author: Carleton Harris, Chief Justice. John A. Fogleman, Justice,

text:
    Jerry CHATMAN v. Willard MILLIS, Jr.
    74-139
    517 S.W. 2d 504
    Opinion delivered January 13, 1975

      Boyett & Morgan, P.A., by: Comer Boyett, Jr., for appellant.

      Pickens, Boyce, McLarty & Watson, by: James A. McLarty, for appellee.
   Carleton Harris, Chief Justice.

The question in this case is whether appellee, a psychologist, can be held liable to appellant for malpractice under the facts hereinafter set out. The facts as set forth in appellant’s complaint are as follows. Mrs. Robbie Chatman was divorced from her husband, appellant herein. Appellant had visitation privileges with the couple’s 2Vi year old son. Mrs. Chatman, partly because of actions of the child, became concerned that her ex-husband had subjected the child to homosexual conduct, and, as a matter of terminating the father’s visiting privileges, sought the aid of appellee in evaluating appellant’s conduct. After talking with Mrs. Chatman and the child, appellee wrote her attorney a letter advising that Mrs. Chatman and her child had been referred to him by Dr. Ben Lowery for the purpose of his providing assistance in determining whether or not the child (Christopher) had been sexually molested by his father, and if so, the future implications for Christopher’s psychosex-ual development. In this letter, Dr. Millis, Jr. went into detail as to comment made to him by Christopher and concluded his letter by stating:

“While it will be the Court’s decision, and not mine, 1 feel that it would not be a good idea to allow Chris to continue to visit his father at all. If it is necessary that visitation rights be continued, I would strongly urge that the presence of a third person, preferably a relative, be in their presence at all times.
“As I mentioned in our telephone conversation of April 10, 1973 I would be willing to testify in Court about my interview or the statements made in the letter above.”

Thereafter, Chatman instituted suit in the Circuit Court of White County, home of Chatman, alleging both defamation of character, and malpractice against appellee. Service was had on appellee at his residence in Jackson County. Millis responded to the complaint with a special appearance and motion to quash asserting that venue in White County was improper in that appellee was neither a citizen not resident of White County, and further, was not served in White County.

On hearing, the court held no action for malpractice exists in this state against a psychologist; that even if such an action were permitted in this jurisdiction, there would have to be a doctor - patient relationship or some similar relationship between the parties, and that the complaint in the instant litigation alleged, and counsel had admitted, that Chatman had never been examined by Millis, and in fact, was not even known to the doctor; accordingly, there could be no action for malpractice. The court then found:

“Since there is no cause of action for malpractice the only cause of action left is defamation of character the proper venue of which is not in White County the motion to quash the service of summons upon the defendant should be granted.”

Appellant admits after the holding of the court that there was a iack of relationship between the parties to support the malpractice action, the complaint was correctly dismissed because of improper venue on the remaining count of defamation.

It is not necessary, in determining this litigation, to pass on the question of whether there is a cause of action in Arkansas for malpractice available against a psychological examiner or psychologist, since we are of the view that, even though such a cause of action exists, the allegations of appellant’s complaint do not state a cause of action.

We do not flatly state that a cause for malpractice must be predicated upon a contractual agreement between a doctor (psychologist) and patient, but we do say that a doctor-patient relationship must exist, i.e., there must be a duty, asa doctor, owed from the practitioner to the patient. Under the allegations before us, Millis made no examination of Chat-man; in fact, he did not even know Chatman, and had never seen him. Appellant was not a patient of Millis, and the diagnosis reached was not for the benefit of Chatman. Even if the findings of the psychologist were negligently made, Chat-man did not rely upon this diagnosis to his detriment.

Of course, all persons owe a duty to refrain from defaming others, but this is simply a duty that all citizens have toward each other, and has nothing to do with a doctor-patient relationship. After all, Chatman was not damaged by the allegedly negligent diagnosis — he was damaged by the alleged defamation. An example given by appellee appears pertinent to illustrate the point. Let us assume that a physician is engaged in lighthearted pleasure at a large cocktail party. Assume further that this physician openly refers to a non-patient individual, and by name, refers to him as a homosexual. Certainly, under these circumstances, the physician might be found to have slandered that person’s character, and, if so found, held to be answerable to that person for damages sustained. However, the fact that the speaker happened to be a physician does not mean that what was said constituted malpractice.

Concisely stated, we simply reiterate that under the facts alleged, appellee owed no duty, as a doctor, to appellant, and this duty must be in existence before appellant can recover because of negligence, constituting malpractice.

Since we agree that, under the allegations, no action for malpractice exists, and it being admitted that the complaint was correctly dismissed because of improper venue on the defamation count, the judgment quashing the service is affirmed.

It is so ordered.

Jones, J., concurs.

Brown and Fogleman, JJ., dissent.

John A. Fogleman, Justice,

dissenting. The peculiar manner in which the issues presented reach this court puts them in an odd perspective for proper treatment on appellate review. As I read the complaint the allegations pertinent to the issues are stated separately. The allegations relating to defamation are stated in Paragraphs I through VI. The allegations relating to negligence (or malpractice) are as follows:

VII
Defendant at all times mentioned in the complaint was either a psychological examiner or psychologist duly licensed under the laws of the State of Arkansas, with offices in Jackson County, Arkansas, as well as White County, Arkansas. On or about April 10, 1973, defendant diagnosed the plaintiff as a homosexual who had engaged in incestuous activities with his 1 V2 year old son and such diagnosis was disseminated to plaintiff’s former wife, Robbie Chatman, and Cecil A. Tedder, Jr.
VIII
Defendant was negligent and careless in making such diagnosis by failing to exercise the degree of skill and care, or to possess the degree of knowledge, ordinarily exercised or possessed by other psychological examiners or psychologists engaged in this type of practice in White County, Arkansas, or similar localities, in that he failed and neglected to ever interview the plaintiff and in fact did not even know him, failed to administer any diagnostic tests which would reveal any homosexuality tendencies or to use any of the proper methods that psychologists use in exercising ordinary care to protect others from injury or damage; the defendant acted in a manner willfully and wantonly in disregard to the rights of plaintiff.
IX
As a proximate result of the negligence and carelessness of the defendant as aforesaid plaintiff suffered excruciating mental anguish, humiliation, embarrassment and will continue to do so in the future; he suffered financial injury.

This complaint was not tested by demurrer. Appellee entered a special appearance and moved the summons be quashed because venue was not properly laid in White County. The grounds stated were that the complaint alleged a cause of action based upon defamation, pointing out that appellant had alleged in Paragraph V that the publication of a letter stating appellee’s findings as to appellant’s conduct was defamatory per se. Appellee did not then allege and has never contended he could not be liable for malpractice. Appellee responded in his brief here upon the sole ground that the allegations of the complaint did not show the existence of a physician-patient relationship, which was apparently a secondary basis for granting the motion to quash. If an action for malpractice was stated, then the motion to quash was not well taken, because the venue was proper. The trial court granted the motion to quash, saying (1) there can be no cause of action for malpractice against a psychological examiner or psychologist, and, (2) if there could be, the allegations of the complaint are insufficient to state a cause of action. The motion to quash was granted as pointed out in the majority opinion because “there is no cause of action for malpractice” so that the “only cause of action left is defamation of character”.

I see no way we can approach this problem except by determining whether a malpractice action was brought in this case. If it was, the venue was properly laid. It seems strange, to say the least, to dispose of this matter without determining whether the trial court’s primary, if not sole, basis for granting the motion to quash was sound. It obviously was not and even though appellee has insisted that this was not in issue in the case, his counsel admitted, in oral argument, that a cause of action for malpractice would lie under proper circumstances, against a psychological examiner or psychologist. This admission was certainly appropriate and consistent with the ethical standards required of a legal practitioner.

Malpractice has been defined as “Any professional misconduct, unreasonable lack of skill or fidelity in professional or fiduciary duties, evil practice, or illegal or immoral conduct”. Black’s Law Dictionary (4th ed.) 1111. In Arkansas, malpractice has been recognized as negligence in the practice of various professions, among which are law, medicine, and dentistry. See Welder v. Mercer, 247 Ark. 999, 448 S.W. 2d 952; Burton v. Tribble, 189 Ark. 58, 70 S.W. 2d 503; Black v. Bearden, 167 Ark. 455, 268 S.W. 27. In the last of the cited cases we held that the rules governing duties and liabilities of physicians and surgeons applied to practice of kindred branches of the healing arts. Our statutes make the practice of psychology a profession of the healing arts. Ark. Stat. Ann. §§ 72-1501 - 1518 (Repl. 1957) deal with this profession. They provide for licensing of psychological examiners and psychologists and for suspension and revocation of licenses, for privileged communication between such a licensee and his client, and for a code of ethics governing practice and behavior. It seems so clear such a malpractice action can lie against such a practitioner as to be beyond argument. This should end this court’s inquiry and serve as a basis for reversal of the order granting the motion to quash, because it is clear the pleader was asserting such a cause of action separate and distinct from the cause of action for defamation. Any defect could easily be cured by amendment when and if a demurrer or motion to make more definite and certain was filed.

The determination of the question posed in the trial court and here, i.e., propriety of the venue, can only be made by reference to the pleadings. Where venue depends upon the essential nature of the action, as it does here, resort can only be had to the complaint in deciding the question. This proposition is well stated at 92 C.J.S. 676, Venue § 6, as follows:

Allegations as controlling. Under the venue statutes a plaintiff bringing a cause of action in good faith is entitled to invoke the venue that accords with the allegations of the petition, regardless of the possibility that venue may fall with the suit on plaintiff’s failure to maintain the merits of the suit. To the extent that a venue statute makes the character and nature of a suit controlling with respect to its venue, the nature is determined by the facts alleged in the petition, and if more than one ground is relied on to establish venue, it is sufficient if either is shown to exist. However, it is only as to the nature of the action that the pleading is controlling; the court may not look to the petition for facts of venue, such as the residence of the parties, the place where fraud was committed, or similar facts.

See also Eckstrand v. Wilshusen, 217 Cal. 380, 18 P. 2d 931 (1933); Pacific Air Lines, Inc. v. Superior Court, 231 Cal. App. 2d 587, 42 Cal. Rptr. 68 (1965); Davey v. Davey, 77 N.M. 303, 422 P. 2d 38 (1967); Renwar Oil Corp. v. Lancaster, 154 Tex. 311, 276 S.W. 2d 774 (1955); High v. Karell, 346 S.W. 2d 920 (Tex. Civ. App., 1961); Stuckey v. Stuckey, 143 Neb. 610, 10 N.W. 2d 458 (1943).

The substance of the pleading, not the demand or prayer for relief, governs. State v. Hess, 472 S.W. 2d 362 (Mo., 1971). In determining venue, the question is what cause of action is alleged, not whether, on the merits, the plaintiff can successfully sustain the cause of action. Leonard v. Carter, 389 S.W. 2d 147 (Tex. Civ. App. 1965); Vitopil v. Gray, 111 S.W. 2d 1202 (Tex. Civ. App. 1937); McKee v. McKee, 12 S.W. 2d 849 (Tex. Civ. App. 1929). See also Calder v. Third Judicial District Court, 2 Utah 2d 309, 273 P. 2d 168, 46 ALR 2d 887 (1954).

Instead of determining the venue on the nature of the cause of action as disclosed by the complaint, the majority launches an exploration into whether appellee can recover from appellant in a malpractice action. Assuming, without conceding, that, on motion to quash, the allegations of a complaint are to be tested just as we would test evidence precisely limited to the bare words of those allegations, I thoroughly disagree with the view that a doctor-patient relationship - as it is described by the majority - is a necessary prerequisite to a recovery for malpractice by appellant. I submit that the attempt to analogize this case and this issue to cocktail party chatter is illustrative of the majority’s approach to the issue and the faulty basis for its result. The dissimilarity of this example to this case should be obvious. It does not involve the professional relationship in any aspect or even remotely approach an involvement of the practice of a profession. I agree with the premise of the majority’s result only in the respect that, in order for a presumably skilled professional to be liable, he must have owed a duty to the person who claims to have been injured and he must have violated that duty. Thereafter, I agree only with the conclusion that the physician at the cocktail party might be held answerable for his chatter in defamation, but not in a malpractice action. The majority’s result has imported a rule of privity into malpractice actions. I consider this not only undesirable but improper.

A malpractice action, however it may be necessary to define it in order to give recognition to factors peculiar to the practice of a profession, should be considered nothing more or less than a tort action to recover damages for either willful, ignorant or negligent misconduct of a practitioner in the practice of his profession. See Introduction, Chapter 15, AMI, Civil (2d); Black’s Law Dictionary (4th Ed.) p. 1211; 54 CJS 1111, Malpractice; Note on Use, AMI 1501, AMI, Civil (2d), p. 177. The appropriate standards are set out in AMI, Civil, 1501. Under that instruction, any practitioner (including appellee and others in his field) would be required to possess and, using his best judgment, apply with reasonable care the degree of skill and learning ordinarily possessed and used by members of his profession in good standing engaged in the same type of practice in the locality in which he practices or in a similar locality; otherwise he is guilty of negligence.

Still, when boiled down to its essentials, this definition of malpractice states precisely the duty owed by a practitioner of a profession, the violation of which renders him liable for negligence. But it is now almost universally recognized, as Mr. Justice (then Judge) Cardozo phrased it in Palsgraph v. Long Island Railroad Co., 248 N.Y. 339, 162 N.E. 99 (1928), there can be no “negligence in the air”. Hill v. Wilson, 216 Ark. 179, 224 S.W. 2d 797; Haralson, Adm’x. v. Jones Truck Line, 223 Ark. 813, 270 S.W. 2d 892. Dr. Leflar defined negligence, in light of the concept that “negligence in the air” is non-existent. That definition (which should be applied here) reads:

****In other words, a negligent act is one from which an ordinary prudent person in the actor's position - in the same or similar circumstances - would foresee such an appreciable risk of harm to others as to cause him not to do the act, or to do it in a more careful manner.

We repeated and applied this definition in Haralson, Adm’x. v. Jones Truck Line, supra.

In other words, there can be no actionable negligence, unless the actor has violated a duty he owed the victim of his act or omission. Prosser, Law of Torts (4th ed.) 244, § 42. The question then becomes “To whom does the practitioner owe a duty?” Actionable negligence must arise from violation of a duty imposed upon the actor by common law, by statute or by contract. 57 Am. Jur. 2d 380, 382, Negligence §§ 33, 36; 65 CJS. 453, Negligence §. 1 (12); 65 CJS. 485, 487, 494, Negligence §§ 4 (2), 4 (3), 4 (6). Judge Cardozo said that negligence was a matter of relationship between the parties which must be founded upon the foreseeability of harm to the person in fact injured. See also, Prosser, Law of Torts (4th ed.) p. 255, § 43; 2 Harper & James, The Law of Torts, p. 1018, § 18.2 (1956). “Duty” is determined by answering the question whether the defendant is under any obligation for the benefit of the other party. Prosser, Law of Torts, p. 324, § 53. Prof. Prosser’s concept of “duty” fits Dr. Leflar’s definition of negligent act quite well. Prof. Prosser says:

*** No better general statement can be made, than that the courts will find a duty where, in general, reasonable men would recognize it and agree that it exists.

The “foreseeability” test is not new to Arkansas law. It was applied in Chapman Chemical Co. v. Taylor, 215 Ark. 630, 222 S.W. 2d 820, in 1949. The application by this court of the test of actionable negligence by foreseeability of harm to the person injured was treated by Senior District Judge John E. Miller with his usual thoroughness in Ozark Industries, Inc. v. Stubbs Transports, Inc., 351 F. Supp. 351 (D.C. Ark. 1972). A review of this excellent opinion should leave no doubt about our adherence to this concept. In another excellent treatment of the subject, Chief Judge Henley has demonstrated that Arkansas cases hold that a duty to use care arises when it is reasonably foreseeeable that injury will probably result to another if care is not used and that it depends upon the foreseeability of injury or damage, not upon privity of contract. Rhoads v. Service Machinery Company, 329 F. Supp. 367 (D.C. Ark. 1971).

The test of actionable negligence, insofar as “duty” is concerned, becomes one of foreseeability, i.e., whether the consequences of the alleged wrongful act were reasonably to be foreseen as injurious to the person seeking recovery (either individually or as a member of a class). Palsgraf v. Long Island Railroad Co., 248 N.Y. 339, 162 N.E. 99 (1928). Prosser, Law of Torts (4th ed.) p. 324, § 53; 57 Am. Jur. 2d 408,. Negligence § 58. See Haralson Adm’x. v. Jones Truck Line, 223 Ark. 813, 270 S.W. 2d 892. In making the determination, “foreseeability is not to be measured by what is more probable than not, but includes whatever is likely enough in the setting of modern life that a reasonably thoughtful man would take account of it in guiding practical conduct.” 2 Harper & James, The Law of Torts, p. 1020, § 18.2.

The Maryland Court of Appeals treated the question whether a physician giving certification to a hospital for the insane, that a plaintiff was mentally deficient, owed any duty to the plaintiff in Miller v. West, 165 Md. 245, 167 A 696 (1933). That court said that the weight of authority, in states having similar statutory proceedings, seemed to “ *** support the view that the physicians, although they are not employed by the patient, and make no report to him, are under a legal duty to him which will support an action, if the duty is violated, and if as a consequence a person who should not be confined is confined.”

In rejecting the argument that a doctor-patient relationship was essential to a recovery for negligence in such case, the court in Kleber v. Stevens, 39 Misc. 2d 712, 241 N.Y.S. 2d 497 (1963) quoted extensively from Ayers v. Russell, 50 Hun. 282, 288 289, 3 N.Y.S. 338, 340, 341 (1888). A part of that quotation follows:

*** The physicians followed the forms of the law. Whether the reasons set forth by them in the certificate for their conclusion that the plaintiff was insane were sufficient or not, is immaterial. The presumption is that they set forth such reasons as in their opinion were sufficient, and such as appeared to them to be true in fact. But the complaint charges that the physicians made the certificate ‘without proper and ordinary care and prudence, and without due examination, inquiry, and proof into the fact whether plaintiff was sane or insane.’ We think the physicians owed the plaintiff the duty of making the examination with ordinary care. Their duty must be measured by the trust which the statute reposes in them, and by the consequences flowing from its improper performance. They assume the duty by accepting the trust. They are not judicial officers, but medical experts. They are not clothed with judicial immunity and are chargeable with that negligence which attaches to a professional expert who does not use the care and skjll which his profession, per se, implies that he will bring to his professional work.

Appropriately the court added:

*** It was plaintiff’s contention throughout the trial that the certificates rendered in compliance to this section were ill-conceived and based on the hearsay of an allegedly vindictive husband rather than good medical practice and examination, and it is conceivable that a doctor examining for purposes of commitment may comply mechanically with the requirements of the law and without malice and yet fail to utilize the minimal skill required to effectuate this process.

A closely analagous case applying the principles I feel should be applied here is Harriott v. Plimpton, 166 Mass. 585, 44 N.E. 992 (1896). In that case, Harriott was engaged to be married to the daughter of Morrill, who took him to the office of a physician named Plimpton, who examined Harriott and told both Harriott and Morrill that Harriott had gonorrhea. As a result, the marriage engagement was broken. Harriott brought suit against Morrill for slander and Plimpton for slander and negligence in making the examination. The jury found that Harriott did not have gonorrhea and that neither Morrill nor Plimpton was actuated by express malice. The presiding judge directed a verdict for the physician. The Supreme Judicial Court of Massachusetts said:

The verdict in the action for negligence must be set aside. The evidence tended to show that the defendant was employed by Morrill. Having undertaken, for compensation to be paid by another, to examine the plaintiff, and to report whether he was diseased, the defendant was bound to have the ordinary skill and learning of a physician, and to exercise ordinary diligence and care; and if he failed, and the plaintiff was injured because of his want of such skill and learning or his want of such care, the defendant was answerable to him in damages. See Gill v. Middleton, 105 Mass. 479; Higgins v. McCabe, 126 Mass. 13; Small v. Howard, 128 Mass. 131; Mallen v. Boynton, 132 Mass. 443. In our opinion, the fact that the purpose of the examination was information, and not medical treatment, is immaterial; and the breaking of the plaintiff’s marriage engagement, in consequence of the wrong diagnosis, was not too remote a damage to sustain the action. Upon the evidence, it was for the jury to say whether the defendant used ordinary care, learning, and diligence.

The “privity requirement” was gasping its last breath in Arkansas prior to today’s decision. This court clearly recognized its illness and foresaw its demise in Chapman Chemical Co. v. Taylor, 215 Ark. 630, 222 S.W. 2d 820, saying:

It is said there was no privity of contract between the Chemical Co. and cross appellants. This showing was at one time, and for some time considered necessary to occasion liability, the line of decisions to that effect going back to the early English case of Winterbottom v. Wright. 10 Mees. & W. 109, 152 Eng. Reprint 402, decided in 1842. But the courts have been getting away from that doctrine and many have entirely repudiated it and discarded it. The opinion of Justice Cardozo, then a member of the Court of Appeals of New York, and later an Associate Justice of the United States Supreme Court in the case of MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050, L.R.A. 1916 F, 696, Ann. Cas. 1916C, 446, is credited with the inception of the modern doctrine of manufacturer’s liability based upon foreseeability rather than privity of contract.
The Supreme Court of Massachusetts in the case of Carter v. Yardley & Co., 319 Mass. 92, 64 N.E. 2d 693, 700, annotated in 164 A.L.R. 559, expressly repudiates the privity contract rule and stated that the MacPherson case, supra, was now generally accepted and the summary of the Mass, case and others there cited in that “The question in each case was whether the danger was sufficient to require the manufacturer to guard against it.” In other words, that foreseeability and not privity was the proper test. See also Sec. 824, Chapter on Sales, Sec. 824, 46 Am. Jur. page 946.

Thus we used the “foreseeability” test as a vehicle for elimination of the privity requirement in the context of that case. See, Green v. Equitable Powder Mfg. Co., 94 F.S. 126 (D.C. Ark. 1950).

It is significant that we were able to find negligence in the gratuitous act of one truck driver giving a passing signal to another, whose truck struck and killed a pedestrian, whose administratrix sued both and their employers. We said:

Nor does it matter that Fulfer was under no legal duty to give any signal at all. As Judge Cardozo observed in the leading case of Glanzer v. Shepard, 233 N.Y. 236, 135 N.E. 275, 276, 23 A.L.R. 1425: “It is ancient learning that one who assumes to act, even though gratuitously, may thereby become subject to the duty of acting carefully, if he acts at all.” Even though Fulfer’s invitation to Duvall was gratuitous the law required that his conduct be characterized by ordinary care.

The “privity” test seems to have yielded to foreseeability in many similar situations. One of them involves the question of liability of an attorney-scrivener engaged by a testator to an intended beneficiary who is frustrated by the invalidity of a will. See 7 Am. Jur. 2d 162, Attorneys at Law, § 199. In 1961, the Supreme Court of California overruled a previous holding in order to lay to rest the “privity” test previously utilized in such a case. Lucas v. Hamm, 15 Cal. Rptr. 821, 364 P. 2d 685 (1961).

In stating the appropriate test, the court adverted to a previously stated rule, saying:

....In restating the rule it was said that the determination whether in a specific case the defendant will be held 'liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury, and the policy of preventing future harm.

For other cases in which it has been held that an attorney may be liable to one other than his client in a tort action, see Hoppe v. Klapperich, 224 Minn. 224, 28 N.W. 2d 780, 173 ALR. 819 (1947); or other action, Higgins v. Russo, 72 Conn. 238, 43 A 1050 (1899).

An annotator has said: “But the privity of contract principle has been the subject of increasing criticism from the courts in recent years. It has been so overlaid with exceptions that, as has been said in another connotation, the exceptions ‘have almost, if not completely, swallowed up the so-called “rule”.’ Many courts have come to the verge of repudiating the privity of contract doctrine in toto.” See Annot. 65 ALR 2d 1363, 1364 (1959).

Of course, the requirement of privity in actions for breach of warranty in sales of goods was abolished in Arkansas by legislative action. Act 35 of 1965 [Ark. Stat. Ann. §§ 85-2-318.1 - 318.3. (Supp. 1973)]. It seems to me that the public policy of Arkansas is clearly opposed to the privity requirement where one person suffers as a result of the failure of another to use reasonable care. We should not resurrect the “privity” doctrine by imposing it where we have never imposed it before.

The allegations in this case are that appellant was damaged by appellee’s failure to exercise the requisite degree of skill in making a psychological diagnosis of appellant. Such diagnoses are certainly within the scope of appellee’s practice. Assuming the allegations of the complaint to be true, as we must, it would border on absurdity to say that appellee could not reasonably have foreseen that a misdiagnosis of homosexuality would harm appellant. The fact that the diagnosis was made without appellee’s having known, seen or interviewed appellant or having administered any tests to him would seem, in and of itself, to be malpractice, but whether it is or not is a matter of evidence when the case is tried on its merits. It certainly is a sufficient allegation to state a cause of action. As a matter of fact, the only flaw the majority perceives in the complaint is the fact that Chatham was not a patient of Mills. I submit that reason and logic do not support the majority opinion. I would remand this case for further proceedings.

I am authorized to state that Mr. Justice Brown joins in this dissent.


source: Caselaw Access Project

author: J. Fred Jones, Justice.

license: Public Domain

text:
    RELIANCE INSURANCE COMPANY v. OKLAHOMA GAS AND ELECTRIC COMPANY
    74-186
    517 S.W. 2d 499
    Opinion delivered January 13, 1975

      Warner and Smith, by: Ben Paddock, for appellant.

      Bryan & Fitzhugh, for appellee.
   J. Fred Jones, Justice.

This is an appeal by Reliance Insurance Company from a circuit court judgment for $3,-501.92 plus penalty and attorney’s fee on a surety bond executed by Reliance in favor of the appellee Oklahoma Gas and Electric Company. Reliance contends on this appeal that the trial court erred, as a matter of law, in holding the surety liable under the bond for unpaid electric service furnished by the obligee to a trustee in bankruptcy and in entering a judgment based on such holding.

The facts as they appear in the record are as follows: J. P. O. Enterprises Corporation of Arkansas owned and operated several retail outlet stores in the Fort Smith area and obtained its electrical energy from the appellee Oklahoma Gas and Electric Company. Oklahoma Gas and Electric experienced some difficulty in collecting utility bills from J. P. O. and on October 27, 1972, demanded that J. P. O. furnish by November 15, 1972, a cash surety deposit or an equivalent surety bond to secure the payment for future electric service. Effective November 15, 1972, the appellant Reliance Insurance Company, as surety, and J. P. O., as principal, executed a surety bond in favor of the appellee Oklahoma Gas and Electric Company under the terms of which the surety agreed to pay up to the maximum of $5,500 to the obligee in the event, and to the extent, of the principal’s failure to pay for service furnished to the principal by the obligee for the principal’s operation of its stores. The bond contained a provision giving the surety the right of cancellation at any time upon 60 days prior written notice to obligee.

On January 3, 1973, the principal filed a petition in bankruptcy at which time it owed electric bills to Oklahoma Gas and Electric in the amount of $363.19 for unpaid electric service. On January 8, 1973, when the obligee, Oklahoma Gas and Electric, learned of the petition in bankruptcy, it demanded a cash deposit or new bond from the trustee in bankruptcy. The trustee refused to make a cash deposit or obtain or execute a bond but according to Oklahoma Gas and Electric, he orally agreed to take care of electric bills under the continued operation of the stores by the trustee.

Oklahoma Gas and Electric continued to furnish electric service to the stores and on January 19, 1973, the appellant-surety, Reliance Insurance Company, exercised its right of cancellation by a written notice of cancellation effective as of that date or 60 days after receipt of the potice.

Under date of April 23, 1973, the assistant secretary and division auditor of Oklahoma Gas and Electric executed a “Proof of Claim in Bankruptcy” stating under oath that the bankrupt estate was justly indebted to the creditor Oklahoma Gas and Electric in the amount of $4,841.80, and stated that the creditor had furnished electrical energy to the bankrupt estate after the bankrupt filed its petition for arrangement under Chapter XI of the Federal Bankruptcy Act on January 3, 1973, and after appointment of trustee in straight bankruptcy. It stated that no part of the debt had been paid except $1,-000. The proof of claim then states as follows:

“That said creditor does not hold, and has not, nor has any person by its order, or to deponent’s knowledge or belief, for its use, had or received any security or securities for said debts (or liability).”

A Photostat copy of this instrument appears in the record but the filing date is not shown thereon. It was dated April 23, 1973, and apparently when it was filed $1,000 had been paid on the account by the trustee in bankruptcy.

On March 22, 1973, the trustee in bankruptcy filed a petition in the bankruptcy court reporting his activities in the operation of the stores in winding up the business under straight bankruptcy. He alleged that several utility companies including Oklahoma Gas and Electric had threatened to discontinue utility service to the various stores for the nonpayment of utility bills. He alleged that it was necessary for the referee in bankruptcy to enjoin the plaintiff from cutting off utilities in the stores and an injunction was prayed to that effect. On March 22, 1973, a temporary injunction was granted as prayed and notice was given to show cause why the injunction should not be made permanent.

In separate response to the show cause order Oklahoma Gas and Electric prayed that the temporary restraining order be vacated or in the alternative that the trustee be required to furnish a cash deposit or surety bond securing the payment of utility bills. In connection with the response, Oklahoma Gas and Electric filed an affidavit dated March 29, 1973, in which it set out the difficulty it had had in collecting for electric service furnished to J. P. O., and setting out its original letter dated October 27, 1972, demanding that J. P. O. put up a cash deposit or bond. The affidavit then stated as follows:

“Affiant further states that in response to this letter JPO Enterprise Corporation of Arkansas furnished a surety bond to the Oklahoma Gas and Electric Company with the Reliance Insurance Company as surety. A copy of this bond is attached hereto, marked Exhibit B, and made a part hereof as though copied word for word.
Affiant further states that the said surety bond with the Reliance Insurance Company was by it canceled on January 3, 1973.
Affiant further states that on or about January 8, 1973, he received a notice that JPO Enterprise Corporation of Arkansas had filed a voluntary petition in bankruptcy and that Hugh W. Thistelthwaite as Receiver was appointed by the court to continue with the business operations of this debtor pending the filing of the plan arrangement therein. A copy of this notice is attached hereto, marked Exhibit C, and made a part hereof as though copied word for word.
Affiant further states that shortly after the receipt of this notice dated January 8, 1973, he telephoned Joe Lopez, Administrator for Receiver, and that Joe Lopez told him over the telephone that no change was to be made in the operation and the bills could be mailed to the same address and the trustee in bankruptcy would take care of the bills.”

On June 11, 1973, Oklahoma Gas and Electric filed its complaint herein, alleging and setting out the execution of the bond as aforesaid, and alleging that the defendant insurance company attempted to cancel the bond as of January 19, 1973, but that under the terms of the bond, such cancellation did not become effective until 60 days after notice of cancellation or March 19, 1973. The complaint then alleged that J. P. O. owed the sum of $3,508.90 and prayed judgment for that amount together with penalty and attorney’s fee.

Reliance Insurance Company filed its answer on February 5, 1973, in which it admitted liability to Oklahoma Gas and Electric for electric bills owed by J. P. O. Enterprises to January 3, 1973, on which date a receiver in bankruptcy was appointed for J. P. O. As affirmative defense it alleged that on January 3, 1973, J. P. O. filed its petition for reorganization under Chapter XI of the Federal Bankruptcy Act in United States District Court of Louisiana and on that date a receiver in bankruptcy was appointed for J. P. O. and served in that capacity until March 8, 1973, when he was appointed trustee in bankruptcy of the estate of J. P. O.; that from January 3, 1973, through April 10, 1973, and thereafter, said receiver or trustee was in charge of and managed the estate of J. P. O., and that Oklahoma Gas and Electric furnished electric service to said receiver and trustee and not to J. P. O. Reliance further alleged that the trustee in bankruptcy became liable for all bills incurred after January 3, 1973, and was liable on his official bond to Oklahoma Gas and Electric for electric service so furnished.

The case was tried before the trial judge sitting as a jury and the court found that as of January 3, 1973, when J. P. O. Enterprises was declared bankrupt, there was due and owing to Oklahoma Gas and Electric by J. P. O., the sum of $363.19 for electrical energy furnished to that date; that as of March 19, 1973, being 60 days after notice of cancellation of the bond, there was still due and owing to the plaintiff Oklahoma Gas and Electric the sum of $3,501, rather than the $3,508.90 as alleged in the original complaint. The court further found that Reliance Insurance Company had tendered the sum of $363.19 in full settlement of the amount it owed to Oklahoma Gas and Electric; that Oklahoma Gas and Electric had refused to accept said amount in satisfaction of the debt owing, and that Reliance Insurance Company had refused to pay the sum of $3,501.92 claimed by Oklahoma Gas and Electric. The trial court then found that Oklahoma Gas and Electric was entitled to judgment against Reliance Insurance Company in the amount of $3,501.92, plus a 12% penalty and attorney’s fee in the amount of $750, and rendered judgment against Reliance for a total of $4,-672.15, together with interest at six per cent per annum until paid.

We are of the opinion that the trial court erred in rendering judgment against Reliance Insurance Company for the amount of service furnished by Oklahoma Gas and Electric to the receiver and trustee in bankruptcy after January 3, 1973. The pertinent part of the bond reads in its entirety as follows:

“KNOW ALL MEN BY THESE PRESENTS: That J. P. O. Enterprises Corporation of Arkansas, hereinafter called the PRINCIPAL, AND Reliance Insurance Company of Pennsylvania, hereinafter called the SURETY, are firmly bound unto OKLAHOMA GAS AND ELECTRIC COMPANY, 311 Lexington Avenue, Fort Smith, Arkansas, hereinafter called the OBLIGEE, in the sum of ($5,500.00) Five thousand, five hundred and no/100 — Dollars, for the payment whereof to the Obligee the Principal binds its heirs, executors, administrators, successors, and assigns, and the Surety binds itself, its administrators, successors and assigns, jointly and severally, firmly by these presents.
SIGNED, SEALED AND DATED this 15th day of November, 1972.
WHEREAS, the Principal has contracted for and shall receive from the Obligee ELECTRIC service at his business or establishment located at the following address: SEE RIDER ATTACHED.
* * *
NOW, THEREFORE, the conditions of the foregoing obligation are such that if the Principal shall promptly pay for such service upon the respective dates when payment therefor becomes due then this obligation shall be void; otherwise to remain in full force and effect.
The following conditions are hereby made a part of this bond:
1. The aggregate liability of the Surety for all or any defaults of the Principal hereunder shall not exceed the penal sum of the bond.
2. No extension of time for payment and no waiver of any default by Principal nor any failure to give notice to Surety of nonpayment shall operate to relieve Surety of liability for service rendered while this bond is effective.
3. This bond may be canceled by the Surety at any time by giving sixty (60) days prior written notice to the Obligee but no such cancellation shall relieve Surety of liability for payment for services rendered prior to the effective date of such cancellation.”

The appellee recites the above wording in the bond with emphasis as follows:

“for the payment whereof to the Obligee the Principal binds its heirs, executors, administrators, successors, and assigns, and the Surety binds itself, its administrators, successors, and assigns, jointly and severally, firmly by these presents.

The appellee then points out that the Bankruptcy Act in 11 USC 34 provides that “liability of a person who is a co-debtor with, or grantor or in any manner a surety for, a bankrupt shall not be altered by the discharge of such bankrupt,” and the appellee argues that the bond by its express provision binds the successors of the principal which would include a receiver and trustee in bankruptcy.

We do not agree with the appellee in its interpretation of the provision of the bond. The obligee in the case at bar was Oklahoma Gas and Electric Company who had furnished the electric service to the principal J. P. O. The principal did bind its heirs, executors, administrators, successors and assigns to pay the amount it owed to the obligee Oklahoma Gas and Electric, but Reliance Insurance Company was not an heir, executor, administrator, successor or assign of the principal J. P. O. The same applies to the surety, Reliance Insurance Company. It had no administrators, successors or assigns involved in this case, but if Reliance Insurance Company should have had administrators, successors and assigns, they would have been jointly and severally obligated under the bond to the same extent Reliance was obligated, and they would have been jointly and severally liable to Oklahoma Gas and Electric to the same extent Reliable would have been liable.

As we interpret the provision of the bond, only the principal and the surety were firmly bound unto the Oklahoma Gas and Electric Company. The principal bound its heirs, executors, administrators, successors and assigns for the obligation incurred and so did Reliance do likewise, but Reliance did not obligate itself for defaults occurring on indebtedness incurred by the principal’s heirs, executors, administrators, successors and assigns. In other words, J. P. O. Enterprises agreed to pay for the electric service furnished to it by Oklahoma Gas and Electric. It further agreed that its heirs, executors, administrators, and assigns would be liable and would pay for the electric service so acquired and used by it. Reliance agreed to pay for the electric service furnished by Oklahoma Gas and Electric to J. P. O. Enterprises and used by it in the event J. P. O. or its heirs, executors, administrators or assigns failed to do so and Reliance agreed that its heirs, executors, administrators and assigns would be bound in carrying out its obligation.

There is no question that Oklahoma Gas and Electric is entitled to pay for its energy sold and delivered in connection with the operation of the businesses in this case. There is no question that J. P. O. Enterprises Corporation of Arkansas obligated itself as well as its heirs, executors, administrators, successors and assigns to pay the obligee Oklahoma Gas and Electric for electric service the principal J. P. O. contracted for and received from the obligee for electric service at its businesses located as set out in the rider attached. There is no question that Reliance Insurance Company obligated itself as well as its administrators, successors and assigns jointly and severally to guarantee the payment for services the principal contracted for and received from the obligee at such establishments. But, the fact of the matter is, J. P. O. did not contract for and receive the electric service furnished to the trustee in bankruptcy at said locations after January 3, 1973.

It is abundantly clear from the affidavit filed in the bankruptcy court on behalf of Oklahoma Gas and Electric that it considered the obligation of J. P. O. Enterprises as well as Reliance Insurance Company’s obligation at an end as of January 3, 1973, and that it only continued service to the trustee in bankruptcy because it felt that it was prohibited from doing otherwise under rules and regulations of the Public Utility Department of the state, and because of an injunction against it as well as against other utility companies under order of the referee in bankruptcy.

The appellee relies on the case of People v. United States Fidelity & Guaranty Co., 114 P. Rpt. 2d p. 389, where a district court in California held a surety liable on a bond for the payment of excise tax on beer sold after the principal had gone into bankruptcy and a receiver had been appointed. The appellee points out that in that case, the surety was held liable for the payment of taxes on beer sold by the receiver after his appointment, and the surety’s argument that its obligation under the bond terminated upon the appointment of the receiver was rejected. The People case might be good precedent for the surety’s liability in the case at bar for electric service furnished to the date of bankruptcy, but the surety admits that liability in the case at bar. In the People case the beer involved had already been manufactured when the principal went into bankruptcy and the receiver was appointed. The bond in the People case was given for the express purpose of insuring the payment of excise tax. The distinguishing feature in that case is set forth in the first sentence of that part of the decision quoted by the appellee as follows:

“ ‘It is appellant’s theory that the license of the Bailey Brewing Company to manufacture and sell beer, or the right to exercise that license, terminated with the appointment of the receiver, with the result that the beer was not sold under the license, so that the tax was not due either from the brewing company or its surety.’ ”

In light of our interpretation of the bond provision as above set out, we deem it unnecessary to prolong this opinion by analyzing the other cases relied on by the appellee, but in none of them was a surety held liable under an obligation to its piincipal for services performed, continued or rendered under a new and separate agreement with, and to, a trustee in bankruptcy in the continuation and winding up of the original principal’s business.

The appellant has cited several cases where liability on surety bonds, with corporations as principals, was held terminated upon consolidation and mergers of the principals with other corporations. We are of the opinion, however, that in the case at bar Reliance Insurance Company only obligated itself to pay Oklahoma Gas and Electric for such utility service it furnished to J. P. O. Enterprises under its contract, and did not obligate itself for default in payment by the trustee in bankruptcy for service furnished the trustee under a new agreement or for service continued under orders of a referee in bankruptcy.

The judgment is affirmed as to the $363.19 for service furnished to J. P. O. Enterprises Corporation but is reversed as to penalty and attorney’s fee and the $3,501.91 for service furnished to the trustee in bankruptcy.

Affirmed in part; reversed in part.

      The original bankruptcy petition was for arrangement under Chapter XI of the Federal Bankruptcy Act and a receiver was appointed. The same receiver was later appointed trustee under straight bankruptcy.


author: Conley Byrd, Justice.

text:
    Gerry Kent DILLAHA v. STATE of Arkansas
    CR 74-111
    517 S.W. 2d 513
    Opinion delivered January 13, 1975

      Murphy & Blair, by: H. David Blair, for appellant.

      Jim Guy Tucker, Atty. Gen., by: Milton Lueken, Asst. Atty. Gen., for appellee.
   Conley Byrd, Justice.

The jury found appellant, Gerry Kent Dillaha guilty of burglary and grand larceny and fixed his punishment on each charge at 21 years in the penitentiary. For reversal he relies upon the following points.

“POINT I. The trial court erred in allowing appellee to introduce into evidence guns carried by persons other than appellant, which guns had relevance neither to the crimes charged nor in connection with appellant.
POINT II. Because of appellee’s highly prejudicial statements to the jury of matters outside of the record, the trial court should have granted appellant’s motion for mistrial and erred in failing to do so.
POINT III. Statements of appellant made shortly after an illegal arrest were improperly admitted into evidence.
POINT IV. Evidence of property of others found in appellant’s vehicle was improperly admitted into evidence.”

The record shows that the burglary and grand larceny occurred at the clinic of Dr. Charles Tucker located just north of Ash Flat near the intersection of Highways No. 167 and No. 62. During the early morning hours of May 26, 1973, two men, Thomas E. Norton and Richard K. Stone were observed in the clinic by a deputy sheriff. The sheriff Ray Martin lives north of the clinic toward Hardy. When he received the summons from his deputies for help he drove from his home directly to the clinic on Highway No. 167. As the sheriff topped the hill where he could view the clinic he saw a slow moving vehicle going south on Highway No. 167, turn right on Highway No. 62 and proceed in a like manner toward Salem. After Norton and Stone had been apprehended and the sheriff had determined that they were from Little Rock, he immediately began to look for their getaway vehicle. About that time a slow moving vehicle came down Highway No. 62 from Salem and proceeded slowly toward Hardy on Highway No. 167. The sheriff stopped appellant at that time and after determining that he was from Little Rock arrested him. At the jail appellant was given the Miranda warnings and placed in a cell some distance from Norton and Stone. While the sheriff was outside the jail he heard Norton yell to appellant, “Gerry, why didn’t you get to hell out of here while you could?” Appellant’s response was; “I didn’t know where you fellows were.” Other proof in the record shows that Ash Flat has a population of only 200 people and that appellant’s vehicle was the only vehicle on the highway for approximately an hour. The sheriff also testified that he had investigated a number of burglaries and that when adults were involved there was always a “get-away” vehicle.

POINT I. We find no merit in appellant’s contention that the guns found in the clinic belonging to Norton were not admissible in evidence. Stone testified for the State that the parties left Little Rock in appellant’s automobile for the purpose of “ripping off a drug store” and that appellant knew that the guns were in the car. Stone further testified that the plan was for him to enter the building with Norton waiting outside for the purpose of shooting anyone who showed up. Thus the guns were admissible to corroborate the testimony of an accomplice and to show that the parties had acted pursuant to a plan or scheme. In the cases relied upon by appellant such as Long v. State, 240 Ark. 687, 401 S.W. 2d 578 (1966), the weapons there erroneously admitted in evidence were neither used nor possessed for the commission of the crime.

POINTS III & IV. Under these points appellant contends that since the arrest was illegal the evidence obtained as a result thereof was improperly admitted — i.e. part of the fruit of the poisonous tree, Wong Sun v. United States, 371 U.S. 471, 83 S. Ct. 407, 9 L. Ed. 2d 441 (1963). As we view the record there was probable cause for the arrest made by the sheriff.

POINT II. During the prosecuting attorney’s argument to the jury the following occurred:

“Dr. Tucker and my law partner grew up together down at Oil Trough, but to his old friends and maybe some of you all know him as Bo — Bo and I have known each other for several years now and after court yesterday he went with me to get some gas up the way, I was afraid I couldn’t get home and back. He said, ‘Terry, I hope you realize and I hope that jury realized I could have gotten killed in a deal like this.’
MR. POST: We object to that, Your Honor. This is not in evidence, we feel that it is a prejudicial error for the prosecutor to mention it, and we ask for a mistrial.
BY THE COURT: The objection will be sustained and that will be taken from the Jury’s consideration. The jury will be instructed to disregard that statement. The motion for mistrial will be overruled. You may proceed. MR. POYNTER: My point is, ladies and-gentlemen, I tell you that for illustrative purposes anyway.”

The statement by the prosecuting attorney is not supported by the record. In fact if such testimony had been offered, it should have been excluded as irrelevant. The effect of the prosecutor’s statement was to transmit a direct appeal from a local doctor for the obvious purpose of appealing to the jury’s passions and prejudices. In reversing a similar appeal to passions and prejudices in Adams v. State, 229 Ark. 777, 318 S.W. 2d 599 (1958), we quoted from Holder v. State, 58 Ark. 473, 25 S.W. 279 (1874), as follows:

“. . . ‘A prosecuting attorney is a public officer ‘acting in a quasi judicial capacity. ’ It is his duty to use all fair, honorable, reasonable and lawful means to secure the conviction of the guilty who are or may be indicted in the courts of his judicial circuit. He should see that they have a fair and impartial trial, and avoid convictions contrary to law. Nothing should tempt him to appeal to prejudices, to pervert the testimony, or make statements to the jury which, whether true or not, have not been proved. The desire for success should never induce him to endeavor to obtain a verdict by arguments based on anything except the evidence in the case and the conclusions legitimately deducible from the law applicable to the same. To convict and punish a person through the influence of prejudice and caprice is as pernicious in its consequences as the escape of a guilty man. The forms of law should never be prostituted to such a purpose.’ ”

Because of the improper remarks of the prosecuting attorney we find that the trial court erred in not declaring a mistrial.

Reversed and remanded.


author: Carleton Harris, Chief Justice.

text:
    David STRODE v. STATE of Arkansas
    CR 74-120
    517 S.W. 2d 954
    Opinion delivered January 20, 1975

      Jeff Duty, for appellant.

      Jim Guy Tucker, Atty. Gen., by: O. H. Hargraves, Dep. Atty. Gen., for appellee.
   Carleton Harris, Chief Justice.

David Strode, appellant herein, was charged with assault with intent to kill and on trial was convicted by a jury, receiving a sentence of seven years imprisonment. From the judgment entered in accordance with the jury verdict, Strode brings this appeal. For reversal, it is asserted that “The method and proceedings used in the selection of the jury amounted to a denial of a fair and impartial trial and due process of law guaranteed by the Constitutions of the State of Arkansas and of the United States.” Actually, this argument covers two asserted errors.

To understand the contentions, it is necessary to point out certain background facts. The current charge against appellant relates to an alleged assault made on Harvey Dean Henshaw on December 7, 1973. Appellant was also charged with assault with intent to kill James Hamblin on December 8, 1973. The assault charge relating to Hamblin was tried on January 17, 1974, and Strode was convicted, this court affirming such conviction. The same jury panel which had been used in this January trial was likewise in use for the trial of Strode in the Henshaw case, which went to trial in February, 1974. It is the contention of appellant that the use of the same panel which had heard the prior case approximately a month earlier, the jury having returned a verdict of guilty in that case, deprived him of the fair and impartial trial guaranteed by the Constitutions of the United States and the State of Arkansas. While the trial court excused the particular 12 persons who served as jurors in the Hamblin assault charge, appellant argues that this step by the court was not sufficient to remove any bias, and a motion was made to quash the entire jury panel, or in the alternative, all members of the panel who were present for the trial of the earlier case. This motion was denied. In arguing here that the trial court erred in its ruling, appellant says:

“We know that the previous panel must have consisted of, at least twenty-four jurors. We find in the record that all but three members were questioned on Voir Dire in the previous trial The charge was the same, the defendant was the same, the only difference being that the victim was a different one.
“Common, ordinary, ‘horse sense’ tells one that these jurors would be unable to eradicate, from their minds, all things learned and impressions made, during the first trial of appellant only about a month before.”

We do not agree. In Montaque v. State, 219 Ark. 385, 242 S.W. 2d 697, Montaque insisted that he did not obtain a fair trial because he was required to select a jury from a panel which had, immediately prior to his trial, heard him vigorously denounced and his credibility violently attacked in another case. James Thompson had been convicted of an assault on Montaque and counsel for Thompson had denounc ed Montaque to the same jury panel with numerous uncomplimentary terms and phrases.

The jurors, when interrogated on voir dire, stated that they had formed no opinions from the previous trial as to the credibility of Montaque, and said that they could try the charge against Montaque impartially. After peremptory challenges had been used, the court refused to quash the remaining members of the panel, i.e., those members who were on the Thompson petit jury, and appellant asserted error. On appeal, we held contrary to the contention of Mon-taque, stating:

“The trial court is given a large discretion in determining the bias or prejudice of a juror as affecting his qualifications to serve in any particular case. In Lane v. State, 168 Ark. 528, 270 S.W. 974, we held: ‘The question of the impartiality of the jury, as guaranteed by the Constitution, Art. 2, § 10, is a judicial question of fact within the sound discretion of the trial court. ’
“Jurors must be presumed to possess the qualifications required under §§ 39-208 and 39-206 of the statutes (Ark. Stats., 1947) and that is ‘persons of good character, of approved integrity, sound judgment, and reasonable information.’ We find no abuse of the trial court’s discretion here. The jurors appear to have been carefully examined on their voir dire as to possible bias or prejudice against appellant and each answered that he had none.”

The record of the present trial does not contain the voir dire examination, and we do not know what questions were asked the members of the panel. Of course, if actual bias were shown, a juror would be disqualified, but there is no contention by appellant of actual bias on the part of any member of the panel, nor is it even shown that any tentative opinions had been formed. In Rowe v. State, 224 Ark. 671, 275 S.W. 2d 887, this court said:

“While it is true that some of the veniremen said that they had formed tentative opinions based upon newspaper reports or what some one had told them, all who were accepted stated that they could and would be guided solely by the testimony, giving to the defendant the benefit of all doubts that the law defines. There was no error in accepting these men. It is no longer practicable in an intelligent society to select jurors from a psychological vacuum or from a stratum where information common to the community as a whole is lacking.”

As previously stated, there is no showing here that any member of the panel possessed any actual bias. The argument is really that members of the panel should be assumed to be biased because they were members of the same panel that served in the first Strode trial.

The second phase of appellant’s argument relates to the fact that in the current case, Strode was originally charged along with a co-defendant, his brother, Walter Strode. Prior to the commencement of the trial, Walter Strode moved for a severance, such motion being denied by the court. After counsel for Walter had used two peremptory challenges to remove two members of the panel, and appellant had exercised one peremptory challenge, the court changed its view, and granted the motion for severance. The two jurors who had been excused by Walter were then, by order of the trial court, returned to the jury panel and the court ruled that appellant had only used his one challenge and was entitled to seven more. Appellant argues that this constituted error, stating:

“A juror challenged peremptorily can have a ‘good’ taste in his mouth and might not be that fair and impartial juror guaranteed by the Constitution of the United States and the State of Arkansas.
“Such procedure, necessarily, makes it imperative that the defendant challenge all such jurors which may be drawn from the box. This precludes his right to otherwise have a free hand at peremptory challenges.”

The record reflects that after appellant had used four of his seven challenges, the panel was exhausted and additional jurors were summonsed. The record is thereafter silent as to whether further peremptory challenges were exercised, and we do not know whether appellant exhausted all eight challenges to which he was entitled under the law. Accordingly, it cannot be contended that he was forced to go to trial with a jury composed of some individuals who were biased. For, to make such a contention, it was necessary that he exhaust his challenges. See Trotter and Harris v. State, 237 Ark. 820, 377 S.W. 2d 14, and the numerous cases cited therein.

Appelant’s contentions have been closely examined, and we find no prejudicial error.

It follows that the judgment of the Washington County Circuit Court should be affirmed.

It is so ordered.

      The opinion was -handed down on October 28, 1974, but was not published-.—

       The record only discloses that in pre-trial proceedings the attorney for appellant, referring to Strode’s first trial, stated:
      “If my memory serves me correctly, we worked through all but three members of this panel on voir dire examination. Each of them heard the charge levied against David Strode. During voir dire there were certain questions regarding Assault with Intent to Kill in that particular case, mentioned to the jury. The jury understood further that — it is defendant’s firm belief that each member of that jury panel would have heard results of the case, whether they served on the actual jury or not.”


author: George Rose Smith, Justice.

text:
    ROWE AUTO & TRAILER SALES, Inc. v. Henry KING
    74-194
    517 S.W. 2d 946
    Opinion delivered January 20, 1975

      Robert D. Smith III and Smith & Peters, for appellant.

      R. David Lewis and Griffin J. Stockley, for appellee.
   George Rose Smith, Justice.

This action at law was brought by Rowe Auto, a used car dealer, to recover an unpaid balance of $580 due under a contract by which it sold a 1965 Chevrolet car to King: King counterclaimed for cancellation of the contract on the ground that it was usurious under Arkansas law and violative of the federal Truth In Lending Act. The trial judge, sitting as a jury, entered a judgment canceling the contract and awarding King damages of $1,000 and an attorney’s fee of $500. Rowe Auto questions the sufficiency of the evidence and the court’s ruling upon issues of law.

On November 24, 1972, King signed a contract by which he purchased the 1965 Chevrolet for a recited cash price of SI 095. The down payment was S250. The unpaid balance of $845 was payable in weekly installments of $20 each, with a final installment of $5. The contract, although reciting the “Amount Financed” as $845, stated that there was no finance charge and thus no annual percentage rate of interest.

King’s theory of the case, with respect both to usury and to the Truth in Lending Act, is that Rowe Auto in fact exacted a finance charge by inflating the credit price far above what the seller would have accepted in a cash transaction. Inasmuch as the provisions of the federal statute and accompanying regulations are more explicit than our case law with regard to usury, we confine our discussion to the federal law. We should add, however, that the appellant’s reliance upon our holding in Ford v. Hancock, 36 Ark. 248 (1880), is not justified, in view of our decisions in Hare v. General Contract Purchase Corp., 220 Ark. 601, 249 S.W. 2d 973 (1952), and Sloan v. Sears, Roebuck & Co., 228 Ark. 464, 308 S.W. 2d 802 (1957).

The Truth In Lending Act, 15 USCA, Chapter 41, Subchapter I, has been extensively implemented by Regulation Z (which is printed immediately after the Act in USCA). Section 226.2 (i) of the Regulation provides that a “cash price” may include the cash price of accessories or services related to the sale, but it cannot include interest or a time price differential, as set out in § 226.4 (a) (1) of the Regulation. In sustaining the Regulation the Supreme Court pointed out in Mourning v. Family Publications Service, 411 U.S. 356 (1973), that one former means of circumventing the objectives of the Act, as passed by Congress, was that of “burying” the cost of credit in the price of goods sold.

King, to show such a violation of the Act (and usury) in this instance, introduced the testimony of Larry Davis and Jim Ahrend. Davis testified that he had gone to the Rowe Auto used car lot on the afternoon before the trial, had asked the credit price of a certain dented 1966 Chevrolet, and had been quoted a price of $995, payable $200 down and $15 a week. Davis testified that he talked to Rowe Auto’s assistant manager, who had testified earlier and was sitting in the courtroom.

The second witness, Ahrend, testified that he too had gone to Rowe Auto, had proposed to a salesman that he would pay cash for the same car, and had been quoted a price of $450. Ahrend obtained a written statement of that price, which was received in evidence. Rowe Auto made no effort to contradict the testimony of either witness.

The trial court overruled Rowe Auto’s objections to the testimony, holding it admissible to show that interest was hidden in the credit price. The only plausible argument now urged against the admissibility of the testimony is that it was too remote, because the date of trial was slightly more than eight months after King’s original purchase.

That argument is without merit. In Fulwider v. Woods, 249 Ark. 776, 461 S.W. 2d 581 (1971), we considered the admissibility, in civil cases, of evidence of other transactions as tending to show a general plan or motive. Although such evidence is usually offered in criminal cases, we discerned no reason why the same rule should not apply in civil cases. Since there is no precise way of determining what is too remote in time, we said that the admission of such testimony rests largely in the sound discretion of the trial court. In Caton and Headley v. State, 252 Ark. 420, 479 S.W. 2d 537 (1972), we again considered the issue of remoteness and discussed one case where the similar conduct had occurred about a year before the offense charged, a second case where the interval was more than two years, and a third where it was from four to five years. In each instance the evidence was held to be admissible. Our conclusion: “The trial court’s latitude of discretion in the matter of remoteness is illustrated in these cases.”

There was certainly no abuse of discretion in the case at bar. In fact, if the two witnesses had priced a car at the Rowe Auto lot, say, six months before the trial, Rowe Auto might easily have been at a disadvantage in trying to refute their testimony after that lapse of time. By contrast, no similar handicap existed with reference to incidents that took place on the day before the trial. The trial judge was doubtless impressed, as we are, by Rowe Auto’s failure to dispute the proffered testimony and, additionally, by Mr. Rowe’s failure to take the witness stand and submit to cross-examination under oath, even though his assistant manager had testified that Rowe handled all such cash transactions.

In view of the testimony just mentioned we must reject the appellant’s argument that King failed to prove a violation of the Truth in Lending Act. Under that statute a cash price must not include interest or a time price differential. Thus the trial court, in order to sustain the a; pellant’s contention, would be required not only to reject the testimony of Davis and Ahrend but also to conclude, without proof, that Rowe Auto would have been equally willing to sell the car to King either for $1095 in cash or for that amount payable, as the contract specified, $250 down and $20 a week for 42 weeks.

We must, however, sustain the appellant’s contention that King failed to ofer substantial proof that the car which he bought was worth only $500, as the trial court found. King did not introduce any expert testimony of value. Instead, he relied upon a finance company employee, who testified that a “Red Book” of used car values showed the car to be worth $500. In overruling the appellant’s objection to that proof the trial court expressed his belief that the Red Book valuation would have been inadmissible at common law but was admissible under the Uniform Commercial Code, Ark. Stat. Ann. § 85-2-724 (Add. 1961), which permits the introduction of trade journals or periodicals.

To begin with, the witness was able to testify only that the Red Book used in the Arkansas offices (their number not being specified) of his own employer. That testimony fell short of establishing the Red Book as a trade journal or periodical. Moreover, the trial court was in error in con-cludin' that the UCC rule of evidence is applicable to this case. Even though the contract of sale between the parties is governed by various provisions of the Code, that statute has no bearing upon the issues now presented, involving usury and Truth In Lending. The UCC does not purport to lay down general rules of law governing litigation not arising under the provisions of the Code. Hence the trial court’s ruling upon the admissibility of the evidence should have followed the common law rather than the UCC rule. It follows that there is no substantial evidence to support the lower court’s essential finding that the value of the car purchased by King was $500.

We find it unnecessary to discuss other arguments urged by the appellant.

Reversed and remanded for a new trial.


author: Lyle Brown, Justice. Carleton Harris, Chief Justice,

text:
    Imogene WILLIAMSON, Executrix of the Estate of Mary Ann MERRITT v. James Clyde MERRITT II & Michael Wheatly MERRITT
    74-235
    519 S.W. 2d 767
    Opinion delivered January 20, 1975
    [Rehearing denied March 24, 1975.]

      Imogene Williamson, for appellant.

      Bolts & Jenkins, for appellees.
   Lyle Brown, Justice.

The sole issue is whether the withdrawal by the testatrix from a savings account willed to appellees showed an intention to revoke the legacy as to the funds withdrawn. The trial court, upon stipulated facts, held there was no such ademption. The appellant is Imogene Williamson, executrix of the estate of Mary Ann Merritt. The appellees are James Clyde Merritt II and Michael Wheatley Merritt, who were designated in the will to receive the proceeds in the savings account.

On January 26, 1965, Ms. Merritt, the testatrix, deposited in the First Federal Savings and Loan Association of Stuttgart, Arkansas, $6,170.05. The account was in the names of “Miss Mary Merritt and James Clyde Merritt and Mike Wheatly Merritt”. There was this written entry. “No withdrawals made without the signature of Miss Merritt. Payable upon her death to James and Mike equally.” The initial deposit was the only one made. By the time of her death Ms. Merritt had, by withdrawals, reduced the savings account to $2,376.68.

Ms. Merritt executed a will on February 12, 1972. Among other things it provided: “I give, devise and bequeath to James Clyde Merritt II and Michael Wheatly Merritt my savings account in First Federal Savings and Loan Ass’n of Stuttgart, Ark. ” The will further directed that the residuary estate be divided equally among nine grandnieces and grandnephews including James and Michael.

On May 1, 1972, by letter, the testatrix gave this directive to First Federal: “Make a transfer in the amount of $3,-000 to the account of Miss Mary Merritt, First National Bank, DeWitt, Arkansas” for “the purpose of taking care of medical expenses for myself”. At that time Ms. Merritt had a checking account at First National and the $3,000 was commingled with $518.78 already in that account. Before her death on May 21, 1972, Ms. Merritt wrote two checks on the account, those checks totaling $69.86.

In the situation before us, we look to the intent of the testatrix. Generaily, the courts look with disfavor upon the ademption of a specific legacy; however, “In construing a will to determine whether there has been an ademption of a specific legacy, the intention of the testator is the controlling factor, the same as in the construction of all wills. Once the intention of the testator has been determined, all other rules of law pertaining to ademption must bend to such intent, so long as his intent does not violate some positive rule of law.” In Re Estate of Brown, 252 N.E. 2d 142 (Ind. 1969). In Brown, the testator willed to his sister-in-law all his rights and title which testator had received from the estate of his deceased brother. Before his death the testator purchased bank certificates with the money obtained from his brother’s estate. The certificates were held intact until testator’s death. The court held there was no ademption.

Looking at the will itself and all other relevant facts and circumstances occurring between the execution of the will and the death of the testatrix, we have concluded there was an ademption. The wording of the will is of no substantial significance on the point in question. However, it should be noted that the will did not “freeze” the savings account at any specific sum. For example, that was the situation in the case cited by appellee—Prendergast v. Walsh, 42 Atl. 1049 (N. J. 1899). In Prendergast, the testatrix bequeathed “whatever of my money now on deposit” (our emphasis) in four named banks to “my beloved sisters”. The money was subsequently withdrawn from the four banks and deposited in another bank. There were no withdrawals. Oral testimony was admitted to show that testatrix moved the money because she thought it would be safer. In that situation the court held there was no ademption.

Upon the opening of the savings account Ms. Merritt made it clear that as long as she lived she held the exclusive right to control withdrawals. As previously stated she had the entry made that no withdrawals would be made without her signature. She did in fact make several withdrawals to the exclusion of all other people. In fact she treated the account as being little more than a checking account. Up until the withdrawal of the $3,000 she had made numerous withdrawals, all of which amounted to $2,599.04.

When Ms. Merritt withdrew the S3,000 from savings she left a tidy balance on savings. By placing the S3,000 in an existing checking account and commingling it with other funds the indication is strong that she no longer wanted the S3,000 to remain a part of her special bequest to James and Michael. In fact she dedicated the funds to her personal needs. The fact that she did not live long enough to expend the funds is not important.

It is also of some significance that the bequest of the savings account was in general terms — “my savings account — rather than naming a specific amount.

Appellee cites Willis v. Barrow, 119 So. 678 (Ala. 1929). But the facts are different from our case. In Willis, money on deposit in a named bank was bequeathed. The money thereafter was transferred to another bank; however, it was placed in a separate savings account rather than commingled with another savings deposit in the same bank. “Significant is the fact that the identical fund was put in a separate savings deposit rather than being commingled with a like savings deposit then in the same bank.”

Appellee also cites In Re Estate of Hall, 160 Atl. 2d 49 (N.J. 1960). Hall, the testator, had money in four banks in Rochester, New York, which he bequeathed to designated relatives. After the execution of the will Hall moved to Maplewood, New Jersey, and he transferred the funds in the four banks to a bank, and a savings and loan association in Maplewood. It was agreed that the funds in the latter account could be directly traced as coming from the banks in Rochester. There was no evidence of commingling of the transferred funds with other funds. The court held it to be obvious that the transfer was purely one of convenience. The court interpreted the will to mean that the testator desired that a grandnephew, Harknett, receive only a nominal sum from his estate. If it held (the court continued) there was an ademption Harknett would receive a substantial sum of money contrary to the wishes of the testator. So we do not think the facts in Hall help in the solution of the problem before us.

Of course appellees, are entitled to the balance in First Federal; however, the S3,000 withdrawn from First Federal was adeemed and therefore becomes a part of the residual estate.

Reversed and remanded.

Harris, C.J., and Holt, J., dissent.

Carleton Harris, Chief Justice,

dissenting. I very much disagree with the majority opinion for two reasons. For one (recognized by the majority), the law looks with disfavor upon the ademption of a specific legacy, and secondly, I cannot agree that the fact situation herein denotes an intent upon the part of Ms. Merritt to revoke the legacy to the two nephews, in the case of In Re Estate of Brown, 252 N.E. 2d 142 (Ind. 1969), cited in the majority opinion there is a thorough discussion of the subject under consideration and the court sets out the law on ademption clearly and definitely as follows:

“The courts look with disfavor upon the ademption of a specific legacy and will not approve of such an ademption unless the facts and circumstances of the particular case unmistakenly demand such a result.
“It is only when the subject matter of the specific legacy has been completely destroyed, alienated or extinguished, or so changed in character that it cannot be recognized or identified, that the legacy will be adeem-ed. But where the subject matter of the specific legacy has not been completely destroyed, alienated or extinguished, but merely changed in form, shape or location, by accident, operation of law, or some act of the testator, and such subject matter in its changed or altered form can be traced into the possession of the testator,, and is a part of his estate as the time of his death, and the attitude of the testator toward such altered property has been such as to indicate no change in his testamentary intent, there is no ademption and the legatee will take such property in its altered form.” [My

In Mee v. Cusineau, Executrix, 213 Ark. 61, 209 S.W. 2d 445, we pointed out the circumstances under which an ademption will occur, and as will be subsequently shown, these circumstances are not present in the instant case. In Mee this court said:

“At § 341, 28 R.C.L. 345, appears statements of the law to the following effect. The distinctive characteristic of a specific legacy is its liability to ademption. If the identical thing bequeathed is not in existence, or has been disposed of so that it does not form a part of the testator’s estate, at the time of his death, the legacy is extinguished or adeemed, and the legatee’s rights are gone. [My emphasis]. The rule is universal that in order to make a specific legacy effective the property bequeathed must be in existence and owned by the testator at the time of his death, and the nonexistence of property at the time of the death of a testator which has been specifically bequeathed by will is the familiar and almost typical form of ademption. [Citing cases]. ***
“The reason for this rule as stated in the numerous cases cited in the note to § 543, 68 C.J. 844, is that as the testator no longer owns the property specifically devised, there is no property for the devisee to take, and also that subsequent conveyance of the property by the testator after having made a specific devise of it indicates conclusively a change of testamentary intent as to that property.”

The majority also mention the case of Prendergast v. Walsh, 42 A. 1049 (N.J), cited by the appellees, but, in my opinion, do not satisfactorily distinguish that case from the one at hand. In Prendergast, the testatrix left a bequest of money to her three sisters, or their survivors, “whatever of my money now on deposit in four banks in New York City (naming them) which may be on hand, and not otherwise disposed of, share and share alike.” During her lifetime, the testatrix withdrew the money from the four New York banks and deposited same in another bank, where it remained until her death. The court, holding there was no ademption, inter alia,

“The thing she bequeathed, she drew from the bank. It remained the identical thing bequeathed, until disposed of in some way by her. She could have disposed of it by consuming it in living, or turning it into other property, or devoting it to a purpose inconsistent with the bequest. She did neither of these things, but, on the contrary, took'the specific thing which she got from the bank, and kept it until April 1st following, and then, with a slight addition, placed it in the Hoboken Bank. While by this deposit in this last-named bank she lost the right to have the same money again in specie, she retained the right to “llave it as money or cash. If thereafter it was properly designated as money or cash, it must be regarded as a part of the same cash which she had taken from the four banks. If the money remained practically the same money, then the removal of it from the place of its deposit did not amount to an ademption. The place of deposit was merely used as descriptive of the thing bequeathed. It was used to identify the particular money given, and it is entirely settled that, where the place is merely descriptive, the removal of the things to another place is immaterial.”

Numerous other cases are to the same effect.

It is apparent that the law strongly looks with disfavor upon an ademption, and if the legacy can be traced and clearly identified and the attitude of the testator toward such altered property has been such as to indicate no change in the testamentary intent, there is no ademption.

Accordingly, the question in this litigation, to which the majority agree, is whether Mary Ann Merritt indicated an intention to revoke the legacy of the two nephews. I contend that there is absolutely nothing in this record — not a single fact — to indicate in any way that Ms. Merritt had any intention to revoke such legacy. In withdrawing the money from the savings and loan association, and depositing it into her checking account, Ms. Merritt specifically and clearly gave her reason for doing so, “the purpose of taking care of medical expenses for myself.” In'other words, it is obvious that the testatrix, whose checking account only consisted of $518.78, contemplated that she would need to expend additional funds for medical expenses, and withdrew the money from the savings and loan account and placed it in her checking account solely for that purpose. This is not unusual, and is done every day by those who are required to live on their savings. She was withdrawing this money for her own use and not for the purpose of leaving it to some different legatee. Of course, if the money was not placed in a checking account, but instead retained at her home, her future expenses could only have been paid in cash and this could hardly be considered practical.

The majority indicate that there is significance in the fact that Ms. Merritt deposited the money withdrawn from the savings account in the checking account that she already maintained, rather than setting it up in a separate account. I cannot attach any importance to this fact. Why should Ms. Merritt, whose only purpose in withdrawing the money from the savings account was to place such money in a location where she could write checks for her medical expenses, open a separate checking account when she already had one? To me, this would be ridiculous.

Succinctly stated, the facts reflect that this withdrawal of funds from the savings and loan association was not occasioned by any change in testamentary intent — but rather (according to her own written statement) was occasioned by her expectation that she would need the money withdrawn for her own personal use.

There is another fact which I consider quite pertinent, and that is that Ms. Merritt’s Will was executed on February 12, 1972, and her death occurred on May 21, 1972, only slightly more than three months after execution of the Will.

To summarize, the depository was changed because Ms. Merritt could not write checks on the money in its original depository. As in Brown, the money can easily be traced into the possession of the testator and was a part of her estate at the time of her death; as in Prendergast, it was not disposed of by her, was not even used for the purpose of turning it into other property, and was not, in my view, set apart for a purpose inconsistent with the bequest.

I, therefore, respectfully dissent to the holding of the majority.

Holt, J., joins in this dissent.

      The majority cite this case and correctly state its holding, which is entirely contrary to the majority view taken in the instant litigation; no effort, however, is made by the majority to distinguish Brown from the case now before us, and it is noticeable that the holding there went beyond the holding of the chancellor in the case before us, in that in Brown the money at issue had been converted to bank certificates.

      From the majority opinion:
      “In Willis, money on deposit in a named bank was bequeathed. The money thereafter was transferred to another bank; however, it was placed in a separate savings account rather than commingled with another savings deposit in the same bank. ‘Significant is the fact that the identical fund was put in a separate savings deposit rather than being commingled with a like savings deposit then in the same bank.’ ”