text:
    Beeble v. Arkansas Light & Power Company.
    Opinion delivered November 8, 1926.
    1. Appeal and error — jury question. — To determine whether a cause should have been submitted to the jury, the Supreme Court will view the testimony in the light most favorable to the party against whom the verdict was instructed.
    2. Damages — notice of special damages. — Evidence held sufficient for the jury on the issues whether plaintiff gave defendant sufficient notice that they would be entitled to special damages for defendant’s failure to furnish an adequate motor to irrigate plaintiff’s rice fields and whether defendant showed that plaintiffs had failed to do all in their power to minimize the damages.
    Appeal from Arkansas Circuit Court, Southern District; George W. Clarh, Judge;
    reversed.

      John W. Moncrief, for appellant.

      JoJm L. Ingram, for appellee.
   Humphreys, J.

Appellants instituted this suit against appellee, in the circuit court of Arkansas County, to recover dam'ages in the sum of $8,795.80 to a rice crop of 119.8 acres grown in the year 1924, for failure to comply with a contract to furnish a 15-horse-power motor capable of producing power sufficient to pump 1,500 or 1,800 gallons of water per minute to irrigate the rice. The complaint alleged a breach of contract to furnish power as well as a motor, but the undisputed proof disclosed that the power lines were completed within the time specified in the contract, so only the allegations relative to the contract of the motor and the failure to furnish same will be mentioned in setting out the substance of the complaint.

The complaint, in substance, alleged that appellee entered into an oral contract with appellants to furnish and rent them a 15-horse-power electric motor, capable of furnishing water for said rice, and to install same;' that appellee, with full knowledge of the purpose for which said motor was desired, advised appellants that a 15 horse-power motor was capable of furnishing power sufficient to pump the necessary water to irrigate said 120-acre tract of growing rice; that appellee was advised of the purpose for which appellants wanted said electric motor, and with this knowledge, and while knowing the consequences of a failure on its part to furnish and install a capable motor in ample time to irrigate said field, entered into a contract with appellants, for a valuable consideration, to furnish an electric motor in time to irrigate the rice, but, in violation of its contract, failed to furnish a motor that would supply the necessary water; that it furnished a motor with which appellants were unable to water the rice, thereby causing the greater part of the crop to burn and die.

Appellee filed an answer, denying the material allegations of the complaint.

The cause was submitted upon the pleadings and evidence, and, at the conclusion of the testimony, the court instructed a verdict in favor of appellee, over appellant’s objection and exception, from which is this appeal.

The court peremptorily instructed a verdict upon the theory that appellants failed to give appellee sufficient notice that they would be entitled to special damages upon its failure to furnish the electric motor; and because appellants made no effort to minimize their damages when appellee breached the contract.

Appellee contends for an affirmance of the judgment upon the theory that the testimony brings the case within the general rule announced in Barry-Wehmiller Machinery Co. v. Thompson, 83 Ark. 283, to the effect that “the measure of the damages for breach by a vendor of a contract of sale of a chattel is the difference between the article agreed to be furnished and the one furnished, or, if the one furnished was not fit for practical use, the cost of procuring an article of the kind agreed to be furnished;” and the rule announced in the eases of Beekman Lumber Co. v. Kittrell, 80 Ark. 228, 96 S. W. 988, and Young v. Berman, 96 Ark. 78, 131 S. W. 62, to the effect that “a party injured by a breach of contract must make reasonable effort to prevent or reduce the damages; and where he can, by reasonable exertion or expense, arrest the loss caused by •such breach, the measure of damages is the amount of such expense.”

Appellants contend for a reversal of the judgment upon the theory that the testimony brings the case within the general rule announced in Miles v. American Railway Express Company, 150 Ark. 114, 233 S. W. 930, to the effect that “where two parties make a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach should be such as may fairly and reasonably be considered either as arising naturally from the breach of the contract or as having been in contemplation of both parties at the time they made the contract, as the probable result of a breach of it. In determining what damages were contemplated by the parties to a contract, it is proper to consider the nature and purpose of the contract and the attending circumstances known to the parties at the time the contract was executed, and the damages should be awarded which might reasonably have been expected to follow from a breach of the contract;” and within the rule announced in 4 Enc.. of Evidence, page 10, to the effect that “it is for the alleged wrongdoer to show any facts and circumstances in mitigation of damages.”

In classifying the instant case, appellants are entitled to the most favorable construction which can be placed upon the evidence, the rule being that, in determining whether the cause should have been submitted to a jury, the Supreme Court will view the testimony in the light most favorable to the party against whom the verdict has been instructed. The evidence, viewed in its strongest aspect for appellants, is as follows: Appellants had planted 119.8 acres of rice in said county, near a bayou where ample water could be secured for irrigation purposes. The stand was good, and free from grass and weeds. They decided to use electric motor power for pumping purposes, instead of pumping water out of the bayou over the rice field with steam or oil engines, provided they could get the electric power and motor from appellee. ■ Appellee was engaged in the business of furnisliing electric power and motors to rice farmers in that section of the State. On June 19, 1924, W. N. Beeble, acting in behalf of appellants R. W. Beeble and J. L. Cartmell, entered into a conditional oral contract with Edward Donan, superintendent of appellee, to supply them with electric power and a motor capable of furnishing from 1,500 to 1,800 gallons of water per minute to irrigate the rice. Donan was informed by W. N. Beeble of the existing conditions and the immediate need of water, as well as the quantity required. The tentative contract was not to be closed until Donan, who was familiar with rice culture in that section, could visit the farm and by personal inspection familiarize himself with the conditions, and by calculations determine the amount of power and the size of the motor necessary to pump 1,500 to 1,800 gallons of water per minute. After making a personal inspection .and the necessary calculations, he advised Beeble that a 15-horse-power motor would do the work, and stated that appellee had two motors on hand, one a 15-horse-power and the other a 25-horse-power, and that, if the smaller one would not do the work, appellee could .replace it with the larger one. The oral contract was then closed, with the understanding that the power lines should be completed and the motor installed by the following Tuesday. Appellants paid $50 at the time on the motor contract, which was a rental contract for $225 for the season, with the privilege or option to purchase it by paying $350 instead of the rent. Appellee began to construct the power lines to the farm at once, and did not complete them until July 1, and did not install the electrical motor until July 9, although the agent of appellants had urged appellee almost daily, after the completion of the power lines, to install the motor. Appellee put oft the installation of the motor from day to day, finally admitting that he had used the motor intended for appellants to replace one which appellee had burned out on another farm, and that it had sent the motor which it had burned out away for repairs, and was sure that it would be back immediately. When it was returned on the 9th, appellee installed a 15-horse-power motor, but, when tested, it would not pump any water at all. Appellee immediately removed it for the purpose of having it repaired, and, on the 12th day of July, substituted, temporarily, a 10-horse-power motor. About this time appellee required appellants to sign a written contract for the electric power covering a period of years. The 10-ho'rse-power motor which had been substituted until appellee could get the first motor repaired, had capacity to pump only 400 gallons of water per minute, and this amount would only supply sufficient water to irrigate about 30 acres of rice. The necessity of immediate action on the part of appellee was urged by appellants almost constantly, and the superintendent promised from day to day to get the 15-horse-power motor repaired, and finally g-ot it back, but discovered it, had been wound the wrong way and could not be used. On the 15th of July, during this period of delay, appellee suggested that it install a 25-horse-power motor, which appellants agreed that it might do, whereupon it took a ■ note from them for the price of the large motor.- It then-failed to install the large motor until July 25, although urged constantly by appellants to install same, and although it was promising from day to day to do so. When the larger motor was installed, on July 25, it was discovered that the rice ‘on two-thirds of the land had burned up and could not be revived by irrigation. W. N. Beeble testified positively and unequivocally that Donan knew what the result would be if the motor furnished them failed to pump the necessary water on the rice. He further testified that it was discussed and known by both parties that appellants would lose the whole crop unless sufficiently irrigated. He also testified that appellants relied upon the promise of appellee to furnish the motor and its further promise from day to day to install same, until it was too late to provide other means for supplying necessary water for irrigation. . He also testified to the damages sustained on account of the breach of the contract,

We think the testimony detailed above brings the case within the rules contended for by appellants, and that the evidence was sufficient to warrant a submission of the cause to the jury upon the issues of notice necessary to recover special damages, and whether appellee met its burden to show that appellants failed to do all within their power to mitigate the damages.

The testimony strongly tended to show that appellee contracted with appellants to furnish a 15-horse-power motor capable of pumping 1,500 to 1,800 gallons of water per minute to irrigate the growing rice crop upon 120 acres of land, and that it made this contract with the knowledge that, if the motor failed to do so, the crop would be destroyed. It refused to rely upon the representations made by the agent of appellants concerning the conditions and situation existing upon the farm, and made its own calculations as to the size and, character of the motor needed, after a personal inspection.

The testimony also tended to show that appellants relied upon the promises of appellee from day to day that it would install a motor of the size and character necessary to pump sufficient water to irrigate and mature the rice crop, and that there was nothing they could do to save the crop after they realized that appellee had breached its contract.

Under our view of the law applicable to this case, the court erred in instructing a verdict against appellants, and for that reason the judgment is reversed and the cause is remanded for a new trial.

Mr. Justice-Smith dissents.


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    Katter v. Hardin.
    Opinion delivered November 29, 1926.
    1. Exchange of property — drunkenness of plaintiff. — An improvident exchange of lands, made while one of the parties was in a drunken condition, is voidable at his instance where the other party knew of his condition at the time.
    2. Exchange of property — rescission—laches.—Where plaintiff was on a drunken spree when he executed an exchange of his land for that of defendant, who knew his condition, delay of several months after plaintiff sobered up before suing to rescind the exchange was too late.
    Appeal from Sebastian Chancery Court, Port Smith District; J. V. Bourland, Chancellor.;
    reversed.

      Cravens <3 Cravens, for appellant.

      John Brissolara and Wm. A. Falconer, for appellee.
   Smith, J.

Prior to the 17th day of January, 1924, appellee owned two lots in the city of Port Smith, and appellant owned a 326-acre farm in LePlore County, Oklahoma, about four miles south of Port Smith, and on that day and the following day they entered into contracts for the exchange of these properties, which contracts were consummated by the exchange of deeds dated January 26, 1924. There were incumbrances on both properties, and the contracts provided for the adjustment and assumption thereof. After the execution and delivery of these deeds, each party went into possession of the property conveyed him. Thereafter, on July 22,1924, appellee brought this suit for the rescission of this sale and the cancellation of his deed to appellant.

This relief was asked upon the ground that, about the first of the year, appellee became intoxicated and remained in that condition until after the execution of the contracts and deed and did not terminate his spree until about the first of April. He alleged that, as a result of this spree, he became highly nervous and was mentally incapacitated to make either the contracts or the deeds, and he further alleged that he did not recover his equilibrium until the last of June, when he realized, for the first time, the utter improvidence of his trade. He thereupon made an appointment with appellant to discuss the rescission of the contract, and, when appellant failed to keep this appointment, this suit was brought.

Appellant filed an answer, denying the allegations of the complaint, and alleged that, in any event, appellee, by his conduct subsequent to the execution of the deed, had ratified it.

By consent of both parties the cause was referred to a master to hear testimony and make a finding of fact on the issues involved, and the Honorable Daniel Hon, a former judge of the circuit court of the judicial district of which Sebastian County is a part, was appointed master.

A number of witnesses testified on behalf of both appellant and appellee, and the testimony is very conflicting as to the extent and duration of the spree upon which appellee entered. It was shown very clearly that, prior to this debauch, appellee had been a man of moral habits, of splendid ability, ■ and attentive to his law practice, the profession in which he was engaged, but, about the first of the year, appellee became intoxicated on moonshine whiskey, and its effects were so demoralizing that appellee was unable to right himself and cease drinking until about the first of April, and, even though he ceased drinking and became sober about the first of April, he did not recover his mental faculties sufficiently to realize the imposition practiced upon him until in June of that year. On the part of appellant the testimony was to the effect that appellee was not intoxicated to an extent to render his deed void on that account.

The master, after hearing all the testimony, made a finding of fact fully sustaining appellant’s contention, and filed a report embodying that finding. Exceptions thereto were filed by appellee, and, after a hearing before the chancellor, these exceptions were sustained, and a written opinion filed by the chancellor contained the finding that appellant had taken advantage of appellee’s inebriated condition to impose an unconscionable exchange of properties on him, and also found the fact to he that appellee did not ratify this-exchange.

We do not review the testimony touching the extent and effect of appellee’s spree, for the reason that, in the opinion of the majority, the testimony sustains the chancellor’s finding.

In the case of Cook v. Bagnell Timber Co., 78 Ark. 53, 94 S. W. 695, 8 Ann. Cas. 251, in the opinion on rehearing it was said: “One who deals with a sober man upon equal footing owes him only the duty not to mislead him to his prejudice by a material false representation concerning the subject-matter, or by a failure to disclose a material fact within his knowledge which the circumstances may make it his duty to disclose, whereas one who deals with a person whom he knows to be partially intoxicated owes him the duty not to take advantage of his condition by knowingly imposing a harsh contract upon him.”

In the opinion of the majority the condition of appellee, and -appellant’s knowledge of that condition, was such that the contracts eventuating in the -exchang’e of deeds were voidable at the election of appellee.

It is, however, the opinion of the majority that this election was not made in apt time. In the case of Fleming v. Harris, 142 Ark. 553, 219 S. W. 33, the plaintiff, Harris, asked rescission of a sale of land upon the ground that he was induced to purchase through false representations made to him. Plaintiff received his deed in the early part of January, 1918, and brought suit to rescind on the 3rd of November, 1918. The court below granted the relief prayed, and we reversed that decree upon the ground that plaintiff had delayed an unreasonable time before filing the suit. We there said that one who desires to rescind his contract on the ground of fraud must act promptly after discovering the facts; that such a person cannot wait to experiment and see whether the transaction might not, after all, turn out well; that such a person must move promptly in asking a rescission, and, in failing so to do, will be held to have acquiesced in permitting a contract to stand which otherwise might have been avoided. In so declaring the law the court followed the previous holding in the case of Fitzhugh v. Davis, 46 Ark. 337.

We have said the testimony was sharply conflicting as to appellee’s mental condition at the time of executing the contracts and deed sought to be canceled, but the majority uphold the chancellor’s finding on this issue. It may also be said that the testimony is in sharp conflict as to the extent of the improvidence of the trade, but we are all of the opinion that the trade was highly improvident. However, we are all of the opinion that the law required appellee to move promptly in asking a rescission, and the difference of opinion among us is whether he did so act under the facts of the case.

The testimony shows that, pending the negotiations for the exchange, appellee visited the farm and inspected it, and caused an examination of the abstracts of title to be made by an attorney who was appellee’s friend, and the title was approved subject to the incumbrances, which were to be adjusted pursuant to the contracts between the parties.

Appellee admits he became sober about the first of April, 1924, and that he thereafter returned to his former habit of sobriety and did not thereafter drink at all, but there is a conflict in the testimony as to when appellee became normal, and two witnesses expressed the opinion that appellee had not fully recovered at the time the depositions in the case were being taken.

The testimony shows that, a few weeks after appellee received his deed, he removed to the farm and made it his home, and began actively to make preparations to cultivate the land. About the 10th day of April one of the •incumbrances'on the land became due. This was about ten days after appellee admitted he had sobered up, and he arranged with a vice president of the First National Bank, which held the note evidencing this- loan, for an extension of from sixty to ninety days. Appellee stated at the time that he expected to pay this note, or a part of it, out of the proceeds of his potato crop. The bank official testified that, during these negotiations, appellee appeared to be both sober and normal. There were certain liens against the city property which appellee traded for the farm, and one was for material which had been used in the construction of a filling station on this city property. Appellee made application to the managing officer of the Deming Investment Company for a loan of $4,000 to take up the note held by the First Nationál Bank and also to pay the past due indebtedness on the filling station. It was required by the investment company, before making this loan, that appellant release a second mortgage which he had taken on the farm, and, when appellant declined to do this, the loan was not made.

After taking possession of the farm, appellee procured the release to himself of a lease outstanding on a portion of the land, and began the cultivation of the land and made some substantial improvements on it, and built a barn. The incumbrances on the farm were so large that appellee was unable to finance the proposition and discharge certain liens on the city property, as he had contracted to do, but it is not contended that appellant made any misrepresentations concerning these incumbrances; indeed, 'it is not contended that he made any misrepresentations of any character. The contracts between the parties recited correctly the outstanding incumbrances against the respective properties.

The fraud found b}^ the court below was that, while appellee was under the influence of liquor to such an extent that he was unable to protect himself in the trade, appellant imposed a harsh and improvident trade upon him. But, even so, it was his duty, after recovering his faculties, to ask, without unreasonable delay, that the contracts be rescinded, and, as we think this was not done, the decree of the court below canceling the deed must be reversed, and it is so ordered, and the cause will be remanded with directions to enter a decree conforming to this opinion.

Mr. Justice Humphreys dissents on the question of ratification.


author: Humphreys, J.

text:
    Kansas City Southern Railway Company v. H. Rouw Company.
    Opinion delivered November 29, 1926.
    1. Carriers — injury to perishable freight — jury question. — In an action against a railroad for damage to a shipment of strawberries, whether the damage occurred before shipment or in transit held for the jury under conflicting evidence.
    2. Trial — charge construed as a whole. — In an action against a railroad for damage to a car of strawberries, an instruction that a common carrier is an insurer of goods accepted for transportation in interstate commerce was not erroneous where other instructions stated the exceptions to the rule, and the jury were told to consider all the instructions together.
    3. Trial — instruction—general exception. — In an action against a railroad for damages to a car of strawberries, an instruction that the amount of recovery should be the difference between the market value of the berries in sound condition at the time of delivery and their value as delivered, with interest, while an imperfect statement of the law, was not ■ open to a general objection.
    4. Carriers — negligence in transportation — excessive damages.— An award of $600 for damage to a-car load of strawberries for damages in transportation was not excessive where the evidence would have sustained a recovery of $900.
    Appeal from Sebastian Circuit Court, Fort Smith District; John E. Tatum, Judge;
    affirmed.

      James B. McDonough and Joseph R. Brotan, for appellant.

      Roy Gean, for appellee.
   Humphreys, J.

This suit was instituted by appellees against appellant in the circuit court of the Fort Smith District of Sebastian County, to recover the sum of $900.55 and interest for damages to a car of strawberries shipped by appellees from Mena, Arkansas, to Kansas City, Missouri, on the 2d day of June, 1923, through the alleged negligence of appellant in the following particulars:

“ (a). In carelessly and negligently failing to properly ventilate said car while in transit, (b). In carelessly and negligently failing and refusing to furnish a car in proper repair and condition for the transportation of strawberries, (c). In carelessly and negligently failing to properly ice said car while in transit, (d). In carelessly and negligently mishandling said car while in transit by violently jerking, stopping, slamming and pushing said car.”

Appellant filed an answer denying the material allegations of the complaint.

The cause was submitted upon the pleadings, testimony adduced and instructions of the court, which resulted in a verdict and judgment in favor of appellees for $600, from which is this appeal.

The undisputed testimony showed that car A.R.T. 16570 arrived iced, and was set on the siding at Mena for loading about 9 o ’clock p. m., May 30, 1923; that it was delivered to appellees for loading at 7 o’clock a. m., May 31,1923; that appellees began loading and continued until completed on June 2, 1923, at 5 o’clock p. m., at which hour the bill of lading was issued by appellant in the name of J. L. Hagen for appellees, from whom said appellees had bought the berries before same were loaded; that it required longer to load the car than the time of twenty-four hours fixed by the Interstate Commerce Commission, so that appellees were required to pay demurrage charges in order to have the required additional time to finish loading; that, during the period'of loading, no request was made by appellees themselves or J. L. Hagen, their representative, to have the car re-iced; that no request was made by S. B. Byrd, the inspector of refrigerated cars, to the agent of appellant, who issued the bill of lading, to note thereon that the berries were in a damaged condition before or at the particular time of the shipment; that the car of berries arrived in Kansas City June 4, 1923, in a soft, overripe and moldy condition; that, on account of their damaged condition, they were sold on the market for $2.10 per crate, whereas merchantable berries were selling for $4 a crate at the time.

The record reflects a dispute in the testimony as to the kind and condition of the berries at the time of shipment. J. L. Cannon, one of the appellees, testified, in substance, that he had been engaged in shipping perishable fruits for ten years; that he purchased this car of berries from J. L. Hagen for himself and his coappellee, and made a thorough inspection of them when loaded, being present almost continuously during the period of loading; that they were hauled about two miles over a good road, in trucks, to the car,'immediately after being picked; that they were of uniform size and of good quality, not soft or water-soaked; that he examined a large number of the crates by taking the berries from the tops or sides of the crate and pouring them into a Y-shaped holder so that every berry in a box could be seen; that he last saw the berries about thirty minutes before the bill of lading was issued, and that they were in good condition; that he climbed on top of the car on the 2d day of June and found plenty of ice in the bunkers to carry them to the first icing point; that the crates were sufficiently and properly braced to keep’ them from slipping and jarring the berries in transit, unless roughly handled; that berries in the condition these were could have been in transit from six to seven days without injury, if properly iced, ventilated and handled as they should have been; that these berries could not have been injured in any other way than by a failure to properly ice, ventilate and handle them.

Burrell Collins, who received and marketed the car of berries, testified, in substance, that the condition in which the berries arrived in Kansas City was due to over-heating on account of improper refrigeration, foul air in the car, and the shifting of the bracing in transit; and that the mold upon them could not have resulted from the manner in which the berries were handled in loading them, or from waiting on the platform before shipment.

S. L. Bobinson testified, in substance, that, if the berries arrived in a weakened condition, soft, moldy and overripe, in Kansas City, their damaged condition was probably caused by improper refrigeration; that heat caused berries in cars to become moldy.

The testimony introduced by appellant tended, to show that the car was handled carefully, properly refrigerated and ventilated in transit, and that they arrived in Kansas City in the same condition in which they were at the time same were shipped.

■ Employees of appellant at the icing stations en route testified that the car was properly refrigerated and ventilated while en route from Mena to Kansas City, and the conductors in charge of the train pulling the car testified that the car was carefully handled in transit.

The inspector of refrigeration, S. B. Byrd, testified that he was present at Mena when the bill of lading was issued by the station agent to J. L. Hagen for appellees; that the berries went into the car 60 per cent, small, 30 per cent, medium, 10 per cent, large, 45 per cent, overripe, 30 per cent, ripe, 15 per cent, under-ripe, 10 per cent, bruised and cut, 20 per cent, with rotten spots on them, 40 per cent, water-soaked, and 2Ó per cent, sandy and covered with field mud.

■Appellee J. L. Cannon testified that he did not see 8. B. Byrd around the car at any time during the three days it was being loaded, and S. B. Byrd testified that he did not see said appellee arouncl the car during said time.

Appellant first contends for a reversal of the judgment on the alleged ground that the evidence is insufficient to support the verdict. The position taken by appellant is that the relation of carrier and shipper did not exist until the issuance of the bill of lading, and at that particular time S. B. Byrd was the only witness present and the only one who inspected and knew the condition of the. berries. He testified that the berries were practically worthless and unmerchantable at the time the bill of lading- was issued, and learned counsel for appellant takes the position that his testimony was uncontradicted by any other witness. We cannot agree with them in this position, because appellee, J. L. Cannon, testified that he was present during- the period the berries were being loaded, and that they were No. 1 berries, placed in the ear in good condition, and properly braced. He saw them only a half an hour before the bill of lading was issued, and their condition could not have materially changed in that sort space of time. He was. corroborated by Burrell Collins, who testified that the damaged condition in which the berries arrived in Kansas City was due to an overheated car, resulting from a lack of proper refrigeration in transit. He also testified that the braces had shifted, caused by careless and negligent handling. The testimony of these two witnesses, coming-out of their experience as shippers of perishable fruits, amounted to a contradiction of Byrd’s testimony and produced a conflict in the evidence for determination by the jury. This issue of fact was determined against appellant by the jury, and is binding- upon it.

Appellant’s next contention for a reversal of the judgment is that the court erred in giving the plaintiff’s requested instruction numbered 2. This instruction is as follows:

“You are instructed that a common carrier of freight is an insurer of goods, wares and merchandise delivered to and accepted by such carrier for transportation in interstate commerce. ’ ’ The instruction is assailed because it failed to tell the jury that appellant was not an insurer against the inherent quality of the berries, or where the damage to them occurred through the fault of appellees. These exceptions to the rule announced in said instruction were given under separate instructions, and the jury was told not to decide the case on any one instruction but to take all the instructions together as the law of the case.
Appellant’s next contention for a reversal 'of the judgment is that the court erred in giving instruction numbered. 6, upon the measure of damages. This instruction is as follows:
‘ ‘ If you find for the plaintiff, you will fix the amount of its recovery at the difference, if any, as shown by the evidence, between the fair market value of the berries at Kansas City, Mo., in sound condition at the time of delivery, and their fair market value in Kansas City, Mo., at the time of delivery, in their damaged condition, with interest from such time to date at the rate of six per cent, per annum.”

Appellant contends that this instruction in effect tells the jury to assess appellees’ damage, if any, by taking the price of a car of perfect berries and subtracting from that figure the price of the berries actually shipped. We agree with appellant that the measure of damages in cases of this class is the difference between the market price of the commodity at destination in the condition it would have been in if it had not been damaged through the carrier’s negligence, and the market price in its damaged condition. We cannot agree, however, with appellant upon the construction it has placed upon said instruction. We think the court imperfectly announced the rule contended for by appellant. If there was anything misleading in the instruction, it should have been pointed out to the court by a specific exception. Only a general exception was made to the instruction.

Appellant’s last contention for a reversal of the judgment is that the verdict is excessive. The testimony in the case showed that appellees were damaged in a greater amount than the jury awarded them. The proof in the case would have supported a verdict for $900.

No error appearing, the judgment is affirmed.


author: Humphreys,

text:
    Mays v. Robertson.
    Opinion delivered November 29, 1926.
    1. Sheriffs and constables — indictment for nonfeasance. — An indictment alleging that a sheriff, knowing that certain persons were exhibiting gambling devices in the county, failed to arrest them, held to state an offense under Crawford & Moses’ Dig., § 2633.
    2. Statutes — construction.—In construing statutes every word used therein should be given its ordinary meaning, if possible.
    3. Sheriffs and constables — suspension for nonfeasance.— Under Crawford & Moses’ Dig., § 10335, providing for suspension of county officers for criminal conduct amounting to nonfeasance in office, a sheriff may be suspended from office during the pend-ency of an indictment for knowingly failing to arrest exhibitors of gambling devices in his county, as enjoined by § 2633, Id.

    Prohibition to Phillips Circuit Court; E. D. Robertson, Judge;
    writ denied.

      W. G. Riddick, for appellant.

      Brewer é Gracrafi, for appellee.
   Humphreys,

J. The petitioner herein is the duly elected, qualified and acting sheriff of Phillips County, Arkansas, whose term of office will expire on December 31, 1926. On the 5th day of November, 1926, the grand .jury of said county returned an indictment against him, which, omitting caption and matters of form, is as. follows:

“The said J. D. Mays, in the county and State aforesaid, on the 1st day of February, A. D. 1926, then and there being the duly elected, qualified and acting sheriff of Phillips County, Arkansas, and then and there knowing and having knowledge that A. L. Keller, W. B. Chaney, Clay Pryor, Eugenia Miller, and divers other persons, were then and there guilty of the crime of setting up, keeping and exhibiting certain gambling devices, commonly called slot machines, which said machines were adapted, devised and designed for the purpose of playing a game of chance at which money and property might be won or lost, in said county and State, did unlawfully, knowingly and willfully fail, neglect and refuse to give notice that said persons were so setting up, keeping and exhibiting the gambling devices aforesaid in the manner and form aforesaid and for the purposes aforesaid, to some judge or justice of the peace of Phillips County, Arkansas, in accordance with the statutes and laws in such cases made and provided, and did unlawfully, knowingly ( and willfully fail, neglect and refuse to arrest said persons aforesaid, who were so setting up, keeping and exhibiting the gambling devices aforesaid, in the manner and form aforesaid, and to carry them before some magistrate or court having jurisdiction to examine into the matter, as provided by law.”

The respondent herein is the duly elected, qualified and acting judge of the First Judicial Circuit of the State, and was presiding over the circuit court in Phillips County at the time the indictment was returned against said petitioner.

On the 10th day of November, 1926, the petitioner herein applied to this court, b}^ petition, for a writ of prohibition to prevent the respondent herein from suspending him from office during the pendency of the indictment, or before the final trial thereon, upon the folloAving alleged grounds:

First, that the indictment failed to charge any offense.

Second, that there is no statute authorizing a suspension of petitioner from office before a trial, under the circumstances of this case.

Respondent filed his answer, .joining issue upon the alleged insufficiency of the indictment to charge a crime, and the alleged want of authority to suspend respondent from office during the pendency of the indictment and before the final trial upon the charge contained therein.

A determination of the issues joined involves:

First, a construction of § 2633 of Crawford & Moses’ Digest, under which petitioner claims the indictment was drawn; and

Second, whether § 10335 applies to the crime charged in the indictment.

.1. The respondent claims that the indictment was drawn under § 2642 of Crawford & Moses’ Digest, making it the duty of a sheriff to notify a judge^ or justice of the peace of the county, if it should come to his knowledge that any person is guilty of setting up gambling devices, etc., and a failure to do so is covered by § 10335 of .Crawford & Moses’ Digest, which provides for a suspension of a sheriff for such failure during the pendency of an indictment and before final trial. ' In arriving at this conclusion, the respondent contends that the last six lines of the indictment may and should be treated as surplusage. It is further claimed by the respondent that the language of the indictment is sufficient to charge a crime against petitioner under § 2633 of Crawford & Moses’ Digest. •

The petitioner claims that § 2642 of Crawford & Moses’ Digest was repealed by § 2633 of said Digest, and that the facts stated in the indictment are insufficient to charge a crime against him under the latter section.

It is unnecessary to decide whether the former section is repealed by the latter, as we agree with respondent that the facts alleged in the indictment constitute a crime under the latter section. The facts stated in the indictment are that the petitioner, being sheriff of said county, and knowing that certain persons (naming them) were guilty of the crime of exhibiting certain gambling devices (specifying them and the use for which designed), in said county and State, did unlawfully, knowingly and willfully fail, neglect and refuse to arrest said persons and take them before some magistrate or court having jurisdiction to examine into the matter, as provided by law, against the peace and dignity of the State of Arkansas.

It is contended by petitioner that it is not a crime, under § 2633 of Crawford & Moses ’ Digest, for a sheriff to fail to arrest a person who exhibits a gambling device, but that the only crime provided against a sheriff therein is a failure to arrest a person- engaged in running a gambling house. The section reads as follows:

“If any sheriff, or deputy sheriff, knows or is informed that a gambling’ house is being operated, or that any person or persons are engaged in the exhibiting of a gambling device or devices, within his county, it shall be his duty to forthwith proceed to the place where such gambling house is located and arrest the person or persons engaged in running or operating said gambling-house, 'and to carry such persons before some magistrate or court having' jurisdiction to examine into the matter, and, upon such sheriff, or deputy sheriff, failing to comply with the provisions of this section, he shall be deemed. guilty of a misdemeanor and shall be fined in any sum not less than one hundred dollars, and shall be discharged from office.”

If it had not been the intent of the Legislature to require a sheriff to arrest and take one before a magistrate or other court who was engaged in exhibiting a gambling- device or devices anywhere in the county, then the following language, “or that any person or persons are engaged in the exhibiting of a gambling device or devices,” used in the section, is meaningless. In construing statutes every word used therein should be given its ordinary meaning, if possible. This clause, containing a number of words, should not be stricken out of the section by construction, but should be left as a coherent part thereof, if possible. This can be done by attaching the meaning of “place” to the word “house” in the section. By attaching this meaning to the word “house” the section may be read as a harmonious whole, imposing the duty alike upon the sheriff to arrest and take one running- a gambling house and one exhibiting a gambling-device, anywhere in the county, before a magistrate or court for investigation. The obvious intent and purpose of the statute was to provide a remedy for immediately and effectually stopping- the operation of gambling houses and the exhibition of gambling devices anywhere in the county. It is suggested that another section of Crawford & Moses ’ Digest covers the exhibition of gambling devices, and for that reason the Legislature did not intend to impose the duty upon a sheriff to arrest parties exhibiting same; but this cannot be, for another section of the statute likewise covers the running of gambling houses. •

2. The reason advanced by petitioner to support his position that the respondent is without authority to suspend him from office before a trial upon the presentment or indictment is that § 2633 of Crawford & Moses ’ Digest, creating new and distinct crimes, is exclusive, having no relation whatever to the crimes enumerated in § 10335 of Crawford & Moses’ Digest, in which provision is made for the suspension of county officers during the pendency of indictments against them. Section 10335 of Crawford & Moses’ Digest is as follows:

“Whenever any presentment or indictment shall be filed in any circuit court of this State against any county or township officer, for incompetency, corruption, gross immorality, criminal conduct amounting to a felony, malfeasance, misfeasance or nonfeasance in office, such circuit court shall immediately order that such officer be suspended from his office until such presentment or indictment shall be tried. Provided, such suspension shall not extend beyond the next term after the same shall be filed in such circuit court, unless the cause is continued on the application of the defendant. ’ ’

This statute is founded upon a sound public policy, and has no relation whatever to punishment for the crimes mentioned therein. In the enactment of the section the Legislature concluded that it would be unwise to allow county officers who had been indicted for delinquencies to continue in the performance of their duties before purging themselves of the charges preferred against them. The petitioner, however, contends that the delinquencies, or other acts of omission and commission enumerated in § 10335 of Crawford & Moses’ Digest, do not embrace the crimes created in § 2633 of Crawford & Moses’ Digest. The former section mentions nonfeasance in office. According to “Words and Phrases,” nonfeasance by an officer is an omission to do or perform something which he ought to do and perform. The gravamen of the offense charged in the indictment under § 2633 of Crawford & Moses’ Digest was an omission or failure on the part of petitioner to arrest certain persons exhibiting gambling devices in said county, which he was required to do by law.

The application for a writ of prohibition herein is therefore denied.


author: McCulloch, C. J.

text:
    Rainwater v. Merchants’ National Bank.
    Opinion delivered December 6, 1926.
    1. Banks and banking — authority of bank commissioner. — Under Acts 1921, No. 496, the Bank Commissioner, as receiver of an insolvent .bank, is entitled to institute action on behalf of the bank’s creditors against a depository bank which knowingly participated in a transfer of a deposit of the insolvent bank constituting a wrongful preference.
    2. Banks and banking — unlawful preference — notice.—Where a director of an insolvent bank transferred a bank deposit belonging to the firm of which he was manager to the credit of the hank to raise its cash reserve as required by Crawford & Moses’ Dig., § 692, under stipulation that the fund could be withdrawn only by his authority, held that the deposit was general and not special, and the director’s subsequent application of the balance to payment of his firm’s note to the depository bank was not of itself sufficient to put such bank on notice that such payment constituted an unlawful preference of the firm, within Acts 1921, No. 496.
    3. Banks and banking — unlawful preference — notice.—Where it was customary for banks to transfer funds on telephone orders with same effect as if checks were drawn, the withdrawal of an insolvent bank’s deposit on verbal orders of its directors did not put the depository bank on notice that such withdrawal was an unlawful preference, under Acts 1921, No. 496.
    4. Appeal and error — conclusiveness of chancellor’s findings. — ■ The findings of fact of the chancery court will not be disturbed on appeal unless against the preponderance of the testimony, and this rule applies to inference as well as to direct proof.
    Appeal from Sebastian Chancery Court, Fort Smith District; J. V. Bourland, Chancellor;
    affirmed.

      Moore, Smith, Moore S Trieber, for appellant.

      Daily & Woods, for appellee.

      Norwood é Alley, for Dover Mercantile Company.
   McCulloch, C. J.

The Bank Commissioner, as receiver in charge of the defunct Bank of Hatfield, instituted this action against the Merchants’ National Bank of Fort Smith, to recover the sum of $10,268.11, held on deposit by appellee hank to the credit of the Bank of Hatfield after the latter became insolvent, and alleged to have been wrongfully diverted from the use of the Bank of Hatfield and paid over to the T. M. Dover Mercantile Company as a preferred creditor of the Bank of Hatfield. The answer of appellee, Merchants’ National Bank, contained appropriate denials of all the allegations as to knowledge of insolvency on the part of the Bank of Hatfield, and the cross-complaint against the T. M. Dover Mercantile Company prayed for a decree over and against that concern, in the event that the court should find that the Merchants’^National Bank was liable to the Bank Commissioner as receiver for the Bank of Hatfield. The cause was heard by the court upon the pleadings and an agreed statement of facts, and a decree was rendered dismissing the complaint of appellant for. want of equity.

The Bank of Hatfield was a banking institution doina business at the town of Hatfield, in Polk County, Arkansas, and M. J. Dover was a stockholder and director of the bank. He was also the managing officer of the Dover Mercantile Company, a concern doing business at the town of Hatfield.

During the latter part of January, 1923, the Bank Commissioner discovered, on examination, that the Bank of Hatfield had permitted its cash reserve to fall below the statutory requirement (Crawford & Mioses’ Digest, § 692) of fifteen per cent, of its deposits, and he made demand on the Bank of Hatfield to comply with the statute by raising its cash reserve. Pursuant to this order of the Bank Commissioner, M. J. Dover, acting for the Bank of Hatfield, applied to its regular correspondent in Fort Smith, the First National Bank of Fort Smith, for a loan of money to be held as its cash reserve, but that institution refused to make the loan, and Dover then applied to appellee, Merchants’ National Bank, for a loan of $20,000. At that time the Dover Mercantile Company had a large sum on deposit with the Bank of Hatfield, and was interested in seeing that the solvency of the bank and its capacity to do business were preserved. The Dover Mercantile Company also had on deposit with the Merchants’ National Bank of Fort Smith the sum of $8,832.34. Appellee, Merchants’ National «Bank, agreed with Dover to make the loan, and, pursuant to that agreement, the deposit of $8,832.34 was charged to the mercantile company and credited to the.Bank of Hatfield, and the loan of $20,000 was made to the mercantile company and also credited to the account of the Bank of Hatfield, thus making a deposit to the credit of the Bank of Hatfield in the total sum of $28,832.34. In this manner the cash reserve of the Bank of Hatfield was raised to conform to the statutory requirement.

M. J. Dover, acting* for the mercantile company, executed to the appellee bank a note for $20,000 to cover the loan. At the time of these transactions it was agreed between appellee bank and M. J. Dover, acting for the Bank of Hatfield, that the money thus deposited to the credit of the Bank of Hatfield could be withdrawn only on checks signed or approved by M. J. Dover, and a deposit card was signed and delivered pursuant to that agreement. The funds were drawn against from time to time, in accordance with this agreement, from then until the time the bank closed its doors, and-the amount on deposit fluctuated, at one time the amount being reduced to about $6,000. On October 17, 1923, the balance of thé deposit on hand with appellee bank to the credit of the Bank, of Hatfield was $10,268.11, the sum sued for in this action. Prior to that date, the mercantile company had paid its note to appellee bank down to $10,000 and had executed its renewal note for that amount to appellee bank, and the note had not become due on the date last mentioned above. On the morning* of that day, October 17, 1923, at 8 o’clock, M. J. Dover called the cashier of the appellee hank over the telephone and gave verbal instructions that $10,000 of the sum remaining to the credit of the Bank of Hatfield be applied on the note of the mercantile company to the bank, that the note be canceled, and that the remaining sum of $268.11 be remitted to the mercantile company by check and charged to the Bank of Hatfield, thus entirely wiping out the deposit and balancing the account. On the day before this occurred, the Bank of Hatfield had drawn and forwarded various checks, payable to its regular customers, aggregating the sum of $5,000, the checks being drawn on the First National Bank of Fort Smith, and, on the same day, drew a check on appellee bank in favor of the First National Bank to cover those remittances to customers. And, in the telephone conversation between M. J. Dover and the cashier of appellee bank, instructions were given to refuse payment oh the $5,000 check drawn in favor of the First National Bank of Fort Smith.

Immediately after these transactions occurred between Dover and appellee bank, Dover gave instructions to the Bank of Hatfield to charge the deposit in appellee bank to the mercantile company, and also on that day appellee bank forwarded a charge ticket to the Bank of Hatfield. The Bank Commissioner was immediately notified that morning of the insolvency of the bank, which was closed and ceased to do business, and the Bank Commissioner took physical charge of the affairs of the bank two days later, that is to say," on October 19, 1923.

It is agreed in the statement of facts that the Bank of Hatfield was insolvent on October 17, 1923, and had been insolvent for a considerable time theretofore; that “the Merchants’ National Bank had no knowledge of the insolvency of the Bank of Hatfield on October 17, 1923, but the statement last made does not preclude plaintiff from arguing inferences of knowledge on the part of said Merchants’ National Bank from facts appearing in this statement.” There is also a paragraph in the agreed statement of facts which reads as follows: “It is customary for-banks to make transfers of funds on ’phone orders with the same effect as if checks were drawn. ’ ’ It was also agreed, that appellee bank was never advised of the fact that Dover had applied to the First National Bank to borrow funds, or that the funds were borrowed for the purpose of raising the cash reserve on the demand of the Bank Commissioner. It also appears in the agreed statement of facts that examinations of the Bank of Hatfield were duly and regularly made by the Bank Commissioner between the date of the deposit with appellee bank and the failure of the Bank of Hatfield, and that the bank examiner had forwarded to appellee bank a reconcilement statement to be verified by appellee bank concerning the amount of funds deposited to the credit of the Bank of Hatfield.

The statutes of this State regulating the banking business (§ 7, act No. 496, session of 1921) prohibit unlawful preferences by banks in contemplation of the Bank Commissioner taking charge of the assets and property of the bank, and this suit is maintained by the Bank Commissioner on the theory that the transactions hereinbefore set forth, in disposing of the funds deposited with appellee bank, constituted an unlawful preference in favor of the Dover Mercantile Company, and that appellee bank is liable for the funds by reason of having knowingly participated in the wrongful act. The theory is correct, and, if the evidence in the case sustains a finding-that appellee bank participated in the unlawful act, the Bank Commissioner is entitled to recover for the creditors of the defunct bank the amount of funds thus wrongfully diverted.

It is perfectly clear, from the facts recited in the agreement, that the transfer of funds on deposit with appellee bank was made by Dover for the express purpose of giving a preference to the mercantile company, of which he (Dover) was the managing officer. A different question of fact, however, is presented with reference to the attitude of appellee bank. It is true that Dover committed a wrongful act for the benefit of the mercantile company, but he was clothed with express authority to withdraw the funds from appellee bank for the purpose of transferring the same to any of the creditors or customers of the Bank of Hatfield. It was expressly stipulated that the funds could only be withdrawn by the authority of Dover acting for the Bank of Hatfield. The funds thus deposited constituted a general deposit and not a special one, notwithstanding the fact that the method of withdrawal was restricted. Therefore Dover had the authority to withdraw the funds, and the fact that the transfer was in favor of the mer•eantile company, of which Dover was the managing offir cer, was not of itself sufficient to put appellee bank upon notice that the withdrawal was wrongful.

These facts do not present a case where the act done was, on its face, one for the benefit of the actor himself so as to charge the person being dealt with with knowledge of that fact. Nor did the fact that the withdrawal of funds was verbal instead of by check necessarily constitute such an irregularity as to put the bank on notice that the withdrawal was wrongful. According to an express recital in the agreed statement of facts, it was customary for transfers of funds to be made on telephone orders; therefore we are not at liberty to treat the fact that it was a telephone message as a suspicious circumstance to be given any considerable force in the case. There was also, as we have already shown, an express agreement in the record that appellee bank had no knowledge of the insolvency of the Bank of Hatfield at the time the funds were withdrawn. There is a reservation in the agreement that this did not “preclude plaintiff from ai-guing inferences of knowledge upon the part of said Merchants’ National Bank from facts appearing in this statement,” but we construe the whole of the stipulation on this subject to mean that there was no actual knowledge on the part of appellee bank as to the insolvency of the Bank of Hatfield, and that the question was to be left open as to inferences which might or might not be drawn from the stipulated facts sufficient to put the bank upon inquiry. We therefore have before us an express stipulation that there was no actual knowledge of insolvency, and a finding by the trial court that the facts stipulated did not warrant inferences sufficient to put appellee bank on notice of such insolvency and wrongful diversion of funds. The well-settled rule here is that the findings of the chancery court will not be disturbed unless found to be against the preponderance of the testimony, and this applies to inferences as well as to direct proof.

There is, on the side of appellant, the fact that the funds were withdrawn early in the morning, before banking hours, and in a telephone conversation instead of by check, and that the funds were transferred to the mercantile company of which Dover was the manager. There might be drawn an inference of more or less force that the withdrawal was irregular and was for the benefit of the mercantile company, and not for the Bank of Hatfield. On the other hand, there is, on the side of appellee bank, as we have already seen, the agreement that the withdrawal of funds on verbal orders 'was in accordance with customary methods, and that appellee bank had'no knowledge of the insolvency of the Bank of Hatfield. There is also the fact that the funds on deposit to the credit of the Bank of Hatfield were placed there by the mercantile company and that the latter was a creditor, to that extent at least, of the Bank of Hatfield. We are therefore unable to say, with any degree of certainty, that the trial court erred in declining to draw an inference of knowledge on the part of appellee bank that the withdrawal of the funds in favor of the mercantile company was for the purpose of consummating an unlawful preference to the mercantile compairy as a creditor of the Bank of Hatfield.

This being the state of the record, it becomes our duty to leave the finding undisturbed and to affirm the decree. It is so ordered.


text:
    Walden v. McCollum.
    Opinion delivered December 6, 1926.
    1. Insurance — by-law limiting beneficiaries. — In a suit on a benefit certificate by the beneficiary, a by-law of the society which limited the beneficiaries to the family of members did not divest the wife’s right as such on a subsequent divorce, as the by-law relates only to her eligibility at the time of issuing the policy.
    2. Insurance — interest of beneficiary. — Where a beneficiary has an insurable interest under the laws and regulations of the insurance company at the time of the issuance of the policy, the subsequent termination of that interest does not affect the right to receive the benefits, unless there is an express provision in the contract to that effect.
    3. Insurance — interest of beneficiary — by-law of successor to insurer. — In an action by a divorced wife as beneficiary of a policy, a by-law of a successor to the insurer providing that a divorce of the beneficiary from the insured should render the divorced wife ineligible to the benefits of the policy held not to affect her right to the insurance, in the absence of any showing that the- successor had a right to change contracts assumed without the policyholder’s consent.
    Appeal from Clay Circuit Court, ‘Western District; W. W. Bandy, Judge;
    affirmed.

      G. T. Bloodworth, for appellant.

      G. T. Carpenter, for appellee.
   McCulloch, C. J.

N. K. McCollum, a resident of Clay County, Arkansas, became a member and certificate bolder on August 2, 1915, of an insurance organization known as the National Council of the Knights and Ladies of Security, a foreign corporation domiciled at Topeka, Kansas. The policy, or benefit certificate, issued by said organization to McCollum in the sum of $2,000 was payable to his then wife, Mary McCollum, who is the appellee in this ease. McCollum and his wife, the appellee, were divorced in October, 1923, by decree of the chancery court in a suit instituted by her, and McCollum died April 28, 1924, without having changed the designation of beneficiary or attempted to do so. He was in good standing up to the 'time of his death, all of the premiums, assessments and dues having been paid in accordance with the contract. Some time after the issuance of the policy to McCollum, the Security Benefit Association, another insurance concern domiciled at Topeka, Kansas, took over or absorbed the National Council of the Knights and Ladies of Security and assumed all of its obligations to policyholders. The time when this was done is not shown definitely in the record.

Appellee made proof of death to the Security Benefit Association, and the latter concern expressly admitted liability for the amount of the benefit, but refused to pay it to appellee on the ground that all benefits under the policy were claimed by appellants, who were children of McCollum by a former marriage. Appellee instituted this action against the Security Benefit Association to recover the amount of the policy, and appellants intervened and claimed the amount involved, on the ground that, under a by-law of the association, appellee’s interest in the policy ceased upon a divorce from the assured, and that the benefit fell to appellants as the children and heirs. The Security Benefit Association paid the amount of the benefit into court, upon stipulation of all of the claimants that the funds should be held subject to final decision. , This eliminated the Security Benefit Association from the controversy, and the cause proceeded upon the issues between appellants and appellee. There was a trial before a jury, which resulted in a verdict in favor of appellee, and judgment was accordingly rendered in her favor for the recovery, of the sum involved.

Appellants base their claim upon certain by-laws of the two associations — one of the National Council of the Knights and Ladies of Security, and two others of the Security Benefit Association. The one relied on of the National Council of the Knights and Ladies of Security is § 1, art. 7, which reads as follows: "The beneficiaries shall be confined to the families, heirs, blood relatives, affianced husband or affianced wife, or to persons dependent upon the member.” This provision, however, does not deprive appellee of the benefit on account of the divorce, for it relates only to the eligibility of beneficiaries at the time of the issuance of the policy. The prevailing doctrine on that subject is stated in 19 R. C. L., p. 1219, as follows:

‘ ‘ Ordinarily a designation valid in its inception continues to be so. Thus, if the by-laws of a benefit society provided that a beneficiary designated by a member and named in the certificate shall, in every instance, be one or more members of the family, or some one related to him by blood, or shall be dependent upon him, such provision must be construed as referring to the relationship at the date of the certificate, and Jhe designation of a beneficiary, valid in its inception, remains, although such relationship has ceased, by divorce, or otherwise, unless it is stipulated to the contrary in the contract of membership.”

The text is supported by the following authorities: Filly v. Illinois Life Ins. Co., 91 Kan. 220, 137 P. 793, L. R. A. 1915D, 130; White v. U. S. Brotherhood of American Yeomen, 124 Iowa 293, 99 N. W. 1071, 66 L. R. A. 164; Overheiser v. Mutual Life Ins. Co., 63 Ohio St. 77, 50 L. R. A. 553; Snyder v. Supreme Ruler T. N. C., 122 Tenn. 248, 45 L. R. A. (N. S.) 209; Wallace v. Mutual Benefit Life Ins. Co., 97 Minn. 27, 3 L. R. A. (N. S.) 478; Schmidt v. Hauer, 139 Iowa 531; 2 Joyce on Insurance, § 902. The doctrine has also been announced by this court that, where a beneficiary has an insurable interest under the laws and regulations of the insurance organization at the time of the issuance of the policy, the subsequent termination of that interest does not affect the right to receive the benefit, unless there is an express provision in the contract to that effect. Atkins v. Cotter, 145 Ark. 326. There was nothing of that kind in the contract with the organization which issued the certificate, therefore, under the'doctrine announced, appellee was not cut out of her right to recover the amount of the benefit because •of her divorce from her husband.

The two provisions in the by-laws of the Security Benefit Association relied on by appellants read as follows:

“Section 1. The payment of death benefits shall be confined to wife, husband, relative by blood, not further removed than first cousins, father-in-law, mother-in-law, daughter-in-law, stepfather, stepmother, stepchildren, children by legal adoption or to a person or persons dependent upon the member; provided, that the member may, with the consent of the association, make an incorporated charitable institution his beneficiary. In case a husband or wife is designated as beneficiary and subsequent thereto becomes divorced from the member, such divorce shall render either of the parties ineligible as a beneficiary and shall annul the designation.”
‘ ‘ Section 81a. Who may be beneficiaries. The beneficiaries shall be confined to those named in article 7 of § 1 of the constitution. - In all cases the person intended as beneficiary shall be specifically named in the beneficiary certificate. No payment shall be made upon any beneficiary certificate to any person who does not bear the required, relationship at the time of the member ’s death. ’ ’

Under the facts shown in the record in this case, we do not think that the quoted provisions' in the by-laws of the Security Benefit Association have any effect upon the contract of insurance now involved. It is undisputed that the organization known as the National Council of the Knights and Ladies of Security has been “absorbed •and its obligations assumed by the Security Benefit Association. ’ ’ Such are among the undenied allegations of appellee’s complaint, and there is an express stipulation in the record to that effect. According to the facts thus shown in the record, there was an unconditional assumption by the Security Benefit Association of all the obligations of the National Council of the Knights and Ladies of Security, and this included an agreement to comply with the contract represented by the policy or' benefit certificate issued to McCollum and payable to appellee. The contract between the two associations is not shown in the record, further than the stipulation with regard to the assumption of obligations, but there is nothing which would, either in express terms or by necessary implication, confer upon the Security Benefit Association the right to change any of the original contracts which had been assumed, and this could not be done without the consent . of the policyholder. American Insurance Union v. Robinson, 170 Ark. 767, 281 S. W. 393. Therefore appellee, upon the undisputed facts in the record, is entitled to collect the amount of the benefit.

There are numerous assignments of error with respect to the rulings of the court in admitting and excluding testimony and also with reference to the court’s charge to the jury, but, as the material facts of the case are undisputed, it is unnecessary to discuss the other questions presented.

Judgment affirmed.


text:
    McWilliams v. Lantz.
    Opinion delivered December 6, 1926.
    1. Equity — interlocutory order. — An order sustaining a demurrer to an intervention, without anything further, is not final, but interlocutory, and may be set aside at a subsequent term.
    2. Equity — jurisdiction at adjourned term. — Where a demurrer was sustained to a plea in intervention, the court had jurisdiction subsequently at an adjourned day of the same term to proceed to a final decree dismissing the intervention.
    Appeal from Ouachita Chancery Court; George M. LeGroy, Chancellor;
    affirmed.

      Harcly & Machen, for appellant.

      Streett & Streett, for appellee.
   McCulloch, C. J.

This action was originally instituted by E. L. Miller in the chancery court of Ouachita County against George Babare and Nick Babare to adjust the accounts between those parties in the operation of a .joint ownership or copartnership in an oil well and lease. Numerous creditors of the copartnership were named as defendants, and in the prayer of the complaint there was an application for the appointment of a receiver. The court appointed a receiver to take charge of the property, and directed notice to creditors to be published, so that the claims of all could be presented. There was a final decree for the sale of the property for the purpose of distributing the proceeds among the creditors and the several owners. During the pendency of the action, Miller sold and conveyed his interest to a concern known as the Crandall Producing Company, and that concern sold and transferred the interest to appellee Lantz. The property was sold by a commissioner, and the sale was confirmed. Before the final distribution of the proceeds, appellant McWilliams intervened and asserted a claim against Miller in the sum of $2,000, evidenced by a promissory note containing a recital that the note ‘ ‘ acts as a lien on my interest in section 34, township 15 south, range 15 west, Ouachita County, Arkansas, being more particularly described as southwest quarter of southeast quarter, containing 40 acres, of the above section mentioned.” The claim of appellant was against the interest of Miller in the proceeds of the sale, which had been transferred by the latter to Crandall Producing Company and by that concern to Lantz.

Appellant’s claim was filed on January 26,1925, and, on February 17, 1925, appellee Lantz filed a demurrer to the intervention, which was sustained by the.court on that day. The-order of the court did not, however, dismiss the complaint of appellant but merely sustained the demurrer, and allowed time to appellant to plead further. On March 25, 1925, appellee filed an additional motion to strike out the intervention of appellant,, setting up grounds f'or holding that appellee’s purchase of'the Miller interest was superior to any claim by. appellant. The court made an order vacating the original order of the court sustaining the demurrer on February 17, 1925, and proceeded to final decree in favor of appellee, dismissing appellant’s intervention for want of equity. An appeal has been duly prosecuted, and appellant bases his grounds for reversal solely upon the contention that the order sustaining- the demurrer on February 17 was final, that the court adjourned before the order was made on March 25 vacating the former order, and that the court was therefore without jurisdiction of the cause. There are two all-sufficient answers to this contention. In the first place, the order sustaining the demurrer, without anything further, was not final, but was interlocutory, and could have been set aside at a subsequent term. Benton County v. Rutherford, 30 Ark. 665; Radford v. Samstag, 113 Ark. 185, 167 S. W. 49; Davis v. St. Louis-San Francisco Ry. Co., 117 Ark. 393, 174 S. W. 1196. In the next place, the record does not bear out the contention that the court had adjourned for the term between the date of the order sustaining the demurrer on February 17 and the date of the final decree, March 25, 1925. On the contrary, the records show that the court did not finally adjourn, as the time for the date for new term of court had not arrived. These proceedings were in the second division of the chancery court of Ouachita County, which convenes on the third Mondays of February and May, and the order of March 25, 1925, was rendered on an adjourned day of the February term.

Appellant has not attempted to bring up the evidence upon which the court based its decree, but contents himself with the claim that the eourt was without jurisdiction to render the decree for the reason that the case had been finally disposed of at a prior term of the court. This contention being unfounded, the decree must be affirmed, and it is so ordered.


text:
    Drace v. Subsidiary Drainage District No. 13.
    Opinion delivered December 6, 1926.
    1. Drains — validity of district — burden of proof. — Under Acts 1909, No. 235, § 3, providing that, in a suit to enforce delinquent taxes due to the drainage district, it shall be sufficient to allege generally the incorporation of the district, the nonpayment of the taxes, the description of the lands proceeded against, and the amount chargeable to each tract, with prayer for foreclosure,
      held that one who attacks the validity of the district in an action for delinquent assessments where the complaint alleged the above facts, has the burden of proof.
    2. Drains — publication of notice of organization. — Evidence held to show publication of notice of organization of subsidiary drainage district required by Special Acts 1911, No. 196, § 9.
    3. Drains — spreading order creating district on record. — The organization of-a subsidiary drainage district was not invalid for failure to spread the order creating the district on the record of the county court at the time it was made as required by Special Acts 1911, No. 196, § 9, where the omission was cured later by spreading it on the record, and a new opportunity was given to landowners to appear and protest against same. .
    4. Drains — approval of assessment of benefits. — Under Acts 1909, No. 235, and Acts 1911, No. 196, there is no requirement that the assessment of benefits in a subsidiary drainage' district be approved by the county court.
    Appeal from Clay Chancery Court, Eastern District; J. M. Futrell, Chancellor;
    affirmed.

      Arthur Sneed, for appellant.

      W. E. Spence, for appellee.
   McCulloch, C. J.

Appellants are the owners of real property within the boundaries of a subsidiary drainage district in Clay County, and this is an action instituted against them in the chancery court by the directors of the district to enforce payment of delinquent assessments. Appellants, in defending the case, attacked the validity of the organization of the district and also the validity of the assessment of benefits.

The district is a subsidiary of the St. Francis Drainage District of Clay and Greene counties, which was created by special act No. 172 of the General Assembly of 1905. The statute was amended by act No. 235 of the session of 1909, and also by act No. 196 of the session of 1911. Section 9 of the act of 1911, supra, authorized the creation of subsidiary districts by order of the board of directors of the principal district, on petition of three or more owners of real property in a proposed subsidiary district. The statute provides, in substance, that, upon the presentation to the hoard of directors of a petition of three or more owners of real property in the territory sought to be organized into a subsidiary district, accompanied by a bond to pay for the expenses of a survey, the board should enter an order appointing an engineer, who should forthwith make a survey and report to the board; that the board should give notice by publication for two weeks in a newspaper, calling upon all owners of property to appear at the time and place named and show cause “in favor of or against the establishment of said subsidiary district.” ' The statute further provided that the board should meet on the day named and hear the property owners, and that, “if the board deems it to the best interest of the owners of real property within said district that the same shall become a subsidiary drainage district, it shall make an order upon its records establishing the same as a drainage district, subject to all the terms and provisions of this act, and fixing its boundaries, and shall file a certified copy of said order in the office of the county clerk, where it shall be spread on the records of the county court for the information of the public.” The statute further provides for the assessment of benefits by the same method as provided for such assessments of lands in the principal district.

Several of the points of attack in the court below on the validity of the organization of the district have been abandoned, and the first point of attack made here is that there was no publication of notice as required by statute. However, the facts shown in the record are against this contention. The case was tried below on the pleadings and upon the minutes of the board of directors of the St. Francis Drainage District of Clay and Greene counties, and upon an agreed statement of facts. The statute fixing’ the method of foreclosure 3, act 235, session of 1909) easts upon the defendant the burden of sustaining an attack upon the validity of the district, for there is a provision that “in such suits it shall be sufficient to allege ■generally the incorporation of the district, the nonpayment of the taxes, the description of the lands proceeded against, and the amount chargeable to each tract, with prayer for foreclosure.” There is, however, evidence afforded by the minutes of the meetings of the board of directors that the notice was given. It appears from the minutes that the petition for the subsidiary district was filed with the commission on July 2, 1918, and that the engineer was appointed on the same day. There was a meeting of the directors on August 6, 1918, at which the report of the engineer was presented. The next meeting was on September 3, 1918, and the minutes contain a published notice of the same date.of the prior meeting, August 6, 1918. There was no effort on the part of appellants to show that the recital of the minutes was incorrect and that notice had not in fact been given. This point therefore is not well taken. .

The next point made is that the organization is void because the order of the board creating the subsidiary district was not spread upon the records of the county court “for the information of the public,” as required in § 9 of the act of 1911, supra. It is true that the directors failed to file with the county clerk' a copy of the order at' the time it was made, and in fact it was not filed until October 4, 1921. In the meantime, the district had been proceeding with its work — the assessment of benefits and the letting of contracts for the construction of the improvement. But the filing of the order on’that date and spreading the same upon the records of the county court completed the organization, and everything essential to progress in carrying out the work was 'thereafter done in accordance with the terms of the statute. It is true that,' prior to that time, the board of assessors had completed and filed with the board of directors the assessment lists and the same had been duly equalized, but, after the organization was completed in the manner above stated, a new notice was given of the filing of the assessment lists and a new opportunity was given property owners to appear and protest against the same. It • would seem therefore that every act requisite to the legal formation of the district was complied with.

It is also contended that tlie taxes are not enforceable because the list of assessment of benefits as made by the board of assessors was never approved by the county court. Counsel rely upon § 7 of the act of 1911, supra, which reads as follows:

“That in no case shall the board of directors of the St. Francis Drainage District construct or make any improvement contemplated by the provisions of said act unless the benefits estimated by the assessors and approved by the county court shall equal or exceed the primary cost of the making of such improvements; but the cost of making the improvements shall not be held to include the interest accruing on any interest-bearing evidence of debt issued for the purpose of'making and maintaining the improvements.”

This is the only reference found anywhere in the statute to an approval by the county court, and it will be observed that this section does not relate to the method of completing- the assessments, but it operates merely as a restriction upon the cost of the improvement. The method of assessment is regulated by § 2 of act No. 235 of the session of 1909, which provides for the approval of the assessments by the board of assessors, after notice to property owners, and not by the county court, except upon appeal within the specified time. That part of the aforesaid statute which is pertinent to this question reads as follows:

“They shall compare and equalize their assessments and correct their books to conform to said equalization; and their assessments as thus equalized and corrected shall be the assessment of the district, and all levies shall be made accordingly, without further right to question or set aside any assessment so made, until another assessment shall be ordered by the board and .made by the assessors in the same manner as hereinabove set out; provided, when the assessors shall meet as provided in this section, any landowner may appear before them and make complaint as to his assessment, or that of any other person, and the said assessors shall have the power to raise or lower the same. If any owner is aggrieved at said assessment so fixed, he shall have the right to appeal to the county court within twenty daj^s, and not thereafter. No appeal shall in any way interfere with said assessment or collection of drainage and levee taxes, but, if it shall ■ finally be determined that said land was assessed too high, the excess in taxes shall be repaid to said owner; provided, that no subsequent assessment shall be made which will reduce the aggregate assessment of the district, or in any other way impair the security of the creditors of the district. ’ ’

It will be observed from the foregoing that there is no requirement for approval by the county court except upon appeal, and that the assessments are complete upon approval by the board, unless there is an appeal to the county 'court. The words, “approved by the county court, ” in § 7 of the act of 1911, supra, were merely used in recognition of the power of the' county court to revise the assessments on appeal, and do not constitute a requirement that the assessments shall in all events be approved by the county court. The language of that section was intended merely as a reference to completed assessments, either by final action of the board or by the county court on appeal, and was intended merely to restrict the cost of the improvement to the total amount of the completed assessment.

Our conclusion is that the attacks upon the validity, of the assessments, as well as those upon the organization of the district, are unfounded.

Decree affirmed.