author: Humphreys, J.

text:
    De Witt v. Stephen.
    Opinion delivered April 25, 1927.
    1. Licenses — Crawford & Moses’ Dig., § 7494, authorizing municipal corporations to publish such ordinances as are necessary to provide for the safety, preserve the health, and promote the prosperity and improve the morals, order, comfort and convenience of such corporations, held not to authorize the enacting of ordinances requiring resident owners of automobiles to pay license thereon.
    2. Licenses — automobile tax. — Crawford & Moses’ Dig., § 4006, giving municipal corporations control of streets and alleys, held not to give implied authority to enact an ordinance requiring resident owners of automobiles to pay license thereon.
    3. Fines — construction or statutes. — Statutes authorizing the imposition of fines and penalties should be strictly and not liberally construed.
    4. Licenses — automobile tax — incorporated towns. — Acts 1919, p. 227, § 1, as amended by Acts 1919 (Sp. Ses.s.) No. 54, § 1, authorizing cities of first and second class and incorporated towns to require residents of cities of first and second class to pay license on mhtor vehicles,, held not to extend authority to “incorporated towns,” despite use of the words “incorporated towns” in one place in section, where cities alone were named in other parts of the statute, 'and cities only were directed as to method of using the money collected.
    Appeal from Arkansas Circuit Court, Southern District; W. J. Waggoner, Judge;
    affirmed.

      J. M. Brice, for appellant.

      G. E. Conclray, for appellee.
   Humphreys, J.

Appellee was tried, convicted, and fined in the mayor’s court of the incorporated town of DeWitt, Arkansas, for refusing to pay his automobile license, in violation of its ordinance No. 135. An appeal from the judgment of conviction was duly prosecuted to the circuit court of Arkansas County, Southern District, where, on trial de novo by the court sitting as a jury, ordinance No. 135 was adjudged to be void on the ground that the town of DeWitt had no power to require resident owners of automobiles to pay the license on them, and appellee was acquitted, from which is this appeal.

Appellant contends for a reversal of the judgment on the ground that the town of DeWitt had authority to pass the ordinance under § 7494 of Crawford & Moses’ Digest, which is as follows:

“It is made the duty of the municipal corporation to publish such by-laws and ordinances as shall be necessary to secure such corporations and their inhabitants against injuries by fire, thieves, robbers, burglars, and other persons violating the public peace; for the suppression of riots, and gambling, and indecent and disorderly conduct; for the punishment, of all lewd and lascivious’behavior in the streets and other public places; and they shall have power to make and publish such by-laws and ordinances, not inconsistent with the laws of this State, as to them shall seem necessary to provide for the safety, preserve the health, promote the prosperity and improve the morals, order, comfort and convenience of such corporations and'the inhabitants thereof.”

The section referred to does not expressly authorize the imposition of such a tax, and we are Tillable to discover in the language used any implied authority to do so. The lawmakers held to such opinion, else the Legislature would not have conferred §uch authority on cities of the first and second class by act 289, passed at the regular session of the Legislature of 1919, as amended by act 54 of the special session held by the Legislature in September, 1919. Neither express nor implied authority was conferred upon the town of DeWitt to pass its automobile license ordinance No.T25 under § 7494.

Appellant also suggests that implied authority existed to pass such an ordinance under § 4006 of Crawford & Moses’ Digest, giving municipal corporations control and supervision of the streets and alleys. Statutes authorizing the imposition of fines and-penalties should be strictly and not liberally construed. We do not think the language of the act referred to is broad enough to justify such an implication of power.

Appellant also contends for a reversal of the judgment upon the ground that the same authority conferred upon cities of the first and second-class by said act 289, as amended by said act 54, to impose a tax not to exceed $5 per annum on resident owners of motor vehicles, also extended the same authority to incorporated towns. Section 1 of said act 289 is as follows:

• “That cities of the first class are hereby authorized to require residents- of said city, for the privilege of keeping and using motor vehicles, to pay a tax of not to exceed five dollars per annum for each motor vehicle defined in this act; said fund thus collected to be used exclusively by said cities in the construction, repair or maintenance of the streets, alleys or public ways of said cities.”

Section 1 of said amendatory act No. 54 is as follows:

“Section 1. That cities of the first class and cities of the second class and incorporated towns are hereby authorized to require residents of said cities of the first class and cities of the second class, for the privilege of keeping’ and using motor vehicles, to pay a tax of not to exceed five dollars per annum for each motor vehicle defined in this act; said fund thus collected to be used exclusively by said cities in the construction, repair or maintenance of the streets, alleys or public ways of said cities.”

In an effort to carry out the supposed intent of the Legislature the digesters of Crawford & Moses’ Digest inserted the words “incorporated towns” after the word “class” in the fourth line o’f said act 54. This was done on the theory that the intent of the Legislature was to extend such authority to incorporated towns because the words “and incorporated towns” appeared in the second line of said amendatory act No. 54. In order to have made a complete act on that theory the words “and incorporated towns” should also have been inserted after the word “cities” in the ninth and last lines of § 1 of the amendatory act. If the .intent of the Legislature was to extend authority to incorporated towns to impose a tax on resident owners of motor vehicles, why did it require the cities of the first and second class to expend such tax on streets and alleys and not require incorporated towns to do so? The justification of such a tax at all grows out of the use of the streets and alleys with motor vehicles, and not on account of police regulation of traffic. The query propounded goes to show that the words “and incorporated towns” used by the Legislature in the second line of the amendatory act are not a definite criterion by which the intention of the Legislature may be determined. If the Legislature had intended to extend the authority to incorporated towns as well as cities to tax resident owners of automobiles, it could have inserted such words where necessary throughout § 1 of the amendatory act. If the failure to insert the words throughout the remaining parts of § 1 could be attributed with certainty to a clerical misprision, there might be force in the argument that the Legislature intended to confer the power upon incorporated towns to impose such a tax, but the insertion of the words in the second line may itself have been a clerical misprision, a mistake, or a piece of inadvertence. To insert the words throughout the act would amount to more than the correction of an obvious misprision or clerical error, which is permissible. It would amount to legislation by the -court, which is never permissible. Endlich on the Interpretation of Statutes announced the rule to be that “the question for the interpreter is not what the” Legislature meant, but what its language means.” If the‘Legislature meant to extend authority to incorporated towns to impose a maximum tax of $5 on resident owners of motor vehicles, it failed to do so. The words “and incorporated towns” used in the second line of the amendatory act are meaningless. They cannot be harmonized with the other language used and made to mean anything without interpolating them in three other places in said section.

No error appearing, the judgment is affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    Pilcher v. Parker.
    Opinion delivered April 25, 1927.
    1. Constitutional law — laborers’ lien — due process. — Acts 1923, p. 430, providing for a lien in favor of employees working in drilling operations for oil and gas, is not unconstitutional as taking property without due process, as the act provides for its enforcement in the manner now provided for enforcement of laborers’ liens, in which the owners of the property on which the lien is sought to be enforced are necessary parties.
    2. Mines and minerals — laborers’ lien- — ownership op property. • — Acts 1923, p. 430, provides for lien in favor of employees on equipment used in drilling or operating oil or gas wells, irrespective of who maybe the owner.
    3. Constitutional law — due process. — The fact that one man’s property may be taken for another’s debt does not render unconstitutional Acts 1923, p. 430, providing for a lien in favor of employees on equipment used in oil and gas drilling operations, since the owner in leasing his equipment voluntarily subjects his property to such liens as are given by the statute.
    4. Mines and minerals — laborers’ lien — repeal of statute.— Acts 1923, p. 430, providing for a lien in-favor of employees on the equipment in oil and gas drilling operations was not repealed by Acts 1923, p. 499.
    Appeal from Nevada Circuit Court; J. H. McCol-lum, Judge;
    affirmed.

      H. E. Rouse and John Marshall Shackleford, for appellant.

      William F. Denma/n, for appellee.
   Humphreys, J.

This is a suit in replevin brought by appellant against appellee, the sheriff of the county, to recover the possession of an oil well rotary drilling ' rig complete, which had been seized by the sheriff under a writ of attachment issued in the case of L. M. Carter et al. v. Prescott Oil Company,-wherein judgment was rendered condemning said drilling rig to satisfy debts for labor performed in and about a certain oil test well being drilled with said rig, in favor of L. M. Carter et al. against the said Prescott Oil Company. Appellant alleged that he was the owner of the drilling rig and that he was entitled to the immediate possession thereof; that he had leased the drill for a monthly cash rental to the Prescott Oil Company, and was not interested in and had nothing whatever to do with drilling the well or employing laborers to drill same; that he was not a party to the suit in which the drill was attached and ordered sold to pay the Prescott Oil Company laborers, and was not bound by the seizure and judgment of condemnation; that the drill was seized under act 513 of the General Assembly of the State of Arkansas for the year 1923, which act is void for the reason that it violates the Constitution of the United States and the Constitution of the State of Arkansas inhibiting the deprivation of property without due process of law; that said act was repealed by act 615 passed by the same session of the Legislature.

■ Appellee filed an answer, admitting the seizure of the well drill under writ of attachment issued in a proceeding to enforce a lien for labor under said act 513, which was performed in and about the oil test well in question, but denying the unconstitutionality of the act or that same was repealed by said act 615.

The cause was submitted to the court, sitting as a jury, upon the pleadings and testimony, which resulted in a judgment against appellant and his bondsmen upon the replevin bond for the return of the drilling rig or its value, from which is this appeal.

The facts are- undisputed, and, in substance, are as follows: Appellant was the owner of the drilling rig complete, having purchased same- for $11,000 three years prior to leasing it to'the Prescott Oil Company. On the 24th day of January, 1924, he leased same to the Prescott Oil Company for a monthly rental of $600 per month to drill oil wells in certain territory in Nevada County. After executing the lease and delivering the drilling rig complete to the lessee he went to Florida, and did not return until about the time L. M. Carter and six other laborers attached the drill and shut down the well because they had not been paid their wages in the total sum of $1,726 for work which they performed in and about drilling a test well in said county. Appellant never had any connection whatever with the Prescott Oil Company and had nothing to do with the drilling of the well or hiring the labor. It is true that appellant was not made a party to the suit of L. M. Carter and the other laborers against the Prescott Oil Company, but, as we understand the record, the fact that Carter and the other laborers worked with and in and about the drill while the test well was being drilled, and that the Prescott Oil Company owed them $1,726 for labor s-o performed, is not questioned. In other words, the undisputed testimony discloses this to be the fact. Act No. 513 of the Acts of the General Assembly of 1923, under which the laborers claimed a lien upon the drilling rig complete, is as follows:

“Section 1. Any person or persons working in or about the drilling or operation of any oil or gas well, or any well being drilled for oil or gas, in this State, shall have a lien on the output and production of such oil or gas well for the amount due for such work, and in addition thereto his lien shall attach to all machinery, tools, equipment and implements used in such drilling or operation of such oil or gas wells, including all leases to oil or gas rights on the land and upon which such drilling or operations shall be performed. Such lien shall be superior of paramount to any and all other liens or claims of any kind whatsoever, and no contract, sale, transfer or other disposition of said property shall operate to defeat said lien, and said lien shall be enforced in the same manner now provided (by law for the enforcement of laborers’ liens.

‘ ‘ Section 2. This lien shall not be construed to be a lien upon the real estate of the employer or lessee, but shall be a lien upon the personal property used and connected with said drilling and operations and the output or production of said oil or gas lease on said land.”

The first question arising on this appeal is whether or-not the act is unconstitutional on the alleged ground that its effect is to take the property of appellant and subject it to the payment of the debt of the Prescott Oil Company without due process of law. .

First. The act does not provide for the enforcement of the lien against the machinery, tools, equipment and implements used in drilling an oil or gas well without making the owner of the property a party to the suit. The act provides that said lien shall be enforced in the same manner now provided by law for the enforcement of laborers’ liens. In such proceedings the owners of'the property are necessary parties. In the instant case, appellant, the owner of the drilling machinery, was not a party to the attachment proceeding to enforce the lien, and it follows as a matter of course that the judgment or order of sale of the property was not binding upon him. It was his privilege to allege and prove that Carter and the other laborers had not performed labor in and about .the test well in which the machinery was used, or that they were not entitled to the amount claimed by them. As stated above, the undisputed testimony reflects that the well where the machinery was being used was shut down by the attachment proceeding brought by Carter and the other laborers to enforce a lien against the machinery, etc., for labor which they had performed in and about, said well.

Second. Our construction of the act is that it gives a lien to laborers working in or about drilling operations of any' oil 0£ gas well on all machinery, tools, equipment and implements used in such drilling operations, irrespective of who may own the machinery. The fact that one man’s property may be taken to pay the debt of another does not render the act unconstitutional. In the instant case, according to the undisputed testimony, appellant placed his property in the possession of the lessee, knowing the purpose for which it was to be used by him and knowing that the statute quoted above gives a lien to laborers for services performed by them in and about the drilling operations, and he therefore voluntarily subjects his property to such liens as are given by the statute. He could have protected himself against the statutory lien in favor of laborers by requiring his lessee to give him a bond to pay the laborers ’ claims and to return it to him free from such incumbrances. A statute similar to act 513 was upheld as constitutional by the Supreme Court of California in the cases of Church v. Garrison, 75 Cal. 199, 16 P. 885, and Lambert v. Davis, 116 Cal. 292, 48 P. 123. Section 1 of the California statute provides that “every person performing work or labor of any kind in, with, about, or upon any threshing machines, the engine, horsepower, wagons, or appurtenances thereof, while engaged in threshing, shall have a lien upon same to the extent of the value of his services.”

In the California cases the property had been leased by the owner, just as in the instant case, and the lessees had employed laborers and failed to pay them, and these laborers sought to enforce a lien under the California statute against the threshing machine, to collect the amounts due. It was said by the court that the act was “not unconstitutional, as authorizing a deprivation of the property of the owner without due process of law, because it gives a lien to one not employed by the actual owner.” The California court further said: “That the actual ownership of the property was an immaterial circumstance —the obvious theory, and, as we deem it, the correct one, being that the one lawfully holding from the actual owner the possession and the right to operate the machine is to be deemed, for the purposes of the statute, the owner of the property.”

The next and last question arising on appeal is whether said act 513, approved March’ 21, 1923, was repealed by act 615, approved March 23, 1923. The latter act contained the following section:

‘ ‘'Section 6. Remedy Cumulative. The provisions of this act shall not be construed to deprive or abridge materialmen, artisans, laborers or mechanics of any rights and remedies now given them by law, and the provisions of this act shall he cumulative of the present lien laws of this State, except as herein repealed or modified.”

We have examined the latter act and find nothing baits provisions specifically repealing or modifying the provisions of act 513. On the contrary, the later act was clearly intended to strengthen and aid act No. 513.

No error appearing, the judgment is affirmed.


author: Kirby, J.,

text:
    Fagan v. Graves.
    Opinion delivered April 25, 1927.
    1. Reformation of instruments — sufficiency of evidence. — In order to justify reformation of a deed or written instrument o-n the ground of fraud or mistake, the evidence of such fraud or mistake must be clear, unequivocal and decisive.
    2. Reformation of instruments — mistaKe as to boundary.— Where plaintiff executed a deed to an adjacent proprietor in settlement of a boundary dispute, the fact that he made a mistake in measurement of his lot .did not show a mutual mistake or warrant a reformation of the deed.
    Appeal from Garland Chancery Court; W. R. Duf-fie, Chancellor;
    affirmed.
    STATEMENT BY THE COURT.
    • This suit was brought to correct the description, alleged to have been made by mutual mistake, in two certain deeds, one from M. Fagan and wife to Jane Fagan and the other from Jane Fagan to Mollie Graves, her daughter, made to effect and carry out a compromise settlement between M. Fagan and his mother, Jane Fagan.
    M. Fagan purchased, in 1904, lots 1 and 2, of Moore and Shultice Subdivision of lot 1, block 8, city of Hot Springs, taking the title in his own name. In January, 1924, Jane Fagan, his mother, sued him in the Garland Chancery Court to divest the title out of him and invest it in her, alleging that she had furnished the money to purchase the lots, which should have been conveyed to her, but that he had fraudulently taken the title in his own name, contrary to the instructions- given him.
    After Jane Fagan’s deposition had been taken in the suit, a family conference was held, -at which Peter G-anter and E. C. Barrow were present, and a compromise of the case agreed upon, under the terms»of which appellant was to convey to his mother, Jane Fagan, 6 feet off the east side of lot 2 and all of said lot 1, except 6 feet off the northeast side thereof, fronting on Crescent Avenue; and appellant executed to Jane Fagan a deed to said lot 1 and 6 feet off'lot 2, she in turn conveying it to her daughter, Mollie Graves.
    Appellant contends in this suit that the description of the lot in the deed should be so corrected as to allow him a small store-room located in the southeast corner of said lot 1, it being the intention of the parties, at the time of the compromise settlement, that he should retain the land upon which the store was situated. The deeds were drawn up by Ganter and Barrow, or one of them— Barrow, in fact — to carry out the terms of the compromise, and were submitted to Jane Fagan’s attorney, A. B. B elding, who corrected, by interlineation and erasure, the description in one of the deeds, making it read correctly, lot 1, etc., of Moore and Shultice’s Subdivision of lot 1, block 8, of the Hot Springs Reservation, instead of lot 1, etc.,.block 8, of the Moore -and Shultice Subdivision, block 1, of the Hot Springs Reservation. Witness said he made no other corrections in the deeds, and the deed from Jane Fagan to Mollie Graves appears to .have been executed with the erasures and any interlinea-tions just as he -made them to correct the descriptions, and the deed had been recorded and was made an exhibit to his deposition. The deed from M. Fagan and his wife to Jane Fagan contained identically the same description as the deed made an exhibit to his deposition, showing that the same changes had been made therein as he made in correcting the other deed. As he remembered it, the deeds were executed after the interlineations and erasures were made, without new ones being written.
    Several witnesses testified, and all understood that '"the deeds were to be executed conveying the lots so that Jane Fagan would get a 6-foot strip off the east side of lot 2, and all of lot 1 except 6 feet off the northeast side of said lot fronting on Crescent Avenue, and the deeds were made accordingly. Some of the witnesses testified, as did appellant, that it was the intention that he should have the land upon which the store building was located in the southeast corner of lot 1, the 6 feet around the storehouse. He stated he was to have the land on which the storehouse was located and six feet around the store.
    One of the arbiters or referees, Peter G-anter, testified that it was the intention at the time, and so expressed by Jane Fagan, his mother, since deceased, in the conference that “Bud,” M. Fagan, should have the storehouse. He stated, however, that he and M. Fagan had gone out and stepped the lots off, and understood that the 6 feet retained on the east side-of lot 1 would leave the storehouse upon M. Fagan’s division of the lots.
    The other arbiter, Barrow, said: “After some controversy it was agreed that M. Fagan was to transfer to his mother lot 1, and he was to accept six feet on the side of this place where he said the store stood on, and he was to give six feet from lot 2 for that, for the six feet 'the store stood on; it seems like he said he and Ganter had been down there and stepped this off and he found out it would take six feet to get this store.”
    The chancellor found that the testimony did not show a mutual mistake of fact made in the conveyances effecting the compromise settlement, and dismissed both the complaint and the cross-complaint for want of equity, and the appeal is prosecuted from the decree dismissing the complaint.

      G. T. Cotham, for appellant.

      Murphy é Wood,'ion appellee.
   Kirby, J.,

(after stating the facts). The rule of evidence is different, requiring more proof than the establishment of the contention by a preponderance of the testimony in order to justify the reformation of a deed "or written instrument on the ground of mistake. In Eureka Stone Co. v. Roach, 120 Ark. 326, 179 S. W. 499, the court said: “It is the settled rule of this court that, to justify or authorize the reformation of a written instrument on the ground of fraud or mistake, the eyi-dence of such fraud or mistake must be clear, unequivocal and decisive.” See also Cain v. Collier, 135 Ark. 293, 205 S. W. 651; Welch v. Welch, 132 Ark. 227, 200 S. W. 139; McGuigan v. Gaines, 71 Ark. 614, 77 S. W. 52; Johnson v. Stuart, 97 Ark. 635, 135 S. W. 354; Waddell v. Bowdre, 151 Ark. 474, 236 S. W. 599; Norsworthy v. Hicks, 170 Ark. 877, 281 S. W. 660.

The undisputed testimony shows that a settlement between the parties was agreed upon for the division of the lots and the conveyance made in completion of it, and the argument that appellant owed no duty to his mother to make such settlement is of no moment. The recitals of the deeds do not purport to show the terms of such settlement, however, nor any intention that the land to be retained by appellant should include that upon which the storehouse was.situated.

Several witnesses testified that it was understood that appellant should keep the land upon which the storehouse was situated, and it was the intention to effect this by the description in the conveyance.

The other testimony tended to show, however, that the description was made in accordance with the agreement of settlement, and that appellant and one of the arbiters had gone out and stepped or measured the lots off before the deeds were written and had given the description as written to the draftsmen, thinking at the time that the land retained included the storehouse.

If he made a mistake in his estimate or measurement, not knowing the boundaries of his lots and the streets as laid out, his inclosure not conforming thereto, and the description was written in accordance with his direction, .it cannot be said such, mistake was mutual or warranted a reformation of the deed.

The evidence of any such mistake as would entitle the plaintiff to the relief sought is not clear, decisive and' unequivocal, as the law requires.

We find no error in the record, and the judgment is affirmed.


author: Mei-iaefy, J.

text:
    Jones v. Green.
    Opinion delivered April 25, 1927.
    1. Bills and notes — negotiable instrument. — A note reciting a promise to pay to the order of a designated person a certain sum of money at a named bank on a certain day held a negotiable instrument, under Crawford & Moses’ - Dig., §§ 7762 to 7769, though providing that tolls collected under a lease of a cotton press to the makers should be credited on the face of the note.
    2. Bills and notes — innocent purchaser. — One to whom a note, complete on its face, was transferred for value without recourse, without notice of dishonor, before it was due, or of any infirmity or defect, was an innocent holder entitled to recover thereon, though the makers received no value.
    3. Bills and notes — sufficiency of consideration. — The consideration of a note peed not exist at the time it is made, as the promise becomes obligatory when the promisee incurs any loss, expense or liability in consequence of the promise and in reliance thereon.
    4. Bills and notes — valuable consideration. — A promise to perform acts in the future is a valuable consideration for a promissory note.
    5. Bills and notes — sufficiency of consideration. — The sale or lease of an article to be delivered in the future is sufficient consideration for a promissory note.
    Appeal from Logan Circuit Court, Southern District; James Cochran, Judge;
    affirmed.

      Kincannon & Kincannon and Rays, Priddy & Rorex, for appellant.

      Evans & Evans, for appellee.
   Mei-iaefy, J.

On February 17, 1922, one J. F. Taft, representing-himself as the president of the dinners’ Compress Trust of Milwaukee, Wisconsin, leased to the Magazine Gin Company, which was a partnership composed of J. T. Jones and C. J. Gorham, a round-bale cotton press for baling cotton into cylinder hales, and appellants executed and delivered to said Ginners’ Compress Trust the following note:

“$1200. Booneville, Ark., Feb. 17, 1922.

“October 17, 1922, after date, for value received, I, we, or either of us, promise to pay to the order of Gin-ners ’ Compress Trust, of Milwaukee, Wis., twelve hundred dollars ($1,200) at the Citizens’ Bank, Booneville, Arkansas, with interest at the i;ate of ten per cent, per annum from date until paid. All interest to he paid annually, and if not paid annually to become part of the principal and draw interest at the same rate. The makers and indorsers of this note hereby severally waive presentment of payment, notice of nonpayment and protest, and authorize extension of time by payment of interest. The tolls collected under lease dated February 17, 1922, will be credited on the face of this note until paid.

“Magazine Gin Company,

“C. J. Gorham,

“Mrs. T. J. Jones.”

Indorsed on ¡back as follows: “Booneville, 2-17-22. Pay to the order of Bank of Booneville. Ginners’ Compress Trust, by J. F. Taft, Pres.”

The lease was as follows:

“This agreement, made and entered into this 17th day of February, 1922, by and between the Ginners’ Compress Trust of Milwaukee, Wisconsin, hereinafter called the lessor, and the Magazine Gin Co., Magazine, Arkansas, herein called the lessee.

“Witnesseth: Whereas the lessor has this day agreed to and does hereby lease and deliver to lessee and installed ready for operation, on or before the beginning of the ginning season of 1922, upon the conditions herein set forth, the following personal property, to wit: One complete system for baling cotton into cylinder bales, as per specifications and drawings shown in pamphlet called ‘Prodigy on Baling’ Cotton.’ Tire lessee does hereby agree to receive said property and operate same at their gin plant, a public toll gin, baling cotton into cylinder bales, at the option of the cotton grower.

“Whereas the lessee, as a guaranty of good'faith, does give his promissory note for twelve hundred ($1,200) dollars to lessor. The lessee agrees to operate this system for a term of not less than three years, and to use their best energy to make it a success and to accommodate the public. Said lessee further agrees to pay the lessor a rental of -20 cents per hundred, pounds for all cotton baled in said system, which the lessee is to charge and collect as a toll for compressing the cotton at the gin, and deposit the same at the end-of each month to the order of the lessor, less the amount hereinafter stipulated.

“It is further agreed by the lessee that he will keep a correct account of all cotton baled on said system, giving the number of bales and weight of same. A settlement of all amounts due under this lease during any one year shall be computed on or before the first day of January of each year while this lease is in effect. The lessee to deduct all the tolls collected up to twelve hundred dollars, as the return of his money advanced on installing, the system. This amount to be expedited on the twelve-hundred-dollar note until paid.

“It is understood that the title of the abpve described property shall remain in the name of the lessor, who is the owner.

“This agreement in no way transfers or incumbers the title other than herein set forth, aixd the lessor shall have the right to enter the premises of the lessee at any time and take possession and remove, -without cost to lessee, said system from his premises, provided if any term of this lease is or shall be violated. The lessee is not to interfere or in any way hinder the removal of the machine, nor is the lessor to be held-responsible for any damage from same.

“Further, the lessor reserves the right to remove the system between ginning seasons, provided said system does not return two thousand bales, under ordinary season conditions, without expense to lessee. The.lessee is to do all necessary carpenter, work at his own expense.

‘ ‘ The lessor guarantees the system to make a perfect, merchantable hale of cotton and a continuous operation, and guarantees to keep said machine in good repair.

' “The lessor also guarantees a market for the product of all cotton out-turned, bidding for same in the open market at the usual premium of round over square, and will furnish the lessee, or whom he may designate, with a "limit each day for the purpose of all cotton out-turned offered for sale.

“The lessor guarantees not to install another system where it will directly interfere with the patronage of the lessee system-for a period of seven years,- provided the lessee meets the demands of the ginning public.

“Witness our hands this the 17th day of February, 1922.”

The indorsement on the notes shows that it was first assigned to the Bank of Booneville, and afterwards transferred to appellee, J. F. Green, without recourse.

Appellants never received the round-bale compress, and they refused to pay the note. Suit was instituted by J. F. Green on December 22, 1923, in the Logan Circuit Court.

The appellants filed answer, alleging that the note was given for a patented article, and did not show on its face that it was executed in consideration thereof, and was therefore void.

The circuit court held that the note was void, and the case was appealed to this court, where it was held that there was not a sale but a lease, and, for that reason, the statute did not apply. Green v. Jones, 168 Ark. 423, 270 S. W. 515.

After the case was reversed by the Supreme Court there was a retrial in the circuit court, and the appellants contended, first, that the note was not negotiable; second, that appellee was not an innocent holder in due course; and third, that the consideration having" wholly failed, appellants were not liable.

“Our uniform negotiable instrument act states that an instrument, to be negotiable, must conform to the following requirements:

“1 It must be in writing and signed by the maker or drawer; 2, must contain an unconditional promise or order to pay a sum certain in money; 3, must be payable on demand, or at a fixed or determinable future time; 4, must be payable to order or to bearer; and, 5, where the instrument is addressed to a drawee, he must be named or indicated therein with a reasonable certainty.” Crawford & Moses’ Digest, § 7767.

The note sued on in this case is a negotiable instrument as defined by above statute. This court has said:

‘ ‘ In order to render the making of instruments negotiable, they must contain a written promise to pay money to another unconditionally, absolutely, and at all events. If the sum promised to be paid is only payable out of a special fund which may prove inadequate to meet the demand in full, the instrument is not negotiable. The reason of the rule is that such an instrument does not carry the general personal credit of the maker thereto, which is one of the essentials of negotiability.” Rector v. Strauss, 134 Ark. 374.

It has been said: ‘ ‘ The true test in every case under the negotiable instruments law, as well as at common law, is whether the general credit of the maker or drawee accompanies the instrument. If it does, the instrument is negotiable, otherwise it is not. * * * Inasmuch as as individual promises are always payable from the separate estate of the maker, it follows that the expression of this fact does not state a particular fund. Lastly, it is to be borne in mind that the negotiability of bills and notes is favored in law, and, whenever the promise can be held unconditional without doing violence to the ordinary meaning of the language used, it will be so held.

Although the amount of an instrument is to be paid out of a particular fund, yet, if the fund is mentioned merely as directory to the drawee, as being a means to reimburse himself, the rule of the law merchant is that the instrument is negotiable.” 3 it. C. L. 885-886.

Then our statute provides that “an unqualified order or promise to pay is unconditional within the meaning of this act, though coupled with: 1, an indication of a particular fund out of which reimbursement is to be made, or a particular account to be debited with the amount; or, 2, statement of the transaction which gives rise to the instrument. But an order or promise to pay out of a particular fund is not unconditional.” Crawford & Moses’ Digest, § 7769.

We think the instrument sued on contains all the essential requirements of the uniform negotiable law, and that it is therefore a negotiable instrument.

Appellant’s next contention is that the appellee is not an innocent holder. The testimony in this case shows that it was the understanding of the makers of the note at the time it was made that it was to be sold, negotiated. The instrument was complete upon its face. Appellee, became the holder before it was overdue, without any notice that it had been dishonored, and took it in good faith and for value. At the time he purchased the note he had no notice of any infirmity or defect. The clause in the note that the tolls were to be credited on the face of the note is not an infirmity and does not render the note non-negotiable. The fact that appellee is seeking to recover, although he knows that the appellant never got any value, is immaterial. It . is true that the appellant did not receive any value.

It is not necessary that the consideration shordd exist at the time of making the instrument, for, if the person to whom a promise is made should incur any loss, expense or liability in consequence of the promise, and relying upon it, the promise thereupon becomes obligatory. * * * A promise to perform acts in the future is a valuable consideration for a promissory note. Thus, an executory contract of sale is therefore sufficient consideration at the time when it is given.” 3 it. C. L. 936.

It is therefore immaterial, so far as the appellee is concerned, whether the contract was ever performed or not. As we have seen, the sale or lease of the article, the promise to deliver in the future, was a sufficient consideration for the promissory note. It is unnecessary for us to determine on whom the burden of proof rests, because, as we view this case, there was nothing to submit to the jury. The facts are undisputed, and the court therefore did not err in directing the verdict. The judgment is therefore affirmed.


author: McHaney, J.

text:
    Neal v. Arkansas Lumber Company.
    Opinion delivered April 25, 1927.
    Logs and logging — expeditious Removal op timber. — Lumber company acquiring deeds to timber in 1913 and 1917 held to have proceeded expeditiously, though cutting was delayed until 1923, where owner’s original deed, executed in 1902, required removal ■in 25 years, and company had other timber to remove in vicinity.
    Appeal from Bradley Chancery Court; A. G. Hammock, Chancellor;
    affirmed.

      Wilson S Martin and Compere & Compare, for appellant.

      Fred L. Purcell and Williamson S Williamson, for appellee.
   McHaney, J.

On June 9,1902, appellant, O. F. Neal, being the owner' of a 320-acre tract of land in Bradley County, Arkansas, west of the Lagles, executed and delivered a deed conveying all the pine timber on said land 12 inches and over in diameter to the Bradley Lumber Company, its successors and assigns, for a valuable consideration. This deed contained an expeditious clause as follows:

‘ ‘ The party of the second part shall cut and remove said timber as expeditiously as possible, and it is agreed that, unless it shall have removed all the same within a period of twenty-five years from the date hereof, it shall be responsible for and pay to the first party the full amount of taxes assessed against said lands after the expiration of said period of 25 years from this date until such time as said timber is removed and said possession returned to said first party.”

At that time, and now, there were three large lumber companies in Warren, the Bradley,- the Arkansas and the Southern, each actively competing with the other in the acquisition of vast areas of valuable pine timber with which Bradley County was richly blessed. Each of said companies had spent large sums of money in the establishment of mammoth lumber manufacturing plants, and immediately set about the business of acquiring sufficient timber from the owners thereof to supply and operate their respective plants for many years to come. Each of said companies employed agents to buy timber for them, and appellant was so employed from 1900 to 1904, during which time he purchased 5,000 acres or more of. timber for his principal, the Bradley Lumber Company. Buying was more or less indiscriminate as to location, and tlie result was that each of said companies acquired valuable tracts of timber scattered over the county, or, to use the language of the. learned chancellor, ‘ ‘ checker-boarded to a considerable extent all over Bradley County.” Appellant wrote the deeds, or many of them, for timber purchased for his principal, and all deeds had the same or similar expeditious clause as above set out, with probably some variation as to the time given to cut and remove. Early in their operations these companies had not matured plans for logging operations, and had inadequate transportation facilities for the bringing of the logs to the mills. But, as time passed, plans were matured, large bodies of timber lands were blocked together, and logging roads were constructed in such a way as to reach their respective timber areas with spur tracks branching off to reach more distant tracts. The Arkansas and Southern so constructed their facilities to reach timber owned 'by them west of the Lagles, while the Bradley’s log-road ran south, east of the Lagles. The Bradley Lumber Company has never had any facilities for bringing its timber on the Neal tract into Warren, but the Arkansas did have, so these companies began the system of exchanging tracts for the purpose of the expeditions removal of the timber therefrom. On May 1,1911, this court decided the case of Earl v. Harris, 99 Ark. 112, 137 S. W. 806, in which a similar clause was construed, and this decision caused some apprehension in the minds of the holders of similar timber deeds as to the time in which the timber must he removed. Therefore, on August 10, 1912, the Bradley Lumber Company secured from appellant another deed to the same tract of timber, with a like expeditious clause, except the -time limit was 15 years instead of 25 years, and the words, “when cut,” were inserted in the deed, so as to convey all the pine timber over 12 inches in diameter when cut.* This deed recited a consideration of $480, written in a blank space with pen and ink, as was also the fifteen years in which to cut and remove.

Appellant says that this was not the real consideration, and that he did not execute the deed with that consideration in it, nor was the word “fifteen” written in the blank space at the time he signed it, and in this respect it is his, contention tliat the deed Is a forgery in that it was altered after its execution, without his knowledge or consent.

On March 22, 1913, the Bradley Lumber Company conveyed three forties," or Í20 acres, of this timber to the appellee, Arkansas Lumber Company, and on the 8th day of February, 1917, it conveyed to appellee the other five forties, o'r 200 acres of said timber. Thereafter, in 1923, appellee, in accordance with its plans for the cutting and removal of timber owned by it, began the extension of its logging road into the territory covered by these deeds, and was preparing to construct its road across .this particular land when appellant served notice upon it that it could not construct its road across’ his land, or cut and x'emove the timber, therefrom. Appellee thereupon brought suit in the Bradley Chancery Court to enjoin appellant from' interfering in any way with the construction of its log-road, or from interfering with it in the cutting and removal of said timber. A temporary restraining order was issued against appellant, a bearing was bad on a motion to dissolve tbe temporary restraining order, wbicb was denied, and tbe order continued. He thereupon filed a demurrer, answer and cross-complaint, in wbicb be sought to enjoin appellee from cutting said timber. Thereafter both parties took voluminous testimony, and, on a final hearing, tbe court overruled tbe demurrer to tbe complaint, dismissed the cross-complaint of appellant* for want of equity, made the temporary injunction permanent, and, in the meantime, tbe timber having been cut from said land, decreed title to tbe timber in appellee and sustained appellee’s right to cut and remove the same at tbe time it was done in 1923 and 1924. Appellant excepted, prayed and was granted an appeal to this court.

Appellant makes several contentions regarding tbe deed of 1912, the purposes of its execution, and questions tbe validity of said deed, in that it was materially altered after it was executed; also that the Arkansas Lumber Company, conceding tbe validity of tbe deed in 1912, has not complied with the expeditious clause therein. We do not agree with appellant in any of these contentions, and, in our view of tbe case, tbe deed of 1912 from appellant to tbe Bradley Lumber Company is unimportant, as we are of tbe opinion that tbe deed executed in 1902 was still effective, and that the Bradley Lumber Company had the title to said timber under said deed at tbe time it conveyed to appellee in 1913 and 1917. Under this view of tbe case, as above stated, tbe timber deed of 1912 is unimportant. But, even conceding tbe invalidity of the deed of 1902, we are convinced that tbe findings of tbe chancellor, with reference to tbe effectiveness and validity of tbe deed of 1912, is supported by the preponderance of the evidence, at least we cannot say that tbe findings are against the clear preponderance of tbe evidence.

This case falls within the .facts and is ruled by the principles announced in tbe cases of Burbridge v. Arkan sas Lumber Co., 118 Ark. 94, 178 S. W. 304, and Orr v. Southern Lumber Co., 170 Ark. 361, 279 S. W. 1013. Under these decisions we .hold that the Arkansas Lumber Company proceeded expeditiously, after it acquired same under the deeds of 1913 and 1917, to cut and remove the timber therefrom. As stated by the chancellor, “true, this timber seems to have been the last removed by the Arkansas Lumber Company in the vicinity,” but, as he again stated, “in the nature of things there had to be a last cutting of timber, and, in view of the apparent ill feeling that existed between the parties, it is unfortunate that this timber should be the Neal timber.” '

In this view of the case it becomes unnecessary to discuss the amount of timber cut and removed from said lands, or its value. The decree of the chancery court is right, and it is accordingly affirmed.


author: MgHaNey, J.

text:
    Naberding v. Karraz.
    Opinion delivered April 25, 1927.
    1. Contracts — undue influence — equity.—A conveyance or contract will be set aside whenever it has been obtained through influence over persons greatly in the power of another if there is no consideration or inadequacy of consideration, or a clear ground of inference that confidence has been abused or an advantage has been taken of weakness of understanding, or clouded or enfeebled faculties.
    2. Bills and notes — validity.—Where an old woman, eighty-two years old, unlettered and unlearned, of weak intellect, was induced to give defendant notes and certificates of deposit without consideration, defendant acquired no title, *and plaintiff was entitled to the money collected by defendant and for possession of notes.

      3.' Bills and notes — innocent holder. — In action to recover possession of notes, evidence held to show that the holder of the notes who purchased them1 from-one who bad got them from the plaintiff without consideration, and who owed the holder a debt, was not an innocent holder.
    Appeal from Monroe Chancery Court; A. L. Hutch-ins, Chancellor;
    reversed.

      G. F. Greenlee, for appellant.

      Bogle £ Sharp and C. W. Norton, for appellee.
   MgHaNey, J.

Appellant is an old woman, eighty-two years old, unlettéred and unlearned, of weak intellect. George Naberding, her son, was killed in France. The United States Government paid to the appellant, his mother, a sum of money on account of the insurance, and has, since that time, been paying her monthly the sum of $48.75 on account of the death of her son. Some of her money she deposited in the Bank of Brinkley, for which time certificates of deposit were issued to her. On December 20, 1922, she loaned $800 of her money to H. Henard at 8 per cent, from date until paid, evidenced by four promissory notes of $200 each, one due December 21, 1923, and one on the 21st day of December for the years 1924, 1925 and 1926. The interest on all notes was payable annually, and, if not paid when due, was to become a part of the principal and bear interest thereafter at 8 per cent. These notes were secured by a chattel mortgage on certain personal property of H. Henard. On December 23, 1922, at the instance of Karraz and Mahfouz, appellant indorsed and surrendered a certificate of deposit to the Bank of Brinkley for $467.12, which was cashed by the bank and deposited to the credit of the Fargo Cash Store in the name of Karraz. The indorsement on the back of the certificate by appellant was made by Mahfouz by her mark. This certificate had' interest due on it in the sum of $18 or $19, which was also collected by Karraz. Aboiit the same time, or later, she turned over all of the above-mentioned notes to Karraz, which she indorsed by Mahfouz writing her name on the back, she touching the pencil, and he witnessing the indorsement, as he'did in the case of certificate of deposit. Karraz tried to get his attorneys to indorse the notes for the old lady, and they declined to do so, but again his friend, Mahfouz, performed the service for him.

When the first note became due, Karraz had Mahfouz collect it and the interest on all the notes, amounting to $264 in all, which. M:ahfouz 'brought back to him. He says that he tried to sell all the notes to Henard for $350; that, later, he sold them to his friend, Namey, for $400, $200 of which was a debt he owed Namey, and $200 was paid to him in cash, and that he sold them to Namey before the suit was brought. He testified that the old lady gave the notes to him because she didn’t want them f — that she would rather he had them than the members of her family; thát, if she had wanted the notes back, he would have given them to her, or, if she wanted the money, he could get the money and pay her; that, if she needs any money and will come to him, he will help her— that is, that he would do the best he could to help her. He admitted that he had no money, had spent all that he had got from her, hut that, if she needed money, so long as he was in good health, he could make it and help her.

Mrs. Naberding testified that she did not give him the notes to be kept by him, but that he was to put them in the bank for her, and stated positively that they were not his property. Appellant is corroborated in her testimony by her daughter, Susie Cash, who stated that her mother gave Karraz the notes to be put in the bank, as also two bank notes, evidently meaning two certificates of deposit.

Namey testified that he purchased the notes for the consideration -stated by Karraz. He was asked this question:

“Q. You do not know, of your own knowledge, in what capacity Karraz was to.collect these notes? A. I asked him where he got that note, and he said ‘-She gave it to me,’ and I asked him, ‘How I know she gave it to him,’ and he says, ‘P. A. Mahfouz was there and signed it,’ also she gave him some money. That is all I know.”

Karraz, 'Mahfouz and Namey are Syrians, and are all intimate friends and acquaintances.

■ This action was brought to recover against Mahfouz and Karraz for the total amount of money converted by them, and against Namey to recover possession of the notes. After hearing the evidence, the chancellor dismissed the complaint for want of equity, from which comes this appeal.

The record in this case shows that the appellant was a very old woman; that she was weak in mind; that'there was no consideration; that, while there is little evidence of persuasion, it is shown ;by the testimony of H. H. Britton, husband of appellant’s granddaughter, and her next friend in this action, that there was persuasion. He testified, in substance,' as follows: I know the reason why grandmother transferred the notes to Isaac Karraz. He petted her up just like she was a child. He gave her a few little candies, called her sweetheart, and that just made a fool of her. Again he testified that Karraz tried to persuade his grandmother away from his home; that Karraz came to witness ’ house during the month of February, 1924, and said to her, “Sweetheart, what’s the matter? Ain’t you going back home with me?” She replied that she. was sick.

Under such circumstances, a court of equity will inquire very closely into the transaction, and will cancel the transfer or conveyance on slight evidence of bad faith and unconscionable acts resulting in the conveyance or transfer of property. No principle is better established, in courts of equity, than that a conveyance or contract will be set aside whenever it has been obtained through undue influence over a person greatly in the power of another, if there is no consideration, or inadequacy of consideration, or clear ground of inference that a confidence reposed has been abused, or an advantage has been taken of incompetency, weakness of understanding or clouded or enfeebled faculties.

, “If there is reason to believe that influence has been acquired over a person of weak mind, the transaction will be carefully scrutinized in equity. And whenever, as a result of age, sickness, or other cause, there is a great weakness of mind, not amounting to total incapacity, in a person executing a conveyance, and it appears that there was either no consideration therefor or a grossly inadequate one, the conveyance may be set aside by a court of equity upon a proper and. seasonable application made either by the injured party or his representatives or heirs.” 13 Cyc. 586.

• One of the leading cases-in our own court on this subject is that of Hightower v. Huber, 26 Ark. 604, written by Mr. Justice Gregg, in which the court said: “And in a court of equity, where bad faith and unconscionable acts can have no allowance or favor, the strength of mental capacity of the parties, the circumstances surrounding them, their relationship, etc., make up the grounds upon which .the court can find the real influences that produced the conveyance. And when it is discovered that the party in whose favor the conveyance is made possessed an undue advantage over the grantor, and, in person or by agent, exercised an improper influence over such one, and to the advantage of the grantee, it is an act against conscience and within the cognizance of a court of equity. ”

We do not believe, from the record in this case, that Mrs. Na'berding intended to deliver the notes to Karraz as a gift, but, even though it may be said she did so intend the transfer, yet, under the circumstances of this particular case, it would be unconscionable and inequitable to permit the conveyance to stand. Mr. Henard states that he refused to borrow the money from her until he had consulted with her daughter, Mrs. Cash. Pie says that she was old, childish, feeble-minded, and there is no contention at all that there was any consideration whatsoever for either the money or the notes.

We- are therefore of the opinion that the chancellor erred in dismissing the complaint for want of equity, and that Karraz acquired no title either to the money or the notes.

The next question to be considered is whether Namey is an innocent purchaser of said notes. We have carefully considered the evidence as to whether Namey was an innocent purchaser, and have reached the conclusion that he was not. He testified himself that Karraz told him the old lady had given him the notes, and, as evidence of tlie fact, lie showed Mm where Mahfouz had signed the old lady’s name to the notes. He therefore knew that Karraz had acquired the notes without any consideration having been paid therefor. Namey was asked this question:

“Q. But you knew the note didn’t cost him anything — he told you he just got it from Mrs. Naberding if he would take care of her in the future? A. That is what he told me, that he would take care of that woman— if he didn’t, she wouldn’t give it to him.”

Then there are other circumstances connected with the transfer of these notes that are, to say the least, very suspicious. He testified that Karraz owed him $200, that Karraz had owed him $200 since 1921, which he had loaned Karraz without taking any note or any security therefor. He was living at Forrest City and Karraz at Fargo; that Karraz had no money, and that he had never .tried to collect the debt from him. Under these circumstances we are' of the opinion that Namey took the notes from Karraz with whatever infirmities attached to them in the hands of Karraz, and that therefore Namey is not an innocent holder of said notes.

With reference to Mahfouz’ connection with this case, it may be briefly stated that, whenever there was any collecting to be done, or the signing of the old lady’s name to any paper necessary to transfer it, he was present and participating therein.

The decree of the chancery court will therefore be reversed, and the cause remanded with directions to enter a decree against Karraz and Mahfouz for the amount of money collected by them, or either of them, from the appellant, and ordering and directing the appel-lee, Namey, to surrender and deliver up the notes in his possession, or, if he has parted with the possession thereof, to enter a judgment against him, Karraz and Mahfouz for the amount of said notes, and the interest thereon, and such other orders or decrees as may be necessary to enforce the rights of appellant according to the principles of equity and not inconsistent with this opinion.


author: McHaNey, J.

text:
    Valley Planting Company v. Currie.
    Opinion delivered April 25, 1927.
    1. Account stated — effect of settlements. — An action by the former manager of defendant corporation to recover one-third of an income tax refund, under a contract to pay him one-third of the net earnings for his services, was not barred by reason of annual settlements in which the income taxes were deducted from the gross earnings, nor by final settlement, since the taxes were paid under the erroneous belief that the amount was due, and hence they were not considered in such settlements.
    2. LIMITATION OF ACTIONS — RECOVERY OF SHARE OF TAX REFUND. — ‘The statutes of limitation did not run against a former manager’s right of action for share of an income tax refund until such refund was made, so that an action brought within the statutory period, after demanding his share immediately on learning of ' refund, was not barred.
    3. Trial — transfer, of cause. — Where a cross-complaint for review of long and complicated accounts running for many years, between defendant corporation and its former manager, suing for his share of an income tax refund, was not filed tfntil over four years after his last connection with defendant, the court did not err in sustaining a demurrer thereto and refusing to transfer the case to equity, as the matters charged would have been barred by the statute, either on plea or demurrer in the court of equity.
    4. Estoppel — conduct of plaintiff., — A corporation’s former manager was not estopped to share in a refund of income taxes by a disclaimer of interest when the government made claim against the corporation for additional taxes, where the possibility of a refund was not considered by either party when his stock was sold, and the fact that a refund was made which resulted in additional assessment against him personally first brought the matter to his attention.
    Appeal-from Jefferson Circuit Court; T. G. Parham, Judge;
    affirmed.

      Williamson & Williamson, for appellant.

      Coleman & Gantt, for appellee.
   McHaNey, J.

Appellant, Valley Planting Company, is an Arkansas corporation, and, from the time of its organization to December 31, 1921, and for some time thereafter, it had only three stockholders. When originally organized the stockholders were J. M. Taylor, J. Gr. Taylor and Andrew Nunn, each owning a one-third interest in the capital stock of $15,000. In 1904 J. M. Taylor died, and his stock passed to his daughter, Henrietta Taylor. On March 1, 1901, appellee, J. D. Currie, purchased the capital stock owned by Andrew Nunn, and from that time on to December 31, 1921, he continued to he the owner of a one-third interest therein, and was the general manager of the corporation. J. M. and J. G. Taylor, as well as other members of the Taylor family, owned valuable farming lands in Drew, Desha and Lincoln counties, and this corporation was organized for the purpose of operating these farms or plantations, doing a plantation supply business, operating gins and other business pertaining thereto. In 1909 the appellant and appellee entered into the following written contract:

“State of Arkansas, County of Jefferson.

“This contract between the Valley Planting Company, a corporation, John D. Currie, and J. M. and J. G. Taylor (a firm composed of J. G. Taylor and Henrietta Taylor) witnesseth:

“That said Valley Planting Company has employed said, J. 1). Currie to manage the business of the corporation, and has rented from said J. M. and J. G. Taylor their lands in Drew, Desha and Lincoln counties. Said corporation is to pay out of its gross earnings the current expenses (other than the salary of the said Currie and the rent of said lands) and is to reserve four thousand five hundred dollars of its net earnings to pay annual dividends. The said Currie is.to have for his services as manager one-third of the remaining net earnings, and said J. M. and J. G. Taylor is to have the other two-thirds of the net earnings for the rent of their lands. This contract is for the year 1909 and from year to year thereafter, subject to be terminated at the end of any year by notice from either party.

“This the 28th day of June, 1909.”

The parties continued to operate under this contract from that time until the appellee sold his stock, December 31, 1921, to Mr. Dillard Saunders, who thereafter succeeded to the management of the corporation, in the place of the appellee. The business of the corporation was conducted apparently without consultation with Miss Henrietta Taylor, Mr. J. G-. Taylor and appellee consulting’ together regarding the- company’s operations when they deemed it proper to do so, J. G. Taylor being president, Miss Henrietta Taylor vice president, and the . appellee general manager. No stockholders’ or directors’ meetings were held, and the business of the company was conducted more as a partnership than that of a corporation. At. the end of each year the business done for that year was audited, the hooks closed, and each of the stockholders credited with one-third of the profits, after deducting all expenses, including income and excess profits taxes. The record shows the company was very successful, especially for the years 1917, 1918 and 1919, when it paid for each of tho.se years a large amount of income and excess profits taxes to the Government. In September, 1921, appellee wrote Mr. J. G. Taylor, and, among other thing’s, mentioned in the letter was that he had heard that two revenue men were after Pickens for $60,000 on 1917, 1918 and 1919, 'and said: “We have had two communications from the revenue men for 1918 and 1919, that are holding for you; hope you will not have to give up anything’ now.” He further expressed the hope, in this letter, that Mr. Taylor would be able to buy all his interest in the Valley Planting Company. In the sale of his stock to Saunders, appellee said nothing about the probability of the Government demanding any additional tax of the corporation. In December, . 1922, or in January, 1923, Mr. David A. Gates was employed by the Valley Planting Company in the matter of the adjustment of the income and profit taxes between it and the Government for the years 1917, 1918 and 1919, and; as a result of his employment, he secured from the Government for those years a total refund of $13,374.33, for which he charged a fee of $2,500, leaving a net amount of refund in the sum of $10,874.33. This readjustment was made by the G-overnment in the fall of 1923, hut, 'because of error in the issuing of the first checks, final vouchers were not delivered until in the spring of 1924. At the time of his employment, the Government was asserting a claim for' an additional income tax against the corporation for those years, amounting to between $20,000 and $30,000, but; as above stated, the Government not only abandoned its claim against the corporation, but made a refund to it in the sum stated. But the obtaining of the refund for the Valley Planting Company resulted in a large increase of the personal tax against the appellee and the Taylors, as individuals. When Mr. Currie was notified of the increase of his personal tax, and that the corporation had been given a refund, he immediately demanded of Mr. Taylor that his additional tax be paid out of this money, or that the corporation pay it. Mp. Taylor declined to do this, and he thereafter, on February 7, 1925, instituted this action against the Valley Planting Company to recover one-third of the total amount of refund. • Appellant demurred to the complaint, which was overruled, and it filed an answer and cross-complaint, the answer denying material allegations of the complaint, and the cross-complaint charging certain irregularities on the part of appel-lee and his son, who was the bookkeeper, in the keeping of the accounts, and that a restatement of the account would result in the indebtedness of appellee to the Planting Company, and praying that the cause be transferred to equity. Demurrer was sustained to the cross-complaint, and, at the conclusion of the testimony, the substance of which has been heretofore stated, the court instructed the jury to return a verdict for the appellee in the sum of $3,624.74, with interest at six per cent, per annum from May 1, 1924. The jury returned .a verdict for $3,991.45, which included the interest on the amount given the jury by the court,' and on which judgment was entered, from which comes this appeal.

Appellant first insists that the action of appellee was barred because of the annual settlements made at the end of each, year of the years involved, when the net profits of the corporation were ascertained and distributed, and also when the final settlement between them was made at the time he sold his stock and severed Ms connection with the company, which, as appellant contends, resulted in an account stated. We do not agree with this contention. It is undisputed that the amount of income and excess profits taxes was deducted from,the gross earnings for the years involved, and, but for the payment of these taxes, appellee would have received his one-third thereof under his contract with the company. It was necessarily a part of his compensation under his contract, under the system the parties had adopted of handling the company’s business, and paying the ¿ppellee for his' splendid management of the company’s affairs. It is furthermore undisputed that this money wa's paid out by the company erroneously under, the belief that this amount was due the Government, and it was not therefore taken into consideration in the annual settlements, or in the final settlement when he sold his stock.

Appellant’s next contention is that the action is barred by the statute of limitations, but we do not agree with this contention. The refund was made by the'Government in May of 1924, and the statute did not begin to run until that time. The cases cited by appellant, to the effect that mere ignorance of the existence of a cause of action does not prevent the running of the .statute of limitations, are correct declarations of law, but this is not a case of that kind. In the very nature of things appel-lee could not have maintained an action against appellant for the recovery of his interest in this refund until the refund had been made by the Government. He therefore had no cause of action until this sum of money, which had been erroneously paid to the Government, was allowed and paid back to the corporation by the Government. He very shortly thereafter learned of this fact, because he received a notice of an increase of his personal taxes, and advising him of the readjustment of the corporation’s taxes, resulting in the assessment of an additional tax against him. He immediately demanded his share of this refund, and thereafter, within the period of the statute, brought this action to recover same. We therefore hold that the statute began to run against his right of action from the date of the payment .of the refund to it by the Government.

It is next suggested that the court erred in refusing to transfer the case to equity. There was no error in the court’s action in this regard, as, even though the case had been transferred to equity, the matters set up and charged in the cross-complaint would have been barred by the statute of limitations, either on a plea thereto or by way of demurrer. Cunningham v. Dellmon, 151 Ark. 409, 237 S. W. 450. The cross-complaint of appellant is lengthy, and was largely based on long and complicated accounts between it and appellee, running for many years, and it contained the allegation that “the Valley Planting Company did not undertake to rec'heck the accounts of the said J. D. Currie until the filing of the present suit,” and “it now develops, on an examination of the books, as kept under the supervision and direction of the said J. D. Cur-rie, ’ ’ that he allowed certain irregularities to exist. The cross-complaint was filed April 3, 1925, and the last connection appellee had with the company, as manager and in charge of the accounts, was December 31, 1921. It will therefore be seen that appellant waited too long to have the accounts reviewed, either in a court of law or equity. There was therefore no error either in sustaining the demurrer to the cross-complaint or in the refusal of the court to transfer to equity.

The filial contention of appellant is that appellee is estopped on the ground set out in his requested instruction number 7, to the effect that, if the jury should find that the Government made a claim against appellant for additional taxes for the years mentioned, and that appel-lee “assumed by his conduct that he had no interest in this trouble of the Valley Planting Company, and that he bad severed- his connection with the company and was not responsible for its indebtedness, then this disclaimer of /interest’ on his part estops him from sharing- in the refund.” But there is no evidence on which to base an estoppel, as suggested in the requested instruction. True, he had sold his stock, but the matter of the probable indebtedness to the Government for additional taxes, or the matter of a refund in the event the company had paid more taxes than it was justly due, was not taken into consideration by either of the parties at the time the stock was sold. The fact that the refund was made, which resulted in an additional assessment against appellee', personally, brought the matter to his attention, and we can find nothing in the evidence that he had done prior to that time to estop him from claiming his share of the profits he was thus entitled to. We find no error in the record, and the judgment is therefore affirmed.


author: Hart, C. J.,

text:
    Taylor v. Arkansas Light & Power Company.
    Opinion delivered May 2, 1927.
    MASTER AND SERVANT — INDEPENDENT CONTRACTOR. — Where a contract of employment of State convicts provided that they should he guarded and worked under the direction of a warden employed by the State, the defendant having no control over the person of the convicts, but only the -right to designate what work was to be done, the relation of m-aster and servant did not exist between defendant and a convict who was injured while employed in clearing land on defendant’s property, and defendant is not liable for injuries -sustained by such convict when a tree fell on him while engaged in such work.
    Appeal from Hot Spring Circuit Court; Thomas E. Toler, Judge;
    affirmed.
    STATEMENT OE EACTS.
    Sidney S. Taylor, as administrator of the estate of R. L. McKinnon, deceased, instituted this action against the Arkansas Light & Power Company to recover damages because of the negligent act of. the defendant in allowing a tree to fall upon said it. L. McKinnon while he was engaged in clearing land for it. The defendant denied that the relation of master and servant existed between it and it. L. McKinnon at the time he was killed, or that it was guilty of any negligent act in the premises.
    The record shows that, during the year 1923, the Arkansas Penitentiary'Commission made a contract with the Arkansas Light & Pcfwer Company to furnish it fifty convicts at a dollar and one-half per day, with which to clear ground to be used as a reservoir in connection with its water-power dam, which was being constructed by it in Hot Spring County, Arkansas. Under the terms of the contract the Penitentiary Commission was to furnish all board, including food and the preparation thereof, for the men supplied, and all bedding needed and used by them. It was further agreed that the Penitentiary Commission should supply, at its own expense and upon its own responsibility, all guards and other help needed for the care of said convicts, without any responsibility upon the part of said company.
    R. L. McKinnon was one o'f the convicts so furnished, and was put to work clearing land, with his fellow-convicts, for said company. A warden was over the men and directed them which trees to cut down. McKinnon and other convicts had sawed down a tree, which lodged against another tree. The convicts were then directed to saw down the second tree in order that the lodged tree might fall to the ground. While they were sawing the second tree, the first tree began to fall, and, as McKinnon started to run and get from under the tree, it fell upon him and injured him so severely that he died. One of the men hollered, “Look out!” just as the tree began to fall. There was some brush where McKinnon ran, and this prevented him from getting out of the reach of the falling tree.
    The circuit court granted a motion of the defendant for a peremptory verdict on the ground that the relation of master and servant did exist between the parties,-tend that, if such relation did exist, there was no evidence to , show that the defendant was guilty of negligence. The case is here on appeal.

      Martin, Wootton & Martin and Sydney S. Taylor, for appellant.

      Robinson, Rouse <& Moses, for appellee.
   Hart, C. J.,

(after stating the facts). The circnit court was right in directing a verdict for the defendant. The case is controlled by the principles of law. announced in St. Louis, Iron Mountain & Southern Ry. Co. v. Boyle, 83 Ark. 302, 103 S. W. 744. In that case it was held that, under Kirby’s Digest-, § 5856, reserving the control in the State of convicts hired out, a railroad company is not liable for the tortious act of -a State convict in injuring an employee of the riailroad company. In that case the court recognized that the relation of master and servant rests upon a contract of service between the parties, the essential elements of which are that the master ©hall have control of the employee and the right to direct the manner in which the service shall be perf ormed.

The same statute was in force at the time McKinnon was hurt in the case at bar. The contract of employment expressly provided that the convicts should be guarded and worked under the direction of a warden employed by the State. The State clothed, fed and guarded the convicts and directed their movements while they were at work. The servants of the defendant would point out to the warden what ground was to be cleared, and the warden directed the movements of the convicts in cutting down the trees. ' The defendant had no control over the persons of the convicts, and they worked under the State’s own officers, who were there to guard and care for the men in the performance -of their labor. The defendant only had the right to designate what work was to be done, but the warden in charge of the convicts had the exclusive right to guard and direct the convicts in the performance of their work. Hence, under the principles of law laid down in. the case above cited, the relation of master and servant did, not exist between the defendant and McKinnon at the time the tree fell upon him and caused his death.

It is not like the ease where the proprietor of a mill or a mine, where convicts have 'been sent to work, fails to nse ordinary care to keep the instrumentalities and the place of work in safe condition. Here they had only a prima facie right to designate the work to be done, and the State warden directed the convicts in the performance of their work.

But it is urged that the principles of law in that case are changed because, under § 9694 of Crawford & Moses’ Digest, it is provided that the Penitentiary Commission shall not hire cut or lease, or permit any person to hire out or lease, any of the convicts of this State to any person or persons whomsoever. In Green v. Jones, 164 Ark. 118, 261 S. W. 43, it was held that a contract leasing convicts to a corporation to construct the dam in question was in violation of this section of the statute, although the physical control and custody of the convicts were under the supervision and control of guards and wardens appiointed by the Penitentiary Commission. It was said that the public policy of the State was to prevent the leasing of convicts to persons or corporations to be worked by them for private gain. We are not afole to see, however, how the holding in this ease could in any wise change the principles decided in the case first cited. There was no right or duty of control in the defendant in the present case, and there.was no negligence in failing to provide safe instrumentalities or a safe place in which to work. The defendant simply told the State warden what trees were to be cut down, and the State warden had exclusive control of the convicts in directing their methods of work.

It follows that the judgment of the circuit court will be affirmed.


author: Hart, C. J.

text:
    Newsum Auto Tire Vulcanizing Company v. Shoemaker.
    Opinion delivered May 2, 1927.
    1. Release — fraudulent Representations. — In a suit by a creditor to set aside an instrument whereby the debtor was released from account and a mortgage was taken from a third party as security, evidence held to show that the release was obtained by fraudulent representations.
    2. Contracts — rescission for fraud. — Contracts secured by false representations and fraud may be rescinded in equity.
    3. Contracts — rescission—laches.—One who seeks to have a contract rescinded on ground of fraud must proceed with promptness to assert right, unnecessary delay being fatal, especially where the property involved has a speculative value or is likely to deteriorate greatly in value.
    4. Release — rescission—delay in asking relief. — A creditor giving a release of indebtedness in return for chattel was not entitled to have the release canceled, though procured by false and fraudulent representations, where he acquiesced therein, knowing the circumstances, for a period of over two years, and instituted proceeding's for cancellation only after litigation under the mortgage had failed to pay the indebtedness.
    Appeal from Pulaski Chancery Court; John E. Mar-tillean, Chancellor;
    affirmed.

      Rogers, Barber & Henry and J. A. Tellier, for appellant.

      John W. Newman, for appellee.
   Hart, C. J.

Appellant brought this suit in equity to set aside a release for $1,416.72 on the ground that it had been obtained by fraudulent representations, and judgment was asked for said sum, alleged to be the balance due for automobile supplies furnished by appellant to appellee, L. F. Shoemaker. The case is here on appeal from a decree óf the chancery court dismissing the complaint for want of equity.

The record shows that L. F. Shoemaker owed appellant $1,416.72 for automobile ■supplies sold him between November 29, 1922, and March 30, 1923. On the 17th day of April, 1923, appellant sighed an instrument releasing L. P. Shoemaker from the payment of said account and accepting in lieu thereof, as its debtor, the Yellow Bus Interurban Company. On the same day the appellant took a mortgage on nine ears from said- Yellow Bus Interurban Company, and the mortgage was duly acknowledged and filed for record.

According to the evidence for appellant, it was induced to sign the release to L. F. Shoemaker and to accept the mortgage on the automobiles from the Yellow Cab Company on the representations made by Shoemaker that said automobiles were free from all liens and incumbrances except 'for a 'small amount, which was stated. The automobiles had mortgages. and other incumbrances on them to an amount in nearly half their full value, and the mortgage thus given turned out to be a worthless security.

Evidence was introduced by appellees tending to show that the release of L. F. Shoemaker and the substitution of the chattel mortgage as security for his indebtedness was not obtained by fraud. Without reviewing the testimony on this branch of the case, it may be said that we have read and considered the evidence carefully and are of the opinion that a preponderance of the evidence shows that the release of L. F. Shoemaker was secured by false and fraudulent representations made to appellant.

It is well settled in this State that a contract secured by misrepresentation and fraud may be rescinded in equity. Cady v. Rainwater, 129 Ark. 498, 196 S. W. 125, and cases cited.

It is equally well settled that, where a party desires to rescind upon the ground of fraud, he must, upon discovery of the fact, proceed with promptness to have the contract rescinded. If he be silent and said contract is still in force, he will be held to have waived the fraud and will be bound by the contract. He must not play fast and loose, and unnecessary delay is fatal to his right to rescind. This is especially true where the property involved has a speculative value or is likely to greatly deteriorate in value. Fleming v. Harris, 142 Ark. 533, 219 S. W. 33; LaVasque v. Beeson, 164 Ark. 95, 261 S. W. 49.

Tested by this rule we do not think that appellant is entitled to the relief asked. The release was signed on the 17th day of April, 1923, and the mortgage on the automobiles to secure the account was taken on the same day. In a month thereafter the company which gave the mortgage had become insolvent, and insolvency proceedings were instituted against it. In August, 1923, appellant filed an intervention in the insolvency proceedings, asserting its rights to the automobiles under the mortgage above referred to. It also brought a suit in the circuit court based on its rights under the mortgage, which was subsequently dismissed. The circumstances were such that the appellant was bound to know at that time that the release to Shoemaker had been secured by false representations. The present suit was not insti-. tuted until August 1, 1925. This was nearly two years after the fraud was discovered. Appellant waited until it found out that it could not recover anything under the mortgage. Appellant could not test out its right in the insolvency proceedings to make its debt out of the mortgaged property and, after it had lost out in that .case, bring a suit to rescind the contract of release.’ Good faith and due diligence in the matter should have prompted appellant to act sooner. It could not wait to see whether or not the mortgage transaction might not turn out well after all. Acquiescence for a period of two years was a condonation of the fraud; and the chancery court was right in dismissing the complaint of the appellant for want'of equity.

Therefore the decree will be affirmed.


author: Smith, J.

text:
    Standard Motors Finance Company v. Mitchell Auto Company.
    Opinion delivered May 2, 1927.
    1. . PRINCIPAL AND AGENT — EFFECT OP NOTICE TO AGENT. — Where a salesman was the agent of an automobile company to sell second-hand automobiles, the company was chargeable with knowledge acquired by him while acting in discharge of his agency.
    2. Sales — false representation — rescission.—Where a note for the price of a second-hand automobile affirmatively recited that 40 per cent, of the sales price had been collected, the falsity thereof afforded ground for rescission of the sale of a note sold to a finance company without recourse, where the payee was chargeable with knowledge of its agent that such cash payment had not been made.
    3. Usury — sales op articles. — Charging a price more than 10 per cent, greater for an article sold on credit than for cash does not constitute usury.
    4. Usury — who may depend. — The usury law is for the protection of the borrower, and he alone can make that defense.
    5. Sales — right to rescind. — Where a material representation in a note that 40 per- cent, of the sales price for an automobile had been collected was false, the fact that the finance company which purchased the note from the payee was allowed thirty days for investigation to determine whether it would purchase the note held not to deprive it of the right to- rescind.
    Appeal from Ouachita Chancery Court, Second Division; George M. LeCroy, Chancellor;
    reversed.

      Saxon., Wade & Warren, for appellant.

      McKay & Smith, for appellee. .
   Smith, J.

Appellant is a’ corporation residing in and operating ont of New Orleans, and is engaged in the business of buying notes given in partial payment of used automobiles. It deals with authorized sales agents of automobiles who take used cars as part payment of new ones, and its plan of operation is as follows: It furnishes to the dealer a blank sales contract, which contains questions to be answered by the dealer and certain other questions to be answered by the purchaser of a used car from the dealer. This contract requires the dealer to add a certain per cent, of the cash price to the sales price when the car is sold on credit, and a statement is furnished the dealer by appellant showing what this amount shall be. This addition to the dealer’s cash selling price is referred to as a “service charge.” Identical contracts ar-e used in all cases, and the contract signed by Daniel Sherman, who bought a used car from appellees, will show the system employed. The cash price of the car bought by Sherman was $224, and to this ■ the dealer added $26, making a credit sales price of $250. The purchaser was required to pay 40 per cent, of the credit sales-price, which in Sherman’s case amounted to $100. The balance of $150 due by him was divided into monthly payments, and the title to the car was reserved until all payments were made.

The .questions which t'he purchaser was required to answer gave information as to the purchaser’s age, present and previous employment, property owned and incum-brances thereon, earnings, and from what sources, and references, with addresses. Attached- to these question ■ blanks was a promissory note, reserving title to the car sold, and providing that the installments should bear interest after their maturity at the highest lawful rate.

It was the theory of appellant that, if the purchaser paid 40 per cent, of the credit selling price of the car, the interest therein thus acquired would be sufficient to induce him to make the monthly payments of the balance of the purchase money as they matured.

When these blanks had been properly filled and the note signed by the purchaser, the contract, and the note would be sent to appellant, which was given thirty days in each case to determine whether it would purchase the note offered, and, if accepted within that time, appellant remitted to the dealer the balance due on the note, dess the “service charge.” Appellant’s profit in the transaction was represented by the service charge, which, as we have said, was the difference between the dealer’s cash selling price and the credit price. Appellant was allowed tlie thirty days for sueli investigation as it cared to make, including inquiry concerning the purchaser.

Appellant’s managing officers testified that its uniform and invariable rule was not to buy any note unless it was affirmatively shown that the purchaser had made a cash payment of 40 per cent, of the purchase price, and that all dealers, -including appellees, were so advised.

Appellees, who are brothers, doing business as the Mitchell Auto Company, in making sales of new cars trade in used cars, which they sell for the best price obtainable. W. A. Taylor had charge for appellees of the sale of these used cars, and he was allowed a commission of 40 per cent, of the price received, and Taylor was required by appellees to collect as much as 40 per cent, of the purchase price of the cars sold by him, and appellees charged Taylor’s account with 40 per cent, of the used car which Taylor sold.

The contract and note of Sherman, together with other similar notes and contracts of other purchasers of used cars from appellees, were sent to and accepted by appellant, who remitted to appellees the amount of all the notes, less the total of the service charges. Only a few payments were made on any of these notes, whereupon appellant sent a representative to Stephens, the place of appellees’ business, to collect the notes. This representative interviewed the makers of these notes, and found that none of them had paid 40 per cent., as recited in the sales contract, in cash. For instance, it was shown in the Sherman contract that Sherman had actually paid only $10 in money, but had agreed to pay Taylor the balance of $90, which the sales contract recited as paid. Appellees testified that they knew nothing about the arrangement between Sherman and Taylor, or between the other purchasers and Taylor, and supposed that the $100 cash had been paid to Taylor by Sherman, and that the 40 per cent, had been paid by all of the other purchasers, and that these were cash transactions so far as they were concerned, as they charged Taylor’s account with that amount of money. Taylor testified that he did not report to appellees that Sherman and the other purchasers of cars had not paid him the 40 per cent, cash payment; that he did not consider it necessary to do this, as he was selling the cars on commission, and the transaction was, as between him and appellees, a cash transaction, as he was charged in each instance with the cash reported by him as having been collected from the purchasers.

Taylor was the agent of appellees, and they are charged with any knowledge acquired by him while acting-in the discharge of his agency. Pie knew that appellant bought these notes on the assumption that 40 per cent, of the sales price had been paid, and that the representation to that effect contained in the sales contract was false. Upon discovering the falsity of this representation appellant demanded a cancellation of the sale of the notes, and tendered them to appellees, and, when this demand was refused, immediately brought this suit to enforce rescission, judgment being prayed in the alternative for the amount paid appellees for the notes, less the collections made thereon. The complaint was dismissed as being'without equity, and this appeal is from that decree.

We think a case for rescission was made. Appellees may not have personally known that the purchasers had not made the 40 per cent, cash payment, but Taylor, their agent, knew this, and they are charged with his knowledge. The note which they tendered appellant contained the affirmative recital that 40 per cent, of the sales price had been collected, and this statement was false. This representation was highly material in inducing the purchase of the notes, and its falsity affords ground for rescission.

In 12 E. C. L., at page 345, § 100, of the chapter on “Fraud and Deceit,” it is said:

“False representations which are made with knowledge- of their falsity, and with a fraudulent intent, are, of course, ground for relief in equity as well as at law. As a general rule, however, courts of equity will grant relief in sncli cases by way of rescission or otherwise, even though no fraudulent intent on the part of the person making the representations is shown, and though he made them innocently, as a result of misapprehension or mistake. All that need he shown under such circumstances is that the representations were false and actually misled the person to whom they were made.”

Appellees insist that the decree should he affirmed for the reason that appellant does not come into court with clean hands, it being’ alleged that the transaction in its inception was usurious and void on that account, for the reason that the service charge exceeded 10 per cent, per annum on the money advanced by appellant.

Two answers may be made to this contention. The first is that appellant did not loan appellees any sum of money. The transaction was a purchase of notes. It is true that the “service charge” exceeded 10 per cent, of the sum paid, but this consisted in an addition to the cash price, which the purchasers — and not appellees — agreed to pay. Charging- a price more than 10 per cent, greater for an article sold on credit than'would have been charged had the sale been' for cash does not constitute usury. Edwards v. Wiley, 150 Ark. 480, 235 S. W. 54; Smith v. Kaufman, 145 Ark. 548, 224 S. W. 978; Blake Bros. v. Askew & Brummett, 112 Ark. 514, 106 S. W. 965. The second answer is that the usury law is for the protection of the borrower, and he alone can make that defense. Ford v. Hancock, 36 Ark. 248. The notes in question were indorsed by appellees without recourse on them, and the makers of these notes are not parties to this litigation.

The fact that appellant was allowed to take thirty days for investigation to determine whether it would purchase a note tendered does not deprive it.of its right to a rescission. It relied, and had the right to rely, on the representation made that a payment of 40 per cent, had been made, and the right to investigate the responsibility of the purchaser did not render this representation less material, because that representation was assumed as true, and appellant’s investigation was to determine whether, even then, it would buy the notes. Matlock v. Reppy, 47 Ark. 148, 14 S. W. 546. The notes would not have been bought, notwithstanding- appellant’s investigation, if reliance had not been placed on the representation that a 40 per cent, cash payment had been made. This representation was false, was material, and was relied -upon, and induced the purchase of the notes, and the relief prayed should have been granted, land the decree of the court below will therefore be reversed, and the canse remanded with directions to enter a decree conforming to this opinion.