author: Darrell Hickman, Justice.

text:
    FIRST COMMERCIAL BANK, Trustee v. Duane T. MEYER, Beneficiary
    86-12
    711 S.W.2d 791
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986

      Friday, Eldredge & Clark, by: A. Wyckliff Nisbet and William A. Waddell, Jr., for appellant.

      Moses, McCellan & McDermott, by: Harry McDermott, III, for appellee.
   Darrell Hickman, Justice.

D. T. Construction Company established a profit sharing plan for its employees. The plan was qualified under the Employee Retirement Income Security Act of 1974 (ERISA). 29 U.S.C. 1001 et seq. Duane T. Meyer, president of the company, was named the plan administrator and First Commercial Bank was named the trustee of the plan. The plan administrator was authorized to interpret the plan, determining to whom and how the benefits were paid. The trustee was only authorized to follow the written directions of the plan administrator regarding any disbursements from the funds of the plan. The plan provides that only vested employees are entitled to distribution from the trust. It takes 10 years of employment to become 100% vested under the plan. After three years of employment, the employee becomes 30% vested with vesting increasing 10 percent each succeeding year.

In September 1984, Meyer delivered seven notices of termination and employee participation in the plan to the trustee, who at that time was Frank Scherr. Scherr had recently been hired by the bank as trustee. The notices were to identify the status of the employee-participants and note their vested interest in the plan. The notices concerning five employees stated they were zero percent vested, meaning they were not entitled to share in the plan. The other two notices were left blank as to their contributory share. All seven notices of termination stated the reason for termination as dissolution of the corporation. Scherr testified he informed Meyer that in his opinion the employees were automatically 100% vested upon dissolution of the corporation. Scherr said Meyer nodded his head in agreement. Meyer testified that he did not recall nodding. Later, Scherr sent Meyer an allocation report for the fiscal year, showing that four of these seven employees were zero percent vested. But Scherr later concluded these four employees were 100% vested because their termination was due to the corporation being dissolved. He said he tried to call Meyer several times but was unable to reach him. Scherr then mailed withholding election forms to these employees, a requirement by the IRS, prior to distribution of the funds. When the forms were returned, Scherr paid these four individuals a total of $4,758.24 on October 16, 1984.

In November, 1984, one and a half months after Scherr paid these employees, Meyer learned of the disbursement. He and his accountant met with Scherr and explained that these four employees were not laid off because the corporation was dissolving, but that they had voluntarily quit at various times during the last fiscal year. Meyer further explained he did not intend for them to receive any funds because none of them were vested in terms of years of service; that was the reason zero was written on the form. Scherr wrote the four individuals and requested that the money be returned explaining that the instructions given to the trustee by the plan administrator were misinterpreted, and they were not entitled to the payments since they had quit. None of the employees returned the money and Meyer sued the bank for reimbursement. The trial court held for Meyer finding that the trustee had acted unreasonably under the circumstances.

On appeal the bank asks us to hold as a matter of law that the payments made to the four employees were proper because their interest in the plan had vested upon dissolution of the corporation under ERISA. On the facts before us, we cannot say the chancellor was clearly wrong because evidently Scherr did misinterpret his instructions. That was the judgment of the chancellor. The termination notices stated none of these individuals had any interest in the plan. While the reason given was dissolution, the trustee on his own decided all four employees were vested and should receive their share of the fund. There is no evidence the four employees were terminated because the corporation was to be dissolved. Meyer testified these four employees had quit prior to the adoption of the resolution of dissolution. This testimony was undisputed.

The question before us then is whether the trustee reasonably relied on Meyer’s acts, causing the claim to be barred by equitable estoppel. Scherr testified Meyer nodded upon the dissolution of the corporation. Meyer testified that he did not recall nodding his head. The trial court has the responsibility of resolving conflicts in testimony. Jackson v. State, 284 Ark. 478, 683 S.W.2d 606 (1985). The chancellor resolved this question of fact in Meyer’s favor, and we cannot say the chancellor was clearly wrong.

There is no doubt that both Meyer and Scherr made mistakes which caused the confusion in this case. Meyer was mistaken by stating the reason for termination was dissolution of the corporation when the employees had quit. Scherr erred in disbursing the funds when the notices indicated no funds should be disbursed. Scherr acted without written authority regardless of Meyer’s mistake. Scherr wrote a letter requesting the money be returned, stating that the instructions had been misinterpreted. Under these circumstances, the findings of the trial court cannot be set aside.

In the bank’s reply brief, it raises for the first time the argument that one of these employees was vested because he had not incurred a break in service before he was terminated. This argument is based on a provision in ERISA. Such an argument cannot be made for the first time on appeal. Ivey v. Bray, 278 Ark. 475, 647 S.W.2d 430 (1983).

The appellee’s attorney was awarded an attorney’s fee pursuant to 29 U.S.C. § 1132 (g) (1). An additional fee of $1,000 is awarded for the appeal.

Affirmed.


source: Caselaw Access Project

author: Robert H. Dudley, Justice. Steele Hays, Justice, John I. Purtle, Justice,

license: Public Domain

text:
    Bessie W. COFFELT v. ARKANSAS STATE HIGHWAY COMMISSION
    86-34
    712 S.W.2d 283
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986
    [Rehearing denied September 15, 1986.]

      Kenneth C. Coffelt, and Michael K. Wilson, for appellant.

      Thomas B. Keys, Philip N. Gowen and Charles Johnson, for appellee.

       George Rose Smith and Hickman, JJ., not participating.

   Robert H. Dudley, Justice.

This is the second appeal of this condemnation case. See Coffelt v. Arkansas State Highway Commission, 285 Ark. 314, 686 S.W.2d 786 (1985). We affirm the trial court because the appellant has flagrantly violated Rules 9(c) and (d) of the Rules of the Supreme Court and the Court of Appeals.

In the section of her brief entitled “Abstract of Record” the appellant has not used the first person and has reprinted a major part of the trial transcript. A reprint of a major part of the transcript is not an abstract. We have consistently held that this type of flagrant violation of Rule 9(d) calls for summary affirmation. Gray v. Ouachita Creek Watershed District, 239 Ark. 141, 387 S.W.2d 605 (1965); Smith v. Pond, 259 Ark. 564, 534 S.W.2d 769 (1976); Harris v. Arkansas Real Estate Commission, 274 Ark. 537, 627 S.W.2d 1 (1982); Board of Education of Franklin County v. Ozark School District No. 14, 280 Ark. 15, 655 S.W.2d 368 (1983).

In addition, appellant sets out only one point of appeal which is as follows: “The trial court erred in denying appellant’s motion to set aside the verdict and judgment and to grant new trial and in rejecting each of her reasons and allegations set forth therein.” Then, in the argument section of her brief, appellant addresses thirty-one points of alleged error by the trial court. This is a clear violation of Rule 9(c) which requires an appellant to concisely list and separately number the points relied on for reversal.

We affirm the trial court pursuant to Rule 9(e)(2).

George Rose Smith and Hickman, JJ., not participating.

Purtle, J., dissents.

Hays, J., concurs.

Steele Hays, Justice,

concurring. I agree with the majority that the testimony has been abstracted in question and answer form and in that respect it violates Rule 9 of our rules. Harris v. Arkansas Real Estate Commission, 274 Ark. 537, 627 S.W.2d 1 (1982). Admittedly, we have affirmed other cases on the basis of Rule 9 where the appellant failed to provide an abridgement and simply reproduced the record in near verbatim form. Oaklawn Jockey Club v. Jameson, 280 Ark. 150, 655 S.W.2d 417 (1983); Gray v. Ouachita Creek Watershed District, 239 Ark. 142, 387 S.W.2d 605 (1965). But in those cases the breach was far greater. In the Harris case the abstract covers two volumes, with 154 pages devoted to testimony which obviously is reproduced word for word in question and answer form. In Oaklawn v. Jameson the abstract was 261 pages, 80% of which was not relevant to the two questions presented by the appeal. In Board of Education of Franklin Co. v. Ozark School District, 280 Ark. 15, 655 S.W.2d 368 (1983), the appellants reproduced virtually the entire records of two appeals. The abstract contained “verbatim reprints of almost every document in both records, including summonses, statutes, pleadings, tax records and minutes from school board meetings.”

On the other hand, we have often looked beyond technical violations of Rule 9 and decided the issues on their merit. See Myers v. Muuss, 281 Ark. 188 (p. 190), 622 S.W.2d 805 (1984); Ford v. State, 276 Ark. 98 (p. 112), 633 S.W.2d 3 (1982); Lincoln v. State, 262 Ark. 511, 558 S.W.2d 146 (1977), and Randle v. State, 257 Ark. 232, 516 S.W.2d 6 (1974).

Abstracting under Rule 9 is not black and white. There is a sizeable area of subjective judgment involved in deciding on just the right amount. And there are, I submit, no clear boundaries between violations that are flagrant and those that are marginal. For that reason alone when the issue is one of too much rather than too little we should, I believe, err on the side of tolerance rather than intolerance. It is one thing for the abstract to omit crucial segments of the record so that an understanding of the points argued on appeal is impossible. (For example see Lawson v. Lewis, 276 Ark. 7, 631 S.W.2d 611 (1982); Wade v. Franklin-Stricklin Land Surveyors, Inc., 264 Ark. 841, 575 S.W.2d 672 (1979); Bank of Ozark v. Isaacs, 263 Ark. 113, 563 S.W.2d 707 (1978); Merritt v. Merritt, 263 Ark. 432, 565 S.W.2d 603 (1978).) But it is a different matter when the abstract contains more than is necessary (though not so much as to be wholly unmanageable) because the simple expediency of skipping over non-essential portions is available to the reader.

Here, the only infraction I can detect in the abstracting (I disagree the abstract is in the third person) is that the testimony is reproduced in question and answer form. But there is relatively little of it. There were only two witnesses — one to a side — and the entire abstract of the testimony covers only 45 pages, about ten of which are attributable to objections and dialogue between the trial judge and the lawyers. That does not strike me as being so flagrant as to require affirmance under Rule 9.

I would consider the appeal on the merits and on that basis I would affirm the judgment.

John I. Purtle, Justice,

dissenting. Article 2, Section 22 of the Constitution states:

The right of property is before and higher than any constitutional sanction; and private property shall not be taken, appropriated or damaged for public use, without just compensation therefor.

Therefore, neither Rule 9 (d) nor the Highway Department are before and higher than our Constitution.

I would reverse and remand.


author: Robert H. Dudley, Justice.

text:
    EVELYN HILLS PHARMACY, INC., and Phillip J. COLWELL v. FIRST NATIONAL BANK OF FAYETTEVILLE
    86-23
    712 S.W.2d 291
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986

      F.H. Martin, for appellant.

      Mark Lindsey, P.A., for appellee.
   Robert H. Dudley, Justice.

This appeal is from a decision of the trial court holding appellant Evelyn Hills Pharmacy, Inc. liable on a promissory note and appellant Phillip J. Colwell liable as a loan guarantor of the note. We affirm the decision.

Evelyn Hills Pharmacy, Inc. is a corporation in which Richard A. Brown owned one-half of the stock and appellant Colwell owned the other half. In 1974 both Brown and Colwell executed loan guaranty agreements to appellee First National Bank of Fayetteville in which they guaranteed the notes of the corporation up to a limit of $20,000.00. In 1980 the noté at issue was executed in favor of the First National Bank.

The form note was executed on August 12, 1980, in the amount of $28,000.00. It provides: “The undersigned borrower . . . promises to pay . . .” The words “Evelyn Hills Pharmacy” are typed in the upper left corner. The handwritten signature “Richard A. Brown” followed by the printed word “borrower” appears on the lower right section of the note.

$8,433.72 of the loan, for which the note is evidence, was used to retire an earlier note of the pharmacy, and the remaining $20,000.00 was deposited in the pharmacy’s bank account. The pharmacy’s board of directors did not authorize either the debt or the note. Brown, who signed the note, actively managed the pharmacy and had previously borrowed money on the corporation’s account. Brown did not discuss the note with appellant Colwell until about a month after it had been executed. Colwell did not take any action to repudiate the note or his guaranty agreement.

In January 1985 the note was in default, and the bank filed suit for judgment against the appellant pharmacy and appellant Colwell. The bank did not sue Richard A. Brown.

The case was tried to the court, which held that Richard A. Brown was an authorized agent of the pharmacy and had the authority to execute the note. The appellant argues that such a factual ruling is clearly erroneous. We agree, but the result reached by the trial court was the right one, and we will sustain a judgment which is right even if the trial court announced the wrong reason. Armstrong v. Harrell, 279 Ark. 24, 648 S.W.2d 450 (1983). While Brown was not authorized to execute the note, all of the stockholders, officers, and directors of the pharmacy knew of the execution of the note about a month after the fact and took no action to either limit Brown’s authority or to return the proceeds of the note. Such action constitutes a ratification and is binding upon the corporation. Our statement in Cleburne County Bank v. Butler Gin Co., 184 Ark. 503, 42 S.W.2d 769 (1931) is precisely in point:

It is well settled, as a general proposition, that the president and secretary of a corporation are not empowered to bind it by their signatures to commercial paper unless such authority is expressly conferred by the charter or by the board of directors. City Elec. St. Ry. Co. v. First Nat. Bank, 62 Ark. 33, 34 S.W. 89, 31 L.R.A. 535, 54 Am. St. Rep. 282, and authorities there cited. See also Anderson-Tully Co. v. Gillett Lbr. Co., 155 Ark. 224, 244 S.W. 26. This rule, however, is subject to important qualifications, one of which is that where the act is performed by the officers through whom the corporation usually functions and results in benefit to the corporation, it will be bound where the transaction was had under circumstances by which knowledge might be imputed to it. Where the unauthorized act of officers is clearly beneficial to the corporation, slight circumstances will be sufficient to impute knowledge and will effect a ratification of that act. City Elec. St. Ry. Co. v. First Nat. Bank, supra; Anderson Tully Co. v. Gillett Lbr. Co., supra; Love v. Metro. Church Assn., 181 Ill. App. 102; Washington Savings Bank v. B. & D. Bank, 107 Mo. 133, 17 S.W. 644, 28 Am. St. Rep. 405; Knowles v. N.T.T. Co., (Tex.) 121 S.W. 232. Especially is this true where the other party to the transaction has acted in good faith, and a repudiation of the transaction will result in harm and disadvantage to him.

Appellant’s second assignment of error has consumed a good deal of our time in conference. Before discussing the point, it is necessary for us to summarize the applicable code provisions. Ark. Stat. Ann. § 85-3-401 (Add. 1961) provides that no person shall be liable on an instrument unless his signature appears on the instrument. That section further provides that a signature is made by use of any name, including any trade or assumed name, upon an instrument, or by any word or mark used in lieu of a written signature. The comments to § 85-3-401 indicate that a signature may be handwritten, typed, printed, or made in any other manner. The comments also indicate that the signature could validly appear in the body of the instrument, as in the case of “I, John Doe, promise to pay . . .” without any other signature.

Ark. Stat. Ann. § 85-3-403 provides that a signature may be made by an agent or other representative. Comment 2 to this section contains language pertinent to this case. The comment indicates that even though an agent is authorized to sign, “the principal is not liable on the instrument, under the provisions (Section 3-401) relating to signatures, unless the instrument names him [the principal] and clearly shows that the signature is made on his [theprincipal’s] behalf.” The appellant tacitly admits that the typing of “Evelyn Hills Pharmacy” rather than “Evelyn Hills Pharmacy, Inc.,” was sufficient to name the principal. However, the appellant in this point of appeal strongly argues that the signature “Richard A. Brown” followed by the printed word “borrower” does not clearly show that the signature was on behalf of the purported principal, and therefore, the principal is not liable according to Comment 2. The appellant is factually correct but we choose not to reach the result suggested by the comment.

Here, Richard A. Brown, the purported agent was not sued. The sole issue is whether the principal, Evelyn Hills Pharmacy, Inc. is liable on the note. The problem with the code comment is discussed in J. White & R. Summers, Uniform Commercial Code, 49-92 (2d ed. 1980):

In at least one type of case (discussed more fully in Section 13-5), the Code is unclear on the principal’s liability. Assume the agent reveals either his agency status or the name of the principal but not both and later successfully frees himself from personal liability in a suit by an immediate party by proving that he acted in an agency capacity. When the agent is free of liability in such case, is the principal nonetheless liable although his name does not appear on the instrument and the instrument does not reveal the agency status of the one who signed as his agent? Section 3-401(1) would seem to indicate that the principal is not liable since his signature does not appear on the instrument. Comment 2 to 3-403 reinforces that conclusion and seems to apply even when the agent names the principal: “Even though he [the agent] is authorized the principal is not liable on the instrument, under the provisions (Section 3-401) relating to signatures, unless the instrument names him [the principal] and clearly shows that the signature is made on his [the principal’s] behalf.” The rule is clear, yet there is something fundamentally unfair about letting the agent weasel out of the apparent agreement on the note without at least holding the principal liable; in such case the payee is left with a wholly worthless instrument. Yet in the face of 3-401 and Comment 2 to 3-403 we see no way to avoid that conclusion.

We choose not to reach such a fundamentally unfair result.

In an action between the immediate parties to the instrument, Ark. Stat. Ann. § 8 5-3-403 (2) (b) allows an agent who has signed a negotiable instrument to introduce parole evidence to establish that personal liability on his part was not intended. See R. Hillman, J. McDonnell & S. Nickles, Common Law and Equity Under the Uniform Commercial Code § 1.04 [4] (1985). If parole evidence may be used to limit liability of an agent, then every reason exists to allow its use to show that the immediate parties intended for the named principal to be liable. The parole evidence in this case convinces us that all parties to the transaction intended that the pharmacy be liable as principal because part of the proceeds were used to retire an earlier corporate note and the remaining $20,000.00 was deposited in the pharmacy’s account. The parole evidence is also binding against the guarantor, Colwell, since he acquiesced in the entire transaction. Accordingly, we hold the pharmacy liable as principal.

Appellant’s final argument is that appellant Colwell agreed to guarantee the pharmacy’s notes “up to the sum of $20,000.00,” but the note at issue was in the original amount of $28,433.72, and therefore the terms of the obligation were changed and appellant is not liable. The short answer to the argument is that the terms of the obligation were not changed. Neither the note nor the guaranty was modified or altered in any manner, and appellant’s liability is for a lesser amount than the guaranteed amount.

Affirmed.

Newbern, J., not participating.


text:
    FIRST NATIONAL BANK OF WYNNE v. Edna O. LEONARD v. Joann HESS
    86-109
    711 S.W.2d 798
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986

      Shaver, Shaver & Smith, by. Tom B. Smith, for appellant.

      Joseph O. Boeckmann, for cross-appellee.

      B. Michael Easley, for appellee.
   Robert H. Dudley, Justice.

Edna Leonard, the plaintiff below and the appellee in this Court, purchased a clothing store in Wynne from Joann Hess, the defendant and counter-claimant below and cross-appellee here. At the time of purchase, counter-claimant Hess owed money to the First National Bank of Wynne, the defendant below and the appellant here. As consideration for the purchase, plaintiff agreed to make a $5,000.00 down-payment to counter-claimant Hess and assume the approximate $ 15,000.00 debt which was owed to the bank. Plaintiff, in running the store, was plagued by a lack of operating capital. In March 1983 she borrowed $2,000.00 for operating capital from the bank. To secure the debt, she signed a new note and security agreement and financing statement. The note was in the amount of $17,802.94, which represented the amount of debt assumed plus the loan for operating capital. Counter-claimant Hess guaranteed the note. The security agreement pledged all of the inventory and equipment of the store. Even after this loan plaintiff was short on operating capital and on March 30,1983, the bank loaned her an additional $2,000.00. She executed a promissory note, and she gave a financing statement and security agreement pledging her automobile. Her financial problems continued, and on June 1, 1983, the defendant bank peacefully repossessed the contents of the store. The bank took an inventory and, although it did not have a security interest in the accounts receivable, attempted to collect the accounts receivable. Thirty days later the bank instructed counter-claimant Hess to liquidate the business. The bank mailed to plaintiff a notice of intent to sell the inventory, but the notice was never received by plaintiff because it was addressed to her at the store after the business had been closed and the locks changed. Hess sold the inventory and fixtures, and all of the funds received were applied to plaintiffs debt. There remained an outstanding balance of $7,602.94 plus interest which the endorser, cross-claimant Hess, paid.

On September 2, 1983, the plaintiff signed an agreement which allowed her to refinance her car for the consideration of executing a release. In addition, she signed an agreement styled “Release of All Claims” by which she released any and all claims arising from the closing of her business.

Plaintiff later filed suit against the bank and cross-claimant Hess for wrongfully closing her business and doing so in a commercially unreasonable manner. She alleged the release was invalid because she was not competent at the time she executed it. Hess counter-claimed against plaintiff for the money she had paid as the promissory note guarantor. The jury returned a verdict on plaintiffs claim against the bank in the amount of $ 15,000.00 and a verdict on counter-claimant’s claim against the plaintiff in the amount of $8,000.00. We affirm both verdicts.

The appellant bank filed a pre-trial motion, in the nature of a motion for summary judgment, to dismiss the complaint because the plaintiff had executed a release. Without objection, the trial court heard testimony on the motion and ruled that the issue of competency to sign the release was a matter for the jury. On appeal, the appellant bank contends that the trial court erred in not granting its motion to dismiss. The argument is without merit.

A release may be voided if the person’s physical or mental condition, at the time of signing, was such that he was incapable of appreciating the character of the instrument and the consequences of executing it. Lynch v. Missouri Pacific Railroad Co., 285 Ark. 49, 684 S.W.2d 817 (1985). Viewing the evidence most favorably to appellee, as we must do, it is clear that there was a genuine issue concerning a material fact and that the trial court was correct in denying the motion to dismiss. At the hearing on the motion, the plaintiff testified that at the time she signed the release she was under a doctor’s care for anxiety, stress, and psychological problems and was taking medication consisting of Ativan and depressants which “slows everything down.” She testified that she was under stress, was physically impaired, and thought she was signing papers about her car.

At trial, the appellant bank moved for a directed verdict at the close of all of the evidence on the ground that the plaintiff had not proved that “she should be relieved of the release by clear and convincing evidence that she did not have the mental capacity. . . .” The trial court denied the motion for a directed verdict, and the appellant now argues the ruling was in error. The trial court was right. Before discussing the point of appeal, we note that the correct burden of proof was by a preponderance of the evidence. The clear and convincing burden is a standard applied at times in chancery cases, but not in law cases under our state standard.

To determine whether the trial court was right in refusing to grant a directed verdict for a defendant, the appellate court takes the view of the evidence most favorable to the plaintiff to see if there was any substantial evidence upon which the jury could have based its finding, and if there was substantial evidence affirms the denial of the motion. Wenger v. Kiech, 273 Ark. 369, 616 S.W.2d 714 (1981). Here, when viewed in the light most favorable to appellee, there was substantial evidence upon which the jury could find that appellee was not competent to execute the release. She testified that she did not know that she had signed a release. More importantly, she testified that on the day she signed the release she had taken two Ativan pills which “made me drowsy, wiped me out and blurred my vision.” Her doctor testified that amount of Ativan could cause her to be dazed. Another witness testified that she drove appellee to the office of the bank’s attorney where the release was signed, because appellee was so dazed she was unable to drive her own car, and while at the attorney’s office plaintiff was crying and shaking.

The appellant also argues that the trial court erred in denying the motion for a directed verdict because the plaintiff ratified the action of the bank and because the plaintiff did not suffer any recoverable loss. However, these arguments were not made to the trial court, and we do not consider arguments raised for the first time on appeal.

Defendant and counter-claimant Joann Hess obtained a verdict against the plaintiff for the $8,000.00 which is the amount she had to pay to the bank on her guaranty of plaintiffs note. Plaintiff cross-appeals from the verdict claiming that the trial court erred by failing to grant a directed verdict or a judgment notwithstanding the verdict because counter-claimant Hess and the bank failed to comply with the Uniform Commercial Code’s notice requirements for a secured party. The trial court was right. The bank was the secured party, not counter-claimant Hess. Hess was the guarantor of the note. The bank, not Hess, had the duty to give notice. Even if the notice was deficient, it did not constitute a defense against Hess.

Affirmed on direct appeal and affirmed on cross-appeal.


author: Steele Hays, Justice.

text:
    Anthony W. BARTELS and Drew LUTTRELL v. Delia WAIRE
    86-41
    712 S.W.2d 285
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986

      Howard & Howard, by: William B. Howard, for appellant.

      William Gary Holt, and James Gerard Schulze, for appellee.
   Steele Hays, Justice.

Delia Waire retained attorneys Drew Luttrell and Anthony Bartels to represent her in connection with a workers’ compensation claim. A hearing was conducted before an administrative law judge who announced at the end of the hearing that he was not in a position to make any kind of determination without additional medical reports. The record was left open for Mr. Bartels to submit additional proof.

A year later, on August 25, 1980, the administrative law judge wrote to Mr. Luttrell and to Mr. Bartels reminding them the hearing had been left open for additional medical reports. The letter stated that since no additional reports had been submitted, in view of the length of time which had elapsed, the administrative law judge would assume the record was complete if he had not heard from claimant’s attorneys within ten days. This letter evidently received no response and in November the administrative law judge issued his opinion denying the claim.

Mrs. Waire brought suit against the attorneys for malpractice. The case was tried and the defendants moved for a directed verdict, which was denied. The jury returned one verdict against Anthony Bartels for $15,000 and one verdict against Drew Luttrell for $15,000. The circuit judge ruled the defendants’ liability was joint and several and entered one judgment against both defendants in the amount of $15,000.

Luttrell and Bartels have appealed on the grounds their directed verdict should have been granted because the plaintiffs case was based entirely on speculation and conjecture. Delia Waire has cross-appealed from the entry of a judgment for $15,000. She contends the judgment should have been for $30,000. We affirm on direct appeal and on cross-appeal.

When a defendant has appealed the denial of a motion for a directed verdict the standard on review is: after giving the plaintiffs evidence, and all reasonable inferences to be drawn from such evidence, its highest probative value, a motion for a directed verdict against the plaintiff should be granted only if the evidence is so insubstantial that if a verdict were returned for the plaintiff the trial court would be required to set it aside. Farm Bureau Mutual Insurance Co. v. Henley, 275 Ark. 122, 628 S.W.2d 301 (1982); Miller v. Tipton, 272 Ark. 1, 611 S.W.2d 764 (1981). Or as is sometimes said, “A directed verdict for the defendant is proper only when there is no substantial evidence from which the jurors as reasonable men and women could possibly find the issues for the plaintiff.” O’Brian v. Primm, 243 Ark. 186, 419 S.W.2d 323 (1967); St. Louis Southwestern Railway Co. v. Farrell, Adm’x, 242 Ark. 757, 416 S.W.2d 234 (1967).

Substantial evidence has been defined in numerous cases:

Substantial evidence has been defined as ‘evidence that is of sufficient force and character that it will, with reasonable and material certainty and precision, compel a conclusion one way or the other. It must force or induce the mind to pass beyond, a suspicion or conjecture.’ Ford on Evidence, Vol. 4, § 549, page 2760. Substantial evidence has also been defined as ‘evidence furnishing a substantial basis of fact from which the fact in issue can reasonably be inferred; and the test is not satisfied by evidence which merely created a suspicion or which amounts to no more than a scintilla or which gives equal support to inconsistent inferences.’ Wigmore on Evidence, Vol. IX, 3rd ed. § 2494, footnote at page 300. See also Tigue v. Caddo Minerals Co., 253 Ark. 1140, 491 S.W.2d 574 (1973); Goaz v. Central Ark. Dev. Council, 254 Ark. 694, 496 S.W.2d 388 (1973).

When viewed according to the foregoing authority the proof in this case plainly justified the denial of the defendants’ motion for a directed verdict.

The allegations of malpractice against Drew Luttrell and Anthony Bartels included the following: failing to secure a hearing on the plaintiffs entitlement to additional temporary total and permanent partial disability benefits, failing to secure medical reports in connection with the proceedings before the administrative law judge; failing to make timely claim for rehabilitation benefits for the claimant; failing to file timely notice of appeal from the decision of the administrative law judge, and failing to adequately and properly prepare and present evidence of the claim for additional benefits under the Workers’ Compensation Act.

The plaintiffs proof consisted of her own testimony as well as that of Dr. Donald Richard Butts, a neuropsychiatrist, who had served as medical director and consultant to the Ozark Regional Mental Health Center, where Mrs. Waire was treated. Attorney Frederick Spencer also testified for the plaintiff. Dr. Butts testified Mrs. Waire was a client of the Mental Health Center from September 1975, through March 5, 1984. He said Mrs. Waire was suffering from reactive depression associated with her back injury; that she had a great deal of difficulty in locomotion, sitting or rising from chairs, riding in cars, climbing stairs, and lifting, which were attributable to complaints in the lumbosacral area. He described emotional and psychological problems due to constant pain, low energy, loss of sleep and appetite which he associated with the type of injury Mrs. Waire had sustained. He was of the opinion that Mrs. Waire’s condition in 1979 was not materially different than at the time of his testimony (June 8, 1984). He estimated her permanent partial disability at 80%, 50% emotional and 30% anatomical.

Mr. Spencer testified about his legal training and experience. Mrs. Waire had consulted him in April 1981 and in that capacity he investigated the status of her claim before the Workers’ Compensation Commission. He said Mrs. Waire understood from Mr. Luttrell that she had six months in which to appeal from the decision of the administrative law judge but in his opinion the claim was barred both for failure to appeal to the full commission within thirty days and because of the lapse of more than two years from the original injury. He said the only thing he could do was to attempt to reopen the case on the basis of Section 26 of the Compensation Act, that is a worsening of a claimant’s condition within six months of an award or order. The administrative law judge held this section did not apply, there having been no award of additional benefits to Mrs. Waire resulting from the hearing on August 22, 1979. That position was upheld on appeal to the full commission and to the Court of Appeals. At that point Mr. Spencer referred Mrs. Waire to other counsel.

Mr. Spencer reviewed the handling of Mrs. Waire’s claim by the defendants, expressing his opinion that two medical reports in the files of the Disability Determination Unit of the Social Security Administration regarding Mrs. Waire could have been obtained by the defendants which he believed would have been helpful to her claim, as they described the functional limitation of her injury. He said he had never known of a permanent, partial disability rating as high as 80%, given by Dr. Butts. Mr. Spencer expressed the belief that the defendants had failed to exercise reasonable diligence in representing Mrs. Waire and that if the evidence which was available had been presented to the Commission Mrs. Waire would have been entitled to a recovery of $140,000.

We find nothing speculative about the proof presented by Mrs. Waire to support her allegations of malpractice. The testimony of Mr. Spencer was clear and unequivocal and entirely sufficient to sustain the verdict on the issue of liability. Appellants insist that Mrs. Waire did not give Mr. Bartels the name of Dr. Butts, which can be conceded. It is undisputed that she gave him the name of the Ozark Mental Health Center where Dr. Butts was affiliated. But whether Mr. Bartels and Mr. Luttrell exerted their best efforts to obtain the medical proof that was plainly available was for the jury to decide and the trial court was entirely correct in submitting the issues to the jury.

For her cross-appeal Mrs. Waire submits that the trial court erred by interpreting the verdicts returned by the jury as a verdict of $15,000 when the jury obviously intended to award $30,000. But it is clear from the record that no objection was made to the judgment as entered and this argument cannot now be asserted.

Affirmed.


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

text:
    Robert HANSON v. GARLAND COUNTY ELECTION COMMISSION, Dan McCRAW, Ed FRENCH and Natalie J. KILMER
    86-134
    712 S.W.2d 288
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986

      Hurst Law Offices, by: Q. Byrum Hurst, Jr.\ and R. David Lewis, for appellee.

      Wood, Smith, Schnipper & Clay, by: Ray S. Smith, Jr. and James W. Chesnutt, for appellee.
   Steele Hays, Justice.

On April 8, 1986 the people of Hot Springs voted in a special election to change their government to the city manager form pursuant to Act 99 of 1921. The vote was 4,018 for to 2,663 against. The Garland County Election Commission certified the election results to the mayor on April 23 and he issued a proclamation calling for a special election on June 17 to elect four city directors.

On May 22, within the time allowed under Ark. Stat. Ann. § 19-111 (Repl. 1980) to contest an election (thirty days), appellant Robert Hanson brought this suit for declaratory judgment and injunctive relief in the Circuit Court of Garland County. The respondents are members of the election commission. The complaint alleged the proposed change in city government was an initiated procedure and therefore subject to the provisions of Amendment VII of the Arkansas Constitution. The complaint further stated because the amendment requires initiated proposals to be submitted to the electorate at general, rather than special elections, the April 8 election was in violation of Amendment VII and should be held void.

As an advanced case, trial was set for June 6 and on that date, 44 days after certification of the election, Hanson filed an amendment to his complaint alleging the issue had been submitted to the voters under an improper ballot title. The respondents immediately objected to this attempt to amend the complaint after the time allowed by § 19-111. The circuit court held that while the ballot title was not properly presented to the electorate, that issue was not raised within the time allowed under § 19-111. The court also held the only timely issue presented was whether a petition for a city manager form of government was an initiated proposal and subject to Amendment VII. Relying on Dingle v. City of Eureka Springs, 242 Ark. 382, 413 S.W.2d 641 (1967) and Knowlton v. Walton, 189 Ark. 901, 75 S.W.2d 811 (1934), the trial judge held in favor of the respondents and dismissed the complaint.

Appellant’s brief before this court asserts only one issue is presented for decision — whether or not the trial court was correct in holding the amendment to the complaint was filed out of time. That holding was correct.

Ark. Stat. Ann. § 19-111 provides in part:

The election thereupon shall be conducted, the votes canvassed, and the results declared in the same manner as is provided by law with respect to other city elections. The county board of election commissioners shall certify the results of any such election to the mayor, and the result so certified shall be conclusive and not subject to attack unless suit is brought to contest such certification within thirty (30) days after such certification in the Circuit Court of the county in which such municipality is situated.

In Jones v. Ethridge, 242 Ark. 907, 416 S.W.2d 306 (1967) and Cain v. McGregor, 182 Ark. 633, 32 S.W.2d 319 (1930) we held that new grounds of contesting an election may not be raised by amendment after the statutory .period has expired.

Appellant urges that this case is distinguishable in that in those cases no cause of action was stated in the original complaint contesting an election, and we held in that situation the complaint may not be amended out of time. Appellant argues the cases do not hold that a legitimate cause of action may not be later amended to raise a legitimate legal issue. We disagree. The obvious purpose behind the requirement in our election statutes for a timely challenge to election results is so the elective process will not be unduly delayed, hence the issues must be promptly raised and promptly decided. We have said the right to contest a primary election is a statutory proceeding, the purpose of which is to furnish a summary remedy and to secure a speedy trial. And the contestant is limited to the grounds set out in his original complaint, and those grounds cannot be enlarged by subsequent amendment not made within the time required by the statute for contesting. Gower v. Johnson, 173 Ark. 120, 292 S.W. 382 (1927); Bland v. Benton, 171 Ark. 805, 286 S.W. 976 (1926). If one could defeat the time limitation simply by filing a timely cause of action and then amending it at his leisure the purpose of the statute would be plainly defeated.

Appellant argues that ARCP Rule 15(c) provides that an amendment arising out of the conduct, transaction or occurrence set forth in the original pleading relates back to the date of such pleading. But we believe election contests are subject to ARCP Rule 81, which excepts from the applicability of the rules “those instances where a statute which creates a right, remedy or proceeding specifically provides a different procedure in which event the procedure so specified shall apply.” See Travelodge International Inc. v. Handleman National Book Company, 288 Ark. 368, 705 S.W.2d 440 (1986).

Affirmed.

Purtle, J., and Newbern, J., dissenting.

John I. Purtle, Justice,

dissenting. On April 8, 1986, the people of the City of Hot Springs, Arkansas, lost their representative form of government. The shame of it is the manner in which the people lost or surrendered their rights. Sometime prior to the election date a few people got together and decided how to change the form of government with the approval of the voters. Thus, they devised a proposal which appeared on the voting machines as follows:

FOR the proposition
[ ]
AGAINST the proposition
[ ]

The paper ballots read as follows:

FOR the proposition to organize this City under Act 99 of the General Assembly of 1921, as amended. [ ]
AGAINST the proposition to organize this City under Act 99 of the General Assembly of 1921, as amended. [ ]

Following the above cited options, there appeared in very small print a “PROCLAMATION OF SPECIAL ELECTION.” It would take a fairly intelligent person several minutes to read the extremely complicated fine print contained in the proclamation. Probably not a single person read the proclamation at the time of voting. It is impossible to know what “proposition” a voter was voting FOR or AGAINST, at least on the voting machines. On the paper ballot, it is likewise impossible for a voter to understand what he was voting FOR or AGAINST unless the voter already knew what it meant to organize the City under Act 99 of the General Assembly of 1921, as amended.

Whether this was a clever maneuver on the part of the sponsors of the City Manager form of government or simply an oversight, is immaterial because the result is the same; no ordinary voter could possibly have understood what was presented unless they had gained knowledge from another source. The trial court was absolutely correct in finding that the ballot proposition was improperly presented inasmuch as it was not in substantial compliance with Ark. Stat. Ann. § 19-111 (Repl. 1980). However, I think the trial court erred in ruling that the amendment to the complaint was not filed within 30 days of the certification of the election and therefore could not be properly considered.

The majority opinion fails to recognize the purpose of ARCP Rule 15, which in part states:

(a) Amendments. With the exception of pleading the defenses mentioned in Rule 12(h)(1), a party may amend his pleadings at any time without leave of the court. Where, however, upon motion of an opposing party, the court determines that prejudice would result or the disposition of the cause would be unduly delayed because of the filing of an amendment, the court may strike such amended pleading or grant a continuance of the proceeding. A party shall plead in response to the original pleading or within 20 days after service of the amended pleading, whichever period is longer, unless the court otherwise orders.
(c) Relation Back of Amendments. Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction or occurrence set forth in the original pleading, the amendment relates back to the date of the original pleading. . . .

The obvious purpose in adopting Rule 15 was to allow amendments to pleadings without special permission of the court in nearly all instances. The court’s discretion is very limited and the pleader is given a rather loose rein.

The majority fails to give effect to the express provisions of Rule 15(a) and Rule 15(c) by stating that Rule 81 is an exception to Rule 15. Rule 81(a) states:

These rules shall apply to all civil proceedings cognizable in the circuit, chancery, and probate courts of this State except in those instances where a statute which creates a right, remedy or proceeding specifically provides a different procedure in which event the procedure so specified shall apply.

This court has dealt with the relation back of amendments under Rule 15 in the case of Jim Halsey Co. v. Bonar, 284 Ark. 461, 683 S.W.2d 898 (1985). In Bonar we stated:

Rule 15 not only makes liberal provision for amendments to pleadings, it also states that any claim asserted in the amended pleading, which arises “out of the conduct, transaction or occurrence set forth in the original pleading, . . .relates back to the date of the original pleading.” Rule 15(c).
Since the amendment relates back, there can be no statute of limitations objection to the amendment without proof of undue delay or prejudice. See, Brill, supra; Ozark Kenworth, Inc. v. Neidecker, 283 Ark. 196, 672 S.W.2d 899 (1984). No such proof was offered here.

In the case before us there was no request for a continuance nor a showing of undue delay or prejudice. There can be absolutely no question in the mind of any reasonable person that every allegation contained in the complaint and the amendment arose out of the same conduct, the April 8,1986, voting incident. I don’t think this court has the right to pick and choose which Rule it wishes to apply in cases being considered by it. It is my opinion that the appellants had the right to amend the complaint in order to have the real issue adjudicated.

Any change in any form of government is a serious matter and should be undertaken only after careful consideration. If the people of Hot Springs want to change their form of government and knowingly vote to do so, then I have no objection to their doing so. However, under the guise of being “FOR” or “AGAINST” most people prefer to be “FOR.” The very least that can be expected is that they know what they are voting “FOR.”

I would have prohibited the election.

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


author: David Newbern, Justice.

text:
    W. J. BUDD, et al. v. Joe DAVIS, et al.
    86-42
    711 S.W.2d 478
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986

      Chambers & Chambers, by: Rodney T. Chambers, for appellants.

      Keith, Clegg & Eckert, by: Elliott L. Clegg, for appellees Joe Davis and Betty Davis.

      Michael E. Surguine, for appellees Barry L. Dennis and Donna Dennis.

      James E. Baine, for appellee Deltic Farm & Timber Co., Inc.
   David Newbern, Justice.

The appellants brought this action against the appellees for wrongfully cutting timber from land owned by the appellants. Appellee Joe Davis claims to be a cotenant with the appellants with respect to the land in question. Appellee Barry Dennis claims to be a cotenant by virtue of a timber deed from Davis. Appellee Deltic Farm and Timber Co., Inc., claims to be a cotenant by virtue of a timber deed from Dennis. The appellants sought treble damages, pursuant to Ark. Stat. Ann. § 50-105 (Repl. 1971). The appellees denied liability for treble damages on the ground that, as cotenants with the appellants, they could not be regarded as trespassers upon the appellants’ land.

The trial court entered an order holding that the appellees could not be trespassers on the interest of their cotenants and thus that § 50-105 does not apply. The appellants have taken this interlocutory appeal. They contend, in their jurisdictional statement, that we should decide the issue despite the fact that the case has yet to be tried. We decline to do so.

The appellants state that the court’s ruling is upon a “separable” branch of the litigation and thus an appeal is permissible under Ark. R. App. P. 2(a)(2). That rule does not permit appeal except of “[a]n order which in effect determines the action and prevents a judgment from which an appeal might be taken, or discontinues the action.” Here we have no such situation. Nor has there been a final determination of a claim or certification under Ark. R. Civ. P. 54(b).

As there has been no final or otherwise appealable order entered, we lack jurisdiction to hear the appeal. 3-W Lumber Company v. Housing Authority for the City of Batesville, 287 Ark. 70, 696 S.W.2d 725 (1985); Arkansas Savings and Loan Association v. Corning Savings and Loan Association, 252 Ark. 264, 478 S.W.2d 431 (1972).

Appeal dismissed.


author: David Newbern, Justice. Ellen B. Brantley, Special Justice, Steele Hays, Justice,

text:
    James E. FENNELL, et ux v. Billy J. ROSS
    85-178
    711 S.W.2d 793
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986
    [Rehearing denied September 15, 1986.]

      Hartenstein, Lassiter & Oberlag, by: Ray Hartenstein, for appellants.

      Ralph M. Cloer, Jr., for appellees.
   David Newbern, Justice.

This is an appeal from a judgment awarding the appellees, the Rosses, who were the sellers, damages for breach of a real estate sale contract against the appellants, the Fennells, who were the buyers. The Fennells answered, contending they had properly rescinded the contract, and they filed a separate counterclaim seeking restitution in the sum of the earnest money they had paid. The basis of the rescission asserted by the Fennells was that the Rosses had misrepresented the property, through their listing broker, in the multiple listing service (MLS) publication by advertising that the property had “Commercial Potential! Any type business!” In fact, the property was zoned residential and was in the one hundred year flood plain. The court held that the fact that the land was in the flood plain was material, presumably because it, in large measure, negated the commercial potential of the property. However, because that fact was known to the agent who showed and sold the property to the Fennells, and because the court deemed her to be the agent of the Fennells, rather than the sellers, the Rosses, he held the Rosses were entitled to damages for the Fennells’ failure to perform. In other words, the court found the Fennells’ attempted rescission of the contract was not effective because their agent’s knowledge, imputed to them, negated their claim of reliance on the misrepresentation that the property had commercial potential. We disagree with the trial court’s holding that the selling agent was the agent of the buyers, and thus we reverse and remand.

Dr. Fennell and his wife were looking for property where they could reside and he could have room to conduct his veterinary medicine practice. Mrs. Whiteman, a real estate agent working for Rainey Realty Co., had been working with the Fennells for months, trying to find such a place. In the MLS publication she noticed a listing for a dwelling on Stagecoach Road in Little Rock described, in part, as follows: “Commercial Potential! Any Type business!” The property had been listed by Century 21 Reddick Company. Mrs. Whiteman showed the property to the Fennells and assured them they would have no trouble getting the zoning changed from residential to a satisfactory commercial classification to accommodate Dr. Fennell’s clinic. After the Fennells and the Rosses executed an offer and acceptance, the Fennells were told by a city planning office employee that the property was in the “100 year flood plain” and that because of that fact, rezoning would be very difficult to obtain. The testimony of Richard Wood, a supervisor in the City of Little Rock planning office confirmed that conclusion. Upon learning of this obstacle caused by the property’s location in the flood plain, the Fennells refused to go through with the contract.

In a letter to counsel after post trial briefs and preceding the entry of judgment, the judge said:

The Court has now received and is appreciative of your excellent briefs; however, those authorities found in those briefs failed to answer with finality the question of whose agent Mrs. Whiteman was. The mention of that failure should not be received as a criticism of either brief. To the contrary, the Court is of the conviction that our Appellate Courts have not been called upon to decide that issue; therefore, to assign you the task of finding such authority was requesting the impossible.
The Court would find that the testimony by and about Mr. Wood and his attitude toward securing a suitable rezoning of the property which was the subject of the sale to be of no significance. Which is to say, a purchaser of property would have no right to rely upon a statement by a real estate agent concerning whether or not the property would find a favorable or unfavorable zoning classification by the city on application to that city seeking rezoning. Further, the mere fact that the city would resist a zoning change does not mean that a zoning change would not follow the applicant’s efforts upon a showing of justification.
The Court, however, is of the conviction that the fact that city property is classified as being in a flood plain and by that very fact there are imposed restrictions upon the use and development of that property is a fact material to the value of that property. By restrictions here the Court intends to describe restrictions imposed by governmental authorities, for a view of the terrain itself should alert any purchaser of property that the property lies in an area which is apt to be affected by heavy rains. Thus restriction to development and use of the property arising from that fact is not an item that is required to be disclosed. Which is to say, a purchaser should be aware or alerted to the point of inquiry.

It would seem to the Court that here the critical facts are:

1. The purchasers of the property were aware or should have been aware that this property was subject to flooding; however, at the time of purchase they were not aware that the land’s use and development was affected by governmental restrictions by reason of the lands having been formally declared to be in the flood plain.
2. The fact that the lands are situated in a formally described flood plain is a fact material to the bargain and a fact that should be disclosed to an innocent party.
3. Mrs. Whiteman is a person who either had knowledge of the “flood plain problem” or is deemed to have such knowledge.
4. Mrs. Whiteman is the agent of the purchasers in the situation found in this record. She had been working with these purchasers for some period of time in an effort to find the type of property they were seeking.
5. The sellers here are entitled to their bargain.

The ensuing judgment contained the five numbered conclusions from the court’s letter.

We have no quarrel with any of the court’s factual determinations, but they were not the crux of the decision. The court obviously, and we think correctly, regarded the question of whether Mrs. Whiteman was the agent of the sellers or of the buyers as one of law. That is the question his decision turned upon, and it is thus the one we must address. Here we are dealing with a garden variety MLS property sale transaction conducted by two real estate brokers through their agents. Obviously, the broker and agent who listed the property with MLS was the representative of the sellers, but what of the others, the selling broker and its agent who brought the buyers’ attention to the property? A good statement of the problem is as follows:

In many real estate transactions, there are two brokers involved. One of the brokers is the “listing broker” and the other broker is the “selling broker.” When this is the case, the agency relationship is usually established between the seller and the listing agent through the listing contract, an agreement that acts as an employment contract for the listing agent. An agency relationship between the seller and the selling broker is often created by express language in the listing agreement. The clause that creates this agency relationship expressly authorizes or requires the listing agent to utilize the services of other brokers as subagents. Therefore, any broker who is not the listing broker but is attempting to effect a sale of the property in cooperation with the listing agent is considered a subagent. Consequently, when the listing contract contains such a provision, the selling broker has the duties of agency imposed upon him as a subagent of the listing broker. In essence, the selling broker, as subagent, is the agent of the seller. This subagency relationship with the seller, which generally precludes an agency relationship with the buyer, seems to be ignored by, if not unknown to, many selling agents. In addition, most buyers are probably unaware of its existence much less its legal ramifications. In practice, if the selling broker ever meets the seller, it is usually either when showing the property to a prospective purchaser or upon presentation of a purchase offer to the seller. However, the selling broker’s relationship with the buyer is quite different. Often, the broker has been in the company of the purchaser for many hours and has conducted some fairly confidential interviews with the prospective purchaser. Given such extensive contact with the buyer, and such minimal contact with the seller, the buyer is justified in believing that the agent will do his best to obtain the property for the buyer at the lowest possible price and on the most advantageous terms. Of course, for the agent to attempt to do so is a violation of the agent’s duty to the seller. However, it would be unrealistic to expect the buyer to feel that a broker who has worked with him extensively is attempting to obtain the highest possible price for the seller, which, in actuality, is the agent’s duty. [Footnotes omitted]

Romero, Theories of Real Estate Broker Liability: Arizona’s Emerging Malpractice Doctrine, 20 Ariz. L. Rev. 767, at 771-773 (1978).

We have not previously decided this issue, and there is a dearth of authority from other jurisdictions. A California court has held the selling agent in these circumstances is the agent of the sellers. Kruse v. Miller, 143 Cal. App. 2d 656, 300 P.2d 855 (1956.) Most scholarly articles, in addition to the one quoted above, reach that conclusion also. See, e.g., D. Burke, Law of Real Estate Brokers,% 1.5, pp. 9-10 (1982); J. Sinclair, The Duty of the Broker to Purchasers and Prospective Purchasers of Real Property in Illinois, 69 Ill. B.J. 263, 265 (1981). One reported trial court decision reached the opposite result. Wise v. Dawson, 353 A.2d 207 (Del. Super. 1975). Recognizing the magnitude of the problem in terms of the frequency with which it arises, one author has suggested the problem could be solved by giving the selling broker a dual fiduciary responsibility. Comment, 18 Wayne L. Rev. 1342 (1972). That suggestion was soundly criticized as one which might create more problems than it would solve. 20 Ariz. L. Rev. 767, supra, p. 773, n. 33.

The law of agency contemplates that an agent may serve only one principal with respect to any one transaction. See Rest. Agency (Second) §§ 387, 391, 394 (1957). We agree with the authorities and authors cited above who have reached the conclusion that in an MLS transaction like this one the selling agent is a subagent of the sellers.

Reversed and remanded for a new trial.

Special Justice Ellen Brantley, concurs.

Hays, J., dissents.

Purtle, J., not participating.

Ellen B. Brantley, Special Justice,

concurring. While I, too, would reverse the trial court’s decision and remand for trial on the Fennells’ claim for restitution, I would do so on different grounds. I do not believe it necessary to decide whether Mrs. Whiteman was the Fennells’ agent. The majority may well be correct in its conclusion that, under the circumstances of this case, Mrs. Whiteman is properly considered a sub-agent of the Rosses. However, agency issues in the Multiple Listing Service conflict can arise in many different ways, and the resolution of those issues raises many complex problems. See, e.g., Burke, Law of Real Estate Brokers, § 1.5, pp. 9-10 (1982); Comment, A Reexamination of the Real Estate Broker-Buyer-Seller Relationship, 18 Wayne L. Rev. 1350 (1972). Since I would reverse the case even if I accepted the trial court’s finding on agency, I do not believe the case should turn on that issue.

The case involves a material misrepresentation of fact in the sale of property. The misrepresentation about whether the property was located in the flood plain concededly began with the Rosses. The failure of Mrs. Whiteman (and Mrs. Reddick) to independently discover that the property was so located, even if they could have done so by the exercise of reasonable care, should not allow the Rosses to profit by their own misrepresentation. A contract may be rescinded if there was a mutual mistake of material fact. Foster v. Dierks Lmbr. & Coal Co., 175 Ark. 73, 298 S.W. 495 (1927). Hubbard v. Elam, 238 Ark. 976, 385 S.W.2d 925 (1965). Precisely such a mutual mistake occurred here, and the trial court erred in refusing rescission.

Steele Hays, Justice,

dissenting. Whether the Multiple Listing Service has altered the traditional concepts of agency in real estate transactions, I have not attempted to fathom. The trial court did not rely on it, though the majority sees it as the basis for the conclusion that Mrs. Whiteman was the seller’s agent as a matter of law, a view I believe is incorrect.

Nor do I think the claim of the sellers that the property had “Commercial Potential — Any Type Business” to have been a material misrepresentation in this case, even taking into account the floodplain issue. It is undisputed the buyers were told the property had flooded, that water had entered the house and damaged the carpets. There was no proof the claim of “commercial potential” was intended by the sellers, nor taken by the buyers, to mean anything other than what the phrase implies — potentially usable as commercial property. There was no guarantee of commercial zoning, just as there was no proof that rezoning was an impossibility. Richard Wood of the planning department testified rezoning would have been difficult but not impossible. The buyers could have conditioned their offer on rezoning but they chose not to. As they did not even attempt to obtain a zoning change, for all intents and purposes the zoning issue is moot. The evident fact is these buyers simply changed their mind soon after signing the offer and acceptance agreement. The agreement was signed on October 7,1983 and on October 12 the buyers gave notice they were not going through with the purchase. There was substantial evidence that Mrs. Fennell did not like the property and did not want to buy it.

Regardless of how any other issues in this case are decided, the issue that concerns me is the majority’s treatment of the agency problem. New areas of the law of agency present problems as complex as in real estate transactions. Whether an individual is the agent of the buyer or of the seller is rarely static, it may depend on the particular function being performed. The “agent” may be an agent of the principal in one capacity though not in ánother. Walker v. Huckabee, 10 Ark. App. 165, 661 S.W.2d 460 (1983). In some respects real estate agents owe a duty to both buyers and sellers and do not fit neatly into a category readily applicable to all situations. Little v. Rohner, 707 P.2d 1015 (Col. App. 1985). And in a dual capacity, each principal is protected from a disloyal agent by general principles of agency and partnership. See 4 ALR 3d 224, Dual agent — Notice to principal.

I believe it is a mistake for this court to hold as a matter of law that Mrs. Whiteman was the agent of the sellers and it is clear the trial court did not treat it as a question of law. The existence of an agency relationship is a question of fact, as countless cases here and elsewhere have held. Hawthorne v. Davis, 268 Ark. 131, 594 S.W.2d 844 (1980); Bell Transportation Co. v. Morehead, 246 Ark. 170, 437 S.W.2d 234 (1969); Campbell v. Bastian, 236 Ark. 205, 365 S.W.2d 249 (1963); Curtis Circulation Co. v. Henderson, 232 Ark. 1029, 342 S.W.2d 89 (1961); Green v. Jones-Murphy Properties, Inc. 232 Ark. 320, 335 S.W.2d 822 (1960); Langston v. Harper, 216 Ark. 778, 227 S.W.2d 973 (1950); Ford & Son Sanitary Co. v. Ransom, 213 Ark. 390, 210 S.W.2d 508 (1948); Walthour v. Pratt, 173 Ark. 617, 292 S.W. 1017 (1927); Bell v. State, 93 Ark. 600, 125 S.W. 1020 (1910).

It has been said the ultimate question in agency is determining the intention of the parties. Green v. Jones-Murphy Properties, Inc., supra, AmJur2d, Vol. 3, p. 525, § 21. That being so, how can it be said Mrs. Whiteman was the agent of the sellers as a matter of law? For more than a year she had been employed by the buyers to search for the type of property they wanted. She considered herself the buyers’ agent and Mr. Fennell testified unequivocally that he regarded Mrs. Whiteman as their agent. Mrs. Whiteman signed the offer and acceptance agreement on a line designating her as the buyers’ agent. Finally, the trial court, sitting as fact finder, found her to be the buyers’ agent. How she was to be paid is not revealed in the record, but even if she were to be paid from the proceeds of a purchase, that is simply one element to be considered in determining her status; it is not controlling. Terry Dairy Co. v. Parker, 144 Ark. 401, 223 S.W.6 (1920); Corpus Juris Secundum, Vol. 2A, p. 608, § 40.

There may be something to be gained by declaring that agents involved in Multiple Listing Service contracts are the agents of the sellers as a matter of law, but I suspect there will be cases where we will not be entirely comfortable with so categorical a rule. For example, see Little v. Rohner, supra, where the equities and sound logic dictated the listing broker was the agent of the buyer for a particular part of the transaction. Had it previously been settled as a matter of law that the listing broker was the seller’s agent, the court would have been precluded from reaching a just result.

The trial court’s findings in this case have not been shown to be clearly erroneous and should be affirmed.


author: Per Curiam.

text:
    James CLARK v. STATE of Arkansas
    711 S.W.2d 162
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986

      Hanks, Gunn & Borgognoni, by: Mary Ann Gunn, for appellant.
    No response by appellee.
   Per Curiam.

The judgment of conviction was entered on November 7,1985. Notice of appeal was filed December 3,1985. The record was thus due in the clerk’s office within ninety days of the filing of the notice of appeal. The record was tendered on June 2, 1986, some three months late.

The appellant’s counsel, Mary Ann Gunn, contends the circuit judge entered an order extending the time for filing the record, and she presents his affidavit to that effect. She also presents her own affidavit showing she gave the extension order to her law clerk to file at the clerk’s office. She presents her law clerk’s affidavit to the effect that he gave the order to a deputy clerk for filing. She does not present the order or a file-marked copy of it.

In similar circumstances we have held we will not permit a record to be filed unless the attorney assumes full responsibility for presenting it late. Tarry v. State, 288 Ark. 172, 702 S.W.2d 804 (1986). A statement that it was someone else’s fault or no one’s fault will not suffice. Moore v. State, 268 Ark. 191, 600 S.W.2d 1 (1980).

If the appellant’s attorney files a motion and affidavit in this case accepting full responsibility for not perfecting the appeal, then the motion will be granted. That negligence will be duly noted and a copy of the opinion granting the motion will be forwarded to the Committee on Professional Conduct.


text:
    Troy Michael McKINNEY v. STATE of Arkansas
    711 S.W.2d 162
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986

      Michael R. Salamo, for appellant.

      Steve Clark, Att’y Gen., by; Theodore Holder, Asst. Att’y Gen., for appellee.
   Per Curiam.

The appellant was convicted on March 7,1985 and filed a notice of appeal on April 8,1985. The record was thus due in the clerk’s office within 90 days of the filing of the notice of appeal.

On March 7> 1986 the appellant’s attorney, Michael R. Salamo, filed a motion for a rule on clerk to lodge the transcript claiming that the attorney-client relationship necessary for effective assistance had dissolved which affected a timely filing of this transcript. On March 24, 1986, this court remanded the case to the trial court for a determination of the attorney-client relationship existing between the parties. On May 3,1986 the trial court held a hearing and found that the attorney-client relationship existed at the time the transcript should have been filed and still exists. The attorney filed a second motion for rule on clerk on behalf of the appellant on June 16, 1986, which stated the same grounds.

In similar circumstances we have held we will not permit a record to be filed unless the attorney assumes full responsibility for presenting it late. Tarry v. State, 288 Ark. 172, 702 S.W.2d 804 (1986). A statement that it was someone else’s fault or no one’s fault will not suffice. Moore v. State, 268 Ark. 191, 600 S.W.2d 1 (1980).

If the appellant’s attorney files a motion and affidavit in this case accepting full responsibility for not perfecting the appeal, then the motion will be granted. That negligence will be duly noted and a copy of the opinion granting the motion will be forwarded to the Committee on Professional Conduct.


text:
    Sterling Jackson WILLIAMS, Jr. v. STATE of Arkansas
    CR 86-84
    711 S.W.2d 479
    Supreme Court of Arkansas
    Opinion delivered June 30, 1986

      Appellant, pro se.

      Steve Clark, Att’y Gen., by: Theodore Holder, Asst. Att’y Gen., for appellee.
   Per Curiam.

Petitioner Sterling Williams pleaded guilty in 1981 to theft in case CR 81-82A and two counts of burglary. He was sentenced to serve terms of imprisonment for each of the burglary counts. A sentence of ten years for theft was suspended. He was released from prison in 1982. Petitioner was again arrested and charged with burglary and confined to the city jail. He escaped and was subsequently charged with escape in the first degree. As a result of the escape charge, the State filed a petition to revoke the ten-year suspended sentence. Petitioner pleaded guilty to escape and to the allegations contained in the petition to revoke. He was sentenced on February 1, 1983 to terms of ten years for escape and the ten-year suspended sentence was revoked.

In July, 1985, petitioner filed an error coram nobis petition in the trial court seeking to vacate the guilty pleas entered on the escape charge and the revocation. Because the petition raised issues cognizable under our postconviction rule, Rule 37, the court treated the petition as a Rule 37 petition and denied relief. This was not improper since a court may treat a petition for postconviction relief as a Rule 37 petition if it raises grounds covered by the rule regardless of the label placed on the petition. Walker v. State, 283 Ark. 339, 676 S.W.2d 460 (1984). Petitioner does not seek a belated appeal.

Instead of filing a notice of appeal as he could have done because the petition was treated as a Rule 37 pleading, petitioner chose to file in this Court a petition for writ of certiorari, which is the means to challenge the denial of a petition for writ of error coram nobis. He also requests appointment of counsel. We find that the petitioner raised no ground on which the lower court could have granted a writ of error coram nobis and deny the petition for writ of certiorari and motion for counsel.

Petitioner contended in his petition for writ of error coram nobis that the trial court had not complied with Criminal Procedure Rule 24 when it accepted the pleas of guilty, that he was placed in double jeopardy when the suspended sentence was revoked and that he was denied credit against his sentence for the time he had spent in jail. These grounds are within the purview of Criminal Procedure Rule 37.

Error coram nobis proceedings are not interchangeable with proceedings under Rule 37. See McDonald v. State, 285 Ark. 482, 688 S.W.2d 302 (1985). Error coram nobis is an extraordinary remedy. The writ serves to fill a gap in the legal system and will provide relief after a plea of guilty only where a remedy was unavailable because a fact exists which was not known when the plea of guilty was entered. The writ is granted only when the error of fact might have resulted in a different verdict. See Penn v. State, 282 Ark. 571, 670 S.W.2d 426 (1984). Petitioner has not demonstrated that the grounds he raised in his error coram nobis petition could not have been presented to the trial court when the plea was entered or raised in a petition under Rule 37. See Williams v. Langston, 285 Ark. 444, 688 S.W.2d 285 (1985).

Petition and motion denied.