text:
    Coy THOMAS v. SOUTHSIDE CONTRACTORS, INC. et al
    76-165
    543 S.W. 2d 917
    Opinion delivered November 29, 1976 (Division I)
    [Rehearing denied January 10, 1977.]

      Keith Rutledge, for appellant.

      Bennett & Purtle, for Southside Contractors, Inc., Walters Construction Co. and Miller Mutual Ins. Co.; and Laser, Sharp, Haley, Young & Boswell, for Norhhwestern National Ins. Co., appellees.
   George Rose Smith, Justice.

The appellant, Coy Thomas, is the claimant in this workmen’s compensation case. At the time of his injury he was drilling rock with a jackhammer, in the process of excavating a trench for the installation of a sewer line to serve a residence that was being built. Walters Construction Company was the prime contractor for the residential project. Southside Contractors, Inc., the appellant’s employer, was the subcontractor for the installation of the sewer line. Thomas’s claim for compensation is asserted both against the prime contractor and its insurance carrier and against the subcontractor and its insurance carrier. The Commission denied the claim altogether, finding (a) that the subcontractor’s insurer had canceled its policy before the accident, and (b) that the claimant is estopped to assert liability on the part of the prime contractor. Upon this appeal Thomas challenges both findings.

There is substantial evidence to support the Commission’s finding that the subcontractor’s coverage had been canceled before the claimant was injured. The risk had been assigned to the subcontractor’s insurer pursuant to Ark. Stat. Ann. § 81-1309 (Repl. 1960). That insurer, owing to its inability to obtain an audit of the subcontractor’s payroll, applied to the Commission for cancellation of the policy. The Commission, acting under Section 81-1309 (d), notified the subcontractor that its policy would be canceled if the Commission “does not hear from you within ten days from the date of this letter.” There was no reply to that letter. Despite some uncertainty about the date of cancellation, the Commission was justified in finding that the policy had been canceled. Upon this point the subcontractor’s local insurance agent testified that he discussed the proposed cancellation with the president of the subcontractor, a corporation, who said: “I guess we will have to get along without it.”

A more difficult question is presented with respect to the liability of the prime contractor and its insurer. The statute provides that when a subcontractor fails to obtain compensation insurance, the prime contractor shall be liable for compensation to the employees of the subcontractor. Section 81-1306. Despite that section of the statute the Commission denied Thomas’s claim, on the ground that he had dealt with the prime contractor, Walters Construction Company, as an independent contractor and that he was estopped to say that he had no part in the cancellation of Southside’s compensation coverage.

We state the facts most favorably to the Commission’s decision. For some time before the claimant Thomas joined the concern there had been a partnership of three or four men engaged in work involving excavations. Thomas bought out one of the partners by contributing a truck for which Thomas had paid SI,000. In January, 1971, when there were three partners, the business was incorporated upon a lawyer’s recommendation and under his supervision.

Paul James was the president of the company, with Thomas being designated as vice-president. The three principals, manifestly in good faith, continued to conduct the business pretty much as a partnership, though some corporate records were kept. Excavation contracts were made orally, without formality. Here is an excerpt from the testimony of Paul James:

Q. Dealing with the decision-making process, is it not true, Paul, that the three members of the Board of Directors, yourself and Gary and Coy, somebody approaches you or Cary or Coy about doing a job, you all meet and say all right here is the job whose [sic] is going to handle it — how much are we going to get for it — right?
A. Right.
Q. And you all say, well, Coy why don’t you handle this one, and the next one, Paul, you take this one — it was a joint decision by the members of the Board of Directors?
A. That is right.

James, as president of the company, was responsible for keeping the records and for obtaining workmen’s compensation insurance. His home was the company’s only office. Coy Thomas received take-home pay of SI 15 a week, paid by the company’s check. Taxes and Social Security contributions were withheld. The company furnished the tools and materials that Thomas and his crew used in their work. Apparently the company never made enough money to distribute any profits before Thomas was injured.

Southside’s compensation coverage was canceled as of May 6, 1973. At about that same time Henry Walters, the owner of the prime contracting company, approached Thomas about the sewer-line subcontract, because Thomas had been highly recommended to Walters as a very competent person in that field. The oral contract was made according to Southside’s usual practice. Thomas discussed it with his associates, who approved the job for the proposed price of $1,100. Walters testified that he thought he was dealing solely with Thomas. Thomas brought his own crew to the job and worked with them, as foreman, until he was hurt. Walters said he knew nothing about Southside Contractors until Paul James came up to finish the job after Thomas’s injury.

When the oral contract was made, Walters asked Thomas if he had workmen’s compensation insurance. Thomas replied that he did have it and, at Walters’s request, promised to furnish the policy number. Walters testified that he discussed Thomas’s coverage because his own insurance carrier had told him very specifically that “subcontractors either had to be covered or we had to furnish coverage.” Thomas did not in fact supply the policy information. Walters testified that he would have insisted upon having that information before he paid the contract price, because if Thomas did not have coverage “we would have to pay the premium for the work that they had done, for the coverage of those employees.” In actuality, Walters paid the agreed contract price to Southside without deducting any amount for the premium and without inquiring about the coverage. Of course, by then Thomas had been seriously injured on the job, and a deduction of the premium from the final settlement would have carried an inplication of liability on the part of the prime contractor and its insurer.

We can find no substantial evidence to support the Commission’s denial of Thomas’s claim. The Commission found, first, that Thomas dealt with Walters as an independent contractor rather than as an employee of Southside. The true issue, however, is not whether Thomas was an independent contractor, for that is ordinarily the status of any subcontractor. Rather, the issue is whether Walters’s contract was with Thomas individually or with the Southside corporation. There is no proof that Thomas held himself out as acting on his own. Apparently the matter was simply not mentioned, which is not unusual. A customer of a small grocery store may believe that he is dealing with a sole proprietor, but that belief makes no difference if the store is actually owned, say, by a family corporation. A corporate entity is to be disregarded only if the corporate structure is illegally or fraudulently abused to the detriment of a third person. Rounds & Porter Lbr. Co. v. Burns, 216 Ark. 288, 225 S.W. 2d 1 (1949). Here there is no evidence that the Southside corporate entity was so used. The Workmen’s Compensation Commission of course has final authority upon disputed issues of fact, but here the Commission made an error of law in its interpretation of an undisputed fact situation. The corporate entity should not have been disregarded.

Neither can we sustain the Commission’s conclusion that Thomas is estopped to deny that he knew that the compensation policy had been canceled. The testimony is not definite, but the cancellation must have occurred not very long before or not very long after the oral subcontract was made. Walters testified that he asked Thomas about the coverage and was told that it existed. Thomas testified that he did not remember such a conversation, but he stated candidly that if the question had been asked he would have said that there was coverage. He testified, without contradiction, that he knew nothing whatever about the cancellation; that was Paul James’s responsibility. The only disinterested witness with regard to this issue was the insurance agent, who said that he discussed the cancellation with James.

Even though there is no testimony that Thomas knew that the policy had been canceled, the Commission made this finding: “The president of this corporation . . . had great power to direct the activities of the corporation, but allowing this policy to lapse . . . and then not afford the claimant protection coverage without some consultation with his vice-president-employee is . . . inconceivable.” Thus the Commission attributed to Paul James a precise knowledge of law when it concluded that James would not have allowed the coverage of his “vice-president-employee” to lapse without some consultation between the two men. Even the members of this court have disagreed about a corporate officer’s right to compensation coverage as an employee. Brooks v. Claywell, 215 Ark. 913, 224 S.W. 2d 37 (1949). It is extremely unlikely that either James or Thomas could have realized that Thomas, an officer of the company, might be protected by the policy while he was engaged in physical labor as an employee.

Thomas established a prima facie case by proving that he was injured while working as an employee of an uninsured subcontractor. The prime contractor and its insurer assert the defense of estoppel, arguing that Thomas knowingly misrepresented the fact of compensation coverage. One who asserts an estoppel must prove it strictly; the facts cannot be supplied by inference. Wheeless v. Eudora Bank, 256 Ark. 644, 509 S.W. 2d 532 (1974). That burden of proof has not been met. To the contrary, the Commission’s conclusion rests upon evidence that presents a mere choice of possibilities and is therefore not substantial. Ellsworth Bros. Truck Lines v. Canady, 245 Ark. 1055, 437 S.W. 2d 243 :1969); Ark. Power & Light Co. v. Cash, 245 Ark. 459, 432 S.W. 2d 853 (1968). We are unwilling to sustain a denial of compensation that rests merely upon speculation.

Reversed.

We agree. Harris, C.J., and Fogleman and Jones, JJ.


source: Caselaw Access Project

author: John A. Fogleman, Justice.

license: Public Domain

text:
    ALUMINUM COMPANY OF AMERICA v. Henry A. HENNING
    76-170
    543 S.W. 2d 480
    Opinion delivered November 29, 1976 (Division I)

      Rose, Nash, Williamson, Carroll, Clay & Giroir, P.A., for appellant.

      Hardin & Rickard, by: Robert N. Hardin, for appellee.
   John A. Fogleman, Justice.

Appellant-employer contends that appellee-claimant’s workmen’s compensation claim cannot be considered as having been controverted under the terms of the Workmen’s Compensation Act and, for that reason, it has no liability for fees for appellee Henning’s attorney. The basis for this contention is that appellant, within the time allowed it after the claim was filed with the commission, advised the secretary of the Workmen’s Compensation Commission the claim would not be controverted. We hold that the evidence was sufficient to support the commission’s finding that the claim was controverted.

Henry A. Henning had suffered a heart attack on November 6, 1974. Initially, appellant took the position that the heart attack was not causally related to Henning’s duties and he was afforded medical care and disability benefits under an insurance program provided by appellant under a contiract with an insurance company. On February 25, 1975, Henning was advised the company considered the heart attack to be “personal.” The next day he consulted attorney Robert N. Hardin, who wrote the Workmen’s Compensation Commission, asserting a claim for workmen’s compensation benefits and asking that appellant be requested to make its position known. The commission sent a copy of Hardin’s letter to appellant, asking it to state its position. On March 31, 1975, appellant advised the commission that it would not controvert the claim. This was within the allotted time, as extended upon appellant’s request. In the letter confirming its acceptance of responsibility for the claim, appellant stated that it was sending a copy of the letter to Hardin, so he would know that appellant did not intend to controvert the claim.

Henning had been called to meet with Charles R. King, Jr., administrator of Alcoa’s self-insured workmen’s compensation program on February 25, 1975. It was at that meeting that Henning was told that appellant had “ruled” that his heart attack, suffered when he lifted a fellow employee of Alcoa from an ambulance at the emergency room of the Saline County Hospital, was personal. The next day he advised Hardin what had happened. He spent about 15 minutes in Hardin’s office. He did not return there before he learned that.Alcoa was going to treat his claim as compensable. He required no further legal assistance in connection with his claim.

King testified substantially as follows:

I did the preliminary workup on the case. Henning was called out on an ambulance run when a mechanic was injured in one of our buildings. Henning drove the ambulance to the hospital. I understand that while Henning was in the emergency room he collapsed. The doctors and nurses suspected that it might be a heart attack and they began to treat him, putting him in intensive care. I discussed the case with our personnel manager, our company physician and the people in our corporate workmen’s compensation department. We finally made a determination that it was not compensable and we would not pay workmen’s compensation. With the personnel manager’s approval, I apprised Henning of this fact. I would not take issue that the date was February 25, 1975. I explained that we had investigated the case and we had taken the position that we would not pay workmen’s compensation and that, if he disagreed, he had certain rights under the Workmen’s Compensation Law. The matter was closed until the claim was filed. No one on behalf of Alcoa ever filed a notice of injury. On review, after the claim was filed, we felt that it was not a workmen’s compensation case, but that we could not successfully defend our position in court. We did not discover any additional evidence that changed our mind or our position.

Appellant contends that under the provisions of Ark. Stat. Ann. §§ 81-1317 and 81-1319 (Repl. 1960) a claim cannot be considered as controverted until after a claim has been filed by an injured employee with the commission and the employer has either filed a notice of controversion or failed to timely state its position. We cannot agree with such a narrow construction of these sections. We must construe and apply the statutory provisions of the Workmen’s Compensation Act liberally in favor of the claimant in the light of its beneficent and humane purposes, resolving all doubtful cases in favor of the claimant. International Paper Co. v. Tidwell, 250 Ark. 623, 466 S.W. 2d 488.

The sections of the act upon which appellant relies are as follows:

81-1317. Notice of injury or death. - (a) Time for giving. Notice of injury or death for which compensation is payable shall be given within sixty [60] days after the date of such injury or death (1) to the Commission and (2) to the employer.
(b) Form. Such notice shall be in writing and shall contain the name and address of the employee and employer, a statement of the time, place, nature and cause of the injury or death, and shall be signed by the person claiming compensation, or by someone in his behalf.
(c) Failure to give notice. Failure to give such notice shall not bar any claim (1) if the employer had knowledge of the injury or death, (2) if the Commission determines that the employer has not been prejudiced by failure to give such notice, (3) if the Commission excuses such failure on the ground that for some satisfactory reason such notice could not be given. Objection to failure to give notice must be made at or before the first hearing on the claim.
81-1319. Payment of compensation. - (a) Payment. Compensation shall be paid directly to the person entitled thereto without an award, except in those cases where liability has been controverted by the employer. If the compensation beneficiary is a mental incompetent or a minor of tender years or immature judgment, the Commission may in the exercise of its discretion direct that payment shall be made to a legally appointed guardian of the estate of such incompetent or minor.
(d) Right to compensation controverted. Each employer desiring to controvert the right to compensation shall file with the Commission, on or before the fifteenth (15th) day following notice of the alleged injury or death, a statement on a form prescribed by the Commission that the right to compensation is controverted on the grounds therefor, the names of the claimant, employer, and carrier, if any, and the date and place of the alleged injury or death. Failure to file such statement of controversion shall not preclude the urging of any defense to the claim subsequently filed, nor shall the filing of a statement of controversion preclude the urging of additional defenses to those contained in such statement of controversion. [Emphasis ours.]

The significance of appellant’s contention lies in the terms of Ark. Stat. Ann. § 81-1332 (Repl. 1960). That section follows:

81-1332. Fees for legal services. - Fees for legal services rendered in respect of a claim shall not be valid unless approved by the Commission, and such fees shall not exceed thirty per centum (30%) on the first one thousand dollars ($1,000.00) of compensation, or part thereof, twenty per centum (20%) on all sums in excess of one thousand dollars ($1,000.00), but less than two thousand dollars ($2,000.00) of compensation, and ten per centum (10%) on all sums of two thousand dollars ($2,-000.00) or more of compensation. Whenever the Commission finds that d claim has been controverted, in whole or in part, the Commission shall direct that fees for legal services be paid by the employer or carrier in addition to compensation awarded, and such fees shall be allowed only on the amount of compensation controverted and awarded. Whenever the Commission finds a claim has not been controverted, but further finds that bona fide legal services have been rendered in respect to the claim, then the Commission shall direct the payment of such fees out of the compensation awarded. In any case where attorneys’ fees are allowed by the Commission, the limitations expressed in the first sentence herein shall apply. In determining the amount of fees, the Commission shall take into consideration the nature, length and complexity of the services performed, and the benefits resulting therefrom to the compensation beneficiaries. [Emphasis ours.]

Appellant relies principally upon Horseshoe Bend Builders v. Sosa, 259 Ark. 267, 532 S.W. 2d 182. But this case is neither controlling nor persuasive, even though we reversed the Workmen’s Compensation Commission’s finding that the claim in that case was controverted. There we simply held that neither failure to pay nor dilatory payment of compensation benefits amounts to controversion per se. Although we held that, under the facts in that case there was no controversion, the holding certainly implies that the determination whether a claim was controverted may be a question of fact, and not one determined mechanically upon ascertaining whether, after the employee has complied with § 81-1317 by filing written notice with the commission and the employer, the employer responds by accepting the claim as compensable or filing a statement of controversion. See also, Garner v. American Can Company, 246 Ark. 746, 440 S.W. 2d 210. Use of the mechanical approach in determining whether a claim was controverted by resort to the pleadings was actually rejected in International Paper Co. v. Remley, 256 Ark. 7, 505 S.W. 2d 219.

A principal, if not the primary, purpose of determining whether or not a claim is controverted is for the purpose of determining who is liable for the claimant’s attorney’s fees. Making an employer liable for the attorney’s fees of the employee serves legitimate social purposes. Among them are discouraging oppressive delay in recognition of liability, deterring arbitrary or capricious denial of claims, and insuring the ability of necessitous claimants to obtain adequate and competent legal representation. See 3 Larson, Workmen’s Compensation Law, 15-584 through 15-611, §§ 83.10 — 83.13 (1976); Note, Workmen’s Compensation — Attorneys’ Fees and Amount of Recovery, 8 Ark. L. Rev. 195. These fundamental purposes are not unlike those served by the statutes governing allowance of attorney’s fees in litigation between an insured and an insurer.

Just as is the case with insurance policy holders, an employee in a covered employment is entitled to rely upon his employer to promptly and honestly comply with its obligations, the payment of which is of very great importance to him, in respect both of amount and promptness, and the police power of the state is appropriately utilized to protect the employee for expenses incurred due to what may sometimes be heartbreaking delays, to encourage reasonably prompt settlement of all proper claims, and to deter refusal to settle just claims and to compensate the employee for trouble and expense of legal action which unwarranted delay and refusal make necessary. See discussion of authorities in Arkansas Insurance Co. v. McManus, 86 Ark. 115, 110 S.W. 797. The social needs addressed are sufficient basis for use of the state’s police power in aid of these purposes. See, Life and Casualty Co. v. McCray, 291 U.S. 566, 54 S. Ct. 482, 78 L. Ed. 987. See also, American Liberty Mutual Insurance Co. v. Washington, 183 Ark. 497, 36 S.W. 963. Permitting recovery of such fees in insurance cases was intended to prevent defenses for the purpose of delay or other vexatious litigation. John Hancock Mutual Life Ins. Co. v. Magers, 199 Ark. 104, 132 S.W. 2d 841.

If the fundamental purposes of such statutes are to be achieved, it must be considered that their real object is to place the burden of litigation expense upon the party which made it necessary. See Globe & Rutgers Fire Ins. Co. v. Batton, 178 Ark. 378, 10 S.W. 2d 859; Commercial Union Assurance Co. v. Leftwich, 191 Ark. 656, 87 S.W. 2d 55. It has been implied that this particular statutory provision is one, among others, inspired by a disproportionate ability of the parties to conduct the litigation or as a legislative “penalty” for the wrongful conduct of the party held liable. See Note, Taxability of Attorneys’ Fees as Costs, 9 Ark. L. Rev. 70, where it was suggested that softening the impact of litigation upon certain ¿rásses who are typically caught in a disadvantageous position is desirable.

These factors were not articulated but, beyond a doubt they induced our holding that the commission did not err in finding that a claim was controverted in part, when there was justification for a claimant’s employing an attorney because payments had been stopped, even though the employer had previously accepted the injury as compensable, and she was still undergoing medical treatment. Pike County Poultry Co. v. Kelley, 243 Ark. 460, 420 S.W. 2d 523. There it appears that no claim had been actually filed with the commission until after medical payments and payments for the healing period had been terminated by the employer on the assumption that the healing period had ended upon its physician’s discharge of the claimant. It also appears from this opinion that the issues hinged upon the question whether the commission’s finding that the claim was controverted was supported by substantial evidence. This was also the basis of our affirmance of the allowance of attorney’s fees on that part of an award which appellant offered to pay by a check bearing the notation “Final Settlement,” before appellee employed an attorney, in International Paper Company v. Remley, supra, 256 Ark. 7. There we said that the facts constituted substantial evidence that the employer was using its control of the purse strings as a coercive means of controverting the claim, in fact, if not by its formal pleadings. Such an inference is certainly justifiable here, because appellant finally accepted the claim as compensable without any evidence having been brought to its attention that was not known to it when it rejected the claim. If appellee had not then employed an attorney, he would have been in a rather helpless situation. It may well be that there is no basis for allowance of attorney’s fees where the attorney has not performed any substantial service. See Wallace v. Jewell, 210 Ark. 274, 195 S.W. 2d 340. But in this case the conclusion that Henning would never have been compensated had he not employed Hardin is certainly not unreasonable if not inescapable.

In Littlejohn v. Earle Industries, Inc., 239 Ark. 439, 389 S.W. 2d 898, after a claim had been filed, the employer and insurance carrier stated they were not controverting the claimant’s right to compensation and payment of medical expenses. We held that the legislature had entrusted to the Workmen’s Compensation Commission the right to determine the necessity of a claimant’s securing the services of an attorney to preserve his benefits. We also said that the courts should not question the discretionary power of the commission in the matter of an attorney’s fee unless the determination is clearly wrong or unless there is a gross abuse of discretion. In that case the only question requiring adjudication by the commission was that pertaining to the end of the claimant’s healing period. The evidence was held to be sufficiently substantial to support the commission’s finding that the claim was controverted. From this case it would seem, and logically so, that if there is substantial evidence to support a finding that a claim is controverted, there is no abuse of the commission’s discretion to award attorney’s fees, and that this court cannot reverse the commission’s finding in the absence of a gross abuse of discretion. See also, Garner v. American Can Co., supra, 246 Ark. 746.

We reject the mechanistic construction of the act that would permit an employer, or carrier, to refuse compensation until after the employee has been forced to employ an attorney and then escape liability for the attorney’s fees by formally advising the commission that it will not controvert the claim asserted by that attorney. To do so would put form above substance. It would also be inconsistent with our treatment of the statutes governing allowance of attorney’s fees in actions against insurance companies. In such cases, the statutes do require that suit be brought. But when this has been done, it is only necessary, in order to invoke the statute, to show facts from which it can reasonably be inferred that the company understood that payment was demanded and that it refused to make it. Metropolitan Life Ins. Co. v. Shane, 98 Ark. 132, 135 S.W. 836. It is not necessary that the demand be formal if there is a clear refusal to pay. Phoenix Insurance Co. of Hartford v. Fleenor, 104 Ark. 119, 148 S.W. 650. When the denial of liability is clear and the claimant is compelled to employ an attorney to enforce his claim, the statute is applicable. Globe & Rutgers Fire Ins. Co. v. Ballon, supra, 178 Ark. 378; Commercial Union Assurance Co. v. Leftwich, supra, 191 Ark. 656. This rule applies even if no specific demand has been made when the insurance company informs the claimant in no uncertain terms that it will not make payments and that it denies liability. Continental Casualty Co. v. Vardaman, 232 Ark. 733, 340 S.W. 2d 277. Liability for attorney’s fees attaches wherever an insured is required to file suit, even though the insurer confesses judgment before trial. Federal Life & Casualty Co. v. Weyer, 239 Ark. 663, 391 S.W. 2d 22.

A liberal construction favoring the claimant mandates a holding that the question whether a claim is controverted be one of fact to be determined from the circumstances of the particular case, only one of which is the status of the formal proceedings before the commission, and that, as in other such determinations, the commission’s finding should not be reversed if there is substantial evidence to support it, or it is clear that there has been a gross abuse of discretion.

Appellant argues, in the alternative, that the award of the maximum allowable fee in this case was an abuse of discretion. The Workmen’s Compensation Commission has a great deal of discretion in fixing and approving the amount of attorneys’ fees. Sisk v. Philpot, 244 Ark. 79, 423 S.W. 2d 871. The statutory limitation on the amount is that the fees “shall not exceed” a percentage of the compensation awarded. Ark. Stat. Ann. § 81-1332. The very words “shall not exceed” indicate that the maximum allowance should not be made in every controverted case. We have said that there is no requirement that the maximum attorneys’ fees be given. Garner v. American Can Co., supra. We have likewise said that the statute is in the nature of a restrictive one in that the commission must observe fixed limitations. Norsworthy v. Georgia Pacific Corp., 249 Ark. 159, 458 S.W. 2d 401. The statute is a limitation on the amount that may be paid. Wallace v. Jewell, supra. The importance of hearing testimony regarding the fee has been noted. Lundell v. Walker, 204 Ark. 871, 165 S.W. 2d 600.

On May 22, 1975, the Administrative Law Judge took evidence on the issue of whether the claim was controverted, and whether appellant’s attorney was entitled to a fee. The Administrative Law Judge requested that claimant’s attorney testify as to his services so that a fee might be determined in the event the judge decided that the claim was controverted. Claimant’s attorney declined on the ground that it would be a moot question if the judge held for Alcoa. The judge agreed with this position but promised, if both parties agreed to the procedure, that there would be an additional hearing on the matter of fees if he decided the claim was controverted. After the judge decided that the claim was controverted, he awarded the maximum fee without any additional hearing. The commission also held that the claimant’s attorney was entitled to the maximum fee and the Circuit Court affirmed the decision.

The appellant observed that as of August 1, 1976, the claimant’s attorney had been paid $1,171.46; and, if the claimant lives out his average life expectancy of thirteen years, his attorney would also be entitled to $4,495.40 plus ten percent commission on additional medical and hospital services. Except for proceedings relating to allowance of attorney’s fees, the record discloses no services except those rendered prior to acceptance of the claim, consisting of one client interview of 15 minutes’ duration and one letter. The claimant states that he knows of no other case where the commission has awarded less than the maximum fee in a controverted case. He argues that he is entitled to the fee because Alcoa exercised bad faith in denying the claim and handled the claim in a haphazard manner. He asserts that maximum fees should be imposed so that employers will carefully investigate and sparingly deny cases in order to avoid the extra expense. But the imposition of attorney’s fees is not purely punitive. To make them so would not be consistent with the lack of statutory requirement that the refusal to pay be unreasonable or arbitrary and with the requirement that an attorney’s services be necessary and substantial. See Pike County Poultry Co. v. Kelley, supra, 243 Ark. 460; Wallace v. Jewell, supra, 210 Ark. 274. See also, 3 Larson, supra, at § 82.12, p. 15-591.

In fixing the amount of the fee the statute requires the commission to take into consideration the nature, length and complexity of the services performed as well as the benefits resulting to the claimant. Sisk v. Philpot, supra, 244 Ark. 79. When judgments are recovered against insurance companies, we have said that attorney’s fees allowed should be commensurate not only with time and work required but also with the ability present and necessary to meet the issues that arise and that, to be reasonable, they should not be so small or low that well prepared attorneys would avoid that class of litigation or fail in the employment of sufficient time for thorough preparation but should be sufficient to compensate for the engagement of counsel thoroughly competent to protect the interests of the claimant. John Hancock Mutual Life Ins. Co. v. Magers, supra, 199 Ark. 104. These considerations are also important in workmen’s compensation cases.

It may not be necessary in every case for the commission or Administrative Law Judge to take evidence to be considered in addition to the trial record, because the record itself speaks to these issues, and in some cases the maximum fee would be so clearly indicated that no evidence could justify a lesser amount. In Union Central Life Ins. Co. v. Mendenhall, 183 Ark. 25, 34 S.W. 2d 1078, it was held that the court erred in fixing the amount of attorney’s fees without a hearing on the motion for them and without hearing evidence tending to establish the proper amount. Where, as here, the record indicates that a bare minimum of services was rendered, it was an abuse of discretion to award the maximum fee without additional evidence that this fee was justified.

The judgment is affirmed insofar as the question of controversion is concerned, but reversed as to the amount of attorney’s fees allowed and remanded with directions to the circuit court to remand the case to the commission for further proceedings not inconsistent with this opinion.

We agree. Harris, C.J., and George Rose Smith and Jones, JJ.

      We tacitly recognized the significance of a prompt assumption of liability by a carrier in Wallace v. Jewell, 210 Ark. 274, 195 S.W. 2d 340.

      For an excellent discussion of this subject, see Trammell, One State’s experience With the Statutory Remedy for Insurer’s Delays — A problem in Payment, 10 Ark. L. Rev. 439.


author: J. Fred Jones, Justice.

text:
    Steven BURROWS v. CITY OF FORREST CITY
    CR 76-110
    543 S.W. 2d 488
    Opinion delivered November 29, 1976 (In Banc)

      Sharpe & Morledge, P.A., for appellant.

      Kinney & Easley, by: B. Michael Easley, for appellee.
   J. Fred Jones, Justice.

The appellant Steven Burrows was convicted in municipal court for the misdemeanor possession of marijuana. He was fined $250 and sentenced to ten days in jail. Upon appeal to the circuit court he was, on February 27, 1975, fined $250 and sentenced to one year in the county jail but the jail sentence was suspended during good behavior. This is an appeal by Burrows from a circuit court judgment revoking the suspension of the sentence, and the precise and only question on appeal is whether the trial judge abused his discretion in refusing to recuse himself from hearing and passing on the motion to revoke.

On July 22, 1975, the appellant was arrested on a traffic violation for making an improper “U-turn.” The arrest was not without additional incident and resulted in municipal court fines of $5.00 for the traffic violation; $25 for disturbing the peace; $500 with six months in the county jail for assaulting an officer; $500 and six months for obstructing justice, and $25 on additional charge of disturbing the peace at the police station. The appellant appealed to the circuit court and while the cases were pending in circuit court on appeal, the city filed a motion to revoke suspension of the sentence previously imposed on marijuana conviction. The motion to revoke was based upon the municipal court convictions growing out of the traffic incident.

On November 6, 1975, the appellant filed a motion for continuance of a hearing on the motion for revocation of suspended sentence on the ground that the municipal court convictions upon which the motion to revoke was based, were still pending before the circuit court on appeal. The appellant also filed a motion to quash the jury panel for trial of the appeal cases because it was not representative of the appellant’s age group.

An unfortunate situation developed between the very reputable attorneys representing the appellant and the very competent and conscientious trial judge during their discussions of the motions. The trial judge apparently considered the motions dilatory in an effort to extend the hearing on motion to revoke beyond the one year suspended sentence but, apparently in the light of Parkerson v. State, 230 Ark. 118, 321 S.W. 2d 207 (1959), the trial court did extend the hearing from November 12 as originally set, to November 18, 1975. This new date as extended was well within the one year suspended sentence, but prior to a possible trial date for the municipal convictions on appeal.

In the meantime, apparently chafing under the trial court’s accusations of dilatory tactics, the attorneys for the appellant concluded from their conversations with the trial judge, that he had already concluded before hearing, that the suspension would be revoked; so, on November 13, 1975, the appellant filed a motion for the trial judge to recuse himself from hearing on the motion for revocation on the ground that the judge had told one of the attorneys of record to tell the appellant “to bring his toothbrush with him,” and had made other statements indicating bias and prejudice against the appellant. In response to the motion to recuse, the appelleecity contended that the full statement of the circuit judge was “that Defendant should bring his toothbrush with him because if he is found guilty, he is going straight to j,ail,” and that the statement was made to one of the attorneys for the appellant but was not made in a professional capacity, as affecting the rights of the defendant. The trial judge refused to recuse himself and on November 18, 1975, hearing was had on the motion to revoke. Following the hearing at which the peace officers and also the appellant testified, the suspension was revoked and the appellant was sentenced to serve the remaining 99 days of his original one year sentence in the county jail.

On appeal to this court the appellant contends that the trial court erred in denying his motion for the judge to recuse himself.

The record on the motion to recuse was made at a hearing on November 6. At that hearing both attorneys for the appellant and the attorney for the appellee-city testified. The record as to attorney Sharpe’s testimony, in pertinent part, appears as follows:

I talked with Judge Hargraves about an hour about this matter [date for hearing], and tried to explain to him the prior commitments that both Mr. Morledge and I had, and on one or more occasions Judge Hargraves told me that the motion to strike the Jury Panel and that the the motion for the continuance on the hearing set for the motion for revocation of the suspended sentence were dilatory pleas, and that if said motions were granted it would be impossible to empanel the jury or set a date for the hearing on motion of revocation of the suspended sentence prior to a date subsequent to the expiration of the suspension, that being February 24, 1976, inasmuch as Steven Burrows secured a one-year suspended sentence that was pronounced on February 24, 1975.
Judge Hargraves told me, Í told Judge Hargraves that Attorney Knox Kinney had stated to me that the law was that the date of the filing of the revocation was applicable. He told me that in the car coming from the Rotary Club, and I had not had a chance to check it out.
Judge Hargraves told me if that was the law that he would grant the continuance for the motion, that he would grant the continuance on the motion for the continuance relating to the motion for the revocation of suspended sentence. However, Judge Hargraves told me—
THE COURT: Until the following week.
* * *
In an effort to show the Judge further that there was no reason to press forward at this particular term, or at this particular date, the next day I tried to explain to him that the case or cases, five cases against Steven Burrows that were on appeal, had their inception with an alleged violation of making a U-turn on Highway 1 in Forrest City, and that maybe the officers had used a little bit too much force.
Judge Hargraves told me that we would not try the officer, that Steven Burrows was on trial, that the officer was not on trial, the arresting officer, and that the arresting officer did what he was supposed to do according to the books, pointing to a set of Arkansas Supreme Court cases in Judge Hargraves’ office.
In addition, Judge Hargraves told me that when Steven Burrows received his suspended sentence of one year on February 24, 1975, that Steven Burrows had made a contract with the Judge, and that Judge Hargraves was going to see that the contract was carried out on the part of Steven Burrows.
After about an hour conversation, unable to agree on a date of continuance, Judge Hargraves suggested that I contact Judge John Anderson, he was not trying any cases at all during this week, and mind you, all of the conversation that I had had with Judge Hargraves related to the continuance on the motion for the revocation of suspended sentence,
m * *
A few minutes after I got to my office Judge Hargraves called me and stated that, to be sure that there would be no misunderstanding, that the only thing that Judge Anderson would hear, if I were able to secure him during the week of the 17th, would be the five appeal cases, that he, Judge Hargraves, was going to hear the motion for revocation the next day, Wednesday morning, November 14, and during that conversation on the telephone Judge Hargraves again questioned our motives as attorneys for Steven Burrows in filing motions to strike the Jury Panel, and our motion for a continuance on the hearing of motion for revocation.
* * *
A quick examination of the authorities reflected that the Supreme Court of Arkansas, in Parkerson v. State, 230 Ark. 118, 231 S.W. 2d 207 had held that a petition to revoke a suspended sentence prior to the end of the suspension gave the Court jurisdiction to revoke a suspended sentence, and jurisdiction was not lost when the Court, on defendant’s motion for a continuance, passed the matter until the date subsequent to the expiration of the sentence.
I immediately dictated a written motion for continuance, relating to the motion for revocation, because Judge Hargraves had told me that if this was the law, or if I would agree that this was the law, that he would continue the case.
THE COURT: Until the following week.
* * *
After analyzing the conversation that had taken place between Judge Hargraves and myself, and his statement made on three or four occasions about the ulterior motives in filing motion to strike the Jury Panel, and continuance, to deprive this Court of jurisdiction, the fact that he had pointed to the books and said that the officer did what he was supposed to do, the fact that I would not be able to try the officer, the other matters set forth in the motion for continuance, I felt as though Judge Hargraves had made his decision in the matter prior to hearing any evidence, and for that reason my partner and I filed a motion asking the Judge to recuse himself in this case. I was not present. I was not present on or about November 6 when the original motion for continuance of the revocation was filed, or matters set forth in the motion for the Judge to recuse himself pertaining to that, and since I was not present I believe Mr. Morledge ought to testify to that.

Mr. Morledge, the appellant’s co-counsel, testified that he and attorney Sharpe prepared a motion to strike the jury panel in the trial of the cases pending against the appellant on appeal, and that they presented the motion to the trial judge in chambers. The pertinent portion of the record pertaining to attorney Morledge’s testimony then appears as follows:

On my delivering the motion [to strike the jury panel] to the Court Judge Hargraves said that I was to bring our client, Mr. Burrows, to court on November 12, 1975, and that he was to bring his toothbrush with him at that time.
* *
I remember specifically that I raised some question with the Court at that time about statements as to whether both the motion for revocation and the trial on the five appeals on misdemeanor cases would be held at the same time. The Court stated that that was not the case, that it may take some two to four days to get to the motion to strike the Jury Panel, and that I should, or we, Mr. Sharpe and I, have our client in Court on the 12th and have him bring his toothbrush with him.

Mr. Easley, the attorney for the appellee-city, testified in part as follows:

... I was present at the time Mr. Morledge has just alluded to with reference to the statement by the Court that the defendant should bring his toothbrush. I, too, well remember the statement, but I think that there is more than one inference that may be drawn from that, and it seems to me that the inference which could logically be drawn was that, reading between the lines, the Court had once been lenient to Steven Burrows, and that in the event he was found guilty on this particular occasion, that he would go to jail rather than be granted any further leniency.
Now, granted, I don’t recall any direct quote on this point. I cannot say what the exact words of the Court were, but I’m telling the Court what my interpretation of that statement was, and I think that the statement is not necessarily and for all purposes indicative of any prejudicial feeling or bias of the Court towards this individual. In fact, I have not at any time during the course of these proceedings seen any indication of any personal bias or prejudice on the part of Judge Hargraves against this individual.
I have, on the other hand, witnesses that this Court has shown a determination that its orders be carried out.
I have noted that Judge Hargraves, in handing down his suspended sentence, and then telling Steven Burrows what was expected of him on February 14, 1975, has shown a determination that people who are given chances, and who breach that trust, and that contract that is made, not only with the Court but what the Jury, can expect to have their sentence revoked, and may not expect the leniency and may not expect to hit the streets again, in common language.

We deem it a matter of common courtesy and accommodation for a trial judge to consider the convenience of attorneys in setting cases for trial and motions for hearing, but when an attorney and the trial judge cannot agree on a mutually convenient date, the convenience of the attorney must give way to the convenience of the trial court in setting a trial or hearing docket. The fact that the trial judge in the case at bar participated in “about an hour conversation” in attempting “to agree on a date of continuance,” in our opinion, negates evidence of arbitrariness on the part of the trial judge in setting the matter for hearing.

We conclude, however, that the judgment must be reversed because of the trial court’s request that the attorneys have the appellant bring his toothbrush with him when he appeared for the hearing on the petition to revoke the suspended sentence, when this remark is considered together with the other remarks made. The city attorney agreed with the appellant’s attorney that the toothbrush remark was made by the trial judge, and the attorneys only differed in their interpretation of what the trial judge meant by the remark. When the remark concerning the toothbrush is considered together with the remakr,s relating to the police officers having done what they were supposed to do, and the enforcement of a contract between the judge and the appellant, it is apparent that the remarks could be interpreted to mean that the trial judge’s impartiality in the exercise of his judicial discretion was impaired.

Of course, a suspended sentence and also its revocation lie within the sound discretion of the trial court, Ark. Stat. Ann. §§ 43-2314 and 43-2326 (Repl. 1964). Gross v. State, 240 Ark. 926, 403 S.W. 2d 75. In Gerard v. State, 235 Ark. 1015, 363 S.W. 2d 916, a suspended sentence was revoked on ample testimony in support of the motion to revoke, but we reversed because the trial court refused to hear testimony offered in behalf of the accused and refused to hear the accused’s own statement.

In the case at bar the testimony of police officers in support of the city’s motion to revoke and also the appellant’s own testimony were heard by the trial court, but we are not concerned on this appeal with whether the trial court abused its discretion in revoking the suspended sentence. We are concerned here with whether the trial judge should have recused himself under the circumstances in this case and we are of the opinion that he should have done so.

Certainly we are of the opinion the trial judge did not consider himself prejudiced or biased against the appellant in this case because we are convinced that if he had felt he was prejudiced or biased, he would have recused himself even without a motion that he do so. We think the language we employed in the civil case of Farley v. Jester, 257 Ark. 686, 520 S.W. 2d 200 (1975), is applicable to the case at bar. In Farley we said:

We think under all the circumstances, the chancellor should have disqualified himself to hear this case. In so finding, we do not mean to say, nor even to imply, that the chancellor had preconceived ideas or that his friendship with the Reverend Park prejudiced his findings. To the contrary, we consider this chancellor a capable jurist and a man of integrity, a reputation that he bears over the state. * * *
However, court proceedings must not only be fair and impartial — they must also appear to be fair and impartial. This factor is mentioned in a Comment found in 71 Michigan Law Review 538, entitled “Disqualification for Interest of Lower Federal Court Judges,” 28 U.S.C. § 455.

Since the trial judge’s remarks in the case at bar could be considered subject to more than one interpretation, we feel the better procedure, where the trial judge sits as a fact finder, would be to resolve the difference in favor of the appearance of fairness and remand this case for hearing on appellee’s motion to revoke before a different judge. See Gerard v. State, supra.

Reversed and remanded.


author: Conley Byrd, Justice.

text:
    Robert COURTNEY v. STATE of Arkansas
    CR 76-146
    543 S.W. 2d 493
    Opinion delivered November 29, 1976 (Division I)

      Ralph E. Wilson Jr., for appellant.

      Jim Guy Tucker, Atty. Gen., by: B. J. McCoy, Asst. Atty. Gen., for appellee.
   Conley Byrd, Justice.

Following the reversal of appellant Robert Courtney’s conviction in Courtney v. State, 252 Ark. 620, 480 S.W. 2d 351 (1972), appellant was again put to trial in Poinsett County. At that trial appellant represented himself with the assistance of Attorney John R. Henry whom the court appointed to help in an advisory capacity. When the jury was unable to agree, the court declared a mistrial. Thereafter, a motion for change of venue was made and granted. When the matter came up for trial in the Osceola District of Mississippi County, a hegotiated plea of 25 years suspended sentence was accepted by appellant on May 8, 1973. After appellant was arrested on some charges in Crittenden County, the State moved to revoke the suspended Mississippi County sentence. Appellant was represented at the revocation by Mr. Dana Davis of the law firm of Skillman, Durrett and Davis of West Memphis, Arkansas. The trial court on March 28, 1974, granted the State’s motion to revoke and sentenced appellant to 15 years in the Department of Correction. On April 29, 1974, appellant filed a pro se “Notice of Appeal and Motion for Appointment of Counsel.” On May 9, 1974, the trial court wrote to appellant the following:

“Robert Courtney 62558
Box 500
Grady, Arkansas 71644
Dear Robert Courtney:
I am mailing your Notice of Appeal to the Circuit Court Clerk at Osceola, Arkansas, for filing.
It will be necessary for you to direct all of your future correspondence in regard to this matter to your attprney, Mr. Dana R. Davis, Skillman, Durrett and Davis, Lawyers, West Memphis, Arkansas, and I am sure he will do whatever is necessary from that point on.
Yours very truly,
Todd Harrison”

On August 6, 1974, Mr. Dana R. Davis of the law firm of Skillman, Durrett and Davis wrote to appellant:

“Dear Mr. Courtney:
I have not been appointed by any State or Federal Court to represent you in your pending appeal and I will not voluntarily represent you further.
Your entire file is enclosed for your inspection or that of any Attorney you might have in the future.
Please do not contact me again.
Yours very truly,
Dana R. Davis”

On August 29, 1974, our Criminal Justice Coordinator wrote to appellant the following:

“Dear Mr. Courtney:
This will acknowledge receipt of your letter dated August 9, 1974, and received by this office on August 15, 1974, in which you inquire as to whether a Notice of Appeal has been received by this Court.
You are advised that we have been notified that your Notice of Appeal has been filed with the Mississippi County Circuit Court but we have no record of any transcript having been filed with this court for purposes of appeal. Of course, the appellate process does take some time to complete. In view of Mr. Davis’ letter of August 6, 1974, I would advise that you contact the circuit court authorities for a clarification of whom has been appointed to represent you on appeal.
Trusting this information is of value, I am
Very truly yours,
Steven N. Carlson
Criminal Justice Coordinator”

On October 28, 1975, appellant filed a pro se petition for post-conviction relief which was heard by the trial court on February 6 and February 11, 1976. Appellant represented himself at the hearings held on those dates. The record of those hearings shows that the trial court had at some time appointed Dana R. Davis of the law firm of Skillman, Durrett and Davis to represent appellant on his appeal from the March 28, 1974, revocation but the record does not show why the appeal has not been perfected in this court.

The record of the post-conviction hearing also shows that appellant is 41 or 42 years of age and has spent 20 of those years in the State’s penal institutions for crimes committed. After the conclusion of the testimony the trial court asked appellant “What action are you asking the court to take here today?” The record then shows the following:

“DEFENDANT: I would ask the Court to set aside the conviction or either reduce the sentence to the lowest term of grand larceny, and to completely, how do you say it? Set aside the habitual offender on the grounds that I’ve been placed twice in jeopardy on these charges that’s been set aside. They used six convictions, and the only — Four of these convictions were set aside, according to testimony, this lawyer, Mr. Henry, was set aside by the Circuit Court, and the State Court elected not to retry me on that, so therefore I would be innocent of the charges. They could not be used as habitual criminal, and I would ask the Court to set aside the conviction, and would be no reason for a new trial.
Like the Court said: I would have to stay in jail probably, unless a reasonable bond, or maybe I could be released on my own reconnaissance, and I could get the proper treatment and go through another trial.
THE COURT: All right. I’ll tell you what I am going to do: I am going to deny your petition for relief under Criminal Procedure Rule Number 1.1 am going to grant your motion for credit for your time in jail and in the penitentiary awaiting trial, and you will be given credit for 19 months jail time on that.”

For reversal of the trial court’s decree in the post-conviction hearing the appellant contends:

“Appellant was denied his right to appeal from the revocation hearing due to his indigency, and through no fault of his own, but due to some misunderstanding between appellant’s retained trial counsel and the circuit judge, which denied him appellate counsel and thus violated his constitutional right of due process of law. ”

Since the record does not show the status of appellant’s appeal from the revocation of his suspended sentence nor why it has not been perfected in this court, we need not speculate as to what relief could have been granted him here had he requested such relief in the trial court. The Criminal Justice Coordinator recognized in August of 1974, that some communication gap existed in connection with the appeal and suggested to appellant that he contact the trial court for a clarification as to who had been appointed to represent him. The record does not show that appellant accepted this advice. In the absence of a showing that the failure to perfect the appeal was the fault of either the trial court or the conduct of his court appointed attorney, we cannot say that the trial court erred in refusing to set aside his conviction or to reduce it to the lowest term for grand larceny.

Affirmed.

We agree: Harris, C.J., and Holt and Roy, JJ.


author: Elsijane T. Roy, Justice.

text:
    Donna KEY v. WORTHEN BANK & TRUST COMPANY, N.A.
    76-112
    543 S.W. 2d 496
    Opinion delivered November 29, 1976 (In Banc)

      McHenry, Bryant & Polk, for appellant.

      Wright, Lindsey & Jennings, for appellee.
   Elsijane T. Roy, Justice.

Appellant Donna Key brought this action to void, as usurious, contracts entered with Worthen Bank & Trust Company, N.A. (Worthen) in conjunction with the issuance of BankAmericard and Master Charge bank cards. Appellant agreed to pay an annual membership fee of $12 in each credit plan and to be responsible for credit extended for purchases made on the basis of authorized use of the cards. She agreed to pay for such purchases currently or in installments on which interest would be charged.

Thereafter appellant charged certain items on her Master Charge account, for which she later paid Worthen although she refused to pay the annual membership fee. On her BankAmericard account she charged certain items amounting to $95.42 which she refused to pay. She also refused to pay the $12.00 membership fee added to the account, contending that the entire account was tainted with usury because of assessment of the membership fee. Worthen denied the membership fees were interest, but admitted that if the chancellor determined otherwise then interest on appellant’s accounts exceeded the Arkansas maximum. In addition, Worthen counterclaimed for the balance of both accounts, including the membership fees.

The chancellor heard the case on the pleadings and a stipulation of facts. He found the membership fees were not imposed as a condition of a loan or extension of credit, but as a valid condition of membership in the bank card plan and not as a cloak for usury. The trial court also awarded Worthen judgment on its counterclaim for the balance on each account. From that decree Mrs. Key has brought this appeal.

The application forms of both cards are almost identical, and the one signed by appellant for the BankAmericard credit plan reads as follows:

I have applied for membership in Worthen Bank & Trust Company’s BankAmericard credit plan. If my application is approved, I agree to pay an annual fee of $ 12.00 for membership in the plan and for issuance of a bank card for use in conjunction with the plan. I understand that the payment of the fee is required as a condition of membership in the plan, whether or not I use the bank card for the purpose of obtaining credit, and I agree that the fee may be charged to my BankAmericard account. (Italics supplied.)

The following portions of the stipulation are pertinent to the issue:

1. * * * Credit applications are taken from applicants and a card or cards will be issued if the applicant meets certain predetermined credit standards established by Worthen. The decision of whether or not to issue a card or cards is made by Worthen. The applicant states the credit limit desired and, if the issuance of the card is approved, Worthen then determines whether the requested credit limit should be granted.
2. * * * The card-issuing bank has contracts with merchants under which the merchants agree to accept charges on bank cards in payment for goods or services. The card-issuing bank agrees to pay the merchants cash for the charge slips generated by the use of the card or cards issued by the bank. * * * By participating in a bank card plan, a merchant is relieved of the necessity of providing charge accounts for his customers and of the risk of accepting checks from customers. If the merchant complies with his contract governing acceptance of bank card charges, he receives cash for the charge slip and the card-issuing bank takes on the risk of collecting from the cardholder and carries the receivables generated by the use of the card. This is the manner in which all card plans operate generally, and it is the manner in which Worthen operated its BankAmericard and Master Charge plans at all times relevant hereto.

The issuer ordinarily waits a period of time, something less than a month, before rendering its statement. If the cardholder pays within 25 days of the billing date then no finance charge is added, but if not, ten percent (10%) interest is added as a finance charge.

The parties also stipulated as to what D. E. Fortson, senior vice prssident of First Arkansas Bankstock Corporation, who s knowledgeable in the bank card industry, would testify if called as a witness. His testimony inter alia would be:

. . . ; that a bank card is proof of the holder’s favorable credit rating and it is not unusual for a bank card to be used and accepted as a credit reference, particularly when a cardholder is in a city other than the city of his residence, and that merchants and innkeepers will cash checks for travelers who are holders of bank cards, relying on the generally known fact that such cards are issued to persons of financial responsibility and proven creditworthiness; that a bank card is a valuable convenience, because travelers can charge airline tickets, hotel bills, restaurant bills, and purchases from merchants on bank cards, obviating the necessity of carrying large amounts of cash on trips, and cardholders can pay the card-issuing bank for all charges at one time, without incurring a finance charge if paid within 25 days of billing, . . . ; that a membership fee is identical to the type of fee charged by companies issuing travel and entertainment cards, such as the American Express card; that the annual fee for an American Express card is $15.00.
* * *
That it is Worthen’s position that membership in a bank card plan is a valuable banking commodity because it affords a cardholder services and conveniences, entirely apart from and in addition to the extension of credit, that would not otherwise be available to the member/cardholder; that member/cardholders would be willing to pay for these incidents of membership; that a. membership fee properly may be charged on an annual basis; and that a fee for membership may be made even though each member may not avail himself of all available features of membership.

Appellant if called as a witness for rebuttal would testify:

. . . that she used her bank cards for the extension of credit only, and not for any of the other purposes described in the stipulated testimony of Mr. Fortson.

Appellant contends whether termed a “membership fee,” a “service charge,” or whatever terminology is used, the annual fees charged by BankAmericard and Master Charge constitute “interest” and the transactions in question are violative of Article 19, § 13 of the Arkansas Constitution, which prohibits a greater rate of interest than 10% per annum.

Appellant also cites as authority for her position Arkansas cases which hold as usurious laws having “hidden items” and/or “multiple transactions” designed to allow the lender to charge more than 10%. We agree with the legal principles enunciated in these cases but do not find them to be appropos here since the membership fees are not hidden items and do not fall within the “multiple transactions” prohibitions.

The burden of proof is on appellant to prove that the contracts are usurious. An intention to charge a usurious rate of interest will never be presumed, imputed or inferred where the opposite result can fairly and reasonably be reached. Brown v. Central Arkansas Production Credit Assn., 256 Ark. 804, 510 S.W. 2d 571 (1974); Davidson v. Commercial Credit Equipment Corp., 255 Ark. 127, 499 S.W. 2d 68 (1973).

Here the membership fee was not imposed in connection with receiving a loan from Worthen or with any specific extension of credit. Mrs. Key came to the bank voluntarily seeking membership in specific bank plans. Appellant’s applications for the cards stated she understood the membership fee was required whether or not she used “the bank card for the purpose of obtaining credit.”

Mrs. Key was not a necessitous borrower who as a prerequisite to a loan was forced to buy something which she did not want. On the contrary, the bank card is a convenience to the cardholder, and the extension of credit is only one of several features of the card.

It serves as a credit reference similar to a letter of credit enabling the holder to cash checks or otherwise trade upon the recognition of credit worthiness which the card affords. Since merchandise and services can be secured without the necessity of writing checks it is very much like a check writing service. However, when the cardholder finds it necessary to cash checks while out of town the card is particularly helpful because it may solve credit worthiness and identification problems which often arise. It also obviates the necessity of carrying large amounts of cash with all the attendant risks. The value of the security feature of an instrument permitting only the bearer thereof to use it to obtain cash, goods or services has long been recognized by the issuance of traveler’s checks, for which a charge is validly made.

We have previously held that contracts or fees collateral to the lending or borrowing of money, if in themselves lawful and made in good faith, do not infect the “borrowing transaction” with usury, although their effect may be to increase the sum payable from the borrower to the lender. See Leavitt v. Marathon Oil Co., 186 Ark. 1077, 57 S.W. 2d 814 (1933); Commercial Credit Plan v. Chandler, 218 Ark. 966, 239 S.W. 2d 1009 (1951).

We find the agreement here was openly made in good faith and the membership fee is collateral to any interest imposed in connection with a loan or the extension of credit. Our decision is not to be interpreted as withdrawal by this Court from its long established position that we will not permit evasion of the constitutional prohibition against interest charges in excess of 10%. See Winston v. Personal Finance Company of Pine Bluff, Inc., 220 Ark. 580, 249 S.W. 2d 315 (1952), where we held the loan usurious and stated: “ . . . here the ‘service charge’ is a mere shell to conceal the kernel of usury.”

However, in the case at bar we agree with the chancellor that the membership fee is not a cloak for usury, but that it is valid consideration paid for the many services available to members in the bank card plans. It is immaterial that Mrs. Key chose not to use the privileges attendant to ownership of the bank cards as these privileges were available to her and furnished valuable consideration for the membership cards.

Affirmed.


author: George Rose Smith, Justice.

text:
    Ernest B. MATKIN, Jr., Administrator v. Samuel E. JONES, Individually and as Father and Next Friend
    76-175
    543 S.W. 2d 764
    Opinion delivered December 6, 1976 (Division I)

      Bailey, Trimble & Holt, by. Jack Holt, Jr., John F. Forster, Jr., and McHenry, Bryant & Polk, by: James M. Bryant II, for appellant.

      Laser, Sharp, Haley, Toung & Boswell, P.A., and Ike Allen Laws Jr., for appellee.
   George Rose Smith, Justice.

A head-on highway collision gave rise to the appellee Jones’s complaint for personal injuries sustained by his minor son and to the appellant Nlatkin’s counterclaim for the wrongful death of his son and for property damage. The jury did not award damages to either party. Matkin’s two points for reversal relate to an inconsistent out-of-court statement shown to have been made by John DeBlock, a passenger in the Matkin car.

The critical question of fact was: Which driver caused the collision by driving into the other’s lane of traffic? Young Jones testified that as he drove over the crest of a hill he saw the Matkin car coming toward him, in Jones’s traffic lane. Jones tried, but failed, to avoid a collision by first going to his left and then trying to get back to his side of the road.

DeBlock, who was riding with young Matkin, testified on direct examination that the Matkin car was continuously on its own side of the highway until the collision took place. On cross-examination DeBlock admitted that right after the accident he talked to a Mrs. Linton at the scene, but he denied having told Mrs. Linton that Matkin, in trying to avoid an animal in the road, had driven on the wrong side of the road. In rebuttal Mrs. Linton testified that when she asked DeBlock what had happened, he said: “We swerved to keep from hitting a ’possum or something.”

It is first argued that Jones made DeBlock his own witness by asking about a matter not mentioned on direct examination and that therefore Jones could not contradict DeBlock. That argument is unsound, because the cross-examination was a permissible method of impeachment. Ordinarily matters of impeachment, such as inconsistent out-of-court statements or criminal convictions, are not mentioned on direct examination. Hence the rule is “that cross-examination to impeach is not, in general, limited to matters brought out in the direct examination.” McCormick on Evidence, § 22 (2d ed., 1972).

To avoid a multiplicity of issues, the cross-examiner is bound by the witness’s answer with respect to a collateral matter. A fact is not collateral if the cross-examining party would be entitled to prove it as part of his case or defense. McAlister v. State, 99 Ark. 604, 139 S.W. 684 (1911). Upon that premise the appellant argues that DeBlock’s statement to Mrs. Linton was collateral, because, being hearsay, it could not have been proved by Jones as part of his case.

That argument is also unsound. What is or is not collateral is the basic fact, not the means of proving it. Here that fact is: The driver of the Matkin car drove on the wrong side of the road to keep from hitting an animal. If DeBlock had been willing to testify to that fact, Jones could have called him as a witness to make that proof. Consequently the issue raised by the cross-examination was not a collateral one. If the appellant’s argument were accepted, an inconsistent out-of-court statement could never be proved, because it would always be hearsay and therefore collateral. That is not the law.

As a second argument Matkin contends that the trial judge should, on his own motion, have instructed the jury to consider DeBlock’s statement to Mrs. Linton only as bearing upon his credibility. The burden, however, was on counsel to request such a limiting instruction. When testimony is admissible for one purpose but not for another, a general objection, as here, is not sufficient; a limiting admonition must be requested. City of Springdale v. Weathers, 241 Ark. 772, 410 S.W. 2d 754 (1967). No such request was made in the court below.

Affirmed.

We agree. Harris, C.J., and Fogleman and Jones, JJ.


author: PER CURIAM

text:
    Re: JUDICIAL PLANNING COMMITTEE
    December 6, 1976
   PER CURIAM

In accordance with the resolution adopted by the Arkansas Judicial Council on October 9, 1976, whereby the Council requested that the Supreme Court establish a permanent Judicial Planning Committee to improve the administration of justice in Arkansas, the Judicial Planning Committee of Arkansas is hereby established.

1. The name of the Committee shall be the “Judicial Planning Committee”. It shall meet regularly to perform research and make recommendations on a long-range basis to improve the administration of justice in the Courts of Arkansas. The Committee shall prepare an annual master plan and a multi-year plan for improving the state court system and shall incorporate into its plans special provisions pertaining to criminal justice in the Courts. The Committee may establish advisory committees to assist it in its deliberations and promote involvement of the public, the executive and legislative branches of government, and other interested parties, in its efforts to upgrade the state court system. The Committee shall be empowered to review applications to the Law Enforcement Assistance Administration for assistance in court projects, to establish priorities for improving the state court system, and to develop and coordinate programs for improving the courts.

2. The Committee shall consist of twelve members as follows: One Supreme Court Justice to serve as chairman, three Circuit Judges, three Chancery Judges, three Municipal Judges, one Prosecuting Attorney, and one criminal defense attorney or public defender, to serve terms of two years’ duration. A majority shall constitute a quorum. The Arkansas Judicial Department shall assist the Committee, administer its operations, and provide necessary staff subject to the approval of the Committee and this Court.

3. This Court may request recommendations of persons to serve on the Committee from the Arkansas Judicial Council, the Arkansas Municipal Judges’ Association, the Arkansas Prosecuting Attorneys’ Association, and the Arkansas Bar Association.

4. This order shall be effective on December 13, 1976.

Byrd, ]., not participating.


author: Carleton Harris, Chief Justice.

text:
    FARMERS COOPERATIVE ASSOCIATION, Inc., An Arkansas Corporation v. W. F. STEVENS
    76-172
    543 S.W. 2d 920
    Opinion delivered December 13, 1976 (In Banc)

      J. L. Hendren, for appellant.

      Burrows & Sawyer, for appellee.
   Carleton Harris, Chief Justice.

This litigation relates to the nature of a homestead exemption claimed by W. F. Stevens relative to land located within the limits of the incorporated town of Little Flock. Stevens contended, and the trial court held, that the land qualified for a rural homestead exemption under Article 9, Section 4, of the State Constitution. Appellant, Farmers Cooperative Association, Inc., asserts that said land qualifies only for an urban homestead exemption under Article 9, Section 5 of the Constitution. Appellant recovered a judgment against appellee in the amount of $10,-800.85 plus interest and, in the face of an execution, appellee contended that his 20 acres of real property were entirely exempt from execution because of being a rural homestead. Appellant asserted that Stevens was only entitled to the urban homestead exemption, constituting no more than one acre. From the judgment entered by the trial court comes this appeal.

The proof establishes that the 20-acre tract claimed to be exempt is used as defendant’s home and exclusively for agricultural purposes. Stevens is engaged in the business of selling eggs, boarding horses, and hiring himself out to other farmers to operate tractors and other farm work. Little Flock, though incorporated, contains no schools, no service stations, no industry, no motels, and the town property is zoned as agricultural. The record does not reflect that any municipal services are afforded except water, which is provided by a rural cooperative. The property was in an unincorporated area when acquired by appellee, and actually it appears that the incorporation was effected to prevent the cities of Rogers and Bentonville from annexing it.

It is apparent from our cases, though facts are different in all, that in doubtful cases, the use made of the property is very much pertinent to the question of whether a homestead is urban or rural; actually it would appear that each case stands on its own, facts. In Spaulding v. Haley, 101 Ark. 296, 142 S.W. 172, the court said:

The testimony in the case establishes the fact that Kingsville was a small village, probably within the meaning of the constitutional provision with reference to homesteads. But it also shows that the whole of the property which the court allotted to the widow as a homestead was farm property, and that it jutted into the outskirts of the village. Some of the witnesses testify that it was not a town or village but merely an aggregation of houses occupied by a few families as a part of their several farms under circumstances like unto the facts with reference to the property of Spaulding. The chancellor found that this property was used entirely for agricultural purposes, and that it therefore constituted a rural, and not an urban, homestead. We can not say that this finding is against the preponderance of the testimony.

In Orr v. Doughty, 51 Ark. 527, 11 S.W. 875, we said:

The tract had never been surveyed into blocks and lots or dedicated to village uses. It has been and is now used for agricultural purposes in connection with defendant’s contiguous farm, and is therefore a country homestead within the meaning of the constitution, notwithstanding the land upon which the defendant’s residence is situated juts into the village.

In Stuckey v. Horn, 132 Ark. 357, 200 S.W. 1025, the testimony reflected that the land in question was situated adjacent to a village (never incorporated) once known as Perrysmith, but later known as Bauxite. It was the site of a school with an enrollment of about 600 pupils, and there were two churches, a bank, a drugstore, two mercantile houses, a barbershop, a butcher shop, and a number of residences. About 3,000 people lived on various parts of the lands in the community and principal employment was labor performed for the Bauxite Company. The court said:

“The case of Spaulding v. Haley, 101 Ark. 296, presented a very similar question under the facts of that case, and in the syllabus there it is said:
‘Where land jutted into the outskirts of a village, but was used entirely for agricultural purposes, although part of it had been divided into lots by a prior owner, without making a plat or subdivision of it, a finding of the chancellor that it constituted a rural, and not an urban, homestead, will not be set aside.’
The land in this litigation had not even been divided into lots. Under this test, we think the land a rural homestead, and not an urban one, and the widow and minor children are not, therefore, limited to a claim of one acre, but may claim the entire eighty-acre tract as a homestead.”

It is thus evident that in determining whether a homestead should be classed as urban or rural, the court has carefully observed the use being made of the property and has considered such use of great weight in deciding the issue. Appellant points out that Little Flock was an incorporated town and it is argued that this is a significant fact. It is true that in the only case before this court that involved property within an incorporated town, First National Bank of Owatonna v. Wilson, (1896) 62 Ark. 140, 34 S.W. 544, we held the property to be an urban homestead, but facts which we deem very pertinent to making a determination (whether the property is urban or rural) are not shown. The town was Brinkley, which had been incorporated before Wilson had even purchased his property. The opinion is short and does not reflect what municipal services were provided. In fact, the case was submitted upon an agreed statement of facts which apparently only stipulated that Wilson’s homestead was in the town of Brinkley. The opinion also states, “We do not hold that the fact that one dwells within the limits of a municipal corporation will in all cases prevent him from holding as exempt a homestead of more than one acre.”

We do not consider the fact that Little Flock was incorporated to be controlling in this litigation. In the first place, the Constitution itself never used the word “incorporated,” but only uses the words “any city, town of village,” such constitutional language apparently being used in the popular sense. In Southeast Ark. Levee Dist. v. Turner, 184 Ark. 1147, 45 S.W. 2d 512, this court had occasion to discuss the meaning of the word “town.” While the case did not involve the Homestead Exemption Act, it is informative on the question of how the word “town” has been construed. There, appellees were landowners in the Southeast Arkansas Levee District, just outside the incorporated limits of McGehee, and they instituted suit to enjoin the collection of an alleged excessive assessment against their property, asserting that they were not within the incorporated limits of McGehee. This court pointed out that the legislation involved did not make any distinction between incorporated and unincorporated towns and cited two previous cases clearly indicating that where the only word used is “town” it is to be taken in the popular sense. In holding that the appellees were subject to the tax, though not actually residents of McGehee, the court pointed out that these citizens had all conveniences which proximity to the city afforded. See also King v. Sweatt, 115 F. Supp. 215 (W. D. Ark. 1953) where Judge John E. Miller pointed out that there was no precise legal definition of the words “city, town or village,” in our Arkansas constitutional provisions relating to homestead and, that it must be presumed that such words were used in their popular sense. In the case before us, since the constitutional provision does not use the words “incorporated town,” we attach no significance to the fact that Little Flock is incorporated.

Summarizing, the subject property in the present litigation was used exclusively for agricultural purposes. Little Flock, with the exception of two churches, does not possess the characteristics of a town as it is generally considered, i.e., no schools, service stations, industry, motels nor, as far as the record goes, services normally furnished by a town.

For the reasons herein set out, we are unable to say that there was no substantial evidence to support the findings of the circuit court.

Affirmed.

      There are two churches in Little Flock.

      The court also commented that whether property occupied by the owner and claimed as a homestead is a rural or urban homestead is to be determined on the facts of each case, and further commented, citing Gainus v. Cannon, 42 Ark. 503 (1884) that homestead laws are to be liberally construed.


text:
    Phillip Leon RASTLE v. MARION COUNTY RURAL SCHOOL DISTRICT NO. 1 et al
    76-153
    543 S.W. 2d 923
    Opinion delivered December 13, 1976 (In Banc)

      Frank H. Bailey and Richard S. Paden, for appellant.

      Donald J. Adams of Adams & Covington, for appellees.
   George Rose Smith, Justice.

The appellant Rastle, a school teacher, was employed by the Marion County Rural School District to teach during the school year running from September, 1974, to May, 1975. At the end of the school year the district apparently decided not to renew Rastle’s contract, but the district failed to give the required notice that the contract was being terminated. Newton v. Calhoun County Sch. Dist., 232 Ark. 943, 341 S.W. 2d 30 (1960). During the following summer the district was divided into two new districts, comprising the same territory as that of the original district.

When the new districts refused to recognize Rastle’s contractual right to teach during the ensuing school year, he brought this suit, in equity, asking that the districts be compelled by a writ of mandamus to execute a voucher in the amount of his salary or, alternatively, that he have judgment for that amount. Without objection the case was transferred to the circuit court. In the course of a trial without a jury, Rastle testified that between the beginning of the 1975-1976 school year and the date of trial, February 13, 1976, he had earned $2,185 in other employment. The trial judge dismissed the complaint, finding that Rastle did not have a clear right to a writ of mandamus, that the court did not have jurisdiction to award a money judgment in a mandamus proceeding, and that the plaintiff had an adequate remedy at law.

The court was undoubtedly right in denying the request for a writ of mandamus to compel the districts to issue a voucher for the amount of the plaintiff’s agreed salary. The testimony presented an issue of fact as to the amount to be credited in mitigation of damages. The writ of mandamus will not be issued when there is a question of fact to be decided. Mothershead v. Ponder, 220 Ark. 816, 250 S.W. 2d 121 (1952). Moreover, at the time of trial the school year still had several months to run, during which Rastle might have earned additional mitigating income.

Rastle argues, however, that the trial court was wrong in holding that it did not have jurisdiction to award money damages in a mandamus proceeding. That question depends upon whether the two causes of action can be joined in the same proceeding.

Act 73 of 1967 enlarged the classes of actions that may be joined, but that act does require that the causes of action “be prosecuted by the same kind of proceedings.” Ark. Stat. Ann. § 27-1301 (Supp. 1975). A suit for breach of contract is a common-law action, triable by jury. By contrast, an action for mandamus is a special proceeding, to be tried by the court. Ark. Stat. Ann. § 33-108 (Repl. 1962). Such a petition “shall have precedence over all other actions and proceedings and shall be heard and determined summarily.” Section 33-104. It is to be heard within seven days, § 33-106, but in a common-law action the defendant need not file his answer until 20 days after the service of summons. Ark. Stat. Ann. § 27-1135 (Repl. 1962).

We think it clear that the two actions are so procedurally incompatible as to prevent their joinder. That seems to be the implication of our decision in School Dist. No. 3 v. Bodenhamer, 43 Ark. 140 (1884), which was also an action for the recovery of a teacher’s wages. In rejecting the school district’s contention that the teacher should have sought a writ of mandamus, we said: “The writ of mandamus is frequently employed to compel public corporations to perform their duties towards their creditors. But there must first be a judgment to establish the validity and amount of the debt.” That decision was adhered to in Huie v. Barkman, 179 Ark. 772, 18 S.W. 2d 334 (1929), although the existence of a statute expressly providing a remedy by mandamus led to a different result.

If the suggested joinder were permitted, two separate trials in a single lawsuit would frequently be necessary — one with a jury and the other without a jury. Under the statute the mandamus action would take precedence and should be tried first, but under the Bodenhamer opinion disputed questions of fact should first be settled by the trial of the common-law action. Such multiple possibilities of confusion are readily avoided by simply holding, as we do, that the two causes of action cannot be joined and that the plaintiff, as is true in many situations, must make an election between two remedies.

Affirmed.