author: Stan Miller, Special Justice.

text:
    Carolyn Ann RUSSELL v. James Edgar RUSSELL
    81-175
    628 S.W. 2d 315
    Supreme Court of Arkansas
    Opinion delivered February 22, 1982

      Howell if Price, for appellant.

      Lightle, Beebe, Raney ir Bell, by: A. Watson Bell, for appellee.
   Stan Miller, Special Justice.

James Edgar Russell sued Carolyn Ann Russell for divorce on August 29, 1980, alleging as grounds the three year separation of the parties. Since Mr. and Mrs. Russell married in 1963, they acquired both real and personal property, including a residence and stock in Matthews International Corporation, Mr. Russell’s employer. The Russells are the parents of one child who was sixteen years of age at the time of the trial. The Court granted a divorce to Mr. Russell on the basis of the three year separation and ordered a division of the marital property. Mrs. Russell was awarded possession of the residence until the minor child reached his majority or finished high school at which time the Court ordered the residence to be sold and the proceeds divided equally. In making the division, the Court valued the Matthews International Stock and awarded it to Mr. Russell. Mrs. Russell received a monetary award equal to one-half the value of the marital property after adjustments for certain in-kind distributions not at issue here. Pursuant to the decree, Mr. Russell was permitted to satisfy the monetary obligation from his share of the net proceeds of the residence when it sold. Finally, the Court continued a temporary child support award of $200.00 per month and also ordered Mr. Russell to continue paying Mrs. Russell $500.00 per month in alimony until the residence is sold.

Appellant contends each of these findings are reversible error. We affirm the decision of the Chancellor as modified herein.

I.

Appellant first contends that the trial court erred in finding that there was sufficient corroboration of the three year separation of the parties. We disagree. Mr. Russell’s corroborating witness, Harold Peterson, testified that he worked with Mr. Russell and had known him for 23 or 24 years and had known Mrs. Russell for 17 or 18 years. He testified that during the entire time he had known them, they had both lived in White County; that he had visited in Mr. Russell’s present home three or four times since the separation and that he had visited the home owned jointly by the parties shortly after the separation occurred. Mr. Peterson’s uncontradicted testimony was that Mr. and Mrs. Russell had been separated since August 29th of 1977, a period of more than three years. Corroboration is as essential to the granting of a divorce on the grounds of three year separation as it is in any other case. But, where it is plain that the divorce action is not collusive, the corroboration may be comparatively slight. Lewis v. Lewis, 255 Ark. 583, 502 S.W. 2d 505 (1973); Owen v. Owen, 208 Ark. 23, 184 S.W. 2d 808 (1945); Allen v. Allen, 211 Ark. 335, 200 S.W. 2d 324 (1947). Nonetheless, there must be corroboration to some substantial fact or circumstance independent of the Appellee’s testimony which would lead an impartial and reasonable mind to believe that the material testimony is true. Lewis, supra; Welch v. Welch, 254 Ark. 84, 491 S.W. 2d 598 (1973). Appellant insists that the Appellee’s corroborating testimony does not meet the standard outlined in Hair v. Hair, 272 Ark. 80, 613 S.W. 2d 376 (1981). In that case, it was undisputed that the parties had continued to reside in the same household during the purported three year period of separation. The testimony of the parties in that case was in direct conflict as to when sexual relations terminated; and, according to the neighbors, there was no appearance of estrangement. In the instant case, the uncontradicted testimony of Mr. Russell and his corroborating witness is considerably more substantial than the corroborating testimony in Hair, supra, and is sufficient to corroborate the three year separation.

II.

Appellant next contends that the trial court erred in not ordering a distribution of the marital property at the time the divorce decree was entered.

During his marriage to the Appellant, Mr. Russell acquired 535 shares of stock in Matthews International Corporation, his employer. During the three year separation period, he sold 200 of those shares. The trial court awarded Mrs. Russell an amount equal to one-half of the after-tax proceeds of the 200 shares of stock which were sold and one-half the value, as determined by the Court, of the shares which were awarded to Mr. Russell. After adjustments were made for the in-kind distribution of other marital property not at issue here, Mrs. Russell’s monetary award totaled $18,310.93.

The Court provided that this amount would be paid to Mrs. Russell from the proceeds of the sale of the home which would occur when the parties’ sixteen year old son attained his majority or finished high school. The Court retained jurisdiction to make adjustments in the event the house did not sell for enough money to enable the parties to divide their property as contemplated in the decree.

Appellant points out that under the arrangement ordered by the trial court she will not receive her monetary award for some period of time. During that time, the money is beyond her control, so she has no means of investing it to prevent its value from being eroded by inflation or to realize income from it. At the same time, she points out that this arrangement permits Mr. Russell to invest the cash he realized from the sale of the 200 shares and also to realize any appreciation in the value of the stock he was awarded. She also points out the possibility that the proceeds of the sale of the residence might be inadequate to satisfy Mr. Russell’s obligation and that, in that event, she has no assurance the Appellee will have resources sufficient to make up the difference. Even though jurisdiction was retained, the Chancellor could do little to ameliorate this kind of circumstance.

The concern expressed by Appellant is consistent with the language of Ark. Stat. Ann. § 34-1214 (Cum. Supp. 1981) which clearly does not contemplate the delayed division of marital property ordered here. In relevant part, the statute provides that:

(A) At the time a divorce decree is entered:
(1) All marital property shall be distributed one-half (¥2) to each party unless the Court finds such a division to be inequitable. . . . (Emphasis Added)

We do not read this section so narrowly as to require the Chancellor in every case to mechanically divide the marital property in kind upon the granting of the Decree of Divorce. We do conclude, however, that the portion of the decree permtting the Appellee to delay payment of the Appellant’s share of the marital property until the sale of the home following the minor child’s attaining majority or graduation from high school is not consistent with the requirement of Ark. Stat. Ann. § 34-1214 that marital property be distributed at the time the decree is entered. Under these circumstances, the Chancellor should have required Mr. Russell to pay Mrs. Russell for her interest in the marital property within a reasonable time after the decree was entered. A reasonable period of time would, in this instance, be the time reasonably required for Mr. Russell to obtain a loan to satisfy the obligation. If Mr. Russell cannot satisfy the monetary award within a reasonable period of time, and certainly within 45 days from the date of this opinion, the undivided marital property will be divided in-kind and distributed to the parties. Therefore, the decree of the Chancery Court is modified as indicated and judgment entered accordingly. This is consistent with the usual practice of this Court to resolve controversies here without remand to the trial court whenever possible. Ferguson v. Green, 266 Ark. 556, 587 S.W. 2d 18 (1979). However, in the event the monetary award is not satisfied within the time specified the Chancellor is directed to take such further action as may be required consistent with this opinion.

Since the residence was owned by both parties as an estate by the entirety, it is not marital property which must be divided pursuant to Ark. Stat. Ann. § 34-1214. Warren v. Warren, 273 Ark. 528, 623 S.W. 2d 818 (1981). The award of possession of the home to Mrs. Russell as provided in the decree is a reasonable application of a well recognized equitable remedy and is consistent with the Appellant’s request at trial. Schaefer v. Schaefer, 235 Ark. 870, 362 S.W. 2d 444 (1962); Fitzgerald v. Fitzgerald, 227 Ark. 1063, 303 S.W. 2d 576 (1975); see also, Stevens v. Stevens, 271 Ark. 248, 608 S.W. 2d 17 (1980).

III.

Appellant next contends that the trial court erred in valuing the 335 unsold shares of stock in Matthews International Corporation, Mr. Russell’s employer. Mr. Russell purchased the stock in several transactions between 1968 and 1976. In each case he executed a promissory note in favor of the corporation for the purchase price. At the same time the various notes were executed, Mr. Russell executed a stock purchase agreement which granted the corporation an option to repurchase the shares in the event of Mr. Russell’s termination of employment (other than by death or retirement) if that termination occurred before the particular promissory note was satisfied or within a three year period thereafter. The purchase price of the shares pursuant to the option was the lesser of (1) the price paid by the stockholder, or (2) the book value of the stock as determined by the company’s certified public accountants. This re-purchase right was optional with the corporation, so Mr. Russell, during the period of the restriction, could not require Matthews International to re-purchase the shares. According to Mr. Russell’s testimony, the consolidated book value of the shares at the time of the trial was substantially higher than their original purchase price, but the shares could not be sold for their book value until all of the restrictions contained in the stock purchase agreement had been satisfied. Paragraph 12 of that agreement defines precisely when the shares become free of the restrictions:

12. Three (3) years after the date of the final payment of the total amount of the Note, the Company will deliver a certificate to the Employee representing the Stock purchased pursuant to this Agreement without the legend referred to in paragraph 10 hereof (but bearing the legend referred to in the Option Agreement), all collateral which has been deposited with the Company in accordance with paragraph 5 hereof and the Note marked “Satisfied in Full”. At such time this Agreement shall be terminated and of no further force and effect.

We interpret this agreement to mean that the subject shares had a value equal to their book value if they had been delivered to Mr. Russell at the time of the trial and had a value equal to their cost if he had not yet received them.

Two Hundred of the 335 shares had been paid for and the three year period had expired, but no evidence was presented at the trial or in the Appellant’s Motion for a New Trial which contradicts Mr. Russell’s testimony that he had not received the shares at the time of the trial; nor does the Appellant allege any collusion between the Appellee and the corporation in withholding delivery of the shares. The Appellant’s motion merely contained the general allegation that the Appellant “has learned that Matthews International Corporation stock of the type Plaintiff owned was actually worth $161.80 per share.” The motion lacked supporting affidavits required by Rule 59 (c), Ark. R. Civ. P., so any specific facts which would shed light on whether or not Mr. Russell had actually received the shares are missing. We will not reverse the decision of the Chancellor on a disputed fact question unless the decision is clearly against the preponderance of the evidence. Rule 52, Ark. R. Civ. P. Without more, we cannot say that the decision of the Chancellor is clearly against the preponderance of the evidence and conclude that the net value of the shares at the time of the trial was correctly determined by the Chancellor to be $12,494.33.

V.

The Appellant insists that the trial court should not have awarded all of the Matthews International Corporation stock to the Appellee with an offsetting monetary award to the Appellant. Appellant contends that an equal division of the stock in kind or a forced sale of the stock are the only methods available to the Court to divide the stock in this case. We disagree. The language in Act 705 of 1979 [Ark. Stat. Ann. § 34-1214 (A) (3)] clearly contemplates the kind of division made by the Chancellor here:

(3) Every such final order or judgment shall designate the specific property both real and personal, to which each party is entitled;

The intent of Act 705 of 1979 was to insure that the chancellor had the discretion to make an equitable division of all of the marital property with the least possible prejudice to either party. In this instance, Mr. Russell was only able to purchase the Matthews International Corporation stock because he was an employee of the company. The stock was subject to substantial retransfer restrictions and some of the stock was still subject to indebtedness at the time of trial. The testimony indicates that ownership of this stock is important to Mr. Russell’s relationship with his employer, but the same stock would only have a monetary value to Mrs. Russell. The Chancellor’s award of the stock to Mr. Russell with an offsetting monetary award to Appellant is a reasonable exercise of discretion amply supported by the record.

VI.

Appellant claims the Chancellor should have awarded her 80% of the marital property. Such a division would require the application of the factors pertaining to the division of marital property found in Ark. Stat. Ann. § 34-1214 which reads as follows:

“DIVISION OF PROPERTY. (A) at the time a divorce decree is entered:
(1) all marital property shall be distributed one-half QA) to each party unless the court finds such a division to be inequitable, in which event the court shall make some other division that the court deems equitable taking into consideration (1) the length of the marriage; (2) age, health and station in life of the parties; (3) occupation of the parties; (4) amount and sources of income; (5) vocational skills; (6) employability; (7) estate, liabilities and needs of each party and opportunity of each for further acquisition of capital assets and income; (8) contribution of each party in acquisition, preservation or appreciation of marital property, including services as a homemaker. When property is divided pursuant to the foregoing considerations the court must state in writing its basis and reasons for not dividing the marital property equally between the parties.”

Appellant bases her contention that she should receive a larger share of the marital property on her physical condition and present prospects for future employment. There was some evidence of a physical impairment suffered by Mrs. Russell. Her testimony indicated that this impairment was partially a result of an accident which occurred at McCain Mall in 1975. In settling the claim arising out of that injury, she testified in depositions that she was disabled from working as a result of the accident, but records reflect that she had actually worked and received raises during the same period she alleged she was disabled. Further, the Chancellor may have found significance in the fact that Mrs. Russell’s visits to the doctor increased substantially after this action was filed.

Appellant also urges this Court to consider her relative financial position as a basis for awarding her a larger share of the marital property, but the application of this factor and all of the other factors outlined in Ark. Stat. Ann. § 34-1214 (A) (1) contemplates an element of discretion best exercised by the Chancellor since he actually has the opportunity to hear the testimony of the witnesses. As this Court indicated in Dennis v. Dennis, 239 Ark. 384, 389 S.W. 2d 63 (1965), the opportunity to observe the witnesses firsthand puts the Chancellor in a position “immeasurably superior to ours” to resolve conflicting testimony. See also, Marine Mart, Inc. v. Pearce, 252 Ark. 601, 480 S.W. 2d 133 (1972). The application of these factors is a factual determination; therefore, this Court will not reverse the decision of the Chancellor in making a division of marital property unless the property division is clearly against the preponderance of the evidence. Rule 52, Ark. R. Civ. P. We have reviewed the record in this case being particularly mindful of the factors identified in Ark. Stat. Ann. § 34-1214 urged by the Appellant and have concluded that an equal division of the marital property is supported by the preponderance of the evidence.

VII.

Appellant next claims the trial court erred in providing that alimony be terminated when the house is sold. Appellant contends that she is completely unemployable and that the proceeds from the sale of the residence are so speculative that she may not be able to support herself when the alimony terminates.

The Chancellor heard the Appellant’s testimony at the trial, including testimony relating to Mrs. Russell’s illness, her employment record, and her monthly financial needs. In his Memorandum Opinion, the Chancellor indicated the reasons for terminating alimony when the house is sold:

The court is not allowing alimony after the house is sold for the reason that she will be receiving substantial property settlement at that time, she settled her claim for disability, this period of time together with the long period of separation should be ample time for her to rehabilitate herself in order to secure employment.

The trial court has broad powers to determine the award of alimony, particularly when the divorce is granted on the grounds of three year separation, and we cannot say that the termination of alimony when the house is sold is clearly against the preponderance of evidence. Narisi v. Narisi, 233 Ark. 525, 345 S.W. 2d 620 (1961). As we have indicated earlier, we do not reverse the decision of the Chancellor on a disputed fact question unless the decision is clearly against the preponderance of the evidence. Rule 52, Ark. R. Civ. P. In the event Mrs. Russell’s physical and financial circumstances at the time of the sale of the home are different from what the Chancellor anticipated in his Memorandum Opinion, our law is sufficiently flexible to permit the Chancellor to modify the alimony award at that time. See Ark. Stat. Ann. § 34-1211 (Cum. Supp. 1981); Ford v. Ford, 272 Ark. 506, 616 S.W. 2d 3 (1981); Boyles v. Boyles, 268 Ark. 120, 594 S.W. 2d 17 (1980); Pledger v. Pledger, 199 Ark. 604, 135 S.W. 2d 851 (1940).

VIII.

Finally, the Appellant contends that the $500.00 per month alimony award and the $200.00 per month child support award are inadequate.

Appellant insists that Mr. Russell’s admitted marital misconduct should increase the amount of the alimony award. However, we think our holding in Drummond v. Drummond, 267 Ark. 449, 590 S.W. 2d 658 (1979) largely settles this issue. Drummond arose out of an alimony termination hearing, but the reasoning of that case is equally applicable here:

... Alimony is not awarded as a reward to the receiving spouse or as punishment of the spouse against whom it is charged. It is an effort, insofar as is reasonably possible, to rectify the frequent economic imbalance in the earning power and standard of living of the divorced husband and wife. Its continuation is not dependent on the good conduct of either spouse. While each case must and should be governed by its particular facts, it can be stated as a general principle that alimony should be terminated or modified by circumstances which relate to its need by the recipient or the ability to pay by the spouse against whom it is assessed.

Unless the alleged misconduct meaningfully relates to the need for support by the recipient or the ability to pay by the spouse against whom it is charged, the misconduct is not a permissible consideration in the determination of the alimony award. If we adopted Appellant’s view that marital misconduct is a permissible consideration, we would, for dubious benefit, measurably expand the opportunity for acrimonious litigation. Consistent with our holding in Drummond, we conclude that Appellee’s marital conduct prior to the divorce should not serve as a basis for increasing the alimony award. See Byrd v. Byrd, 252 Ark. 202, 478 S.W. 2d 45 (1972).

The amount of child support and alimony awarded must depend upon the particular facts of each case. Dean v. Dean, 222 Ark. 219, 258 S.W. 2d 54 (1953). Mr. and Mrs. Russell had been married for 18 years and had lived together for 14 years. Mrs. Russell testified that she had been under the continual care of physicians for the last year and that she was unable to work. However, she also has received a sizable award of marital property and will receive a substantial equity in the family residence when the home sells.

Mr. Russell’s gross pay at the time of the trial was $2,903.00 per month. The record indicates that $881.24 is taken out of that amount each month for state and federal income taxes and social security withholding, leaving a net take-home pay of $2,021.76. Together, the child support and alimony awards total $700.00 per month, a substantial amount in relation to Mr. Russell’s take-home pay. See Knopf v. Knopf, 264 Ark. 946, 576 S.W. 2d 193 (1979); see also Stevens v. Stevens, 271 Ark. 248, 608 S.W. 2d 17 (1980). In making the award, the Chancellor evidently believed that Mrs. Russell would be able to rehabilitate herself and find employment. If Mrs. Russell was not required to make the $275 monthly house payment from this amount, this award would be adequate. In this case, however, Mr. Russell will recover one-half of that portion of the house payment which reduces the principal balance of the mortgage when the house sells. In the meantime, he may deduct the alimony payment while Mrs. Russell will be required to report the alimony award, including that portion used to make the house payment, as taxable income. See, INT. REV. CODE of 1954, § 71 (a) and (d). Under these circumstances, we hold that the Appellant should receive an additional award of $225 per month in alimony. That allowance is always subject to modification upon the application of either party. Knopf, supra; Pledger, supra.

The Appellant’s attorneys are awarded a fee of $750.00 for services rendered in connection with this appeal, to be paid by Appellee. Costs of this appeal are assessed against the Appellee.

Affirmed as modified.

Hickman, J., not particpating.

       In addition to the stock purchase agreement discussed here, these shares were also subject to a separate re-purchase agreement granted the company on July 28, 1977. The second agreement grants the corporation certain options to re-purchase the shares upon the employee’s retirement or attaining of age 65. It is not relevant to the determination of the issues in this case.

      Appellee admitted in interrogatories filed with the Court that he was living with his former wife, Mrs. Joan Russell.


source: Caselaw Access Project

author: Richard B. Adkisson, Chief Justice.

license: Public Domain

text:
    John Paul COOPER v. STATE of Arkansas
    CR 81-113
    628 S.W. 2d 324
    Supreme Court of Arkansas
    Opinion delivered March 1, 1982

      Keith, Clegg ir Eckert, for appellant.

      Steve Clark, Atty. Gen., by: Matthew Wood Fleming, Asst. Atty. Gen., for appellee.
   Richard B. Adkisson, Chief Justice.

After a trial by jury, appellant, John Paul Cooper, was convicted of aggravated robbery and sentenced as a habitual offender to 40 years in the Arkansas Department of Correction. On appeal appellant alleges the evidence is insufficient to support his conviction.

Testimony at trial revealed that Mr. Bill Cheatham, part owner of the Wilson-Bearden Drug Store in Magnolia, Arkansas, was robbed on January 25, 1980. Cheatham testified that he opened his store at 7:30 a.m. and that shortly thereafter two black males entered the store and began looking at sunglasses. Cheatham offered to help them, but they declined. He then filled prescriptions for two other customers in the back part of the store. Approximately 10 to 15 minutes later he heard someone up front. As he started in that direction, a black male stuck a gun in his chest and told him not to move. Another black male, who had a stocking over his face, put a gun to his head and said, “We want Delaudid and Preludin.”

Cheatham recognized the unmasked man as one of the two men who had been looking at sunglasses. He later picked this man out of a photo lineup and identified him as Earl Mosley.

Cheatham stated that the man with the stocking over his face had the same build and was dressed in the same flowered tannish sport shirt as the person who was with Mosley at the sunglasses rack. Cheatham picked this man out of a subsequent photo lineup and identified him as appellant.

After Cheatham gave the drugs to the men, they took his billfold and tied him up with tape. The men were unable to open the cash register; they then left the store. Cheatham broke the tape and called the police. The police took the tape from the scene of the crime for testing. At trial, an expert latent fingerprint examiner testified that appellant’s fingerprint was on the tape.

The test for determining the sufficiency of the evidence is whether there is substantial evidence to support the verdict. Substantial evidence is that which is of sufficient force and character that it will, with reasonable and material certainty and precision, compel a conclusion one way or the other. It must force or induce the mind to pass beyond a suspicion or conjecture. Jones v. State, 269 Ark. 119, 598 S.W. 2d 748 (1980). The fact that evidence is circumstantial does not render it insubstantial — the law makes no distinction between direct evidence of a fact and evidence of circumstances from which a fact may be inferred. Williams v. State, 258 Ark. 207, 523 S.W. 2d 377 (1975).

In this case there was substantial circumstantial evidence from which the jury could conclude that the person at the sunglasses rack, who was identified as appellant by Mr. Cheatham, was the same person who participated in the robbery a few minutes later. Both were black males, had the same physique, and were wearing the same clothes. Apparently, the only difference was that appellant was wearing a stocking over his head at the later meeting.

The State’s fingerprint expert testified that a fingerprint located on the smooth side in the middle of one of the strips of tape belonged to appellant. Appellant contends it was impossible for appellant’s fingerprint to have been placed on the tape during the robbery because in wrapping the tape around Mr. Cheatham the sticky side of the tape would have adhered to the smooth side, thereby transferring the print to the sticky side. Appellant contends that the better explanation for the presence of the print is that it was placed there when appellant tore off a strip of tape for a friend to use in repairing wires of a tape player. In any event, it was for the jury to decide from the evidence presented how appellant’s print got on the piece of tape. There was substantial evidence from which the jury could find that the print was placed on the tape during the robbery.

Affirmed.


author: Frank Holt, Justice.

text:
    Harold L. HYATT et ux v. CITY OF BENTONVILLE, Arkansas, an Arkansas Municipal Corporation of the First Class
    81-208
    628 S.W. 2d 326
    Supreme Court of Arkansas
    Opinion delivered March 1, 1982

      J. L. Hendren, for appellants.

      Kevin J. Pawlik, for appellee.
   Frank Holt, Justice.

The appellee city initiated this suit in circuit court seeking to exercise its power of eminent domain to procure an easement across appellants’ property. Appellee alleged the easement was necessary to complete the construction of a public improvement, i.e. an underground primary electrical service line and placing a pad mount thereon. Appellants answered and denied that the appellee had any statutory authority to exercise the power of eminent domain for the purpose stated. Appellant landowners then filed a motion requesting that the circuit court transfer the case to chancery court for a resolution of the issue of the city’s “right to take” and, if the chancellor found the “right to take” existed, appellants requested that the case be retransferred to circuit court for a determination of damages by a jury.

The chancery court, on the pleadings and without any proof whatsoever as to need, held that the appellee city had the authority to enter and take private property for the lawful purpose of furnishing light and power to consumers in connection with the operation of the municipal corporation. Ark. Stat. Ann. § 35-902 (Repl. 1962) and Ark. Stat. Ann. § 19-2318 (Repl. 1980). Hence this appeal which presents the sole issue as to whether the appellee city has the power to condemn land within its city limits for the purpose of constructing an underground primary electrical service line and placing thereon a pad mount transformer.

We hold the order of the chancellor is not an appealable order and dismiss the appeal. Even though the parties do not raise the issue of the existence of a final order, it is a jurisdictional question which the appellate court has the right and duty to raise in order to avoid piecemeal litigation. Ark. S & L v. Corning S & L, 252 Ark. 264, 478 S.W. 2d 431 (1972); McConnell v. Sadle, 248 Ark. 1182, 455 S.W. 2d 880 (1970); Ark. State Highway Comm. v. Kesner, 239 Ark. 270, 388 S.W. 2d 905 (1965); and Piercy v. Baldwin, 205 Ark. 413, 168 S.W. 2d 1110 (1943). It is well established that before a j udgment is final and appealable, it must dismiss the parties from the court, discharge them from the action or conclude their rights to the subject matter which is in controversy. McConnell v. Sadle, supra; Ark. State Highway Comm. v. Kesner, supra; Piercy v. Baldwin, supra; and Roy v. Int’l Multifoods Corp., 268 Ark. 958, 597 S.W. 2d 129 (Ark. App. 1980). ARAP, Rule 2, Ark. Stat. Ann. Vol. 3A (Repl. 1979). Here, there are two facets to this litigation which are to be resolved before there is a final judgment: 1) the right of the city to exercise eminent domain, and 2) the right of the landowners to just compensation. Only this preliminary right and need of the city was attempted to be resolved by a temporary transfer from circuit to chancery court. As requested by the appellant landowners, the matter was retransferred to the circuit court for a future determination of damages by a jury. This constitutes piecemeal litigation.

Appeal dismissed.

Hickman, J., concurs.


text:
    John P. BALLENTINE v. Harrell BALLENTINE and BALLENTINE PRODUCE, INC.
    81-212
    628 S.W. 2d 327
    Supreme Court of Arkansas
    Opinion delivered March 1, 1982

      William M. Stocks, for appellant.

      Carl K. Creekmore, for appellees.
   Frank Holt, Justice.

Appellant brought this action to recover damages based upon an asserted fraudulent representation by appellees in violation of state and federal securities acts. The Securities and Exchange Act of 1934 applies to “the offer or sale of any security.” 17 C.F.R. § 240.10b-5 (1981). 15 U.S.C. § 77 q. The Arkansas Securities Act applies to “the offer, sale or purchase of any security.” Ark. Stat. Ann. §§ 67-1235 and 67-1256 (Repl. 1980). The appellant contends that the chancellor erred in finding that these state and federal securities laws were inapplicable to the facts of this case and that as a result of that erroneous finding the court further erred in holding that the appellant failed to sustain his burden of proof in establishing fraud or damages.

The appellant filed suit against the appellees, his older brother, Harrell Ballentine, and Ballentine Produce, Inc., which is principally owned by Harrell, in September, 1979, alleging Harrell made fraudulent misrepresentations prior to 1970 and continued them through 1974 concerning an oral employment agreement whereby appellant was to receive 49% of the stock in a proposed “spin-off” corporation of Ballentine Produce for appellant’s past and future services. The spin-off corporation would be established to handle the transportation aspects of Ballentine Produce. Based upon the offer to sell or issue stock in exchange for services rendered or to be rendered, appellant alleges he suffered substantial damages. Further, the corporation also was liable for the alleged fraudulent and misleading offer to transfer the stock, all of which was in violation of federal and state securities laws. He sought damages in excess of $200,000 and in the alternative specific performance of the oral agreement to issue stock to him in exchange for his past and future services.

The appellant had worked in the trucking operation of Ballentine Produce since 1954. In 1970 he was supervisor of transportation operations and received a salary of $12,000 per year. In May or June of 1970, he left his employment following a dispute with Harrell. A few days later, at the request of another brother, Ralph, a meeting was arranged at a local bank where Ralph was an official to discuss the differences between the two brothers. Attending the meeting were the three brothers, an attorney friend of the family and a long time accountant for the appellee produce company. The appellant testified that he had a salary offer of $30,000 annually plus expenses from another organization. At the meeting Harrell agreed to meet his terms for an increase in salary to $15,000 annually and there would be a spin-off of the corporation with John receiving 49% of the new corporation. It would be formed within a reasonable time. This understanding had previously been discussed and agreed upon. He had not mentioned the subject to appellee Harrell nor made any demands on him since he left his employment in 1974 until he filed this lawsuit in 1979.

The attorney testified that he understood the subject of the meeting was John’s reemployment, an increase in salary, and ratifying a previous agreement between them about appellant’s participation in the division of some company stock. However, he could not recall the specifics of the agreement. He recalled it was to be performed within a reasonable time.

Ralph testified that he called the meeting to resolve the differences between his two brothers, i.e., John’s reemployment and to draw up the necessary documents and legal papers about John owning a part of the business. The subject of a spin-off was discussed and Harrell instructed the accountant to accomplish the necessary paper work. The accountant never did comply. He further testified that when John severed his employment again in 1974 that Harrell urged him to persuade John to return to work and, should he sell his business within a few years, he would give John three or four hundred thousand dollars. Ralph acknowledged that he and Harrell had been at odds since their father’s death in January, 1976, and Harrell had harassed, humiliated and embarrassed him at great lengths. On one occasion when he was out of town, Harrell had resigned from the board of Ralph’s bank and become a board member of a rival bank which resulted in considerable publicity in the local paper.

The accountant for the appellee corporation testified that he had served in that capacity since 1954 until his retirement in 1976. He had incorporated the produce business. He had no definite recollection of the meeting since it had occurred approximately ten years ago. He had discussed the feasibility of a spin-off for tax purposes with Harrell, and it was decided that it was too expensive and, therefore, never materialized.

Harrell testified that he had incorporated his business in 1954. John had worked for him since then and would walk off the job about four times a year. He would continue paying John and Ralph would relay to appellant that if he wanted his job he could come back to work. He recalled the May or June 1970 meeting at the local bank where he was a vice president and on the board. Ralph initiated the meeting in order to get John back to work. Ralph said he would have to keep him up if he, Harrell, didn’t. The meeting resulted. At the meeting he agreed to raise John’s salary from $12,000 to $ 15,000 a year plus a new car, expenses and a country club membership. John drew this salary plus the extras until he quit in 1974. He and John drew the same salary including the same Christmas bonus. He denied that he ever promised appellant any percentage of the business or made any statement that he would share with him any proceeds should he sell it. The first he even knew about the alleged promise or representation to give him 49% of the new corporation in a spin-off arrangement was when appellant filed this action about five years after he had voluntarily left his employment. He had considered a spin-off for tax purposes but determined it was too expensive and, therefore, not feasible. At appellant’s request he permitted him to purchase trucks and lease them to the corporation. Appellant voluntarily left his job threatening to “break you” when a dispute arose concerning dispatching of the leased trucks. Before bringing this law suit, the appellant had been unsuccessful in two business ventures. He had assisted John since he was 14 years old, including high school and college. He is spoiled and when Ralph would call about putting him back to work, he would always do so. Two other brothers had worked for him and each, with his assistance, has a successful business in other states.

The findings of the chancellor as to a fact question will not be disturbed on appellate review unless clearly erroneous (clearly against the preponderance of the evidence) and due regard shall be given the trial court to judge the credibility of the witnesses. Rule 52, ARCP, Ark. Stat. Ann. Vol. BA (Repl. 1979). Ratliff v. Thompson, 267 Ark. 349, 590 S.W. 2d 291 (1979). Here, when we give due regard to the chancellor’s superior position to observe the witnesses and resolve the conflict in their testimony, we cannot say that his findings are clearly erroneous.

Affirmed.


author: John I. Purtle, Justice. Richard B. Adkisson, Chief Justice, Robert H. Dudley, Justice, Steele Hays, Justice,

text:
    CITY OF WALDO v. Peggy POETKER et al
    81-214
    628 S.W. 2d 329
    Supreme Court of Arkansas
    Opinion delivered March 1, 1982

      David B. Simmons, Public Employees Claims Div., Ark. Insurance Dept., for appellant.

      Tom Forest Lovett, P.A., for appellees.
   John I. Purtle, Justice.

This involves a workers’ compensation claim by the survivors of two employees of the cityof Waldo, Arkansas. The administrative law judge ruled that there was “coincidental” and “dual” coverage between Home Insurance Company and the State of Arkansas Workers’ Compensation Fund. The state fund has appealed from the decision.

The Court of Appeals affirmed the action of the Workers’ Compensation Commission in holding there was dual coverage at 3 Ark. App. 12, 621 S.W. 2d 491 (1981). This was a case of first impression and decided by a 3-3 vote in the Court of Appeals thereby affording this court the opportunity to grant certiorari. We affirm the holdings of the Court of Appeals and the Arkansas Workers’ Compensation Commission.

On appeal it is argued that the Commission erred in (1) determining that the legislature intended to automatically include all city employees unless there was strict compliance with Act 469 of 1973 and (2) that the Commission erred in determining that the failure of the city of Waldo to strictly comply with the law mandates a finding of “coincidental” or “dual” coverage. We disagree with the appellant on both, arguments.

The facts are undisputed. The General Assembly passed Act 469 of 1973 which is now codified as Ark. Stat. Ann. § 81-1350 et seq. (Repl. 1976). The act was effective July 1, 1974. The chief purpose of the act is to provide workers’ compensation coverage for all city employees in cases where the city does not furnish a private plan providing similar benefits. In the event a city elects to provide a private plan it is required by the act to submit the plan for approval to the Workers’ Compensation Commission in order that it might be certified as comparable to the state plan. The city can also avoid coverage under the state plan by calling a referendum wherein the employees could elect not to be covered by the Arkansas Workers’ Compensation Act. In the present case the mayor of the city of Waldo notified the Workers’ Compensation Commission that the city would continue with a private plan. The plan was a regular workers’ compensation policy written by Home Insurance Company. The private plan carried by Waldo was effective until October 1976.

In May 1974, shortly before the act was to become effective, the Commission requested the city of Waldo to provide it with a copy of its policy. The city of Waldo did not respond to this letter and was subsequently placed on the list of participating cities. In October 1975 assessment was made against the city’s turnback funds for the fiscal year 1974-75 as required by Act 469.

On April 16, 1976, two police officers in Waldo were killed when their vehicle collided with a train. Home Insurance Company immediately accepted the deaths as compensable and commenced making payment to the widows of the two deceased policemen.

In October 1976 Mayor Beasley became aware that the state plan existed. By this time another year’s turnback funds were to be withheld for the purpose of compensating the state plan. He wanted a refund of the assessments against the city’s turnback funds for the years 1974 and 1975.

Home Insurance Company filed a claim with the Workers’ Compensation Commission contending the state plan should share in 50% of the liability since there was double coverage. The administrative law judge ruled that dual coverage existed and that the state and Home Insurance should share equally in the losses. The administrative law judge’s opinion was affirmed by the full Commission and the city of Waldo filed notice of appeal.

The question to be determined by this court is whether there was dual liability at the time or whether Home Insurance Company alone was liable for the loss. The title of Act 469 of 1973 reads as follows:

An Act to Provide Workmen’s Compensation Coverage for Employees of Municipalities in this State; to Provide the Method of Financing Such Coverage; to Vest Exclusive Jurisdiction of the Workmen’s Compensation Claims of Such Employees in the Arkansas Workers’ Compensation Commission; to Prescribe the Procedure for Filing Claims; and for Other Purposes.

The pertinent provisions of the body of the act are as follows:

Section 1 (b). Provided, however, that any municipality which maintains a plan providing benefits to its employees because of accidental injury or death which arises out of and occurs in the employment of such employee may present such plan in full to the Workmen’s Compensation Commission. If the Commission determines that such voluntary plan provides benefits substantially comparable to the benefits provided under the Arkansas Workers’ Compensation Law, it may certify such fact to the Chief Fiscal Officer of the State and to the city making such application, and any city or municipality obtaining such certificate shall be exempt from the provisions of this Act and no amount shall be deducted from such exempted city’s share of the municipal aid fund.
# # #

In giving the above words their plain and ordinary meaning it is clear the Workers’ Compensation Commission is vested with exclusive authority in implementing this act. In the present case the Commission did not place the city of Waldo on the nonparticipating list because Waldo failed to comply with the provisions of the act allowing for private plan exemptions. So far as the Commission’s records were concerned, Waldo had no private plan available to its employees. Therefore, the provisions of the act were mandatory so far as the Commission was concerned.

It was conceded by all parties that the city of Waldo failed to strictly comply with the provisions of Section 1 (b) as set out above. Neither is it disputed that the city of Waldo intended to come within the exception of the act by providing its own private policy through Home Insurance Company. We do not have the benefit of any Arkansas decision on the question here for review. The question to be decided is whether the failure of the city of Waldo to furnish a copy of its plan to the Commission, as requested, caused it to be included in the state plan. None of the cases cited by the parties sheds any particular light on the question before us. All of the cases cited appear to cover cancellations rather than coverage. It is stated by the appellant that this court has dealt with the issue of strict construction in St. Paul Fire & Marine Ins. Co. v. Central Surety & Ins. Corp., 234 Ark. 160, 350 S.W. 2d 685 (1961). Again, this case involved the cancellation of a policy. The employer in St. Paul originally had a policy with Central Surety and requested that it be cancelled. St. Paul wrote a policy which went into effect on September 9. Under state law Central Surety could not have terminated its policy until October 7. Meantime, on October 3 a claim arose and there was an argument of dual coverage. In that case we stated:

We recognize the rule relied upon by the appellant, that the statute is to be construed strictly to the end that employees will not be left without the protection of insurance coverage. But the rule of strict construction should not be carried beyond the reason for its existence. The legislature was plainly concerned with the protection of employees, but it still permitted an accelerated cancellation date when other insurance had been procured. Double coverage is not contemplated. The statute contains only two substantive requirements, that notice be given and that other insurance be procured. Inasmuch as both requirements had been met on September 22 there was then no longer any reason for deferring the effective date of cancellation.

The above quotation states the statute is to be construed strictly to the end that the employee will not be left without protection. This seems to be in conformity with our general rule of liberal construction of the benefits under the workers’ compensation laws. We have stated that it is a well-established rule that in workers’ compensation cases when a doubt exists we must remember the act is remedial in nature and should be construed liberally to effectuate its purpose. Gill v. Ozark Forest Products, et al, 255 Ark. 951, 504 S.W. 2d 357 (1974). See also Alred v. Jackson Atlantic, Inc., 268 Ark. 695, 595 S.W. 2d 249 (App. 1980), wherein we stated the workers’ compensation act is highly remedial and is therefore entitled to a liberal construction.

We think the reasoning that was applied in St. Paul Fire & Marine Ins. Co. v. Central Surety & Ins. Corp., supra, against double coverage applies here. However, there is no provision for exclusion of coverage by either insurer in the event such should happen. It is obvious the state had received funds for this coverage just as Home did. Both were paid the required premium by the city of Waldo although the city did so unwittingly. We know that the legislature intended that city employees be covered by workers’ compensation or a policy approved by the Commission. Certainly, it goes without saying that a private policy could be terminated and the city could revert to coverage by the state or it could obtain private coverage and withdraw from the state plan. However, notice in the form of a copy of the private policy was a requirement and was lacking in this case.

Workers’ compensation is not truly insurance nor is it a true pension. It is a type of hybrid obligation based upon moral and equitable principles for the protection of society in general. It gives workers a remedy which did not exist under common law, in most cases. It is designed for the protection of workers who are unable to work because of injury or disease arising out of their employment.

The Arkansas Workers’ Compensation laws originated in Amendment 26 to the Arkansas Constitution. The first Arkansas legislation in regard to workers’ compensation was Act 519 of 1939. Subsequently, initiated Act No. 4 of 1948 was adopted as the basis of our present system. The law provides maximum and minimum benefits and requires insurance companies or self-insureds to provide coverage for all employees. The rates charged are set by the state. Ark. Stat. Ann. § 81-1310 (Supp. 1981) sets out the maximum and minimum benefits to be paid for scheduled injuries. Other sections provide for payments to those who are disabled because of occupational disease. It is clearly intended that there be a set of single guaranteed benefits to employees which inherently implies single coverage. The Workers’ Compensation Act is public policy of the state of Arkansas as set out by initiated Act No. 4 and subsequent actions by the General Assembly.

Certainly, there is nothing to prevent an individual or groups of individuals from obtaining other benefits but such benefits are supplemental to and are not a part of the workers’ compensation requirements. Therefore, it is logical that only single benefits are contemplated by the act. In case of dual coverage either one or both carriers are liable — but only for the benefits mandated by the act. The act itself prevents double payments by setting out the maximum benefits which may be paid on account of disability arising out of employment.

In the present case there was no attempted cancellation of either policy until after the loss. The only equitable and fair way to apportion the loss is to divide it equally.

Affirmed.

Adkisson, C.J., and Hays and Dudley, JJ., dissent.

Richard B. Adkisson, Chief Justice,

dissenting. The majority correctly held that there was dual coverage in this case. However, they were incorrect in not holding the State and Home Insurance Company each liable for the entire amount.

The Workers’ Compensation Act sets maximum and minimum benefits for which an employer will be liable. This provision is a limitation on the coverage required to be carried by the employer, but it is not a limitation on coverage employers may wish to provide for their employees. There is nothing in the statute or public policy which prevents an employer from providing benefits in excess of those provided by Workers’ Compensation.

It is undisputed that the City of Waldo paid both Home Insprance Company and the State for coverage. It is undisputed that both Home Insurance Company and the State accepted this money and provided the coverage. It is also undisputed that if there were no coverage by Home Insurance Company, the State would have to pay the dependency benefits and vice versa. Therefore, the full amount of these dependency benefits should be recovered from both Home Insurance Company and the State.

Robert H. Dudley, Justice,

dissenting. The statutes involved in this case, Ark. Stat. Ann. § 81-1350, et seq. (Repl. 1976 and Supp. 1981), extend the protection afforded by the Workers’ Compensation Act to municipal employees, who were formerly excluded from coverage. The State is required to provide workers’ compensation benefits from the State Fund in the event a municipality does not enter into an adequate contract with a private insurance carrier. In this case an adequate insurance contract existed with a private carrier, the Home Insurance Company, and the State should not be required to provide a part of the benefits.

If dual insurance contracts with private carriers existed, it would be fair to require each private carrier to share 50 percent of the liability because double coverage would exist. I do not consider the provocative argument of double payment advanced in one of the dissenting opinions because it was not raised below and was not briefed by either party. However, in this case no double coverage existed because the State Fund was intended to provide benefits only when there was no adequate private insurance contract.

The majority opinion treats the private carrier and the State Fund as co-insurors and, as a result, reaches an unfair decision. It is unfair because the Home Insurance Company, a private carrier, received its full premium and now is allowed to shift 50 percent of its just debt to the taxpayers of this State. Such a result was not intended when the statutes were enacted.

I dissent.

Steele Hays, Justice,

dissenting. I agree with the views expressed in the dissenting opinions in the Court of Appeals. See City of Waldo v. Poetker, 3 Ark. App. 12, 621 S.W. 2d 491 (1981).


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

text:
    C. L. ALDRIDGE and Robbie ALDRIDGE v. WATLING LADDER COMPANY and P. C. HARDWARE & MACHINERY CO.
    81-206
    628 S.W. 2d 322
    Supreme Court of Arkansas
    Opinion delivered March 1, 1982

      Barron, Coleman & Barket, P.A., by: John W. Barron, Jr. and Gary P. Barket, for petitioners.

      Rose Law Firm, by: Webster L. Hubbell and Jerry C. Jones, for respondents.
   Robert H. Dudley, Justice.

This case involves the construction of Rule 4 (i) of the Rules of Civil Procedure, Ark. Stat. Ann. Vol. 3A (Repl. 1979). The Court of Appeals decided the case, Watling Ladder Co. and P. C. Hardware & Machinery Co. v. Aldridge, 3 Ark. App. 27, 621 S.W. 2d 499 (1981). However, Rule 29 (1) (c) of the Rules of the Supreme Court and Court of Appeals, Ark. Stat. Ann. Vol. 3A (Supp. 1981), provides that jurisdiction shall be vested in the Supreme Court to interpret a rule or regulation of any court. This case should have been certified to this court by the Court of Appeals because Rule 29 requires that all such cases be decided by this court. To resolve any confusion we have granted certiorari.

Petitioners C. L. Aldridge and Robbie Aldridge filed a products liability suit against respondents Watling Ladder Company, a non-resident manufacturer, and P. C. Hardware, a resident retailer of ladders. On February 28, 1980, in accordance with A. R. Civ. P., Rule 4 (e) (3), the long-arm service rule, petitioners’ attorney sent the complaint and summons by certified mail to Watling Ladder Company in Valley, Park, Missouri. This rule authorizes service outside the state . .. “By any form of mail addressed to the person to be served and requiring a signed receipt;...” The complaint and summons were received by the president of Watling on March 3, 1980.

However, when petitioners filed their complaint they did not cause the court clerk to appoint an attorney ad litem. On April 7, which was more than 30 days after respondent Watling received the complaint, the petitioners filed a motion asking for a default judgment against Watling and asked for the appointment of an attorney ad litem. The next day, April 8, an attorney ad litem was appointed, and on April 24, Watling’s answer was filed. Thus respondent Watling’s answer was filed within 30 days of the appointment of an attorney ad litem but more than 30 days from the date of notice by mail. The trial court granted a default judgment. We affirm the Court of Appeals in reversing and remanding to the trial court.

Rule 4 (i) provides:

(i) Default in Case of Service by Mail: Before judgment is rendered against a defendant who is served by mail only or by warning order and who has not appeared, it shall be necessary —
First. An attorney be appointed at least thirty [30] days before the judgment is rendered to defend for the defendant and inform him of the action and of such other matters as may be useful to him in preparing for his defense. He may take any step in the progress of the action, except filing an answer, without it having the effect of entering the appearance of such defendant. The attorney may be appointed by the clerk when a warning order is made, or by the court, and shall receive a reasonable compensation for his services, to be paid by the plaintiff and taxed in the costs. Where service is to be made only by mail, the clerk shall appoint an attorney ad litem upon application of the party or attorney seeking to have such service. [Emphasis supplied.]

The meaning of the rule is that a default judgment cannot be taken against a non-resident defendant who has been served by mail until thirty days have elapsed after the appointment of an attorney ad litem and the attorney ad litem’s report has been made. Here the plaintiffs, petitioners, did not cause the court clerk to appoint an attorney ad litem on the date the case was filed. The attorney ad litem was not appointed until a later date and the respondent filed its answer within 30 days of the appointment of the attorney ad litem. As a result, the filing of the answer was timely and a default judgment should not have been granted.

The rule and this interpretation are in accordance with decisions construing the prior comparable statutory provision. See Frank v. Frank, 175 Ark. 285, 298 S.W. 1026 (1927), and Gaines v. Gaines, 187 Ark. 935, 63 S.W. 2d 333 (1933).

There is a second reason for reversing the default judgment against respondent Watling. P. C. Hardware was allowed to file a late answer by agreement of petitioners’ attorney and P. C. Hardware’s attorney. Respondent Watling contends that the answer of P. C. Hardware should inure to Watling’s benefit. We agree. It has been settled in this State for almost a century and a half that the answer of one co-defendant inures to the benefit of the other co-defendants. Allied Chemical Corp. v. Van Buren School Dist. No. 42, 264 Ark. 810, 575 S.W. 2d 445 (1979); Bruton et al v. Gregory, 8 Ark. 177 (1847).

Petitioners contend that P. C. Hardware is technically in default as its answer was also late and therefore there is no answer by P. C. Hardware which can inure to the benefit of respondent Watling. This argument overlooks the fact that P. C. Hardware did file a late answer, the petitioners did not move to strike it and they admit that the late answer is filed by agreement. Under the circumstances a default judgment could not be granted against P. C. Hardware. Therefore, the answer of co-defendant P. C. Hardware denying the material allegations of the complaint inures to the benefit of Watling. Hence, default judgment should not have been entered against Watling.

Affirmed.

Adkisson, C.J., and Hays, J., not participating.

Hickman, J.,

concurs for the reasons stated in the concurring opinion filed in Watling Ladder Co. & P. C. Hardware & Machinery Co. v. Aldridge, 3 Ark. App. 27, 621 S.W. 2d 499 (1981).


text:
    DES ARC WATERSHED IMPROVEMENT DISTRICT v. Richard M. FINCH
    81-232
    630 S.W. 2d 17
    Supreme Court of Arkansas
    Opinion delivered March 8, 1982
    [Amended on Denial of Rehearing April 19, 1982.]

      Lightle, Beebe, Raney ir Bell, for appellant.

      Rose Law Firm, P.A., by: W. Dane Clay, for appellee.
   Richard B. Adkisson, Chief Justice.

This litigation was originally before this Court in Des Arc Bayou Watershed Improvement District v. Finch, 271 Ark. 603, 609 S.W. 2d 70 (1980); we held that appellee, a landowner, could recover his attorneys’ fees if appellant, the condemnor, had acted in bad faith in instituting and then later abandoning condemnation proceedings. We remanded for a finding by the trial court on the issue of bad faith. On remand, the White County Circuit Court found that appellant had acted in bad faith and that appellee could recover his attorneys’ fees; on appeal from that judgment, we affirm.

The Des Arc Bayou Watershed Improvement District was established in 1966 as a White County flood control and recreation project; it has never been completed although over $3,000,000 in public funds have been spent on the project. In planning the project, the Soil Conservation Service found that fifty-seven acres of appellee’s property would be affected by the project; however, appellant took the position that this property would not be damaged. Before releasing the funds for the project, the Soil Conservation Service required that appellant expressly agree to pay “such damages as are finally awarded by the Court” in condemnation proceedings. Appellant offered nothing for the property, and appellee refused to grant a needed floodage easement. Appellant then initiated condemnation proceedings against appellee’s property.

Appellant refused to pay the jury award of $30,000 in damages pursuant to Ark. Stat. Ann. § 35-1105 (Repl. 1962):

Refusal to pay award on abandonment of line — Relocation of project — Liability for costs. — Any levee or drainage district may refuse to pay the award which may have been made by any board of appraisers herein provided for, or the j udgmen t of any court assessing the damages for right of way, and abandon the line and relocate the levee, drain, ditch, or canal anew without being liable for any award or judgments rendered in any proceeding for the condemnation of right of way, except as to the costs.

Therefore the question: Was there sufficient evidence of bad faith to enable the trial court to award attorneys’ fees as “costs” under this statute?

Generally, attorneys’ fees are not recoverable as a part of the cost unless specifically authorized by statute. There is, however, an exception to that rule when the condemnor has acted in bad faith. Housing Authority of North Little Rock v. Amsler, 239 Ark. 592, 393 S.W. 2d 268 (1965). In Amsler we indicated that bad faith was inferred from the fact that the condemnor alleged in the complaint that the taking was “necessary” and then elected to dismiss the proceedings without explanation after a jury awarded damages. Bad faith was further explained in Housing Authority of North Little Rock v. Green, 241 Ark. 47, 406 S.W. 2d 139 (1966) where we held that lack of funds to pay an award did not establish good faith on the part of the condemnor, stating that the lack of funds could not be attributed to any fault of the landowner.

Here, appellant alleged in the complaint that the taking of appellee’s property was “necessary,” but after the jury awarded damages, appellant dismissed the proceeding, stating that there were insufficient funds to pay the $30,000 award. It is significant that after dismissing the proceeding and claiming that no funds were available to pay the award, appellant authorized a second condemnation proceeding in fee against the property. Under these circumstances, the claim of lack of funds is contradicted by appellant’s own actions and is an affirmative indication of bad faith. See Whitestone v. Town of South Tucson, 2 Ariz. App. 494, 410 P. 2d 116 (1966).

Appellant’s state of mind is further illustrated by the fact that an appraiser paid by appellant initially filed an appraisal with the court stating that there were no damages to appellee’s property; this same appraiser later testified at trial that he not only found damage but found damages in a substantial amount. This change in the amount of the appraisal is reflected by the trial judge’s question and the answer of Mr. Clay, attorney for the appellee:

THE COURT:
For example, Quattlebaum, $6,950. A transcript might answer this question, did Mr. Quattlebaum sign an appraisal and file it with the Court saying no damages, and then later testify in Court to $6,950 damages?
Mr. CLAY [The landowner’s attorney]: Yes, he did.

Appellant did not dispute this statement, and therefore it must be taken as true. This change of position by appellant’s own appraiser is indicative of bad faith and is attributable to appellant.

Another indication of bad faith arises from the length of time it took appellant to make the election to dismiss under Ark. Stat. Ann. § 35-1105 (Repl. 1962). The jury verdict was returned in October 1977, and judgment was entered in March 1978. Appellant filed a notice of appeal in April 1978, and the next day a six months extension for preparing the transcript was granted. Then, in May appellant decided to abandon the proceedings but did not notify the appellee of this decision until December of 1978. During this entire time the cloud and uncertainty of the condemnation action hovered about, detracting from appellant’s right to the quiet enjoyment of his property.

In light of the above instances of appellant’s bad faith, we cannot say that the trial court’s finding was clearly against the preponderance of the evidence.

Affirmed.


author: George Rose Smith, Justice.

text:
    GARRISON MOTOR FREIGHT, INC. v. David E. HAMMONS, d/b/a TRIANGLE LEASING COMPANY
    81-198
    628 S.W. 2d 567
    Supreme Court of Arkansas
    Opinion delivered March 8, 1982

      Rex M. Terry, of Hardin, Jesson ir Dawson, for appellant.

      Lawrence W. Fitting, of Gean, Gean ir Gean, for appellee.
   George Rose Smith, Justice.

The Court of Appeals properly transferred this usury case to us. Rule 29 (1) (1). The contract in issue, a three-year lease of an accounting machine, is in many respects similar to the ostensible leases found to be usurious in Standard Leasing Corp. v. Schmidt Aviation, 264 Ark. 851, 576 S.W. 2d 181 (1979), and Bell v. Itek Leasing Corp., 262 Ark. 22, 555 S.W. 2d 1 (1977). The circuit court, however, sitting without a jury, upheld this contract on the ground that the appellee Hammons was in the leasing business and that an intent to charge usury will not be presumed when the opposite result can reasonably be reached. We affirm the trial j udge’s decision, not on the basis of a presumption but because on the facts his conclusion is not clearly against the weight of the evidence. Rule 52, A. R. Civ. P.

When the contract was made in 1975 (before Itek was decided), Hammons was the majority stockholder in Fort Smith Cash Register Company, a corporation, and also operated Triangle Leasing Company as an individual proprietorship. When a person desiring to buy a cash register or similar machine from the corporation could not pay cash, Hammons had the needed forms for handling the transaction as a lease. The corporation first sold the machine to Triangle, which then leased it. The form of lease was similar to those in Schmidt and Itek in that most of the risk was on the lessee, the remedies on default were those available to a conditional seller, a financing statement was executed in which the lessee was shown as the debtor, and at the expiration of the lease the lessee had an option to purchase the property for not more than 10% of the original price, plus options to surrender the machine or to continue to lease it on a year-to-year basis by paying one monthly payment per year.

There is, however, at least one significant, substantial difference between this case and the earlier two. The cash price of the machine in this case, which was rebuilt especially for the purchaser’s requirements, would have been $4,300, plus sales tax. Hammons testified that if the machine had been sold by the corporation for cash, the buyer would have been required to pay an additional $300 for an optional six-months maintenance contract, $200 for the installation of the machine, and $600 for the training of the purchaser’s employees in its operation. The appellant argues that those three added items were merely part of the cash price, but we do not so construe Hammons’ testimony. He testified that he trained this purchaser’s employees in the use of the machine. Since the six-months maintenance contract was optional, it could hardly have been part of the basic cash price. And certainly the machine was installed, though the record does not show by whom.

The appellant, having pleaded the defense of usury, had the burden of proving that the transaction was usurious. Temple v. Hamilton, 178 Ark. 355, 11 S.W. 2d 465 (1928). The appellant offered no testimony about the original transaction and did not cross-examine Hammons in detail about the three extra services. If the prospective buyer was unable to pay the entire purchase price and the cost of the services in cash, it would not be a sham as a matter of law for Triangle Leasing to buy the machine from the corporation and lease it to the purchaser at a sufficient monthly rental to include the services to be provided by Hammons’s two related companies. The trial court was justified in finding that the defendant’s burden of proof had not been met. It is undisputed that the agreement did not entail as much as 10% interest if the $1,100 total for the three extra services were added to the cash price as principal. We cannot say that the trial court’s resolution of a disputed issue of fact is clearly erroneous.

Affirmed.


text:
    Jack ECKLES v. PERRY-AUSTEN BOWLING PRODUCTS, INC.
    81-223
    628 S.W. 2d 869
    Supreme Court of Arkansas
    Opinion delivered March 8, 1982

      Herschel W. Cleveland, of Hixson, Cleveland ir Rush, for appellant.

      Bruce H. Bethell, of Bethell, Callaway ir Robertson, for appellee.
   George Rose Smith, Justice.

This action against Eckles was brought by Perry-Austen, an Iowa company, to recover the purchase price of bowling equipment shipped to Eckles on an open account. The complaint, without itemizing the account, sought judgment for $6,127.20 “and other relief as [plaintiff] may be deemed entitled.” At the trial the plaintiff’s testimony disclosed that the $6,127.20 claim, calculated as of the date the suit was filed, consisted of a $5,520.24 principal account and $606.96 in interest at 1% a month. This appeal, from a verdict and judgment for $7,065.84, comes to us because there is an assertion of usury. Rule 29 (1) (1). Four points for reversal are argued.

The testimony of the two main witnesses was in absolute conflict. The witness Sherwood, an officer of Perry-Austen, testified that the delinquent account arose from seven shipments to Eckles, evidenced by seven itemized invoices that were introduced. Each invoice recited that an interest charge accumulated at 1% a month on past-due balances. Sherwood said that he had telephoned Eckles 8 or 10 times about the account. Eckles never disputed the account, and promised repeatedly to pay it, and once agreed to sign a note for the total amount, with interest, but did not do so. Eckles testified that he never admitted the indebtedness. He said he owed only two of the invoices, the other shipments having been ordered by Eckles to be shipped to other consignees and to be billed to them. The verdict shows that the jury accepted Sherwood’s testimony.

First, the issue of usury was not preserved for review. It was raised only once in the trial court, by a motion for a directed verdict at the close of the plaintiff’s case. The court denied the motion, finding (on sufficient evidence) that the suit was based upon an Iowa contract. The motion was not renewed at the close of all the evidence and was therefore waived. Sanson v. Pullum, 273 Ark. 325, 619 S.W. 2d 641 (1981).

Second, the defense objected to the introduction of the invoices because Sherwood admitted that before sending them to Perry-Austen’s attorney he had written notations on them, such as: “This order phoned to us by Art Kirk, Eckles’ office accountant.” The jury heard Sherwood’s explanation of the notations, and both Eckles and Kirk in effect admitted on the witness stand that the information was true. No possibility of prejudice is shown.

Third, during the closing arguments plaintiff’s counsel displayed to the jury a sheet of paper containing, in large letters and figures, this summation of the account:

Goods $5,520.24
Interest
1% per mon. 55.20
X # months X _28 $1,545.60
Total $7,065.84

It happened that the j urors carried the piece of paper into the jury room along with the exhibits. When that fact was discovered after the j ury had returned its verdict for $7,065.84, defense counsel moved for a mistrial. We find no error in the denial of the motion. Sherwood had testified to the accuracy of the total figure, which had again been brought to the jury’s attention in argument. The trial judge did not abuse his discretion in refusing to order a new trial merely because the jury had taken into the jury room a calculation already known to them.

Fourth, it is argued that the court should not have entered judgment for 12% interest, because the complaint contained no such prayer. This point is well taken. The complaint simply sought judgment for $6,127.20 and other relief. It was impossible for the defendant to learn from the pleadings that 12% interest under Iowa law was being asked. Rule 44.1, A. R. Civ. P., provides that a party who intends to raise an issue concerning the law of another jurisdiction shall give notice in his pleading or other reasonable written notice. Had the rule been complied with by the plaintiff, defense counsel would have been alerted to the need for determining the permissible interest rate in Iowa. It is impossible for us to take notice of it, for it seems to be a variable rate that fluctuates with a rate published by the federal reserve system and is determined every month by the superintendent of banking in Iowa. Iowa Code Annotated, Vol. 32, § 535.2 (Supp. 1981-1982).

In the complaint there is a prayer for general relief. This is a sufficient basis for an award of 6% prejudgment interest. Under our law it is the statement of facts in the complaint that constitutes the cause of action; the court may in the absence of surprise grant whatever relief the facts warrant. Grytbak v. Grytbak, 216 Ark. 674, 227 S.W. 2d 633 (1950). An open account for goods sold bears interest after maturity. Frazer v. Pettit-Galloway Co., 172 Ark. 209, 287 S.W. 1010 (1926). The basic principle is that interest is ordinarily allowable for the wrongful detention of money. City of Fort Smith v. Southwestern Bell Tel. Co., 220 Ark. 70, 247 S.W. 2d 474 (1952). Under our Constitution the legal interest rate for obligations not in writing is 6%. Ark. Const., Art. 19, § 16; Wilson v. Lester Hurst Nursery, 269 Ark. 19, 598 S.W. 2d 407 (1980). The judgment will therefore be modified by reducing the interest before judgment from $1,545.60 to half that amount, $772.80, being 6% instead of 12% interest.

Modified and affirmed.


author: Darrell Hickman, Justice. Robert H. Dudley, Justice,

text:
    Virgil WILBUR & Wilma WILBUR, His Wife v. Robert L. KERR, M.D. et al
    81-174
    628 S.W. 2d 568
    Supreme Court of Arkansas
    Opinion delivered March 8, 1982

      Bailey ir Paden, P.A., for appellants.

      Sidney P. Davis, of Davis, Cox ir Wright, for appellees.
   Darrell Hickman, Justice.

The issue presented to us is whether the parents of a normal, healthy child may recover the expenses of raising that child from a doctor who negligently and unsuccessfully performed a vasectomy on the father resulting in the birth of the unexpected child. The trial court held that as a matter of law such expenses were not recoverable and we agree with that judgment.

The question comes to us from a summary judgment granted to the appellees, Dr. Robert L. Kerr and his professional association. The parties narrowed the issue to the trial court, as they have on appeal, by admitting certain facts. The appellant, Virgil Wilbur, the father of two, sought a vasectomy to prevent having any more children. The appellee negligently performed two unsuccessful vasectomies on Mr. Wilbur. Mr. Wilbur did not know the operations were unsuccessful, and he and his wife had a normal, healthy daughter — a child neither planned nor expected.

Originally Mr. Wilbur’s lawsuit sought other damages besides the expense of raising the child: Mr. Wilbur’s medical expenses, pain and suffering, loss of wages and the cost of yet a third vasectomy, damages on behalf of his wife, occasioned by the pregnancy and the birth of the child. The trial court ruled that Mr. Wilbur could claim all of these damages but ruled that the cost of the care, maintenance, support, and education of the child could not be recovered. Mr. Wilbur then amended his request, deleting all damages requested except the expenses for rearing the child, choosing to base his whole lawsuit on that issue.

This is a matter of first impression with us. A lawsuit for the cost of raising an unwanted or unplanned child has been referred to as one for “wrongful birth” or “wrongful conception.” The development of the law by the various states which have dealt with this question is relatively recent but rapid. See 50 CIN. L. REV. 65 (1981). Most states recognize this as a valid cause for action grounded in tort, but the courts disagree on what damages should be allowed. Mason v. Western Pennsylvania Hospital, 428 A. 2d 1366 (1981); Wilczynski v. Goodman, 73 Ill. App. 3d 51, 391 N.E. 2d 479 (1979); Sherlock v. Stillwater Clinic, 260 N.W. 2d 169 (Minn. 1977); Anonymous v. Hospital, 33 Conn. Sup. 126, 366 A. 2d 204 (1976); Bowman v. Davis, 48 Ohio St. 2d 41, 356 N.E. 2d 496 (1976); Stills v. Gratton, 55 Cal. App. 3d 698, 127 Cal. Rptr. 652 (1976); Betancourt v. Gaylor, 136 N.J. Super., 344 A. 2d 336 (1975); Ziemba v. Sternberg, 45 App. Div. 2d 230, 357 N.Y.S. 2d 265 (1974); Hackworth v. Hart, 474 S.W. 2d 377 (Ky. 1971); Troppi v. Scarf, 31 Mich. App. 240, 187 N.W. 2d 511 (1971); Custodio v. Bauer, 251 Cal. App. 2d 303, 59 Cal. Rptr. 463 (1967). Several courts have recognized that the expenses for raising a child who is either unplanned or unwanted are foreseeable damages directly resulting from the negligence of the doctor; a negligent act was committed and there must be compensation for that negligent act. Sherlock v. Stillwater Clinic, supra; Bowman v. Davis, supra; Troppi v. Scarf, supra; Custodio v. Bauer, supra; Ziemba v. Sternberg, supra.

The courts that have allowed such recovery have done so for logical reasons, treating the question as one of ordinary damages. Should parents in this sophisticated day and time not have a right to plan their family and avoid the economic hardship of raising a child they chose not to have? Should a doctor not pay for all the damages occasioned by his negligent act? Custodio v. Bauer, supra.

Other courts have denied recovery for the expenses of raising a child, on the basis that it is against “public policy.” Wilczynski v. Goodman, supra; Rieck v. Medical Protective Co., 64 Wis. 2d 514, 219 N.W. 2d 243 (1974); Hays v. Hall, 477 S.W. 2d 402 (Tex. Civ. App. 1972), rev’d on other grounds, 488 S.W. 2d 412 (Tex. 1973); Stewart v. Long Island College Hospital, 35 A.D. 2d 531, 313 N.Y.S. 2d 502 (1970); aff’d. 30 N.Y.S. 2d 695, 332 N.Y.S. 2d 640 (1972); Shaheen v. Knight, 11 Pa. D. & C. 2d 41 (1957); Christensen v. Thornby, 192 Minn. 123, 255 N.W. 620 (1934) (Holding the question of damages to be a matter for the legislature).

The questions that have been raised by the judges and courts who have examined this problem demonstrate that the answer is not easy, nor can any disposition be completely satisfactory. The courts that have denied recovery because of public policy articulate that policy in different ways. For example, the Texas Court of Civil Appeals decided that the joy and pride in raising a healthy child far outweighs any economic loss suffered by the parents; the birth of a child is a benefit on which an economic price tag cannot be placed. The court also remarked that recovery should be denied because damages are too speculative and uncertain. Terrell v. Garcia, 496 S.W. 2d 124 (Tex. Civ. App. 1973), writ ref. N.R.E (Tex. 1974), cert. denied 415 U.S. 927 (1974). In Rieck v. Medical Protective Co., supra, the Wisconsin court viewed the issue as parents pursuing a claim for an unwanted child; they now choose to keep the child but transfer the cost of rearing the child to the doctor, creating a new category of surrogate parent. The Wisconsin Court decided in the final analysis it would be against public policy to allow such damages.

The question has been properly raised whether parents who do not want a child should place it up for adoption or abort the child’s birth to mitigate their damages. See Ziemba v. Sternberg, supra (dissenting opinion). Parties are supposed to mitigate their damages. DOBBS, HANDBOOK ON THE LAW OF REMEDIES. But courts recognizing this cause of action have rejected the argument that parents should have to make such an election. See, e.g. Sherlock v. Stillwater Clinic, supra.

Examining the problem more deeply, authors have addressed the possible harm to the unwanted child referring to it, indelicately but realistically, as an “emotional bastard;” that is, a child who is unwanted by his family, one who will know some day that he was unwanted and whose cost of raising was paid for by another person. Shaheen v. Knight, supra; 50 CIN. L. REV. 65 (1981); Robertson, Civil Liability Arising from “Wrongful Birth” Following an Unsuccessful Sterilization Operation, 4 Am. J. of L. & M. No. 2, 131. One court has gone so far as to make the parents’ name anonymous to protect the child. Anonymous v. Hospital, supra. Another court in its opinion excused the parents for filing the lawsuit, saying that no doubt they did so on principle, and not because the child was unwanted. Rieck v. Medical Protective Co., supra. One writer went so far as to suggest that the possible harm to the child might not be great when it discovered $50,000 was collected on its behalf. Bryan, Damages The Not So “Blessed Event,” 46 N.C. L. REV. 949, 952 (1968). So, the child’s welfare has troubled all who have examined the problem.

Another line of cases has reached a compromise of sorts between those states that allow such damages and those that deny them. Recognizing that a child, although unwanted, is usually a joy, pleasure and benefit, these states allow recovery of expenses for raising the child but allow the jury to offset an award if they find the parents actually love the child and it is a “benefit” to them. Troppi v. Scarf, supra; Anonymous v. Hospital, supra; Mason v. Western Pennsylvania Hospital, supra; See RESTATEMENT (SECOND) OF TORTS § 920 (1979). Of course this view places the parents in the position of going before a jury and demonstrating they do not want the child in order to get a greater award. If they admit that the child is a welcome addition that will be loved, cherished, and properly raised, they may get nothing.

There is also the problem of the money recovered. Should it be kept by the parents for the sole use of the unwanted child or used by the whole family? One writer has suggested that a guardian ad litem should be appointed for the benefit of the child to see that the money recovered actually goes to the raising of the child. See Robertson, Civil Liability Arising from “Wrongful Birth” Following an Unsuccessful Sterilization Operation, supra, at 153.

In sifting through these decisions and studying the words and thoughts of judges and writers, it is understandable why the courts have reached different results. It is a question that searches the nature and validity of our civil law system which allows money damages to compensate for wrongs that are intangible, such as wrongful death or emotional anguish, things which cannot really be made right by money. Courts denying recovery because of “public policy” are bothered by the idea that a normal, healthy life should be the basis for compensable wrong. Wilczynski v. Goodman, supra.

We are persuaded for several reasons to follow those courts which have declined to grant damages for the expense of raising a child. It is a question which meddles with the concept of life and the stability of the family unit. Litigation cannot answer every question; every question cannot be answered in terms of dollars and cents. We are also convinced that the damage to the child will be significant; that being an unwanted or “emotional bastard,” who will some day learn that its parents did not want it and, in fact, went to court to force someone else to pay for its raising, will be harmful to that child. It will undermine society’s need for a strong and healthy family relationship. We have not become so sophisticated a society to dismiss that emotional trauma as nonsense.

We do not say that a doctor performing such a negligent act should not have to pay for that act. He would be responsible for any and all proper damages connected with the operation and connected with the pregnancy. Wilczynski v. Goodman, supra. We join those courts which recognize these as valid damages that may be recovered in such cases. It is the expense of raising an unwanted, healthy child that we find should not be allowed. We must deny that claim as against public policy.

Affirmed.

Adkisson, C.J., and Dudley, J., dissent.

Robert H. Dudley, Justice,

dissenting. The issue is whether public policy should be invoked to prevent a common law cause of action against a doctor who is admittedly negligent in a surgical attempt at vasectomy.

It was resolved at common law, first in a line of specific, reasoned decisions, that a tortfeasor should be liable for his negligence. Those specific decisions built, by gradual accretion, to the principle of law that a tortfeasor is liable for all damages flowing from the negligent act. That principle became the major premise from which conclusions are now deduced. See Aldisert, The Nature of the Judicial Process: Revisited, 49 U. of Cincinnati L. Rev. 1 (1980). Today, in the case at bar, the majority declines to deduce liability from the major premise of liability for a negligent act and invokes public policy as the rationale to avoid years of well-settled common law.

For some time I have been disquieted by the lack of a standard by which we determine when to apply public policy and the lack of a meaningful definition by which we discover what constitutes public policy. This case involves wide-ranging social and economic issues which will affect parents and children for a number of years. Today we have invoked public policy with no true understanding of why it is applied or how it is discovered. The doctrine of public policy has not been built by accretion, but has experienced growth by eruption. I hope, at some later time, to be able to define standards for its use. Perhaps, in the meantime, our friends in academe will be of assistance by writing a deep and meaningful treatise on a suggested doctrine. While I cannot yet define when and why I would invoke public policy, I can define when I would not invoke public policy. I would not invoke the doctrine of public policy when there is no logical sense of conscience. While, in this case, I find many good policy reasons to support the view of the majority I find an equal number of policy reasons against that view. Therefore, I would not invoke the doctrine; instead, I would follow the common law.

The well written majority opinion correctly points out many of the holdings including those in Wisconsin and Texas. In Rieck v. Medical Protective Co., 64 Wis. 2d 514, 219 N.W. 2d 243 (1974) and Terrell v. Garcia, 496 S.W. 2d 124 (Tex. Civ. App. 1973), there is the suggestion that the child be considered as worth its cost or else it be put up for adoption. Yet, many parents feel a moral sense of obligation to raise, as best they can, a child unwanted at conception. “A living child almost universally gives rise to emotional and spiritual bonds which few parents can bring themselves to break.” Troppi v. Scarf, 31 Mich. App. 240, 187 N.W. 2d 511 at 519 (1971). I can find no logical sense of conscience for a public policy which requires the mother to abort, put the child up for adoption, or else deprive the family members, including brothers and sisters, of their planned share of family income. “The compensation is not for the so-called unwanted child or ‘emotional bastard’ [see Case Note, 9 Utah Law Rev. 808 (1965)] but to replenish the family exchequer so that the new arrival will not deprive the other members of the family of what was planned as their just share of the family income.” Custodio v. Bauer, 251 Cal. App. 2d 303, 59 Cal. Rptr. 463 (1967).

A public policy which subtly encourages abortion or adoption, as today’s holding necessarily does, is inconsistent with the stated goal of family stability and has no logical sense of conscience. Reference is made to the emotional damage of the child who finds out he or she was unwanted, but that emotional injury is no greater “than to be found in many families where ‘planned parenthood’ has not followed the blueprint.” Custodio v. Bauer, supra. The expense of raising an unwanted and healthy child should not be considered as a matter of public policy when we will find that the same public policy allows us to hold that the parents of a deformed or diseased child are able to recover. This is inconsistent, see Mason v. Western Pennsylvania Hospital, Pa. Super., 428 A. 2d 1366 (1980), and demonstrates the consequence of invoking public policy without standards.

I would not invoke public policy in order to deny a cause of action against the common law rules of tort damages when there is no logical sense of conscience.

I recognize this is an extremely difficult case but rather than invoke public policy I would allow the cause of action and would allow the jury to reduce damages by the “benefit rule,” § 920 Restatement of Torts (Second). It provides:

When the defendant’s tortious conduct has caused harm to the plaintiff or to his property and in so doing has conferred a special benefit to the interest of the plaintiff that was harmed, the value of the benefit conferred is considered in mitigation of damges, to the extent that this is equitable.

Thus, the jury in setting damages would be allowed to offset the value of the child’s aid, comfort and society during the parents’ life expectancy against the cost of rearing the unplanned child. See Sherlock v. Stillwater Clinic, 260 N. W. 2d 169 (Minn. 1977).

I am authorized to state that Chief Justice Adkisson joins in this opinion.

       When the question concerns the birth of an impaired child, the courts treat it differently. See, e.g., Speck v. Finegold, 408 A. 2d 496 (Pa. Super. Ct. 1979); Jacobs v. Theimer, 519 S.W. 2d 846 (Tex. 1975).

      The situation varies. Sometimes it is primarily on behalf of the wife who sought a tubal ligation; sometimes it is against a pharmacist who negligently filled a prescription which would prevent conception. See Sard v. Hardy, 34 Md. App. 217, 367 A. 2d 525 (1976), rev'd 281 Md. 432, 379 A. 2d 1014 (1977) (tubal ligation); Troppi v. Scarf, 31 Mich. App. 240, 187 N.W. 2d 511 (1971) (oral contraceptives).


author: Darrell Hickman, Justice.

text:
    Reba Faye O’BAR, as Admx. of the Estate of Jeweral Wayne O’BAR, Deceased v. MFA MUTUAL INSURANCE COMPANY
    81-209
    628 S.W. 2d 561
    Supreme Court of Arkansas
    Opinion delivered March 8, 1982

      Daily, West, Core, Coffman & Canfield and Robert S. Blatt, for appellant.

      Jones, Gilbreath ir Jones, for appellee.
   Darrell Hickman, Justice.

The only issue on appeal is whether a reduction clause in an automobile insurance policy that provides for $5,000 in accidental death benefits is void because it violates public policy. The trial court held that the clause which reduced payment by any amounts paid under workers’ compensation law was valid. We disagree and find such a provision void as against public policy.

The appellant’s husband, Jeweral Wayne O’Bar, was killed in a vehicle accident while driving his employer’s truck. His widow, Reba Faye O’Bar, the appellant, and his child received over $5,000 for his death from workers’ compensation. O’Bar had an automobile insurance policy with the appellee, MFA Mutual Insurance Company, and it provided $5,000 in benefits for accidental death. MFA refused to pay, relying on a clause in the policy which reads:

REDUCTION OF AMOUNT PAYABLE — Any amount payable under the terms of this coverage on account of death of an insured shall be reduced by the amount paid and the present value of all amounts payable on account of such death under any workmen’s compenstion law, disability benefits law or any other similar law.

The case was submitted to the trial court for summary judgment and the court ruled for MFA. Both parties relied to an extent on our decision in Aetna Ins. Co. v. Smith, 263 Ark. 849, 568 S.W. 2d 11 (1978), which held such a reduction clause for medical and disability benefits was not void. Aetna interpreted Arkansas’s no fault insurance law, enacted in 1973. Ark. Stat. Ann. § 66-4014 — 66-4021 (Repl. 1980 & Supp. 1981). The no fault law was enacted “ ... to make an insured whole on relatively minor automobile injury damage claims without regard to fault... ” Aetna Ins. Co. v. Smith, supra. It provided that policies must give an insured the right to certain minimum medical and hospital benefits, income disability benefits and accidental death benefits. Ark. Stat. Ann. § 66-4014 (Repl. 1980 & Supp. 1981). But the insured has the right to reject in writing any one or all of such benefits. Ark. Stat. Ann. § 66-4015.

More importantly, an insurance company has the right to reduce, or claim reimbursement for any medical hospital benefits or income disability benefits paid out. Ark. Stat. Ann. § 66-4019. No such right was granted in regard to accidental death benefits. Therein lies the crux of this case. While requiring automobile insurance policies to provide for three different types of benefits, the General Assembly granted the insurer the right to reduce only medical and income disability benefits by any amount recovered by the insured from another source. Obviously medical or income disability benefits if not so reduced would allow double recovery to certain beneficiaries. Accidental death benefits are like life insurance and life insurance is treated differently from medical and income disability benefits so far as double coverage is concerned. Life insurance is more in the nature of an investment and is actually a contract to pay a sum certain upon the death of the insured. 43 Am. Jur. 2d Insurance §§ 3, 1594 (1969).

There is no convincing reason such a benefit should be reduced simply because an insured also receives workers’ compensation and since the General Assembly made no such provision, we hold such a clause to be in violation of public policy.

Reversed.


author: Darrell Hickman, Justice. Richard B. Adkisson, Chief Justice,

text:
    PROFESSIONAL ADJUSTMENT BUREAU, INC. v. Billie STRONG
    81-220
    629 S.W. 2d 284
    Supreme Court of Arkansas
    Opinion delivered March 8, 1982
    [Rehearing denied April 5, 1982.]

      R. Douglas Schrantz, of Kendall & Schrantz, for appellant.

      Wommack, Lindsay 6- Associates, P.A., by: Mark Lindsay, for appellee.
   Darrell Hickman, Justice.

The only issue on appeal is whether the trial court was wrong in dismissing the appellant’s case with prejudice when the appellant and appellant’s attorney failed to appear for trial. We find that in this case the court should not have dismissed the case with prejudice.

The appellant, a collection agency, filed suit to collect an $823.00 debt the appellee owed to Sisco Chapel, Inc. The case was set for trial March 31, 1980. When the case was called and the appellant did not answer, the court ordered the bailiff to call the appellant and its attorney three times, all to no avail. The judge inquired of the appellee’s attorney whether he wanted the case dismissed with or without prejudice. Understandably the response was with prejudice, and it was done.

A motion to set aside the order was filed, and at a hearing appellant’s attorney explained that a former associate attorney just failed to attend to the matter. The court found no “excusable neglect.”

The appellant argues that Ark. R. Civ. P., Rule 41, prohibits a trial judge from ever dismissing a case with prejudice the first time, that it can only be on a second dismissal.

The appellee argues that our decision in Gordon v. Wellman, 265 Ark. 914, 582 S.W. 2d 22 (1979), permits a case to be dismissed with prejudice upon failure to prosecute, regardless of Ark. R. Civ. P., Rule 41 (b).

Rule 41 (b) provides that:

(b) Involuntary Dismissal: Effect thereof. The court may, upon its own motion, or upon motion of any defendant, dismiss an action for failure of the plaintiff to prosecute or to comply with these rules or any order of court. A dismissal under this subdivision is without prejudice to a future action by the plaintiff unless the action has been previously dismissed, whether voluntarily or involuntarily in which event such a dismissal operates as an adjudication on the merits.

We did say in Gordon that a trial court has the inherent power, independent of statute or rule, to dismiss a case for failure to prosecute. However, we do not read Rule 41 (b) and the Gordon case to be inconsistent. Rule 41 is a tool for trial courts to dispose of cases filed and forgotten, and, ordinarily, the disposition for lack of prosecution should be without prejudice, allowing the plaintiff the right to refile the case. But, as we said in Gordon, Rule 41 does not absolutely prohibit a trial court from dismissing with prejudice a case for lack of prosecution. Obviously circumstances can vary and a trial court’s discretion should not be bound in irons.

In this case, it was the first trial setting. An answer had been filed the day before. (A motion to quash had been pending for some time.) The court, at the request of the appellee, dismissed the case with prejudice, making no findings of its own why this action should be taken. Unlike the facts in Gordon where the case had been pending for thirteen years, this was evidently a case of one-time neglect by counsel. Dismissal without prejudice would have been in order and consistent with the intent of Rule 41 and the Gordon case. Consequently, we reverse the judgment and remand the case for further proceedings.

Reversed and remanded.

Adkisson, C.J., and Purtle, J., concur.

Richard B. Adkisson, Chief Justice,

concurring. Rule 41 states very clearly that the sanction for failure to prosecute a case is dismissal without prejudice. This rule, adopted by this Court, supersedes all prior rules on this subject, inherent or otherwise. If this Court had intended that the trial courts retain the right to dismiss with prejudice for failure to prosecute, surely, we would have said so.

The Reporter’s note No. 4 following this rule recites that the Federal Rule on this subject provides for a dismissal with prejudice and states the reason our rule was written as it is.

I am hereby authorized to state that Purtle, J., joins in this concurrence.