author: ANDREW JACKSON HIGGINS, Special Judge.

text:
    Lillian M. SOMMERS, Plaintiff-Respondent, v. Victor HERGENRETER et al., Defendants, and Christopher Harris, Receiver-Respondent, and C. L. Paxson et al., Claimants-Appellants.
    No. KCD 26981.
    Missouri Court of Appeals, Kansas City District.
    May 5, 1975.

      Wendell E. Koerner, Jr., Brown, Douglas & Brown, St. Joseph, for claimants-appellants.
    Don B. Sommers, Sommers & Holloran, St. Louis, for plaintiff-respondent.
    James H. Counts, Morton, Reed & Counts, St. Joseph, for receiver-respondent.
    Before SWOFFORD, P. J., and WEL-BORN and HIGGINS, Special Judges.
   ANDREW JACKSON HIGGINS, Special Judge.

Action in equity under Chapter 351, RSMo 1969, V.A.M.S., for liquidation of corporation in which proof of claim of Paxson & Richel was denied without a hearing on its merits.

In Count I of her petition, plaintiff Lillian M. Sommers alleged: that she was a judgment creditor of individual defendants Hergenreter and Newhart in an amount in excess of $124,000; that such defendants were stockholders and statutory trustees of defendant N-H-N Grain Corporation a/k/a N-H-N Farm Center, Inc., which had forfeited its charter; that individual defendants had sold or intended to sell the assets of the corporation and, after satisfaction of creditors, there would be an excess of funds in their hands of which they would be beneficiaries and which would be subject to attachment in satisfaction of plaintiff’s judgment. Plaintiff prayed for an accounting of corporate assets, a temporary order restraining individual defendants from dissipating such assets, an attachment of such assets, and an order for payment of excess funds to her in satisfaction of her judgment.

In Count II plaintiff alleged she was a minority stockholder of defendant corporation and that individual defendants were in the process of disposing of corporate assets without authority and converting funds from liquidation of such assets to their own use. Plaintiff prayed for appointment of a receiver and for an order for individual defendants to account for corporate assets to such receiver.

On December 9, 1971, the court, after hearing, found that the appointment of a receiver was necessary; that individual defendants should be restrained from transferring any assets of defendant corporation, and ordered to place all assets and records of the corporation with a receiver.

On December 15, 1971, Christopher Harris was appointed receiver. He was subsequently authorized to sell assets of defendant corporation, and such sale was effected by the receiver and confirmed by the court.

On October 19, 1972, receiver requested the court to enter an order requiring creditors of defendant corporation to file proof of claims in accordance with Section 351.-500, RSMo 1969, V.A.M.S. Such request was sustained, and the court ordered that all creditors file verified proof of their claims with the Clerk of the Circuit Court of Andrew County, with copies to receiver, on or before February 28, 1973; that receiver gave notice of the order by regular mail to all creditors within his knowledge; that all creditors who fail to file such proof on or before February 28, 1973, be barred from filing any claims against defendant corporation’s assets, and that notice of the order be given also by publication in a proper newspaper of general circulation.

On October 23, 1972, the required notice was mailed on behalf of receiver by his attorney. Among the parties so notified was “C. L. Paxson, Paxson & Richel, American Home and Life Building, 400 Kansas Avenue, Topeka, Kansas 66603.” Attached to the notice was a copy of the court’s order requiring the filing of proofs of claims. The receiver also advised that he would call all such proofs of claims for hearing on March 21, 1973. The notice was duly received by Paxson & Richel.

On February 1, 1973, Don Paxson, as a partner and on behalf of Paxson & Richel, Certified Public Accountants, filed on his oath “Proof of Claim in Receivership,” alleging defendant corporation was indebted to his firm for accounting services in sum $3,648.85.

On March 21, 1973, the court, of its own motion, continued the hearing on proofs of claims from March 21, 1973, to April 24, 1973.

On March 26, 1973, a notice was mailed on behalf of receiver by his attorney to all recipients of his notice of October 23, 1972. Attached to the notice was a copy of the court’s “Order Continuing Hearing on Claims.” The receiver again advised that he would call previously filed proofs of claims for hearing on April 24, 1973.

On April 24, 1973, plaintiff appeared by her attorney, receiver appeared in person and by attorney, and Mr. and Mrs. Hin-derks appeared in person on behalf of claimant Flury-Hinderks Insurance Agency, Inc.

Evidence was heard on the claim of Flury-Hinderks after which the following happened:

“MR. COUNTS [attorney for receiver] : * * * There is the further * * * claim of Paxson and Richel * * * filed pursuant to this Court’s order.
“MR. SOMMERS [attorney for plaintiff] : I would object to consideration of that particular claim * * * because there is nothing to support it here.
“THE COURT: Who are Paxson and Richel ?
“MR. COUNTS: Paxson and Richel are a co-partnership, an accounting firm in Topeka, Kansas, according to the information contained in the claim filed pursuant to this Court’s order. The total amount of the claim is $3,648.85. No proof has been offered on this claim by any person, and, on behalf of the Receiver * * * we are objecting to this claim and request that same be denied because of failure of any evidence whatsoever to prove either the merits or the validity of said claim.
“THE COURT: * * * were these people notified ?
“MR. COUNTS: They were, Your Honor, by me personally. * * *
“THE COURT: That concludes the matter of the Paxson-Richel claim * * *. Let the record show that the claim of Don Paxson, a partner in the certified public accounting firm of Paxson and Richel, filed in this case in the amount of $3,648.85, is disallowed by the Court for the reason that they have been notified as to two dates when proceedings would be taken up in this case, and the Court has not heard from anyone on their behalf.”

On June 1, 1973, a notice which was filed June 4, 1973, was mailed on behalf of receiver by his attorney to all recipients of his prior notices which advised that on June 16, 1973, receiver would present to the court his final accounting as receiver, request for approval and discharge, and petition for receiver’s and attorneys’ fees.

Prior to June 15, 1973, plaintiff caused summons to garnishee to be served on the receiver attaching and levying upon all debts owed by him to individual defendants Hergenreter and Newhart.

On June 15, 1973, receiver appeared in person and by attorney, and Sam Sommers appeared as an interested party on behalf of his mother, the plaintiff, and his brother, her attorney. Counsel for receiver advised the court that he had heard from three persons in connection with proceedings to be held, one of whom was John Newhart who had originally appeared in his own right and as attorney for the corporate defendant. “Mr. Newhart inquired of me why at the last hearing * * * the claim of Paxson and Richel * * * had not been allowed. I explained no proof on that claim had been offered and therefore the claim was denied. Mr. New-hart expressed his dissatisfaction as to that portion of the prior proceeding and stated he would so object. * * *

“THE COURT: Regardless of what Mr. Newhart’s feelings are, I have never heard what they did to earn the money, and I don’t see how a Court can make an allowance if it doesn’t know that the people have done something to justify the allowance. This has been done, I think my order was correct, and I don’t intend to do anything about it. * * * Mr. Counts, in what shape was the Paxson claim called to the Court’s attention? Did they send in some statement that they wanted some money ?
“MR. COUNTS: They filed a claim in this Court, and we gave due notice of the date all claims in this matter would be called up for hearing. The matters were called up for hearing before this Court in open session, with Mr. Don Sommers present, counsel for plaintiff, myself present, Mr. Harris present and Mr. Sam Sommers present. We called the claim of Paxson and Richel. No persons appeared on their behalf to prove up their claim. No evidence having been offered, the claim was denied by this Court.”

The court then considered receiver’s request for authority and granted the request except for an order assessing costs and an order for disbursement of funds remaining in receiver’s hands amounting to $12,267.-23.

On June 19, 1973, receiver filed “Request to Disburse Proceeds and for Discharge of Receiver,” having given notice on June 18, 1973, of such request, to all creditors advising them of the court’s action of June 15, 1973, and that the request would be called before the court on June 27, 1973.

On June 29, 1973, claimant Paxson & Richel, now with assistance of counsel, moved the court to set aside its previous orders of April 24, 1973, disallowing the claim, and of June 15, 1973, approving receiver’s final settlement showing no payment of its claim. Claimant asserted, in support of the motion, that “At no time were movants informed that further proof of claim would be necessary. At no time did movants receive written objections to their claim, nor were they at any time informed of any objection thereto of any kind or character. Movants were unaware that the Court would require them to appear and offer evidence in support of their claim, nor were they at any time so informed. By letter from Attorney John Newhart, a shareholder and director of NHN Grain Farm Center, Inc. and by telephone conferences with Mr. Newhart, they were led to believe that their claim was considered to be valid and would be honored. Furthermore, the Court and counsel for the receiver received copies of said letter and were, therefore, informed that said claim was meritorious.

“In further support of their motion, movants state to the Court that they were not notified by the Court or counsel until the 27th day of June, 1973, that any order had been entered by the Court relating to their said claim against NHN Grain Farm Center, Inc., and that such information was acquired by a telephone call to the Court. Had they been aware that an order had been entered by the Court on the 24th day of April, 1973, relating to their said claim, they would have immediately filed a motion to set aside such order and are filing this motion as soon as practicable after obtaining knowledge of the Court’s order of April 24, 1973.

“Movants further state that their claim is for fees for professional accounting and auditing services provided NHN Grain Farm Center, Inc., that all of the services listed in said claim filed with the Court were performed, and that the charges for said services were fair and reasonable.

“ * * * that the receiver’s accounting filed with the Court shows that there are cash assets remaining in his hands well in excess of movant’s claim, which assets should be made available to pay all just debts of NHN Grain Farm Center, Inc., before distribution to the shareholders. This being an action in equity, movants are entitled and should be permitted to present evidence in support of their claim on the merits. Inasmuch as there are excess assets available to pay said claim, no other persons would be prejudicied by allowing movants to present their, claim to the Court on the merits.”

On August 13, 1973, claimant’s motion was heard. Plaintiff appeared by her attorney, receiver appeared in person and by attorney, and claimant appeared by copart-ner Don Paxson and by attorney.

Don R. Paxson identified himself as a certified public accountant and as a partner in Paxson & Richel whose senior partner was his father, C. L. Paxson. He verified and filed the proof of claim on behalf of Paxson & Richel. It was stipulated that such claim was timely filed. Mr. Paxson received the receiver’s notice of the court’s order setting the deadline for filing proofs of claims and advising that such claims would be for hearing on March 21, 1972. He prepared claimant’s proof of claim, followed a federal bankruptcy form because no form had been provided, pursuant to the notice. In response to correspondence from the receiver, Mr. Paxson, in April 1972, answered the receiver and enclosed claimant’s unpaid statement for work performed for defendant corporation. He also asked that the statement be treated as a formal claim for payment and asked that any prescribed forms for verification of claims be forwarded to claimant; and, in August, 1972, he inquired again about claimant’s past due account, advised of his understanding from Mr. Newhart, counsel and officer of defendant corporation, that sufficient assets existed to cover payment of the account, and asked to be advised of the status of the claim and the likelihood of its settlement in full. Mr. Paxson wrote the receiver again in October, 1972, to inquire about the status of claimant’s bill. The receiver consulted with his attorney and advised Mr. Paxson that he should file a claim.

Mr. Paxson acknowledged that his firm received all the notices sent by the receiver, and that no one appeared at the hearing on proofs of claims or at the hearing on receiver’s accounting.

Mr. Paxson identified Exhibit 6 as a copy of a letter he received from Mr. New-hart as attorney for defendant corporation addressed to the receiver. The letter bore date of April 21, 1973, and concerned both the Flury-Hinderks and Paxson & Richel claims which were for hearing April 24, 1973. By the letter Mr. Newhart advised the receiver, with copies to receiver’s attorney, the clerk of the circuit court where the hearing was to be conducted, and the claimants:

“The Flury-Hinderks Co. insurance premium claim should certainly he allowed without protest or delay. These people have furnished insurance coverage to the corporation over a long period of time and they will have the policies and itemization needed to substantiate their claim. They have extended credit for these insurance premiums for some time.
“The same is true of Paxson and Richel, Certified Public Accountants. They have rendered accounting and tax service for many years to the corporation. They have likewise extended credit. Their account should be paid without protest or further delay.
“I do not have any information on these accounts other than my memory, personal knowledge of the incurrence of the services, and verification of their merit. I forwarded to you the billings on the same in the early stages of the receivership.”

Claimant offered this letter, conceding it to be hearsay, not for the truth of what it stated but as evidence of the knowledge of the claim of the receiver against whom claimant’s motion was filed. The court sustained receiver’s objection to the exhibit on the ground of hearsay.

The court denied claimant’s motion to set aside its previous orders and to hear the claim on its merits. Subsequent alternative motions to amend the court’s order to grant a hearing on the merits of their claim or for a new trial on the motion to set aside were also denied.

Appellant contends that the trial court’s action should be reversed in order to accord claimant a hearing on the merits of its claim, or, at the least, to accord a hearing to receive and consider all evidence on whether the claim should be heard on the merits. As grounds for this contention, appellant asserts:

A. It was error to deny the claim, when timely filed, without fixing and giving notice of a time for concluding the hearing of all claims.

B. It was error to deny the claim, when claimant received no notice that receiver was disallowing the claim although submitted under oath.

C. It was error and an abuse of discretion to ignore evidence at the hearing of August 3, 1973, tending to establish a reasonable excuse for not appearing at the hearing of April 24, 1973; that claimants pursued their claim diligently; that receiver and the court had knowledge that the corporation through its attorney conceded the validity of the claim, yet neither the receiver nor the court notified claimant of its disallowance although receiver had notified creditors of all other actions taken by the court subsequent to the court’s requiring creditors to file proofs of claims.

Respondent receiver contends that he gave timely notice of the hearing on proofs of claims; that notice to one partner was notice to the entire partnership claimant, and that there was no error in disallowance of subject claim because claimant offered no evidence by which to sustain the burden of proving its claim.

Respondent plaintiff joins with respondent receiver and contends that the court did not abuse its discretion by its action, and that this court should not disturb the trial court’s judgment unless it was clearly an abuse of discretion or clearly erroneous.

This case is for review upon both the law and the evidence with due regard to be given to the opportunity of the trial court to have judged the credibility of the witnesses. Rule 73.01, subd. 3(a), (b), V.A. M.R. There are no questions of credibility or resolution of conflicts in the evidence upon which deference would be accorded the trial court. The only evidence question is the admissibility of Exhibit 6, the copy of the letter from the attorney for the debtor corporation to the receiver.

The only objection to the admissibility of Exhibit 6 was that it was hearsay. There was no question of its authenticity and genuineness, and it purports to bear on issues immediately confronting the receiver addressee and which had been the subject of communication between the addressee, the copy addressees, and the writer for some time. In such circumstances, it should have been admitted as evidence of the receiver’s and the court’s knowledge of the existence of the claim in question and its probable validity and merit insofar as the debtor’s concession of its merit would bear on its allowance. Crawford v. Metropolitan Life Ins. Co., 167 S.W.2d 915 (Mo.App.1943).

The court disallowed subject claim “for the reason that they have been notified as to two dates when proceedings would be taken up in this case, and the court has not heard from anyone on their behalf.” The court referred to the same reason in refusing to reconsider on claimant’s motion to set aside the disallowance.

Appellant concedes that it received notice of the court’s order to all creditors of defendant corporation to file verified proofs of claim on or before February 28, 1973, or to be barred from filing any such claim; and it is conceded by all parties that claimant filed the subject claim prior to that date. Appellant concedes also that it received notice from the receiver that he would call all duly filed proofs of claim for hearing on March 21, 1973, and the notice from the receiver of the court’s order of March 21, 1973, continuing such hearing to April 24, 1973, and that it made no appearance on either date.

Nevertheless, appellant devotes a portion of its argument to its attempt to show an excuse for its failure to heed the receiver’s notices due to an internal problem of correspondence created by notices to partner C. L. Paxson not coming to the attention of Don Paxson, the partner who did the work for defendant corporation on behalf of claimant. That portion of appellant’s argument is not persuasive because it, alone, does not overcome the general rule that knowledge of one partner in relation to the business of a firm is imputed to the other partners if the receiving partner was acting within the scope of the partnership business. Buder v. Denver Nat. Bank, 151 F.2d 520, 526 (8th Cir. 1945).

Appellant, however, raises other issues which bear on whether the trial court abused its discretion in this case.

Section 351.500, RSMo 1969, V.A.M.S., provides: “In proceedings to liquidate the assets and business of a corporation the court may require all creditors of the corporation to file with the clerk of the court or with the receiver proofs under oath of their respective claims. If the court requires the filing of claims it shall fix a date, which shall be not less than four months from the date of the date of the order, as the last day for the filing of claims, and shall prescribe the notice that shall be given to creditors and claimants of the date so fixed. Prior to the date so fixed, the court may extend the time for the filing of claims. Creditors and claimants failing to file proofs of claim on or before the date so fixed may be barred, by order of the court, from participating in the distribution of the assets of the corporation.”

There is no question that appellant filed its claim in compliance with the statute and with the court’s order entered pursuant to the statute. The statute, however, makes no provision with respect to allowance or disallowance proceedings, in which case the common law prevails.

The nature of receivership proceedings was stated in State ex rel. Bromschwig v. Hartman, 221 Mo.App. 215, 300 S.W. 1054, 1059 [7-13] (1928): “When a court of equity has appointed a receiver and placed him in charge of the assets of a corporation, the receiver thereafter holds such assets subject to the order of the court. The assets are in the custody of the court, and may be lawfully paid out or disbursed only upon the order of the court. Claims of creditors may be established by separate suits against the receiver, or may be presented for allowance to the court in the action in which the receiver was appointed, if the court shall so direct. When the court in which the receivership is pending calls upon creditors to come in and prove their claims, this is a substitute for separate suits on such claims. In the absence of any special statutory practice on the subject, it is no part of the receiver’s duty to report claims to the court for allowance, but such duty devolves upon the creditors themselves, and the time within which any and all claims may be presented is to be determined by the court. Where, on application of the receiver, an order is granted for the publication of notice to creditors, and notice is duly published, claims not exhibited within the time specified in the notice are precluded from sharing in the assets, where there has been in the meantime a final distribution of the assets in the hands of the receiver based upon claims proven. If a reasonable excuse for delaying to make an earlier claim is shown, the court may in its discretion permit a creditor to come in and prove his claim at any time before actual distribution, or even after partial payments, if there is a surplus in the hands of the receiver, so as not to interfere with payments already made.”

With respect to whether a court of equity could bar claims by delimiting the time for presentation, State ex rel. Hyde v. Falkenhainer, 309 Mo. 381, 274 S.W. 722, 726[2] (banc 1925), stated: “The reasonable rule seems to be that if the claim is provable (not merely contingent), then if proven within the date fixed for concluding the hearing of claims (which date should be a reasonable time before distribution), then the claim should be allowed.”

It is to be noted also that in addition to the duty to file a timely claim, the claimant must support it with evidence. State v. Falkenhainer, supra; Holland Banking Co. v. Continental Nat. Bank, 9 F.Supp. 988, 989 (W.D.Mo.1934); Strubinger v. Mid-Union Indemnity Co., 352 S.W.2d 397 (Mo.App.1961).

Consistent with the foregoing principles is the statement in 19 C.J.S. Corporations § 1544, p. 1289: “Claims presented in an insolvency proceeding against a corporation should be passed on by the receiver and allowed or disallowed and notice * * * should be given to claimants who then have the opportunity of having this determination reviewed by the court * * *. Only claims of creditors which are properly proved and are enforceable may be allowed; and on the other hand, if a claim is provable it should be allowed if proved within the date fixed for concluding the hearing of claims.”

Within the meaning of the foregoing, the evidence shows the following pertinent matters:

1. As early as April, 1972, claimant, pursuant to a letter from the receiver, advised receiver by mail of its unpaid statement for work performed for defendant corporation, requested that such letter be treated as a formal claim for payment, and requested it be furnished with prescribed forms for verification of the claim.

2. In August, 1972, C. L. Paxson and the receiver discussed the claim at receiver’s home.

3. Subject claim was timely filed and was verified on oath of the partner who had done most of the work.

4. There was no order fixing a date for concluding the hearing of claims, and nothing about the notices calling claims for hearing suggests that any date there mentioned would be a final or concluding date for hearing of claims.

5. The notice which called proofs of claim “for hearing” would not necessarily have impressed claimant with the need to support its verified claim with “evidence” other than the verified claim itself and Mr. Newhart’s concession of its merit.

6. The receiver and the court had knowledge of subject claim by way of Exhibit 6 and it showed also that the debtor’s attorney considered it a valid claim against the assets of his corporation. This knowledge is contrary to the finding that “the court has not heard from anyone on their behalf,” and to counsels’ statements that there was nothing by way of support for subject claim.

7. Subject claim does not appear to have been questioned prior to the hearing.

8. Claimant was not notified of the dis-allowance of its claim until June 27, 1973, and it filed its motion to set aside the dis-allowance and accounting within two days and prior to any final judgment by which other parties acquired rights or distribution was made.

9. Surplus funds remain in the hands of the receiver in an amount considerably in excess of subject claim from which the claim could be paid. Consequently, no prejudice could result to other claimants. Such surplus funds would, under the proposed accounting and distribution, go to satisfy a judgment creditor of shareholders as opposed to creditors of defendant corporation.

In these circumstances, all parties were advised that claimant had a timely filed and provable claim. To deny it in the first instance upon claimant’s failure to appear at a scheduled hearing was one thing. To refuse claimant a hearing on the merits of the claim at a subsequent time when no final date for hearing of claims had been set, when no other claimants could be prejudiced and prior to distribution of surplus funds, was a failure of the court to exercise its discretion amounting to an abuse of its discretion.

There is an analogy in these proceedings to those in which a default judgment in favor of a plaintiff or a dismissal with prejudice of a plaintiff’s petition is set aside. The grounds for such action are: (1) existence of a meritorious defense or claim; (2) reasonable diligence or excuse for default or failure appears; and (3) no substantial injury to other parties resulting from delay caused by reopening the proceedings. Lester v. Dyer, 518 S.W.2d 213, 216 [1] (Mo.App.1974).

In this case the evidence indicates that! subject claim is meritorious, i. e., it was verified, it was conceded by the corporation’s attorney to be meritorious and there is no indication to the contrary. The evidence shows claimant to have been diligent in making all parties aware of the claim throughout the dissolution proceeding and by timely filing it and that no injury would result to any other claimant. With its verification, the concession of its merit, the lack of an order or notice of a final date for hearing such claims, the lack of notice of disallowance of the claim, and a timely request to reopen the hearing on claims, a reasonable excuse for failure to appear at the hearing is properly inferred.

The trial judge was no doubt motivated by a desire to resolve this litigation at an early date, and he should have received a better effort from this claimant. He is to be commended for his efforts to accomplish that purpose. Nevertheless, the cause must be remanded to the end that subject claim, timely filed, may be heard and determined on its merits. Casserly v. Bench, 521 S.W.2d 395 (Mo. banc 1975).

The judgment is reversed and the cause is remanded for a hearing of subject claim on its merits, and for any other proceedings not inconsistent with this opinion.

All concur.


source: Caselaw Access Project

author: MATHERNE, Judge.

license: Public Domain

text:
    Mary Ann ROWLAND, Appellee, v. AMERICAN FEDERAL SAVINGS & LOAN ASSOCIATION, Appellant.
    Court of Appeals of Tennessee, Western Section.
    Jan. 15, 1975.
    Certiorari Denied by Supreme Court May 12, 1975.

      Rice & Rice, Jackson, for appellant.
    Melvin L. Rowland, Pierce Winningham, Jr., Jackson, for appellee.

       On Petition for Writ of Certiorari, the Supreme Court of Tennessee entered the following order, dated May 12, 1975:
      “ORDER DENYING PETITION FOR WRIT OF CERTIORARI
      Upon consideration of the petition, the briefs of counsel and the entire record, the Court is of the opinion that the Court of Appeals reached the correct results.
      We accordingly deny the writ and direct the publication of the opinion of that Court.
      PER CURIAM”

   MATHERNE, Judge.

The Honorable W. E. Quick, by appointment of the Chief Justice of the Supreme Court of Tennessee, sat on this lawsuit in the place of Presiding Judge C. S. Carney.

One Ellis Maness owned an interest bearing deposit with the defendant, which deposit he assigned to the plaintiff. Upon demand by the plaintiff assignee, the defendant obligor refused to pay to her the amount of the deposit. The plaintiff sues for that amount.

Each party filed a motion for summary judgment and an affidavit in support thereof. The chancellor dismissed the motion of the defendant, sustained the motion of the plaintiff and entered judgment against the defendant for the amount of the deposit, $2,128.99, plus interest thereon from March 9, 1973. The defendant appeals to this Court.

The record reveals that James L. Chris-man attempted to borrow $12,000 from the defendant. The defendant would advance only $10,000 to Chrisman. In order to aid Chrisman to obtain the full amount of $12,000, Ellis Maness placed on deposit with the defendant the sum of $2,000, and executed a written pledge agreement in favor of the defendant whereby he pledged the account to secure the payment of the Chrisman loan to the extent the amount of the loan exceeded the sum of $10,000. This transaction occurred on January 26, 1965.

On about October 28, 1969, Maness made a written assignment of the above account to the plaintiff. By letter dated February 6, 1970, the plaintiff, through her father and attorney, notified the defendant of the assignment made to her by Maness, and requested the account be converted to such an account as would draw the highest rate of interest. The defendant answered by letter dated February 26, 1970 that it could not accept the assignment to the plaintiff until the pledge of the account to 'it was satisfied, which should occur within approximately 36 months.

It appears Ellis Maness died, and by letter dated March 6, 1972, the plaintiff’s attorney again wrote the defendant reminding it of the assignment of the Ellis Maness account to the plaintiff. By letter dated March 13, 1972, the defendant, by its counsel, answered this last reminder, which letter states in part as follows:

“Account #1135 in the individual name of Ellis Maness has a balance as of December 31, 1971 of $2,075.16. This account was pledged to American Federal Savings and Loan Association of Jackson on January 26, 1965 to secure a loan to James L. Chrisman. Mr. and Mrs. Chrisman desired to make a $12,000. loan from American Federal, but the Association was unwilling to loan this amount nor any amount above $10,000. Mr. Maness executed this assignment in order to induce the Association to make a $12,000. loan to Mr. and Mrs. Chrisman, and by the terms of the assignment when the unpaid balance of the Chrisman loan goes beneath $10,000, the assignment can be released. I am advised that this will occur in about eleven months if all payments are made when due.
“In the meantime we remind you that due to the existing assignment, the Association has not accepted your assignment, nor do we do so now. When the account of Mr. Chrisman reaches $10,000. we will advise you and the estate of Mr. Maness, and if the two of you are unable to agree as to how this matter should be handled, we will place this matter in the Chancery Court by in-terpleader and your claim and the claim of the estate can then be settled in the proper tribunal.”

On October 6, 1972, the Chrisman loan was paid in full, and all terms and conditions of the original deposit and the pledge thereof were satisfied. The defendant did not notify the plaintiff assignee of this payment. On April 19, 1973, the plaintiff made personal demand of the defendant that the amount of the Maness account be paid to her, and presented proof of the account and the assignment thereof. The defendant refused to pay the amount of the account to the plaintiff.

The reason given by the defendant for its refusal to honor the plaintiff’s assignment is that it had, in a lawsuit in the Chancery Court of Maury County, Tennessee, in the cause of American Federal Savings and Loan Association vs. Robert D. Holder, et al, No. 12341, obtained judgment dated December 20, 1972, against Travis J. Maness, Executor of the Estate of Ellis Maness, deceased, in the amount of $3,900. The defendant offset the account of Maness against the judgment.

The background of the Chancery lawsuit in Maury County, Tennessee, involves a series of events totally unrelated to the transaction which resulted in the account of Ellis Maness with the defendant, and the assignment thereof to the plaintiff. That lawsuit grew out of the following factual situation as recited in the defendant’s affidavit and supporting exhibits:

On September 22, 1967, Robert D. Holder, et ux sold some land to Robert R. Chapman, et ux. The Chapmans borrowed $19,000 from the defendant and gave a deed of trust on the property as security. In fact there was a prior recorded deed of trust on the same property which secured a note payable to Ellis Maness in the amount of $3,500 plus interest, dated December 30, 1966. In order to avoid foreclosure by Ellis Maness, and to protect its security on its loan to Chapman, the defendant did on October 4, 1968, purchase the Holder note from Maness. On August 19, 1970, the defendant filed the chancery lawsuit in Mau-ry County against Holder on the warranties in his deed to Chapman. The Holders pled they paid the debt to Peoples Protective Life Insurance Company, which concern had in turn paid the amount over to Ellis Maness. By amendment to its complaint, filed May 23, 1972, the defendant made Peoples Protective and the Executor of the Estate of Ellis Maness parties defendant. The executor of the estate of Ellis Maness did not plead, and a judgment pro confesso was entered against that defendant on October 24, 1972. On December 20, 1972, the chancellor entered his decree dismissing all defendants except the Executor of the Estate of Ellis Maness. As to that defendant, the chancellor decreed :

“It is further Ordered, Adjudged and Decreed that the Complainant, American Federal Savings and Loan Association of Jackson, Tennessee have and recover of Travis J. Maness, Executor of the Estate of Ellis Maness, deceased, judgment in the amount of Three Thousand Nine Hundred Dollars ($3,900.00), together with interest from and after October 4, 1968, same being the date upon which American Federal Savings and Loan Association of Jackson, Tennessee made the erroneous second payment of the note in issue to Ellis Maness.”

It thus appears to have been finally adjudicated that the defendant did make a good faith purchase of the Holder note from Ellis Maness on October 4, 1968; and further, the defendant’s purchase of the note from Ellis Maness constituted an erroneous second payment of the note to Ellis Maness.

We must conclude the defendant had a claim against Ellis Maness, in the amount it paid him for the Holder note, as of October 4, 1968. It is fairly established the defendant did not at that time realize it had a claim, and the defendant did not realize it had such claim until after the assignment of the account by Maness to the plaintiff, and after notice of assignment was given the defendant on February 6, 1970.

The statements in the letters of the defendant obligor that it did not accept the assignment are meaningless. The obligor has no choice about the assignment, and once the assignment is made and notice given it is effective.

The question is whether the assignment made by Ellis Maness to the plaintiff is subject to the counterclaim of the defendant obligor in the amount of the erroneous prior payment made by the defendant obligor to Ellis Maness in the purchase of the Holders note from Maness ?

The plaintiff relies upon T.C.A. § 47-9-318, and argues that statute is merely declaratory of the case law of this state prior to its adoption. We hold that statute not applicable, because T.C.A. § 47-9-104(k) specifically excludes the assignment of a bank deposit from the provisions of T.C.A. §§ 47-9-101 through 47-9-507:

“47-9-104. Transactions excluded from chapter.—This chapter does not apply
(a) . . .
(k) to a transfer in whole or in part of any of the following: and [sic] claim arising out of tort; any deposit, savings, passbook or like account maintained with a bank, savings and loan association, credit union or like organization.”

Case law under prior statutes is not conclusive, because Section 2918 of the Code of 1858, carried over to T.C.A. § 20-1001, sets out certain named and limited claims and equities which could be the subject of cross action and setoffs. T.C.A. § 20-1001 was repealed by Rule 13, Tennessee Rules of Civil Procedure, effective January 1, 1971. The situation at bar is covered by Rule 13.02:

“A pleading may state as a counterclaim any claim against an opposing party, whether or not arising out of the transaction or occurrence that is the subject matter of the opposing party’s claim.”

Under Rule 13.02, the defendant obligor could assert a counterclaim against Ellis Maness in the amount of the payment to Maness for the Holder note. The defendant’s claim against the assignor Maness having risen on October 4, 1968, before the assignment to the plaintiff and before'notice of that assignment, we conclude, with nothing more appearing, the defendant ob-ligor has the right to counterclaim against the plaintiff assignee that amount so paid to the assignor Maness. This holding is in accord with the case law of this state, except as that case law was affected by the now repealed T.C.A. § 20-1001. See and compare: Hight v. McCulloch (1923) 150 Tenn. 117, 263 S.W. 794; Gatewood v. Denton (1859) 40 Tenn. 380; Litterer v. Berry (1879) 72 Tenn. 193; Kennedy v. Woolfolk (1817) 4 Tenn. 195; Breedlove v. Stump (1830) 11 Tenn. 257.

The fact the defendant obligor may not have known of the claim it had against the assignor Maness at the time of the notice of the assignment, would not defeat its right to counterclaim against the plaintiff assignee. See and compare: Ahrens & Ott Mfg. Co. v. Moore & Sons (1914) 131 Tenn. 191, 174 S.W. 270. This conclusion, though not governed by, is buttressed by Rule 13.05 which allows a counterclaim, with permission of the court, which arises or matures after pleading.

We must now determine if the defendant obligor by its acts and representations is estopped to rely upon the counterclaim as against the plaintiff assignee.

In Commerce Union Bank v. Blalock (1954) 38 Tenn.App. 260, 273 S.W.2d 487, this court, speaking through Judge Felts, held an obligor could be estopped from asserting certain defenses against an assign-ee. The Court there stated the case as follows :

“This suit was brought by complainant bank to recover on a note for $13,000 for money lent by it to defendants Roy E. Blalock, Jr., and A. O. Newberry, partners doing business under the name of A & B Construction Company, and to recover the amount of an estimate for work done by them for Kerby Saunders, Inc., and assigned by them to the bank as collateral security to their note.”

After a review of the factual situation involved, the court found:

“But this case was more than an ordinary assignment, more than a mere transfer of the obligee’s rights against the obligor to the assignee. Kerby Saunders, besides being obligor in the chose assigned, added its own direct promise and representations to the bank, and thereby induced it to make the loan which constituted a present and sufficient consideration for the promise, and which differentiates this case from Ahrens & Ott Mfg. Co. v. George Moore & Sons [131 Tenn. 191, 174 S.W. 270] where there was no consideration for the promise.”

On the issue of estoppel the court then held:

“While the assignee of a non-negotiable chose in action ordinarily takes it subject to all the defenses which the ob-ligor may have against the assignor, the obligor may preclude such defenses by making an absolute promise to pay the assignee in substitution of the assigned obligation, or may, by his representations, estop himself from raising such defenses.”

The court in Commerce Union Bank held the obligor Kerby Saunders estopped to assert against the assignee certain defenses it may have had against its subcontractor, the assignor, because by its conduct it intended to induce the assignee to act, and the assignee did rely on that conduct and act thereon.

The case at bar is distinguishable from the Commerce Union Bank case wherein here there were no representations made by the defendant obligor to the plaintiff assignee prior to the assignment upon which the assignee could have relied and acted.

The letters from the defendant obligor to the assignee; the failure to notify the assignee of the payment in full of the Chrisman note; the failure to notify the assignee of the lawsuit the obligor instituted against the assignor Maness in Maury County, cannot be deemed actions which estop the defendant obligor from asserting against the assignee those defenses it had against the assignor Maness. See and compare Third National Bank v. Capitol Records, Inc. (1969) 60 Tenn.App. 189, 445 S.W.2d 471.

It results, the decree of the chancellor is reversed, and this lawsuit is dismissed at the cost of the plaintiff-appellee.

NEARN, J. concurs.

W. E. QUICK, Special Justice concurs.


author: TAYLOR, Special Judge.

text:
    Glenda June GILBERT and J. D. Gilbert, Appellants, v. Sidney D. JONES and Ortho Pharmaceutical Corporation, Appellees.
    Court of Appeals of Tennessee, Western Section.
    Dec. 31, 1974.
    Certiorari Denied by Supreme Court May 12, 1975.

      James F. Schaeffer, J. E. Mitchell, Memphis, for appellants.
    Thomas R. Prewitt, J. Kimbrough Johnson, Memphis, for appellees.
   TAYLOR, Special Judge.

This is an appeal involving two separate civil actions brought by the plaintiffs, Glenda June Gilbert and her husband, J. D. Gilbert, against a physician, Sidney D. Jones, and a drug manufacturer, Ortho Pharmaceutical Corporation. The circuit judge sustained the plea of the statute of limitations and granted the motions for summary judgment filed by the defendants.

The depositions of Mrs. Gilbert and Dr. Spiotta indicate that Mrs. Gilbert began taking birth control pills in 1963. These pills were prescribed by Dr. Jones and manufactured by Ortho Pharmaceutical Corporation. Mrs. Gilbert took these contraceptive pills for some six years when she was advised by Dr. Jones in June, 1970 that she had high blood pressure. In Mrs. Gilbert’s deposition, she states that she purchased birth control pills in containers containing a three-month supply, and that she purchased two containers at a time. She further stated it was necessary to see Dr. Jones every six months to get a prescription for these contraceptive pills. On March 12, 1971, she saw Dr. Jones for the last time for this particular condition.

After seeing Dr. Jones on March 12, 1971, she also went to see Dr. Hal Bennett on that same day and was told by him that her blood pressure was 230/130 and that it was “severely high”. Dr. Bennett suggested that she see a doctor of internal medicine and she then consulted Dr. Eugene Spiotta who admitted her to the hospital on March 17, 1971 for high blood pressure.

On March 29, 1971, Mrs. Gilbert was apprised by Dr. Spiotta of the causal relationship between her high blood pressure and the contraceptive pills, and she was advised to and did discontinue use of the contraceptive pills at that time.

On March 21, 1972, the complaint was filed in Circuit Court by Mr. and Mrs. Gilbert against both defendants alleging that the injury to Mrs. Gilbert was “severely high blood pressure with resulting heart damage”.

The trial judge ruled that the causes of action of the plaintiffs were barred by the statute of limitations which began to run as of March 12, 1971, the last date contraceptive pills were prescribed by Dr. Jones. This was one year and nine days before the filing of the complaint against the defendants in this case. The ruling of the trial judge was correct at the time he ruled that this malpractice action was barred by the statute of limitations.

The record before us, however, indicates that Mrs. Gilbert did not know of the causal relationship between the birth control pills and her high blood pressure condition until March 29, 1971.

Section 28-304, T.C.A. provides that the cause of action be “commenced within one (1) year after cause of action accrued”. This section of the code was amended in 1969 to provide that “insofar as products liability cases are concerned, the cause of action for injury to the person shall accrue on the date of the personal injury not the date of the sale of a product and in said products cases no person shall be deprived of his right to maintain his cause of action until one (1) year from the date of his injury and under no circumstances shall his cause of action be barred before he sustains an injury”.

The most recent case bearing on the question of the statute of limitations in malpractice suits is an opinion by the Supreme Court of Tennessee on December 9, 1974 written by Justice Henry in the case of Teeters v. Currey, 518 S.W.2d 512, with a concurring opinion by Justice Har-bison, in which the Supreme Court recedes from prior cases on this particular question in order, “to establish a rule which we are convinced will be productive of results more nearly consonant with the demands of justice and the dictates of ethics and morality”.

The Supreme Court further said, “We adopt as the rule of this jurisdiction the principle that in those classes of cases where medical malpractice is asserted to have occurred through the negligent performance of surgical procedures, the cause of action accrues and the statute of limitations commences to run when the patient discovers, or in the exercise of reasonable care and diligence for his own health and welfare, should have discovered the resulting injury. All cases contra are overruled.”

The cause of action in this case accrued on March 29, 1971 when Mrs. Gilbert was apprised of this causal relationship between her high blood pressure and the contraceptive pills. On March 21, 1972 this complaint was filed in Circuit .Court by Mr. and Mrs. Gilbert against both defendants.

This record indicates that there is an issue of fact to be determined and we are only holding that, on the pleadings, this suit is not barred by the statute of limitations.

These cases are remanded to the trial court for further action consistent with this opinion. The costs of this appeal will be taxed one-half to the appellants and one-half to the appellees.

MATHERNE and NEARN, JJ., concur.


author:
RUSSELL, Judge.
      OLIVER, Judge GALBREATH, Judge

text:
    Joe CAPPS et al., Plaintiffs-in-Error, v. STATE of Tennessee, Defendant-in-Error.
    Court of Criminal Appeals of Tennessee.
    Dec. 23, 1974.
    Certiorari Denied by Supreme Court April 7, 1975.

      Edward Michael Ellis and Charles H. Child, Knoxville, for plaintiff in error.
    R. A. Ashley, Jr., Atty. Gen., Michael E. Terry, Asst. Atty. Gen., Nashville, David Black and John C. Crawford, III, Asst. Dist. Attys. Gen., Maryville, H. Kenneth Deatherage, Dist. Atty. Gen., Kingston, for defendant in error.
   RUSSELL, Judge.

OPINION

Joe Capps, Glen R. Birmley and John P. Sexton were jointly tried and convicted for the second degree burglary of a Roane County residence. Each was sentenced to three (3) to five (S) years in the penitentiary. The burglary involved the theft of a large quantity of guns, and occurred between early evening on October 3, 1973, and 6:30 p. m. on October 4, 1973. The three plaintiffs-in-error were arrested in Nashville on the evening of October 5, 1973, at 10:45 p. m. in Birmley’s car, being driven by Capps with Sexton upon the rear seat, and with a substantial number (24) of the stolen guns in the trunk of the car.

Capps testified that he had purchased the guns from a stranger in Chattanooga named Larry Johnson, who had telephoned him. Capps claims that he drove his car to Chattanooga, there met the stranger (Johnson) upon a shopping center parking lot, and paid him $1,200.00 cash for the guns. When recovered the guns were wrapped in bedding which was also taken in the burglary, and Capps claimed that they were so wrapped when he bought them. Capps admitted going to Nashville to try to dispose of the guns. He claimed to have taken them from Chattanooga back to Roane County, to have borrowed Birmley’s car for the Nashville trip, and to have invited Sexton along for the ride. In other words, Capps defense was that he had innocently purchased the stolen guns. He admitted possessing them, but attempted to explain that possession.

Birmley’s story was that he knew that Capps had the guns, and that he helped to load them into the trunk of his car, but that he had no knowledge that they were stolen.

Sexton denied even knowing that the guns were in the car. This was quite incredible, since at the time of the arrest the car was parked at a telephone booth on a large business parking lot, where the men were awaiting further contact by a prospective buyer of the guns. The jury undoubtedly concluded that if Sexton rode from Roane County to Nashville with the other two men, who admittedly were there for Capps to try to sell the guns, he had to know what was going on.

The burglary involved entry forced by an instrument like a medium sized screw driver. A quantity of such tools was found under the front seat of Birmley’s car. A dress taken in the burglary was upon the rear seat, a bedspread and sheets likewise taken were in the trunk with the guns, as were certain plastic trash bags and laundry bags. Despite Birmley’s initial denial that he had ever been upon the burglarized premises, it was proven that he had worked for an exterminator and had in fact signed an inspection sheet upon that very house dated October 4,1971.

It is obvious that these men were in the joint possession of this stolen property. Capps and Birmley admit their possession, but attempt to give it an innocent cast. When one considers that these guns were very fine guns, many of them collector’s items, and that they were simply thrown together and wrapped in bedding, plastic trash bags and laundry bags, the admissions by Capps and Birmley of the loading of the guns into the car to take to Nashville to sell completely destroys the claim of innocence. The jury was justified in also finding Sexton to be involved. A dress taken in the burglary was upon the rear seat where he was riding. His story that he didn’t even know about the guns was justifiably found by the jury to be unbelievable, in the context of what Capps himself testified. Their first stop in Nash-vile was a restaurant, at which Capps telephoned his contact, and was told to go to the telephone booth on the parking lot and wait. Common sense dictates that Sexton, a friend of Capps and Birmley for years, and with them late at night many miles from their home, knew about the guns. His claim to the contrary was rejected by the jury. This Court, in the case of Peters and Lee v. State, 521 S.W.2d 233, filed in Knoxville September 16, 1974, dealing with a drug possession case in which the contraband was found in a vehicle and in which Peters and Lee sought to lay the possession solely upon the third occupant, said:

“ * * * Their contention was that Palmer was in possession of the drug and that they had no knowledge of the presence of heroin in the van and that therefore [sic] could not be attributed to them. * * * The facts sufficiently support the inference that all those inhabitants of the van were in control of the drugs. These three had been together earlier in the day on a trip to Oak Ridge. They had met girls there and had gone to an apartment with them. The three were returning together a second time to Oak Ridge when the officer received the call from his female informant. Thus, the jury could and did conclude from this circumstantial evidence as to possession or control, that these two defendants were on a joint adventure and were in control of the drugs when the officer stopped them. * * * ”

We hold that the circumstances of this case support the conclusion arrived at by the jury that all three of the plaintiff s-in-error were in the joint possession of the stolen guns.

Possession of property very recently stolen in a burglary, together with possession of tools which could have been used in the burglary, with evidence that Birmley had knowledge of the burglarized premises, when considered with the fact that they were engaged in a patently clandestine attempt to sell the fruits of the burglary the day after it occurred is legally sufficient evidence to support these convictions, in the light of the jury’s rejection of the explanations. Cooke v. State, 3 Tenn. Cr.App. 533, 464 S.W.2d 324 (1970). In the unreported case of Albert Adams and Bill Hubbard v. State, filed at Knoxville, certiorari denied March 2, 1970, the question presented was the sufficiency of evidence of unexplained possession of recently stolen property taken in a burglary to support a conviction for that burglary. We held that that evidence, together with the other circumstantial evidence of guilt, was sufficient to support the burglary conviction. Guilt of burglary may be shown by circumstantial evidence. Bollin v. State, Tenn.Cr.App., 486 S.W.2d 293 (1972).

The first assignment of error is that the trial court erred in overruling a motion for dismissal of the burglary charge at the close of the State’s proof. For the foregoing reasons the assignment is overruled. The third assignment of error is simply a restatement of the first. The fourth contends that the verdict is contrary to the law and weight of the evidence. All these assignments are overruled.

The remaining assignment asserts that the trial court erred “in failing to suppress the evidence seized by the federal officers without the authority of a valid search warrant, without consent of the owner of the automobile, or without being the incident of a lawful arrest.” When this assignment is put into context it is clearly without merit. When the arresting officers testified as to the auto search and the arrests absolutely no objection was made to the introduction into evidence of the stolen guns, bedclothing, etc. The full picture of probable cause, etc., was not presented because no issue was ever raised. Then, after all of the State’s proof was in, a motion was made (along with several others) to “suppress” this evidence. Obviously, a motion to suppress should have come before the proof was introduced. The movant should be prepared to and present the necessary proof in support of the motion. Here, after the evidence was in without objection, and with no issue having been raised as to the legality of the search so as to give the State an opportunity to present the whole picture, the plaintiffs-in-error simply made a motion to “suppress” this evidence based upon what they conceived to be the illegalities of the search which alleged illegalities got into the record without the issue having been raised. While it is possible to strike evidence illegally introduced after the fact of introduction, it is hardly possible to suppress it at that time. Certainly the trial court cannot be said to have erred, absent a clear showing that the evidence was illegally obtained. The search was made by federal officers who apparently had excellent information that sawed-off shotguns were being transported in the subject car. It could be argued that they had probable cause to search and exigent circumstances to justify their not first getting a warrant; or that the search was in fact incident to the arrests. Certainly it can be said that under the procedures which plaintiffs-in-error chose to follow the State was never called upon nor given the opportunity to justify the legality of the search. Its clear illegality not appearing, we overrule the assignment.

A further reason for this ruling is that all three defendants took the stand and testified about the guns. Capps claimed to have purchased them, Birmley admitted having loaded them, and Sexton denied any pre-search knowledge of them. Under the authority of Lester v. State, 216 Tenn. 615, 393 S.W.2d 288 (1965), they could not be heard to complain about the State’s having introduced this same proof.

The convictions are affirmed.

OLIVER, J., concurs.

OLIVER, Judge

(concurring).

It is always competent to show that the defendant had possession of property recently stolen from the premises he is charged with burglarizing, and such possession is evidence which may be considered, along with all the other facts and circumstances in proof, as bearing on the question whether the defendant committed the burglary. An inference of guilt is permissible from the possession of property recently stolen in a burglary, and the inference exists both as to the burglary and the stealing. Pruitt v. State, 3 Tenn.Cr.App. 256, 460 S.W.2d 385 and authorities therein cited; Wyatt v. State, 4 Tenn.Cr.App. 1, 467 S.W.2d 811.

GALBREATH, Judge

(dissenting).

The evidence presented in this case is adequately detailed by Judge Russell’s majority opinion. I cannot agree, however, that this evidence is sufficient to sustain a conviction of these defendants for burglary. Defendants admit that the law in Tennessee allows a conviction for larceny upon a showing of unexplained possession of recently stolen property. While this presumption has been expanded in recent years by our Supreme Court (see Tackett v. State, 223 Tenn. 176, 443 S.W.2d 450), such proof has not been held previously to provide the basis for a burglary conviction. A discussion of this point is found in the old (1903) case decided by the Supreme Court of Iowa, State v. Brady, which to me retains its logic and justness today:

1. As to the effect to be given in prosecutions for burglary to proof of possession of goods stolen in connection with the breaking and entering, the authorities are not entirely in harmony. There are decisions holding without qualification that the fact of possession of property recently stolen under such circumstances has no tendency to prove the possessor’s guilt of burglary. People v. Gordon, 40 Mich. 716. On the other hand, cases may be found to the effect that such fact alone creates a sufficient presumption of guilt to justify a conviction. Knickerbocker v. People, 43 N.Y. 177. Our own cases have gone to neither extreme, and are, we think, in harmony with the weight of authority. As laid down in State v. Rivers, 68 Iowa [611], 616, 27 N.W. 781, the rule approved by this court is that: “The possession of property which has been stolen from a building which had been broken and entered is not alone prima facie evidence that the one having it is guilty of burglary. Such possession unexplained does raise a presumption that the party is guilty of larceny, but it does not follow that both crimes were committed by the same party. The one who committed the larceny may have found the building open after the burglary was committed, and may have entered and stolen the goods without having been concerned in the breaking. It is obvious, therefore, that the mere possession of the stolen goods does not have the same tendency to connect him with the burglary which it does with the larceny.” To the same effect, see State v. Reid, 20 Iowa, 413; State v. Shaffer, 59 Iowa, 290, 13 N.W. 306; State v. Tilton, 63 Iowa, 117, 18 N.W. 716.
State v. Brady, 121 Iowa 561, 97 N. W. 62.

The Trial judge correctly instructed in this case:

Now the offense of possession of stolen property in burglary. The mere fact that a person is in conscious possession of recently stolen property is not enough to justify a conviction of burglary. It is however a circumstance to be considered in connection with other evidence. To warrant finding them guilty'there must be proof of other circumstances tending of themselves to establish guilt.

Bill of Exceptions, Vol. Ill, Page 218.

The only evidence presented other than the possession of the stolen property which could possibly tend to show guilt of the breakin itself was the presence of tools in the car. The fact that tools were found in the car which could have been used to force entry into the burglarized home is not to me sufficient to add to the possession of the stolen goods to support a conviction for the actual breakin.

Further difficulty is encountered in these convictions, particularly that of Sexton, in that the possession of the property shown to be recently stolen was not personal and exclusive. As in Morelock v. State, 187 Tenn. 478, 216 S.W.2d 5, . . . “to warrant an inference of guilt it must further appear that the possession was personal, and that it involved a distinct and conscious assertion of possession by the accused.”

As was succinctly noted by the Supreme Court of Illinois in People v. Urban:

. . . [I]t must be made to appear that the defendant’s possession of the stolen property was not only recent but that it was exclusive and as is said in People v. Mulvaney, 286 Ill. 114, 121 N.E. 229, 230, “it must be personal, exclusive and with a distinct implied or express assertion of ownership. A mere constructive possession is not enough.”
People v. Urban, 381 Ill. 64, 44 N.E.2d 888.

Capps admitted possession of the guns, claiming he had bought them in Chattanooga, Birmley admitted knowledge of the guns in the car, but Sexton denied even knowledge of their presence. In this context Capps alone was shown to be in possession.

I would reverse the burglary convictions.


author: WALKER, Presiding Judge.

text:
    James Franklin REAVES, Plaintiff-in-Error, v. STATE of Tennessee, Defendant-in-Error.
    Court of Criminal Appeals of Tennessee.
    Feb. 27, 1975.
    Certiorari Denied by Supreme Court April 21, 1975.

      Walker Gwinn, Asst. Public Defender, Memphis, for plaintiff in error.
    R, A. Ashley, Jr., Atty. Gen., William J. Haynes, Jr., Asst. Atty. Gen., Nashville, W. Fred Axley, Asst. Dist. Atty. Gen., Memphis, for defendant in error.
   OPINION

WALKER, Presiding Judge.

The Shelby County grand jury, in case no. B-40914, indicted the defendant below, James Franklin Reaves, in four counts for third degree burglary, grand larceny, receiving stolen property, and concealing stolen property alleging that he broke into the house of Thomas McConnell at 832 Park Rose, Memphis, and stole an air conditioner valued at $1000.

The case was tried along with a similar charge that he broke into the home of Charles F. Johnson at 826 Park Rose and stole another air conditioner. At the conclusion of the state’s proof, the trial judge directed a verdict for the defendant in this case at 826 Park Rose and as to the burglary count in the first indictment. The jury found him guilty of grand larceny in case B^40914 and fixed his punishment at three to five years in the pentitentiary. He appeals in error.

On September 8, 1973, Mrs. Doris Taylor, who lived at 838 Park Rose, noticed that air conditioners had been moved from two nearby vacant houses. While she was waiting for police whom she had called, the defendant and another person drove up in a truck to 832 Park Rose and loaded an air conditioner belonging to Thomas McConnell. On their arrival officers arrested the truck driver, J. W. Brown, coming from 826 Park Rose from which a central air conditioner had been removed. They found the defendant hiding in the attic there and also arrested him. An officer gave him full Miranda warnings, but the trial judge held his oral statement inadmissible because the state had failed to comply with TCA 40-2441.

J. W. Brown testified that the defendant approached him at a service station and offered him $20 to haul something; the defendant directed him to Park Rose where he helped load one air conditioner on his truck; the defendant said, “I’ve got one over here I’ve gotta’ get,” and went to the other house. In the meantime Brown and the defendant were arrested.

In a written statement the defendant confessed that he saw an air conditioner in the yard at a vacant house on Park Rose; that he then asked Brown to haul something and that they had loaded one unit when the police arrived; that he hid in the attic trying to get away from the police.

The defendant did not testify or offer any evidence.

The defendant contends the court erred in consolidating the two cases for trial. The offenses were similar and arose out of the same acts; much of the same evidence was admissible in the cases. This assignment is meritless. See Bruce v. State, 213 Tenn. 666, 378 S.W.2d 758; Burum v. State, 1 Tenn.Cr.App. 508, 445 S.W.2d 946.

In attacking the weight and sufficiency of the evidence, the defendant particularly urges that there was no proof of the value of the unit stolen and that a conviction of grand larceny cannot stand.

On direct examination the owner of the property, Thomas McConnell, testified that the unit was worth $400 to $500. On cross-examination he said he did not know its value on today’s market.

The owner is qualified by the fact of ownership to testify as to the value of his property. McKinnon v. Michaud, 37 Tenn.App. 148, 260 S.W.2d 721; Clift v. Fulton Fire Insurance Co., 44 Tenn.App. 483, 315 S.W.2d 9.

It was not necessary to show the precise value, but rather that the property exceeded $100. The trial judge instructed the jury on both grand and petit larceny. The weight of McConnell’s testimony was for the jury. This assignment is overruled.

The defendant says that the court erred in admitting into evidence his written statement when, on cross-examination, the interrogating officer indicated he did not advise the defendant that the statement could be used against him.

There were two hearings on the admissibility of the defendant’s statements. At the arrest Officer Thweatt read the defendant his Miranda rights from a card he carried. No question is made as to the full warning at that time but the statement was held inadmissible for failure to comply with the statute above mentioned.

At the second hearing Sergeant Burgess testified that the following day he read the Miranda rights from a card to the defendant after which the defendant made his written confession. Testifying from his memory as to the warnings he had read the defendant, the officer did not say that he advised that any statement could be used against him. At the hearing the defendant testified that neither officer had given him any warnings but that he understood them because of previous warnings. When defense counsel objected to the admission of the statement, the trial judge held that the defendant had been properly warned and that the statement was admissible.

When a defendant has been fully advised of his Miranda rights, it is not necessary to repeat them on the following day before interrogation. See Mitchell v. State, 3 Tenn.Cr.App. 153, 458 S.W.2d 630; Cook, Constitutional Rights of the Accused, Trial Rights, Confessions, Sec. 89. This assignment is without merit.

All assignments are overruled and the judgment is affirmed.

MITCHELL, J., and W. A. HAR-WELL, Special Judge, concur.


author: PALMORE, Justice. LUKOWSKY, Justice

text:
    Joseph M. SHELLMAN, Appellant, v. INDEPENDENCE LIFE AND ACCIDENT INSURANCE COMPANY et al., Appellees.
    Court of Appeals of Kentucky.
    March 14, 1975.
    Rehearing Denied June 20, 1975.
    Malcolm R. Boaz, Mayfield, for appellant.
    Carroll Hubbard, Jr., Farland Robbins, L. M. Tipton Reed, Jr., Mayfield, William E. Scent, Hopkinsville, William H. Par-ham, Mayfield, for appellees.
   PALMORE, Justice.

Joseph M. Shellman appeals from a summary judgment made final under CR 54.-02, determining that the facts established thus far in this proceeding preclude his recovering the proceeds of an insurance policy on the life of his divorced wife, May-dee.

The policy was issued on March 10, 1967, for a renewable term of five years. In the application Maydee’s occupation was listed as the co-owner of a retirement home and her duties were described as “managerial.” Joseph was named as the beneficiary and a daughter, Lana Susan, as contingent beneficiary. Joseph also was shown on the application as “owner” of the policy. The application was signed by both Joseph and Maydee. A printed statement, “Only one signature required when proposed insured is the applicant,” appears under the signatures.

On one of the. policy attachments, following a renewal provision, the following endorsement is typewritten:

“In accordance with the application the owner of this policy is Joseph M. Shellman. The owner shall have the sole right to exercise all privileges under this policy and to agree with the Company as to any changes in or amendments to this policy. Dated March 10, 1967.
INDEPENDENCE LIFE AND ACCIDENT INSURANCE CO.
/s/ R. Herm
Assistant Secretary”

At the same time the policy on Maydee’s life was issued another policy was issued by the same insurer on Joseph’s life with Maydee as the designated beneficiary. That policy is not in the record before us, so we do not know what it provided with respect to ownership or what was shown on the face of the application. It was allowed to lapse after one year.

It is stipulated that when the two policies were issued the Shellmans were partners in the operation of Meadowview Retirement Home. Premiums for the first year were paid by a check in the amount of $1094.64 drawn on the partnership account. The premium covering the policy on Maydee’s life for the second year of the term was paid by a check in the amount of $308.00, also drawn on the partnership account. The premium for the third year on this policy was paid by a $308.00 money order purchased by Joseph.

The Shellmans were divorced on October 31, 1969. In February of 1970 Maydee paid the fourth premium of $308.00 by personal check, though Joseph had retained possession of the policy. She died on October 28, 1970.

There is a good deal more to the story than has been disclosed here, but at this juncture we have only to decide whether Joseph’s rights as the beneficiary of the policy on Maydee’s life were terminated by the divorce. We think they were not.

While it is true that with certain exceptions our cases have hewed to a general principle that the interest of one spouse as the beneficiary of insurance on the life of the other is divested by divorce, the rationale for such a result has been that it was compelled by the restoration statutes, KRS 403.060 and 403.06S, which, though now repealed and replaced by KRS 403.190, were in effect at the time the Shellmans were divorced. Warren v. Spurlock’s Adm’r, 292 Ky. 668, 167 S.W.2d 858, 859 (1943). In this case, however, the insurable interest of Joseph in the life of Maydee at the time the policy was procured did not depend entirely upon his status as her husband, but existed also by reason of their business partnership. He could have insured her life for his benefit even if they had never been married. Bissell v. Gentry, Ky., 403 S.W.2d 15 (1966), in which the wife was made the beneficiary of a policy taken out on her husband’s life by his employer, is not in point, because the wife’s insurable interest existed only by virtue of the marriage.

Except for the effect of divorce upon an insurable interest existing solely by virtue of the marriage, this court has “recognized the general rule that cessation of insurable interest does not affect the validity of an insurance contract where the insurable interest existed at the time the policy was issued.” Ficke v. Prudential Ins. Co. of America, 305 Ky. 172, 202 S.W.2d 429, 431, 175 A.L.R. 1215 (1947). See Couch on Insurance 2d, §§ 24.122, 24.125.

Since at the time the policy naming him as beneficiary was issued Joseph’s insurable interest in Maydee’s life did not exist solely by reason of the marriage, it was not divested by the divorce. And since the policy gave him the exclusive right to change the beneficiary, no attempt by Maydee to effect such a change could have been effective. We are of the opinion that the summary judgment should have been in favor of Joseph Shellman rather than against him.

The judgment is reversed with directions for further proceedings consistent herewith.

All concur.

LUKOWSKY, Justice

(concurring).

I agree that the judgment should be reversed but do not believe it is necessary to distort the general rule governing the cessation of insurable interest in order to reach that result. The case should be decided on the basis of procedural law and the existence of factual issues. C.R. 56.03.

The “gut” issue here is whether the ap-pellees have conclusively established that Joseph applied for and obtained the insurance policy on the life of Maydee as her “marital partner” rather than as her “business partner” since the restoration statutes affect only property obtained from or through the other spouse by reason of marriage and in consideration thereof.

Even if we assume, arguendo, that all facts bearing on this issue are undisputed in the record, the inferences that may be drawn therefrom are not. A case in such a posture is not ripe for summary judgment. Pessin v. Keeneland Association, D.C.Ky., 45 F.R.D. 10.

I would reverse the judgment and remand for further proceeding consistent herewith.


author: JONES, Justice.

text:
    PEABODY COAL COMPANY et al., Appellants, v. Willard SIMPSON et al., Appellees.
    Court of Appeals of Kentucky.
    March 7, 1975.
    Rehearing Denied June 20, 1975.
    James M. Graves, Larry L. Johnson, William P. Swain, Boehl, Stopher, Graves & Deindoerfer, Louisville, for appellants.
    E. Louis Johnson, Owensboro, Earl M. Cornett, Dept, of Labor, Frankfort, Gem-ma M. Harding, Louisville, for appellees.
   JONES, Justice.

Peabody Coal Company appeals from a judgment affirming an opinion and award of the Workmen’s Compensation Board. Peabody contends: (1) that the opinion and award of the board is ambiguous, and (2) that the board-appointed physician’s report was based upon a history proven to be false and did not constitute probative evidence.

Willard Simpson was employed by Peabody on November 25, 1968. On March 5, 1969, Simpson sustained a back injury when a large piece of coal fell on him. He made no claim for this injury, and subsequently returned to work.

On November 20, 1970, Simpson tripped over a drill cable and was thrown to the ground. He alleges that his back was injured as a result of the fall.

Simpson filed with the board an application for adjustment of claim for injuries sustained on November 20, 1970. After all the evidence was submitted to the board, it rendered an opinion and award declaring Simpson to be 100% permanently disabled. The pertinent portion of the opinion and award attacked by Peabody follows:

“3. After reading all of the medical, the Board finds plaintiff was still receiving medical treatment for his injury of March 5, 1969 at the time he received his second injury and find that the second injury was a continuing of the first injury; that plaintiff is 100% permanently and totally disabled as a result of said injuries. . . .”

This court is of the opinion that the trial court erred in sustaining the findings of the board. The board directed Peabody to pay all the disability benefits to Simpson. Simpson had made no claim for benefits resulting from the March 5, 1969 injury. There is no specific finding by the board that Simpson was not occupationally disabled prior to the November 20, 1970 injury. Such a finding is necessary to support the board’s failure to carve out of the award that portion of Simpson’s disability which is attributable to the March 5, 1969 injury.

The medical evidence shows that Simpson’s back injuries continued from the prior injury to the subsequent injury. He made numerous visits to his doctor and was treated for a back injury. At the time of the injury of November 20, 1970, it is obvious that Simpson had an active pre-ex-isting, disabling condition. Neither the Special Fund nor Peabody is liable for the percentage of resulting disability attributable to the March 5, 1969 injury. KRS 342.270. This court is unable to determine what percentage of Simpson’s disability was attributable to either the March 5, 1969 injury or to the injury of November 20, 1970. The court holds that the opinion and award of the board is patently ambiguous.

Peabody’s second contention of error is without merit.

The judgment is reversed with directions to remand the proceedings to the board for appropriate proceedings consistent with this opinion.

All concur.


author: STERNBERG, Justice.

text:
    Ronnie CORNWELL, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    Court of Appeals of Kentucky.
    April 11, 1975.
    Rehearing Denied June 20, 1975.

      Anthony M. Wilhoit, Public Defender, Timothy T. Riddell, Asst. Public Defender, Frankfort, Joseph S. Freeland, Paducah, for appelant.
    Ed W- Hancock, Atty. Gen., Patrick B. Kimberlin, III, Asst. Atty. Gen., Frankfort, for appellee.
   STERNBERG, Justice.

Appellant Ronnie Cornwell, on the 13th day of August, 1973, was' indicted for the offense of armed assault with intent to rob, as is denounced by KRS 433.150. A jury trial on September 17, 1973, resulted in a hung jury. The court, thereupon, discharged the jury. The case again was tried to a jury on November 21, 1973, and again the jury failed to reach a verdict; whereupon, it was discharged. The case then came on for a third trial on February 13, 1974, at which time counsel for appellant moved the court to dismiss the indictment. This, the court declined to do. Appellant’s counsel’s motion that the trial of the action be continued by reason of the absence of a material witness was likewise overruled. Thereupon, the case continued to trial. After a lengthy trial, the jury returned a verdict finding appellant guilty and fixed his punishment at ten years in the penitentiary.

On this appeal, appellant complains of two errors, each of substantial consequence, that allegedly denied him a fair trial and violated his constitutional rights. First, Ronnie contends that his motion to dismiss should have been sustained because to force him into a third trial, as was done, violated his constitutional right of freedom from double jeopardy. In addition, he claims to have been prejudiced by the trial court’s refusal to continue the trial by reason of the absence of a material witness.

Article 13 of the Bill of Rights of the Kentucky Constitution provides:

“Double jeopardy — Property not to be taken for public use without compensa tion. — No person shall, for the same offense, be twice put in jeopardy of his life or limb, nor shall any man’s property be taken or applied to public use without the consent of his representatives, and without just compensation being previously made to him.”

The Fifth Amendment to the Constitution of the United States provides:

“Criminal actions — Provisions concerning — Due process of law and just compensation clauses. — No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

In Roberson’s New Kentucky Criminal Law and Procedure, 2d Edition, at § 122, it is stated:

“ * * * Thus, if the trial court had no jurisdiction of the offense; or if the statute creating the court is unconstitutional; or the term of court is being held at a time not authorized by law; * * * or the inability of the jury to agree upon a verdict after a reasonable time has been given them for deliberation; * * * in any or all of these cases the accused has not been placed in jeopardy, and he may again be put upon trial upon the same facts before charged against him. * * * ” (Emphasis added)

In Volume 21 of American Jurisprudence 2d, under the title “Criminal Law” and in § 204 thereof, we find the following:

“Failure to agree. It appears to be unquestioned that a trial court may, without prejudicing a future prosecution, discharge the jury where it appears that after a reasonable time for deliberation there is no probability of an agreement. It has also been held that the discharge of a jury that has convicted the defendant on some counts of an indictment and has disagreed as to another count will not bar a subsequent prosecution for the offense on which they disagree.
“Whether the circumstances are such as to justify the conclusion that the jury will be unable to agree on a verdict is to be determined by the exercise of sound judicial discretion. The conclusion of the court is not open to collateral attack.
“The consent or nonconsent of the defendant is not material so long as the court is judicially satisfied that an agreement cannot be reached.”

It has long been the law of this commonwealth that a defendant is not placed in unconstitutional double jeopardy by being brought to trial for the same offense a second time, after the jury in the first trial had been unable to reach a verdict as to his guilt or innocence. Kentucky Digest, Criminal Law, ©^lSS. Counsel has not cited to this court any case that holds that a person may not be tried a third time after two prior juries had been unable to reach a verdict, and this court, in its research, has been unable to locate such an authority. In the landmark case of United States v. Perez, 22 U.S. 579, 6 L.Ed. 165 (1824), Mr. Justice Story, speaking for the Supreme Court of the United States on the subject, said:

“ * * * The prisoner has not been convicted or acquitted, and may again be put upon his defense. We think, that in all cases of this nature, the law has invested Courts of Justice with the authority to discharge a jury from giving any verdict, whenever, in their opinion, taking all the circumstances into consideration, there is a manifest necessity for the act, or the ends of public justice would otherwise be defeated. They are to exercise a sound discretion on the subject; and it is impossible to define all the circumstances, which would render it proper to interfere. To be sure, the power ought to he used with the greatest caution, under urgent circumstances, and for very plain and obvious causes; and, in capital cases especially, Courts should be extremely careful how they interfere with any of the chances of life, in fa-vour of the prisoner. But, after all, they have the right to order the discharge; and the security which the public have for the faithful, sound and conscientious exercise of this discretion, rests, in this, as in other cases, upon the responsibility of the Judges, under their oaths of office. * *

The United States courts have thus long been guided, and this court has and continues to adhere to the same philosophy.

Appellant’s motion for a continuance, which he filed with the trial court, was supported by his affidavit which set out in detail the substance of the testimony which had been given by his witness John Cissell at the two former trials. Appellant, on the date and at the time his case was called for trial, for the first time notified the court that his witness was absent and was reported to be in Phoenix, Arizona, and not available to testify. On February 8, 1974, five days prior to the scheduled trial date, a subpoena was issued for the witness John Cissell. However, on the day of trial appellant and his counsel first learned that the witness had not been served with the subpoena and would not be available to testify. The responsibility of a person charged with the commission of a criminal offense and that of his counsel does not stop merely with having issued a subpoena. There is no showing that any effort was made by appellant or his counsel to learn whether his witness would be available. As a matter of fact, there is no statement made that the witness actually was in Phoenix, Arizona, or if he could be located, or if he would be available to testify at a future date. Had appellant made diligent effort to locate this witness prior to the issuance of the subpoena, or even at the time of the issuance, and learned of his absence, his present whereabouts may have been ascertained and his presence secured. It is provided in the Kentucky Rules of Criminal Procedure that upon a proper showing the deposition of a witness may be taken and his testimony used m that manner. RCr 7.10. More in point, however, is RCr 9.04, which provides as follows :

“Postponement of hearing or trial— Motion and affidavit. — The court, upon motion and sufficient cause shown by either party, may grant a postponement of the hearing or trial. A motion by the defendant for a postponement on account of the absence of evidence may be made only upon affidavit showing the materiality of the evidence expected to be obtained, and that due diligence has been used to obtain it. If the motion is based on the absence of a witness, the affidavit must show what facts the affiant believes the witness will prove, and not merely the effect of such facts in evidence, and that the affiant believes them to be true. If the attorney for the commonwealth consents to the reading of the affidavit on the hearing or trial as the deposition of the absent witness, the hearing or trial shall not Be postponed on account of his absence.”

The granting of a continuance on account of absent witnesses rests within the sound discretion of the trial court, and his action will not be disturbed except where it is clearly shown that there has been an abuse of discretion. Toler v. Commonwealth, Ky., 295 Ky. 105, 173 S. W.2d 822. In this case there has not been a showing that the trial court abused its discretion in denying the continuance, and the court was justified in overruling appellant’s motion for a continuance.

The judgment is affirmed.

All concur, except REED, C. J., and CLAYTON, J., who concur in result only.


author: GARDNER, Commissioner.

text:
    Charles KETRON, Appellant, v. LINCOLN INCOME LIFE INSURANCE COMPANY, Appellee.
    Court of Appeals of Kentucky.
    April 25, 1975.
    Rehearing Denied June 20, 1975.
    Norbert J. Bischoff, Albert Berry Howe, Bischoff & Hehl, Newport, for appellant.
    Rodney S. Bryson, L. Thomas Hiltz, Ware, Bryson, Nolan & West, Covington, for appellee.
   GARDNER, Commissioner.

Appellee insurance company refused to pay the proceeds of a life policy to appellant, the beneficiary, because of false answers that were in the application for insurance. The applicant, wife of appellant, died of hepatic failure and acute hepatitis. In the preliminary negotiations for the insurance, applicant fully revealed to the insurance agent her physical condition, including that of her being a diabetic, but the agent failed to put in the application information regarding the diabetic condition. (Medical evidence disclosed that diabetes was not a contributing factor to the death of the insured, but as appellee correctly points out, the question was not whether insured died from diabetes, rather would knowledge of the condition cause insurer to refuse to issue the policy.)

The trial court, without a jury, found that “said agent completed the insurance application form for said applicant (insured), but inadvertently or otherwise reported that said applicant was not a diabetic,” and that “said insured did not read such application completed by the agent as aforesaid, before signing it, although she was educated and literate.” The trial court concluded that in view of Kentucky Central Life Insurance Company v. Combs, Ky., 432 S.W.2d 415 (1968), and Mills v. Reserve Life Insurance Company, Ky., 335 S.W.2d 955 (1960), applicant should be held responsible for the wrong answers appearing in the application, and denied recovery.

According to Appleman, Insurance Law and Practice, Vol. 16A, section 9101, page 353, “The general rule, adopted by the overwhelming weight of authority, is to the effect that any knowledge or information coming to an authorized representative of the insurer while acting within the proper scope of his authority is the knowledge of the company.” See also Couch on Insurance 2d, section 35:165; and 26 A.L. R.3d 6, page 33. The view generally taken is that the agent, in making out the application, acts for the insurer, and the insurer is therefore estopped to assert the falsity of the answers or, as has been said in some cases, the falsity is deemed to be waived by the insurer.

Kentucky has been listed as not following the majority view. See Mills v. Reserve Life Insurance Company, Ky., 335 S.W.2d 955 (1960), wherein it was said that the applicant himself must be held responsible. In accord is Kentucky Central Life Insurance Company v. Combs, Ky., 432 S.W.2d 415 (1968). However, in a more recent case, Pennsylvania Life Insurance Co. v. McReynolds, Ky., 440 S.W. 2d 275 (1969), it was said that no longer would the full responsibility be placed on the applicant to see that the application is correctly filled out, except where the applicant inserts the answer. We qualified the statement by saying that if the applicant knows that false answers are being placed in the application he will be responsible for them.

In the present case we interpret the finding of the trial court to be that applicant, who had fully revealed her condition to the agent, did not know the application contained false answers. We believe that Pennsylvania Life Insurance Co. v. McReynolds, supra, which expressly overruled Kentucky Central Life Insurance Company v. Combs, supra, is controlling and the insurance company, rather than the applicant, should bear the responsibility for the application’s containing false statements.

The judgment is reversed and remanded for the entry of a judgment for appellant.

All concur.


author: PALMORE, Justice.

text:
    Willie Lee BURNETT, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    Court of Appeals of Kentucky.
    April 25, 1975.
    Rehearing Denied June 20, 1975.
    C. Michael Hatzell, Louisville, for appellant.
    Ed W. Hancock, Atty. Gen., Guy C. Shearer, Asst. Atty. Gen., Frankfort, for appellee.
   PALMORE, Justice.

The appellant was found guilty of rape (KRS 435.090) and of indecent and immoral practices (KRS 435.105) and sentenced to life imprisonment on the first count and five years’ imprisonment on the second.

There is no question that a heinous offense or offenses were committed upon the prosecuting witness, but there was a real question as to the identity of the offender, and we cannot say that the proof against the appellant in that respect was so clear that the error in admitting evidence of his prior conviction of a felony was not prejudicial. According to the transcript, this is what took place:

Q- “While we’re on the issue of truth, do you know what a felony is ?”
A- “Yes, I do.”
Q- “Have you ever been previously convicted of a felony ?”
A- “Yes, I have.”
“MR. HATZELL: Object to that, Your Honor. May we approach the Bench?”
“(Whereupon, the following proceedings were had at the Bench, out of hearing of the jury.)”
“MR. HATZELL: I think he can’t ask about a felony, without going by the Cotton case and having an in chambers hearing to determine which of these questions you may ask and which you may not.”
“THE COURT: You can’t go into it. All you can ask him is yes, or no. That’s what the Cotton case says.”
“MR. HATZELL: He can’t even ask him yes, or no, until we go into chambers.”
“THE COURT: No, that’s not what the law says. That’s the way a lot of lawyers read it, but that’s not what it says.”
“MR. HATZELL: All right.”
“(End of proceedings at Bench.)”
“THE COURT: Ladies and gentlemen of the jury — ”
“MR. ROSENBAUM: (Interrupting) Can we read back the question and answer, Judge ? I apologize.”
“(Whereupon, question No. 90, together with the answer thereto, were read by the reporter.)”
“THE COURT: Ladies and gentlemen of the jury, you may consider that testimony, the statement by the witness that he has been convicted of a felony, only for the purpose of whether or not it would affect his credibility as a witness, if you wish to consider it at all, and for no other purpose.”
In his closing address to the jury the prosecuting attorney made use of this evidence as follows:
“Now, I asked him on direct examination if he had ever been convicted of a felony, and he answered yes, that he had, and the Judge properly instructed you that you may consider that, in weighing his testimony. The law of this State, and of every state is that when a man has previously been convicted of a felony, that he is not necessarily as credible and worthy of belief — ”
“MR. HATZELL: (Interrupting) Objection, Judge.”
“THE COURT: Sustain the objection. It’s up to the jury.”
“MR. ROSENBAUM: I said not necessarily. You may consider this felony conviction in weighing- whether or not he’s telling the truth.”

The case was tried in June of 1974. Four years before that time it had been announced in Cotton v. Commonwealth, Ky., 454 S.W.2d 698, 702 (1970), that evidence of a previous conviction for impeachment purposes would thereafter be limited to felony convictions evincing dishonesty, stealing, or false swearing and that the nature of the conviction should first be ascertained in a hearing or conference held outside the presence of the jury. There was absolutely no excuse for either the trial court or the prosecuting attorney to be oblivious to such an important and frequently-occurring point of evidentiary law. Reversal in such a case does not reflect a soft attitude on the part of appellate judges toward crime and criminals. It is a direct result of the trial court’s failure to recognize and comply with the law.

The judgment is reversed with directions for a new trial. Clayton and Stephenson, JJ., dissent because it is their opinion that in view of the strength of the evidence for the Commonwealth the error was not prejudicial.

      . For example, before identifying the appellant from photographs and in a police lineup the prosecuting witness had described her assailant as being some four inches shorter in height than her husband. Actually her husband and the appellant were about the same height. A mail carrier who saw the assailant departing from the public washroom in which the offense had just taken place also testified that the man he saw was shorter than the appellant.

      . The motion for a new trial in the instant proceeding stated that the appellant’s prior conviction was on a narcotics charge. Under the Cotton rule, of course, it would not serve as a basis for impeachment.