjust the machine, but with only partial success, and that expenses amounting to about $75 were incurred in these attempts, including wasted electricity, and thalt ithey were never able to make it roast peanuts, although, after two electricians had worked on the machine, it could he used for popping corn, and that the machine was worth $450' less than its purchase price.

The .jury returned a verdict for appellant for the balance due upon each of the machines, but found also that the balance due upon the larger machine should be credited with the sum of $450, with interest from April 8, 1925, this being the date of the sale, and judgment was rendered accordingly. From this judgment the plaintiff has appealed and the defendant has cross-appealed.

The only error assigned by appellant (plaintiff below) for the reversal of the judgment is that the court erred in the instructions given on the measure of damages. On this question appellant asked the following instruction:

“6. In arriving at the measure of damages which defendant claims he is entitled to recover by reason of the defects in such'machine, the court tells you he would be entitled to the cost of correcting snoh defects if the machine could be corrected at reasonable expense, or the difference in value between the value of the defective machine and one which was free from defects, and such as was contracted for. ’ ’

The court modified this instruction by adding thereto the following clause:

“and also for the time of his employees, if any, lost in trying to operate and repair the said machine, and the cost of electricity ineffectively used in the operation caused by the defect, if any, and the sums paid out, if any, in an effort to repair same.”

Appellant excepted to this modification, also objected and excepted to the instruction given at the request of the defendant numbered 2, which was to the same effect as the modified 6th instruction set out above.

Under the issues joined in this case we think there was no error in modifying the instruction as indicated. If the machine was defective, and it appeared that these defects might be remedied at a reasonable cost, the purchaser had the right to affirm the sale and make the necessary adjustments, and to recoup the cost thereof when sued for the balance of the purchase money.

In the ease of E. A. Stevens Co. v. Whalen, 95 Ark. 488, 129 S. W. 1081, the purchaser of a pool table, when sued for the balance of the purchase price, sought to rescind the contract for a breach of warranty, after having elected, as the court held, to affirm the sale. It was there said:

“He had no right to keep the property and use it, and at the same time insist on a rescission of the contract. By keeping the property and using it, he elected to pursue the other remedy — that of demanding damages sustained by reason of the defect, which would be the cost of correcting the defect, if it could be corrected at a reasonable expense, or the difference between the value of the defective table and one which was free of defect, such as was contracted for. If the damages found by the jury, by reason of the defective condition of the table, exceeded the amount of the mortgage notes, then the plaintiff could not recover judgment for possession of the property” (Citing authorities).

At § 1826 of Mechem on Sales, vol. 2, page 1457, it is said:

“Expenses incurred in preparing for -what the seller is to do but fails to perform, or in doing that which the seller ought to have done, or in undoing thait which he did improperly, fall clearly within the doctrines of the preceding sections, and may be included within the damages to he recovered. For like reasons money expended in a reasonable endeavor to avoid or diminish the injury resulting from the breach of warranty, as, for example, to cure an animal sold as sound, but found to be diseased, may be recovered. Expenses, however, in an unreasonable, hopeless or useless endeavor, or losses caused by continuous use after the defects were patent and evidently incurable, could not be recovered. ’ ’

The testimony on the part of appellee is to the effect that, while the defects were not entirely remediable, they were partly so, and that, without the work done on the machine, it would neither pop corn nor roast peanuts, but, as a result of this work, the machine could be used to pop corn, although peanuts could not be roasted, and the machine was given a value as the result of the labor expended upon it which it would not otherwise have had.

This right to repair is upon the theory that, by making the repairs, the damages are not only minimized but the cost of the repairs which would place the machine in the condition it was warranted to be would properly measure the damages which the purchaser would be entitled to when sued for the balance of the purchase price. The purchaser would not be required to attempt the repair, and would n.ot be permitted to do so, at the expense of the seller, unless it reasonably appeared, in the exercise of an honest judgment, that the repairs would remedy the defect and at a reasonable cost. If, after such an attempt had been made without success, the machine did not conform to the warranty, the purchaser might, when sued for the balance of the purchase money, recoup, as damages for the breach of the warranty, the difference between the value of the machine as repaired and its sale price.

In the ease of Western Cabinet, etc., Co. v. Davis, 121 Ark. 370, 181 S. W. 273, a purchaser, who was sued for the balance of purchase money due upon a soda fountain, defended on the ground that there was a breach of the warranty of the fitness of the fountain, and in an attempt to repair the fountain certain expenses had been incurred. The trial court gave the following instruction, which was approved by this court:

“1. Plaintiff sues the defendant on a balance on a contract introduced in evidence. The execution of the contract is admitted, and also that there is a balance of $2,311.26 not paid of the amount agreed to be paid under the contract. Defendant, by way of counterclaim, asks damages against plaintiff for alleged defects in the soda fountain (one of the articles sold under the contract), and also damages for expenses in testing the fountain as a suitable article for the purpose for which it was purchased. The burden of proof is on the defendant to sustain his counterclaim by a preponderance of the evidence. ’ ’

The opinion in the case of Parrett Tractor Co. v. Brownfiel, 149 Ark. 566, 233 S. W. 706, supports the views here announced. In that case a tractor had been sold for $1,675, and $1,000 of the purchase price paid. In an attempt to repair and adjust the tractor so that it would do the work for which it was intended, the purchaser spent $600, and, when sued for the balance of the purchase price, $675, and the interest thereon, he defended upon the ground that there had been a breach of the warranty, and that he had incurred expense in the repair of the tractor. After announcing the options which a purchaser has where there is a breach of warranty the court said: ‘The proof showed that the defects in the machine could be corrected by reasonable expenditure, and the correct measure of damages was the expense of curing defects.” (Citing Western Cabinet Co. v. Davis, supra.

Such is the measure of damages where the defect is remedied; hut if, notwithstanding the repair, the defect is not completely remedied so that the article as repaired conforms to the warranty under which it was sold, the purchaser may recoup the difference between the value of the article as repaired and its contract price, together with the cost of the repair. This was what was done in the Parrett case, supra, as appears from the statement of facts in that case, as the jury found the amount of damages for the breach of the warranty at an amount equaling the balance of the purchase money, and interest thereon, which amount substantially exceeded the cost of the repairs, and that judgment was affirmed.

The case of Edwards Mfg. Co. v. Stoops, 54 Ind. App. 361, 102 N. E. 980, announces the principles which are applicable here. It was there decided (to quote a syllabus) that:

“Where metal shingles were warranted fit for use on a certain building, which warranty failed, and effort was made to repair the roof and thus make use of the shingles, but it was found necessary to remove them and supply another roof, the measure of damages was the cost of the metal shingle roof, including the cost of the shingles and the expense of putting them on, less their value after removal from the roof, to which should be added any reasonable expense incurred in attempting to repair and improve the roof so as to make it conform to the warranty, since it was the buyer’s duty to minimize the damage as far as possible, and, where tilings are sold for a particular use, damages for breach of warranty are not confined to the difference of the value of the goods as they were and as they would have been if as warranted, but include all such consequential damages as are the direct, immediate and probable result of the breach. ’ ’

As to the cross-appeal but little need be said. Aippellee (the defendant below) alleged his damages on account of the defect in the machine to be $450 and Ms expense to be $75, and there was no reply to his cross-complaint. But he did not move for a judgment for the want of an answer in the court below, and he cannot now be heard to say that no issue was joined in that behalf.

In the case of Winters v. Fain, 47 Ark. 493, 1 S. W. 711, it was said:

“It is further objected that the decree is wrong because Preddy’s answer contained a set-off and counterclaim, which stood practically confessed, as no reply was filed. On the authority of Gibbs v. Dickson, 33 Ark. 107, we decline to allow Preddy any advantage from this slip in pleading. In that case it is said the correct practice is to move the court for judgment upon the undemed plea; and that if the defendant fails to move, and goes to trial as if the issue was made up, he loses his advantage.”

The case of Young v. Gaut, 69 Ark. 114, 61 S. W. 372, is to the same effect.

■ Appellee points out that the jury allowed him damages in the sum of $450, with interest from the date of the sale, thus showing that no credit was allowed him for repairs, and that he was allowed only for the difference between the actual value of the macMne and its sale price, as the testimony on Ms behalf was to the effect that this difference amounted to $450. We cannot determine the mental processes by which the jury arrived at its verdict or what sum was allowed on one account or the other. WMle the testimony supports the verdict returned, it cannot be said that the undisputed evidence would require a larger verdict, and we must therefore affirm the judgment on the cross-appeal, although the testimony would have supported a finding foir more damages. Fulbright v. Phipps, 176 Ark. 356, 3 S. W. (2d.) 49.

As no error appears, the judgment must be affirmed, and it is so ordered.


text:
    Fidelity & Deposit Company of Maryland v. Cunningham.
    Opinion delivered June 18, 1928.

      John A. Luhn, Chas. H. McComas, W. E. Beloate and Horace Chamberlin, for appellant.

      Cunningham ■& Cunningham, G. M. Gibson and H. L. Ponder, for appellee.
   Smith, J.

Neil Cole was duly elected sheriff and collector of Lawrence County, and assumed his duties as such on January 1, 1923, and he was re-elected for a second term which began January 1, 1925. He gave the usual bond as collector, and practically all of the appellees' in this case were sureties on the bond executed for each of his terms. He gave no indemnifying bond to the sureties on his first bond as collector, but the sureties on his second bond required him to give them an indemnifying bond in the sum of $100,000 at the beginning of his second term. 'This bond was executed by Cole and the appellant, the Fidelity & Deposit Company of Maryland, hereinafter referred to as the company, and at the conclusion of his second term Cole was found to be short ih his accounts as collector in a large amount, which was paid by the sureties on his official bond, who, after paying the shortage, brought this Suit against Cole and the company on the bond which had been executed to them.

The bond executed by ’Cole and the company, and herein sued on, provided that “* * * the said principal (Cole) for himself, * * * and the said company, for itself, * * * jointly and severally do hereby covenant, promise and agree to indemnify and keep indemnified the said assured (the sureties on the official bond of Oole) to the extent of $100,000 collectively, and no further, during the period beginning January 1, 1926, and ending December 31, 1926, from and against any and all loss which they might be put to, incur or suffer, by reason of any personal act or acts of larceny or embezzlement committed by the said principal in the discharge of his duties in said position; the liability of the said company hereunder being expressly limited to loss occasioned said assured by reason of any personal act or acts of larceny or embezzlement committed by the said principal in the discharge of his duties in said position, notwithstanding any provision of the bond or bonds executed by the assured, by which their liability may be enlarged beyond the terms of this bond.”

A petition and bond was filed by the company, in which its co-defendant, Oole, did not join, for the removal of the cause to the Federal court, and the cause was removed thereto. Upon the convening of that court the cause was remanded to the Lawrence Circuit Court, in which it originated. Upon the remand of the cause the case proceeded to trial, and at the conclusion of the plaintiffs’ case the surety company demanded that Cole put on testimony tending to sustain his defense, but he failed to do so, whereupon the company renewed its motion to remove the cause to the Federal court, upon the ground that, as Cole made no defense, the plaintiffs were entitled to a judgment against him, and the cause of action against the surety company had become a separable one.

This does not follow. Plaintiffs had sued Cole and the surety company upon an identical cause of action, and the same judgment was prayed against each of them, and the right to recover against the defendants, and each of them, and the extent of that right, remained a question for the jury.

No error was committed in refusing to again transfer the canse to the Federal court. It is true the company is a foreign corporation, but Cole is a citizen of the State, and, while the appellees might have sued the company without suing Cole also, they did not elect so to do. They had the right to sue Cole, and have done so, and it was entirely proper to make him a co-defendant in a suit against the. company.

A motion was made in apt time to transfer the cause to the chancery court, and an exception was saved when that motion was overruled.

At the trial from which this appeal comes a very large record — one of about nine hundred pages — was made, and the various accounts for which the revenues were collected were inquired into, and there was offered in evidence the record of the county court which cast up the collector’s accounts. This settlement was offered in evidence over the company’s objection. Cole made a partial settlement of his collections in accordance with this settlement, bu.t defaulted in paying the balance shown to be due 'by this settlement.

We have concluded that this cause should have been transferred to the chancery court, and that it was error to refuse to make that order, and this conclusion renders it unnecessary to discuss many of the exceptions saved at the trial to various rulings of the court.

It will be remembered that the bond sued on is one of. restricted liability. It is wholly unlike the bond which the plaintiffs executed as sureties on the official bond of Cole as collector. That bond required the sureties to pay and make good any shortage occurring in the settlement of Cole’s accounts as collector, whereas the bond executed by the surety company herein sued on obligated the surety company to pay only such sums as plaintiffs were required to pay as the result of the personal dishonesty of Cole through larceny or embezzlement.

A similar bond was construed in the' case of United States Fidelity & Guaranty C Go. v. Bank of Batesville, 87 Ark. 348, 112 S. W. 957, where it was held that the liability of such a bond is expressly restricted to such acts of fraud or dishonesty as amount to larceny or embezzlement.

The plaintiffs offered in evidence, over the company’s objection, a copy of the settlement, which was about seventeen or eighteen feet in length and about eight inches in width, and contained a statement of the many accounts for which Cole had made collections. This settlement included the various accounts for which State and county taxes had been collected, and the taxes collected for the towns in the county, and the numerous school and improvement districts.

It was not sufficient here for the plaintiffs to show that Cole had collected funds for which he had not accounted, but it was essential that the testimony show, and that the jury find therefrom, the amounts of money which Cole had stolen or embezzled. It may be said that the testimony fully supported the finding made by the jury that Cole had misappropriated the public revenues, but the extent of this peculation is a question of more difficulty and one which can be determined only after a careful inspection and audit of the many complicated accounts.

It may be said, in this connection, that it is unnecessary to determine whether Cole, in misappropriating the tax collections, was guilty of larceny or embezzlement, as the surety company is liable in the one case as well as in the other.

The complicated nature of the accounts involved in this litigation is shown by the testimony of R. A. Cul-pepper, an expert accountant, who made an audit of Cole’s accounts and who testified in regard thereto on behalf of the company. According to Culpepper’s testimony, Cole’s shortage was less than that shown by the settlement made up by the clerk of The county court and the Auditor of State, and for which amount in full a judgment was rendered against Cole and the surety company.

According to Culpepper’s testimony, Cole had been overcharged in numerous respects. These charges covered lands redeemed, the county taxes collected, the county road taxes, taxes collected for road improvement districts numbered 4, 5, 6, 7 and 8, and the Western Lawrence County Road Improvement District and the Hoxie-Running Water Road Improvement District. According to Culpepper, Cole had been overcharged in his settlement with the McDonald Drainage District, the Black Spice Drainage District, the Lower Running Water Drainage District, the Rabbit Roust Drainage District, the Flat Creek-War Pond Drainage District, the Caney Creek Drainage District, the Greene and Lawrence Drainage District, the Lower Swan Pond Drainage District, the Running Water Drainage District, and that he was overcharged on account of taxes he collected for the towns of Black Rock, Imboden and Minturn.

Culpepper further testified that Cole had been overcharged on the valuations on which he had collected taxes from various taxpayers. -As illustrative of other items of this class, he was charged, according to Cul-pepper, with having collected taxes from one taxpayer on the basis of a two-thousand dollar assessed valuation, whereas the correct valuation was only two hundred dollars.

The jury returned a verdict for the plaintiffs for the exact amount for which plaintiffs prayed judgment, but it will not do to say that the jury found all these questions of accounting against the company, and that the settlement made up by the clerk of the county court was inerrant. The verdict of the jury indicates, rather, that, in its bewilderment in the maze of figures submitted, it resolved all doubts against the company, and found that the settlement was exactly correct, which we think Culpepper’s testimony shows to be demonstrably wrong, in several respects at least.

We think the case of Hugus v. Sanders, 164 Ark. 385, 261 S. W. 899, announces the rule which should have been followed here. It was there said that “causes are only transferred from courts of law to courts of equity where the issues are exclusively within the jurisdiction of the latter, or, if concurrent, where the law court cannot afford complete and adequate relief.”

The jurisdiction of the circuit court is concurrent with that of the chancery court in a suit upon an intricate account, but we think the nature of the account here sued upon is such that the use of the facilities which a court of equity affords was necessary to a finding approximately accurate as to the extent of Cole’s shortage.

The case of State v. Churchill, 48 Ark. 426, 3 S. W. 352, 880, was a suit upon the bond of the State Treasurer, who was charged with being short in his accounts, and it was there insisted that a suit for the breach of ail official bond was cognizable only in a court of law, but in holding against that contention it was there said (to quote a syllabus): “In all cases where mutuality of accounts is claimed as tire basis of equitjr jurisdiction, mutuality is essential only in this,- that it indicates intricacy and complication. And it would seem that the difficulty of properly adjusting accounts is that which confers the jurisdiction of accounts upon equity courts, without much regard to their singleness or mutuality.”

Having reached the conclusion that the judgment of the court below should be reversed, and that the cause should be' transferred to equity upon its remand, we proceed to consider such questions as counsel have discussed which have not already been decided. We have announced our conclusion to be that no error was committed in refusing to again transfer the cause to the Federal court, and that it is immaterial whether, in failing to account for money collected by himself, Cole was guilty of larceny or embezzlement, as the company is liable in either case.

It is insisted that the plaintiffs have no right to maintain this action, for the reason that they -have not shown that they- have paid the shortage or the amount thereof paid by each of them. The plaintiffs have shown, however, that when the Auditor's distress warrant issued against them, they executed a joint note, with the proceeds of which they paid the amount of the shortage, and this showing is sufficient to entitle plaintiffs to maintain this suit. The company’s 'bond was executed for the benefit of the plaintiffs collectively, and it is no concern of the company as to the manner in which the note will be paid or the proportion which each maker will be required to pay.

It is insisted that it was error to admit in evidence the record of the settlement of Cole’s account as made up by the county clerk; but there was no error in this, as it was essential for plaintiffs to show that there was a shortage. As against the company, this judgment evidences only the fact that it was rendered, and does not determine the amount of the shortage or that Cole had embezzled the money which he failed to pay over. Biederman v. Parker, 105 Ark. 86, 150 S. W. 397.

It is earnestly insisted that the testimony was insufficient to show that Cole had embezzled any money, and that it was error to admit in evidence proof of his admission that he had in fact embezzled public funds, but this, admission was made in the presence of the surety company’s representative and in response to the questions of the representative as to what he bad done with the money. It was shown also that Cole had stated, while still in.possession of his office, that he had used portions of his collections for his own purposes, but in amounts not exceeding a hundred dollars at a time.

It was competent in the trial o.f this cause to prove this admission, and the proof thereof, in connection with the other facts herein summarized, is sufficient to sustain a finding that Cole was an embezzler. Russell v. State, 112 Ark. 282, 166 S. W. 540.

It is insisted that the testimony showing that Cole took and used portions of his collections, even in amounts as large as a hundred dollars at a time, for his personal use, did not show that he was an embezzler, as he was entitled, by way of commissions, to a larger amount than he was shown to have used. If Cole had used only such amounts as were due him as commissions upon making' a final and complete settlement, this would not constitute embezzlement, hut his personal use of any portions of these funds is a proper circumstance to consider in determining whether he -was in fact an embezzler.

In regard to the commissions due Cole as collector, it is insisted that the company should not he charged with certain commissions which would have been due Cole upon -making a final settlement and paying over the public funds, for the reason that his sureties were personally liable for the payment thereof, and should, by payment, have saved the loss of the commissions. The plaintiff sureties testified, however, that they were not advised of the shortage until the distress’ warrant had been issued, and they were therefore unable to make settlement, as the 'bond which they had executed required them to do, until after the right to make the payment and save the commissions had expired. As plaintiffs paid this money, they are entitled to be reimbursed, provided, of course, that Cole embezzled it. -Commissions were allowed on all sums paid over by -Cole before the issuance of the distress warrant.

The company claims that Cole was in fact short in certain of his accounts for taxes collected for the preceding year (1924) and that he used taxes collected for the year 192-5 in making good his shortage, and that to the extent that this was done there was no embezzlement, as there was no conversion of this money to his own use or intent to deprive the owner thereof. We do not agree with counsel in this contention. Cole had no right to use the taxes collected in 1925 for any other purpose than to make settlement of his collection for that year, -and if he diverted these funds to any other purpose, this was an act of embezzlement, and none the less so because the funds embezzled were pai-d to the credit of a fund with which he was in default, as by the u-se of this money he was discharging an existing liability against himself, and that action was a conversion of the funds. A prior embezzlement,- if true, did not excuse a subsequent embezzlement. It was his duty in each instance to pay over, and this alleged payment of a 1924 shortage out of the revenues of 19'25 amounted to nothing more than a restitution of embezzled funds, and the act of restitution was made by an unauthorized use of tax money for which he and the plaintiffs as sureties on his official bond were liable. In other words, Cole had no right to commit embezzlement, even though he intended to use the funds embezzled to make restitution for a prior embezzlement.

The bond sued upon provided “that the company, upon the execution of this bond, shall not be liable under any bond or bonds previously issued to the assured, or either of them, on behalf of said principal, the acceptance of this bond being a release to the company from any possible liability under such prior bond or bonds, and upon the issuance of any bond subsequent hereto upon said principal in favor of said assured, or either of them, liability hereunder shall cease and determine, and the acceptance thereof shall be a release to the company from any possible liability under this bond.”

It is insisted that, if any portion of the 1925 revenues were used by Cole to make good any shortage in his 1924 collections, the'provision above quoted will be violated, because the surety company will be required to pay a shortage existing in 1924, whereas it is provided that, by talcing the bond sued on, any liability on the previous bond is discharg-ed.

The purpose 'of this suit is not to recover for any shortage in Cole’s accounts through the collections of the 1924 revenues. Plaintiffs seek to recover only such sums as were stolen or embezzled by Cole from his 1925 collections, and we hold that it is an embezzlement of these revenues to use them for any purpose except to pay them over, and that it is none the less so because portions of the 1925 revenues were used to discharge a shortage already existing in the 1924 collections.

Another provision of the bond is that if the assured, or any of them, were aware at the time of its execution of an existing embezzlement or larceny of revenues, that knowledge should operate to discharge the surety company from any liability on the bond; but it is a question of fact whether the assured, or any of them, had this information. Those who testified 'denied having this information. But this provision of the bond has no application here. If the assured were not aware of the 1924 shortage when the bond covering the 1925 revenues was executed, they had the right to require the surety company to indemnify them for all money stolen or embezzled by Cole from the 1925 revenues, and it was an embezzlement of the 1925 revenues to pay them out for any purpose except to make settlement for that collection.

Other questions are discussed by counsel, but, in view of the fact that a new trial must be had in the chancery court, we deem it unnecessary to discuss them.

. No appeal was prosecuted by Cole, but the appeal of the surety company has brought the entire proceeding before us for review, and the reversal of the judgment remands the entire matter for a new trial when the cause has been transferred to the chancery court, including the liability of Cole as well as that of the surety company.

For the error in refusing to transfer the cause to the chancery court the judgment is reversed, and the cause remanded with directions to transfer.

McHaney, J., dissents.


author: Humphreys, J.

text:
    Norman v. Blair.
    Opinion delivered June 18, 1928.

      George M. Bennett, for appellant.

      Evans & Evans, for appellee.
   Humphreys, J.

Appellants brought this suit in the chancery court of Logan County, Southern District, on behalf of themselves and all other taxpayers in said county, against appellees, consisting of the county judge, clerk, courthouse commissioners and. the contractors, to enjoin the construction of a courthouse at Boone-ville, the county seat of the Southern District, pursuant to the direction of the quorum court, the orders of the county court and the provisions of -the contract entered into between the courthouse commissioners and the county .judge on the one part, and the contractors on the other, and to prevent the issuance of county warrants to pay for same. The injunction was sought upon two grounds, the first -being that the 'contract was let for an excessive amount on account of being payable in scrip or warrants, in installments of equal amounts, covering a period of fifteen years, instead of being let for cash, in violation of § 1, article 16, of the Constitution of the .State of Arkansas, which is as follows:

“Neither the State nor any city, county, town or other municipality in this State shall ever loan its credit for any purpose whatever; nor shall any county, city, town or municipality ever issue any interest-bearing evidences of indebtedness (a), except such bonds as may be authorized by law to provide for and secure the payment of the present existing indebtedness, and the State shall never issue any interest-bearing treasury warrants or scrip.”

And the second ground being that, after paying the necessary expenses out of the revenues derived from all sources, there will not be sufficient revenue left each year to pay the installments to become due under the contract for the construction of the courthouse.

(1). This court ruled in the case of Watkins v. Stough, 103 Ark. 468, 147 S. W. 443, that:

“Where a contract for constructing county bridges or other work is let to the lowest -bidder, as required by law, the contract price is the measure of the contractor’s rights, and not the customary cash market price for materials furnished or work done; and, unless fraud or ¡collusion to increase the price by reason of payment in depreciated warrants be shown, the contractor is entitled to recover the contract price.”

In approving and applying the doctrine of the Watkins case to a contract for the construction of a courthouse, this court stated in the case of Stone v. Mayo, 135 Ark. 127, 204 S. W. 751:

“That case controls this. Here was a straight contract for the construction of the courthouse for $91,806.90. There was no. evidence of any collusion among the bidders to perpetrate a fraud on the court, to have the contract let at a higher price because of the depreciated value of the county warrants, nor is there any testimony to warrant the conclusion that the county court entered into collusion with the contractor to give him the contract at an increased price because the value of the county scrip was less than par. The fact that the bidders made inquiry, and ascertained that the value of the county warrants was less than par, and made their bid with such knowledge, does not establish that, there was a collusion between them to stifle the bidding and to defraud the court by securing a contract at a higher price on account of the depreciated value of the county warrants. There is no allegation that the county court, or its commissioner, or the bidder, in securing the contract, were guilty of any fraud. The complaint sets out the hid, which, strictly construed, on its face calls for the payment of $91,000 in county warrants at ‘70-125 base,’ which would necessitate the issuance of county warrants to the amount of about $118,000. If the contract had been expressed in these terms, there would be grounds for saying that, upon its face, it was a fraud upon the court, but, as already stated, the contract calls for the payment of $91,000 in county warrants, without any increase of the contract price on account of the warrants being below par. ’ ’

In the instant case a straight contract was let to the lowest bidder, payable in county warrants in fifteen equal annual installments, for the construction of the courthouse, in accordance with plans and specifications therefor. There is no allegation in the complaint nor evidence of fraud or collusion between the contracting parties that the bid should be increased by adding-carrying or interest charges thereto and including same in the warrants. The contract does not offend against § 1, article 16, of the Constitution, and is constitutional and valid under the rule announced in the Stone and Watkins cases, supra.

(2). The trial court found, from the answer of appellants and the testimony of other witnesses, that, after investigating the income of the county from all sources and the necessary governmental expenses, there will be a margin or surplus left, after paying the necessary expenses of government, if spread over a period of fifteen years, to pay the contract price of $86,273 for the construction of the courthouse. His finding is sustained by the appellee’s answer, which appellant agreed stated the facts, and which, by agreement, was inserted in the bill of exceptions as a true statement of the facts. The weight of the evidence of the county judge and commissioner, when read together, also sustains the finding of the trial court upon this point.

No error appearing, the decree dismissing appellants ’ complaint for want of equity is affirmed; .


text:
    Adams v. Sims.
    Opinion delivered June 18, 1928.

      ...:;-,Mjomsvé^B,a!i:r-o/i% for'appellant.-

      Thweatt, for appellee.^riel.,o ion ¿ooo vov.,...cl ¿e i .em.L
   Humphreys, J.

Separate suits were brought in the chancery court offp^siyigt,..'by P- D. Adamsf,ti^.t©e o.f .(tb-Q 'St. &^o^fe.a--PoAd^%fM#%l9r|liaAitetyr,(Den%al ¡^un¡sThn(l Bessie. B..;Bini-s,-(rt0.fcanc,eli(deeds -executed í’in i&£fefe3í& -5vpf tjrie ..-Q ou.n.t y, land.. Hazen-La(xrue-SlovaÍk- Boad 4e«^®Jereal; e^atj^tfcmfe 33}! ,-qwt®i5i2lr w,©#: (BSiHu£gt ^oM^itim-^h tgjBes^ieiBgiSims fea%a WmíM?#6»?» e^tat^t^^it: .iPítheMf ■ship 2 í?.o^ths:^ng-e0;5. west* eoft^» BhMKisyii&ná'íkí gRÍ,et,Jin.ei.tij|eíioj^ai^Jair^s^in- themgáLyesj and-ifiproa writ which appellees were ‘residing.

It is alleged, in substance, that the lands acquired from the road district by the Madams Sims were tax deeds based upon forfeitures of the lands constituting the respective homesteads of the Messrs. Sims, who never paid the special improvement taxes for the year 1923, and which it was the duty of the Messrs. Sims to pay, and that at the tax sales the districts bought the lands, and that, after the expiration for the time for redemption, conveyed the respective homesteads to the Madams Sims. It was further alleged that title to the J. F. Sims homestead was acquired by the National City Bank of St. Louis, Missouri, and title to the I. T. Sims homestead was acquired by the Liberty Central Trust Company of St. Louis, Missouri, on the 11th day of May, 1925, under mortgage foreclosure sales’ on mortgages which J. F. Sims and wife had executed to said bank and I. T. Sims and wife had executed to the trust company on March 29, 1923, to secure large amounts, which they failed to pay at maturity.

Answers' were filed to the separate suits, in substance, to the effect that each of the Madams Sims bought her respective husband’s homestead from the road districts subsequent to the mortgage foreclosure, with their respective individual funds.

The suits were consolidated for the purpose of trial and heard upon the pleadings and testimony adduced by the respective parties, resulting in a dismissal of each complaint, from which is this appeal.

The facts as revealed by the record are briefly stated by appellants as follows:

‘ ‘ On March 29,1923, J. F. Sims and his wife, Mag'gie Sims, jointly mortgaged their homestead to the National City Bank of St. Louis, Missouri, to secure $12,500 and future advances, and on the. same day I. T. Sims and his wife, Bessie Sims, jointly mortgaged their homestead to the Liberty Central Trust Company of St. Louis, Missouri, to secure a loan of $15,000 and future advances. They defaulted in payment of the indebtedness secured by these mortgages, and on April 9, 1925, a decree was rendered in the Prairie Chancery Court, 'Southern District, awarding to the' National City Bank a judgment against J. F. Sims for $14,264.19, declaring it a lien upon his homestead, and a judgment in favor of the Liberty Central ’Trust Company for $17,552.33 against I. T. Sims, and declared it a lien upon his homestead. The foreclosure suits were consolidated, and the judgments and liens against the Sims and their homesteads were embodied in the same decree. The Sims failed to pay the liens against their respective homesteads, and the court’s commissioner, on July 27, 1925, sold same. D. D. Adams, as agent of the National City Bank, became the purchaser of J. P. Sims’ homestead for $5,000, and, as agent for the Liberty Central Trust Company, he purchased the I. T. Sims homestead for a like sum. Both of said mortgages foreclosed contain the statutory words necessary to create a warranty of title. The homestead of J. P. Sims and Maggie Sims was occupied by them at the time of the giving of said mortgage, and they have continued to reside therein. The homestead of I. T. Sims and Bessie Sims was occupied by them at the time they mortgaged it, and they have since continued to reside therein. Both homesteads were delinquent for 1923 assessments of Road Improvement District No. 5 of Prairie County and Hazen-LaG-rue-Slovak Road Improvement District No. 8 of Prairie County. The districts purchased the homesteads, and in the year 1926, after the time for redemption had expired, conveyed the J. P. Sims homestead to his wife, Maggie Sims, and I. T. Sims’ homestead to his wife, Bessie Sims.”

Appellants contend that a duty rested upon the Messrs. Sims, as owners and mortgagors, to pay the taxes accruing against their respective homesteads after they mortgaged them to appellants,'and that they and their wives were estopped to subsequently purchase and acquire the tax titles based upon forfeitures for the nonpayment of special improvement road tax for the year 1923, except as a redemption thereof from the forfeiture and sale. The special road improvement taxes accrued after the mortgages were executed by the Messrs. Sims and their wives to appellants, and forfeitures for the nonpayment thereof occurred prior to the foreclosure of same. It was clearly the duty of the Messrs. Sims to pay the road improvement taxes when same became due, and, failing to do so, it was their duty to redeem the lands from the sales. 'This court is committed to the doctrine that the mortgagor must pay the taxes upon the mortgaged property, and that for this reason he cannot allow said property to be sold for the nonpayment thereof and acquire title by purchase at the sale antagonistic to that of his mortgagees. His purchase at such a sale must be regarded and treated as a redemption of the mortgaged property from the forfeiture and tax sale. Drake v. Sherburne, 57 Ark. 563, 22 S. W. 430; Randolph v. Nichol, 74 Ark. 93, 84 S. W. 1037; Wade v. Goza, 99 Ark. 543, 139 S. W. 639. We do not think the foreclosure of a mortgage in the interim between the accrual of taxes and sale under the forfeiture should change the rule. If the foreclosure of the mortgage in the interim reversed the rule, a mortgagor would reap a benefit from his own wrong and neglect in failing to pay the taxes. It is true that a foreclosure decree and sale of mortage lands extinguishes the relationship of mortgagor and mortgagee, but the cessation of such a relationship certainly cannot place the mortgagor in a position to take advantage of his own neglect and failure to pay taxes which were levied and which became payable before the mortgage foreclosure and sale of the mortgaged property. It would be otherwise in tax sales for taxes which became payable after the mortgage foreclosure.

Appellees argue, however, that no duty whatever rested upon the wives of the Messrs. Sims to pay the taxes which accrued before the mortgage foreclosure, and that therefore they had a right to purchase the lands with their separate funds at the tax foreclosure sales which occurred after the mortgage foreclosures. This court ruled in the case of Herrin v. Henry, 75 Ark. 273, 87 S. W. 430, (quoting syllabus) that “where an insolvent debtor permitted bis land to forfeit for taxes, and bought it in his wife’s name and with her means, the transaction will be treated, so far as his creditors are concerned, as, in effect, a redemption of the land by him. ’ ’ The argument of appellees is completely answered by this case, without further comment by ns.

On account of the error indicated the decree is reversed, and the cause is remanded with directions to the trial court to cancel the road improvement district deeds to Maggie M. Sims and Bessie B. Sims, and to quiet the title to said property in appellants as against appellees, and to issue a writ of assistance for the possession of said property.


author: Kirby, J.

text:
    Lavender v. Buhrman-Pharr Hardware Company.
    Opinion delivered June 18, 1928.

      T. B. Vance, for appellant.

      John D. Rogers and Pratt P. Bacon, for appellee.
   Kirby, J.

The undisputed testimony shows that application was made by appellant for the loan through Dewberry, the local agent of the loan company, that the application was approved, and the loan granted at its home office in Colorado. The bond for tire loan and the mortgage securing it and the agreement to purchase stock, along with a draft in payment of the loan, made payable to the appellants, mortgagors, and Dan Dewberry, agent, were sent to Texarkana for signature of the mortgagors and delivery to them of the money loaned through Dewberry, upon the completion of the transaction. It was further shown and the court found that the names of the mortgagors, payees in the draft or check, were forged by Dewberry, agent of the loan company, and the other payee in the draft to whom it was. sent for delivery of the money to the mortgagors upon the execution of 'the necessary papers. Appellants having denied, in accordance with the statute (§ 4114, C. & M. Digest), their indorsement of the draft, payable to their order and Dan Dewberry, as agent, by whom it was claimed the money loaned was paid to them, and alleged that their signatures were forgeries and not genuine, the draft could not be read in evidence as a receipt of the money, or in anywise binding against them for its payment, and the burden of proof devolved upon the loan company to show the delivery of the money loaned to the mortgagors. Ohio Gal. Co. v. Nichol, 170 Ark. 16, 279 S. W. 377. See also Terrill v. Fowler, 175 Ark. 1010, 1 S. W. (2d.) 75.

Lavender testified that the signatures of himself and wife indorsed on the draft were forgeries, and the court found such to be the case He also testified that none of the money which was attempted to be borrowed from the loan company, payment and delivery of which was attempted to be made by said draft, payable to the order of appellants, mortgagors, and Dan Dewberry, agent, and sent and delivered by the loan company to its said agent Dan Dewberry, and cashed by him upon his own and the forged signatures of appellants, had ever been delivered to or received by them. Certainly the loan company could not collect the note given for the loan nor foreclose the mortgage given to secure the payment thereof, when it had never in fact made such loan by delivering the money to the makers of the note and mortgage. The undisputed testimony shows, that Dan Dewberry was the local agent of the loan company, authorized to submit applications, procure the signatures of the applicants to the papers necessary for completion of loans, and deliver the money loaned to the mortgagor or borrower, and also that the draft for the money constituting the loan was made payable to the mortgagors and to Dan Dewberry, agent, and sent to him for final disposition. The loan company made it possible, by this procedure, for its agent to cash the draft and collect the money upon his own indorsement and the forgery of the signatures of the other payees, and,' having done so, must bear the loss resulting from the agent’s failure to deliver the money loaned to the mortgagor in accordance with the contract made therefor. See Gate City Building & Loan Ass’n v. Crowell, ante, p. 539. The consideration for the execution of the bond and mortgage never having been paid to the makers of the bond, the mortgagors, failed utterly, and the mortgage could not, of course, be foreclosed and the property subjected to the payment of such note and mortgage.

The court held, however, that, notwithstanding such failure of consideration of the note given for the loan, the mortgagors having sold and conveyed to Sparks and wife the property mortgaged, after the amount of the loan was in fact received by the agent of the loan company, Dewberry, who embezzled the money, requiring, as, part of the consideration therefor, the assumption and payment of their bond or obligation to the loan company for the amount of said loan, and the payment of three or four installments thereof by such purchasers, estopped appellants to plead a failure of consideration of their «rote to the loan company. This, notwithstanding the preoh-showed that appellants had no knowledge what-¡every-a-Nthe time of said conveyance and of the payment of the installment’s upon the property, that the money applied for as the loan from the loan company had ever been forwarded or received by its agent at Texarkana, which said agent in fact had denied that it ever had been received by him, according to the testimony in the case. This holding was erroneous. There was no change of conduct or position by the loan company because of such sale or transfer of the property to Sparks and wife, nor was it misled to its injury in any way thereby, and certainly there could have been no estoppel by this act of appellants to deny that the consideration for the bond and mortgage given by them for the loan, the money for which had never been delivered to them, had failed.

The consideration for the note having failed, the mortgagors were entitled to have the note and mortgage canceled, and the court erred in holding otherwise, and that they were estopped to plead such failure of consideration. Appellants having sold and conveyed the property to Sparks and wife, requiring the payment, as part of the consideration thereof, of the amount that would have been due the loan company under their bond and mortgage, if it had been valid and enforceable, were also entitled to recover the amount as part of the purchase money due from Sparks and wife to them, and to enforce a vendor’s lien for the payment thereof in accordance with the terms of the contract of sale.

The decree is reversed as against appellants in favor of the loan company, and, it appearing that the vendees of appellants, Sparks and wife, failed to answer and defend the cause, and that the property has already been sold and purchased by the appellee, the loan company, the cause will be remanded with directions to enter a decree canceling appellant’s mortgage and note or bond to the loan company, and decreeing them a vendor’s lien for the entire amount of the unpaid purchase price against Sparks and wife, for foreclosure of the lien, and a sale of the property in satisfaction thereof, and payment of the proceeds, after payment of the amount of the lien for materials furnished by appellee, Buhrman-Pharr Co., to appellants, with costs.

It is so ordered.