author: Conley Byrd, Justice. Carleton Harris, Chief Justice, John A. Fogleman, Justice,

text:
    Rodney Dale REEVES v. STATE of Arkansas
    CR 75-29
    528 S.W. 2d 924
    Opinion delivered November 3, 1975

      Harold L. Hall, Public Defender, by: Ed Hargis, Dep. Public Defender, for appellant.

      Jj.m Guy Tucker, Atty. Gen., by: Jack T. Lassiter, Asst. Atty. Gen., for appellee.
   Conley Byrd, Justice.

Appellant Rodney Dale Reeves was jointly charged and tried with his brother Paul Reeves before a jury upon the offense of possession of stolen property and with being a person subject to the Habitual Criminal Act. The trial court, at the close of the evidence, directed a verdict in favor of Paul Reeves. The jury, having specifically found appellant guilty and that he had previously been convicted of two prior felonies, set his punishment at seven years in the Department of Correction. For reversal appellant makes the contentions hereinafter discussed.

The record shows that on February 18, 1974, a 1951 Chevrolet truck belonging to Leon Fulgham, d/b/a All Seasons Auto Sales, was stolen from his automobile sales lot. Mr. Cecil Fulgham, Leon’s father, who was in the area of appellant’s residence at 5322 Free Ferry Road in Fort Smith, Arkansas, on other business, on February 23, 1974, discovered the 1951 vehicle in the back yard of the premises rented by appellant. Mr. Cecil Fulgham, together with his sons, Leon and James, went to the address on Free Ferry Road to investigate. When they arrived they found appellant and his brother Paul working on a Plymouth automobile. Leon asked one of the men if they would sell a Pontiac automobile also on the premises. Appellant replied that he did not want to sell it. Leon then inquired about the 1951 Chevrolet pickup and was told by appellant that he did not want to sell it since it had been in the family a long time. The Fulghams then drove to a public phone booth and called the police. Mr. Danny Phillips, a patrolman with the Fort Smith Police Department, responded to the Fulghams’ telephone call. When the -Fulghams and Officer Phillips went to 5322 Free Ferry Road they found that neither the truck nor appellant was there. Upon inquiry, Paul Reeves told the officer that appellant had gone to get some cigarettes. When asked where the truck was, Paul asked “What truck?” Not long after Officer Phillips arrived appellant returned driving a Pontiac automobile. When appellant returned Officer Phillips asked appellant where the pickup truck was. Officer Phillips testified that appellant said “he took it over to somebody’s house or something.” At this time Officer Phillips tried to put appellant in the Police automobile, but appellant refused. The Officer also failed to heed appellant’s demand that he and the Fulghams get off of the premises. Officer Phillips at that time called police headquarters for a backup. Appellant went into the house and Officer Phillips followed him, where appellant showed him a title to an automobile, which Officer Phillips determined was not to the vehicle stolen from Leon Fulgham. Officer Phillips, at this time, would not permit appellant to get out of his sight. While appellant was in the house, Officer Lawrence Pfeifer arrived in answer to Phillips’ request for a backup. Also, a lady with appellant’s children arrived, and, as a result thereof, appellant and Officer Phillips went back outside. While the officers were talking to the lady with the children, Officer Phillips observed appellant removing his billfold and offering the Fulghams $1,000 in cash “to forget the whole thing.” Officer Phillips stopped those negotiations. At that time appellant was placed in Officer Pfeifer’s automobile.

Prior to the $1,000 offer to the Fulghams, Officer Pfeifer had also made inquiries of appellant. Officer Pfeifer testified that on the way to the police station, appellant volunteered that he knew he was in trouble and began to explain “about this pickup,” and that he would give $1,000 if this man would let him pay for the pickup. At that time Officer Pfeifer gave appellant his Miranda warnings, and the only statement made thereafter was that appellant “knew where the pickup was but he was not going to tell anybody.”

With respect to searches, the record shows that the officers, without a search warrant and after appellant was in jail, went to the premises about 6:30 p.m. on February 23, 1974, the day of the arrest, examined the premises, and with the aid of a flashlight, looked into an outbuilding at the extreme rear of the residence where they observed two license plates — one of which was on the Fulgham vehicle when it was stolen. A patrolman was stationed on the premises at that time. When appellant’s wife returned home about 3:00 a.m. on February 23rd the officers again went to the premises and obtained from the wife a written consent to search the house. Subsequently, upon the information obtained from the first search of the premises with the aid of a flashlight, the officers obtained a search warrant and searched the premises for the third time. On February 28th the officers again searched the premises. A fifth search came on March 1, 1974, when Officer Hampton again went to the premises with some FBI agents and obtained a second written consent to search from appellant’s wife.

John Reeves, a brother of appellant, testified that appellant had not been living at the premises for over a year. John also testified that he was the person who stole the vehicle and that he was the person who drove it from the premises immediately after the first visit by the Fulghams. He testified that he told both appellant and Paul Reeves that he paid $400 for the vehicle and that he was the person who made the alterations to disguise the vehicle.

POINT 1. We find no merit to appellant’s contention that he was entitled to a directed verdict. The testimony of the Fulghams with reference to appellant’s statement about the vehicle being in the family for a long time and appellant’s subsequent offer of $1,000 to forget the whqle thing, together with the showing that appellant was renting the premises, is sufficient to prevent a directed verdict.

POINT 2. The search made at 6:30 p.m. after appellant’s arrest but without a search warrant constituted an unlawful search. Since the search warrant issued and served the following day was admittedly issued upon the evidence obtained in the unlawful search, the evidence obtained therefrom should have been suppressed as being “the fruit of the poisonous tree.”

The State contends that the 6:30 p.m. search should be considered permissible because of the exigencies of the circumstances. However, this contention is wholly without merit, see Jenkins v. State, 253 Ark. 249, 485 S.W. 2d 541 (1972) and Coolidge v. New Hampshire, 403 U.S. 443, 91 S. Ct. 2022, 29 L. Ed. 2d 564 (1971).

POINT 3. The validity of the consent of the wife to search the residence at 3:00 a.m. on February 24th is moot since no evidence was introduced as a result of the search nor any search warrants issued as a result thereof.

POINT 4. The only other search that produced any evidence was the search of Officer Hampton and the FBI on March 1, 1974. Mr. Hampton says that Mrs. Reeves voluntarily signed the consent to search for purposes of examining some Volkswagens on the premises. Mrs. Reeves testified that she was told that she was signing a consent to search the cars and that she only signed it after she was told that if she didn’t sign the consent the officers would get a search warrant. The written consent signed by Mrs. Reeves is much broader and authorized the officers “to search my residence (or other real property located at 5322 Free Ferry Road and my motor vehicle, namely my N(A ... . ”

In speaking of when a consent is voluntary or involuntary in Schneckloth v. Bustamonte, 412 U.S. 218, 93 S. Ct. 2041, 36 L. Ed. 2d 854 (1973), this language was used:

. . We hold only that when the subject of a search is not in custody and the State attempts to justify a search on the basis of his consent, the Fourth and Fourteenth Amendments require that it demonstrate that the consent was in fact voluntarily given, and not the result of duress or coercion, express or implied. Voluntariness is a question of fact to be determined from all the circumstances, and while the subject’s knowledge of a right to refuse is a factor to be taken into account, the prosecution is not required to demonstrate such knowledge as a prerequisite to establishing a voluntary consent. ...”

In United States v. Curiale, 414 F. 2d 744 (2d Cir. 1969), cited approvingly in Schnecklolh v. Bustamonte, supra, the test for determining the voluntariness of a consent to search is put in this language:

“ . . . The resolution of the issue depends on whether his consent was a voluntary, intentional and understood waiver of a known right, or, on the contrary, was the product of deceit, duress and coercion, actual or implicit. ...”

Under the circumstances we cannot say that the trial court was incorrect in finding that the State had met its burden of showing that the consent was voluntary. It follows that the trial court did not err in refusing to suppress the evidence obtained in the March 1, 1974 search.

POINT 5. The issue here relates to the failure of the trial court to suppress alleged oral statements made by appellant at the scene of his arrest because of the failure of the officers to give the Miranda warnings. That such warnings are necessary when an individual is taken into custody at his home is established by Orozco v. Texas, 394 U.S. 324, 89 S. Ct. 1095, 22 L. Ed. 2d 311 (1969). As pointed out in Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966), custodial interrogation means not only actual arrest but also any conduct that deprives a person of his freedom of action in any way. Furthermore, as pointed out in United States v. Hall, 421 F. 2d 540 (2d Cir. 1969), the test is an objective one.

When we view the evidence here from an objective view point, it at once becomes obvious that the investigation had become so focused upon appellant at the moment he returned to the premises that the officers would not let him out of their sight and that they would not obey his command to depart from his premises. The testimony of Officer Phillips that he tried to get appellant into his patrol unit to continue the investigation takes away any doubt to the contrary. Thus, it follows that all statements of appellant made to the officers from the time of his return in the Pontiac to the time that Officer Pfeifer gave the Miranda warnings on the way to jail should have been suppressed.

POINT 6. Appellant suggests that the statements made by him after his arrest should be suppressed on the basis that the arrest was illegal and without probable cause.1 We find no merit in this contention, for probable cause existed upon the knowledge and information which the Fulghams conveyed to Officer Phillips prior to going to appellant’s residence.

POINT 7. The trial court permitted the State to introduce into evidence statements made by Paul Reeves out of the presence of appellant notwithstanding appellant’s objection that it violated his constitutional right to be contronted with the witnesses against him. The State’s theory at that time was that the statements were made in furtherance of a conspiracy. The State so utterly failed to prove a conspiracy between Paul Reeves and appellant that the trial court directed a verdict for Paul at the close of the evidence. To sustain the conviction now, the State suggests that Bruton v. United States, 391 U.S. 123, 88 S. Ct. 1620, 20 L. Ed. 2d 476 (1968) and Kerr & Pinnell v. State, 256 Ark. 738, 512 S.W. 2d 13 (1974), are not applicable for each of two reasons: (1) Appellant did not request a severance and thereby waived the right to confront the witnesses against him; and (2) When Paul Reeves was discharged by a directed verdict after the close of the evidence, appellant should have called him for purposes of cross-examination. We find no merit in either contention for the simple reason that under the Sixth Amendment to the United States Constitution the burden is on the State to confront the accused with the witnesses against him. It follows that the trial court erred in permitting the officers to testify to the statements made to them by Paul Reeves.

POINT 8. In proving prior convictions on the habitual criminal charge it was admitted by appellant that he had one prior felony conviction and that if the clerk of the court were called he would testify that the docket sheet kept in his office-showed that appellant had pled guilty to a second conviction. We agree with appellant that the docket sheet cannot be used to supply a deficiency in the records and that the trial court erred in permitting the docket sheet to be used to show a prior conviction. See Hollaway v. Berenzen, 208 Ark. 849, 188 S.W. 2d 298 (1945).

Neither do we find any merit to the State’s contention that appellant’s testimony given at his motion to suppress hearing should be used for purposes of making the State’s failure of proof a harmless error.

Reversed and remanded for new trial.

Harris, C.J., and Fogleman and Jones, JJ., concur in part and dissent in part.

Carleton Harris, Chief Justice,

concurring in part, dissenting in part. I concur in the result reached in this case for reasons set out in the majority opinion, except that I cannot agree with the majority in the conclusions reached under Point 5, i.e., “that all statements of appellant made to the officers from the time of his return in the Pontiac to the time that Officer Pfeifer gave the Miranda warnings on the way to the jail should have been suppressed.”

I agree with Justice Fogleman’s dissent in this respect, and accordingly dissent myself to the holding under Point 5.

John A. Fogleman, Justice,

concurring in part, dissenting in part. Except for the matters set out in this separate opinion, I concur in the majority opinion. I do not agree that any statements made by appellant after his return to the premises until the Miranda warnings were given were inadmissible.

We must remember that the trial court found them admissible on motion to suppress. While we make an independent determination of voluntariness based upon the totality of the circumstances, we will not reverse the trial judge on his finding unless it was clearly against the preponderance of the evidence. Degler v. State, 257 Ark. 388, 517 S.W. 2d 515. It must be remembered that the exclusionary rule applies only to statements resulting from custodial interrogation. Rodney Reeves came back to the premises where he lived while the officers were trying to ascertain the whereabouts of the truck the Fulghams had claimed they saw on the premises. When asked about the truck by Patrolman Phillips he said he had taken it to someone’s house and parked it. When asked for the title to the vehicle, he said that it was in the house. At some point, he ordered the officers off the premises. It may have been as early as his arrival there and it may have been as late as the request for the title. At any rate, his freedom had not been restricted in any way and the inquiry was purely investigatory and proper until the officer refused to let Rodney go into the house without accompanying him, after these statements had been made. Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694, 10 ALR 3d 974 (1965); Johnson v. State, 252 Ark. 1113, 482 S.W. 2d 600; Patrick v. State, 245 Ark. 923, 436 S.W. 2d 275; Stout v. State, 244 Ark. 676, 426 S.W. 2d 800.

En route to the police station, Rodney began to try to explain and said he knew he was in trouble, and officer Pfeifer remarked that he wouldn’t be in any trouble if he told them where the pickup was. Rodney said he wasn’t going to tell them anything and then said he would give SI000 if the man would let him pay for the truck. Pfeifer then warned Rodney of his rights and Rodney then said he knew where the pickup was but wasn’t going to tell anybody. Rodney did testify that Pfeifer asked him during the trip to the police station, “Where in the hell is that truck?”, before advising Rodney of his constitituional rights, and that he answered that it was probably in Oklahoma. According to Pfeifer, he asked Rodney where the pickup truck was after Rodney had been advised of his constitutional rights and Rodney said he knew or felt like it was in Oklahoma but did not know where and wouldn’t tell who took it there.

The exclusionary rule does not apply to voluntary statements and statements made without coercion following the proper advice as to constitutional rights. Miranda v. Arizona, supra; U.S. v. Joslyn, 371 F. Supp. 423 (D.C. Az. 1974); Hale v. State, 252 Ark. 1040, 483 S.W. 2d 228; O’Neal v. State, 253 Ark. 574, 478 S.W. 2d 618; Blanton v. State, 249 Ark. 181, 458 S.W. 2d 373.

Certainly we cannot say that the finding of the trial judge was clearly against the preponderance of the evidence, on statements made before his freedom was restricted and statements made after the warnings were given.

Ozorco v. Texas, 394 U.S. 324, 89 S. Ct. 1095, 22 L. Ed. 2d 311 (1969), cited by the majority, does not require the exclusion of these statements. The statements there all resulted from interrogation while the accused was in custody and he had not been warned of his constitutional rights. They were elicited by four police officers who entered the accused’s bedroom in a boardinghouse at 4:00 a.m. One of these officers testified that the accused was not free to leave from the time they entered his bedroom. That is a decidedly different situation.

I also cannot agree that a docket sheet is not admissible in evidence to show a previous conviction. Ark. Stat. Ann. § 43-2330 (Repl. 1964) does not purport to make the certified copy of a former conviction and judgment the exclusive method of proof. Until notations on a docket sheet are controverted they are prima facie evidence. Prout v. State, 256 Ark. 723, 510 S.W. 2d 291; Smith v. Wallis-McKinney Coal Co., 140 Ark. 218, 215 S.W. 385; Visart v. Bush, 46 Ark. 153. I would not, however, disagree with the holding that it was not admissible in this case. There was no conviction and judgment for imprisonment in the penitentiary in this instance. Appellant was put on statutory probation. This could not come within the terms of Ark. Stat. Ann. § 43-2330. Furthermore, we have held that there is not a conviction until there is a commitment to prison. State Medical Board v. Rodgers, 190 Ark. 266, 79 S.W. 2d 83; Tucker v. State, 248 Ark. 979, 455 S.W. 2d 888; Sutherland v. Arkansas Department of Insurance, 250 Ark. 903, 467 S.W. 2d 724. The probation may well account for the fact that no judgment was ever entered of record in the case.

As to all other matters, I fully concur.

I am authorized to state that Mr. Justice Jones joins in this opinion.


source: Caselaw Access Project

author: Frank Holt, Justice.

license: Public Domain

text:
    H. Clay ROBINSON et al v. GREENWOOD DISTRICT, SEBASTIAN COUNTY QUORUM COURT
    75-252
    528 S.W. 2d 930
    Opinion delivered November 3, 1975

      Charles Karr, Pros. Atty., for appellants.

      John I. Turtle, for appellee.
   Frank Holt, Justice.

The appellants, who comprise the Sebastian County election commission were mandamused by the trial court to create two separate quorum courts in that county,.i.e., the Greenwood District, the appellee, and the Fort Smith District in accordance with the provisions of Act 128 of 1975. Appellants contend that the trial court erred in holding Section 13 of that Act constitutional. It is appellants’ argument that this section of the Act is in irreconcilable conflict with our recent Amendment 55 to the Constitution of Arkansas (1874). We must agree.

It is true as appellee argues that Sebastian County has had two separate districts for one hundred years (Greenwood and Fort Smith) with each having its own quorum court. This is so because our state constitution contains a unique provision with respect to Sebastian County. Article 13, Section 5 provides “Sebastian County may have two districts and two county seats, at which county, probate and circuit courts shall be held as may be provided by law, each district paying its own expenses.” In Jewett v. Norris, 170 Ark. 71, 278 S.W. 652 (1926), we observed:

Obviously the purpose of the provision of the Constitution set out above was to make valid and constitutional subsequent legislation like that which had been stricken down **** [or] was declared unconstitutional.

See Patterson v. Temple, 27 Ark. 202 (1871); and Jones, ex parte, 27 Ark. 349 (1871). In Scaramuzza v. McLeod, Commr. of Revenues, 207 Ark. 855, 183 S.W. 2d 55 (1944), and Jewett, supra, we recognized that both of these districts of Sebastian County are as distinct and separate as are two counties with respect to jurisdiction in matters of local concern and fiscal affairs.

In 1974, as indicated, Amendment 55 to our constitution was approved. The pertinent provisions are:

Section 1. (a) A county acting through its Quorum Court may exercise local legislative authority not denied by the Constitution or by law. ****
Section 2. (a) No county’s Quorum Court shall be comprised of fewer than nine (9) justices of the peace, nor comprised of more than fifteen (15) justices of the peace. The number of justices of the peace that comprise a county’s Quorum Court shall be determined by law. The county’s Election Commission shall, after each decennial census, divide the county into convenient and single member districts so that the Quorum Court shall be based upon the inhabitants of ithe county with each member representing, as nearly as practicable, an equal number thereof.
(b) The Quorum Court may create, consolidate, separate, revise, or abandon any elective county office or offices except during the term thereof; provided, however, that a majority of those voting on the question at a general election have approved said action. ****
Section 4. In addition to other powers conferred by the Constitution and by law, the Quorum Court shall have the power to override the veto of the County Judge by a vote of three-fifths of the total membership; fix the number and compensation of deputies and county employees; fill vacancies in elective county offices; and adopt ordinances necessary for the government of the county. The Quorum Court shall meet and exercise all such powers as provided by law. ****

At the 1975 legislative session, the legislature enacted Act 128. Section 13 provides:

Notwithstanding any other provision of this Act, any county in the State which on the effective date of this Act is divided into two districts and has a separate levying or quorum court for each district, shall continue to have separate levying or quorum court for each district and the provisions of this Act relating to the quorum court shall be applied in each district of such counties the same as if such districts were separate counties.

We fully recognize that historically and legally the Greenwood District, appellee, and the Fort Smith District since 1874 have consistently been treated as separate counties for certain purposes. However, the 1974 Amendment 55 to our constitution contains provisions that are patently inconsistent and incompatible with these two districts continuing to have separate quorum courts which is provided by Section 13 of Act 128. In particular, Section 2 (b), supra, provides “[T]he Quorum Court may create, consolidate, separate, revise, or abandon any elective county office or offices except during the term thereof. ...” Section 4, supra, provides that the quorum court shall have the power to “fix the number and compensation of deputies and county employees; fill vacancies in elective county offices; and adopt ordinances necessary for the government of the county.” Amendment 55 makes no provision for any county to have more than one quorum court. It makes no reference whatever to a county being divided into districts as does Article 13, Section 5.

It is apparent from reading Amendment 55 that it is in the nature of a home rule amendment which gives to each county much local legislative authority. Sebastian County has had, as other counties, only one set of county officials. We are unable to construe Amendment 55 as being intended to permit the creation, consolidation, or abandonment of any county office by a dual authority — two quorum courts. Further, we do not think the intent of the people in enacting Amendment 55 was that two quorum courts in a county rather than one would determine the number and compensation of deputies, county employees, and fill any vacancy that might occur in a county wide elective office. Also, the amendment provides that each county have not less than nine and not in excess of fifteen justices of the peace to constitute its quorum court. It is readily apparent from a population standpoint that one district might have only nine and the other district might have fifteen. Naturally, this would pose considerable conflict with reference to the discharge of a quorum court’s duties with respect to the county offices.

Appellee asserts that “[I]t is apparent that no thought was given to Sebastian County’s unique position until the enabling legislation was considered and at that time it was expressed in clear and unequivocal terms, in Section 13 of Act 128. ...” We have held that where provisions are omitted from a constitutional amendment which is proposed by the legislature, as here, either by design or mistake, the courts have no power to supply them. Hodges v. Dawdy, 104 Ark. 583, 149 S.W. 656 (1912). Likewise, in the case at bar, we cannot supply a provision to Amendment 55 that would permit each of the districts to have a separate quorum court.

Reversed and remanded.


author: Elsijane T. Roy, Justice. Conley Byrd, Justice,

text:
    FARM BUREAU MUTUAL INSURANCE Company of Arkansas, Inc. v. Joseph Shelby LYON
    75-67
    528 S.W. 2d 932
    Opinion delivered November 3, 1975

      Tackett, Moore, Dowd & Harrelson, for appellant.

      McMath, Leatherman & Woods and Wm. R. Wilson, Jr., for appellee.
   Elsijane T. Roy, Justice.

This case presents a novel issue which has not heretofore been considered by this court. Both appellee and appellant have favored us with excellent briefs.

The appellant, Farm Bureau Mutual Insurance Company of Arkansas, Inc., or on about December 2, 1970, contracted to insure Jack Hardman, d/b/a Hardman’s Sporting Goods, against liability for certain hazards in his business operations.

The appellant’s broad general insuring language in the subject policy provided as follows:

Coverage A - Bodily Injury Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages (except punitive damages) because of bodily injury, sickness or disease, including death at any time resulting therefrom sustained by any person. . . .

While the policy was in full force and effect, the insured’s agent sold gunpowder, which was to be used as an explosive in a sound-making device at football games, to some minors including Joseph Shelby Lyon. Appellee Lyon, when using the gunpowder for this purpose, was severely and permanently injured by an explosion of the gunpowder. Thereafter, he filed suit against the insured alleging negligence in the sale of the gunpowder. The trial resulted in a $38,500 judgment in appellee’s favor against the insured. The appellant refused to defend on the basis of an exclusion contained in the policy which provides as follows:

This policy does not apply under Coverages A (bodily injury liability) ****, to products hazard, which is defined as follows: (emphasis supplied)
(1) the handling or use of, the existence of any condition in or a warranty of goods or products manufactured, sold, handled or distributed by the named insured, if the accident occurs after the insured has relinquished possession thereof to others and away from the premises owned, rented or controlled by the insured:
(2) operations, if the accident occurs after such operations have been completed or abandoned at the place of occurrence thereof and away from the premises owned, rented or controlled by the insured.

In joining the issues appellant filed a motion for summary judgment and later an amended motion for summary judgment alleging there was no genuine issue as to any material fact and that the appellant was entitled to judgment as a matter of law. Appellee filed a cross-motion for summary judgment and response to defendant’s motion which alleged that the exclusion in the subject insurance policy, relied upon by appellant as its sole defense, is inapplicable as a matter of law and, there being no genuine issue of material fact on this point, appellee is entitled to summary judgment on his complaint. Furthermore, in the alternative, in response to appellant’s motion for summary judgment, appellee states that appellant’s agent made a material misrepresentation or representation to its insured, Jack Hardman, on which he relied; the representation was to the effect that the subject insurance policy covered Hardman against the type of risk which gave rise to appellee’s injuries; and appellant is bound by such representation or misrepresentation.

The court, after due consideration of the respective summary judgment motions, attached affidavits and certain designated portions of depositions and on December 20, 1974, rendered a summary judgment for appellee in the sum of $38,500 plus interest, penalty and a reasonable attorney’s fee in the sum of $5,000. The appellant timely perfected this appeal.

For reversal the appellant relies upon the following points:

1. The trial court erred in refusing to grant defendant’s motion for summary judgment^and
2. The trial court erred in determining that a material fact question existed in the event the validity of the exclusion was determined in defendant’s favor by Summary Judgment.

The issue before us, as far as the exclusion is concerned, is whether the judgment awarded appellee Lyons falls within a risk covered by the insurance policy. Stated conversely, was the negligent sale of the gunpowder, under the circumstances of this case, a risk which is excluded from the terms of the policy?

This court has not passed on the precise question presented here and there is a definite split on the point at issue in other jurisdictions. Some courts have given a broad sweep to the “products completed operations” exclusion (which this exclusion is often called) in favor of the insurer to an extent which this court finds unwarranted upon consideration of the policy as a whole. However, other courts have read the exclusion in conjunction with the basic insuring clause and looked to see whether an off-premises injury was prokimately caused by on-premises negligence as opposed to off-premises negligence or a defective product.

We think the better view is that enunciated in the trial court’s opinion and in the cases supporting the reasoning of the trial court in granting appellee’s motion for summary judgment. The language of the exclusion clearly appears to indicate it is to apply to “products completed operations” only-

Appellant’s brief calls attention to some general insurance law with which this court does not find fault. The fault lies in the appellant’s application of the principles enunciated. Some of appellant’s citations and quotes therefrom might more appropriately be cited in behalf of appellee.

We call attention to one of appellant’s citations of this nature which indicates that in all probability the exclusion was drafted to cover the ever broadening products liability field and has no application to the general insuring provision.

7A Appleman, Insurance Law and Practice, § 4508, p. 98, (1962) states:

Products liability insurance, is becoming increasingly important with the passage of time, in view of the ever present potentialities for injury resulting from such things as lime compounds used for waterproofing, cosmetics, drugs, certain dyed materials, explosives, and other products possessing inherent hazards. Clearly a company which writes an ordinary liability policy does not want a risk extending without end as a result of work performed or merchandise sold; nor, conversely, would a company willing to undertake the products risk want to assume the general liability burden, (emphasis supplied)
****
It is scarcely just either to deprive a purchaser of the protection he is entitled to receive or to extend one type of coverage to fit a completely different situation from that contemplated, (emphasis supplied)

Appellee contends, and we agree, that this accident was the type for which he purchased coverage since the negligence which was the proximate cause of the accident occurred on premises insured under the terms of the policy.

A number of the citations upon which appellant relies are distinguishable. In Dixie Furniture Co. v. Central Assurity and Ins. Co., 173 F. Supp. 862 (E. D. Ark. 1959), a loss occurred off of the insured’s furniture store premises when the insured’s employee, repossessing a stove, negligently failed to cap a gas pipe. After a third party was injured and sued the insured, the insured there sued the insurance company. Judge Henley noted that the accident arose from the “completed operations” sub-section of the “products provision.” In other words, a work project away from plaintiff’s premises was involved and this renders the case entirely different from the case at bar. The negligence which caused the accident occurred off the insured’s premises as contrasted with the negligence here of Hardman’s agent which occurred in his store.

Appellant’s citation, Bituminous Casualty Corp. v. Horn Lumber Co., 283 F. Supp. 365 (W. D. Ark. 1968), supports appellee, not appellant. In Bituminous a person was injured when straps binding lumber on a lumber truck broke during an unloading procedure allegedly because of a defect in the binding materials. In construing this exclusion, Judge Miller wrote:

The endorsement is written, apparently, to exclude coverage for injuries which result from defects in products after the product has been given up by the insured and placed in the stream of commerce. In other words the policy did not cover ‘products liability.’

In the case at bar neither party alleges any defect in the gunpowder purchased by Lyons.

In Standard Accident Insurance Co. v. Roberts, 132 F. 2d 794 (8th Cir. 1942), the insured, a seller of furniture and appliances in the State of Arkansas, negligently installed a refrigerator in a customer’s home. The customer and his family were injured by escaping gas that very night. The loss was excluded under the Products-Completed Operations hazard, largely because it occurred away from the insured’s premises. Appellant can find no support from this citation as, again, we find a work project away from the insured’s premises.

We are not overlooking other citations furnished by appellant in support of its position, but we do not find the reasoning upon which they are buttressed to be as sound as that found in St. Paul Ins. Co. v. Coleman, 316 F. 2d 77 (8th Cir. 1963), affirming 204 F. Supp. 713 (W. D. Ark. 1963). In that case the general insuring clause provided coverage for hazards related to the “ownership, maintenance or use of the premises and all operations” (of a public boat dock business). The insured’s employee had negligently refueled plaintiff’s boat and after the boat had drifted about 73 feet from the boat dock, it caught Fire, injuring several persons. The insurance company denied coverage based on the Products-Completed Operation exclusion (the exclusion relied upon by defendant in this case) which provided that:

.... ‘[I]f the accident occurs after possession of such goods or products (i.e., those “manufactured, sold, handled or distributed by the Named Insured”) has been relinquished to others **** and if an accident occurs away from premises owned, rented or controlled by the Named Insured, coverage for such an “occurrence” is not afforded by its policy. . . . ’ (316 F. 2d, p. 79) (emphasis supplied)

The Eighth Circuit held that the negligent refueling of gasoline did not render it a “products case” which would be excluded under the “Products-Completed Operation” exclusion. The court stated:

.... The appellees do not make any claim that they were injured because of the nature or condition of the gasoline sold to Stover (plaintiff), (emphasis supplied by the court)
*****
.... The place where the fire ‘occurred’ is not here’controlling under the ‘Premises-Operations’ coverage afforded by appellant’s policy.. (316 F. 2d, p. 80)

The insurance company in Coleman attempted to do exactly what the appellant here is trying to do, i.e., tie the “away from premises” exclusion onto the basic coverage. The Eighth Circuit rejected this attempt:

Under the terms of appellant’s policy, ‘Products-Completed Operations’ is the only coverage related to ‘away from premises’ exclusion. There is no such limitation or exclusion from coverage as to ‘Premise-Operations.’ Appellant’s attempt to read that limitation into the ‘Premises-Operations’ coverage is not justified by any rule of construction known to us. An unbiased reading of appellant’s policy must convince a reasonable mind that such is not a proper legal interpretation thereof. (316 F. 2d, p. 80)

Judge Miller quotes from Appleman:

‘. . . . [A]n injury or loss may result while an activity is in progress, and prior to the completion thereof, either as the result of an act of negligence or an omission. That is what is embraced within the ordinary liability aspect of a public liability policy. But if the operation has been completed, and liability results thereafter either by reason of a defect in merchandise or improper workmanship, that is called ‘products liability’ or ‘completed operations’ (here “products hazard”), the protection of which can be purchased for a premium. . . . ’ (283 F. Supp., p. 368) (emphasis supplied)

Another case following the same line of reasoning as Coleman and almost identical with the case at bar is McGinnis v. Fidelity and Casualty Co. of N.Y., 276 Cal. Appl. 2d 15, 80 Cal. Rptr. 482 (1969). In that case a fifteen year old boy purchased a can of gunpowder from the insured ammunition dealer. A week later the powder exploded and McGinnis was injured. He sued the dealer and obtained a judgment, then he sued the insurance company which had declined coverage. The California court noted that the insured ammunition dealer had not paid a premium for the following specific coverage:

‘Division 4-Products-Completed Operations.
(1) Goods or products manufactured, sold, handled or distributed by the named insured, or by others trading under his name, if the accident occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such accident occurs away from premises owned, rented or controlled by the named insured. . . . ’ (80 Cal. Rptr., p. 483)

The defendant insurance company contended that the failure to buy this specific coverage excluded coverage, but the California court held that the dealer was insured under the general insuring clause. In regard to the Products-Completed Operation provision, that court stated:

One would be hard put to express a ‘products liability’ exclusion more clearly than does the foregoing clause upon which appellant relies. Since Piper (ammunition dealer) paid no premium for such coverage, the first question that emerges is whether the accident in this case comes within the doctrine of products liability and, a fortiori, within the exclusion.

In Lessak v. Metropolitan Casualty Ins. Co. of N.Y., 168 Ohio St. 153, 151 N. E. 2d 730 (1958), the insured was an individual doing business as a hardware company and he sold some BB’s to a minor in violation of state law. Subsequently the minor was injured by the BB’s. The involved insurance policy has the same general insuring clause as to bodily injury liability as we have in the case at bar. The policy in Lessak offered additional coverage under “Division 3 Products” and the coverage offered there is set forth in language almost identical to the exclusion in the policy in the instant case. The insured in Lessak had not purchased coverage under Division 3 and contended that he was covered under Division 1. The insurance company declined coverage on the contention that the risk came under Division 3, which the insured had not purchased. The court rejected this contention and held for the injured party and the insured. After pointing out there was not a defective product involved, the court stated:

A careful perusal of division 3, ‘Products,’ discloses that it is concerned with reference to the existence of any conditions or warranty of goods or products manufactured, sold, or handled or distributed by an insured, and that it is not applicable to the hazard described in division 1, upon which plaintiff must rely.
It is not claimed that the B-B pellets, which plaintiff’s employee is alleged to have sold to the boy **** were in any manner defective, or that there was any breach of warranty in the sale of them. In fact, there is nothing relative to the condition of the pellets themselves, (emphasis supplied)
It is true that the accident for which damages are claimed **** arose away from plaintiff’s premises and the insurance company strenuously maintains that the hazards under division 1 contemplate only accidents occurring upon the premises. However, the language of division 1 does not so state. Such division is only a description of the hazard, and that was the alleged unlawful selling of the BB shot on the premises of plaintiff. Assuredly, that was an operation necessary or incidental to the purpose for which the premises were used. There is no statement in the policy with reference to the place where the accident occurs, and if the insurance company intended to limit the place of the accident, as well as the incidence of the hazard, to the premises of plaintiff, it could easily have so stated in the policy. (151 N.E., p. 734-5) (emphasis supplied)

As in Lessak the general insuring clause in the case at bar has no on-premises limitation as to situs of the accident. The negligent sale of the gunpowder was on insured’s premises. The sale was the proximate cause of the accident and of appellee’s injuries (not a defective product — nor completed operations away from the premises of the insured). Therefore, it is clear the exclusion has no application herein.

Having decided the motion for summary judgment in appellee’s favor it is unnecessary to reach or decide the issue raised by appellee regarding any alleged representations or misrepresentations by appellant’s agent.

Accordingly, the judgment of the lower court is affirmed in all particulars, including penalty and attorney’s fees.

Fogleman, Jones and Byrd, JJ., dissent.

Conley Byrd, Justice,

dissenting. I disagree with the majority view. The cases the majority relies upon, such as, Lessak v. Metropolitan Casualty Ins. Co. of N.Y., 168 Ohio St. 153, 151 N.E. 2d 730 (1958), recognize that an insurance company can limit its coverage to both the place and incidence of the hazard to the insured’s premises. At page 9 of the majority opinion the above subject case is quoted as follows, — to-wit:

“. . . , and if the insurance company intended to limit the place of the accident, as well as the incidence of the hazard, to the premises of plaintiff, it could easily have so stated in the policy.”

Under the policy before us the Farm Bureau Ins. Co. did limit the place of the accident and the occurrence to the appellee’s premises. Its policy provides:

“1. COVERAGES
Coverage A — Bodily Injury Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages [except punitive damages] because of bodily injury, sickness, or disease, including death at any time resulting therefrom, sustained by any person ... .
2. EXCLUSIONS
The policy does not apply:
(i) under Coverages A and B, to products hazard, which is defined as follows:
1. the handling or use of . . . goods or products manufactured, sold, handled or distributed by the named insured, if the accident occurs after the insured has relinquished possession thereof to others and away from the premises owned, rented or controlled by the insured.”

Had not the term “products hazard” been defined by the policy, I would agree that the authorities cited by the majority are controlling. Here, however, the term “products hazard” is defined by the policy to exclude bodily injury arising from the “handling or use of. . . goods . . . distributed by the named insured, if the accident occurs after the insured has relinquished possession . . . and away from the premises . . . controlled by the insured.” The accident giving rise to this claim occurred both after the insured had relinquished possession and away from the insured’s premises, and I can think of no logical reason for pointing out as the majority does that an insurer can limit the place of the accident when it so states and then not applying the above stated exclusion in this policy.

For the reasons stated I respectfully dissent.

Fogleman and Jones, JJ., join in this dissent.


author: Elsijane T. Roy, Justice. George Rose Smith, Justice, John A. Fogleman, Justice,

text:
    Richard R. HEATH, Director, Department of Finance And Administration, State of Arkansas v. RESEARCH-COTTRELL, INC.
    75-104
    529 S.W. 2d 336
    Opinion delivered November 3, 1975
    [Rehearing denied December 8, 1975.]

      Karl Glass, Robert Brockman, James Cooper, H. Ray Hodnett, James Eads, Walter Skelton, for appellant.

      Wright, Lindsey & Jennings, for appellee.
   Elsijane T. Roy, Justice.

Appellee, Research-Cottrell, Inc., under a subcontract agreement with the Bechtel Corporation, contractor for the Arkansas Nuclear 1 Unit of Arkansas Power & Light Company located in Russellville, Arkansas, was engaged to design, furnish and install a natural draft cooling tower for Arkansas Power & Light Company at the nuclear generating power station. After an audit, appellant served appellee with a notice of tax assessment which was upheld in an administrative hearing. Appellee brought a petition for declaratory judgment in the Chancery Court of Pope County, Arkansas. After trial the court entered judgment for the appellee declaring the notices of assessment to have been wrongfully issued, and that appellee was entitled to a use tax exemption.

Appellee first alleged that an exemption is applicable under Ark. Stat. Ann. § 84-3106 (D)(2)(d), which statute gives an exemption for machinery and equipment required by state law or regulations to be installed and utilized by manufacturing facilities to prevent or rfeduce air and/or water pollution. It was under this theory that the court found for appellee. The other theory advanced by appellee is that a specific exemption applies under Ark. Stat. Ann. § 84-3106 (D)(2), and that the cooling tower constructed was machinery and equipment used directly in manufacturing.

The appellant contends that there is no exemption under either theory, and that under Ark. Stat. Ann. § 84-3129 and § 84-3130 appellee is a contractor and therefore a consumer of the items purchased, and consequently responsible for paying the use tax on such purchases. The appellant also contends that since appellee is a contractor, that any exemption which could possibly be applied to Arkansas Power & Light Company would not be imputed to the contractor. The appellant’s last contention is that certain exemptions were granted by the legislature to utilities by Act 439 of 1969, which was later modified by Act 222 of 1971, presently codified as Ark. Stat. Ann. § 84-31.05.1 (H). The net effect of appellant’s last contention is that utilities are afforded unique exemption status in the use tax laws, and are not characterized as manufacturers but as utilities, and therefore, even if Arkansas Power & Light Company had an exemption, it would not be under the manufacturing exemption of Ark. Stat. Ann. § 84-3106 (D)(2), but would be limited to Ark. Stat. Ann. § 84-3105.1 (H).

Appellant brings this appeal from the adverse decision of the Pope County Chancery Court.

For reversal appellant contends the chancellor erred in finding that appellee Research-Cottrell, Inc., a contractor, is entitled to the benefits of the use tax exemption found in Ark. Stat. Ann. § 84-3106 (D)(2)(d).

Under appellee’s first contention we find the issue to be whether appellee Research-Cottrell, in performing its contract with Bechtel Corporation (the general contractor) to install a cooling tower at the nuclear generating facility of Arkansas Power & Light Company, is entitled to the exemptions to the use tax found in the above cited statute.

Under well established law, appellee, Research-Cottrell, Inc., has the burden of clearly proving any right to an exemption. C.J.C. Corporation v. Cheney, Commissioner, 239 Ark. 541, 390 S.W. 2d 437 (1965).

The basic use tax exemptions were enacted in Act 487 of the 1949 Acts of Arkansas, (Ark. Stat. Ann. § 84-3106). These basic use tax exemptions have been amended several times, including Act 5 of the 1968 Acts of Arkansas (First Ex. Sess.) which is now codified as Ark. Stat. Ann. § 84-3106 (D)(2)(d) (1973 Cum. Supp.). The exact language of the statute is as follows:

“There are hereby specifically exempted from the taxes levied in this Act:
“(D)(2)(d) Machinery and equipment required by State law or regulations to be installed and utilized by manufacturing or processing plants or facilities in this State to prevent or reduce air and/or water pollution or contamination which might otherwise result from the operation of such plant or facility.”

This part of the statute was passed because the legislature recognized the increased anxiety of concerned citizens about damage to the environment caused by the disposal of industrial waste and thermal discharge. About the same time federal and state governments began pollution abatement efforts which took several forms. One method was to grant subsidies in the form of tax incentives. By the end of 1969 a number of states had amended their tax laws to offer one or another form of incentive as a mode of approach to the pollution problem.

Arkansas passed the cited exemption to the use tax laws in an effort to encourage industries to make substantial capital investments in order to prevent and reduce air and water pollution and to protect the overall environment. This was clearly the purpose of the tax exemption.

Appellee, to qualify for the pollution use tax exemption, must fit precisely within the statutory definition.

Appellant takes the position that a cooling tower is not machinery and equipment but is only “a massive cement structure.” Such a characterization of the cooling tower does not preclude its being machinery or equipment.

Appellant also draws a comparison between the cooling structure at issue and a chimney, asserting that an ordinary person would share appellant’s reluctance to characterize this tower as a machine. Appellee, on the other hand, has made available the testimony of the mechanical engineer who was responsible for the design and construction of the cooling tower and who found no difficulty in denominating this tower a machine. He stated that natural draft cooling towers are evaporative cooling machines, and probably the largest pollution control mechanisms in use today. In this instance, the cooling machine serves to prevent the hot water, which is a necessary by-product to electrical generation, from damaging the waterways (in this instance Dardanelle Reservoir). The testimony was that fish and plant life would be significantly damaged in the Reservoir without the operation of the cooling tower.

The testimony of one of appellee’s engineers on this issue follows:

Q. Could you briefly for us, in your own words, just describe what is an evaporative cooling tower?
A. An evaporative cooling tower is really quite a simple machine that uses the laws of nature to do its work for it. It consists of a device which raises water to some elevation, allows it to fall back to the ground thereby engaging with air which is moving in the other direction and allowing the transfer of energy from the water to the air and heat in the form of energy is being transferred.
* * *
Q. All right, would you describe this cooling tower as a pollution control device, Mr. Haggerty?
A. Yes, it certainly is. Its function is to prevent the discharge of the very high quantities of heat into the local body of water, which would result in thermal pollution of that body of water. So its use, therefore, is a pollution control device designed to prevent thermal pollution.
Q. Also would you describe the cooling tower, not only as a pollution control device, but as a machine as you understand the word?
A. Yes, it’s a machine in that it is probably the largest single system cooling device of its kind. Largest type of machine ever made in fact.

In Blankenship v. W. E. Cox & Sons, 204 Ark. 427, 162 S.W. 2d 918 (1942), we relied upon the Webster International Dictionary definition of the word “machine” as being “any device consisting of two or more resistant, relatively constrained parts, which, by a certain pre-determined intermotion, may serve to transmit and modify force and motion so as to produce some given effect or to do some desired kind of work ...” We additionally pointed out that “a crowbar abutting against a fulcrum” and “a pair of pliers in use” would fall within any “strict definition” of the word “machine.” Later in Ben Pearson, Inc. v. The John Rust Co., 223 Ark. 697, 168 S.W. 2d 893 (1954), we incorporated the definition found in Blankenship, supra, and added an extract from Corning v. Burden, 56 U.S. (15 How.) 252, 14 L. Ed. 683, to the effect that “the term machine includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.” (Emphasis supplied.) In the case at bar, even though the principle involved in recirculating the water for cooling purposes lacks the complexity customarily associated with a machine, there is still present the dynamics of elevating (by mechanical pumps) the heated water some 447 feet and the subsequent interaction of this heated water with asbestos baffles to aid in dissipating the heat as the water descends. This interaction comports with the Blankenship and Ben Pearson, supra, definitions of a machine in that the internal components of the cooling tower comprise “two or more resistant, relatively constrained parts” which “produce some given effect or do some desired kind of work.”

The second part of the pollution control use tax exemption which appellee must come within is that the natural draft cooling tower must be required by state law or regulations to be installed to prevent or reduce air and/or water pollution which might otherwise result from the operation of such plant or facility.

Appellee’s Exhibit No. 22 was the permit issued by the Arkansas Pollution Control Commission to Arkansas Power & Light Company. This permit is required by Ark. Stat. Ann. § 82-1908 (2). The statute states that it is unlawful for any person to discharge any effluent into the waters of the state without having first applied for and obtained a disposal permit from the Commission.

Appellee’s Exhibit No. 23 is a letter from the attorney for the State Department of Pollution Control and Ecology. The letter states inter alia:

“In summary, there is no question that the cooling tower was a required pollution control system under the Arkansas Water and Air Pollution Control Act Regulation No. 2, and the terms of the Commission permit. Absent the cooling tower, thermal pollution of the Dardanelle Basin would inevitably result from the combined discharges of cooling water by the two nuclear units.”

No oral testimony nor documentary evidence was offered by the Department of Finance and Administration to controvert the fact that the cooling tower was required by state law.

During the trial Mr. Dennis Haggerty, engineer of appellee, testified that the Arkansas Power & Light Station at Russellville is really an energy processing plant. He explained how the manufacture of electricity can be traced just as one can trace the output of a plant that manufactures steel or processes food. Like any other manufacturing facility, a power processing plant converts raw materials into a salable product.

In addition to the testimony which indicated that the power plant does manufacture electricity, there is also Arkansas judicial authority for this position. In Morley, Commissioner of Revenues v. Brown and Root, Inc., 219 Ark. 82, 239 S.W. 2d 1012 (1951), we held that personal tangible property purchased by contractors engaged in construction of a dam used in part for “manufacturing” of electricity was exempt from the use tax to the extent that property went into the construction of the dam. We specifically characterized the generating of electrical power as a manufacturing process in Morley, supra.

Appellant argues that exemptions for utilities are restricted to Ark. Stat. Ann. § 84-3105.1 (H) (Act 439 of 1969 as amended by Act 222 of 1971). We find that Act 222 of 1971 removes many of the use tax exemptions which were formerly granted to public utilities, but said act does not indicate that it is exclusive and that there could not concurrently exist an exemption for pollution control equipment. For appellant to argue that the pollution control exemption applies only to some types of manufacturers and not to others is not rational for it would be tantamount to saying that the Arkansas legislature is encouraging some industries to control the environmental pollution problem while discouraging other industries from attempting to do so. It is apparent to this Court that Section (D)(2)(d) of Act 5 of 1968 was intended to grant tax incentives for pollution equipment to any industry which has the capability of polluting the air or water in Arkansas.

Appellant contends further that even if the exemption were available to Arkansas Power & Light Company, it is not available to appellee Research-Cottrell as appellee is a contractor and as such must pay the use tax despite exemptions available to owners. Appellant relies upon Act 125 of 1965 Acts of Arkansas (Ark. Stat. Ann. § 84-3129, et seq.) which levied a 3% tax on all tangible personal property purchased by contractors to be used in the performance of contracts within the state. It is important to note that Section 6 of Act 125 of 1965 states:

“The provisions of this Act shall be cumulative to the provisions of Act 487 of 1949 (As Amended).”

Act 487 of 1949 is the basic use tax exemption statute and one of several amendments to it was Act 5 of 1968 previously referred to which included the “pollution” exemption under consideration here. Ark. Stat. Ann. § 84-3106 is Act 487 of 1949 along with the amendments which have been adopted since then. This issue was considered in Bryan Leary, Comm. of Revenues v. Wolfe, 242 Ark. 715, 416 S.W. 2d 266 (1967). In Wolfe, the Arkansas Commissioner of Revenues sought to assess the use tax against an oil and gas drilling contractor headquartered in Oklahoma on machinery and equipment used in Arkansas operations. The specific exemption of the use tax law included manufacturing and processing machinery, materials and supplies used directly in the mining and production of natural resources. The chancellor found that the contractors were entitled to claim the use tax exemption and held for the taxpayer. On appeal, we affirmed, stating:

“Had the intent been to repeal any provision of the law then existing, the legislature was free to so recite in Act 125.”

Thus in Wolfe we held that the exemptions afforded the taxpayer by Act 487 of 1969 (the basic use tax exemptions) were not repealed by Act 125 of 1965.

The plain and unambiguous wording of the exemption herein reflects that it was based upon the nature of the transaction and not the identity of the taxpayer. It is not an exemption granted only to manufacturers or processors but machinery and equipment “installed and utilized by manufacturing or processing plants or facilities in this State” .... are specifically exempted from the tax.

To hold the exemption did not apply to contractors would defeat the purpose of the Act which was designed to encourage the construction and installation of anti-pollution machinery and equipment. In very few instances would the manufacturer undertake construction and/or installation of the magnitude involved herein. In the regular course of business the manufacturing plant owner would in all probability contract with a qualified contractor to do the construction work.

Accordingly, we agree with the learned trial court in its holding that:

“1. The design, furnishing and installation of a natural draft cooling tower by plaintiff under its subcontract with Bechtel Corporation, the general contractor for Arkansas Nuclear 1 of Arkansas Power & Light Company, comes within the specific exemption of Ark. Stats. § 84-3106 (D)(2) of the Arkansas Compensating Use Tax being machinery and equipment required by State law or regulations to be installed and utilized by manufacturing or processing plants or facilities in this State to prevent water pollution or contamination which might otherwise result from the operation of such plant or facility.
“2. Plaintiff, as a contractor, is entitled to the benefits of the specific exemption of Ark. Stats. § 84-3106 (D)(2)(d), and is entitled to relief from the Arkansas Compensating Use Tax in this transaction.
“3. The notice of assessment by defendant against plaintiff was wrongfully issued and the specific exemption from the Arkansas Compensating Use Tax set forth in Ark. Stats. § 84-3106 (D)(2)(d) exempts plaintiff from the Arkansas Compensating Use Tax.”

Having found that appellee is entitled to the exemption provided in the pertinent section of the anti-pollution statute we do not reach consideration of its contention that the cooling tower was machinery and equipment used directly in manufacturing.

Judgment of the trial court is affirmed in all respects.

George Rose Smith, Fogleman and Jones, JJ., dissent.

George Rose Smith, Justice,

dissenting. I find it little short of astonishing that a majority of this court can describe Nuclear One as a machine, especially when the opinion recognizes that the taxpayer has the burden of clearly showing its right to the exemption (“To doubt is to deny,” as we have said), and when the taxpayer is a foreign corporation having little claim to a free ride at the expense of our taxpaying citizens.

Nuclear One is essentially an enormous cooling tower made of steel, concrete, and stone — all immovable components in its construction. True, it houses machinery which lifts the hot water to the top of the tower, so that it can be cooled by falling back to earth by gravity. But the point at issue is not the exemption of the machinery contained within the tower; certainly that is exempt. The question is the right of the tower itself to the exemption, as a machine.

The majority quote the testimony of one of the appellee’s employees, who presumably put the matter in the light most favorable to his employer:

An evaporative cooling tower is really quite a simple machine that uses the laws of nature to do its work for it. It consists of a device which raises water to some elevation, allows it to fall back to the ground, thereby engaging with air which is moving in the other direction and allowing the transfer of energy from the water to the air, and heat in the form of energy is being transferred.

According to that definition of a machine, there are many machines that have not been recognized as such, with an attendant tax exemption. In a concrete rice-mill the rough rice is carried by machinery to the top level, so that it can be economically processed by machinery as it descends by gravity to ground level. But we don’t think of the rice mill as a machine. In a tower for the manufacture of leaden shot the lead is carried to the top of the tower and dropped through the air in a molten state, so that it forms into spheres before it hits the cooling water at the bottom. But we don’t think of the tower as a machine. In the Washington Monument people are carried to the top in elevators and brought back down by gravity. But we don’t think of the monument as a machine. On Arkansas farms fodder is lifted to the top of a silo so that it can settle to the bottom by gravity and be consumed by cattle. But we don’t call the silo a machine. By a coincidence, however, Nuclear One is popularly called a silo. I think the popular view to be right; Nuclear One is a silo, not a machine.

Jones, J., joins in this dissent.

John A. Fogleman, Justice,

dissenting. While I must agree with the majority that the cooling tower was equipment, if not machinery, used directly in manufacturing, I do not agree that there was an exemption from the use tax in this case. Tax exemption provisions must be strictly construed in favor of the state and against the taxpayer and to doubt is to deny the exemption. Heath v. Midco Equipment Co., 256 Ark. 14, 505 S.W. 2d 739. Of course, the burden was upon the appellee to show its entitlement to exemption beyond reasonable doubt. Arkansas Beverage Company v. Heath, 257 Ark. 991, 521 S.W. 2d 835. This it failed to do in my opinion.

First, I should say that I do not consider that Ark. Stat. Ann. § 84-3106 (D)(2)(d) is an exemption separate from § 84-3106 (D)(2). The sub-section (d) merely describes one of the purposes for which machinery and equipment used directly in manufacturing articles of commerce at manufacturing and processing plants or facilities in the State of Arkansas may be purchased and used to qualify for exemption. The tax was assessed on the materials and components that went into the construction of the tower, not on the tower itself. In order to qualify for the exemption appellee must first show that the tax was assessed on machinery and equipment. This, it did not do. I cannot tell from the record before us that any item on which the tax was assessed was machinery or equipment. Certainly not all of it was.

Secondly, whatever was purchased by Research-Cottrell and used in building the cooling tower, was not used directly in producing or manufacturing, fabricating, assembling, processing, finishing or packaging electricity, as required to qualify under § 84-3106 (D) (2), before consideration can be given to the subordinate uses and purposes set out in subsections (a) through (e). In this connection, it should be emphasized that sub-section (d) did not amend the introductory language of § 84-3106 (D) (2) as the majority seems to treat it. It merely added a purpose to subsection (D).

I fear the majority has misread Act 5 of the First Extraordinary Session of 1968. Sec. 2 of that Act is an amendment of subsection (D) of § 6 of Act 487 of 1949, as amended by § 1 of Act 55 of 1955, as amended by § 1 of Act 141 of 1957, as amended by § 1 of Act 35 of 1959, as amended by § 1 of Act 140 of 1961, as amended by § 2 of Act 113 of 1967 (§ 84-3106 (D) Arkansas Stat., 1947) to read as it is reproduced in Vol. 7B Ark. Stat. Ann. Supp. 1973, and not as quoted in the majority opinion. The majority ignores the language of § 84-3106 (D) (2).

In the next place, Research-Cottrell did not purchase machinery and equipment to be installed and utilized by a manufacturing and processing plant or facility in this state. It did not install and utilize any of the items purchased for its own operation, if that could be called manufacturing. As pointed out before, the assessment is not on machinery and equipment in the first place and the question is not the use to which Research-Cottrell’s end product will be put. The question is to what use did Research-Cottrell put those items upon which the tax was assessed. Research-Cottrell did not use them to prevent air or water pollution. Its customer, Arkansas Power & Light Company, did.

Under the construction given this act by the majority, any producer of any machinery or equipment which it sells to some manufacturer in Arkansas for installation and use in Arkansas will have a use tax exemption for everything he purchases for use in producing that machinery and equipment. I submit that the General Assembly had no such intention.


author: Carleton Harris, Chief Justice.

text:
    Mary E. BAKER et al v. Claude ODOM et al
    75-110
    529 S.W. 2d 138
    Opinion delivered November 10, 1975

      McArthur, Lofton & Wilson, for appellants.

      Hall, Tucker, Lovell & Bramhall, for appellees.
   Carleton Harris, Chief Justice.

Appellees, fifty-nine persons, almost all of whom reside within one mile, most within a quarter or a half mile, of appellants’ dirt motorcycle racetrack, instituted this suit in equity, seeking to enjoin the operation of the track as a private nuisance. Appellants are Mary Baker and her son, Jim Bker, who own the land, and Phillip DuVall and Marion D. Caple, who have leased the property and have developed a motorcycle dirt track. After a hearing, the chancellor granted a temporary restraining order and subsequently on trial of the issues, permanently enjoined appellants from conducting motorcycle or automobile races at the track, finding same to constitute a private nuisance with reference to appellees. From the decree so entered, appellants bring this appeal. For reversal, three points are asserted, which we proceed to discuss in the order listed.

“I.

TRIAL COURT ERRED IN REFUSING TO DISQUALIFY HIMSELF AND TO VACATE THE TEMPORARY INJUNCTION WHICH HE GRANTED.”

Following the issuance of the temporary restraining order, appellants filed a motion to vacate the order, alleging that the chancellor owned land at least as near to the property of the appellants as some of the named appellees; further, that the chancellor was an incorporator of the Benton Speed-bowl, a competitor of the appellants, it being thus asserted that he was disqualified to act in the case, and it was contended that the order should be set aside.

As to the first contention, the principal reason for seeking the disqualification of the judge according to appellants, was that he might feel that the value of his property was affected. A hearing was set, at which time the chancellor stated, with respect to the proximity of his home to appellants’ property, that he lived from a mile and a half to two miles “as the crow flies” from the racetrack property, and that he did not feel that the track would have any “bearing upon the value of my property whatsoever.” There was no showing by appellants, nor any effort to show, that the chancellor had been subjected to noise caused by the racing motorcycles and, of course, the burden was upon appellants to make such a showing.

As to the second ground for disqualification, the chancellor stated that he had been an incorporator of the Benton Speedbowl, incorporated in 1958, but that he had disposed of his interest about five years before the present suit, did not even know who was operating the Benton Speedbowl, and had no connection or interest whatsoever in the mentioned Speedbowl. The chancellor declined to disqualify. When the case came on for trial, appellants served a subpoena on the judge, who refused to honor same, stating that he certainly was not going to testify in a case that he was trying. At that time, he also stated to counsel for appellants, “I will tell you anything you want to know.” We think there was no showing that the court was “interested” as that term has been defined in Article 7, Section 20 of the Constitution of the State of Arkansas and Ark. Stat. Ann. § 22-113 (Repl. 1962). See Foreman v. Marianna, 43 Ark. 324. Appellants admit that the trial court stated that it no longer had an interest in the Benton Speedbowl, but then propounds the question, “Did he sell or give it to a relative or close friend?” Of course, this information could have been obtained by subpoenaing the records of the corporation; moreover, as already pointed out, the court stated that it would “tell you anything you want to know”, but no questions were asked in this regard. We are of the view that the record falls short of reflecting facts that would warrant disqualification.

“II.

TRIAL COURT ABUSED ITS DISCRETION IN LIMITING THE PRETRIAL DISCOVERY OF THE APPELLANT.”

We do not agree. The complaint is that the court abused its discretion in requiring appellees to answer only nineteen of fifty-one interrogatories propounded by appellants. These interrogatories were reviewed individually in a hearing, and, without going into detail, the grounds for refusing to require answers were generally that appellants had asked for legal conclusions — or for facts equally available to both parties — or for facts already admitted. With respect to other queries, appellees’ counsel stipulated that the testimony of all appellees would be the same as that of the appellees who had testified at the preliminary hearing for a temporary restraining order. Additionally, appellants point to no specific instances of surprise or prejudice resulting from the trial court’s action, and absent a specific showing of prejudice, it would appear that no abuse of discretion occurred.

“III.

THE GRANTING OF A PERMANENT INJUNCTION WAS CONTRARY TO THE EVIDENCE AND THE LAW.”

Again, we cannot agree with the contention of appellants. No point would be served by detailing the testimony of the numerous witnesses who testified that the operation of tlo track was a nuisance. Virtually all testified that the operation produced noise and dust that disturbed their enjoyment and use of their lands . . . this noise and dust preventing them from getting outside their houses when races were being held . . . the noise made sleeping impossible . . . the noise prevented normal conversation outdoors . . . television could not be enjoyed. According to one witness, the noise resembled “four or five men out there with chainsaws cutting down trees.” Two complained about trespassers who crossed their property to reach the track. The testimony reflected that the area involved was a semi-rural residential area with only a few commercial establishments.

Witnesses for appellants testified that the area where appellees resided already contained some commercial enterprises, including an Alcoa plant. The court received testimony that appellants had spent over $36,000.00 to build their track, that races had been conducted only on a few Sundays each month, and that appellants planned to develop an automobile and motorcycle speedway on their grounds, complete with parks, trees and grandstands. Appellant also offered three witnesses, living within a three-quarter mile radius of the track, who said that the noise from the track did not disturb them. Finally, appellants called an expert, an engineer who specialized in sound measurements for radio stations. The witness measured sound levels from five motorcycles at appellants’ track and made computations that purportedly reflected noise levels for thirty motorcycles. He also made computations for noise levels from race cars. On cross-examination, however, the witness admitted that appellant Baker had supplied the measuring instrument used in the tests, and that he had never used such an instrument before. Moreover, he had not checked the instrument for correct calibration. DuVall and Baker testified that there were plans to place mufflers on the motorcycles in the future, but no expert testified as to the value of these devices in reducing noise.

The opinion in Durfey v. Thalheimer, 85 Ark. 544, 109 S.W. 519, sets forth the rule that applies to nuisances resulting from the operation of a business:

“It is the duty of everyone to so use his property as not to injure that of another, and it matters not how well constructed or conducted a [business] may be, it is nevertheless a nuisance if it is so built as to destroy the comfort of persons owning and occupying adjoining premises, creating annoyances which render life uncomfortable, and it may be abated as a nuisance.”

Though no Arkansas cases have considered whether the operation of a motor vehicle racetrack may create a nuisance, other jurisdictions provide several decisions on the issue. See generally Annotation, 41 ALR 3d 1273. The general rule of these cases, illustrated in Bedminster v. Fargo Dragway, Inc., 253 A 2d 659, is in accord with that of the Durfey case, supra, i.e., while not a nuisance per se, a motor vehicle racetrack may become a nuisance either because of the locality in which it is carried on or because it is conducted in an improper manner. In particular, other courts have found that satisfactory evidence of noise, fumes and dust from a racetrack, disrupting the activities of surrounding landowners, may constitute sufficient grounds for declaring the racetrack a nuisance. Bedminster v. Vargo Dragway, Inc., supra; Sakler v. Huls, 20 Ohio Ops. 2d 283, 183 NE 2d 152.

Appellants Baker and DuVall testified that they planned to increase the extent of their operations by building a new racetrack and including automobile races in future programs.

We think that a preponderance of the testimony clearly establishes that previous races conducted by appellants seriously interfered with the enjoyment of neighboring residential property, and we find no error in the ruling by the court that same constituted a nuisance. However, the court also restrained appellants from operating an automobile racetrack, and under our cases this phase of the court’s order must be modified. In Cooper v. Whissen, 95 Ark. 545, 130 S.W. 703, we stated that where an injunction is sought merely on the ground that a lawful project will be put to a use that will constitute a nuisance, the court will ordinarily refuse to restrain the construction or completion of the project, leaving a plaintiff free to thereafter assert his rights in the proper manner if the contemplated use results in a nuisance. It was pointed out that ordinarily an injunction, in such instances, will not be granted unless the act threatened is a nuisance per se. While we have no cases on the subject, it appears generally speaking, that the operation of a motor vehicle racetrack is not a nuisance per se. See Annotation, 41 ALR 3d 1276. In fact, we know of no case to the contrary.

Accordingly, the restraining order issued by the Saline County Chancery Court is modified to the extent of setting aside such order insofar as it relates to the racing of automobiles. Let it be emphasized, however, that this modification is due to the fact that insufficient evidence was offered relative to automobile racing to justify such restraining order and appellants, if proceeding further with plans to develop an automobile racetrack, will do so entirely at their own risk, for as pointed out in Cooper v. Whissen, supra, a claimant is free “to assert his rights thereafter in an appropriate manner if the contemplated use results in a nuisance.”

Affirmed as modified.

      Married couples are counted as one in this computation.

      § 22-113 provides:
      “No judge of the circuit court, justice of the county court, judge of the court of probate or justice of the peace, shall sit on the determination of any cause or proceeding in which he is interested, or related to either party within the fourth degree of consanguinity or affinity, or shall have been of counsel, without consent of parties.”

      Sixteen testified at the first hearing.

      One witness testified that one Saturday or Sunday afternoon she heard two cars which evidently were running around the track, and oil and gas fumes “hung so heavy that we had to shut our windows because my husband has bronchial trouble and it bothered him.” She said the fumes were “still there the next morning.” This was the only testimony relative to the racing of automobiles.


text:
    Ralph CANTRELL v. STATE of Arkansas
    CR 75-135
    529 S.W. 2d 136
    Opinion delivered November 10, 1975

      Don Langston, for appellant.

      Jim Guy Tucker, Atty. Gen., by: Gary Isbell, Asst. Atty. Gen., for appellee.
   Carleton Harris, Chief Justice.

This proceeding to revoke appellant’s probation arises from undisputed facts and presents solely a question of statutory construction. Appellant first came before the trial court on a burglary and grand larceny charge in 1969. The trial court refused to accept appellant’s guilty plea, however, and instead placed him on “court probation” for three years. In September, 1970, appellant committed a second burglary, and this offense resulted in the court rendering two separate sentences for appellant. With respect to the 1969 burglary, the trial court revoked appellant’s “court probation” by accepting his plea of guilty, and placing him on probation for a period of five years, dating from September, 1970, in accordance with the provisions of Ark. Stat. Ann. § 43-2331 (Supp. 1973). In respect to the 1970 burglary, the trial court sentenced appellant to three years, with two suspended. In April, 1975, appellant was convicted in the Fort Smith Municipal Court of possession of marijuana, driving without a driver’s license, and failure to answer a summons, and the prosecuting attorney petitioned the trial court to revoke appellant’s probation on the 1969 offense. The trial court granted the petition and sentenced appellant to four years in the Department of Correction. From the judgment so entered, appellant brings this appeal, arguing that the length of his probation for the 1969 burglary violated the five-year limit placed on probation by Ark. Stat. Ann. § 43-2331 (Supp. 1973).

We do not agree with appellant in his argument. The controlling Arkansas decision on the question of “court probation,” utilized by the Sebastian County Circuit Court on the 1969 charge, is Maddox v. State, 247 Ark. 553, 446 S.W. 2d 210. There, the trial court postponed the acceptance of Maddox’s guilty plea for one year, conditioned upon his good behavior. Within two months, Maddox had committed other crimes, and the trial court revoked the “court probation” and accepted his plea of guilty to the initial charge, giving him a twelve year sentence. Maddox appealed, contending that because the trial court had given him a “one year probation,” he could not be sentenced to any period longer than one year. We rejected the argument, holding that the use of “court probation” to postpone acceptance of a guilty plea did not limit the trial court’s discretion as Maddox later violated the terms of the probation. This was the principal question in Maddox, i.e., whether the court was limited to its one year probation, or had the authority to render the sentence that was rendered. We said that the controlling fact is when the plea is accepted. Further, from the opinion:

“We perceive no language in this statute nor in any case cited to us that limits the power and the discretion of the trial court to delay the acceptance of a plea. In the case at bar we cannot say that one year is an unreasonable length of timeto defer acceptance of a plea. ***
“Should we accept appellant’s argument we would circumscribe and severely handicap our trial judges in their efforts to determine when their trust and compassion should be exercised for the ends of justice and the best interest of the public as well as the defendant. The future of deserving individuals, especially youthful offenders, who come before our sentencing courts should not be jeopardized by such a narrow construction as urged by the appellant. Nor do we agree with the appellant that the sentence imposed is excessive since it exceeded one year. The sentence was within the statutory limits which are from 1 to 21 years.”

The cited language explains clearly the benefits of “court probation,” and we observe no reason why we should now render the narrow construction suggested by appellant.

The facts in the instant case and Maddox are virtually identical, each case involving the same informal “court probation” procedure. Only the statute cited by appellant is different — § 43-2331 instead of § 43-2324. However, Maddox still controls because the applicability of § 43-2331, limiting probation to five years, is conditioned upon the very first line of that section, “Upon entering a judgment of conviction *** the court may suspend the imposition or execution of sentence and place the defendant on probation for such period and upon such terms and conditions as the court deems best.” [Our emphasis.] No judgment of conviction for the first offense was entered until September, 1970, and the period of probation for that first offense thus commenced in September, 1970. It is readily apparent that the April, 1975 offense was clearly within that five year period.

Affirmed.

Byrd, J. dissents.

      Under the “court probation” procedure, the trial court retains jurisdiction over one admittedly guilty of a felony, but gives him a chance to rehabilitate himself, by a formal refusal to accept his guilty plea. By retaining jurisdiction, however, the trial court can revoke the “probation” by accepting the plea at a later time, if the person commits another offense.

      The court could also have rendered this sentence under Ark. Stat. Ann. § 43-2324, and actually did not state which section was invoked.

       Nor can’we say that three years is an unreasonable length of time.

       Actually, it appears that the court had been very lenient with Cantrell. In June, 1973, a petition was filed requesting that probation be set aside because of the fact that Cantrell had been convicted in Municipal Court at Fort Smith for the offense of DWI and no driver’s license, being fined in the sum of $173.00. The court, however, did not revoke the probation. Again, in April, 1974, Cantrell was convicted of disturbing the peace and public drunkenness, fined $75.00 for the former offense and $50.00 for the latter, and the prosecuting attorney sought revocation of the probation. This petition was also denied.


author: George Rose Smith, Justice.

text:
    ARKANSAS STATE HIGHWAY COMMISSION v. Bessie C. LEWIS
    75-139
    529 S.W. 2d 142
    Opinion delivered November 10, 1975

      Thomas B. Keys, Kenneth R. Brock, for appellant.

      Lester & Shults, for appellee.
   George Rose Smith, Justice.

When this condemnation action was filed in 1971 the appellee owned a 14.51-acre tract at the intersection of West Markham Street and Shackleford Road, in Little Rock. The highway department is taking all except 5.42 acres of that tract. The taking is partly for a controlled-access highway and partly for city streets, the landowner having a right of access to the latter. The jury fixed the landowner’s compensation at $88,000. Several points for reversal are argued.

The highway department, in filing the complaint and declaration of taking, as amended, incorporated by reference the plans pursuant to which the highway improvement is to be constructed. See Ark. State Highway Commn. v. Wilmans, 239 Ark. 281, 388 S.W. 2d 916 (1965). At the beginning of the trial counsel for the condemnor conceded that the highway department was bound by the plans and then went on to say: “We will build the highway in accordance with the plans, and any judgment entered in this case can certainly specify in the event those plans were changed with respect to the control of access to this property, that this would constitute a new taking for which the landowner would be entitled to damages.”

Despite that assurance on the part of counsel the court gave the landowner’s requested instruction number two. That instruction told the jury that the department was acquiring the property for “highway purposes,” which were then defined as including the eleven purposes enumerated in Ark. Stat. Ann. § 76-532 (Repl. 1957), all of which were then read to the jury. The enumeration included such patently extraneous purposes as rock quarries, gravel pits, borrow pits, shops, storage yards, drainage, stock trails, cattle passes, the elimination of grade crossings, and other matters not pertinent to the particular improvement to be constructed in this instance. We have recognized that the highway department, in taking the fee simple, has the power to devote the property to various purposes listed in the statute. Ark. State Highway Commn. v. Wallace, 247 Ark. 157, 444 S.W. 2d 685 (1969). It does not follow, however, that the jury should be presented with an exaggerated and misleading conception of the actual uses to which the tract being taken might be put in the future. The instruction was abstract and should not have been given. We cannot say with assurance that its effect upon the jury was not prejudicial.

In view of the necessity for a new trial two other points should be mentioned. First, the court was unduly strict in limiting the highway department’s cross-examination of the witness Barnes. The great value of the right of cross-examination has been emphasized so frequently that we need not cite the cases. Counsel sought to show, by interrogating Barnes, that in other condemnation cases he had testified that the taking had not enhanced the value of the landowner’s remaining land, which was thereafter promptly sold at prices in excess of the valuation given by the witness. Of course, the trial judge has much discretion in controlling cross-examination, so that the inquiry does not go too far afield. Even so, if counsel could bring out by Barnes’s own admissions that his earlier testimony had proved to be wrong in a number of instances, his credibility might well have been seriously impaired. The effort should have been permitted.

We perceive no error in the court’s rulings with respect to the direct examination of the landowner’s witness Meeks. He testified to the diminution in the value of the landowner’s remaining tract that would result from the highway department’s predominant control of the part being taken. That type of damage was recognized in the Wallace case, supra, and in Ark. State Highway Commn. v. Kesner, 239 Ark. 270, 388 S.W. 2d 905 (1965). The court’s explanation, arising in the heat of the trial, may not have been as precise as it might have been, but that is a matter that counsel may be expected to improve upon in their preparations for a second trial.

Reversed.

Jones, J., not participating.