text:
    ARKANSAS PHARMACISTS ASSOCIATION et al v. DIVISION OF SOCIAL SERVICES OF THE DEPARTMENT OF HUMAN SERVICES OF THE STATE OF ARKANSAS
    78-178
    574 S.W. 2d 644
    Opinion delivered November 20, 1978
    (In Banc)
    [As Amended on Denial of Rehearing January 12, 1979.]

      Friday, Eldredge & Clark, by: George Pike, Jr., for appellants.

      Ivan H. Smith, for appellee.
   Darrell Hickman, Justice.

The Arkansas Pharmacists Association and one individual pharmacist sued the Division of Social Services of the Department of Human Services of the State of Arkansas challenging procedures and payments to certain pharmacists who are entitled to reimbursement for dispensing prescriptions as part of the Medicaid Prescription Drug Program.

The Arkansas General Assembly, by Act 492 of 1977, authorized continuation of such a program, set forth the fees that could be paid under such a program, and authorized the Commissioner of Social Services to set the fees according to certain criterion.

Ray Scott, the Commissioner of Social Services, was authorizing a fee of $2.50 at the time the Act was passed in March of 1977. In June of 1977, he authorized by emergency order an increase to $2.70, effective July 1, 1977. Commissioner Scott conducted a public hearing on August 10, 1977 and decided, after hearing evidence, that the fee should remain at $2.70. On February 17, 1978, a public hearing was held by Commissioner Yarborough, Scott’s successor, reviewing the findings of Commissioner Scott, and also considering other evidence regarding the fee. Yarborough determined that the $2.70 authorized in August was properly made. Commissioner Yarborough determined that an increase would be authorized effective March 18, 1978 to $2.87. It was undisputed that an additional seventeen cents would be in order due to the increase in the cost of living index, therefore, the Commissioner authorized the fee to be increased to $2.87.

The pharmacists contend that it was the intention of the Arkansas General Assembly to authorize no less than $3.00 from the Act’s inception in March of 1977, and that an annual adjustment in March of 1978 would authorize the pharmacists to receive $3.17.

In the alternative the pharmacists argue that if the Act does not require payment of $3.00, then the Commissioner was wrong in setting the amount of the fee according to guidelines set forth in the Act and that $3.00 should have been paid from the inception of this Act.

Social Services argues that the Act only authorizes a maximum payment of $3.00 at any time and that the Commissioner’s rulings were not arbitrary and unreasonable but were, in fact, based upon substantial evidence and that the appellants’ claim should fail in all respects.

The Circuit Court of Pulaski County, where this lawsuit was originally filed, reviewed the Commissioner’s findings which were made on March 3, 1978, after the February hearing, and determined that those findings were essentially correct. That is, that the Commissioner was not authorized at any time to pay more than $3.00 for each prescription; that Commissioner Scott had a reasonable basis for setting the fee in August of 1977 at $2.70; and, that the Commissioner had a reasonable basis for setting the fee at $2.87, effective March 18, 1978. We agree with the trial court and the Commissioner that in no event is more than $3.00 authorized for each prescription. However, we disagree with the Commissioners and the circuit court in finding that there was a reasonable basis for setting the fees in question.

Section 3 of the Act clearly limits the maximum fee. It provides:

Each participating pharmacist shall receive a fee equal to the usual and customary dispensing fee as determined by the Department of Social and Rehabilitative Services based upon cost survey, but in no event shall the fee exceed Two Dollars and Fifty Cents ($2.50) for each prescription filled, plus the Fifty Cents ($.50) per prescription co-payment by the recipient and as funds are available. The fee shall be reviewed and adjusted annually to reflect changes in the standard cost of living index based on the most recent figures of the U.S. Department of Labor, Bureau of Labor Statistics, and any unusual or unforeseen cost factors. [Emphasis added.]

Evidence was submitted in the way of testimony by members of the General Assembly, when hearings were held there on this Act, which might indicate that it was the intent of the legislature to set the fee at $3.00 with no maximum limit. However, that is not what the Act says. It is clear that the Commissioner has discretion to set the fee at less than $3.00 and in no event shall the fee exceed $3.00.

We have held that:

The cardinal rule of interpretation is the ascertainment of the meaning of the law-makers as expressed in the language which they have used. Not what the lawmakers themselves meant, but what the language they used means. And all rules of interpretation must yield to this as the paramount one. State ex rel. v. Trulock, 109 Ark. 556, 160 S.W. 516 (1913).

The pharmacists would also have us examine the emergency clause in interpreting this Act, but the Act is clear and plain on its face. We only resort to the emergency clause to resolve doubts in interpretations. City of Fort Smith v. Brewer, 255 Ark. 813, 502 S.W. 2d 643 (1973).

We conclude that in no event under this Act, at any time, can a commissioner authorize a payment in excess of $3.00.

The basis of a fee to be paid to pharmacists is mentioned in two sections of Act 492. Section 3 states that “Each participating pharmacist shall receive a fee equal to the usual and customary dispensing fee as determined by the Department of Social and Rehabilitative Services based upon cost survey . . . . ”

Section 4 of the Act states quite clearly that “. . . drug product costs under this program are to be defined as prevailing local wholesale costs of the manufacturer’s 100-unit size or the next smaller size when the 100-unit size is not available.”

There were two hearings held on this matter, one in August, 1977 by then Commissioner Scott, and one in February, 1978 by Commissioner Yarborough. The record clearly shows that no survey was made in the State of Arkansas at any time to determine the wholesale costs as mentioned in Section 4. Ms. Debbie Dodson, an employee of the department, testified as follows:

Mr. Pike — I believe you stated in your memo that there had been no formal study done in Arkansas to compare average wholesale price and actual acquisition cost.
Ms. Dodson — Correct.
Mr. Pike — And this Commission again if it is going to base its decision on facts rather than arbitrarily pick figures out of the air, has no figures on which it could arrive at a figure that would show the difference between average wholesale price and actual acquisition cost in Arkansas, does it?
Ms. Dodson — Not at this time, no.

It was Commissioner Scott’s position, and that position was confirmed by Commissioner Yarborough, that a study from the State of Iowa regarding wholesale costs was considered and was used as a basis in determining that the fee should be $2.70. Ms. Dodson testified that at one time a spot check was made of local wholesale costs but to her knowledge this was not used as evidence in setting the fee.

Two witnesses provided evidence on behalf of the pharmacists as to what the usual and customary fee was in Arkansas. However, there is no evidence that either study used wholesale costs, as defined by the Act, in determining what the fee should be. In fact, one of the witnesses said such a study did not exist and, therefore, there was no such information available.

There are, of course, relevant federal regulations which give guidelines as to how one can arrive at the usual and customary fee charged by pharmacists. However, the Arkansas Legislature made it clear that when drug product costs were to be determined, then the prevailing local wholesale costs must be used.

Commissioner Scott testified, and the record reflects that he acted in good faith, that a survey of some 79,000 claims submitted to Blue Cross-Blue Shield Insurance Company was used as one of the bases for setting the fee at $2.70. However, it was undisputed that these were billings by pharmacists and there is no evidence that wholesale costs, as defined by the Act, were taken into consideration.

Therefore, aside from the Iowa study, which he hardly consider “local”, there is no evidence that local wholesale costs were used as a criterion in setting the fee at $2.70 or $2.87.

We see no reason to go back beyond the determination made by the Commissioner in August of 1977. The Commissioner used his emergency power to set the fee at $2.70, effective July 1, 1977, and certainly we cannot say this was arbitrary or unreasonable considering the evidence that was available to the Commissioner at that time. (That fee was effective until October 17, 1977.) However, the Commissioner should have had available local wholesale costs before he made his determination after a hearing in August of 1977, and when a determination was made after the hearing in February of 1978.

Therefore, we must conclude that there was no reasonable basis for the Commissioner’s decision to set the fee at $2.70 in August of 1977, or $2.87 in February, 1978. Consequently, these decisions cannot stand.

We do not read the Act in question to mandate that in any event a pharmacist shall receive $3.00. The pharmacist is to be paid the usual and customary fee after a cost survey. The cost survey will be as required in Section 3 of the Act.

Therefore, this matter is remanded so that a hearing may be held to determine what should be the usual and customary fee to be paid the pharmacist from October 17, 1977 until present. The trial court is reinvested with jurisdiction for proceedings not inconsistent with this opinion.

Affirmed in part.

Reversed and remanded in part.


source: Caselaw Access Project

author: John A. Fogleman, Justice. George Howard, Jr., Justice,

license: Public Domain

text:
    STATE of Arkansas v. Glenda REEVES
    CR 78-24
    574 S.W. 2d 647
    Opinion delivered November 27, 1978
    (In Banc)
    [Rehearing denied January 12, 1979.]

      Bill Clinton, Atty. Gen., by: Jesse L. Kearney, Asst. Atty. Gen., for appellant.

      William Martin Cromwell, of Rose, Kinsey & Cromwell, and Matthew Horan, for appellee.
   John A. Fogleman, Justice.

This appeal was taken by the state from an order granting the motion of Glenda Reeves to dismiss a charge of theft by receiving. The trial court sustained appellee’s contention that the prosecution was barred by the three year statute of limitations. We disagree and reverse the judgment.

The information charging Glenda Reeves with the crime was filed on 17 November 1976. It alleged that the crime was committed on 27 August 1976. The trial court held that, since Mrs. Reeves had possession of the automobile which was the subject of the charge since 1972, the three year statute of limitations had run, holding that the offense of theft by receiving is not a continuing offense. The information alleged that Mrs. Reeves received and retained this automobile. Since we do not agree with the trial judge that theft by receiving, as alleged here, is not a continuing offense, we reverse the order of dismissal.

It should be pointed out that the court’s finding as to the date appellant first came into possession of the vehicle in question was based upon a stipulation by the state’s attorney that: Rodney Dale Reeves first came into possession of the automobile in 1972; he and Glenda Reeves were husband and wife and were living together at the time; and they continued to live together until they were divorced in October or November, 1974, when the automobile was awarded to appellee through a property settlement incorporated into the divorce decree.

Prior to the adoption of the Arkansas Criminal Code, larceny, embezzlement, receiving stolen property and possession of stolen property were separate crimes, separately defined by separate statutes. There were several statutes covering the crime of receiving stolen property. See e.g., Ark. Stat. Ann. §§ 41-3912, 41-3934 — 41-3937 (Repl. 1964). Possession of stolen property was defined by Ark. Stat. Ann. § 41-3938 (Repl. 1964). All such crimes were consolidated into the crime of theft by the Criminal Code. See Ark. Stat. Ann. § 41-2202 (Repl. 1977). The intention was to eliminate needless wrangling over the question whether particular conduct that is obviously criminal constitutes one offense rather than another. See commentary to § 41-2202.

The offenses of receiving stolen property and possession of stolen property were included under the broad general title of “ [tjheft by receiving.” This offense is defined by Ark. Stat. Ann. § 41-2206 (1) (Repl. 1977), in the following words:

A person commits the offense of theft by receiving if he receives, retains, or disposes of stolen property of another person, knowing that it was stolen, or having good reason to believe it was stolen. [Emphasis ours.]

The fact that the words “receives” and “retains” are alternatives clearly shows the legislative intent to incorporate the crimes of receiving stolen goods (see Ark. Stat. Ann. § 41-3934) and possession of stolen goods (see Ark. Stat. Ann. § 41-3938) into one offense and that either receiving or retaining stolen property constitutes the offense. The definition in Ark. Stat. Ann. § 41-2206 (2) (Repl. 1977) does not eliminate the mere knowing possession of stolen property as a form of theft by receiving. The commentary accompanying § 41-2206 shows clearly that such a result was not intended. The pertinent language of the commentary follows:

*** Secondly, the person found in knowing possession of stolen items can be convicted without the necessity of proving whether he took the property himself or acquired it from the actual thief. There were formerly a number of statutes that treated the receiver of stolen property in the same fashion as the thief. See, e.g., prior law formerly found at Ark. Stat. Ann. § 41-3934 (Repl. 1964) (receiving stolen goods); § 41-3937 (Repl. 1964) (receiving stolen animals); § 41-3938 (Repl. 1964) (possession of stolen goods).
Section 41-2206 adopts a definition of “receiving” that is broad enough to include not only the possession of stolen property, but also constructive possession, the acquisition of bare title to the property, or the extension of credit secured by the property.

This was part of the commentary before the General Assembly when the Code was adopted. See Commentary, p. 2, Vol. 4, Ark. Stat. Ann. (Repl. 1977). While we are not bound by the interpretation of the Criminal Code set out in the commentary, it is very highly persuasive and should be adopted unless we are clearly convinced that it is erroneous or that it is contrary to the settled policy of this state, as declared in the opinions of this court. Shultz v. Young, 205 Ark. 533, 169 S.W. 2d 648; Rumph, Clerk v. Lester Land Co., 205 Ark. 1147, 172 S.W. 2d 916; Britt v. State, 261 Ark. 488, 549 S.W. 2d 84.

The question before us then is: when does the statute of limitations begin to run on the crime of theft by receiving committed by retaining possession of stolen property? The information filed specified that the offense was charged as a class C felony and the value of the property was stated as in excess of $100, so the prosecution must have been commenced within three years after the commission of the offense. Ark. Stat. Ann. § 41-104 (2) (b) (Repl. 1977). For the purposes of § 41-104, an offense is committed either when every element of the offense occurs, or, if a legislative purpose to prohibit a continuing course of conduct plainly appears, at the time the course of conduct or the defendant’s complicity therein is terminated. Ark. Stat. Ann. § 41-104 (5) (Repl. 1977). Appellee’s alleged course of conduct of retaining the automobile and her complicity in its retention had not been terminated at the date alleged in the information. By the very use of the word “retains,” there was a clear intention of the General Assembly to make this aspect of the crime a continuing offense. The word “retain” means “to hold or continue to hold in possession or use; to continue to have, use, recognize, accept, etc.; to maintain in one’s keeping; as to retain part of the money, one’s position, one’s faculties.” Webster’s New International Dictionary, 2d Ed. See also, Webster’s Third New International Dictionary. Thus, retaining the automobile was a continuing course of conduct. There is nothing in the definition of “receiving” in Ark. Stat. Ann. § 41-2206 (2) that leads to a contrary conclusion. Here again, the commentary to § 41-104 makes the legislative intention quite clear by the following:

Crucial to the application of a criminal statute of limitations is the determination of when the offense is committed and when the prosecution is commenced. Subsections (5) and (6) answer these questions. The substance of subsection (5) is that the limitations period begins to run when the defendant could first be prosecuted for the offense. The subsection also states a special rule applicable to statutes prohibiting a continuing course of conduct. For example, if possession of an object is declared illegal, the elements of the offense are present from the moment defendant takes possession, but the limitations period does not begin to run until his possession ends.

We treated the subject of continuing offenses in Britt v. State, 261 Ark. 488, 549 S.W. 2d 84. The offense here is clearly a continuing one under the definition used there. The definition we adopted was that a continuing offense is “. ... a continuous, unlawful act or series of acts set on foot by a single impulse and operated by an unintermittent force, however long a time it may occupy; an offense which continues day by day; a breach of the criminal law, not terminated by a single act or fact, but subsisting for a definite period and intended to cover or apply to successive similar obligations or occurrences.” Retaining stolen property, as defined by the statute, fits that definition.

Appellee’s argument that possession of stolen property is not a continuing course of conduct because it was not listed in examples given in that opinion is not persuasive. There is no indication in that opinion of an intention to list all crimes that are continuing offenses. We did not purport to do more than give examples, some of which are analogous to the offense charged. Some of these are: erecting or maintaining a gate across a highway; carrying a concealed weapon; desertion and neglect to provide for family.

The statute of limitations as to the offense with which appellee was charged did not begin to run until her possession ended.

The judgment is reversed and the cause remanded for further proceedings consistent with this opinion.

Byrd, Holt and Howard, JJ., dissent.

George Howard, Jr., Justice,

dissenting. I am compelled to dissent in the results reached by the majority in this case and set out my reasons below.

Ark. Stat. Ann. § 41-104 (Repl. 1977) provides in pertinent part as follows:

(2) Except as otherwise provided in this section, prosecutions for other offenses must be commenced within the following periods of limitation after their commission:
(b) class B, C, or D or unclassified felonies, 3 years;
“The period of limitation does not run:
(a) during any time when the accused is continually absent from the state or has no reasonably ascertainable place of abode or work within the state, but in no event shall this provision extend the period of limitation otherwise applicable by more than three years; or
(b) during any period when a prosecution against the accused for the same conduct is pending in this state.” (Emphasis added)

The majority in holding that the statute of limitation does not commence to run on a charge of retaining stolen property, under Ark. Stat. Ann. § 41-2206 (1) (Repl. 1977) until the party has divested himself of possession of the property not only conflicts with the well established rule that penal provisions are construed strictly and nothing will be taken as intended which is not clearly expressed and all doubts must be resolved in favor of the accused, but conflicts with Article 4 of the Constitution of the State of Arkansas which provides for three distinct departments of government, i.e., legislative, executive and judicial. Section 2 thereof provides:

“No person, or collection of persons, being one of the three departments, shall exercise any power belonging to either of the others ...”

It is clear from the reading of Ark. Stat. Ann. § 41-2206 (1) involving the offense of theft by receiving as well as Ark. Stat. Ann. § 41-104, statute of limitation, that the majority is engrafting a provision which extends the period of limitation that does not fall within the exception set out in the applicable statutory provision by the General Assembly. Thus, the majority is indulging in legislative action.

The majority seeks to justify its posture by advancing the following argument contained in its opinion:

“. . . By the very use of the word ‘retains,’ there was a clear intention of the General Assembly to make this aspect of the crime a continuing offense. . . . There is nothing in the definition of‘receiving’ in Ark. Stat. Ann. § 41-2206 (2) that leads to a contrary conclusion. ...”

It is plain from the argument of the majority that aside from construing a penal provision liberally, namely, Ark. Stat. Ann. § 41-2206, the majority indulges in a form of reasoning that is very much akin to a form of. pleading characterized as a negative pregnant. In other words, the absence of language in the applicable statutory provision indicating that retention of stolen property is not a continuing course of conduct justifies, by way of implication, the conclusion that an affirmative or positive intent on the part of the General Assembly to make the offense a continuing one.

In Toussie v. United States, 397 U.S. 112, 114, the United States Supreme Court made the following observation regarding the statute of limitation and continuing offenses:

“In deciding when the statute of limitations begins to run in a given case several considerations guide our decision. The purpose of a statute of limitations is to limit exposure to criminal prosecution to a certain fixed period of time following the occurrence of those acts the legislature has decided to punish by criminal sanctions. Such a limitation is designed to protect individuals from having to defend themselves against charges when the basic facts may have become obscured by the passage of time and to minimize the danger of official punishment because of acts in the far-distant past. Such a time limit may also have the salutary effect of encouraging law enforcement officials promptly to investigate suspected criminal activity. For these reasons and others, we have stated before ‘the principle that criminal limitations statutes are to be liberally interpreted in favor of repose, . . . ’ We have also said that ‘[statutes of limitations normally begin to run when the crime is complete.’ . . . And Congress has declared a policy that the statute of limitations should not be extended ‘[ejxcept as otherwise expressly provided by law.’ . . . These principles indicate that the doctrine of continuing offenses should be applied in only limited circumstances since, as the Court of Appeals correctly observed in this case, ‘[t]he tension between the purpose of a statute of limitations and the continuing offense doctrine is apparent; the latter, for all practical purposes, extends the statute beyond its stated term.’. . . These considerations do not mean that a particular offense should never be construed as a continuing one. They do, however, require that such a result should not be reached unless the explicit language of the substantive criminal statute compels such a conclusion, or the nature of the crime involved is such that Congress must assuredly have intended that it be treated as a continuing one.” (Emphasis added)

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

      At most, the effect of this definition makes § 41-2206 (1) read: “A person commits the offense of theft by acquiring possession, control or title, or lending on the security of the property if he acquires possession, control or title, or lends on the security of the property, retains or disposes of stolen property . . . . ”


author: Frank Holt, Justice. George Howard, Jr., Justice,

text:
    Antonio CLARK v. STATE of Arkansas
    CR 77-198
    573 S.W. 2d 622
    Opinion delivered November 27, 1978
    (In Banc)

      Roberts & Kesl, by: Marjorie M. Kesl, for appellant.

      Bill Clinton, Atty. Gen., by: Joseph H. Purvis, Deputy Atty. Gen., for appellee.

   Frank Holt, Justice.

A jury found appellant guilty of two counts of capital felony murder and assessed his punishment at death by electrocution on each conviction. Appellant first contends that the court committed reversible error by denying him his right to allocution under Ark. Stat. Ann. § 43-2303 (Repl. 1964). The statute provides that “[w]hen the defendant appears for judgment .... he must” be asked (by the court) “if he has any legal cause to show why judgment should not be pronounced against him.” Here the trial court did not use that specific language. He asked appellant, in the presence of court appointed counsel: “Do you have anything that you wish to say?” In response, the appellant replied: “I am sorry for what happened. I never did shoot anyone. This is all I would like to say about that. I would like to put my appeal in.” The court: “You will be granted an appeal.” Counsel: “I explained to him that we will appeal after the judgment is entered.” Then in response to the court’s inquiry, “You understand everything that is going on?”, appellant replied: “Yes, sir, I understand.” The court then stated that the judgments and sentences he had imposed are “subject to the agreement between the State of Arkansas and the State of Michigan” and the commitment would so provide. Further, appellant would be returned to Michigan where he was serving a life sentence for murder plus forty to sixty years on assault with intent to murder. The sentencing was approximately one week following the trial. At sentencing, appellant agreed that he had “waived, by your attorney, and agreed that your judgment could be pronounced here in Dewitt where you were charged rather than in Lonoke County.”

The purpose of a statute such as ours is to give the accused, upon sentencing, an opportunity to show any cause why sentence should not be pronounced. Where a question is addressed to the defendant which affords him an opportunity to express why sentencing should not be pronounced, it is unnecessary that the precise language of the statute be used. People ex rel. Bester v. Johnston, 9 A.D. 2d 827, 192 N.Y.S. 2d 947 (1959); Valdez v. State, 479 S.W. 2d 927 (Tex. Crim. App. 1972); and 24 C.J.S. Criminal Law § 1576 (b). Here the question asked by the court upon sentencing of the appellant gave him the unfettered right to state any cause, legal or otherwise, as to why sentence should not be pronounced. The appellant’s response was not restricted in any manner. He was assured of his right of appeal, as an indigent, by the court and that the sentences were subject to the agreement that he would be returned to Michigan where, as indicated, he was serving two sentences. Appellant was present with counsel at the sentencing and there was no objection to the procedure. Neither has any objection been raised by a motion for a new trial, which is permissible. Finch v. State, 262 Ark. 313, 556 S.W. 2d 434 (1977). We have held that in capital cases it is necessary to make an objection in the trial court in order to raise the issue on appeal. Hulsey v. State, 261 Ark. 449, 549 S.W. 2d 73 (1977), cert. den., ___ U.S ___, 99 S. Ct. 220, 58 L. Ed. 2d 194 (1978). We further observe that here on appeal, although raised for the first time, there is no suggestion of any prejudice other than the court did not follow the exact wording of the statute. Upon a review of the entire sentencing procedure, we are of the view no prejudicial error as to allocution is demonstrated. See Tate v. State, 258 Ark. 135, 524 S.W. 2d 624 (1975).

Appellant next contends that the imposition of two death penalties constitutes cruel and unusual punishment. The death penalty per se is not violative of our Federal Eighth and Fourteenth Amendments. Gregg v. Georgia, 428 U.S. 153, 96 S. Ct. 2909, 49 L. Ed. 2d 859 (1976); Proffitt v. Florida, 428 U.S. 242, 96 S. Ct. 2960, 49 L. Ed. 2d 913 (1976); Jurek v. Texas, 428 U.S. 262, 96 S. Ct. 2950, 49 L. Ed. 2d 929 (1976); Collins v. State, 261 Ark. 195, 548 S.W. 2d 106 (1977), cert. den. 429 U.S. 808, 98 S. Ct. 231, 54 L. Ed. 2d 158 (Oct. 3, 1977); and Pickens v. State, 261 Ark. 756, 551 S.W. 2d 212 (1977). The cumulative effect of consecutive sentences does not make the punishment cruel and unusual. Hinton v. State, 260 Ark. 42, 537 S.W. 2d 800 (1976). Here appellant was convicted of two felony murders and received the death sentence in each, as authorized by statute for each offense, which is not so disproportionate to the nature of the offense as to shock the moral sense of the community. See Hinton v. State, supra.

Appellant also contends that the trial court erred in admitting into evidence a tape recorded statement which he asserts was involuntarily given. A Denno hearing was held concerning appellant’s motion to suppress the statement, and the trial court ruled that it had been voluntarily made and was admissible in relevant part. Appellant argues that the statement was involuntary in that he was interrogated in Detroit by three officers who induced him to make the statement by their promises that he would not be returned to Arkansas for trial if he gave them a statement. Where a confession is made when in custody, the state bears the burden of proving it was voluntary. Giles v. State, supra. When the voluntariness of a confession is challenged, we make an independent determination of the issue from a review of the entire record looking at the totality of the circumstances but will not set aside a finding of voluntariness unless such is clearly against the preponderance of the evidence. Tucker v. State, 261 Ark. 505, 549 S.W. 2d 285 (1977).

Appellant was twenty-one years of age and had a tenth or eleventh grade education. At the Denno hearing, appellant testified that the police in Detroit, where he was apprehended, promised him that if he made the statement they would not return him to Arkansas for trial. Otherwise, he would be returned. Appellant’s testimony was contradicted by the three officers conducting the interrogation. See Smith v. State, 254 Ark. 538, 494 S.W. 2d 489 (1973); and Northern v. State, 257 Ark. 549, 518 S.W. 2d 482 (1975). Here it appears that all material witnesses testified that at no time were any promises or threats made to appellant to elicit his confession; it was freely and voluntarily given; appellant was not in their opinion under the influence of any drugs or alcohol; appellant was informed of his right to remain silent; any statement he made could be used against him in court; he had a right to have retained or appointed counsel present; and he could exercise his right to remain silent at any time. Appellant signed a Constitutional Rights Certificate of Notification form which corroborated the officers’ testimony.

Additionally, the tape recording and transcription of the interrogation, which were presented at the Denno hearing, indicate that prior to the giving of the statement, appellant was informed of all his constitutional rights. Appellant stated that he understood his rights and waived them; he had not been threatened or promised anything; and was not under the influence of drugs or alcohol. Here we cannot say the court’s finding of voluntariness was clearly against the preponderance of the evidence. Further, we observe that appellant, when testifying at trial, denied only that part of his statement that he, rather than one of his confederates, fired the pistol.

Appellant finally contends that the jury was prejudiced by the admission of evidence of a rape committed by him during the robbery which aroused the jury’s passion and resulted in their imposition of the death penalty. The state adduced evidence that appellant with two confederates, Gooch and Pickens, entered a rural grocery store, robbed the proprietor, raped an employee, killed two of the customers, and wounded five others. The full details are narrated in Pickens v. State, supra, where we affirmed his death sentence. Here the appellant, testifying in his own behalf, admitted raping the store employee and participating in the robbery. However, he denied the actual shooting of any of the victims. All of these activities constitute one continuous criminal episode. Appellant was charged with two counts of felony murder in the perpetration of a robbery and rape. The evidence of the rape was admissible as a contemporaneous part of the criminal episode. Russell & Davis v. State, 262 Ark. 447, 559 S.W. 2d 7 (1977); Harris v. State, 239 Ark. 771, 394 S.W. 2d 135, cert. den. 386 U.S. 964, 87 S. Ct. 1043, 18 L. Ed. 2d 114.

Ark. Stat. Ann. § 43-2725 (Repl. 1977) and Ark. Stat. Ann. Vol. 4A, Rules of Crim. Proc., Rule 36.24 (Supp. 1977) require that we “review the entire record for errors prejudicial to the right of an appellant in capital cases.” After compliance with this requirement, it was suggested in conference there was a violation of appellant’s constitutional rights by the trial court when he struck prospective jurors for cause because of their inability to consider the imposition of the death penalty had they, as jurors, found the appellant guilty. Witherspoon v. Illinois, 391 U.S. 510, 88 S. Ct. 1770, 20 L. Ed. 2d 776 (1968), provides in pertinent part:

The most that can be demanded of a venireman in this regard is that he be willing to consider all of the penalties provided for by state law, and that he not be irrevocably committed, before the trial has begun, to vote against the penalty of death regardless of the facts and circumstances that might emerge in the course of the proceedings. . . .

Here the trial court struck five prospective jurors for cause due to their inability, as jurors, to consider the imposition of the death penalty. Prospective juror Lucas told the court that if she were selected as a juror, she could not impose the death penalty under any circumstances. Prospective jurors Young and Pettus responded in a like manner as to the imposition of the death penalty. Prospective juror Harris responded that she did not believe she could consider the death penalty because it is contrary to the way she thinks. She was equivocal and finally answered that she didn’t believe she could impose the death penalty under any circumstances nor did she think she could even consider it. Prospective juror Thrift was struck for cause when she responded that unless she saw the crime committed, she would not consider the imposition of the death penalty. In our view there was sufficient compliance with the requirements of Witherspoon v. Illinois, supra.

Further, it is significant that no objections were raised to the court’s striking these jurors for cause. Failure to interpose an objection or raise the issue in a motion for a new trial prevents the issue from being raised for the first time on appeal in a capital case. Neal v. State, 259 Ark. 27, 531 S.W. 2d 17 (1975); Finch v. State, supra; Hulsey v. State, supra. See also Estelle v. Williams, 425 U.S. 501, 96 S. Ct. 1691, 48 L. Ed. 2d 126 (1976); and Francis v. Henderson, 425 U.S. 536, 96 S. Ct. 1708, 48 L. Ed. 2d 149 (1976) to the effect that failure of a criminal defendant to object precludes review of the issue on appeal. Here, as indicated, there was no objection to the court’s excusing any of thesejurors for cause. Neither was the issue raised in a motion for new trial. In another very recent case, it was held that objections must be made at trial in order to preserve for appellate review errors of constitutional dimensions. Boulware v. State, 542 S.W. 2d 677 (Tex. Crim. App. 1976); cert. den. 430 U.S. 959, 97 S. Ct. 1610, 51 L. Ed. 2d 811 (1977). There it was specifically held in a capital case that “the failure to object to the improper exclusion of a venire member waives that right and it cannot be considered on appeal.” Therefore, “absent an objection,” it was not error when the trial court excused the jurors for cause “even though they were not questioned as thoroughly as they might have been with reference to their ability to render the death penalty no matter what the trial may reveal.” This view was reaffirmed in Shippy v. State, 556 S.W. 2d 246 (Tex. Crim. App. 1977); cert. den. 434 U.S. 935, 54 L. Ed. 2d 294 (1977).

Here after reviewing the entire record, as required by § 43-2725, supra, and Rule 36.24, supra, and finding no errors prejudicial to appellant, the judgments are affirmed.

Affirmed.

Howard, J., dissents.

George Howard, Jr., Justice,

dissenting. I am compelled to dissent in this case inasmuch as there were jurors who were excluded from serving on the jury that convicted the appellant simply because they voiced general objections to the death penalty or expressed conscientious scruples against its infliction. The action of the trial court in excluding these jurors conflicts with the holding of the United States Supreme Court in reversing the death sentence in the case of Witherspoon v. Illinois, 391 U.S. 510, where the Court stated:

. . Specifically, we hold that a sentence of death cannot be carried out if the jury that imposed or recommended it was chosen by excluding veniremen for cause simply because they voiced general objections to the death penalty or expressed conscientious or religious scruples against its infliction. No defendant can constitutionally be put to death at the hands of a tribunal so selected.
“Whatever else might be said of capital punishment, it is at least clear that its imposition by a hanging jury cannot be squared with the Constitution. The State of Illinois has stacked the deck against the petitioner. To execute this death sentence would deprive him of his life without due process of law.”

The following is an exchange between the prosecuting attorney, the court and prospective jurors regarding their position on the death sentence resulting in the exclusion of the jurors from serving by the court which does not square with the Witherspoon doctrine:

MRS. BOBBIE HARRIS, Juror:
“Q. Ma’am, this is a murder case, two counts of murder, and one of the penalties in it is the death penalty and that is what I am going to be asking for. I am going to be asking the jury if they find this man guilty, I am going to ask them to put him in the electric chair and turn the juice on him until he dies. The shock goes all through him.
THE COURT: Let’s quit getting so__ You are trying to prejudice this juror.
MR. BAYNE: No, sir, I am not.
Q Could you consider, if you were a juror, could you consider the death penalty?
A No, sir, I don’t believe I could.
Q Could you consider it in any kind of case? Are there any circumstances where you could give the death penalty?
A No.
Q Is it against your religion, your way of thinking?
A It is against the way I think.
Q You couldn’t give that as a penalty?
A I don’t believe so.
MR. BAYNE: Judge I challenge her.
THE COURT: Mrs. Harris, if you were selected as a juror and the evidence convinced you beyond a reasonable doubt that this defendant was guilty, would you consider all of the punishments that are provided by law for the crime that he is charged with?
JUROR: That he was proved guilty of —
THE COURT: If you determine in your own mind that he is guilty from the evidence you have heard, would you then consider all of the punishments that you could impose, that you could give him. One of them being death, one of them life without parole, one of them just straight life or one five to fifty years. Would you consider all of those punishments before you made your mind up which one you wanted to give him?
JUROR: I don’t believe I could.
THE COURT: Ma’am.
JUROR: I don’t believe I could give him the death penalty.
THE COURT: Regardless of what the circumstances were. In other words, would you go in there now — would you say now, not even knowing what the facts are going to be, would you say that I am not going to give anybody the death penalty. I am talking about before you hear the evidence.
JUROR: Well, I don’t know. I don’t think I could.
THE COURT: You just don’t think you could give the death penalty under any circumstances. You have got your mind already made up that you are not going to give the death penalty?
JUROR: No, sir, I haven’t made my mind up.
THE COURT: Well, would you consider giving the death penalty if you found the man to be guilty as charged from the evidence you heard from the witness stand.
JUROR: I guess so.
THE COURT: You would consider giving him the death penalty or would you say, no, I am not going to give anybody the death penalty. I don’t care what he did. Now, you are the only one that can answer that question, Mrs. Harris. That’s the reason I am asking you.
JUROR: I don’t believe I could.
THE COURT: You wouldn’t even consider giving it.
JUROR: No, sir, I don’t think I could.
THE COURT: Okay. The Court will excuse you.”
MRS. MARTHA YOUNG, Juror:
“Q Do you have moral, ethical or religious beliefs against giving the death penalty?
A Yes, sir.
MR. BAYNE: Challenge for cause Your Honor.
THE COURT: Mrs. Young, would you even consider all the punishments that are provided by law if you found this man guilty of the crime. In other words if you found him guilty, after you listened to the evidence and you found him guilty, would you consider all of the possible punishments which would include the death penalty?
JUROR: Could I answer by just saying I really don’t know.
THE COURT: Let me ask you another way then. Can you right now, before you hear any evidence in this case made (sic) up your mind that you would not vote for the death penalty regardless of what the evidence turned out to be?
JUROR: I might. I have just been through a terrible experience. I have just lost my husband. I really don’t know what I think. I might. I just might not believe in capital punishment.
THE COURT: But under no circumstances would you vote for the death penalty even if you were convinced that the man was guilty, from the evidence, guilty of the crime charged. You would not even consider giving him the death penalty?
JUROR: No, sir.
THE COURT: You would not. The Court will excuse you then, Mrs. Young.”
MRS. CORINE LUCAS, Juror:
“Q, I am not required by law but I feel I should ask this question. If you were selected as a juror, to sit on the jury, would you, before the trial ever started and no witnesses had been called, would you automatically eliminate giving the death penalty regardless of any evidence that you heard during the trial?
A No.
Q You would not automatically vote against it?
A No, sir.
Q I am going to be asking for the death penalty. In Arkansas the death penalty is carried out by electrocution. Did you know that?
A Yes, sir, I understand that.
Q And they hook them up and the juice goes all through them like that? Now, could you vote—
A No, sir, No, sir, I can’t.
Q You see what I mean?
A No, sir, I couldn’t do that.
Q Regardless of what he did you just couldn’t vote for it?
A I couldn’t do that.
MR. BAYNE: Challenge for cause, Your Honor.
THE COURT: Just a minute. Let me ask you these questions, Mrs. Lucas. They are basically the same as Mr. Bayne’s. If you are selected as a juror in this case, would you consider all punishments provided by law if you found the defendant guilty?
JUROR: Yes.
THE COURT: You would consider all the punishments?
JUROR: Un huh.
THE COURT: The law might provide a five year sentence or a life sentence or death. Would you consider all of those sentences if you found the defendant guilty before you finally arrived at which punishment you elected to give? Would you do that? Would you consider all of them?
JUROR: Yes, sir.
THE COURT: You would go into the jury box and just automatically say I wouldn’t give — before you heard any of the evidence — you have made up your mind already. Is that correct?
JUROR: Yes, sir.
THE COURT: I will excuse you for cause.”

In Witherspoon, thirty-nine veniremen, including four of the six who indicated that they did not believe in capital punishment, had acknowledged having conscientious or religious scruples against the infliction of the death penalty or against its infliction in a proper case and were excluded without any effort being made to find out whether their scruples would invariably compel them to vote against capital punishment.

One venireman who admitted to a religious scruple against the death penalty when asked: “You don’t believe in the death penalty?” She replied: “No.” But later she stated she had no religious scruples against capital punishment and further stated that she would not “like to be responsible for .. . deciding somebody should be put to death. ” She was excused.

In Maxwell v. Bishop, Penitentiary Superintendent, 398 U.S. 262, the United States Supreme Court, in reversing the Arkansas Supreme Court’s affirmance of Maxwell’s death sentence, stated:

“As was made clear in Witherspoon, ‘a sentence of death cannot be carried out if the jury that imposed or recommended it was chosen by excluding veniremen for cause simply because they voiced general objections to the death penalty or expressed conscientious or religious scruples against its infliction.’ ...”

In Maxwell, one prospective juror was successfully challenged for cause solely on the basis of the following exchange:

“Q. If you were convinced beyond a reasonable doubt at the end of this trial that the defendant was guilty and that his actions had been so shocking that they would merit the death penalty do you have any conscientious scruples about capital punishment that might prevent you from returning such a verdict?
“A. I think I do.” (Emphasis supplied)

Still another member of the panel was dismissed after the following dialogue:

“Q. Mr. Adams, do you have any feeling concerning capital punishment that would prevent you or make you have any feelings about returning a death sentence if you felt beyond a reasonable doubt that the defendant was guilty and that his crime was so bad as to merit the death sentence?
“A. No, I don’t believe in capital punishment.” (Emphasis supplied)

In the instant case, veniremen were excused from serving on appellant’s jury for reasons essentially similar to the ones quoted above in Maxwell.

In Davis v. Georgia, 429 U.S. 122, 97 S. Ct. 399 (1976), the United States Supreme Court made the following comment in reversing the conviction of a death sentence:

.. Unless a venireman is ‘irrevocably committed, before the trial has begun, to vote against the penalty of death regardless of the facts and circumstances that might emerge in the course of the proceedings’ ... he cannot be excluded; if a venireman is improperly excluded even though not so committed, any subsequently imposed death penalty cannot stand.”

In Davis, only one prospective juror had been excluded in violation of the Witherspoon standard.

The majority, in addition to rejecting the doctrine in Witherspoon in this case, further asserts another reason for not applying the Witherspoon doctrine in the instant case by asserting:

“Further, it is significant that no objections were raised to the court’s striking these jurors for cause. Failure to interpose an objection or raise the issue in a motion for a new trial prevents the issue from being raised for the first time on appeal in a capital case.”

But, on the other hand, the majority concludes its opinion by asserting the following:

“Here after reviewing the entire record, as required by § 43-2725, supra, and Rule 36.24, supra, and finding no errors prejudicial to appellant, the judgments are affirmed.”

Upon reviewing Ark. Stat. Ann. § 43-2725 and Arkansas Criminal Rule 36.24, set out below, it is obvious that the majority is pursuing a contradictory course when it says that the Court may not consider the Witherspoon issue because counsel for appellant made no objections to the exclusion of the jurors:

Ark. Stat. Ann. § 43-2725 provides as follows:

“The Supreme Court need only review those matters briefed and argued by the appellant provided that where either a sentence for life imprisonment or death, the Supreme Court shall review all errors prejudicial to the rights of the appellant(Emphasis supplied)

Arkansas Criminal Rule 36.24 provides:

“The Supreme Court need only review those matters briefed and argued by the appellant provided that where either a sentence for life imprisonment or death was imposed, the Supreme Court shall review the entire record for errors prejudicial to the right of the appellant. ” (Emphasis added)

Moreover, the failure of counsel to object to the exclusion of the jurors who manifested scruples against the death penalty was not dispositive of the Witherspoon issue, and accordingly, this Court is empowered under law to consider the issue whether there was an objection registered or not, for the following provisions make this crystal clear:

Rule 102 of the Uniform Rules of Evidence provides as follows:

“These rules shall be construed to secure fairness in administration, elimination of unjustifiable expense and delay, and promotion of growth and development of the law of evidence, to the end that the truth may be ascertained and proceedings justly determined.”

Rule 103(a) (1) of the Uniform Rules of Evidence provides:

“(1) Objection. In case the ruling is one admitting evidence, a timely objection or motion to strike appears of record, stating the specific ground of objection, if the specific ground was not apparent from the contest; ...”

Rule 103 (2) (d) of the Uniform Rules of Evidence provides:

“(d) Errors Affecting Substantial Rights. Nothing in this rule precludes taking notice of errors affecting substantial rights although they were not brought to the attention of the court.”

Accordingly, I would reverse and remand this case for a new trial because of the improper exclusion of jurors under the doctrine of Witherspoon v. Illinois, supra.

        See: Maxwell v. State, 236 Ark. 694, 370 S.W. 2d 113.


author: George Rose Smith, Justice.

text:
    Ellen R. FINDLEY, Administratrix v. TIME INSURANCE COMPANY
    78-122
    573 S.W. 2d 908
    Opinion delivered December 4, 1978
    (In Banc)
    [Rehearing denied January 8, 1979.]

      Spears, Sloan & Johnson, by: James A. Johnson, Jr., for appellant.

      Rieves, Rieves & Shelton, by: Frank C. Elcan II, for appellee.
   George Rose Smith, Justice.

Within the past ten years a few court decisions, primarily in California, have recognized what may be referred to as the tort of bad faith. Under those decisions an insurance company, in addition to its liability on the contract, may also be liable to its insured in tort for breach of an implied duty to deal fairly and in good faith with the insured in the settlement of a claim under the policy. A recent discussion of the cases may be found in a Comment, “The Tort of Bad Faith: A Perspective Look at the Insurer’s Expanding Liability,” 8 Cumberland L. Rev. 241 (1977).

In the case at bar the appellee issued a major medical insurance policy to the appellant’s decedent, Delores A. Wolfe, who died after her complaint was filed. The complaint first sought a contractual recovery for certain hospital and medical expenses, plus the statutory penalty and attorney’s fees. In paragraph 12 of the complaint the insured also sought to assert a cause of action in tort for actual and punitive damages arising from the insurance company’s asserted bad faith in dealing with its insured, the plaintiff. The trial court sustained the defendant’s demurrer to that paragraph and dismissed the cause of action in tort. The rest of the case has not yet been tried. The order of dismissal is appealable. Ark. Stat. Ann. § 27-2101 (2) (Supp. 1977). The only question now before us is whether paragraph 12 of the complaint states a cause of action in tort.

The tort allegations of paragraph 12 can best be viewed in the context of the decisions recognizing the tort of bad faith, upon which the plaintiff relies. For that reason we postpone for the moment a summary of paragraph 12.

The tort of bad faith is actually an extension of the well-established rule by which a liability insurance company may be accountable in tort for its failure to settle a claim within the policy limits. Members Mutual Ins. Co. v. Blissett, 254 Ark. 211, 492 S.W. 2d 429 (1973). In such cases the insurer is confronted with a conflict of interest. Suppose, for example, that the insurer has issued a $10,000 automobile liability policy. As the result of a traffic collision the insured is sued for $25,-000. The plaintiff offers to settle for $10,000. If the insurance company refuses to settle for more than $8,000, it is risking only $2,000 of its own money against the possibility that its insured may be held liable for the full $25,000, a loss of $15,-000 above the protection of the policy. That conflict of interest has led the courts to hold, as we did in Blissett and earlier cases, that the insurance company may be liable for fraud, bad faith, or negligence if it fails to investigate and settle a claim against its insured.

The landmark decision extending the doctrine of the failure-to-settle cases is Fletcher v. Western Nat. Life Ins. Co., 10 Cal. App. 3d 376, 89 Cal. Rptr. 78, 47 A.L.R. 3d 286 (1970). There the insurance company was guilty of clear-cut bad faith in refusing to recognize a claim for disability under a policy of disability insurance. The insured suffered an injury to his back in an accident. As the proof ultimately showed, the company was chargeable with bad faith and actual dishonesty in its determination not to pay a claim to which it had no defense. It first sought to treat the claim as one for sickness, instead of accidental injury, which would have reduced its possible liability from a maximum of 30 years to a maximum of two years. That contention was based on the absurd possibility that the insured, instead of having been accidentally injured, might have contracted glanders from a horse. The company then accused the insured of having deliberately misrepresented his condition in the application for the insurance, but it later admitted that there was no basis in fact for that false accusation. The court held that the insurance company was liable for $60,000 in compensatory damages and $180,000 in punitive damages.

A similar case, involving affirmative misconduct on the part of the insurance company, is Gruenberg v. Aetna Ins. Co., 108 Cal. Rptr. 480, 510 P. 2d 1032 (1973). That was a suit on a fire insurance policy. The complaint alleged that the defendant, in seeking to avoid payment of a valid claim, had conspired with the police to have the claimant charged with arson, on the representation that he was over-insured and thus had a motive for arson. It was also asserted that the insurer, knowing that the insured would not appear for an examination while the criminal charge was pending, had used his failure to appear as a ground for denying liability. The Supreme Court of California held that the complaint stated a cause of action in tort.

Perhaps the most extreme statement of the new doctrine is to be found in the opinion of an intermediate California court in Egan v. Mutual of Omaha Ins. Co., 63 Cal. App. 3rd 659, 133 Cal. Rptr. 899 (1976), where the court, citing a refusal-to-settle case, made this statement: “In short, when an insurer decides to withhold payment on a policy of insurance, it proceeds at its own risk.” There the court upheld awards of $123,600 in compensatory damages and $2.5 million in punitive damages. The view that the insurer always acts at its peril was disclaimed in Christian v. American Home Assurance Co., 577 P. 2d 99 (Okla., 1978).

We do not agree with the view that whenever an insurance company denies a claim, it exposes itself to an action in tort. As the Supreme Court of Kansas has succinctly stated:

Mere refusal to pay insurance cannot constitute wanton or malicious conduct when, as here, an actual controversy exists with respect to liability on the policy. If this were not the rule punitive or exemplary damages could be recovered in every action involving a refusal to pay an insurance policy.

Moffet v. Kansas City Fire & Marine Ins. Co., 173 Kan. 52, 244 P. 2d 228 (1952).

In the case at bar we actually need not pass upon the extreme view expressed in the Egan case, supra, because such a situation is not presented. We are fundamentally in agreement with the position taken by the North Carolina court in Newton v. Standard Fire Ins. Co., 291 N.C. 105, 229 S.E. 2d 297 (1976):

We need not now decide whether a bad faith refusal to pay a justifiable claim by an insurer might give rise to punitive damages. No bad faith is claimed here, nor are any facts alleged from which a finding of bad faith could be made. Insurer’s knowledge that plaintiff was in a precarious financial position in view of his loss does not in itself show bad faith on the part of the insurer in refusing to pay the claim, or for that matter, that the refusal was unjustified. Had plaintiff claimed that after due investigation by defendant it was determined that the claim was valid and defendant nevertheless refused to pay or that defendant refused to make any investigation at all, and that defendant’s refusals were in bad faith with an intent to cause further damage to plaintiff, a different question would be presented.
We are slow to impose upon an insurer liabilities beyond those called for in the insurance contract. To create exposure to such risks except for the most extreme circumstances would, we are certain, be detrimental to the consuming public whose insurance premiums would surely be increased to cover them.
On the other hand, because of the great disparity of financial resources which generally exist between insurer and insured and the fact that insurance companies, like common carriers and utilities, are regulated and clearly affected with a public interest, we recognize the wisdom of a rule which would deter refusals on the part of insurers to pay valid claims when the refusals are both unjustified and in bad faith.

Much to the same effect are the opinions in Ledingham v. Cross Plan for Hospital Care, 29 Ill. App. 3rd 339, 330 N.E. 2d 540 (1975), and Santilli v. State Farm Life Ins. Co., 278 Ore. 53, 562 P. 2d 965 (1977).

We come now to the allegations in the case at hand. The complaint first alleges a cause of action in contract, in that the plaintiff has suffered a malignant condition in her female organs and has expended $19,465.65 in hospital and medical expenses, which she is entitled to recover, with penalty and attorney’s fees. To those allegations the defendant answered that the plaintiff had experienced vaginal bleeding for more than a year before she applied for the policy, that her statement in the application that she had had no menstrual irregularity was false, and that the company would not have issued the policy if it had been aware of the applicant’s condition. That controversy in contract is not now before us.

The complaint, after asserting the cause of action in contract, goes on in paragraph 12 to charge that the defendant’s refusal to honor the plaintiff’s claims and its wrongful handling of the claims have been wholly unjustified, willful and wanton, grossly negligent and reckless, improper, and done with intent to deceive and defraud the plaintiff in the following particulars (which we paraphrase for brevity):

A. Defendant has failed to explain to plaintiff the reasons for its refusal to honor her claims.
B. Defendant failed to investigate fully the diagnosis by plaintiff’s treating physician.
C. Defendant has never contacted plaintiff’s physicians to investigate their diagnosis or to determine when plaintiff could first have become aware of her condition.
D. Defendant has never attempted to contact plaintiff or her physicians to inquire whether the plaintiff’s change of menses was a manifestation of malignancy or was due to other causes.
E. Defendant has misrepresented the terms of the policy by stating to the plaintiff and to her creditors that the charges in issue are not reimbursable under the policy.

By an amendment to the complaint the plaintiff added sub-paragraphs which assert:

F. After notice of the loss the defendant continued to accept the payment of premiums on the policy, which makes the defendant liable either as having waived the forfeiture of the policy or as having defrauded the plaintiff by accepting the premiums.
G. Defendant’s misconduct “is in violation of the statutes of Arkansas.”

Paragraph 12 also alleges that the defendant’s outrageous conduct has caused the plaintiff to suffer loss of health, severe emotional distress, damage to her credit, fear of loss of her residence and personal property, and humiliation and embarrassment at the hands of her creditors. Further, the complaint alleges that because of her nonpayment of existing medical bills the plaintiff will be denied proper care and treatment in the future. The complaint asks compensatory damages in tort of $200,000 and punitive damages of $973,250.

It will be seen that the complaint does not assert any affirmative action on the part of the defendant that would constitute bad faith or fraud, as was true in the Fletcher and Gruenberg cases, supra. Paragraphs A, B, C, and D merely allege that the defendant has failed to explain, failed to investigate, and failed to contact the plaintiff or her physician. Such inaction does not give rise to a cause of action in tort. Prosser has pointed out that an action in tort cannot ordinarily be based upon a breach of contract which amounts to mere nonfeasance, which means not doing the thing at all, as distinguished from misfeasance, which means doing it improperly. “Much scorn has been poured on the distinction, but it does draw a valid line between the complete non-performance of a promise, which in the ordinary case is a breach of contract only, and a defective performance, which may also be a matter of tort.” Prosser, Torts, § 92 (4th ed., 1971). We recently applied that very distinction, citing Prosser, in Morrow v. First Nat. Bank of Hot Springs, 261 Ark. 568, 550 S.W. 2d 429 (1977).

Subparagraph E of the complaint, asserting that the defendant has misrepresented the terms of the policy by stating to the plaintiff and her creditors that the charges in issue are not reimbursable, is even less persuasive. The question obviously arises, if an insurance company cannot deny liability without laying itself open to claims such as those now asserted, what it is to answer when asked if there is coverage under the policy?

With respect to subparagraph F, concerning the defendant’s acceptance of premiums after it was notified of the plaintiff’s claim, it must be remembered that the policy, which is attached to the complaint, provided coverage for other hospital and medical expenses. The plaintiff apparently desired to retain that coverage and voluntarily continued to pay the premiums, which the defendant accepted. The parties are actually in the same attitude: One paid the premiums and the other accepted them. We fail to see how either committed a tort. In this respect the case differs from Old Southern Life Ins. Co. v. Woodall, 326 So. 2d 726 (Ala., 1976), where the court said that the jury could have found that the insurance company fraudulently induced the insured to continue to pay premiums when the company had no intention to pay any claims on the policy. No such allegation is made in the present complaint. Finally, the assertion in subparagraph G, that the defendant violated the statutes of Arkansas, is a mere conclusion, not argued in the brief and not calling for any discussion.

In conclusion, we do not reject the possibility that an insurer may be liable in tort, as in Fletcher and Gruenberg, upon a showing that, without a good faith defense to the insured’s claim, it actively engaged in dishonest, malicious, or oppressive conduct in order to avoid its liability. Such questions we leave to the future. All that we now hold is that paragraph 12 of the present complaint does not state facts sufficient to constitute a cause of action in tort.

Affirmed.


text:
    VALLEY FORGE LIFE INSURANCE COMPANY v. Ollie GASKINS
    78-149
    573 S.W. 2d 630
    Opinion delivered December 4, 1978
    (Division I)

      Frierson, Walker, Snellgrove & Laser, for appellant.

      David Hodges, of Hodges & Hodges, for appellee.
   George Rose Smith, Justice.

The appellee, following two brief periods of hospitalization, brought this action upon a sickness and accident policy to recover the entire hospital charges, totaling $1,436.20. The appellant, relying upon the benefit provisions of the policy, asserted that it was liable for only $312.00 and offered to confess judgment for that amount. The trial judge, sitting without a. jury, found the policy to be ambiguous (without pointing out the ambiguity) and entered judgment for the amount sued for, with penalty and attorney’s fee. The appellant still insists that it is liable for only. $312.

The appellee does not pinpoint any ambiguity in the policy, and we find none. Instead, the appellee argues, in effect, that the appellant’s abstract is not sufficient to exclude the possibility of ambiguity, so that the judgment should be affirmed.

We find the appellant’s abstract to be in strict compliance with Rule 9. The appellee argues, first, that the entire policy has not been abstracted. Rule 9 (d) provides, however, that the abstract is to be a condensation only of material parts of the record. Here the insurance policy, a document of substantial length, would require an abstract of ten pages or more, but no reason is shown why the court need be familiar with the whole policy. If the appellee thought that other provisions in the policy were pertinent, in addition to those copied by the appellant, she could easily have abstracted them. It will not do for her merely to say that perhaps something has been omitted. That assertion could always be made, defeating the purpose of our insistence upon brevity.

The appellee argues, second, that the hospital bills have not been abstracted. Only their amount, not their contents, is pertinent. Finally, it was perfectly permissible for the appellant to quote the material paragraphs of the policy in its opening statement and in its brief, with an appropriate cross-reference in the abstract. When the exact language of a short excerpt from the record, such as a paragraph in a contract or an instruction given or refused, is in issue, it is often a convenience to the court for the language to be quoted in the course of counsel’s argument rather than in the abstract. We have never discouraged that procedure.

The judgment is reduced to $312 and affirmed.

We agree.

Harris, C.J., and Holt and Howard, JJ.


author: John A. Fogleman, Justice.

text:
    Charles CARMICHAEL v. SECURITY SAVINGS & LOAN ASSOCIATION OF CONWAY
    78-80
    574 S.W. 2d 651
    Opinion delivered December 4, 1978
    (Division II)
    [Rehearing denied January 12, 1979.]

      Guy H. Jones, Phil Stratton, Guy Jones, Jr., and Casey Jones, by: Phil Stratton, for appellant.

      Henry & Graddy, by: Larry E. Graddy, for appellee.
   John A. Fogleman, Justice.

Appellant Charles Carmichael, while a minor, suffered injuries in an automobile accident, as a result of which he became a quadriplegic. He received a settlement upon an insurance claim arising from these injuries. His father, Levi Carmichael, was appointed his guardian on April 30, 1974. On June 18, 1974, Levi Carmichael purchased a $5,000 savings certificate from appellee Security Savings & Loan Association. The funds used were those of appellant and the certificate was issued to “Levi Carmichael Guardian for Charles Carmichael.” The ledger sheet on appellee’s books relating to this certificate was in the name of “Levi Carmichael, Guardian for Charles Carmichael.” Later, Levi Carmichael borrowed $4,600 from appellee and secured the loan by pledging the certificate of savings issued to him as guardian. Although Levi Carmichael paid some interest on the loan, there was a substantial balance due on the loan when he died on December 7, 1975.

Appellant’s demand for payment of the proceeds of the savings certificate was refused by appellee. Instead, appellee tendered the balance due on the certificate after having deducted the balance due on the loan to Levi Carmichael. Appellant, having attained majority, then filed this action for a declaratory judgment seeking to establish his right to the face amount of the certificate plus all accrued interest, free and clear of the pledge. Appellee responded, saying that it had applied a substantial part of these proceeds to the retirement of the loan to Levi Carmichael, in reliance upon the loan agreement with Levi Carmichael and the agreement printed on the signature card which was signed by Levi Carmichael when he opened the savings account represented by the certificate. Appellee also asserted that the guardianship was void as a matter of law, because neither the minor nor anyone else was given notice of the petition upon which the appointment of the guardian was based, and because no bond was made by the guardian. The chancery court dismissed appellant’s petition for want of equity, holding that the actions of appellee were permissible under Ark. Stat. Ann. § 67-1840 (Repl. 1966). We disagree and reverse the decree.

The signature card contained the following language:

Account No. 4237
A. Carmichael Levi Guardian for
and B. Carmichael Charles Minor
and C.
Type All Names:
(Last Name) (First Name) (Middle Name)
as joint tenants with right of survivorship and not as tenants by the entirety, the undersigned hereby apply for a savings account in
Security Savings and Loan Association
and for the issuance of evidence thereof in their joint names described as aforesaid. You are directed to act pursuant to any one or more of the joint tenants’ signatures, shown below, in any manner in connection with this account and, without limiting the generality of the foregoing, to pay, without any liability for such payment, to any one or the survivor or survivors at any time. This account may be pledged in whole or in part as security for any loan made by you to one or more of the undersigned. Any such pledge shall not operate to sever or terminate either in whole or in part the joint tenancy estate and relationship reflected in or established by this contract. ***

The only signature on the card was that of Levi Carmichael as party A. There was no other specific designation of the capacity in which he signed. There was a place for signature by party B.

The pledge to secure the loan to Levi Carmichael was executed by him without any mention of his capacity as guardian. There was nothing in the files and records of appellee to indicate that this loan was made for the benefit of the minor ward. No order of court authorizing the loan was presented to appellee. The executive vice-president of appellee testified that it was not customary for anyone to question the guardian when he makes withdrawals from a guardian’s account. Appellee has no special signature cards for fiduciary accounts.

The trial court did not rely upon the signature card. Assuming that an appropriately worded signature card could have justified appellee’s action, this one did not. There was no joint tenancy and this card did not, and probably could not, establish one. There can be no joint tenancy without two “tenants.” There was only one here. No certificate was issued in the joint names of any parties. Levi Carmichael did not sign the card as a joint tenant. The authorization of a pledge of the certificate or the account by any one of two joint tenants is wholly inapplicable to this situation. The sentence relating to a pledge cannot be read in isolation. It must be read in its context. When this is done, it cannot form a basis for a pledge of the certificate and the account it represented. The certificate was not issued to joint tenants or to two persons.

Insofar as pertinent here, Ark. Stat. Ann. § 67-1840 provides:

67-1840. Savings accounts of fiduciaries. — An association *** may accept savings accounts in the name of any ♦♦♦guardian, *** or other ficuciary with or without the designation of the name of the beneficiary or beneficiaries or the court order creating the fiduciary relationship, and any such fiduciary shall have power to vote as a member, to open and make additions to, and to withdraw from any such savings account in whole or in part. The payment or delivery of rights to any such fiduciary or a receipt or acquittance signed by any such fiduciary to whom any payment or delivery of rights is made shall be valid and sufficient release and discharge of an association. *** Unless the written agreement or court order filed with the association at the time an account is opened by a fiduciary provides otherwise, the association may make loans on the security of the savings account, pay withdrawals to the fiduciary personally or as directed by him, and otherwise deal with the account, in whole or in part, without regard to any notice to the contrary, as directed by such fiduciary, *** so long as *** such fiduciary is living, ***

The guardian did not withdraw any money from the account. There was no payment to the guardian, nor was there any “delivery of rights” to him. The authority, if found in this section, must be based upon the statement that the association “may make loans on the security of the savings account, pay withdrawals ... as directed by him [the fiduciary], and otherwise deal with the account, in whole or in part, without regard to any notice to the contrary, as directed by such fiduciary, so long as such fiduciary is living. . . ” At the time appellee applied funds represented by this certificate, Levi Carmichael was not living. The right to make the application then depends on the right of appellee to act according to directions given by Levi Carmichael during his lifetime. The only such directions were contained in the pledge, which was actually a part of a “Savings Loan Agreement” evidencing the loan. That pledge reads:

The undersigned hereby pledges the account of the undersigned in the said Association, No. 4237, as security for said debt and authorizes any officer of said Association in the event of any default to sign the name of the undersigned to a withdrawal request and to withdraw any part of all of the funds from said account from time to time for interest and principal payment hereon. ***

This agreement was signed “Levi Carmichael,” without any reference to his capacity as guardian. The quoted portion, at best, was an attempt to delegate the authority to withdraw money from the account. The act in question only permits the association to disregard notice of the fiduciary relationship when dealing with the account “as directed by the fiduciary. ” Here, the only time Levi Carmichael attempted to act as fiduciary was when he made the deposit. We do not believe the General Assembly intended to permit a savings association to participate in a guardian’s self-dealing, from which it benefits, without liability to the ward. The loan agreement, consisting of a promise by “the undersigned,” can only be construed as evidencing a loan to Levi Carmichael personally-

The general rule governing such transactions was reiterated in Drainage District No. 7 v. Citizens Bank of Jonesboro, 205 Ark. 435, 170 S.W. 2d 60, viz:

The general rule was recognized in the case of Helena v. First National Bank, 173 Ark. 197, 292 S.W. 140, where Chief Justice Hart, speaking for the court said: “The general principle governing the bank’s liability is that the officers of the bank, who know that a fund on deposit is a trust fund, cannot appropriate that fund to the private benefit of the bank, or, where charged with notice of the conversion of the trustee, participate with him in appropriating it to his own use, without being liable to refund the money, if the appropriation is a breach of the trust. Allen v. Puritan Trust Co., 211 Mass. 409, 97 N.E. 916, LRA 1915C, 518, and Blanton v. First National Bank of Forrest City, 136 Ark. 441, 206 S.W. 745.”

See also, Hartford Accident & Indemnity Co. v. Bradley, 211 Ark. 1069, 204 S.W. 2d 792. In the Citizens Bank case, we held that the bank had permitted the fiduciary to withdraw funds with notice that he was committing a breach of trust, and so was liable for participation in the breach of trust. While factual distinctions might be made, we are convinced that, in the case before us, the association participated in the conversion of the proceeds of the minor’s savings account to the use of the guardian and to the benefit of the association.

It is true that a pitiful effort was made to show that the proceeds of the loan were used for the benefit of the minor. Levi Carmichael’s widow, the mother of appellant, testified that her husband bought an automobile with the proceeds of the loan. Although she said that the automobile was purchased when she and her husband had been told that appellant would have to go to Houston and that the car they then owned would not make the trip, she said that the title to the car was taken in her husband’s name and that its purchase was “mostly” so she and her husband could go visit their son. The automobile was later lost upon her pledge of it as security for another loan of $2,000. It is true that there is no evidence that the association had any notice of the actual use made of the loan proceeds by Levi Carmichael. But it is also true that appellee failed to show that they were used for the benefit of appellant and the chancellor did not so find.

Appellee contends that cases involving banks are not applicable to a savings and loan association and that cases decided prior to 1963, when § 67-1840 was adopted, are not applicable. This may be true when the issue turns upon the question of a guardian’s authority to withdraw funds from a savings account, or to borrow money in his capacity as guardian, with the account as security, or to direct payment of funds from the account to a third party. As we have heretofore indicated, we do not read this section to license the association’s participation in the guardian’s self-dealing in breach of the trust.

It is quite clear that, whatever construction is given this section, it is in derogation of the common law, and is to be strictly construed. See Wright v. Wright, 248 Ark. 105, 449 S.W. 2d 952; Grimmett v. State, 251 Ark. 270A, 476 S.W. 2d 217; Raney v. Gunn, 221 Ark. 10, 253 S.W. 2d 559.

In Carroll County Bank v. Rhodes, 69 Ark. 43, 63 S.W. 68, we stated the common law thus:

“When money is placed as a general deposit in a bank, it is no longer the property of the depositor, but immediately becomes the money of the bank. The depositor becomes the creditor of the bank, and the bank is his debtor; and the bank is bound by an implied contract to honor the checks of the depositor to the extent of his deposit. When his checks are drawn in proper form, the bank is bound to honor them. It cannot excuse a refusal to pay them by showing that it had reason to believe that the checks were given for an unlawful purpose, or that other persons had liens or claims on the money deposited.” But there is an exception to this rule. If the banker has notice that the fund does not belong to the depositor, and the check is drawn to pay a debt due the bank, then the banker would be affected with a knowledge of the unlawful intent, and would be in duty bound to dishonor the check, and, if he did not do so, would be a participant in the profits of the fraud, and liable to the owner of the fund for all moneys appropriated to its payment. *"'*

See also, Annot. 145 ALR 445, 446.

Under the law in effect prior to the passage of § 67-1840, the association, in order to protect itself from liability, would probably have felt it necessary to require an order of the probate court before paying out any of the principal of the ward’s estate. See Russell v. Johnson, 193 Ark. 541, 101 S.W. 2d 172. The enactment of the section in question relieved the bank of this burden, but we do not construe it to permit the loan transaction in this case.

It is true that we have placed reliance upon cases involving banks rather than savings and loan associations. We cannot see any reason for making a distinction in a case such as this, unless that distinction is made by statute. We note, in that connection, that the General Assembly passed Act 496 in 1921, adding a section [Ark. Stat. Ann. § 67-522 (Repl. 1966)] to the banking law. This section, treating dealings with fiduciaries, reads:

A bank dealing, whether to its own benefit or otherwise, with, through or under any person, who is or may be an agent, trustee or other fiduciary, or a corporate officer, agent or employee, or a partnership member or representative, shall not be deemed to have notice of or be obliged to inquire as to any lack of or limitation upon the power of such person by reason in and of itself either of the fact that such person has executed in his representative capacity and is himself the payee or indorsee of any check, bill, note or other promise or order, or of the use of descriptive words in connection with his deposit account or accounts, any transfer, certificate or memorandum thereof, or in connection with any signature or indorsement of such person. ***

Since the passage of that act, we have held that a bank is liable when it participates in, and benefits from, a breach of trust by a fiduciary. See, e.g., Drainage District No. 7 of Poinsett County v. Citizens Bank of Jonesboro, supra; Hartford Accident & indemnity Co. v. Bradley, supra. Of course, a bank cannot be held liable in the absence of notice of an intention by the fiduciary to misappropriate the trust fund. Pine Bluff National Bank v. Kesterson, 257 Ark. 813, 520 S.W. 2d 253. But the pledge of the trust fund to secure Levi Carmichael’s personal debt was a misappropriation of the trust fund from which the association benefitted.

A strict construction of § 67-1840 requires that we reverse the decree, with instructions to the trial court to render judgment in favor of appellant.

We agree.

Harris, C.J., and Byrd and Hickman, JJ.


author: Darrell Hickman, Justice.

text:
    JOHN E. BRYANT & SONS LUMBER COMPANY, INC. v. Joe MOORE et al
    78-124
    573 S.W. 2d 632
    Opinion delivered December 4, 1978
    (Division II)

      Murphy, Blair, Post & Stroud, by: Robert D. Stroud, for appellant.

      Pickens, Boyce, McLarty & Watson, by: TimF. Watson, and Thaxton & Flout, by: Steven G. Howard, for appellees.
   Darrell Hickman, Justice.

This is an appeal of a materialmen’s lien case from the Jackson County Chancery Court.

John E. Bryant and Sons Lumber Company, Inc. of Batesville, doing business as North Arkansas Cash Lumber Co., filed suit in Jackson County seeking to impose a lien against land and improvements thereon owned by Jabez F. Jackson and Patricia Jackson. Bryant alleged that some $3,-500.00 worth of material had been furnished to the building contractor, Joe Moore, who used the material in building the Jacksons a cabin. Moore was fired by the Jacksons before the job was completed and the Jacksons cross-complained against Moore for damages. Moore was essentially in default in the suit. First National Bank of Newport was joined as a party because it had a mortgage on the land, which had been recorded several months before any construction was commenced or material was furnished for the job.

After Bryant had put on its case, both the Jacksons and First National Bank demurred to the evidence on two grounds: a failure by Bryant to prove the amount of the lien since there was no evidence of profit to Bryant; and, there was no evidence that the material had been furnished within 120 days before suit was filed.

The chancellor took the case under advisement and in a decree denied Bryant’s lien for two reasons. First, he ruled that because invoices were not attached to the complaint, and because the complaint simply prayed for a total sum of $3,-511.51, there was no itemized account filed as required by Ark. Stat. Ann. § 51-613 (Repl. 1971). Second, the chancellor held that profits of a materialman are not lienable and since there was no evidence of Bryant’s profit, then the request for a lien must fail.

The chancellor granted Bryant’s motion to amend its pleadings to conform to the proof and found the value of material furnished to Moore was $3,511.51, the amount prayed for in the complaint. Judgment was granted to Bryant against Moore for that amount. The First National Bank was declared to have a first mortgage on the property.

Bryant alleges on appeal the chancellor was wrong in both regards for denying Bryant a lien. We agree.

Bryant filed a complaint alleging that $3,511.51 worth of materials were furnished to Moore, that the material was included in the cabin of the Jacksons, and that the suit had been filed within 120 days from the time that material had last been furnished. Although the complaint stated that true, perfect and complete copies of all the invoices for materials delivered were attached, they were not. In this case such a failure was not critical.

There are two ways a materialman may seek to impose a lien. A “just and true account of the demand due or owing to him . . . verified by affidavit” may be filed with the circuit clerk within 120 days after material is furnished, with proper prior notice; or, suit may be filed within 120 days to perfect the lien. Ark. Stat. Ann. § 51-613 (Repl. 1971). If an account is filed with the clerk, suit must be commenced within fifteen months thereafter to foreclose the lien. Ark. Stat. Ann. § 51-616 (Repl. 1971).

It was the chancellor’s decision that Bryant’s complaint had not substantially complied with Ark. Stat. Ann. § 51-613, supra. We have held that there must be substantial compliance. Conway Lbr. Co. v. Hardin, 119 Ark. 43, 117 S.W. 408 (1915). If suit is filed, we have said:

In such a situation, either the account which accompanies the complaint or allegations of that complaint, which embrace substantially all that the statutes require to appear in the verified account, are treated as a substitute for the account required by the statute. Wiggins v. Searcy Federal Savings & Loan Assn., 253 Ark. 407, 586 S.W. 2d 900 (1972).

We have held that a complaint which has attached an itemized but unverified account is substantial compliance with the statute. Rust v. Kelley Brothers’ Lumber Co., 180 Ark. 517, 21 S.W. 2d 973 (1929). In a similar case we overruled a trial court’s decision sustaining the demurrer to a complaint that simply alleged total figures. Phelps-Powell v. Silver Dollar Homes, 241 Ark. 425, 407 S.W. 2d 925 (1966).

None of the defendants at any time objected to the fact that the invoices were not attached to the complaint. In fact, the invoices were later introduced at the trial. The only objections made to the claim for the lien were as we have recited. The court on its own decided that there had not been substantial complaince. We find the court was wrong in this regard.

The chancellor also ruled that profits of a materialman are not lienable. Bryant did not have an agreement with the owners of the land, the Jacksons, but instead, as is customary, delivered the material at the order of the contractor, Moore. During the trial, Bryant’s witnesses were questioned as to what profit Bryant made on the material furnished. The evidence either could not be, or was not, provided. An objection was made to Bryant imposing a lien on the basis that profits could not be the subject of a lien. The chancellor agreed with this objection.

We have consistently, for many years, held that a contractor cannot have a lien for profits. Cook v. Moore, 152 Ark. 590, 239 S.W. 750 (1922); Withrow v. Wright, 215 Ark. 654, 222 S.W. 2d 809 (1949). These decisions are simply based on the language of the statute authorizing a lien. Ark. Stat. Ann. § 51-601 (Repl. 1971) provides:

Every mechanic, builder, artisan, workman, laborer or other person who shall do or perform any work ... or furnish any material . . . shall have for his work or labor done, or materials . . . furnished a lien upon such building . . . and upon the land.

Nowhere does the statute say that a contractor, who is not necessarily a laborer, nor necessarily the provider of the material, can have a lien for profit. However, he is granted the lien for materials he does furnish, or for the labor he does perform. See Bell v. Carver Air Conditioning Co., 245 Ark. 31, 431 S.W. 2d 452 (1968); Cook v. Moore, supra. Profits are simply not in the same category as the cost of labor or materials.

We do not view our decisions regarding profits of contractors as holding or implying that the same is true as to materialmen. The statute makes no such limitation. Consequently, we feel the chancellor was in error in holding that a materialman cannot recover for the retail value of material furnished. There is no question raised in this case as to the value of the materials furnished.

Bryant argues that First National Bank should not have been granted a first lien on the property. However, Bryant was not granted a lien, and, therefore, we cannot say the chancellor was in error in this regard. It was undisputed that the mortgage of First National Bank did not contain a clause stating that the purpose of the mortgage was to provide funds to build the cabin or make improvements on the property. We have no reason to believe on a rehearing that if Bryant prevails in perfecting its lien, the chancellor will not follow our decision in Jack Collier East Co. v. Barton, 228 Ark. 300, 307 S.W. 2d 863 (1957). The law is settled that a materialmen’s lien has priority as to the improvements over a previous recorded mortgage which does not contain “purpose” language. Jack Collier East Co. v. Barton, supra; U.S. v. Westmoreland Manganese Corp. (1955) 134 Fed. Supp. 898.

Reversed and remanded.

We agree.

Harris, C.J., and Fogleman and Byrd, JJ.

      Bryant reduced its claim against the Jacksons several hundred dollars during its presentation of proof.