author: Mehaeey, J.

text:
    Haley-Thompson Special Consolidated School District v. Splawn.
    Opinion delivered January 31, 1927.
    Counties — liability op county treasurer. — The rule that, before a suit can be brought against a county treasurer for amounts growing out of or in connection with a settlement required.to be made in the county court, his accounts must have been passed on by the county court, has no application to an action in the circuit court by a school district against a county treasurer for wrongfully paying school moneys on warrants not properly drawn as required by Crawford & Moses’ Dig., § 8925.
    Appeal from Chicot Circuit Court; Turner Butler, Judge;
    reversed.

      J. R. Parker and William Kirten, for appellant.

      Harry E. Cook and B. E. Merritt, for appellee.
   Mehaeey, J.

This suit was begun in the Chicot Circuit Court, the plaintiff alleging in its complaint that it was a special consolidated school district, created under the acts of the General Assembly, and that C. F. Thompson was elected and served as president of said district for and during the years 1921, 1922, and 1923, and that-M. C. Hall was elected secretary and served during the years of 1921, 1922 and a part of 1923. That, by virtue of the office as secretary of said district, said Hall acted as secretary of said board, and it was his duty to draw warrants and pay debts on the proper order of said board, to be signed by the president, C. F. Thompson, and M. C. Hall, as secretary. That W. J. Splawn was the regularly elected and duly qualified and acting county treasurer of Chicot County for and during the years 1921, 1922 and 1923, and was custodian -of all the school funds of Chicot County and the Haley-Thompson Special Consolidated School District, and had and held in his hands funds of the said district which had come to his hands from the various sources of taxes and apportionment and belonging to said district during those years. That, during the years above mentioned, the said M. C. Hall, as secretary of said Haley-Thompson Special Consolidated School District, unlawfully and without warrant or authority illegally drew and signed the name of the president, C. F. Thompson, to a great number of warrants of said district, which warrants were unlawfully cashed and illegally paid by the said W. J. Splawn, county treasurer of said county, without any authority or right on his part to do so. That, by reason of said W. J. Splawn cashing and paying said illegal warrants, the Haley-Thompson Special Consolidated School District has been damaged in the sum of $1,507.17, interest and costs. The warrants are then described in the complaint, giving the number, amount, payee and date of warrants, and plaintiff prays judgment for the amount above mentioned, interest and costs.

Defendant filed motion to require plaintiff to file the warrants sued on, which warrants were filed in compliance with said motion. The defendant answering, admitted that Thompson was president and Hall was secretary of plaintiff school district, and had duties, power and authority to issue warrants, as alleged in said complaint. Defendant alleged that, as county treasurer, he was advised that it was the practice and custom of Thompson, president of said board, to sign warrants in blank, and in some instances authorizing the signing of his name to warrants by Hall, the then trusted secretary of said school district, and authorizing said secretary to fill in thereafter the amount and purpose for which said warrants were issued,, and that all such-warrants which were presented and paid by this defendant were paid in good faith and without any knowledge of alleged illegality or lack of authority to issue any of such warrants, and that plaintiff should thereby be estopped from any right of action against the defendant. Defendant denied that plaintiff was damaged in the sum mentioned or any other sum by reason of the issuance and payment of said warrants, but alleged the truth to be that most of said warrants wore issued in payment of salaries earned by teachers under contract with said school district and the remainder thereof on payment of allowances by the board of directors of said school district for necessary incidental expenses of operating schools and expenses of improvements of buildings, etc., and prayed that the complaint be dismissed.

Defendant thereafter filed an amendment to his answer, alleging that he presented said warrants for credit and cancellation, as the law requires, to the Chicot County Court, and that said warrants were duly examined, audited, allowed, canceled, and his accounts credited with same. That judgment approving said settlement and allowing him credit for said warrants, as set forth in the complaint, 'by the Chicot County Court, was duly entered. That said judgment still stands as a record of said court; that the plaintiff had its day in court, and that plaintiff has not filed petition to set aside said settlement, nor to reopen same, and has taken no appeal, and pleads the judgment of said county court.

Plaintiff theh filed reply to the amendment to answer, stating that the complaint was filed in May, 1924, answer filed at October term, 1924, continuance granted, and that the amended answer was filed at the time. Plaintiff states that it was not before the county court when defendant presented fraudulent warrants and obtained the order giving defendant credit for them, and was not a party to the suit; that the county court had no jurisdiction nor authority to enter an order crediting said Splawn with the amount of said fraudulent warrants; that the warrants were void; that, upon the discovery of the fraud in issuing said warrants, President Thompson, W. T. Knight, director, and other directors of the district took the matter up with the county superintendent, D. T. Henderson, and the defendant, W. J. Splawn, as county treasurer, and that, at a conference between the plaintiff and defendants, the county superintendent and M. O. Hall, the defaulting- secretary, the amount of the defalcation and fraudulent warrants issued by said Hall as secretary was fixed and arrived at, the said Hall ag-reeing to pay the amount to the said Splawn, county treasurer, and during this proposed settlement and adjustment the defendant, Splawn, appeared in the county court and presented the warrants for cancellation and credit, without the knowledge or consent'of plaintiff or its officers.

The court entered the following order: “On this day this cause is heard by the court upon the amended answer of defendant, which is taken and considered by the court as a motion in abatement of plaintiff’s suit, and upon due consideration thereof said motion is sustained. It is therefore considered, ordered and adjudged by the court that plaintiff’s complaint and cause of action herein is abated and dismissed, and that plaintiff pay all costs herein. To which ruling of the court in sustaining said motion and dismissing plaintiff’s suit, the plaintiff at the time excepted.”

The defendant introduced the county clerk, and by him introduced the records, and the clerk also testified that the warrants were presented by the county treasurer to the county court in open court, canceled, and credited to the proper account of the county treasurer. That he gave the warrants to Mr. Kirten, attorney for the school district, some time last year; that all the warrants involved in this suit were canceled at various times by the county court and credited to Splawn’s account, and filed certified copies of the judgments. The judgments were dated August 19,1922; February 1,1922; October 1,1921; September 18, 1922. The treasurer’s certified copy of the treasurer’s, settlement was filed October 6, 1925. The clerk further testified that a balance was struck, and he exhibited whatever money he had on hand. Plaintiff ■renewed his motion to exclude the testimony of witness as incompetent, which motion was overruled; the court then stated he thought the plea in abatement which was in the answer was well taken, and that the defendant should have judgment. Plaintiff filed its motion for new trial, which was overruled, and plaintiff prayed an appeal to the Supreme Court, which was granted.

The appellee begins his argument by stating: “The only questions involved upon this appeal, as presented by the record, are: 1. Did the plaintiff’s complaint present a cause of action? 2. Did the circuit court have jurisdiction to try and adjudicate the matter involved upon the record made and presented?”

His contention is that, before suit could be brought in the circuit court, it would have to be made to appear that the county treasurer had made his settlement and .that the settlement showed a balance due; that this was necessary to fix the liability of the treasurer, and cites cases holding that it was necessary for the declaration to contain an averment that the officer had settled with the county court and failed to pay over the amount due, or that he had failed to settle and the county court had proceeded to adjust his account. It is said in one of the cases:

“The county court is the forum where the liability of thé collector upon which that of his securities depend, is to be ascertained and evidenced 'by his records. An adjudication in that forum is conclusive evidence against the securities as well as the collector in an action • upon his bond in the circuit court. There can be no lia-' bility upon the collector’s bond without such adjudication, unless the circuit court can, in an action upon the bond, draw to itself in a collateral way jurisdiction to investigate and settle the accounts of delinquent officers for the collection of revenue which apparently belonged to the county courts.” Jones v. State use of Pope County, 14 Ark. 170.

It should be remembered that the above case was with reference to the settlement of the accounts of the collector, and what the court held there was that, when that was true, the circuit court did not have jurisdiction to investigate and settle the accounts of the delinquent officers for the collection of revenue which appropriately belonged to the county court.

The next case to which attention is called by appellee is the case of Greene County v. Croft, 24 Ark. 550, in which case the court held that it was the duty of the county court to cause settlement to be made with the treasurer to ascertain the state of accounts and strike a balance, if any due him, that this was necessary in order to fix the liability of the treasurer and his securiti.es upon the bond, and in a suit upon a bond this was a necessary averment.

In the case of Graham v. State use of Monroe County, 100 Ark- 571, the court also held that, before suit could be brought in the circuit court, it was necessary, in order to fix the liability of the sureties of the treasurer, that a settlement should be made with him by the 'county court, as the law requires, and the amount due determined and ordered to be paid by it before suit could be brought against his bondsmen for any default. That such judgment, when made, is conclusive as to the liability of the sureties, and that it is a condition precedent to the bringing of a suit against them.

It was again held that suit could not be brought in the circuit court before a determination and adjudication fixing the liability of the sheriff’s account. State use of Columbia County v. Nabors, 103 Ark. 16, 145 S. W. 550.

It may therefore be conceded that, if this were a suit against the treasurer for any amounts growing out of or in connection with the settlement required to be made with the county court, no suit could be brought until the county court had examined and passed upon the accounts .of the treasurer. This, however, is not a suit of that character, but is a suit for damages for paying warrants in violation of law. It is provided by statute: “When the warrant of any board of directors, properly drawn, is presented to the treasurer of the proper county, he shall pay the same out of any funds in his hands for that purpose .belonging to the district specified in said warrant.” Crawford & Moses’ Digest, § 8925.

This wrongful act, if it were wrongful, had nothing to do with his accounts or with his settlement with the county court.

This court held, in the case of Hendrix v. Morris, 127 Ark. 222, 191 S. W. 949, that the warrants of a school hoard issued in payment of the cost of transportation for pupils were invalid when issued by districts other than such school districts as became consolidated school districts in the manner and under the terms of the act. This court reversed the case, and held that the court should have enjoined the issuance or payment of any warrant covering the operation of the automobile, as prayecl by appellant.

Again, the court said, in the suit against the treasurer and the school directors, that the school directors were not liable, hut continued:

“A different rule of law, however, applied to the treasurer. He is only authorized to pay out money on the orders or warrants of the hoard of directors of a school district properly draivn. The law requires that the directors shall draw orders on the treasurer' for the payment of wages due teachers, or for any lawful purpose, and they shall state iii every such order the services or consideration for which the order is drawn, and that, when the warrants are properly drawn, he shall honor the same out of the funds in his hands for that purpose belonging to the district. When a warrant is therefore presented to the treasurer for payment for an unauthorized purpose, the treasurer pays the same at his peril, and is personally and individually liable to the district for the moneys unlawfully expended. The judgment of the trial court dismissing appellant’s complaint against the appellees, directors, is therefore affirmed. The judgment dismissing the complaint against the treasurer is erroneous and is therefore reversed, and the cause as to him is remanded for a new trial.” Hendrix v. Morris, 134 Ark. 358, 203 S. W. 1008.

In cases against those officers who are required by law to make settlement with the county court, as treasurer and collector are required to do, a suit cannot be maintained against them in tbe circuit court as required by law, but, in a case ag'ainst such officer for a wrongful act, like tbe misappropriation or conversion of school funds, suit may be brought in the circuit court, whether the officers’ accounts have been passed on by the county court or not. It. is not a question of his settlements or his accounts, but a question of wrongful conduct resulting in damage to the school district. Certainly there could be no reason to have the county court pass on whether or not a treasurer had wrongfully paid a warrant. As to whether the treasurer did or did not wrongfully pay these warrants or any of them, is a question of fact, and may be determined in a trial in the circuit court without any. regard to what the officer may have done in the county court. It might happen that an officer would make a settlement, and that the school directors or other persons whose money had been converted or misappropriated would know nothing, about the settlement, and might.not learn about it until the two years had expired, but, independent of that, we think there is no reason why the county court should act in a case like this before suit is begun in the circuit court, and that such action by the county court is not necessary to give the. circuit court jurisdiction.

The case is therefore reversed, and remanded for new trial.


source: Caselaw Access Project

author: Mehaffy, J.

license: Public Domain

text:
    Shreveport-El Dorado Pipe Line Company v. Bennett.
    Opinion delivered January 31, 1927.
    1. Mines and minerals — reservation in oil lease. — A provision in an oil and gas lease requiring the lessee to deliver to the credit of the lessor one-eighth of the oil produced and saved is a reservation of title in the lessor, and not a mere covenant to pay rent in kind, as affecting the lessor’s right to recover against the lessee’s vendee for conversion.
    2. Mines and minerals — notice op reservation in oil lease.— Where a pipe line company purchased oil from a lessee, it was charged with notice of the lessor’s reservation of title to one-eighth of the oil, and is liable for conversion thereof.
    3. Mines and minerals — nature op oil. — Oil, before it is severed, is a part of the land, bnt after severance is personal property.
    Appeal from Union Chancery Court, Second Division ; George M. LeCroy, Chancellor;
    affirmed.

      Patterson & Rector and Powell, Rmead <ts Knox, for appellant.

      Mahony, Yocum, «3 Raye, for appellee.
   Mehaffy, J.

The plaintiffs brought suit in the Ouachita Circuit Court, alleging that Henry C. Cates was the owner of the south half of the northwest quarter of the southwest quarter of section 33, township 18 south, range 15 west, Union County, Arkansas, which was subject to an oil and gas lease in favor of the Gf. S. & Gf. Corporation; that Cates was the owner of one-eighth royalty interest in and to the oil produced and severed from said tract of land; that the Gf. S. & Gf. Corporation, from November 21 to March 22, sold and delivered to the defendant numbers of barrels of oil for the total price of $135,924.31, of which sum the plaintiff, Henry Cates, was entitled to $16,990.54; that the defendant had paid Cates one-half this sum and owed him $8,495.26, which was past due; that Henry C. Cates had assigned and transferred to the plaintiff, Harlan Bennett, his interest and claim to said money.

The defendant, Shreveport-El Dorado Pipe Line Company, Incorporated, denied that Cates was the owner of the land and entitled to receive royalty of one-eighth of the oil, and denies that it received the oil from the Gf. S. & Gf. Corporation, as alleged in the complaint; denied that it had paid Cates any sum whatever on account of oil purchased from the land described. Defendant, by way of cross-complaint, alleged that it purchased oil from the Gf. S. & Gf. Corporation, which was delivered to it on the southwest quarter of the southwest quarter of section 33, township 18 south, range 15 west, and paid Henry Cates one-sixteenth royalty interest; that this payment was made in pursuance to a division order executed by Henry C. Oates, in which division it was alleged that Cates agreed that this was his only interest. Defendant further alleged that, at the same time, it paid to Cordell, Swilley and Cobb the other one-sixteenth; that, by the terms of the division order, the title to the oil purchased by the defendant was guaranteed, and the defendant made payments to the parties other than Cates, in accordance with the division of interest as shown by said division order; defendant asked that Cordell, Swilley and Cobb be made parties to the action, and that defendant have judgment against them in case plaintiff obtained judgment against it. The case was transferred to equity.

Cordell, Swilley and Cobb filed separate answer. Defendant filed an amendment to its answer, denying that the plaintiff, Cates, was the owner of any oil severed from the lands, but alleged that the G-. S. & Gr. Corporation, under the terms of the lease, was the owner of all oil produced and severed from the soil, and that, if any oil which defendant ran was in fact produced and severed from land described in plaintiff’s complaint, it was purchased by this defendant from the Gr. S. & Gr. Corporation, which failed and refused to run any part of said oil to’ the credit of the plaintiff, Henry Cates, except one-sixteenth, for which payment had been made to plaintiff. Defendant says it had no knowledge that plaintiff was entitled to receive any royalty on any part of the oil purchased by it from the Gr. S. & Gr. Corporation, except an undivided one-sixteenth, and, if plaintiff had failed to receive what was due him, it was caused by breach of the contract existing between plaintiff and Gr. S. & Gr. Corporation, and not the fault on the part of defendant, and was caused by the carelessness of plaintiff in failing to notify defendant about the division order. Defendant alleged that all oil purchased by it was purchased under the division order referred to in the original answer, which was signed by the plaintiff, Cates, and that said division order authorized said defendant to pay to Cordell, Swilley and Cobb one-sixteenth; that, if part of the oil purchased by the defendant, of which Cates was entitled to one-eighth, was delivered to Cordell, Swilley and Cobb, he and his co-plaintiff, Bennett, knew the fact, and knew that said oil was being run under said division order, and they allowed and permitted defendant to make payment in accordance with said division order, and, by their failure to object and call defendant’s attention do the fact that the oil was being produced from lands where the plaintiff was entitled to receive and collect one-eighth, they are estopped to insist that defendant be required to pay them. That, if plaintiff has any right of action, it is against the G-. S. & G. Corporation. The court found in favor of the plaintiff against the Shreveport-El Dorado Pipe Line Company, Incorporated, and found in favor of the Shreveport-El Dorado Pipe Line Company, Incorporated, against cross-defendants, Cordell, Swilley and Cobb, finding the amount due each.

The lease passed to the G. S. & G. Corporation, in so far as sixty acres of the land is concerned, and, in discussing the issues and the case, the attorneys have referred to the land as the south forty and the north twenty. The lease is the usual oil and gas lease by Cates and his wife of the land described, for the sole and only purpose of mining and operating for oil and gas, laying pipe lines, etc. After a description of the land and the statement as to the term it is to remain in force, it is stated: “In consideration of the premises the said lessee covenants, (1) to deliver to the credit of lessor, free of cost, in the pipe line to which he may connect his wells, the equal one-eighth part of the oil produced and saved from said leased premises.” The above is the important section involved in this suit, because the main contention of appellant is that the lessee became the owner of all the oil and gas, and that the one-eighth was merely paid as rental. Another clause of the lease provided :

“If the estate of either party hereto is assigned, and the privilege of assigning in whole or in part is expressly allowed, the covenants hereof shall extend to their heirs, executors, administrators, successors or assigns, but no change in the ownership of the land or assignment of rentals or royalties shall be binding, on the lessee until the lessee has been furnished with a written transfer or assignment or a true copy thereof; and it is hereby agreed that, in the event this lease shall be assigned as a part or as to parts of said above described lands, and the assignee or assignees of such part or parts shall fail or make default in the payment of the proportional part of the lands due from him or them, such default shall not operate to defeat or affect this lease in so far as it covers a part or parts of said lands upon which said lessee or any assignee thereof shall make due payment of said rentals. ’ ’

The last quoted clause is also important, because ■of the contentions of the different parties.

On December 17, 1921, the parties interested signed a division order directed to the Shreveport-El Dorado. Pipe Line Company, Incorporated, in which they stated that they certified. and guaranteed that they were the legal owners of the wells on the south forty and that they are entitled to the entirety of the oil produced from said well, including the royalty and interest, until further written notice. The Shreveport-El Dorado Pipe Line Company, Incorporated, was to give credit for all oils received from said wells as per directions 'below. Then the directions were to give Henry C. Cates one-sixteenth, the G-. S. & G-. Corporation seven-eighths. This letter or division order was signed by the Gr. S. & G-. Corporation, Henry Cates, John A. Cobb, J. C. Swilley, treasurer, and R. M. Cordell.

It is unnecessary to set out the testimony in full or at length. ' The real contention is largely a question as to the law. That portion of the testimony necessary to be discussed will be set out later.

The appellant’s first contention is that, under the terms of the lease, the title to all the oil from the land covered by the lease vested in the lessee and his assigns as and when it was produced and severed from the soil, and that the stipulation in the lease for the delivery of one-eighth of all the oil produced to the pipe line to the credit of the lessor was a covenant by the lessee to pay rent in kind, and was not a reservation of title in the lessor as to snch one-eighth. We dq not agree with the contention of appellant that this is true.

Appellant’s attorneys call attention to a'number of cases decided by this court to the effect that, when the oil or gas is taken from the ground and placed in the pipe line, it becomes the personal property of the plaintiff, just like any other personalty owned by it, but, even in those cases referred to, the question now before the court was not under consideration* and we do not think the authorities of this court cited by appellant support its contention.

The evidence shows that the pipe line company had ■ knowledge of the provisions of the lease, and the provisions of the lease advised it that the appellee owned one-eighth of the oil on the south forty and the north twenty. About this there is no dispute. The division order expressly states that the persons signing it are the legal owners and entitled to the entirety of the production from said wells, including the royalty interest. Therefore, when appellant examined the lease, it was bound to know that one-eighth of the oil which went into its pipe line, under the terms of the lease, belonged to the appellee. When it received the division order, it showed on its face that it applied to the south forty alone. It therefore had knowledge 'that, under the terms of the lease, the- appellee owned one-eighth, and from the division order it knew that he had sold a portion of his royalty on the south forty alone. Therefore, whether the lessee became the sole owner or not would seem to be immaterial, because, when the appellant received the oil into its pipe line, it knew that the appellee was entitled originally to one-eighth on both tracts of land, and knew that he had only sold a portion of that on the south forty. It therefore follows that, when the appellant received oil which came from the north twenty, it was its duty to deliver it according to the terms of the lease, unless it had received a division order as to the oil from this north twenty.

It was said by the West Virginia court: “A complaint is made that the decree required the pipe-line company to make discovery of the oil run into this line, when no officer of it was made a party capable of making discovery. This is answered by the fact that the company filed a statement of such oil which formed the basis of a decree. The law does not require that some officer be made a defendant when discovery is required, as a corporation discovers by an officer; it is a means of discovery for the plaintiff’s benefit, but, when the corporation does make the discovery and it is accepted, where is the error?” Smith v. Linden Oil Co., 69 W. Va. 57, 71 S. E. 167.

It was also said in the above case:

“That the pipe line company was a common carrier; * * * that it contracted only with the Linden Company to receive its oil, and that parties must look to Harter and the Linden Company. This is a claim of nonaceountability by the pipe-line company to the true owner of the oil; a claim that a common carrier .knows only the consignor and consignee, and cannot be called on by a third party, having true title to the goods, to recognize this right. But the authorities do not bear out this position. The carrier is bound to respond to the demand of the real owner for possession of Ms goods, and, in so doing, does not render himself liable to one who, having wrongfully obtained possession, has delivered them to the carrier for transportation. The real owner may maintain an action against the carrier' for refusal to deliver goods to which he is entitled. * * * The lessee in this lease stipulated to deliver the royalty oil into the pipe line to the credit of Harter., When that oil got into the pipe line, it was the property of Smith and Underwood. It was by extraction made personal property, and belonged to them. It cannot be that,,, simply because it was in the pipes, it was beyond the reach of the true owners.”

Again, the court said in the same case:

“Tke'fact that the premises were in the possession of the Linden Company is urged as being the sole test to show that the pipe-line company was not hound to look further, hut only to receive from it without liability to the true owner.”

The court also said:

“Counsel tell us that an oil lease providing for royalty is like an agricultural lease; that tbie royalty is like a share of a grain crop to be paid the landlord; and that title remains in the landlord until he divides the grain and separates the landlord’s part, and Harter and those under him have no title to sustain suit until the oil is separated- Now, all the oil is run into the pipe line. The lease in terms says that the royalty shall be delivered into the pipe to the credit of the party of the first part. It provides no separate delivery, but for running the oil as a whole into the pipes. This peculiar provision distinguishes it from an agricultural lease. Delivery to the pipe line was a separation going to the credit of the lessor, giving him title.”

"We think the decision of the "West Virginia court is a complete answer to appellant’s argument as to the ownership of the one-eighth interest; but, in addition to the fact that the lease itself showed that the appellee was entitled to the one-eighth, the division order expressly states that the persons signing it are the owners of all the oil. There is no controversy about the fact that .oil, before it is severed, is a part of the land, and, when it becomes severed, it is personal property, but it is earnestly argued that it is not only personal property but it is the property of the person who severs it, that is, the property of the lessee. The facts in this case, the lease and the division order, show that a portion of it is the property of the lessor. It is just as much his property under the facts in this case as it would be if he had simply employed the lessee as his servant to do the work and bring it to the surface. In fact, one might employ an agent or servant to bring oil to the surface with the agreement and understanding that, when it 'was brought to the surface, it should be delivered into a pipe line, a certain portion of it to the employer or landowner and a certain portion of it to the person who severed the oil. It therefore seems clear that one-eighth of the oil on the twenty acres was the property of the appellee, but we also think that, even if it were the payment of rent in kind, when the one-eighth together with the other seven-eighths was delivered into the pipe line, all together, the appellant was hound to know that one-eighth of it was to be paid to the lessor.

In the ease of Nonamaker v. Amos, 73 Ohio St. 163, 76 N. E. 949, from which the appellant quotes at length, it .will be observed that one contention in that case was that a parol contract related to an interest in land, and that it was not to be performed in a year. These were the issues, but it was said in that case:

“This is the lessor’s compensation for the lease and rights granted therein. The five-sixths go to the lessees by virtue of the same instrument, because the grant to them was the oil contained in the premises.”

So, it seems from that case that the lessor was regarded as the owner. To be sure, it says that the oil becomes personal property and belongs to the owner of the well. That simply means that it belongs to the parties whose interests are shown in the lease and the division order. Other cases referred to hold that the one-eighth is given as a consideration for the grant, and that it. was not a reservation in any sense of any part of the gas or oil in place in the land. Of course, it did not become personal property until severed from the land, and the lessee himself had no interest in the soil and no interest in the land except the right given him by the lease as to the gas and oil.

Appellant next contends that, because the title is in the lessee when the oil is severed, an action will not lie by the lessor against the lessee’s vendee for conversion. We have already held that the title to the one-eighth is not in the lessee, and certainly, when delivered in the pipe line, one-eighth of it was the property of the lessor.

It is next contended by appellant that appellees are estopped to recover from the appellant by the execution of the division order which sets forth the interest of Cates as one-sixteenth. Defendants argue that they had no notice. We have already shown that they had knowledge of the lease, which showed one-eighth to belong to the lessor, and that the division order was confined to the south forty.

They next argue that the appellees are estopped by the failure to call appellant’s attention to the fact that it was paying royalties to other parties, which should, have been paid to Cates. What we have already said about the notice and knowledge of appellant disposes of this question.

The evidence is sufficient to justify a decree in favor of appellees against appellant, and also in favor of appellant against Cordell, Swilley and Cobb. The decree of the chancery court is therefore affirmed.


text:
    Toulmin & Toulmin v. Underwood.
    Opinion delivered January 31, 1927.
    1. Payment — account settled by note. — The mere giving of a promissory note for an antecedent debt does not extinguish the debt unless the note is received in payment of the debt, but a note given and received for and in discharge of an open account is a bar to an action upon the account.
    2. Payment — presumption.—Where a note is given subsequently . to the existence of an account, the presumption is that the account was settled by the note; but this presumption may be rebutted by proof.
    3. ' Bills and notes — payment out op ' collections. — Where attorneys accepted in satisfaction of their account against clients the latter’s note reciting that it was to be paid out of collections by the attorneys from parties indebted to the clients, the attorneys must look to such collections alone for payment of the noté.
    4. Bills and notes — payment—burden op proof. — In an action on a promissory note, the makers have the burden of proving that the payees agreed that the note should be paid by their collections of amounts due to the makers from third persons.

      5. Account — burden of proof. — In an action to recover the amount due on an account, plaintiffs have the burden of proving that the account is due.
    6. Appeal and error — remark of court harmless when. — In an action on a note, a remark of the court that he did not think the cross-examination of a certain witness had anything to do with the case, if error, was not prejudicial, where such cross-examination was with reference to payment of a note, which matter had been fully developed.
    Appeal from Crawford Circuit Court; James Cochran, Judge;
    affirmed.

      D. II. Powell, for appellant.

      Starbird & Starbird, for appellee.
   Mehaeey, J.

The appellants brought suit in the Crawford Circuit Court against the appellees for $1,095, for $995 of which appellants had received the note of J. T. Underwood, and $100 was alleged to be for services not included in the note. The defendants denied the indebtedness of $100, and admitted the execution of the note, and pleaded a final settlement, and alleged that the note was given and received in payment, and that it was agreed that the note was to be paid out of money collected on notes due appellees; alleged that the appellants had neglected to collect the note, and that, for that reason, there was nothing due on the note.

The undisputed proof shows that, on July 25, 1922, the appellee, J. T. Underwood, executed and delivered to the appellants the following note:

“$995 July 25,1922.
“Ninety days after date I promise to pay to the order of Toulmin & Toulmin nine hundred and ninety-five dollars, at their offices in Schmind Bldg., Dayton, Ohio. Value received.
“J. T. Underwood.
“No.........................Due........................
“Indorsed: Toulmin & Tioulmin.”

On the same day and at the same time the appellants executed and delivered to John T. Underwood the following agreement:

“II. A. Toulmin, Dayton, Ohio,
“H. A. Toulmin, Jr. Schwind Building
“F. W. Schaefer, Washington, D. C.
McGill Building.
“Patent Law Offices,
‘‘Toulmin & Toulmin.
Dayton, Ohio, July 25, 1922.
“Mr. John T. Underwood, City.
“Dear sir: It is agreed that the promissory note you gave us this date for $995 for ninety days is to be paid out of the proceeds to be derived from the note of the Underwood Gas Producer Co., made in favor of yourself and Mrs. Underwood and payable October 24, 1922. “Yours truly,
“Toulmin & Toulmin.”

Also at the same time, July 25, 1922, the appellants rendered a statement to John T. Underwood, in which they state:

“Dayton, Ohio. July 25,1922.
“Mr. J. T. Underwood,
To Toulmin & Toulmin, Dr.
Patent Counselors.
By statement rendered July 8, 1921..................$495
To time and services rendered since said statement of July 8, 1921.................................... 500
$995
“Rec’d. payment by note of John T. Underwood dated July 25,1922.
“Toulmin & Toulmin.”

It will be observed that the appellants signed the statement that they had received payment. It therefore appears that the written contract entered into between the parties shows not only that the note was executed but also shows that it was received by Toulmin & Toulmin in payment of their account against the Underwoods.

There are only two questions in this case necessary to consider:

First: Was the note received as a payment of said indebtedness ?

■Second: Was it to he paid out of notes which other parties owed the Underwoods?

If the note was received in payment, then it extinguished the original debt, and appellants could not maintain a suit for the debt. Not only does the testimony of the appellee show that it was received in payment, but the written statement of appellants themselves shows that they did receive the note in payment. It is well settled that the mere giving of a promissory note for an antecedent debt does not extinguish-the debt unless the note is received in payment of the debt, but it is also well settled that, if a note is given and received for and in discharge of an open account, it is a bar to an action upon the account. This court said, in Costar & Harvick v. Davies & Gaines, 8 Ark. 213:

“An action cannot be maintained on an original contract for goods sold and delivered by one who has received a note as a conditional payment and has passed away the note. A promissory note given and received for and in discharge of an open account is a bar to an action upon open account, although the note be not paid. A note without a special contract will not of itself discharge the original cause of action, but, by express agreement, even the note of the third person may be received in payment. In general a higher security taken from the debtor himself extinguishes the original contract. This proceeds upon the presumption of law that it is taken in satisfaction of the original debt; for, if it appears otherwise upon the face of the security, it will not operate as ah extinguishment. It is a mere question of intention.”

Where a note is given subsequent to the existence of an account, the presumption is that the account was set- „ tied by the note. Again, this court has said:

“It is true that a note given and accepted in discharge of an open account bars an action on the account; and, when a note is taken subsequent to the existence of an account, the presumption of the law is that the outstanding account is settled by the note; but it is a presumption merely, and may be rebutted by proof. It is a question of intention.” Carlton v. Buchner, 28 Ark. 66.

In the case at bar, however, the written statement of the appellants themselves shows that the note in this instance was received in payment. This written statement was a part of the contract entered into at the time, just as much as the note whs a part of the contract. Both instruments were signed at the same time, the receipt of the appellants showing that the note was received in payment of the account. In fact, the appellants presented the appellees with a statement of their account, at the bottom of which was written: “Received payment by note,” and signed this' statement. So, we do not think there could-be any question of the intention here. The written contract itself shows that it was received in payment of the existing indebtedness, a statement of which was presented to appellees at the time. It has also been said by this court:

“It is well settled in this State that the giving of notes for a debt is no payment of the debt, unless, by agreement of the parties, the notes are taken in payment.” Daniel v. Gordy, 84 Ark. 218, 105 S. W. 256.

Here we have the positive agreement of the parties in writing that the notes were received in payment of the account. All of the authorities, are to the effect that the mere giving a note without' agreement does not discharge a debt, but that the giving of a promissory note, with the agreement of the parties that the notes are taken in payment, always extinguishes the original debt. Triplett v. Mansur-Tebbets Implement Co., 68 Ark. 230, 57 S. W. 261, 82 Am. St. 284.

Since the writing itself in this case shows that the note was received in payment, we think the debt was extinguished, and that the suit in this case was properly a suit on the note.

The second proposition is whether, under the contract, the notes were to be paid out of the collections made by Toulmin & Toulmin from parties indebted to the Underwoods. The preponderance of the testimony shows that the appellants had in their possession for collection certain notes due the Underwoods, and that their written agreement, made at the time the $995 note was given, was that said note was to be paid out of the proceeds to be derived from the note of the Underwood Gas Producer Company, made in favor of John T. Underwood and Mrs. Underwood, and payable October 24, 1922, and the testimony of appellee shows that the Toulmins simply neglected to collect these notes. We think the parties had a right to make this agreement, whatever their reason or purpose may have been in making it; that they did make it; and that it was a valid, binding agreement of the parties. According to the preponderance of the evidence, they had the notes which they were to collect, in their possession at the time, and kept them, and, if the agreement was valid, they would have to undertake to make the collection, or, at any rate, they would have to look to the proceeds of said, notes for payment of the note to them. It is well settled that any mode of payment accepted by the payee would be binding on him. In other words, payment can be made in anything or in any manner which the creditor is willing to accept.

“An allegation of payment admits evidence of payment in cash or in any other mode agreed upon by the parties, e. g., by delivery of chattels received by the creditor in satisfaction of his demand, or by giving and acceptance of anything in lieu of money, and in discharge of the debt. Payment may be made in anything that the creditor will receive in payment.” Bush v. Sproat, 43 Ark. 416; Williams v. Uzzell, 108 Ark. 242, 156 S. W. 843.

The appellants complain of the action of the court in giving and refusing instructions, and they also complain because the court stated that he did not think the cross-examination by Mr. Howell had anything to do with the ease. The court properly instructed the jury, we think, that the burden was upon the Underwoods to show by a preponderance of the testimony that the $995 note was. to be paid by notes from other people and owing to the Underwoods and in the hands of the plaintiffs for collection. The court stated to them that, if they showed these facts by a preponderance of the testimony, the verdict should be in favor of the Underwoods on the question of the note; certainly there was no error in this. If the appellees showed by a preponderance of the testimony that the $995 note was to be paid from the proceeds of these other notes, and showed that they were in the hands of the holder of this note for collection, and that the agreement was that they were to collect these notes, or had them for collection and were to pay themselves the note due them out of the proceeds of these other notes, the Underwoods would be entitled to a verdict.

The parties had the right to make the agreement about the manner of the payment of. the note, they had the right to agreé that it should be paid out of the proceeds of the other note, and this was shown in writing, and the instruction simply told the jury that they would have to show these facts by a preponderance of the testimony, that is, show that this was the agreement, and the court required them to show further that the other notes wore in the hands of appellants for collection. The instruction went further, and told the jury, if they did not so find from a preponderance of the testimony, that their verdict should be for the plaintiffs. We think this was a correct instruction.

The court instructed, as to the $100 account, that it was only a question of fact for them to determine, and instructed properly that the burden of proof was on the appellants to show by a preponderance of the testimony that the defendants owed them $100. The first instruction requested 'by plaintiff was properly refused because, as we have already shown, if the note was accepted by appellants in payment of the original account, any cause of action the appellants might have against the appellees would be upon the note, because, if accepted in payment, it would extinguish the original debt.

The remark of the. court objected to by appellants was not a charge to the jury in regard to any matters of fact, but it was a declaration of law. The court simply stated that he did not think the cross-examination of Mr. Howell had anything to do with the case. He made this statement because, evidently, he had concluded the only question in the case was whether or not they were to get their money out of these notes; that is, whether or not this contract had been made; and stated to attorney for appellant that he might go fully into that matter.

The cross-examination to which the appellant objected was with reference to the payment of the $995 note, which the appellees admitted had not been paid, and with reference to the notes which Toulmin & Toulmin had for collection, and as to whether they had been sued on, and if that was not the reason why witness had copies instead of the original. There was no effort made to show that appellants had endeavored to collect said notes; and, since the appellants were permitted to develop the case fully as to whether the notewasreceivedinpaymentof the account and whether it was to be paid out of the proceeds of the other notes, and these two questions were fairly submitted to the jury under the instructions of the court, telling them that the burden was upon the Underwoods upon’these questions, we think there was no prejudicial error in the remark of the court. The real issues in the case were questions of fact properly submitted to the jury, and there was evidence to sustain their verdict.

The judgment is therefore affirmed.


author: McCulloch, C. J.

text:
    Bloede Company v. Mae Veneer Products Company.
    Opinion delivered February 7, 1927.
    1. Appeal and error — conclusiveness of verdict. — A verdict supported by substantial evidence will not be disturbed on appeal even though it appears to be against the preponderance of the evidence.
    2. Actions — consolidation of interventions. — Under Crawford & Moses’ Dig., § 1081, relating to consolidation of causes of action, held in an action for the purchase price of goods and machinery in which goods and machinery were attached, where one intervener claimed the attached machinery and equipment by purchase and another intervener claimed a mortgage lien therein, it was not error to .consolidate the interventions.
    3. Appeal and error — exclusion of testimony — harmless error.— In an action to recover the price of goods, where the issue was as to whether one of the defendants or one of the interveners was an innocent purchaser of such goods, the exclusion of oral testimony that part of the property was purchased by another defendant on the ground that the purchase was witnessed by writing, was harmless error.
    4. Trial — instruction ignoring issue. — An instruction to find for plaintiff as to certain property in an attachment suit if an intervener made no claim thereto, was properly refused as ignoring a claim thereto of one of defendants as an innocent purchaser.
    5. Attachment — property destroyed by fire. — In an action of attachment for certain property, it was not error to refuse .to direct a verdict for its recovery in favor of the plaintiff if the testimony showed that the property had previously been destroyed by fire.
    Appeal from Clay Circuit Court, Western District; W. W. Bandy, Judge;
    affirmed.

      Oliver ds Oliver, for appellant.

      Raley & Ashburn and G. T. Bloodworth, for appellee.
   McCulloch, C. J.

Appellant, a foreign corporation doing business in Baltimore, Maryland, instituted this action in tbe circuit court of the Western District of Clay County against Samuel Frelich, doing business under the style of Western Veneer Products Company, to recover the sum of $2,362.87 alleged to be due for the price of a lot of glue sold and delivered by plaintiff to the defendant. At the commencement of this action an order of attachment was issued and levied on a lot of glue, alleged to be of. the value of $1,400, also machinery and equipment of a veneer plant situated at Knobel, Arkansas, in Clay County. Subsequently an amended complaint was filed, making G-. M. Walker, E. L. Walker, Mae Prelich and Mae Veneer Products Company parties defendant. It was alleged in the amended complaint that the attached property had been fraudulently delivered to Mrs. Mae Prelich, who was the wife of Samuel Prelich, or to Mae Veneer Products Company, for the purpose of cheating, hindering and delaying the creditors of Samuel Prelich, including appellant. Appellee, Mae Veneer Products Company, filed an answer and cross-complaint, as intervener, claiming title to all of the attached property by purchase from another corporation, known as the American Investment Corporation, which had purchased from still another corporation, doing business in St. Louis, known as the Western Veneer Products Company. This plea of Mae Veneer Products Company contained a full and complete denial of the charge of fraud in the acquisition of the property in controversy, and alleged that the property was purchased for a valuable consideration, which was paid, and without any notice of any fraud. There was also an allegation that the machinery and equipment in the plant were purchased by the intervener from Frank Sellmeyer, and that the latter.had a mortgage lien on the property— that the intervener was the owner, subject to the lien of Sellmeyer. Sellmeyer also filed an intervention, claiming that he had a mortgage lien on'the property, and prayed that the lien be enforced. It was also alleged, and the evidence tended to show, that the veneer plant at Knobel, including 'the equipment and machinery involved in the action, was destroyed by fire, and practically nothing of any value left, except a steam, boiler to the engine. There was, over objection of appellant, a trial of the two interventions together, which resulted in a verdict and judgment against' appellant and in favor of both of the interveners. Appellant filed a~motion for. a new trial, which was overruled, and then prosecuted this appeal.

The Western Veneer Products Company was a Missouri corporation, domiciled at St. Louis, and owned and operated a veneer plant there and at another place in the State of Missouri. Samuel Frelich, one of the defendants, was connected with that corporation, and was a stockholder and officer, and manager of the 'business. Defendants, Gr. M. Walker and E. L. Walker, were also' connected with that corporation. The Western Veneer Products Company was thrown into bankruptcy by the Walkers on account of a disagreement between the parties interested, but there was a settlement outside of the bankruptcy court, which ended the bankruptcy proceedings, and the corporation continued to do business under the management of Samuel Frelich. A bill of glue was purchased by that corporation from appellant, at a price aggregating the amount sued for in this action. The glue was shipped to St. Louis to the Western Veneer Products Company, and received there.

There is testimony to the effect that, after the bankruptcy proceedings, the business of the Western Veneer Products Company was conducted by Samuel Frelich for his own benefit, and that the corporate name was merely used as a trade name; that Frelich was the real party in interest, and was the real purchaser of the glue from appellant, but the great preponderance of the evidence, which comes very nearly, if not entirely, undisputed, is that the. business was carried on by the corporation, and that Frelich was merély the manager. That question, however, is unimportant, as will hereafter be seen in the discussion.

A portion of the glue sold by the appellant was shipped by the Western Veneer Products Company to the Mae Veneer Products Company at Knobel, Arkansas, and constitutes the property involved in this action, in addition to the machinery and equipment of the plant. The glue was sold by the Western Veneer Products Company to the American Investment Corporation, and by the latter to appellee, Mae Veneer Products Company. It appears also from the testimony that the American Investment Corporation was controlled by Samuel Frelich.

The veneer plant at Knobel was originally owned by Sellmeyer Brothers, merchants at Knobel, under the partnership style of Southern Novelty Company. The Sellmeyers held a mortgage on the property from the Western Veneer Products Company, and foreclosed it in the chancery court, and bought it for the amount of the decree. After the confirmation of the sale, the Sellmeyers sold the plant to Mrs. Mae Frelich, and executed a bill of sale expressly declaring a lien for the purchase price, and on the same day Mrs. Frelich executed to Frank Sellmeyer, who was acting for the part-' nership, a promissory note for the price, referring to the bill of sale and the lien. The bill of sale also contained a recital that any machinery or other equipment which might thereafter become attached to and become a part of the plant should be embraced in the lien for the purchase price.

The Mae Veneer Products Company was organized as a domestic corporation, and Mrs. Frelich became the principal stockholder, putting in the machinery and other property connected with it in payment for her stock in the corporation.

Testimony was adduced by appellant to the effect that, at the time the glue was shipped from St. Louis to Knobel, there was also included in the shipment a. lot of machinery of the value of about $2,000, which had been purchased from the Walkers. It was the contention of appellant that all of the attached property -was, in fact, owned -by Samuel Frelich, and that the claim of ownership by Mrs. Frelich and the Mae Veneer Products Company was fictitious — that the alleged sale was-fraudulent. On the other hand, the contention of the interveners was that.Mrs. Frelich was the purchaser of-the property for a valuable consideration, and without knowledge of any fraud on the part of Samuel Frelich or the Western Veneer Products Corporation. Appellant also contended) and attempted to show, that the sale of the plant by the Sellmeyer Brothers, though on its face made to Mrs. Prelich, was really a sale to the defendant, Samuel Prelich. All these issues were correctly submitted to the jury on instructions requested by each of the parties, and we are of the opinion that the evidence was legally sufficient to sustain a verdict in favor of the interveners.

There was very strong testimony, in the way of proof of family relationship and certain other suspicious circumstances, which tend to show that the purchase of the plant by Mrs. Prelich was colorable, but we cannot say that the testimony is not legally sufficient to support the finding of the jury that the purchase was in good faith and for a valuable consideration. Mrs. Prelich testified to that effect, and it appears the jury accepted her statement as true. We are not concerned with the question of preponderance of the evidence, for, under settled rulings of this court, it is our duty to leave the verdict of the jury undisturbed if there is substantial evidence to support it, even though it appears to us that the finding is against the preponderance of the evidence.

It is earnestly insisted by counsel for appellant that the verdict is without support, but, as before stated, we are unable to agree with them in this contention.

It is next contended that the court erred in consolidating the two interventions for trial together. In the first place, it may be said, in answer to this contention, that the two interventions were so closely related that they could be treated as a joint intervention, for one of the interveners, the Mae Veneer Products Company, .claims as the owner of the machinery and equipment, as well as the glue, and the intervener, Sellmeyer, claims as lienor. They could have filed a joint intervention, but the fact that they intervened separately does not affect their real status. Besides, the question of consolidation comes squarely within the statute providing for the consolidation of “causes of action of like nature or relative to the same question” pending in the same court. Crawford & Moses’ Digest, § 1081. There was therefore no error of the court in this reg’ard.

The next assignment of error relates to the ruling of the court in excluding offered testimony of witness Walker. It was the contention of appellant that part of the machinery in the plant at Knobel was shipped from St. Louis to Knobel, and appellant offered to show by witness Walker that this machinery was sold by the Walkers to Samuel Frelich. It developed in the examination of the witness that there was a written contract with reference to the sale, and the objection was made that the written contract itself was the best evidence of the transaction. It also appeared from the testimony of the witness that he bad the contract in his possession, and that it was in St. Louis, and he could not produce it at the trial. ’The court sustained the objection, and appellant saved an exception. The contention is that the written contract was the best evidence of. its terms but that it was competent to prove- by oral testimony the identification of the person to whom the sale and delivery were made. The answer to this contention is that we fail to see the materiality of the proof as to who the purchasers really were — whether it was Samuel Frelich or the Western Veneer Products Company, which was under his management. The real question in the case was whether or not the acquisition of the property by Mrs. Frelich or the Mae Veneer Products Company was in good faith and for a valuable consideration* or whether it was colorable for the purpose of defrauding’ the creditors, and that question was, as we have already said, submitted to the jury on appropriate instructions, and-we0 fail to see any prejudice in the rulings of the court, even if found to be incorrect.

There are two assignments of error with reference to refusal of the court to give instructions requested by appellant. One of the assignments relates to instruction No. 6, which reads as follows:

“Even though you should find for the intervener, F. J. Sellmeyer, yet your verdict will.be in favor of plaintiff as against F. J. Sellmeyer as to the glue attached, and as to the machinery shipped from St. Louis in 1923, if you find any machinery was so shipped.”

The first part of this instruction relating to glue is wholly abstract, because Sellmeyer made no claim to the glue. There was no such issue in the case, so far as he was concerned. The other portion of the instruction, which related to the machinery alleged to have been shipped from St. Louis, was incorrect, for it is to be remembered that there was joint claim by the two interveners — one claimed ownership and the other a lien on the property, and it would have been misleading to the jury to tell them to exclude the claim of the intervener Sellmeyer on that property. If the jury found, on the other instructions, that the property was purchased by Mae Veneer Products Company and that the purchase was free from fraud, then it was immaterial, so far as appellant was concerned, whether the recovery was in favor of one intervener or the other.

The other instruction covered by assignment is No. 7, which reads as follows:

“You are instructed that, regardless of any other verdict, your verdict will be for the plaintiff and against both the interveners as to the machinery shipped from St. Louis in March and April, 1923, if you find that any machinery was shipped during or about that time, and you will assess the value of said machinery at the time the bond was filed by interpleader, Mae Veneer Products Company. ”

This instruction was plainly erroneous, for it excluded the machinery alleged to have been shipped from St. Louis in March and April, 1923. This is so for the reason stated above in regard to the court’s ruling on instruction No. 6. In addition to what we have said in regard to those instructions, we are unable to discover the materiality of any testimony in regard to any of the machinery alleged to have( been shipped from St. Louis, for witness Sellmeyer testified that, after the fire, there was no property, constituting machinery and equipment, left there of any value, except the boiler. There was nothing to litigate about, except the boiler and the glue. However, even if there was other property there, we think there was no error in the court’s ruling.

This covers all the assignments, and our conclusion from the whole case is that there is no error in the proceedings, and the judgment must be affirmed. It is so ordered.


text:
    J. I. Porter Lumber Company v. Bonner.
    Opinion delivered February 7, 1927.
    1. Limitation op actions — vendor's lien. — A note for the purchase price of land, which fell due more than five years before the commencement of an action to enforce a vendor’s lien, the vendee holding under bond for title, was not barred by the statute of limitations as against the holder of the note^by assignment from the vendor.
    2. Bills and notes — innocent purchaser. — Qne who takes a negotiable note by assignment for value before its maturity is an innocent purchaser, though the assignment was to cover an antecedent indebtedness.
    3. Vendor and purchaser — rights op assignee. — Under assignment of notes given for the purchase’ of land, the assignee acquired all the rights of the vendor.
    4. Vendor and purchaser — payment to assignor of notes.. — Where notes were assigned before maturity, the assignee was not bound by subsequent payments to the assignor, where the original holder did not have possession of the notes at the time and was not authorized by the assignee to collect them,
    5. Bills and notes — payment.—In an action by the assignee of notes against the makers, evidence held not to support a finding that the makers had paid the original holder.
    Appeal from Cleveland Chancery Court; II. R. Lucas, Chancellor;
    reversed.

      Woodson Mosley, for appellant.

      George Brown, for appellee.
   McCulloch, C. J.

Appellant, a domestic corporation with its principal place of business at Stuttgart, Arkansas, was the owner of a large body of land in Cleveland County, containing 13,600 acres, and on September 15, 1913, executed to one Blodgett a contract to convey same at a stipulated price to be thereafter paid, and undertaking to execute a deed or deeds upon the payment of the price. The contract contained a stipulation permitting Blodgett to obtain a separate conveyance from appellant, conveying parts of the aggregate acreage, on resale to other parties and payment of the price to appellant. The details of this contract were set forth in a recent decision. Wilms v. Dedman, p. 783.

Blodgett organized a corporation, of which he was president and manager, known as the Western Land Company, and made a quitclaim deed to that corporation, which operated as a sale of his interest in the contract with appellant. Thereafter, on December 27, 1915, the Western Land Company entered into an executory contract with appellee, Victor E. Bonner, for the sale of one hundred and twenty acres of the land embraced in the Blodgett contract for the total purchase' price of $1,800, payment of $600 of which was acknowledged in the contract and the balance of $1,200 was evidenced by eight equal promissory notes, payable annually, beginning December 27, 1918. These notes were subsequently delivered by the Western Land Company and Blodgett to appellant in settlement of certain indebtedness under the original contract, the notes bearing indorsement of assignments to J: M. Cox, on September 1, 1917, and J. M. Cox’s subsequent assignment to appellant. There were no credits indorsed on the notes, and appellant instituted this action against Bonner on February 16, 1924, in the chancery court of Cleveland County, to recover the amount of the note's and to enforce a lien as vendor of the land embraced in the contract from the Western Land Company to Bonner. Mrs. Bonner, wife of Victor E. Bonner, was made a party defendant at her own request, and both of the defendants joined in an* answer pleading payment, and also pleading bar of the statute of limitation. The court heard the cause on oral testimony and documentary proof evidencing the contract between the parties, and dismissed the complaint of appellant for want of equity. The court made special findings in the decree that the notes had been paid and discharged.

Counsel for appellees also insist here on the defense of the bar of the statute of limitations against the notes, and we will first dispose of that question. Two 'of the notes, the one falling due on December 27, 1924, and the other December 27, 1925, matured after the commencement of this action, but all of the notes recited that they constituted a series, and each contained an accelerating clause, which made them all due at the option of the holder. The first note, which fell due December 27,1918, was the only one of them which matured more than five years before the commencement of the action, but even that note was not barred as against the vendor of appellee or the holders of the note by assignment from the vendor. Tillar v. Clayton, 76 Ark. 405, 88 S. W. 972; Perry v. Arkadelphia Lumber Co., 83 Ark. 374, 103 S. W. 724; Little Rock & Fort Smith Ry. Co. v. Rankin, 107 Ark. 487, 165 S. W. 431; Wilm v. Dedman, supra.

Now, as to the plea of payment, we are of the opinion that the trial court erred in its finding, and that the decree should be reversed on that ground. The undisputed testimony shows that the notes were assigned to appellant for the purpose of settling an indebtedness of Blodgett to appellant under the original contract. Blodgett testified to that effect, and it is undisputed. The indorsements show that the assignments were made by the Western Land Company September 1, 1917, which was before maturity of the first note. Appellant was therefore an innocent purchaser for value, even though the assignment was to cover an antecedent indebtedness. Newell Construction Co. v. McConnell, 156 Ark. 558, 246 S. W. 854.

Under the assignment, appellant acquired all the rights of the vendor of appellee. Rodman v. Sanders, 44 Ark. 504; Manicuring v. Farmers’ Bank of Commerce, 139 Ark. 218, 213 S. W. 407.

Payments, if any were ¡made at all, were to Blodgett long after the assignments of the notes to appellant, and there is no testimony at all that Blodgett had possession of the notes at the time, or that he was authorized by appellant to make collection. Under those circumstances, appellant was not bound by payment made to Blodgett. Koen v. Miller, 105 Ark. 152, 150 S. W. 411.

The testimony very clearly preponderates, we think, against the finding of the trial court that the payments claimed by appellees were made to Blodgett. Bonner and his wife both testified concerning those payments, and that was the only testimony they offered on the subject. Their testimony is inconsistent and inherently weak. They claim to have paid large sums, in the aggregate more than the amount of the indebtedness. They testified to a great many payments in small amounts, from a few dollars to several hundred; then they testified to a cash payment of $1,000, for which they say Blodgett gave them a receipt and afterwards purloined it, but no such receipt was produced. They claim they met Blodgett in Pine Bluff for the purpose of settling; that they called for the notes, and Blodgett assured them he would treat them right; and that they made a payment of- $1,000 in currency, without the production of the notes, merely upon Blodgett’s promise that he would produce the notes and make a deed. This was contradicted by Blodgett, who testified that the payment of $1,000 was not made to him; that the transaction did not occur at all; that nothing had been paid on the notes except a credit of something less than $50 for a fee due to Bonner for acting as auctioneer in the sale of three mules. Mr. Culpepper, the secretary, testified about the notes, and stated that nothing had been paid on them, but there was to be a credit of $28 for auctioneer’s service. E. L. McClendon, circuit clerk, who appears not to have had the slightest interest in the controversy, testified that, just after this action was commenced by appellant against Bonner, the latter stated to him that he had not paid anything on the land except the first payment; that that amounted to no more than the rent would be up to the time of the decree, and that he was not going to contest the suit. The testimony of appellee is, as we have already said, entirely without any corroboration. We have the testimony of Blodgett and Culpepper, which is corroborated by Mr. McClendon’s testimony concerning appellee’s' admission that he owed the debt. With this state of the proof there is no escape from the conclusion that the preponderance of the testimony is clearly in favor of appellant, that no payment has been made on the notes. For each of these reasons there must be a reversal of the judgment, and it is so ordered, with directions to enter a decree in favor of appellant for the recovery on the notes, with interest, and for the enforcement of same as a vendor’s lien on the land described in the complaint.


author: Wood, J.

text:
    American Investment Company v. Keenehan.
    Opinion delivered February 7, 1927.
    1. Judgment — premature rendition. — A default decree will not be set aside at a subsequent term on the ground that it was prematurely rendered.
    2. Judgment — motion to vacate. — A motion to vacate a default decree rendered at a former term was insufficient as not setting up any grounds stated in Crawford & Moses’ Dig., § 6290, and because it did not comply with §§ 1316 and 6292, Id.

    Appeal from White Chancery Court; John E. Martineau, Chancellor;
    reversed.

      Hillhouse <& Caldivell and Evans S. Evans, for appellant.
   Wood, J.

On August 28, 1925, the American Investment Company, an Oklahoma corporation, instituted this action in the White Chancery Court against John Keenelian to recover judgment on a certain note and to foreclose a mortgage executed to secure the same on certain real estate situated in White County, Arkansas. A. A. Prewitt and his wife were also made defendants. The plaintiff prayed judgment for the amount due on the note and for the foreclosure of the mortgage. The parties named as defendants in the complaint were duly served with summons. The cause was heard on October 19,1925, and, the defendants failing to appear, a decree by default was rendered against them for the amount of the note and the foreclosure of the mortgage. On December 14, 1925, Avery M. Blount, as solicitor for the defendant, John Keenehan, filed the following motion to set aside the decree:

“Comes the defendant, John Keenehan, and for his motion herein states: That this suit was filed on the 28th day of August, 1925, and that said suit was for the purpose of foreclosing a mortgage which the plaintiff alleges to. be due, but such allegation is denied by the defendant. Defendant states further that, soon after the suit was filed, he employed Avery M. Blount as his attorney for the purpose of filing an answer and defending said suit. That his attorney communicated with the plaintiff, American Investment Company, and advised them of defendant’s defense, and that the next term of the court was an adjourned term, which was held on the 19th day of October, 1925, and defendant’s attorney learned that the plaintiff did not expect to be present, or be represented by counsel at this term of court, and, as no depositions or proof of any kind had been taken by the plaintiff, nor any evidence of the mortgages and notes had been filed with the court, the defendant, for that reason, did not expect the cause to be submitted, and therefore did not file an answer, believing that the plaintiff would recognize the validity of his defense and would make a settlement with him without a trial.
“Defendant further states that, when the court convened on October 19, 1925, the court called'the docket of all cases pending, and the defendant’s counsel was called out of the court room by another client, and in his absence this cause was called by the court, not for the purpose of trial but for the purpose of sounding the docket and ascertaining the cases that would be ready for trial, and, when this case was called, J. N. Rachels, an attorney of the White County bar, erroneously announced that he was representing the defendant, and requested that a decree be entered against the defendant, which the court did.
“Defendant further states that the said 3. N. Rachels acted without authority, and that he had not employed him nor given him authority to represent him, and that the action of the court in granting the decree was premature, as no evidence of any kind or character was offered by the court, and the court could not make a finding of facts and find that the defendant was due the plaintiff any amount.
“Defendant further states that he has a valid defense, that the mortgage or interest on same is not due, but that, on the other hand, the plaintiff has collected from him the sum of $600 from rents upon his farm and for timber that the plaintiff has sold from his farm.
“Wherefore defendant prays that the decree entered herein be set aside and forever held for naught, and that the defendant be given permission to file an answer and present to- this court Ms defense, and for all other relief that the court may deem just and equitable.”
On the same day the motion was filed the motion was heard as if on de.murrer thereto, and the court entered a decree setting aside the decree that had been entered on October 19, 1925, an adjourned day of the' regular June term of the court for 1925, and entered an order giving the defendants permission to file an answer, and continue the cause until the next adjourned day of court, March 8, 1926.

The allegations of the motion to set aside the decree rendered .on the adjourned dav of the regular June term, 1925, of the White Chancery Court, treating the same as true, only show, at most, that the decree which the motion seeks to set aside was prematurely rendered. But the court was without authority to set such decree aside at a subsequent term of the court on the ground that the same was prematurely rendered. Section 6290 of Crawford & Moses’ Digest prescribes the grounds upon which a decree may be vacated after the expiration of the term at which it was rendered. The allegations of the motion to vacate do not set up any of these grounds, nor was the motion sufficient in form, nor did the appellee comply with the procedure prescribed by § § 1316 and 6292, C. & M. Digest.

It follows that the court erred in granting appellee’s motion to vacate the decree rendered in favor of the appellant against the appellee and others at the regular June term, 1925, of the White Chancery Court. The decree from which this appeal comes is therefore reversed, and the cause will be remanded with directions to dismiss appellee’s motion to vacate and set aside the decree rendered in favor of the appellant against the appellee and others, at the regular June term, 1925, of the White Chancery Court, and on the 19th of October, 1925, the same being an adjourned day of the regular term. The trial court is hereby directed to enter an order vacating its decree rendered on December 14, 1925, and to reinstate the decree rendered by it in the cause of the appellant against the appellee and others on October 19, 1925, and for such other and further proceedings as may be necessary according to law and not inconsistent with this opinion.


author: IIart, J.,

text:
    Snow v. Riggs.
    Opinion delivered February 7, 1927.
    1. Constitutional law — delegation of power by legislature.— The State Highway Commission may be authorized by the Legislature to promulgate a rule prescribing on which side of the highway pedestrians should walk,' without violating the Constitution.
    2. Constitutional law — delegation of power. — The Legislature may by statute prescribe general rules and intrust their enforcement to the State Highway Commission and give power to the Commission to enact further rules not in conflict with the statute.
    3. Statutes — uncertainty.—A statute which is too vague and uncertain to be effective is void.
    4. Highways — regulation of use. — Acts of Extraordinary Session of 1923, p. 11, § 68, giving the State Highway Commission power to make rules and regulations for traffic on State highways, held not to authorize the Commission to adopt a rule as to the side of the highway on which pedestrians should travel.
    5. Highways — injury by automobile — contributory negligence.— A pedestrian walking on the right side of a highway, contrary to a rule of the State Highway Commission, is not guilty of contributory negligence as matter of law precluding recovery for injury by an automobile coming from behind.
    6. Highways — rights of pedestrians. — A pedestrian has equal rights with others to the use of public roads, and must exercise ordinary care for his own safety, and it is generally a question for the jury whether such care has been exercised.
    7. Highways — injury to pedestrian — burden of proof. — In an action for personal injuries by a pedestrian, the burden of show- < ing defendant’s negligence is on plaintiff, and the burden of showing plaintiff’s contributory negligence is on the defendant.
    Appeal from Randolph Circuit Court; John G. Ashley, Judge;
    affirmed.
    statement oe facts. .
    Mary Riggs instituted this action in the circuit court against Linn Snow to recover damages for having been negligently struck and injured by an automobile which he was driving while she was walking along a State highway in Randolph County, Arkansas.
    According to the evidence adduced in favor of the plaintiff, she came out of a gate on the State highway in Randolph County, Arkansas, and started walking northward along the edge of the road on the east, or right-hand side thereof. She was at the edge of the road, and did not hear any warning of the approach of an automobile. There was a wagon about the center of the road where the plaintiff was walking*, and Linn Snow approached in an automobile, also going north. He was traveling at a rapid rate, and turned around to the right of the wagon in order to pass it, and struck the plaintiff with his automobile and severely injured her. It is fairly inferable from the evidence that the defendant could have seen the plaintiff in time- to have stopped his automobile and thus have avoided striking her. According to the evidence of the plaintiff, she did not hear or see the approaching automobile.
    There was a verdict and judgment in favor of the plaintiff, and the case is here on appeal.

      E. G. Schoonover and Smith, Jackson & Blackford, for appellant. '

      Pope & Bowers, for appellee.
   IIart, J.,

(after stating the facts). Under an act of an extraordinary session of the Legislature, approved October 10,1923, power is given the State Highway Commission to promulgate reasonable rules and regulations to regulate traffic on State highway's. Extraordinary Acts of 1923, page 11. According to the rules promulgated pursuant to § 68 of the act, pedestrians on State highways are required to travel on the left side of the highway in order that they may face and thus see approaching automobiles.

It is the contention of counsel for the defendant that, under this regulation adopted by the State Highway Commission, the plaintiff ivas guilty of contributory negligence as a matter of law because she was walking on the wrong side of the road when she was struck by the automobile. It is sought to uphold the judgment on two grounds.

The first ground is that the State Highway Commission had no authority to promulgate a rule prescribing on which side of a State public highway footmen should walk. We do not agree with counsel in this contention. In 6 Ruling Case Law, page 179, § 179, the general rule is declared to be that there are no constitutional objections arising out of the doctrine of the separation of the powers of government to the creation of administrative boards empowered within certain limits to adopt rules and regulations, and authorizing them to see that the legislative will expressed in statutory form is carried out by the parties or corporations over whom such boards may be given administrative power. This doctrine has been recognized and applied by this court according to the facts of each particular case. Davis v. State, 126 Ark. 260,190 S. W. 436; State v. Martin & Lipe, 134 Ark. 421, 204 S. W. 622; and Britt v. Laconia Circle Sp. Drainage Dist., 165 Ark. 92, 263 S. W. 48.

The rule itself and the reason for it is stated in a clear and comprehensive manner by the Supremo Court of Illinois in People v. Roth, 249 Ill. 532, 94 N. E. 953, Ann. Cas. 1917A, p. 100. In discussing the subject, Vickers, C. J., said:

“The government of a State is not such an exact science that every possible contingency can be foreseen and provided for by legislative enactment. The agencies of government do not act automatically, but, to accomplish the ends of government, it is necessary to vest in its officers certain general powers,.with a discretion in the government agents as to their exercise. It would be as impracticable as it is undesirable to attempt to formulate in advance a set of hard-and-fast rules by which every conceivable public act should be governed.' In order to accomplish the ends of local government it has been found expedient to create various boards and commissions, which are charged with the duty of supervising, directing and controlling particular subjects, and to authorize such boards to formulate rules to carry out the object in view, and it has usually been held, in this and other States, that the granting of such power by the Legislature was not a grant either of legislative or judicial power.”

There can be no doubt that, in pursuance of its authority to regulate public highways and travel thereon, the Legislature may by statute prescribe general rules and intrust their enforcement to a State Highway Commission, and may give powér to the Commission to enact further rules not in conflict with the statute. 12 C. J. 847 et seq., and p. 917. If the Legislature, within reasonable limits, may enact statutes regulating the use of vehicles on the highways and prescribing the side of the highways upon which pedestrians may travel, in the application of the principles above announced, it is equally certain that the Legislature may delegate to the State Highway Commission the power to adopt reasonable rules and regulations to carry out the provisions of the statute regulating the use of the public highways of the State.

It is also insisted that the rule in question is of no effect because the statute under which the rule is promulgated is not sufficiently definite for that purpose. In this connection we think counsel for the plaintiff are correct. Where an act is too vague and uncertain to be effective, it is void on that account. Bittle v. Stuart, 34 Ark. 224, and Ex parte Jackson, 45 Ark. 158.

The rule prescribing upon which side of State highways footmen may travel was enacted under the authority of § 68 of the act referred to above. It reads as follows:

“Power is hereby conferred on the State Highway Commission to make all necessary and reasonable rules and regulations to carry out the provisions of this act, to regulate the traffic on State highways, including regulation of lights on motor vehicles, to fix the load limits and speed limits, the cancellation of licenses issued to incompetent or reckless chauffeurs, to regulate the placing of appropriate road signs and danger signals, to fix the duties of all persons employed by the Commission, including the State. Highway Engineer and secretary, and to issue necessary bulletins and publications. Said rules and regulations may be printed and distributed by the State Highway Commission.”

There is nothing in the section, when construed according to the plain and ordinary meaning of the language used, which would give the State Highway Commission the authority to adopt rules prescribing upon what side of the street highway pedestrians should travel. If the Legislature thinks such an act is desirable, it should declare its purpose in a statutory enactment, or should give the Highway Commission the power to do so in plain and unmistakable terms. . The Legislature, having-failed to confer the power upon the State Highway Commission, the courts cannot do so by judicial construction.

Then, too, the judgment must be affirmed for another reason. Even if the rule in question was rightfully in force, it could not be said as a matter of law that the plaintiff was guilty of contributory negligence which would preclude her recovery. A pedestrian, having equal rights with others to the use of the public roads, must exercise ordinary care for his own safety, and it is generally a question for the jury to say whether such care has been exercised. In the present case the burden of proving negligence was upon the plaintiff and of proving contributory negligence upon the defendant. Millsaps v. Grogdon, 97 Ark. 469, 134 S. W. 632, 32 L. R. A., N. S., 1177, and Minor v. Mapes, 102 Ark. 351, 144 S. W. 219, 39 L. R. A. N. S. 214. In the latter case the court held that, while drivers of automobiles and other vehicles have the right to share the street with pedestrians, they must anticipate the presence of the latter and exercise reasonable care to avoid injuring them, commensurate with the danger reasonably to be anticipated. In the case first cited, the court held that, a pedestrian and. the driver of an automobile each have the same right to the use of the streets of a city, and each is bound to the exercise of ordinary care for his own safety and the prevention of injury to others in the use thereof. In the application of this principle of law, even if there was a valid statute or a regulation of the State Highway Commission prescribing upon which side of a public road a pedestrian should travel, it could not be said that the pedestrian was guilty of contributory negligence as a matter of law for the reason he was struck by an automobile approaching from his rear; for the pedestrian might have some good cause or excuse for traveling on the wrong side of the road.

No other assignments of error are urged for reversal of the judgment, therefore it will be affirmed.