author: Conley Byrd, Justice. Carleton Harris, Chief Justice,

text:
    THE HARTFORD INSURANCE GROUP v. Harriet CARTER and Bel-Air Sales Company, Inc.
    5-5663
    473 S.W. 2d 918
    Opinion delivered December 20, 1971

      Daily, West, Core ir Coffman, for appellant.

      Jones, Gilbreath & Jones, for appellees.
   Conley Byrd, Justice.

The issue on this appeal by The Hartford Insurance Group is whether a release executed by an employee to a third party tortfeasor before the filing of a workmen’s compensation claim is a defense to the employer’s subsequent action against the tortfeasor brought pursuant to Ark. Stat. Ann. § 81-1340 (b) (Repl. 1960).

The record shows that appellant, The Hartford Insurance Group, hereinafter referred to as the compensation carrier, was the workmen’s compensation insurance carrier for Bill Yates Buick-GMC, Inc., on October 2, 1969. On that dáte Paul Ruth, an employee of Bill Yates Buick-GMC Inc., had an automobile collision with appellee Harriet Carter, an employee of appellee Bel-Air Sales Company, Inc., (the appellees will hereinafter be referred to as third parties). On October 29, 1969, Paul Ruth, the employee, settled his and his wife’s claim for personal injuries with the third parties for $1,000 and executed a complete release. Subsequently the employee made a claim for workmen’s compensation benefits. The workmen’s compensation claim, which could have been compensable for approximately $2,500.00, was settled by joint petition with the approval of the Workmen’s Compensation Commission for $1,760.45. Admittedly the compensation carrier did not notify the third parties of its subrogation rights until March 19, 1970. It is not contended that the employee gave the compensation carrier notice of his claim against the third parties before the settlement. The record is also silent as to whether the compensation carrier knew of the third party release when it compromised the workmen’s compensation claim on March 17, 1970.

The compensation carrier brought this action against the third parties pursuant to Ark. Stat. Ann. § 81-1340 (b) to recover the $1,760.45 paid to the employee Paul Ruth. On a motion for summary judgment, the trial court held that the employee’s release to the third parties was binding on the compensation carrier. For reversal the compensation carrier states the issues in this manner:

"Appellant has no contention with and does not argue against the well established rule of equitable and contractual subrogation law that a subrogee succeeds to only those rights against a third party which were held by the subrogor at the time the subrogation right was created, neither does appellant contend with the consequential rule that a release of the third party by the subrogor prior to a payment creating a subrogation right in the subrogee bars a later attempt by the subrogee to enforce the subrogation right. See, e. g., Home Insurance Company v. Dearing, 248 Ark. 574, 542 S. W. 2d 852 (1970); Phillips v. Worthen, 220 Ark. 877, 251 S. W. 2d 118 (1952). It is the contention and argument of the appellant that the ‘action in tort’ created by the Arkansas Workmen’s Compensation Act in comperisation carriers such as the appellant takes on certain legal characteristics which distinguishes it from ordinary equitable and contractual subrogation rights. Appellant does not contend that the statutorily created ‘action in tort’ is an entirely distinct cause of action. Rather, appellant contends that the ‘action in tort’ has some characteristics, but not all characteristics, which distinguishes it from normal subrogation rights, and that one of the distinguishing characteristics is that the action is not destroyed by a release given to a third party by the employee prior to the payment of workmen’s compensation benefits and without the consent of the employer or the employer’s workmen’s compensation carrier.”

The particular section of the Workmen’s Compensation Law here involved is Ark. Stat. Ann. § 81-1340 which provides:

“(a) LIABILITY UNAFFECTED. (1) The making of a claim for compensation against any employer or carrier for the injury or death of an employee shall not affect the right of the employee, or his dependents, to make claim or maintain an action in court against any third party for such injury, but the employer or his carrier shall be entitled to reasonable notice and opportunity to join in such action. If they, or either of them, join in such action they shall be entitled to a first lien upon two-thirds [2/3] of the net proceeds recovered in such action that remain after the payment of the reasonable costs of collection, for the payment to them of the amount paid and to be paid by them as compensation to the injured employee or his dependents.
(2) The commencement of an action by an employee or his dependents against a third party for damages by reason of an injury, to which this act [§§ 81-1301 —81-1349] is applicable, or the adjustment of any such claim shall not affect the rights of the injured employee or his dependents to recover compensation, but any amount recovered by the injured employee or his dependents from a third party shall be applied as follows: Reasonable costs of collection shall be deducted; then one-third [1/3] of the remainder shall, in every case, belong to the injured employee or his dependents, as the case may be; the remainder, or so much thereof as is necessary to discharge the actual amount of the liability of the employer and the carrier; and any excess shall belong to the injured employee or his dependents.
“(b) SUBROGATION. An employer or carrier liable for compensation under this act [§§ 81-1301 — 81-1349] for the injury or death of an employee shall have the right to maintain an action in tort against any third party responsible for such injury or death. After reasonable notice and opportunity to be represented in such action has been given to the compensation beneficiary, the liability of the third party to the compensation beneficiary shall be determined in such action as well as the third party’s liability to the employer and carrier. After recovery shall be had against such third party, by suit or otherwise, the compensation beneficiary shall be entitled to any amount recovered over and above the amount that the employer and carrier have paid or are liable for in compensation, after deducting reasonable costs of collection, and in no event shall the compensation beneficiary be entitled to less than one-third [1/3] of the amount recovered from the third party, after deducting the reasonable cost of collection.
“(c) SETTLEMENT OF CLAIMS. Settlement of such claims under subsections (a) and (b) of this section must have the approval of the Court or the Commission, except that the distribution of that portion of the settlement which represents the compensation payable under this act [§§ 81-1301 — 81,-1349] must have the approval of the Commission. Where liability is admitted to the injured employee or his dependents by the employer or carrier, no cost of collection shall be deduced from that portion of the settlement under subsections (a) or (b) of this section, representing compensation, except upon direction and approval of the Commission.”

When section 40 of the Workmen’s Compensation Law is viewed from the drafter’s standpoint, it is at once obvious that the drafters were generally dealing with the correlative rights of employee and employer relative to bringing third party tort actions and distribution of the proceeds. The only place the drafters attempted to place any burden upon third parties tortfeasors different from their common law duty was in subsection (a) (1) wherein it was specifically provided that the employer or its carrier would have a lien upon the proceeds if it should join in an action by the employee against the third party. However, it is to be noted that the drafters in providing' the manner for perfecting the employer’s lien on the proceeds also provided an adequate notice to the tortfeasor by requiring that the employer either join or intervene in the action against the tortfeasor. Having thus provided a manner and method of perfecting the employer’s lien on the proceeds, the third party tortfeasor should have every right to proceed according to the common law as if no employer is involved until such time as the lien is perfected. In fact subsection (a) (2) recognizes that an employee can make such an adjustment before filing a Workmen’s Compensation claim by providing a procedure for the application of the proceeds thereof between the employee and the employer when a claim is filed.

In St. Paul Fire & Marine Insurance Company v. Wood, 242 Ark. 879, 416 S. W. 2d 322 (1967), we held that Section 40 recognized but one cause of action against the third party tortfeasor. We can find nothing in Section 40 (b) that would make the third party’s liability to the employer any greater than that of any other subrogation claimant. Winfrey and Carlile v. Nickles, Admr., 223 Ark. 894, 270 S. W. 2d 923 (1954), upon which the compensation carrier relies, merely involved a controversy between the employee and the employer relative to the employer’s obligation for expenses of recovery. St. Paul Fire & Marine Ins. Co. v. Wood, supra, involved a court approved compromise pursuant to subsection (c) by which the third party tortfeasor was permitted to buy his peace from the employee at a discount the employer was unwilling to take. The common law liability of the third party tortfeasor to the employer was not increased in either case.

Finally the compensation carrier argues that the release is ineffectual as to it because the third parties failed to obtain the court approval of the settlement required by Section 40(c). We find no merit in this contention. In the first place there is no showing that the third parties knew that they were settling a claim under subsections (a) and (b). In the next place it does not appear that the drafters of the Compensation Law intended for subsection (c) to be binding upon third party tortfeasors. Rather it appears to us that the purpose of subsection (c) was to permit the adjustment of controversies between the employee and employer such as occurred in St. Paul Fire & Marine Ins. Co. v. Wood, supra, and to require that settlements as between them have the approval of either the court or the Workmen’s Compensation Commission to prevent an employee from compromising his claims through his tort action in a manner that would not be permitted under the Compensation Law as by way of joint petition.

See Ark. Stat. Ann. § 81-1319(i). To hold subsection (c) applicable to third party tortfeasors would leave the adequacy or inadequacy of a compromise settlement approved by both the employer and the employee to the discretion of a court or the Commission. There is nothing in the Workmen’s Compensation Law to indicate that any such far reaching result was intended.

The public policy of this State is to encourage settlements of tort claims. No greater harm would be done to an employer by permitting a conscientious citizen to amicably settle his just obligations before the employer has paid compensation than would be done to the conscientious citizen by making him, as a third party, pay twice for the same obligation. If we should accept the compensation carrier’s interpretation of Section 40(c), no citizen could effectively obtain a tort release from his neighbor without the employment of a lawyer to file a complaint and causing a court to hear enough facts to approve a settlement. A law making it that difficult for a citizen to discharge his just obligations without running the risk of having to pay twice should be plain and unequivocal in its application to a tortfeasor.

Cases from other jurisdictions can be found going both ways on the issues involved here. Such decisions usually turn upon the particular wording of the statute involved. Our construction here is not only consistent with the statute's design of a lien only upon notice to third parties of the employer’s claims but also conforms to the general proposition that statutes imposing burdens and liabilities unknown at common law are to be strictly construed in favor of those upon whom the burden is sought to be imposed. See Thompson, Commissioner of Revenues v. Chadwick, 221 Ark. 720, 255 S. W. 2d 687 (1953) and State v. International Harvester Co., 79 Ark. 517, 96 S. W. 119 (1906).

Affirmed.

Harris, C. J. & Fogleman, J., dissent.

Carleton Harris, Chief Justice,

dissenting. I very much disagree with the holding by the majority. Statutes are designed to give fair play to all parties in a controversy and, in my view, this result is certainly not reached iri this litigation. Ark. Stat. Ann. § 81-1340 (Repl. 1960), set out in full in the majority opinion, in sub-section (a) sets out the requirements to be met by an employee when he institutes suit against a third party tortfeasor. Sub-section (b) sets out what an employer, or carrier, shall do when he institutes suit. Very clearly, paragraph (1) under sub-section (a) provides that an employee has a right to make a claim or maintain an action in court against the third party for his injury, But the employer or carrier shall be entitled to reasonable notice and an opportunity to join in the action. Paragraph (2) provides that the “commencement of an action” (which has to be the action mentioned in paragraph [1]) or the adjustment of the claim, shall not affect the right of the employee or his dependents to recover compensation, and the statute then provides how the proceeds of the monies obtained through the action that has been commenced, or by settlement, shall be disbursed.

Sub-section (b) permits the employer or carrier to maintain the action in tort against a third party, but provides that reasonable notice and opportunity to be represented must be given to the compensation beneficiary. Apparently, the majority are holding that it is not necessary to give notice to the employer or carrier if the claim is settled before institution of a suit. I think this holding is absolutely contrary to the intention of the statute, and is completely unfair to the compensation carrier. If a carrier instituted suit against a third party and obtained a judgment, or settlement, without ever giving any notice to the employee that such a suit had been instituted, a court, upon complaint by the employee, would not hesitate to set aside any such judgment, and this court would affirm. I merely say “What is sauce for the goose, is sauce for the gander”. Here, the employee settled his third party claim before he ever made any claim for workmen’s compensation benefits to the carrier, and accordingly, the carrier neither knew of any claim for compensation against it nor of any settlement made by the employee with the third party. Accordingly, there was no way for appellant to protect itself.

I also definitely have the view that sub-section (c) requires approval of this settlement. Admittedly, approval was not obtained. Now, I do not mean that the commission has any jurisdiction over the third party. I agree that it has no authority to make the third party do anything— 4 ut it does have jurisdiction over the employee and certainly, in my view, has the power to disapprove a settlement which it deems improvident. In Winfrey & Carlil v. Nickles, Admr., 223 Ark. 894, 270 S. W. 2d 923, this court held that sub-section (c) was designed for compromise settlements only, (rather than when a case is brought to trial and results in a verdict), stating:

“There is, however, good reason to require that a compromise settlement be so approved, for it is a basic theory of workmen’s compensation legislation that neither the injured employee nor his dependents are to be allowed to sacrifice their rights by improvident settlements.”

I submit that the commission also has a right to protect the employer or carrier from the effect of an improvident settlement between any employee and a third party. Let me give an example of what could happen. An employee, in the course of his employment, has a serious wreck with his brother, the fault being entirely with the brother, in which the employee is severely injured. Because of the relationship, he settles the tort claim with the brother by accepting a small amount of money, much less than his tort claim is worth, without giving any notice to the employer or carrier. He then files his claim for compensation and draws maximum benefits. The employer or carrier accordingly pays out a large sum of money, but, under the holding today, is precluded from recovering from the third party (brother) because of the settlement made.

The majority say:

“To hold subsection (c) applicable to third party tortfeasors would leave the adequacy or inadequacy of a compromise settlement approved by both the employer and the employee to the discretion of a court or the commission. There is nothing in the Workmen’s Compensation Law to indicate that any such far reaching result was intended.”

In the first place, we are not here dealing with a settlement which has been approved by the employer (carrier) In fact, this is basically the complaint of appellant, i. e., that a settlement was made without its approval — or even knowledge.

The statement of the majority, just quoted, is particularly confusing to me since we have already followed the procedure of the commission approving settlements between an employee and a third party. In Maxcy v. John F. Beasley Construction Co., 228 Ark. 253, 306 S. W. 2d 849, this court set out the facts as follows:

“The facts appear not to be in dispute. Appellant Maxcy, while in the course of his employment with John F. Beasley Construction Company, suffered injuries by a third party, the Ditmars, Dickmann, Pickens Construction Company (succeeded by Dickmann, Pickens, Bond Construction Company). Maxcy employed attorney, Whetstone, under a contract whereby he agreed to pay Whetstone 50 per cent of any recovery. Suit was filed in the federal court with the result that a settlement was effected, without trial, for $10,016.50. Because of his injuries, Maxcy was paid benefits by his employer’s compensation carrier, the Liberty Mutual Insurance Company, in the total amount of $3,780.56. It appears that there was never any controversy between Maxcy and Liberty Mutual as to its liability to Maxcy for his injuries.

On March 5, 1956, appellant Maxcy filed a petition with the Workmen’s Compensation Commission in which he asked for approval of a settlement and for an order of distribution of the $10,016.50. Later, in an amended petition, he asked that distribution be made in the following manner: To Liberty Mutual Insurance Company, $2,250 (5/9ths of its payment of $3,730.56); to Bernard Whetstone, $5,142.40 (attorney’s fee plus $142.50 costs expended); and the balance to the employee, Robert Maxcy. In the alternative, he prayed for a distribution as follows: To Liberty Mutual Insurance Company, $1,865.28; to Bernard Whetstone, attorney, $5,142.40; to Robert Maxcy, employee, $3,008.82.

Following a hearing before a single commissioner, on the question of distribution and approval of the settlement with the third party, the commissioner approved the settlement of $10,016.50 and that attorney Whetstone was entitled to a fee of $5,000 to be deduced from the total recovery and that he should be reimbursed in the amount of $142.40 for certain expenses incurred by him in procuring the settlement. Of the remaining $4,851.60, $3,234.40 was ordered paid to Liberty Mutual Insurance Company and the remainder amounting to $1,617.20 paid to the employee, Maxcy. The full commission, on a hearing, approved the findings of the single commissioner and on appeal to the Circuit Court of Garland County, that Court affirmed the findings of the commission on November 2, 1956. This appeal followed.”

We mentioned that the settlement was effected without the suit being contested, was a voluntary compromise settlement, and the commission had acted under the authority of § 81-1340 (c).

The majority state, that under the view of the appellant in this case, a third party would have to pay twice for the same obligation. That certainly is not my view. If a settlement had been made, and the settlement taken before the commission before any money was paid — and the commission disapproved the settlement — there simply would have been no settlement. If, on the other hand, the settlement had already been effected, and the commission would not approve because of its inadequacy, the third party would be credited with what had already been paid when a settlement was made which met with the approval of the commission. Of course, from a practical standpoint, any settlement with a third party which had been approved by both employee and employer, would, in 99% of the cases, be approved also by the commission.

I respectfully dissent to the affirmance.

I am authorized to state that Fogleman, J. joins in this dissent.


source: Caselaw Access Project

author: Conley Byrd, Justice.

license: Public Domain

text:
    Walter GREEN v. Fred PICKENS, Adm’r, et al
    5-5675
    473 S.W. 2d 862
    Opinion delivered December 20, 1971

      Martin, Dodds, Kidd, Hendricks & Ryan, for appellant.

      Pickens, Pickens ir Boyce and Smith, Williams, Friday, Eldredge ir Clark by; Fred M. Pickens, Jr., Herschel H. Friday and Michael G. Thompson, for appellees.
   Conley Byrd, Justice.

Appellant Walter Green, a licensed real estate broker, brought this action against appellees Fred Pickens, administrator of the ancillary estate of T. A. Hester, deceased, M. W. Staples, Josephine Graham, T. H. Brown, K. N. Jones and T. A. Hester, Inc., to collect commissions and assert his rights as a joint venturer into three separate parcels of property. For convenience the properties will hereinafter be referred to as the (1) T. A. Hester and M. W. Staples, trustees, property, (2) T. A. Hester, Inc., property and (3) M. W. Staples and K. N. Jones, trustee, property. The Chancellor denied him the relief prayed and entered judgments on appellees’ counterclaims for commissions and secret profits obtained. For reversal appellant contends:

“I. The Court erred in excluding the testimony of Eugene Warren, attorney at law, on the basis of a privileged communication between Mr. Warren as attorney and Mr. T. A. Hester as a client.
II. The Court erred in invoking the ‘dead man’s statute’ preventing the appellant from testifying as to an oral agreement he had with T. A. Hester.
III. The Court erred in excluding that part of appellant’s testimony relating to his oral agreement with T. A. Hester, now deceased, on the grounds that such statements constituted hearsay.
IV. The Court erred in holding that enforcement of an oral agreement between appellant and T. A. Hester is barred by the Statute of Frauds.
V. The Court erred in holding that appellant’s claims were barred by the Statute of Limitations.
VI. The Court erred in dismissing appellant’s petition against M. W. Staples and K. M. Jones, trustees, with respect to the Pleasant Hills property.
VII. The Court erred in holding that appellant was guilty of misusing appellees’ funds.
VIII. Trial Court erred in its interpretation of Swindle v. Swindle.”

The first witness called by appellant was Eugene Warren, an attorney who had consulted jointly with appellant and T. A. Hester before any of the properties were purchased. The Chancellor erroneously excluded his testimony under the attorney client privilege. Morgan v. Wells, 242 Ark. 499, 415 S. W. 2d 223 (1967) and Laster v. Oldham, 189 Ark. 5, 69 S. W. 2d 1078 (1934). However, as suggested in Swindle v. Swindle, 242 Ark. 790, 415 S. W. 2d 564 (1967), the trial court caused appellant to proffer the testimony through an interrogation of the witness. Thus for purposes of this appeal and because of the disposition herein made, we are treating Mr. Warren’s testimony as uncontradicted even though appellees did not cross examine.

Without deciding the issues raised as to the “dead man’s statute”, hearsay, statute of limitations and statute of frauds, for purposes of disposing of the issues here we are treating the record as if all of the Chancellor’s rulings thereto were erroneous. We point out that the proffers of the evidence were made and are available in the record for review purposes.

Mr. Warren testified that in late 1962 or early 1963, Hester and Green came into his office. Green advised him that he and Hester had entered into an agreement whereby Mr. Green was to purchase property in the western part of Little Rock in Pulaski County for Hester and his associates upon a price agreed to by Hester. The conditions that Hester had placed in the agreement caused Green some anxiety because of the litigation which Green had had in the case of Green v. Jones-Murphy Properties Inc., 232 Ark. 320, 335 S. W. 2d 822 (1960). According to Warren’s understanding of the agreement, Hester insisted that Green was to receive the standard real estate commission for the purchase of the property and was to obtain all he could of that from the seller. It was Warren’s understanding that, in addition, Green was to be caretaker of the property, was not to obligate Hester or his associates without their prior approval, and Green was to have the right to sell the property and to receive the standard real estate commission.

THE HESTER — STAPLES TRUSTEE PROPERTIES: In his petition, Green, with reference to these tracts, alleged that he had entered into a joint venture whereby T. A. Hester and M. W. Staples, trustees, would furnish the money and Green would seek and find real estate to purchase. For his efforts, Green would participate in the joint venture to the extent of 10 % of the purchase price, would manage the properties through to an ultimate sale for profit and would then participate in such sales to the extent of ten percent of the sales price. Pursuant to this plan he bought the Hickey tract for $225,000 and for his efforts was paid $5,062.50 leaving a balance owing him of $17,437.50; pursuant to such agreement he obtained the Collins tract for $200,000 and was paid compensation or fees in the amount of $19,-696.00 leaving a balance due of $204.00; pursuant to such agreement he acquired the Wilson tract for $20,000 and was paid $2,000; and that pursuant to the same agreement he purchased the Johnson tract for $136,000 and was paid $13,600 for his efforts. On direct examination Green testified substantially as alleged and that this agreement had been breached. On cross-examination it developed Green had not purchased the Collins tract for $200,000 but that in fact he had purchased the same for $188,800 and obtained $8,496,000 commission from the seller. He also admitted that he had received $200,000 from Hester, Staples and Josephine Graham. Green testified that he purchased the Wilson tract for $22,000, the amount he had collected from Hester, Staples and Graham, but his offer and acceptance showed a purchase price of $20,000. Having alleged and testified to a purchase price of $136,000 for the Johnson tract and the collection of a commission of $13,600, it developed on cross-examination that the tract, according to Green’s own records, had been purchased for $122,000 and that from Hester, Staples and Graham he had received checks totalling $136,000.

T. A. HESTER, INC., PROPERTIES: The allegation of Green here and his testimony on direct were that he had a joint venture agreement whereby T. A. Hester, Inc., was to supply $300,000 to purchase real property. According to the agreement, T. A. Hester, Inc., was first to receive 6% interest on its investment, Green was next to receive 6% commission and one half of any profits remaining. Pursuant to such agreement Green testified that he purchased seven tracts of land as follows:

Cooper tract $ 8,500.00
Kanis Road tract 16,000.00
Boydston tract 42.200.00
Rush tract 13.500.00
Downie tract 18,000.00
Asher Road tract 10,000.00
Reusser tract 78.500.00

Defendants’ exhibit No. 21, the closing agent’s settlement sheet, shows a purchase price of $8,500 for the Cooper tract from which were deducted $50.00 for an attorney’s opinion and $350.00 for an appraisal fee. Defendants’ Exhibit No. 42 is T. A. Hester, Inc’s., settlement sheet with Green after the Cooper tract was sold. The latter exhibit shows that the settlement was based upon a purchase price of $8,500 in accordance with Green’s alleged agreement. On cross-examination it developed that Green in his deposition prior to trial had admitted receiving the fee and had described the $350 appraisal fee as a loan owed to him by Cooper. At trial he described the $350- as an appraisal fee. Admittedly there was nothing in the closing statement to show the purchasers that Green received the fee. Neither was the fee calculated as a fee or commission paid to Green in the settlement sheet from T. A. Hester, Inc. Paul Cooper testified that he neither authorized an appraisal by Green nor had any need for such an appraisal. That Cooper did not need an attorney’s opinion is obvious.

Another typical example of Green’s conduct involves the Boydston tract. According to Green the purchase price was $42,200. The closing statement prepared for the purchaser showed a purchase price of $42,200.00 with no deduction of a commission. The closing statement'prepared for the seller, G. C. Boydston, showed a sales price of $37,950 with a deduction of $3,795 for a commission. Defendants’ exhibit No. 29 shows a disbursement to Green for a commission of $4,250 on the same legal description. Defendants’ exhibit No. 25 is an offer and acceptance agreement to "Glenn Johnson Real Estate Agent” from “Walter Green Agent” to purchase the 30.36 acres for $1,100 per acre under an agreement by Boydston to pay a ten percent commission to Glenn Johnson, Jr. Green at one time testified that he purchased the land for himself and that Mr. Hester agreed to the price of $42,198 by telephone. At another place in the record he says that he was acting as agent for both himself and T. A. Hester, Inc.

THE STAPLES — JONES PROPERTIES: Appellant’s allegation is that on or about March 1, 1967, he entered into an agreement with M. W. Staples and K. M. Jones, trustees, for the purchase of lands to be resold exclusively by Green and that upon such sale Staples and Jones were to receive 6% interest on their investments and the profits were to be divided one third to Green and two-thirds to Staples and Jones. Green testified that no commission was to be paid at time of purchase. Pursuant to this arrangement Green transferred to Staples and Jones, trustees, property owned by Pleasant Hills Inc., a corporation he solely owned, for $255,000, and also purchased property described as the Walton tract for $5,000 net to the seller. Green testified that he acted as agent for Staples and Jones in the purchase of the tract and that they paid him a commission. The record shows that the offer and acceptance in Green’s files on the Walton tract was made to “Walter Green Realty Agent’’ from “M. W. Staples by Walter Green Agent’’ and that no fee was to be paid lay seller. Green received from Staples a check for $5,595.60 and mailed to Staples a seller’s closing statement showing a purchase price of $5,500 and the payment of a $500 commission to the unnamed agent making the sale. He also testified that Staples knew that he got the $500 commission. However the record does not show that Staples was furnished a copy of the offer and acceptance.

Counsel, throughout the cross-examination of Green, often found it necessary to apply to the court to compel direct answers to questions. Needless to say, Green’s testimony is so evasive and conflicting that it is entitled to little if any credibility.

When we give full credence to Mr. Warren’s testimony and T. A. Hester, Inc.’s, settlement sheet on the Cooper tract, it at once becomes obvious that in each agreement Green’s position depended on the faithful performance of the duties of a broker. In that relationship he was at all times required to make a full disclosure to his principals and not withhold any valuable information. See Felhauer v. Milam, 159 Ark. 178, 251 S. W. 379 (1923) and Taylor v. Godbold, 76 Ark. 395, 88 S. W. 959 (1905). A failure to make a full disclosure forfeits all right to compensation and renders the broker liable for any profits. Green v. Jones-Murphy Properties, Inc., supra. The rule is set forth in Taylor v. Godbold in this language:

“ ‘Like other agents in whom trust and confidence are reposed, the broker owes to his principal the utmost good faith and loyalty to his interests.*** It is his duty, therefore, to fully and freely disclose to his principal at all times the fact of any interest of his own or of another client which may be antagonistic to the interests of his principal, and he will not be permitted to take advantage of the situation to make gain for himself by forestalling or undermining his principal.’ ”

It is obvious from the record that appellant failed in numerous instances to make full disclosure to appellees. For this reason the judgment is affirmed. We find it unnecessary to determine the correctness or incorrectness of the other alleged errors.

Affirmed.


text:
    Hazel HOPPER, Widow of J. P. Hopper v. THE RUST ENGINEERING COMPANY, et al
    5-5729
    474 S.W. 2d 414
    Opinion delivered December 20, 1971
    [Rehearing denied January 24, 1972.]

      John Norman Warnock and Lester Dole, for appellant.

      Riddick Riffel, for appellees.
   Conley Byrd, Justice.

The issue on this appeal is whether the Workmen’s Compensation Commission erred in refusing to reopen the claim of Hazel Hopper, widow of J. P. Hopper, for death benefits.

The referee’s order, adopted by the Commission, shows that on August 8, 1966, J. P. Hopper while working for appellee, The Rust Engineering Company, got into an argument over a dice game. He resumed his work about noon but subsequently returned to the dice game where he and another employee got into a scuffle. He died within a few minutes thereafter. A claim for compensation benefits for appellant as the sole dependent was filed on October 12, 1966, by her then attorney Richard Earl Griffin. A hearing was held on that claim on June 23, 1967. At the request of claimant’s counsel the hearing was held open until additional evidence could be presented. March 29, 1968, Mr. John E. Cowne, Jr., Secretary of the Commission, wrote to claimant’s counsel, with a copy to claimant, that the claim would be dismissed within 30 days if no further action were taken. On May 1, 1968, the claim was dismissed without prejudice for failure to prosecute. July 8, 1969 the Commission received a letter from claimant’s present attorney that he desired to reopen the claim due to newly discovered evidence.

Claimant admitted that she received the copy of the Commission’s letter of March 29, 1968, but denied any knowledge of the May 1, 1968, order. Mr. Griffin testified that he had told her about the May 1, 1968, order before the file was turned over to present counsel. Other evidence in the record shows that decedent had had a prior heart condition.

To reverse the decision of the circuit court sustaining the Commission’s refusal to reopen the case, claimant relies upon Dura Craft Boats, Inc. v. Daugherty, 247 Ark. 125, 444 S. W. 2d 562 (1969). There, however, it was not shown that claimant had notice of the order dismissing the claim. Here there is substantial evidence that claimant was made aware of the order of dismissal in apt time.

The petition to reopen was filed more than one year after the order of dismissal and more than two years after the death of the employee. Under Ark. Stat. Ann. § 81-1318 (b) (Repl. 1960) the claim was properly dismissed.

Affirmed.


text:
    Sammy SWEARINGIN v. STATE of Arkansas
    5615
    474 S.W. 2d 111
    Opinion delivered December 20, 1971
    [Rehearing denied January 17, 1972.]

      Marshall Carlisle, for appellant.

      Ray Thornton, Attorney General; John D. Bridgforth, Asst. Atty. Gen., for appellee.
   Conley Byrd, Justice.

Appellant Sammy Swearingin, convicted of possession of stolen property worth more than $35, has filed no brief in this court, although he is not a pauper. It is evident from the record that appellant consistently refused to cooperate with or confer with his attorneys employed in the trial court. The two points raised by the motion for new trial, which was denied, are (1) that the court erred in failing to strike testimony offered by the State concerning certain tape cartridges and the tape box containing the tapes since the tapes and box were not offered or admitted into evidence, and (2) the trial court erred in denying his motion for a directed verdict because there was no evidence properly introduced from which the jury could find appellant was in possession of stolen property which exceeded the value of $35.

Appellant was charged by information with possessing stolen goods, “namely 31 stereo tapes, transistor radio, Holly Carburetor, a silver teapot, and other miscellaneous items,” belonging to Bill Cline. Cline testified that on the evening of June 26, 1970, he had found his home broken into, thoroughly messed up, and many things missing. After the police had come and he had given them a report, he went to appellant’s garage. He hid in the weeds across the street and heard tapes being played that sounded like his tape collection, which he reported to the police. Thereafter, he testified, the bulk of the missing items were returned to him by appellant.

Ronald Haskins, a patrolman, testified that he went to appellant’s garage, saw a black tape box full of tapes, traded two tapes to appellant for two tapes from the box, which he marked, and which Cline later identified as his. These two tapes were the only stolen goods introduced into evidence. Cline on recall testified that the tape box, given him by his wife a few weeks prior to the break-in, and the tapes in it belonged to him, and that the box was worth $5 and the 20 tapes in it were worth $1.75 each.

Appellant’s assertion that testimony about the box and tape cartridges should have been stricken because the box and tapes were not offered into evidence is without merit. A witness may testify about articles of personal property involved in a crime without producing the articles. Meyer v. State, 218 Ark. 440, 236 S. W. 2d 996 (1951); Washington v. State, 248 Ark. 318, 451 S. W. 2d 449 (1970). It follows, therefore, that since this testimony was properly admitted, appellant’s second assertion must also fail. Without enumerating the long list of other goods and their value, the testimony shows that the tape box and tape cartridges had a value of more than $35.00.

Affirmed.


author: Frank Holt, Justice.

text:
    COMMERCIAL CREDIT CORP. v. NATIONAL CREDIT CORP.
    5-5662
    473 S.W. 2d 881
    Opinion delivered December 20, 1971

      Dickey, Dickey & Drake, for appellant.

      Coleman, Gantt, Ramsey ir Cox, for appellee.
   Frank Holt, Justice.

The appellant and appellee are two competing creditors. They each claim superior liens on two automobiles, hereinafter referred to as the “Williams” and “Morgan” vehicles. The appellant was in possession of the vehicles and the appellee had possession of the certificates of title. Appellant demanded delivery of the titles and, upon refusal, it brought suit seeking a mandatory injunction requiring appellee to deliver the titles. Appellee filed a counterclaim seeking possession of the two vehicles. As to the Williams automobile, the chancellor found that appellant’s possession and subsequent bailment or storage of this vehicle with Mathews Motor Company did not constitute the actual or open possession required to perfect appellant’s security interest under Ark. Stat. Ann. § 75-160 (Repl. 1957) and provisions of the Uniform Commercial Code; therefore, appellee National’s security interest has priority and it is entitled to the proceeds of the mutually agreed sale of the Williams vehicle.

Commercial’s records show that on February 24, 1969, it purchased a security agreement, dated four days previously, from Howard Mathews Motor Company, the dealer, showing the sale of a 1966 Buick Electra, 4-door Hardtop, Motor No. 484376X138256, to Kenneth Williams. Williams made five payments on the vehicle before default. On October 29, 1969 Commercial repossessed a 1966 Buick LeSabre, 2-door hardtop sedan, Motor No. 452376X138256, by Williams’ wife bringing it to appellant. The latter vehicle was stored by appellant under a storage agreement, accurately describing the car, with Mathews Motor Company from October 29, 1969, to February 12, 1970, when Commercial again took physical possession of the vehicle. Commercial admittedly never had possession of the title to the automobile nor was its lien recorded pursuant to § 75-160.

National’s records and dealings with the 1966 Buick show that on December 8, 1969, for an advance of $3,-950, Mathews Motor Company executed a 90-day promissory note and a trust receipt to National for (among other vehicles) a 1966 Buick LeSabre, 2-door Hardtop, Motor No. 452376X138256, together with a bill of sale of the automobile. At that time the title certificate, signed in blank by Kenneth Williams, was delivered to National. On February 10, 1970, National contacted Commercial and advised that a number of National’s trust receipt units were missing. On February 22, 1970, National filled out the title certificate showing itself as owner and forwarded the certificate to the Motor Vehicle Division of the Arkansas Department of Revenues. The title certificate was issued in National’s name as owner on February 26, 1970. National’s floor plan financing arrangement with Mathews had extended over a number of years. Its financing statement under the Uniform Commercial Code in connection therewith was last filed on January 15, 1962.

By virtue of the five-year limitation period set out in Ark. Stat. Ann. § 85-9-403(2) (Supp. 1969), National does not have a perfected security interest under the Uniform Commercial Code in either the automobile or the chattel paper. Furthermore, having failed to comply with Ark. Stat. Ann. § 75-160 and § 75-161, National was not a lien encumbrancer insofar as third parties are concerned under the Motor Vehicle Registration requirements on February 12, 1970, the date that Commercial took possession of the Williams Buick. See West, Sheriff v. General Contract Purchase Corp., 221 Ark. 33, 252 S. W. 2d 405 (1952). In the absence of a lien either on the vehicle or the chattel paper, we must turn to the Uniform Commercial Code to determine the priority between the parties.

Under Ark. Stat. Ann. § 85-9-203(a) (Add. 1961) the security agreement need not be in writing where the collateral is in the possession of the secured party (see Comment 3).

Furthermore, § 85-9-305 provides:

“A security interest in letters of credit and advices of credit (subsection (2) (a) of Section 5-116 [§ 85-5-116]), goods, instruments, negotiable documents or chattel paper may be perfected by the secured party’s taking possession of the collateral. If such collateral other than goods covered by a negotiable document is held by a bailee, the secured party is deemed to have possession from the time the bailee receives notification of the secured party’s interest. A security interest is perfected by possession from the time possession is taken without relation back and continues only so long as possession is retained, unless otherwise specified in this Article [chapter]. The security interest may be otherwise perfected as provided in this Article [chapter] before or after the period of possession by tíre secured party. [Acts 1961, No. 185, § 9-305.1”

To avoid the effect of the foregoing provisions of the Uniform Commercial Code, National makes two arguments. The first is that there is no evidence that either Kenneth Williams, Howard Mathews Motor Company or anyone else consented or agreed that Commercial would have a lien on the 1966 Buick LeSabre 2-door Hardtop as distinguished from the 1966 Buick Electra 4-door Hardtop described in Commercial’s security agreement. This argument not only overlooks the provisions of § 85-9-203(a), supra, but also the evidence. While the testimony of Commercial’s managers may not be considered as undisputed, their testimony to the effect that the 1966 Buick LeSabre is the vehicle surrendered to them by Kenneth Williams’ wife after default in his car payments on the security agreement describing a 1966 Buick Electra and stored by Commercial with Mathews Motor Company is not controverted and there is nothing to indicate any lack of credibility. Furthermore, the parties stipulated at the beginning of the trial that the Buick LeSabre was in the possession of Commercial.

National’s second argument is that since Commercial’s lien was not perfected on December 8, 1969, when National acquired its security interest in the automobile, National takes priority under § 85-9-301 (l)(b) which provides:

“Except as otherwise provided in subsection (2), an unperfected security interest is subordinate to the rights of ### a person who becomes a lien creditor without knowledge of the security interest and before it is perfected; ***.”

National does not here stand in the position of a “lien creditor” as that term is defined in subsection (3) of § 85-9-301 which provides:

“A ‘lien creditor’ means a creditor who has acquired a lien on the property involved by attachment, levy or the like and includes an assignee for the benefit of creditors from the time of assignment and a trustee in bankruptcy from the date of the filing of the petition or a receiver in equity from the time of appointment.”

Under the record before us and the foregoing provisions of the Uniform Commercial Code, we conclude that Commercial, when it took possession of the Williams Buick from Mathews Motor Company, thereafter, at least, stood in the position of a secured party in possession pursuant to the provisions of § 85-9-203(a) and § 85-9-312(5)(b). Since National was neither a lien encumbrancer, insofar as third parties are concerned, under the Motor Vehicle Registration Act [§ 73-160 and § 73-161] nor the holder of a perfected security interest, a “lien creditor” or a buyer in the ordinary course of business under the Uniform Commercial Code, it follows that the trial court erred in holding that National’s security interest had priority over the security interest that Commercial perfected by possession.

The Morgan vehicle: In this second transaction, the Mathews Motor Company, on September 23, 1969, floor planned a 1969 Chevrolet Impala (and other vehicles) with National by executing a bill of sale, a 90-day promissory note for $10,500 and trust receipt, along with an unendorsed title which was in the name of another car dealer. This car was purchased from Mathews Motor Company on October 2, 1969, by Sharon Morgan who executed a security agreement. On October 6, Commercial discounted and purchased the Morgan security agreement from the dealer. After two payments, the purchaser defaulted and on March 18, 1970, appellant repossessed the automobile and stored it on its lot behind its office. On January 9, 1970, Mathews Motor renewed the original 90-day floor plan arrangement by giving National a new note, bill of sale, and trust receipt. It appears that National did not check at this time to ascertain whether the Impala was still in possession of Mathews Motor, and, in fact, did not discover that it was missing until February 11, 1970. Neither Commercial nor National filed with respect to the Morgan Impala, although National secured an endorsement after February 11 to the title it held and then acquired a new title on February 27, 1970, from the Motor Vehicle Division of the Arkansas Revenue Department, naming itself as owner and not as a lienor.

Upon National’s refusal to deliver the Morgan title, Commercial brought suit seeking delivery of the title as in the Williams’ transaction, supra. Appellee National countersued for possession of the 1969 Impala. The court found that Commercial had not perfected its lien by filing or possession on January 9, 1970, the date on which appellee re-executed its “floor-plan” transaction with Mathews Motor Company, and, therefore, National was entitled to the proceeds of the mutually agreed sale.

It appears undisputed that National did not comply with the requirement of § 75-160 since it did not deposit or record with the motor vehicle registration department a copy of the promissory note, bill of sale, and trust agreement upon which the asserted prior lien is based. See, also, West, Sheriff v. General Contract Purchase Corp., supra.

Furthermore, we consider our recent opinion in the companion case of Commercial Credit Corp. v. National Credit Corp., 251 Ark. 702, 437 S. W. 2d 876 (1971) controlling in this Morgan transaction. There, as here, National took a bill of sale, a trust receipt, and a certificate of title to a vehicle from the Mathews Motor Company, the retail dealer, to secure a floor-plan loan. Thereafter, the dealer sold the encumbered vehicle to a customer who signed a security agreement which was discounted and purchased by Commercial. Subsequently, upon learning of Commercial’s security interest, National registered the vehicle in its name as the owner and indicated no liens. There, as here, National contended its security interest was paramount to Commercial’s security interest. In disagreeing with this contention we said:

“*** Priorities between National and Commercial as to security interests in the automobile are not important to our decision in this case because National lost whatever security interest it may have had in the automobile when it permitted Matthews to sell the automobile in the regular course of Mathews’ business, which was the business of selling automobiles at retail.
* # #
Mathews sold Edgerson’s (Morgan’s) contract to Commercial within three days after he obtained it from Edgerson, and after Mathews sold Edgerson’s contract to Commercial, National’s security interest would not have followed the chattel paper into the hands of Commercial, but would have continued in the proceeds Mathews received from Commercial in the sale of the chattel paper (contract).”

Citing §§ 85-9-306, -308; Spivach, Secured Transactions Under the Uniform Commercial Code. See, also, Associates Discount Corp. v. Old Freeport Bank, 220 A. 2d 621 (Penn. 1966).

Neither does National have a perfected security interest under the Uniform Commercial Code in either the automobile or the chattel paper since National did not, as in Williams, supra, have a currently effective financial statement on file. Section 85-9-403(2).

We agree with the chancellor, there is no merit in National’s contention that the car was merely a “loan” to Miss Morgan by a friend who was Mathews’ salesman. Furthermore, Morgan’s ownership would not be affected, with or without notice, by National’s unfiled security agreement. Section 75-160; Williams, supra.

The decree is reversed and the cause remanded with directions to render a decree that Commercial was entitled to the certificates of title to the Williams and the Morgan vehicles and, consequently, to the proceeds from the mutually agreed sales.

Reversed and remanded.

Harris, C.J., not participating.


text:
    ARKANSAS STATE HIGHWAY COMM’N v. Stella PITTMAN
    5-5687
    473 S.W. 2d 924
    Opinion delivered December 20, 1971

      Thomas B. Keys and Hubert E. Graves, for appellant.

      Tompkins, McKenzie ir McRae, for appellee.
   Frank Holt, Justice.

By this eminent domain action, the appellant acquired 34.63 acres of land from appellee’s 160-acre farm tract for the construction of interstate highway 30 and an interchange. The interstate diagonally severs appellee’s lands, leaving a residual of 122.27 acres on one side and a 3.1 acre residual on the other side of the interchange. Appellant presented evidence that construction of the interstate highway enhanced the value of the residuals in excess of the value of the whole property before the taking. However, the jury disagreed with appellant’s theory of enhancement and awarded appellee $24,536.00 in damages.

For reversal appellant asserts that: After appellant’s witness testified on direct examination that he sold a site on an interchange to Humble Oil Company and, on cross-examination, that Humble Oil Company did not talk to him about purchasing any other site it was error for the trial court to refuse to allow appellant to show that other oil companies had negotiated to purchase other sites on the interchange and the amount which they offered to pay.

One of appellant’s witnesses, Mr. Hale, testified on direct examination that he owned property at the nearby interchange on interstate 30 and that he had sold, a portion of that property measuring 250 x 250 feet for $75,-000.00. On cross-examination by appellee, Mr. Hale testified, without objection, to the effect that Humble Oil Company didn’t talk to him about buying any other site. Appellant asserts that this testimony created a prejudicial inference that other sites were less desirable and, therefore, “that the Trial Coiirt erred in then sustaining defendant’s [appellee’s] objection and not allowing the plaintiff [appellant] to combat the inference by showing, not only that other companies had made offers for the other quadrants, but the amount of the offers.” In other words, appellant argues that this testimony was admissible to combat the appellee-landowner’s contention that her property was not enhanced by construction of the highway.

At first the court sustained the appellee’s objection to appellant’s questioning Mr. Hale concerning his negotiations with a different oil company for the sale of another site at a nearby interchange. Appellant countered that appellee’s question as to whether Humble evidenced any interest in any other locations "opened up” the subject and, therefore, gave appellant the right to inquire as to any negotiations, including offers and amounts. Finally, the trial court held, and appellee concurred, that proof was admissible as to any negotiations for sales between Mr. Hale and other or different prospective purchasers. However, the scope of the inquiry excluded the "dollar amount” of any offer on any incomplete transaction.

It is true, as appellant contends, that where one party introduces incompetent testimony, he cannot complain of the introduction of the same character of evidence directed to the same issue by the other party. German-American Ins. Co. v. Brown, 75 Ark. 251, 87 S. W. 135 (1905); St. Louis I. M. & S. Ry. Co. v. Flinn, 88 Ark. 484, 115 S. W. 142 (1908). This rebutting evidence is restricted to “similar evidence,” the “same subject,” or to "answering evidence” in denial or explanation of the subject. Eaves v. Lamb, 209 Ark. 987, 193 S. W. 2d 328 (1946). See, also, I Wigmore on Evidence, § 15, p. 304; McCormick on Evidence, § 57, p. 132.

In the case at bar the appellant was permitted to interrogate Mr. Hale and another witness relating to all aspects of their negotiations to sell their property at a nearby interchange to other oil companies. The only restriction placed upon appellant’s inquiry was the dollar amount involved in the negotiations of these incomplete sales. In our view, the trial court accorded the appellant ample latitude in its introduction of "answering testimony” to refute any inferences possibly created by appellee’s opening up the "subject” on cross-examination, to which the appellant made no objection. Certainly it cannot be said that the trial court abused its discretionary powers in limiting the scope of this inquiry.

Affirmed.


text:
    George RILEY v. STATE of Arkansas
    5643
    474 S.W. 2d 410
    Opinion delivered December 20, 1971
    [Rehearing denied January 24, 1972.]

      Kenneth Coffelt, for appellant.

      Ray Thornton, Attorney General; Gene O’Daniel, Asst. Atty. Gen., for appellee.
   Frank Holt, Justice.

A jury convicted appellant of the crime of first degree murder and recommended life imprisonment in the State Penitentiary. The State had waived the death penalty. From the judgment on that verdict comes this appeal. For reversal appellant contends that: The appellant was entitled to have the jury instructed by the trial court on all degrees of homicide, regardless of whether his counsel waived and objected to such instructions, and the failure of the trial court to so instruct the jury is reversible error. We find no merit in this contention.

The sufficiency of the evidence to sustain the State’s theory of the case is not questioned by appellant. However, it was appellant’s defense that the killing resulted from an accidental gunshot wound. Being a capital case, appellant asserts that it is the absolute duty of the trial court to instruct on a lesser offense when there is any evidence to justify it. Walton v. State, 232 Ark. 86, 334 S. W. 2d 657 (1960). Therefore, in the case at bar, appellant’s counsel could not effectively waive the right of the appellant to an instruction on a lesser degree of the alleged offense. However, in Walton the defendant requested an instruction on a lesser degree of murder and objected to the court’s refusal to give the proffered instruction. In the case at bar, the court offered to give an instruction on second: degree murder and did not give it because of the objection of appellant’s counsel. The appellant offered no instructions. The trial strategy was that the jury would not convict the appellant of first degree murder, whereas it might convict him of the lesser offense if given that choice. In other words, where the jury had only the choice of life imprisonment or acquittal, it was considered that the latter action of the jury would most likely prevail. It is not demonstrated to us'that this strategy did not have appellant’s understanding and approval. Appellant’s counsel candidly admits that he misjudged the situation. It is well recognized that experienced and competent trial counsel often employ such trial strategy advantageously for a defendant.

In Randle &Wright v. State, 245 Ark. 653, 434 S. W. 2d 294 (1968) the appellants were charged with first degree rape, a capital offense. There the appellants did not request an instruction on a lesser degree and ob1 jected to the giving of such an instruction when requested by the State. There we said that the trial court did not err by failing to instruct the jury on the lesser offense of third degree rape. Furthermore, that an appellant is in no position to complain about the trial court’s rulings which are made at appellant’s insistence.

Finding no error, the judgment is affirmed.


author: Carleton Harris, Chief Justice.

text:
    Thomas Albert COX v. Rita Sue (Cox) TUCKER
    5-5693
    474 S.W. 2d 675
    Opinion delivered January 10, 1972

      John F. Gibson, Jr., for appellant.

      Sam Bird, for appellee.
   Carleton Harris, Chief Justice.

This is a child custody case. Thomas Albert Cox, appellant herein, and Rita Sue (Cox) Tucker, appellee herein, were divorced on May 9, 1966. The parties were the parents of two minor children, Christopher Michael Cox, and Shelly Joan Cox, and appellant was given custody of these children. They subsequently re-married but were again divorced on November 1, 1966. At that time, appellee was given custody of the two children. On January 7, 1967, the court modified the custody order, placing custody of the children with appellant. On June 9, 1967, appellee married Eddie Tucker. In October of that year, custody was again given to the mother. In June, 1968, appellee separated from Tucker. The record does not reflect how long the separation lasted, but it is evident that they did resume the marital relationship since the record reflects that they again separated in January, 1969. Here, the transcript does not reveal the date of their reconciliation, but another separation occurred in March, 1970. On June 6, 1970, appellant, who had visitation rights, picked up the children, but did not return them because appellee was in the hospital, recovering from an overdose of pills which had apparently been taken in an attempt at suicide. On June 15, appellee obtained a divorce from Tucker, and about a week later disappeared, leaving a note for her mother, in which she stated "Right now I don’t know exactly where I’ll be when you hear this letter but just leave me alone and I’ll let you know where I’ll be. If you or Daddy ever again, as long as I live try to boss me then I will get my things out of here and never come back”.

On June 27, 1970, the court gave temporary custody to appellant. Actually, appellee had gone to Little Rock, where she obtained a job, working about a week before effecting a reconciliation with Tucker. On July 7, the June 15 divorce decree was annulled and appellee and Tucker resumed the marriage state. In September, 1970, pursuant to a petition for permanent custody filed by appellant, another hearing was conducted and the court then took the matter under submission. In December, the court entered its findings of fact and on February 1, 1971, entered its order restoring custody to appellee (with certain visitation rights to appellant), and from this order, appellant brings his appeal. In seeking a reversal, it is urged that the court erred in awarding custody to the mother, and failed to recognize that the welfare of the children is the controlling factor in awarding custody.

Without detailing the testimony, let it be stated that the record clearly establishes a lack of stability on the part of appellee, and this fact was recognized by the chancellor in an opinion rendered at the time the last order was entered. Among other things, the court stated:

"The rule of the absolutes is still the ruling authority in this jurisdiction, that is, ‘In the absence of testimony showing the mother to be an unfit person she should have custody of the infant’, which rule is supported by the case of Northcutt v. Northcutt, supra. Thus, the burden of proof is cast on the petitioner to show that the petitioner is an ‘unfit person’. The proof does not show unfitness by reason of immorality, mistreatment of the children, or abandonment of them. The proof of unfitness runs to insanity and emotional instability. The insanity relates to incidents where respondent sought to take her life. The existence of the desire is not made to appear or that she has ever been adjudicated or committed for such disability. The emotional instability relates to general behavior, which includes, separating, divorcing and resumption of marriage relationship with husband, changing jobs, having fainting spells, receiving psychiatric treatment, apparently departing to unknown places, leaving mystifying letters on departure, and nervous temperament. The Chancellor’s research did not uncover precedent to support the above factual background as a basis for the unfitness of a natural mother. The best interest of the children in issue has been a continuing concern of this Court since 1967, and all of which has been occasioned by the erratic actions and conduct of the respondent.”

These findings were supported by the record. It has already been mentioned that appellee had been hospitalized for an overdose of pills, this occurring in the latter part of May, 1970. It is not clear how long she remained at St. Vincent’s Hospital. Mr. Tucker, her present husband, also testified that his wife had tried to commit suicide by jumping from the automobile on one occasion. Mrs. Tucker received psychiatric treatment, and it also became necessary that a child psychologist be consulted with reference to the little boy, Christopher. The record further reflects that Mrs. Tucker would obtain a job, but would work only a short time before quitting, and of course, her marriage history with both husbands indicates instability. As stated by the chancellor, there is no evidence that appellee was immoral in any respect, and the learned judge apparently felt that immorality on her part must be shown before the court would be justified in giving custody to the father. Certainly,. .his findings, quoted above, reflect that, from the standpoint of stability, appellee was not a proper person to have custody. That he was disturbed was reflected by his statement:

“The Court with great misgivings feels constrained to follow the experience tested rules of the absolutes in this action.”

While it is true that we have, stated in numerous cases that a mother is given preference in cases involving the custody of small children, we have also said on many occasions that the controlling consideration is the welfare of the children; Bornhoft v. Thompson, 237 Ark. 256, 372 S. W. 2d 616. In Stephenson v. Stephenson, 237 Ark. 724, 375 S. W. 2d 659, this court stated:

“In custody matters the unyielding consideration is the welfare of the children. It matters not to this court which of the parties 'wins’ custody, so long as the children are the ultimate winners of good care and home.”

In Haller v. Haller, 234 Ark. 984, 356 S. W. 2d 9, we said that the welfare of the children is the “polestar”.

That then being the paramount consideration, we think the court erred in re-investing custody of the children in the mother. To be more specific, though Mr. Tucker testified that his wife’s condition was, at the time of the trial, more stable than at any time over a three year period, we do not think it has been demonstrated that her stability has yet reached the point that it can be said the children would be assured of the care to which they are entitled.

The morality of neither party is questioned in this hearing, and the court found “That all during this period the petitioner (appellant) has always stood in the wings to accept his parental responsibility when the need arose”. Mr. Cox has re-married, and his present wife, Gladys, testified that she treated these two children in the same manner that she treated her own child by a previous marriage. Her evidence was not attacked. The present Mrs. Cox quit work some time ago in order that she could stay home and keep the children.

Circumstances in this case are distressing, but we think the record clearly reflects that the welfare of Christopher Michael and Shelly Joan demands that they be placed in the custody of the father.

Reversed, with directions to the Drew County Chancery Court to enter an order not inconsistent with this opinion.

      Christopher Michael Cox was born January 4, 1964, and Shelly Joan Cox was bom June 21, 1965.

      No brief was filed by appellee.

      This was an inadvertent error, and should read “respondent”.

      Tucker stated: “She is quite a bit more stable.”


author: George Rose Smith, Justice.

text:
    ARKANSAS STATE HIGHWAY COMM’N v. John F. HAWKINS et ux
    5-5656
    474 S.W. 2d 673
    Opinion delivered January 10, 1972

      Thomas B. Keys, Charles E. Yingling, Jr. and Hubert E. Graves, for appellant.

      Joe T. Gunter, for appellees.
   George Rose Smith, Justice.

This is a condemnation suit in which the highway department is taking 19.01 acres out of the appellees’ 64-acre tract of farm land. In appealing from a verdict and judgment fixing the landowners’ compensation at $12,500 the department argues two points for reversal.

First, the landowners’ expert witness, Terrell Huff, testified that the highest and best use for the property, which lies near the city of Beebe, would be to subdivide it into residential homesites. The witness was also allowed to testify, over objection, that the house and barn on the property had a value of $8,639. It is now insisted that the latter testimony should have been excluded, on the theory that the improvements added nothing to the value of the property as a prospective municipal subdivision. Huff, however, also testified that the agricultural improvements were vital to the landowners’ farming operations until such time as the property is actually divided into town lots. Upon practically identical facts we held such testimony to be admissible. Arkansas State Highway Comm’n v. Wallace, 249 Ark. 303, 459 S. W. 2d 812 (1970).

Secondly, despite Huff’s testimony that the landowners’ total damages were $19,183, the highway department insists that there is no substantial evidence to support an award of $12,500. Specifically, it is argued that Huff’s reliance upon several comparable sales was complexly discredited on cross examination, because he could ik state that the other purchasers had bought the comparable tracts for the purpose of developing them as residential homesites. Counsel cite Nichols, Eminem Domain, § 21.31 (3) (3d ed., 1969), and State ex rel. Publicity & Parks Comm. v. Earl, 233 Ark. 348, 345 S. W. 2d 20 (1961). Nichols states that where the tract in question is being valued for a specific use, “evidence of comparable sales of property for inconsistent uses is not admissible.”

That principle has no application here, for no inconsistency of use appears. Huff valued the property in question at $420 an acre before the taking. Among other comparable sales he cited the Smith-White transfer, also for $420 an acre. In comparing the two tracts, he stated that the Smith-White tract had no better access to public utilities than the Hawkins property had and that the Smith-White tract was farther away from the highway and from the Beebe city limits than the Hawkins property was. Thus the witness made a prima facie showing of comparability. There is no indication whatever that the Smith-White tract was bought for a purpose inconsistent with, or more valuable than, that of municipal development. It is certainly not an essential element of comparability that the purchaser be shown to have bought the other property for the specific purpose of municipal development. If the two tracts can fairly and reasonably be said to be comparable, then the other person’s subjective intent in making his purchase is not of controlling importance.

Affirmed.


text:
    Claude M. BRUNSON et al v. LITTLE ROCK ROAD MACHINERY COMPANY et al
    5-5695
    474 S.W. 2d 672
    Opinion delivered January 10, 1972

      W. G. Wiley and L. A. Hardin, for appellants.

      Owens, McHaney if McHaney; by: James M. McHaney; Chowning, Mitchell, Hamilton if Chowning; by: Robert Chowning and Teague, Bramhall, Davis if Plegge; by: Jeff Davis, Jr., for appellees.
   George Rose Smith, Justice.

This case is unusual in that the chancellor entered judgment for the plaintiff upon the pleadings alone, without hearing any evidence and without resort to our summary judgment procedure. Our rule is that such a judgment should be entered only if the pleadings, construed liberally in favor of the defendants, show on their face that there is no defense to the suit. Reid v. Karoley, 229 Ark. 90, 313 S. W. 2d 381 (1958). Here the appellants insist that their counterclaim presented questions of fact that should have been heard in the trial court.

The litigation arises out of the sale of a tractor. In 1969 the plaintiff-appellee, Little Rock Road Machinery Company, sold the tractor to the principal defendant, Claude M. Brunson. Brunson executed a note and conditional sales contract for the unpaid purchase price of $37,816. He and his wife also executed a real estate mortgage as additional security for the debt.

In the early part of 1970 the purchasers defaulted in their monthly payments. On July 24, 1970, the seller filed the present suit, asking for the appointment of a receiver to take possession of the tractor, for judgment for the unpaid purchase price, for the sale of the tractor, and for foreclosure of the real estate mortgage.

Six days later, on July 30, the defendants filed their answer and counterclaim. The answer admitted the allegations of the complaint. The counterclaim asserted that the tractor was defective from the outset, in that it overheated to a dangerous degree whenever it was operated. Despite the seller’s assurances that the condition was not dangerous, the tractor was heavily damaged by fire several weeks after the defendants bought it. It took the seller about 60 days to repair the tractor, at a .cost of $13,152.25. In that interval the purchaser Brunson was damaged to the extent of $25,000 by reason of not being able to use the tractor in various land-clearing j obs. Later on the defendants amended their counterclaim to assert two additional causes of action: One, that the seller had agreed to pay part of the damages that resulted from the fire, and, two, that the seller had agreed to rewrite? the real estate mortgage so that it would secure only the first four monthly notes, totaling $7,000, instead of the entire debt of $37,816.

The chancellor was in error in entering judgment upon the pleadings. He mistakenly took the view that the defendants could not file a counterclaim or an amended counterclaim after having elected initially to admit the allegations of the complaint. Our law, however, is liberal in allowing a defendant to file new pleadings or to amend his pleadings from time to time, as long as there is no unreasonable delay in the disposition of the case. Huffman v. City of Hot Springs, 237 Ark. 756, 375 S. W. 2d 795 (1964). There we pointed out that in some instances, such as a counterclaim for personal injuries, it might be impossible for the counter-claimant to know the extent of his injuries within the time originally allowed for the filing of an answer.

In this court the seller argues that under the Uniform Commercial Code the purchasers waived the causes of action asserted in their counterclaim by making payments upon the purchase price after the tractor had been repaired and returned to them. That question, however, is not yet firmly at issue. The appellants are not in the position of having elected to stand upon their pleadings after a demurrer thereto had been sustained. Quite the contrary, they vigorously objected to the court’s action in sustaining the plaintiff’s oral motion to strike the counterclaim. Even after the remand of the case to the trial court the defendants may interpose new defenses by amendment. Stucker v. Hartford Acc. & Ind. Co., 222 Ark. 268, 258 S. W. 2d 544 (1953). Hence it would be both idle and premature for us to express an opinion upon the pleadings as they now stand.

Reversed.


author: Lyle Brown, Justice.

text:
    Junius HENDERSON et al v. David ANDERSON et al
    5-5696
    475 S.W. 2d 508
    Opinion delivered January 10, 1972
    [Rehearing denied February 14, 1972.]

      Keith Rutledge, for appellants.

      Bennett if Purtle, for appellees.
   Lyle Brown, Justice.

This case arose out of a local option liquor election in Stone County. On the face of the returns the “drys” won out over the “wets.” An appeal was lodged in the Stone County Court. That court held that it was without jurisdiction. On appeal, the circuit court agreed with the county court and dismissed the suit. The question we must resolve is whether the county court had jurisdiction.

Act 108 of 1935 legalized the manufacture and sale of liquor in this State. Article 7, § 14 thereof provided the procedure for the contest of a local option election. It is codified as Ark. Stat. Ann. § 48-820 (Repl. 1964). Subsection 1 thereof provides:

The contest shall be heard and determined by the same board which, by law, is authorized and empowered to hear and determine a contest of an election for county officers; and the same provisions of the statutes shall apply to the contest of any election held under this law as are provided for the contest of any election for county officers, .... (Emphasis supplied.)

Another provision of § 48-820 provides for the lodging of the appeal in the county court. (At that time the county court had jurisdiction of contests for county offices. Ark. Stat. Ann. § 3-1205 (Repl. 1956) ).

By Act 465 of 1969 the General Assembly passed an extensive act aimed at codifying the election laws. Article 10, § 1 of Act 465 appears in Ark. Stat. Ann. § 3-1001 (Supp. 1969), and provides in part:

A right of action is hereby conferred on any candidate to contest the certification of nomination or the certificate of vote as made by the appropriate officials in any election. The action shall be brought in the circuit court of the county in which the certificate of nomination or certificate of vote is made when a county or city or township office, including the office of county delegate or county committeeman, is involved, and except as hereinafter provided, within any county in the Circuit or District wherein any of the wrongful acts occurred when any Circuit or District office is involved, and except as hereinafter provided, in the Pulaski Circuit Court when the office of United States Senator or any State office is involved.

Then Ark. Stat. Ann. § 3-1004, also a part of Act 465, reads in part as follows:

Except as hereinafter provided all laws pertaining to general and special elections or rules of political organizations holding primary elections providing for contest before political conventions or committees other than the proceedings herein provided shall be of no further force or effect. (Emphasis supplied.)

Appellees cited the provisions we have quoted to sustain their contention that the county court had no jurisdiction of the election contest. We agree with appellees. The purpose of Act 465, as reflected in the title, is “to codify the election laws of the State . . . The only exception we find in the act is that the term “general or special election” as used in the act “shall not apply to school elections or officials of school districts.” It is fairly logical to assume that in listing that exception the Legislature could and probably would have listed local option liquor elections as an exception had such been the intention.

It is therefore our conclusion that Act 108 of 1955 provides that the contest of any local option election should follow the statutes providing for the. contest of any election for county officers; and that Act 465 of 1969 provides that the contest for a county office shall be brought in the circuit court.

This case could have been resolved on another point, namely, that the demurrer to the complaint could have been sustained because the complaint did not state a cause of action. The complaint, or petition, did not charge any specified vote was illegally cast but contained only generalities or conclusions that illegal votes were cast. It is too late to amend after the time for filing a contesting petition has expired. Jones v. Etheridge, 242 Ark. 907, 416 S. W. 2d 306 (1967).

The reason we do not rest the case on the propriety of the demurrer is that public policy dictates that controversies about election laws should be put at rest. Henley v. Goggins, 250 Ark. 912, 467 S. W. 2d 697 (1971).

Affirmed.


author: John A. Fogleman, Justice.

text:
    Martha HENDERSON v. Mrs. Annie Mae HARRIS, Mrs. Johnnie DUDLEY and Scott NOBLE
    5-5690
    474 S.W. 2d 892
    Opinion delivered January 10, 1972

      Judith Rogers, for appellant.

      Givens, Capps ir Reeves; By: Paul Capps, for appellees.
   John A. Fogleman, Justice.

This appeal comes from a decree directing the sale for partition of a dwelling house and lot in North Little Rock. The chancery court determined that appellant Martha Henderson and appellees Annie Mae Harris, Johnnie Dudley and Scott Noble owned an undivided one-fourth interest each in the property, as devisees under will of their aunt, Sinia Himes. The chancellor specifically held that the title to the property was not held by the testatrix in a resulting trust in favor of appellant, as she had asserted in her answer to the partition suit brought by the appellees, her brother and sisters. Appellant concedes that she had the burden of showing the existence of the trust by clear, satisfactory and convincing evidence. We cannot say that the chancellor’s finding that she failed to meet this burden was error.

The father of the parties died when appellant, the youngest of his children, was about two years old. Although their mother survived, several of these children were turned over to sisters of their father soon after his death. While the means and reasons are disputed, appellant was taken by Louise Bass, the father’s sister, to her home at Eudora and kept there for a time. Louise Bass was then teaching school, so during a term of school she turned appellant over to another paternal aunt, Sinia Himes, who lived at Readland, after which appellant was returned to Louise Bass and was raised by her. Later Louise Bass moved to North Little Rock. Martha Henderson stayed with this aunt, at least off and on, until she was about 17 years of age. There seems to be some uncertainty about the places these two lived, either separately or together. According to Scott Noble, they lived at 600 North Hazel Street when they first came to North Little Rock, and he visited them there when he was a small boy. There was a time when one or both of them lived near Earle, probably with a paternal uncle of the parties, named Pete (or Pink) Noble. Appellant said that they moved to various places, one of which was Pine Bluff, where she claimed to have been employed at washing dishes in a restaurant at the age of seven. She also said that she had lived in Memphis in a home for orphans in 1926 and 1927 until Louise Bass "stole me back” at the age of nine. Somehow and somewhere she got through the sixth or seventh grade in school. Louise Bass was married and lived with her husband during at least some of this time, but the record abstracted does not show what became of him.

The property.was purchased June 27, 1940. It was conveyed to Louise Bass by an Arkansas Bank Commissioner’s Deed for a consideration of $1,000. The deed recited deferred purchase money amounting to $890, which was to be paid in monthly installments of $10 beginning August 1, 1940. The lien for this balance was satisfied of record on October 1, 1947. It is admitted by appellant that she did not sign any obligation for the purchase money and that all papers concerning the purchase were signed by Louise. Bass. It is also admitted that appellant never received a receipt for any payment concerning the property from anyone. There is no documentary evidence whatever as to payment of the purchase price or the source of the funds used in making payments. It is admitted that the final payments were made by Mose Himes, but appellant claimed that she had given him the money to do so.

Louise Bass was living on the property involved when she died intestate in 1944. Sinia Himes sold property she owned in Readland when she moved into the Louise Bass home in North Little Rock. Sinia Himes was the sole heir at law of Louise Bass.

Sinia Himes died in June of 1967. Her will dated March 27, 1963, was admitted to probate upon a petition signed by all the parties to this proceeding. Administration on this estate was closed on April 11, 1968, more than one year before this suit was filed. The attorney who offered the will for probate was Clifford McCloy.

Martha Henderson relies largely upon her own testimony, in effect as follows:

Louise Bass’ last employment was as a school teacher in 1925. Appellant was earning $7 or $8 per week farming and took care of this aunt from the time the latter became ill in 1937 until her death. Appellant borrowed $300 for her aunt to pay on this house in 1940. She moved Louise Bass there about that time, but continued to work on a farm at Shell Lake until sometime in 1943, when she moved to the house in North Little Rock after having repaid the $300 loan. Appellant and her aunt did not live on the property when it was first purchased, so they turned it over to one Willie Goss to look after. Appellant was earning $40 to $50 per week when she moved into the house. Rebecca Pfeifer also moved in the house in 1943, and was joined there by her sister Hester (or Esther). Louise Bass had no resources and no income from any source after 1937 except for appellant’s contributions. No one else was living in the house when Louise Bass died, and Sinia Himes was still in Readland. Appellant lived in the house alone for a time. Appellee Johnnie Dudley moved in with her about the middle of 1945, and stayed for about a year, after appellant located her and sent her some money. Appellant then went to Readland and brought her Aunt Sinia and Uncle Mose back to the house with her. Johnnie Dudley left when Mose Himes “throwed her out” because she paid nothing for living expenses. He also caused Rebecca Pfeifer and her sister to move for the same reason. Aunt Sinia was not employed, and although Uncle Mose was employed for a short while, appellant paid all the household expenses and also saved some money. In 1950 appellant left and went to California. She then sent her Aunt Sinia $100 per month for 17 years. Her aunt and uncle continued to live on the property. She left the Himeses there because she wanted them there. One of her sisters, Annie Mae Harris, while visiting in the home, had attempted to steal the deed to the property, but returned it when Mose Himes talked about having her arrested.

Even if this testimony were sufficient to show a resulting trust, there are many contradictions, discrepancies and unexplained matters, which would justify a trier of the facts in concluding that it lacked the clarity and convincingness required to engraft a trust upon a solemn conveyance made 30 years ago. Her claim of having provided the sole support for herself and this aunt on $7 or $8 per week, even in 1937, strains credulity. Appellant’s testimony that until the death of Sinia Himes she believed the title to be in her own name is not completely consistent with her testimony that she borrowed money for Louise Bass to pay on the purchase price and her admission that all papers relating to the transaction were signed by Louise Bass. Rebecca Pfeifer, who stated that she had lived in the house with Louise Bass and cared for her for seven years before the latter’s death, testified that during this time appellant only visited in the home, and contradicted appellant’s claim that appellant had lived in the house with her aunt for a period beginning in 1943. Alberta Sizemore, a neighbor who said that she cared for Sinia Himes for four months before the latter’s death, testified about reading all the elderly woman’s mail to her. This witness stated that, while appellant once sent some clothing to her aunt, and $25 on one occasion and $10 on another, she never sent $100.

Apparently, no real effort was made to controvert damaging testimony by appellee Scott Noble relating to the interest appellant took in the property both before and after she went to California. This brother testified that he spent money on the house because of its rundown condition beginning in 1945 or 1946 after he got out of the army. He said he was sending the money to Sinia Himes after 1945, but he brought the money in the 1960’s. He presented receipts for $695 for a new roof on June 1, 1965, and $3,900 for payments and construction in 1965 to prevent condemnation. He said he spent some unspecified amount for new water piping in 1964 or 1966. He asserted that appellant did not furnish any money for these purposes and that he did not hear from her until two days after their Aunt Sinia died. It seems that if Martha Henderson owned the property, furnished all the money to pay for it and knew of no claim that the record owner’s sister had to it, she should have been more concerned with its condition than the evidence shows her to have been.

There is a strange inconsistency in appellant’s attitude toward Louise Bass. In one breath, she seems to explain her purported actions by calling Mrs. Bass her mother, as well as her aunt. In another she expresses resentment toward this aunt, who, she says, stole her and took devious means to hide her from her own mother.

Appellant’s conduct after the death of the testatrix is also inconsistent with her present position. Her testimony that she asserted a claim to the property in her own right is corroborated by one of the appellees, who said that appellant claimed that the property was her own in spite of what the will said. Yet, this supposed owner signed the petition for probate of the will, signed a waiver of notice of further proceedings, went back to California and stayed and did nothing until administration was closed and this partition suit filed. It is true that she claims that her brother and sisters only let her read parts of the will and ihat before she left she placed her claim in the hands of an attorney, Judge Robinson, who, she says, obtained the services of Mr. McCloy, and that a real estate agent was looking after the property while the will was being probated. The appellee who heard appellant claim the property in spite of the will said that Judge Robinson was recommended to the devisees to bring the will to probate, but that he in turn recommended Clifford McCloy, who was then employed. It hardly seems likely that the attorney would close the administration of an estate with full knowledge that an outstanding claim to the property by one of the devisees had been entrusted to him for handling, without some notice to that claimant, regardless of formal waiver.

Corroboration of appellant’s testimony as to funds furnished by her at the time of, or subsequent to the purchase, is almost totally lacking. Only Rebecca Pfeifer corroborates her testimony that Louise Bass had no source of funds during the years she lived in the house, but this witness could not tell of any occasion when appellant gave her aunt any money. Even though this witness did say on redirect examination that she knew Martha Henderson was the only one bringing money to the house, it seems that she was referring to a time after the death of Louise Bass, because she again denied knowledge of any source of the older woman’s money during her lifetime.

Since the evidence is not such as to support appellant’s plea for reversal, we affirm the decree of the chancery court.