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

text:
    AMERICAN ACCIDENT AND LIFE INS. CO. et al v. AMERICAN PIONEER LIFE INS. CO. et al
    5-4954
    445 S. W. 2d 896
    Opinion delivered October 13, 1969
    [Rehearing denied November 17, 1969]

      Rose, Meek, House, Barron, Nash & Williamson, for appellants.

      Frierson, Walker So Snellgrove, Sam, Montgomery and Wright, Lindsey So Jennings, for appellees.
   Conley Byrd, Justice.

This litigation questions the

validity of two exclusive agency contracts that were not approved by the Insurance Commissioner as required by Ark. Stat. Ann. § 66-4240 (Repl. 1966). It was commenced in the trial court by appellee American Pioneer Insurance Company, against appellees Pioneer Underwriters, Inc. and R. E. Phillips and Huey Duke for a debt owed. Appellants American Accident and Life Insurance Company and Investors Insurance Corporation were brought into the action by garnishment on the„ allegation that thev were indebted to Pioneer Underwriters, Inc., et al, for commissions due upon renewal premiums received. Thereafter there were cross complaints and counterclaims which put into issue the validity of the exclusive agency contracts, the liability of appellants upon quantum meruit and the assumed liability of Investors Insurance Corporation.

After a trial on the merits, the trial court entered judgment for 5% of the premiums received less credits for payments received or monies retained. For reversal appellants rely upon the following points:

“I. Appellees are not entitled to recover under unapproved contracts requiring prior approval of the insurance commissioner.
“II. In such cases of contracts void by statute, to permit recovery by quantum meruit is against public policy.
“III. Even were quantum meruit recovery permissible, appellees are entitled to nothing, and appellants are entitled to recover for refunds made on policies cancelled or unissued.
“IV. There is no basis for any liability to appellees by appellant Investors Insurance Corporation. ’ ’

Tbe record shows that on August 22, 1963, the management of American Pioneer Insurance Corporation also controlled the management of First American Reserve Life Insurance Company and appellant American Accident & Life Ins. Company. On that date First American Reserve Life Ins. Co. entered into an exclusive agency contract with Pioneer Underwriters to write hospitalization insurance. By the terms of that contract Pioneer Underwriters were to receive all of the initial premium plus 15% of all renewals for a period of at least two years from the date of termination.

In July, 1964, the management determined that it would be more advantageous to place the better risk hospitalization policies into American Accident & Life Ins. Company. This was accomplished through a reinsurance agreement by which American Accident gave $27,000.00 in cash, assigned a $4,991.52 account owed by Hyneman Enterprises, Inc., and assumed the liabilities of First American Reserve to Pioneer Underwriters.

In the same month American Accident entered into a new contract with Pioneer Underwriters, by which American Accident promised Pioneer Underwriters an exclusive agency contract and to pay to them 15% of the initial premiums and 5% of the total annual renewal premium income.

On July 28, 1964, American Pioneer Life Insurance Company sold its 8,263 shares of capital stock in American Accident to Floyd Shellman and Byron Prugh. As part of the purchase agreement the purchasers agreed to assume the obligation owed by American Accident to Pioneer Underwriters. Shellman and Prugh later assigned their contract to Investors Insurance Corporation upon the same terms and conditions.

Subsequent to Investors’ acquisition of control of tbe management of American Accident, tbe latter caused its attorney to submit tbe exclusive agency contract of July 2, 1964, to the Insurance Commissioner pursuant to Ark. Stat. Ann. § 66-4240 with a suggestion that the contract was not in the best interest of the company. On September 25, 1964, the Insurance Commissioner refused to approve the contract. Shortly thereafter American Accident discharged Pioneer Underwriters.

Robert M. Gannaway testified that he was in charge of the management of American Accident when it entered into the 1964 exclusive agency contract, that he discussed the terms thereof with the Deputy Insurance Commissioner and got his approval, and that American Accident obtained a financial advantage over the renewal terms in the exclusive agency contract with First American Reserve Life Ins. Company.

Richard M. Flahibe qualified as an expert in the field of health and accident insurance management. He described a two year commission of 15% on renewal premiums as being reasonable and proper. However he was not nearly as definite about the 100% commission on the initial premium.

The present management admitted that if they were not obligated to Pioneer Underwriters, they would get the $400,000 annual renewal premiums virtually commission free.

POINTS I & II: Appellants, to avoid liability under both contracts and upon quantum meruit, rely upon Ark. Stat. Ann. § 66-4240 which provides:

“No domestic insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the substantial exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for tbe insurer, unless the contract is filed with and approved by the Commissioner. ...”

Obviously this statute would prevent the enforcement of the exclusive agency provision of either contract without the approval of the Insurance Commissioner, but it does not follow that the statute would prevent a quantum meruit recovery. In Gantt v. Ark. Power & Light Co., 189 Ark. 449, 455, 74 S. W. 2d 232 (1934), we said:

“. . . The general rule is that, where a contract is expressly prohibited by law, and the statute in terms declares the contract to be null and void, no recovery can be had under it, and a taxpayer has a right to maintain an action to recover back money when its officers neglect or fail to perform their duty in that respect. Capron v. Hitchcock, 98 Cal. 427; Winchester v. Frazier, (Ky.) 43 S. W. 453; Milford v. Milford Water Co., 124 Pa. St. 610.
“The status, however, of appellees does not come strictly within the prohibition of the rule just stated. The prohibitory statute here involved does not, in terms, declare the contract to be ‘null and void.’ The rule seems to be that, in the absence of the prohibitory words ‘null and void’ and where the contract has been performed by the parties in good faith, compensation may be retained measured by the reasonable value thereof. Such recovery, however, is not because of the contract, but is grounded squarely upon the proposition that valuable services having been rendered which have been accepted by the parties, it would be inequitable and unjust to permit one party to substantially gain under the contract to the great and irreparable damage of the other.”

Neither does it follow that the compensation portion of the exclusive agency contract with First American Reserve Life Ins. Co. is not enforceable. In Hanauer & Co. v. Gray, 25 Ark. 350 (1869), we had a note payable in Confederate bonds or Tennessee money. We there held:

“. . . ‘A distinction must be taken between the cases in which the consideration is illegal in part, and those in which the promise, founded on the consideration, is illegal in part. If any part of a consideration is illegal, the whole consideration is void, because public policy will not permit a party to enforce a promise which he has obtained by an illegal act, or an illegal promise, although he may have connected with this act or promise another which is legal. But, if one gives a good and valid consideration, and thereupon another promises to do two things — one legal and the other illegal — he shall be held to do that which is legal, unless the two are so mingled and bound together that they can not be separated, in which case the whole promise is void.’ ”

The record here clearly demonstrates that the 1963 contract contains two separate and distinct promises— i. e. one for the payment of the services to be rendered by Pioneer Underwriters, and one for an exclusive agency management contract. The statute relied upon does not attempt to regulate the commission which an insurer may agree to pay to an agent for writing policies. For other cases supporting the Hanauer & Co. case, see Re Port Publishing Co., 231 N. C. 395, 57 S. E. 2d 366, 14 ALR 2d 842 (1950) where a collective bargaining contract was held enforceable to recover vacation pay although it contained a “closed shop” provision contrary to North Carolina’s “right to work” law.

POINT III. Appellants’ arguments under this point appear to be that the $130,000 initial premiums which Pioneer Underwriters received for writing the policies in the first place is sufficient consideration and also that appellants are entitled to recover from Pioneer Underwriters for premiums that appellants were forced to refund to policy holders in settlement of policy claims.

With respect to the premiums refunded, the record shows that a portion thereof has been collected in a federal district court action against American Pioneer Life Ins. Co. and appellants have made no attempt here to show what portion of the premiums refunded they are still entitled to collect. Furthermore, they appear to also be precluded by the separate and valid promises contained in the 1963 contract with First American Reserve Life Ins. Company.

On the contention that the $130,000 initial premiums received by Pioneer Underwriters constitutes adequate compensation we find no merit. Without either expressing approval or disapproval of the 100% initial premium commission paid to Pioneer Underwriters, we find that appellants are in no position to complain. The record shows that the major portion of the premiums were collected by Pioneer Underwriters when the policies were written for First American Reserve Ins. Co. and that American Accident, in purchasing the policies from First American Reserve, agreed as part of the purchase price that it would pay Pioneer Underwriters the obligations which First American Reserve recognized. The law will not permit one in such a position to retain the benefit of its agreement and at the same time question its validity. See Murray v. Murray Laboratories, Inc., 223 Ark. 907, 270 S. W. 2d 927 (1945); McBlair v. Gibbes, 17 How. (U. S.) 232, 15 L. Ed. 132 (1854).

Furthermore,, there is substantial evidence to support the trial court’s finding that the amount allowed is due upon a quantum meruit basis.

POINT IV: The contract upon which Investors Insurance Corporation relies to reverse the judgment of the trial court is not abstracted and although Investors Insurance Corporation designated the exhibited instrument as a part of the record, the exhibit has not been filed with the Clerk of this Court nor made a part of the record. It is appellant’s duty to file the instruments upon which it relies for reversal, Ark. Stat. Ann. § 27-2127.3 (Repl. 1962). In the absence of the instrument we cannot say that the trial court erred.

Affirmed.

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

Carleton Harris, Chief Justice,

dissenting. In my opinion, this judgment should be reversed because of the simple fact that the contract entered into was in violation of the law. Ark. Stat. Ann. § 66-4240 (Repl. 1966) provides as follows:

“No domestic insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the substantial exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for the insurer, unless the contract is filed with and approved by the Commissioner. The contract shall be deemed approved unless disapproved by the Commissioner within twenty (20) days after date of filing, subject to such reasonable extension of time as the Commissioner may require by notice given within such twenty (20) days. * * *”

On September 25, 1964, the State Insurance Commissioner disapproved the agency managers’ contract between appellant, American Accident and Life Insurance Company and Pioneer Underwriters, Inc., R. B. Phillips and Huey Duke, individually. The commissioner, in disapproving same, stated that he had carefully read the contract, and would first say that he would not have approved it had it been presented to him at any time following the date of its execution which was July 2, 1964. The commissioner then stated that he was required, under the law (Section 66-4240), to disapprove any such contract if he found that it:

“ (a) Subjects the insurer to excessive charges; or
(b) Is to extend for an unreasonable length of time: or
(c) Does not contain fair and adequate standards of performance; or
(d) Contains other inequitable provision or provisions which impair the proper interests of stockholders or members of the insurer.”

He concluded:

“It is my opinion that this contract would violate each and every one of the above provisions under Paragraph 2 and for those reasons the contract is this day disapproved. ’ ’

It is true that the statute only prohibits the insurance company from entering into this type of contract without approval of the commissioner, but the statute necessarily prevents any other person from entering into a contract with a domestic insurance company— for it takes two to contract.

It must be remembered that the insurance industry is one charged with the public interest, and its dealings are subject to close scrutiny by the Insurance Department. As pointed out in appellant’s brief, our Insurance Code is designed to produce an insurance industry operating at a reasonable profit for the benefit of the stockholders, but more importantly, operating in a sound manner for those members of the public who have chosen to become its policyholders. -

The majority say that there is substantial evidence to support the trial court’s finding that the amount allowed is due upon a quantum meruit basis. I am unable to determine, from the record, that the amount of the judgment was based upon quantum meruit. Though not at all clear, it appears, as stated by appellant, that the judgment was awarded on the basis of the contract.

Be that as it may, I do not think that appellees are entitled to the judgment obtained since they had already received more than $130,000.00. In this litigation, appellees are attempting to obtain payment for renewal commissions supposedly owed after termination of their services, and this type of recovery, in my view, depends entirely upon the validity of the contract sued upon.

For the reasons herein set out, I respectfully dissent.

John A. Fogleman, Justice,

dissenting. I share the views expressed by the Chief Justice. The contract involved was clearly one giving a controlling or preemptive right to an agency manager to produce substantially all insurance business for the insurer.

I feel that I should express my views on the means by which the majority reach a result permitting recovery under this contract. If the statute in question were designed only for protection of insurance companies, I would not feel so alarmed by a result which leads to its easy circumvention. Obviously, this statute was designed not only to protect uninformed investors but, more importantly, to safeguard the rights of unsuspecting policy buyers. The latter are the more innocent victims of a ruined insurance company. The ruin can as readily come by solicitation of poor risks and by payment of excess commissions as by any other means. While this particular sittiation may not have culminated in such an unhappy conclusion, the statute is designed to avoid such a result. Now, it seems of little value.

I do not agree that recovery can be had under quantum meruit on a contract prohibited by statute, as such a contract is void. A contracting party is allowed to retain, not recover, the reasonable value of goods and services under an executed contract when a prohibitory statute does not declare the contract void, or under a contract which is voidable but not void. Gantt v. Arkansas Power & Light Co., 189 Ark. 449, 74 S. W. 2d 232; Smith v. Dandridge, 98 Ark. 38, 135 S. W. 800. While it is true that quantum meruit recovery has also been allowed for goods or services furnished to a city under a contract not formally authorized according to statute, this is done on the basis that acceptance constituted ratification of the contract. Forrest City v. Orgill, 87 Ark. 389, 112 S. W. 891. This contract could not have been ratified without approval by the Insurance Commissioner, and no question of ratification is involved.

I find no basis for application of Hanauer & Co. v. Gray, 25 Ark. 350. There the promise was to pay in Confederate or Tennessee funds. The contract was held, in Í869, enforceable as to payment in the latter.

It must be kept in mind that the insurance company promised to pay Pioneer commissions on all renewals of business, in force, as well as commissions on new business written after June 8, 1964, regardless of whether the applications were taken by Pioneer or the business developed by the company. All new business written by the company’s agents was to be turned in or forwarded to Pioneer. Thus, it can hardly be said that the contract is divisible. 'The language of the court in Ensign v. Coffelt, 102 Ark. 568, 145 S. W. 231, is applicable here. There we said:

“* * * It is well settled, we think, that, if a contract is based upon several considerations, some of which are merely insufficient and not illegal, it is not void but may be upheld by the consideration which is sufficient; but if one of several considerations of an entire contract, as a note, is illegal, the whole contract is void. In other words, where the contract is entire, and a part of the consideration thereof is illegal, and the illegal portion is not separable from the whole consideration, then the whole contract is unenforceable. 1 Parsons on Contracts, § 455; 1 Daniel on Negotiable Instruments, § 204; Edwards v. Randall, 63 Ark. 318; Hanauer v. Gray, 25 Ark. 350; Tucker v. West, 29 Ark. 386; Kizer v. Texarkana & F. S. Ry. Co., 66 Ark. 348.”

An even closer parallel is found in Bourland, Mayor v. First National Bank Building Co., 152 Ark. 139, 237 S. W. 681. There, the city took bids for designation of a city depository. Not only were the bidders required to state the rate of interest the city would pay on city funds, but the rate at which they would lend money to the city. The Constitution of Arkansas prohibited a city from issuing interest-bearing evidence of indebtedness. The court declared that the purpose of this provision was to protect the people from abuse of the public credit. We there said:

“It is well settled that if any part of the entire consideration for a promise or any part of an entire promise be illegal, whether by statute or by the Constitution or from considerations of public policy, the whole contract is void. Kuhn v. Buhl, 251 Pa. 348, 96 Atl. 977, Ann. Cas. 1917D, 415, and cases cited; Hazelton v. Sheckells, 202 U. S. 71, 26 Sup. Ct. 567, 50 L. Ed. 939, 6 Ann. Cas. 217.
Where there are provisions in a contract for a compensation which is legal, still if they are blended with those which are forbidden, the whole is a unit and indivisible. The above is the language of Mr. Justice Swayne in Trist v. Child, 21 Wall. (88 U. S.) 441, 22 L. Ed. 623. The learned justice added that that which is bad destroys that which is good, and they perish together.
Where the lawful and unlawful parts of a contract cannot be separated so as to enforce the one and annul the other, it is an indivisible contract and therefore null and void throughout. Edwards v. Randle, 63 Ark. 318, 38 S. W. 343, 36 L. R. A. 174, 58 Am. St. Rep. 108. And in that case the court quoted with approval the following:
‘If any part of an indivisible promise, or any part of an indivisible consideration for a promise, is illegal, the whole is void.’ ”

I do not see how the contract here involved can be divided. It can hardly be said that the rates of commissions were unrelated to the agency management agreement giving commissions to Pioneer on all business theretofore or thereafter written.

      From appellant’s brief:
      “The judgment of the Court does not state whether it is based upon a quantum meruit theory, on the general agency contract or under the previous general agency contract with First American Reserve. Apparently, however, the Court awarded judgment on the general agency contract with American Accident and Life Insurance Company inasmuch as the total premium income for the period involved — July 1, 1964, through June 30, 1966 — amounted to $962,131.44. Commissions due under the general agency contract would amount to $48,106.57, which is the amount of the judgment less certain setoffs for amounts advanced to appellants, leaving a net recovery of $36,957.57.


source: Caselaw Access Project

author: Conley Byrd, Justice.

license: Public Domain

text:
    Benton TAYLOR et al v. Lucille PURIFOY et al
    5-4957
    445 S. W. 2d 485
    Opinion delivered October 13, 1969

      8. Hubert Mayes, Jr.; for appellants.

      Lookadoo, Gooch & Lookadoo and L. Weems Trussell, for appellees.
   Conley Byrd, Justice.

Appellant Benton Taylor, who farms near Sparkman, sent bis two ton truck and a 3/4 ton pick-up truck borrowed from bis brother, appellant Phil Taylor, to the Arkadelphia sale barn to pick up cows he bad purchased. Frank Cash, an employee of Benton Taylor, drove the two ton truck and Horace Johnson, Jr., an employee of Benton Taylor, drove the 3/a ton pick-up truck. The two trucks loaded with cows left the sale barn at dusk, the larger truck in front and the pick-up following some 100 yards to a quarter of a mile behind. About five miles from Sparkman a Volkswagen collided head-on with the pick-up truck, in' the pick-up truck’s lane of traffic, knocking the battery loose and completely disabling the truck. Subsequent to the first collision an automobile driven by Doyle Honeycutt, in which appellee Lucille Purifoy was a passenger, collided with the then unlighted pick-up truck. Appellees Lucille Purifoy and Lawrence Purifoy brought suit against appellants Benton Taylor and Phil Taylor and Benton Taylor’s employees, Cash and Johnson. 'The jury in returning a verdict for appellees against Benton Taylor and Phil Taylor exonerated Cash and Johnson by finding in their favor. Thus the sole issue on this appeal is whether there is any independent actionable negligence on the part of Benton Taylor and Phil Taylor.

Appellees contend that both Benton Taylor and Phil Taylor were guilty of independent actionable negligence because of a failure to equip the pick-up truck with the flares required by Ark. Stat. Ann. § 75-722 (Supp. 1967). That statute provides:

“(A) Certain vehicles to carry flares or other warning devices.
(1) No person shall operate any motor truck, passenger bus or truck tractor, or any motor vehicle towing a house trailer, upon any highway outside the corporate limits of municipalities at any time from a half hour after sunset to a half hour before sunrise unless there shall be carried in such vehicle. . .
(a) At least three [3] flares or three [3] red electric lanterns or three [3] portable red emergency reflectors, each of which shall be capable of being seen and distinguished at a distance of not less than 600 feet under normal atmospheric conditions at nighttime.”

Appellant on the other hand argues that the statute is not applicable because a pick-up truck is not a “motor truck” within the meaning of the statute.

The record shows that as Cash and Johnson were proceeding down Highway No. 7, Cash kept up with Johnson through his rearview mirror. After a Volkswagen passed, he no longer saw Johnson’s lights, so he turned around and went back looking for Johnson. Johnson testified that after the collision with the Volkswagen, which knocked out his lights, he came to himself a little and realized there was some lights coming; that he had no flashlight or flares, but he used a black leather cap to flag traffic. One car slowed down and came on around. The next car was coming pretty fast; he kept flagging but about that time the car hit the back-end of the truck. Mr. Kenneth Rogers, a state policeman, testified that he investigated the accident and found no flares in the truck. Cash states that he arrived at the scene of the collision between the pick-up truck and the Volkswagen about the time that Honeycutt hit the pick-up truck. In fact Cash says he took to the ditch to avoid a collision with Honeycutt who was swerving at the time to miss the pick-up truck.

Cases from other jurisdictions reach different conclusions as to whether a pick-up is a motor truck within the meaning of the statute. See Musgrave v. Githens, 80 Ariz. 188, 294 Pac. 2d 674 (1956), and Hemlock 6400 Tire Co. v. McLemore, 151 Tenn. 99, 268 S. W. 116 (1925). Such cases, however, usually construe the term “motor vehicle” with reference to contemporary statutes dealing with motor vehicles which were in existence at the time. In this connection we note that Ark. Stat. Ann. § 75-722 was first enacted as § 131 of Act 300, Acts of 1937, and that statute applied to “motor truck” without reference to passenger bus or truck-tractor, etc. The licensing statute in effect when Act 300. was enacted was § 32 of Act 11, Acts of 1934 (2d Extraordinary Session). The latter section provides:

“Paragraph B. For motor trucks equipped with pneumatic tires the following fees shall be charged: V2 ton or less capacity..............................$8.00 per annum 1 ton or more than y2 ton capacity......12.00 per annum 1 % tons capacity .......................................35.00 per annum

Section 31 of the same act, providing for the licensing of other vehicles, reads:

“(a) For all automobiles equipped with pneumatic tires, used for the transportation of persons, there shall be charged a fee. ...”

Thus we see that the licensing statute at the time made a distinction between automobiles used for the transportation of persons and “motor trucks”. We find this distinction indicative of the meaning of the legislature of the term “motor truck” and hold that the term as used in Ark. Stat. Ann. § 75-722 includes pick-up trucks.

Appellants point out that the statute provides: “No person shall operate any motor truck . . . upon any highway . . .,” and suggest that Benton Taylor does not come within the term “operate.” Thus, say appellants, since Benton Taylor’s employee was exonerated while operating the vehicle, the same jury verdict exonerates Benton Taylor. However we must point out that the term “person” is defined by Ark. Stat. Ann. § 75-303 (a) (Rep-1. 1957) to mean, “Every natural person, firm, copartnership, association or corporation.” 'Thus since “person” as used in the statute is synonymous with “corporation” and since a corporation cannot operate a vehicle except through the conduct of an individual, we believe that the statute must be construed to include those persons who cause the vehicle to be set in motion such as an employer. For this reason we affirm the judgment against Benton Taylor.

The allegations in the complaint with respect to Phil Taylor are that he violated Ark. Stat. Ann. § 75-722 in failing to have the necessary flares and warnings signals in his truck. The only proof is the following stipulation: ‘1. . . And, it is further stipulated that Horace Johnson was driving a three-quarter Chevrolet pickup truck, 1963 model, and that the registered owner of said vehicle was Phil Taylor, and that Horace Johnson was one of the employees of Benton Taylor and that at the time of this collision, was engaged in the operation of this three-quarter pick-up truck with the consent of Phil Taylor and was in the course of his employment with Benton Taylor.” We can find no evidence in the record which would sustain a finding that Phil Taylor, the owner, by loaning his vehicle to his brother was in any way guilty of violating the statute. Admittedly the statute only requires a vehicle to be equipped with flares when it is being operated at any time from a half hour after sunset to a half hour before sunrise.

Appellees, recognizing that Phil Taylor may not literally come within the terms of the statute, have suggested that he should be held liable on a negligent entrustment theory in that he knowingly permitted the vehicle to be operated upon the highways at the time and in such defective condition. See 6 Blashfield Auto Law § 254-30 (3d ed. 1966). Here again we find that the record is insufficient to show that Phil Taylor knowingly permitted his vehicle to be operated upon the highways at the time involved without being equipped with flares. The only thing the record shows is that the flares were not in the truck at the time of the collision. For this reason the judgment is reversed as to Phil Taylor.

Affirmed in part and reversed in part.


text:
    Doris Alred HIGH et al v. SOUTHERN FARM BUREAU CASUALTY INS. CO.
    5-5042
    445 S. W. 2d 507
    Opinion delivered October 13, 1969

      Howell & Price, for appellants.

      Cochrill, Laser, McGehee, Sharp & Boswell, for appellee,
   Conley Byrd, Justice.

Appellant Doris Aired High brought this action against appellee Southern Farm Bureau Casualty Insurance Co. alleging that it is liable for accrued interest on a judgment she recovered against the Company’s insured, because the Company, although it had already paid out its policy limits, failed to pay court costs of $17.10. For reversal of the trial court’s judgment appellant relies upon the following point:

“Southern Farm’s failure to pay the court costs taxed against its insured, Charles Cornett, renders it, under its policy, liable for interest accruing on the entire judgment until such time as these court costs are paid.”

The record shows that the Company’s insured Charles Cornett was involved in an automobile collision in 1959, in which several persons including appellant’s decedent were injured. Prior to appellant’s judgment the Company paid out its policy liability limits settling other claims. However it is stipulated that the Company pursuant to its policy agreements furnished a defense to appellant and paid all the court costs except' the $17.10 that appellant advanced when she filed suit. In 1962, appellant received a judgment against Cor-nett for $57,000. That judgment provided:

“and that the plaintiff have judgment for her costs herein expended; for all of which execution may issue.”

The policy issued to Charles Cornett provided:

“Southern Farm Bureau Casualty Insurance Company. . .

(Herein called the Company)

“Agrees with the insured, named in the declarations made a part thereof, in consideration of the payment of the premium and in reliance upon the statements in the declarations and subject to the limits of liability, exclusions, conditions and other terms of this policy:

INSURING AGREEMENTS

“I. COVERAGES
COVERAGE A — BODILY INJURY LIABILITY. To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law for damages, because of bodily injury, including death at any time resulting therefrom, sustained by any person or persons, caused by accident and arising out of the ownership, maintenance or use of the automobile.
“COVERAGE B — PROPERTY DAMAGE LIABILITY. . . .
“II. DEFENSE, SETTLEMENT, BONDS, SUPPLEMENTARY PAYMENTS. As respects such insurance as is afforded by the other terms of this policy,
“ (a) under Coverages A and B the Company shall
“(1) defend in his name and behalf any suit against the insured alleging such injury, or destruction and seeking damages on account thereof, even if such suit is groundless, . . .
“ (2) pay ... all costs taxed against the insured in any such suit; all expenses incurred by the Company; all interest accruing after entry of judgment until the Company has paid, tendered, or deposited in court such part of such judgment as does not exceed the limit of the Company’s liability thereon; ...
“(b) . . .the Company agrees to pay the amounts incurred under this insuring agreement, except settlements of claims and suits, in addition to the applicable limit of liability of this policy.”

Appellant contends that the Company is required under the quoted provisions to pay interest on the entire judgment until it “paid, tendered or deposited in court” the $17.10 costs recovered in the original judgment and for which the Company was liable under the policy terms but which were never “paid, tendered, or paid into court. ’ ’ With this we do not. agree.

It will be noted that under Insuring Agreement - No. 1 the Company set forth its Coverages A and B. Under Insuring Agreement No. II the policy provides:

“(a) under Coverages A and B the Company shall (1) . . . (2) pay ... all interest accruing after entry of judgment until the Company has paid . . . such part of such judgment as does not exceed the limit of our Company’s liability thereon; ...” [Emphasis ours.]

Merriam-Webster New International Dictionary (2d ed. 1935) defines the term “thereon” as an adverb meaning “thereupon; after, or as a result of, some specified thing. ’ ’ The same dictionary defines an adverb as: “A qualifier of a verb or of another qualifier, whether adjective, adverb, or qualifying phrase or clause, or of verbal nouns and nouns expressing action or state.” Thus when we consider that the adverb “thereon” means “as a result of” and that “the limit of the Company’s liability” is not affected by the judgment but by the Coverages A and B, we can only conclude that “the limit of the Company’s liability thereon” refers to the coverages under A and B and does not affect the coverages otherwise provided in Insuring Agreement No. II.

In River Valley Cartage Co. Inc. v. Hawkeye-Security Ins. Co., 17 Ill. 2d 242, 161 N. E. 2d 101 (1959), Justice Schaefer pointed out that the purpose of the interest clause requiring the insurer to pay the accrued interest until such time as it had tendered the limit of its liability thereon was brought about by the relationship between the parties which gave the insurer complete control of any litigation from which it might incur liability. He there pointed out that, since the insured could not settle with the injured party without releasing the insurer from its obligation, the accumulation of interest was the responsibility of the insurer. 'That is not the situation under the facts of this case. The Company here had already paid the limit of its liability to the other parties injured in the accident and consequently had no liability to protect in the litigation nor a reason to prevent the insured from settling. Thus we find that appellants’ contention here is also contrary to the intent and purposes for which the interest clause was placed in the policy by the insurance underwriters.

Affirmed.

George Rose Smith, J., concurs.

Fogleman, J., disqualified.


author: Frank Holt, Justice.

text:
    Charles M. BAKER, Individually and for the use and benefit of St. Paul Fire & Marine Ins. Co. et al v. Hon. A. S. “Todd” HARRISON, JUDGE, Circuit Court of Crittenden County, Arkansas
    5-4984
    445 S. W. 2d 498
    Opinion delivered October 13, 1969

      Goff, Winchester & Nash; By: Tom Mitchell Jr. Memphis, 'Tenn. and Edward J. Rubens, Memphis, Tenn., for petitioner.

      Rale & Fogleman, for respondent.
   Frank Holt, Justice.

This is an original petition for a Writ of Mandamus to compel the respondent to set petitioner’s case for trial at the earliest available date and thereby correct respondent’s alleged abuse of discretion in ordering a continuance.

In granting a continuance, the trial court found, after consideration of the motion, the record, argument and statement of counsel, that the petitioner had sued the defendant, Heath & Scarbrough, and other parties in a Federal District Court of Tennessee; that the cause in that court against the defendant was dismissed for lack of jurisdiction; that petitioner had elected to proceed in that forum against the other defendants; that such cause was tried before a jury and a verdict was rendered against petitioner and that the cause was appealed; that petitioner’s appeal is now pending in the United States Court of Appeals for the Sixth Circuit; that petitioner’s cause in the state court appears to be based on the same facts, witnesses, and issues involved in the pending federal case and that the rights of the defendant will be prejudiced if this cause be tried during the pendency of that appeal. In the exercise of its discretion and based upon its findings, respondent continued petitioner’s case until there is a determination of petitioner’s action in the federal court. This continuance was granted at a pretrial conference on January 10, 1969. On March 4, 1969, the respondent heard petitioner’s motion to rehear and set aside its order of continuance. The respondent restated its original findings and adhered to its original ruling, adding that defendant could not plead its defenses fully until after a determination of petitioner’s case in the federal court.

The petitioner contends for reversal that the pend-ency of a similar suit in a federal court is not a legal ground for a continuance of his cause of action in. our state court, citing Road Imp. Dist. No. 1 v. Henderson, 155 Ark. 482, 244 S. W. 747 (1922) and State ex rel v. Nelson, Berry Petroleum Co. et al, 246 Ark. 210, 438 S. W. 2d 33 (1969); that respondent has no discretion to order a continuance in this case, citing Road Imp. Dist. No. 1 v. Henderson, supra; that the continuance is indefinite and constitutes a refusal by respondent to exercise its jurisdiction, citing Village Creek Drainage Dist. v. Ivie, 168 Ark. 523, 271 S. W. 4 (1925), that the stay of proceedings in the case at bar is interlocutory and not appealable, and the petitioner’s appropriate remedy is by mandamus to compel the respondent to exercise its jurisdiction, citing Road Imp. Dist. No. 1 v. Cooper, 150 Ark. 505, 234 S. W. 623 (1921); Road Imp. Dist. No. 1 v. Henderson, supra; Thompson v. Foote, 199 Ark. 474, 134 S. W. 2d 11 (1939); that respondent’s continuance of petitioner’s case is an arbitrary abuse of discretion for which the proper remedy is by writ of mandamus, citing Edmondson v. Bourland, 179 Ark. 975, 18 S. W. 2d 1020 (1929), and that mandamus is a proper remedy to prevent an irreparable injury where the later remedy by appeal shows it to be inadequate, citing Edmondson v. Bourland, supra. Although petitioner presents a persuasive and compelling argument in his analysis of these cases, we do not consider them controlling in the ease at bar. Each case must be decided upon its own particular facts and circumstances.

The petitioner suffered personal injuries in August 1966 as an employee of a subcontractor on a construction project in Arkansas. In February 1967 the petitioner filed a personal injury suit in federal district court in Tennessee against the general contractor, Heath & Scarbrough Construction Company, a subcontractor (petitioner’s employer), and other defendants. The petitioner’s original and amended complaint and the defendants’ answers joined various allegations of negligence. In March 1967 the general contractor was dismissed from the action by the federal court on the basis that the court was without jurisdiction. In March 1968, or a year later, the petitioner refiled his present action against the general contractor in the Crittenden Circuit Court. In July 1968 a judgment was entered on a jury verdict in the federal court action wherein the issues were found against the petitioner. The petitioner appealed and this appeal is now set for a hearing on October 14, 1969, in the Sixth Circuit Court of Appeals.

An order granting or refusing a continuance will not be set aside unless there is a manifest abuse of discretion. Newsom v. Reed, 177 Ark. 177, 6 S. W. 2d 10 (1928) and Thompson v. Foote, 199 Ark. 474, 134 S. W. 2d 11 (1940).

It is true that mandamus is proper where the lower court wrongfully refuses to exercise jurisdiction. Thompson v. Foote, supra. However, the writ of mandamus will not issue to control the judicial discretion of an inferior court, nor can the writ be used to correct an erroneous exercise of discretion. State ex rel Attorney General v. Nelson, supra. It is well settled that whether a continuance is granted or refused is largely a matter within the sound discretion of the trial court. Phillips v. Nowlin, 238 Ark. 480, 382 S. W. 2d 588 (1964) and Andrews v. Lauener, 229 Ark. 894, 318 S. W. 2d 805 (1958).

The trial court obviously was not persuaded to grant the continuance merely because of a similar suit pending in federal court. This alone would be insufficient. The additional basis for the continuance was the court’s finding that the defendant would be prejudiced and could not fully plead its defenses if petitioner’s cause were tried during the pendency of petitioner’s appeal in the other forum. The prejudice to defendant could involve its right to join third parties and avail itself of certain defenses, in the event of a reversal in the federal forum. It must be said there appears to exist in both forums an identity of the relief sought, the facts and circumstances seem similar, and common issues also exist. The petitioner is the only plaintiff in both forums. He is largely in control of his litigation in the federal action where the issue hqs progressed from a trial proceeding to the appellate status.

Bach trial court must be allowed wide discretion and latitude in the control of its own docket. The granting or refusal of a continuance in each case must be determined upon its own particular facts and circumstances. Since the court found that, in addition to the pendency of petitioner’s appeal in another forum, the rights of the defendant would be prejudiced at this juncture of both proceedings, we cannot say that the respondent manifestly and arbitrarily abused its discretion as asserted by the petitioner.

Writ denied.

Fogleman, J., disqualified and not participating.


text:
    SOUTHWESTERN BELL TELEPHONE CO. v. Virgil DAVIS
    5-4987
    445 S. W. 2d 505
    Opinion delivered October 13, 1969

      Donald K. King, Charles G. Hollis and George F. Hartje, for appellant.

      Guy H. Jones and Phil Stratton, for appellee.
   Frank Holt, Justice.

Appellee, a Faulkner County-road employee, brought this action against the appellant to recover damages for injuries appellee sustained when the road grader he was operating overturned upon striking appellant’s underground baffle. A jury awarded appellee $20,000 and from the judgment on that verdict comes this appeal. Appellant first contends for reversal that the appellee was a trespasser upon its easement and, therefore, appellant is not responsible for appellee’s injuries since no duty of care is owed to him.

This accident occurred in 1965 when appellee was shaping and widening a road which both parties agree is a public road established by prescriptive or adverse use for some forty years. In 1957 the appellant, by virtue of its utility easement, installed its underground toll cable upon lands adjoining the road and across and underneath the public road at a depth of about 5 feet. When the cable was installed the appellant, for purposes of soil erosion control, embedded a baffle or revetment near the south side of the road and within its own easement. This baffle was constructed with pieces of telephone poles and crossarms driven into the ground. It formed a wall diagonal to the cable ditch. The top of the baffle was constructed flush with the ground. Appellant erected two signs which warned of the presence of the cable and that no one should dig in this area without notifying the telephone company. One of the signs was at the site of the baffle on the south side of the road and the other sign was on the north side of the road. When the appellant laid its cable in 1957 within its easement, the traveled portion of the highway was about 12 feet wide with a 3-foot bar ditch on the south side. For approximately 8 years following the installation of appellant’s cable, the county’s maintenance of the road was restricted to grading the roadbed and taking dirt from the adjoining bar ditch to fill holes in the road as well as to provide drainage. These maintenance operations were at infrequent intervals. Thereafter, or in 1965, the county officials decided to “rehabilitate” and widen this road from 12 to 24 feet to meet the needs of increased traffic. To accomplish this, a bulldozer was first used by the county to skin off the scrub trees, underbrush and surface of a portion of the adjacent lands. This was done at the site of appellant’s easement. There a quantity of dirt was scraped off or removed from appellant’s easement on the hillside south of the road. This was for the purpose of filling or building up the roadbed on the north side. In the process, a bulldozer operator knocked down appellant’s warning sign and “shaved over” thé top of the baffle. The telephone company was notified and the sign was not reinstalled by either the company or the county. About two weeks later the appellee, a motor grader operator, began grading and shaping the newly widened road. When the motor grader blade struck the baffle upon appellant’s easement it caused the machine to overturn and injure appellee.

There was evidence that the baffle was located 11 feet from the south edge of the original bar ditch of the public road as it existed in 1957 and that following the widening of the road in 1965, this 11-foot distance was decreased to 4.4 feet at the nearest and 5.5 feet at the most distant point. It appears that the baffle does not exactly parallel the road. Appellee takes the position that the distance of 11 feet or 4.4 feet is immaterial because the use of this space upon appellant’s easement was reasonably necessary to backslope the existing ditch in order to maintain, improve and widen this admittedly public road which had no definitive boundaries. Therefore, appellee could not be a trespasser upon this portion of appellant’s adjoining property or easement.

We cannot agree. It is true that one who holds a right-of-way easement does have the right to preserve and maintain it. However, this right is subject to the limitation that in doing so nothing will be done to injure or damage the adjoining property rights of others. Craig v. O’Bryan, 227 Ark. 681, 301 S. W. 2d 18 (1957). There we quoted with approval:

* * It is a general rule that the owner of an easement of way may prepare, maintain, improve or repair the way in a manner and to an extent reasonably calculated to promote the purposes for which it was created or acquired, causing neither an undue burden upon the servient estate nor am unwarranted interference with the rights of common owners or the independent rights of others.”

Further:

a* * * As a general rule, when the character of an easement is once fixed, no material alterations can be made in physical conditions which are essential to the proper enjoyment of the easement except by agreement. ’ ’

See, also, 76 A. L. R. 2d 555 (1961).

An easement is a property right and as such is entitled to all the constitutional safeguards afforded to other property rights. Arkansas State Highway Comm’n v. Arkansas Power & Light Co., 231 Ark. 307, 330 S. W. 2d 77 (1959).

In the case at bar the county, in rehabilitating and improving the existing road, was in the process of widening the road, relocating the ditch, changing the grade of the roadway and its drainage facility. In doing so, the appellee removed from appellant’s adjoining easement several feet of overburden which was used as fill for the new roadbed on the other or north side. It cannot be said that the portion of appellant’s easement which the county used in backsloping and widening the existing public road was dedicated in any manner to the public use for a road. The public had established no title or rights by adverse use to any of the adjoining-property extending beyond the traveled portion and the adjacent 3-foot bar ditch. The width of the public road before or after enlargement, viewed most favorably to the appellee, never extended closer than 4.4 feet to the baffle on appellant’s property or easement. Such a width was all that was ever deemed necessary by the county for forty years in order to make the road a usable highway. This prescriptive right did not vest in the public the additional right at a later date to widen or enlarge this prescriptive use except by just compensation to or permission of the adjoining easement owner or landowner. Appellant, as an easement owner, has the same independent rights from unwarranted interference as was enjoyed by the landowner from whom it acquired this easement. It was private property and not subject to acquisition or use by the county in the manner contended by appellee. To hold otherwise and accept appellee’s contention that this was a reasonable use of appellant’s adjoining easement would be taking property without just compensation. Further, it would subject all landowners adjacent to a public road to possible liability where injury to one such as appellee results from objects left by the landowner flush with his ground within a few feet of a public road which needs to be improved and. widened. Such concealed objects could include stumps, concrete emplacements, abandoned and covered wells and other items in addition to revetments.

Therefore, we must agree with the appellant that the appellee was a trespasser when the blade of his motor patrol struck the baffle upon appellant’s easement. The only duty owed to a trespasser is not to willfully or wantonly injure him after his presence is known. Knight v. Farmers’ & Merchants’ Gin Co., 159 Ark. 423, 252 S. W. 30 (1923); Garrett v. Arkansas Power & Light Co., 218 Ark. 575, 237 S. W. 2d 895 (1951); Webb v. Pearson, 244 Ark. 109, 424 S. W. 2d 145 (1968); AMI No. 1102 and No. 1106. In the case at bar there is no substantial evidence of any willful or wanton act on the part of appellant, and, therefore, we must hold that appellee’s evidence was insufficient to submit the case to a jury. It becomes unnecessary to discuss other points appellant urges for reversal.

Reversed and dismissed.


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

text:
    Roy WELLS v. STATE of Arkansas
    5437
    446 S. W. 2d 217
    Opinion delivered October 20, 1969
    [Rehearing denied November 24, 1969]

      Hobbs & Longinotti, for appellant.

      Joe Purcell, Attorney General; Don Langston, Asst. Atty. Gen., for appellee.
   Carleton Harris, Chief Justice.

Roy Wells, appellant herein, was charged with the crime of Murder in the First Degree, and the Garland County Circuit Court appointed counsel for Wells shortly after his arrest. A plea of not guilty was entered, and on the morning of the trial date, these attorneys learned that fourteen members of the regular petit jury panel had not been called as prospective jurors, the court having instructed the clerk not to call the regular members of the petit jury panel who served as jurors in the case of the State v. Tollett, a first degree murder case, which had been tried approximately one week prior to the date set for the trial of Wells. After the jury was impaneled, but prior to the commencement of the trial, a conference between court and counsel was held in chambers, the court advising that this action had been taken because of the fact that three of the fourteen jurors (two alternates being included) who heard the Tollett case, had expressed an opinion to the court after the trial of that case, indicating that a different verdict might have been arrived at if the case had been tried again. Tollett had received a two year sentence for voluntary manslaughter, and the court received the definite impression that these jurors meant, if the case had been subsequently tried, they would have given Tollett considerably more time. The trial judge stated that the Wells case was similar to the Tollett case, and that the court’s action had been taken as a precautionary effort to see that Wells received a fair and impartial trial. Counsel for the defense then objected to the refusal of the court to call the members of the regular panel who had served on that case, stating the ground of objection as follows:

“On the ground that such an arbitrary exclusion would deny the defendant his rights under the law and deny him access to the right to have those persons who sat on the case of State vs. Tollett as jurors in the defendant’s present case about to be tried.”

The motion was denied, defense counsel noting their exceptions to the ruling. On trial, Wells received a sentence of twenty-one years. The alleged error was brought forth in the motion for new trial, and after that motion was overruled by the court, an appeal was granted. Only one point is relied upon for reversal, viz:

“The court committed prejudicial and reversible error in arbitrarily advising the clerk of the court not to summons any of the jurors or alternates who had sat as jurors in the case of State vs. Tollett tried approximately one week prior to the present case.”

It might be stated that there is no contention on the part of appellant that the fourteen regular jurors were excused because of any bias or prejudice on the part of the court, the good faith of the court not being questioned ; nor is it asserted that any biased juror sat on the case. It is simply argued that the action of the trial court Avas beyond its power or jurisdiction, and that the defendant had the right to accept or challenge, either for cause or by peremptory challenge, any or all of the regular members of the jury selected by the jury commission.

We do not agree. The statutes providing for the selection of jurors and relied upon by appellant, Ark. Ktat. Ann. § 39-216 through § 39-223 (Repl. 1962), contain no language consistent Avith appellant’s argument. There is no absolute right entitling a defendant to accept or reject individual jurors from the total regular panel. This is shown by our decisions in Pate v. State, 152 Ark. 553, 239 S. W. 27, and Hallum v. Blackford, 202 Ark. 544, 151 S. W. 2d 82, and cases cited therein. The holding in those cases (and the cases they cite) was that the court did not abuse its discretion in not making-available all of the members of the regular panel. Appellant’s answer to those cases is, in effect, that justification was shown for the court’s action, while in the case before us, the action of the court was arbitrarily taken. We need not reach that question in disposing of this litigation.

In Trotter and Harris v. State, 237 Ark. 820, 377 S. W. 2d 14, this court pointed out that we had many times held that an accused did not have the right to the services of any particular juror, and that a defendant is not in a position to complain of the composition of the jury if he did not exhaust his peremptory challenges. We said:

“Under Arkansas law [Ark. Stat. Ann. § 43-1922 (1947)], a defendant in a capital case is given twelve peremptory challenges, and, in the instant case, appellants only used eight peremptory challenges. Throughout the years, no rule of procedure has been more consistently adhered to than the rule that a defendant cannot complain of the composition of the jury if he does not exhaust his challenges. In Benton v. State, 30 Ark. 32, decided in 1875, Chief Justice English pointed out that this rule had stood as a precept of criminal practice in this state, for a period of over 22 years. In a long line of cases, we have consistently upheld the rule to the present time. A cursory examination of our cases reveals over thirty-five criminal cases in which this rule has been cited and adhered to. [Citing cases.]”

Admittedly, appellant did not exhaust all of his peremptory challenges. He is thus in no position to raise the question which he endeavors to present on this appeal.

Because the peremptory challenges were not exhausted, we do not reach the issue of whether the trial court abused its discretion in refusing to summons the fourteen members of the regular panel who had previously been excused by the court.

Affirmed.

Byrd, J. dissents.

Conley Byrd, Justice,

dissenting. In disagreeing with the majority, I do so on the basis of the statutory scheme set up by law for selection and challenge of jurors

In reviewing our constitutional and statutory provisions, it will be observed that the people of this State have taken detailed pains to provide a method of selecting jurors. By this method they did not leave it to the trial court to pick the jurors but rather removed it one step from him by requiring the selection of jury commissioners, Ark. Stat. Ann. § 39-201 (Repl. 1962). Ark. Stat: Ann. § 39-208 (Repl. 1962) provides:

“The commissioners shall also select from the electors of said county, or from the area constituting a division thereof where a county has two [2] or more districts for the conduct of circuit courts, not less than twenty-four (24) nor more than thirty-six (36) qualified electors, as the court may direct, having the qualifications prescribed in Section 39-206 Arkansas Statutes 1947 Annotated to serve as petit jurors at the next term of court; and when ordered by the court, shall select such other number as the court may direct, not to exceed twelve [12] electors, having the same qualifications, for alternate petit jurors, and make separate list of same, specifying in the first list the names of petit jurors so selected, and certify the same as the list of petit jurors; and specifying in the other list the names of the alternate petit jurors so selected, and certifying the same as such; and the two [2] lists so drawn and certified, shall he enclosed, sealed and indorsed ‘lists of petit jurors’ and delivered to the court as specified in Section 39-207, Arkansas Statutes 1947, Annotated for the list of grand jurors. [Crim. Code, § 403;. . . .”]

The method of selecting the jurors before the court is set forth in Ark. Stat. Ann. § 43-1903 (Repl. 1964) as follows:

“In a prosecution for felony, the clerk, under the direction of the court, shall draw from the jury box the names of twelve [12] petit jurors, who shall be sworn to make true and perfect answers to such questions as may be asked them touching their qualifications as jurors in the case on trial, and each juror may be examined by the State and cross-examined by the defendant, touching his qualification. If the court decide he is competent, the State may challenge him peremptorily or accept him, then the defendant may peremptorily challenge or accept him. If not so challenged by either party, he shall stand as a juror in the case, and each of the twelve [12] jurors shall be examined and disposed of in like manner. If any of said jurors are disqualified or challenged, the clerk shall draw from the box as many more as may be required, and as often as may be required, until the jury shall be obtained, or the whole panel exhausted. [Crim. Code, $ 193; . . .]”

The challenges allowed by statute are set forth in the following statutes:

“Ark. Stat. Ann. § 43-1910 (Repl. 1964). Challenge defined. — A challenge is an objection to the trial jurors and is of two kinds:
First. To the panel.
Second. To the individual juror.
[Crina. Code, § 199; . ...]
“Ark. Stat. Ann. § 43-1911 (Repl. 1964). Challenge to panel. — A challenge to the panel shall only he for substantial irregularity in selecting or summoning the jury, or in drawing the panel by the Clerk. [Crim. Code, § 201; . . .]
“Ark. Stat. Ann. § 43-1912 (Repl. 1964). Sustaining challenge to panel, effect. — Where the challenge is sustained on the ground of irregularity in selecting or summoning the jury, all the standing jurors shall be excluded from the trial jury, and it shall be composed of persons summoned by the sheriff, or other officer appointed by the court for that purpose; if sustained because of irregularity in drawing the panel, all the names of the standing jury shall be replaced and another panel drawn. [Grim. Code, § 202; . . .]
“Ark. Stat. Ann. § 43-1913 (Repl. 1964). Individual juror, challenge to. — The challenge to the individual juror is:
First. For cause.
Second. Peremptory.
[Crim. Code, § 203; . . .]
“Ark. Stat. Ann. § 43-1914 (Repl. 1964). When challenge taken. — It must be taken before he is sworn in chief, but the court, for a good cause, may permit it to be made at any time before the jury is completed. [Crim. Code, § 204; . . .]”
“Ark. Stat. Ann. § 39-226 (Repl. 1962). Interrogation of prospective jurors. — In all cases, both civil and criminal, the court shall examine all prospective jurors under oath upon all matters set forth in the statutes as disqualifications. Further questions may be asked by the court, or by the attorneys in the case, in the discretion of the court. [Init. Meas. 1936, No. 3, § 16, Acts 1937, P. 1384; . . .] ”
“Ark. Stat. Ann. § 43-1921 (Repl. 1964). Peremptory challenges for state. — The State shall be entitled to ten [10] peremptory challenges in prosecutions for offenses punishable by death or life imprisonment, to six [6] peremptory challenges in all other prosecutions for felony, and to three [3] peremptory challenges in the prosecutions for misdemeanor. [Init. Meas. 1936, No. 3, § 17, Acts 1937, P. 1384; . . .]
“Ark. Stat. Ann. § 43-1922 (Repl. 1964). Perempory challenges for defendant. — The defendant shall be entitled to twelve [12] peremptory challenges in prosecutions for offenses punishable by death or life imprisonment, to eight [8] peremptory challenges in all other prosecutions for felony, and to three [3] peremptory challenges in prosecutions for misdemeanor. [Init. Meas. 1936, No. 3, § 18, Acts 1937, p. 1384; . . .]”
“Ark. Stat. Ann. § 43-1925 (Repl. 1964). Separate Challenges. — The challenges of either party need not be all taken together, but separately, in the following order;
First. To the panel.
Second. To the individual juror for general disqualification.
Third. To the individual juror for implied bias.
Fourth. To the individual juror for actual bias.
Fifth. Peremptory.
[Grim. Code, % 217; . . .]”

As I read the foregoing statutes they recognize that a defendant has two objections or challenges, that is, the first challenge is to the panel, and the second challenge is to the individual jurors. By Ark. Stat. Ann. § 43-1913, supra, the challenge to the individual jurors is first for cause and second, peremptory. Consequently I conclude that the peremptory challenge goes to the individual juror and not to the panel. Furthermore it appears to me that it is a harsh rule to say to a defendant who must select a jury from a “stacked deck” that in your efforts to obtain as fair a trial as possible from the “stacked deck” you have waived your objections to the stacking of the deck because you did not exhaust all of your peremptory challenges. See Clinton v. Englebrecht, (U. S. 1892) 13 Wal. 434, 20 L. ed. 659.

Assuming that the regular panel consisted of 36 jurors and the alteimate panel of 12 comprised a cross-section of the community, the prejudice to the defendant here can easily be demonstrated by the action of the court in refusing to call 14 of the regular panel who had shown a tendency to be lenient in homicide cases. The abstract of the record here does hot show the nature of the homicide involved but-from common experience we know that some individuals are strong on the protection of the home and are inclined to-give little or no punishment to the man who'kills his wife’s paramour. Other jurors who strongly believe in the organized labor movement are reluctant to be stern where the decedent had a reputation of being a strike breaker. These examples are only a few of the many factors that go into the make-up of a jury and the reasons for peremptory challenges. Therefore, since the alternate panel had been called in the trial of State v. Tollett and, assuming that the regular panel consisted of 36, Ave find that there existed on the regular panel a total of 48 jurors. When the trial court struck 14 Avho had shoAvn a tendency to be lenient with defendants in homicide cases there remained only 34 jurors. When we consider that the State has 10 peremptory challenges and the defense 12 peremptory challenges we can readily see that if none of the jurors were excusable for cause that the defendant must take 12 of the remaining 34 jurors — i. e., assuming that the State had exercised its 10 peremptory challenges, the defense had exercised 10 of its peremptory challenges and that 10 of- the jurors had been selected, defendant would be in the position of having 4 jurors remaining, two of whom he would have to select. When he selects the best two of the remaining four by not exercising his peremptory challenges, are we not penalizing him in holding that because he did not exercise all of his peremptory challenges he has waived the defense to the action of the trial court which “stacked the deck” against him in the first place?

In making this dissent, fairness calls for me to state that the honorable trial judge involved in this case apparently was trying to obtain justice for the defendant rather than injustice and that the majority opinion is in accord, with our prior adjudicated cases. However, since the possibility exists for trial courts to summarily remove so-called “conscientious objectors”, see Witherspoon v. Illinois, 391 U. S. 510, 20 L. Ed 2d 776, 88 S. Ct. 1770 (1968), or otherwise give the State more than its 10 peremptory challenges, I dissent for the reasons stated in Byler v. State, 210 Ark. 790, 197 S. W. 2d 748 (1946). We there pointed out that notwithstanding the fact that the trial judge acted in the utmost good faith we were unwilling to establish the precedent. For these reasons I would reverse and remand the case for trial by a jury panel selected by law rather than by a jury panel from which the trial court had culled certain jurors

      Actually, appellant was provided with a full panel of twenty-four regular jurors, the record reflecting that a special panel had been called and sworn at the Tollett trial. This panel then became a part of the regular panel.


author: Carleton Harris, Chief justice.

text:
    E. T. DAVIS et al v. Kirby C. SEAY et al
    5-4980
    445 S. W. 2d 885
    Opinion delivered October 20, 1969

      Spencer & Spencer, for appellants.

      Don Gillaspie, for appellees.

      Brown, Compton, Prewett & Dulces, for receiver.
   Carleton Harris, Chief justice.

This is a second appeal relative to the foreclosure suit filed by Kirby C. Seay and wife against E. T. and T. G. Davis, father and son, respectively. Seay v. Davis, 246 Ark. 201, 438 S. W. 2d 479, handed down on February 24, 1969, and supplemental opinion on rehearing rendered on April 7, 1969. The facts concerning the commencement of the litigation are set out in that opinion. As reflected therein, the Chancery Court, without notice to appellants, appointed a receiver to take charge of the Rose Haven Motel and Restaurant, purchased on time by the Davis-es from Seay; a hearing to determine whether the receiver should have been appointed was held on August 22, 1968; at that time the Chancellor announced that the receivership would be terminated on September 5, 1968. The person named as receiver on August 2 was E. P. Williams, who, at the time of being appointed receiver, had the Rose Haven Restaurant under lease, the restaurant being operated in connection with the motel. Williams had already paid the lease rental in full ($5,000.00) until September, 1969. He also held an option to renew for an additional year until September, 1970, Williams, upon termination of the receivership, filed his report with the court, and the Davises filed exceptions to this report. On December 16, 1968, the court conducted a hearing, and after hearing testimony, approved the receiver’s report and denied the exceptions, ordered that Williams receive a $500.00 receiver’s fee, allowed the receiver’s attorney a fee of $200.00, and directed that the balance of any funds held be delivered to E. T. Davis. From this order, appellants bring this appeal. For reversal, it is first contended that all costs of the receivership should be paid by the Seays, and second, that the receiver should be charged wdth $1,-169.16, which was spent in remodeling the restaurant.

Relative to the first point, appellants argue that there was no valid reason for the appointment of the receiver, and Seay and wife, the mortgage holders, should be charged with the costs of the receivership. It is pointed out that the order of receivership was made without notice to appellants, and that, generally speaking, it is only in exceptional cases that a receiver should be appointed where no notice is given to adverse interests. Excelsior White Lime Company v. Rieff, 107 Ark. 554, 155 S. W. 921. Appellees depend primarily upon the fact that the mortgage itself provides that appellees shall be entitled to the immediate appointment by the court of a receiver without further showing’ than that there has been a breach or default.

However, we agree with appellants that this provision does not entitle the mortgagee to the appointment of a receiver as a matter of right, and the question of whether one should be appointed, despite the inclusion of the language quoted, still remains within the discretion of the court. As stated in 59 C. J. S. § 663(b), p. 1187:

“Generally a mortgage provision for a receivership, if valid, is entitled to due. weight in determining whether a receiver will be appointed, and it may afford good ground for the appointment of a receiver where without such provision a receivership would be denied. So a stipulation for a receivership may be enforceable regardless of the insolvency of the mortgagor, at least where it is so provided by the agreement of the parties or where inadequacy of the security is shown.
“It has been held, however, that a receivership clause in a mortgage, even if valid, does not prima facie or as a matter of right entitle the mortgagee to the appointment of a receiver, and the question still remains within the discretion of the court.”

Appellants state:

“* * * In this case the appellees, Kirby O. Seay and wife, obtained the appointment of a receiver without notice, when there was no necessity for a receivership, and in a case based on an attempted inequitable acceleration of a debt (as held by both the lower court and this court); and on application the court held the receivership unnecessary and dissolved it.”

It appears that appellants are in error in this statement. The trial court did not hold that the receivership had been unnecessary, nor did it immediately dissolve same; to the contrary, the Chancellor kept the receivership in effect until September 5, some two weeks later. In addition, the court specifically retained jurisdiction for the reappointment of a receiver in the event of a future default by appellants. Likewise, we made no finding that a receivership was unnecessary; we simply affirmed the trial court in its finding that appellees were not entitled to accelerate the maturity of the note and mortgage, saying:

“It would be altogether inequitable to allow Seay to repudiate his own promise and thereby not only retake the property but also, according to the proof, bring financial ruin upon the older of the two debtors.”

Nor can we agree with appellants that the order appointing a receiver was entered without any justification. Seay testified that it had come to his attention that the younger Davis was getting drunk at night, insulting the customers, and making a “public nuisance” of himself in the restaurant adjoining the motel. He also testified that a partially completed building on the premises, which he understood would be completed, had instead been torn down. The witness said that young Davis did not look after the property, and had permitted it to become “run down and filthy.” The July payment on the purchase was made by check in the amount of $1,682.21, and this check was not paid because of insufficient funds. "When we consider this evidence, together with the provision in the mortgage for the appointment of a receiver, we are unable to say that the Chancellor abused his discretion in making this appointment, for it appears that this step was taken for the purpose of preserving the property under mortgage. Accordingly, we find no merit in the first point.

The second contention is based upon the fact that the receiver had certain improvements made in the restaurant without first obtaining a court order authorizing him to do so. As previously stated, Williams, who had operated the restaurant since 1959, held a written lease for this property, all rentals being paid until September, 1969. His option for an additional year granted him the right to continue operations for an agreed rental of $500.00 per month. Williams was present on August 22, 1968, at the hearing when the trial court announced that the receivership would be terminated on September 5, 1968. It appears that a few days after this hearing, Williams arranged for the installation of additional air conditioning units, vent fans, and fluorescent lights in the restaurant at a total cost of $1,169.16, this amount being paid with receivership funds. Although Williams testified that he had talked w ith young Davis about some of the improvements, there was no firm commitment from either appellant that anything would be done.

“* * * He told me that we would get this done but we never did, he didn’t have the money at that time and we never did get it done. I paid a year’s lease, thinking maybe we could perhaps get it done at that time, which we did not get it done, so it was an item that needed to be done and when I was Receiver and had the money to have it done, I had it done.”

Admittedly, the lease held by Williams did not obligate the owner to make these improvements. Of course, the general rule is that, where there is no agreement between a landowner and tenant relative to improvements, the tenant is presumed to repair and improve for his own benefit. National Housewares Corporation v. Trahin, 247 Ark. 1, 444 S. W. 2d 68 and cases cited therein.

Be that as it may, we are not here concerned with whatever rights Williams, as a tenant, may have had against appellants, as landlords. Rather, we are dealing with a court officer, a duy appointed receiver. The trial court found that the receiver should have obtained authorization from the court before making any substantial expenditures, but further found that the purpose of the expenditures was for the improvement of the building, and that the value of the building had been enhanced. The Chancellor then added:

“* * * Therefore the Court is of the opinion that although this item may not be strictly legal by the cold black letter of the law, Equity demands that it be allowed, especially since all the expenses were paid out of the income of the business during the short time Receiver operated same.”

We do not agree. In Phelan Middle States Oil Corporation, 154 F. 2d 978, the court makes some pertinent observations concerning receivers, as follows:

“* # * a receiver, as ‘an officer or arm of the court,’ is a trustee with the highest kind of fiduciary obligations. He owes a duty of strict impartiality, of ‘undivided loyalty,’ to all persons interested in the receivership estate, and must not ‘dilute’ that loyalty. He is ‘bound to act fairly and openly with respect to every aspect of the proceedings before the court. * * * The court, as well as all the interested parties,’ have ‘the right to expect that all of its officers,’ including the receiver, will not ‘fail’ to reveal any pertinent information or use their official position for their own profit or to further the interests of themselves or any associates. ‘* * * Where a receiver has a possible personal interest adverse to those of any parties to the receivership, it is usually unwise for him to participate in the reorganization; if he does so he must act with unusual caution; that the court has acquiesced in his participating does not relieve him of his duty of disinterestedness.’ ”

In 75 C. J. S. § 182 a, p. 828, it is stated:

“A receiver should not be motivated by personal considerations in his administration of the receivership estate. He administers the assets of the estate, not in his own right or for his own benefit, but for the benefit of the creditors and those who own the property or are otherwise interested therein. Ordinarily he will not be permitted to derive personal profit or advantage out of his office or the administration of his trust other than the compensation which may be allowed to him by law, * * * even though he acted in good faith and the transaction was free from fraud and even though the estate suffered no loss therefrom.”

Further, under Sub-section b of the same section, p. 829;

“As a general rule, a receiver is prohibited from dealing with receivership property or funds for his own benefit, and he will not be permitted, as receiver, to purchase property from himself in his personal capacity, or to acquire for his personal benefit, directly or indirectly, pending the receivership* any property committed to his custody or management, however free from fraud the transaction may be.”

Williams was certainly the chief beneficiary of the expenditure, if not the only one. Certainly, any enhancement in value could not be of any benefit to the owners until September, 1970. Furthermore, it definitely does not appear that there was any urgency for immediate installation of the equipment mentioned, for Williams had operated the restaurant for nearly nine years (without these improvements) before he was appointed as receiver.

We. cannot approve a procedure which would serve as a precedent for any receiver to proceed to make additions and installations to property under his control, without any prior court approval, or without notifying other interested parties, no emergency or urgency being shown. This is particularly true in the present case, where it definitely appears that the installations were made primarily for the benefit of the receiver, and within a few days after the court had announced the dissolution of the receivership on a date some two weeks hence.

Accordingly, this portion of the trial court’s decree is reversed, and the cause is remanded to the Union Chancery Court, Second division, with directions to charge E. P. Williams, receiver, and his bondsmen, with the $1,169.16 expended for the installation of the equipment herein discussed.

It is so ordered.

Costs are to be divided equally between appellants and appellee Williams.

      This has reference to the finding that Seay assured the elder Davis that, if the latter’s son permitted a delinquency in his payments, he (Seay) would give Davis notice before proceeding further. The senior Davis had promised to make good any delinquency within three hours

      The testimony is conflicting as to whether the equipment installed actually enhanced the value of the building, though the Chancellor so found.


author: George Rose Smith, Justice.

text:
    Curtis Lee WELLS v. STATE of Arkansas
    5443
    445 S. W. 2d 719
    Opinion delivered October 20, 1969

      Harold Sharpe, for appellant.

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

In 1966 the appellant Curtis Lee Wells, a youth apparently now in his twenties, pleaded guilty to a charge of burglary and received a five-year suspended sentence. In April, 1969, the trial judge revoked the suspension after a hearing at which four witnesses testified. In appealing from that order Curtis contends that the court abused its discretion in setting aside the suspension.

The pivotal point at the hearing was Curtis’s complicity in a burglary at Madison on January 20, 1969. On that date Eldridge Butler’s place of business was broken into. The missing articles included transistor radios, cigarettes, a gold ring, and several wrist watches. Three or four days later Curtis left the county in a car and drove to Detroit.

Another youth, James Louis Wilson, was charged with having participated in the burglary. He denies his guilt. At the hearing below James testified that he was present when Curtis left his parents’ home to go to Detroit. James said that Curtis brought out from the house and put in the car a transistor radio, a gold ring, and two wrist watches. There was testimony to support a finding that those articles had come from Butler’s place. An officer testified that other items of the stolen property were found in the home of Curtis’s parents in the course of a search under the authority of a search warrant.

Curtis flatly denied the accusations made by James Louis Wilson. He said that after receiving the suspended sentence in 1966 he worked in Detroit until he was drafted for military service. After his discharge he visited his parents in January, 1969, before driving to Detroit. There he was interviewed by the F.B.I. and at their suggestion returned to St. Francis county to try to straighten out his supposed connection with the burglary. Specifically, Curtis testified that he did not have any of the stolen property with him when he left his parents’ house and that he was not implicated in the burglary of Butler’s store.

Those, we think, are all the material facts. In a case of this kind the question on appeal is whether the trial judge abused his discretion in revoking the suspended sentence. Our cases were discussed at length in Gross v. State, 240 Ark. 926, 403 S. W. 2d 75 (1966), where we said that the circuit court’s revocation would not be disturbed except upon a showing of a gross abuse of discretion.

We do not find that showing in the record before us. The controlling issue at the hearing below was primarily one of credibility. According to the State’s witnesses, Curtis left the State a few days after the burglary with some of the stolen property in his possession. Curtis denied that accusation. The trial judge, who had the immense advantage of observing all the witnesses as they gave their testimony, concluded that the State’s version of the matter was the truth. With the evidence in irreconcilable conflict we have no sound basis for saying that he was wrong.

Affirmed.


author: Lyle Brown, Justice.

text:
    MISSOURI-PACIFIC TRUCK LINE v. Johnny RILEY d/b/a D & R Liquor Store
    5-4968
    445 S. W. 2d 720
    Opinion delivered October 20, 1969

      Frierson, Walker & 8nellgrove, for appellant.
    No brief for appellee.
   Lyle Brown, Justice.

This action was instituted by Johnny Riley against Missouri-Pacific Truck Line because of an accident said to have resulted when the latter’s truck struck two neon signs in front of Riley’s place of business in Harrisburg. The truck was traveling in the street at the time of the accident. At the close of the testimony introduced by both parties, the trial court directed a verdict for Riley. Missouri-Pacific appeals, contending the evidence was disputed and should have been submitted to the jury.

Johnny Riley testified that he was not present when the incident occurred. He stated he replaced the smaller sign át a cost of $229.44 and had the larger sign repaired for $210.60. Both signs, so he said, were about two years old and in good condition at the time of the accident. Counsel for Missouri-Pacific questioned the witness concerning the location of the supporting pole with reference to the street because defendant contended that the signs protruded over the street and at a height lower than authorized by law. Riley did not know the distance of the pole from the street, nor was he aware of the height from the street to the contact point with the lower sign. He did concede that a similar incident damaged the signs about one year previously.

The only other witness testifying for appellee was his employee, Imogene Douglas, the manager of the liquor store at the time of the accident. She said she saw a truck with Missouri-Pacific’s name on it strike the signs; that the same truck traveled in front of the store at least three times a week; that the driver did not stop; that one of her patrons saw the incident and unsuccessfully tried to stop the truck; that Malcolm Rupphen made a delivery to her for Missouri-Pacific later and she informed him that he had damaged the signs; and that Rupphen disavowed any knowledge of having struck the signs. On cross-examination Mrs. Douglas said the truck driver veered his truck to miss a car that came into his path and that the back of the truck hit the lower sign.

The single witness for Missouri-Pacific was the truck driver, Malcolm Rupphen. He testified that he had been passing the area for seven or eight years; that Riley’s signs constituted a hazard in that they were considerably lower than twelve feet, six inches, the highest point of his truck; that he regularly veered from his course of travel to miss hitting the signs; and that he was not aware that he did hit the signs but he could not say he did not hit them. He testified that the supporting pole was three feet from the street and that the signs extended over the street.

In considering Johnny Riley’s testimony in relation to the motion for a directed verdict it was the duty of the court to treat it as disputed. That is because he was the plaintiff; Little v. George Feed & Supply Co., 233 Ark. 78, 342 S. W. 2d 668 (1961); and Skillern v. Baker, 82 Ark. 86, 100 S. W. 764 (1907). It was pointed out in Hales & Hunter Co. v. Wyatt, 239-Ark. 19, 386 S. W. 2d 704 (1965), that “a directed verdict for the plaintiff is a rarity.” That same case is authority for the rule that Riley’s testimony should not have been regarded as undisputed in testing it on his motion for a directed verdict. Also, see Turchi v. Shepherd, 230 Ark. 899, 327 S. W. 2d 553 (1959).

We also think there was a jury question with reference to the testimony of Mrs. Douglas. She was Riley’s store manager and might have been biased. Sykes v. Carmack, 211 Ark. 828, 202 S. W. 2d 761 (1947); Old Republic Insurance Co. v. Alexander, 245 Ark. 1029, 436 S. W. 2d 829 (1969). To say the least, it is not shown that she was wholly disinterested. The jury could also have considered as significant the fact that a patron of the store was allegedly an eyewitness, yet he was not called to corroborate Mrs. Douglas, nor was his absence explained.

In urging the trial court to permit the case to go to the jury, Missouri-Pacific pointed out that it had asserted negligence on the part of Riley in allegedly erecting his signs in such manner as to encroach on the traveled portion of the street and at a height which constituted a hazard. When the evidence is weighed with all reasonable inferences in a light most favorable to Missouri-Pacific, we conclude that Riley’s alleged negligence in that respect was a question for the jury. Smith v. McEachin, 186 Ark. 1132, 57 S. W. 2d 1043 (1933). We refer to the evidence which we have summarized and to repeat, except by reference, is not necessary. Suffice it to say that if the jury believed that appellant’s truck did not exceed permissible height, and that Riley maintained his signs at such heights that a reasonable person should have anticipated danger to the motoring public, the trier of facts could have placed fault on Riley.

Reversed.

Byrd, J., concurs.