author: Hart, C. J.

text:
    Smith v. Thomas.
    Opinion delivered April 18, 1932.

      McKay d Smith, for appellant.

      J. E. Éawhins and A. B. Vaughan, for appellee.
   Hart, C. J.

The appellee brought this suit in equity against the appellant to obtain a decree for a debt due and a foreclosure on a mortgage on real estate to secure the same. Appellant denied owing the debt sued for, and as a further defense claimed that the consideration for the mortgage was an agreement not to prosecute her for a crime.

Appellee, J. A. Thomas, was a merchant and Ada Smith, appellant, was his customer for the years 1927 and 1928, In the first part of the year 1928 she gave him a mortgage on real estate to secure her indebtedness for the year 1927 in the form of a promissory note for $400, and for further supplies to be furnished her during the year 1928. The chancellor found that the appellant was indebted to the appellee in the sum of $322.09, and rendered judgment for that amount. A decree of foreclosure on the real estate was also entered of record. The facts will be sufficiently stated in the opinion. The .case is here on appeal.

According to the testimony of appellee and his bookkeeper, Ada Smith was indebted to them in the sum of over $400. They gave an itemized list of the articles of merchandise furnished her and told in detail of the transaction between them. While their testimony is contradicted by that of Ada Smith, the chancellor was the judge of the facts, and it cannot be said that his finding in favor of the appellee on this branch of the case is against the weight of the evidence. No useful purpose could be served by setting out in detail the facts testified to by the parties. Suffice it to say that the testimony is in conflict, and under our settled rules of practice we cannot disturb on appeal the findings of fact made by a chancellor unless they are clearly against the preponderance of the evidence.

Further defense to the suit was that the chief consideration of the note was an agreement not to prosecute the appellant for a crime. The general rule is that it is to the interest of the public that the suppression of a prosecution for crime should not be made a matter of private agreement. Hence a settlement by such transactions is contrary to public policy and void. In the instant case, however, according to the testimony of'the appellee, he did not agree not to prosecute the appellant for the crime of disposing of mortgaged property. He told her that he would prosecute her if she did not pay him. Later he did prosecute her for disposing of mortgaged property. He never did agree not to prosecute her if she would pay him. He had a right to use every legal means available to collect his claim. Goodrum v. Merchants’ & Planters’ Bank, 102 Ark. 337, 144 S. W. 198, Ann. Cas. 1914 A, 511.

The chancellor found under the facts that there was no contract tending to stifle a criminal prosecution, and the appellee, as above stated, had the right to use all legal means to collect his claim. This did not amount to compounding a criminal offense. Shattuck v. Watson, 53 Ark. 147, 13 S. W. 516, 7 L. R. A. 551; Ellis v. First National Bank of Fordyce, 163 Ark. 471, 260 S. W. 714.

No other grounds for reversal of the decree are urged upon us. The result of our views is that the decree of the chancery court was correct, and it will therefore be affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    Connecticut General Life Insurance Company v. Speer.
    Opinion delivered April 18, 1932.

      Powell, Smead i& Knox, for petitioner.

      Surrey E. Gilliam, for respondent.
   Hart, C. J.

The Connecticut General Life Insurance Company filed in this court an application for a writ of prohibition against W. A. Speer, judge of the Second Division of the Union Circuit Court, to prohibit said court from exercising jurisdiction in a suit brought against the petitioner by Walter J. Williams.

The record shows that Williams brought suit in said circuit court against the ■ Connecticut General Life Insurance Company to recover upon two contracts of insurance which were issued under what is called the “group insurance” plan.

The Connecticut General Life Insurance Company was organized and doing business under the laws of Connécticut. It issued a group or master policy of insurance to the Gulf Oil Corporation of Pennsylvania, and its subsidiary corporations. The Gulf Refining1 Company of Louisiana was one of the subsidiary corporations. The master policy contains in detail the terms upon which the insurance is issued.

In one of the contracts sued on, the premiums were paid by the Gulf Oil Corporation of Pennsylvania without any reference to any amounts to be collected from the employees of the oil corporation.

On the second contract sued on, the employee signed an application in -blank form which reads as follows:

“Application
“No............................... Date..................................................................
“I hereby apply for Contributory Group Life Insurance in amount now or hereafter applicable to my class provided for in the policy issued by the Connecticut General Life Insurance Company and rider dated November 1,1929, to the Gulf Oil Corporation of Pennsylvania, agreeing to be bound by the rules governing this insurance, and I authorize the Gulf Oil Corporation of Pennsylvania and/or subsidiaries and/or affiliated companies, to deduct in advance the necessary amount per month from my pay, to apply towards premium for said insurance.
“I reserve the right to rescind the order in writing at any time.
“ (Signature).........................................................”

This application or deduction blank was presented to Williams while at work on a lease in Union County, Arkansas, by an employee of the Gulf Refining Corporation of Louisiana. The insured, Williams, was working for the latter company at the time he signed the application. The insurance company had nothing whatever to do with the matter.

Service was had in the suit on the insurance contract" upon petitioner-in the manner provided by statute for suing foreign corporations doing business in this State.

The insurance company appeared only for the purpose of quashing the service of summons upon it, and the ground therefor was that it was a foreign corporation ; that it was not authorized to do business in the State of Arkansas; and that it had not done business in said State. ......•- .■ t y

It is first sought to establish jurisdiction in the circuit court in the suit on the insurance contract by the agency of the oil corporation in taking applications for insurance for its employees.

"We have not set out the master contract of insurance in detail and do not deem it necessary to do so. It is sufficient to say that similar contracts of insurance under the group plan have been construed not to constitute the insured as agent of the insurer to solicit applications for insurance from its employees. Duval v. Metropolitan Life Insurance Co., 82 N. H. 543, 136 Atl. 400, 50 A. L. R. 1276; and Leach v. Metropolitan Life Ins. Co., 124 Kan. 584, 261 Pac. 603.

In one of the contracts the employer paid all the premiums and costs of handling the insurance for its employees. In the other deduction was made from the wages of the employees signing the application to pay a part of the premium. Under these circumstances the employer was not the agent of the insurance company, and had no authority to act for it.

The fact that the employees of the oil corporation were to be insured did not create the oil corporation the agent of the insurance company. It was merely one of the terms or conditions upon which the insurance .company would issue a policy at the request of the employer. By the terms of the policy, the insurance company looked to the employer for the payment of the premiums.. It did not make any difference to the insurance company that the oil corporation might collect a part of the premiums from its employees. The employee ■yvas insured because he made application through a contract executed for his benefit by the oil corporation with the insurance company.

The contract was executed and the whole transaction ha’d beyond the limits of the State of Arkansas, and the rights of the parties were fixed by that contract. As above stated, the insurance company was not concerned with how many of the employees of the oil corporation made application for insurance. That was a matter between the oil corporation and its employees. Therefore, under the authorities above cited, we are of the opinion that the petitioner was not doing business within the State of Arkansas nor was it attempting to carry on its insurance business in this State.

It is next insisted that, under % 6061 of Crawford & Moses’ Digest, the employees of the Gulf Refining Company of Louisiana became agents of the insurance company by securing applications in the blank form above set out to be issued .to the employees of the company in the State of Arkansas.

The section reads as follows: “Effect of agent soliciting- insurance. Any person who shall hereafter solicit insurance or procure applications shall be held to be soliciting agent of the insurance company or association issuing a policy on such application, or on a renewal thereof, anything in the application or policy to the contrary notwithstanding; and whenever any agent of a corporation or association shall .do any of the acts named in § 5978 within this State, said corporation or association shall be subject to the jurisdiction of the courts of this State by service named in § 6063, whether said corporation or association has complied with the requirements of said last-named section or not.”

This section of our statute was passed by the Legislature in 1895 and was borrowed from a statute passed in the State of Iowa in 1880.

It is the settled law of this State that, where the Legislature adopts a statute of another State, which has been construed by the courts of that State,-it will be held that that interpretation was also adopted. Nebraska Nat. Bank v. Walsh, 68 Ark. 433, 59 S. W. 952; Hanson v. Hodges, 109 Ark. 479, 160 S. W. 392; McIlroy v. Fugitt, 182 Ark. 1017, 33 S. W. (2d) 719.

The Iowa statute was construed hy the Supreme Court of that State on December 20, 1888, which was before our Legislature passed our statute. In St. Paul Fire & Marine Ins. Co. v. Shaver, 76 Ia. 282, 41 N. W. 19, the court said:

“The purpose of the statute was to settle, as between the parties to the contract of insurance, the relation of the agents through whom the negotiations were conducted. Many insurance companies provided in their applications and policies that the agent by whom the application was procured should be regarded as the agent of the insured. Under that provision, they were able to avail themselves, in many cases of loss, of defenses which would not have been available if the solicitor had heen regarded as their agent, and many cases of apparent hardship and injustice arose under its enforcement, and that is the evil which was intended to be remedied by the statute, and it ought to be so interpreted as to accomplish that result. ’ ’

The same construction was placed upon it in the latter case of Jemison v. State Insurance Company, 85 Iowa 229, 52 N. W. 185.

Hence the Legislature will be held to have adopted the construction placed upon the statute by the Supreme Court of the State of Iowa.

The result of our views is that, under the allegations of the petition, the circuit court is about to exercise judicial power over a nonresident corporation which is not authorized to do business in this State, and which has not attempted to do any business here.

No service of process can be legally had on the petitioner in the Union Circuit Court. Therefore prohibition is-the proper remedy. Order of Railway Conductors of America v. Bandy, 177 Ark. 694, 8 S. W. (2d) 448; Metzger v. Mann, 183 Ark. 40, 34 S. W. (2d) 1069.

From, the views we have expressed, it follows that petitioner had no adequate remedy at law, and the writ of prohibition should be granted.

It is so ordered.


author: Smith, J.

text:
    McCown v. Edwards.
    Opinion delivered April 18, 1932.

      Frmenthol, Sherrill A Johnson, for appellant.

      B. E. Isbell, for appellee.
   Smith, J.

On February 27,1928, the probate court of Sevier County, Arkansas, appointed L. D. McCown as guardian of Helen Marjorie Kiser and Elmer Kiser, minors. On March 28, 1928, McCown received $1,500 for the'use of each ward, which he deposited on the same day in separate savings accounts with the Bank of DeQueen, of which institution he was the president. The money remained on deposit, less certain expenses of maintenance and support of the minors, until October 4, 1929, when McCown applied for authority to lend the money to a bank on interest at four per cent., to be paid semiannually. The petition for this order recited the inability of the guardian to obtain satisfactory loans to be secured by real estate, and, upon hearing the petition, the probate court found and ordered “that it would be better and safer for the guardian to continue for the present and until the further orders of this court to lend the money of his wards to a bank at the customary rate of 4 per cent, per annum, and that such disposition of such funds would be more profitable to the estate than the purchase of government bonds.” Upon this finding it was ordered that the guardian lend the money to a bank at four per cent, “until such time as the court may by proper order direct him to invest the same in real estate, as provided by law.”

Thereafter the guardian appears to have allowed the money to remain on deposit in the bank of which he continued to be president, and upon which he regularly collected interest, calculated at four per cent., semi-annually. He made reports thereof in his annual settlements, which were approved by the probate court.

These deposits remained in the bank until it closed its doors on July 15, 1930, -when it was taken over by the State Banking Department as an insolvent institution.

On September 8, 1930, the probate court made an order removing McCown as guardian of each of the wards, and appointed E. K. Edwards as his successor, and, after ascertaining the amount due each ward, respectively, directed McCown to pay over the money so found due to his successor. McCown failed to comply with this order, whereupon suit was brought by Edwards as guardian for the use of each minor against McCown and the surety on the guardian’s bonds.

An answer was filed by McCown and his surety, which did not question the amounts alleged to be due the respective wards, but which did deny any liability therefor, for the reason that the guardian had disposed of the money as directed by the probate court, and he claims immunity from liability by virtue of the orders of the probate court.

Conflicting testimony was offered at the trial from which this appeal comes as to whether safe loans of this money might have been obtained with real estate as security, and McCown testified that he considered the deposit of this money in the bank as the safest and best disposition he could make of it. He testified that he regarded the bank as solvent,- even at the time the decision was reached by himself and other officers of the bank to close its doors. He testified that the depositors commenced withdrawing their deposits in an unusual manner, and that this run continued in increasing volume for several days, and that the bank was unable to meet these unusual withdrawals, and that on the afternoon of July 14, 1930, the decision was reached not to reopen the bank on the following day, and it did not reopen the next day. At the time the bank closed its doors there was on hand in cash a sum of money in excess of the joint'deposits of his two wards, but Mc-Cown did not withdraw these deposits, for the reason, as stated by him, that he believed the bank would later be able to reopen for business.

Judgment was rendered in the court below against McCown and his surety for the amount of these deposits, and this appeal is from that judgment.

Various reasons are assigned for the affirmance of this judgment, but we discuss only one of them, as, in our opinion, it is conclusive of this case. McCown deposited this money as soon as he received it, and allowed it to remain on deposit until October 4,1929, when he obtained the order to lend it to the -bank, yet nothing was done to change the relation of the bank to this money. It continued as an ordinary deposit. Of course, this deposit created the relation of debtor and creditor, but the court’s order -contemplated something more should be done, and that was that a loan of this money should be made to the bank. There is a vital distinction between a loan to a bank and a deposit with a bank. In one ease security may be, and usually is, exacted. In the other security may not be given by the bank. The power of a bank to borrow money and to give security for it is unquestioned; while the power of a bank to give security for an ordinary deposit has been expressly denied. The difference between the power of a bank to secure a loan as distinguished from the power to secure a deposit was pointed out in the case of Arkansas-Louisiana Highway Imp. Dist. v. Taylor, 177 Ark. 440, 6 S. W. (2d) 533. We there quoted from Divide County v. Baird, 55 N. D. 45, 212 N. W. 236, 51 A. L. R. 296, as follows: “The doctrine that there is no difference between a loan and a deposit we cannot accept in all its implications. It is true that in law the two transactions have many characteristics in common; but so have other business deals which, nevertheless, are not identical in all their legal incidents. The striking fact remains, a fact which this court cannot ignore, that a real difference between a deposit and a loan has always been assumed, as a matter of custom, in the banking business itself, and in all legislation dealing with the subject since statehood.”

We do not again review the authorities, as the conclusion of the court is declared in the fourth headnote in the case above cited, which reads as follows: “While a bank may pledge its bills receivable to secure loans, it may not do so to secure deposits.” That holding was reaffirmed in the case of Arkansas County Road Imp. Dist. No. 5 v. Taylor, ante p. 293.

It is not the policy of the law to permit a guardian to loan the money of his ward without security. There is a mandatory statute to the contrary. By § 5059, Crawford & Moses’ Digest, it is provided that “* * * such guardian shall, under the direction of the court, loan the same to such person as will give good security therefor, and such money shall be loaned on such time as the court shall direct.”

Preference is given by § 5061, Crawford & Moses’ Digest, to loans on real estate, and direction is there given to make loans that “can be obtained on unincumbered real estate security, and then not more than to the extent of one-half of the value thereof.”

If such loans, approved first by the guardian and thereafter by the court, cannot be obtained, the guardian may, if so directed by the court, deposit the funds of his ward in a bank, provided interest is agreed to be paid at a rate which is as high or higher than can be obtained- on bonds of the United States. Lee v. Beauchamp, 175 Ark. 716, 300 S. W. 401.

The guardian must not only act in good faith, but he must act pursuant to the orders of the probate court. In discussing this duty, it was said in the case of Parker v. Wilson, 98 Ark. 55-3, 136 S. W. 981, that: “The statute contemplates that it shall be done under the direction and orders of the probate court. It is true the guardian may assume the responsibility and loan it without an order of the court, but in such case he acts at his own peril. If he imprudently loans the ward’s money upon inadequate security, without having first procured an order of the court to loan it, he must suffer the loss occasioned thereby, even though he may have -acted honestly in the matter.” See also Alcorn v. Alcorn, 183 Ark. 342, 35 S. W. (2d) 1027.

In the case of Lee v. Beauchamp, supra, where the guardian was held liable only for the amount of interest received from a bank upon the deposit therein of his ward’s money, the facts were that the guardian had endeavored to obtain real estate loans for his ward, and the court had refused to approve applications for real estate loans which he had received, and, failing to obtain such loans, the guardian had deposited the money in bank, upon which the interest paid “was as high, or probably higher rate of interest than would have been obtained if the funds had been invested in United -States bonds.” Section 5066, Crawford & Moses’ Digest.

In the case of Harper v. Betts, 177 Ark. 977, 8 S. W. (2d) 464, 60 A. L. R. 484, the facts were that the deposit in a bank believed to be solvent was made “until he (the guardian) could obtain an order of court with reference to the disposition thereof.” But within three weeks after the deposit was made, and before any other disposition of the funds could be made and approved by the court, the bank failed. Under those circumstances, we held it would be unreasonable to charge the guardian with neglect of duty or failure to comply with the law.

Here, however, the guardian made an ordinary deposit of the money of his wards in a bank of which he was president, where it remained without any authority of the probate court from March 28,1928, the date of the deposit, until October 4,1929, when he obtained the order of the court to lend the money to the bank. Thereafter the character of the transaction as a deposit, and not a loan, as the probate court had directed, remained unchanged, and the guardian- — the president of the bank— allowed the deposit to remain in the bank, although he knew its failing circumstances and did not withdraw the deposits after the decision had been reached not to reopen the bank the following day, although the bank had sufficient funds on hand the day before it closed to have paid these deposits.

Under these facts we conclude that the court below was warranted in finding, as it did find, that the guardian had not sufficiently complied with the law and the orders of the probate court to be granted immunity from the loss of the money of his wards, and the judgment of the court below must be affirmed, and it is so ordered.


author: Humphreys, J.

text:
    Ellis v. Gann.
    Opinion delivered April 18, 1932.

      John R. Duty, W. A. Dickson and Price Dickson, for appellant.

      Earl Blansett and John W. Nance, for appellee.
   Humphreys, J.

This is an appeal from the circuit court of Benton County dismissing the petition of appellants to the county board of education to consolidate School Districts Nos. 1, 2, 15, 34, 101, 109, 111, 114, 121 129 and 136 into one district under the provisions of act 156 of the Acts of 1927 (page 549).

Appellants contend for a reversal of the judgment of dismissal of their petition upon the alleged ground that the circuit court acquired no jurisdiction of the cause by appeal from the county board of education. A motion was filed in the circuit court to dismiss the appeal for want of jurisdiction, which was overruled over the objection and exception of appellants, and their exception has been preserved in their motion for a new trial.

It is argued that, although act 183 of the Acts of 1925 provides that any one who feels aggrieved by the final order of the board of education may appeal to the circuit court within thirty days from the date thereof by filing an affidavit that the appeal is not taken for delay and by filing an appeal bond, and that, although this was done, yet the circuit court acquired no jurisdiction because it does not appear in the record that the appeal was granted by the board of education. It does appear that the affidavit was directed to the board of education, and that the order granting the appeal was signed by the president of the board. The statute does not provide that each member or a majority of the board members sign an order granting an appeal; so, when signed by the president, it will be presumed that the board granted the appeal, and that the board was in session when the appeal was granted, nothing to the contrary appearing. The method of appeal is sufficiently set out in the statute and was specifically complied with. The circuit court properly overruled the motion to dismiss the appeal.

Many questions are argued by appellants in support of their contention that the trial court erred in dismissing its petition for a consolidation of the districts which we deem unnecessary to consider, as it was proper to dismiss the petition for the reason, if no other, that the notice required by § i8821 of Crawford & Moses’ Digest was not posted thirty days before the petition was filed with the board of education. It has been decided in several recent cases that the posting of the notice for thirty days under said section was a prerequisite to filing the petition with the board. Texarkana Special School District v. Consolidated School District No. 2, ante p. 213; Shook v. Morrison, ante p. 522.

No error appearing, the judgment is affirmed.


author: Mehakky, J.

text:
    Bourland v. Southard.
    Opinion delivered April 18, 1932.

      George W. Dodd, for appellant.

      Simmons & Lister and A. M. Dobbs, for appellee.
   Mehakky, J.

This suit was begun by property owners in Paving District No. 11 of the city of Fort Smith against the Board of Improvement and Henry C. Lane, as collector of the district. The appellees who brought this suit are owners of real property in the district, and .brought the suit for themselves and others similarly situated.

The appellants, who were defendants below, are Fag*an Bourland, mayor; Earl Henderson, commissioner No. 1, and W. H. Vaughan, commissioner No. 2, of the city of Ft. Smith, who constitute the board of improvement for said district.

The district was organized to pave certain streets, and benefits were assessed and levied against the property of appellees and others, and appellees have paid all their assessments.

The bonds which were sold have all been paid, the district does not owe any debts, and it has on hand $1,200 or more which belong to the taxpayers of the district who paid the last assessment, among whom are the appellees.

It was alleged that the appellants had failed and neglected to make this distribution, and failed and neglected to petition the chancery court for an order directing* what disposition to make of said funds. Appellees alleged that the appellants had wrongfully and illegally expended certain funds of the district amounting to $300. It was alleged that the accounts of the district were complicated, and the amount of funds which should remain in the district could not be correctly determined without an accounting. It was also alleged that the appellants, unless restrained, would continue to wrongfully expend the funds of the district to pay the general expenses of the city.

The appellees asked for an accounting and a refund of the money belonging to the taxpayers, an injunction against further expenditures, and appellants be required to distribute the amounts due to taxpayers. The answer denied all the material allegations of the complaint as to liability.

Fort Smith has a commission form of government, organized under act No: 13 of the Acts of 1913. That act provided for the election of a mayor and four commissioners. In 1917 there was an amendment reducing the number of commissioners to three.

The act providing for commission form of government, among other things, provides that the mayor and commissioners elected shall constitute the respective boards of improvement for any and all improvement districts in the city operating under the provisions of the act, and shall discharge and perform all duties required of any board or boards of any improvement district or districts, but shall receive no compensation as members of such board or boards.

They are required to take separate oaths as members of the boards of improvement, and each of them is also required to make a bond for the benefit of all improvement districts. The act also requires that the records, papers and contracts of the improvement district shall be kept separate from the records, papers, contracts and property of the city, and that the funds, accounts, and deposits of the improvement districts shall be kept separate.

It is also provided in act No. 13, supra, that every board of improvement district shall quarterly print in pamphlet form a detailed and itemized statement of all receipts and expenditures of each respective district with proper vouchers for all payments, and cause to be filed with the clerk of the circuit court not less than 100 copies of such report, 10 copies of which the said clerk shall furnish to the city library, 5 to each daily newspaper published in the city, and retain 5 in his office.

The same section which provides for this detailed and itemized statement also provides that any taxpayer may, within six months, file exceptions to such report in the chancery court. It provides for an examination of such report and account, and that the chancery court shall disallow any and all unjust, illegal, or improper charges and credits.

The chancery court found that there were $1,300 of the funds of the district in the hands of the commissioner that should be distributed to the taxpayers, and directed that said amount be distributed to the taxpayers who had paid the last and final assessment of benefits, in such proportion as said sum of $1,300 bears to the amount of the last and final assessment of benefits, less a reasonable sum to be charged for the distribution thereof, and less cost of the action.

The chancellor also found that the appellants owed $216 of money wrongfully expended by the commissioners.

There was no appeal taken from the order and decree of the court for a distribution of the funds on hand, but this appeal is prosecuted to reverse the judgment for $216.

Since there is no appeal from the decree for the distribution of the $1,300, this part of the decree is not before us for consideration. The only question for our consideration being whether appellants were liable for the $216 which they were adjudged to pay.

The authority to levy and collect assessments on real property in towns and cities, is found in § 27 of article 19 of the Constitution. That section reads as follows : “Nothing in this Constitution shall be so construed as to prohibit the General Assembly from authorizing assessments on real property for local improvements in towns and cities under such regulations as may be prescribed by law, to be based upon the consent of a majority in value of the property holders owning property adjoining the locality to be affected; but such as-’ sessments shall be ad valorem and uniform.”

Numerous questions are discussed by counsel which are not now properly before this court for consideration. The right of the taxpayers to a distribution, the time within which the court should close the affairs of the district and order a distribution, the power and right of the board after the lapse of a reasonable time, are all settled by the decree of the court ordering a distribution from which there is no appeal.

The question for us to determine is whether the commissioners had the right to expend any of the funds of the improvement district to pay a part of the salaries of certain officers in the employ of the city or to expend the funds for any purpose other than the cost of con-' struction, engineering and legal services.

The provision of the Constitution above referred to authorizes assessments on real property under such regulations as may be prescribed by law.

Section 5656 of Crawford & Moses’ Digest provides for the plans for improvements, and, among other things, provides: “For this purpose said board may employ

such engineers and other agents as may be needed, and may provide for their compensation, which, with all other necessary expenditures, shall be taken as a part of the cost of improvement.”

The commissioners could not lawfully expend any money collected from the taxpayers except that which was necessary, as a part of the cost of construction. When Improvement District No. 11 was formed under the Constitution and laws, a majority of the taxpayers agreed to it. A majority must have consented in order to form a district.

Under the law existing at that time they consented to assessments which were necessary in the cost of the construction of the improvement, and the taking or appropriating of any part of the assessments collected for any other purpose would be a violation of the Constitution.

This court, in discussing a special act of the Legislature, with reference to funds of an improvement district, said: “The majority of the court are of the opinion that the special act of the General Assembly is unconstitutional, as authorizing a diversion of funds collected for one purpose to be appropriated to another use, as an improvement district organized to construct streets has no authority to use funds collected for that purpose to thereafter appropriate any portion thereof for purposes of repair, and the special act did not confer that authority because it was not based upon the consent of the taxpayers of the city, as required by the Constitution. In other words, to create an improvement district for the purpose of building or repairing streets in a city, the consent of the taxpayers must first be obtained in the manner provided by law, and the authority conferred by the original petition under which the district was formed could not be subsequently enlarged by legislative enactment to which the taxpayers had not consented.” Paving Dist. No. 5 v. Fernandez, 142 Ark. 21, 217 S. W. 795. This same case was before this court again where the question of distribution was discussed at length, but that question, as we have said, is not involved here.

While this court has held that the provision of the Constitution that no money arising from a tax levied for one purpose shall be used for any other purpose has no application to assessments in improvement districts, it is stated: “The 'basis of our decision in that case was that the consent of owners of property to the construction of the original improvement being necessary under the Constitution (art. 19, § 27), funds arising from taxes levied on benefits could not be used for any. other purpose without the consent of the owners of the property.” McAdams v. Henley, 169 Ark. 97, 273 S. W. 355, 41 A. L. R. 629.

This court held that the property owners in a local improvement district had interest in the funds of the district, and that it was an impairment of their vested rights for the Legislature to enact a law to divert the funds to uses other than for the benefit of the owners. Of course, if the Legislature could not pass such a law, the law-making body of the city could not.

Again this court said: “In short, improvement district taxes can only be levied to the extent that the benefits conferred are equal to or exceed the amount of the special taxes levied. Therefore, so far as improvement districts are concerned, we conclude that the individual landowners have vested rights which cannot be impaired by subsequent legislative enactment.” Bauer v. North Ark. Highway Imp. Dist. No. 1, 168 Ark. 220, 270 S. W. 533.

This court has many times held that the only theory justifying local assessments on real property is that the real property assessed is benefited in an amount equal to or greater than the assessment. There is therefore no authority for collecting assessments for any purpose other than the construction of the improvement, and this includes incidental expenses that are necessary to making the improvement.

The commissioners cannot therefore lawfully expend any of the money of the improvement district for general expenses of the city or for paying employees or officers of the city. If they could require the improvement district to pay any part of the expenses of the city, they could require it to pay all. The taxpayers of the district can be required to pay the assessments only because their property is benefited equal to the amount they have to pay.

It is contended by the appellant, however, that the appellees were guilty of laches in failing to take timely exceptions to the report of the board. The law requires the board of improvement to cause to be filed with the clerk of the circuit court certain numbers of copies as mentioned above, of the report, and the same section provides that any taxpayer may, within six months, file exceptions to such report. Acts 1913, p. 82, § '23.

The evidence shows that the report was not filed with the clerk of the circuit court, and it is sufficient to say that the taxpayer had a right to assume that he could file any exceptions or bring a suit within six months after the filing of the report at the place where it was required to be filed, and, as no such report was filed with the cleric of the circuit court, the taxpayer would not be required to file exceptions to said report.

This court has said that notices of this kind are for the benefit of the landowners, and that giving of the notice is jurisdictional. The giving of the notices provided for in the act authorizing a commission form of government is for the benefit of the landowner, and he is not guilty of laches in failure, to bring a suit within the time mentioned in the statute, when the report was not filed with the clerk as required by law. See Sudberry v. Graves, 83 Ark. 344, 103 S. W. 728.

It is finally contended that the chancellor gave judgment for two or three small items improperly, and that the decree for $216 should have been for not more than $191. The amount of the money erroneously expended was a question of fact, and we cannot say that the finding of the chancellor was against the preponderance of the evidence.

It is urged that the method employed by the commissioners in the city of Ft. Smith is reasonable and economical. This appears from the evidence to be true, and, so far as the evidence shows, the affairs of the district have been properly administered with the exception of appropriating certain sums of money belonging to the district for the payment of city expenses, and this, as we have already said, it could not lawfully do.

The decree of the chancery court is affirmed.


author: MoHaney, J.

text:
    Storthz v. Fullerton.
    Opinion delivered April 18, 1932.

      Ingram Moher, Robinson, House & Moses and Harry E. Meek, for appellant.

      Coleman & Riddick, for appellee.
   MoHaney, J.

On the former appeal of this case, Fullerton v. Storthz, 182 Ark. 751, 33 S. W. (2d) 714, this court reversed the decree of the trial court and held that the purchase money note given by Thane Lumber Company to appellant and by him indorsed to the order of the Bradley Investment Company was. a sale and not a payment of the note. It was further held that the note in the hands of appellee was a valid and subsisting obligation, and should share ratably with the other two purchase money notes held by appellant in the security of vendor’s lien on the timber conveyed. For a statement of the facts on the former appeal, see 182 Ark. 751, 33 S. W. (2d) 714.

On a remand of the case, appellant filed a new bill which he says in reality is a creditor’s bill. He alleged his judgment against Thane Lumber Company, insolvent ; that the security is insufficient to discharge his debt; that Bradley Investment Company contracted with Thane Lumber Company to pay appellant the amount of the note in controversy, and that it could not lawfully buy said note because it had agreed to pay it; that, the Bradley Investment Company having bought the note in violation of its agreement, “it acquired title thereto without beneficial interest but strictly as trustee ex maleficio for the benefit of Thane Lumber Company”; that appellee is not an innocent purchaser of the note from the Bradley Investment Company, and that as assignee his title is impressed with the same trust, to the end that the beneficial interest of Thane Lumber Company in said note be subjected to the payment of the deficiency which will be due appellant after a sale to enforce Ms lien on the timber. The trial court denied the relief prayed, and this appeal followed.

The basis of the relief sought is somewhat involved and difficult of comprehension. It is stated by counsel that: “This second bill was filed in the hope that this court would welcome an opportunity to cure, in a manner not conflicting with the principles of res judicata, what, we respectfully submit, was a bad decision.” It is well settled that on a second appeal the judgment on the former appeal becomes the law of the case, and is conclusive of every question of law or fact decided in the former suit, and also of those which might have been, but were not presented. Shackleford v. Arkansas Baptist College, 183 Ark. 404, 36 S. W. (2d) 78. And this is true whether we may now think the former decision was right or wrong. St. L., I. M. & S. R. Co. v. York, 92 Ark. 554, 123 S. W. 376; Coca-Cola Bottling Co. v. Shipp, 177 Ark. 757, 9 S. W. (2d) 8.

It is argued on this appeal that appellant is entitled to reach the lien note in appellee’s hands by equitable garnishment or creditor’s bill on the ground that appellee is not an innocent purchaser thereof from Bradley Investment Company, which was precluded from purchasing same because of its agreement with Thane Lumber Company to pay it for its account, and that therefore appellee is a trustee ex maleficio for the benefit of the latter company. The further argument is made that, if he be wrong in the above contention, credits derived from a foreclosure proceeding in the federal. court by appellee, as assignee of Bradley Investment Company against Thane Lumber Company, should be applied to the satisfaction of the note in controversy. We do not discuss the merits of these arguments. They either were or could have been made on the former appeal and are now res judicatae.

We find no error, and the decree is accordingly affirmed.


author: Butler, J.

text:
    Morgan v. Scott-Mayer Commission Company.
    Opinion delivered April 18, 1932.

      Buzbee, Pugh d Harrison, for appellant.

      Francis T. Murphy and Eugene H. Murphy, for appellee.
   Butler, J.

In the case of D. D. Adams v. W. O. Scroggins, pending in the chancery court, the proceeds of a quantity of assets involved in that litigation were deposited in the registry of the court. S. R. Morgan acquired the interest of a number of the parties to the litigation who were entitled to a part of this fund. Numerous parties intervened from time to time, among others the Scott-Mayer Commission Company, which, in its intervention, alleged that it was the owner of a valid and subsisting judgment against S. R. Morgan obtained in the Pulasld Circuit Court on October 16, 1922, on which there remained unpaid a sum which, together with the accrued interest, amounted to $1,019.75 on the date of the intervention. A certified copy of the judgment was attached to the intervention as exhibit A thereto.

Further allegation was made that Morgan was the owner of the assets involved in the litigation then pending in the chancery court in the aforesaid case of Adams v. Scroggins, and that certain sums of money were on deposit in the registry of the court subject to be disbursed to the said Morgan. The intervention concluded with a specific prayer that the Pulaski Chancery Court fix and declare a lien in favor of the intervener upon any money involved in the litigation and a general prayer for all other legal and equitable relief to which the intervener might be entitled.

On July 20, 1931, the court rendered a decree adjudging the rights of the several interveners in the action and, on the intervention of the commission company, rendered a personal judgment in its favor against Morgan in the sum of $1,019.74, declaring the same to be a lien upon all the property of the said Morgan.

On September 11, 1931, the commission company obtained from the clerk of the Pulaski Chancery Court a writ of execution on the aforesaid judgment which was executed by levying upon a certain automobile, the property of S. R. Morgan. In order to discharge this execution, Maude Wade Morgan, who claimed to be the owner of the automobile, executed a bond with sureties, the condition of which was that she should interplead “'before the next term of the court to which the order of execution in this action is returnable and will prosecute to judgment without delay her interpleader for the property attached in this case and claimed hy her,” and, in’ the event that the property should be found to be that of S. R. Morgan, that she would deliver the same to the sheriff, etc.

On October 5, 1931, the Pulaski Chancery Court, on motion of the appellant, entered an order amending the judgment of July 20, 1931, eliminating the personal judgment rendered against S. R. Morgan and substituting in lieu thereof and the lien given therein the following: “The court finds that Scott-Mayer Commission Company has a judgment against S. R. Morgan which it obtained in other courts, and that it is entitled to a lien against any funds of the estate belonging to, or which might belong to, S. R. Morgan in the amount thereof, to-wit, $1,019.74.”

On the 15th day of December, following, the commission company appeared in court and filed its motion to set aside the decree of October 5,1931, setting up, among other things, that said amended decree was rendered at a subsequent term of the court and without notice to it. On the 18th day of December, Maude W. Morgan filed her intervention claiming the automobile. To this intervention a demurrer was filed, and on the 23d day of December, 1931, the court entered an order finding that the decree entered October 5, 1931, was after the term at which the decree of July 20 had been entered, and that said last-mentioned decree “truly speaks the finding of the court at that time. ’ ’ The court found that Maude W. Morgan had failed to intervene within the time nominated in the bond, and had made default.

The demurrer to the intervention was treated as a motion to dismiss, and was sustained. The court then found that the automobile had been delivered by the sureties to the sheriff of Pulaski County, and exonerated them from further obligation on the bond, ordering that the commission company proceed with the sale of the car under execution, and rendering a judgment against Maude W. Morgan and her sureties on the bond for costs. . That part of the decree of the court awarding personal judgment against S. R. Morgan and dismissing the intervention of Maude W. Morgan is here on appeal.

The appellants first contend that that part of the decree of the Pulaski Chancery Court of July '20, 1931, rendering a personal judgment against S. R. Morgan on the intervention of the Scott-Mayer Commission Company was erroneous. It is insisted that no summons was issued.on the intervention, and no defense interposed by Morgan to the prayer of the intervention. There is no recital in the decree thát any evidence was heard, and the court therefore should not have granted any relief beyond that sought in the prayer of the intervention, which was for a lien on the funds of Morgan then in the registry of the court. The court erred in rendering a personal judgment, the appellants contending that there was no foundation in the allegation to support a personal judgment. They cite and rely on the case of Wilson v. Overturf, 157 Ark. 388, 248 S. W. 898, to support the contention made. It is further insisted that, since the judgment was erroneously made, there was no foundation for the execution, and that it was wrongfully issued.

It is further suggested by the appellant that, if the judgment of July 20, 1931, was not a nullity, the execution issued was without warrant because not authorized by the terms of the decree of July 20,1931. The position taken by the appellant on these questions is without foundation. In the case of Wilson v. Overturf, supra, the court held that a judgment by default must be responsive to the allegations of the complaint, as the default after service of summons admits only the allegations of the complaint, and that these must be sufficient to support the judgment. This is the settled rule, Thomas v. Hickman, 164 Ark. 469, 262 S. W. 20; Shelton v. Landers, 167 Ark. 638, 270 S. W. 522, but it has no application to the case at bar, because this was not a judgment by default. The decree of July 20, 1931, recites: “And S. R. Morgan, being present in person and submitting himself to the jurisdiction of the court in this case, and all parties announcing ready for trial, the court finds, etc.,” and he must be deemed to have acquiesced in the judgment then rendered.

Although prayer for a judgment was not included in the specific relief asked, the statement of facts, and not the prayer, constituted the cause of action, and the court may grant any relief that the facts pleaded and the general prayer may warrant where the element of surprise does not exist. Alberson v. Klanke, 177 Ark. 288, 6 S. W. (2d) 292. The judgment of the circuit court pleaded in the intervention was a cause of action which warranted the rendition of a judgment in the Pulaski Chancery Court, although there was no specific prayer for such judgment. Where there is a prayer for special relief and also a prayer for general relief, the court may give to the complainant under his general prayer any relief warranted by the facts alleged. Cook v. Bronaugh, 13 Ark. 183; Rogers v. Brooks, 30 Ark. 613; Ashley v. Little Rock, 56 Ark. 391, 19 S. W. 1058; Waterman v. Irby, 76 Ark. 551, 89 S. W. 844. The court therefore properly rendered a personal judgment, and it was not necessary, in order to warrant the issuance of an execution, that the judgment direct that one might be issued, as the issuance of an execution is authorized by § 4253 of Crawford & Moses’ Digest, providing that an execution may issue upon any final judgment, order or decree of a court of record for a liquidated sum of money and for interest and costs, or for costs alone.

We take judicial knowledge that the April term of the chancery court had expired before October 5, 1931, and therefore the court had lost control of the decrees rendered at the April term, except for the causes mentioned in §§ 1361 and 6290 of Crawford & Moses’ Digest. This case does not fall within any of the exceptions in those sections, and they therefore have no application, and the only ground on which the decree of October 5 could be justified was on the theory that the judgment then being entered was the judgment of the court on July '20, 1931, and that the order was made now for then. If there was any testimony introduced on the hearing of the motion for the judgment nunc pro tunc of October 5, none has been preserved in the record, and to justify such an order that testimony must be clear and so decisive in its nature as to overcome the recitals of the written judgment .sought to be corrected, (Midyett v. Kerby, 129 Ark. 301, 195 S. W. 674; Turnbow v. Baird, 143 Ark. 543, 220 S. W. 826), and on the hearing of a petition for a judgment nunc pro tunc the trial judge may indulge his personal recollection as to the judgment sought to be corrected. Bertig Bros. v. Grooms Bros., 164 Ark. 628, 262 S. W. 672. We must therefore indulge the presumption that the trial court’s finding “that the decree of July 20, 1931, truly speaks the finding of the court at that time” was supported by the testimony in the case or the personal recollection of the judge. Moreover, it may be observed that the order of October 5 was in effect an entirely different judgment from that entered on July 20. The power of the court by order nunc pro tunc could not be invoked, as it had then no power to change or revise the judgment, since that power could not be used to correct errors or mistakes, but only to state what was actually done and which had failed to be properly recorded. Evans v. U. S. Anthracite Co., 180 Ark. 578, 21 S. W. (2d) 952. The court therefore correctly held that it was without authority to render the decree of October 5, 1931, in so far as it sought to change the decree of July 20,1931.

From what has been said, it follows that the contention of Maude Wade Morgan that there was no valid decree of July 20, 1931, upon which to base an execution, and that the execution, moreover, was not valid because there was no authority in that decree for the issuance of an execution, cannot be sustained. It is further insisted, however, on her part, that, if the decree properly recited a judgment against S. R. Morgan, and there was a valid execution thereunder, the decree of October 5, 1931, excused her from filing her intervention; that, when filed, it alleged facts which, if true, entitled her to retain the automobile, and that the court erred in sustaining the demurrer to her intervention, and should have permitted* her to introduce testimony in support of the allegation.

The answer to this contention is that she was in default before October 5, 1931, and that order, as conceded by counsel, was obtained without any notice to her adversary and after the time when the decree of July 20, 1931, had become final. In order to obtain the discharge of an execution, she obligated herself to intervene before the next term of the court. This she failed to do, and she cannot .justify this default by the void order of October 5, 1931. The court had before it her intervention and the motion to set aside the order of October 5, 1931, from the 15th of December until the 23d of December, and it then disposed of these motions with the rest of the case. Considering the record before us, we cannot say that the court erred. The decree therefore, both as to S. R. Morgan and Maude Wade Morgan, is affirmed.

Kirby, J., dissents.


author: •Smith, J.

text:
    Copeland v. Union Industrial Loan Corporation.
    Opinion delivered April 25, 1932.

      H. M. Jaocnoay and Lee Miles, for appellant.

      Wills, Wills & McLees, for appellee.
   •Smith, J.

Appellee instituted suit on September 11, 1930, in the municipal court of the city of Little Rock against R. E. Copeland and N. E. Douglas on a note which they had signed as sureties for J. W. Deavers, which note was payable to appellee’s order.

An answer was filed, in which Douglas alleged that his name had been forged, and Copeland answered that he had signed the note upon condition that Douglas would also sign it, and that it should not be delivered until he had done so. The answer further alleged that, on October 18, 1930, written notice had been served upon appellee, signed by both Copeland and Douglas, demanding that suit be brought against Deavers as the principal in said note, but that such suit had not been brought, and that they had been exonerated by this failure to sue.

Douglas testified that he did not sign the note. Copeland admitted that he did sign the note, but testified that it was agreed between himself and Deavers that the note would not be delivered to the payee unless and until Douglas'had signed it. It was not shown, however, that appellee was advised of this ag’reement between Copeland and Deavers, nor was it shown that appellee was advised that the signature of Douglas was not genuine.

On behalf of appellee, it was shown that there was a balance due upon the note; that Deavers died in May before the institution of suit the following September, and that he left no estate, and there was no testimony that there had been any administration upon his estate. Upon this testimony the court rendered judgment in favor of Douglas and against Copeland, from which judgment Copeland has appealed.

The agreement between Copeland and Deavers that the note should not be delivered unless Douglas signed it, of which agreement appellee was not advised, constituted no defense in favor of Copeland, who did sign it. Saxon v. McGill, 179 Ark. 415, 16 S. W. (2d) 987; White-Wilson-Drew Co. v. Egelhoff, 96 Ark. 105, 131 S. W. 208; Williams v. Morris, 99 Ark. 319, 138 S. W. 464; J. R. Watkins Medical Co. v. Warren, 150 Ark. 542, 234 S. W. 618; § 7780, Crawford & Moses’ Digest; § 8296, Crawford & Moses’ Digest.

The notice served upon appellee to sue Deavers as principal was given pursuant to §§ 8287 and 8288, Crawford & Moses’ Digest, which read as follows:

“Section 8287. Any person bound as surety for another in any bond, bill or note, for the payment of money or the delivery of property, may, at any time after action has accrued thereon, by notice in writing, require the person having such right of action forthwith to commence suit against the principal debtor and other party liable.

“ Section 8288. If such suit be not commenced within thirty days after the service of such notice, and proceeded in with due diligence, in the ordinary course of law, to judgment and execution, such surety shall be exonerated from liability to the person notified. ’ ’

It is insisted that the failure to sue Deavers pursuant to the demand that this be done exonerated the sureties. But we do not think so.

It will be remembered that Deavers was dead when the notice was served, and for this reason the sections of the statute above quoted do not apply.

At volume 2 of Brandt on Suretyship and Guaranty (3d ed.), § 778, in a discussion of statutes similar to those above quoted, it was said: “Another statute provided that a surety might, by writing, require ‘the person having such right of action forthwith to commence suit against the principal debtor and other parties liable.’ Held, a surety could not, after the death of the principal, exonerate himself by notifying the creditor to present his claim against the estate of the principal. The case was not within the meaning of the statute.”

The case of Hickam v. Hollingsworth, 17 Mo. 475, was cited in the note to the text quoted. This case construed certain sections of the statutes of Missouri, from which our statute was obviously borrowed. Indeed, we acquired the statute by virtue of the fact that the Territory of Arkansas was organized out of territory originally a part of the Territory of Missouri, and the act of Congress approved March 2, 1819, “* * * establishing a separate territorial government in the southern part of the Territory of Missouri,” provided, in § 10 thereof, “That all the laws which shall be in force in the Territory of Missouri, on the fourth day of July next, not inconsistent with the provisions of this act, and which shall be applicable to the Territory of Ark- . ansas, shall be, and continue, in force in the latter territory, until modified or repealed by the legislative authority thereof.” Steele & M’Campbell’s Digest, Laws of Arkansas Territory (1835), page 36.

The Missouri statute appears in a Digest of the laws of the Territory compiled in 1818, page 368, and was amended by an act approved February 5,1825, which was after the admission of Missouri to statehood. Yol. 2, Digest, Laws of Missouri (1825), page 735.

A comparison of this act with our present statute leaves no doubt as to the origin of our existing statute.

Sections 8287 and 8288, Crawford & Moses’ Digest, were brought forward from §§ 1 and '2 of chapter 137 of the Revised Statutes of Arkansas (1838), page 722,-this chapter being entitled “Securities,” and it there appears as having been approved December 18, 1837, which was shortly after the admission of this State into the Union. The identity of these sections with the statutes of Missouri construed in the case of Hickam v. Hollingsworth, supra, becomes apparent when the same are compared.

We feel constrained therefore to give much deference to this Missouri ease, although it was not decided until 1853, which was subsequent to the enactment of our present statute, it being an amendment of a Missouri statute, which we acquired by virtue of the fact that the Territory and State of Arkansas had been formed out of territory once a part of the Territory of Missouri. Inasmuch as the decision of the Supreme Court of Missouri was not rendered until after our statute had been enacted, it is not controlling upon us. Townes v. Krumpen, 184 Ark. 913, 43 S. W. (2d) 1083. Yet, in view of the history of the legislation, we read the Missouri case with great deference.

In the case of Cathcart v. Robinson, 5 Peters (U. S.) 264, Chief Justice Marshall said the rule had been uniformly observed by the Supreme Court of the United States, in construing adopted statutes, to accept the construction of the statute made by the courts of the country by whose Legislature the statute was enacted, if rendered prior to its adoption. He there also said: “But, however we may respect subsequent decisions, and certainly they are entitled to great respect, we do not admit their absolute authority.” Lewis’ Sutherland Statutory Construction, (2d ed.) vol. 2, page 785; Northcutt v. Eager, 132 Mo. 265, 33 S. W. (2d) 1125.

The Missouri case to which reference has been made arose under facts substantially identical with those of the instant case, and it was there held (to quote the headnote) that: “Under the act concerning ‘securities’ (R. C. 1845), a surety cannot exonerate himself from liability by notifying the creditor, after the death of the principal debtor, to present the demand for allowance against his estate, and his failure to do so within thirty days. A case where the principal is dead is not within the meaning of the statute.” See also Davis v. Gillilan, 71 Mo. App. 498.

In view of the fact that this decision was rendered subsequent to the adoption by this State of the statute there construed, it is not controlling, but, when given the deference which its sound reasoning and the history of the legislation there construed entitle it to, we feel constrained to follow that case, and we therefore hold that our statute has no application in a ease like this, where the principal was dead when the notice to sue was served. ^

The judgment of the court below was based upon this construction of the statute, and, as we concur in that view, the judgment must be affirmed, and it is so ordered.


text:
    Lacefield v. Taylor.
    Opinion delivered April 25, 1932.

      Carmichael $ Hendricks, for appellant.

      H. B. Stubblefield, for appellee.
   Smith, J.

Appellant filed an intervention in a suit brought by the State Bank Commissioner to wind up the affairs of the Travelers’ Building & Loan Association as being insolvent. The intervener alleged that on November 18, 1929, he obtained a loan from the association of $5,000 on the regular, and usual plan of subscribing for $5,000 worth of stock, to be paid for in monthly instalments, in addition to the interest. These payments, which are called dues, amounted to $15, plus interest, and were regularly paid for a period of twenty-five months, when the association was taken over by the Bank Commissioner in the suit filed to wind up its affairs. The intervener made a tender of the balance due on his loan, less the dues paid, and prayed that the receiver of the association be required to accept this tender in satisfaction of his loan and be directed to cancel the mortgage which he had given to the association to secure it. A demurrer to the intervention was sustained, from which decree is this appeal.

The case presented involves the construction of § 7 of act 236 of the Acts of 1931 (page 726), which is entitled “An act to amend act 128 of the Acts of 1929 for the supervision and operation of building and loan associations.” This section reads as follows:

“Section 7. That § 11-c is hereby added to act 128 of the Acts of 1929 as follows:

“Section 11-c. Repayment of loans in voluntary or involuntary liquidation. Any borrower from a domestic building and loan association which shall be in voluntary or involuntary liquidation or which has been legally declared insolvent, who, at the time of such liquidation or insolvency, is indebted to the said association, shall be charged with the amount due on said loan and/or advance, and any other indebtedness due said association by such borrower, at the time of liquidation or insolvency, and shall be given credit on his loan and/or advance for the amount theretofore paid on his stock, bond, investment certificate, membership certificate, or other evidence of shares, as the ease may be, less any fees, fines, or penalties due said association by such borrower.”

It is apparent that this section changes the rule announced by this court in the case of Courtney v. Reap, 184 Ark. 112, 40 S. W. (2d) 785. In that case a borrowing member of an insolvent building and loan association sought the relief which the section copied above is intended to afford. The question there presented was stated as follows: “* * * The main question is the right of set-off, or whether the appellant (the borrowing member) is entitled to any credit for dues paid on the value of her stock against the loan.” The opinion sets out the procedure under which building and loan associations operate, and it is not contended that there is any difference in the facts between that case and' the instant one. The relief there prayed was denied upon the authority of the earlier cases of Hale v. Phillips, 68 Ark. 382, 59 S. W. 35, and Taylor v. Clark, 74 Ark. 222, 85 S. W. 231. It was there conceded that the relief prayed could not he granted unless those cases were overruled, and this we were asked to do, but we declined to do so. In reaffirming those eases, we said: “In other words, if the payments made on stock by the borrowing members were applied on the debt, the borrowing member would receive for his stock all that he had paid on the stock if it were worthless, and the nonborrowing member would lose everything he had paid on Ms stock. The rule adopted by this court requires each to bear his part of the burden, and, so' far as the payments on stock are concerned, each stockholder, whether he is a borrower or not, is treated like every other stockholder. The borrowing member’s duty as a stockholder is not changed because he borrows money from the association.

“The court said in a later case: ‘The court is of the opinion that the rule adopted in Hale v. Phillips, supra, and here followed, more nearly conserves than any other the principles of equality, mutuality and fairness, upon which building and loan associations are supposed to be founded.’ Taylor v. Clark, 74 Ark. 220, 85 S. W. 232.”

The advantage of § 7, above quoted, to the borrowing member is apparent. It enables him to terminate his relation with the association without loss, although it is insolvent. He is given full credit for all dues paid, and is required only to pay the difference between the total amount of dues paid and the amount of his loan. It is equally as apparent that this preference is given at the expense of the investing stockholder, as sufficiently appears from the opinion in Courtney v. Reap, supra, and the whole system of mutuality is destroyed.

In support of the decree of the court below sustaining the demurrer to the intervention, it is insisted that § 7 is not retroactive, and does not apply to existing contracts. It is also insisted that, if it is retroactive, it is unconstitutional, as impairing the obligation of existing contracts, the validity of which had long been recognized under the decisions of this court.

We recognize the seriousness of the question as to the constitutionality of the act if it is held applicable to existing contracts, but we find it unnecessary to decide that question, for the reason that, in-our opinion, the act is not retroactive, and does not apply to contracts existing at the time of its passage.

It is not expressly stated in the act that it shall be retroactive, nor does that intention otherwise sufficiently appear to compel that construction. In the recent case of Dulaney v. Continental Life Ins. Co., ante p. 517, we recognized that an act might be retroactive in its operation, although that intention had not been expressly declared by the Legislature, but we said this could not be true unless the provisions of the act were such as to clearly show that intention.

The case of Mosaic Templars of America v. Bean, 147 Ark. 24, 226 S. W. 525, announces the rule which this and all other courts consistently follow that all statutes will be construed as having only a prospective operation unless the Legislature expressly declares or otherwise shows a clear intent that it shall have a retrospective effect.

As appears from the facts herein stated, § 7 of the act of 1931, if retroactive, affects contracts existing at the time of its passage, and in the case of Rhodes v. Cannon, 112 Ark. 6, 164 S. W. 752, we quoted from the case of City Ry. Co. v. Citizens’ St. R. R. Co., 166 U. S. 557, 17 S. Ct. 653, as follows: “A statute should not be construéd to act retrospectively or to affect contracts entered into prior to its passage unless its language be so clear as to admit of no other construction.” We there also quoted from our own case of Beavers v. Myar, 68 Ark. 333, 58 S. W. 40, where it was said: “An act of the Legislature will not be construed to have a retrospective effect if susceptible of any other construction.”

In the case of Dulaney v. Continental Life Ins. Co., supra, we were of the opinion that the legislative purpose in passing the act there construed would have been defeated had the aet there involved not been construed as being retrospective.

Such is not the case here. The Legislature knew that many building and loan associations were then operating, and would continue in business, and the act may be construed as applying to contracts entered into after it became a law.

The act was approved March 27, 1931, and as it contained no emergency clause, it did not become a law until ninety days after the adjournment of the session of the General Assembly at which it was enacted. Dulaney v. Continental Life Ins. Co., ante p. 517; School Dist. No. 41 v. Pope County Board of Education, 177 Ark. 982, 8 S. W. (2d) 501; Crowe v. Security Mortgage Co., 176 Ark. 1136, 5 S. W. (2d) 346.

In addition to the presumption that an act is not intended to be retroactive, we have the presumption that the General Assembly did not intend to enact an unconstitutional law, and it is a settled rule of construction that legislation will be so construed as to be constitutional if that construction may be fairly and reasonably given. Board of Commrs. Rd. Imp. Dist. No. 9 v. Furlow, 165 Ark. 60, 262 S. W. 991; Standard Oil Co. of La. v. Brodie, 153 Ark. 114, 239 S. W. 753; Commrs. of Broadway-Main St. Bridge Dist. v. Quapaw Club, 145 Ark. 279, 224 S. W. 622.

While we have said that we do not feel required to pass upon the constitutionality of § 7 if held to be retrospective, there is such grave doubt of its constitutionality, if so construed, that we cannot fail to take this fact into account in determining whether there was indeed a legislative intent that it should be so construed.

We therefore hold that the section is not retroactive, and that the demurrer was properly sustained, and the decree is therefore affirmed.

Kirby, <7., dissents.


author: Kirby, J.,

text:
    Pulaski Mining Company v. Vance.
    Opinion delivered April 25, 1932.

      Robinson, House Moses and Frank Bird, for appellant.

      Carmichael & Hendricks, for appellee.
   Kirby, J.,

(after stating the facts). It is insisted by appellant that the court erred in holding the lease invalid as being executed by the Commissioner without authority of law, and also in declaring the suit could be maintained by the appellees.

The conveyance of the lands upon which the Ex-Confederate Home was already constructed was made by individuals, trustees for the establishment of the home, for the use of soldiers of the Confederate Army. It will suffice to say that the deed conveying the lands to the State conveyed the whole title without any trust being imposed upon the State, the grantee, for the maintenance of the home thereafter that could be enforced to prevent the disposition of the lands by the State.

The statute, which it is claimed authorized the lease made by the Commissioner of Revenues, is § 6789, Crawford & Moses’ Digest, as amended by act 212 of 1929, and reads as follows:

“Section 6789. Hereafter it shall be unlawful for any person, firm, company, corporation or association to take sand and gravel, oil and coal, or other minerals from the beds or bars of navigable rivers and lakes, or from any and all other lands held in the name of the State of Arkansas, without first procuring the consent of the Commissioner of Revenues. Such consent may be withheld unless such person, firm, company, corporation or association shall agree in writing to keep an accurate record and account of all sand and gravel, oil, coal and other minerals taken by him or them from said rivers and lakes, and from any other lands owned by the State of Arkansas, and render to the said Commissioner of Revenues at the end of each month an itemized, verified statement of all the number of cubic yards of sand and gravel, and gallons of oil and tons of coal and other minerals taken out each day during the month. At the time of making such statement the person, firm, company, corporation, or association shall pay into the State Treasury two and one-half cents for each cubic yard of sand and five cents per cubic yard of gravel so taken, and one-half cent for each gallon of oil and six cents per ton of coal, and, if any other valuable minerals be found in such rivers, lakes or under other lands owned by the State of Arkansas, any firm, company, corporation or association taking the same out shall make a contract with the Commissioner of Revenues stating the amount due the State of Arkansas under said contract.”

This section makes it unlawful to take sand and gravel, oil and coal, and other minerals from the bed and bars of navigable rivers and lakes, “and from any and all other lands owned by the State of Arkansas,” or “held in the name of the State of Arkansas,” or “under other lands owned by the State of Arkansas.” It provides also the procedure for obtaining the consent of the Commissioner of Revenues therefor and for payment for such minerals taken from the said lands owned by or held in the name of the State of Arkansas, or under lands owned by the State of Arkansas.

Appellant insists that these phrases necessarily include any lands owned by the State or held in the name of the State, and authorized the Commissioner of Revenues to dispose of the minerals thereon or thereunder; while appellees insist that the “lands of the State” under the provisions of this statute would be such as are included within the chapter 107, Crawford & Moses’ Digest, which it has authority to sell.

It was the evident purpose of this statute to allow the sale and disposition of these minerals from the bed and bars of navigable rivers and lakes and any other lands owned by or held in the name of the State of Arkansas — “lands of the State” being such as are included within the said chapter 107 of the digest of the statutes— and the meaning could not be extended to lands that were in fact owned by the State already dedicated to other uses with improvements thereon. The lands here constituted one of the State’s charitable institutions, and there was no intention of the Legislature, under a proper •construction of any of the language used in said act, to authorize the disposition of minerals under the foundations or grounds of the buildings constituting its charitable institutions, or its Capitol, for instance. These-lands, while owned by the State, are a part of such institutions, arid no fair construction of such statute gives authority for the disposition of minerals that might be found under the buildings or within the grounds of such institutions.

The parties to the lease evidently doubted that authority was granted by the statute for the disposition of the minerals made in the execution of the lease therefor, since the Governor and the Attorney General were required to approve the lease and did do so, although the statute does not require it done. Such approval could give the lease no greater validity bhan it had already as executed by the Commissioner under the authority of the statute, which does not require the execution and approval of the lease by them. Neither could the Commissioner execute a valid lease of the minerals, as was attempted to be done in this case, since the statute, neither by express words or necessary implication, granted him the authority to make such disposition of minerals under a part of the grounds and foundations of the buildings of one of the State’s charitable institutions. The Legislature could have done so, of course, the State having the title to the property, but it did not, and, if there was any such intention, it is not fairly deducible from the language of the statute, which should use such language as shows an unmistakable intention to authorize it done— too plain to admit of construction.

Neither did the court err in refusing to dismiss the suit as one that could not be prosecuted by the appellees as taxpayers and eligible to be inmates of the charitable institution and beneficiaries of the use of 'it. It was not necessary for the appellees to first request the Attorney General to bring the suit and then allege his refusal to do so in order to proceed, since the law does not require a vain thing done, and the Attorney General was a party to the lease, having given his approval thereto as shown by the lease exhibited with the complaint. Griffin v. Rhoton, 85 Ark. 89, 107 S. W. 380.

It makes no difference that the lease does not appear to have been improvidently made, or without due regard for the protection of the improvements in the mining of the minerals, nor whether the purpose was good in attempting to dispose of the minerals for the better maintenance of the home, and in providing increased comforts for the inmates thereof, since the statute did not authorize its execution.

The lease having been executed without authority, it was necessarily void, and the court did not err in so holding. The decree is accordingly affirmed.


author: McHaney, J.

text:
    School District No. 45, Pope County, v. McClain.
    Opinion delivered April 25, 1932.

      C. G. Wait, for appellant.

      Robert Bailey, for appellee.
   McHaney, J.

School District No. 45, until the passage of act No. 169 of 1931, p. 476, was a common school district in Pope County with a board of three directors, composed of C. B. Wait, Jr., E. E. Easley and B. P. Beaumont. In June, 1930, director Easley left Arkansas for Oklahoma, either temporarily or permanently, and an election was called under § 8914, Crawford & Moses’ Digest, to fill the vacancy caused by the removal of director Easley, and held on July 6,1930. At this election Lee Cams was elected, took the oath of office as such, and his election certified to the county board of education. At a meeting held in September the county board of education declared the election void, and refused to recognize him as director: The appellee was teaching the school in the district during the year 1930-31, and on April 9, at a meeting of the hoard, of which all tie directors were notified and at which directors Beaumont and Cams were present, Wait being absent, a contract was made with appellee to teach a seven months’ school in 1931-32, beginning July 6, for two months, with an intermission, and five months to be taught in the fall and winter, at a salary of $90 per month. At the regular school election in May, 1931, after the above contract .had been entered into, a new board of six directors was elected under the provisions of act 169 of 1931, and this new board refused to permit appellee to teach the school, or to recognize her contract with the old board. She thereafter brought this suit to recover $630 as damages for breach of the contract. At the time of the trial only two and one-half months of the school term had elapsed, and the court instructed a verdict against appellants for $225, the salary that had accrued at the time of the trial, and refused to permit a recovery for the four and one-half months still to run. Upon this verdict judgment was entered, from which both parties have appealed.

Appellants demurred to the complaint,' which was overruled, and this is assigned as one of the grounds of error on the direct appeal. The basis of the demurrer is act 169 of 1931. It is contended that, by reason of said act, which became effective on March 25,1931, all districts having either more or less than six directors were left without a governing body from the effective date of said act until the third Saturday in May, when the regular election for directors was held and six new directors were elected for each such district in the State. This contention is untenable, as it is manifest from said act that the Legislature did not intend to remove the directors of such school districts until the new directors were elected, in accordance with § 43 of said act. Said section provides that the school directors in all districts which were not dissolved by the provisions of said act, “the school directors now in office, shall continue to' serve until the next annual school election.” School District No. 45 was not dissolved by the provisions of said act, and the directors thereof continued to serve as such until the election in May. The court properly overruled the demurrer.

On the merits of the case, we are of the opinion that the court correctly directed a verdict in appellee’s favor, unless director Cams was not a director, and that the action of the board in making- the contract with appellee is void. We are of the opinion, however, that Cams was a de facto director, if not de jure, and that appellee was not required to inquire into his authority to act in order to preserve the validity of her contract. We have had occasion to pass upon the same or similar questions in the cases of Gardner v. North Little Rock School Dist., 161 Ark. 466, 257 S. W. 73, and Carroll v. Leeman Special School District, 175 Ark. 274, 299 S. W. 11. The reasoning- adopted by the court in these cases applies with equal force here.

On the appeal of appellee, all that need be said is that she was not entitled to recover the full amount she would have earned under the contract at the time this case was tried because she may have since that time obtained other employment which would reduce the amount of her recovery subsequent to the trial.

The case will therefore be affirmed, both on the appeal and the cross-appeal.


author: Hart, C. J.,

text:
    Travelers’ Protective Association of America v. Stephens.
    Opinion delivered April 25, 1932.

      Jones ■& Jones, for appellant.

      Will Steel and Frank S. Quinn, for appellee.
   Hart, C. J.,

(after stating the facts). It is earnestly insisted by counsel for the defendant that the court should have directed a verdict in its favor. We do not agree with counsel in this contention. Under the evidence adduced by the plaintiff, the injury was brought about without the ag'ency of the insured, and it was accidental, although, the injury might have been intentionally inflicted by the negro. According to the testimony of the plaintiff, which was corroborated by his companion, he was accidentally cut while trying to separate the negro and his companion. He did not see any knife or other weapon in the hands of the negro. There was apparently no danger in trying to separate them. The negro was a small man, and the conduct of the plaintiff in trying to separate them was the natural result of any one with human impulses. Hence the injury was accidental, within the meaning of the policy. We have set out its terms in our statement of facts, and we need not repeat them here. Maloney v. Maryland Casualty Co., 113 Ark. 174, 167 S. W. 845; Ætna Life Ins. Co. v. Little, 146 Ark. 70, 225 S. W. 298; Mutual Benefit Life & Accident Association v. Tilley, 176 Ark. 525, 3 S. W. (2d) 320; Pacific Mutual Life Ins. Co. v. Ware, 182 Ark. 868, 33 S. W. (2d) 46.

It is next contended that the court erred in giving, at the request of the plaintiff, instruction No. 1. It reads . as follows: “You are instructed that the terms ‘accident’ and ‘accidental means,’ as used in the policy sued upon and in the constitution and bylaws of the defendant association, are used in their ordinary popular sense, as ' meaning happening" by chance; unexpectedly taking place; not according to the usual course of things, or not as expected. If you find from a preponderance of tfie evidence that tfie injury received by the plaintiff happened by chance, or unexpectedly took place, or was not according to the usual course of things, or was not as expected, then you will find that said injury was tfie result of accident and comes within tfie terms of tfie insurance contract, unless you find from a preponderance of tfie evidence that it falls within one or any of tfie exceptions in tfie contract.” It is contended on tfie part of tfie defendant that there is a technical difference between tfie term “accident” and the term “accidental means,” as used in tfie policy sued on and in tfie constitution and bylaws of tfie association.

Where tfie provisions of a policy of indemnity are reasonably susceptible of two constructions consistent with tfie object and purpose of tfie contract, one favorable to tfie insurer and tfie other to tfie insured, that will be adopted which is favorable to the insured. It has been tfie settled policy of this court since tfie beginning of its construction of contracts of insurance to hold that tfie policy should be liberally construed so as not to defeat, without necessity, tfie claim for indemnity. Tfie reason is that such policies are written on printed forms prepared by experts employed by tfie insurance companies for that purpose, and tfie insured has no voice in the matter. Hence it is fair and reasonable that, where there is ambiguity, or where tfie policy contains language susceptible of two constructions, that which, will sustain tfie claim and cover tfie loss should be adopted. Providence Life Assurance Society v. Reutlinger, 58 Ark. 528, 25 S. W. 835; American Bonding Co. v. Morrow, 80 Ark. 49, 96 S. W. 613,17 Am. St. Rep. 72; Fidelity & Casualty Co. v. Meyer, 106 Ark. 91, 152 S. W. 995, 44 L. R. A. (N. S.) 493; Home Mutual Benefit Association v. Mayfield, 142 Ark. 240, 218 S. W. 371; Great American Casualty Co. v. Williams, 177 Ark. 87, 7 S. W. (2d) 775; National Equity Life Ins. Co. v. Bourland, 179 Ark. 398, 16 S. W. (2d) 6; Fowler v. Unionaid Life Ins. Co., 180 Ark. 140, 20 S. W. (2d) 611; Southern Surety Co. v. Penzel, 164 Ark. 365, 261 S. W. 920.

In this connection, it may 'be stated that the whole policy and the constitution and bylaws of the association must be construed together, and every part read in the light of the other provisions. The constitution and bylaws are expressly made a part of the policy. It would be unreasonable for the court to give a construction to the contract .which it is manifest was not contemplated by the parties when the policy was issued and which would defeat the evident object of the contract of insurance. If the association had wished that the terms “accident” and “accidental means” should have had different meanings, the contract of insurance should have given the insured warning of that fact. The court correctly instructed the jury in accordance with the principles of law above announced. If the association used the terms “accident” and “accidental means” as synonymous, it cannot now complain that the court gave them the same construction.

It is also contended that the court erred in submitting to the jury the question of total disability. The first ground, for the contention is that two claims were presented to the association. The first one was presented on January 19, 1931, which was a few days after the injury was received. In that claim partial disability only was asked for by the plaintiff. The second claim was filed on February 14, 1931, and was for total disability. There is no inconsistency in this respect. As we have already seen, insurance policies are framed by the insurance companies with great care with the view of limiting their liability as much as possible, and usually impose conditions on the insured to be performed in a particular manner. These provisions are strictly construed against the insurer. Here the plaintiff gave notice within the time required by the policy. According to his testimony, when he made the claim for partial disability, he did not know that he was wholly disabled. He did not make any claim for total disability until he had ascertained and believed that he was wholly disabled. It would be at variance to the principles of law and justice to hold that his honest act in attempting to comply with the terms of the policy by giving notice as required by it should deprive him of what he was honestly and reasonably entitled to under the terms of the policy. American Life & Accident Association v. Walton, 133 Ark. 348, 202 S. W. 20.

The second ground of their contention is that there is no evidence upon which to base a submission of the question of total disability to the jury. Our decisions support the view that provisions in accident policies for indemnity in the event the insured is totally or wholly disabled do not require that the accident shall render the insured absolutely helpless, but such provisions are construed as meaning such a disability as renders him unable to perform the substantial and material acts of his business or occupation in the usual and customary way. Industrial Mutual Indemnity Co. v. Hawkins, 94 Ark. 417, 127 S. W. 457, 29 L. R. A. (N. S.) 635, 21 Ann. Cas. 1029; Ætna Life Ins. Co. v. Phifer, 160 Ark. 98, 254 S. W. 335; Ætna Life Ins. Co. v. Spencer, 182 Ark. 496, 32 S. W. (2d) 310; Missouri State Life Ins. Co. v. Snow, ante p. 335; Mutual Benefit Health & Accident Association v. Bird, ante p. 445. As pointed out in the Spencer case, our rule on this subject is in accord with the general trend of authority. It is claimed by counsel for the defendant that other decisions of our court are somewhat at variance with the rule announced in the cases cited. We do not think so, but no useful purpose could be served by pointing out in detail the differences in the cases. Isolated sentences of a particular case may always be used in apparent contradiction of expressions announced in other cases by the same court where the facts are different. Each case must be construed with reference to the particular facts, and all the cases on a given subject must be read in the light of each other. When this is done, it does not appear to us that we have ever varied from the rule announced in the cases above cited. If any mistake was made, it was in the application of the rule itself to the facts of the particular case.

There are certain exceptions to the risk as appears from the constitution of the association. They may be summarized as follows:

“1. Received while under the influence of intoxicating liquor or narcotics;

“2. From fighting or wrestling;

“3. From a hazardous adventure or an altercation;

“4. From intentional injury;

“5. ’While fighting, resisting arrest, or violating ’ the law. ’ ’

It is not claimed by the defendant that the plaintiff was under the influence of intoxicating liquor or narcotics as provided in subdivision 1. The contention of the defendant as to the other four subdivisions with regard to whether the injury was received while the plaintiff was fighting or engaged in a hazardous adventure, or from an intentional injury, was submitted to the jury under, instructions prepared by the defendant in its own behalf. The jury found that issue in favor of the plaintiff, and no useful purpose could he served by setting out and reviewing the instructions in detail.

It is strongly insisted by the defendant that the court erred in allowing the plaintiff to recover for total disability for 104 consecutive weeks, as provided in the policy, when the trial of the case took place a shorter period of time. Defendant’s contention now is that it was entitled to a reduction of the amount recovered to the value at the time the trial was had. We do not agree with defendant in this contention. The defendant denied that it was liable to the plaintiff in any amount under the terms of the policy. It did not offer to pay him the weekly indemnity for total disability as long as such disability should continue. It sought to defeat his claim altogether. The jury only allowed the plaintiff to recover for the period of time provided for in the policy. In railroad damage cases recovery for permanent disability is allowed for a period of time according to the life expectancy of the plaintiff shown by mortality tables prepared by insurance companies. In the case at bar defendant was only required to pay for the time it agreed to do so in its contract of insurance.

Finally, it is insisted that there is no testimony upon which to base the question of total disability because the physician only gave it as his opinion that the plaintiff was wholly disabled. The plaintiff was engaged in the business of buying and selling secondhand automobiles. In the course of his avocation he was required to repair and put in condition the secondhand cars, before he would sell them. He had a small business and performed most of the labor himself. According to a reputable physician, he examined plaintiff in June after the injury and found adhesions. The knife cut caused a serious wound. The plaintiff had a hemorrhage in the pleural cavity between the lungs and the wall. Adhesions caused him to breathe heavily and suffer great pain when he performed manual labor. That condition would prevail until removed by surgical operation, and the physician considered it permanent. By adhesions witness means the pleural sac growing together, which would lessen the ability of the plaintiff to do manual labor. Under these circumstances, the jury had a right to consider the opinion of the physician and to find that the plaintiff was not capable of pursuing his usual avocation within the meaning of the rule announced above.

Other assignments of error are urged for the reversal of the judgment, but we believe that they are fully covered by the principles of law above announced and do not merit a separate discussion.

We find no reversible error in the record, and the judgment will therefore be affirmed.