decision of the question as to the meaning his testimony, were sufficient to pay only of the phrase "near relative." He testified about 35 per cent. of the claims of the credithat he did, and there is no contradiction of tors. The assignee then brought this suit, this testimony, and as it cannot be said that and alleged that E. C. Cain, a stockholder the question is so free from doubt as to indi- and officer of the corporation, had misapprocate a mistake so gross as to indicate bad priated the assets of the corporation by payfaith, his decision, which was that of the ing to appellee, R. T. Hunt, funds known to management, must be accepted as final and belong to the corporation in satisfaction of binding on the contestants. a personal obligation due Hunt by Cain. The judgment must, therefore, be reversed, and as the case has been fully developed it will be dismissed. HERRING v. HUNT. (No. 60.) (Supreme Court of Arkansas. June 15, 1925. Rehearing Denied July 13, 1925.) 1. Corporations 430-One receiving check on corporate funds for payment of officer's individual debt with knowledge thereof liable to corporation therefor. One receiving a check from an officer of a corporation, drawn against corporate bank account in payment of individual debt of officer drawing check, with knowledge that funds of corporation are being thus misappropriated, becomes liable to corporation for money thus received. 2. Corporations 430 - One receiving check on corporate funds on officer's debt must have knowledge that money received was corporation property before he is liable. Though acceptance of a check against corporate funds, in payment of individual debt of officer, raises presumption of knowledge that funds are being misappropriated, it is a rebuttable presumption, and burden to show that payee had knowledge of misappropriation is on party asserting such facts, and before one accepting check would be liable he must have knowledge that money received was property of corporation. The testimony offered in the case in support of these allegations was to the following effect: Hunt had been' engaged in the hardware business at Miami, and sold a half interest in the business to Cain, after which the business was incorporated as the HuntCain Hardware Company. Later Hunt sold to Cain his remaining half interest in the corporation, and in payment of the balance due on the sale of this stock Cain remitted to Hunt three checks payable to Hunt's order as follows: One dated June 15, 1921, for $350; one dated August 5, 1921, for $864.61; and one dated August 27, 1921, for $204. These checks were drawn on a bank in Mi ami, Okl., and were signed: "Hunt-Cain Hardware, by Edgar Cain, Secy. & Treas." These checks were indorsed by Hunt and deposited by him in a bank in Ft. Smith, where Hunt was then living and in business, and were paid by the bank upon which they were drawn, and the cashier of that bank testified that when paid the checks were charged to the hardware company's account. The name of this corporation appears to have been signed both as the Hunt-Cain Hardware Company and as Hunt-Cain Hardware, but the identity of the corporation under both names does not appear to be questioned. Hunt testified that after having been in business in Van Buren 35 years he removed to Miami in 1918 and engaged there in the hardware business, in which he invested $15,000. Soon thereafter he sold Cain a half Appeal from Circuit Court, Sebastian interest in the business for $7,500, of which County; Jno. E. Tatum, Judge. $2.000 was paid in cash and the balance of $5,500 was divided into monthly payments, the number of which was not stated. The business was then incorporated with a capi tal stock of $14,000, but the assets of the company amounted at that time to about $19,000, of which $5,000 was invested in fixtures, $3,000 in accounts, and the balance in a stock of hardware. At this time Hunt and Cain regarded themselves as equal owners of the business, although the wife of Cain had stock to qualify her as an incorporator. Two months after the sale of this half interest Hunt sold Cain the remaining half for $7,500, of which $5,000 was paid in cash, and the balance was evidenced by notes. He admitted that he received and cashed the checks in question, but testified that he paid no attention to them except the amounts (273 S.W.) thereof, and did not know where the money | first instruction, from which we have quoted, was coming from with which they were paid. that one receiving the check of a corporaHunt further testified that he supposed that tion in payment of the personal obligation of both Cain and the corporation were solvent, the officer of the corporation drawing it is and he did not realize or know that Cain put upon notice that he may be held liable was using corporate funds with which to pay for receiving misappropriated funds. But the individual debt of Cain due him. In oth- we think the court was not in error in modier words, if Hunt's testimony is to be cred-fying instruction numbered 3 by requiring ited, and its truth was, of course, a question the jury to find that Hunt knew the funds for the jury, he assumed that Cain was in of the corporation were being misapproprieffect and in fact the sole owner of the busi- ated. ness of the Hunt-Cain Hardware Company, and further assumed that both Cain and the hardware company were solvent, and cashed the checks without having his attention called to the manner in which they had been drawn. The court charged the jury, at the request of the plaintiff, that a person who accepts a check which, on its face, purports to be drawn on the funds of a corporation by an officer thereof in payment of the personal debt of the officer drawing the check must ascertain whether such officer had authority to so divert and use the corporate funds, and that the payee of such a check receives and cashes it at his peril, and is subject to be required to account for the proceeds thereof if the check was drawn without authority, and the funds of the corporation were thus misappropriated. One who is the beneficiary of such misappropriation may be called upon to restore the funds so received. And if it be said that the acceptance of a check, drawn as were the. checks in question, raises the presumption that the party accepting it knows that the funds are being misappropriated, this is a rebuttable presumption, and the burden upon the whole case to show that the payee in the check has knowledge of the misappropriation is upon the party asserting that fact. It was not error, therefore, for the court to modify the instruction numbered 3 by adding the clause that Hunt must have known that the money which he received on the checks was the property of the corporation before he would be bound thereby, and this is true although the form of the checks prima facie imputed such knowledge. Having concluded that the testimony is le The plaintiff requested an instruction num- gally sufficient to support the finding of the bered 3 reading as follows: "You are instructed that an officer of a corporation has no right to use the funds of the corporation to pay his personal debts, and any one accepting the funds of said corporation from an officer in payment of the officer's personal debt does so at his peril." The court gave this instruction after adding, at the end thereof, a qualifying clause reading as follows: "But he must have known that the money was the property of the corporation before he would be bound thereby." An exception was saved to this modification, and the correctness thereof presents what we regard as the controlling question in the case, although other questions are argued. [1] It is the law that if one receives from an officer of a corporation a check drawn against the corporate bank account, in paỹIment of the individual debt of the officer drawing the check, with knowledge that the funds of the corporation are being thus misappropriated, he becomes liable to the corporation for the money thus received. And the court so instructed the jury. Section 642, chapter on Corporations, in 7 R. C. L. page 640; Rochester, etc., Turnpike Road v. Paviour, 164 N. Y. 281, 58 N. E. 114, 52 L. R. A. 790, and cases cited in the annotator's note. jury that Hunt did not know that the funds of the Hunt-Cain Hardware Company were being misappropriated, it follows that the judgment should be affirmed, and it is so or dered. BROWN et al. v. REYNOLDS. (No. 86.) (Supreme Court of Arkansas. June 29, 1925.) Reformation of instruments 45 (5)-Deed not reformed, unless testimony clear and convincing that mutual mistake made. A deed will not be reformed, unless it is shown by clear and convincing testimony that a mutual mistake was made in description employed in deed. 2. Reformation of instruments 45(5)—Mutual mistake in description in deed warranting reformation held not shown by clear and convincing testimony. Grantors held not to have shown by clear and convincing testimony required that mistake in description employed in deed, covering more land than they owned, was mutual, warranting reformation. Appeal from Ouachita Chancery Court; Geo. M. LeCroy, Chancellor. Action by T. H. Reynolds against W. W. Brown and others, wherein defendants filed a cross-complaint and cause was transferred [2] The court also charged the jury in the to equity. From a decree dismissing de For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes fendants' cross-complaint and entering judgment for plaintiff, defendants appeal. Affirmed. Gaughan & Sifford, and Streett & Streett, all of Camden, for appellants. Haynie, Parks & Westfall, of Camden, for appellee. The property which appellants intended to convey had been owned by two brothers, who are referred to as the Brown brothers, and the grantors were their heirs. Of these W. W. Brown resided in Camden, where the property was situated. Six of the other heirs were nonresidents, but had executed to G. S. Rumph a power of attorney to execute deeds conveying their interests in the land. The til all of them had executed it. SMITH, J. On the 28th day of March, 1923, the appellants executed a deed to ap-deed was sent around to the other heirs unpellee conveying lot 510 in the Ashley plat in the city of Camden, Ark., as numbered and shown on the official map of said city, made by J. V. Pedron in the year 1891. This sur'vey included what is a part of lots 1 and 2 of Mitchell's subdivision of the city of Camden according to another survey. Both lots had been owned by E. C. Holmes, but he had sold lot 2 to Mrs. A. W. Green. Appellants never had any title to these two lots, and were never in possession of them. These lots were part of the property which bounded appellant's property on the east, and were in the possession of Holmes and Mrs. Green when appellants executed the deed to appellee. Lot 510, as shown on the Pedron map, contained 12.7 acres, and the portions of lots 1 and 2 included in lot 510, according to the Pedron map, contained 1.6 acres, thus reducing the acreage of the property which was actually owned and conveyed by appellants to appellee to 11.1 acres. Appellee instituted suit for damages for a breach of the warranty contained in the deed; and appellants filed an answer in which the execution of the deed was admitted, but it was alleged that that part of the description in the deed reading, "as numbered and shown on the official map of said city, made by J. V. Pedron in the year 1891," was inserted by the mistake of the scrivener who prepared the deed, and that in preparing said map, said Pedron, by mistake, included within lot 510 that part of the property known as lots 1 and 2 of Mitchell's subdivision of the town of Camden, and that they had no knowledge of the mistake made by Pedron; that a fence marked the true line between the property owned by appellants, which they intended to convey, and lots 1 and 2 of the Mitchell subdivision, and that appellee knew this fence was the line and that appellants did not own and did not intend to convey any property east of this fence, but appellee knew that appellants intended to convey only the land extending to that dividing fence. There was a prayer that the cause be transferred to equity, and the deed from appellants to appellee be reformed to express the real intention of the parties. The cause was transferred, and upon a trial the chancellor found in favor of appellee, dismissed appellants' cross-complaint, and entered judgment for appellee for the proportionate value of the land to Appellee testified: That he bought lot 510 to divide into a subdivision. That he supposed there were about 12 acres in it, and that he paid $12,500 cash for the property. That he had never seen any of the corners, and it was only by the streets that he knew where the lines were, and before he received his deed he had a survey of the property made, the survey being made to see how the property could be subdivided into lots. Appellee had used a portion of this property as a pasture. His son and another man had stretched a couple of barbed wires across it to keep some cows in. The price on the property was given appellee by the resident heir, but no one showed him the lines. Had seen the plat of the land attached to the abstract of the property, and knew what it showed, and took the dimensions as shown by this plat and compared them with the official city map of Camden, and found that the dimensions corresponded. The map, which is referred to as the official map of the city of Camden, was prepared by Pedron in 1891, under an ordinance of the council employing Pedron to make a map of the city, and is the map to which the description in the deed referred. After appellee had negotiated for the purchase of the land, he employed an engineer to subdivide it into lots. This engineer testified that he commenced work on March 29, 1923, which was one day after the date of the deed but several days before the acknowledgment of all the heirs had been obtained, and of course before the delivery of the deed. Mr. Brown, the resident heir, testified that he knew nothing about the plat attached to the abstract, and did not know where the property lines were, nor the area of the property. He merely fixed the price for which the heirs would sell, and intended only to convey the land owned by his father and his uncle. Mr. Rumph, who executed the deed under the power of attorney from six of the heirs, testified that he did not know anything about the legal description of the property, but there were fences from which appellee should have known what property was intended to be conveyed; but, on his cross-examination, he admitted that he could not say that, appellee knew he was buying any less land than the plat attached to the abstract showed. About a year before the sale, witness (273 S.W.) pasture, and witness supposed appellee knewed Rumph the fence which Holmes claimed from the fences what lands were owned by was on the line, and Rumph stated that he the estate of the Brown brothers. After the price had been agreed upon, the abstract was delivered to appellants' attorney to prepare the deed. The attorney was not asked to pass upon the title, and made no examination of the abstract. He observed that the plat on the abstract described the land as lot 510, and gave the dimensions thereof, and the attorney verified these dimensions by comparing them with the Pedron map, and, when he had done so described the land as being lot 510 according to the Pedron survey. Mr. Holmes testified that he had owned lots 1 and 2 of Mitchell's subdivision, but he had sold lot 2 to Mrs. Green. These lots joined the Brown property on the east, and were separated from it by a fence, which had been in existence for 26 years. Some years before appellee bought the Brown lot, he bought the pine timber on it, and witness Holmes notified the timber cutters to stop when they got to the line, and they did so. There were merchantable trees on his land at that time which appellee did not attempt to cut, and the timber thereon was not cut up to the east line of the Brown property. Witness would not say, however, that appellee knew of the directions he had given the timber cutters, but he did testify that appellee knew that witness was in possession of the land up to the fence. In rebuttal of appellants' testimony, a son of appellee testified that he represented his father in the negotiations for the purchase of the land. He admitted seeing the various fences, but did not regard them as anything more than inclosures of pastures-that several people were using portions thereof as pastures, the lands being devoted to that use. Before buying the land for his father, he examined the plat on the abstract, and compared it with the official map, and supposed he was buying for his father the land which the deed in fact described. He had charge of the cutting of the timber, and they had cut all the timber on the land as he supposed except two trees, one of which was in a ravine, and was not cut on that account, and the other was full of nails which had been driven in the tree to attach fences to it. Immediately after getting the deed, witness began clearing the land, when his crew of laborers was stopped by Holmes. Witness had observed no fences which indicated to him that there was any adverse possession of any of the land which he proposed to buy. He thought he was buying for his father the land which the deed described. This witness testified that after Holmes claimed a part of the land witness and his father went with Rumph to the land, and witness show. could not understand why Holmes would fence up something that did not belong to him, and that he could prove the land had not been fenced for 7 years. Rumph admitted that he went with appellee and appellee's son to look at the land after the sale, but he did not understand they were talking about the fence on the east side, but supposed they were talking about the fence on the west side. The testimony also shows that the Brown estate paid taxes for a number of years on lot 510 which was assessed for taxes according to the Pedron survey. Holmes brought suit to quiet his title to the portion of his land conveyed by appellants to appellee, and prevailed in that litigation, and the court decreed the relief prayed. Thereafter appellee brought this suit. [1, 2] The parties to this litigation do not disagree about the law of the case. It is, of course, settled that the deed from appellants will not be reformed unless it is shown by testimony that is clear and convincing that a mutual mistake was made in the description employed in the deed. It is certain that the Brown heirs did not intend to convey any land which they did not own, and it is reasonably certain that none of them knew that a description had been employed in the deed which covered more land than they owned. But this is not sufficient to obtain the relief here prayed. There is no intimation that any fraud was practiced in procuring the deed. It is only contended that appellee knew the land claimed by appellants, and that appellants did not intend to convey any land they did not own, and that appellee knew there was no intention to convey any part of the land owned by Holmes and Mrs. Green. But appellee and his son both testified unequivocally that they were governed by the plat of the land attached to the abstract of title; that they took the dimensions from the plat and compared them with the official map before offering to buy the land and that they had for a month planned with the engineer how best to subdivide the property, and that they supposed they were getting the land shown on the plat attached to the abstract, and which was described in the deed. It is clear that a mistake was made, but, when we remember that reformation will not be granted unless the mistake was mutual and that fact established by testimony that is clear and convincing, we are unable to say that the testimony measures up to this requirement, and the decree of the court below denying that relief will be affirmed. WEAKLEY v. STATE. (No. 34.) (Supreme Court of Arkansas. June 8, 1925. Rehearing Denied July 13, 1925.) 1. Homicide 308 (3) - Charge on homicide, in lower degree than murder in second degree, not justified under evidence. In prosecution for murder, where evidence tended to show that accused killed deceased while in state of intoxication and without provocation, instruction on homicide of any lowerdegree than murder in second degree held not warranted under evidence. 2. Homicide 294 (2)-Charge as to whether killing was with malice or result of insanity produced by intoxication approved. In prosecution for murder, charge as to whether killing was done with malice or was result of mania a potu-insanity produced by intoxication-held proper. 3. Homicide 28-Killing, resulting from voluntary intoxication without provocation and by deadly weapon, would be murder in second degree. Killing caused by voluntary intoxication without provocation, and by use of a deadly weapon, would be murder in second degree, unless accused was laboring under diseased condition of mind or fixed insanity, caused by a continued intoxication, so that he was incapable of knowing nature of act or that it was wrong. 4. Homicide 294 (2)-Refusal of instruction to acquit accused, if laboring under defect of reason from disease of mind, proper. Refusal of instruction that, if at time of alleged shooting accused was laboring under defect of reason from disease of mind, so as not to know nature of act, or that it was wrong, he must be acquitted, held proper, in absence of evidence that accused was afflicted with delirium tremens or any other form of mental disease produced by intoxication, and that killing was result of such disease rather than mere temporary loss of reason. 5. Witnesses 274 (2)-Cross-examination as to accused's general reputation for "peace and quietude" proper; "public peace." Where justice of peace testified to general reputation of accused for peace and quietude in community, cross-examination as to complaints about dances and drinking parties and crap games at his house held not error; "peace and quietude" signifying public quiet, order, and security, public tranquility and obedience to law, and that public order and security which is commanded by the laws of a particular sovereign, lord or superior; "public peace" being a condition of order that conforms to the requirements of the law. in community was good, cross-examination as to complaints that accused conducted dancing and drinking parties and crap games for boys at his house held proper to test credibility. 7. Homicide 216- Proper foundation must be laid for dying declaration. A proper foundation must be laid for admission of an alleged dying declaration. Appeal from Circuit Court, Arkansas County; George W. Clark, Judge. Ike Weakley was convicted of murder in the second degree, and he appeals. Affirmed. Botts & O'Daniel, of De Witt, for appellant. H. W. Appelgate, Atty. Gen., and Jno. L. Carter and Darden Moose, Asst. Attys. Gen., for the State. WOOD, J. The appellant was indicted by the grand jury of Arkansas county for the crime of murder in the second degree, in the killing of one Den Garrison. Witness Slim Huddleston for the state testified substantially as follows: On the night of the shooting Den Garrison and others were at the appellant's house. They had met there for a dance. After the dance broke up some of them went upstairs and engaged in a crap game. Garrison borrowed some money from the defendant that night. The game broke up about 4 o'clock in the morning, and the crowd went downstairs. The defendant came downstairs and through the room where Garrison and others were, but did not at that time say anything. He went into the kitchen and came back with a gun and cursed and said, "Now, what do you want me to do?" He threw the gun on his wife, who ran and picked up the baby and said, "Daddy, don't shoot me; I have got the baby." Albert Dallas and witness were the only men in the room at that time. Witness left the room and went about a hundred yards from the house, and about that time a shot was fired. Witness went back to the house and found Den Garrison was shot. The defendant told them all to clear out, and some one took the gun away from him. Garrison was lying on the floor with a wound about an inch or two across on the inside of his leg. Garrison asked the defendant why he shot him, and the defendant smiled a little bit and told Garrison that he had insulted his wife, but when his wife came in she said that Garrison had not insulted her. Garrison and defendant were friendly. Witness Albert Dallas testified that he was at the dance at defendant's home when the [Ed. Note. For other definitions, see Words defendant came downstairs and got his gun and Phrases, Public Peace.] 6. Witnesses 330(1)-Cross-examination as to reputation of accused in conducting dances and drinking parties proper to test credibility. Where justice of peace testified that general reputation of accused for peace and quietude and told the crowd to leave. Witness left and went down the road about a quarter of a mile when he heard a gun fire. Witness did not hear the defendant say anything to Garrison that night. They had no differences or words over money. Witness did not see or |
