author: John I. Purtle, Justice.

text:
    El Cid HARRIS v. STATE of Arkansas
    CR 89-34
    774 S.W.2d 121
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      John W. Walker, P.A., by: R.S. McCullough; Don E. Glover, for appellant.

      Steve Clark, Att’y Gen., by: Ann Purvis, Asst. Att’y Gen., for appellee.
   John I. Purtle, Justice.

A jury convicted the appellant of seven counts of rape and one count of kidnapping and recommended sentences totaling 230 years. The trial court followed the recommendation of the jury. For his appeal the appellant makes four arguments: (1) the trial court erred in denying appellant a full psychiatric evaluation; (2) the court erred in refusing to allow a proffer of evidence concerning the need for an additional psychiatric evaluation; (3) the court erred in allowing the state to proceed on a felony information which did not conform to the law; and (4) the jury verdict finding the appellant guilty of kidnapping is not supported by substantial evidence. None of the arguments is persuasive. The conviction and sentence are affirmed.

The information charged the appellant with seven counts of rape, one count of kidnapping and one count of aggravated robbery, alleged to have been committed on the same victim on December 18, 1987. The aggravated robbery charge was not presented to the jury. The victim was personally acquainted with the appellant and reported him to the police immediately after the crimes occurred. She described the circumstances of this case as commencing about 3:30 p.m. on that date when the appellant came into the school which had closed early for Christmas holidays. The victim was alone in the school until El Cid Harris appeared. When she heard footsteps outside her door, she opened the door and noticed the appellant and said, “El Cid, what do you want?”

She further testified that the appellant, with whom she was acquainted, attacked her and that she fought him off for fifteen minutes. During this fifteen-minute struggle she broke away from him on two occasions. Once she got to the outer door of the building before he caught her and dragged her back down the hallway and into her office. The second time she temporarily escaped, she kicked him in the groin and ran as far as the “astrodome,” the covered area outside between the wings of the building. He again caught her from behind and threatened to kill her before starting to drag her back into the building. When he got back to the outer door of the building, she managed to get loose and started to run, but he knocked her down again and, by the hair of her head, pulled her back into the building.

He then ripped her clothes off and demanded that she get on the desk, and when she refused, he threw her to the floor and raped her for the first time. He then demanded that she perform oral sex on him and, when she refused, he beat her head against the floor and forced his penis into her mouth. After that, he performed oral sex on her. Then he raped her again. Shortly thereafter, he forced her to get on her knees and he raped her in the rectum. After that he forced her to perform oral sex for the second time. He then threw her on the floor, fell on top of her, and raped her a third time.

After this series of rapes, he asked her whether she had any money and when she said she didn’t, he asked her about checks. She told him that she didn’t have any checks. He repeatedly threatened to kill her, she said. He then had her get up and put her clothes on and he did the same. They then went out by the drinking fountain and into a bathroom in the teacher’s lounge. He was still dragging her by the collar at that time. He looked around the teacher’s lounge and opened the refrigerator and took out a coke and poured it down her throat. At that time he forced her on the table and raped her again. Then he compelled her to sit astride him on the couch while he raped her. When they left the teacher’s lounge he told her: “Come on we’re going. I am going to kill you.”

The first argument is that the court erred in denying appellant another psychiatric examination. The second argument is that the trial court erred by refusing to allow the appellant to make a proffer concerning the need for additional psychiatric evaluation. There appears to have been some question concerning the appellant’s mental condition and he was examined at a local clinic. At a pre-trial hearing, defense counsel requested that the appellant be examined at the state hospital. This request was denied. Counsel then asked he be allowed to make a proffer on the need for further evaluation. This request was denied.

During the voir dire of the jury for appellant’s trial, the prosecutor inquired whether appellant was going to assert a defense of mental disease or defect. Defense counsel stated: “No, I’m not going to assert it, your Honor. We haven’t brought a psychiatrist down.” The prosecutor: “He’s withdrawing that defense?” The court: “Yes, he’s withdrawing that defense.” Defense counsel: “Subject to any —, we’re withdrawing it. We are not going to assert it here.” In view of the fact that the defense had originally intended to interpose the defense of mental defect, the trial court improperly rejected the offer to submit the appellant’s testimony concerning the need for additional psychiatric evaluation. However, at the beginning of the trial the defense, in open court, waived any defense concerning mental disease or defect. We consequently find it unnecessary to consider either the first or second point argued for reversal.

The third argument is that the court erred in allowing the state to prosecute on an improper felony information. His primary objection is to that language in the information which states:

The said defendant on or about December 18, 1987, in Ashley County, Arkansas, did unlawfully: In seven specific instances engage in sexual intercourse or deviate sexual activity with another person by forcible compulsion.

Upon appellant’s motion for a bill of particulars he was furnished a copy of the victim’s statement which sets out all of the details of the different allegations of sexual intercourse and deviate sexual activity. The proof at the trial was exactly the same. The state therefore informed the appellant of the charges in sufficient detail by furnishing the statement of the victim.

The appellant relies upon our decisions in Bliss v. State, 282 Ark. 315, 668 S.W.2d 936 (1984); and Limber v. State, 264 Ark. 479, 572 S.W.2d 402 (1978). Bliss held that an indictment need not include specific statements of fact constituting the offense. However, in such a case, the state is bound to furnish a bill of particulars upon the request of the defendant. Limber held that the purpose of the bill of particulars was to acquaint the defense with sufficient information that he could be prepared for trial. The information had charged two persons with multiple acts of violence to a child. The case was affirmed because the state had furnished details of the accusations by turning over the prosecutor’s complete file to the defense. Moreover, the evidence at trial did not vary from that furnished to the defense prior to trial. In effect a bill of particulars was supplied. The same is true in the present case. As a substitute for a bill of particulars the state may furnish the accused with the information in the file and any other information within the control of the state which is reasonably necessary to properly defend against the charges. The statement provided to the defense was in complete detail and was as useful to the defense as any bill of particulars could have been. Therefore, we find no prejudice.

The final argument is that the evidence does not support the conviction for kidnapping. The appellant submits the controlling authority on this issue is found in Summerlin v. State, 296 Ark. 347, 756 S.W.2d 908 (1988). The heart of the decision in Summerlin is that when the restraint exceeds that normally incidental to another crime, such as rape, the evidence is sufficient to sustain a prosecution for kidnapping. The applicable code is Ark. Code Ann. § 5-1 l-102(a)(4) (1987), which reads in part as follows:

A person commits the offense of kidnapping if, without consent, he restrains another person so as to interfere substantially with his liberty with the purpose of . . . inflicting physical injury upon him, or of engaging in sexual intercourse, deviate sexual activity or sexual contact with him ....

On appellate review we affirm the jury’s finding if it is supported by substantial evidence. The evidence is viewed in the light most favorable to the state. Lewis v. State, 295 Ark. 499, 749 S.W.2d 672 (1988). We considered a similar argument in Tarry v. State, 289 Ark. 193, 710 S.W.2d 202 (1986), where we held that rape is not a continuing offense but consists of engaging in sexual intercourse or deviate sexual activity with another person by forcible compulsion. The opinion continued: “Here the prosecutrix testified that she had been raped in two different ways, and the jury so found by separate verdicts. There was not a continuing offense, for the two acts of rape were of a different nature and were separated in point of time. A separate impulse was necessary for the commission of each offense. There were two offenses.”

The appellant first contacted the victim in the hallway outside her office. When she attempted to get away, he caught her and dragged her back. On another occasion she got free and went out under the “astrodome.” Finally, he took her into a separate area where the teacher’s lounge is located and raped her again.

The kind of restraint which is considered incident to a rape is that which is necessary to consummate the act. Any additional restraint will support a conviction for kidnapping. See Summerlin v. State, 296 Ark. 347, 756 S.W.2d 908 (1988), where we stated:

[T]he exclusion of de minimus restraints from the definition of kidnapping is desirable since offenses such as rape or robbery necessarily contemplate restrictions on the victim’s liberty while the crime is actually committed. Thus, it is only when the restraint exceeds that normally incidental to the crime that the rapist (or robber) should also be subject to prosecution for kidnapping.

Chasing and dragging the victim from room to room or building to building and forcefully engaging in acts of rape between the attempts at freedom certainly involve restraint more than that normally incidental to the crime of rape. The facts in this case clearly warrant the finding that the appellant kidnapped his victim before and between the acts of rape.

Affirmed.


source: Caselaw Access Project

author: John I. Purtle, Justice. Tom Glaze, Justice,

license: Public Domain

text:
    Sam SEXTON, Jr. v. ARKANSAS SUPREME COURT COMMITTEE ON PROFESSIONAL CONDUCT
    89-73
    774 S.W.2d 114
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989
    [Rehearing denied September 11, 1989.]

      Howell, Price, Trice, Basham & Hope, P.A., by: Dale Price; Sexton Law Firm, by: Sam Sexton III, for appellant.

      Steve Clark, Att’y Gen., by: R.B. Friedlander, Solicitor General, for appellee.
   John I. Purtle, Justice.

The Arkansas Supreme Court Committee on Professional Conduct voted to suspend the license of the appellant for a period of one year, but stayed the suspension until the appeal could be heard by this court. We affirm the action taken by the Committee and dissolve the stay.

In January, 1987, Danny Haffelder and his wife, Tina Haffelder, filed a complaint against the appellant with the Committee on Professional Conduct. Following the filing of the complaint the Committee made a determination that the appellant’s license should be suspended for one year. The charges were brought pursuant to our Model Rules of Professional Conduct which were adopted in 1985 (effective January 1, 1986). However, on appeal we reversed and remanded, holding that it was a violation of Due Process to charge a person under a rule that was not in effect at the time of the alleged violation. Sexton v. Supreme Court Committee on Professional Conduct, 295 Ark. 141, 747 S.W.2d 94 (1988). We stated, however, that the Committee could still proceed with the complaint under the Code of Professional Responsibility (which was in effect in 1983).

The Committee subsequently charged the appellant with violation of Disciplinary Rule 5-104(a) of the Code of Professional Responsibility. Appellant then sought prohibition, certiorari, or mandamus in which he asked this Court to order the Committee to follow the standards for lawyer discipline as adopted by the American Bar Association and to order the Committee to answer interrogatories and requests for admissions. He further asked the members of the Committee to disqualify. We declined to issue a writ and instead held that appeal was an adequate remedy. Sexton v. Supreme Court Committee on Professional Conduct, 297 Ark. 154-A, 761 S.W.2d 602 (1988).

The Committee then reconsidered the charges pursuant to DR 5-104(a). The appellant’s license was again suspended for a period of one year. That order was stayed pending appeal. It is from the Committee’s second decision that the present appeal is taken.

The complaint in this case grew out of a transaction between the appellant and the Haff elders on June 30,1983. It isquiteclear that the Haff elders believed that Sexton was still their attorney in this transaction, which was entered into following settlement of a personal injury claim. The appellant admits that his firm represented Danny Haffelder in the damage claim and that he was Haff elder’s personal attorney at the time of the transaction. The basic agreement was that the Haffelders would lend Sexton (or his company) $20,000 and that they would be paid back $40,000. The repayments were to be $1,000 per month, commencing one month after the transaction. The loan was guaranteed personally by Sexton, and the proceeds from the loan were used in a corporation involved in some type of coal processing or mining. The project did not survive, and the investment was evidently lost. Either the now-defunct corporation or Sexton paid the Haffelders for a period of about one year and then stopped making the payments. The Haffelders filed a suit against the appellant for collection of the balance due under the terms of the transaction, and later filed a complaint with the Committee. Sexton paid the debt before the Committee held the hearing.

At the time the loan was made to the appellant, he agreed that the Haffelders could take the proposal to their banker or a lawyer prior to signing it. They did in fact take a facsimile of the agreement to their banker for consultation. About a week after the first loan discussion, the appellants returned with the proposed agreement, executed it, and wrote a check for $20,000.

The central issue in this appeal concerns Disciplinary Rule 5-104(a), which states:

A lawyer shall not enter into a business transaction with the client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure.

The appellant argues that he made a full disclosure and was thereafter under no duty to look after the interests of the Haffelders.

Both parties have correctly interpreted the rule to involve three elements: (1) a business transaction between the lawyer and the client; (2) differing interests in the transaction between the lawyer and client; and (3) the client’s expectation that the lawyer will exercise his professional judgment for the client’s protection. If these three elements are present, the lawyer’s obligation under the rule may be fulfilled by the lawyer making a full disclosure to his client and making it clear that he no longer is looking after the client’s interests in the matter. There is no disagreement that the first two elements are present in this case. The appellant’s argument is that the third element was not present because he agreed that the Haffelders could seek the advice of others in this matter. Alternatively, the appellant argues that, even if the third element was present, the client consented after “full disclosure” was made by the attorney.

In order to make a determination concerning the full disclosure issue, it is necessary for us to undertake a de novo examination of all the facts surrounding this transaction. See Rule 8 of the Rules of the Court Regulating Professional Conduct. When the business transaction was first mentioned, it was the client who suggested he might want to discuss it with other parties. The appellant agreed that the Haffelders could have the contract examined by anyone they chose. The clients kept the papers about six days and talked with a person or persons at the institution where they banked. From the actions and testimony of the parties, it is obvious that the clients were relying on the appellant to protect them and look after their interests, even though they had discussed the contract with their banker. Danny Haifelder stated: “I trusted the man with everything I had.” It is equally obvious that the clients felt they were going to double their money in a reasonably short time. (The rate of return under the terms of the contract far exceeded any normal investment they could have made.)

The appellant took very little affirmative action, if any, to inform his clients of the highly speculative nature of the transaction. The only thing they knew was that Sexton was in charge and it was a “coal business.” The appellant was a sophisticated, intelligent, and experienced attorney, while his clients were not at all conversant in these matters. The appellant should have revealed the facts and the economic status of the business venture he wanted his clients to invest in. He should have told his clients that the venture could fail and that, if it did, he would pay the obligation personally. He also should have told them, among other things, that the note was usurious and that he might be able to avoid full repayment if he so chose. His silence in this regard no doubt led his former clients to believe that this was a risk-free undertaking. It was not. He should have told his clients that he would not be able to pay promptly if the venture failed. Most certainly he should have expressly told them he would no longer serve as their attorney. Due to the nature of this transaction, the appellant was under a duty to affirmatively point out the details of this venture, including every circumstance and fact, to enable his clients, or former clients, to make an intelligent decision.

We also look to the action taken by the attorney after the business venture turned sour. He did not keep his word to personally make the payments to the clients, and it was necessary for the clients to file suit before the appellant paid the balance of the money. The clients eventually received all the money they were supposed to receive under the terms of the contract, but they had to obtain the services of other counsel to recover it.

The Arizona Supreme Court, in the case of Matter of Neville, 708 P.2d 1297 (Ariz. 1985), ruled that although there might not be a formal attorney-client relationship between the parties at the time of a transaction, the provisions of DR 5-104(a) still applied. The test in deciding the applicability of this disciplinary rule is whether an ordinary person would look to the lawyer as a protector rather than as an adversary. The Arizona court assumed that the lawyer informed the client that he was not acting as attorney for the client in the transaction in question. The court stated:

We adopt the view of the cases which hold that full disclosure requires not only that the lawyer make proper disclosure of non-representation, that he also must disclose every circumstance and fact “which the client should know to make an intelligent decision concerning the wisdom of entering the agreement.” [Citation omitted.] The rule is strict. The lawyer must give the client that information which he would have been obliged to give if he had been counsel rather than interested party, and the transaction must be as beneficial to the client as it would have been had the client been dealing with a stranger rather than with his lawyer. [Citation omitted.] Thus, “full disclosure” requires not only a full explanation of the divergence in interest between the lawyer and the client and an explanation about the need to seek independent legal advice, but also “a detailed explanation of risks and disadvantages to the client which flow from the agreement.” [Citation omitted.]

In reviewing this case de novo from the record of the proceedings before the Committee, we have determined that the clients expected the appellant to exercise his professional judgment for their protection in this transaction. The appellant simply did not make the “full disclosure” required of him by DR 5-104(a) when he solicited the loan from his clients.

The appellant’s second argument is that the Committee erred in assuming judicial functions constitutionally reserved to the courts. The right to practice law is a privilege granted by the state. The privilege cannot be denied in an arbitrary or invidiously discriminatory manner. McKenzie v. Burris, 255 Ark. 330, 500 S.W.2d 357 (1973). It cannot be denied in a manner inconsistent with due process of law. In the case of In re Murchison, 349 U.S. 133 (1955), the United States Supreme Court stated that a fair trial by a fair tribunal is a basic requirement of due process and this rule applies to administrative agencies as well. See also Gibson v. Berryhill, 411 U.S. 564 (1973).

The judicial power of the state of Arkansas, pursuant to Article 7, section 1, is vested in the Supreme Court, circuit courts, and such chancery and other courts as may be created by the legislature. Article 7 goes on to establish the responsibilities and duties of various courts.

The source of power to establish the Commission is in Amendment 28, which consists of a single sentence: “The Supreme Court shall make rules regulating the practice of law and the professional conduct of attorneys at law.” The Amendment is stated in mandatory language. This court is affirmatively charged with the duty of making and, by implication, of enforcing rules governing the practice of law and the conduct of lawyers. See Per Curiam dated January 19, 1972, 251 Ark. 800, 483 S.W.2d 174 (1972). This per curiam stated that “[t]he duty necessarily extends to the enforcement of the rules as well as their promulgation, for without enforcement the purpose of the Amendment would fail.” See also our opinion in McKenzie v. Burris, supra, where we stated: “Amendment 28 certainly put to rest for all time any possible question about the power of the courts to regulate the practice of law in the state. There can be no doubt that the power of the judicial department, acting through this court, is, in this respect, exclusive and supreme under this amendment, if the power was not already inherent in the courts.”

The appellant in effect argues that this court has established an inferior court and named it the Arkansas Supreme Court Committee on Professional Conduct. His argument is bottomed on our recent decisions concerning “masters” and juvenile judges. See Hutton v. Savage, 298 Ark. 256, 769 S.W.2d 394 (1989); and Arkansas Department of Human Services v. Templeton, 298 Ark. 390, 769 S.W.2d 404 (1989), which held that trial courts may not set up separate courts and judges such as had been done in the case of standing masters and juvenile judges. These designated representatives purported to serve as judges. We agree that the Constitution does not permit the appointment of temporary or part-time judges by other judges.

The appellant insists that the Committee should fulfill its functions by gathering information, investigating complaints, and making recommendations to this court. He argues that the Committee has gone beyond those functions and become a court in its own right through the exercise of the power of this court in suspending the appellant’s license.

In establishing this Committee, we have presumed the honesty and integrity of those appointed. Certainly we could never tolerate the denial of the right to practice law without fully affording due process to the practicing attorney. Amendment 28 did not specify the procedure or the manner in which we would regulate the practice of law. We have adopted rules and have declared that the right to appeal a decision of the Committee exists. See Sexton v. Supreme Court Committee on Professional Conduct, 297 Ark. 154-A, 761 S.W.2d 602 (1988).

The appellant has several arguments concerning the procedural rules which should be followed by the Committee. We have adopted the Rules of Professional Conduct, which furnish a format for the presentation of evidence and the procedure to be followed by the Committee. The rules governing the procedure before the Committee are uncomplicated and are written in ordinary language. In some opinions we have made reference to various rules and proceedings by which the established courts are bound. The Committee is in the nature of an administrative agency, which is not bound by rules of the courts. However, we have not at any time attempted to require the Committee to strictly adhere to the Rules of Evidence or the Rules of Procedure. To do so would unduly complicate and probably lengthen the proceedings before the Committee. We have no hesitancy in changing the rules if it has been brought to our attention that a change would improve the discharge of the duties and functions of the Committee and would serve the best interests of the bar. See Walker v. Supreme Court Committee on Professional Conduct, 275 Ark. 158, 628 S.W.2d 552 (1982).

The appellant argues that the Committee erred in refusing to deem as admitted certain requested admissions and in failing to comply with Rule 52 of the Arkansas Rules of Civil Procedure. These are rules which concern proceedings in the courts. Since we review appeals from the Committee de novo, we are not concerned so much with the procedure followed as we are with reaching the proper results. See Davis v. Merritt, 252 Ark. 659, 680, 480 S.W.2d 924 (1972).

We have reviewed all of our prior decisions concerning the professional conduct of attorneys and have not found a case directly on point. We believe our rules of professional conduct relating to the practice of law are good ones. The fundamental purpose of these rules is to give the attorneys professional guidance and to inform them of the procedure that will be followed if disciplinary action is necessary.

In reviewing the actions of the Committee we look to the preponderance of the evidence and affirm the action taken by the Committee unless it is clearly against the preponderance of the evidence. See Muhammed v. Supreme Court Committee on Professional Conduct, 291 Ark. 29, 722 S.W.2d 280 (1987). We have complied with the provision of Amendment 28 and find that the Committee did not deny the appellant his constitutional or statutory rights.

We briefly discuss the appellant’s argument that the Committee should have recused because some members had expressed opinions prior to the hearing. Rule 5(B) (1) of the Rules of the Court Regulating Professional Conduct states that the executive secretary “shall also advise that the attorney may request a hearing before any vote is taken by the Committee,” and in the absence of such a request the file will be sent to the Committee members who will vote by a ballot. That is exactly what occurred in this case. The mere happenstance that a trier of fact has expressed an opinion on a matter under consideration does not automatically disqualify that person from further participation. Frequently we reverse a trial judge and remand the case for another trial. Even though we may reverse a trial judge, on remand the judge is considered fair and impartial.

The argument concerning procedural due process by the courts and administrative agencies was discussed in Withrow v. Larkin, 421 U.S. 35 (1975). The Withrow opinion cited with approval the case of FTC v. Cement Institute, 333 U.S. 683 (1948), in which a party had demanded that the commission members disqualify themselves because, long before the Commission had filed its complaint, it had investigated the parties, and its members had testified before congressional committees concerning the legality of a pricing system. Some of the members had disclosed their opinion that the system was illegal. The Court in FTC stated:

[T]he fact that the Commission had entertained such views as the result of its prior ex parte investigations did not necessarily mean that the minds of its members were irrevocably closed on the subject ....

The case of NLRB v. Donnelly Garment Company, 330 U.S. 219 (1947), stated:

Certainly it is not the rule of judicial administration that, statutory requirements apart ... a judge is disqualified from sitting in a retrial because he was reversed on earlier rulings. We find no warrant for imposing upon administrative agencies a stiffer rule, whereby examiners would be disentitled to sit because they rule strongly against a party in the first hearing.

We find nothing in the record to indicate that the members of the Committee did not consider this matter on its merits and vote in accordance with their convictions.

This case has already been before this court twice. There can be no more positive proof that we are protecting the rights of the appellant and at the same time looking to our obligation to the public. We hold that the preponderance of the evidence supports the Committee’s conclusion that the appellant did not make a full disclosure as required by DR 5-104(a). Therefore, the decision of the Committee to suspend the appellant’s attorney’s license for a period of one year is affirmed.

Glaze, J., dissents.

Tom Glaze, Justice,

dissenting. The majority opinion properly adopts a standard by which an attorney’s conduct or actions can be measured to determine if the attorney, who has a conflict of interest with a client, has violated Disciplinary Rule 5-104(a). In this connection, the majority adopts the rule set out in In re Neville, 147 Ariz. 106, 708 P.2d 1297 (1985), and I agree with this part of the majority’s decision. However, I cannot agree with the court’s decision that this court is constitutionally empowered to establish a committee which may serve in a judicial capacity with the authority to suspend attorneys for their professional misconduct. In my view, the majority court assumes more authority and power than it is given by the Arkansas Constitution.

The majority court assumes for itself this power to regulate and suspend attorneys by virtue of amendment 28 to the Arkansas Constitution, which was passed by the vote of the people in 1938 and which provides as follows:

The Supreme Court shall make rules regulating the practice of law and the professional conduct of attorneys at law.

Clearly, this court has the authority under amendment 28, directly or impliedly, to provide all necessary and reasonable means by which attorneys’ conduct may be regulated. Such authority does not, and should not, include the authority to appoint or establish a committee with authority that conflicts with existing powers already given by the constitution to other courts.

In the case of In re Dodrill, 260 Ark. 223, 538 S.W.2d 549 (1976), this court, quoting from Feldman v. State Board of Law Examiners, 438 F.2d 699 (8th Cir. 1971), stated the following:

The principle is firmly established that the judicial branch of government, acting through the courts, has exclusive jurisdiction to admit, control and disbar attorneys. (Emphasis added.)

The Arkansas Constitution provided that the circuit courts shall have jurisdiction in all civil and criminal cases the exclusive jurisdiction of which may not be vested by the constitution in some other court, see Ark. Const. art. 7, § 11, and our court repeatedly has held the proceedings involving the disbarment of an attorney are civil in nature. In Re: Dodrill, 260 Ark. 223, 538 S.W.2d 549 (1976); Weems v. Sup. Ct. Comm. on Prof. Conduct, 257 Ark. 673, 523 S.W.2d 900 (1975); Hurst v. Bar Rules Comm. of the State of Arkansas, 202 Ark. 1101, 155 S.W.2d 697 (1941). In Dodrill, the court held that, in a disbarment proceeding, the trial court [circuit court] had jurisdiction with the power and authority to impose the lesser penalty, i.e., to conditionally suspend the petitioner’s [attorney’s] license.

The majority would quibble that the supreme court committee would have authority to suspend an attorney’s license but must defer to the circuit (or chancery) court when disbarment proceedings are involved. Such a distinction runs a very fine line and has little in the way of rationale to support it. For example, no rule or authority exists that I can find which would prevent the committee from suspending an attorney indefinitely, that is, if the committee decided to impose such a sanction. However, even if the committee chose only to suspend an attorney for one or two years, the practical result is the same as a disbarment — the attorney cannot practice law. When comparing suspension and disbarment proceedings, it is also noteworthy that Ark. R. Prof. Conduct 16 treats attorneys who are disbarred or suspended in other states in the same manner when taking action against them in Arkansas.

In sum, amendment 28 contains no terms or language that endow this court with the power to appoint a committee to act in a judicial function so as to enforce the rules this court promulgates to regulate attorneys. Amendment 28 was passed in 1938, and no one even suggested this court had such power, at least until the court, by per curiam order dated March 11, 1985, adopted its present rules to regulate the conduct of attorneys. The reason for the nearly fifty-year delay between the passage of amendment 28 and the court’s 1985 per curiam order was, I submit, because our constitution’s mandates harmoniously provide for the supreme court to regulate the professional conduct of attorneys and for the circuit court to provide the mechanism for trying such matters. In construing and applying amendment 28 and the judicial article (particularly Ark. Const, art. 7, § 11) in this manner, an attorney is also availed the panoply of civil rules of procedure which are normally allowed in civil proceedings. Under the majority’s decision, such procedures are not available.

For the foregoing reasons, I would reverse the committee’s decision with directions for it to file this matter in circuit court.

       In view of Ark. Const, art. 7, § 11,1 would take issue with this court’s rules which allow the committee to file its complaint in chancery court.


author: Robert H. Dudley, Justice. Hays, J.,

text:
    BANK OF DOVER v. Randy SHIPLEY, Betty J. Shipley Martin, A.D. Shipley, and Kathryn Bewley
    89-148
    773 S.W.2d 825
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      Young & Finley, by: James K. Young, for appellant.

      Dennis C. Sutterfield, for appellee Randy Shipley.

      Jon R. Sanford, for appellee A.D. Shipley.
   Robert H. Dudley, Justice.

The issue in this Uniform Commercial Code case is whether the appellant, the Bank of Dover, is entitled to a deficiency judgment on a note. The trial court ruled that the bank was barred from obtaining a deficiency judgment under the Code. The trial court ruled correctly and, accordingly, we affirm.

Appellees, Randy and Betty Shipley, borrowed money from the appellant bank in order to start a video rental business. As collateral for the loan, they gave appellant a second mortgage on their house and signed a security agreement covering the inventory of the video rental business. The promissory note in the amount of $14,823.11, was co-signed by Kathryn Bewley, Betty Shipley’s mother. At a later date, after Randy and Betty Shipley divorced, the note was renegotiated, and Randy Shipley’s father, A.D. Shipley, co-signed the note. The appellees made several payments on the note, but eventually defaulted. Shortly thereafter, they surrendered the personal property to the bank.

Later, the bank filed a petition for foreclosure. The petition named Randy Shipley, Betty Shipley Martin, Kathryn Bewley, and A.D. Shipley as defendants. The petition stated the balance due on the note was $12,857.70, and asked the court to order a sale of the real property. The petition mentioned the property covered by the security agreement, and the security agreement was attached to the petition. However, the petition did not ask for the sale of the personal property in addition to the real property. Several cross-claims were filed by various defendants/appellees contesting their liability on the note.

The court ordered the sale of the “premises” securing the note, and specifically retained jurisdiction of the case in order to determine the liability of each of the appellees in the event of a deficiency after the sale. Personal property was not mentioned. The sale was held on May 11,1988. On May 13,1988, the court entered its order confirming the sale of the real estate. Again, personal property was not mentioned. The real property was sold for $4,000, which resulted in a deficiency judgment of $10,565.22 in favor of the bank.The court again retained jurisdiction of the case to determine the liability of the various appellees for the deficiency.

Next, the bank sent a letter to the appellees, informing them that it had received bids on some of the personal property securing the note, and asking them what they wanted to do about it. When the bank received no response after two weeks, it proceeded to sell the personal property. The bank then filed a motion with the court, stating that it had sold some of the personal property securing the note for $425 and had applied that amount to the deficiency judgment owed it by the appellees. The bank asked the court to proceed with the final hearing to determine the liability of the various appellees for the deficiency judgment. Following the sale of the personal property, the appellees contended that the bank had forfeited its right to a deficiency judgment by failing to give them notice of the sale of personal property, as required by the Code.

The trial court ruled that the bank was barred from obtaining a deficiency judgment because of its failure to comply with the notice requirements of the Code before conducting a sale of personal property under the Code. The bank now appeals from the trial court’s order denying it a deficiency judgment on the note.

The trial court’s ruling was correct. The appellees had surrendered control of the personal property to the bank before the bank filed its foreclosure petition. The bank had the option of foreclosing on the personal property, as it did on real property, or of utilizing the self-help remedies of the Uniform Commercial Code. Since the bank did not choose to sell the personal property through a judicial sale, but, nevertheless, sold the personal property, it necessarily chose to proceed under the self-help provisions of the Code. That choice imposed several requirements on the bank with regard to the sale of the personal property. See Ark. Code Ann. § 4-9-504 (1987). One of these requirements is notice of the sale to the debtor. Ark. Code Ann. § 4-9-504(3) provides in pertinent part:

Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor, if he has not signed after default a statement renouncing or modifying his right to notification of sale.

The bank failed to provide the appellees with this notice prior to selling the personal property in this case. We have held on several occasions that a creditor’s failure to provide a debtor with this notice bars the creditor’s right to recover a deficiency judgment. See Hallmark Cards, Inc. v. Peevy, 293 Ark. 594, 739 S.W.2d 691 (1987); First State Bank of Morrilton v. Hallett, 291 Ark. 37, 722 S.W.2d 555 (1987). Accordingly, the bank’s failure to provide notice to the appellees, prior to the sale of the personal property, barred its right to a deficiency judgment.

Affirmed.

Newbern, J., not participating.

Glaze, J., concurs.

Hays, J.,

dissents and would reverse, see dissenting opinion in First State Bank of Morrilton v. Hallett, 291 Ark. 37, 722 S.W.2d 555 (1987).


author: Robert H. Dudley, Justice. Steele Hays, Justice,

text:
    Worth CAMP, Jr. v. FIRST FINANCIAL FEDERAL SAVINGS AND LOAN ASSOCIATION
    89-30
    772 S.W.2d 602
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989
    [Rehearing denied September 25, 1989.]

      Gill Law Firm, by: John P. Gill, for appellant.

      Law Offices of Ian W. Vickery, by: Ian W. Vickery, for appellee.

      Hays and Glaze, JJ., would grant rehearing. Hickman, J., not participating.

   Robert H. Dudley, Justice.

Appellant, Worth Camp, Jr., co-signed a $25,000 promissory note payable to appellee, First Financial Federal Savings and Loan Association. The purpose of the transaction was to establish a line of credit for an inventory of used cars to be resold by Rusty Jones, a used car dealer who was the other co-signer. The note was renewed three (3) times and, during that time, the amount of the note was increased to $50,000. Jones defaulted, suit was filed, and judgment was entered against Jones and appellant, jointly and severally, in the amount of $52,180, plus interest at the rate of 12 % and attorneys’ fees of $5,218. Jones is not involved in this appeal. We reverse the judgment against appellant.

The facts concerning the execution of the note are not in dispute. Jones applied to appellee for a loan in order to open a used car business. Appellee refused to make a loan to Jones. Jones, a family friend of appellant Camp, asked appellant if he would cosign a note. Appellant agreed, and the two of them then completed a credit application for appellee. Appellee agreed to make a $25,000 loan if both co-signed the note. The loan was approved because of appellant’s financial worth. Appellant neither owned nor acquired an interest in the used car business, nor did he receive any of the proceeds of the loan. Appellant, an attorney, did represent Jones in the formation of his business and charged Jones a reasonable fee for his work.

Ark. Code Ann.§4-3-415(l)(1987) defines an accommodation party as “one who signs the instrument in any capacity for the purpose of lending his name to another party to it.” The comment to this section provides in part that the “essential characteristic is that the accommodation party is a surety, and not that he has signed gratuitously.” Thus, an accommodation party may appear on the instrument as a co-maker. See J. White and R. Summers, Uniform Commercial Code, % 13-12, at 516 (2d ed. 1980). Under the facts of this case, appellant is an accommodation party and a surety.

Sureties may have simple contract defenses. See Comment to Ark. Code Ann. § 4-3-415(1) (1987). One of the defenses involves the creditor’s failure to disclose facts which materially increase a surety’s risk. A number of courts have adopted Section 124(1) of the Restatement of Security (1940), to define the creditor’s duty to disclose. Sumitomo Bank of California v. Iwasaki, 70 Cal. 2d 81, 88, 73 Cal Rptr. 564, 571, 447 P.2d 956, 963 (1968); accord, Maine National Bank v. Fontaine, 456 A.2d 1273 (Me. 1983); First National Bank of Arizona v. Bennett Venture, Ltd., 130 Ariz. 562, 564, 637 P.2d 1065, 1067 (App. 1981); First National Bank & Trust of Racine v. Notte, 97 Wis. 2d 207, 213, 293 N.W.2d 530, 536 (1980); Watkins Products, Inc. v. Stadel, 214 N.W.2d 368 (N.D. 1973). We also adopt the section which provides:

§ 124. Non-Disclosure by Creditor.
(1) Where before the surety has undertaken his obligation the creditor knows facts unknown to the surety that materially increase the risk beyond that which the creditor has reason to believe the surety intends to assume, and the creditor also has reason to believe that these fácts are unknown to the surety and has reasonable opportunity to communicate them to the surety, failure of the creditor to notify the surety of such facts is a defense to the surety.

Comment (b) to that section states that:

Among facts that are material are the financial condition of the principal, secret agreements between the parties, or the relations of third parties to the principal. If the surety requests information, the creditor must disclose it. Where he realizes that the surety is acting or is about to act in reliance upon a mistaken belief about the principal in respect of a matter material to the surety’s risk, he should afford the surety the benefit of his information if he has an opportunity to do so.

In this case, the original note was executed on August 2, 1984, and the renewals were executed on January 25, 1985, September 11,1985, and March 15,1986. The appellant testified thaton August 15, 1985, just beforetheSeptember 1985 renewal, the loan officer of appellee “advised me the note was coming up for renewal and he advised me that the interest had been paid.” Appellee offered no evidence to the contrary. In truth, interest payments were four (4) months delinquent. Appellant testified that he would not have executed the September 11, 1985, renewal if he had known that interest was not current. The trial court did not find that these facts constituted a sufficient defense, but that appears to be because that court, faced with a case of first impression, applied the wrong standard of duty. It held that “the evidence shows that the plaintiff [appellee] did not administer this loan in bad faith or cause any fraudulent misrepresentations with regard thereto to be made, and that the actions of the bank in administering this loan did not impair the collateral in question.” It was not necessary for the surety to prove bad faith or fraudulent misrepresentation. Instead, he had to prove only the elements set forth in Section 124.

Appellee’s conduct toward appellant was even more egregious in a different regard. All of the witnesses agreed that appellee would not make the loan to Jones alone. Appellee’s president testified that “the loan would not have been made without Mr. Camp as the co-borrower.” However, once appellant signed as a co-maker, and the loan limits were practically reached, the appellee began making side loans, or personal loans, to Jones. For example, when $24,861 of the guaranteed $25,000 line of credit had been reached, appellee made a side loan to Jones of $3,250. When $48,019 of the $50,000 guaranteed line of credit had been reached the appellee made side loans to Jones of almost $10,000. These side loans to Jones amounted to $25,038, and were repaid from cars which were mortgaged to appellee. Yet, all parties understood that the loans which appellant co-signed were to be repaid by sale of the car inventory. Appellant knew nothing of the side loans and naturally thought that Jones’ used car business was making payments only on the loans which he cosigned. The trial court again applied the wrong standard and held that although appellee “did loan additional sums to the Defendant Jones without the knowledge of Mr. Camp, these loans evidenced by ‘side notes’ were not in violation of any duty to Mr. Camp nor do they fall within the concept of bad faith by the Plaintiff [appellee].”

Both of these actions, the failure to disclose and the secret side loans, materially increased the surety’s contemplated risk, and the creditor was aware of the surety’s ignorance of the facts. Yet, the creditor, appellee, chose to misrepresent the truth about the currency of the interest payments and to secret the side loans.

As a result of the actions, the surety assumed a risk well beyond that which he intended. The appellee was aware of the facts, and although given the opportunity, failed to communicate them to the surety. Such actions by a creditor discharge a surety. Accordingly, the judgment is reversed and the complaint is dismissed.

Reversed and dismissed.

Hickman, J., not participating.

Hays, J., dissents.

Steele Hays, Justice,

dissenting. I take no exception to the adoption by the majority of Section 124 of the Restatement of the Law of Security requiring a creditor to disclose information to a surety which materially increases the risk assumed by the surety. However, in applying § 124 to this case, I believe the majority misconstrues both the facts and the law.

The majority asserts that appellant was told the interest payments were current when in fact they were four months in arrears. I concede the appellant testified to that, but that is the only evidence in the abstract (or, for that matter, the record) which attests to either the status of the interest payments or what appellant may have been told. The appellant argues that his testimony on these points is undisputed. But that contention ignores the settled rule that the testimony of a litigant is disputed as a matter of law, even though it may be unchallenged. Knobles v. Salazar, 298 Ark. 281, 766 S.W.2d 613 (1989); Courtney v. Courtney, 296 Ark. 91, 752 S.W.2d 40 (1988); Hamby v. Hankins, 275 Ark. 385, 630 S.W.2d 37 (1982); Hurley Pickett Lake Farms, Inc. v. Sullivan, 245 Ark. 709, 434 S.W.2d 88 (1968), and Skillern v. Baker, 82 Ark. 86 (1909). Moreover, the findings of the circuit judge were to the contrary and the majority fails to explain how those findings were clearly erroneous. Indeed, the majority treats the appellant’s testimony as though he had prevailed in the trial court. The majority also ignores the testimony of Rusty Jones that several times each year and particularly when the note came up for renewal he and appellant sat down and discussed the current status of the business. Even if we were to accept the appellant’s testimony as undisputed on this point, it would still not relieve him of liability for the indebtedness existing prior to the last renewal.

Citing a finding by the trial court that the bank did not act in bad faith or make any fraudulent misrepresentations in connection with the loan, the majority asserts that the trial court applied the wrong standard of duty to the bank. Clearly, the trial court was merely observing that in making side notes to Rusty Jones, the bank did not act fraudulently or in bad faith. Nothing suggests the trial court adopted an erroneous standard and it should be noted that the appellant does not even attempt to advance such an argument.

As to the side notes, again I can find nothing in the abstract or the record which supports the assertion that the side notes were repaid from the sale of the inventory of used cars. The fact is, the side loans were handled entirely separately from the inventory and affected appellant’s risk not at all. If anything, the side loans benefited the venture by keeping fresh stock on the lot.

Comment (b) to § 124 (quoted in the majority opinion), points out that “secret agreements” between the parties must be disclosed, but that comment is clearly subject to the language of § 124. That is, it is not just any secret agreement that must be disclosed by the creditor, but only those which “materially increase the risk beyond that which the creditor has reason to believe the surety intends to assume.” Moreover, under the interpretations of this section of the Restatement, the making of an additional loan to the borrower is not sufficient in itself to support a finding that the risk to the surety has been materially increased. In Sumitomo Bank of California v. Iwasaki, 70 Cal.2d 81, 73 Cal. Reptr. 564, 447 P.2d 956 (1968), cited by the majority, the court examined an agreement between the creditor and the borrower that was not disclosed to the surety. The agreement provided for a later, additional loan to the borrower for funds to pay federal taxes. In a thorough analysis of the disclosure requirements of § 124, the Sumitomo court listed three prerequisites for the imposition of a duty to disclose:

(a) ‘the creditor has reason to believe’ that those facts materially increase the risk ‘beyond that which the surety intends to assume’; (b) the creditor ‘has reason to believe that the facts are unknown to the surety’; and (c) the creditor ‘has a reasonable opportunity to communicate the facts to the surety.’

The court in Sumitomo did not reach the question whether the new loan increased the risk, because there was no evidence of the debtor’s financial position at the time the surety was signed, so the bank had no information concerning the risk the surety intended to assume. The court stated:

Thus, the evidence cannot support a finding that the [debtors’] inability to pay their taxes without a loan materially increased [the surety’s] risk. A fortiori, it cannot support a finding that the [creditor] had reason to believe this fact materially increased [the surety’s] risk.

The court also observed that a note for taxes would not ordinarily suggest to a creditor that a material increase in risk was created.

Section 124 was similarly interpreted in Peoples National Bank of Washington v. Taylor, 711 P.2d 1021 (Wash. App. 1985). There the surety was guaranteeing a loan for part of the price of a boat. The bank was expecting the buyer/debtor to produce the balance of the price through the sale of his home, which seemed imminent. The sale of the house did not go through and the bank then gave the debtor a “bridge loan,” which was renewed four times in the following thirteen months. The debtor ultimately defaulted on the guaranteed loan and the surety, when sued on the guarantee, attempted to defend on the basis of § 124 and the bank’s nondisclosure of the bridge loan. The court found no violation of § 124, finding that the bridge loan had been ultimately satisfied by the sale of the house, and that the loan otherwise presented no material increase in risk to the surety. The court pointed out that the surety had not demonstrated how, as a matter of law or fact, the bridge loan would have been significant to the surety or how the bank would have had reason to know about the alleged materiality.

Here, there is no evidence to support a conclusion that these side loans-materially increased the risk undertaken by appellant. The loans were all made independently of the credit line signed by appellant, and each was collateralized by a specific vehicle purchased by Jones. The side loans were paid off as Jones was able to sell those specific vehicles, and all the side loans were in fact satisfied. Jones’s problems were a result of his inability to sell the cars he purchased on the guaranteed credit line, and it was this venture that appellant had undertaken to insure. The side notes did not increase appellant’s risk, as they were each individually collateralized. In fact, when asked directly if he had any knowledge of money generated by the sale of cars from the inventory being used to pay any of the side loans, appellant answered, “I have no specific knowledge of how the funds were applied. I just know some of these [side loans] were used car loans.” The fact is under the arrangement for payment to the bank on both loans, such a procedure would not have been possible, as the bank released titles only upon payment from Jones. Were the purchaser of a car from the credit line of vehicles to have his payment credited to one of the side loans, Jones would not have been able to obtain the title from the bank to deliver to the purchaser.

The thrust of appellant’s argument is that the alleged interest and side note problems revealed to the bank that Jones’s business was in trouble, and, had the bank disclosed that to appellant, he would not have signed the renewals. Yet prior to the last renewal appellant was specifically told the loan was in trouble and was “a problem loan,” even so, he decided to sign the renewal. Given that, the trial court could easily conclude, as it did, that trouble in running the business and meeting the loan was a risk that appellant had assumed, and in that case, even if the bank had known of some trouble in Jones’s business, it was not beyond the risk appellant had originally assumed. See Sumitomo, supra:

As is also stated in Comment (b) of § 124:
Every surety by the nature of his obligation undertakes risks which are the inevitable concomitants of the transactions involved. Circumstances of the transactions vary the risks which will be regarded as normal and contemplated by the surety. While no surety takes the risk of material concealment, what will be deemed material concealment in respect of one surety may not be regarded so in respect of another.

I submit that appellant has not shown that the risk he assumed was materially increased and the circuit judge so held. He should be affirmed.


author: Robert H. Dudley, Justice.

text:
    PROFESSIONAL ADJUSTMENT BUREAU, INC. v. Perry WILLIAMS d/b/a Siloam Springs, Ready Mix
    89-87
    773 S.W.2d 824
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      Jeff Slaton, for appellant.
    No brief filed.
   Robert H. Dudley, Justice.

This appeal arises from an order vacating a default judgment. Appellant, Professional Adjustment Bureau, Inc., obtained a judgment against James C. Tucker, judgment debtor. On July 12, 1988, appellant alleges that it served a writ of garnishment and interrogatories by certified mail on appellee, Perry Williams d/b/a Siloam Springs Ready Mix. On appellant’s motion, the trial court subsequently entered a default judgment against appellee finding that appellee had failed to answer the writ of garnishment in the time required by law.

Appellee filed a motion to set aside the garnishment. A hearing was held on the motion. Kathryn Edgmon, an employee of appellee who was authorized to receive certified mail on its behalf, testified that she opened the envelope and found the interrogatories, but that there was no writ of garnishment. She answered the interrogatories, and mailed them to appellant’s attorney on July 14, 1988; however, nothing was filed in the circuit court. It is undisputed that the interrogatories, by themselves, gave no notice as to when answers should be returned, where they should be filed, nor what the consequences of a failure to answer would be.

The trial court made no finding on the question of whether a writ of garnishment, containing the notice provisions, was included in the envelope opened by Ms. Edgmon. Rather, the trial court found that the answers mailed by Ms. Edgmon to appellant’s attorney substantially complied with the law. On that basis, the court issued its order granting the motion to set aside judgment and vacating the garnishment. We reverse and remand.

Appellant argues on appeal that the trial court erred in finding that appellee substantially complied with the law by forwarding answers to appellant’s attorney. The argument has merit.

The only evidence of a response is the July 14 letter written by Ms. Edgmon and mailed to appellant’s attorney. There was no evidence that it was filed in circuit court. Thus, as the record stands, the trial court found substantial compliance in the mailing of an unverified letter to the judgment creditor’s attorney.

The trial court erred in doing so because appellee’s response, while timely, was not filed in court as required by Ark. Code Ann. § 16-110-404 (1987):

The garnishee shall, on the return day named in the writ, exhibit and file, under his oath, full, direct, and true answers to all such allegations and interrogatories as may have been exhibited against him by the plaintiff. [Emphasis added.]

We have consistently required strict adherence to garnishment procedures. See, e.g., Karoley v. A. R. & T. Electronics, 235 Ark. 609, 363 S.W.2d 120 (1962) (default judgment proper where nothing filed in response to writ within time allowed); and Harmon v. Bell, 204 Ark. 290, 161 S.W.2d 744 (1942) (default judgment proper where garnishee orally answered allegations). This same sort of strict adherence has been required in cases governed solely by the Rules of Civil Procedure. See, e.g., Allstate Ins. Co. v. Bourland, 296 Ark. 488, 758 S.W.2d 700 (1988); and Webb v. Lambert, 295 Ark. 438, 748 S.W.2d 656 (1988).

Accordingly, the trial court’s order setting aside and vacating the default judgment must be reversed. However, we also remand this case for the trial court to make a specific finding on whether or not the writ of garnishment was enclosed along with the interrogatories because without the notice provided by the writ of garnishment, default judgment would not be proper.

Reversed and remanded.

Newbern, J., not participating.


author: Robert H. Dudley, Justice. John I. Purtle, Justice,

text:
    Timothy C. SANDUSKY and Rose M. Sandusky v. FIRST NATIONAL BANK of Sikeston
    88-310
    773 S.W.2d 95
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      Fendler, Gibson & Bearden, by: Mike Bearden, for appellant.

      Wilson & Associates, P.A., by: Jack T. Lassiter, for appellee.
   Robert H. Dudley, Justice.

The creditor bank, appellee, negligently failed to secure federal mortgage insurance protection on its loans to appellants. Upon default and foreclosure the chancellor granted a deficiency judgment against appellants. The appellants contend that the bank’s negligent failure to secure mortgage insurance should have excused them from the deficiency judgment. The chancellor ruled correctly, and, accordingly, we affirm.

The appellants, Timothy and Rose Sandusky, obtained four (4) loans from the appellee, First National Bank of Sikeston, Missouri. The loans were secured by mortgages on real estate in Arkansas. The bank anticipated selling the notes and mortgages in secondary markets, and, in order to do so, intended to obtain mortgage insurance payment certificates from the Federal Housing Administration. These certificates would have guaranteed payment of the mortgages in the event of default. As part of the loan transaction the appellants were charged premiums for the federal mortgage insurance certificates. Borrowers routinely pay mortgage insurance premiums which are collected by lenders and then submitted to the F.H.A. These premiums then go into' insurance funds which are used to cover losses on insured defaulted loans.

The issuance of an F.H.A. mortgage insurance certificate is a contract between F.H.A. and the lender. Thus, it is the lender, not the borrower, who makes the application. 12 U.S.C. § 1709 (a) (19 80). The lender in this case, appellee, was negligent in its loan processing and, as a direct result, did not obtain mortgage insurance on three (3) of the loans in question. Appellee subsequently sold all four (4) loans to another financial institution. Appellants then defaulted. Because appellee had failed to obtain the mortgage insurance, it was required to repurchase the three (3) loans.

Appellee filed suit for foreclosure on the three (3) mortgages and, after sale of the real estate, sought a deficiency judgment against the appellants. The chancellor found that the failure to secure mortgage insurance was due to the bank’s negligence, but awarded the deficiency judgment after giving appellants credit for the insurance premiums.

Appellants’ first point of appeal is that the chancellor erred in entering a deficiency judgment. The argument is without merit.

Although the appellee bank was clearly negligent, that negligence damaged only the appellee bank. Instead of collecting the deficiency under a policy of insurance, the appellee, because of its negligence, has only a deficiency judgment, which may or may not be collectible. On the other hand, the appellants have not been damaged by the bank’s negligence. They owe the same unpaid balance on the note and face the same cause of action, no matter who the creditor is. If the mortgage insurance had been purchased, the appellants would have owed F.H.A. and faced foreclosure and a deficiency judgment because of the right of subrogation set out in 12 U.S.C. § 1710(a) (1980). Since the mortgage insurance was not purchased, they owe the appellee bank and are subject to the deficiency judgment in its favor. They simply have not been damaged. The chancellor gave them credit for the premiums which they paid.

Appellants argue that the appellee should be estopped from obtaining the deficiency judgment. In Padgett v. Haston, 279 Ark. 367, 651 S.W.2d 460 (1983), we reiterated the doctrine of estoppel as follows:

Four elements are necessary: (1) the party to be estopped must know the facts; (2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel had a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the former’s conduct to his injury.

Here, neither the second nor the fourth elements of estoppel were present. There was no reliance or altered conduct by the appellants because of the payment of the mortgage insurance premiums. Next, the appellants were not injured by reliance on the appellee’s conduct.

For the same reason, appellants’ argument involving the doctrine of unclean hands must fail. A party must prove that he was injured in order for the unclean hands doctrine to apply. Batesville Truck Line, Inc. v. Martin, 219 Ark. 603, 243 S.W.2d 729 (1951). The rationale of the doctrine is to secure justice and equity and not to aid one in an effort to acquire property to which he has no right.

The appellants next argue that they are entitled to a set-off of the amount of money which would have been paid by the mortgage insurance. This argument is also without merit. Since the appellants would not have been the payees under a certificate of mortgage insurance, and since no benefit would have accrued to them had the insurance been paid, they did not prove any damages or the entitlement to a set-off of the amount of insurance. They were entitled to a set-off of the premiums, and the court awarded that relief.

The appellants next argue that the trial court erred in refusing to award damages to them for conversion of the insurance premiums. We need not deal with the issue of whether a conversion occurred because, even if it did, the proper measure of damages is the market value of the property at the time and place of the conversion. Burdan v. Walton, 286 Ark. 98, 689 S.W.2d 543 (1985). In this case that would be the amount of the premiums which the chancellor did apply against the deficiency.

The appellants’ final argument is that the chancellor erred in refusing to award damages to appellants after finding that the appellee was negligent in failing to obtain the mortgage insurance. The argument is without merit for the reason that appellants suffered no damage as a result of the appellee’s negligence, as already set out. They face the same cause of action for foreclosure and deficiency judgment they would have faced had the mortgage insurance been purchased.

Affirmed.

Newbern, J., not participating.

Purtle, J., dissents.

John I. Purtle, Justice,

dissenting. The logic of the majority holding escapes me. I do not understand how the lender can be found negligent for collecting insurance premiums from the borrower and not obtaining the insurance, and not be held responsible for damages. The return of the premium on the three loans is small satisfaction indeed for the wrong the bank had inflicted on these borrowers.

The opinion clearly demonstrates on its face why it is wrong. The appellants applied for and received loans on four different properties. They paid a premium for mortgage credit insurance on the four loans, which were all approved on the same day. The bank covered one of the loans with mortgage credit insurance, in accordance with the terms of the loan agreements. However, the appellee failed to procure insurance on the other three, although it continued to collect the premiums from the appellants. The failure to cover the three loans was negligent and it was so found by the trial court and the majority of this court. The appellants have been afforded no remedy at all; instead they are saddled with a deficiency judgment for more than $100,000.

The mere fact that the balance of the loan which was properly insured was paid to the bank without foreclosure is proof of the damage to the appellants. The three uninsured loans were foreclosed and resulted in a deficiency judgment against the appellants. Whether the loan that was covered by the mortgage insurance will ever be revived against the appellants is questionable. Obviously if some action is commenced, the appellants will have the right to defend or settle. In any event, they will be free of a huge judgment during the time that no legal action is brought against them as a result of the loan which was insured. Not having clairvoyant power, I am unable to see that the FHA will ever foreclose or seek subrogation on the loan that was paid. The very purpose of the mortgage insurance is to build up a fund to pay the deficiencies to FHA when foreclosures are required.

I will briefly consider the majority opinion’s discussion of estoppel. The majority relies on Padgett v. Haston, 279 Ark. 367, 651 S.W.2d 460 (1983), for the rejection of the claim of estoppel. The four elements in the doctrine of estoppel are set out in the majority opinion. The first element requires that the party to be estopped know the facts. Obviously, the appellee bank knew the facts. Certainly the second requirement is present because the bank knew the borrower had a right to believe and did in fact believe that FHA insurance had been procured on all four loans. The third element is met by the fact that the appellants did not know the truth, i.e., that the bank had not obtained the FHA insurance. The fourth element is surely met because the borrowers relied completely on the lender to purchase the insurance and as a result have obviously been injured. The extent of their injuries is not known. Perhaps their damages will be exactly the amount of the deficiency judgment. There is simply nothing in the record to indicate that the appellants either were not completely innocent or that they did not completely rely upon the bank to obtain the insurance required. Had they been told of the failure to obtain the insurance there is no doubt that they would have immediately made arrangements to acquire the coverage. Under the circumstances of this case, the bank is estopped.


author: Steele Hays, Justice. John I. Purtle, Justice,

text:
    Nancy DeVINEY v. STATE of Arkansas
    CR 89-25
    772 S.W.2d 607
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      The Madden Law Firm, by: Jean M. Madden, for appellant.

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

The issue on appeal is whether the trial court abused its discretion in denying appellant’s motion to extend the initial time within which an appeal be lodged and docketed in the Supreme Court or the Court of Appeals. Finding no abuse of discretion, we affirm the order appealed from.

Appellant, Nancy DeViney, filed a petition for post-conviction relief under A.R.Cr.P. Rule 37 following her conviction of second degree murder. She alleged that defense counsel was ineffective. The trial court found that appellant had effective representation and denied the motion. On June 3,1988, appellant filed a timely notice of appeal.

The facts are not in dispute. On August 31,1988, the next to the last day of the ninety days allowed for lodging the record on appeal, appellant moved for an extension of time for the preparation of the transcript by the court reporter. The trial court heard the matter and held that because appellant had failed to comply with the trial court’s policies relating to the preparation of transcripts for appeal and payment thereof, the motion for an extension of time should be denied. The trial court made specific findings, which are not challenged: That on June 9, 1988, the court reporter wrote to counsel for the appellant to state that, as requested, she had estimated the cost of the transcript to be $279, which amount “must be deposited with me when the transcript is ordered.” The letter also stated she would probably need the full seven months from the date of the order appealed from. There was no response to this letter.

On July 5, the court reporter wrote a second letter to counsel for the appellant, restating the substance of the June 9 letter and asking if the appeal were being abandoned. There was no response to this letter.

On July 25, 1988, the court reporter again contacted counsel for the appellant, this time by telephone, reminding counsel of her earlier letters. Neither the court nor the court reporter received any communication from counsel or appellant until August 31, when the $279 estimate was tendered and the motion for an extension was filed.

We have held that extensions of time for lodging the record on appeal are matters within the discretion of the trial court. Henderson Methodist Church v. Sewer Impr. Dist. No. 142, 294 Ark. 188, 741 S.W.2d 272 (1987); Harper v. Pearson, 262 Ark. 294, 556 S.W.2d 142 (1977). We have also held that, except for the timely filing of notice of appeal and lodging of the record, both of which are jurisdictional, the remaining steps of the appeal process require substantial, rather than strict, compliance. Johnson v. Carpenter, 290 Ark. 255, 718 S.W.2d 434 (1986).

We find nothing in this record to indicate that appellant ever specifically ordered the transcript. It is clear from the June 5 letter that the court reporter was proceeding on the assumption that the transcript had not yet been ordered. Counsel for appellant did nothing to correct that assumption, nor did appellant challenge that position either before the trial court or this court. Therefore, we view the record in light of that undisputed evidence.

The notice of appeal states only that appellant does “hereby serve notice” upon the court, clerk and court reporter of “her desire to appeal” and “requests that the clerk and reporter take action to prepare the proper documents and transcript for submission on appeal within the proper legal time limit.” That language falls short of compliance with Ark. R. App. P. 3(e), requiring that the notice of appeal “shall also contain a statement that the transcript, or specific portions thereof, have been ordered by the appellant.” (Our emphasis.) Had the appellant actually ordered the transcript, the equivocal wording of the notice of appeal would not be fatal to the appeal. Phillips v. LaValle, 293 Ark. 364, 737 S.W.2d 652 (1987). However, when such equivocal language is coupled with a similar uncertainty in the matter of ordering the transcript, then we are compelled to the conclusion that substantial compliance with Rule 3(e) is lacking. See McElroy v. American Medical Int’l, Inc., 297 Ark. 527, 763 S.W.2d 89 (1989). That being so, it follows that the trial court’s discretion was not abused, at least where, as here, the appellant offers no explanation for a failure to move diligently in the appeal process. The amendment to Rule 3(e) was intended to require the appellant to specifically order the transcript, and the mere recitation in the notice of appeal that appellant “hereby requests” court officials to take appropriate action is not the definitive act contemplated by the provision.

In view of the absence of a specific order for the transcript, the failure to respond to repeated inquiries by the court reporter, and the continued inaction until the eve of the deadline for filing the appeal, we cannot say the trial court’s discretion was abused by refusing to extend the time. The purpose behind the rules of appellate procedure is to expedite appeals, not to delay them.

AFFIRMED.

Purtle, J., dissents.

John I. Purtle, Justice,

dissenting. Although the trial court may have been following our precedent in Henderson Methodist Church v. Sewer Improvement District No. 142, 294 Ark. 488, 741 S.W.2d 272 (1987), I am still of the opinion that the appellant should have been granted an extension. The court reporter informed the appellant in the beginning that she could not complete the record within 90 days. Not a single soul would have been harmed by the granting of an extension, while the lack of appellate review may have meant that justice, in this instance, did not prevail. The majority opinion exemplifies the tendency of this court to indulge its penchant for a technical application of the law.


author: Steele Hays, Justice.

text:
    Andrew SHAW v. STATE of Arkansas
    CR 89-4
    773 S.W.2d 827
    Supreme Court of Arkansas
    Opinion delivered July 10, 1989

      Margulis & Grant, P.C., by: Arthur S. Margulis and T. Patrick Deaton; and John Wesley Hall, Jr., for appellant.

      Steve Clark, Att’y Gen., by: Clint Miller, Asst. Att’y Gen., for appellee.
   Steele Hays, Justice.

Appellant, Andrew Shaw, was charged and convicted of several offenses, all stemming from his actions in avoiding apprehension by the police over a two-day period in May, 1988. From those convictions appellant brings this appeal, arguing six points for reversal.

The events began on Monday May 16, in Harrison, Arkansas, when Officer Rick Riggs of the Harrison Police Department attempted to stop appellant for questioning on possession of stolen goods. Appellant ran from his car and eluded police. The police recovered a pistol from appellant’s car where they also found appellant’s girlfriend and her three small children.

Appellant continued on foot until he commandeered a car and drove to Missouri. He returned to Harrison the next day, to pick up his girlfriend. As they were leaving Harrison, they were seen by Officer Brian Snavely who noticed appellant’s taillight was broken and that his license tags were not visible. Snavely put on his blue light and appellant brought his car to a stop at the side of the road. Snavely got out and as he approached appellant’s car, appellant fired at him with a sawed-off shotgun, seriously injuring Snavely.

Appellant immediately left Harrison and, en route to Missouri, abandoned the car he was driving for a pickup truck he found with keys in it. He continued to drive toward Carroll County, about seventeen miles from Harrison, with the police in pursuit. About four miles into Carroll County, appellant encountered a roadblock. He tried to run the roadblock and in doing so Officer Dwyer was injured as he was hit by a patrol car. Police arrested appellant the next day in Carroll County and appellant was then returned to Harrison.

Appellant’s trial began on September 1, 1988. He was convicted and received sentences totalling seventy-three years for the offenses of 1) attempted capital murder, 45 years; 2) felony fleeing, six years; 3) possession of a firearm by a felon, two counts, six years each; 4) theft of property, ten years; 5) unauthorized use of a vehicle, one year; and 6) misdemeanor fleeing, thirty days.

Appellant first argues that neither his waiver of Miranda rights nor his confession was voluntary. There is no merit to either contention. Custodial statements are presumed to be involuntary and the state has the burden of proving otherwise. This court makes an independent review of the totality of the circumstances and will reverse only if the trial court’s finding is clearly against the preponderance of the evidence. Fleming v. State, 284 Ark. 307, 681 S.W.2d 390 (1984). The credibility of the witnesses who testify to the circumstances surrounding the defendant’s custodial statement is for the trial court to determine. Smith v. State, 286 Ark 247, 691 S.W.2d 154 (1985).

The factors to consider for both the voluntariness of the waiver and the statement are essentially the same. They include: age, education and intelligence of the accused, length of detention, repeated or prolonged questioning, the use of mental or physical punishment, and the advice or lack of advice of constitutional rights. See Scherrer v. State, 294 Ark. 227, 742 S.W.2d 877 (1988); Hatley v. State, 289 Ark. 130, 709 S.W.2d 812 (1986).

In this case, the only contention appellant makes as to any deficiency in the waiver and statement process is that because of his flight, he was “tired and weakened” and “almost delirious” and this was sufficient to render both the waiver and the statement involuntary. Appellant’s argument is conclusory only and cites to no authority that this is a sufficient basis to render the confession involuntary. Neither are there any facts in the record to support such a claim. Appellant made no statement at the suppression hearing that his condition in any way made the confession unknowing or involuntary.

Appellant had been eluding the police from Monday, May 16th until he was picked up about 4:00 a.m. on the 18th, however, he had eaten and slept intermittently. His statement was taken within three hours from the time he was picked up and prior to taking a statement, appellant’s rights were given to him. After his rights were read, the following exchange occurred:

Appellant: Yeah, I understand them right.
Officer: And that you wish to waive them at this point?
Appellant: Yeah, I wish to waive them, you know the deal.

Appellant then gave a statement to police that was detailed and thorough.

At the suppression hearing, in addition to noting that he was quite tired during the time he gave his statement to the police, appellant also stated that he remembered little of the events and could not remember waiving or signing his rights form. In a similar case, Hunes v. State, 274 Ark. 268, 623 S.W.2d 835 (1981), the appellant claimed he had taken drugs prior to the time he was interrogated and was unable to remember being questioned or signing the confession. We found the state’s evidence was that the appellant appeared to be lucid and understood his rights and it was for the trial court to weigh the evidence and resolve the credibility of the witnesses. So it is in this case, and we find no basis for error.

Appellant also argues that the trial court erred by making an express finding only as to the voluntariness of the waiver and by failing to make a clear finding on the voluntariness of the confession, citing Simms v. Georgia, 385 U.S. 538 (1967). Appellant however, made no objection at the time the trial court made its ruling nor was there any request for further clarification. Failing that, the issue is precluded from review on appeal. Stephens v. State, 293 Ark. 366, 738 S.W.2d 91 (1987); Shelton v. State, 271 Ark. 342, 609 S.W.2d 12 (1980).

Appellant next argues that the trial court erred in denying appellant’s motion to dismiss the felony fleeing charge on the basis that it had no jurisdiction of the offense. Appellant implicitly conceded at the hearing that the felony flight charge began in Boone County. He points out, however, that the injury to Officer Dwyer, which injury raised the offense to a felony, see Ark. Code Ann. § 5-54-125(c)(3) (1987), occurred in Carroll County. Therefore, he argues, as the offense was not complete until the injury in Carroll County, the trial for that offense must be held in that county and Boone County was without jurisdiction. Appellant cites to Art. 2, § 10 of the Arkansas Constitution which provides that the accused is entitled to a trial by jury in “the county in which the crime shall have been committed.” The argument is summarily dispensed with by Ark. Code Ann. § 16-88-108(c) (1987):

Where the offense is committed partly in one county and partly in another, or the acts, or effects thereof, requisite to the consummation of the offense occur in two or more counties, the jurisdiction is in either county.

Appellant also argues that the trial court erred in its instructions to the jury on the two separate counts of fleeing. He maintains his rights against double jeopardy were violated, contending first that he could only be charged with one continuous act of fleeing, not two, under Ark. Code Ann. § 5-54-125, and second, that the instructions were not sufficiently clear to allow the jury to know which instruction should be applicable to appellant’s flight. However, appellant made no objections to the instructions, and his only objection to either of the fleeing charges was to the felony charge on the jurisdictional argument just discussed. To preserve the point for appeal, appellant must have made a specific objection below, and he may not change those grounds on appeal. Harris v. State, 295 Ark. 456, 748 S.W.2d 666 (1988).

Appellant next argues that the trial court erred in overruling his motion in limine on the admittance of evidence of other crimes, in violation of Rule A.R.E. 404. The other crimes appellant was concerned with were brought in by the admission of his confession in which he detailed the events of May 16, 17 and 18. In that recounting, he mentioned certain activities on his part that constituted crimes, but they were offenses for which he was not being prosecuted at this trial. The crimes appellant made reference to include: 1) receiving stolen property (a “hot” ring appellant was trying to pawn when he was in Harrison on May 16th); 2) that appellant was wanted by the Missouri police; 3) theft of license plates (appellant had broken into a home while he was on the run and had taken a few items of clothing and a little food); 4) smoking marijuana (at the end of his statement to police, appellant was protesting his innocence as to any premeditation in the shooting, stating that all he ever did was “smoke weed once in a while”).

The appellant did not detail these specific crimes to the trial court in either his motion or at the hearing. What was given to the court at the hearing was the outline of the facts of the case, and the court decided the facts and context of the in limine objections would become clearer as the case progressed. The court decided to defer any ruling and stated:

My inclination right now is to deny that. The Court doesn’t have a firm grasp of the facts of this case, and rather than issue some sort of blanket order, as indicated by the motion to limit, to some extent, I think this is going to be dealt with on an instance-by-instance basis.

However, when appellant’s statement was introduced, there was no objection whatsoever from appellant. The trial court had been quite clear as to the action appellant needed to take and yet he did not act. In order to preserve an objection for review, a defendant must obtain a ruling from the trial court, Richardson v. State, 292 Ark. 140, 729 S.W.2d 189 (1987), and under the circumstances of this case, it required a contemporaneous objection to the admission, in addition to the motion in limine. Having failed to make a proper objection and obtain a ruling from the court, the argument is not subject to review.

As final point of error, appellant argues that the trial court erred in denying his directed verdict motion made at the end of the state’s case with regard to the charge of attempted capital murder of Officer Snavely. Appellant contends on appeal that the state failed to prove he acted with premeditation and deliberation as required by Ark. Code Ann. § 5-10-101 (a)(3) (1987).

Directed verdict motions are challenges to the sufficiency of the evidence, Glick v. State, 275 Ark. 43, 627 S.W.2d 14 (1982), and the trial court should grant a directed verdict motion where there is no evidence from which the jury could have found, without resorting to surmise and conjecture, the guilt of the defendant. Gardner v. State, 296 Ark. 41, 754 S.W.2d 518 (1988). In criminal cases, we will affirm where there is substantial evidence to support the verdict. Lunon v. State, 264 Ark. 188,569S.W.2d663 (1978). Substantial evidence is defined as evidence which is of sufficient force that it will compel a conclusion one way or the other. The evidence must be more than mere suspicion or conjecture. Jones v. State, 269 Ark. 119, 598 S.W.2d 748 (1980). In determining whether there is substantial evidence to support a verdict, we review the evidence in the light most favorable to the appellee, Pope v. State, 262 Ark. 476, 557 S.W.2d 887 (1977), considering only the testimony which tends to support the guilty verdict. Gardner v. State, supra.

Premeditation and deliberation may be inferred from circumstantial evidence. Garza v. State, 293 Ark. 175, 735 S.W.2d 702 (1987). Premeditation and deliberation are not required to exist for any particular length of time and may in fact be formed almost on the spur of the moment. Garza v. State, supra. They can be inferred from the circumstances of the case, such as the character of the weapon used, the manner in which it was used, the nature, extent and location of the wounds inflicted and the conduct of the accused. Harris v. State, 291 Ark. 504, 726 S.W.2d 267 (1987).

The appellant does not contest any part of the state’s proof of his guilt on the charge but rather, makes a general, conclusory allegation that the jury would have to resort to speculation and conjecture. The facts, however, are otherwise. From the circumstances of the shooting, there was substantial evidence from which the jury could infer premeditation and deliberation. See, e.g., Stout v. State, 263 Ark. 355, 565 S.W.2d 23 (1978), where on similar facts we found sufficient evidence to support the jury’s finding on this issue.

The judgment is affirmed.