author: Jack Holt, Jr., Chief Justice. Tom Glaze, Justice.

text:
    Timothy J. LEATHERS, Commissioner of Revenues, State of Arkansas v. A & B DIRT MOVERS, INC.
    92-505
    844 S.W.2d 314
    Supreme Court of Arkansas
    Opinion delivered December 21, 1992
    [Rehearing denied February 15, 1993.]

      Rick L. Pruett, for appellant.

      Larry E. Graddy, for appellee.

      Jack East, III, for amicus curiae Associated General Contractors.

      Glaze, J., would grant rehearing.

   Jack Holt, Jr., Chief Justice.

This case involves the question of whether the appellee, A & B Dirt Movers, Inc. (“A & B”), should incur the Arkansas Gross Receipts Sales Tax on certain of their transactions involving the hauling of dirt. We find that it should and reverse.

A & B Dirt Movers, Inc. is engaged in the business of excavation and dirt hauling. The appellant, Arkansas Department of Finance and Administration, conducted a sales tax audit of A & B covering six years and determined that certain transactions involving the transfer of title and possession of tangible personal property such as dirt, fill material and similar items, were occurring without payment of the Arkansas Gross Receipts Tax. Mrs. Henry, an auditor with Arkansas Department of Finance and Administration, went to A & B and reviewed the actual sales invoices which were prepared according to the month of the sale. Information on the invoices included the customers’ names and addresses, type of transaction, date of transaction, number of loads hauled and the cost. According to Mrs. Henry, the invoices did not indicate the owners of the dirt from the beginning of the transaction to the end. As a result of this audit, A & B Dirt Movers, Inc. was assessed tax and interest in the amount of $8,919.45. No penalty was assessed because since this was A & B’s first audit, the Department of Finance and Administration assumed they were not aware of the tax. A & B disagreed with the audit contending that it was in the business of providing a nontaxable service — hauling. The company claimed that although they charged for the excavation and hauling of dirt, the dirt was actually free. After exhausting its administrative remedies, A & B filed an action in the Faulkner County Chancery Court contesting the audit determination. After a nonjury trial, the chancellor found that the transactions were not taxable, and the Commissioner of Revenues brings this appeal.

In order to be subject to the Gross Receipts Tax, the dirt hauled must be considered tangible personal property that has been sold:

26-52-301 Tax Levied
There is levied an excise tax of three percent (3 %) upon the gross proceeds or gross receipts derived from all sales to any person of the following:
(1) Tangible personal property.

Ark. Code Ann. § 26-52-301(1) (1992).

The Arkansas Gross Receipts Tax Regulations, promulgated by the Department of Finance and Administration in 1987, define the term “tangible personal property” as:

GR-3(I) The term “Tangible Personal Property” means personal property which may be seen, weighed, measured, felt, touched or is in any other manner perceptible to the senses.

The Gross Receipts Act provides the definition of a sales:

(3) (A) “Sale” is declared to mean the transfer of either title or possession. . for a valuable consideration of tangible personal property, regardless of the manner, method, instrumentality, or device by which the transfer is accomplished.
(3) (D) “Sale” shall not include the furnishing or rendering of services, except as otherwise provided in this section.

Ark. Code Ann. § 26-52-301(1) (1992) (emphasis added).

In holding that the audited transactions are not subject to the gross receipts tax, the chancellor made the following findings of fact:

A. The primary business purpose of A & B is excavation and dirt hauling;
B. The primary source of revenue of A & B is generated from the services it renders;
C. The Ferguson Monument case directs the Court’s attention to the question of whether or not A & B does anything to the dirt at any time to change its character or enhance its value. A & B does nothing to the dirt to change its character or enhance its value. As delivery doesn’t enhance the value of the dirt within the meaning of Ferguson, it is not subject to tax;
D. The Court referred to the title or name used by A & B as a factor in its decision, that name being A & B Dirt Movers, Inc.;
E. The price charged by A & B for its service remained the same price to the customer even if A & B paid for and passed through the cost of the dirt;
F. The Ferguson case is distinguished from this case because (1) Ferguson’s primary purpose was that of selling a product and (2) Ferguson actually changed the form of the product prior to selling it to the customer, e.g. like changing water to ice, and A & B does not change the dirt in any manner;
G. In viewing the transfer of dirt from A & B’s property, the Court determined that (1) A & B’s primary motivation in purchasing the land was not to sell the dirt; (2) A & B’s purchase of its land was not similar to a merchants purchasing inventory for future sale; (3) A & B’s removal of dirt from its own land would improve the land and would not depreciate the land; and (4) A & B does not charge for the dirt, only the service of hauling;
H. The Court examined the various types of transactions and concludes that A & B is generally a delivery person for the customer or an agent of the customer;
I. The court cannot distinguish between the hauling of dirt from A & B’s own property versus the hauling of dirt from other property because A & B’s stockholders could easily create a separate corporation that would eliminate any distinction to be made;
J. The defendant’s witness testified that sales tax would or would not apply depending on whether or not A & B could prove with documented invoices the manner in which the particular transaction evolved. The Court finds no substantive distinction between (1) A & B paying for the dirt and passing the cost to the customer versus (2) the customer paying the owner of the dirt directly and therefore, finds that a transaction should not be considered to be taxable dependent upon whether or not it is supported by written invoices.

Ark. Code Ann. § 26-18-406(b)(l) (1992), provides that chancery courts are to review administrative tax decisions de novo. The statute gives the court jurisdiction to hear appeals of these tax cases once they have been adjudicated in chancery: “An appeal will lie from the chancery court to the Supreme Court of Arkansas, as in other cases provided by law.” Ark. Code Ann. § 26-18-406(b) (2) (1992). As such, we review this case as we review all chancery court decisions, de novo. See Medalist Forming Sys., Inc. v. Malvern Nat’l Bank, 309 Ark. 561, 832 S.W.2d 228 (1992) (“While our review of chancery cases is de novo. . .we do not reverse findings of fact unless the chancellor’s findings are clearly erroneous.”).

As this case involves a question of whether a gross receipts tax should be assessed against the taxpayer, we are deciding an issue involving the levy of a tax. Any doubts or ambiguities, in this regard, must be resolved in favor of the taxpayer. Dunhall Pharmaceuticals, Inc. v. State, 295 Ark. 483, 749 S.W.2d 666 (1988); City of Hot Springs v. Vapors Theatre Rest., Inc., 298 Ark. 444, 769 S.W.2d 1 (1989). The agency claiming the right to collect a tax bears the burden of proving that the tax law applied to the item sought to be taxed. Meadowbrook Country Club, supra.

However, if the taxpayers records are not clear, this burden shifts to the taxpayer to show why he should not be taxed. Arkansas Code Annotated § 26-18-506 (1992) provides:

(a) It is the duty of every taxpayer required to make a return of any tax due under the state tax law to keep and preserve available records as are necessary to determine the amount of tax due or to prove the accuracy of any return. ...
(d) When a taxpayer fails to preserve and maintain the records required by any state tax law, the director may, in his discretion, make an estimated assessment based upon information available to him as to this amount of tax due by the taxpayer. The burden of proof of refuting this estimated assessment is upon the taxpayer.
(Emphasis added.)

In making his determination that the transactions at issue were not taxable, the Chancellor premised his findings on the fact that “a transaction should not be considered to be taxable dependent upon whether or not it is supported by written invoices.” This underpinning is wrong as a taxpayer has a legislatively imposed responsibility to keep good tax records, and A & B failed to do so. Thus, the burden was on A & B to refute the tax.

In his findings of fact, the Chancellor refers to Ferguson Monument v. Cook, 215 Ark. 373, 220 S.W.2d 808 (1949). However, as Ferguson involves the issue of whether labor costs should be included in the price of the product for taxation purposes, we do not find this case relevant and will not discuss it.

As the auditor testified, whether ownership was transferred in certain circumstances could not be determined by looking at A & B’s records. The invoices reviewed in the audit contained the customer’s name, address, type of transaction, loads hauled and a date. According to the auditor’s testimony, she could not determine from the information on the invoices the owner of the property at the beginning and the owner at the end of the transaction.

The auditor further testified that she deleted items that she deemed taxable if A & B’s owner, Mr. Nabholz, provided proof that they should be deleted. For example, if Mr. Nabholz had a contract or other documentation proving ownership of the dirt had not transferred from A & B to the customer, the auditor deleted the item. Without documentation to the contrary, the auditor assessed a tax on the transactions as sales of dirt.

To illustrate its position, A & B prepared exhibits one through six, summarizing the transactions at issue from A & B’s viewpoint:

Plaintiff’s Exhibit One. Material Owned By Customer and Hauled to Another Location.

CUSTOMER DESCRIPTION AMOUNT

Baptist Camp Loads $1275.00

Bernard Nabholz 24 Lds Fill Dirt $ 660.00

Con Ark Const Co 23 Ld Fill $ 690.00

Con Ark Const Co 1 Ld Fill Dirt $ 30.00

Con Ark Const Co 11 Ld Fill $ 319.00

Con Ark Const Co 2 Ld Fill $ 58.00

Con Ark Const Co 2 Ld Fill $ 203.00

Con Ark Const Co 22 Ld Fill $ 638.00

Con Ark Const Co 240 Yd Fill Dirt $ 750.00

Con Ark Const Co 3 Lds Fill $ 87.00

Con Ark Const Co 7 Ld Fill Dirt $ 175.00

Con Ark Const Co 8 Ld Fill $ 200.00

Con Ark Const Co Fill $1276.00

Starkey Const Co 7 Ld Fill Dirt $ 157.00

David Starkey 12 Lds Fill $ 360.00

Bernard Naboltz 18 Lds Fill $ 450.00

Conark 2 Lds Topsoil $ 60.00

May Lewis 10 Lds Topsoil $ 300.00

Ollie Hamlett 10 Lds Haul Off $ 150.00

Ollie Hamlett 13 Lds Haul Off $ 195.00

Ollie Hamlett 6 Lds Haul Off $ 90.00

TOTAL $8123.00

Plaintiff’s Exhibit Two. All Dozer Time Only $120.00 Charged for Material.

CUSTOMER DESCRIPTION AMOUNT

Rich Fore 4 Lds Fill $2155.00

TOTAL $2155.00

Plaintiffs Exhibit Three. Material Paid For 2.00 Per Yard

CUSTOMER DESCRIPTION AMOUNT

Dick Enderlin 1 Ld Topsoil $ 45.00

Ralph Strack 4 Lds Topsoil $ 200.00

Frank Roland 2 Lds Haul $ 80.00

Frank Roland 60 Lds Topsoil $ 360.00

Trotter Const 14 Loads Topsoil $ 690.00

TOTAL $1375.00

Plaintiffs Exhibit Four. Material Hauled From Property of A & B Movers, Inc. to Customer.

CUSTOMER DESCRIPTION AMOUNT

Dan Davis 4 Lds Shale $ 120.00

S & S Const 10 Lds Shale $ 350.00

Ken 6 Lds Fill $ 150.00

Kent Griffin 12 Lds Shale $ 360.00

Kent Griffin 3 20 Yd Lds $ 90.00

Kent Griffin 6 20 Yd Lds $ 360.00

K & D Const 9 Lds Shale $ 400.00

K & D Const 9 Lds Shale $ 320.00

Charles Hightower 16 Lds File $1220.00

TOTAL $3370.00

Plaintiffs Exhibit Five. Material Obtained by A B Dirt Movers, Inc. Free of Charge and Delivered to Customer

CUSTOMER DESCRIPTION AMOUNT

Con Ark Const Co Loads $1650.00

Paul Bruich Fill Dirt $ 25.00

Gold Creek 7 Lds Fill $ 245.00

Paul Watts 77 Lds Fill Dirt $ 770.00

Ronnie Fowlkes Fill Dirt $ 165.00

Paul Watts 7 Ld Fill Dirt $ 350.00

Edwards Const 20 Lds Fill $ 400.00

TOTAL $40,072.60

Plaintiffs Exhibit Six. Material Obtained by Customer From a Third Party Customer’s Material.

CUSTOMER DESCRIPTION AMOUNT

Hitower 11 Lds Fill $ 440.00

Hitower 2 Lds Fill $ 80.00

Hitower 2 Lds Fill $ 80.00

Hitower 2 Lds Fill $ 80.00

Hitower 4 Lds Fill $ 160.00

Paladino & Nash 2 Lds Topsoil $ 70.00

TOTAL $73,376.00

The Commissioner conceded during the course of the appeal that the transactions reflected in exhibits one and six were not taxable under the gross receipts tax. That leaves for our consideration the transactions alluded to in exhibits two through five. At the chancery court trial, Mr. Nabholz reviewed the exhibits and discussed the source of the dirt in each. In arguing that the transactions represented in these four exhibits are subject to the Gross Receipts Tax, the Commissioner claims that pursuant to Ark. Code Ann. § 16-18-506 (1992), he may assess a tax on these transactions because A & B’s records are not clear. We agree.

As the statutory definitions indicate, a sale of tangible personal property results when title of the property is exchanged for valuable consideration. There is no means to determine from the records of the transactions at issue how much of the price charged is for hauling and how much, if any, is actual consideration for the dirt. Nor do the records reflect from whom ownership of the dirt was transferred.

While it is clear that the transactions involved a service, it appears that these transactions also involved the sale of dirt. Absent adequate additional documentation or testimony from the parties involved, the gross receipts tax should have been levied against the taxpayer on these transactions. The taxpayer has the burden of refuting the reasonableness of the estimated tax assessments. Jones v. Ragland 293 Ark. 320, 737 S.W.2d 641 (1987). At the trial, A & B supported its documentation with testimony from Martin Presley, a customer of A & B, as well as from A & B’s owner, Mr. Nabholz. Mr. Presley testified that he often used A & B to haul materials that he had previously acquired. Transactions between A & B and Mr. Presley were included on exhibit six. Since exhibit six is one of the two exhibits the Commissioner of Revenues conceded during this appeal was not subject to tax, Mr. Presley’s testimony is not relevant to the transactions at issue in this appeal.

During the trial, Mr. Nabholz testified to explain that the information in the exhibits pertained to transactions involving charges for hauling rather than selling dirt; however, the record is devoid of any testimony from the other parties involved in exhibits two through five, the questioned transactions, as to whether or not there was a sale of dirt. In short, we find Mr. Nabholz’s testimony insufficient, standing alone, to meet the taxpayer’s statutory burden in refuting the reasonableness of the assessment. To hold otherwise would be to permit a taxpayer to maintain scant records and after an unsatisfactory tax audit, avoid taxation by merely verbalizing his transactions unsupported by appropriate documentation made at the time of the transactions or by testimony from other parties to the transactions.

Accordingly, the Chancellor’s ruling is reversed.

On cross appeal, A & B argues that the Chancellor erred in refusing to grant the company civil damages and attorneys fees claiming that the Commissioner of Revenue and his employees intentionally disregarded tax law. A & B relies upon Ark. Code Ann. § 26-18-809:

26-18-809 Civil damages for certain unauthorized collection actions.
(a) IN GENERAL. If, in connection with any collection of state tax with respect to a taxpayer, any employee of the Department of Finance and Administration, Revenue Division, recklessly or intentionally disregards any provision of this title. . .such taxpayer may bring a civil action for damages against the director. . . .

As A & B has presented no evidence to prove that the Commissioner disregarded tax law, we affirm the Chancellor’s decision in refusing damages and fees.

Reversed and remanded on direct appeal; affirmed on cross appeal.

Glaze, J., dissents.

Tom Glaze, Justice.

I dissent. The primary factual issue is whether A & B Dirt Movers sold or merely hauled dirt. In issue at trial were six exhibits each listing business transactions of A & B; the exhibits are set out in the majority opinion. The state now, on appeal and for the first time, concedes exhibits one and six reflect nontaxable transactions; however, it still maintains that exhibits two through five list events that are presumable sale-of-dirt transactions and are taxable. The chancellor, however, found the transactions on all six exhibits involved A & B hauling services and not sale transactions.

The majority court reverses the chancellor, and in doing so, finds that the testimony and explanation of these various exhibits and transactions by Mr. Jerry Nabholz, President of A & B, were “insufficient, standing alone, to meet A & B’s burden to refute the reasonableness of the state’s assessment.” In short, the majority simply disbelieves Mr. Nabholz’s explanation of exhibits two through five and his version that the transactions reflected on them did not involve the sale of dirt. In reaching such a conclusion, the majority court departs from the established rule that, while the supreme court reviews chancery court cases de novo, it recognizes the superior position of the chancellor to weigh issues of credibility and therefore does not reverse unless the chancellor’s findings are clearly erroneous. McElroy v. Grisham, 306 Ark. 4, 810 S.W.2d 933 (1991).

Mr. Nabholz testified that he had unneeded dirt he gave away so he could build on his land, and other witnesses, testifying on A & B’s behalf, related similar narratives. In these situations, A & B merely charged for hauling free dirt to customer destinations. If believed, such testimony clearly refutes any idea that consideration was paid for the dirt hauled to the customers listed in the four exhibits still in dispute.

This court is in no position to second guess the chancellor on what are strictly factual and credibility issues. The evidence or explanations surrounding exhibits one and six were apparently accepted by the state since the state now concedes transactions listed on them are nontaxable. The chancellor found the remaining four exhibits and related testimony worthy of belief, and this court has no basis to hold otherwise. I would affirm the chancellor’s findings.


source: Caselaw Access Project

author: Robert H. Dudley, Justice.

license: Public Domain

text:
    Ricky ANDERSON v. STATE of Arkansas
    CR 92-841
    842 S.W.2d 855
    Supreme Court of Arkansas
    Opinion delivered December 21, 1992

      Burbank, Dodson, & McDonald, by: Jack W. Barker, for appellant.

      Winston Bryant, Att’y Gen., by: Kent G. Holt, Asst. Att’y Gen., for appellee.
   Robert H. Dudley, Justice.

Appellant was arrested for tampering with physical evidence and possession of a controlled substance. He twice confessed to both felonies and was charged and convicted of both crimes. He appeals and argues that the trial court made two erroneous rulings. We affirm the convictions as there was no reversible error.

Appellant first argues that the trial court erred in refusing to grant a mistrial following a comment by the prosecutor. We do not reach the issue because the appellant did not make an objection that would apprise the trial court of the argument he now makes. We have consistently held that an objection below must be sufficiently specific to inform the trial judge of the error complained of on appeal. Terry v. State, 304 Ark. 344, 802 S.W.2d 925 (1991).

Appellant next argues that the trial court erred in refusing to suppress both of his confessions because he was under the influence of cocaine and was unable to make a knowing and intelligent waiver of his Miranda rights. A court may properly conclude that the accused has waived his Miranda rights only if the “totality of the circumstances” reflects he possessed the requisite level of comprehension. Moran v. Burbine, 475 U.S. 412 (1986). Whether an accused had sufficient capacity to waive his constitutional rights, or was too incapacitated due to drugs or alcohol to make an intelligent waiver, is a question of fact for the trial court. McDougald v. State, 295 Ark. 276, 748 S.W.2d 340 (1988); Baker v. State, 289 Ark. 430, 711 S.W.2d 816 (1986); Abdullah v. State, 281 Ark. 239, 663 S.W.2d 166 (1984); Fuller v. State, 278 Ark. 450, 646 S.W.2d 700 (1983); Hunes v. State, 274 Ark. 268, 623 S.W.2d 835 (1981). While we make an independent determination based on the totality of the circumstances, we will not reverse the trial court unless its determination is clearly erroneous. Graham v. State, 277 Ark. 465, 642 S.W.2d 880 (1982).

The arresting police officer testified that at the time of appellant’s first confession, appellant was unsteady on his feet, slurred some of his words, and appeared to be somewhat intoxicated and possibly high on cocaine, but that he was coherent, understood the process, and understood his constitutional rights and his waiver of them. Another officer testified that appellant did not appear to be under the influence of drugs and was coherent at the time he gave the first confession. Appellant disputed the State’s proof and testified at the suppression hearing that he was so high that he could not. comprehend his rights or the consequences of waiving them. It is noteworthy that, on cross-examination, appellant testified that he could recall the contents of his pockets from the time of the first confession. He testified that he had a matchbox with a razor blade in it, a cigarette lighter, and sixty-five cents in change.

The evidence presented by the State was sufficient to support a finding that appellant was not seriously incapacitated and could understand and appreciate both the nature of his constitutional rights and the consequences of waiving those rights. Under the totality of the circumstances, we cannot say the trial court’s finding that appellant knowingly and intelligently waived his rights was clearly erroneous. Accordingly, we affirm.


author: Steele Hays, Justice.

text:
    Lawrence BUTLER, Nathaniel Thomas, and James Ellison v. STATE of Arkansas
    CR 92-879
    842 S.W.2d 434
    Supreme Court of Arkansas
    Opinion delivered December 21, 1992

      McArthur & Finklestein, by: William C. McArthur, for appellants.

      Winston Bryant, Att’y Gen., by: Clint Miller, Senior Asst. Att’y Gen., for appellee.
   Steele Hays, Justice.

Appellants purport to bring this interlocutory appeal under Rule 2(a)(6) of the Arkansas Rules of Appellate Procedure giving this court jurisdiction under Ark. Sup. Ct. R. 29(l)(k). We dismiss for lack of an appealable order.

Appellants Lawrence Butler, James Henry Ellison, and Nathaniel Thomas were charged by information in Pulaski County Circuit Court with three counts each of Capital Murder in violation of Ark. Code Ann. § 5-10-101 (1987) . The information alleged that on February 19,1992, they feloniously, with the premeditated and deliberated purpose of causing the death of another person, caused the deaths of Cyrus Lee, Sabrina Earl and Marcus Johnson. Appellants have remained incarcerated since they were arrested.

On June 22,1992, the prosecuting attorney’s office appeared ex parte before the Honorable Floyd J. Lofton, Pulaski County Circuit Judge, and orally moved that appellants submit to the extraction of pubic hair, blood and saliva. The court signed an order on that date requiring the appellants to submit to a physical examination for the collection of samples of appellants’ pubic hair, blood and saliva.

On June 23, 1992, Nathaniel Thomas filed a motion to set aside the order of June 22nd alleging there had been no showing of probable cause for the intrusive search of his person and that reasonable notice of the time and place for his appearance was not given by the prosecuting attorney.

A probable cause hearing was held with all parties and their attorneys present. The prosecuting attorney’s office again made an oral motion to the Honorable Chris Piazza, Circuit Judge. No witnesses were presented. The court ordered that all three appellants submit to a physical examination for the collection of samples of appellants’ blood and saliva for testing and comparison with items of clothing, floor coverings, weapons, and other physical evidence secured from the scene of the homicides.

Appellants brought this interlocutory appeal by filing a Notice of Appeal on July 7, 1992. They claim that there was no showing of probable cause for the court’s order.

Appellants do not challenge the trial court’s authority to order the taking of body fluid samples pursuant to Ark. R. Crim. P. 18.1(a)(vii). This rule reads in part:

(a) Notwithstanding the initiation of judicial proceedings, and subject to constitutional limitations, a judicial officer may require the defendant to:
(vii) permit the taking of samples of his blood, hair and other materials of his body which involve no unreasonable intrusion thereof;
(b) Whenever the personal appearance of the defendant is required for the foregoing purposes, reasonable notice of the time and place of such appearance shall be given by the prosecuting attorney to the defendant and his counsel. . .

Instead, appellants challenge the lack of procedure and the lack of evidence preceding the order in this case. They contend the discovery provided by the State showed no reasonable or probable cause to order the taking of body samples. They also claim the reason offered by the State at the hearing was insufficient, i.e., that the FBI had requested samples of the blood of all accused prior to its testing of the evidence.

This court has no jurisdiction to hear this interlocutory appeal. A defendant does not have any general right to an interlocutory appeal in criminal cases. The appealability of a circuit court’s order is governed by Ark. R. App. P. 2(a), which requires a final judgment or decree or one which, in effect, discontinues or determines the action and prevents a judgment from which an appeal might be taken. See Ellis v. State, 302 Ark. 596, 791 S.W.2d 370 (1990). Rule 2(a) contains no provision which permits an interlocutory appeal from an order entered by a circuit court during pretrial procedures.

The State may bring an interlocutory appeal in two circumstances. Under Rule 36.10 of the Arkansas Rules of Criminal Procedure, an interlocutory appeal is allowed only when the order (1) grants a motion under Rule 16.2 to suppress seized evidence or (2) suppresses a defendant’s confession. See State v. Russell, 271 Ark. 817, 611 S.W.2d 518 (1981); State v. Glenn and Hamilton, 267 Ark. 501, 592 S.W.2d 116 (1980). In State v. Stuart, 306 Ark. 24, 810 S.W.2d 939 (1991), the court dismissed an interlocutory appeal by the State from an order suppressing evidence because such an order was not appealable under A.R.Cr.P. Rule 36.10. No provision exists in the Rules of Criminal Procedure for such an appeal by a defendant.

In order to appeal, a defendant must first be convicted of a crime. Rule 36.1 of the Arkansas Rules of Criminal Procedure states that “any person convicted of a misdemeanor or a felony by virtue of trial in any circuit court of this state has the right to appeal to the Arkansas Court of Appeals or to the Supreme Court of Arkansas.” The jurisdiction of the Arkansas Supreme Court is limited to appellate jurisdiction only. Weston v. State, 265 Ark. 58, 576 S.W.2d 705, cert. denied, 444 U.S. 965 (1979). In Weston, the court stated that an appeal attacking the defendant’s indictment will not lie at this stage in the proceeding in the absence of a final order of the trial court settling some issue against him or finding him guilty of some offense. In the present case, the appellants have not been convicted and have no right to appeal at this point.

Appellants contend the order is comparable to a mandatory injunction, which is appealable. Ark. R. App. P. 2(a)(6). The argument is without merit. An injunction is a command by a court to a person to do or refrain from doing a particular act; it is mandatory when it commands a person to do a specific act, and prohibitory when it commands him/her to refrain from doing a specific act. Tate v. Sharpe, 300 Ark. 126, 777 S.W.2d 215 (1989). In Tate, the court stated that in order for an injunction to be mandatory, the order must be based upon equitable grounds to justify the use of extraordinary powers of equity, such as irreparable harm and no adequate remedy at law, and the order must determine issues in the complaint, not merely aid in the determination of such issues. Also, an injunction is an equitable remedy over which a chancery court has jurisdiction. Manitowac Remanufactuirng, Inc. v. Vocque, 307 Ark. 271, 819 S.W.2d 275 (1991). Because the Pulaski County Circuit Court issued the order in a proceeding not equitable in nature, the order does not qualify as a mandatory injunction.

For the reasons stated, the appeal is dismissed.

Holt, C. J., not participating.


text:
    Joe E. EDWARDS v. Nancy C. EDWARDS
    92-612
    843 S.W.2d 846
    Supreme Court of Arkansas
    Opinion delivered December 21, 1992

      Everett, Stills & Gunderson, for appellant.

      Batchelor & Batchelor, by: Fines F. Batchelor, Jr., for appellee.
   Steele Hays, Justice.

This dispute between brother and sister involves the construction of a deed and the will of their mother. Joe E. Edwards, appellant, and Nancy Edwards, appellee, are children of Edna Edwards, who died in December 1989. Two other children are not parties to this suit.

Edna Edwards purchased a home in Ft. Smith in April of 1988, accepting a warranty deed from the sellers “to Edna Edwards and to Joe E. Edwards, her son, with right of survivor-ship.” On September 28, 1988, Edna Edwards executed a will which contained a provision devising the identical property to all four of her children, “in equal shares, subject to a life estate to Nancy Carol Edwards, conditioned upon her occupying the home place and paying for taxes, insurance and repairs.”

After the will was filed for probate in February 1990, Joe Edwards filed a complaint in circuit court against Nancy Edwards claiming ownership of the home by virtue of the warranty deed and alleging that Nancy was unlawfully in possession of the property. Nancy filed an answer claiming under the will. On Nancy’s motion the case was transferred to chancery.

Nancy filed a counterclaim in chancery to quiet title to the property. The case was tried and the chancellor entered his decree, finding that Joe Edwards, by virtue of the deed, held the property as tenant in common with the estate of his mother, subject to the terms of her will. Joe Edwards argues that the trial court erred in finding he held the property only as a tenant in common and not as a joint tenant with right of survivorship.

The facts surrounding the execution of the warranty deed are these: Edna Edwards had concerns that her children be taken care of after she died. She had a particular concern that Nancy have a home to live in and there was testimony that she wanted Nancy to have the property in question to live in after she died. Edna had real estate holdings and also had a $65,000 CD, proceeds from her husband’s life insurance. The $65,000 was used as payment on the home.

When Edna’s husband died, Edna was living in a larger family home and decided to move to a smaller home in Ft. Smith. She meant for Nancy to live with her and to live in it after she died. Edna picked out the property in question, and decided to purchase it.

At the closing neither Nancy nor Joe was present. The closing was held at the real estate office of Caldwell-Banker Fleming-Lau, and in addition to Edna and the sellers, two real estate agents were present — Rosemary Jedlicka and Jan Ford. Ms. Jedlicka testified that the deed had been prepared by an abstract company and only Edna Edwards name was originally listed as grantee. She testified that Edna requested that her son Joe be added to the deed, that Edna specifically requested that not only his name be added to the deed, but the particular words, “with right of survivorship” be included. There was other testimony from Jan Ford, suggesting there was no specific request for those words.

Ms. Jedlicka testified that she contacted the abstract office that had prepared the deed and they authorized the addition of these words. Ms. Jedlicka then typed in after Edna’s name, in an obviously different type from the rest of the deed, “and Joe E. Edwards, her son, with right of survivorship.” Eugene Wahl, head of the abstract firm, testified he would not have authorized such wording to create a joint tenancy.

In finding there was no joint tenancy, the chancellor specifically found that the words “with right of survivorship” were not the words of Edna Edwards, but were the words of the realtor who changed the deed. Joe Edwards does not dispute that finding, rather, he insists the language used in the deed creates a joint tenancy as a matter of law, and that the trial court erred in finding otherwise. However, for reasons to be explained, we hold that a resulting trust was created for the benefit of Nancy Edwards, rendering the wording of the deed moot.

On cross appeal, Nancy Edwards agrees that Joe Edwards had no survivorship rights in the property, but argues the chancellor erred in finding he held the property as a tenant in common with the estate of Edna Edwards. She advances two alternate theories deducible from the evidence: one, that Joe held the property as a mortgagee for Edna Edwards, and, two, that an implied trust was created for Nancy’s benefit.

Under the mortgage theory, Nancy claims that Joe should be found to be a mortgagee as there was evidence he had claimed an interest in the $65,000 CD used to buy the property, and when Edna added Joe’s name to the deed she intended it, in essence, as security for the use of his money. The trial court found, however, that by Joe’s own admission he did not claim any interest in the $65,000, but testified unequivocally it belonged to his mother as beneficiary of life insurance proceeds.

Nancy Edwards does not dispute this finding but merely argues there is room for another interpretation of the evidence. That however, is not the standard for review. Rather, we reverse only if it can be demonstrated that the trial court’s findings are clearly against the preponderance of the evidence. Nancy Edwards has made no such showing.

The second argument, an implied trust, does have merit. The term “implied trust” encompasses both constructive trusts and various types of resulting trusts. See 76 Am. Jur. 2d Trusts §§ 159-163 (1992); W. Fratcher, V Scott on Trusts §§ 404 through 404.2 (1989) (describing the three types of resulting trusts) and § 462 (describing constructive trusts). Hickman v. The Trust of Heath, House & Boyles, 310 Ark. 333, 835 S.W.2d 880 (1992); Andres v. Andres, 1 Ark. App. 75, 613 S.W.2d 404 (1981). A constructive trust arises in favor of persons entitled to a beneficial interest against one who secured legal title either by an intentional false oral promise to hold the title for a specified purpose, or by violation of a confidential or fiduciary duty, or is guilty of any other unconscionable conduct which amounts to a constructive fraud. Andres v. Andres, supra.

A resulting trust arises where one disposes of property under circumstances which raise an inference that he/she does not intend that the putative grantee should have the beneficial interest in the property. Scott, supra, at § 404.1. There are different types of resulting trusts but that which concerns us here is often called a purchase money resulting trust and arises where property is purchased and the purchase price is paid by one person and at his/her direction the vendor converts the property to another person. Id.

The distinction between a resulting and a constructive trust is discussed in Scott:

A resulting trust is to be distinguished from a constructive trust. A constructive trust is imposed where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it. The duty to convey the property may arise because it was acquired through fraud, duress, undue influence or mistake, breach of a fiduciary duty, or wrongful disposition of another’s property. The basis of the constructive trust is the unjust enrichment that would result if the person having the property were permitted to retain it. Ordinarily a constructive trust arises without regard to the intention of the person who transferred the property. On the other hand, a resulting trust arises in favor of the person who transferred the property or caused it to be transferred under circumstances raising an inference that he intended to transfer to the other a bare legal title and not to give him the beneficial interest.

Scott, supra at § 404.2.

The theory of a resulting trust is that grantors expect something for their money, and when they pay the purchase price, but direct that the property be conveyed to a third party who is a stranger, the presumption is there has been no gift to the third party but a conveyance of the property to be held in trust for the party who paid the purchase price. G.G. Bogert and G.T. Bogert, The Law of Trusts and Trustees, § 454 (2nd ed. 1991). If, however, the third party stands in such relationship to the party furnishing the purchase money as to be the natural object of his/ her bounty, things get more complicated, as a gift may have been intended. Bogert, supra, § 459.

In general, a resulting trust must be proven by clear and convincing evidence. Festinger v. Kantor, 272 Ark. 411, 616 S.W.2d 455 (1981); Crain v. Keenan, 218 Ark. 375, 236 S.W.2d 731 (1951). See also Walker v. Hooker, 282 Ark. 61, 667 S.W.2d 637 (1984). In the Festinger case the grantees were the wife and daughter of the purchaser, and we noted the presumption that a gift was intended. In Jones v. Wright, 230 Ark. 567, 323 S.W.2d 932 (1959), a wife paid for land, and the deed conveyed it to her and her husband. We held that the burden was on the heirs to overcome the presumption of a gift from the wife to the husband. In First National Bank v. Rush, 30 Ark. App. 272, 785 S.W.2d 474 (1990), our Court of Appeals dealt with the same question and stated the presumption of gift could be overcome only by “clear and convincing proof that no such gift was intended.”

While we find no Arkansas case dealing with purchase by a mother naming her son as grantee, the same principles should apply. As Bogert points out:

Where a mother is the payor and a child is made the grantee, with the mother’s consent, the courts have not been entirely unanimous in their application of a presumption. Most decisions, however, treat the case in the same way as where the father pays the price, and presumes a gift, whether the child be an adult or an infant.. . . Gifts from her to the children, out of mere generosity or for the purpose of distributing her estate at the end of her life, are quite natural and common. [Bogert, supra, § 460, pp. 360-365. (Citations omitted; emphasis in original.)]

Was the evidence in this case so clear and convincing as to overcome the presumption of a gift? We think so.

Here the evidence pointed unerringly to the conclusion that Edna Edwards did not intend for Joe to have any beneficial interest under the deed, but was to act in the role of administrator or trustee of the property in case of her death so that the property could be distributed according to her will, specifically, to her four children equally subject to a life estate to Nancy. The testimony of Joe Edwards effectively confirms that conclusion.

In sum, the total proceeds with which the real estate was purchased came from Edna Edwards; Joe furnished no part of the consideration for the purchase of the real estate in question; although Joe Edwards paid the premiums on the policy of insurance on his father’s life, he made no claim whatever to that money, but acknowledged it was intended to be a resource to care for his mother, although a certificate of deposit including Joe’s name was included on the CD so he could assist in taking care of his mother; Joe, the oldest of the four children, had discussed with his parents and had understood that his parents were counting on him to carry out their intent that Nancy and their brother, Jerry, have a home the rest of their lives; Joe had known at all times that his mother intended for Nancy to have the property as her home the rest of her life, yet said nothing to his mother indicating he would not see that this was done; Joe had known of the desire of his mother and her intent that the property go to Nancy for life with remainder to the four children equally at the end of her life estate. Joe testified that after the death of his mother he intended that Nancy have the property as her home the rest of her life but he changed his mind after Nancy declined certain demands he made with regard to other matters, and after he had learned his name was on the deed.

In light of the above evidence, and the chancellor’s finding that Edna Edwards did not request the survivorship phrase be added to the deed, the clear import of the testimony, including that of Joe Edwards, was that the property in question was purchased with Edna’s money so Nancy would have a place to live after her mother died, i.e., a life estate; and the only reason Joe’s name would have been added to the deed was to allow him to act as administrator or trustee of the property when Edna died and to carry out the wishes of his mother for Nancy’s life estate.

Affirmed on direct appeal, reversed on cross appeal and remanded for further proceedings not inconsistent with this opinion.


text:
    JOHNNY’S PIZZA HOUSE, INC. v. Chester Paul HUNTSMAN and Sheila McCloud Huntsman
    92-713
    844 S.W.2d 320
    Supreme Court of Arkansas
    Opinion delivered December 21, 1992

      Billy J. Hubbell, for appellant.

      Arnold & Streetman, by: James A. Hamilton, for appellees.
   Steele Hays, Justice.

The trial court dismissed this action by Johnny’s Pizza House, Inc., a foreign corporation, for its failure to comply with the Wingo Act, Ark. Code Ann. § 4-27-1501 (1987). On December 10, 1984, appellees, Chester and Sheila Hunstman, executed a promissory note payable to appellant, Johnny’s Pizza House, Inc., (Johnny’s) for $53,002.84 at 13 1/4% interest per year on the unpaid balance. On January 30, 1991, Johnny’s filed suit against the Huntsmans to collect the note. Among other things, the complaint alleged:

The plaintiff is a Louisiana corporation which has its principal place of business in West Monroe, Louisiana, and is doing business or has done business in Ashley County, Arkansas. The defendants are individuals who live in Ashley County.

The Huntsmans moved to dismiss Johnny’s complaint because Johnny’s did not have a certificate of authority to transact business in Arkansas as required by § 4-27-1501 and, as a foreign corporation doing business in Arkansas, which the complaint admitted, such a certificate is required. Further, that as a consequence of not having that certificate, it was precluded under Ark. Code Ann. § 4-27-1502 (1987) from maintaining any action in this state. On February 26,1991, the Huntsmans filed a motion to treat their earlier motion for dismissal as one for summary judgment.

Johnny’s responded to these motions and defended on the premise it was a franchisor only, and it is the franchisee who actually conducts business in Arkansas. It further stated that it applied for the certificate of authority, and argued that the trial court should not dismiss the case until the secretary of state’s office decided whether to issue the certificate.

The court heard argument on the motions and took them under submission pending briefs to be submitted by both sides. Based on what was before him, the judge granted a “Summary Judgment of Dismissal.” The court found that 1) the specific contract was made in Arkansas and 2) at the time it was made, Johnny’s did not have a certificate of authority, and 3) because there were no issues of material fact remaining the Huntsmans were entitled to a judgment of dismissal as a matter of law.

Johnny’s filed a motion to amend findings of fact and judgment, or a new trial. The primary point of this pleading was that the trial court had misinterpreted § 4-27-1502, and that as Johnny’s had now obtained a certificate of authority from the secretary of state, suit could be maintained. This motion was deemed denied when the trial court failed to act on it in the prescribed time.

Before addressing Johnny’s arguments, some discussion of the old and the new Wingo Acts is in order. The former act required any foreign corporation “doing business” in this state to file with the secretary of state and to obtain a certificate of authority. Ark. Stat. Ann. § 64-1201 (1987). Arkansas Stat. Ann. § 64-1202 (1987) provided two distinct penalties. The first was pecuniary, and the second provided that any contract made in Arkansas was unenforceable by a foreign corporation if the corporation had not filed with the secretary of state and received its certificate of authority. The “new” Wingo Act is part of the “Arkansas Business Corporation Act,” enacted as No. 985 in 1987, at § 4-27-101 through 4-27-1705. (§ 64-1201 and 1202 are found in their revised forms at § 4-27-1501 and 1502 respectively.) The Arkansas Business Corporation Act of 1987 is based primarily on the Model Business Corporation Act, which is a product of a committee of the American Bar Association. See A.C.A. Commentaries at p. 415; Centennial Valley Ranch Management, Inc. v. Agri-Tech Ltd. Partnership, 38 Ark. App. 177, 832 S.W.2d 259 (1992).

Under the new act, foreign corporations “transacting business” in this state are still required to file for a certificate of authority. Section 4-27-1501. The primary difference is that this section also lists a number of transactions that will not be held to be “transacting business.”

The major difference for purposes of this case, however, is in the penalty section, § 4-27-1502. While a pecuniary penalty can still be imposed, the “unenforceable contract” penalty is eliminated and a milder sanction is substituted.

The new “consequences” provision merely requires that in order to maintain a suit, the foreign corporation which transacts business in this state, must first obtain a certificate of authority. Further if such a corporation does commence a proceeding without a certificate, the court may stay the proceedings until it determines whether a certificate is needed, and grant a further stay to allow the foreign corporation to obtain the certificate if it is determined that it is needed. This is in sharp contrast to the former provision that expressly precluded any rehabilitation of the uncertified foreign corporation, and made the contract void ab initio. See Worthen Bank & Trust Co. v. United Underwriters Sales Corp., 251 Ark. 454, 474 S.W.2d 899 (1971).

On appeal, Johnny’s has challenged the correctness of the trial court’s granting of summary judgment, arguing four points for reversal. We need address only the last of these.

It appears from the order that the trial court was acting pursuant to the provisions of the old act. Its focus was on the parties having contracted in Arkansas, which fact would be neither pivotal nor conclusive under the new act. See § 4-27-1502; and see generally, Model Business Corporation Act, (Supp. 1991), Selected cases, 2. Transacting business. It seems clear the former act was being applied because instead of granting a stay, the trial court dismissed the action, presumably with prejudice.

In its fourth point for reversal, Johnny’s argues that the trial court erroneously applied the penalty provisions in the repealed act, and that rather than granting a “dismissal of summary judgment,” the trial court should have granted a stay to permit Johnny’s to obtain the certificate of authority. We sustain the argument.

Centennial Valley Ranch Management, supra, dealt with what action a trial court should take when the defense is raised under the Wingo Act that the plaintiff had not obtained a certificate as required by § 4-27-1501:

Under the old law (Wingo Act) the nonqualifying foreign corporation was not permitted to enforce any contract made in Arkansas. But [in a law review article, M. Matthew, Corporate Statutes - Which One Applies?, 13 USLF 69, 677 (1990) it says that] “the commentary to the revised Model Business Corporation Action which the section is based makes clear the drafters intended a qualifying foreign corporation be able to enforce a contract simply by qualifying.”

We agree. The Official Commentary to the Model Business Act on which ours is based, makes it clear that this provision is not to be used to penalize, but to encourage foreign corporations to file. The commentary does not state that the stay should be granted in all cases, but it does provide that the stay is to be liberally granted. The pertinent section of the commentary provides:

OFFICIAL COMMENT
The purpose of section 15.02 is to induce corporations that are required to obtain a certificate of authority but have not to qualify promptly, without imposing harsh or erratic sanctions. The Model Act rejects the provisions adopted in a few states that make unenforceable intrastate transactions by unqualified corporations or that impose punitive sanctions or forfeitures on nonqualifying corporations. Often the failure to qualify is a result of inadvertence or bona fide disagreement as to the scope of the provisions of section 15.01, which are necessarily imprecise; the imposition of harsh sanctions in these situations is inappropriate. Further, as a matter of state policy it is generally preferable to encourage qualification in case of doubt rather than to impose severe sanctions that may cause corporations to resist obtaining a certificate of authority in doubtful situations.
Section 15.02 closes the courts of the state to suits maintained by corporations which should have but which have not obtained a certificate of authority. However, this sanction is not a punitive one: section 15.02(e) states that the failure of the corporation to qualify does not affect the validity of corporate acts, including contracts. Thus, a contract made by a nonqualified corporation may be enforced by the corporation simply by obtaining a certificate. Further, section 15.02(c) authorizes a court to stay a proceeding to determine whether a corporation should have qualified to transact business and, if it concludes that qualification is necessary, it may grant a further stay to permit the corporation to do so. Thus, the corporation will not be compelled to refile a suit if the corporation qualifies to transact business within a reasonable period. The purpose of these provisions is to encourage corporations to obtain certificates of authority and to eliminate the temptation to raise section 15.02 defenses only after applicable statutes of limitation have run. [Our emphasis.]

Hence, the granting of a stay is in line with the stated intentions of the drafters of the code, and in accord with other jurisdictions operating under similar statutes. See Charles v. Smith & Sons v. Lichtefeld-Massaro, 477 N.E.2d 308 (Ind. App. 1 Dist. 1985) (“failure of a plaintiff foreign corporation to obtain a certificate. . .by the date of the filing of its complaint in Indiana merely suspends rather than bars further legal proceedings until such time as the certificate is obtained); South Carolina Equipment, Inc. v. Sheedy, 353 N.W.2d 63, 120 Wis2d 119 (Wis. App. 1984) (“Commentators and the vast majority of courts have held that when an unregistered foreign corporation commences or defends a suit, and during the course of that suit complies with the registration of law, that act is sufficient to allow it to maintain a court action or a defense.”) Tri-Terminal Corp. v. CITC Industries, Inc., 78 A.D.2d 609, 432 N.Y.S.2d 184 (1980) (the proper procedure was for the trial court to grant a conditional stay affording the corporation the opportunity to cure the defect.)

We note, too, that the commentary implies that if a dismissal, rather than a stay, is granted, it will not be a dismissal with prejudice: “Thus, the corporation will not be compelled to refile a suit if the corporation qualifies to transact business within a reasonable period.”

The appropriate action in this case would have been to grant a stay to Johnny’s until it was determined whether a certificate was necessary, and if so, to further stay the proceedings until the corporation obtained the certificate. See § 4-27-1502(C). We recognize that Section (C) of 1502 is discretionary and, where appropriate circumstances exist, the trial court may deny the request for a stay. There was no such showing in this case. See e.g., Rigid Component Systems v. Nebraska Component, 202 Neb. 658, 276 N.W.2d 659 (1979).

Reversed with directions consistent with this opinion.

       § 4-27-1502. Consequences of transacting business without authority.
      A. A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.
      B. The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.

        C. A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. It is so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.
      D. A foreign corporation is liable for a civil penalty of not more than five thousand dollars ($5,000) and not less than one hundred dollars ($100) if it transacts business in this state without a certificate of authority. The Secretary of State shall promulgate regulations for the calculation of the appropriate penalty. In determining the appropriate penalty, the Secretary of State shall consider the size and assets of the corporation, the total amount of business transacted by the corporation within the state and such other circumstances as the Secretary of State may institute proceedings in Pulaski county Circuit Court to recover such penalty.
      E. Notwithstanding subsections A. and B. of this section, the failure of a foreign corporation to obtain certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.

       Also, there seems to be a little question that under the express provision in the act, that under the facts of this case, the new act would apply. See transition provision, § 4-27-1701 through 1706. It was stated in a recent law review article, M. Matthews, “Corporate Statutes — Which Applies?” § 13 UALRLJ 69, at 77:
      The issue is whether a nonqualifying foreign corporation which enters into a contract prior to 1988 will be able to qualify and thereafter enforce the contract. The 1987 ABCA transition provisions suggest that the pre-1988 contract will be enforceable. The relevant section provides that “[i]f a penalty or punishment imposed for violation of a statute repealed by this chapter is reduced by this chapter, the penalty or punishment, if not already imposed, shall be imposed in accordance with this chapter.” Arguably the harsh penalty of voiding the contract is reduced by the 1987 ABCA comply-and-enforce approach, and the penalty should therefore be imposed according to the new statute.
      There is no dispute on this point by the parties.


author: David Newbern, Justice.

text:
    Ernest L. LOEWER v. NATIONAL BANK OF ARKANSAS
    92-506
    844 S.W.2d 329
    Supreme Court of Arkansas
    Opinion delivered December 21, 1992

      Crockett, Brown & Worsham, P.A., by: R.J. Brown and Richard E. Worsham, for appellant.

      Davidson Law Firm, by: Brandon L. Clark, for appellee.
   David Newbern, Justice.

This case involves two competing claims to furniture, fixtures, and equipment (referred to hereafter collectively as “the equipment”) used by National Bank of Arkansas (NBA). Ernest L. Loewer, the appellant, claimed ownership resulting from an assignment from one J.R. Hodges. The jury found the appellee, NBA, owned the equipment by virtue of a purchase agreement executed between it and Interstate Leasing Incorporated (Interstate), Hodges’ corporation. Loewer argues (1) there was insufficient evidence to support the finding that NBA owned the equipment, (2) the Circuit Court erred by awarding NBA $50,000 in attorney’s fees, and (3) the Circuit Court abused its discretion by failing to impose sanctions against NBA for discovery violations.

We hold (1) the evidence was sufficient to support the jury’s verdict as to ownership, (2) there was statutory authority to award the attorney’s fees, and (3) there was no abuse of discretion in the decision to decline to impose discovery sanctions. The judgment is affirmed.

NBA made two loans to Loewer. On December 19, 1984, Loewer borrowed $31,741.14 from NBA at 13.5% interest. The same day Loewer borrowed $56,054.58 also at 13.5% interest. The loans were evidenced by two promissory notes from Loewer which were made payable to NBA on demand or on March 19, 1985. Loewer received four extensions but failed to make any payments on the principal. On March 10,1989, NBA filed suit in Pulaski County Circuit Court to collect the principal plus interest.

Loewer admitted failing to make payments under the terms of the notes but alleged he was the owner of the equipment which had been intentionally converted by NBA. Loewer claimed entitlement to set off his debt to NBA in the amount of damages suffered as a result of the conversion. NBA answered, asserting a prior ownership interest in the equipment.

To understand the conversion claim, it is necessary to examine the history of transactions involving the equipment. NBA did not want to own equipment used in banking operations because of the effect of ownership on NBA’s balance sheet. If NBA leased, as opposed to owning, federal regulations would allow more loans to be made to customers. The executive vice-president of NBA, Ted Blagg, approached NBA’s largest depositor, Hodges, about purchasing the equipment and leasing it back to NBA. Blagg testified he told Hodges that when the lease expired, NBA would purchase the equipment at an agreed upon price. Hodges agreed to purchase the equipment through Interstate.

The five-year lease dated December 1983 between Interstate and NBA provided for monthly rental payments of $9,394.88. Article II of the lease stated:

This is an agreement of lease only. Nothing herein shall be construed as conveying to Lessee any right, title or interest in or to the Equipment leased hereunder, except the express interest hereunder of Lessee as a lessee to maintain possession and use of the Equipment for the full term of this lease. No options or agreements for purchase of the Equipment by Lessee or extension of the term hereof exist, nor shall any be implied, except as specifically stated in the Schedule.

The agreement provided in Article IV that when the lease expired, NBA would return the equipment to Interstate at NBA’s expense. Article XX stated, “This lease contains the entire agreement between the parties with respect to the Equipment and may not be altered, modified, terminated or discharged except by a writing signed by the party against whom such alternation, modification, termination or discharge is sought.”

Blagg testified that, at the same time the lease was executed, three other documents were prepared, plaintiffs exhibits six, seven, and eight. Exhibit 6 was an undated letter from Hodges to Blagg which stated:

This letter will confirm the price at which you may purchase the residual value of the furniture, fixtures and equipment; which National Bank of Arkansas is leasing from Interstate Leasing, Inc. After due consideration, it is my opinion that the fair market value of the leased property as of December 20, 1988, is $39,845.47.

Exhibit 7 was a bill of sale indicating the grantor, Interstate, sold the equipment to the grantee, NBA, for $39,845.47. The bill of sale was executed on December 20,1985, and signed by Hodges. Exhibit 8 was a promissory note from NBA to Interstate in the amount of $39,845.47. The note was to be paid by NBA on December 20, 1985. Although the documents do not reflect this fact, Blagg testified they were all prepared at approximately the time the lease was executed.

There was testimony that Blagg told Ron Tullos, then chief executive officer of NBA, to take the bill of sale, valuation letter, and promissory note away from NBA and bring them out five years later at the expiration of the lease. Tullos placed the documents in his personal files at his home. Copies of the original documents were accidentally found by a loan officer in a safe deposit box at NBA only a few days before trial.

On March 6, 1984, Interstate and NBA executed an addendum to the lease providing that Interstate would remove the equipment at the termination of the lease at Interstate’s expense. Interstate and NBA executed the addendum despite the fact that NBA had allegedly previously agreed to purchase the equipment at the expiration of the lease. Blagg explained accountants told NBA the addendum was necessary to make the lease an operating, versus a capital lease.

Loewer testified that in July of 1986 Hodges gave him an assignment of the NBA lease and a bill of sale to the equipment. Hodges did so to cover part of a debt he owed to Loewer. Hodges stated he did not remember signing the valuation letter, executing the prior bill of sale to NBA, or seeing the promissory note from NBA to Interstate. Hodges admitted there were discussions between himself and NBA concerning a buy out at the expiration of the lease, but that the buy out would be at a fair market value. Both Hodges and Loewer testified about the existence of the 1986 assignment and bill of sale, but we find nothing in the record to indicate these documents were introduced at trial, and they have not been abstracted for purposes of appeal.

Another party to this action was Savers Federal Savings & Loan Association (Savers). Savers loaned the purchase money which enabled Interstate to buy the equipment for NBA. Savers, therefore, had a superior right to the equipment by virtue of its purchase money lender status. NBA recognized Saver’s claim to the equipment and filed a third party complaint against Savers. Savers, through its conservator FDIC, removed the entire case to United States District Court for the Eastern District of Arkansas. On June 7, 1990, the District Court granted a partial summary judgment for Savers, declaring they had a first lien on the equipment. The pending claims and counterclaims were then remanded to the Circuit Court.

As Savers threatened to foreclose, NBA purchased its judgment for $67,500. After notifying Interstate and Loewer, NBA sold the equipment to Diversified Financial Investments for $72,000.

NBA’s first amended complaint and third party complaint requested (1) a monetary judgment against Loewer on the two promissory notes, (2) a judgment declaring its ownership of the equipment under the agreement, and alternatively, (3) an order setting aside the bill of sale and assignment to Loewer as a fraudulent conveyance in the event Loewer was found to have any interest in the property.

After the evidence was presented, the Trial Court granted NBA’s motion for directed verdict on Loewer’s liability on the promissory notes. Loewer’s counterclaim was submitted to the jury by this interrogatory: “Do you find from a preponderance of the evidence that National Bank of Arkansas and Interstate Leasing Inc. entered into an agreement whereby National Bank of Arkansas purchased the furniture, fixtures and equipment?” The jury responded “yes.” The Court awarded judgment against Loewer in the amount of $130,851.21, plus $50,000 in attorney’s fees, and $4,493.68 in costs. The Court then declared NBA entered into a lawful contract to purchase the equipment on December 20, 1983, and was the owner of the property free and clear of any claims by Interstate or Loewer. Loewer’s conversion claim against NBA was dismissed with prejudice.

1. Substantial evidence

Loewer argues there was no substantial evidence supporting the jury finding that NBA purchased and owned the equipment as of December 1983. To support his argument, Loewer relies on the provision of the lease stating NBA had no option to purchase and the provision stating the lease constituted the entire agreement between the parties. He also contends the addendum to the lease executed in March 1984 conclusively established NBA did not own the property as of December 1983.

We will affirm a jury verdict if supported by substantial evidence. Handy Dan Improvement Center, Inc. v. Peters, 286 Ark. 102, 689 S.W.2d 551 (1985). Substantial evidence is defined as that which is of sufficient force and character that it will compel a conclusion one way or another, forcing the mind to pass beyond suspicion or conjecture. Bank of Malvern v. Dunklin, 307 Ark. 127, 817 S.W.2d 873 (1991). In testing the sufficiency of the evidence on review, we need only consider that part which is most favorable to the appellee, here NBA. Love v. H.F. Construction Co., 261 Ark. 831, 552 S.W.2d 15 (1977).

The evidence supports the conclusion that Interstate and NBA entered into a purchase agreement in December 1983. It is true that NBA and Interstate executed a lease stating it was the entire agreement between the parties and no options to purchase existed. During the same approximate time period, however, Hodges sent Blagg a valuation letter confirming the price at which the equipment would be purchased by NBA at the expiration of the lease. A bill of sale showed Interstate transferred to NBA all its interest in the equipment, and the promissory note from NBA to Interstate evidenced NBA’s financial obligation for the purchase.

A case particularly instructive on the issue presented is Ark. Aviation Sales v. Carter Const., 250 Ark. 1007, 469 S.W.2d 118 (1971). There the lessor of an airplane, Arkansas Aviation, and the lessee, Carter Construction, entered a five-year lease which contained an option to purchase. Two weeks after the original lease was executed the parties mutually agreed to delete the purchase option for tax purposes. When the lease expired, Arkansas Aviation claimed it retained ownership of the aircraft and Carter Construction claimed it acquired ownership by virtue of the option to purchase language found in the original lease. The Chancellor found for Carter Construction and allowed parol testimony to show the parties intended for the lease to remain a lease-purchase agreement, and the option to purchase language was deleted only for tax purposes.

We affirmed, stating “parties to a written contract may, subsequent to its execution, modify it and substitute a valid oral agreement therefor.” Ferguson v. C.H. Triplett Co., 199 Ark. 546, 134 S.W.2d 538 (1939). The option continued:

In these circumstances, we are of the view that the deletion of the lease purchase paragraph from the written contract, for tax purposes, was a proper subject for a “side agreement;” that this deletion would not affect the original agreement between the parties and is consistent with their contract; and that it is an oral or collateral agreement which “might naturally be made as a separate agreement by parties situated as were the parties to the written contract.” Therefore, the trial court did not err in admitting parol testimony by the original parties to establish their “side agreement” made subsequent to the parties’ written contract, and to show the scope and effect of this oral agreement.

We recognize that in the present case, the lease failed to include an option to purchase the equipment. There was evidence presented that the lease was not structured as a lease-purchase agreement for tax and regulatory purposes. Subsequent to the execution of the lease, testimony existed that Interstate and NBA entered into a “side agreement,” whereby an option to purchase the equipment was extended to NBA. This is shown by the valuation letter sent from Hodges to Blagg. The jury was presented with evidence in the form of the bill of sale and the promissory note that NBA exercised its option at the beginning of the lease. The jury thus had before it substantial evidence that the lease agreement was intended to operate as a lease-purchase agreement, and that NBA exercised its option and became the owner.

2. Attorney’s fee

Loewer raises several objections to the $50,000 in attorney’s fees. He first argues the amount of fees awarded should be a question for the jury to resolve, not the Trial Court. It is undisputed that the award was determined by the Court based on affidavits of NBA’s counsel. We find no indication in the record that Loewer requested a hearing on the amount of fees assessed, and thus he has waived this issue on appeal. Arkansas Code Ann. § 16-22-308 (Supp. 1991) provides that in actions to recover on promissory notes, a reasonable attorney fee may be assessed by the court and collected as costs. Loewer also contends he was not given any notice or opportunity to be heard on the amount of fees assessed. As stated previously, we find nothing in the record which indicates Loewer ever requested a hearing on this issue.

Loewer also argues recoveries of attorney’s fees on promissory notes are limited to 10 % of the principal and interest, relying on Ark. Code Ann. § 4-56-101 (Repl. 1991). This section simply recognizes that a provision in a promissory note for the payment of a reasonable attorney’s fee, not to exceed 10% of the amount of principal plus interest, may be enforceable as a contract of indemnity. We cannot interpret the Statute to limit the amount of attorney’s fees which can be awarded in an action to recover on a promissory note. Arkansas Code Ann. § 16-22-308 (Supp. 1991) clearly authorizes attorney’s fees to be awarded in an action such as this one.

The last objection regarding the award of attorney’s fees is that the Trial Court lacked subject matter jurisdiction. To support this argument, Loewer relies on Ark. Code Ann. § 16-60-111 (1987) and argues venue was improper in Pulaski County Circuit Court because he resided in St. Francis County.

It is important to note that venue and jurisdiction are distinct concepts. Glad-o-Lac Co. v. Creekmore, Judge, 230 Ark. 919, 327 S.W.2d 558 (1959). While jurisdiction may not be waived or created by consent of the parties, venue may be waived when a party enters an appearance. Hargis v. Hargis, 292 Ark. 487, 731 S.W.2d 198 (1987).

Although Loewer objected to venue in Pulaski County, in his answer, he asserted a permissive counterclaim under Ark. R. Civ. P. 13(b) (1992) and waived his venue objection. In Arkansas Game & Fish Comm’n v. Lindsey, 292 Ark. 314, 730 S.W.2d 474 (1987), we stated, “By interposing a permissive counterclaim, a party voluntarily asks the court for affirmative relief and thus should not be allowed objections based on personal inconvenience.”

3. Discovery sanctions

Loewer’s last point is that the Trial Court erred by refusing to impose sanctions against NBA based on the failure to produce the valuation letter, bill of sale, and promissory note until September 16, 1991, only eight days before trial.

On May 20,1991, the Trial Court granted Loewer’s motion to compel NBA to produce all documentation regarding the equipment leased from Interstate in December 1983. NBA informed the Court that all such documentation had been produced. Shortly before trial, plaintiffs exhibits six, seven, and eight were found in a safe deposit box at NBA. A loan services officer at NBA, Brenda Burks, testified she was checking the safe deposit box for collateral on an unrelated loan and found the documents. She further stated the documents were not on the inventory list for the safe deposit box.

We will not reverse a Trial Court’s decision on imposing sanctions for discovery violations unless there has been an abuse of discretion. Davasher v. State, 308 Ark. 154, 823 S.W.2d 863 (1992). There was testimony before the Trial Court that NBA had repeatedly searched for the documents without success. Tullos stated he made diligent efforts to find the documents but did not find them. There was also testimony that the documents were located accidentally in a place where they would not normally be found. In light of the evidence that NBA officials searched for the documents prior to trial and could not find them, we cannot say the Trial Court’s refusal to impose sanctions was an abuse of discretion.

Affirmed.


author: David Newbern, Justice. Robert L. Brown, Justice, Tom Glaze, Justice,

text:
    STATE of Arkansas v. Michael MILLS
    CR 92-625
    844 S.W.2d 324
    Supreme Court of Arkansas
    Opinion delivered December 21, 1992

      Winston Bryant, Att’y Gen., by: Sandy Moll, Asst. Att’y Gen., for appellant.

      Jeff Rosenzweig, for appellee.
   David Newbern, Justice.

The State attempts to bring an interlocutory appeal from an evidentiary ruling. During the trial of the appellee, Michael Mills, for rape and carnal abuse Mills sought to introduce evidence that the alleged victim had falsely accused two other men of sex offenses against her. The State objected on the basis of the rape-shield law, Ark. Code Ann. § lb-42-101 (1987), which precludes admitting evidence of “prior sexual conduct” on the part of an alleged rape victim. The Trial Court overruled the objection. The issue is whether this Court has jurisdiction to hear the appeal. We lack jurisdiction, and thus the appeal must be dismissed.

At an omnibus hearing Mills offered evidence of the alleged victim’s allegations against others. The alleged victim admitted making the earlier allegations and said they were true. Both of the other men accused earlier testified at the hearing and denied the incidents. The alleged victim stated she informed the police of these earlier allegations when she accused Mills, but no criminal charges were filed against the other two men.

After the hearing the Trial Court ruled that the evidence presented was not of “prior sexual conduct” as the term is used in the rape-shield law and thus it was admissible.

Jurisdiction

Subsection (a) of § 16-42-101 defines “sexual conduct” as “deviate sexual activity, sexual contact, or sexual intercourse, as those terms are defined by § 5-14-101.” Subsection (b) provides that in sex offense eases, “opinion evidence, reputation evidence, or evidence of specific instances of the victim’s prior sexual conduct ... is not admissible by the defendant ... to attack the credibility of the victim, to prove consent or any other defense or for any other purpose.” Subsection (c) permits a trial court to hold a hearing to determine, notwithstanding the provision of subsection (b), whether evidence of the victim’s prior sexual conduct is so relevant that it should be admitted. Subsection (c)(3)(B) provides that if the prosecutor “is satisfied that, the order [presumably the order of the trial court admitting the evidence] substantially prejudices the prosecution of the case, an interlocutory appeal on behalf of the State may be taken in accordance with Arkansas Rules of Criminal Procedure 36.10(a) and (c).”

The Statute provides for an appeal by the State only where a trial court rules that the evidence proffered is of “prior sexual conduct” of the victim and then decides that the evidence should be admitted regardless of the rape-shield prohibition as it is both relevant to a fact issue and is more probative than prejudicial. If the ruling of the trial court is that the evidence is not of “prior sexual conduct,” as in this case, the Statute does not apply. That was our holding in West v. State, 290 Ark. 329, 719 S.W.2d 684 (1987). The State asks that we overrule that decision, but we have been given no convincing reason to do so. It was a correct interpretation of the Statute, giving literal and obvious meaning to the words used by the General Assembly.

Trial courts have broad discretion in deciding evidentiary issues, and their decisions are not reversed absent abuse of that discretion. Terry v. State, 309 Ark. 64, 826 S.W.2d 817 (1992); State v. Massery, 302 Ark. 447, 790 S.W.2d 175 (1990). There is no basis for pretrial review of that exercise of discretion, and this is not a ruling which is subject to interlocutory appeal pursuant to Ark. R. Crim. P. 36.10(a) and (c).

When the question is whether evidence should be allowed, of prior false allegations of sex offenses by an alleged victim, a trial court finds itself in the position of having to decide a purely factual issue. If the previous allegations by the alleged victim are true, then the evidence is, in a sense, evidence of “prior sexual conduct,” although it is possibly not the harmful sort of evidence at which the rape-shield law is directed. If the previous allegations are false, the evidence of them is not of “prior sexual conduct” but is evidence of prior misconduct of the alleged victim which has a direct bearing upon the alleged victim’s credibility, particularly in the circumstances before the court. The Trial Court in this case voiced, several times, objection to having to conduct a “mini-trial,” but it is obvious that it must be done in these circumstances.

The State rejects Mills’s argument that there is no provision for an appeal where a court rules that the proffered evidence is not of “prior sexual conduct” by arguing that all rulings of a trial court made pursuant to the Statute should be subject to appellate review. It is argued that if a trial court erroneously finds that the evidence does not involve “prior sexual conduct” the ruling can not be corrected by appeal in the event of an acquittal. That is of course so, but it is true of the myriad other discretionary rulings a trial court must make.

While, as a matter of policy it may be that all rulings of a trial court interpreting the rape-shield law should be subject to interlocutory review, it is clearly a policy not yet expressed or implemented in the Statute. If the ruling a trial court must make in this sort of case is special, like that prescribed in Subsection (c) and to be given special treatment, the General Assembly has not said so.

In the absence of a statutory or constitutional provision or a provision in a rule of this Court, appellate jurisdiction is lacking. Jenkins v. State, 301 Ark. 20, 781 S.W.2d 461 (1989) (jurisdiction lacking because no provision found in criminal procedure rule); City of Little Rock v. Tibbett, 301 Ark. 376, 784 S.W.2d 163 (1990) (jurisdiction lacking because no provision in constitution or rule of criminal procedure). In Ellis v. State, 302 Ark. 597, 791 S.W.2d 370 (1990), a criminal defendant sought dismissal of charges on the basis that the evidence the State proposed to introduce against him was inadmissible. The State argued, and we agreed, there was no statutory basis for jurisdiction to hear an appeal. We said:

The state correctly points out that appeals are granted as a matter of statute. There is no right of appeal granted by the United States Constitution. Abney v. United States, 431 U.S. 651 (1977). Appealability is controlled by Ark. R. App. P. 2(a) which requires a final judgment or decree or one which, in effect, determines the action and prevents a judgment from which an appeal might be taken or discontinues the action.

Burrow v. State, 301 Ark. 222, 783 S.W.2d 52 (1990), was a rape case in which the defendant wished to appeal from the Trial Court’s decision, made pursuant to Subsection (c) of § 16-42-101, that he could not introduce evidence of prior sexual conduct of the victim. He argued he was being deprived of equal protection of the law because of the provision that the State could appeal but lack of a provision for appeal by the defendant. We held that the law was not unconstitutional, pointing out as a basis of the discrimination that the State could not appeal from an acquittal but that the defendant could appeal from a conviction on the basis of error in refusing to admit the evidence. There again, the appeal was dismissed because of lack of a provision for it in the Statute.

Our rape-shield law is a product of the General Assembly, and until it sees fit to provide for interlocutory appeal by the State of a trial court’s decision with respect to admitting evidence of prior false allegations made by an alleged victim, or until some other jurisdictional basis by rule or constitutional provision appears, we lack jurisdiction to hear such an appeal.

Appeal dismissed.

Brown, J., concurs.

Hays, Glaze, and Corbin, JJ., dissent.

Robert L. Brown, Justice,

concurring. I join the majority opinion but write to associate myself with one point made in Justice Glaze’s dissenting opinion. Though the court agrees that West v. State, 290 Ark. 329, 719 S.W.2d 684 (1986) is still good law, the unfortunate statement in the opinion relating to sexual fantasies inducing some women to make false accusations about sexual attacks should be excised. The statement is archaic, and any suggestion that this court subscribes to that psychiatric point of view should be disparaged.

Tom Glaze, Justice,

dissenting. This case involves Arkansas’s rape-shield statute — a statute designed to exclude a rape victim’s irrelevant sexual history from being paraded before a jury. The four-member court’s decision today emasculates the purpose and intent of that statute. In short, when a trial judge erroneously mislabels a victim’s prior sexual conduct as merely admissible, impeachable evidence bearing on her earlier sexual allegations against others, the majority court holds the state cannot appeal that erroneous ruling to have it corrected. The majority court claims the General Assembly, in drafting and enacting this rape-shield statute, failed to provide for such an interlocutory appeal. I say this court badly misinterprets the statute, its intent, and its procedural appellate safeguards. Because of the significance of this case and its effect on future rape prosecutions, I will go into some detail why I disagree with the the majority opinion.

Michael Lloyd Mills, a Pentecostal minister, was charged with rape and carnal abuse of the prosecutrix, who was twelve to fifteen years old at the time. During this period alleged by the state, the prosecutrix attended appellee’s church. Pursuant to the rape-shield statute, Ark. Code Ann. § 16-42-101(1987), the state brings this interlocutory appeal from the trial court’s pretrial hearing and ruling that the appellee could introduce evidence of the prosecutrix’s prior sexual allegations against two other men and the men’s denial of them. At the hearing, the prosecutrix admitted making the prior sexual allegations and reasserted the veracity of those allegations. The prosecutrix stated that she had told the police about these sexual allegations, but no criminal charges were ever filed against the two men.

The appellee first contends the state cannot appeal the trial court’s evidentiary ruling because, under § 16-42-101(b) of the rape-shield statute, the judge determined the men’s testimony did not involve the prosecutrix’s prior sexual conduct with the two men, but instead involved only false sexual allegations against them which they have denied. Appellee argues the state could only bring an appeal if the trial judge had ruled appellee’s proffered evidence could be characterized as prior sexual conduct rather than false sexual accusations, but, nevertheless, the judge still allowed such evidence to be introduced under provision § lb-42-101(c) of the rape-shield statute. That provision essentially provides that notwithstanding a trial judge’s finding that a defendant’s proffered evidence bears on the victim’s prior sexual conduct with the defendant or another person and is generally inadmissible, such evidence still may be introduced if the court determines (1) the proof is relevant to a fact in issue and (2) the probative value of the proof outweighs its inflammatory or prejudicial nature.

Appellee’s and this four-member court’s interpretation of provision (c) is too restrictive and fails to recognize the overall intent of the rape-shield statute to permit the state, after conferring with the victim, to obtain an appellate decision on whether the trial court correctly ruled in admitting a defendant’s proffered evidence as (1) not being prior sexual conduct or (2) being prior sexual conduct of the victim which the trial court ruled admissible. In short, under appellee’s and the majority court’s view of § 16-42-101(c), particularly 101(c)(2)(B), if the trial court erroneously decided a defendant’s proffered evidence did not concern the victim’s prior sexual conduct, the state can never test the court’s ruling by either an interlocutory appeal or for that matter, by direct appeal after an acquittal had been entered.

Provision 101(c)(2)(B) provides that, if the prosecuting attorney is satisfied that the trial court’s order or ruling substantially prejudices the prosecution of the state’s case, an interlocutory appeal may be taken by the state. Both the state and appellee agree the state can file an interlocutory appeal when the trial court finds the defendant’s evidence includes the victim’s prior sexual conduct, but the court still allows such evidence as relevant and probative under 101(c). But the state’s case is also clearly prejudiced if a trial court, as in the instant case, erroneously allows the defendant’s proffered testimony to impeach prior sexual allegations of the victim when that testimony actually bears on the victim’s prior sexual conduct and is not relevant or otherwise admissible. In other words, if a trial court routinely but wrongly characterized evidence as not concerning the victim’s prior sexual conduct, the state could never overturn the trial court’s erroneous and prejudicial ruling. Such a construction works to render the interlocutory appeal provision in the rape-shield statute meaningless. In construing and harmonizing provisions (b) and (c) of the rape-shield statute, this court should conclude that a trial court’s ruling under either of these provisions is subject to interlocutory appeal to test the correctness of such rulings.

The present case is a prime example of the harm that can arise if a trial court’s erroneous ruling under provision (b) is allowed to stand without appellate review. In simple terms, the trial court misconstrued this court’s decision in West v. State, 290 Ark. 329, 719 S.W.2d 684 (1987), and ruled two men could testify when such testimony in actuality concerns the victim’s prior sexual conduct and would generally be excluded under the rape-shield law.

Because the trial judge wrongly determined that the men’s testimony proffered by appellee did not concern the prosecutrix’s prior sexual conduct, this court should hold the state’s case was clearly prejudiced. The state thus would be entitled to challenge that erroneous ruling under § 16-42-101. In fact, such an appeal is the only way the state can correct the court’s erroneous, prejudicial ruling. In my view, the General Assembly clearly intended to provide the state and rape victims with the right to appeal such rulings under the rape-shield law to assure their prior sexual conduct histories are not improperly allowed in a public trial. Because I would accept jurisdiction of this appeal, I now turn to the merits of this cause.

As already mentioned, the trial court erred in its ruling by misreading our West decision. And while the state argues this court should overrule this court’s decision in West, I would point out that the facts there are significantly distinguishable from the ones now before this court. Unlike the situation here, the defense proffered that the prosecutrix in West would deny having made any prior accusations of sexual conduct involving other men. This court allowed three witnesses to testify that the alleged victim had made such prior accusations, thus permitting West to test the prosecutrix’s credibility and raising possible doubt concerning her present charge against West. This court explained the prosecutrix’s purported conduct was not sexual conduct as defined by law, and therefore was not excludable under the rape-shield law provisions. 290 Ark. at 340-A, 722 S.W.2d at 284 (1987). This court’s holding in West was in accord with two out-of-state decisions it relied on where the prosecutrix in each case had made sexual accusations against other men, but later either said the allegations were lies or denied having made the allegations. See People v. Hurlburt, 166 Cal.App. 334, 333 P.2d 82, 75 A.L.R.2d 200 (1959); People v. Evans, 72 Mich. 367, 40 N.W. 473 (1888). I note that, since this court’s decision in West, other jurisdictions have reached similar conclusions in attempting to balance the protection of the victim and the accused’s right to present a defense. Clinehill v. Com., 368 S.E.2d 263 (Va. 1988). (The Virginia court cites nineteen jurisdictions that hold that evidence of prior false accusations is admissible to impeach the complaining witness’ credibility.)

I still agree that the victim’s conduct in West, namely, making false accusations of sexual abuse, does not fall under the protection of the rape-shield statute. But in the present case, the prosecutrix related that two men had sexually abused her, and reaffirms, even now, that those abuses occurred. Thus, the prosecutrix has not put her credibility into issue and is entitled to the protection provided under the rape-shield statute. While discussed above, I re-emphasize that portion of the rape-shield statute, Ark. Code Ann. § 16-42-101 (b) (1987), that supports the state’s argument and reads as follows:

In any criminal prosecution under §§5-14-101 — 5-14-110, ... opinion evidence, reputation evidence, or evidence of specific instances of the victim’s prior sexual conduct with the defendant dr any other person is not admissible by the defendant, either through direct examination of any defense witness or through cross-examination of the victim or other prosecution witness, to attack the credibility of the victim, to prove consent or any other defense, or for any other purpose. (Emphasis added.)

Under § 16-42-110(a) of the rape-shield statute, sexual conduct is defined as meaning deviate sexual activity, sexual contact, or sexual intercourse, as those terms are defined by § 5-14-101. Again, I briefly add that, while I would hold evidence of the prosecutrix’s prior sexual conduct in these circumstances may be excludable under the rape-shield statute, such evidence might still be admissible under other provisions of the law. See Ark. Code Ann. § 16-42-101 (c).

In conclusion, I wish to touch on two additional points. One, while I underscore this case is factually distinguishable from West, I am aware of obiter dictum in the court’s opinion which reads that, if the prosecutrix admits having made prior statements involving sexual conduct with other persons but asserts them to be true, then the defense should be permitted to prove the statements are false. That situation was not before the court in West, nor was any authority cited in West to support such a proposition. If such logic is accepted as already discussed above, little would be left of the rape-shield statute since it could be easily circumvented by a defendant’s or defendant’s witness’s simple denial to any prior sexual conduct in which a prosecutrix may have been involved. In my view, the dictum in West should be overruled by this court. Second, I note this court’s earlier reference to Wigmore’s treatise on this topic in West. Wigmore, Evidence, § 924(a). While I recognize that Wigmore is an eminent authority on the topic of evidence, I suggest that his statement, based on Freud’s teachings, that some women and young girls have fantasies about being attacked by men is archaic and prejudicial. As with any other untruths, I would recognize that the reasons why some women might make false accusations against men are often complex. In any event, whatever the reason or cause might be, the answer or explanation does not lie in Professor Wigmore’s archaic statement.

For the reasons stated above, I would accept jurisdiction of this appeal and correct the trial court’s evidentiary ruling as discussed above.

Hays and Corbin, JJ., join this dissent.

       One of the men was a teenager when the alleged sexual contact took place, but was twenty-one years old at the time of the pretrial hearing.

       No in camera hearing was held by the trial court to determine the admissibility of these men’s testimony as being otherwise relevant and probative under § 16-42-101 (c).