text:
    Arkadelphia Milling Company v. Goddard.
    Opinion delivered April 9, 1928.
    1. Appeal and error — order directing verdict. — On appeal from the judgment on a directed verdict for defendants, the court will give the testimony tending to support plaintiff’s cause of action its highest probative value.
    2. Guaranty — construction of guaranty bond. — Where the execution of a guaranty bond was the only condition precedent to placing a contract for the sale of merchandise to the principal in full force and effect, such bond should be treated as contemporaneous with- the contract, though hearing a different date.
    3. Guaranty — notice of acceptance. — Where there has been a precedent request for a guaranty, notice of its acceptance need not be given to the guarantor.
    4. Guaranty — liability for “shortage.” — A guaranty bond binding sureties for any shortage in the principal’s accounts, held not to mean that only a fidelity bond was executed and that the guarantors became liable only for money collected and not accounted for by the principal, where the latter’s contract permitted him to sell merchandise for his own account, to whom he pleased, at Ms own price, without reporting the purchasers’ names, quantity sold, or price, to the consignor;' the word “shortage” meaning only the balance due after allowance of credits for remittances to the consignor.
    Appeal from Pulaski Circuit Court, Second Division; Richard M. Mcmn, Judge;
    reversed.

      Barber & Henry, Troy W. Lewis and Clayton Freeman, for appellant.

      Ben F. Reinberger and J. A. Tellier, for appellee.
   Smith, J.

Appellant brought this suit in the Pulaski Circuit Court to recover a sum alleged to be due it on account of merchandise sold and shipped to one Jack Goddard, under a written contract of continuing guaranty which Goddard’s co-defendants had executed. Service was not had upon Goddard, but the other defendants, the' alleged guarantors, filed an answer, in which they denied liability, upon the grounds that the instrument sued upon was a mere offer of guaranty, of the acceptance of which by the guarantee they had not 'been advised, and that the alleged guaranty was in fact a mere fidelity bond whereby, .if liable at all, they were liable only for such sums of money as Goddard might collect and fail to account for.

The court below upheld both of these contentions, and, under this view, directed the jury to return a verdict in favor of the defendants, which was done. We must therefore give to the testimony tending to support plaintiff’s cause of action its hig'hest probative value.

The bond sued upon reads as follows:

“Personal Indemnity Bond.
.“Know all men by these presents:
‘ ‘ That we, the undersigned,..................................................................... acknowledge ourselves indebted to the Arkadelphia Milling Company, of Arkadelphia, Arkansas, in the sum of five thousand ahd no/100 ($5,000) dollars, same to be void upon the following terms and conditions.
“Whereas Jack Goddard, of 1201 Marshall Street, Little Rock, Arkansas, has been appointed the city representative of Little Rook and North Little Rock, Arkansas, to handle and sell the products of the said Arkadelphia Milling Company: now if the said Jack Goddard shall faithfully perform the terms of the said contract and account to the said Arkadelphia Milling Company for all money coming into his hands through and by reason of the said contract, then and in that event this instrument shall be null and void, but for any shortage that might occur in his accounts we consider and acknowledge ourselves bound.
“Witness our hands and seals on this, first day of June, 1923.
“F. L. Brown, Atty., 414 A. O. U. W. Bldg.
“A. W. D. Overton, 423 Ferry St.
“F. J. Donahue, 2617 W, 14th St.
“Albert McMahon, Salesman Am. Gro. .Co., 1522 Oak St.
“Wm. Riley, Contr., 519 Cumberland St.”

So much of the contract referred to in the bond appointing Goddard as city representative of the plaintiff milling company as need be here considered reads as follows:

“This contract, made this 12th day of June, 1923, by and between Arkadelphia Milling Company, hereinafter called the consignor, and Jack Goddard, hereinafter called the consignee, witnesseth: That the consignor has delivered to the consignee on consignment certain merchandise, the description and present market price of which f. o. b. cars Little Rock, Arkansas, is as follows, to-wit: Flour, feed and meal.
“The consignee is to (pay freight) on said merchandise from Arkadelphia, Arkansas, to Little Rock, and is also to pay all drayage and storage charges. * * * The consignee, shall have the right to sell the-said merchandise in the due course of business for not less than the market price on the day of sale, and the consignee shall receive as commission all amounts for which the said goods are sold in excess of the market price and interest, and the proceeds of any and all sales of said merchandise, less the said commission, shall be remitted to the consignor by postoffice money order or cashier’s check, weekly, or deposited in Exchange National Bank to the credit of Arkadelphia Milling Company.”

The contract provided the manner in which Goddard might return and receive Credit for any merchandise found to be unsatisfactory.

The first transaction under this contract occurred June 21, 1923, at which time merchandise amounting to $970.09 was shipped to Goddard, and thereafter other shipments were made, the last being March 31, 1924. An itemized statement of the account was exhibited and shown to be correct by the accounting officers of the appellant company, from which it' appeared that merchandise of the total value of $11,314.98 was shipped to Goddard, and that credits amounting to $9,111.09 were received, leaving a net balance, with interest, of $2,203.89, for which amount judgment was prayed.

The contract — which we have not copied in full— contains no restrictions or directions in regard to sales which Goddard might make, except that the merchandise should not be sold at less than the purchase price, and he was at liberty to sell to whom he pleased. The accounting officers of the plaintiff company who testified concerning the balance due on the account did not know to whom sales had been made, nor what amounts, were due Goddard by his customers to whom he had sold merchandise. It 'did not therefore appear whether Goddard had remitted to the plaintiff company all collections made by him.

The court instructed the jury that the defendant guarantors were not liable, for two reasons: “One is, the bond was executed prior to the execution of the contract, and it is an obligation to pay certain .amounts, if any, that may accrue from Goddard, the principal. When that bond was signed the contract had not been signed, and the bond was forwarded to the plaintiff, and the plaintiff subsequently, on the 12th day of June, the date of the signing of the contract, and the bond was signed on the first day of June, signed the contract, but plaintiff did not notify these defendants that the contract had been signed by the plaintiff, and that any liability would accrue under the bond.” • The court further charged the jury that the word “shortage” appearing in the bond “means the defalcation of moneys coming into his hands through the operation of the contract, and there is no proof in the case that there has been any defalcation of moneys or goods, but, so far as the proof is concerned, it may be uncollected debts from- the resale of the produce delivered to the principal in the case.” For both these reasons the court directed the jury to return a verdict in favor of the defendant guarantors.

The testimony on the part of the plaintiff was to the effect that Goddard was promised a contract, such as was later executed, upon furnishing a satisfactory bond, and that both instruments were treated as having been simultaneously executed, although they bore different dates, and that no goods were furnished under the contract until after its execution and approval by the home office of the company.

Appellees insist that the court below was correct in construing the bond as a mere offer of guaranty, and that, as such, they were entitled to notice of its acceptance before any liability could accrue against .them. On the other hand, appellant contends that the writing was a direct promise of guaranty, and' not a mere offer of guaranty, and that notice of its acceptance was not essential to the accrual of liability thereunder.

Under the plaintiff’s testimony the jury might have found that the execution of the bond by satisfactory and sufficient sureties was the only condition precedent to placing the contract for the sale of the merchandise into full force and effect, regardless of the date of the bond or the contract, and, if so, they should be treated as contemporaneous instruments, although they bore different dates.

In 12 R. C. L., page 1072, § 23 of the chapter on “Guaranty,” it is said: “A written guaranty to pay a debt the proof of which rests in parol evidence, is legal and enforceable. Even if the principal obligation is evidenced by a writing, it need not be completely executed and delivered at the time the guaranty is entered into.”

At § 43 of the chapter on “Guaranty” in '28 C. J., page 913, it is said: “A contract of guaranty may be executed contemporaneously with the principal contract or after it is executed, and the fact that the guaranty is executed before the principal contract is executed is immaterial, where they are delivered simultaneously, or where the guarantee acts on the faith of such guaranty, in entering into the principal contract.”

In the case of Hudson Trading Co. v. Durand, 194 App. Div. 248, 185 N. Y. Supp. 187, it was held by the Supreme Court that, where a guarantor signs an agreement to -become jointly liable with a buyer in the performance of a sales contract, in consideration of the seller entering into such sales contract, and where such guaranty is an inducement to the seller to enter into the contract, the guarantor is liable for the buyer’s nonperformance, without executing a guaranty subsequent to the execution of the sales contract.

The case of Rosenwasser v. Amusement Enterprises, Inc., 88 Misc. Rep. 57, 150 N. Y. Supp. 561, decided by the same court, is to the same effect.

In the case of J. R. Watkins Medical Co. v. Brand, 143 Ky. 468, 136 S. W. 867, 33 L. R. A. (N. S.) 960, it was held by the Supreme Court of Kentucky (to quote the syllabus in that case) that: “Notification o'f acceptance of the guaranty is not necessary to bind persons who sign an agreement to be responsible for the faithful performance of his contract by one about to be reappointed ;as salesman for the obligee for another year, since the guaranty is absolute, and not conditional, and it is immaterial that the contract has not been signed by either employer or employee when the sureties put their names to the guaranty which is attached to it. ’ ’

In the annotator’s note to this case it is said: ‘ ‘ So, where the terms of a proposed guaranty contemplate acceptance by the delivery of merchandise on credit to a third person, the offer can be accepted by the furnishing’ of merchandise pursuant to the terms of the guaranty, the contract becomes complete when credit is actually so furnished, and no notice of acceptance is necessary where hot called for by the offer.”

In the case of Falls City Construction Co. v. Boardman, 111 Ark. 415, 163 S. W. 1134, appears this statement:

“In 20 Cyc. p. 1407, III, it is said: 'Both the English and American cases hold generally that the rule requiring notice by the guarantee of his acceptance of the guaranty applies only where the guaranty is, in legal effect, an offer or proposal. Where the transaction is not merely an offer to guarantee the payment of debts, and amounts to a direct promise of guaranty, all that is necessary to make the promise binding is that’ the promisee should act upon it; he need not notify the promisor of his acceptance, and at page 1409 it is said: ‘Where there has been a precedent request for the guaranty, notice of its acceptance need not be given to the guarantor.’ See Stewart v. Sharp County Bank, 71 Ark. 585-589, 76 S. W. 1064; Davis v. Wells, 104 U. S. 159, 26 L. ed. 686.”

Under the plaintiff’s testimony there was a precedent request for the guaranty, in that the plaintiff was proposing to sell Goddard merchandise upon the condition that Goddard secure satisfactory guarantors, and, in signing this bond, the defendant guarantors must necessarily have known that the plaintiff milling company would sell merchandise to Goddard if the milling* company satisfied itself that the guaranty was sufficient, that is, that the guarantors were responsible for the amount of the bond. Moreover, the bond, by its terms, is not a mere offer to -guarantee, but is a direct and •unconditional promise to pay $5,000 to be void upon the condition that Goddard should faithfully perform the terms of the contract and account to the milling company for all money coming into his hands under the contract.

See also Davis Sewing Machine Co. v. Richards, 115 U. S. 524, 6 S. Ct. 173, 29 L. ed. 480; McCarroll v. Red Diamond Clothing Co., 105 Ark. 443, 151 S. W. 1012, 43 L. R. A. (N. S.) 475; Beeson v: LaVasque, 144 Ark. 522, 223 S. W. 355; First National Bank v. Solomon, 170 Ark. 555, 280 S. W. 659; Ouachita Valley Bank v. DeMotte, 173 Ark. 52, 291 S. W. 984.

We are of the opinion also that the court was in error in construing the word “shortage” to mean that only a fidelity bond had been executed, and that the guarantors became liable only for such money as Goddard collected and failed to account for.

The contract did not authorize Goddard to sell merchandise for the account of the plaintiff. He sold for his own account and to whom he pleased, with the right do fix his own price, keeping for himself any excess over the market price at which he himself bought the merchandise. He was not required to report the names of persons to whom he sold, or the quantity sold, or the price of the salé. He exercised his own discretion in these matters, land this the milling company allowed him to do because of the indemnity or guaranty of the bond to the extent of $5,000 that Goddard “shall faithfully perform the terms of the said contract,” and Goddard’s contract required him to pay for merchandise which he bought from the plaintiff milling company. It was obviously not the purpose of the bond to permit Goddard to make indiscriminate sales of which he was required to make no report and over which the milling- company had no supervision or control, nor for Goddard to be liable only for such sums of money as he might collect. Under such a contract Goddard would have had everything to gain and nothing to lose, -.and would have been under no constraint to use discretion in making sales. If this was the contract, he could have sold to anyone willing to buy and have taken the chance, at the milling company’s expense, and without risk to himself, that the purchasers would pay.

'The bond is somewhat ambiguous, hut, when read in the light of the contract the performance of which it guaranteed, we think that the proper construction of it is that the word “shortage” meant such balance as was due after credits had been allowed for such remittances as were made to the consignor “by postoffi.ee money order or cashier’s check weekly, or deposited in Exchange National 'Bank to the credit of the Arkadelphia Milling Company.”

The judgment of the court below will therefore he reversed, and the cause remanded.


source: Caselaw Access Project

author: Humphreys, J.

license: Public Domain

text:
    Dierks Lumber & Coal Company v. Kull.
    Opinion delivered April 9, 1928.
    1. Evidence — admission of telegrams and letters. — Where the authenticity of telegrams and a letter purporting to come from defendant or its agent was not denied, and the office from which the telegrams were sent and in which the letter was written were outside of the court’s jurisdiction, and the letter was written on defendant’s letterhead and received by mail in due course, held that the authenticity of telegrams and letters was sufficiently established to be admitted in evidence.
    2. Evidence — telegrams and letters. — In an action for a balance due for goods, Tetters and telegrams passing between the attorney handling the account for collection and defendant’s agent for adjustment of the account were properly admitted.
    3. Corporations — liability for indebtedness of subsidiary cor- . poration. — In an action for a balance due for goods delivered to an alleged subsidiary corporation of defendant, testimony as to an adjustment by defendant of an account between such subsidiary corporation and another was admissible as tending to show that defendant was hacking such subsidiary corporation.
    4. Trial — instruction assuming fact. — In an action for a balance due for goods delivered to an alleged subsidiary corporation of defendant, an instruction that if the jury find that the subsidiary corporation purchased merchandise for defendant without the latter’s authority, hut that the latter ratified such act, the verdict should toe for plaintiff, held not objectionable as assuming that the subsidiary corporation purchased the goods with authority from defendant; the instruction submitting the issue of authority only as preliminary to the issue of ratification.
    Appeal from Howard Circuit Court; B. E. Isbell, Judge;
    affirmed.

      Collins & Collins and Lake, Lake & Carlton, for appellant.

      June R. Morrell, for appellee.
   Humphreys, J.

Appellee sued appellant for a balance of $4,924.09 alleged to be due Mm by it for baskets and crates delivered to Dierks Lines Growers’ Association, an alleged subsidiary corporation, sponsored by appellant for tbe purpose of encouraging tbe growing of frMts, vegetables and other agricultural products. The baskets and crates were used by tbe Dierks Lines Growers’ Association for tbe shipment of tomatoes and cantaloupes.

Appellant filed an answer, denying liability on tbe account.

The cause was submitted upon tbe pleadings, tbe testimony introduced by tbe respective parties and tbe instructions of tbe court, which resulted in a yerdiot and consequent judgment against appellant for $3,852.07, from which is this appeal.

Appellee recovered tbe judgment appealed from upon tbe theory that, in purchasing tbe baskets and crates, tbe Dierks Lines Growers’ Association was tbe agent in fact for appellant. Appellant contends for a reversal of tbe judgment upon tbe alleged ground that there is no evidence in tbe record tending to show tbe agency. After tbe baskets and crates bad been delivered and used, appellee sent a telegram to appellant calling its attention to tbe account for which this suit wtas afterwards brought. He received a telegram in response as follows:

“Kansas City, Mo., 10:05 a. m. Deo. 13, 1926. “Horatio Basket Co., Horatio, Ark.
“Your account being looked after by Southerland, and he is out of city; will be back in two or three days, and immediately upon his return matter will have prompt attention.
“11:25 a. m. Dierks Lumber & Coal Co.”
Li response to telegrams or letters, appellee received the following telegrams and letter:
“Kansas City, Mo., 2:43 p.m., Dec. 22,1926. “Horatio Basket Co., Horatio, Ark.
‘ ‘ On your bill recently rendered you stated interest due as per agreement. We were not familiar with any agreement as to interest, and were compelled to refer to Murrah, and have not heard from him as yet.
“3:45 p.m. B. Southerland. ’ ’
“Kansas City, Mo., 9:32 a.m., Jan. 12, 1927. “Horatio Basket Co., Horatio, Ark.
“Please refer to our wire of yesterday. Mr. Southerland is out of town; however plans to be down at Horatio to see Mr. Kull early part of next week.
“10:30 a. m. Dierks Lumber & Coal Co.”
“Kansas City, Mo., 11:53 a. m., Jan. 20,1927. “Horatio Basket Co., Horatio, Ark.
“Southerland confined home account illness; feels will be able get down next Tuesday sure. He has complete charge of this matter. We are very anxious get Ibis straightened up, but it will be necessary for him personally handle it, as he is. familiar with all details.
“1:23 p.m. Dierks Lumber & Coal Co.”
“Dierks Lumber & Coal Company Manufacturers of Yellow Pine & Hardwood Lumber 1006 Grand Avenue.
“Kansas City, Mo., Jan. 27, 1927. “Horatio Basket Co., Horatio, Ark.
* ‘ Gentlemen: We havé your wire of January 20 and 21. The writer is now dictating from his home and‘is ill, for which you, of course, don’t give a damn. I am confident of that because you say in your wire you wouldn’t be out anything if I die, but I think that I will make the grade and you will be that much ahead at least.
“For your information, I have charge of this matter and will be down there and straighten it out as soon as I get well enough.
“You may be sure that your kindly solicitude as to my death is going to greatly hasten my recovery.
“Yours very truly,
“Dierks Lumber & Coal Coal Co.
“By R. Southerland.”

These telegrams and letter purported to come from appellant or R. Southerland, the one mentioned in the messages as the party looking after the account in question. Neither ¡appellant nor Southerland denied the authenticity of the telegrams and letter. Appellant objected to the introduction of the telegrams and letter upon the ground that the telegrams were signed by typewriter and the name “R. Southerland” by stamp. The office from which the telegrams were sent is beyond the jurisdiction of the court. The rule with reference to the introduction of telegrams is laid down in Ruling Case Law, vol. 10, page 1151, § 354, ¡and is as follows:

“A telegram delivered by the transmitting company is admissible in evidence where the original and the office from which it is sent are beyond the jurisdiction of the court. The authenticity of telegrams may be found from the fact that the alleged sender does not deny that he sent them, and that he knew their contents, ¡and acted in accordance with instructions contained in them.”

The letter introduced was written on the letterhead of appellant, and bore its typewritten signature, “By R. Southerland,” in stamp. The letter was received by mail in due course. The office in which it was written is out of the jurisdiction of the court.

Under the principle quoted in this opinion from Ruling Case Law, the ¡authenticity of the telegrams and letter were sufficiently established to be admitted in evideuce. When the telegrams and letter are read together they practically admit initial liability on the part of appellant. Nowhere in the telegrams or the letter is it intimated that the account was an independent obligation of the Dierks Lines Growers’ Association. It is clearly inferable from the contents of the telegrams and letter that appellant knew all about the account. If appellant did not want to be bound by the contents of the telegrams and letter, it should have introduced proof to the effect that they were not authorized. Appellant also objected to the introduction of certain correspondence, in the nature of telegrams and letters, 'between June R. Morrell, an attorney in whose hands the account was placed for collection, and R. Southerland, for the same reason that it objected to the introduction o.f the other telegrams and letter. We think this correspondence was admissible, as the other telegrams designated R. Southerland as appellant’s agent for the adjustment of the account in question.

Appellant also objected to the introduction of an adjustment by appellant of an account between the Dierks Lines Growers’ Association with A. P. Steel, trustee for the 'Cannon estate. According to the testimony of A. P. Steel, appellant deducted one account from the other and paid the difference. We think this was admissible as a circumstance tending to show that appellant was backing the Dierks Lines Growers’ Association.

There is ample evidence of a substantial nature in the record to support the verdict and judgment. The court did not err in refusing to give appellant’s instruction for a directed verdict.

Appellant also contends for a reversal of the judgment because the court gave appellee’s requested instruction No. 2, which is as follows:

“If you find from a preponderance of the evidence that the Dierks Lines Growers’ Association purchased the merchandise in question for the Dierks Lumber & Coal Company without authority from the said Dierks Lumber & Coal Company to do so, yet if you find that the Dierks Lumber & Coal Company later ratified the act of the Dierks Lines Growers’ Association, then your verdict should be for the plaintiff as lagainst the Dierks Lumber-& Coal Company.”

The objection made to the instruction is that it assumes that the Dierks Lines Growers’ Association purchased the merchandise in question for the Dierks Lumber & Coal Company, and submitted to the jury only the question as to whether or not the purchase was made with or without authority from appellant. The instruction does submit the issue of authority to the jury, but only as preliminary to the issue of ratification. It does not assume that the Dierks Lines Growers ’ Association purchased the merchandise with authority from appellant.

No error appearing, the judgment is affirmed.


author: Hart, C. J.,

text:
    Halbert & Son v. Baker.
    Opinion delivered March 26, 1928.
    1. Mechanics’ liens — necessity of itemized account. — It is not necessary that one claiming a mechanic’s lien should file an itemized account in order to make his lien effectual, and such rule applies where the lien is sought to be enforced by one with a contract direct with the owner and by a subcontractor.
    2. Mechanics’ liens — value of materials furnished. — -Where, by an agreement between a contractor and owner, the inside painting and screening of a porch were to be charged as extras, the contractor was entitled to a mechanic’s lien for the reasonable value of materials furnished, even though he did not file an itemized account of such items.
    Appeal from Baxter Chancery Court; A. 8. Irby, Chancellor;
    reversed.
    STATEMENT OE EAOTS.
    B. 'S. Halbert & S-on brought this suit in equity against Leo F. Baker and Ruth Baker, his wife, to foreclose a mechanic’s and materialman’s lien for the sum of $181.30, the balance alleged to be due them for the erection of a house for the defendants. The defendants filed an ¡answer and cross-complaint, in which they denied that they were indebted to the plaintiffs in the sum of $181.30, and, by way of cross-complaint, they sought to recover the sum of $305 damages for the alleged breach of the building contract by the plaintiffs.
    The record shows that the plaintiffs entered into a contract with the defendants to erect a house for the sum of $1,500. Subsequently a change in the plans was agreed upon, and the contract price was increased to $1,575. The plaintiffs introduced evidence tending to show that they were entitled to extras in the sum sued for.
    The chancellor found that certain items, amounting to $64.30, were due the plaintiffs as extras, in addition to the sum of $25 due them on the contract price. This made a total of $89.30 due the plaintiffs. The chancellor disallowed two items claimed by the plaintiffs, one being for $80 for inside painting* and the other for $12 for screening* the porch. The chancellor further found that the defendants were entitled to recover on their cross-complaint for certain items which the plaintiffs failed to furnish under their contract, which amounted in the aggregate to $90. Wherefore judgment was entered in favor of the plaintiffs against the defendants for $89.30, and that amount was declared a lien on the real estate described in the complaint, and judgment was rendered in favor of the defendants against the plaintiffs for $90. These amounts were set-off against each other, which resulted in a judgment in favor of the defendants for $21.70. The case is here on appeal.

      H. J. Denton and Kent K. Jackson, for appellant.
   Hart, C. J.,

(after stating the facts). It is insisted by counsel for the plaintiffs that the court erred in refusing to allow the items of $80 for inside painting and $12 for screening the porch. These two items amounted to $92, and should have been allowed by the chancery court. The proof shows that it was not .a part of the contract for the erection of the house that the plaintiffs should do the inside painting or should screen the porch. By agreement between the parties these two items were to be charged as extras. The proof shows that the inside painting together with the materials furnished were reasonably worth $80, and that the materials and labor for screening the porch were worth $12. It is true there was no itemized account of these items, but this court has held that it is not necessary that a claimant file an itemized account in order to make his lien effectual. The rule is the same where the lien is sought to be enforced by one with a contract direct with the owner and by a subcontractor. Terry v. Klein, 133 Ark. 366, 201 S. W. 801.

In that case it is also held that, where labor and material are placed in the construction of a house as a completed job, the contractor is entitled to a lien, not as for labor, but as for the price of material furnished in the place to be used. To the same effect see Shaw v. Rackensack Apartment Corporation, 174 Ark. 492, 295 S. W. 966.

In the case at bar the plaintiffs were entitled to a lien in the sum of $80 for the price of the paint for the inside of the house and for $12 for the price of the screen placed on the porch, these items totaling $92.

The result of our views is that the decree must be reversed, and the cause wifi be remanded with directions to the chancery court to allow the plaintiffs the sum of $92, and a lien for this amount.

The decree will be reversed, and the cause remanded with directions to enter a decree in accordance with this opinion, rand for further proceedings according to the principles of equity. It is so ordered.


text:
    Foster v. Elswick.
    Opinion delivered April 9, 1928.
    1. Vendor and purchaser- — reasonable time to perfect title.— Where, in an agreement for the sale and purchase of real estate, no definite agreement was entered into with regard to time in which the vendor should perfect title, he is allowed a reasonable time.
    2. Escrows — loss of escrow deposit. — Where, under an escrow agreement, a vendor had no right to money for the sale of land until she perfected her title, and while she was attempting to do so, and without unreasonable delay, the bank in which the escrow deposit was made failed, the loss fell upon the purchasers, and not upon the vendor.
    Appeal from Washington Chancery Court; Lee Secmster, Chancellor;
    affirmed.

      G. T. Sullins, for appellant.

      John N. Tillman, W. A. Dickson and Price Dickson, for appellee.
   Humphreys, J.

Appellants instituted suit against appellee in the chancery court of Washington County to enforce the specific performance of a contract of sale and purchase of appellee's farm, located in said county. It was alleged that appellants -contracted to buy said farm for $3,000 from appellee, and that the consideration, together with a warranty deed from her, describing the land, were placed in the First National Bank of Lincoln, Arkansas, under an escrow agreement to the effect that, when appellee furnished an abstract showing a merchantable title to the . lands in herself, the consideration of $3,000 should be paid to her and the deed delivered to appellant. It was also alleged that when the abstract was presented it contained defects, but that appellants offered to waive the defects and accept the deed to the land, the possession thereof having been surrendered to them at the time the escrow agreement was entered into.

Appellee filed an answer, admitting the escrow agreement but denying that she delivered possession of more than three rooms of her home to appellants, which the escrow agreement provided she should do, or that appellants offered to waive the defects in the title and accept the deed until after the hank- had mingled the escrow deposit of $3,000 with its other funds' and its doors had been closed on account of insolvency. She prayed for the return of her deed and the possession of the farm.

The cause was submitted upon the issue joined by the pleadings and the testimony adduced by the respective parties, which resulted in a decree dismissing appellants’ complaint for want of equity, and adjudging a return of the deed, together with possession of the farm, to appellee, from which an appeal has been duly prosecuted to this court.

The escrow agreement was entered into on the 18th day of December, 1926, and it, together with a warranty deed from appellee to appellants and the consideration of $3,000, were placed in escrow in the First National Bank of Lincoln, Arkansas. The agreement provided that, when appellee should furnish an abstract showing % merchantable title to the land in herself, the consideration of $3,000 should be delivered to her and the deed to appellants. Pending the preparation of the abstract, appellee allowed appellants to take possession of three rooms in her residence. When the- abstract was furnished, on or about the 12th day of January, 1927, appellant, Walter Foster, refused to accept it, on account of alleged defects in the title, and demanded that his money be returned to him and appellee’s deed to her. Appellee would not consent, and, in an effort to cure the alleged defects shown by the abstract, brought -suit in the chancery court of Washington County to quiet her title. During the pendency of the suit, appellee went to Oklahoma to visit her daughter. The bank failed on February 2,1927. The escrow money deposited by appellants had been mingled with the other funds of the bank, and there was only $300 in cash in the bank at the time of the failure. After the failure, appellants insisted that appellee present the claim for the escrow money to the receiver and that the escx’ow deed be delivered to them. Appellee refused to accept the claim against the bank in payment for her land, axxd the suit for specific performance followed.

The question presented by this appeal for determination is whether funds deposited ixx escrow pexxding procurement of title belong to the vendor or the vendee. The escrow agreement provided that the money and deed should remain in the bank until appellee could furnish an abstract showing a merchantable title to the laxxd in appellee. It also provided that, when appellants accepted the abstract, the bank should turn the money over to appellee. When the abstract was furnished, on January 12, 1927, appellants claimed it showed a defective title, axxd demanded a return of their money, but appellee insisted upon carrying the contract out and having further time to perfect the title. As no time was specified in the agreement for perfecting the title, appellee had a reasonable time within which to do so. Under the escrow agreement she had no right to the money untjj she perfected her title. She was attempting to do this, and without unreasonable delay, at the time the bank failed. During such period the money was the property of the vexidee and xxot of the vendor. Of coux'-se, if the money had been lost on account of an unreasoxxable delay on the part of appellee in perfecting her title, the loss should have been charged to her. Appellants should have waived the defects in the title before the bank failed, instead of waiting uxxtil after that event had happened. If they had waived the defects, the escrow agreement would have been performed. The uxxdisputed fact is that they did not waive or attempt to waive the defects until after the money had been lost.

The decree of the trial court was correct, and should be and is affirmed.


author: Kirby, J.,

text:
    Hardin v. Marshall.
    Opinion delivered April 9, 1928.
    1. Sales — separate contracts — reservation of title. — Separate contracts for different purchases of furniture at different times, neither of which furnished a consideration for any other, cannot be regarded as an entire contract entitling the seller to repossess all the property at any time before payment of the entire purchase price, notwithstanding the same reservation of title in each contract.
    2. ' Sales — retention of title. — Where conditional sale contracts expressly retained title to all the property described therein until full payment of the entire price, the title to all the property described in each contract remained in the vendor so long as any part of the purchase price for the whole amount remained unpaid, though different articles purchased were listed with prices designated to be paid for each.
    3. Sales — conversion by seller — damages.-—-The buyer of property . under a conditional sale contract held not entitled to the rental value thereof from the date of conversion by the seller, in addition to the value of property converted at the time of conversion, . with interest, as damages. '
    Appeal from Jefferson Circuit Court; T. G. Parham, Judge;
    reversed.
    STATEMENT BY THE COURT.
    This appeal is prosecuted from a judgment for damages rendered against appellant for the wrongful conversion of certain articles of furniture and household furnishings sold by him to appellee under contracts retaining the title until full payment of the purchase price.
    The complaint alleged that appellee was the owner and in possession of the property described in the complaint, and that, on or about May 15, she stored with the appellant certain of the property, setting forth the items thereof, of the value of $336; that afterwards she left the city of Pine Bluff for the summer, land did not return until November 16, 1925; that during her absence appellant, without her consent or knowledge, acquired the property described in her complaint, and wrongfully converted it to his own use, and also that the property consisted of household goods which had been in use by the plaintiff, and appellant knew, at the time of his conversion thereof, the reasonable rental value of same was $20 per month.
    Appellant denied the material allegations of the complaint and that he had wrongfully converted the prop: erty, that it had any reasonable rental value ¡at the time of the alleged conversion, and that he had any property whatever belonging to appellee. Alleged that on October 14,1925, the constable of the township, under an order from the municipal court, duly made in a suit between appellant furniture company against appellee and one H. B. Davis, took possession of the property; and, further, that it had been delivered by him to the appellee under a written contract of purchase, in which it was expressly provided that the title thereto should remain in him until the purchase price had been fully paid. That appellee had failed to pay for the property according to the contract, and, after demand made for the return thereof was refused,, he instituted suit for its recovery in the municipal court in the city of Pine Bluff, and especially pleaded the order of the municipal court delivering certain property to him as a bar to any right of recovery against him herein.
    It appears from the testimony that appellant made three different sales of furniture and furnishings to appellee, the articles sold at each time being itemized in a written contract of sale and purchase made by him, in which the title was retained in the vendor until the full payment of the purchase price.
    Appellee testified, and read a list of the property purchased to the jury, and also a list of the furniture which she had stored with the appellant, totaling $179 in value, which she said was included in the first bill of furniture purchased, and for part of which she owed and for part of which she had settled. That she had left certain of the other property in the possession of Mr. Davis, in her dwelling. This was also described, giving the value of each article and the total value as $157, all of which had been paid for, she said, and it was included in the first bill purchased. That she had sold Mr. Davis, upon leaving Pine 'Bluff, $55 worth of the property, with the consent of appellant, who had written up a contract allowing Davis to make payments on this lot of furniture at $10 per month. She said it was understood that these payments would take care of all payments during her absence from the city, and that she had written appellant from each place she visited while away, and also gave the wife of Mr. Davis her address, so they would know where she was, if necessary. That she had written appellant from Arkansas City on September 16, 1925, that she was coming home as soon as possible, and asking him to take care of everything, and she would make it all right when she returned. When she returned she went to appellant to make payment on her furniture, and was told it had already been sold in October. She then visited his attorney, to ascertain what had been done, and made a demand for the property, and brought suit for its conversion. Stated that the aggregate amount of the first lot of furniture purchased was about $175; the first items did not amount to $366.50. She admitted signing the contracts for the purchase, in which the title was retained by the seller until paid for. It seems that the witness purchased about one-half of the first bill of goods before dinner on one day, and was given a pink slip therefor, and selected the rest of it later in the evening, signing the contract then for the entire purchase.
    The proceedings in the municipal court in the case for repossession of the property were introduced in evidence, with the judgment rendered against H. B. Davis, the cause having been dismissed upon motion of the plaintiffs against appellee.
    Appellant testified about the sale of the furniture to appellee, that she selected about one-half of the first bill one morning and the rest of it after 6 o ’clock in the evening, when she was able to leave -her work at the store. The first bill amounted to $366.50, upon which she made a payment of $50, and signed the original contract for the whole amount upon its being delivered to her. The contract was dated March 24, 1923. Another contract for a small bill of goods, $14.25, was introduced in evidence, as were the other contracts for all goods purchased at different times by appellee. He stated that his ledger showed five different sales of furniture to appellee, two or three of them for small amounts, all of them amounting to $613.55; that she had paid thereon, including the $55 allowed as a credit for the furniture -she let Davis have, $405, leaving a balance due of $208.55, which had never been paid.
    The court instructed the jury, giving requested instruction No. 3, over appellant’s objection, as follows:
    “You are instructed that, while under a contract of conditional sales for a single chattel, or for a number of chattels -sold for a lump sum, title will not pass between the vendor and vendee until full payment of the entire contract price, still, if, in the contract, there are separate and distinct articles upon which separate prices are fixed and agreed, such a contract is severable, and installments as paid shall be credited against the items shown on the contract in the order in which they appear, and title to said articles passes to the vendee as such payments fully pay the prices fixed against said articles.” And also in instruction No. 4, allowing the jury to assess damages if they find the property had been converted, its value on the date of conversion, with interest, “together with such sum as you may find from the evidence was the reasonable rental value of the property so converted from the date of its conversion to this date. ’ ’
    The court also amended appellant’s requested instruction No. 3, and gave it as -amended, -over his objection, striking out the last line, “and your verdict should be for the defendant,” and inserted in lieu thereof, “damages for the taking of any property which had not been fully paid for”; and from the verdict on the judgment against him for $468.70 this appeal is prosecuted.

      Wooldridge S Wooldridge, for appellant.

      Rowell & Alexander, for appellee.
   Kirby, J.,

(after stating the facts). There is no dispute about the several purchases of furniture and furnishings, that they were made at different times, and a separate written contract, descriptive of the articles purchased and retaining the title thereto in the vendor until the purchase price was fully paid, was executed at the time of the purchase.

Appellant insists, first, for reversal, that the court erred in not holding the account for all the different purchases of furniture made a single account, as charged on appellant’s ledger, and an entire contract of purchase, not severable or divisible, under which he had the right to repossess the property at any time so long as any part of the purchase price remained unpaid.

This contention cannot be sustained, however. There were, in fact, several purchases made at different times, and separate written contracts executed with each of such purchases, retaining the title in the vendor of the items described therein until payment in full of the purchase price. There is no expression in these different contracts tending to show any intention of the parties to make of the several purchases but one account or contract of purchase, notwithstanding the same reservation of title was made in each of them. Nor does any one separate purchase of such furniture furnish any consideration for another, so far as any definite expression of an intention of the parties to that effect is concerned. The different purchases of furniture and the written separate contracts therefor, neither furnishing any consideration for the other, cannot be regarded as an entire contract, as contended by appellant, but must be held, as they appear to be, separate contracts.

The court erred, however, in giving appellee’s said instruction No. 3. In each of said contracts of conditional sale the title to all the property purchased and described therein was expressly retained until the full payment of the entire amount of the purchase money, and notwithstanding the different articles purchased were included with the prices designated to be paid for each, the title to all the property described remained in the vendor so long as any part of the purchase money for the whole amount thereof remained unpaid.

The court also erred in giving appellee’s requested instruction No. 4, allowing the jury to assess as damages, in addition to the value of the property converted at the time of the conversion, with interest, the rental value of the property converted from the date of the conversion. 8 R. C. L. 486, par. 47; American Soda Fountain Co. v. Futrall, 73 Ark. 464, 84 S. W. 505, 10 Am. St. Rep. 64; Sonsee v. Jones & Green, 157 Ark. 131, 248 S. W. 289; Hudson v. Burton, 158 Ark. 619, 250 S. W. 898.

For the errors designated the cause must be reversed, and remanded for la new trial. It is so ordered.


author: Kirby, J.

text:
    Stevens v. Hubbard.
    Opinion delivered April 9, 1928.
    1. Judgment — consent decree. — Where a case was submitted to an attorney by consent of the parties and the decree was prepared by such attorney in the chancellor’s absence and was approved and adopted by the chancellor and regularly entered on the chancery records as a decree of the chancery court, such decree became a decree of the court as though the chancellor had heard the cause himself and rendered the decree entered of record.
    2. Judgment — vacating decree after term.. — A decree prepared by an attorney to whom the case was submitted by the parties in the chancellor’s absence and approved and adopted by the chancellor and entered as the chancellor’s decree could not be vacated after the term in which the decree was rendered, where no grounds under Crawford & Moses’ Dig., §§ 1316, 6290-62/96, were alleged.
    3. Judgment. — nunc pro tunc entry. — Where a cause was submitted to an attorney by consent of the parties on their motion in the absence of the regular chancellor, and the attorney prepared a decree which was approved and adopted by the regular chancellor, and entered on the records of the chancery court, such decree became the decree of the chancery court, and the court erred in amending the record by a nunc pro tunc order to show that such purported decree was in fact rendered by the attorney assuming to act as special chancellor without authority.
    Appeal from Poinsett Chancery Court; T. A. McLin, Special Chancellor;
    reversed.

      J. S. Mosby, E. L. Westbrooke, Jr., and E. L. Westbrooke, for appellant.

      C. T. Carpenter, M. P. Watkins and T. T. Mardis, for appellee.
   Kirby, J.

This appeal comes from a judgment sustaining a motion to vacate and a decree vacating the decree of the Poinsett Chancery Court foreclosing a vendor’s fien on certain lands in said county. The motion was filed by appellees, the Hubbards, against whom the foreclosure decree was rendered, and by the sureties on the supersedeas bond given on appeal to the Supreme Court.

The appellants failed to file a transcript of the record in the Supreme Court within 90 days, as required, and it was dismissed on motion under Pule 7, at the cost of appellants and the sureties on the supersedeas bond.

None of the grounds provided in § 6290-6296, C. & M. Digest, for vacation of decrees after the expiration of the term, was alleged in the motion, which alleged that the case was heard in vacation before Hon. J. P. Gautney, in Craighead County, who was neither the regular nor a specially elected or qualified chancellor; that the decree was entered upon the records of the county without the sanction of or being signed by the regular chancellor, and was absolutely void. The death of Philip Bazenah, the judgment plaintiff, was alleged, ¡and the appointment of A. Gtevens as administrator of his estate, the appellant herein, and prayer was made for vacation of the judgment and a temporary restraining order.

■Stevens, the administrator, filed a response, denying all the allegations of the motion, except the rendition otf the decree and his appointment as administrator; alleged that the decree was rendered by consent of all parties, indorsed land approved by the regular chancellor, and regularly entered of record, and that the defendants prayed an appeal to the Supreme Court and gave a supersedeas bond, and, failing to comply with Rule 7 of that court, the appeal was dismissed. It was further alleged that T. T. Mardis, one of the petitioners, had no interest in the cause, except that he signed the supersedeas bond in the cause on appeal, and was seeking to avoid liability thereon. By amendment he denied the jurisdiction of the court to pass on the motion, since none of the grounds for vacating a judgment after the expiration of the term, as provided by §§ 1316 and 6290, O. & M. Digest, were alleged in the petition; alleged further that the decree entered in the cause was the decree of the regular chancellor, Hon. J. M. Futrell, the original copy of which was attached, bearing the initials of the chancellor, authorizing the clerk to enter it of record. A copy of the supersedeas bond executed in the case on the first appeal was also attached.

It was further alleged that T. T. Mardis was the only solvent surety on the supersedeas bond; the dismissal of the appeal in the former case for failure to comply with Rule 7; that, because of the filing of the supersedeas bond, respondents had been precluded from collecting rents on land embraced in the decree to the amount of $750, which had been paid to Á. R. Nichols, one of the defendants, and that the property had not been insured by defendants, and the house thereon had been destroyed by fire during the pendency of the appeal, at a further loss of $1,500, the cost of replacement, and that .Mardis, under the terms of his bond, was bound to the payment of all rents and damages to the property during the appeal, and that the proceeding was but a collateral attack upon the decree regularly rendered in the cause, the validity of which cannot be inquired into by the court herein. Prayed for dismissal of the petition to vacate for want of equity, or, in the alternative, for judgment in the sum of $2,250, with interest from the date of the supersedeas bond, and for damages to the property destroyed by fire.

Appellees then filed a motion for a nunc pro time order to correct the decree, alleging that the cause was beard by J. P. Gautney, by consent, in Craighead County, as special chancellor, on the 16th day of June, 1926, but the record in the case fails to disclose the fact, and it should be amended to speak the truth.

The testimony shows that the case was submitted to Hon. J. P. Gautney, an attorney at Jonesboro, by consent of the parties, on their own motion, the regular chancellor being absent engaged in a campaign for nomination to the office of Judge of the Supreme Court, was heard, findings made, and the suggested form of the decree prepared by Gautney, approved by the attorneys and given to the regular chancellor and approved, adopted and initialed by him as his decree in the case, and regularly entered upon the chancery records as the findings and decree of the chancellor.

There was no attempt made to elect or select Mr. Gautney as special chancellor, nor did he assume to act as such, but only agreed to examine the record, at the request of the attorneys of the parties, and make and suggest such findings and decree as should be rendered therein, all of which was adopted and approved by the regular chancellor, the suggested form of decree being ordered entered of record as made, and rendered in vacation by him. Such being the case, it became the decree of the chancery court as though rendered by the chancellor by consent of the parties, or on a regular hearing by him, as fully and completely as though the chancellor had heard the cause himself throughout and rendered the decree entered of record.

There was no allegation in the motion to vacate or any ground provided by the statute for vacation of decrees after the expiration of the term in which they were rendered. Nor was there any testimony introduced warranting the chancellor in holding that the form of decree so adopted, approved and rendered by the regular chancellor and entered of record, was a decree attempted to be rendered in vacation by one not regularly elected as special chancellor, and was not the decree of the chancery court and entitled to all such credit or authority as though the cause had been regularly heard throughout by him.

It follows that the court erred in amending the record by a mmc pro tunc order to show that the purported decree was in fact rendered by an attorney assuming to act as special chancellor without authority, never having been regularly elected or selected as such special chancellor, and in not denying both the motion to vacate the decree and for the vmnc pro tunc entry.

The decree is accordingly reversed, and the cause remanded with directions to deny both the petition for vacation of the judgment and the motion for a nunc pro tunc order to correct the record of the judgment.

Justices Wood, Smith and Mehaeey dissent.


author: Mehaffy, J.

text:
    Jones v. Dowell.
    Opinion delivered April 9, 1928.
    1. Mortgages — intention op parties. — In order to ascertain whether a mortgage secures an indebtedness other than the note specifically described therein, it is proper to consider the entire mortgage.
    2. Mortgages — indebtedness secured. — A mortgage given to secure the payment of a note and providing for the payment of other indebtedness due to the mortgagee secured both the note and the debt for any other advances.
    3. Payment — appropriation.—Where a debtor made payment to his creditor several days before a note was due, and neither party made application of such payment, the law applied it to the payment of a debt' then due, and not to the note which was not due.
    4. Payment — application.-—A payment on a note made after it was due should be applied first to the payment of interest.
    5. Mortgages — sale by substituted trustee. — Where a deed of trust provided that if the trustee was incapacitated by absence or other cause, another trustee might be appointed, a sale by a substituted trustee in the absence of the trustee was valid.
    6. Appeal and error — question not considered below. — In an action involving an adverse claim to land, a contention that sale under a deed of trust was void for lack of appraisement will not be considered on appeal when it was not raised in the trial court.
    7. Appeal and error — conclusiveness of chancellor’s finding.— The chancellor’s finding of facts will not be set aside on appeal unless against the preponderance of the evidence.
    Appeal from Bradley Chancery Court; E. G. Hammock, Chancellor;
    affirmed.

      B. L. Beasley, for appellant.

      DuVal L. Purkins, for appellee.
   Mehaffy, J.

This action was begun in the Bradley Circuit Court by plaintiffs, who are appellants here. Plaintiffs alleged that they were the owners and entitled to the possession of the lands described in their complaint; that the defendants were in the actual possession of said lands under some claim unknown to the plaintiffs, and refused to give possession. Plaintiffs claimed under B. J. Lewis, who had purchased said lands from the Rock Island Townsite Company. There was no dispute about the title of B. J. Lewis. Plaintiffs are the only heirs of B. J. Lewis. They allege that defendants were in the wrongful possession of said lands, and refused to deliver possession to the plaintiffs.

Defendants filed answer and motion to transfer to equity. The motion to transfer to equity was granted by the court, over the objections of plaintiffs. Defendants admitted they were in possession of the lands in controversy, and alleged that J. P. Lansdale advanced the money to B. J. Lewis to purchase said lands. That B. J. Lewis and his wife, who is now Mary Lewis Sanders, made a note and mortgage or deed of trust to secure the payment of the indebtedness due to Lansdale. R. W. Carnley was named as trustee in the deed of trust. That H. C. Johnson was substituted as trustee in place of R. W. Carnley. After B. J. Lewis died, the debt to Lansdale not having been paid, H. C. Johnson, substituted trustee, advertised and sold the land in controversy under the power of sale contained in the deed of trust, and F. R. Dowell became the purchaser. The evidence shows the execution of the note and deed of trust, the sale under the power of sale contained in the mortgage, and it also shows the indebtedness existing at the time of the sale. Plaintiffs moved to transfer the case back to the circuit court, which motion was overruled.

Counsel for appellants state that there is only one question involved, and that is whether the attempted foreclosure sale is valid or void. The lower court held that it was valid, and to reverse that decree plaintiffs prosecute this appeal.

Lewis was indebted to Lansdale, in addition to the note, for supplies furnished. And it is first contended by appellants that the deed of trust was given for the purpose of securing the note for $300 due December 15, 1918, and that nothing whatever was said about future advances in the deed of trust, and that therefore the mortgage was not intended to secure the payment of any debt other than the $300 note. The mortgage or deed of trust covered not only the 15 acres involved in this suit, but also block 52 in the town of Hermitage, some live stock, and the entire crop of cotton and corn to be grown during the year 1918 in Bradley County by the mortgagors. And the mortgage contained the following*: “This sale is on condition that, whereas we are justly indebted to J. P. Lansdale in the sum of $300, evidenced by our note of even date, due and payable on December 15, 1918, and bearing 10 per cent, interest from date until fully paid, and have agreed to pay all taxes assigned .against the property and to keep the premises insured.”

And it also contains the following: “Now if we shall pay said moneys at the time and in the manner aforesaid, and all other indebtedness which may be due said J. P. Lansdale, and all taxes and insurance, then the above conveyance shall be null and void, else to remain in full force.”

The deed of trust then contains the power of sale.

In order to ascertain the intention of the parties in the mortgage and whether or not any indebtedness is secured by said mortgage other than the $300 note, it is proper to consider the entire mortgage. This court has frequently held that each case calls for an interpretation otf the language of the mortgage, so as to determine whether the description falls within the rule announced. That is, within the rule adopted by this court. See Patterson v. Ogles, 152 Ark. 395, 238 S. W. 598, and cases there cited.

We think, under a proper construction of the mortgage, it secures the debt for advances made as well as the $300 note mentioned. The 15 acres of land only was sold under the power of sale in the mortgage. The mortgage included, as we have said, block 52 in the town of Hermitage, some live stock, and the entire crop raised by the mortgagors, and provided for the payment of ,all other indebtedness and taxes and insurance. But whether it included the advances or not appears to be immaterial in this case.

Appellant argues that, when you apply the rule ¡as to the application of payments, the note secured by the mortgage would be paid and whatever indebtedness there was in addition to that would not be secured by the mortgage, and therefore the mortgagee would have no right to sell. The first payment of $250.70 was made before the note was due, and the rule with reference to application of payments, if neither the debtor nor creditor made any application, would require this payment to be applied to a debt that was due rather than to the note which was not due. In fact, the creditor would not have had the right to apply this payment, which was made before -the maturity of the note, to a debt not due.

The rule is stated in Cyc. to be that the law will apply the payment to a debt that has matured rather than one not yet due. 30 Cyc. 1242.

Again it is said: “Except where equitable principles require a different disposition thereof, or where a •different application has been made by the parties themselves, it is a well-settled rnle that a payment should be applied by the court to the oldest debt, where there is more than one debt. That is, the debt first.becoming due.” 30 Cyc. 1243,

It is also held by many courts that the oldest debt means the first debt due, land not the first debt contracted. Numerous eases are cited under the above section of Cyc.

The following is a note in 30 Cyc. 1244: “Where several notes have been given at the same time by the same person and payable to the same party, but falling due at different times, partial payments made by the debtor to the creditor when the notes are all due will be applied to the payment of principal and interest of the note first due, and so on in this order until the last note is paid.”

In this case we have the payment made some days before the note is due, and, as neither party made any application of the payment, the law applies it to the payment of the debt due and not to the note which was not yet due.

Another rule well settled is that even a payment that was thereafter made, if it applied to the note, would go first to the payment of interest.

“As to the appropriation of payments, there is no proof that the right of appropriation was exercised by either party at the time the payments were made, and the court below found that they were made generally, and appropriated them according to priority, the first payment to the first items on the accounts between the parties, which was the rule approved in Kline v. Ragland, 47 Ark. 111, 14 S. W. 474, where it is held that “when, in the absence of appropriation 'by a debtor, the creditor appropriates payments from him to a running account, the law will apply them to the items of the account in the order of their dates.” Citing Price v. Dowdy, 34 Ark. 285; and continuing, the court said: “The latter case says, ‘a different agreement may be shown by evidence’.” Lazarus v. Freidheim, 51 Ark. 371, 11 S. W. 518.

The court in the above ease holds that they are paid according to the priority. As we have already shown, however, that means of debts that are due. The creditor would have no right and the law would not apply a payment to a debt that was -not due rather than to a debt that was due.

‘ ‘ The right of a creditor to make application of payments to one of several debts owing from the debtor applies only to those that are then due, and does not apply at. all when the debtor himself makes the appropriation.” Gates Bros. v. Burkett, 44 Ark. 90.

Applying the payments that were made according to these rules, the first payment that was made would have to go to the payments other than the $300 note, because it was not due. Subsequent payments, even if they were applied to the note, would be applied first to interest; so that it would make but little difference in the result whether the deed of trust secured the payment of the accounts or not.

Appellants next contend that the substituted trustee was without authority to act in the attempted foreclosure sale, and calls attention to Stallings v. Thomas, 55 Ark. 326, 18 S. W. 184. It appears from the quotation that the deed of trust in that case provided that the beneficiary might substitute another trustee in case the trustee named in the deed fails or refuses to execute, and the court held that, since he had never been asked to make the sale, it could not be held that he had failed or refused to execute it. ‘But in the ease at bar the deed of trust provided that, if the trustee was incapacitated by sickness, absence, death or any other cause, ia trustee might be substituted, and the undisputed proof shows that the trustee, Oarnley, was absent, and, that being true, the beneficiary had a right to substitute Dowell.

It is next contended by appellant that the sale is void because there was no appraisement. The record does not show whether there was an appraisement or not, and this was not an issue in the court below, and therefore cannot be considered here. And of .course, if the sale is valid, as held by the court below, this is a complete answer to appellants’ next contention, that Dowell was holding as mortgagee in possession.

It is argued also that the„15 acres of land involved in this controversy was the homestead of B. J. Lewis and his family, and that some of his heirs are minors. If the sale was valid under the power of sale in the mortgage it would be unimportant whether it was a homestead or not; but the undisputed proof shows that the mortgage included the 15 acres involved in this suit, and this tract of land was described by metes and bounds in the mortgage, and the mortgage provides that, in addition to that, block 52 in the town of Hermitage is mortgaged. Block 5'2 may or may not be contiguous to the 15 acres. If it were not, of course the 15 acres would not be a part of the homestead. If it were contiguous, it would then depend upon the value as to how much could be claimed as a homestead. But the undisputed proof shows that the homestead, block 52, was included, but that Lansdale would not sell that, and told the widow of B. J. Lewis that he would not sell it, and it is therefore not involved in this suit.

As to whether the deed of trust had been correctly satisfied was a question of fact to be determined by the court, and, even if it had been satisfied on the record through mistake and the debt had not been paid, such satisfaction would not prevent a sale of the property to collect the debt. But all of the facts were determined by the chancellor, and we could not reverse on that unless we could say that his finding was against the preponder-, anee of the evidence.

Our conclusion is that the decree of the chancery court is correct, and it is therefore affirmed.


text:
    Crow v. Fones Brothers Hardware Company.
    Opinion delivered April 9, 1928.
    1. 'Sales — implied warranty. — In a sale of manufactured goods, where there is no opportunity for inspection by the purchaser, there is an implied warranty that the articles are merchantable and reasonably fit for the purpose for which they are intended.
    2. Sales — implied warranty. — The rule 'as to the implied warranty of merchantability and fitness for purpose intended does not apply where the purchaser demands a specified article and it is snipped by the seller direct from the manufacturer to the purchaser.
    S. 'Sales — implied warranty. — -Where a known, described, and defined article is ordered of a manufacturer, although it is stated to be required by the purchaser for a particular purpose, still, if the known, described, and defined thing be actually supplied, there is no warranty that it shall answer the particular purpose intended by the buyer.
    Appeal from Pulaski Circuit Court, Third Division; Marvin Harris, Judge;
    affirmed.

      D. T. Cotton and Watkins & Pate, for appellant.

      Owens & Ehrman and Pryor, Miles & Pryor, for appellee.
   Mehaffy, J.

Plaintiff, a resident of Vían Burén County, Arkansas, 38 years of age, brought suit in the Pulaski Circuit Court against Fones Brothers Hardware Company, a corporation organized and doing business under the laws of the St'ate of Arkansas, and engaged in the business of selling hardware and other commodities in'the city of Little Bock. Among other things it sells fuse, which is used in lighting and exploding dynamite and powder.

The plaintiff, on the 3d day of August, 1926, was in the employ of the Highway Department of Arkansas, and his principal duty was to use dynamite in clearing highways of obstructions. He was, on the date mentionéd, at work on road number 65, in Van Burén County, Arkansas, blowing stumps and rocks from the right-of-way. He cut a piece of fuse eighteen or twenty inches, in length, to which he attached a cap, and to which was also attached dynamite, and this was placed where the obstruction was necessary to be. .removed. He was using Clover Leaf Brand of fuse, which was manufactured by the EnsignBickford Company of Simsbury, Connecticut, and had been using the same brand of fuse for quite a while, and it had a burning speed of one foot to each minute after it was lighted. At the time mentioned in plaintiff’s complaint he cut the fuse eighteen or twenty inches in length, attached the cap and dynamite in the -usual manner, using care, prudence and caution, lighted the fuse, expecting that it would require a minute and a half before the explosion, and this would have given him time to walk to la place of safety. But, when he lighted the fuse, it exploded instantly, causing him to lose the sight of one of his eyes and impair the sight of the other so that he is practically blind, and he suffered other injuries on the head, face and body.

The fuse he was using was furnished to him by the State Highway Department, 'and he alleged that the Highway Department had purchased it from Fones Brothers Hardware Company. It is alleged that Fones Brothers Hardware Company knew the fuse was to be used in blowing stumps and obstructions from highways and that a slow-burning fuse was necessary; that, in selling the same to the Highway Department, the seller impliedly warranted that the fuse was a slow-burning fuse and fit and suitable for the purposes for which it was purchased and to be used, and, by reason of its fail- . ure to furnish this character of fuse, it is .liable to plaintiff for the injury which occurred, resulting in his damag’es.

The defendant answered, denying the material allegations in the complaint.

After hearing the evidence, the court below directed a verdict for the defendant. Plaintiff filed a motion for a new trial, which was overruled, and exceptions saved, and the plaintiff duly prosecuted his appeal to this court.

The evidence on the part of the plaintiff tends to show that he was working for the Highway Department, and was using explosives, and had attached to the dynamite a fuse about eighteen or twenty inches in length. He put the dynamite, fuse and cap in the hole in the usual way, and stuck a match to the end of the fuse, and it exploded immediately, within a couple of seconds, injuring his eyes, destroying one of them, and almost destroying the other. He was also injured about the neck, and his flesh was burned. He had been at work for the Highway Department about ten or twelve months; had been handling powder on county roads for about eighteen years. At the time of the accident he was using Clover Leaf Brand of fuse, and had not used any other brand of fuse during his employment with the Highway Department. He had tested this brand of fuse, and found that it ranged from 45 to 60 seconds to the foot. That is, it would take from 45 to 60 seconds for a. foot of said fuse to burn after being lighted. If this fuse had burned in the usual way he could have been in a place of safety before the explosion. He put in numerous shots, and this is. the only accident he ever had. The explosion was instantaneous when he lighted the fuse. Before this accident his health was good. He had used Hercules and Dupont powder. The dynamite that he used at the time of the accident did not seem to explode quite as quickly as. the Hercules or Dupont. The Highway Department furnished the dynamite and the fuse. Plaintiff had made tests as to the burning speed of fuse several times before the accident, and it ranged from 45 to 60 seconds to burn a' foot. He got the fuse from the Highway Department, but does not know where the Highway Department got it. He was using the same kind of dynamite that he had been using during his employment with the Highway Department, and he prepared his shot according to the instructions that accompanied the dynamite box and fuse, and fixed it just like he had been preparing his other shots.

Other witnesses testified to seeing the accident, and to the effect that the explosion occurred immediately after the fuse was lighted. And they testified to substantially the same facts with reference to the accident as was testified to by the plaintiff.

Testimony also showed that the method of ordering material of this kind was that the foreman or man working a section made requisitions on the Little Bock office for materials, and the purchasing department would either ship the material or authorize him to purchase it locally. The shipments of dynamite and fuse were largely from Little Bock, from the State warehouse. The fuse used at the time of the accident was bought from Fones Brothers Hardware Company. They began to use the fuse from Fones Brothers Hardware Company about the first of September, 1925, and had bought fuse from no other jobber since that time. They had always bought the Clover Leaf 'Brand. When they ordered from Fones Brothers Company they expected them to send them the Clover Leaf Brand.

A witness identified the bill of lading, and testified that on April 12, 1926, the Hercules Powder Company delivered about 30,000 feet of Clover Leaf fuse, and witness signed for it on that date. The shipment was delivered on account of Fones Brothers Hardware Company. He receipted for it in the warehouse of the Highway Department. When the requisition was received from Van Burén County, the Highway Department sent the Clover Leaf Brand. This fuse had been placed in the warehouse April 5 by the Hercules Powder Company, for the account of Fones Brothers Hardware Company. There was no other fuse in the warehouse except the Clover Leaf Brand. A slip or billing on the package .showed that the package was shipped through the Fones Brothers Hardware Company of Little Bock.

The appellant insists on a reversal of the judgment, contending that there was an implied warranty by Fones Brothers Hardware Company that the fuse that it sold to the State Highway Department, and which caused the injury complained of, was suitable for the purposes for which it was ordered.

The first case to which appellant calls attention is the case of Neel v. West-Winfree Tobacco Company, 142 Ark. 505, 219 S. W. 326, and quotes from the syllabus as follows:

“In a sale of manufactured goods, where there is no opportunity for inspection by the purchaser, there is an implied warranty that the articles are merchantable and reasonably fit for the purpose for which they are intended. ’ ’

We think the above statement of the law is correct, especially where the manufacturer of goods makes a sale to a person who has no opportunity to inspect, or where a dealer has the goods in his possession with the opportunity to inspect and the buyer has no opportunity to' inspect same, and purchases relying on the seller’s judgment or information and the fact that the seller had the opportunity to know about the quality of the goods. But the above statement is not the rule where the purchaser demands a specified article and it is shipped direct from the manufacturer to the purchaser. In the instant case the Highway Department specified the article it wanted; it purchased the Clover Leaf Brand of fuse. This was a brand that the Highway Department had been using for quite a while, and this particular brand was bought through Fones Brothers Hardware Company. It was not manufactured by appellee, and the particular fuse about which complaint is made was never in the possession of the ¡appellee, hut it was delivered direct to the purchaser, the Highway Department, ¡by the Hercules Powder Company. The purchaser would doubtless have refused to accept any other brand. It knew as much about the quality of the goods as the appellee knew. In the particular instance neither had ¡any opportunity to inspect.

“Where a known, described and defined article is ordered of a manufacturer, although it is stated to be required by the purchaser for a particular purpose, still if the known, described and defined thing be actually supplied, there is no warranty that it shall answer the particular purpose intended by the buyer.” "Williston on Sales, second edition, 229.

There would be no reason for the seller to be bound • by an implied warranty when the buyer described particularly the hind of article it wanted to purchase and the manufacturer sent that particular article. It might not be suitable for the use intended by the purchaser, but the seller' would certainly have a right to assume that, when the purchaser described the article, called for a particular hind, that was the hind desired. The purchaser had been using this hind of fuse, hnew as much about it as the appellee knew, it was never in 'the possession of .the appellee, it had no opportunity to examine it, and could not have known ¡any more about it than the . appellant, and there was therefore no reason for an implied warranty.

Appellant next calls attention to Main v. Dearing, 73 Ark. 470, 84 S. W. 640. In that case the court stated:

‘‘Ordinarily the law implies no warranty of quality, leaving that a matter of contract between parties, but there is an exception to this rule as thoroughly recognized as the rule itself. When a manufacturer offers his goods for-sale, where the opportunity of inspection is not present before the purchase, the vendee necessarily relies on his knowledge of his own manufacture. In such cases the law implies a warranty that the article shall be merchantable and reasonably fit for the purpose for which it was intended.”

It will' be noticed that the court said, in the last ease, that the purchaser had no opportunity to inspect, and that he necessarily relied on the knowledge of the manufacturer as to his own goods. The manufacturer, of course, would know, would have an opportunity to inspect and ascertain whether the goods were suitable, but we have no such case here; Fones Brothers Company never had an opportunity to see or inspect the goods complained about at any time. The goods were never in its possession, and the vendee conld not have relied on the knowledge of Fones Brothers Hardware Company.It could not do that, because Fones Brothers Company never had the goods in its possession. One of the reasons why a dealer is held on an implied warranty is that the purchaser has no opportunity of inspection, and he is therefore entitled to rely and will naturally be presumed to have relied on the seller’s skill and judgment. But, as to the particular g*oods sold in this case, the purchaser could not have relied on any implied warranty, because he bought the goods by description, called for a particular brand which the Fones Brothers Hardware Company did not have in stock, and did not see or inspect, and hence could not have known anything about the character of the goods, certainly could not have known any more than the purchaser. It would be unreasonable to say that the Fones Brothers Hardware Company, who had no opportunity to see the goods, had any superior skill or knowledge, and of course the purchaser did not rely and would not have been justified in relying on any implied warranty of Fones Brothers, under the circumstances in this case.

“Even though inspection would not reveal the defect in the goods, it is possible for the buyer to select them, relying upon his own judgment, and, if he does this, the seller, at least in the absence of guilty knowledge, will not be liable on an implied warranty.” Williston on Sales, 2' edition, § 235.

“The rule excluding implication of warranties in sales of known, described and definite articles, is simply an application of the general principle stated in both statutes, that reliance on the -seller’s skill and judgment is a prerequisite to the imposition of an obligation upon him.” Williston on Sales, 2 edition, § 236A.

Appellant next calls attention to the case of Hercules Powder Company v. Rich (C. C. A.), 3 F. (2d.), 12, and quotes from that opinion. In that opinion it is stated that the plaintiff, testifying to his conversation with Bailey, said: ‘ £I .asked the kind of fuse that I would get. He said he would give me safety fuse. I told him that I couldn’t use anything except slow-burning safety fuse with a minute per foot. He says, ‘That is what I will ship.’ * * * So he sold me 500 caps, blasting caps, 500 electric globe caps that is to be used with a powder with which we connect the wire, regular ‘ B ’ caps; that is, the blasting caps supposed to be used by fuse of various kinds and touching off by fire. I told Mr. Bailey that I couldn’t use anything except the slow-burning fuse of a burning speed of a minute per foot. He says ‘That is what you will get.’ ”

There is no such evidence in the case at bar. ■

J. D. MeGlathery testified in substance as follows: That the fuse that appellant, Crow, was using at the time of the accident came from the State Highway Department, shipped through Fones Brothers Hardware Company of Little Bock, Arkansas, and was consigned toL. B. MoGrlathery, at.Shirley, Arkansas. When the shipment of fuse arrived at Shirley the witness carried it out to road No. 65 and placed it in the shop building for use. This shipment of fuse was delivered at Shirley, Arkansas, on the 26th day of May, 1926.

Yanderberg testified that when McG-lathery, county superintendent, made the requisitions on him for fuse, he sent him Clover Leaf Brand. That the fuse he sent McGrlathery was placed in the warehouse on April 12 by the Hercules Powder Company for the account of Fones Brothers Hardware Company. He did not have any other fuse in the warehouse but the Clover Leaf Brand, and from the time he became connected with the Highway Department he had no other brand of fuse except the Clover Leaf Brand. Yanderberg was the storekeeper for the Highway Department, and he shows that this fuse was delivered by the Hercules Powder Company, that it was the Clover Leaf Brand, and that, while it was delivered for the account of the Fones Brothers Hardware Company, it was delivered by the Hercules Powder Company direct to the warehouse of the Highway Department.

The court said in the Hercules Powder Company case, above referred to:

“If the jury believed the testimony of plaintiff, they were warranted in finding that the party selling the fuse —one Bailey — was fully cognizant of the purpose for which it was intended; that plaintiff told him he could not use anything except a fuse of a burning speed of a minute per foot, and that Bailey assured him that was what would be shipped; that such statement Was not one merely of an opinion, but was a distinct affirmation of a fact and intended to influence the sale, and that plaintiff relied on such affirmation in making the purchase. Hence that the words, if used, constituted a warranty.”

We have no such testimony in this case. Fones Brothers made no promise at all, and, as a matter of fact, knew less labout what was wanted than the purchaser. Fones Brothers Hardware Company was not the seller in the sense that they had the goods in store and made a sale direct, but the order was given, sent to the Hercules Powder Company for a particular brand of fuse, land that brand was delivered by the powder company to the purchaser direct.

In the Hercules Powder Company case referred to, the fuses complained of were sent to the branch office at Little Bock for the purpose of sale. Bailey was the agent in charge of the branch office,, and engaged in selling the goods of the defendant, that is, the Hercules Powder Company. The fuses in question in the Hercules Powder Company case were sent to the agency in Arkansas for the purpose of being sold in the business of the agency. The goods in the instant case were not sent to Fones Brothers Hardware Company to be sold. Bailey was the agent of the Hercules Powder Company, and the court held that he had authority to make warranties. In view of his handling fuses of different burning periods, it was said that nothing could be more natural, less out of the ordinary, than to have the authority as such general sales agent to make warranties of a reasonable period for the fuses to burn. He could not otherwise-have made the sales.

It was also said in the Hercules Powder Company ease, quoting from Benjamin on Sales :

“But where a chattel is to be made or supplied to the order of the purchaser, there is an implied warranty that it is reasonably fit for the purpose for which it is ordinarily used, or that it is fit for the special purpose intended by the buyer, if that purpose be communicated to the vendor when the order is given. * * ■ * "When one contracts to supply an article in which he deals, to be applied to a particular purpose, so that the buyer necessarily trusts to the judgment or skill of the vendor, there is an implied warranty that it shall be reasonably fit for the purpose to which it is to be applied; and the better doctrine is that this rule applies to dealers as well as to manufacturers, and not to manufacturers alone, as the plaintiff in error contends.”

But, as we have already said, there was nothing done at any time, so far as this record shows, by the Fones Brothers Hardware Company that would justify the buyer in believing that Fones Brothers Hardware Company knew anything about the goods or that would justify the buyer in relying on the superior judgment and skill of the Fones Brothers Hardware Company. If a manufacturer or dealer sells an article of this character, and knows the use for which it is intended, the-weight of authority is that there isi an implied warranty that the goods are suitable for such use, and also that the dealer as well as. the manufacturer may be 'bound by an implied warranty. However, we know of no case where a -shipment was made direct from the factory, and buyer described the goods that he wanted, that another would be held liable on an implied warranty simply because the goods were shipped through it.

Appellee discusses the question of whether there could be any liability in this case because the sale was not made to the injured party, and that the dealer is not liable to any persons other than the persons to whom the sales are made. But it is unnecessary to decide that question in this case, because we hold that, under the circumstances and evidence in this case, the Pones Brothers Hardware Company could not'be liable in any event, even to the buyer himself.

’The judgment of the circuit court is correct, and is therefore affirmed.