author: Steele Hays, Justice.

text:
    Berniece JASPER v. JOHNNY’S PIZZA
    91-23
    807 S.W.2d 664
    Supreme Court of Arkansas
    Opinion delivered April 29, 1991

      James E. Smedley, for appellant.

      Shackleford, Shackleford & Phillips, P.A., for appellee.
   Steele Hays, Justice.

Berniece Jasper appeals from an order granting summary judgment. Ms. Jasper sued Johnny’s Pizza for injuries sustained in a slip and fall at the restaurant. Johnny’s Pizza denied ownership or operation of the restaurant and alleged that Huntaway, Incorporated, owned the restaurant. Johnny’s Pizza moved for summary judgment supported by an affidavit of Chester Huntsman that Johnny’s Pizza had no connection with the restaurant.

Ms. Jasper sought and obtained an extension until July 1, 1990, to answer the motion for summary judgment. That date came and went without response and on July 17 an order was entered granting summary judgment.

On July 20 Ms. Jasper filed an amended complaint naming Chester Huntsman and Huntaway, Incorporated, d/b/a Johnny’s Pizza, as defendants, filing at the same time a response to the motion for summary judgment and later (on July 27), a motion to set aside the summary judgment. Johnny’s Pizza moved to strike the amended complaint and on August 10,1990, the trial court struck the amended complaint upon a finding that it was filed after the cause of action had been dismissed. On August 24, 1990, Berniece Jasper filed notice of appeal.

We do not reach the merits because the notice of appeal is deficient. First, it fails to designate the judgment or order appealed from as required by Ark. R. App. P. 3(e). While we do not hold that this defect is fatal, we do hold that the timing of the notice of appeal renders it a nullity. The pertinent dates are:

July 17, 1990 - Order of summary judgment filed.
July 27, 1990 - Motion to set aside summary judgment.
August 10, 1990 - Order striking amended complaint.
August 24, 1990 - Notice of appeal.

The deadline for filing notice of appeal from the July 17 order of summary judgment was extended by the July 27 motion to set aside the order of summary judgment. Ark. R. App. P. 4(b). But where, as here, the trial court does not act on such motion, it is deemed denied as of the 30th day [Ark. R. App. P. 4(c)], which in this instance would be August 27. In that circumstance a notice of appeal filed before August 26 or after September 26 would not be timely.

The problem here is that appellant’s notice of appeal was prematurely filed on August 24, which rendered it ineffectual. Ark. R. App. P. 4(c) provides in part:

A notice of appeal filed before the disposition of any such motion or, if no order is entered, prior to the expiration of the 30-day period shall have no effect. A new notice of appeal must be filed within the prescribed time measured from the entry of the order disposing of the motion or from the expiration of the 30-day period. No additional fees shall be required for such filing. [Our emphasis.]

With respect to the order of August 10, 1990, from which the notice of appeal was timely, that order merely disallowed an attempt to amend the complaint after the case had been concluded by summary judgment. Since there is no valid appeal from the summary judgment, an appeal from the denial of an amendment to the complaint would be purely academic.

Appeal dismissed.

       August 26,1990, being a Sunday, the thirty days began to run on Monday, August 27, 1991. Ark. R. Civ. P. 6.


source: Caselaw Access Project

license: Public Domain

text:
    William Randall McKIEVER v. Connie Lee McKIEVER
    90-328
    808 S.W.2d 328
    Supreme Court of Arkansas
    Opinion delivered April 29, 1991

      Gibson & Hashem, by: C. C. Gibson III, for appellant.

      Gill, Johnson & Gill, by: Kenneth B. Johnson, for appellee.
   Steele Hays, Justice.

These parties were divorced by a decree entered on September 14,1987. The decree approved and incorporated a property settlement agreement by which Connie McKiever (appellee) was to receive $25,000 for her interest in marital property- $10,000 on entry of the decree and $15,000 on or before six months following. Custody of two minor children was awarded to Mrs. McKiever and Dr. McKiever (appellant) was ordered to pay $1,500 per month in child support. The agreement included the following provision:

As additional support for the children, the husband shall, on or before the expiration of 12 months from the date of a final divorce decree acquire at a cost of not more than $80,000.00 nor less than $50,000.00, a resident premises for the parties’ children, at which wife shall be allowed to reside. This house will be selected by wife and negotiated for by husband. The title to the residence premises shall be held by husband in trust for the children and shall be conveyed over to the children upon the youngest child reaching the age of majority, subject to any remaining mortgage debt and any easements and restrictions of record. The husband shall be responsible for the cost of exterior and structural maintenance, real estate taxes and structural fire and casualty insurance until title is conveyed to the parties’ children.

On September 12, 1988, Mrs. McKiever filed a petition to find Dr. McKiever in contempt of court for refusing to acquire a residence for the children and for his failure to pay Mrs. McKiever the $15,000 balance due her under the agreement.

Dr. McKiever alleged in response that the provision of the settlement set out above was so vague as to be an unenforceable contract, and that a material change in circumstances justified a modification in child support. Dr. McKiever conceded the $15,000 payment was late but declared he could pay it by December 31,1988, less a credit of $4,400 he alleged he was due.

Following a hearing the chancellor upheld the property settlement agreement, found that circumstances had not changed materially, and disallowed the $4,400 credit.

On appeal Dr. McKiever renews the contention that the provision obligating him to purchase a residence for Mrs. McKiever and the children is vague and unenforceable. We reject the argument. This provision of the property settlement agreement was acceptable to both parties and their respective counsel, was approved by the chancellor and incorporated into the decree by reference. The language seems clear enough and the contention at this late date that it is vague and enforceable is unconvincing.

As to the waiver and estoppel argument, it is enough to note that this provision was for the benefit of the minor children, since the realty became theirs when the youngest reached adulthood. Too, Mrs. McKiever testified that she had attempted to complete the purchase of a residence within the twelve months but that Dr. McKiever had refused. The chancellor’s finding that there had been no waiver was not clearly erroneous.

Dr. McKiever next contends the trial court erred in failing to make specific written findings as to why it did not apply the family support chart in reviewing Dr. McKiever’s child support obligations.

Ark. Code Ann. § 9-12-312(a)(2) (Repl. 1991) provides:

In determining a reasonable amount of support, initially or upon review to be paid by the noncustodial parent, the court shall refer to the most recent revision of the family support chart. It shall be a rebuttable presumption for the award of child support that the amount contained in the family support chart is the correct amount of child support to be awarded. Only upon a written finding or specific finding on the record that the application of the support chart would be unjust or inappropriate, as determined under established criteria set forth in the support chart, shall the presumption be rebutted.

Dr. McKiever claims that under the new statute the chancellor is required to enter specific findings as to why the family support chart is inappropriate. Formerly, trial courts were required to refer to the chart but the degree of dependence on the support chart was left to the discretion of the chancellor. Thurston v. Pinkston, 292 Ark. 382, 730 S.W.2d 239 (1987). Dr. McKiever maintains he is entitled to the rebuttable presumption of the new statute unless the trial court’s denial is justified by specific findings. We disagree.

We have not yet addressed this argument, but the Court of Appeals did so in Ross v. Ross, 29 Ark. 64, 776 S.W.2d 834 (1989), where there was a review by the trial court of an earlier support order. In Ross, the trial court ordered support payments under the new chart without any showing of change of circumstances. The Court of Appeals held this to be error, saying: “When support has been previously set in a decree, a change of circumstances must be found before Ark. Code Ann. § 9-12-312(a)(2) (Repl. 1991) is applicable.”

This is consistent with our per curiam adopting the new chart, 301 Ark. 627, 784 S.W.2d 589 (February 5, 1990):

In publishing its per curiam, this Court recognizes that the trial court has continuing jurisdiction to modify child support orders to advance the welfare of the child when there is a material change in circumstances. See Hilt v. Maynard, 256 Ark. 31, 576 S.W.2d 211 (1979); Lively v. Lively, 222 Ark. 501, 261 S.W.2d 409 (1953). Approval of the Family Support Chart by this Court does not per se create a material change in circumstances. In determining requested modifications of child support orders entered prior to the effective date hereof, the trial court should consider the totality of the present circumstances of the parties and avoid modifications that would work undue hardship on the parties or any persons presently dependent thereon.

The chancellor found that Dr. McKiever had failed to show a change of circumstances and the evidence fully supports that position.

As his third point Dr. McKiever argues the trial court erred in allowing the introduction of business records of Dr. McKiever’s medical practice and in refusing a post-trial motion to supplement the record. There is no merit to this point. Some computer printouts of Dr. McKiever’s financial statements had been prepared by Dr. McKiever’s accountant of nine years, Howard Sanderlin. Dr. McKiever maintains they were hearsay and it was error to admit the statements as evidence, and that his post-trial motion to supplement the record with testimony from Sanderlin about these financial statements was added error.

These documents were first discussed by Dr. McKiever on direct examination by his attorney. Dr. McKiever testified that certain figures were not correct and was then cross-examined by an attorney ad litem representing the children. After extended questioning, Dr. McKiever’s attorney objected to these documents as hearsay and the objection was overruled. We believe Dr. McKiever waived any argument on this point because he not only instigated the matter, he failed to object at the first opportunity. Pursley v. Price, 283 Ark. 33, 670 S.W.2d 448 (1984); Young v. State, 283 Ark. 435, 678 S.W.2d 329 (1984). As to the refusal of the trial court to reopen the case for additional evidence, we cannot say the chancellor’s broad discretion was abused.

Dr. McKiever’s assertion that he was entitled to a credit of $4,400 against the $15,000 still due Mrs. McKiever is quickly resolved. Dr. McKiever testified he paid $4,400 in rent payments for Mrs. McKiever under the mistaken belief he was obligated to do so. Mrs. McKiever testified Dr. McKiever had paid her rent as part of an oral agreement made at Dr. McKiever’s request so that his obligation to purchase a residence could be postponed. This was an issue of credibility which we customarily leave to the trial court. The chancellor obviously believed Mrs. McKiever and, accordingly, there was no basis for a credit as claimed.

As his last point, Dr. McKiever argues the trial court erred in awarding attorney fees of $850 to Mrs. McKiever’s attorney. We have not been shown that that amount was excessive. Price v. State, 285 Ark. 148, 685 S.W.2d 506 (1985).

AFFIRMED.


author:
David Newbern, Justice. Tom Glaze, Justice,
      Robert L. Brown, Justice,

text:
    BANK OF BEARDEN v. Delton SIMPSON, Darlene Simpson, and Gee Owens
    91-22
    808 S.W.2d 341
    Supreme Court of Arkansas
    Opinion delivered April 29, 1991

      Bridges, Young, Matthews, Holmes & Drake, by: David L. Sims, for appellant.

      Wright, Chaney, & Berry, by: Don P. Chaney, for appellee.
   David Newbern, Justice.

This mortgage foreclosure case presents a question with which we have not previously dealt. If a lender accepts both personalty and realty as collateral for a loan and, upon default, proceeds first against the personalty in a commercially unreasonable manner, how will the remainder of the debt be calculated and what are the lender’s remaining remedies? We hold that if the lender is unable to show that market value or more was obtained for the personalty sold, a rebuttable presumption arises that the remainder of the debt will be the difference between the market value of the personalty which has been sold and the debt owed at the time the personalty was sold. The Bank will be barred from foreclosure on the real estate mortgage or from a deficiency judgment if it is unable to show that the collateral was insufficient to satisfy the debt.

Delton Simpson and his wife, Darlene Simpson, operated a logging business. They refinanced four pieces of logging equipment with the Bank of Bearden resulting in their signing a note to the Bank of $34,111.42. Gee Owens, Darlene Simpson’s father, also signed the note. As additional security, a real estate mortgage was made to the Bank by Delton, Darlene, and Leatha Simpson. Due to an illness suffered by Delton Simpson, note payments were not made, and a default occurred.

The Bank sold the logging equipment without giving notice to the Simpsons, and none of the debtors were present at the sales. The items were sold separately, and the monies received were applied by the Bank partially to the refinancing note and partially to another note Delton and Darlene Simpson owed to the Bank. The Bank claimed that $19,028.01 remained due on the refinancing note which was originally for $34,111.42.

The Bank then brought this action to foreclose against the real estate. Delton and Darlene Simpson defended on the basis that the Bank should be allowed no further relief after selling their equipment in a commercially unreasonable manner. They also counter-claimed, alleging bad faith and the tort of outrage. The chancellor denied relief on the Simpsons’ counter-claim. He awarded a judgment in favor of the Bank.

In the original order, the Chancellor found that the Bank had failed to comply with the notice requirements of the Uniform Commercial Code upon selling the logging equipment.

The Chancellor’s amended order, after reciting the facts, and reaffirming its original order, stated that the Bank could “proceed to collect in accord with. . . [Ark. Code Ann. § 4-9-501 (4)]. . .its remedies, with regard to real property collateral are not governed by the U.C.C. repossession procedures.” The order further recited that “the Defendants,” naming the Simpsons and Gee Owens, had been properly served,and then it provided:

that the Defendants are justly indebted to the Plaintiff, Bank of Bearden, in the sum of $ 10,496.52 as evidenced by portion paid off on land included in total debt, after credit for pro-rata payments, plus interest ... at the rate of 10.5% per annum, as a result of a Promissory Note. . . .

The order then recited the terms of the real estate mortgage securing the note, after which it stated a total indebtedness figure of $14,665.06 plus costs “to which the Plaintiff [Bank] is entitled to have judgment against the Defendants, with said judgment to bear interest ... at a rate of 10% per annum, and to have judgment entered, foreclosing the rights of Defendants on the aforesaid Mortgage.” That figure represented the amount left unpaid on the note plus interest to date and attorney’s fee. It was less than the Bank alleged to be due because the Chancellor credited to the note the total amounts received by the Bank from the sales of the equipment, thus not allowing the Bank to use the proceeds to reduce Delton and Darlene Simpson’s other obligations to the Bank.

The order then recited that Gee Owens was a “separate borrower” so far as the U.C.C. provisions applied and as to the subject mortgage. Owens was not a party to the mortgage.

The order winds up by stating, “IT IS ALSO, THEREFORE, CONSIDERED, ORDERED, ADJUDGED AND DECREED that the . . . Bank. . . have and recover a judgment In Rem against the land ... in the amount of $ 14,665.06 including the attorney’s fee with interest from this day at a rate of 10 % per annum; . . . .”

The Bank argues that the security agreement specifically provided that the logging equipment was security not only for the refinancing note but for any other obligation of the debtors to the Bank. It is thus contended that the Chancellor erred by refusing to allow the Bank to credit some of the proceeds of the equipment sales to Delton Simpson’s other obligations to the Bank. It also argues that the Chancellor erred in calculating interest at 10% because the Code called for 10.5 % which was the amount sought in the Bank’s complaint. The Simpsons and Owens do not directly contest these arguments. They do, however, contest the Bank’s argument that it is entitled to personal relief against them in addition to the “in rem” judgment against the land. Their cross-appeal seeks relief from the mortgage foreclosure, claiming that it is based on a deficiency judgment to which the Bank is not entitled because it violated the Uniform Commercial Code when it sold the logging equipment. While it is true that the Simpsons and Owens have not questioned the specific amounts the Bank received upon sale of the logging equipment, they clearly have questioned the commercial reasonableness of the sales, and we regard that as sufficient to raise the issue as to the manner in which the Bank should have proceeded and the extent of any further relief available to it.

For the proposition that a party which has sold collateral in violation of the Uniform Commercial Code is not entitled to a deficiency judgment, the Simpsons and Owens correctly cite First State Bank of Morrilton v. Hallett, 291 Ark. 37, 722 S.W.2d 555 (1987). In that case, the creditor had not sent the debtor notice of the time and place of the sale of collateral, as required by Ark. Stat. Ann. § 85-9-504(3) (Supp. 1985), the governing section of the Uniform Commercial Code, now codified as Ark.Code Ann. § 4-9-504(3) (1987). This Court held that the violation absolutely barred a deficiency judgment.

A line of cases represented by Norton v. National Bank of Commerce, 240 Ark. 143, 398 S.W.2d 538 (1966), constructed a presumption that the collateral was worth at least the amount of the debt, thus placing on the creditor the burden of proving the amount which should reasonably have been obtained through a sale conducted according to law and allowing a deficiency judgment for the remaining debt less the amount which could reasonably have been obtained in a sale according to law. That line of cases was thus overruled by the decision in the Hallett case absolutely barring a deficiency judgment.

In a plain Uniform Commercial Code case, the Hallett rule is simple to apply. The problem with it here is that the remedies of the Bank with respect to the real estate mortgage are not governed by the Code. On one hand it may be argued that no deficiency occurs until all of the collateral, both personalty and realty, has been disposed of. On the other hand, if the personalty subject to the Code provisions is disposed of first, any remainder of the debt owed which was secured by the personalty could be considered a deficiency. The only provision of the Code purporting to deal with this situation is Ark. Code Ann. § 4-9-501(4) (1987) which provides:

If the security agreement covers both real and personal property, the secured party may proceed under this part as to the personal property or he may proceed as to both the real and the personal property in accordance with his rights and remedies in respect of the real property in which case the provisions of this part do not apply.

This section is an apparent attempt by the drafters of the Code to require creditors to proceed either pursuant to the Code or pursuant to the equitable foreclosure laws and avoid any combination. It simply does not succeed in a case like this, and it does not answer the question posed here. The Bank proceeded against the personalty first but did so extrajudicially. It now seeks to foreclose against the real property, but the amount of the debt it claims is established as a result of the sale of the personalty.

It has been suggested that when the action brought is solely to foreclose a real estate mortgage, the Code provisions are disregarded. See Bank of Chenoa v. Bagby, 467 N.E.2d 596 (Ill. App. 1984). It has also been held that, in a situation like the one before us now, the creditor’s commercially unreasonable sale of personalty precludes any action to foreclose a mortgage securing the same debt. United States v. Kennedy, 256 Ga. 345, 348 S.E.2d 636 (1986).

Neither of these solutions is satisfactory. The real estate mortgage is not governed by Uniform Commercial Code provisions, and there is no reason the Bank should lose altogether the security of the mortgage for having violated the Code with respect to sale of the personalty. However, the sale of the personalty is governed by the Code, and the Bank should not be allowed to sell the personalty in violation of the Code and thus establish the amount of the remainder of the debt against the real estate. While that may not technically be the same as collecting the sort of deficiency judgment we outlawed in the Hallett case, the effect is the same, especially if a deficiency judgment were awarded after foreclosure against the real estate. The amount of any such deficiency judgment would be directly affected by the amount received by the lender in the sale of the personalty pledged as collateral for the same loan.

The best solution we have found is the one adopted in Bank of Hawaii v. Davis Radio Sales & Service, 727 P.2d 419 (Haw. App. 1986). It was held that a creditor who had sold personalty collateral in violation of the Code could pursue the remainder of the debt by foreclosing against real property which also served as collateral but that the amount of the remaining debt would be no more than the difference between the reasonable value of the personalty at the time of the sale and amount of the obligation at the time the sale of the personalty occurred.

While this solution is reminiscent of the line of cases represented by Norton v. National Bank of Commerce, supra, which we overruled in the Hallett decision, we should make it clear that we contemplate no reversion to such holdings in garden variety Code cases.

We usually try to decide chancery cases without remanding them if the record permits. We cannot do that here, as the Bank must be given an opportunity to prove what would have been obtained from the sale of the logging equipment had the sale been conducted in accordance with the Code. If the Bank is able to prove that an amount is due on the note, the Chancellor may proceed with the mortgage foreclosure, and we see no reason to bar a personal deficiency judgment against Delton and Darlene Simpson and Leatha Simpson if one would be available under the law governing real estate foreclosures. There can be no deficiency judgment against Gee Owens, as his only obligation was on the note, and the Hallett decision bars such a judgment against him.

We cannot tell from the record why the Chancellor provided for post-judgment interest to accrue at 10% rather than the 10.5 % specified in the note and sought in the Bank’s complaint. See Ark. Code Ann. § 16-65-114(a) (1987) which provides that interest on a judgment will be 10 % or the amount “provided by the contract, whichever is greater.” We will leave that matter open for decision on remand.

We affirm the Chancellor’s decision denying the Simpsons’ and Owens’ claims of the tort of outrage and lender liability due to bad faith. These claims, seeking compensatory and punitive damages were based on testimony that the Bank had agreed to hold off collecting on the note until Delton Simpson received a workers’ compensation disability payment which he could use to reduce the debt. There was evidence that the Bank was attempting to work out the problem of nonTpayment with the Simpsons and had even agreed to allow them to sell some of the logging equipment themselves to help pay off the loan. The evidence did not support an allegation of “bad faith” or the tort of outrage.

One of the cases cited as the basis of the counter-claim is Deason v. Farmers & Merchants Bank, 299 Ark. 167, 771 S.W.2d 749 (1989). Just as in the Deason case, we find the evidence here depicting the Bank’s conduct as being in bad faith or outrageous falls far short of the conduct contemplated in Counce v. M.B.M. Co., 266 Ark. 1064, 597 S.W.2d 92 (1980), in which we recognized the tort.

All that remains is the question whether it was proper for the Bank to reduce the amount to be applied to the refinancing note from the proceeds of the sales of the logging equipment by applying a portion of them to the Simpsons’ other note. Although the Court’s holding on this issue was apparently based on Ark. Code Ann. § 4-9-504(1)(b) (1987), the statute was not mentioned in the Court’s order. The issue was raised by the Simpsons and Owens in a post-trial brief. They claimed, as a part of their lender bad faith argument, that it was improper for the Bank not to credit the amount received from the sales fully to the note for which the logging equipment was pledged as collateral. In its responding post-trial brief, the Bank did not specifically address that issue. We can find nothing in the record showing that the Bank argued to the Court that it should have been permitted to apply the sale proceeds to Delton and Darlene Simpson’s other note because of language in the refinancing note security agreement permitting it. The argument is raised for the first time on appeal, and we decline to address it. Helm v. Mid-America Indust., Inc., 301 Ark. 521, 785 S.W.2d 209 (1990); Wilson v. Wilson, 270 Ark. 485, 606 S.W.2d 56 (1980).

The decision of the trial Court is affirmed in part and reversed in part on appeal, affirmed in part and reversed in part on cross-appeal, and remanded.

Glaze, J., concurs.

Brown, J., concurring in part and dissenting in part.

Dudley, J., not participating.

Tom Glaze, Justice,

concurring. This case falls casualty to this court’s holding in First State Bank of Morrilton v. Hallett, 291 Ark. 37, 722 S.W.2d 555 (1987), where, in a 4-3 decision, it held that a secured creditor is not entitled to a deficiency judgment under the Uniform Commercial Code (UCC) when the creditor failed to comply with the Code’s procedures for disposition of collateral. Until Hallett, the court followed the well-settled rule in Norton v. National Bank of Commerce, 240 Ark. 143, 398 S.W.2d 538 (1966), which provided that, if a secured creditor fails to comply with UCC notice requirements when disposing of a debtor’s collateral, the presumption is that the collateral is worth at least the amount of the debt, and the creditor has the burden of proving the amount that should reasonably have been obtained through a sale conducted according to law. Hallett, 291 Ark. at 42, 722 S.W.2d at 555; see also Glaze, J., dissenting, 291 Ark. at 42, 722 S.W.2d at 557.

The present case is another Code case where the secured creditor, the Bank of Bearden, failed to comply with Code requirements. Thus, if this court followed the new “no notice-no deficiency” rule adopted in Hallett, it would conclude this case by affirming the trial court’s holding that the Bank of Bearden is entitled to no relief. In fact, the majority cites United States v. Kennedy, 256 Ga. 345, 348 S.E.2d 636 (1986), where the Georgia Supreme Court precluded a creditor’s foreclosure action to foreclose on a mortgage securing the debtors’ loans because the creditor had previously failed to meet Code requirements when selling personalty that secured the same loans.

Instead of following the rationale and holding in Kennedy, the majority court here attempts to distinguish Hallett solely on the basis that the debtors’ real property was also used to secure the indebtedness owed the Bank of Bearden. In other words, the court suggests that, while the Bank is absolutely barred from obtaining a deficiency judgment under the UCC because it violated Code requirements, it may still obtain a deficiency judgment if the Bank is shown to have actually received the fair market value from its “Code-violated” sale of the debtors’ personalty. If the Bank offers such proof and the amount received remains less than the debtors’ obligation, the Bank, the majority court says, can collect the remaining deficiency by foreclosing on the debtors’ real property.

In my view, this court has gone full circle, adopting the same type rationale the court had previously followed for twenty years in Norton. In fact, the majority cites and relies on the case of Bank of Hawaii v. Davis Radio Sales & Service, Inc., 727 P.2d 419 (Haw. Ct. App. 1986), where that court, quoting from Liberty Bank v. Honolulu Providoring, Inc., 650 P.2d 576 (Haw. 1982), said the following:

We therefore adopt the “rebuttable presumption” rule in this jurisdiction. If the secured creditor fails to comply with notification requirements or disposes of a collateral other than in a commercially reasonable manner, the secured creditor will have the burden of rebutting the presumption that the fair market value of the collateral equals the unpaid balance of the outstanding debt. In proving the fair market value of the collateral, the secured creditor who fails to comply with the requirements of the Code may not rely solely on the value received on resale, but must prove the value of the collateral by other evidence. Moreover, to the extent that the debtor is harmed by the secured creditor’s failure to comply with proper notification and commercial reasonableness requirements, the debtor will be entitled under HRS § 490:9-507(1) to have the amount of damages sustained set-off against any deficiency the secured creditor would otherwise recover.

As can be readily seen, Hawaii, like many other states, follows the “rebuttable presumption” rule which is the same rule (the Norton rule) our court rejected in Hallett. This court made a mistake in Hallett, and it should now reinstate the Norton rule. Certainly, it would make the present case much easier to understand and to resolve.

Under the rebuttable presumption rule, the debtors here were entitled to the presumption that the amount due on their debt had been received by the Bank. However, if the Bank of Bearden can show that it had sold the debtors’ personalty for its fair market value and that the sale amount was still less than the debt owed, the Bank would be entitled to a deficiency judgment. The Bank would then be entitled to foreclose against the debtors’ real property in order to satisfy deficiency still owed on the original debt. Of course, if the Bank of Bearden failed in its proof, it would be barred from proceeding against the debtors’ real property since no deficiency amount would be shown to exist.

Instead of readopting the “rebuttable presumption” rule and being done with it, the majority opinion retains the “no notice-no deficiency” rule in Code cases involving only personalty, but adopts the “rebuttable presumption” rule when dealing with secured transactions involving both personal property and real property. In doing so, I believe that the underlying rationale for its decision is extremely confusing. For the sake of clarity, I believe the court should either adhere to its decision in Hallett and uphold the trial court’s decision finding that the Bank is not entitled to any further relief, or reinstate the Norton or rebuttable presumption rule in personalty or both personalty and realty secured transactions, thus, requiring remand of this cause for the trial court to determine if the Bank’s sale of the debtors’ property was for its fair market value. Instead, the majority adopts another or third position which adopts the “rebuttable presumption” rule but such rule is operative only in cases where both personalty and real property secure a borrower’s loan and the lender first proceeds against the personalty when a default occurs. I simply fail to understand why the majority chose to retain the “no notice-no deficiency” rule in one circumstance (where personalty only is involved) but apply the “rebuttable presumption” rule in another (where both personalty and realty are involved). Nevertheless, because the majority’s new rule sounds and looks much like Arkansas’s earlier “rebuttable presumption” or Norton rule, which this court overruled with me dissenting, I find myself joining in the result reached by the court.

Robert L. Brown, Justice,

concurring in part; dissenting in part. I dissent from the majority’s conclusion that the issue of the value received from the sale of the logging equipment must be remanded to the trial court for determination.

First, the majority has rushed to consider an issue of first impression in this state, but fails to recognize that the issue was not raised by the Simpsons before the trial court. It is all but axiomatic that we, as an appellate court, dp not consider issues where the trial court has not had an opportunity to decide them first. See, e.g., Horne Brothers, Inc. v. Ray Lewis Corp., 292 Ark. 477, 731 S.W.2d 190 (1987). The Simpsons did not question the amount received from the sale of their equipment at the trial, even after the Bank’s loan officer testified that a fair price was realized. Rather, they attacked the failure of the Bank to give notice under the Uniform Commercial Code which we have held absolutely bars collection of a deficiency amount after the sale of the personal property securing the note. See Walker v. Grant County Savings and Loan Ass’n, 304 Ark. 571, 803 S.W.2d 913 (1991); First State Bank of Morrilton v. Hallett, 291 Ark. 37, 722 S.W.2d 555 (1987). Attacking the notice provisions is not the same as arguing that the actual sale resulted in unfair prices, as the majority now suggests.

Secondly, the Simpsons did not ask for the relief fashioned by the majority opinion. The Simpsons asked for an absolute bar against a real estate foreclosure because the Bank had failed to comply with the notice requirements of the Commercial Code. In effect, the Simpsons asked for an extension of our decisions barring deficiency judgments after sales of personalty under the Commercial Code to real estate foreclosures where the real estate secures the same note. Hence, the majority has granted relief to the Simpsons which was never requested by them or contemplated by the trial court.

Thirdly, though the majority’s opinion acknowledges that the Commercial Code does not apply to real property remedies [Ark. Code. Ann. § 4-9-501(4) (1987)], it then applies a Commercial Code remedy to real estate foreclosures. The majority does admit that the rebuttable presumption remedy is one that we previously applied to notice violations under the Commercial Code prior to our adoption of the absolute bar under First State Bank of Morrilton v. Hallett, supra. Now it resurrects that Commercial Code remedy and applies it to foreclosures in equity.

Fourthly, the record in this case is absolutely devoid of any evidence suggesting that fair market value was not received from the Bank’s sale of the logging equipment. The majority, however, remands the case for still another hearing and applies a theory that “presumes” that fair market value was not obtained.

Fifthly, by applying a different Commercial Code remedy to real estate collateral (rebuttable presumption) as opposed to personalty collateral (absolute bar), we are confusing this area of the law to the extent that it has become well-nigh unintelligible. Assuming we should apply Commercial Code remedies to real estate foreclosures, which I do not countenance, there is an inconsistency in the majority’s application where the security is personal property and land. A better result would be to allow the trial judge to consider the matter of value and the appropriate amount left to be collected against real estate through foreclosure than for this court to apply Commercial Code concepts to equitable foreclosures.

Other jurisdictions have allowed a foreclosure against land to proceed where the trial court has made a finding that fair market value was in fact realized from the sale of personalty. See, e.g., Siltzer v. North First Bank, 445 So. 2d 649 (Fla. App. 1984). Having the lower court make this determination, after value is placed in issue by the debtor, seems infinitely preferable to this court’s mandate of a rebuttable presumption hearing.

But, again, the issue of fair market value is not appropriately before us and should not be considered on appeal. The Simpsons had ample opportunity to question the value received from the UCC sales, especially when the trial court specifically scrutinized the amount to be collected by the foreclosure and reduced that amount because of the Bank’s misapplication of sale proceeds. Yet they remained silent.

By the majority’s decision today we are giving financial institutions, holding both realty and personalty as security for a note, an incentive to foreclose on a debtor’s homestead first. By doing so they avoid the rebuttable presumption hearing, after the sale of personalty, which has now been fixed in place by this court. Public policy considerations alone should militate against that incentive.

I would affirm the trial court’s order finding that the Uniform Commercial Code does not govern real estate foreclosures.

       The practical result, I suspect, will be that, hereafter, lenders will avoid all this confusion and possible pitfalls by first foreclosing on real property before exercising their rights against personalty under the Code.


author:
David Newbern, Justice. Robert L. Brown, Justice,
      Robert H. Dudley, Justice.

text:
    Abram Isaac PEEBLES v. STATE of Arkansas
    CR 90-276
    808 S.W.2d 331
    Supreme Court of Arkansas
    Opinion delivered April 29, 1991

      Harold W. Madden, for appellant.

      Winston Bryant, Att’y Gen., by: Clint Miller, Sr. Asst. Att’y Gen., for appellee.
   David Newbern, Justice.

The appellant, Abram Isaac Peebles, was convicted of rape of his three-year-old nephew (the boy) and sentenced to 40 years confinement. He raises these points on appeal: (1) the evidence was insufficient to support the conviction; (2) the court erred in allowing Peebles’ sister, who is the mother (the mother) of the boy to give hearsay testimony pursuant to A.R.E. 803(25); (3) the court erred in admitting as expert testimony the statement of a physician who examined the boy; and (4) the court erred in allowing the prosecutor to question Peebles’ mother (the grandmother) about irrelevant pornographic materials found in his home. We find the evidence sufficient to support the conviction. We decline to reverse the trial court’s determination, made in consideration of the factors stated in Rule 803(25), that the boy’s statement to the mother was sufficiently reliable to allow the mother’s testimony. We hold that the physician was qualified as an expert and that, to the extent the prosecutor was erroneously allowed to question the grandmother about the pornographic matter it was not sufficiently prejudicial to require reversal.

The Circuit Court held a hearing to determine whether to admit the mother’s testimony as to what the boy had told her with respect to the alleged rape. The boy was brought before the Court, and after stating his name and that he was four years old, he became completely inarticulate. He answered questions about his family in an obviously incorrect manner and was unable even to identify Peebles. He denied that he had told his mother about anything that Peebles had done to him.

The mother testified that she, the grandmother, an aunt of the boy, and Peebles lived in separate trailer homes in the same trailer park. The mother testified she took the boy to Peebles’ home to watch television. She testified that when she returned for her child she struck a glass window on Peebles’ trailer with her arm. Peebles said, “Wait a minute. I’m fixing to take a bath.” The boy drew back a sheet covering the glass door, and she could see Peebles, naked with an erection, pulling up the boy’s pants. When she entered the trailer, Peebles told her he had done nothing wrong. She took the boy by the hand and left. She felt something “slimy” in the boy’s left hand, so she took his other hand.

The mother testified that when she got him home, she put the boy on the bed and asked him what had happened. He said “No mommy, you’ll whip me.” She assured him she would not and asked “What did Uncle Abram do to you?” He replied, “He bite my dingdong.” In response to further questions, the boy told the mother that Peebles began bouncing on the bed and “we fight dingdongs.” He also told her “I had some milk from his dingdong.” She called the police. She testified that when her husband arrived at home, the boy ran up to him and said, “Daddy, Uncle Abram bite my dingdong.”

On cross-examination, the mother testified that she had been in counseling, had been taking antidepressants, and that she sometimes did and sometimes did not get along with Peebles.

The grandmother testified at the hearing that she came to the trailer park sometime after the event but while the police cruiser was there. She found the mother standing by the police car laughing. She stopped laughing as the grandmother approached.

The boy was brought to the grandmother, and she asked him if Peebles bit him. He replied “Uh huh, Meemaw.” She then asked him to show her where, and he pointed to a spot on his penis where, she said, he had been bitten by a tick four days earlier. He again responded affirmatively when she asked if he were sure that was where Peebles had bitten him. The grandmother testified that Peebles and the mother often fought and that the mother had previously suffered brain damage from a coma and would have to be in counseling for the rest of her life. She also related that the mother had made false sexual accusations against her father and grandfather, and that the allegations had caused such a stir in the trailer park that the grandmother, who was in charge of the park, had had to ask the mother to move away.

The aunt testified that on the day of the incident she heard the mother banging on Peebles’ door and asking to be let in. She shut her window because, “they’re constantly fighting.” Fifteen minutes later, the mother came to her and told her what had happened. The aunt went to the boy and asked him what had happened at Peebles’ trailer, and he said “We hit wingdings together” and “I wanted some milk. Uncle Abram got me some milk.”

The mother testified that, at the request of the police, the boy was taken to Arkansas Children’s Hospital. He was examined there by Dr. Jim Mark Ingram. Dr. Ingram testified at the hearing that he had found a film around the boy’s mouth, down his chin, down his abdomen and on his left hand. He used an ultraviolet Wood’s lamp which causes sperm to floresce with positive result. On cross-examination he admitted that lots of substances would floresce under the lamp.

At the conclusion of the hearing, the Court stated that the stories of the mother, the grandmother, and the aunt were consistent, and there was sufficient evidence for the doctor to give his opinion. The Court ruled the testimony admissible.

1. Sufficiency of the evidence

Peebles was charged with rape in violation of Ark. Code Ann. § 5-14-103 (1987) which provides, in relevant part, “(a) A person commits rape if he engages in . . . deviate sexual activity with another person:. . . (3) Who is less than fourteen (14) years of age. . . .” “Deviate sexual activity” is defined in Ark. Code Ann. § 5-14-101 (1987), in relevant part, as “any act of sexual gratification involving: (A) The penetration, however slight, of the. . . mouth of one person by the penis of another person.. . .”

At the trial, the State’s evidence consisted of the mother’s testimony and that of Dr. Ingram. They each testified in virtually the same language used at the pre-trial hearing and to the same facts.

The defense presented the testimony of a serologist from the State Crime Laboratory who testified that he examined the “rape kit” consisting of samples of body fluids, hair, etc., taken from the boy at the hospital and was unable to detect any semen.

The defense also presented testimony of the aunt who said that when she had asked the boy what had happened the boy told her he had been at Peebles’ trailer, had wanted some milk, and that Peebles brought it to him. She testified that Peebles had stopped by her place on the way to the store and asked if she needed anything. When he came back, he had the soft drink she had requested, and when asked, told her the contents of the sack he was carrying were vanilla wafers and milk for the boy and a candy bar.

The grandmother testified for the defense that when she saw the boy after the incident he had no signs of having been molested but did have a tick bite on his penis.

In response to Peebles’ motion for a directed verdict at the end of the State’s evidence, the Court stated that the boy’s statement that he got some milk from Peebles’ dingdong was sufficient to indicate penetration. Apparently referring to the term “dingdong,” the Court recognized that the terminology being used was “imprecise.” No challenge to the testimony on that basis was made at the trial, and none is made on appeal.

In response to Peebles’ contention that the hearsay statement was not corroborated, the Court found corroboration in the testimony of Dr. Ingram. The directed verdict motion was renewed at the conclusion of all the evidence. In making that determination whether there was sufficient evidence to go to the jury, the evidence and all reasonable inferences from it are viewed most favorably to the State, Blaney v. State, 280 Ark. 253, 657 S.W.2d 531 (1983), disregarding any other possible trial errors, Harris v. State, 284 Ark. 247, 681 S.W.2d 334 (1984).

Circumstantial evidence may be sufficient to take the question to the jury. Still v. State, 294 Ark. 117, 740 S.W.2d 926 (1987). In a case similar to this one, Bryan v. State, 288 Ark. 125, 702 S.W.2d 785 (1986), we found substantial evidence of rape by deviate sexual activity even though there was only a hearsay statement of the child victim, admitted through the testimony of the child’s father who, like the mother in this case, was the witness who related the circumstantial evidence we held sufficient. We hold the evidence was sufficient in this case to take the case to the jury.

2. The physician’s statement

Peebles contends Dr. Ingram’s testimony should not have been admitted because he had not previously been qualified to testify as an expert, had never before used a Wood’s lamp in a sexual abuse investigation, and ultimately conceded that the lamp could show up substances other than semen.

The issue of whether to permit one to be qualified as an expert and to give opinion evidence as an expert falls within the discretion of the trial court. Dumond v. State, 290 Ark. 595, 721 S.W.2d 663 (1986). Dr. Ingram testified with respect to his training as a physician, including study of investigation in child abuse cases. We find no abuse of the trial court’s discretion.

3. Hearsay

The most difficult aspect of this case is the Court’s ruling that Rule 803(25) permitted the mother to testify as to what the boy said. It should be noted at the outset that Peebles does not challenge the constitutionality of the Rule or complain that he was not afforded the opportunity to confront his accuser. His sole challenge is to the trial Court’s determination, made pursuant to Rule 803(25), that the boy’s statement possesses a reasonable likelihood of trustworthiness. He argues that one of the criteria for making the determination is the Court’s observations of the child as a witness. In this case, as noted above, the child told the Court nothing.

If the issue here were the credibility of the mother, there would be real doubts, given the evidence of her history and mental condition. Her credibility, however, was an issue for the jury to determine. The question before us, assuming the mother’s testimony was true, is in the words of Rule 803(25), the “reliability-credibility” of the boy’s statements.

In Hughes v. State, 292 Ark. 619, 732 S.W.2d 829 (1987), we in an obiter dictum sustained an appellant’s argument that Rule 803(25) requires that the child declarant appear before the trial judge “to establish the reliability-credibility of his statements if they are to be introduced at trial.” We held that there was substantial compliance with the requirement by the fact that the child testified at the trial in that case.

Here, the boy did appear before the judge, but nothing the child did or said can be held by us to have sustained the court’s ruling admitting the hearsay version of his testimony. The judge was obviously aware of the Rule, as he read parts of it to counsel at the hearing. His decision must have been based upon one of the other criteria stated in the Rule. They are:

a. the age of the child
b. the maturity of the child
c. the time of the statement
d. the content of the statement
e. the circumstances surrounding the giving of the statement
f. the nature of the offense involved
g. the duration of the offense involved
h. the relationship of the child to the offender
i. the reliability of the assertion
j. the reliability-credibility of the child witness before the Judge
k. the relationship or status of the child to the one offering the statement
l. any other corroborative evidence of the act which is the subject of the statement
m. any other factor which the Court at the time and under the circumstances deems relevant and appropriate.

Many of these criteria do not seem to be useful in the context of this case. We believe, however, the Court could have based the decision to admit the testimony on the fact that it was the boy’s mother to whom the statement was allegedly made and which he was unable to repeat in court. In addition, the assertion that the boy had made the statement was corroborated by the pretrial testimony of the grandmother and the aunt. It was also corroborated by the testimony of Dr. Ingram expressing the opinion that there was semen around the boy’s mouth and elsewhere on his body soon after the alleged event. We find no error in the admission of the statement.

4. The photographs

Prior to the beginning of the trial, the prosecutor announced that she had some pornographic photographs and magazines she wished to introduce into evidence but was not sure if she could do so. Defense counsel said he “obviously” would object to questions about them. The prosecutor warned that if any witness testified that Peebles was just a “straight” person, she was armed with these materials and would use them for impeachment.

When the prosecutor was questioning the grandmother, she asked the grandmother if she was aware that Peebles had some “sexual perversions.” The grandmother answered “No ma’am. I knew he had the magazines.” Defense counsel objected and complained that the prosecutor was trying to “bootstrap” herself into a position to introduce the items or questions about them when he had not opened the door by any such inquiry. The Court allowed the inquiry to go “a little further.” The prosecutor then asked what kind of magazines, and the response was “girly magazines.” She then asked if the grandmother knew Peebles kept some photographs. The grandmother said she had seen them “that night.” At that point the court interrupted the examination. The photographs to which the prosecutor referred were pictures of Peebles, taken by him, of himself in various stages of erection.

Neither the photographs nor any magazines were introduced into evidence. The jury was not informed as to the nature of the photographs. The most they heard was that Peebles had possessed magazines “like Hustler.”

While the questions asked were probably irrelevant, the testimony of the grandmother was ultimately not unfavorable to Peebles. She concluded by saying that she had no problem with him possessing such materials, as it was “his property, his life.”

Peebles cites cases, such as Berry v. State, 290 Ark. 223, 718 S.W.2d 447 (1986), in which photographs which were shown to the jury or admitted in evidence at trial were held to be inadmissible on appeal. While we are not persuaded by those cases because the facts are different here, we are concerned about his argument that counsel questioned the grandmother further about the magazines and photographs after the Court had told her she could go no further on the matter.

After the Court had ruled she could go no further on the issue, the prosecutor asked: “It’s your testimony that the photographs that you viewed that were taken from Abram’s trailer that night, you don’t have any problem with those materials?” The grandmother responded: “It bothers me a little bit, yes, ma’am, but I consider that is his property, his life.”

We agree with Peebles’ argument, supported by his citation of Walker v. State, 138 Ark. 517, 212 S.W. 319 (1919), that it is a trial court’s duty to maintain control of the trial and to prohibit counsel from making improper argument or engaging in improper questioning. We also agree that counsel should not have asked the question after being limited by the Court. There was, however, nothing new in the question, and we do not find the sort of prejudice in it, and certainly not in the grandmother’s answer, which requires reversal. Cherry v. State, 302 Ark. 462, 791 S.W.2d 354 (1990); Taylor v. State, 299 Ark. 123, 771 S.W.2d 283 (1989).

Affirmed.

Brown, J., concurs.

Dudley, J., dissents.

Robert L. Brown, Justice,

concurring. I concur in the result but only because we are not presented with the crucial issue in this case — the appellant’s right to confront and cross-examine the primary witness against him. Here, the appellant appears to have been denied that right.

The four-year-old boy testified at the Rule 803(25) hearsay hearing that the appellant did nothing wrong to him and that he had not told his mother that the appellant had harmed him in any way. The appellant was present at the hearing, and his counsel did not cross-examine the boy for obvious reasons. Following the hearing the trial judge ruled that the boy’s mother could testify at trial regarding statements she said he made to her which incriminated the appellant. The mother did testify at trial about the boy’s incriminating statements. The boy did not testify. Nor was the fact that the boy exonerated the appellant at the Rule 803(25) hearing brought out at trial. The result of all this is the appellant did not have an opportunity to confront or cross-examine the boy, and the jury was not able to assess the boy’s credibility.

In 1988, the United States Supreme Court emphasized the right of the accused not only to cross-examination but also to a face-to-face confrontation with the accuser in molestation cases. See Coy v. Iowa, 487 U.S. 1012 (1988). Prior to Coy the Court had held that when the reliability of the declarant is not called into question, hearsay testimony may be presented so long as it falls within a firmly rooted hearsay exception. See Bourjaily v. United States, 483 U.S. 171 (1987). The function of Rule 803(25) is to guarantee that trustworthiness.

In this case the reliability of the boy has been called into question, since he gave contradictory testimony to the trial judge, and the mother’s credibility is suspect as the majority opinion aptly states. Under these circumstances the right of the accused to confront his accuser and cross-examine him appears paramount.

I do not suggest, by this opinion, that the right to confront witnesses is absolute. It may readily bow to other competing interests such as the emotional trauma that could be visited upon the child witness. This raises the question of whether a videotaped deposition of the child, as authorized by Ark. Code Ann. § 16-44-203 (1987), might have been arranged by the state to reduce that trauma. That statute contemplates a videotaped deposition in the trial judge’s chambers with the defendant and child both present. Such a deposition would eliminate the confrontation clause problems and reduce the emotional trauma to the child inherent in a jury trial.

Robert H. Dudley, Justice.

I dissent from that part of the majority opinion which affirms the trial court’s evidentiary ruling that the mother could testify as to what her three-year-old child told her. The majority, in my opinion, has mistakenly found the statement admissible under A.R.E. Rule 803(25), just as the trial court did.

The twenty-five (25) different exceptions to the hearsay rule, which are listed in Rule 803, are phrased in terms of the non-application of the hearsay rule, rather than in positive terms of admissibility. This was done by the drafters in order to reject any implication that other possible grounds for exclusion are eliminated. See J.B. Cotchett & A.B. Elkind, Federal Courtroom Evidence, 256 (2d Ed. 1988). Among those other grounds for exclusion is the lack of competency by the declarant.

Before a witness can testify at trial, either directly or through the testimony of another, the witness must be competent. Wigmore states:

The hearsay rule is merely an additional test or safeguard to be applied to testimonial evidence otherwise admissible. The admission of hearsay statements by way of exception to the rule, therefore presupposes that the assertor possessed the qualifications of a witness. . . . (emphasis in the original.)

5 J.H. Wigmore Evidence § 1424 (Chadbourne rev. 1979).

The qualification of a person to be a witness is a preliminary question to be determined by the trial court. The criteria for determining the competency of a witness are: (1) the ability to understand the obligation of an oath; (2) an understanding of the consequences of false swearing; (3) the ability to receive and retain accurate impressions; and (4) the capacity to transmit a reasonable statement of what has been seen, felt, or heard. Chambers v. State, 275 Ark. 177, 628 S.W.2d 306 (1982).

Here, the declarant was a three-year-old boy, who was labeled a “slow learning child” by the deputy prosecutor, and a “slightly retarded” three-year-old child by the defense attorney. His competency was assessed by the trial judge at a preliminary hearing. Because it is so unarguably clear from that hearing that the child was not competent, it is set out in full:

(THEREUPON, Michael Cook was brought into Chambers; then the following proceedings occurred:)
THE COURT: Michael. Michael. Hi.
MICHAEL COOK: Hi.
THE COURT: Come here. Come here. I want to talk to you a minute.
MICHAEL: No.
THE COURT: Well, let your daddy sit right here. I want you to sit right here and your daddy can sit right beside you. Right here. Sit right here. Sit in his lap. How are you?
MICHAEL: Fine.
THE COURT: You’re a nice looking young boy. How old are you?
MICHAEL: Four.
THE COURT: Four years old? My goodness gracious. Where’d you get that pretty shirt?
MICHAEL: At home.
THE COURT: At home? Do you know who this is over here? That’s Mrs. LaRue. [Deputy Prosecutor] She’s a friend of mine and she’s a lawyer. She wants to talk to you a little bit. Okay? You see that lady back there? See that woman way back there? She has to — Everything that you say, she’s got to write it down on a piece of paper. So, will you talk up real loud? Oh, please do. Talk up real loud. Say, “Yes, sir.”
MICHAEL: Yes, sir.
THE COURT: Okay. That’s good. If you do that when she talks to you, then she can write it down. Okay?
MRS. LaRUE: Hi, Michael.
MICHAEL: Hi.
MRS. LaRUE: Keep your hand down from your mouth so everybody can hear what you’re saying. Okay? Will you state your name, please? Will you tell us what your name is?
MICHAEL: Michael Cook.
MRS. LaRUE: Speak up.
THE COURT: Louder.
MRS. LaRUE: Can you say that louder? Say what your name is.
MICHAEL: Michael Cook.
MRS. LaRUE: There you go. That’s good. How old are you?
MICHAEL: Four.
MRS. LaRUE: Four years old. Do you have any brothers or sisters?
MICHAEL: Yeah.
MRS. LaRUE: Who?
MICHAEL: At home.
MRS. LaRUE: Who? Who? Do you have a little brother?
MICHAEL: Yeah.
MRS. LaRUE: What’s his name.
MICHAEL: Justin.
MRS. LaRUE: Justin? How old is Justin?
MICHAEL: Four.
MRS. LaRUE: Justin’s not four. How old is he?
MICHAEL: One.
MRS. LaRUE: There you go. That’s good. Who are you with? Who are you sitting with?
MICHAEL: My daddy.
MRS. LaRUE: Yeah. Michael, do you know who Abram [the appellant] is? You know who Abram is.
MICHAEL: What?
MRS. LaRUE: Huh? Do you remember who Abram is? Is Abram your uncle?
THE COURT: Speak up.
MRS. LaRUE: Take your hand out of your mouth.
THE COURT: Speak up. Do you know who Abram is? Do you remember who Uncle Abram is?
THE COURT: Say something. Say something. Answer her out loud.
MRS. LaRUE: Yes? No?
MICHAEL: No.
MRS. LaRUE: You don’t know who he is?
MICHAEL: No.
MRS. LaRUE: Do you remember who used to live next to your trailer? Remember when you lived in a trailer where your grandmother lives?
MICHAEL: Yeah.
MRS. LaRUE: You remember that? Who else lived over there?
MICHAEL: My papaw.
MRS. LaRUE: Who else?
MICHAEL: My meemaw.
MRS. LaRUE: Okay. Who lived in the other trailer?
MICHAEL: I don’t know.
MRS. LaRUE: Did you live in one of the trailers? Did you and your mom and dad at one time live over there?
MICHAEL: (moves head)
THE COURT: Is that, “No”?
MICHAEL: No.
MRS. LaRUE: You never did?
MICHAEL: (moves head)
THE COURT: No?
MRS. LaRUE: And you can’t tell us who Abram is? You don’t want to or you can’t?
MICHAEL: I don’t want to.
MRS. LaRUE: How come you don’t want to?
MICHAEL: I don’t want to.
MRS. LaRUE: Are you afraid?
MICHAEL: Cause.
MRS. LaRUE: Cause why?
MICHAEL: I don’t want to.
MRS. LaRUE: Do you want to ask him any questions?
MR. MADDEN [Defense Lawyer]: I don’t think so.
MRS. LaRUE: Do you think you could just tell us while the Judge is here who Abram is. He wants to know.
MICHAEL: Yeah.
MRS. LaRUE: Would you just look at him and tell him who Abram is?
MICHAEL: He’s Abram.
THE COURT: But who is Abram, Michael?
MICHAEL: Michael.
THE COURT: No. Who is Abram? Is he your uncle?
MICHAEL: Yeah.
THE COURT: Where does he live? Do you know where he lives?
MICHAEL: Yeah. By my meemaw.
THE COURT: Over there in that other trailer? Okay, Do you remember Abram — Is he in the room today? Is Abram in the room today?
MICHAEL: (moves head)
MRS. LaRUE: Did you look?
THE COURT: Look over there and see if you see him. Do you know that man over there?
MICHAEL: No.
THE COURT: Huh?
MICHAEL: No.
THE COURT: You don’t know that man over there? Do you want to walk over there and look at him? You don’t know him? Speak up. Do you know him? Yes or no?
MICHAEL: No.
THE COURT: That’s not Abram, huh? I thought that was Abram. Is it?
MICHAEL: No.
THE COURT: Did Abram do something to you several months ago, sometime back?
MICHAEL: (moves head)
THE COURT: He didn’t? Did you tell your mother he did? Speak up. Is that yes or no?
MICHAEL: No.
THE COURT: He didn’t do anything to you and you didn’t tell your mother?
MICHAEL: No.
THE COURT: No?
MICHAEL: No.
THE COURT: Okay. Did that man over there ever do anything to you?
MICHAEL: No.
THE COURT: He didn’t? Okay. Anything else?
MRS. LaRUE: Come and stand right here. Could you do that? Could you come and stand right here? You don’t want to do that? Would you ask Mr. Peebles to look this way.
MRS. LaRUE: Michael. Michael. Look at this man. Do you know who this is?
THE COURT: Can you see him good? Can you see him good? Speak up. Yes or no?
MICHAEL: Yeah.
THE COURT: But it’s not Abram?
MICHAEL: No.
THE COURT: It’s not Abram? Okay.
MRS. LaRUE: Are you scared, Michael?
MICHAEL: (moves head)
MRS. LaRUE: You’re not scared in here?
MICHAEL: No.
MRS. LaRUE: That’s good.
THE COURT: Do you know this man right here? Who is that?
MICHAEL: Papaw.
THE COURT: I thought' that was Abram. That’s not Abram? If that’s not Abram, that must be Abram.
MICHAEL: It is.
THE COURT: Which one?
MICHAEL: (points)
THE COURT: That’s Abram? Well, you just told me it wasn’t. Are you sure this is not Abram? This is your papaw? So, that’s Abram over there? Speak up. Yes or no?
MICHAEL: Yeah.
THE COURT: Now, did that man do something to you sometime back?
MICHAEL: (moves head)
THE COURT: Well, did this man do something to you? You told your mother somebody did, didn’t you? Huh?
MRS. LaRUE: Do you remember talking to your mother one day? Remember when your daddy came home from work. You remember all that?
MR. MADDEN: Can I ask a question?
THE COURT: Sure.
MR. MADDEN: Michael, have you ever talked to this lady? Do you know who this lady is? Huh? Have you talked to her before? You have never talked to her before?
MICHAEL: (moves head)
MR. MADDEN: Okay?
THE COURT: Is that no?
MICHAEL: No.
THE COURT: Have you ever talked to me before?
MICHAEL: No.
THE COURT: Do you want to come back and talk to me again sometime? Okay.
(THEREUPON, Michael Cook left Chambers; then the following proceedings occurred:)

It is readily apparent from the foregoing testimony that the child was not able to receive and retain accurate impressions or to communicate a reasonable statement of what he had seen, felt or heard with regard to the alleged incident, as is required for a competent witness. The trial court did not rule on the declarant’s competency, and the majority opinion acknowledges that “nothing the child did or said can be held by us to have sustained the court’s ruling.” It is my opinion that the child was not a competent witness and, therefore, his statement was not admissible either directly or through his mother. That should decide the evidentiary issue.

However, the trial court went a step further and ruled that, pursuant to Rule 803(25), the statement was corroborated, and, therefore, admissible. The majority opinion makes the same error. In short, both the trial court and the majority tacitly admit that the child is not competent to testify but hold that because the statement is corroborated the mother can testify as to what the incompetent declarant said. If corroboration truly makes an incompetent witness competent, the incompetent witness could testify if his statement where corroborated. In a comparable situation, Lord Blackburn said, “It is impossible that if a person said something, and could not himself if alive have been permitted to give testimony to prove it, he can by dying render that statement admissible. I think that is a self-evident proposition.” Dysard Peerage Case, L.R. 6 App. Cas. 489, 504 (1881). Indeed, the Supreme Court of the United States has held that corroboration is not relevant to the issue of competency. Idaho v. Wright, 497 U.S. __, 110 S.Ct. __, 58 U.S.L.W. 5036 (1990).

Even forgetting the foregoing reasoning, if one would analyze the facts of this case solely under Rule 803(25), this case still must be reversed because the trial court abused its discretion in holding that the statement offered possessed a reasonable likelihood of trustworthiness. Rule 803(25) provides that trustworthiness is to be evaluated by twelve criteria. They are set out below along with the applicable facts:

1. Age of child — Three years at the time of the incident. This fact alone practically mandates reversal.

2. Maturity of the child — A slightly retarded three-year-old child. From his quoted testimony it is obvious he is very immature. Again, this factor mandates reversal.

3. Time of statement — Given soon after the event, thus more likely to be trustworthy.

4. Content of the statement — Sufficiently clear child-like language. More likely to be trustworthy.

5. Circumstances surrounding the giving of the statement — Testimony showed that the mother had previously falsely accused others of sexual misconduct and had a history of fabricating stories. Immediately after the offense supposedly occurred, she was leaning against a police car laughing. She did not get along with her brother, the accused. She was undergoing psychological counseling and taking antidepressants. Even by her own testimony the mother asked the child leading questions, such as, “What did Uncle Abram do?” and, before answering, he said, “No Mommy, you’ll whip me.” She did not record either her questions or the child’s answers, and her recollection may well not be exact. In fact, her sister and her mother say the child’s statements to them at the time were markedly different.

6. Nature of the offense — Sex act with child of tender years would militate against requiring child to testify in court.

7. Duration of offense involved — Was alleged to be of short duration, while they were “fighting ding dongs.” It is also material that the child did not want to leave the accused’s home after the alleged incident.

8. The relationship of the child to the offender — The alleged offender is the uncle of the child.

9. The reliability of the assertion — As set out, the exact words of the child’s statement are questionable. The mother testified that he said, “I had some milk from his ding dong,” but the sister testified that he told her, “I wanted some milk. Uncle Abram got me some milk.” The mother has been a mental patient. Her recollection is doubtful. Most importantly, the child now says the accused did not do it, and says that he did not tell his mother that the accused did it.

10. The reliability-credibility of the child witness before the judge — The testimony shows the child was not credible.

11. The relationship of the child to the one offering the statement — Mother-son relationship.

12. Other corroborative evidence — A medical doctor said the child had a substance on his chin, around his mouth, on his abdomen, and left hand which, under a Wood lamp, looked like sperm, but admittedly, a lot of other substances, such as milk, would have looked the same. This amounts to only some corroboration.

On the whole, the child’s alleged statements as related through the mother do not possess a reasonable likelihood of trustworthiness, and, therefore, the trial court’s ruling should be reversed.

The issue of confrontation and the issue of whether 803(25) has been validly adopted are not raised and are not addressed.

I dissent.


author: David Newbern, Justice.

text:
    SCOTT COUNTY, et al. v. Donald FROST
    90-353
    807 S.W.2d 469
    Supreme Court of Arkansas
    Opinion delivered April 29, 1991

      Winston Bryant, Att’y Gen., by: Frank J. Wills III, Asst. Att’y Gen., for appellant.

      Parker and Parker, by: Wayland A. Parker II, for appellee.
   David Newbern, Justice.

In 1989, Scott County undertook reappraisal of property for taxation purposes to comply with Ark. Const, amend. 57. The reappraisal could not be completed prior to 1990. Donald Frost, the appellee, brought a class action in the Scott County Circuit Court to enjoin the appellants, Scott County, the Scott County Judge, Collector, and Assessor, from collecting taxes until all of the property in Scott County had been reassessed. The Assessment Coordination Division of the Arkansas Public Service Commission was later joined as a defendant.

Mr. Frost contended that only 40 % to 45 % of the property in the County had been reassessed and that it would violate the equal protection and due process clauses of the United States Constitution and the equal protection clause of the Arkansas Constitution if taxes were to be collected in 1990 based on the 1989 assessments. The parties stipulated that some property owners would owe taxes in 1990 on the reassessed value of their property, and others would pay at the old assessment rate.

The Circuit Court granted injunctive relief against the County on the basis of Ark. Const., art. 16, § 5(a), which requires that taxation be based on property value “equal and uniform throughout the State.” The order ultimately was stayed during appeal on condition that, when collecting the tax, the County would notify members of the class of taxpayers affected that their taxes might change as a result of this case.

We must reverse the decision and dismiss the case because the Circuit Court lacked jurisdiction of the subject matter. County courts have “exclusive original jurisdiction in all matters relating to county taxes.” Ark. Const. art. 7, § 28. While chancery courts may enjoin “illegal or unauthorized taxes and assessments,” Ark. Code Ann. § 16-113-306 (1987); McIntosh v. Southwestern Truck Sales, 304 Ark. 224, 800 S.W.2d 431 (1991), we do not remand for transfer to a chancery court. Mr. Frost is not contending that his assessment is “illegal or unauthorized” but that there is a procedural flaw. We discussed the distinction in the McIntosh case. See also Burgess v. Four States Mem. Hosp., 250 Ark. 485, 465 S.W.2d 693 (1971).

A circuit court could have jurisdiction of a taxation matter such as this, but it would be as a result of Ark. Const., art. 7, § 33, which provides for appeals to be taken from county court to circuit court. The record in this case demonstrates that Mr. Frost made no appearance before the Scott County Equalization Board from which he could then have appealed to the County Court and the Circuit Court.

Reversed and dismissed.


author: Tom Glaze, Justice.

text:
    Allan L. JANSSEN and Jo Ann Janssen v. Byron MCKIMMEY, Eugene J. Mazzanti, Robert M. Mitcham, Ken Shivey, Marvin H. Day, William Kelly, CCMN Joint Venture, and Allen G. Gold, d/b/a Little Italy Company
    91-13
    807 S.W.2d 920
    Supreme Court of Arkansas
    Opinion delivered April 29, 1991
    [Rehearing denied June 3, 1991.]

      Joyce Kinkead, for appellants.

      Davidson Law Firm, Ltd, by: Charles Phillip Boyd, Jr., for appellees.

      Dudley and Hays, JJ., not participating.

   Tom Glaze, Justice.

This case involves the purchase of two tracts of land by the appellants, Allan and Jo Ann Janssen, from a limited partnership known as the Little Italy Company. The appellants brought this suit to rescind the sale, alleging that the Little Italy Company, through its broker, Real Estate Central, and sales agent, Floyd “Spider” Webb, made a fraudulent misrepresentation about constructing a road to the tracts. After a full trial, the chancellor found the appellants failed to prove their claims and denied them any relief. We uphold the chancellor’s decision.

The tracts in dispute are undeveloped property located in a wooded area. The property is somewhat out-of-the-way, but the Janssens said that Mr. Webb told them “that a road would be cut through from [Highway] 300 so we could reach the property.” Mr. Janssen later restated Webb’s promise as “a road would be constructed to his property.” Janssen testified that Webb made these statements repeatedly. The Janssens also asserted that Webb never informed them of Reece Creek which, when it rained, would flood making it difficult or impossible at times to drive to the two tracts.

The proof at trial reveals that there is a private dirt road, leading to the Janssens’ property from Highway 300. A video tape taken after a rain shows the road to be rough in places and somewhat difficult to traverse unless the driver was in a truck or four-wheel-drive vehicle. Photographs introduced at trial reflect a dirt road that, while having been bulldozed and graded, is clearly passable, wide enough in places for two vehicles, and smoother in appearance than when it was video taped. Regardless of the road’s varying appearance as shown by the photographs and tape, the question centers on the type of road Webb and the Little Italy Company represented the Janssens would have from Highway 300 to their property. Both Janssens agreed that Webb had never told them that a paved or gravel road would be built or that a bridge would be constructed over Reece Creek. In fact, Mr. Janssen on cross-examination testified as follows:

Q. (referring to his deposition) Did he ever say we are going to build you a road that you can drive a Toyota car down that sits low to the ground or that you can drive a normal car down in two wheel drive? And your answer is, He never said that. Is that true?
A. That’s true. But he did say they would construct a road.
* * *
Q. Okay. Would you agree with me, sir, that everyone’s definition of what is a road, quote, would be different, including Mr. Webb’s?
A. Yes, sir.
Q. Did you ever ask for any type of a clarification on what type of road would be out there on the property?
A. No, just that it would be a passable road that we could reach our property on.
* * *
Q. Fact of the matter is though, you cannot say that Mr. Webb ever intentionally lied or made any intentional mistatements to you, is that true?
A. That would be true, yes, sir.
* * *
Q. Now, in regards to a. . .even assuming, without me agreeing with you, but even assuming that Mr. Webb stated that they would, quote “construct” a road there. You have a road like the road that’s on the film that goes right by and right to your property, don’t you?
A. It’s like that, yes, sir.
Q. And the kind of road never was defined and you never asked for clarification, did you? Yes or no?
A. No.

Consistent with the Janssens’ above versions of what was and was not represented, Webb said the following:

Q. Well, this is the question, Spider. Did you, at any point in time during your dealings with the Janssens, ever tell them that Real Estate Central, Little Italy Company, or anyone was going to build them any kind of road to their property?
A. Yes.
Q. What did you tell them?
A. A dozer-type road.
Q. Okay.
A. They would cut through the woods, it would be forty to fifty feet wide, occasionally, maybe, a grader, but it basically would be a bulldozer road, a dirt road, a private road not associated with the county.
Q. Is that the type of road (as pictured) that they were supposed to get?
A. Yes, actually. It’s difficult for me to remember all portions of that, but the road was actually put in. In fact, we advertised in the paper and had an open house up there and I had several people come up in their vehicles, regular passenger cars, to go over the road to see the property.
* * *
Q. Did you ever tell them a bridge for them would be built over Reece Creek?
A. We never mentioned a bridge. I may have mentioned a low water crossing, which eventually was put in. . .

In sustaining their burden in this case, the Janssens were required to prove the following elements of misrepresentations and fraud: (1) a false representation, usually of material fact; (2) knowledge or belief on the part of the person making the representation that the representation is false or that there is not a sufficient basis of information to make such a representation; (3) an intent to induce the other party to act or refrain from acting in reliance upon the misrepresentation; (4) a justifiable reliance upon the representation by the other party in taking action thereon; and (5) resulting damages. Brookside Village Mobile Homes v. Meyers, 301 Ark. 139, 782 S.W.2d 365 (1990); McWilliams v. Zedlitz, 294 Ark. 336, 742 S.W.2d 929 (1988); Croley v. Baker, 237 Ark. 136, 371 S.W.2d 830 (1963). Here, the chancellor, in evaluating all the evidence before her, found that “an honest misunderstanding” existed between the parties and that neither the Little Italy Company nor its agents made any misrepresentation that could constitute grounds for rescission.

Of course, we review chancery cases de novo, but we do not reverse the chancellor’s factual findings unless they are clearly erroneous. Wilson v. Wilson, 301 Ark. 80, 781 S.W.2d 487 (1989). Furthermore, this court gives due regard to the opportunity of the trial court to judge the credibility of the witness. ARCP Rule 52(a).

In reaching her decision, the chancellor found the Janssens to be credible witnesses, but, as we have reviewed above, the respective parties’ proof was not that diverse. The chancellor emphasized that the Janssens’ versions of what they had been told about a road was “pretty non-specific.” In fact, they were unable to say what type of road they were promised, and they admitted they were never promised a paved or gravel road or a bridge constructed over Reece Creek. There is a dirt road from Highway 300 leading into the Janssens’ tracts, and other evidence reflected the road had been graded.

In making their argument here on appeal, the Janssens rely on Webb’s asserted use of the language “construct a road” and state that no road was ever constructed. Specifically, they contend that the Little Italy Company has only maintained an existing logging trail. As cited by the Janssens, one definition for construct is to make ready for use. Black’s Law Dictionary 283 (5th ed. 1979). Although there was an existing logging road when the Little Italy Company purchased the property, evidence shows that the company put in at least part of the road, graded the road, and put in a low water crossing. In other words, we believe that the evidence shows that the Little Italy Company made the road ready for use.

In sum, we are unable to say, given the evidence before us, that the chancellor was clearly erroneous in finding the Little Italy Company or its agents did not make a misrepresentation warranting a rescission of their sale of the tracts to the Janssens. Thus, we affirm.

Dudley and Hays, JJ., not participating.