if they were in earnest about buying said establishment, as he did not know them they would have to give a mortgage upon their lands in Arkansas as a guaranty that they were in good faith; that thereafter, through fraud and connivance on the part of Ray Bidell and N. A. Williams, they procured from appellant and wife their signatures to a certain deed of trust, which was at the time represented by Bidell and Williams to be in blank, and that they secured their signatures to a certain note which Bidell and Williams assured the Delolmes would not be binding upon them but was only to show the latter's good faith in the transaction; that Bidell further assured appellant and wife that they would place the deed of trust and note in the Green County Bank in escrow, and that they did so in the presence of appellant and wife. They represented to the appellant and his wife at the time that they could draw said papers out at any time, and that same would not be in any way binding on them; that they should not be delivered to Williams until appellant and wife were fully satisfied with the restaurant; that Bidell and Williams got possession of the note and deed fraudulently through said representations, without any consideration therefor; that thereafter appellant and wife reported to Bidell that they were not satisfied with the restaurant, and asked him to return to them the note and deed of trust; that the restaurant was not as represented by Bidell and Williams, who were in position to know its value; that they fraudulently misrepresented to appellant and wife that the value of the restaurant was $1,000, when in truth and in fact it was worth not over $300; that appellant and his wife were ignorant of the laws of Missouri, and so informed Bidell and Williams, and they, being in a position to know, conspired together to defraud appellant and his wife, and informed them that under the laws of Missouri they would have to accept the restaurant; that appellant and wife realized very little from the restaurant; that appellant, a short time before executing the purported note and deed of trust, and at the time the same was executed, was non compos. They prayed that the note and deed of trust be canceled and set aside as a Icloud on their title.

There was a demurrer to the answer, which does not appear to have been passed

upon.

The testimony of appellee Bidell was, in substance, as follows: He was a real estate agent at Springfield, Mo. The Delolmes came to his office inquiring for a restaurant or bakery. He told them of several places and of the place mentioned in the pleadings that was listed with him by the owner at the price of $1,200. The Delolmes seemed to prefer that place. He showed it to them, and they were there several days before the deal was made. Williams, the owner, finally agreed

to take $1,000. The Delolmes were unable to raise the money, and witness told them that if they could give any guaranty that they could get the money, or give a mortgage on their land, he would give them plenty of time. They examined the property very closely before they finally purchased it. They executed the note and deed of trust in suit, and the property was turned over to them. The restaurant was reasonably worth every dollar they agreed to pay for it when judged by the value of other restaurants around it. It was sold prior to the time they purchased it for $1,050.

Witness, on the 11th day of December, 1911, signed a note in favor of the bank for $500. The note was also signed by N. A. Williams and C. D. Williams. Witness at the time turned over to the bank the $1,000 note and deed of trust as collateral security for the $500 which he and Williams received. When the $500 note to the bank fell due Williams failed to take it up, so witness bought it. The note to the bank was the note of Williams. The reason witness signed it was that the bank would not take it unless witness indorsed it. After the first note for $500 became due and was unpaid by Williams, witness gave the bank a new note for $500, secured by the note and mortgage in suit. There was nothing said by the Delolmes to witness about putting the note and deed of trust in escrow. Witness thinks the note was executed the day the Delolmes took possession of the restaurant. The payee's name was in the note and deed of trust at the time they were executed. It was two or three months before Williams indorsed the note. Witness did not think that the deed of trust was recorded until after it was put in the bank as collateral.

The cashier of the bank testified that the bank loaned Bidell and Williams, on December 11, 1912, $500, taking their note, secured by the note and deed of trust in suit as collateral. When the loan of $500 was due Williams failed to pay it, and the bank notified Bidell. The collateral was sold June 10, 1912, to Bidell, and he redeposited it as collateral. The bank now has the note of Bidell for $500, and the note and deed of trust of $1,000, signed by the Delolmes, as collateral. The note for $500 of Bidell was due.

The lawyer who wrote the note and deed of trust in controversy testifies that he lived in Springfield, Mo.; that he met the Delolmes in his office, and remembered their buying a certain restaurant at Springfield. He wrote the note and deed of trust, and at the time he testified they were in the same condition they were in when he wrote them as to the payee's name. He knew that the words "containing sixty acres” were in the deed of trust, because he had the abstract when he drew the deed. He went to Batesville the latter part of November, about 30 days after the deal, to see if the note was negotiable.

He

did not make any investigation of the description of the land while in Batesville further than was shown by the abstract.

A witness by the name of Crane testified that he lived in Springfield, and that his occupation was running a restaurant. He own

ed the restaurant purchased by the Delolmes

about 18 months prior to the time they bought it. He sold it for $1,050. He paid about $300 for the old fixtures that the Delolmes had at auction. Witness thought they were worth $500.

The testimony of the Delolmes was to the effect that Bidell guaranteed that the restaurant he sold them was a good business and worth $1,000. They showed him the papers to their land, and he stated that he did not want the cash for the restaurant; that he would advance the money for them. After he got the information about their land he asked them to sign a mortgage to show that they were in good faith and not trifling with him. They did not want to sign the mortgage because at that time they had not fully determined whether they wanted the restaurant, having seen it but once. They wanted to see other places, and Bidell said, "Sign the mortgage anyway." It was not to guarantee the price of the restaurant, but only to guarantee good faith on their part. The mortgage was signed in blank.

"He said that by putting the mortgage in the bank he could draw it out, and if we didn't buy the restaurant he had something else for us; that the paper had no value. He said he asked for the mortgage because any one could talk to him without having any money or any intention of buying, and he wanted to avoid that. Then he took the papers to put them in the Green County Bank, and stated that neither of us could get them out without the signatures of each of us."

Mrs. Delolme further testified:

"I met a man by the name of George Phillips, who, told me that he had overheard our conversation, and that Bidell was trying to beat me out of my mortgage. I then told Bidell I wanted my mortgage. He told me it was too late; the bank had closed. He said I had signed the mortgage and had the restaurant, and that I could do what I wanted to. We did not assume anything at the time we signed the mortgage and note. I asked them twice to return the mortgage and note before we took the restaurant. They told me I had signed, and I must buy the restaurant. I did not know the law of Missouri. My husband and I had not been in the United States quite six years. Mr. Delolme scarcely understood English, and didn't speak it at all. He was sick from June until September, and his mind was affected from the illness, and I don't think he was able to transact business at the time we went to Springfield. He didn't understand the transaction, only from what I told him, and I told him that it was an affair of that kind, and I am sure that if he had known that it was as I found out, he would not have signed it. They asked it to show our good faith, and he signed it because I told him to. It is my opinion he didn't understand the nature of the transaction. Mr. Bidell came to see us during the course of the first 30 days after the transaction, and brought us a paper and said that it was my mortgage; that I had to sign it in the place of the first; that it was not properly made. I told him that I didn't want to sign anything;

that they had defrauded me, and that I didn't want to sign anything more. He said again that I didn't know the law, and that he would send his lawyer to explain the matter. The lawyer, Cowden, came on Saturday evening, and he said for us to sign it; that the other mortgage was defective. He explained it, but I didn't understand what was wrong, and didn't sign it."

The testimony of the appellant corroborated, in detail, the testimony substantially as given by his wife. When asked if he understood the transaction of the purchase of the restaurant he replied, "No, not in English." The restaurant was sold, after they had refused to pay for it, for $100 by the constable. Appellant said he did not understand English sufficiently at the time of the alleged sale to follow the negotiations; that his wife explained everything to him. There was testimony on behalf of the appellant to the effect that he was in jail at Batesville from July 23 to 31, 1911. The physician who attended him testified that he was insane from malarial fever, and he didn't know Witness heard that from what other cause. he had drunk considerable. If he had, that He could hardly would affect his mind. speak English at that time. When his wife would ask him anything he could understand her. Witness thought the condition of his mind was caused by malaria and work, but that it might have been from whisky, as witness heard afterwards that he had drank a good deal. When he was released, in about 10 days, his condition had improved. Another witness testified that appellant was never mentally right after he was released from jail until he left for Springfield, and was not mentally capable of transacting business when he left Batesville for Springfield. He could not speak English very much. He drank whisky a good deal after he was released from jail. It was witness' opinion, from her knowledge of the Delolmes, and as to their knowledge of the English language and customs, that it would have been an easy matter to have persuaded them into a business transaction, or to have frightened them by threats as to the state law.

The sheriff of the county testified that Delolme was placed in jail for insanity on the 23d of July, and released on the 31st. When he was placed in jail he was insane to such an extent that they claimed he was dangerous. They released him when Mrs. Delolme thought she could take care of him. sheriff was informed that he drank a good deal before he was placed in jail.

The

Ernest Neill testified that in November,

1911, he met a man by the name of Cowden, from Springfield, Mo. He brought witness an abstract to bring down to date on certain lands.

Witness found that the description in a certain deed of trust executed to N. A. Williams by Mr. and Mrs. Delolme was incorrect. Witness prepared an additional deed of trust and note, and later sent them to Cowden, who was to have them executed, and witness was to sell the note at Bates

It could serve no useful purpose to discuss the testimony in relation to these alleged misrepresentations in detail (arguendo). As to whether or not they were made, and whether or not they were fraudulent, were purely issues of fact, upon which the finding of the chancery court was not clearly against the preponderance of the evidence.

Its decree is accordingly affirmed.

PHOENIX INS. CO. OF HARTFORD, CONN., v. A. B. BANKS & CO.

(No. 106.)

(Supreme Court of Arkansas. July 13, 1914.) INSURANCE (8 83*)-AGENTS-VIOLATION OF INSTRUCTION-MEASURE OF DAMAGES.

Where an insurance company's agents failed to comply with the company's demand that they either cancel a policy or collect an additional premium, and such demand continued for several months and until a loss occurred nearly six months after issuance of the policy, and where the company knew during such time that the policy was outstanding and made no unconditional demand for its cancellation, the liability of the agents was limited to the amount of the additional premium, and they were not liable for the sum paid by the company in set tlement of the loss.

[Ed. Note. For other cases, see Insurance, Cent. Dig. §§ 107-110; Dec. Dig. § 83.*] Appeal from Circuit Court, Pulaski County; Guy Fulk, Judge,

Action by the Phoenix Insurance Company of Hartford, Conn., against A. B. Banks & Co. From judgment sustaining demurrer to the complaint in so far as it sought to recover damages in excess of $30, plaintiff appeals. Affirmed.

respondence was pursued between plaintiff and defendants with reference to the transaction. The correspondence is set forth in the complaint in this action as part of the statement of facts, and shows that defendants were insisting that the additional premium be not charged, for the reason that it would cause them to lose the patronage of that customer, and that plaintiff continued to insist upon the collection of the premium or the cancellation of the policy.

The policy was issued on December 22, 1911, and reported to the plaintiff shortly thereafter, and the insured property was damaged by fire which occurred on June 9, 1912, while the policy was in force. The company made good the indemnity on account of the damage by fire, and this is an action instituted by plaintiff against defendants as its agents to recover the amount plaintiff was required to pay to the assured under the policy, and it is alleged in the complaint that the defendants wrongfully failed and refused to carry out the instructions of plaintiff as their principal, and thereby caused loss to plaintiff in the sum paid out under the policy. The allegations of the complaint, after setting forth the facts as hereinbefore recited and the correspondence between the parties, are

as follows:

W. L. & D. D. Terry, of Little Rock, for appellant. Wynne & Harrison, of Fordyce, for appellee.

MCCULLOCH, C. J. The plaintiff, Phoenix Insurance Company of Hartford, Conn., been doing a general fire insurance business in the state of Arkansas, and defendants were its local agents at Fordyce, Ark., with authority to countersign, issue, and deliver policies and contracts of insurance subject to the approval and instructions of the plaintiff.

Defendants issued to the Arkansas Lumber Company a policy of fire insurance in plaintiff company, and delivered same with an indorsement thereon waiving, in favor of a certain railway company, a provision in the policy referred to as the subrogation clause. When the issuance of the policy with the indorsement thereon was reported to plaintiff, it wrote to defendants, as its agents, demanding that an additional premium of $30 be paid by reason of the indorsement of said waiver on the policy, and that the policy be canceled unless the additional premium be paid. The policy was not canceled, nor was

The defendants offered to confess judgment in the sum of $30, the amount of the additional premium demanded, and demurred to the complaint in so far as it sought to recover damages in excess of that amount. The court sustained the demurrer, and rendered final judgment, from which the plaintiff has appealed.

The complaint undoubtedly states a case of wrongful act on the part of the defendants as agents of the plaintiff which caused injury; but the only question involved in this case is as to what shall be the measure of the recovery.

The trial judge decided that the amount of the lost additional premium sought to be collected was the measure of recovery, and in this we think he was clearly correct.

It will be noted that the complaint does not state a case where the agent refused to comply with an unequivocal demand or instruction for cancellation of the policy, nor a case where the policy was wrongfully issued or permitted to continue on a prohibited risk; but the facts stated in the complaint are that the plaintiff demanded of the defendants that the additional premium of $30 be collected, or that the policy be canceled. This demand continued over a period of several months and until the fire occurred, nearly six months after the policy was issued. The plaintiff knew, according to the allegations of the complaint, that the policy was still outstanding, and had never made an unconditional demand for its cancellation, but merely insisted upon the collection of the additional premium. In other words, the point of controversy between the plaintiff and defendants was concerning the collection of the premium and the violated instructions related to that point only. It is true, according to the allegations of the complaint, there was a demand that the policy be canceled unless the premium should be paid, but that was only for the purpose of forcing the collection of the premium. Plaintiff did not desire the cancellation of the policy; if it had, it could easily have insisted upon immediate cancellation, as it had the right to do; but, with the knowledge that the agent had neither collected the premium nor canceled the policy, it continued to couple together the alternative demand for the collection of the premium or the cancellation of the policy.

It is argued that the plaintiff was entitled to show that, if the demand for the premium had been insisted upon, the assured would have refused to pay, and would have forfeited the policy, and that thereby the risk would have been avoided. The answer to that is that, if cancellation had been sought, the more direct method would have been adopted of merely demanding unconditional cancellation of the policy.

Learned counsel for plaintiff rely upon the case of State Ins. Co. v. Jamison, 79 Iowa, 245, 44 N. W. 371, as sustaining their position. That case, however, announces a very different principle, and one which has no application whatever to the facts of the present case. In that case the defendant, an insurance agent, issued a policy, but wrongfully or negligently withheld from the company a report which would have contained matter that afforded ground for cancellation. In other words, the matter contained in the withheld report made the risk a prohibited one. The plaintiff offered to prove that if the report had been made, disclosing that information, the policy would have been canceled, and the court held that the proof should have been admitted, and that it would have established the fact that the wrongful act of the agent

was the proximate cause of the loss to the company under the policy, which it would have canceled if it had known the facts, and that the agent was liable.

We have a very different case before us in the present one. This was not a prohibited risk, and it was one which the plaintiff, not only was perfectly willing to carry, but repeatedly expressed its willingness to do so in the correspondence.

By merely insisting on the collection of the additional premium under those circumstances, it would be carrying the rule of measuring damages beyond that which was reasonably within the anticipation of the parties to hold that the agent is responsible for a loss by fire which occurred during the continued existence of the policy.

Mr. Ostrander states the rule applicable as follows:

"Where the risk is of a class that a company is accustomed to write, but which it has accepted at a lower rate of premium than should have been paid, having been misled as to its true character by the representations of the agent, the measure of the agent's liability on the destruction of the property by fire is not the sum which the insurer will be required to pay claimant in settlement of the loss, but such sum as expressed the difference between the premium actually paid and such premium as might fairly have been demanded on a correct representation of the hazard." Ostrander Fire Ins. (2d Ed.) 180.

We are of the opinion that the court took the right view of the law applicable to the facts stated in the complaint, and that the demurrer was properly sustained. Judgment affirmed.

WESTERN UNION TELEGRAPH CO. v.
FRANKLIN. (No. 46.)

(Supreme Court of Arkansas. June 15, 1914.) 1. TELEGRAPHS AND TELEPHONES (§ 36*)-RECEIPT AND ACCEPTANCE OF MESSAGE-MESSAGES WHICH MAY BE REFUSED.

A telegraph company may refuse to send a message which is obscene, slanderous, blasphemous, profane, indecent, or the like.

[Ed. Note. For other cases, see Telegraphs and Telephones, Cent. Dig. §§ 26, 31, 32; Dec. Dig. § 36.*] 2. Telegraphs and TELEPHONES (§ 36*)—RE

CEIPT AND ACCEPTANCE OF MESSAGE-MES- . SAGES WHICH MAY BE Refused.

A message tendered to a railroad and telegraph agent for transmission to his superior officer, reading: "Please advise why you cannot get a civil answer out of your agent here. If you ask him anything he has to curse you out"was neither slanderous, profane, or indecent, and was entitled to be transmitted.

[Ed. Note. For other cases, see Telegraphs and Telephones, Cent. Dig. §§ 26, 31, 32; Dec. Dig. § 36.*]

3. TELEGRAPHS AND TELEPHONES (§ 78*)—RECEIPT AND ACCEPTANCE OF MESSAGE-MESSAGES WHICH MAY BE REFUSED.

That the purpose of the sender of a telegraph message refused by the company's agent was to report the conduct of the agent to his superior did not affect the right to recover the