text:
    Fant v. Arlington Hotel Company.
    Opinion delivered February 15, 1926.
    1. Courts—jurisdiction of state courts over ceded territory.— The courts of this State are not deprived, by the cession of territory of the Hot Spring's Reservation to the United States, of the right to exercise judicial power in the enforcement of transitory rights of action in civil matters which accrue in the ceded territory.
    2. States—effect of cession of territory.—Whenever political jurisdiction and legislative power over any territory are transferred from one nation or sovereign to another, the municipal laws of the former, that is, laws which are intended for the protection of private rights, continue in force until abrogated or changed toy the new government or sovereign. ‘
    3. States—legislative authority over ceded territory.—After the State ceded jurisdiction over a portion of the Hot Springs Reservation to the United States by the act of February 21, 1903, the State thereafter had no authority to legislate over the .territory so ceded.
    Appeal from Garland 'Circuit Court; Earl Witt, Judge;
    reversed.

      Cochrill & Armistead and Murphy £ Wood, for appellant.

      Martin, Wootton £ Martin, for appellee.
   McCulloch, C. J.

Tbe Arlington Hotel, owned and operated by a domestic corporation, was situated in tbe city of Hot Springs on a portion of tbe United States Hot Springs Reservation, wliieb was ceded to tbe United States by tbe General Assembly of Arkansas by statute approved February 21, 1903. Tbe statute ceded exclusive jurisdiction to tbe United -States, with tbe following proviso: “That this grant of jurisdiction shall not prevent tbe execution of any process of the State, civil or criminal, on any person who may be on such reservation or premises; provided further, that tbe right to tax all structures and other property in private ownership on the Hot Springs Reservation accorded tbe State -by' tbe act of Congress approved March 3, 1901, is hereby reserved to the State of Arkansas.” Congress enacted a statute (33 iStat. L. 187), approved April 20, 1904, accepting jurisdiction, -which, after describing- the ceded area, and cession of jurisdiction, provides that the territory “ shall be under the sole and exclusive jurisdiction of the United States, and all laws applicable to places under such sole and exclusive jurisdiction shall have full force and effect therein; provided, that nothing in this act shall be so construed as to forbid the service within said boundaries of any civil or criminal process of any court having jurisdiction in the State of Arkansas; that all fugitives from justice taking refuge within said boundaries shall, on due application to the executive of said State, whose warrant may lawfully run within said territory for said purposes, be subject to the laws which apply to fugitives from justice found in the. State of Arkansas ; and provided further, that this act shall not be so construed -as to interfere with the right to tax all structures and other property in private ownership within the boundaries above described.”

The hotel building was destroyed by fire on April 5, 1923, and the appellants instituted separate actions in the circuit court of Garland County against the owner to recover compensation for loss of baggage which was destroyed in the fire. Liability is predicated upon facts which would bring the case within the common-law liability of -inn-keepers.

There is a statute in this State, enacted hy the General Assembly of 1913 ('Crawford & Moses ’ Digest, § 5567), which restricts the liability of hotel keepers to loss or damage to property of guests, so that there is no liability under the circumstances of the present case. In other words, the complaint states the cause of action under the common law, but none under the statute of this State. The court sustained a demurrer to the complaints of the several appellants (the cases being consolidated here) presenting the question, first, whether or not the courts of this ¡State have .jurisdiction to enforce civil liability which accrued within territory over which exclusive jurisdiction lias been ceded by the State to the United States Government; and second, whether or not a statute regulating civil liability, enacted after a cession of jurisdiction, is applicable to causes of action arising within that territory.

Our conclusion in regard to the first question is that the courts of this State are not deprived, by the State’s cession to the general government of exclusive jurisdiction, of the right to exercise judicial power in the enforcement of rights of action in civil matters which accrue in the ceded territory. ¡We are not dealing with a local action, such as one which concerns the title to real estate, and what we say now must, of course, he confined to the character of action involved in these appeals. These are transitory actions which may be enforced anywhere that jurisdiction can be acquired over the person of the defendant. This kind of an action may be enforced here, regardless of the place where the right of action accrued, but of course the lex loci must control. The power of the State and general government over ceded territory has been discussed at length by the decisions of the Supreme Court of the United States in several cases. Ft. Leavenworth R. Co. v. Lowe, 114 U. S. 525; C. R. I. & P. Ry. Co. v. McGlinn, 114 U. S. 543; Benson v. United States, 146 U. S. 325. The McGlinn case, supra, was one maintained in the State court to recover damages accruing on lands ceded by the State to the United States Government on a cause of action under a State statute enacted prior to the cession of the territory by the State to the government. The question of jurisdiction of the State court was not expressly raised, but it was necessarily included within the decison of the court, for the judgment of the State court was affirmed by the Supreme Court of the United States. The question dealt with in the opinion was not one of jurisdiction, but one of substantive law relating to the effect of State laws existing a.t the time that jurisdiction over the territory was ceded to the United States. The opinion of the court was delivered by Mr. Justice Field, and it was said:

“It is a general rule of public law, recognized and acted upon by the United States, that whenever political jurisdiction and legislative power over any territory are transferred from one nation or sovereign to another, the municipal laws of the country, that is, laws which are intended for the protection of private rights, continue in force until abrogated or changed by the, new government or sovereign. By the cession public property passes from one government to the other, but private property remains as before, and with it those municipal laws which are designed to secure its peaceful use and enjoyment. As a matter of course, all laws, ordinances, and regulations in conflict with the political character, institutions, and constitution of the new government are at once displaced. * * * But with respect to others affecting the possession, use and transfer of property, and designed to secure good order and peace in the community, and promote its health and prosperity, which are strictly of a municipal character, the rule is general, that a change of government leaves them in force until, by direct action of the new government, they are altered or repealed. * * * It is true there is a wide difference between a cession of political jurisdiction from one nation to another and a cession to the United States by a State of legislative power over a particular tract, for a special purpose of the general government; but the principle which controls as to laws in existence at the- time is the same in both.”

Now, it is clear that the exercise of judicial power in the enforcement of civil law involves no question concerning the sovereignty of the general government which exercises exclusive jurisdiction over the territory where the cause of action accrued.

We go no further in determining the validity of the jurisdiction now sought to be exercised, for no other question is involved in the present controversy, but we do hold that the State court had jurisdiction to hear and determine the right of action in accordance with the law of the place where it accrued.

The next question presented is one which necessarily arises, but which counsel for appellee disclaims being presented in the present status of the case. It necessarily arises because, if the statute restricting liability of hotel keepers, which was enacted subsequent to the cession of jurisdiction to the Federal Government, applies, no cause of action is stated in the complaint, and the ruling of the court sustaining the demurrer was correct, though based upon the wrong ground. We think it is equally clear that the statute was inoperative. The cession of jurisdiction was necessarily one of political power, and it took away the authority of the State Government to legislate over the territory ceded to the general government. This point is expressly decided by the Supreme Court of the United States in the Lowe case, supra, where the court said:

“ These authorities are sufficient to support the proposition, which follows naturally from the language of the Constitution, that no other legislative power than that of Congress can be exercised over lands within a State purchased by the United States with her consent for one of the purposes designated; and that such consent, under the Constitution, operates to exclude all other legislative authority. ’ ’

In other portions of the decision attention is called to the distinction between land owned by the general government with merely a proprietary interest and those lands over which exclusive jurisdiction has been ceded to. it by the State in which the lands are situated.

The court erred in sustaining the demurrers and dismissing the complaints, so the judgments are reversed, and the causes remanded with directions to overrule the demurrers.


source: Caselaw Access Project

author: Wood, J.

license: Public Domain

text:
    Farmers’ State Bank v. Foshee.
    Opinion delivered February 15, 1926.
    1. Appeal and error—waiver -of error.—¡Where the record shows that a cause was submitted to the court of equity :by consent of the parties, and it appears that chancery had jurisdiction of the •subject-matter, towit, the setting aside of a fraudulent conveyance, failure of the trial court to- rule upon a demurrer, will be treated on appeal as waived.
    2. Fraudulent conveyances—voluntary conveyances t.o relatives.—Where an embarrassed debtor makes conveyances to his family or near relatives, such conveyances are prima facie fraudulent; when voluntary, they are prima facie fraudulent, and when the embarrassment of the debtor proceeds to financial wreck, they are conclusively presumed to be fraudulent as to existing creditors.
    3. Homestead—fraudulent conveyance.—-A conveyance of a homestead, even though without consideration and with full intent to defraud creditors, is valid.
    4. Homestead—extent op area.-—A homestead in any city, town or village, under Const., art. 9, § 5, is limited in area to one acre of land.
    Appeal from Johnson Chancery Court; W. E. Atkinson, Chancellor;
    reversed.

      Jesse Reynolds, for appellant.

      G. O. Patterson, for appellee.
   Wood, J.

This action was instituted by the appellant against the appellees. The appellant alleged that W. F. Foshee was indebted to it in the sum of $548 with interest from April 7, 1922; that it had procured a judgment aggregating said amount at the May term, 1923, of the Johnson Circuit Court; that, at the time- the debt of W. F. Foshee was contracted with the appellant, he was the owner of eighty acres of land in section 29, township 9 north, range 22 west, of Johnson County, Arkansas, and also a certain town lot containing eight acres in the town of Lamar, in Johnson County, Arkansas. These tracts and parcels of land are described in appellant’s complaint. The appellant alleged that the land in the town of Lamar was purchased from one M. E. Burgess and wife for a consideration of $4,250, which W. F. Foshee sold on the 13th of September, 1921, to Nannie Foshee, his wife, naming as the consideration in the deed the sum of $1. It is further alleged in the .complaint that in August, 1921, W. F. Foshee' conveyed to one Henry Stubblefield one of the forties above mentioned, and on the ,16th of November W. F. Foshee conveyed to his son, W. R. Foshee, the other forty in section 29-9-22, for the consideration of $500; that the latter in November, 1921, conveyed to his mother, Nannie Foshee, the other forty, which his father had conveyed to him, naming as a consideration in the deed the sum of $500. The appellant alleged that the conveyances from W. F. Foshee to W. R. Foshee and from W. R. Foshee to Nannie Foshee were without consideration, and therefore voluntary, and made for the purpose of defrauding creditors.

The appellees filed a joint answer, in which they denied the allegations of the complaint, and set up that they had deeded a part of the lands described to one Henry Stubblefield, and stated that the land through mistake had been misdescribed, and they prayed that the deed be reformed and be made to contain the correct description.

The facts are substantially as follows: The appellee, W. F. Foshee, contracted the debt to the appellant upon which this action was founded in November and December, 1919, and July, 1920. The debts were contracted with the Blue Stone Bank, and the appellant acquired the notes from that bank. It was shown that W. F. Foshee owned the property in the country at the time the debts were contracted, and also had a home in the town of Lamar, which property at the time was unincumbered; that the loans were made to him on the strength of his financial condition at that time. The appellant established the indebtedness upon which the action was founded, about which there is no dispute. The appellant also introduced the notes and judgment and copies of the deeds set up in its complaint, which deeds it asked to have canceled. It was shown that demand had been made on W. F. Foshee for the payment of the indebtedness, and that he had failed to pay.

W. F. Foshee testified on behalf of the appellees to the effect that he sold the southeast forty of the land in the country to one Stubblefield in August, 1921, for the consideration of $2,150. Some time afterwards, on the 16th of October, 1922, he and his wife sold to their son, W. R. Foshee, the other forty, for which he paid $500, $150 cash, and worked out the balance of the consideration. Before the conveyance was made to their son, witness was indebted to the Farmers ’ State Bank of Lamar. At that time witness owned four forties, and the same was his homestead. The two forties he sold were a part of his homestead. Witness didn’t believe he was living on the place when he sold to Stubblefield, but he was living there at the time he sold to his son. At the time witness sold the south forties, two forties had been sold before. He only owned at that time two forties, and at the time he sold these he lived in the town of Lamar. Witness’ wife owned the town property. At the time witness sold the forty to Stubblefield he paid the Bank of Lamar a thousand dollars, but did not pay anything on the notes in suit.

Mrs. Nannie Foshee testified, and her testimony is substantially the same as that of W. F. Foshee. She stated they sold the south forty to Stubblefield and the other forty to their son. It was their homestead. The forty sold to their son had a well and a house on it, and the other forty had a fine orchard. At the time they sold to their son he was living with them. He was 22 or 23 years old. He has paid $150 in cash, and then worked out some, and witness paid the rest when she bought it back on the 21st day of October, 1922. The consideration she paid her son was on notes at the Blue Stone Bank, one for $193.35 and one for $165. She took up these notes, and told her son that she would pay W. F. Foshee the balance due him on the forty of $100. She paid this out of her rents on the house in town. They first moved on the 160 acres in the country in 1913, which was their home. She bought the eight acres in the town of Lamar. She moved to town in 1916 and back to the farm in 1921. After she bought the forty back from W. B. Foshee she owned it until December, 1923, and sold it to the First National Bank of Lamar. She did not buy the land back from her son to defeat her husband’s creditors. She paid what it was worth. At the time they sold the property to their son, and at the time she bought it back from him, they lived on the property as their homestead. That was the only forty acres they had. The house and lot in Lamar was conveyed to her on September 13, 1921. The deed recites “for $1 and other considerations.” She had signed a mortgage given by her husband to pay security debts and had a verbal contract with him at the time that, When he made her the deed to the Lamar town property, she would sign the mortgage. It was understood between her and her husband, when she conveyed her dower in the forty to Stubblefield and in the other forty and to the other property, that she should have the town property as her own. This was their homestead at the time it was conveyed to her. At the time' her husband made her a deed to the home place in Lamar she didn’t know anything about his owing these other notes. He had promised her that he would not go security. The deed was not'made to her with the view of defeating the appellant in the collection of its debt. The forty acres she had bought back from her son she contracted to sell to the First National Bank of Lamar for $800 on security debts which her husband had contracted for supplies. She stated that, at the time her husband made her the deed to the town property, she knew that he was involved at the First National Bank, and that something had to be done. She had signed a mortgage to the town property in Lamar to the First National Bank for something like $1,900, and at that time she had an understanding with her husband that he was to convey this town property in consideration of her dower rights in the other property. She was to sell the forty acres for this town property. Witness had previously assigned her dower and homestead right in the old home place for the sum of $3,000, which was paid to her husband.

W. R. Foshee testified substantially to the same effect as his father and mother. He had bought the forty acres from his father. The consideration paid by him was a reasonable value of the land at that time. He didn’t know at that time that his father was owing considerable amounts, and didn’t make the purchase to defeat his father’s creditors. They were living on the land at the time he bought it. Witness had kept an account of the amount of the work he had done for his father, amounting to the sum of $250.

W. F. Foshee also testified that he had an agreement with his wife that, if she would help him pay the security debts, he would give her the home place in the town of Lamar. It was their homestead, and had a mortgage on it in the sum of $1,900. They were living on the farm when they sold that to .Stubblefield, and were living in town when that place was deeded to his wife. They were only temporarily on the farm. He didn’t make any of' the conveyances to defeat his creditors.

John Hawkins, the president of the First National Bank, testified that that bank had a mortgage on the town property in the sum of $758.50. The bank had trouble in getting the mortgage renewed. It had to threaten suit, and Mrs. Foshee finally agreed to sign the mortgage. -She and her husband had an agreement in witness’ presence that, if she would sign the mortgage, she should have a deed to the property. The bank bought forty acres of land from Mrs. Foshee for $800, of which amount $500 was paid on the debts of Foshee.

W. H. Wilson took the acknowledgment of the deed from W. F. Foshee to Nannie Foshee conveying the town property, and they stated in his presence that W. F. Foshee had agreed with his wife that she should have a deed to the property on condition that she sign a. mortgage. Foshee signed the deed on that condition.

The trial court made a general .finding in favor of the appellee and rendered a decree dismissing appellant’s complaint for want of equity, from which is this appeal.

1. Counsel for appellees contend that the chancery court was without jurisdiction to grant the relief asked because the foundation of the action was a judgment at law against W. F. Foshee as a surety with other sureties and a principal debtor, and that appellant’s complaint does not allege that the principal and other sureties were insolvent. Counsel insist that the demurrer to the complaint should have therefore been sustained.

While the record shows that there was a general demurrer filed by the appellees to the appellant’s amended complaint, it does not show that the appellees asked that this demurrer be ruled on by the trial court, and does not show that the court ruled on it. On the contrary, the bill of exceptions in the case shows that the cause was, upon the merits, “submitted to the court by agreement and consent of parties in writing, and the cause was heard upon the depositions and certain exhibits.” The chancery court had jurisdiction of the subject-matter of setting aside fraudulent conveyances, and, as the appellees waived their demurrer and agreed that the cause be heard by the trial court, they cannot be heard now to say that the chancery court was without jurisdiction to determine the cause.

2. The issue as to whether or not the conveyances were fraudulent is purely one of fact. We have set forth at length the testimony bearing upon this issue, and it could serve ho useful purpose to. discuss it in detail. A résumé of the testimony will show that before W. F. Foshee conveyed the two forties in the country to his son, W. R. Foshee, and Henry Stubblefield, he was indebted' to the Bank of Lamar in the sum of nearly $2,000, which was covered by mortgage on the property in the town of Lamar. While so indebted, he conveyed forty acres of his land in the country in August, 1921, to Henry Stubblefield for $2,150, out of which he satisfied the mortgage on the town property on September 14, 1921. Then on the 16th of October, 1922, he conveyed the other forty acres of his land in the country to his son, W. R. Foshee, for the consideration of $500. His wife, Mrs. Nannie Foshee, joined in this deed, conveying her dower and homestead interests. W. R. Foshee, the son, was living at the time of the conveyance to him with his father and mother. The consideration of $500, according to their testimony, was paid, $150 in cash, and $250 of the balance in work done for his father. Then, five days after this conveyance, the son deeded the property which he had bought from his father to his mother, Nannie Foshee, and, according to their testimony, she paid for this forty, stating that she paid the same on notes to the Blue Stone Bank, and that she would pay his father $100, which was paid some five or ten days later, but the record does not disclose that she had any separate estate of her own. Later, on the 13th of September, 1921, W. F. Foshee conveyed the town property to his wife, Nannie Foshee. She testified that the consideration to her for this conveyance was the dower interest that she had relinquished in the land sold to Stubblefield and her son.

It impresses us that the purpose of all these conveyances of the property of W. F. Foshee was to place the property beyond the reach of his creditors. The result of all the conveyances was that the property, which was the property of W. F. Foshee when the debts were contracted, became, through the various deeds, the property of Mrs. Foshee, the wife and mother. The law is well established in this State, and by the authorities generally, that “where an embarrassed debtor makes conveyances to members of his own family—his near relatives—such conveyances are looked upon with suspicion and scrutinized with care; when voluntary, they are prima facie fraudulent; and when the embarrassment of the debtor proceeds to financial wreck, they are presumed conclusively to be fraudulent as to existing creditors.” Wilkes v. Vaughan, 73 Ark. 174-179; Harris v. Smith, 133 Ark. 250-260; Davis v. Cromer, 133 Ark. 224.

But the deeds from W. F. Foshee and his wife to their son, W. R. Foshee, and from W. R. Foshee to his mother of the forty acres in the country cannot be set aside on the ground that these deeds were made for the purpose of defrauding creditors, for the reason that the testimony tends to prove that the forty acres conveyed was the homestead of W. F. Foshee. “A conveyance of a homestead, even though made without consideration, and with full intent to defraud creditors, is valid.” Gray v. Patterson, 56 Ark. 373; Sharp v. Fitzhugh, 75 Ark. 562; Fluke v. Sharum, 118 Ark. 229; Godfrey v. Herring, 74 Ark. 186, and other cases collated in 3 Crawford’s Digest, p. 2334. But the conveyance of the town property, consisting of eight acres, should be set aside as fraudulent and void, even though the homestead of W. F. Foshee and his wife was on this property. Under our Constitution, article 9, § 5, “the homestead in any city, town or village, owned and occupied as a residence, shall consist of not exceeding one acre of land, with the improvements thereon to be selected by the owner, provided the same shall not exceed in value the sum of twenty-five hundred dollars, and in no event shall the homestead be reduced to less than one quarter of an acre of land, without regard to value. ” The testimony tended to prove that this property at the time of the conveyance was the homestead of ¡W. F. Foshee and his wife, Nannie Foshee. Being their homestead, they were entitled to one acre thereof to be selected by them.

It follows that the decree of the trial court was erroneous. The same is therefore reversed, and the cause will be remanded with directions to set aside the deed of W. F. Foshee to Nannie Foshee, conveying the town property, and to allow them to select one acre as their homestead, and to subject the remainder thereof to the payment of Foshee’s debt to the appellant.


author: Wood, J. Wood, J.

text:
    DeLukie v. American Petroleum Company.
    Opinion delivered February 15, 1926.
    Contracts—breach.—Where a contract obligated defendant to accept and pay for 50,000 barrels of crude oil at 50 cents a barrel, “with the usual pipe-line deductions on oil runs,” and the evidence " showed that it was the custom of pipe-line companies to accept oil containing not exceeding 2 per cent, of basic sediment and water, a notice given by defendant to plaintiff that it would not accept oil containing more than 1% per cent, of basic sediment and water was equivalent to a breach of the contract, and a subsequent offer to perform the contract, made by plaintiff, will no’t affect the rights of the parties.
    Appeal from Union Chancery Court, Second Division; George M. LeCroy, Chancellor;
    reversed.

      Kitchen & Harris and J. R. Wilson, for appellant.

      Mahony, Yocum & Saye, for appellee.
   Wood, J.

On the 23rd of September, 1923, F. M. DeLukie, hereafter called appellant, wrote the following letter to the American Petroleum Company, hereafter called appellee:

“ Greutlemen: This confirms oil contract between us as follows:
“(1). We have sold and agreed to deliver 50,000 barrels of heavy .Smackover crude out of production from our lease being the SE14 of NW'%, section 17, township 16 south, range 15 west, at fifty cents a barrel (of 42 U. S. gallons), with the usual pipe-line deductions on oil runs.”
“(2). All the production from this lease will be applied to such delivery until said 50,000 barrels has been delivered into your pipe line.” This letter was indorsed “Accepted: American Petroleum Company, by Craig F. Cullins, Pres.”

The appellee was a purchaser of oil in the Union County, Arkansas, oil field. It connected its pipe line with the appellant’s lease and began taking oil therefrom under the contract. Some time after the contract was executed, the appellant, at the instance of the appellee, signed what is designated in. the evidence as a “division order” in which, was set forth the respective interests of the owners of the oil produced from appellant’s wells and run into appellee’s pipe line under the above contract. This order was addressed to the appellee and signed hy the appellant, and was made effective from the date the contract above mentioned was executed. The division- order specified that they were the owners of certain wells on the land described in the contract above mentioned, and that until further notice appellee was authorized to receive oil therefrom, giving credit as therein specified. The order then, among other things, recites: “The following covenants are also parts of this division order, and shall be binding on the undersigned, their successors and assigns:

“1. Quantities are to be computed from regularly compiled tank tables, the oil ownór to have the privilege of witnessing gauge tickets, and, in addition to the deductions of the tank tables, corrections shall he made for temperature and impurities according to your local rules in force at the time, and oil shall he steamed when necessary to render it merchantable. * * *
“3. You are not expected to receive oil in definite quantities or for fixed periods or to provide storage on the credit balance plan or otherwise, except as and when you shall now or hereafter so agree in writing.”

Section 4 provided in substance that, in the absence of a written agreement to the contrary, the oil run should become the property of the appellee when delivered to any pipe line designated by it to be paid for to the owners in proportion to their interests “at the price posted by you for the same kind and quality of oil in the particular field on the day when such oil is received by your company.” This section then provides for the time and manner of payment. Section 5 authorizes the appellee to deduct from any moneys due the appellant any taxes that the appellee may have -been required to pay for the appellant.

From the execution of the contract until February 4, 1924, the appellant had delivered to the appellee’s pipe line 27,000 'barrels of marketable oil, which was accepted by the appellee. On the latter date the appellee wrote the appellant as follows: “Up to the present time we have been accepting Smackover crude into our lines that contained up to 2 per cent. B S&W. We are obliged to change this specification and cannot accept Smackover crude that contains more that 1 y2 per cent. B S & W.” “ B S & W” in the oil industry means ‘ ‘basic sediment and water.” This letter was received by the appellant about the 12th of February, 1924. Between the date of the letter and its receipt by the appellant the appellee continued to take oil under the specifications of 2 per cent. B S & W until the 9th of February, 1924, when same was discontinued, and at that date the B S & W in the oil as tested was 1.9 per cent. The B S & W began' to increase in the oil exceeding the specifications of 2 per cent. The appellant ’s oil accumulated at the rate of 500 barrels per day, according to the testimony of appellant, and overran his earthen storage tank to the extent of 1,500 barrels, forcing him to enlarge his pits and to put in a treating plant. The change in the specification by the appellee from 2 per cent, to iy2 per cent. B S & W was not communicated to the appellee’s gauger who tested the oil preparatory to running the same, and who was never directed by the appellee to change the specification to iy2 per cent. B S & W. On the 27th of February, 1924, the contract was acknowledged by the appellee before a notary public in Texas, and filed for record in the office of the circuit clerk of Union County, Arkansas. Thereafter, on March 3,1924, the appellant learned that the contract had been recorded. He thereupon telegraphed to the appellee at Houston, Texas, the following: “You have broken contract, I demand release of my oil.-” On the same day the appellee’s attorney wrote to the appellant’s attorney the following: “I am authorized to advise you that the American Petroleum Company pipe line will receive oil containing up to two per cent. B S & W but no more; this to be delivered at the customary temperature of oil received 'by pipe line. American Petroleum Company is ready to receive the oil from Mr. DeLulrie, and will expect him to deliver the oil until his contract is fulfilled. ’ ’

According to the testimony of the appellant, he had succeeded in arranging with the Texas Pipe Line Company to connect with his lease, but on the 12th of March, 1924, that company refused to take his oil, stating, in a telegram to appellant’s attorneys, that it understood that there was a dispute between the appellant and the appellee as to the ownership of the oil, and that it did not care to purchase the oil, as it would be in the attitude of purchasing a lawsuit. The appellant testified that he was put to an expense aggregating $109.51 to enlarge his earthen storage tank to hold the oil after the appellee had refused to take the same. There was testimony in the record to the effect that oil from September 21, 1923, to December 29, 1923, was 40c a barrel; from December 29, 1923, to January 10, 1924, 55c a barrel; from January 10 to January 21, 1924, ’65c a barrel; from January 21 to February 8, 1924, 80c a barrel; and from February 8, 1924, the price was $1 per barrel. The preponderance of the testimony tended to show that it was customary with oil companies in the El Dorado field during the period of the transactions above mentioned to take oil that did not contain B S &¡W of over 2 per cent. A preponderance of the evidence likewise tends to prove that on February 4, at the time the letter was written by the appellee stating that it could not accept Smackover crude that contained more than 1% per cent. B S & W, and at the time the letter was received by the appellant, a test of the oil showed that it contained less than 2 per cent. B S & W.

On March 25, 1924, the ‘appellant instituted this action against the appellee. Appellant set up the contract, and alleged that the appellee had violated its terms, to the appellant’s damage in the sum of $2,000.- The appellee, in its answer, denied the allegations of the appellant’s 'complaint, made its answer a cross-corn,plaint, and set up covenants one and three in the division order as a defense to the action;, and alleged that the appellant had first breached the contract, and that, since the execution of the contract, the appellant’s lease had produced in excess of 50,000 barrels of oil of the quality specified in the contract.' The appellee prayed for specific performance, and that the appellant be required to deliver to it 23,000 barrels of oil, or in the alternative, upon his failure to do so, that the appellee have judgment against the appellant in an amount equal to the difference between the contract price and the market price of 23,000 barrels of oil.

"Upon the issues and the evidence adduced the trial court dismissed the appellant’s complaint for want of equity, and entered a decree in favor of the appellee for damages in the sum of $11,500, from which appellant duly prosecutes this appeal.

1. The letter of September 23, 1923, written by the appellant and accepted by the appellee, evidenced the contract between the parties. We are convinced that the division order executed by the appellant several 'days after the contract of September 23, but made effective as of that day, was not intended by the parties as a part of the contract. But, if we be mistaken in this view, and if the division order should be construed in connection with and as a part of the contract of September 23, 1923, we are nevertheless convinced from the testimony in the whole case that at the time the contract was entered into it was the intention of the parties that the appellant should deliver to the appellee 50,000 barrels of heavy Smackover crude oil from his lease, and that the appellee should receive the number of barrels of oil mentioned, and pay therefor the price designated of 50 cents with the usiml pipe'line deduction on oil runs. We do not see anything in the division order that is in conflict with this construction, even though it be considered as a part of the contract. The division order, as we construe it, was but a guaranty by the appellant to the appellee that the appellant was the owner of the lease from which the oil was being produced and specifying a method for ascertaining the qualities of oil and B S & W contained therein; and that the parties might agree in writing as to the quantity, the periods of delivery and storage, and providing that, in the absence of such agreement, the oil, when delivered in the pipe lines designated by the appellee, should be its oil, and prescribing the time and manner of payment to the owners of the oil in proportion to their respective interests.

The division order, when construed as a part of the contract, does not relieve the appellee of the obligation to take the oil produced 'by the appellant at the price named in the contract with the usual pipe line deductions on oil runs. The contract expressly provides that the usual pipe line deductions on oil runs should be made, and the decided preponderance of the testimony shows that it was the custom of pipe line companies in the El Dorado field during the time covering the transactions involved herein, with one or two exceptions, to receive pipe line oil that did not contain over two per cent. B S & W. Such was the testimony of the appellant himself; and another witness testified that the usual pipe line reduction was two per cent. B8&¥. The custom was for pipe lines to take oil up to two per cent. B S&¥. True, one of the witnesses for the appellee testified that the specifications of the Standard Oil Company in the field was 1 y2 per cent. B S & W, but this witness testified thathe didnotknow what the B S &W reduction was on any other company in the field, and he does not state that he knew what the usual or customary reduction in the El Dorado field was. So, it is practically undisputed that the usual pipe line reduction of B S & W could not exceed two per cent. Now, it occurs to us that the language of the first section of the division order conferring authority upon the parties to make corrections for temperature and impurities according to local rules does not contemplate that any such corrections would justify the appellee in reducing the B S & W below the quantity which the pipe lines in the El Dorado field usually received. Such a construction of § 1 would make it wholly contradictory to the express provision of the contract requiring only the usual pipe line reduction to be made, and it was evidently the intention of the parties that the corrections in B S & W, temperature, impurities, and the steaming of the oil should only be made with a view of rendering the oil merchantable; that’ is, so that it would be accepted or received by the pipe line company. But, so long as these corrections did not result in reducing the appellant’s oil below two per cent. B S & ÍW, they were authorized by the contract.

2. Therefore appellant, under his contract, had not violated the terms thereof, so long as he was furnishing the appellee oil that did not contain more than two per cent. B S & W. This appellant had done up to February 4, 1924, when the appellee, on that day, wrote appellant a letter saying that up to that time they had been accepting the oil containing 2 per cent. B S & W, but were obliged to change the specification, and could not from that time on accept oil that contained more than one and a half per cent. B S & W. The appellant did not receive this letter until February 12, and until that time the tests of the oil proved that appellant’s oil was still running under two per cent. B S & "W. Therefore appellant had not violated his contract when he received the above letter of February 4, 1924. This letter was an unequivocal declaration by the appellee that it could not any longer accept the appellant’s oil. According to the custom in the El Dorado field, pipe lines, as we have seen, did not make deductions on oil runs that contained two per cent, and under of B S & W, and the appellee was bound under the contract to accept the appellant’s oil runs so long as they did not contain more than two per cent. B S & W. Therefore, when the appellee announced on the 4th of February, 1924, that it could not any longer receive appellant’s oil if it contained more than one and a half pex cent. B S & W, it violated its contract.

In Ingham Lumber Co. v. Ingersoll, 93 Ark. 447, 452, we said: “A contract is not invalid, nor is the obligor therein in any manner discharged from its binding effect, because it turns out to be difficult or burdensome to perform. A valid contract cannot be abrogated or modified unless both parties assent thereto; and if one of the parties manifests in unequivocal language his intention not to perform the contract .unless it is modified, he breaches the contract. ’ ’ The letter of February 4, 1924, is couched in the most positive and unequivocal terms. It expressed the appellee’s purpose to change the specifications of the contract, which, under the custom as we have seen, was two per cent. B S & W, to 1 y2 per cent. B S & W, and its purpose not to accept oil containing more than one and a half per cent. B S & W. In Majestic Milling Co. v. Copeland, 93 Ark. 195, 204, we said: “But the rule is well established that, in order for one party to a contract to be justified in treating it as broken by the other, and claiming damages for the breach, there must have been a distinct and unequivocal intention, manifested either ■by the words or conduct of the other, not to perform the contract.-” See also Spencer Medicine Co. v. Hall, 78 Ark. 336; Ford Hdw. Lbr. Co. v. Clement, 97 Ark. 522.

It is the contention of learned counsel for the appellee that, notwithstanding the appellee’s letter of February 4, 1924, it nevertheless did not violate its contract for the'reason that it continued to receive the oil until as late as February 9, 1924, and in fact never refused to receive appellant’s oil where the B S & ¡W was two per cent, or less. But the appellant did not receive the letter until the 12th of February, 1924, and didn’t know until that time of the appellee’s intention to repudiate the contract. The testimony on behalf of the appellant was to the effect that the appellee did refuse to take the oil at two per cent. B S & W after writing the letter, and did not offer to comply with the contract until the appellant notified it by telegram that the appellee had broken the contract and demanded the release of his oil, and did not offer to comply with, the contract until it ascertained that the appellant had entered into a contract with another company to take his oil. Now, after the appellee, by its letter of February 4, 1924, had repudiated the contract, and by that act had committed the first breach thereof, it was not incumbent on the appellant to offer the appellee the oil produced ¡by him as a condition precedent to maintaining his action for damages for breach of the contract on the part of the appellee. As we have seen, the appellant, after the receipt of the letter of February 4, 1924, had the right to treat the contract as at an end. Plunkett v. Winchester, 98 Ark. 160-165.

As is said 'by ns in the latest case on the subject, Griffin v. Chesney, 168 Ark. 240, 243: “A party is not entitled to enjoin the breach of a contract by another, unless he himself has performed what the contract required of him so far as possible; if he himself is in default, or has given cause for nonperformance by defendant, he has no standing in equity.” In Waterman v. Bryson, 158 N. W. 466, it is held, quoting syllabi: “Positive notice of intended breach of contract to be performed in the future may be treated by the adverse party as actual breach.” “After anticipatory breach of contract, a subsequent promise or offer to perform does not affect the rights of the adverse party.” See Torry v. Shea, 155 Pac. 820; Shopper Pub. Co. v. Skat Co., 90 Conn. 317, 97 Atl. 317; Lake Shore & M. S. Ry. Co. v. Richards, 38 N. E. 773; Brady v. Oliver, 125 Tenn. 595, 147 S. W. 1139.

3. But, notwithstanding the appellee violated the contract in ignoring the same and refusing to take appellant’s oil, under the contract, the appellant sustained no damages by reason of such violation, except the necessary expense that he had to incur in enlarging his earthen storage tank and the oil that he actually lost when the appellee cut the connection with his pipe line. The testimony showed that the cost of enlarging the storage tank was $109.51, and that appellant lost 1,500 barrels of oil, which were priced, under the contract, at 50 cents per barrel. The appellant was not damaged by reason of the failure of the appellee to take his oil that was not wasted, because the price of such oil steadily increased in value from the time of the making of the contract until its breach, at which time the oil was worth $1 per barrel. The appellant had the benefit of this increase.

It follows from what we have said that the trial court erred in rendering a judgment in favor of th¿ appellee against the appellant, and for this error the decree is reversed, and a decree will be entered here in favor of the appellant against the appellee in the sum of $859.51.

OPINION ON REHEARING.

Wood, J.

Counsel for the - appellee, on rehearing, contend that this court was not warranted in entering a judgment here in favor of the appellant against the appellee in the sum of $859.51, and they say that the complaint does not allege any damages for the loss of oil, nor does it allege facts upon which to predicate a decree for the damages caused by the expense of enlarging or constructing additional storage. They contend that the testimony was not sufficient to sustain the decree.

We have re-examined the transcript, and are unable to concur in this view of learned counsel. After setting up and alleging a breach of contract on the part of the appellee, the complaint alleges “that, by reason of the breach of said contract, * * * plaintiff * * * has been forced, in order to take care of his oil, to enlarge his earthen storage, put in a treating plant, and make other necessary preparations for storage at great expense, * * * and has been damaged in the sum of $2,000. ’ ’ There was a further allegation in the complaint to the effect that plaintiff “had been forced by the breach of said contract to put in a treating plant, enlarge its earthen storage, and make further necessary preparations to take care of his oil, which had been accumulating at the rate of 500 barrels per day at a great and heavy expense.”

While the appellant was being examined as a witness in his own behalf, he was asked by his counsel: “Did you lose any oil by reason of the crowded condition of your tank there, brought about by the breach of this contract?” Objection was interposed by counsel for the appellee on the ground that ‘ ‘ there is no such allegation in his complaint.” Thereupon counsel for the appellant stated: “I ask to amend right now.” The court thereupon announced: “Let the objection be overruled. Plaintiff permitted by the court to amend, and include loss of oil.” The appellant (witness) thereupon made the following answer to the question: “I figure I have lost about. 1,500 barrels.” Appellee’s counsel thereupon objected to the answer because the answer is uncertain.

In addition to the above testimony as to the loss of 1,500 barrels of oil, the appellant further testified that the extra expense necessarily incurred by him by reason of the failure of the appellee to take his oil amounted in the aggregate to $109.51, and he specified the items of cost constituting the above sum.

It is obvious from the above that the court treated the complaint as amended to allow the appellant to include the loss of oil as an element of damages, and the complaint was sufficient to justify the introduction of the testimony of the appellant tending to prove the expense he incurred in enlarging his earthen storage tank. Therefore we conclude that the allegations of the complaint and the proof adduced by the appellant warranted the court in entering a decree in his favor against the appellant in the sum of $859.51 as directed in the original opinion. The motion for rehearing is therefore overruled.


text:
    Wright v. Ward.
    Opinion delivered February 15, 1926.
    1. Constitutional law—self-executing provision.—A constitutional provision is self-executing- if it supplies a sufficient rule by means of which the right given may be enjoyed and protected or the duty imposed may be enforced; and it is not self-executing when it merely indicates principles, without laying down rules by means of which those principles may be given the force of the law.
    2. Constitutional law—initiative and referendum amendment self-executing.—Amendment 13, providing, among other things, for a referendum of municipal ordinances, is self-executing, and additional legislation is not essential in order to effect the referendum of such ordinances.
    3. Municipal corporations—referendum of ordinance—day of election.—Though- a petition to a town council for referendum of an ordinance asked that the council designate a day named as the date for a special election for the referendum, which was denied by the town council, the fact that the day named had passed before a petition for mandamus was filed in the circuit court would not deprive that court of jurisdiction to name a subsequent day for the election.
    Appeal from Pulaski Circuit -Court, Tliird Division; Marvin Harris, Judge;
    affirmed.

      Mehaffy & Mehaffy, for appellant.

      John D. Shackleford, for appellee.
   Wood, J.

Tlie appellees petitioned the circuit court of Pulaski County for a mandamus to require the appellants, who are the mayor, the town recorder and the aldermen of the town of Alexander, to hold an election on the referendum of a stock ordinance which had been duly passed by the town council. The petition was in due form, setting out that the petitioners were residents of the State and of the incorporated town of Alexander, and qualified voters of the town, county and State, and that the defendants were the mayor, recorder and aider-men of the town; that they had filed their petition with the recorder of the town, duly verified as required by law, within ninety days after the passage of the ordinance, and containing the requisite number of voters under Amendment No. 13 to the Constitution, and asking for a referendum on the ordinance to the people at an election of the voters of the town to be held on August 8, 1925. They set out the ordinance. They alleged that Amendment No. 13 was self-executing, in that it provided all the necessary steps for an election on the referendum. The defendants demurred to the petition, and the court overruled the demurrer. The petitioners stood on their petition. The court entered a judgment granting the prayer of the petition and directing the defendants to call an election within a reasonable time at which the voters of the town might vote upon the ordinance of which the petitioners complain, and that the defendants do and perform all acts necessary to carry out and make valid the election. The defendants prayed an appeal from the judgment of the court, which was granted.

1. Amendment No. 13 to the Constitution was adopted in 1920. Brickhouse v. Hill, 167 Ark. 513. The amendment is in one section divided into numerous paragraphs treating of various subjects under different titles. The next to the last paragraph is as follows: “Self-executing. This section shall be self-executing, and all its provisions shall be treated as mandatory, but laws may be enacted to facilitate its operation.. No legislation shall be enacted to restrict, hamper or impair the exercise of the 'rights herein reserved to the people.” Among other provisions of the amendment, are the following :

“The initiative and referendum powers of the people are reserved to the legal voters of each municipality and county as to all local, special and municipal legislation of every character in and for their respective municipalities and counties, but no local legislation shall be enacted contrary to the Constitution or any general law of the State, and any general law shall have the effect of repealing any local legislation which is in conflict therewith.”
“Municipalities may provide for the exercise of the initiative and referendum as to their local legislation. * * * Fifteen per cent, of the legal voters of any municipality or county may order the referendum or invoke the initiative upon any local measure. In municipalities the number of signatures required upon any petition shall he computed upon the total vote cast for the office of mayor at the last preceding general election. * * * The time for filing a referendum petition shall not be fixed at less than thirty days nor more than ninety days after the passage of such measure by a municipal council. * * * Referendum petitions may be referred to the people at special elections to be called by the proper official, and such special elections shall be called when fifteen per cent, of the legal voters shall petition for such special election, and if the referendum is invoked as to any measure passed by a city or town council, such city or town council may order a special election.
“Any measure submitted to the people as herein provided shall take effect and become a law when approved by a majority of the votes cast upon such measure, and not otherwise, and shall not be required to receive a majority of the electors voting at such election. Such measures shall be operative on and after the thirtieth day after the election at which it is approved, unless otherwise specified in the act.
“The result of the vote upon any *•* * municipal or county measure shall be canvassed and declared by the State Board of Election Commissioners or any legal substitute therefor. In submitting measures to the people the officials shall be guided by the general election laws or municipal laws, as the case may be, until additional legislation-is provided for.”

We are convinced that the provisions of the Constitution, supra, as to the referendum on ordinances or measures enacted by municipalities, are self-executing. The provisions of the entire amendment are all embodied in one section, though composed, as we have stated, of various paragraphs on different subjects; and then, after setting ont all these paragraphs with their various provisions, the amendment declares: “This section shall he self-executing, and all its provisions shall be treated as mandatory.” Judge Cooley says: “A constitutional provision may be said to be self-executing if it supplies a sufficient rule by means of which the right given may be enjoyed and protected, or the duty imposed may be .enforced; and it is not self-executing when it merely indicates principles, without laying down rules by means of which those principles may be given the force of law. ’ ’ Cooley’s Constitutional Limitations, p. 121.

In People v. Fancher, 50 N. Y. 288, the Court of Appeals of New York says: “The same general rules which govern the construction and interpretation of statutes and written instruments generally apply to and control in the interpretation of written constitutions. They are made by practical and intelligent men for the practical administration of the government, and they are to receive that interpretation which will give effect to the intent of the framers as deducible from the language employed and operate most benignly in the interest of the governed, and best harmonize with and give effect to the general scope and design of the instruments. As in other written instruments, the intent and design of a particular provision being ascertained from the words used, effect will be given to it in harmony with such intent and design.”

Following these wholesome rules, in view of the provisions above set forth, we are convinced that all the machinery necessary for holding an election on the referendum on ordinances passed by municipalities is provided for in the Constitution and the general statutes. It was the duty of the defendants, the mayor, recorder, and aldermen of the town of Alexander to obey the mandates of the Constitution by providing for a special election at which the voters of the municipality might voice their approval or disapproval of the ordinance in controversy. The allegations of the petitions show that the petitioners had complied with the provisions of the Constitution, which entitled them to have the special election called fby the town council as therein directed. It is unnecessary to reiterate these provisions in regard to the election. They are sufficient, when taken in connection with the statutes governing elections (ch. 54, C. & M. Digest), to have the election held and the result thereof declared and the will of the people as thus declared enforced. The amendment is very comprehensive in its provisions, and additional legislation is not essential in order to effectuate the referendum on ordinances passed by the town council. See § 3825, C. & M. Digest, and other sections pertaining to the holding of municipal elections.

It appears that the petition for mandamus was not filed by the petitioners until November 7, 1925. In the petition for referendum to the town council, the petitioners had asked that August 8 be designated as the day for the special election on the referendum on the ordinance which they desired to have voted upon. The appellants contend that, inasmuch as the eighth day of August had passed before the petition for mandamus herein was filed in the circuit court, the circuit court could not grant the relief prayed for. But we do not concur in this view of learned counsel. It would ¡be magnifying form above substance. True, the day had passed originally named in the petition for the referendum because the town authorities had ignored such petition and refused to call the election. It is manifest that the naming of this'day was merely suggestive and tentative on the part of the petitioners for the referendum. Certainly it was not binding either on them or the town council whose duty it was to order the special election. It was entirely within the power of the council to order the election, name the day, and provide by ordinance the necessary machinery for holding the same.

The judgment of the circuit court directing and compelling the defendants named in the petition to call an election is sufficient to require the petitioners to provide for the election as prayed for in the petition. The judgment is therefore correct, and it is affirmed.


author: Hart, J.,

text:
    Missouri Pacific Railroad Company v. Wellborn & Walls.
    Opinion delivered February 15, 1926.
    1. Carriers—interstate shipment—published tariff.—The rights of a shipper as against an interstate carrier are measured by the published tariff filed with the Interstate Commerce Commission, and the rights as defined ¡by the tariff cannot be varied or enlarged toy either the contract or tort of the carrier.
    2. Carriers—interstate shipment—liability of initial carrier. —-The initial carrier in interstate shipments is liable for the negligence of any connecting carrier, including the terminal carrier.
    3. Carriers—presumption of negligence.-—Proof of damage to a shipment raises a presumption -of negligence, and the burden rests on the carrier to overcome that presumption.
    4. Carriers—-negligence of terminal carrier—-jury question.— Where the undisputed evidence -showed that a shipment of lumber arrived at its destination in good condition, but it was rendered valueless by being unloaded at the place and in the manner shown in the record, and the railroad company made no effort to show that there was no negligence in unloading the lumber, there was no question of fact to be submitted to the jury, and the court properly directed a verdict for the shippers.
    Appeal from Clark Circuit Court; J. II. McCollum, Judge;
    affirmed.
    STATEMENT BY THE COURT.
    H. K. Wellborn and H. A. Walls, doing business under tbe firm name of Wellborn & Walls,-sued the Missouri Pacific Railroad Company to recover damages for the breach of a special contract for the shipment of a carload of lumber specially prepared for making toys, from Árkadelphia, Ark., to 137th St. and Southern Blvd., New York City.
    According to the evidence for the plaintiffs, they were engaged in the lumber business in Arkadelphia, Ark., during the year 1923, and on the 28th day of November of that year they sold a carload of lumber, specially prepared, to the Side Car Vehicle Mfg. Corporation, New York City. The lumber was about two feet long, and was specially prepared to be used in making toys. It was prepared according to specifications received from the buyer. The boards were planed and dressed, and then the corners of each iboard were rounded with a band-saw. They then cut around the edges with a band-saw and sandpapered them. Tbe material was the kind that toy manufacturers generally used in making certain toys.
    Tbe plaintiffs were not sure whether the lumber in question could be shipped as lumber on the lumber rate, and asked the agent of the railway company at Arkadelphia about it. They were told that it could be shipped as lumber. The plaintiffs then placed the lumber in the car very carefully, in piles of even numbers. It was flat lumber, so that it could be easily stacked, one piece on another. There was not a full car of it, but it was billed at the minimum weight so that it could be delivered without being disturbed on the way. The lumber was stacked in each end of the car and then walled up so that it could not shake around or be displaced in shipment. The bill of lading showed that the car of lumber was to be delivered to the Side Oar Vehicle Mfg. Corp., New York City, at 13.7th Street and Southern Boulevard, by way of 125th Street Terminal. The lumber was of such size and dimensions that it could have been put in boxes and crates if the railroad agent had required' that to be done. The invoice price of the lumber was $1,548, and it was of that value. The freight amounted to $147. The agent of the plaintiffs called upon the Pennsylvania Eailroad Company, which was the terminal company, to get the car delivered to the consignee. He was told that the car of lumber could not be delivered at point of delivery because of the rulings of the Interstate Commerce Commission. The agent of the plaintiffs inspected the car of lumber at Jersey City, and it was in good condition at that time. The Pennsylvania Eailroad Company unloaded the car of lumber on Pier K, Manhattan Piers, Jersey City, N. J. This was done because, under the tariff filed by the Pennsylvania Bailroad Company with the Interstate Commerce Commission, it could not have delivered the lumber at the manufacturing establishment of the consignee according to the terms of the bill of lading, unless the lumber had been packed in boxes and crates and shipped that way. At the time of the shipment, neither the plaintiff nor the defendant’s agent at Arkadelphia knew of the existence of this rule of the Pennsylvania Bailroad Company in the schedule or tariff of rates filed by it with the Interstate Commerce Commission. The lumber was inspected after its arrival and found to be worth its original or invoice value. It had no commercial value, and could not be used after it was unloaded.
    The circuit court instructed the jury to find a verdict for the plaintiffs for the sum of $1,437, which was the value of the lumber less the freight.
    From the judgment against it in favor of the plaintiffs, the defendant has duly prosecuted an appeal to this court.

      E. B. Kinsworthy and Samp Jennings, for appellant.

      R. W. Huie, Jr., for appellee.
   Hart, J.,

(after stating the facts). Counsel for the defendant contend for a reversal of the judgment on the ground that, under the Interstate Commerce Act, it could not contract for a service not provided for in the tariff schedule filed by it or its connecting carriers with the Interstate Commerce Commission, and that such a contract, if made by it with the shipper, is unenforceable. They point to the fact that the Supreme Court of the United States has decided that the legal rights of the shipper as against the carrier are measured by the published tariff filed with the Interstate Commerce Commission, and that the rights as defined by the tariff can not be varied or enlarged by either the contract or tort of the carrier. Keogh v. Chicago & N. W. Ry. Co., 260 U. S. 156, and cases cited; N. Y., N. H. & Hartford Rd. Co. v. Interstate Commerce Commission, 200 U. S. 361; and Texas & Pacific Ry. Co. v. Abilene Cotton Oil Co., 204 U. S. 426.

Therefore, they contend that because, under the published tariff of the Pennsylvania Railroad Company, which was the terminal carrier, the lumber could not be delivered to the consignee at the point designated in the bill of lading, the Pennsylvania Railroad Company had the right to unload the lumber at the point where it did unload it, upon the refusal of the consignee to receive it at the station on the railroad nearest to its place of business, which was named as the place of delivery in the 'bill of lading.

Counsel might be right, if this was all there was in the case; but counsel have not taken into consideration the peculiar facts of this case, which we regard as controlling. Under the decisions of the Supreme Court of the United States above cited and under our own decisions, the initial carrier in interstate shipments is liable for the negligence of any connecting carrier, including the terminal carrier. G. R. I. & P. Ry. Co. v. Dawson, 157 Ark. 460, and Mo. Pac. Rd. Co. v. Americcm Fruit Growers, Inc., 163 Ark. 318.

This court has also held that proof of damage to the shipper raises the presumption of negligence, and the (burden rests on the carrier to overcome that presumption. St. L. I. M. & S. Ry. Co. v. Cunningham Commission Co., 125 Ark. 577; and C. R. I. & P. Ry. Co. v. Walker, 147 Ark. 109.

The undisputed evidence, shows that the lumber in question was about two feet long, and was specially prepared to be used for a particular purpose by the consignee. The agent of the railroad company was notified of that fact 'before the lumber was loaded in the car. It could have been packed in boxes and crates and shipped in that way if the railroad had so directed. It was carefully packed in each end of a car, and was billed as a car of lumber in order to prevent other freight from being placed in the car. The lumber was walled up in each end of the ear, so that it would not become displaced in shipment. It arrived at its destination in good condition. It appears from the record that it was unloaded on the pier in such a way that it became valueless. Under the circumstances .just detailed, this constituted negligence on the part of the terminal carrier for which the initial carrier was responsible. The evidence for the plaintiffs is uncontradicted, and shows that the lumber had become valueless after it was unloaded on the pier by the Pennsylvania Eailroad Company. It was in good condition before it was unloaded, and the railroad company made no effort to show that there was no negligence in unloading the lumber. Then, assuming that it had a right to deliver the lumber at the pier where it was unloaded, still it had no right to do so in a negligent manner. The undisputed evidence shows that it was worthless after being-unloaded, and the circumstances detailing the care with which it was packed, considered in connection with the special use for which it was designed, show negligence on the part of the railroad company in unloading it so that it became valueless. It is a case where there was no effort on the part of the shipper to secure a preferential rate or advantage which was not given to all other shippers. For some reason, as shown by the undisputed evidence, the lumber was rendered valueless by being-unloaded at the place and in the manner shown in the record.

Hence there was no question of fact to be submitted to the'jury, and the court did not err in instructing a verdict for the plaintiffs.

It follows that the judgment must be affirmed.


text:
    Mosaic Templars of America v. Crook.
    Opinion delivered February 15, 1926.
    1. Insurance—fraternal benefit society—-beneficiaries.—Crawford & Moses’ Dig., § 6074, providing that the payment of death benefits by fraternal benefit societies shall be confined to certain designated relatives or dependents of the members, is prospective in operation, and does not affect the rights of beneficiaries in policies issued prior to the passage of the statute.
    2. Insurance—construction of by-laws.—A by-law of a fraternal benefit society which provides that “the payment of death benefits shall be confined to said beneficiaries, as permitted in the statutes of the State in which the deceased resided,” held not to apply to policies issued prior to its adoption.
    3. Wills—signature.—A will signed at the beginning of the instrument, instead of at the end, is effective if it appears that the writer intended to sign the instrument and become bound by its provisions. *

    Appeal from Asbley Circuit Court; Turner Butter, Judge;
    affirmed.
    statement by the court.
    Lecester Crook sued the Mosaic Templars of America to recover $300 alleged, to be due Mm as beneficiary upon a life insurance policy issued by the defendant to Henrietta McCloud.
    Lecester Crook was a witness for himself. According to his testimony, he was sometimes called Leaster Crook. He is 32 years old, and is not related to the insured, Henrietta McCloud, but had been paying the premiums on the policy sued on for fifteen years. -Prior to that time his father and mother had paid the premiums orí' the policy. He was made the beneficiary in the policy soon after he was born. On the 13th day of March, 1911, a substituted policy was issued to Henrietta McCloud, and the insurer agreed in it to pay the amount of the policy at the death of the insured to the person named in the will made by the insured.
    The will or assignment referred to is as follows:
    “Will or Assignment. I, Henrietta McCloud, do hereby will and assign the benefits of this policy to: Names of beneficiaries ........................age ............ City, Leaster Crook, whatever amount may be due on this policy.
    “Betty Lyons,
    “Name of Member.
    “Witness: C. F. Newton, W. S., M. L. Peoples, W. Z. M.”
    Other testimony relating to the time and manner in which the will or assignment was executed will be stated in the opinion.
    The certificate of insurance, or the policy sued on, contains a provision for the payment to the beneficiary of the member after his death “subject to the conditions hereinafter set forth in this policy and the general laws of the order as are now in force and shall be adopted and enacted from time to time.”
    It was agreed between the parties in open court that Lecester Crook is not within any of the classes who are permitted to be a beneficiary of the policy of insurance issued by a fraternal benefit society under the limitation provided by § 6074 of Crawford & Moses’ Digest, which is § 6 of act 462 of the Acts of 1917.
    The defendant then introduced the constitution and general laws for the government of the defendant. Among other things, § 6 of the by-laws contained the following: “The payment of death benefits shall be confined to said beneficiaries as permitted in the statutes of the State in which the deceased resided. ’ ’
    The case was tried before the circuit court sitting as a jury, and the court found that the plaintiff was entitled to recover from the defendant the sum of $300 with interest at the rate of six per cent, per annum from May 15, 1923, until paid. Judgment was rendered accordingly, and the defendant has duly prosecuted an appeal to this court.

      Carmichael S Hendricks, for appellant.

      Compere é Compere, for appellee.
   Hart, J.,

(after stating the facts). The first contention of counsel for the defendant for a reversal of the judgment is that the plaintiff is precluded from recovery under the terms of the policy and the by-laws, which it is claimed became a part of it. The Legislature of 1917 passed an act relating to the regulation and incorporation of fraternal beneficiary associations. Section 6 of the act is now § 6074 of Crawford & Moses’ Digest. It provides that the payment of death benefits shall be confined to certain designated relatives or dependents of the members. This statute has been construed as having only a prospective operation, and as not affecting the rights of beneficiaries in policies issued prior to the passage of the statute. Mosaic Templars of America v. Bean, 147 Ark. 24, and International Order of Twelve Knights and, Daughters of Tabor v. Rosenberg, 163 Ark. 594.

The benefit certificate or the policy sued on in this case was issued prior to the passage of the statute, and it is conceded that the plaintiff is not precluded from recovery under it. It is insisted, however, that he is barred of recovery under the policy itself and the by-laws of the order. As shown in our statement of facts, the policy contained a provision that it was subject to such laws of the defendant as might then be in force and such others as should be enacted in the future.

It is claimed that, under this clause of the policy, as construed in connection with § 6 of the by-laws, the defendant is barred of recovery. It will be remembered that § 6 provides that the payment of death benefits shall be confined to such beneficiaries as are permitted in the statutes of the State, and that it was passed in 1917. The exact time in that year that the change was made is not certain, but the change was made in order to conform to the statute. Prior to that time there was nothing in the constitution or the by-laws of the order which precluded the insured from making the plaintiff her beneficiary. It is well settled that contracts are to be construed in the light most favorable to the insured, and, when that is done, in view of the object sought to be accomplished, it seems to us that the defendant was acting for the future only, and not for the past, when the change was made in the by-laws. In other words, they changed the by-laws so that in the future policies should not be issued to those persons who were prohibited by statute from being named as beneficiaries. There is no reason apparent to us why the same rules applying to the construction of statutes should not be applied to the construction of the by-laws as to policies which had already been issued. It will be remembered that the plaintiff was named in the policy as beneficiary in 1911, before the passage of the act of 1917 enumerating the persons who might be designated as beneficiaries. We are of the opinion that § 6 of the by-laws was not intended to operate upon policies which had been issued prior to its adoption, and that the plaintiff continued to be the beneficiary named in the benefit certificate.

It is also contended that the will or assignment, as it is called, did not in a proper and legal manner designate the plaintiff as a beneficiary. The will is copied in our statement of facts, and need not be repeated here. The plaintiff was sometimes known as Leaster Crook, as it appears in the will or assignment. This instrument also shows that it was signed by Henrietta McCloud at the beginning of it and not at the end, as is usually done. That the signature appears at the beginning instead of the end of the writing is unimportant if it appears that the writer intended to sign the instrument and become bound by its provisions. Lee v. Vaughan’s Seed Store, 101 Ark. 68.

According to the testimony of Minnie Peoples, she was the presiding officer of the lodge at the time Henrietta McCloud assigned the policy of the plaintiff, and C. F. Newton was the scribe of the lodge; C. F. Newton wrote the name of Henrietta McCloud in the will or assignment while she held the pen. C. F. Newton, Betty Lyons and the witness were all present and witnessed the signature. This was done in open lodge at the request of Henrietta McCloud, in order that Lecester Crook should receive the insurance at her death. The testimony of Betty Lyons was to the same effect. This testimony shows that the requirements of the order as to the designation of the beneficiary were substantially complied with.

It follows that the judgment will be affirmed.


text:
    McClain v. Reliance Life Insurance Company.
    •Opinion delivered February 15, 1926.
    1. Insurance—forfeitures.—Forfeitures of insurance policies are enforced only when it appears that this is the plain intent and meaning of the contract.
    2. Insurance—construction of policy.—The words of an insurance policy should ibe taken most strongly against the insurance company employing them.
    3. Insurance—extension of policy upon default.—A life insurance policy provided that, in case of default after the policy has been in force three years and the assured failed to exercise one of two other- options therein provided, the policy should be extended for 3 years and 8 months; upon the date for payment of the fourth annual premium, without exercising the other options, assured paid one-half of the premium and executed a note for the balance payable 6 months after date, which provided that, if the note should not he paid when due, the policy should lapse. Held, upon default in payment of the note, the policy by its terms extended the insurance for 3 years and 8 months longer.
    Appeal from Craighead Circuit Court, Jonesboro District; G-. E. Kech, Judge;
    affirmed.
    STATEMENT BY THE COURT.
    Med V. McClain sued the Reliance Life Insurance Company of Pittsburgh, Penn., to recover $2,000 alleged to be due him on a policy of life insurance on the life of Grace M. Roddy.
    The defendant admitted the issuance of the policy and the death of the insured, but denied liability on the ground that the policy had lapsed by reason of the nonpayment of the premiums..

      The record shows that on the 18th day of May, 1916, the defendant issued to Grace M. Roddy a life insurance policy in which her mother is named as the beneficiary. Subsequently the insured married Med V. McClain, and, at the request of the insured, the beneficiary was changed from her mother to her husband. The annual premium on said policy was $53.06. The first premium was paid at the time the policy was delivered, and the second and third annual premiums were paid when due. By the terms of the policy the premium was due annually on the 18th day of May. The policy contained a provision which reads as follows:
    “Options on surrender or lapse. After this policy shall have been in force three full years, the owner, within one month after any default, may elect (a) to accept the value of this policy in cash, or (b) to have the insurance continued in force from date of default, without future participation and without the right to loans, for its face amount, including any outstanding dividend additions, less any indebtedness to the company hereon, or (c) to purchase non-participating paid up insurance, payable at the same time and on the same conditions as this policy. * * * If the owner should not, within one month from default, surrender this policy to the company at its home office for a cash surrender value or for paid-up insurance as provided in option (a) and (c), the insurance will be continued as provided in option (b).”
    Ob. the 18th day of May, 1919, the fourth annual premium became due, and insured was not able to pay it in full. By agreement with the company, she paid one half of the premium and executed her note for the balance. The body of the note reads as follows:
    “For third and subsequent years only—not to be used for second year premiums, policy No. 94556. May 18, 1919. On or before November 18, 1919, after date, without grace and without demand or notice, I promise to pay to the order of the Reliance Insurance Company of Pittsburgh twenty-six and 53/100 ($26.53) at the head office of the company in Pittsburgh, Pennsylvania, value received, with interest at the rate of five per cent, per annum. This note is accepted by said company at the request of the maker, together with $26.53 in. cash, on the following express agreement: That the insurance under policy No. 94556 issued by said company on the life of Grace M. McClain shall be continued in force until midnight of the due date of said note; that, if this note is paid on or before the date it becomes due, such payment together with said cash will then be accepted by said company as payment of the premium due on the 18th day of May, 1919, under the above policy, and all rights under said policy shall thereupon be the same as if said premium had been paid when due; that, if this note is not paid on or before the date it becomes due, it shall thereupon automatically cease to be a claim against the maker, and the said company shall retain said cash as part compensation for the rights and privileges hereby granted, and all rights under said policy shall be the same as if said cash had n,ot been paid nor this agreement made, and said policy shall be considered lapsed as of the due date of said premium; that any partial payments or extensions indorsed on the reverse side of this note shall be subject to all the terms and conditions of this agreement the same as if originally included in this note; that said company has duly given every notice required by its rules or by the laws of any .State in respect to said premium, and, in further compensation for the rights and privileges hereby granted, the maker hereof has agreed to waive and does hereby waive every other notice in respect to said premium or this note, it being well understood by the said maker that said company would not have accepted this agreement if any notice of any kind were required as a condition to the full enforcement of all its terms. ’ ’
    The note was not paid when due, and no part of it has since been paid. The insured died on January 27, 1924, and the defendant was notified of her death, in accordance with the terms of the policy.

      The cause was submitted to the circuit court sitting as a jury, and the court found for the defendant. Judgment was rendered accordingly, and the plaintiff has duly prosecuted an appeal to this court.

      Oautney S Dudley, for appellant.

      Gordon Frierson and Penix & Barrett, for appellee.
   Hart, J.,

(after stating the facts). It is sought to

uphold the judgment under the principles of law decided in Robnett v. Cotton States Life Insurance Company, 148 Ark. 199. We do not think, however, that the principles of law controlling that case have any application whatever to the facts as shown in the record in the case at bar. In the Robnett case the court recognized that the consideration of a contract of insurance is the payment of the premiums by the insured annually or otherwise, as may be agreed upon,' and that, under the terms of the policy, the payment of the premiums at the date due is essential to the continuance of the contract of insurance. The policy in that case had no cash reserve or loan value, and no provision for extended insurance. Hence the rights of the parties were governed entirely by the provisions of the blue note. The blue note was not paid when due, and for that reason, by virtue of the agreement contained in it, it ceased to be a claim against the maker. The cash payment by the terms of the note was treated as the consideration for the privilege which the insured had enjoyed in the extension of his insurance beyond the period provided for under the policy. The rights of both parties, when the conditions prescribed in the blue note were not complied with by the assured, were precisely the same as if the blue note had never been given and the payment in cash had never been made.

In the present case the facts are essentially different. It will be seen by reference to our statement of facts that condition (b) provides that the assured has the right to have the insurance continued in force from the date of default, without future participation and without the right to loans, for its face amount, excluding any outstanding dividend additions, less any indebtedness to the company. It is further provided that, if the assured shall not within one month from default surrender his policy to the company, the insurance will be continued as provided in option (b). .Another clause of the policy provides that the length of the automatic extension at the end of the third year is three' years and eight months. Forfeitures are only enforced when it appears that this is the plain intent and meaning of the contract, and the rule applies that the words of an instrument shall be taken most strongly against the party employing them. There being in the policy a provision for automatic extension insurance where the premium has not been paid when due, and where neither of the other options provided in the policy are exercised, it can not be considered that this provision was abrogated by the execution of the blue note, for the reason that, the policy being automatically extended by its express terms, there is no consideration for the execution of the blue note. It gave the assured no right that the policy itself did nut give him. Moreover, as we have just seen, the policy contains a provision for extended insurance and provides that it shall be ini force when the owner does not exercise one of the other two options provided in it. By the terms of the policy, the company expressly agrees that, if default shall be made in the payment of any premium, and the assured does not exercise one of the other two options, the policy will be automatically extended at the end of each year for a certain specified time, which is expressly named in the policy.

In the case at bar, the assured failed to pay the premium due at the end of the third year, and under the terms of the policy there was an automatic extension of three years and eight months, and there was no consideration whatever for the provision in the blue note as to the forfeiture of the policy. Hence we are of the opinion that the case is not controlled by the holding in the Rob-nett case, but is governed by the principles of law in Mutual Life Insurance Co. v. Henley, 125 Ark. 372, and other cases of that character decided ¡by this court. In one respect, the policy in the Henley case was more favorable to the assured than the one in the present case. It contained a provision that the premiums might be paid semi-annually or quarterly. The policy under consideration contains no such provision, and under it the premiums must be paid annually on the 18th day of May.' The assured made a cash payment of one-half of the annual premium and gave his note for the balance. For the purposes of this decision, it may be said that the insurance company elected to apply the cash payment to the payment of the premium, and thus extended the insurance under the terms of the blue note for six months. This would have extended the insurance to November 18, 1919.

We do not wish to be understood as holding that this was the correct interpretation to be placed upon the blue note in this case, but we have simply assumed this to be so for the benefit of the assured because it is the most favorable construction to be placed upon it. Assuming this to be the correct interpretation, we have a case of insurance extended under the terms of the blue note to the 18th day of November, 1919. Now, under the terms of the policy, there is a further extension of three years and eight months. This would extend the insurance to the 18th day of July, 1923. The assured did not die until the 27th day of January, 1924. Thus it will be seen that, under the most favorable construction which might be placed upon, the policy and the conduct of the company, the extended insurance expired before the death of the assured. It can not be contended that the blue note could in any event extend the insurance more than six months. Such holding would be in direct conflict with the terms of the blue note. It can not be said that the terms of-the policy would extend the insurance more than three years and eight months, because, under option (b), after the policy shall have been in force three years the assured is entitled to an automatic extension of his policy for three years and eight months. But under the terms of the policy there can be no extension, for the fourth year until the whole of the fourth premium has been paid. There is no provision in the policy for any apportionment of the extended insurance, because no provision is made for paying premium except annually. If, as above stated, it can be said that the conduct of the company in: accepting the cash payment for one-half of the premium could have the effect of extending the policy for six months, such conduct on the part of the company could in no way extend the period of time under the policy for insurance. The reason is that the automatic extension: of insurance under the policy is governed exclusively by its terms, and under the express terms of the policy the assured would not be entitled to an automatic extension for the fourth year, which amounts to five years and nine months, until he has paid the whole of the fourth premium.

It follows that, according to the interpretation of the contract and conduct of the company most favorable to the assured, the policy expired before his death.

It follows that the judgment must be affirmed.

McCulloch, C.J., concurring.