author: Smith, J. Hart, J.,

text:
    McFarlane v. Morgan.
    Opinion delivered February 5, 1923.
    1. Taxation—effect of land commissioner’s deed.—A Land Commissioner’s deed, reciting that the State had title under forfeiture and sale for taxes of a specified year, would also convey any other title the State may have had.
    2. Taxation—overdue tax sale.—confirmation.—Where a tract of land was ordered to be sold in an overdue tax proceeding, hut was omitted from the order confirming sales thereunder, the State acquired no title thereto.
    3. Taxation.—effect of overdue tax proceeding upon previous forfeitures.—Under the overdue tax act requiring the court to inquire into the sufficiency of tax sales or forfeitures to vest . title in the State, and, if found insufficient, to proceed to order the assessor to assess the lands for the years the taxes were unpaid, held, where the court found that a sale to the State of a certain tract was insufficient to vest title and ordered the land to be assessed and thereafter ordered it to be sold, but the sale was never confirmed, such proceedings vacated the prior sale, and the State acquired no title to the land.
    4. Adverse possession—payment of taxes for seven years.— Under Crawford & Moses’ Dig., § 6943, payment of taxes for seven consecutive years on unimproved and uninclosed land gives title.
    Appeal from Union Chancery Court; J. T. Stevens, Chancellor;'
    affirmed.

      Jesse B. Moore, for appellant; H. B. Martin, of counsel.
    The burden of proof upon the issues presented and upon the whole case was on the appellee. 95 Ark. 445; 142 Ark. 609; 110 Ark. 571; Id. 577. The deed of the State Land Commissioner was effective to convey whatever right the State had without reference to its recitals. 43 Ark. 543, 544 ; 7 Ark. 427; 15 Ark. 331; 76 Ark. 450 et seq.; C. & M. Digest, § 6669. The State is not complaining against appellant’s title, and the appellee, in view, of the title acquired by the State under the overdue tax proceeding, which was duly conveyed by the commissioner to appellant, is in no position to complain. 76 Ark. 450,. 458-9. See also 74 Ark. 202, 205-6; 81 Ark. 170, 172-3; 50 Ark. 188, 191-2; 91 Ark. 95 et seq.; 72 Ark. 101. Succession of tine and possession from former owner for a series of years, together with continuity of tax payments without break, are requisite to raise any presumption of redemption from forfeiture of land to the State for taxes under previous adjudications of the court. • 47 111. 17; 53 Pac. 421 (Cal.); 80 Ark. 520, 522-3; 89 Ark. 300, 307. There can be no presumption of redemption from tax sales to the State except in favor of the former owner, his heirs and assignees, coupled with possession and payment of taxes without break. 135 Ark. 353, 366-7; 339 Ark. 333; 347 Ark. 247.

      Marsh & Marlin, for appellee.
    In order to vest title in the State to the land in' controversy, it was necessary that these things affirmatively appear: (1) That the land was actually sold to the State at the overdue tax sale. (2) That such sale was reported by the commissioner who conducted the sale to the chancery court having jurisdiction, and that it confirmed the sale, and (3) that a list of the lands contained in the' report of sale as confirmed was filed in the office of the Commissioner of State Lands and in the office of the Auditor of State. -That the land in controversy appears in a descriptive list filed with the Auditor Nov. -8, 1883, which list was never filed in, nor ever confirmed by, any court, is no sufficient evidence of a sale to the State under the overdue tax act of 3881. The certificate of the State Land Commissioner that the land iii controversy is not contained in the list filed in his office, as sold to the State at overdue tax sale, is competent evidence of the fact that it was not sold to the State. But, if the list filed with the Auditor in 3.883 be treated as competent evidence of a sale to the State, the proof is ample, and the presumption is overwhelming, that the land was redeemed. 135 Ark. 354; 147 Ark. 247: act No. 621. Acts of 1921.
   Smith, J.

Appellee brought this suit to effect the cancellation of a deed executed by the Commissioner of State Lands on April 21, 1920, conveying to appellant the title of the State to the northeast quarter of the northwest quarter of section eleven, township eighteen south, range sixteen west, as a cloud on his title.

Appellee purports to deraign his title from the United States by an unbroken chain of conveyances; but appellant says that, under the testimony, there are some broken links in this chain. We do not stop to inquire whether there are missing links in this chain of title or not, for the reasons hereafter stated, and the point to be decided is the effect of this deed. The Land Commissioner’s deed recites that the State had title to the land conveyed under a forfeiture and sale for the taxes of 1868; but it would, of course, convey any other title the State may have had. Walker v. Taylor, 43 Ark. 543.

The answer of appellant alleged the fact to -be that the land had been sold to the State under an overdue tax decree; that this sale had been duly confirmed and the State acquired the title thereby, and conveyed it to appellant by, the deed of the Land Commissioner stated above. We have before us the record in the overdue tax suit of Union County, a proceeding had under act 39 of the Acts of 1881 (Acts 1881, p. 63). This was a general act entitled “An act to enforce the payment of overdue taxes,” and under it proceedings were had in Union County substantially similar to proceedings had under said act in all the other counties of the State. Many cases have reached this court which grew out of these proceedings, and we shall attempt no review of this legislation at this time.

The records of Union County, at least the court records, are intact in so far as this overdue tax proceeding is concerned, and this litigation arises out of a difference of opinion as to what the records show in regard to this statutory proceeding. .

The first order of the court was that of the clerk in vacation, made pursuant to section 2 of the overdue tax act, warning all persons to appear within forty days and show cause why a lien should not be declared on the lands there described for unpaid taxes, and the same ordered sold. The land in litigation is there described, and this order was made July 13, 1882.

The next order of the court is one in which a decree pro confesso is taken, pursuant to section 5 of the act. The court finds that the sales to the State for the nonpayment of the taxes for the year set out in the complaint are void, and the assessor of the county was directed to proceed forthwith to reassess the land. This order was made November 1, 1882. The next order recites the filing of the assessment by the county assessor pursuant to the directions of the court.

The next is an order before the clerk in vacation made on October 21, 1882. This order recites that the order -of the court requiring the owners of the land in this State to show cause why a lien should not be declared has been duly published, and that the State Auditor has been duly summoned, and no answers have been filed as to the lands therein set out. It is ordered that the complaint be taken as true and confessed. The land here involved is there described.

The next order is found in chancery record “D,” and extends from page 576 to page 605, and was made on November 1, 1882. This order recites the previous proceedings, and adjudges that all sales to the State for taxes for the years 1868 to 1878, with the exception of the sale for the taxes of 1871, were void for the reasons .therein set forth. It was adjudged that those sale were null and void, and that no title had passed to the State thereby; but it was also adjudged that there were taxes due on these lands, and .the amount thereof was set opposite each tract, as was also the cost chargeable against each of said tracts. The taxes so adjudged against the land in suit were $12.03, and the cost assessed at $1.03, making the total taxes and cost $13.06. M. H. Gladden was appointed commissioner, and was directed to advertise and sell the lands in satisfaction of the lien which the court declared against each of said tracts of land for the taxes and costs found due thereon. It was directed that the sale should begin on January 1, 1883, and should continue until all the lands therein described should be sold, unless they had been previously redeemed.

The next record appearing in the transcript is a certificate made by James Guy Tucker, Auditor of State, on August 9, 1921. This certificate of the Auditor recites that there was filed in that office on November 7, 1883, a document containing the following recitals:

“In the Union Circuit Court
“April Term, 1883.
‘ ‘ Commissioner’s Report.
“To the Hon. Circuit Court of Union County on the
Chancery side thereof.
“Your Commissioner, M. H. Gladden, respectfully submits the following as his report:
“The following tracts and lots of land were each and every one of them on the first and subsequent days of January, 1883, to the 15th day of said month, sold or knocked off to the State of Arkansas, for the aggregate amount of taxes, penalty, costs and attorneys’ fees due upon each tract. .
“That the sale of said lands was duly advertised in the Union County Times and El Dorado Eagle, two weekly newspapers, .published in El Dorado, Union County, of general circulation in said county, for twenty days next before-the first day of January,-1883, the date for beginning said sale, in the manner and form, at the time and place, and on the terms required in the decree condemning said land, and as required by law in all respects, and according to the manner, time, terms, quantity and place of said advertisement or notice. The said tracts and lots of land were duly sold to the State of Arkansas, to-wit:
“Northeast quarter of northwest quarter of section 11, township 18 south, range 16 west (among other lands not included in this case).
“Your commissioner respectfully submits the foregoing report, and asks to be discharged herein.
“M. H. Gladden, as Commissioner.
“Sworn and subscribed to before me this 16th day of April, 1883.
“J. C. Wright, Clerk.”
Attached to this document was the following certificate :
“State of Arkansas, County of Union.
“I,-J. C. Wright, circuit clerk and ex-officio county clerk, do hereby certify that the above and foregoing 62 pages is a full, true and perfect copy of the list of lands sold to the State of Arkansas as at a sale made on the 1st and subsequent days of January, 1883, by M. H. Gladden, comr. appointed by the court to sell said lands, under a decree of the circuit court of Union County, chancery side, Oct. term, 1882, in a suit in said court wherein Union County was plft. and SW14 of NE14 of sec. 9, T. 18, R. 10 W., and other lands upon which taxes are due and unpaid, are defts., as appears from the report of said com., now on file in this office, and as the same also appears of record in chancery court record ‘D,’ pages 579 to 602 inclusive. (Shows lands sold to State including land in controversy).
“Witness my hand and official seal this 3rd day of Nov. 1883.
“J. C. Wrigi-it, Clerk.
“By O. A. Mills, D. C.”

There is nothing about this document to indicate' that this report of the commissioner was ever filed anywhere except in the Auditor’s office. The significant thing about this certificate of the clerk is the recital that the list of lands is that appearing of record in chancery court record. “D,” pages 579 to 602. That record happens to be the decree of sale. As we have before stated, that decree begins at page 576 and extends to page 605, and necessarily includes pages 579 to 602 mentioned in the clerk’s certificate as being the list of lands which he certified as having forfeited to the State. Evidently the pages of the decree preceding page 576 and the pages following page 602 contained the recitals and directions of the decree, and the pages from 579 to 602 contained the descriptions of all the lands ordered sold, of which there were 2,329 tracts, as shown by the report of the commissioner to which we next refer.

And next follows the commissioner’s report showing that there were 2,329 tracts of land ordered sold. This report was dated April 27, 1883, and was filed with the clerk of the court on April 28, 1883. This report is as follows:

“To the Hon. Circuit Court of County of Union:
“The commissioner of this court appointed at the October term thereof, 1882, to make sale of certain lands situated in said county in pursuance of the decretal orders of said court in two certain cases therein rendered, to-wit: Union County v. NE SW section 6, township 18, range 10, and Union County v. SW NE section 9, township 18, range 10, respectfully represents that, in pursuance of said orders and decree, he did, after advertising same as required by law, on the 1st day of January and from thence to the 15th January, 1883, inclusive, sell at public outcry the lands mentioned and embraced in said decree, giving his certificates of purchase to the purchasers thereof, and for such tracts or parcels of land and not purchased by individuals were struck off to the State of Arkansas, and a list whereof has been filed in the office of the clerk of said county, as required by law. ’ ’

The report then recites the collections made by the commissioner, his disbursements thereof, and a statement of the money on hand, but it does not describe any lands.

The next order of the court was made on May 1, 1883, and we copy it in full. It reads as follows:

“Tuesday, May 1, 1883.
commissioner's report.
“Union County, No. 380, against SW NE sec. 9, T. 18, E. 10 W.
“On this 1st day of May, 1883, it being the 8th day of the term, the court takes up the report of the sale of the commissioner, M. H. Gladden, of the sale of lands for overdue tax, and, the same being in due form, and there being no exceptions filed thereto, and it appearing to the court that said lands were duly advertised and sold in accordance with the statute of the State of Arkansas in such cases made and provided.
“It is therefore considered, ordered, adjudged and decreed by the court that said commissioner’s report is hereby in all things approved, except as to the NE¼ of SE¼ of section 25, in township 17 south of range 18' west, the order of sale whereof is set aside and held for naught, and the commissioner is ordered to refund the money. And
“It further appearing from said commissioner’s report that he collected for and on account of overdue tax aiid on account of the sale of the said lands the sum of eight hundred and fifty and 92/100 dollars, that said commissioner has paid out and expended out of said sum to the clerk of this court, attorney for the county, printers and commissioner, commissions amounting in the ag*gregate to the sum of seven hundred and seventy-one and 73/100 dollars, and filed the vouchers for the same, leaving still in commissioner’s hands a balance of eighty-eight and 19/100 dollars in Union County scrip.”

Evidently the report here approved and confirmed by the court is the report of the commissioner, copied above, in which that officer accounts for the funds received and disbursed by him. It appears quite clear that the court here confirmed only one report, and it is equally manifest that the report confirmed was the financial report, which did not purport to show what lands had been sold to the State.

It appears therefore that there is no record showing what lands were sold to the State, except a list of lands which appears to have been filed in the Auditor’s office, and not to have been filed anywhere else, and which list appears to have been made by copying the entire list of lands embraced in the decree of sale.

The conclusion which we have announced is reenforced and fortified by the court proceedings, which thereafter follow.

The next order of the court was made on October 10, 1891, and is entered in chancery court record “E,” pages 376 and 377. This order recites that one C. W. Hearin had theretofore been appointed to make report of the sale of certain lands sold under an overdue tax proceeding by M. H. Gladden, special commissioner, and bought by the State of Arkansas. Hearin himself now reports that Gladden did, on the 1st to 15th days of January, 1883, offer the lands for sale described in the report of sale, and he attaches to his report, as exhibit “A” thereto, a report which Gladden had himself prepared, showing the lands which he had sold to the State and which had not been redeemed. ' This report of Hearin was sworn to before the judge of the court where the proceeding was pending, on October 9, 1891. The court found that this exhibit “A” was the report made up by Gladden himself .showing the lands sold to the State, and the specific finding is made that this sale to the State was never reported by Gladden to the court or confirmed by the court. The court found Hearin’s report to be correct and confirmed it, and vested in the State title to the lands there described. The land in suit did not appear in that report as having been , sold to the State.

The effect of this confirmation was to complete the sale and to vest title to the lands sold to the State in the State; but the sale was not -complete and the title did not yest until there had been a confirmation thereof. St. L. I. M. & S. B. Co. v. Greeson, 81 Ark. 170; Kelley v. Laconia Levee Dist., 74 Ark. 202. As no confirmation of the sale of the land in suit is shown, it follows that the State did not acquire the title as the result of that suit.

We have therefore the following record. Under section 7 of the overdue tax act it was made the duty of the court to inquire whether the tax sales or forfeitures were sufficient in law to vest title in the State, and the direction was given by the act that, if the court found that no title had .passed to the State by virtue of the tax sale, the court should proceed as if no forfeiture had taken place, in which event section 8 provided that the court should make an order requiring the assessor of the county to assess the lands for the years during which the taxes were not paid. This assessment was made, and taxes amounting to $12.03 were assessed against the land in suit. This proceeding necessarily operated to set aside the sale for the taxes of 1868, the court having expressly found that the sale for the taxes of that year was void. As there has been no confirmation of a sale to the State, the State did not acquire title as a result of that -proceeding; and we think the inference fairly deducible from the records quoted is that the land was in fact redeemed from the decree of sale, as it might have been under the act.

The Land Commissioner’s deed purports to be based upon a sale to the State for the taxes of 1868, and, as the State is not shown to have had any other title to the land, that deed conveyed no title, because the sale for 1868 was expressly -canceled by the overdue tax decree.

It is stipulated that the Land Commissioner would testify that the land in litigation does not-appear in the list of lands certified to his office as having been sold and confirmed under the overdue tax proceedings.

The law required a list of the lands sold to the State to he filed with both the Auditor and the Commissioner of State Lands. But the list filed with the Land Commissioner was the only list which the law required to be recorded. Permanent records were provided in which the Land Commissioner recorded the lists coming from .all the countiees, and the land in litigation does not appear in the list as recorded from Union County, where the land was, and is, situated. The Land Commissioner was, and is, the State’s land agent, and these records which he was required to make, and still keeps, are the records preserving the evidence of the State’s title to lands acquired through the overdue tax proceeding.

To summarize: There is no writing anywhere to indicate that the report of the commissioner showing the land in litigation was ever sold and confirmed to the State, except the ambiguous record found ill the Auditor’s office. The court records relating to this overdue tax proceeding are intact, and no court order shows any confirmation of any list of lands sold to the State. The only report confirmed was -the financial report of the commissioner. The recital of the certificate to the list of lands in the Auditor’s office can be read to include the land in litigation; but the certificate identifies that list, which it designates as the list of lands on designated pages of the chancery court records, which we know to be the decree of sale including all the lands embraced in the suit, many of which, we know were never sold to the State, from the fact that the financial report of the commissioner referred to shows that he had on 'hand a large sum of money derived from the sale of lands to individuals, who paid him the amounts of their bids at his commissioner’s sale. In addition, there must necessarily have been many tracts of land- redeemed either before the sale or within the period allowed for redemption. Yet this list, referred to as being the list of lands sold and confirmed to the State, includes all of the lands embraced in the decree.

In addition, the Land Commissioner’s records in which these lists were required to be recorded do not contain the land in litigation; and, when the Commissioner undertook to sell the State’s title, he recited in his deed the forfeiture to the State for the taxes of 1868 as the basis of the State’s title.

■ We also have the solemn adjudication of the court in which the overdue tax proceeding had been had that there had never been any confirmation of the report of the commissioner showing the lands sold to the State; and the decree of •confirmation which adjudged there had been no prior confirmation, and which described the lands reported as sold to* the State, did not include the land in litigation.

From all these facts we conclude the land was never sold to the State-; but, if so, there was a redemption within the time -allowed -by law.

The court found that appellee was the owner of the land by an unbroken -chain of -conveyances of the -original title, and canceled the commissioner’s deed as a cloud upon that title. We do not stop to decide questions raised in regard to that finding, -as it appears that appellee, and his predecessors in title, had at least color of title, and had paid th-e taxes for seven consecutive years thereon before the institution of this suit, and this makes a -title, unless during that time the land was owned by the State. Sec. 6943, C. & -M. Digest.

Appellant paid taxes after the institution of this suit, «and thus broke the -continuity of the payments; but there had been seven payments by appellees and his predecessors in title before this break in the payments occurred.

It follows, from what we have said, that the decree of the court below should be affirmed, and it is so ordered.

Hart, J.,

(concurring.) I concur in the opinion affirming the decree of the court below, on the ground that a presumption should be indulged that the land had been redeemed from the decree of sale, because of the tax payments which the record shows were made, and in support of that view I rely on the doctrine, announced in the cases of Wallace v. Hill, 135 Ark. 353; Lloyd v. Thornton, 147 Ark. 247, and Carter v. Stewart, 149 Ark. 189.

The facts in regard to the payment of taxes are as follows: There was a conveyance of the land to Jerry Tatum in 1878, and the taxes were assessed in his name for the year 1882, and in the name of his estate for the years 1883 to 1888, inclusive, and in the name of Louise Tatum for the years 1889 to 1892, inclusive; and the taxes from 1893 to 1896, inclusive, were assessed in the name of B. W. Reeves; and the taxes for all these years Avere paid, although the records extant do not. show by whom the payments were made, and the relationship between Jerry Tatum and Louise Tatum does not affirmatively appear. Reeves acquired his title by the foreclosure of a deed of trust executed in 1881 by Jerry Tatum to Reeves & Gresham; and Reeves conveyed to Kinard, who paid the taxes for the years 1897 and 1898. From 1897 the records show by whom the taxes were paid. Payments from 1899 to 1903, inclusive, were made by J. Z. Robertson, in whose name the lands were assessed. The record does not show under what claim of title Robertson paid; but in 3904 Kinard resumed the payment of taxes; and thereafter the taxes were, either paid, or Avere redeemed after having been sold for nonpayment, by persons in the Kinard chain of title.

The taxes were paid during the time when, under the law, redemption could have been made, and, in view of the payments of taxes set out above, I am of opinion that a presumption should be indulged that the right of redemption had been exercised.

Wood, J., dissents.


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    Johnson v. Jones.
    Opinion delivered February 5, 1923.
    1. Corporations — preference by insolvent corporation — limitations. — Under the statute prohibiting preferences by insolvent corporations, which provides that no such preference shall be set aside unless complaint be made within 90 days, a mortgage by an insolvent corporation cannot be assailed as a preference several years after it was executed.
    2. Subrogation — first and second mortgage. — Where trustees of a corporation, authorized to borrow $16,000 to pay part indebtedness, executed a mortgage for $10,000, and, this amount proving to be insufficient, executed a second mortgage for $5,000, the holders of the second mortgage could not claim equality of lien under the doctrine of subrogation, since none of the money was used to pay the first loan.
    3. Mortgage — effect of successive deeds. — Where corporate stockholders authorized the directors to mortgage the corporate assets to the extent of $16,000 to pay existing indebtedness, and the directors first borrowed $10,000, executing a mortgage to secure same, and thereafter borrowed $5,000, and executed a second mortgage therefor, in which the warranty excepted the prior mortgage, held that the first mortgage gave a prior lien, and the holders of the notes secured by the second mortgage were not entitled to claim the entire transaction as ' a single loan.
    4. Mortgages — priority.—Where a corporation executed two mortgages at different times to different persons and for different debts, the priority of lien in the first deed is not discharged because the proceeds of both instruments were applied to the payment of corporate debts which were outstanding before either deed was executed.
    5. Mortgages — foreclosure of junior mortgage. — In an action to have a mortgage declared equal in priority with another mortgage which was prior in time, with alternative prayer for foreclosure of the first-mentioned mortgage, where the first relief was properly denied, it was error to deny the alternative relief.
    Appeal from Garland Chancery Court; J. P. Henderson, Chancellor;
    reversed in part.

      A. B. Belding and Gibson Witt, for appellant.
    The corporation is, and was at the time both loans were made, insolvent, and the money received by it on the loans inured to the benefit of all its stockholders alike. It is manifest that a preference'is being sought in favor of one class of creditors over other creditors, contrary to the law. C. & M. Digest, §§ 1798, 1799 and 1800; 67 Ark. 11; 121 Ark. 122. All the assets of an insolvent corporation are equally liable for the payment of all of its creditors. 96 Ark. 1; 51 Ark. 580; 58 Ark. 17; 107 Ark. 121; 107 Ark. 118; 123 Ark. 575. The beneficiaries under the two deeds of trust are entitled to be subrogated to the rights of the original creditors whose claims they furnished the money to pay. 37 Cyc. 363; 108 Ark. 558; 39 Ark. 512; 3 Pom. Eq. Juris. 1212; 37 Cyc. 378, and authorities cited in note; 38 Cyc. 395.

      Calvin T. Cotham and L. E. Sawyer, for appellees.
    1. Appellant’s reference to the statute dealing with preferences has no application in this case. This corporation has never been adjudged insolvent by the chancery court; and there are no proper allegations in the complaint and amended complaint of insolvency, nor is there any prayer that the court take charge of the assets of the corporation. 39 Ark. 562; 102 IT. S. 118. There is no sufficient allegation in the pleadings or exhibits that the action of the corporation in executing the deeds of trust was in contemplation of insolvency. C. & M. Digest, § 1800. The statute does not prevent a corporation from giving a first and second mortgage, if necessary, for the payment of its debts. It was never intended to destroy the -priority of mortgages given in good faith to secure present advances of money for use in the payment of the corporation’s debts. 10 Cyc. 1261; 7 R. C. L. 751; Id. 755. See also 97 Ark. '57.
    2. Subrogation has no application under the facts 'in this case. If appellant had paid off the first deed of trust for his own protection, he might be subrogated to- the rights of his fellow mortgagees in the first deed of trust, but that is not the case. 31 Ark. 113; 76 Ark. 215; Sheldon on Subrogation, 127, par. 3; Harris on Subrogation, par. 29; 90 Ark. 51; 6 Pomeroy, Eq. Jur., par. 866.
   Smith, J.

After twice amending her complaint, appellant elected to stand upon it, a demurrer thereto having been sustained, and this appeal is from the decree dismissing it.

Appellant is the widow and administratrix of Thomas E. Holland, who was a stockholder, director and president of the Pasteurized Milk Company, a domestic corporation having its principal place of business in the city of Hot Springs.

The complaint alleged that on and prior to November 3, 1917, the corporation had become largely indebted to various parties in sums aggregating approximately $16,000. On that date a stockholders’ meeting was held for the purpose of considering the affairs of the corporation, and a resolution was adopted by them authorizing the directors of the corporation to borrow the sum of $16,000 for the purpose of paying the existing debts and to mortgage all the assets of said corporation as security to the persons making the loan. A copy of this resolution was made an exhibit to the complaint.

It was alleged that, pursuant to said resolution, and under and by virtue thereof, the directors of said corporation, on the 11th day of December, 1917, borrowed the sum of $10,000 from certain of the defendants, who were directors and stockholders of the corporation, and notes were executed by the corporation to each of said parties for the amount loaned. The complaint further alleged that “said sum” ($10,000) “being thought at the time sufficient to liquidate the indebtedness of the company sufficiently to enable it to continue the operation of its business.” And further, “that thereafter, to-wit, on the 16th day of October, 1918, it having first been ascertained that the loan first made by the above named defendants was not sufficient to liquidate the indebtedness af said company, and that the amount first borrowed by said company was left, to the determination of the board of directors, who fixed the amount at ten thousand dollars, a further resolution by the said board of directors was passed, authorizing the completion of the loan first authorized, by the execution of notes of the said company in the sum of five thousand dollars, and the execution to defendant Roht. Neil, as trustee, of a second mortgage on the property described in the deed of trust executed as security for the amount of money first loaned to said company,” etc.

It appears from the exhibits to the complaint that a resolution of the board of directors preceded each of these'loans, and the resolution under which each loan was made was incorporated in the deed of trust securing the loan.

In the first resolution it was recited that, “whereas, the said party of the first part, desiring to raise money for the purpose of discharging or paying the debts against said corporation heretofore necessarily incurred in its business, has, by a resolution of its board of directors, duly authorized the negotiation of a loan in the sum of $10,000, and the execution and delivery of a deed of trust, conveying all of the property, both real and personal, belonging to said corporation, for the purpose of securing said loan,” etc.

The second deed of trust recited that a resolution of the board of directors • had been duly adopted authorizing the negotiation of a loan in the sum of $5,000, and the execution of a second deed of trust conveying all the property of the corporation for the purpose of securing that loan. This second deed of trust recites that the authority of the directors was derived from the resolution of the stockholders adopted on November 3,1917, and contained the usual covenants of warranty, but excepted from the warranty the first deed of trust dated December 11, 1917.

After setting out these facts, the complaint prayed that the two deeds of trust be treated as a single instrument, securing a single debt, and there was a prayer that the court take over the assets of the corporation, order them sold and prorate the proceeds of such sale to the holders of the indebtedness secured by the second deed of trust in proportion to the amount of their holdings, and without reference to the deed of trust by which the indebtedness was secured.

In other words, the stockholders authorized the directors to borrow $16,000. The directors were of opinion that a loan of $10,000 would suffice, and borrowed that sum of money on December 11, 1917, and executed a mortgage of the company’s assets. This loan proved insufficient, whereupon the directors, under the authority of the original resolution of the stockholders, .borrowed an additional $5,000, and gave a second mortgage on all the company’s assets, being the same-property conveyed in the first deed of trust. The second deed of trust recited the second resolution of the board of directors adopted when it was decided to borrow the $5,000, and mentions the fact that the first loan was not for the full amount authorized by the stockholders’ resolution, and that the $5,000 was badly needed to pay off and discharge pressing debts and obligations and to successfully carry on the business of the company.

It is first argued, for the reversal of the decree of the court sustaining the demurrer to the amended complaint, that the court permitted an insolvent corporation to prefer certain of its creditors, in violation of the statute preventing preferences among creditors of insolvent corporations.

The good faith of these mortgages is not questioned. Indeed, appellant’s intestate was the president of the company, and, as such, executed both deeds of trust. It appears that the persons advancing the money under both deeds of trust were stockholders, and five of them were directors. The resolutions authorizing the loans did not specify that the money should be borrowed from either directors or stockholders, and the loans could have been made under the resolutions by any person who was willing to make them. The first $10,000 was advanced as follows: Rix, Van Leer and Jones, each $2,000: Col-lings, ’ $1,000; Stearnes, $1,500 5. Holland and Hebert, $500 each; Solmson and Berg, $250 each. The loan eov-' ered 'by the second mortgage was made by Rix, Jones, Van Leer, Codings and Holland, who each advanced a thousand dollars. Stearnes, Hebert, Solmson and Berg advanced no part of the $5,000. Holland is the only person who advanced parts of both loans, and whose interest in the second loan was greater than his interest in the first loan. It would therefore be to the advantage of his estate if the court should hold that the two mortgages covered a loan of $15,000, negotiated under the resolution of November 3, 1917; and we think the real point in the case is whether it is true there was in fact but a single loan.

In answer to the contention that the corporation is preferring certain of its creditors, it is pointed out that the beneficiaries in the deeds of trust were not creditors prior to the execution of those instruments; and those instruments were not executed for the benefit of the cestuis que trust in the sense that they were being_paid demands due them, but they'themselves advanced money to be used in paying other creditors, and the deeds of trust were executed to secure those advances.

However that may be, the statute sought to be invoked cannot be applied, for the reason that these deeds of trust were executed on December 11, 1917, and October 17, 1918, and this suit was not filed until November 3,1921; whereas the statute against preferences provides that “no such preference shall be set aside unless complaint thereof be made within ninety days after the same is given, or sought to be obtained.”

We think appellant is not entitled to the relief prayed under the doctrine of subrogation, as contended by her. The loan of $10,000 did not pay all the debts; the loan pf $5,000 did not pay any part of the $10,000 loan; and the beneficiaries in the two deeds of trust are not the same. The beneficiaries in the $10,000 deed of trust are entitled to their security, whatever it is, and they are not required to share it with the beneficiaries in the second deed of trust, -unless those instruments are construed as being in fact one instrument, securing one debt, and that a debt of $15,000 incurred under the stockholders’ resolution authorizing the negotiation of a loan of $16,000.

As we have said, the beneficiaries are not the same in the two deeds of trust. It is true the money secured by both deeds of trust was used in paying debts outstanding before the execution of either deed of trust; but the loans were made under separate resolutions of the board of directors, and the first resolution passed by that body recited the fact that $10,000 was believed to be sufficient to answer the purpose of the stockholders’ resolution. Under that resolution, and the recitals of the first deed of trust, the beneficiaries therein were given a first lien on the company’s assets. Can we assume, as a matter of law, that they would have made this loan if they had not been offered the security which the deed of trust purported' to convey, and had not relied upon the recital in the directors’ resolution that a loan of $10,000 would suffice? We answer this question by saying that we do not feel warranted in dividing or diminishing the- security which the first deed of trust purports to give. We reach this conclusion from a consideration of the recitals of that instrument itself, and are reenforced in that view by the recital in the covenant of warranty in the second deed of trust that the warranty excepts “the deed of trust heretofore executed by the party of the first part to the party of the second part, bearing -date December 11, 1917.”

This case is distinguishable from the case of Hoehler v. W. B. Worthen Co., 154 Ark. 444. There we held that bonds, issued at different times, to construct the same improvement, were without priority, the one issue over the other; but we did so because the holders of each issue derived their right to a lien on the property in the improvement district from the statute under which the district was organized. There was but a single statute authorizing a bond issue, and the lien was derived from that statute.

The case of Penzel v. Brookmire, 51 Ark. 105, was cited in the above-mentioned case. The case of Pensel v. Brookmire involved the question of priority between notes maturing at different times, and held by different parties, 'but secured by the same mortgage. The court held that, in the absence of any special equities arising out of the assignments of the notes secured by the mortgage, the proceeds of the sale of the mortgaged property should be applied pro rata in part payment of the several notes, irrespective of the dates of their maturity or assignment, and in announcing that conclusion Judge Battle, for the court, said: “The comparison of a mortgage given to secure several notes to successive mortgages given to secure each one of them does not support the doctrine it is made to prove. To make the case analogous, the mortgages to secure each note must bear the same date, and be executed, delivered and filed for record, and recorded, at the same time, and the property mortgaged must be the same. In the latter case the mortgages would be concurrent; neither one would have preference over the others, and all would have equal claims to be paid ratably out of the property mortgaged. ’ ’

■ Here the deeds of trust cover the same property, but the dates are different; the beneficiaries axe.not the same, and the debt itself is different, and the priority of the lien of the first deed of trust is not discharged because the proceeds of both deeds of trust were applied to debts outstanding before either deed of trust was executed.

It appears that the trustee has sold certain real estate owned by the corporation, and included in both deeds of trust, for the sum of $4,000, and, as has been shown, a prayer of the complaint was that the $4,000 be distributed among the beneficiaries of the two deeds of trust ratably in proportion to the amount of the indebtedness owed by them; but, for reasons stated, that relief will be denied.

The complaint, however, contains a prayer in the alternative for judgment against the corporation for the $1,500 advanced by appellant’s intestate, and for a foreclosure of this second deed of trust. The indebtedness secured by this second deed of trust is past due and unpaid, and the beneficiaries therein are, of course, entitled to foreclose this second deed of trust, subject, of course, to the prior deed of trust; and, as all parties in interest appear to have been made parties, the decree of the court below will be reversed and the cause remanded, with directions to grant the alternative relief prayed in the complaint.


author: Humphreys, J.

text:
    Conley v. Benedict.
    Opinion delivered February 5, 1923.
    1. Ejectment — 'Sufficiency of general denial. — A general denial of plaintiff’s ownership of land sued for in ejectment, where the complaint specifically sets forth the plaintiff’s title, raises no issue.
    2. Ejectment — judgment against party not disclaiming.— Where a party in an ejectment suit made no disclaimer, but joined in the answer claiming adverse possession, judgment on the verdict was properly rendered against her for possession and costs.
    Appeal from Garland Circuit Court; Scott Wood, Judge;
    affirmed.

      R. G. Davies, for appellant.
    There was no proof of title by appellee at all. In suits in ejectment plaintiff must recover upon the strength of his own title and not the weakness of the defendant’s title. 138 Ark. 396, and eases cited. The instructions of the court made it necessary for appellant to prove title by limitation, which was erroneous. The issues tendered were not only the statute of limitations, but by answer a denial of ownership on the part of appellee.

      Calvin T. Cotham, for appellee.
    No request for instructions was made by appellant. It was his duty to request such instructions as would cover his contentions. 60 Ark. 613; 69 Ark. 289; 70 Ark. 136; 95 Ark. 593. Appellee, in her complaint, set forth her muniments of title. C. & M. Dig., 3692. Appellant did not comply with this statute in his answer. She entered a general denial of ownership on the part of 'appellee, but set up on title in herself. 74 Ark. 417. The statute does not require, in suits in ejectment, that the plaintiff: be in actual possession at the time the suit is brought. C. & M. Dig., § 3686.
   Humphreys, J.

Appellee instituted suit in ejectment, in the Garland Circuit Court, against appellants to recover the possession of “all that part of lot six, block eleven, of the U. S. Hot Springs Reservation, as surveyed, mapped and platted by the Hot Springs commissioners, bounded and described as follows: beginning on the division line between lots six and nine, a distance of 115 feet southerly from lot eight; thence southerly along the division line between lots six and nine for a distance of 45 feet; thence northwesterly parallel with the division line between lots five and six, for a distance of 27 feet; thence northerly for a distance of 40 feet to a point that is 39 feet from the place of beginning; thence easterly for a distance of 39 feet to the place of beginning, situated in Garland County, State of Arkansas.” Appellee alleged ownership and right to possession of said parcel of land through mesne conveyances from the United States.

Appellants filed an answer denying the ownership of said land by appellee or the grantors in the chain of her title, naming them; .also alleging ownership in themselves by adverse possession.

At the conclusion of the testimony appellants requested a peremptory instruction, which was'refused by the court, to which ruling they objected and excepted.

Over the objection and exception of appellants the cause was then submitted to the jury upon the sole issue of whether they had acquired title to the parcel of land under the seven years’ statute of limitation. Upon conflicting evidence responsive to this issue, the jury returned a verdict in favor of appellee, and from the judgment rendered in accordance therewith an appeal has been duly prosecuted to this court.'

Appellants’ contention for reversal is, that the trial court erred in holding that the pleadings presented only the one issue for determination by the jury. It is argued that the court should have also presented -the issue of the sufficiency of appellee’s record title to the jury for decision, as the undisputed testimony disclosed that appellee, nor her predecessors in title, had ever been in actual possession of the land. We think not. Appellee set out her chain of title in the complaint, to which a general denial was entered by appellants. This court ruled in Pace v. Crandell, 74 Ark. 417 (quoting from syllabus 1) that “a general denial of plaintiff’s ownership of land sued for in ejectment, where the complaint specifically sets forth the plaintiff’s title, raises no issue.”

Malinda Greer, one of the appellants, makes the additional contention that the trial court erred in rendering judgment against her for possession and costs, because it was not shown that she claimed or occupied the property. She was made a’party defendant to the suit, and did not enter a disclaimer. On the contrary, she answered jointly with Hester A! Conley that they claimed title by adverse possession. The jury determined the issue thus tendered against her, so it was proper to render judgment against her for possession and costs.

No error appearing, the judgment is affirmed.


text:
    L. D. Powell Company v. Rountree.
    Opinion delivered February 5, 1923.
    1. Corporations — foreign corporation doing intrastate business. —Suits cannot be maintained in this State by foreign corporations on their contracts covering' intrastate transactions without complying with Crawford & Moses’ Digest, §§ 1826, 1832, requiring the filing of copies of their articles or certificates of incorporation as a prerequisite to doing business in the State.
    2. Commerce — resale of books as continuation of intrastate transaction. — Where law books were shipped into the State by a foreign corporation under a contract which constituted an interstate transaction, the recovery of the books under the contract amounted to a collection growing out of the interstate transaction, and a resale of them in order to collect the purchase money was a continuation of such transaction.
    Appeal from Pike Circuit Court; James S. Steel, Judge;
    reversed.

      J. S. Butt, for appellant.
    A contract identical with this one was construed and held in that case that the business conducted was interstate. 148 Ark. 151. Unless there is .a continuous business carried on by the foreign .corporation, there is not any “doing business” as contemplated by the statute. 60 Ark. 120; 90 Ark. 73. Whether doing an unauthorized business or not, still appellant would have the. right to maintain this action. 94 Ark. 621. If it be interstate business at the outset, it continues so to the end. Rose City Bottling Works v. Ggclohaux Sugars, 151 Ark. 269.

      Pinnix & Pinnix, for appellee.
    Appellee, although the beneficiary of the unlawful transaction, is not estopped to raise the question of the disability of appellant to maintain the suit. 106 Ky. 472; 9 Bush (Ky.) 590; 17 B. Mon. (Ky.) 349; 54 Ala. 150; 85 Minn. 121; 204 Pa. St. 22; 92 Tenn. 587; 60 Neb. 636; 60 .Ark. 122; 115 Ark. 166; 124 Ark. 539; 128 Ark. 211; 136 Ark. 52. The transaction was purely an intrastate one. See Arkansas authorities cited above, and in addition 233 U. S. 16; 196 S. W. 1132; 87 S. E. 598; 56 So. 961; 128 S. W. 1136; 95 Ark. 588.
   Humphreys, J.

Suit in replevin was commenced in the Pike Circuit Court by appellant, a foreign book corporation, against appellee, who had purchased certain law books under written contract that the title to them should remain in appellant until the payment of the entire purchase money. At the time of the institution of the suit a balance of $95.25 was due on the books, which appellee refused to pay. The written contract was made the basis of the suit.

The main defense interposed by appellee, and the only one presenting a question for determination on this appeal, was that the contract is void and non-enforceable because made in this State by a foreign corporation, without complying with the laws of the State of Arkansas authorizing them to do business in the State.

The cause was submitted to the court, sitting as a jury, on the pleadings and testimony, which resulted in a judgment in favor of appellee, from which is this appeal.

The facts are undisputed, and, in substance, are as follows: Two sets of law books, the Encyclopedia of Evidence and of Procedure, were sold to one McNeill, a resident of Pike County, upon order secured by appellant’s traveling salesman, subject to approval of appellant at its home office in Los Angeles, Calif., and to be shipped from a point outside of Arkansas to McNeill at Murfreesboro, Arkansas. Volumes 1 to 14 inclusive of the Encyclopedia of Evidence and six volumes of the Encyclopedia of Procedure were shipped to and received by McNeill. Under the written contract, the title of the books was retained in appellant until the purchase money should be paid. Judge T. AV. Rountree obtained the books from McNeill in payment of a law fee. Subsequently the agent of appellant ascertained the whereabouts of the books and claimed them for appellant under the McNeill contract. Judge Rountree examined the contract, and told the agent to take them. The books were at the time in the grand jury room. Judge Rountree was county judge, and had the books in the grand jury room where he could conveniently use them. In about two hours, and before moving the books, the agent returned and proposed to resell the two sets of books complete, with supplements, to appellee under contract similar to the McNeill contract in form. A price was agreed upon, and the proposed contract entered into, subject to the approval of appellant at its home office in Los Angeles. The books in the grand jury room were delivered to appellee, and the remaining books necessary to complete the sets were to be shipped to him upon his order, by appellant. The contract was approved and the undelivered books afterwards shipped to and received by appellee. All of the purchase money except $95.25 was paid by appellee. Appellant made no attempt to comply with the laws of Arkansas so that it might transact business in the State.

Suits cannot be maintained, either in law or equity, by foreign corporations upon their contracts covering intrastate transactions, without complying with the statutory requirements as a prerequisite to doing busmess in this State. Section 1826 and 1832, Crawford & Moses’ Digest.

' The sole question therefore presented by this appeal for determination is, whether the facts relating to this sale made it an intrastate transaction. In the recent case of Coblentz & Logsdon v. L. D. Powell Co., 148 Ark. 151, this court, in considering a contract in which L. D. Powell Company retained title in books until the purchase money was paid, which it sold on order and shipped into this State, said:

“The taking of an order from the appellants by the appellee’s traveling salesman for certain books, which order was transmitted to the appellee and accepted by it and the books shipped to the appellants under a contract by which the title was reserved in the appellee until the purchase money was paid, is not the doing’ of business in this State, in contemplation of act of May 13, 1907, p. 744 (Crawford & Moses’ Digest, § 1826); see also § 1832.”

The larger part of the books in the instant case were not sold on order to Judge Rountree for future delivery, but were in the, State when sold, and were immediately delivered to him. Appellee contends that the presence of the goods in the State at the time of the sale, and the immediate delivery thereof to the purchaser, made it an intrastate transaction. The case of Hogan v. Intertype Corporation, 136 Ark. 52, is cited in support of the contention. In the Hogan case the machinery had been shipped into the State to shipper’s own order for the purpose of selling same to Hogan after demonstration, and was retained as the sole and independent property of the Intertype Corporation until after demonstration and sale to him. In the instant case the books were not shipped into the State as the sole and independent property of appellant for the purpose of selling them to appellee or any other person. On the contrary, they were shipped into the State by appellant to McNeill on an order for future delivery, obtained by appellant’s traveling agent. The McNeill contract clearly covered an interstate transaction. Coblentz & Logsdon v. L. D. Powell Co., supra. The recovery of the books under the McNeill contract amounted to a collection growing out of an interstate transaction. The collection was made in books instead of money, and we think the resale of them, in order to convert them into money, was a continuation of the interstate transaction. It was the only practical method by which a collection could be completed against one who had defaulted on an interstate contract. Otherwise it would have been necessary to incur the expense of shipping the books out of the State in order to convert them into money. The statutes of this State requiring foreign corporations to comply with certain conditions before doing intrastate business were not intended to place such a burden upon the enforcement of good faith interstate transactions-. We think the doctrine announce 1 in the case of Rose City Bottling Works v. Godchaux Sugars, Inc., 151 Ark. 289, is applicable and controlling in this case.

On account of the error indicated, the judgment is reversed, and the muse is remanded with instructions to render judgment for appellant.


author: McCulloch, C. J.

text:
    Davis v. Dunn.
    Opinion delivered February 12, 1923.
    1. Limitation of actions — damage by nuisance.- — Where a nuisance is of a permanent character, and its construction and continuance are necessarily an injury, the damage is original and may at' once be fully compensated, in which case' the statute of limitations begins to run upon the construction of the nuisance; but where, although the structure constituting a nuisance is permanent in its character, its construction and continuance are not necessarily injurious, but may or may not be so, the injury to be compensated is only the damage which has happened, and there may be as many recoveries as there are successive injuries, and the statute of limitations begins to run from the happening of the injury.
    2. Limitation of actions — nuisance—original injury. — That the extent of an injury is difficult to determine or its ascertainment is inconvenient or expensive does not prevent the injury from being original.
    3. Limitation of actions — original injury. — An action against a railroad company for damages to crops by reason of its failure to provide sufficient openings in a dump to permit overflow waters from a river to pass off, held barred by the three-year statute; the damage being caused by the original construction of the dump.
    4. Eminent domain — injury to non-contiguous land. — Injuries -to crops by reason of -a railroad’s failure to provide sufficient openings in its dump to permit overflow waters to pass off is a compensable injury to property within the meaning of the Constitution, whether it abuts oh the railroad or' not.
    Appeal from Calhoun Circuit Court; Charles W. Smith, Judge;
    reversed.

      Thos. S. Buzbee, H. T. Harrison and C, L. Johnson, for appellant.

      The damage was original, and any canse of action is now barred by the three-year statute of limitation, which runs from the completion of the obstruction to the watercourse. 35 Ark. 622; 62 Ark. 364; 86 Ark. 406; 92 Ark. 406; 107 Ark. 330. The government was in the attitude of a lessee. To render it liable, it must have had notice of the existence of the defect, or have had time to acquire such knowledge. 20 R. C. L. 395. However, damages were sought from the government by reason of its construction of a nuisance — a thing which was in existence for such a length of time before United States control as to have become permanent, and with which the government had nothing to do in creating.

      C. L. Poole and J. S. McKnight, for appellees.
    There was no injury prior to 1919. "Where a structure is permanent, and its construction and maintenance are not necessarily injurious, but may become so, the injury to be compensated is only the injury which has happened, and there may be as many successive recoveries as there are successive injuries. In such cases the'statute of limitations begins to run from the happening of the injury. Greenleaf, Ev. 433; Wood on Nuisances, sec. 865; Wood on Limitation, 180; Angelí on Limitation, sec. 300; 52 Ark. 244. Unless the injury was certain or apparent upon the construction of the dump, the statute would not begin to run until some damage had actually occurred. 56 Ark. 612; especially is this true where the damages are only speculative and' conjectural.’ 107 Ark. 65; 95 Ark. 297; 92 Ark. 465; 107 Ark. 330. This court has distinguished between a complete obstruction of a drainway and a partial obstruction, which determines whether the damage was original in the following cases. 80 Ark. 237 and 76 Ark. 542.
    It was the duty of appellant as lessee and operator to keep the drain open. 80 Ark. 238.
   McCulloch, C. J.

Appellees own and operate a farm in Calhoun County and in the valley of Ouachita River, near the place where the line of railroad of the Chicago, Rock Island & Pacific Railway Company crosses that stream, and they instituted separate actions in the circuit court of Calhoun County against said railway company and the Director General of Railroads for damages to crops in the year 1919, alleged to have been caused by the overflow waters from the Ouachita River. The right of action in each case was based upon alleged acts of negligence on the part of the defendants, in failing to provide sufficient openings in the railroad dump to permit the waters to pass off.

The causes were consolidated, and the court sustained demurrers in favor of the said railway company and dismissed the complaint as to that defendant, leaving the cause to proceed against appellant Davis, Director General of Railroads, as agent. The trial of the consolidated causes resulted in a verdict in favor of each of the appellees for the recovery of damages.

Among other defenses there was a plea of the statute of limitations, and a denial of responsibility of the Director General of Railroads for failure to provide for additional openings in the dump constructed by the railroad company prior to the time the railroad came under government control. In other words, the question raised by this answer was that the damage to the crops of appellees was caused by the original construction of the dump, which occurred more than three years before the commencement of these actions, and was barred by limitation, and that the government was not liable for the original injury caused by a negligent act of the railway company. Appellant asked the court to give the jury a peremptory instruction in his favor on the grounds stated above.

This line of the Chicago, Rock Island & Pacific Railway Company was constructed during the year 1907. At the place where the railroad crosses the Ouachita River there is a low bottom, about three miles wide, which is subject to inundation by overflowed waters of the river. At the time of the original construction of the railroad there was a trestle across this bottom, but in the year 1912 the railway company filled, in the trestle so that the track rested on a dump. There was ah open space of 3,200 feet for the railroad trestle and. bridge across the river, and about a mile and a half from the river there was an opening of 425 feet left in the dump for the passage of water. The theory of appellees is that the opening in the dump was insufficient to let the water pass out, and that this constituted a continuing act of negligence for which damages might be recovered from time to time as injury resulted from the overflow.

There is evidence tending to show that the height of the overflow and the length of time it consumed in passing off were increased by the construction of the dump, and that the opening was insufficient to permit the water to flow through.

The overflow came in October, 1919, and damaged the crops of cotton grown by each of the appellees. The evidence adduced by the appellees tended to show that the height of the water during the overflow had been increased from the time the dump was erected, but that no damage had been done prior to the year 1919, for the reason that the overflow had not come at a season of the year when there were growing crops.

We are of the opinion that, according to the undisputed facts, the injury, if any, was original, and that appellees’ cause of action against the railroad company was barred by the statute of limitations; and that, for the same reason, there was no liability at all on the part of the government for damage caused during its operation of the railroad.

The decisions of this court on this subject are very numerous, and there is no uncertainty as to the law. Doubts which arise on the subject are concerning the application of the law. All of the cases are cited in C., R. I. & P. Ry. Co. v. Humphreys, 107 Ark. 330, and it is unnecessary to review all of the decisions. Special reference to a few of them is necessary in order to show the varying application of the rule of law announced by this court. One of the leading cases on the subject in this court is St. L. I. M. & So. Ry. Co. v. Biggs, 52 Ark. 240, and the following statement of law, in the opinion in that case, has often been quoted in subsequent cases:

“Whenever the nuisance is of a permanent character and its construction and continuance are necessarily an injury, the damage is original, and may be, at once, fully compensated. In such case the statute of limitations begins to run upon the construction of the nuisance. * '* * But when such structure is permanent in its character, and its construction and continuance are not necessarily injurious, but may or may not be so, the injury to be compensated in a suit is only the damage which has happened; and there may be as many successive recoveries as there are successive injuries. In such case the statute of limitation begins to run from the happening of the injury complained of.”

We said in C. R. I. & P. Ry. Co. v. Humphreys, supra, that the fact that “damage is probable, or that even though some damage is certain,” does not necessarily make the injury original so as to start the running of the statute of limitations. But it may be added that the fact thattbe extent of the injury is difficult to determine, or its ascertainment is inconvenient or expensive, does not prevent the injury from being original so as to permit recoveries for recurring injuries.

The following eases may be especially considered in determining the application of the law on this subject: St. L. I. M. & So. Ry. Co. v. Biggs, supra; St. L. I. M. & So. Ry. Co. v. Anderson, 62 Ark. 360; C. R. I. & P. Ry. Co. v. McCutchen, 80 Ark. 235; Turner v. Overton, 86 Ark. 406; St. L. I. M. & So. Ry. Co. v Magness, 93 Ark. 46: Board of Directors of Levee District v. Barton, 92 Ark. 406; C. R. I. & P. Ry. Co. v. Humphreys, supra.

In the present case it is evident that the obstruction, by reason of insufficient opening in the dump, was permanent in its nature, and that damage would result to .adjacent lands if the natural flow of waters was obstructed. If the height of the overflow had been raised prior to this injury and at the time the injury occurred, as contended by appellees, this was a fact ascertainable by ordinary means in the beginning. All of the lands in the valley of the Ouachita were subject to overflow from that river, and this was just as certain in the beginning as it was at the time, the injury occurred. Even though difficult to determine to what extent damage would result, it was, in fact, known or could have been known when the dump was completed. The only reason shown in the evidence why damage had not resulted theretofore was that the overflow had come at times of the year when there were no crops to be damaged. In this instance it so happened that the overflow came during the crop-gathering season, and the ungathered crop was damaged.

If the damage from this structure was not original, it is difficult for us to conceive a case where there would be such original injury. It is not material, in considering this question, that the railroad did not run through the lands of appellees. If the building of the dumn caused the injury to lands, whether abutting on the railroad or not, it constituted an injury to the property within the meaning of the Constitution, for which there must be compensation, and appellees could have, in the beginning, recovered compensation for such injury.

Our conclusion being that there was no liability on the part of the government by reason of the fact that the injuries resulted from the original construction of the dump', it follows that there is no evidence upon which a recovery can be sustained, and the judgment is therefor reversed, and each of the consolidated actions is dismissed.


text:
    Sonsee v. Jones & Green.
    Opinion delivered February 12, 1923.
    1. Attachment — wrongful issuance — compensatory damages.— Compensatory damages arising from the loss of or injury to attached property are recoverable by the defendant only in the action in which the attachment was dissolved.
    2. Attachment — damages for malicious prosecution. — Damages arising from the malicious prosecution of an attachment or on account of injury to credit or loss of prospective profits are not recoverable in the attachment suit on the dissolution of the attachment, but must be recovered, if at all, in a separate action.
    3. Attachment — measure of damages. — The measure of damages for the wrongful detention or loss of attached property is the usable value of the property during detention or its market value at th time of its loss.
    4. Malicious prosecution — complaint.—A complaint for malicious prosecution which does not show that the suit was instituted or the writ of attachment was issued without probable cause does not state facts sufficient to state a cause of action.
    Appeal from Lawrence Circuit Court, Eastern District; Bene H. Coleman, Judge;
    affirmed.

      E. F. Duncan, for appellant.
    Unlawful imprisonment is an actionable wrong. 70 Ark. 136. The questions of wrongful attachment, false arrest, restraint and detention of plaintiff were not in issue in the former trial, and the plea of res judicata should not have been sustained. 41 Ark. 75. The justice of the peace was without jurisdiction to try this cause, for the amount involved exceeded $300; neither did he have jurisdiction in a case of false imprisonment. See 61 Ark. 33; 44 Ark. 377; 29 Ark. 455; 21 Ark. 573. Damages for injury to credit and loss of prospective profits in business are not recoverable in an action on the attachment bond nor in the attachment suit, but. must be by a separate action. 34 Ark. 707. Where such profits are ascertainable, they are recoverable, 113 Ark. 556.

      Smith & Gibson, for appellee.
    All damages recoverable by appellant in this suit were awarded him in -the former suit, and that suit is a bar to this one. 131 Ark. 571 j 217 S. W. 178; 218 S. W. 189; 136 Ark. 115.
   McCulloch, C. J.

This is an action to recover damages alleged to have been sustained on account of the wrongful issuance and levy of. a writ of attachment. It is against J ones & Green, a copartnership, which was the the plaintiff in the original action, and against the constable who levied the attachment, and the sureties on his official bond.

• It was alleged in the complaint that the plaintiff was a resident of Lawrence County, Arkansas, and was the owner of four horses, a wagon and harness, and some household goods, nil of the value of $185, and that, while he was removing from Lawrence County to Jackson County, for the purpose of farming, the defendant, Jones & Green, sued him before a justice of the peace in Lawrence County, and sued out a. writ of attachment and caused the same to be levied on the aforedescribed property of the plaintiff. He alleged in his complaint that his said property was seized by the constable, and that he was arrested under the writ, that he and his property were taken into custody, and that the property was sold to pay the debt of Jones & Green, plaintiffs in that action.

It was further stated in the complaint that ‘ ‘ by reason of the taking of this property, as aforesaid, the plaintiff was rendered unable to go-to Jackson County and make said crop, or to make any crop in 1920, and from moving to Jackson County, that plaintiff was also deprived of his legal and constitutional rights as a citizen of Arkansas, and restrained in his liberty and in his person, to his actual damage in the sum of $1,000, and to his good name and reputation in the sum of $1,000 punitive damages.”

The court sustained a demurrer to that part of the complaint which claimed compensatory damages,

The defendant answered, and, among other things, pleaded, as a former adjudication of the issues involved, the judgment of the circuit court of Lawrence County, on appeal from the justice of the peace, dissolving the attachment in the case of Jones & Green against the plaintiff in this action and ordering the return of the proceeds of the attached property to the plaintiff. On the trial of the issue, the court sustained the plea of res judicata, and judgment was .accordingly rendered against the plaintiff.

The court was correct in sustaining the demurrer. Compensatory damages arising from the loss of, or injury to, the attached property were recoverable only in the original 'action in which the attachment was dissolved. Davidson v. Mayhue, 120 Ark. 344.

Damages arising from malicious prosecution, or on account of injury to credit and loss of prospective profits, were not recoverable in the original action, and must he recovered, if at all, in a separate action. Holliday Bros. v. Cohen, 34 Ark. 707; Goodbar v. Lindsley, 51 Ark. 380.

The loss of profits set forth in the complaint was too remote to he recovered, as the measure of damages for the detention or loss of the attached property was the usable value of the property during detention or the market value at the time of its loss.

The complaint does not state facts sufficient to constitute a cause of action for malicious prosecution, as it does not show that the suit was instituted, or that the writ of attachment was issued, without probable cause.

It is unnecessary to determine whether or not the allegations were sufficient to constitute a cause of action for false imprisonment, since there was a trial of that issue so far as it related to the recovery of punitive damages, and there was no proof adduced tending to show that the plaintiff was arrested and taken into custody. The testimony is directed only to the fact that his property was seized and taken away from him under the writ,

On the trial of the cause the court found that the plaintiff was barred by the judgment in the original action from recovering compensatory damages in a separate action, and this was correct. As there was no evidence of false imprisonment, there conld be no recovery on that account.

Finding no error in the record, the judgment is affirmed.


text:
    Carl-Lee v. Road Improvement District No. 16.
    Opinion delivered February 12, 1923.
    1. Highways — vacation order levying assessment. — In the absence of express statutory authority for the county court to be opened at any time for the purpose of making an order levying an assessment against the property of a road improvement district, such an order cannot be made except during the regular term, .and a vacation order would be void.
    2. Highways — county court compelled to enter order of assessment. — Under Sp. Act No. 183, Extra. Sess. 1920, providing that the order of the county court levying an assessment on the property of a road improvement district may be made at the time the assessment of benefits is filed, or at any subsequent time, the court can enter the order at any time after the assessment list has been filed, and can be compelled by mandamus to do so if it refuses; the entry of such order being ministerial.
    3. Highways — general and special acts. — Crawford & Moses’ Dig., § 5456, providing that county courts sha-ll be open at all times for the purpose of making an order or entering any judgment for the carrying forward of the work of a highway im- ' provement being a part of a general statute, has no application to districts organized under special statutes.
    4. Highways — general and special acts. — Crawford & Moses’ Dig., § 5458, providing that, if a county court refuses to make the necessary orders relative to a road improvement district, the circuit court is vested with jurisdiction to hear and determine an application for mandamus or injunction, and that a ruling by that court in vacation shall have the same effect as if made in term time, being a part of the general statute for the establishment of road improvement districts, is not applicable to districts organized under special statutes.
    5. Highways — general and special statutes. — Crawford & Moses’ Dig., § 5462, providing that it shall not he construed to repeal any special act for the creation of road improvement districts, and shall be liberally construed for the purpose of aiding and promoting improvement of public roads in the State, and on trial of any question relating to the establishment of any district or the collection of any tax thereunder after a district has been established by the county court, the presumption shall be in favor of the establishment of said district, or the collection of the tax thereunder, has no application to road improvement districts subsequently formed under special statutes.
    6. Mandamus — vacation order. — An order of the circuit judge in vacation awarding a writ of mandamus is without authority and void.
    Appeal from Woodruff Circuit Court, Northern District; J. M. Jackson, Judge;
    reversed.

      R. M. Huntchins, for appellant.
    A hearing upon mandamus is by the court and not by the judge in chambers. 26 Ark. 452. The district in question was created by special act, and the general laws on the subject are not applicable. Secs. 5456-5458, relied upon.by appellee, refer to the road created under the Alexander road law. When a special act covers the subject-matter, the general law is excluded. 84 Ark. 329; 68 Ark. 130; 142 Ark. 95. The county court must act in term time unless otherwise provided. Mandamus will not lie to compel it to act in vacation for the benefit of a special road district. 55 Ark. 216; 32 Ark. 676.

      J. W. House, Roy D. Campbell, Harry M. Woods, for appellee.
    The general law was applicable to grant the relief asked, unless the provisions of the special law repealed the general law. There was no such repeal here, and the county court should be construed to be open at all times for the purpose of perfecting the district.
   McCulloch, C. J.

Section 9 of the special statute creating Boad Improvement District No. 16 of Wood-ruff County (act No. 183, extraordinary session of January, 1920, unpublished) provides, in substance, that, after the assessment of benefits to lands in the district is completed, the list shall be filed with the county clerk and notice given by publication, and that on the day mentioned in the notice the commissioners shall meet to hear complaints against the assessments and to readjust the same.

Section 11 of the statute provides that “the county court shall, at the time the assessment of benefits is filed, or at any time subsequent, enter upon its record an order, which shall have the force and effect of a judgment, ’ ’ levying the assessments as a tax against the property in the district, etc.

The commissioners of the district, after the time for hearing complaints on the assessments had expired, filed an application in the county court asking that an order be entered levying the assessments in accordance with the provisions of the statute, but the county judge refused to enter such an order, and the commissioners then filed a petition with the circuit judge of the district praying for a writ of peremptory mandamus to compel the county judge to- perform the duty imposed upon the county court by the statute. There was a hearing of the application upon notice, -and the circuit judge made an order in vacation awarding the writ of peremptory mandamus as prayed for in the petition, and an appeal has been prosecuted to this court.

The county judge appeared by counsel before the circuit judge at the hearing and filed a response challenging the authority of the circuit judge to hear the petition in vacation, and also setting forth the fact that there had been no refusal of the county court to enter the order, but that, on the contrary, the court had not been in session on any day since the assessment list was filed. Proof was adduced showing that the county judge had announced his refusal to enter an order levying the assessments.

The contention of appellant is that there is no authority in the statute for the county court to enter an order except in term time; that there is no provision for a special term or for the judge to act in vacation, and that there is no provision in the law for the circuit judge to hear a mandamus case in vacation.

Counsel for appellee rely upon certain provisions of the general statutes governing road improvement districts for authority of both the county court and circuit court to make orders in vacation. Crawford & Moses’ Digest, §§ 5456, 5458, 5462.

In the absence of express statutory authority for the county court to be opened at any time for the purpose of making such an order, the order cannot be made except during the regular term, and a vacation order would be void. State v. Canal Construction Co., 134 Ark. 447; Light v. Self, 138 Ark. 221.

Section 11 of act No. 183, supra, provides, however, that the order of the county court may be made “at the time the assessment of benefits is filed, or at any time subsequent,” therefore the court can enter the order at any time after the assessment list has been filed, and can be compelled to do so if it refuses. The entry of the order is ministerial, involving no discretion, and on refusal the court can be compelled by mandamus to enter the order. It appears, however, from an examination of act No. 183 that it contains no provision with reference to special sessions, either of the county court or of the circuit court, to enter orders or judgments with respect to the operation of the district.

We cannot agree with counsel for appellee that the sections referred to in the general statute are applicable, for those sections in express terms apply only to proceedings inaugurated under that particular statute.

Section 5456, Crawford & Moses’ Digest, provides that county courts “shall be open at all times for the purpose of making an order or entering any judgment necessary for the carrying forward of the work gf improvement contemplated by this act.” That section is a part of the general statute for the establishment of road improvement districts, approved March 30,. 1915, Crawford & Moses’ Digest, § 5399 et seq. It has no application to districts subsequently organized under special statutes.

The same may be said of § 5458, which provides that, if a county court refuses to make the necessary orders, the circuit court is vested with jurisdiction to hear and determine an application for mandamus or injunction, and that “the ruling made by the circuit judge in vacation shall have the same force and effect as if made in term time.” This section refers to orders having reference to “said district,” meaning a district organized under general statutes.

Counsel place much reliance on § 5462, which reads as follows:

“This act shall not be construed to repeal any special act providing for the creation of road improvement districts in the various counties, and road improvement districts may be created in counties where a special act is applicable, either under the provisions of said special act, or under the provisions of this act, as deemed best by the petitioners, and this act shall be liberally construed by the courts for the purpose of aiding and promoting the improvement of public roads in Arkansas, and upon the trial of any question relating to the establishment of any district, or the collection of any tax hereunder, after a district has been established by the county court, the presumption shall be in favor of the establishment of said district, or the collection of any tax hereunder.”

This section has no application to districts formed under special statutes enacted subsequent to the enactment of the general statute. The section merely provides that the act shall not be construed to repeal any special statute, and this is necessarily a reference to a special statute alreády in existence. We discover no language in it which, can he construed to confer authority upon a road district formed under a special statute thereafter enacted.

The order of the circuit judge awarding the writ of mandamus was strictly judicial, and could not he rendered by the circuit judge in vacation, in the absence of statutory authority. Finding none, we are forced to the conclusion' that the order of the circuit judge was void.

The judgment is therefore reversed and quashed, and the cause is remanded to await a hearing before the circuit court in term time.