text:
    Aberdeen Oil Co. v. Goucher.
    5-2814
    362 S. W. 2d 20
    Opinion delivered November 26, 1962.

      M. A. Hathcoat, for appellant.

      R. V. Laverty, for appellee.
   Jim Johnson, Associate Justice.

This is an appeal from a decree quieting title. Appellees, Walter and Alice Goucher, filed suit against Aberdeen Oil Co., Inc., and Crescent Oil & Gas Corp., appellants, and others, seeking to quiet title to certain real property in themselves and to cancel certain mineral grants of record. Appellees ’ predecessor in title, J. W. Stills, purportedly executed, on February 12, 1930, a mineral deed conveying %ths interest in all oil, gas and other minerals on Still's’ property to E. C. Catlett, which deed was recorded on March 4, 1930. This instrument recited a consideration of $1.00, and was signed by mark, the mark being witnessed by the notary public who notarized the instrument. In August 1930 and in 1932, Catlett and his wife made several conveyances of parts of their undivided %ths interest (appellant corporations being the ultimate purchasers through Catlett’s remote grantees of almost one-half of the mineral and oil rights on the subject property). On May 4, 1946, Stills deeded the lands herein involved to appellees Goucher, which deed was recorded September 18, 1946. On March 15, 1962, appellees filed their amended complaint against appellants and others, alleging ownership of the land and seeking to cancel the mineral grant from Stills to Catlett and other instruments made pursuant thereto as clouds upon appellees’ title, alleging that the mineral grant was fraudulently obtained, that there was no valid consideration given, and that appellees had been in adverse possession and paid all taxes on the lands for more than seven years. After trial of the case on March 28, 1962, the chancellor decreed the mineral grant from Stills to Catlett and all subsequent conveyances thereunder cancelled as clouds on appellees ’ title, and quieted and confirmed title in fee simple in appellees. In its opinion, the trial court stated, inter alia :

“That the ‘Oil, Gas and Mineral Grant’ . . . was obtained and placed of record by payment of $1.00 consideration for a %th interest in all oil, gas and other minerals under or pertaining to 130 acres of the above described lands. There is no contention or proof of consideration in addition to the $1.00 recited in the deed, and the presumption is that the recited consideration is the true one. The mineral grant and the record thereof reflects on its face that the signatures of the grantors were made by “mark” only indicating that because of either illiteracy or infirmity they were incapable of signing their names.
‘ ‘ Here we have an alleged conveyance of a fee interest in 130 acres of land for the token consideration of $1.00 only coupled with the signatures of the grantors by ‘marks’, and this combination of circumstances disclosed upon the face of the mineral grant instrument itself, and the record thereof, constitute a badge of fraud sufficient to place all of the defendants herein upon inquiry as to whether the purported mineral grant was a bona fide transaction.”

From the decree comes this appeal. For reversal, appellants rely on two points: (1) That the findings and judgment of the trial court are contrary to law; and (2) that the findings and judgment of the trial court are against, and not supported by, a clear preponderance of the evidence.

The evidence in the record includes the mineral grant and conveyances subsequent to it, agreed statement of facts between the attorneys for the parties, and testimony taken in open court and by interrogatories.

The facts are undisputed that the mineral deed from Stills to Catlett was recorded in the proper county some 32 years ago; that appellants without notice of defect or adverse claims paid a valuable consideration to their predecessors in title for their mineral interests; that all the parties to the deed from Stills to Catlett as well as the notary public who took the acknowledgment to the deed are dead.

We have recently considered the quantum of proof necessary to set aside a deed, in Simmons v. Murphy, 235 Ark. 519, 360 S. W. 2d 765, (opinion delivered October 8, 1962), in which we stated :

££ This court has consistently held that in a proceeding to cancel a solemn deed, on the theory of nondelivery or otherwise, the quantum of proof required must rise above a preponderance of the testimony; it must be clear, cogent and convincing.” Stephens v. Keener, 199 Ark. 1051, 137 S. W. 2d 253.

On trial de novo we have diligently searched the record for evidence of the quantum necessary to meet the test of the rule set out above. Not only have we failed to find such evidence but also we find virtually an absence of proof as to fraud, adverse possession of the mineral interest, Schuman v. Certain Lands, 223 Ark. 85, 264 S. W. 2d 413; Jones v. Brown, 211 Ark. 164, 199 S. W. 2d 973, and lack of consideration. This being true, the sole question remaining for our determination is whether a deed, reciting a consideration of $1.00 coupled with the signatures of the grantors by marks, disclosed on the face of the instrument, is void as a matter of law.

A mere inadequacy of consideration is not sufficient to set aside a deed without accompanying acts of fraud or deception. Luther v. Bonner, 203 Ark. 848, 159 S. W. 2d 454; Penney v. Long, 210 Ark. 702, 197 S. W. 2d 470. There is absolutely no proof of fraud shown by the evidence in this case. Fraud is never presumed, but must be affirmatively proved. Green v. Bush, 203 Ark. 883, 159 S. W. 2d 458, and burden is on the one pleading fraud to establish it. Gerlach v. Cooper, 217 Ark. 596, 232 S. W. 2d 458. Before inadequacy of price will be considered a sufficient ground for cancellation of a conveyance it must be so great that it shocks the conscience. Cunningham v. Love, 202 Ark. 375, 150 S. W. 2d 217; Braswell v. Brandon, 208 Ark. 174, 185 S. W. 2d 271; Johnson v. Foster, 201 Ark. 518, 146 S. W. 2d 681. There is no proof in this record as to value, if any, of the oil, gas and mineral rights conveyed. That there is an actual consideration which is legal and of some value is enough. Luther v. Bonner, supra.

One is bound by whatever he uses as a substitute for his name. Walker v. Emrich, 212 Ark. 598, 206 S. W. 2d 769. The signing of a deed by a properly witnessed mark does not affect its validity. This has been the law in Arkansas “since the memory of man runneth not to the contrary. ’ ’ This common law rule was adopted as a part of the Civil Code of 1868. See Ark. Stats. § 27-109. Watson v. Billings, 38 Ark. 278.

The law as to consideration and signature by mark being thus established, and in the absence of proof tending to question the verity of either, it follows that the coupling together in the same instrument of a recited consideration of $1.00 and execution of the instrument by mark does not ipso facto render the instrument void. To hold otherwise would place in question some of the best established titles to real property in this state. Accordingly, the decree is reversed and the cause is remanded with directions for the entry of orders consistent with this opinion.


source: Caselaw Access Project

author: Neill Bohlinger, Associate Justice.

license: Public Domain

text:
    Hendrix v. Thomas.
    5-2787
    362 S. W. 2d 22
    Opinion delivered November 26, 1962.

      Maner & Stanley, by Fenton Stanley, for appellant.

      Joe W. McCoy, for appellee.
   Neill Bohlinger, Associate Justice.

This case was brought in the Chancery Court of Hot Spring County by Charlie Y. Hendrix, an incompetent, by his brothers and sisters as his next friend against Robert Thomas and Dovie J. Thomas and sought the cancellation of two deeds which the appellant, Charlie Y. Hendrix, and his wife had executed conveying their home in Malvern, Arkansas to the appellees.

It was alleged that Charlie Y. Hendrix was mentally incompetent to transact his business affairs and that Eliza J. Hendrix, the wife of Charlie Y. Hendrix, was physically and mentally depressed and that while she was in the home of the appellees and in that state of health she was fraudulently induced to transfer the property in Malvern to the appellees; that the transfer of the title to their property was void by reason of the mental incompetency of the grantor; that the deeds were procured by duress and the exercise of undue influence by the appellees; that the deeds were given without consideration or upon a grossly inadequate consideration; and, that there was such a failure of the consideration that the transaction resulted in a fraud upon Charlie Y. Hendrix.

While the case was pending, the First National Bank in Little Rock, having been appointed guardian of the estate of the incompetent, was substituted as plaintiff.

The case was duly tried and on October 3, 1961, the chancellor entered a decree dismissing with prejudice the complaint in this cause and from that action comes this appeal.

The record reflects that on the 13th day of May, 1959, the title to the property here involved was transferred by the appellant, Charlie Y. Hendrix, to Eliza J. Hendrix, his wife, and she in turn,delivered a warranty deed to the same property to the appellees herein, the deed reciting $1.00 and other considerations and she retained in snch deed a life estate in herself.

Much testimony was taken before the chancellor and it appears that Charlie Y. Hendrix, if not incompetent, was suffering from a speech impairment and that his wife had cared for him for a long period of time in realization of his lack of capacity to care for himself and his physical needs. It further appears that Eliza J. Hendrix was, at the time of the execution of the deeds on May 13, 1959, suffering from a malignancy from which she died the following September. After the death of Eliza J. Hendrix, the appellees took the incompetent appellant to their home and three days after the burial of Eliza J. Hendrix, on September 21st, the appellees transported the appellant, Charlie Y. Hendrix, to the federal mental hospital at Ft. Boots where he remained until he was released to his sister, Mrs. Madie Pippin, in December of 1959. He has remained in her home near Jacksonville, Arkansas, ever since.

The evidence is, for the most part, convincing that Charlie Y. Hendrix was an incompetent and the Probate Court of Pulaski County so found but there is an absence of testimony as to whether or not Charlie Y. Hendrix, at the time of the execution of the deeds on May 13,1959, was aware of the extent and value of his one piece of property and to whom he was transferring it or for what consideration, but the following facts are clear: Eliza J. Hendrix was dying of a cancer; the appellee, Mrs. Dovie J. Thomas, was her sister and appellees seem to have made a number of trips to the home of Charlie V. Hendrix and Eliza J. Hendrix in Malvern; they carried Mrs. Hendrix to a hospital and to doctors and for a while moved Mr. and Mrs. Hendrix to the Thomas home in Little Bock. We are now confronted with the question as to whether or not if Charlie Y. Hendrix, as the chancellor found, was capable of transferring and disposing of his entire estate, were the circumstances such as to preponderate in favor of a finding of fraud in the procurement of the two deeds by which Hendrix divested himself of his home. One deed was made to his wife and at the same time the wife executed her deed to that home to the appellees.

The consideration recited in the deeds is $1.00 and other valuable considerations. In searching for the fraud that is alleged we look to the circumstances by which appellant’s home was transferred to the appellees. Viewing the testimony, as to the consideration, in the light of the circumstances that confronted Hendrix and his wife we find it difficult to believe that the deeds were given, as the appellee, Mrs. Thomas, stated, “they gave me that for helping them in their illness.” There was nothing rendered to the appellants by the appellees in the period that preceded the death of Mrs. Hendrix in September that would not have been prompted by a warm personal friendship in addition to services which would be engendered by the tie of blood and we conclude that the next statement of the appellee, “yes, she asked me if I would take care of him [Hendrix] and I said I would see that he was cared for,” was the basic reason for the conveyance.

There are two other witnesses as to the promises which prompted the giving of the deeds. The appellee, Dovie J. Thomas, testified: “I said I promised my sister that I would care for him,” and the witness, Mrs. Spears, who heard the conversation when the deeds were explained by the attorney who drew them, was definite in her statement: “The place was to be deeded to Mr. and Mrs. Thomas to see after Mr. Hendrix. ’ ’ Mrs. Pippin, the sister of the incompetent appellant and who is the duly appointed guardian of his person, testified in regard to a conversation with Dovie J. Thomas: “She said she promised Liza that she would take care of Charlie but she didn’t promise that she would take care of him at her house.” However, it is immaterial as to which line of testimony we take. Whether the out-and-out statements of Mrs. Thomas and Mrs. Spears that the appellees would care for the incompetent, or the more guarded statement of the appellee, Robert B. Thomas, that he would see he was taken care of is true, the result is the same for the appellees have failed to do either of these two things.

Eliza J. Hendrix was buried on September 21, 1959, and her husband, the incompetent appellant, was taken by the appellees to their home in Little Rock and on September 24th, or three days after they started caring for the appellant, they delivered him to the mental hospital. When the appellees placed the incompetent in the mental hospital they were doing nothing for him that he conld not have done for himself. He had earned the right to the care which the government hospital afforded by reason of his service in the army. He could have committed himself, for the appellees testified that the incompetent had his admission card on him when they delivered him there, or he might have been committed by any veteran’s agency or by a court and the only thing that the appellees furnished toward his care was the automobile ride from their home in Little Rock to the mental institution at Ft. Roots.

There seems to have been but one person, after the death of the appellant’s wife, who has displayed any degree of interest or care for his welfare and that is his sister, Mrs. Pippin. She made efforts to have him released from the mental institution and finally, in December, the hospital authorities deemed it prudent and released the incompetent to her.

The only logical conclusion that can be taken from the testimony in regard to the deeds is that the sole asset that the incompetent had to shield him from charity was his home which was given away. His plight was so pitiful that one witness testified that his wife had to fix his food on his plate and watch him while he was out in the yard as though he were a little child. Death was imminent for the wife and she therefore gave up their sole asset to assure him of some degree of care and comfort after her death.

This support the appellees have failed to provide. They have not cared for him or seen that he was cared for and when they saw the doors of the mental institution close on him they deemed their promise of care had been fulfilled. Neither can they take refuge behind the fact that a guardian was appointed for him. The books are replete with instances in which guardians have been faithless to the'ir trust and the estates of incompetents and minors have, in many instances, been dissipated and some incompetents and minors, for lack of care by their guardians, have suffered hardship and privation which their estates might have mitigated. If this incompetent has a kind and considerate guardian it is by a fortuitous circumstance for which the appellees can take no credit.

The appellee, Mrs. Thomas, seems to have objected at the hospital to the custody of the incompetent being given to Mrs. Pippin and while the record discloses recitals of care and solicitude on behalf of the appellees toward Mr. and Mrs. Hendrix prior to the death of Mrs. Hendrix, we find no instance in which the appellees have concerned themselves as to the extent and kind of care that the incompetent was receiving since Mrs. Hendrix’ death although they had received a valuable piece of property under a promise that they would care for him.

In the case of Cannon v. Owens, 224 Ark. 614, 275 S. W. 2d 445, we said:

“* * * It is true that when a promise of future support is made in good faith, the cause of action for its breach is personal to the promisee and cannot be asserted by his heirs. Priest v. Murphy, 103 Ark. 464, 149 S. W. 98; Jeffery v. Patton, 182 Ark. 449, 31 S. W. 2d 738. But nonperformance of the promise may also be evidence of fraud in the original procurement of the deed, giving rise to a cause of action that does survive'the promisee’s death. Phillips v. Phillips, 173 Ark. 1, 291 S. W. 802; Richey v. Crabtree, 198 Ark. 25, 127 S. W. 2d 269.”

In the instant case we have the nonperformance of a promise and that nonperformance had its inception within three days of the burial of the incompetent’s wife.

In Owen v. Owen, 185 Ark. 1069, 51 S. W. 2d 524, we said:

‘ ‘ This court is committed to the doctrine that, where a deed is executed in consideration of the agreement by the grantee to support the grantor, and this agreement is made by the grantee for the fraudulent purpose of securing the deed, and without intending to carry it out, and it has this effect, it constitutes a fraud vitiating the conveyance, and equity will set it aside. Salyers v. Smith, 67 Ark. 526, 55 S. W. 936; Boyd v. Lloyd, 86 Ark. 169, 110 S. W. 596; Edwards v. Locke, 134 Ark. 80, 203 S. W. 286; Jeffery v. Patton, 182 Ark. 449, 31 S. W. 2d 738; and Federal Land Bank of St. Louis v. Miller, 184 Ark. 415, 42 S. W. 2d 564. ’ ’

The same rule was laid down and discussed in Brimson v. Pearrow, 218 Ark. 27, 234 S. W. 2d 214:

“ * * * In the recent case of Green v. Whitney, 215 Ark. 257, 220 S. W. 2d 119, we reaffirmed the following-rule stated in the leading case of Edwards v. Locke, 134 Ark. 80, 203 S. W. 286: ‘This court is committed to the doctrine, which is supported by the great weight of authority, as announced in 4 R.C.L., p. 509, § 22, that: “Where a grantor conveys land, and the consideration is an agreement by the grantee to support, maintain, and care for the grantor during- the remainder of her or his natural life, and the grantee neglects or refuses to comply with the contract, that the grantor may, in equity, have a decree rescinding the contract and setting aside the deed and reinvesting the grantor with the title to the real estate.” Salyers v. Smith, 67 Ark. 526-531, 55 S. W. 936; Priest v. Murphy, 103 Ark. 464, 149 S. W. 98; Whittaker v. Trammell, 86 Ark. 251, 110 S. W. 1041.

The rationale of the doctrine is that an intentional failure upon the part of the grantee to perform the contract to support, where that is the consideration for a deed, raises the presumption of such fraudulent intention from the inception of the contract and, therefore, vitiates the deed based upon such consideration. Such contracts are in a class peculiar to themselves, and where the grantee intentionally fails to perform the contract, the remedy by cancellation, as for fraud, may be resorted to regardless of any remedy that the grantor may have had also at law.

It thus appearing that the deed from Eliza J. Hendrix to Robert B. and Dovie J. Thomas should be set aside, it brings us to consideration of the deed from Charles and Eliza Hendrix to Eliza Hendrix. In the recent case of Henslee v. Boyd, 235 Ark. 369, 360 S. W. 2d 505, this court said:

i i # * * ^w0 instruments were executed together, in the course of the same transaction, and should he considered as a single contract not only in the matter of interpretation, Gowen v. Sullins, 212 Ark. 824, 208 S. W. 2d 450, but also, we think, in the determination of whether rescission is proper.”

We therefore treat both instruments as a part of the same scheme and both deeds should accordingly be set aside.

The decree in this case is accordingly reversed and remanded with directions to cancel the deeds above referred to and vest the title to the involved property in the guardian of the estate of Charlie Y. Hendrix, incompetent.

The chancery court will take proof and ascertain if any rents and profits have accrued from this property since the death of Eliza Hendrix and enter proper judgments in behalf of the estate of the appellant, Charlie Y. Hendrix.

In briefing the case for the appellant the attorneys have failed to include a transcript of the testimony of the appellees which is required by Rule No. 9 of the rules of this court, (d) the abstract being designed to bring before the court the material parts of the pleadings, proceedings, facts, documents, and other matters in the record that are necessary to all questions presented to this court for decision. The appellees have, in order for this court to be advised of the facts, supplied the deficiency in appellant’s abstract. The trial court will ascertain the costs to the appellees of supplying that part of the abstract and judgment against the appellant will be entered for that amount. Otherwise, the appellant will recover costs. It is so ordered.


author: Carleton Harris, Chief Justice.

text:
    Caldwell v. McLeod.
    5-2833
    362 S. W. 2d 436
    Opinion delivered December 3, 1962.

      O. W. “Pete” Wiggins, for appellant.

      Cockrill, Laser, McGehee & Sharp, for appellee.
   Carleton Harris, Chief Justice.

This appeal relates to an automobile accident which occurred in North Little Rock on June 21, 1961. Appellant, R. E. Caldwell, was driving his automobile north on Olive Street and William H. McLeod, appellee, was driving west on East Broadway. The collision took place in the intersection. McLeod instituted suit against Caldwell, alleging various counts of negligence, and sought judgment against the latter for damage to his automobile in the sum of $229.15. Caldwell answered, wherein he denied the allegations of negligence, and filed his own cross complaint, alleging negligence on the part of McLeod. Judgment was sought in the amount of $1,008.50 as alleged damage to his automobile. The case was tried by the court, sitting as a jury. Sole witnesses were appellant, appellee, and Sgt. Larry W. Patterson of the North Little Rock Police Department, who was called as a witness on behalf of appellee. At the conclusion of the testimony, the court entered its judgment, finding that the collision “was unavoidable, and occurred without negligence on the part of either driver”; the complaint and cross-complaint were thereupon dismissed. From this judgment, Caldwell brings this appeal; McLeod has not cross-appealed. Appellant relies upon one point, vis., that the physical facts clearly establish that the damages to his car were caused by the sole negligence of appellee.

Caldwell testified that he was driving north on Olive Street, and stopped at a stop sign before entering into East Broadway. East Broadway is a four-lane thorough-way. According to the witness, an east-bound car on Broadway, driven by a lady unknown to appellant, had entered into the intersection, blocking his way across. This car then backed out of the intersection, and the lady signaled Caldwell to proceed. He stated that he looked, saw no traffic approaching and entered into the intersection. His car was struck by appellee.

Officer Patterson testified that the approximate point of impact was 13 feet south of the north curb of Broadway, and 4 feet west of the east curb line of Olive. He stated that the accident happened 2 feet over the center line of the two west-bound lanes on Broadway.

McLeod testified that he was traveling west, in the inside lane (nearest to the center line); that “as the officer stated, there were cars blocking, or cars piled up on Broadway there with an opening for Olive Street”. According to the witness, he was approximately two to three car lengths from the intersection when he first saw the front of the Caldwell car entering into Broadway ; that he hit the brake, and almost immediately struck appellant’s vehicle. He estimated his speed at 25 to 30 miles an hour.

Of course, our view as to whether the collision was due to negligence on the part of either, or both parties, is immaterial; we are only concerned with whether there was substantial evidence to support the trial court’s finding that the accident was unavoidable. We think this query is immediately answered if we pose but a single question vis., “Can it be said, as a matter of law, that there was negligence on the part of either litigant?” Unless that question can be answered in the affirmative, appellant cannot prevail. From the facts herein recited, it is apparent that the question of negligence was a question of fact (rather than a question of law), and the jury, or court, sitting as a jury, are the triers of fact questions. The term “unavoidable accident” actually means a collision occurring without negligence on the part of either driver. Appellant testified that he stopped at the stop sign, looked, and saw no cars approaching. Appellee testified that he was proceeding at a lawful rate of speed, and the Caldwell car suddenly came out from the side street; though he applied his brakes, there was not sufficient time to stop. In addition, the evidence reflected that there was gravel on the street, spilled from large trucks which had been hauling to the expressway, which could have made stopping more difficult. Certainly, the question of whether appellant, (after stopping at the stop sign), was negligent in moving on into Broadway, or whether appellee was driving too fast under the circumstances existing at the time, were questions of fact to be determined by the trial court, sitting as a jury. "While the court, in reaching its conclusion, did not divulge its reasons, it could, well have found that the accident was occasioned by the act of the unknown woman, who motioned to appellant to enter into Broadway, i.e., the court could have found that the driver of this third car was entirely to blame for the collision. "While appellant argues that there was no substantial evidence to support the court’s finding of unavoidable accident, he is really complaining (as set out in his point for reversal), that the court found no negligence on the part of appellee. This is actually the issue, since appellee has not cross-appealed; a finding of no substantial evidence that Caldwell was free of negligence would certainly not benefit appellant. We are unable to say from the record in this case, that there was no substantial evidence that appellee was operating Ms automobile, under all tbe attendant circumstances and conditions, in tbe exercise of ordinary care, i.e., without negligence.

Affirmed.

Ward, J., concurs.

       Subsequently, Caldwell reduced his claim to $987.00.

       Broadway is about 44 feet wide.

       McLeod was driving a Ford Falcon.

       Of course, the fact that one might be guilty of negligence in following the directions of an unauthorized “traffic director” would he of no aid to appellant in this case.


author: Ed. F. McFaddin, Associate Justice.

text:
    Latty v. Latty.
    5-2816
    362 S. W. 2d 676
    Opinion delivered December 3, 1962.
    [Rehearing denied January 7, 1963.]

      Batchelor & Batchelor, for appellant.

      Jeff Duty, for appellee.
   Ed. F. McFaddin, Associate Justice.

This is a dispute between the divorced parents of a little boy, as to visitation rights of the father.

John and Catherine Latty were married on March 14, 1957; and on April 6, 1961 the Benton Chancery Court awarded John Latty a divorce on his cross-complaint, but gave Catherine Latty the custody of their 3-year-old son, Jimmy Latty, and required John Latty to pay $50.00 each month for the support of the little boy. Catherine Latty had removed to Kiowa, Oklahoma (some 200 miles from Benton County, Arkansas) during the course of the divorce litigation; and the decree of April 6,1961 had this provision as to the visitation rights of John Latty:

“The custody of the minor child,. Jimmy John Latty, should be awarded to plaintiff (Catherine Latty) with the right to the defendant (John Latty) for reasonable visitation, including a visit with said child every other week-end at his home in Benton County, which will include an over-night stay with the defendant on a Saturday night. The burden is upon the plaintiff (Catherine Latty) to bring the child for the visit and return the child at her own expense. The defendant is further granted the temporary custody of said child for one month during the summer, such month to be chosen by the defendant, but he shall give reasonable notice of the time for such visit, which shall be not less than two days prior to his coming after the child. The expense of coming after and returning the child for this month’s visit during the summer shall be borne by the defendant.”

On December 22, 1961, Catherine Latty filed a petition in the Benton Chancery Court seeking, inter alia: (a) modification of the above copied visitation provisions; and (b) increased monthly payments because another child had been born to the Lattys after the divorce decree had been granted. At the hearing from which comes this appeal, the Chancery Court rendered a decree on January 25, 1962, which increased the monthly payments required of John Latty to $60.00 per month (on account of the birth of the other child), and made this provision as to John Latty’s visitation rights to his now 4-year-old son Jimmy:

“That part of the Petition which seeks to modify the Decree of April 6th, 1961 as to custody and visitation rights concerning the minor child, Jimmy John Latty, should be denied, and said Decree as regards custody and visitation rights should remain as rendered and unchanged.
“It is further found by the Court that the Plaintiff and Cross-Defendant, Catherine Latty, should deliver said child, Jimmy John Latty, to the Defendant and Cross-Plaintiff, John Latty, Jr., on the week-end visits as provided for in said Decree, between 2:00 and 2:30 P.M. on Saturday and that said child shall remain with the defendant and Cross-Plaintiff until 1:30 P.M. on Sunday.”

On this appeal, Catherine Latty challenges the Chancery Decree on five points; but we find none to possess merit except the one now to be discussed; and it relates to the requirement in the decree that Catherine Latty bear the entire expense of delivering Jimmy Latty to his father, and returning to receive the boy.

Since the making of the original visitation order on April 6, 1961, there has been a change in conditions, in that Catherine Latty has another baby; and naturally such baby requires her attention. The distance from Kiowa, Oklahoma to Benton County, Arkansas was shown to be approximately 200 miles, and a four or five hour journey by automobile, which seems to be the best method of transportation in this case. Catherine Latty has no automobile; and to comply with the Court’s decree she must either borrow her step-father’s car, or borrow or rent a car from some other person. "We conclude that it is an unjust burden to charge her with the responsibility and expense of delivering Jimmy Latty to his father in Benton County, Arkansas for each bi-weekly visit, as well as the expense of returning to receive the child at the end of such visit. It was shown that John Latty has an automobile, and that he rarely works on Saturdays and Sundays. We therefore conclude that John Latty is better able to make the bi-weekly trips, than is Catherine Latty.

We, therefore, modify the decree of January 25, 1962, to this extent only: John Latty may go to Catherine Latty’s home in or near Kiowa, Oklahoma every other week, if he so desires, and get his son Jimmy at any time after 8:00 A.M. on Saturday; but must return the child to the mother in or near Kiowa, Oklahoma not later than 6:00 P.M. on the next day (Sunday); and the expense of the trip will be borne by John Latty and no part of such expenses will be deducted from the $60.00 per month support money which he is to pay.

As so modified, the Chancery decree is affirmed at the cost of appellee.


text:
    Loveless v. Diehl.
    5-2841
    364 S. W. 2d 317
    Opinion delivered December 3, 1962.
    [Rehearing granted Feb. 18, 1963
    See 236 Ark. 129.]

      Rolland A. Bradley, for appellant.

      Robert W. Henry, for appellee.
   Ed. F. McFaddin, Associate Justice.

Appellees, W. A. Diehl and wife, filed suit against Appellants, J. E. Loveless and wife, for specific performance of an option contract, and in the alternative prayed for damages. Appellants, Loveless and wife, denied the claim for specific performance; and, by counterclaim, sought judgment on a note. Trial in the Chancery Court resulted in a decree awarding Diehl and wife specific performance and damages ; and also awarding Loveless judgment on the note. Both sides have appealed.

Mr. and Mrs. Loveless owned a farm of 79 acres in Faulkner County; and they leased the farm to Mr. and Mrs. Diehl for a 3-year term beginning December 15, 1956, at a rental of $100.00 per month, payable in advance. The lease instrument also contained this option:

“It is mutually agreed and understood between the parties hereto that Lessees shall have an option to purchase said property at any time during the life of this lease, it being specifically understood that at any time between December 15, 1956, and December 15, 1959, that said option can be exercised by the Lessees wherein they will be permitted to purchase said lands for a total purchase price of $21,000.00.”

The Diehls took possession of the land and spent several thousand dollars in improvements. Also, Mr. Diehl purchased from Mr. Loveless a “pipeline milking system complete with two walk through stalls,” and executed therefor his promissory note for $1,440.95; and no part of this note has been paid. The Diehls evidently intended to seasonably exercise the option to purchase the land; but as time went on they found it impossible to do so. In order to salvage what they could from the expenditures they had made for improvements, the Diehls listed the property with real estate brokers, hoping to find a purchaser who would pay in excess of the $21,000.00, the amount required to be paid to exercise the option with Loveless.

Shortly before the option expired, the Diehls agreed with Dr. J. W. Hart to sell him the place for $22,000.00; which, after paying the Loveless option of $21,000.00, would have left the Diehls $1,000.00. It is clear that Dr. Hart could have paid the $22,000.00 for the property. The evidence is in conflict as to the conversations and dealings between the Diehls and Dr. Hart on the one side, and the Lovelesses on the other; but it is reasonably clear that before December 15,1959, Dr. Hart would have paid the $22,000.00. if Mr. Loveless had not interfered with the Diehl-Hart trade, by disclaiming any intention to sell the property to Diehl. Such interference and disavowal by Loveless made unnecessary any further tender of the $21,000.00 to him. (Read’s Drug Store v. Hessig-Ellis Drug Co., 93 Ark. 497, 125 S.W. 434.)

After December 15, 1959 the Diehls moved a portion of their property from the premises; and the Lovelesses took forcible possession, and rented the property to Mr. Waggoner for $100.00 per month; and there are claims and counterclaims because of such forcible possession, and also claims for rent, and damages. No useful purpose would be served by detailing the testimony of the various witnesses and differentiating our conclusions from those of the learned Chancellor. After a careful study of all the evidence, we have decided that the best way to conclude this litigation is as follows:

1. The Diehls are entitled to judgment against the Lovelesses for $1,000.00, being the amount the Diehls would have realized if they had purchased the property from the Lovelesses for $21,000.00 and sold it to Dr. Hart for $22,000.00. Under the situation as it existed in December 1959, the judgment of $1,000.00 gives the Diehls all the relief that a deed from the Lovelesses would have given them. The Diehls admitted that they could not have purchased the property except by obtaining the money through resale to Dr. Hart. He was ready, able, and willing to purchase in December 1959, but was not bound to do so thereafter. Furthermore, the Diehls prayed for damages in the alternative to specific performance, and we conclude that the amount of $1,000.00 is the amount of damages they established in connection with the option to purchase; and this conclusion eliminates any rental claims of the Diehls after December 15, 1959. In thus awarding the clearly established damages in lieu of specific performance, we are exercising the sound discretion which a court of equity has in cases involving specific performance. Such discretion has been recognized in: Orr v. Orr, 206 Ark. 844, 177 S.W. 2d 915; Cole v. Salyers, 190 Ark. 53, 76 S.W. 2d 669; and Simms v. Best, 140 Ark. 384, 215 S.W. 519. See also Jamison Coal Co. v. Goltra (8th Cir.), 143 F. 2d 889; 154 A.L.R. 1191; and see also 49 Am. Jur. p. 13 et seq., “Specific Performance” § 8 and § 9.

2. Mr. Loveless is entitled to judgment against Mr. Diehl on the milking equipment note for $1,440.95, with interest at six per cent per annum from January 15, 1957 until paid. The $1,000.00 damages as awarded the Diehls in the paragraph just above is to be credited on the Loveless judgment as of December 15, 1959; and Mr. Loveless will have judgment against Mr. Diehl for the balance: The appellees’ claim to strike this note item was correctly denied by the Chancery Court.

3. The claim of the Lovelesses for balance of rents, and the claims of the Diehls for loss of property were considered by the learned Chancellor as offsetting. At least, each claim was so disputed by evidence as to be unproved; and in this we agree.

It follows that the Chancery decree is reversed and the cause remanded, with directions to enter a decree in keeping with this opinion; and each party will bear the cost of the entire case that such party has incurred.

Johnson, J., not participating.


author: George Rose Smith, J.

text:
    Ark. State Highway Comm. v. Light, Judge.
    5-2931
    363 S. W. 2d 134
    Opinion delivered December 3, 1962.
    [Rehearing denied January 14, 1963.]

      Dowell Anders, H. Clay Robinson and Wm. H. Donham, for petitioners.

      Hale & Fogleman, Rieves & Smith, Spears & Sloan, for respondents.
   George Rose Smith, J.

This petition for a writ of prohibition (or a ivrit of certiorari) involves a construction of Act 115 of 1953, regulating the procedure by which the Highway Commission may deposit estimated compensation in the registry of the court in condemnation cases. Ark. Stats. 1947, §§ 76-534 to 76-541. The particular question at issue is the extent of the trial court’s power to permit the landowner to withdraw the deposit before trial.

In 1960 the commission filed a proceeding for the condemnation of eight tracts of land in Crittenden county. Upon the filing of the petition the commission deposited $111,300 in the registry of-the court, as estimated compensation to the landowners.. By various orders of the court the property owners were permitted to withdraw the original deposit from the court’s registry. The commission concedes that these withdrawals of the initial deposit were allowed by the statute. Ark. Stats., § 76-537.

Later on the defendant landowners asked the court to increase the amount of the deposit, contending that the commission’s estimate had been too low. After a hearing the court directed the commission to deposit an additional $176,200. This was done. On October 15,1962, the court, over the commission’s objection, entered an order permitting the landowners to withdraw the additional deposit.

The commission then filed its petition in this court, asking us to prohibit the circuit court from enforcing the order just mentioned. After a preliminary hearing counsel dropped their insistence that a temporary writ of prohibition be issued; that writ tests only the question of jurisdiction, and the circuit court plainly has jurisdiction over funds that have properly been deposited in its own registry. Instead, counsel now ask that we treat the petition as one for certiorari, as we may do, Wasson v. Dodge, 192 Ark. 728, 94 S. W. 2d 720, and quash the challenged order as being void for want of statutory authority.

In seeking certiorari the commission maintains that it has no effective remedy by appeal, because after final judgment in the condemnation proceeding the validity of the interlocutory order of distribution may present only a moot question. Even so, certiorari will not lie unless the trial court exceeded its jurisdiction in making the order. Brown & Hackney, Inc., v. Stephenson, 157 Ark. 470, 248 S. W. 556.

We need not speculate whether the absence of statutory authority would render an order such as this one actually void, for in our opinion the court did not exceed the power conferred by Act 115. Sections 3 and 5 of the act permit the commission to acquire title to the land and the right to possession by making a deposit of the estimated compensation. Section 8 allows any landowner who feels aggrieved at the amount of the deposit to ask the court to require the deposit to be increased.

Section 4, which we find to be controlling, reads as follows: “Upon the application of any party in interest, and upon due notice to all parties, the court may order that the money deposited in the court, or any part thereof, be paid forthwith to the person or persons entitled thereto. If the compensation finally awarded shall exceed the amount of money so deposited, the court shall enter judgment against the State of Arkansas and in favor of the parties entitled thereto for the amount of the deficiency. If the compensation finally awarded shall be less than the amount of money so deposited and paid to the persons entitled thereto, the court shall enter judgment in favor of the State of Arkansas and against the proper parties for the amount of the excess.” Ark. Stats., § 76-537.

In arguing that the section just quoted applies only to the commission’s original deposit and not to any additional amount required by the court, counsel rely mainly upon the sequence in which the sections appear in the act. That is, § 3 permits the commission to make the original deposit at the inception of the case, § 4 empowers the court to order that the money be paid forthwith to the landowners, and § 8 authorizes the court to require that the deposit be increased. It is contended that the legislature would have inserted the provisions of § 8, having to do with the additional deposit, ahead of § 4, having to do with the distribution of the fund in court, if the lawmakers had meant for such an additional deposit to be subject to tbe court’s authority to order an immediate withdrawal of the money.

We are not impressed by this argument. The legislature plainly intended for the landowner, in a proper case, to have an immediate right to withdraw the estimated compensation when the full amount was fairly deposited in the first instance by the commission. We can think of no good reason for finding a contrary legislative intent merely because the deposit of full and fair compensation had to be directed by the court.

Moreover, the commission’s argument would mean that the legislature, in the first sentence of § 4 of the act, had reference only to the commission’s original deposit when it was directed that “the money deposited in the court” be paid forthwith to the landowner. Yet the next sentence in § 4 provides for a judgment in favor of the State if the compensation finally awarded exceeds “the amount of money so deposited.” Obviously the second sentence refers to the additional deposit as well as to the initial one; so we cannot reasonably declare that the first sentence is not equally comprehensive.

The commission’s real concern seems to be that if an excessive amount of estimated compensation should be paid over to an insolvent landowner the commission might later be unable to collect its judgment for the overpayment. It is perhaps a sufficient answer to point out that the trial court evidently has some discretion in the matter, since § 4 of the act permits the court to order a distribution of the money deposited ‘ ‘ or any part thereof.” In any event, however, this question is not at issue in the case at bar, since an application for certiorari does not involve a review of the trial court’s exercise of discretionary authority.

Writ denied.

Harris, C. J., and Bohlinger, J., not participating.

Robinson, J., dissents.


author: Paul Ward, Associate Justice. Ed. F. McFaddin, Associate Justice

text:
    City of El Dorado v. Ark. Public Service Comm.
    5-2707
    362 S. W. 2d 680
    Opinion delivered December 3, 1962.
    [Rehearing denied January 7, 1963.]

      J. V. Spencer, Jr., for appellant.

      Mchaffy, Smith & Williams, by Pat Mchaffy and Herschel H. Friday, Jr., R. H. Thornton, Jr. and Mark Woolsey, for appellee.
   Paul Ward, Associate Justice.

This appeal comes from a judgment of the Pulaski County Circuit Court which affirmed an order of the Arkansas Public Service Commission. Said order related to a controversy between the Arkansas Louisiana Gas Company and the cities of El Dorado and Pine Bluff. One reason for the cities involvement was that the Arkansas Louisiana Gas Company was attempting to raise the minimum monthly service charges on certain domestic customers’ meters from $1.17 to $1.87. Hereafter we may refer to the Arkansas Public Service Commission as “Commission,” to the Arkansas Louisiana Gas Company as the “Company”, and to the cities as appellants.

How the litigation arose. In 1957 the Commission asked the Company to present certain facts with respect to the various municipal taxes paid by the Company to municipalities throughout the state. No further steps appear to have been taken until early 1961 when the Company filed a petition with the Commission stating it was prepared to present the requested information, and also asking the Commission to examine and adjust the minimum service charges on certain customers’ meters. In the hearings that followed it was developed (generally speaking) that some cities were taxing the Company meters nothing, others a small amount, and others a much larger amount. It was also developed that the Company had fixed a monthly minimum charge of $1.17 on each meter in certain cities (Group A), a greater charge on cities in another group and no charge in still another group. The Company asked to raise the charge in Group A to $1.87 and to lower the higher charges to $1.87. This adjustment, approved by the Commission, resulted in an increase of revenues for the Company. Appellants took the position that the Company could not justify raising the minimum service charge without showing it would not result in earnings of more than 6.34% on its over-all operations. This percentage of return was apparently agreed to by the parties, and it was found to be fair in Acme Brick Company v. Arkansas Public Service Commission, 227 Ark. 436, 299 S. W. 2d 208. To meet this burden the Company showed that because of a labor wage scale increase (over which it had no control) its operating expenses had increased by $200,000 annually. Also the Company, in order to meet the burden, asked the Commission to make certain adjustments necessitated by the-unusually severe weather experienced in 1960. Other adjustments were also asked to be made in order to determine whether the Company was making more than 6.34% on its investment. It should be noted at this time that the purpose of these extensive proceedings, shown in a. record of seven volumes, was not primarily to reduce:- or increase gas rates generally. The extensive hearing became necessary, however, because appellants insisted (and the Commission agreed) that the Company would not be entitled to any additional revenues without first disclosing its over-all revenues and expenses pertaining to its operation in Arkansas, as applied to the Company’s services to distribution customers as distinguished from industrial customers. This procedure was approved in the Acme Brick Company case, supra, where we said: “. . . it is necessary for the Commission to allocate or apportion the joint costs of transmitting gas from the well to customers according to each class of customer’s responsibility therefor.”

It is the Company’s contention, after making a full disclosure of its pertinent operational revenues and expenses, that its net income does not exceed the 6.34% return.

Appellants challenge several items of expense and income claimed by the Company and allowed by the Commission, which items we will later examine.

Fundamental Rules. Before proceeding to discuss the merits of the aforementioned items it is deemed appropriate to restate briefly some of the well established fundamental rules, as we conceive them to be, by which we must be guided.

(a) It is the duty of the Company to operate in such manner as to give to the consumers the most favorable rate reasonably possible. This stems from the fact that the State has given the Company the exclusive right to sell and distribute gas to its customers. Consequently the Company bears a trust relationship to its customers and must conduct its operations on that basis and not as if it were engaged in a private business with no restrictions as to the income it could earn.

(b) In a hearing of this nature the burden is on the Company to justify any rate increase requested from the Commission. See: City of Fort Smith v. Southwestern Bell Telephone Company, 220 Ark. 70, 247 S. W. 2d 474. This in part stems from the nature of its relationship just mentioned and also from the fact that it has possession of all pertinent records. If the burden were not on the Company, aggrieved cities or persons would be greatly handicapped for lack of funds, organization, and access to material information.

(c) The Commission, with its training and personnel, performs the function of weighing and passing on the facts presented to it, and in that field its findings are like those of a jury and must be allowed to stand if based upon substantial evidence, free from fraud and not arbitrary. See: Inc. Town of Emerson v. Ark. Public Service Commission, 227 Ark. 20, 295 S. W. 2d 778. As we see it, the Commission has two distinct duties: One is to the Company to see that it may charge such a rate as will give it a fair return on invested capital; The other is to see that the. consumer shall not pay more than necessary to produce such fair return. If, however, the Commission misapplies any principle of law in reaching its conclusions they are subject to reexamination by this Court.

Since the records, as introduced in evidence by the Company and interpreted by the Commission, reveal no excess earnings, it is incumbent on us, as we examine the several points relied on by appellants, to seek the correct answers to two questions: One, did the Commission make any conclusion of fact which is not supported by substantial evidence; and, Two, did the Commission, in reaching any conclusion, violate any principle of law or approved procedure?

For convenience and clarity we choose to discuss the numerous objections raised by appellants under two principal classifications: One, dealing with substantial evidence; Two, dealing with law or proper procedure.

One.

In the following discussion each of appellants’ points is quoted from their brief.

(a) “The Order of the Commission is Arbitrary, Unreasonable and Without Evidentiary Support in Eliminating $2,640,000 of Actual Revenue on Account of ‘Weather’ ”.

In line with appellants’ insistence throughout the hearing that the Company had no justification for raising certain minimum fixed charges, it is contended that the Commission erred in adjusting the Company’s income because of the weather conditions in 1960. The undisputed evidence shows that the Company did have a sizeable increase in revenues for that year due to the increased sale of gas. Evidence was introduced to show that this increase amounted to anywhere from $4,208,088 (as contended by the Company) to $1,667,960 (as reflected by Exhibit 4 of appellants) as compared to an average over the past 14 years. After due consideration the Commission fixed the allowable figure at $2,640,-000.00. We cannot say that this figure fixed by the Commission is not supported by substantial evidence. In this connection it is pointed out, also, that the evidence showed that the Company, due to the same factor, had an increase in expenses in the amount of $848,978 for the year 1960 over and above the average expenses for the past 14 years. In reaching its final conclusion the Commission took into consideration both the increased revenues and the increased expenses. Due to the self-evident fact that utility rates cannot be adjusted from day to day, but are made for the foreseeable future, we think the action of the Commission in this instance was proper and fully justified under rules established not only by our own Commission but by the decisions in other states. The record discloses that on two previous occasions the Commission adjusted rates based on weather conditions.

See: Re: Public Service Company of Colorado, 34 P.U.R. 3d 186 (1960); Re Plateau Natural Gas Company, 36 P.U.R. 3d 452 (1960); Re Diamond State Telephone Company, 28 P.U.R. 3d 121 (1959); Re Gas Light Company of Columbus, 31 P.U.R. 3d 350 (1959); Re Columbia Gas of Kentucky, 36 P.U.R. 3d 401 (1959); and Re Central Maine Power Company, 29 P.U.R. 3d 113 (1959).

(b) “The Commission Order is Arbitrary, Unreasonable and Without Evidentiary Support in Eliminating over $4,000,000 Products Extraction Income.”

The record disclosed that the Company wholly owns the Arkansas Louisiana Chemical Corporation (hereafter referred to as “Arkansas”) which engages in many activities among which is extracting and processing the liquid hydrocarbons from natural gas. It is further shown that the Company permits Arkansas to extract the liquid hydrocarbons from much of the gas which is distributed to its customers. In this process Arkansas derives considerable profits. It is the contention of appellants that these profits should be added to the Company’s overall revenues. If this were done of course it would tend to reduce the customers’ rate. The Commission allowed Arkansas to retain the profits. In the case of Associated Mechanical Contractors of Arkansas, Etc. v. Arkansas Louisiana Gas Company, 225 Ark. 424, 283 S. W. 2d 123, we put the stamp of approval on the participation of the Company in a private business. The last paragraph of the cited case makes it clear, we think, that although a utility may own or engage in a private business and retain the profits therefrom for the stockholders, none of the expenses incidental thereto can be charged to the utility customers. In connection with the point under consideration there is substantial evidence to show that all expenses incurred by Arkansas in its operations are charged to Arkansas and not to the utility customers. We understand from appellants ’ argument they contend the cost of transporting the gas from its source to Arkansas’ plant is borne by the utility customers and not by Arkansas. It is pointed out, however, that insofar as we can tell, this cost would accrue whether the gas is processed or is piped directly to utility customers. Therefore no error is shown in the Commission’s findings. It is pertinent, however, in this connection to point out that it would be error for the Commission to charge the customers with any expense which contributed solely to the profit of Arkansas. It. is also the duty of the Company to keep its books in such a way as to be able to inform tbe Commission so it could make a proper ruling in a situation like this.

(c) “The Commission Order is Arbitrary, Unreasonable, and Without Evidentiary Support in Eliminating $1,054,432.71 of Income Prom Gas Transported for Others. ’ ’

It is disclosed by the record that the Company transported gas, using its distribution system, for other persons or corporations and derived therefrom in revenues the amount of $1,054,432.71. There is substantial evidence to support the Commission in finding that the reasonable expense of transportation amounted to $425,523 and that the distribution customers were given credit for this amount by reducing the rate base by $3,889,557. This, of course, resulted in a profit of $629,000 for the Company or the stockholders. It is insisted by appellants that the latter amount should inure to the benefit of the customers and not to the benefit of the stockholders as held by the Commission. In this we think appellants are in error because as we have already pointed out, the Company has a right to engage in nonutility operations and keep all of the benefits derived therefrom as long as it pays all the expenses incidental thereto.

(d) “The Commission Order Is Arbitrary, Unreasonable and Without Evidentiary Support in Eliminating $2,563,078 of Income from Sales to Other Gas Utilities.”

What we have already said disposes, we think, of appellants’ objections here considered. It appears that in 1960 the Company purchased gas for the sum of $5,-761,994 and resold it to other gas utility companies for $8,294,952 resulting, apparently, in a profit of $2,532,958. Under the ruling of the Commission this profit inured to the Company or the stockholders and not to the benefit of the customers. This was in line with eliminating all expenses and all income relative to these non-utility sales in like manner as previously pointed out. This was also in accord with the previous ruling of the Commission in Re Arkansas Louisiana Gas Company, 97 P.U.R. (n.s.) 67 (1952) where, it is pointed out the Commission in considering a similar question said:

“The sales from the ‘nonutility’ sales are all sales to other utilities. They are not sales to ultimate consumers, but are ‘sales for resale’.
“We hold, therefore, that while such properties are utility in nature that they should be excluded from the determination of the rate base, and similarly from revenues and expenses applicable to the 3-B customers.”

The only way we can see how the Company’s distribution customers might be adversely affected would be for the Company to sell its gas at a lower rate than that which it charges the customers or to deplete its available supply of gas to a point where the customers might be eventually affected. In the case of Federal Power Commission v. Sierra Pacific Power Company, 350 U.S. 348, 100 L. Ed. 388, 76 S. Ct. 368 (1956), the Court in discussing a similar situation said:

“In such circumstances the sole concern of the Commission would seem to be whether the rate is so low as to adversely affect the public interest — as where it might impair the financial ability of the public utility to continue its service, cast upon other consumers an excessive burden, or be unduly discriminatory.”

There is no showing here that such a result has come about from the Company’s sale of gas to other utilities.

(e) “The Commission Order is Arbitrary, Erroneous and Without Evidentiary Support in Allowing ‘Fictitious’ Income Taxes as an Expense of the Company. ’ ’

We have carefully considered appellants’ contention that the Commission erroneously allowed the Company to withhold money for the purpose of paying income taxes without deducting therefrom what is designated as “fictitious” income taxes which it will never be called on to pay. To fully understand this contention necessitates a consideration of Act 175 of the Acts of 1957. Generally speaking the effect of this act was to take certain gas producing properties out of the rate making base and allow the Company to charge its customers the fair field price. Appellants point out that the production properties, when considered for income tax purposes, are subject to certain income tax deductions detailed as follows: (1) abandoned lease and non-producing well drilling $727,000; (2) depletion, gas $1,904,000, and (3) intangible well drilling expense $2,667,000. It is appellants’ contention that these sums should be deducted from the amount withheld by the Company for payment of income taxes. In this we think they are in error. We think the effect of Act 175 of 1957 was to disassociate the Company owned oil and gas production properties from all consideration in connection with rate making. That is the effect of the Commission’s holding and that is clearly the contention of the Company. We quote from the Company’s Brief at page 175 the following:

“The producing arm of the Company is accorded the same treatment as a third party producer selling gas to the Company. Both must pay, from the dollars appropriate to the value of the product, all expenses connected with drilling producing wells [and] all losses of ‘dry holes’.”

We understand this to be a commitment by the Company that hereafter all expenses incurred in developing its oil and gas operations and all losses resulting therefrom, will be paid and sustained by the Company stockholders and not by the utility customers. In other words, the result of Act 175 is that from here on the rate payable by gas customers will in no way be affected by the success or failure of said oil operations. That being true, it is immaterial to the Company’s customers whether the Company’s stockholders pay taxes on the oil production properties or not or whether they take depletion allowances or not. Under this view the Commission was correct in refusing to require the Company to take the allowable deductions mentioned from the amount withheld for the payment of income taxes. Except for this failure on the part of the Commission, we understand that appellants have no objections to the amount withheld by the Company.

(f) “There Is No Substantial Evidence of Any Discrimination and No Allocation to Group A Customers.”

By order of the Commission the monthly minimum fixed charge per meter was fixed at $1.87 for customers. Previously the fixed minimum charges varied in different towns. In towns on the integrated system (towns served by the main line distribution system) the charge had been $1.17. This class of town is also designated as Group A towns. In another group of towns the charge had been $1.50; in another it was $T.90; in another it was $2.00; and in others it was $2.50.

The reasons, as we understand them, given by appellants may be stated in the following way:

1. In Group A towns the average service expense per customer (or meter) is lower than $1.87, so there is no justification for the increase in that group.

2. In the other towns the average service expense is much greater than $1.87. This would therefore result in the towns in Group A subsidizing the other towns.

3. Due to the fact that there are a great many more customers in Group A towns than there are in the other towns, resulting in increased revenues, the Company would not be entitled to the increased revenues without first showing it would not earn more than 6.34% on its fixed base rate.

The answer to the last argument is that it has been shown elsewhere in this opinion that the Company will not be earning more than the allowed rate. The answers to the other arguments are found, we think, in facts and considerations presently set out.

It must be understood that the Commission, in approving a fixed minimum charge, has many things to take into consideration. In making a determination it would be unreasonable to expect it to fix a charge that would eliminate all inequities. This fact was recognized in Ogden City v. Public Service Commission, 123 Utah 437, 260 P. 2d 751, 123 Utah 443, 260 P. 2d 754, where the following statements are found:

‘ ‘ The order of the Commission is not only an exercise of its legal authority, but appeals to basic equities — at least eliminating one discrimination in a field where it is impossible to eliminate them all.
“Public policy seeks the elimination of as many discriminations as possible in a field where total elimination thereof is difficult or impossible of achievement. * * * ’ ’

It must be realized also that the Commission must consider not only the facts as they exist on any given date, but it has the right to consider what conditions may be in the foreseeable future. For instance, the expert evidence shows that the monthly distribution expense, in Group A towns, was more than the $1.87 allowed by the Commission (or $1.95) and that in 1961 it would likely be $2.04. We must agree with appellants that there appears to be a discrimination against the Group A towns and in favor of the non-integrated towns since it costs more per meter to serve the latter than it does the former and yet all customers pay the same minimum charge. But there are other things which the Commission had a right to consider. Some of the non-integrated towns floated bond issues and installed their own distribution systems without cost to the Company. This of course voided the necessity of increasing the Company’s rate base when in turn it inured to the benefit of all gas customers. In addition, it was shown that the cost of furnishing gas and services to the non-integrated towns was so high that were they forced to pay their numerical proportion of same, they would be required to pay almost prohibitive rates. In our opinion the Commission had a right to consider that feature in arriving at a proper mi ni mum charge which would enhance the development and general welfare of the entire state. This right may reasonably be inferred from the language used by the legislature in Act 175 of 1957, section 3.

In view of all we have said above we are unable and unwilling to say the Commission acted arbitrarily or without the support of substantial evidence in fixing the minimum monthly service charge at $1.87 per meter.

Two

The remaining points or objections are distinguished from the ones previously discussed in that they deal primarily with questions of law or proper procedure while the others involved primarily questions of substantial evidence.

(a) “The Commission Order Is Arbitrary, Erroneous and Contrary to Law in Allowing Loss From Merchandising and Jobbing as a Utility Expense, and in Failing to Assign Cost to Arkansas Louisiana Finance Company.”

The record reveals that the Company engages in certain forms of merchandising, sales promotion and advertising. Appellants do not appear to question the legal right to engage in these activities, nor would they be justified in doing so. In the case of Associated Mechanical Contractors of Arkansas, Etc. v. Arkansas Louisiana Gas Company, 225 Ark. 424, 283 S. W. 2d 123, we held that the Commission had no authority to prohibit the Company from selling and installing air-conditioning equipment.

However, appellants do contend that the expenses incidental to such merchandising should not be allowed as a utility expense. The great weight of authority appears to be against such contention. See West Ohio Gas Company v. Public Utilities Comm. of Ohio, 294 U. S. 63, 55 S. Ct. 316, 79 L. Ed. 761 (1935); Consolidated Gas Company of New York v. Newton, 1920 F P.U.R. 483, 267 F. 231 (2 Cir. 1920); Public Service Company of New Hampshire v. New Hampshire, 30 P.U.R. 3d 61, 102 N.H. 150, 153 A. 2d 801 (1959); and Wichita Gas Company v. Public Service Commission, 1928 D P.U.R. 124, 126 Kan. 220, 268 P. 111 (1928). The record reflects that the Company engages in merchandising only such items that are related to its utility business and would tend to increase the sale of gas. So, we hold that the Commission had the authority to permit the Company to charge to utilities expense proper items of merchandising, and that it did not act arbitrarily in doing so on the reasonable theory that increased gas sales would tend to lower the price paid by consumers. Based on the same reasoning the Commission correctly allowed the expense of Company advertising to be charged to utilities expense.

Notwithstanding the above, appellants properly argue that the Company has no right to make improper charges, i.e., charges which do not promote the interest of the consumers. One argument is based on the expenses incurred, and allowed, in connection with the operation of the Arkansas Louisiana Finance Company which is wholly owned by the Company. It is pointed out that the finance company makes a profit which inures to the stockholders (in effect) but that certain expenses of operation- — -such as billing and collecting — are charged to utility expenses. In other words, it is pointed out that the stockholders get all the profits and the consumers pay part of the expense. We think appellants’ contention in this connection would have merit if the finance company were engaged in serving the general public, but as we understand from the record, this is not the case. The finance company handles only the accounts of customers who buy gas-using-equipment from the Company. Such being the case we conclude the Commission, under its broad discretionary powers, had the right to treat this item on the same basis as it did the items of merchandising and advertising — that is, all the activities tended to promote an increase in the sale of gas.

(b) “The Commission Order Is Arbitrary, Erroneous and Contrary to Law in Failing to Consider ‘Overall’ Company Operations.”

Under this point appellants say it was arbitrary and unlawful for the Commission (in reaching its several conclusions) to fail and refuse to consider the Company’s “over-all” operations. We agree with the general principle announced in 73 C.J.S., Public Utilities § 13, page 1008, that:

“According to many decisions, a public utility is entitled to charge and receive for its product or service such rates, and such only, as will give it as profit a fair return on the reasonable value of its property at the time used and useful in the public service. . . .” It is pointed out by appellants that the Commission failed to consider several items of revenue accruing to the Company, which items, in view of the conclusion hereafter reached, we deem it unnecessary to set out in detail.

We can also agree with appellants contention that the Commission would have no right to grant the Company an increase in minimum fixed charges if, to do so, the Company’s earnings would exceed the allowable return — in this case fixed at 6.34%. We can readily understand how appellants were led to think, during the hearing, that the Commission was going to give consideration to the Company’s over-all revenues and expenses. In spite of all we have said, however, we are forced to conclude, from a full examination of the entire record, the Commission did not intend to (and did not in fact) give full consideration to the Company’s operation as it pertained to industrial customers, but only to its operation pertaining to distribution customers. In this, we think, the Commission acted correctly within its discretionary powers based on sound reason and in accord with precedent. See: Acme Brick Company case, supra. There are sound reasons for separating the income and expense referable to industrial customers from distribution customers. It was also stated in the Acme Brick Company case, supra, that industrial customers use “approximately 80% of all gas passing through the Company’s lines”. It is not unreasonable to assume this percentage may increase as the state becomes more industrialized. To supply this volume of gas and for the Company to give to industrial consumers contractual assurance of an adequate supply at a stabilized price, it is understandable that the Company must make long range purchase contracts. This could mean that a profit or a loss would result. It has been properly said that a utility exists primarily for the benefit of distribution customers. We think the Commission can therefore properly determine that it would not be to tbe best interest of the distribution customers for them to run the risk of absorbing the losses the Company might incur in servicing industrial customers. It must logically follow, therefore, that the Commission should not compel the Company to give to the distribution customers any profits that might likewise accrue. We conclude therefore that appellants had no right to demand an over-all accounting in this particular proceeding. It is also pointed out that both sides agreed that the proper rate was 6.34% as fixed in the Acme Brick Company case, supra.

(e) “The Order of the Commission Is Clearly Arbitrary, Unlawful and Erroneous and Without Substantial Evidentiary Support in Allowing a ‘Field Price’.”

The point is here made that the Commission acted unlawfully and without evidentiary support in allowing a “fair field” price. We can find no merit in this contention. Act 175 of 1957 (Ark. Stats. § 73-1903) fixes the method to determine the price which the Company can charge (as an operating expense) for the gas purchased from its own gas wells. It is “the fair value or reasonable market price of such natural gas at the point at which the gas is delivered into the transmission system” of the Company, “or within the vicinity of the field or fields where produced”.

The method used in this instance was to average the price at which several sales were made. By the Company’s calculations the average was 18.74 cents per MCF; other calculations by appellants resulted in an average of 14.26, and the Commission fixed the price at 16.57. The contention is made that some of the Company’s prices were based on gas sold, not at “the transmission system”, but at other points after it had been transmitted for some distances (not shown) through the Company’s system. In principle we are in agreement with the above contention. We think the clear intention of the statute (above quoted) is that the price of gas was not to be determined at some distant place after it is transported in the Company system. Otherwise, the distribution system would be used for Company benefit by the use of utility property — or at the expense of the distribution customers. We cannot, however, say this was done in this instance, or that the Commission did not consider that factor. The Commission’s findings show conclusively that they were aware of the correct procedure. The Commission refused to allow the price of 18.74 based on the Company’s calculations and it allowed more than 14.26 based on the appellants’ calculations. The Commission pointed out, however, that some of the sales in appellants ’ calculations included sales made .some time previously and therefore were not true indications of the present price. In view of all we have said above we are unable and unwilling to say that the Commission, in fixing the price it did, acted arbitrarily, unlawfully, or without substantial evidence.

(d) “The Commission Order Is Clearly Arbitrary, Unlawful and Erroneous in Using a Year Ending Rate Base Without Adjusting Revenues to Year End Levels and Without Crediting Against Rate Base Income Tax Accruals.”

Apparently it is not argued that the Commission had no authority to fix a rate base predicated on year-end figures of plant investment, but it is insisted that in doing so, it must consider year-end revenues and expenses, citing the Commission’s holding in its own case, 7 P.U.R. 3d 561, 563 (Docket U-905). The answer to this objection is that we cannot say the Commission did not take into consideration (along with other factors later mentioned) the year-end level of both revenues and expenses in fixing the rate base in this instance. Only two expert witnesses, Clayton and Flanders, made calculations for the Commission’s consideration relative to a proper rate base. Clayton’s figure, the smaller of the two, was the one adopted by the Commission.

In adopting the figure most favorable to the rate payers, the Commission had the prerogative and the duty to consider a variety of pertinent items which have been approved not only by this Commission but by court decisions. Some of these items are: Rates and bases must be made, not for a day or a month, but for the foreseeable future; It is common knowledge that prices for labor and materials (for operation and construction) have advanced in the past few years and probably will advance in the years ahead; and to meet the growing demand by the public for a better and expanded service the Company must be prepared financially to provide these services. The Commission, as shown by its order, took these and other items into consideration in fixing the rate base at $36,756,234, and we are in no position to say, with confidence, it acted arbitrarily or without substantial evidence.

On the whole, the important issue is whether the Company will be allowed (on the above rate base) to earn more than the approved and accepted earnings of 6.34%. Clayton’s calculations (Exhibit No. 10) show the Company’s earnings will be only 4.57%.

(e) “The Commission Order Is Clearly Unlawful in Limiting the Amount of Municipal Taxes Which May Be Levied Against the Company.”

The short answer to the above objection is that the Commission’s order does not in any way limit, or tend to limit, the amount of any kind of taxes a city or town may wish to levy. However, there are other objections in this connection which grow out of the situation presently set forth.

As stated in the beginning, the Company requested the Commission to eliminate certain “discriminations” with reference to the taxes levied, in various amounts, by municipalities against customer meters. In attempting to properly and equitably solve this situation, the Commission first divided the municipalities into four groups — A. B. C. and D. based upon features, unnecessary to describe, which grouping we cannot say was arbitrary. It then discovered that the municipal tax charge per meter for the year 1960 within the municipalities so grouped was as follows:

Group A Prom 20 cents to $2.34, some levying none

Group B Prom 20 cents to $4.28, some levying none

Group C Prom 22 cents to $1.12',” some levying none

Group D No tax levied in any municipality.

Based on the above, the Commission properly found that discrimination existed. Properly, because all taxes paid by the Company are paid out of revenues derived from all customers. Thus, customers living in municipalities where no tax, or a small tax, was .levied are forced to help pay the taxes levied by other municipalities. Consequently, the Commission, no doubt realizing perfection could not be reached in such a complex situation, by its order permitted the following procedure: In municipalities in Groups A & B, where the tax exceeds $2.00 per meter, the Company can charge the excess to the customer ; and in municipalities in Groups C & D, where the tax exceeds $1.00 per meter, the Company can likewise charge the excess to the customer. We are unable to say that the Commission, in so doing" acted arbitrarily or without substantial supporting evidence, or that it acted without authority. The inequities resulting from imposing unequal municipal taxes against a public utility were considered in City of Newport News v. Chesapeake and Potomac Telephone Co., 198 Va. 645, 96 S. E. 2d 145 (1957), where the Court, among other things, said:

‘ ‘ The result is a form of taxation without representation, which has aroused historic protest in this country.”

See also: State Ex Rel Pacific Telephone & Telegraph Co. v. Department of Public Service, 19 Wash. 2d 200, 142 P. 2d 498 (1943).

(f) “The Order of the Commission Denying Motion of the City of El Dorado and Approving Escalator Clauses and Increases Thereunder Without Notice or Hearing Is Arbitrary, Unlawful and Not Supported by Any Evidence.”

(This point is urged only by the City of El Dorado.)

To understand El Dorado’s argument under this final point it is necessary to give a brief history of what led up to the point here considered.

On October 1,1958, the Company filed what is called Rate Rider 2-58 with the Commission. This was in fact an escalator clause. Generally speaking, it provided for the Company to receive a rate increase or decrease depending on the rise or fall of the price the Company had to pay for gas to be distributed to its customers. No notice was given by the Company or the Commission to any city, rate payer, or the general public. It appears that the Commission never did formally approve the escalator clause but permitted it to become effective by operation of law.

Pursuant to provisions of the escalator clause the Company, on November 1, 1958, filed for an adjustment of its rate in accordance with the claimed increased cost of gas. The Commission authorized the Company to increase the price of gas sold to its customers an additional 3.5 cents per MCF of gas; on November 1, 1959, an increase in the amount of 1.5 cents per MCF was authorized; and, on November 1, 1960, an increase in the amount of 2 cents per MCF was allowed. During this hearing El Dorado strenuously objected to the above procedure, contending that it was irregular and unlawful because no notice had been given and because the Commission did not require the Company to justify the increase.

On October 15, 1961, by direction of the Commission, the Company filed a new escalator clause which was approved by the Commission on the following day. Again, no notice was given and no hearing on the merits was granted. On October 31,1961, El Dorado filed exceptions to the above procedure but was overruled by the Commission without a hearing.

It is first insisted by El Dorado, “The Escalator is not authorized by Statute”. We see no merit in this because Ark. Stats. § 73-219 does provide for a “sliding scale” or an “automatic adjustment” of rates. The use of escalator clauses as a method of adjusting utility rates without having to resort to long-drawn-out and expensive over-all hearings has been, at least in part, recognized by our Court in the case of Aluminum Co. of America v. Arkansas Public Service Commission, et al., 226 Ark. 343, 289 S. W. 2d 889 (1956), in which it was said that Ark. Stats. § 73-219 “seems to recognize some sort of escalator clause to be possible in some situations”. They have frequently been approved by legal writers and courts and Commissions in other jurisdictions. See “Escalator Clauses in Public Utility Rate Schedules”, 106 U. Pa. L. Rev. 964 (1958); “Cost Adjustment in Utility Rate Schedules”, 13 Vand. L. Rev. 663 (1960); Cities Service Gas Producing Co. v. Federal Power Commission, 233 Fed. 2d 726 (10 Cir., 1956); City of Chicago v. Illinois Commerce Commission, 13 Ill. 2d 607, 150 N. E. 2d 776 (1958); and Mississippi Public Service Commission v. Home Telephone Company, Inc., 236 Miss. 444, 110 So. 2d 618 (1959).

The pivotal question therefore to be decided is (a) whether or not notice must be given before the escalator clause is filed with the Commission and (b) whether the public must be notified before any raise is allowed by the Commission pursuant to the escalator clause. In an effort to dispel some of the confusion that perhaps prevails, we proceed now to examine some of the pertinent statutes.

First, there is Section 18 of Act 324 of 1935, as amended, set out in Ark. Stats. § 73-217. Without copying this section of the statutes and without discussing it fully, suffice to say that it provides Jthat no utility shall make any change in its existing rates except after 30 days notice to the Commission. It also provides that “the utility shall also give notice of the proposed changes to other interested parties as the [Department] Commission in its discretion may direct”. (Emphasis supplied.) The above quoted sentence, and especially the emphasized portion, might well be subject to more than one interpretation. It might be argued that the Commission in its discretion may direct that no notice at all be given to anyone. This is not our interpretation, particularly in view of the provisions of the preceding section of the statutes (73-216) wherein is set out a number of people and organizations who may be interested parties in any rate change, namely: any Chamber of Commerce, Board of Trade, mercantile associations, municipality or any twenty-five public utility users. In our opinion the only discretion the Commission has in this connection is to require the utility to give notice to one or more of the above interested parties. It is important to bear in mind that the procedure under § 73-217 apparently envisions a full scale rate hearing which might well involve many weeks or months of hearing and the expenditure of several thousands of dollars.

Secondly, apparently it was the desire of the legislature to avoid such a lengthy and expensive hearing to make what might be termed minor adjustments. Pursuant thereto the legislature enacted Section 20 of Act 324 of 1935, set out in Ark. Stats. § 73-219 mentioned above. Speaking generally of this section, it appears to provide an abbreviated procedure whereby the utility rates can be raised or lowered depending on one item (or at least a very few items) affecting income or expenses of the utility, such as in the present case where an increase in the utility rate depends on the price the Company is required to pay for the purchased gas for distribution. It will be noted that this section does not require any notice to be given to the general public, either at the time of filing the schedule or subsequently when an adjustment is made pursuant thereto. The section does contain this language, “Nothing in this section shall prevent the Department [Commission] from revoking its approval at any time and fixing other rates and charges for the product or commodity or service, if after reasonable notice and hearing the Department [Commission] finds the existing rates or charges unjust, unreasonable, insufficient or discriminatory”. We take this to mean that once the Commission fixes a definite rate it cannot lower the rate without giving notice to the utility affected, and cannot raise the rate without notifying, in some way, the rate payers.

After carefully studying the various provisions of the statute relative to the question here involved we are unahle to see how the interests of the utility customers or the rate payers are in any way prejudiced because of the lack of notice. Ark. Stats. § 73-205 provides, “The utility shall keep copies of such schedules open to public inspection under such rules and regulations and at such places as the Department [Commission] may prescribe”. It cannot logically be contended that the rate payers ’ interest is prejudiced at the time the utility files an escalator clause with the Commission, because at that time no change is made. Likewise, it is difficult to understand why the rate payers would be prejudiced when the Commission, as in this case, increases the utility rate to compensate for an increase in the price of purchased gas. In the first place, when such a raise is effected, that of itself would be notice to the rate payers and they could then ask the Commission to set aside the increase under the provisions of § 73-219 heretofore quoted. In the second place, if long-drawn-out and expensive rate hearings are to be avoided, it does not seem unwise, or prejudicial to the rate payers, for the Commission to pass on the relatively simple question of whether or not there had been an increase in the price of purchased gas. This is not to say, of course, that if any customer or organization feels that to grant this increase in rates would result in the utility earning more than the allowed rate (6.34%), recourse may not be had to a full hearing under the provisions of Ark. Stats. § 73-216.

All of the above reasoning basically stems from the inevitable fact that utility rates cannot be adjusted every few months or every year, otherwise there would be no cessation of such procedure. As has heretofore been said, it is the duty of the Commission to fix a rate of return not for a day or a week but for the foreseeable future.

It is objected by El Dorado that the schedules filed by the Company in this case did not provide, as § 73-219 requires, “for a fixed period”. This objection again calls for an interpretation of the statute. The term “fixed period” could refer to the length of time the escalator clause is to remain in effect, or it could refer to the length of time between adjustments. We prefer the latter interpretation for the following reasons. We cannot see that any useful purpose would be served by limiting the time the escalator clause would be in effect, because it could be renewed at any time by the utility filing another one. Also, the Commission has the authority, either on its own motion or on petition, to revoke the escalator clause for good cause. On the other hand, we can readily see good reasons for limiting the time (for instance) an increased rate adjustment (made on the price of gas) should be allowed to remain in force. This is because it may well be assumed that the price of gas can decrease within a year’s time. If this situation should arise, then the Commission would have the opportunity to make a re-examination once every year.

It is our conclusion therefore, based on all we have heretofore said, that the judgment of the trial court should be affirmed.

Affirmed.

George Rose Smith, J., not participating.

McFaddin, J., concurs.

Ed. F. McFaddin, Associate Justice

(Concurring). I agree with the Majority that the judgment should be affirmed; but on some points I have arrived at my conclusion by a method of reasoning which is different from that contained in the Majority Opinion; and therefore I concur in the result.

It is unnecessary for me to list the various points of concurrence, but I do mention one. It is Topic Two (f) in the Majority Opinion, which is captioned: “The Order of the Commission Denying Motion of the City of El Dorado and Approving Escalator Clauses and Increases Thereunder Without Notice or Hearing is Arbitrary, Unlawful and Not Supported by any Evidence.”

This point is urged by the City of El Dorado; and is a challenge, not only on the legality of escalator clauses, but on the procedure that the Arkansas Public Service Commission has employed in allowing escalator clauses to take effect. Escalator clauses are legal; but I am firmly of the opinion that the Commission should not allow any escalator clause to go into effect in any case without first giving notice to all interested parties; and I think this Court should now definitely so hold.

It was shown that without notice the gas rates had been increased by escalator clauses; and I think such procedure was wrong; but the question becomes moot in the case at bar because the increases by escalation were in 1958, 1959, and 1960; and, in the hearing from which comes this appeal, all of these escalation increases were considered; and it was found that the rate allowed by the escalation clauses had not exceeded the allowable rate. All interested parties and municipalities were heard in the present case, and the rate now in effect, even by such escalation clauses, was found to be less than the allowable rate; so the effect of the previous escalation increases in 1958, 1959, and 1960, is really moot.


author: Sam Robinson, Associate Justice.

text:
    Adams v. State Highway Comm.
    5-2752
    362 S. W. 2d 425
    Opinion delivered December 3, 1962.

      Kaneaster Hodges, for appellant.

      Dowell Anders and Thomas B. Keys, for appellee.
   Sam Robinson, Associate Justice.

Appellee, Arkansas State Highway Commission, condemned a fraction of an acre of land for highway purposes. On the property there was a small house built of hollow tile. The Commission estimated the condemned property to be worth $3,550.00, and deposited that amount in the registry of the Court. The property owners moved that the deposit he increased. On authority of Ark. Stats. 76-541, the Court granted the motion and ordered the Commission to deposit, an additional $1,450.00. The Commission complied, making a total of $5,000.00 deposited. The appellants withdrew the entire amount.

Upon a trial on the merits before a jury, there was a verdict for the property owners in the sum of $4,000.00. A judgment was entered accordingly and the Commission was given judgment against appellants in the sum of $1,000.00, with interest at the rate of six per cent (6%) per annum, to'run from the time appellants received the excess compensation until it is repaid. The property owners have appealed.

Appellants argue that there is no substantial evidence to support the verdict. Several witnesses testified on behalf of appellants that the property condemned was worth more than $4,000.00. However, Mr. Robert Hamilton, who qualified as an expert in appraising property values, testified that in his opinion the property owners had been damaged to the extent of only $3,550.00. Mr. Hamilton testified in detail just how he arrived at that figure. He considered the total value of the property before the taking, and the value of that part left to appellants after the taking; he figured the number of square feet in the house, the cost of construction, the depreciation, and other pertinent facts, and arrived at his estimate of the damages. The jury added $450.00 to that estimate. We cannot say Mr. Hamilton’s testimony was not substantial evidence of the damages suffered by appellants.

Appellants contend that the jury was drawn in an improper manner. The same method was used in drawing the jury in the case at bar as had been used by the Court Clerk for many years. Counsel for appellant had never objected to that method, and did not object in the case at bar. The first indication of any dissatisfaction with the method of drawing the jury was made at a hearing on a motion for a new trial, which was held subsequent to the trial. Of course, the objection was not made in apt time.

The hearing on the motion for new trial was in connection with appellants’ allegation that the juror, Ells Huff, failed to disclose that he was an organizer, officer and director of the Arkansas Good Roads Association, and the further allegation that the Court erred in excusing until a later time, twelve jurors who had just sat in another case, resulting in their absence from the courtroom at the time the jury in the case at bar was selected.

There is no merit at all in either of those contentions. Mr. Huff was not asked whether he was a member of the Arkansas Good Roads Association, and he did not think about volunteering the information. There is no showing whatever that Huff’s membership in the Arkansas G-ood Roads Association would in any way disqualify Mm as a juror, and the thought did not occur to him that one of the parties might want to exercise a peremptory challenge on him because of his membership in the Association.

The Court’s action in excusing the twelve members of the panel until a later time in the day, mailing them unavailable for the case at bar, was in no way prejudicial to the rights of appellants. This Court has held many times that a party is not entitled to any particular juror. The Court said in Sullivan v. State, 163 Ark. 11, 258 S. W. 643, “It is thoroughly settled that a defendant has no right to the services of any particular juror. He may only demand that he be tried before a fair and impartial jury, and it is difficult to imagine a case where the judge had excused a juror from further service on the regular panel which would afford any defendant just cause of complaint.”

The judgment reads in part “That the plaintiff do have and recover from the defendant, Nola Clyde Adams, judgment in the sum of $1,000.00 with interest at the rate of six per cent (6%) per annum from the 17th day of November, 1960, until paid, said $1,000.00 being the amount in excess of the verdict of the jury withdrawn by defendant.” The appellant chose to file a motion for a new trial, setting up nine alleged assignments of error, but the action of the Court in awarding interest was not one of the assignments.

The issue of whether the Court erred in awarding interest was raised for the first time in this Court. This is not a matter that can be successfully urged for the first time on appeal. Bish v. Woods, 162 Ark. 463, 258 S. W. 352; Hot Springs Railroad Co. v. McMillan, 76 Ark. 88, 88 S. W. 846; Heineman Dry Goods Co. v. Schiff, 167 Ark. 422, 268 S. W. 596. We said in Weeks v. McClanahan, 227 Ark. 495, 300 S. W. 2d 6, “Defendant Weeks argues the court erred in failing to allow him interest on the account due him by plaintiff, but no objection was made below on this ground and it cannot be urged for the first time omappeal.”

Appellant argues other points, all of which we have examined, but find no error. The judgment is, accordingly, affirmed.