text:
    Bobby Joe INGRAM v. CONTINENTAL CASUALTY COMPANY
    5-5186
    451 S. W. 2d 177
    Opinion delivered March 16, 1970
    G. Leroy Blankenship, for appellant.

      G. D. Walker, for appellee.
   J. Fred Jones, Justice.

Bobby Joe Ingram sued Continental Casualty Company in the Lawrence County Circuit Court to recover on a health and accident insurance policy issued to Ingram by Continental. Continental denied liability because of a military exclusion clause in the policy and its motion for summary judgment was granted. On appeal to this court Ingram relies on the following points for reversal:

“The trial court erred as a matter of law in granting summary judgment to the defendant.
The trial court erred in finding that an exclusion of loss ‘caused by or resulting from * * * service in the armed forces of any country’ stated in the policy precludes recovery by the plaintiff in this case.
The trial court erred in granting the defendant a summary judgment for the reason that there is' a question of material fact which is in dispute as to whether the risk of an accident such as tripping and falling as in this case is a risk peculiar to military service.”

Ingram was a railroad employee when he purchased the policy and he was also a member of the Arkansas National Guard. Two months after he purchased the policy he was called to National Guard duty and while performing his assigned duties as a cook, he was injured. Ingram had supervised the setting up of a cook tent, and as he was carrying crates of milk from a truck to the tent, he stepped back to allow another soldier to pass in front of him, and sustained his injury when he tripped over the tent ropes and fell to the ground on his back. Ingram sustained fractures to the vertebrae in his spine as a result of the fall and he required hospitalization and surgery in connection with his injury.

The clause in the policy under which Continental denied coverage reads as follows:

“This policy does not cover any loss, fatal, or non-fatal, caused by or resulting from * * * service in the armed forces of any country.”

The parties agree that the exclusionary clause in the policy is a “result” clause as distinguished from a “status” clause. In other words, they agree that the exclusion is effective when the injury occurs as a result of the insured’s service in the armed forces, and that the exclusion is not effective merely because the insured is. a member of the armed forces. To exclude the coverage the insured must sustain the loss not merely while he is a member of the armed forces, but because he is a member of the' armed forces. The loss must be service connected before it is excluded from the coverage under the policy. The appellant’s status as a member of the armed forces at the time of his injury does not appear to be questioned, nor is it questioned that the injury occurred while the appellant was in the course of his duties as a member of the armed forces. The question then, on all three points relied on by the appellant, is whether appellant’s loss was caused by, or resulted from, his service in the armed forces.

The appellant contends that his injury and resulting loss were not caused by, and did not result from, his service in the armed forces. The appellee, of course, makes the opposite contention. Both the appellant and the appellee have cited several cases in support of their respective contentions, but most of the cases cited are distinguishable from each other and from the case at bar on the facts as to how the loss occurred' and the policy coverage or exclusion. In some of the cases cited by the appellant the courts had no difficulty in ' determining that coverage was not excluded. In Benham v. American Central Life Ins. Co., 140 Ark. 612, 217 S. W. 462, the insured died from influenza while in the armed forces and the exclusion being a “result” rather than a “status” clause, it was held that the exclusion did not apply. The same decision was reached in Gorder v. Lincoln National Life Ins. Co., 180 N. W. 514, where the insured died from pneumonia contracted on a troop ship en route to England. In Nutt v. Security Life Ins. Co., 142 Ark. 29, 218 S. W. 675, the insured also died from influenza while stationed at Camp Pike during World War I. In Nutt as in Benham, supra this court, in effect, held that the word “engaged” as used in the exclusionary clause denotes action and not disease.

The appellee cites cases in which the courts had no difficulty in holding the exclusions applicable under the facts and policy provisions of the particular cases. In the 1945 case of Bologna v. New York Life Ins. Co., 40 So. 2d 48, the Louisiana Court denied payment under a clause which provided that double indemnity should not be payable,

“if the insured’s death resulted, directly or indirectly, from * * * war or any act incident thereto * *

In that case the insured was lost at sea when he dived overboard during a fire, following a collision between a merchant ship on which he was a seaman, and another merchant vessel loaded with gasoline. The two vessels were traveling in convoy under naval escort in time of war.

In Selenack v. Prudential Ins. Co. of America, 50 A. 2d 736, a double indemnity insurance policy contained a provision as follows:

“No accidental Death Benefit will be paid if the death of the Insured resulted * * * from having been engaged in military or naval service in time of war.”

The insured was killed while commanding an M-4 tank returning to the post from maneuvers. The tank turned over when it ran off the road to avoid an approaching s.chool bus it was meeting. In affirming the trial court’s judgment in favor of Prudential, the appellate court said:

“There is nothing in the clear language of the clause which will permit a construction limiting the exclusion to actual combat service. Death resulting from military service in time of war comprehends death in actual combat but is not so restricted as to exclude death under other circumstances, if actually resulting from military service, in time of war.”

The same result was reached on very similar facts in Eggena v. New York Life Ins. Co., 18 N. W. 2d 530. In Goodrich v. John Hancock Mut. Life Ins. Co. of Boston, 234 N. Y. S. 2d 587, the insured, while a soldier in Korea, was killed when a member of his company accidentally discharged a carbine while cleaning it. The exclusionary clause was held applicable.

In Couch on Insurance, 2d, § 41:725, is found the following:

“In a number of cases a distinction has been suggested, either expressly or by inference, between injuries not peculiar to the military service but equally likely to occur in civilian life, and those which are the result of military service or war. * * * If the clause is considered a result clause, the insurance company is excused from paying the face value of the policy or double indemnity, as the case may be, only if the insured died from causes peculiar to military service.”

This same rule is stated in 36 A. L. R. 2d 1018.

We now examine some of the cases which we consider nearest in point with the case at bar as to cause of loss and policy exclusion. The appellant cites, and seems to rely heavily on, Johnson v. Mutual Life Ins. Co. of New York, 115 S. E. 14, which was a World War I case involving a double indemnity clause in an insurance policy containing a provision as follows:

“Provided, however, that this double indemnity shall not be payable in the event of the insured’s death as a result of military or naval service in time of war, * * * nor if such death be caused directly or indirectly, wholly or partly by * * * war, or any act incident thereto, # * * or from police duty in any military, naval or police organization.”

The insured, a member of the armed forces, was struck and killed by a bridge girder while standing on a step, or while leaning out a window of a troop train enrome from his training base, Fort Oglethorpe, Georgia, to his port of embarkation, San Francisco, California. In holding the insurance company liable under the policy, the court said:

“If the insurer had intended that it was not to be liable for this double indemnity if the insured died while in the military service from any cause whatsoever, it would have been an easy matter to have written such a stipulation in the policy. Such a provision would have made the insured’s status in the military service, at the time he met his death, and not the cause of his death, the ground of the insurer’s exemption from liability. But the insurer, by this stipulation in this policy, made the cause of the death of the insured, and not his status as a soldier, the thing which would relieve it from the payment of this double indemnity. This is clearly shown by the language employed. The words used make death, not in, but as a result of, military or naval service in time of war, or caused by war, or some act incident thereto, the condition which would free the company from this double indemnity. This language is pregnant with cause as the exemption from liability in this matter. If the death of the insured was not the result of military service in time of war, or if it was not caused directly or indirectly, wholly or partly, by war, or some act incident thereto, the insurer would be liable for this double indemnity, although the insured died while in the military service of his country.”

In all practical aspects, except as to time and results, the case of Hooker v. New York Life Ins. Co., 161 F. 2d 853, was very similar to Johnson v. Mutual Life, supra. In Hooker the beneficiary was awarded a summary judgment by the trial court on a double indemnity provision of an insurance policy providing as follows:

“* * * upon receipt of due proof * * * that the death of the insured resulted directly and independently of all other causes from bodily injury effected solely through external, violent and accidental means * * *; provided, however, that such double indemnity benefit shall not be payable if the insured’s death resulted, directly or indirectly, from * * * war or any act incident thereto.”

At the time of his death in 1943, Hooker was a captain in the United States Marines and was stationed in New Zealand where he was engaged in war training maneuvers over an area of several miles. On the second or third day of maneuvers the insured, while playing the role of a scout, was captured by the opposing “enemy” team and was turned over to six members of the company to be taken as a “prisoner” to their command post. On their return trip, while the patrol had stopped to rest, the insured, taking his guard by surprise, made a break to escape and in doing so he jumped a fence and crashed through some bushes bordering a deep ravine which he did not see. He fell to the bottom of the cliff or ravine and subsequently died from the injuries he sustained. In reversing the judgment of the trial court, the appellate court said:

“The insured was in New Zealand because of war and his activities were because of war and a part of war. The activities in which he was engaged and which resulted in his death were in no wise common to a civilian. Certainly such activities must have been incident to something. If not war, what was it? As we view the matter, his death was clearly an incident of war. The plain, unambiguous language of the exclusion clause as applied to the facts of the instant situation requires a reversal of the judgment.”

In the 1945 Ohio case of Smith v. New York Life Ins. Co., 86 N. E. 2d 340, double indemnity was denied under a policy which provided:

“Double indemnity shall not be payable if the insured’s death resulted from * * * war or any act incident thereto * *

The insured was employed in a defense plant which was engaged exclusively in the manufacture of incendiary bombs. He was killed when one of the bombs exploded in the process of being loaded.

In Neidle v. Prudential Ins. Co. of America, 85 N. E. 2d 614, a claim for double indemnity was denied because of an exclusion in the policy where the insured’s “death resulted * * * from participating * * * in military or naval service in time of war.” The insured was a sergeant in the army ánd was assigned to army intelligence. As a part of his duties he interviewed captured enemy soldiers at forward areas, and on October 7, 1944, he was returning from such a mission to his headquarters in Florence, Italy, when the jeep in which he and other military personnel were traveling collided with an army ammunition truck and he was killed. In affirming the trial’ court’s holding that the insured was participating in military service in time of war within the exclusionary clause of the policy, the court said:

“The case would perhaps be different if, for instance, death resulted while the insured, though in military service, met death while on a furlough, under conditions having nothing to. do with the war effort. It is sufficient for present purposes to say that, since Rosenwald was on a military mission in a military situation when he died, his death resulted from participating in military service in time of war.”

In the case at bar the material facts are not in controversy and we are unable to say that the trial court erred in granting the appellee’s motion for summary judgment. The appellant argues that the military exclusion in the policy does not “exclude coverage while in military service, nor while on a military reservation, while in uniform, while carrying government milk or while drawing government pay.” It is quite true that the policy does not contain such specifically named exclusions, but neither does the policy exclude coverage while operating a tank, digging a foxhole, direcdng a patrol or assaulting the enemy. The policy does exclude coverage on any loss caused by, or resulting from, service in the armed forces. The appellant also argues that anyone of the general public may trip and fall over a tent rope while carrying a case of milk. We are forced to the conclusion, however, that no such accident would befall a member of the general public unless he has occasion to be carrying a case of milk near an erected tent on which tent ropes are used, and we cannot escape the fact that the appellant’s service as cook, while in the armed forces, furnished him just such occasion.

We are not unmindful that the appellee prepared the policy and could have been more specific in the exclusion provision. As a matter of fact the appellee could have made the provision a “status” exclusion, but to have done so the coverage would have been excluded while in town, or while traveling on leave. We have no reason to assume that such was the intent of the parties to the insurance contract. We conclude, therefore, that the appellant, in this particular case, would not have stepped backward and tripped over a tent rope while carrying a case of milk, had he not been serving in the armed forces. Consequently, we agree with the trial court that appellant’s loss was caused by, or resulted from, his service as cook in the armed forces while on assignment in the Arkansas National Guard.

The judgment is affirmed.


source: Caselaw Access Project

author: Conley Byrd, Justice. Carleton Harris, Chief Justice,

license: Public Domain

text:
    CITY OF DEWITT v. PUBLIC SERVICE COMMISSION et al
    5-5154
    451 S. W. 2d 188
    Opinion delivered March 16, 1970

      Wilbur H. Botts, for appellant.

      Tom S. Lovett and Harry McDermott, for appellees.
   Conley Byrd, Justice.

Appellant, the City of DeWitt, on December 2, 1965, passed an ordinance requiring all utility companies doing business within the city to maintain a business office in the city. On December 18, appellee General Telephone Company of the Southwest filed its complaint with the Public Service Commission pursuant to Ark. Stat. Ann. § 73-208(d) (Repl. 1957), alleging that the ordinance was unreasonable, unjust and unlawful and, in the alternative, that the additional expense caused by the ordinance be passed on to the defendant city rather than to all telephone company subscribers. The matter was heard by the Public Service Commission on July 8 and July 19, 1968, and the final brief was submitted on Sept. 26, 1968. On Dec. 18, 1968, the Public Service Commission, with one commissioner dissenting, found that the ordinance was unreasonable, unjust and unlawful and relieved the company of any obligation to comply with the ordinance. On appeal the circuit court denied relief to the city. Here the city contends that the Public Service Commission was without jurisdiction and that the Commission order was not based upon evidence presented at the hearing.

The findings of the Public Service Commission from which the city appeals are as follows:

“5. The DeWitt business office is a two (2) employee office in which the employees handle such office operations as receipt of customer payments, answering of customer questions interpreting and applying tariffs, and reporting all such information back to the Company. The evidence revealed that seventy-five per cent (75%) of the accounts which are handled in the DeWitt business office are paid by mail. The trend is away from personal contacts by customers at that office. Small business offices with one or two employees, such as DeWitt, cause a problem for the Company’s customers and for the Company because such offices cannot be well supervised; employee replacements for sickness, vacations and other absences must be brought in from other towns; proper training is difficult to keep the employees advised of current changes; and work flow cannot be properly spread over the entire month.
“6. A consolidated business qffice operation is more efficient because the work load can be spread out over the month and an employee can become more specialized in the handling of a certain operation. A consolidated business office operation also permits greater flexibility in the handling of sudden changes or emergency situations since more employees are available. There is better coverage from the standpoint of more employees where you have sicknesses, vacations, and resignations. Better supervision and training of employees is also possible with consolidation, and this results in better servicing of the customers’ needs.
“7. The testimony showed that after consolidation the DeWitt customers may pay their bills either at the DeWitt payment contractor (Schallhorn Hardware in DeWitt) or mail them to the Stuttgart, Arkansas, business office.. A self-addressed return envelope is included with the customers’ bills. The DeWitt payment contractor is conveniently located and its hours are longer than the business office hours, permitting more time for the customers to pay their bills. A payment contractor is a reasonable method for receiving customer payments. After consolidation, questions regarding a bill can be answered by the customers calling the consolidated office in Stuttgart toll-free. Applications for service can be made by calling the same Stuttgart telephone number toll-free. Reports by customers of service outage or service difficulties will continue to be made in the same manner as before consolidation.
“8. The testimony showed that consolidation of other business offices by the Company has not resulted in a deterioration of service and it does not appear that telephone service to the DeWitt customers will deteriorate after consolidation of the DeWitt office into the Stuttgart business office. The testimony showed that the trend in the telephone industry is toward consolidation. Such consolidation is a modern method necessary to meet changing times. It appears that the decision to consolidate the DeWitt business office operation into the Stuttgart business office operation is the result of prudent business judgment and to require the business office to be maintained in DeWitt is both unreasonable and unjust and unnecessary.”

The statute applicable here is Ark. Stat. Ann. § 73-208 (Repl. 1957):

“73-208. Every city and town shall have jurisdiction, acting by ordinance or resolution of its council or commission.
(a) To determine the quality and character of, and the rates for, each kind of product or service to be furnished or rendered by any public utility within said city or town, and all other terms and conditions upon which such public utility may be permitted to occupy the streets, highways or other public place within the municipality, and such ordinance or resolution shall be deemed prima facie reasonable.
(d) Any public utility affected by any such ordinance or resolution, or any other party authorized to complain to the Department [Commission] under Section 17 [§ 73-216] hereof, may appeal from the action of said council or commission by filing, within twenty [20] days of such final action, a written complaint with the Department [Commission] setting out wherein the ordinance or resolution is unjust, unreasonable, or unlawful, whereupon the Department [Commission] shall proceed with an investigation, hearing, or determination of the matters complained of with the same procedure that it would dispose of any other complaint made to it and with like effect. . .
(e) In all matters of which by this Act the Department [Commission] and cities and towns are each given original jurisdiction, such jurisdiction shall be concurrent and the cities and towns shall take no action with respect to any matter under investigation by the Department [Commission] until the same has finally been disposed of by the Department [Commission] and the Department shall take no action with respect to any matter which is the subject of an ordinance or resolution pending before the council or commission of any city or town until the same has finally been disposed of.
(f) That nothing in this Act shall deprive or be construed as depriving any municipality of the benefits of rights accrued or accruing to it under any franchise or contract to which it may be a party, and neither the Department [Commission] nor any court exercising jurisdiction under this Act shall deprive such municipality of any such benefit or right.”

POINT 1. (a): The city here makes two arguments to show that the Public Service Commission was without jurisdiction. The first is that the ordinance passed by the city, containing an emergency clause, was not final because of the possibility of filing a referendum petition pursuant to Amendment 7 of the Arkansas Constitution. The other argument is that under the terms of the franchise between the city and the telephone company, the city had a right to prevent the telephone company from moving its business office. We find no merit in the latter argument since the franchise agreement specifically provides that, “[T]he Telephone Company shall continue to exercise its right to place, remove, construct and reconstruct ... its plant and appurtenances as the business and purpose for which it is or may be incorporated may from time to time require. . . .” Under its first argument the city contends that even though its ordinance contained an emergency clause the ordinance did not become final, for purposes of appeal under Ark. Stat. Ann. § 73-208(e), until the 30 days for filing a referendum provided in Amendment 7 with reference to franchise agreements had expired. The city has cited no authority to support its proposition and under the record here we hold that it is estopped to deny that the matter had been finally disposed of before the city council for purposes of taking an appeal under the statute.

POINT 1 (b): The city here points out that under Ark. Stat. Ann. § 73-229 (Repl. 1957), the Public Service Commission is required within 60 days after the conclusion of any hearing to file its findings and order, if any. Because of this statute it argues that the Commission was without jurisdiction to enter an order more than 60 days after the final brief was filed. We do not agree. As we interpret the statute it is directory only and noncompliance therewith does not invalidate an order of the Commission. See Mt. Konocti Light & Power Co. v. Thelen, 170 Cal. 468, 150 P. 359 (1915); Fuller-Toponce Truck Co. v. Public Service Comm., 96 P. 2d 725 (Utah 1939).

POINT 2 (a) & (b): Under point 2 (a) the city argues that every reasonable presumption must be indulged in the validity of the ordinance and that such validity can only be overcome by clear and satisfactory evidence. Based upon this argument the city contends that General Telephone Co. did not meet its burden of proof. We disagree with appellant. Ark. Stat. Ann. § 73-208(d) provides that on appeal the department shall proceed with an investigation, hearing, or determination of the matters complained of with the same procedure that it would dispose of any other complaint made to it and with like effect. In this connection we have repeatedly held that if the commission’s order is supported by substantial evidence, free from fraud, and not arbitrary, it is the duty of the courts to permit it to stand even though the courts might disagree with the wisdom of the order. See Allied Telephone Co. v. Arkansas Public Service Commission, 239 Ark. 492, 393 S. W. 2d 206 (1965).

The record here shows that the General Telephone Company breaks down its operations into categories and that in this proceeding it is concerned only with the business office and not with its physical services such as installation and maintenance of lines and telephones.

Mr. John Skinner of Texarkana, Texas, area operation manager of General Telephone Co., testified that there has been a change in the operation of telephone companies in general which would influence whether or not management wanted to maintain the office in DeWitt, that is, that there is a trend toward consolidation. He stated that the principal reason for consolidating the business office is to effect more efficient service through better trained employees. That the employees must become familiar with all general and exchange tariffs and that the company has a problem in trying to train its people. That in consolidating the business office it would be able to accumulate accounts so as to have a concentration of people, making possible training that it cannot give in smaller offices. In the larger offices it has designated daily periods to train employees.

He says there are some eight broad work categories in its business offices and that one person can learn one or two of these and become familiar with the volume and become more efficient. In addition it can provide coverage from the standpoint of more employees with reference to sickness, vacation and resignations. He stated that by consolidating the offices it can more readily furnish service to the customer and with less loss of time — for instance, in a small office the employee who took an order had to type a number of papers to distribute to different divisions of the company before actual installation of a telephone could start and that if that employee became sick, resigned, etc., there was often as much as two weeks delay in transmitting the desired information to the proper offices before the actual physical service of installation would commence. He said that in a concentrated business office more coverage could be given to such service to the customer and less delay would result in the actual physical services needed to be performed.

In the event the company was permitted to move the office ffrom DeWitt to Stuttgart applications for new service or changing service could be made by telephone by special reverse toll or no charge to the customer. The customer could report trouble just as before by picking up the telephone. Since there was to be no change in the physical service part of the telephone operation, the customers in De Witt and nearby areas would receive just as prompt attention as before.

He pointed out that the trend was away from oeople coming in the business office at DeWitt to pay their bills. Their records showed that 75% of accounts are handled by mail. However, for the benefit of those persons who still wish to pay in person a payment office was being maintained in the City of DeWitt which would actually provide longer hours for the payment of bills than the business office provided.

Mr. Skinner said he had canvassed other cities where business offices had been closed and consolidated and that in no case did he receive any complaints about the treatment customers had received from the business office. In fact in one town the people he contacted were complimentary.

Other testimony by Mr. Skinner showed that there would be a savings to the General Telephone Co. of $5,941.61 per year if the consolidation could be affected. It was his testimony that it would be unfair for the company’s general subscribers to absorb this cost.

The city, on the other hand, produced the testimony of Mr. John Schallhorn, Mayor of the City of DeWitt; Mr. Dupslaff, Mayor of St. Charles; Mr. Herbert Hoizhauer, Mayor of Gillett; Mr. W. W. Turner, President and Chairman of the Board of the Bank of Gillett and a member of the Farm Bureau of Arkansas County; Mr. Harold Stephenson, an Alderman from Ward 2 in the City of DeWitt; and Mr. John L. Peterson, the County Judge of Arkansas County, all of whom pointed out that the City of DeWitt was the center of commerce of the areas served by the business office and that it would be a convenience to the people there involved to do their telephone company business in DeWitt rather than Stuttgart. They pointed out that the average businessman would be in DeWitt once or twice a week whereas,' they would not average going to Stuttgart, a distance of some 50 miles, more than once or twice a month. However, each of the witnesses stated, in answer to questions from Commissioner Downie, that if the removal of this business office to Stuttgart would cause an upgrading of their present service they would favor the move. Needless to say, each witness had many complaints with reference to the telephone company’s service. However, their complaints may have been considered by the Commission as going to that part of the telephone company’s operation designated “physical services” rather than having to do with the business office.

Based upon the record before us we are not in a position to say that the Public Service Commission order was arbitrary. We certainly cannot say that Mr. Skinner’s testimony is not substantial enough to support the decision of the Commissioners.

Under its Point 2 the City also argues that the concurring members of the Public Service Commission were arbitrary throughout the proceeding. The City’s argument here is apparently based upon some rather stern inquiries made by the Commissioners relative to physical services furnished by the General Telephone Co. in and around Cabot, Jacksonville, and Stuttgart where other business offices have been closed or consolidated. These inquiries or exchanges occurred between the Commission members and the General Telephone Company’s witness, Mr. Skinner. We find nothing in these inquiries with reference to physical services to show that the concurring members were arbitrary with reference to the removal of the business office from DeWitt.

Affirmed.

Harris, C. J. and Fogleman, dissent.

Carleton Harris, Chief Justice,

dissenting. I agree with that portion of Commissioner Malone’s dissent where he points out that “there is no reasonableness in moving the office from DeWitt because DeWitt is the more centrally located city in Arkansas County, while Stuttgart is located in the Northwestern part of the county and is some forty-five to fifty miles distance away from the South border of that County.

This could not possibly be in the public interest, and, therefore, it is my opinion that the Commission erred in this finding permitting the telephone company to move its business office.”

The order made should always be consistent with the interest of the public. Arkansas Power and Light Company v. Arkansas Public Service Commission, 226 Ark. 225, 289 S. W. 2d 668. In Barnes v. Arkansas Public Service Commission,. 235 Ark. 683, 362 S. W. 2d 1, this court italicized the following statement, “The problem of the commission was to determine the best interests of the people of the whole area in question.” Here, the area is the southern district of Arkansas County.

I feel that the convenience of the people who live in this part of the county requires an office in DeWitt, and I am of the opinion that the evidence established that fact. I do not consider that the testimony of Mr. Skinner constituted substantial evidence that the public would be better served if the company were permitted to close that office and maintain only the Stuttgart office. While Mr. Skinner testified that there is a trend over the country to consolidate offices, and that the principal reason for consolidating the business office is to effect more efficient service through better trained employees, I feel that the record indicates that a primary reason for desiring to close the DeWitt office was to effect a savings to the telephone company. The witness said that $3,328.00 per year would be saved in wages which did not include fringe benefits, such as vacation pay, sickness and disability benefits; that $600.00 per year in rent would be saved and approximately $324.00 per year in utilities. There would also be a saving in miscellaneous expenses, janitorial, etc. But this was not all of the evidence with regard to savings to the company if the office were closed. For instance, the following appears in the transcript during the cross-examination of Mr. Skinner:

“Q. This business office that you have at DeWitt now, are you saying that those women are inefficient?
A. Yes, sir.
Q. Why is it you don’t have efficient personnel down there?
A. Well, these people probably it is not necessarily through their own fault that they are inefficient, but the combination of circumstances, the various work functions which they must learn — and by the way, these functions constantly change, our routines, our proceedures constantly change. So. seniority not necessarily means that a person does know everything she should know in a business office. Because of this accumulation of circumstances, our office is less than efficient in DeWitt.
Q. And you haven’t maintained an efficient office down there all these years, have you?
A. There have been varying degrees of efficiency in the office.
Q. Now, if you had efficient personnel down there, they could handle this operation as well there as, they could in Stuttgart, couldn’t they?
A. No, sir.
Q. Why?
A. Because of the lack of training, the inability to replace on vacations, leaves—
Q. Now, Mr. Skinner, I asked you if you had efficient personnel there?
A. Then you would have to define efficient for me.
Q. I am not a telephone man, I don’t know what is efficient personnel.
A. Well an efficient person to me would be different from performing efficiently on the job. Now these people are good people. They are not dumb. They have the ability to learn, but because of our being required in this case to have a smaller office, we haven’t been able to give them the training to which they are entitled. They have not operated that office efficiently.
Q. If you have efficient personnel there, there is no reason why they couldn’t operate it efficiently out of the DeWitt office, is there?
A. No. That is right.
Q. It gets right back to the proposition that it is a financial savings for the telephone company, then, doesn’t it?
A. Well, yes, in this extent, but not in the number of dollars which I mentioned a while ago. In order to train these people and properly supervise them, we would have to have a management employee in DeWitt who would spend their time with them. This would be costly. In addition, in order for us to operate the office an eight hour period, we would have to pay for eight and a half or nine hours a day for each of these employees to give them the same training that they are able to receive in Stuttgart without our having to do this, or will be able when we have these accounts accumulated in Stuttgart.
Q. I didn’t follow you there, Mr. Skinner.
A. Well, in order to give the supervision that we would need in our DeWitt business office, would require more management time than we have available to them, so whatever proportionately more time management employees would have to spend in DeWitt would be costly to that extent. In addition, so as to be able to hold training courses for these girls, we would have to do this outside of our normal business office hours so as to be able to keep the office open the same length of time we are now. This again would be costly to us in salary dollars.”

There is a great deal more along this line, but the above suffices to show the reason I think that a financial saving to the company is of paramount importance in appellee’s effort to close down the DeWitt business office, and I reiterate that I do not agree there was substantial evidence that the public would benefit by this action.

I therefore respectfully dissent.

Fogleman, J., joins in this dissent.


author: Conley Byrd, Justice.

text:
    M. E. WITKOWSKI v. Mrs. George C. WHITE
    5-5173
    451 S. W. 2d 749
    Opinion delivered March 16, 1970
    [Rehearing denied April 20, 1970.]

      Russell ir Hurley, for appellant.
    /. H. Carmichael, Jr., for appellee.
   Conley Byrd, Justice.

This is a boundary dispute between appellant M. E. Witkowski and appellee Mrs. George C. White. Appellee owns the SE NW of Sec. 12, T. 2N., R. 13 W., and appellee owns the ENE NW. In addition to the parties, three surveyors, Max A. Mehlburger, Forrest Marlar, and Orson Jewell, testified about location of the boundary, each reaching a different result. The trial court accepted the Mehlburger survey and entered a decree in accordance therewith. For' reversal appellant contends that the decree is not supported by sufficient evidence; that the Chancellor should have accepted an alleged original corner as shown by a stone and a fence line; and that, in any event, the Chancellor erred in not equally dividing the short quarter between the parties.

Mr. Max Mehlburger testified that his survey party found three pins on the White tract, one each at the northeast corner, the northwest corner and the southwest corner. They also found a stone 661 feet west of the southwest corner. The southeast corner of the White tract was set by drawing a straight line from the latter stone through the iron pin at the southwest corner, a distance of 660 feet east of the southwest corner. This placed the southeast corner 1,331 feet from the northeast corner. In getting ready for trial Mr. Mehlburger’s survey crew rechecked their survey and in doing so found a pin at the northeast corner of the SE NE, on the boundary between sections 12 and 7. They then found that the southern boundary when extended from the stone, to the west, through the pin at the southwest corner of the White tract and through the pin found at the northeast corner of the SE NE was in a straight line.

In checking his survey against Mr. Forrest Marlar’s survey, who used the same iron pin at the southwest corner of Mrs. White’s tract, Mr. Mehlburger pointed out that the southern boundary of Mrs. White’s property commencing at the southwest terminus would angle northward to Mrs. White’s eastern boundary and that if the same point were used for the southern boundary of the NÍ4 NE, the line would angle southward to the point where it reached the northeast corner of the SE NE.

Mr. Forrest Marlar, a civil engineer, testified that in making his survey he began at a stone on the fence line at the southeast corner of the NWM of section 12 and ran north to an iron pin which he found on the north line of the section. The distance was 2,595.74 feet. As a result he set an iron pin half way or a distance of 1,297.87 feet from the north line. In making his survey a stone was uncovered approximately 29 feet north and 10.7 feet east of the pin that he set. He found an old fence line going west from the stone. The corner established by him is 34J£ feet north of the corner established by Mr. Mehlburger’s survey. On cross-examination Mr. Marlar admitted that on the southwest corner he found the same stone that Mr. Mehlburger found and that the line from the other side would have to angle to come to his pin.

The Pulaski County Surveyor, Mr. Orson Jewell, made a survey of the area by commencing on the north line and surveying south to the center of the section. He then went back and, commencing on the north line, surveyed north for a quarter of a mile where he located a stone. To further check his figures he surveyed a half-mile south of what he considered the center of section 12. According to the monuments he found, he concluded that there was a definite shortage in the north half of section 12. In making his survey he established the southern boundary of the White tract as 1,303.5 feet from the north line of section 12.

Mr. Mehlburger on the other hand testified that section 12 was a regular section and that according to the U. S. Government surveys, a copy of which he introduced into the record, there was no shortage in the north half of section 12.

Mr. Marion Witkowski testified that there was a distinct timberline separating a field from an old wooded area; that the corn rows are still there as evidence. According to his testimony the line existing along and between the field and the timberline would line up with the old fence row that Mr. Marlar described, and along the location of the fence that he had erected.

As we view the testimony, there is a difference of opinion between the surveyor Mehlburger and the surveyor Jewell as to whether there is a shortage in the north half of section 12. Further, the proof shows that three surveyors surveyed in the field and that none accepted the stone monument and fence lines as an established corner.

Under the evidence as we view it, the Chancellor had before him three surveys, one of which fixed the southeast corner of the White tract as 1,297.87 feet from the northern boundary; one which fixed the southeastern corner as 1,303.5 feet from the northern boundary and the third of which fixed the southeastern corner at 1,331 feet from the northern boundary. As far as the record shows all of the surveyors are competent and experienced in their field of work. Consequently, we cannot say that the trial court in accepting the Mehlburger survey acted contrary to a preponderence of the evidence. Furthermore, since none of the surveyors accepted the stone upon which appellant relies as a monument or an established corner we are at a loss to understand why the trial court erred in not doing so under the facts here.

Affirmed.


author: Frank Holt, Justice. John A. Fogleman, Justice,

text:
    ARKANSAS STATE HIGHWAY COMM’N v. Robert KENNEDY et ux
    5-5178
    451 S. W. 2d 745
    Opinion delivered March 16, 1970
    [Rehearing denied April 20, 1970.]

      Ken R. Brock and Jack Rose, for appellant.

      Way land Parker, for appellees.
   Frank Holt, Justice.

This is a condemnation proceeding in which the state acquired 11.02 acres of land belonging to appellees. This was necessary for the construction of a controlled access highway which bisects appellees’ 137.5 acre tract of land. The landowners estimated their damages at $45,000 ($75,000 value before the taking and $30,000 after). Their expert value witness placed the damages at $35,300 ($67,100 value before the taking and 31,800 after). Appellant’s only witness estimated $14,750 as the landowners’ total damages ($47,500 value before the' taking and $32,750 after). The jury awarded $40,000. On appeal the appellant contends for reversal that the trial court erred in not striking the testimony of Mr. Kennedy, the landowner, with respect to damages.

On this point the appellant argues only that Mr. Kennedy was unable to give any basis for the per acre value and consequently no substantial basis for the $45,000 damages which he claimed. We cannot agree. On direct examination the landowner testified that:

“Q. Mr. Kennedy, are you familiar with, general- „ ly, the value of lands and beef ranches or cattle ranches within the area where you, reside here, within this area of Sebastian County?
A. Well, I certainly couldn’t be classified as an authority. Of course, I’m actually interested in the price of land and try to keep up with the price of land, and know something about it.
Q. Generally, you know what land is worth?
A. I feel that I do, yes sir.
Q. Based on your knowledge of land in this area and your position as an owner, what would you tell the jury what the fair market value of the total acreage was, including the improvements which have been taken and destroyed, plus your home, of this whole tract?
A. I believe in the neighborhood of $75,000.00.
Q. Now, you say $75,000.00. Is this your opinion of the fair market value at that time?
A. Yes sir.”

On cross-examination he was asked on what basis he arrived at this particular value. He testified:

“Q. Did you hear about some other property in close proximity to you that had sold?
A. Yes, I heard — I heard, it was just hearsay —of some property that Mr. Bill Lewis sold for $300.00 an acre.
Q. And is this one of the factors you’re using in arriving at your land value?
A. That’s one factor.
Q. Where is Mr. Bill Lewis’ land located?
A. Well, it lays south and east. He owns a lot of land, in the vicinity of Greenwood.”

Although appellee could not give the exact location of the particular land sold he did testify that it was in close proximity. Appellee lives on his property which is also in the vicinity of Greenwood or three miles southwest.

Upon further cross-examination appellee testified that the before value of his 137.5 acre farm was $300.00 per acre which included all improvements except his new home. However, appellee followed this by an explanatory version. In doing so he excluded all improvements. Separate from this acreage value he placed a value of $6,000.00 for the old homesite and $4,000.00 for the barns and related outbuildings, all of which were acquired in the taking. He valued his new home at $25,000.00 which was not acquired by the appellant. He was further asked:

“Q. Now, if we pull that $25,000.00 out of your $75,000.00 before figure, we have $50,000.00?
A. Yes, sir.
Q. Is that what you’re saying the value of this farm is worth at the time you purchased it?
A. I believe that’s what it was worth at the time I purchased it. Not at the time I purchased it, but at the time you took it.
* * *
Q. Now, if we pull the value of the improvements off of the land — and you say the improvements and the land were worth $50,-000.00 — if we pulled $10,000.00 off the improvements, we would have $40,000.00 for the value of the land. And this, of course, would make it figure on a per acre basis something less than $300.00 per acre, would it not?
* * *
Q. Would it be less than $300.00?
A. A little bit less, I’d think would be right.”

Thus, by a computation of 137.5 at $300.00 per acre plus all improvements, it is clear that the appellant is incorrect in its argument that the landowner did not testify to a total before value of at least $75,000.00. ($40,000 + $25,000 + $10,000).

Mr. Kennedy candidly admitted that he was not an expert on land values and only had a general knowledge from being a resident landowner in the vicinity. Recently we have reiterated the well established principle of law that a landowner’s testimony is competent and admissible as to the value of his lands, regardless of his lack of knowledge of property values, if a satisfactory explanation is given for his conclusion. Arkansas State Highway Comm. v. Duff, (May 12, 1969), 440 S. W. 2d 563; Arkansas State Highway Comm. v. Clark, (Sept. 22, 1969), 444 S. W. 2d 702; Arkansas State Highway Comm. v. Taylor, (Dec. 8, 1969), 447 S. W. 2d 646. This is based upon the landowner’s intimate knowledge of his property. Any infirmities bear upon the weight.

The fact the landowner was able to testify that he knew of only one sale for $300 per acre in close proximity is of little consequence. This single sale was only one factor he considered as a landowner. He testified that the property had been, in his family for more than fifty years. He has resided on the property all of his life, except during his service in World War II. He had acquired it from his family a few years before. Practically all improvements on the land were taken except his new house. He further testified that the controlled access highway almost equally divides his lands and that he now has no access from one residual to the other except an existing unimproved county road that traverses the northern portions. He was using his property for a cattle ranch and planned to expand this activity. No direct access is provided from one residual to the other. He built his new residence between one-fourth to one-half mile from any existing highway facility. The new highway runs in front of his home which results in an access facility which is steep and undesirable. He described the terrain and demonstrated a per acre value of the varied parts of his lands as a single unit before the taking and, also, the consequent damages after the taking. According to him, as previously indicated, the before value of his property was $75,000, the after value was $30,000, and his just compensation was $45,000.

Mr. Kennedy’s long standing and demonstrated familiarity with his land and the improvements thereon, its advantages, its present and future utility as a cattle ranch operation affords a reasonable basis for his value opinion as a resident owner. We cannot say that his testimony is insubstantial.

Appellant next contends that the court erred in not striking that portion of the landowners’ expert witness’ testimony relative to damages to the landowners’ new home. The expert witness testified that in his opinion the construction and location of the new highway in front of the landowners’ home had damaged it $2.00 per square foot, or a total of $4,950. He placed a before value of $20,800 on the home. Appellant asserts that the witness included elements of damage which are not properly a part of just compensation and the jury should not have been allowed to consider them. Appellant limits its argument to the element of noise. We find no merit in this contention. The trial court instructed the jury not to consider these separate items as constituting the measure of damages. The jury was told that it could only consider the separate items as an aid and that the true test of damages is the before and after value. Assuming, without deciding, that the element of noise is an improper element in the case at bar, we think the trial court correctly refused to strike all of the witness’ testimony with reference to damages to the home. One of the elements assigned as damage was the "steep driveway due to the Cut.” Certainly this was a proper element for the jury to consider. It is improper to strike all of a witness’ testimony if any part of it is proper and admissible. Arkansas Highway Comm. v. Phillips, (Nov. 24, 1969), 447 S. W. 2d 148. Further, we perceive no prejudice to the appellant in view of the court’s admonition to the jury.

With reference to the element of noise, appellant relies upon Campbell v. Arkansas State Highway Comm., 183 Ark. 780, 38 S. W. 2d 753 (1931), reaffirmed in Arkansas State Highway Comm. v. Kesner, 239 Ark. 270, 388 S. W. 2d 905 (1965), to the effect that noise is not a compensable element of damages. We unanimously observe that we will re-examine this view when it is appropriately and fully presented to us. The recognition of noise as being a compensable element of property damages is not an innovation nor is it unknown in our decisions. Little Rock, M. R. & T. Ry. Co. v. Allen, 41 Ark. 431 (1883). The general rule seems to be that the loss of rights which render property and its ownership or possession valuable is compensable when not suffered by the public in general.

The appellant next asserts that the verdict is excessive because there is no substantial evidence to support an award of $40,000. We find no merit in this contention. We have previously discussed the testimony of Mr. Kennedy, the landowner, and concluded that it is substantial. He placed his just compenstadon at $45,-000. His expert value witness testified that just compensation was $35,300. There is no attack upon the expert’s testimony except as to his enumerated elements of damages to the new house. We have found no reversible error on that point. The landowners’ expert witness is the owner of a real estate agency. It appears that he is a landowner, a real estate broker, a rancher and is experienced in the sale of farms and ranches in the general area. He testified as to four comparable and recent sales in the area of appellees’ property. The value per acre ranged from $625 to $310 per acre. He gave a detailed analysis of the before and after value of appellees’ property. We cannot say that the jury’s verdict is unsupported by substantial evidence.

Affirmed.

Harris, C. J. and Fogleman and Jones, JJ., dissent.

John A. Fogleman, Justice,

dissenting. I respectfully dissent because I feel that the testimony of West relating to the damage to Kennedy’s house should have been stricken, and the action of the circuit judge did not eliminate the consideration of a noncompensable item of damages. West testified that Kennedy’s house had diminished in value to the extent of $4,950, and that this was a part of the total damage to the landowner. When asked to explain his reasons for arriving at that amount of damage, West said that they were (1) the steep driveway required after the taking, (2) the increased traffic and noise, and (3) changing the view of the city and the privacy. Appellant’s counsel first moved that the witness’ value testimony be stricken. The court correctly denied this motion. Appellant’s counsel then moved to strike that portion of West’s testimony relating to the damages to the house because of the inclusion of improper elements of damages. This motion was denied and the court then instructed the jury that the proper measure of damages was “before” and “after” values and that West’s testimony as to breakdowns and figures might be considered only as an aid in determining these values, but that the separate items should not be considered as constituting the measure of damages. West had testified that he arrived at his “after” value by subtracting from the “before” value the damages resulting from the taking. Thus the judge’s instruction to the jury did not have the effect of eliminating any improper element of damages included by West from the jury’s consideration.

It was clearly held in Campbell v. Arkansas State Highway Commission, 183 Ark. 780, 38 S. W. 2d 753, that a landowner should not recover for noise, dust and matters of that sort, which, in varying form, are “incidents” to living upon a public highway and, as such, must be borne by all abutting property owners, even though he was entitled to recovery for interference with access. The owners’ allegation that the construction of a bridge and approaches on existing right-of-way caused annoyance by dust and dirt and sound caused by vehicles going over the bridge was admitted by demurrer. See also Arkansas State Highway Commission v. Kesner, 239 Ark. 270, 388 S. W. 2d 905.

The inclusion of an improper element of damages should be reversible error, where, as here, we cannot say that there was manifestly no prejudice in the failure of the trial court to eliminate that element from consideration.

Harris, C. J., and Jones, J., join in this dissent.

      The soundness of this rule is questionable to say the least, but it has been the law in Arkansas for 39 years. It will remain so, until it is overruled.


author: Carleton Harris, Chief Justice.

text:
    ARKANSAS STATE HIGHWAY COMM’N v. Frank FOUGEROUSSE et ux
    5-5221
    451 S. W. 2d 459
    Opinion delivered March 23, 1970

      Thomas. B. Keys and George Green, for appellant

      George J. Cambiano, for appellee.
   Carleton Harris, Chief Justice.

This is a highway condemnation case. The State Highway Commission condemned 4.89 acres from approximately 149 acres of land belonging to appellees Frank Fougerousse and Mary Anne Fougerousse. This acreage was taken from the northeast corner of the farm, leaving a remainder of .47 acres in the northeast corner, leaving 61.53 acres of croplands south of the tract acquired by condemnation, and an additional 82.11 acres also lying south of the area and south of Point Remove Creek. On trial, Forrest Griswood, a witness on behalf of appellees, testified that damages were $4,089.00. Mr. Fougerousse testified to total damages of $6,730.00. The jury returned a verdict of $6,000.00 in favor of appellees, and from the judgment so entered, appellant brings this appeal. For reversal, only one point is asserted, viz., that the trial court erred in permitting Mr. Fougerousse to testify to the amount of an estimate by a contractor as to the cost of building necessary ramps, after the taking, for access to a portion of the remaining land.

Mr. Fougerousse testified as to the necessity for the two ramps, and stated that he had had an estimate made by Mr. J. C. Norwood, a contractor, to ascertain what it would cost to construct the ramps. He said that he had been given a figure, and when he started to testify to this amount, the attorney for the Highway Department objected, saying:

“If the Court please, we object to his answer. I have no idea what it will be, but we admit that it costs money to construct ramps, but Mr. Norwood, if he gave the estimate, would be the person. I would like to have the opportunity to cross-examine him, if we are going to hear his testimony.”

Fougerousse reiterated that he “just asked him what he would charge to build the ramps,” and the court permitted the witness to answer, overruling appellant’s objection. Fougerousse then stated that the figure given was $1,460.00. This was, of course, hearsay evidence, and an almost identical situation arose in Arkansas State Highway Commission v. Carruthers, (April 7, 1969), 439 S. W. 2d 40. There, we said:

“We agree that there is merit in appellant’s first contention. During examination of Mr. Carruthers, he was asked if he would have any problem getting to a certain portion of his land, and he replied that he would not, if he could construct a bridge across a canal. The witness was then asked if he knew what that would cost, and he replied, 'I am not familiar with the building of roads. I have an estimate from a contractor.’ He then said that he asked the contractor what it would cost to build the bridge, and received a reply. Counsel for the department objected to the use of the estimate, or to any testimony to be given on the basis of same, stating, ‘That is hearsay testimony. He has no personal knowledge, it is what someone else told him.’ Over these objections, the court permitted Carruthers to testify, and the witness stated, ‘I believe it was $24,-300.00 or $24,400.00.’

We held that the ruling of the court constituted error, and reversed the judgment.

Appellees argue that there can be no prejudice even if the answer was inadmissible, because Mr. Gris-wood had already, without objection, testified that the construction of the ramps, according to Mr. Norwood, would be $970.00; that the purpose of the testimony from Fougerousse was to show the difference in the cost of constructing the ramps where the dirt would be taken from Fougerousse’s land, and where the dirt would be obtained elsewhere. The mere fact that no objection was made to Norwood’s incompetent testimony does not make Mr. Fougerousse’s incompetent testimony admissible. Even had the same identical figure been given, the evidence was inadmissible, for we cannot know just what evidence the jury considered. It is possible that they might not have accepted Griswood’s testimony but did accept Fougerousse’s. Of course, it is possible that they did not pay any attention to this evidence by either witness, but we have held that where error is committed, it is assumed to be prejudicial unless we can say with assurance that it is harmless. Arkansas State Highway Commission v. Parks, 240 Ark. 719, 401 S. W. 2d 732. We can make no such finding in this case.

We hold that the court erred in permitting Mr. Fougerousse to answer the question. However, the figure of $1,460.00 is a separable item of damages, and as pointed out in Swenson and Monroe v. Hampton, 244 Ark. 104, 424 S. W. 2d 165, when the only error relates to a separable item of damages, a new trial can sometimes be avoided by the entry of a remittitur. Here, the most that this testimony could have contributed to the $6,-000.00 judgment was the sum of $1,460.00. Therefore, if appellees wish to remit that amount within 17 days, the rest of the judgment will be affirmed. Otherwise, the case must be remanded for a new trial.


author: George Rose Smith, Justice.

text:
    Kenneth COFFELT v. ARKANSAS POWER & LIGHT COMPANY
    5-5192
    451 S. W. 2d 881
    Opinion delivered March 23, 1970
    [Rehearing denied April 27, 1970.]

      Kenneth Coffelt, pro se.

      House, Holmes ir Jewell; By: Darrell Dover, for appellee.
   George Rose Smith, Justice.

This suit for a declaratory judgment was brought as a class action by the appellant, who seeks relief on behalf of all consumers who purchase electricity from the appellee, a public utility. The question presented is whether our constitutional prohibition against usury is violated by the utility company’s authorized practice of imposing a “late charge” against customers who do not pay their monthly bills within ten business days (fourteen calendar days) after the due date. This appeal is from a summary judgment upholding the validity of the late charge and dismissing the complaint for want of equity.

The complaint asserts that the imposition of the late charge amounts to the exaction of usurious interest upon the net amount of the bill. By answer the utility company denied the assertion of usury. We take the controlling facts from the affidavit and exhibits accompanying the defendant’s motion for summary judgment.

In 1968 the utility company filed a petition asking the Public Service Commission to approve a tariff entitled “Gross-Net Billing Rider,” which was apparently the first attempt by this particular company to add a late charge to its bills. (We use the phrase “late charge” merely for convenience. The practice has also been said to involve a discount for prompt payment, a penalty for tardy payment, a gross-net rate differential, and, at least by this appellant, usurious interest. We are interested not in nomenclature but in the substantive nature of the charge.) Interventions were filed protesting approval of the proposed charge.

At a hearing upon the petition the company offered proof from which the Commission found that the company’s extra expense in the collection of overdue accounts had amounted, apparently in 1968, to $610,629. The Commission, to enable the company to recoup such expenses from the consumers who were responsible therefor, authorized the imposition of a late charge amounting to 8% of the first $15.00 of the net bill and 2% of any amount in excess of $15.00. The Commission’s announced purpose was to avoid discrimination as between the company’s consumers. The Commission’s reasoning was stated in its order, as follows:

The genesis of such a penalty [late charge] is the strong policy of rate regulation against discrimination. Rates and other charges must be designed as nearly as possible to assess costs on the class of customers which creates them. In this case the application of this policy to the question before the Commission means that costs created by late paying customers should be borne by those very customers rather than distributed in the rates charged all consumers. The other side of the proposition is that if the penalty is excessive as compared to the costs created, then the late payers are bearing costs of company operation not properly attributable to them. In the latter instance this class becomes the class discriminated against.
The Company has conclusively demonstrated that it is put to considerable expense in collecting past due accounts. ... It cannot be gainsaid that those consumers who are responsible for these expenses to the Company should pay them. It is noteworthy that those customers who in the past have not paid their bills within two weeks of billing date include persons in all income brackets and are in no way confined to those who are in the lower income groups.

In approving the proposed late charge the Commission pointed out that the company’s accounting methods had not been designed to completely isolate its collection costs, because no late charge had been imposed in the past. The Commission directed that the company maintain appropriate records in. the future to reflect such costs and to file a report of its experience every sixty days, to the end that the Commission may adjust the amount of the late charge to equal the actual cost of collecting overdue accounts.

With respect to the summary judgment, the foregoing facts are undisputed. We should add that the appellant is mistaken in suggesting in his brief that the facts supporting the motion for summary judgment must be treated as being disputed by the plaintiff’s verified complaint, That view was originally taken by some federal courts in construing the Federal Rules of Civil Procedure, but both the Rules and our summary judgment act have been amended to make it clear that proof must be met with proof. This is the pertinent language in Act 160 of 1967: “When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.” Ark. Stat. Ann. § 29-211 (e) (Supp. 1.969). Inasmuch as the plaintiff in the case at bar filed no response whatever to the defendant’s motion for summary judgment, the facts established by that motion stand undisputed.

The trial court was right in rejecting the charge of usury. What we must determine is the substantive nature of the late charge authorized by the Public Service Commission. Usury involves an agreement by which the borrower is required to pay an excessive rate of interest for the loan or forbearance of money. Armstrong v. McCluskey, 188 Ark. 406, 65 S. W. 2d 558 (1955). There we went on to point out that the existence of usury is to be determined by “the real nature of the transaction.’

We think it plain that the Public Service Commission, in approving a late charge similar to those which the Commission found to be already assessed by some 52 other utility companies in Arkansas, was not authorizing this appellee to collect excessive interest for the loan or forbearance of money. We readily distinguish this case from the only authority cited by the appellant, Sloan v. Sears, Roebuck & Co., 228 Ark. 464, 508 S. W. 2d 802 (1957). There the seller was charging more than 10% per annum for an extension of credit, which we found to be the equivalent of a loan of money.

The late charge, as approved by the Public Service Commission, is simply a practical method of preventing discrimination among the utility company’s customers. The prohibition against discrimination in utility rates is basic in public utility law. Pond, Public Utilities, § 270 (4th ed., 1932). That prohibition is incorporated in our statute governing public utilities: “No public utility shall, as to rates or services, make or grant any unreasonable preference or advantage to any corporation or person or subject any corporation or person to any unreasonable prejudice or disadvantage.” Ark. Stat. Ann. § 73-207 (Repl. 1957). Even before the passage of that statute we had held that a public utility must serve its consumers without unjust discrimination, though the utility may make a reasonable classification of its consumers. Ark. Natural Gas Co. v. Norton Co., 165 Ark. 172, 263 S. W. 775 (1924).

The late charge, far from being an exaction of excessive interest for the loan or forbearance of money, is in fact a device by which consumers are automatically classified to avoid discrimination. Its effect is to require delinquent ratepayers to bear, as nearly as can be determined, the exact collection costs that result from their tardiness in paying their bills. The appellant’s argument actually means in substance not that the utility company be prevented from collecting excessive interest but that its customers who pay their bills promptly be penalized by sharing the burden of collection costs not of their making. We are confident that the framers of the Constitution of 1874 did not insert their prohibition against usury with any notion of outlawing an arrangement such as that approved by the Public Service Commission in this instance.

Affirmed.


text:
    Wadell WASHINGTON v. STATE of Arkansas
    5484
    451 S. W. 2d 449
    Opinion delivered March 23, 1970

      Louis W. Rosteck, for appellant.

      Joe Purcell, Attorney General; Don Langston, and Mike Wilson, Asst. Attys. Gen., for appellee.
   George Rose Smith, Justice.

By information the appellant was charged with the unlawful sale of narcotic drugs, in the form of thirty capsules of “amphetamine with sulfate pentrobarbital.” The trial court, sitting without a jury, found the accused guilty and sentenced him to three years confinement in the penitentiary. In this court the appellant asserts three points for reversal.

First, it is argued that the State’s proof about the sale was inadmissible, because the transaction was unlawfully induced by means of entrapment on the part of a federal narcotics agent. Upon that issue, however, the substantial evidence is in conflict. The agent testified that after a conversation about drugs he was taken by the defendant to a weedy vacant lot, where the defendant left the car and shortly returned with the drugs. The agent said that he later paid Washington $12.50 for the drugs, after Washington had ascertained that to be the right price. Washington, on the other hand, testified that he had been given the drugs by a third person, that he had thrown them away as worthless, and that he reluctantly retrieved them for the agent only at the latter’s insistence. He also said that he made no charge for the drugs and retained the money only because the agent thrust it upon him and urged him to keep it.

We recently discussed the defense of entrapment in Peters v. State, 248 Ark. 134, 450 S. W. 2d 276. There, upon proof decidedly more favorable to the accused than that now before us, we held only that the defense should have been submitted to the jury. Here, too, we find the issue to be one of fact, upon which the trial court’s judgment is supported by substantial evidence. That ends our inquiry.

Secondly, both the narcotics agent and a government chemist testified about the drugs, but the State did not offer the capsules in evidence. It is now insisted that the trial court should have “required” the State to produce the physical evidence. It is perfectly permissible, however, for a witness in a criminal case to testify about tangible objects involved in the crime without producing them. Meyer v. State, 218 Ark. 440, 236 S. W. 2d 996 (1951). Furthermore, there was no request in the court below that the capsules be produced. Consequently there was no adverse ruling by the trial court upon which a claim of error can now be based.

Thirdly, the prosecution was allowed to amend the information to conform to the testimony of the chemist, who said that there is no such drug as “sulfate” pentrobarbital and that the correct term is “sodium” pentrobarbital. The amendment did not change the nature or degree of the crime charged and was therefore permissible. Ark. Stat. Ann. § 43-1024 (Repl. 1964); Underwood v. State, 205 Ark. 864, 171 S. W. 2d 304 (1943). Moreover, the defense made no claim of surprise nor request for a continuance; so there is a total absence of any indication that the accused was prejudiced by the amendment.

Affirmed.


author: Lyle Brown, Justice.

text:
    NATIONAL INVESTORS FIRE AND CAS. CO. v. James Ray PREDDY
    5-5171
    451 S. W. 2d 457
    Opinion delivered March 23, 1970

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

      Branscum, Schmidt ir Mazzanti, for appellee.
   Lyle Brown, Justice.

Appellee James Ray Preddy was awarded judgment against appellant, National Investors Fire and Casualty Company, based on a homeowner’s policy insuring against physical damage to Preddy’s house. National Investors defended on the theory that the damage was due to a mechanical breakdown in the circulating heater’s duct work and that it came under one of the exclusions from coverage. The sole issue on appeal is whether the described failure constituted a “mechanical breakdown” within the meaning of that term in the exclusionary clause.

In 1965 appellee purchased a new home in Briar-wood Addition in Little Rock and procured a homeowner’s policy from appellant. In the winter of 1969, appellee detected trouble with his heating system. He discovered that the unit was not pushing fresh air through the ventilation system. The duct work, which came into the house under the floor and was imbedded in concrete, had apparently collapsed under the floor. It was determined to be less expensive to abandon the floor ventilation system and install an overhead heating unit in the attic. Appellee sought to recover the expense of the change-over. The cost of the project is not questioned.

Each side offered the testimony of an experienced heating and air conditioning contractor. Their testimony was not essentially in conflict. They explained that the duct work under the floor is made of fiber board, as opposed to metal; that it is in common usage; that in reality it constitutes a form which holds the concrete in place and “actually the concrete becomes the shape and form of the duct work to a great extent.” Both witnesses concluded that the trouble was caused by a collapse of the duct system under the slab floor; however, they could not determine the specific cause of the collapse because that would require destruction of the floor. Neither witness observed any ground-settling around the house. The mechanism of the heating unit was in good order.

Interpretation of the phrase “mechanical breakdown” is determinative of the only issue on appeal. In Washington Fire & Marine Ins. Co. v. Ryburn, 228 Ark. 930, 311 S. W. 2d 302 (1958), two basic rules of interpretation were stated thusly:

It is a settled rule in this state (and appears to be the general rule elsewhere) that policies of insurance will be interpreted and construed liberally in favor of the insured and strictly against the insurer, who wrote the insurance contract, and any doubt as to the meaning of language used, should be resolved in favor of the insured. It is also well settled that exceptions and words of limitations will be strictly construed against the insurer.

Construing the phrase “mechanical breakdown” in accordance with the recited rules, we have no hesitancy in holding that the air duct, permanently imbedded in concrete, is not included within the phrase. We interpret a mechanical breakdown here to have reference to a failure in the working mechanism of the machinery— a functional defect in the moving parts of the equipment which causes the latter to cease functioning or to function improperly. Actually, that is the very common usage of the term. For example, when the thermostat on a motor vehicle sticks we refer to it as mechanical trouble; but when a tire goes flat we simply refer to it as tire trouble. In considering the phraseology of an insurance policy the common usage of terms should prevail when interpretation is required.

We are also mindful that National Investors selected the phraseology and if it were intended to include all the attachments to the heater in the exclusions it would have been the fairer procedure to have put the insured on notice by using clear-cut terminology to that effect.

An additional attorney’s fee of $250 is awarded appellee.

Affirmed.


author: John A. Fogleman, Justice.

text:
    James Mack NASH v. STATE of Arkansas
    5477
    451 S. W. 2d 869
    Opinion delivered March 23, 1970

      Martin L. Green and Shaw & Bedwell, for appellant.

      Joe Purcell, Attorney General; Don Langston and Mike Wilson, Asst. Attys. Gen., for appellee.
   John A. Fogleman, Justice.

Appellant was charged with first degree murder of Larry McKinney on June 14, 1969. He was convicted of second degree murder and sentenced to five years’ imprisonment. He urges three grounds for reversal of that conviction, viz: (1) failure of the circuit court to suppress his alleged confession; (2) failure of the trial court to grant his motion for continuance; and (3) failure of the evidence to support the verdict.

In support of the first ground, appellant now argues that his confession was inadmissible because it was given as a preliminary to a polygraph examination, the results of which are barred as evidence by Ark. Stat. Ann. § 71-2225 (Supp. 1969). His present argument also includes the contention that the alleged confession is so inconsistent that it is obvious that appellant could not have understood what he signed. His motion to suppress was on other grounds, i. e., that the statement was involuntary because the language, comments and innuendos of the officer to whom the statement was made constituted promises of leniency. Although it appears that appellant’s present arguments on this ground are without merit, we will not further consider them because they were raised for the first time on appeal. Petty v. State, 245 Ark. 808, 434, S. W. 2d 602; Gathright v. State, 245 Ark. 840, 435 S. W. 2d 433. We will review the evidence for the purpose of determining whether, under all the circumstances, the statement appellant sought to suppress was voluntarily given.

Nash was 22 years of age, the son of a minister and possessed of education including Wz years of college. He had experienced two years of Army Service. He had on occasion filled his father’s pulpit. At the time of his arrest he was employed at the Whirlpool Corporation factory as a paint operator. On Saturday, June 14, during an investigation by the prosecuting attorney of the circumstances of the killing of Larry McKinney, Nash had agreed to take a polygraph test. While at work during the afternoon of June 16, he was called to his employer’s personnel office. Upon arrival there he recognized Officer Tidwell whom he willingly accompanied to the police station for the purpose of taking the test. Sometime after arrival at the station he was taken to Sergeant Bettis, whose primary duty was administering polygraph tests. While the officer stated that he identified himself as a police officer, Nash denies that he knew this. Appellant’s statement in this regard is irreconcilable with his contention about promises of leniency by the officer, and his later testimony that he had confidence in Bettis because he knew that Bettis was a police detective.

Bettis testified that he gave appellant a printed form containing a concise explanation of the rights of one in custody as to interrogation as delineated in Miranda v. Arizona, 384 U. S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966). The officer stated that he asked Nash to read the form and that he read from an identical one while Nash followed his reading by reference to the form provided him. According to Bettis, appellant answered affirmatively when asked if he understood his rights and added that he was only going to tell the truth and was willing to sign the appended waiver of his rights to remain silent and to have the advice of counsel. This waiver was signed by Nash, and his signature was witnessed by Bettis and Tidwell.

Bettis’ testimony relating to the circumstances leading up to the signing was confirmed by Tidwell, who stated that he left the room after attesting Nash’s signature. Nash substantially corroborated the testimony of the officers, but testified that he was asked to sign the papers only as an agreement to take the polygraph test.

After the signing of the waiver, Bettis proceeded with an explanation of the test and after about 10 minutes, Nash proceeded to make a statement of his activities on the occasion of the killing of Larry McKinney. Bettis testified that he typed the státement as it was given over a period of approximately one hour. He also stated that as the typing of each paragraph was completed, it was read back to and confirmed by Nash. At the very inception of Nash’s oral statement, he admitted that he had possessed a gun on the evening in question, and had left it at the home of a friend named Bruce Sanders. Nash signed an authorization to Officer Tidwell to pick up this weapon. Tidwell then was recalled to the room and given the authorization. He proceeded to the designated house and returned with a pistol about the time Sergeant Bettis finished typing Nash’s statement. The weapon was exhibited to, and identified by, Nash. Bettis then asked appellant to read the typed statement. According to this officer, after Nash finished reading the statement, he asked appellant if he wanted to sign it, and appellant did so in the presence of Officers Tidwell and Brooks. Bettis stated that Nash was so upset and emotional after signing the statement that a polygraph test was not then possible, even though Nash was still willing to undergo it.

While Nash admits that he acted of his own free will, he asserts that he understood that the waiver was signed by him with the understanding that it was given in connection with the taking of the polygraph test. He testified that, in explaining the test, Bettis told him that if he didn’t tell the truth not to take the test, because his untruthfulness would certainly be disclosed. Thereafter, said Nash, Bettis advised that “if a man told him the truth, he would tell a man the truth” and that conflicting: stories had been told about the events surrounding the shooting of Larry McKinney Nash also testified that Bettis continually told him that even if he shot and killed McKinney he surely couldn’t be held for first degree murder but that the only thing “they” could do was to reduce the charge to “justifiable” homicide or involuntary manslaughter. By way of explanation to the court, Nash testified that Bettis said that he would probably be “booked” for murder, just as one would be “booked” for manslaughter after an automobile accident, and, after two or three days, a judge, upon preliminary hearing, would reduce the charge to “justifiable” homicide.

Appellant admitted that he told Bettis what happened, but said that the statement he signed was not typed until after the officer’s assurances about reduction of the charge, and the sergeant asked that he repeat his story while it was being typed. Nash also said that most of the matters set out in the statement were “almost correct,” but that “they project a different meaning” and “can be interpreted a different way than from the way I stated.” He did deny any knowledge that a shot he fired had struck the deceased, because he said he was running backward and looking the other way when his weapon was fired. He also denied having made some of the remarks contained in this purported statement and attributed to him on the occasion of the shooting.

Nash’s claim that he only read parts of the incriminating statement is hardly credible in view of his equivocal testimony on that point. He stated in answer to one question by the trial judge that “I know I read through it. . .” Bettis denied having made any promises to Nash.

The independent review of the record to which we are committed in considering admissibility of confessions convinces us that the circuit judge was correct in holding the statement to be voluntary and admissible. In so doing, we have given appropriate, but not controlling, weight to the findings of the trial judge. See Harris v. State, 244 Ark. 314, 425 S. W. 2d 293, cert. denied, 393 U. S. 941, 89 S. Ct. 308, 21 L. Ed. 2d 278 (1968). He stated that he might have felt some concern about appellant’s understanding of what had been said and done if the latter were illiterate or dull and unappreciative of the meanings of words and distinctions in words and expressions. His observation of appellant, however, convinced him that Nash was bright and appeared to have understood all that took place. The judge found that Nash had readily admitted that he had been fully warned of all his rights, that there was no basis for any understanding by him that his waiver of rights applied only if he were undergoing a polygraph test, that he could not have been misled, and that he intelligently made the statement with a full understanding of his rights. We note, as did the circuit judge, that appellant is possessed of intelligence and a good vocabulary. Nash displayed a ready perception of questions asked, and an ability to express his answers clearly, comprehensively and fluently. We have no doubt that the statements were voluntarily made. Whatever inconsistencies appear in the text are not such as to evidence any lack of understanding on Nash’s part.

Appellant filed two motions for continuance on September 12, 1969, after the case had been set for trial. The first was filed by David T. Westmoreland, who had been employed by appellant’s father three months earlier, had represented appellant at the preliminary hearing, had filed his motion to suppress evidence and had represented appellant at the hearing thereon. The motion recited that the attorney had done substantial investigative work. It disclosed that a “certain lack of confidence had developed” between the client and this attorney, asserted that Nash should be represented by someone else, and stated that efforts were being made to secure additional or substitute counsel. On the same date, a motion was filed by Warner, Warner, Ragon & Smith, through Wayne Harris, asking that the case be continued until sometime in October to afford adequate opportunity to Harris, as newly retained counsel to investigate and prepare for trial. This motion alleged that lack of confidence in his first attorney developed during conferences beginning September 8 and that Harris would be unable to prepare for trial because he would be in Denver from September 14 through September 17, 1969. No evidence was offered on this motion and an order denying it was not made until the beginning of the trial on September 19.

Appellant’s motion for new trial served on September 29 and overruled on October 6 stated that appellant was prejudiced by Harris’ inability to prepare for trial and that, before Harris’ acceptance of employment, appellant’s friends and relatives had unsuccessfully tried to follow Harris’ advice to employ another attorney.

The principal part of appellant’s argument on this point here has to do with matter that was developed during the course of the trial but not shown to have been made known to the trial court prior to denial of the motion, e. g.: the shooting took place where 200 people were assembled; the state’s case was presented through interested witnesses; at least six shots were fired in the vicinity; that appellant was able to present only two witnesses present at the scene, neither of whom saw the critical shot fired. The record does disclose that Westmoreland had subpoenaed 45 witnesses. It also reveals that appellant had caused a subpoena to be served upon a witness who did not appear, but it is not shown what this witness was expected to testify.

Motions for continuance are addressed to the sound judicial discretion of the trial court, and we will not reverse its action unless we can say that the judge has abused this discretion. Johnson and Loyd v. State, 247 Ark. 1086, 449 S. W. 2d 954; Scates v. State, 244 Ark. 333, 424 S. W. 2d 876. When we view the lack of evidence to support appellant’s motions, the active participation of Westmoreland, who had made at least enough investigation to subpoena 45 witnesses, and the lack of any showing as to reasons for Harris’ anticipated absence or of unavailability of any member of his firm to assist in investigation and preparation for trial, we cannot say that the circuit judge abused his discretion in denying these motions. Furthermore, neither the motion for new trial nor any part of the record demonstrates how appellant was prejudiced, the identity of witnesses who might have been disclosed by pretrial investigation or what such witnesses would have testified. In the absence of a showing of prejudice, we cannot say that the refusal of a continuance is error. Gathright v. State, 245 Ark. 840, 435 S. W. 2d 433. Appellant argues that he was prejudiced because the identity of the alleged murder weapon became a critical issue and the evidence was so unsatisfactory on this point that appellant could have identified the true owner of the weapon, if granted a continuance. Yet, he had 17 days after the trial to make a showing of prejudice on this score, or any other, on presentation of his motion for new trial, but failed to do so.

The argument here on the insufficiency of the evidence is three-pronged. It is asserted that the evidence does not establish (1) the identity of the killer, (2) the whereabouts of appellant when the fatal shot was fired, (3) the ownership and possession of the murder weapon. None of these grounds was specifically mentioned in the motion for new trial. On this point, appellant only asserted that the evidence was insufficient to support a conviction of first degree murder, in addition to the statement that the verdict was contrary to the evidence. Even if this argument is reviewable, it seems to us that it fell with our holding that appellant’s statement was properly admitted in evidence. In that statement Nash told of going up to Larry McKinney, asking who was fighting, and running away when Louis Wilson chased him and McKinney made threatening gestures toward him. After assuring himself that he was no longer being pursued, he said that he went back to his car, armed himself with a .22 caliber pistol and returned to the scene of the fighting because he was “shook up” about Wilson’s and McKinney’s “jumping” him. McKinney then came toward appellant, who told him to stop, stated “I have got my____together now” and fired at the deceased from a distance of five feet. He then stated that he went to his car, told Bruce Sanders’ sister to get in and drove to the house where Bruce Sanders lived, taking Sanders, Sanders’ sister and Ham Phillips. According to the statement, Sanders hid the pistol, after which Nash and Sanders returned to the scene. It was only necessary that there be other proof that the offense charged was committed by someone. Ark. Stat. Ann. § 43-2115 (Repl, 1964); Wallis v. State, 245 Ark. 1024, 436 S. W. 2d 273; Bivens v. State, 242 Ark. 362, 413 S. W. 2d 653. There was evidence that McKinney’s wife found him lying on the ground after he had been shot. A police officer also testified that he found McKinney on the ground and sent him to a hospital where he expired at 12:35 a.m. A pathologist who performed an autopsy found a bullet wound in the deceased’s right chest which penetrated his lung and caused his death. This, coupled with appellant’s statement, was sufficient to sustain conviction of murder in the second degree.

Actually, we find sufficient evidence to sustain this conviction of second degree murder without the incriminating statement. Waldo Sanders testified that he had stopped his brother-in-law McKinney from fighting and was holding his hand in which there was a gun, when he heard a shot and turned and saw Nash going back through a crowd which had assembled. He said that Nash fired at McKinney, saying “You must want to die.” McKinney’s widow said that as she ran away from the scene after shots had been fired, Nash ran past her and hollered “I gotcha man.” This evidence, without going into further details, was sufficient. See Long v. State, 240 Ark. 687, 401 S. W. 2d 578; Rand v. State, 232 Ark. 909, 341 S. W. 2d 9.

The judgment is affirmed.

      For example, the witness said: that Sergeant Bettis explained “which impulses the test reacted on;” that the officer’s reading of the printed part of that statement with reference to his rights "was the same thing in essence” as the otal explanation; that he had his gun “in the console of the car.”