author: Lyle Brown, Justice.

text:
    Margie C. MARTIN v. James Arthur ROCHELLE et al
    5-5365
    460 S. W. 2d 70
    Opinion delivered November 23, 1970

      Chambers & Chambers, for appellant.

      Jerry A. Rochelle and Wheeler, Watkins, Hubbard, Patton & Peek, for appellee.
   Lyle Brown, Justice.

This suit was initiated by appellant, Margie C. Martin, against her sister and the latter’s husband, Mavis Cochrell Rochelle and James Arthur Rochelle, appellees. During his lifetime, H. K. Cochrell, the father of the two girls (his only heirs), conveyed forty acres of land to Mavis and her husband, James. Margie sought to set aside the transaction on the grounds of (1) lack of adequate consideration, (2) mental incapacity of H. K. Cochrell to make the conveyance, and (3) undue influence exerted over the father by ap-pellees. On appeal Margie contends she should have been granted relief because she established her allegations by a preponderance of the evidence. She also alleges error by the chancellor in admitting the evidence of three witnesses who sat in the courtroom during part of the trial notwithstanding the court had placed all witnesses under the rule.

The father, H. K. Cochrell, was widowed in 1952, and lived alone near Taylor, Arkansas, in Columbia County. He raised livestock, leased out his forty acres (which was all the land he owned), and sold small amounts of timber. In about 1962, Cochrell became ill and was hospitalized for several months for tuberculosis. From 1962 until his death in January 1968, he was treated at Veterans Hospital in Shreveport, by a doctor in Springhill, Louisiana, and by Dr. Short in Texarkana. It is apparent that his chest problem lingered with him until his death. When Cochrell was not in the hospital during those six years he divided his time between the homes of his two daughters; however, he lived most of the time with the appellee daughter because appellant testified she was not really able to care for her father and his needs. Appellee James Rochelle purchased a trailer and placed it on his property in Texarkana, where he resided, so that Cochrell would have a place to stay when he visited his daughter there. Cochrell’s favorite doctor —Dr. Short — practiced in Texarkana, and he saw Coch-rell as a patient many times during those six years.

Cochrell executed two deeds to the forty acres, both to his daughter and son-in-law, appellees, the second allegedly to correct errors in the first. Rochelle testified that in about 1963 Cochrell offered to give the land to appellee Mavis Rochelle in gratitude for some $2,000 the Rochelles had expended for Cochrell’s medical bills and other items. Apparently the Rochelles declined to take the property. Then in 1964 Cochrell offered to sell it to them for $1,000. Rochelle described the transaction in this manner:

I gave him $100 at the time I accepted his offer. He went to a law office and had the deed prepared. When the deed was delivered the balance was paid in cash. The deed was made out to Mrs. Rochelle, my wife, and she told her father she wanted it in both our names. Her father took the deed back home with him and the next time he came to see us he brought the deed back with my name inserted. I put the deed away without recording it and several months later I was looking at it and noticed Mr. Cochrell’s name had been misspelled. When I subsequently called it to Mr. Cochrell’s attention he said he would get another deed made. An undetermined time elapsed and on a subsequent trip to Texarkana, Cochrell inquired where he could get a deed drafted. He was referred by me to Lawyers Title Company in Texarkana and the deed was there prepared and delivered in 1967. In the second deed, Cochrell reserved a life estate in ten acres of the oil, gas, and other minerals, which was not done in the first deed. The latter deed was recorded on March 7, 1968, approximately one month after the death of Mr. Cochrell.

The Rochelles did not destroy, nor did they file for record, the first deed; however, they decided to place it of record about two weeks before this case was tried by the chancellor, namely, October 30, 1969.

Appellant lists seven points for reversal:

1. The court erred in permitting witnesses to remain in the courtroom and testify after the court had ordered all witnesses who were not parties to the suit to leave the courtroom.

2. The court erred in admitting in evidence two deeds that were in conflict.

3. The lower court erred in admitting an altered deed.

4. The court erred in not cancelling the deeds for failure of fair consideration.

5. The court erred in not cancelling the deeds for use of undue influence.

6. The lower court erred in not cancelling the deeds for mental incapacity to execute the deed.

7. The court erred in allowing testimony contradictory of the consideration recited in the deed.

The first point, relating to the exclusion of witnesses, centered upon a brief procedure which we summarize. Appellees, at the beginning of the trial, asked that the rule be invoked as to the witnesses. Thereupon the court announced: “All the witnesses who expect to testify here today, and who are not a party to this law suit, will leave the courtroom during the trial of this case.” The one-day trial was started and the appellant proffered her testimony in a matter of a few hours. The first witness for appellees was James Arthur Rochelle. Then when Dr. Harold Short, the next witness, was called for appellees, Attorney Chambers, on behalf of appellant, objected to the testimony of that witness, along with the anticipated testimony of witnesses Souter and Jennings, on the ground that those three witnesses had been in the courtroom during the testimony of Rochelle. “The defendant [appellee here],” related Mr. Chambers, “asked for the rule and the plaintiff’s witnesses were excluded from the courtroom and have been under the rule.” The court reminded Mr. Chambers that he had not asked for the rule on behalf of appellant.

In the first place, appellant’s counsel never asked for the rule. Ark. Stat. Ann. § 28-702 (Repl. 1962) governs the rule on witnesses in civil cases. “If either party requires it, the judge may exclude from the courtroom any witness of the adverse party . . .” So when counsel for appellees asked for the rule the judge was authorized, in his discretion, to exclude appellant’s witnesses, not those of appellees. Secondly, it is not shown that appellees’ witnesses were even in the courtroom at the time the announcement was made or that they otherwise had knowledge of the rule. From the colloquy between court and counsel it is apparent that appellees’ witnesses entered the courtroom at a time when the trial was in progress. In fact it is stated in the record that the objectionable witnesses first entered the courtroom during the testimony of Rochelle. It was so stated by counsel for appellant. That would have been the time to have invoked the rule as to those witnesses, rather than waiting until Rochelle’s testimony had been completed. Certainly we cannot say that the chancellor abused his broad discretion in permitting the witnesses to testify. See St. Louis, I. M. & S. Ry. v. Pate, 90 Ark. 135, 118 S. W. 260 (1909); Wigmore on Evidence, Vol. 6, § 1842 (1940). The recited authorities look with some disfavor on the disqualification of a witness in a civil case solely because he has unwittingly violated the rule of exclusion.

Points 2, 3, and 7 are listed in appellant’s brief but neither of them is argued for reversal.

Points 4, 5, and 6 are combined by appellant for purposes of argument and we shall treat them as one. They concern the allegations of inadequate consideration, undue influence, and mental incapacity of H. K. Coch-rell, the maker of the conveyances.

The most detailed witness for appellant regarding Cochrell’s physical and mental problems was Margie C. Martin. Here is a fair abstract of her testimony:

Father started going down in 1962 from the time he had tuberculosis and was in VA Hospital; at times he would be all right and other times he wasn’t. He improved somewhat but went back to the hospital in 1964 and from that time he got worse. He should have been staying with someone all the time but he took spells when he wanted to stay by himself. He would not take his medicine unless some of us were around. I could tell his mind was failing. He could not remember things he told me. He had severe headaches. He would not stay in the hospital. He talked about a lot of business matters that I knew wasn’t right. He talked to me about the deed he made to Mavis. He said he made it to Mavis before I quit my husband, but now that we were separated things were different. He said he had the deed at home, that it wasn’t any good, and that he would make the land to Mavis and me. About his condition around September 1967, Father was very confused. He would send for me and when I would arrive he couldn’t remember having sent for me. He complained of headaches and said “if something ain’t done you ain’t going to have your dad here long.” He was sixty seven when he died in 1968.

Mrs. Annis Disotell, age 70 years, and a sister of Mr. Cochrell, was called by appellant. She was a neighbor of her brother and stated that during the last few years of his life he visited her house often; that he had given Mavis a deed but had changed his mind and would see that it was not recorded; that a few days after Mr. Coch-rell died, James Rochelle related to her that he had procured a second deed from Cochrell and it was prepared the way Rochelle wanted it. This witness expressed no opinion as to Cochrell’s health during his last years.

Witness Delores Nix, another neighbor of Cochrell near Taylor, related that Cochrell had told her about the first deed he made to Mavis; that he had it in his possession; that he had changed his mind and was not going to have it recorded. She also said she drove him to town several times when he expressed a desire to pay his grocery bill; that he would leave without paying it; and that at one time she took him to the funeral home to pay his burial dues and they were already paid.

Witness Jeff Fish testified that he knew Cochrell the last several years of the latter’s life; that he was in poor health and “wasn’t at himself like a man would be if he wasn’t sick”; and that he would not have, during that period, made a business deal with Cochrell without the consent of his family, “not for several months before he died.”

Harold and J. R. Nations, brothers engaged in the buying of timber lands, testified as to their familiarity with Cochrell’s forty acres; that $25 per acre was considerably under fair market value; and in fact they valued it at $75 to $100 per acre in 1964 and at $125 to $150 an acre in 1967. J. R. further testified that Cochrell’s mind was not normal during the last few years, but that when Cochrell was sober it might have been safe to make a business deal with him.

On the question of mental capacity, appellees presented four witnesses. James Rochelle testified that he married Cochrell’s daughter in 1942; that he and Cochrell had been around each other quite often over the years; and that Cochrell was normal mentally the last years of life, just as much so as he was throughout their years of acquaintance. He agreed that Cochrell was weak from illness from 1962, but that otherwise he showed no abnormality.

Dr. Harold Short of Texarkana testified that he treated Mr. Cochrell from 1962 until 1968; that the number of professional visits ranged from twenty to thirty; that Cochrell had a case of advanced tuberculosis in 1962 but there was no indication of a mental disorder; that in 1964 the patient was again treated for chest infections, and again his mental processes appeared normal; that in January 1968 Dr. Short went to the Rochelle home in Texarkana and discussed with Cochrell and Mrs. Rochelle the desirability of sending Cochrell to a veterans’ hospital for further treatment; and that he detected nothing wrong with Cochrell mentally. Dr. Short concluded by stating that from 1962 until 1968, Cochrell "was of sound mind and capable of performing his business functions.” On cross-examination Dr. Short identified a letter written by one of his partners in which it was stated that Cochrell was suffering from chronic lung disease and superimposed infection, along with mental confusion, all of which necessitated hospital care. That letter was written for the purpose of gaining the patient admission into the VA Hospital. He was immediately admitted and died within two days after the letter was written.

Another witness for appellees was Willie Souter, a Cochrell neighbor at Taylor for nineteen years. He testified that he saw and talked with Cochrell about once each month during the last six years of Cochrell’s life; that he never noticed anything unusual about Cochrell; and that in his opinion Cochrell was as capable as ever to attend to his business. Austin Jennings, a filling station operator at Taylor, testified substantially the same as Souter.

On the issue of mental competency we are certainly unable to say that the finding of the chancellor is against the greater weight of the evidence. That conclusion was based on the testimony of four witnesses who were well acquainted, and often associated, with Mr. Cochrell. It included the testimony of a medical doctor who had seen Cochrell as a patient some twenty or thirty times from 1962 until early 1968. It is true that medical evidence indicated that Cochrell was confused mentally two days before he died, but it must be remembered that Cochrell was then critically ill; and also we are concerned with his mental condition back in those years in which he made the conveyances.

Little need be said of the allegation of undue influence. We are simply unable to find, except possibly by inference, any evidence to support the point. Appellant argues that James Rochelle was Cochrell’s son-in-law; that Rochelle “is a polished man in conversation” and that he had “all opportunity he needed to have helped agitate Mr. Cochrell against the appellant’s husband,” whom Cochrell did not like. Even if those facts were true, they would make no case for a finding of undue influence. We have not overlooked the contention of appellant that the amount of the consideration sheds light on the issue of undue influence; however, that contention is based on the assumption that $1,000 is the sum total of the consideration for the conveyance.

Inadequacy of Consideration. Appellant’s position that the recited $1,000 as consideration precludes parol testimony to establish additional consideration is not tenable. When a consideration is recited, parol evidence may not be utilized to show no consideration; otherwise, parol testimony is proper to show the true consideration upon which a deed rests. Mitchell v. Smith, 206 Ark. 936, 175 S. W. 2d 201 (1943); Whitlock v. Barham & Duncan, 172 Ark. 198, 288 S. W. 4 (1926). It was appellees’ contention — and they offered evidence to that effect — that by 1963 the Rochelles had boarded Cochrell at various and frequent times and had expended considerable sums for his medical bills; and that he wanted to give the Rochelles the land “because of what we had done for him.” Then in 1964, Cochrell was said to have wanted some cash and approached the Rochelles to buy his land at a figure which he set at $1,000. Thus there was evidence of far more consideration for the conveyance than that which was recited, and it was proper for the court to consider that testimony.

Affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    James BEARD, d/b/a Beard Real Estate v. Walter COGGINS et ux
    5-5371
    459 S. W. 2d 791
    Opinion delivered November 23, 1970

      John I. Purtle, for appellant.

      Murphy, Arnold ér Blair and W. G. Wiley, for ap-pellees.
   Lyle Brown, Justice.

Appellant James Beard, d/b/a Beard Real Estate, brought this suit against Walter Cog-gins and wife, to recover a sales commission on a parcel of land which was sold by appellees after Beard’s listing expired. Appellees defended on the ground that the sale did not result from information obtained from or through appellant and conveyed to appellee landowners during the period of the sales listing. A jury trial resulted in a general verdict favoring appellees. Appellant here contends that he should have been granted judgment notwithstanding the verdict, and, secondly, that the verdict was contrary to the law and the evidence.

For a number of years appellees owned a farm in Monroe County on which cotton and soybeans were raised. It was divided into two tracts, designated as the headquarters (12 acres), and the open lands across the road from the headquarters and consisting of 182 acres. In about 1965 appellee Coggins decided, because of a physical ailment, to dispose of the farm lands and obtain a cattle ranch. He negotiated with Richardson brothers, neighbors and substantial farmers, but those negotiations failed to materialize into a sale.

Appellant Beard was a licensed real estate broker residing in Monroe County. He also engaged in the buying and selling of real estate and in the procuring of farm loans. In early September 1967, he contacted Coggins for the purpose of obtaining a listing of the Cogginses farm, stating that he had a prospect that might pay as much as $150,000, being the figure Mr. Coggins said he wanted. A few days later, September 6, 1967, a written listing was executed. That contract gave appellant the exclusive agency of sale of the farm as a unit for a period of two weeks, the sale price to be $150,000.

On the same day the listing was granted, appellant obtained an offer from A. B. Walls. The agreed purchase price was $150,000, conditioned that Walls could finance the sale through the Federal Land Bank, and further conditioned that the purchaser would get the crop for the current year. The loan from the bank did not materialize, and appellee Coggins was not agreeable to letting the crop go with the sale; therefore the Walls proposal collapsed in a matter of a few days. On the last effective date of the listing between appellant and appellees, appellant obtained a written offer from Richardson brothers. That offer was $120,000 for the open lands. On September 26 — six days after the Coggins-to-Beard listing expired — appellant learned that appellees were on the verge of closing a sale with the Richardsons, Appellant contacted appellee Coggins and was informed that his services as a broker were no longer needed. The Cog-ginses and the Richardsons closed the sale on September 26.

Appellant bases his right to recovery on this provision in the listing contract:

Owner agrees to pay the commission set forth in Paragraph 2 to Agent if the property be sold or otherwise disposed of by any other person, association or corporation, including Owner, after expiration of above listing period, when such sale or other disposition of the property resulted from or was based upon information given by or obtained through Agent, with notice thereof to Owner, during the period of this contract.

It is undisputed that the sale to Richardson brothers occurred after the listing period expired; however, appellant broker contends that the sale resulted from information given by the broker to the owners, the Cog-ginses, during the period of the contract. On this crucial point the evidence is somewhat in dispute, as the summary to follow will reflect.

Appellant Beard testified that the day after the Walls deal collapsed he contacted the Richardson brothers and learned that they would pay $120,000 for the open land; that a day or two later (within the listing period) appellant asked appellee Coggins if the latter would be interested in such a sale; and that Coggins declined. Nevertheless, said appellant, he went ahead on September 20 and obtained a written offer from the Richardsons, hoping the headquarters could be sold separately. Appellant concedes that he did not notify appellees of the written offer until the listing period expired; the record seems to indicate that notice was given on September 26, the day appellees closed the sale with the Richardsons. At that time appellant told appellees that he thought he was entitled to a commission.

Witness John A. Latimer, Jr., was the manager for Federal Land Bank in five counties, including Monroe. Two years previously — when Coggins first decided to sell his farm — the two men discussed it and Latimer told Coggins about the interest of the Richardsons in buying the open lands. Coggins was said to have called Latimer on September 26, 1967, to tell him that he had decided to sell the farm in two parcels and that Latimer could so notify the Richardsons. As a result of that contact, the Richardsons and Coggins, assisted by Latimer on the paper work, closed the sale that day. Latimer testified that he felt sure Coggins had knowledge that appellant was, in his conversation with Coggins, making an offer for the Richardsons; however, Latimer could not say that Coggins had that knowledge before the listing expired.

Witness Barner Richardson verified that he talked with Coggins in about 1965 about the purchase of the lands but that Coggins withdrew from the negotiations. Richardson’s next contact, so he testified, was with appellant, to whom he gave a written offer accompanied by earnest money; that six days later, September 26, Latimer called Richardson and informed him that Coggins was ready to sell his farm. Thereupon, Richardson called appellant because appellant held the written offer. Appellant informed Richardson that appellant was unable to reach an agreement with Coggins about a commission, and told Richardson to “go ahead and make the deal.” Shortly thereafter, on the same day, the deal was closed. Richardson ventured the conclusion that Beard was instrumental in the Richardsons making the offer, but of course he had no knowledge of what transpired as between appellant Beard and Coggins.

Appellee Walter Coggins was the only witness to testify in his behalf. Here is a fair abstract of his pertinent testimony:

A few years ago my health got bad and I tried to sell the farm. That is when I first contacted the Richardsons. When I gave Beard the listing on September 6, 1967, he told me he thought he could get $150,000 for it, for the entire place. That same day he came to me with an offer from Walls but that sale fell through and Beard said he was returning Walls’ deposit of $1,000. It rocked on a few days and Beard tried to get me to split up the farm and sell the open lands to the Richardsons but I declined, insisting that I had listed the entire farm with him and that he was not authorized to sell it in parcels. At no time prior to the expiration of the listing did appellant inform me of the written offer from the Richardsons. I already knew what the Richardsons were willing to do. Mr. Latimer had discussed that fact with me about two weeks before I gave Beard the listing. It was on September 26 (six days after expiration of the listing) that I decided to split the farm because I thought I had a sale for the headquarters; in fact I did sell the headquarters later for $25,000. I called Mr. Latimer on the 26th and told him I was ready to split the farm if the Richardsons were still interested. After the deal was closed that day the Rich-ardsons told me about their offer to Beard; that was the first time I knew it.

Appellant insists that a judgment notwithstanding the verdict should have been granted. Such a judgment is appropriate only if it can be said that the trial court should have directed a verdict in favor of the plaintiff (appellant), which is a rarity. Spink v. Mourton, 235 Ark. 919, 362 S. W. 2d 665 (1962). In testing the sufficiency of the evidence on a motion for a directed verdict the testimony and all reasonable inferences are viewed in the light most favorable to the party against whom the verdict is sought. Page v. Boyd-Bilt, Inc., 246 Ark. 352, 438 S. W. 2d 307 (1969). We conclude that a judgment n.o.v. was properly denied and we shall shortly discuss the evidence which supports that conclusion.

Appellant next contends that the verdict was contrary to law and that there is an absence of substantial evidence to support it. As to the law, the case was submitted on instructions which are not questioned on appeal. As to the substantiality of the evidence we cannot disturb the jury’s conclusion “unless we can say there is no reasonable probability in favor of appellee’s version, and then only after giving legitimate effect to the presumption in favor of the jury findings.” McWilliams v. R & T Transport, 245 Ark. 882, 435 S. W. 2d 98 (1968).

The vital question for the jury to resolve, under the court’s instructions, was whether the sale of September 26 to Richardson (which was after the expiration of the listing period) “resulted from or was based upon information given by or obtained through Agent, with notice thereof to Owner, during the period of this contract.” There was substantial evidence that Coggins had for some time known of the Richardsons’ interest in his property and that their continued interest in the open farm lands was again made known to Coggins about two weeks before the listing with Beard was signed. In other words, the jury could have logically reasoned that a listing with Beard was wholly unnecessary to reveal to Coggins the interest of the Richardsons in a purchase; it would therefore not be unreasonable for the jury to conclude that Beard’s contact with the Richardsons played no part in the consummation of the ultimate sale. See Hatchett v. Story, 221 Ark. 120, 252 S. W. 2d 78 (1952). Also, it is undisputed that the written offer executed by the Richardsons was not communicated to Coggins until after the expiration of the listing contract with Beard.

There is evidence that Coggins and Beard, within the listing period, discussed a proposed sale to the Rich-ardsons; there is the statement of Richardsori that he thought Beard was instrumental in setting up the sale; and Latimer testified to his impression that Beard made an offer to Coggins on behalf of the Richardsons, although he could not fix the time of the offer. Yet, in testing the substantial nature of the evidence to support the verdict, we look at that evidence which is “favorable to appellee alone.” Mo. Pac. R. R. Co. v. Hampton, 195 Ark. 335, 112 S. W. 2d 428 (1938). Having so tested appel-lees’ evidence, and adhering to the presumption in favor of the jury verdict, we find substantial evidence to support the judgment.

Affirmed.


author: John A. Fogleman, Justice.

text:
    HOUSING AUTHORITY OF THE CITY OF LITTLE ROCK v. Mary ROCHELLE and Ella Rochelle
    5-5387
    459 S. W. 2d 794
    Opinion delivered November 23, 1970

      Smith, Williams, Friday ir Bowen; By: William L. Terry, for appellant.

      Louis “Art” Dodrill, for appellees and cross-appellants.
   John A. Fogleman, Justice.

On direct appeal Housing Authority of the City of Little Rock asserts that a jury award of compensation to appellees in the amount of $45,000 in an eminent domain proceeding was excessive and not supported by substantial evidence. We do not agree that the evidence supporting the verdict was insubstantial.

The property taken was a lot 50 feet wide and 140 feet deep on which there was an apartment building. It is located at Louisiana and Eleventh Streets in Little Rock. It fronts on Louisiana, is five blocks from the downtown shopping area and one block from the First Baptist Church, and was purchased by the Rochelle sisters, appellees here, in 1950. The building was divided into six apartments, one of which was occupied by appellees, one of whom is retired and the other employed by Western Auto Supply Company as a saleslady. The remaining five apartments were occupied by tenants who paid a rental of $60 per month. The apartments were furnished, and appellees paid for all utilities. It is conceded that the building was well maintained, particularly on the interior. Appellant’s expert witnesses valued the lot alone at $22,400 and $22,500, but only valued the building at $10,000 and $8,300, respectively. One of them stated that the building was very sound and that, with normal maintenance, it would last for 200 to 300 more years.

Tenants, who occupied apartments in the building at the time of the taking and had to find other apartments, placed the fair rental value of the units at $90 to $100, based upon the amount for which like apartments were being rented. Bill Burroughs, who deals in rental property in Little Rock fixed the rental value of the apartment occupied by appellees at a minimum of $125 per month and the remaining five at $80 per month, which he said was $10 per month less than any other apartment in that neighborhood.

The taxes on the property amount to $318 per year and insurance premiums, $167. Ella Rochelle stated that depreciation amounted to $693 per annum and utilities, $1,050. She placed maintenance costs at approximately $200 annually. She calculated that the property would produce a gross annual income of $6,480 per year based upon a rental value of $90 per month per apartment, or a net income of $4,052 per year. She testified that an investment of $80,570 would Ire required to produce a like income at an interest rate of 5% per annum. This is obvious from a simple iftathematical calculation.

Capitalization of income is a recognized method of arriving at the fair market value of real estate used to produce rental income, in determining just compensation in eminent domain cases. We have long held evidence of rental value to be admissible as a factor to be considered in determining just compensation. Desha v. Independence County Bridge District No. 1, 176 Ark. 253, 3 S. W. 2d 969. See also, Springfield v. Housing Authority of the City of Little Rock, 227 Ark. 1023, 304 S. W. 2d 938; Osceola Housing Authority v. Gillespie, 244 Ark. 248, 424 S. W. 2d 521. This is certainly a' matter that would be considered by a prospective purchaser in estimating the market value of the premises. Regents of University v. Irwin, 239 Minn. 42, 57 N. W. 2d 625 (1953). It has been said that, when property is rented for the use to which it is best adapted, the rent capitalized at the rate which local custom adopts for that purpose forms one of the best tests of value. 5 Nichols, Eminent Domain, 3rd Ed. 19-6, § 19.2. This method is an accepted one, not uncommonly or infrequently utilized in eminent domain cases. See Winner, Rules of Evidence in Eminent Domain Cases, 13 Ark. L. Rev. 10, 18; Bergeman v. State Roads Comm., 218 Md. 137, 146 A. 2d 48 (1958); State v. Nunes, 233 Ore. 547, 379 P. 2d 579 (1963); Redevelopment Agency v. Zwerman, 240 Cal. App. 2d 70, 49 Cal. Rptr. 443 (1966); In re Lincoln Square Slum Clearance Project, 15 A. D. 2d 153, 222 N. Y. S. 2d 786 (1961), aff'd 16 N. Y. 2d 497, 260 N. Y. S. 2d 439, 208 N. E. 2d 172 (1965), motion to reargue and amend remittitur denied 16 N. Y. 2d 828, 263 N. Y. S. 2d 169 210 N. E. 2d 459 (1965); 1 Orgel on Valuation under Eminent Domain, 648, § 157. In proceedings involving property having a rental value, the fact that part of it is occupied as a residence by the owners does not make evidence of this value any less competent in determining market value. Regents of University v. Irwin, supra. See also, Bergeman v. State Roads Comm., supra. The fair rental values may be considered when they are greater than the rentals reserved at the time of the taking. In re Lincoln Square Slum Clearance Project, 16 N. Y. 2d 497, 260 N. Y. S. 2d 439, 208 N. E. 2d 172 (1965). We have strongly implied that this method is acceptable when the income from the property consists only of rents. Hot Spring County v. Bowman, 229 Ark. 790, 318 S. W. 2d 603. One of appellant’s expert witnesses testified that the income approach is one of three used in arriving at market value. He felt that it was the best indicator of value on this particular piece of property.

When we view this evidence in the light most favorable to appellees, as we must, it substantially supports the verdict. Even though Ella Rochelle did not make any deduction for the amount of rent attributable to the furnishings, for which appellees were compensated by appellant, the only evidence as to this amount was presented through one of appellant’s expert witnesses who fixed it at $5 per apartment per month. This would amount to $360 per year. If the net income based on rental value was reduced by this amount it would be $3,692, which would represent 5% on an investment of $73,840. The witness stated one might, at present, be able to realize an income of TA% on an uninsured investment. This net income at this rate of interest would require an investment of $49,226. The witness stated a 6% return on an insured income was probable and that not more than 7% could be had. A 7% return would require an investment of $52,742.85, and a 6% return, $61,533.37. A TA% return on the amount of the verdict, would be only $3,375, and a 5% return would be only $2,250.

Bill Burroughs actually used a crude but practical application of the income approach to market value when he testified that buyers of rental real estate considered a purchase “a good buy” whenever the income from the property would “pay for it” in 10 years. On this basis he calculated that, using what he considered conservative rental values of the Rochelle apartments, the income would equal a purchase price of $50,400 in eight years. If the basis of calculation used was 10 years, the price for “a good buy” would be $63,000.

We realize that appellant’s witnesses considered the actual rents to be the rental value of the property, but the jury returned a verdict within the limits of substantial evidence on the part of appellees. Since the verdict had substantial evidentiary support, we cannot say that it is excessive.

On cross-appeal, appellees contend that the circuit court erroneously denied them interest on the full amount of the compensation awarded from the date of taking, November 8, 1968. We agree.

Interest is awarded in order that an owner whose property is taken may be assured of just or full compensation. Otherwise he would, for a time, be deprived of both the use and the value of his property. Arkansas State Highway Commission v. Stupenti, 222 Ark. 9, 257 S. W. 2d 37. Appellant seeks to distinguish this case from Stupenti by its assertion that appellees were not entitled to interest on the estimated just compensation deposited for this particular tract by appellant at the time the circuit court authorized its entry upon the land. In Stupenti the deposit was for the lands of numerous owners. Appellant is mistaken in the principle applied in Stupenti, however. We said that the deposit there could not be considered as a definite tender for the specific land, because a deposit of the compensation award does not amount to a true tender or stop the recovery of interest on the final award. We did acknowledge that there were circumstances under which a tender to a landowner in a condemnation proceeding might bar the recovery of interest thereafter. Such circumstances do not exist here.

Appellant is authorized to exercise the power of eminent domain in the manner prescribed in Ark. Stat. Ann. §§ 35-201 — 35-206 (Repl. 1962) or in the manner provided by any other applicable statutory provisions for the exercise of the power. Ark. Stat. Ann. § 19-3015 (Repl. 1968). In its complaint, appellant elected to proceed in the manner provided by Ark. Stat. Ann. §§ 35-201 — 206. A preliminary deposit designated by the circuit court as a condition of entry upon the lands by the condemnor pursuant to Ark. Stat. Ann. § 35-206 is not a tender which may be withdrawn by the landowner but is only security for the payment of the final award. Ft. Smith & W. R. Co. v. Hare, 116 Ark. 10, 172 S. W. 835; Reynolds v. Louisiana, A. & M. Ry. Co., 59 Ark. 171, 26 S. W. 1039; Ex parte Reynolds, 52 Ark. 330, 12 S. W. 570. In the case last cited, it was pointed out that this deposit of money was devised as a substitute for the earlier requirement of a bond with sureties, as a prerequisite for entry upon lands by a condemnor, when progress would be impeded by awaiting the fixing of the amount of the final award of compensation to the landowner. Under these circumstances appellees were no more entitled to draw the deposit from the registry of the court than was the landowner in Stupenti. As a result, denying them interest on the full award from the date of entry would deny them just compensation, because they had the use of neither the land nor the money until final judgment was entered.

The judgment is affirmed on appeal. It is reversed on cross-appeal and judgment entered for interest on the amount of the jury verdict at the rate of 6% per annum from November 8, 1968.

       One of appellant’s witnesses placed maintenance costs at $350 per year, which included a $50 reserve for reroofing.

       While he stated that he took this approach into consideration in making his appraisal, he seems to have done so only in relating the rents received by appellees to rents received from what he considered to be comparable properties in establishing sales of the latter as indicative of market value. He stated that he first arrived at the market value of the lot from comparable sales and then determined the value of the building from that portion of the rental income attributable to the building by some method he did not disclose. We do not understand this to be “capitalization of income.”


author: Conley Byrd, Justice.

text:
    CITY OF LITTLE ROCK v. Joseph KAUFMAN
    5-5390
    460 S. W. 2d 88
    Opinion delivered November 23, 1970

      Joseph C. Kemp and Perry V. Whitmore, for appellant.

      J. H. Carmichael, Jr., for appellee.
   Conley Byrd, Justice.

Appellee Joseph Kaufman, the owner of lots 1 & 2, and 17 and 18 in Block 7, Lincoln Park Addition to the City of Little Rock, filed a petition with the Board of Adjustment for zoning variances. The City through its Board of Adjustment denied the application. On appeal to the Circuit Court the City’s denial of the variances was reversed. The City of Little Rock’s only point for reversal is that the Circuit Court erred in finding that appellee’s evidence established a hardship relative to the property owned by him.

The applicable statutory authority under which the Board of Adjustment operates is set forth in Ark. Stat. Ann. § 19-2829b (Repl. 1968), as follows:

. . . “The board of zoning adjustment shall have the following functions:
... (2) Hear requests for variance from the literal provisions of the zoning ordinance in instances where strict enforcement of the zoning ordinance would cause undue hardship due to circumstances unique to the individual property under consideration, . . . The board of zoning adjustment may impose conditions in the granting of a variance to insure compliance and to protect adjacent property.”

Section 43-22(4) of the City Code defines the authority of the Board of Adjustment as follows:

. . . “The board shall have the following powers and it shall be its duty. . .
(d) Permit the location of the following uses in a district from which they are prohibited by this chapter: airport, nursery, greenhouse, library, museum, community center, hospital, institutions of an educational, religious or philanthropic nature, and parking lot.”

The record shows that Lincoln Park Addition was platted in lots 30 feet wide North to South and 140 feet long East to West. Lots 1 through 10 in Block 7 are numbered from North to South and lots 11 through 20, laying immediately East and across an alley, are numbered from the South to the North. Lots 1 through 10 are zoned “E-l Quiet Business.” Lots 19 and 20 are zoned for multi-family use (“C-2 Family”). Lots 11 through 18 are zoned “B-l Family Residence.”

The record shows that appellee Kaufman owns lots 1 & 2 on which he has erected an office building 40 by 100 feet. Through a prior zoning variance, the West 50 ft. of lots 19 and 20 are used for parking for the office building. In the building are three businesses, a cosmetologist, an orthodontist, and a local office of Hoover Co. The proof shows that the parking lot on the West 50 ft. of lots 19 & 20 accommodates 12 cars. Parking at the East of the building extends out into the alley and to some extent blocks the alley. The lands lying southward of the office building are improved with an apartment complex. This apartment complex uses the same alley for parking as does the office building.

When Kaufman became aware of the crowded condition of his tenants in their offices and of a parking problem he purchased lots 17 & 18. He then filed a request for a variance with respect to the front and the rear yards, proposing to construct a 20 by 40 ft. extension on the West end of his building and 15 by 40 ft. extension on the East end of his building. At the same time he requested a variance for parking lot purposes on the West half of lots 17 & 18.

All of the testimony shows that the proposed variances with respect to building set-backs and parking lot area will not adversely affect property in the area.

Thus as we review the record there is substantial evidence to sustain the trial court’s finding that strict enforcement of the zoning ordinance would cause undue hardship due to circumstances unique to the individual property under consideration. This is especially so since such variance would not adversely affect other property in the immediate area. In Williams v. Kuehnert, 243 Ark. 746, 421 S. W. 2d 896 (1967), we affirmed the action of the trial court under circumstances much more favorable to those appellants than the appellant has shown here.

Affirmed.


author: J. Fred Jones, Justice.

text:
    COMMERCIAL STANDARD INSURANCE COMPANY OF FORT WORTH, TEXAS v. Wilbert COMBS et al
    5-5369
    460 S. W. 2d 770
    Opinion delivered November 23, 1970
    [Rehearing denied January 11, 1971.]

      Williams & Gardner, for appellant.
    No brief for appellees.
   J. Fred Jones, Justice.

This is an appeal by Commercial Standard Insurance Company of Fort Worth, Texas, hereinafter called “Commercial,” from an adverse judgment of the Pope County Circuit Court in a suit brought by Commercial against Mr. and Mrs. Combs to enforce subrogation rights in the proceeds of a judgment obtained by Combs against a Mr. Owens for collision damages to the Combs automobile and in which Combs’ attorneys claimed a contingent fee interest. Mrs. Combs remained a party litigant throughout but for convenience we refer to both parties as “Combs.”

While the record before us is not as complete as it might have been, we gather from the pleadings, and from such evidence that is of record, the following facts: Commercial issued a $50 deductible insurance policy to Combs insuring the Combs automobile against collision loss, and the policy was in force on December 18, 1967, when the Combs automobile was involved in a collision with an automobile operated by a Mr. Owens. Mr. and Mrs. Combs were injured in the collision and their automobile was damaged. On or about March 11, 1968, Combs submitted a form statement in proof of loss to Commercial, and was paid $1,230.12 in satisfaction of the amount owed under the policy. The policy is not in evidence so we do not know the extent of coverage under it; but the statement signed by Combs in his proof of loss contained the following agreement:

“The insured hereby covenants that no release has been or will be given to or settlement or compromise made with any third party who may be liable in damages to the insured; and the insured in consideration of the payment made under this policy hereby assigns and transfers to the said company to the extent of the payment herein made each and all claims and demands against any other party, person, persons, partnership or corporation, arising from or connected with such loss and damage, and the said company is hereby authorized and empowered to sue, compromise or settle in my name or otherwise to the extent of the money paid as aforesaid.”

From the pleadings and proof it appears that on December 19, 1967, Combs employed attorneys Mobley, Bullock and Harris to prosecute a claim for damages against Mr. Owens, and agreed to pay the attorneys, as a fee for their services, 40% of all amounts recovered. Combs also assigned to the attorneys an undivided 50% interest in the cause of action against Owens as security for the payment of the agreed fee. The attorney-client contract is not in the record, but it is alleged in Combs’ pleadings that the contract was entered into on December 19, which was the day following the collision. The record indicates some unsuccessful negotiations toward settlement of the claim against Owens, but on December 16, 1968, Combs filed suit against Owens for damages because of personal injuries, as well as property damages. The case was tried before a jury on March 18, 1969, and a judgment was entered on a general verdict for Mr. Combs in the amount of $10,500, and for Mrs. Combs in the amount of $2,000. The verdicts against Owens exceeded the total of Owens’ liability insurance coverage and the judgment was settled for a total amount of $11,500. Owens’ liability insurance carrier having had notice of Commercial’s subrogation claim, paid the $11,-500 into the registry of the court.

On May 20, 1969, Commercial filed its complaint against Combs setting out the above facts except as to the agreement between Combs and the attorneys. Commercial prayed judgment against Combs in the amount of $1,230.12. Commercial then attached, through garnishment before judgment, the funds that had been paid into the registry of the court. Combs filed an answer denying that he collected any amount from Owens for property damage. He alleged repeated efforts to get Commercial to prosecute its subrogation rights against Owens and Commercial’s refusal to do so. As a counterclaim Combs alleged that Commercial had kept the $1,230.12 belonging to Combs tied up in garnishment and prayed judgment against Commercial for $1,230.12. Combs’ attorneys intervened alleging their contract with Combs as above set out. They alleged that under their contract with Combs they were entitled to a fee of 40% of the amount attached by Commercial; that Commercial had wrongfully attached a portion of the recovery belonging to Combs, and they prayed judgment for $492.05. Of the amount paid into the registry of the court, $1,500 represented the gross amount of the recovery against Owens for damage to the automobile; and all of the amount except the $1,500 was paid over to Combs, leaving $1,500 still in the registry of the court and subject to the attachment.

The only testimony in the record is that of attorney Mobley. Most of his testimony was directed to the unsuccessful attempt to get Commercial to participate in the efforts to collect the property damage from Owens. He testified that the property damage was finally settled for $1,500 in addition to the damages for personal injuries.

The trial court found that Commercial had waived its rights under its subrogation agreement, by refusing to participate in the litigation against Owens, and for reasons beyond our comprehension, the trial court entered judgment as follows:

“IT IS THEREFORE, CONSIDERED, ORDERED AND ADJUDGED tliat the Complaint of Plaintiff, Commercial Standard Insurance Company of Fort Worth, Texas, be and the same is hereby dismissed; it is further considered, ordered and adjudged that Counter Claimants, Wilbert Combs and Mary Combs, do have and recover judgment against Plaintiff, Commercial Standard Insurance Company of Fort Worth, Texas, in the sum of $738.07 with interest thereon from the 17th day of April, 1969, at the rate of six per cent per annum; it is further considered, ordered and adjudged that Intervenors, Jeff Mobley, William R. Bullock and John C. Harris, d.b.a. Mob-ley, Bullock and Harris, Attorneys at Law, do have and recover judgment against the Plaintiff, Commercial Standard Insurance Company of Fort Worth, Texas, in the amount of $492.05 with interest thereon from the 17th day of April, 1969, at the rate of six per cent per annum. It is further considered, ordered and directed that Counter Claimants, Wilbert Combs and Mary Combs, and Intervenors, Jeff Mob-ley, William R. Bullock and John C. Harris, d.b.a. Mobley, Bullock and Harris, Attorneys at Law, do have and recover from Plaintiff, Commercial Standard Insurance Company of Fort Worth, Texas, all their costs herein expended.
The attachment by Commercial Standard Insurance Company of Fort Worth, Texas, Plaintiff herein, of the funds in the hands of the Clerk of this Court is hereby dissolved and the Clerk of this Court is hereby ordered and directed to pay over to Counter Claimants and Intervenors the funds in his hands in partial satisfaction of the judgment awarded herein.”

On appeal to this court Commercial relies on the following points for reversal:

“The lower court erred in awarding judgment against appellant for part of Combs’ attorneys’ fee.
The lower court erred in awarding judgment to Combs of $738.07.”

Commercial contends that our decision in the case of Courtney v. Birdsong, 246 Ark. 162, 437 S. W. 2d 238, is determinative of the question presented on this appeal. We do not agree. We consider the case at bar more in line with our decision in the case of Washington Fire & Marine Ins. Co. v. Hammett, 237 Ark. 954, 377 S. W. 2d 811, which case was distinguished in Birdsong. In the first place, the Birdsong case was a suit strictly between the insured subrogor and his insurance carrier. In Birdsong the insured had a 50% contingent fee arrangement with his attorney and subsequently, after he had filed suit against the tort-feasor, and while the suit was pending, he called on his insurance carrier to pay accrued medical bills in the amount of $1,797.90. This amount was paid in the form of a loan by the insurance company, and as security for the repayment of the $1,797.90, the insured assigned his cause of action, to the extent of his net recovery, against the tort-feasor. The insured in Birdsong convenanted that no settlement of his claim against the tort-feasor had been made or would be made without the written consent of the insurance carrier. The insured’s attorney in Birdsong knew of the advancement made to his client but did not know the contents of the agreement his client had entered into with the insurance company until a compromise settlement in the amount of $5,000 had been reached and agreed to by the insured, his attorney, and the tort-feasor’s insurance carrier. Upon being advised of the company’s claim against his client for the $1,797.90 advanced on medical bills, the attorney directed the tort-feasor’s insurance carrier to draw two separate drafts, one for $3,202.10 to himself and his client, and the other in the amount of $1,797.90 to himself, his client and the insurance company. This was done and the suit against the tort-feasor was dismissed with prejudice. The difficulty arose in Birdsong when the company’s attorney called for its draft and the insured refused to endorse it contending that when he paid his attorney out of the $1,-797.90 draft, his net recovery would only be one-half of that amount and that he had only agreed to reimburse the company to the extent of his net recovery.

What the Birdsong case boiled down to was simply this: The insured owed his attorney 50% of the $5,000 collected in the compromise settlement of his lawsuit. The attorney settled the lawsuit and earned his fee without even knowing that his client had pledged a part of his net recovery for money advanced by the insurance company. In effect, we concluded in Birdsong that the insured’s net recovery had been determined before the drafts were delivered and that the draft for $1,797.90 drawn at the attorney’s request, was a part of the insured’s $2,250 net recovery. It was not until the amount pledged had been segregated from the gross recovery and the draft for that amount had been drawn and delivered under the directions, and at the request, of the insured’s attorney, that demand was made for contribution on attorney’s fees. Of course, the insurance company had no interest in the amount recovered except as it related to the plaintiff’s net recovery. Such was not the situation in Hammett, supra, and such was not the situation in the case at bar.

Turning now to the case at bar, Combs did not agree to reimburse Commercial to the extent of the net amount he would recover from Owens. In order to collect what Commercial owed and agreed to pay under its contract with him, Combs not only assigned all claim and demands against Owens to Commercial; he also authorized Commercial to sue, compromise and settle in his name or otherwise to the extent of the amount Commercial had paid. He did not covenant that he had not, and would not, settle or compromise his claim against Owens without the knowledge or consent of Commercial; he covenanted that he would not compromise or settle his claim against Owens at all.

“No release has been or will be given to or settlement or compromise made with any third party who may be liable to the insured.”

As already stated, the insurance contract is not in the record, so we can only surmise from the statement contained in Commercial’s brief, as well as the difference between the amount paid under the provisions of the contract and the amount of the recovery from Owens, that the insurance contract only covered the cost of repairs to Combs’ automobile and did not cover the full difference in market value of the automobile for which Owens was liable. Be that as it may, Commercial stood on the above covenant and assignment and apparently on an arbitration arrangement between insurance companies, and Commercial did nothing from March 11, 1968, until December 16, 1968, when Combs was forced to file suit againsi Owens to recover damages for personal injuries as web as the full damage to the automobile. Commercial wa¿ notified of the pending litigation and that claim was being made for the property damage, as well as personal injuries. Commercial was urged to hire an attorney or to contribute to Combs’ expense in hiring attorneys to pursue the claim against Owens for the property damage. Commercial continued to rely on the covenant and assignment from Combs and steadfastly failed and refused to participate in any manner.

It must be remembered that Commercial was only subrogated to the amount it had paid to Combs and not to the full amount of the damage Combs had sustained to his automobile. In attempting to get Commercial’s cooperation in collecting from Owens, Combs’ attorneys even threatened to eliminate Commercial’s interest iri the property damage from Combs’ claim against Owens unless Commercial agreed to compensate them for their services; but, nevertheless, the company refused to hire its own attorney to participate in the matter or to share any part of the expenses of collection from the tort-feasor Owens. Apparently, in recognition of Combs’ right to recover from Owens the full difference in the market value of the automobile before and after the collision, including the $50 deductible which Commercial did not pay; and apparently in recognition that Combs’ cause of action against Owens could not be split between his personal injury and property damages without destroying his own claim as well as Commercial’s claim against Owens, for property damage, Combs’ attorneys did not strike from Combs’ complaint against Owens the property damage item' as they had threatened to do, but proceeded to a jury trial which resulted in the compromise and which included the $1,500 for the property damage to Combs’ automobile as above set out.

The damages Combs sustained to his automobile exceeded the amount to which Commercial was sub-rogated. We agree with Commercial’s argument that stronger language was used in the assignment to Commercial in the case at bar than was used in the Birdsong case, and we agree with Commercial’s argument that:

“Here, the assignment gives the Insurance Company the right to handle the claim as it saw fit even to sue in the insured’s name while in the Courtney case the insured only agreed to cooperate and to commence the suit himself for the recovery from the wrongdoer.”

We cannot agree, however, that an insurance company may require its insured to make such an assignment and covenant as a condition for payment or settlement of its obligation, and then relying on arbitration arrangements between insurance companies, force the insured to split his cause of action against the tort-feasor, bear the entire cost of collection or wait out the period of limitations.

The judgment of the trial court in the case at bar totally ignores both the legal and equitable principles set out in our decision in the case of Courtney v. Birdsong, supra, as well as Washington Fire & Marine Ins. Co. v. Hammett, supra. Under no stretch of the imagination, from the record before us, can we perceive of why the insureds, Mr. and Mrs. Combs, and their attorneys, would be entitled to separate judgments for $738.07 and $492.05 respectively, against Commercial in this case.

There are only two questions actually involved in this case. The first question is whether Combs’ attorneys are entitled to their contractual fee out of the total amount of the recovery, and we are of the opinion that they are. The next question is whether Commercial is required to share with Combs a proportionate share of the expenses of recovery under the facts of this case, and we are of the opinion, and so hold, that under the equitable doctrine of subrogation, it is. (Washington Fire & Marine Ins. Co. v. Hammitt, supra). See also United States Automobile Ass’n v. Hills, 172 Neb. 128, 109 N. W. 2d 174; Brown v. T. W. Phillips Gas & Oil Co., 105 F. Supp. 479.

The judgment of the trial court is reversed and this cause is remanded with instructions to enter judgment in favor of the attorneys for 40% of the amount remaining in the registry of the court, and to render judgment in favor of Commercial for the balance of said funds.

Reversed and remanded.

         Washington Fire & Marine Ins. Co. v. Hammett, 237 Ark. 954; 377 S. W. 2d 811; Motors Ins. Corp. v. Coker, 218 Ark. 653, 238 S. W. 2d 491.


author: Frank Holt, Justice.

text:
    MFA MUTUAL INS. CO. v. Wesley C. PEARROW
    5-5391
    459 S. W. 2d 798
    Opinion delivered November 23, 1970

      Pollard, Bethune & Cavaneau, for appellant.

      Lightle & Tedder, for appellee.
   Frank Holt, Justice.

This appeal results from the imposition of a statutory penalty and an attorney’s fee. The appellant issued its fire insurance policy to the appellee. Thereafter appellee’s dwelling and household contents were destroyed by fire. Appellant denied liability on the assertion of arson and also contested the amount claimed as damages to the household contents. On the first appeal [MFA Mutual Ins. Co. v. Wesley C. Pearrow, 245 Ark. 795, 434 S. W. 2d 269 (1968)] we reversed, holding that a directed verdict for the appellee on the issue of arson was error since there was sufficient evidence for a jury question. Before a retrial, the appellee amended his complaint by subdividing it into two separate counts. Count I sought recovery for $4,000 for destruction of the dwelling, plus attorney’s fee and penalty; Count II sought recovery for $1,500 for loss of the household contents, plus attorney’s fee and penalty. A jury awarded the $4,000 sought for loss of the dwelling and reduced the $1,500 claim to $250 for the household goods. The court, on Count I, then assessed a 12% penalty on the $4,000 recovery and an attorney’s fee of $1,000. On appeal the appellant asserts that the court erred in allowing an attorney’s fee and the statutory penalty because the jury award was less than the total amount ($5,500) sought by the appellee. We must agree with the appellant.

We have recently held that where one fire insurance policy was issued and one premium paid covering loss of personal and real property and one fire occurred causing damages to the real property and personal property, that only a single cause of action existed and it could not be split by bringing separate lawsuits on each loss item. Lisenby v. Farm Bureau Mutual Ins. Co. of Arkansas, Inc., 245 Ark. 144, 431 S. W. 2d 484 (1968). There the insured first recovered the full amount for which the dwelling was insured. This action constituted a bar to a subsequent suit for damages to the personalty inasmuch as splitting the single cause of action is not permitted. In the case at bar, it is the appellee’s contention that in this single action he should be permitted to subdivide the insuring clauses with respect to the dwelling and household contents as separate causes of action; that he is entitled to the statutory penalty and attorney’s fee where a full recovery is had on a separate count, although the recovery is less than the total amount sued for in both counts. Appellee argues that this should be permitted because a different rule of law applies with respect to a dwelling [the valued policy law, or a liquidated demand where a total loss occurs by fire — Ark. Stat. Ann. § 66-3901 (Repl. 1966)] and that another rule applies as to personal property [the actual market value of the property insured at the time of the loss].

Our well established rule is that before one is entitled to the 12% statutory penalty and attorney’s fee, the insured must recover the full amount he seeks. Smith v. U. S. F. & G. Co., 239 Ark. 984, 395 S. W. 2d 749 (1965); Farmers Mutual Ins. Co. v. Denniston, 237 Ark. 768, 376 S. W. 2d 252 (1964). Even so, in the case at bar, appellee asserts that it would be a harsh application of this rule to require the insured to recover the full amount he seeks on both insuring clauses. In the Smith case we reiterated that our interpretation and application of this statute have existed for some sixty years during which time our legislature has not seen fit to make any change with reference to any asserted harshness. This statute is penal in nature which requires a strict construction and one who invokes it must bring himself clearly within its terms. National Old Line Ins. Co. v. Russell, 188 Ark. 632, 67 S. W. 2d 195 (1934); National Fire Ins. Co. v. Right, 185 Ark. 386, 47 S. W. 2d 576 (1932). In cases somewhat similar to the case at bar, although not fire insurance contracts, we have held, where claims under two separate clauses of a single policy were made, that the failure of the insured to recover the full amount souglit on both clauses or claims precluded the imposition of the statutory penalty and attorney’s fee. The Equitable Life Assurance Society of The United States v. Bruce, 203 Ark. 543, 157 S. W. 2d 522 (1942); Metropolitan Life Ins. Co. v. Pope, 193 Ark. 139, 97 S. W. 2d 915 (1936); Interstate Business Men’s Accident Ass’n. v. Sanderson, 148 Ark. 195, 229 S. W. 714 (1921).

Since the appellee did not recover the full amount sought on both counts or claims, we must hold that the 12% statutory penalty and attorney’s fee are not authorized.

Reversed.


author: Carleton Harris, Chief Justice.

text:
    NATIONAL SURETY CORPORATION, and Ben F. HAWKINS, Contractor v. IDEAL LUMBER COMPANY, INC.
    5-5394
    460 S. W. 2d 55
    Opinion delivered November 30, 1970

      William H. Drew, for appellants.

      Arnold, Hamilton & Streetman, for appellee.
   Carleton Harris, Chief Justice.

The question at issue in this case is whether appellee, Ideal Lumber Company, Inc., is entitled to recover for the sale of materials and hand tools to a subcontractor for use in connection with a public contract under the provisions of Section 14-604. Ark. Stat. Ann. (1968 Repl.). Ben F. Hawkins, contractor, was awarded Job No. 2636 by the Arkansas Highway Department, the job consisting of reconstruction of U. S. Highway 82 at Crossett. National Surety Corporation, appellant herein, was Hawkins’ bondman. A subcontract was given to Sutton Construction Company, Inc., for the construction of concrete and drainage structures, Sutton also doing other construction work at the same time. Sutton became insolvent and did not pay its account to appellee, and the latter brought this action against appellant and Sutton Construction Company, Inc., seeking recovery for the price of equipment allegedly due it from Sutton. Appellant in its answer admitted that it was surety on the performance bond for Hawkins and admitted that Sutton. Construction Company, Inc., was a subcontractor on the project. The lumber company subsequently amended its complaint deleting certain items from the complaint for which it had originally claimed payment, thus reducing the amount sought in its prayer for relief. Hawkins, by reason of indemnity required by his surety, filed an intervention in which he denied that the account of Sutton with Ideal was for materials used in the construction of Highway 82. Prior to the trial, Hawkins died, and there was no revivor on his behalf. After the conclusion of the evidence and the instructing of the jury, the.court struck the name of Hawkins from the verdict forms and the case was submitted to the jury. A verdict was returned against appellant and Sutton Construction Company in the amount of $661.93, which was the amount sought by appellee after amending its complaint. To this sum the court added the 12% statutory penalty in the sum of $79.43, and awarded an attorney’s fee in the amount of $250.00, with interest thereon from date of trial until paid at the rate of 6% per annum. From the judgment so entered comes this appeal. For reversal three points are asserted, though points one and three are linked together. We proceed first to a discussion of point two.

This point is predicated upon the contention that, before appellee could obtain a judgment against appellant, it must first establish the liability of the surety’s principal, Ben F. Hawkins, contractor. It is asserted that the surety’s liability does not extend beyond the principal’s liability, and there having been no determination of the latter’s liability, the judgment against National Surety cannot stand. We do not agree. We have held that laborers and materialmen may, in cases involving public improvements, sue the surety on the bond of the contractor without making the contractor a party. Holcomb v. American Surety Company, 184 Ark. 449, 42 S. W. 2d 765. It is there pointed out that where the construction is of a public nature, and no lien can be enforced, the rights of the persons performing or furnishing material must be enforced through the bond given for the protection of laborers and materialmen. We said:

“This bond, which is hereafter set out, entitles the beneficiaries — the laborers and materialmen — to an action against the obligors. Oliver Construction Co. v. Williams, 152 Ark. 414, 238 S. W. 615. Clark [contractor] was a proper, but not a necessary party. If it be true, as claimed by appellees, that Clark was frequently within the State and conferred during the pendency of the suit with their attorneys, they could have themselves made Clark a party if they deemed such action necessary for the preservation of their rights.”

See also Trinity Universal Insurance Company v. Smithwick, 222 F. 2d 16 (8th Cir., 1955).

Appellant’s principal argument for reversal is stated in his brief, as follows:

“Mr. Brady, [carpenter superintendent for Sutton, who also from time to time in course of employment, purchased materials from appellee] who purchased all items of materials from appellant, repeatedly stated that these tools purchased were turned in by him to the warehouse of Sutton. While the use thereof may have been essential at the particular moment, a clear example would be the pipe wrench to fix a leak, being used two or three times was turned in. These tools not only did not enter into, or form a part of the completed improvement, they were in fact, turned into the warehouse where they became a part of the assets of Sutton.* **

While the value of the tools herein may not be great, to hold the prime contractor and bondsman liable for tools purchased by subcontractors would cause claims to arise for the purchase of anything conceivable that would or could be used in any portion of performing a contract, without regard to the amount of the contract or the cost of the tool.”

Appellant relies upon the case of Heltzel Steel Form & Iron Co. v. Fidelity & Deposit Co., 168 Ark. 728, 271 S. W. 325, wherein this court held that although certain tools, implement, and appliances, may be essential in the construction, they do not enter into it, form no part of the completed improvement, and there can be no recovery. Recovery had been sought by the materialman for such items under the authority of Section 5446 of Crawford and Moses Digest of the Statutes of Arkansas. This court specifically pointed out that 5446 did not authorize recovery for such items, although we recognized in Heltzel that some other courts had held to the contrary. In 1929, the legislature enacted Act 368 which set out items for which recovery could be had. Three years later (January 11, 1932) in the case of Detroit Fidelity & Surety Co. v. Yaffee Iron & Metal Co., Inc., 184 Ark. 1095, 44 S. W. 2d 1085, we mentioned that the construction company had given a bond with the appellant company as surety as required by Act 368 of 1929. The same question before us today was raised in that case. There, the ma-terialman sought payment from the appellant for the purchase price of some iron pipe and similar materials sold by appellee to the contractor and used in connection with the construction of a state highway. Appellant admitted that the pipe was part of the construction company’s equipment, but contended that it was not covered by the terms of the bond. From the opinion:

“Proof shows that the material, pipe, joints and things of this kind, was bought by the construction company for use on this particular work and job, and delivered by appellee at the site of the work. The construction company had been engaged in similar work for 10 years, but needed special size pipe for bringing water to its concrete mixer and wetting down the concrete after it had been laid. * * * * The only question, therefore, for determination here is whether the appellant company, surety on the contractor’s bond, is liable to the payment for the materials furnished by appellee, the fact of the sale, purchase and use of the materials being undisputed. * # * * Appellant’s only contention is that the pipe purchased by the contractor, for the value of which the suit is brought, is part of the major equipment of the construction company, which could be used in the construction of other work of a like kind, and that there was no liability on the part of the surety company imder the bond for the payment thereof, and that the court erred in not so directing the jury. * * * The undisputed testimony shows that this pipe was purchased from appellee company and was necessary to the construction of this particular piece of work or road, and was used in such construction as necessary or incident thereto for supplying water to the concrete mixer and wetting down the concrete on the road surface after it was laid; and payment of the purchase price thereof comes within the provisions of the statute and bond, without regard to whether the materials or pipe could be used on other construction work thereafter by the contractor It makes no difference whether it was called major equipment in the bond, as a fair construction of the statute includes within its terms the purchase and use of the materials sued for as certainly incident to the construction of the public work, and the contractor and surety were liable to the payment thereof under the statute and bond, and the court did not err in directing the verdict for appellee.”

Objections to the court’s instruction No. 6 to the jury were based on the same arguments advanced in the point just discussed, and which we have held to be without merit; that is, it objects to the words (referring to equipment) “were used” and says that under this instruction, “equipment of every kind and description, buildings or otherwise, incidental to Sutton’s work on the project”, was covered. As already stated, we think the issue is settled by Detroit Fidelity & Surety Co. v. Yaffee Iron & Metal Co., Inc., Supra. The equipment involved here is mainly hand tools, items such as shovels, sledge hammers, sharpshooter, mops, and similar articles. All would be classed as minor items, and it is not argued that appellee was only entitled to the rental value of the equipment; in fact, the materials questioned on this appeal are only valued at $134.96.

The judgment is affirmed. Attorneys for appellee ask for an additional fee for services rendered in this court and we find that this request should be granted in the amount of $250.00.

It is so ordered.

       Appellee admits that it would not be entitled to recover under this holding, but points out that that statute was subsequently super-scdcd»

       Amended by Act 82 of 1935, Act 261 of 1953, and Act 209 of 1957. The Act as amended is Ark. Stat. Ann § 14-604 (Repl. 1968).

       Emphasis supplied.

       Appellant has offered to confess judgment for $522.92.


author: George Rose Smith, Justice.

text:
    Sherman A. JOHNSON v. LUMBERMEN’S RECIPROCAL INSURANCE EXCHANGE et al
    5-5396
    460 S. W. 2d 53
    Opinion delivered November 30, 1970

      William W. Green and M. C. Lewis, Jr., for appellant.

      Wright, Lindsey <t Jennings, for appellees.
   George Rose Smith, Justice.

This suit to set aside an order of the workmen’s compensation commission was brought in the Pulaski Chancery Court, where it was dismissed for want of jurisdiction. The correctness of the order of dismissal is the only issue on appeal.

Johnson’s complaint asserts that on April 2, 1966, while he was employed by J. M. Hampton & Sons Lumber Company, he suffered a back injury in the course of his employment. In November of that year Johnson and the employer’s insurance carrier, Lumbermen’s Reciprocal Insurance Exchange, filed a joint petition for final settlement, which was approved by the compensation commission. Ark. Stat. Ann. § 81-1319 (1) (Repl. 1960). Under the joint settlement Johnson received $1,850 as full compensation for his injury.

The present complaint was filed by Johnson in the chancery court in March, 1968, the defendants being Lumbermen’s and the Arkansas Workmen’s Compensation Commission. The complaint asserts that Johnson, uneducated and without an attorney, was defrauded in the joint settlement. Specifically, it is charged that Lumbermen’s claims adjuster and its examining physician falsely and fraudulently represented Johnson’s condition to be less serious than it actually was and that Lumbermen’s thereby obtained Johnson’s consent to an inadequate settlement. The complaint asks that the commission’s order approving the settlement be set aside.

The chancery court’s order of dismissal must be affirmed. In Cook v. Brown, 246 Ark. 11, 436 S. W. 2d 482 (1969), we discussed the joint settlement procedure, pointing out that it is a statutory method of putting into effect a compromise settlement reached by negotiations between the parties. The commission’s approval is required as a protection to the injured worker. There we held that, in the absence of any assertion of fraud or insanity, the commission is not authorized to reopen a settlement made in good faith, merely because the claimant’s partial disability later proves to be greater than it was originally thought to be.

In the case at bar the claimant, affirmatively asserting fraud, relies upon the broad power of chancery to set aside a judgment for fraud in its procurement. David v. Rhea, 90 Ark. 261, 119 S. W. 271 (1909). Such fraud, however, must be extrinsic to the questions presented for decision. For example, as we explained in Alexander v. Alexander, 217 Ark. 230, 229 S. W. 2d 234 (1950), there is extrinsic fraud when a party is kept away from the trial by his adversary’s deception or when a party is corruptly betrayed by his own attorney. “On the other hand,” we went on to say, “the doctrine is equally well settled that the court will not set aside a judgment because it was founded on a fraudulent instrument, or perjured evidence, or for any matter which was actually presented and considered in the judgment assailed.” Our Reports contain many cases to the same effect.

We are not presented here with any question about the compensation commission’s power to grant relief in a situation of this kind. The sole issue before us is that of the chancery court’s jurisdiction. Upon that issue it is clear that the trial court’s decision was correct, for there is no assertion of extrinsic fraud in the procurement of the commission’s order.

Affirmed.


text:
    Doris HUBBLE v. Kathleen Margaret HUBBLE et al
    5-5395
    460 S. W. 2d 58
    Opinion delivered November 30, 1970

      Carpenter, Finch ¿r McArthur, for appellant.

      Spitzberg, Mitchell Hays and Rose, Barron, Nash, Williamson, Carroll é1 Clay, for appellees.
   Lyle Brown, Justice.

This suit concerns the validity of a settlement of property rights as between the heirs of Hannibal Hampton Hubble. The appellant is Doris Hubble, an heir; the appellees are Kathleen Margaret Hubble, a pretermitted grandchild, and Georgia P. Tucker, Executrix. Doris Hubble here asserts that the finding of the probate court that there was a valid compromise agreement between the parlies interested in the estate was not supported by a preponderance of the evidence.

Primary beneficiaries under the holographic will of Hannibal H. Hubble were Georgia P. Tucker; Gertrude Hubble, decedent’s alleged widow; and Doris Hubble, decedent’s daughter by Gertrude. The estate was substantial and varied — going businesses, stocks, real estate, savings, and notes receivable. The orderly administra-don of the estate was made complicated by two principal factors, (1) it was determined by the probate court that Kathleen Margaret Hubble was a pretermitted grandchild, and (2) Gertrude Hubble, the apparent widow, sued Holiday Inns of America and others, alleging that her late husband had conveyed valuable lands to them without a release of her dower. Those who were sued by Gertrude in turn filed claims against the estate asking for reimbursement for any sums for which they were held liable to Gertrude.

Four or five meetings were held, to explore settlement of the difficulties created by the described incidents. The final meeting, which culminated in the controversial settlement in the form of a precedent for judgment, was held on April 29, 1968. The following persons attended that meeting: Mr. Wayne W. Owen, attorney for Gertrude and Doris Hubble; Mr. Fornes, an attorney of Cleveland, Ohio, also representing Gertrude and Doris Hubble; Georgia Tucker, the executrix of the estate; Gertrude Hubble; Mr. Henry Spitzberg, attorney for Kathleen Hubble; Mr. Dane Clay, attorney for the estate; and Mr. John T. Williams, attorney for Holiday Inns and another client which had been sued by Gertrude and which had filed claims against the Hubble estate. The six-hour conference produced an apparent meeting of the minds and Mr. Clay was elected to prepare and circulate a precedent for a consent order. When the draft was circulated there were some objections by Messrs. Spitzberg and Fornes, who felt that certain parts affecting their clients should be clarified to more appropriately reflect the agreement insofar as their clients were concerned. Those changes were made to the satisfaction of the attorneys for the objecting parties; however, Mr. Fornes held the precedent for some time until he could confer with appellant in Cleveland. As a result of that conference he returned the precedent unsigned because his client instructed him that her permission would be forthcoming only if she were paid some cash..

In December 1969, on petition of appellees, the probate court conducted a hearing and found that the submitted precedent was a true representation of the terms of compromise and agreement resulting from the conference of April 29, 1968. Appellant urges that the ruling is not supported by a preponderance of the evidence. In making a determination of the issue we examine the evidence in the same manner as in chancery cases. State v. Snow, 230 Ark. 746, 324 S. W. 2d 532 (1959).

The petitioners (appellees), who sought validation of the precedent for judgment, called all the witnesses produced at the hearing. Attorney Fornes of Ohio did not appear, nor did appellant Doris Hubble. An attorney for Doris cross-examined the witnesses.

Attorney John T. Williams explained the reason for his presence in the conference at Mr. Owen’s office in April 1968. Suits had been filed by Gertrude Hubble to establish a dower interest in four different tracts of land which Hannibal Hampton Hubble had sold as a single man. The defendants were Holiday Inns of America, John Hancock Mutual Life Insurance Company (Williams’s clients), Bruce Bullion, Agent, and Urban Renewal Agency of North Little Rock. Those parties were controverting the existence of a surviving widow. Williams asserted that there was a meeting of the minds of counsel and parties present at the six-hour conference and that the proposed precedent accurately reflected the agreed settlement. Williams was so certain of an . harmonious agreement that he forthwith obtained a final order of dismissal of the cases against his clients. Additionally, Gertrude Hubble was paid a substantial sum of money, contributed to by Holiday Inns, John Hancock, Urban Renewal, and the Hubble estate. Those payments were made, so Williams asserted, because those parties participating in the payments thought all controversies were settled. The witness also stated that Attorneys Fornes and Owen participated as representatives of Gertrude and Doris Hubble. He related that the settlement by his clients was of interest to Doris Hubble because Williams’s clients withdrew their claim against the Hubble estate for whatever amounts they might be adjudged to pay if their deeds proved defective.

Attorney Wayne W. Owen testified that he, along with Attorney Fornes, represented at the meeting Gertrude Hubble, the widow, and appellant Doris Hubble, an adult daughter of the deceased. The three-fold purpose of the meeting was described as (1) to settle Gertrude Hubble’s dower claim in the Holiday Inns property, (2) to settle the interest of Gertrude and Doris in the Hubble estate insofar as matters other than the trust for Doris were concerned, and (3) to settle the claim of the preter-mitted heir, Kathleen Margaret Hubble. It was Mr. Owen’s opinion that full and complete accord was reached on all points and incorporated in the proposed precedent. He related that appellant had, subsequent to the conference and pursuant to one of the agreements there reached, executed a deed to Kathleen Margaret Hubble, conveying Doris’s interest in certain tourist court property in North Little Rock. He explained that subsequent to the execution of the deed and the payment of monies described by Mr. Williams, Doris Hubble directed Mr. Fornes and the witness not to approve the proposed precedent. Hence the absence of the signatures of those two attorneys. Mr. Owen was asked on cross-examination what Doris Hubble received for giving up, by the terms of the agreement, certain interests in the Hubble estate, to which he replied:

A. She got exempted from the claim of Mr. Williams against the estate for his damage sustained by Hannibal having conveyed as a single person the properties in the Holiday Inn.
Q. Wasn’t she equally affected by the property going to her mother? I mean, doesn’t that balance out? Did she gain anything from this consent order or agreement?
A. Oh, yes. If that had not happened — let’s say that we had recovered from Holiday Inn $50,000. Then, under the warranty of Mr. Hubble, Mr. Williams’ clients would have been entitled to recover from his estate to the extent of $50,000.

Witness W. Dane Clay, who represented the Hubble estate, corroborated the witnesses whose testimony we have summarized, and elaborated on some additional features of the case. The described conference was the fourth or fifth meeting of all the parties and/or their attorneys. He related that Gertrude Hubble, who was present at the final meeting, was asked specifically if her daughter, the appellant, was represented by Mr. Owen and Mr. Fornes, and she replied affirmatively. After all issues were settled, according to the witness, he was selected to draft the precedent for the agreed order. He explained the reason for a first and second draft of the precedent. Mr. Spitzberg, on behalf of Kathleen Hubble, wanted a change made in paragraph five of the first draft. Mr. Fornes, on behalf of appellant, wanted a change in the same paragraph. Also at Mr. Fornes request, a new paragraph was added. Mr. Clay emphasized that the changes did not vary the settlement agreement but merely clarified certain points. The final draft was transmitted to Mr. Fornes, who wrote that the document met with his approval and he expected in a matter of days to have appellant in his office for a conference and "I hope to have the consent entry in the mail to you shortly.” Mr. Fornes later wrote that appellant refused to let him sign the order unless appellant was paid some cash. Mr. Clay’s description of appellant’s benefits derived from the settlement are summarized as follows:

Doris Hubble gained considerably out of this. She gained a settlement of her mother’s dower claim for several tens of thousands of dollars less than she was claiming. That increases the estate in which Doris is a beneficiary and therefore increases what she would get from the estate. Gertrude Hubble’s dower claim was substantially in excess of the two pieces of real estate and the $3,000.00 in cash that we paid her. In addition she gained a substantial diminution in the claim of Mr. Spitzberg.

Georgia P. Tucker, the executrix, testified that she was present during the entire meeting in Mr. Owen’s office; that she had examined the final draft of the precedent and that it reflected the agreements of all persons present at the meeting. She recited the numerous estate transactions which immediately followed the conference, all in reliance upon, and in conformity with, the contents of the agreement.

In addition to the positive testimony of all the witnesses that there was a meeting of the minds, there is the added factor of substantial part performance which immediately followed. Those performances included dismissal of the lawsuits, payment to Gertrude of considerable monies, assignment of dower to Gertrude, payments to Kathleen Hubble, the pretermitted grandchild, and the release by appellant of her claim to certain tourist court property.

We conclude that the probate court’s findings are sustained by a preponderance of the evidence.

Affirmed.