text:
    Kelley Trust Company v. Paving Improvement District No. 47 of Fort Smith.
    Opinion delivered March 21, 1932.

      Geo. F. Yowmans and J. F. O’Melia, for appellant.

      George W. Dodd, for appellee.
   Hart, C. J.,

(after stating the facts). Numerous persons, who were citizens of Fort Smith and property owners in the proposed improvement district, joined in the suit and attacked the validity of the assessment of benefits on the ground that it was so excessive and discriminatory as to render it arbitrary and void. The burden was upon them as attacking the validity of the assessment as a whole to prove that it was made upon the wrong basis or that it was arbitrary and void. Turner v. Adams, 178 Ark. 67, 10 S. W. (2d) 41, and Lenon v. Street Improvement District No. 512, 181 Ark. 318, 26 S. W. (2d) 572. In the latter case, it was said that there was a presumption in favor of the validity of the assessment of benefits, and that the burden was upon the property owners who assailed it to show that it was so excessive as to render it void.

Special assessments proceed upon the theory that, when a local improvement enhances the value of adjacent property, that property should pay for the improvement. Hence, special assessments are made upon the assumption that the land in the proposed district is to be actually benefited by the enhancement of its value. Local assessments can only be imposed to pay for local improvements clearly conferring special benefits on the property assessed, and to the extent of those benefits only. This court has uniformly held, in a long- line of cases, that all assessments for local improvements in municipal corporations are based on the principle that the property subjected to the assessment is benefited by the improvement for which the assessment is made. Hence there is a constitutional limitation that the amount of the special assessment must not exceed the special benefit derived, and also that the imposition of the assessment must be uniform and free from unjust discrimination. Otherwise the special assessment would be invalid on the ground that it is an attempt to take private property without just compensation, in violation of the Constitution. Ahern v. Board of Improvement District No. 3 of Texarkana, 69 Ark. 68, 61 S. W. 575; Mullins v. Little Rock, 131 Ark. 59, 198 S. W. 262, L. R. A. 1918B, 461; Stevens v. Shull, 179 Ark. 767, 19 S. W. (2d) 1018, 64 A. L. R. 1258; and Thacker v. Paving Improvement District No. 5 of Mena, 182 Ark. 368, 31 S. W. (2d) 758.

The cases above cited, as well as many other cases decided by this court, establish the doctrine that special assessments cannot be levied in local improvement districts unless the property charged receives a corresponding physical, material and substantial benefit from the improvement.

It is first sought to set aside the assessment of benefits on the ground that it was so excessive as to be arbitrary. It is first pointed out that the total of the assessed benefits is $74,235, and that the estimated cost of the improvement is $47,763. This, of itself, could not constitute an arbitrary assessment of benefits. In the first place, interest on the amount of bonds to be issued to make the contemplated improvement would be necessary; and, when the testimony of all the witnesses on both sides is considered, it cannot be said that the assessment of benefits was made upon an arbitrary basis, so as to leave a large margin of benefits in favor of the bondholder.

It is next insisted that the assessment of benefits is so discriminatory and excessive as to render the assessment arbitrary and void under tbe principles of law above announced. About eight witnesses were introduced by each party. So far as the record discloses, they were responsible citizens, property owners, and were more or less interested in the contemplated improvement. There is nothing- to impeach their integrity or veracity except that they wholly contradicted each other about the assessment of benefits made upon the property in the 'district.

On the part of the property owners, the testimony shows that the assessment of benefits was excessive, and that in many instances there was discrimination in the assessment of benefits between the property owners in the district. On the other hand, the testimony of the witnesses for the district shows that the assessment of benefits was made after due consideration of every element that should enter into it. The situation of the property and the condition surrounding it, as well as all other matters which might tend in a substantial way to increase its value, were given due consideration in the assessment of benefits, and the assessment was not void as being excessive or made in an arbitrary manner. The assessors had before them a map of the proposed district, showing the situation of the property and the physical material benefits that might accrue to it.

It is true that the testimony of the witnesses for the property owners tended to show that in many instances the assessment of benefits, as regarding the different' property owners, was unequal and discriminatory. This was a matter which would have entitled these individual property owners to relief, had they proceeded in the manner pointed out in the statute. The present suit, however, is an attack upon the assessment of benefits as a whole as being made on the wrong basis.

It is claimed that the assessment of benefits as a whole was excessive, and made in such a discriminatory manner as to render it arbitrary and void. The evidence tends to show that part of the streets in the district had already been paved and had become badly worn, but this matter seems to have been taken -into consideration by the assessors in making their assessment. It also claimed that some nf the property abutted the street, and some of it did not. This fact of itself would not render the assessment void, and the situation of the property appears to have been taken into consideration by the assessors in making the assessment of benefits. Cooper v. Hagen, 163 Ark. 312, 260 S. W. 25; and Little Rock v. Boullion, 171 Ark. 245, 284 S. W. 745, and cases cited.

To set out the testimony in detail and to review it would serve no useful purpose in this case, and would unduly extend this opinion. We deem it sufficient to say that it was fully abstracted by counsel for appellant, ¿nd that we have carefully read and considered it. We have also considered the brief of opposing counsel, and are of the opinion that the assessment of benefits was made in attempted compliance with the principles of law announced in the cases above cited. It is not within our province to say whether or not the chancery court should have reached a different conclusion upon the facts. Under our settled rules of practice, it is our duty to uphold the finding of facts made by a chancery court, unless it is against the preponderance of the evidence. It is true that we try cases ele novo upon the record made in a court below, but it is our duty to give due deference to the finding of facts made by the chancellor as above indicated.

It cannot be said that the finding of facts made by the chancellor in the court below is clearly against the weight of the evidence; and, under our settled rules of practice, it becomes our duty to affirm the decree. It is so ordered.


source: Caselaw Access Project

author: Hart, C. J.,

license: Public Domain

text:
    Albright v. Taylor.
    Opinion delivered March 21, 1932.

      J. F. Parish and H. U. Williamson, for appellant.

      C. M. Erwin, for appellee.
   Hart, C. J.,

(after stating the facts). Under our rules of practice, in equity exhibits to the complaint control its averments, and may be looked to for the purpose of testing the sufficiency of the allegations of the complaint. Moore v. Exelby, 170 Ark. 908, 281 S. W. 671.

The general rule is that, where a deposit is made in a bank with the distinct understanding that it is to be held by the bank for the purpose of furthering a transaction between the depositor and a third person, or where it is made under such circumstances as give rise to a necessary implication that it is made for such a purpose, the deposit becomes impressed with a trust which entitles the depositor to a preference over the general creditors of the bank, where it becomes insolvent while holding the deposit. See case notes to 31 A. L. R., at page 473; 39 A. L. R. 930; 57 A. L. R. 386; and 60 A. L. R. 336.

Among the many cases cited in support of the rule is Covey v. Cannon, 104 Ark. 550, 149 S. W. 514. In that case, the general rule was stated by the court substantially as above. It was held that, where checks, given as part of the purchase price of lands, and either made payable to a certain bank or indorsed to it, and where delivered to the bank to 'be held until the sales were completed, with no intention that the checks should be cashed and the money deposited to the credit of the drawers, tké deposits were special, and the relation of debtor and creditor was not established, though the bank cashed the checks and mingled the proceeds with its funds. It was further held that, where a hank has mingled trust money with its own funds, money paid from such fund for its own purposes will be presumed to have been paid from its own money and not from the trust funds; hut, where the mingled fund is at any time reduced below the amount of the trust fund, the latter must be regarded to that extent as dissipated, and sums subsequently added from other sources cannot be treated as a part of the trust fund.

In that case, as here, the account was marked, “escrow,” and the court in its opinion recognized that this showed that the bank received the fund upon the express condition that it was not to be mingled with its own funds, and that it was intended by the parties that it should be a trust fund. The checks were given to the bank with the understanding that they were to.be held for the seller until the transaction was completed and delivered to him. Hence this act constituted a deposit for a special purpose, and, as such, was impressed with a trust entitling the vendor to preference on the bank’s insolvency, provided he could trace the funds or their equivalent as pointed out in the opinion. The court said: “It was not the purpose nor intention of Mason or Cannon, upon placing the checks and drafts with the contracts of purchase and the deeds to be held in the bank and delivered when the trades were consummated, that the checks should be cashed and the money deposited therein to their credit, and the bank did not understand that such was the purpose, as clearly shown by its marking the account ‘escrow’ in each instance. This was all done without the knowledge of either of the parties, and doubtless for its own convenience to identify the fund. Said deposits, in any event, were not general, but special, deposits for a particular purpose. The funds were so placed to the credit of these individuals as depositors without right and authority, and wrongfully mingled with the funds of the bank. The ordinary relation of debtor and creditor was not thereby established, nor did the funds lose their character as trust funds by being so wrongfully used and commingled with the funds of the bank.”

Other cases recognizing the principle will be found •in the case note to 31 A. L. R., pp. 476-478.

In Shulz v. Bank of Harrisonville, (Mo. App.) 246 S. W. 614, in a similar case, the bank marked the deposit slip with the word “escrow,” and it was held to constitute a special deposit impressed with a trust.

Again, in Bank of Rison v. Layne & Bowler Company, 173 Ark. 368, 292 S. W. 126, the court held that an escrow agreement with a bank, providing that the deposit in escrow should be paid out only to plaintiff company engaged in drilling a well for a depositor, was not ultra vires.

See also Brogan v. Creip, 116 Kan. 506, 227 Pac. 261, 37 A. L. R. 126, and case note.

But it is insisted that such holding would be contrary to the rule announced in Blalock v. Bank of McCrory, 170 Ark. 597, 280 S. W. 650, where it was held that money deposited under a special act in a certain bank, to the credit of the county treasurer, to pay the expenses of a special election to be held on the question of the removal of the county seat, created the relation of debtor and creditor between the bank and the county treasurer. There was nothing in the account to show that the parties intended it to be a special deposit. The record shows that the sum of $400 was deposited in the bank, “subject to the check of the county treasurer, for the purpose of paying the expense of said election.” The court expressly passed over the question as to the validity of the provision of the statute in regard to the deposit of funds by the citizens of the town of MoOrory, on the ground that no issue was raised on that feature of the case. Continuing, the court said that the funds had been deposited in the bank and thereby came into the hands of the treasurer, and, like any other deposit, created the relation of debtor and creditor between the appellant as treasurer and the bant as depository. No reference was made to the case of Covey v. Cannon, supra, and this indicates that the court had no intention whatever of overruling it.

Here a copy of the account is placed in the record, and it shows that the parties intended that it should be a special deposit. We are of the opinion that the deposit : n this case is a prior claim, as defined in § 1, subdivision 4, of act 107 of the Acts of 1927, which reads as follows:

“The owner of a special deposit, expressly made as such in said bank, evidenced by a writing signed by said bank at the time thereof, and which it was not permitted to use in the course of its regular business.”

We are of the opinion that plaintiff’s claim should be regarded as a special deposit and treated as a trust fund, and that he should have been awarded a preference under the statute. Therefore the decree will be reversed, and the cause will be remanded for further proceedings in accordance with the principles of equity, and not inconsistent with this opinion.


author: Smith, J.

text:
    Surbaugh v. Dawson.
    Opinion delivered March 21, 1932.

      C. T. Carpenter, for appellant.

      Knott & Spencer, for appellee.
   Smith, J.

Appellee recovered a judgment, from which is this appeal, for a commission alleged to have been earned by him upon the sale of a tract of land owned by appellant, which appellee had been employed to sell.

Stated in the light most favorable to appellee, the facts disclosed in the record are as follows: Appellee had an agency to sell the land, the terms thereof being defined in the correspondence between the parties. The agency was not exclusive, nor was it for a definite time. While this contract was in force, appellee showed the land to Faggs and priced it to him, but no sale was made because Faggs declined to make the cash payment required by appellant. Subsequent attempts by appellee to sell the land to Faggs failed for the same reason. The letters above referred to were all written in January, 1930, the last being dated January 21, 1930. Appellant wrote appellee a letter in which the agency was definitely canceled. Appellee testified this letter was received only three months before appellant himself sold the land to Faggs. Appellant testified this letter was written several months earlier.

However, after this letter was written, appellant leased the land — a farm — -to Carlton for a year, with an option to Carlton to renew the lease on the same terms for a period of three years. The good faith of this transaction is not questioned. Carlton occupied the land under this lease for a short period of time, when he surrendered it. Thereafter, one Thompson told Faggs that appellant was in possession of his farm, and was offering it for sale. Thompson introduced Faggs to appellant. They had never previously met. Faggs did not tell either Thompson or appellant that he had ever discussed the purchase of this land with appellee, and appellant was without information to that effect until he sold the land to Faggs on November 1, 1930.

Appellant made a reduction in the price for which he had authorized appellee to. sell, but, in consideration of this reduction, the sale was made on an all-cash basis of $4,250, of which $2,250 was paid in cash to appellant. The $2,000 balance was paid by the agreement to discharge a mortgage for that amount outstanding against the land.

It has been held in a number of eases that, where a real estate agent employed to sell land introduces a purchaser to the seller, and through such introduction a sale is effected, the agent is entitled to his commission, although a sale was later made by the owner. Scott v. Patterson, 53 Ark. 49, 13 S. W. 419; Hunton v. Marshall, 76 Ark. 375, 88 S. W. 963; Hodges v. Bayley, 102 Ark. 200, 143 S. W. 92; Horton v. Huddleston, 132 Ark. 396, 200 S. W. 1003; Carpenter v. Phillips, 157 Ark. 609, 249 S. W. 357; Johnson v. Garrett, 174 Ark. 682, 297 S. W. 839.

It was held in the case of Moore v. Moss, 117 Ark. 593, 175 S. W. 1195, that a real estate broker is entitled to his commission where he has been given authority to sell the land and produced a purchaser ready, willing and able to pay, but the sale is delayed by the seller, and the property is finally sold to the purchaser provided by the broker.

But it is also settled law that, when an agency is not exclusive, the owner may sell it himself without liability for commission. Gammell v. Cox, 143 Ark. 72, 219 S. W. 745.

It is also well settled that, when an agency is not for a definite time, it may be discharged at the pleasure of the owner, provided the discharge is in good faith and not done for the purpose of defeating the payment of the agent’s commission. One must, of course, act in good faith with his agent, and will not be permitted to discharge him as a subterfuge to prevent the payment of the commission where the owner later sells to the purchaser provided by the agent.

The instant case is not unlike that of Bodine v. Penn Lumber Co., 128 Ark. 347, 194 S. W. 226, in which case it was contended by the agent that he was the procuring cause of the sale and entitled to a commission, notwithstanding there was a cancellation- of the agency before the sale was made. We said, however: “We do not think this contention is well founded. There was no length of time specified in the contract between plaintiff and defendant, and the authority to sell was revocable at any time, subject only to the limitation that it should be done in good faith. [Citing cases.]”

The instant case is similar also to that of Johnson v. Knowles, 169 Ark. 1089, 277 S. W. 868, in which case the headnote reads as folloAvs: “Where a broker showed a house to a prospective purchaser, who declined to purchase it, but three months later rented the house, and thereafter purchased it from the owner, there being no connection between the broker’s efforts and the sale, the agent was not entitled to a commission.”

Here, under appellee’s own testimony, the agency was not exclusive, and was not for a definite time. The agent failed to procure a purchaser ready, willing and able to buy upon terms under which the agent was authorized to sell. The agency was definitely terminated, and there was no testimony that this was not done in good faith. The owner had never met Faggs, and did not know, until after he had sold him the property, that Faggs had ever been interested in its purchase. It is true appellant sold the land for a less price than he had authorized appellee to sell it for, but it is true also that he received a much larger cash payment than he had directed appellee to demand.

We conclude therefore, under the undisputed testimony, that appellee was not entitled to a commission upon this sale, and the judgment in his favor must therefore be reversed, and, as the case appears to have been fully developed, it must be dismissed, and it will be so ordered.


text:
    Bank of Mulberry v. Sprague.
    Opinion delivered March 21, 1932.

      Starbird & Starbird, for appellant.

      G. C. Garter, for appellee.
   Smith, J.

This suit was brought by Sprague and his wife to foreclose a mortgage given to them by W. W. Mahan and wife to secure a note payable to their order for the sum of $400, dated March 8,1916, and due twenty-four months after date. The complaint was filed April 14, 1930, and alleged that the property mortgaged was an undivided one-eighth interest in the land described, which Mahan had inherited from his father, W. Mahan. On the back of the note there appeared the following indorsements: “$80 Sept. 26, 1918. Rec’d of F. L. Wagner eighty dollars. (Signed) Herbert Sprague. April 4, 1920. Rec’d of F. L. Wagner forty dollars. (Signed) Herbert Sprague. May 27, 1921. $140. Rec’d of F. L. Wagner one hundred forty dollars. (Signed) Herbert Sprague. $60. Dec. 15,1922. Rec’d of F. L. Wagner sixty dollars. (Signed) Herbert Sprague. $50. Nov. 23, 1925. Rec’d fifty dollars.”

It is apparent that, but for this last payment, the note was barred by the statute of limitations when the suit was brought. It will also be observed that all the payments were signed as having been received by Herbert Sprague, whereas the last payment is not so signed, and was written in pencil, and the other payments are indorsed in ink. The mortgage was also made an exhibit to the complaint, and it appears to have been filed for record March 16, 1916, and to have been duly recorded.

An intervention was filed July 14, 1930, by the Bank of Mulberry, in which it was alleged that F. L. Wagner had purchased the interests of all the heirs of W. Mahan, and had on June 5, 1927, mortgaged the entire tract to the bank to secure a note due June 15, 1930, on which there was due an unpaid balance of $1,261.21. This mortgage was not introduced in evidence, but its execution and validity were admitted in open court.

The intervener alleged that the mortgage sought to be foreclosed was barred by the statute of limitations, and prayed the court to adjudge that fact, and that intervener’s mortgage be declared a first lien, and that it be ordered foreclosed as such.

Wagner filed an answer, in which he adopted the recitals of the intervention, and specifically denied that he had made the alleged payment, or any payment, credited on the note as having been made on November 23, 1925. Counsel for plaintiff offered the note in evidence, but no witness gave any testimony concerning it, and no one testified that the alleged payment of November 23, 1925, had in fact been made.

Only three witnesses testified in the case, but, before calling any witness, plaintiff introduced three letters from Wagner to Sprague, but no witness testified that Wagner had written them, or that Sprague had received them. These letters relate to the debt to Sprague, and promised to pay it, and two of them refer to remittances therein made. The last of these is dated 12-15, 1922, and stated that a check for $60 was enclosed. There is no reference to the alleged payment made in 1925 in any of these letters; in fact, none of them bore a date later than 1922.

The first' witness called was the clerk and recorder, who identified the mortgage record in which the mortgage to Sprague was recorded, and he stated that there appeared on the margin of the record the same indorsements which were found on the back of the note, set out above. This marginal indorsement was not signed by Sprague, or his wife, or by any one for either of them, or by any other person, and was not attested by the clerk or his deputy. No name whatever was signed on the record. The clerk testified that he knew nothing about these indorsements except that they were on the record, and that he had just seen them on the day of the trial for the first time.

A vice president of the bank was the next witness called. He introduced the note of Wagner to the bank, and stated the balance due on it.

The third and last witness called was J. D. Mcllroy, who testified that he had been a deputy clerk for fifteen years, but had “quit working the 14th of February, 1927, or 1928.” This witness was shown the indorsements on the margin of the record and stated that they were in his handwriting. But he did not remember when or by what authority he made the indorsements. Being asked when the indorsements were made, he answered that he did not know, and, when asked about “How many years back”? he answered: “I cannot say.” He knew nothing whatever- about the payments, and could only identify his writing, but stated that “Some one gave me the information.” He did not recall why he had failed to attest the indorsement on the record.

This is a brief but complete summary of the pleadings and testimony in the record before us, and upon this record a decree was rendered ordering the foreclosure of plaintiff’s mortgage as prior to that of the bank, and this appeal is from that decree.

The decree of the court below contains the recital that Wagner had purchased “subject to the note and mortgage of the plaintiff and assumed the payment of plaintiff’s mortgage in writing as a part of the purchase price of the lands mentioned in plaintiff’s mortgage.” No pleading filed in the case contained any such allegation, and there was no testimony on that subject except only the unidentified letters addressed to Sprague and signed by Wagner. The deed to Wagner from Mahan was not offered in evidence, and no testimony was offered concerning that instrument.

The letters from Wagner to Sprague, above referred to, were offered in evidence without objection, and, if it be said that this failure to object to their introduction rendered them competent, they prove only that WTagner recognized that the mortgage to Sprague from his grantor of an undivided eighth interest was then a subsisting lien on the land, it not then being barred by the statute of limitations. He bought this eighth interest subject to this mortgage, because that mortgage was of record when he purchased, and it was, of course, necessary for him to pay the debt there secured, or cause it to be paid, to clear his title of this outstanding incumbrance. However, the last of these letters was written more than seven years before the suit was filed to foreclose the mortgage.

Laying aside all questions of pleadings and of evidence, and, assuming that all testimony offered was competent, and that all pleadings were amended to conform thereto, although no request to that effect was made, we have left certain questions of law.

The first of these relates to the alleged payment of November 23, 1925, the only payment made within five years of the date of the filing of the suit. The complaint alleges that this payment was made. The answer denied that fact. Neither pleading was verified. The note itself showed only that the payment was indorsed on its back. No witness testified concerning this payment. This payment having been alleged and denied, the burden was on the plaintiff to show that it had, in fact, been made.

In the case of Taylor v. White, 182 Ark. 35, 31 S. W. (2d) 745, it was said: “The fact of a part payment, which was relied upon to stop the running of the statute of limitations, was denied by (defendant) 'White, and the burden was therefore upon the plaintiff to prove that fact.” A number of cases were there cited in support of this statement of the law, and many others to the same effect might also be cited.

There is no proof that the payment was made except the indorsement thereof on the note, and this does not suffice to prove the payment. It was held in the case of Johnson v. Spangler, 176 Ark. 328, 2 S. W. (2d) 1089, 59 A. L. R. 899, to quote a headnote in that case, that: “'Where payments were relied upon to stop the running of the statute of limitations, the burden of proof is on the party alleging it to show by other evidence, in addition to the indorsement on the note, that the payment was in fact made.” See also, to the same effect: Alston v. State Bank, 9 Ark. 455; Slagle v. Box, 124 Ark. 43, 186 S. W. 299.

We are therefore of the opinion that the note from Mahan to Sprague was barred under the record thus ■made by the statute of limitations at the time of the institution of the suit to foreclose the mortgage given to secure it, and for this reason the decree of the court below must be reversed.

We are also of the opinion that the mortgage from Mahan to Sprague was barred, as against the intervener, the Bank of Mulberry, through failure to comply with the provisions of § 7408, Crawford & Moses’ Digest, under the record before us.

It is provided by this § 7408, Crawford & Moses’ Digest, that in suits brought to foreclose mortgages or deeds of trust it shall be sufficient defense that they have not been brought within the period of limitation prescribed by law for a suit on the debt for the security of which they were given, with the proviso, however, that where payment has been made on such indebtedness before the same is barred by the statute of limitations, such payments shall not operate to revive the debt, or to extend the statute of limitations, so far as the same affects the rights of third persons, unless the mortgagee or trustee shall, prior to the expiration of the period of the statute of limitations, indorse a memorandum of such payment, with the date thereof, on the margin of the record where such instrument is recorded, which indorsement shall be attested and dated by the clerk. There was no compliance with this statute in the instant case, as the memorandum was not attested by the clerk (Clark v. Lesser, 106 Ark. 207, 153 S. W. 112), and there is a total failure to show when the indorsement was made or by what authority. If, therefore, the bank was a third party, the plaintiff’s mortgage was barred as to it (unless its payment was assumed in the deed from Mahan to Wagner), for, as was said in the ease of Morgan v. Kendrick, 91 Ark. 394, 121 S. W. 278, in construing § 5399, Kirby’s Digest (now § 7408, Crawford & Moses’ Digest): “The effect of that statute, as to strangers to the transaction, is that when the debt secured by a mortgage is apparently barred by limitation, and no payments which would stay the limitation is indorsed on the margin of the record of the mortgage, it becomes as to such third parties an unrecorded mortgage; and like an unrecorded mortgage it constitutes no lien upon the mortgaged property, as against such third party, notwithstanding he has actual knowledge of the execution of such mortgage. (Citing authorities).”

If Wagner assumed and agreed to pay the plaintiff’s mortgage, he was not a third party as to that instrument within the meaning of § 7408, Crawford & Moses’ Digest, although that agreement was not expressed in the deed to him from Mahan. Kenney v. Streeter, 88 Ark. 406, 114 S. W. 923. But whether Wagner was a third party or not, there is no valid reason for holding that the Bank of Mulberry was not a third party, unless the agreement to pay it was contained in the deed to Wagner from Mahan. As we have said, there is no testimony that any such agreement on the part of Wagner appeared in his deed from Mahan. That instrument was not offered in evidence, and we do not even know its date.

The recent case of Connelly v. Hoffman, 184 Ark. 497, 42 S. W. (2d) 985, is in point on this question and is decisive of it. The facts stated in that opinion are as follows : Huggler executed a mortgage to Connelly on March 31, 1922, to secure the payment of notes due in 1923 and 1924. On July 15, 1927, neither of said notes then being barred by the statute of limitations, Huggler executed a mortgage on the same property to Wilson, but made no mention of the prior mortgage to Connelly. The mortgage to Wilson was assigned to Hoffman, who brought suit to foreclose it on February 28, 1930, making Connelly and Huggler parties. Hoffman alleged that Connelly’s mortgage was barred by the five-year statute of limitations. Connelly filed an answer and cross-complaint, in which he alleged that Huggler had agreed in writing to pay his debt, this agreement being within the period of limitations, and he prayed a foreclosure of his mortgage from Huggler. An answer was filed by Huggler, who denied the promise to pay and pleaded the statute of limitations against Connelly’s demand. The court granted the prayer of Hoffman’s complaint and dismissed Connelly’s cross-complaint as being without equity. The question of the priority of mortgages as between Connelly and Hoffman was presented on the appeal from that decree.

The opinion states the fact to be that Connelly’s mortgage was prior in point of time and was a valid subsisting lien when Hoffman’s mortgage was executed. Both mortgages had been promptly recorded.

At the time Hoffman brought his suit to foreclose (February 28, 1930) there was no indorsement upon the margin of the record where Connelly’s mortgage was recorded showing any extension thereof, but on August 26,1930, Connelly caused such a marginal indorsement to be made. The court found the fact to be that there was an agreement on the part of Huggler for an extension of his mortgage lien to Connelly, but that no indorsement thereof was made on the record until after the bar of the statute had fallen. The court held that because of this fact the mortgage from Huggler to Connelly became, in effect, an unrecorded mortgage, and that it made no difference whatever that this mortgage was not barred when Hoffman took his mortgage from Huggler.

It was contended by Connelly in that case that, as Hoffman and Wilson had at least constructive notice of his mortgage, and, having taken their mortgage at a time when his own was a valid and subsisting lien and after the mortgagor Huggler had acknowledged the debt in writing and had agreed to its extension, his mortgage continued thereafter to be a valid lien and paramount to the lien of the Hoffman mortgage. We held to the contrary, for the reason that Hoffman was a third party within the meaning* of the law, and, being* such, his mortgage was superior to that of Connelly, because of Connelly’s failure to indorse the extension agreement upon the margin of the record as required by § 7382, Crawford & Moses’ Digest, which section required the extension agreement to be attested and dated by the clerk. . The extension agreement made by Huggler operated to extend the lien of his mortgage as between himself and Connelly, but did not have that effect so far as Hoffman was concerned, for the reason that Hoffman was a third party, as the statute had not been complied with.

So here, whatever may be the effect of any agreement on Wagner’s part to pay plaintiff Sprague’s mortgage, as between himself and Sprague, that agreement could not affect the mortgage of the bank — a third party— as Hoffman was in the ease last cited, for the reason that the provisions of § 7408, Crawford & Moses’ Digest, which are similar to those of § 7382 of Crawford & Moses’ Digest construed in the Connelly case, supra, in regard to keeping liens alive, had not been complied with (unless the deed from Mahan to Wagner contained that agreement).

We have said that there was no allegation or proof that Wagner assumed the payment of the debt secured by the mortgage from Mahan to Sprague as a part of the consideration of the deed to him from Mahan, and this is one of the undeveloped issues of fact in the case. If this is true, then the bank was affected with notice thereof, as it was a fact appearing in the chain of Wagner’s title. Gunnells v. Farmers’ Bank of Emerson, 184 Ark. 149, 40 S. W. (2d) 989; Elk Horn Bank & Trust Co. v. Spraggins, 182 Ark. 27, 30 S. W. (2d) 858. In this event the bank would not be a third party within the meaning of § 7408, Crawford & Moses’ Digest, if the plaintiff’s mortgage lien has been kept alive by payments.

If the conveyance to Wagner from Mahan was not made subject to this mortgage, the subsequent agreement of Wagner to discharge that indebtedness would not affect the status of the bank as a third party, as there would be nothing to charge it with notice of plaintiff’s mortgage. The payments not having been indorsed upon the margin of the record where this mortgage was recorded in the manner required by law, it became as to third parties, in legal effect, an unrecorded mortgage, and the bank is a third party unless its mortgagor had assumed the payment of this mortgage debt in the deed under which he acquired his title. His agreement, if not expressed in his deed, to discharge the outstanding lien, would not affect the status of his mortgagee — the bank — as a third party.

The case must therefore be more fully developed, and leave so to do is here granted. Therefore, upon the remand of the cause, which is here ordered, the court will hear testimony to determine whether or not the alleged payments indorsed upon the note to Sprague were in fact made. If they were not made, as Wagner alleges in his answer, then, of course, the mortgage was barred as to' all parties and for all purposes. If, however, the court finds that the payments were made as alleged in plaintiff’s complaint, the court will then determine whether Wagner assumed the payment of this indebtedness in his deed from Mahan. If this finding is made, the court will decree that plaintiff’s mortgage is superior. Gunnells v. Farmer’s Bank of Emerson, supra, and Elk Horn Bank & Trust Co. v. Spraggins, supra. If that finding is not made, it will be decreed that the bank, as a third party, has a superior lien.

The decree of the court below will therefore be reversed, and the cause remanded for further proceedings in accordance with this opinion.

Kirby, J., dissents.


author: Humphreys, J.

text:
    Sovereign Camp Woodmen of the World v. Meek.
    Opinion delivered March 21, 1932.

      O. D. Thompson and E. L. Matlock, for appellant.

      H. G. Rains and Partain <& Agee, for appellee.
   Humphreys, J.

This suit was instituted on February 25, 1931, by appellee against appellant to recover $1,000, penalties, and attorney’s fee for total disability under paragraph 12 of a beneficiary certificate No. B.-219, 309-D, issued to him by appellant, which paragraph, in so far as material to a determination of the issues involved in this case, is as follows:

‘ ‘ If such member, while younger than sixty years of age, and while the certificate is in full force and effect, has suffered bodily injury, through external, violent or accidental means, or by disease, and shall furnish satisfactory proof to the society that he is and will be permanently, totally, continuously and wholly prevented thereby for life from pursuing any and all gainful occupations or performing any work for compensation of value,” he shall be entitled to the payment of one-half the face amount of his policy.

It was alleged in the complaint that during the time the certificate was in force and effect appellee became totally disabled on account of a disease commonly known as pernicious anemia.

Appellant filed an answer denying the material allegations of the complaint, and interposed the further defense of a failure on the part of appellee to make satisfactory proof of appellee’s total disability to it prior to the institution of the suit.

The cause was submitted to a jury upon the pleadings, testimony, and instructions of the court, resulting in a verdict and judgment against appellant in amounts sued for, from which is this appeal.

The record reflects, without material dispute, that during the life of the certificate appellee became a confirmed invalid on account of a disease that crept upon him by degrees, commonly known as pernicious anemia, which disease totally disabled him. He paid premiums on his certificate for about twenty-one years and did not cease to do so until his earning capacity was destroyed by said disease and until his finances were entirely depleted. He explained his condition fully to the local agent to whom he had paid his premiums for many years, and on several occasions asked the agent to take up the matter of adjusting and settling his rights under the certificate with the auditor. The local agent had knowledge of his -financial and physical condition during the life of the certificate, but during that time or after appellee did not notify other officials in a formal manner of his disability. It seems that the officials of the order treated the certificate as forfeited and void after the last premium was paid in June, 1928, and, when sued, denied liability.

Appellant contends for a reversal of the judgment because appellee made no satisfactory proof to it of his total disability. Under our construction of paragraph 12 of the certificate quoted above, the existence of total disability during the life of the certificate was enough to create liability. Under a correct interpretation of the meaning of paragraph 12, the obligation of appellant rested upon the total disability of appellee during the life of the certificate, and not upon the receipt of the proof of disability by appellant. A similar clause or paragraph in an insurance policy was thus construed by the Circuit Court of Appeals, 29 Fed. (2d) 977, and approved by the Supreme 'Court of the United States in the case of Bergholm v. Peoria Life Ins. Co. of Peoria, Ill., 284 U. S. 489. It will be observed that no time was fixed in the paragraph construed for making the proof of total disability.

There is no provision in the policy providing for a forfeiture upon failure to make proof of disability; so the failure to make such proof cannot be regarded as a condition precedent to recovery. Hope Spoke Co. v. Maryland Casualty Co., 102 Ark. 1, 143 S. W. 85, 38 L. R. A. (N. S.) 62.

No error appearing', the judgment is affirmed.


author: Kirby, J,

text:
    Loftin v. King.
    Opinion delivered March 21, 1932.

      D. H. Howell, for appellant.

      J. P. Clayton and J. B. Perrymore, for appellee.
   Kirby, J,

(after stating the facts). Appellant insists that the court erred in not instructing the verdict in his favor, the note attempted to be used as an offset having been purchased by appellee after the beginning- of the suit as shown by the indorsement thereon.

Under the statute “bonds, bills, notes or other writings assigned to the defendant after suit has been commenced against him and the writ served ’ ’ are not allowed to be set-ofif against the demands of the plaintiff. Section 1199, 'Crawford & Moses’ Digest.

The testimony shows that appellee’s father begun trying to find and purchase a note of appellant’s immediately after his son, who lived in Detroit, wrote him that he was about to be sued by appellant upon a note he had given him. That he approached Battles and bought the note in April before the suit was brought, agreeing to pay 33 1/3 per cent, of the face value thereof, provided the note was'not “outlawed” as he expressed it, and that he later found it was not barred by the statute of limitations. After some investigation he feared it might be barred and went to a holder of one of appellant’s other notes to see about making a purchase of him, telling him that he had already bought one note but feared it might be outlawed. He ascertained some time before the trial of the case that the note was not barred by the statute of limitations and went to Battles, from whom he had purchased it sometime before, and told him it would be necessary for him to indorse it, and the indorsement was made at that time, rather than at the time of the sale thereof. Other testimony was also introduced explaining the indorsement of the note.

The jury was properly instructed as to the law and found a verdict against appellant. No error was committed in allowing- the explanation made of the date of the indorsement on the note, the title to same having been acquired on the date of its sale and delivery to appellee’s agent upon condition that it was not barred by the statute of limitations. The sale was to be effective at the date of delivery of the note, and the title passed tneu, since in fact the note was not barred by the statute of limitations as was later discovered to be the case, and the purchaser was entitled to have assignment made as of the date of sale and delivery of the note and it necessarily related back to that time.

There was substantial testimony sufficient to support the verdict of the jury returned under correct instructions from the court as to the law of the case, and the verdict is conclusive. We find no error in the record, and the judgment is affirmed.


author: MoHaney, J.

text:
    Riley v. Atherton.
    Opinion delivered March 21, 1932.

      Harry T. Wooldridge, for appellant.

      Reinberger d Reinberger, for appellee.
   MoHaney, J.

On or about December 1, 1927, appellees purchased from Captain M. W. Ware, through the National Bank of Arkansas at Pine Bluff, certain real property in said city for a home. The purchase price was $6,200, of which Captain Ware was paid $1,700 in cash by said bank for appellees, and they executed and delivered their first mortgage and note to him for $4,000. At the same time, they borrowed a sum of money from said bank on second mortgage on said property to secure their notes for $2,300, including the $1,700 paid to Captain Ware. Appellees entered into possession of said property, reduced their indebtedness to the bank in the sum of $600 at the rate of $60 per month over a period of ten months, moved out of the house, delivered the keys to the house to the president of the bank under an alleged agreement that they surrendered possession in satisfaction of their indebtedness to the bank secured by the second mortgage. Thereafter, suit was brought to foreclose the first mortgage, in which appellant, who is the receiver of the National Bank of Arkansas (it being insolvent) and appellees were made defendants. Appellant answered, admitting the validity and priority of the first mortgage, and filed a cross-complaint against appellees seeking judgment on their indebtedness to the bank and a foreclosure of the second mortgage. Appellees answered, denying that they were indebted to appellant as receiver for the reason stated above — that they had surrendered the property to the bank in satisfaction of the debt in October, 1928, and that the bank had accepted same for such purpose. The court found for appellees, entered a decree dismissing appellant’s cross-complaint for want of equity, and the receiver has appealed.

It is not claimed that there was any written agreement between appellees and the bank by which a delivery of the property to the bank was accepted in satisfaction of the mortgage debt, and it is conceded that such an agreement could rest in parol. This court has so held with reference to chattel mortgage indebtedness. Fincher v. Bennett, 94 Ark. 165, 126 S. W. 392; Horton v. Thompson, 124 Ark. 545, 187 S. W. 627; Ribelin v. Loyd, 148 Ark. 487, 230 S. W. 556. The reason for the rule is, as stated in the case last cited, that “a mortgage is a mere security for a debt, and the property may be released from the mortgage by parol agreement, as well as by a written one.” In this and in many other States a mortgage is considered as security for the debt merely, and not the principal obligation. An oral agreement to satisfy therefore does not fall within the statute of frauds. In other .jurisdictions the mortgage is held to be the principal obligation, and that a parol agreement to release or satisfy is void as being within the statute of frauds. 19' R. C. L., § 238, p. 454.

The next question that arises is what is the degree of proof required to establish a parol agreement to release or satisfy a mortgage? May such fact be established by a mere preponderance of the evidence, or does the clear, unequivocal and convincing- rule apply? This question has given us some concern. We do not find that we have heretofore decided it. In Fincher v. Bennett, sv,pra, a replevin suit, the court instructed the jury that a preponderance of the evidence was sufficient, and this court sustained the instruction. The question as to the degree of proof was not there raised or decided. In the section of R. C. L., above cited, the author states that, in those jurisdictions where a mortgage is held to be security for the debt, “it is generally held that a parol release of a mortgage * * * is not void by reason of the statute of frauds, though it has been said that an agreement in parol to release the mortgagor from his personal liability must be established by clear and convincing evidence, for the effect thereof is to set aside the written contract.” Benson First Nat. Bank v. Gallagher, 119 Minn. 463, 138 N. W. 681, Ann. Cas. 1914B 120, and note, are cited to support that statement, which it does. And in Stevens v. Turlington, 186 N. C. 191, 119 S. E. 210, 32 A. L. R. 870, it is held that evidence of a parol discharge of a written contract within the statute of frauds, or of an equitable estoppel by matter in pais, must be positive. In 41 Corpus Juris, p. 805, it is said that “a parol release may be shown by circumstances and declarations and acts of the parties inconsistent with the continued existence of the mortgage. The proof of matters relating to the discharge or release of a mortgage should be clear and satisfactory.” A great many cases are cited to support that statement.

We have reached the conclusion that, as to mortgages of real estate, the correct rule is that the proof relating to the discharge or release thereof must be clear, satisfactory and convincing. Title to real property, and the validity and continued existence of mortgages thereon, would be insecure by any less stringent rule.

Having reached this conclusion, the next question is: Does the proof in this case meet the requirements of the rule? We hold that it does not. Appellee, Mr. Atherton, testified to the effect that he told Mr. Hudson, president of the bank, that he was quitting, would make no other payments, and that Hudson told him to bring the keys to the bank when he moved out; that he offered to deed the property back to the bank, but that Mr. Hudson told him to wait until they sold it to another purchaser and deed could be made direct to the purchaser; that the bank accepted the keys, took charge of the property, rented it out, kept the rents, and otherwise dealt with it as owner. Mr. Hudson testified to the contrary; that Mr. Atherton brought the keys to the bank, told him he was quitting, moving out, because he couldn’t meet the payments; that he took the keys and told Atherton he would list the property for sale for his account with a real estate firm and try to have it sold so as to make a profit for him. This was in October, 1928. No sale was made, but the house was rented, and the rents did not cover the taxes, insurance and interest on the first mortgage, which the bank had to pay to protect itself. The evidence is in conflict, but the circumstances speak strongly against appellees. They did not demand or receive from the bank their notes in the sum of $1,700, nor did they demand a satisfaction of the record of the mortgage. It seems reasonable to believe that, if they were surrendering the property in satisfaction of the debt, they would have demanded their notes, the written evidence of the debt, and a satisfaction of the mortgage. They did not tender the bank a deed to their equity of redemption in the property. Under these facts and circumstances, it is doubtful if appellees proved their case by a clear preponderance of the evidence. It is certain that such evidence is not clear, satisfactory and convincing. The burden was on them to do so, and they have failed.

The judgment will be reversed, and the cause remanded, with directions to enter a decree of foreclosure on the cross-complaint in accordance with the prayer thereof.

Kirby, J., dissents.


author: Kirby, J.,

text:
    Rural Special School Districts Nos. 24 and 63 v. Hatfield Special School District No. 22.
    Opinion delivered February 15, 1932.

      Lake, Lake <& Carlton, for appellant.

      Byron Goodson, for appellee.
   Kirby, J.,

(after stating the facts). It is contended for reversal that a majority of the electors did not sign the petition and that their status became fixed upon the filing of the first petitions, the giving of notice, etc., and that the court- erred in not permitting the remonstrants’ names to he stricken from the petitions, and in counting the names of certain petitioners which had been signed hy other parties.

The statutes require the giving of notice of a proposed change in. a school district, and provide the authority for the creation of new districts or change of boundaries of districts and the procedure therefor. Section 8821, Crawford & Moses’ Digest, and § 8823, Crawford & Moses’ Digest, as amended by Acts 1927, No. 145; Consolidated School District No. 2 v. Special School Dist. No. 19, 179 Ark. 822, 18 S. W. (2d) 349.

Notice is required to be given by posting up handbills in four or more conspicuous places in each district to be affected, one of the notices to be placed on the public school buildings in each district, and all of same to be posted 30 days before the convening of the board to which the petition is to be presented, all containing a geographical description of the proposed change. The giving of the notice prescribed by statute is a prerequisite to the exercise of the jurisdiction of the county board, which cannot be waived being required for the benefit of the landowners as well as the electors. Lewis v. Young, 116 Ark. 291, 171 S. W. 1197; Mitchell v. Directors of School District No. 13, 153 Ark. 50, 239 S. W. 371; Acree v. Patterson, 153 Ark. 191, 240 S. W. 33.

Notice is only required to be given in accordance with the statute 30 days before the convening of the 'board to which it is proposed to present the petition for a change in the school district or its boundaries, and it makes no difference, if. it were true even, that one or two parts of the identical petition were filed with the board after the principal petition was lodged there, since they were all signed before the date fixed in the notice for heariug of the petition, and the fact that there were several petitions identical in form, except as to’signature, filed at.different times, “did not change the prayer or lessen the number of petitions.” They were evidently ■ intended to be used as one, entitled to be considered as such, and were in fact only one petition. Bridewell v. Ward, 72 Ark. 187, 79 S. W. 762; Priest v. Moore, 183 Ark. 1002, 39 S. W. (2d) 710.

After the petitions were filed, the names of the petitioners could not be withdrawn merely upon request of the signers, but only upon showing that the signature had been procured by some improper method deceiving the signer, in effect by a fraud perpetrated upon him. Nathan Special School Dist. No. 4 v. Bullock Springs Special School Dist. No. 36, 183 Ark. 710, 38 S. W. (2d) 19. There is no evidence in the record showing- that any of the petitions for creation of the new school district was signed subsequent to the filing of the petitions by the remonstrants, and nó error was committed in refusing to allow such names to be withdrawn.

It is also insisted that the court erred in allowing the names of certain petitioners signed by others than themselves counted as valid upon the petitions for the change and creation of the new district. Only seven names not previously authorized to be signed were counted on the petition, and each of the seven, with the exception of Schultz, testified that he had information that his name was signed to the petition for consolidation prior to the time of the hearing by the county board, and all appeared in the circuit court and testified that they each had ratified the action of the agent in signing their names to the petition and did not wish to withdraw them. These names were signed either by the husband for the wife or by the wife for the husband, and in one instance by a mother for her daughter, who was away at the time, and the undisputed testimony shows that some of these parties had informed their husbands or wives that they were in favor of the petition and asked that their names be signed by them accordingly in case they were not present when said petition was submitted; and all testified that they had been immediately informed that their names had been signed to the petition and that they ratified such action and made no effort to withdraw their names and were in favor of the consolidation of the districts. The court therefore did not err in holding that these were valid signatures and could not be withdrawn, even by the persons whose names had been signed, as a matter of fight without a proper showing first made.

It is doubtful any way whether any one but the persons whose names were so signed could challenge the validity of the signatures, and, even though all seven names were considered withdrawn, it would have left the petition still signed by a majority of the qualified electors of the territory affected; and, if an error was committed in holding the signatures valid, it was harmless.

We find no error in the record, and the judgment must be affirmed. It is so ordered.


author: Butler, J.

text:
    Quarry Savings Bank & Trust Company v. First National Bank of DeWitt.
    Opinion delivered March 14, 1932.

      G. W. Botts, for appellant.

      George E. Pike, for appellee.
   Butler, J.

These cases were consolidated in the court below for the purpose of trial, and as consolidated are here on appeal.

These are the facts material to the decision of the case: One Luebke, to secure loans from the appellants, executed to each of them mortgages on identical lands, which were duly filed for record on January 29, 1919. Subsequent thereto, being indebted to appellee bank, he executed a mortgage on the same lands to it, subject to the first mortgages, to secure it therefor. All of these debts remaining unpaid, appellants brought their several suits on March 2, 1929, for judgment on their debt and for foreclosure of the mortgage securing them. A decree was rendered in this suit on March 30, 1929, and on May 3d, following, the lands were sold by virtue of the decree and purchased by the appellee for the debts and interest named in the decree and the costs that had accrued. '■

Between the date of the decree of foreclosure and the date of the sale and purchase of the lands by appellee, appellant paid, to-wit, on April Í3,1929, the taxes on the lands which had become due January 1 preceding' in the sum of $331.87.

The report of the sale was duly made, and the sale confirmed, and a commissioner’s deed executed and approved in open court on Juné 10, 1929, by the terms of which deed the lands were conveyed to the appellee in consideration of the payment of the debt, interest and costs aforesaid.

' On the 29th day of September, 1929, the appellants brought this suit against the appellee to recover the amounts of taxes paid by them as aforesaid and asked that they have a lien declared on the lands for the payment thereof. On the hearing' of the case, the above state of facts, was developed, and the chancellor made a s-eneral finding: in favor of the defendants.

■Generally in judicial sales the rule of caveat emtptov applies by reason of which the purchaser is charged with full knowledge of all of the facts affecting the title to the lands purchased and takes it subject to ail legal or equitable incumbrances. Guynn v. McCauley, 32 Ark. 112; Green v. Maddox, 97 Ark. 403, 134 S. W. 931; Miller v. Henry, 105 Ark. 265, 150 S. W. 700, Ann. Cas. 1914D, 754.

The taxes which became due January 1 were a lien on the land (Crawford & Moses’ Digest, § 10023) and in discharging this lien appellants were not volunteers as contended by the appellee, for the reason that the payment of the taxes was necessary to protect their interest, and ordinarily they would be entitled to be subrogated to the State’s lien for reimbursement. N. Y. Life Ins. Co. v. Nichol, 170 Ark. 791, 281 S. W. 21; First National Bank of Mineral Springs v. Hayes-McKean Hdw. Co., 178 Ark. 429, 10 S. W. (2d) 866; Federal Land Bank of St. Louis v. Richland Farming Co., 180 Ark. 422, 21 S. W. (2d) 954.

This rule does not apply, however, in cases where taxes are due on real estate when it is sold at judicial sale. By act of the General Assembly of 1883, at page 199 of the acts' of that year, digested in § 10056 of Crawford & Moses’ Digest, provision is made that “when any real estate shall be sold at judicial sale, * * * the court shall order the taxes and penalties and interest thereon against such lands to be discharged out of. the proceeds of such sale.” This court, in the case of Miners’ Bank v. Churchill, 156 Ark. 191, 245 S. W. 829, construed this language to apply to all judicial sales. In that case the question under consideration was whether, under a sale to foreclose a mortgage on real estate, the taxes which had fallen due prior to the date of the sale could ¡be treated as an incumbrance on the land to be borne by the purchaser, or whether it should be paid out of the proceeds of the sale. We there said: “Our statute provides that a lien for taxes as between grantor and grantee shall attach on the first Monday in January of each year. Crawford & Moses ’ Digest, § 10023. At the time of the sale there was then unpaid taxes due on the land which constituted a lien in favor of the State and county. It was well established at common law that the rule of caveat emptor applied to purchasers at judicial sales, and that the purchaser took the land subject to all incumbrances existing at that time, including tax liens. This rule was changed as to tax liens, however, by statute which is a part of the general revenue laws enacted by the General Assembly of 1883. * * * The question suggests itself as to when, under the statute, the order of the court must be made, whether at the time of the decree or later, before the fund is paid out by the commissioner. We think that the statute itself declares that the tax shall be paid out of the proceeds of the sale, and it is not essential that the original decree directing foreclosure shall contain a direction for such payment, but the court may direct the payment at any time before the fund is disbursed.”

In the case at bar the taxes were due at the time of the institution of the suit and at the date of the decree of foreclosure, and therefore the court might have ordered these paid out of the purchase money. It may be argued that, as the taxes were not included in the judgment of the court, and were paid by appellant to protect the land after the date of the decree of foreclosure and before the sale, the statute would not apply. But this is not so. The appellants might well have discharged the liens at any time before the final decree and secured their reimbursement by amendment to their complaints, and, having failed to do this, might have appeared on the day of sale and themselves bid an amount sufficient to cover the sum named in the decree together with the taxes they had paid. They could not, however, avoid the effect of the statute by neglecting to do this and, after confirmation of the sale and the execution of the commissioner’s deed, enforce the payment by the method undertaken. This is especially true when the proceeds of the sale are paid to them, since the court might have made the order for the payment of the taxes out of the purchase money at any time before the fund was distributed, and since they, themselves, have received it, they are in no attitude to complain.

The decree of the trial court is correct, and is therefore affirmed.


text:
    Walthall v. McArthur.
    Opinion delivered March 21, 1932.

      Joh-n G. Rye and J. B. Ward, for appellant.

      Dean, Moore <& Brazil, for appellee.
   Smith, J.

This suit was instituted by appellee, Mrs. Ola McArthur, for the purpose of having declared void a certain mortgage purporting to have been executed by her, in conjunction with her husband, W. R. McArthur, on July 13, 1929, to secure the payment of a note for $1,040, given to E. P. Walthall for the purchase of an automobile. The property described in the mortgage was the homestead of Mr. and Mrs. McArthur. An answer and cross-complaint was filed by Walthall, making Mr. McArthur a party, in which the execution and validity of the mortgage was alleged, and its foreclosure was prayed. The court found the fact to be that Mrs. McArthur had not signed or acknowledged the mortgage, and that it was void for this reason, and granted the relief prayed, and this appeal is from that decree.

The acknowledgment was in proper form, and purports to have been taken by W. D. Vance, a notary public, who testified that Mrs. McArthur appeared before him and acknowledged the execution of the mortgage. We do not give this testimony the weight it would ordinarily have for the following reasons: Mr. Vance was an abstractor of land titles, and knew full well the purpose and effect of acknowledgments, yet he admitted that Mrs. McArthur .did not appear before him at the time he fílléd in the certificate of acknowledgment and signed it and attached his seal thereto. He stated that he was unwilling to do this, but did do it at the request of Mr. McArthur only upon the promise that Mrs. McArthur would later appear before him and acknowledge the execution of the mortgage; that he kept the matter in mind, and that on September 20, 1930, Mrs. McArthur came to.his office, and, in response to his question as to whether she had signed the mortgage, she stated that she had. This was more than a year after the date of the alleged acknowledgment, and at that time the automobile, for the security of which the mortgage was alleged to have been given, had been taken out of McArthur’s possession. Vance testified that Dr. Berryman was present when Mrs. McArthur admitted signing the mortgage.

The note and mortgage in question were exhibited to M. A. Patrick and to Clarence E. Lemley, cashier and assistant cashier and paying teller, respectively, of the People’s Exchange Bank of Russellville, where Mrs. McArthur carried an account, and each stated that he would pay a check against her account on a signature similar to that appearing on the note and mortgage.

Mrs. McArthur testified that she did not sign either the note or the mortgage, and knew nothing of either until after the automobile had been taken from her husband’s possession, and that, when she had been advised that Walthall claimed to have a mortgage on her home, she consulted Dr. Berryman, who was her physician and financial adviser, and that they went together to the office of the clerk and recorder to examine the record, and that, when they found the mortgage of record, she called, with Dr. Berryman, at Vance’s office, and that she then mentioned the matter to Vance for the first time, and denied in his presence that she had ever signed either the note or- mortgage. She was fully corroborated by the testimony of Dr. Berryman.

Mr. McArthur testified that he signed the name of his wife to both the note and mortgage, and that, she had not authorized either signature. He also testified that he had on more than one occasion signed his wife’s name to checks on the People’s Exchange Bank against her account, which had been paid on presentation.

In response to a request so to do, both Mr. and Mrs. McArthur wrote the name “Ola McArthur” a number of times in the presence of the court, and the originals of these signatures have been brought before us. We are not handwriting experts, but we have carefully compared all these signatures with those appearing upon the note and mortgage, and those admittedly written by Mr. McArthur appear to resemble the signatures on the note and mortgage, as much so as those written by Mrs. McArthur in the presence of the court; indeed, they all look very much alike.

The law of the case is well settled. The property mortgaged being a homestead, it is essential to the validity of a mortgage thereon that it be both signed and acknowledged by Mrs. McArthur. Section 5542, Crawford & Moses’ Digest. Inasmuch as the mortgage was apparently signed and acknowledged by Mrs. McArthur, it was presumptively valid, and the burden was upon her to establish, by a preponderance of the evidence, that she did not sign and acknowledge it,. Eades v. Morrilton Lumber Co., 172 Ark. 52, 288 S. W. 1, and cases there cited.

The chancellor found the fact to be that Mrs. .McArthur did not sign or acknowledge the mortgage, and we are of the opinion that this finding is sustained by a preponderance of the evidence. As we have said, the testimony of the notary public does not, under the circumstances, carry much weight. Section 2472, Crawford & Moses’ Digest. He was, moreover, flatly contradicted ■by Dr. Berryman as to the alleged admission made more than a year after its purported date by Mrs. McArthur that she had signed the mortgage. Mr. McArthur wrote the name of his wife seventeen times in the presence of the court, and these signatures are strikingly similar to those appearing on the note and mortgage. It does not appear that either of the witnesses testifying as handwriting experts were examined as to these signatures, and we do not know what their opinion would have been in regard to them.

The court rendered a decree against McArthur for the balance due on the note, and declared this balance to be a lien on the automobile, from which decree there is no appeal, but canceled the mortgage as not having been signed and acknowledged by Mrs. McArthur. As we concur in this finding, the decree must be affirmed, and it is so ordered.


text:
    Bushmiaer v. Special Protective Rewards Committee of Arkansas Bankers' Association.
    Opinion delivered March 21, 1932.

      B. S. Wilson, for appellant.

      Starbird <& Starbird, Partam $ Agee and Wm. G. Alters, for appellees.
   Humphreys, J.

The issue involved on this appeal is which of three claimants is entitled to a reward of $500 offered by the Special Protective Rewards Committee of the Arkansas Bankers’ Association for the arrest and conviction of any one implicated in the robbery of the Bank of Alma on or about the 14th of September, 19'26.

The committee brought this suit in the chancery court of Crawford County, admitting its liability in the sum of $500 for the arrest and conviction of Ky Coatney for' complicity in the crime, alleging that appellant, its coappellees, and W. S. Chastain each claimed all the reward, and praying that the court determine to whom the reward should be paid.

Each of the three intervened and claimed to have earned the entire reward.

The cause was submitted to the court upon the pleadings and testimony, which resulted in a finding and consequent decree adjudging that the reward be divided equally between appellant and A. B. Maxey and his deputies, to which all parties exempted, and from which is this appeal and cross-appeal.

Appellees contend for an affirmance of the decree because the bill of exceptions was not filed within sixty days first allowed to file same. Nineteen days after the time elapsed, the court allowed additional time and signed and filed same. The original time given and the additional time allowed was given and allowed during the same term of court, so there is no merit in appellee’s contention for the reason that a court has absolute control over all orders and decrees rendered during the term, and may modify, change, or set them aside at any time before final adjournment.

An inspection of the record discloses that the salient and controlling facts necessary to a determination of the issues involved are undisputed.

On the day of the robbery, W. S. Chastain discovered suspicious circumstances in the conduct of Ky Coatney which convinced him that Coatney was implicated in the crime, and immediately went to J. C. Alexander, the cashier of the looted bank, who was the person in charge of the investigation and prosecution of the guilty parties, and told him of Coatney’s suspicious conduct and urged that he be arrested. The next day after the robbery, A. D. Maxey, sheriff, aided by his deputies, arrested Ky Coatney without a warrant and placed him in jail. J. C. Alexander informed the prosecuting attorney and A. D. Maxey of the information obtained from Chastain, whereupon Chastain appeared before the grand jury and gave testimony, upon which the indictment was rendered charging Coatney with the crime of robbery. Coatney gave -bond for his appearance in the circuit court and absconded. A forfeiture was taken on the bond, which was set aside by the Governor at the instance of appellant. J. C. Alexander obtained information that Coatney was living with a brother in New York and imparted this information to appellant, who had, in the mean time, been elected sheriff of Crawford County to succeed A. D. Maxey. A requisition was procured for him, and appellant proceeded to New York as agent or representative of Arkansas, paying his own expenses, apprehended and returned Coatney to the Crawford County jail. At the succeeding term of the circuit court, Coatney pleaded guilty to the charge in the indictment returned on the evidence of W. S. Chastain and was adjudged to serve a term in the State penitentiary as a punishment therefor. Within thirty days after his conviction, appellant notified the rewards committee that he claimed the reward. The others failed to notify them of their claim, but, having heard that there were three claimants for the reward, they filed the instant suit and offered to pay the reward into the registry of the court to be paid to the party entitled thereto. There is a dispute in the testimony as to whether they sent it to appellant as a payment or whether they sent it to him through mistake. According to the weight of the evidence, they intended that it should he deposited in the registry of- court, and through mistake sent it to him instead of the circuit clerk. Although ordered by the chancery court to deposit the money in the registry of the court, appellant was permitted to retain same during the pendency of this appeal upon the execution of a supersedeas bond.

The law is that officers acting within the scope of their duties, and those called to aid them in the performance of their official duties, shall not receive rewards or other compensation not allowed by statute. The reason for the rule is based on public policy and is in accord with the weight of authority. Chambers v. Ogle, 117 Ark. 242, 174 S. W. 532, and numerous eases cited therein.

This, rule precludes A. D. Maxey and his deputies from claiming the reward. They were acting within their official duties when they arrested Ky Coatney. Their contention is that they were not acting within the scope of their official duties because they made the arrest without a warrant and because the offense was not committed in their presence.^ On account of suspicious conduct on the part of Ky Coatney, it was believed that he was implicated in the robbery, and his arrest was based upon this belief. In other words, the officers who made the arrest did so upon the belief that Ky Coatney was one of the guilty parties. Section 2904'of Crawford & Moses’ Digest provides: “A peace officer may make an arrest: * * * without a warrant, where a public offense is committed in his presence or where he has reasonable grounds for believing that the person arrested has com-. mitted a felony.”

The reward was offered for the arrest and conviction of any unknown person implicated in the robbery of the bank, and not for following and recapturing one who had already been indicted for the offense and who had forfeited his bond. Appellant did not procure the indictment and conviction of Ky Coatney, and hence did not bring himself within the purport and intent contained in the terms of the offer of reward, In following and recapturing Ky Coatney, he did so as an agent or representative of the State and not as an individual. The State could not participate in the reward, and it follows .that its agent could not do so where he was acting for the State and not for himself.

The first information disclosed to the cashier of the bank relative to Ky Coatney being a participant in the offense came from W. S. Chastain. He not only disclosed his suspicious conduct to the cashier, but urged his arrest. It is true that A. D. Maxey testified that he received information from some other sources that caused him to arrest Ky Coatney. After the arrest, the cashier notified the prosecuting attorney and A. D. Maxey of the information disclosed to him by W. S. Chastain, and he subsequently appeared before the grand jury and procured an indictment against Ky Coatney upon his own testimony. After the return of the indictment, Ky Coatney gave bond and absconded. When apprehended and returned to the Crawford County jail, he was held under the original indictment until court convened, whereupon he pleaded guilty to the charge preferred in the indictment. We think it may well be said that W. S.. Chastain procured the indictment and continued incarceration or arrest of Ky Coatney until he obtained his liberty under bond. There can be no question that his conviction was the direct result of the testimony given by Chastain before the grand jury. W. S. Chastain brought himself clearly within the rule announced in the case of Railway Company v. Dickinson, 78 Ark. 483, 95 S. W. 802, 115 Am. St. Rep. 54, and earned the reward. In the case referred to, Dickinson swore out a warrant before a justice of the peace against the criminal and later appeared against him as a witness and procured his conviction. In that case, the offer for the reward was a general one, for the arrest and conviction of the unknown offender. We think the instant case is ruled by the Dickinson case, supra.

Appellant cites the case of Chambers v. Ogle as authority for eliminating W. S. Chastain as a claimant for the reward. In the 'Chambers case, Mrs. Ogle did nothing except to give a torn envelope with an address on it which led to the whereabouts of the criminals. She did not become a prosecuting witness either before a magistrate or a grand jury, and the conviction was not obtained upon her testimony. The Ogle case is not analogous to the instant case.

On account of the error indicated the decree is reversed, and a judgment is directed to be entered here against appellant and his bondsmen in favor of "W. S. Chastain in a sum of $500 and interest thereon from the date appellant received same together with costs incurred in the trial and appeal of the case.

Hart, C. J., and Smith and McHaney, JJ., dissent.