author: Hart, O. J.,

text:
    Patterson v. Woodward.
    Opinion delivered November 7, 1927.
    1. Trusts — dealings with trust property. — The rule that a trustee caimot deal with a trust property to his own advantage against the consent of the oestui que trust applies to all trustees.
    2. Trusts — purchase of trust property by trustee. — No person ■should be allowed to purchase an interest in property and hold it for his own use where he has a duty to perform in relation thereto, which is inconsistent with the character of the purchase for his own use.
    3. Receivers — breach of fiduciary relationship. — Where a decree fixed the rights of ownership of an undivided interest of indi- ' viduals in a syndicate organized to acquire oil and gas leases, the purchase by the receiver of the syndicate of an undivided interest of one member thereof was not violative of the fiduciary relationship of the receiver in respect to the property.
    Appeal from Columbia Chancery Court; J. Y. Stevens, Chancellor;
    affirmed.
    statement of facts.
    Appellees instituted this proceeding in the chancery court against appellants for an accounting of the benefits of operating oil wells on certain oil and gas leases in which they had purchased an interest. The proceeding grew out of the purchase by appellees of the interest of M. G. Haskell in certain oil and gas leases involved in the case of Hashell v. Patterson, 165 Ark. 65, 262 S. W. 1002, and is, for all practical purposes, a continuation of a branch of that case. Hence a brief statement of the issues in that case, in so far as they relate to the question raised, will be of help.
    In the case referred to, Patterson and others brought a suit in equity against Haskell and others to have a trust declared in favor of' themselves and their assodates in an undivided interest in certain oil and gas leases taken in the name of Haskell, and to have set aside as fraudulent a conveyance of said leases by Haskell to a trustee for the use and benefit of his wife. According to the allegations of the complaint in that case, Haskell was a trustee of a syndicate organized for the purpose of buying oil and gas leases and developing the same by drilling wells for oil and gas. The syndicate had a certain amount, which was turned over to Haskell and used by him in securing oil and gas leases, which he look in his own name. Haskell then fraudulently transferred these leases to a trustee for the benefit of his wife. The prayer of the complaint was that a receiver be appointed to take charge of the property for the benefit of the syndicate; that Haskell be enjoined from disposing of said property, and be required to render a full account of his dealing with the trust property, and that the title to said leases be quieted in the plaintiffs in the action. Haskell filed an answer, admitting that he acquired the leases in his own name, but denied that he purchased them for the syndicate with the funds of the syndicate. After hearing the evidence in the case, the chancellor made a specific finding that Haskell had purchased the oil and ga,s leases in his own name with his own funds, but that the purchase was made in violation of the terms of the trust agreement, and that he held the leases in trust for the syndicate; and that the transfer of the leases by Haskell to a trustee for the benefit of his wife was without consideration, and void. It was therefore decreed that the conveyance 'by Haskell to the trustee of his wife should be set aside and the title of leases should be quieted in the plaintiffs, as prayed for in the complaint. This decree was rendered in the chancery court on May 4, 1923, and the decree was affirmed in this court in an opinion delivered on June 23, 1924. Haskell v. Patterson, 165 Ark. 65, 262 S. W. 1002,
    On March 26, 1923, parties to that suit agreed to the appointment of a receiver for the purpose of taking charge of the property and of developing it by drilling oil and gas wells and operating the same. P. S. Gray-son, one of the appellees herein, was appointed receiver, and had charge of the property, as such receiver, until February 7, 1925, when he was removed as receiver, and John Marabel was appointed as his successor. During all the time that Grayson acted as receiver*, W. A. G. Woodward, one of the appellees herein, was his superintendent, bookkeeper and general field manager. On May 5,1923, M. G. Haskell assigned and transferred to appellees his undivided interest in and to the oil and gas leases involved in the suit of Hashell v. Patterson, referred to above. This proceeding was commenced by appellees on the 27th day of July, 1925, and against appellants, in the same chancery court as that which decided the case of Hashell v. Patterson, referred to above. Appellants, who were the plaintiffs in that action, filed an answer and cross-complaint, in which they substantially admit all of the allegations above stated, but deny the right of appellees herein to maintain their action, on the ground that it would be a breach of their fiduciary relations as receiver to allow them to purchase any interest in said oil and gas leases.
    The case was submitted to the chancellor upon the pleadings, and the court found that appellees acquired legal title to the undivided interest of M. G. Haskell in said oil and gas leases. The court made a specific finding that appellees were entitled to an accounting of the profits of an undivided nine-thirtieth interest in said oil and gas leases, and that the appellants herein own the twenty-one-thirtieth undivided interest in said oil and gas leases. To reverse that decree, appellants have duly prosecuted an appeal to this court.

      Joe Joiner and Alvin D. Stevens, for appellant.

      John Bruce Cox and C. E. Wright, for appellee.
   Hart, O. J.,

(after stating the facts). At the outset it may be said that it is a rule of universal application in equity that a trustee shall not deal with trust property to his own advantage against the consent of the cestui que trust. The rule is not confined to any particular class of trustees, but applies to all who come within its principles. The rule itself is 'bottomed upon the moral duty growing out of confidence and trust reposed by one and accepted by another in business relations. The principle is that no person should be allowed to purchase an interest in property, and hold it for his own use, where he has a duty to perform in relation to such property which is inconsistent with the character of the purchase for his own use. In the application of this well-settled principle, in Cook v. Martin, 75 Ark. 40, 87 S. W. 625, 1024, 5 Ann. Cas. 204, it was held that the general rule which refuses to permit a trustee to deal with the trust property in his own behalf will debar a receiver appointed to hold attached property and collect rents therefrom, from purchasing, as against the attaching creditors, a superior outstanding title to the property for the benefit of his wife.

Counsel for appellants rely upon the decision in that case for a reversal of the decree, but we do not think that the facts alleged and admitted in the pleadings in the case at bar call for an application of the principle. Appellants were the plaintiffs in the case of Haskell v. Patterson, referred to above, and asked that they be declared to have a specific and definite undivided interest in certain oil and gas leases which Haskell had taken in his own name. They do not claim to own the whole interest in the leases. After the suit was commenced, by agreement of the parties, a receiver was appointed to develo]) and operate the leases of the parties. T. H. Gray-son -was appointed as such receiver, and continued as such until the 7th day of February, 1925. The decree of ihe chancery court was rendered on the 4th day of May, 1923, and that decree specifically found the interests of appellants in said oil and gas leases, and entered a decree setting aside the conveyance of Haskell to a trustee for his wife in said leases, and quieted the title to the plaintiffs to their undivided interest in said leases, as alleged in their complaint. It will be remembered that the plaintiffs in that action are the appellants here.

On the next day after the rendition of the decree in the chancery court, Haskell sold his undivided interest in the leases to Grayson and Woodward. The decree of the chancery court was affirmed in this court. So that it will be seen that, at the time Haskell assigned and transferred his undivided interest in the leases, hehadavested interest therein, acquired by the decision' of said chancery court. No one would contend that Haskell would not have had the right’ to sell his interest to the plaintiffs in that action or to any third person. Haskell is not complaining that Grayson and his associates in the receivership were guilty of had faith in buying from him. So far as Haskell is concerned, the transaction is valid and binding. His undivided interest in the oil and gas leases belonged to him, and he could do what he pleased with it.

Appellants had an undivided interest in the same leases, but they could not control or direct the sale and transfer of his undivided interest. The salé by Haskell to appellees could in no wise affect the title of appellants to their undivided interest in the oil and gas leases, and we perceive no reason why the purchase by the receiver of the undivided interest of Haskell would be a breach of his duty as receiver, in so far as the interest of appellants is concerned. After he acquired an undivided interest in the leases, he would become jointly interested with appellants in them, and, so long ,as he continued to have charge of the property and operate it, he would owe appellants the duty of acting in good faith just as much as if he continued to operate the property as a receiver. Therefore we are of the- opinion that the chancellor rightly held that the purchase by the receiver of the undivided interest of Haskell, after the decree of the chancery court definitely fixing the rights of appellants and Haskell in the gas leases had been rendered, was not a violation of the fiduciary relationship of Grayson in respect to the property.

There is one aspect of the case which is’ not very clear from the pleadings. According to the allegations of appellees, they own an undivided nine-thirtieth interest in said oil and gas leases by purchase from Haskell. It .is also fairly inferable from their pleadings that appellants own the remaining undivided twenty-one thirtieth interest in said oil and gas leases. It is true that, in one place in their answer, appellants deny that appellees own an undivided nine-thirtieth interest in said oil and gas leases. The court rendered a decree upon the pleadings, and found that appellees had an undivided nine-thirtieth interest in the oil and gas leases and that the appellants had an undivided twenty-one thirtieth interest in said leases. In the first place, we are of the opinion that, when that part of the answer of the appellants which denies that appellees own an undivided interest in the oil and gas leases is considered with reference to the remainder of the pleadings, appellants seem to mean that their actual sale and transfer by Haskell to them of his interest in the leases was void because made when he was receiver. In any event, this finding on the part of the chancery court did not result in any prejudice to appellants. In the case of Haskell v. Patterson, referred to above, appellants alleged that they were entitled to an undivided twenty-one thirtieth interest in said oil and gas leases, and the chancery court made a finding in their favor, and it was decreed that they had title to such undivided interest. In the first case the decree vests in them an undivided twenty-one thirtieth interest in said oil and gas leases, and no possible prejudice. could result to them from a finding by the court that appellees own the remaining nine-thirtieth interest. The reason is that the pleadings plainly show that Haskell owned the undivided interest which appellants did not claim to have owned, and that he transferred all his interest to appellees. It follows that the decree of the chancellor was correct, and it will therefore be affirmed.


source: Caselaw Access Project

author: Hart, C. J.,

license: Public Domain

text:
    Tate v. Gould.
    Opinion delivered November 7, 1927.
    1. Contracts- — validity.—Courts will not aid party to enforce a contract which, is void as against public policy, either by enforcing its provisions on the one hand or by permitting the recovery of money paid in the performance- of its conditions on the other.
    2. Joint adventures — illegal contract. — In a suit for accounting for the profits derived from a joint adventure in buying and selling bonds -of improvement districts, relief was properly denied where it appeared that the parties contemplated and used illegal means to induce the sale o-f bonds to themselves.
    3. Evidence — parol proof o-f consideration of note. — No rule of evidence is violated by admitting parol proof of the consideration for the promissory note for the purpose of showing the want of consideration, failure of consideration, or illegality thereof.
    4. Bills and notes — illegal consideration. — The indorser of notes was not entitled to recover against the makers, where the evidence showed that indorsement was part of a joint adventure in buying -and selling improvement district bonds, which was contrary to public policy as contemplating the use of illegal means and carried on by such illegal means.
    5. Contracts — invalidity.—An illegal contract can no .more be enforced at law than in equity.
    Appeal from Ouachita Chancery Court, Second Division; George M. LeCroy, Chancellor;
    reversed in part.
    STATEMENT OE EAOTS.
    On January 30, 1925, J. M. Gould sued R. M. Tate and C. 0. Tate in the Ouachita Circuit Court to recover ■the sum of $4,350, alleged to be duo him on three promissory notes. On March -6, 3925, R.- M¡ Tate and O.' 0.' Tate brought suit in-the Ouachita Chancery-Court against James- Gould and R. .W. Gould-, in which they asked for an accounting on account of a joint adventure or partnership in which the parties, -purchased improvement district bonds for their joint- benefit, and to recover- from the defendants the sum of $59,540.69, which plaintiffs claimed to be their part'of the profits in said transactions, and for which they seek judgment against the defendants. By agreement between the parties the suit in the circuit court was transferred to the chancery court and consolidated with the suit pending there.

      Tlie record shows that R. M. Tato, C. 0. Tate and J. M. Gould entered into a joint adventure for the purpose of dealiug- in road improvement aud other improvement district bonds in the State of Arkansas. It is the contention of J. M. Gould that he signed the notes sued on in this case as an accommodation for the Tates, and that the money received by the Tates was used by them in speculating in oil leases in the State of Louisiana. On the other hand, it was the contention of the Tates that the money received on these notes was either profits already due or anticipated profits which would arise in the course of their dealing in Arkansas bonds. Evidence was introduced by the plaintiffs and the defendants to sustain their respective theories, which will be more particularly stated and discussed under an appropriate heading in the opinion. The evidence on the part of the Tates also shows that a much larger sum of money was due them as their part of the profits in dealing in road bonds than was due by them to Gould on the notes sued on. On the other hand, there is evidence in the record which' tends to show that the parties made their profits, in some instances, in dealing in road bonds by entering into agreements with other bond brokers for the suppression of competition in bidding, and also by employing persons to unduly influence road commissioners to sell them the bonds, and also by advancing money to the road commissioners themselves, in some instances, for that purpose. The evidence on this branch of the case will also be more specifically stated and discussed in the opinion.
    The court made a finding as follows: “That both the plaintiff and defendants are'guilty of such iniquity as to bar their standing and recovery in a court of equity, as revealed from the testimony in this cause. That, by reason of plaintiff Gould bringing his suit at law and standing on his legal rights, he should recover the amounts due upon the two notes sued upon, viz., $4,350.”
    It was then decreed that the complaint of R. M. and C. 0. Tate against J. M. Gould should be dismissed for want of equity. It was also adjudged that J. M. Gould recover from E. M. Tate the sum of $4,350, with the accrued interest. E. M. and C. 0. Tate have duly prosecuted :an appeal to this court.

      Houston Emory, T. J. Gaughan, J. T. Sifford, J. E. Gaughan and Elbert Godwin, for appellant.

      Roioell & AlexaAider, for appellee.
   Hart, C. J.,

(after stating the facts). The record shows that the complaint of E. M. and C. 0. Tate against J. M. Gould for an accounting and 'division of the profits arising from their purchase and sale of Arkansas road bonds was dismissed in the chancery court because the evidence showed that all the parties were guilty of such illegal conduct in the course of the various transactions that they were not entitled to relief in a court of eqidty. At the outset it may be proper to state the principles of law which govern transactions of this character.

In the case of Security Mutual Life Ins. Co. v. Little, 119 Ark. 498, 178 S. W. 418, L. R. A. 1917A, 475, it was held that courts will not aid any party to a contract which-is void as against public policy, either to enforce its provisions on the one hand or to permit the recovery of money paid in the performance of its conditions on the other. In that case it was held that certain contracts of insurance were void as against public policy because the beneficiary had no insurable interest in the parties whose lives Avere insured. Earlier cases of the court, recognizing- the same principle of laAV as applied to A^arying facts, were cited and revieAved.

In Mitchell v. Fish, 97 Ark. 444, 134 S. W. 940, 36 L. R. A. (N. S.) 838, it Avas held that, although a contract of partnership between a man and a woman was. tainted Avith illegality or immorality, yet if the contract has been executed by the A'oluntary acts of the parties and a division of profits agreed upon, the courts will enforce the settlement. In that case there Avas a relation of concubinage between the parties, and the court said that, although the partnership between them may have been illegally formed on account of the consideration for it being- the living together of the parties illegally as husband and wife, yet, where the contract had been completely executed and a division of the profits had been agreed upon, such a division of profits formed a new contract which the partner entitled to a share of such profits might enforce in the courts.

A leading case on the subject is that of McMullen v. Hoffman, 174 U. S. 639, 19 S. Ct. 839, 43 L. ed. 1117. In that case it was held that the contract was illegal, not only as tending to lessen competition at a public letting of a contract by the city of Portland, Oregon, but also because the parties had committed a fraud in combining their interests and concealing the same, and in submitting the different bids as if they were bona fide. It was expressly held that, in such a case, the court will not lend its assistance towards carrying out the terms of an illegal contract, nor mil it enforce any alleged rights directly springing from such a contract. In that case the court recognized that there might be honest cooperation between public contractors, although it might prevent their rivalry and thus lessen competition. This was on the ground that joint adventures are allowed where the risk as well as the profit is joint and openly assumed. The reason is that, in such cases, the public may obtain the benefit of the joint responsibility, and the whole transaction is disclosed, and the public agent can weigh the merits of the bid and estimate the motives of the bidder.' In discussing the question the court said:

“We must therefore come back to the proposition that, to permit a recovery in this case is, in substance, to enforce an illegal contract, and one which is illegal because it is ¡against public policy to permit it to stand. The court refuses to enforce such a contract, and it permits defendant to set up' its illegality, not out of any. regard for the defendant who sets it up, but only on account of the public'interest. It has been often stated in similar cases that the defense is a very dishonest one, and it lies ill in the mouth of the defendant to allege it, and it is only ¡allowed for public considerations and in order the better to secure the public against dishonest transactions. To refuse to grant either party to an illegal contract judicial aid. for the enforcement of his alleged rights under it tends strongly towards reducing the number of such transactions to a minimum. The more plainly parties understand that, when they enter into contracts of this nature, they place themselves outside the protection of the law, so far as that protection consists in aiding them to enforce such contracts, the less inclined will they be to enter into them. In that way the public secures the benefit of a rigid adherence to the law. ’ ’

In the application of these well-settled principles of law to the facts in the case at bar, we are of the opinion that the chancery court properly held that the complaint of ]R. M. and C. 0 Tate against J. M. Gould for an accounting and division of the profits arising from their dealings in Arkansas road bonds should be dismissed for want of equity.

The record shows that J. M. Gould and it. M. and C. 0. Tate entered into a joint adventure for the purpose of dealing in Arkansas road bonds. The testimony is very voluminous, and enters into the details of the various transactions between the parties in the course of their dealings, which extended over a period of several years. No useful purpose will be served by setting out the testimony in full or discussing it in detail. The record plainly shows that it was the intention of the parties to use illegal means to induce the commissioners to sell them the bonds of various road districts. In one instance it is shown that they agreed with a rival bond broker that, if he would not enter into competitive bidding- with them for the bonds of a certain road district, they would share the profits with him. This fact was concealed from the commissioners of the road district. In other cases it was shown that money was paid to persons supposed to have influence over the road commissioners to induce them to sell the bonds of the road district to the parties to this suit. In still other instances it is inferable that money was furnished to those directly interested in selling the bonds to induce them to sell the bonds to the parties to this suit. These various acts were known to the plaintiffs as well as to the defendants to this action. Consequently it presents such a state of facts as bring the various transaction -with regard to the road bonds within the principles of law above stated. It was in contemplation of the parties that the transactions should be carried on by illegal as well as legal means, and distinct illegality runs through the whole course of their dealings and taints the whole joint adventure from beginning to end. Hence the chancery court properly held that the parties were not entitled to an accounting with respect to the alleged profits or to enforce their contract in any wise whatever in a court of equity.

It will be observed that the record presents an essentially different state of facts from that shown in Mitchell v. Fish, 97 Ark. 444, 134 S. W. 940, 36 L. R. A. (N. S.) 838. In that case the parties to the illegal transaction had fully performed their contract and had agreed upon the amount of profits due each one of the parties. Nothing remained to be done except for one of the parties to pay over to the other his share of the profits. The court-said that, under the circumstances, a new contract had been entered into -which wms collateral to and not contaminated by the original contract. In the case at bar the very object, of the suit is to secure an accounting between the parties, and the facts bring the case squarely within the principles of law above announced, which do not allow recovery where the contract sought to be enforced is void on account of being against public, policy. Hence we are of the opinion that the transaction out of which the profits are alleged to have been derived in the present case was illegal and entered into for improper-purposes, and a court of equity will leave the parties as it finds them.

Counsel for J. M. Gould seek to uphold the judgment in his favor against R. M. Tate, for the amount of the notes sued on, on the ground that this transaction was not tainted with the illegality of their dealings in road bonds. No rule of evidence is violated by admitting oral proof of the consideration for a promissory note for the purpose of showing want or failure of consideration, or . illegality of consideration. Little v. Arkansas National Bank, 105 Ark. 281, 152 S. W. 281.

Counsel for appellees rely principally on the testimony of J. M. Gould, which is as follows-:

“Q. Do you or did you know for what purpose that money was borrowed on the two notes which you indorsed? A. No sir, I did not know that. Q. It was not in connection with your and Mr. Tate’s business? A. No sir; Bob and Charley (Tate) told me they were in the oil business in Louisiana, and that they wanted that for that purpose. Not a dollar of it went into our business. They Avere pressed for money in Louisiana, and I indorsed their notes for them. My indorsement Avas purely an accommodation. ”

In this connection we call attention to the testimony of R. W. Gould, a son of J. M. Gould, who was a Avitness for his father. After testifying that his father and the Tates had entered into a contract whereby they settled the various road bond issues they Avere to participate in, he said that he remembered that, some time prior to this, R. M. Tate told his father that, if he Avould indorse some paper for him and help him pull out of a bad mess, he would waive all participation in any contract in Avhich he was interested. Again, in his testimony, he speaks of times when his father Avent fully into the matter of undelivered road bonds AAdth the Tates in Avhich they were interested, 'and on account of which his father had indorsed Tate’s notes in a large sum.

According to the testimony of R. M. Tate, these indorsements of his notes by J. M. Gould, were to be met out of the profits Avhich should arise in the various bond transactions; The various contracts with the road districts for the purchase of their bonds were taken in the name of Gould because he was better known in the bond market, and it was contemplated between the parties that Gould should reimburse himself out of the profits Avhich should come into his hands from the purchase and sale of these Amrious road bonds.

According to the testimony of Gould, a settlement was had 'between the parties at the time of the purchase and sale of the bonds of each road district. This was denied by E. M. Tate. According to his testimony, Gould then told them that no profits Avere derived from a group of road districts in Southwest Arkansas, and that, long afterwards, he discovered that Gould had made $20,000 out of the purchase and sale of bonds in this group of road districts. Gould denied the statement that he made money out of this group of districts.

Be that as it may, it is fairly inferable from the evidence in the case that Gould indorsed the notes of the Tates because they Avere associated together in the purchase and sale of Arkansas road and other improvement district bonds, and it was contemplated that he should be reimbursed or paid for signing these notes out of any proceeds arising from the sale of the bonds in Avhich the parties were jointly interested which might come into his hands. This is shown by the testimony of E. "W. Gould as well as by that of E. M. Tate. E. W. Gould testified that E. M. Tate had told his father that, if he Avould indorse some paper and help him pull out of a bad mess, he would waive participation in any contract in which he was interested. This testimony could have reference to the indorsement of no other notes than the ones sued on, for it does not appear that Gould indorsed any other notes of Tates. Thus, it Avill be seen that his indorsement of the notes \ATas a matter growing out of their joint adventure in dealing in Arkansas road and other improvement district bonds. It does not matter A\7hat. the Tates used the money for. That was not the question. ¥e are only concerned with the question of whether or not his indorsement of the notes was a part of their joint adventure in dealing in Arkansas improvement district bonds, and, for the reasons above given, we are convinced that it grew out of and was a part of such transactions. In this vie\v of the matter it does not make any difference that Gould brought suit at law. An illegal contract can no more be enforced at law than in equity. This will be seen by reference to the case of Mutual Life Ins. Co. v. Little, 119 Ark. 498, 178 S. W. 418, L. R. A. 1917A 475, and the cases cited in it.

It is true that the other two cases cited in this opinion arose in the chancery court, but this was because an accounting was sought between the parties which gave jurisdiction. to a court of equity. The principles announced apply with as much force in a court of law as in a court of equity. The principle equally applies that, where a contract is illegal or void as contrary to public policy, a law court as well as an equity court will leave the parties as it finds them.

The result of our views is that the chancery court erred in allowing J. M. Gould to recover against E. M. Tate for the amount of the notes sued on, and, for that error, the decree will be reversed, and the cause remanded, with directions to the chancery court to dismiss the complaint of J. M. Gould against E. M. Tate and C. 0. Tate. In all other respects the decree of the chancery court will lie affirmed. It is so ordered.


text:
    Miller v. Yell and Pope Bridge District.
    Opinion delivered November 7, 1927.
    1. Bridges — powers op bridge commissioners. — The powers of the commissioners of a bridge district are derived from the act creating it, and in exercising these powers the board acts as the agent of the owners of the real property within the limits of the district.
    2. Statutes — legislative intention. — In the construction and interpretation of statutes, the intention of the Legislature is to be ascertained and given effect from the language of the act, if that can be done, and in doing this each section is to be read in the light of every other section, and the object and purpose of the act are to be considered.
    3. Bridges — limitation of cost. — The limitation of $300,000 in section 6 of Acts 1925, p. 450, creating the Yell and Pope Bridge District, refers to the actual cost and construction of the bridge when the work is done, and interest on the bond issue for the purpose of hastening the work provided by § 11 should not be included as part of the cost of the bridge.
    Appeal from Yell Chancery Court, Dardanelle District; I. E. Chambers, Chancellor;
    affirmed.'
    STATEMENT Oe'eACTS.
    This suit was brought in equity by a landowner against the commissioners of Yell and Pope Bridge District to restrain them from issuing bonds and from levying and collecting assessment of benefits upon the real property in the district for the purpose of constructing a bridge across the Arkansas River at Dardanelle.
    According to the allegation of the complaint, the cost of the improvement is approximately $600,000. The State Highway Department proposes to pay one-half, and the other one-half is to be paid by funds derived from the assessments of benefits upon the real property within the limits of the distinct. The commissioners have caused to be made an assessment of benefits against the real property in the district, and contemplate issuing $300,000 in bonds, bearing interest, for the purpose of constructing the improvement.
    The defendants demurred to the complaint, and their demurrer was sustained by the court. The plaintiff, refused to plead further, and it was decreed that his complaint should be dismissed for want of equity. The (‘ase is here on appeal.

      Hays, Priddy S Rorex, for appellant.

      H. G. Scott, M. L. Davis and Ward & Candle, for appellee.
   Hart, C. J.,

(after stating the facts). The plaintiff relies for a reversal of the decree upon the ground that the interest on the contení}dated bond issue of $300,000 should be included as part of the cost of constructing the bridge. The chancery court held against the contention of the plaintiff, and the correctness of its decision depends upon the interpretation to be placed upon the act creating the improvement district. Yell and Pope Bridge District -was created 'by act No. 154 of the Legislature of 1925, Acts of 1925, p. 450. Section 6 of the act reads as follows:

“The bridge contemplated herein shall be constructed under the provisions of § 26 of act No. 5 of the extraordinary session of the General Assembly of the State of Arkansas, approved October 10, 1923,. and that the other sections of this act shall be construed as in harmony with the provisions of this section and not conflicting therewith. Provided, however, the total cost of the bridge district .shall not exceed $300,000.”

Section 31 of the act reads as follows:

“In order to hasten the completion of the improvement, the commission is hereby authorized to borrow money, not exceeding $300,000, and to issue bonds therefor, to be sold at not less than par and to bear interest at a rate not exceeding six per cent, per annum, and may pledge all the uncollected assessment, or so much thereof as may be necessary for the payment thereof, except such assessments as may be required to be pledged for the acquisition of the right-of-way and such as may be necessary to create a sinking fund to pay said bonds or to retire same. And said bonds shall be a lien upon the real estate of said district. And the commission shall create a sinking fund from the annual assessments in order that said bonds may be paid at maturity or retired earlier, if possible.”

Other sections of the act provide for the assessment of benefits and a levy and collection of taxes based thereon for the purpose of repaying the cost of constructing the bridge.

It is well settled in this State that the powers of the board of commissioners of an improvement district are derived from the act creating it and, in exercising its powers, the board acts as the agent of the owners of the real property within the limits of the district. This court has uniformly held that, in the construction ancl interpretation of statutes, the intention of the Legislature is to be ascertained and given effect from the language of the act, if that can be done. In doing this, each section is to be read in the light of every other section, and the object and purpose of the act are to be considered. Rayder v. Warrick, 133 Ark. 491, 202 S. W. 831; Summers v. Road Improvement District No. 16, 160 Ark. 371, 254 S. W. 696; Turner v. Ederington, 170 Ark. 1155, 282 S. W. 1000; and Hill v. American Book Co., 171 Ark. 427, 285 S. W. 20.

According to § 6, the total cost of the bridge shall not exceed $300,000. This was the highest sum which might actually become due when the work was done. This does not include interest. Section 11 provides that, in order to hasten the completion of the improvement, the district is authorized to borrow money not exceeding $300,000 and to issue bonds therefor, to be sold at not less than par, and to bear interest at a rate not exceeding six per cent, per annum. The section further provides that the commissioners may pledge the uncollected assessments for the payment thereof. Thus it will be seen that the interest is not a part of the cost of construction, but of collection, when collection of the assessment is made as the law provides. The design of the statute is that the improvement district may pay for the work during its progress or when it is completed, and that it is to be reimbursed at a future date by a levy and collection of a tax based upon an assessment of benefits upon the real property within the district. The improvement district cannot be fully reimbursed unless the bonds bear interest, for they are to be paid out of the tax levied, as just indicated.

Reliance is placed by counsel for the plaintiff upon the decision in Fitzgerald v. Walker, 55 Ark. 148, 17 S. W. 702, but we do not think that that case had any-application to the present one. There the court decided that no assessment could be made against the real property of any improvement district in excess of twenty per cent, of the assessed value as provided in the statute. This construction was obviously correct, because, if the interest did not become a part of the cost of the work within the meaning of the statute, there would be no means provided for its payment. This view is in accordance with the holding in Webster v. Ferguson, 95 Ark. 575, 130 S. W. 513. In that case the question was -whether the statement, in the petition of the owners of real property, which limited the cost of the improvement to a certain amount, included interest, and it was held that the statement of the amount in the petition referred to the actual cost of the improvement, exclusive of interest. We are of the opinion that the limitation of $300,000 in § 6 of the act refers to the actual cost of the construction of the bridge to the improvement district when the work is done, and that the interest on the bond .issue for the purpose of hastening the work should not be included as a part of the cost of the bridge referred to in § 6.

It follows that the decree of the chancery court will be affirmed.


author: Wood, J.

text:
    Oil Fields Corporation v. Meek.
    Opinion delivered November 7, 1927.
    1. Appeal and error — hearing on exceptions to receiver’s report. — In appeal from an order overruling exceptions to a receiver’s final report, failure of 'appellant to present testimony introduced at the hearing on demurrer to exceptions, held not to require affirmance under rule 19, providing for embodiment of the whole of the evidence under the transcript, as exceptions were in the nature of pleading, on demurrer to which no testimony was required.
    2. Receivers — exceptions to- final report — demurrer.—A demurrer to exceptions to a receiver’s final report admits as true all facts set forth in the exceptions which are well pleaded.
    3. Receivers' — exceptions to report. — Where exceptions to a receiver’s report set forth facts showing good reason why the report should not 'be confirmed, a decree overruling the exceptions and confirming the report was erroneous, notwithstanding some parts of the exceptions were not sufficiently specific, and contained mere conclusions.
    4. Receivers — exceptions to report. — Exceptions to the final report of a receiver, alleging his failure to keep an accurate record, or to show expenses incurred, and alleging neglect of .affairs of the corporation, and misconduct in handling its funds,
      held as against demurrer, to state a ease for rejection of the receiver’s report.
    5. Receivers — exceptions to report. — Where exceptions to the final report of the receiver of a corporation were defective in part because they alleged conclusions, the remedy was to require the pleader to make his allegations more specific.
    6. Receivers — exceptions to report — reference.—Where facts alleged in exceptions to a receiver’s report as true were sufficient to prevent its confirmation, the chancellor should appoint a referee to take testimony in order to determine the truth of the facts alleged.
    Appeal from Ouachita Chancery Court, Second Division; George M. LeCroy, Chancellor;
    reversed.

      Albert L.-Wilson, for appellant.

      II. E. Meek and L. E. Smead, for appellee.
   Wood, J.

On the 10th day of March, 1924, J. H. Meek was appointed receiver in a ease pending in the chancery court of Ouachita County, in which Frank W. Lowe was plaintiff and Gordon Ingalls and others, including the Oil Fields Corporation, were defendants. J. H. Meek duly qualified as receiver by taking the oath and executing a bond as such receiver in the sum of $100,000, which had been fixed by the court in that sum. As a result of the litigation, the Oil Fields Corporation was adjudged to own certain properties, consisting of oil and gas leases, producing oil wells, oil in storage, and equipment of the leases. As receiver, Meek was directed to take an inventory of the property and to continue the’business of managing and operating the property during the litigation, and was authorized to do any and all acts to properly conduct such business under the orders and directions of the court. Among other directions was the following:

“The receiver is ordered and directed to make a report of all his acts as receiver herein, on or before the first day of each succeeding month hereafter, said report to be filed with the clerk of the Ouachita Chancery Court, where it shall remain and be in the files of said court, subject to the inspection of all parties in interest.”

On the 19th day of May, 1924, the receiver filed a report, in which he had made an inventory of the assets and liabilities of the Oil Fields Corporation, and stated the total value of the property involved in the litigation to be $311,855.29, against which were bills and accounts payable in the sum of $85,934.03. In this inventory the oil storage was estimated at 190,523.66 barrels, of the value, at that date, of $1 per barrel, which the receiver was disposing of, the same being run through the Standard Pipe Line Company at the rate of 5,000 barrels a day. The total assets above included accounts receivable in the sum of $80,281.91, $75,000 of which the receiver reported was due from the Arkansas Pipe Line & Navigation Company, which was of remote and doubtful value, as that company was in a state of bankruptcy. Among other items the receiver reported that the McKenzie and Laney leases were producing 800 barrels of oil per day, of the value of $1 per barrel. The report is too voluminous to set out in detail, and it is unnecessary to do so. The above are the salient features thereof. The court approved the report, embracing the inventory of the property, on May 19, 1925.

The first monthly report embraced the operations of the receiver from March 11, 1924, to March 31, 1924. In this report the receiver stated that he expected to run from 100,000 to 125,000 barrels per month, pipe-line oil, at $1 per barrel, during the month of April; that the leases in his hands were making on an average from 800 to 1,000 barrels of oil per day, and he stated that he would thereafter make regular monthly reports and file the same with the clerk of the court. The receiver thereafter made reports covering his management each successive month to and including July, 1925. The last report showed receipts for the month of July in the sum of $41,809.99, and .the report for the month of April, 1925, showed that the receipts were $24,569.08.. The report ending July 31, 1925, included an “accumulative trial balance for the general ledger period, ’ ’ showing the debits and credits to be $404,109.61. This accumulative trial balance showed that the oil sales were $372,176.41, gas sales $647.58, and miscellaneous earnings $4,526.81.

On August 19,1925, being the third day of the August term, the court entered the following order: “Now on this day comes the receiver herein, by his attorneys, and files herewith the report of the receiver in this cause, which is by the court in all things approved. ’ ’

The only other report that had been approved up to this time was the report for the month of October, 1924. The report for October, 1924, showed the total oil production for that month to be 28,855.43 barrels and the total sales to be $17,470.82. The record shows that the receiver filed what are designated “accumulative trial •balances” from the general ledger, for various periods from month to month. Wc have examined these statements from the receiver’s report in the record. They are so confused it would require an expert accountant to determine their accuracy. The last report of the receiver, embracing the period ending December- 31, 1925, and the trial balance from the general ledger ending at that time, showed the receipts to be $446,863.83, and a supplemental report vas filed in vacation showing that, after all receipts and disbursements, the receiver liad on hand at that time $27,456.51.

The final report is too lengthy to set forth in detail. It states that the receiver took charge of the property on March 24, 1923. Then there is a general statement to the effect that he had filed from month to month current financial statements, and a general statement to the effect that the receiver had managed the properties intrusted to his hands to the best of his ability, in a business-like manner, and that he had turned over all the property in his hands under the orders of the court to the Oil Fields Corporation. He refers to the cash on hand as shown by his report of December 31, 1925, and the remainder of the report explains in detail the various items set forth in his “accumulative trial balance from the general ledger,” covering the period ending December 31, 1925, and referred to as Exhibit A, with schedules attached numbered from 1 to 10 inclusive.

The Oil Fields Corporation, on January 25, 1926, filed exceptions to the final report of the receiver. The exceptions are paragraphed and numbered from one -to twelve, inclusive, the substance of which we will set forth.

No. 1 denies that the receiver took charge of the property on March 24,1924, but alleged that he took charge on or about March 11, 1924.

No. 2 consists of general denials of the allegations of the report as to the faithful and correct manner of the management of the' property, and denies that the statement or exhibit attached to the receiver’s report showed the amounts of cash the receiver had on hand on December 31, 1925.

No. 3 sets up that, at the time the receiver took charge, the oil in storage amounted to fully 500,000 barrels and that the wells were producing at least 1,500 barrels per day; that these wells continued to produce during the entire period of his receivership more than 1,000 barrels per day, and that the amount of oil produced during his receivership was fully 1,130,000 barrels, whereas the receiver reported that he had received only 489,619.78 barrels. It was alleged that it was the duty of the receiver to keep an accurate daily record of the oil in storage and that produced, which the receiver had not done, and asked that such record be produced.

No. 4 alleged that the receiver had failed to return the furniture, fixtures, books and records of the Oil Fields Corporation in his possession as he had been directed to do by order of the court. It was alleged in this paragraph that, if the receiver procured an order of sale of this furniture, it was without notice to the corporation, and that each of the orders made by the court approving the action of the receiver in any manner was without a hearing and without notice to the corporation; that these orders of the court, being without notice or hearing, were obtained for the purpose of being used as a shield upon final settlement of the receiver.

No. 5 begins with general allegations that the manner of bookkeeping by the receiver was defective and therefore the books do not show the funds that were recklessly given away, belonging to the defendant, and do not show the necessary expenses incurred by him. This paragraph specifies the following items: $20 given away as pretended-rentals due on the Telford lease for the year ending December, 1926, when the lease expired by its terms December, 1925; for stenographer and bookkeeper $6,387.76; J. H. Meek $2,750; H. C. Compton, $500; L. J. Wardlaw $500; H. C. Compton $500; L. J. Wardlaw $500; H. C. Compton $250; L. J. Wardlaw $250; Compton & Wardlaw $500; Compton & Wardlaw $2,000; Smead & Meek $150; Smead & Meek $6,000; Smead & Meek $2,000; Smead & Meek $4,000; L. B. Smead $1,800; all of which items and many others, it is alleged, were an improper charge against -the funds in the hands of the receiver, and, if said receiver obtained an order of the court directing said payments, he did so without presenting the facts, or informing the court in the premises, and without any notice to this defendant, and the procuring of such an order from the court by said receiver was a violation of his duty and a fraud upon this defendant; that most of the items specified are for compensation for pretended legal services rendered the receiver, and this defendant alleges that said attorneys instituted or prosecuted or defended no suits of any kind whereby the estate in the hands of the receiver was benefited in any manner whatsoever. This paragraph then sets forth that the only litigation pending against the receiver for the property in the hands of the receiver was a proceeding in bankruptcy in the Federal court at Texarkana, which was successfully defended by Albert L. Wilson, general counsel of the defendant, and all any attorney for the receiver had to do was to copy motions filed by said Albert L. Wilson and submit them to the court upon the proof and argument already made by the said Albert L. Wilson; that one member of the firm of said Smead & Meek is a brother of the said J. H. Meek, receiver, and the other member of said firm is L. B. Smead, to whom the $1,800 is reported to have been paid.

No. 6 sets out specifically that the receiver had not fully paid the sum of $1,800 on the McKenzie lease and the sum of $3,224.20 on the Laney lease, which he reports had been fully paid; that a lien was claimed on these properties for the sum of $135, which, if the receiver had paid to the wrong person, would result in a loss of that sum to the defendant.

No. 7 charges specifically that a large quantity of two-inch pipe, worth $2,000, was taken possession of by the receiver, under order of the court, and was subsequently sold by liim without any order of the court, and was not listed in the receiver’s inventory. This paragraph also alleges that the receiver had permitted other parties to use an engine belonging to the defendant, .worth more than $1,000, and to remove same from the property, for which the receiver had failed to account.

No. 8 alleges that the receiver had permitted large sums of money to be kept on deposit in the First National ■Bank at Camden on which he should have 'collected at least 4 per cent, interest for the benefit of the defendant; that the receiver was a director in this bank, and had failed to collect any interest on these deposits, or, if he had collected the same, he had appropriated the same to his own use and failed to charge himself therewith. This paragraph asks that the receiver be required to set forth the rate of interest the bank pays on time deposits, and that he be required to charge himself with the interest on the daily balance on deposit to Ms credit as receiver at the rate of 4 per cent, per annum.

No. 9, in substance, charges that, at- the time the receiver took possession of the property, the Arkansas Pipe Line & Navigation Company was indebted to the defendant in the sum of $75,000; that at that time the receiver herein was also the receiver of the pipe-line company; that a bankruptcy proceeding was instituted against the pipe-line company, and J. H. Meek turned over all property and assets of that company in his hands as receiver of such company into the bankruptcy proceeding about the time he was appointed receiver for this defendant company; that the pipe-line company owned property at that time of the value of $480,000, and its total indebtedness would not exceed $285,000; that the pipe-line company was not insolvent, and could not be properly adjudicated a bankrupt; that J. H. Meek, as receiver herein, failed to present the facts to the bankruptcy court, as it was liis duty to do, and that, by his willful neglect to defend against the bankruptcy proceeding, he caused a loss to the defendant herein of its entire account against the Arkansas Pipe Line & Navigation Company in the sum of $75,000, except the sum of $3,476, which he claims to have received from the trustee in bankruptcy, causing a loss to the defendant, with which the receiver should be charged.

Paragraph No. 10 alleges that the receiver took credit for $622.79 as an uncollectable account; that such account is not charged to him, and therefore he should liave no credit for the same. The balance of this paragraph is a general exception to each item of the receiver’s report as contained in Exhibit A with its schedules, except the $50,000 advanced to the defendant.

Paragraph No. 11 alleges that the receiver willfully had well No. 9 on the McKenzie lease sealed off after it had encountered a valuable flow of natural gas, which the receiver should have utilized for the benefit of the defendant, instead of paying the sum of $2,000 per month for gas from other sources, and that, by his neglect in this particular, the defendant had suffered several thousand dollars ’ loss.

Paragraph No. 12 charges the receiver with willfully conducting himself in a manner hostile to the rights of the defendant and with entering into a conspiracy with others to elect a board of directors favorable to the wrecking of the corporation and sacrificing, its property at a forced sale. Among the items of misconduct charged against the receiver in this paragraph are the following: “That J. T. Burney, to whom he claims to have paid $10,-482.95, expended much of his time looking after the personal affairs of said J. H. Meek, and habitually neglected the affairs of the property and business in the hands of the receiver; and that said receiver should be charged with a large part of said $10,482.95, -and a large part of the $124,753.80 mentioned in schedule 5 as operating expenses, and with the entire amount of $8,000 claimed by said J. H. Meek in schedule No. 7, for the reason that he has been so reckless, extravagant and unfaithful to his trust that he has forfeited his right to any compensation. ”

Paragraph No. 13 contains the prayer of the defendant for a referee and the taking of testimony covering all acts • of the receiver, and the report of the same, and that the receiver be required to pay the defendant all sums belonging to the defendant now in his hands, and that, upon a final hearing, he be required to pay such additional sums as the court shall find to be due from him upon a strict accounting, etc;

The receiver filed a demurrer .specifically as to each paragraph of the complaint, but general in form, alleging that each of such paragraphs “does not contain statements sufficient to constitute a valid exception to the final report of J. H. Meek, receiver.” The cause was submitted on a demurrer and the court found that the exceptions of the Oil Fields Corporation to the said reports of J. PI. Meek, receiver, failed to state facts sufficient to constitute an exception to said report, and that said demurrer therefore should be sustained. The court thereupon entered a decree overruling the exceptions and confirming the report of the receiver and ordered the receiver to pay over to the corporation the sum of $23,931.06. The corporation appealed from the decree overruling its exceptions, and the receiver appealed from the decree directing him to'pay over the sum specified to the corporation.

1. The appellee, Meek, filed a motion to affirm the cause on appellant’s appeal because of an alleged failure by the appellant to comply with Rule 19 of the Supreme Court. Rule 19 requires, among other things, that, in chancery cases, “the whole of the evidence shall be embodied in tbe transcript, unless the parties shall agree upon an abbreviated statement thereof.” Appellee -sets up in Iris motion, containing eighteen paragraphs, that certain orders, specifying them, were made by the chancery court, which show on.their face that oral testimony was heard upon which the orders were based andthat none of this evidence is brought into the record. Counsel for appellee contend that it is impossible to predicate error on the part of the trial court in overruling the appellant’s exceptions to the receiver’s report unless the testimony is brought into this record upon which the various orders-were made by the trial court. A complete answer to this contention is that the cause was heard on demurrer to the appellant’s exceptions. The final report of the receiver is not verified. The appellant did not move to have the same verified. It is therefore analogous to an unverified complaint of the receiver asking that his report be confirmed and his account allowed. The appellant’s exceptions thereto were duly verified and were tantamount to an answer denying and challenging the matters set forth in the report to which the exceptions were directed.

In Johnson v. Central Trust Company, 159 Ind. 605, 65 N. E. 1028, it is said: ‘ ‘ The report of a receiver and an exception filed thereto stand as the complaint and answer of the respective parties. ’ ’ See cases there cited; see also 34 Cyc. 454-456. The appellee’s demurrer to appellant’s exceptions admitted as true all the facts set forth in the several paragraphs of these exceptions that were well pleaded. Green v. Williams, 169 Ark. 1198, 278 S. W. 5; Hudson v. Simonson, 170 Ark. 243, 279 S. W. 780. On the hearing of the demurrer no testimony could, or should, have been introduced. The demurrer tested the sufficiency of the exceptions as a pleading only, and it was not necessary or proper to adduce testimony to establish facts well pleaded that were admitted by the demurrer. The case of Remmel v. Collier, 93 Ark. 394, 125 S. W. 422, 130 S. W. 167, upon which the appellee relies to sustain his motion to dismiss, has no application t.o this record. That was a case where, notwithstanding there was a demurrer to the complaint, which the-court passed upon, the whole case was nevertheless submitted to the court on the merits as well as the sufficiency of the pleadings. To be sure, in that case it was the duty of the appellant to bring the whole record before this court in order to enable the court to determine whether the decree of the court below on the testimony adduced at the hearing on the merits was correct. If such were the case here the contention of appellee’s counsel would be sound, but such is not the case. Appellee’s motion therefore to confirm the decree, or to dismiss the appeal, is not well taken, and is overruled.

2. This brings us to a consideration of the question as to whether or not the court erred in sustaining the demurrer to the appellant’s exceptions and in entering its decree overruling these exceptions and approving and confirming the receiver’s report. We have set out above the substance of the different paragraphs of the exceptions to the receiver’s final report. It would unduly extend this opinion and we deem it unnecessary to refer specifically again to each paragraph. Some of them unquestionably correctly pleaded facts which show that the court erred in confirming the report of the receiver. The court’s ruling reached to each and every paragraph and overruled the exceptions as a whole. This was manifestly erroneous. -Some of the paragraphs are too general in their statements, and, on remand of the cause, the court .should require the pleader to state facts and not mere conclusions. But other paragraphs, and most of them, do state facts and not mere conclusions of the pleader. Some of the paragraphs state the exceptions in too broad and general terms, but they nevertheless state good reasons why the report of the receiver should not have been confirmed by the court, and such of these paragraphs as stated the exceptions defectively the court should have required the pleader to make more specific, and not overruled the exceptions as a whole. In this connection the language used by the author of the chapter on “Receivers” in 34 Cyc. at page 456, is exceedingly apposite, towit:

“The report of a receiver, and an exception filed thereto, stand as the complaint and answer of the respective parties; the mere pro forma ex parle settlement of an important receiver’s account, where creditors are dissatisfied therewith, is held to be an indiscretion, and his account will not be confirmed by the court without a reference, and over objection, when the items of expenditures are not accompanied by voucher or supported by other proof.. So, on the proceedings before the master the burden is upon the accountants to justify and vouch the accounts which they had rendered, so far, at least, as they were called in question by exceptions; the receiver has been held to great strictness in this respect, and, upon failure to produce vouchers for disbursements, required to give .a satisfactory reason for such failure.”

We have examined all of the receiver’s reports sufficiently to convince us that the chancellor erred on demurrer to the exceptions in sustaining the demurrer and in confirming the final report of the receiver. The chancellor, instead, should have granted the prayer of the appellant as set up in the 13th paragraph of the exceptions, and should have appointed a referee to take testimony concerning the facts alleged in the appellant’s exceptions, and directed him to overhaul the final report of the receiver in connection with the various other reports, both those that had been previously approved and those that had not been approved, to the end that the receiver might prove, if he could, that the facts correctly pleaded in appellant’s exceptions were untrue; or, if they were true in fact, that the final report might be corrected and confirmed in conformity with the established facts.

The decree of the trial court is therefore reversed, and the cause is remanded with directions to overrule the appellee’s demurrer and for further proceedings according to law and not inconsistent with this opinion.


author: Humphreys, J.

text:
    Clyburn v. Clyburn.
    Opinion delivered November 7, 1927.
    1. Divorce — right to absolute divorce. — In a suit by a wife for maintenance and support, in which the husband filed a cross-bill for divorce, evidence showing- that the parties could not live together as husband and wife after making an honest effort to do so, and that the marital relationship had been shattered beyond repair, through the fault of both parties, but principally through the wife’s jealousy, held the husband is entitled to an absolute divorce, rather than a divorce from bed and board.
    2. Divorce — when absolute divorce granted. — A divorce a vinculo matrimonii may be granted on the same ground as a divorce a mensa et thoro, and should always be granted where the evidence warrants the granting of either, unless by granting a divorce a mensa et thoro a reconciliation might be effected.
    3. Divorce — when alimony allowed. — The chancery court has power to allow alimony to a wife against whom a decree of divorce is granted, the amount thereof -being governed by the ■circumstances of each case.
    4. Divorce — allowance of alimony. — In a wife’s suit fox maintenance and support, in which the husband was granted a divorce, where the wife retained their three children, one of whom was a minor, an allowance of $37.50 per month alimony to the wife was warranted, in view of the husband’s earning capacity.
    Appeal from Union Chancery Court, Second Division ; George M. LeCroy, Chancellor;
    reversed in parti

      Samp Jennings, for appellant.

      Powell-, Smeacl £ Knox, for appellee.
   Humphreys, J.

This suit was commenced by appellee against appellant in the chancery court of Union County for maintenance and support of herself and eighteen-year-old son, making necessary statutory allegations to obtain same. The gist of the complaint'is that appellant, her husband, voluntarily and without cause ceased to live with her on November 26, 1924, as his wife, and since that time has failed to care for and maintain her and their son as he should, out of his earnings of $350 per month as a locomotive engineer for the Chicago, Rock Island & Pacific Railway Company. She prayed for an allowance of $100 per month for the maintenance and support of herself and son.

Appellant filed an answer, denying the alleged canse of action and the extent of his earning capacity, and a cross-bill for an absolute divorce, upon the alleged ground that appellee had offered him indignities which rendered his condition in life intolerable; that she had been unjustly jealous of him for a number of years, and, on that account, had wrongfully accused him of being intimate with other women, and continually quarreled and nagged at him, so much so that he was forced to leave home to obtain any peace of mind and rest between his railroad runs.

Appellee filed a reply denying the alleged indignities set up in the cross-bill for divorce.

The cause was submitted to the court upon the pleadings and testimony adduced by the . respective parties, which resulted in a decree in favor of appellee for $37.50 per month for support and maintenance, the use of their home in El Dorado for her life, and a decree in favor of appellant from bed and board. Appellant has duly prosecuted an appeal from that part of the decree granting him a decree of divorce from bed and board instead of an absolute decree of divorce, and in allowing appellee $37.50 per month for the support of herself and son.

Appellant and appellee were married on November 11, 1894, and lived together, with the exception of about three months in 1922, until November 26, 1924, at which time they separated. Appellee remained in appellant’s home with her three sons, Neil, 31 years old, Roy, 24, and Howard, 18, and appellant moved to other quarters. After appellant left, home the two older sons paid board to their mother, and with that, with a little room rent which she collected for a time, and the contributions from her husband to herself and son, she maintained the home. Appellant’s contribution consisted largely in paying grocery bills and in purchasing clothing for and furnishing spending money to Howard. His earnings have dropped off considerably the last few years, and his per sonal expenses have increased since leaving home.

After the first separation, appellant and appellee remained apart for throe months, at which time a reconciliation took place, and they lived together in peace and harmony for awhile, but drifted back into the turbulent life they were living prior to the first separation. Strife existed between the father and oldest son to such an extent that it became impossible for them to live together in the home. Appellee took the side of her 31-year-old son, and insisted that her husband must go, if either left home. During* these latter 3>*ears there was little or no congeniality between appellant and appellee, and, as a result, there were many bickerings and frequent quarrels. Appellee became intensely jealous, charging appellant with infidelity. In fact, most of the quarreling resulted from the charges she made against him of intimacy with the women with whom he boarded when out on his railroad trips. He boarded where the other railroad men boarded. The charges she made against him were based largely upon rumor, and, so far as the record discloses, there was little or no foundation for them. Appellee went to the extent of having policemen raid the houses and hotels in which he stopped in an effort to ascertain the truth of the rumors. The record reflects that both parties were to blame, 'but, according to the weight of the testimony, appellee was to blame in a greater degree than appellant. The only disinterested witness who testified to the alleged ground for divorce was Mrs. Mae Bishop. She and her husband lived in the home of appellant and appellee from February, 1924, to April, 1925, and did light housekeeping. They were there when, the final separation occurred. Mrs. Bishop testified that she heard appellee tell appellant to get his trunk and -leave; that, after he left, appellee came into her room and said she did not care if he had gone, as she had three sons to support her; that she did not need him; that appellee fussed at appellant all the time that he was around the house.

Appellee herself testified that she had lost all her love for appellant, and the oldest son admitted that be disliked his father and quit speaking* to him.

It is apparent that the appellant and appellee can never live together as husband and wife again. They made an honest effort to do this, and failed. The marital relationship has been shattered beyond repair or redemption. No useful purpose could be served by granting the divorce to appellant from bed and board only. It is true that appellant was not blameless, but much that he did and said was due to provocation emanating from the jealous heart of appellee. She was to blame in a greater • degree than he for the irreparable situation. A divorce a vinculo matrimonii may be granted upon the same ground that divorce a mensa et thoro may be, and it should always be granted where the evidence warrants the granting of either, unless by granting the latter a reconciliation might be effected.

We think the chancery court correctly found that appellant was entitled to a divorce, but erred in granting him a divorce from bed and board only instead of an absolute one.

In the matter of the allowance of alimony we agree with the chancery court. A chancery court has the power to allow alimony to a wife against whom a decree of divorce is granted. The amount allowed should be governed by the circumstances of each particular case. Prior v. Prior, 88 Ark. 302, 114 S. W. 700, 129 Am. St. Rep. 102; Shelfman v. Shelfman, 153 Ark. 110, 239 S. W. 728.

In the instant case appellant and appellee lived together for thirty years. Appellee bore him five children, three of whom are living and residing with their mother. She was decreed the house for life, and she will have to keep the taxes paid and make the necessary repairs upon the property. The station in which appellant and his family lived, when considered in connection with lfis earning capacity, justified the expenditure of ia considerable amount each month. They kept a servant most of the time. Although his earnings are less than they were, and his personal expenses have increased on account of the separation, it will work no great hardship on him to pay $37.50 a month, the amount allowed her by the chaneery court. It must be remembered that appellee has no ability to earn, having- contributed her life to the care of a large family and the many duties incident to housekeeping. Prom aught that appears, she performed her duty well until jealousy entered her heart and obsessed her mind. She at least had rumor, and a picture of another woman she found in appellant’s pocket, to support her change in attitude toward him. Had appellant been considerate and kind at all times, instead of inconsiderate and harsh, he might have disabused her mind of the effect produced by rumor and the discovery of the picture. It perhaps disclosed a lack of confidence on her part to search his pockets, but it only added fuel to the flame to carry the picture of another woman in his pocket. The circumstances detailed above warrant the allowance made by the chancellor.

The decree for alimony will be affirmed, but the decree from bed and board will be reversed, and the cause remanded, with directions to enter a decree for absolute divorce in favor of appellant.

Hart, C. J., and Kirby and Mehaeey, JJ., dissent from the allowance of alimony.


text:
    Columbia Weighing Machine Company, Inc., v. Palace Drug Company, Inc.
    Opinion delivered November 7, 1927.
    Evidence — varying terms op written contract by parol. — Evidence that a written contract for the sale of a machine was entered into, with the understanding- that the salesman would keep the contract for a 30-day trial period, during- which the buyer would not be bound to buy, held, in an action by the seller for the purchase price, not inadmissible in view of the terms of the written contract, by which the machine was sold subject to return within a 60-day period.
    Appeal from Jefferson Circuit Court; T. G. Parham, Judge;
    affirmed.

      A. JR. Cooper, for appellant.
   Humphreys, J.

Appellee was sued by appellant in the circuit court of Jefferson County, upon an order signed by appellee on February 27, 19'25, and accepted by appellant on the 12th day of March, 1925, at its New York office. The order was procured by a traveling agent of appellant, and is as follows, omitting signatures:

“Date February 27, 1925. Columbia Weighing-Machine Co., Inc., 9 West Sixty-first St., New York, U. S. A. Price $150. Freight paid. Payable $15 monthly. You may ship us one Columbia Mirror Weighing Machine, freight paid. It is sold to us with the understanding that we may return it to you at any time within sixty days from date of arrival of the machine, instead of paying the purchase price. Return shipment to be made to above address, by freight only; freight charges collect. Should we not ship it back to you within thirty days from date of' its arriyal, w7e will pay you the purchase price thereof, namely, one hundred and fifty dollars, as follows: fifteen dollars per month, until paid; first payment to be made within sixty days from date of arrival of the machine. Should we be two monthly payments in arrears at any time, the entire unpaid balance of the purchase price shall then become due, together with attorney’s foes amounting to twenty per cent, of the sum in default, if collections are made by law. It is understood that you are to supply us -with any mechanical parts required for the machine for a period of five years, without charge. Whenever w7e may w'ant a part, v7e are to inform you by registered mail. Six per cent, may be deducted if the entire purchase price is paid within sixty days from date of arrival. No verbal agreement will be recognized. All orders are subject to acceptance of the company.”

The complaint, omitting formal portions, alleged that appellant w7as a New Jersey corporation, and that appellant land appellee entered into the contract herein-before set out; that- its obligations in said contract had been carried out; that the weighing machine had been shipped to and delivered to and accepted by the appellee; that defendant had neglected, failed and refused to ship it back to the plaintiff in accordance with the agreement; that the payments had not been made in accordance with the agreement; that same were past due and unpaid; the prayer was for the recovery of judgment for $180 and interest.

Appellee filed an answer, denying all the allegations of the complaint, except that appellee was incorporated under the laws of Arkansas. For further defense appellee alleged: That the agent ¡of the appellant called upon appellee,' and at the time agreed with appellee that, if he would sign the contract as alleged in appellant’s complaint, he would keep the same, and would have the machine shipped, and that he would call again within thirty days, and, if the machine was satisfactory, he would send the contract to the plaintiff; and it was understood and agreed that there was to be no contract until the- expiration of thirty days, when this agent of appellant was to return, and, in the meantime, he would hold the contract until he should return, and, in the event the machine was not satisfactory, . same was to be reshipped; that the machine was not satisfactory, as it is so constructed with faulty mechanism that .it is not reasonably fit for the purpose for which it ivas manufactured, as the scale has no value -whatever, and the same is now held- subject to the order of plaintiff..

■ The cause was submitted upon the pleadings, the testimony -adduced by the respective parties -and instructions of the court, which resulted in a verdict -for appellee and consequent dismissal of appellant’s complaint, from -.which is this appeal.. - - - .....

- • Appellant ■ requested an instructed verdict,- at the conclusion of the testimony, upon the theory that the written contract was- one ‘ ‘ of sale or return, ’ ’ which was a- condition subsequent and which could not be added to, varied, contradicted or controlled by parol- or extrinsic evidence- of a condition precedent, which was 'alleged as an- additional defense, and which' was supported by the testimony introduced by appellee; - The. court refused the request, and sent the case to the jury upon the issue of whether it was agreed, when the contract was signed, that it should be held until the return of the salesman to Pine Bluff, at which time, if the machine proved to be satisfactory, appellee would keep it and the contract would be sent to his company, and, on the other hand, that, when he returned to Pine Bluff, if the machine was not satisfactory, the contract was to be returned to the appellee.

Appellant contends for a reversal of the judgment upon the ground that the trial court erred in rejecting its theory. We think, under the rule announced in the case of American Sales Book Company v. Whitaker, 100 Ark. 360, 140 S. W. 132, 37 L. R. A. (N. S.) 91, that-the court sent the case to the jury upon the correct theory, and did not err in discarding appellant’s theory of the case. This court, said in the case cited:

“Parol ■ testimony is admissible to show that a written instrument was not signed or delivered as a concluded contract, but was only signed and delivered to be held pending the happening* of a contingency or the performance of some condition, and that subsequently such contingency did not happen or that such condition was not performed, and therefore that the written instrument did not actually become effective as a complete contract.”

No error appearing, the judgment, is affirmed.


author: Kirby, J.

text:
    Chronister Bros. & Company v. Oswalt.
    Opinion delivered November 7, 1927.
    Landlord and tenant — priority op landlord’s lien. — Where no indorsement 'or waiver of her lien was made by a landlord on her tenant’s mortgage of his crop for supplies, purchasers of the crop were not bound to take notice of any other kind of a waiver, and were only bound to show as against other liens, by a preponderance of the testimony, the existence of a valid lien on the part of the landlord in an amount equal to or greater than the price paid by them in purchasing the crop.

      Appeal from Pope Circuit Court; J. T. Bulloch, Judge;
    ¡affirmed.

      Robert Bailey, for appellant.

      1lays, Pricldy & Rorex, for appellee.
   Kirby, J.

This suit was brought by W. J. Chronister, doing business as Chronister Bros. & Company, against J. N. Oswalt, to foreclose a mortgage given by him to secure the payment of money for supplies for making a crop during the year 1925. It was alleged that he was indebted to the plaintiff in the sum of $372.20, on open account and a note. That he had paid nothing on said account, .and had sold six bales of cotton to Falls & Sinclair, cotton buyers, for a total of $388.19. That he ivas due the landlord for rent of said crop, $97.04, leaving a balance due from the purchase price of the cotton, which plaintiff was entitled to under his mortgage, in the sum of $281.15. That the mortgagor later had delivered some of the stock mortgaged with the crop, appraised at $204.50, for which he was entitled to credit on the mortgage indebtedness, leaving a balance due of $167.70, for which he prayed judgment against the mortgagor and the purchasers of the cotton.

Falls & Sinclair denied that any indebtedness was due from 'Oswalt to plaintiff and that he had executed any mortgage to secure same, and that he had failed to pay any such indebtedness. They admitted that they bought the six hales of cotton from Oswalt, and stated that they were informed and believed that Mrs. Huso Brown was the landlord of the defendant mortgagor, J. N. Oswalt, and held a prior and valid lien and right to the cotton bought by them, produced by the mortgagor, as a tenant upon rented premises, on account of having -furnished supplies to the tenant to enable him to make the crop, in a greater sum than the amount of the price of the cotton, which was paid to her as such landowner.

Oswalt filed no answer, and judgment w,as rendered against him by default.

It appears from the record that Mrs. Huse Brown, the landlord, was a sister of Oswalt, the tenant, and rented him the land for ,a certain price; one-fonrth of the cotton and seed and $60 standing rent for the corn land, $10 an acre.

Appellant testified that he had spoken to Mrs. Brown, the landlord, before taking the mortgage from Oswalt, the tenant, and had been informed by her that she did not intend to furnish him supplies, whereupon he took the mortgage on the crop and furnished supplies in the amount sued for.

Mrs. Brown denied having told appellant that she was not going to furnish Oswalt supplies. Stated that she had asked him if he had ,a mortgage on the crop, and he replied “No,” and she told him that she was supplying her brother Oswalt. She testified as to the amount of the rent due and the furnishing of so much corn, 75 bushels at $1.25, and $20 in cash, and that he was sick and unable to pick the crop, and she had furnished him $20 a bale, $140, with which to pay for the picking. She claimed other items of indebtedness due her from the tenant, the whole amounting to $35.82 more than the price realized from the sale of the cotton to Falls & Sinclair, and she and the tenant both testified that he still owed her between $20 and $30.

The court gave, over appellant’s objection, instruction No. 2 as follows:

“The landlord’s lien is superior to the mortgagee’s lien, and the landlord’s lien was not waived in the manner provided by statute as to third parties, or to the defendants, Falls & Sinclair. As between Mrs. Brown and Mr. Chronister, if the issue were between them, the testimony about her' telling Chronister that she wanted him to furnish supplies and she wouldn’t claim a lien against him, even if the testimony convinces you that she told him that, would not defeat the claim of Falls & Sinclair,' because the statute provides that the mortgagee, if he wants the landlord.’s lien waived, must make that waiver in the manner provided for by the statute. They didn’t do that. And on the waiver, if you find that were true, would not justify a recovery against Falls & Sinclair by Mr. Cimmistor. Tlie only question for you to determine is whether or not Mrs. Brown furnished the supplies that she contends she did furnish and for which they have paid. If so, as to them, it was a valid landlord’s lien. It would be different if the issues were between Mrs. Brown and Mr. Chronister, but, as between Falls & Sinclair, the landlord’s lien has not been waived.”

The court refused to give the instruction asked by appellant, that the landlord had no right to furnish money to have the cotton picked, as against the claim of appellee for supplies under his mortgage. The jury returned a verdict for the defendants, and from the judgment thereon this appeal is prosecuted.

The statute gives the landlord a lien upon the crop raised upon the rented premises for the value of advances made “to enable his tenant or employee to make and gather the'crop” (§ 6890, C. & M. Digest), necessary supplies, etc., and declares the lien shall be preferred over any mortgage or other conveyance of such crop made by such tenant or employee. Sections 6888 and 6891 provide that certain mortgages on crops given by the person cultivating the land of another are without validity, unless made with consent of the employer or owner of the land or crop, which consent must be indorsed upon such mortgage or conveyance, and that, as between a tenant or his employee, the landlord’s lien is only subject to the lien of the employee for services rendered towards the production of the crop, upon the landlord’s written consent indorsed upon the contract of employment.

It was not claimed in the instant' case that any indorsement or waiver by the landlord of her lien had been made upon the tenant’s mortgage of the crop for supplies, and the defendants, who had purchased the crop of the tenant produced on the rented land, were not bound to take notice of any other kind of a waiver, and were only bound, as the court told the jury, to show by a preponderance of the testimony the existence of a valid indebtedness or lien on the part of the landlord in an amount equal to or greater than the price paid by them in purchasing the crop grown on the rented premises.

The testimony, although unsatisfactory, is sufficient to support the yerdict, and, there being no prejudicial error in the record, the judgment is affirmed.