text:
    ALL CITY GLASS AND MIRROR, INC. v. McGRAW HILL INFORMATION SYSTEMS COMPANY, A Division of McGraw Hill, Inc.
    88-103
    750 S.W.2d 395
    Supreme Court of Arkansas
    Opinion delivered May 23, 1988

      The Cortinez Law Firm, by: Robert R. Cortinez, for appellant.
    No brief filed.
   Darrell Hickman, Justice.

The trial court ruled that the appellant corporation had to be represented by an attorney and would not allow the corporation’s president, a non-lawyer, to appear on behalf of the corporation. We find no error in the court’s decision and affirm the judgment.

The appellee sued the appellant on the balance of an account, asking for $597.50. Jimmy Overton, the corporation’s president, filed an answer on behalf of the corporation and appeared at a hearing before the court. The trial judge struck the answer and would not allow Overton to act as counsel; the judge ruled that Ark. Stat. Ann. § 25-205 (Repl. 1962), now codified at Ark. Code Ann. § 16-22-211(a) (1987), requires that a corporation be represented by an attorney. When the trial judge struck the answer, he offered the appellant a continuance to obtain an attorney. The appellant rejected the offer and the judge proceeded to hear the merits of the case and finally entered judgment for the appellee.

The appellant makes several arguments on appeal. However, it is only necessary to address the first argument. Appellant argues it was not practicing law to sign and file the pleading. The trial judge reached the right result but for the wrong reason. Dale v. Sutton, 273 Ark. 396, 620 S.W.2d 293 (1981). Ark. Code Ann. § 16-22-211(a) is not controlling in this case.

It is illegal to practice law in Arkansas without a license. See Ark. Code Ann. § 16-22-206 (1987). Although we allow individuals to represent themselves, we have held that corporations must be represented by licensed attorneys. See Ark. Bar Assn. v. Union Nat’l Bank, 224 Ark. 48, 273 S.W.2d 408 (1954), where we said:

A corporation may also represent itself in connection with its own business or affairs in the courts of this state provided it does so through a licensed attorney.

We also said in Union Nat’l Bank that filing an answer is practicing law. We held:

[W]hen one appears before a court of record for the purpose of transacting business with the court in connection with any pending litigation or when any person seeks to invoke the processes of the court in any matter pending before it, that person is engaging in the practice of law.

The judge was within his power in striking the answer of the president of the corporation who was not authorized to practice law.

In McKenzie v. Burris, 255 Ark. 330, 500 S.W.2d 357 (1973), we said:

It is widely held in other jurisdictions that proceedings in a suit instituted or conducted by one not entitled to practice are a nullity, and if appropriate steps are timely taken the suit may be dismissed, a judgment in the cause reversed, or the steps of the unauthorized practitioner disregarded.

See also 7 C.J.S. Attorney & Client § 31 (1980).

Other arguments were raised, but the errors were not preserved for appeal.

Affirmed.


source: Caselaw Access Project

author: John I. Purtle, Justice. Tom Glaze, Justice, Steele Hays, Justice,

license: Public Domain

text:
    Larry D. CENTER, and Barbara Center, Husband and Wife v. Neil JOHNSON
    87-366
    750 S.W.2d 396
    Supreme Court of Arkansas
    Opinion delivered May 23, 1988
    [Rehearing denied June 20, 1988.]

      Williams & Brinton, by: Charles N. Williams, for appellants.

      Mashburn & Taylor, by: W.H. Taylor and Jennijfer Morris Horan, for appellee.
   John I. Purtle, Justice.

This appeal presents the question whether a trial court may inquire into and modify a jury verdict after the jury has been discharged. We hold that the trial court did not have authority to change the verdict by allowing the ninth juror to sign the verdict eleven (11) days after the jury had been discharged.

The appellants sued the appellee for breach of express and implied warranties in constructing a house for the appellants. The case was tried to a jury and a verdict was returned by the jury in open court on May 22, 1987. At that time the court announced that the verdict was for the defendant and had been signed by nine (9) of the jurors. Upon inquiry by the trial court, the foreman of the jury confirmed that the verdict had been signed by nine jurors. The trial judge then inquired of counsel whether the jury should be polled. Neither lawyer requested the jury be polled. The verdict was accepted by the court and the jury was discharged.

Several days later it was discovered that only eight (8) jurors had signed the verdict. The trial court then inquired of the foreman of the jury concerning the jury’s decision. In this ex parte communication, the foreman informed the judge that in fact he had thought nine (9) jurors had signed the verdict because nine (9) had agreed with it.

On June 2, 1987, eleven (11) days after the jury had been discharged, the court convened a hearing to inquire into the irregularity in the verdict. At the beginning of the hearing the court announced to the parties present that he had spoken to the foreman of the jury and had learned that nine of the jurors had indeed intended to sign the verdict for the defendant. The foreman then testified at this hearing as follows:

We returned a verdict for the defendant, and as I recall, nine jurors voted for that verdict. I think I can explain what happened. I believe the problem arose because certain of the people who needed to sign the interrogatory did not vote, or were not supposed to sign the verdict. We were all in a hurry, it was getting late. It was my recollection that Mr. Faddis was the one who didn’t sign.

During this hearing it was determined that it was Mr. Faddis who had intended to sign the verdict but did not do so because they were “in a hurry to get out.” The trial judge then allowed Mr. Faddis to add his signature to the verdict form at the conclusion of the hearing.

The Constitution of the State of Arkansas, Article 2, Section 7, provides that “in all jury trials in civil cases, where as many as nine of the jurors agree upon a verdict, the verdict so agreed upon shall be returned as the verdict of such jury, provided, however, that where a verdict is returned by less than twelve jurors all the jurors consenting to such verdict shall sign the same.” Also pertinent to this appeal is Arkansas Rules of Evidence, Rule 606(b), which provides:

Upon an inquiry into the validity of a verdict or indictment, a juror may not testify as to any matter or statement occurring during the course of the jury’s deliberations or to the effect of anything upon his or any other juror’s mind or emotions as influencing him to asset [assent] to or dissent from the verdict or indictment or concerning his mental processes in connection therewith, nor may his affidavit or evidence of any statement by him concerning a matter about which he would be precluded from testifying be received, but a juror may testify on the questions whether extraneous prejudicial information was improperly brought to the jury’s attention or whether any outside influence was improperly brought to bear upon any juror.

The Constitution requires that at least nine (9) jurors sign a verdict, if it is less than unanimous. If it is unanimous, only the foreman must sign. Only eight (8) signed the verdict here in question.

The issue presented in this case is whether the appellant waived the irregularity when the verdict was announced in open court. An early case concerning waiver of irregularities in the verdict is Hodges v. Bayley, 102 Ark. 200, 143 S.W. 92 (1912). This court affirmed the trial court in entering a verdict for the plaintiff. The Hodges opinion relied upon the case of Northern Pacific Railroad Company v. Urlin, 158 U.S. 271 (1895). In Urlin the jury had returned a verdict which was not signed by the foreman as was required by Montana law. When the verdict was rendered the defendant requested that the jury be polled. Each juror responded that the verdict as read was theirs. After the jury was polled and all confirmed that the verdict returned was that intended, the judgment was entered of record. No further objection was made. We agree with both the Urlin and Hodges decisions. However, neither control the present case.

A jury verdict should in all cases reflect the actual final conclusion of the jury on the matter being tried before them. However, if before the jury is discharged it is made known to the court that the jury misunderstood the instructions, it is not error for the court to permit the jury to further consider their verdict, after the instructions are again read to them. Clift v. Jordan, Administrator, 207 Ark. 66, 178 S.W.2d 1009 (1944). The time to correct or clarify a verdict is before the jury is discharged. Barham v. Rupert Crafton Commission Company, 290 Ark. 211, 718 S.W.2d 432 (1986).

In Williams v. State, 264 Ark. 77, 568 S.W.2d 30 (1978), the trial court convened a hearing after the jury had been discharged, for the purpose of inquiring into their deliberations. In reversing we stated:

[W]e have disregarded the testimony of the individual jurors, as to their deliberations, statements made during the deliberation, matters considered, the votes taken, the votes of the individual jurors and other such matters admitted into evidence over the strenuous and repeated objection of the prosecuting attorney. . . . [T]his testimony was inadmissible ....

We have found it to be improper for plaintiffs attorney to question members of the jury after the verdict has been read and the jury dismissed. Stull v. Ragsdale, 273 Ark. 277, 620 S.W.2d 264 (1981). We likewise have refused to allow questioning of jurors concerning unsubstantiated allegations of “extra-judicial communications” during the trial. Pride v. State, 285 Ark. 89, 694 S.W.2d 819 (1985). Even an affidavit of a juror describing the discussions during deliberations has been held inadmissible as evidence of juror misconduct. Waterfield v. Quimby, 277 Ark. 472, 644 S.W.2d 241 (1982). We recently discussed A.R.E. 606(b) and noted that the only issues which may be inquired into concerning the jury’s deliberations are extraneous prejudicial information or improper outside influence. Watkins v. Taylor Seed Farms, Inc., 295 Ark. 291, 748 S.W.2d 143 (1988).

In the very recent case of Coran v. Keller, 295 Ark. 308, 748 S.W.2d 349 (1988), we considered the question whether it was proper for a trial judge to engage in an ex parte conversation with a juror concerning the deliberations and the meaning of the verdict. The verdict was announced in open court and neither party requested that the jury be polled or otherwise questioned the verdict. In Coran we stated: “Similarly, a trial judge, before ruling on a motion to modify the verdict, should not have an ex parte conversation with some of the jurors about anything which caused them to assent to the verdict. To do so is error.”

The cases allowing incomplete verdicts to stand are based upon waiver or failure to object at the time the verdict is presented in open court. We recognize the general rule that failure to object to an irregularity in a verdict prior to discharge of the jury constitutes a waiver of the irregularity. Coran v. Keller, supra. However, in the present case the trial judge and the foreman both announced in open court that the verdict has been signed by nine (9) jurors. Under these circumstances the attorneys had no reason to object to the irregularity because they did not know about it until after the jury had been discharged. Therefore, the irregularity was not waived.

Appellants also submit it was error for the trial court to refuse to give their instruction No. 1, clarifying the definition of ordinary care by a building contractor. Appellants contend the instruction is based on Dixon v. Ledbetter, 262 Ark. 758, 561 S.W.2d 294 (1978), and reads: “That a contractor uses customary methods is a matter to be considered, but that standard does not necessarily meet the test of ordinary care.”

The trial court was right. It refused the instruction tendered by the appellants because the Arkansas Model Jury Instructions — Civil contains an instruction (AMI 1204) dealing with ordinary care by a contractor, and the jury was instructed accordingly. Appellants argue that the trial court gave “a modified version of AMI 1204.” But the instruction appearing on page fourteen of the record conforms exactly to AMI, Civil 2d, 1204. The AMI instruction covered the issue of the degree of care required of a contractor and it was not error for the court to refuse to instruct differently. Instructions which doTiot conform to AMI should be given only when the trial judge finds the AMI instruction does not accurately state the law or the AMI does not contain a necessary instruction on the issue. Henderson v. State, 284 Ark. 493, 684 S.W.2d 231 (1985); Beaumont v. Robinson, 282 Ark. 181, 668 S.W.2d 514 (1984); Blaney v. State, 280 Ark. 253, 657 S.W.2d 531 (1983).

The irregularity in the verdict in this case was sufficient to render the verdict void because it did not conform to the constitutional requirement that at least nine (9) jurors sign the verdict in civil cases. The defect was not waived because the announcement in open court that the verdict had been signed by nine (9) jurors relieved counsel of responsibility to inquire. Therefore, the constitutional deficiency of the jury verdict requires that the decision be reversed and remanded.

Reversed and remanded.

Holt, C.J., and Hickman and Hays, JJ., dissent.

Glaze, J., concurs.

Tom Glaze, Justice,

concurring. I concur. As pointed out in the majority opinion, amendment 16 to article 2, § 7 of the Arkansas Constitution provides that in civil cases a verdict may be returned where as many as nine jurors agree. However, amendment 16 continues as follows:

[Pjrovided, however, that where a verdict is returned by less than twelve jurors all the jurors consenting to such verdict shall sign the same. (Emphasis added.)

The dissenters rely on Ark. Code Ann. § 16-64-119 (1987) [formerly Ark. Stat. Ann. §§ 27-1737 — 1738 (Repl. 1979)] which was enacted prior to amendment 16 and was operative when all twelve jurors were required to agree when returning a verdict; even if one juror, when polled, disagreed with the verdict, § 16-64-119 required the jury to be sent out again. It is fundamental law that an existing statute is superseded by a subsequent constitutional amendment only when there is an irreconcilable conflict or the statute is necessarily repugnant to the new constitutional provision. See, e.g., McKenzie v. Burris, 255 Ark. 330, 500 S.W.2d 357 (1973). Obviously, the statutory provisions of § 16-64-119 are necessarily repugnant to the provisions of amendment 16, since the amendment allows nine, rather than all twelve jurors, to return a final verdict.

The narrowed question then becomes whether the remains of § 16-64-119 (i.e., the parts not in direct conflict with amendment 16) are sufficient to support the dissenters’ reliance on the statute and the case they cite in construing it.

While there may be some merit to the argument that a party should raise his or her objection to the verdict at the time it is rendered, the threshold issue is: whose burden is it to question the verdict? If a verdict fails to reflect at least nine signatures, a mistrial results. In my view, unless a party, before the jury is discharged, can establish that the verdict was actually properly returned with sufficient signatures so as to support a judgment, that party waives any right to raise the issue later. Amendment 16 requires this conclusion by mandating that, when a verdict is less than unanimous, all jurors consenting to the verdict shall sign it. Thus, without nine-juror signatures, the verdict fails to support a final judgment. In fact, this court has stated that a verdict signed by only eight jurors would render the verdict and consequent judgment of no effect. See Cartwright v. Barnett, 192 Ark. 206, 90 S.W.2d 485 (1936) (wherein this court found that the lower court’s verdict was valid because it reflected nine, not eight, jurors signed).

No ambiguity exists in the use of the constitutional terms found in amendment 16, and their clear meaning should be followed.

I agree with the majority that a trial court may not conduct a later hearing — as was done here — to correct a verdict that fails to meet the dictates of amendment 16. Jury deliberations should remain secret, unless it becomes clear that the jury’s verdict was tainted by a showing of extraneous prejudicial information or some improper outside influence. Watkins v. Taylor Seed Farms, Inc., 295 Ark. 291, 748 S.W.2d 143 (1988); see also, A.R.E. Rule 606(b).

The present case did not pose a situation that justified the calling of a juror to testify about the jury’s verdict or to relate his best recollections of how the jury reached its vote. If the jurors were to be polled regarding their votes, it should have been done at trial before the jury was discharged. Because the jury’s verdict at trial reflected a mistrial, I believe the burden was the appellee’s to raise the issue since he was, and is now, the one who claims the verdict and judgment were properly rendered.

For the foregoing reasons, I concur.

Steele Hays, Justice,

dissenting. Following a two day trial this case was submitted to the jury upon an interrogatory and two verdict forms, one finding for the defendant, the other finding for the plaintiffs. The jury deliberated and nine jurors voted to find for the defendant, with one undecided and two voting for the plaintiffs. Nine jurors signed the interrogatory for the defendant, but through oversight only eight signed the verdict form.

The majority opinion states that because the trial judge and jury foreman both announced in open court that the verdict had been signed by nine jurors, appellants’ counsel had no reason to poll the jury. But that is not what the record tells us. When the jury announced that it had reached a verdict the following occurred:

THE COURT: If you would, please pass the Verdict and Interrogatory to the bailiff, please.
(The Verdict form and Interrogatory is handed to the bailiff, who in turn hands it to Judge Smith.)
THE COURT: First, the Interrogatory. “Do you find that the defendant, Neil Johnson, insisted or promised that the house or footing could be repaired and that the defendant, Neil Johnson, continued to attempt to repair the house or footing after substantial completion of the house on April 5th, 1979?” That is checked “Yes”, and signed by eleven (11) of the twelve (12) jurors?
MR. HOLLADAY: It’s supposed to be nine (9). Some of us printed. There should be nine (9) signatures.
THE COURT: I’m sorry. I can’t count the lines. It’s signed by nine (9) of the jurors; is that correct, Mr. Foreman?
MR. HOLLADAY: Yes, Your Honor.
THE COURT: The Verdict, “We, the jury, find for the defendant, Neil Johnson”; signed by nine (9) of the jurors?
MR. HOLLADAY: That is correct.
THE COURT: Does either side wish the jury polled?
MR. TAYLOR: No, Your Honor.
MR. WILLIAMS: No, Your Honor.
THE COURT: Ladies and gentlemen, we appreciate your time. Everyone please remain in the courtroom and let the jury have an opportunity to leave. Court will be adjourned.

Thus it is clear the trial judge never announced that nine jurors had signed the verdict, rather, he asked if nine had signed the interrogatory and the verdict. The foreman’s response, after indicating that there “should be nine signatures,” was “That is correct.”

Determining the number of signatures on a verdict form should not present a difficulty. It was complicated in this instance by the fact that the jurors had both printed and signed, resulting in this array of names:

When a precedent for judgment was presented several days later for the signature of the trial judge, it was discovered that only eight jurors had actually signed the verdict form. Evidently the trial judge asked the jury foreman if the verdict had been agreed to by nine jurors and when told that it had, he notified counsel and a hearing was conducted. The foreman and a juror, Lonnie Faddis, testified that nine jurors voted to render a verdict for the defendant, that the interrogatory was signed by all nine jurors, including Mr. Faddis, but in the confusion Mr. Faddis neglected to sign the verdict form. Mr. Faddis testified his failure to sign was merely an oversight, that he had voted for a verdict for the defendant and that was still his verdict. The trial court asked Mr. Faddis to sign and date the original verdict and the judgment for the defendant was entered.

It is undisputed that the verdict represented the vote of nine jurors and was, in fact, signed by them before the judgment was formally entered. The fact that all nine had not signed the verdict when it was returned could have been detected simply by examining the verdict. That, I believe, was the duty of the party against whom the verdict was rendered, in order to preserve the right to complain. Appellants could have polled the jury when the verdict was announced and they declined that opportunity. Having failed to do so, they should not be permitted to obtain a new trial because of an inadvertent omission that was readily discoverable. Ark. Code Ann. § 16-64-119 (1987) [Ark. Stat. Ann. §§ 27-1737 and -1738 (Repl. 1979)] deals with verdicts:

(a) When the jury has agreed upon its verdict, they must be conducted into court, their names called by the clerk and the verdict rendered by their foreman.
(b) When the verdict is announced either party may require the jury to be polled, which is done by the clerk or court asking each juror if it is his verdict. If any one answers in the negative, the jury must again be sent out for further deliberation.
(c) The verdict shall be written, signed by the foreman, and read by the court or clerk to the jury, and the inquiry made whether it is their verdict.
(d) (1) If any juror disagrees, the jury must be sent out again.
(2) If no disagreement is expressed, and neither party requires the jury to be polled, the verdict is complete and the jury discharged from the case. [My emphasis].

When the verdict was accepted in open court without objection and the jury was not polled, the omission was waived, as I see it. In Hodges v. Bayley, 102 Ark. 200, 143 S.W. 92 (1912), a jury trial ended in a plaintiffs verdict. Neither party asked that the jury be polled. On appeal the defendant argued that the verdict was not signed by the foreman, as required by subsection (c), quoted above. In Hodges, the court held the requirement that the verdict be in writing and signed by the foreman is waived when rendered in open court “and duly received without objection by either party.” Hodges v. Bayley was decided before Amendment 16 was adopted, but the reasoning remains sound. By not objecting to the verdict as rendered, nor requesting that the jury be polled, the appellants waived the irregularity of the verdict.

The majority relies in part on A.R.E. Rule 606(b), which protects the confidentiality of the jury’s deliberations. But nothing in that rule prevents a juror being asked whether he or she agreed with the verdict as rendered. Under the circumstances of this case it was entirely proper for the trial court to conduct a hearing to inquire into the discrepancy in the number of signatures.

This case is now being tried a second time at the expense of the court, the parties, and. the system itself, not because of some material error in the proceedings, but because of a simple oversight which could have and should have been corrected at the time of occurrence. The failure ought to rest with the party against whom the verdict was rendered. I respectfully disagree with the majority and dissent to the reversal of the trial court.

Holt, C.J., and Hickman, J., join this dissent.


author: John I. Purtle, Justice. Tom Glaze, Justice,

text:
    Vernon DAMRON and Betty Damron v. UNIVERSITY ESTATES, PHASE II, INC.
    88-43
    750 S.W.2d 402
    Supreme Court of Arkansas
    Opinion delivered May 23, 1988
    [Rehearing denied June 20, 1988.]

      Bullock & McCormick, by: David H. McCormick, for appellant.

      Sanford, Pate & Gunn, by: Jon R. Sanford, for appellee.

       Glaze, J., would grant rehearing.

   John I. Purtle, Justice.

The chancellor awarded appellee a judgment on its complaint to collect charges from the appellant for services rendered in maintaining the common areas on property within a horizontal property regime. Additionally, the chancellor ordered appellant to pay attorney’s fees. This appeal is from that part of the decree only. We hold that the chancellor was correct in awarding attorney’s fees.

The appellee, University Estates, Phase II, Inc., is an Arkansas non-profit corporation with the purpose of, among other things, maintaining common areas in a horizontal property regime. The appellee collects from the individual property owners an amount sufficient to pay the costs of care and maintenance for the common areas in the regime.

The appellants own a residence within University Estates, and were assessed the sum of $526.50 for their share of the cost of maintaining the common areas. They denied owing said sum. The appellee brought suit to collect this sum, plus interest at the rate of 10%, and for costs and attorney’s fees. The complaint also sought to have the judgment declared a lien upon the property owned by the appellants and for foreclosure if said judgment was not timely satisfied.

On the 10th day of February, 1987, a decree was entered awarding the appellee judgment against the appellants for their pro rata charges for maintenance of the common areas. The court also entered judgment for costs and attorney’s fees in the amount of $919.87. The total judgment was decreed a lien against appellants’ property. The court declared the judgment prior to all liens except the first mortgage.

The appellants had purchased property within a horizontal property regime already in existence. The regime had filed a “Declaration of Covenants, Conditions and Restrictions” in the Office of the Circuit Clerk of Pope County, Arkansas, the county where the property is situated. This document contained a provision which stated:

The annual and special assessments, together with interest, costs and reasonable attorney’s fees shall be a continuing lien upon property against which each such assessment is made. Each such assessment, together with reasonable attorney’s fees, shall also be the personal obligation of the person who was the owner of such property at the time assessment fell due.

The Horizontal Property Act is codified at Ark. Code Ann. § 18-13-101 et seq. (1987), and provides for mandatory pro rata contributions from property owners within a horizontal property regime for “the expenses of administration and of maintenance and repair of the general common elements . . . .” (§ 18-13-116). The act also provides that the administration of every building constituted into horizontal property shall be governed by the bylaws which shall be recorded with the master deed at the county courthouse. (§ 18-13-108(a)). Arkansas Code Ann. § 18-13-108(b) sets out the minimum provisions of the bylaws, and subsection (b)(4) specifically requires the bylaws to provide for the manner of collecting from the “co-owners” for the costs of the common expenses. The act further provides that the “co-owners” of the apartments are bound to contribute “toward any other expense lawfully agreed upon.” (§ 18-13-116).

The only question to be answered by this opinion is whether the chancellor erred in awarding attorney’s fees to the appellee for the attorney’s services in collecting the charges from the appellants for maintenance of the common areas in the regime.

Our general rule relating to attorney’s fees is well established and is that attorney’s fees are not allowed except when expressly provided for by statute. Harper v. Wheatley Implement Co., 278 Ark. 27, 643 S.W.2d 537 (1982). Harper cited with approval our holding to the same effect in Brady v. Aiken, Inc., 273 Ark. 147, 617 S.W.2d 358 (1981). This line of cases was followed by the Arkansas Court of Appeals in White v. Associates Commercial Corp., 20 Ark. App. 140, 725 S.W.2d 7 (1987), in which the court stated: “Notwithstanding that the parties have contracted for recovery of attorney’s fees, the Arkansas Supreme Court has consistently held that a party cannot recover attorney’s fees unless such fees are expressly provided for by statute.” See also Millsap v. Lane, 288 Ark. 439, 706 S.W.2d 378 (1986), where we discussed the American rule concerning attorney’s fees and the “common fund” exception.

Arkansas Code Ann. § 4-56-101 (1987) provides that “a provision in a promissory note for the payment of reasonable attorney’s fees... is enforceable as a contract of indemnity.” In Geyer v. First Arkansas Development Finance Corp., 245 Ark. 694, 434 S.W.2d 301 (1968), we held that attorney’s fees were expressly provided for by this statute, where the promissory note incorporated by reference the mortgage, which provided for the payment of reasonable attorney’s fees. See also In Re Morris, 602 F.2d 826 (8th Cir. 1979), applying Arkansas law. Arkansas Code Ann. § 4-9-504(1)(a) (1987) (a provision of the Uniform Commercial Code), which concerns the disposition of collateral involving secured transactions for the sale of goods, authorizes an award of attorney’s fees “to the extent provided for in the agreement and not prohibited by law.” A very recent statute, Ark. Code Ann. § 16-22-308 (Supp. 1987) (effective April 6, 1987), which will no doubt have a considerable impact on this area of the law provides:

In any civil action to recover on an open account, statement of account, account stated, promissory note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, or for labor or services, unless otherwise provided by law or the contract which is the subject matter of the action, the prevailing party may be allowed a reasonable attorney fee to be assessed by the court and collected as costs.

Our decisions concerning attorney’s fees under the UCC appear somewhat conflicting. See Svestka v. First National Bank in Stuttgart, 269 Ark. 237, 602 S.W.2d 604 (1980); and Harper v. Wheatley, supra. These two opinions seem to take opposite positions on the question whether a secured creditor is entitled to recover reasonable attorney’s fees for services rendered in obtaining possession of collateral after default and in disposing of the collateral.

This court has recognized the right of parties under certain circumstances to contract for the collection of attorney’s fees. In Abrego v. United Peoples Federal Savings and Loan, 281 Ark. 308, 664 S. W.2d 858 (1984), we held that indemnity agreements, which included a promise to indemnify for reasonable attorney’s fees, were enforceable. In Abrego I, we remanded the case to the trial court with instructions to award attorney’s fees and other costs “which were reasonable, proper, necessary, and incurred in good faith and with due diligence.” The same case was again before us in Warner Holdings, Ltd. v. Mary Ann Abrego, et al., 285 Ark. 434, 688 S.W.2d 724 (1985). In Abrego II we stated that Arkansas still follows the general rule that when a party agrees to indemnify another against losses, attorney’s fees incurred in the enforcement of the indemnity agreement are not recoverable. We noted, however, that the rule developed in cases in which the indemnity agreement contained no specific promise to pay attorney’s fees. The agreement between the parties in that case contained a specific promise to pay attorney’s fees which might be incurred in enforcing the indemnity agreement. The Abrego II opinion concluded:

We cannot end this opinion without noting we have not been asked ,to address instances in which attorney’s fees may be allowed as a general proposition. The appellant has not argued that attorney’s fees may not be awarded unless specifically authorized by statute, or that an agreement permitting recovery of such fees constitutes an unlawful penalty. [Citation omitted.] We recognized that our decisions in this area are not clear, and, when presented with a case raising the issue properly, we will address squarely the question whether a clause permitting recovery of reasonable attorney’s fees incurred in enforcement of the agreement containing the clause is enforceable.

Although that precise question is not before us, we must answer the question whether attorney’s fees, although not specifically authorized by statute, are nevertheless recoverable under the circumstances of this case. The Horizontal Property Act does not specifically mention attorney’s fees. However, it does clearly authorize the collection of common expenses and any other expense lawfully agreed upon.” (Emphasis added.) The act further requires that the bylaws, which are binding upon the purchasers of property within the regime, be filed of record. The “Declaration of Covenants, Conditions and Restrictions” was recorded on the property records of Pope County at the time the appellants purchased property in the regime. These bylaws provide for the collection of reasonable attorney’s fees. By the act of purchasing property in the regime, the appellants agreed to abide by the terms of these bylaws. This agreement was clearly authorized by the legislature in the Horizontal Property Act.

Contrary to the assertion of the dissent, we do not categorize the attorney’s fees authorized by the statute as “expenses” or “costs” as those terms are generally recognized in the context of the expenses of litigation. Rather, under the circumstances of this case, we think the appellants clearly agreed to be obligated to pay reasonable attorney’s fees incurred in collecting the common expenses of the regime. Although not. doing so expressly, the legislature authorized horizontal property regimes to collect attorney’s fees under the circumstances by authorizing the collection of “any other expense lawfully agreed upon.” Certainly the recovery of attorney’s fees in this case was an “expense lawfully agreed upon.” Therefore we hold that the chancellor was correct in entering judgment for the attorney’s fees.

Affirmed.

Dudley and Glaze, JJ., dissent.

Tom Glaze, Justice,

dissenting. The majority opinion contradicts this court’s long-settled rule that attorneys’ fees are not charged as costs in litigation unless specifically permitted by statute. See Millsap v. Lane, 288 Ark. 439, 706 S.W.2d 378 (1986). Here, the majority uses “bootstrap logic” in holding that Arkansas’s Horizontal Property Act authorizes attorneys’ fees. In its opinion, the majority says that, although the Act does not mention attorneys’ fees, the Act does authorize the collection of “the expenses of administration and of maintenance and repair of the common elements,” and further binds co-owners to contribute toward “any other expense lawfully agreed upon.” The majority surmises from this language in the Act that since the parties, in their bylaws, agreed that the association’s annual and special assessments should include attorneys’ fees, the trial court was authorized by law to award appellee such fees in this litigation wherein it sued appellants for their share of common-area expenses.

Clearly, the Act makes no mention whatsoever of attorneys’ fees, and for that reason alone, the majority should have ended its inquiry and held the trial court was wrong in awarding fees to the appellee. Instead, the majority took the private bylaws that controlled the parties’ horizontal property regime, and construed those bylaws as being part of the Act. In doing so, the majority concludes that attorneys’ fees are “other expense(s) lawfully agreed upon.” By this engrafting process, the majority claims the language of the Act “expressly” authorizes the award of attorneys’ fees. If this logic controls, I see nothing to prevent parties from entering private agreements under which they agree attorneys’ fees are “costs” or “expenses” and awardable as such. However, such a practice would appear contrary to the rule that the term “costs” or “expenses” as used in a statute is not understood ordinarily to include attorneys’ fees. See 20 Am. Jur. 2d Costs § 72 (1965). In view of the position now taken by the majority, I would expect written contracts, leases and similar documents to provide that attorneys’ fees be allowable as costs or expenses even though no statute specifically mentions attorneys’ fees, but does contain language that costs (or expenses) are recoverable.

Another reason I part with the majority’s logic is that the terminology “other expense,” as employed in the Act, in no way indicates the General Assembly intended that term to include attorneys’ fees. As pointed out in the majority opinion, Ark. Code Ann. § 18-13-116(a) (1987) — where the “other expense” language appears — concerns itself with an owner’s obligation to share in the expenses of the administration, maintenance and repair of the general common elements. That provision makes no reference as to costs or expenses incurred in collecting such common-area expenses.

The appellee, in the present case, brought suit against the appellants for their pro-rata unpaid share of expenses actually incurred in maintaining the common areas. The statutory language in issue here offers no suggestion that it was intended to include attorneys’ fees incurred in the event action is required to collect common-area expenses from a horizontal-property owner.

If this court now adheres to the rule that parties, by agreement or bylaws, may authorize attorneys’ fees as costs or expenses, we should plainly adopt that view. If not, the court should continue to deny attorneys’ fees as costs or expenses unless a statute exists that expressly or specifically provides such fees are recoverable.


author: John I. Purtle, Justice. Steele Hays, Justice,

text:
    Donna STEPHENS v. STATE of Arkansas
    CR 87-208
    750 S.W.2d 52
    Supreme Court of Arkansas
    Opinion delivered May 23, 1988
    [Rehearing denied June 27, 1988.]

      Guy Jones, Jr., P.A., for appellant.

      Steve Clark, Att’y Gen., by: J. Brent Standridge, Asst. Att’y Gen., for appellee.

       Hickman, Hays, and Glaze, JJ., would grant rehearing.

   John I. Purtle, Justice.

This is an appeal from a Faulkner County Circuit Court jury verdict wherein the appellant was found guilty of driving under the influence of intoxicants in violation of Ark. Stat. Ann. § 75-2503 (Ark. Code Ann. § 5-65-103 (1987)). She was sentenced to thirty (30) days in jail and fined $750.00. The appellant argues that she was denied her right to a speedy trial. We agree that the appellant was denied her Sixth Amendment right to a speedy trial and reverse and dismiss.

On June 28, 1984, the appellant was arrested and charged with driving under the influence of intoxicants. She was tried and convicted in municipal court on January 23, 1986. She immediately appealed to the circuit court and a trial was held on June 22, 1987.

On June 19, 1987, the appellant filed a motion to dismiss in the circuit court. Several grounds for dismissal were alleged. The third paragraph of the motion reads as follows:

Defendant motioned and requested trial court [municipal court] to dismiss for failure to prosecute which is jurisdictional and should have been granted as defendant was charged on June 28,1984 with the offense of DWI and was not tried until January 23, 1986.

No verbatim record of the trial in the municipal court was made. However, the motion to dismiss filed in the circuit court specifically alleges assertion of her speedy trial rights in the municipal court. In the absence of a stenographic report of the proceedings in the municipal court, we are unable to determine whether the appellant asserted her right to a speedy trial. However, her case was tried de novo in the circuit court on the exact same charge. Therefore, she was free to utilize the same defense in the circuit court.

Appeals from the municipal courts to the circuit courts are tried de novo. Appeals to circuit courts are controlled by Ark. Code Ann. § 16-96-507 (1987) which reads as follows:

Upon the appeal, the case shall be tried anew as if no judgment had been rendered, and the judgment shall be considered as affirmed if a judgment ... is rendered against the defendant, and thereupon he shall be adjudged to pay costs of the appeal.

We have restated this principle many times. In Killion v. City of Waldron, 260 Ark. 560, 542 S.W.2d 744 (1976), this court decided a case dealing with an erroneous ruling by a municipal court relating to a violation of a traffic law. The case was appealed to the circuit court where it was tried de novo to a jury. On appeal Killion argued the erroneous ruling of the municipal court. We held that even though the municipal court erred, the accused was not entitled to rely upon such error because he had the right to appeal to the circuit court where he was entitled to a new trial “as if no judgment had been rendered in the municipal court.” We affirmed the action by the circuit court because the appellant received a fair trial, i.e., the trial in the circuit court had not been influenced or affected by what had taken place in the municipal court.

Again we held, in Hogan v. State, 289 Ark. 402, 712 S. W.2d 295 (1986), that “appellant cannot rely on an error in the municipal court after he has received an entirely new trial in the circuit court, ‘as if no judgment had been rendered’ in the municipal court.” Even if the municipal court lacks jurisdiction to proceed with an information, this defect is cured on appeal to the circuit court because the trial in the circuit court is de novo. Hill v. State, 174 Ark. 886, 298 S.W. 321 (1927).

Counsel for appellant filed a motion to dismiss for lack of a speedy trial before the appellant was tried in the circuit court. By the time the motion was made it had been almost three years since the appellant’s arrest. More that nineteen months elapsed before her trial in the municipal court. The trial in circuit court is tried as though there had been no trial in municipal court. Therefore the speedy trial issue was timely raised.

The leading case of Barker v. Wingo, 407 U.S. 514 (1972), resolves most of the issues raised in this case. In addressing the remedy for the denial of a defendant’s constitutional right to a speedy trial, the Barker opinion stated:

This is indeed a serious consequence because it means that a defendant who may be guilty of a serious crime will go free, without having been tried. Such a remedy is more serious than an exclusionary rule or a reversal for a new trial, but it is the only possible remedy. [Emphasis added.]

The holding of the Barker opinion prescribes the balancing tests which are necessarily involved in the speedy trial issue. The Court held that there are four basic factors to be considered in determining whether a defendant’s right to a speedy trial has been violated. These are: (1) the length of the delay; (2) the reason for the delay; (3) the defendant’s assertion of his rights; and (4) the prejudice to the defendant.

The length of the delay is usually the triggering mechanism; otherwise, the matter would probably go unnoticed. An inquiry into such a delay necessarily involves the circumstances of each case and is therefore applied on an ad hoc basis. In the present case a nineteen month delay, in a trial for driving under the influence, most certainly triggers the speedy trial issue. There is nothing in the record concerning this delay other than the previously mentioned motion to dismiss filed by the appellant’s attorney prior to commencement of the circuit court trial.

After the speedy trial issue is raised it becomes necessary to determine the reasons the state assigns to justify the delay. The first issues to be considered, if the accused is denied a speedy trial, are the sanctions imposed upon the state and whether the appellant waived the right to a speedy trial. Certainly it is prejudicial for the state to deliberately delay the trial in order to gain an advantage for the state or hinder the defenses of the accused. United States v. Marion, 404 U.S. 307 (1971). The Barker opinion stated: “A more neutral reason such as negligence or overcrowded courts should be weighed less heavily but nevertheless should be considered since the ultimate responsibility for such circumstances must rest with the government rather than with the defendant.”

Whether a defendant has asserted his right to a speedy trial must be carefully examined. We must consider the length of and reason for the delay and the prejudice which may have resulted from such a delay. The defendant’s assertion of such a right in most cases disposes of the question. Shaw v. State, 18 Ark. App. 243, 712 S.W.2d 338 (1986). The accused is entitled to every reasonable presumption against waiver. Aetna Ins. Co. v. Kennedy, 301 U.S. 389 (1937). Courts should not presume acquiescence in the loss of fundamental rights. Ohio Bell Tel. Co. v. Public Utilities Comm’n, 301 U.S. 292 (1937). In Carnley v. Cochran, 369 U.S. 506 (1962), the Supreme Court held:

Presuming waiver from a silent record is impermissible. The record must show, or there must be an allegation and evidence which show, that an accused was offered counsel but intelligently and understandably rejected the offer. Anything less is not a waiver.

The Court has ruled similarly with respect to waiver of other rights designed to protect the accused. See Miranda v. Arizona, 384 U.S. 436 (1966); Boykin v. Alabama, 395 U.S. 238 (1969). This court has also recognized that waiver may not be presumed from a silent record. Lovell v. State, 283 Ark. 425, 678 S.W.2d 318 (1984).

Admittedly it is impossible to define the exact time in every case when the right to a speedy trial must be asserted or waived. However, that does not place the burden of proof upon the defendant. After all, a defendant is under no duty to bring himself to trial. The Supreme Court held in Dickey v. Florida, 398 U.S. 30 (1970), that the right to a prompt inquiry into criminal charges is fundamental and it is the duty of the charging authorities to provide a prompt trial. The right of a speedy trial is so fundamental it is guaranteed by the Constitution and is “not to be honored only for the vigilant and knowledgeable.” Hodges v. United States, 408 F.2d 543 (8th Cir. 1969).

In deciding whether a defendant can waive his right to a speedy trial, the Supreme Court in Barker held:

We reject, therefore, the rule that a defendant who fails to demand a speedy trial forever waives his right. This does not mean, however, that the defendant has no responsibility to assert his right. We think the better rule is that the defendant’s assertion of or failure to assert his right to a speedy trial is one of the factors to be considered in an inquiry into the deprivation of the right.

The appellant contends that she was denied a speedy trial in the municipal court and also that she was denied a speedy trial in the circuit court. Again we find the Barker opinion helpful:

We regard none of the four factors identified above as either a necessary or sufficient condition to the finding of a deprivation of the right of speedy trial. Rather, they are related factors and must be considered together with such other circumstances as may be relevant. In sum, these factors have no talismanic qualities; courts must still engage in a difficult and sensitive balancing process. But, because we are dealing with a fundamental right of the accused, this process must be carried out with full recognition that the accused’s interest in a speedy trial is specifically affirmed in the Constitution.

In Harwood v. Lofton, 288 Ark. 173, 702 S.W.2d 805 (1986), we held that “once the accused has shown that the trial is to be held after the speedy trial period expires the state has the burden of showing the delay was legally justified.” We discussed the speedy trial issue at some length in Novak v. State, 294 Ark. 120, 741 S.W.2d 243 (1987). The Novak opinion clearly placed the burden of showing the necessity of the delay on the state. The Novak opinion, after applying the balancing test established in Barker, “placed the primary burden on the courts and prosecutors to assure that cases are brought to trial.” The opinion further stated: “[A] defendant has no duty to bring himself to trial; rather the state has that duty, as well as the duty of insuring the trial is consistent with due process.” The Novak opinion was decided essentially on the four factors relating to a speedy trial as enumerated in Barker. Arkansas Rules of Criminal Procedure Rule 28 would likewise require a similar result.

The other issues argued by the appellant are rendered moot in view of our ruling that the appellant was denied her right to a speedy trial. After reviewing the circumstances in this case, and applying the balancing process required by Barker, we hold that the appellant’s right to a speedy trial was violated. Although dismissal of the charge is a rather severe remedy it is the only possible one for denial of a speedy trial.

Reversed and dismissed.

Hickman, Hays and Glaze, JJ., dissent.

Steele Hays, Justice,

dissenting. Based on neither rule nor case law, and without notice to the trial bench, the majority holds that if the period between the date of an arrest and the date of trial in municipal court exceeds the time for speedy trial provided by A.R.Cr.P. Rule 28 (now one year in this instance), then the charges must be dismissed. It makes no difference whether the defendant moved to dismiss the charges in municipal court, nor does it matter whether the defendant may have been the cause of the delay, the mere time element, per se, is sufficient. I respectfully disagree and will attempt to demonstrate several reasons why this case should be affirmed.

These are the significant dates:

June 28, 1984 — Appellant arrested for DWI.
January 23, 1986 — Appellant tried in municipal court.
January 23, 1986 — Appeal to circuit court.
April 13, 1986 — Counsel notified of jury trial setting for week of June 16.
June 22, 1987 — Jury trial in circuit court.

At 3:45 on Friday afternoon before the jury trial on Monday, appellant filed a motion to dismiss, which makes no mention of speedy trial. On Monday morning appellant moved for a dismissal on two grounds: 1) the appellant was not tried in municipal court within one year of the date of her arrest and 2) she was not tried in circuit court within one year of her appeal. The second argument has not been pursued on appeal before this court and need not be discussed, except to note that appellant was tried in circuit court within the applicable time as then prescribed by A.R.Cr.P. Rule 28, that is, eighteen months.

First, neither motion was timely. As the state pointed out to the circuit judge, it had no notice that speedy trial was to be asserted by the appellant and, hence, the state had no opportunity to determine and prove whether there were excludable periods under A.R.Cr.P. Rule 28.3. In exactly the same circumstance, in Summers v. State, 292 Ark. 237, 729 S.W.2d 147 (1987), we refused to .dismiss a petition to revoke a probation which was not heard within sixty days, as required by Ark. Stat. Ann. § 41-1209(2) (Repl. 1977). Our refusal was based on the failure of the defendant to make a timely objection to the delay, hence the state was not placed on notice before the hearing that such objection would be raised. “The state was prejudiced by this lack of notice because it did not have the opportunity to present any evidence regarding whether there was a delay in returning Summers to Arkansas and whether he was unavailable during that time period.” Id., at 239. The identical situation exists here.

Second, we have no transcript or other evidence of the proceedings in municipal court and therefore it is impossible to determine whether appellant waived the right to a speedy trial by not raising the issue in that court, as required by A.R.Cr.P. Rule 28.1(f); Duncan v. State, 294 Ark. 105, 740 S.W.2d 923 (1987); Richardson v. State, 292 Ark. 140, 728 S.W.2d 189 (1987). Nor can we determine whether there were excludable periods under Rule 28.3 chargeable to the appellant. On this ground alone the case should be affirmed.

The majority accepts without question the assertion of the appellant that the defendant “motioned and requested the trial court to dismiss for failure to prosecute which is jurisdictional,” as evidence that the issue of speedy trial was raised in municipal court. But we are not bound by the mere allegations of a pleading. Munnerlyn v. State, 292 Ark. 467, 730 S.W.2d 895 (1987); Greeny. State, 223 Ark. 761, 270 S.W.2d 895 (1954); Buschow Lumber Co. v. Ellis, 194 Ark. 104, 105 S.W.2d 531 (1937); Booth v. St. Louis Southwestern Ry. Co., 170 Ark. 801, 281 S.W. 8 (1926). It is the appellant’s burden to produce a record that demonstrates error and a proper objection thereto. S.D. Leasing Inc. v. RNF Corp., 278 Ark. 530, 647 S.W.2d 447 (1983). Appellant has provided neither.

Third, A.R.Cr.P. Rule 28, by its own language, applies to charges pending in circuit court and appellant has cited nothing to support the contention that the rule applies to municipal court. If the majority concludes that the rule should be broadened to apply to municipal court trials, it ought, at least, to revise the rule in a manner that adopts appropriate procedures and gives reasonable notice to the bench and bar, as well as to the public.

Fourth, even if Rule 28 were now applicable to municipal courts, the rule does not require a trial within one year, as appellant argued below, except as to charges filed after October 1, 1987. It is undisputed that the charge against appellant was filed no later than June 28, 1984.

The majority cites cases holding that it is the state’s burden to show the speedy trial requirement was not breached by the prosecution. But those cases have no relevance to the facts of this case where the state had no notice prior to the commencement of trial that speedy trial in municipal court was to be an issue on appeal in circuit court.

I submit the judgment of the circuit court should be affirmed.

Hickman, J., and Glaze, J., join this dissent.


author: Robert H. Dudley, Justice.

text:
    ARKANSAS DEPARTMENT OF HUMAN SERVICES v. M.D.M. CORPORATION d/b/a Nursing Home and North Arkansas Life Care Center, Inc.
    87-356
    750 S.W.2d 57
    Supreme Court of Arkansas
    Opinion delivered May 23, 1988

      Breck G. Hopkins, Deputy Gen. Counsel, and Richard B. Dahlgren, Asst. Gen. Counsel, Department of Human Services, for appellant.

      Robinson, Staley, Marshall & Shively, by: Scotty Shively, and William T. Marshall, for appellees.
   Robert H. Dudley, Justice.

The appellant seeks an advisory opinion, and we dismiss the appeal because it is moot. The appellees, two corporations that operate nursing homes, submitted applications to the appellant, Office of Long Term Care of the Arkansas Department of Human Services, for licenses to expand their nursing homes. The appellees contended their applications should have been immediately approved because they fell within a capital expenditure exemption contained under Act 593 of 1987 (Regular Session). The appellant contended that the exemption did not entitle appellees to the licenses because their applications were not approved prior to the effective date of Act 40 of 1987 (1st Extraordinary Session). Ark. Code Ann. § 20-8-106 (Supp. 1987). Prior to exhausting all administrative appeals, the appellees filed a petition for a writ of mandamus. The trial court issued the writ and ordered appellant to begin the review process of appellees’ applications for licensure. The appellant applied for an order of supersedeas, but it was not issued. The appellant’s reply brief states that the hearings now have been held. Therefore, the issue is moot. We do not decide moot cases. Hogan v. Bright, 214 Ark. 691, 218 S.W.2d 80 (1949).

In oral argument of this case the attorneys for both parties were asked if they were not seeking an advisory opinion in a moot case. The attorney for the appellant admitted that it was moot, but argued that the trial court applied Act 593, instead of Act 40, and the holding became a binding precedent unless reversed in this appeal. The short answer to the argument is that the trial judge did not rule that Act 40 was inapplicable. There is no definitive holding on the question of which act governs. The attorney for the appellees, whose clients stand to benefit by this appeal being dismissed, took issue with appellant’s statement that both hearings had been held. She stated that the hearing had been held for one appellee and indicated the review process was under way for the other. We do not know the exact state of the case, but obviously the affirmative order of the trial court to process the application is being followed, so the case is moot. The issues argued in their appeal have not yet been fully adjudicated below. They will have to be decided administratively and by a court of competent jurisdiction before they can be decided by an appellate court.

Appeal dismissed.


author: Steele Hays, Justice. Tom Glaze, Justice, John I. Purtle, Justice,

text:
    Bill ABERNATHY v. Honorable John S. PATTERSON, Judge, Pope County Circuit Court
    87-308
    750 S.W.2d 406
    Supreme Court of Arkansas
    Opinion delivered May 23, 1988

      Shermer & Walker, for petitioner.

      Steve Clark, Att’y Gen., by: J. Brent Standridge, Asst. Att’y Gen., for respondent.
   Steele Hays, Justice.

This is an original action by the petitioner, Pope County Judge Bill Abernathy, to have this court prohibit the Pope Circuit Court from proceeding to trial upon indictments issued against him by a special grand jury. Judge Abernathy contends the grand jury was selected illegally and, hence, its indictments are void. We granted a temporary writ of prohibition and required briefs pursuant to Rule 16 of the Rules of the Supreme Court and Court of Appeals. Having considered the arguments we now dissolve the temporary writ of prohibition.

On November 1, 1986, the Circuit Court of Pope County, acting pursuant to Ark. Code Ann. § 16-32-103 (1987) [Ark. Stat. Ann. § 39-205.1 (Supp. 1985)], selected at random a list of 800 members to serve as petit jurors for 1987. In May and June of 1987, the court, at the request of the prosecuting attorney, selected 60 names from the jury wheel to serve as a special grand jury.

On June 30 the grand jury returned one felony indictment and one misdemeanor indictment with four counts against Judge Abernathy, who then moved to void the indictments. Abernathy contends Ark. Code Ann. § 16-32-103 (1987) [Ark. Stat. Ann. § 39-205.1 (Supp. 1985)] exclusively controls the selection of jurors, whereas the respondent argues that the selection may be made in accordance with either Ark. Code Ann. § 16-32-201 (1987) [Ark. Stat. Ann. § 39-217.1 (Supp. 1985)], or § 16-32-103. The end result, as we interpret these contentions, is that Abernathy maintains § 16-32-103 requires the selection of 100 grand jurors, whereas the circuit judge selected only 60.

Prohibition is an extraordinary writ and is never issued to prohibit a trial court from erroneously exercising its jurisdiction, only where it is proposing to act in excess of its jurisdiction. Lowery v. State, 215 Ark. 240, 219 S.W.2d 932 (1949); Skinner v. Mayfield, 246 Ark. 741, 439 S.W.2d 651 (1969); Miller v. Reed, 234 Ark. 850, 355 S.W.2d 169 (1961).

Assuming, without deciding, that there were irregularities in impanelling this grand jury, it is clear its members were selected at random from a jury wheel compiled from the voter registration list. Whether the irregularities would constitute reversible error we will not here decide, we need only determine whether the Pope Circuit Court clearly exceeded its jurisdiction.

Petitioner relies primarily on Streett v. Roberts, 258 Ark. 839, 529 S.W.2d 343 (1975), but we do not read Streett as holding that any irregularity in the selection of jurors by circuit courts can be challenged by writ of prohibition. In Streett there was no attempt whatever to comply with existing law, and no random selection of grand jurors, the circuit judge of Faulkner County simply dismissed an existing grand jury, presumably properly impanelled, and immediately proceeded to impanel another special grand jury by instructing the sheriff to select 25 grand jurors. That selection, it appears, was to be made by whatever method pleased the sheriff. The prosecuting attorney of that judicial district moved to prohibit this clear violation of law and a majority of this court held the prosecutor had standing to do so and that the circuit court was proceeding in excess of its jurisdiction. We find little similarity in the two situations.

Petitioner cites Horne v. State, 253 Ark. 1096, 490 S.W.2d 806 (1973), as holding that the provisions of the jury wheel act are mandatory. But we have recognized that some sections of the act are more important than others and that any irregularity in the selection process does not per se invalidate the proceedings. In Huckaby v. State, 262 Ark. 413, 557 S.W.2d 875 (1975), we said:

Act 568 of 1969 is a comprehensive statute by which the legislature directed the use of a jury wheel and made other changes in the selection of juries. In Horne v. State, 253 Ark. 1096, 490 S.W.2d 806 (1973), we held to be mandatory that section of Act 568 which requires the jury commissioners to meet each year and select prospective jurors for the following calendar year. . . .
In Home, however, we did not hold, as counsel now seem to argue, that every provision in Act 568 is mandatory in the sense that noncompliance requires that the jury panel be quashed. Some sections of the act are more important than others. . . . There was, in the circumstances, a substantial compliance with the statute.

In Harrod v. State, 286 Ark. 277, 691 S.W.2d 172 (1985), and Williams v. State, 278 Ark. 9, 642 S.W.2d 887 (1982), we found substantial compliance with the act and rejected challenges to the jury selection. As we have seen, there was not even minimum compliance in Streett v. Roberts, supra.

We conclude that the circuit court of Pope County is not clearly without jurisdiction to proceed in this case and, hence, petitioner’s proper remedy, if it becomes necessary, is by appeal rather than by prohibition.

The Temporary Writ of Prohibition is dissolved and writ denied.

Hickman, J., and Glaze, J., concur.

Purtle, J., dissents.

Tom Glaze, Justice,

concurring. The majority opinion correctly states and addresses the petitioner’s contention, but I believe the petitioner is misdirected as to the purpose served by Ark. Code Ann. § 16-32-103 (1987) — Arkansas’s law that establishes the procedure for selecting a district’s or county’s master list of prospective jurors. Section 16-32-103 (a) sets forth the random manner by which names of persons are selected from the voter-registration list, and § 16-32-103(b) provides the required minimum numbers of names to be listed from which petit or grand jurors are drawn and empaneled. Section 16-32-103 provides no requirement that a separate master list be kept for petit and grand juries. Nonetheless, petitioner here contends otherwise, arguing that the judge was required to compile a grand-jury-master list, containing 100 prospective grand jurors, from which he should have empaneled the grand jury. Petitioner argues that the judge erred by selecting 60 names from the petitjury-master list, which contained 800 prospective jurors.

Assuming the correctness of the petitioner’s interpretation of § 16-32-103(b), no prejudice would attach by the procedure employed by the circuit judge since he selected 60 prospective jurors from a petit-jury list (and jury wheel) containing 800 randomly selected names rather than the lesser number of 100 names, which, under petitioner’s theory, would have been required if a grand-jury list had been prepared. In sum, the petitioner was favored with a larger master panel (800) from which grand jurors were selected since if a prospective grand-jury list (and jury wheel) had been prepared, the judge would have drawn from only 100 names.

Justice Purtle, in his dissenting opinion, concedes that a separate grand-jury list containing 100 names would comply with the statutory law, but he also suggests that a list with the total of the minimum petit and grand juror numbers (1000 and 100) set out in § 16-32-103 (b) would comply with the law as well. Frankly, the language contained in § 16-32-103(b) is not as clear as it should be, but I fail to see how the major purpose and intent of this law is enhanced by a construction that would require adding the minimum members for petit and grand jurors when preparing the master list. The major importance of § 16-32-103 is its employment of a random-selection method used for the empaneling of petit and grand juries. Section 16-32-103 proscribes situations as the one presented in Streett v. Roberts, 258 Ark. 839, 529 S.W.2d 343 (1975), where the judge instructed the sheriff to select twenty-five grand jurors — the panel from which the judge chose the sixteen-member grand jury.

In the instant case, the petitioner was afforded the protection of the random-selection method which provided a large number (800) of prospective jurors. In enacting § 16-32-103(b), the General Assembly required that at least 100 prospective jurors be randomly selected before the circuit judge proceeded in drawing a grand-jury panel. In my opinion, the judge’s action in this cause was totally, not just substantially, consistent with the requirements set out in § 16-32-103. Therefore, I concur with the majority that the petitioner’s request for a writ of prohibition should be denied.

Hickman, J., joins in this concurrence.

John I. Purtle, Justice,

dissenting. I dissent because the majority fails to recognize the mandatory provisions of Ark. Code Ann. § 16-32-103 (1987). The majority seems to hold that so long as there is good faith on the part of the circuit judge and some similarity to the law, then it is alright to proceed in a “short-circuited manner.” I cannot go along with such loose interpretation of the clear and unambiguous law applicable to this case.

On May 15,1987, the court, at the request of the prosecuting attorney, selected 50 names to serve as a special grand jury. These names were randomly selected from the jury wheel which had been previously established on November 1, 1986. On June 8, 1987, the court entered an ex parte order allowing the random selection from the jury wheel of an additional 10 names to serve as prospective grand jurors.

On June 30,1987, the special grand jury returned one felony indictment and one misdemeanor indictment with four counts against Bill Abernathy. The petitioner moved to void the indictments on the grounds that the grand jury was not properly impaneled and the facts were not properly presented to the grand jury.

The Attorney General concedes that Act 1066 of 1985, Ark. Code. Ann. § 16-32-103 (1987), no longer provides for the use of jury commissioners but argues that the Act did not repeal section (c) of the provisions of Act 485 of 1975, Ark. Code Ann. § 16-32-201(c) (Ark. Stat. Ann. § 39-217.1). I do not agree with the Attorney General, or the majority opinion, on this point. The previous act required that when a grand jury was impaneled, it should consist of sixteen (16) qualified grand jurors plus a reasonable number of alternates. Act 1066 of 1985 requires, in this case, that 100 prospective grand jurors be selected during the month of November or December to serve during the following calendar year. These two provisions simply cannot be reconciled.

The grand jury is a powerful tool and should not be used in a haphazard manner. This court has traditionally taken the view that a circuit court is without jurisdiction in matters where an improperly impaneled grand jury has returned indictments. I also disagree with the majority’s distinction between the case at bar and Streett v. Roberts, 258 Ark. 839, 529 S.W.2d 343 (1975), where we stated:

If the grand jury proceedings are void it is clearly appropriate for the prosecuting attorney to commence and prosecute an action [by information] to avoid the waste of the taxpayers’ money necessarily involved in the futile trial of criminal cases that might be tainted with reversible error from the very outset.
[I]s the Writ of Prohibition the proper remedy? We have no doubt that it is. A basic purpose of the writ is to prevent a court from exercising a power not authorized by law, when there is no other adequate remedy. State, ex rel. Purcell v. Nelson, 246 Ark. 210, 438 S.W.2d 33 (1969). If the circuit court in this instance is exercising its authority in a manner contrary to law, prohibition is the only remedy to provide prompt and effective relief in the public interest.
[W]as the circuit judge’s method of impaneling a special grand jury contrary to law? We have no doubt that it was. There is no dispute about the facts.

The present case is like Streett in that there is no dispute concerning the facts. Therefore, we need examine only the law to reach the right result. The controlling statute is Ark. Code Ann. § 16-32-103, which provides for the manner and selection of jurors as follows:

(a) During the month of November or December of each year, the prospective jurors for the following calendar year shall be selected from among the current list of registered voters of the applicable district or county in the following manner:
(1) The circuit judge, in the presence of the circuit clerk, shall select at random a number between one (1) and one hundred (100), inclusive, which shall be the starting number, and the circuit court shall then select the person whose name appears on the current voter registration list in that numerical position, counting sequentially from the first name on the list.

The statute designates the number of persons to be selected based upon the number of qualified registered voters in the district or county as reflected by the current voter list. The minimum number of prospective petit jurors required for Pope County is 1,000 and the minimum number of prospective grand jurors is 100. The court may select a greater number but has no authority to select fewer than the minimum number designated by statute.

In the present case the circuit court complied with neither the old nor the new law in selecting the grand jury. Act 1066 establishes the minimum number of both prospective petit and grand jurors which must be selected from the outstanding voter registration list. The Act does not specify whether the grand jury panel can be pulled from the petit jury wheel. Because the Pope County Circuit Court failed to select the minimum number of jurors for the grand jury panel, its action rendered the indictments void. The circuit court could have complied with the present law by placing eleven hundred (1100) names in a master jury wheel box and withdrawing one hundred (100) to serve as the grand jury; or the circuit court could have selected one hundred (100) names from the qualified voter registration list to establish a separate grand jury panel.

The failure of the court to establish a pool containing the minimum number of prospective jurors was fatal. The reduced number in the petit jury wheel automatically reduced the number of eligibles from which to draw the grand jury. The lack of the minimum number for the prospective grand jury list further reduced or limited the petitioner’s opportunity for a cross-section of his peers to serve on the jury. This procedure is contrary to expanding the random selection of grand and petit jury members as intended by Act 1066. If the number of prospective grand jurors can be reduced by fifty percent (50 %), as was done in this case, what would prevent the number from being reduced by 7 5 % or more?

The respondent argues that the old system was used in this case and that the grand jury was properly selected because a sufficient number of persons was drawn to provide for 16 qualified grand jurors plus a reasonable number of alternates. This could be said about any list of 16 or more qualified electors regardless of how the names were obtained. That is the evil of the old system which was changed by the legislature. As previously stated, section 16-32-201 (c) is in direct conflict with the new Act. It was therefore repealed by implication.

I agree with the respondent that statutes must be construed together and reconciled, if possible. Poe v. Housewright, 271 Ark. 771, 610 S.W.2d 577 (1981). Likewise repeals by implication are not favored. Davis v. Cox, 268 Ark. 78, 593 S.W.2d 180 (1980). In the present case the General Assembly repealed “All laws and parts of laws in conflict with this Act [Act 1066 of 1985]. . ..” Repeal by implication will not be adjudged unless the legislative intent is clear and necessary. In McDonald v. Wasson, 188 Ark. 782, 67 S.W.2d 722 (1934), this court, at page 788, stated:

The law as to implied repeal is stated in 59 C.J. 904, as follows: “An implied repeal is one which takes place when a new law contains provisions which are contrary to, but do not expressly repeal, those of a former law. A statute, or a provision thereof, may be repealed by implication. Whether it has been so repealed is a question of legislative intent. While such a repeal is not favored, nevertheless it must be recognized and accorded effect where it is apparent that it was intended. Conversely, there is no room for repeal by implication where no legislative intent to repeal is indicated or expressed, or an intent not to repeal is apparent or manifest.”

It is obvious that the legislature intended to eliminate the jury commissioner system when Act 1066 of 1985 was enacted. The law no longer provides for selecting prospective jurors by jury commissioners. These duties are now required to be performed by the circuit judge. The heart of the new statute is to provide for a random selection of both grand and petit juries. The number selected for each panel is determined by the number of persons currently registered to vote. These requirements are incompatible with the former method of selection of juries by commissioners. Therefore, I believe Act 1066 repealed any provision of the previous statutes providing for selection of juries in any manner inconsistent with the provisions of the Act. Because the indictments are illegal and void the trial court has no authority to proceed further based upon these indictments.

The concurring opinion of Justice Glaze obviously does not comprehend this dissent or the law. Therefore, I will not address his opinion.

I would grant the writ.

       Petitioner also complains that § 16-32-103(b) required Pope County to have 1,000, rather than 800 prospective petit jurors.


author: Jack Holt, Jr., Chief Justice. John I. Purtle, Justice,

text:
    STATE FARM FIRE AND CASUALTY COMPANY v. Ola STOCKTON, Ira Stockton, and First National Bank, Siloam Springs, Arkansas
    88-66
    750 S.W.2d 945
    Supreme Court of Arkansas
    Opinion delivered May 31, 1988

      Roy & Lambert, by: John D. Copeland, for appellant.

      Elrod & Lee, by: Daniel R. Elrod, for appellee First National Bank, Siloam Springs, Arkansas.

      Odom, Elliott & Martin, by: Don R. Elliott, Jr., for appellees Ola Stockton and Ira Stockton.
   Jack Holt, Jr., Chief Justice.

This case involves an issue of first impression in Arkansas: whether an insurer, when canceling an automobile liability policy, must notify both the insured and any bank or other lending institution having a lien on the named insured’s automobile in order for cancellation to be effective with respect to the insured. Jurisdiction is pursuant to Ark. Sup. Ct. R. 29(l)(c).

On June 24, 1985, appellee Ola Stockton, through agent Ralph L. Reeves, purchased a liability and collision policy for her 1982 Dodge Colt from appellant State Farm Fire and Casualty Company (“State Farm”). The policy was to be effective from June 24,1985, until December 24, 1985. Stockton paid one-half of the $215.26 premium, or $107.63, and received a policy. Appellee First National Bank of Siloam Springs, Arkansas (“First National Bank”), which financed the vehicle, was listed on the policy as loss payee.

Stockton received notice from State Farm that the balance of $107.63 was due on August 4, 1985. She did not make the payment. She then received a second notice requiring payment by September 24, 1985. Subsequently, Stockton received notice, dated September 10,1985, that her policy would be cancelled as of September 24, if she did not make payment by that date. She did not make the payment.

On September 25, Ola Stockton’s son Ira, while driving Ola’s car, had a collision with a vehicle owned by Maxine Grammer. All parties agree that the car sustained total damages. On September 26, Ola Stockton tendered a check for $107.62 to her agent. State Farm reinstated the policy as of September 26 and issued Ola Stockton a refund check in the amount of $2.37 for the day (September 25) she was not covered by the policy.

On November 4, 1985, Ola and Ira Stockton filed a complaint in the Chancery Court of Washington County for a declaration that Ola Stockton was fully insured as of September 25, 1985. They also prayed for a declaration requiring State Farm to assume the defense to the claim of Maxine Grammer, to pay for the damage to her automobile, and to pay attorneys’ fees.

Subsequently, First National Bank filed a complaint in intervention against Ola Stockton because she had defaulted on her promissory note executed in favor of the bank and against State Farm and Ralph Reeves because they refused to pay the sums owed to the bank, as loss payee, under the policy.

The case (except First National Bank’s complaint in intervention against Stockton) was transferred to circuit court. The court found in its opinion letter and judgment that Ark. Code Ann. § 23-89-304 (1987) [formerly Ark. Stat. Ann. § 66-4009 (Repl. 1980)] requires an insurance company to give written notice to both an insured and to any bank or lending institution having a lien on the named insured’s automobile before cancellation of insurance is effective. The court held that even though State Farm gave notice to Ola Stockton, this action did not legally cancel the policy since State Farm did not notify First National Bank. In addition, the trial court entered a declaratory judgment requiring State Farm to assume the defense of the claim of Maxine Grammer on behalf of Ola Stockton and awarded First National Bank $1,348.40, which represented the actual cash value of the automobile at the time of the loss minus the salvage value and the deductible under the policy. Furthermore, the trial court held that Ralph Reeves had no liability and that Ira Stockton had no standing in the case.

On October 20, 1987, a second hearing was held to determine the attorneys’ fees to be awarded. In an amended judgment, the trial court awarded Ola Stockton attorney’s fees in the amount of $7,148.75.

From the judgment of the trial court, State Farm appeals. We affirm.

DUAL NOTIFICATION REQUIREMENT

State Farm argues that the trial court erred in holding that written notice of cancellation given to Ola Stockton did not legally cancel her automobile liability policy. It asserts that Ark. Code Ann. § 23-89-304 (1987) does not require that notice be given to both an insured and to any bank or lending institution having a lien on the named insured’s automobile in order for cancellation to be effective as to the insured. We disagree.

Section 23-89-304 provides in pertinent part as follows:

Time for notice of cancellation.

(a) No notice of cancellation of a policy to which § 23-89-303 applies, and no notice of cancellation of a policy which has been in effect less than sixty (60) days at the time notice of cancellation is mailed or delivered, shall be effective unless mailed or delivered by the insurer to the named insured and to any bank, or other lending institu tion having a lien on the named insured’s automobile at least twenty (20) days prior to the effective date of cancellation, provided that where cancellation is for nonpayment of premium, at least ten (10) days’ notice of cancellation accompanied by the reason therefor shall be given. [Emphasis added.]

By the plain language of the statute, an insurance company must give notice of cancellation to both the insured and to any bank or other lending institution having a lien on the named insured’s automobile for cancellation to be effective. Cancellation of the automobile liability insurance policy in this case was ineffective since State Farm, although it gave notice of cancellation to Ola Stockton, failed to notify First National Bank.

State Farm cites Wisniewski v. State Farm General Ins. Co., 25 Wash. App. 766, 609 P.2d 456 (1980), and Szymczak v. Midwest Premium Finance Co., 19 Ohio App. 3d 173, 483 N.E.2d 851 (1984), to support its position that where a statute provides that notice of cancellation must be given to both an insured and to a mortgagee, notice to the insured is effective as to the insured even if the insurer does not give notice to the mortgagee.

In Wisniewski, the relevant statute, Wash. Rev. Code § 48.18.290 (1976), provided in pertinent part as follows:

(1) Cancellation by the insurer of any policy which by its terms is cancellable at the option of the insurer, or of any binder based on such policy, may be affected as to any interest only upon compliance with either or both of the following:
(a) Written notice of such cancellation must actually be delivered or mailed to the insured or his representative in charge of the subject of the insurance not less than twenty days prior to the effective date of the cancellation except for cancellation of insurance policies for non-payment of premiums, which notice shall be not less than ten days prior to such date;
(b) Like notice must also be delivered or mailed to each mortgagee, pledgee, or other person shown by the policy to have an interest in any loss which may occur thereunder.

The Court of Appeals of Washington held that notice to the insured was effective to cancel the policy in question with respect to the insured even though notice was not given to the mortgagee. However, the Washington statute, even though it provided for dual notification, did not clearly state, as does Ark. Code Ann. § 23-89-304, that cancellation is ineffective unless an insurer gives notice to both an insured and to any bank or other lending institution having a lien on the named insured’s automobile.

In Szymczak, supra, the court held that “failure to provide proper notice to a mortgagee would be a defense to cancellation available to that mortgagee and not to the insured.” However, the relevant Ohio statute, Ohio Rev. Code Ann. § 1321.81 (Page 1979), like the Washington statute, did not plainly state that before cancellation is effective, notice must be given to an insured and a bank or other lending institution having a lien on a named insured automobile. Thus, we likewise do not consider it persuasive authority.

REASONABLENESS OF ATTORNEYS’ FEES

State Farm also argues the amount of the award of attorneys’ fees was excessive. We disagree.

In the event an insurer wrongfully refuses to pay benefits under an insurance policy, the insured may recover the overdue benefits, twelve percent (12%) damages upon the amount of the loss, and reasonable attorneys’ fees. Ark. Code Ann. § 23-79-208 (1987) [formerly Ark. Stat. Ann. § 66-3238 (Repl. 1980)]. The computation of attorneys’ fees is governed by such factors as the experience and ability of the attorney, the time and labor required to perform the legal service properly, the amount involved in the case and the results obtained, the novelty and difficulty of the issues involved, the fee customarily charged in the locality for similar legal services, whether the fee is fixed or contingent, the time limitations imposed upon the client or by the circumstances, and the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer. See Southhall v. Farm Bureau Mutual Ins. Co. of Arkansas, Inc., 283 Ark. 335, 676 S.W.2d 228 (1984); Equitable Life Assur. v. Rummel, 257 Ark. 90, 514 S.W.2d 224 (1974). While courts should be guided by these recognized factors, there is no fixed formula in determining the reasonableness of attorneys’ fees. Id. Because of the trial judge’s intimate acquaintance with the record and quality of service rendered, we usually recognize the superior perspective of the trial judge in assessing the applicable factors. Id. Accordingly, an award of attorneys’ fees will not be set aside absent an abuse of discretion by the trial court. Id.

Don Elliott, Stockton’s attorney, presented a detailed, itemized, fee statement to the trial court containing dates, description of services, specific hours spent (75.5), and hourly rate ($95.00). Three attorneys testified concerning Elliott’s outstanding reputation and superior ability and the fee customarily charged in the locality for similar services — $100.00 per hour. Although the amount involved in the case was only $1,348.40, the issue of whether an insurance company, when cancelling a policy, must give notice to both an insured and to any bank or other lending institution having a lien on the named insured’s automobile in order for cancellation to be effective with respect to the insured is novel.

The trial court awarded Stockton $7,148.75 in attorneys’ fees for 75.5 hours spent by her attorney at $95.00 an hour, plus interest. Based upon the evidence presented at trial, we cannot say the trial court abused its discretion in the computation of attorneys’ fees.

RECOVERY BY THE LOSS PAYEE

State Farm asserts that the trial court erred in entering judgment in favor of loss payee First National Bank against State Farm since the bank has not repossessed the automobile as required by the language of the policy. The relevant policy provision provides as follows:

If a creditor is shown in the declarations, we may pay any comprehensive or collision loss to:
1. you and, if unpaid, the repairer; or
2. you and such creditor, as its interest may appear, when we find it is not practical to repair your car.
3. the creditor, as to its interest, if your car hás been repossessed.

State Farm’s contention that First National cannot recover because it has not repossessed the automobile is premised on the incorrect assumption that subsection (2) of the above provision is inapplicable because the insured, Ola Stockton, does not have an interest in the policy. However, as held above, she does have an interest in the policy since State Farm did not effectively cancel the policy. Subsection (2) does not require repossession but simply that the insurer find it impractical to repair the automobile in question. State Farm does not dispute the fact that this condition has been satisfied. In fact, one of its witnesses admitted that the car was “totaled.” Therefore, we find the trial court was correct in entering judgment in favor of First National Bank.

State Farm also argues that the trial court erred in holding that First National Bank was entitled to a judgment against State Farm in the amount of $1,348.40 plus interest in that there is no evidence to support such a ruling.

Stockton testified at trial that the market value of her automobile was $2,300.00. She admitted that she derived this figure from the fact that she paid $2,300.00 for the vehicle four months prior to the accident. The stipulated NADA (National Automobile Dealers’ Association) market value on the date of the accident was $1,905.00. The trial court averaged the two numbers for an actual cash value of $2,100.00. Pursuant to the “Limit of Liability” section of the policy, the court subtracted the policy deductible of $500.00 and the stipulated salvage value of $251.60, resulting in a net judgment of $1,348.40.

State Farm asserts, in effect, that what Ola Stockton paid for the car four months prior to the accident was incompetent evidence of market value. State Farm cites no authority in support of this proposition, nor is the argument convincing on its face. Therefore, we do not consider its contention. Reed v. Alcoholic Beverage Control Div., 295 Ark. 9, 746 S.W.2d 368 (1988).

Affirmed.

Purtle and Hays, JJ., dissent in part.

John I. Purtle, Justice,

dissenting. I disagree with that part of the majority opinion which holds that before cancellation is effective as to an insured, the lienholder must also be notified. It is true that the notice of cancellation provision of Ark. Code Ann. § 23-89-304 (1987) uses the conjunctive “and”; i.e., that no notice of cancellation “shall be effective unless mailed or delivered by the insurer to the named insured and to any bank . . ..” (Emphasis added.) However, a literal reading of these words gives an absurd result. Such a literal reading results in a construction of this statute which is completely contrary to its obvious purpose. It is therefore imperative that the history of this statute be considered.

The history of this statute commences with Act 333 of 1969, and was first amended by Act 66 of 1973. As amended in 1973 the statute read as follows:

(a) No notice of cancellation of a policy to which Section 2 of Act 333 hereof applies, and no notice of cancellation of a policy which has been in effect less than sixty (60) days at the time notice of cancellation is mailed or delivered, shall be effective unless mailed or delivered by the insurer to the named insured at least twenty (20) days prior to the effective date of cancellation, provided, however, that where cancellation is for nonpayment of premium at least ten (10) days’ notice of cancellation accompanied by the reason therefor shall be given.

It takes no imagination at all to realize that lending institutions holding liens on policyholders’ vehicles were left out in the cold if the policyholder allowed a policy to lapse and the insurer failed to notify the lienholder. Needless to say such institutions initiated reform of this statute which manifested itself as Act 528 of 1975. The act amended the existing statute simply by inserting into the law the following words: “and to any bank, or any other lending institution having a lien on the named insured’s automobile.”

Obviously the purpose of the amendment was to protect lending institutions because insureds were already protected. However the added provision requiring notice to the lienholder was inartfully drafted. Had a comma simply been inserted before the added words, the true intent would have perhaps been more clear. The application of the first rule of statutory construction (i.e., that a statute, if not ambiguous, is to be construed just as it reads) thus gives the absurd conclusion reached by this court: the amendment which was designed to protect the lienholder’s interest results in a completely unjustifiable windfall to the insured. Act 528 amended the statute to read as follows:

(a) No notice of cancellation of a policy to which Section 2 of Act 333 hereof applies, and no notice of cancellation of a policy which has been in effect less than sixty (60) days at the time notice of cancellation is mailed or delivered, shall be effective unless mailed or delivered by the insurer to the named insured and to any bank, or any other lending institution having a lien on the named insured’s automobile, at least twenty (20) days prior to the effective date of cancellation, provided, however, that where cancellation is for nonpayment of premium at least ten (10) days’ notice of cancellation accompanied by the reason therefor shall be given. [Emphasized words were added by Act 528.]

The result of the majority opinion is that the insurer must notify both the insured and the lending institution for the notice to either to be effective. Surely that was not the intent of Act 528.

I concede that the majority interprets the statute just as it reads. That is the proper and correct thing to do — unless the results of such reading are obviously irrational, which is the case here.

Hays, J., joins this dissent.


text:
    Arthur F. GNAS and Ethelmae Gnas v. BURGER & ASSOCIATES, INC.
    88-73
    750 S.W.2d 58
    Supreme Court of Arkansas
    Opinion delivered May 31, 1988

      Jackson, Loving & Gutman, by: Gary D. Jackson, and Landers and Shepard, by: Michael R. Landers, for appellants.

      Burbank, Dodson & McDonald, by: Gary D. McDonald and John W. Unger, Jr., for appellee.
   Robert H. Dudley, Justice.

The primary issue in this case is whether the appellants’ mortgage or the appellee’s mortgage has priority. The chancellor held that the appellee’s mortgage is entitled to priority. We affirm that holding.

The debtor, Moro Bay Oil Company, Inc., gave two promissory notes to the Smackover State Bank, which were subsequently assigned to the appellee, Burger & Associates, Inc. The notes were secured by a mortgage and assignment of oil runs on an oil, gas, and mineral lease in Bradley County.

The debtor oil company also executed a promissory note to the appellants, Arthur and Ethelmae Gnas. This note was secured by a mortgage and assignment of oil runs on the same oil, gas, and mineral lease that secured appellee’s notes. The appellants’ mortgage provided:

This mortgage and assignment of oil runs is junior and subordinate to that certain mortgage and assignment of oil runs executed by Moro Bay Oil Co., Inc. to Smackover State Bank of Smackover, Arkansas. . . .

The debtor, Moro Bay Oil Co., Inc., filed a petition in the bankruptcy court seeking relief under Chapter 11. Claims were filed by the Smackover State Bank and by appellants on their notes.

The debtor and the appellee subsequently entered into a separate contract which provided in part:

MORO BAY agrees to convey unto BURGER [appellee] an undivided One-half (Vi) of all its interest in said Lease upon completion of the terms and provisions herein contained. BURGER agrees, as partial consideration, to purchase such Note from the BANK. BURGER further agrees to a moratorium of payments pursuant to and on said Note until such time as the GNAS [appellants] Note has been paid in full. It is mutually agreed by the parties hereto that such moratorium of payments shall not and does not constitute a subordination of the Note to the Gnas Note. The parties hereto further agree that said Note shall draw simple interest on such Promissory Note as thereon stated.

At approximately the same time the separate contract was entered, the debtor, the appellee, and the appellants entered into a settlement agreement which was part of a plan of reorganization. It provided in part:

8. Smackover State Bank, held a promissory note from Moro Bay which was secured by a first mortgage prior to that said second mortgage held by Gnas [appellants]. Burger & Associates, Inc., [appellee] transferee of such note and first mortgage, agrees to defer receipt of any payments on such note until the claim of Gnas [appellants] is paid in full as provided herein, provided, however, that said first mortgage shall retain its lien priority over the second mortgage.

The agreement then provided that the debtor immediately would pay $100,000.00 to the appellants, followed by thirty-six monthly installment payments of $6,022.75, and a final balloon payment of $200,000.00. The debtor made the initial payment and seven of the monthly installments and then ceased making payments.

After the debtor stopped making the payments set out in the settlement agreement, the appellee filed suit against Moro Bay Oil Company, Inc., to foreclose on the oil, gas, and mineral leasehold. The appellants intervened and also sought to foreclose on the same security. Both claimed first mortgages. The chancellor ruled in favor of appellee.

The appellants argue that the agreements should have been construed to mean that appellee had no right to foreclose until appellants were paid in full. The argument completely overlooks the fact that appellants’ mortgage and both agreements provide that appellee’s mortgage is first in priority. The contract between Moro Bay and appellee only provided for a moratorium of payments on the notes and this “moratorium of payments shall not and does not constitute a subordination.” (Emphasis added.) Similarly, by the terms of the settlement agreement, appellee agreed to defer receipt of the payments on its note until appellants’ claim “is paid in full as provided herein, provided, however, that the first mortgage [appellee’s] shall retain its lien priority over the second mortgage [appellants’].” (Emphasis added.) The chancellor correctly held this language meant that as long as payments were being made as set out in the agreement there was a moratorium on payments to appellee, but once payments stopped and foreclosure began, appellee had priority over the second mortgage.

Appellants also argue that appellee’s conduct enabled debtor Moro Bay to modify its contractual obligations. However, they do not explain how Moro Bay modified its contractual obligations to appellants, nor what existing contractual rights they gave up. We will not search the record to see if such an argument might have a factual basis. Accordingly, we find no merit in the argument.

After the chancellor had found that, under the terms of the promissory notes, Moro Bay owed $125,350.69 to appellee and that appellee was entitled to a first lien on the security, appellants tendered $125,350.69 to the appellee for its two promissory notes. The appellee refused to sell the notes to appellants for the tendered amount. The chancellor refused to order the appellee to accept the tender, and appellants cite this as error. The appellants do not cite any authority for their argument and do not make a convincing argument on the point. In effect, they ask us to research the point and reverse if the result of our labor so demands. We decline to do so. “ ‘Assignments of error presented by counsel in their brief, unsupported by convincing argument or authority, will not be considered on appeal, unless it is apparent without further research that they are well taken.’ ” Dixon v. State, 260 Ark. 857, 862, 545 S.W.2d 606, 609 (1977).

Affirmed.