author: Butler, J. Hart, C. J.,

text:
    Cobb v. Parnell.
    Opinion delivered March 9, 1931.

      Frauenthal, Sherrill S Johnson, for appellant.

      Hal L. Norwood, Attorney General, and Walter L. Pope, Assistant, for appellee.
   Butler, J.

Act No. 10 and act No. 34, amendatory thereto, were passed at the present session of the General Assembly of the -State of Arkansas. By this legislation a board was created consisting of the Governor, the Auditor of State, the Chairman of the Highway Commission, and seven others, designated as the State Agricultural Credit Board. These acts empowered said board to issue bonds in the sum of $1,500,000, for which the full faith and credit of the State is pledged, for the purpose of financing farmers and stock raisers for agricultural purposes. The loans are to he made by finance corpora-' tions, already organized and to be created, under the supervision of the State Agricultural Credit Board according to rules prescribing the conditions under which the loans shall be made to the farmers and the manner of repayment, which rules the board are empowered to promulgate. A general annual tax of one-half mill is levied, which, when collected, shall be devoted solely to the payment of the bonds.

The reasons for the enactment of this law are to be found in the emergency clause, which is as follows: “It is ascertained and hereby declared that, owing to the terrible drouth in the State of Arkansas during the year 1930, and to the failure of more than one hundred banks in this State during the fall and winter of .1930-31 whereby several millions of dollars of deposits have been tied up, many of the farmers of the 'State have no means to plant a crop this year; and that, unless means are provided forthwith, many of said farmers and their families will suffer in health for want of proper food, and some may die from starvation; and it is therefore ascertained and declared that an emergency exists, and that for the immediate preservation of the public health and safety, it is necessary that this act should go into immediate operation, and be in full force from and after its passage.”

In order to make the provisions of the act immediately effective, the sum of $1,500,000 was appropriated» out of the funds in the State Treasury to the credit, of the Highway Department, with provision that, when the bonds authorized by the act are sold the funds arising from such sales shall be immediately transferred from the credit of the Credit Board to the credit of the Highway Department, and deposited for its use to reimburse it for the amount transferred from its funds as aforesaid.

This action questions the constitutionality of the act, and the attack is made upon it on four grounds, the last two of which we shall consider first.

It is claimed by the appellant that the act is void in that no provision is made for the levying or collecting of the tax sought to be imposed. This objection is not tenable, for the levy was in fact made by the Legislature which has the inherent authority to make the levy, and, as it is a general tax, the laws relating to the collection of State general taxes will govern.

The further point is raised that the act is unconstitutional because said act creates the board which is to carry out the purpose of the act and in the same act appropriation is also made to meet and carry int.o effect the purpose of the act. As stated in its title, the act is “a.n act to enable agriculture finance corporations to obtain funds with which to carry out the purposes of their organization, to levy a tax for the repayment thereof, and for other purposes.” There is but one subject embraced in the act and it, therefore, complies with the requirements of § 30 of article 5 of the Constitution.

These objections are not seriously urged by the appellant, but it is insisted that the act is void because it violates § 1 and § 11 of article 16 of the Constitution.

Section 1, article 16: . “Neither the State nor any city, county, town or other municipality in this State shall ever loan its credit_for any purpose whatever; nor shall any county, city, town or municipality ever issue any interest bearing evidences of indebtedness, except such bonds as may be authorized by law to provide for and secure the payment of the present existing indebtedness, ’and the Stajte shall never issue (any interest-bearing treasury warrants or scrip.”

Section 11, article 16: “No tax shall be levied except in pursuance of law, and every law imposing a tax shall distinctly state the object of same; no moneys arising from a tax levied for one purpose shall be used for any other purpose.”

Section 1, article 16, of the Constitution is ambiguous, and for a time it was thought by some that it precluded the State from issuing any interest-bearing evidences of debt except in payment of the indebtedness existing at the time the Constitution was written.

It is a fundamental and universally recognized canon of construction that the Constitution of this State is not a grant, hut a limitation, of power, and in all cases where there is not an express or necessarily implied limitation of its power by the Constitution, the Legislature is supreme; and it is always the presumption that in the enactment of a law the power of the Legislature has not been limited, and it is properly exercising its inherent 'authority. Therefore, a statute will be upheld unless it is clearly prohibited by the Constitution, and, where it is doubtful whether an act comes within the inhibition of the Constitution, the doubt must be resolved in favor of the constitutionality of the act. State v. Crowe, 130 Ark. 272, 197 S. W. 4; Bush v. Martineau, 174 Ark. 214, 295 S. W. 9.

Although every presumption must be indulged in favor of the constitutionality of an act, some of the older decisions in States having constitutional provisions similar to the one under discussion have held that acts like the one before us were prohibited by the Constitution. The Supreme Court of Kansas had occasion to construe a statute passed by the Legislature of that State for the relief of farmers in certain areas of the State where the crops had been destroyed by drouth. This act appropriated a sum of money derived from the general revenue to be loaned to the farmers through agencies created by the act for the purpose of enabling them to buy seed and grain. The court held that the purpose for which the appropriation was made was not a public one, and that it was a loan of the State’s credit in violation of the Constitution, and, after reciting the provisions of the act under review, the court said: ‘ ‘ These various provisions show that the idea of the Legislature was not the relief of the helpless and penniless, but the assistance of a class temporarily embarrassed.” State v. Osawkee Township, 14 Kan. 418, 19 Am. Rep. 99.

A constitutional provision similar to ours was considered by the Minnesota court in the case of William Deering & Co. v. Peterson, 75 Minn. 118, 77 N. W. 568, construing- an act of the Legislature providing for the loan of seed grain to farmers owning less than 160 acres of land and to those owning more than that amount if the land was free from mortgage incumbrance. The act was held unconstitutional on the ground that it. appropriated public money for a private purpose. In commenting- on. the purposes of the act, the court said: “It permits every one who has not more than 160 acres of land free from mortg*age incumbrance to borrow from the State. A person might have 10,000 acres of land worth $100,000 subject to a mortgage of only. $500, and he would be entitled, under the terms of this act, to- borrow from the State. He might also have one million dollars worth of personal property and still he could borrow from the State. * * Taxation cannot be imposed for a private purpose, and if the State can appropriate for a private purpose the money in its treasury and then replace it by taxation, it can do indirectly what it cannot do directly.”

As supporting the rule the cases of Citizens’ Savings’ etc. v. Topeka, 20 Wall. 655, 15 Am. Rep. 56; Allan v. Inhabitants of Joy, 60 Me. 124, 11 Am. Rep. 185; Lowell v. Boston, 111 Mass. 454, 15 Am. Rep. 39; and Coates v. Campbell, 39 Minn. 498, 35 N. W. 366, may be cited.

The modern, doctrine, however, seems to be more elastic and liberal than the one laid down by those decisions. In the case of Shenandoah Lime Works v. Mann, 115 Va. 865, 805 E. 753, Ann. Cas. 1915C, 973, an act of the Legislature providing for the working of convicts by a board created for that purpose for the manufacture of lime and for its disposition to the citizens of the State was attacked by a number of merchants on the ground that it appropriated public funds for a private business. The court upheld the statute as a valid exercise of the police power.

For the same reason an act of the Alabama Legislature was upheld providing for the taxing of fire insuranee companies, tlie proceeds to be administered through a private association to aid in fire prevention. The court recognized that under constitutional inhibition taxes could be levied for public purposes only, and said: “The objects for which money is raised by taxation must be public, and such as sub-serve the common interest and well-being of the community required to contribute. To justify the court in arresting the proceedings and declaring the tax void, the absence of all possible public interest in the purposes for which the funds are raised must be clear and palpable — so clear and palpable as to be perceptible by every mind at the first blush. * * * The purposes for which this tax is imposed are not private or individual. * * * The prevention and suppression of calamities, involving the destruction of property, peril to life, the disturbance of public security, is a governmental function and duty, aid and assistance in which it is the duty of every citizen to render. Sacred as are the rights.of private property, jealous as is the law of every infringement or invasion of them, emergencies or occasions may arise in which they are subordinate and must yield to public necessity.” Phoenix Assurance Co. v. Montgomery Fire Department, 117 Ala. 64, 23 S. E. 843, 42 L. R. A. 468.

Also in State v. McCown, 92 S. C. 81, 75 S. E. 392, an appropriation of State funds to create a warehouse system was upheld. The substance of the reason for the enactment of the law as stated by the court was that, by affording the farmers of the State a means of storing their cotton and borrowing money on the same under the plan set out in the act, they would be enabled to . prevent the manipulation of speculators in cotton by which price of the commodity would be depressed. The attack on the statute was on the ground that it appropriated public revenues for private purposes. In upholding the act, the court said: “In passing this statute, the State was clearly within the exercise of its police power, which in its last analysis simply means the State’s right of self-defense. * * * The act in question was for a public and not a private purpose.”

In 1890 the Legislature of North Dakota passed an act which, among other things, provided that, in any county in the State where the crops of the preceding year had been a total or partial failure by reason of drouth or other cause, the board of county commissioners of such county might issue bonds of the county pursuant to the provisions of the act and with the proceeds thereof purchase seed grain for those as were in need of same and who were unable to procure it. The act further provided for a tax levy sufficient to pay the principal and interest on the bonds. Objection was made to the act on the ground that it was forbidden by the Constitution which expressly provided that the 'State could not lend its aid to either corporations or individuals, and that the tax was not for a public purpose. The test laid down by the court was this: “Is the tax provided for in the statute laid for a public purpose?” In answering this question in the affirmative, the court took occasion to say that the act was passed because of successive crop failures, a numerous body of citizens were reduced to extremities without fault on their part and so impoverished that they were unable to obtain the grain necessary for seeding the lands from which they derived the necessities of life. The court said: “It is agreed on all sides that this class of citizens, having already exhausted their private credit, must have friendly aid from some source in procuring seed grain if they put in any crops this year. The Legislature, by this statute, has devised a measure which seems well adapted to meet the exigency and promises to give the needed relief with little ultimate loss to the county treasurer.” After discussing certain authorities the court proceeded: “We have carefully examined the authorities above cited, and many others of similar import, and, while fully assenting to the principles enunciated by the cases, viz, that all taxation must be for a public purpose, we do not, with the single exception of the Kansas case (State v. Osawkee Township), regard them as parallel cases, and applicable to the question presented in the case at bar. As we view the matter, the tax in question is for a public purpose, i. e., a tax for the ‘necessary support of the poor’.”

“This review of legislation in aid of destitute farmers will serve to illustrate the well known fact that legislation under the pressure of a public sentiment, born of stern necessity, will adapt itself to new exigencies, even if in doing so a sanction is given to a broader application of elementary principles of government than have before been recognized and applied by the courts in adjudicated cases. It is the boast of the common law that it is elastic, and can be adjusted to the development of new social and business conditions. ’ Can a statute enacted for such broadly humane and charitable purposes be annulled by another branch of the Government as an abuse of legislative discretion? We think otherwise. Great deference is due from the courts to the legislative branch of the State Government, and it is axiomatic that in cases of doubt the courts will never interfere to annul a statute.” State v. Nelson County, 1 N. D. 88, 45 N. W. 33, 26 Am. St. Rep. 609, 8 L. R. A. 283.

A cyclone destroyed a large part of the city of New Richmond, Wisconsin, killing and injuring many of its inhabitants. To bury the dead, care for the injured, clear up the debris to prevent disease, and to relieve and aid the homeless, destitute and impoverished, the city incurred large expense. Afterward it borrowed from the State out of certain funds a sum of money. At the next session of the Legislature an act was passed making an appropriation from the general fund for the purpose of relieving the city of its indebtedness. This act was attacked as unconstitutional on the ground that the money appropriate was for a private and not a public purpose. The Supreme Court of Wisconsin, in passing on this question, said: “Can we say that the appropriation in question was for a public purpose and such as subserved the common interest and well being of the people of the State? * * * The condition of thing’s so suddenly precipitated, the claim of humanity, and the g’ood of the State called for immediate and extraordinary relief. In passing- the act the Legislature were called upon to consider the whole situation. The people of the commonwealth were bowed in sorrow over the great calamity, and the call was for the immediate exercise of the police power of the State on a large scale. The object of the act being public, and to subserve the common interest and well-being of the people of the State at large, brought the subject legitimately within the power of the Legislature.” State ex rel. New Richmond v. Davidson, 114 Wis. 563, 88 N. W. 596, 58 L. R. A. 739.

The Constitution of the State of Montana provided by § 1 of article 13 that “neither the State, nor any county, city, town, municipality, nor any other subdivision of the State shall ever give, or loan its credit in aid of, or make any donation or grant by subsidy, or otherwise, to any individual association or corporation.” The Legislature of that State passed an act, the outstanding purpose of which was to furnish aid in the shape of seed grain to needy farmers who could not procure the same, and authorized the issuance of bonds to procure money for the purchase of seed grain, and provided that those obtaining the grain should sign a contract for the repayment of the cost with six per cent, interest. This act was attacked as being in violation of the section of the Constitution quoted above and because it was not for a public purpose. It was stated by the court that “public am thorities may not do by indirection what they cannot do directly; and forasmuch as the bonds or warrants authorized by this act to be issued and sold must, to the extent that repayment fails or is delayed, be made good by taxation, it is entirely clear that their issuance cannot be authorized save for a purpose for which taxation is lawful. Hence the rule that taxes may not be laid except for a public purpose is properly invoked. May this be considered such a purpose? That depends on what is meant by ‘needy farmers who are unable to procure seecP; for, vast and important as farming operations are, and worthy as they may be of such public encouragement as many of our statutes do authorize, still, as such, they are private and not public. ^ * * Now, to the farmer, unfavorably situated, drouth, hail, or other causes of crop failure may entail results equally ruinous and not different in character from those of pestilence or fire; they may drive him to the verge of the poorhouse, and he becomes, as the victim of misfortune, a person with claims upon the sympathy and aid of society — the more so as he is unwilling to become wholly dependent — for which the county may and must provide. If, therefore, the phrase ‘needy farmers who are unable to procure seed’ may be taken to mean persons engaged^in agriculture who, by natural or other conditions beyond their control, are so reduced in circumstances that they have neither money, nor credit, nor property, in shape to be pledged or mortgaged, and who without some aid will become paupers, dependent on the county for support — and we think this is the meaning — then the purpose to aid them is a public one, and the only subject left to consider is the validity o'f the means prescribed. * * * If any course proposed is a measure of poor relief and is prescribed by law, there is no contravention of § 1, article 13, even though it should involve a loan or a donation. As a matter of fact, the origin and purpose of the restrictions in § 1, art. 13, are well known. They arose in a time when the evils of public aid to railroads were notorious; they were intended to prevent the extension of such aid to either individuals or corporations for the purpose of fostering business enterprises, whether o'f a semi-public or private nature; they had and were designed to have no reference whatever to suitable measures, elsewhere commanded, for the relief of the poor.” State v. Weinrich, 54 Mont. 390, 170 Pac. 942.

In construing § 1, art. 16, of our Constitution, this court refused to accept the narrow view taken by some that the credit of the State could not be pledged for any purposes, for it had in mind the history of the times jnst preceding the adoption of the Constitution and the evils sought to be corrected. Among the evils were precisely those mentioned in the case of State v. Weinrich, 170 Pac., supra. The State had just been liberated from the domination o'f alien adventurers who, under the guise of fostering the industries of the State by lending to them credit, had looted the treasury. A notable example of unwarranted and improvident loans of the State’s credit was the aid given to the building of railroads. That it was only to prevent a recurrence of this that § 1, article .16, was adopted was apparent from the fact that at the first session of the Legislature after the adoption of the Constitution of which article 16 is a part, the Legislature passed an act providing for the issuance of bonds as noted in the case of Hays v. McDaniel, 130 Ark. 52, 196 S. W. 934. Since that time the credit of the State has been used for the promotion of the general welfare of the State and appropriations made from revenues derived from general taxation for the purposes of protecting the State 'from disease, from hazards by fire, and for exhibiting the resources of the State at various expositions, the design of which was to attract immigration and to secure the development of our own resources. Therefore, it has become recognized that the State, although prohibited from lending its credit in the furtherance of private enterprises, may still use that credit for the promotion of the common good. Hays v. McDaniel, supra; Bush v. Martineau, 174 Ark. 214, 295 S. W. 9, supra.

The question then presented for our consideration is this: Is the purpose and effect of the act now before us a loan by the State o'f its credit to foster individual enterprises,, or is it one which has for its end the accomplishment of a purpose which will secure the State from a general threatened evil and promote the welfare of its citizens? In other words, is it for a public purpose?

These are the circumstances which called into existence the act in question, to which reference is made in its emergency clause. A great drouth prevailed in the State of Arkansas throughout the entire growing season of 1930 which caused in the greater part of the State, the entire failure of corn, the principal grain grown, and all other crops except cotton; while cotton is among the most drouth resistant of plants, many parts of the State made less than one-tenth of the normal crop, and except in a few favored localities, small in area, the cotton was not more than 50 per cent, of a normal yield. The total production of cotton for the State was less by approximately 500,000 bales than the year preceding, and was produced at a cost based on normal production and an average price of twenty cents. About the time of the maturity of the crop prices of cotton began rapidly to decline, and, when farmers began to harvest and market the crops, its value was not more than half the price per pound obtained for the crop of 1929. This gave the farmers, according to locality, from one-twentieth to one-fourth of a normal return for their expenditures in making and gathering the crop; and as it was made on borrowed money, the vast majority of farmers were unable to pay but a fraction of their debts, for the payment of which all they had stood pledged. Therefore, they faced another year without food for man or beast, heavily burdened with debt, and their securities exhausted. To add danger to this situation, twenty-one of our sister States had suffered severely from the effects of the drouth, though in none of them was the drouth so complete and prolonged as with us, and, to complete the burden of calamity, an economic depression obtained throughout the nation, more prononnced perhaps than ever before in history, and, largely because of this, together with the failure of crops, late in November, 1930, the largest bank in the State closed its doors. Immediately before, or soon thereafter, bank after bank throughout the State became insolvent and went into liquidation until more than one hundred banks, within a space of three months, had closed their doors, thus rendering unavailable a major part of the liquid capital of the State. The farmer had already mortgaged, for debts be could not pay, all he had, and could borrow no more. This was the plight of vast numbers of men and women when winter closed down. The larger landowners, the merchants, the banks to whom they were accustomed to go for help were themselves bankrupt, or their credit exhausted. What money the thrifty and careful had hoarded was locked behind the doors of insolvent banks and dreadful, sudden poverty gripped the State within all her borders. Relief from private sources at home was pitifully inadequate, and, but for aid from without, thousands of our people would have already starved. That everready agency of a benevolent people, the society of the Red Cross, came to the succor of our distress with the utmost speed and generosity. The extent of the aid needed and furnished is" almost beyond belief. In many of the counties and in some — naturally the most productive — a majority of the entire population was provided with means of subsistence, and in one, out of a population of some 22,000, it was necessary that more than 20,000 be given aid, and in practically every county except possibly two or three of the 75 counties, a considerable number .of the people have been maintained by the Red Cross.

Our accredited representatives in both houses of the National Congress, have entreated, in the most moving terms and with some measure of success, aid from the Government of the United States, but with all this the measure of relief is still insufficient, and the people, though saved from immediate starvation, are now undernourished, and with vital forces so depleted as to be unfit to perform hard physical labor and are subject to the inroads of disease.

With measures of relief still insufficient, the Legislature now in session, passed the acts which we have under consideration. • The plight of our citizens, most feebly and inadequately here described, was the motive moving our General Assembly — the relief of a people •wholly destitute and utterly helpless its aim and purpose.

It will be seen by a review of tbe cases heretofore cited that under constitutional inhibition like or analagous to ours, aid has been extended by the -State under varying circumstances, to ward off anticipated dangers, or relieve present calamities; and, even in those eases denying the authority of the State to lend its aid, the intimation is that statutory relief was denied not so much for lack of power, but rather that the power was improvidently exercised and without sufficient reason.

But, even under the view prevailing a half century ago of the limits of legislative power, when the case of State v. Osawkee Township, 14 Kan. supra, was written, we are justified, from the language there used in the opinion, that had the people of Kansas been suffering under so wide-spread an irremediable catastrophe as are now the citizens of- Arkansas, the decision would have been quite otherwise, for there it was said: “The relief of the poor, the care of those who are unable to care for themselves, is among the unquestioned objects of public duty. In obedience to the impulses of common humanity, it is everywhere so recognized. * * * 'Something more than poverty, in that sense of the term, is essential to charge the State with the duty of support. * * * It is not one who is in want merely, but one who, being in want, is unable to prevent or remove such want. There is the idea of helplessness as well as of destitution. "We speak of those whom society must aid, as the dependent classes, not simply because they do depend on society, bxit because they cannot do otherwise than thus depend. * * * It matters not through what the inability arises, whether from age, physical infirmity, or other misfortune; it is enough that it exists.”

The case of William Deering & Co. v. Peterson, 75 Minn. 118, 77 N. W. 568, is a case as we have already seen which held unconstitutional an act for the purchase and distribution of seed grain to farmers. But the conception of the State’s duty had broadened, and there it was said: “The cases, of Lowell v. City of Boston, 111 Mass. 454 [15 Am. Rep. 39]; and State v. Osawkee Tp., 14 Kan. 418 [19 Am. Rep. 99], are much in point. The latter case holds that no one can obtain such public aid unless he is actually a pauper, however imminent and immediate the danger of his becoming such. It may be that, if this question were before us, we would not go thus far, but would hold that, in the midst of such a great public calamity, a person who is within one degree of being a pauper, and in imminent and immediate danger of becoming such, may, for the purpose of preventing him from becoming such, be given aid by the State or municipality without violating the Constitution.”

Again we say, in none of the cases either upholding or denying the right to aid was there such general destitution and complete helplessness as exists now in this State and which moved the Legislature to action. Through the leaders of the State we have applied to the Eed Cross for aid, and our cry has been heard and heeded; through our representatives in Congress a measure of relief has been granted. While the private resources of the citizens of this State are exhausted, the credit of the State itself is not, and now to say, because of a narrow and scholastic interpretation of our Constitution that the 'State is unable itself to give what measure of relief it can is a comtention to which we cannot assent. We think the need is great, and the means for its relief but a use of the credit of the State for its own protection, as, protecting its citizens from famine and disease, it protects itself, and the aid extended is for a public purpose. The protection of its citizens from danger of whatever kind is the duty of the State and in this case the measure is but a valid exercise of the police power and the means employed finds ample justification in the maxim “The safety of the people is the highest law.”

The landowners in many sections of this State had become heavily burdened by taxes placed by themselves upon their lands for the construction of local improvements. It was feared that they would be unable to pay these taxes and therefore would lose their lands. These improvements were not made for the benefit of the citizens of the State as a whole, although they might indirectly inure to the general benefit, but because of the theory that the improvement would enhance the value of the land taxed. But, notwithstanding this, the State recognized that a considerable number in the State could not suffer without great hurt to the whole, and issued its bonds for their relief. The act of the Legislature authorizing the issuance of the bonds was sustained in the case of Bush v. Martineau, supra, on the theory that the State was not loaning its credit, but using it for a public purpose, in that the poverty of many would injure the prosperity of all. If it was a public duty to relieve a large number of our citizens from a burden of taxation improvidently assumed by themselves and for their own benefit, and the act sustained as the use of the State’s credit for a public purpose, then where a law is enacted for relief from certain starvation and probable disease, certainly it, too, must be but the use of the State’s credit for a public purpose. This we so hold as consonant with the impulses of common humanity and natural justice, our conclusions finding support in the authorities we have cited and reviewed. The doctrine announced in this case has no application except in cases where the calamity is certain and irremediable in its nature and general in its scope.

The last objection raised is that the act violates the provisions of section 11, article 16, because it diverts funds belonging to the Highway Department and levied for the construction of roads to the credit of the State Agricultural Credit Board. To this contention we do not agree, because there was no diversion. The section in question by the use of the word “diversion” evidently meant a permanent taking from one fund to the use of another and did not mean a temporary transfer of the funds as in this case. Funds are not to be diverted, but to be transferred temporarily with adequate means for their return provided.

Our conclusion, therefore, is that the act before us must be upheld as not in violation of 1 and 11 of article 16 of the Constitution, but as a use by the State of its credit for a public purpose and a valid exercise of its general police power. The decree of the trial court is correct, and it is therefore affirmed.

Hart, C. J.,

(dissenting). It seems to Judge Smith, Judge Mehaeey and me that this is a case which calls for the application of the old and often quoted maxim that hard cases make shipwreck of the symmetry of the law.

Article 16, § 1, of our Constitution provides that neither the State nor any city, county, town or other municipality shall ever loan its credit for any purpose whatever. In the construction of this provision, the court has held that it prohibits the making of loans for private purposes by the State, either directly or by delegation of power. Hayes v. McDaniel, 130 Ark. 52, 196 S. W. 934; and Bush v. Martineau, 174 Ark. 214, 295 S. W. 9.

In the case’first cited, the money was borrowed and the bonds issued to cover deficiencies in the General Revenue Fund, and a tax was authorized to be levied to create a sinking’ fund for the payment of the principal and interest of said loan. The primary object of all taxation is for the support of the government, and there would seem to be no room for doubt that a loan for supplying a deficiency in the taxes collected for the support of the State government was for a public purpose. The loan proposed to be secured and the bonds issued in the case last cited were for the payment of certain obligations incurred by road improvement districts and other governmental agencies created for the purpose of constructing improved roads, and for constructing new improved roads by the State itself. This was for a public purpose. Highways are constructed and maintained for public use by the State itself or by governmental agencies created by law for that purpose. The making and maintaining of public highways has always been held to be governmental, and it has been recognized as one of the most important duties of tlie State to provide and repair them. Therefore, public highways are for public uses, and there is no reason why the power of taxation by the State may not be exercised in their behalf.

It is elemental that taxes can only be levied for a public purpose. Indeed, there is no principle of constitutional law better settled than that taxes can not be levied for a private purpose. This brings us to a consideration of whether the present act is the loan of the credit of the State for a private purpose. Both the original act and the amendment thereto pledge the full faith and credit of the State for the payment of the bonds proposed to be issued. This shows that the State is lending its credit to whatever purpose for which the bonds are issued.

“If the State can not loan its credit, it can not borrow money on its own bonds, and then loan the money. It can not do indirectly what it can not do directly.” During v. Peterson, 75 Minn. 118, 77 N. W. 568.

It is true that the Governor, State Auditor, and Chairman of the Highway Commission are created as a board to carry out the provisions of the act. This does not make any difference. ‘ ‘ The right to tax depends upon the ultimate use, purpose, and object for which the fund is raised, and not on the nature or character of the person or corporation whose intermediate agency is to be used in applying it. A tax for a private purpose is unconstitutional, though it pass through the hands of public officers; and the people may be taxed for a public work, although it may be under the direction of an individual or private corporation.” Sharpless v. Mayor of Philadelphia, 21 Pa. St. 147; and Coates v. Campbell, 37 Minn. 498, 35 N. W. 366.

It is true that there is no hard and fast rule by which to determine which purposes are public and which private. People v. Salem, 20 Mich. 452. Judge Campbell in a concurring opinion at page 495 said: “It can not be claimed that there is no limit to the power of taxation, which can prevent the imposition of taxes for all purposes which the Legislature may choose. There are purposes the illegality of which would be so manifest that, although not mentioned in any Constitution, no one could hesitate to say the burden was not validly imposed to further them. The purposes for which taxes are imposed must be public purposes, and however close things may be to the dividing line, yet whenever any subject lies clearly on one side or the other, the courts must sustain or reject the tax accordingly, whether the purpose be laudable or not. ’ ’

This means that the power of taxation can not be resorted to in aid of any class in business, although it might promote general prosperity. The reason is that taxation is only lawful to enable the State to fulfill its public duties, and to tax the people to pay the expenses of public business.

By section 5 of the original act, the board created lyy the act was empowered to make loans from the fund provided for the purpose of purchasing capital stock in corporations organized for the purpose of financing farmers and stock-raisers for agricultural purposes. The section provides that the loans shall be evidenced by the note of the individuals, secured by an assignment of the stock so purchased, etc. The section further provides that preferences shall be given borrowers subscribing stock in finance corporations already organized rather than in corporations hereafter organized. _ The aggregate loans to counties are fixed not to exceed $50,000, and to individuals not to exceed $2,000. In the amended act it is provided that the loan to any one individual shall not exceed $5,000. Thus, it will be seen that the act b3r its terms does not propose to be a measure of poor relief, but only to lend to the needy to keep them from becoming objects of charity.

Once the agencies of taxation are operated to anticipate further want, no one can foretell what the ultimate result will be. It is the character of the use, and not the number of persons affected,'that makes a public or a private purpose. Otherwise, by insensible degrees, sanctioned by judicial approval, subsequent Legislatures, swayed by the misfortunes of the people of the State, might be carried step by step into the exercise of illegal powers of taxation without perceiving the progression.

The cardinal rule for the interpretation of statutes is the ascertainment of the meaning of the language used in the statute, and not what the lawmakers themselves meant. State v. Trulock, 109 Ark. 556, 160 S. W. 516.

As we have already seen, taxation is the means of raising revenue for public purposes. Section 3 of the amended act' expressly provides that the Credit Board is empowered to make loans to individuals for the purpose of purchasing capital stock in corporations proposed to be organized in the various counties to finance farmers and stock-raisers. The section further provides that preferences shall be given to borrowers subscribing stock in corporations already organized, and that no loan shall be made to any individual to exceed the sum of $5,000. Section 5 provides for incorporation of these credit corporations under act 250 of the Acts of 1927, regulating the organization of business corporations. The language used shows that a loan of money is contemplated from funds ultimately to be collected by taxation.

If, as we have already seen, the term “public purpose” has no relation to the urgency of the public need, but is merely a term of classification to denote the objects for which the State is under the duty to provide, we have an act to loan the public money, not to persons who are classified in law as poor persons for whom it is the duty of the State to provide, but to persons who may need as much as $5,000 to carry on their farming operations for a single year. If this be a public purpose and their farming operations end disastrously and the loan becomes too burdensome, then a subsequent Legislature might provide for the release of the borrowers from any further obligations on bonds issued under the provisions of the act, just as was done when the bonds issued by the various road improvement districts became too burdensome to bear. The Legislature alone may declare the public policy of the State with refereu.ee to taxation, and the courts have nothing’ to do with the wisdom and expediency of its acts, when done within constitutional limitations. It is the duty of the courts, however, to act when the Legislature attempts to levy taxes for uses that are usually classified in law as private purposes.

Owing- to the public importance of the question, we have deemed it proper to express our dissent in writing*, and to express the view that the Legislature might make an appropriation of the public money for those who may now he properly classed as poor persons, but not to loan its credit to individuals to prevent them from becoming* a charge on the public.

The views we have expressed render it unnecessary to consider the remaining* questions raised by the appeal.


source: Caselaw Access Project

author: Hart, C. J.,

license: Public Domain

text:
    White & Black Rivers Bridge Company v. Vaughan.
    Opinion delivered March 16, 1931.

      Cooper Thweatt and Chas. B. Thweatt, for appellant.

      8. Brundidge, for appellee.
   Hart, C. J.,

(after stating the facts). It is first insisted by counsel for the defendant that there is no basis for the allowance of the'$1,000 attorney’s fee, which must have entered into the verdict of the jury. The verdict of the jury was for $2,750 for the plaintiff on his complaint, and it was adjudged that this amount should bear interest at six per cent, from the 8th of June, which was fixed by the court as the date of the termination of the plaintiff’s employment. It is insisted by counsel for the defendant that the only basis of allowance of the $1,000 item was the testimony of Vaughan to the effect that it is claimed-“for value of my interest in Des Arc Bridge Company, taken over under promise to compensate me by attorney’s fees.” It is insisted that on the trial of the case Vaughan’s attorney called this a retainer fee, and that this is the only basis of sustaining it ás a part of the claim of Vaughan against the defendant. In making this contention, counsel for the defendant invoke the rule laid down in Windett v. Union Mutual Life Insurance Co., 144 U. S. 581, 12 S. Ct. 751, in which the court said that an agreement to pay a retainer for services which are never performed is not to be implied. In that case there was no express agreement to pay a retainer. We do not think that the question as to whether an implied agreement may be made to pay a retaining fee arises in this case. According to the testimony of Vaughan, when he sold his interest in the bridge at Des Arc, it was understood that the defendant was to employ him as its attorney, but no stated amount was agreed on between them.

As said by Judge Cooley, in Detroit v. Whittemore, 27 Mich. 281, the employment of counsel does not differ in its incidents, or in the rules which govern it, from the employment of an ag*ent in any other capacity or business. This rule has been recognized and applied in numerous cases in this court where it has been expressly recognized that, in the absence of an agreement for a stated amount, the attorney might recover upon a quantum meruit for services performed. The rule is so well settled that we need only cite the following cases: Sebastian State Bank v. Holland, 130 Ark. 59, 196 S. W. 482; Valley Oil Co. v. Ready, 131 Ark. 531, 199 S. W. 915; and Bayou Meto Drainage District v. Chapline, 143 Ark. 446, 220 S. W. 807.

In the application of this rule to the facts testified to by Vaughan, it will be seen that his contract for attorney’s fees was an express contract and not an implied agreement. He testified positively that they agreed to employ him as attorney in January, 1927, but that no stated amount was agreed upon. He continued in their employment for something over a year, and it was only when he presented an itemized account for his services that there was any dispute about the $1,000 item claimed by him or about any other item. It is true that his testimony is flatly contradicted by that of Bovay and Mills, but the jury were the judges of the credibility of the witnesses, and this court upon appeal cannot disturb the verdict when there is any evidence of a substantial character to support it.

Again it is insisted that the jury must have included the $450 item of office rent, stationery, stenographer, etc., when there was no substantial evidence to support it. Here again we are met with a conflict in the testimony which has been settled adversely to the contention of counsel for the defendant. If the testimony of Vaughan is to be believed, he was to furnish and did furnish an office, stenographer and stationery for the defendant during the time he was employed by it and such services were necessary. Therefore it cannot be said that there is no substantial evidence for this item. We do' not know what items the jury allowed and what items were disallowed by it. The verdict shows that they cut the total claim of Vaughan nearly $1,000. This was within the peculiar province of the jury. The testimony of Vaughan, being that of a substantive character, we cannot consider upon appeal what items might have been allowed or disallowed by the jury. We can only consider whether, the evidence as a whole would warrant the jury in returning its verdict in the amount stated above in favor of Vaughan.

In this connection, it may be stated that three attorneys testified that the fee claimed by Vaughan was a fair and reasonable one.

It is next insisted that the court erred in allowing Vaughan interest on the amount of the verdict from the 8th day of June, 1928, instead of the date of the judgment. In making this contention, reliance is placed upon the case of Meek v. Christian, 168 Ark. 313, 270 S. W. 614, where it was held that, in an action on a quanrtum meruit for the value of the engineer’s services in making a preliminary survey for an improvement district which never became effective, it was error to allow interest on the certificates of indebtedness issued to him from the time of their issuance, but that interest should only have been allowed from the date of the judgment. In that case the record did not show that the commissioners and Christian ever took up the matter of settling his compensation upon a quantum meruit basis. He claimed that he was entitled to two per cent, under his contract, and the court held that the contract was not valid and binding on the defendant because the contemplated improvement was never constructed. If he had made a demand for services upon a quantum meruit basis, the holding would have been different. The reason is that he should have been paid for whatever the value of his services was then; and, as the district refused to pay him, interest would have been allowed. In effect, there was no demand for the value of services upon a quantum meruit basis until the judgment in the case was rendered.

Here Vaughan only claimed judgment upon a quantum meruit basis. He did not claim any contract, nor any stated amount for legal services was made with him. In Prager v. New Jersey Fidelity & Plate Glass Ins. Co., 245 N. Y. 1, 156 N. E. 76, 52 A. L. R. 193, it was held that a claim for legal services resulting on quantum meruit draws interest to be computed from the date of the demand. It was further held that a demand for compensation for legal services on quantum meruit greatly in excess of the amount determined to be due does not prevent the adding of interest to the award. The opinion in that case is very comprehensive, and in a case note on page 197 of 52 A. L. R., it is stated as a general rule that interest on a claim for legal services is recoverable from the time it becomes dne and payable, and that this is the time when the demand for payment is made.

In Spalding v. Mason, 161 U. S. 375, 16 S. Ct. 592, Mr. Justice White, speaking for the court, said that interest is allowed both in law and in equity upon money due. Continuing, he quoted with approval from Curtis v. Innerarity, 6 How. 146, as follows:

“It is a dictate of natural justice, and the law of every civilized country, that a man is bound in equity, not only to perform his engagements, but also to repair all the damages that accrue naturally from their breech. *' * * Every one who contracts to pay money on a certain day knows that, if he fails to fulfill his contract, he must pay the established rate of interest as damages for his nonperformance. Hence it may correctly be said that such is the implied contract of the parties.”

Again in Miller v. Robertson, 266 U. S. 243, 45 S. Ct. 73, the court said that one who has had the use of money owing to another may justly be required to pay interest from the time it lawfully should have been paid.

The record in this case shows that interest was only allowed from the 8th day of June, 1928, and that Vaughan made the demand for the payment of his services, accompanied by an itemized list of his services and expenses, on the 31st day of May, 1928, and that payment of the same had been refused by the defendant. The demand was made upon a quantum meruit basis, and, under the principles of law in the cases above cited, the court properly allowed interest on his claim. See also Rogers v. Atkinson, 152 Ark. 167, 237 S. W. 679.

On the cross-complaint, the court told the jury that the burden of proof was upon the defendant because Bovay had transferred his interest in the claim ,to the bridge company. There was no error in this respect. It is true that in Norfleet v. Stewart, 180 Ark. 161, 20 S. W. (2d) 868, and cases cited, this court is committed to the rule that, in all transactions between attorney and client, the burden is on the attorney to show that no advantage was taken of the client and that he gave him all the information and advice about the matter that was necessary to enable the client to act understandingly. That principle of law has been recognized and applied by this court in various cases, but it has no application here for two reasons. In the first place, it is alleged in the cross-complaint that Bovay had transferred his interest in the subject-matter of the cross-complaint to the defendant bridge company. The cross-complaint was filed by the bridge company, and, in addition, it introduced Bovay as a witness on this point. Bovay testified in positive terms that he had transferred his interest by written transfer to the bridge company, and that any money recovered on the cross-complaint should be paid to the treasurer of that company. The transaction complained of was made between Bovay and Mills on the one hand and Vaughan and House on the other. Hence no relation of attorney and client existed between the bridge company and Vaughan. In the second place, it may be stated that the undisputed evidence in the case shows that Bovay knew as much or more about the transaction as Vaughan. No attempt was made by Vaughan to conceal anything about the transaction. Bovay acted with a full and complete understanding of the whole matter and in his own interest.

The case was fully and fairly submitted to the jury under the principles of law above declared. We find no reversible error in the record, and the judgment must be affirmed. .


author: Smith, J.

text:
    Kirchoff v. Wilcox.
    Opinion delivered March 16, 1931.

      A. G. Meehan and John W. Moncrief, for appellant.

      M. F. Elms, for appellee.
   Smith, J.

The evidence tending to support the judgment from which this appeal comes is to the following effect. Wilcox purchased a new automobile from W. J. Kirchoff, a dealer. He traded in an old car, for which he was allowed a credit of $580, and gave a note for the balance, payable $50.83 on the 14th of each month. The sales contract reserved the title to the new car until all the purchase price was paid. The sales contract provided that time was of the essence of the contract, and that, upon failure to pay promptly any monthly payment when due, all unpaid payments should, at the option of the seller,- become due, and the right was reserved, upon default of any payment, to take possession of the car and sell it, at either public or private sale, after advertisement of the sale and notice thereof to the purchaser. The sales contract and the note evidencing it were sold and assigned to Wm. Joerns. The first payment fell due April 14, and was made one day after it was due by a deposit of the amount thereof to the credit of Joerns at the bank with which he did business. Joerns had purchased other similar notes from Kirchoff, and these notes were deposited by Joerns at his bank for collection. The second payment was made after a. delay of several days.

Default was made in the third payment, but Wilcox promised to make the payment when demand therefor was made upon him. The contract of sale provided for “servicing” the car for a period of ninety days free of charge, and Wilcox advised that the car required adjustments, and he delivered the possession of it to Kirchoff and Joerns for that purpose. After obtaining possession of the car they advised Wilcox that possession would be retained until the car had been paid for.

On June 26,1930, Joerns and Kirchoff wrote Wilcox a letter reading as follows: “Since we have had your Studebaker Dictator sedan in our garage for ten days, held by Mr. Wm. Joerns, who holds the note and sales contract on same against you for settlement, we are asking you hereby to come in and take care of the settlement thereof. Mr. Joerns will offer the car for sale after the third of July if you do not settle for same by that time.”

Wilcox construed this letter as a waiver of his default provided he met the payment then past due by July 3. He testified that he was told that he might make the payment notwithstanding his default, and on July 3 he attempted to make the payment, but neither Joerns nor Kirchoff were in the city. He then went to Joerns’ bank and deposited to Joerns’ credit $50.83 and received a deposit slip from the cashier, and the amount thereof was credited by the cashier to Joerns’ account.

The cashier of the bank testified that it was the practice of the bank to receive similar deposits for dhe credit of Joerns, but he did not claim any authority for the bank to waive Joerns’ right to declare the entire debt due, as the sales contract authorized the holder thereof to do.

When Joerns was advised of the deposit, he denied the authority of the cashier to receive it, and drew a check to Wilcox’s order on the bank for the amount of the deposit and left the check at the bank, and he advised Wilcox of that action. Wilcox declined to accept the check to his order and demanded possession of the car, and when this was refused he brought suit for its value, alleging its wrongful conversion. In the meantime the car had been sold pursuant to the notice of sale, and, there being no other bidders, Joerns became the purchaser on his bid of $400.

The parties differ as to the meaning and purpose of the letter of June '26, set out above. The contention of Joerns and Kirchoff was and is that they intended by the letter to say that the entire balance due on the car had been declared due and that the car would be surrendered only on payment of the entire balance of purchase money.

The court took the view that the letter was ambiguous and might be construed as contended by Joerns and Kirchoff, but was also susceptible of the construction placed upon it by Wilcox, and the meaning of the letter was submitted to the jury as a question of fact.

The jury was told that if Wilcox had breached his contract he could not recover, but that Wilcox contended that, while he did not make the payment promptly when due, he had an agreement with Joerns for an extension of time, pursuant to which agreement he had deposited the amount of the payment then due to the credit of Joerns at the bank with which Joerns did business.

We think no error'was committed in submitting this question to the jury, and that it was properly submitted. The letter is ambiguous, especially when read in connection with Wilcox’s testimony concerning it. There is no question but that Joerns had the right to declare the entire debt due and to demand full payment thereof, although the possession of the car had been obtained upon the representation that the “service” which it required would be rendered. Neither is there any question but that Joerns might have waived this right, if he, in fact, represented that he would do so, upon condition that the payment were made by July 3, and pursuant to that agreement the payment was made, the right to require full payment was waived.' The verdict of the jury is conclusive of this question of fact.

The jury returned a verdict in Wilcox’s favor for $300, and judgment was rendered on August 6, 1930, for that amount, and we are asked to reverse it for the reason that it is contrary to the undisputed evidence. But, for the reasons stated, we do not concur in that view.

After the rendition of the judgment Wilcox went to the bank on August 9,1930, and obtained from the cashier the check to his order above referred .to, which had been kept at the bank, and cashed it, and thereafter entered upon the margin of the judgment record a receipt therefor as a credit upon the judgment in his favor.

On October 1, 1930, thereafter a supplemental motion for a new trial was filed, in which it was recited that Wilcox had cashed the check after the rendition of the judgment in his favor, and it is now insisted that this action on Wilcox’s part relates back to the date of the check and confirms his default and the right of Joerns to the possession of the car.

We do not think so. The rights of the parties had been adjudged, and that judgment was final and had not been superseded. Wilcox may not have had the right to proceed in this manner to collect his judgment, but that is not the controlling question. Wilcox’s unauthorized appropriation of the proceeds of the check to the partial satisfaction of the judgment did not affect the validity of the judgment. The judgment was a valid and final adjudication of the rights of the parties at the time the credit was indorsed on the margin of the judgment record, and it remained so until set aside by the trial court or reversed by us, and, as we have said, its enforcement had not been superseded.

An instruction was given on the court’s own motion which reads as follows: “If you find for the plaintiff your verdict should be: ‘We, the jury, find for the plaintiff,’ and assess whatever damages you think he is entitled to under the proof.” No other instructions on the measure of damages was asked or given, and only a general objection was made to the instruction as given.

It is very earnestly insisted that this instruction was erroneous and requires the reversal of the judgment, and the case of Kansas City Southern Railway Co. v. Biggs, 181 Ark. 818, 28 S. W. (2d) 68, is cited in support of that contention. The judgment was reversed in the case just cited for giving a similar instruction, which, like the one in the instant case, furnished no correct guide to the jury as to the measure of damages, but left the jury to its own contrivance. The instruction set out above is open to that objection and is erroneous for that reason, but, as we have said, no other instruction was asked or given on this subject, and only a general objection was made to it. The instruction does not contain any erroneous declaration of law and does not announce an improper rule by which to measure the damages. Its defect is that it does not furnish a correct guide to the jury as to the measure of damages, and in this respect is similar to the one which led us to reverse the judgment in the Biggs case, supra.

An examination of the record and of the briefs of opposing counsel in the Biggs case discloses the fact that a specific objection to the instruction was urged, for the reversal of the judgment, that it was open to the objection stated, and it was not argued that no such objection had been made in the court below. The instruction was defended upon the ground that it was a correct declaration of the law except that it was more favorable to appellant than the law required it should be.

Here our attention is called to the fact that no specific objection was made to the instruction in the court below, and such is the state of the record.

The practice in such cases was defined by Chief Justice Cockrill in the opinion on rehearing in the case of Fordyce v. Jackson, 56 Ark. 564, 20 S. W. 528, and it has never been our intention to depart from the rule there announced. On the contrary, we have consistently followed the rule there stated in all cases where our attention has been called to the absence of a specific objection to an instruction defective in form.

In the opinion on rehearing in the Jackson case, supra, after the judgment had been affirmed, the attention of the court was called to an instruction which had been given in the trial of that case which was defective in that it left to the jury to determine what were the elements of recovery, whereas that was a question of law for the court, and not a question of fact for the jury. In overruling the objection to the instruction, which the court did not question was well taken, the learned chief justice said: “It is not contended that the charge contains a misstatement of the law on the subject, but that it was the court’s duty to go further than it did and make the charge more specific. It was the defendant’s right to have the rule for the ascertainment of damages specifically defined by the court, so that the jury would have an accurate guide to conduct them to a proper award. But the defendant should have requested a more specific charge, if it conceived that the jury would be misled by the general language of the charge. It is the settled practice in this State that a party cannot avail himself of an omission which he made no effort to have supplied in the trial court. Our practice is in accord with the following statement from the text of Judge Thompson’s work on Charging the Jury, § 82: ‘If the charge is not a clear misdirection — if there is a mere tendency in it to mislead the jury, the defendant must ask additional explanatory instructions, in order to avail himself of its defectiveness in a court of error; but where it necessarily * * # misleads the jury, it is a- fatal error. Nor will a judgment be reversed, because the charge is so general in its terms as to leave it doubtful whether the jury understood its application to the evidence. Here, as in the preceding case, the remedy of the party is to ask additional instructions before the jury retire. So where the judge has laid down a proposition, which, in the abstract is clearly right, but there is something peculiar in the situation of the parties, or their relations to each other, which would require a modification of it, and which had escaped the attention of the judge, it is the duty of counsel to call his attention thereto’.” See also, Hines v. Rice, 142 Ark. 170, 218 S. W. 851; Kirchman v. Tuffli Bros. P. I. & C. Co., 92 Ark. 117, 122 S. W. 239; Western Coal & Mining Co. v. Buchanan, 82 Ark. 503, 102 S. W. 694; St. L. I. M. & S. Ry. Co. v. Jackson, 78 Ark. 105, 8 S. W. 746; Fox v. Spears, 78 Ark. 76, 93 S. W. 560; McGee v. Smitherman, 69 Ark. 637, 65 S. W. 461; White v. McCracken, 60 Ark. 619, 31 S. W. 882.

Upon a consideration of the whole case, we find no reversible error in the record, and the judgment must be affirmed. It is so ordered.

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


author: Humphreys, J.

text:
    Johnston v. Lindsey.
    Opinion delivered March 16, 1931.

      Brewer $ Cracruft, for appellant.

      A. M. Coates, for appellee.
   Humphreys, J.

This snit was brought in the chancery court of Phillips County by appellants against appellees to recover $1,805.67, the value of materials they furnished to construct a building upon lots 34, 35 and 36 in Richmond Hill Addition to the city of West Helena in said county.

The suit is based upon a builders’ bond executed by appellees to the Helena Building & Loan Association and conditioned that T. E. Lindsey, the owner of the lots, Avould construct a building thereon in accordance with plans filed by him Avith said association at a cost of not less than $3,500 and Avould “fully pay off and discharge all indebtedness incurred in the said construction to contractors, subcontractors, mechanics, laborers, materialmen, and any and all others who might in the absence of such payment obtain a lien on the real estate or building. ’ ’

Appellees B. E. Leighton and J. C. Frazier, sureties on the bond, demurred to the complaint upon the ground that materialmen are not beneficiaries under the terms of the bond, and,, for that reason, were without authority or right to maintain a suit upon the bond against them as sureties.

The demurrer to the complaint was sustained by the court, and the appellants refused to plead further, whereupon the complaint was dismissed for want of equity, from Avhich is this appeal.

The only question for determination is whether the bond in question was made for the sole benefit of the Helena Building & Loan Association or for the benefit of the materialmen as well. The bond in form and substance is the kind of common-law bond usually executed by contractors and bondsmen to protect the owner and builder against liens of laborers and materialmen. This court, in dealing with the liability of bondsmen on such bonds, has permitted a direct recovery from them by laborers and materialmen as being beneficiaries in the late cases of Mansfield Lumber Co. v. National Surety Co., 176 Ark. 1035, 5 S. W. (2d) 294; Leslie Lumber & Supply Co. v. Lawrence, 178 Ark. 573, 11 S. W. (2d) 458; Ætna Casualty & Surety Co. v. Big Rock Stone & Material Co., 180 Ark. 1, 20 S. W. (2d) 180. Appellees argue that the cases referred to deal with the liability of sureties on bonds of contractors and have no application to the instant case because the Helena Building & Loan Association was the obligee in the bond in question, whereas the owner of the property was the obligee in each of the cases referred to. The cases referred to did not turn upon the fact that the owner happened to be the only obligee specifically named in the bond. They turned upon the meaning of the language used in formulating the conditions in the bonds. The court interpreted the language used in formulating the conditions in the bonds as broad enough to include laborers and materialmen as beneficiaries therein. By reference to the bonds in the cases referred to it will be seen that the language used in formulating the conditions in the several bonds is, in substance, the same as that used in formulating the conditions in the bond now before us for construction. The construction, therefore, given the language in the cases referred to is applicable to the bond in question.

It follows that the court erred in sustaining the demurrer to the complaint and dismissing same. On account of this error the judgment is reversed, and the cause is remanded with directions to overrule the demurrer to the complaint and for further proceedings not inconsistent with this opinion.


author: Mehaffy, J.

text:
    Hopper v. Chandler.
    Opinion delivered March 16, 1931.

      E. L. Carter, T. Nathan Nall, for appellant.

      Isaac McClellan, for appellee.
   Mehaffy, J.

The appellant, D. L. Hopper, began this suit in the Grant Chancery Court alleging that he was the owner of the north half of the northwest quarter of section 17, township 3 south, range 11 west, in Grant County.

On the 18th day of December, 1924, a decree was entered in the case of Road Improvement District No. 4 of Jefferson County v. Certain Delinquent Lands, and said land was condemned to be sold for the delinquent road improvement taxes which had been assessed against it.

On the 13th day of January, 1925, the above described land was sold to plaintiff by the commissioner appointed to make the sale, and a commissioner ’s deed was executed to appellant by the commissioner and is recorded in Grant County.

The appellee, E. S. Chandler, obtained from the State Land Commissioner, on December 17,1927, a donation certificate to said land, and thereafter entered into and continues in possession.

The appellant alleged that appellee had out $100 worth of timber; that he was insolvent, and a judgment against him for damages would be worthless. Appellant also alleged that the forfeiture and sale to the State was void for several reasons set forth in the complaint.

Appellee filed a demurrer to the complaint and also a motion to transfer the case to the law court, and the case was thereafter transferred. The demurrer was overruled, and the appellee filed answer and cross-complaint. The parties afterwards presented the demurrer to the court, which the court sustained, holding that the title was in the State at the time of the sale by the commissioner to appellant, the lands having been forfeited to the State to pay taxes for 1920.

It is the contention of the appellant that the sale to the State of Arkansas by the collector of Grant County for the delinquent taxes of 1920, on the 2d Monday in June, 1921, was void and conveyed no title to the State. The appellant claimed title under a deed from the commissioner appointed by the chancery court, on the 13th day of January, 1925, the land having been sold in a proceeding in said court, in which the Road Improvement District No. 4 was plaintiff and the Delinquent Lands were defendants.

The appellee obtained his donation certificate from the State Land Office based on a forfeiture and certification to the State December 17, 1927.

Appellant concedes that, if the forfeiture and sale to the State was valid, then the State had the superior title when the appellant acquired his title. In other words, it is conceded that, if the State had title when the land was ordered sold by the decree of the chancery court, the appellant would have no right to maintain the suit, because the forfeiture to the State necessarily suspends the enforcement of the special tax lien as long as the title remains in the State.

This court has said: “Of course the forfeiture to the State of lands for general taxes necessarily suspends the enforcement of the special tax lien as long as the title remains in the State, but, as the lien under the terms of the statute is not extinguished and continues until the special taxes are paid, the same can be enforced when the land goes back into private ownership. This construction of the statute gives full recognition to the State’s paramount right of taxation and in nowise detracts from the dignity and power of the State as against subordinate governmental agencies.” Turley v. St. Francis County Road Imp. Dist., 171 Ark. 939, 287 S. W. 196; Wyatt v. Beard, 179 Ark. 305, 15 S. W. (2d) 990.

It is contended, however, by appellant that these cases have no application because sales referred to in them were valid sales, and the sale involved in this case by the State is void. The appellant, however, in his statement of facts, says that this land was sold to the State of Arkansas by the collector of Grant County on the second Monday in June, 1921, for the delinquent State and county taxes for the year 1920, and was certified to the State Land Office in 1923 as State land. It will be observed that the contention is that the sale is void, and there is no contention that the taxes were not due. The taxes therefore were due the State, and the State had a lien on the land for same, and no one could acquire the land free from the lien of the State for taxes. It was after the lands had been certified that appellant purchased the land under a decree of the chancery court, and he does not claim that he had ever paid the taxes, and he had no interest in the land according to his own pleadings at the time of the forfeiture and sale.

“No person can question the validity of a tax sale unless he can first show that he, or those under whom he claims, had some title to the property at the time of the sale.” '26 E. C. L. 446.

“It is conceded that the forfeiture of the land for nonpayment of taxes upon which the claim of the State was based was invalid. At the time of the sale the plaintiff, Mrs. Henry, had title to this land, and it is admitted by the defendant that she made no written contract in reference to this land.” Henry v. Knod, 74 Ark. 390, 85 S. W. 1130.

Knod claimed to have bought the land under an oral contract. The court found that the sale to the State was invalid, but that Knod’s purchase was against the statute of frauds and void, and he therefore had no right to redeem.

‘ ‘ In order to question the validity of the tax title, the plaintiff must show that those under whom it holds were the owners of the land or had some interest in it at the time it was sold for taxes. ” Osceola Land Co. v. Chicago Mill & Lbr. Co., 84 Ark. 1, 103 S. W. 609.

At the time of the sale for taxes the appellant had no interest and claimed no interest, and, so far as the record shows, there were no assessments due to Improvement District No. 4, at the time this land was certified to the State. It therefore appears that at the time of the forfeiture and sale for taxes neither the appellant nor the improvement district had any claim against this land, and, as the title was apparently in the State at the time of the sale under the decree of the chancery court, the chancery sale was void, and the court below was correct in so holding, and the decree must therefore be affirmed, and it is so ordered.


author: McHaney, J.

text:
    Belzung v. State.
    Opinion delivered March 16, 1931.

      jRoy Cean, for appellant.

      Hal L. Nonuood, Attorney G-eneral, and John Ii. Caldwell, Assistant, for appellee.
   McHaney, J.

Appellant, a dairyman, was convicted on the first count of an information charging a violation of § 17 of the rules and regulations of the district board of health of the Fort Smith District of Sebastian County, adopted June 20, 1929, in that he had sold milk in said city without having paid the fees provided by said section, and fined $1. He assigns six reasons for a reversal of the judgment against him:

1. That special act 629, Acts 1919, p. 870, is unconstitutional and void. This is the act under which said district board of health is operating. It is entitled “An act to consolidate the health and sanitary offices in the Fort Smith District of Sebastian County, to abolish existing offices, to create a district board of health therein, and give it jurisdiction to select certain officers and to superintend their duties, to provide for the expenses incurred in such service, and for other purposes.” We had this same act under consideration in Fort Smith v. Roberts, 177 Ark. 821, 9 S. W. (2d) 75, where its constitutionality was attacked on similar grounds, and the act was sustained as a valid exercise of the police power of the State, and not an unlawful delegation of legislative power. The attack now made upon the act by appellant goes further, alleges its unconstitutionality upon other grounds, all of which we have considered and find them without merit. The act already having been sustained in the case above cited, we do not deem it necessary to discuss the grounds alleged separately.

2. That the rides of the district hoard conflict with the regulations of the State Board of Health as applied to dairies. He sets out eight rules of the district board that are claimed to be in conflict with those of the State Board, because the regulations of the State Board make no such requirements. Conceding them to be in conflict, which they are not, but only supplementary, (power so to do being conferred in § 2 of said act) appellant is in no position to complain. He was charged with the violation of two rules in two separate counts, § 17 and § 3, the latter for selling milk in the city without a permit from the health officer. He was found guilty of having violated § 17 only. Apparently appellant has violated only one rule of the district 'board, that of refusing to pay the small inspection fee of $10 per year, plus 50 cents per head per year for each cow more than ten. Having complied with all the other rules, it is difficult to see what right he has to complain of them, since they do not affect him. Section 17 is not in conflict with the regulations of the State Board, as it does not undertake to fix the fees for this inspection service.

3. That the district health board’s rides are in conflict with said act 629. But not so. Section 2 of the act gives the district board power “to promulgate such rules and regulations not in conflict with rules and regulations of the State Board of Health as ma}'- be deemed necessary,” etc. We think it was in the power of the board to promulgate § 17, and that such rule is not contrary to the act or in conflict with the rules of the State Board.

4. That said act 629 confers no authority to levy the inspection, fees or to fix a penalty for violating the rules. We have already held that the district board was empowered to enact § 17, as stated above. As to the power of said board to provide a penalty, appellant is concluded by the cases of Davis v. State, 126 Ark. 260, 190 S. W. 436, and Cazort v. State, 130 Ark. 453, 198 S. W. 103.

5. That the district board’s rules are discriminatory and unreasonable. We have already held that § 17 is a reasonable rule, within the power of the board to enaotj and that, since this is the only rule with which appellant is concerned, he is in no position to complain of others. The rules apply to all dairymen alike who sell milk in the Fort Smith district.

6. It is finally said that the rules and regulations of the district board repeal ordinance 1468 of the city of Fort Smith. We think it unnecessary to decide this question, as it has nothing to do with appellant’s guilt or innocence' of violating § 17 of the rules and regulations of the district board of health.

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


author: Butler, J.

text:
    Casteel v. Yantis-Harper Tire Company.
    Opinion delivered March 16, 1931.

      Simmons <& Lister, for appellant.

      Daily & Woods, for appellee.
   Butler, J.

In the trial of this cause in the court below a verdict was returned under the direction of the court against appellant, the plaintiff, in favor of the defendants, Yantis-Harper Tire Company, and, when that action was taken, a nonsuit was entered against their co-defendant, Robert Tolliver. We are therefore required by settled rules of practice to view the testimony on plaintiff’s behalf, with the inferences properly dedueible therefrom, in the light most favorable to her in the determination of the correctness of the court’s ruling in directing a verdict in favor of the tire compány. The suit was against S. B. Harper and Marshall Yantis, partners in business, operating under the firm name of Yantis-Harper Tire Company, and Robert Tolliver, a colored employee of that firm.

The testimony on plaintiff’s behalf is to- the effect that about 7 p. m. on Tuesday, November 12,1929, she was standing in the safety zone at 11th Street and Garrison Avenue in the city of Fort Smith waiting for a street car. Several other persons were there also, among these being Walter Hager, who became a witness in plaintiff’s behalf. While standing in this safety zone, through which automobiles were not supposed to drive, a car ran around another car and, traveling at a speed of from 25 to 30 miles an hour, drove through the safety zone, striking plaintiff and very seriously injuring her.

The suit was brought upon the theory that the ear inflicting the injury was driven by the defendant, Tolliver, and that he was at the time engaged in his employment as the employee of his co-defendant, the YantisHarper Tire Company.

Tolliver denied striking plaintiff. In addition to this defense, Yantis-Harper Tire Company defended upon the ground that Tolliver was not in their service at the time of the injury, even though he, in fact, caused it. The evidence was to the effect that Tolliver had been employed by Yantis-Harper for several years as the driver of a service truck, his business being to deliver gasoline and tires and other commodities and to answer service calls over the city.

Hager testified that the car sped on after striking the plaintiff and went towards the place of business of Yantis-Harper, and that he followed on to that place, and that Tolliver came out on the walk and asked: “What’s the matter; did I hit some one down there?” and that Tolliver made the further statement that he had been away to get or to deliver a package. This witness identified the car as belonging to the defendants, Yantis-Harper. The place of business of Yantis-Harper was only three-fourths of a block away from the place of the collision.

The testimony concerning the remarks of Tolliver was objected to as being* incompetent as against YantisHarper. The car driven by Tolliver was of the kind used by him in the discharge of his regular duties.

It is not questioned that the testimony concerning the statement made by Tolliver after the collision was admissible against him, but it is insisted that it was not admissible and should not be considered in connection with the liability of Yantis-Harper, for the reason that it was not a part of the res gestae, and that it was improper to' prove any act or declaration of Tolliver as tending to show his agency or employment.

The rule is settled that the declarations of an employee as to who was responsible for an injury, made after its occurrence, are incompetent as against his employer, for the reason that his employment does not carry with it authority to make declarations or admissions at a subsequent time as to the manner in which he had performed his employment. River, R. & H. Const. Co. v. Goodwin, 105 Ark. 247, 151 S. W. 267; Stecher Cooperage Works v. Steadman, 78 Ark. 381, 94 S. W. 41; Caldwell v. Nichol, 97 Ark. 420, 134 S. W. 622; Pfeifer Stone Co. v. Shirley, 125 Ark. 186, 187 S. W. 930; Williams v. Elrod, 128 Ark. 207, 193 S. W. 514; Webb v. K. C. Sou. Ry. Co., 137 Ark. 107, 208 S. W. 301; Frolich v. Hicks, 143 Ark. 565, 222 S. W. 373; St. L. S. F. R. Co. v. Vernon, 162 Ark. 226, 258 S. W. 126. But that rule does not render this testimony incompetent. It is to be remembered that one of the issues in the case was the question of fact whether Tolliver was the driver of the car. He denied that he was. The testimony was therefore competent to identify him, and no error was committed in admitting it, not only as against Tolliver, but as against his codefendants and employers as well.

We think the testimony, when viewed in the light most favorable to plaintiff, as it must be, is sufficient to support a finding* that plaintiff was struck by a car driven by Tolliver and owned by Yantis-Harper, and that in his regular employment he drove such a car. This is not seriously questioned. It is very earnestly insisted, however, that the undisputed testimony shows that Tolliver was not acting within the scope of his employment at the time of the injury, indeed, that he was not employed at all at that time.

The law on this subject has been so frequently considered by us that it may be treated as settled. The authorities from our own and other jurisdictions are reviewed in the recent cases of Hunter v. First State Bank of Morrilton, 181 Ark. 907, 28 S. W. (2d) 712, and Andrews v. Bloom, 181 Ark. 1061, 29 S. W. (2d) 284; and Mullins v. Ritchie Grocery Co., ante p. 218, and no useful purpose would be served by again reviewing* them.

It was said in the Ritchie case that “the doctrine is settled in this State that, if the automobile causing the accident belongs to the defendant, and is being operated at the time of the accident by one of the regular employees of the defendant, there is a reasonable inference that at such time he was acting within the scope of his employment and in the furtherance of his master’s business. The inference or presumption of fact, however, may be rebutted or overcome by evidence adduced by the defendant during the trial. Where the evidence on this point is contradictory, the question is one for the jury. Where the facts are undisputed, and uncontradicted, it becomes a question for the court.” Citing cases.

It is argued, however, that any inference or presumption which may have arisen from the plaintiff’s testimony was overcome by the testimony on the part of the defendants, and that, as defendants’ testimony was to the effect that Tolliver was not acting within the scope of his employment, nor was he employed at all at the time of the collision, there was no presumption to the contrary. This is true, but it does not follow, for that reason, that no case was made for the jury.

The record before us presents the question, not as a presumption of law, but as an inference, to be deduced from all the testimony, whether Tolliver was, in fact, employed and was acting within the scope of his employment at the time he collided with plaintiff, if he, in fact, did so.

The conditions under which the trial court may direct a verdict have been defined in many cases.

In the recent case of Mutual Life Ins. Co. of N. Y. v. Raymond, 176 Ark. 879, 4 S. W. (2d) 536, it was said: “For, if the facts are such that men of reasonable intelligence may honestly draw therefrom different conclusions on the question in dispute, then they were properly submitted to the jury for determination.”

The testimony on the part of the defendants was to the effect that, although Tolliver had been, employed by Yantis-Harper for several years, he was paid by the day, and was only paid when he worked, and that he was not employed or paid on the day of the injury. ■ Tolliver testified that he was not employed on this day, and the cashier and timekeeper of Yantis-Harper gave testimony to the same effect, as did other employees. Their testimony was to the effect that shortly before the collision Tolliver was loaned the use of one of Yantis-Harper’s cars for the sole purpose of permitting Tolliver to go to his own home to get a raincoat which he wanted for his own use because it was raining, and that the use of the car had no relation whatever to any service performed for Yantis-Harper or in connection with their business by Tolliver, and had no relation to any duty on Tolliver’s part as an employee, and that, indeed, he was not an employee at all on that day.

There are contradictions in the testimony of these witnesses, which prevent us from so holding, as a matter of law, and we are unable also to say, as a matter of law, that no 'bias on their part was shown.

In the case of Skillern v. Baker, 82 Ark. 86, 100 S. W. 764, 118 Am. St. Rep. 52, 12 Ann. Cas. 243, Mr. Justice Biddick said: “It may be said to be the general rule that where an unimpeached witness testifies distinctly and positively to a fact and is not contradicted, and there is no circumstance shown from which an inference against the fact testified to by the witness can be drawn, the fact may be taken as established, and a verdict directed based as on such evidence. But this rule is subject to many exceptions, and where the witness is interested in the result of the suit, or facts are shown that might bias his testimony, or from which an inference may be drawn unfavorable to his testimony or against the fact testified to by him, then the case should go to the jury.”

Upon a consideration of the whole case, we are unable to say, as a matter of law, that the inference might not fairly and reasonably be deduced that Tolliver drove the car which ran over plaintiff or that he was not employed nor acting within the scope of his employment at that time.

The judgment of the court must therefore be reversed, and it is so ordered.


author: Per Curiam.

text:
    Austin v. State.
    Opinion delivered March 16, 1931.

      M. L. Reinberger, for appellant.

      Hal L. Nonvood, Attorney General, for appellee.
   Per Curiam.

There appears in the record what purports to be an agreed bill of exceptions which contains a notation signed 'by the prosecuting attorney as follows: “0. K. as an abstract of the testimony in the above case so far as I am able to remember.” This cannot be considered upon appeal for two reasons: In the first place, it was not filed with the clerk within the time allowed by the court for filing a bill of exceptions. In the second place, it is still necessary that the trial judge sign the bill of exceptions in a felony case before it can be admitted as a part of the record upon appeal. Ward v. State, 135 Ark. 259. The trial judge did not sign what purports to be the bill of exceptions, and our review is limited to errors apparent on the face of the record. Both the indictment, which is for grand larceny, and the judgment and sentence, are in proper form. Therefore the judgment will be affirmed.