author: Frank Holt, Justice.

text:
    ARKANSAS STATE HIGHWAY COMM’N v. W. D. DAVIS et ux
    5-5220
    455 S. W. 2d 97
    Opinion delivered June 22, 1970

      Thomas Keys, and James Dowell, for appellant.

      Graves ir Graves, for appellees.
   Frank Holt, Justice.

This is an eminent domain proceeding and is a sequel to Arkansas State Highway Commission v. Davis, 245 Ark. 813, 434 S. W. 2d 605 (1968). In 1966 appellant took 3.37 acres of appellees’ land and severed 18 acres from their 95-acre tract. Prior to that time, the property was utilized for the operation of a commercial laying hen business and a cattle farm. Upon retrial, a jury assessed damages at $20,666, and from a judgment on that verdict comes this appeal.

Appellant first contends for reversal that the trial court erred in overruling its motion in limine. Appellant asserts that its motion was directed primarily and specifically toward eliminating from the jury’s consideration the testimony adduced at the first trial with regard to the cancellation of the landowners’ egg production contract which was cancelled by the Corn Belt Hatcheries due to the proximity of the interstate construction facility. Appellant’s trial counsel asked, in effect, that the appellees’ witnesses not be permitted to testify that the possibility of loud nosies and bright lights from heavy traffic would adversely affect the egg production, causing the cancellation of appellees’ egg contract and, therefore, rendering worthless the sin: chicken houses on their property. The trial court denied the motion with the admonition to the landowners that testimony as to possibilities would be improper and that any evidence offered by the appellees should be limited to reasonable probabilities. The refusal of the motion in limine with the accompanying admonition to~Thd appellees to limit the testimony to reasonable probabilities was clearly within the discretion of the trial court. We have often recognized the discretionary power of a trial court in the control of the admission of testimony. Western Coal & Mining Co. v. Nichols, 168 Ark. 346, 269 S. W. 991 (1925). Certainly there is no abuse of discretion demonstrated in the case at bar. Furthermore, on the first appeal of this case we remanded with directions to “afford an opportunity for the parties to present more positive and more explicit evidence relative to the issue of whether the Davises’ commercial laying houses are now a total loss because of the proximity of the new interstate highway.” The appellees were entitled to again present their theory of damages and to implement their evidence within reasonable probabilities.

Appellant next asserts that the trial court erred in striking that portion of Mr. Charles Wilburn’s testimony as to damages to appellees’ chicken houses. Mr. Wilburn testified for appellees as an expert appraiser. According to him, the proximity of the interstate highway to appellees’ property, and particularly to their chicken houses, depreciated the value of the use of those buildings for the production of eggs to the extent of $20,000. Appellant asked the trial court to strike that portion of his testimony, asserting that it had no basis in fact since his estimate of the diminution in value of the chicken houses was based upon information he acquired from the landowners and an employee of the Com Belt Hatcheries when he made his investigation for appraisal purposes. We cannot agree with this contention. We firmly settled the merits of this contention in Arkansas State Highway Comm’n v. Russell, 240 Ark. 21, 398 S. W. 2d 201 (1966), when we said:

“It is at once apparent that if we sustain the commission’s contention it will hardly be possible in the future for a landowner or an expert witness to give an admissible opinion about the value of property.
The overwhelming weight of authority is contrary to the appellant’s present contention. It has repeatedly been held that expert or lay testimony is competent even though it is based wholly or partly upon hearsay, [citing cases]”

Furthermore, in the recent case of Arkansas State Highway Comm’n v. Highfill, (April 20, 1970), 452 S. W. 2d 846, we again recognized that the landowner has the right to show the highest and best use for which his property is adaptable before and after the taking. So, too, in the case at bar, the appellees could properly show that the highest and best use of. their property before the taking was for commercial egg production purposes and that after the taking, their lands were rendered useless for this purpose.

Appellant next contends that the verdict is not supported by substantial evidence and is excessive. We do not agree. As previously indicated, 3.37 acres of appellees’ lands were acquired in fee and 18 acres were severed from the 95-acre tract. Appellees presented three witnesses who were experts and knowledgable as to the effect of the proximity of the highway facility upon appellees’ commercial egg production business. Evidence was adduced that because of the proximity, appellees’ contract was cancelled and they were unable to acquire a commercial contract from other sources and that appellees’ six chicken houses were designed and constructed in such a manner that they were rendered useless for any other purpose and had only a salvage value as a result of the cancellation of the contract. The appellant produced an independent operator who disagreed with appellees’ witnesses. According to him, the appellees’ property would continue to be suitable for commercial laying hen operations. These two. conflicting theories were presented to the jury, and it was for it to determine which should prevail.

One of appellant’s value witnesses estimated damages to all the property at $1,550 and another estimated $3,000. The appellees’ value witnesses estimated damages to the entire property ranging from $26,658 to $27,383. As previously indicated, the jury awarded $20,-666. There was detailed evidence that the specially designed six chicken houses (with a 13,500 laying hen capacity) were damaged to the extent of $20,000 since they were rendered totally useless except for salvage purposes due to the proximity of the interstate highway and interchange facilities. In view of this latter evidence and the undisputed facts that 3.37 acres were acquired in fee and 18 acres were severed from the 95-acre tract which was also being utilized for cattle pasturage, we hold there is substantial evidence to support the verdict and we cannot say it is excessive.

Affirmed.


source: Caselaw Access Project

author: Roy Penix, Special Chief Justice.

license: Public Domain

text:
    Mrs. Marion E. CARTER, Individually and as Administratrix of the Estate of Steven Ira Carter, Deceased v. R. E. HARTENSTEIN, d/b/a Hartenstein Elevator Company et al
    5-5315
    455 S. W. 2d 918
    Opinion delivered June 22, 1970
    [Rehearing denied August 3, 1970.]

      Teague, Bramhall if Davis, for appellant.

      John M. Lofton, Jr., Wright, Lindsey if Jennings and Rose, Barron, Nash, Williamson, Carroll if Clay, for appellees.

      Smith, Williams, Friday if Bowen and Moses, McClellan, Arnold, Owen if McDermott, amici curiae.
   Roy Penix, Special Chief Justice.

Steven Ira Carter, a 14 year old newspaper boy, was crushed to death February 8, 1968, while attempting to use an elevator installed in the Justice Building on the State Capitol Grounds in Little Rock. The youth’s mother, Mrs. Marion E. Carter, as administratrix, brought this suit under the wrongful death act against R. E. Hartenstein, d/b/a Hartenstein Elevator Company, who manufactured and installed the elevator, alleging liability because of the manner in which the elevator had been constructed and installed.

Hartenstein answered and brought in as third-party defendants, Erhart, Eichenbaum, Rauch & Blass, the architects who designed the Justice Building, and D. A. Harmon, d/b/a Harmon Construction Company, the contractor who built the elevator shaft. Mrs. Carter amended her complaint and pleaded over against the architects and the contractor.

All defendants raised as their defense Ark. Stat. Ann. § 37-237 thru 37-244 (Repl. 1962) which is Act 42 of the General Assembly of 1967. The pertinent statute is § 37-238:

“Personal injury or wrongful death — Four-year limitation. — No action in tort or contract (whether oral or written, sealed or unsealed) to recover damages for personal injury or wrongful death caused by any deficiency in the design, planning, supervision or observation of construction or the construction and repairing of any improvement to real property shall be brought against any person performing or furnishing the design, planning, supervision or observation of construction or the construction and repair of such improvement more than four (4) years after substantial completion of same.”

The parties stipulated that the Justice Building was substantially completed in the year 1958: Thereafter, the defendants all moved for a summary judgment. The Circuit Court granted summary judgment, finding that the cause of action was barred by § 37-238.

The sole issue before this court is the constitutionality of § 37-237 et seq. (Act. 42). The appellant contends the statute violates the Arkansas Constitution, Article 2, Sections 13 and 18; Article 5, Section 25; and Amendment 14, as well as the United States Constitution, Amendment 14, Section 1.

Appellant asserts the statute violates due process; is discriminatory, contravenes equal protection of the laws, and is local and special legislation.

The question raised is whether the legislature was arbitrary or capricious in granting this immunity from suit four years after substantial completion of construction to those enumerated in the statute without giving such protection to others such as materialmen and owners, whom appellant claims belong to the same class as those exempted.

This Statute, whether it be one of “vested right” and a means of remedy and recovery, or whether it be characterized as a “statute of limitations”, is largely a question of semantics and manipulation of legal theory. The true issue is whether it is fair and reasonable and an appropriate action by the General Assembly of the State of Arkansas, or whether it impinges and frustrates basic rights guaranteed constitutionally. The court cannot — and it should not try to — make legislative policy in a case like this, but only protect essential and basic rights when they are infringed.

This Act only cuts off action after four years. But, even then, if an accident or injury occurs before the expiration of that four year period, it may still be brought within an additional 12 months against those furnishing the design, planning, supervision or observation of construction, or the construction and repairing of any improvement to real property. All of the defendants in this action are within this definition. However, it does not include owners of buildings or materialmen who are not otherwise involved. Such materialmen and the owners of buildings or structures who are in sole control of premises after completion of the work are not similarly situated with the defendants in this case. They are not in the same class with those described in the act. Particularly is this true after construction is substantially completed and accepted by the owners. Part of acceptance is to accept some future responsibility for the condition of the premises.

Other similar limitation acts are only analogous, but we derive some knowledge and benefit from their application and use. The basic limitation for torts is three years (Ark. Stat. § 37-206); malpractice against professionals two years (Ark. Stat. § 37-205), and against banks three years (Ark. Stat. § 85-4-406). Of course, it may be that under tort and malpractice actions, limitations might only begin to run from the time of the accident or discovery, but this is not true in respect to banks and we have found no authority to overturn that three-year period. See, Bamford v. Van Emon Elevator Company, 79 Oregon 395, 155 Pacific 373, (1916). Kakargo v. Grange Silo Company, 204 N. Y. Supp. 2d, (1960). These acts have been consistently upheld.

We have carefully considered Skinner v. Anderson, 38 Ill. 2d 455, 231 NE 2d 588 (1967), concerning this appeal. In all deference and in respect to the decision by the Supreme Court of Illinois, we cannot apply its reasoning to this case. That court held the Illinois Statute, there challenged, to be discriminatory against others similarly situated. The Arkansas Statute, as we view it, does not do this. The Illinois Constitution, (specifically Section 22 of Article IV) enumerates classes and creates a different problem. Further, a vital distinction, nonetheless, exists between owners or suppliers and those engaged in the professions and occupations of design and building. This is not arbitrary or unreasonable. It is a legitimate and practical exercise of the legislative function.

To say that there can be no limitation in perpetuity against a designer or erector of a structure would be in effect to discriminate against professional builders and designers. Whether three years, four years of five years — or more or less— is the correct or appropriate period, should not and cannot be the concern of the judiciary. We only must determine whether the legislature has acted reasonably in respect to their mandate from the people as set out in the Constitution.

This case has nothing to do, as presented, with questions of concealed defects, imminently and inherently dangerous, or prospective liability. See Frumer and Friedman, Products Liability, 1967, Chap. 12, Secs. 39.01, 39.02 and 40.01 (2); and Prosser, The Fall of the Citadel, 50 Minn. L. Rev. 791 (1960). Also see generally: Anderson, Special and Local Acts in Arkansas, 3 Ark. L. Rev. 113 (1949) and Comment, 18 Cath. U. L. Rev. 361.

Almost every statute or law serves to work for some and against others. Here, we simply do not view this enactment as granting special privileges and immunities. Our opinion is that Act 42 is valid, reasonable, constitutional and not enacted for arbitrary or capricious reasons. We think the legislature was entirely within its constitutional right in passing such statute.

Affirmed.

Harris, C. J., not participating.

      A materialman who designs a component or substantial part of a building could be otherwise involved and within the statute.


author: Carleton Harris, Chief Justice.

text:
    Bobby Ray MASON v. Jean Marie MASON
    5-5274
    455 S. W. 2d 851
    Opinion delivered June 29, 1970
    [Rehearing denied August 3, 1970.]
    /. H. Carmichael, Jr., for appellant.

      Herrod & Cole, for appellee.
   Carleton Harris, Chief Justice.

Jean Marie Mason, appellee herein, instituted suit in the Pulaski County Chancery Court, seeking an absolute divorce from Bobby Ray Mason, appellant herein, alleging various indignities to her person, pursued to the extent that her condition, in life became intolerable. A division of the personal property owned by the parties was sought, including a request that appellant be directed, to make the remaining payments due on household goods. Appellant answered, praying that the complaint be dismissed'; it was further asserted that his total debts were such a burden that he would not be able to pay same; that it would be necessary for him to file a voluntary petition in bankruptcy to obtain relief; that such petition would be filed on November 10, 1969. On November 13, appellant amended his answer, stating that he had filed the petition for bankruptcy in the United States District Court for the Eastern District of Arkansas, Western Division, and that the case had been referred for further proceedings to the Referee in Bankruptcy. The answer also stated that on the previous day, the referee had entered an order prohibiting any person from taking further action for collections against the bankrupt, pending further orders of the bankruptcy court. On November 14, the chancery court entered a temporary order, finding that the court was without jurisdiction to make an award of any of the property, but an order was entered directing appellant to pay, commencing on November 14, 1969, to appellee the sum of $40.00 per week for her support and maintenance. Mason was also directed to pay a fee of $100.00 to appellee’s attorney, and court costs. Thereafter, on December 18, 1969, appellant was directed to appear in court on January 5, 1970, to show cause why he should not be held in contempt for failure to comply with the order of November 18. The record does not however reflect any hearing, and on January 21, 1970, Mason was again directed to appear in court to show cause why he should not be held in contempt, this order directing that he appear on January 29, 1970, which was the same date already set for the trial of the case on its merits. On that date, both parties appeared, and the court announced that it would hear proof on both the question of divorce, and the alleged contempt of appellant. No objection was raised to this procedure by either party or attorney. Thereafter, Mrs. Mason testified both to her grounds for divorce, and the failure of her husband to comply with the court’s order, and her mother testified on her behalf in the divorce case. Appellant also testified; however, all of his testimony dealt with the contempt citation, Mason stating that he was not able to pay $40.00 a week, and he admitted that he was delinquent in his payments. The court denied an absolute divorce because of a lack of corroboration, but, in effect, granted a divorce from bed and board, ordering “that the divorce sought in this action is hereby denied, but that the complaint not be dismissed, the court retaining jurisdiction over this cause”. It was further ordered that the support order should remain in full force and effect until further orders, and that appellee was given judgment in the sum of $241.00 for the arrearage due as of January 29, 1970. An additional attorney’s fee was awarded appellee’s attorney.

A separate order was entered finding that Mason was in contempt of court for his failure to make payments totaling $241.00, but Mason was allowed until February 6, 1970, to become current; upon a failure to become current, appellee’s counsel was directed to present to the court an order of arrest providing that the sheriff should confine Mason to the county jail for a period of 30 days, unless appellant should present a cash bond in the amount of $350.00 payable to the sheriff, and to be held by him until further orders of the court. From the decree so entered, appellant brings this appeal.

For reversal, it is first asserted that no service was had upon appellant or his attorney advising of the contempt hearing, and the court was without jurisdiction of the person of the appellant. He relies upon Ark. Stat. Ann § 27-364 (Supp. 1969), and the case of Henry v. Henry, 247 Ark. 771, 447 S. W. 2d 657. This case and statute can afford no relief to appellant. In Henry v. Henry, Supra, there was an effort, after the divorce had been granted, to enforce a property settlement which apparently had been entered into between the parties, but had not been incorporated in the divorce decree; nor was any notice given that Mrs. Henry was actually endeavoring to modify the decree. Henry was only ordered to show cause why he should not be held in contempt. It is at once obvious that the facts there were entirely different from those in the present litigation. Here, Mr. Mason appeared in court, and admitted that he was aware of the fact that he had been ordered to pay $40.00 per week, and further admitted that he had not made all of the required payments because “I didn’t have the money. At times I didn’t have the money to pay”.

Prior to hearing any witnesses on either the main case or the contempt citation, counsel for appellee stated, “If the Court please, this is a complaint filed by Mrs. Mason October 13, 1969 for a divorce, possession of one of the automobiles of the parties and the household goods. It is also a contempt hearing for the failure to comply with this Court’s order of November 13, 1969, with regard to the payment of support and maintenance to the plaintiff by the defendant”. Counsel for appellant then stated, “I think we are up on the payments the court required us to pay. I believe the proof will show that. However, I think he did pick up the amount, in fact it was double, I think. No, it was triple. One thing I question here, whether or not he [she] is going to ask for divorce this morning”. The court then announced that it would hear proof on both matters, and proceeded to do so. Not one single objection was raised to hearing the contempt matter, and, even if there were merit in the contention that the statute had not been complied with, it would be too late to raise that question now.

It is next asserted that since Mrs. Mason was not granted the divorce, her complaint should have been dismissed. We do not agree. Apparently, the court refused an absolute divorce because of the fact there was not sufficient corroboration of appellee’s grounds for divorce (most of the mother’s testimony was hearsay) — not because she failed to make out a case by her own testimony. Of course, if the complaint had been dismissed for lack of equity, appellant might have considered himself free of the obligation to support his wife. The court commented upon this phase of the case as follows:

“He is obviously in willful, open contempt of this Court’s order. This Court is hardheaded about its orders which it feels it should be. To not be hardheaded permits a husband who wants more time to require a wife who was not working at the time the order was entered to grovel in the street or manage some way to get herself fed and housed and clothed. * * * And where the divorce is denied the wife, this does not mean the Court is bound to dismiss her complaint and relegate her back to the streets or the law of the jungle, the club, to seek to gain any support from her spouse. He married her. * * * In this Court and this state under the law prevailing a husband taking a wife is required to support her. It is this simple.”

Ark. Stat. Ann. § 34-1202 (Repl. 1962) provides that the chancery court shall have power to dissolve and set aside a marriage contract from the bonds of matrimony, and also from bed and board. We have held that the court has sound discretion to grant a divorce from bed and board, even though both parties seek an absolute divorce. See Crews v. Crews 68 Ark. 158, 56 S. W. 778. In the opinion, written by Chief Justice Bunn, it was pointed out that the chancellor had found that both parties were, to some extent, at fault, but that the fault of the husband was greater than that of the wife. Nonetheless, we approved the court’s action in granting a divorce from bed and board to the wife, which included an award of alimony. In the case before us, there was no finding of fault on the part of the wife and the court was certainly justified in entering the order here in question.

It follows, from what has been said, that we do not agree that a writ to quash the court’s order of February 2, 1970, (relating to contempt) should be issued.

Affirmed.

      The answer was filed on November 3, 1969.

      On January 5, 1970, the referee in bankruptcy entered an order finding "that there were no assets available for benefit of common creditors and that all property should be disclaimed and abandoned”.


text:
    H. E. McCONNELL & SON, et al v. Frances SADLE
    5-5339
    455 S. W. 2d 880
    Opinion delivered June 29, 1970

      Cockrill, Laser, McGehee, Sharp ir Boswell, for appellants.

      John Purtle, for appellee.
   Carleton Harris, Chief Justice.

This is a workmen’s compensation case, being an appeal from a judgment of the Pulaski County Circuit Court, in which that court affirmed an order rendered by the commission in favor of claimant, Mrs. Frances Sadie. However, only one issue was passed upon, and the order is not reviewable because it does not constitute a final order. Mrs. Sadie filed a claim for dependency benefits alleging that she was the widow of Lou M. Sadie, who allegedly died as a result of an accidental injury in the course of his employment with H. E. McConnell & Son on February 5, 1967. The claim is controverted in its entirety by the McConnell company and its insurance carrier. However, the only question passed upon by the referee and the full commission was whether Mrs. Sadie was the legal widow and dependent of Lou Sadie. The commission found for claimant, but held in abeyance the question of whether decedent’s death arose out of and during the course of his employment. Thus, an adjudication of the one issue presented would not determine whether the claim should be allowed.

While no objections to the determination of this one phase of the litigation are raised by the parties, as pointed out in Worth Insurance Company v. Mrs. Tommy Patching and Helena National Bank, 241 Ark. 620, 410 S. W. 2nd 125, the want of a final order is a matter that we raise ourselves, and under Ark. Stat. Ann. § 27-2101 (Repl. 1962), we are limited to a review of final judgments and decrees. As pointed out in Piercy v. Baldwin, 205 Ark. 413, 168 S. W. 2d 1110, a judgment, to be final, must dismiss the parties from the court, discharge them from the action, or conclude their rights to the subject-matter in controversy. In the case before us, only one facet of the litigation has been determined. There is left for further determination the question of whether Sadie’s death arose out of and during the course of his employment, and accordingly whether Mrs. Sadie is entitled to benefits, and if so, the amount of benefits.

In McPherson v. Consolidated Casualty Company, 105 Ark. 324, 151 S. W. 283 (1912), we said:

“Cases can not be tried by piecemeal, and one can not delay the final adjudication of a cause by appealing from the separate orders of the court as the cause progresses. When a final order or judgment has been entered in the court below determining the relative rights and liabilities of the respective parties, an appeal may be taken, but not before***.”

It follows, from what has been said, that the case should be, and is, remanded to the Pulaski County Circuit Court (Third Division) with directions to remand same to the Workmen’s Compensation Commission for further development.

It is so ordered.

For good cause, we direct the issuance of an immediate mandate.


author: George Rose Smith, Justice.

text:
    ARKANSAS INSURANCE COMMISSIONER v. CHRISTIAN FOUNDATION LIFE INSURANCE COMPANY
    5-5282

      455 S. W. 2d 878
    Opinion delivered June 29, 1970

      Stephan Safly, for appellant.

      Allen & Young, for appellee.
   George Rose Smith, Justice.

By statute the Insurance Commissioner is required to make periodic examinations of the affairs, transactions, accounts, records and assets of domestic insurance companies. Ark. Stat. Ann. § 66-2115 (Repl. 1966). Pursuant to that statute the Commissioner conducted an examination of this appellee, Christian Foundation Life, for the period January 1, 1964, through December 31, 1967. A detailed report of the examination was duly filed by the examiners.

In connection with the examination of this insurer and of other insurers being examined at the time, the Commissioner imposed for the first time a requirement that the principal officers of each company execute what the Commissioner refers to as a Standard Certificate, having to do with information not disclosed by the records of the company. The officers of Christian Foundation Life refused to execute the Standard Certificate as prescribed by the Commissioner but offered to execute a similar certificate in a slightly amended form. After a hearing conducted by a departmental examiner the Commissioner refused to accept the proposed amendments and ordered that the original Standard Certificate be completed. On appeal, however, the circuit court set aside the Commissioner’s order and allowed Christian Foundation Life to use the amended form. For reversal the Commissioner contends that the circuit court exceeded its authority in modifying the Commissioner’s decision.

The facts are not in dispute. It is conceded that Christian Foundation Life, during the examination of its affairs, afforded the Commissioner’s representatives complete access to all the company’s books and records. At the departmental hearing the Commissioner’s chief examiner, Franklin Seford, repeatedly made it clear that the Standard Certificate was designed solely to elicit information known to an insurer’s principal officers but not reflected by its records. Here áre exerpts from Se-ford’s testimony: “This [the Standard Certificate] is to have the officers of the company commit themselves to definitive answers for any liabilities that are not reflected by the company’s books. . . . We want them to make a statement of fact over and above what the records show. . . . This is a disclosure that must be made independent of any of their records or examinathe officers’ standpoint in the event something is in the mill, is pending, has been committed, but has not been reduced to the record-keeping status. . . . [T]he certificate is to supplement what is in the records to determine if there are in existence any liabilities or other contingent — or other liabilities — that are not reflected in the books and records of the company.”

In the order that was modified by the circuit court the Commissioner himself expressed precisely the same point of view, saying: “The certificate form in question is required by this Department to be completed as a disclosure in addition to any information disclosed by the books and records of the company being examined, the purpose of which is to have the officers of the company commit themselves to definitive answers for any liabilities that are not reflected by the company’s books and records.”

The appeal to this court actually brings up a point of minimum disagreement, for the amended certificate approved by the circuit court contains the exact information demanded by the Commissioner. To make that fact clear we are setting forth in composite form the original Standard Certificate and its form as amended. We have italicized the amendments and have enclosed in brackets the only two words in the original that were deleted in the revision:

In connection with examination of our records for the period from January 1, 1964, to December 31, 1967 we certify that to the best of our knowledge: (1) All borrowings have been recorded in the accounts of the Company.
(2) No liabilities or contingent liabilities in the form of endorsements or guarantees of the obligations of others existed at December 31, 1967 except as reflected in the Company’s records and except as noted below.
(3) No liabilities or contingent liabilities in the form of financial commitments not in the reguiar course of ordinary business existed at December 31, 1967, except as reflected in the Company’s records and except as noted below.
(4) No liabilities or contingent liabilities in the form of purchase commitments or repurchase commitments for investments or assets at prices in excess of current market quotations existed at December 31, 1967, except as reflected in the Company’s records and except as noted below.
(5) None of the Company’s assets were pledged or hypothecated as securities for liabilities of this Company or any other company, firm or person except as reflected in the Company’s records and except as noted below.
(6) Except as reflected in the records of the Company, and except as noted below, the Company holds (without claim of offset) valid and [unquestioned] legal title to all assets ■ listed on the books of the Company and the undersigned officers have no [knowledge] reasonable grounds for believing that any of the Company’s debtors lacked the legal capacity or authority to execute any of the notes or .contracts held by the Company.

A reading of subparagraph (2), for example, will make clear the appellee’s objections to the original Standard Certificate. That_ subparagraph would have required the officers signing the certificate to separately list all the designated liabilities and contingent liabilities of the company even though those obligations were fully disclosed by books that were open to the Commissioner’s examination. Yet the Commissioner from the outset has disclaimed any intention to obtain by means of the Standard Certificate any facts except those known to the officers but not disclosed by the company’s records. Hence the phrase inserted by amendment in sub-paragraph (2), “except as reflected in the Company’s records,” is completely in harmony with the Commissioner’s own position in the matter.

In its brief the Commissioner argues that the circuit court exceeded its reviewing authority when it undertook a rewriting of the certificate to be executed by Christian Foundation Life. That action, however, falls clearly within the circuit court’s authority to “modify” the Commissioner’s order. Ark. Stat. Ann. § 66-2127 (6). Moreover, the Commissioner is mistaken if he considers the circuit court’s action to be a permanent rewording of the Standard Certificate. All that a court does is to decide the controversy before it upon the proof adduced by the parties to the case. The circuit court’s judgment, and our affirmance thereof, settle the present controversy and will presumably serve as a controlling precedent in similar cases that may arise in the future. The courts, however, do not even purport to exercise any rule-making power in a case such as this one. Consequently the Commissioner is still free to make any regulations or to prescribe any certificates that he deems to be desirable, within the limits permitted by law.

Affirmed.


author:
Lyle Brown, Justice.
      John A. Fogleman, Justice,

text:
    Floyd HARBER, Taxpayer v. Rabie RHODES et al
    5-5289
    455 S. W. 2d 926
    Opinion delivered June 29, 1970
    [Rehearing denied August 3, 1970.]

      Lee Ward, for appellant.

      Don Langston, Graham Sudbury and John Watkins, for appellees.
   Lyle Brown, Justice.

Appellant Floyd Harber initiated this action in his capacity as a taxpayer and patron of Gosnell School District, Mississippi County. He sought a writ of mandamus directed to appellees as chairman and secretary of the State Board of Education to require that a hearing be conducted to resolve a complaint filed by Harber with the Board and against J. W. Rea, Superintendent of Gosnell Schools. The chancellor rejected a demurrer to the pleading, heard the case on its merits, and ruled that the State Board had performed its duty by acting on the complaint against Rea. Since it is our view that the demurrer should have been sustained we shall not enumerate appellant’s points for reversal because they are concerned with the merits of the rase.

In June 1969, appellant filed with the State Board in affidavit form his charges against Superintendent Rea. The affidavit alleged that appellant was employed for the school year 1968-69 as principal of the junior high school; that at the outset of the school year he was called in by Rea and instructed to show on appellant’s attendance reports an average daily attendance in the upper 90% range; that when pressed for assurance of cooperation appellant “stalled for time”; that pursuant to his final decision not to participate in the padding of attendance rolls appellant made a full disclosure to the school board; and that the local board supported the superintendant in the plan and discharged appellant for failure to follow orders. Appellant’s affidavit further alleged that the superintendent had, during the current school year, used a system whereby he added to the final attendance reports a number of absentees and certified them as actually being in school. In corroboration of his charges he filed two written statements from former employees of Gosnell District. In those statements the respective employees stated that under pressure from the superintendent they had in previous years falsified attendance records. Appellant asked that the superintendent’s teaching certificate be revoked, which is the statutory penalty for permitting or requiring any teacher to falsify attendance records. Ark Stat. Ann. § 80-1228 (Repl. 1960).

Appellee A. W. Ford is, and was, the State Commissioner of Education and ex-officio Secretary of the State Board of Education. Upon receipt of the described charges, along with a request from appellant’s attorney for a hearing, Mr. Ford appointed a committee from his staff to make an investigation. Based on the committee interviews with school employees at Gosnell and inspection of attendance records the committee filed an extensive report. Its findings need not here be detailed, except to say that “non-conforming practices” were found with respect to reporting daily attendance.

The matter was presented to the State Board at the regular quarterly meeting in September 1969. The record available to the board was the affidavit of appellant, two statements supporting his position, and a detailed report of the investigating committee. The State Board was also informed that the committee “did not find substantial evidence of an attempt to falsify the records.” The board concluded there was no basis for a public evidentiary hearing as requested by appellant. Counsel for appellant was immediately notified of the decision of the board and the petition for mandamus was shortly filed.

Appellant relies on the provisions of the Arkansas Administrative Procedure Act which he asserts affords him a right to a formal and evidentiary public hearing before the State Board. The cited Act is found in Ark. Stat. Ann. §§ 5-701-714 (Supp. 1969). It has two purposes, (1) to require certain designated State agencies to adopt and publish procedural rules, including methods whereby the public can make submissions or requests; and (2) to afford adjudication rights in matters over which the agencies have jurisdiction. “Adjudication” is defined as “agency process for the formulation of an order.”

Authority for the procedure followed by appellant is recited in Ark. Stat. Ann. § 5-707, which is a part of our administrative procedure act:

Agency failing to act. — Suit in court. — In any case of rule making or adjudication, if an agency shall unlawfully, unreasonably, or capriciously fail, refuse, or delay to act, any person who considers himself injured in his person, business, or property by such failure, refusal, or delay may bring suit in the Chancery Court of any county in which he resides or does business, or in the Chancery Court of Pulaski County, for an order commanding the agency to act.

Appellees demurred to the jurisdiction of the chancery court over the subject matter of the action, the subject of course being whether a writ of mandamus should issue. The demurrer was overruled. On appeal, appellees cite as authority for their contention of lack of jurisdiction our recent case of Nethercutt and Payne v. Pulaski County Special School District, 248 Ark. 143, 450 S. W. 2d 777. It was there held that Ark. Stat. Ann. § 33-101 (Repl. 1962) was unconstitutional insofar as it purported to vest in chancery courts the power to hear and determine a petition for writ of mandamus.

The portion of § 5-707 which authorizes the chancery court to entertain a petition for writ of mandamus must fall for the reasons stated in Nethercutt and Payne. The designation of the forum is clearly severable from the other provisions of the section and therefore the remainder of the section is not affected by our holding.

Had the trial court sustained the demurrer it would have then been appropriate to have transferred the case to law. That is because appellant responded to the demurrer by conceding its apparent merit and specifically praying that the cause be so transferred.

Appellees argue here, as they did below, that appellant did not possess the legal capacity to sue. We hold that the broad provisions of § 5-707 give him the right to bring the süit. It provides that any person might bring suit to compel action if he “considers himself injured in his person, business, or property” by the failure or delay of the agency to act on his complaint. According to his petition and supporting affidavits, appellant was a taxpayer, resident, and patron of Gosnell School District; the school superintendent was exacting an illegal requirement that teachers responsible for average daily attendance records falsify those reports; and the refusal of appellant to cooperate had resulted in the loss of his position. We of course make no finding as to the truth of the allegations; however, assuming their truth for the purposes of the demurrer, such a practice could jeopardize the careers of the faculty, imprint a black mark on the community and the school system, and result in misappropriation of school funds. (Average daily attendance is related to both federal and state aid.) Additionally, appellant had been injured in his vested right to follow his profession, allegedly because he failed to follow the illegal practice. Because of the reasonable possibilities we have enumerated we think any citizen, taxpayer, and patron would rightfully deem it to his best interest, as well as to the community collectively, that the practice be exposed in order to avert the inevitable.

The cause is remanded with direction that the motion to transfer to law be granted.

Fogleman, J., dissents in part.

John A. Fogleman, Justice,

dissenting. I must dissent to that part of the court’s decision holding that appellant has standing to pursue the particular remedy he seeks, because the remand of the case depends on this factor.

In order to see this matter in proper perspective, it must be kept in mind that petitioner seeks to require the State Board of Education to revoke J. W. Rea’s teacher’s certificate. This is the only relief he is seeking. In this proceeding he does not seek damages for wrongful discharge or a hearing to reverse that action, if indeed he could. However desirable it may be that Rea’s guilt or innocence of the reprehensible conduct with which he is charged be determined, I simply do not see how it can be said that Harber is injured in his person, business, or property by the board’s failure to act in the premises. Furthermore, I do not see how Harber can get any relief if Rea’s certificate is revoked, except for any satisfaction that he might feel from vengeance or from seeing right triumph. In passing, I would add that I do not see how Harber has established standing to assert an illegal exaction because of the failure of the board to conduct a hearing to determine whether Rea’s teaching license be revoked. No tax funds are being illegally used or applied until such time as it has been determined that he is not qualified to hold his position. Until then he is holding it legally.


author: John A. Fogleman, Justice.

text:
    R. S. MISKIMINS v. THE CITY NATIONAL BANK of Fort Smith, Arkansas
    5-5011
    456 S. W. 2d 673
    Opinion delivered June 29, 1970

      Bethell, Stocks, Callaway ir King, for appellant.

      Thomas Harper and Don A. Smith, for appellee.
   John A. Fogleman, Justice.

The summary judgment appealed from in this case was rendered in a suit by appellee against appellant seeking a declaration of appellee’s rights and appellant’s liability for a $9,000 balance remaining unpaid on a $25,000 loan. Appellant borrowed the money to pay for stock in Investors Thrift Corporation (hereinafter referred to as ITC), and used it for that purpose. The proceeds of the sale of .stock by ITC were to be used in the purchase of stock of American Home Builders, Inc., (hereinafter called AHB), which in turn owned the controlling stock in Peoples Loan and Investment Company (hereinafter called PLI) and other corporations. Appellant pledged 100,000 shares of the capital stock of ITC as sole security for the loan. It was made on October 29, 1965, and was payable in installments of $5,000 in June 1966, $10,000 in June 1967 and $10,000 in June 1968. Appellant filed an answer and counterclaim alleging that a vice-president of appellee had worked out a fraudulent scheme whereby appellant, with others, would purchase the stock of AHB, one-third of which was owned by the vice-president, with funds borrowed from appellee. He alleged that appellee knew, or should have known, that it was participating in a scheme whereby appellant would purchase stock in an insolvent corporation.

Appellant filed a motion for leave to file a cross complaint against additional cross defendants. There is nothing in the transcript before us to indicate that the court ever granted permission to appellant to file this pleading. In the transcript there appears a pleading which is unsigned but bears an endorsement of the clerk of the trial court indicating that it had been filed.

After appellee filed its motion for summary judgment, its attorney wrote the circuit judge with reference to the appellant’s motion saying:

A review of this file indicates there is pending a motion by defendant for leave to file a cross complaint which defendant’s counsel states “could better be styled cross complaint and amended counterclaim.”

We are compelled to reject the contention by appellee that this pleading was not before the court for consideration on the motion for summary judgment. While appellee is correct in its statement that the record fails to show that the trial court ever ruled on the motion for leave to file the cross complaint, the pleading, as to appellee, did constitute, in effect, an amended counterclaim and appellee’s supplemental motion for summary judgment incorporated “the cross complaint or amended counterclaim filed herein by defendant with motion for leave to file same.” The judgment of the trial' court refers to appellee’s motion as one “for a summary judgment granting the relief prayed in plaintiff’s complaint and dismissing defendant’s amended counterclaim against the plaintiff.” Incorporated in this judgment is a finding that appellee’s motion for summary judgment granting the relief prayed in its complaint and “dismissing defendant’s counterclaim, as amended, should be granted.” There is a further finding that appellee was entitled to the relief prayed in its complaint and to a dismissal of the defendant’s counterclaim, as amended. It was adjudged that appellant should “take nothing on his counterclaim.”

In this amended counterclaim, Miskimins alleged that the bank, through its officers and agents, represented to him or his representative that the net worth of AHB, exclusive of the value of PLI stock owned by a subsidiary, was at least $540,000, that PLI had the capacity to buy all mortgages that AHB could produce, that controlling interest in PLI was worth an additional $1,000,000, that AHB was producing a net profit of at least $1,500 per house sold, that AHB and its subsidiaries were producing and selling 350 houses per year at a net profit of $525,000 per year, and that both PLI and AHB with its subsidiary corporations were highly profitable, financially sound, going businesses. He asserted that he obtained the loans involved, in reliance upon these representations, in order to make an additional investment in ITC. He alleged that he had invested $107,625 of a total of approximately $947,300 of capital for the purchase of stock of AHB by ITC and had authorized Markham to enter into a contract to purchase such stock. Miskimins further alleged that he came to Fort Smith to obtain loans for additional investment in ITC, in order to enable that corporation to make deferred payments on the contract of purchase as they became due, a part of which were for the purpose of retiring indebtedness of AHB, partially guaranteed by Hall. According to this pleading,. Miskimins applied to appellee for the loan because he had been advised by Markham that this bank would readily make the loan. Miskimins charged that the bank represented to him that the purchase being made was a good investment, although it knew or should have known that the purchaser of the stock had been provided with false or misleading information, in order to insure continuity of business with PLI and AHB. He further alleged that appellee aided and abetted Sexton, Hall, Smith and Gatlin in employing a manipulative scheme and artifice to defraud him in violation of Rule 10b-5 promulgated by the Securities and Exchange Commission.

The transcript in this case consists of some 600 pages, and the briefs contain a total of 315 pages. For the purposes of this opinion, we will view the supporting and controverting affidavits, depositions and admissions in the light most favorable to appellant, as it is our duty to do.

' The series of complicated transactions leading up to the loan made by the appellee to appellant commenced some time in 1965. One Maurice W. Markham, Jr., who had practiced as a veterinarian in Platte, South Dakota, had established a concern called Markham Homes, Inc., which was engaged in building shell homes in the northeast Oklahoma area. When the capital of this corporation became tied up in shell home financing, its mortgages were sold to savings and loan associations in areas in which the homes were built. Markham discontinued his veterinary practice and moved to Pryor, Oklahoma, where the corporation opened a lumber yard and continued building houses. A search for outlets for mortgages on shell homes revealed information about Peoples Loan and Investment Company of Fort Smith, which had bought numerous mortgages from AHB, a concern which was also in the shell home business. AHB was owned by Jim Hall, Executive Vice-President of appellee, Huie Smith and Sam Sexton, Jr., each owning one-third of the outstanding capital stock. Markham then contacted one Austin Gatlin of Mountainburg, who had formed PLI. Gatlin informed him that he had sold PLI to AHB and had subsequently established Arkansas Loan and Thrift Corporation in Van Burén. Gatlin advised the formation of an institution identical with Arkansas Loan and Thrift Corporation for the financing of shell homes. Markham then employed Gatlin to set up such a corporation and to render advisory services to it for a period of one year. Gatlin indicated that he was in contact with numerous investors who would buy stock in such a corporation. It was contemplated that certain investors in South Dakota would also take stock and Gatlin agreed with Markham to go there to talk with them.

The first meeting of the incorporators of Investors Thrift Corporation was held at the Diamond G Ranch, owned by Gatlin and his wife, at Mountainburg, Arkansas, on August 10, 1965. Appellant was represented at this meeting by his proxy, Markham. His subscription was shown to be for 100,000 shares of class A stock. Markham and Gatlin were two of the three directors elected. While Gatlin was transacting business in the PLI offices on some date after his employment by Markham, Sexton asked Gatlin if he thought Markham would be interested in buying AHB. Gatlin promised to determine whether Markham was interested. After a trip to South Dakota, Markham expressed interest but did not want to buy AHB without also acquiring the control of PLI. On September 9, 1965, Hall, Smith and Sexton granted an option to ITC and Markham to purchase all of the shares of stock of AHB. Sexton had offered Gatlin $50,000 to sell AHB. Gadin said that he advised Markham of that fact. Sexton had written a letter to Gatlin, dated August 3, 1965, regarding the condition of AHB, which was delivered to Markham.

The agreement for sale required the payment of $150,000 in cash for an option to purchase and $157, 500 on or before January 10, 1966, if the option was exercised. It also required the payment of $300,000 to Texas Capital Corporation by the same date and an additional $400,000 (or such lesser sum as might be due from AHB) before June 30, 1966. ITC was granted full access to the books and records of AHB, PLI and all subsidiaries under the agreement. The cash payment was to be forfeited as consideration for the contract if the option was not exercised.

Markham became general manager of AHB, at least nominally, on the date of the contract. Sexton and Gatlin managed PLI, at least until the option was exercised on November 2, 1965. It appears that Sexton did not actually leave until November 8. Thereafter, the management was vested in Markham and Gadin, with the latter serving as a consultant until February 6, Í966, according to his agreement.

Soon after the contract was entered into, Markham discovered that the requirements made by Texas Capital were in excess of those set out in the option. These requirements were finally set out in a letter of November 1. Texas Capital, to whom the corporation stock to be transferred was pledged, expected that at least $400,000 be paid promptly, and at least $150,000 by January 1, 1966, and an additional $115,583.27 by June 30, 1966, with interest to be added.

Both Gatlin and Smith began to urge Markham to close the deal quickly to remove Sexton from the management of PLI. Gatlin insisted that if they waited until January 10, Sexton would substantially impair the value of PLI. Smith advised the purchasers that he would invest $45,000 of the $50,000 he was to receive in ITC stock if Sexton were out of the business. As a result, Markham urged his principals to expedite the matter. The option was exercised November 2, and the balance required was paid to the sellers on November 5, when $400,000 was also paid to Texas Capital. The purchasers paid the full balancé to that corporation by January 10, 1966.

It was necessary that Miskimins and his associates borrow money in order to make the cash payments required. Miskimins stated that the loans involved in this litigation were obtained in order to acquire the funds that he used to purchase ITC stock, and thus provide his contribution to the amount of capital required to consummate the purchase. Hall had advised Smoot, the president, and Greathouse, another officer of appellee, that these purchasers would probably ask for loans in connection with the transaction. All transactions of appellant and his associates with the bank were handled by officers other than Hall, its vice-president. Hall had advised Smoot that he had a personal interest in the sale. Smoot, Greathouse, Hall ánd six others constituted appellee’s discount committee. The loans to appellant were made by Smoot and approved by this committee.

Sexton stated that he understood that PLI had the largest single deposit in City National Bank. Appellee extended credit from time to time in order that cash reserve requirements of PLI be maintained. According to Sexton, both AHB and PLI regularly furnished their financial statements to the bank and used them as a credit reference.

Miskimins and his associates came to Fort Smith on October 29, 1965, to borrow money so that they could buy enough additional stock in ITC to enable it to exercise the purchase option. They went to the bank and met Hall and Smoot in the coffee shop there. An informal discussion of their desire for a loan and the purposes thereof ensued. Although Smoot denied that he was aware that the borrowed funds were to be used to purchase stocks from Hall or to relieve Hall of any obligation, he admitted that he had conversations with appellant and- the other borrowers with reference to the loans and that he understood from Miskimins that the loan was to purchase stock in ITC. He also admitted that Hall had advised him and other officers of the bank that he would not participate in matters pertaining to these loans because of his personal interest. Smoot also stated, in answer to interrogatories, that he considered the financial condition of PLI to be good and that the financial condition of AHB was good, as far as he knew. A finding that Smoot knew that the purposes of the loan were to enable ITC to complete the purchase of PLI and AHB would be justified.

Appellant’s affidavit relates his version of the discussion, as follows:

* * * There a general discussion of the proposed purchase, of American Home Builders, Inc., with its control of Peoples Loan and Investment Company and related organizations took place. The financial soundness of both American Home Builders, Inc., and Peoples Loan and Investment Company was discussed, as well as the profitability of the businesses. We were assured by Mr. Hall in the presence of Mr. Smoot that both businesses were financially sound and highly profitable going businesses and we were encouraged by both Mr. Hall and Mr. Smoot to proceed with the investment. Mr. Smoot definitely knew of Mr. Hall’s stock ownership in American Home Builders, Inc., and was completely aware of the fact that the funds which I and the other South Dakota investors were borrowing from The City National Bank were to be used by Investors Thrift Corporation to purchase American Home Builders, Inc. stock, with its related corporations.

The same statement was contained in the affidavit of five of Miskimins’ associates in ITC.

Sexton stated that, to the best of his knowledge and belief, Markham, as general manager of AHB, had possession of its books and records at all times after September 9, 1965. He said that on September 2, when the first draft of a contract was presented, PLI was being audited by the Arthur Anderson Company. He revealed that no changes in the books or accounts of the company were made when this audit was completed. Sexton knew that Markham did not inspect the books of the companies, but said that Markham had one Jimmy Willis examine the books at AHB and had his sister look at the books of PLI at one time or another.

In a deposition, Gatlin testified that the basic asset of PLI was about $6,000,000 in loans and mortgages which he said could not have been evaluated in a short period of time. He said that he was unable to evaluate these loans during the time he remained at PLI. In early September, Markham had a certified public accountant máke a preliminary survey of PLI on behalf of Markham Homes. This accountant advised that, with the personnel available to his company, at least six months would be required for it to complete an audit. He estimated that a minimum of three months would be required fdr such an audit, regardless of the number of persons wfyo could be employed.

Various errors in the assets and liabilities accounts of AHB and PLI began to appear in early 1966. About July 1, 1966, Ronnie Butler, a public accountant having five years’ experience with a national firm of certified public accountants was employed by AHB to make an audit. On September 1, 1966, he moved to PLI and devoted his time to an audit there. He continued to find errors in the liabilities and repossession accounts of AHB through 1967. His audit was completed in October of that year. It disclosed that there was no substantial change in the net worth of PLI between January 30, 1965, and September 30, 1965. He found AHB to have a net- deficit of $537,253.18' on September 30, 1965. The PLI deficit was $31,152.41 on June 30, 1965. According to Markham, the full nature and extent of the misrepresentations made about these corporations were not known to him or those he represented until the fall of 1967. As irregularities continued to appear, a meeting, of the • stockholders of ITC was held in South Dakota, where most of them resided, in May 1967. Thereafter- the accounting firm of Fred Landau of Chicago was employed and an audit completed in the fall of 1967. Markham stated that it took almost two years to unravel' the complicated, false and misleading transactions involved.

The allegation of appellant that AHB and PLI were insolvent at the time he obtained the loans involved is not controverted.

Appellant hinges his argument for reversal upon the existence of a genuine issue of material fact as to his right to relief for legal or constructive fraud and for violation of SEC Rule 10b-5. We shall first discuss the cause of action for legal or constructive fraud. We feel that no discussion of any possible cause of action for actual fraud is warranted. In the first place, we find no support for such a cause and, in the second place, appellant seems to have abandoned this basis for relief.

We have clearly recognized long ago that there may be a cause of action for legal, or constructive fraud, even though there is a complete absence of any moral wrong or evil intention. Stewart v. Clark, 195 Ark. 943, 115 S. W. 2d 887. This type of fraud is based upon a breach of a legal or equitable duty which the law declares to be fraudulent because of its tendency to deceive others, regardless of the moral guilt, purpose or intent of the fraud feasor. Lane v. Rachel, 239 Ark. 400, 389 S. W. 2d 621; Levinson v. Treadway, 190 Ark. 201, 78 S. W. 2d 59; Bridges v. United Savings Association, 246 Ark. 221, 438 S. W. 2d 303. Representations are considered to be fraudulent when made by one who either knows them to be false, or, not knowing, asserts them to be true. Fausett & Co. v. Bullard, 217 Ark. 176, 229 S. W. 2d 490; Maurice v. Chaffin, 219 Ark. 273, 241 S. W. 2d 257. It may involve a mere mistake of fact. Kersh Lake Drainage District v. Johnson, 203 Ark. 315, 157 S. W. 2d 39.

Of course, the burden of demonstrating that there is no justiciable fact issue rests, in the first instance, upon the party moving for summary judgment. Evers v. Guaranty Investment Co., 244 Ark. 925, 428 S. W. 2d 68; Widmer v. Ford Tractor Co., 244 Ark. 696, 426 S. W. 2d 806; United Press International, Inc. v. Heinreich, 241 Ark. 36, 406 S. W. 2d 317. Doubts must be resolved against the motion. Bull v. Manning, 245 Ark. 552, 433 S. W. 2d 145; Bergetz v. Repka, 244 Ark. 60, 424 S. W. 2d 367; Griffin v. Monsanto Co. 240 Ark. 420, 400 S. W. 2d 492. Yet, when the movant makes a prima facie showing of entitlement to the relief sought, the respondent must remove the shielding cloak of formal allegations and demonstrate a genuine issue as to a material fact. Mid-South Ins. Co. v. First National Bank of Fort Smith, 241 Ark. 935, 410 S. W. 2d 873; Deam v. O. L. Puryear & Sons, Inc., 244 Ark. 18, 423 S. W. 2d 554. In order to do this, opposing affidavits must set forth facts which would be admissible in evidence. The response and supporting material must set forth specific facts showing that there is a genuine issue for trial. Ark. Stat. Ann. § 29-211(e) (Supp. 1969). The affidavit is not sufficient if it states only conclusions. The appropriate rule is stated at 49 C. J. S. 414, Judgments § 225 (1947), as follows:

The statements made, whether adduced in support of, or in opposition to, the motion for summary judgment, must be statements of fact, and not mere conclusions, opinions, or beliefs. # # * The affidavits should set forth evidentiary and not ultimate facts, and should set forth the facts with particularity, mere general averments being insufficient. However, the affidavit need not be composed wholly of strictly evidentiary facts, and an affiant is not required to aver as a fact that which is not a fact, but an opinion.

For some of the cases supporting this rule, see Salitan v. Tinkham, 103 N. H. 100, 166 A. 2d 115 (1960); Wanous v. Balaco, 412 Ill. 545, 107 N. E. 2d 791 (1952); Gherardi v. Board of Education of the City of Trenton, 53 N. J. Super. 349, 147 A. 2d 535 (1958); Bennett v. Kazvini, 120 N. Y. S. 2d 229 (1952); Humboldt Livestock Auction Co., Inc. v. B & H Cattle Co., 261 Iowa’419, 155 N. W. 2d 478 (1967); Engelhard Industries, Inc. v. Research Instrumental Corp., 324 F. 2d 347 (1963), cert. denied, 377 U. S. 923, 84 S. Ct. 1220, 12 L. Ed. 2d 215 (1964).

Appellant cannot rely upon the statements and representations of Hall, because the bank cannot be charged with them, or with his knowledge, because of his known individual interest in the transaction, and the absence of any indication that he was the sole manager or the dominating influence in its affairs. Futrall v. McKennon, 187 Ark. 374, 59 S. W. 2d 1035; Greer v. Levee District No. 3 of Conway County, 140 Ark. 60, 215 S. W. 171; Bank of Hartford v. McDonald, 107 Ark. 232, 154 S. W. 512. See also 10 Am. Jur. 2d 153 and 155, Banks, §§ 163 and 167. Therefore, appellant can only demonstrate that there was a genuine fact issue, insofar as he is concerned, from the affidavits concerning the “coffee shop” conference.

When we consider the Miskimins affidavit in this light, we are unable to say that he demonstrated a genuine fact issue as to legal or constructive fraud by setting forth specific facts which would be admissible in evidence. The only statement of Miskimins relating to Smoot is that “* * * we were encouraged by both Mr. Hall and Mr. Smoot to proceed with the investment.”

The generality of this statement is such that it cannot be classified as the statement of a specific fact or as admissible in evidence. In reaching this conclusion, we find nothing in the affidavit which would indicate that Smoot had, at the most, stated anything more than the expression of opinion. Such a statement cannot furnish the basis of a cause of action for legal or constructive fraud. Cannaday v. Cossey, 228 Ark. 1119, 312 S. W. 2d 442. Thus, the opposing affidavit cannot be said to indicate that there was any representation made by Smoot. It must be recalled that no audit or financial statement, which had been furnished to the bank, had disclosed any of the irregularities later discovered.

We consider appellant’s argument that he is entitled to relief under Rule 1 Ob-5, Title 17, § 240.1Ob-5, page 334, Code of Federal Regulations, to be without merit, for want of standing to assert a cause of action thereunder. City National Bank of Fort Smith v. Vanderboom, 290 F. Supp. 592 (W. D. Ark. 1968), aff’d, 422 F. 2d 221 (8th Cir. 1970).

The judgment is affirmed.

      It seems to have been contemplated that only $50,000 in cash was to be paid. The balance was in the form of stock which was to go to Gatlin and Markham for commissions or “bonuses.”

      We note that it was found in a companion case that there was no proof that Smoot made any representations as to the financial condition of AHB and PLI. See City National Bank of Fort Smith v. Vanderboom, 290 F. Supp. 592, (W. D. Ark. 1968), aff’d, 422 F. 2d 221 (8th Cir. 1970)


text:
    ARKANSAS STATE HIGHWAY COMM’N v. Arville STALLINGS et ux
    5-5176
    455 S. W. 2d 874
    Opinion delivered June 29, 1970

      Thomas Keys and James Dowell, for appellant.

      Wayland Parker, for appellees.
   John A. Fogleman, Justice.

Appellant mounts a three-pronged attack upon a jury award of $6,800 compensation to appellees for the fee simple taking of 19.37 acres from a 118-acre tract for the relocation of United States Highway No. 71 as a controlled-access facility. Appellant contends, first, that the court erroneously refused to strike the testimony of Arville Stallings and of appellees’ value expert Glenn West; second, that the trial court erred in failing to quash the jury panel; and, third, that there is no substantial evidentiary support for the verdict. We have resolved the second point adversely to appellant in Arkansas State Highway Commission v. Sadler, 248 Ark. 887, 454 S. W. 2d 325.

The third ground and the first are intertwined and interdependent, being hinged upon the question whether the testimony of the witnesses is substantial. We find the testimony of the landowner to be vulnerable to appellant’s assault. Appellant moved that his value testimony be stricken as being without substantial basis. There is no question about Arville Stallings having sufficient familiarity with the land to qualify him to express his opinion as to the value of the lands taken, as well as the value of the whole tract before the taking and the value of the tracts remaining after severance of the whole by the right-of-way. When examined as to the value of the 118-acre tract as it existed immediately before the taking, he responded that if he were to put a price on it, he’d want $20,000. He responded affirmatively to leading questions as to whether he thought this price was the fair market value and his belief that the land "would go” for that price. Yet when asked about the value of the lands taken, he again said that if he were to put a price on it, $250 per acre would be a bare minimum, or that he would average the value at this figure. He interjected a reminder that he did not have the land for sale. He arrived at his $7,500 valuation of the remaining lands by stating that there was enough damage to the land by reason of the taking to leave only this value. Even if it be said that Stallings’ measure of values was not a statement of the value of the lands to him, the price fixed by a reluctant, not a willing, seller hardly meets the test for evidence of market value.

Just compensation in partial taking cases is measured by the difference between the market value of the whole tract at the time of the taking and the market value of the remaining lands, or the market value of the lands taken plus the net damage to the remaining land. Young v. Arkansas State Highway Commission, 242 Ark. 812, 415 S. W. 2d 575; Arkansas State Highway Commission v. McAlister, 247 Ark., 757 447 S. W. 2d 649. Market value is the price which could be agreed upon at a voluntary sale by an owner willing to sell and a purchaser willing to buy. Desha v. Independence Bridge District No. 1, 176 Ark. 253, 3 S. W. 2d 969. Stallings’ testimony cannot be taken as evidence tending to prove the measure of compensation. We have heretofore held that value testimony of a landowner based upon an improper standard is not substantial evidence. Arkansas State Highway Commission v. Perryman, 246 Ark. 120, 444 S. W. 2d 564; Arkansas State Highway Commission v. Darr, 248 Ark. 730, 437 S. W. 2d 463.

We cannot say that failure to strike Stallings’ value testimony was error, however. Appellant did not move to strike it or make any other objection to it until appellees had presented the testimony of Glenn West, an expert value witness called by appellees, and had rested. We have not had this exact situation presented previously. We have held that granting a motion to strike all of a witness’ testimony, a part of which was competent, made after other witnesses have testified is error. Johnston v. Ashley, 7 Ark. 470; Phelan v. Bonham, 9 Ark. 389. We have also held that objections to evidence were waived when first raised in questioning the sufficiency of the evidence to support a jury verdict (Sandusky v. Warren, 177 Ark. 271, 6 S. W. 2d 15), and that an objection made after the trial court has commenced instructing the jury comes too late. Beene v. Youngblood, 247 Ark. 667, 447 S. W. 2d 62. We have also held that excluding inadmissible portions of testimony from a jury’s consideration, when objection thereto was first raised upon a motion for a directed verdict made after both parties had rested, was not error. American Workmen v. Ledden, 196 Ark. 902, 120 S. W. 2d 346. -

It is generally held that objections to evidence müst be seasonably made, in the absence of good cause for the objector not doing so and prejudice to the proponent. Solomon v. Dabrowski, 295 Mass. 358, 3 N. E. 2d 744, 106 A. L. R. 464 (1956); Schaffer v. Dorsey, 70 Ill. App. 2d 390, 217 N. E. 2d 19 (1966); Traders and General Insurance Co. v. Wright, 95 S. W. 2d 753, 766 (Tex. Civ. App. 1956); Ball, Objections to Evidence, 15 Ark. L. Rev. 69, 70 (1960-61). The same authorities demonstrate that inexcusable delay in making a motion to strike objectionable testimony may be grounds for denial of the motion and that a court may properly overrule such a motion made after a witness has been excused from the stand, or discharged from attendance at the trial or after other witnesses have testified or after the proponent’s case, has been concluded. It may well be that the proponent would be severely prejudiced by a delay in making a motion to strike or that the trial judge should not be expected to put the testimony to which belated objection is made in proper perspective to make a correct ruling after other witnesses have testified, particularly where a close question is involved and the exact words of a witness may be the determining factor. The trial judge is in a much better position than an appellate court to judge whether such a motion is timely under the circumstances existing when it is made. He should only be held to the exercise of a sound judicial discretion under the circumstances existing here. We cannot say that denial of the motion of appellant was an abuse of discretion so we find no error on this point.

On the other hand, appellant did not demonstrate that there was no reasonable basis for the testimony of Glenn West, appellees’ only other witness. He was not only a real estate broker and salesman, operating within a radius of 50 to 75 miles of Greenwood, he had actually bought and sold lands in the area himself. Appellant argues that there is not a reasonable basis for West’s valuation of the 118 acres before the taking, because he “averaged out” the value at $150 per acre. This approach is not fatal, at least in this instance, where West stated that he valued the woodlands on the tract at $100 per acre and the open lands at $200 per acre and that each such type of land constituted about one-half of the entire tract.

Appellant says that West’s reference to the only sale he considered comparable furnished no basis for his valuation of the tract and assessment of the damage to it. The sales referred to by West were his purchase of a 180-acre tract at $55 per acre on February 4, 1966, pursuant to a contract dated in June, 1965, and his sale of 120 acres of that tract for $125 per acre on August 1, 1966, some two years before the taking. In comparing the land he had bought and sold himself, West located it as being about four miles southeast of the Stallings property which was two miles via a county road from downtown Greenwood. He described that land as being rugged terrain bisected by a valley, just as he had characterized appellees’ land. He said that he had sold the worst part and kept the best part, which was pastureland. He pointed out that his tract had some county road frontage, somewhat similar to that on the Stallings property. He also mentioned that the lands he purchased and sold were grown up and unimproved. We cannot say as a matter of law that these sales were not comparable.

The major part of the remainder of appellant’s argument is based upon the assertion that there is no reasonable basis for West’s assessment of a $75 per acre decrease in value of the 23.43-acre tract left west of the right-of-way and a $50 per acre diminution in value of the 75.2-acre residual east of the highway. There was no error in the denial of appellant’s motion to strike West’s testimony because the motion asked that all his value testimony be stricken and not just this part. Even if it is appropriate that the testimony of a witness as to “after” values be stricken, testimony as to “before” values is not thereby rendered inadmissible. Young v. Arkansas State Highway Commission, 242 Ark. 812, 415 S. W. 2d 575; Arkansas State Highway Commission v. Russell, 240 Ark. 21, 398 S. W. 2d 201. See also, Arkansas State Highway Commission v. Wilmans, 236 Ark. 945, 370 S. W. 2d 802.

We also find West’s testimony to be substantial on this point, however, along with his testimony relating to the value of the land taken. This witness classified the property as a “combination ranch” — for hogs, goats and cows — from the standpoint of highest and best use. He stated that at the time of the taking appellee could have run about 15 head of cattle on the land. Where there had been easy communication between most parts of the tract by means of a county road, the only connection between the two tracts after the taking was a culvert in a creek bed, far from the road. West granted that a cow might drift through this culvert, but doubted that cows could be driven through it. He said that if part of them did go through then the herd would be split. He thought that a rancher would have to haul his cattle back and forth between the tracts. Not only did he consider the severance of the two tracts, he pointed out the odd, irregular shape of part of the remainder. West also considered the extreme cuts and fills through the property necessitated for highway construction as having some bearing on the value of the remaining tracts.

West said that the 19.37 acres taken was the best land in the whole tract, insofar as grassland was concerned, with the major part of that land having been in a valley through which the right-of-way passes. He said that one acre of the lands taken lying on the south side of the county road through the tract was suitable for a homesite valued at $1,000. Even though the major part of the remaining 18.37 acres was the best land, he only considered it as having a value of $150 per acre in arriving at his total valuation of $3,755.50 for the lands taken. In valuing the lands taken, he probably took into consideration his estimate that there were six or seven acres of woodland in the tract taken.

We find West’s testimony to be substantial and to support the jury verdict.

The judgment is affirmed.


text:
    Robert H. BOOTH et al v. Larry R. McCORD, Trustee of Peoples Loan & Investment Co.
    5-5303
    455 S. W. 2d 868
    Opinion delivered June 29, 1970

      Walter Niblock, Truman Smith & Bob Mayes, for appellants.

      Ball & Gallman, for appellee.
   John A. Fogleman, Justice.

This is an appeal from a summary judgment quieting the title of Larry R. McCord, as Trustee of Peoples Loan & Investment Company, to certain lands in Washington County against appellants. Appellee cross-appealed from that part of the decree awarding judgment against appellee in favor of appellants B. B. and Lydia Booth for $828.50, the amount paid to the Commissioner of State Lands for deeds to the lands involved, after their forfeiture for nonpayment of the taxes for the year 1964. Appellee claimed title by virtue of a deed dated November 19, 1968, executed by a Commissioner of the Chancery Court of Washington County in an action brought by Peoples Loan & Investment Company in March 1966 to foreclose a mortgage conveying the lands to secure a loan made by the loan company to B. B. and Lydia Booth, then owners of the property. See Peoples Loan & Investment Company v. Booth, 245 Ark. 146, 431 S. W. 2d 472.

During the pendency of the action, the Clerk of Washington County certified the lands to the state land commissioner as forfeited. On May 9, 1968, appellants Robert H., Jeanette, Arnold D. and Mary Booth, the sons and daughters-in-law of B. B. and Lydia Booth, obtained deeds from the Commissioner of State Lands conveying the lands involved. These deeds were obtained prior to the foreclosure decree, which was entered on October 15, 1968.

Appellee’s suit to quiet title was filed on November 22, 1968, seeking cancellation of the deeds from the Commissioner of State Lands as clouds on its title, quieting of its title and recovery of $5,000 damages for slander of title. Affidavit for warning order, stating that appellants were nonresidents of Arkansas, was filed on the same date. Warning order was issued on that date and duly published on November 27, December 4, 11 and 18, 1968. An attorney ad litem was appointed.

Appellee filed a request for admissions on December 4, 1968, which was mailed to appellants at their respective out-of-state addresses. No answer to these requests was filed within the indicated 10-day period for response.

On February 11, 1969, appellee filed its motion for summary judgment, relying upon the failure of appellants to respond to the request for admissions, and the affidavit of County Clerk Ruth E. Roberts. The clerk’s affidavit stated: that the county collector filed the list of lands delinquent for nonpayment of taxes for the year 1964, on October 25, 1965, including the lands involved here; that notice of sale filed indicated that the date of sale was November 12, 1965; that certificate of publication filed January 10, 1966, disclosed that the notice was published November 19 and 26, 1965; that no sale was conducted and the certificate of sale was filed unexecuted; that the clerk’s certificate, indicating that the lands were erroneously returned delinquent, forfeited and certified to the land commissioner because the land was recorded under an incorrect section number, was filed May 7, 1968. The motion was also accompanied by an affidavit of the vice-president of appellee setting out the manner of acquisition of title by appellee.

On February 24, 1969, appellants filed a response to the motion for summary judgment in which they stated that there were genuine fact issúes and that appellee was not entitled to judgment as a matter of law. Appellants filed no opposing affidavits.

The court’s decree contained findings that the tax forfeiture was void, for the following reasons: the delinquent list was not filed with the county clerk by October 18, 1965, as required by Ark. Stat. Ann. § 84-1101 (Repl. 1960); the delinquent list was not published between October 18 and November 8, 1965, as required by Ark. Stat. Ann. § 84-1103 (Repl. 1960); the delinquent lands were never offered for sale by the collector as required by Ark. Stat. Ann. § 84-1105 (Repl. 1960, now Supp. 1969); and the lands in Sections 10 and 11, T 13 N, R 32 W, were listed as being in Section 2. The court held the deeds issued by the Commissioner of State Lands void, quieted and confirmed title in appellee and awarded B. B. and Lydia Booth judgment for the amount of money paid to the land commissioner for the deeds.

Appellants assert that it was error for the chancery court to give consideration to the unanswered request for admissions, and that it was error for the court to enter a decree on appellants’ motion for summary judgment. On cross-appeal appellee contends that the judgment in favor of appellants B. B. and Mary Booth was erroneously entered. Appellants respond that this judgment was properly rendered as a condition for the granting of relief to the owner against the holder of an invalid tax title.

Appellants’ argument that the decree was erroneously entered on the motion for summary judgment is that there is a clear and definite question of fact as to whether the sons and daughters-in-law acted as the agents for, or at the direction of, B. B. and Lydia Booth in acquiring the deed from the land commissioner. They also argue there is no evidence that the parents had any interest in the acquisition of title or that there was any scheme, conspiracy or fraudulent action among appellants to acquire title to the lands and defeat appellee’s title. We need not determine whether there was a question of fact on this point, because the uncontroverted affidavits in support of appellee’s motion for summary judgment clearly show that the tax forfeiture on which the tax deeds were based was invalid for the reasons stated in the decree. See Ramsey v. Long-Bell Lumber Co., 195 Ark. 528, 112 S. W. 2d 951; Berry v. Davidson, 199 Ark. 276, 133 S. W. 2d 442; Penrose v. Doherty, 70 Ark. 256, 67 S. W. 398, and cases cited in those opinions. Cases relied upon by appellants, such as Palmer v. Ozark Land Co., 74 Ark. 253, 85 S. W. 408, are not applicable. There was no decree confirming the tax sale here, as there was in Palmer.

It is well settled that, once a moving party establishes a prima facie case for relief by affidavits and other supporting documents, the adverse party must remove the shielding cloak of formal allegations in pleadings and demonstrate the existence of a genuine issue of material facts. Ark. Stat. Ann. § 29-211 (Supp. 1969); Mid-South Ins. Co. v. First National Bank of Fort Smith, 241 Ark. 935, 410 S. W. 2d 873; Deam v. O. L. Puryear & Sons, Inc., 244 Ark. 18, 423 S. W. 2d 554. Mere allegations in a response to the motion are not sufficient, unless supported by showing facts admissible in evidence or otherwise showing how the respondent will support his contentions that issues of fact exist. Ark. Stat. Ann. § 29-21 1(e)(Supp. 1969). See 3 Federal Practice & Procedure, Barron & Holtzoff (Wright) Rules Edition, 146, et seq., § 1235; Bruce Construction Corp. v. U. S., 242 F. 2d 873 (5th Cir. 1957); Engl v. Aetna Life Ins. Co., 139 F. 2d 469 (2nd Cir. 1943); McClellan v. Montana-Dakota Utilities Co., 104 F. Supp. 46 (D. C. Minn. 1952), aff’d, 204 F. 2d 166 (8th Cir. 1953), cert. denied, 346 U. S. 825, 74 S. Ct. 43, 98 L. Ed. 350 (1953).

Appellants also argue that the provisions of Ark. Stat. Ann. § 84-1313 (Repl. 1960) prevent the granting of summary judgment in this case. Even if it would otherwise have that effect, this statute does not apply when the tax deeds were made by the state land commissioner. Dill v. Snodgress, 213 Ark. 526, 211 S. W. 2d 440.

We are unable to say that appellee has relied on the weakness of appellants’ title rather than on the strength of its own title as appellants urge. The source of appellee’s title is not the subject of any controversy. Deraignment of title beyond a common source is not required. Coulter v. O’Kelly, 226 Ark. 836, 295 S. W. 2d 753. While one seeking to cancel a void tax deed must rely upon the strength of his own title, deraignment of a perfect title is not necessary under circumstances such as those existing here. Fine v. Bucha, 247 Ark. 1074, 449 S. W. 2d 406; Davis v. Stonecipher, 218 Ark. 962, 239 S. W. 2d 756. Appellants are not really in position to attack appellee’s title in view of their special appearance and the requirement of deraignment of title is not jurisdictional.

On cross-appeal, appellee argues that B. B. and Lydia Booth were not entitled to judgment for the amounts paid to obtain the tax deeds, because they were obligated to pay the taxes in the first instance. In this respect we agree with appellee. A similar situation was treated by this court in Adams v. Sims, 177 Ark. 652, 9 S. W. 2d 329. J. F. and I. T. Sims and their wives were mortgagors, and Adams was trustee for the mortgagees. Foreclosure decrees were rendered on April 9, 1925, and the mortgagees purchased the lands at a foreclosure sale on July 27, 1925. In 1926, the wives obtained tax deeds for the lands forfeited for nonpayment of 1923 special road improvement tax. We said:

Appellants contend that a duty rested upon the Messrs. Sims as owners and mortgagors to pay the taxes accruing against their respective homesteads after they, mortgaged them to appellants, and that they and their wives were estopped to subsequently purchase and acquire the tax titles based upon forfeitures for the nonpayment of special improvement road tax for the year 1923, except as a redemption thereof from the forfeiture and sale. The special road improvement taxes accrued after the mortgages were executed by the Messrs. Sims and their wives to appellants, and forfeitures for the nonpayment thereof occurred prior to the foreclosure of same. It was clearly the duty of the Messrs. Sims to pay the road improvement taxes when same became due, and, failing to do so, it was their duty to redeem the lands from the sales. This court is committed to the doctrine that the mortgagor must pay the taxes upon the mortgaged property, and that for this reason he cannot allow said property to be sold for the nonpayment thereof and acquire title by purchase at the sale antagonistic to that of his mortgagee. His purchase at such a sale must be regarded and treated as a redemption of the mortgaged property from the forfeiture and tax sale. Drake v. Sherburne, 57 Ark. 563, 22 S. W. 430; Randolph v. Nichol, 74 Ark. 93, 84 S. W. 1037; Wade v. Goza, 99 Ark. 543, 139 S. W. 639. We do not think the foreclosure of a mortgage in the interim between the accrual of taxes and sale under the forfeiture should change the rule. If the foreclosure of the mortgage in the interim reversed the rule, a mortgagor would reap a benefit from his own wrong and neglect in failing to pay the taxes. It is true that a foreclosure decree and sale of mortgage lands extinguishes the relationship of mortgagor and mortgagee, but the cessation of such a relationship certainly cannot place the mortgagor in a position to take advantage of his own neglect and failure to pay taxes which were levied and which became payable before the mortgage foreclosure and sale of the mortgage property. It would be otherwise in tax sales for taxes which became payable after the mortgage foreclosure.

If appellee had paid the taxes, which were due long before the foreclosure, the payment would have become a part of the debt secured by the mortgage and appellee would have been entitled to reimbursement, or judgment against the elder Booths for the increased amount. Dalton v. Polster, 200 Ark. 168, 138 S. W. 2d 64; Bingham v. Zeno, 228 Ark. 1039, 312 S. W. 2d 181; Federal Land Bank of St. Louis v. Treece, 199 Ark. 1168, 138 S. W. 2d 90. If the Booths had paid the taxes before forfeiture they would not have been entitled to recover the amount from appellee. If appellee had paid them, the amount of the judgment against the Booths would have been increased by that amount. Therefore, B. B. and Lydia Booth could not be entitled, either on equitable principles or by statute, to reimbursement by appellee. Arkansas Statutes Annotated § 84-1119 (Repl. 1960) cannot have any application, because any purchase by them was only a redemption, insofar as appellee is concerned.

A different result might be reached as to the remaining appellants, but they have not yet asserted any claim for reimbursement or a lien, either in the trial court or in this court. Appellants appeared specially and moved to quash the service in the trial court and responded to the motion for summary judgment with a reservation of their rights under the motion to quash. In the court’s decree, there was incorporated the finding that the court had jurisdiction of the parties. We take this to mean that the motion to quash was overruled. Yet appellants do not now argue that the service was defective as constructive service. They simply urge that the court had no such jurisdiction at the time requests for admissions were made and when answers were called for. They state the question as being twofold: (1) Had there been a commencement of the action when the request for admissions was filed; and (2) if so, was there sufficient jurisdiction over the nonresident defendants when the requests were filed to subject them to statutory requirements under Ark. Stat. Ann. § 28-358(a) (Repl. 1962)? The court’s decree shows that the request for admissions was considered.

The answer to appellants’ first question is in the affirmative. An action on constructive service is commenced on the date the warning order is made, and not the date of the first publication, or the date when the defendant constructively summoned received notice from the attorney ad litem. Johnson v. Foster, 69 Ark. 617, 65 S W. 105; Boynton v. Chicago Mill & Lumber Co., 84 Ark. 203, 105 S. W. 77; Frank v. Frank, 175 Ark. 285, 298 S. W. 1026; Missouri Pacific R. Co. v. McLendon, 185 Ark. 204, 46 S. W. 2d 626; Burks v. Sims, 230 Ark. 170, 321 S. W. 2d 767. See also Ark. Stat. Ann. § 27-357 (Repl. 1962).

As to the second question it is clear that the court had no jurisdiction to make any final order affecting the rights of non-resident defendants, until the warning order had been published for four weeks and 30 days had elapsed after the appointment of the attorney ad litem and his report had been filed. Frank v. Frank, supra. Yet, we pretermit any further discussion of this question as to the serving of requests for admissions, even though the chancery court found that only the question of damages remained to be determined on that portion of appellee’s complaint alleging a cause of action. It is clear that no personal judgment could be entered against one constructively summoned who does not voluntarily submit to the jurisdiction of the court. Gainsburg v. Dodge, 193 Ark. 473, 101 S. W. 2d 178, Meier v. Hart, 143 Ark. 539, 220 S. W. 819; Brookfield v. Boynton Land & Lumber Co., 127 Ark. 306, 192 S. W. 215; Webster v. Daniel, 47 Ark. 131, 14 S. W. 550. It is the settled policy of our law to permit a special appearance to question the sufficiency of the service of process. United Equitable Insurance Company v. Karber, 243 Ark. 631, 421 S. W. 2d 338. Further action in the case by one who moves to quash the service does not amount to an entry of appearance, or waiver of the objection to service, so long as the objection is maintained throughout the proceeding. Cox Inv. Co. v. Major Stave Co., 128 Ark. 321, 194 S. W. 701. Where the reservation of rights as to the service is made throughout the proceedings in the trial court, the prosecution of an appeal from a judgment entered therein will not constitute an entry of appearance. Anheuser-Busch, Inc. v. Manion, 193 Ark. 405, 100 S. W. 2d 672. Appellants reserved the question as to the sufficiency of the process in every pleading filed by them. No reason appears why the rules above set out should not govern in a proceeding in rem where the service is constructive. Consequently, it does not appear that the trial court has jurisdiction to render a judgment for damages against appellants, so the propriety of the request for admissions and the effect of the failure of appellants to answer them are not now before us.

The decree is affirmed on appeal but reversed on cross-appeal.

Harris, C. J., and Byrd, J., concur.

      This action was instituted by the corporation, but appellee was substituted as plaintiff in the action in his capacity as Trustee for the corporation in bankruptcy after the motion for summary judgment and the response thereto had been filed.