author: Mehaffy, J. Smith, J.,

text:
    Metropolitan Life Insurance Company v. Harper.
    4-3427
    Opinion delivered April 30, 1934.

      Leroy A. Lincoln and Streett d Streett, for appellant.

      Powell, Smead d Knox, Lmvrence E. Wilson and J. F. Qmllin, for appellee.
   Mehaffy, J.

On June 1,1923', the appellant, Metropolitan Life Insurance Company, issued and delivered to the International Paper Company of New York, in said State, its group policj^ No. 1864G-, insuring* and agreeing to insure the lives of certain employees of the said International Paper Company. The employees of the Southern Kraft Corporation were eligible for insurance under the group policy.

On December 1, 1928, appellant, Metropolitan Life Insurance Company, executed a certificate, No. 15,881, and delivered same to the International Paper Company to be by it delivered to the appellee, Curtis Harper, this certificate evidencing that the said Curtis Harper was then insured under the group policy above mentioned.

This policy provided, among other things, that, upon receipt at the home office in New York City, of due proof that the insured had become, while insured thereunder, and prior to his 60th birthday, totally and permanently disabled, as a result of injury or disease, so as to be prevented thereby from engaging in any occupation or performing any work for compensation or profit, it would pay the insured a stipulated sum per month for a certain number of months.

The appellee, Curtis Harper, continued in the employ of the Southern Kraft Corporation at Camden until April 7, 1933', on which date he received an injury as a result of being kicked 'by a mule, which caused his permanent and total disability.

Suit was brought by the appellee in the Ouachita Circuit Court on July 14,1933. The appellee alleged the execution and delivery of the certificate to him, and the execution and delivery of the group policy to the International Paper Company, and that appellee was in the employ of the Southern Kraft Corporation at the time of his injury, and that the certificate was in full force and effect. He alleged that he was injured prior to his 60th birthday, by being kicked on his head and other parts of his body by a mule; that, as a result of said injuries, his skull was fractured, and there was a severe injury over his right eye, one over his left eye, injury to his left ear, and severe injury to his back and kidneys, and that he became totally and permanently disabled; that he duly notified the appellant of his injuries and disability, and requested blank forms upon which to make proof; and that the appellant refused to furnish such forms. It was further alleged that he was entitled, under the certificate, to recover 20 monthly payments of $71.45 each, aggregating $1,429, for which sum he prayed judgment. The group policy and the certificate were attached to the complaint as Exhibits A and B, and the total and permanent disability clause was copied in his complaint.

On October 3, 1933', the appellant answered, admitting that it is a corporation chartered under the laws of New York and authorized to do business in Arkansas; denied that the certificate contained the provisions alleged in the complaint; denied that appellee, from the date that the certificate was issued, was continuously in the employ of the International Paper Company until April 7, 1933; denied that on that date the insurance in force was $1,400, or any other sum; denied that appellee was in the employ of the International Paper Company; denied that appellee was required to drive and feed certain mules; denied that he was kicked on the head and other parts of the body by one of the mules; denied that he was permanently injured. It specifically denied the injuries mentioned in the appellee’s complaint; denied that appellant was notified and requested to furnish blank forms on which to make such proof; denied that it refused to furnish forms; denied that it denied liability prior to the filing of the suit; denied that appellee is entitled to recover $71.45 for 20 months or any other sum; denied that it is liable to appellee in any sum. It further denies any repudiation of the contract, but expressly affirms the contract as expressed in the policy sued on.

Appellant then pleads certain paragraphs of the group policy as a defense, and denies that appellee received injuries while he was insured under said group policy. Appellant further states that the contract was made in New York, is not an Arkansas contract, and that appellee cannot recover 12 per cent, penalty or attorney’s fees.

Appellee introduced^ the group policy and the certificate above mentioned, and he testified about his age and about working for the International Paper Company and his injuries.

Physicians were also introduced who testified as to the injuries. The appellant also introduced physicians who testified. Their testimony was in conflict, and it would serve no useful purpose to set it out.

The following stipulation was introduced: “It is stipulated and agreed by and between counsel for plaintiff and defendant that: The first and only notice, claim or proof that plaintiff had become totally and permanently disabled as defined in the policy was by letter of June 20,1933, written by Lawrence E. Wilson, as attorney for plaintiff, and addressed to the Metropolitan Life Insurance Company, New York City. (Original of said letter hereto attached as part of this stipulation.) That defendant company replied to said letter under date of June 27,1933, and on same date wrote the assured, International Paper Company, requesting information as to the status of plaintiff’s claim. (Copies of said letters hereto attached as part of this stipulation.) That on July 6, 1933, the defendant again wrote the attorney for plaintiff sending’ him the forms GH 24-C on which to make claim as requested, and on the same date and on July 11,19 and 21 it wrote other letters seeking information as to the status of plaintiff’s insurance claim. (Copies of said letters hereto attached as part of this stipulation.) That, without further notice or time, this suit was filed on July 14,1933', and summons issued. That shortly thereafter notice of summons was received by the defendant. That prior to the filing of this action no denial of liability had ‘been made by the defendant.

It is further stipulated and agreed that Master Insurance Policy No. 1864-Gr, pleaded in the complaint, was made, executed and delivered in the State of New York, between the defendant and the International Paper Company, both New York corporations, and dated June 1, 1923. That the certificate, exhibited with the complaint, was executed and delivered to said International Paper Company in New York for the use and benefit of plaintiff and 'by said paper company delivered to plaintiff in Camden, Arkansas, on December 1, 1928. That at the time of such delivery to plaintiff he was a citizen and resident of Arkansas, and defendant was authorized to do business in said State.”

Certain correspondence was introduced, which will be referred to hereafter. The case was tried before a jury, and a verdict for appellee was returned for $1,429. The case is here on appeal.

It is first contended by the appellant that the action was prematurely brought. It is contended that the action could not 'be brought until proof of disability was received by the home office in New York City. The policy provides that the first monthly installment will be paid upon due proof of total and permanent disability. There is nothing in the contract as to the character of proof required. The injury occurred on April 7, 1933, and on June 20 the attorney for appellee wrote a letter to the appellant, stating that appellee was insured under the group policy, giving the. number, and stated to tbe appellant in this letter that be bad made an effort to procure blanks upon which to file claim under the policy, but had failed to receive them; and said further: “This is to advise you that he expects to assert his rights under the total and permanent disability benefits provided for in the said policy. I will appreciate you writing me at your earliest convenience advising me the proper person to communicate with, in the event you have a State representative.”

This letter was written on the 20th of June. Thereafter, on June 27, the appellant wrote the attorney that-it had received his letter of the 20th, and that it was necessary that it know the present status of claimant’s insurance, and that it was writing to the group policyholder for this information.

Although appellant was informed on June 20th that appellee had made an effort to get blanks to make proof, the appellant, seven days thereafter, wrote to him, not sending him blanks to make proof or requesting any proof, but stating to him that they were writing the group policyholder. They introduced a letter which the evidence shows that they did write to the group policyholder.

On July 6th, the evidence shows a letter was written, in which the statement was made that they were attaching two forms, SH 24 C, on which claim was to be made. Three months had elapsed since the accident to appellee, before this letter was written, and the company had been informed on June 20th that the appellee intended to assert his rights under the. total and permanent disability benefits provided for in the .policy. While the letter states that blanks to make proof of claim were attached, Mr. Wilson testifies that they were never received, and presented papers, and said that that was all that he had ever received from the company.

This evidence was admitted without objection. Of course it was competent for the appellee to prove that he never received the blanks, although it might be admitted that they were mailed. But in their first letter in response to Wilson’s letter of the 20th, appellant not only did not furnish, blanks, but it did not ask for any information or proof, but manifested an intention to get its information from the group policyholder. Appellant was then in the attitude of either treating Wilson’s communication as proof, or of refusing to send him blanks to make the proof; but in either event he would have a right to bring his suit.

The policy provides that the first installment will be paid upon receipt of due proof of disability. Appellant either accepted Wilson’s communication as proof, or declined to furnish him blanks at that time, and did not at that time ask for any additional proof or information. Appellee had a right to treat this as a breach of the contract. If he was entitled to recover at all, liability attached on the 7th of April, and the suit was not brought until July 14th. Immediately on the bringing of the suit, the appellant was again advised of appellee’s claim and the facts he relied on.

When one party to a contract breaches it, the other party may immediately bring suit to recover .damages for the breach. It is true that appellant, in its answer, expressly disavows any repudiation of the contract, but it is also true that it denies that appellee was continuously in the employ of the. International Paper Company until April 7, 1933; it denies that on that date appellee had any insurance in force; and also denies that appellee was in the employ of the paper company on April 7th. It might very well say that it admitted issuing the group policy, and at the same time say that the appellee was never in the employ of the paper company, and never had any policy, and this would be a repudiation of the contract with appellee, notwithstanding it states in its answer that it does not repudiate the contract.

Insurance policies, as we have frequently said, are liberally construed in favor of the insured, and strongly against the insurer. National Life & Acc. Ins. Co. v. Whitfield, 186 Ark. 198, 53 S. W. (2d) 10.

The next contention of appellant is that the verdict is not supported by the evidence, and is contrary to the law and the evidence. The evidence was in conflict as to the. extent of appellee’s injuries, and that question was settled by the jury under proper instructions, given both at the request of 'the appellee and the appellant.

There was sufficient evidence to submit the question of total and permanent disability to the jury. This court has frequently decided what constitutes total and permanent disability, and we do not deem it necessary to discuss this question here. Among the cases discussing this question are the following: Missouri State Life Ins. Co. v. Snow, 185 Ark. 335, 47 S. W. (2d) 600; Mo. State Life Ins. Co. v. Johnson, 186 Ark. 519, 54 S. W. (2d) 407; Guardian Life Ins. Co. v. Johnson, 186 Ark. 1019, 57 S. W. (2d) 555; Ætna Life Ins. Co. v. Spencer, 182 Ark. 496, 32 S. W. (2d) 310; Travelers Prot. Ass’n v. Stephens, 185 Ark. 660, 49 S. W. (2d) 364; Mutual Life Ins. Co. v. Marsh, 186 Ark. 61, 56 S. W. (2d) 433.

It is next contended that the verdict of the jury is excessive. The policy provided for the payment of 20 monthly installments of $71.45 each. At the time of the suit, there were four installments due. The other installments were due, one every thirty days.

“The breach of the contract, the appellant company’s refusal to pay under its terms, and denial of any liability thereunder, gave the insured the right to sue. for gross damages for such breach of contract, and the court has held that the measure of such damages is the present cash value of the past and future installments of the weekly indemnity, based on the life expectancy of the insured.” Nat. Life & Acc. Ins. Co. v. Whitfield, supra; Ætna Life Ins. Co. v. Phifer, 160 Ark. 98, 254 S. W. 335.

The recovery was for $1,429, the aggregate amount of the monthly installments. It should have been for the present value of the installments. As we have said, four installments were already due, and that left 16 installments that were to become due, one every 30 days. The four installments which were already due, together with the present cash value at the time of the trial of the 16 other installments, aggregate $1,362.92. The verdict should therefore have been for this amount, instead of $1,429, and it is modified so as to give judgment for $1,382.92.

It necessarily follows that the 12 per cent, damages should be 12 per cent, of $1,382.92, instead of 12 per cent, of $1,429, and the judgment will -be modified accordingly.

In this case the policy or certificate was delivered to appellee in Arkansas, and it was not effective until delivered. The statute as to damages and attorney’s fees is therefore applicable.

We do not deem it necessary to set out the instructions, but we have carefully examined the same, and have reached the conclusion that the jury was fairly instructed. All questions of fact were settled by the verdict of the jury, and the jury’s finding- of facts is conclusive here.

The judgment will be modified as above indicated,, and, as so modified, affirmed.

Smith, McLIaney and Butler, JJ., dissent.

Smith, J.,

(dissenting). The judgment here appealed from should, in my opinion, be reversed.

I give fullest assent to the rule, many times applied by this court, that the verdict of a jury is conclusive of all disputed questions of fact, and, in recognition of the rule, agree that the disability of the insured has been established, althoug-h the physician who attended him expressed the opinion that the insured’s recovery was complete.

But, while the verdict of the jury concludes the question that the insured is permanently and totally disabled, the testimony of this doctor, substantiated by other testimony in the case, would appear also to be conclusive of the question that it was not a repudiation of the contract to demand proof of the disability, and that the insurer was not required to accept the letter of the insured’s attorney as being conclusive of that fact.

The contract gave the insurer the right to make this demand for proof of disability; in fact, the insurer’s policy or certificate makes the furnishing of this proof a condition precedent, upon, the performance of which suit may be brought. Can it be considered a repudiation of a contract to demand a right which the contract expressly confers?

Now, the verdict of a jury is not necessarily, and in all cases, conclusive of the issues in the case. It is conclusive only of disputed questions of fact. The rule is well settled, and has been many times applied, that, where there are no disputed questions of fact, the case becomes one of law for the decision of the court. See Catlett v. Railway Co., 57 Ark. 461, 21 S. W. 1062, and the numerous cases citing and following it. There are certain controlling questions in this case which are either established by the undisputed evidence or are covered by the stipulation of the parties, which, under rules of practice long accepted and always followed, we must assume to be true.

There is first no question about the obligation which the insurer agreed to perform, nor as to the conditions under which performance could be demanded. These are so plain that it is impossible to construct an ambiguity to becloud them or to leave their meaning in doubt.

The master policy reads as follows: ‘ Total and Permanent Disability ¡Benefits. Upon receipt, at the home office in the city of New York, of due proof that any employee, while insured hereunder, * * * has become totally disabled, * * * the company will, in lieu of the payment at death of the insurance on the life of said employee, * * * pay monthly installments as hereinafter described. * * *. Such monthly installment payments shall be made during the continuance of said disability. Provided, however, that in no event shall more than sixty monthly installments be payable hereunder. * * * The first monthly installment will be paid upon receipt of due proof of total and permanent disability, in which event the insurance herein provided for under this policy on the life of said employee shall cease to be in force, and no further premiums will be payable on account thereof. During the period of total and permanent disability, the said employee shall not have the rig*ht to receive in one lump sum the commuted value of any unpaid monthly installment, but, if the said employee dies during such period, any installment provided herein remaining unpaid at the date of death shall be commuted at rate of three and one-half per cent, per annum, compound interest, and paid in one sum to the beneficiary. ’ ’

The plain meaning of this language appears to be that, upon receipt of proof of disability, that is, when and after proof has been received at the home office of the insurer in New York City, payments will be made as agreed, upon the conditions stated. These payments are to be made monthly over a period not exceeding sixty months, except in the case only of death, in which case they shall be commuted at the rate of three and one-half per centum per annum, compound interest, and paid in one sum to the beneficiary. It is an undisputed fact that the insured was not dead when this case was tried in the court below.

The certificates which are given to the employees, and one of which was given to appellee, contain nothing to becloud the meaning of these conditions. The group or master policy and the employee’s certificate, together, constitute the contract. There being nothing in the latter which conflicts with the former or renders its meaning doubtful, the two instruments must be construed together to arrive at a correct knowledge of the actual contract. Ætna Life Ins. Co. v. Dunkin, 266 U. S. 389, 45 S. Ct. 129. The certificate given the employee conforms to the group policy, and provides that the benefits shall be payable upon receipt of due proof of loss, in equal monthly installments as shown in a table made part of the insured’s certificate, with the proviso that in case of death the present value of any unpaid installments shall be paid in one sum. According to this table, made a part of the certificate here sued on, the number of the installments of payments and the amount of each is made dependent upon the amount of insurance carried, increasing automatically each year the certificate is kept in force. Appellee’s certificate has been in force long enough for the twenty installments for which it provides to be increased from $51.04 to $71.45, so that the twenty installments to be paid as they matured and without commutaion would amount to $1,429, and that is the exact amount of the verdict and judgment in this case.

Now, it was held, in the case of Ætna Life Ins. Co. v. Phifer, 160 Ark. 98, that, in a suit based on the permanent disability clause of a life policy, where the insurer had renounced the obligation and binding effect of the contract, as we held had been done in that case, the insured, if permanently and totally disabled, could treat the contract as breached and sue for the present value of the monthly payments agreed to be paid during disability, based on his life expectancy, to which, under the contract, he would have been entitled but for its repudiation by the insurer. It will be observed that the sum to be sued for and recovered was not the total amount of all the installments, but the present value thereof, and this upon the theory that the insurer had renounced the contract.

Has there been any renunciation of the contract in the instant case? It must be answered, under the undisputed evidence, that there has not been, unless the demand for the proof of disability, which the contract of insurance gives the insurer the right to ask, and upon the making of which the right to sue was conferred, constitutes renunciation.

The answer here filed contains a general denial of the allegations of the complaint, and specifically denied the allegation of disability. It must be remembered that it is not contended that any proof of disability was ever furnished. Lacking this proof, which the insurer had the contractual right to demand, was it not justified in denying disability and liability therefor? The insurer had not been furnished.' with the evidence thereof to which. it was entitled, and it ought not to be expected that it would admit this material fact of which it had been kept in ignorance.

After denying facts of which it had no information, the defendant insurance company answered as follows: “Further answering, defendant expressly disavowing any repudiation but, on the contrary, affirming the contract as it is expressed in the policy sued on by the plaintiff,” admits the issuance of both the group policy and the certificate of appellee and their binding effect, but alleges that the conditions are non-existent under which liability may be asserted thereon. This answer, like all pleading’s to be correctly interpreted, must be read as a whole, and, when so read, a fair interpretation of it is that, having no information on the subject, a general denial of its allegations was made, following which it is alleged that the contract was a binding obligation if plaintiff was an employee at the time of his injury and had become totally and permanently disabled. However, it is undisputed and stipulated that there had been no denial of any fact prior to the institution of the suit. Therefore, if this case is to be predicated upon a denial of liability, the cause of action was prematurely brought, and should be abated for that reason. Atlas Life Ins. Co. v. Wells, 187 Ark. 979, 63 S. W. (2d) 533; Metropolitan Life Ins. Co. v. Gregory, 188 Ark. 516, 67 S. W. (2d) 602.

I most respectfully, but very earnestly, insist that no one can be justly held to have repudiated or renounced a contract which he insists shall be employed to determine the relative rights of the respective parties.

A written stipulation was prepared and signed by the attorneys for the respective parties, which was offered in evidence, and the authority of the attorneys to enter into this stipulation and to file it is not questioned. It reads, in part, as follows:

“It is stipulated and agreed by and between counsel for plaintiff and defendant that:
“The first and only notice, claim or proof that plaintiff had become totally and permanently disabled as defined in the policy was by letter of June 20, 1933, written by Lawrence E. Wilson, as attorney for plaintiff, and addressed to the Metropolitan Life Insurance Company, New York City. (Original of said letter hereto attached as part of this stipulation.) That defendant company replied to said letter under date of June 27, 1933, and on the same date wrote the assured* International Paper Company, requesting information as to the status of plaintiff’s claim. (Copies of said letters hereto attached as part of this stipulation.) That on July 6, 1933, the defendant again wrote the attorney for plaintiff sending him the forms GH 24-C on which to make claim as requested and on the same date and on July 11th, 19th and 21st it wrote other letters seeking information as to the status of plaintiff’s insurance claim. (Copies of said letters hereto attached as part of this stipulation.) That without further notice or time, this suit was filed on July 14, 1933, and summons issued.”

The letters referred to are made exhibits to the stipulation, and it will be observed that the first information which the insurer had of the existence of the claim was contained in the letter which was dated — not received but dated — on June 20, 1933'. It is not contended, and the contention could not be sustained if made, that the obligation to pay arose or matured upon the receipt of this letter. The contract does not so provide. On June 27 a letter was written to the employer at its New York office asking it to “be good enough to consult your records and let us know present status of Mr. Harper’s life insurance, ’ ’ and asking whether he was an employee. On July 6 a letter was written to the insurer’s attorney which reads as follows: “In accordance with your request, we are attaching two forms, GH 24C, on which claim is to be made. When presenting this, please see that all questions are fully answered so as to avoid any delay. We will then, upon receipt of the claim, be glad to review it without prejudice. ’ ’ Now, Mr. Wilson admitted receiving this letter, but he denied receiving the blanks to which it referred, although it is recited in the stipulation “That on July 6, 1933, the defendant again wrote the attorney for plaintiff sending him the forms GH 24-C on which to make claim as requested.” It is stipulated also that on July 11th, 19th and 21st the insurer wrote other letters to said attorney, seeking* information as to the status of the plaintiff’s insurance, claim. Without answering any of these letters, and without furnishing this information, in fact, before the receipt of the two last-mentioned letters the suit was filed “without further notice,” on July 14, 1933, and summons issued. Do these undisputed and stipulated facts support the contention that the insurance contract had been repudiated? '

We held, in the case of Missouri State Life Ins. Co. v. King, 186 Ark. 983, 57 S. W. (2d) 411, that “the proof of disability furnished by the insured was not conclusive of that fact. The company had the right to make an investig’ation. Disability is not a fact, like that of death, which either exists or does not exist. It may be, and frequently is, a question about which there is a doubt, and, if the company had the right to investigate this fact, it was, of course, entitled to a reasonable time within which to exercise the right.” We there also said that this investig’ation should be made expeditiously and in good faith, and that the insurer’s approval thereof was due when, acting expeditiously and in good faith, it had been afforded a reasonable opportunity to investigate the proofs submitted.

Does not the undisputed testimony and. the stipulated facts in the instant case, show the greatest expedition and the utmost good faith ? The attorney was advised to fill in the blanks carefully, so that delay might be avoided, and it was urged in other letters to submit this proof promptly.

Now, it being undisputed that no proof was ever made, and it being also undisputed, in my opinion, that the insurer was not responsible for this failure, it follows that the suit was prematurely brought.

The case of Smith v. Mutual Life Ins. Co. of New York, 188 Ark. 1111, is too recent to again review the question. We, there said: “We held in the Farrell case, as we have in all other cases decided, that liability attached upon causation of the injury suffered, but that the cause of action on such liability accrues only after the filing of the proof of disability. The making of the proof of loss was not treated or considered as a condition precedent to liability in the Farrell case, but it was treated as a condition precedent to the right of recovery. Tlie rule is, as announced in the Farrell case, and in all others on the subject announced by this court, that liability attaches upon causation of total and permanent disability of the insured, but that the right of recover is postponed until notice to the insurer of the disability or the filing of the proof of disability or the lapse of time provided for in the policy in reference to the accrual of the right of recovery. Ætna Life Ins. Co. v. Davis, 187 Ark. 398, 60 S. W. (2d) 912; W. O. W. v. Meek, 185 Ark. 419, 47 S. W. (2d) 567; Ætna Life Ins. Co. v. Phifer, 160 Ark. 98, 254 S. W. 335.”

The majority, in the Smith case, also reviewed the case of Bergholm v. Peoria Life Ins. Co., 284 U. S. 489, 52 S. Ct. 230, and drew a distinction between it and the case there, under review, which the writer and Mr. Justice McHaney thought did not exist and we therefore dissented.

The opinion of the Supreme Court of the United States in the Bergholm case, recites the provisions of the policy there sued on in regard to notice, which read as follows: “Upon receipt by the company of satisfactory proof that the insured is totally and permanently disabled, as hereinafter defined, the Company will, * * etc. After quoting this provision the Supreme Court of the United States distinguished it from the provision as to notice appearing in the case of Minnesota Mutual Life Ins. Co. v. Marshall, 29 Fed. (2d) 977, and proceeded to say-: “Here the obligation of the contract does not rest upon the existence of the disability, but it is the receipt by the company of proof of the disability which is definitely made, a condition precedent to an assumption by it of payment of the premiums becoming due after the receipt of such proof. The provision to that effect is wholly free from the ambiguity which the court thought existed in the. Marshall policy.”

The similarity of the language in regard to notice in the instant case to that quoted from the Bergholm case, supra, is such that, if we are to follow the Bergholm case, as we professed to do in the Smith case, supra, we should give it the same construction. In the Smith case the majority said: “The Supreme Court of the United States was eminently correct in holding that . the language just quoted must be performed by the insured as a condition precedent to his right of recovery. This is the plain and unmistakable meaning of the language employed.” If it is, I submit that the instant suit is prematurely brought, and, if so, it should be abated. It was so expressly held in the ease of Atlas Life Ins. Co. v. Wells, 187 Ark. 979, 63 S. W. (2d) 533. This Wells case cited the Bergholm case as authority for the holding there made that “liability attaches when the disability accrues and proof of loss was made.”

Numerous objections of a specific nature were made to the instructions given in this case. Instruction numbered 1 contained the declaration of law under which the judgment was recovered. It reads, in part, as follows: “And if you further find that plaintiff has furnished due notice of such disability and requested blanks upon which to furnish due proof of such disability, and if you further find that defendant failed or refused to furnish such blanks within a reasonable time after such request, and denied liability for such disability, if any, then you are. instructed that the total amount collectible by the insured monthly, for such disability, has matured, and your verdict will be in the sum equal to the total monthly payments under the said certificate, if you find plaintiff is entitled to recover.”

I think this instruction was erroneous for reasons already stated, and for other reason hereinafter stated. It required only notice of the disability, whereas, as has been shown, the insurance contract required proof of disability, the furnishing of which was the condition precedent upon which the suit might be maintained. The instruction apparently dispenses with this requirement if the fact be. found that a demand was made for blanks upon which to make the proof, if it was further found that the defendant failed or refused to furnish such blanks within a reasonable time after such request and denied liability for such disability. Specific objections were made to the instruction raising the questions here discussed. The instruction was wrong, if for no other reason, because, as we have pointed out, the undisputed and stipulated facts show there was no failure or refusal to furnish such blanks within a reasonable time after such request, and there had been and was no denial of liability, and certainly, none of any kind prior to filing suit.

It is very earnestly insisted that the judgment is excessive, and I think this contention is well taken. It was held, in the Phifer case, supra, that where there was total and permanent disability, accompanied by a renunciation of the contract, the person who had made due proof might recover the present value of all installments to which he was entitled, and this holding was reaffirmed in the case of Travelers’ Protective Ass’n v. Stephens, 185 Ark. 660, 49 S. W. (2d) 364. The facts in the Stephens case, as found by the verdict of the jury, were that the insured had sustained an injury which rendered him totally and permanently disabled. The disability was such that it would necessarily continue beyond the time during which benefits would be payable. The insurer contended that the disability had arisen from participation in a fight, and that it had expressly exempted itself from any liability arising “ (2) from fighting or wrestling,” in other words, that there was no contract covering the insured’s disability. This was regarded as a repudiation of the contract and an immediate recovery of all the installment benefits was permitted.

It was recognized in the case of Mutual Life Ins. Co. v. Marsh, 186 Ark. 861, 56 S. W. (2d) 433, that there was some uncertainty and difference of opinion as to the effect of our cases, and we there attempted to clarify them and to remove this uncertainty. To that end the previous cases were reviewed and cited. It was stated in the Marsh case that the insurer, in its answer, “expressly disavowed any repudiation but affirmed the contract, and merely contended that, under its terms, the appellee (the insured) was not entitled to the monthly benefits.” This is what the answer, when fairly construed, does in the instant case.

We held in the Marsh case that a mere denial of liability under the policy was not a repudiation of the policy, and was therefore distinguishable from the cases where recovery of damages had been allowed for an anticipatory breach. These cases were named, and the Stephens case was included in that number, it being classed along with the Phifer case as one in which the contract had been renounced. This interpretation of the Stephens case, and the others is emphasized by the statement, there appearing, that: “We have made diligent search and have been unable to find any case holding contrary to the rule announced in Richards on the Law of Insurance., expressly approved by this court in Kirchman v. Tuffli Bros., supra, and followed in subsequent cases.”

This Marsh case was thought to represent the deliberate and unanimous view of the members of the court, as there was no dissent from it, and I assert, most respectfully but very earnestly, that unless its authority is to be impaired, this case should be reversed.

It was said, in the recent case of Equitable Life Assurance Society v. Pool, ante p. 101, that it was obiter to hold in the Marsh case that a denial of liability under the policy was not a renunciation of the contract, for the reason that Marsh had estopped himself to assert that fact, because, after disability had accrued, he had paid a premium which he was 'not required to pay if he was in fact disabled. That cannot be, as the reasoning in that case and the discussion of the authorities there cited and the distinction made between them, leave no room for any reasonable doubt that we. were deliberately holding* that a mere denial that liability had accrued under a policy was not a renunciation of the policy, especially so where it was alleged, as it is in the answer in this case, that the contract is affirmed as a subsisting obligation, and it is prajmd that the rights and obligations of the parties be adjudged in accordance with its provisions. This proposition is so elementary and so just that we would not hesitate to apply it in an ordinary contract, and there is no valid reason why the same rule should not be applied to an insurance contract. I submit it was the rule properly applied in the Marsh case and controlled that decision.

We said nothing in the Marsh case about estoppel, and I do not understand how that doctrine could have been invoked. Certainly it was not applied against the insurer, for we held it was not liable for anticipatory damages because it had answered that it was not liable at all. That is the exact point decided in the Marsh case. The payment of a premium by the insured after he fiqd become disabled and which he was not required to pay would not have worked an estoppel against him to later assert that he was disabled. It would have been evidence having some probative value that he was not disabled and was admissible in evidence for that reason. The payment of a premium which could not have been required could work no prejudice to the insurer, and, therefore, could not estop the. insured. The injection of the question of estoppel into the Marsh case appears as strained as other contentions appear to be which I have discussed.

In my opinion, the judgment should be reversed, and I am authorized to say that Justices McIIaney and Butler share the views here expressed.


source: Caselaw Access Project

author: McHaney, J. Smith, J.

license: Public Domain

text:
    Sparling v. Refunding Board. Denison v. Wiseman. Rodgers v. Wiseman. Lowden v. Wiseman.
    Nos. 4-3496, 4-3504, 4-3505, 4-3512
    Opinion delivered April 30, 1934.

      Barber ■& Henry, (for Sparling),

      Daggett Daggett, (for Denison and Rodgers), Thos. 8. Buzbee, E. L. Westbrooke and R. E. Wiley, (for railroads), for appellants.

      Hal L.. Norwood, Attorney General, Trieber <& Lasley and Walter L. Pope, for appellees.
   McHaney, J.

"While separate appeals have been taken in these several cases and separate- 'briefs filed, except in the Denison and Rodgers cases, which were consolidated and briefed together, we- are treating them as one case for the purpose of this opinion, since the same or similar questions are involved in all of them. The Sparling case, No. 3496, brings into question the constitutionality of act No. 11 of the first Extraordinary Session of the General Assembly of 1934, which act was approved February 12,1934-, as a whole and as to certain sections thereof. The other appeals question the right of the State lawfully to levy and collect a tax on gasoline sold or used in this State for agricultural and industrial purposes. In other words, that only such gasoline as may be used in propelling motor vehicles over the highways of this State may be lawfully taxed. Further contentions are that, “even though the act (act 11) be held to apply to and impose a tax on gasoline bought or sold within the State, regardless of the- character of use, such holding would not necessarily impose a tax on gasoline bought without, transported within, and thereafter used” for agricultural and industrial purposes; that said act does not impose, a' tax on gasoline except such as may be used in motor vehicles on the highways; and that, if it does, it contravenes § 5 of article 16 of the Constitution of this State. The chancery court sustained a demurrer to the complaint in each case, and judgments of dismissal were entered.

Turning now to a consideration of the attack made on the constitutionality of the act in the Sparling case, we find a number of grounds argued in support of the allegations of the complaint seeking to enjoin the “Refunding Board” from proceeding under the act. Section 1 thereof creates a “Refunding Board” composed of the Governor, Lieutenant-Governor, Treasurer of State, Secretary of State, State Auditor, Attorney General and State Bank Commissioner. It is argued that this section contravenes § 6 of article 19 of the Constitution, which provides: “No person shall hold or perform the duties of more than one office in the same department of the government at the same time, except as expressly directed or permitted by this Constitution.” And further that it violates § 10 of article 5, which provides: “No Senator or Representative shall, during the term for which he shall have been elected, be appointed or elected to any civil office under this State.” A sufficient answer to the first part of this contention is that the members of the Refunding Board are not holding or performing the duties of more than one office, membership on said board not -being an additional office, but only additional duties imposed by the act on the holders of the respective offices. A sufficient answer to the second part of this contention is that the Lieutenant-Governor is neither a Senator nor a Representative. By express provision of § 1 of amendment No. 6 to the Constitution, the Lieutenant-Governor is an executive officer — a member of the Executive Department of State. Section 5 of amendment 6 provides that he shall be president of the Senate, and may vote in case of a tie, but this does.not make him a Senator. Moreover the creation of this board was not the creation of a new office, nor are its members new officers. As heretofore stated, new duties are imposed on existing* exec utive officers. The executive State officers are now members of various boards and have, for a long period of time served thereon, such as the State Board of Election Commissioners, State Burning Board, State Printing Board, etc., and many others in the past which have been abolished. See Bruce v. Matlock, 86 Ark. 556, 111 S. W. 990; Russell v. Cone, 168 Ark. 989, 272 S. W. 678.

The second contention is that § 22 of the act is violative of § 5, article 15 of the Constitution. This will be considered later in this opinion in connection with the Denison and other cases.

It. is next contended that § 51 of the act is violative of § 1, article 5, of the Constitution which provides that “the legislative powers of this State shall be vested in a General Assembly, which shall consist of the Senate and House of Representatives.” Section 51 of the act provides that when the net revenue credited to the State Highway Fund in any fiscal year shall exceed $10,000,000 and the Refunding* Board finds that a reduction of the tax on gasoline during the succeeding year could be made without reducing the net revenue below that sum, said board may, “in its discretion,”' determine the amount of possible reduction, and make an order to that effect, not to exceed one-half of one cent a gallon. It is said this is a delegation of legislative power, because it vests a discretion in the board. This is not a delegation of legislative power, as we have many times held. In Harrington v. White, 131 Ark. 291, 199 S. W. 92, this court quoted with approval from Cincinnati, etc., Rd. Co. v. Commissioners, 1 Ohio State 77, as follows: “The true distinction * * ’* is between the delegation of power to make the law which necessarily involves the discretion as to what it shall be, and conferring authority or discretion as to its execution to be exercised under and in pursuance . of the law. The first cannot be done. To the latter no valid objection can be made.” And in State v. Martin & Lipe, 134 Ark. 420, 204 S. W. 622, it was said: “It is a well-established rule of law that legislative bodies have no right to delegate the law-making power to executive officers or administrative boards, but it is settled in this State that the Legislature may delegate ‘the power to determine some fact or state of things upon which the law makes or intends to make its own action depend.’ Boyd v. Bryant, 35 Ark. 69.” Many other cases might be cited to the same effect. Section 51 therefore does not delegate a legislative function, but confers authority or discretion as to its execution to be exercised under and in pursuance of its provisions.

Other contentions are that the act is void because § 55 gives the Governor the power within 30 days after its approval to direct the board not to issue any bonds; in other words, to suspend the act, in violation of § 12 of article 2 of the Constitution; that it attempts to suspend the statute of limitations with respect to actions on road improvement district bonds; that the bill for the act was not properly passed in both houses; that the exchange of direct State obligations for those of road improvement districts is violative of § 1 of article-16 of the Constitution ; and that the tax on gasoline may not be used to pay road district bonds. We have carefully considered all these questions and find them without substantial merit. To discuss them in detail would unduly extend this opinion. However it may be said that the Governor has not suspended the act and that the 30 days time for doing so has elapsed; that limitation of actions is subject to control by the Legislature; that the records of both Houses, of which we take judicial notice, show the act was properly passed; and that the payment of road district bonds with State bonds is not violative of § 1 of article 16 of the Constitution. Tapley v. Futrell, 187 Ark. 844, 62 S. W. (2d) 32; Jobe v. Urquhart, 102 Ark. 470, 143 S. W. 121; Hays v. McDaniel, 130 Ark. 52, 196 S. W. 934; Bush v. Martineau, 174 Ark. 214, 295 S. W. 9.

We now come to a consideration of the points' raised and argued on the other appeals. In the Denison and Rodgers cases the gasoline sought to be taxed was purchased in Tennessee in large quantities, shipped into Arkansas and stored in tanks adjacent to the levees which they were engaged in constructing, and was to be used in such construction work. No part of it was to be used in propelling motor vehicles over the highways. In the Lowden et al. case, the trustees in bankruptcy of three railroad companies — the Rock Island, the Missouri Pacific and the Frisco — seek to enjoin the Commissioner of Revenue from collecting the tax on gasoline used in propelling motor cars over their respective railroads. The contentions of all these appellants are substantially the same.

Prior to the passage of the “Refunding Act” (act No. 11 now under consideration), such gasoline as was used by these appellants for purposes other than use on the State’s highways was not taxable. In actual practice, except where bond was given, the tax on gasoline used for agricultural, industrial, domestic, railroad, levee, counties, cities, towns and miscellaneous purposes was paid by the consumer but the State refunded such tax on refund claims properly made and filed. During the calendar year 1933, out of a total tax collection of $6,542,024.79, refunds were made by the State in the sum of $553,596.38, or approximately 8 per cent, of the total collection. Perhaps from 50 per cent, to 90 per cent, or more of that amount was fraudulent. At any rate, based on past experience, the Legislature in § 24 of the “Refunding Act” repealed all prior provisions of statute authorizing refunds in the following language: “Section 44 of act No. 65 of the G-eneral Assembly, approved February 28, 1929, as amended: Paragraphs 3, 4 and 5 of § 39 of said act No. 65; paragraphs A and B of § '52 of said act No. 65, Act 127 of 1933, § 6 of act 36 of 1933, and paragraph (f) of § 24 of said act 65, are hereby repealed, provided however that refunds of the tax collected under this act on motor vehicle fuel used for industrial purposes as now provided by law in carrying out contracts entered into for public works and g-uasi-public works prior to the first day of January, 1934, shall be made in the manner provided for by the sections and paragraphs hereby repealed.”

Now, in the face of this section, it is seriously contended that the Legislature did not mean or intend to tax gasoline other than that used on the highways. The act further provides in § 22: “There is hereby levied a privilege or excise tax of six and one-half cents on each gallon of motor vehicle fuel as defined in this act, sold or used in this State or purchased for sale or use in this State.” Motor vehicle fuel is defined in § 19 (b) of the act as follows: “(b) ‘Motor Vehicle Fuels’ are those fuels known as gasoline, benzine, naphtha, and such other volatile and inflammable products produced or blended for the purpose of operating or propelling motor vehicles as defined in paragraph (a), provided the product commonly known as ‘Kerosene Oil,’ and fuel having an antiknock rating of not less than eighty octane when tested in a series 30 knock testing engine, at a jacket temperature of three hundred and seventy-five degrees Fahrenheit, known as aircraft fuel, and the product known as distillate, as defined in the following sections,, are not motor vehicle fuels.” Section 25 provides: “The purpose of this act is to provide for the payment and collection of an excise or privilege tax on the first sale of motor vehicle fuels when sold, or the use, when used in this State; double taxation is not intended. Motor vehicle fuel manufactured, produced or compounded in or imported into this State and subsequently sold for exportation, is not taxable. The tax levied is to be collected at the source in this State of the manufacturer or wholesaler when sales of any motor vehicle fuels are made, and when not sold in this State, then when first brought into this State for use herein.” Again it is provided in § 29 that: ‘ ‘ The intent of this act is to provide for the col- „ lection at the source within this State of a tax on the sale or use of motor vehicle fuel.” It then defines “the source” as to the manufacturer and the wholesaler. Section 30 provides as to refunds the following: “Refunds of taxes on motor vehicle fuel used for industrial purposes and domestic purposes as now provided by law shall be made where such uses were made of such fuel before the passage of this act and where such' uses shall be made in carrying out existing contracts for public works and g"Masi-public works, entered into prior to Januaiy 1, Í934, but all claims for refunds shall be filed within thirty days from the effective date of this act as to such uses heretofore made and within thirty days after such uses hereafter made in carrying out existing contracts for public works.”

These provisions of the act appear to us to be clear and unambiguous. Section 22 undoubtedly levies a tax of six and one-half cents a g*allon on motor vehicle fuel as defined in the act, and § 19 defines “motor vehicle'fuels,” naming them, as those “produced or blended for the purpose of propelling motor vehicles as defined in paragraph (A).” The word “purpose” as therein used means suitable for, adapted to or susceptible to. Therefore it was the clear intent of the Legislature, when these various provisions are considered together, from the language used, to tax all motor vehicle fuel sold or used in this State, regardless of the purpose to which it is put. This intention is further reinforced by the fact that the journals, of which we take notice, show that numerous amendments to exempt gasoline used for agricultural, industrial and domestic purpose from the levy of the tax, were offered, but defeated. Appellants Denison and Rodgers insist that, since their gasoline was purchased out of this State and brought into this State for use here, it is not taxable. It is difficult to follow the reasoning of these appellants in this regard. We think the fact it was bought in another State can make no difference, as the tax is also levied on the use of it in this State wherever it may have been purchased, and when brought here for use here, it loses its interstate character and becomes taxable.

But all appellants say that, if act 11 be so construed as to levy a tax on' gasoline used for agricultural and industrial purposes, it is unconstitutional and void as being in violation of § 5 of article 16 of the Constitution. This is by far the most vital point raised and the one that has given us most concern, when viewed in the light of former decisions of this court. The germane -part of this constitutional provision follows: “All property subject to taxation shall be taxed according to its value, that value to be ascertained in such manner as the General Assembly shall direct, making the same equal and uniform throughout the State. No one species of property from which a tax may be collected shall be taxed higher than another species of property of equal value, provided the General Assembly shall have power from time to time the tax hawkers, peddlers, ferries, exhibitions and privileges, in such manner as may be deemed proper.” This court has had occasion to consider this provision in a great variety of cases. See annotation to this section in Crawford & Moses ’ Digest, (page 104).

It may be well to state at the outset that the fact that the act designates the tax as “a privilege or excise tax” does not necessarily make it so, for, as said in Dawson v. Kentucky Dist. Co., 235 U. S. 288: “The name by which the tax is described in the statute is, of course, immaterial. Its character must be determined by its incidents.” We are of the opinion, after so considering the act, that it is a privilege tax — a tax on the privilege of selling and using gasoline in this State, payable at the source as defined in the act, for substantially the only available use to which it may be put, for highway travel. While it is true that gasoline is used for other purposes than propelling vehicles over the highways, still the percentage of gasoline so used is comparatively negligible. Since the tax is levied and paid at the source, there is no way for the manufacturer or wholesaler to know when a sale is made, the use to which it will be put, whether for road purposes or otherwise. It is also true that the right to tax gasoline was sustained in Standard Oil Co. v. Brodie, 153 Ark. 114, 239 S. W. 753, on the theory that it was a tax for the nse of the highways, and that such use was a privilege subject to tax. There it was contended that the only available use of gasoline was for propelling motor vehicles over the highways and that a tax on the only available use to which the article is susceptible is in effect a tax on the article itself. The court refused to accept such contention as sound and said: “It may be conceded that a tax on gasoline for its only available use would, in effect, be a tax on the commodity itself, but such might not be the case as to other articles, and we are unwilling to subscribe unqualifiedly to the doctrine that a tax on the only available use of an article is in every instance a tax on the article itself. In fact, this court repudiated the doctrine in the case of City of Ft. Smith v. Scruggs, 70 Ark. 549, 69 S. W. 679, 58 L. R. A. 921, 91 Am. St. Rep. 100.”

While it is true that it has been generally considered, since the decision in Standard Oil Co. v. Brodie, supra, that the State is without power to levy and collect a tax on agricultural and domestic gasoline, it is also true that, prior to that time (1921), it was generally doubted that such a tax could be levied for road purposes or any other purpose. It was also thought and seriously contended that a severance tax could not be imposed, and this court had great difficulty in arriving at the conclusion that such a tax was within Legislative power. See the different opinions in Miller Lumber Co. v. Floyd, 169 Ark. 473, 275 S. W. 741. See also Sims v. Ahrens, 167 Ark. 557, 271 S. W. 720, for doubts about the validity of an income tax law. The Constitution of this State was adopted in 1874. It was not made for those times alone. It was intended to be, and is, a living, growing instrument, yielding to the necessities of the people in the advancement of civilization. This court has for nearly 100 years so regarded it and .former Constitutions and has broadened and expanded its construction of them to meet the necessities of the people of this State. It is true that this court has always held that the Legislature cannot lay a tax for State revenue on the theory that it is a privilege tax on occupations that are of common right. The State is not taxing the right to sell or the right to use gasoline, but only the sale and the use for highway purposes, as only a negligible per cent, is used otherwise. To this we perceive no constitutional objection. It is in accord with Standard Oil Co. v. Brodie, supra. See Monamotor Oil Co. v. Johnson, 292 U. S. 86, 54 S. Ct. 575. Nor can we see why appellants should raise the question. None of them can be hurt by the imposition of the tax. Appellant contractors will take it into account in bidding for contracts. Appellant railroads are forever relieved of the road improvement district taxes which they formerly paid in annual sums largely in excess of the tax now paid. Agriculture is relieved in the same way as the railroads.

Let it be definitely understood that the tax imposed is not a property tax, but is a privilege tax for the use of the highways, and that the Legislature has declared the public policy of the State to be to tax all gasoline sold or used in this State for such purpose in order to prevent fraud and imposition on the State in the sale or use of a comparatively negligible quantity for other purposes.

Let the decrees in all cases be affirmed. It is so ordered.

Mr. Justice Smith and Mr. Justice Butler dissent from so much of the opinion as holds the tax'on gasoline for industrial, agricultural, etc., purposes is not a property tax.

Smith, J.

(dissenting). In the Denison case gasoline purchased in Tennessee was transported into this State for the purpose of supplying motive power for stationary engines and for trucks and tractors used in the performance of a contract with the. United States Grovornment to move earth from borrow pits adjacent to the St. Francis Levee and place it on the levee, and no part of the gasoline was used in the operation of a vehicle, movable engine or machine operated or propelled or used on the public highways and roads of the State. Such is the allegation of the complaint in that case, the truth of which is admitted by the demurrer, which was sustained by the court.

In the case of the Missouri Pacific Railroad it was alleged that the Commissioner of Revenue was attempting to collect the tax of 6% cents per gallon on 31,731 gallons of gasoline used by the Railroad Company in the month of February, 1934, in the operation of motor cars and locomotives wholly on the rails of the Railroad Company, no part of which had been used for operating vehicles of any character on any of the highways of the State. This tax, amounting to $2,062.51, for the shortest month in the year, does not appear to be de minimis and of inconsequential importance.

The complaints of the Frisco and Rock Island railroads contain similar allegations, the truth of which is, of course, admitted by the demurrers filed and sustained to those complaints.

The effect of the majority opinion appears to be, not that the gasoline thus used could be taxed if the gasoline was used for no other purpose, but rather that the amount thus used in comparison with all gasoline used is too small to be of importance, and that it is necessary to tax all gasoline used for any purpose whatsoever to prevent fraud being perpetrated in the collection of the tax which may lawfully be imposed. In other words, a tax not authorized by the Constitution may be collected to facilitate the collection of a tax which the Constitution does authorize. I submit that this is an innovation in taxation which finds no support in any of the cases cited in the majority opinion.

It is said that g’asoline taxes refunded in the year 1933 amounted to $553',596.38, of which from 50 to 90 per cent, was fraudulently refunded. This is a very serious indictment of the efficiency of the State officials charged with this duty. The statement appears to be dehors the record, but, even though true, I submit that this inefficient administration of the law affords no justification for the collection of a tax contrary to the provisions of the Constitution. A more appropriate remedy would be to administer the law efficiently.

The question here presented is of vast importance, but the legal principles which should control the decision are simple and have been often stated, and have been applied under various circumstances, beginning with the early case of Stevens v. State, 2 Ark. 291, and continuing down to the late case of Hixon v. School District of Marion, 187 Ark. 554, 60 S. W. (2d) 7027. Many of these cases were cited and reviewed in the case of Sims v. Ahrens, 167 Ark. 557, 271 S. W. 720, where the right of the State to levy and collect a tax on net incomes was upheld. The opinion of Justice Wood on the rehearing granted in that case became and is the law, and it would be a work of supererogation to again review the various cases there cited and reviewed in the original majority opinion and in the opinion of Judge Wood which superseded it and became the majority opinion. The controlling point in that case is reflected in the second headnote, which reads as follows: “An income tax is neither a property tax nor an occupation tax, within the provisions of art. 16, § 5, of the Constitution. ’ ’ It was apparently the opinion of all the judges that the tax would he void if it were either. Without reviewing that case, it will suffice to say that the State’s authority to tax and the sources from which that authority is derived were given the most extensive and deliberate consideration, as is reflected by the several opinions of the judges. The one point upon which there appeared to be entire accord was that section 5 of article 16, of the Constitution should be construed to mean what it plainly says, that: “All property subject to taxation shall be taxed according to its value — that value to be ascertained in such manner as the General Assembly shall direct, making the same equal and uniform throughout the State, ’ ’ and that: “No one species of property from which a tax may be collected shall be taxed higher than another species of property of equal value,” provided that certain named occupations and privileges might be taxed as such, and certain named property should be exempt from taxation. It is unnecessary to consider these exceptions from the rule of uniformity, as they have no application to the facts of this ease.

The tax sought to be collected from the levee contractor and the railroads appears to be void, I think, from the unanimous opinion of the court in the case of Standard Oil Co. of La. v. Brodie, 153 Ark. 114, 239 S. W. 753, as being unauthorized and violative of our Constitution. That case construed our first legislation providing for the collection of a tax upon the sale of “gasoline, kerosene or other products to be used by the purchaser thereof in the propelling of motor vehicles using combustible type engines over the highways.”- Acts 1921, p. 685.

It was there, very earnestly insisted that the legislation was void as imposing a tax upon gasoline as property, and upon that question we there said: “It is conceded in all quarters that, if the imposition is, in effect, a property tax, it is void.” The legislation was upheld, not because the right to tax the sale or use of gasoline as property existed under the act, but because it had not been taxed as such. We said: “If it had-been intended to tax the gasoline or its use, it would have been wholly unnecessary to describe the character of the use or the place where it was to be used, and the fact that the lawmakers incorporated these elements in laying the bases of the taxation shows unmistakably that it was intended to impose a tax upon the use of the public highways by the method described. It is clear that the tax is not imposed on the seller nor upon the gasoline while in his hands, and this of itself makes it manifest that there was no intention to levy a tax upon the sale of gasoline nor upon the gasoline itself.” And, to make it perfectly clear that the gasoline could not be and was not taxed as property, it was said: “In the final analysis of this language (of the act) it comes down to the point that the thing which is really taxed is the use of the vehicle of the character described upon the public highway, and the extent of the use is measured by the quantity of fuel consumed, and the tax is imposed according to the extent of the use as. thus measured.” Nothing could make plainer what was then thought to be the constitutional limitation on the right to tax gasoline.

It was said by the Supreme Court of the United States in the case of Dawson v. Kentucky Distilleries Co., 255 U. S. 288, 41 S. Ct. 272, that the name by which a tax is designated in a statute is immaterial, and that its c haracter must he determined by its incidents.

Here it is not even contended that the gasoline sought to be taxed in the case of the levee contractor and the railroads had any relation to the privilege of propelling vehicles or machines of any character on the highways of the State. The facts admitted by the demurrers negative that idea. It is sought to tax this gasoline used for other and different purposes because not to do so might enable gasoline which should be taxed to escape taxation.

The right of the contractor to use gasoline as a fuel to place earth upon the levee, or of the railroads to use it as a fuel to propel their cars, is no more a privilege than would be the right to use wood or coal for the same purposes, and it could not be contended that the right existed to tax the use of wood or coal not used on public highways. A common right cannot be made a privilege by merely designating it as such either by the General Assembly or by this court.

The 1933 session of the General Assembly sought to levy a tax of one per cent, of the face value of all State and county warrants, to be deducted by the State treasurer in one case and by county treasurers in the other, to provide a fund for old age pensions. This legislation was held to be violative of § 5 of article 16 of the Constitution, above quoted. The taxation of the warrants was held to be a taxation of property, and not a privilege tax, although it was so called. In that connection, it was said that no definition of property could be framed which did not include the right of ownership, and that the essential attributes of ownership are the rights of dominion, possession, enjoyment and disposition, and that these rights are included within the protective provisions of the Constitution to the same extent as the physical things to which th'ey pertain.

I conclude, therefore, that the tax sought to be collected from the contractor and the railroads is not a privilege tax, but is in fact a property tax, and is unauthorized for that reason. For the same reason I am of the opinion that so much of the act as attempts to tax gasoline used exclusively for agricultural or industrial purposes is void.

The unconstitutionality of so much of the. act as authorizes the collection of the tax against the contractor and the railroads, under the facts herein existing, does not affect the remainder of the act, as it provides that, “if, for any reason, any sentence or provision of this act shall be held to be unconstitutional, it shall not affect the remainder of this act, but this act, in so far as it is not in conflict with the Constitution of this State or the Constitution of the United States, shall be permitted to stand, and the various provisions of the act are hereby declared to be severable for that purpose.”

Finding no valid objection to any other portion of the act, I dissent only from so much of the majority opinion as is herein indicated.

I am authorized to say that Mr. Justice Butler concurs in the views herein expressed.


author: Johnson, C. J.

text:
    Jamison v. Henderson (1). and Arkansas Baptist College v. Arkansas Missionary Baptist Convention (2).
    3408 3459

      Booker •<& Booker and Charles B. Thweatt, for appellants in No. 3408, and for appellees in No. 3459.

      John A. Hibbler and R. W. Wilson, for appellees in No. 3408, and for appellants in No. 3459.
   Johnson, C. J.

These consolidated cases arose under the following circumstances:

On June 5, 1933, J. H. Henderson et al., purporting to represent the Arkansas ¡Baptist College, filed in the Pulaski Circuit Court their petition, alleging facts from which a benevolent association might be inferred, and praying that such be declared by the court, under authority of §§ 1788 to 1795, inclusive, of Crawford & Moses’ Digest. On the same date the petition was presented to the court, and the prayer thereof was granted declaring said incorporation for benevolent purposes as follows:

“It is therefore considered, ordered and adjudged by the court that the petitioners be, and they are hereby, created a body politic and corporate, under the name and style of ‘Arkansas Baptist College,! with all the powers, privileges and immunities, and subject to all the liabilities and exemptions granted in the law thereunto appertaining. ’ ’

Thereafter, on June 13, 1933, J. B. Jamison et al. in their own behalf, and as purported trustees for the Arkansas Baptist College for the Arkansas Missionary Baptist Convention, filed their petition of intervention in said cause, in which it was alleged that the Arkansas Baptist College is a corporation organized under the laws of this State in 1887, and that the Arkansas Missionary Baptist Convention was and is the parent body thereof; that the order and judgment made and entered in said cause was erroneous and void, because the name assumed by the incorporators is in conflict with the statutes of Arkansas, and that the Arkansas Baptist College had not been previously dissolved as a corporation. To the intervention thus filed, petitioners responded, denying the allegations of the petition of intervention and alleging affirmatively that, at a meeting of the Arkansas Missionary Baptist Convention held at Helena, Arkansas, in November, 1931, a resolution was duly presented and passed by said convention which had the effect of dissolving and surrendering the charter of said Arkansas Baptist College and transferring all its properties to petitioners as trustees. It was further alleged in petitioners’ response that, prior to December, 1931, there had existed two branches of the Arkansas Baptist Convention, namely, Arkansas State Missionary Baptist Convention and the Arkansas Missionary Baptist Convention Progressive; that on December 9,1931, the two branches, in conformity to proper resolutions theretofore passed, met in joint session and then and there, by proper resolutions, effected a permanent merger and consolidation of said conventions, thereafter to be known and designated as the Consolidated Missionary Baptist Convention of Arkansas; that said joint meeting, then assembled, adopted a constitution and bylaws for its government and elected permanent officers, who thereafter assumed their duties as such and have since managed and controlled the business and affairs of the Negro Baptist in Arkansas ; that interveners are without right or authority in the premises, and that they and each of them should be restrained and enjoined from intermeddling in the affairs of the consolidated convention.

Upon the issues thus joined, a trial was had in the Pulaski Circuit Court on June 20, 1933, which resulted in a judgment dismissing interveners ’ petition as follows:

‘ ‘ The court finds that the petition for incorporation filed in this case on June 5, 1933, was duly authorized by resolutions of the Arkansas Missionary Baptist Convention and the Arkansas Missionary Baptist Convention Progressive; and the court further finds that neither the Arkansas Missionary Baptist Convention nor the Arkansas Missionary Baptist Convention Progressive was a party to this case. ’ ’

The appeal in case number 3408 brings into question the validity of these circuit court judgments, but the evidence adduced upon trial in the circuit court has not been brought before us by bill of exceptions or otherwise.

On June 22, 1933, the Arkansas Missionary Baptist Convention, through its purported trustees, J. R. Jami-son et al. filed its complaint in the Pulaski Chancery Court, which is case number 3459 in this court, in which a permanent injunction was prayed against the agents, officers and trustees of the Arkansas Baptist College restraining and enjoining them from interfering with the possession and control of all properties then and theretofore held or controlled by the Arkansas Missionary Baptist Convention.

The Arkansas Baptist College, as incorporated by the circuit court judgment of June 5,1933, answered this complaint for injunction by alleging its incorporation and affirmatively pleaded that the proceedings had and done in the Pulaski Circuit Court were res juclieatae. A demurrer was interposed to the answer thus 'alleging res judicatae, which was sustained by the chancery court, upon the theory that the circuit court judgment declaring the merger and consolidation of the Arkansas Missionary Baptist Convention and the Arkansas Missionary Baptist Convention Progressive was void. Defendants declining to further plead, a permanent injunction was granted in behalf of petitioners, and against the trustees of the Arkansas Baptist College, and this appeal is therefrom.

From the foregoing recitals, it definitely appears that the Pulaski Circuit Court acquired jurisdiction of the subject-matter and parties in the litigation presented in case number 3408, and its judgment in the premises is conclusive and binding upon all parties thereto. Sections 1788 to 1795, inclusive, Crawford & Moses’ Digest, vests in the circuit courts of this State exclusive jurisdiction in the determination whether an association of individuals should be incorporated, and necessarily draws into question all necessary legal prerequisites thereto. Moreover, jurisdiction was conceded and invoked by the trustees of the Arkansas Missionary Baptist Convention when they voluntarily appeared therein and affirmatively requested and procured a temporary injunction pending the litigation. Organ v. Memphis & L. R. Rd. Co., 51 Ark. 235, 11 S. W. 96; Morton v. Miller, 25 Ark. 108. The' contention is, however, that the circuit court judgment declaring the incorporation and the'merger of the old conventions is void, which appears upon the face of the judgment. It is argued that a merger of two or more corporations is not authorized by statute in this State, and for this reason the circuit court judgment so declaring appears to be void upon its face. All necessary intendments should be invoked in aid of the jurisdiction of this circuit court judgment. Certainly, it must be conceded that any corporation organized or existing under the laws of this State may surrender its corporate, charter and existence and cease to do business as such by proper resolutions of its stockholders, officers and agents. Such procedure is expressly authorized by § 1823, Crawford & Moses’ Digest. When such procedure is invoked and accomplished, no creditors being involved, the property of such corporation reverts to the stockholders. The circuit court was warranted in finding that the legal effect of the resolutions adopted by the various conventions was to dissolve the corporate existence of the respective conventions and coi-porations and thereby vesting their respective properties in the parent bodies. 7 R. C. L. Cor., § 745. In the absence of a bill of exceptions, we must conclusively presume that legal evidence was heard which warrants the judgment entered.

•Since, the circuit court was warranted in finding that the corporations had dissolved by consent of their stockholders and that the property had reverted to the parent bodies, it was fully justified in holding that a merger and consolidation could be effected by the owners. This procedure was expressly recognized by us in the case of Sanders v. Baggerly, 96 Ark. 117, 131 S. W. 49, wherein we stated the rule as follows : “In Christian thought, unity is more desirable than division. All denominational church organizations have as their primary object the propagation of the Christian religión. The individual advancement of each separate organization is looked upon as a contribution that far to the general cause. A union with another church organization having the same purpose may be regarded therefore as a step forward in the consummation of the work in which all are engaged. For this reason the general analogy of any secular corporation or association is misleading. The purpose of such an organization is self-aggrandizement, the advancement of its own interests, its increase in power, in wealth, in strength, without regard to any other organization, to the prosperity or purposes of any other association of individuals. Such organizations have no common purpose, no common head, no invisible cords of union. Each stands alone. Each has property devoted to the special individual purposes of the society, and each has stockholders. A business corporation is organized for profit; and if its life is not limited by its charter, it is regarded as perpetual unless sooner ended for breach of law or duty, or inability to discharge its functions. In case of a termination of corporate rights by efflux of time, or for either of the causes last mentioned, the business is wound up, the property is sold, and the proceeds, after payment of debts, if any, divided among the stockholders. But Avith church organizations it is different. They are not created for either profit or pleasure, but to do good. They have property, but no stockholders. The possession of all churches are [is] devoted to the same broad, general purpose, likewise the efforts of all of their members acting' Avithin the organizations. * * *

‘ ‘ There must he in every church organization an implied or inherent power of union with other church organizations, growing out of the purpose for which all are constituted, vis., the dissemination of the Christian religion. If any two organizations reach the conclusion that they can better subserve this great and fundamental purpose by uniting with each other, and if they can agree, within their constitutional limits, upon the points of difference previously dividing them, there can be no reason, in law, why they should remain apart. There is no soundness in the view that church divisions, once made, must ever continue. If divisions in the Christian church were intended to be perpetual, then the argument for the defendants, on this- head, is unanswerable; if there be such a thing as a universal church of which all the divisions are members or branches, if there be a tendency to unity in Christendom, and if this tendency is in accord with the spirit and purpose of Christianity — then the argument referred to can avail but little. * * *

“The power exists by implication. It exists from the very nature of the case, not only in the Cumberland organization, but in every other Christian society in whose standards there is not an explicit pronouncement to the contrary, because they are all parts of one whole, all engaged in the same work, seeking the same end, and animated by a common purpose.”

It definitely appears from the rule just stated that we are committed to the doctrine that ecclesiastical associations and conventions may merge and consolidate without statutory sanction or authority, as the power so to do exists by implication in the very nature of the subject.

It follows from what we have said that the circuit court judgment of June 5, 1933, and as amended subsequent thereto does not appear to be void upon its face, but on the contrary is a valid and binding judgment and order upon all parties thereto and must be affirmed.

In case number 3459, which is an appeal from the Pulaski Chancery Court, it appears that the chancellor was of the opinion that the circuit court judgment heretofore discussed appeared to be void upon its face, therefore a demurrer was sustained to appellants’ answer therein pleading said circuit court judgment as res judicata. It suffices to say that the chancery court erred in sustaining said demurrer. The plea of res judicata was well pleaded, and was and is a complete bar and defense to the complaint in said cause. It is the well-settled doctrine in this jurisdiction that a judgment of a court of competent jurisdiction is conclusive of all questions within the issue, whether formally litigated or not. It extends, not only to questions of fact and law which were decided in the former suit, but also to the grounds of recovery or defense, which might have been, but were not, presented. Howard-Sevier Road Imp. Dist. 1 v. Hunt, 166 Ark. 62, 265 S. W. 517; Road Imp. Dist. No. 4 v. Burkett, 167 Ark. 176, 266 S. W. 930; Coleman v. Mitchell, 172 Ark. 619, 290 S. W. 64; Prewett v. Water Works Imp. Dist. No. 1, 176 Ark. 1166, 5 S. W. (2d) 735; Akins v. Heiden, 177 Ark. 392, 7 S. W. (2d) 15.

For the reason stated, cause number 3459, is reversed, and remanded with directions to overrule appellees’ demurrer to appellants’ answer, and to enter a decree sustaining appellants’ plea of res judicata.


author: Smith, J.

text:
    Beason v. Withington.
    4-3457
    Opinion delivered May 7, 1934.

      Henry J. Burney and O. W. (Pete) Wiggins, for appellants.

      Floyd Terral, for appellee.
   Smith, J.

This suit was brought by appellants to recover damages to compensate personal injuries alleged to have been occasioned by the reckless and negligent driving of an automobile by appellee in which appellants were riding as guests of appellee at the time of their injury. During the progress of the trial the answer was amended, over the objection and exception of appellants, to allege that the plaintiffs, appellants here, were guilty of contributory negligence, and in the submission of that question to the jury an instruction numbered 13 was given over the objection and exception of appellants. This instruction reads as follows: “You are instructed that, if you find from all the evidence that the plaintiffs, Dovie Beason and Homer Beason and the deceased, Ruby Ger-lain Reason, were of such age as to appreciate danger, and in possession of all their mental faculties, and that, at the time of the accident complained of, they were riding in an automobile driven by the defendant at a dangerously high rate of speed and being zig-zagged from one side of the highway to the other, and that they had been riding in said automobile for a sufficient distance prior to the time of. the accident for them to know, and they did know and realize, that said automobile was being driven at a high and dangerous rate of speed and in a careless and negligent manner, and knew defendant persisted in so doing, and, after possessing that knowledge, they had a reasonable opportunity to abandon said car without injury to themselves, but, instead of so doing, continued to ride with the defendant while the automobile was being operated in that manner after such discovery, if any, had been made by them, then they were guilty of contributory negligence, and they cannot recover in this action.”

There was a verdict for the defendant, upon which a judgment was rendered, from which is this appeal, and for the reversal of that judgment error is assigned in permitting the answer to be amended and in giving the instruction set out above.

Appellee insists that the errors assigned are such as may be brought upon the record only by a bill of exceptions, and he filed a motion to dismiss the appeal for the want of a bill of exceptions, which was overruled. Now that the case has been submitted on its merits, this motion was renewed.

It is true, as contended by appellee, that a bill of exceptions is necessary to bring the alleged errors into the record, and that they may not otherwise be considered ; but we think it is also true that a sufficient bill of exceptions was prepared and filed to present the questions later discussed. The bill of exceptions as filed does not purport to set out all the testimony heard at the trial from which the appeal comes, and, this being true, the presumption must be indulged, in accordance with well-settled rules of practice, that the verdict and judgment accorded with the testimony.

Neither the statute nor the rules of this court require a transcription of all the oral testimony into a bill of exceptions. It is not essential that we be furnished all the testimony to consider specific assignments of error.

The statute provides (§ 1318, Crawford & Moses’ Digest) that the party objecting to a decision must ex-oept at the time the decision is made, but may be given time to reduce the exception to writing, but not beyond the next succeeding term of court. No particular form of exception is required, except that: “The objection must be stated, with so much of the evidence as is necessary to explain it and no more, and the whole as briefly as possible.” Section 1319, Crawford & Moses’ Digest. It is further provided that: “ WRere the decision is not entered on the record, or the grounds of objection do not sufficiently appear in the entry, the party excepting must reduce his exception to writing and present it to the judge for his allowance and signature. If true, it shall be the duty of the judge to allow and sign it; whereupon, it shall be filed with the pleadings, as part of the record, but not spread at large on the order book. * * *” Section. 1321, Crawford & Moses’ Digest.

Rule XY of this court (163 Ark., page XXXII) reads, in part, as follows: “Bills of exceptions, except in cases of felony, shall be so prepared as only to present to the Supreme Court the rulings of the court below upon some matter of law; and shall contain only such statements of facts as may be necessary to explain the bearing of the rulings upon the issues or questions involved; and, if the facts are undisputed, they shall be stated as facts, and not the evidence from which they are deduced; and if disputed, it shall be sufficient to state that evidence was adduced tending to prove them instead of setting out the evidence in detail, but if a defect of proof be the ground of ruling or exception, then the particulars in which the proof is supposed to be defective shall be briefly stated, and all the evidence offered in any wise connected with such supposed defect shall be set out in the bill of exceptions.”

In the ordinary trial many exceptions are saved, during its progress, to various rulings of the presiding judge, and the practice has become quite general to have trials reported stenographically and to have transcriptions made of all the stenographic notes. This is done to more fully reproduce and reflect the incidents of the trial in their continuity so as to more fully explain the objections to the overruling of which the exceptions were saved. But neither the statute nor the rules of court require this to be done, as appears from the rule and the statutes from which we have quoted. An appeal might be taken upon a bill of exceptions which presented only a single exception saved at the trial, provided so much of the proceedings at the trial were recorded as was necessary to sufficiently explain it.

Chief Justice Cockrill discussed the functions of a bill of exceptions in the case of McKinney v. Demby, 44 Ark. 74. In that case the bill of exceptions did not show that it contained all the evidence adduced at the trial, and for that reason he said that the sufficiency of the evidence to support the verdict would not be considered. In that case he said also that an objection that a certain instruction should not have been given would not be considered for the reason that there might have been testimony which made the instruction proper, and that in the case stated every intendment would be indulged in favor of the action of the trial court, and that this court would presume that every fact susceptible of proof that could have aided appellee’s case was fully established, the salutary rule being-applied that every judgment of a court of competent jurisdiction is presumed to be right unless the party aggrieved will make it affirmatively appear that it is erroneous.

Pleadings may be amended, and in some cases will be treated as amended, even during the progress of a trial, proper conditions being imposed to prevent surpris_e and injustice in the particular ease, but, as there is no showing of the conditions under which the answer of appellee was amended, it will be conclusively presumed that no error was committed in permitting that action.

Now a judgment would not be reversed where the bill of exceptions showed only the refusal of the court to give a proper and correct instruction. This is true because the presumption would be indulged that other and correct instructions were given which made the giving of the particular instruction unnecessary or superfluous. But a judgment would be reversed when the bill of exceptions showed only the giving of,an erroneous instruction, and its relevancy to the points in issue, provided it was so inherently erroneous that it could not be cured by other instructions explanatory of it. If it could be, the presumption would be indulged that it had been.

Applying this well-known rule to instruction numbered 13, set out above, we conclude that the instruction is not so inherently erroneous as to require the reversal of the judgment. We said, in the case of Graves v. Jewell Tea Co., 180 Ark. 980, 23 S. W. (2d) 972, that while the negligence of the driver of an automobile cannot be imputed to one riding with him as a guest, it is the duty of the guest to exercise ordinary care for his own safety, and that the failure to exercise such care which contributed to his injury constituted contributory negligence and defeated a recovery. See also Carter v. Brown, 136 Ark. 23, 206 S. W. 71; Pine Bluff Co. v. Whitlaw, 147 Ark. 152, 227 S. W. 13; Miller v. Ft. Smith L. & T. Co., 136 Ark. 272, 206 S. W. 329; Itzkowitz v. P. H. Ruebel & Co., 158 Ark. 454, 250 S. W. 535; Arkansas P. & L. Co. v. Heyligers, 188 Ark. 815, 67 S. W. (2d) 1021.

Instruction numbered 13 declared the duty of the guest to leave the car where the driver had ignored protests to cease his reckless driving, and stated this duty to be to leave the car if afforded reasonable opportunity to do so. Other instructions may have defined reasonable opportunity.

In the chapter on Guest and Passenger, vol. 5-6, of Cyclopedia of Automobile Law (Huddy) (9th ed.), § 145 subhead, “Remaining in machine after protest,” it is said: ‘ ‘ The circumstances may be such as to charg’e the occupant with negligence as a matter of law, where he unreasonably remains in the machine after adequate opportunity is offered for alighting, or, at least, where he fails to insist on leaving the car. But this duty is not absolute, the question whether a failure to leave the vehicle is a want of ordinary care being dependent on the circumstances of the particular case.”

It is easily conceivable that cases might arise where it would not be negligence for the guest to remain in the car after making futile protest against the recklessness or negligence of. the driver. The case of Krause v. Hall, 195 Wis. 565, 217 N. W. 290, was snch a case, and the Supreme Court of Wisconsin there said: “The jury might well have believed that the ordinary person would have taken chances on remaining in the car rather than be let out on a highway many miles from home on a dark night. It seems fairly plain that in every respect the question of plaintiff’s contributory negligence was for the jury, and that their finding with reference thereto cannot be disturbed.” See also Klopfenstein v. Eads, 143 Wash. 104, 254 Pac. 854; Archer v. Bourne, 222 Ky. 268, 300 S. W. 604; Shields v. King, 207 Cal. 275, 277 Pac. 1043; Trotter v. Bullock, 148 Wash 516, 269 Pac. 825.

Other instructions may have explained when it was the duty of the guest to leave the car, reasonable opportunity being afforded to do so, and we cannot therefore say that the instruction was so inherently erroneous as to require reversal of the judgment.

As no error appears, the judgment must be affirmed, and it is so ordered.