author: Ray Thornton, Justice. Tom Glaze, Justice,

text:
    Linda PHILLIPS and Marvin Phillips v. TOWN OF OAK GROVE, Arkansas, and Jean Morgan, Mayor, Sam Jones, Alderman, Gary High, Alderman, Pat Davis, Alderwoman, Vicki Allen, Alderwoman, and Willard Standlee, Alderman, in Their Official Capacities as the Mayor and Town Council of the Town of Oak Grove, Arkansas
    97-898
    968 S.W.2d 600
    Supreme Court of Arkansas
    Opinion delivered May 7, 1998

      Lisle Law Firm, P.C., by: Stephen Lisle, for appellants.

      Epley, Epley & Parker, Ltd., by: Lewis E. Epley, Jr. and Tim S. Parker, for appellees.
   Ray Thornton, Justice.

In 1987, the town of Oak Grove adopted Ordinance 20, which prohibits the keeping of swine or fowl for commercial purposes within the town limits. Appellants Marvin and Linda Phillips breed emus for sale on their property in Oak Grove. The appellees are the town of Oak Grove, the mayor, and members of the town council. When the Town charged them with violating the Ordinance, the Phillipses responded with a motion for summary judgment challenging the Ordinance’s constitutional validity. Oak Grove counterclaimed, asking for a declaratory judgment that the ordinance was valid. The chancellor granted Oak Grove’s motion for summary judgment, ruling that the Ordinance was a valid enactment that was rationally related to Oak Grove’s legitimate government concerns for the health, safety, and welfare of its citizens. We affirm the chancellor’s ruling.

In attacking the constitutional validity of the Ordinance, the Phillipses raise the following three arguments on appeal: Oak Grove cannot prohibit a lawful business when it does not constitute a nuisance; an ordinance that classifies on the basis of commerce is an arbitrary exercise of Oak Grove’s police power; and prohibiting all animals of the Aves class is overbroad for the purpose of preventing the encroachment of large-broiler houses into the Town.

Oak Grove is an incorporated town with a population of about 230 residents. In 1987, its town council passed Ordinance 20 in response to concerns arising from commercial fowl and hog operations in the Northwest Arkansas area. The stated purposes of the Ordinance are as follow:

WHEREAS, the Town of Oak Grove, Arkansas, is located in close proximity to areas of expanding commercial broiler houses and other commercial activities, and it is necessary to enact measures to protect the citizens of the Town of Oak Grove from the deleterious effects of such commercial activities if carried on within the town limits; and
WHEREAS, the Council of the Town of Oak Grove has determined that this Ordinance is necessary in order to protect the residents of the Town of Oak Grove from offensive or noxious odors, and
WHEREAS, the passage and approval of this Ordinance will improve and protect the order, peace, comfort, convenience, safety, general welfare, health and prevent injury from offensive or unhealthy matters [.]

This ordinance makes unlawful the “raising, keeping, growing, maintenance, husbandry or quartering of either swine or fowl within the town limits of the Town of Oak Grove, by any person for any commercial purpose.” As defined in the ordinance, the term “fowl” includes all members of the zoological class “Aves,” including chickens, turkeys, ducks, geese, quail, guineas, and other domestic or wild birds. The Ordinance expressly allows “limited activities strictly for personal consumption by an individual and not involving other parties.”

The Phillipses purchased emus and began raising them for commercial purposes on their property within the town limits. Emus are members of the Aves zoological class and are second in size only to the ostrich, weighing in excess of one hundred pounds at maturity. In 1995, Mayor Morgan ordered the Phillipses to remove their emus from the town limits. When the Phillipses refused, Oak Grove filed a criminal misdemeanor action in municipal court for keeping emus in violation of Ordinance 20. The Phillipses countered by filing this action in chancery court seeking a declaratory judgment that the Ordinance was invalid. Oak Grove counterclaimed, asking for a declaratory judgment that the Ordinance was a valid, rationally related exercise of Oak Grove’s power to enact laws for the general health, safety, and welfare of its citizens. Oak Grove suspended its criminal complaint pending the outcome of the chancery court decision. The chancellor granted Oak Grove’s motion for summary judgment and this appeal ensued.

I.

Municipal corporations derive their legislative powers from the general laws of the state. Ark. Const. art. 12, § 4. A municipality has no powers except those expressly conferred by the legislature, and those necessarily or fairly implied as incident to or essential for the attainment of the purpose expressly declared. City of Lowell v. M & N Mobile Home Park, Inc., 323 Ark. 332, 336, 916 S.W.2d 95, 97 (1996).

In Springfield v. City of Little Rock, 226 Ark. 462, 290 S.W.2d 620 (1956), we recognized the city’s plenary duty to exercise its police power in the interest of the public health and safety of its inhabitants. Id. at 464-65, 290 S.W.2d at 622. The police power of the state is founded in public necessity and this necessity must exist in order to justify its exercise. Id. It is always justified when it can be said to be in the interest of the public health, public safety, public comfort, and when it is, private rights must yield to public security, under reasonable laws. City of Little Rock v. Smith, 204 Ark. 692, 695, 163 S.W.2d 705, 707 (1942) (quoting Beaty v. Humphrey, 195 Ark. 1008, 115 S.W.2d 559 (1938). The State has authorized the municipalities to legislate under the police power in Ark. Code Ann. § 14-55-102 (1987). That section provides, “Municipal corporations shall have the power to make and publish bylaws and ordinances, not inconsistent with the laws of this state, which, as to them, shall seem necessary to provide for the safety, preserve the health, promote the prosperity, and improve the morals, order, comfort, and convenience of such corporations and the inhabitants thereof.

Under its grant of power, cities and incorporated towns can “[p]revent injury or annoyance within the limits of the municipal corporation from anything dangerous, offensive, or unhealthy and cause any nuisance to be abated within the jurisdiction given the board of health in § 14-262-102[.]” Ark. Code Ann. § 14-54-103 (1987).

In light of these statutes, the town of Oak Grove has the authority to legislate for the protection of the public health. The preamble to Ordinance 20 makes clear that Oak Grove is legislating under its police power when it states that its purpose is to protect the residents of the town from the deleterious effects of commercial broiler activities, to protect against offensive or noxious odors, and to protect the order, peace, comfort, convenience, safety, general welfare, health and prevent injury from offensive or unhealthy matters. The Phillipses private rights must yield, unless we find that Oak Grove has acted in excess of the authority conferred.

II.

The Phillipses argue first that the town of Oak Grove cannot prohibit a lawful business when it does not constitute a nuisance. The appellees, on the other hand, contend, and the chancellor agreed, that the controlling law is stated in City of Lowell v. M & N Mobile Home Park, 323 Ark. 332, 916 S.W.2d 95 (1996). In Lowell, we declared that judicial review of a legislative enactment is limited to determining whether the legislation is arbitrary, capricious, and unreasonable. Id. at 339, 916 S.W.2d at 98. The legislation is not arbitrary if there is any reasonable basis for its enactment. Id.

The Phillipses argue that Arkansas law requires a municipality first to determine that an activity poses a threat to its citizens before it may regulate that activity under its police power. The crux of their argument is that there is no evidence that their emu farm is a nuisance or a threat, and that because it is a lawful business, Oak Grove does not have the authority to prohibit it. This argument has two parts, which we address seriatim. The first question is whether a municipality can regulate an activity that is not a nuisance under its police power, and the second question is whether a municipality can prohibit a lawful business.

A.

The Phillipses rely on Town of Arkadelphia v. Clark, 52 Ark. 23, 11 S.W.2d 957 (1889) for the proposition that a nuisance must exist before the town can regulate under its police power. In a brief per curiam opinion, we stated that the ordinance prohibiting the keeping of bees within the city limits was invalid because it declared each act a nuisance and was therefore too broad. Id. at 25, 11 S.W. at 958. We said that bees may become a nuisance but whether they are so or not is a question to be judicially determined in each case. Id. Our decision in Clark stated that municipalities cannot legislatively declare some activity to be a nuisance. We did not address the question of public health and safety in that case. Contrary to the Phillipses’ assertion, Clark does not hold that a municipality must first determine that an activity is a nuisance before it can regulate that activity under its police power.

In fact, the mere possibility of a public harm is sufficient basis for the municipality to regulate under its police power. The United States Supreme Court, in affirming an Arkansas Supreme Court decision, said that a “business lawful today may in the future, because of the changed situation, the growth of population or other causes, become a menace to the public health and welfare, and be required to yield to the public good.” Pierce Oil Corp. v. City of Hope, 248 U.S. 498, 500 (1919) aff'g 127 Ark. 38, 191 S.W.2d 405 (1917) (quoting Dobbins v. Los Angeles, 195 U.S. 223, 238 (1904)).

In Pierce Oil Corp., the City of Hope enacted an ordinance forbidding the storing of petroleum, gasoline, and other oil products within three hundred feet of any dwelling, beyond certain small quantities specified. Pierce Oil Corp., 248 U.S. at 499. The appellant in that case was engaged in the business of selling petroleum oil and gasoline and had tanks on the right of way of a railroad in the city. Appellant presented evidence that an explosion was impossible and that the location of the tanks did not endanger nearby buildings. He alleged that he could not store the tanks in the city without violating the ordinance. He claimed that the ordinance was arbitrary, unnecessary, and unreasonable, and that the enforcement would deprive him of his property without due process of law in violation of the Fourteenth Amendment of the United States Constitution.

Notwithstanding the Fourteenth Amendment or the absence of pleaded facts showing a nuisance, the Court held that a state may prohibit the sale of dangerous oil products; and it may make the place where they are kept or sold a criminal nuisance. Pierce Oil Corp., 248 U.S. at 499-500. With approval, the Court noted our declaration that a court may take judicial notice that disastrous explosions have occurred for which no satisfactory explanations have ever been offered. Id. at 500. Observing that “[t]he unexpected happens,” the Court recognized that combustion was possible, and that the ordinance undertook to limit its effects. Id. More to the point, the California supreme court said,

A city clearly has power to pass general police regulations to prevent nuisances, and such power is not limited to the suppression of those things which are nuisances per se . . . .
...
Whenever a thing or act is of such a nature that it may become a nuisance, or may be injurious to the public health, if not suppressed or regulated, the legislative body may, in the exercise of its police powers, make and enforce ordinances to regulate or prohibit such act or thing although it may never have been offensive or injurious in the past.

Ex parte Mathews, 214 P. 981, 983, 191 Cal. 35 (1923), reh’g denied 209 P. 220 (1923) (internal citation omitted).

Under our holding in Pierce Oil Corp., a lawful business that poses the possibility of harm can be regulated, even if the effect of the ordinance excludes the operation of the business within the city limits. In the present case, an emu farm is a lawful business; and it is subject to all appropriate laws relating to farm animals. Ark. Code Ann. § 2-32-101 (Repl. 1996). Unlike the Pierce Oil Corp. ordinance, the express language of the Oak Grove ordinance acts as a complete bar to the commercial keeping of fowl and swine within the town limits.

B.

We have repeated often that a business, lawful in itself and not a nuisance per se, may be regulated but not prohibited. We know of no cases, however, that apply this rule with the rigidity that the Phillipses request. Rather, we have always considered whether the legislation is otherwise arbitrary, capricious, and unreasonable; and we uphold the enactment if there is any rational basis for its enactment. See Hackler v. City of Fort Smith, 238 Ark. 29, 377 S.W.2d 875 (1964); Goldman & Co., Inc. v. City of North Little Rock, 220 Ark. 792, 249 S.W.2d 961 (1952) (upholding an ordinance that prohibited junkyards within a limited district in the city; noting that the ordinance was not arbitrary or unreasonable when the business contemplated by appellant tended to constitute a safety and health hazard to the welfare of the people); City of Morrilton v. Malco Theatres, Inc., 202 Ark. 100, 149 S.W.2d 55 (1941) (holding that the city had the power to regulate reasonably, but could not prohibit appellee from operating more than one picture show; stating that the court may consider the effect of the ordinance in practical application, but that after the business has been authorized and the owner has incurred expense, the city has power only to regulate and not prohibit its use); Arkansas R.R. Comm’n v. Castetter, 180 Ark. 770, 22 S.W.2d 993 (1929) (recognizing that no individual can be deprived of the right to engage in lawful business in any manner he sees proper so long as he does not use such right in a manner to injure others); Balesh v. Hot Springs, 173 Ark. 661, 293 S.W. 14 (1927) (holding that the city could not prohibit, but could regulate the sale of merchandise by auction; noting that the Legislature may not arbitrarily interfere with private business, or impose unusual or unnecessary regulations upon lawful occupations).

The Phillipses rely on Hackler, a case in which the ordinance prohibited blasting or use of explosives in quarrying operations located within the city limits of Fort Smith. Hackler, 238 Ark. at 29, 377 S.W.2d at 875. In that case, appellants produced convincing evidence at trial that blasting could be done safely by having small quantities of the blasting agent set off in a series, rather than in one large explosion. Id. at 32, 377 S.W.2d at 877. We first noted that a quarry operation was a lawful business and that it was not a nuisance per se, and as such, it could be regulated but not prohibited. Id. at 33, 377 S.W.2d at 876. We then held that the city did not have the power to absolutely prohibit blasting at rock quarries within the city when it was shown that the blasting could easily be regulated. Hackler, 238 Ark. at 33, 377 S.W.2d at 877.

In Hackler, while we stated the “regulation versus prohibition rule” distinctly, we did not apply the rule rigidly. Instead, we considered the appellant’s expert-witness testimony that blasting could be done safely. The expert testified that he had placed a seismograph near the quarry and measured the vibrations from blasting done with small quantities of explosives. Hackler, 238 Ark. at 32, 377 S.W.2d at 877. The seismographic readings verified that a person standing within 60 feet of the point of explosion experienced no harm, and that the nearest dwellings were about 250 feet from the quarry. Id. In reversing the chancellor’s decision to uphold the ordinance, we found, in effect, that there was no rational basis for prohibiting the activity when appellants proved that blasting could be done safely within the city limits.

After the Hackler case in 1964, our decisions have made even more clear our application of the rational-basis test to ordinances that purport to prohibit lawful businesses under the police power. In Piggott State Bank v. State Banking Bd., 242 Ark. 828, 416 S.W.2d 291 (1967), after declaring that the banking business is closely related to the public welfare and within the police power of the state, we said that the power extends to the regulation or even the prohibition of the business except on such terms as the state may prescribe. Id. at 831-32, 416 S.W.2d at 294. Likewise, in Wometco Servs., Inc. v. Gaddy, 272 Ark. 452, 616 S.W.2d 466 (1981), in invalidating an ordinance that contained a one-year residency requirement before a vendor could be licensed to conduct business in Arkansas, we said that the State may regulate business that affects public health, safety, and welfare; but it may not deprive an individual of his right to conduct lawful business unless it can be shown that such deprivation is reasonably related to the State interests sought to be protected. Id. at 456, 616 S.W.2d at 468-69. In light of these decisions, the town of Oak Grove may regulate and even prohibit commercial swine and fowl businesses under its police power unless it can be shown that there is no rational basis for the deprivation.

III.

The Phillipses contend next that, even if we apply the rational-basis test, an ordinance that classifies on the basis of commerce is an arbitrary exercise of Oak Grove’s police power. They note that, under the provisions of the Ordinance, it is unlawful to keep birds for commercial purposes, yet it is lawful to keep the same number or even greater numbers of birds for personal use. They argue that an ordinance that classifies on the basis of profit is arbitrary and, therefore, void.

The issue is not whether the legislation allows difference in treatment of activities generally similar in character, but whether there is a rational basis for the difference. See J.W. Black Lumber Co., Inc. v. Arkansas Dept. of Pollution, 290 Ark. 170, 172-73, 717 S.W.2d 807, 809 (1986). The equal protection clause does not require that all persons be dealt with identically, only that classifications rest on real rather than feigned differences, that the distinctions have some relevance to the purpose for which the classification is made, and that the treatment be not so disparate as to be wholly arbitrary. Id. at 173, 717 S.W.2d at 809. When examining the distinction, we consider whether any rational basis exists that shows the possibility of a deliberate nexus with state objectives. Allen v. State, 327 Ark. 350, 358, 939 S.W.2d 270, 274.

The party alleging that legislation is arbitrary has the burden of proving that there is no rational basis for the legislative act, and regardless of the evidence introduced by the moving party, the legislation is presumed to be valid and is to be upheld if the court finds a rational basis for it. City of Lowell, 323 Ark. at 340, 916 S.W.2d at 99.

Ordinance 20 prohibits the keeping of fowl for commercial purposes, yet allows “limited activities strictly for personal consumption by an individual and not involving other parties.” Observing the usual presumption of constitutional validity, we can conclude that there is a nexus between a classification based on commerce and the legislative concern for the peace, health, safety, comfort, and welfare of the public. Commercial broiler houses have been expanding in the area surrounding Oak Grove. To protect the citizens of the town from deleterious effects of these types of commercial activities, Oak Grove, following valid procedures, enacted this Ordinance.

We can reasonably conceive that the term, “commercial,” connotes large volume. To be sure, the dictionary definition of the term confers a meaning of “large scale,” or “large market.” See Merriam-Webster’s Collegiate Dictionary 231 (10th ed. 1993). The local authorities may well have concluded that a farmer who keeps a small number of emus for commercial purposes will likely expand his business as he prospers, quantitatively adding to the bodily waste product from these animals, which smells, decays, attracts pests, and can cause disease. See City of Springdale v. Chandler, 222 Ark. 167, 168-69, 257 S.W.2d 934, 935 (1953) (observing that it might be arbitrary to prevent the keeping of few hens at a place where it would not be arbitrary or unjust to prevent the keeping of thousands of chickens). If that judgment is correct, then the private keeping of birds would have a less harmful effect on public health. A rational nexus is apparent, therefore, between Oak Grove’s stated purposes and the distinction based on commercial (large) or private (small) operations.

The law of equal protection has never mandated that either all evils be extinguished, or none at all. Rather, it allows legislation that recognizes degrees of evil. See J. W. Black Lumber Co., Inc. v. Arkansas Dept. of Pollution, 290 Ark. 170, 717 S.W.2d 807 (1986). We cannot say that Oak Grove acted arbitrarily, capriciously, or unreasonably when it chose to prevent the keeping of fowl for commercial purposes within the town limits, while permitting limited activities strictly for private consumption.

The Phillipses argue that a rational basis did not exist when the town could have accomplished its purposes through zoning ordinances, or numerical restrictions, minimum property sizes, and concentration limits. We find no merit in this argument. Even if Oak Grove could have written the Ordinance with greater precision, under rational-basis review, the United States Supreme Court has held that we are bound “to accept a legislature’s generalizations even when there is an imperfect fit between means and ends.” Heller v. Doe, 509 U.S. 312, 321 (1993). The Court said further, “A classification does not fail rational-basis review because it is not made with mathematical [precision] or because, in practice it results in some inequality.” Id. See also, Pierce Oil Corp., infra, 248 U.S. at 500.

On appellate review of legislative enactments, we will not reverse a chancellor’s finding of fact unless it is clearly erroneous. City of Lowell, 323 Ark. at 339, 916 S.W.2d at 97. We do not give the same deference to a chancellor’s conclusion of law. Id. If a chancellor erroneously applies the law and the appellant suffers prejudice, the erroneous ruling is reversed. Id. Here, the chancellor found that keeping a large number of birds within the town limits constituted a threat to the peace, health, safety, comfort, and welfare of the town’s residents. We cannot say that the chancellor committed error in his judgement, either in fact, or in law when he ruled that the ordinance was rationally related to a legitimate-government purpose.

IV.

As their final point on appeal, the Phillipses assert that prohibiting all animals of the Aves class is overbroad for the purpose of preventing the encroachment of large-broiler houses and hog farms into the town. The Phillipses argue that Oak Grove did not even contemplate emu farms when they enacted the Ordinance. They contend that because their emus have not been found to be a nuisance, the zoological classification of Aves is over inclusive.

In support of their position, the Phillipses rely on Town of Dyess v. Williams, 247 Ark. 155, 444 S.W.2d 701 (1969) for the proposition that the town’s purpose can be accomplished by enacting an ordinance that directly prohibits the objectionable operation. In Dyess, the town passed an ordinance that required all businesses in town to close from midnight to 4:00 a.m. to prevent teenagers and other youth from causing disturbances late at night. We invalidated the ordinance, stating that the same purpose could be accomplished by prohibiting the objectionable conduct of the youth rather than making lawful businesses close.

Dyess is inapplicable to the facts before us. In that case, the businesses were not creating the disturbances that the town sought to address, and we held that the sweep of the ordinance went too far beyond the necessities of the situation. In this case, it is the commercial raising of fowl that creates the danger to the public health, and the Ordinance addresses that danger directly.

Rather, we respond with Justice Holmes’s opinion in Pierce Oil Corp., where he acknowledged that an enterprise may not ostensibly threaten the problems that led to the enactment of the ordinance. Pierce Oil Corp., 248 U.S. at 500. Justice Holmes commented that the mere fact that the ordinance may embrace some innocent objects, that of itself neither invalidates the law nor removes the objects from the grasp of the law. Id. at 500-01. It is not our role to discover the actual basis for the legislation, but rather to consider if any rational basis exists that demonstrates the possibility of a deliberate nexus. Johnson, 306 Ark. at 505, 816 S.W.2d at 587. We can reasonably conceive that the emu operation may grow and present the same concerns for the health, safety, and welfare of Oak Grove residents as large-poultry operations.

In summary, we conclude that Ordinance 20 is not arbitrary, capricious, or unreasonable, but that it is a legitimate exercise of reasonable regulation by the town of Oak Grove. The Phillipses failed to show that there was no rational basis for the enactment. Consequently, we hold that the town of Oak Grove acted within its lawful discretion in prohibiting the keeping of swine or fowl for commercial purposes within the town limits, and the chancellor’s finding that there was a rational basis was not clearly erroneous. Affirmed.

Newbern and Glaze, JJ., dissent.

Tom Glaze, Justice,

dissenting. I agree with the majority’s conclusions that municipal corporations may, under the police power, legislate for the protection of the public health and may also regulate lawful businesses that pose the possibility of harm. However, I strongly disagree with the determination that the Town of Oak Grove, and other towns and cities, can prohibit such businesses when a rational basis can be shown for the deprivation. In truth, what the majority’s decision has accomplished is nothing short of sending out a loud message that if municipalities want to get rid of what they wish to label an undesired activity, all they have to do is couch it in commercial terms. The message is wrong and its long-term consequences can lead to pernicious future municipal legislation.

The majority concedes that this court has often repeated the rule that a business, lawful in itself and not a nuisance per se, may be regulated but not prohibited. See Hackler v. City of Fort Smith, 238 Ark. 29, 377 S.W.2d 875 (1964) (citations omitted). However, the majority states that we have never applied this rule rigidly, since we have always analyzed ordinances that purport to prohibit lawful businesses under rational-basis review. The majority then cites many cases which it argues support this proposition. All of these cases, however, are factually distinguishable from the instant case, and instead they show the flaw in the majority’s logic. For example, in City of Morrilton v. Malco Theatres, Inc., 202 Ark. 100, 149 S.W.2d 55 (1941), we said that the power of the city council extended only to the right to regulate reasonably and did not include the power to prohibit the Maleo Theatres, or others, from conducting its lawful business. (Emphasis added.) Even more persuasive, this court in City of Morrilton added that the power to prohibit a lawful business has not been conferred upon municipalities. Id. Also, in Goldman & Co., Inc. v. City of North Little Rock, 220 Ark. 792, 249 S.W.2d 961 (1952), while we did uphold the regulatory ordinance in question after applying the rational-basis test, the ordinance did not go so far as the one we are presented with today.

In addition, the two cases given in support of the conclusion that prohibition of businesses will be tolerated in this state are also distinguishable. In Piggott State Bank v. State Banking Bd., 242 Ark. 828, 416 S.W.2d 291 (1967), the power to prohibit was specifically supported by statute and was a mere continuation of the authority to regulate the banking business. And in Wometco Servs., Inc. v. Gaddy, 272 Ark. 452, 616 S.W.2d 466 (1981), the ordinance was actually struck down on constitutional grounds — the restriction in question found to have gone too far.

This court should be reminded that municipal regulation of industries, businesses, trades and occupations is not without its limitations. It is limited by public policy to promote the growth of commerce and industry. McQuillin Mun Corp § 24.323 (3rd Ed). While I recognize that, at times, there is a fine line between what constitutes a regulation and what is a prohibition, the ordinance in this case is nothing but a sweeping prohibition not supported by our statutes or case law.

I respectfully dissent.

Newbern, J., joins this dissent.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Brian K. ELLIS v. Larry NORRIS
    97-104
    968 S.W.2d 609
    Supreme Court of Arkansas
    Opinion delivered May 7, 1998

      Appellant, pro se.

      Winston Bryant, Att’y Gen., by: Vada Berger, Asst. Att’y Gen., for appellee.
   Per Curiam.

In 1992, the appellant, Brian Ellis, pleaded guilty to delivery of a controlled substance and was sentenced to twenty-five years’ imprisonment. At the time that Ellis entered his guilty plea, inmates in the Department of Correction could earn “good time” credits that could be applied toward the reduction of their sentences. One form of good time credit was awarded automatically by the Department to prisoners who were classified into one of four categories. The other form of good time credit was discretionary meritorious good time, or “extra good time,” which could be awarded if a prisoner, among other things, completed rehabilitative programs or performed special jobs. In 1993, however, the General Assembly passed Acts 536 and 558. Both of these acts, which became effective on January 1, 1994, repealed “extra good time.”

In April of 1996, Ellis filed a pro se petition for a declaratory judgment and a petition for a writ of mandamus in the Circuit Court of Jefferson County. In the petition, Ellis alleged that Acts 536 and 558 were ex post facto legislation because they were applied retroactively to deny him the ability to earn extra good time. As exhibits to his petition, Ellis attached copies of letters in which his application for “extra good time” was denied by the Department of Correction. The Circuit Court denied Ellis’s petition. Ellis now appeals pro se from that order.

In his argument on appeal, Ellis contends that Acts 536 and 558 violate the ex post facto clauses of the United States Constitution and the Arkansas Constitution. Ellis relies on the premise, which has been suggested in some of the opinions of the United States Supreme Court, that any law which is retroactively applied to the petitioner’s disadvantage, or which affects the opportunity for an early release from prison, is in violation of the ex post facto legislation clause of the Constitution of the United States.

In response, the State first concedes that the Acts 536 and 558 have been retroactively applied to prisoners who were convicted before January 1, 1994. The State argues, however, that the United States Supreme Court has retreated from the position upon which Ellis relies, and now focuses on whether a law alters the definition of criminal conduct or increases the penalty by which a crime is punishable. The State contends that because the retroactive application of Acts 536 and 558 does neither, the ex post facto clauses are not violated.

Article 1, § 10, of the United States Constitution provides that “[n]o state shall . . . pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts. . . .” Article 2, § 17, of the Arkansas Constitution similarly provides, “No ... ex post facto law . . . shall ever be passed . . . .” Ellis does not offer any argument, and none is readily available to us, showing why we should interpret the ex post facto doctrine in a manner different from the interpretation of the parallel provision in the United States Constitution by the United States Supreme Court.

In Calder v. Bull, 3 Dall. 386 (1798), Justice Chase explained the four categories of legislative acts that would violate the Ex Post Facto Clause:

1st. Every law that makes an action done before the passing of the law, and which was innocent when done, criminal; and punishes such action. 2d. Every law that aggravates a crime, or makes it greater than it was, when committed. 3d. Every law that changes the punishment, and inflicts a greater punishment, than the law annexed to the crime, when committed. 4th. Every law that alters the legal rules of evidence, and receives less, or different testimony, than the law required at the time of the commission of the offense, in order to convict the offender.

Over a century later, the Supreme Court succinctly restated these principles in Beazell v. Ohio, 269 U.S. 167 (1925):

The constitutional prohibition and the judicial interpretation of it rest upon the notion that laws, whatever their form, which purport to make innocent acts criminal after the event, or to aggravate an offense, are harsh and oppressive, and that criminal quality attributable to an act, either by the legal definition of the offense or by the nature or amount of the punishment imposed for its commission, should not be altered by legislative enactment, after the fact, to the disadvantage of the accused.

Thus, according to Calder and Beazell, a law is in violation if it is retroactive and it disadvantages the accused by altering the definition of criminal conduct or by increasing the punishment for the crime. See also Collins v. Youngblood, 497 U.S. 37 (1990); Lynce v. Mathis, 519 U.S. 433 (1997).

The United States Supreme Court has disapprovingly noted, however, that some of its opinions have broadened the categories to include those measures which retroactively impose another form of disadvantage on the accused. In Collins v. Youngblood, supra, the Court expressly overruled two cases, Kring v. Missouri, 107 U.S. 221 (1883), and Thompson v. Utah, 170 U.S. 343 (1898), which added “any change which ‘alters the situation of a party to his disadvantage’” to the Calder v. Bull analysis.

While the Court in Collins v. Youngblood attempted to clarify the Ex Post Facto Clause by reaffirming the analysis set forth in Calder v. Bull and Beazell v. Ohio, the confusion persists because of the difficulty in determining whether the disadvantage suffered by the accused “alters the definition of criminal conduct or increases the punishment for the prime,” or whether it is another form of disadvantage that would fall short of the sort requiring relief under the Ex Post Facto Clause. We must make that determination in this case.

The specific issue that must be decided is whether the retroactive application of the amendment that takes away a prisoner’s ability to earn “extra good time” actually increases the punishment for the crime for which Ellis was convicted, thereby violating the Ex Post Facto Clause. Clearly, Mr. Ellis is disadvantaged by the retroactive application of the amendment because he has lost the opportunity to earn extra good time that can be applied toward the reduction of his sentence. What we must decide, however, is whether that disadvantage is the kind that is prohibited by the Ex Post Facto Clause.

In his argument on appeal, Ellis relies on Weaver v. Graham, 450 U.S. 24 (1981). In that case the Supreme Court held that an amendment that retroactively shortens the amount of automatic good time that can be earned by a prisoner violates the Ex Post Facto Clause. Although Weaver dealt with automatic good time rather than discretionary good time, it provides Ellis with the following helpful language:

We have previously recognized that a prisoner’s eligibility for reduced punishment is a significant factor entering into both the defendant’s decision to plea bargain and the judge’s.calculation of the sentence to be imposed.
***
In Lindsey v. Washington, [citation omitted], we reasoned that “(i)t is plainly to the substantial disadvantage of petitioners to be deprived of all opportunity to receive a sentence which would give them freedom from custody and control prior to the expiration of the . . . prison term.” Here, petitioner is similarly disadvantaged by the reduced opportunity to shorten his time in prison simply through good conduct.

Ellis contends that the Court in Weaver recognized that a measure that retroactively affects a prisoner’s opportunity to reduce his prison term is the kind of disadvantage that is prohibited by the Ex Post Facto Clause. Since Acts 536 and 558 retroactively eliminate his opportunity to reduce his sentence through the accrual of “extra good time,” Ellis argues that Weaver is controlling.

In California Department of Corrections v. Morales, 514 U.S. 499, 115 S.Ct. 1597 (1995), however, the Supreme Court observed that the language in the Weaver opinion was inconsistent with its decision in Collins v. Youngblood, and most important, that it was unnecessary to the outcome of the case. In a footnote, the Court wrote:

Our opinions in Lindsey, Weaver, and Miller suggested that enhancements to the measure of criminal punishment fall within the ex post facto prohibition because they operate to the “disadvantage” of the accused offenders, [citations omitted] But that language was unnecessary to the results of those cases and is inconsistent with the framework developed in Collins v. Youngblood, [citation omitted] [emphasis added]. After Collins the focus of the ex post facto inquiry is not on whether a legislative change produces some, ambiguous sort of “disadvantage,” nor as the dissent seems to suggest, on whether an amendment affects a prisoner’s “opportunity to take advantage of early release,” [citation omitted], but on whether any such change alters the definition of criminal conduct or increases the penalty by which a crime is punishable.

We think a fair interpretation of this footnote is that it was not a disadvantage in the form of the lost opportunity to reduce the prison sentence that was dispositive in Weaver. Rather, it was the fact that a reduction in the amount of good time that was automatically awarded operated to increase the length of time Weaver would be in prison. In other words, the disadvantage suffered by Weaver, in the form of an increase in the punishment for his crime, is within the scope of the Ex Post Facto Clause. Consequently, Weaver is not helpful to Ellis unless the repeal of “extra good time” actually operates to increase his sentence, rather than merely remove his opportunity to reduce his time in prison. We hold that it does not.

Pursuant to Act 273 of 1987, upon recommendation by a committee of the Board of Correction, “the director may recommend to the Board of Correction up to ninety (90) additional days of meritorious good time awards for such completion(s) as rehabilitative programs, special jobs performed, and/or as a result of heroic acts or other exceptional circumstances.” In other words, by performing one of the acts specified in the statute, a prisoner had the opportunity to add to the meritorious good time that he has earned automatically. It is clear from the wording of the statute, however, that the time was also awarded at the discretion of the Director.

We conclude that when Act 273 was repealed in 1993, all that was lost was the opportunity to earn discretionary good time toward the reduction of a prison sentence. Ellis has not demonstrated, moreover, that the Department of Correction denied him any extra good time that had already been recommended by the Director. Accordingly, it can not be said that Acts 536 and 558 operated to increase his sentence.

Affirmed.


text:
    Perry M. GUYNN v. STATE of Arkansas
    CR 98-278
    968 S.W.2d 61
    Supreme Court of Arkansas
    Opinion delivered May 7, 1998

      Jack R. Kearney, for appellant.
    No Response.
   Per Curiam.

Appellant, Perry M. Guynn, by his attorney, Jack R. Kearney, has filed a motion for leave to file a belated appeal. Appellant’s attorney admits that the notice of appeal was prematurely filed due to an error on his part. Ark. R. App. P. 4.

We grant the motion for a belated appeal upon counsel’s admission of error, and direct that a copy of this opinion be forwarded to the Committee on Professonal Conduct. Woods v. State, 316 Ark. 705, 873 S.W.2d 563 (1994).


text:
    David L. McGREW v. STATE of Arkansas
    CR 98-426
    966 S.W.2d 266
    Supreme Court of Arkansas
    Opinion delivered May 7, 1998

      W. Hunter Williams, for appellant.
    No response.
   Per Curiam.

Pursuant to Ark. Sup. Ct. R. 2-2 (1997), appellant, David L. McGrew, by his attorney, W. Hunter Williams, Jr., filed a motion for rule on the clerk. Mr. Williams admitted in the motion that the record was tendered late due to a mistake on his part. We find that such an error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See In Re: Belated Appeals in Criminal Cases, 265 Ark. 964 (1979) (per curiam). Accordingly, the motion is granted. A copy of this opinion will be forwarded to the Committee on Professional Conduct. Id.


author: W.H. “Dub” Arnold, Chief Justice.

text:
    Corey JONES, Chantez McGhee, and Dale Marcus Shaffer v. STATE of Arkansas
    CR 97-1268
    969 S.W.2d 618
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      James R. Marschewski, for appellants.

      Winston Bryant, Att’y Gen., by: Mac Golden, Asst. Att’y Gen., for appellee.
   W.H. “Dub” Arnold, Chief Justice.

The appellants, Corey Jones, Chantez McGhee, and Dale Marcus Shaffer, were charged by amended felony information in Sebastian County Circuit Court with second-degree battery for the September 27, 1996, beating of a night watchman while attempting to escape from Ouachita Wilderness Institute, a juvenile-detention facility. The State sought enhancement of the battery charges under Ark. Code Ann. § 5-74-108 (Repl. 1997), which amplifies the felony classification and sentence-penalty range of a person convicted of a “crime of violence” while acting in concert with two or more persons. A person commits a “crime of violence” when he or she “purposely or knowingly causes . . . death or physical injury to another person.” Ark. Code Ann. § 5-74-103(c) (Repl. 1997). During the attempted escape, the appellants struck the guard with a two-by-four and kicked him in the head. Following a jury trial, the jury found appellants guilty of third-degree battery. Pursuant to § 5-74-108, the circuit court sentenced McGhee, Jones, and Shaffer to terms of imprisonment of three years, two years, and one year, respectively.

On appeal, all of the appellants maintain that § 5-74-108 is unconstitutionally vague. Separate appellant Dale Marcus Shaffer also argues that his conviction should be reversed, and his case remanded, because the circuit court lacked jurisdiction to try him for the battery charge. While we find no merit to the appellants’ vagueness argument, we agree with Shaffer that the circuit court lacked jurisdiction over his case. We affirm the convictions and sentences of Jones and McGhee, but reverse and remand Shaffer’s case for transfer to juvenile court.

I. Constitutionality of Ark. Code Ann. § 5-74-108 (Repl. 1997)

Appellants first assert that their convictions under engaging in violent group activity should be reversed because the statute is unconstitutionally vague. The statute in question, Ark. Code Ann. § 5-74-108 (Repl. 1997), provides in pertinent part that:

(a) Any person who violates any provision of Arkansas law which is a crime of violence while acting in concert with two (2) or more other persons shall be subject to enhanced penalties.
(b) Upon conviction of a crime of violence committed while acting in concert with two (2) or more other persons, the classification and penalty range shall be increased by one (1) classification.

(Emphasis added.) Particularly, the appellants complain that the statute fails to define the phrase “in concert.”

The procedures for determining whether a statute is unconstitutionally vague are as follows:

Our review of challenges to the constitutionality of statutes begins with the principle that statutes are presumed to be constitutional. The burden of proving a statute is unconstitutional is upon the party challenging it. If it is possible to construe a statute as constitutional, we must do so.
The norm by which we determine when a statute is void-for-vagueness is whether it lacks ascertainable standards of guilt such that persons of average intelligence must necessarily guess at its meaning and differ as to its application. The law must give fair warning in definite language of the prohibited act. In addition to fair warning, a statute is also void-for-vagueness if it is so broad that it becomes susceptible to discriminatory enforcement. Nevertheless, flexibility, rather than meticulous specificity or great exactitude, in a statute is permissible as long as its reach is clearly delineated in words of common understanding. Moreover, impossible standards of specificity are not constitutionally required, even in criminal statutes. A statute will meet constitutional muster if the language conveys sufficient warning when measured by common understanding and practice. Additionally, it is not necessary that all kinds of conduct falling within the reach of the statute be particularized and the statute will not be struck down as vague only because marginal cases could be put where doubts might arise.

Dougan v. State, 322 Ark. 384, 912 S.W.2d 400 (1995); quoting State v. Torres, 309 Ark. 422, 424-425, 831 S.W.2d 903 (1992)(other citations omitted). A statute survives a due process challenge of vagueness if it is clear enough to provide a standard of conduct for those whose activities are proscribed, as well as a standard for police enforcement and for ascertainment of guilt. Bridges v. State, 327 Ark. 392, 938 S.W.2d 561 (1997); Moore v. State, 304 Ark. 257, 801 S.W.2d 638 (1990).

The statute in question is part of the Arkansas Criminal Gang, Organization, or Enterprise Act, which was modeled after the federal continuing criminal enterprise statute, 21 U.S.C. § 848. The intent of the Act is stated in Ark. Code Ann. § 5-74-102(e) (Repl. 1997), which provides that:

It is the intent of the General Assembly of the State of Arkansas to use as a model the federal continuing criminal enterprise statute, 21 U.S.C. § 848. This should provide law enforcement officers, prosecutors, and our courts with ample case law to guide in the interpretation of the language and the legislative intent. It is furthermore the intent of the General Assembly to focus the state’s law enforcement agencies and prosecutors on investigating and prosecuting all ongoing organized criminal activity and to provide for penalties that will punish and deter organized ongoing criminal activity.

(Emphasis added.) In interpreting the federal continuing enterprise statute, the Eighth Circuit has stated that “[T]he plain meaning of the phrase ‘in concert’ signifies mutual agreement in a common plan or enterprise.” United States v. Lefkowitz, 125 F.3d 608 (8th Cir. 1997); quoting United States v. Rutledge, 116 S.Ct. 1241, 1247 (1996). Moreover, the appellants did not object to a jury instruction submitted in the present case, which stated that:

The phrase “in concert” means to act pursuant to a common design or plan, or that Corey Jones and Dale Marcus Shaffer were part of an agreement or joint action to commit the crime of Battery in the Second Degree.

We conclude that § 5-74-108 conveys fair and sufficient warning when measured by common understanding. See Dougan, 324 Ark. at 392. Under these circumstances, we hold that § 5-74-108 is sufficiently clear to overcome the appellants’ vagueness challenge.

II. Motion to Transfer Dale Marcus Shaffer

Separate appellant Dale Marcus Shaffer further asserts that the trial court erred in failing to transfer his case to juvenile court because he was fourteen years of age at the time of the incident. The State responds that we should affirm because Shaffer failed to abstract the motion, the trial court’s ruling on the motion, or any testimony at the transfer hearing. According to the State, while Shaffer maintains on appeal that he was fourteen at the time of the offense, his pretrial motion to transfer states that he was fifteen at the time of the incident. Finally, the State contends that the circuit court possessed proper jurisdiction over Shaffer under Ark. Code Ann. § 9-27-318(b)(1) (Supp. 1995).

We could address this jurisdictional issue even if Shaffer had not raised it. See Rice v. State, 330 Ark. 257, 954 S.W.2d 216 (1997). Arkansas law provides that if a juvenile is fourteen or fifteen at the time the delinquent act occurs, the prosecuting attorney may charge him with certain enumerated crimes under Ark. Code Ann. § 9-27-318(b)(2) (Supp. 1995). While the jury found Shaffer guilty of third-degree battery, the State charged him with second-degree battery, Ark. Code Ann. § 5-13—202(a)(1) (Repl. 1997), which is not a listed charge. Specifically, the State’s amended information alleged that Shaffer “did unlawfully and feloniously with the purpose of causing physical injury to another person caused serious physical injury to another person while acting in concert with two or more persons.” Under § 5-74-108(b), “[u]pon conviction [of engaging in violent group activity], the classification and penalty range shall be increased by one (1) classification.” As such, engaging in violent criminal activity is merely an enhancement of punishment statute, not a substantive offense. See B.J. v. State, 56 Ark. App. 35, 937 S.W.2d 675 (1997).

Arkansas State Police Investigator Alex Sylvester testified that, with respect to Shaffer’s age, “I didn’t verify his age at fourteen but I believe Investigator Hyden did that.” The abstract includes Shaffer’s arrest-information sheet, which shows his date of birth as November 20, 1981. Thus, on September 27, 1996, the date of the offense, Shaffer was fourteen years of age. Even if Shaffer had been fifteen, as the State suggests in its brief, it would make no difference. The circuit court had no jurisdiction to try Shaffer for second-degree battery in this case whether he was fourteen or fifteen, as second-degree battery, as defined in § 5-13-202(a)(1), is not an enumerated offense in §9-27-318(b)(2). Thus, we reverse and remand Shaffer’s case for transfer to juvenile court.

Affirmed in part; reversed and remanded in part.


author: W.H. “Dub” Arnold, Chief Justice. Robert L. Brown, Justice,

text:
    OZARKS UNLIMITED RESOURCES COOPERATIVE, INC. v. Edward C. DANIELS, Jr., and Edward C. Daniels, III
    97-924
    969 S.W.2d 169
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      Laser, Wilson, Bufford & Watts, P.A., by: Dan F. Bufford and Brian A. Brown, for appellant/cross-appellee.

      Vowell & Atchley, by: Russell C. Atchley, P.A., for appellees/ cross-appellants.
   W.H. “Dub” Arnold, Chief Justice.

Appellant, Ozarks Urdimited Resources (“O.U.R.”), brings this appeal challenging the Boone County Circuit Court’s findings that (1) O.U.R. was not immune from suit pursuant to Article 5, Section 20, of the Arkansas Constitution, and (2) that a lease entered into by O.U.R. was not violative of Ark. Code Ann. § 6-20-402 (Repl. 1993 & Supp. 1997). Additionally, O.U.R. appeals the circuit court’s judgment awarding the appellees, Edward C. Daniels, Jr., and Edward C. Daniels, III (collectively “Daniels”), prejudgment interest. Via a cross-appeal, Daniels contests the circuit court’s judgment setting aside a portion of a jury verdict awarding Daniels $25,000 for damages sustained after July 26, 1993. Our jurisdiction is invoked pursuant to Ark. Sup. Ct. Rules 1-2(a)(1), (a) (17) (i), (a)(17)(vi) (1997) because the issues involve the interpretation of the Arkansas Constitution and Ark. Code Ann. § 6-20-402. Finding no error in the points raised on direct appeal or cross-appeal, we affirm.

O.U.R. is an education service cooperative, providing educational services to twenty-one school districts in a multi-county region of northwestern Arkansas, that was created pursuant to Ark. Code Ann. § 6-13-1000 to -1025 (Repl. 1993 & Supp. 1997). Since the late 1980’s O.U.R. has leased a building from Daniels. The initial leases provided for one-year lease terms. However, in November of 1990 O.U.R. and Daniels executed an “Agreement to Enter into a Lease” that contemplated a new lease, conditioned upon Daniels completing specified improvements to the premises, with a five-year term at a higher monthly rental rate than the prior leases. In May of 1991, the parties executed a new lease with the five-year lease term.

Subsequently, in January 1992, O.U.R. informed Daniels that it was exploring other housing alternatives, because of a projected decrease in funding and an inability to make the additional space functional, and that it was terminating the lease effective June 30, 1992. Although Daniels sold the property to another party on July 26, 1993, they filed a complaint in the Boone County Circuit Court against O.U.R. for breach of the lease agreement. Daniels’s complaint sought recovery of the unpaid monthly rental payments due from July 1992 through July 26, 1993, and $25,000 for diminution in property value.

O.U.R. asserted two legal defenses: (1) that the action was barred by Article 5, Section 20, of the Arkansas Constitution because it was, in effect, a suit against the State, and (2) that the five-year lease agreement was void because it violated the limitation on a school district’s current indebtedness mandated by Ark. Code Ann. § 6-20-402. Additionally, O.U.R. claimed two factual defenses: (1) that the lease agreement permitted termination if O.U.R.’s funding was not sufficiently available and, in fact, funding was not available, and (2) that Daniels breached the lease.

O. U.R. moved for summary judgment based on the two legal defenses and, after hearing oral arguments on March 10, 1995, the trial court denied the motion. On December 2, 1996, the parties tried the case before a jury. O.U.R. renewed the legal defenses raised in its summary-judgment motion at the close of Daniels’ case and at the close of all evidence. However, the trial court overruled these motions and permitted the jury to consider whether O.U.R. was justified in terminating the lease because of a funding loss and whether O.U.R. breached the lease. Ultimately, the jury returned a verdict in favor of Daniels, awarding them $13,575.60 for lost rental payments from July 1, 1992 through July 26, 1993, and $25,000 for damages sustained after July 26, 1993. The trial judge set aside the post-July 26, 1993 damages and entered a judgment for Daniels in the amount of $13,575.60, plus prejudgment interest, attorney’s fees, and costs.

1. Appeal from Denial of Motion for Summary Judgment

The appellant’s first point on appeal contests the trial court’s finding that O.U.R. was not entitled to sovereign immunity pursuant to Article 5, Section 20, of the Arkansas Constitution. O.U.R. first raised the immunity defense via a motion for summary judgment, which the trial court denied. As a general rule, the denial of a motion for summary judgment is neither reviewable nor appealable. Nucor Holding Corp. v. Rinkines, 326 Ark. 217, 931 S.W.2d 427 (1996). Accordingly, we first consider whether this point reaches us through an appealable order. See Newton v. Etoch, 332 Ark. 325, 965 S.W.2d 96 (1998). When the parties fail to address the issue of an order’s appealability we, nevertheless, must determine whether we have jurisdiction. See Associates Fin. Servs. Co. v. Crawford County Mem. Hosp., 297 Ark. 14, 759 S.W.2d 210 (1988).

O.U.R.’s brief on appeal suggests that it renewed the immunity defense via motions for directed verdict at the close of Daniels’s case and at the close of all evidence. Such a motion, if made, would be properly appealable. However, the record indicates that O.U.R. merely renewed the arguments advanced in its summary-judgment motion. Specifically, O.U.R. made the following motion at the conclusion of Daniels’s case:

The Court will recall that I had a motion for summary judgment pending which the Court denied about a year ago, but I just want at this point to renew for the record that we contend that this lease is unenforceable and illegal under the state law and the Arkansas constitution, and, in fact, make the same motion I did at summary judgment and have the Court note the denial of that for the record.

The trial court noted and overruled the motion. Likewise, the trial court noted and overruled the motion when made at the close of all evidence.

Although denials of summary-judgment motions generally are nonappealable, the general rule does not apply where the refusal to grant a summary-judgment motion has the effect of determining that the appellants are not entitled to immunity from suit, as the right of immunity from suit is effectively lost if a case is permitted to go to trial. See Robinson v. Beaumont, 291 Ark. 477, 725 S.W.2d 839 (1987); see also Ark. R. App. P.—Civil 2(a)(2) (providing that an appeal may be taken from an order that in effect determines the action and prevents a judgment from which an appeal might be taken). In Robinson, this court held that the refusal to grant the motion for summary judgment amounted to “a denial of appellants’ claimed defense which would have, if allowed, discontinued the action. The qualified immunity claim is a claim of right which is separable from, and collateral to, rights asserted in the complaint. ...” Robinson, 291 Ark. at 482-83.

Moreover, in Virden v. Roper, 302 Ark. 125, 128, 788 S.W.2d 470 (1990), we noted that: “The appealability of a denial of summary judgment based on qualified immunity from suit is clearly established.” Id. (citing Robinson, 291 Ark. 477); compare Nucor Holding Corp., 326 Ark. 217 (dismissing appeal from denial of summary-judgment motion for lack of finality when issue raised was exclusivity of remedy under the Workers’ Compensation Act)). Although we voiced our strenuous objections in Nucor against accepting appeals from denials of motions for summary judgment, the facts of the instant case are distinguishable from Nucor, which implicated the Workers’ Compensation Act. Here, appellants claim the defense of sovereign immunity, which is, simply, jurisdictional immunity from suit. See Newton, 332 Ark. 325. Accordingly, the instant case falls within the well-settled line of cases permitting review of summary-judgment denials based on qualified immunity, and warrants our review. The standard of review when an order denying a motion for summary judgment is appealed is whether the trial court abused its discretion in denying the motion. Karnes v. Trumbo, 28 Ark. App. 34, 770 S.W.2d 199 (1989).

II. Sovereign Immunity

Article 5, Section 20, of the Arkansas Constitution provides that, “[t]he State of Arkansas shall never be made defendant in any of her courts.” Article 5, Section 20, grants sovereign immunity and a general prohibition against awards of money damages in lawsuits against the State of Arkansas and its institutions. Cross, 328 Ark. at 258 (citing Smith v. Denton, 320 Ark. 253, 895 S.W.2d 550 (1995); Fireman’s Ins. Co. v. Arkansas State Claims Comm’n, 301 Ark. 451, 784 S.W.2d 771, cert. denied, 498 U.S. 824 (1990). The doctrine of sovereign immunity is rigid and, as such, the immunity may be waived only in limited circumstances. Id. at 258-59 (citing State v. Staton, 325 Ark. 341, 934 S.W.2d 478 (1996). Where the suit is one against the State and there has been no waiver of immunity, the trial court acquires no jurisdiction. Id. (citing Staton, 325 Ark. 341). Therefore, sovereign immunity iully protects the State absent a waiver or consent by the State to be sued. Jacoby v. Arkansas Dept. of Educ., 331 Ark. 508, 962 S.W.2d 773 (1998); see also Cross, 328 Ark. 255; State v. Tedder, 326 Ark. 495, 932 S.W.2d 755 (1996); Fireman’s Ins. Co., 301 Ark. 451; Parker v. Moore, 222 Ark. 811, 262 S.W.2d 891 (1953). There is no issue of waiver or consent by the appellant in the case before us. O.U.R. relies, rather, on a claim of immunity granted under the State Constitution.

Here, O.U.R. notes that it is a “public agency” overseen by the Arkansas Department of Education pursuant to Ark. Code Ann. §§ 6-13-1001 to -1025, the Education Service Cooperative Act of 1985, and that this “agency” designation makes it akin to the State Department of Education. Moreover, O.U.R. acknowledges that it receives funding from the State, which would be jeopardized by any judgment against O.U.R. . Daniels argues, on the other hand, that the funding issue is irrelevant, that the mere appellation “public agency” is not determinative of whether O.U.R. has the capacity to sue and be sued, and that the answer to that question lies in the enabling legislation creating education service cooperatives. We agree.

A review of the enabling legislation reveals that the coop entities are more closely analogous to school districts than, as the appellant suggests, to the State Department of Education. Significantly, the legislation governing co-ops is nested within the legislation governing school districts and not within the statutes governing the State Department of Education. Described in section 6-13-1002 as “intermediate service units,” the co-op entity is comprised of school districts and, like school districts, co-ops must report to the Department of Education. The growth of a co-op begins at a grassroots level. Although the tentative geographic boundaries of co-ops are established by the Department of Education, 75% of the school districts in a proposed co-op must request formation of the co-op by formal resolutions. The decisions to initiate, activate, or participate in a co-op are made by school districts. Further, co-op personnel are employed and terminated using the same procedures applicable to school districts and, only when the co-op’s governing body approves, will the Department of Education assign state personnel to the co-op. Clearly, the growth, utilization, and maintenance of the co-op stems from the participating school districts and, as an entity, the co-op is comparable to a school district.

The importance of the co-op’s characterization as one type of entity or another cannot be overemphasized because, unlike school districts, the State Department of Education enjoys sovereign immunity. School districts are considered creatures of the state who may not avail themselves of all constitutional safeguards. See Delta Special Sch. Dist. No. 5 v. State Bd. of Educ., 754 F.2d 532 (8th Cir. 1984). As creatures of statute, school districts may only act through a board of directors, and are bound by all lawful contracts into which they may enter. F.E. Compton & Co. v. Greenwood Sch. Distr. No. 25, 203 Ark. 935, 159 S.W.2d 721 (1942). A school district is a corporate body with the power to sue and be sued. Clarke v. School Distr. No. 16, 84 Ark. 516, 106 S.W. 677 (1907) (decision under prior law). Consistent with the legislation creating co-ops and the practical manner in which they function, we conclude that the trial court’s determination that O.U.R. was not entitled to sovereign immunity was not erroneous.

III. Ark. Code Ann. § 6-20-402

O.U.R.’s second point on appeal, also raised in its summary-judgment motion, is that the trial court erred in finding that the five-year lease term was not violative of section 6-20-402. We note that this point is not properly before us on appeal through a denial of a summary-judgment motion; however, we will address it in the interest of judicial economy. Paradoxically, O.U.R. urges us to find that it is analogous to the State Department of Education for purposes of analyzing its immunity argument but compels us to define it as a school district for purposes of applying section 6-20-402, a statute found in a subchapter entitled “District Finances.” Section 6-20-402 (Repl 1993 & Supp. 1997) provides:

The amount of obligations incurred by a school district for any school fiscal year shall not be in excess of the revenue receipts of the district for that year except as provided herein and in §§ 6-20-801 et seq. [Revolving Loan Program] and 6-20-1201 et seq. [District Bonds].

Although the co-op entity is more similar to a school district than the State Department of Education for purposes of determining immunity, the co-op’s formation and operation are independently governed by the Education Service Cooperative Act. For example, the Act authorizes a co-op’s board of directors to employ a director, establish policies and procedures for operation and management, prepare an annual budget, and receive and expend funds and employ necessary personnel to provide programs and services. Ark. Code Ann. § 6-13-1006(d). Notably, the Act also empowers co-ops to rent or lease facilities and buildings to provide programs and services. Id.

Arguably, section 6-20-402 is wholly inapplicable to a co-op because it is a part of school district finance statutes. However, even an inspection of the statutes that govern co-ops indicates the legislature’s determination that co-ops may enter into contracts that will commit their funds, and extend their indebtedness, beyond one fiscal year. Most compelling, the Act authorizes a co-op to enter into a three-year employment contract with a director. Ark. Code Ann. § 6-13-1012(c). Assuming, arguendo, that section 6-20-402 were applied to a co-op, it would be perplexing to reconcile that debt limitation with the authority expressly granted to a co-op in section 6-13-1012. We agree with the appellees that the legislature could have imposed similar debt restrictions within the Education Service Cooperative Act. In fact, the only limitation placed on a co-op’s board of directors is that the board’s agreements must be “consistent with funds available.” Ark. Code Ann. § 6-13-006(d). In light of the foregoing, we conclude that the trial court’s finding that O.U.R.’s five-year lease was not in violation of section 6-20-402 was not erroneous.

IV. Prejudgment Interest

In the interest of judicial economy, we will consider the appellant’s third point on appeal contesting the trial court’s awarding Daniels prejudgment interest. Prejudgment interest is compensation for recoverable damages wrongfully withheld from the time of the loss until judgment. Prejudgment interest is allowable where the amount of damages is definitely ascertainable by mathematical computation, or if the evidence furnishes data that makes it possible to compute the amount without rebanee on opinion or discretion. Woodline Motor Freight, Inc. v. Troutman Oil Co., 327 Ark. 448, 938 S.W.2d 565 (1997). Where prejudgment interest may be collected at all, the injured party is always entitled to it as a matter of law. TB of Blytheville v. Little Rock Sign & Emblem, 328 Ark. 688, 946 S.W.2d 930 (1997) (citing Wooten v. McClendon, 272 Ark. 61, 612 S.W.2d 105 (1981)).

Here, the lease agreement detailed a specific sum to be paid as rent each month, specifically, $1,000.41 per month, due on the first of each month, adjusted annually each January to reflect changes in the consumer price index. This formula permits the calculation, with reasonable certainty, of the overall amount due during the remaining term of the lease and yields a liquidated amount that is not subject to conjecture. The amount of damages was ascertainable by means of a defined formula from the date O.U.R. vacated the premises. Accordingly, we conclude that the trial court did not err in awarding Daniels prejudgment interest.

V. Cross-Appeal

On its own motion, the trial court set aside the jury’s verdict awarding Daniels $25,000 for damages sustained after July 26, 1993, the date the leased property was sold to another party. From that judgment, Daniels brings the instant cross-appeal. Before considering the final point on cross-appeal, we note that Daniels’ complaint actually sought recovery for $25,000 for diminution in property value allegedly caused by O.U.R.’s lease termination and waste, which, Daniels argued, left the property vacant and reduced its marketability. Diminution in property value is a recoverable element of damages, Walker v. Dibble, 241 Ark. 692, 409 S.W.2d 333 (1966), but no such instruction was given to the jury. Rather, the jury received an instruction relating to lost profits under the lease, which are not recoverable damages. Daniels failed to object to the submitted instruction and its variance from his claimed damages, and arguments not presented to the trial court are not reviewable on appeal. See Schueck v. Burris, 330 Ark. 780, 787, 957 S.W.2d 702 (1997) (citing Jamison v. Estate of Goodlett, 56 Ark. App. 71, 938 S.W.2d 865 (1997)).

Turning now to the point that is before us, the first issue is whether the trial court erroneously instructed the jury that Daniels could receive an award for damages sustained after July 26, 1993. In Weingarten/Arkansas, Inc. v. ABC Interstate Theatres, Inc., 306 Ark. 64, 811 S.W.2d 295 (1991), we recognized that when a landlord “reenters and resumes the use and enjoyment of the premises for his own account, he terminates the lease, as a matter of law, insofar as his right to recover subsequendy accruing rent is concerned.” Weingarten, 306 Ark. at 69 (citing 49 Am. Jur. 2d, Landlord and Tenant § 620, 592 (1970); Hayes v. Goldman, 71 Ark. 251, 72 S.W. 563 (1903)). O.U.R. asserts that Daniels accepted the surrender of the leasehold and resumed their use and enjoyment of the property by selling it to another party. Daniels, in effect, terminated the lease and the accrual of damages under the lease for lost rent. The authority of Weingarten supports O.U.R.’s conclusion, and we agree that a jury instruction permitting an award for damages after the sale date was erroneous.

Second, we must determine whether the trial court erred by setting aside an erroneous jury instruction. Significantly, the jury’s verdict was in the form of two interrogatories, the first relating to damages prior to the sale of the property on July 26, 1993, and the second related to damages sustained after the sale date. Notably, each interrogatory answered by the jury is a special verdict on that particular fact. Carroll Boone Water District v. M. & P. Equipment Co., 280 Ark. 560, 661 S.W.2d 345 (1983). According to the Reporter’s Notes to Ark. R. Civ. P. 49, the court “has the power and authority to rectify inconsistent answers, particularly where the inconsistency is due in part to incorrect instructions to the jury.” Given that the incorrect instruction was a special verdict on a particular fact, we conclude that the trial court did not err in setting aside that portion of the award representing damages sustained after July 26, 1993.

In conclusion, we affirm the trial court’s findings that the appellant was not entitled to sovereign immunity and that the five-year lease was not violative of Ark. Code Ann. § 6-20-402. We also affirm the trial court’s judgment awarding Daniels prejudgment interest and setting aside a $25,000 award for damages sustained after July 26, 1993.

Corbin, Brown, and Imber, JJ., concur.

Glaze, J. not participating.

Robert L. Brown, Justice,

concurring. My only disagreement with the majority opinion is its unrealistic assumption that O.U.R. made a motion for summary judgment at the close of the Daniels’s case, and at the close of its own case, and at the close of all of the evidence following rebuttal. It is clear to me and, no doubt, was equally clear to the attorneys at trial and to the trial court that defense counsel was making a motion for directed verdict but was making the same argument he made in his pretrial motion for summary judgment. Indeed, counsel said as much:

The Court will recall that I had a motion for summary judgment pending which the Court denied about a year ago, but I just want at this point to renew for the record that we contend that this lease is unenforceable and illegal under the state law and the Arkansas constitution, and, in fact, make the same motion I did at summary judgment and have the Court note the denial of that for the record.

The trial court overruled defense counsel’s motion three times at trial, which, again, supports the conclusion that the trial court, without question, viewed these motions as motions for a directed verdict.

I would accept the reality of what occurred at trial and recognize that the trial court overruled O.U.R.’s directed-verdict motions. This conclusion would avoid the contorted reasoning of the majority opinion that what transpired at trial fell under the qualified-immunity exception to our general rule regarding denials of summary-judgment motions.

Corbin and Imber, JJ., join.


author: David Newbern, Justice.

text:
    Jerry L. ROSS v. SOUTHERN FARM BUREAU CASUALTY INS. CO.
    97-995
    968 S.W.2d 622
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      Bulter, Hicky & Long, by: Rita Reed Harris, for appellant.

      Easley, Hicky, Cline & Hudson, by: Michael B. Easley and Daggett, Van Dover, Donovan & Perry, by: Robert J. Donovan, for appellee.
   David Newbern, Justice.

More than ninety days after entering an order of dismissal of a personal injury and property damage claim brought by Jerry L. Ross, the Trial Court entered orders purporting to modify its dismissal order. We hold that the Trial Court lacked jurisdiction to modify the order.

Mr. Ross drove a vehicle that was struck from behind by one owned by Clay Vanoven. Mr. Vanoven’s vehicle was being driven by Troy Osbourne with Mr. Vanoven as a passenger. Mr. Ross sued Mr. Osbourne for negligent operation of the vehicle, and he sued Mr. Vanoven for negligent entrustment of his vehicle to Mr. Osbourne. Among the allegations were claims that Mr. Osbourne was driving too fast and was intoxicated at the time of the accident. To his claim against those two defendants, Mr. Ross joined a claim against Southern Farm Bureau Insurance Co. (“Southern Farm”), alleging that Southern Farm would be liable on Mr. Ross’s underinsured-motorist coverage with that Company.

Attorney Bob Donovan represented Mr. Osbourne and Mr. Vanoven. They agreed to settle the claim for $25,000, which was the policy limit on the insurance covering Mr. Vanoven’s vehicle. Mr. Donovan sent a draft of a release agreement and a draft of an order of dismissal to Attorney Michael Easley who represented Mr. Ross.

On September 9, 1996, the Trial Court entered the following order: “Upon motion of the parties it appears to the court that this case has been settled and that the complaint of the plaintiff should be and is hereby dismissed with prejudice. All claims asserted and all claims that could have been asserted are forever barred.” The order was signed by Judge Harvey Yates and signed as “approved” by Mr. Easley and Mr. Donovan. Identical orders were entered two additional times, on September 12 and 18, 1996, apparently as the result of confusion in Mr. Donovan’s law firm as to who was responsible for filing it.

Later it was realized that the effect of the order was to dismiss Mr. Ross’s claim for underinsured-motorist coverage against Southern Farm. Without giving notice to Southern Farm or its attorney, Phil Hickey, Mr. Donovan presented a “Corrected Order of Dismissal with Prejudice by Reason of Settlement” that provided,

Upon oral motion of the Defendants, Osbourne and VanOven pursuant to Rule 60(a), ARCP, it appears to the court that this case was setded by them only and that the complaint of the plaintiff as to Defendants Osbourne and VanOven only, should be and is hereby dismissed with prejudice. All claims asserted and all claims that could have been asserted against said defendants are forever barred.
IT IS SO ORDERED pursuant to Rule 60(c) ARCP.

That order was signed by the court and as “approved” by Mr. Donovan. On the following day, February 6, 1997, yet another “Order of Dismissal With Prejudice By Reason Of Settlement” was filed. This one provided,

Upon motion of the parties, it appears to the Court that this case has been settled, with Defendants Troy P. Osbourne and Clay Vanoven, and that the Complaint of the Plaintiff, insofar as it makes a claim against said Defendants, should be and is hereby dismissed with prejudice. All claims asserted and all claims that could have been asserted against those Defendants are forever barred.
The purpose of this Order is to amend the Order dated and filed September 9, 1996.

It was signed by the court and as “approved” by Mr. Easley and Mr. Donovan.

On April 3, 1997, Mr. Hickey moved on behalf of Southern Farm to extend the time for filing a notice of appeal from the February orders. The motion was supported by his affidavit stating that he had not received notice of those orders and had only learned of them on or about March 21, 1997.

On April 10, 1997, Mr. Easley, on behalf of Mr. Ross, apparently recognizing that the February orders were possibly ineffective as they were entered more than ninety days after the September 1996 order of dismissal, moved to amend corrected orders, stating, in part, the following:

Subsequent to September 18, 1996, and after ninety (90) days, the Court entered two (2) separate orders, one filed February 5 and the other filed February 6, 1997, correcting the Order of September 18, 1996. Neither the February 5, 1997, nor February 6, 1997, Order proposes to dismiss Defendant, Southern Farm Bureau Casualty Insurance Company. Plaintiff requests a third Order be entered nunc pro tunc to reflect that Defendant, Southern Farm Bureau Insurance Company is not dismissed from the case.

At a hearing held on April 11, 1997, the Trial Court considered Southern Farm’s motion to extend the time to file its notice of appeal and the motion of Mr. Osbourne and Mr. Vanoven to amend the February orders. The resulting order granted Southern Farm’s motion for an extension to file its notice of appeal. On April 24, 1997, Southern Farm filed its Notice of Appeal in which it appealed the February orders. On June 10, 1997, the Trial Court entered an order in which it denied Mr. Ross’s Motion to Amend the Corrected Orders, stated that Mr. Ross’s motion to correct the September 18, 1996 order would be in accordance with Ark. R. Civ. P. 60(a) and (b) and not (c), and set aside the February 5 and 6 orders as improper because the 90-day period to amend or correct the September 18 order had expired when the February orders were entered, and thus the Trial Court lacked jurisdiction.

On June 16, 1997, Mr. Ross filed his Notice of Appeal with respect to the June 10, 1997 order.

The issue in both Mr. Ross’s appeal and Southern Farm’s appeal is whether the Trial Court had lost jurisdiction to modify its September 1996 order in view of the passage of more than ninety days from the date it was entered. According to Ark. R. Civ. P. 60(a), the Trial Court has the power “at any time” to correct “clerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission.” Rule 60(b), however, contains this language:

To correct any error or mistake or to prevent the miscarriage of justice, a decree or order of a circuit, chancery, or probate court may be modified or set aside on motion of the court or any party, with or without notice to any party, within ninety days of its having been filed with the clerk.

See Slaton v. Slaton, 330 Ark. 287, 956 S.W.2d 150 (1997) (“[W]e have held that a trial court loses jurisdiction to set aside or modify an order pursuant to Ark. R. Civ. P. 60(b) if it does not do so within ninety days of the entrance of the original order.”).

In Phillips v. Jacobs, 305 Ark. 365, 807 S.W.2d 923 (1991), we held that the reference to “miscarriage of justice” in Rule 60(b) is to those clerical errors or mistakes described in Rule 60(a), and we applied the ninety-day limit. Thus, the ninety-day requirement in Rule 60(b) applies to clerical errors.

There is some doubt whether the error in this case is properly characterized by the parties as “clerical.” Whether it was a clerical error or some other type of oversight, Rule 60(b)’s ninety-day limit on modification applies, and the Trial Court lost jurisdiction to amend the order of dismissal ninety days after the September order was entered.

Reversed and dismissed.


author: Tom Glaze, Justice.

text:
    A.C.E., INC. v. INLAND MORTGAGE COMPANY and West Star Financial Corporation
    97-907
    969 S.W.2d 176
    Supreme Court of Arkansas
    Opinion delivered May 14, 1998

      Griffin Smith, for appellant.

      Wilson & Associates, P.A., by: Randall S. Bueter, for appellee.
   Tom Glaze, Justice.

This case involves the interpretation of statutory provisions under the Uniform Commercial Code. Because the application of these Code provisions is in issue, we first address the facts that led to this litigation and appeal.

Bilal Badar owned a house in Little Rock, Arkansas, mortgaged to West Star, and the mortgage was serviced by Inland Mortgage Corporation (Inland). The house was damaged by fire, and afterwards, A.C.E., Inc. (ACE), performed the repairs. Inland supervised the repairs and distributed the insurance proceeds required for their payment.

Inland issued its last insurance check in the amount of $3,800.00 on July 11, 1996, payable to Badar and ACE as joint payees, and ACE received the check on July 15, 1996. On that July 15 date, ACE’s agent, Sandi Ganus, handed the check to Badar and asked him to indorse it, since the proceeds were owed to ACE for repairs. Badar, however, put the check in his pocket, and refused to return it to Ganus. ACE had not yet indorsed the check.

Ganus has claimed throughout this litigation that she called Inland on the morning of July 16, 1996, and told Inland’s agent, Laure Eck, what Badar had done. Ganus says she recommended that Inland stop payment of the check. The record reflects that the check was paid by the payor bank — First Commercial Bank — on July 18, 1996, and the back of the check reflects “A.C.E., Inc.” and a signature difficult to decipher, but which appears to be Badar’s. John Giuffie, an Inland supervisor in the company’s hazard insurance section, averred Inland’s records showed that ACE contacted it concerning the check on July 19, 1996, but by that time, the check had already been cashed.

On August 21, 1996, ACE filed suit against Inland and Badar, and alleged the following: (1) ACE had immediately (on July 15 or 16, 1996) requested Inland to stop payment on the check and Inland refused to comply; (2) Inland refused ACE’s demand for payment; and (3) Inland’s and Badar’s actions constituted a conversion of the check. Alternatively, ACE asserts it had no agency relationship with Badar, so Inland’s delivering the check to ACE as joint payee, and the bank’s cashing the check bearing ACE’s forged indorsement, did not discharge the underlying debt to ACE.

On October 30, 1996, ACE moved for summary judgment on the basis that the forged indorsement did not discharge the underlying obligation. In its argument, ACE relied solely on the holding in a Massachusetts case, General Motors Acceptance Corporation v. Abington Casualty Insurance Co., 413 Mass. 583, 602 N.E.2d 1085 (1992) (hereafter GMAC).

On March 26, 1997, the trial court denied ACE’s motion for summary judgment, and in doing so, cited Ark. Code Ann. § 4-3-414(c) (Repl. 1991), which provides that, once a draft is accepted by a bank, the drawer (here Inland) of the instrument is discharged. The trial court held the decision in GMAC did not apply because of a factual difference, namely, in GMAC, the drawer sent the check directly to the wrongdoer co-payee instead of giving it to GMAC, the co-payee lienholder. Here, Inland, as drawer, delivered the check first to ACE, which in turn gave the check to Badar. The trial court further held ACE was not entitled to summary judgment because a fact issue exists (1) as to whether Inland had unreasonably delayed in stopping the check after ACE made the request, and (2) because Badar was a necessary party, who had not as yet been served with the complaint and summons.

On January 2, 1997, Inland filed a motion to dismiss under ARCP Rule 12(b)(6), alleging ACE’s complaint failed to state a claim. The trial court granted Inland’s motion on April 29, 1997, by an amended order dated June 11, 1997. ACE appeals from the amended dismissal order on the following bases: (1) the trial court overlooked its conversion allegation based on its claim that Inland failed to timely stop payment on the check; (2) § 4-3-414(c) is inapplicable because the provision refers to a “draft,” but this case involves a check; (3) Badar was not a necessary party under ARCP Rule 19; and (4) the GMAC case is applicable and the rule there states that the payment of a check to one co-payee without the indorsement of the other co-payee does not discharge the drawer of either his liability on the instrument or the underlying obligation.

Inland cites the GMAC holding, but does so for the proposition that an unpaid co-payee cannot collect from the drawer because, under § 4-3-414(c), the instrument payable to the co-payees is deemed discharged once it is negotiated by any party. Inland argues that, when this type of situation occurs, ACE’s remedy, if any, is against the drawer’s bank. Inland further argues that, when a check is issued for an underlying obligation, that obligation is suspended until the check is presented for payment. Under the Code, “presentment” means a demand made by or on behalf of a person entitled to enforce the instrument, Ark. Code Ann. § 4-3-501 (Repl. 1991), and under this definition, Inland contends that a forger is unable to “present” a check because he is not a person entitled to enforce it. Inland submits that, because Badar forged the check, no presentment occurred, and the payee (ACE) was unable to sue on the suspended obligation.

We hold that Inland’s obligation under the check was discharged at the time of payment. We find the decision in Mills v. Hurley Hdw. & Furn. Co., 129 Ark. 350, 196 S.W.2d 121 (1917), helpful. There, appellant T. R. Mills lived in Little Rock, and was the owner of Batesville White Lime Company in Batesville, Arkansas. A. B. Gowens was Mills’s superintendent at the plant. Gowens was authorized to receive and fill orders, and to receive checks in payment, but was not authorized to cash checks; instead, checks were to be turned over to Mills. Appellee Hurley Hardware & Furniture Company purchased goods through Gowens and sent its check to Gowens for payment. Gowens forged Mills’s indorsement on the check, cashed it at the First National Bank at Batesville, and appropriated the proceeds. This court held that, because the check was sent and received by the proper party, that ended Hurley’s responsibility and constituted payment by Hurley the moment the check was cashed. Id. at 353.

The early common-law rule in Mills is found at UCC § 3-414(c), codified in Arkansas at § 4-3-414(c), which provides that, if a draft is accepted by a bank, the drawer is discharged regardless of when or by whom acceptance was obtained. Under Ark. Code Ann. § 4-3-104(3) (f), “check” means, in part, a draft, other than a documentary draft, payable on demand and drawn on a bank. Hence, Inland’s obligation on the check ended when Badar demanded payment of the check from the First Commercial Bank, and the bank paid it.

While ACE relies on GMAC in making its argument that Inland had not discharged its obligation, that case is factually and significantly distinguishable. There, Abington Casualty Insurance Company had insured Robert A. Azevedo’s car, which had sustained damages. Abington appraised the loss and issued a check payable jointly to the owner and insured, Azevedo, and the lienholder, GMAC. Abington mailed the check directly to Azevedo, who forged GMAC’s indorsement and took the funds.

GMAC sued Abington under UCC § 3-116(b) [codified in Arkansas at Ark. Code Ann. § 4-3-110(d) (Repl. 1991)], which requires that, if an instrument is payable to joint payees, it may be negotiated, discharged, or enforced only by all of them. The Massachusetts court held that liability on the instrument or underlying obligation did not discharge the drawer, Abington, because GMAC had not indorsed the check. The court in GMAC conceded that, ordinarily, under UCC’s 3-802(1) (b) [here, Ark. Code Ann. § 4-3-414(c)], payment of a check discharges the obligation. However, the decision in GMAC hinged on UCC § 3-116(b) [Ark. Code Ann. § 4-3-110(d)], which expressly prohibits the discharge of an instrument except by all payees. The legal analysis in GMAC ends there, because GMAC never had possession of the check nor the opportunity to indorse it.

Here, unlike GMAC, ACE originally possessed the check, but delivered it to Badar. Under Ark. Code Ann. § 4-3-309(a) (Repl. 1991), a person not in possession of an instrument is entitled to enforce an instrument if: (i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process. Since the loss in this case occurred as a result of a transfer by ACE, ACE cannot enforce the instrument under § 4-3-309(a). Accordingly, under § 4-3-414(c), Inland’s underlying obligation on the debt was discharged when payment was made on the check.

Lastly, ACE argues that the court’s dismissal was improper because it did not dispose of ACE’s claim against Inland for conversion based upon Inland’s alleged failure to act timely in stopping payment on the check. No such conversion may lie against Inland.

Under Ark. Code Ann. § 4-3-420(a) (Repl. 1997), an instrument is converted if it is taken by transfer from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. Inland could not have converted the instrument since it did not take the check by transfer from Badar after it came into Badar’s possession. Inland’s liability on the check is for the underlying obligation the check was based upon, which was discharged when the check was paid.

Inland’s alleged negligence in failing to timely stop payment on the check does not inure to ACE’s benefit in a suit against Inland, but instead would be a defense the bank might use as a defendant to the extent Inland’s negligence contributed to the loss. See Ark. Code Ann. § 4-3-406 (Repl. 1997).

We affirm.

       The trial court erroneously entered its first dismissal order without notice to ACE, but on motion by ACE to correct the original order, the trial court obliged by entering an amended order which deleted earlier language that the dismissal order was granted after a hearing. The amended order now provides, “Before the court is the motion to dismiss of defendants. Upon a review of the pleadings and other matters before the court, this court doth find and order that the defendants’ motion should be and hereby is granted.” The trial court refused ACE’s request for additional findings.