author: LEWIS W. CLYMER, Special Judge.

text:
    Robert I. GALE, Respondent, v. Florence J. CORBETT, Appellant.
    No. KCD 27381.
    Missouri Court of Appeals, Kansas City District.
    April 4, 1977.
    Motion for Rehearing and/or Transfer Denied May 2, 1977.
    Order Jan. 18, 1978.

      Roy W. Brown, Kansas City, for appellant.
    Robert G. Oberlander, Leary G. Skinner, Kansas City, for respondent; Linde, Thomson, Fairchild, Langworthy & Kohn, Kansas City, of counsel.
    Before SWOFFORD, P. J., and MOORE, BONDURANT and CLYMER, Special Judges.
   LEWIS W. CLYMER, Special Judge.

The parties will be referred to herein as they were below.

On April 28, 1972, plaintiff, Robert I. Gale, commenced this action for an accounting against his former wife, Florence J. Corbett. In his petition, plaintiff prayed for an accounting of certain funds which defendant had withdrawn from Capitol Federal Savings & Loan Association of Prairie Village, Kansas, Account No. 0 168577-01, in the approximate amount of Eleven Thousand Two Hundred Fifty Dollars ($11,250.00) and the proceeds of a Certificate of Deposit 0760288-05 purchased from Capitol Federal Savings & Loan Association in the amount of One Thousand One Hundred Twenty-one and 18/100 Dollars ($1,121.18).

Plaintiff alleged that he was the rightful owner of the aforementioned funds. The defendant by her answer contested his right to an accounting, pleaded an affirmative defense, and filed a counterclaim for an accounting. Appeal was taken from the judgment of the court below finding all issues in favor of the plaintiff and entering judgment against the defendant in the sum of Six Thousand Dollars ($6,000.00).

On appeal, the point for decision is whether or not the action before the court was a compulsory- counterclaim in the previous action for divorce between these parties.

Plaintiff and defendant were married on November 26, 1967 and lived together until January 7, 1972. No children were born of this marriage. A petition for divorce was subsequently filed by the present defendant, Florence J. Gale, (now Corbett), and Robert I. Gale cross-petitioned. On April 13, 1972, the court granted the divorce decree to Robert I. Gale and restored to the present defendant her former name of Florence J. Corbett. The civil action for accounting was initiated on April 28, 1972.

Numerous cases hold that an action for an accounting may be had in a divorce proceeding. Fawkes v. Fawkes, 204 S.W.2d 132 (Mo.App.1947); State ex rel. Fawkes v. Bland, 357 Mo. 634, 210 S.W.2d 31 (Banc 1948); Builderback v. Builderback, 241 Mo.App. 508, 244 S.W.2d 377 (1951); Ray v. Ray, 336 S.W.2d 731 (Mo.App.1960); Coffey v. Coffey, 485 S.W.2d 167 (Mo.App.1972); Oliver v. Oliver, 508 S.W.2d 209 (Mo.App.1974). A detailed history of the development of the law regarding counterclaims to determine property rights in divorce actions is set out in Coffey v. Coffey, supra. The court in Coffey reviewed the previous authorities and held “ * * * neither the husband nor the wife owning personalty by the entirety can dispose of the whole or any part thereof without the consent, agreement or acquiescence of the other.” (1. c. 170). The record shows that no agreement existed between the parties as to the disposition of all or any part of the personal property taken by the defendant. In 1974, the Missouri Court of Appeals in Oliver v. Oliver, supra, when presented with facts similar to the instant circumstances, held that a claim made after a divorce decree, for value of certain joint personal property removed from the joint residence of the parties when they separated prior to divorce, was properly treated as an accounting joined with the suit for divorce.

Defendant’s contention that the present cause of action was fully presented in the initial divorce suit and is thus res judicata, is without merit. Since the court below treated this action as separate and apart from the suit for divorce, it lacks certain essential elements which the St. Louis Court of Appeals defines as res judicata in Ratermann v. Ratermann Realty & Investment Co., 341 S.W.2d 280 (Mo.App.1960):

“ * * * Generally speaking, identity of the thing sued for, identity of the cause of action, identity of the persons and parties to that action and identity as to the quality of the person for or against whom such a claim is made are essential to a plea of estoppel by judgment. * *” (1. c. 290)

The rules of compulsory counterclaim and res judicata were intended to stop duplication of litigation; however, in the instant case the right of ownership to the funds in question was never pleaded or put in issue in the earlier divorce action nor in our opinion was it required. State of Missouri ex rel. Farmer v. Allison, 359 S.W.2d 245 (Mo.App.1962); Prentzler v. Schneider, 411 S.W.2d 135 (Mo. banc 1966); Jackson v. Hartford Accident and Indemnity Company, 484 S.W.2d 315 (Mo.1972).

Having carefully reviewed the cases cited in the briefs, we have reached the conclusion that the plaintiff’s action for an accounting was not precluded by the prior divorce decree. The trial court was within its discretion in awarding the former husband an equal share of the joint assets.

For the reasons herein stated, the judgment is affirmed.

All concur.

ORDER

WHEREAS, this case was submitted to this Court on April 19,1976, and an opinion adopted on April 4, 1977 affirming the judgment of the court below and appellant’s motions for a rehearing in this Court or in the alternative to transfer to the Supreme Court were overruled and denied on May 2,1977. On May 17,1977, the cause was transferred to the Supreme Court upon its order and under date of January 10, 1978, the mandate of the Supreme Court of Missouri issued setting aside its order of transfer and remanding the case to this Court.

NOW, THEREFORE, this cause is reinstated upon the docket of this Court and it is ordered that the mandate of this Court issue forthwith in accordance with the opinion of April 4, 1977.


source: Caselaw Access Project

author: KELLY, Judge.

license: Public Domain

text:
    Steve TOCKMAN, d/b/a Steve's Sunoco Service Station, Plaintiff-Respondent, v. SHOWER DOORS, INC., et al., Defendants-Appellants.
    No. 38379.
    Missouri Court of Appeals, St. Louis District, Division Three.
    May 16, 1978.

      Edward Lawson, Clayton, for plaintiff-respondent.
    Warren W. Davis, Davis & Davis, Clayton, for defendants-appellants.
   KELLY, Judge.

Steve Tockman, d%61b/a Steve’s Sunoco Service Station, instituted this action in the Circuit Court of St. Louis County naming as defendants therein the St. Louis Shower Door Company, a corporation, and Shower Doors, Inc., a corporation, seeking to set aside an allegedly fraudulent conveyance of two motor vehicles, a 1969 GMC van and a 1968 GMC van, on November 24, 1972. As initially filed, this petition was in two counts. In Count I Mr. Tockman prayed for a decree that the conveyance of the two vehicles from St. Louis Shower Door Company, Inc., to Shower Doors, Inc., be adjudged fraudulent and void as to him and that it be set aside and held for naught; that the property be ordered sold for satisfaction of a judgment he had obtained against St. Louis Shower Door Company, in the Magistrate Court of St. Louis County, and an injunction restraining the defendant from disposing of said vehicles or paying out any of the proceeds thereof. Count II sought punitive damages from both defendants in an amount of $5,000.00.

Subsequently, on April 23, 1973, plaintiff amended his petition by giving credit to defendants for $273.62 received from sale of a 1969 Pontiac stationwagon by way of execution and by amending, by interline-ation, the “Wherefore clause in Count I” of his petition to pray for a judgment against the defendants in the amount of $1,826.38 plus interest.

The cause came on for trial on February 9,1976, and was tried to the court without a jury. On July 2, 1976, Findings of Fact, Conclusions of Law and Judgment were entered by the trial court whereby judgment was entered in favor of the plaintiff and against the defendant Shower Doors, Inc., in Count I of the petition, in the amount of $1,826.38 plus interest in the amount of $427.47 for a total of $2,253.85. Judgment on Count I was found in favor of defendant St. Louis Shower Door Company. Judgment in Count II of the petition was found in favor of both of the defendants.

Thereafter, on July 30, 1976, defendant Shower Doors, Inc., filed its notice of appeal from the judgment on Count I.

On appeal, the appellant, Shower Doors, Inc., contends initially that the trial court erred in refusing to grant its motion to dismiss plaintiff’s petition at the close of plaintiff’s case for the reason plaintiff failed to introduce evidence sufficient to meet his burden of proof.

Inasmuch as this was a court tried case the scope of review is that set out in Rule 73.01.3 V.A.M.R. and we must (a) review the case upon both the law and the evidence as in suits of an equitable nature, (b) giving due regard to the opportunity of the trial judge to have judged the credibility of the witnesses. The Supreme Court, in Murphy v. Carron, 536 S.W.2d 30, 32 [1-3] (Mo. banc 1976), has told us that “appellate ‘review . . . as in suits of an equitable nature,’ as found in Rule 73.01, is construed to mean that the decree or judgment of the trial court will be sustained by the appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Appellate courts should exercise the power to set aside a decree or judgment on the ground that it is ‘against the weight of the evidence’ with caution and with a firm belief that the decree or judgment is wrong.” We find that this case suffers from none of the aforementioned infirmities and we therefore affirm.

The facts developed at trial proved that the respondent had obtained a judgment against the defendant St. Louis Shower Door Company for $2,100.00 plus costs in the Magistrate Court of St. Louis County on May 25, 1972. This judgment was satisfied to the extent of $273.62 through the sale on execution of a 1969 Pontiac station-wagon owned by the St. Louis Shower Door Company. Subsequently, two executions run on this judgment were returned unsatisfied.

According to Morley Gluskoter, President of St. Louis Shower Door Company from 1950 to 1971, and also its majority stockholder, St. Louis Shower Door Company engaged in the business of manufacturing shower doors and selling of patio doors, mirrors and medicine cabinets. Sometime in the 1960’s St. Louis Shower Door Company “took over” Shower Doors, Inc., and after that Shower Doors, Inc., became inoperative although it continued payment of its annual franchise tax.

The ownership of Shower Doors, Inc. was acquired by St. Louis Shower Door Company by the transfer of the stock of Shower Doors, Inc., and its inventory to St. Louis Shower Door Company in exchange for which St. Louis Shower Door Company acknowledged an indebtedness to Shower Doors, Inc., of $13,000.00. This indebtedness was never reduced to writing, was not satisfied prior to 1971, and continued being carried on the books of St. Louis Shower Door Company. Mr. Gluskoter explained how this debt of $13,000.00 came about by testifying: “That was (sic) the assets that my brother-in-law had at the time I took him back with me; that was his entire assets in becoming my partner again, my partner in St. Louis Shower Door Company.”

Mr. Gluskoter sold his interest in St. Louis Shower Door Company in 1971 for an unspecified cash consideration.

Donald Gilden, who at the time of trial was President of both St. Louis Shower Door Co. and Shower Doors, Inc., since about September 24, 1971, had been an employee of St. Louis Shower Door Company from 1959 to 1971, and became President of both companies when Mr. Gluskoter sold his interest in the companies. Thereafter the officers of the two corporations were the same. Mr. Gilden testified that on February 28,1972, St. Louis Shower Door Company filed a security agreement granting to Shower Doors, Inc. a security interest in various assets. This security agreement recites that the items listed on a list attached to the security agreement as collateral for said agreement, and the two vehicles which are the object of this litigation are listed thereon.

The chronology of events relevant to our decision as gleaned from the transcript are:

1960 (sometime) St. Louis Shower Door Company acquired the stock and the assets of Shower Doors, Inc.

9-24-71 St. Louis Shower Door Company ceased active operation, and Mr. Gluskoter sold his interest in both companies.

12-1-71 respondent commenced law suit against St. Louis Shower Door Company in Magistrate Court, St. Louis County.

2-8-72 Security agreement filed.

5-25-72 Consent judgment entered in Tock-man v. St. Louis Shower Door Company for $2,100.00.

5-25-72 Title to property subject of this appeal transferred from St. Louis Shower Door Company to Shower Doors, Inc.

8-2-72 Execution levy issued on these three vehicles.

11-15-72 Pontiac stationwagon sold at sheriff’s sale for $950.00 subject to lien; respondent received from this execution the sum of $273.62.

11-24-72 This suit instituted.

After the trial on February 9, 1976, the trial court found that the transfer of the title to the three vehicles from St. Louis Shower Door Company to Shower Doors, Inc., was for the purpose of defrauding creditors, without good faith, and in violation of § 428.020 RSMo. 1969, and entered the judgment from which this appeal has been taken.

The point raised initially by appellant is directed to the failure of the trial court to sustain its motion to dismiss at the close of the plaintiff’s evidence,

The essential elements of a cause of action for a fraudulent conveyance include (1) a conveyance (2) of goods and chattels (3) with the intent to hinder, delay or defraud creditors. Section 428.020 RSMo. 1969. The sole contested issue at trial was the intent of the defendant in making the transfer. However, in arriving at the question of intent in a case of this kind Missouri courts have recognized that there are circumstances which are “badges of fraud” that may be employed to determine the presence of fraud. Among these are the following:

1. inadequate consideration for the conveyance;
2. a conveyance in anticipation of suit;
3. transfer of all or nearly all of the debtor’s property; and
4. the debtor’s insolvency subsequent to the conveyance.

Allison v. Mildred, 307 S.W.2d 447, 454[7] (Mo.1957); Morris v. Holland, 529 S.W.2d 948, 953[8, 9] (Mo.App.1975).

In this case there is evidence from which the fact-finder might find that the consideration for the three vehicles was inadequate because it was a long standing and pre-existing debt between defendants, which had been on the books of St. Louis Shower Door Company for a period in excess of the statute of limitations. Section 561.120 RSMo. 1969. A “stale claim” has been held to be a badge of fraud in this state. Brennecke v. Riemann, 102 S.W.2d 874, 877[2] (Mo.1937). In the posture in which this Point is presented to us appellant is not entitled to the benefit of the evidence of Mr. Gilden relative to a tax liability of St. Louis Shower Door Company at the time the new owners took it over which came out on cross-examination by respondent’s counsel. Even if he was, he did not testify that the tax liability was paid by them.

In addition to the foregoing, there was evidence that the conveyance of these vehicles was made in anticipation of suit. The institution of the suit in Magistrate Court on December 1,1971, pre-dated the filing of the Security Agreement, executed on Sept. 24, 1971, but not filed until February 8, 1972, some 17 days prior to the entry of the consent judgment against St. Louis Shower Door Company on May 25, 1972, the same date on which the titles to these vehicles were transferred.

There is also, at this point in the case, prima facie evidence of insolvency in the return of the execution unsatisfied, Glover v. Berger, 75 Wyo. 191, 294 P.2d 793, 800[11] (1956). When a voluntary conveyance without consideration is shown, the party attacking the transfer makes a prima facie case and the burden of going forward with evidence to show that the conveyance was not fraudulent, including the fact that the grantor was not insolvent at the time of the conveyance, or was rendered insolvent by it, passes to the party who received the conveyance. Oldham v. Wright, 357 Mo. 170, 85 S.W.2d 483, 485[7] (1935); Hartman v. Lauchli, Trustee, 238 F.2d 881, 888-889 (8th Cir. 1956).

We hold that, with these indicia of fraud in evidence in this case, it was not error for the trial court to overrule appellant’s motion for directed verdict at the close of respondent’s case, and find this Point to be without merit.

Appellant next contends that the judgment against Shower Doors, Inc. is inconsistent with the judgment in favor of St. Louis Shower Door Company. It argues that the judgment in favor of St. Louis Shower Door Company was predicated upon the failure of the respondent to prove the necessary element of his cause of action that St. Louis Shower Door Company intended to defraud it when it transferred these vehicles to Shower Doors, Inc.

The trial court in its Conclusions of Law specifically stated: “(T)he intent underlying the transaction of the transfer of the vehicles on May 25, 1972, was for the purpose of hindering, delaying, and defrauding plaintiff . . . ” We conclude that this finding of the trial court refutes this argument.

Furthermore, from the evidence it is clear that St. Louis Shower Door Company had no legal rights in these vehicles which might be affected by any judgment of the trial court. Under these facts, where the grantor has relinquished all legal interest in the property and the creditor has obtained a judgment against the grantor, the grantor is not even a necessary party to the action to set aside the transfer to hinder, delay or defraud the creditor, since the grantor could not be prejudiced by a determination subjecting property to the payment of his debts and therefore has no interest in the lawsuit. First National Bank of Monett v. Vogt, 344 Mo. 284, 126 S.W.2d 199, 201[3] (1939). Any judgment against St. Louis Shower Door Company was unnecessary to enforce respondent’s rights with respect to these vehicles which had been transferred to Shower Doors, Inc. The judgment appealed from is not erroneous.

Affirmed.

GUNN, P. J., and WEIER, J., concur.

      . Although the parties stipulated at trial that the security agreement was filed on February 28, 1972, the exhibit itself, Pltf’s Ex. 3, shows that the filing date is February 8, 1972. This discrepancy in the evidence is not significant in resolving the issues in this case.

      . The documents which are evidence of the registration of the three vehicles — Pltf s Ex.’s 3, 4.5 — are of very poor quality and the dates thereon are almost illegible. Appellant, however, establishes the date of registration as of May 25, 1972 and respondent does not dispute that; we must, therefore assume that the correct date is May 25, 1972.

      . Appellant’s discussion of this Point in its brief presents a sufficiency of the evidence argument and includes therein not only plaintiffs evidence but its own evidence offered in defendant’s case. Argument of this type in the posture in which the Point is raised — i.e. whether plaintiff, at the close of his evidence made a submissible case, — is inappropriate, and in ruling this Point we are required to view all of the evidence most favorably towards plaintiff, give him the benefit of all reasonable inferences deducible therefrom, and disregard defendant’s evidence unless it aids plaintiffs case. Woodford v. Illinois Cent. Gulf R. Co., 518 S.W.2d 712, 715[1] (Mo.App.1975).

      . Appellant’s sole witness did not testify directly on this issue, and on cross-examination stated that the $13,000.00 due on taxes was paid by P. M. Investment. No further explanation was adduced as to why P. M. Investment paid these taxes.


author: McMILLIAN, Judge.

text:
    Harry O. STAHLBERG, Appellant, v. The TRAVELERS INDEMNITY COMPANY, Respondent.
    No. 39521.
    Missouri Court of Appeals, St. Louis District, Division One.
    May 30, 1978.

      John F. Sutherland, IV, Clayton, for appellant.
    Evans & Dixon, Ralph C. Kleinschmidt, St. Louis, for respondent.
   McMILLIAN, Judge.

Appellant Harry 0. Stahlberg appeals from a judgment entered in the circuit court of St. Louis County in favor of respondent, The Travelers Indemnity Company. For reversal appellant argues the trial court erred in (1) construing “total loss” to mean actual total physical loss, (2) finding respondent was only liable for partial loss, and (3) finding the terms of the insurance policy to be controlling and the valued policy statute inapplicable. For the reasons discussed below, we reverse and remand the judgment with directions to the trial court to enter a judgment not inconsistent with this opinion.

This cause was submitted to the trial court upon a stipulation of facts, exhibits and briefs of counsel. The parties stipulated that appellant is a resident of St. Louis County, Missouri; respondent is a Connecticut corporation authorized and qualified to conduct the business of insurance in Missouri; appellant is the owner of property (a single-family residence) located at 3319 Calvert Avenue in the village of Breckenridge Hills, Missouri; respondent (insurer) issued a policy of fire insurance, No. 2220239, to appellant (insured), effective March 17, 1973 to March 17, 1974, in the amount of $9000 (the policy was admitted into evidence, Exhibit A); on April 21, 1973, appellant’s property was partially destroyed by fire; on May 30,1973, the building commissioner of Breckenridge Hills advised appellant that his building would have to be torn down and removed pursuant to village ordinance # 321, which provides that a building which is 60% destroyed cannot be repaired (the letter and ordinance were admitted into evidence as Exhibits B and C); appellant’s building was torn down after May 30, 1973; appellant made a demand upon respondent for $9,000, the face value of the insurance policy; respondent offered appellant $5,810.12, the estimated cost, less depreciation, to repair and replace appellant’s building with material of like kind and quality. In order to expeditiously resolve the controversy, appellant agreed to accept the offered sum of $5,810.12 without prejudice to either party. Appellant also agreed to withdraw all claims against respondent except for the difference between the amount paid by respondent and the face amount of the policy, $3,189.88, which is the amount in dispute in the present action. Respondent also agreed to withdraw all defenses except with respect to the amount due under the terms of the policy.

The trial court entered its judgment in favor of respondent. The trial court construed “total loss” to mean “actual total physical loss wherein any remaining portion is not subject to use as a basis for reconstruction” and concluded appellant did not suffer a total loss, making Missouri’s valued policy statute, § 379.140 RSMo 1969, inapplicable. The trial court noted that the parties stipulated the building was partially damaged by fire and that the prohibition against reconstruction was apparently based upon the building’s status as a nonconforming use, not because the remaining portion was not usable in reconstruction. The trial court also found the insurance policy to be a matter of contract and the exclusionary provision limiting the insurer’s liability to be enforceable. The trial court held that respondent had discharged its obligation and responsibility under the insurance policy by paying to appellant the sum of $5,810.12 and that respondent was not responsible for any additional loss alleged to have occurred by reason of the prohibition against reconstruction and the demolition of the remaining portion of the building-

For reversal appellant argues that he has suffered a constructive total loss of his building as the result of the fire damage and the municipal building commissioner’s order to tear down the remaining portion. Because the loss was total, appellant argues the valued policy statute is applicable, the policy’s exclusionary provision is void and he is therefore entitled to recover the balance of the face value of the policy, $3,189.88. Respondent argues that the valued policy statute is not part of the cause and the real question is whether the policy is to be enforced according to its terms, including the exclusionary provision. Respondent argues that the trial court correctly held that appellant was entitled to recover only for partial loss because the parties had agreed to exclude any further loss occasioned by an ordinance which prohibited repairs and no public policy or statute prohibits such an agreement.

We note initially that the decree or judgment of the trial court will be sustained by an appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We hold that the trial court has erroneously declared and applied the law in the present case and accordingly reverse the judgment. As discussed above, appellant argues he has sustained a total loss, advancing the theory of constructive total loss, and is therefore entitled to recover the full face value, less depreciation, of the insurance policy under Missouri’s valued policy statute, § 379.140 RSMo 1969. Because appellant stipulated to the partial destruction by fire of his building, the question presented is whether appellant nevertheless suffered a total loss within the meaning of the policy and the valued policy statute when the building was subsequently demolished pursuant to municipal order.

First, we disagree with the trial court’s definition of total loss as “actual total physical loss wherein any remaining portion is not subject to use as a basis for reconstruction.”

The rule in Missouri has been long settled that the words “total loss,” as used in its statute, mean—

“. . . ‘that the building has lost its identity and specific character as a building, and become so far disintegrated that it cannot be properly designated as a building, although some part of it may remain standing’. . . . ”

St. Paul Fire & Marine Ins. Co. v. Eldracher, 33 F.2d 675, 681 (8th Cir. 1929) citing O’Keefe v. Liverpool & L. & G. Ins. Co., 140 Mo. 558, 41 S.W. 922, 923 (1897) (discussion of § 5897 RSMo 1889, the valued policy statute then in effect). See also Lux v. Milwaukee Mechanics’ Ins. Co., 221 Mo.App. 999, 295 S.W. 847 (1927); Lowry v. Fidelity-Phenix Fire Ins. Co., 219 Mo.App. 121, 272 S.W. 79 (1925); Stevens v. Norwich Union Fire Ins. Co., 120 Mo.App. 88, 96 S.W. 684 (1906).

Similarly, under the doctrine of constructive total loss, there is a total loss by fire if the building is so damaged that no substantial remnant remains that a prudent uninsured person would use on rebuilding. Fidelity & Guaranty Ins. Corp. v. Mondzelewski, 49 Del. 306, 115 A.2d 697, 699 (1955); see also Hart v. North British & Mercantile Ins. Co., 182 La. 551, 162 So. 177, 179 (1935), citing Wallerstein v. Ins. Co., 44 N.Y. 204, 4 Am.Rep. 664 (comparison between actual total physical loss or demolition and annihilation, and constructive total loss or a destruction of all value to the owner); Monteleone v. Royal Ins. Co., 47 La.Ann. 1563, 18 So. 472 (1895). An extension of the doctrine of constructive total loss is at issue in the present case. The general rule is that if repair or reconstruction of a building damaged by fire is prohibited by municipal authorities acting under proper authority of law, recovery may be had by the insured as for a total loss; this is a total fire loss by operation of law. E. g., St. Paul Fire & Marine Ins. Co. v. Eldracher, 33 F.2d 675, 682 (8th Cir. 1929); Lux v. Milwaukee Mechanics’ Ins. Co., supra (demolition order); 6 J.A. Appleman & J. Appleman, Insurance Law and Practice, §§ 3821-22 (1972, Supp. 1978); 15 G. Couch, Insurance § 54.163-165 (2d ed. R A Anderson 1966); 44 Am.Jur.2d, Insurance, § 1631 (1969); 45 C.J.S. Insurance § 913 (1946); Annot., 90 A.L.R.2d 790, 792 — 95 (1963). This rule is also followed in other jurisdictions, especially those with valued policy statutes. See, e. g., Ollie v. Security Mut. Underwriters, 235 F.2d 932 (4th Cir. 1956) (South Carolina); City of New York Fire Ins. Co. v. Chapman, 76 F.2d 76 (7th Cir. 1935) (Wisconsin, valued policy statute); Rutherford v. Royal Ins. Co., 12 F.2d 880 (4th Cir. 1926) (North Carolina); Fidelity & Guaranty Ins. Corp. v. Mondzelewski, supra (valued policy statute); Hart v. North British & Mercantile Ins. Co., supra (valued policy statute); Palatine Ins. Co. v. Nunn, 99 Miss. 493, 55 So. 44 (1911) (valued policy statute); Meccage v. Spartan Ins. Co., 156 Mont. 135, 477 P.2d 115 (1970) (valued policy statute); Dinneen v. American Ins. Co., 98 Neb. 97, 152 N.W. 307 (1915) (valued policy statute); Maryland Cas. Co. v. Frank, 85 Nev. 209, 452 P.2d 919 (1969); Firemen’s Ins. Co. v. Houle, 96 N.H. 30, 69 A.2d 696 (1949); Scanlan v. Home Ins. Co., 79 S.W.2d 186 (Tex.Civ.App.1935) (valued policy statute).

After reviewing these authorities, we conclude that appellant has suffered a total loss in accordance with the general rule. Appellant’s building was partially destroyed by fire; he was then prohibited by law from repairing or restoring it and was ordered to demolish the remaining structure pursuant to municipal ordinance. By demolishing his building in compliance with the municipal order, appellant suffered a total loss.

In addition, we find the demolition order is in itself sufficient to support a finding of total loss. For example, in Lux, the court stated that a demolition order may be fairly and reasonably construed to mean that the requirement that a building damaged by fire be torn down is equivalent to a declaration that the insured sustained a total loss. 295 S.W. at 851. We accept the interpretation of the effect of a demolition order as merely a recognition of the loss. See Maryland Cas. Co. v. Frank, supra (cases cited therein). “. . .An administrative order of a municipal building inspection department directing the razing of a burned building is a legislatively approved declaration that for public policy reasons the damage to the property constitutes a total loss.” Gambrell v. Campbellsport Mut. Ins. Co., 47 Wis.2d 483, 177 N.W.2d 313, 316 (1970); see also Conestoga Chemical Corp. v. F. H. Simonton, Inc., 269 A.2d 237 (Del.1970) (demolition order); Gimbels Midwest, Inc. v. Northwestern Nat. Ins. Co., 72 Wis.2d 84, 240 N.W.2d 140 (1976) (demolition order).

Second, we disagree with the trial court’s determination that because the policy is a matter of contract, the exclusionary provision limiting the insurer’s liability is enforceable. It is true that an insurance policy is a matter of contract; however, “where parties contract upon a subject which is surrounded by statutory limitations and requirements, they are presumed to have entered into such contracts with reference to such statutes, and such provisions become part of the contract.” Lux v. Milwaukee Mechanics’ Ins. Co., supra. Thus, this exclusionary provision insofar as it attempts to limit the liability of the insurer to less than the face value of the policy in cases of total loss, is contrary to the valued policy statute and void. § 379.145(3) RSMo 1969; e. g., Michigan Fire & Marine Ins. Co. v. Magee, 240 Mo.App. 767, 218 S.W.2d 151 (1949); McCollum v. Liverpool & London & Globe Ins. Co., 67 Mo.App. 66 (1896); see also Fidelity & Guaranty Ins. Corp. v. Mondzelewski, 49 Del. 306, 115 A.2d 697, 700 (1955); Scanlan v. Home Ins. Co., 79 S.W.2d 186, 189 (Tex.Civ.App.1935). Moreover, the ordinance at issue in the present case, which, when applicable, requires demolition or prohibits repair of a building partially damaged by fire, is an integral part of any policy insuring property within the city limits and is binding upon the insurer, who is presumed to have knowledge of the ordinance. See Lux v. Milwaukee Mechanics’ Ins. Co., 221 Mo.App. 999, 295 S.W. 847, 850 (1927). There can be no question that the regulation of the repair or reconstruction or demolition of buildings is within the police power of municipal government.

For example, in Scanlan v. Home Ins. Co., supra, the court held that a provision in a fire insurance policy, whereby the insurer sought to limit liability to the amount of actual fire loss where partial fire loss is rendered total because of a city ordinance prohibiting the reconstruction of buildings damaged by fire, was in contravention of the valued policy statute and void. In Fidelity & Guaranty Ins. Corp. v. Mondzelewski, supra, the court held that a policy provision excluding from coverage “. . . ‘any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repairs’ did not limit the extent of the loss to actual fire damage, did not exclude a claim for a total loss arising from compulsory condemnation, and was expressly overridden by the valued policy statute if the loss was total by reason of such demolition. In another case, Dinneen v. American Ins. Co., 98 Neb. 97, 152 N.W. 307, 309 (1915), the court held that any condition in the policy providing for the payment of a less sum than the amount of the insurance as written therein for loss occurring by reason of any ordinance regulating the construction or repair of buildings is invalid under the valued policy statute. In another case, Hart v. North British & Mercantile Ins. Co., 182 La. 551, 162 So. 177, 181 (1935), the court held that the insurer’s incorporation into a valued fire policy on immovable property of a provision limiting the liability for loss caused by order of civil authority or for loss occasioned by any ordinance or law regulating the construction or repair of buildings was inconsistent with the valued policy statute and void. Also, consistent with our discussion of the effect of a demolition order, we do not find that appellant’s loss was caused by the enforcement of any local ordinance. The demolition order merely recognized that, under the valid ordinances of the municipality, the loss was total. E. g., Lux v. Milwaukee Mechanics’ Ins. Co., 221 Mo.App. 999, 295 S.W. 847, 850 (1927); Maryland Cas. Co. v. Frank, 85 Nev. 209, 452 P.2d 919 (1969); Feinbloom v. Camden Fire Ins. Ass’n, 54 N.J.Super. 541, 149 A.2d 616 (1959); Gambrell v. Campbellsport Mut. Ins. Co., 47 Wis.2d 483, 177 N.W.2d 313, 318 (1970).

Judgment reversed and remanded with directions to the trial court to enter a judgment not inconsistent with this opinion.

CLEMENS, P. J., and SMITH, J., concur.

      . The ordinance admitted into evidence as Exhibit C provides in part:
      “Section 5. When a building, the use of which does not conform to the provisions of this ordinance is damaged by fire. ... to the extent of more than sixty (60) percent of its assessed value, it shall not be restored except in conformity with the district regulations of the district in which the building is situated. . . . ” (Emphasis added.) Village of Breckenridge Hills, Mo., Art. VIII, § 5.
      We note that the terms of this ordinance do not simply prohibit repair when a building has been damaged more than 60% by fire. The ordinance provides that the structure may be restored but only in compliance with any applicable regulations. Although it is not clear from the record, appellant’s building was apparently a nonconforming use. We leave open the ques- . tion of the possibility of repair or restoration in conformity with applicable regulations and its impact upon respondent’s liability in view of the parties’ stipulation. Our discussion will therefore accept as true that appellant’s building was partially destroyed by fire and was subsequently tom down and removed by municipal order pursuant to municipal ordinance # 321.

      . See discussion in Footnote 1. For the purposes of this appeal we do not find the precise reason why appellant was directed to tear down and remove his building to be significant, that is, whether the building was a nonconforming use or because the remaining portion was not usable in reconstruction or because the remaining portion was a nuisance. The important fact is that appellant’s building was tom down and removed pursuant to municipal order.

      . The statute provides that “in case of total loss of the property insured, the measure of damage . shall be the amount for which the same was insured, less whatever depreciation in value, below the amount for which the property is insured, the property may have sustained between the time of issuing the policy and the time of loss . . .” § 379.140 RSMo 1969. First enacted in 1879, see § 6009 RSMo 1879, the statute was construed and held constitutional as within the legitimate powers of the state in the regulation of the business of corporations created by its laws or of foreign corporations permitted to do business therein. Daggs v. Orient Insurance Co., 136 Mo. 382, 38 S.W. 85 (1896), aff’á, 172 U.S. 557, 19 S.Ct. 281, 43 L.Ed. 552 (1899). Similar legislation' has been adopted in other jurisdictions. See e. g., Gambreil v. Campbellsport Mut. Ins. Co., 47 Wis.2d 483, 177 N.W.2d 313 (1970) (Wis.Stat. § 203.21 (1977)). In Daggs the court described the purpose of the valued policy statute was to prevent insurance companies from taking reckless risks in order to obtain large premiums by advising them in advance that they would be held to the value agreed upon when the policy was issued and estopping them from denying the valuation stated in the policy. 38 S.W. at 87. A related purpose was also to put at rest the measure of damages in a suit on a fire policy in case of total loss and arbitrarily to fix the same at the amount for which the property was insured, less depreciation. See, e. g., Michigan Fire & Marine Ins. Co. v. Magee, 240 Mo.App. 767, 218 S.W.2d 151 (1949); see also Gamel v. Continental Ins. Co., 463 S.W.2d 590 (Mo.App.1971) (general discussion of history and purposes of the valued policy statute). Another effect of the statute is to place upon insurers the burden and responsibility for evaluation of the insured’s interest and of the property insured at the date of the insurance contract. E. g., Lumbermens Mut. Ins. Co. v. Ed-mister, 412 F.2d 351 (8th Cir. 1969).
      We also note that the valued policy statutes are not limited in their application to insurance against loss by fire of improvements on real property but apply as well to personal property. Duckworth v. United States Fidelity & Guaranty Co., 452 S.W.2d 280, 282-285 & n. 3 (Mo.App. 1970), overruling Green v. Lancashire Ins. Co., 69 Mo.App. 429 (1897); Coleman v. Phoenix Ins. Co., 69 Mo.App. 566 (1897); City of DeSoto v. American Guaranty Fund Mut. Fire Ins. Co., 102 Mo.App. 1, 74 S.W. 1 (1903).

      . The original valued policy statute, § 6009 RSMo 1879, used the term “wholly destroyed.” This term was construed to require that no part of the building above ground remain intact and substantially uninjured and that no part of it could be utilized as a remaining standing structure in effectively restoring the structure to its entirety. Ampleman v. Citizens’ Ins. Co., 35 Mo.App. 308 (1889). This definition is similar to the trial court’s definition of “actual total physical loss.”
      This definition was, however, subsequently modified. “Wholly destroyed” was held to mean totally destroyed as a building, even though there is no absolute extinction of all its parts or some debris remains which may be useful or valuable for some purposes. Havens v. Germania Fire Ins. Co., 123 Mo. 403, 27 S.W. 718, 723 (Banc 1894); see also Horine v. Royal Ins. Co., 199 Mo.App. 107, 201 S.W. 958 (1916); Prather v. Connecticut Fire Ins. Co., 188 Mo. App. 653, 176 S.W. 527 (1915). This modified definition of “wholly destroyed” is very similar to that used for “total loss” — the emphasis is upon the loss of character, integrity and identity of the structure as a building such that it cannot be properly designated as a building, even though some parts may remain standing. (The current wording of the valued policy statute uses the term “total loss.”)

        . Respondent did not challenge the validity of the demolition order or the constitutionality of the ordinance providing that buildings damaged by fire more than 60% of their assessed value shall not be restored or repaired except in conformity with applicable district regulations. A similar ordinance was held unconstitutional because too much discretion was given to the administrative official by the ordinance. Lux v. Milwaukee Mechanics’ Ins. Co., 322 Mo. 342, 15 S.W.2d 343 (Mo. banc 1929), 16 S.W.2d 595 (Walker, J., dissenting); see also New Hampshire Fire Ins. Co. v. Murray, 105 F.2d 212 (7th Cir. 1939); Fidelity & Guaranty Ins. Co. v. Mondzelewski, 49 Del. 306, 115 A.2d 697 (1955) (ordinance held constitutional).

      . Policy exclusion A-3 specifically excludes loss “occasioned directly or indirectly by enforcement of any local or state ordinance or law regulating construction, repair or demolition of building(s) or structure(s).”

      . We distinguish cases in which the loss is only partial. In such cases of partial loss, the rule appears to be that exclusionary provisions limiting liability for loss resulting from the application of building laws or regulations are valid, even under valued policy statutes. E. g., Scan-lan v. Home Ins. Co., 79 S.W.2d 186, 189 (Tex. Civ.App.1935); see generally Annot., 90 A.L. R.2d 790, 792-95 (1963); 44 Am.Jur.2d, Insurance, § 1631 (1969).


author: TURNAGE, Judge.

text:
    STATE of Missouri, Respondent, v. Claude M. HARDY, Appellant.
    No. KCD 29221.
    Missouri Court of Appeals, Kansas City District.
    June 12, 1978.
    Motion for Rehearing and/or Transfer Denied July 20, 1978.
    Application to Transfer Denied July 24, 1978.

      Clifford A. Cohen, Public Defender, Lee M. Nation and Kevin Locke, Asst. Public Defenders, Kansas City, for appellant.
    John D. Ashcroft, Atty. Gen., J. Michael Davis, Asst. Atty. Gen., Jefferson City, for. respondent.
    Before SOMERVILLE, P. J., and DIXON and TURNAGE, JJ.
   TURNAGE, Judge.

Claude M. Hardy, who was convicted of kidnapping, § 559.240, RSMo 1969, and rape, § 559.260, RSMo 1975 Supp., was sentenced to consecutive terms of ten and twenty years.

On this appeal, Hardy attacks the constitutionality of § 494.031, RSMo 1969, and the admission in evidence of a cotton swab. Affirmed.

Hardy first attacks the constitutionality of the jury selection system as applied to Jackson County under Article I, § 22(b), of the Missouri Constitution, and § 494.031, because women are allowed to elect not to serve on the jury. This precise question was decided in State v. Duren, 556 S.W.2d 11 (Mo. banc 1977). Although the United States Supreme Court has granted certiora-ri, 23 Cr.L. 4044, this court is bound to follow Duren.

Hardy next contends a cotton swab inserted in the victim’s vagina by a physician was not properly identified to be admitted in evidence. Hardy claims there is no foundation to show the swab introduced at trial and on which a test was made to determine the presence of sperm was the same one inserted in the victim.

Officer Johnson stated he was in an examining room at the hospital with the victim when a physician and nurse entered. Officer Johnson left the room and waited outside beside the door. A few minutes later the nurse handed him the cotton swab, together with hair and blood samples. Officer Johnson stated that the swab introduced into evidence was the same one handed him by the nurse.

The victim testified the physician inserted a cotton swab and stated the swab introduced at trial was similar to the one used by the physician. She stated the physician had given the swab to the nurse. She stated only one swab was used.

The contention made here is the lack of testimony of the nurse and physician to identify the swab handed the officer as being the one inserted in the victim. There was no evidence to indicate anyone else was in the room besides the victim, physician and the nurse, and Officer Johnson was beside the door on the outside. The testimony indicated only one swab was used and only one nurse was present. There is no reasonable inference to believe any other swab was involved.

In State v. McClain, 536 S.W.2d 45 (Mo.App.1976), the court had a very similar question. There, the court stated at p. 47[3], “Here it is sufficient if the evidence shows with reasonable assurance the smear taken from the victim was that examined by the doctor.”

There was reasonable assurance in this case the swab introduced in evidence was the one actually used. The swab was properly admitted.

Hardy does not attack the sufficiency of the evidence.

The judgment is affirmed.

All concur.


author: FLANIGAN, Judge.

text:
    D. L. HOPKINS, Plaintiff-Appellant, v. Robert W. PHILLIPS and Delores G. Phillips, Defendants-Respondents.
    No. 10277.
    Missouri Court of Appeals, Springfield District.
    June 21, 1978.
    Larry G. Luna, Gainesville, for plaintiff-appellant.
    Richard D. Moore, Moore & Brill, West Plains, Richard T. Martin, Gainesville, for defendants-respondents.
    Before STONE, P. J., and TITUS and FLANIGAN, JJ.
   FLANIGAN, Judge.

On Thursday, December 4, 1975, this non-jury action was tried in the Circuit Court of Ozark County. The cause was taken under advisement and eight days later the court entered judgment in the amount of $770,-103.20 in favor of defendants Robert W. Phillips and Delores G. Phillips on their counterclaim against plaintiff D. L. Hopkins. The latter was denied relief on his petition. Plaintiff appeals.

Plaintiff’s sole “point relied on” is, in essence, that the trial court abused its discretion in denying plaintiff’s application for continuance. The application was filed on December 3, 1975.

On June 6, 1969, the defendants, as sellers, and the plaintiff, as buyer, entered into a contract for the purchase of several tracts of real estate. The contract provided that plaintiff assumed and agreed to pay five interest-bearing notes previously made by defendants in favor of third persons. The total indebtedness represented by the unpaid balance of those notes is unclear from the contract but the total of their original amounts was $616,925. Also as part of the purchase price defendants received plaintiff’s note in the amount of $220,000. Except for a comparatively minor item the trial court’s judgment represented the amounts due on the notes at time of trial.

Plaintiff’s reply to the counterclaim did not plead payment of any of the notes. At the trial itself defendants introduced, without objection, plaintiff’s admissions, one of which conceded nonpayment.

This action was filed on November 21, 1969. Except for a limited amount of discovery, it was dormant until August 26, 1975, when defendants filed a request for change of judge. On September 8, 1975, the request was sustained and Judge Winston V. Buford was assigned as trial judge. On September 24, 1975, Judge Buford set the case for trial on December 4, 1975. Plaintiff’s counsel received notice of that setting “shortly after the date that it was set.”

On December 3, 1975, plaintiff filed a written application for continuance “on the ground that plaintiff will be unable to attend the trial on the scheduled date of December 4, 1975.” Attached to the application was the affidavit of plaintiff’s attorney Larry Luna.

Luna’s affidavit contained, as material here, the following statements: plaintiff could not safely proceed to trial on December 4, 1975, because of plaintiff’s absence; if plaintiff were present, he would testify “that he at all times acted in good faith and in accordance with the terms of the contract”; plaintiff is unable to attend the trial “because of an obligation to appear on December 3,1975, at 2 p. m. before the U.S. Magistrate in Houston, Texas”; Luna was “informed” that the Houston hearing could extend into December 4, 1975; on November 28,1975, Luna first discovered “the fact of the Houston hearing”; Luna “notified” the attorney for defendants on November 29, 1975, and Judge Buford was “notified” on December 1, 1975; since the latter date Luna “has been in contact continuously with said judge and attorney”; because of the Houston hearing, Luna was unable to prepare for the trial.

On December 4, 1975, the defendants, who were Arizona residents, and their attorneys appeared before Judge Buford. Attorney Luna appeared on behalf of plaintiff. At that time Mr. Luna informed the court that he had received information to the effect that the hearing in Houston commenced at 3 p. m. the preceding day and concluded “around 5 p. m.” Luna also told the court that he had received information from the plaintiff to the effect that plaintiff “was unable to make connections to the Springfield area until 10 o’clock this morning, plus the fact that he has been advised by his attorney in Houston to remain there for at least through Saturday for purposes of drawing down cash bail which he had posted in obtaining the withdrawal of certain evidence which was entered in yesterday’s hearing.”

The court denied the request for continuance. Defendants then introduced the evidence on which the judgment was based. Plaintiff’s counsel made no request to introduce, at a later date, the testimony of his client.

“We recognize that the denial of a continuance rarely is reversible error; yet, the trial court enjoys neither an absolute nor an arbitrary discretion, and the court’s action will be reversed if there has been an abuse of discretion.” Missouri Public Service Company v. Argenbright, 457 S.W.2d 777, 785[10] (Mo.1970).

In support of his application for a continuance, based on his own absence as being that of a material witness, it was necessary for plaintiff to show, among other things, “due diligence upon the part of the applicant to obtain such witness or testimony.” Rule 65.04(1), V.A.M.R.

Here there was no showing of the nature of the proceeding in Houston nor the relationship of plaintiff to that proceeding. There was no showing of the date when plaintiff (as distinguished from his attorney Luna) was first made aware of his “obligation” to appear in Houston on December 3. Although there was a showing that Mr. Luna became aware, on November 28,1975, of the hearing to be held in Houston, there was no showing of any efforts made by Luna to obtain plaintiff’s deposition after receiving that information or at any time during the many years the action had been pending. There was no showing of what information was imparted by reason of Luna’s being “in contact” with Judge Buford and defendants’ attorney after December 1.

This type of application for continuance required a showing of “[w]hat particular facts the affiant believes the witness will prove, and that he knows of no other person whose evidence or attendance he could have procured at the trial, by whom he can prove or so fully prove the same facts.” Rule 65.04(3) (emphasis added). Rule 65.04(1) also requires a showing of “[t]he facts showing the materiality of the evidence sought to be obtained.”

Only the affidavit of attorney Luna purported to describe the testimony which plaintiff would have given. That affidavit stated that plaintiff “would testify that he at all times acted in good faith and in accordance with the terms of the contract which is the subject of this lawsuit.” Although the sole issue on this appeal does not require this court to review the evidence touching the merits of the judgment, some of that evidence will be noted. Defendants produced evidence that plaintiff made no payment on any of the notes. Plaintiff had not pleaded the affirmative defense of payment and he had admitted that no payments had been made. Other aspects are mentioned below.

The instant application failed to set forth the “particular facts” which plaintiff would have proven had he been present. The mere statement that plaintiff “acted in good faith” added nothing to his affidavit for the reason that a party to a contract may be in good faith but nevertheless fail to fulfill his contractual obligation. The statement in the affidavit that plaintiff acted “in accordance with the terms of the contract” is a conclusion rather than a statement of “particular facts,” especially when viewed in light of the instant pleadings, the nature of plaintiff’s duties under the contract, and his admitted failure to fulfill them. There was no compliance with that portion of Rule 65.04(3) requiring a showing of knowledge “of no other person whose evidence or attendance he could have procured at the trial, by whom he can prove or so fully prove the same facts.”

It appears that plaintiff’s presence in Houston, if it was required initially, was no longer needed after 5 p. m. on December 3. Plaintiff made no showing that he could not thereafter have made travel arrangements permitting him to attend the Missouri hearing, at least at some time during the following day. It appears that plaintiff remained in Houston, after his presence there was no longer required, solely for his own pecuniary purposes.

This court finds that the record fails to show that the trial court abused its discretion in denying the application for continu-anee. See Matter of Estate of Anderson, 544 S.W.2d 35, 40[2] (Mo.App.1976).

The judgment is affirmed.

All concur.

      . At the trial the defendants’ evidence showed that the holder of two of the notes had obtained a judgment against defendants totaling $298,-703.20. Defendants’ evidence also showed that the deed of trust securing another of the notes had been foreclosed and the land had been sold to satisfy that note. Plaintiff was given credit therefor.

      . See Blessing v. Blessing, 539 S.W.2d 699 (Mo.App.1976) for a discussion of the general principles governing appellate review of a trial court’s denial of an application for continuance grounded on the “enforced absence” of a party.

      . Plaintiffs petition had sought cancellation of the $220,000 note, the return of certain bonds of “Nineteen Corporation” securing same, and damages of $11,455. The evidence showed that the bonds were worthless at the time they were given as security, that plaintiff knew of their worthlessness at that time, and that the states of Texas and Missouri had issued “cease and desist” orders directed to plaintiff forbidding plaintiff to sell or to offer to sell the bonds. The claim for $11,455 was based in part on a check in the amount of $7,750 which plaintiff had given to one of the note holders. The evidence showed that the check “bounced.” Plaintiff was given credit for an expenditure of $1,455 which was a part of the $11,455 claim. The latter also included a $2,500 item which plaintiff, during pretrial discovery, admitted he could not substantiate.


author: HENRY, Chief Justice. BROCK, Justice,

text:
    Leslie C. THOMPSON, Appellant, v. CITY OF HARRIMAN et al., Appellees.
    Supreme Court of Tennessee.
    June 26, 1978.
    Elmer F. Rich, Rockwood, for appellant.
    J. Frank Qualls, Harriman, for appellees.
   OPINION

HENRY, Chief Justice.

This is an appeal from a decision of the Chancery Court of Roane County upholding the City of Harriman’s denial of appellant’s application for a permit to sell beer. Appellant submits that the Chancellor erred in denying his application “because of the arbitrary, capricious and discriminatory enforcement of the Charter and Ordinances of the City of Harriman.”

I.

The history of the events giving rise to appellant’s claim of discriminatory enforcement are fully related in a recent opinion of this Court, Goldston v. City of Harriman, 565 S.W.2d 858 (Tenn.1978). A brief review of these facts, however, is not inappropriate.

Ordinance No. 2-201 of the City of Harri-man states that it is unlawful to sell or store beer within the city, and beer was not sold within Harriman’s corporate limits until the early 1960’s. In 1961 the city annexed an area where several businesses had been selling beer under permits issued by the Roane County Beer Board. In order to end litigation contesting the annexation, the city entered into a compromise settlement, approved by the court, allowing those establishments selling beer at the time of annexation to continue to do so under the outstanding permits. A similar arrangement occurred when the city annexed the area in which the local Holiday Inn, also engaged in the sale of beer under a Roane County permit, was located. The City of Harriman itself has never issued to anyone a permit allowing the sale of beer within its boundaries.

Over the next several years, these establishments continued to operate under their county permits. In addition, when some of these businesses were sold, or passed to new hands because of their owners’ deaths, the county board re-issued permits to the new proprietors. In 1975, however, the Roane County Beer Board issued a permit, unrelated in any way to a permit that had been outstanding at the time of annexation, to the owner of a new establishment in the annexed area. The city refused to recognize this permit and “revoked” by resolution any authority of the county beer board to issue a permit to any business located within the city. This resolution was accepted by the county.

After these events, appellant, who had originally applied to the county board for a permit, sought one from the city council. After a full hearing on the matter, the council noted that to grant appellant’s application would violate not only Ordinance 2-201, but also provisions of the city charter, and denied his application.

II.

During consideration of this appeal, the issue has arisen of whether, since the passage of Chapter 105 of the Public Acts of 1961, a municipality has the power to regulate the sale of beer to the point of prohibition, as the City of Harriman does with certain noted exceptions.

Counties, as opposed to cities, have never had such authority and do not now possess it. The 1961 Act, now codified as a part of Sec. 57-205, T.C.A., does not apply to cities; and we directly, correctly, and unanimously so held in Richards v. Lewisburg Alcoholic Beverage Commission, 543 S.W.2d 852 (Tenn.1977). We said:

§ 57-205 relates to counties only. Id. at 853.

Reference to the derivation of Sec. 57— 205, T.C.A., will demonstrate the correctness of this holding. It originated as a part (first 6 paragraphs) of Sec. 10, Ch. 69, Pub-lie Acts of 1933. This portion of the Act shows on its face that it applies to counties only. It was carried into the Code Supplement of 1950 as Sec. 1191.14 and into our present Code as Sec. 57-205, with the catch line reflecting its contents as follows:

License to sell outside of town or city limits. (Emphasis supplied).

Sec. 57-208, T.C.A., governs sale within incorporated cities and towns.

The caption of Chapter 105, Acts of 1961, reads as follows:

AN ACT to amend Section 57-205 and 57-209 Tennessee Code Annotated, relating to the sale of beer.

It will be noted that it does not purport to amend Sec. 57-208, T.C.A., relating to municipalities.

Omitting the enacting clause, Section 1 of the 1961 Act provides:

That Section 57 — 205 Tennessee Code Annotated be and the same is hereby amended [etc.].

Thus, it is clear that the 1961 Act had no effect on the power of municipalities.

We went into the history of “the very pronounced difference between the authority possessed by cities and counties,” in our recent case of Howard v. Willocks, 525 S.W.2d 132 (Tenn.1975). We recognized that municipalities have broad powers in the regulation of the sale of beer, Gatlinburg Beer Regulation Committee v. Ogle, 185 Tenn. 482, 206 S.W.2d 891 (1948); that municipalities are given absolute discretion in the matter of regulating and controlling beer, Ketner v. Clabo, 189 Tenn. 260, 225 S.W.2d 54 (1949); and that their regulation may properly extend to outright prohibition, De Caro v. City of Collierville, 213 Tenn. 254, 373 S.W.2d 466 (1963); Grubb v. Mayor of Morristown, 185 Tenn. 114, 203 S.W.2d 593 (1947). See also Barnes v. City of Dayton, 216 Tenn. 400, 392 S.W.2d 813 (1965), and Howard v. Christmas, 180 Tenn. 519, 176 S.W.2d 821 (1944). Howard is actually the first case to hold that municipalities may regulate beer to the point of prohibition, although the source of this rule is generally attributable to Grubb, supra.

As we held in Howard v. Willocks, supra, speaking with reference to counties, the effect of the passage of Chapter 105, Public Acts of 1961, was that:

[T]he Legislature mandated that an applicant for a beer permit, who complies with all the legal requirements, shall be entitled to have such license or permit issued to him. 525 S.W.2d at 136.

But Tennessee cities, being unaffected by the 1961 Amendment, have the continuing right to regulate to the point of outright prohibition. The reason for this disparity of concept is covered in Howard v. Willocks, supra.

III.

We turn now to the question raised by appellant, namely whether under the circumstances related earlier the City of Harriman arbitrarily and unlawfully discriminated against him in the enforcement of its charter and ordinance. This is essentially the same question considered by this Court in Goldston v. City of Harriman, supra.

In that case we held that the city was estopped to enforce its ordinance forbidding the sale of beer against those holding valid county permits at the time of annexation but that this estoppel did not benefit one who did not hold a valid permit prior to annexation. Additionally, we expressed the opinion that the recognition of the Holiday Inn permit was not “an arbitrary or unreasonable action.”

The Court continued:

[fjailure of the City to enforce its ordinance prohibiting the sale of beer within the City limits against the Holiday Inn or those who held permits at the time of the 1961 annexation does not, in our opinion, amount to unequal and discriminatory administration of the ordinance “with an evil eye and an unequal hand” which, of course, is not permissible under the equal protection clauses of the Fourteenth Amendment and of Article I, Section 8 and Article XI, Section 8 of the Tennessee Constitution. See Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220 (1886); Berry v. Arapahoe and Shoshone Tribes, 420 F.Supp. 934 (D.C.Wyo.1976).
The same is true with respect to the third category of permit holders, viz., successor owners of establishments which were duly licensed by the Roane County Beer Board at the time of the 1961 annexation.

The judgment of the trial court is Affirmed.

FONES, COOPER and HARBISON, JJ., concurring.

BROCK, J., dissenting.

BROCK, Justice,

dissenting.

I respectfully dissent.

The record presents no dispute of the material facts. It is stipulated by the City that the plaintiff had duly filed an application for a beer permit with the city council which was satisfactory in all respects and that the plaintiff is a person of good moral character and would be entitled to a permit were it not for the fact that Ordinance No. 2-201 purports to prohibit outright the sale of beer within the City.

Despite this ostensible prohibition of the sale of beer within the City of Harriman, beer has in fact been sold at seven or more different establishments within the City for the past 16 years following annexation by the City in 1961 of the area of South Harri-man. Prior to that time, beer was not sold within the corporate limits of the City. However, in connection with the annexation, the City entered into a compromise decree settling the litigation brought to contest the annexation ordinance in which it agreed that seven beer-selling establishments within the area being annexed could continue to operate under permits then outstanding which had been issued by the Roane County Beer Board, but the City did not agree that the Roane County Beer Board should issue any further permits for the sale of beer within the City.

Since 1961 beer has been sold at the seven establishments mentioned either by the original permit holders or successor owners of those establishments. In addition, since 1966 beer has also been sold at the Holiday Inn which was annexed by the City in 1966, a permit to sell beer at that establishment having been issued by the Roane County Beer Board prior to its annexation.

■ Although obviously the City was faced with a new situation with respect to the sale of beer within its limits after the 1961 annexation, it has never enacted a comprehensive ordinance regulating the sale of beer within the City nor has it enacted any ordinances to amend its old ordinance which purports to prohibit outright the sale of beer; neither has it established a board to handle applications for beer permits, as provided by T.C.A., § 57-208(a). Consequently, the appellant complains in his brief:

“It would appear that the City of Harri-man has taken the approach that if they ignore it, it will go away.”

Inescapably, the issue is presented whether the City’s ordinance prohibiting outright the sale of beer within the City is a valid enactment and, thus, furnishes a lawful basis for denial of the plaintiff’s application for a permit.

In 1933 the General Assembly enacted Chapter 69 of the Public Acts of 1933, codified as T.C.A., §§ 57-201 — 57-223, terminating the “noble experiment” in Tennessee. This Act proclaimed:

“It shall be lawful in this state to transport, store, sell, distribute, possess, receive and/or manufacture beer . . .”

The Act authorized the sale of beer within the cities as well as the counties of this state, subject to the provisions of the Act. Despite the fact that the Act contained no language whatever purporting to authorize cities or counties to prohibit outright the sale of beer within their boundaries, this Court, in early decisions, erroneously in my view, interpreted the law to permit such prohibition. Ketner v. Clabo, Mayor, 189 Tenn. 260, 225 S.W.2d 54 (1949); Grubb v. Morristown, 185 Tenn. 114, 203 S.W.2d 593 (1947); Howard v. Christmas, 180 Tenn. 519, 176 S.W.2d 821 (1944). Thus, in Sandford v. Pearson, 190 Tenn. 652, 231 S.W.2d 336 (1950) this Court stated its theory of the 1933 Act as follows:

“This general law does not confer any absolute right on the citizens of Tennessee, to manufacture, sell, transport or possess beer, but is a local option statute, (citation omitted) whereby the governing bodies of cities and the Quarterly County Courts of counties, may regulate the manufacture, sale, transportation and possession of beer even to the extent of prohibition.” Id. at 655, 656, 231 S.W.2d at 337.

An important change of the law in this respect occurred with the enactment by the General Assembly of Chapter 105 of the Public Acts of 1961. The following provision of that statute is pertinent:

“Any applicant seeking license or permit under this Section and who complies with the conditions and provisions of this Section shall have issued to him the necessary license or permit and in the event said license or permit is refused, the applicant shall be entitled to a hearing on his application for the issuance of a license or permit. The refusal to grant a license or permit, or the refusal to grant a hearing upon a person’s application for a license or permit may be reviewed by the Circuit or Chancery Court in the manner as authorized under Section 57 — 209 [Tennessee Code Annotated].”

Of course, this enactment was soon challenged in the courts, resulting in the decision of this Court in Fentress County Beer Board v. Cravens, 209 Tenn. 679, 356 S.W.2d 260 (1962) in which the Court interpreted the new Act and upheld its validity and laid down its construction of the 1933 Act as amended by the new 1961 Act above quoted. The facts in the Fentress County case were quite similar to those presented in the case at bar. Thus, it was admitted by the Board that the plaintiff had filed an application for a permit which was in proper form and fully complied with the law in all respects and that he was a person of good moral character. The only reason offered by the Board members for refusing to issue the permit to the plaintiff was that

“. . . they were opposed to the sale of beer and would not issue a permit to anyone.” Id. at 681, 356 S.W.2d at 261.

Because, in my opinion, the decision in the Fentress County case should control the disposition of the case at bar, I quote further from that opinion:

“Chancellor Officer found that the facts stated in the petition were true; that petitioner’s application complied with all the requirements of the law and he was entitled to have the Board issue him the permit; and that in refusing to do so, they acted ‘illegally, arbitrarily, capriciously and without any legal right or authorization.’ He accordingly entered a decree sustaining the petition and directing defendants to issue the permit to petitioner.
* * * * * *
“Our statute (Acts 1933, ch. 69, now T.C.A. § 57-201) legalized the manufacture and sale of beer in Tennessee. But if provided no one could engage in such business without first obtaining a permit and a license from the local authorities (the city, if the business was to be therein, if outside the city, the quarterly court), and left a large discretion to such authorities in issuing and revoking permits. (Citations omitted.)
******
“Thus, this Act [referring to the amenda-tory act, Chapter 105, Public Acts of 1961] expresses the legislative intent to amend the statute so as to provide that an applicant for a license or permit, who complies with all the legal requirements, shall be entitled to have such license or permit issued to him; and that if the same is refused, he shall have a right to have the board’s refusal reviewed by the statutory writ of certiorari, or certiorari in lieu of an appeal, ‘with a trial de novo,’ under the procedure outlined in T.C.A. §§ 27-901 through 27-913.
******
“The Legislature had plenary power to prohibit the business of manufacture and sale of beer absolutely, or to legalize such business and license and regulate it as it saw fit, and to give an applicant a legal right to a permit on complying with the conditions prescribed, and a right to a review of the board’s refusal of such permit by the statutory writ of certiorari.
“The Act gives an applicant a legal right to a hearing and to issuance of a permit upon compliance with the prescribed conditions. .
“For these reasons, we think the Act is not unconstitutional, but is valid; and that the decree of the Chancellor in so holding was correct and it is accordingly affirmed.” Id. at 681, 682, 685, 687, 688, 356 S.W.2d at 261, 262, 263.

In my opinion, the enactment of Chapter 105 of the Public Acts of 1961 and the decision of this Court in the Fentress County case, supra, terminated any authority which counties and cities were thought to have prior thereto to prohibit outright the sale of beer within their jurisdictions. There have been two or three observations in opinions of this Court since 1961 to the effect that cities in the exercise of the power given them by T.C.A., § 57-208, to regulate the sale of beer within their boundaries may totally' prohibit such sales, but an examination of the facts in those cases will disclose that such statements have been dicta rather than decisions. See DeCaro v. Collierville, 213 Tenn. 254, 373 S.W.2d 466 (1963). The instant case is the first since 1961 which has presented the issue squarely to this Court.

There is no question but that cities have much broader power to regulate the sale of beer within their borders, T.C.A., § 57-208, than do counties in the area outside municipalities, T.C.A., § 57-205. This additional grant of power to regulate is granted to cities by the following language:

“(a) All incorporated cities and towns in the state of Tennessee are authorized to pass proper ordinances governing the issuance and revocation of licenses for the storage, sale, manufacture and/or distribution of such beer and/or other beverages as herein prescribed within the corporate limits, providing a board of persons before whom such application shall be made, but the power of such cities to issue licenses shall in no event be greater than the power herein granted to counties, but cities and towns may impose additional restrictions, fixing zones and territories and providing hours of opening and closing and such other rules and regulations as will promote public health, morals and safety as they may by ordinance provide.” T.C.A., § 57-208.

This Court has held that under this grant of power cities and towns are possessed with a broad discretion in the matter of the regulation and control of the sale of beer by proper ordinances, Richards v. Lewisburg Alcoholic Beverage Commission, Tenn., 543 S.W.2d 852 (1977); Barnes v. Dayton, 216 Tenn. 400, 392 S.W.2d 813 (1965), so long as such regulations are reasonable and nondiscriminatory, DeCaro v. Collierville, supra; Case v. Carney, 213 Tenn. 597, 376 S.W.2d 492 (1964). Nevertheless, broad as this power to regulate undoubtedly is, it is not the power to impose absolute prohibition. The power to regulate is not the power to prohibit entirely.

It is axiomatic that cities and towns have no power beyond that granted to them by the legislature and the cities and towns of this state have been granted no authority to absolutely prohibit the sale of beer within their limits.

I would hold that the ordinance of the City of Harriman which purports to totally prohibit the sale of beer within the city limits is unauthorized by the general statutes of this state, T.C.A., § 57-201, et seq. and, therefore, invalid. I, therefore, dissent from the decision of the majority.

      . The owner of the new business to which the county permit had been issued was arrested for violation of the city ordinance. His Gonviction was upheld by this Court in Goldston v. City of Harriman, supra.

      . The City Charter, set out in the Private Acts of 1917, Chapter 165, Article 2, § 18, Subsection 12, provides in part: “It shall be unlawful for any person to sell or tipple any intoxicating liquors, including wine, ale, and beer as a beverage in the City of Harriman within one mile of any schoolhouse, . . . where a school is kept, whether the school be in session or not, or within one mile of a church building in which people usually congregate for religious worship or within one thousand (1,000) feet of any dwelling-house occupied by a family.” The location of appellant’s establishment is within 200 feet of a public school, 225 feet of a church and 50 feet of a dwelling-house occupied by a family.

      . In 1975 Mr. Tommy Goldston obtained a permit from the Roane County Beer Board to sell beer at a place of business which was not one of the eight establishments above-mentioned, but the City proceeded against him for violation of the City ordinance and his conviction and punishment were upheld in an unreported decision of this Court.


author: FONES, Justice.

text:
    AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, Appellant, v. Gene BRADSHAW, Appellee.
    Supreme Court of Tennessee.
    July 10, 1978.

      N. R. Coleman, Jr., Milligan, Coleman, Fletcher & Gaby, Greeneville, for appellant.
    John C. Porter, Newport, for appellee.
   OPINION

FONES, Justice.

The single issue in this case involves the determination of plaintiff Gene Bradshaw’s, average weekly wage for the purpose of workmen’s compensation benefits.

Pursuant to contract, Bradshaw, whose operations would not have been covered by the Workmen’s Compensation Act by operation of law, was required to pay for workmen’s compensation coverage obtained by Champion International Corporation, Tim-berlands Division, through defendant American Mutual Liability Insurance Company. Champion withheld 26.9 cents per ton from the price of pulpwood to pay the workmen’s compensation and public liability insurance premium under the first contract with Bradshaw and 38.6 cents per ton under the second contract.

Over the period covered by two contracts between Bradshaw and Champion, Champion paid Bradshaw $7,765.85 for 1,031 tons of pulpwood. In this Court, defendant concedes that the correct number of weeks of operation that produced the gross tonnage and earnings of Bradshaw was twenty-one.

Bradshaw contends that his average weekly wage should be computed on the gross earnings of $7,765.85 for twenty-one weeks of work, resulting in an average weekly wage in excess of the maximum workmen’s compensation benefit of $85 per week.

Defendant, American Mutual Liability Insurance Company, insists that the gross earnings paid Bradshaw by Champion should be reduced by labor costs, truck and equipment expense, equipment depreciation and stumpage costs paid the U. S. Forestry Service. AH of these deductions were estimated because neither Bradshaw nor Champion had any records that reflected any of Bradshaw’s expenses. In the trial court, defendant’s computation of Bradshaw’s alleged expenses resulted in an average weekly wage of $24.60, and defendant had tendered that amount in payment of temporary total disability benefits, which tender was refused by plaintiff. The “suggested computation” in defendant’s brief in this Court would produce an average weekly wage of $35.30.

The trial judge found that plaintiff had sustained a permanent partial disability of fifty-five percent and that he was entitled to the maximum compensation rate of $85 per week. The trial judge found that the premium rates paid by plaintiff were determined on the basis of Bradshaw’s gross earnings and he observed that the statute, T.C.A. § 50-902(c), does not distinguish between net and gross earnings and that the statute ought to be liberally construed in favor of the employee. T.C.A. § 50-918.

On January 28, 1976, Bradshaw, as seller, entered into a written contract with Champion International Corporation, as buyer, to harvest and deliver pulpwood to buyer at Del Rio, Tennessee. The contract covered a six month period calling for Bradshaw to deliver ninety tons of pulpwood every two weeks. Champion agreed to pay Bradshaw the following sums per ton for four categories of pulpwood: pine shortwood — $8,588; hardwood shortwood — $7,586; pine long-wood — $7.85; hardwood longwood — $6.89. The contract provisions relevant to this case were these: (1) the seller Bradshaw was an independent contractor; (2) Bradshaw would be required to pay for insuring his own operations to the extent demanded by Champion; (3) Champion was authorized to deduct 26.9 cents per ton on a monthly basis for workmen’s compensation and public liability insurance to be written by American Mutual Liability Insurance Company.

A second contract was entered into in June, 1976, calling for Bradshaw to provide 1,000 tons of pulpwood by December 1, 1976, and increasing the price per ton in each of the four categories approximately thirty-five cents. The sum to be deducted from the price paid Bradshaw for workmen’s compensation and public liability premiums was also increased by 11.7 cents per ton.

Parties who would not be within the coverage of the workmen’s compensation law may bring themselves within its provisions by contract. Eidson v. Hardware Mutual Casualty Company, 191 Tenn. 430, 234 S.W.2d 836 (1950); Woods v. City of La Follette, 185 Tenn. 655, 207 S.W.2d 572 (1947).

The provisions of T.C.A. § 50-902(c) defining “average weekly wage” provide several methods of determining an employee’s earnings when he has worked less than fifty-two weeks, none of which is applicable here. The act is silent with respect to any deductions from gross earnings and it is clear that the statute contemplates employees who earn a wage or salary for labor or services from which no deductions are appropriate in determining the average weekly wage. The act simply does not envision that an “employee’s” earnings would be computed on the basis of business profits or losses using standard accounting methods, as urged upon us by defendant.

No authority has been cited by the parties that we find analogous or persuasive, nor have we found any as a result of considerable independent research.

The record leaves no doubt that Bradshaw’s operations would not have been within the coverage of the workmen’s compensation act and that Champion required him to elect to accept the provisions of the law and pay the cost of insuring that liability. The trial judge found as a fact that the premiums paid by Bradshaw through Champion were predicated on the amount Champion paid Bradshaw per ton for pulpwood cut and delivered. There is material evidence to support that finding. It is significant that when the price per ton of pulpwood was increased in the second contract, the workmen’s compensation premium was also increased. It is also clear that neither Champion nor defendant insurance company had any information about Bradshaw’s expenses until after his claim for workmen’s compensation was made, when defendant sought to ascertain his expenses by taking his discovery deposition. If the parties had intended that Bradshaw’s earnings for workmen’s compensation purposes be reduced by expenses incurred in cutting and delivering the pulpwood then it was incumbent upon Champion to expressly provide therefor in the contract.

The testimony is not clear, but supports the inference, that Bradshaw had no regular employees; that his father, his brother and one Lawrence Parton helped him cut wood from time-to-time. Defendant seeks to interpret Bradshaw’s testimony as requiring a finding that employees of Bradshaw did all of the wood cutting and Bradshaw only did the hauling. This contention is obviously made to justify deduction $10 per cord for labor, a total of $3,750.10, according to defendant’s estimate. But Bradshaw testified that he cut wood himself and that he never had more than two men helping him. The fact that he sustained the injury that is the subject of this suit while cutting wood supports his testimony to some extent.

He also testified, uncontradicted, that one man could cut five cords of wood per day and that labor costs for cutting wood were usually figured at approximately $10 per cord. Based upon those uncontradicted figures, a worker employed in the work Bradshaw was doing when injured would earn $50 per day, with an average weekly wage for workmen’s compensation benefits well in excess of the $85 maximum. We think this record would justify treating Bradshaw’s earnings as equivalent, for workmen’s compensation purposes, to a workman engaged in cutting and hauling wood in that area. “Where . . . it is impracticable to compute the average weekly wages as above defined, regard shall be had to the average weekly amount being earned . . . by a person in the same grade employed in the same class of employment in the same district.” T.C.A. § 50-902(c).

The decree of the Circuit Court of Cocke County is affirmed and the cause is remanded to that court for the enforcement of the decree. Costs are adjudged against defendant, American Mutual Liability Insurance Company.

HENRY, C. J., BROCK and HARBISON, JJ., and OLIVER, Special Justice, concur.


author: HARBISON, Justice.

text:
    William B. MILLS and wife, Barbara Mills, Petitioners-Plaintiffs, v. Oliver L. BROWN and wife, Joan H. Brown, Respondents-Defendants, v. Robert F. TALLENT and wife, Sue L. Tallent, Respondents-Third-Party Defendants.
    Supreme Court of Tennessee.
    July 10, 1978.

      John B. Hagler, Jr., Cleveland, for petitioners-plaintiffs.
    Allen H. Carter, Carter & Reid, Athens, for respondents-defendants.
    Edwin C. Harris, Eugene Pennington, Madisonville, for respondents-third-party defendants.
   OPINION

HARBISON, Justice.

This is an action for damages brought by the purchasers of real property, alleging a deficiency in the number of acres purchased. Their vendors in turn sued the persons from whom they had purchased it, claiming a somewhat larger deficiency.

The facts of the case were stipulated. All parties agreed that both sales in issue were by the acre, and not by the tract, or in gross. Prior to trial the original plaintiffs sold the property for more than they paid for it, despite the deficiency in acreage. Both the Chancellor and the Court of Appeals held that in effect the plaintiffs had thereby “ratified” their purchase and had “made a profit” from it. Both courts denied relief. We granted a petition for cer-tiorari filed by the original plaintiffs, and a protective petition filed by the third-party plaintiffs. We are of the opinion that the courts below were in error in denying relief to both.

The subject matter of the suit was a tract of unimproved land in Monroe County. On June 24,1972 respondents Brown purchased the property from the third-party defendants Tallent at a price of one hundred dollars per acre. All parties involved in that transaction believed that the tract consisted of at least 165 acres, and the purchase price accordingly was fixed at $16,500.00. The warranty deed actually called for “160 acres, or more.”

A little less than eight months later, respondents Brown sold the property to petitioners Mills for $137.50 per acre, by warranty deed describing the tract as “160 acres or more.” The total purchase price was $22,000.00.

About nine months thereafter, petitioners Mills contracted to sell the property to Fred Key at a price of $200.00 per acre. In this transaction, however, a survey was called for. It is stipulated that an accurate survey was made, showing that the tract contained only 122.5 acres, rather than 160 acres. Petitioners deeded the property to Key, receiving $200.00 an acre therefor, or a total purchase price of $24,500.00 for 122.5 acres. Had the tract contained 160 acres as deeded, petitioners would have received $32,000.00 therefor.

Subsequently petitioners sued their vendors, the Browns, for the deficiency of 37.5 acres at the price which petitioners had paid, $137.50 per acre, or a total of $5,156.25.

In their answer, the Browns admitted the allegations of the complaint, conceded the deficiency, and sued their vendors, the Tal-lents, for a deficiency of 42.5 acres (the difference between 122.5 acres and 165 acres, upon which their transaction had been based) at a price of $100.00 per acre, or $4,250.00.

The third-party defendants, respondents Tallent, denied that either the original plaintiffs or the third-party plaintiffs were entitled to relief, and their position was ultimately sustained both by the trial court and the Court of Appeals. In his memorandum opinion dismissing all actions, the Chancellor recognized that ordinarily a purchaser who has bought land by the acre is entitled to an abatement of the purchase price upon discovery of a shortage. He cited a recent leading case on the subject, Delforge v. McMurtry, 481 S.W.2d 396 (Tenn.App.1972). In the present case, however, because he felt that the original plaintiffs, petitioners here, had never given their vendors “an opportunity to rescind the contract . . . ” but instead had “decided to comply with his agreement with the purchaser rather than give the defendants an opportunity to respond . . . ,” relief should be denied. He recognized that there “could conceivably be a question of damages” but concluded that the petitioners had not shown damages but, in fact, had “made a profit from the transaction.” He dismissed both the original action and the third-party claim.

It is apparent that during the periods of time involved in these transactions, property values were increasing and that the petitioners did in fact receive more for the property than they paid for it. This, however, in our opinion, does not determine the rights of these parties. In effect, both the original defendants and the third-party defendants insist that the petitioners should have offered rescission of the transaction, and that they should have afforded one or the other of these parties an opportunity to refund to the petitioners the amount which the petitioners had originally paid. In this way, of course, either the defendants or the third-party defendants would have profited from the increase in property values, but they contend that the petitioners would have been made whole.

The election of remedies, however, in the case of a purchaser of property who has been damaged by mutual mistake, lies with the purchaser, not with the vendor. It is perhaps arguable that the petitioners could have utilized the equitable remedy of rescission upon discovery of the shortage in acreage, had they desired to do so, and had they taken the requisite legal steps. There does appear to have been a good faith, mutual mistake as to the quantity of land involved, and a court of equity possibly could have allowed rescission; alternatively, however, depending upon the equities of the case, it might have denied that relief and awarded damages in the form of an abatement of the purchase price, as was done in the case of Delforge v. McMurtry, 481 S.W.2d 396 (Tenn.App.1972). This, rather than rescission, is the usual remedy in cases of mistake in quantity where sale is by the acre and not in gross. See Caughron v. Stinespring, 132 Tenn. 636, 179 S.W. 152 (1915); Rich v. Scales, 116 Tenn. 57, 91 S.W. 50 (1905); 77 Am.Jur.2d, Vendor and Purchaser §§ 110 et seq. (1975). Abatement of purchase price frequently is not permitted where there is a sale in gross, in the absence of actual fraud. Williams v. Daniel, 545 S.W.2d 120 (Tenn.App.1976); Evins v. Price, 63 Tenn.App. 627, 477 S.W.2d 204 (1971). See generally Annot., 1 A.L.R.2d 9, 19-20 (1948).

It is probably true that the petitioners waived any right to rescission by “ratifying” the contract and selling the property to Key. They did not, however, in our opinion, lose their right to sue for damages. The two remedies are not the same. The cases cited and relied upon by the defending parties deal with the denial of rescission where the purchaser has specifically ratified the contract or taken some other step inconsistent with that particular remedy. See Gilbert v. Hunnewell, 59 Tenn. 289 (1873); Knuckolls v. Lee, 29 Tenn. 577 (1850).

Rescission, of course, involves the avoidance, or setting aside, of a transaction. Usually it involves a refund of the purchase price or otherwise placing the parties in their prior status. As this Court pointed out in a recent decision, Isaacs v. Bokor, 566 S.W.2d 532, released at Nashville for publication May 1, 1978, the purchaser who has been the victim of fraud or mistake may recover, in addition to the purchase price, other damages which he may have incurred in good faith by reason of the mistake, such as cost of improvements and the like.

It was also pointed out in that opinion, however, that rescission is but one of a number of remedies available to the purchaser. In the present case the petitioners did not seek to avoid or set aside the transaction, but claimed an abatement of the purchase price because of a shortage in the acreage conveyed to them. This is one of the well-settled remedies available to a purchaser of land by the acre, and we do not find that the petitioners have taken any action inconsistent with their right to pursue it. Such an action is based upon an election by the purchaser to affirm the transaction, not to avoid it. We are not familiar with any authority which requires the purchaser, in order to avail himself of an action for damages, to forego any economic advantage which may have accrued to him by increase in market value of the property.

The judgments of the courts below are reversed. We are of the opinion that judgment should be awarded to petitioners Mills against respondents Brown in the amount sued for, $5,156.25, with interest from the filing of the complaint, and judgment to respondents Brown against third-party defendants Tallent in the amount of $4,250.00, with interest from the date of the filing of the third-party complaint. We do not deem this an appropriate case for the allowance of interest to any party prior to the institution of suit. Costs will be taxed equally to the respondents Brown and the respondents Tallent. The cause is remanded to the Chancery Court of McMinn County for entry of judgments in accordance with this opinion and for such further proceedings as may be necessary to enforce them.

HENRY, C. J., COOPER and FONES, JJ., and WM. I. DAVIS, Jr., Special Justice, concur.

      . That it could be pertinent in establishing the absence of damages had the sale been by the tract, or in gross, rather than by the acre, see Lee v. Watson, 181 S.W.2d 599 (Tex.Civ.App.1944).