author:
Carleton Harris, Chief Justice.
      Conley Byrd, Justice,

text:
    Joy D. ROCHESTER v. STATE of Arkansas
    5587
    467 S. W. 2d 182
    Opinion delivered May 24, 1971

      Lohnos T. Tiner, for appellant.

      Ray Thornton, Attorney General; Garner L. Taylor, Jr., Asst. Atty. Gen., for appellee.
   Carleton Harris, Chief Justice.

Joy D. Rochester, appellant herein, was convicted of Negligent Homicide and the jury imposed a fine of $1,000 as punishment. From the judgment entered in accordance with the jury verdict, appellant brings this appeal. The proof on the part of the state reflects that Officers Brown and Com-stock of the Marked Tree City Police Department, observed appellant on the evening of October 10, 1969, driving a blue Cadillac automobile, the car hitting a divider, and then running a stop sign. The officers followed appellant, who was traveling west, and turned on the emergency light. The car was clocked at 95 miles per hour and, as it went into a curve “went off the highway and seemed to have went into the air; flipped over”. Upon arriving at the scene, appellant was found lying on the back seat unconscious and Vickie Jones, 18 years of age, who was riding in the front seat with appellant and Ray Dean Atchley, was found under the automobile. She was unconscious, but not dead, and an ambulance was called. This testimony was given by Officer Brown and it was stipulated that Officer Com-stock, if called to testify, would testify substantially the same as Brown.

Ray Dean Atchley, 18 years of age, testified that he was with appellant and Vickie Jones at the Riverside Tavern prior to the wreck, for about twenty minutes, and that appellant was intoxicated. He observed the blue light on the police car behind the Rochester automobile and told appellant that she had better stop the car. But she replied that “she was going to outrun them”. He also testified that the automobile was traveling at 95 miles per hour just prior to the accident. Atchley received a cut on his leg. He further stated that he attended the funeral for Vickie.

Dorothy Jones, mother of Vickie, testified that she last saw her daughter alive on October 10, 1969, at about 6 p.m. “The first time I saw her after the accident, after she was dead, she was already dressed and ready. You couldn’t tell how badly hurt she was.”

Lowell Lewis, Trooper with the Arkansas State Police, testified that he received a call concerning the accident and went to the scene, observed Vickie Jones on a stretcher, stating that she was still alive, but was removed a short time after his arrival. The state rested and appellant moved for a directed verdict for the reason that the state had failed to prove the corpus delicti, i. e., it had not been established that death resulted from injuries sustained in the accident. The court denied the motion and stated that it would reopen the case for the purpose of going into that particular matter further, if the state" desired. After objections and exceptions by appellant, Mrs. Jones was recalled, at which time she reiterated her testimony about last seeing her daughter alive at 6 p.m. o’clock on October 10, 1969, and added that the daughter was in good health and was not injured in any manner. Officer Comstock then testified that, upon arriving at the scene, he found Vickie Jones under the car; that part of her body from the chest down was extending out beyond the car. He, Brown, and Atchley, then removed her from under the automobile and Comstock, when questioned as to her condition, replied "Well, all I could see, a lot of blood coming out of her mouth. She was just laying there and this blood running out of her mouth”. He said that it was fresh blood, and that there was a “gurgling” sound from her mouth. Comstock stated that the ambulance took her away. The state then again rested, and the appellant again moved for a directed verdict for the same reason as mentioned originally, said motion being denied. No evidence at all was offered by appellant.

It is asserted that the court erred in permitting the state to reopen its case after the state had rested. We do not agree. In the first place Ark. Stat. Ann. § 43-2114 (Repl. 1964) provides that the court for good reason, in furtherance of justice, may permit the parties (after having rested) to offer evidence upon the original case. We have likewise so held numerous times, stating that it is within the trial court’s sound discretion and furtherance of justice, to permit the state to present witnesses after resting, where the circumstances are such as not to prejudice defendant through surprise or otherwise when the disadvantage cannot be overcome. Wimberly v. State, 240 Ark. 345, 399 S. W. 2d 274, and Shepherd v. State, 221 Ark. 191, 252 S. W. 2d 621. Certainly, there was here no surprise that could have resulted in prejudice.

It is next asserted that the motion for directed verdict following the additional testimony should have been granted because the state still had not proved the corpus delicti. Again, we disagree. In Edmonds v. State, 34 Ark. 720 (1879), the requisites for proving corpus delicti in a homicide case were set out by Chief Justice English. To establish same, the fact of death must first be shown, second, the identification of the body, or remains, as those of the person said to have been killed, and finally, the criminal agency of another, as the cause of the death. As to the last, the opinion states:

“A dead body, or its remains, having been discovered and identified as that of the person charged to have been slain and the basis, of a corpus delicti being thus fully established, the next step in the process, and the one which serves to complete the proof of that indispensable preliminary fact is, to show that the death has been occasioned by the criminal act or agency of another person. This may always be done by circumstantial evidence, including that of the presumptive kind; and for this purpose a much wider range of inquiry is allowed than in regard to the fundamental fact of death, and all the circumstances of the case, including facts of conduct on the part of the accused, may be taken into consideration.”

In Outler v. State, 154 Ark. 598, 243 S. W. 851, Buck Outler was convicted of the crime of Murder in the First Degree, it being charged that he had murdered Will Blackburn by striking Blackburn with a gun. The proof reflected that Outler struck Blackburn a violent blow across the head with a- gun, knocking the latter down. A number of people witnessed what happened thereafter, the opinion reflecting the following:

“Blackburn walked into the room with blood streaming down from his head and face, and was engaged in wiping his face with a cloth. The testimony tends to show that it was not thought, either by Blackburn himself or those present, that Blackburn was seriously hurt, at least there is no testimony directly on this subject, some of the witnesses merely stating that Blackburn was wiping blood from his face and seemed to be conscious. Nor),e of the witnesses detailed the circumstances under which Blackburn left the house, or what occurred after that time, but it was proved that Blackburn went home and died early the next morning.”

We then stated:

“It is earnestly contended that the evidence is insufficient to warrant the conviction, for the reason that it was not proved that death resulted from the blow delivered by appellant. There is nothing, however, in the record to show that there was any other cause for the death which resulted so soon after the infliction of the blow, and- the jury were authorized, we think, in drawing the inference, even in the absence of direct proof on the subject, that death resulted from the blow.”

It is at once apparent that there is a good deal more evidence to establish the corpus delicti in the present case than in Outler. Here, Miss Jones was observed pinned under a Cadillac automobile which had been traveling at 95 miles per hour at the time of the crash; she was unconscious; blood was coming from her mouth, together with “gurgling” sounds. The ambulance came and took her away, (rather than her leaving the scene of her own volition, as did Blackburn). Here was a woman, who from appearances, was evidently, at least, critically injured (unlike Outler, where it was not thought by those present that Blackburn was seriously hurt). The language used by this court in rejecting Outler’s contention is entirely apropos here, viz, “There is nothing, however, in the record to show that there was any other cause for the death which resulted so soon after the infliction of the blow [injury] and the jury were authorized, we think, in drawing the inference, even in the absence of direct proof on the subject, that death resulted from the blow [injury]”. It will be remembered that Mrs. Jones testified that her daughter was in good health and had no injuries just a short time prior to her death.

Appellant asserts that error was committed in permitting Officer Comstock- to testify since it had already been stipulated that Comstock, if called, would testify substantially the same as Officer Brown, but that when called, Comstock did not testify the same. We find no merit in this argument. A stipulation that the testimony would be substantially the same certainly does not mean word for word; such a stipulation really means that there will be no conflict in the testimony between those who have testified and those whose testimony is stipulated to be the same. Here, there was no conflict. The evidence complained of was simply additional facts not covered in the examination of Officer Brown. Appellant says that this could have meant to the jury that Officer Brown would have testified to these facts, and appellant had no opportunity to again cross-examine Brown. We do not agree with the basis of the objection since it is certainly reasonable to assume that after both witnesses testified, the jury would consider their testimony separately, and as to having no further opportunity to cross-examine Brown, there is nothing in the record to indicate that any effort was made to get Officer' Brown back on the stand, or that he would have been unavailable for further examination. More noticeable than that is the fact that counsel did not cross-examine either Comstock or Brown when they were on the stand.

It is also asserted that it was error for the court to permit Mrs. Jones, the mother of the deceased, to take the stand the second time for the reason that the rule had been asked and the witness advised the court, prior to testifying, that she had been present in court and had heard the testimony of other witnesses, “The appellant had no way of knowing how much of the testimony this witness had heard and was therefore unable to effectively cross-examine her”. We are unable to see how permitting Mrs. Jones to take the stand the second time resulted in prejudice to the defendant. Actually, her testimony was almost identical to that given the first time; she only added that her daughter was in good health and not suffering from any injury when she left home on the evening of the accident. Of course, this last was not information which Mrs. Jones would have acquired from witnesses who had already testified.

No prejudicial error being shown, and it appearing that appellant received a fair trial, the judgment is affirmed.

It is so ordered.

Byrd, J., dissents.

Fogleman, J., not participating.__

Conley Byrd, Justice,

dissenting. Arkansas Stat. Ann. § 75-1001 (Repl. 1957) provides:

“(a) When the death of any person ensues within one [1] year as a proximate result of injury received by the driving of any vehicle in reckless or wanton disregard of the safety of others, the person so operating such vehicle shall be guilty of negligent homicide....”

Proximate cause is defined as a cause which, in a natural and continuous sequence, produces damage and without which the damage would not have occurred. A. M. I. (civil) 501.

If someone in the future should assert that Vicki Jones died from drowning when the ambulance in which she was riding was blown into Black Fish Lake, not one member of the majority can point to the record before us and say that there was evidence before the jury from which it could find' to the contrary. The fact that jurors may have been permitted in the past to speculate as to the cause of death does not seem to me to be a sufficient license to perpetuate such speculation. Even the Outler case, 154 Ark. 598, upon which the majority relies contained more proof of proximate cause than that shown in the case at bar. In the Outler case the proof showed the injury sufficient to cause a brain concussion, the fact that the deceased walked home and went to bed without other apparent injury and that the deceased was found dead in his bed the next morning after the attack upon him sometime between dark and the breakup of the party at which the attack occurred. Here the proof shows nothing as to what happened to Vicki Jones from the time she was put in the ambulance until she was seen by her mother at the morgue in West Memphis sometime the next day.

For the reasons herein stated, I dissent as to the affirmance.

       Defense counsel did not cross-examine Mrs. Jones at all on either occasion when she was on the witness stand.


source: Caselaw Access Project

author: George Rose Smith, Justice.

license: Public Domain

text:
    Naomi LITTLE, Administratrix v. Harold McGRAW
    5-5575
    467 S. W. 2d 163
    Opinion delivered May 24, 1971

      Butler ir Hickey, for appellant.

      Daggett ir Daggett, for appellee.
   George Rose Smith, Justice.

This action for the wrongful death of Sam Little was brought by the appellant, his administratrix, against three defendants, Darrell Riddell, Carl Riddell, and the appellee, Harold McGraw. All three defendants filed motions for summary judgment. The court denied the Riddells’ motions but sustained that of McGraw. This appeal is from a summary judgment in favor of McGraw.

Our summary judgment statute, Ark. Stat. Ann. § 29-211 (Repl. 1962 and Supp. 1969), was copied from Rule 56 of the Federal Rules of Civil Procedure. Under Federal Rules 54 and 56 there would be some doubt about the finality and appealability of a summary judgment in the federal court in favor of only one of several defendants. Barron & Holtzoff, Federal Practice and Procedure, § 1241 (Wright’s ed., 1958). Our legislature, however, has not adopted Federal Rule 54, which has to do with the finality of a partial judgment. Hence the finality and appealability of a summary judgment dismissing only one of several defendants must be determined under our general statutes governing appellate procedure. We are of the opinion that such a judgment is final and appealable. Safeway Stores v. Shwayder Bros., 238 Ark. 768, 384 S. W. 2d 473 (1964); Seitz v. Meriwether, 114 Ark. 289, 169 S. W. 1175 (1914).

The facts, as developed in the depositions accompanying the motions for summary judgment, are not entirely without dispute. Sam Little, the decedent, was employed by McGraw, a farmer. On May 20, 1968, Mc-Graw telephoned Riddell Flying Service, which was engaged in cropdusting, to arrange for the spraying of a rice field. McGraw says that in the course of his conversation with Darrell Riddell he asked if the flying service was qualified to spread 2, 4-D, which requires a special license. According to McGraw, Darrell said that he was so qualified, though in fact he was not. Darrell denies that he was asked about his license. Darrell, who was then 22 years, old, had only a student pilot’s license and was not qualified to do any kind of cropdusting, for which a commercial pilot’s license is required.

Late the next day Darrell flew a small single-seated plane to a landing strip about four miles from the rice field that was to be sprayed. There McGraw helped Darrell mix and load the chemical. Darrell then began spraying the field. McGraw had stationed Sam Little and another man at opposite ends of the field, to guide the flier as he made passes over the area. After every pass the two men would each move 14 steps in the same direction and take a new position to guide the plane upon its next passage over the field. At one point in the operation the plane was flown so near the ground that its landing gear struck Little and fatally injured him.

We are not here concerned with the liability of either Darrell Riddell or his father, who are not parties to this appeal. The issue before us is the existence of supporting evidence for the four separate theories upon which the appellant administratrix asserts a cause of action against McGraw. In considering that evidence we must view it in the light most favorable to the appellant. Russell v. City of Rogers, 236 Ark. 713, 368 S. W. 2d 89 (1963).

First, the appellant invokes the doctrine of respond-eat superior, on the theory that Darrell Riddell was an employee of McGraw. There is no merit in this contention. According to the undisputed evidence, Darrell was an independent contractor over whom McGraw had no right of control.

Secondly, the appellant contends that McGraw failed to exercise ordinary care to furnish Little with a reasonably safe place to work. This contention, too, is without merit. Little’s death was due not to a dangerously defective condition of the field where he was standing but to Darrell Riddell’s asserted negligence in flying too low. See, by analogy, our opinions in Tatum v. Rester, 241 Ark. 1059, 242 Ark. 271, 412 S. W. 2d 293 (1967)', where, as here, the condition of the landowner’s premises had no causal connection with the plaintiff’s injury, which was caused by the landowner’s negligence in backing his car out of his carport.

Thirdly, the appellant insists that the spraying of a crop by airplane is so inherently dangerous that the negligence of Darrell, as an independent contractor, is chargeable to his employer. AMI 708, Civil. There is actually no proof to sustain this argument. Many years ago aviation was considered to be an ultrahazardous activity. Restatement of the Law, Torts, § 520, Comment b (1938). Although the spreading of 2,4-D by air is unduly hazardous to nearby crops, Chapman Chem. Co. v. Taylor, 215 Ark. 630, 222 S. W. 2d 820 (1949), it does not follow that an airplane in flight is inherently dangerous to a person standing on the ground. Aviation is now so commonplace that it cannot be considered to be either inherently dangerous or ultrahazardous. For a full discussion of this fact see Boyd v. White, 276 P. 2d 92 (Cal. App., 1954).

Fourthly, the appellant asserts that McGraw failed to use ordinary care to select a competent independent contractor to do the work. AMI 709, Civil. Upon that issue the proof made a question of fact for a jury. Mc-Graw admittedly knew that a flier must have a special license to engage in cropdusting. McGraw remembered that about a year earlier Darrell had said that “he hoped in another year he would be qualified to do that type of work himself.” Although McGraw testified that he asked Darrell during the telephone conversation if the flying service was qualified to disperse 2, 4-D, Darrell testified that he was never asked if he was properly licensed. Finally, Mrs. Little testified that when McGraw came to tell her that her husband was dead, McGraw “said that the boy said that he had hit Sam, and he said that he didn’t think the boy had a license, and that he thought that it was his father’s business.” We are unable to say that the record is devoid of substantial evidence to support the appellant’s fourth theory of liability.

Thus the court erred in entering a summary judgment in favor of McGraw. The statute provides that a defendant may move for a summary judgment “upon all or any part” of the plaintiff’s claim. Ark. Stat. Ann. § 29-211 (b). Here the court should have entered an interlocutory order, which the federal decisions liken to a pretrial order, finding that there was a disputed issue of fact only with respect to the fourth asserted ground of liability.

Reversed and remanded for further proceedings.


author: Lyle Brown, Justice.

text:
    Bertha GREGORY v. NATIONAL LIFE AND INSURANCE COMPANY
    5-5582
    467 S. W. 2d 181
    Opinion delivered May 24, 1971

      Reinberger, Eilbott, Smith ir Staten, for appellant.

      Bridges, Young, Matthews & Davis, for appellee.
   Lyle Brown, Justice.

Appellant Bertha Gregory was the plaintiff below and appeals from a summary judgment in appellee’s favor. She was the beneficiary in an insurance policy on the life of her son, Daniel Eans, covering death by accidental means. The policy excluded payment in case of death resulting “from the insured’s commission of, or attempt to commit, an assault or felony.” Appellee moved for summary judgment and attached the affidavit of the wife of Daniel Eans, she being the only eyewitness to the fatal event. Appellant contends that her cross motion for summary judgment should have been granted, and alternatively, that the case presented fact questions for the jury.

In November 1968 Daniel Eans and his wife, Bessie Mae, resided in Michigan. Her affidavit recited that the couple engaged in a quarrel on November 11 and it culminated in his striking her, knocking her to the floor and then stomping her; that she locked herself in the bathroom and he opened the door with a clothes hanger; that he again attacked her; that she succeded a second time in getting in the bathroom and fastened the latch; and that he opened the door with an ice pick. Then she recited, as gleaned from the abstract, these events:

When he entered the bathroom he had the ice pick in his hand and I grabbed for the ice pick and we wrestled over it. I got it from him and we fell into the bathtub when we were wrestling and he got up first with the ice pick in his chest. ... I don’t know how the ice pick got lodged in his chest. I was scared because he was fighting me and when he opened the door I saw the ice pick and the first thing I thought about was getting it from him. When he came in we were sort of wrestling and I ended up with the ice pick in my hand. . . . After he came in the bathroom the second time with the ice pick in his hand he didn’t strike me then because I think my main concern was getting the ice pick and I know he didn’t hit me after he got in the bathroom. When he came in he had the ice pick in his hand and holding it so that the pick part was facing his body towards his upper arm. He didn’t make any gesture with the ice pick towards me. . . . The only struggle we had after he came in was for the ice pick itself. I wanted to get it away from him and we accidentally stumbled into the bathtub.

Our unhesitating conclusion is that this was not a case for summary judgment. That judgment is appropriate only when “there is no genuine issue as to a material fact and the moving party is entitled to judgment as a matter of law.” Ark. Stat. Ann. § 29-211(c) (Repl. 1962). In determining whether there was a genuine issue of fact on such a motion we view the proof in the same light as if it were a motion for a directed verdict. McClain v. Anderson, 246 Ark. 658, 459 S. W. 2d 296 (1969). The evidence is viewed in the light most favorable to the party resisting the motion, with all doubts and inferences resolved against the moving party. Deam v. Puryear, 244 Ark. 18, 425 S. W. 2d 554 (1968). “[I]n a case where fairminded men may honestly differ about the conclusions to be drawn from the testimony, a summary judgment should be denied.” Mason v. Funder burk, 247 Ark. 521, 446 S. W. 2d 543 (1969). Additionally, the policy being one of insurance against death by accidental means, there was a presumption of death by accident. Mutual of Omaha v. George, 245 Ark. 670, 434 S. W. 2d 307 (1968). The character of the assault contemplated by the exclusion means more than a simple assault; it must have been of such severity “as would have justified the assaultee in inflicting death or serious injury by way of self-defense.” The severity of an assault is ordinarily a question for the jury. Lincoln Income Life Insurance Co. v. Alexander, 231 Ark. 63, 328 S. W. 2d 266 (1959). Such a reservation as is before us is to be construed strictly against the party for whose benefit the reservation was made. Harrison v. Interstate Business Men’s Accident Ass'n., 133 Ark. 163, 202 S. W. 34 (1918).

In order to reach the conclusion that no justiciable issue existed the trial court necessarily had to weigh the facts set forth in the affidavit and in light of the numerous principles we have recited. The court had to determine whether the acts of the insured unquestionably constituted a severe assault, whether the presumption of death by accident was overcome, and the credibility of affiant’s testimony had to be evaluated. Those were factual questions which addressed themselves to a jury.

Reversed and remanded with directions to set aside the summary judgment.

Harris, C. J., not participating.


author: John A. Fogleman, Justice.

text:
    Ouita MARTIN v. SIMMONS FIRST NATIONAL BANK, Trustee et al
    5-5448
    467 S. W. 2d 165
    Opinion delivered May 24, 1971

      Brockman, Brockman ér Gunti, for appellant.

      Coleman, Gantt, Ramsay ér Cox, for appellees.
   John A. Fogleman, Justice.

The chancery court held that the separate assets and income of Ouita Martin should be taken into consideration before the trustee of a trust for her benefit, created by the will of her sister, Elizabeth Nichol, could invade the corpus of the trust for Miss Martin’s hospital, medical, drug and nursing expenses. Appellant contends that, under the circumstances existing here, she is not required to exhaust all her resources, or even her income, before these expenses are paid for by the trustee.

Determination of the principal questions involved on this appeal depends upon construction of a clause in the will of Elizabeth Nichol, who died in 1963. That clause reads:

In the event the said income is not sufficient to provide for the needs of my said sister by reason of her illness or by reason of accident or other calamity [ajffecting her, the trustee shall sell such part of any of the shares of stock held by it as trustee and as shall be reasonably necessary to provide for the needs of my said sister and use the proceeds for that purpose.

The corpus held by the trustee at the time of the institution of this action were 3,711 shares of the stock of Simmons First National Corporation, a one-bank holding company, and 110 shares of Arkansas Oak Flooring Company. At the time of Mrs. Nichol’s death the flooring company stock and 2,475 shares of Simmons First National Bank were designated by her as the trust corpus. The trustee converted the bank stock into holding company stock at the time of the organization of the company, whose principal corporate purpose was ownership of the stock of the bank. The increase in number of shares was attributable to stock dividends.

The bank has been paying the income from the trust to Miss Martin at the rate of $490 per month, with appropriate adjustment annually, so that she has received all income from the trust. The total annual disbursements ranged from $5,767.20 to $7,792.19 during the years from 1964 to 1969.

The present action was precipitated by reason of an injury and an illness suffered by Miss Martin, requiring unusual medical expenses, but she also contended that current inflation has caused an increase in her cost of living and constituted “a calamity affecting her” under the terms of the pertinent clause. She filed her petition in September 1969 asking judgment against the trustee for medical expenses incurred by her and directions to the trustee to pay all medical, hospital,, surgical, and nursing expenses accrued to the date of hearing, and to pay all future medical, hospital, surgical and nursing expenses. She prayed that the trustee be directed to sell shares of stock held by it for these purposes. Her petition was opposed by the trustee, as it had ascertained before the filing of appellant’s petition that there would be objection on the part of some of the residuary beneficiaries of the trust. The petition was also opposed by these residuary beneficiaries. Both the trustee and these beneficiaries are appellees here.

The chancellor made an. exhaustive review of authorities and concluded that it was the intention of the testator that the corpus of the trust be invaded only in case the “needs” of appellant required when her private means were taken into consideration, and that there should be no invasion of the corpus until appellant’s expenses because of illness, accident or calamity were in excess of all her means consisting of her own private resources as well as the net income of the trust. The decree incorporated the chancellor’s findings, and defined the resources and assets of appellant which must be exhausted before invasion of the corpus as the principal, dividends, interest and any other income from investments in land, stocks, bonds, savings and checking accounts in banks and savings and loan institutions, including any accounts standing in the joint names of appellant and others and other investments of a similar nature and type.

On trial de novo, we reach a different result in some respects. Our different conclusions do not result so much from a disagreement with the chancellor on the law involved as from its application to the facts in this case. Of course the paramount and overriding rule of construction is to ascertain the intent of the maker, preferably from the four corners of the instrument itself. Clay v. Benton, 248 Ark. 691, 455 S. W. 2d 405. The courts should give a will that construction which accomplishes the purposes and objectives of the testator. In order to determine the intentions of the testator consideration must be given to every part of her will. Carroll v. Robinson, 248 Ark. 904, 454 S. W. 2d 329.

Mrs. Nichol’s will, made April 16, 1962, makes the following provisions:

First: Usual provisions for payment of debts and funeral expenses.

Second: Devise of life estate in home of testatrix to appellant, with remainder to First Presbyterian Church of Pine Bluff.

Third: Outright bequest to appellant of all furniture, furnishings, silverware, chinaware, and other articles of household and domestic use in the home, together with all clothing, jewelry and other personal effects not otherwise disposed of by the will, any automobile owned by testatrix and $20,000 in cash.

Fourth: Establishment of trust here involved, requiring distribution of income from stocks to appellant. Direction for termination of trust upon death of appellant by sale of stock then in possession of trustee and payment of net proceeds to six named nieces and nephews.-

Fifth: Bequest to a nephew of husband.

Sixth and Seventh: Bequests to charitable institutions.

Eighth: Bequest of watch and bracelet to a niece who is one of the residuary beneficiaries of the trust.

Ninth: Bequest of diamond bar pin to a niece who was not a residuary beneficiary of the trust.

Tenth: Bequest of diamond engagement ring to another niece who was residuary beneficiary of the trust.

Eleventh: Bequest of diamond solitaire ring.

Twelfth: Bequest of diamond dinner ring to niece who was still another residuary beneficiary.

Thirteenth: Bequests of cash to relatives in varying amounts, including the six residuary beneficiaries, who were to receive amounts varying from $1,000 to $6,000.

Fourteenth: Bequests to cousins.

Fifteenth: Bequest to First Presbyterian Church, Pine Bluff.

Sixteenth: Division of residue with one-half to go to appellant and other one-half in equal shares to six nieces and nephews who were named as residuary beneficiaries of the trust.

Seventeenth: Direction that estate taxes be paid out of residuary estate.

Eighteenth: Nomination of executor.

Examination of the will can only lead to the conclusion that appellant was intended to be the primary object of Mrs. Nichol’s bounty. Others were given consideration secondarily or incidentally. Except for specific bequests, the residuary beneficiaries were to share in the estate only after all debts, taxes and expenses of administration had been paid, all other specific bequests had been distributed and the trust established. They are then to benefit from the trust only to the extent that it has not been exhausted in providing for appellant in the eventualities mentioned in the clause in question. This preference standing alone, however, is not of sufficient significance to control the construction of the clause according to appellant’s contention. Furthermore, we cannot say that the meaning of the words in the pertinent clause is so clear and unmistakable that we can determine the testator’s intention from the language of the will alone. We agree with the chancellor that similar clauses have led to much litigation and considerable disagreement by the courts as to their meaning. We also agree with the chancellor that the sole decision of this court shedding any light upon the subject is Cross v. Pharr, 215 Ark. 463, 221 S. W. 2d 24, where we said:

Unless something appears in the will indicating a different purpose, it is ordinarily presumed that the trustor intended the beneficiary to be supported and maintained from estate income, or as is sometimes the case, from sale of a part of the corpus. See 101 A. L. R., 1461 et seq.; Restatement of the Law of Trusts, § 128, Comment “e”;. Scott on Trusts, p. 672.

In that case, the clause in question required the payment of net income from a trust estate to the beneficiary “when and as the same may be needed” by her. The chancellor correctly pointed out that corpus was not involved there. Authorities cited for our statement in Cross, ultimately lead to the fundamental proposition in any such case—that the intent of the trustor must be determined from the language of the trust interpreted in the light of the circumstances.

Whenever there is uncertainty as to the intention of a testator which cannot be clearly ascertained when the words of his will are considered in their ordinary sense, the court must read the language employed by the testator in the light of the circumstances existing when the will was written and, in order to put itself in the place of the testator as nearly as possible, may consider all surrounding facts and circumstances known to him, including the condition, nature and extent of the testator’s property, his relations with his family and other beneficiaries named, the motives which may reasonably be supposed to influence him, the subject matter of the gift, the financial condition of the beneficiary and other such matters. Murphy v. Morris, Executor, 200 Ark. 982, 141 S. W. 2d 518; Rufty v. Brantly, 204 Ark. 32, 161 S. W. 2d 11; Thompson v. Arkansas Nat. Bank of Hot Springs, Trustee, 220 Ark. 802, 249 S. W. 2d 958; Eagle v. Oldham, 116 Ark. 565, 174 S. W. 1176, 1199.

A review of the pertinent circumstances reveals the following:

Miss Martin had lived in her sister’s home since 1921. When she came there she was employed at the local school cafeteria, but she had not been employed for 45 years. Appellant was 80 years of age on August 26, 1969.

The dwelling house is a very old two-story building consisting of seven rooms and a sleeping porch, located upon a large lot. Appellant testified that she had cared for Mrs. Nichol who was in poor health during the last few years of her life. She also said that she looked after the housekeeping during that time.

Appellant’s physician testified that he had seen Miss Martin as a patient since 1946, that she suffered grand mal epileptic seizures as early as 1961 and that she then gave a history of such seizures early in life. He had also treated Mr. and Mrs. Nichol and the mother of Mrs. Nichol. This physician had an intimate relationship with the family. He had discussed appellant’s condition with her sister and brother-in-law, and testified positively that the testatrix was aware of appellant’s condition on the date of execution of the will. The doctor related that he had treated both Mr. and Mrs. Nichol during illnesses in their home and that being cared for in the home was a way of life in the family.

Appellant had little in the way of financial resources when Mrs. Nichol died. They consisted largely of approximately 62 shares of Arkansas Power & Light Company stock, $4,000 on deposit in Southern Federal Savings & Loan Association and 90 shares of the stock of Container Corporation, which she inherited from her mother.

Our view of these circumstances and the terms of the will leads us to the conclusion that it was the intention of the testatrix that appellant be enabled to spend the rest of her life in the home where she had lived for 50 years and in the style of life to which she had become accustomed. There is little room for doubting that Mrs. Nichol was fully aware of her sister’s physical and financial condition. There is little likeli-. hood that the income from the trust would have been expected to maintain the dwelling house and grounds and support Miss Martin in her customary style and still provide full medical, hospital and nursing care to her in case of illness, without encroachment upon the corpus. The testatrix’s apparent desire that the particular stocks constituting the trust be held intact except for authorized invasion until Miss Martin’s death seems to indicate that she was more concerned with security than quantity of income.

As the life tenant, Miss Martin pays property taxes on the home and contents. The real estate taxes amount to $291.58 annually. She also maintains insurance thereon at a cost of $71 per year. Her expenses for maintaining the large yard are great, approximating $100 per month, which includes necessary annual tree surgery. She averages general house maintenance at $35 per month. She had paid $750 for replacing the roof and $650 for replacing the furnace. Shortly after Mrs. Nichol died, Miss Martin paid $3,000 to put sheetrock on the interior walls. Appellant said that the plumbing and water tank were constantly in need of repair. She pays $22 per week to a cook who has been in the employment of the family for 25 years. This cook works five days per week, preparing only the noon meal each day. Miss Martin is unable to drive a car, so she pays a driver employed some 25 years, on an occasional basis. Her grocery bill averages approximately $90 per month. Utility bills run to $50 per month, and the telephone bill costs her a little less than $20 per month. Miss Martin estimates that she spends only $30 per month for clothing and $15 for laundry and cleaning. She pays $8 per month for insurance on the automobile left her by Mrs. Nichol.

While she is eligible for Medicare benefits, she pays $7.20 per month for Blue Cross-Blue Shield Medi-Pak insurance providing excess coverage over Medicare payments. She averaged her real and personal property and income tax payments at $66 per month. Miss Martin’s annual income from sources other than the trust consists of the following:

Social Security $612.00

Dividends from AT&T stock 48.00

Dividends from First Federal Savings & Loan Association 285.00

Dividends from Guaranty Federal Savings & Loan Association. 294.39

At the time of the trial she had $5,770.74 on deposit with First Federal Savings & Loan Association and $6,-196.13 with Guaranty Federal Savings & Loan. She valued her corporate stock at $1,000. All these assets came from the specific cash bequests to appellant, with the possible exception of the AT&T stock which may have been purchased from the proceeds of AP&L stock she surrendered to the company. It appears that she received nothing as a residuary legatee and devisee.

Appellant gave the stock in Container Corporation inherited from her mother to relatives other than those who are appellees. She testified that she gave 52 shares of AP&L stock she owned to appellee Frances M. Bailey. She had also given the money she had in the bank to relatives and to charity. All these gifts were made before she suffered the shoulder injury.

Subsequent to Mrs. Nichol’s death, Miss Martin has suffered two illnesses which required hospital confinement. She spent seven weeks in a hospital when she suffered a broken shoulder in August 1968, and two weeks in 1969 as the result of a stroke. She now walks around the house only with the aid of a cane and by holding onto some other support. She can hardly walk outside the house. She testified that it was necessary that she have nursing care at night since July 11, 1969. The nurse she employed is paid $50 per week for spending the night with her, applying hot packs, dressing and bathing her, measuring her medicines, helping her downstairs and taking her places she must go. The nurse comes on duty about 9:00 p.m. Appellant states that her drug bill runs $25 per month.

A friend by the name of Lucille Mason has lived with appellant since 1963. She pays no rent but contributes to the payment of the telephone bill. Miss Mason is employed, but attends to getting breakfast and supper and Saturday meals for both herself and Miss Martin. Appellant testified that her friend brings her own food for meals that she does not eat at the school where she is employed and that its value exceeds the cost of any of appellant’s groceries consumed by the guest.

Appellant’s charitable contributions amount to approximately $60 per month. Her estimate of her cost of living, without considering the contributions, and without allowing any amount for medical and hospital bills is $773.85 per month.

Dr. Talbot has treated appellant for arteriosclerosis, recurrent migraine headaches, osteoarthritis, and osteoporosis of the spine in addition to her epilepsy, her stroke and her injury. He suspected that her shoulder injury resulted from a seizure. He was of the opinion that appellant’s condition requires the presence of a nurse or someone else because of the constant hazard of accident, which is intensified by the possibility of seizures which cause her to lose consciousness. He characterized these as “breakthrough” seizures because they occurred in spite of preventive medication. The doctor felt that, considering the presence of the cook and appellant’s friend, the nursing service she had was adequate and reasonable, and predicted that more care would probably be needed in the future. In his opinion, Miss Martin will respond better both physically and mentally to treatment in her familiar surroundings, and her removal from the home to a nursing home or hospital would be demoralizing in the utmost. He felt that the estimate of $25 per month was a reasonable amount for necessary drugs and medicines.

There was evidence showing that the bank stock was “low-income” stock and that an investment of its present value in other securities would produce a substantially larger income. Yet it seems clear that the testatrix intended that the corpus of the trust consist of the shares of stocks designated by her throughout its existence, because the trust clause limits the. trustee’s power to sell to the eventualities named in the particular clause we are considering, until the death of Miss Martin, when all the remaining stock is to be sold. Directions as to reinvestment are also lacking. The duties of the trustee with reference to the stock are directed toward its preservation. We can only assume that Mrs. Nichol had knowledge of the characteristics of the stock placed in trust. Her husband was formerly president of the Simmons bank. It is not unreasonable to infer that one reason for inserting the provision for invasion of corpus was because of these relatively low dividends.

It is certain that the gift of the trust income is absolute and unrestricted as to use. The fact that the testatrix used the words “in the event the said income is not sufficient to provide for the needs of my sister by reason of illness, or by reason of accident or other calamity affecting her” is significant to us. If she had intended that appellant first exhaust her own resources before there was any encroachment it would have been quite easy for her to have used the words “in the event my sister’s income is not sufficient” or “in the event my sister’s resources are not sufficient.” But she did not even say “in the event that the income from the trust and my other bequests to my sister are not sufficient.” We conclude that it was the intention of the testatrix that the expenses of her sister because of illness or accident be provided from the trust, without regard to any resources that Miss Martin might have, and that she did not have in mind the very narrow and restricted definition of “need” as indicative of destitution. The word “need” is also defined as “The lack of anything requisite, desired or useful; . . . anything needed or felt to be needed, as our daily needs.” Webster’s New International Dictionary, Second Edition; see also Third Edition.

We do not mean to suggest that unbridled discretion is vested in Miss Martin as to expenditures for her living costs or that she may incur any expense she chooses for medical and nursing care. We do not think that it has been shown that her present expenditures are excessive in view of the standard of living she has enjoyed for 50 years and in view of care rendered necessary because of illness. Nor do we feel that the corpus of the trust was intended to support Miss Martin’s charities, beyond those which might have been anticipated by the testatrix at the time of the execution of the will. We do feel that the testatrix intended that the corpus be invaded to pay any additional expense to Miss Martin arising by reason of illness, accident or other calamity, if the income from the trust proved inadequate for that purpose after her payment of usual and customary living expenses from the income from the trust. In this respect it is to be noted that the trustee is directed to sell such part of the shares of stock as shall be “reasonably necessary to provide for the needs” of appellant and to use the proceeds for that purpose. Consequently, the trustee is charged with the exercise of discretion as to what is “reasonably necessary.”

Miss Martin first requested payment by the trustee of expenses attributable to her illness on or about July 11, 1969. At that time it appears that the following items had accrued:

Jefferson Hospital $ 102.00 (This amount was charged to Miss Martin over and above Medicare and Blue Cross Medi-Pak)

Mrs. Clara Phillips—special nursing at hospital 28.00

Mrs. Clara Phillips—14 weeks nursing at home, $50 per week 700.00

Consumers Drug Co.—3/15/69 to 6/27/69 89.55

The Doctors Clinic—4/10/69 $15.00 and 5/8/69 $151.00 166.00

Total................................................................$1,085.55

Of these items, Miss Martin had paid and was seeking reimbursement for the hospital bill, the clinic item and the drug bill. While she had paid the nurse, it is not clear from the record whether the payment was made before or after her request that these items be paid by the trustee. Miss Martin testified that she continued to pay the nurse after her request was refused and that she incurred additional drug expenses of $258.79 after July 11, 1969.

The fact that the trustee is not required to look to other means of Miss Martin before encroaching upon the corpus for her needs arising out of illness or accident does not mean that the trustee is required to invade the corpus to reimburse appellant for moneys voluntarily spent by her prior to any demand for payment from the trust principal. If the trustee were required to reimburse appellant for such expenditures, which may or may not have been made from income from the trust, she would be enabled to exercise her discretion as to the number of shares of stock to be sold. This would deprive the trustee of discretion vested in it, and permit the life beneficiary to dissipate the trust to the detriment of the residuary beneficiaries. The fact that she paid these expenses without any demand on the trustee is at least some evidence that the income paid to her was then sufficient for those purposes.

We hold that appellant is not entitled to reimbursement for any expenses paid by her before her demand upon the trustee for the payment thereof in July 1969. See In re Hoepner’s Estate, 176 Misc. 47, 27 N. Y. S. 2d 398 (1941); Clark v. Mississippi Valley Trust Co., 360 Mo. 452 , 228 S. W. 2d 808 (1950); Green v. Cleveland Bank & Trust Co., 6 Tenn. App. 685 (1928). The trustee should, however, investigate all expenses of Miss Martin attributable to her illness or accident which are now unpaid and all incurred after demand made upon it by Miss Martin to determine the number of shares of stock reasonably necessary to be sold to properly provide for all such expenses reasonably incurred taking into consideration any income of the trust remaining after the payment of Miss Martin’s usual and customary cost of living, but without considering Miss Martin’s income from other sources or her other assets.

Appellant also contends that the chancery court erred in denying her prayer that the trustee be required to sell the stocks held in the trust and to invest the proceeds so as to provide an increase in the income to the trust. We do not agree. Her argument here is based almost entirely upon the fact that the trustee, without court authority, exchanged the bank stock for stock in the holding company. While we express no opinion upon the authority of the trustee to make such exchange, that question is not before us. No one has sought to require the trustee to account for its action in converting the bank stock to holding company stock. Appellant brought out the fact that the conversion of the stock pertained to a reorganization relating to the ownership of the bank.

We agree with the chancellor that the evidence does not justify a sale for reinvestment. It was the apparent intention of the testatrix that the corpus of the trust be preserved in the form of the stocks which constituted it when the trust came into existence. There is no express authority to sell except to provide for the needs of appellant for the purposes stated, and to permit distribution to the residuary beneficiaries upon the death of appellant. While there are circumstances under which a trustee may sell stock held in trust in the absence of specific authority in the trust instrument, they were not shown to exist here. The fact that the proceeds of sale of the stock could be invested to produce a greater income is not itself sufficient. It may well be that the testatrix expected the residuary beneficiaries to profit by the obvious growth potential of these stocks, even if she disregarded any sentimental reasons she might have for their being held during the lifetime of the sister who lived with her and her husband for many years. A trust officer of the bank estimated the present value of the holding company stock at $371,000. The trust officer did not know the value of the flooring company stock. The former was valued at $139,218 at the time of the creation of the trust and the latter at $42,350. A sale, he pointed out, would require payment of income taxes on the gain. He felt that putting all the Simmons stock on the market at once would depress the per share price. The interests of the residuary beneficiaries are not to be ignored. Furthermore, there has been no evidence to show that there has been any decline in the value of the new stock or that it produces less income than' the bank stock.

Appellant argued in the lower court that continuing inflation causing a rise in the cost of living is a calamity which also justifies encroachment upon the corpus. The chancellor found it unnecessary to decide this question. Appellant seems to have abandoned that argument here. At any rate, we do not find the evidence sufficient to support such a finding at this time.

The cause is remanded with directions to the chancery court to enter its decree instructing the trustee to proceed in accordance with this opinion.


author: J. Fred Jones, Justice.

text:
    THE EMPLOYER’S LIABILITY ASSURANCE CORPORATION, LTD. v. MID-STATE HOMES, INC., and Etheene Peterson
    5-5588
    467 S. W. 2d 386
    Opinion delivered May 24, 1971
    [Rehearing denied June 21, 1971.]

      Tackett, Young, Patton & Harrelson, for appellant.

      Robinson ir Robinson, for appellees.
   J. Fred Jones, Justice.

Mid-State Homes, Inc. filed suit against Etheene Peterson in the Lafayette County Chancery Court to foreclose a mortgage on a house previously damaged by fire. The Employer’s Liability Assurance Corporation, Ltd. intervened and paid $2,-647.04 into the registry of the court as the total amount it owed under a fire insurance policy issued to Etheene Peterson.

This is an appeal by The Employer’s Liability Assurance Corporation, Ltd., hereinafter called “Employer’s”, from a decree in favor of Etheene Peterson for the amount of $7,100 plus statutory penalties and attorney’s fee. On appeal to this court Employer’s has designated the following point on which it relies for reversal:

“The court erred in allowing, over appellant’s continuous objection, testimony regarding total loss, the testimony relating to whether or not the insured premises was a total loss at the time of the trial, rather than immediately following the fire.”

The facts, as near as we can determine from the récord, appear as follows: Etheene Peterson owned a lot in the town of Lewisville in Lafayette County, Arkansas, and contracted with the Jim Walter Corporation to construct a residential building on the lot. She paid $500 down on the building and on March 2, 1962,. she executed her promissory note secured by a mortgage to Jim Walter Corporation in the amount of $7,027.20, payable in 144 monthly installments of $48.80 each, commencing oh May 5, 1962. Of this amount $4,095 represented principal balance of the purchase price, and $2,932.20 represented interest over the life of the note. The house was completed within about two or three weeks and Miss Peterson started renting it to her sister for $40 per month. On March 12, 1962, the note and mortgage were assigned to Mid-State Homes, Inc.

On March 30, 1965, Employer’s insured the property against loss by fire under a policy in the face amount of $7,100, with Etheene Peterson as the primary beneficiary and with a loss payable clause in favor of Mid-State Homes, Inc. or its assignee, as their interest might appear. The record is not clear as to insurance on the property prior to 1965 but it appears that there was additional insurance not germane to the issues in this case.

Etheene Peterson collected the rents from her sister and made the regular monthly payments on the mortgage indebtedness until the house was severely damaged by fire on April 6, 1966. All payments were made to Mid-State through June, 1966, but no payments were made on the note after that date. On July 12, 1967, Etheene Peterson signed a proof of loss directed to Employer’s setting out that the actual cash value of the property at the time of the loss was $7,100; that the whole loss and damage amounted to $3,392.68, and that the amount of the claim (apparently because of other insurance) was $2,647.04.

The record is very vague as to the cause for the delays in the collection and payment of the insurance which is the primary subject of this litigation, but it would appear from the overall record that negotiations were going on between Mid-State Homes, Inc. and Jim Walter Corporation on the one side, and Employer’s on the other side, and that Etheene Peterson knew very little about what was going on between the companies. The record indicates that $1,000 or $2,000 in insurance was paid on the fire loss by a company not involved in this litigation, but the record is not clear as to whom the amount was paid, or whether any of it was credited on the note. In any event, according to computation of balance due, filed as exhibit by Mid-State Homes, Inc., Miss Peterson had paid $2,342.40 on the mortgage indebtedness as of July 5, 1966, and still owed as of February 17, 1969, accrued payments in the amount of $1,561.60 and unaccrued principal in the amount of $3,123.20, all of which, together with an insurance premium advanced by Mid-State on July 5, 1965, amounted to a total balance of $4,214.63.

The record indicates that sometime after July 12, 1967, when the proof of loss was signed by Miss Peterson, Employer’s sent its draft in the amount of $2,647.04 to the attorney for Mid-State Homes, Inc. By letter dated September 8, 1967, the draft was returned to Employer’s with demand for additional amount, two paragraphs of the letter being as follows:

"Even though the house was covered by more than one (1) policy, under the Mann case, 196 F. Supp. 604, where a home was covered by two (2) policies, the Court in construing the statute found that the total recoverable is the aggregate of the face value of both policies.
We therefore request that you forward your check for $3,606.87, representing the amount of the mortgagee’s interest in the property, to us as attorneys for Mid-State Homes, Inc., the mortgagee of the property.”

In any event, Employer’s refused to pay any additional amount above the $2,647.04 indicated in the original proof of loss, and this was the amount they subsequently paid into the registry of the court.

On October 23, 1967, Mid-State Homes, Inc. filed its suit against Etheene Peterson for the amount of $4,006.87 it alleged was due and owing on the aforesaid note and prayed a foreclosure of the mortgage against the property. On November 10, 1967, Etheene Peterson filed her answer admitting nonpayment as alleged and setting up usury as a defense. On December 7, 1967, Employer’s filed its intervention setting out its receipt of proof of loss signed on July 12, 1967, and alleging that it stood ready, willing and able to pay according to the proof of loss and it tendered into the registry of the court the sum of $2,647.04. On January 10, 1968, Etheene Peterson filed an answer to the intervention and a cross-complaint against Employer’s. She admitted that she signed the proof of loss as alleged by Employer’s, but alleged that the actual cash value of the property at the time of the fire was $7,000, and that the total damage because of the fire was $6,000. She alleged that the total amount of insurance in effect on the property was $9,000, $7,000 of which was the obligation of Employer’s. She prayed judgment against Employer’s for 7/9 of $7,000 or $5,444.44, together with interest, penalties and attorney’s fee.

The only testimony offered at the trial was that of Etheene Peterson, Mary Lee Peterson, Casey Jones, Bob Bums, Tom Roberts and Jim Fuller. Etheene Peterson testified that she is unable to read and write except that she is able to sign her name. She testified that she purchased a lot for $550 and had a house erected thereon by Jim Walter Corporation paying $500 down on the house. She testified that the house was completed in two or three weeks and that her sister lived in the house. She testified that the house was damaged by fire on April 6, 1966, and had not been lived in since that date. She admitted the execution of the note and mortgage and that she made no further payments after the one she made in June, 1966. She testified that she reported the fire to the “Jim Walter people” the next morning after the fire occurred, and that some of the “Jim Walter people” came out from Texarkana in about a month. She says that some insurance adjusters came to see her about three months after the fire. She says that the “Jim Walter people” made several trips and that men she thought to be insurance adjusters came with them. This witness testified that she assumed that she had insurance on the property because she was paying premiums along with her regular monthly payments. She says that the “Jim Walter people” finally insisted that she pay up the arrears on her note and that if she did not do so, “they would foreclose me out if I don’t pay up.” This witness then testified on direct examination as follows:

“Q. Did you understand about the foreclosure?
A. I reckon they meant they wouldn’t pay me anything. I thought they would pay off if I would send in the payments but I didn’t have anything to pay.
Q. The insurance company hadn’t paid you anything and you had no money to pay Mid-State Homes, is that correct?
A. Yes sir, that’s right.
Q. When you sent this paper off, when if ever have you been advised or offered any money?
A. They never have offered me any money.
Q. I want you to be clear on this. The Employer’s Liability Assurance Corporation was carrying your insurance. After you signed the Proof Of Loss there, when if ever have you been tendered any money on that?
A. I never have been.
Q. When is the first time that you know they had deposited some money in the Court here.
A. I never have known.
Q. Do you remember when I talked with you? They served papers on you when they filed the foreclosure suit. The Sheriff served papers on you and you brought that to me and you don’t know what happened since then in the proceedings in Court?
A. No sir, I don’t know.
Q. How far did you go in school, Etheene?
A. Fourth grade.
Q. Can you read and write?
A. No sir.
Q. Can you sign your name?
A. Yes sir, I can sign my name.”

On cross-examination this witness testified that she signed the proof of loss in her attorney’s office and that it was witnessed by her attorney. She says that she did not know how much she owed on her home at the time of the fire, and that she does not know how much longer she would be required to pay on her house before it was paid out. Under questioning by the attorney for Employer’s, this witness testified as follows:

“Q. Did you ever talk to Mr. Robinson about this fire loss?
A. Yes sir, I talked to him about it.
Q. After the fire, did you ever have anyone to go look at the house to deterimine how badly it was damaged?
A. Yes sir.
Q. Did you hire him yourself?
A. No sir.
Q. You never did hire anyone to go down and determine the damage?
A. No sir, but you asked someone else to come.
Q. Did you know how much you owed Mid-State Homes when this fire occurred?
A. No sir.
Q. Did you have a payment book?
A. No sir, I had some cards and I mailed them in.
Q. And you didn’t know how much you owed on the house when the fire took place?
A. No sir.
Q. Did you know how much longer it was to go, before the house was paid for?
A. No sir.
Q. You are claiming you signed this piece of paper because they threatened to foreclose your mortgage, is that right?
A. Yes sir.
Q. On your Insurance Policy, do you know first whether or not you had any fire insurance?
A. When I signed it, it was supposed to be so much insurance on it.
Q. And you were to pay so much by the month, is that right?
A. He said it was included in my payments.
Q. So you assumed you had fire insurance on this house, didn’t you?
A. Yes sir.
Q. Did you know the company that held the mortgage on your house, Mid-State, was also on the Policy?
A. I didn’t know who was on there.
Q. Do you know on the policy that any loss was to be sent or mailed to the person on the mortgage?
A. No sir.
# # *
Q. This paper you signed was signed in your attorney’s office, isn’t that correct?
A. Yes sir.
Q. Did you talk to Mr. Robinson about it, or to Miss Patsy Robinson?
A. Yes sir, I talked to them about the fire.
Q. You did sign the Proof Of Loss in their office, did you not?
A. Yes sir, I signed it.
Q. You are claiming the only reason you signed it is that you were afraid they would foreclose, is that correct?
A. Yes sir.”

Mary Lee Peterson only testified that she lived in her sister’s house and paid $40 per month rent; that she lived there until the fire on April 6, 1966.

Casey Jones testified that he is 50 years of age and in the construction and builder’s supply business in Lewisville; that he has been engaged in the construction business for 31 years. He testified that he looked at the property involved on three different occasions. The first time being 1967, the second time being October, 1968, and then again a few days before the trial. He testified that a new house could be built on the lot cheaper than the damaged one could be repaired, and that he would consider the house a total loss. He testified that the first time he looked at the house it would have cost $5,300 to repair it.

On cross-examination this witness testified that the first time he looked at the house was in August, 1967, over a year after the fire had occurred. He testified that the windows were out and that rain had blown in during the intervening time and that there was some apparent water damage which occurred in putting out the fire. He testified, however, that while the roof looked good from outside, it was charred on the inside and the shingles were brittle. This witness then testified as follows:

“Q. If the house had been repaired shortly after the fire, it could hgve been done for somewhat less than $5,300.00. Isn’t that true?
A. Very little less.
Q. Had building costs gone up in 1967, Mr. Jones?
A. Yes, building costs go up every year. It goes up about fifteen percent.
Q. Would that have knocked fifteen percent off the cost, if the house had been repaired right after the fire?
A. Yes, about that.”

Bob Burns testified that he is captain of the local fire department and is also in the business of remodeling and building homes. He testified that he saw the building involved in this case the morning after the fire; that he had inspected the house during the year prior to trial and that in his opinion at that time, the house was a total loss. On cross-examination this witness testified that he thought the house could have been repaired the morning after the fire but that he does not think it could be now.

Tom Roberts, a building contractor, testified that he looked at the house two different times within the past week and that in his opinion the house is a total loss.

Jim Fuller testified that he is connected with “Homestead Homes, Inc.” and that his company constructs, builds, sells and assigns new residences in Arkansas, Louisiana and Texas, and that the homes he deals in are very similar to the Jim Walter homes. He testified that he inspected the damaged property about two or three weeks after the fire and again four days prior to the date of trial. He testified that he first looked at the house in early May, 1966, and made a thorough inspection of it as his company was involved in a comparable lawsuit at that time. He testified that at that time, it was his opinion the house could have been repaired for between $2,500 and $5,000.

On recross-examination this witness testified that he spent about 15 minutes examining the house and did not make an itemized list of the necessary repairs.

The chancellor found that on the 6th day of April, 1966, the home located on the property involved was destroyed by fire to such extent that no part of the house was capable of being utilized in restoring the building to the condition to which it was before the fire and therefore was a total loss; that there is due Mid-State Homes, Inc. the sum of $4,339.50, together with an attorney’s fee of 10% on the past due note owed by Etheene Peterson. The chancellor awarded judgment for Mid-State Homes, Inc. against the defendant, Etheene Peterson, and Employer’s in the amount of $4,773.45, together with interest from date with all cost in the action to be paid by Employer’s. The chancellor decreed a foreclosure of the mortgage on the property involved and ordered sale thereof if the judgment be not paid within 60 days. The chancellor further decreed judgment for Etheene Peterson against Employer’s in the amount of $7,100 plus 12% statutory penalties in the amount of $852, together with attorney’s fee in the amount of $1,000, to bear interest at the legal rate until paid, with a proviso that the $4,775.45 should first be paid by the insurance company to Mid-State Homes, Inc. with balance together with penalties and attorney’s fee to Etheene Peterson.

On trial de novo we are of the opinion that the chancellor’s findings and decree are against the preponderance of the evidence. Proofs of loss are primarily intended for securing an adjustment between the insured and the insurer, and the statements contained in a proof of loss as to the amount and circumstances of the loss do not, as a matter of law, preclude the insured from proving and recovering the actual amount of his loss. The proof of loss is merely an estimate of the party, and where a settlement is not made upon it, it is not conclusive of the amount due by the insurance company to the insured, but the insured may recover in a suit upon the policy the amount established by the evidence as the true amount of his loss. Fidelity-Phenix Fire Ins. Co. v. Friedman, 117 Ark. 71, 174 S. W. 215.

The policy issued by Employer’s insured the property against loss by fire “to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss.” The policy further provided: “This Company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved, whether collectible or not.” The policy then provided for immediate notice of any loss and provided that the insured protect the property from further damage.

Approximately 15 months elapsed between the date of the fire and the proof of loss. There was an additional delay of approximately 14 months between the date of Employer’s intervention and the trial, and there was a total delay of three years four months between the date of the fire and the entry of the decree. The evidence seems clear to us that there was only a partial loss at the time of the fire, but the evidence is equally clear that the loss was total by the time of the trial. It is Employer’s contention that it is only liable for damage immediately following the fire, and it is the insured’s contention that Employer’s is liable for the damage at the time of trial.

In Connecticut Fire Ins. Co. v. Boydston, 173 Ark. 437, 293 S. W. 730, we stated:

“It is elementary that any competent evidence is admissible to prove the extent or amount of the loss for which the defendant is liable which tends to prove that fact.”

We conclude, therefore, that the chancellor did not err in admitting evidence of damage from the date of the fire to the date of the trial. See also Nat. Union Fire Ins. Co. v. Sch. Dist No. 60, 131 Ark. 547 (at page 554), 199 S. W. 924.

There is no evidence in the record that the insured took any steps whatever to protect the property against additional damage for a period of three years following the fire, and there was ample evidence that additional damage was sustained following the fire. We conclude, therefore, that Employer’s was not liable for the total loss of the building at the time of trial, but was only liable, under its contract, for the amount it would cost to repair the building within a reasonable time after the fire as provided in the insurance contract.

Aside from the proof of loss, we only haT e the testimony of contractor Casey Jones and Jim Fuller as to the cost of repairing the fire damage. Fuller was employed by a competitor of the Jim Walter Corporation and only looked at the house some 15 minutes because his employer was involved in a similar lawsuit. He testified that the house could have been repaired for $2,500 to $3,000. We are of the opinion, therefore, that the preponderance of the evidence lies in the testimony of Casey Jones. While he saw the house for the first time more than a year after the fire, he estimated that at that time the cost of repair would amount to $5,300, and that it would have cost very near that much to have repaired it immediately following the fire.

It is obvious from the record before us that this house was overinsured; that the named beneficiary insureds, Etheene Peterson as well as Mid-State Homes, Inc., were negligent in not reporting and following up on their claim against Employer’s, and that Employer’s was also negligent in its failure to ascertain the amount of damage to the building and in its handling of the claim even after it had notice of the loss. We conclude, therefore, that the equities are evenly balanced between the parties and that the preponderance of the evidence as to the cost of repairs within a reásonable time following the damage caused by the fire, rested in the testimony of Casey Jones and that the insureds are only entitled to judgment for his maximum estimate of $5,300. As a matter of fact Etheene Peterson only prayed judgment for $5,444.44, and the chancellor’s decree in favor of Mid-State against Etheene Peterson and Employer’s included interest as well as premium advanced on the insurance policy. Etheene Peterson has not appealed from that part of the decree.

This cause is reversed and remanded to the chancery court for the entry of a decree against Employer’s in favor of Etheene Peterson and Mid-State Homes, Inc. as their interest may appear, in the total sum of $5,300 without penalty or attorney’s fee.

Reversed and remanded.

Byrd, J., would affirm.

       This letter would indicate that the proceeds of other insurance were credited to the mortgage indebtedness.


text:
    S. Fenton SMITH, Individually, and as Administratrix of the Estate of Lloyd E. Smith, Deceased v. George HANKINS and Milton MOORE
    5-5610
    467 S. W. 2d 159
    Opinion delivered May 24, 1971

      N. J. Henley and Terral, Rawlings, Matthews ir Purtle, for appellant.

      Wright, Lindsey ir Jennings, for appellees.
   J. Fred Jones, Justice.

This is an appeal by Mrs. S. Fenton Smith, individually, and as administratrix of the estate of her deceased husband Lloyd E. Smith, from a directed verdict in favor of George Hankins and Milton Moore in the Searcy County Circuit Court wherein Mrs. Smith had filed a wrongful death action against Hankins and Moore. We conclude that the trial court did not err in directing a verdict for the appellees-defendants.

The collision out of which this litigation arose occurred on Cantrell Road in Little Rock on June 12, 1970. The decedent, Lloyd Smith, was riding in the rear seat of an automobile being driven by his sister-in-law, Mrs. Joe Mays, in a westerly direction on Cantrell Road, and Milton Moore, an employee of George Hankins, was driving a loaded milk truck in an easterly direction on the same road. As the two vehicles approached each other at a curve, the Mays’ vehicle, in which Smith was riding, skidded out of control and across the highway into the path of the oncoming truck driven by Moore.

The only evidence offered at the trial as to how the accident occurred, consisted of testimony given by and photographs made under the directions of the investigating police officer, S. R. McKinney, and the deposition of the milk truck driver, Milton Moore. The photographs offered in evidence clearly reveal very heavy damage to the entire front and left side of the Mays vehicle, with considerably less, but extensive, damage to the left front of the milk truck. The photographs as well as the testimony reveal that where the impact occurred, Cantrell Road is a four lane thoroughfare with a double stripe painted between the east and westbound traffic lanes and with a single white stripe separating the two westbound traffic lanes and also a single white stripe separating the two eastbound traffic lanes. The curve in which the collision occurred is upgrade and bears to the north for the westbound traffic and is downgrade for eastbound traffic.

Police Officer S. R. McKinney testified that the collision occurred about 6:55 a.m. and that the weather was cloudy and damp. He testified that the collision occurred on the center line between the two eastbound traffic lanes, and that there was no evidence that the eastbound truck was ever on the wrong side of the four lane highway. Officer McKinney testified that when he reached the scene of the collision, he found debris on the pavement on the center line between the eastbound lanes and about nine feet from the east curb on Cantrell Road. He says the milk truck was sitting at an angle across the division line of the eastbound lanes with its right front wheel within about five feet of the curb. He says the entire highway at this point is about 45 feet wide. Officer McKinney testified that the pavement at the time was wet and that he found no skid marks behind either vehicle. He testified that the blacktop pavement at this point is very slick when wet.

Mr. Milton Moore testified by deposition that he was driving his employer’s milk truck generally east down Cantrell hill in Little Rock; that it had been raining and the pavement was wet. He testified that he was driving 20 to 25 miles an hour and that he first observed the Mays vehicle when it was 50 or 40 yards from him. He testified that when he first saw the Mays vehicle it was on its proper side of the four lane highway, but that in attempting to negotiate the curve the automobile did not respond; that he saw the automobile “turn up sideways and then it started sliding, started slipping sideways across the road.” He testified that he was driving under 20 miles an hour when the collision occurred. Mr. Moore then testified as follows:

“Q. You applied your brakes, I assume?
A. I already had my foot on the brake; and was holding the truck back with the brakes.
Q. Did you skid this full distance until you all collided?
A. No, I don’t know whether I did or not, really.
Q. Traveling at 25 miles an hour, how long would it take you to stop that truck?
A. It would depend on the condition of the road.
Q. On that particular date, were you not able to stop it within 120 feet?
A. No, I wasn’t.
Q. You were not able to stop it within 120 feet?
A. No, I wasn’t completely stopped.
Q. As I understand it, you were not able to stop this truck within 120 feet on this particular date because of the wet streets, is that correct?
A. Yes.
Q. If you said at that time you saw the Mays vehicle when it was 50 yards away and it started to cross the road in front of you, you wouldn’t dispute that now, would you?
A. No.
Q. As you are coming down Cantrell hill there, there are quite a few speed limit signs and curve signs there, aren’t there?
A. Yes, there are.
Q. As a matter of fact within 20 or 30 yards of where this accident happened there is a big curve sign with a speed limit of 25 miles an hour, is there not?
A. Yes, there is.”

Mr. Moore testified that the truck as well as the automobile sustained heavy damage. He says that the Mays vehicle was demolished; that both doors of his truck were jammed; that the windshield was broken and that he had to climb through the broken windshield in getting out of the truck. He says that he had approximately 5,000 pounds of milk on his truck; that after he saw the automobile cross the center line and go into a skid, he tried to completely stop his truck but was unable to do so. He says that he had his foot on the brake and had been holding the truck back with the brake; that he thinks he applied more pressure when he saw the automobile skid towards him, but in the short time involved he is not sure whether he applied more pressure on the brakes or not.

On redirect examination Mr. Moore testified that the Mays vehicle was traveling probably 50 miles an hour when he first observed it and that he was probably 30 yards from it when it started skidding across to his side of the highway. He says that when he saw the automobile coming to his side of the highway, he immediately applied his brakes and started cutting to his right. He testified that he is not sure whether the automobile turned sideways or not because it happened so fast, but that he knew it was skidding. He testified that his truck was at a slight angle to his right when the collision occurred and that the automobile slid straight into his truck.

The other evidence submitted in the case had to do with the elements of damage and is not germane to the issue on this appeal. In granting the motion for a directed verdict, the court first took the motion under advisement and his reasoning is set out as follows:

“THE COURT: The Court understands there is no attempt to prove, as far as the Plaintiff is concerned, who was the more negligent. The question is, is there any negligence, and of course, the question the Court has more trouble with than that is probable cause. Assuming that the actions of the defendant could be interpreted by the jury as being some negligence, was it the proximate cause. * * *”

We agree with the trial court that if the jury could have found any negligence at all on the part of Moore in the operation of his truck, the record would still be void of any evidence of causal connection between any negligence that could have been attributed to Moore and the collision resulting in the death of Mr. Smith.

The facts in the case at bar are very similar to those encountered in the case of Steinberg v. Ray, 236 Ark. 569, 367 S. W. 2d 445. In that case the McCarty and Steinberg automobiles collided on Highway 67 with the Steinberg automobile traveling north and the McCarty automobile traveling south. McCarty’s wife was killed in the collision and both McCarty and his wife’s estate sued and obtained judgments against Steinberg. Steinberg, as did Moore in the case at bar, testified that he first noticed the McCarty automobile in its proper or southbound lane as it was meeting him and that McCarty pulled from his southbound lane across and into the northbound lane in front of him, whereupon he, Stein-berg, applied his brakes and swerved to his right in an unsuccessful effort to avoid the collision. According to the physical facts the Steinberg vehicle left 90 feet of skid marks leading up the point of impact, and both vehicles came to rest in the northbound lane. The trial court overruled Steinberg’s motion for a directed verdict and upon appeal by Steinberg to this court, in reversing the judgment, we said:

“According to the evidence in this case there is no proof of facts, nor can any reasonable inferences be drawn from the evidence, that establishes any substantial evidence that the appellant, Steinberg, was negligent or that any negligence on his part was the proximate cause of this collision resulting in injuries to the appellees.”

The judgment is affirmed.


author: Conley Byrd, Justice.

text:
    H. Gordon GREGSON v. GREAT AMERICAN INSURANCE CO.
    5-5551
    467 S. W. 2d 173
    Opinion delivered May 24, 1971

      Gannaway, Darrow ér Hansháw, for appellant.

      John M. Lofton Jr., for appellee.
   Conley Byrd, Justice.

Appellant H. Gordon Gregson brought suit pursuant to Ark. Stat. Ann. § 66-3240 (Repl. 1966) directly against appellee Great American Ins. Co. to recover damages for bodily injuries sustained on April 20, 1968, when he slipped and fell in a completed portion of the Rebsamen Park Golf Club House owned by the City of Little Rock. After our mandate in the previous appeal, Gregson v. Great American Ins. Co., (May 4, 1970), 453 S. W. 2d 28, the trial court sustained appellee’s motion to dismiss appellant’s complaint as to it because its policy did not cover any bodily injury arising out of the operation of the premises when the portion of the work out of which the injury arose had been put to its intended use.

The policy here issued, number 1-25-36-02, is entitled “GENERAL-AUTOMOBILE LIABILITY POLICY”. Under item No. 1, the NAMED INSURED is designated as “City of Little Rock, Ark. and Horace A. Piazza, Architect, 1515 Building, Little Rock, Ark.” The policy period is from 8/24/67 to 8/24/68. Under item No. 3 on insurance afforded, the blocks on the form are not checked but typed in on the form is the notation “See Endorsement 6153b attached.”

Endorsement 6153b is entitled “OWNERS’, LANDLORDS’ AND TENANTS’ LIABILITY INSURANCE COVERAGE FOR DESIGNATED PREMISES AND RELATED OPERATIONS IN PROGRESS INCLUDING STRUCTURAL ALTERATIONS, NEW CONSTRUCTION AND DEMOLITION.” In the blank portion of the form entitled “Premises-Operations” appears the typed notation: “Coverage operations: Construction of Club House and remodeling at Rebsamen Park in accordance with the plans and specifications of Horace A. Piazza, Architect.” Under “Coverage” form 6153b provides:

“The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of. . . bodily injury. . . to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental thereto. . . .”

Under “Exclusions” the endorsement provides:

“This insurance does not apply: (a) . . . (m) to bodily injury . . . included within the COMPLETED OPERATIONS HAZARD....”

The policy, as distinguished from the endorsement, provides under the heading “Definitions” as follows:

“When used in this policy . . . “COMPLETED OPERATIONS HAZARD” includes bodily injury . . . arising out of operations. . . , but only if the bodily injury . . . occurs after such operations have been completed . . . and occurs away from premises owned by . . . the NAMED INSURED. . . . Operations shall be deemed completed at the earliest of the following times:
“(B) When the portion of the work out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.”

To sustain the dismissal by the trial court, Great American only relies upon the exclusion that: “This insurance does not apply (a) . . . (m) to bodily injury . . . included within the COMPLETED OPERATIONS HAZARD. . It then points out that under the definition of “COMPLETED OPERATIONS HAZARD” an operation is deemed to be completed when the portion of the work out of which the injury arises has been put to its intended use.

We disagree with Great American’s argument because, as we understand the Exclusion, the “Owners’, Landlords’ and Tenants’ Liability Coverage” applies unless the injury is one that is included in the definition “Completed Operations Hazard”. The injury here admittedly occurred upon the policy-designated premises owned by the City of Little Rock, the NAMED INSURED. As we read the definition of “Completed Operations Hazard”, it is required that the injury must occur away from the premises of the City of Little Rock, as well as occur after the operations have been completed. As thus read the definition provides: “Completed Operations Hazard includes bodily injury . . . arising out of operations . . . but only if the bodily injury ... (1) occurs after such operations have been completed . . . and (2) occurs away from premises owned by the City of Little Rock (the named insured).”

Since the injury here admittedly occurred upon premises owned by the named insured, it follows that the trial court improperly ruled that the coverage provided under the “Owners’, Landlords’ and Tenants’ Liability Insurance Coverage” was excluded.

Reversed and remanded.


author: Frank Holt Justice.

text:
    Plutarcho C. HILL v. STATE of Arkansas
    5593
    467 S. W. 2d 179
    Opinion delivered May 24, 1971

      Louis W. Rosteck, for appellant.

      Ray Thornton, Attorney General; Milton R. Lueken, Asst. Atty. Gen., for appellee.
   Frank Holt Justice.

Appellant was convicted of robbery by a jury which assessed a penalty of twelve years’ imprisonment in the State Penitentiary. From a judgment entered on that verdict appellant brings this appeal. Appellant’s present counsel, who did not participate in the trial, was then appointed for appeal purposes.

Appellant first contends that the lower court erred in failing to hear evidence concerning the admissibility and voluntariness of his confession out of the presence of the jury. Appellant cites Ark. Stat. Ann. § 43-2105 (Supp. 1969) which provides that the trial court shall determine by a preponderance of the evidence the admissibility and voluntariness of a confession out of the jury’s presence “when the issue is raised by the defendant.” A hearing on the voluntariness of appellant’s confession was conducted in the presence of the jury. The court determined the confession to be voluntary before admitting the confession into evidence. Appellant did not object nor request a hearing out of the jury’s presence. In fact, appellant acquiesced in the procedure and cross-examined the proffered witness in the jury’s presence with respect to the circumstances surrounding the confession. The issue was not “raised by the defendant.” This is in accord with Pinto v. Pierce, 389 U. S. 31 (1967). There the court said: “Since trial counsel consented to the evidence on voluntariness being taken in the presence of the jury, and the judge found the statement voluntary, respondent was deprived of no constitutional right.” Therefore, we find no merit in appellant’s contention.

Appellant next contends that the lower court erred in admitting the testimony of an F. B. I. agent concerning a purported confession while appellant was in custody. We find no error. An F. B. I agent questioned appellant in a New Orleans jail for the purpose of identifying him in connection with a federal warrant for his arrest. The agent testified that he advised appellant of his constitutional rights as is required by Miranda v. Arizona, 384 U. S. 436 (1966) and that after the Miranda warnings had been read and fully explained to him, appellant signed the “advice of rights” and “waiver of rights” form and voluntarily confessed to having committed this alleged robbery. Further, that appellant was not threatened or abused by him or anyone else to his knowledge. Appellant admits signing the statement to the effect that proper warnings had been given; he denies, however, that the warnings were explained to him and says that he signed the statement without reading it. He further stated that the confession made to the agent was involuntary. According to him, it was made because he had been physically abused by the New Orleans police and he concocted the confession in order to avoid possible prosecution in Louisiana. He denied the alleged offense. Reconciling discrepancies and conflicting testimony and weighing the evidence are within the exclusive province of the jury and it is the jury’s prerogative to believe or disbelieve the witnesses. Houpt v. State, (Ark. Nov. 16, 1970) 459 S. W. 2d 565. A full review of the record convinces us that the court was correct in permitting the officer to orally recite his version of appellant’s confession which was restricted to this alleged offense.

Appellant’s next contention is that the court erred "in failing to have a witness requested by the defendant appear to testify in his behalf.”

On'the morning of the trial, appellant made a motion for a ten-day continuance for the purpose of obtaining a witness (in the Tennessee Penitentiary) to testify in his behalf. At the time this motion was made, appellant did not offer proof of the testimony to be adduced by the absent witness. This court has often said that the granting of continuances is within the sound discretion of the trial court and its action will not be reversed on appeal without a showing of an abuse of discretion. Nash v. State, (Ark. Mar. 23, 1970) 451 S. W. 2d 869. Furthermore, we held in Davis v. State., 95 Ark. 555, 129 S. W. 530 (1910) that the refusal to grant a continuance is not an abuse of discretion where there is no proof of the testimony to be offered by the absent witness. Appellant’s contention is, therefore, without merit.

Affirmed.


author: Carleton Harris, Chief Justice.

text:
    James E. HOLST et al v. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION et al
    5-5573
    467 S. W. 2d 397
    Opinion delivered May 31, 1971

      William Gilliam, for appellants.

      Chowning, Mitchell, Hamilton ir Chowning, for appellees.
   Carleton Harris, Chief Justice.

Appellee, Bank of America National Trust & Savings Association is a national banking association located and established in San Francisco, California. Appellants, James E. Holst and Charlotte C. Holst, financed a Buick automobile in California by security agreement which was assigned to appellee. With permission from appellee, appellants brought the automobile to Hot Spring County, Arkansas. Approximately a year later, appellants became delinquent in their monthly payments and the bank employed Arkansas Automobile Recovery of Pulaski County to repossess the Buick from appellants. According to a complaint subsequently filed by the Holsts, they entered into an agreement with Arkansas Automobile Recovery that that company would take the car and store it until appellants could “redeem” it. According to a further allegation, they received a notice of intent to sell the vehicle from the Bank of America National Trust and Savings Association, and thereupon contacted H. G. Kelley, the General Manager of Arkansas Automobile Recovery, who assured them that the automobile would be held for twenty days in this state. It is asserted that within that period of time, appellants obtained the money but were told by Kelley that the car was on its way to California. The complaint then asserted that the bank assured appellants that the vehicle would be returned if the Holsts would deliver the total balance to Arkansas Automobile Recovery. It is then alleged that this was done but there was a refusal to return the Buick and the check given by appellants was returned. Following this act, the suit, allegations of which have just been set forth, was filed in the Hot Spring Circuit Court. Judgment was sought against the Bank of America National Trust and Savings Association, Arkansas Automobile Recovery and H. G. Kelley jointly and severally for their conversion of the vehicle in the amount of $4,964 plus attorney fees and court costs. Thereafter the Bank of America National Trust and Savings Association appeared specially and exclusively for the purpose of seeking an order quashing the summons issued against it for the reason that it is a national banking corporation located in San Francisco, California, and has no location or establishment in Hot Spring County, Arkansas. This appellee asserted that the court had no jurisdiction of the cause of action because of the fact that 12 U. S. C. Sec. 94 provides the proper venue for the action against a national bank and is the sole, exclusive, and applicable provision of law in that regard. The other defendant, Arkansas Automobile Recovery, and H. G. Kelley, likewise appeared specially and exclusively for the purpose of moving that service be quashed against them, asserting that they were not served in the proper county under the provisions of Ark. Stat. Ann. §§ 27-605 and 27-613 (Repl. 1962). The court sustained the motion of appellee, quashed the service and dismissed the bank as a party defendant, but the record does not reflect what action was taken on the other two motions. From the judgment entered dismissing the bank as a party, appellants bring this appeal. For reversal, it is simply asserted that the appellee is subject to suit in Arkansas.

Of course, a national banking association is a creature of federal law, and the question of where it can be sued is governed by federal law. Proper venue against such an association is determined by 12 U. S. C. Sec. 94, which provides:

“Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.”

Appellants say this section is permissive, calling attention to the use of the word “may”, but it has been flatly held that the requirements of Section 94 are mandatory. In Mercantile National Bank at Dallas v. Langdeau, 371 U. S. 555, 83 S. Ct. 520, 9 L. Ed. 2d 523, the United States Supreme Court, in an opinion by Justice White, stated that the court found “nothing in the statute, its history or the cases in this court to support appellee’s construction of this statute. On the contrary, all these sources convince us that the statute must be given a mandatory reading.” The opinion cited that the phrase “may be had” [referring to service on defendant national banks] was, “in every respect, appropriate language for the purpose of specifying the precise courts in which Congress consented to have national banks subject to suit and we believe Congress intended that in those courts alone could a national bank be sued against its will”. This holding was reaffirmed in the case of Michigan National Bank v. Robertson, 372 U. S. 591, 9 L. Ed. 2d 961, 83 S. Ct. 914, in a Per Curiam opinion. It might be mentioned in connection with the latter case that the strongest authority cited by appellants is the concurring opinion of Mr. Justice Black— but, of course, it was just a concurring opinion, and not the opinion of the court. In addition, the original transaction there had originated in Nebraska, the home of the debtors to the bank. In the 1969 case of Ebeling v. Continental Illinois Nat. B. & T. Co. of Chicago, etc. et al, 77 Cal. Rptr. 612, the California court rendered the same holding, citing a number of cases including Langdeau and Robertson.

We are somewhat inclined to agree with appellants that simply because a bank is nationally chartered, it should not be immune from this type of litigation, but this is a matter that should be directed to the attention of the Congress. Under the holdings cited, we have no choice but to affirm.

It is so ordered.