text:
    PINEVIEW FARMS, INC. v. A.O. SMITH HARVESTORE, INC.
    88-205
    765 S.W.2d 924
    Supreme Court of Arkansas
    Opinion delivered February 27, 1989

      Daggett, Van Dover, Donovan & Cahoon, by: Robert J. Donovan, for appellant.

      Allen Law Firm, A Professional Corporation, by: H. William Allen and Sandra Jackson, for appellee A.O. Smith Harvestore, Inc.

      Anderson & Kilpatrick, by: Joseph E. Kilpatrick, Jr., and Frances E. Scroggins, for appellees Southern Harvestore Systems, Inc., Gerald King, and Joe McMullen.
   Jack Holt, Jr., Chief Justice.

Appellant Pineview Farms, Inc. (Pineview) claims appellees A. O. Smith Harvestore, Inc. (A. O. Smith), Southern Harvestore Systems (Southern), which is a subsidiary of A. O. Smith, and Gerald King and Joe McMullen, two servicemen of Southern, were negligent in failing to properly inspect and repair Pineview’s grain silo. The trial court entered judgment in favor of the appellees. We affirm.

In July 1980 Pineview, located in Cabot, Arkansas, employed Southern, located in Harrison, Arkansas, to inspect and repair its Harvestore silo. The Harvestore silo system preserves feed by limiting oxygen that comes into contact with feed stored inside a silo. Breather bags allow temperature changes in the system to occur without affecting the vaccum. The estimate for the job was $7,500.00, which included resealing the silo, replacing the breather bags, and putting a new floor in the silo.

On July 18, 1980, employees of Southern partially resealed the silo. However, they did not replace the breather bags or the floor because they felt both were “okay.” The charge for this work was $1,127.00. The silo was placed in use, and silage began spoiling shortly thereafter.

On October 27, 1981, Southern sent two servicemen to Pineview Farms in response to a call that the silo was on fire. Upon arrival, the servicemen found no evidence of fire but did find the unloader door open. They changed a valve, clamped down a top hatch, and checked the breather bags, which appeared to be in good condition. The charge for this service was $63.86.

On May 7,1982, Southern replaced a cutter chain and hooks and conducted a pressure test. The charge was $2,412.13.

On July 13,1982, two Southern servicemen (appellees King and McMullen) were sent to pressure check the silo and examine its foundation. They did a partial pressure check on the lower portion of the structure, replaced a bottom drain cap missing from the foundation, and fixed a faulty center hatch gasket. They also tested the breather bags, finding them to be in good condition. The charge was $141.33.

Pineview dumped spoiled silage into its fields in July or August of 1982. In November 1982 Pineview again put grain in the silo. Near this time, Robert Gordon, a representative from A. O. Smith, visited Pineview Farms. He inspected the breather bags and determined that the bags were old and “with fairly good accuracy” inoperable. However, he did not report this to Pineview, A. O. Smith, or Southern.

From November 1982 until February 1983, the silage deteriorated rapidly. Pineview called A. O. Smith in Chicago to discuss the problem. On February 9,1983, Smith sent representatives from K-W Harvestore in Missouri to Pineview. The repairmen found four leaks in the silo and also found that the breather bags were bad. The repairmen fixed the leaks and replaced the breather bags and breather valve flaps. Pineview was not charged for this work.

In April of 1983, A. O. Smith’s representative, Bob Gordon, met with Dr. Clinton Jewett, the manager of Pineview, concerning a delinquent account to Southern. In an interoffice memo concerning this visit, Gordon stated that (1) he questioned the credibility of the work performed by Southern on July 13, 1982, in that he and K-W Harvestore people found the breather bags to be very brittle and inoperative seven months later; that (2) he agreed to give Pineview $141.33 credit on the July 13, 1982, invoice; and that (3) he agreed to give Pineview a $440.32 credit on the July 18, 1980, invoice since Pineview paid for a complete reseal but only received a partial reseal.

In May of 1983, Pineview put another crop of grain in the silo. In about a month, some of the silage spoiled. On July 15, Pineview filed a complaint against A. O. Smith Harvestore, Southern Harvestore, Gerald King and Joe McMullen, alleging thatfrom July 18,1980,until July 15,1983, A. O. Smith, through its agents (Southern, King, and McMullen) was negligent in failing to inspect and repair the silo and breather bags, resulting in damage to silage and livestock and loss of milk production in excess of $10,000.00

The case was tried before a jury, which found that (1) Southern Harvestore, Joe McMullen, and Gerald King were not negligent and that (2) Pineview’s negligence was the proximate cause of the occurrence. The trial court entered judgment for A. O. Smith, Southern, King, and McMullen. Thereafter, Pineview filed a motion for new trial, which the trial court denied. From this order, Pineview appeals.

AMENDMENT OF PLEADINGS.

Pineview argues that the trial court erred in (1) denying its motion to amend the pleadings to conform to the evidence and in (2) failing to submit the issue of the independent negligence of A. O. Smith Harvestore to the jury. We hold to the contrary.

In a deposition taken seven months prior to trial, Bob Gordon, A. O. Smith’s representative, testified that he inspected the breather bags in November of 1982 and determined that they were old and “with fairly good accuracy” inoperable, but did not disclose this fact to anyone.

Three months prior to trial, A. O. Smith filed a motion for summary judgment asking that it be dismissed from the case. In its response to this motion, Pineview asserted that Bob Gordon’s inspection of the breather bags “constitutes independent inspection of the Harvestore silo by an agent of A. O. Smith Harvestore” and, “[cjonsequently, there is substantial evidence from which the jury could conclude that A. O. Smith Harvestore is guilty of an act of independent negligence.”

Well into the trial, Pineview moved that the pleadings be amended to allege independent negligence on the part of A. O. Smith Harvestore to conform to the proof that Bob Gordon inspected the breather bags in 1982 and found them to be old but did not disclose this fact to anyone even though he thought they should have been replaced. The following exchange then took place:

The Court: Somewhat in my mind, I thought that motion wasn’t necessary anymore.
Mr. Donovan (counsel for Pineview): Whether it is or not, Your Honor, I’d like to make it. And the allegation further is that Bob Gordon is the agent and employee of A. O. Smith Harvestore.
Mr. Allen: May I be heard on that, Your Honor?
The Court: Yes.
Mr. Allen (defense counsel): Your Honor, I offer Defendant’s Exhibit 25 and Defendant’s Exhibit 26, the pretrial information sheet and the supplemental pretrial information sheet filed by the Plaintiff in this case, which says, “This is a claim for negligent inspection and repair of a Harvestore silo and the resulting damage to livestock and loss of milk production as a consequence of the negligence,” and the supplemental includes what each witness would testify to, and there’s no testimony in there to anything other than negligent inspection or repair of the Harvestore silo.
The Court: What is he trying to make it conform to anyway?
Mr. Allen: He is trying to say now independent — independent liability on Harvestore, a claim that’s never been in this case, and we move for a continuance because we didn’t prepare for an independent liability case. We prepared for an agency case, and that’s what he’s been.
The Court: Well, I think the rule is that if the motion is objected to, it’s denied anyway, as I remember the rule from ten years ago. I’m not sure the motion is good anyway, right now. But anyway, it is denied at this late date.

This motion was renewed at the conclusion of the proof and denied again by the trial court. In addition, Pineview objected to the court’s failure to submit the question of A. O. Smith’s independent negligence to the jury.

Ark. R. Civ. P. 15 provides as follows:

(b) Amendments to Conform to the Evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended in its discretion. The court may allow a continuance to enable the objecting party to meet such evidence.

A party who knowingly acquiesces in the introduction of evidence relating to issues that are beyond the pleadings is in no position to contest a motion to conform. Bailey v. Matthews, 279 Ark. 117, 649 S.W.2d 175 (1985). Newbern, Arkansas Civil Practice and Procedure % 15-3 (1985). Thus, consent is generally found when evidence is introduced without objection. Id. However, “a court will not imply consent merely because evidence relevant to a properly pleaded issue incidentally tends to establish an unpleaded claim.” Quillen v. International Playtex, Inc., 789 F.2d 1041 (4th Cir. 1986).

It is undisputed that the appellees did not expressly consent to litigating the issue of A. O. Smith’s liability, as principal, for agent Bob Gordon’s negligence in failing to inform anyone after finding the breather bags to be old and inoperable in November of 1982. Thus, our only concern is whether the appellees impliedly consented to the trial of this issue. We quickly find they did not.

Granted, appellees did not object to testimony concerning this issue at Bob Gordon’s deposition seven months prior to trial or at trial. Notwithstanding, since Gordon’s testimony was relevant to the negligence of Southern and its employees in failing properly to inspect and repair the silo, a pleaded issue, the appellees were not put on notice of the unpleaded issue by this testimony sufficient to establish implied consent.

In addition, we are not persuaded by Pineview’s contention that the appellees were put on notice of this issue by Pineview’s argument in its response to the appellees’ motion for summary judgment. Pineview’s brief is devoid of language indicating that it was alleging negligence by Gordon in failing to inform. Pineview merely alleged Bob Gordon’s inspection of the breather bags “constitutes independent inspection of the Harvestore silo by an agent of A. O. Smith Harvestore” and, “[consequently, there is substantial evidence from which the jury could conclude that A. O. Smith Harvestore is guilty of an act of independent negligence.”

Surely, had Pineview intended to make Gordon’s negligence an issue prior to trial, it would have moved to amend its pleadings. Pineview’s supplemental pre-trial information sheet indicating the expected testimony of Bob Gordon reveals its intentions were to the contrary. The sheet merely states that Gordon would testify that the Southern workmen did not perform the work indicated by the invoice and that he found the breather bags to be defective. However, it does not state that Gordon would testify that he failed to inform anyone that the bags were old or inoperable.

Absent express or implied consent, the question of whether pleadings may be amended to conform to the evidence is within the sound discretion of the trial court. See Ark. R. Civ. P. 15(b). A party should be allowed to amend absent prejudice. Webb v. Workers’ Compensation Comm'n, 286 Ark. 399, 692 S.W.2d 233 (1985). An important consideration in determining prejudice is whether the party opposing the motion will have a fair opportunity to defend after the amendment. T. H. Epperson, Inc. v. Robinson, 274 Ark. 142, 622 S.W.2d 688 (1981).

Some of the trial court’s language in denying Pineview’s motion to amend was nebulous. However, in light of (1) the statement by appellees’ counsel in response to Pineview’s motion to amend that he had not prepared for an independent liability case and (2) the trial court’s ruling immediately thereafter stating that it was denying the motion at “this late date,” it is obvious that the court’s holding was essentially based upon prejudice to appellees which would have resulted from amendment of the pleadings...

This ruling is well founded. The appellees appeared in court prepared to try only a negligent repair and inspection action. If the trial court had allowed Pineview to amend its pleadings late in trial with a new unpleaded claim based upon the negligence of Bob Gordon in failing to inform anyone of the condition of the breather bags, the appellees would have been faced with the task of defending a matter significantly different from that for which they originally prepared. We conclude that the trial court did not abuse its discretion in denying Pineview’s motion to amend or in failing to submit the issue of the independent negligence of A. O. Smith Harvestore to the jury.

JURY MISCONDUCT.

Pineview contends that the trial court abused its discretion by denying Pineview’s motion for new trial on grounds of jury misconduct. We disagree.

During voir dire, the following took place:

The Court: Do we have any dairy farmers? Are you a dairy farmer?
Juror Mrs. Bennie Hicks: Yes, I am.
The Court: Okay. Would you identify yourself, please, ma’am?
Mrs. Hicks: I’m Mrs. Bennie Hicks, and we own a dairy farm in the Oak Grove Community.
Mr. Donovan (Pineview’s counsel): Are any of you engaged in the farm equipment or supply business?
Jurors: (no response)
Mr. Donovan: Are you familiar with Pineview Farms?
Mrs. Hicks: Yes, I am.
Mr. Donovan: Okay. Are you the lady that told us you’re in the dairy business?
Mrs. Hicks: Right.
Mr. Donovan: Have any of you ever worked with any silage — with silage in any way? Or a feed company?
Mrs. Hicks: (raises hand)
Mr. Donovan: Could you be fair to Pineview Farms?
Mrs. Hicks: Yes.
Mr. Allen (defense counsel): Mrs. Hicks, you’re kind of in a unique position here. You’re the only one that’s mentioned being involved in dairy farming. Could you tell us a little about your farm and how long you have been involved in it and how many cows? Just tell us a little about your farm.
Mrs. Hicks: We’ve been dairying for six years tomorrow. We are located in the Oak Grove community, which is about nine miles northeast of here. Presently, we’re running about sixty cows. My husband and I own it and operate it ourselves.

After trial, Pineview moved for a new trial based in part on jury misconduct. It attached affidavits indicating that (1) Bennie Hicks, Mrs. Hicks’ husband, while doing some custom tractor work for Pineview, became very upset when Pineview refused to repair his broken tractor and left without completing the job; that (2) Pineview bought silage from Hicks in May of 1981, the same silage for which Pineview claimed damages; and that (3) Mrs. Hicks endorsed the check given to her husband by Pineview for this silage.

After a hearing, the trial court denied the motion for new trial, finding that there was no direct proof that Hicks did anything wrong or committed fraud.

No verdict shall be void or voidable because any juror shall fail to possess the necessary qualifications unless the juror knowingly answers falsely or knowingly fails to respond to any question on voir dire relating to the qualifications propounded by the court or counsel in any cause. Ark. Code Ann. § 16-31-107 (1987). To obtain a new trial on the grounds of juror misconduct, a party must first demonstrate that a juror failed to honestly answer a question or deliberately concealed a matter during voir dire, and then further show that a correct response would have provided a valid basis for a challenge for cause. See McDonough Power Equipment, Inc. v. Greenwood, 464 U.S. 548 (1984). See also B. & J. Byers Trucking, Inc. v. Robinson, 281 Ark. 442, 665 S.W.2d 258 (1984); Hot Springs Street Railway Co. v. Adams, 216 Ark. 506, 226 S.W.2d 354 (1950). The motives for concealing information may vary, but only those reasons that affect a juror’s impartiality can truly be said to affect the fairness of a trial. McDonough, supra.

In a hearing on a motion for a new trial because of ineligibility of a juror, the complaining party has the burden of first establishing that (1) diligence was used to ascertain the desired information and that (2) he made known to the juror the specific information desired. Lemley v. Fricks, 251 Ark. 923, 475 S.W.2d 702 (1972); Kane v. Erick, 250 Ark. 448, 465 S.W.2d 327 (1971). See also Ark. State Highway Comm’n v. Kennedy, 233 Ark. 844, 349 S.W.2d 133 (1961). We affirm where there is substantial evidence to support a trial court’s finding on whether a party has met its burden. Lemley, supra.

First, there was absolutely no evidence introduced at the hearing on the motion for a new trial that Mrs. Hicks failed to honestly answer a question or deliberately concealed any matter. Secondly, Pineview has not met its burden of showing that it used due diligence to obtain the desired information and that it made known to Mrs. Hicks the specific information desired. In short, Pineview’s argument is meritless.

SUFFICIENCY OF THE EVIDENCE.

Pineview asserts that the trial court erred in failing to grant its motion for new trial in that there was insufficient evidence to support the jury verdict.

When acting upon a motion for new trial challenging a jury’s verdict, the trial court is required by Ark. R. Civ. P. 59(a)(6) to set aside the verdict if it is clearly against the preponderance of the evidence or contrary to law. Dedman v. Porch, 293 Ark. 571, 739 S.W.2d 685 (1987). The test on review, where the motion is denied, is whether the verdict is supported by substantial evidence. Schaeffer v. McGhee, 286 Ark. 113, 689 S.W.2d 537 (1985). It is only where there is no reasonable probability that the incident occurred according to the version of the prevailing party or where fair-minded men can only draw a contrary conclusion that a jury verdict should be disturbed. Blissett v. Frisby, 249 Ark. 235, 458 S.W.2d 735 (1970).

It is Pineview’s contention that the trial court abused its discretion in failing to grant a new trial since there was overwhelming proof that the silo was improperly inspected and repaired by employees of Southern on several occasions.

Notwithstanding testimony concerning negligence on the part of the employees of Southern, the jury concluded that Southern was not negligent, apparently accepting the employees’ testimony that they performed their services properly. Also, the jury could have reasonably concluded that it was Pineview’s negligence that caused the damage to the feed and livestock and loss of milk production in light of testimony that (1) upon arrival at the Pineview Farms, servicemen found the door to the silo open and that (2) on one occasion the men found a drain cap missing. The verdict is supported by substantial evidence.

Pineview’s argument is essentially an attack on the credibility of appellees’ witnesses. The weight and value to be given to the testimony of witnesses is in the exclusive province of the jury. Butler Mfg. Co. v. Hughes, 292 Ark. 198, 729 S.W.2d 142 (1987).

JURY INSTRUCTIONS.

The jury was instructed on negligence (AMI 301), the standard of care (AMI 305), proximate cause (AMI 501), affirmative defenses (AMI 206), and damages (AMI 2206,2221, and 2226). Pineview argues that the trial court erred in refusing to give the jury the following additional instruction on these matters:

The defendants allege poor management practices. Poor management practices of Pineview Farms, Inc., if any, are not to be considered as contributory negligence in comparing fault, unless related to defendants’ negligence, if any. However, you may consider management practices of Pineview Farms, Inc., in determining the amount of damages caused by defendants’ negligence, if any.

This argument is meritless.

Where a party is entitled to an instruction on an issue but requests an erroneous or incomplete instruction, he may not complain of failure of the court to charge the jury on the subject. See Williams v. First Security Bank of Searcy, 293 Ark. 388, 738 S.W.2d 99 (1987). See also Reynolds v. Ashabranner, 212 Ark. 718, 207 S.W.2d 304 (1948). Atrial court need not give an instruction which needs explanation, modification, or qualification. Williams, supra. A jury instruction must be simple, impartial, and free from argument. Paul v. Safley Construction Co., 287 Ark. 412, 700 S.W.2d 55 (1985). A litigant is not entitled to his particular preference in the wording of instructions, and a trial judge is not required to give repetitious or redundant instructions. Hopper v. Denham, 281 Ark. 84, 661 S.W.2d 379 (1983).

The matters embraced by Pineview’s instruction are adequately covered by the instructions given to the jury. In addition, the proffered instruction is erroneous on its face in that it commingles comparative and contributory negligence principles.

Affirmed.


source: Caselaw Access Project

author: Darrell Hickman, Justice.

license: Public Domain

text:
    Arthur JURNEY v. STATE of Arkansas
    CR 88-25
    766 S.W.2d 1
    Supreme Court of Arkansas
    Opinion delivered February 27, 1989

      The More Head Practice, by: Evelyn L. Moorehead, for appellant.

      Steve Clark, Att’y Gen., by: Kay J. Jackson Demailly, Asst. Att’y Gen., for appellee.
   Darrell Hickman, Justice.

Arthur Jurney was convicted of cutting his mother with a knife and raping her. He was sentenced to six years imprisonment and a $ 10,000 fine for second degree battery and life imprisonment for the rape. We affirm the convictions.

Jurney is a 32 year old alcoholic. At trial he admitted cutting his mother but said he had no recollection of the rape. He makes four arguments on appeal, all of which we find meritless.

First, he claims he is entitled to a new trial because two pretrial hearings were not recorded by the court reporter. Jurney’s lawyer did not ask that a record be made of the hearings. After an appeal was brought, we remanded the case to settle the record, and the judge did so. The appellant has not complained that the settlement of the record is inadequate. We have recognized that Rule 6 of the Arkansas Rules of Appellate Procedure is an effective tool for reconstructing the record. Holiday Inns, Inc. v. Drew, 276 Ark. 390, 635 S.W.2d 252 (1982).

Next, the appellant alleges he was entitled to have a court appointed psychiatrist observe the victim’s testimony and determine her competency. Two days before trial, he filed a motion claiming his mother was suffering from mental disease or defects.

There is some support for the proposition that a court has the discretion to order a psychiatric examination of a prosecuting witness if compelling reasons are shown on the record. See, e.g., Murphy v. Superior Court, 142 Ariz. 273, 689 P.2d 532 (1984). But here, the appellant could not present any evidence to back up his claim. We cannot say the court abused its discretion in denying the motion. See Kitchen v. State, 271 Ark. 1, 607 S.W.2d 345 (1980).

The appellant remained in jail fourteen months awaiting trial. He filed a motion to be released on his own recognizance under A.R.Cr.P. Rule 28.1(a). The judge refused to release him but set a trial date. The trial was conducted within eighteen months of his arrest, so the speedy trial provisions of the Rules of Criminal Procedure were not violated. Even if the trial judge erred in not releasing the appellant, we have held that a dismissal of the charges is not required. Jackson v. State, 290 Ark. 375, 720 S.W.2d 282 (1986). The appellant has been unable to demonstrate any prejudice to his case resulting from the delay. See Halfacre v. State, 292 Ark. 329, 731 S.W.2d 182 (1987).

Finally, the appellant argues that the victim should not have been allowed to testify about his prior violent acts. When asked if this was the first time the appellant had been violent to her and her husband, the victim said no, he had pulled a knife on her before and hurt his father several times. An objection was sustained.

When asked why she left town shortly after the incident, the victim replied that she feared her son would get out of jail and hurt her or her husband. Again, an objection was sustained.

The appellant got the relief he requested. Since he did not ask for either an admonition or a mistrial, we find no error. Daniels v. State, 293 Ark. 422, 739 S.W.2d 135 (1987).

We find the record contains no other reversible errors. Ark. Sup. Ct. Rule 11(f).

Affirmed.


author: John I. Purtle, Justice.

text:
    Elsie HUBBARD v. Floyd JACKSON
    88-257
    766 S.W.2d 2
    Supreme Court of Arkansas
    Opinion delivered February 27, 1989

      Mark S. Cambiano, P.A., for appellant.

      Matthews, Sanders, Liles & Sayes, by: Marci Talbot Liles, for appellee.
   John I. Purtle, Justice.

This is an appeal from a jury verdict and judgment in the amount of $6,927.00 in favor of the appellant. For reversal she argues that the trial court erred in failing to allow her to introduce evidence of the appellee’s consumption of alcohol and in refusing to grant her motion for a new trial. Neither point being persuasive, we affirm the judgment of the trial court.

On December 31, 1984, the appellant was driving a pickup truck along Highway 64 in the city limits of Morrilton, Arkansas. She stopped at an intersection to make a left turn, awaiting oncoming traffic, and was struck from behind by a vehicle driven by the appellee. The appellant testified that she was giving a left turn signal, and the appellee testified that she was not. The appellant was taken from the scene by her husband to a local hospital emergency room where she was treated and released. The appellee alleges that, prior to the time the police officers and her husband arrived, the appellant stated she was not injured.

She was treated from the date of the accident up until the time of the trial on February 16, 1988. She had very favorable medical testimony, especially from her chiropractor. On the other hand, the appellee had the testimony of a radiologist and an orthopedic surgeon that neither x-rays nor physical examination provided evidence of injury. The overall medical testimony was in direct conflict concerning the nature and extent of the appellant’s alleged injuries.

During the opening statement to the jury, the attorney for the appellant stated that immediately after the accident the appellee came up to her and said, “Fm sorry.” She intended to testify that at the time he apologized she smelled the odor of alcohol on his breath. An objection by the appellee’ attorney was sustained by the court on the grounds that intoxication had not been alleged in the complaint. The appellant’s attorney then attempted to amend the pleadings, but the court denied his request on the grounds that it would prejudice the appellee.

The appellant then proffered testimony that she smelled the odor of alcohol on the appellee’s breath. The parties then stipulated that the police officer who made the incident report was unavailable at the time of the trial. It was further stipulated that the report did not contain a check mark in the place designated “had been drinking.”

The jury evidently did not find the verdict form to their liking and therefore wrote their own, awarding the appellant $5,000 disability and $1,927.18 medical expenses through May, 1985, making the judgment total $6,927.18.

The first argument for reversal is that the trial court erred by refusing to allow evidence of intoxication. In support of this argument the appellant relies on the case of Inderrieden, Executrix v. Phillips, 294 Ark. 156, 741 S.W.2d 255 (1987). It is true that the Inderrieden case held that evidence of intoxication was a matter to be presented to the jury. However, intoxication was pled in the answer as an act of contributory negligence. The opinion stated that “it was for the jury to resolve that issue and to decide if indeed alcohol was a contributing cause or the cause of the accident.” One of the disputed issues in Inderrieden was whether the injured party was intoxicated at the time of the accident. Evidence that the injured party was drunk on the date of the accident and was an alcoholic was presented to the jury along with her testimony that the she was neither an alcoholic nor drinking on the date of the occurrence. In the present appeal, there was no assertion of appellee’s intoxication at the trial.

The appellant contends that she should have been able to amend her pleadings pursuant to Rule 15 of the Arkansas Rules of Civil Procedure. This rule provides: “If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended in its discretion.” The appellant candidly admits that we would have to find that the court abused its discretion in order to reverse on this point. Under the facts of this case we cannot so hold. In the absence of even allegations of some type of impairment as a result of intoxicants, we cannot hold the trial court abused it discretion.

The second point for reversal is that the trial court committed prejudicial error by failing to grant the appellant’s motion for a new trial. This argument is based essentially upon the argument presented in the first point for reversal. The chief argument in the motion for a new trial concerned the evidence about the smell of alcohol. This issue has been treated under the first point and will not be repeated now.

In her motion for a new trial, the appellant also argued the verdict was improper because it failed to award damages for pain and suffering. This is a matter which should have been taken up with the court at the time the verdict was returned. All parties were present and heard the reading of the verdict. The jury fashioned its own verdict form as follows:

Past medical expenses through May 1985 to include all or parts of plaintiffs exhibits number 1, 6, 7, and 9.
Disability-$5,000.

Perhaps the jury thought disability included pain and suffering. They may, however, even have found that the appellant did not incur pain and suffering. The instruction given to the jury (AMI 2201) on the measure of damages included the following element: “permanency of injury, medical expenses, pain and suffering, and loss of ability to earn.” The jury may have combined all or some of these elements into the award for $5,000.

It is well settled law in this state that on a motion for a new trial the jury verdict is favored and will not be set aside unless it is clearly against the preponderance of the evidence. Millers Casualty Insurance Co. v. Holbert, 253 Ark. 69, 484 S.W.2d 528 (1972). Moreover, we cannot speculate on how the jury arrived at its award. Young v. Bailey, 294 Ark. 300, 742 S.W.2d 905 (1988). Considering the dispute involving the facts and the divergence of expert medical opinion concerning the appellant’s injury, we are unable to hold as a matter of law that the verdict was clearly contrary to a preponderance of the evidence.

Affirmed.


text:
    NATIONWIDE RENTALS CO., INC. v. Henry CARTER
    88-221
    765 S.W.2d 931
    Supreme Court of Arkansas
    Opinion delivered February 27, 1989
    [Rehearing denied March 27, 1989.]

      Sessions, Fishman, Rosenson, Bisfontaine, Nathan & Winn; and Shackleford, Shackleford & Phillips, P.A., for appellant.

      Gibson & Deen, for appellee.

      Hays, J., would grant rehearing.

   John I. Purtle, Justice.

An Ashley County jury returned a verdict in favor of the appellee in the amount of $175,000 on his claim against the appellant for injuries arising out of an industrial accident. The appellant argues three points for reversal: (1) the trial court erred in refusing to grant the appellant’s request for a directed verdict at the close of the plaintiffs case; (2) the trial court erred in failing to grant a directed verdict at the close of all the evidence; and (3) the trial court erred in failing to grant the appellant’s motion in limine which sought to exclude testimony and evidence about prior malfunctions of the machine involved in this occurrence. Finding no reversible error, the judgment is affirmed.

The appellee was employed by Georgia Pacific, Inc., which rented the machine in question which is called a “manlift.” The appellant is in the business of renting machinery and equipment to the public. The manlift was not a new machine and was delivered to Georgia Pacific on March 13,1984. At the time of the delivery a “limiting switch” was missing from the boom on the machine. On April 14, 1984, one of appellant’s employees repaired the machine’s hydraulic pump system. He allegedly checked all of the switches at that time and found them in proper working order. The machine was again repaired on May 15,1984, at which time an employee of appellant replaced the muffler. Again all functions were tested and found to be in order. The accident involved in the lawsuit occurred on May 29, 1984.

The “manlift” is simply a crate or work platform, about four feet by four feet, with a wire cage around it, on top of a boom which extends some 35 or 40 feet in any direction above or beside the base of the machine. The control box for the machine is located in the rear of the platform or basket where people stand to work. The “limiting switch” should be connected to the top of the boom at the base of the platform. The purpose of this switch is to keep the whole unit from moving at a fast speed when the boom is extended. Apparently the extension of the platform releases this switch and, when the boom is extended, the limiting switch is designed to automatically prevent the unit from traveling at a fast speed. When the boom is retracted, the manlift will again travel at a fast pace.

On the date of the occurrence the appellee was painting a pipe quite some distance above the floor when he decided to switch the work platform from one side of the pipe to the other. In order to put the working platform on the opposite side of the pipe, it was necessary to lower the platform slightly and move the machine forward several feet. He intended to then raise the platform back to a position where he could reach the opposite side of the pipe he had been painting.

The events surrounding the appellee’s attempt to move the manlift form the basis of this lawsuit. The appellee testified that he hit the shift or lever which should have lowered the basket, that the machine then made a jerking motion, that he then released the lever. He said he again pushed the up/down control switch, at which time the machine traveled forward at a fast rate of speed. Since the control box was in the back of the basket, the appellee was facing away from the pipe at the time the machine moved forward. The machine traveled forward some four to six feet, and in the process, the appellee was pushed under the pipe, wedging his head between the control box and the pipe. The appellee’s face was crushed and bones in his head were broken.

Suit was filed by the appellee against the appellant under several theories of liability: negligence, strict liability and breach of warranty. During the trial Nationwide moved for a directed verdict on the grounds of insufficiency of the evidence, and the trial court granted its motion to dismiss the plaintiff’s breach of warranty claim and parts of the negligence claim. The court denied the motion with respect to the strict liability claim, and the allegations concerning failure to warn and failure to repair.

Appellant’s first point asserts that the trial court erred as a matter of law in failing to grant its motion for a directed verdict at the close of the plaintiff’s case. The second point reaches the same subject and is that the court erred in not directing a verdict at the close of all of the evidence. Both arguments will be treated together. The case went to the jury on the theories of strict liability and negligence in failure to repair and warn.

Whether there is substantial evidence to support a verdict is a question of law and should be decided by the judge. Farm Bureau Mutual Insurance Company v. Henley, 275 Ark. 122, 628 S.W.2d 301 (1982). Negligence and strict liability are not mutually exclusive claims. More than one theory of liability is permissible in a products liability claim. W.M. Bashlin Company v. Smith, 277 Ark. 406, 643 S.W.2d 526 (1982). Bashlin involved claims of strict liability and negligence on the part of the supplier of the allegedly defective linesman’s belt. The opinion stated that the jury might have found that the supplier was negligent in failing to warn on the use of the belt and in failing to warn about a particularly dangerous use called double D-ringing, or that the manufacturer had become aware of a defect and should have recalled the product. The opinion remarked that it would be mere speculation to try to decide on exactly which theory the jury based its finding of negligence. Bashlin further stated:

We have attempted to define intervening negligence which bars recovery of the original wrongdoer. In the case of Gatlin v. Cooper Tire & Rubber Co., 252 Ark. 839, 481 S.W.2d 338 (1972), we held that negligence of a third party is no defense unless it is the sole proximate cause of the injury and/or damages sustained and a plaintiff may recover from the original defendant if the negligence of such defendant was a contributing factor. Appellant also relies upon our holding in Larson Machine, Inc. v. Wallace, [268 Ark. 192, 600 S.W.2d 1 (1980)]. In Larson we upheld the doctrine that an independent intervening cause excludes liability for the earlier negligent acts of another party. In fact, we held that there was an independent intervening cause which shielded the manufacturer from the acts of the dealer who had rented the fertilizer spreader to the injured party. We find a substantial distinction between the facts in Larson and those in the present case. In Larson the machine left the factory with a shield to protect the power take-off shaft. The shield was intended to prevent injuries such as the one which subsequently occurred. The dealer who obtained the machine and rented it out did so with the full knowledge that the protecting shield had been removed and the power take-off gears were exposed. This was an obvious defect and dangerous condition which was known by the dealer who rented it out and the obviously negligent action on the part of the dealer was held to be an independent intervening cause.

The negligence of a third party is not a defense unless the third party’s negligence is the sole proximate cause of the injury. If the intervening act is a normal response to the situation created by the original actor’s conduct, then there is no intervening cause. When the negligent acts of the parties are concurrent there is no intervening cause which bars recovery against the original actor. Larson. The question of intervening cause is whether the original act of negligence or some intervening act of negligence is the proximate cause of the injury and this is a question for the jury. Hergeth, Inc. v. Green, 293 Ark. 119, 733 S.W.2d 409 (1987); and Forrest City Machine Works v. Aderhold, 273 Ark. 133, 616 S.W.2d 720 (1981). Moreover, the jury in the present case was thoroughly instructed on the question of appellee’s contributory negligence.

In Forrest City Machine Works we stated: “Manufacturers in Arkansas are not and should not be relieved of the duty to exercise due care in the design and manufacture of equipment merely because the dangerous feature is clearly exposed to those foreseeably using the machine.” In view of the testimony in the present appeal, it is obvious that the missing switch was not a defect which would have been detected under ordinary circumstances. Moreover, we stated in Forrest City Machine Works that an open and obvious defect would not automatically serve as a defense to all allegations of liability. We then referred to Larson Machine v. Wallace, 268 Ark. 192, 600 S.W.2d 1 (1980), where we dealt with the “open and obvious” theory. In Larson we upheld the judgment against the dealer in the machinery but reversed the verdict as to the manufacturer because the dealer handling the tractor had modified the power take-off area by removing a protective shield, thereby creating a danger which did not exist at the time it left the factory.

In the present case there is no evidence that anyone had attempted to repair the “limiting” function after the machine left the possession of the appellant. Several witnesses, both for the appellant and the appellee, testified that the limiting switch was not working when the machinery was delivered to the Georgia Pacific plant. The evidence was very clear that if the limiting function had been working it would have prevented the machine from moving at a fast rate in any direction when the boom was extended. The appellee’s testimony at trial was that when he walked to the back of the basket to push the controls he pushed the control throttle to lower the boom. He stated that the boom then went through jerking motions, at which time he immediately released the switch. He said he then re-engaged the switch to lower the boom, but instead it went forward at a fast speed.

An instruction booklet was introduced into evidence which stated that the machine would be immobilized for fast travel so long as the boom was extended. An expert witness for the appellants, Mr. Lawrence Hopkins, admitted that in the absence of the limiting switch the machine would function in a high-speed movement while the basket was elevated.

Several other employees of Georgia Pacific testified that the manlift had not been working properly for several days. George Morgan testified that he and another employee, Mike Young, inspected the manlift on the date in question and refused to work with it because they considered it unsafe. Morgan said he called Jimmy Stafford, a supervisor, and told him that the machine had been fouling up. Morgan stated:

“The part that I saw was on the travel of it. It didn’t start off slow like it should. Once you started into forward or reverse it was just wide open. The man standing in the bucket, if he took off and he got off of it, it would almost sling you out. Even with the handrails around it, it was, you know, a jolt.

Thus, there were several eyewitnesses who testified that the machine would travel forward fast when it was not supposed to do so. The proximate cause of the accident was a matter for the jury to decide.

The abstracts do not reveal that the appellant made any effort to warn Georgia Pacific’s employees that the limiting switch was absent or the consequences thereof. Also, on at least two occasions, representatives of the appellant came to the plant and repaired the machine for malfunctions not related to the switches. The appellant’s representatives testified that although they had not repaired the switches, they tested them on each of the two trips and found they were properly working.

On the other hand, the appellee’s witnesses testified that the machine had been deteriorating since it had been delivered to Georgia Pacific. They testified that it operated in a jerking manner and that it went forward when it should not have. These witnesses made other comments indicating the manlift was not functioning properly. Whether it in fact traveled fast forward is in sharp dispute. Nevertheless, this was a matter which was properly considered by the jury. Because it was a question of fact, we do not reverse if there is substantial evidence to support the verdict. Even if the appellee engaged the wrong lever, the machine should not have gone fast forward. See Otis Elevator Co. v. Faulkner, 288 Ark. 344, 705 S.W.2d 428 (1986).

The appellant relies on Williams v. Smart Chevrolet Company, 292 Ark. 376, 730 S.W.2d 479 (1987), for the proposition that the appellee “failed to negate other causes of the accident.” A plaintiff is only required to negate other causes if he is unable to show that the product was supplied with a defect. It is undisputed that this machine was supplied in a defective condition in that the safety switch or limiting switch was not operable. Had the switch been operable, the appellee contends that he would have been able to move out of the way of the pipe in time to avoid the injury.

In denying a directed verdict for the defendant the trial court, and this court on appeal, gives the evidence of the plaintiff its most favorable weight and probative value, taking into account all reasonable inferences deducible therefrom. Dan Cowling & Associates v. Clinton Board of Education, 273 Ark. 214, 618 S.W.2d 158 (1981). A motion for a directed verdict should be granted only if there is no substantial evidence which would support a verdict. Cockman v. Welder Supply Company, 265 Ark. 612, 580 S.W.2d 455 (1979).

The appellant correctly states that although Arkansas has adopted strict liability, the doctrine has not changed the burden of proof as to the existence of a flaw or defect in the produce. The plaintiff still has the burden of proving that a product was defective and that it caused the plaintiffs injuries. In Higgins v. General Motors Corporation, 250 Ark. 551, 465 S.W.2d 898, 900 (1971), we stated:

[A] plaintiff must still prove a defect in design or manufacture which was a proximate cause of his injury. This imposes upon him the burden of proving that the product was in a defective condition at the time it left the hands of the particular seller. [Citations omitted.] In the absence of direct proof that the product is defective because of a manufacturing flaw or inadequate design, plaintiff must negate the other possible causes of failure of the product for which the defendant would not be responsible in order to raise a reasonable inference that the dangerous condition existed while the product was still in the control of the defendant. [Citations omitted.] Otherwise, proof of proximate causation would be reduced to rank speculation

Appellant’s final argument is that the trial court erred in refusing to grant its motion in limine wherein it sought to exclude testimony or other evidence about previous malfunctions of this particular machine which were dissimilar to the malfunction allegedly experienced by the plaintiff. Other employees of Georgia Pacific testified that the vehicle had moved fast when it should not have. Although repairs were made to the hydraulic system and to the muffler, it was stated by the appellant’s employees that they also checked out the instrument panel at the same time. Everything but the limiting switch, which was not on this machine when it was delivered, was allegedly checked by the appellant and found to be in good working order. In view of the fact that the appellant’s witnesses testified that each time they came to repair the unit they also checked the control switches, the testimony concerning other malfunctions was certainly relevant to the question whether this machine was properly maintained.

Although the appellant correctly argues that it had received no notice of the specific malfunctions testified to by the other witnesses, it is undisputed that the machine did not have a limiting switch on it when it was delivered to the Georgia Pacific plant. There is no evidence that the appellant warned or even notified Georgia Pacific that the absence of the limiting switch created a possibility of injury. Certainly it cannot be argued that the defect was obvious and that therefore no warning was necessary. The jurors were instructed not to set aside their common sense in deciding the issues presented to them. A reasonable person might well have decided that the absence of the limiting switch and the failure to warn were the proximate causes of the appellee’s injuries.

Affirmed.


author: Robert H. Dudley, Justice.

text:
    DIXIE INSURANCE COMPANY v. JOE WORKS CHEVROLET, INC.
    88-217
    766 S.W.2d 4
    Supreme Court of Arkansas
    Opinion delivered February 27, 1989

      Wright, Lindsey & Jennings, for appellant.

      Shackleford, Shackleford & Phillips, P.A., for appellee.
   Robert H. Dudley, Justice.

This case presents a question concerning an oral binder of insurance. The appeal comes to us from the granting of summary judgment in favor of appellee, Joe Works Chevrolet, Inc. We affirm the granting of summary judgment.

On April 28,1987, appellee, Joe Works'Chevrolet, Inc., sold an automobile to Patrice and Anthony Ford. As a prerequisite for the sale, the Fords were required to have insurance coverage on the vehicle which was effective before delivery. One of appellee’s salesmen accompanied the Fords to the Wayne Smith Agency for the purpose of obtaining the necessary insurance coverage.

The Fords completed the application for insurance with a representative of the Wayne Smith Agency who told them that upon execution of the application, coverage was effective immediately. It is undisputed that the Wayne Smith Agency is appellant’s agent. The financing papers were forwarded to the offices of the General Motors Acceptance Corporation, the lienholder on the vehicle. Upon receiving the papers, a senior clerk for GMAC called the Wayne Smith Agency to verify insurance coverage before releasing appellee from a floor plan financing arrangement. Coverage was confirmed by the insurance agency representative who had handled the Fords’ application. She told the GMAC clerk that Wayne Smith had binding authority for Dixie Insurance Company for seventy-two hours.

Within seventy-two hours the vehicle was involved in a collision which resulted in substantial damage. GMAC made demand, but appellant refused to honor the demand. GMAC subsequently reassigned an Act of Sale and Chattel Mortgage to appellee. This lawsuit followed with both parties moving for summary judgment.

The trial court denied appellant’s motion, but granted that of appellee finding that at the time of the loss there was an oral binder of insurance for collision coverage on the automobile. This appeal followed.

Appellant first contends that the trial court erred in granting summary judgment to appellee because the Fords’ premium check was not honored by the bank, and payment of the premium was a necessary condition for operation of the policy. Generally, payment of the premium is a necessary condition for the operation of a policy of insurance. Leigh Winham, Inc. v. Reynolds Ins. Agency, 279 Ark. 317, 651 S.W.2d 74 (1983). However, as explained in Leigh Winham, we recognize exceptions to that general rule. One of the exceptions is that effective oral binders are often issued prior to payment of the premium. Id. at 320. Therefore, appellant’s first point has no merit because the trial court did not base coverage on the policy, but rather upon an oral binder.

Appellant’s second point of appeal is that the trial court erred in granting summary judgment because the court’s finding that an oral binder was issued was based on inadmissible evidence.

Facts stated in an affidavit must be admissible in evidence if they are to be relied upon in granting or denying summary judgment. Organized Security Life Ins. Co v. Munyon, 247 Ark. 449, 446 S.W.2d 233 (1969). Appellant argues that the statements contained in the affidavits of appellee’s salesman and the GMAC senior clerk, asserting that they were told by representatives of the Smith Agency that those representatives had the authority to give an oral binder of insurance, are hearsay, and, therefore, not admissible in evidence. Appellant does not dispute the fact of an agency relationship between it and the Wayne Smith Agency. Rather, appellant asserts that inadmissible hearsay evidence was presented with respect to the scope of that agency relationship.

A.R.E. Rule 801 (d)(2)(iv) provides in pertinent part:

(d) Statements Which Are Not Hearsay. A statement is not hearsay if:
(2) Admission by party-opponent. The statement is offered against a party and is . . . (iv) a statement by his agent or servant concerning a matter within the scope of his agency or employment, made during the existence of the relationship, ....

It is undisputed that the statements in question were made by appellant’s agent during the existence of the agency relationship. Therefore, in order to determine if the statements fall within the exception to the hearsay rule, and would be admissible evidence, it is only necessary to make a preliminary determination concerning whether the statements involved a matter within the scope of that agency relationship. That determination is more a matter of the substantive law of agency that the law of evidence. See J. Weinstein & M. Berger, 4 Weinstein’s Evidence 801-211 to -212 (1987). Further, deciding whether the challenged statements are admissible in evidence does not involve a question of fact. Rather, it involves a question of law based upon the facts that have been presented.

Neither agency nor the extent of an agent’s authority can be shown by his own declarations in the absence of the party to be affected. Hawthorne v. Davis, 268 Ark. 131, 594 S.W.2d 844 (1980). However, circumstantial evidence may be sufficient to establish the scope of agency, and the declarations of the purported agent may be used to corroborate other evidence of the scope of agency. See id. Further, it is no longer necessary that an agent be authorized by his principal to make a statement. Missouri Pacific R.R. Co. v. Arkansas Sheriff’s Boy’s Ranch, 280 Ark. 53, 655 S.W.2d 389 (1983).

Restatement (Second) of Agency § 285 (1958) provides:

§ 285. Statements as to Authority
Evidence of a statement by an agent concerning the existence or extent of his authority is not admissible against the principal to prove its existence or extent, unless it appears by other evidence that the making of such statement was within the authority of the agent, or as to persons dealing with the agent, within the apparent authority or other power of the agent.

(Emphasis added.) Further, in discussing the power of an agent to bind the insurer, the following explanation appears in Appleman, Insurance Law and Practice § 7230 (1981):

Where an agent is furnished with indicia of authority by the insurer, it may be bound by his acts. Certainly such authority would seem to be present where the agent issues and delivers policies of the company. Where the evidence shows a holding out or apparent authority, the company is bound, if, in fact, he is an agent of the company.

Finally, we have long recognized that some statements, made by an admitted agent, are admissible as to the scope of employment. See Golenternek v. Kurth, 213 Ark. 643, 212 S.W.2d 14 (1948), and cases cited therein.

It is not disputed that the Wayne Smith Agency is appellant’s agent. Appellee’s salesman took the Fords to the Wayne Smith Agency for the express purpose of obtaining insurance coverage on the car that would be effective before delivery of the car. That intention was conveyed to a representative of the agency. The representative then completed an application for the Fords that had appellant’s name printed at the top and a label showing the agency’s name and agent code number. The representative also inserted the date and time of April 28, 1987, 3:35 p.m., as the effective date of the policy. For the purpose of determining whether the statements would be admissible in evidence, those undisputed facts are sufficient circumstantial evidence that it was within the apparent authority of the agent to issue an oral binder of insurance. Consequently, the statements made by the representatives of the Wayne Smith Agency would be admissible in evidence, and, therefore, the trial court did not err in considering them.

Neither did the trial court err in concluding that an oral binder had been issued. The affidavits supporting appellee’s motion for summary judgment established prima facie that there was no material issue of fact remaining and that an oral insurance binder had been issued which would cover the damage to the automobile. Appellant, on the other hand, offered nothing in response to the motion to show that material issues of fact remained.

Once the moving party has demonstrated prima facie that no material issue of fact remains, then the defending party must respond showing facts which would be admissible in evidence to create a factual issue. ARCP Rule 56; D. Newbern, Civil Prac. & Proc. 255 (1985). Since appellant did not do so, the trial court was correct in finding that a valid oral binder had been issued.

Affirmed.


author: Steele Hays,’ Justice. Darrell Hickman, Justice, John I. Purtle, Justice,

text:
    Pauline CRUMLEY v. Morgan BERRY d/b/a Morgan Berry Appliance
    88-313
    766 S.W.2d 7
    Supreme Court of Arkansas
    Opinion delivered February 27, 1989

      James C. Luker, for appellant.
    No brief filed.
   Steele Hays,’ Justice.

The only question in this case is whether a “rental with option to purchase” agreement constituted a sale and not a true lease.

Pauline Crumley, the appellant, entered into “rental with option to purchase” contracts for a used refrigerator and microwave oven with Morgan Berry Appliance, the appellee. Berry supplied form contracts which allowed for a week-to-week rental only, with no requirement that the lessee continue the contract for more than one week. There was an option to buy the specified property after an agreed number of weeks, the only consideration being the lessee’s fulfillment of the obligations of the contract, i.e., the weekly payments for the specified number of weeks.

The refrigerator contract was signed on June 30,1986, and provided for a weekly rental fee of $17.90. If Ms. Crumley chose to rent for fifty-two weeks and fulfilled the obligations of the contract for that period of time, title would be transferred to her name. The refrigerator’s ticketed purchase price was $599.95. The microwave contract was signed on November 15, 1986, and provided for a weekly rental fee of $10.00, with transfer of title if the lessee paid for forty weeks. The cash price of the microwave was $250.

Ms. Crumley made her regular weekly payments on both items until just prior to April 3,1987. At that time she had made thirty-nine payments on the refrigerator, a total of $698.10, and nineteen payments on the microwave, a total of $190. While the record is not entirely clear, it appears Ms. Crumley stopped making payments because she thought her accumulated payments for both appliances at that time equalled the cash price of both items.

When Ms. Crumley stopped making payments, Mr. Berry made several attempts to repossess the appliances, but Ms. Crumley would not relinquish them. On October 2, 1987, Mr. Berry brought suit in municipal court and a judgment was entered in his favor.

Ms. Crumley appealed to the circuit court, and a bench trial was held on April 25,1988. The only evidence presented was the rental contract and testimony by Mr. Berry and Ms. Crumley, each relating the basic facts of the transaction. After their testimony, Ms. Crumley moved for a directed verdict on the grounds that the rental agreement was in reality a financing arrangement for a sale and was usurious.

The trial court denied the motion, finding the agreement to be a true lease and entered judgment for Mr. Berry. Ms. Crumley appeals from that judgment, alleging that the trial court erred in finding the agreement was a true lease.

When considering whether a particular agreement constitutes a lease or a sale, we look at a number of factors to determine the nature of the contract. See Hill v. Bentco, 288 Ark. 623, 708 S.W.2d 608 (1986); Bell v. Itek, 262 Ark. 22, 555 S.W.2d 1 (1977). The agreement in this case includes one particular factor that would strongly favor an interpretation of a sale: the option to buy the items at the end of a specified period of weeks for no additional cost, or in other words, the “absence of any appreciable residual in the lessor at the end of the lease.” Hill v. Bentco, supra. This factor was significant in both Hill v. Bentco, supra, and Bell v. Itek, supra.

Still, as noted in Hill, all factors must be considered and looking further in this case, what is noticeably absent is any obligation on the part of the lessee to make payments equivalent to the purchase price of the items, an obligation present in both Hill v. Bentco and Bell v. Itek. Under the contract, Ms. Crumley was free to terminate the arrangement at the end of the first week, or any subsequent week. There was no obligation to continue payments for the specified periods. This course of action was completely optional with Ms. Crumley. Is such an obligation necessary to finding a contract for sale?

We have not previously considered this question, but from an examination of other jurisdictions and authorities, it appears that the greater weight of authority agrees that when the lessee has the right to terminate at any time and is under no obligation to make payments equivalent to the purchase price of the leased goods, it will generally preclude a finding that the arrangement is a sale and not a lease.

A basic test was devised by Professor Peter Coogan to distinguish a true lease from a conditional sale:

Where the lessee has agreed to pay an amount substantially equal to the value of the goods of which he is to become the owner (or has the option to become the owner), the parties have entered into a conditional sale agreement. P. Coogan, Leases of Equipment and Some Other Unconventional Security Devices: An Analysis of UCC Section 1-201(37) and Article 9, Benders Secured Transactions Under the Uniform Commercial Code § 4A.07[1] (1977).

This test is discussed in Ronald M. DeKoven, Leases of Equipment: Puritan Leasing Company v. August, A Dangerous Decision, 12 Univ. San Francisco L. Rev., p. 259 (1978):

Coogans’ test established the following three elements as the sine qua non for determining whether a lease is a finance lease: (1) there must be an agreement by the lessee to pay the lessor a set amount; (2) such amount must be equivalent to the value of the leased goods; and (3) the lessee must become the owner or have the option to become the owner of the leased goods. If any one of these elements is lacking, the lease is not a finance lease, but a true lease. The test is of great significance as it not only determines the nature of the transaction, but it also determines the law applicable to the enforceability of the rights and remedies of the parties thereto.

The purchase price obligation was recently discussed in In Re Armstrong, 84 B.R. 94 (1988 W.D. Tex.), where the court reemphasized that before any other factors are considered, it must be first determined that the lessee was under an affirmative obligation to pay the equivalent of the purchase price. Armstrong, citing In Re Peacock, 6 B.R. 922 (N.D. Tex. 1980), among several others for this proposition, notes Peacock’s three-tier analysis for making the lease/sale distinction. The first tier is the obligation to pay the equivalent purchase price and the second tier is the “no or nominal consideration” test. Armstrong further notes that Peacock requires that that first tier must be met before proceeding with the next tier of the “no or nominal consideration” test.

In B. Clark, The Law of Secured Transactions Under the Uniform Commercial Code, § 1.5[4] (1980), the obligation to pay the full purchase price is listed as one of five key factors in the lease/sale distinction. Clark’s 1988 Supplement elaborates on this issue, discussing In Re Marhoefer Packing Co., 674 F.2d 1139 (7th Cir. 1982), one of the leading cases requiring the full payment obligation as a prerequisite to finding a sale over a lease. Clark writes:

The Marhoefer Packing decision makes great good sense. In defining a “security interest” to include leases with nominal purchase options in § 1-201(37), the drafters of the Code were attempting to stop form from overwhelming substance. They were trying to catch disguised conditional sales and purchase money loans. But when the lessee can terminate the transaction early by returning the property, the purpose behind the definition in § 1-201(37) is gone and the transaction should be considered as a legitimate lease, even though the lease also provides that if rent is paid for a certain period, the lessee has an option to purchase the goods for nominal or no consideration. B. Clark, supra, § 1.5 [3] (1988 Supp.)

While there has not been complete agreement on this issue, recent developments in the Uniform Commercial Code may well minimize the significance of previous cases which have overlooked the purchase price obligation. As noted in R. Hillman, J. McDonnell, S. Nickles, Common Law and Equity Under the Uniform Commercial Code, § 18.05 [3] [a] (1988 Cum. Supp.), Article 2A, which governs true leases, has been added to the official uniform version of the Code. The definition of “security interest” includes the following:

Whether a transaction creates a lease or security interest is determined by the facts of each case; however, a transaction creates a security interest if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and (a) The original term of the lease is equal to or greater than the remaining economic life of the goods. Uniform Commercial Code Article 2A, Leases, Conforming Amendment Section 1-201(37). [Our emphasis.]

Hillman, et al. comments on the changes indicated by this new addition to the Code:

Most important, the new definition adopts the case law holding that, even when there is no option to purchase, a lease is a secured transaction if the lease term is equal to or greater than the economic life of the goods. On the other hand, the new definition rejects the cases that allow that a lease is intended as security even though the lessee has a free right to terminate the arrangement. Id. [Our emphasis.]

In light of the foregoing, we hold that the sounder view requires as a prerequisite to finding a sale, that there be an obligation to pay the purchase price of the leased goods. There may be exceptions to this general proposition, for example, where in spite of the language of the contract, the lessor is clearly led to believe the arrangement is a sale. See In re Puckett, supra. Those are not the facts before us, however.

Here, there was no evidence to show Ms. Crumley was led to believe the arrangement was a sale and not a lease. While she testified that when she made the payments at the store she had told the secretary she was buying the items, there was no evidence to show, nor did Ms. Crumley even claim that anyone at Berry’s store had done or said anything to give her the impression that the transaction was anything but a lease. The only evidence offered on that account was the lease itself which clearly states that the lessee may terminate the arrangement at any time. There is no language in the contract that requires or even suggests that the lessor is obligated to pay the full term of the contract.

Without any requirement to pay throughout the contract and with the corresponding right to terminate the contract at any time, we must find, as did the trial court, that under the facts and the language of the contract, the transaction was a lease and not a sale.

Affirmed.

Hickman, J„ concurs.

Purtle, J., dissents.

Darrell Hickman, Justice,

concurring. I would affirm under Rule 9 of the Arkansas Supreme Court Rules. The agreement was not abstracted, and I cannot say whether it is a sale or a lease.

John I. Purtle, Justice,

dissenting. The instrument in question clearly reflects a sale and is therefore usurious. It looks like a sale; it sounds like a sale; it has all of the attributes of a sale.

The appellee admitted that at the end of the lease period the property would belong to the lessee, provided she paid him $ 1.00. This amount was not mentioned anywhere in the contract. Obviously, neither party anticipated that these items were to be returned to the “seller” or “lessor” upon the termination of the contract.

The instrument in question provided that if the appellant made the total payments on her refrigerator she would have paid about $930.00. She had paid roughly $700.00 at the time she stopped making payments. The cash price of the refrigerator was listed at $600.00. The cash price of the microwave was $250.00; she paid $ 190.00 on the agreed price of $400.00. The duration of the contract was for fifty-two weeks on the refrigerator and forty weeks on the microwave. This transaction clearly was a sale and was consequently usurious.

The transfer instruments in this case provided that, at the end of the payment schedule, the title to the property would be transferred to the appellant. I believe that fact alone is sufficient to warrant a holding that this was a sale and not a lease. This factor appears to have been of particular significance in our decisions in Hill v. Bentco Leasing, Inc., 288 Ark. 623, 708 S.W.2d 608 (1986), and Bell v. Itek Leasing Corp., 262 Ark. 22, 555 S.W.2d 1 (1977).

The instrument of agreement between the parties provided that the lessee was responsible for the loss, theft, or destruction of the property from any and all causes whatsoever. The purchaser was obligated to pay the full price, even if the property were destroyed by an act of God. Also, if the property were damaged to an extent less than its full value, the agreement provided that the renter agreed to pay the owner for partial damage or destruction to the property.

The majority opinion employs the test of Professor Peter Coogan to determine whether this is a lease or sale. Professor Coogan states:

Where the lessee has agreed to pay an amount substantially equal to the value of the goods of which he is to become the owner (or has the option to become the owner), the parties have entered into a conditional sale agreement.

The transaction at issue in this appeal could not be more accurately described than by these words of Professor Coogan.

The majority also apply the following three point test to determine whether a transaction is a sale:

(1) There must be an agreement by the lessee to pay the lessor a set amount; (2) such amount must be equivalent to the value of the leased goods; and (3) the lessee must become the owner or have the option to become the owner of the leased goods.

If any one of these elements is lacking, the lease is not a financing agreement but a true lease.

None of these elements is lacking in the case before us. There was an agreement to pay a stated amount; that amount was equivalent to the value of the goods; the lessee was to become the owner at the end of the payment period. This instrument meets all three of the above requirements. In keeping with the rationale of Hill v. Bentco and Bell v. Itek, I see no reason why a sale should not be called a sale.

I would reverse and remand.

         “[/]f a lease contains an option in the lessee to terminate, then there is no obligation to pay an amount substantially equal to the purchase price and thus no conditional sale under pre-Code law as well as no security interest under the UCC.” Coogan, § 4A.01[5][c], [Our emphasis.]

       As Coogan himself notes, see P. Coogan, W. Hogan, D. Vagts, Secured Transactions Under the Uniform Commercial Code § 29A.05[l][a] (1987 Supp.), noting authority contrary to Marhoefer: In re J.A. Thompson & Son, Inc., 665 F.2d 941 (9th Cir. 1982). See also In re Elliott, 18 B.R. 602 (D. Neb. 1982); Sight & Sound of Ohio, Inc. v. Wright, 36 B.R. 885 (D.C. 1983); In re Puckett, 60 B.R. 223 (M.D. Tenn. 1986).


author: David Newbern, Justice.

text:
    Rollie BEEBE v. STATE of Arkansas
    CR 88-177
    765 S.W.2d 943
    Supreme Court of Arkansas
    Opinion delivered February 27, 1989

      Davis & Cox, by: Dennis J. Davis, for appellant.

      Steve Clark, Att’y Gen., by: /. Denhammcclendon, Asst. Att’y Gen., for appellee.
   David Newbern, Justice.

This appeal arises from an order causing statutory forfeiture of guns owned by the appellant, Rollie Beebe. The guns were found in Beebe’s house when he was arrested for possession of several types of controlled substances and possession with intent to deliver of another controlled substance. We reverse the forfeiture judgment because the state produced no evidence showing the guns fell within the description of the kind of property to be forfeited according to the statute on which the state relied.

A forfeiture of property may be ordered by the court when the court “finds upon a hearing by a preponderance of the evidence that grounds for a forfeiture exist. . . .” Ark. Code Ann. § 5-64-505(e) (1987).

The only part of the forfeiture statute which might possibly permit forfeiture of the guns is Ark. Code Ann. § 5-64-505 (a) (2) (1987), which provides for forfeiture of “[a]ll raw materials, products, and equipment of any kind which are used, or intended for use, in manufacturing, compounding, processing, delivering, importing, or exporting any controlled substance or counterfeit substance . . . .” While it can be imagined that the guns seized were used or intended for use in, perhaps, delivery of the drug Beebe was found to have intended to deliver, no evidence was produced to that effect.

Because the forfeiture statute is penal in nature and because forfeitures are not favorites of the law, we interpret the statute narrowly. Gallia v. State, 287 Ark. 176, 697 S.W.2d 108 (1985). The “hearing” consisted only of arguments by counsel upon Beebe’s motion to have his property returned to him to which the state responded by seeking forfeiture. Beebe had pleaded guilty to the criminal charges. Neither in his discussion with counsel nor in the forfeiture order did the court refer to any evidence pertinent to this issue which might have been produced at a plea proceeding. Given the state’s failure to present any evidence at the hearing, the record before us contains no evidence from which the court could have concluded that the guns were equipment used in delivering controlled substances. None of the arguments in the state’s brief addresses the state’s failure to present evidence, therefore, we need not discuss them.

Reversed and dismissed.


author: David Newbern, Justice. Darrell Hickman, Justice, Steele Hays, Justice,

text:
    IN THE MATTER OF Kimberly Anne PORTER, An Incompetent
    88-315
    765 S.W.2d 944
    Supreme Court of Arkansas
    Opinion delivered February 27, 1989
    [Rehearing denied March 27, 1989.]

      Richard B. Dahlgren, Ass’t Gen. Counsel, Department of Human Services Office of General Counsel, for appellant,

      Steve Inboden, for appellee.
   David Newbern, Justice.

This is a guardianship case. The State of Arkansas appeals a probate court decision that the guardian of the ward’s estate may not use money represented by a certificate of deposit (CD) owned by the ward to reimburse medicaid payments which had been made and were to be made for the ward’s care. The first issue presented is whether there was subject matter jurisdiction in the probate court to determine how the principal of the CD was to be used. We hold the probate court had jurisdiction of the guardianship and authority to approve or disapprove the guardian’s expenditure of the fund represented by the CD. The second issue is whether there was sufficient evidence to support the court’s decision that the fund could not be used by the guardian to reimburse the state for medicaid assistance to the ward. We find the state has misperceived and mischaracterized the decision made by the probate court. The insufficiency of the evidence argument is directed to an issue not decided and thus is unavailing. The state also argues that the guardian was estopped to assert that the fund could not be used because of her failure to disclose it when she initially applied for medicaid assistance. We decline to address that issue as it was not raised at the trial. Polnac-Hartman & Assoc. v. The First Nat. Bank, 292 Ark. 501, 731 S.W.2d 202 (1987).

Patsy Smith is the mother of Kimberly Anne Porter (Kim). Kim is a cerebral palsy victim who is severely retarded and requires extensive professional care. At the time of the proceedings below Kim was 14 years old but was described by Mrs. Smith as having the mental development of a child six months old. Mrs. Smith was appointed guardian of Kim’s person and estate by the Poinsett County Probate Court. When the guardianship was established, Kim’s estate consisted of the $30,000 CD in question here and a checking account containing cash accumulated from social security benefits and interest from the CD. The CD was funded from life insurance proceeds from Kim’s deceased father’s estate.

The guardianship order provided that Kim’s social security benefits and the interest from the CD could be used by Mrs. Smith to meet Kim’s needs but that the principal of the certificate of deposit could not be invaded without court approval.

When Kim grew too big for Mrs. Smith and her husband to care for at home, Mrs. Smith applied to have her placed in the Conway Human Development Center, an agency of the Arkansas Department of Human Services, and she applied for financial assistance through medicaid. Prior to 1987 she signed two application forms on which she listed Kim’s assets but did not include the CD. On her 1987 application, however, she listed the CD and was told that she was not entitled to future medicaid financial assistance and would be responsible for the assistance already rendered. Some $47,000 had been spent by medicaid on Kim.

Mrs. Smith appealed the ruling through administrative channels and petitioned the probate court for a determination whether the CD principal could be used for medicaid reimbursement. The State of Arkansas, which is the medicaid provider, using state and federal funds, became a party to the petition before the probate court. Mrs. Smith’s position in the probate court was that the court should rule that the CD money could not be thus used.

The probate court ruled that the CD principal is “inaccessible to the guardian for the purpose of payment to or reimbursement of the Conway Human Development Center or Medicaid for benefits provided or to be provided to the ward. . .

1. Jurisdiction

The appellant, the State of Arkansas, contends the probate court lacked jurisdiction of the issue because it was pending before administrative agencies from which an appeal to the circuit court would lie. Mrs. Smith’s position is that only the probate court can decide to release the money which is the subject of the guardianship.

We have not been given references to the regulations governing medicaid eligibility. The state’s argument, however, conveys the idea that one is not eligible for medicaid assistance when there are assets at one’s disposal in excess of a certain value. Testimony of an official of the Conway Human Development Center put that maximum value at $1,900. The argument specifically is that the guardian, Mrs. Smith, has not exhausted the administrative remedies she initiated to review the ruling against the estate, including appeal to the circuit court as provided in Ark. Code Ann. § 25-15-212 (1987). It is contended that, if it is allowed to stand, the probate court decision will be res judicata thus frustrating the statutory power of the circuit court to review the administrative decision. If, as we discuss below, the administrative decision whether the CD is “accessible” for medicaid reimbursement involves elements such as whether the guardian has made an effort to obtain the funds, the probate court decisions will not be a bar to that decision. We do not read the probate court’s order to interpret or construe the federal law regarding medicaid reimbursement requirements.

Neither are we persuaded by the state’s citation of UHS of Arkansas, Inc. v. Charter Hosp. of Little Rock, Inc., 297 Ark. 8, 759 S.W.2d 204 (1988). There we required a chancery court to transfer to the circuit court a case in which a declaratory judgment had been sought with respect to the same issues pending in a circuit court proceeding. In that case neither court had been assigned exclusive jurisdiction by statute of the issues in question. In the case before us now, the circuit court may ultimately have to determine the issue of Kim’s eligibility for medicaid. Apparently one factor in that decision will be whether the fund represented by the CD is “accessible” to Kim’s guardian for the purpose of reimbursement of medicaid payments.

The circuit court’s power to review and conclude, subject to appeal, whether the money in the CD is “accessible” under whatever state or federal regulations may apply does not mean that the circuit court has the authority to determine how a guardian is to use a ward’s funds. That decision lies exclusively within the jurisdiction of the probate court according to Ark. Code Ann. § 28-65-107(a) (1987) which provides: “The jurisdiction of the probate court over all matters of guardianship, other than guardianships ad litem in other courts, shall be exclusive, subject to the right of appeal.” Another statute, Ark. Code Ann. § 28-65-310(c)(3) (1987), deals with the probate court’s authority to invade the principal of a minor ward’s estate to provide for support.

In Arkansas Dept. of Human Services v. Donis, 280 Ark. 169, 655 S.W.2d 452 (1983), it was made clear that a circuit court decision with respect to the “accessibility” of funds of a ward, in the context of deciding eligibility for medicaid and food stamp benefits, may depend on a decision to be made by another court having jurisdiction and direct responsibility for expenditure of the funds in question. The mother of two children whose father was the victim of a wrongful death had been appointed conservator of the children’s estates in a New Mexico proceeding. Each of the children had some $4,800 remaining from the wrongful death recovery. The Arkansas state agencies concerned determined that the children were not entitled to medicaid or food stamp assistance due to the existence of these funds and the absence of any court imposed limitations on the use of them. The only limitation imposed by the court had been the requirement that the money not be spent without a court order. The circuit court reversed the administrative ruling and held that the funds were subject to court-ordered limitations and thus not available to the mother to use for the childrens’ support. We reversed the circuit court, and our opinion stated:

No court imposed limitations have been placed on her use of those funds, other than that she must obtain court permission to remove them from the savings accounts. She has not sought the court’s permission. The burden is upon her, the applicant, to demonstrate these funds are inaccessible. She has not met the burden of showing that the trust funds are inaccessible within the meaning of subsection ii, 7 CFR § 273(e)(8), supra.
With respect to the eligibility for medicaid, the critical regulation is § 3332.2(13) of the appellant’s Medical Services Manual, which supplements 42 CFR § 436.840. It states in pertinent part: “Whether the principal of a trust is resource depends on its availability to the applicant.” As we have stated, the New Mexico court order makes the savings accounts available to the appellees upon approval of a petition for the removal from the accounts. Furthermore, a beneficiary’s interest in a trust can be properly counted for the purposes of determining medicaid eligibility. See McNiff v. Olmsted County Welfare Department, 176 N.W.2d 888 (Minn. 1970). In the circumstances, it follows that the trial court erred in holding that the savings accounts are not available to the appellees. [Emphasis in original.]

It must be noted that our decision in the case resulted from appeal of a circuit court review of the question of accessibility of funds in the context of deciding eligibility for food stamps and medicaid under the regulations then extant. It was not an appeal from a guardianship, conservatorship, or trust order. The very point of the case was that the mother of the children had not made application to the court which had established the conservator-ship to be permitted to use the funds for everyday support of the children.

While the Donis case is indicative that the circuit court has jurisdiction to make the accessibility decision it does not suggest that the court which had established the conservatorship was without jurisdiction to determine how the children’s money would be spent. To the contrary, the suggestion of the opinion is that the circuit court’s decision might well be dependent upon a decision in the court which had established the conservatorship if the conservator had made an effort to obtain permission to use the funds for the childrens’ support and failed.

We have been given no reason whatever to question the statutory assignment of exclusive jurisdiction of the probate court of matters involving the guardianship of the estate of an incompetent. Given our determination that the probate court has exclusive jurisdiction to govern the release of funds in Kim’s guardianship estate, we turn to focus on that court’s decision.

2. Sufficiency of the evidence

The state’s argument on this point is that our decision in Arkansas Dept. of Human Services v. Donis, supra, requires a showing by the guardian that she has attempted to obtain release of the funds to make them accessible for medicaid reimbursement and that she has made no such attempt here. Mrs. Smith argues she sought the appropriate court order but that it would have been hypocritical of her to have urged the release of the funds in view of her feeling that Kim would need the money in the future.

The parties have argued the issue as if the decision being made in the probate court were like the circuit court decision in. the Donis case, that is, whether the CD fund is “accessible” under the medicaid regulations. That question was not before the probate court, but was under consideration in administrative channels and may ultimately be decided on review in the circuit court. Again, we have not been cited to any of the current regulations or laws governing this issue, but we speculate that the issue in the administrative and circuit court proceedings may turn out to be whether Mrs. Smith has made an eifort to get the funds released. In Steinberg v. New York State Dept. of Social Services, 90 Misc.2d 547, 394 N.Y.S.2d 763 (1977), a trust beneficiary, who was an applicant for medical assistance through New York social services, declined to seek an order permitting invasion of the corpus. The court held:

Until a bona fide effort has been made by the petitioner to seek an invasion of the Trust created for her benefit as may be permitted by law, she may not be considered a person who “requires” public assistance and the respondents, rightfully, so determined. The petition is dismissed and judgment may be entered accordingly. The petitioner, of course, may again seek relief in this Court should she exhaust her remedies under section 7-1.6 of the EPTL.

We cite and quote from this case only to show the nature of the issue which may arise before the circuit court where the question may be whether there is evidence to show that an effort or a good faith effort has been made by Mrs. Smith to obtain release of the CD money for use in reimbursement of medicaid payments. The state seems to argue that that decision has been made in the probate court. It has not, and therefore we reject the state’s insufficiency of the evidence argument, as it is addressed to an issue not decided by the probate court.

Conclusion

We conclude the probate court had exclusive jurisdiction to entertain the petition to determine how the funds of the ward would be used. We are not persuaded by the argument that the evidence was insufficient to support the probate court’s decision because the state’s brief misperceived the issue before the probate court. We have, therefore, been given no reason to reverse.

Affirmed.

Hickman and Glaze, JJ., concur.

Hays, J., dissents.

Darrell Hickman, Justice,

concurring. I think I agree with the majority opinion, but its holding is not clear to me. I fear it will not be clear to the probate and circuit judges.

At an administrative hearing, it was determined that the guardian would have to reimburse the medicaid program for $48,000.00 in benefits received. That ruling was appealed to the circuit court. Not liking that decision, the guardian petitioned the probate court to, in effect, shield the $30,000.00 CD from any circuit court order.

The general statement that the probate court has exclusive jurisdiction in guardianships is, of course, true, but it does not answer the question presented in this case. A probate court cannot interfere with the jurisdiction of another court. In this case, the circuit court has jurisdiction over the central question — whether the existence of the CD renders the ward ineligible for medicaid benefits.

I would find the probate court order in error. I think the majority does also, insofar as it would take from the circuit court the right to decide whether this $30,000.00 must be surrendered under federal regulations.

Glaze, J., joins the concurrence.

Steele Hays, Justice,

dissenting. On March 18,1986, Mrs. Patsy Smith petitioned the Probate Court of Poinsett County for her appointment as guardian of the person and estate of her daughter, Kimberly, and the appointment was made on that same date. The estate included a $30,000 certificate of deposit.

Mrs. Smith’s appointment was conditioned on her furnishing a corporate surety bond in the amount of $30,000 or furnishing evidence of an agreement with the bank issuing the CD that no funds would be removed from the CD without prior approval of the probate court, a routine step authorized by Ark. Code Ann. § 28-65-215 (1987).

This litigation arises because Mrs. Smith applied to the Department of Human Services (Department) to provide care and residency for Kimberly at the Conway Human Services Center and on June 30, 1986, Kim was accepted. Mrs. Smith requested long term care and assistance and completed a questionnaire which failed to reveal that the assets of Kim’s estate included the $30,000 CD. Based on the nondisclosure of the CD, Kim was declared eligible for Medicaid benefits to which the Department asserts she would not otherwise have been entitled.

When the true facts were disclosed in a second questionnaire the following year Medicaid benefits were terminated and reimbursement was requested of the guardian. Mrs. Smith asked for an administrative hearing and the denial of benefits was upheld. Mrs. Smith then appealed to the circuit court where the case is now pending.

At this stage in the proceedings, Mrs. Smith filed in the Poinsett Probate Court a pleading entitled “Petition For Order Nunc Pro Tunc” asking the court to determine “nunc pro tunc until June 30,1986,” whether the CD was available for expenses incurred by the Conway facility and for reimbursement of funds received from Medicaid.

The probate court reserved judgment on the issue of whether it could enter its order nunc pro tunc, but held without explanation that the funds were inaccessible for payment to, or reimbursement of, the Conway Human Development Center. The Department of Human Services has appealed to this court and the majority now holds that the Probate Court of Poinsett County has exclusive jurisdiction over the subject matter of this dispute, effectively leaving the primary proceedings in limbo. I respectfully disagree with that conclusion and would reverse.

It is clear that the “Petition For Order Nunc Pro Tunc” was a maneuver to deprive the circuit court of subject matter jurisdiction over a proceeding which was properly pending before it. It is equally clear that the probate court had no jurisdiction to grant the requested relief, i.e. enter an order “nunc pro tunc until June 30, 1986,” under the guise of a nunc pro tunc procedure. While under ARCP Rule 60(a), clerical mistakes in orders may be corrected at any time, such corrections are plainly limited to matters which were dealt with initially but which were omitted by oversight or mistake. While courts have the inherent authority to enter orders correcting errors, the power is confined to making them conform to the action which was in reality taken at the time. Fitzjarrald v. Fitzjarrald, 233 Ark. 328, 344 S.W.2d 584 (1961). Since it cannot be seriously contended that the probate court did anything on June 30, 1986, the date of Kimberly’s admission at the Conway facility, the relief requested by the guardian, i.e. a nunc pro tunc ruling, was nonexistent under the law. Thus, the guardian’s resort to the probate court was patently to head off the possibility of an adverse determination by the circuit court, which clearly had jurisdiction over the subject matter and the parties.

While I would not contend the probate court does not ordinarily have jurisdiction to determine how a ward’s estate will be used, in the rather unusual context of this case, I believe the circuit court’s jurisdiction was paramount, and the proper course for the probate court was to defer to the circuit court, at least until that proceeding was concluded.

In City of Cabot v. Morgan, 228 Ark. 1084, 312 S.W.2d 333 (1958), this Court has soundly criticized attempts by one court to assume jurisdiction over matters pending in another court where concurrent jurisdiction exists:

We condemn the practice of a person after being charged with violating the law . . . then asking for a declaratory judgment in an independent cause, with the result that two cases involving the same subject matter are pending at the same time. If such a practice were permitted, it would cause an unnecessary burden on the courts and the law enforcement authorities. In the New York case of Woollard v. Schaffer Stores Co., reported in 272 N.Y. 304, 5 N.E.2d 829, 832, 109 A.L.R. 1262, 1265, the Court said: 'When, however, another action between the same parties, in which all issues could be determined, is actually pending at the time of the commencement of an action for a declaratory judgment, the court abuses its discretion when it entertains jurisdiction.’ (My emphasis).