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    Burke Construction Company v. Board of Improvement of Paving District No. 20.
    Opinion delivered November 12, 1923.
    1. Municipal corporations — paving contract — breach—remedies. —Though a paving contract authorized the engineer of a street improvement district to complete the work, in the event of the contractor abandoning or failing to complete the work without unreasonable delay, and authorized the district to recover from the contractor the difference between the cost price and the contract price, such remedy was not exclusive, and did not preclude the district from bringing an action for damages upon a breach of the contract being committed.
    2. Municipal corporations — paving contract — breach.—The fact that a street improvement district, after notifying the contractor and its surety that the contractor was not proceeding with the work, proceeded to put the streets in passable condition, did not constitute an election to take over and complete the work under the contract, especially where the contractor, by securing an injunction in a suit against the district, prohibited it from proceeding to complete the work.
    3. Account — jurisdiction of chancery. — The chancery court has jurisdiction of a suit to settle and adjust long and complicated accounts.
    4. Appeal and error — question not raised below.- — In an action ' by a street improvement district against a contractor for breach of contract by abandonment, the contractor could not urge on appeal that the district could not have performed its part of the contract by making payments, if the contractor had completed the work, where such question was not raised by the pleadings and was not presented to the court below.
    5. Municipal corporations — paying contract — waiyee of— breaches. — Breaches of its contract by a paving district were waived by the contractor where it subsequently agreed to extensions of the contract and continued operations thereunder.
    6. Municipal corporations — paving contract — ¡breach.—Under the evidence, held that failure of a paving contract to complete his work during the time agreed upon in an extension of his original contract was a breach of the contract.
    7. Municipal corporation — paving contract — breach—interest. —Upon a paving contractor abandoning its contract, the district was not entitled to interest on the cost of completing the improvement in excess of the contract price from the date of the breach of the contract to the date of the judgment, where the delay in completing the work resulted from the district’s election to sue for damages instead of completing the work at once, as the district did not, in fact, expend the money on which it was asking interest.
    8. Damages — liquidated damages. — An improvement district, having recovered actual damages for breach of a paving contract, was not entitled to liquidated damages.
    Appeal from Miller Chancery Court; C. E. Johnson, Chancellor;
    affirmed, with modification.

      James B. McDonough, Paul Jones, Webber & Webber and James B. Head, for appellants.
    1. The action is one to recover a money judgment for unliquidated damages for an alleged breach of contract. The contract was-undisputed, there were no complicated accounts between the parties, and the amount of payments was undisputed. The mere difficulty of proving their case afforded no ground for equitable relief. The case should have been transferred to. the law court. 57 L. R. A. 417; 165 N. W. 342; 200 U. S. 450; 119 IT. S. 347; 138 U. S. 146; 140 U. S. 106; 101 Fed. 511; Simpkins, Federal Suits in Equity, 2d ed., 27-28; I Pomeroy, Equity Jur. § 237; 1 Ark. 31; 7 Ark. 520; 127 Ark. 318; 56 Ark. 391; 109 Ark. 537; Id. 171. 2. The action was premature. Section 16 of the contract provides' a valuable and drastic remedy, one which was not only for the benefit of the district but also for the benefit of surety of the construction company, and this remedy is, by many courts, held as exclusive. 105 Fed. 711; 36 Fed. 181; 158 Fed. 850; 11 N. Y. S. 518. Whether in this case the remedy be held to be the sole remedy or merely optional, it is clear that the ordinary remedy under the law and that provided by the contract are inconsistent, and the district must have, at least, elected on the breach, if any, which remedy it would pursue. 20 C. J. 6; Id. 11; 11 So. 332; 78 S. W. 801; 2i3 S. W. 236. The district, as is conclusively shown by the evidence, made its election, and is bound by it. 126 N. Y. S. 256; 39 Atl. 885; 30 Atl. 21; 219 Fed. 387; 60 N. E. 119; 92 N. E. 666; 129 Ark 275; 131 Ark 117; 117 Ark. 581; 151 Ark. 561; Perdue <& Hill v. Road Imp. Dist. No. 1, 159 Ark. 117.
    3. There was no iustifieation for the engineer’s action in arbitrarily making material changes in the character of the work and in quantities of materials, without any authorization on the part of the board. 101 Fed. 157; 88 N. E. 330; 82 N. E. 523; 92 Fed. 299; 99 Fed. 237; 186 U. S. 309; 271 Fed. 659.
    1. It is unconscionable for the district to ask, and would be inequitable for the court to grant, any damages on account of the items of paving which were not constructed the first year, which, as shown by the testimony, resulted solely because the engineer and the district failed to designate where this work should be done. 218 U. S. 331, 310; Elliott on Contracts, § 3713; 2 Hudson on Building Contracts. 1th ed., 122; 102 N. Y. 205; 13 Barb. 33; 93 N. E. 81. The extension agreement did not operate as a waiver of the claim for damagos arising from the failure to designate such paving in the first year, but only to substitute a new time for performance. It did not operate as a waiver of damages to the contractor for breaches of the contract. 9 C. J. 790; 271 Fed. 659.

      5. Tlie district breached, the contract by withholding payment of the November estimate; and by its permitting the work to continue beyond the first of November, under the supervision and direction of its engineer, it waived any breach of the contract as to completion of the work by that date. 4 Elliott on Contracts, § 3714; 6 R. C. L., Contracts, 984, § 353; L. R. A. 272, note 5; 4 Atl. 566; 9 C. J., Building & Construction Contracts, 728, § 64; 9 C. J., 789, § 30; 11 S. W. 18; 24 N. E. 315; 27 N. E. 631; 9 C. J., 812, § 151; 76 N. W. 1093; 51 S. E. 638. Where, after the expiration of the time limit for performance of a contract, the owner insists upon or demands performance by the other party, he thereby confirms the existence of the contract and waives the delay of the contractor. 104 S. W. 975; 1 Otto 646, >656, 23 L. ed. 341; 54 N. W. 743; 66 N. E. 1010. See also 42 N. Y. Super. 176; 6 Ir. 577; 24 Ga. 478; 70 S. E. 201; 9 Cyc. 608; 70 S. E. 970; 102 Ark. 79; 98 Ark. 328; 91 Ark. 133. One who is himself in default may not insist on performance by the other. 88 Ark. 491; Id. 422 ; 93 Ark. 472; 158 Ark. 91; 64 Ark. 228; 67 Ark. 156; 148 Ark. 181; 35 Pac. 146.
    6. The district, when it gave notice to the Burke Construction Company that it must perform its contract, the district was itself unable to perform its part of the contract. 94 So. 5.

      Frank, S. Quinn, James D. Shaver and Arnold & Arnold, for appellee.
    1. Chancery has jurisdiction. Its jurisdiction is tested by the allegations of the complaint. 61 Ark. 564; 140 Ark. 480 ; 152 Ark. 50. When these show a necessity for an accounting, they are sufficient to give equity jurisdiction. 31 Ark. 345; 82 Ark. 547; 48 Ark. 426; 102 Ark. 343; 119 Ark. 276; 129 Ark. 197. In matters of accounting’, chancery and the law courts have concurrent jurisdiction, but chancery is the more suitable forum. Appellant had no 'absolute right of trial by jury. 102 Ark. 276. The plaintiff’s 'board of commissioners, as trustees of the funds and property of the district, had the right to apply to a court of equity for aid and direction. 52 Ark. 546; 123 Ark. 258; 101 Ark. 455; 121 Ark. 85; 150 Ark. 63; 4 Ark. 302; 97 Ark. 588; 110 Ark. 475. Moreover, after so much delay, litigation and expense, it is too late to insist on a motion to transfer which was never pressed. It should be treated as waived. 134 Ark. 254.
    2. The suit was not premature. 133 Ark. 286; Id. 302; C. & M. Dig. § 5737; 137 Ark. 386; 119 Ark. 506; 247 S. "W. 393. The Federal court suit instituted by Burke gave the board an immediate right of action for breach of the contract. 236 U. S. 512; 245 S. W. 802.
    3. The various items claimed by appellants on account of alleged breaches of the contract prior to the •renewal or extension agreements were all waived by reason of such extension agreements, and appellants are estopped from claiming the same. 105 Ark. 421-432; Id. 233; 102 Ark. 79 ; 94 Ark. 9; 111 Ark. 362; 118 Ark. 465; 124 Ark. 141;. 126 Ark. 14.
    4. ' "Where there is a continuance of operations under the contract, it constitutes a waiver of past-forfeiture. 250 S. W. 1; 153 Ark. 606.
   Smith, J.

The appellant construction company, hereinafter referred to as the company, made a contract with Paving District No. 20 of Texarkana, hereinafter referred to as the district, to construct the paving, curbing and guttering in the district. The contract is dated November 29, 1916, but appears to have been signed December 22,1916, and there was attached to it a bond in the sum of $300,000, with the United States Fidelity & Guaranty Company and the two principal stockholders of the construction company as sureties, conditioned that tii e comnany should perform the work in accordance with the contract. The work was not completed within the year allowed by the original contract, and, by mutual agreement, the term was extended to November 1, 1918, and, not having then been completed, a second extension was made by consent of all parties to November 1, 1919.

On this last-mentioned date the work was unfinished, and the parties had thoroughly disagreed, and each charged the other with having breached the contract. The company quit work, and the district demanded that the work proceed. The district proposed a third extension, which the company agreed to sign provided E. P. Petersen, the engineer of the district, was discharged and another engineer was selected in his place. The company’s letter containing- this proposition was dated December 12,, and, in a letter dated December 16, the district answered that the facts did not warrant the discharge of the engineer, and declined to do so. This letter inclosed extension agreements, and urged the contractor to sign them and to proceed with the work.

On December 26 the company replied in a letter con- ' taining a recital of grievances against the engineer, whose acts were alleged to have been so arbitrary as to constitute breaches of the contract. The district was reminded that payment of the November estimate was being withheld, and demand for payment was made, and the letter closed with the statement that the company would postpone a decision of the course to pursue until an answer had been received to that letter from the board.

On January 5, 1920, the board replied, advising that it could not take the company’s view about the engineer, and denied any breach of the contract by it, and declined to pay the November estimate without deducting the penalty of $30 per day for delay provided for by the contract. This letter stated the deduction would not be made if an extension agreement was signed on the basis of the one which had just expired. This letter also stated that the contract provided that the board might withhold estimates when, in its opinion, the work was not progressing satisfactorily, and then stated: “In the face of your letter, which seems to indicate that you are considering abandonment of the work, the board would now, more than ever, be unjustified in allowing the November estimate.” The letter closed with a request for a conference to be held on January 12.

On January 11 the company replied that the board's letter had been turned over to its attorney for reply; and on January 14 the attorney wrote the board that he would advise the company to execute the extension agreement, with one change in it, to the effect that “the company waived no right to assert, in the event of litigation, a claim for damages resulting from any breach,” and requesting the insertion of this clause in the extension agreement, and attention was called to the fact that, if the board had not breached the contract, this amendment could not hurt.

On January 19, 1920, the attorney for the board wrote the attorney for the company that the board could not accept and would not agree to the insertion of the clause proposed in the extension agreement, and that the board had instructed the engineer to give the company notice to resume work under section 16 of the specifications contained in the' contract.

This section provides that, in case of any unnecessary or inexcusable delay in the general conduct of the work, or in the event of an actual or practical abandonment of the work, the engineer will notify the contractor and his bondsmen to that effect. If, after this notice, the contractor or Ms surety does not, within ten days, take such measures as 'will, in the judgment -of the board, insure the satisfactory completion of the work, the engineer may, with the consent of the board, notify the contractor to discontinue work. This section further provides: “The engineer shall thereupon have power, under the direction of the board, to place such and so many other persons as he may deem advisable, by contract or otherwise, to complete the work herein described, and to use such materials and equipment as he may find upon the line of said work; all expense of such completion of the work, including the additional amount to be paid to the persons completing same, the claim of the engineer for services for overtime, and the compensation of the inspectors and any other claim arising under this contract, shall be deducted and paid by the parties of the first part out of any such moneys as may then be due the said contractor, or which may thereafter become due, under and by virtue of this agreement or any part thereof, and in case any such expense is less than the sum which would have been payable for such work under the contract, if the same had been completed by the party of the second part, the contractor shall be entitled to receive the difference. If the expense is greater, then the bondsmen or surety will be called upon to make good the difference.”

On the day on which this letter was written, the board adopted a resolution that “the Burke Construction Company and its bondsmen be notified that work in this district must be resumed within ten days, or else the work would be taken over by the board.” On January 22 the company wrote the board in regard to the notice of the 19th, and stated that it had not abandoned the work and did not intend to do so, but, as the engineer required the work to be bone-dry before proceeding, and that, inasmuch as more or less rains would occur within the next ninety days, the work would be suspended for that time. This letter stated that the board had violated the contract in many respects, and was still violating it, and had no right to take the steps indicated in the let-’ ter of the 19th.

In reply to this letter, the attorney for the board stated that the board had not satisfactory evidence of the purpose of the company to resume work, and called attention to the fact that the extension agreement had not been signed, and that from the circumstances the board could draw no conclusion except that the company was in fact abandoning the work, and advised that the board was unwilling to withdraw the notice of the engineer dated. January 19th.

On January 31st the engineer made a report to the board, advising that he had received no reply to his notices sent the company and the sureties under section 16 of the specifications, and stating that he had no evidence whether the company intended to respect that notice, and in this report he recommended that the engineer be authorized to employ such help and provide such organization as was necessary, that the rough grading be let to a responsible person, and that the board take over all equipment and material belonging to the company to facilitate its performance, and that, in making these recommendations, he had considered the option reserved by the board to relet the work remaining to be done.

On February 9* the board had a meeting, at which a resolution was adopted reciting the notice -of January 19, and the failure of the company to resume work, and it was resolved that the company’s contract be terminated and that the company cease to' have further possession of the work or any connection therewith, and that “the engineer be and he is hereby instructed to take over and to take charge of said work, and to so notify the Burke Construction .Company, and also further to take charge of such machinery, tools, equipment,' and materials as he may find along the line of said work,” and that the bonding company, as surety, be offered the opportunity to take over the work under the terms of the contract. The board, at that meeting, ordered the engineer to be placed in charge of the work and all of the machinery, tools, materials, and equipment on the line of the work, in accordance with section 16- of the specifications, and that the engineer notify the company to get off the work.

On February 9, pursuant to the instructions of the board given at its meeting on that date, the attorney for the district wrote the surety company and inclosed a cony of the minute's of the meeting, and advised that the district had taken over the company’s equipment and would hold the same as provided in section 16 of the specifications, and requested the surety company to take over tlie work. On the same day the engineer notified the company that, in accordance with the resolutions of the board, he was notifying it to discontinue all work, “it being the intention of the board henceforth to continue with the work under the terms of section 16 of the specifications,” a copy of the resolutions being inclosed in the letter. •

On February 26, 1920, the surety company wrote the board declining to take over the work in the district, and advised that the company contended that the district had broken the contract.

The engineer made an inventory of the equipment which he found on the job belonging to the company, and he filed a copy thereof with a report which he made to the board at its meeting on February 16. This report was approved, and a copy of the inventory was ordered forwarded to the company. After taking over the company’s equipment, the district held all of it until-May 20, at which time it released a grader and a tractor, and retained possession of the remainder until June 19, at which, time the district notified the company that it had no use for the equipment, and the same was tendered to and accepted-by the company.

After this correspondence began, a conference was arranged to be held on February 16 between the board and the company to attempt an adjustment of their differences, but no representative of the company attended, and the meeting was not held. Upon the -contrary, the company, on that date, filed suit in the Federal court against the district and the members of the board individuallv for breach of contract, and prayed judgment for $114,331.60 damages. Thereafter, on'March 20,-the board brought this suit against the company and its sureties in the chancery court, and prayed judgment for the difference between the contract niñee of the unfinished work and the cost of finishing it. On motion of the company, this cause was removed to the Federal court, where, upon the motion of the district, it was remanded to the chancery court of Miller-County, where it had originated.

The company filed a bill in equity on August 24, ' 1920, in the Federal Court for the Western District of Arkansas, to enjoin the board from proceeding with the prosecution of this suit, on the alleged ground that it was an interference with the jurisdiction of the Federal court. The relief prayed was denied by the district judge, whereupon the company prayed an appeal to the Court of Appeals of this circuit, and that court reversed the decree of the districDcourt and granted an injunction as prayed. The case was then taken to the Supreme Court of the United States on certiorari, and the decision of the Court of Appeals was reversed. Thereafter the parties proceeded with the prosecution of this litigation.

The complaint filed by the district alleged that, under the terms of section 16 of the specifications, the district was authorized to, and did, take over the equipment belonging to the company, and that the property was then in its hands, and was being held and preserved by the board for use in finishing up the work, and a list of the property taken over was made “Exhibit D” to the complaint. There was a prayer “that proper disposition be made of said property that plaintiff had taken over under the contract, that the plaintiff be authorized to retain and use said equipment,” and that judgment be rendered in its favor for $80,000 damages for breach of contract.

Many .motions and pleadings were filed in the cause, and a vast amount of testimony was taken, and, on final hearing, a decree was rendered in favor of the district for the sum of $60,833.14, and both the company and,the sureties and the district have appealed.

One of the preliminary questions raised and very earnestly insisted upon is that the suit was prematurely brought. The company denies that it has in any manner breached the contract, but insists that, even though the fact be otherwise, the district has elected to proceed under section 16 of the specifications, and, having so elected, the rights and liabilities of the parties must be determined by that section, and that, inasmuch as the district took over the work for the purpose of completing it, the district must first finish the work, either by letting a new contract therefor or by doing the work itself under the direction of its engineer, and, after finishing the work by one method or the other, then demanding that the company-pay the difference, if any, between the cost price and contract price, if there is an excess, or, on the other hand, paying to it the difference between the cost price and contract price if there was a saving.

It is apparent, from a reading of section 16, set out above, that, if the company had breached the contract by failing to proceed with the work, the district had the right to take it over and complete it, and, as a means to that end, was authorized to take over the company’s equipment, and, having done so, the district had the right to complete the work itself, or to let new contracts therefor, and in either event to hold the company and its sureties for any excess of cost over the -contract price, with the reciprocal obligation of accounting* to the company for any saving accomplished if the work was completed at a cost less than the contract price.

In the case of Perdue & Hill v. Road Imp. Dist. No. 1, 159 Ark. 117, the district exercised the right to take over the work and relet a contract to complete an unfinished improvement; and we held the district should account to the contractor for the difference which there existed between the cost under the new contract and the original contract price.

It is the opinion of Mr. Justice Humphreys that the effect of that case is to require a district, operating under a contract like the one here involved, to take over the work and complete it, in the event the contractor fails and refuses to complete the work, and, after having been given this right, it is the remedy which the district must pursue, and is its exclusive remedy.

The majority do not so construe the case cited. That opinion must be interpreted in the light of the facts there stated. There was, in that case, no question of the options of the district or its right of election of the remedies it would pursue. Section 61 of the contract in that case gave the district the same right to take over the work as is here given by section 16, and the district there had elected to exercise that right, and, pursuant to that election, had completed the improvement. No question was presented as to whether the district was 'compelled to complete the work. The fact was-that the district had done so, and the question presented was, what were the rights of the parties under the case made? The parties had in fact proceeded under the section of the contract which gave the district the right to take over and complete the work, and, having done so, it became necessary to determine the rights of the parties undeu those circumstances. In other words, section 61 was the contract in that case, because the district had proceeded under it, and that section became therefore the relevant and governing section. As we there said, section 61 could be applied in the event only that the district had taken over the work upon a failure of the contractors to complete it. In other words, the question there presented was not whether the district was required to proceed under section 61, for it had already done so, and, having done so, the only question was, what were the respective rights and obligations of the parties under the section under which the district had acted?

The majority there said it was somewhat anomalous that one’s rights could be controlled by a contract which he had breached, but that such was the law of that case, because the parties had provided by the contract what the respective rights and liabilities of the parties should be in the event the contractor failed to complete the improvement and the district took it over and completed it, which, was the state of that case. The Chief Justice dissented upon the grounds, however, that, having breached the contract, as the majority found, the contractor could predicate no right upon the contract.

It is the opinion of the majority that the district was • not required to proceed under section 16. That was a mere option which the contract gave it, and, if there was no election to exercise that option, it might pursue the ordinary common-law remedies available to a contracting party whose contract has been breached.

It is the view of the writer that, while the opinion in the case of Perdue & Hill v. District, supra, has no application here, this suit was prematurely brought, because the district is shown to have made its election to proceed under section 16, and, having elected, the election is irrevocable, and the district should therefore have completed the improvement, as was done by the district in the Perdue & .Hill case, and thereafter .called the contractor and his surety to an accounting in the manner provided by that section.

It is the opinion of the majority, however, that the district made no such election as to be bound thereby. The views of the majority are as follows: It was the duty of the district to advise the surety that the contractor was not proceeding with the work, if a breach on that account was being claimed. The district did take charge of the equipment; but this was done to compel performance by the contractor and his surety, and, after taking over the equipment, the district demanded that the surety complete the work, and insisted that this be done. The district made no use of the equipment so far as attempting to complete the work was concerned, and, in fact, did no work towards the completion of the contract, the only work done by the district being directed to putting the streets, which had been torn up and rendered impassable by the company, in condition so that the public could use them. The company made no demand for any of its equipment except the grader and the tractor, and these were turned over to the company on demand, and the remainder of the equipment was voluntarily turned back to the company. Moreover, the suits brought in the Federal court against the district and tlie members of the board individually for damages, and the one for injunction, operated to prevent the election .to proceed under section 16 from becoming effective, had the board sought to make it final, as the company thereby expressed, in the most emphatic and effective ■manner possible, its refusal to acquiesce in the district proceeding to the completion of the work, and the district thereafter did nothing except to wait on the company to complete the work and sue for the damages for a failure to do so.

Another preliminary question which is pressed with equal earnestness is that the chancery .court was without jurisdiction to try this case, it being insisted that the suit, in effect and in fact, is an ordinary suit for unliquidated damages. In support of the court’s- jurisdiction, it is insisted by the district that the case is one involving intricate accounts, and, further, that the company has waived the right to question the jurisdiction bf the chancery court.

As we have concluded that the district is right on the first proposition, we do not stop t-o consider whether it is also right on the second.

The transactions covered by the testimony in this case extended over a period of three years, and the contract out of which the litigation arose covered a large part of the city of Texarkana. It was alleged in the complaint of the district that little more than one-half of the proposed improvement was completed and a considerable amount left in an unfinished condition: The contractor claimed about $85,000' for -sundry items of extra work and material, for improperly rejected curbs and gutters, for unnecessary moves, loss of time of men and teams and material. There is a conflict with reference to the kind and character of the work and the material to be used and the material which was used. It was apparent from the allegations of the pleadings that much testimony would be required, and much was offered on the disputed values, measurements and estimates, and in our own attempt to review these controverted items it appears that the case is one which involved long and tedious accounts. The case on this question is not unlike that of Seitz v. Meriwether, 119 Ark. 271, except that many more items are here involved than were in controversy in that case. That case involved many disputed items which had first to be passed upon before stating the account, and we there said: “In such cases the chancellor has power to appoint a master trained in the work to examine the accounts, to take'testimony in reference thereto, and to direct Mm to report his finding to the court. The chancellor then has authority to consider and modify the report of the master, after exceptions thereto have been made. All these are cogent reasons why the- accounts could be better settled by the machinery of a court of equity than by a jury. The jurisdiction of a court of chancery to settle and adjust long and complicated accounts, such as appear from the record in this case, is well established by former decisions of this court. Trapnall v. Hill, 31 Ark. 345; Smith v. Stack, 89 Ark. 143; Bagnell Tie & Timber Co. v. Goodrich. 82 Ark. 547; Goodrum v. Merchants’ & Planters’ Bank, 102 Ark. 326.”

Another question raised by the company, which may be disposed of at this point in the opinion, is the insistence that the testimony shows that the district could not have performed its part of the contract by making payments had the company completed the work, and that the district is therefore in no position to complain of the company’s failure to perform the contract. A complete answer to this point appears to be that no such question is raised by the pleadings or was presented to the court below. It may be that the cash which the district had on hand would not have paid the balance which would have been due the company had the work been completed; but there is no showing that the district could not have met its obligations, as it does not appear that the sum raised by the district equaled the betterments which had been assessed, and more money might have been raised by the sale of additional bonds or otherwise, and there might have been, if necessary, a reassessment of the portion of the betterments to be collected which would have produced enough money to meet the district’s obligations to the company without exceeding the total assessment of benefits.

The court found the fact to be that the company, and not the district, breached the contract. The company complains bitterly of the conduct of the engineer, and insists that in many respects the engineer’s conduct was so arbitrary and unreasonable as to constitute breaches of the contract. But most of these complaints occurred in the first year of the contract, and others were in the second, and we think the extensions of the contract and the continued operations thereunder waived these breaches, if any there were. Lewelling & Price-Williams v. St. Francis Road Imp. Dist., 158 Ark. 91; Brown & Froley v. Monroe County Road Imp. Dist., 153 Ark. 606.

We concur in the court’s finding that it was the company, and not the district, which breached the contract. The failure to complete the contract within a year was itself a breach of the contract. It is true the district waived the breach by the extension, and it also waived the breach to finish the work in the time covered by the second extension; but the company did not complete the work within that time, and this was a breach. The company was urged to sign an extension agreement, but this it refused to do except upon conditions which, we think, it had no right to .impose.

It is true the district withheld the November estimate, which was payable in December; hut section 25 of .the contract gave the district the right so to do if, in the opinion of the hoard, the work was not progressing in accordance with the provisions of the contract; and the contractor here had suspended work and had refused to resume it. The contractor did finally offer to execute an extension agreement,.but, as we have said, he offered to do this only under conditions which he had no right to impose.

Having reached the conclusion that the company had breached the contract, and that the rights of the parties were not determined by section 16 of the specifications, it becomes necessary to measure the damages, and this is done by ascertaining the cost to complete the work in accordance with the specifications in excess of the contract price.

Upon this subject there is a vast amount of testimony, covering many items, which we have carefully considered, but which we do not undertake to review because of its very volume, and a review of the testimony would not serve as a precedent in any other case. An itemized statement of the portions of the work remaining uncompleted was prepared by Petersen, and this estimate of the cost of completion was $87,000 in excess of the balance which would have been due the company had 'it completed the work. The district employed two engineers, who were men of established reputation, who had no connection with the case except to make an estimate of the cost of completion in excess of the contract price. These engineers made separate estimates, after a consideration of all the items involved. Tillson, one of these engineers, placed the excess at $80,833.14, and Miller, the other, placed the excess at $89,538.39. This excess over the contract price was shown to have resulted in a large measure from the increased cost of labor and material.

Witnesses Taylor and Gregory, who were also engineers, testified in behalf of the company, and one placed this excess at $18,767.14, and the other at $23,809.36.

The court accepted as substantially correct the figures of Tillson, and based its finding thereon; and we have concluded that action is not clearly against the preponderance of the evidence except in the particulars hereinafter» stated.

Tills on’s estimate appears to have been based upon Petersen’s estimate of the work completed. It was, of course, necessary to know what percentage of the work bad been finished to ascertain what the cost of completion would be. Petersen made an elaborate statement covering that question. The district employed Ayres, an engineer, to check up the completed work which was covered by the estimates which had been given the contractor each month as the work progressed. Ayres made an estimate and measurement of a number of the disputed items, and, according- to his testimony, the estimates given the company from time to time by Petersen lacked $3,677.12 of covering all the work which they had done. The district practically concedes that( Ayres’ figures are correct, except that it contends that Ayres included in his calculation work which Petersen had refused to accept as defective. It appears, however, that in the second paragraph of an amendment to the complaint of the district it was specifically alleged that various items of the work had been defectively done, and credit on that account should not be allowed. The court, in its decree, specifically found against the district on this allegation, and we clo not think this finding is clearly against the preponderance of the testimony.

We think therefore that Ayres’ figures should be accepted as correct; and, if this is done, it follows that the company should have credit for this unestimated work, and the decree of the court below must be so modified as to allow it. In addition to all the other controverted items the company claimed certain credits aggregating $23,372.51. The principal items embraced in this claim were for the reserved percentage and the unestimated work embraced in Ayres ’ measurements and a few small items which do not appear to be disputed. The court allowed the contractor a credit on account of these items amounting- to $20,000. It is not made plain how this amount was arrived at, and, if Ayres’ measurements are taken as correct, it appears to us the court should have allowed the credit of $23,372.51 as claimed, instead of the credit of $20,000. The decree against the company and its sureties should therefore be reduced by the difference between these amounts, which is of course $3,372.51.

On behalf of the surety company it is insisted that, whatever the liability of the company may be, its own liability has been discharged because of the unauthorized changes which were made in the contract during the progress of the work. Of this contention but little need be said. We think the changes which were made were either authorized by the contract, or that the right to complain because of them was waived' by the extension agreements which were executed with the consent of the surety, for, as we have said, these changes occurred either during the first or second year of the contract, and were therefore waived either by the first extension agreement or by the second one.

There, is a cross-appeal by the district, in which we are asked to reverse the findings of the court below on items covering’ work rejected by Petersen as defective and for relaying the same. But we have said that the court’s finding on these items was not clearly against the preponderance of the evidence.

The district also insists, on the cross-appeal, that interest should be allowed on the cost of completing the improvement in excess of the contract price from the date of the breach of the contract by the company to the date of the judgment, amounting to $10,958.74. We do not think so, as the delay in completing the work has resulted from the district’s own volition in not proceeding: with it sooner, as it might have done, and the district has not in fact expended the money upon which it is asking interest.

The district also asks, on the cross-appeal, for liquidated damages from the date when the work.should liave been completed to February 9, 1920, when the work was taken over by the board. We do not think so, because, in its decree, the court has rendered judgment in favor of the district for the damages which it was shown to have sustained.

It follows from the views here expressed that there was no error in the decree except in failing to allow the company .credit for work done in accordance with Ayres ’ estimate, and the decree will therefore be modified in this respect, and, as thus modified, affirmed.

Humphreys, J., dissents.


source: Caselaw Access Project

author: Hart, J.

license: Public Domain

text:
    Hall v. State.
    Opinion delivered December 3, 1923.
    1. Criminal law — joinder op offenses — election.—It was not error to refuse to require the State to elect between counts charging larceny and embezzlement, as the statute (Crawford & Moses’ Dig., § 3016) authorizes the two offenses to be charged in one indictment.
    2. Larceny — sufficiency of evidence — Evidence that the chairman of the State Board of Control, without authority, cashed a warrant belonging to a corporation which had furnished merchandise to the State, and appropriated the money to his own use, held to sustain a finding that the money was constructively in the possession of the corporation, and that, at the time he received the money, defendant intended to convert it, under such circumstances as to commit larceny.
    3. Criminal law — sufficiency of evidence.. — A finding that defendant was guilty of larceny will be sustained, though there was evidence tending to prove his insanity at the time of its alleged commission, where there was testimony also leading to prove that he was not insane, but only suffering, from the excessive use of alcoholic liquors.
    4. Criminal law — evidence of other crimes. — In an indictment against the Chairman of the State Board of Control for larceny alleged to have been committed by cashing the warrant of a creditor of the State and appropriating the money to his own use, evidence that defendant was guilty of other similar crimes was admissible to show guilty intent. '

      5. Criminal law — argument op prosecuting attorney. — Where the court, in a larceny case, permitted the prosecution to prove that the defendant had stolen large sums, in addition to the amount alleged in the indictment, but limited such evidence to its effect as tending to show motive or intent, it was not error to permit the prosecuting attorney to refer to the various amounts so proved, in such a way as not to violate the court’s instructions.
    6. Criminal law — argument op prosecuting attorney. — Where defendant in- a larceny case relied upon insanity as a defense, it was not error for the prosecuting 'attorney to argue that the fact that defendant was practicing law tended to rebut the idea that he was insane at the time of the transactions involved in the case.
    7. Criminal law- — argument op prosecuting attorney. — In a larceny case in which the jury’s verdict fixed the punishment at four years, the prosecuting attorney in argument said : “He ■ (defendant) steals all this money, and goes to the asylum. You saw that poor negro plead guilty here this morning for stealing $100 worth of automobile tires, all of which were recovered, and the court gave him four years in the pen.” Held not error.
    Appeal from Pulaski Circuit Court, First Division; John, W. Wade, Judge;
    affirmed.

      Kirby $ Hays, for appellant.

      J. 8. Utley, Attorney General, John L. Garter, Wm, T. Hammock and Barden Moose, Assistants, for appellee.
   Hart, J.

W. H. Hall prosecutes this appeal to reverse a judgment and sentence of conviction against him for the crime of grand larceny.

The indictment contains two counts, and it is insisted that the circuit court erred in not requiring the prosecuting attorney to elect on which count he would try the defendant.

Under the first count, W. H. Hall is charged with the crime of grand larceny, committed by feloniously taking and carrying away $1,631.97, the property of J. B. Ford Comnanv, a corporation.

In the second count W. IT. Hall is accused of the crime of embezzlement by wrongfully converting to his own use $1,631.97 belonging to the J. B. Ford Company, a corporation, which was in his possession as bailee for said -corporation.

The court refused to require the prosecuting attorney to elect, and the defendant was tried for grand larceny and embezzlement at the same time. The trial resulted in an acquittal on the embezzlement charge and in a conviction on the larceny charge.

There was no error in refusing to require the prosecuting attorney to elect. Under §3016 of,Crawford & Moses ’ Digest, larceny and embezzlement may be charged in one indictment. The evident purpose of the statute was to enable the State to embrace in one indictment a charge for larceny and embezzlement where the charge resulted from the same transaction and it might be doubtful whether the proof would fit the one charge or the other. Larceny and embezzlement belong to the same family of crimes. If the actual or constructive possession of the property was in the owner, then the wrongful conversion would be larceny, and not embezzlement. There must be lawful possession in the defendant at'the time of the conversion to constitute embezzlement. The distinguishing feature of embezzlement is that the taking essential to larceny is not required, a breach of trust taking its place.

The charge of larceny and that of embezzlement in the present case grew out of the same transaction and related to the same warrants. Hence, under the statute, they were properly charged in the same indictment, and the two charges might be tried together, just as, under a different subdivision of the same section, forgery and the uttering of a forged instrument may be joined in the same indictment and the defendant tried on both charges at the same time, where they grew out of the same transaction and related to the same instrument. Zachary v. State, 97 Ark. 176. Where the statute .authorizes two offenses of a kindred nature to be joined in one indictment, and they would be proved by substantially the same evidence, or evidence connected with a single line of conduct, it necessarily follows that the defendant’s rights are not jeopardized by a single trial. Therefore we hold that this assignment of error is not well taken.

It is next insisted that the evidence is not legally sufficient to sustain the verdict. According to the evidence for the State, W. H. Hall was chairman of the Board of Control for State Charitable Institutions in the State of Arkansas during the period- of the transactions involved in this case. Vouchers were issued to the J. B. Ford Company, a corporation, in the sum of $1,631.97 for merchandise and supplies sold to the State by said corporation. After these vouchers had been-issued by the Board of Control, of which W. H. Hall was chairman, they were filed with the Auditor of State, as required1 by the statute, and warrants were drawn by him on the State Treasurer for said amounts. These warrants were carried to the office of the State Treasurer and were there paid by him to the person having the warrants in his possession. The Treasurer required the person having possession of the warrants to indorse the same before he would pay them.

According to the testimony of the warrant clerk in the Treasurer’s office, warrant No. 17, issued on January 3, 1922, for $975.80, payable to the J. B. Ford Company, is shown by the record to have been paid to W. H. Hall on January 7, 1922. The warrant clerk also exhibited the original warrant, and it bears the indorsement of W. H. Hall.

It is also shown that other warrants payable to the same corporation were paid by the Treasurer to the stenographer of the defendant Hall. It is also shown that warrants issued to other persons for merchandise furnished by them to the State were presented by the defendant for payment at the State Treasurer’s office, and that the money was paid to him.

It was shown by the employees of the- J. B. Ford Company that W. H. Hall had no authority to collect r.he money due that corporation on said warrants. - It was also shown by numerous other persons that W. H. Hall presented warrants which had been issued to them at the office of the State Treasurer, and that these warrants were paid to him. The said defendant had been given no authority to collect said warrants.

According to the testimony of a stenographer who worked in the office of the Board of Control since November, 1921, she was there for about five months during the time that the defendant was chairman of the Board of Control, and before he resigned his office. She receipted for the warrant for $975.80 which had been issued to the J. B. Ford Company, and gave the warrant to the defendant. She sometimes cashed warrants, which had been issued to persons who had sold merchandise to the State charitable institutions, at the State Treasurer’s office, but did this because the defendant told her to do so. In each instance she gave the money which she received at the State Treasurer’s office, by cashing the-warrants, to the defendant, and never gave any money to any other member of the board. No other member of the board except the defendant ever handled any of the warrants issued to merchants who had sold supplies to the State charitable institutions under contracts made with the Board of Control. The witness receipted for the warrant for $975.80 issued to the J. B. Ford Company, and gave the warrant to the defendant. She knew that she did not cash the warrant, because her name is not indorsed on it.

Evidence was introduced by the defendant tending to show that he was insane during the period of time involved in these, transactions. He resigned his. office in March, 1922, and was confined in the State Hospital for Nervous Diseases for some time thereafter. Various members of the' medical staff in the hospital and other physicians testified that the defendant was insane from tbe excessive use of alcoholic liquors, or perhaps from other causes. Some of these experts state that, while they observed that the defendant was addicted to the excessive use of intoxicating liquors for some time before he resigned, they could not state that he was insane on this account, or for any other reason.

Other witnesses testified that the defendant was addicted to the excessive use of alcoholic liquors for some time before he resigned, and that such excessive use showed itself in various ways in the conduct of his office, hut that they could not state that he was insane at the time. The peculiarities of his conduct might only have resulted from his excessive use of intoxicating liquors, and not from insanity caused thereby.

The above is a brief recital of the substance of the evidence adduced in favor of the State and for the defendant. After a careful consideration of the evidence as it appears in the record, we are constrained to hold that the jury was warranted in returning a verdict of guilty on the larceny count of the indictment.

Under the above testimony there was no variance between the allegations of the indictment and the proof. On the first count the grand jury accused the defendant of the crime of grand larceny by feloniously talcing and carrying away $1,633.97 in gold, silver, and paper monéy of that value, the property of J. B. Ford Company, a corporation.

The evidence for the State showed that a warrant for £975.80 was issued on the State Treasury on January 3, 1922. This warrant was issued on a claim'allowed by the Board of Control in favor of the J. B; Ford Company, for merchandise which it had sold the State under a. contract with the Board of Control.

It appears from the testimony of the warrant clerk in the State Treasurer’s office that this warrant was presented at that office, and the warrant clerk testified that it -was paid by the State Treasurer to W. H. Hall. The original warrant was exhibited, and bore his indorsement. The office always required the one -who received money on a warrant to indorse the warrant.

Here we find that the witness testified thht the State Treasury paid the amount of the warrant to the defendant, and that the defendant received the amount of money which the face of the warrant called for. The warrant was issued on the Treasurer for the amount found to be due to the J. B. Ford Company, on the claim in its favor allowed by the Board of Control, for- merchandise sold by that company for the use of the State charitable institutions. The warrant was issued pursuant to § 9332 of Crawford & Moses’ Digest.-

A stenographer testified that she had cashed warrants at the office of the State Treasurer, at the request of the defendant, and delivered the money which she received to the defendant. These warrants were issued to merchants who had furnished supplies to the State, under contracts with the Board of Control, and vouchers for the amounts of their claims had been previously issued by said board.

It is fairly and legally inferable from the above testimony that the warrants were paid in United States currency, which is the medium of exchange in this State. The money deposited in the State Treasury was for the payment of State taxes of various kinds, and they were paid in United States currency, which is the only lawful medium of exchange in this State. When the witnesses testified that the warrants were cashed at the State Treasurer’s office, or that the money was paid to the defendant on these warrants, it is fairly inferable that they meant that the warrants were paid in United States currency. We think this is the effect of our previous decisions on this branch of the case. Cook v. State, 130 Ark. 90, and Kent v. State, 143 Ark. 439.

But it is insisted that the testimony is not legally sufficient to warrant the verdict, because there is no direct proof that the warrants had been delivered to the J. B. Ford Company, and on this account there is a variance between the ownership of the property as laid in the indictment and as shown by the proof. We cannot agree with counsel in this contention. We think the circumstances related above show that the money charged to have been stolen was constructively, at least, in the possession of the J. B. Ford Company. It undoubtedly shows that a voucher for the amount of the money was issued to that company by the Board of Control, as required1 by statute. Then this voucher was filed with the Auditor of the State, and he duly issued his warrant for the amount on the State Treasury, as he was required to do by the statute.

It is true that this warrant was never actually delivered to any authorized agent of the J. B. Ford Company, which is a corporation. The defendant, however, took the warrant and presented it at the Treasurer’s office, where the face of it was paid to him in money. He was not authorized to cash the warrant or in any manner to use it. His act in cashing the warrant, then,'constituted a wrongful conversion of it, and his appropriating the money which he received on it to his own use, together with other circumstances, showed that he intended to take the money under such circumstances as to commit larceny.

It was the duty of the defendant, as chairman of the board, to issue a voucher for the warrant in question. He had no authority to have the warrant delivered to himself for the corporation. He cannot take advantage of his own wrong and escape the penalties of the statute by saying that the warrant was never delivered to its rightful owner. The fact remains that he took possession of it after it had been rightfully issued, and procured the money on it at the office of the State Treasurer. His wrongful act in this respect constituted a constructive delivery to the rightful owner of the warrant, and his conversion of the money collected on the warrant constituted a wrongful taking of it under such circumstances as amounts to larceny. He was never rightfully in possession of the warrant or the money derived by cashing it, and he was not therefore guilty of embezzlement. He rightfully caused the voucher to he issued in favor of the J. B. Ford Company, and he cannot now claim that there was no actual delivery of the voucher or the warrant issued on it to that company because he wrongfully cashed the same at the State Treasurer’s office and converted the money to his own use. His wrongful act in presenting the warrant at the Treasurer’s office constituted, at least, a constructive delivery to the J. B. Ford Company, and his cashing the same and wrongfully converting the money thereby to his own use constituted the crime of larceny.

Mr. Bishop, in his work on Criminal Law, vol. 2, §864, says: “If one hires a horse and sells it before the journey is performed, or sells it afterward before it is returned, he does not commit larceny thereof if the felonious intent comes to him only after he takes it into his possession. But where one had- a horse from a livery stable in London to go to Barnet, the jury were instructed that, when he had accomplished the journey, and also brought the horse back to London, which, under the contract of hiring, he was to do, then if, instead of delivering it to the owner, he ‘ converted it after such return to his own use, he is thereby guilty of felony; for the end and purpose of hiring the horse would then be over.’ And if the hirer intends, when he receives the horse, to convert it to his own use, he thereby commits larceny; to complete which there need be no subsequent act of sale or conversion.”

In Wharton’s Criminal Law, 11 ed., vol. 2, § 1195, p. 1412, the author says that where one, having only the care, charge or custody of property for the owner, converts it animo furcvndi, it is larceny.

Following the rule in Commonwealth v. Williamson, 96 Ky. 1, 49 Am. St. Rep. p. 285, it was held that, if the owner of goods parts with their possession for a particular purpose, and he who receives such possession avowedly for that purpose, has a fraudulent intention to make use of the possession as a means of converting the goods to his own use, and does so convert them, it is larceny. The court said that in such a case the question of intent was for the jury.

So, too, in Morrison v. State, 50 Am. St. Repts. 120, the Texas Court of Appeals held that, where one hires a horse and subsequently converts it, an indictment for larceny will not lie unless it was shown that the felonious intent existed at the time of hiring. So it may now be considered settled that the question of intention is for the consideration of the jury, and, where it may be said that the defendant came into the possession of personal property by the express or implied consent of the owner, to warrant his conviction for larceny, this fraudulent intent to take the property, or the animus furcmdi, at the time of its original taking, must be established beyond a reasonable doubt.

In the present case the question of the intention of the defendant in the original taking was left to the jury, and, from the evidence introduced, the jury might have found that, while he had lawful authority to issue the voucher in favor of the J. B. Ford Company and to have a warrant issued for the amount of its claim and deliver it to the company, it was the intention of the defendant from the very beginning to cash this warrant in the State Treasurer’s office and to convert the money secured thereby to his own use. This would amount to larceny, within the rule just announced.

In the application of the same principle in Arkansas National Bank v. Johnson, 122 Ark. 1, and cases cited, this court held that, where the possession of drafts and money is obtained from the owner through a trick or device, with the intent, at the time the party receives them, to convert the same to his own use, and the owner of the property parts merely with the possession and not with the title, the party receiving the property is guilty of larceny.

It is true that the testimony of various experts showed that the defendant was insane at the time of the transactions involved in this suit, and therefore not legally responsible for liis act, because he was incapable of forming a criminal intent; nevertheless it is fairly inferable from other testimony, and also from the testimony of some of these experts, that the defendant was not insane, but was only suffering from the excessive use of alcoholic liquors. In short, it cannot be said that the undisputed evidence in the case conclusively shows that the defendant was insane within the meaning of the law, and therefore not legally responsible for his acts which constituted the crime for which he was charged and convicted. It follows, from a consideration of the testimony, as a whole, that the evidence; as above stated, was legally sufficient to warrant the verdict.-

The next assignment of error is that the court erred in allowing to go to the jury other testimony offered in behalf of the State, showing other transactions on the part of the defendant of like kind as.the one charged in the instant case. As we have already seen, the defendant was chairman of the Board of Control. He had charge of making contracts for the various State charitable institutions. It was his duty to pass upon the correctness of,these accounts, and to cause vouchers to be issued to the various persons for the amounts respectively .dne them. The very nature and. character of his office and of the circumstances surrounding the transactions, and relied upon by the State, made proof of similar transactions admissible. His repeated acts of a similar nature might, in the minds of the jury, rebut any presumption of innocence as to one independent transaction. The testimony was admissible in order to show the intent or guilty knowledge on the part of the defendant. Therefore we think the evidence of other similar iransactions was admissible, subject to proper instructions as to the purpose of such testimony. In this connection it may be said that the instructions given by the court properly restricted the testimony to other transactions of a similar nature, and the court also told the. jury that it must believe beyond a reasonable doubt that the defendant was guilty in regard to the transactions shown in the indictment. Nash v. State, 120 Ark. 157; Bledsoe v. State, 130 Ark. 122; Monk v. State, 130 Ark. 358; Cole v. State, 156 Ark. 9, and Cain v. State, 149 Ark. 616.

It is next insisted that the court erred in permitting the improper argument of the prosecuting attorney. In one respect it is claimed that the court erred in allowing the prosecuting attorney to state before the jury that the defendant stole over $27,000, and in naming the individual warrants issued for the various amounts which totaled this sum.

As we have just seen, this testimony was introduced in evidence for the purpose of shedding light on the guilty intent of the defendant with respect to the particular transaction laid in the indictment. Therefore it was a proper subject of comment upon the part of the prosecuting attorney, and it does not appear from the record that the prosecuting attorney commented upon this testimony in such a way as to violate the instructions of the court, which limited it as tending to show motive or intent on the part of the defendant with respect to the transactions charged in the indictment.

. It is also contended that the prosecuting*, attorney erred in arguing to the jury that the defendant was down at Smackover, in this State, practicing law, and that this tended to rebut the idea that he was insane at the time of the transactions involved in this case.

The principal transaction involved in this case was in the fall of 1921, and the trial was commenced on the 4th day of June, 1923. The defendant introduced a lawyer to establish his good character for honesty and morality. In the course of this testimony, this witness said that the defendant was down at Smackover practicing law, and had been engaged in the practice of law there since the year before.

It follows that the prosecuting attorney was not making use of a-matter concerning the defendant which had not been introduced in evidence. Therefore this assignment of error is not well taken.

It is next insisted that the prosecuting attorney erred in his argument to the jury in saying the following: “He (referring to the defendant) steals all this money and goes to the asylum. You saw that poor negro plead guilty here this morning for stealing $100 worth of automobile tires, all of which was recovered, and the court gave him four years in the pen.”

The jury fixed the punishment of the defendant at four years in the State Penitentiary. The remarks of the prosecuting attorney indicate that the defendant was tried before the regular panel of the jury; The record shows that the jury which tried the defendant was composed of nine of the regular panel and three talesmen. Those of the regular panel were bound to know what had happened in their presence during the regular proceedings of the court on the morning before this trial was commenced. The prosecuting attorney was merely expressing his opinion about what it was the duty of the jurors to do in the enforcement of the law.

This court has always held that a wide range must be given to the arguments of counsel and much discretion must be left to the court. Treating the jury as men of good sense and sound judgment, it does not seem to us that the remarks of the prosecuting attorney could have resulted in prejudice to the defendant. It was not the statement of a substantive fact which had not been proved in the case, but was rather the general expression of opinion by the prosecuting attorney as to what the jury should do under the evidence. See Cravens v. State, 95 Ark. 321, and Blackshare v. State, 94 Ark. 548.

As we have already seen, the verdict of the jury resulted in a conviction on the charge of larceny and in an acquittal on the charge of embezzlement.. Hence it is unnecessary to consider the instructions given on the embezzlement charge.

We Lave examined tlie instructions on the subject of larceny given by the court, and are of the opinion that they are in accord with the principles of law laid down by the former decisions of this court in construing our larceny statutes.

We find no reversible error in the record, and the judgment will be affirmed.


author:
McCulloch, C. J.
      Hart, J.,

text:
    Gardner v. North Little Rock Special School District.
    Opinion delivered December 10, 1923.
    1. Schools and school districts — power to contract. — Under Crawford & Moses’ Dig., § 8942, authorizing school boards in certain cities to elect superintendents without restriction as to the length of the term of the employment and duration of the contract, a school board is not limited in its contracts employing superintendents to a period- of one year, nor to such . a time a-s is within the term of office of all the members of the board, but may make a contract for a reasonable length of time, its reasonableness to be determined by all of the circumstances.
    2. Schools and school districts — employment of superintendent —fraud.-—The execution of a contract employing a superintendent -of -schools of a city, immediately -before the school election, does not of itself warrant the inference that there was fraud or collusion between the superintendent and the board of directors.
    3. Schools and school districts — employment .of superintendent. - — Crawford & Moses’ Dig., § 9030, prohibiting school directors from employing a “teacher to teach a school in any district in this State unless said district has money to its credit, in the treasury of the county in which said district is located, to pay said teacher for such work,” held not to apply to the employment of a school superintendent.
    4. Schools and school districts- — discharge of superintendent.— Proof that a superintendent of city schools, against the opposition of half of the school board, favored improvement of the school properties and an increase in the teachers’ salaries, that he was persistent in advocating his policies even to the extent of challenging two members -of the board to debate same with him, and that he actively engaged in political activities in a school election, held not to show such misconduct as to afford grounds for hi-s discharge.

      5. Damages — wrongful discharge of superintendent. — Where a school district wrongfully discharged its superintendent of schools before the expiration of his term of employment, it will be liable to him for his salary during the remainder of such term, less such amounts as he earned during such period.
    Appeal from Pulaski Circuit Court, Second Division; R. M. Mann, Judge;
    reversed.

      Mehaffy, Donham £ Mehaffy, for appellant.
    The plaintiff was discharged without _ cause. 147 Ark. 176; 152 Ark. 215; Ottinger v. School District, 157 Ark. 82.

      Coleman, Robinson .£ House, for appellee.
    The finding of the trial court will not be disturbed where there is any evidence to support it. 147 Ark. 178. The contract between plaintiff and the board was void. C. & M. Dig., § 9030.
   McCulloch, C. J.

The plaintiff, E. B. Gardner, is by profession engaged in educational work, and on May 17,1919, the defendant, North Little Eock Special School District, entered into a written contract with him. whereby lie was employed as superintendent of schools in said district for a period of two calendar years beginning on July 1, 1919, at a stated salary, payable-at the end of each month. ■ Plaintiff entered upon the discharge of his duties on the date specified in the contract for the commencement of his term of employment, and continued in the service until he was discharged by a resolution of the board of directors of the district, adopted June 21, 1920. The discharge was without plaintiff’s consent, and he instituted this action, after the expiration of his term, to recover the amount of his salary, alleging that his discharge was wrongful apd without fault on his part, and that he had been unable to obtain other employment during the remainder of the term of his contract with defendant.

The defendant in its answer tendered several defenses, one a denial that the district had made a valid contract with plaintiff for a term of two years; another that, at the time of the execution of the contract, there were not available funds in the district to pay the salary of plaintiff, together with other school expenses, during the full period covered by the contract, and that for that reason the contract was void under the. statutes of this State; and finally, on the ground that the discharge of plaintiff was not wrongful for the reason that he was “guilty of insubordination; that he refused to work in harmony with the board; that, instead of cooperating with the board and accepting its policies, plaintiff tried to dominate and control the board, and, to that end, devoted his efforts in stirring up strife among the patrons of the school and inciting the teachers against the board, and in political activities with a view to electing members of the board who would agree with him, with the result that the efficient conduct of the schools was impossible under plaintiff as superintendent, and plaintiff, by such conduct, became unfit to be superintendent and his influence damaging and detrimental to the interests of the schools.”

The case was tried, by consent, before the court sitting as a jury, and the finding was in favor of the defendant.

The first question which presents itself is whether or not the directors of the district were empowered to enter into a contract with a school superintendent for a term of more than one year. This question was not expressly raised in the proceedings, but the denial of the execution of the contract itself is sufficient to raise the question of the legal power of the district to enter into the contract.

The statute governing single school districts, and conferring authority upon the directors of such districts in the management and control of school affairs, authorizes the directors to “employ a superintendent of the schools, who may also be principal of any graded or high school that said board may establish.” Crawford & Moses’ Digest, §8942. It will be noted that there is nowhere found in the statute any express restriction, upon the authority of the district in employing a superintendent, so far as concerns the length of the term. If any such restriction exists, it must therefore be an implied one. In the case of Gates v. School District, 53 Ark. 468, this court held that the statute just referred to, conferring’ authority upon the board of directors to employ a superintendent of schools, does not limit 'the authority to an employment during the term of office of such directors, and that the statute does not forbid the board to make a contract with the superintendent for a term beginning after some members of the board go out of office. The question of employment for a longer term than one year was not involved in that case, but the term fixed by the employment did, in fact, extend beyond the term of office of some of the directors then in office, and the reasoning of the court leads inevitably to the conclusion that the statute does not restrict the power of the board to the employment of a superintendent for a single year. In disposing of the question involved, the court said:

“Public interest might suffer from unwise contracts covering an extended term in future; they might suffer equally for want of power to make a contract when a good opportunity offered. But with the question of policy we have no concern, except in so far as it aids in ascertaining legislative intent. There is nothing in the act that implies that the Legislature intended either more or less than it said. We therefore conclude that the act furnishes an accurate expression of legislative intent, and that there is no law that forbids the school board to make a contract for a superintendent for a term beginning after some members of the board go out of office.”

We are of the opinion that the authorities sustain the view that the statute authorizing such an employment by a board of school directors or trustees, without any restrictions .as to the length of term of the employment and duration of the contract, is not limited to the period of one year, nor to such a time as is within the term of office of all the members of the board at that time.

In a case note to Manley v. Scott, 29 L. R. A. (N. S.) 652, the prevailing rule on this subject is stated as follows :

“Where there is no limit placed on the exercise of the power conferred upon school trustees or boards to contract with and employ teachers, a contract by such trustee or board employing* a teacher for a term to commence or to continue after the expiration of the term of such trustee or board, is valid and binding upon their successors in office.”

Cases are there cited to sustain the text, and we think the rule is sound.

The same doctrine is stated in 24 R. C. L., p. 579, as follows:

“In the absence of an express or implied statutory limitation, a school board may enter into a contract to employ a teacher or any proper officer for a term extending bevond that of the board itself, and such contract, if made in good faith and without fraudulent collusion, binds the succeeding board. It has even been held that, under proper circumstances, a board may contract for the services of an employee to commence at a time subsequent to the end of the term of one or more of their number and subsequent to the reorganization of the board as a whole, or even subsequent to the terms of the board as a whole. The fact that the purpose of the contract is to forestall the action of the succeeding board may not, of itself, render the contract void. But a hiring for an unusual time is strong evidence of fraud and collusion, which, if present, would invalidate the contract.”

The proper rule seems to be that, unless the statute prescribes a time limit upon the duration of such a contract, the board may make a contract for a reasonable length of time, and the reasonableness of the contract is to be determined by all the circumstances. The mere fact that there are partial changes in the personnel of the board during’ the life of the contract does not of itself render it unreasonable in duration of time. Whether or not a contract extending beyond the incumbency of all of the members of the board then in office would be unreasonable we need not determine, for no such state of facts exists with respect to the contract now before us. In the present case the contract was made immediately before the school election in May, 1919, and the term extended up to July 1, 1921. The terms of two of the directors then in office expired with the election in May, but if the contract with plaintiff had been for only one year, the board, as constituted prior to the school election in 1920, which was a majority as it existed when this contract was made, could have made a new contract for another year, so the making of this contract did not extend the employment beyond the terms of even a majority of the members of the board, and, under the decision in the Gates case,-supra, the contract was valid. The fact that it was within the power of a majority of the board who would remain in office past the time when the second year of the term might be contracted for affords a reason, if no other existed, for holding that the contract was not unreasonable. Our conclusion is that the contract was valid, and that there was no defense on that ground.

It has been suggested that the execution of the contract immediately before the school election in 1919 war- • rants the inference that there was fraud and collusion between the plaintiff and the board of directors, but we do not think that that circumstance alone shows any collusion. ' The board as it then existed had the right to act within its statutory powers, even though such action anticipated the action of members of the board who were to be elected at the approaching election.

It is next contended that the employment for more than one year was in violation of the statute (Crawford & Moses’ Digest, § 9030) which, prohibits the directors from employing a “teacher to teach a school .in any district in this State unless said district has money to its credit in the treasury of the county in which said district is located to pay said teacher for such work.” Without deciding whether or not this statute applies to employment in single school districts, it is sufficient answer to the contention that it in no event applies to the employment of anything but teachers. According to its express language it has no application to the employment of a school superintendent, therefore it has no bearing on the present case.

- 'We come now to a determination of the question whether or not the discharge of the plaintiff from his employment was wrongful and without just cause.

The contract was, as. before stated, executed just prior to the school election in May, 1919. Two new directors, Moseley and Foster, were elected at that election, and, immediately after their election and qualification, they joined in a letter to the plaintiff, notifying him that they objected to his employment for a term of two years, that it had never been the custom in the district for a superintendent to be employed for more than one year, and'that there was no authority for employment for a longer term, and warning plaintiff that he need not come to the district with the expectation of serving for two years, and advising him to remain in the field where he was then employed.

It appears from the testimony that, prior to the time of the employment of the plaintiff and during the incumbency of his predecessor, there were two factions, one favorable and the other hostile to the superintendent of schools, and this factionalism continued during the period of plaintiff’s service. The factionalism grew more and more acute, and resulted in a controversy over the election in May, 1920, by the two factions, one being designated as the Gardner faction and the other as the anti-Gardner faction. As the time for the election approached, plaintiff wrote a letter to directors Moseley and Foster, reminding them of the fact that, by their letter to him before he came to assume the duties of his employment, they showed their antagonism and their opposition to his policies, and he challenged them to the sportsmanlike conduct of resigning their offices and running for reelection on an anti-Gardner platform s'o as to get an expression from the people of the district as to the respective policies of the plaintiff and these two directors. Moseley and Foster did not, however, accept the challenge, and they were not involved in the election further than their preference for the successors of the two directors whose terms had expired. Mann and Machin were candidates of the anti-Gardner faction, and Bennett and Ryan were candidates for the Gardner faction, and it is shown from the testimony that there was a heated campaign. At the election Mann and Machin were returned as having received the highest number of votes, and were declared elected, and entered upon the discharge of their duties, but there was a contest instituted by Bennett and Ryan, which resulted in their favor, and there was a judgment ousting Mann and Machin from office and awarding the offices to Bennett and Ryan. The discharge of plaintiff by the board of directors occurred while Mann and Machin were serving, and before they were adjudged not to be entitled to the office.

The contention of,the defendant is that the plaintiff was guilty of insubordination to the authority of the board of directors, and that he became so active in political affairs of the district that he intensified the spirit of factionalism which existed and impaired Ms usefulness to the extent that he was no longer fit to manage the school. ' There is no contention that the plaintiff was lacking, to any degree, in moral character, or habits, or health, or that he was not up to a high standard of ability for the discharge of the duties of his employment. The testimony shows affirmatively that he is a man of good character, that no objections were made to his methods of discharging the duties of his office, nor that he was to any degree inefficient. The sole contention is that he persistently pursued policies in hostility to the views of the members of the board, thereby maldng himself obnoxious to the members of the board, and that his overzeal in the political affairs of the district was detrimental to the school interests and rendered him unfit to discharge his duties.

Of course, in testing the sufficiency of the evidence to support the finding of the court, we must view the evidence in its strongest probative force and adopt any inference from the evidence which would be sufficient to sustain the finding of the trial judge. After a careful consideration of the evidence, we are of the opinion that, thus viewing it in its strongest light favorable to the cause of defendant, there is nothing of a legally sufficient nature to justify the finding that the conduct of the plaintiff afforded just grounds for his discharge. It is shown that the plaintiff favored a somewhat ambitious plan for enlargement of the school properties, for expensive grounds and buildings, and that in this policy he was supported by an even half, in numbers, of the board of directors, but was opposed by the other half. The evidence shows that he .was persistent in the advocacy of his policies and plans, but never disrespectful nor personally offensive in his conduct toward the members of the board. All the witnesses who testified on this subject stated that there was lack of harmony between the superintendent and the board, but never any harsh feelings or offensive conduct. The most that the evidence shows on this subject is that the plaintiff adhered persistently to his views with respect to his plans for improvements in opposition to the wishes of at least half of the members of the board. It shows that he was not disposed to treat the decision of the board as final, in the sense that he ceased to attempt to impress his views upon the board, but there is no evidence to show that there were any obstructive tactics on the part of the plaintiff, nor any overt act of insubordination.

There is also testimony on the subject of plaintiff’s activity in school politics, that he entered with a considerable degree of activity into the campaign, and that he made a speech at one of the meetings just prior to the school election of 1920.

It is difficult to draw a line of demarcation between the political rights of a school-teacher, or others engaged in educational work, with respect to activity in politics. Certainly they are not denied the right of free speech or the right to a reasonable amount of activity in all public affairs. There is, however, a limit to such an extent that their usefulness in the work for which they are employed shall not be impaired. Their zeal in political activity must not carry them to such a degree of offensive partisanship that their usefulness in educational work is impaired or proves a detriment to the school interests affected by their service. It does not appear to ns that the evidence in this case shows any such over zeal or activity on the part of the plaintiff. It is not contended that the schools’ interests were injured, or that the efficiency in the school work in that district was lessened.

There is some evidence also that an organization, or a union, was formed among a large number of school-teachers in North Little Rock, but it is not shown that nlaintiff was a member of this union, but merely that he favored it. Nor is it shown by the evidence that this organization was detrimental to the school interests of the district.

A contract of service of this kind is like any other contract, in the sense that it is binding upon the parties unless there are just grounds for avoidance. The directors have no right to discharge a teacher or superintendent unless there are iust grounds for it, and these grounds must exist at the time of the discharge, not’ merely a bare fear that they may arise in the future. Argenta Special School District v. Strickland, 152 Ark. 215. The nearest approach to impropriety in the conduct of the plaintiff, and which might tend to show insubordination and lack of harmony with the board of directors, is his written challenge to two of the members, Moseley and Foster, to resign and enter the election in May, 1920. But it must be remembered that this impropriety was invited, to a very large extent, by the conduct of the two directors themselves in opposition to the plaintiff before he began his work as superintendent of the district, and continuing such opposition as long as he remained in the service. There was a feeling of hostility initiated by the act of these two gentlemen themselves, which, to some extent at least, must have aroused a feeling of resentment on the part of the plaintiff, and his act in writing the challenge must be viewed in this light, which affords some palliation for the apparent impropriety. Viewing it, however, as an act of impropriety in which the plaintiff should not have permitted himself to indulge, we do not think that it was such misconduct as was sufficient to afford just grounds for plaintiff’s discharge. The fault which caused the lack of harmony was not altogether with the plaintiff, and he should not be required to bear alone the results. Some allowance should be made for natural emotions and human imperfections, and the impropriety of the plaintiff and the two directors in engaging in personal correspondence, to some extent beyond the bounds of punctilious courtesy, is of too little significance to afford just grounds for the abrogation of a solemn contract.

Our conclusion therefore is that the evidence is not sufficient to sustain the finding that the plaintiff broke the contract: therefore his discharge was wrongful, and he is entitled to recover as damages the amount of compensation which he would have received under the contract, having failed to find other employment during the term.

The evidence as to actual loss sustained by plaintiff resulting from his wrongful discharge is also undisputed. He lost the salary for twelve months, at $280 per month, an aggregate of $3,360 for the whole period. He sought other employment, but succeeded in earning and receiving only the net sum of $266.65 during a short period in which he was engaged in commercial pursuits. He was elected mayor of the city of North Little Eock, and, taking office on April 11, 1921, he received the ■salary of $250 per month for a period of two and two-thirds months during the term prescribed by his contract with the school district, making an aggregate of $666 thus earned. This makes a .total of $932.'65 earned and received from all sources, which should be deducted frotn his salary of $3,360, leaving the net sum of $2,427.35 which he is entitled to recover. Plaintiff testified that he incurred and paid expenses in securing his nomination and election to the office of mayor in the sum, approximately, of $266, which, it is contended by his counsel, should be deducted from his earnings. We do not think this contention is sound, for the reason that plaintiff’s election expenses were incurred in securing the office of mayor for a full term of two years, and should not be deducted from the salary earned during the first part of the term. The expenses are referable to the full term, and should not be apportioned to different periods. Whether election expenses should be deducted, under any circumstances, we need not now decide. The defendant introduced no testimony on this feature of the case, and the facts are undisputed.

The evidence has been fully developed on the whole case, and there is no reason for remanding it for a new trial.

Judgment will be entered here in favor of the plaintiff for recovery of the sum of $2,427.35, with interest at legal rate from the respective dates of maturity of the unpaid monthly salary prescribed in the contract between plaintiff and defendant. It is so ordered.

Hart, J.,

(dissenting). I agree with that part of the majority opinion which says that school teachers are not to be denied, free speech, or a reasonable amount of activity in all public affairs. 'But I think it is fairly inferable from the testimony, when viewed in the light most favorable to the defendant, that the circuit court was justified in finding that the appellant denied this right to the teachers and pupils under him.

Some of the directors thought that the district was too deeply in debt to build any more schoolhouses or to pay better salaries to the teachers. It seems that appellant thoug’ht otherwise, and caused a teachers’ union to be organized for the purpose of obtaining better salaries for them and to also carry out his building program. The circuit court was justified in finding that the organization of the union divided the school into acrimonious factions. The pupils took sides in the matter, and the union and non-union teachers held themselves aloof from each other, and the result was to seriously impair their usefulness as teachers. The ultimate result was that the teachers, the pupils, and their parents all became active members of the rival factions. Appellant challenged two members of the school board to resign and run for reeleetion because they opposed his policies. He reprimanded teachers and pupils severely for slight offenses because they did not join the union.,

The testimony of the witnesses relating these facts was found to be true by the circuit court, and was, in my mind, sufficient to justify the directors in removing the appellant from the office of superintendent. The school directors are intrusted by statute with the management of the affairs of the school district, including that of electing- teachers. If they cannot discharge a superintendent or teacher wlio, by his unwarranted activities, causes a division of the teachers, pupils, and patrons of the school into bitter factions, their usefulness is practically at an end. In my judgment it does not make anv difference which side was right, for the board of directors may discharge for cause any teacher who, by his activities in any direction in opposition to the board, causes the school to be divided into factions which tend to lower the morale of the pupils. It seems to me that, under the holding of the majority in Hall v. Bledsoe, 126 Ark. 125, the finding of the trial court should be upheld.

I am also of the opinion that the decision of the court on the question of law is unwise as well as an unwarranted extension of the principles decided in Gates v. School District, 53 Ark. 468. In that case it was simply held that the board of directors could make a binding contract, before the school year opened, which would run into the succeeding year. If a director could not participate in making a contract for the services of a teacher that would lap over into the term of .his successor, desirable teachers could not be secured. I think, however, that by necessary implication our Constitution and statutes forbid school boards from employing teachers for a longer term that of the succeeding school year.

It is will be remembered that our Constitution provides that the General Assembly may, by general law, authorize school districts to levy, by a vote of the qualified electors of such district, at an election held for that purpose, a tax not to exceed 12 mills on the dollar in any one year, for school purposes. Under our statute there are six directors for special school districts, and two of the. six go out of office yearly. If the directors are ahowed to reach out too far in advance in making contracts with teachers, they may seriously embarrass the school district. If the contracts are valid, the district must issue warrants to the teachers, whether there is anv money in the treasury or not, to pay them. Thus it will be seen that in this way the value of the warrants would be greatly depreciated.

Hence I agree with the views expressed in Gates v. School District, supra, as I understand them, and disagree with the views expressed in the majority opinion herein. To say that a director can participate in making no contract that shall be .operative beyond his official term is too narrow, and to say that he can contract for services for teachers so far in the future as the present one is too wide.

Therefore I respectfully dissent.