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disposition of the stolen money, although he QUIN, J. This is an appeal in the consays he did not do so.

solidated cases of the Lincoln County Fiscal The jury that tried the case saw the wit- Court et al. v. Hustonville & Coffey's Mill nesses, heard them testify, and reached the Turnpike Road Company and its president, conclusion that Taylor was guilty. There is G. C. Lyons. no claim that the jury were influenced by Appellees (plaintiffs below) allege they prejudice or passion, and their finding, upon were owners of stock in the turnpike comthe facts and circumstances before them, we pany; that by a sale of its turnpike it had will not set aside.

ceased to be a going corporation; that G. C. The judgment is affirmed.

Lyons, as president, treasurer, and manager, had in his hands certain sums of money belonging to the company arising from the sale of its roadbed and other property, and from

tolls which had been collected. HUSTONVILLE & COFFEY'S MILL TURN- The petition asks that the affairs of the PIKE ROAD CO. et al. v. Mc

company be settled, the property on hand ANINCH'S ADM'R et al.

sold, and the assets distributed among the

stockholders. The cause was referred to the (Court of Appeals of Kentucky. Jan. 17,

master commissioner. The commissioner filed 1919.)

his report, and, exceptions to same filed by

appellees having been overruled, judgment 1. TURNPIKES AND TOLL Roads 31-COR

was entered: (a) Fixing the ownership of PORATION-DISSOLUTION-ACCOUNTING.

338 shares of the capital stock of the comIn turnpike company's stockholders' action for settlement of affairs and distribution of as- pany, and (b) adjudging that appellant Ly. sets, the company was properly charged with ons, who had absolute control and manage full amount that had been due from county, ment of the company, had collected and had though settlement made for reduced on hand a sum of money aggregating, with amount, where deduction was for dividends due accrued interest as of the date the petition county and could have been credited on pro rata was filed, $12,039.38, or $35.61 on each share due county as stockholders; other stockhold- of stock, and which sum the stockholders ers being entitled to full amount.

were entitled to have paid to them. 2. TURNPIKES AND Toll Roads 31-Dis- Appellants contend the judgment is errone SOLUTION OF COMPANY-ACCOUNTING. ous in the following particulars:

In turnpike company's stockholders' action 1. In adjudging that the amount received for settlement of affairs and distribution of from Lincoln county on account of the purassets, the company was properly charged with chase of a portion of the pike was $3,000, full amount of proceeds of sale of tollhouse, instead of $2,400. notwithstanding item in 1890 report reading

2. In charging appellants with the pro"to amount collected on house and lot $275.00," where sale was made in 1906 and president of ceeds of sale of a tollhouse as $550, instead company while testifying did not explain item of $275. or claim it referred to such sale.

3. In adjudging that J. W. Drye was the

owner of any shares of stock in the com3. REFERENCE 100(4)—Master's REPORT EXCEPTIONS.

pany. A party complaining of a master's report first two items the amount for distribution

It being contended that by reason of the should point out, by exception, any therein and thus afford master an opportunity was excessive. These in their order. of correcting his errors, if any, or of reconsid- 1. Lincoln county agreed to pay $3,000 for ering his opinion.

the 672 miles of the pike in that county ; 4. APPEAL AND ERROR 220 FAILURE TO

but, having failed to receive any dividends OBJECT IN LOWER COURT MASTER'S RE- | from the company on the 60 shares of stock PORT.

held by the county, it deducted $600 from Objection to master's report not made in the purchase price, paying only $2,400. This lower court will not be considered on appeal. was November 19, 1901.

[1] At the June term, 1914, of the lower Appeal from Circuit Court, Lincoln County. court, the claim of the Lincoln county fiscal Consolidated actions by H. H. McAninch's court was compromised and settled by an

agreed judgment. Appellants contend they administrator and others against the Hus

should only be charged with $2,400. Accordtonville & Coffey's Mill Turnpike Road Company and another. From judgment render- have retained the whole of the purchase

ing to this contention, Lincoln county could ed, defendants appeal. Affirmed.

price for its share of the dividends or asGeo. E. Stone, of Danville, and J. S. Ows- sets, and the, remaining stockholders would ley, of Stanford, for appellants.

have no cause to complain. We cannot see K. S. Alcorn and P. M. McRoberts, both of it that way. The amount of said deduction Stanford, for appellees.

could properly have been credited on the For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

errors

1

pro rata due the county on its 60 shares, but proper credits and debits that should enter
the other stockholders were entitled to the into the making of his report.
benefit of the full purchase price. The [3] 3. In paragraph 2 of the master's re-
amount of said deduction, plus the sum re- port, he states that J. W. Drye is the owner
ceived in settlement of Lincoln county's of 41 shares of stock in the appellant com-
claim, did not give the county as much as it pany. No exception was filed to this item.
would have received under the judgment had A party complaining of a master's report
it not settled its claim; hence the appel- should point out, by exception, any errors
lants were not hurt. Justice to the stock- therein, and thus afford the master an op-
holders demands that in arriving at the portunity of correcting his errors, if any, or
amount for distribution the sum of $3,000 be of reconsidering his opinion.
treated as the sum received from the sale of [4] The objection should have been made
the pike to Lincoln county. This plan ac- in the court below, but was not done. It is
cords an equal distribution to all based on too late to make it now. Henderson's Chan-
the number of shares held.

cery Practice, $ 456; Magruder et al. v. Eric-
2. In a report of the company filed with son, 146 Ky. 89, 141 S. W. 1193; Sullivan v.
the county court May 3, 1890, this item is Sullivan, 147 Ky. 48, 143 S. W. 744.
included in the receipts: "To amount collect- In fixing the amounts due the several
ed on house and lot $275.00." Appellees stockholders, the court has charged the sum
claim this is a part of the proceeds of sale of $50 and interest against the amount due
of a tollhouse to Mrs. Ellen Powers. There the estate of H. H. McAninch, whereas this
is nothing in the record to substantiate such charge should have been against the estate
a claim. In reaching the sum due the stock- of J. S. Coulter. The court can correct this
holders, the master includes $3,000.12, be item upon the return of the case. This in no
ing the balance on hand May 6, 1893, as

wise alters the amount of the judgment to be shown by report filed in the county court; paid by the appellants, the amount due the the balance of the preceding year being H. H. McAninch estate being $106.83 instead brought forward in each succeeding report. of $24.18; that due the estate of J. S. Coulte In this wise the item of $275 enters into the $24.18 instead of $106.83. aforesaid balance.

The judgment is affirmed. The master also charges appellants with the sum of $550 received from Mrs. Powers for the tollhouse and lot, and appellant claims this is a duplication to the extent of $275.

[2] It is alleged in the petition, and ad- R. E. JONES & CO. v. NORTHERN ASSUR. mitted in the answer, that the sale of the CO., LIMITED, OF LONDON, ENGtollhouse to Mrs. Powers was in 1906, the

LAND, et al. price being $550. We fail to see how the item of $275, appearing in the report 'filed in (Court of Appeals of Kentucky. Jan. 14, 1919.) 1890, could be taken as a payment under a sale that did not take place until 16 years

1. INSURANCE 574(3)-FIRE INSURANCE

ARBITRATION--DISQUALIFICATION OF ARBI. later. There is nothing in the 1890 report to

TRATOR-EVIDENCE. indicate it was from this source. Besides,

Facts held not to warrant setting aside of at the time the turnpike was being operated an award for partiality of the insurer's arbiby the company, as was the case in 1890, it trator or appraiser. would hardly have disposed of so necessary 2. INSURANCE Cw570 – FIRE INSURANCE a portion of its property as a tollhouse.

ARBITRATION-QUALIFICATION OF ARBITRAThen, too, the president of the turi ke company was twice on the stand, and he prob

That an arbitrator named by insurers to adably could have explained this item of $275; just a loss occurring in Bowling Green was a but he did not do so, nor did he claim it was citizen of Hopkinsville, a town only a short a part of the Ellen Powers sale. The an- distance from Bowling Green, and in which the swer admitting the sale as being in 1906 for merchandising carried on was similar, did not $550, we see no cause for disturbing the disqualify, such arbitrator to act on account of

lack of information to merchandising in judgment in this respect. The court is not Bowling Green. favorably impressed with the attitude of the

ARBITRATION president, who owned 220 of the 338 shares

3. INSURANCE 574(3)

ZEAL OF ARBITRATOR-EFFECT. of stock in the company, and who seems to have been its guiding spirit and of all per- and impartial arbitrators, it does not go to the

While the general rule requires disinterested sons the most familiar with its affairs. He extent of invalidating an award where the arseems to have adopted a policy of resistance bitrators are merely zealous for what they conrather than assistance towards the master ceive to be the rights of the parties who noiniin the latter's endeavor to ascertain the nated them.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

TOR.

as

4. ARBITRATION AND AWARD 31 Ex-only preserved such rights as plaintiff then had TRINSIC EVIDENCE-NOTICE TO PARTIES. under the rules of practice to have case trans.

As a general rule, arbitrators, in the ab- ferred to common-law docket. sence of parties or notice to them of the time and place, cannot receive extrinsic evidence cal- Appeal from Circuit Court, Warren County. culated to have a material bearing upon the Five actions by R. E. Jones & Co. against award.

the Northern Assurance Company, Limited, 5. INSURANCE 574(2)-FIRE INSURANCE- of London, England, and others. Actions ARBITRATOR-EXTRANEOUS EVIDENCE.

consolidated and transferred to the equity An insured, submitting to an arbitrator of side by agreement, motion to transfer to the loss under a fire policy, should not have selected common-law docket for trial of questions of a witness as an arbitrator, and such arbitrator fact denied, and decree for dcfendants, and had no right to present extraneous facts or give plaintiff's appeal. Affirmed. evidence before the board except such as was obtainable from the premises.

Sims, Rodes & Sims and G. Duncan Mil6. INSURANCE 574(1)-FIRE INSURANCE

liken, all of Bowling Green, for appellants. ARBITRATION-EXTRINSIC EVIDENCE.

T. W. & R. P. Thomas, of Bowling Green, In action on fire insurance policies, defend- and Gordon & Laurent, of Louisville, for aped on ground of an arbitration and award, no

pellees. error prejudicial to insured was committed by allowing the chief of the fire department of the SAMPSON, J. The partnership firm of R. city wherein the loss occurred to make a state E. Jones & Co., composed of R. E. Jones and ment as to matters about which the insured's E. H. Adams, were engaged in general merarbitrator had given evidence.

chandising in Bowling Green, in 1914 and 7. INSURANCE Cw574(3)-FIRE INSURANCE, 1915. In the first year appellees, Northern AWARD-FRAUD.

Assurance Company, Limited, of London, If an arbitrator selected by the insurer act-England, New Hampshire Fire Insurance ed corruptly and induced other members of the Company, Scottish Union & National Insurboard of arbitration so to act in reaching and ance Company, Citizens' Insurance Company returning the appraisement and award, it was of Missouri, and Great Southern Fire Insurthe duty of the court to set aside the award.

ance Company, in five several policies for 8. JURY 13(7) – EQUITY JURISDICTION

different sums insured the stock of goods of FIRE INSURANCE-FRAUD-ARBITRATION. appellants against loss by fire. In Febru.

Whether the arbitrator selected by the in-ary, 1915, and while said policies were in surer acted corruptly and induced the other force, the storehouse was damaged and a members of the board so to act in reaching and large part of its contents was destroyed, and returning an appraisement and award was a) the remainder, more or less, damaged by fire. question cognizable in equity, and was for the Each of the policies contained an arbitration chancellor to hear and determine as a question clause, and shortly after the fire an arbitraof fact, without the intervention of a jury.

tion agreement was duly executed between 9. TRIAL 374(2)-SUBMISSION OF Facts the insured and the aforesaid five companies, TO JURY-ADVISORY VERDICT.

and arbitrators were selected, one by the If the chancellor submitted to a jury the insured, one by the companies jointly, and question of fact as to whether an insurer's ar- the two so selected agreed upon a third, who, bitrator was an impartial and disinterested ap- in case of disagreement, was to act as umpraiser, its verdict would have been advisory pire. The arbitrators, after qualification, only.

met on the premises and made the following 10. TRIAL 371-TRIAL OF ISSUES BY JURY award : -MOTION-TIME.

"We, the undersigned, in accordance with our Even where either party is entitled to a appointment and the conditions hereinabore trial by a jury of an issue out of chancery, the set forth, do hereby declare that we have estimotion therefor must be seasonably made, and mated and appraised the sound value of the otherwise it is the court's duty to deny it; and property herein described and the loss and dama motion for such trial, made after the evidence age thereto caused by said fire, and our award is entirely made up by depositions, etc., was too is as follows: late.

Total sound value...

$8,726.91 11. STIPULATIONS Om14(11) TRIAL OF Is- Total loss and damage.

7,526.91 SUE OUT OF CHANCERY-CONSTRUCTION.

“Witness our hands and seals at Bowling In action on fire insurance policies, de- Green, Ky., this 27th day of April, 1915.

"E. B. Bassett. fended on ground of an arbitration and award,

"E. Brown. an agreement that, pending decision of defend

“Sam Pushin." ant's motion to transfer cause to the equity side for preparation, it should be transferred to equity docket, without waiver of rights of ei

Immediately thereafter the insurance comther party to thereafter have an issue out of panies offered to pay Jones & Co. the amount chancery, did not enlarge rights of plaintiff to fixed by the board of arbitrators as the have case returned to common-law docket, but sound value of the stock, and take the sal

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

Fage or remnant of the stock undestroyed as and disinterested appraiser, one E. B. Bassett, provided in the policies of insurance, but and that thereupon plaintiffs nominate an apthis was refused. Several weeks later the praiser of their choice and selection, one E. five actions styled above were commenced in Brown, and the said appraisers so selected were the Warren circuit court by Jones & Co. to agreeable to the parties, and the appraisers recover on the policies, alleging that the signed an affidavit as to their competency and stock was almost wholly destroyed by fire;

qualifications." that the actual cash value of the merchan- The defendants, further pleading, relied dise at the time of its destruction was $12,- upon the award of the arbitrators as binding 234.19, and that the companies had failed to and conclusive upon the plaintiffs, Jones & comply with the conditions of the insurance Co., and as a bar to the prosecution of the contracts by paying the full face of the poli- live, or any actions. cies, which amounted to $10,000. In the By replies Jones & Co. denied that the de meantime, the salvage or damaged goods sav- fendant insurance companies in good faith ed from the fire and valued by Jones & Co. nominated or selected a competent or disat $750, and by the board of arbitrators at interested appraiser, and charged that Bas$1,200, was sold at auction for $1,900, R. E. sett, who was selected by the company as an Jones bidding $1,850 therefor. The $1,900 appraiser, was an interested, incompetent, was promptly paid over to Jones & Co. and disqualified person to act in such ca

The answers denied the entire stock was pacity, and that the companies and their destroyed or was worth $12,234.19, or any representatives who made the nomination of sum in excess of $6,500, or that the actual Bassett did so with the fraudulent intent total loss was in excess of $4,000, but ad- and purpose to obtain an advantage in the mitted that the stock had been damaged by arbitration, and, further, that Bassett, after fire on February 7, 1915. By a second para- his nomination and qualification, acted in graph defendants averred that:

bad faith, and while so acting as an apprais"There was a disagreement between this de er fraudulently .estimated the salvage at too fendant and plaintiffs as to the amount of the high a price and the sound value of the goods loss and damage, and this defendant in good at too low a price and the depreciation of faith attempted to reach an agreement with the stock at too great a per cent., and thereplaintiffs as to the amount of the loss and dam- fore the arbitration and award, being obtainage sustained to said building. It states thated by fraud, were invalid and without force there was a substantial difference between it or effect. and plaintiffs as to the amount of the loss, as this defendant was insisting that the loss and identical, the five several actions were con

The pleadings being similar and the issues damage did not exceed the sum of $4,000, while solidated. A motion was then entered by deplaintiffs contended that the amount of loss and damage exceeded $11,000, and defendant fur: fendants to transfer the consolidated action nished to plaintiffs the facts and figures upon to the equity side of the docket for preparawhich it based its conclusion as to the amount tion. This was objected to by Jones & Co., of said loss, but that, notwithstanding these but while the matter was pending the folfacts, this defendant and plaintiffs could not lowing agreement with respect to the transagree as to the amount to which defendant was fer was made between the parties : indebted to plaintiffs under said policies. It states that thereafter, by reason of such disa

“Pending the decision upon said motion, it greement, it demanded of plaintiffs that they was, and is, agreed between plaintiffs and deagree to submit to appraisers the amount of fendants that each and all of the above-styled loss and damage sustained to said insured prop- causes shall be, and the same are hereby, transerty as required by the provisions of the policy ferred to the equity docket of the Warren cirabove quoted. It states that thereupon the cuit court, without either plaintiffs or defendplaintiffs entered into an agreement with this ants waiving their right, if any, to thereafter defendant and the other companies which car. have any issues out of chancery tried by a ried policies of fire insurance on this property,

jury." to wit (naming the companies), whereby all the

The burden being upon Jones & Co., they parties concerned agreed to submit to two com proceeded with the taking of depositions in petent and disinterested appraisers the question of the amount of loss and damage caused by support of their several contentions, and said fire, and also of the question of the actual when they were through in chief the comvalue of the insured property immediately be- panies took sundry depositions, whereupon fore the fire, and said agreement provided that Jones & Co. took several depositions in reone of the appraisers should be selected by the buttal, and the evidence was closed. At this plaintiffs, one by the defendant and other in- point Jones & Co. moved for a transfer surance companies mentioned, and that the ap of the consolidated action to the commonpraisers so selected should first select a com- law docket for a trial of certain questions petent and disinterested umpire, to whom the of fact. To this the companies objected, and appraisers should submit their differences in their objection was sustained, and this is case they should fail to agree. * It states that, pursuant to the terms of the policy one of the chief grounds of complaint upon and of the said agreement, this defendant and this appeal. the other insurance companies above mentioned

The case was then submitted, and the Dominate and select in good faith a competent chancellor entered a decree sustaining the

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award of the arbitrators, and, as there had to merchandising in the city of Bowling been a tender by the companies under sec- Green. This position however, is not tena. tion 634 of the Civil Code, adjudged the ble, because Hopkinsville is no great discost of the consolidated action against the tance from Bowling Green. In fact the two plaintiffs, Jones & Co., from that date. towns are in many respects much the same,

The appellants, Jones & Co., insist that the and the merchandising carried on in the two judgment should be reversed: (1) Because is very similar. It must be granted, how. Bassett, the arbitrator nominated by the ever, that in the arbitration and while the companies, was not qualified, disinterested, several questions of difference were being and impartial; (2) extraneous evidence was considered, Bassett strongly favored the poreceived by the board of arbitrators in the sition of the insurance companies, and, absence of the parties, without notice to while this is true, it must not be overlookthem either of its purpose to hear evidence ed that Mr. Brown, who represented Jones or of the time or place it was to be received ; & Co. was equally vigilant for the insured. (3) the court should have submitted to a jury The umpire, Mr. Pushin, in his testimony the issue of whether or not Bassett, the ar- makes it quite plain that Bassett insisted upbitrator selected by the insurance companies, on the rights of the companies, while Brown was a disinterested and impartial appraiser. argued the side of Jones & Co., and when the We will consider these complaints in the or- two could not agree the umpire came in and der named:

settled the controversy. We are of opinion [1-3] 1. Bassett is a merchant of several from the evidence that Mr. Brown, who repyears' experience in the city of Hopkinsville. resented Jones & Co., was as capable and as He had acted as arbitrator for an insurance earnest in behalf of the insured as Bassett company some years previous to the time in was for the insurers. Mr. Brown was a busiquestion; he had also acted as an appraiser ness associate of R. E. Jones. They were for insurance companies only a short time partners in real estate business, and Brown before his nomination in this case, and this frequented the store of Jones & Co. In the is the chief ground of objection to Bassett arbitration Jones insisted that he knew the by Jones & Co. Appellants say that the nature, character, and value of the goods in fact that Bassett had acted as arbitrator for the Jones & Co. store because of his frequent insurance companies on other occasions was visits there. He also urged that the goods unknown to them at the time of his appoint- which had been destroyed by fire were worth ment and action as arbitrator; that his se- 100 cents on the dollar, although the fact is lection so frequently indicated an alliance that the whole stock, or a very large part with and bias for the companies. The evi- thereof, was secondhand and badly shopdence, however, tends to show that Bassett worn; that Jones & Co. acquired it from other is a man of good business ability and of wide retail merchants, who in turn had acquired experience in the mercantile business, and the same goods from other retail merchants, while he had acted upon two different occa- and that some of the goods had passed sions, one some 15 years before, and the oth-through bankruptcy and had been sold and er only a few months previous to his appoint- resold. Some of the goods were much out of ment in this case, no attempt is made to date. On the other hand Bassett contended show that he was not honorable, just, and that the goods were so old that the insurance upright, except by inferences such as might companies were entitled to a depreciation of be drawn from his frequent selection by in- at least 50 per cent. This question was arsurance companies and his conduct in this gued pro and con by Bassett and Brown, and

The arbitrators met upon the prein- when they failed to come to an agreement ises and concluded the work in one day. Mr. the umpire, Pushin, fixed the depreciation at Brown, who was selected by Jones & Co. was 15 per cent. thus allowing Jones & Co. 85 a business man of good repute, residing in per cent. on the dollar for their stock. While Bowling Green; so also was the umpire Mr. the general rule requires disinterested and Sam Pushin. The companies selected Bas- impartial arbitrators, it does not go to the sett to represent them in the arbitration, and extent of invalidating an award where the Jones & Co. selected Brown to represent arbitrators are merely zealous for what they them on their side of the controversy, and conceive to be the rights of the party who Bassett and Brown selected Pushin as um- nominated them, and we are of opinion that pire. Pushin's name was suggested by R. E. the facts of this case would not have warJones, of the firm of Jones & Co. It will thus ranted the chancellor in setting aside the be seen that Jones & Co. nominated two of award on the grounds of disqualification of the three arbitrators. It was provided in the Bassett as an appraiser. agreement of arbitration that any two of the [4-6] 2. As a general rule, arbitrators canthree acting might return a binding award. not, in the absence of the parties or notice It is insisted, however, that Bassett was a to them of the time and place, receive extracitizen of Hopkinsville, and that his home neous evidence, which is calculated to have was so far removed from Bowling Green as a material bearing upon the award. The to disqualify him to act in that locality on fire occurred at night, but the fire departnent account of lack of information with respect saved a part of the building and stock of

case.

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