author: Steele Hays, Justice.

text:
    George COWGER and Irene Cowger, Husband and Wife v. The STATE of Arkansas, Department of Aeronautics; et al.
    91-104
    817 S.W.2d 427
    Supreme Court of Arkansas
    Opinion delivered October 28, 1991
    [Rehearing denied December 9, 1991.]

      Hankins, Hicks & Madden, by: Stuart W. Hankins and Sherry S. Means, for appellants.

      Terry R. Ballard; Street & Kennedy, by: J. Thomas Kennedy; Winston Bryant, Att’y Gen., by: Sarah H. Harberg, Asst. Att’y Gen.; Hilburn, Calhoun, Harper, Pruniski & Calhoun, Ltd., by: David M. Fuqua and James M. McHaney, Jr., for appellees.
   Steele Hays, Justice.

The question presented by this appeal is whether the law of Arkansas gives one municipality eminent domain over land in another municipality. We hold that it does.

The appellants, George and Irene Cowger, own property in the City of Belleville. The City of Danville, in conjunction with the State Department of Aeronautics, filed an action against them in the Circuit Court of Yell County seeking condemnation of 10.56 acres for the construction of an airstrip. The City of Belleville indicated its approval of the project by the adoption of Resolution No. 7-27-87 authorizing the construction of the airport.

The Cowgers brought this action in Pulaski Chancery Court against the cities of Danville and Belleville, the Department of Aeronautics, and officials of both cities. The complaint alleged that Danville was illegally constructing a municipal airport across lands belonging to the Cowgers in violation of various Arkansas statutes and the Federal Civil Rights Act of 1871, 42 U.S.C. § 1983. The Cowgers asked for an injunction and a judgment declaring the actions of the defendants to be unlawful.

The defendants moved for dismissal of the complaint under Ark. R. Civ. P. 12(b)(6), failure to state a claim, and Rule 56, summary judgment. Hearings were held and further amended pleadings were submitted, and the trial court subsequently dismissed all claims.

The Cowgers appeal from the order of dismissal. They first assert the trial court erred in finding that Ark. Code Ann. § 14-360-101 (1987) authorized Danville to exercise its power of eminent domain over lands in Belleville for use of the property as an airport. That section reads:

Cities of the first and second class and incorporated towns in the State of Arkansas may acquire and own airports or flying fields, which may be located either within or without the corporate limits of the cities or towns.

The following section, Ark. Code Ann. § 14-360-102 (1987), Acquisition of Property, provides:.

(a) The real property for municipal airports or flying fields may be acquired by gift, purchase, or by the exercise of the right of eminent domain, which is granted to cities for this purpose.
(b) The procedure for the exercise of the right of eminent domain shall be that prescribed by law for the exercise of this power by railroads.

The Cowgers also contend the language of § 14-360-101, providing that cities can acquire and own airports (“within or without the corporate limits of the cities”) is an insufficient expression by the legislature to empower one municipality with eminent domain over another, and, in any case, should not be allowed.

It is widely held that cities and other political subdivisions of a state may be authorized to acquire land by eminent domain. 26 Am. Jur. 2d Eminent Domain § 19 (1966). And, when acting pursuant to statute, municipalities may condemn lands beyond their borders, even within the boundaries of another municipality. Id. Schiller Park v. Chicago, 26 Ill.2d 278, 186 N.E.2d 343 (1962); Howard v. City of Atlanta, 190 Ga. 730, 10 S.E.2d 190 (1940).

As stated in J. Sackman, Nichols on Eminent Domain § 2.24 (1985):

A municipal corporation is a creature of the state designed to operate as a local government over a limited area. Generally a municipal corporation is confined to such area and is without power to acquire or hold real property beyond its territorial limits unless the power to do so is expressly given by the legislature. . . . The legislature may confer upon a municipality the power to acquire and hold real property outside its territorial limits and in connection with such power to effect such acquisition by eminent domain.
Although the weight of authority leans toward the general principle set forth above, there is a judicial tendency toward the proposition that, unless a municipality is expressly prohibited from so doing, it may acquire real property beyond its territorial limit for legitimate municipal purposes. . . .
Such acquisition outside the corporate limits of the condemnor may be of private property situated in another municipality and has been sustained, also, with respect to property devoted to a public use within another municipality.

To the same effect see 11 E. McQuillan, Municipal Corporations §§ 32.11, 32.15, 32.16, 32.66, 32.72 (1985).

The Cowgers insist that a grant of the power of eminent domain by one municipality over another should not be allowed, but they cite no authority and our own research has produced none. Rather, as noted above, the general rule is that one municipality can have such power over another. There are cases dealing with whether condemnation will lie where the intended use by the condemnor municipality conflicts with a public use asserted by the condemnee municipality. See Nichols, supra', Annotation, Condemnation — of Public Entity’s Land, 35 A.L.R. Fed. 1293 (1971); 26 Am. Jur. 2d, supra. Flowever, in this case we are not confronted with conflicting public purposes, the only question is whether the language of the statute, § 14-360-101, invests Danville with the power of eminent domain over private property within the City of Belleville.

The only authority we find interpreting language similar to our statute fully supports the trial court’s conclusions. The statute in Schiller Park v. City of Chicago, supra, was virtually identical to the pertinent part of § 14-360-101. That statute empowered every municipality with a population of 500,000 or more to establish and maintain public airports upon “any land either within or outside the corporate limits of the municipality.”

The Schiller court observed that the statute was similar to one construed in Howard v. City of Atlanta, supra, where it was held that unless there were words of limitation on the phrase, “within or without the territorial limits of the municipality,” the power of eminent domain extended even to other municipalities. The court in Schiller approved the following language from Howard:

If the condemning municipality acts in good faith, ‘the fact that the other municipality may be deprived of the right to tax or police the property so taken is merely the express result of the exercise of the power so granted, and does not constitute reason why the act should be construed as denying the powers.

Adding:

It may be conceded that the power of one municipality to condemn land in another municipality is an unusual or extraordinary one. But as we have indicated, the legislative intention to confer it is expressed clearly enough, and as is the case with other aspects of the eminent domain power, the courts will afford protection against any abuse thereof. . . .
No convincing reason has been advanced for reading into the unqualified statutory language an exception as to territory within some other municipality. . . .

We find these cases persuasive and, accordingly, we affirm the trial court on this point.

The Cowgers also contend that eminent domain requires the consent of the city within whose boundaries the condemned property lies. But we do not find that to be the law. The general rule, as we have seen, is that one municipality may assert eminent domain against lands in another municipality. Beyond that, courts have upheld eminent domain without the consent of the condemnee and even over its objection. See Schiller Park v. Chicago, supra. Thus, consent of the condemnee municipality is not a prerequisite to eminent domain.

Another point of contention involves the resolution of the City of Belleville authorizing the construction of the airport. The Cowgers maintain the resolution violates that part of art. 12, § 4 of the Arkansas Constitution which denies authority to municipal corporations to pass “any law contrary to the general laws” of the state. The chancellor declined to address the argument because of having held that § 14-360-101 provides the authority relied on for condemnation, thus rendering the argument abstract. For the reasons already noted, we believe that ruling by the trial court was correct.

Another assignment of error concerns the trial court’s dismissal of the Cowgers’ complaint for failure to state a claim under 42 U.S.C. §§ 1983 and 1988. A number of sub-issues are raised: The Cowgers were deprived of due process, state statutory schemes were violated, and fraud by municipal officials deprived them of property without due process.

The due process argument is directed toward the Danville eminent domain action. But, for reasons already seen, the eminent domain proceeding is authorized by statute and no constitutional violation has been demonstrated. If the argument goes to a denial of just compensation, the appellees correctly point out that the Fifth Amendment does not require payment prior to the taking, nor does it necessarily require a pre-taking hearing. Williamson Co. Regional Planning Commission v. Hamilton Bank, 473 U.S. 182 (1985).

The violation of statutory schemes argument has been addressed above and even if there were a violation it would not give rise to a § 1983 cause of action unless the violation were constitutional. Virden v. Roper, 302 Ark. 125, 788 S.W.2d 470 (1990); Baker v. McCollam, 443 U.S. 137 (1979).

We find no error in the trial court’s dismissal of the claim of fraud, as the complaint does no more than declare conclusively that the mayor “defrauded” the plaintiffs, with no attempt to state facts upon which relief could be granted. Ark. R. Civ. P. 12(b)(6).

The Cowgers also raise an argument concerning the nature of the property interest which is the subject of the condemnation proceeding. The gist of the argument is that § 14-360-102(b) provides that procedure for municipal airport condemnation shall be that prescribed by law for railroads, which is found in Ark. Code Ann. § 18-15-1202 (1987):

(a) Any railroad, telegraph, or telephone company, organized under the laws of this state, after having surveyed and located its lines of railroad, telegraph, or telephone, in all cases where the companies fail to obtain the right-of-way over the property by agreement with the owner of the property through which the lines of railroad, telegraph or telephone may be located, shall apply to the circuit court of the county in which the property is situated. Application shall be made by petition to have the damages for the right-of-way assessed, giving the owner of the property at least ten days notice in writing of the time and place where the petition will be heard.
[The statute provides additional procedures for condemnation]

The Cowgers urge that because of the references in § 18-15-1202, to “right-of-way,” Danville is limited to a right-of-way interest in its condemnation under §§ 14-360-101 and 102. We disagree with that interpretation. The substantive grant of eminent domain is clearly contained in § 14-306-101 and 102, that cities may “acquire and own airports” by “eminent domain.” The statute then provides succinctly that the procedure shall be as prescribed by law for railroads. The first rule in interpreting a statute is to give the words an ordinary and usually accepted meaning. Garrett v. McDonagh, 303 Ark. 348, 796 S.W.2d 582 (1990). And where the legislation is clear, we have no authority to construe a statute. Townsend v. State, 292 Ark. 157, 728 S.W.2d 516 (1987).

For the reasons stated, the order appealed from is affirmed.

Corbin, J., not participating.


source: Caselaw Access Project

author: David Newbern, Justice.

license: Public Domain

text:
    Joe David WILLIAMS v. ARKANSAS OIL & GAS COMMISSION, et al.
    91-51
    817 S.W.2d 863
    Supreme Court of Arkansas
    Opinion delivered October 28, 1991

      Don Gillaspie, for appellant.

      Crumpl'er, O’Connor & Wynne, for appellee.

      Keith, Clegg & Eckert, for intervenor-appellee Oryx Energy Co.
   David Newbern, Justice.

The appellant, Joe David Williams, and others represented by him (Williams group) own working interest mineral leases in two 20-acre tracts in Miller County. These tracts are part of the Rodessa Field which encompasses the oil producing Gloyd Formation. The Williams group established two wells on these tracts, Freedom A-l and Freedom Prospect. When this case arose, Freedom Prospect was not producing oil from the Gloyd Formation but Freedom A-l was. Sun Exploration and Development Company, now Oryx Energy Company, filed a petition before the appellee, Arkansas Oil and Gas Commission (AOGC), for the establishment of a secondary recovery water flood unit for the Gloyd Formation. This proposed unit included the leases of the Williams group. The Williams group refused to convert their leases voluntarily and opposed the compulsory unitization formulated at a series of hearings before.the AOGC culminating on May 24, 1988.

Williams appeared before the AOGC with counsel to object to the proposed unit, asserting that the formula developed by Oryx was unfair. Williams presented no expert testimony. During the hearing he cross-examined Oryx’s witnesses concerning the basis of the formula by which they proposed to distribute proceeds and charge expenses. Each witness insisted the formula was commonly used in the industry and that the computations were not unfair. The unitization petition was granted by a unanimous vote of the eight participating commissioners.

Williams filed a petition for injunctive relief in the Chancery Court on May 26, 1988, challenging the unitization order. A hearing was set, and discovery began. Oryx took a deposition of Williams’s potential expert witness, Henry Coutret, in which he said the basic formula for distribution of unit costs and income was fair but one aspect could be in violation of the law, depending on how it was interpreted. As Williams’s counsel interpreted it, it would be wrong. If interpreted in accordance with Oryx’s responses to interrogatories, it could be proper. By agreement of the parties, the unitization was held in abeyance pending the outcome of the trial. On the first date set for trial, January 25, 1990, Henry Coutret was present to testify on Williams’s behalf. On the day of trial, Oryx filed a motion to transfer the case to the Circuit Court, objecting to chancery jurisdiction and to the receipt of any additional evidence. The hearing was cancelled. The Chancellor later rejected the jurisdictional challenge by letter ruling on May 3,1990. He withheld ruling on the question of the scope of his review and asked that the parties provide briefs on the issue.

One week before the subsequently scheduled hearing, the Chancellor informed the parties he would receive evidence on the issue raised before the Commission, i.c., whether the formula was fair. Counsel for Williams, Don Gillaspie, had made it known to counsel for the Commission, William Wynne, that he would introduce additional testimony from Coutret. Coutret could not be present for the rescheduled hearing. Gillaspie told Wynne that if Wynne and Oryx’s counsel would set up a time to take Coutret’s deposition to be admitted in evidence, Gillaspie would participate at their convenience.

At some point Wynne agreed to participate in the taking of the deposition. Apparently Oryx’s counsel, Oliver Clegg, agreed to pay for the deposition. After consideration of the chancellor’s ruling concerning receipt of evidence, Wynne apparently decided the deposition was unnecessary under any circumstances. He did not convey this decision to Gillaspie. Wynne informed Coutret he would notify him on the Friday before the hearing but did not do so. At the scheduled June 7 hearing Gillaspie began by requesting that the Chancellor hold the record open for receipt of a deposition from Coutret. Counsel for the Commission and Oryx objected to the receipt of any evidence after the date of the hearing. The Chancellor ruled he would accept no additional evidence unless all parties agreed to it. Gillaspie renewed his request for the Chancellor to hold the record open. The request was denied. After review of the evidence, including the hearing before the Commission, the analysis from Coutret, and the discovery, the Chancellor found the Commission order to be fair and in conformity with the statutory scheme.

Williams has raised three points of appeal. First, he contends the Chancellor abused his discretion in refusing to receive additional evidence. Second, the order approved by the Commission fails to comply with the mandatory provisions of the unitization statute. Third, under the circumstances of this case, the unitization act permits a taking of private property without just compensation in violation of the Arkansas Constitution. The decree is reversed and remanded, as we find the first point to be meritorious, and the second one may have merit as well.

1. Receipt of evidence

Williams argues that, because counsel for the Commission and Oryx repudiated their agreement to permit the taking of the additional evidence in the form of a deposition of Coutret, the Chancellor erred by refusing to hold the record open. The issue was characterized by the Trial Court and argued here by the parties as whether the Court erred in denial of a continuance.

The rule is very clear that the granting or denial of a continuance is a matter within the sound discretion of the Trial Court, and such a ruling will not be disturbed unless the Court has abused that discretion. Smith v. City of Little Rock, 279 Ark. 4, 648 S.W.2d 454 (1983); Bolden v. Carter, 269 Ark. 391, 602 S.W.2d 640 (1980).

The Chancellor’s authority and scope of review in this matter are established by Ark. Code Ann. § 15-72-106(a) and (c) (1987) as follows:

Court review by aggrieved person — Injunction.
(a) Any interested person adversly affected by any statute of this state with respect to conservation of oil or gas, or both; by any provisions of this act; by any rule, regulation, or order made by the commission thereunder; or by any act done or threatened thereunder, and who has exhausted his administrative remedy, may obtain court review and seek relief by a suit for injunction against the commission as defendant or against the members of the commission by suit in the chancery court of the county in which the property involved is located.
(c) In the trial, the burden of proof shall be upon the plaintiff, and all pertinent evidence with respect to the validity and reasonableness of the order of the commission complained of shall be admissible. [Emphasis supplied]

Clearly the Chancellor is authorized to receive all pertinent evidence concerning the “validity and reasonableness” of the Commission’s order. Williams had the burden of presenting that evidence. In the lengthy discussion which took place in response to the motion to hold the record open on June 7 the Chancellor stated:

Gentlemen, when I wrote this letter on May 3rd, and Mr. Gillaspie, granting you the opportunity to proceed today and, of course, advising all of you that I wanted you to brief the issue which I felt was in question at the top of page two of my letter of May 3, the question in my mind was whether we reopened this thing for all evidence just as if we were hearing it for the first time, and, of course, as a trial de novo, or whether there was a limited scope of my review. I advised all three of you last week that I felt that the scope of my review was limited in regard to Arkansas Code 15-72-106C to a determination of whether the Arkansas Oil and Gas Commission had acted unreasonably in entering their Order of March 22, 1988. All of you understood that. No question in my mind but that I talked to each one of you and advised you of that. Gentlemen, this case has been set for today since shortly after May 3rd of 1990 for the purpose of introducing any further evidence that might be available to you. I advised you last week what I thought that evidence would or should consist of and what I would limit that evidence to. I think there has been ample opportunity on everybody’s behalf to have everybody ready to appear here today, and today, gentlemen, is the day that I’m going to receive evidence. And I’m not going to receive any additional evidence after today unless it’s by agreement of the parties. . . .
Gentlemen, again, this case was set for today shortly after within three or four days, certainly a week of May 3rd of 1990. When I advised you, gentlemen last week, I talked to you gentlemen last week on the telephone. I advised you that I did not expect additional testimony touching on other matters other than the reasonableness of the Order of the Arkansas Oil and Gas Commission. Today has been the day set for this hearing, today is the day that this hearing is going to be. Mr. Gillaspie, if you feel that because of the circumstances that have arisen that you are compelled to file a motion for continuance, and I am taking your statement as a motion for continuance, and I am denying your oral motion for continuance, and keeping with the recent decisions of the Arkansas Supreme Court, I think you should file a written motion for continuance, I am denying that motion for continuance. ... I understand completely what has taken place in this case, that does not get around the fact that this case has been set for at least a month.

The chancellor apparently failed to consider the fact that Wynne either did not fully appreciate the Court’s ruling with respect to scope or did not agree with the ruling and that Wynne subsequently made a unilateral decision concerning the need for additional testimony from Coutret. During the hearing Wynne confirmed Gillaspie’s assertions that he had agreed to arrange to obtain the deposition following the May 3rd letter and his subsequent change of heart as follows:

MR. WYNNE:
Now, as I understood the Court in his conversation with me and admittedly there has been some variations within the understanding of the three attorneys, but at least Mr. Clegg and I are in harmony that it was your position that you were willing not to foreclose, Mr. Gillaspie clarifying the record to the extent that it failed to include matters insofar as what was before the Commission at the time of the entry of the Order, but that you did not intend to open this record for the reception of testimony and evidence as it related to facts or circumstances subsequent to the date of the Order of the Commission which was entered effective May 24, 1988. . . .
I have never considered it my responsibility to engage Mr. Coutret or inquire as to his schedule when he is the expert for the Plaintiff and not the Defendant. In addition, Judge, the dialogue and conversation between Mr. Gillaspie and I concerning the evidential deposition of Mr. Coutret were all predicated upon the ruling which this Court made as to whether or not it would hear this matter de novo. If the matter was to be heard de novo, I certainly did tell Mr. Gillaspie of my willingness to arrange to schedule the evidentiary deposition of Mr. Coutret with the idea he would take the deposition since he would be sponsoring that witness’s testimony. But, the Court in its ruling has determined the question of constitutionality is not at issue. The matter is only one of reasonableness, and the pivotal points that are dispositive of the reasonableness of the Order if we limit the review to the record before the Court, that is the record that the Commission had that led to the adoption of the Order, then Mr. Coutret’s testimony touches upon the points that are critical to the issue to be determined. Now, what Mr. Gillaspie is in actuality concerned about, Judge, is he wishes to include within this record not evidence that was not available at the time of the hearing before the Commission, he wishes to introduce into this record through the evidential deposition of Mr. Coutret testimony concerning facts and circumstances as they have occurred from and after the issuance of Order reference 37-88.

Clearly Wynne considered the Chancellor’s ruling to mean that only evidence developed before the Commission or directly relating to that evidence was relevant, and he did not feel additional testimony from Coutret would be admissible by that standard.

The Chancellor was correct in ruling that the Statute would permit consideration of evidence developed subsequent to the Commission’s order which was pertinent to the issues raised. The testimony of Coutret as proffered by Williams would undoubtedly be relevant to that issue. In his written motion Williams proffered Coutret’s testimony, in relevant part, as follows:

14. If permitted to testify, Mr. Coutret would review the Unit Agreement, the Unit Operating Agreement, the data selected to be plugged in the basically fair formulae used therein, and would state that, under the evidence and factual background, the Order of the Commission is invalid and unreasonable.
Mr. Coutret would testify that the selection by intervenor of the period immediately following the production of the A. Capps well as the determining period to be used in calculations of the Phase I allocation among tracts was arbitrary and unreasonable and unfair to plaintiffs working interest owners. He would state that the data used resulted in a smaller allocation to Tract 33 was, at the date of the Order, producing some 30 %, rather than 12 %, of all oil produced in the Unit Area.
Mr. Coutret would testify that under the circumstances of this case the provision of Article 11 of the Unit Agreement that all unit expense shall be allocated on the basis of the unit participation factor in effect at the time such unit expense is charged is in direct and express violation of the statute which requires that unit expenses shall be apportioned on the same basis as production.
He would testify that the Order will require Tract 33 to pay some 14 times more in operating expenses than its Phase II allocation of production so long as oil is being allocated to Phase I production. He would testify that even if Article 11 were amended to provide for apportionment of operating expenses at Phase II rates on a per/barrel basis Plaintiffs working interest owners would be required to pay many times more in operating expenses than their fair share due to the operation of injection wells and additional producers for which they would be charged a percentage of costs and which would in no way benefit them as to Phase I production due to the monthly limit.

The Chancellor’s ruling oh admissibility of additional evidence bearing on the reasonableness of the AOGC order was correct. Wynne’s interpretation of the order as permitting only evidence taken before the AOGC was incorrect. The problem arises with the Chancellor’s willingness to accept further evidence only by agreement of the parties. If that be regarded as an exercise of the Chancellor’s discretion not to grant a continuance, we conclude it was an abuse of that discretion. On the record before the Chancellor it was clear that Wynne agreed with Gillaspie to schedule a further deposition with Coutret to be received in evidence, and his subsequent refusal to do so was a result of his misconstruction of the Statute and the Chancellor’s order concerning the evidence which could be received. It was unfair to make continuance or receipt of evidence dependent on agreement of the parties. It was apparent such agreement would not be forthcoming for a reason which, at best, resulted from a misinterpretation of law.

2. Compliance with the statute

Despite the error we find in point 1, we could affirm if we could conclude that the AOGC’s decision was fair and reasonable and that that conclusion would obtain regardless of the prospect of Coutret’s testimony. We cannot reach that conclusion.

Before discussing this point, a review of parts of the unitization formula is required. In testimony before the Commission it had been established that only 20 % of the oil reserves in the proposed unit could be recovered by primary methods. Expert testimony from Oryx showed the field’s primary reserve would be depleted in 1996, but secondary recovery unit operations would extend its productive life to 2006. The uncontradicted evidence showed that 288,000 barrels of oil represented the full recovery possible in primary reserves. Secondary reserves were set at 1.44 million barrels. All parties concurred that unitization of the field would be necessary and proper to prevent waste. The problem arose from the formula proposed to apportion the anticipated $6.1 million in expenses associated with unitization of the field. Oryx proposed a two-phase process designed to compensate all the parties having working interests, including the Williams group, for the remaining primary reserve in the first phase while charging each interest for its share of the expenses of developing the unitized field. In the second phase profit and expenses would be distributed and charged based on the participation of each working interest owner.

The key component of the proposal to which Williams takes exception is the allocation of expenses. Phase 1 of the unit would continue until all the primary reserves (288,000 barrels) had been recovered. The unit agreement contemplated the recovery of 3210 barrels of oil per month in primary reserves. The proceeds from these barrels would be assigned to each working interest owner based on Phase I tract participation. Any proceeds from recovery of oil above 3210 barrels would be assigned based on Phase II tract participation. Unit expenses were to be charged as follows:

11.1 Basis of Charge to Lessees. Unit Operator initially shall pay all Unit Expenses. Each Working Interest Owner shall reimburse Unit Operator for its share of Unit Expense. Each Working Interest Owner’s share of such Unit Expense shall be the same as its Phase II Unit Participation for the following items (a)-(d):
(a) items in the nature of capital assets including, without limitation, real property if acquired;
(b) acquiring, drilling, redrilling, equipping and reequipping water injection wells, pumping and pipeline facilities for such wells, and changing any injection interval in any such well;
(c) gathering lines and facilities and common tank batteries utilized or acquired for Unit Operations; and
(d) water purchased or otherwise obtained for inj ection purposes and the costs of injection thereof into the Unit Area.
All other Unit Expense shall be allocated upon the basis of the Unit Participation in effect at the time such Unit expense is charged to the Joint Account.

The final paragraph allocating expenses forms the basis of Williams’s statutory challenge to the formula.

In the initial analysis from Mr. Coutret’s deposition based on the data provided by Oryx from which they developed the formula, he concluded that the basic unitization formula was fair and equitable for the circumstances but that the proposed method of allocation of expenses was somewhat ambigious and potentially represented a gross inequity. Upon receipt of further information in the form of Oryx’s answers to Williams’s interrogatories Coutret stated the following in a letter to Gillaspie:

* * *
I can see why you are not clear as to exactly how they intend to allocate operating expenses between Phase I and Phase II when monthly production exceeds 3210 barrels. In reading the answer it sounds like they intend to apportion the operating charges to Phase I and Phase II participation relative to the monthly volumes of Phase I and Phase II production. Basically, my guess is (and it’s only a guess) they will use the following formula to allocate monthly operating expenses when production exceeds 3210 barrels in any month before total Phase I cumulative production (from January 1, 1987) is 288,000 barrels.
Charges=(Mo. Op. Cost)x(3210)x(Phase I factor)
Total Monthly Production
(Mo. Op. Cost)x(Total Monthly Prod.-3210)x(Phase II factor)
Total Monthly Production
This would mean that operating expenses would be allocated to working interest owners relative to their production during each Phase which is in conformance with the Arkansas statute.
* * *

It is apparent from Coutret’s analysis that the unit agreement and the order of the Commission embodying that agreement contain an ambiguity which would permit the unit operators to charge certain Phase II expenses which are incurred during Phase I at the Phase I tract participation rate while only assigning Phase II proceeds to the Williams group accounts. Mr. Coutret could only “guess” the formula to be used. Arkansas Code Ann. § 15-72-310 (1987) provides:

Order requiring unit operation — Contents.
The order requiring unit operation shall be fair and reasonable under all circumstances and shall include:
* * *
(2) An allocation, upon the basis agreed upon by the provisions of the unit operating agreement, to each separately owned tract, which for all purposes of this section and §§ 15-72-308, 15-72-309, and 15-72-311 — 15-72-322, may be a previously established drilling unit if the unit operating agreement so provided, in the unit area, its fair share of all of the oil and gas produced from the unit area and not required or consumed in the conduct of the operation of the unit area or unavoidably lost. No allocation formula shall be adopted by the commission and put into effect unless it is based on the relative contribution to the unit operation, other than physical equipment, made by each separately owned tract or previously established drilling unit;
* * *
(4) A provision that a part of the expenses of unit operation, including capital investments, be charged to each separately owned tract in the same proportion that the tract shares in the unit production. The expenses chargeable to a tract shall be paid by the person or persons who, in the absence of unit operation, would be responsible for the expense of developing and operating the tract;

While production being allocated based on the contribution to unit operation in Phase II is not at issue, the potential allocation of expenses at a Phase I tract participation level for Phase II expenses when such expenses are incurred during Phase I seems clearly to violate the statute. That this may occur was established by testimony before the Commission. During the hearing on May 24, 1988, Darlynne Hayden, unitization manager for Oryx, testified:

Q. [Mr. Gillaspie]: We would be paying point one two one three (.1213) percent of the operating expenses for each barrel, whether it was above or below the three thousand two hundred ten barrels (3,210) per month that’s limited to Phase One, correct?
A.: Yes.
Q.: But we would be receiving as to the barrels over three thousand two hundred and ten only point zero zero eight eight (.0088), is that correct?
A.: For just that one tract.
Q.: That’s correct, is it not?
A.: Yes.
Q.: So we’d be paying at a rate, what, ten times what we’d be receiving for Phase Two oil?
A.: Yes. But also your investments in developing the unit are carried under Phase Two, which is a very, very low rate. So you’d be reaping the benefits of a lot of new wells out there at the point zero eight eight for your investment.
Q.: We’d be paying also, would we not, at the same rate in Phase Two for those units that you say are being donated to us by Sun? That point zero zero eight eight is the only way we can reap benefits in Phase Two and we pay on that basis, do we not.
A.: You pay, yes, that’s right.
* * *
Q.: Would you accept that it’s at least six-and-a-half years that we would be paying twelve point one three percent (12.13) of all the operating expenses for the entire year?
A.: Yes.

The formula, if interpreted to require the Williams group to pay expenses at a higher percentage rate than their percentage share in production, would violate the statute, and evidence on that question should have been received.

3. Taking of property

Williams contends that under the circumstances of this case the order of unitization amounts to a taking of private property without just compensation. The contention is easily answered. The unitization order and the statutory scheme provide that the interests of the working interest owners will be transferred to the unit producer for the use and benefit of the working interest owner. Article 10 (f) of the agreement so provides. Article 10 of the agreement later provides that on abandonment of unit operations the agreement terminates and the interests revert to the contracts in place affecting the separate tracts. The compensation for the transfer is a share of the proceeds from the field which would not be available without secondary recovery. There has been compensation and there is no merit in this argument.

Reversed and remanded.

Brown, J., not participating.


author: Tom Glaze, Justice.

text:
    Willis ROBINSON v. Charles BUIE, et al.
    91-135
    817 S.W.2d 431
    Supreme Court of Arkansas
    Opinion delivered October 28, 1991

      Art Dodrill, for appellant.

      Charles Buie, pro se.
   Tom Glaze, Justice.

This case arises from the appellant Willis Robinson’s purchase of two allegedly defective automotive heads from Charles Buie’s business, Advanced Head Service. These two automotive heads were installed into a new engine block, and when the engine was started, a valve fell from the head causing extensive damage to the engine. Appellant filed suit, alleging breach of contract and warranty and naming Advanced Head Service as the only defendant. Service of process was made on Todd Bowie, apparently an employee of Advanced Head Service. Except for a short time when Advanced Head Service was represented by an attorney, all of its pleadings were signed, Charles Buie, pro se, for Advanced Head Service, defendant. The appellant was awarded a default judgment against Advanced Head Service for $685.65 plus court costs.

The appellant subsequently could not execute on his judgment, because Advanced Head Service had gone out of business and had no assets. Thus, appellant then filed postjudgment motions under ARCP Rule 60(b) requesting that the trial court amend the judgment to make Charles Buie a party or to set aside the judgment to prevent a miscarriage of justice. Buie responded to appellant’s motions, stating no fraud was committed on the court, no mistake was made by the defendant, and no error was committed by the court, thus, the judgment must stand. The trial court denied the appellant’s postjudgment motions, and the appellant did not appeal that ruling.

Instead, on October 3, 1990, the appellant filed another lawsuit this time against Charles Buie and all of his businesses, including Advanced Head Service. In this complaint, appellant incorporated by reference the pleadings contained in the prior complaint against Advanced Head Service and added allegations of fraud and deceit pertaining to Buie’s relationship and ownership of Advanced Head Service. Specifically, he alleged and argued that, when Buie appeared pro se for Advanced Head Service, he made himself a party to the suit; in the alternative, he claims Buie engaged in the unauthorized practice of law, because a layman cannot represent another. Buie responded, seeking dismissal of appellant’s second complaint on the basis of res judicata and collateral estoppel. The trial court agreed with Buie, and granted his motion to dismiss. Appellant challenges the court’s dismissal order in this appeal. We affirm.

Under the doctrine of res judicata or claim preclusion, a valid and final judgment rendered on the merits by a court of competent jurisdiction bars another action by the plaintiff or his privies against the defendant or his privies on the same claim or cause of action. Toran v. Provident Life & Accident Ins. Co., 297 Ark. 415, 764 S.W.2d 40 (1989). Privity of parties within the meaning of res judicata means “a person so identified in interest with another that he represents the same legal right.” Spears v. State Farm Fire & Casualty Ins., 291 Ark. 465, 725 S.W.2d 835 (1987). Res judicata bars not only the relitigation of claims which were actually litigated in the first suit, but also those which could have been litigated. Id. Collateral estoppel or issue preclusion bars the relitigation of issues of law or fact actually litigated by the parties in the first suit. Id.

The appellant’s claims of breach of contract and warranty were litigated and decided in his favor in the first suit against Advanced Head Service. Now, the appellant attempts to argue these same claims against Buie and his businesses, including Advanced Head Service. Evidently, the appellant for whatever reasons chose not to join Buie as a party defendant in the first suit, but tried later to correct that omission or mistake by refiling his suit against Buie. Clearly the appellant is barred from relitigating his claim of breach of contract and warranty which had already been decided in his favor in his first action.

Likewise, the appellant’s allegation of fraud against Buie is also barred by res judicata. The appellant moved to have the judgment amended or set aside to prevent a miscarriage of justice under Rule 60(b). In Buie’s response, he stated that there was no mistake, fraud or miscarriage of justice present and thus the judgment should stand. In the trial court’s order denying the appellant’s post-judgment motions, the judge specifically mentioned reviewing Buie’s response. Thus, there is every indication that the trial judge specifically considered the possibility of fraud when denying the appellant’s motions. However, even if the trial judge did not consider allegations of fraud when he denied appellant’s motions, the appellant could have made his fraud argument against Buie in his first lawsuit. Under ARCP Rule 60(b) and (c)(4), a judgment may be vacated which has been obtained by fraud. See Brown v. Kennedy Well Works, 302 Ark. 213, 788 S.W.2d 948 (1990). Throughout the first lawsuit, Buie filed pleadings on Advanced Head Service’s behalf but signed the pleadings, “Charles Buie, pro se.” The facts and issues available to appellant when he filed his second lawsuit are the same as existed during the first action and at the time he filed his post-judgment motions. Thus, since the appellant could have made his fraud argument before, he is barred from doing so now.

For the reasons stated above, we affirm.

       When entered, the judgment erroneously contained Mr. Buie’s name in the style of the case, but Buie’s name was later excluded when the trial court granted Buie’s motion to amend the judgment.


text:
    Steele HOLT v. CITY OF MAUMELLE, et al.
    90-352
    817 S.W.2d 208
    Supreme Court of Arkansas
    Opinion delivered October 28, 1991

      John Wesley Hall, Jr., P.C., by: William A. McLean, for appellant.

      Hilburn, Calhoun, Harper, Pruniski & Calhoun, Ltd., by: Greg Stephens, for appellee.
   H. Maurice Mitchell, Special Chief Justice.

This case involves three animal control ordinances adopted by the City of Maumelle. The first ordinance was adopted on June 16, 1986. Section 19 of the first ordinance prohibited the keeping of a dog substantially conforming to standards set by two kennel clubs as to certain breeds, including American Pit Bull Terrier, and Section 24 empowered an enforcement officer to enter upon any premises for the purpose of seeing an animal prohibited by the ordinance.

Steele Holt was charged with the keeping of a dog prohibited by the first ordinance. He filed suit in the Pulaski County Circuit court in 1987 against the city and its animal control officer for a judgment declaring the first ordinance invalid. This suit was settled. On March 25,1988, Holt executed a release for all claims which he may have against the city and its directors, agents and employees in consideration of the repeal of Section 19 and 24 of the first ordinance and the payment of the sum of $2,000 to his attorney. On April 4,1988, the city adopted the second ordinance which amended Section 19 of the first ordinance by eliminating all reference to dogs and amended Section 24 of the first ordinance by eliminating the power of an enforcement officer to enter upon any premises without notice. The second ordinance provided that it would become effective thirty days after its adoption.

The city adopted the third ordinance on May 2,1988, which became effective upon its passage and publication. The third ordinance amends the first and second ordinances. Section 7 of the third ordinance prohibits the keeping of certain breeds of dogs, including American Pit Bull Terrier, within the city. Holt, the owner of an American Pit Bull Terrier and a resident of Maumelle, filed suit in the Pulaski County Circuit Court against the city, members and former members of the city board of directors in their official capacity and individually. He sought a judgment declaring Section 7 of the third ordinance unconstitutional and awarding compensatory and punitive damages and attorneys’ fees against the defendants under Section 83 and 88 of Title 42 of the U.S. Code. The defendants filed a motion for summary judgment. The lower court entered an order granting this motion and dismissing the suit. Holt appeals from this order. The order is affirmed.

For reversal, the appellant contends that the granting of the motion for summary judgment was improper because material issues of fact existed. He urges that questions of fact remained as to (1) the vagueness of Section 7 of the third ordinance, (2) the impermissible classification of American Pit Bull Terrier or “Pit Bull” as a breed banned under that section, and (3) an alleged breach of contract.

First, we examine Section 7 of the third ordinance to see if it violates due process of law by being impermissibly vague. This section reads as follows:

SECTION 7. BANNING OF SPECIFIC BREEDS: “Banned Breeds or Dogs” are banned entirely and may not be owned or kept within the City of Maumelle, Arkansas. “Banned Breeds or Dogs” are defined as any one of the following:
A. American Pit Bull Terrier;
B. Staffordshire Bull Terrier;
C. American Staffordshire Terrier;
D. Any dog whose sire or dam is a dog of a breed which is defined as a banned breed or dog under Section 7; Subsections A, B, C, E, F, G, or H of this Ordinance;
E. Any dog whose owner registers, defines, admits, or otherwise identifies said dog as being of a banned breed;
F. Any dog conforming, or substantially conforming, to the breed of American Pit Bull Terrier, American Staffordshire Terrier, or Staffordshire Bull Terrier as defined by the United Kennel Club or American Kennel Club; or
G. Any dog which is of the breed commonly referred to “pit bull” and commonly recognizable and identifiable as such;
H. Any vicious dog which is found at large in violation of Section 5 of Ordinance 36.

Provisions similar to Section 7 have withstood a challenge as to vagueness in the following cases: Hearn v. City of Overland Park, 772 P.2d 758 (Kan. 1989); State v. Peters, 534 So. 2d 760 (Fla. Dist. Ct. App. 1988); and Garcia v. Village of Tijeras, 767 P.2d 355 (N.M. Ct. App. 1988).

In our view, appellant places overly strict interpretation upon the constitutional requirement for clarity in defining conduct prohibited by a criminal law. The Supreme Court of the United States, in its opinion in United States v. Petrillo wrote:

That there may be marginal cases in which it is difficult to determine the side of the line on which a particular fact situation falls is not sufficient reason to hold the language too ambiguous to define a criminal offense. . . . The Constitution has erected procedural safeguards to protect against conviction for crime except for violátion of laws which have clearly defined conduct thereafter to be punished; but the Constitution does not require impossible standards.

United States v. Petrillo, 332 U.S. 1, 7 (1946). We believe that a person of ordinary intelligence is placed on sufficient notice by Section 7 to reasonably determine the prohibited conduct.

Next, we refer to appellant’s contention that Section 7 unconstitutionally includes American Pit Bull Terrier and “Pit Bull” within the classification of banned breeds. A similar argument was raised and rejected in the first three cases cited above. The opinion in Hearn, at 768, quotes from the case of McQueen v. Kittitas County, 115 Wash. 672, 198 P. 394 (1921), as follows:

‘[Sjince dogs are a subject of the police power, we see no reason why the legislature may not make distinctions between breeds, sizes, and the localities in which they are kept. The object of the statute is protection. The purpose is to prevent injuries to persons and property by dogs. Any distinction, founded upon reason at least, is therefore valid. . . .’

115 Wash, at 678, 198 P. at 394 (emphasis added).

The appellant insists that disagreement exists as to whether the American Pit Bull Terrier and “Pit Bull” can be justifiably singled out and banned. Even though some experts may argue that these breeds should not be banned by municipalities, we hold that the city had a reasonable basis for including them in the class defined in Section 7.

Finally, the appellant contends that the adoption of the third ordinance breaches the contract which he had with the city in the settlement of the prior litigation relating to the first ordinance. The release which the appellant executed stated that it was in consideration of the repeal of the section of the first ordinance prohibiting the keeping of three named breeds, including American Pit Bull Terrier. The release also contains the following wording:

I acknowledge that the City of Maumelle makes no representation, concerning any other Ordinance or any action, repeal, reenactment, amendment or procedure which it may or may not adopt in the future with respect to this or any other Ordinance except as specifically provided for hereinabove. [Emphasis added.]

The appellant interprets the emphasized language to mean that the city would never reenact any ordinance prohibiting the keeping of an American Pit Bull Terrier or a “Pit Bull.” We do not agree. We believe that if we were to adopt the appellant’s interpretation, the contract would violate public policy. The board of directors of a city does not have authority to contract away its legislative powers. The possession of these powers carries with it the duty to act in the public’s interest. This duty is breached when a legislative body limits its power to render public service. Contracts involving such a breach are contrary to public policy and void.

In ruling that a contract for a lobbying fee contingent upon the passage of legislation was void, this court said:

It follows from what has been said above that all agreements whose object or tendency is in any way to interfere with, or unduly influence, legislative action, either by congress, by a state legislature, or by a municipal council or other like body, are contrary to public policy and void.

Page v. McKinley, 196 Ark. 331, 338-39, 118 S.W.2d 235, 239 (1938) (quoting 113 C.J., p. 430, § 368).

We disagree with the contentions on which the appellant relies for reversal; therefore, the order of the lower court in granting summary judgment and dismissal is affirmed.

Affirmed.

Special Justice Christopher Heller joins in this opinion.

Holt, C.J., and Corbin, J. not participating.


author: Per Curiam.

text:
    Bennie L. FRY, Jr. v. STATE of Arkansas
    RC 91-56
    817 S.W.2d 211
    Supreme Court of Arkansas
    Opinion delivered October 28, 1991

      Tom Garner, for appellant.
    No response.
   Per Curiam.

Bennie L. Fry, Jr., by his attorney, has filed a motion for rule on the clerk.

The motion admits that the record was not timely filed and that it was no fault of the appellee.

However, the motion does not state good cause for granting the motion as discussed in our per curiam, In Re: Belated Appeals in Criminal Cases, 265 Ark. 964 (1979). If the attorney for Fry will concede that it was his fault that the record was not filed, or if other good cause is shown, then the motion will be granted. The present motion for rule on the clerk is denied.


text:
    Albert Eldon WILLIAMS v. STATE of Arkansas
    RC 91-55
    817 S.W.2d 433
    Supreme Court of Arkansas
    Opinion delivered October 28, 1991

      Rae Rice Perry, for appellant.
    No response.
   Per Curiam.

Petitioner, Albert Eldon Williams, by his attorney, Rae Rice Perry, has filed a motion for rule on the clerk. His attorney admits that the record was tendered late due to her misunderstanding of the fact that it is not sufficient merely to file a motion to be relieved of counsel with the lower court before notice of appeal is filed, but that such motion must be granted by the lower court before notice of appeal is filed. See Ark. Sup. Ct. R. 11(h).

We find that such error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See per curiam dated February 5, 1979, 265 Ark. 964; Terry v. State, 272 Ark. 243 (1981).

A copy of this opinion will be forwarded to the Committee on Professional Conduct. In re: Belated Appeals in Criminal Cases, 265 Ark. 964 (1979).


author: Robert H. Dudley, Justice.

text:
    SPHERE DRAKE INSURANCE COMPANY and E.W. Turner & Company v. BANK OF WILSON
    91-149
    817 S.W.2d 870
    Supreme Court of Arkansas
    Opinion delivered November 4, 1991

      Matthews, Sanders, Liles & Sayes, by: Marci Talbot Liles, for appellants.

      Fendler, Gibson, Bearden & Rhodes, by: Mike Gibson, for appellee.
   Robert H. Dudley, Justice.

The primary issue in this case involves a sanction imposed against the appellant insurance company for failing to obey an order compelling discovery.

Edward and Rachael Carr borrowed money from the appellee Bank of Wilson. The bank contends the Carrs secured the debt with a real estate mortgage on a building in Joiner, but this fact is disputed by the appellant insurance company. The Carrs sold the building to the Conways and, as security for the purchase price, the Conways gave back to the Carrs a deed of trust on the building. The Conways insured the building with appellant Sphere Drake Insurance Company. The policy of insurance named the bank as an insured mortgagee. Later, the Carrs assigned to the bank the deed of trust which they had received from the Conways. The building burned, but the insurance company refused to pay the loss because, it contended, the building had been deliberately burned by the Carrs and the Conways. The bank responded that, as mortgagee, it was entitled to recover regardless of whether arson had been committed. The insurance company still refused to pay and contended that the bank did not have a mortgage from the Carrs; that the only security the bank had on the building was the assignment of the deed of trust given by the Conways to the Carrs and, that being so, the bank would have only the same rights as the assignors, the Carrs. The bank filed suit against the insurance company and prayed for damages in an amount equal to the amount of the Carr’s debt.

Numerous pleadings were filed, but only a few are germane to the resolution of the arguments on appeal. Among them are a pleading by the insurance company alleging that it did not owe any money under the terms of the policy, but that if it did owe, it owed only for the value of the building insured and not for the amount owed by the Carrs. The next relevant pleading is a set of four (4) interrogatories which the bank propounded to the insurance company. The interrogatories were filed and served on June 15, 1990, and asked the names of witnesses and exhibits to be used at trial. At that time, the insurance company’s attorneys were having a difficult time communicating with their client, a London, England firm, and they did not want to devote more time to the case if they were not going to be paid. As a result, they did not answer the interrogatories.

The insurance company’s attorneys told the bank’s attorneys about their problem. On August 13, 1990, one of the bank’s attorneys wrote the insurance company’s attorneys and stated:

I have gone ahead and prepared and filed a Motion To Compel Answers To Interrogatories, and perhaps this will help you in getting your client off center. As I understand it, this case is scheduled for trial beginning the first week in November, and we would like to go ahead and complete our discovery, but cannot do so until we know the names and addresses of your witnesses and documents which you intend to use at the trial of this case.

Over a month later, on September 26, 1990, the trial court entered an order compelling answers to the interrogatories. The last part of the order provides that the insurance company shall answer the interrogatories “and deliver a copy of said answers to the plaintiff’s [bank’s] attorney within ten (10) days after this date and, upon their failure to so answer, judgment shall be enteredfor the plaintiff as prayedfor in its complaint.” (Emphasis added.) The order was served on the insurance company’s attorneys.

There is some dispute about what happened next, but it is undisputed that the interrogatories were not answered within the ten-day limit, and no extension was asked of the trial court. The insurance company’s lawyers contend they told the bank’s attorneys that they were not going to answer and that the bank’s attorneys never indicated that was unacceptable. The bank’s lawyers deny such a conversation. Both sets of attorneys agree that the insurance company’s attorneys made an offer of settlement during this period.

On October 15, 1990, the bank’s principal trial attorney attempted to call the insurance company’s principal trial attorney, but was unable to reach him. It is undisputed that the bank’s attorney asked the secretary of the insurance company’s attorney to give the attorney the message: “Bank unwilling to yield.”

The next day, October 16, the bank’s trial attorney telefaxed a message to the insurance company’s trial attorney stating that the $10,000 offer of settlement was declined as a bad faith offer because the building had a value of at least $15,000 or $16,000, and that he was going to seek the sanction of a judgment for the insurance company’s failure to answer the interrogatories. Later that same day the trial court entered an order of default judgment as to liability and damages. The trial court set damages at the amount prayed, $31,724.47, which was the amount of the Carr’s debt, plus 12% penalty, attorney’s fees, and costs. The insurance company subsequently answered the interrogatories and moved to have the default judgment set aside. The trial court refused to set aside the default judgment.

The insurance company appeals and makes two (2) arguments. First, it argues that the trial court erred in refusing to set aside the default judgment. That argument is without merit as to liability. Second, it argues that the trial court erred in granting the default as to damages. That argument has merit.

ARCP Rule 37, entitled “Failure to Make Discovery; Sanctions,” provides that after a trial court issues an order to compelí an answer to an interrogatory, and the party still fails to comply with the trial court’s order, the trial court may enter a sanction against the offending party by, among other things, “rendering a default judgment against the disobedient party.” ARCP Rule 37(b)(2)(C).

ARCP Rule 6(b)(2) would have given the trial court the authority to enlarge the time for the insurance company to answer if it had asked for it. However, it did not ask the trial court to enlarge the time and, instead, filed nothing until after the default judgment was entered.

ARCP Rule 5 5 (c) authorizes a trial court to set aside a default judgment “upon a showing of excusable neglect, unavoidable casualty, or other just cause.” The appellant insurance company argues that such unavoidable casualty and just cause existed in this case. Its argument is based upon its attorneys’ version of the alleged conversations between attorneys. In support of its argument, it cites such cases as Foote v. Jitney Jungle, Inc., 283 Ark. 103, 671 S.W.2d 186 (1984). In that case, a writ of garnishment was served on the garnishee. One of the garnishee’s officers immediately phoned the attorney who had caused the writ to issue and said there might be some difficulty in filing an answer by the date it was due. The attorney replied: “Don’t worry. File it whenever you obtain the information.” Two (2) days after the garnishee’s answer was due the attorney for the creditor took a default judgment. Three (3) days after the due date the answer was filed. The trial court set aside the default judgment. We affirmed. See also Martin v. Martin, 241 Ark. 9, 405 S.W.2d 934 (1966). Those cases are not applicable to the case at bar because, in each of them, attorneys or parties had a valid misunderstanding about when something was to be filed. Here, there could be no such valid misunderstanding, because the offending party was given a direct court order telling it when to answer. Even if the insurance company’s attorneys’ version of the facts should be correct, and the bank’s attorneys did not indicate that the insurance company’s failure to file responses was unacceptable to them, it would not matter. The bank’s attorneys did not have the authority to authorize the insurance company to flaunt the order of the trial court. In fact, it is hard for us to imagine many situations where the refusal to comply with a direct order of a court would come within “excusable neglect, ... or other just cause.” Accordingly, we affirm the trial court’s refusal to set aside the sanction of a default judgment as to liability.

However, the default judgment should have been as to liability only, that is, it should have provided only that the insurance company was liable to the bank on the insurance policy. But, the default judgment went further and assessed damages.

The bank urges us to affirm the damages fixed in the default judgment, $31,724.47, plus 12% penalty, attorneys’ fees and costs, because, it argues, they are not damages, but instead, are a monetary sanction imposed on the insurance company for its failure to respond to the interrogatories. The bank argues that our holding in Helton v. Fuller, 299 Ark. 341, 772 S.W.2d 343 (1989) authorizes such a sanction. We cannot affirm a damage award on such a basis. ARCP Rule 37(b)(2)(C) does not provide authority for trial courts to award monetary sanctions of the kind awarded here, and this was expressly mentioned in both the majority and concurring opinions in Helton v. Fuller, supra. The award in that case was affirmed on the basis of an award of expenses incurred for failure to appear for a deposition. See Rule 37(a)(4). Subsection (b)(2)(D) of the same rule provides that, in addition to the sanctions listed in subsection (C), the trial court may hold a disobedient party in contempt and impose the appropriate punishment, but that was not the case here. The monetary award granted in this case was clearly the amount of damages prayed, and there is no authority for such a sanction when the damages are unliquidated.

Accordingly, we affirm the granting of the default judgment as to liability, but reverse the granting of default judgment as to damages, and remand for proceedings consistent with this opinion.

Brown, J., not participating.


text:
    BANK OF MALVERN v. Jammie DUNKLIN
    91-128
    817 S.W.2d 873
    Supreme Court of Arkansas
    Opinion delivered November 4, 1991

      Wright, Lindsey & Jennings, by: Mark L. Pryor, for appellant.

      Lovell & Nalley, by: John Doyle Nalley, for appellee.
   David Newbern, Justice.

This is a slip and fall case in which the jury returned a verdict for thirty-four thousand dollars against the appellant, the Bank of Malvern. The Bank argues the evidence was insufficient and a verdict should have been directed in its favor. We find the evidence insufficient and reverse and dismiss. The Bank raises other issues concerning the admissibility of certain statements and photographs, but a discussion of them is unnecessary in light of our resolution of the first question.

The appellee, Jammie Dunklin, entered the east entrance of the Bank a few minutes after it opened at nine o’clock in the morning. At that time, it was raining. Dunklin proceeded through the doors leading into the lobby, and after taking a few steps, she fell and broke her arm. Dunklin testified her feet hit something slick causing her to fall, but she did not see the substance. Dunklin assumed the substance was water because after the fall she was lying in something wet. Dunklin could not remember whether her clothes were wet when she got up because she was in so much pain. None of the other witnesses who testified remembered seeing any substance on the floor the morning of the accident.

Brenda Weldon was an employee of the Bank whose desk was located near the east entrance where Dunklin fell. She testified employees arrived at work beginning at eight o’clock, and usually five or six employees entered the Bank through the east entrance. Weldon remembered only one customer entering the Bank before Dunklin the morning of the accident.

A motion for a directed verdict should be granted only if there is no substantial evidence to support the verdict. On appeal from a denial of a directed verdict, the Court views the evidence in the light most favorable to the party against whom the verdict is sought and gives it the highest probative value. Boykin v. Mr. Tidy Car Wash, Inc., 294 Ark. 182, 741 S.W.2d 270 (1987). Substantial evidence has been defined as being of sufficient force and character to compel a conclusion one way or another. It must force the mind to pass beyond suspicion or conjecture. Wal-Mart Stores, Inc. v. Kelton, 305 Ark. 173, 806 S.W.2d 373 (1991).

A property owner has a general duty to exercise ordinary care to maintain his or her premises in a reasonably safe condition for the benefit of invitees. Johnson v. Arkla, Inc., 299 Ark. 399, 771 S.W.2d 782 (1989). See also AMI Civil 3rd, 1104. The burden of establishing a violation of this duty in a slip and fall case is well established. A plaintiff must show either: 1) that the presence of a substance upon the premises was the result of the defendant’s negligence, or 2) that the substance had been on the premises for such a length of time that the defendant knew or reasonably should have known of its presence and failed to use ordinary care to remove it. Safeway Stores, Inc. v. Willmon, 289 Ark. 14, 708 S.W.2d 623 (1986). See also AMI Civil 3rd, 1105.

Under the first part of the standard, the Bank argues there was insufficient evidence that a substance was on the floor as a result of their negligence. Dunklin could only speculate that the substance which caused her fall was water. She did not see the sbustance before she fell and only believed it was water because she felt something wet beneath her. Furthermore, there was no substantial evidence regarding how the substance came to be on the lobby floor. Dunklin believed water was brought inside on the clothes or shoes of a customer or employee and that it accumulated on the floor causing her to fall. This testimony was speculative and insufficient to show there was a substance on the floor due to the Bank’s negligence. In Safeway Stores, Inc. v. Willmon, supra, the Court stated “possible causes of a fall, as opposed to probable causes do not constitute substantial evidence of negligence.”

The Bank next contends, under the second part of the standard, that there was insufficient evidence that a substance remained on the floor for such a length of time that its employees were or should have been aware of its existence and failed to exercise ordinary care to remove it. We have recognized the length of time a substance is on the floor is a key factor. The burden is on the plaintiff to show there is a substantial interval between the time the substance is placed on the floor and the time of the accident. Johnson v. Arkla, Inc., supra.

Here, there was insufficient evidence that a substance had been on the lobby floor for such a substantial period that the employees knew or should have known of its existence. There is a possibility that an employee brought water in when coming to work at eight o’clock that morning. It is equally possible that Dunklin herself brought water in when she entered the Bank. There was no evidence from which a jury might determine without speculation or conjecture how the substance got on the floor or how long it remained there prior to the accident. Skaggs Co. v. White, 289 Ark. 434, 711 S.W.2d 819 (1986).

Dunklin cites Wal-Mart Stores, Inc. v. Kelton, supra, in support of the judgment. In that case, the appellee slipped and fell on water which had accumulated between the checkout counter and the exit door of the store. As in the present case, it was raining the morning of the accident. Kelton fell approximately two hours after the store opened. Other witnesses identified the substance as water and testified the water had foot tracks through it. Also, a Wal-Mart employee stated most employees used the exit door to enter and leave the store. A witness testified a tile was missing from the store ceiling and another said a drop of water hit her face while in the store. After the fall, Kelton left the store and returned later to find the water still on the floor. Based on this evidence, the Court held the jury could infer water collected inside the building for an undue period of time and failure to remove it was negligence.

Wal-Mart Stores, Inc. v. Kelton, supra, is clearly distinguishable. There was no evidence in the present case that there were foot tracks through the water in the Bank lobby which might lead to the inference that employees had walked through the water and ignored the danger it presented. Also, in the Kelt on case, the store was open more than two hours before the accident occured, thus leading to the conclusion that employees had time and opportunity to notice the water. Here, there was no evidence whatever of a substance on the floor prior to the time the Bank opened for business. The accident occured only a few minutes after the Bank doors opened to customers which would leave very little time to notice a substance on the floor which might have been brought in by them. There was no evidence of a leak in the Bank ceiling which might indicate the Bank knew or should have known of water accumulation on the floor.

Reversed and dismissed.


text:
    NATIONAL CASHFLOW SYSTEMS, INC., d/b/a Timepay Consumer Financial Services v. Thomas RACE, d/b/a Race Carpet & Vinyl
    91-145
    817 S.W.2d 876
    Supreme Court of Arkansas
    Opinion delivered November 4, 1991

      Peel and Eddy, by: James Dunham, for appellee.

      Young & Finley, by: Dale W. Finley, for appellant.
   .

David Newbern, Justice.

The question we must decide is whether a trial court may award an attorney’s fee for services performed by an attorney on appeal after the case in which the fee is sought has been returned to the trial court by a mandate which does not order the fee. We hold a trial court has no such authority.

The petitioner, National Cashflow Systems, Inc. (National), prevailed in an action to collect a debt owed by the respondent, Thomas Race. Included in the judgment was an award for an attorney’s fee in the sum of $667.50. Race appealed the judgment to the Court of Appeals which affirmed. The mandate of the Court of Appeals awarded an additional $75.00 to National as costs incurred in the appeal. That mandate was filed in the Trial Court which ordered the clerk to pay over to National all monies held as a supersedeas bond in satisfaction of the judgment and costs awarded by the.Court of Appeals.

National then filed a petition in the Trial Court seeking an attorney’s fee for services rendered by its attorney on appeal and in collecting the bond. The Trial Court ordered payment of the additional fee. Race appealed from that decision and successfully argued to the Court of Appeals that the Trial Court was without authority to reopen the case for a new judgment granting the additional fees. National argued that Ark. Code Ann. § 16-22-308 (Supp. 1991) provided authority for the new judgment.

The Court of Appeals concluded that where the additional award of costs on appeal is not at the direction of an appellate court, nor a mere ministerial act of a trial court following an appellate mandate, a trial court is without authority to award additional attorney’s fees following an appeal. Race v. Nat'l Cashflow Sys., Inc., 34 Ark. App. 261, 810 S.W.2d 46 (1991).

National sought review, arguing that the Court of Appeals decision did not correctly interpret the statute and was incorrect in relying on decisions rendered prior to the enactment of the statute. We granted review permitting the parties to file supplemental briefs. The Court of Appeals decision is affirmed.

National argues the matter is solely one of statutory interpretation and asserts that the Court of Appeals failed to “ascertain and give effect to the intention of the legislature.” Vandiver v. Washington County, 274 Ark. 561, 628 S.W.2d 1 (1982). The statute in question presides:

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

National asserts the General Assembly intended that a trial court make all attorney’s fee awards because the term “court,” as used in the statute, refers to the court in which the “civil action” is pending and that means the court which conducts hearings, makes rulings on testimony and ordinarily exercises discretion. The Court of Appeals declined that interpretation, and so do we.

The conclusion that the Trial Court was without authority to reopen the case following issuance of the appellate mandate was correct. Once the mandate of the appellate court issues:

The inferior court cannot [vary] it, or judicially examine it for any other purpose than execution. It can give no other or further relief as to any matter decided by the Supreme Court even where there is error apparent; or in any manner intermeddle with it further than to execute the mandate, and settle such matters as have been remanded, not adjudicated by the Supreme Court.

Fortenberry v. Frazier, 5 Ark. 200, 202 (1843). While the Fortenberry case was decided long before the establishment of the Court of Appeals, it applies with the same force to any appellate court decision, and this Court has followed it many times.

Nothing in the statute provides a basis for this Court to overturn the Fortenberry rule.- The first Court of Appeals mandate awarding costs incurred on appeal left nothing open for the Trial Court except execution on the supersedeas bond. The award of additional fees went beyond execution and was in error.

Affirmed.


text:
    Linda K. ELLIOTT v. George HURST
    91-55
    817 S.W.2d 877
    Supreme Court of Arkansas
    Opinion delivered November 4, 1991

      John Wesley Hall, Jr., P.C., by: Craig Lambert, for appellant.

      Jesse W. Thompson, for appellee.
   Tom Glaze, Justice.

This tort case involves appellee’s suit against appellant for appellant’s conversion of appellee’s wolf hybrid dog named Rambo. Appellant apparently responded to' appellee’s advertisement offering purebred Arctic tundra wolves for sale, and when she visited appellee concerning his advertisement, appellant observed Rambo, noticing he had a seriously infected left front leg. Later the same day, appellant called Joyce Hilliard, the chief investigator for a humane organization named Arkansans for Animals (AFA), and Dr. Carl Fulton, a veterinarian who had previously treated Rambo. Four days later, the appellant, along with Hilliard and Jean Duffy, the president of AFA and Saline County deputy prosecutor, returned to appellee’s property. The three women took pictures of Rambo and then went to the Faulkner County Prosecuting Attorney H. G. Foster to request legal advice. Later that day, the women confronted the appellee, threatening to prosecute him and to take Rambo from him. Jim Kirkpatrick, appellee’s friend, arrived and joined in the fray, and afterwards all parties agreed to take Rambo to Dr. Fulton’s clinic, where appellee left the dog for x-rays and further treatment. Appellant testified she returned to Foster’s office the same day to obtain an affidavit for a seizure warrant and to file animal cruelty charges in municipal court. The charges were later dismissed or nol prossed.

Dr. Fulton x-rayed Rambo’s leg the next day and amputated the leg two days later. Appellee kept in close contact with Fulton’s office during this period, but Fulton refused to permit appellee to take the dog home. About five days after Rambo’s surgery, Fulton was advised by Foster and the Faulkner County Sheriff that he could release the dog, but because Fulton did not have appellee’s correct telephone number, he was unable to reach appellee’s home to leave a message until another five days had passed. The day after he left appellee the message that Rambo was ready to be released, appellant picked up the dog from Dr. Fulton, telling him she had the authority to keep Rambo. Soon thereafter, appellee, who never saw the dog again, brought this conversion action against appellant.

At trial, the trial court denied appellant’s motion for summary judgment, claiming immunity from tort liability under Ark. Code Ann. § 16-6-105 (1987). Afterwards, a bench trial was held, and the trial judge found the appellant had converted the dog. Appellee was awarded $1,400 compensatory and $25,000 punitive damages. The judge also awarded appellee attorney’s fees in the amount of $2,500.

For reversal, appellant first argues appellee failed to present substantial evidence of conversion. Because this is an appeal from a bench trial, the standard of review is whether the trial court was clearly erroneous. ARCP Rule 52(a); Taylor’s Marine, Inc. v. Waco Mfg., 302 Ark. 521, 792 S.W.2d 286 (1990). Under either standard, however, the appellant’s argument has no merit. Appellant’s argument is two-fold. She initially contends that appellee suffered no violation of a possessory right to Rambo because she was protected under Ark. Code Ann. § 5-62-111 (1987), which provides as follows:

Any officer, agent, or member of a society which is incorporated for the prevention of cruelty to animals may lawfully interfere to prevent the perpetration of any act of cruelty upon any animal in his presence.

Basically, appellant claims that § 5-62-111 allowed her to interfere with appellee’s possessory right to Rambo because appellee had treated the dog inhumanely. At a minimum, she says the statute gave her the right to possess the dog until a determination was made as to who was entitled to its custody.

The appellant offered no evidence indicating that appellee actually inflicted an injury on Rambo, nor did the trial judge believe appellant’s story that appellee was inhumane by failing to seek treatment of Rambo’s infection. In fact, appellee testified that he had Dr. Fulton treat Rambo before appellant became involved and appellee, himself, continued that treatment at home. In addition, appellee’s paramedic friend helped with caring for Rambo and antibiotics were given him regularly. Dr. Fulton conceded that Rambo’s leg appeared much better on the day that appellee, Kirkpatrick and the three women brought the dog to Fulton’s clinic. In sum, the trial court simply found appellee had perpetrated no cruelty on his animal. Thus, based on the record before us, we cannot say the trial court was clearly wrong in refusing to apply § 5-62-111.

Appellant’s second reason for claiming appellee suffered no violation of his right of possession to Rambo is based upon her contention that appellee had abandoned his dog. Again, the trial court obviously believed appellee’s story to the contrary. In addition to that testimony of appellee set out above, appellee testified that he called Dr. Fulton on occasions after Rambo was left with Fulton, and visited Rambo after his leg was amputated. He stated that he tried everything he knew to get his dog back, but appellant told him that she and her friends would “see to it” that his dog would never be returned to him. The trial court simply did not accept appellant’s theory that appellee voluntarily abandoned his dog, and we hold that finding is not against the preponderance of the evidence.

To conclude appellant’s first point, we are left with appellant’s actions in this matter when determining if the trial court correctly found that she had converted appellee’s dog. Conversion is any distinct act of dominion wrongfully exerted over property in denial of, or inconsistent with, the owner’s right. McKenzie v. Tom Gibson Ford, Inc., 295 Ark. 326, 749 S.W.2d 653 (1988). The conversion need not be a manual taking or for the defendant’s use: if the defendant exercises control over the goods in exclusion, or defiance, of the plaintiffs right, it is a conversion whether it is for his own use or another’s use. Id. Here, appellant presented no order or judgment showing she had a right to possess the dog, and while she claimed she acted upon advice of the prosecutor or his deputy, the deputy prosecutor could not recall whether he told appellant she could take the appellee’s dog. Even so, appellant personally took possession of the dog and by her own account, gave it to an exotic pet farm where he was euthanized. Based upon the foregoing evidence, we hold that the trial court’s judgment finding that appellant converted the dog is not clearly against the preponderance of the evidence.

Appellant next claims that the trial court denied her motion for summary judgment because she was entitled to volunteer immunity from tort liability under Ark. Code Ann. § 16-6-105 (1987) which provides in part as follows:

A qualified volunteer shall not be liable in damages for personal injury or damage sustained by one who is a participant in, or a recipient, consumer, or user of, the services or benefits of a volunteer by reason of any act or omission of a qualified volunteer in connection with the volunteer except as follows:
* * *
(2) Where the qualified volunteer acts in bad faith or is guilty of gross negligence;
* * *

The record reflects that the trial court did not deny appellant’s motion until at the end of appellee’s case-in-chief and after the entire case was tried on its merits. In any event, this court has consistently held that denial of a motion for summary judgment is not an appealable order and that, even after there has been a trial on the merits, such denial order is not subject to review on appeal. Rick’s Pro Dive 'N Ski Shop, Inc. v. Jennings-Lemon, 304 Ark. 671, 803 S.W.2d 934 (1991); Malone & Hyde, Inc. v. West & Co. of LA, Inc., 300 Ark. 435, 780 S.W.2d 13 (1989); Henslee v. Kennedy, 262 Ark. 198, 555 S.W.2d 937 (1977).

Appellant’s third point of appeal involves the exclusion of certain hearsay evidence about legal advice from a prosecuting attorney. During appellant’s direct examination, she testified that she went to see Faulkner County Prosecuting Attorney H. G. Foster on March 13, 1989, between her first and second visit to appellee’s property. She testified as follows:

Q. Did you have a meeting with Mr. Foster?
A. Yes, we did.
Q. What happened at that meeting?
A. At that time, he told us that —
MR. THOMPSON: Your Honor, I’m gonna object. If they want to introduce the results of a prosecution that they attempted, well, we’ll get into that, but if she wants to testify about what she and H. G. talked about, I’m gonna’ object.
THE COURT: I sustain your objection.

Appellant claims that the trial court erred by sustaining appellee’s hearsay objection because the statement was not offered for the truth of the matter asserted but merely to show that the statements were in fact made and relied upon. Ark. R. Evid. 801(c); see also, L. L. Cole & Son, Inc. v. Hickman, 282 Ark. 6, 665 S.W.2d 278 (1984); Gautney v. Rapley, 2 Ark. App. 116, 617 S.W.2d 377 (1981). Appellant also argues that the statements were crucial to her defense because they bore directly on the question of punitive damages and were necessary to prove that she acted in good faith and without malice.

We are unable to reach and discuss appellant’s argument because she made no offer of what her testimony would have been. As a consequence, we cannot say that prejudicial error occurred. Ark. R. Evid. 103(a)(2); National Bank of Commerce v. HCA Health Servs. of Midwest, Inc., 304 Ark. 55,800 S.W.2d 694 (1990); Goodin v. Farmers Tractor & Equipment Co., 249 Ark. 30, 458 S.W.2d 419 (1970).

In her fourth point of appeal, appellant argues appellee failed to prove the compensatory damages awarded by the trial judge. We agree. The proper measure of damages for conversion of property is the market value of the property at the time and place of the conversion. Sandusky v. First Nat. Bank, 299 Ark. 465, 773 S.W.2d 95 (1989).

Appellee purchased Rambo for $ 1,400, but when asked to give his opinion of the dog’s value, appellee stated that no doubt he could have sold him for $2,500 or $3,000. He further said that he would not have taken less than $5,000. However, when then asked if his dog would have brought those prices in its wounded condition, appellee responded no. Approximately three months had transpired and Rambo’s front leg had been amputated between the time appellee purchased the dog and appellant converted him. When confronted with the question of the dog’s value at the time of conversion, appellee honestly conceded he did not believe the three-legged dog was worth the amounts to which he had just testified. Accordingly, we must reverse and remand on this point.

Appellant’s next point challenges the lower court’s award of $25,000 punitive damages to appellee. Of course, the law is settled that exemplary or punitive damages are dependent upon the recovery of actual damages. Stoner v. Houston, 265 Ark. 928, 582 S.W.2d 28 (1979). Thus, because we have reversed the trial court’s award of compensatory damages, we need not address the parties’ arguments concerning punitive damages except to say the punitive award is also reversed and remanded for retrial purposes.

Finally, appellant contends the trial court’s award of $2,500 in attorney’s fees was improper. As a general rule, attorney’s fees are not allowed in Arkansas unless expressly authorized by statute. Damron v. University Estates, Phase II, Inc., 295 Ark. 533, 750 S.W.2d 402 (1988). However, in any civil action in which the court having jurisdiction finds there was a complete absence of a justiciable issue of either law or fact raised by the losing party or his attorney, the court may award an attorney’s fee in an amount not to exceed $5,000, or ten percent of the amount in controversy. Ark. Code Ann. § 16-22-309(a)(l) (Supp. 1991). In awarding such fees, the court may pronounce its decision on the fees at the conclusion of the trial without written motion and with or without additional evidence, and the judgment for attorney’s fees, if any, shall be included in the final judgment entered in the action. Ark. Code Ann. § 16-22-309(c) (Supp. 1991). On appeal, the question as to whether there was a complete absence of a justiciable issue shall be determined de novo on the record of the trial court alone. Ark. Code Ann. § 16-22-309(d) (Supp. 1991).

Here, the trial court failed to mention attorney’s fees at the trial’s conclusion, but it did include such an award in its final judgment. Appellant is then able to question the validity of that award on appeal merely by requesting a de novo review of the question as to whether a justiciable issue existed below. Of course, our review reflects there was. Therefore, we also reverse the trial court’s $2,500 attorney’s fee award.

For the reasons stated above, we reverse and remand.

       Appellant offers no evidence or argument that she was an officer, agent, or member of AFA entitling her to the protection of § 5-62-111, but we need not reach that issue.


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    Cecil POTTER, Ruth Potter, Roberta Stephens, Bob Downing and Dorothy Downing v. BRYAN FUNERAL HOME
    91-86
    817 S.W.2d 882
    Supreme Court of Arkansas
    Opinion delivered November 4, 1991

      Wilson & Castleman, by: Richard L. Castleman, for appellants.

      Bill W Bristow, P.A., for appellee.
   Tom Glaze, Justice.

Appellants appeal the Lawrence County Chancery Court’s dismissal of their request to enjoin as a nuisance the appellee’s placement of a funeral home in appellant’s neighborhood. They argue the chancellor was clearly erroneous in finding that the funeral home was not a nuisance. Also, the appellants contend the chancellor erred in inspecting or viewing the proposed site and other property without first obtaining the consent of the parties.

The facts are largely undisputed. Appellee planned to convert a two-story house into a funeral home to be located on the southwest corner of the intersection at U.S. Highways 62/63 and State Highway 115 in the town of Imboden. Many of the appellants’ houses are situated across from the proposed site and along the north side of Highway 62/63. Other residences are located on the south side of 62/63 and are both east and west of appellee’s proposed funeral home. Four or five commercial businesses are nestled in this same area. A used car lot owned by the town’s mayor is situated on the northwest corner of the same block where the appellee proposes to establish its business. A repair shop is directly behind the car lot. A car wash and a convenience store are located on the north side of Highway 62/63 within two blocks east of the funeral home site. And finally, a beauty shop is located approximately two blocks from appellee’s site and about one block south of the corner where the car lot is located. In addition to these businesses, a home for the elderly and a federal housing project are approximately within the general two-block area of the proposed site.

At trial, appellants presented testimony that a funeral home would lower their property values and would also interfere with the peaceful enjoyment of their homes because the business would be a constant reminder of death and dead bodies. Appellee offered evidence that classified the area as being mixed residential and commercial. Appellee argued that the appellants would not be any more adversely affected by the placement of a funeral home in the neighborhood than they already had been by having the other businesses already located in the area. Based on the foregoing evidence, the chancellor held that the establishment of a funeral home on the proposed site would not be a nuisance.

This court has established the following general principles with regard to preventing establishment of funeral homes:

A funeral home is not a nuisance per se. The intrusion of a funeral home into an exclusively residential district would constitute a nuisance. It may be a nuisance in an area essentially residential in character. If, however, transition of the district from residential to business has so far progressed that the value of the surrounding property would be enhanced as business property, rather than depreciated as residential property, the establishment of a funeral home would not constitute a nuisance.

Mitchell Funeral Home v. Bearden, 255 Ark. 888, 503 S.W.2d 904 (1974); see also Miller-Elston Mortuary v. Paal, 261 Ark. 644, 550 S.W.2d 771 (1977); Blair v. Yancy, 229 Ark. 745, 318 S.W.2d 589 (1958); Powell v. Taylor, 222 Ark. 896, 263 S.W.2d 906 (1954).

While appellants take issue with the chancellor’s finding that the two-block area surrounding the proposed site is mixed residential and commercial, we conclude the evidence clearly supports such a finding. In fact, appellants concede that some of the businesses located in the area actually became operational after appellants’ houses had been built. Appellants point to language in the Bearden case when arguing that the law does not require the area surrounding a proposed funeral home site to be “exclusively” residential before a funeral home can be enjoined as a nuisance. Instead, appellants claim that they may be entitled to injunctive relief when the area is “predominately” residential. While the court in Bearden indicated considerable weight is given to the predominance of either commercial or residential property in the area, the court in no way broadened or enlarged the rules that the intrusion of a funeral home into an “exclusively” residential district would ordinarily constitute a nuisance or may constitute a nuisance in an area “essentially” residential in character. As we review the evidence, we believe it both supports the views that the area involved here is mixed residential and commercial and that it has slowly changed its character to include additional business ventures.

Appellants emphasize that all of the value evidence presented at trial reflected that their homes’ residential values would be lowered if a funeral home business was located in the neighborhood. Appellee responds, pointing out that it is reasonable to expect residential values to be lowered whenever any commercial establishment moved into a residential area. As pointed out earlier, commercial establishments here were located in the appellants’ neighborhood years before appellee advanced its plans to build a funeral home in this same area. Whether or not these businesses have enhanced appellants’ properties for commercial purposes is unclear because neither appellants nor the appellee offered value testimony on this issue.

In summation, it is clear that the neighborhood here is not exclusively residential, and appellants clearly are not entitled to enjoin the appellee’s funeral home business on that basis. Nor can we conclude from the evidence that the area is essentially residential. Instead, we believe the chancellor’s characterization of the area as mixed residential and commercial is thoroughly supported by the evidence. Thus, based upon the law and the evidence presented, the chancellor was not required to determine that appellee’s funeral business would constitute a nuisance. At the very least, we are unable to say the chancellor was clearly wrong when he refused to find a nuisance would result from the establishment of appellee’s funeral home.

In their second point for reversal, they argue the chancellor erred in making an unannounced view of the area in question and other properties along Highway 62/63 as it traverses through the entire town of Imboden. Sometime after trial, the chancellor apparently counted the businesses and residences along the highway and mentioned those numbers in his findings. Appellants challenge those numbers as being incorrect and also argue those businesses and residences are not material or relevant to the nuisance issue concerning the two-block area involved in this case. See Powell v. Taylor, 222 Ark. 896, 263 S.W.2d 906 (1954) (where the court limited its characterization of “essentially residential” to a sixteen-block area in Gurdon, Arkansas, stating that, in a relatively small city, an area of this size may well be treated as a district in itself, else there might be no residential districts in the whole community.) Although appellants may be correct on both points, those errors are harmless and do not require the reversal of the chancellor’s finding that appellee’s funeral home is no nuisance.

While personal inspections of property are permissible and proper as an aid to a better understanding by the chancellor of what witnesses had testified to, such views are limited to that purpose and a judge’s personal observations on the site are not considered evidence of facts. Mitcham v. Temple, 215 Ark. 850, 223 S.W.2d 817 (1949); Clark v. Clark, 4 Ark. App. 153, 632 S.W.2d 432 (1982). In the present case, the chancellor not only viewed the two-block area involved in the dispute between appellants and appellee, but also he inspected and referred to businesses and residences along Highway 62/63 outside the area which the parties addressed at trial. In this latter respect, the chancellor erred. Nevertheless, the limited two-block area here was properly characterized as mixed residential and commercial as we have previously discussed. Thus, even excluding the chancellor’s references to businesses outside the pertinent area involved, we are required on de novo review to uphold the chancellor’s finding that no nuisance would result from appellee’s business since that finding is not clearly erroneous.

We affirm.