author: Hart, J.,

text:
    Eversmeyer v. McCollum.
    Opinion delivered May 17, 1926.
    1. Deeds — application op rule in shelley’s case. — The rule in Shelley’s Case is applicable only when the language used in the conveyance creates a limitation to the heirs in general of the grantor.
    2. Remainders — application op rule in shelley’s case. — Under ■a conveyance to A and her husband for their natural lives with remainder over to her children, the rule in Shelley’s Case has no application, and the deed conveyed only a life estate to A and her husband, with remainder to her children.
    3. Remainders — when contingent. — Where land was conveyed to A and her husband for their natural lives and at their death to A’s children or descendants, and, if none such be in existence at their death, to a named child of the husband by a former marriage, held that during A’s lifetime her child was a contingent remainderman, to whom no title passed.

      4. Remainders — rights of contingent remainderman. — Grantees of a contingent remainderman may bring an action to prevent waste of the remainder estate, but not to quiet title in themselves subject to the estate of the life tenant.
    Appeal from Hempstead Chancery Court; G. E. Johnson, Chancellor;
    reversed in part.
    STATEMENT OE THE EACTS.
    James H. McCollum brought this suit in equity against P. F. Hein, W. M. Kennedy, J. B. Yates, D. R. Hammet and A. G. Guise, to enjoin them from cutting timber on the lands embraced in. the complaint, and to declare that the plaintiff’s'title to said land may be confirmed and quieted forever, subject to the life estate of the defendant P. F. Hein; that an oil and gas lease, executed by P. F. Hein to J. B. Yates be canceled, and that the plaintiff have a decree against the defendants for the value of all the crossties made by them of the timber which they had cut on. said land.
    P. F. Hein filed a separate answer in which he asserted title to the land embraced in his complaint, and filed a cross complaint against the plaintiff and A. H. Eversmeyer and Hattie Eversmeyer, his wife, and Dr. W. B. H. Pool and Jessie G. B. Pool, his wife, and asked that they be made defendants to the action.
    In the event it was decreed that P. F. Hein only owned a life estate in 220 acres of land to which he asserted title, and which is described in the complaint, during the life of Mary Pool, he asked to recover against A. H. Eversmeyer, from whom he had a warranty deed to said land, the sum of $8,800 on account of failure of his title.
    The suit involves the construction of a deed from T. R. Billingsley and wife to Mary Pool and others, executed on. the 18th day of July, 1910. Omitting the description of the land, the body of the deed is as follows:
    “That T. R. Billingsley and wife, Loti Billingsley, of Hempstead County, Arkansas, for and in consideration. of the sum of forty-five hundred dollars ($4,500), the receipt of which is hereby acknowledged, do hereby grant, bargain, sell and convey nnto Mary A. Pool for and during her natural life, and-at her death to Philander Pool, if alive, for and during his natural life, and at his, Philander’s, death, the said Mary A. Pool being dead, if there should be a child or children born of the said Mary Pool or descendants, and if none such be in existence on the death of Philander Pool, then said land shall go to and become the property of Nannie L. Mason (formerly Nannie L. Pool), the following lands lying in the county of Hempstead and State of Arkansas, to-wit:
    ‘ ‘ To have and to hold the same unto the said Mary A.. Pool for and during her natural life, and at her death-to Philander Pool, if alive, for and during his natural life, and at his, Philander’s, death, the said Mary A. Pool being dead, if there should be a child or children born to the said Mary Pool.or descendants of such child or children, the land herein described shall go to isuch child or children or their descendants, and, if none such be in existence on the death of Philander Pool, then said land shall go to and become the property of Nannie L. Mason (formerly Nannie L. Pool), with all appurtenances thereunto belonging.”
    The record shows that on February 22, 1910, Philander Pool, Mary Pool, his wife, William B. H. Pool and Nannie L. Mason and her husband J. A. Mason filed an ex parte petition in the Henderson 'Circuit Court for the purpose of having sold 176 acres of land situated in Henderson County, Kentucky.
    The petition, alleges that William B¿ H. Pool, who is 27 years of age, is the child of Mary Pool, and the only child born to her now living. Philander Pool is alleged to be 69 years and Mary Pool 66 years of age. The petition further alleges that Philander Pool resides in McCracken County, Kentucky, and that William B. H. Pool resides in the State of Arkansas, and that Nannie L. Mason resides in Union County, Kentucky. The reason given for selling the land is its inconvenient location to the home of the petitioners and the infirm condition of Philander Pool and Mary Pool. The petitioners ask that the proceeds of sale, after paying the costs, be paid in the following manner: One-third to Philander.Pool and the remainder of the proceeds to be reinvested by the court in other real estate with the title thereto in the same manner and as provided by the conditions and provisions of the deed of B. H. Hendrick and wife to Philander Pool and others. The deed of B, H. Hendrick and wife was executed on the 11th day of September, 1889, and contains the following:
    “One-third to Philander Pool' and the other two-thirds to his wife, Mary Pool, for and during her natural life, and at her death to go to Philander Pool, if alive, for and during his natural life, and if at his, Philander’s, death, the said Mary Pool being dead, there should be living a child or'children born of the said Mary Pool, or descendants of such child or children, said land shall go to such child or children, or their ■ descendants, and, if none such be in existence at the death of said Philander Pool, then said balance of two-thirds of said land shall go to and become the property of Nannie L. Popí and her heirs forever.’’
    On June 4, 1910, the same petitioners filed in the same court a supplemental petition, with, which was submitted the written proposition of T. R. Billingsley of Hempstead County, Arkansas, to sell and convey to them for a consideration of $4,500, 220 acres of land in Hemp-stead County, Arkansas, which is described in said supplemental petition, and which is the land in controversy in this suit.
    The prayer of the petition was granted by said Henderson Circuit Court, and the sum of $4,500 of the remaining two-thirds of the proceeds of the sale of the land in Henderson County, Kentucky, was ordered by said Henderson Circuit Court to be invested in said Hempstead County, Arkansas, lands.
    The commissioner was ordered and directed to pay said sum of $4,500 to said T. R. Billingsley upon the delivery of a warranty deed conveying said land to said petitioners. In the order with reference to the vesting of the title to said Hempstead County land in the petitioners the following language is used:
    “Said deed is to vest in the petitioners the same title in said land and 'by the same conditions and terms as the two-thirds interest was vested in them in the conveyance filed in this cause — that is, to Mary A. Pool, for and during her natural life, and at her death to the said Philander Pool, if alive, for and during his natural life, and at his, Philander’s, death, the said Mary Pool being dead, [if] there should be a child or children born of the said Mary Pool, or descendants of such child or children, said land shall go to such child or children or their descendants, and if none such be in existence on the death of Philander Pool,-then said two-thirds of said land shall go to and become the property of Nannie L. Pool (now Nannie L, Mason) and her heirs forever.”
    Pursuant to this order the deed of T. R. Billingsley and wife as copied above was executed.
    On September 20, 1915, Mary Pool instituted, an action in the chancery court of Hempstead County, Arkansas, against T. R. Billingsley, Philander Pool, Nannie L. Mason and William B. H„ Pool, to reform the deed above referred to from T. R. Billingsley so as to vest the title in fee simple in said Mary Pool. In her petition Mary Pool alleges that William B. H. Pool was only her foster son.
    William B. H. Pool filed an answer in which he denied all the allegations of the petition, and alleged the truth to be that he was the lawful son of Mary Pool and her husband, Philander Pool.
    The court found from the evidence that there was no equity in the complaint of Mary Pool, and it was decreed that it should be dismissed for want of equity. No appeal was taken from this decree.
    Oü the 8th day of April? 1918', Philander Pool and Mary Pool, his wife, for the consideration of $2,500' paid by A. H. Eversmeyer, conveyed to him by warranty deed the 220 acres of land involved in this suit. This deed was duly filed for record on April 16, 1919.
    On the 6th day of November, 1919, A. H. Eversmeyer and Hattie Eversmeyer, his wife, for the consideration of $1,000 paid by P. F. Hein, conveyed to him by warranty deed the 220 acres of land involved in this suit. This deed was duly filed for record on the 16th day of February, 1920. On, the 5th day of November, 1919, Nannie L. Mason, who was the daughter of Philander PodI by a former wife,, executed a quitclaim deed to Mary Pool to the 220 acres of land involved in this action. This deed was duly filed for record on the 16th day of February, 1920.
    On the 27th day of November, 1915, William B. H. Pool executed a quitclaim deed to his wife, Jessie Gr. B. Pool, to the 220 acres of land in this suit. This deed contained a proviso that she was to make a deed to James H. McCollum to the south 80 acres for defending the title to said lands.' This deed was filed for record on December 1, 1915.
    On July 1, 1916, William B. H. Pool and Jessie Gr. B. Pool, his wife, executed a warranty deed to James H. McCollum to said 80 acres of land, which is also involved in this suit.
    The record shows that Philander Pool is now dead. The evidence as to whether or not William B. H. Pool was born as the fruits of the marriage of Philander Pool and Mary Pool will be stated and discussed under an appropriate heading in the opinion.
    On the 6th day of November, 1924, a decree was entered of record in which the court found that Philander Pool was dead; “that Mary Pool was eighty years of age; that William B. H. Pool was, at the time of the execution of the Billingsley deed and at the time of the filing of the suit herein, and at the time of the trial, the only child of Mary Pool; that plaintiff was the owner of the 80 acres of land described in the complaint, and Jessie Gr. B. Pool was the owner of the other 140 acres in controversy, subject to the estate for the life of Mary Pool; that the Yates oil and gas lease should be canceled; that the deeds from Mary Pool and Philander Pool to Eversmeyer and from Eversmeyer and. wife to Hein should be canceled, except as to the estate for the life of' Mary Pool; and that the plaintiff’s title to the 80 acres and the title of Jessie Gr. B. Pool to the 140 acres should be quieted and confirmed, subject to the said life estate; that the defendants, P. F. Hein and W. M. Kennedy, should be perpetually enjoined from cutting timber and crossties and committing waste on the plaintiff’s '80 acres; that in the exchange of lands the said P. F. Hein had paid the sum of $8,240 for the 220 acres, which sum was the agreed value of said 220 acres by and between, the said A. H. Eversmeyer and wife and P. F. Hein at the time of the sale and exchange of said lands, and that the agreed value of the Nevada County land, at the time of the sale and exchange, was $12,000; that, on account of the infirmities and failure of title of the Hempstead. County land, said P. F. Hein, had been damaged in the sum of $8,240, and was entitled to recover said sum from the said A. H. Eversmeyer and Hattie Eversmeyer, his wife. Decree was entered in accordance with said find-, ings, canceling said oil and gas lease and deeds, and quieting and confirming plaintiff’s title to the 80 acres and Jessie Gr. B. Pool’s title to the 140 acres, subject to said life estate, and perpetually enjoining the defendants, Hein and Kennedy, from cutting crossties- and timber or permitting waste on plaintiff’s said 80 acres, and rendering judgment against the defendant Hein in favor of plaintiff for $70.80, and rendering judgment against the defendants A- H. Eversmeyer and wife in favor of P. F. Hein on his cross-complaint for $8,240, and declaring the same to be a lien on the Nevada County land and said life estate in said Hempstead County land, .and ordering said land sold in. default in the payment of said sum, and for which execution might issue.”
    The case is here on appeal.

      Jobe & Jobe, for appellant.

      U, A. Gentry, for appellee,
   Hart, J.,

(after stating the facts). The decision of the chancellor is based upon the theory that the deed of T. E. Billingsley and wife to the 220 acres of land in Hempstead County, Arkansas, conveyed a life estate to Mary Pool with the remainder to Dr. W. H. B. Pool, who was found to be her son.

In the first place it is sought to reverse the decree upon the theory that the Billingsley deed conveyed the fee to Mary Pool, under the rule in Shelley’s Case, as declared in Hardage v. Stroope, 58 Ark. 303, and Ryan v. Ryan, 138 Ark. 362.

Mary Pool and Philander Pool, her husband, conveyed the land by warranty deed to A. H. Eversmeyer, and he iu turn conveyed it by warranty deed to P. F. Hein, who claims to be the present owner.

We do not think the rule in Shelley’s Case lias any application under the language of the Billingsley deed. In looking for the intention of the grantor we must be guided by the words which he has used, reading them iu the light of established principles of law. Under the terms of the deed of T. E. Billingsley, the entire fee in the 220 acres in controversy is conveyed. The fee is carved up into a life estate for the benefit of Mary Pool and her husband, Philander Pool,- with the remainder over to Dr. W. H. B. Pool, her child, and, in case of . his death before the life tenants, to other persous. It is clear from the language used that it was intended that Mary Pool and her husband should only have an estate during their natural lives, and that upon their death the land should go to the child or children born of Mary Pool, or the descendants of such child or children. The deed further provides that, if there be no child'or children or their descendants in existence at their -death, then the land should become the property of Nannie L. Mason, who was the child of Philander Pool by a former wife. Thus it appears from the language used that the words, “child or children born of Mary Pool or descendants of such child or children, ’ ’ meant the issue of Mary Pool living at her death, or at the death of her husband Philander Pool, and not the whole line of succession which would be included under the words, “heirs of the body, ’ ’ and the words used must necessarily be construed to be the words of purchase, and the rule in Shelley’s Case does not apply. The language of the deed clearly gives a life estate to Mary Pool, with the remainder over to her son, Dr. W* H. B. Pool, under the rule announced in the repeated decisions of this court. Horsley v. Hilburn, 44 Ark. 458; Watson v. Wolff-Goldman Realty Co., 95 Ark. 18; Georgia State Savings Association v. Dearing, 128 Ark. 149; and Gray v. McGuire, 140 Ark. 109, and cases cited.

The rule in Shelley’s Case is applicable only when the language used in the conveyance creates a limitation to the heirs of the grantor in general. If the -limitation is to the heirs of the body of the grantee, the rule in Shelley’s Case does not apply.

Philander Pool is dead, and Mary Pool is still alive. It follows then that the chancellor was correct in holding that only a life estate was conveyed to Mary Pool, and his holding that Dr. W. H. B. Pool is the remainderman depends upon whether the proof shows him to be the son of her marriage with Philander Pool.

On this phase of the case the testimony is in irreconcilable conflict.. Philander Pool and Mary Pool were both witnesses in the case, and both testified in positive language that Dr. W. H. B. Pool was not their son.

According to the testimony of Philander Pool, he was 76 years old when he testified in January, 1916, and he married Mary Pool in 1881. His wife had a miscarriage in 1885, and the attending physician persuaded him to take a child which he brought to his house, and tell his wife that it was a child born unto her. The child was less than twenty-four hours old wheu. the physician brought him there. They reared the child as their own, and always spoke of him as their son. Dr. W. B. H. Pool is the child in question. Mary Pool was of nearly the same age as her husband, and corroborated his testimony in the matter.

On the other hand, Dr. W. B. H. Pool testified that he was raised and educated by Philander Pool and Mary Fool, and was always told by them that he was their own son. There never was any intimation that such was not the case until his mother filed the suit in the Hempstead Chancery Court in 1915, which- had- for its object the reformation of the- Billingsley deed so as to vest title in fee simple in her to the 220 acres of land- in question.

U. L. Lovell, who worked for and boarded with the Pools when Dr. Pool was born, told in detail about being sent for the physician, and the birth of the child about seven o’clock in the morning. He worked with the.Pools for about eight months after this, and never heard any intimation that Dr. Pool was not the child of Mary Pool. He was present at the house after the physician was summoned, and does not think that any child could have been brought in and substituted as a child born of Mary Pool on that morning, without his knowledge.

Several other persons who lived in the neighborhood testified that' Dr. Pool was regarded as¡ the son of Mary Pool and Philander Pool, and that they never heard his birth questioned during his childhood.

When the petition for the division of the Kentucky land in the circuit court of Henderson County was filed, Mary Pool signed the petition in which Dr. Pool was represented to be the child of herself and her husband. At this time he was 27 years of age. The form of the deed used in the conveyance by Billingsley was expressly provided in the order of the court to be the same as that used in the deed to the Kentucky land. It was recognized by the parties that Mary Pool had only a life estate in the Henderson County, Kentucky, land. It would seem that this was the purpose in providing that the grantees should be described in the deed in the same way as they were described inthe'deedto the Kentucky land. Of course, it could make.no difference to Billingsley who the grantees were. He evidently executed the deed in the manner provided by the petitioners in the order they procured from the circuit court in Henderson County, Kentucky. To avoid the force of their action in the circuit court proceeding in Henderson County, Kentucky, Mary Pool and Philander Pool claimed that they were persuaded by false statements to make the deed, in this way.

In the first place, it may be stated that the attendant circumstances do not warrant such a finding, and .no statement whatever of what Dr. Pool said to cause them to sign a false application is testified to by them. In-the next place, no complaint was ma'de from the time this was done, which was in July, 1910, until Mary Pool instituted the chancery suit in Hempstead County, Arkansas, in September, 1915. The fact that the petitioners asked the Henderson Circuit Court to have two-thirds of the proceeds derived from the sale of the Henderson County land invested in the Hempstead County land and the .grantees to be described just as they were in the 'deed- to the Kentucky land, shows that the parties acted with .deliberation, and intended for their rights to 'become the same in the Arkansas, land as they were in the Kentucky land.

When all the attending facts and circumstances are considered, it cannot -be said that the finding of .the chancellor on this point is not sustained by a preponderance of the evidence.

Both A.» H. Eversmeyer and P. F. Hein have appealed to this court. The chancellor found that P. F. Hein was entitled to recover on his cross-complaint against A. H. Eversmeyer the sum of $8,240 as damages for the failure of his title.

It is insisted that this is wrong because Dr. Pool had only a contingent remainder in' the- land under the holding in Watson v. Wolff-Goldman Realty Co., 95 Ark. 18, and Liberty Central Trust Co. v. Vaughan, 167 Ark. 219, and cases cited. Certainly, when the deed was executed, it was uncertain who the remaindermen were, and it is not possible now to ascertain who they will be until the death of Mary Pool. Therefore, under the authorities cited, the remainder was contingent, and no. title passes to the contingent remaindermen until the happening of the contingency, and, strictly speaking, the recovery could not be had.

It is well settled, however, in this State that chancery cases are tried de novo upon the record made in the court below, and we do not think that the finding of the chancellor in this respect was against the weight of the evidence.

It appears from the evidence in the record that Mary Pool is over 80 years of age and is very feeble. Dr. Pool is in the prime of life, and is a married man. The record shows that he already ,has two minor children. P. F. Hein executed an oil and gas lease to the land in question under the belief that he had received a title in fee to the land in his deed from A. H. Eversmeyer, and this lease is canceled. When all these matters are considered, it is plain that the chancellor might have found that he had been already damaged in a sum at least as great as that found by him. Therefore the finding of the chancellor in this respect will be sustained.

Under the authorities above cited, and particularly that of Watson v. Wolff-Goldman Realty Co., 95 Ark. 18, James H. McCollum as the grantee of Dr. W. H. B. Pool as the contingent remainderman, and Jessie Gr. B. Pool as grantee of Dr. W. H. B. Pool, had the right to bring an action against P. P. Hein and the other defendants to prevent waste, but they had no right to have the title quieted in them, subject only to the life estate of Mary Pool. As above stated, no title passed to the contingent remaindermen until the happening of the contingency, which was, if their grantor was living at the time of the death of Mary Pool, and in the interim they would have no right to have the title quieted in themselves subject to the life estate of Mary Pool, because this would interfere with the rights of the two minor children of Dr. Pool, and possibly with the rights of appellants- It may be that Dr. Pool might die before his mother. In which event his two minor children. would become the contingent remaindermen, and tlie land would go to them at the death of the life tenant, Mary Pool. If the two minor children of Dr. Pool should die before the death of Mary Pool — a contingency which is possible — then Nannie L. Mason would become the remainderman, and, inasmuch as she has conveyed her interest in the land to Mary Pool, the life estate and the remainder would be merged.

For the error in entering a decree quieting the title in James H. McCollum and Jessie G. B. Pool, subject to the life estate of Mary Pool, the decree must be reversed, and the cause remanded with directions to render'a decree declaring them to be contingent remaindermen, as decided in this opinion. In all other respects the decision of the chancellor was correct, and the decree will be affirmed except as indicated.


source: Caselaw Access Project

license: Public Domain

text:
    Root Refineries v. Gay Oil Company.
    Opinion delivered May 17, 1926.
    1. Fraudulent conveyances — construction of bulk sales act.— Bulk Sales Act (Crawford & Moses’ Dig., § 4870), providing that the sale in bulk of any part or the whole of a stock of merchandise and the fixtures pertaining to the conduct of any such business, otherwise than in the ordinary course of trade and the ordinary prosecution of the business of the seller, shall be void as against creditors of the seller, unless the terms of the act are complied with, held comprehensive enough to protect the creditors of wholesale as well as retail merchants.
    2. Fraudulent conveyances — bulk sales act — merchandise.— Merchandise, under the Bulk Sales Act, means something that is sold every day, and is constantly going out of the store and being replaced by other goods.
    3. Fraudulent conveyances — bulk sales act — merchant.—A company engaged in refining crude oil into gasoline and other products and in selling such products from day to day in the same way that they are sold by merchants is a dealer in merchandise within the Bulk Sales Act.
    Appeal from Pulaski Circuit Court; Richard M. Mann, Judge;
    affirmed.

      STATEMENT OF FACTS.
    This is an action instituted in the circuit court by the Boot Befineries against the Gay Oil Company to recover the sum of $2,253.88, the invoice price of two cars of gasoline and one car of fuel oil.
    The defendant filed an answer in which it denied that it purchased the goods sued for from the Boot Befineries. It avers the facts to be that it purchased the gasoline and fuel oil in question from the Petroleum Products Company, and alleges that the company is indebted to it in the sum of $3,217.18, and pleads the same as a set-off. The defendant also alleges that the plaintiff is indebted to it in.the sum of $61.66 for merchandise.
    The record shows that on July 21, 1921, the Petroleum Products Company made a contract with the Bose City Cotton Oil Company of Little Bock to furnish it with fuel oil. The Petroleum Products Company made an agreement with the Gay Oil Company, whereby it was to carry out its contract with the Bose City Cotton Oil Company. By the terms of the contract the Petroleum Products Company was to furnish fuel oil to the Bose City Cotton Oil Company for a stipulated period of time, and the contract contained a provision by which the Petroleum Products Company guaranteed that the cost of the /fuel oil furnished would not exceed the cost of coal. The Petroleum Products Company made an agreement with the Gay Oil Company by which the latter should furnish the fuel oil to the Bose City Cotton Oil Company for it under its contract. The fuel oil was furnished by the Petroleum Products Company to the Bose City Cotton Oil Company, and payments were made from time to time. During the months of October and November, 1921, the amount of fuel oil furnished invoiced $3,217.98. The fuel oil thus furnished exceeded the cost of coal, and for this reason the Bose City Cotton Oil Company declined to pay it. In the month of December, 1921, the Gay Oil Company, in the regular course of'business, purchased from the Petroleum Products Company the gasoline and oil sued for in this case, amounting to $2,253.81. Subsequently the Petroleum Products Company sold its physical properties, plant, refinery and real estate to the Root Refineries for a consideration of $130,000. It only retained its stock of oil on hand, which invoiced about $10,000.
    According to the evidence for the plaintiff, it notified the Gay Oil Company of the purchase of' the property of the Petroleum Products Company, and told the Gay Oil Company that it would fill its orders with the Petroleum Products Company for the two cars of ghsoliile and one car of fuel oil, provided the account was paid promptly, and that there would be no counterclaim on account of the alleged contract of guaranty between the Petroleum Products Company and the Rose City Cotton Oil Company, and the Gay Oil Company.
    According to the evidence for the defendant, it thought that the Petroleum Products Company had shipped it the two cars of gasoline and one car of fuel oil, and did not know the Root Refineries in the transaction at all. In other words, the Gay Oil Company did not know that the Root Refineries had purchased the property of the Petroleum Products Company until after the two cars of gasoline and one car of fuel oil had been shipped to it under the order sent to the Petroleum Products Company.
    The jury found against the plaintiff on its claim, and brought in a verdict in favor of the defendant for the amount by which its set-off against the Petroleum Products Company exceeded the claim of the Root Refineries.
    From a judgment against it in favor of the Gay Oil Company for said amount the Root Refineries has duly prosecuted an appeal to this court.

      Rogers, Barber S Henry, for appellant.

      Moore, Smith, Moore & Trieber and Geo. A. McConnell, for appellee.
   Hart, J.,

(after stating the facts). It is conceded that the claim of the plaintiff was submitted to the jury upon proper instructions and that it is concluded by the verdict of the jury as to the account sued on by it.

It is claimed, however, that there is nothing in the record to show that the plaintiff assumed the debts and liabilities of the Petroleum Products Company, and that it is not liable to the defendant for any claim it might have against the Petroleum Products Company. 'This is true, but the liability attaches on other grounds.

The Petroleum Products Company sold and conveyed its business and all its property used in connection therewith to the Root Refineries for the sum of $130,000. It only reserved from the sale about $10,000 worth of oil, which it had in stock. It went out of business, and the Root Refineries succeeded to its business and operating plant. This summary sale of the business of the Petroleum Products Company to the Root Refineries was not in the ordinary course of business, and the transaction falls within the prohibition of our Bulk Sales Law., That statute provides that the sale in bulk of any part of, or the whole of, a stock of merchandise and the fixtures pertaining to the conduct of any such business, otherwise than in the ordinary course of trade and in the ordinary prosecution of the business of the seller, shall be void against the creditors of the seller unless the terms of the act are complied with. The language of the act is very broad and comprehensive, and by its terms protects all creditors of merchants alike.

The court has held that the language of the statute is sufficiently broad and comprehensive to protect the creditors of wholesale merchants as well as the creditors of retail merchants. North American Provision Co. v. Fischer Lime & Cement Co., 168 Ark. 106.

No attempt was made to comply with the provisions of our Bulk Sales Law. The Petroleum Products Company sold practically all of its business, including1 its fixtures, to the Root Refineries for $130,000, which is a sum greatly in excess of the claim of the defendant. No other claim has been proved against the Petroleum Products Company. Therefore the assets received by the Root Refineries are far in excess of the claim of the Gay Oil Company.

In reaching this conclusion we are not unmindful that in Robbins v. Fuller, 148 Ark. 173, it was held that our Bulk Sales statute refers to the trade fixtures connected with the business, and not to the building in which the business is carried on.

The record shows that the Root Refineries bought the physical properties of the Petroleum Products Company for $130,000. This included the real estate, trade fixtures and all the remainder of its property except a stock of oil which invoiced about $10,000. The Petroleum Products Company was engaged in refining oil and selling gas, oil, fuel oil, gasoline and naphtha. "While there was no separate valuation of the trade fixtures, in the very nature of things it is inferable that they were worth more than the amount of the claim of the Gay Oil Company, which is the only one proved in this case.

In this connection it may be stated that in Ramey-Milburn Co. v. Sevick, 159 Ark. 358, it was held that a person operating a veneer mill and sawmills, at which logs were manufactured into lumber and then sold, is not within the purview of our Bulk Sales statute, though he sells substantially all the lumber he has on hand at a particular time. The reason is that the sale of the lumber was only an incident to the operation of the manufacturing plant.

On the other hand, if the main business of Sevick had been to operate a lumber yard, the sale in bulk of his lumber and trade fixtures would have fallen under the ban of the statute, although he might have operated a sawmill and a veneer mill for the purpose of supplying, in whole or in part, stock for his lumber yard.

Merchandise means something that is sold every day, and is constantly going out of the store and being replaced by other goods. Boise Association of Credit Men v. Ellis, 26 Idaho 438, 144 Pac. 6 L. R. A. 1915E, 917. Such is the effect of our holding in Fisk Rubber Co., Inc., v. Hinson Auto Co., 168 Ark. 418, where it was held that an automobile repair shop did not fall within the prohibition of the statute, although there were occasional sales of the various accessories which were kept for the purpose of repairing cars. The reason given was that the principal business of the company was repair work, and the supplies were carried for use in that business. The court said that the occasional sales of supplies constituted an inconsequential part of the principal business.

The Petroleum Products Company was refining crude oil, which it purchased, into the various products above enumerated and selling the same from day to day in precisely the same manner as other articles of commerce are bought and sold in trade by merchants. II was doing something more than selling its products as a necessary incident to refining oil. It was engaged in selling its various products in the same way that they are sold by merchants. The record shows that it was making contracts with various companies to supply them with such products as it sold. It made a contract with the Gay Oil Company to carry out some of its contracts which it had made with other companies. When the record is construed as a whole, it shows that the Petroleum Products Company was carrying on a business or trade in merchandise, and that it was not merely engaged in refining oil and selling the refined products as an incident to its main business. Hence the Petroleum Products Company fell within the ban of the statute when it sold its trade fixtures in connection with its other property.

The proof fully established the claim of the defendant against the Petroleum Products Company. Hence the court properly rendered judgment in favor of the defendant against the plaintiff for the amount its claim exceeded the claim of the plaintiff.

It follows that the judgment will be affirmed.


author: Hart, J.

text:
    Bankers' Reserve Life Company v. Crowley.
    Opinion delivered May 17, 1926.
    1. Insurance — effect of false representation. — Where answers in an application for life insurance constituted merely representations, a misrepresentation or omission to answer will not avoid the policy unless willfuly or knowingly made with intent to deceive.
    2. ’ Insurance — false representations — knowledge of agent.— A life insurance company will be bound by a policy where the insured made false representations as to his physical condition, if the agent soliciting the insurance was charged with the duty of writing the data concerning the applicant’s physical condition, and, in the course of the examination, learned the applicant’s true condition.
    3. Insurance — fraud in procurement of policy. — If an insurance agent, in collusion with an applicant, even though acting within . the apparent scope of his authority, perpetrates a fraud upon the insurance company iby making false and fraudulent representations upon which the insurance is obtained, such fraud will vitiate the policy.
    4. Insurance — fraud—burden of proof. — The burden of proving that a life insurance policy was procured by fraud is upon the insurer.
    5. Insurance — penalty and attorney’s fees. — The twelve per cent, penalty allowed by Crawford & Moses’ Dig., § 6155, is given as damages for a failure to comply with the contract of payment, and the attorney’s fee is allowed as compensation for the cost of collecting the debt; and such penalty and attorney’s fee are collectable in a chancery court as in any other court.
    Appeal from Greene Chancery Court; J. M. Fwtrell, Chancellor;
    reversed in part.

      Huddleston d> Little, for appellant.

      Jeff Bratton, for appellee.
   Hart, J.

This is a suit in equity by the Bankers’ Reserve Life Company against J. L. Crowley, adminis trator of the estate of Elizabeth Crowley, deceased, to cancel a policy of insurance in the sum of $5,000 issued by plaintiff on the 30th day of July, 1923, on the life of Elizabeth Crowley, in which her executor or administrator is named as the beneficiary. The ground on which the policy is sought to be canceled is that the insured gave false answers in her application for insurance to the following questions:

“13. Name below all causes for which you have consulted a physician in the last ten years: Illness, flu. Number of attacks, 1. Date, Dec. 1922. .Severity and duration, five days. Any remaining effects? No. Attending physician name and address. W. J. Blackwood, Walcott, Ark. 14. Are you in good health as far as you know and believe ? Yes. 15. Has any medical examiner or physician formally or informally expressed an unfavorable opinion as to your insurability or health? No. 16. Have you had, or been advised to have, any surgical operation? No. 17. Have you ever been under observation, care, or treatment in any hospital, sanatorium, asylum, or similar institution? No. 21. Have you now, or have you ever had, any other disease or any injury? Give details, dates, and names and addresses of doctors consulted. No.”

J. L. 'Crowley, the husband of Elizabeth Crowley, was appointed administrator of her estate, and filed an answer and cross-complaint against the insurance company, in which he denied the allegations of the complaint, and asked for judgment against the insurance company in the sum of $5,000 with.interest from the 13th day of November, 1923, at six per cent.; for 12 per cent, penalty, and for reasonable attorney’s fees, costs, and all other general relief.

The record contains a stipulation between counsel for the plaintiff and defendant as follows:

“It is undisputed that questions numbered 13 to 17 inclusive and question number 21 were propounded to the assured in the form set out in the complaint and that she gave the answers thereto in the form set out in, the complaint, and the only question at issue in this lawsuit is as to whether the answers to these questions, or any of them, were false at the time and were known by the assured then and there to be false, and whether they were made with the false and fraudulent purpose and intent to deceive the plaintiff company, and did in fact deceive plaintiff company and cause it to issue the policy in question.
“It is undisputed that the policy mentioned and described in the complaint was delivered to the deceased on or about .September 1,19;23, and that she departed this life intestate while a resident of Greene County, Arkansas, on or about November 13,1923, and that J. L. Crowley is the duly appointed, qualified and acting administrator of said estate.
“The above and foregoing facts are undisputed, and it will not be necessary to formally introduce the application for insurance, medical examination made by Dr. W. J. Blackwood, the policy itself, nor the appointment of J. L. 'Crowley as administrator, it being agreed and understood that each of these instruments may be considered by the court as though formally introduced and identified.”

After hearing the testimony in the case, the chancellor found the issue on the question of false representations in favor of the defendant. It was therefore decreed that the complaint of the paintiff should be dismissed for want of equity and that the defendant recover from the plaintiff the sum of $5,000, with accrued interest. The defendant, however, was denied a recovery on his claim under the statute for penalty and attorney’s fees.

The plaintiff has duly prosecuted an appeal from that part of the decree allowing a recovery against it. The defendant has taken a cross-appeal from that part of the decree refusing to allow twelve per cent, damages and attorney’s fees allowed under § 6155 of Crawford & Moses’ Digest.

It is expressly agreed that the answers of the applicant copied above are representations and not warranties. In this connection it may be stated that a noncompliance with a warranty operates as an express breach of the contract of insurance, while false representations render the policy void on the ground of fraud. The questions propounded in the application as set out above call for answers founded on the knowledge or belief of the applicant, and a misrepresentation or omission will not'avoid the policy unless willfully or knowingly made with an intent to deceive. Metropolitan Life Ins. Co. v. Johnson, 105 Ark. 101.

In Mutual Aid Union v. Blacknall, 129 Ark. 450, it was held that knowledge affecting the rights of the insured, which comes to the agent of the insurance company while he is performing the duties of his agency in receiving applications for insurance and delivering policies, becomes the knowledge of the company; and the insurance company is bound thereby, where the agent who solicited the business was charged -with the duty of asking the applicant questions concerning his physical condition.

It was further held that a life insurance company will be bound under a policy of life insurance where the applicant and insured made false statements concerning his physical condition, where the agent soliciting the insurance was also charged with the duty of writing the data concerning the applicant’s physical condition, and where the agent, in the course of the examination, learned the applicant’s true condition.

It was also held that if an agent, in collusion with the applicant, even though acting within the apparent scope of his authority, perpetrates a fraud upon the insurance company by making false and fraudulent representations upon which the insurance is obtained, such fraud -will vitiate the policy.

The rule established in these cases was expressly reaffirmed in Home Mutual Benefit Association v. Mayfield, 142 Ark. 240, and Missouri State Life Insurance Co. v. Witt, 161 Ark. 148.

In the present case Dr. W. J. Blackwood acted for the company in taking the application for insurance and in writing down the answers of the applicant copied above, and also in the medical examination of her. He was likewise the physician of the applicant before she applied for the insurance. Hence, under the principles of law above announced, in order to cancel tbe policy and defeat an action on it, it was necessary for the company to prove that the statements and answers as written in the application were false, and that they were intentionally so made by the assured, and that the insurance company relied and acted upon such statements, or that the insured and Dr. Blackwood, as agent of the company, acted collusively in the matter for the purpose of securing the insurance.

In this conection it may be also stated that, under these authorities, the burden of proof of establishing the fraud was upon the insurance company, and, under our rules of practice, findings of fact by a chancery court are allowed to stand upon appeal unless they are clearly against t'he preponderance of the evidence.

The record shows that Dr. W. J. Blackwood was the agent of the company in taking the application of Mrs. Elizabeth Crowley for insurance. According to his testimony, he had been, given blanks ¡by the agent of the insurance company for the purpose of soliciting insurance. He was also the local medical examiner of the company, and made the medical examination of Mrs. Elizabeth Crowley on the 17th day of July, 1923, and the policy was delivered to her on the 30th day of July, 1923. The premium amounted to $219, and a note for that amount was given, sighed by J. L. Crowley, the husband of the insured, and by Dr. Blackwood and another person.

J. L. Crowley and Mrs. Elizabeth Crowley, his wife, were tenant- farmers in Greene County, Arkansas. On .the 12th day of October, 1923, Mr. Crowley carried his wife to Dr. Olive Wilson of Paragould, Greene County, Arkansas, for examination.. According to her testimony,' Mrs. Crowley gave her a history of having been sick at intervals for four or five years. .She stated that she had had attacks of intense pain in the region of her gall bladder and over her appendix and pelvis. She said that the pains came to her quite often. An examination showed that Mrs. Crowley was very tender -over the gall bladder and over the appendix and over the ovaries. According to the doctor, Mrs. Crowley had been suffering from the date of the birth of her last child. The doctor also stated that she could not say that Mrs. Crowley had gallstones at the time she examined her, but she thought of it. She told Mrs. Crowley that nothing would do her any good, and that an operation would be all that would relieve her pain. She thought that an operation was absolutely imperative. Dr. Wilson also stated that, in her opinion, it would have been impossible, from the condition she found, for Mrs. Crowley’s ailment to have been only of six weeks’ duration. Basing her judgment solely upon her examination, she is of the opinion that the condition of the gall bladder and the appendix could not have resulted within sixty days ’ time.

Mr. Crowley then carried his wife to the Baptist Memorial Hospital at Memphis, Tennessee, and on November 8, 1923, she was operated on by Dr. J. W. Bodley. In giving the history of herself she stated at the hospital that she had suffered with irregular attacks of pain in the region of the right shoulder blade, accompanied by indigestion; that these attacks had commenced about six years before and had become more frequent during the three months preceding her entrance to the hospital.

We copy from the testimony of Dr.. Bodley the following:

“Q. Is there anything in that operative record to indicate how long she had been suffering from the diseases.from which,she died? A. No, it is something you can’t tell. It is impossible for anybody to tell how long it had existed. It probably had existed for a very long time. Gallstones very often exist for life without symptoms. You may have them and I may have them, and you have no reason at all to consider that you are diseased. On the other hand, you might have a gallstone that might have recently been formed, or it anight have been there for life, which would suddenly start to giving you trouble and continue to do so until removed. Now, I will state, however, that the condition at the time of this operation was snch that no one could have, lived with it for a great length of time without interference.; that she may-have had a gall bladder disease all her life, so far as I could tell, or any one else, but the condition of her liver was acute; it was the toxic absorption from this liver, I believe, killed her. Q. How long do .you think the liver had been in that condition? A. She could not have lived very long with her liver in that condition. It might have been 3 or 4 days or it might have been a week.”

Mrs. Crowley died on, the 13th day of November, 1923. She was operated on for the removal of the gall bladder and the appendix. She was suffering from chronic gall bladder affection and chronic appendicitis at the time she was received in the hospital. According to the physicians at the hospital, indigestion is the symptom of either a diseased gall bladder, a diseased appendix, or a diseased intestine. It is also the opinion of these physicians that Mrs. Crowley had been suffering-from the diseases from which she died for several years; probably six years.

J. M. Rhea, a fire insurance agent, testified that he had a conversation with Dr. W. J. Blackwood with reference to the suit of the" Bankers’ Reserve Life Company to cancel the policy in question on the life of Mrs. Elizabeth Crowley.' This conversation occurred- on the 6th day of March, 1924. Dr. Blackwood asked him to see a certain attorney at Jonesboro and find, out for what he would take the case for the defendant, and to write him.

Dr. Bláckwood denied having had any such conversation with the witness Rhea, and denied having any interest whatever in the case. According to his testimony, and that of his two brothers, who are also physicians, J. M. Rhea, was a drug addict. Rhea admitted having once been addicted to the use of morphine, but claimed that he had not used any, except in case of sickness, since the year 1918.

Several other witnesses for the plaintiff testified that Mrs, Elizabeth Crowley was sick in the first part of July, 1923, and two of them stated that Dr. Black-wood had been her attending physician.

One witness testified that Mrs. Elizabeth Crowley had told her early in July, 1923, that she was suffering from gallstone colic.

Several other witnesses testified that she was sick for several days in the first part of July, and complained that her neighbors had not come to see her while shi was sick. One of them said that Mr. Crowley had sent him for Dr. Blackwood.

Dr. J. W, Blackwood was a witness for the defendant. He denied having told any one that Mrs. Elizabeth Crowley was suffering from an attack of gallstones in the first part of July, 1923, and that he had been called as a physician to treat her at that time, "as testified by one witness for the plaintiff. According to his testimony, he had known Mrs. Elizabeth Crowley for seven or eight years, and was called to see her as a physician in December, 1922, and treated her for influenza. At that time he probably made three or four visits to see her. Mrs. Crowley was taken sick in the fall of 1923, and Dr. Blackwood was called to treat her. He found her suffering from ptomaine poison. Her bowels were running off profusely, and she was vomiting. There, was nothing at that time which indicated that she had either a diseased gall bladder or gallstones. Two weeks later, after she had recovered from the ptomaine poison, he was again called to see her. She had a high fever, and examination disclosed that she had an infection of the gall bladder following the ptomaine poison. Dr. Blackwood treated Mrs. Crowley for the infected gall bladder, but advised her husband not to have her operated on. Dr. Blackwood did not know that Mr. Crowley had carried her to Memphis to be operated on until after her death.

According to this witness, the diseased gall bladder could have become chronic in eight or ten days. He also said that a person may have gallstones and not know it, and live a lifetime and die with something else. Dr. Blackwood stated that Mrs. Crowley had the appearance of ¡being a very healthy woman, and denied in positive terms that there was any collusion whatever between him and Mr. Crowley or his wife in taking the application, of insurance in question. He stated positively that s'he did not have gallstones or a diseased gall bladder at the time he examined her for insurance.

J.. L. Crowley was also a witness for the defendant. He denied any knowledge that his wife was suffering with gallstones or a diseased gall bladder at the time the policy of insurance in question was applied for. He remembers about his wife being sick in the first part of July, but states that she only had a chill, and was in bed a day or two at the time. He did not know that his wife was suffering with an infection of her gall bladder until Dr. Blackwood treated her in the fall of 1923. Dr. Blackwood advised against an operation. He then carried his wife to Dr. Wilson, and she diagnosed the case as gall bladder infection, and advised an operation. He took his wife to Memphis on November 8, 1923, where she was operated on, and she died four days later. His wife had chills, headaches, and bad colds, but appeared to be a stout, healthy woman.

According to the testimony of Dr. W. P. Hutchins, he went to examine Mrs. Crowley on the 23rd day of August, 1923, as an agent for an insurance company. She was apparently in good health so far as he could tell from the examination that he made of her. He did not complete his examination, because her husband said that he would not take out any more insurance on her life.

More than a dozen witnesses who were neighbors of the Crowleys testified that Mrs. Crowley was a stout healthy-looking woman, and that they never heard of her being afflicted with any chronic ailment. They denied that she had any sick spell of any consequence in the first part of July, 1923. Some of them were visiting at the house every day, and said that her complexion was good and that she looted well. As some of them expressed it, she was tolerably heavy, and generally her face was red and robust.

The testimony is very lengthy, and it is not practical to set it out at length.

The chancellor made a finding in favor of the defendant; and in considering this case we must bear in mind that the plaintiff is not seeking to cancel the policy on the ground that the insured died of a disease she had prior to the execution of the contract of insurance and which she Avarranted that she did not have, but upon the ground that, when the plaintiff, for the purpose of ascertaining whether it would issue a policy upon her life, asked Mrs..“Crowley certain questions which are copied above, she answered them falsely with the intent to deceive the plaintiff company and thereby induce it to issue the policy sued on.

To prove its case, the plaintiff has established by a number of physicians that, in their opinion,-Mrs. Crowley had been suffering Avith gallstones for several years before she applied for the contract of insurance in question. This testimony falls short, howeArer, of establishing as a fact that her answers to the questions copied above were false and that they were so made for the purpose of inducing the company to issue the policy sued on, regardless of their truth. All of her neighbors testified that she was a stout, healthy-looking Avoman. It is true that she had had sick spells from time to time and, as she expressed it at the hospital in Memphis, she had suffered from indigestion. There is nothing to indicate, however, that she knew that she was suffering from gallstones at the time she applied for the policy in question. Her conduct and that of her husband when she became ill in the fall tends to show that she had not before that time appreciated the fact that she had any serious ailment. During the course of her previous ailments she had been in bed a day or two, and then recovered. Her condition appeared more serious in the fall, and her husband sent for Dr. Blackwoods He first treated ¡her for ptomaine poison. She apparently recovered from that, and in two weeks became quite sick again. Dr. Blackwood was again called in, and decided that she was suffering from an infection of the gall bladder, which he attributed to the ptomaine poison. He told the husband that an operation was not necessary, and that his wife would get all right. Mr. Crowley and his wife appear to have not been satisfied with this diagnosis, but immediately went to Dr. Wilson at Paragould, Arkansas, to be examined. After examining Mrs.. Crowley, Dr. Wilson advised an operation, and Mr. Crowley carried his wife to Memphis for that purpose.

If there had been collusion between Crowley and his wife and- Dr. Blackwood to secure the policy sued on, or previous knowledge on their part that she was suffering from a serious infection of the gall bladder, it does not seem that Crowley and his wife would have gone to Dr. Wilson and subsequently to the hospital at Memphis, without at least consulting with Dr. Blaekvrood. The conduct of 'Crowley and of his wife, after she became sick in the fall of 1923, indicates that this was "the first time they had knowledge ór belief that she had any serious ailment. Before that time she had either treated herself for her periodic spells of sickness, as is quite common, or she had merely called in the family physician. The facts in the record do not reflect that either she or her husband had any knowledge or intimation, that she was suffering from a serious ailment prior to her attack in the fall of 1923- All the physicians testify that a person might suffer with gallstones for a long time without knowing it, and Dr. Wilson was not sure that Mrs. Crowley had gallstones when he examined her in the fall of 1923.

Dr. Blackwood and his two brothers, who are also physicians, testified that the witness Rhea was addicted to the use of morphine, and was unreliable. Dr. Black-wood denied in positive terms that he had talked with Rhea about employing an attorney to represent Crowley in the case at bar. Even if the facts testified to by Rhea are true, it would not have much probative force to establish collusion on the part of Crowley and his wife. Dr. Blackwood might have known, from his examination, that Mrs- Crowley was suffering from gallstones, and might have concealed that fact from her, because he was not only ácting as medical examiner for the company, but was also empowered to solicit applications for insurance and to be paid therefor. Then too he might have become angry because the insurance company was seeking to cancel the policy on account of his alleged fraud in securing it, and for that reason was anxious for Crowley to win the case. In any event, there must :be sufficient evidence adduced by the insurance company to show collusion between D'r. Blackwood and the Crowleys in the matter, or that Mrs. 'Crowley made false answers to the questions propounded to her in her application for the purpose of deceiving the insurance company as to her physical condition and thereby induce it to issue a policy of insurance npon her life. Upon the whole case, we are of the opinion that the chancellor’s finding, that the plaintiff failed to meet the burden of proof of the falsity of the representations, within the meaning of the law, as above announced, was sustained by the evidence, and for that reason it should not be disturbed on appeal.

Upon the cross-appeal we think the chancellor was wrong in not allowing twelve per cent, damages, together with a reasonable attorney’s fee for the prosecution..and collection of the loss, as provided in % 6155 of Crawford & Moses’ Digest. It is true, as held in Federal Union Surety Co. v. Flemister, 95 Ark. 389, that no recovery could be had under this statute in the application of the general rule that a chancery court will not enforce penalties except under very peculiar circumstances, which were not presented in that case. There a suit was instituted in behalf of policyholders for the appointment of an ancillary receiver to take charge of the assets of an insurance company in this State, on the ground that a general receiver liad been appointed in the State of Nebraska to take charge of the assets of the company and to wind np its affairs on the ground of insolvency. All parties having claims voluntarily submitted themselves to the jurisdiction of the chancery court, and the liability of the Federal Union 'Surety Company as surety on the bond of the insurance company was treated by the parties and by the chancery court as an asset of the insurance company in this State. There the main purpose of the suit was the appointment of the. ancillary receiver to aid in winding up the affairs of the insurance company in the chancery court, and the filing of the claims was but an incident to the main suit.

In the case at bar the suit was commenced in equity by the insurance company to cancel a policy of life insurance after the death of the insured on the ground of fraudulent misrepresentation on. the part of the insured in the procurement of the insurance, and a cross-bill was filed by the administrator of the estate of the deceased policyholder to recover the amount of the insurance provided in the policy. There was a recovery for the full amount of the policy.

The twelve per cent, allowed by the statute is given as damages for failure to comply with the contract of payment, and the attorney’s fee is allowed as compensation for the cost of collecting the debt. Mutual Life Ins. Co. v. Owen, 111 Ark. 554.

It is settled by our previous cases that contracts of insurance, from their very nature, are susceptible of classification apart from other contracts, and, under ordinary circumstances, the damages and attorney’s fees are as collectible in a chancery court as in. any other court. It is only under peculiar circumstances, as in the ease under consideration, that a court of chancery will refuse to allow the damages and attorney’s fees provided by the statute, as was the case in Mass. Bond & Ins. Co. v. Home L. & A. Co., 119 Ark. 102, and cases cited.

The chancellor should have allowed twelve per cent, of the amount of the recovery, as provided by the statute, and a reasonable attorney’s fee. We think that $500 for services in the court below and $100 for services in this court would have been a reasonable attorney’s fee.

The result of our views is that the decree of the chancellor allowing a recovery for the amount sued for in behalf of the defendant will be affirmed; and that part of the decree refusing to allow the twelve per cent, damages or penalty and a reasonable attorney’s fee, as provided in § 6155 of Crawford & Moses’ Digest, will be reversed, and judgment will be entered here for the amount indicated in the opinion.

It is so ordered.


author: Smith, J.

text:
    Roberts v. Tatum.
    Opinion delivered May 17, 1926.
    1. Contempt — sufficiency of citation. — A citation for contempt which orders the alleged contemnor to appear in court and show cause why he should not be punished for contempt of court in running off a witness in a certain case, without stating the facts constituting the offense or the court against which the contempt is alleged to have been committed, is insufficient.
    2. Contempt — jurisdiction.—A court of the Port Smith District of Sebastian County has no jurisdiction to punish a contempt committed against a court of the Greenwood District of the same county.
    3. Prohibition — scope of inquiry. — On an application for a writ of prohibition, the inquiry is limited to consideration of jurisdiction.
    4. Prohibition — necessity of objection to jurisdiction. — Objection in the lower court to its exercise ©f jurisdiction is not a jurisdictional fact upon which the power to issue a writ of prohibition depends, but is discretionary and unnecessary where it would obviously be futile and would result in unnecessary or hurtful delay.
    Prohibition to Sebastian Circuit Court, Port Smith District; John E. Tatum, Judge;
    prohibition granted.

      Carmichael & Hendricks and Evans é Evans, for appellant.

      H. W. Applegate, Attorney General, and John L. Carter, Assistant, for appellee.
   Smith, J.

John P. Roberts has filed a petition for a writ of prohibition, which contains the following recitals and allegations: On March 22, 1926, there .was pending in the circuit court for the Greenwood District of Sebastian County an indictment for burglary and grand larceny against one Neal Fuller, but the circuit court for that district of the county was not then in session. The circuit court for the Fort Smith District of Sebastián County was in session on that day. The court for the Greenwood District had been adjourned until March 26, 1926, at which time an adjourned session of the court was to be held, and the indictment against Neal Fuller, charged with burglary and grand larceny, had been set for trial on that day.

On June 29, 1925, one Hubert Smith was convicted in the circuit court for the Fort Smith District of Sebastian 'County on an indictment charging him with receiving stolen property. An appeal was prosecuted to this court, and on November 23, 1925, the judgment of the lower court was affirmed. Petitioner is a practicing attorney, and in that capacity represented the said Smith, ■and was one of the sureties on his bond on the appeal to the Supreme Court.

On March 22,1926, the said Smith came to petitioner, -as his attorney and bondsman, and requested petitioner to accompany him'to the penitentiary, where he desired to surrender himself, and petitioner accompanied the said Smith to Little Rock, where he was surrendered to the penitentiary authorities. The said. Smith was at the time under subpoena as a witness in the case of State v. Neal Fuller, pending in the circuit coiirt for the Greenwood District of Sebastian County, but was not a witness in any casé pending in the Fort Smith District of the county.

On April 1, 1926, the Honorable John E. Tatnm, the regular presiding judge of the Twelfth Judicial Circuit, of which Sebastian County is a part, sitting as the presiding judge of the circuit court for the Fort Smith District of Sebastian County, caused the following order to be entered of record:

“In the Sebastian Circuit Court, Fort Smith District.
“State of Arkansas, plaintiff, v. John P. Roberts, defendant. — No. 9070.
Contempt op Court.
“ ‘4-1-26. Ordered that a citation issue for John P. Roberts to appear on the 6th day of April, 1926, at 1 p. m., to show cause, if any he has, why he should not be punished for contempt of court, for running the witness Hubert Smith, who had been duly subpoenaed to appear in the case of State of Arkansas v. Neal Fuller.’ ”

Pursuant to this order, the clerk of the court issued a citation to petitioner to appear in the circuit court for the Fort Smith District of Sebastian County on the 6th day of April, 1926, to answer the charge of contempt alleged to have been committed by him by running off Hubert Smith, a witness for the State in the case of the State of Arkansas v. Neal Fuller.

After denying that he was guilty of running the witness off, petitioner alleged that the circuit court for the Fort Smith District of Sebastian County had no jurisdiction to try the petitioner for said alleged contempt, for the reasons, (a) that no sufficient statement in waiting was filed or made against petitioner before the issuance and service of citation, and (b) that the said Hubert Smith was not a witness in any case pending in the circuit court for the Fort Smith District of Sebastian County, out of which the citation issued, but was a witness in a case pending in the circuit court for the Greenwood District. It was therefore alleged that, if any contempt was committed, it was against the circuit court for the Greenwood District, of which the circuit court sitting in the Fort Smith District had no jurisdiction.

It was further alleged by petitioner that, notwithstanding this lack of jurisdiction, the circuit court for the Fort Smith District would, unless restrained, proceed, on the said 6th day of April, 1926, to try and punish petitioner by fine and imprisonment for said alleged contempt.

Pending the hearing of the petition a temporary restraining order was issued suspending the proceedings of the court below.

A response has been filed by the judge of the court, in which the facts just summarized are set out in detail. It appears from this response, in an unmistakable way, that the circuit judge is of the opinion not only that he has jurisdiction to try and punish petitioner, but also that appellant was guilty of contempt of his court.

The case of CarlLee v. State, 102 Ark. 122, has become the leading case in this State on the practice in contempt cases, and has been followed and quoted from in several decisions since rendered.. It was there said: “Under our system of procedure, the accused is entitled to be informed with reasonable certainty of the facts constituting the offense with which he is charged and an opportunity to make defense thereto — his day in court.”

We have concluded that the order of the court upon which the citation issued, and which we have set out in full, is insufficient in form to meet this requirement. There is no special form in which an order of citation must appear, but, whatever its form, it must be sufficiently definite to apprise the party accused with reasonable certainty of the nature of the charge against him, so that an opportunity will be afforded to make defense thereto.

The order fails to state the court against which the petitioner was guilty of contempt, and if it be said that the presumption is that it wias against the court which issued the citation, it may be answered that this is a jurisdictional requirement, and the accusation should not rest upon a mere presumption. The reason for this •requirement is shown by the facts of this case. As a matter of fact, petitioner is not charged with defying the process of the circuit court for the Fort Smith District — the court which made the order — yet, if a presumption, instead of an affirmative recital, were sufficient, he would be misled in making his defense.

We conclude therefore that the order of citation was insufficient to meet the requirement announced in the CarlLee case, supra.

It is quite apparent from the response hied in this cause that the judge of the Twelfth Circuit, who presides in both districts of Sebastian County, is under the misapprehension that he had the jurisdiction to cite appellant to appear in the Fort Smith District, although the alleged contempt was committed against the circuit court of the 'Greenwood District. We think it therefore not inappropriate to say that the learned judge is mistaken in this. It is true that he is the judge of both courts, but the alleged contempt is the defiance or circumvention of the orders of the court, and the court thus alleged to have been offended against is that of the Greenwood District, and ary proceeding to punish for contempt of that court would have to be in that court, and not in another and different court.

The circuit court for the Fort Smith District is one court, and that of the Greenwood District is another. They are separate and distinct. Each has the right to protect its own authority and enforce its own process and to punish contemptuous disobedience thereof; but neither has the jurisdiction to perform that service for the other. Citation for contempt must issue out of the court offended against.

We do not consider whether petitioner is guilty of contempt of either court under the facts alleged in the petition and the response, as this is an application for prohibition, and our inquiry in such a proceeding is limited solely to a consideration of the question of jurisdiction. Monette Road Imp. Dist. v. Dudley, 144 Ark. 169.

It is insisted that the writ of prohibition should not be awarded, for the reason that petitioner did not first appear' in the court below and make formal objection to the jurisdiction of the court. In the case of Monette Road Imp. Dist. v. Dudley, supra, we recognized' the general rule, which imposes the requirement that objection to the jurisdiction of the court against, which prohibition is asked should first be made in that court, but it was there decided that this requirement was not without exceptions thereto, in which connection it was said: “This, we think, is the correct view of the matter, and it will necessarily follow, under this rule, that, where it is obvious that an objection made to the court itself would be futile and would result in unnecessary or hurtful delay, this ought to and does form an exception to the general rule of discretion that, before a writ of prohibition can be asked .for, objection to the exercise of that jurisdiction must be made to the court. This exception is well sustained by the authorities. (Citing cases). ’ ’

At § 320 of Ferris 'on Extraordinary Legal Remedies it is said: “In some jurisdictions the question is regarded as one of practice, not of jurisdiction,' and the enforcement of the rule is declkred to be discretionary, and in-no sense rigid and arbitrary. * * * It is not the purpose of the rule or practice to require the question to be litigated below and decided for review in the superior court, but only to give the lower court an opportunity to correct its act in excess of jurisdiction, due to misapprehension or oversight, or some adventitious circumstance. Therefore it would seem that its application is clearly unnecessary in any circumstance in which the intention of the inferior court to act beyond its jurisdiction is made apparent in any way, as when it appears in any manner that such court has acted deliberately, or has considered the question of its jurisdiction and intends to proceed, where application to the court below would be a mere formality. ’ ’

And in the same section it is also said: “Criminal cases, involving personal liberty, sometimes invoke the discretion of the court. Thus it was held that, notwithstanding the right to an appeal, if the situation disclosed he such that, to take the ordinary course by appeal would of itself subject the complainant to irreparable loss, the writ should issue, notwithstanding no objection was made below; that the matter of judicial courtesy should yield to substantial personal rights of litigants, such as a sacrifice of their liberty. ’ ’

The instant case is an example of the cases which are exceptions to the general rule. Here the proceeding was initiated by the court itself, and, after the writ of prohibition had been applied for in this court, a response was filed, in which jurisdiction is asserted, and it is therefore morally certain that the court below will proceed to a hearing of the matter unless prohibited by this court.

‘ ‘ The true test is, as stated in the case already cited (Weaver v. Leatherman, 66 Ark. 211), whether or not the court is proceeding beyond its jurisdiction; and, when that state of facts is shown to exist, the remedy by prohibition is the appropriate one.. A litigant is not bound to submit to the exercise of jurisdiction not authorized by-law, even though he has the right of appeal after the exercise of the jurisdiction has been consummated, and has resulted in a judgment from which he can appeal. The remedy by appeal is afforded from an unjust judgment, whether it be void or merely erroneous (Pritchett v. Road Improvement District, 142 Ark. 509); but the remedy by prohibition is afforded as a protection against a wrongful attempt to exercise jurisdiction unauthorized by law.” Monette Road Improvement Dist. v. Dudley, supra.

We conclude therefore that the court below is without jurisdiction, to proceed against petitioner, and the writ of prohibition will be awarded.


author: ■Smith, J. McCulloch:, C. J.

text:
    Cain v. CarlLee.
    Opinion delivered May 17, 1926.
    1. •. Appeal and error — dismissal of moot case. — Generally, where: there is nothing to be determined upon an,appeal to the Supreme Court [but the question of liability for the costs of the litigation, the appeal will be dismissed; but, where the case is of practical ■importance to the public, the court may proceed to determine the questions at issue.
    2. Elections — contest of primary nomination — abatement.— Under the initiated act No. 1, § 12 (Crawford & Moses’ Dig., § 3772), conferring on any defeated candidate “a right of action” to contest the certification of a nomination, the right of a contestant to have a final determination' of the contest does not become moot nor the action abate upon the contestee resigning from the ofiice to which he had been elected after receiving the certificate of nomination.
    ■ 3. Elections — moot question — abatement of . action. — Where - a contest under the primary law (Crawford & Moses’ Dig., § 3757 et seq.) was resisted by contestee until a large amount of costs had accumulated, which contestant would be required to pay if the judgment appealed from should be affirmed, the defendant cannot, by resigning from the office, secure an abatement of the action.
    • . Appeal from Woodruff Circuit Court, Southern District; E. D. Robertson, Judge;
    motion to abate overruled.

      Roy D. Campbell, for, appellant.

      J. F. Summers and Ross Mathis, for appellee.
   ■Smith, J.

There is pending in this court the third appeal in a suit involving the nomination of -the Democratic Party for the office of county judge of Woodruff. County in the primary election held in that county in the year 1924 against the appellee CarlLee, who' was declared the nominee, and was elected as such at the ensuing general election held after the primary election. In the first trial of the contest CarlLee was declared the nominee, -but, upon the appeal to this court by appellant Cain, the contestant, that judgment was reversed, and the cause remanded for a.new trial. Cain v. CarlLee, 168 Ark. 64. The cause was remanded, and upon the second trial in the circuit court CarlLee was again declared the nominee, and that judgment was reversed upon the second appeal to this court (Cain v. CarlLee, 169 Ark. 887), and a third trial was had' in the circuit court, when CarlLee was again declared the nominee, and the appeal from that judgment is now pending in this court.

. The appellee CarlLee has filed a motion to abate the cause, for the reason that, since this third appeal was lodged in this court, he has tendered his resignation as county judge to the Governor and the same has been accepted, and he insists that the contest has therefore become a moot question.

Appellant resists this motion, and insists that the question involved in the pending appeal should be decided, for the reasons (a), that he is the nominee and is entitled to have that fact judicially determined, and (b), in the attempt to enforce this right a large amount of costs have been incurred which, under the judgment from which this appeal was prosecuted, he will be required to pay, inasmuch as that judgment declared appellee CarlLee the nominee and assessed the cost against appellant. Certain costs of the former appeal were involved in a per curiam opinion handed down by this court on April 5, 1926, in which we overruled a motion of appellee to retax costs.

The first question which arises is whether this court will consider an appeal if the subject-matter has become a moot question. The rule in such cases is generally that “where there is nothing to be determined on an appeal to the Supreme Court but the question of liability for the costs of the litigation, the appeal will be dismissed.” Pearson v. Quinn, 113 Ark. 24. In that case we quoted and followed the opinion of Chief Justice Cockrill in the case of Wilson v. Thompson, 56 Ark. 110. But the Chief Justice recognized that the rule stated was not without its exceptions. That case involved the construction of the local option three-mile law then in force, and, after stating that the appeal had become' fruitless, and that the court would be justified, under the rule stated, in dismissing the case without going into the merits of it, the court proceeded to determine the questions at issue, for the reason that “the case was of practical importance” to the public, and having for this reason gone into the question, and having found that the judgment rendered was erroneous, the judgment appealed from was reversed, and appellants were awarded costs.

That principle is applicable here. The questions' involved on this'appeal were and are of practical importanee to the public. Questions are involved which, relate to the manner of holding primary elections and of the qualifications which must be possessed to participate therein. The law of this subject cannot be said to be so well settled or so certain that litigation was unnecessary to determine it, for the first decision of this court was rendered by a divided court, and we have, since that decision, réversed the .judgment of the circuit court ón the second appeal.

The two opinions on the former appeals show the practical importance of the questions involved, for it is a matter of common knowledge that the nomination for public office by the majority party in this State is practically equivalent to election, and this is true of all offices where primary elections are held, except in a few of the counties of the State, and there are questions raised in this contest which involve construction of the statutes under which such elections are held.

We do not think, however, that this has become a moot case, and we are also of the opinion that the resignation of appellee does not abate the' suit. The decision of that question involves a further consideration of the primary election law under which the election was held which Cain has been contesting.

' The history of this act is so well known that courts' cannot be ignorant of it. This court had held, in the case of Walls v. Brundidge, 109 Ark. 250, that the courts were without jurisdiction to entertain a contest for the nomination of a party as a candidate for public office. Thereafter, under the Initiative and Referendum Amendment to our Constitution, there was initiated and enacted by the people, at the election in 1916, an act which became and is known as initiative act No. 1, and which appears as § 3757 et seq., C. & M. Digest, Acts 1917, vol. 2, p. 2287.

This is a very comprehensive act, and provides that the political parties of the State may hold legalized primary elections to nominate candidates for office, and provides in detail how such elections shall be held and how they may be contested.

By the first paragraph of § 12 of this act it is provided that “a right of action is hereby conferred on any candidate to contest the certification of nomination or the certification of vote as made by the county central committee” of the party holding the election.

A procedure is provided in the act whereby and in accordance with which a contest may be conducted, and the courts are required to hear and dispose of these contests expeditiously, because of the public interest involved, but, to give the courts jurisdiction of a contest, the complaint of a contesting candidate must be supported by the affidavit of at least ten reputable citizens.

By § 15 of the act it is provided that, if the contest is not determined until after the general election, at which the declared nominee has run as the candidate of his party for the office itself and has been elected, and it is thereafter determined that the declared nominee was not legally entitled to the nomination, “such judgment shall operate as an ouster from office, and the vacancy in it shall be filled as provided by law for filling vacancies in such office in case of death or resignation.”

Appellant Cain instituted a contest under this act, and his opponent for the nomination, CarlLee, has resisted that claim, and this contest has resulted in the accumulation of a large amount of costs, which appellant Cain will be required to pay if the judgment appealed from is affirmed on the final submission of the cause, or if this appeal must abate because of the resignation of CarlLee.

The first paragraph of § 12 of the initiative act No. 1 conferred upon appellant Cain “a right of action” to contest this nomination. In order that frivolous contests might not be instituted under this section, the requirement was imposed that ten reputable citizens make affidavit supporting the contest, and this was done, and when it had been done a cause of action- — a suit at law— was before the court for decision. The law gave this cause of action to Cain after he had met the precedent conditions, and nothing which CarlLee could thereafter do would operate to deprive Cain of this right. He was entitled to prosecute this cause of action so long as Carl-Lee resisted, or until there had been a final decision determining the case against him. CarlLee elected to resist this cause of action, as he had the right to do, and in so doing large costs have accumulated.

Since the adoption of our Civil Code, remedies in civil cases have been divided into two classes. First, actions; second, special proceedings. Section 1027, C. & M. Digest.

Section 1028, C. & M. Digest, which was also taken from the Civil Code, defines a civil action as “an ordinary proceeding in a court of justice by one party against another for the enforcement or protection of a private right or the redress or prevention of a private wrong. It may also be brought for the recovery of a penalty or forfeiture.”

With this definition of an “action” incorporated in the statutes of the State, the initiative act made a contest for a nomination for office a cause of action.' This it would not be if the voluntary act of another, and an adversary party, could deprive him of the right.

It is unnecessary for us to consider what value this right may now possess. It suffices for us to decide that there was a cause of action, the prosecution of which cannot be defeated by the act of another party, and this is especially true when the right has been resisted until costs have accumulated, the payment of which by the judgment appealed from has been imposed upon appellant.

We think there is nothing in the case of Buchanan v. Parham, 95 Ark. 81, which entitled appellee to abate this suit. In that case the court quoted from the opinion of Mr. Justice Biddick in the case of Wilson v. Fussell, 60 Ark. 194, which was a special proceeding wherein certain taxpayers questioned the sufficiency of a collector’s bond, the language quoted being as follows: ‘1 The right to recover costs did not exist at common law. It rests upon statute only, and it is to the statute we must look for the authority to recover costs in any given case. * * * There is a general provision in our statute that a plaintiff or defendant recovering judgment at law is entitled to his costs, but this is not an action at law or in equity. ’ ’

We think the language there quoted supports the view here taken., for there is an express recognition in the language quoted of the right to recover costs in any case where the plaintiff or defendant recovers a judgment at law. This is what appellant Cain is seeking to do, that is, to have a judgment at law pronounced upon his cause of action, and, if he should finally prevail, he will be entitled to have it adjudicated that he was the nominee of his party for the office for which he was a candidate, and he will also be entitled, not only to be relieved of the existing judgment against him, but to have' judgment for his own costs. We so interpret the purpose and meaning of the initiative act, and the motion to abate will therefore be overruled.

DISSENTING OPINION.

McCulloch:, C. J.

A vacancy in the office has occurred by the resignation of appellee, and, as a vacancy would be the only result in the event this contest proceeding should go to final judgment in favor of appellant (Crawford & Moses’ Digest,- § 3776), the case has become moot, and, in my view, should be' abated. This is so for two reasons: In the first place, “where there is nothing to be determined on an appeal to the Supreme Court but tbe question of liability for tbe cost of litigation, tbe appeal will be dismissed.” Pearson v. Quinn, 113 Ark. 24. Tbe majority rely on the decision of this court in Wilson v. Thompson, 56 Ark. 110, holding that the fact that a cause is one of “practical importance” makes it an exception to the general rule that litigation will not be continued after it has become moot merely for the purpose of adjudicating the question of liability for costs. The reasoning in that case, as well as the present one, is not convincing. In the next place, there is no liability for costs in an election of this kind, for the reason that the statute contains no authority for awarding judgment for costs. It is well settled that the right to recover costs did not exist at common law and rests on statutes alone (Wilson v. Fussell, 60 Ark. 194), and, following this theory, we held in Buchanan v. Parham, 95 Ark. 81, that costs could not be awarded in an election contest in the absence of a statute authorizing it.

The majority hold now that the right to recover costs falls within the general statute allowing recovery for costs in all civil actions; but this court has held that election contests are not “civil actions”, within the -meaning of the statute. Davis v. Moore, 70 Ark. 240; Buchanan v. Parham, supra.

The fact that the primary election statute has created “a right of action” to contest an election does not bring it within the Code provision referred to in regard to costs.

My conclusion is that the action should be abated without recovery of costs — each party left to pay his own costs.