text:
    House v. Halton.
    Opinion delivered February 16, 1925.
    1. Mines and minerals — consideration for oil and gas lease. — A lease for five years and as long thereafter as oil and gas is produced from the land hy the lessee, subject to termination if no well is commenced thereon within a year unless the lessee tenders the stipulated rental for the privilege of deferring the commencement for 12 months, etc., held based on sufficient consideration and valid when made.
    2. Mines and minerals — commencing well within year. — Where an oil and gas lease provided that it should be terminated if tno well should be commenced “on said land” within a year, the locating of a well on other land in the vicinity of that described in the lease was not a compliance with the contract.
    3. Mines and minerals — right- to extension of time for commencing WELL. — The mere filing of a suit to forfeit an oil and gas lease was insufficient to entitle the lessee to an extension of time for commencing to drill a well, where the lessee was not prevented by injunction or otherwise from commencing drilling operations.
    Appeal from Ouachita Chancery Court, Second Division; George M. Lecroy, Chancellor;
    affirmed.

      Lamar Bmead and Coleman, Robinson <& Rouse, for .appellant.
    The contract is enforceable and subject to reformation. 158 Art. 448 and oases cited; 145 Ark, 566.

      T. J. Gaughan, J. T. Biford, J, E. Gaughan and E. E. Godivin, for appellee.
    ' The contract is unenforceable for lack of consideration. Equity will not enforce voluntary contracts, nor .validate by reformation voluntary conveyances. 15 Ark. 519; 80 Ark. 458; 44 Ark. 182; 127 Ark. 54; 152 Ark 387; 104 Wis. 81; 110 Mich. 505; 166 Mo. 110; 1 Story on Equity Jurisprudence, § 433; 24 Am. Eng. Enc. Law (2nd ed.) 653.
   Wood, J.

This is an action instituted by the appellee against the appellants. The appellee alleged in substance that, on the 1st of July, 1920, the appellant, through his agents, requested the appellee to execute to appellant an oil and gas lease on property owned by the appellee; that appellant’s agents represented that, within three months, a well would be begun in the neighborhood of this land to ascertain whether oil or gas was in that territory; that it was represented that the lease was wanted for another year, and nothing was said about rental; that the appellee and his wife executed the lease in accordance with this understanding; that the appellee has since discovered that there is a provision in the lease for an extension from year to year for a period of five years, provided the appellant deposited to the credit of the appellee the sum of $15 per acre as a consideration for the extension of said lease annually; that the appellant has failed to comply with this provision of the lease, and has failed to drill on the land as required in the lease. The appellee alleged that the lease was therefore null and void, and prayed that the same be canceled and that their title be quieted in said lands.

The appellant answered as trustee, denying that there were any representations made excepting those set forth in the lease, and he denied that the rental was to be $15 per acre, but alleged that, instead, the rental was to be fifteen cents per acre, which fact the appellee knew at the time. Appellant further alleged that the fifteen cents per acre had been deposited according to the terms of the lease, and he asked that the appellees be compelled to accept that sum and that the suit be dismissed. He prayed, by way of cross-relief, that the lease be reformed so as to read fifteen cents per acre for rental, and fox-such other and further relief as he was entitled to.

The lease under review was a lease from the appellee, S: E. Halton, lessor, to J. W. House,'Jr., lessee, on 635 acres of land situated in Ouachita County, Arkansas, described therein. The lease was to remain in force for a period of five years from date, and ‘ ‘ as long thereafter as oil or gas, or either of them, is produced from the said land by the lessee.” Among other recitals constituting the consideration is the following: “If no well be commenced on said land on or before the 1st day of July, 1920, this lease shall terminate as to both parties, unless the lessee, on or before that date, shall pay or tender to the lessor, or to the lessor’s credit in the Camden National Bank at Camden, Arkansas, or its successors, which shall continue as a depository, regardless of changes in the ownership of said land, the sum of 15 per acre dollars, which shall operate as a rental to cover the privilege of deferring the commencement of a well for 12 months from said date. In like manner, and upon like payments or tenders, the commencement of a well may be further deferred for like periods of the same number of months successively. And it is understood and agreed that the consideration first recited herein, the down-payment, covers not only the privilege granted to the date when said first rental is payable as aforesaid, but also the lessee’s option of extending that period as aforesaid, and any and all other rights conferred. Should the first well drilled on the above described land be a dry hole, then, and in that event, if a second well is not commenced on said land within twelve months from the expiration of the last rental period which rental has been paid, this lease shall terminate as to both parties, unless the lessee, on or before the expiration of said twelve months, shall resume the payments of rentals in the same amount and in the same manner as hereinbefore provided. And it is agreed that, upon the resumption of the payment of rentals, as above provided, that the last preceding paragraph hereof, governing the payment of the rentals and the effect thereof, shall continue in force just as though there had been no interruption in the rental payments. ”

It is unnecessary to set out the testimony concerning the question as to whether the leases were procured through fraudulent representations by the agents of the appellant. The syndicate, for which J. W. House, Jr., was the trustee, procured the drilling of a well in the neighborhood or locality of the land in controversy prior to the expiration of one year, and procured the development of other wells. But no well was drilled on the l'and in controversy within one year. The appellant tendered fifteen cents per acre to the appellees, which they refused to accept, and appellees filed this action, on August 16, 1922, to forfeit the lease.

The appellant concedes that he'had not drilled a well on the lands in controversy on or before the first day of July, 1920, and has not yet drilled any wells on the land, but he contends that he did drill wells in the neighborhood of this land, and that such drilling was a compliance with the provisions of the lease by which the lease contract was terminated unless a well were begun on the land within a period of twelve months. The appellant also contends that this provision of the lease cannot avail appellee, for the reason that appellant had tendered to the appellee the fifteen cents per acre before the expiration of the year contemplated by the lease contract.

The appellant further contends that, although the five-year lease had expired since the institution of the suit by the appellee, nevertheless the appellee cannot avail himself of that fact, because the bringing of the suit by him entitled the appellant to an extension of time for the fulfillment of his contract until the litigation is concluded.

The trial court dismissed the appellant’s cross-bill asking for a reformation of the lease, for want of equity, and granted the appellee’s prayer terminating the lease and quieting the title to the lands involved in the appellee, from which is this appeal.

The lease was based upon a sufficient consideration, and was valid when made. We are convinced that there was no fraud upon the part of the agents of the appellant in its procurement.

In Epperson v. Helbron, 145 Ark. 566, we held (quoting syllabus): “An oil and gas lease for a term of ten years in consideration of $1, in which the lessee covenanted, in ease a well was not completed within one year from date of execution, to pay a fixed sum per annum for each additional year, and to pay a royalty of one-eighth of all the oil, is valid; part of the consideration being the exploitation of the mineral resources under the land.” See also Gross v. Menton, 158 Ark. 448.

The appellant has failed to comply with the terms of the lease. The lease contract provides that “if no well be commenced on said land on or before the first day of July, 1920, this lease shall terminate as to both parties.” This recital of the contract requires that a well be commenced on the land described therein, and not on some other land. The placing of a well on other land than that described, even though in the neighborhood or vicinity of the lands mentioned, is not a compliance with the provisions of the contract. Appellee Halton testified that the well was to be drilled on the lands described and not on some other land, and such are the plain terms of the lease. The words “on said land” could have no other interpretation.

Furthermore, the bringing of the suit by the appellee to declare a forfeiture of the lease does not entitle the appellant, under the facts of this 'record, to an extension of time for commencing drilling operations. While the appellee instituted this action against the appellant, he did not seek an injunction to restrain him from drilling operations on the land, and did not interpose any obstacle in appellant’s way other than the mere filing of the suit.

A court of chancery, upon a proper showing, might grant relief to a lessee where it would be unconscionable not to do so under particular circumstances. But the mere filing of a suit claiming that the contract had been forfeited is not sufficient. It is not shown that the appellee, by asking for an injunction, or by threats or intimidation, attempted to prevent the appellant from performing his contract to drill. Appellant therefore is not in an attitude to claim that the filing of the suit interfered with his drilling operations, and that he is therefore entitled in equity to have the time for the performance of his contract extended. The appellant himself has asked for affirmative relief in the reformation of the lease contract. The lease, on its face, plainly says that appellant must pay $15 per acre rental, instead of fifteen cents per acre,.for the privilege of deferring the commencement of his well for twelve-month periods, and appellant concedes that he has not complied with the contract in this respect, and asks that the lease be reformed to show that it was the mutual intention of the parties that appellant should pay fifteen cents per acre instead of $15. If appellant intended to make this contention, he should have been more prompt in instituting his action to have the contract interpreted and reformed to conform with his notion of the proper construction to be given the contract. Appellant is not in an attitude to ask the interposition of a court of chancery to prevent the forfeiture of the lease.

The decree is therefore in all things correct, and it is affirmed. i! |


source: Caselaw Access Project

author: Hart, J.,

license: Public Domain

text:
    Fairbanks, Morse & Company v. Parker.
    Opinion delivered February 6, 1925.
    1. Sales — rights of seller under conditional sale. — In conditional 'sales of personal property in -which the title is retained •by the seller until the purchase price is paid, the buyer acquires an interest which he can sell or mortgage without the seller’s consent, but the seller’s right to recover the property if not paid is not prejudiced by such sale or mortgage.
    2. Sales — conditional sale — note as payment. — The giving of promissory ■notes for the balance due under a conditional sales contract is not a payment thereof unless by agreement of the parties the notes are accepted in payment.

      3. Sales — conditional sale — limitation to right of recovery.— The right of a seller of goods with reservation of title to replevy such goods on nopayment of the purchase money notes was not barred by limitation, though the original buyer had resold the goods and his vendee had been in possession for more than three years before the original seller brought his action, where it was not shown that the seller knew that the second buyer claimed adversely.
    4. Adverse possession — removal of goods conditionally sold. — The fact that goods conditionally sold had been moved from one county to another by a second buyer does not lead to show the latter was holding adversely to the original seller’s right.
    Appeal from Independence Circuit Court; Bene H. Coleman, Judge;
    reversed.
    statement oe eaots.
    Appellant brought this suit against appellees to recover a certain 10-horse-power type “Y” gasoline engine, one 15-horse-power type “Y” gasoline engine with standard equipment, and one 25-horse-power type “ Y” gasoline engine with equipment.
    The basis of the appellant’s suit was that it had sold these engines and retained the title in them until the purchase price was paid, and that the vendee had failed to pay the purchase price.
    Appellees pleaded the statute of limitations of three years, and the court found that issue in their favor. Therefore judgment was rendered in favor of appellees, and, to reverse that judgment, this appeal has been prosecuted.
    On the 21st day of October, 1916, appellant, which is a manufacturing corporation doing business in the city of St. Louis, Missouri, by a written contract sold to the J. C. Shepherd Mining Company, an Arkansas corporation. and to J. C. Shepherd, a 10-horse-power engine, and the engine was delivered to it at Cedar Creek, Arkansas. On the 21st day of June, 1918, appellant sold to J. C. Shepherd a 15-horse-power gasoline engine and a 25-horse-power gasoline engine. These were to be shipped to J. C. Shepherd at Cushman, Arkansas. There was a written contract in each case,' and appellant expressly reserved title to the property until it was paid for.
    The contract of October 21, 1916, provided that the purchase price of $3,300 was to be paid partly in cash and partly on a credit. The deferred payments were $1,320 due on March 1, 1917, and $1,320 on June 1, 1917, after shipment. Notes, were given for these amounts, and a renewal note was accepted some time in the month of June of July, 1918, for the balance due. The principal and interest of these renewal notes at the date of the trial on October 23, 1923, was $463.40. Under the contract of June 21, 1918, for the 15-horse-power and the 25-horse-power engines, certain payments and credits were made, leaving a balance due, principal and interest, of $1,201.97 at the date of the trial.
    The purchaser under the original contract of the conditional sale sold the engines in question to his coappellees, and they were finally located by the plaintiff in the possession of .appellee, Parker, near Batesville, Independence County, Arkansas. As soon as the whereabouts of Mr. Parker was obtained, a written demand was made on him, on August 13, 1921, for the return of the engines, or the payment of-the balance of the purchase price. A long correspondence ensued between the parties as to their respective rights in the premises, and appellees finally failed, or refused, to return the engines or pay the balance of the purchase price of them. • Thereupon, on March 7, 1923, appellant instituted this suit in the circuit court against appellees to recover possession of said engines. The defendant, Parker, showed that he had been in the possession of the engines, as purchaser of them from the original vendee, for more than three years before this suit was brought, and that he had claimed them as his own during all that time.
    Under this state of facts the circuit court declared the law to be that appellant was barred of recovery by the statute of limitations. ■

      Jones, Hocher, Sullivan & Angert, Vincent L. Boisaubin and Ernest Neill, for appellant.
    The statute of limitations in replevin suits is a bar to recovery only after three years after the cause of action .accrues. Where the possession is. rightjful,, demand and refusal are necessary to convert the original rightful possession into a wrongful detention or taking, and the action does not accrue nor the statute begin to run undér such circumstances until demand and refusal. 34 Cyc. pp. 1404, 1405, 1423; Wells on Beplivin (2nd ed.) § 798; 8 Ark. 109; 46 Ark. 489(22 Ark. 467; 44 Ark. 29; 96 Atl. (N. J.) 481; 115 Pac. 930, 19 Idaho 790; 107 Pac. 458; 92 Atl. 6; 141 Pac 933;- 85 Atl. 511; 94 Atl. 30; 176 N. W. 786,13 Am. L, B. 439. Conditional sales contracts are good, and the title remains in the vendor until paid for, and a purchaser from the vendee acquires no title, although he buys in good faith for a valuable consideration. Beplevin will lie for possession in ease of nonpayment, and the burden is on defendant to show payment of purchase price. 68 Ark. 230; 107 Ark. 337; 149 Ark. 369; 57 Ark. 270. While the conditional vendee had such an interest in the property, subject to the reservation of title, as that he could sell it, the purchaser could only acquire the right to become the absolute owner by a compliance with the contract, i. e. upon payment of the purchase price. 5 B. O. L. 402-; 52 Ark. 164; 149 Ark. 369; 55 Ark. 642; 40 L. B. A. (N. S.) 873, note.

      Samuel M. Casey, for appellee.
    The statute of limitations in replevin is three years and begins at the date of the defendant’s possession of the property and not at the time of plaintiff’s demand for it. 44 Ark. 29; 92 Ark. 618. The statute applies in cases of conditional sales. Parker v. Rolfe, ante p. 245, citing 49 Ark. 63.
   Hart, J.,

(after stating the facts). We think the decision of the circuit court was wrong. There is no showing in the record that appellees claimed the property adversely to the rights of appellant, or that the latter waived his. right to retake the property, under his contract, for failure to pay the purchase money. The contract in each case was in writing, and in express terms stated that the title to the propérty should remain in the seller until it was paid for. The fact that the original purchaser sold the engines did not give the second purchaser any greater rights than the original purchaser possessed, in the absence of notice to the seller, or of facts equivalent to notice, that the second purchaser claimed the property adversely to the rights of the seller. In conditional sales of personal property, where the title is retained by the vendor until the purchase price is paid, the vendee acquires an interest that he can sell or mortgage without the consent of the vendor, but the vendor’s right to recover the property, if the purchase price of the property is not paid, is not prejudiced by such sale or mortgage. Clinton v. Ross, 108 Ark. 442, and Estes v. Lamb & Co., 149 Ark. 369.

In the latter case it was also held that the giving of promissory notes for the debt is no payment, unless, by agreement of the parties, the note's are taken in payment of the debt.

In Triplett v. Mansur & Tebbetts Implement Co., 68 Ark. 230, it was held that, where goods are sold on condition that the title shall remain in the vendor until the purchase notes are paid, the execution of renewal notes for the debt is not a payment, unless, by agreement of the parties, the notes are taken as such. Thus it will be seen that the mere fact that the seller failed to demand possession of the property when the notes given for its purchase price became due, and the fact that a renewal note was taken for the balance of the purchase price of one of the engines, do not constitute a forfeiture of his rights under the original contract. The seller made demand of the purchaser and his vendee of the balance of the purchase mice of the engines, and, in default thereof, demanded that they should be returned to it. The purchaser and his vendee failed and refused to make the payment of the balance of the purchase price or to return the engines to the seller. Hence he had a right, under his contract, to bring a replevin suit for the engines.

But it is contended that appellant is barred of this right by the statute of limitations of three years. We do not think there is anything to bar a recovery by appellant. As we have already seen, the original purchaser had a right to sell the property, and the fact that he did so did not divest the seller of any of his rights. The same may be said of the fact that a renewal note was given for the balance of the purchase price of one of the engines. There is nothing else in the record which would start the running of the statute of limitations. It is not shown that appellant knew that the vendee of the original purchaser was claiming the property adversely to its rights, or that it was in possession of any facts that would lead to :such knowledge. .

It is true that the property was moved from one county to another, but both counties were in the same section of the State, and it is not even shown that appellant knew that the property had been moved from one locality to another. Even if such had been the case, it would not tend to show that the person removing the property was holding it adversely to appellant.

In Nattin v. Riley, 54 Ark. 30, it was held that, under a contract for the conditional sale of property, the omission of the purchaser to pay the purchase price when due does not operate as a forfeiture of his rights under the contract, in the absence of a demand on the part of the seller of payment, or of the property for nonpayment of the purchase price. It was further held that, on such demand, even after the purchase money was overdue, the purchaser would have the right to pay the purchase price and retain the property which he received under the contract. To the same effect see Sunny South Lumber Co. v. Neimeyer Lumber Co., 63 Ark. 268.

This holding was in recognition of the principle that the rights of the parties remained the same after the purchase price became due as they were before that time, in. the absence of a showing that the seller demanded the property on his part, or the purchaser ¡claimed adversely to the rights of the seller, and that the latter had knowledge of such claim or of such facts as would lead to knowledge, if inquiry was made. 'Therefore we are of the opinion that there is nothing upon which to base a finding that appellant was barred of recovery by the statute of limitations, or that appellant had waived his rights to treat the sale as a conditional one.

. It follows that the judgment will be reversed, and the cause remanded for a new trial.


text:
    Johnson v. Missouri Pacific Railroad Company.
    Opinion delivered February 16, 1925.
    1. Trial — instructions ignoring issues. — In an action by a locomotive fireman for damages for personal injuries received in derailment of the engine, instructions directing a verdict for defendant if the jury believed.that a trespasser caused the derailment by opening a switch were erroneous as disregarding plaintiff’s theory that but for a defective headlight the engineer could have seen the switch signal in time to avoid derailment.
    2. Negligence — concurring acts. — Where the negligent acts of two persons concur to produce an injury, the author of either negligent act is liable to the injured party for the damages sustained.
    3. Evidence — privilege op communication to physician. — Where an injured employee of a railroad.was examined by a surgeon at a hospital maintained by employees’ dues, his testimony as witness for the railroad as to information acquired in such examination was privileged, though the examination was agreed • upon by the employee and claim agent to determine the extent of plaintiff’s injuries.
    4. Witnesses — test op credibility. — In an action by a locomotive fireman against this railroad company for personal injuries resulting from derailment, the engineer testifying for the plaintiff may, for the purpose of testing his credibility, be asked on cross-examination whether he had received anything on account of the accident.

      5. Appeal and error — exclusion op testimony — prejudice.— Alleged error in excluding a question asked a witness will not be considered on appeal where the record fails to show what answer would have been given.
    Appeal from Crawford Circuit Court; James Goch-, ran, Judge;
    reversed.
    STATEMENT OE EACTS.
    George J. Johnson sued the Missouri Pacific Railroad Company to recover damages for personal injuries alleged to have been sustained by him while in the employment of. the defendant as a locomotive fireman.
    George J. Johnson was twenty-nine years of age, and lived at Yan Buren, Arkansas, at the time he was injured. According to his testimony, on the 26th day of December, 1922, he was locomotive fireman on engine 1224, pulling extra train 1224 north from Yan Buren, Arkansas, to Coffeyville, Kansas. After they got out on the road at Greenwood Junction, Johnson noticed that the headlight and the lights in the engine cab were defective. The headlight did not show down the track far enough, and the lights in the cab flickered. He spoke to the engineer about it, and the latter, replied that they would have to go to Coffeyville and have the lights fixed there. At Sallisaw, Oklahoma, the train met the southbound fast train. They waited on the siding fifteen or twenty minutes for it. The train then went on towards Upson. South of Upson there is a curve. The point of the curve is about 500 yards from the south switch. The curve favors the engineer, who is on the right side of the engine. It is 500 yards straight track from the point of the curve to the south switch. The switch in question was open, which caused the train to be derailed. The engine turned over on the engineer’s side, and Johnson was severely injured. The switch-stands in question had' red and green signals on them. The red means danger, and the green is the clear-track sivnal. You eau tell whether a switch is blocked by the lia-ht on the switch-stand, and also by the- nosition -of the lierhts. If the engine in question had been equipped with a .proper headlight, the engineer could have been able to distinguish the red board a distance of 1,000 feet.
    Prank Hedrick, the engineer on the train in question, was also a witness for the plaintiff.
    Soon after they started on the run he noticed that they did not have very good lights. The headlight of the engine was very dim. If a horse had been on the track, he could not have seen it 400 feet away. Ordinarily he could have seen it 1,000 to 1,200 feet away. If the track had been straight where the accident occurred for a distance of 800 feet, he would have been able to see the target on the switchstand if he had had good lights.' He would have been able to stop his train in 600 feet. On the night in question he could not see to tell whether the switch was spread open the distance of 800 feet. If there had been a good light on his engine he could have told that far whether or not the danger signal showed on the switch.
    A physician for the plaintiff testified as to the character and extent of his injuries. According to his testimony, the injury to the plaintiff was permanent, and was a very .severe one.
    In brief, the evidence for the defendant tends to show that a trespasser had knocked the lock off of the switch-stand, and spread the switch open a short time before the accident occurred. The trainmen on the train which had last passed the switch-stand, going towards the train in question, testified that the switch was closed when their train passed it.
    The jury returned a verdict in favor of the defend- . ant, and the plaintiff has appealed.

      George G. Stochard, for appellant.
    The court erred in admitting the testimony of Dr. Zeiner over the objection of appellant. C. & M. Dig. § 4149; 98 Ark. 352; 113 Ark. 296; 114 Ark. 112; 117 Ark. 396; 90 N. W. 815, 117 Iowa 442 ; 24 Hun (N. Y.) 43; 124 Iowa 623; 111 Ark. 5'54. The court erred in refusing to allow appellant to. cross-examine witness Hedrick upon matter brought out by appellee. The evidence was proper under the rule announced in 75 Ark. 251. - Instruction No. 3 given at the request of defendant was erroneous, without the qualification suggested by plaintiff 149 Pac. 421, 96 Kan. 30; 184 Mass. 476, 69 N. E. 338. Instruction No. 11 was erroneous. Ill Ya. 771, 69 S. E. 938; 90 Ark. 407.

      Thomas B. Pryor and Vincent M. Miles, for appellee.
    The purpose of Dr. Zeiner’s examination was to acquire information for both parties in a controversy between them, and his testimony was properly admitted. Ill Ark. 548; Jones on Evidence in Civil Cases (3rd ed.), § 759; 28 R. C. L. § 129 p. 540. The cases cited by •appellant on the point are not applicable under this state of facts. The case cited by appellant at 96 Kan. 30 149 Pac. 421 is an authority in support of instruction No. 6 about which he complains, the same being on the question of proximate cause. It is too late to raise a specific objection to instructions after the verdict. 164 Ark. 556.
   Hart, J.,

(after stating the facts). Counsel for the plaintiff contends that the court erred in giving instructions Nos. 3, 6 and 7 at the request .of the defendant. These instructions read as follows:

“3. You are instructed that it is not the duty of the defendant to have any person constantly inspecting its switch-lights and switch-stands, but that if, in the usual course of its business, and without negligence, the defendant placed a light in the proper manner on its switch at Upscn, and had the switch properly locked and lighted for the main line, and that some person, without notice to the defendant, broke open such switch, and that plaintiff wa.s injured as a result of the breaking of said switch-lock and the opening of said switch, then your verdict will be for the defendant, unless the defendant knew that said switch was broken or dangerous.
“6. You are instructed that you are not to guess or conjecture as to what was the proximate cause of the derailment of the train whereby the plaintiff was injured, and, if you believe that said derailment which injured the plaintiff would not have occurred except for the fact that said switch had been opened by trespassers without notice to the defendant, than the action of such trespassers in opening said switch was the proximate cause of the derailment, and your verdict must be for the defendant.
“7. You are instructed that, although you may find that the headlight did not focus as usual, yet this will not entitle the plaintiff to recover if you believe that the proximate cause of the plaintiff’s injury was the act of third persons, without notice to defendant, in breaking the lock of said switch and opening same. By proximate cause is meant the nearest efficient cause, or, in this case,-the thing without the happening of which the derailment could not have happened.”

The instructions in question were prejudicial, because they made it the imperative duty of the jury to return -a verdict for the defendant if it believed that the switch was thrown open by a trespasser. This constituted reversible error. It was the theory of the plaintiff that, notwithstanding the switch had been thrown open by a trespasser, if the engine had been equipped with a good headlight, the engineer could have seen that the switch was open and could have stopped his train in time to have avoided the injury.

Evidence on the part of the plaintiff tended to show that, when the switch was thrown, a red signal would be displayed upon it. The engineer, at a, distance of 800 to 1,000 feet, could have discovered that the red signal was displayed. He could have told this, not only by the color of the signal, but by its position on the switch-stand. The instructions complained of wholly ignored this theory of the plaintiff.

Instruction No. 3 told the jury that, if the defendant had placed a light in the proper and customary way on the switch-stand in question, had left the switch properly locked, and it had been broken open by some third person without notice to the defendant, and the plaintiff was' injured as the result of the breaking of the switch-lock and the opening of the switch, its verdict should be for the defendant, unless the defendant knew that said switch was broken or dangerous. Thus it will be seen that this instruction entirely ignored the plaintiff’s theory of the case.

As we have already seen, suppose the switch-lock had been broken and the switch thrown open only five minutes before the train in question cáme along; this would not have relieved the defendant from responsibility if the jury should believe the plaintiff’s evidence. According to the evidence for the plaintiff, if a proper headlight had been on the engine, the engineer could have seen the danger signal on the switch-stand at a distance of 800 feet and could have stopped the train in 600 feet. The engineer was keeping a lookout, and the jury might have found that he could and would have stopped the train before it got to the switch if he had had a good headlight. Therefore, even though some trespasser broke the switch-lock and opened the switch only a few minutes before the train came along, it cannot be said that this act alone caused the injury; for, if a. proper headlight had been on the engine, the jury might have found that the accident could and would have been prevented.

The error in this instruction was emphasized by instructions Nos. 6 and 7. Instruction No. 6 told the jury that, if it believed that the derailment would not have occurred except for the fact that the switch had been opened by a trespasser without notice to the defendant, then the act of the .trespasser in opening the switch was the proximate cause of the derailment, and that its verdict must be for the defendant.

Instruction No. 7 told the jury that, although the headlight did not focus as usual, this fact would not entitle the plaintiff to recover if the jury believed that the proximate cause of the plaintiff’s injury was the act of a third person, without notice to the defendant, breaking the lock of the switch-stand and opening it.

These instructions emphasized the fact that the court wholly ignored the plaintiff’s theory of the case, and in effect told the jury that, if a trespasser opened the switch, this was the proximate cause of the injury to the plaintiff, and that it must find for the defendant. Now, no matter if a trespasser did break the lock and open the switch, it cannot 'be said that this act alone was the proximate cause of the injury. The jury might have found that the negligence of the defendant in failing to equip its engine with a good headlight was a concurring cause of the injury.

Where the negligent acts of the defendant and another concur to produce an injury, the author of either negligent act will be liable to the injured party for damages sustained. Jenkins v. Midland Valley Rd. Co., 134 Ark. 1; St. L. I. M. & So. Ry. v. Steel, 129 Ark. 520; St. L. S. W. Ry. Co. v. Mackey, 95 Ark. 297, and Bona v. Thomas Auto Co., 137 Ark. 217.

In view of another trial, we desire to call attention to two other errors which would not call for a reversal of the judgment had proper instructions been given and a verdict rendered in favor of the defendant.

The first of these alleged errors is in the action of the court in allowing the testimony of Dr. Zeiner to go to the jury. According to the testimony of the plaintiff, he was first examined by the physician of the Missouri Pacific Hospital Association at Port Smith, Arkansas, and they were not certain as to the extent of his injuries. The plaintiff was a member of the Missouri Pacific Hospital Association, and his dues, together with those of the other employees of the railroad company, kept up the various hospital associations of the railroad, and the physician and surgeons employed therein were paid by said dues. Therefore it follows that all these physicians and surgeons were the physicians and surgeons of the employees of the railroad company.

Owing to the uncertainty as to the extent of his injuries, the plaintiff agreed with the claim agent of the railroad company to go to St. Louis and be examined with a view of ascertaining- the extent and character of his injuries, in order that he might settle therefor with the claim agent. After the plaintiff had been examined' by the surgeon at St. Louis, the latter was called as a witness on the trial of the case to testify on behalf of the defendant as to the character and extent of the plaintiff’s injuries. The plaintiff objected to him testifying, and the court allowed .the surgeon to testify in behalf of the defendant over the objections of the plaintiff.

This .court has decided that the incompetency of a physician concerning information acquired while attending a person in a professional capacity extends to a physician connected with a hospital, who offers testimony as to the condition of a patient therein, where his duties in the hospital require him to obtain information which is necessary to enable him to determine the patient’s condition and prescribe for him. Poinsett Lbr. & Mfg. Co. v. Longino, 139 Ark. 69.

A physician in charge of a railroad hospital, whose services are compensated by assessments upon the wages of the railroad employees, acts in a professional employment, within the rule excluding communications made by a patient to his physician, in the course of professional capacity in examining an injured employee who is sent to the hospital, and eliciting information as to his injuries on the day of the examination. McRae v. Erickson (Cal.) 82 Pac. 209; Colorado Fuel & Iron Co. v. Cummins (Colo.), 46 Pac. 875; Obermeyer v. F. D. Logeman Chair Mfg. Co., St. Louis Court of Appeals, 96 S. W. 673; and Freel v. Market Street Cable Ry. Co. (Cal.), 31 Pac. 730.

Counsel for the defendant admit the correctness of the general rule, but attempt to differentiate the case before us on the ground that the plaintiff agreed with the claim-agent of the railroad company to go to St. Louis and be examined by the general surgeon in charge of' the hospital there in order to learn, the character and extent of his injuries with a view to a settlement. This did not make any difference. The General Hospital Association at St. Louis wag kept up by contributions from the employees of the railroad, and the physician and surgeon in charge were the physicians and surgeons of the employees. The plaintiff had it in his mind to' be treated by the surgeon there as well as to be examined with a view to making a settlement with the railroad company. If he afterwards changed his mind and did not wish to settle or treat with the railroad company, he had the right to do so, and this would not constitute a waiver of the privilege.

In this connection, it may be stated that when Johnson went to St. Louis he reported to Dr. Vasterling, the chief surgeon of the General Hospital Association at St. Louis. Dr. Vasterling assigned the case to Dr. Zeiner, who was a member of his staff. It is true that Dr. Zeiner ’did not devote all of his time to surgical operations at the Missouri Pacific Hospital at St. Louis, but nevertheless he was a member of the general staff and was paid by the employees of the railroad company for his services in that respect.

Inasmuch as there was a finding in favor of the defendant, the admission of this testimony would not have prejudiced the plaintiff and does not constitute reversible error.

Another assignment of error relates to the testimony of Frank Hedrick. On cross-examination counsel for the defendant asked him if he had ever been paid anything by the railroad company on account of the accident in question. Hedrick replied that he had not. The circuit court properly held that it was competent for counsel for the defendant to cross-examine the witness on this point for the purpose of testing his credibility.

Councel for the plaintiff then asked the witness if he had been promised anything by the railroad company on account of injuries isuffered by him in the accident. Objections was made to this question by counsel for the defendant, and the court sustained the objection. The record does not show what the answer of the witness would have been, and this court has repeatedly held that the exclusion of evidence is not ground for a reversal where appellant fails to show what the excluded evidence was. Russell v. Brooks, 92 Ark. 509; Mutual Life Ins. Co. v. Owen, 111 Ark. 554, and Battle v. Guttrey, 137 Ark. 228.

We call attention to the general rule, however, that, where a part of the matter or transaction has been given in evidence, it is competent to develop the whole matter or transaction in order to explain or qualify the testimony already given. Thus,' if it was competent to impeach Hedrick by asking him if he had not been paid anything for the injuries suffered by himself, and he answeerd “No,” it would be proper for the opposing party to develop the whole transaction by asking him if he had been promised 'anything.

For the error in giving instructions as indicated in the opinion, the judgment will be reversed, and the cause remanded for a new trial.


author: Smith, J.

text:
    Vieth v. Mushrush Lumber Company.
    Opinion delivered February 16, 1925.
    1. Contracts — execution.—A contract which is not required to be in writing is valid where it was reduced to writing and signed by one of the parties and accepted by the other party.
    2. SACES — ACTION ON PURCHASE MONEY NOTE — DEFENSE.—In an action on a note given in piart payment of the payee’s interest in a mill in which the payee was to furnish the makers with orders for lumber and credit part of the proceeds on the note, evidence held not to warrant a finding that the makers could refuse to ship lumber or otherwise pay the note, keep the mill, operate for nearly two years without making additional payments, and then sell the mill and refuse to pay the balance due on the note.
    Appeal from Union Circuit Court; L. 8. Britt, Judge;
    reversed.

      J. W. Warren, for appellant.

      Mahony, Yocum <& 8aye, for appellee.
    A contract not required to be in writing, if written and signed by one of tbe parties, is valid if accepted or adopted by the other. 91 Ark. 162. The jury necessarily found-that there was a material alteration in the note. It was not incumbent on the defendant to show when the alteration was made. If it was made before the second party discontinued the shipment of lumber to the first party, the second party had the right to treat the contract as breached. 34 Ark. 312; 96 Ark. 184. The indorsement on the back of the note; “This note is given subject to a contract of even date herewith” made the note non-negotiable, and the defense of innocent purchaser does not apply. 14 A. L. E. 1121; 87 So. 332. If that indorsement was erased from the note, it was a material alteration. C. & M. Big. §7891; 131 Ark. 185; 2 Am. Eng. Encyc. of L. 2nd Ed. 228; 1 Daniel, Neg. Inst. 151; 15 L. E. A. (N. S.) 612.
   Smith, J.

Appellant, A. H. Vieth, brought this suit to recover on a note executed by the Mushrush Lumber Company to Otto T. Pfeffer, and which he alleged he had acquired before maturity, for value, as an innocent purchaser. The note was dated July 1, 1920, and due one year from date, and was for the sum of $4,986.88. The note bore interest at six per cent., and payments aggregating $1,448.17 had been made on it.

Appellant testified that he purchased the note on April 30, 1921, which was two months before the note matured, and he exhibited his canceled check, which was for the sum of $3,000, and which recited that it was given for the note sued on. He testified that this was the price paid for the note, and that he had no information that the validity of the note was questioned, but, on the contrary, there was indorsed on its back twelve different payments which had been made on it, aggregating $1,448.17, and that he thought the note was all right.

Pfeffer, the payee in the note, testified that he sold the note to appellant in good faith and without disclosing to appellant that there was any question about the note, and he further testified that there was in fact no defense to it.

By way of defense on the part of the makers of the note, it was alleged that there was written on the back of it, at the time of its execution, this notation: “This note is subject to contract of even date herewith,” and that this notation had been erased. The original of this note has been brought before us by a subpoena duces tecum, and it is insisted that we should find' as a physical fact that no alteration of the note had been made. If the note has been altered, it was done with consummate skill, but appellees testified that the notation was indorsed on the note at the time of its delivery, and we cannot say, as a physical fact, that such was not the case. The jury, by its verdict, under the instructions given, found that the note had been altered, and we are unwilling to reverse that verdict as being contrary to the physical fact that the note had not been altered.

Mushrush, who signed the note, testified that the contract referred to in the note was prepared in triplicate, and that he signed each copy, and that he sent two of the signed copies to Pfeffer, but he. admitted that Pfeffer had never returned a signed copy to him.

Upon this phase of the case, it may be said that the contract referred to'was not one required to be in writing, and the law is that a contract not required to be in writing is valid if signed by one of the parties and is accepted or adopted by the other party. Parker v. Carter, 91 Ark. 162. The jury might have found from the testimony that the contract was accepted and adopted by Pfeffer, and that he became bound thereby. In this connection it may be said that the credits on the note were indorsed thereon in apparent conformity to the provisions of this contract.

The relevant portions of this contract.are as follows : M. Mushrush and Mae Pepple, who are referred to in the contract as parties of the second part, together owned a one-half interest in the Diana-Mushrush Lumber Company of Urbana, Arkansas, and Pfeffer owned the other half interest. Pfeffer sold his half interest to Mushrush and Pepple for $513.12, cash in. hand paid, and the note sued on, and the assumption of all outstanding obligations of the partnership by the parties of the second part.

By article 4 of the contract it was provided that the note was “to be paid by allowing 12% per cent, of the net mill receipts derived from all lumber shipments from Urbana yard, except as noted in article six, paragraph two.”

Articles 5 and 6 of the contract read as follows:

“Article five. Orders.
“Par. one. First party agrees to furnish second party, to the best of his ability, with orders for lumber, at the best prices obtainable and suitable to the stock on hand at mill.
“Par. two. Second party shall have the right to refuse any and all orders of first party, which he may see fit so to do; he shall ship all accepted orders as promptly as possible and fill same to the best of his ability.
“Article six. Remittances on Shipments.
“On all shipments of lumber to him or his orders, first party agrees to remit to second party, promptly, on receipt of BL and invoice of each carload, 75 per cent, of the gross F. O. B. mill invoice of same. Remaining 25 per cent., less customary 2 per cent, cash discount, 8 per cent, selling commission to first party, and 12% per cent, deduction to apply on payment of above note, to be paid promptly to second party 60 days from date of invoice.
“On all shipments of lumber to other than first party, second party shall, within ten days from date of shipment, remit 12% per cent, of net mill receipts for same to first party, to apply as payment on note; except that second party shall have the right to ship not to exceed four cars per month to his own yards free of any deductions in favor of first party. On all such shipments, second party shall mail to first party memorandum BL for his information.”

Appellees insist that, for the reasons stated, appellant was not an innocent purchaser of the note, and that, this being true, they are absolved from liability on the note by reason of Pfeffer’s breach of the contract in the particulars hereinafter set out. The testimony tending to show a breach by Pfeffer was to the following effect.

Mushrush testified as follows on that subject: “The lumber manufactured at Urbana was shipped to the Diana Lumber Company, of St. Louis, of which Pfeifer was president, and twelve or fourteen cars were so shipped, and Pfeifer credited the note with 12y2 per cent, of the proceeds,” and along in September the market began to break very badly, and the buyers began to cut down so on the grades, and cut the prices so, that we were not getting anything out of it, and we notified Pfeffer that, unless he would do better, we would quit the job.”

In answer to a question how the lumber was shipped, the witness stated: “Pfeifer would send us an order to ship to his customers, and we would make the shipment, and our invoices would go in to Pfeifer direct.” That they discontinued filling Pfeifer’s orders on account of the low grades and prices he was giving.

Witness was asked if he recalled any shipments where Pfeifer had cut the grade too low or the sale price too low, and answered that he could not name any, as some of his records had been lost and other records burned. He was asked: “You do know that he did that, though?” and he answered, “Yes sir.”

Witness further testified that shipments of lumber on Pfeifer’s orders ceased about 'September 1, 1920, but that they continued to operate the mill until about June, 1922, at which time they sold it without having made any payments not indorsed on the note.

Pfeifer testified that he bought none of this lumber for the company of which he was president; that it was his business only to place orders, which appellee filled, and that these orders were placed by the company of which he was president; that it was to his interest to obtain the best price and highest grades, as this increased the amount of the payments he would receive.

Appellant asked that a verdict be instructed in his favor, and asked for no other instructions. This the court refused to give.

On behalf of appellees, instructions were given to the effect that, if appellant did not become the owner of the note until after its maturity, or if the note, when executed, contained the proviso that it was subject to a contract of even date with the note, appellant was not an innocent purchaser and .could recover nothing on account of the note if Pfeffer first breached the contract of purchase.

There was a general verdict in favor of appellees, and from the judgment thereon is this appeal.

"We think no sufficient excuse was shown by appellees for not paying this note, and that, under the case as made, a verdict should have been directed for appellant. There was no definite testimony that any lumber was of a particular grade, and was sold as a lower grade, nor was there any testimony that the lumber was sold at one price and was reported as sold at a less price. Pfeffer was, in effect, a sales agent, and not a purchaser, and there was no testimony that he did not correctly report and account for sales as made. When Mushrush was asked why he said Pfeffer was grading the lumber too low or selling it too cheap, his answer was “because the returns we were getting were not sufficient to warrant us to ship the lumber.”

The testimony on the part of appellees, as well as on that of appellant, was that the lumber market was very dull; that buyers were more exacting in grading and closer in prices, and appellees testified that grades and prices which Pfeffer was getting were so low that they could not afford to fill his orders. Pfeffer did not refuse to .continue to place orders and to credit the proceeds of sale as required by the contract, and we think the testimony did not warrant the finding that appellees could refuse to ship lumber or otherwise pay the note, keep the mill, operate it for nearly two years without making additional payments, and then sell the mill and refuse to pay the balance due on it as evidenced by the note sued on.

Paragraph 2 of article 5 of the contract expressly conferred on appellees the right to refuse any orders received from Pfeffer, and article 6 gave them the right to sell elsewhere, provided 12½ per cent, of the net proceeds of such sale were paid to Pfeffer to be credited on the note. This right was exercised from September 1920, to June, 1922, when the mill was sold.

We think a verdict should have been directed in favor of appellant, and the judgment of the court below will be reversed; and, as the case appears to have been fully developed, judgment will be rendered here for the face of the note and interest, less the credits thereon.


text:
    Hunter v. Scott.
    Opinion delivered February 9, 1925.
    1. Exchange of property — fraud—notice.—In a suit to cancel as fraudulent deeds and notes executed by plantiff in an exchange of lands with defendant vendee, a finding that two parties who purchased plaintiff’s notes acquired them with knowledge of the fraudulent representations which induced the trade held not clearly against the preponderance of evidence.
    2. Exchange of property — Rescission—laches.—Plaintiff was not guilty of laches in suing to rescind an exchange of lands for fraud where she offered to rescind immediately upon discovery of the fraud.
    Appeal from Sevier Chancery Court; C. E. Johnson, Chancellor;
    affirmed.

      Henry S. Julian and Roland Hughes, for appellant.

      Abe Collins, for appellee.
   Smith, J.

This suit was brought by appellee to cancel two deeds which she had executed conveying lands owned by her in Sevier County, Arkansas, and to cancel certain notes which she had executed in connection with the sale of these lands. The transaction was in form an exchange of the plaintiff’s Arkansas lands for lots in Kansas City, Missouri, on which were located a residence and an apartment house.

The court below made an extended finding of fact, from which the issues in the case are made to fully appear. We copy from this finding the following recitals.

On November 1, 1921, plaintiff executed two warranty deeds to F. M. Hunter. By one she conveyed 1,887.20 acres of her land; by the other she conveyed 823.06 acres of land, the last including the cleared and cultivated land. The consideration for said deeds was an exchange of properties.

Hunter conveyed to plaintiff, Mrs. Scott, the Kansas City lots. The deed from Hunter was made subject to a mortgage for $10,000 on the dwelling, and a mortgage for $23,000 on the apartment, and a $5,000 mortgage covering both buildings.

To indemnify Mrs. Scott from the lien of these mortgages, Hunter executed to her the following notes: One for $4,500, due November 1, 1922; one for $1,900, due November 1, 1923; and six notes, for $5,000 each, due November 1, 1926, all being secured 'by a vendor’s lien reserved in the deed to the larger body of land from Mrs. Scott to Hunter.

A further consideration for the exchange of properties was an agreement on the part of Mrs. Scott to deliver to Hunter a stock of merchandise and certain other personal property. No demand for the delivery of the personal property was ever made, and it was in the possession of Mrs. Scott at the time of the rendition of the decree.

Mrs. Scott indorsed to Benjamin Davis, as agent for Hunter, the $4,500 note, with the understanding that Davis would discharge three notes, for $1,500 each, which were a part of the indebtedness secured by the mortgages on the Kansas City property. Davis claimed to have transferred the note to G. W. Harmon for $1,500, and he converted the proceeds thereof to his own use and did not pay any one, or any part of any one, of the $1,500 notes which he had agreed to pay with the proceeds of the $4,500 note. Harmon claimed to be an innocent purchaser of the $4,500 note, but the court found that he was not.

Plaintiff indorsed the $1,900 note to Davis to cover his commission for making the deal, and Davis indorsed this- note to Pearson, who claimed to be an innocent purchaser thereof, and the cause was continued as to this note.

Plaintiff owned the remaining notes, aggregating $30,000.

The -court found the fact to he that the execution of the two deeds by plaintiff had been procured by the concerted fraudulent acts and misrepresentations of F. M. Hunter, Benjamin Davis, Isaac F. Tyson, J. M. McPherson, G-. W. Harmon, and W. L. Perkins.

The false -and fraudulent representations were that the parties named had represented to plaintiff and her son, who acted as her agent, that the residence and apartment were rented for $910 per month, when, in fact, they were earning, less running expenses, only about half that amount. It was represented that $1,600 had been paid on the $5,000 mortgage and that the balance was payable at the rate of $500 per month, and could easily be paid out of the rents; and that nothing would be due on the $23,000 mortgage or on the $10,000 mortgage for three years; when, in truth, there was $4,304 due on the $5,000 mortgage, instead of $3,400, as represented, and a suit was pending to foreclose the $10,000 and the $23,000 mortgages.

The 800-aere farm was conveyed to Hunter by a deed which gave him an unincumbered title thereto, and he executed a mortgage on this land to Isaac F. Tyson to secure a note for $16,800, which was delivered to Isaac F. Tyson in payment -of the purchase price for the Kansas City property, Tyson being the owner of the equity of redemption therein. The court found that this note and mortgage were, in fact, forged, and that Hunter had never executed either.

The court further found that the -mortgages on the Kansas City property were about to he foreclosed, and that it was a part of the conspiracy for this $16,800 note to he executed to Isaac F. Tyson, and that Isaac F. Tyson had indorsed this note to his father, John Tyson, in apparent payment of past due indebtedness due by Isaac F. Tyson to his father, who claimed to be an innocent purchaser of the note, for value, and before maturity; but the court found that John Tyson was not an innocent purchaser.

Upon these findings the court ordered that the $16,800 note, together with the mortgage securing it, the two deeds from plaintiff to Hunter, and all of the notes purporting to have been signed by Hunter and which were secured by the vendor’s lien, except the note for $1,900, be canceled, and that the plaintiff’s title to all the land be quieted against all the defendants, and that the case be continued as to J. R. Pearson.

It was further ordered that the decree canceling the notes secured by the vendor’s lien should not apply to the $4,500 note of that series owned by Gr. W. Harmon in so far as defendant Hunter was concerned, but only in so far as it appeared to be a lien against the land.

Prom this decree the Tysons only have appealed.

We will not set out the testimony showing the sordid conduct of the parties upon which the court made the finding of fact set out albove.

According to the defendants, Mrs. Scott was represented by her son and by W. L. Perkins, a real estate agent, whose home was in Sevier County, and that these agents dealt with the defendant Davis, who was the agent Pf Hunter, and Davis, as the agent of Hunter, dealt with the 'agent of Isaac- F. Tyson, and with Tyson himself. It is pointed out that the testimony does not show that Tyson himself, or his agent, dealt directly with Mrs. Scott or her son. It is also insisted that the testimony shows that it was Davis, agent for Hunter, who dealt with Mrs. Scott and her son, on the one hand, and with Tyson and his agent, on the other, and that, if any fraud was practiced by -Davis, they were not parties thereto, nor were they the beneficiaries thereof, and it is especially insisted that there was no testimony tending to show that John Tyson was not an innocent purchaser of the note for $16,800' which he acquired from his son; and it is also insisted that the offer to rescind was not made until after the Kansas City property had been sold under a decree of foreclosure.

There appears to be no question that the exchange of properties was induced by false and fraudulent representations made to Mrs. Scott’s son, who was her agent, and the only real questions in the case appear to he whether Isaac F. Tyson was a party to the fraud, and whether his father was an innocent purchaser of the $16,800 note.

The undisputed testimony shows that Hunter, who ostensibly bought appellee’s farms and Tyson’s lots, was a figurehead. He was a day laborer on the farm of McPherson, who was one of the real estate agents who put over the deal. The court found that Hunter’s signature to the $16,800 note and the mortgage securing it was a forgery, this finding being based on the testimony given by him when his deposition was first taken, that he knew nothing about the transaction and had not executed either instrument. In a deposition taken later he admitted signing both the note and the mortgage. We think it is not essential to find, in order to sustain the decree of the court below, that these instruments were in fact forged. The transaction was fraudulent, even though it be conceded that Hunter had signed both instruments.

We are of the opinion that the finding of the court below that Isaac F. Tyson knew what the fraudulent representations were which induced the trade is not clearly against the preponderance of the evidence. Henderson, one of the real estate agents who participated in the deal, testified that Tyson furnished him the information upon which he based the statements made to appel-lee’s son and agent as to the rental value of the property.

We are also of the opinion that the finding of the court that John Tyson was not an innocent purchaser is not clearly against the preponderance of the evidence. The indebtedness due from Isaac F. Tyson to his father was past due; the amount involved was large; the relationship was that of father and son; and the fair inference is that the father would have made some inquiry about the transaction whereby his son had acquired this $16,800 note.

We conclude also that appellee acted with reasonable and sufficient promptness in offer to rescind the sales. It is true that the Kansas City property was sold under a decree of foreclosure-, and this may have been done before the offer to rescind was made. But the suit to foreclose the mortgages on the Kansas City property was pending when the deal was made, and the concealment of this fact, or, rather, the statement in regard to the maturity of this indebtedness, was one of the false representations which induced the contract, it having been represented that the part of the indebtedness which could not be discharged with the monthly rentals did not mature for three years. Appellant did offer to rescind immediately when she discovered the fraud practiced upon her, and we think the court committed no error in according her this right.

The decree of the court below is therefore affirmed.


author: Wood, J.

text:
    Pearson v. Scott.
    Opinion delivered March 9, 1925.
    1. Bills and notes — innocent purchaser op note. — Evidence held to sustain a finding that the holder of a certain note was an innocent purchaser for value.
    2. Vendor and purchaser — vendor’s lien — enforcement.—Under the rule that where one of two innocent persons must suffer the one whose act first made it possible for the injury to occur must suffer the consequences, held an innocent purchaser for value of one of a series of notes constituting a lien on land, after the other notes had been cancelled for fraud in their inception, is entitled to satisfaction out of the entire proceeds of sale of the land, though, if the other notes were valid, he would be entitled only to a pro rata share of the proceeds.
    Appeal from 'Sevier Chancery Court; C.E. Johnson, Chancellor;

    reversed.

      J. S. Lake and Gordon Carlton, for appellant.
    Appellee has made mo claim that the notes for $5000.00 each and the $4500.00 note were not merged and extinguished when the court by its decree cancelled the deeds which she had given Hunter and quieted her title to the lands. The only exception from the doctrine of merger in such cases is where the manifest intention of the parties, or the ends of justice require that the rights he kept separate. 84 Ark. 277. If all the series of notes were outstanding obligations, there would he no contention but that, in the absence of special equities in the appellant, all should participate ratably in the proceeds of the sale; but here they are not outstanding obligations, and in addition the special equities in appellant do exist. 51 Ark. 105; 72 Ark. 350; 76 Ark. 245; 92 Ark. 291; 103 Ark. 473.
   Wood, J.

This action was instituted by Plora G. Scott in the Sevier Chancery Court against F. M. Hunter et al., to cancel certain instruments on the alleged ground of fraudulent representations made by Hunter and his agents, by which Mrs. Scott was induced to convey certain real estate to F. M. Hunter. In the original complaint Hunter, Isaac F. Tyson and Benjamin Davis were made parties defendant, and afterwards, by amendments to the complaint, W. L. Perkins, J. E. Pearson, G. W. Harmon, J. M. McPherson and' John Tyson were also made defendants. The plaintiff, Mrs. Scott, alleged that the several parties named had entered into a conspiracy to cheat and defraud her out of her lands; that, as a result of the conspiracy, she executed two deeds to F. M. Hunter, in one of which was conveyed 1,887 acres and in the other 823 acres of land in Sevier County, Arkansas; that, as a part consideration for these deeds, F. M. Hunter exchanged certain property in Kansas City, Missouri, and executed certain notes; that in consideration for the 1,887 acres, Hunter executed to Mrs. Scott eight promissory notes, one for $1,900, due in one year; one for $4,500 due in two years; six for $5,000 each, due in five years, all bearing interest at the rate of 7 per cent, per annum; that a vendor’s lien was reserved in the deed to secure these notes; that, as a result of fraudulent representations, the instruments set forth in the complaint were without consideration, and-void. -She prayed that the instruments and notes be canceled, and that the defendants he enjoined from transferring certain notes, and for all legal and equitable relief to which she might be entitled. The answer of all the defendants, except Harmon, admitted the exchange of properties and the execution of the instruments and notes set up, but denied all the allegations as to fraud. The defendant Harmon demurred to the complaint, and his demurrer was 'overruled. He stood on (his demurrer, and decree was rendered against him, canceling the $4,500 note which he held. On the hearing of the other parties of the issues raised by the pleadings, the court entered a decree also canceling the six notes for $5,000 each, in so far as they represented a lien upon the land, but these notes, and also the note for $4,500, by direction in the decree, were kept alive for the purpose of sharing with the $1,900 note in the distribution of the proceeds of the sale of 1,887 acres of land. The cause was continued as to J. R. Pearson, and, at a later day, was heard on the issues raised by the complaint and his answer and cross-complaint.. .The court found that he was a holder in due course of the note for $1,900 executed by Hunter to Mrs. Scott; that this note was a lien on the 1,887 acres of land, and directed that the land be, sold to satisfy his, lien, and that he be paid out of the proceeds of the sale a sum equal to the proportion that the note for $1,900 .bore to the whole amount represented by the eight notes given as part consideration for the land. Pearson appeals from, the decree ordering this distribution of the proceeds of the sale of the 1,887 acres.

The facts bearing upon the issues raised as to the allegations of conspiracy and fraud are fully set forth in the recent case >of Hunter v. Scott, ante p. 1, where we affirmed the decree of the chancery court holding that the transaction by which Mrs. Scott exchanged and sold her property to Hunter was fraudulent. The present case grows out of and is a branch of that case, and we refer- to the facts there stated as helpful to a thorough comprehension of the issues raised by this appeal. It appears from the testimony in this record that the negotiations leading to the consummation of the deal between Mrs.- Scott and Hunter were conducted by one Benjamin Davis. Mrs. Scott indorsed the note for $4,500 executed by Hunter to her, and delivered same back to Hunter, to be used by him in removing certain incumbrances from the property, which Mrs. Scott agreed to take as a part consideration for the conveyances made by her to Hunter. The note for $1,900 was indorsed by Mrs. Scott without recourse and delivered to Benjamin Davis, in payment' of his commission for making the deal. The six notes for $5,000 were retained by Mrs. Scott, and were in her possession when the final decrees were entered in the case.

Davis, on the 14th day of November, 1921, borrowed of J. R. Pearson $1,600, for which he executed his note due February 14, 1922, with interest at the rate of 8 per cent, per annum from date until paid. As collateral security to.this note, Davis indorsed and delivered to appellant the $1,900 purchase money note. Davis did not pay the, $1,600 note executed to appellant for borrowed money, and, on the 2d, day of July, 1922, appellant sold the collateral note of $1,900, and purchased the same himself, the consideration therefor being the amount of the principal note due him by Davis, with accrued interest. A witness who procured the loan for Davis from appellant testified that appellant did not know Davis until the witness introduced him. Appellant agreed to make the loan and advance to Davis the money. "Witness saw him give Davis the check. Appellant acted in good faith in the transaction, without any knowledge of any fraud, collusion or conspiracy to defraud Mrs. Scott. The only business transaction witness had with appellant was the one in which he procured the loan from him for Davis.

The appellant himself testified that he was the owner of the note for $1,900; that he obtained it as collateral to secure a personal loan of $1,600 that he made to Benjamin Davis. He made the loan upon the representation of Davis’ agent that the loan was safe and would he secured by the $1,900 note on 1,887 acres of land in Sevier County, and that the note of $1,900 given as collateral security was the first lien note on the land', which was worth some $40 or $50 an acre, making the note perfectly safe. Appellant, before making the loan to Davis, asked him if the trade had been completed which they had talked about, and he stated that it was entirely completed, and that they had the deed to the Arkansas property. Davis and his agent came to the office of appellant, and produced the deed, which appellant mailed to the recorder at DeQueen, Arkansas. Appellant gave Davis checks for the amount of the loan, and exhibited the checks on the Commonwealth National Bank of .Kansas City, Missouri. The check showed that it passed through the Kansas City Clearing House November 15, 1921. The deed, after having been recorded, was returned ho the appellant. He miade no effort to have the title to the property examined. Davis and his agent stated1 that it had been examined and had been found to be all right. Appellant had the deed and the collateral note for the $1,900 before him when the loan was made, and he knew that the note was one of a series amounting in the aggregate to $36,000, the note of $1,900 offered appellant as collateral being the first of the series to mature. Appellant did not know that Davis went through bankruptcy after this transaction, but reached the conclusion that he was irresponsible after he failed to pay his note.

The court correctly found, under the above evidence, that appellant was an innocent purchaser for value of the $1,900 note, and that he was entitled to recover the sum. of $1,900 with interest thereon at the rate of 7 per cent, per annum, making the amount due appellant at the time of the rendition of the decree the suim of $2,199, and the decree of the court declaring such sum a lien on the land described, and directing that same .be sold for the satisfaction of the decree, was also correct.

But the court erred in directing that the commissioner pay appellant, out of the proceeds of the sale, a sum equal to the proportion that the note held hy the appellant bore to the whole amount represented hy the eight notes executed hy Hunter to the appellee.

The court, by its decree on the other branch of the case, which was affirmed by us in Hunter v. Scott, supra, canceled all other conveyances, notes and incumbrances which might affect appellee’s title, and revested the title in her, subject only to the lien of the $1,900 note- in controversy. The six notes for $5,000 and the note for $4,500, held by Harmon, were merged in and extinguished by that decree. After that decree, these notes were no longer outstanding liens on the land and entitled to fro rata in the proceeds of the sale of foreclosure for the $1,900 note. As between the appellant and the appellee, the appellant’s equities are superior to those of the appellee, for the appellee, by her act, although free from any fault or intentional wrongdoing, made it possible for the appellant to buy this $1,900 note, and he must suffer injury if her equities in the proceeds are declared equal to his. His equities must be protected and declared superior, under the doctrine that, where one of two innocent parties must suffer, the one whose act first made it possible for the injury to occur must suffer the consequences. If a series of purchase money notes contain no stipulation as to the order in which they should be paid, and without any agreement between the holders as to precedence of payment, in the absence of special equities, the proceeds of the sale should be applied fro rata in part payment of the several notes, irrespective of the dates of their maturity or assignment. See Penzel v. Brookmire, 51 Ark. 105; Smith v. Butler, 72 Ark. 350; Bank of Fayetteville v. Lorwein, 76 Ark. 245; Cook v. Collins, 92 Ark. 291; Kissire v. Plunkett-Jarrel Grocer Co., 103 Ark. 473. But, in the case at bar, there are special equities, as already indicated, in favor of the appellant, which entitled him to the proceeds of the sale without a ratable division or distribution with the appel-lee.

The decree of the trial court is therefore reversed, and the cause is remanded with directions to enter a decree in accordance with this opinion.


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    First National Bank of Paris v. Gray.
    Opinion delivered February 16, 1925.
    Mortgages — notice of rights of tenant in possession. — The possession of a tenant or lessee is not only notice as against a subsequent mortgagee of rail Ms rights and interst connected with or growing out of the tenancy or lease, hut is also notice of all interests he may have acquired through subsequent or collateral agreements.
    Appeal from Logan Chancery Court, Northern District; J. V. Bourland, Chancellor;
    reversed.

      Robert J. White and Kincaimon & Kincannon, for appellant.
    Appellee, having knowledge at the time he took the mortgage that Caldwell was in possession of the land, took subject to any claim or interest of Caldwell, or any one claiming under him in the land. 145 Ark. 306, 309, 310; 101 Ark. 163 168-9; 137-Ark. 538, 543.

      Holland, Holland & Holland, for appellee.
    Possession of land by a person generally known to be a mere tenant, as is the case here, is not the character of possession required to put a purchaser on notice that the occupant has 'any right -other than that of a tenant Possession, to charge a purchaser with notice, must be unambiguous^ not liable to be misunderstood or misconstrued by the public. 128 Fed. 293; 30' So. 991; 85 Ala. 585, 5 So. 309. By failure to record his -deed, Caldwell and those claiming under him are estopped to. rely thereon as against one who has been led to believe in its non-existence. 3 Devlin on Deeds, §§ 626, 626a. See also 70 Ark. 256, 260 261.
   Smith, J.

This appeal involved the priority of a mortgage securing a note acquired iby the First National Bank of Paris, Arkansas, for value, in due course of business, as an innocent purchaser, and the litigation arose out of the following facts:

A. L. Gray owned a certain tract of land in the Northern District of Logan County. He had rented the land in 1918 to J. M. Caldwell, who moved on to the land and occupied it .as the sole tenant during the years 1918 and 1919, and, on February 13, 1920, Gray conveyed the land by warranty deed to Caldwell. The consideration for this deed was $500 cash and five notes, each for $500, the first of which fell due November 1,1921, and one note each year thereafter. Caldwell paid no rent after his purchase, except that he did pay rent for one year, under an order of the court, after a receiver had been appointed to take charge of the land, and this was paid subject to the court’s order. There was no showing of any visible change in the character of his possession, and the deed was not filed for record until the 27th day of October, 1921.

T. C. Gray testified that A. L. Gray applied to him for a loan of a thousand dollars, and proposed to secure the note evidencing the loan by giving a mortgage on the land. T. C. Gray caused the records of the clerk and recorder to be examined, and, after being advised that there was no prior lien against the land, T. C. Gray made the loan on September 12, 1921, and took a mortgage on the land to secure it, and this mortgage was duly recorded on September 15, 1921. T. C. Gray knew that Caldwell was on the land, and he made no inquiry to ascertain what interest Caldwell had.

Is this mortgage lien prior to the deed? The court below held that it was, and, upon this finding, decreed accordingly, and this appeal involves the correctness of that decision.

In the case of American Bldg. & Loan Assn. v. Warren, 101 Ark. 163, this court held: “Actual possession is evidence of some title in the possessor, and puts the subsequent purchaser or mortgagee on notice as to the title which the occupant holds or claims in the property. Generally actual, visible and exclusive possession is notice to the world of the title and interest of the possessor in the property, and it is incumbent upon the subsequent purchaser or mortgagee to make diligent inquiry to learn the nature of the interest and claim of such possessor; and, if he does not do so, notice thereof will be imputed to him” (citing authorities).

It is pointed out that there are certain exceptions to the general rule quoted, and it is stated that one of these exceptions is that, if a tenant in possession, even though his possession was exclusive, as was that of Caldwell in the instant case, continues in possession without exercising any acts of ownership of such character as to indicate a charge in the nature of the possession, such as the making of extensive improvements, notice will not be imputed to a subsequent purchaser or mortgagee of the tenant’s title.

In § 486 of the chapter on Vendor and Purchaser, in 27 R. C. L., page 722, it is said that “the fact that a person was, prior to his purchase, in possession as a tenant or the like, does not, according to the better view, prevent his continued possession from being notice of his rights. ’ ’

In the notes to the text quoted the following annotated cases are cited: Carr v. Brennan, 57 A. S. R. 119; Crooks v. Jenkins, 104 A. S. R. 326; Phelan v. Brady, 8 L. R. A. 211; Bell v. Twilight, 45 Am. Dec. 367; Niles v. Cooper, 13 L. R. A. (N. S.) 49.

Many cases bearing on this question are cited in these annotated cases.

The case of Crooks v. Jenkins, supra, itself contains an extended review of the cases on the subject. In that case Justice Ladd, speaking for the Supreme Court of Iowa, said: “The plaintiff took the mortgage without notice of the deed to Patterson (the tenant), other than the possession of the premises afforded. The doctrine that a purchaser of real estate — and a mortgagee has been held to be such — takes the same charged with notice of the equities of a person, other than the vendor, in possession at the time of the purchase, is not questioned. O’Neill v. Wilcor, 115 Iowa 15, 87 N. W. 742. But, like other general rules, this has its exceptions. Thus, when possession is consistent with the record title, it is presumed to he under such title, and is not notice of outstanding, unrecorded equities. (Citing cases). This is on the ground that, having given notice to the world of his estate in land by a proper record of a conveyance to himself, a possession justified by said recorded title is to he presumed to have been under such title, and is not notice of any other which he may have subsequently acquired, but which, through neglect, he has failed to record. Dutton v. McReynolds, 31 Minn. 66, 16 N. W. 468. So too, where a vendor remains in possession after a conveyance, such possession, unless long continued, is not notice to subsequent purchasers of any rights reserved inconsistent with his conveyance. (Citing cases). Such possession is to be presumed to be continued by the sufferance of the purchaser. Appellant contends that there is still another exception, to the effect that possession begun under one kind of right is not notice of another or different interest subsequently obtained by the occupant, unless circumstances direct the purchaser’s attention to the change of title, and thereby operate as actual notice. The authorities ordinarily cited by text-writers cannot be said to sustain this proposition.”

The learned justice then proceeded to review the cases cited as so holding, and distinguishes them, and, after having done so, he proceeded to say: “Indeed, we have discovered no case holding that the notice charged by the possession of a tenant is limited to rights incident to his tenancy.”

He proceeded further to say: “On the contrary, the doctrine has long prevailed in England that the possession of a tenant or lessee is not only notice of all Ms rights and interests connected with, or growing out of the tenancy inself or the lease, hut is also notice of- all interests acquired by collateral or subsequent agreements. Daniels v. Davidson, 16 Ves. 249. The .same -rule has been approved by several courts in this country,” and the cases so holding are cited.

The learned justice concluded his discussion of the question with the following quotation from Pomeroy on Equity Jurisprudence: “In a note in § 616 of his work on Equity Jurisprudence, Mr. Pomeroy declares that, in his opinion, ‘these decisions are much more in harmony with the general doctrine than those others which have speculated and drawn fine distinctions upon the amount of notice derived from the occupant’s original right to the possession. The reasons upon which the whole doctrine rests seem to be conclusive. The possession of a third person is said to put a purchaser upon an inquiry, and he is charged with notice of all that he might have learned by a due and reasonable inquiry of the occupant with respect to every ground, source, and right of his possession. Anything short of tMs would fail to be reasonable and due inquiry.’ ”

We have quoted thus extensively from this case because it is directly in point and contains a review of what are regarded as the leading cases on the subject.

We conclude therefore that the learned chancellor erred in holding that the mortgagee was not affected with notice of Caldwell’s possession, and the decree of the court below will therefore be reversed, and the cause remanded with directions to enter a decree conforming to this opinion.


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    First National Bank of Corning v. Corning Bank & Trust Company.
    Opinion delivered February 16, 1925.
    3. Moktgages — indebtedness secured. — A mortgage, the preamble of which described the debt secured as the sum of $80.02, evidenced by a note, and a defeasance clause of which recited that, on payment of the note “together with all other indebtedness which may be due,” to the mortgagee at a later date, the mortgage should be void, held to secure only indebtedness evidenced by note and additional advances subsequently made, land not indebtedness evidenced by prior notes.
    2. Mortgages — construction.—The intention of the parties to a mortgage at the time of its execution, as expressed by the language employed, governs, and this purpose cannot be enlarged by any contemporaneous piarol or subsequent agreement that it should secure any indebtedness other than that referred to in the mortgage.
    Appeal from Clay Chancery Court, 'Western District; J. M. Futrell, Chancellor;
    affirmed.

      1F. O. Taylor, for appellant.
    Under the defeasance clause of appellant’s mortgage, it secured all of the indebtedness of the mortgagor to the mortgagee at the time it became due. 46 Ark. 70; 68 Ark. 256; 91 Ark. 400; 96 Ark. 594. Appellee is estopped from questioning the validity of appellant’s mortgage, by the provision in appellee’s mortgage that it was given subject to appellant’s mortgage. 48 Ark. 258; 63 Ark. 268; 27 Cyc. 1168-9, and note, 27; Id. 1226, and note 82; Jones on Chattel Mortgages, 2nd Ed. 494; 123 Mass. 105.

      Harper B. Harb and Oliver ■& Oliver, for appellee.
    The defeasance clause had reference to. future indebtedness that might be incurred, and can not be extended to include notes evidencing a pre-existing indebtedness, not mentioned in the mortgage. 11 C. J. 497 ; 66 Ark. 550; 55 Ark. 569. Appellee is not estopped. The mortgage was taken subject to appellant’s mortgage given to secure $80.02.
   Smith, J.

This cause was submitted, to the court below on an agreed statement of facts, under § 1340, C. & M. Digest, from which we copy the following recitals

On April 17, 1922, one Ben Allen executed to the First National Bank of Corning, Arkansas, hereinafter referred to as appellant, a note for $80.02, and, on the same day, he executed to this bank a chattel mortgage. At the time of the execution of this note and mortgage Allen was already indebted to appellant in the amount of two notes, one for $161.29, and the other for $201.12. The mortgage was duly filed with the clerk and ,reoorder on April 20, 1922.

On the 27th of April, 1922, the said Allen executed a chattel mortgage to the Corning Bank & Trust Company, hereinafter referred to as appellee, covering the same personal property described in the mortgage to appellant, except that it did not cover a certain mule, which was one of a pair of mules mortgaged to appellant. The mortgage given appellee recited that it was subject to a mortgage from Allen to appellant “to secure the sum of $80.02, mentioned in said mortgage to said First National Bank.”

There was no question about the amount or the validity of the indebtedness claimed by either appellant or appellee, and no further or other indebtedness was incurred by Allen to either bank.

Appellant foreclosed its mortgage by a sale thereunder on November 18, 1922, and at this sale the mule was sold which was not covered by appellee’s mortgage, along with all of the other property described in appellant’s mortgage. After paying the expenses of the sale and the note for $80.02 due appellant, there remained in the hands of appellant the sum of $136.65. The team of mules sold for $175; and it was agreed that the mules composing the team were of equal value.

On the day of the sale the parties hereto entered into an agreement that the property should be sold by appellant and, after paying the expenses of the sale and the note for $80.02, the balance should be held by appellant until it was determined which of the parties hereto was entitled to this balance, the sum being held by appellant pending the decision of the controversy upon an agreed statement of facts, it being the contention of each bank that it was entitled under its mortgage to this balance of $136.65.

The mortgage to appellant contained the following provision: “Whereas, the said party of the first part is indebted to the party of the second part in the sum of eighty and 02/100 dollars, evidenced by one note of even date herewith, for the above said sum, for value received, with interest from date, at the rate of ten peí-cent. per annum until paid, and payable on October 1, 1922.”

The defeasance clause of the mortgage reads as follows :

“Now, if the party of the first part shall well and truly pay to party of the second part the sum herein-before mentioned, or any subsequent renewal or renewals thereof (it being understood that party of the second part has the right to accept a renewal note without renewing this mortgage), together with all other indebtedness which may be due the party of the second part by the party of the first part, together with the cost of this trust, on or before October 1, 1922, then the conveyance shall be void and satisfied of record at the cost of the party of the first part; or otherwise to remain in full force and effect. ”

Thereafter followed authorization to sell the property described in case of default of payment under the power of sale contained in the mortgage.

The question presented for decision is, which of the banks is entitled to the proceeds of the mortgaged property remaining after paying the expenses of the foreclosure and the note for $80.02.

The court below made a finding that appellant bank, which was the defendant below, should first apply the proceeds o.f the sale of the mule not included in both mortgages to its debt, but also found that, after this had been done and all of the indebtedness due appellant which was secured by its mortgage had been paid, there remained in its hands the sum of $136.65, and judgment was rendered for appellee for this amount, and this appeal is from that decree.

There is a discussion in the briefs of counsel of the doctrine of marshaling assets, which we find it unnecessary to consider, as, in our opinion, the point at issue will be disposed by deciding what debt due appellant was covered by its mortgage, and, as we have concluded that only the $80.02 note was covered by the mortgage, and as the balance in appellant’s hands exceeds the proceeds of the sale of the mule not included in both mortgages, there is no question of marshaling of assets to consider.

The validity and priority of appellant’s mortgage are conceded, 'but did it cover the entire debt due appellant?

Appellant cites and relies on the cases of Curtis v. Flinn, 46 Ark. 70, and Hoye v. Burford, 68 Ark. 256.

The syllabus in the first case is as follows: “Though usual, it is not necessary that a mortgage state the amount of the debt to be secured, or that it is evidenced by a note or any other instrument. If it contains a general description, sufficient to embrace the liability intended to be secured and to put a person examining the records upon inquiry, and to direct him to the proper source for particular information of the amount of the debt, it is sufficiently certain.”

In the other case a syllabus reads: * ‘ The recital in a mortgage that it is given to secure all indebtedness that the mortgagor owes the mortgagee, is a sufficient description of the debt intended to be secured.”

The rule announced in those cases has been applied in a number of later ones; but we do not think there is anything in the rule stated which authorizes us to construe appellant’s mortgage to cover the two notes from Allen to appellant outstanding at the time of the execution of the mortgage to it.

The preamble to tbe mortgage recites the existing debt which the mortgage was- intended to secure, and it is described as the sum of $80.02, evidenced by a note. No intimation is given that there was any other indebtedness outstanding.

It is true the defeasance clause of the mortgage provides that, if the note shall be paid, together with all other indebtedness which may be due the party of .the second part (appellant) by the party of the first part (Allen), together with the cost of this trust, on or before October 1, 1922, ’ ’ that the mortgage should be void. But we think this additional indebtedness here referred to contemplated an indebtedness not then existing, but which might later be incurred. The note for $80.02 was specifically described in the preamble as the indebtedness then due, and the preamble does not provide that it shall secure any other indebtedness due at the time of the execution of the mortgage.

It does mot appear in the mortgage, until the defea-sance clause is reached, that any other indebtedness existed or was contemplated, and this clause begins with the proviso that, if this note is paid, that is, the existing debt which the mortgage secures was paid, and further, that >any other indebtedness which may become due later is paid, the mortgage shall be void, and shall be satisfied of record.

The court below construed this language as covering the indebtedness described and any additional advances, and we think this construction was correct. There were, however, no additional advances made, so the mortgage secured only that mentioned.

In the case of Lightle v. Rotenberry, 166 Ark. 337, we considered the cases relied upon by respective counsel, although they are not all reviewed in that opinion, but in that case, as in this, we thought the applicable rule to apply was the one announced by Chief Justice Cookrill in the case of Martin v. Halbrooks, 55 Ark. 569. In following and applying that case we recognized the rule announced in other cases, that the mortgagor might employ language sufficiently broad to cover any indebtedness be might owe the mortgagee at the time foreclosure was sought, and that this could be done without specifically mentioning the debts to be secured, if the language of the mortgage was sufficiently comprehensive to secure all indebtedness that might be due. But the doctrine of that case is that an effect so broad will not be given to a mortgage unless it is apparent, from the language of the instrument, considered in its entirety, that such was the intention of the mortgagor.

The case of Lightle v. Rotenberry is also authority for holding here that the intention of the parties at the time of the execution of the mortgage, as expressed by the language there employed, governs, and that this purpose cannot be enlarged by any contemporaneous parol or subsequent agreement that it should1 secure any indebtedness other than that referred to in the mortgage. See also Page v. American Bank of Commerce & Trust Co., 167 Ark. 607.

We conclude therefore that the mortgage in question secured only the note described and additional advances to be made, but, as no additional advances were made, the mortgage was satisfied when this note was paid, and the decree was properly rendered in appel-lee’s favor for the balance remaining after this note and expense of foreclosure were paid. That decree is therefore affirmed.