text:
    Mildred ALEXANDER and Mary M. ALEXANDER Legatees v. FIRST NATIONAL BANK OF FORT SMITH, Executor in Succession
    84-24
    676 S.W.2d 731
    Supreme Court of Arkansas
    Opinion delivered October 8, 1984

      Gean, Gean ¿r Gean, by: Lawrence W. Fitting, for appellant.

      Rose Law Firm, A Professional Association, by: W. Dane Clay, for appellee.
   John I. Purtle, Justice.

The Crawford County Probate Court entered an order distributing the remaining balance of the estate of J. Fred Alexander who died in 1956. We agree with the appellants that the probate court did not have jurisdiction to partition the estate as was done in the order of distribution here under consideration.

The testator left his widow one-half of his estate free and clear of all debts, taxes and other incumbrances. The other half of this estate was to pay all charges against the property and estate with the balance of the half interest of the estate to be set up in trust for testator’s children. The widow was given wide power as trustee of the estate. Her authority included invasion of the corpus if necessary. The facts of this case are set out in more detail in Alexander v. First National Bank of Fort Smith, 278 Ark. 406, 646 S.W.2d 684 (1983); Alexander v. First National Bank of Fort Smith, 275 Ark. 439, 631 S.W.2d 278 (1982) and Alexander Ex’x v. Alexander, Ex’x, 262 Ark. 612, 561 S.W.2d 59 (1978).

The only issue before us is whether the probate court had jurisdiction to make disposal of the real estate as it did.

The order of the court below concluded with the statement, “The Petition for Distribution of Real Property should be granted.” It is obvious from the disposition that the court actually partitioned the property. It had been previously determined by the trial court and approved by this court that the appellants owned 40.8% of the 4 separate farms which remained in the estate. The trust owned the other 59.2% of the real property. The mineral rights were distributed in undivided interest in accordance with the above stated interest. However, the land was not subject to precise distribution in kind. The court awarded two farms to the appellant widow and two farms to the trust and ordered the trust to pay the difference in cash. Thus the order was not a distribution but a partition which the probate court had no authority to grant. Gibson v. Gibson, 266 Ark. 622, 589 S.W.2d 1 (1979). The probate court is a court of limited jurisdiction and it must receive its powers by specific grants of authority from the legislature.

Since the case must be reversed and remanded it is unnecessary to discuss other matters argued on appeal. Although it may appear to be a waste of money and time we are bound by the law to return the case to the trial court with instructions to proceed in chancery for partition of the estate. For almost 30 years this case has languished in the courts because the appellants have generally stubbornly refused to abide by the orders of the court and the expressed intent of the testator.

Reversed and remanded.

Hickman, J., concurs.

Hubbell, C.J., not participating.


source: Caselaw Access Project

author: Robert H. Dudley, Justice.

license: Public Domain

text:
    Timothy Ellis McDANIEL v. STATE of Arkansas
    CR 84-54
    676 S.W.2d 732
    Supreme Court of Arkansas
    Opinion delivered October 8, 1984
    [Rehearing denied November 13, 1984.]

      Tapp Law Offices, by /. Sky Tapp, for appellant.

      Steve Clark, Atty. Gen., by; Theodore Holder, Asst. Atty. Gen., for appellee.
   Robert H. Dudley, Justice.

Appellant, Timothy McDaniel, and Jaran Gookin were initially jointly convicted of the capital murder of Thomas Farham, Jr., We reversed, holding that appellant and Gookin were entitled to separate trials because their defenses were antagonistic. McDaniel & Gookin v. State, 278 Ark. 631, 648 S.W.2d 57 (1983). Upon remand, appellant McDaniel was given a separate trial in which he was found guilty of first degree murder and sentenced to life imprisonment. We affirm. Jurisdiction is in this court under Rule 29 (1)(b).

Appellant initially contends that the trial court erred in admitting the testimony of Robert Merchant, a Hot Springs police officer. The same issue was raised in the first appeal and there we held that Merchant’s testimony was admissible. That holding became the Law of the Case and we will not reexamine that holding in subsequent proceedings. Turner v. State, 251 Ark. 499, 501, 473 S.W.2d 904, 905 (1971).

In order to impeach the credibility of Merchant, the appellant called a witness, Thomas Elliott, who testified that Merchant had previously made a different statement. The appellant then sought to introduce a prior consistent statement which had been written by Elliott. The court refused to allow the prior consistent written statement into evidence. The appellant contends the ruling was erroneous.

Under Rule 801 (d)(1), Unif. Rule of Evid., a trial judge has discretion in determining whether to admit a prior consistent statement. See United States v. De Vore, 423 F.2d 1069 (4th Cir. 1970). Here, the prior consistent written statement met neither of the criteria set out in Rule 801(d)(1) and was cumulative of the oral testimony Therefore the trial judge did not abuse his discretion in refusing its admission.

Appellant next urges that the trial court committed reversible error by refusing to grant a mistrial after a prospective juror commented that she could not forget what she had read about the case. The juror did not say what she read, just that she had read about the case and could not forget it. The statement, without more, did not rise to the level of manifest prejudice which would have mandated the granting of a mistrial. The trial judge did not abuse his considerable discretion by refusing to grant a mistrial. See Berry v. State, 278 Ark. 578, 647 S.W.2d 453 (1983).

The next point of appeal also questions the refusal of the trial court to grant a mistrial. Prior to trial, the trial court suppressed evidence of a fight between appellant and Len Morrison. At trial, Jaran Gookin testified that after the murder he and appellant were at a nightclub, the Purity. While there, Mike Brewer told them that an informant had given the details of the murder to the police. The prosecutor then asked Gookin, “Okay, so after the Purity incident did you see the defendant again?” Gookin responded that he had seen the appellant again and the prosecutor asked when. Gookin responded, “Well, that same evening McDaniels [appellant] and this man I was referring to got in a big fight right outside the Purity.” Appellant moved for a mistrial. Before going into chambers, the trial court instructed the jury “not to consider the answer for any purpose.” In chambers the prosecuting attorney stated that he had no desire to ask about the fight and the judge commented that Gookin seemed anxious to give more information than was asked. Later, in front of the jury, the judge instructed Gookin to respond only to the questions asked. Defense counsel refused the court’s offer to again instruct the jury not to consider the answer. Appellant argues that the refusal to grant a mistrial was an abuse of discretion. As we have often said, a mistrial is a drastic remedy and will not be resorted to unless the prejudice is so great that it cannot be removed by an admonition to the jury. Robinson v. State, 275 Ark. 473, 631 S.W.2d 294 (1982). Before Gookin volunteered the information about the fight, he had testified that on the day of the murder the appellant had: misled the victim to believe that he would pay $1,500 for a machine gun; lured the victim to a remote area in order to test fire the weapon; shot the victim in the back of the head while he was on his knees; tore out part of the victim’s throat and then hung him upside down in a tree to die. It was only after such sanguinolent testimony that Gookin stated appellant had been in the fight. Under these conditions, the statement about a fight is innocuous and the slight prejudice, if any, was not so great that it was not removed by the admonition to the jury.

Appellant next argues that the conviction must be reversed because the trial judge made a disparaging remark about appellant’s attorney. The colloquy at issue involved the direct examination of a detective by appellant’s attorney. It is as follows:

MR. TAPP [Appellant’s attorney]:
Q. Now did she make a statement about two sheets, not one?
A. Yes, sir, she did.
Q. And is it not correct she also stated that they were in the bed?
MR. CLARK [Prosecutor]: Objection, leading.
THE COURT: Sustained.
MR. TAPP CONTINUING: [Appellant’s attorney] Did you ask her whether or not her brother —
MR. CLARK: [Prosecutor] — Objection, leading. Even though characterizes whether or not. It does not make an inadmissible leading question permissible, Your Honor.
THE COURT: That is correct, sir. It’s sustained.
MR. TAPP: [Appellant’s attorney] Your Honor, I believe the rules of evidence allow leading questions on simple matters of fact, not in truth to the matter to be asserted, and that’s exactly what we’re doing here. We’re asking to read a statement.
THE COURT: Mr. Tapp, is it that you do not wish for the jury to believe the truth of what you’re eliciting from his witness?
MR. TAPP: [Appellant’s attorney] No, sir, I said, the purpose is simply to read the statement of what Mrs. Reedy said. And that is not a leading question. I’ll rephrase the question, Your Honor.
THE COURT: Maybe that’ll solve the problem.

A majority of the members of this court view the inquiry as an effort by the trial judge to understand the explanation which would have allowed appellant’s af ney to lead his witness on direction examination. However, even if the inquiry is considered as a rebuke, it would not cause reversal.

This court has decided many cases involving remarks by a judge to counsel. On one hand, we have consistently reversed where there was an unmerited rebuke which gave the jury the impression that counsel was being ridiculed. Davis v. State, 242 Ark. 43, 411 S.W.2d 531 (1967). Examples of unmerited rebukes which ridiculed counsel and caused reversal are: You are “facilitating a trial like a crawfish does, backwards;” Jones v. State, 166 Ark. 290, 265 S.W. 974 (1924); “To grant your motion would be just silly;” and “I am not going to put up with any more of this foolishness,” McAlister v. State, 206 Ark. 998, 178 S.W.2d 67 (1944); “. . .these men here on the jury have something else to do besides listen to that,” Fuller v. State, 217 Ark. 679 at 681, 232 S.W.2d 988 (1950).

On the other hand, we recognize that the trial court has the responsibility for the proper conduct of the trial and we find no reversible error where the record reveals that the trial judge was merely irritated at defense counsel’s trial tactics. Rogers v. State, 257 Ark. 144, 152, 515 S.W.2d 79, 84 (1974). For example, in Rogers, supra, the defense counsel cross-examined a prosecutrix in such a manner that she began to cry. Defense counsel then stated that the prosecutrix needed a few minutes to get herself together. The judge responded, “Well, you got her this way. Why don’t you go ahead?” The judge’s inquiry in the case now before us amounted, at the most, to a showing of irritation at defense counsel’s trial tactics and did not constitute an unmerited rebuke which ridiculed the attorney.

Further, where evidence of the appellant’s guilt is overwhelming, as here, we have affirmed convictions in spite of the fact that remarks by the trial court were improper. Rogers v. State, supra: Bates v. State, 210 Ark. 1014, 198 S.W.2d 850 (1947); Tuttle v. State, 83 Ark. 379, 104 S.W. 135 (1907).

In accordance with the provisions of Ark. Stat. Ann. § 43-2725 (Repl. 1977) and Rule 11 (f) of this court, we find there are no other rulings adverse to appellant which resulted in prejudicial error.

Affirmed.

Purtle, J., and Hollingsworth, J., dissent.

John L Purtle, Justice, dissenting. I dissent because the court ridiculed the defense attorney who was appointed to defend the appellant, commented on the evidence and failed to enforce its own ruling that the state could not bring up certain testimony.

First, the defense attorney was examining a witness when the court remarked: “Mr. Tapp, is it that you do not wish for the jury to believe the truth of what you’re eliciting from this witness?” The real meaning of the remark to the jury could be stated as follows: “Mr. Tapp, this witness is telling the truth; why don’t you want the jury to believe him?” This was a comment on the evidence and it cast the attorney in the light of one trying to make the jury believe a lie. That is worse than calling him a crawfish, foolish or silly. We have reversed and ordered a new trial for those comments. (See cases cited in the majority opinion).

To many, the second point of my dissent will no doubt seem nebulous. The court ruled in limine that the state could not bring out evidence of a fight. The state indeed brought out the prohibited testimony. The court admonished the jury but failed to rebuke the prosecutor. This is only the beginning of what I fear will become the general practice. Why make a ruling in limine if it is not to be enforced? Admittedly this was probably not prejudicial error in this particular case. Nevertheless, I would enforce the order on retrial because the case should be reversed on the comment by the trial court.

Hollingsworth, J., joins in this dissent.


author: P. A. Hollingsworth, Justice.

text:
    William COLEMAN v. STATE of Arkansas
    CR 84-107
    676 S.W.2d 736
    Supreme Court of Arkansas
    Opinion delivered October 8, 1984
    [Rehearing denied November 19, 1984.]

      James M. Simpson, for appellant.

      Steve Clark, Atty. Gen., by; Theodore Holder, Asst. Atty. Gen., for appellee.
   P. A. Hollingsworth, Justice.

The appellant was convicted by a jury of burglary, two counts of theft of property and found to be an habitual offender. He was sentenced to a term of twenty-five years imprisonment on each charge, to be served consecutively. It is from that conviction that this appeal is brought. This appeal is before us under Ark. Sup. Ct. R. 29(l)(b).

The charges arose over the March 23, 1983, theft of a vehicle from Hatcher Construction Co. in Pine Bluff, the subsequent entry into Dillard’s department store, and the theft of property therefrom. On appeal, the appellant challenges the trial court’s denial of his motion for a directed verdict and the sufficiency of the evidence to support his conviction.

The State presented evidence that a van worth approximately $4,500 was stolen from the Hatcher Construction Company on March 23, 1983. At approximately 10:30 p.m. on the same day, the van was seen by a passerby, John Watson, at Dillard’s department store in Pine Bluff, driven through a plate glass window. Watson went to telephone the police and, upon returning, the van was being driven away. He was unable to identify the driver.

After the police arrived, the store officials were notified of the incident, and it was determined that merchandise was missing from the electronics department. The department manager made an inventory of items that were missing and gave the list to the Pine Bluff detectives investigating the burglary. There were fourteen items on the list and all but four had the serial numbers listed. Several of these items were later recovered and, as a result of the investigation, the appellant was arrested on February 21, 1984. On February 23, 1984, he was read the standard Miranda rights form and signed it indicating he understood. Three detectives were present and appellant agreed to talk to them about the burglary at Dillard’s on March 23,1983. The appellant in his oral statement went into detail about taking the van from the construction company, driving it into Dillard’s and taking the televisions and other electronic items on the inventory list. Appellant did not account for all of the items but told the detectives enough for them to recover several of the items they had not found. Appellant was asked to put his statement in writing, but he refused.

We have held that “[A] directed verdict is proper only when no fact issue exists and on appeal we review the evidence in the light most favorable to appellee and affirm if there is any substantial evidence to support the verdict.” Harris v. State, 262 Ark. 680, 561 S.W.2d 69 (1978).

The standard for reviewing the sufficiency of the evidence is similar. In Phillips v. State, 271 Ark. 96, 607 S.W.2d 664 (1980), reh’g denied, we held that:

[i]t is well-settled that on appeal in criminal cases the evidence must be viewed in the light most favorable to appellee and the judgment affirmed if there is any substantial evidence to support the finding of the trier of fact, (citations omitted) Substantial evidence is that which is more than a scintilla and must do more than create a suspicion of the existence of the fact to be established; it is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

In Pickens v. State, 6 Ark. App. 58, 638 S.W.2d 682 (1982), we defined substantial evidence as evidence 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, (citation omitted)
We hold that the evidence in this case was sufficient.

Mrs. Fannie Washington, the department manager at Dillard’s, testified as follows:

Q: Were you asked to prepare an inventory of what was unaccounted for?
A: Yes, I was.
Q: Okay. Did you prepare that inventory?
A: I did.
Q: Before we go over the inventory, who did you give that inventory to?
A: Art Brown.
Q: Okay, and Art Brown is who?
A: He is one of the officers of the Police Department.

Mrs. Washington read from the inventory all of the items that she listed as being missing. She then used the list for reference to testify as to which items were returned. The recovered items included a Magnavox television set valued at $399, a JVC portable radio valued at $499, and an Intellivision television game main frame value at $69.95. According to the list, which was included in the record, the television, the radio, and the television game all had serial numbers.

Furthermore, in his confession, the appellant identified the items on the inventory list and stated that he gave the Magnavox 19" color television to his mother. He also identified the JVC portable radio which was sitting in the detective’s office as an item that had come out of the burglary.

The appellant argues that the State’s case was based on circumstantial evidence. We held in Cooper v. State, 275 Ark. 207, 628 S.W.2d 324 (1982), that “[t]he 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.”

The evidence was sufficient to support the appellant’s conviction.

Affirmed.


author: Per Curiam.

text:
    Harvey Dale JONES v. STATE of Arkansas
    CR 83-52 and CR 84-165
    767 S.W.2d 738
    Supreme Court of Arkansas
    Opinion delivered October 8, 1984
    Appellant, pro se.

      Steve Clark, Atty. Gen., by Marci L. Talbot, Asst. Atty. Gen., for appellee.
   Per Curiam.

Petitioner Harvey Dale Jones and co-defendant Rickey Moore were each found guilty by a jury of two counts of aggravated robbery and one count of attempted capital murder. Each man was sentenced to terms of 15 years imprisonment on each count of aggravated robbery and 13 years for attempted capital murder. On appeal, we reversed the convictions for attempted capital murder but affirmed the convictions for aggravated robbery. Moore & Jones v. State, 280 Ark. 222, 656 S.W.2d 698 (1983). Petitioner Jones now seeks permission to proceed in circuit court for postconviction relief pursuant to A.R.Cr.P. Rule 37. [Moore filed a separate postconviction petition which was recently denied by this Court. CR 83-52 (September 17, 1984).]

Petitioner alleges that the witnesses at his trial were unable to identify him conclusively and that they gave conflicting, inconsistent testimony regarding their identification of him. The allegations are essentially an attack on the sufficiency of the evidence adduced at trial. As such, the assertions are not grounds for relief under Rule 37. Challenges to the weight of the evidence are direct attacks on the judgment which must be made at trial and on direct appeal, not in a petition for postconviction relief. McCroskey v. State, 278 Ark. 156, 644 S.W.2d 271 (1983).

Petitioner next alleges that his trial counsel was ineffective for failing to “attempt or to direct cross-examine state witness Lonetta Chism.” Since petitioner does not say what counsel should have asked the witness, we cannot assess whether there was any prejudice to him. Petitioner also alleges that counsel had a conflict of interest, but he again fails to explain the nature of the conflict or how he was prejudiced by it. Allegations without factual support and a showing of prej udice do not warrant an evidentiary hearing. Jeffers v. State, 280 Ark. 458, 658 S.W.2d 869 (1983).

With this petition we are also considering petitioner’s attempt to appeal the deniál of a Rule 37 petition by the trial court. In May, 1984, after his conviction had been affirmed on appeal, petitioner filed a postconviction petition in circuit court. The petition was denied pursuant to Rule 37.2(a) which provides that once a case has been appealed, no proceeding under the rule shall be entertained by the circuit court without prior permission of this Court. We find that the trial court was correct in its conclusion that it had no jurisdiction to consider the Rule 37 petition once the case was appealed; therefore, the appeal, CR84-165, is dismissed. Coston v. State, 283 Ark. 155, 671 S.W.2d 738 (1984).

Petition denied; appeal dismissed.


text:
    Jane CZECH, City Clerk, City of Little Rock, Buddy BENAFIELD, Myra JONES, Charles BUSSEY, Bob HESS, Gale WEEKS, Lottie SHACKLEFORD and Dick HERGET v. Kenny BAER, Allen QUATTLEBAUM, Albert MILLER, Marty GARRISON and The FRATERNAL ORDER OF POLICE, LODGE #17
    84-235
    677 S.W.2d 833
    Supreme Court of Arkansas
    Opinion delivered October 8, 1984

      Carolyn B. Witherspoon, Acting City Att’y, for petitioners.

      Robert Newcomb, for respondents.
   Per Curiam.

The petitioners in this action seek a stay which would prohibit the Pulaski County Election Commission from placing proposed initiated ordinance #1 and proposed initiated ordinance #2 on the election ballot November 6, 1984. In order that the matter can be head in a timely manner, the following preliminary orders áre entered:

1. The motion to consolidate appeals is granted.

2. The motion to advance the cases on this docket is granted.

3. Oral arguments on the motion for a temporary stay will be heard on October 10, 1984 at 1 p.m. in the courtroom of the Supreme Court.

4. The motion to expedite the briefing schedule is granted. The petitioners’ brief is due on October 12, 1984. The respondents’ brief is due on October 15, 1984. The reply brief is due on October 17, 1984.

Hubbell, C.J., and Hollingsworth, J., not participating.


author: George Rose Smith, Justice. Darrell Hickman, Justice, Julian B. Fogleman, Special Justice,

text:
    ARKANSAS STATE NURSES ASSOCIATION v. ARKANSAS STATE MEDICAL BOARD
    84-62
    677 S.W.2d 293
    Supreme Court of Arkansas
    Opinion delivered October 15, 1984

      John M. Bilheimer, for appellant.

      Cearley, Mitchell and Roachell, for appellee.
   George Rose Smith, Justice.

This suit for a declaratory judgment was brought against the State Medical Board by the Arkansas State Nurses Association, a professional association whose membership includes about 100 “registered nurse practitioners,” a branch of the nursing profession created by Act 613 of 1979. Ark. Stat. Ann. §§ 72-746 (e) and 72-754 (f) (Repl. 1979). The suit seeks to invalidate the Medical Board’s Regulation 10, as an unauthorized and illegal attempt to regulate registered nurse practitioners. This appeal from the circuit court’s declaratory judgment upholding the Medical Board’s regulation comes to the Supreme Court under Rule 29 (1) (c).

Ever since the passage of Act 128 of 1913 registered nurses have been licensed and regulated by law in Arkansas. Act 613, cited above, created a new class of nurses, registered nurse practitioners, consisting of registered nurses who have gone a step farther by taking postgraduate courses in an accredited school of nursing and by being licensed as registered nurse practitioners by the State Board of Nursing. Under the 1979 act nurse practitioners are authorized to engage in the usual practices of registered nurses and also, under the direction of a licensed physician, to engage in other activities specified by the State Board of Nursing.

The Medical Board’s Regulation 10, now challenged, provides that whenever a physician employes an R.N.P. the physician must file prescribed forms with the Medical Board setting forth his own professional qualifications and experience in addition to those of the R.N.P., describing how the R.N.P.’s services are to be utilized, and listing all other physicians to whom the R.N.P. will be responsible in the absence of the employing physician. The following paragraphs in Regulation 10 are critical to this dispute:

(3) No physician licensed to practice medicine in the State of Arkansas shall employ more than two (2) licensed Registered Nurse Practitioners at any one time; nor shall such physician assume responsibility for collaborating with or directing the activities of more than two (2) Registered Nurse Practitioners at any one time.
(6) Violation of this regulation shall constitute “malpractice” within the meaning of the Arkansas State Medical Practices Act and shall subject the violator to all penalties provided therein.

Paragraph (4) of the regulation provides that an exemption from the restriction to two R.N.P.’s may be granted to a physician in case of undue hardship, after a hearing, but no such exemptions had been sought when this case was heard below.

We find the regulation to be invalid insofar as it restricts the number of R.N.P.’s that may be employed by a physician or a group of physicians and declares that a violation of the restriction is malpractice. The legislature has not even attempted to delegate to the State Medical Board the authority to define punishable malpractice. Quite the contrary, the legislature specified in the Medical Practices Act the sixteen instances of unprofessional conduct for which a physician’s license to practice medicine may be revoked or suspended. Ark. Stat. Ann. §§ 72-613 and -614. The matter of hiring too many R.N.P.’s does not fall within the malpractice statute by even the most liberal construction of its language. The Medical Board had no authority to create a non-statutory basis for the revocation of a physician’s license.

In the second place, Regulation 10 is arbitrary on its face, so clearly so that testimony about its purpose or effects could not change or justify the plain meaning of its language. The matter of arbitrariness is not specifically argued in the appellant’s brief, but when the general public’s interest is being represented by one party in a class action such as this one, we do not permit the party to waive any point that should be considered. See Parker v. Laws, 249 Ark. 632, 460 S.W.2d 337 (1970). This is necessarily the rule, for otherwise the public’s right to raise other defects in the statute or regulation might be foreclosed by the doctrine of res judicata. McCarroll v. Farrar, 199 Ark. 320, 134 S.W.2d 561 (1939). If there were any possibility that further testimony might establish the validity of Regulation 10, we would remand the case for additional proof, as is our practice. Ark. Motor Vehicle Commn. v. Cliff Peck Chevrolet, 277 Ark. 185, 640 S.W. 2d 453 (1982). Here the language of the regulation is so exact that we can conceive no such possibility.

The Nurses Association argues that the purpose of the regulation is to restrict the number of R.N.P.’s that may be licensed. In response, Dr. Verser, a member of the Medical Board for 32 years and its secretary for 30, testified that the Board was not attempting to limit the number of R.N.P.’s, only to see that they are adequately supervised. Without the regulation, he said a doctor might hire 20 R.N.P.’s in different areas of a city and let them do the practice while he was on the golf course.

We are not persuaded by the Medical Board’s protestations. As for a doctor’s neglecting his patients to go play golf, the Board already has specific authority to discipline a physician for “grossly negligent or ignorant malpractice.” § 72-613 (g). Moreover, if one doctor can adequately and effectively supervise two nurse practitioners, it is not reasonable to suppose that a group of ten doctors cannot supervise more than two equally well. The reality is that at a time when there is a need for additional medical care in some parts of the state, the effect of Regulation 10 would be to discourage registered nurses from becoming nurse practitioners, for the regulation would undeniably limit the number of jobs available to them. In a closely analogous case, the 1977 legislature created a classification called “physician’s trained assistants,” who were described by Dr. Verser as performing essentially the same functions as nurse practitioners. In the 1977 act creating physician’s assistants the legislature prohibited any one physician from employing more than two such assistants, but that limitation was not extended to groups of two or more physicians practicing together, as Regulation 10 seeks to do. §§ 72-2001 and -2014. We are not convinced that the Medical Board has the authority to adopt a restriction which the legislature did not adopt in a similar situation.

Reversed.

Hollingsworth, J., not participating.

Hickman, J., and Special Justice Julian Fogleman, dissent.

Darrell Hickman, Justice,

dissenting. I welcome the majority’s approach to the appeal and hope it will become a consistent one in taxpayers’ suits and public interest cases. But I join the dissent.

There was nothing arbitrary, in the legal sense, in the Arkansas State Medical Board limiting the number of registered nurse practitioners that will be allowed to work under the direction of a physician. After all, it is the physician that will be held accountable and responsible for the actions of the nurse.

While the goal of increasing the availability of medical care is an admirable one, we have to look at those ultimately held accountable for that care. That is, of course, the physicians, who are regulated by the Arkansas State Medical Board, a board directly responsible to the legislature and the people for the quality of medical care in Arkansas. When the finger of malpractice is pointed, it is ultimately directed to the physician, the one in charge, the one responsible. It is reasonable for the board to limit the number of nurses any physician can reasonably supervise.

One result of the majority decision will be the possibility of medical factories that seek not to serve but to make money. The medical board sought to prevent just such an occurrence as it should have.

Julian B. Fogleman, Special Justice,

dissenting. Appellant’s suit filed in the Circuit Court and its Brief on appeal asked that Regulation 10 of the Arkansas State Medical Board be declared void and unenforceable based only on the argument that the Regulation is actually a regulation of the practice of nursing and is beyond the powers of the Medical Board because the Legislature has committed all regulation of nurse practitioners to the Nursing Board.

Nothing in appellant’s pleadings, in the evidence offered or in its Brief, even suggests a challenge to the validity of Regulation 10 because paragraph six (6) declares violation of the Regulation to constitute malpractice within the meaning of the Medical Practices Act, nor because the Regulation is arbitrary.

I do not agree that this Court should, on its own initiative, declare Regulation 10 invalid upon bases which were not raised in the trial court and were not addressed nor argued in the briefs. If appellant had advanced these arguments in its appeal brief (after failing to plead them in the trial court), we undoubtedly would have held them inappropriate because an issue cannot be raised for the first time upon appeal.

The majority may be correct in holding that the Medical Board lacks authority to define punishable malpractice, but inclusion of paragraph (6) should not be found to invalidate the regulations contained in the other paragraphs because of that paragraph. Aside from the fact that this argument is not properly before us, paragraph (6) of the Regulations does not create a non-statutory basis for revocation of a physician’s license, because it only provides "that violation . . . shall subject the violator to all penalties provided” in the Medical Practices Act and, while that Act does provide for revocation (or suspension) of a physician’s license upon hearing and a finding that the physician has committed any of the offenses described in the Medical Practices Act (Ark. Stat. Ann. Sections 72-613 and 72-614), that Act in subsection (g) only permits such revocation for "grossly negligent or ignorant malpractice.” There is nothing in the Regulation which would permit revocation of a license unless the Medical Board should find, in a hearing as required by Section 72-614, that the violation of Regulation 10 did, in fact, constitute “grossly negligent or ignorant malpractice.”

I respectfully disagree with the conclusion of the majority that Regulation 10 is arbitrary on its face.

It seems obvious that the number of Registered Nurse Practitioners who could properly be directed by a licensed physician and the number with whom he could properly collaborate must be subject to some reasonable limitation, and determination of that appropriate number is properly the subject of the authority of the State Medical Board. The majority of the Court seems to hold that the limitation of two nurse practitioners for employment, collaboration or direction by one physician makes the regulation arbitrary on its face, apparently concluding that this restricts a group of physicians to the same numerical limitation.

While the evidence before the trial court did not exhaustively cover the question of whether the limitation of two (2) Registered Nurse Practitioners which a physician might employ, collaborate with or direct the activities of, was a reasonable or unreasonable number, or the pros and cons of any other particular numerical limitation, the transcript reflects that a hearing was held by the State Medical Board prior to its adoption of Regulation 10 and witnesses who had used nurse practitioners were heard at the public hearing. Undoubtedly, appellee did not more fully pursue nor more zealously attempt to establish that the limitation contained in its Regulation was not unreasonable or arbitrary, because the litigation in which it became involved when appellant brought its action against the Medical Board to challenge Regulation 10 did not raise such an issue, nor in any way suggest that it should be addressed.

Further, weighing against the conclusion that the regulation is arbitrary on its face are the provisions of Sections (4) and (5) of Regulation 10, which permit the Board to grant exemptions from the restriction on employment of no more than two (2) Registered Nurse Practitioners, upon application showing enforcement of the restriction would cause undue hardship. I do not agree that Regulation 10 restricts a group composed of a number of physicians to the employment of only two (2) nurse practitioners and aril not aware of anything in the record to justify such a conclusion. However, if that conclusion is correct and, if as suggested by the majority opinion, a group of ten doctors can properly supervise more than two (2) nurse practitioners, the restriction of that group to the limit of two may well result in an undue hardship and, upon application and a showing of such hardship, the group could receive an exemption from that limitation, with appropriate terms and conditions upon such exemption as are necessary to protect the public health, safety and welfare.

Regulation 10 may or may not be arbitrary in fixing the limitation of two (2) as the number of licensed Registered Nurse Practitioners which a licensed physician may employ or for which he may assume the responsibility of collaboration or direction, but such a determination by this Court should only be made after a trial and hearing where that issue is properly before the trial court and evidence on that issue is presented. We should not hold the regulation invalid on a finding that it is arbitrary without that issue having been raised in the trial court and brought before us by the record in brief and argument.

To strike Regulation 10 as invalid on the bases suggested by the majority, upon the record and briefs before us, is almost as if appellant had filed a pleading challenging the regulation as invalid, without stating any basis and without presenting any evidence nor argument for its challenge and requested that the trial court (ánd this Court) find some basis for declaring it invalid. A finding of invalidity should not be pronounced by this Court unless the challenge to validity reaches the Court on pleadings, evidence, briefs and arguments that assert a basis for invalidity. To say that we do not permit a party to waive any point that should be considered when the general public’s interest is being represented by one party in a class action should not permit us to search out and find a basis for invalidity not suggested in the record of proceedings in the trial court nor argued, in the briefs before us and which has not been presented as a basis for our decision.

By the terms of Act 613, Registered Nurse Practitioners may be licensed under rules and regulations promulgated by the State Board of Nursing and the Registered Nurse Practitioner is authorized to engage in activities recognized by the nursing profession and specified in the Arkansas State Board of Nursing rules and regulations relating to Registered Nurse Practitioners.

Appellant argues that Act 613, by authorizing the State Board of Nursing to promulgate these rules and regulations, committed all regulation and all licensing of nurse practitioners to the Nursing Board.

It is agreed that the State Board of Nursing is the only agency given authority to adopt rules and regulations concerning licensing of Registered Nurse Practitioners and activities in which these nurse practitioners may engage subject, however, to the restrictions set forth in the terms of the act, but nothing in the act states that any and all regulations affecting these practitioners in some way, may only be adopted by the Board of Nursing.

When Registered Nurse Practitioners are licensed and those activities in which they may engage are specified under Nursing Board rules and regulations, they are, under the terms of Act 613, “authorized to deliver health care in collaboration with, a licensed physician” and “under direction of a licensed physician . . . and authorized to engage in activities . . . specified.”

The act thus limits the use of these skilled health care professionals and permits them to act in their expanded area of services only “in collaboration with” and “under the direction of” a licensed physician. This necessarily places their authorized services and activities in delivery of health care within the area of the practice of medicine. Appellee, Arkansas State Medical Board, is given authority to promulgate rules and regulations as are necessary to carry out the purposes and intentions of the Medical Practices Act (Ark. Stat. Ann. Sections 72-601 through 72-623; 72-618).

Rules and regulations concerning performance standards of licensed physicians, the practice of medicine by them and delivery of health care under their direction, are within the authority of the State Medical Board in carrying out the purposes of the Medical Practices Act.

Regulation 10 is a regulation of licensed physicians. Act 613 requires the Registered Nurse Practitioner to perform services permitted by its terms only in collaboration with and under direction of a licensed physician. The fact that Regulation 10 deals with the employment by licensed physicians of Registered, Nurse Practitioners (whose licensing and permitted activities are subject to rules and regulations of a different State Board) and limits the number of those practitioners for whom a licensed physician may assume responsibility for collaboration or directing activities, does not make this a regulation of the collaborating or directed professional and certainly does not invade the authority of the Nursing Board to regulate and control their licensing or to specify the activities in which they may engage.

Since the licensed physician is made indispensable in the performance of the authorized services and activities of the Registered Nurse Practitioners — that person without whose collaboration and direction these licensed professionals may not act as such — the manner of use of the services authorized necessarily is directly related to the quality of medical practice and logically makes their employment by licensed physicians subject to State Medical Board regulation.

Argument is made that since the General Assembly in enacting Act 459 of 1977 (Ark. Stats. Ann. Sections 72-2001 through 72-2017) (which authorizes qualification and registration of a “physician’s trained assistant”) specifically prohibited a physician from employing more than two physician’s trained assistants (Ark. Stat. Ann. Section 72-2014) and did not in any manner restrict the number of Registered Nurse Practitioners which a physician might employ in Act 613, the legislature did not intend that such a prohibition (or restriction) apply to the nurse practidoners and, therefore, the restriction cannot be established by regulation.

While the General Assembly undoubtedly has the authority to restrict the number of nurse practitioners which a physician would be permitted to employ, the fact that it elected not to do so, in enacting Act 613, does not establish the legislative intent that no limit should be placed on such employment. It might be argued with equal force that the failure to place a limit on the number of nurse practitioners which might be employed by a licensed physician shows the legislature felt such restriction was better left to reasonable regulation by the Board authorized to carry out the purposes of the Medical Practices Act.

We should not decide this appeal and make a final determination of the validity of Regulation 10 upon bases which were not included in the pleadings, covered by the evidence, nor submitted to us in the briefs filed.

On the basis of the records before us and the issues as presented and argued by appellant, the judgment of the trial court should be affirmed. If Regulation 10 is of such significance to the interest of the general public that it demands resolution for the proper protection of that interest, the decision of this Court, based upon the record and evidence before it, would not preclude further challenges on the issue of the validity of the regulation on the grounds suggested by the majority opinion or other appropriate grounds, but a determination based on such grounds should only be made when those issues are properly presented as issues before the trial court where the parties have the opportunity to present evidence and argument relating to the issue and to answer those contentions so that the issue is properly before us upon appeal to this Court.

On the basis of the record before us and on the issues presented, I would affirm the judgment of the lower court, based upon my finding that the subject matter of Regulation 10 is within the rule making authority- of the Arkansas State Medical Board and that adoption of the regulation does not constitute an invasion of authority of the Arkansas State Nursing Board.


author: George Rose Smith, Justice. P.A. Hollingsworth, Justice,

text:
    Ronald TURNEY v. ALREAD PUBLIC SCHOOLS
    84-107
    677 S.W.2d 299
    Supreme Court of Arkansas
    Opinion delivered October 15, 1984

      Cearley, Mitchell & Roachell, by; Richard W. Roachell and Clayton Blackstock, for appellant.
    G. Ross Smith, P.A., for appellee.
   George Rose Smith, Justice.

The circuit court denied the appellant Turney’s motion to vacate its former judgment and grant a new trial for newly discovered evidence. The case comes to us as a second appeal in the same litigation. Rule 29 (1) (j).

For several years Turney was employed by the Alread School District as an uncertified provisional teacher. Finally, before the 1982-83 school year, the school board terminated Turney’s contract because he had failed to achieve full certification and was keeping the district from obtaining an "A” rating. The board’s action was affirmed by the circuit court and by this court. Turney v. Alread Public Schools, 282 Ark. 84, 666 S.W.2d 687 (1984).

Before that appeal was decided, Turney filed the present motion in the circuit court, asking the court to vacate its judgment for newly discovered evidence. It was asserted that the school board had not acted fairly and impartially, thus denying Turney due process of law, in that the board had been “primarily concerned with [Turney’s] alleged relationships with female students.” The motion relied upon the expected testimony of the district’s former superintendent, Charles Faulkner, to prove that “the board had already made up its mind to get rid of [Turney] because of rumors in the community that he had improper relationships with female students in the school district.” No charge of that kind was made when Turney was terminated.

Faulkner, the former superintendent was the only witness to testify at the circuit court hearing on Turney’s motion. Since Turney’s present appeal rests solely on Faulkner’s testimony, we narrate it in some detail.

Faulkner was employed by the district about the first of July, 1982, six weeks before Turney was discharged on August 18. Faulkner testified at the first circuit court hearing that he attended two board meetings during that time. He testified at the second hearing, now on review, that the board members talked about rumors that Turney was shacked up with a woman and that he had had high school girls sit on his knee or his lap in the library. Faulkner could not say which of the five board members made any particular statement, except that when he went to Mr. Goodman’s house to report what he had found out about Turney’s attending school to complete his certification, Goodman said: “I hope we can find some reason to get rid of that bastard.” That remark apparently arose from Turney’s lack of certification, not from Turney’s misconduct. Rather to the contrary, Faulkner testified at the second hearing with respect to those rumors:

I questioned them [the board members] about that and asked if anything was done about it. And they said, well, he’s — we — we had a session and talked with him about it, and he had an attorney there. And I said, where are the — what minutes would that be in? And they were never able to tell me if there were minutes — obviously no minutes were made of that board meeting.

Faulkner conceded that he had twice testified under oath — once before the school board and once in the circuit court — that Turney was fired because he failed to obtain his certification as a teacher, as he had promised to do. Faulkner explained that testimony by saying in effect that as superintendent he wanted the district to get an “A” rating and that Turney’s status stood in the way. Faulker said that after he himself had been fired after only one year’s employment, he decided, “reflecting back,” that Turney’s lack of certification had been used by the board as a ruse for firing him.

Our original statute allowing new trials for newly discovered evidence was concerned primarily with cases tried before a jury; in chancery the remedy was by a bill of review. Hence, since the jury was the trier of the facts, the statute contemplated that the motion would be heard only on affidavits. Mangrum v. Benton, 194 Ark. 1007, 109 S.W. 2d 1250 (1937). In that case, however, as in the present case, the parties seeking the new trial were permitted to elicit the testimony of their witnesses in open court, which led us to remark that "it appears to us that the effect of this proceeding was really such as to give to the appellants a new trial upon this evidence." In the same way, Turney has proffered the testimony of his only witness, ex-superintendent Faulkner, and in effect has been given a new hearing by the circuit court.

We have said with respect to a motion for new trial for newly discovered evidence: "Much discretion is left with the trial court in granting applications of this sort, and great weight should attach to his opinion upon the evidence in a motion of this character.” Freeo Valley R.R. v. Rowland, 164 Ark. 613, 262 S.W. 660 (1924). Tested by that standard, this record does not indicate an abuse of the trial court’s discretion. Faulkner’s testimony is essentially contrary to his sworn statements at two earlier hearings. He admittedly did not attend the meeting at which the board decided to terminate Turney’s employment. He has no first-hand information about the reasons for their actions. It was not until more than a year after that meeting, and after he himself had been fired, that Faulkner reflected back and concluded that Turney had been terminated on a pretext. He says he was new in the superintendent’s job and implies that in those circumstances he recommended that Turney be terminated. At the same time, however, he would have the court believe that during those same early weeks he also cross-examined the board members about their treatment of Turney and in effect demanded that they show him written confirmation of their asserted meeting with Turney and his attorney. The trial judge, who observed Faulkner as he testified under oath on two occasions, apparently attached no persuasive weight to his second version of the matter. We cannot say that the court’s decision was wrong.

Affirmed.

Hickman J., concurs because Turney was a provisional teacher.

Hollingsworth, J., dissents.

P.A. Hollingsworth, Justice,

dissenting. This is the second appeal we have heard in this cause. The issue in the first appeal was whether the trial court erred in finding a rational basis for the termination. We said in our opinion, “In light of the school board’s attempt to raise the accreditation of its high school and appellant’s failure to meet the requirement that he obtain twelve hours in the summer of 1982, we cannot say the trial court clearly erred in finding a rational basis for appellant’s discharge.” Turney v. Alread Public Schools, 282 Ark. 84, 666 S.W.2d 687 (1984).

The basis for this appeal is provided by the superintendent at the time of Turney’s termination. He testified at the second hearing, now on review, that the board members talked about rumors that Turney was involved in acts of moral turpitude rather than his lack of certification. Turney requests that we grant a new trial because he was denied his right to a fair and impartial hearing under the due process clause of the federal Constitution. I agree and dissent from the Court’s decision today.

It is not contested that one of the board members stated prior to the hearing on Turney’s termination, “I hope we can find some reason to get rid of that bastard.” The Court holds that remark apparently arose from Turney’s lack of certification, not from his alleged misconduct. I disagree. There are no circumstances present here that require a board member to make a derogatory statement about an employee’s ancestry if the issue is really qualifications. There appears to be confusion to be perpetuated in future opinions, the importance of due process should be reexamined. Due process assures reasoned decision making by forcing school board members to articulate the bases of their employment decisions. It provides a forum for facts and the inferences to be drawn from those facts, thereby allowing discovery of any erroneous basis for the decision. The procedure also allows the affected teacher to rebut erroneous information and put forth his side of the facts.

Turney alleges that there is a basis for believing that the board members based the nonrenewal of his contract on charges that he was guilty of immorality. If this is the case, due process would afford an opportunity for Turney to refute the charge before the school board and clear his name. For “[wjhere a person’s good name, reputation, honor, or integrity is at stake because of what the government is doing to him, notice and an opportunity to be heard are essential.” (citations omitted). Board of Regents v. Roth, 408 U.S. 564 (1972).

I respectfully dissent for these reasons.


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    Allan Wayne VIRGIN v. STATE of Arkansas
    677 S.W.2d 840
    Supreme Court of Arkansas
    Opinion delivered October 15, 1984

      Petitioner, pro se.

    No response by respondent.
   Per Curiam.

In March, 1981, petitioner pleaded guilty to aggravated robbery, in the Circuit Court of Randolph County. He was sentenced as an habitual offender to 20 years imprisonment. The court also revoked petitioner’s suspended sentences in four other cases. Later in 1981, petitioner filed a petition to proceed pursuant to Criminal Procedure Rule 37 and an amended petition. The petition and amended petition were denied after an evidentiary hearing. We affirmed. Virgin v. State, CR 81-134 (April 29, 1982).

Petitioner subsequently filed numerous pro se petitions in circuit court, all of which raised grounds for postconviction relief. The exact number of the petitions is not contained in the record. The State moved in November, 1983, to dismiss the petitions, citing A.R.Cr.P. Rule 37.2 which provides that all grounds for relief must be raised in the original or amended petition. The motion to dismiss was granted on November 16, 1983, and petitioner filed a timely notice of appeal. He also asked to be declared indigent so that the record could be prepared at public expense.

Because of the number of petitions involved, the trial court appointed an attorney to review the files. It appears that counsel was not appointed to handle the appeal but only to sort out the file and report to the Court. Petitioner continued to represent himself, and there is nothing to indicate that he was led to believe that the attorney was appointed to take over the appeal.

While the practice of appointing attorneys to review files may benefit the trial court, it is not a good practice to appoint counsel for a limited purpose, unless it is made clear to the appellant that counsel’s duties are limited. If there is any possibility that the appellant may be misled, the court must notify him of the appointment, setting out clearly the obligation of the attorney to the court and to the appellant. In the event that appellant is not fully informed of the limited appointment and can establish that he was led to rely on counsel to perfect the appeal, we must hold counsel responsible for taking whatever steps are necessary to protect the appellant’s best interests.

Counsel here reported that petitioner was seeking to appeal the order to dismiss and that the record should be limited to items concerning the order and should not include the pro se petitions filed after the original petition was denied. He also petitioned the court to declare petitioner indigent. In June, 1984, well after the time for filing the record had elapsed, the trial court found petitioner indigent and ordered the record prepared, limiting it to items pertinent to the order to dismiss.

The rules of appellate procedure require that a record be filed within 90 days of the date of notice of appeal, making the record in petitioner’s case due on March 5, 1984. The latest the record could have been timely filed even, with extensions of time from the trial court was seven months from the date of judgment, which was June 16, 1984. Ark. R. App. P. Rule 5 (b). The record was not tendered until September 6; hence, the pro se motion for rule on the clerk now before us.

Without regard to the merits of the appeal which we do not consider now, we find good cause to permit the record to be filed. It is clear that petitioner attempted to comply with the rules of appellate procedure. Since the untimely tender of the record was not caused by any fault on his part, the motion is granted.

Motion granted.


author: Webb Hubbell, Chief Justice.

text:
    BALDWIN-UNITED CORPORATION and D. H. BALDWIN COMPANY v. Linda N. GARNER, Insurance Commissioner for the State of Arkansas
    84-162
    678 S.W.2d 754
    Supreme Court of Arkansas
    Opinion delivered October 22, 1984

      Jacob <k Sherman, by: William F. Sherman, for Jack Mendel, G. William Ogden, Trustees for Richard J. Ogden, and Richard J. Ogden, Individually,

      Wright, Lindsey & Jennings, and Debevoise & Plimpton, for Baldwin-United Corp. and D. H. Baldwin Co.

      Wood Law Firm, by: Doug Wood, and Frey tag, Laforce, Rubinstein and Teofan, by: Karl L. Rubinstein, for appellee.
   Webb Hubbell, Chief Justice.

Appellants Baldwin-United Corporation and D. H. Baldwin Company appeal from the circuit court’s order which adopted a Plan of Rehabilitation proposed by appellee, the Arkansas Insurance Commissioner, and denied appellants’ motion to amend the Plan. The Plan concerns three Arkansas insurance companies: National Investors Pension Insurance Company, National Investors Life Insurance Company, and Mt. Hood Pension Insurance Company. All three companies are appellants’ subsidiaries. Appellants argue two points on appeal. First, they assert that the circuit court erred in making a series of rulings about its jurisdiction which prevent appellants from asserting claims against their subsidiaries in any other forum. Second, appellants argue that the Plan of Rehabilitation is not fair and equitable because it will compensate policyholders far beyond what they would have received had the insurance companies never encountered financial difficulties. We affirm.

Baldwin-United Corporation is the corporate parent of the Baldwin-United group of companies. D. H. Baldwin Company is a subsidiary of Baldwin-United. Two of the Arkansas insurance subsidiaries, National Investors Pension Insurance Company and National Investors Life Insurance Company, are direct subsidiaries of D. H. Baldwin. Mt. Hood Pension Insurance Company is an indirect subsidiary of Baldwin-United.

The Arkansas insurance companies’ principal insurance product is a single premium deferred annuity (SPDA). An SPDA guarantees the purchaser the right to a deferred stream of annuity payments in exchange for the payment of a one-time premium. Interest is periodically credited to the policyholder’s account at a specified crediting rate. The policyholder can withdraw principal and interest by surrendering the policy, by making periodic withdrawals, or by electing to receive annuity payments.

On July 13, 1983, the circuit court entered Orders of Rehabilitation concerning each of Appellants’ Arkansas insurance subsidiaries, appointed the Arkansas Insurance Commissioner as Rehabilitator of the insurance companies, and ordered her to take possession of all the insurance companies’ property and to propose a plan for their rehabilitation.

In its July 13, 1983 order, the court entered an injunction “restraining all persons and other legal entities” from “the making of claims or the commencement of further prosecution of any actions in law or equity or administrative [proceedings] except in this Court,” and from “the making of any levy, garnishment or execution against any of the property, personal or real, of respondent or its assets or its policyholders.”

On September 26, 1983, appellants entered reorganization proceedings under Chapter 11 of the Federal Bankruptcy Code, 11 U. S. C. §§ 1101 et seq. Those proceedings are pending in the United States Bankruptcy Court for the Southern District of Ohio.

On October 17, 1983, appellee submitted to the court below a proposed Plan of Rehabilitation. The proposed Plan sought to provide the Arkansas insurance companies, within 3-1/2 years, with assets at least sufficient to support the amount of the accumulated value of their single premium annuities as of May 1, 1984 plus, at a minimum, an assured rate of interest from May 1, 1984 with the possibility of receiving a higher crediting rate from May 1, 1984.

Appellants intervened in these proceedings and filed a motion to amend the Plan. Appellants challenged: (1) the parts of the Plan which continued the July 13 injuction of actions against the insurance subsidiaries in any other forum and provided that no judgment obtained elsewhere would be paid until the rehabilitation ended and all policyholder claims had been satisfied; (2) the part of the Plan which subordinated all claims against the assets to the claims of the policyholders; and (3) the part of the Plan which proposed certain rates of interest for some of the options available to holders of single premium deferred annuities. The court held hearings concerning the proposed Plan and various motions to amend, and on March 23,1984, the court approved the Plan of Rehabilitation substantially as proposed and denied appellants’ motion to amend.

In addition to its ruling on the Plan, the court made three rulings concerning its purported power over all controversies relating to the insurance companies. First, the court found that it had exclusive jurisdiction to adjudicate all claims involving the property of the insurance subsidiaries:

[T]he Court has exclusive jurisdiction of the [subsidiaries] and the assets of the [subsidiaries] and has exclusive jurisdiction with respect to the administration of the assets of the [subsidiaries] to determine the validity or invalidity of all claims against such assets.

Second, the court continued the injunction originally entered in its July 13 Rehabilitation Order:

The injunctions issued by the Court on July 13, 1983 are hereby reaffirmed the same being reasonable and necessary to protect the jurisdiction of the Court . . . and all persons or other entities are hereby enjoined from the commencement, prosecution, or further prosecution of any suit, action, claim or proceedings against the [subsidiaries] and their assets or the Receiver other than in this Court except to the extent, if any, this Court grants it permission to do so upon written Orders entered hereafter upon good cause shown

Finally, the court announced it would not recognize any judgment affecting the Arkansas insurance companies from any other court:

No sale, assignment, transfer, hypothecation, lien, security interest, judgment, order, attachment, garnishment or other legal process of any kind or nature with respect to or affecting these [insurance companies] or their assets or the Receiver shall be effective or enforceable unless entered in this Court in accordance with [the injunction provision quoted above].

I.

Appellants claim that, beginning in 1981, they gave their Arkansas insurance subsidiaries cash, securities, and other assets for less than fair consideration. Appellants believe that they may be entitled to set aside these transfers as fraudulent conveyances and preferential transfers under Bankruptcy Code §§ 544, 547, and 548. Although the record is silent as to the size or exact nature of their claims, appellants assert on appeal that the transactions could amount to hundreds of millions of dollars. Appellants.have not presented any other claims other than those they claim might arise under the bankruptcy act.

Appellants contend that the circuit court erred in making a series of rulings concerning its purported jurisdiction which prevent appellants from presenting their fraudulent conveyance and preferential transfer claims in any forum other than the rehabilitation court. By these rulings appellants are enjoined both from bringing their claims in bankruptcy court and from petitioning the bankruptcy court to determine whether certain assets should be included in the bankruptcy estate. The bankruptcy court is also enjoined from attempting to exercise jurisdiction over assets which appellants assert might be determined to be part of appellants’ bankruptcy estate. Appellants claim that Congress has given them the right to bring their claims in federal bankruptcy cSurt and that the state court cannot impair that right. Appellants contend the central issue is whether the court can deny appellants their right to present their claims in a federal forum.

Arkansas has enacted a comprehensive statutory scheme dealing with impaired insurance companies. This scheme is designed to protect the interests of policyholders and to provide for the adjustment of the right of creditors and policyholders in the event of insolvency. This scheme expressly authorizes the issuance of injunctions. Ark. Stat. Ann. § 66-4804 (Repl. 1980) provides:

The court may at any time during a proceeding under this chapter issue such other injunctions or orders as may be deemed necessary to prevent interference with the Commissioner or the proceeding, or waste of the assets of the insurer, or the commencement or prosecution of any actions. . .

The injunction issued by the rehabilitation court does not exceed the court’s statutory authority, nor do appellants so contend.

Appellants argue a Congressionally mandated right to pursue their claims in federal bankruptcy court. It is of prime significance, however, that insurance companies are not eligible to be debtors in bankruptcy. 11 U. S.C. 109 (b) (2) and (d). Congress has thus decided that rehabilitation and liquidation of insurance companies should be left to the several states. By exempting state insurance liquidation and rehabilitation proceedings, Congress prevented bankruptcy courts from interfering with the rights of insureds protected by state regulations. See In Re Equity Funding Corporation of America, 396 F. Supp. 1266, 1275, (C. D. Cal. 1975)

Of even greater significance is the fact that Congress has expressly left the regulation of insurance to the states by its passage of the McCarran-Ferguson Act, 15 U. S. C. 1011 et seq. This act provides in pertinent part:

The Congress hereby declares that the continued regulation and taxation by the several states of the business of insurance is in the public interest, and that silence on the part of Congress shall not be construed to impose any barrier to the regulation or taxation of such business by the several states.
No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any state for the business of insurance . . . unless such Act specifically relates to the business of insurance.

The purpose of the McCarran-Ferguson Act was to preserve intact from any federal intrusion, existing and future state regulation of the insurance industry subject only to the exceptions expressly provided. Prudential v. Benjamin, 328 U.S. 408, 420-30 (1946). The McCarran-Ferguson Act does not purport to make the states supreme in regulating all activities of insurance companies. Insurance companies may do many things which are subject to federal regulation, but when they are engaged in the business of insurance, the Act applies. S.E.C. v. National Securities, 393 U.S. 453, 459-60 (1969). When a state does act to regulate the insurance business, particularly in respect to the rights of policyholders, it is free from the intervention of Congress in the absence of a specific law concerning that matter.

Appellants assert that state rehabilitation proceedings are not business of insurance within the meaning of the McCarran-Ferguson Act. The focus of “business of insurance” is the relationship between the insurer and an insured, particularly the policy’s reliability. Statutes aimed at protecting or regulating the relationship between an insurance company and a policyholder, directly or indirectly, are laws regulating the business of insurance. S.E.C. v. National Securities, at 460. The Plan of Rehabilitation protects over 300,000 policyholders throughout the United States by attempting to provide the Arkansas insurance companies with assets at least sufficient to support the full amount of the accumulated value of the annuities. Ark. Stat. Ann. § 66-4810 (Repl. 1980) provides that the order to rehabilitate a domestic insurer shall direct that the Commissioner take possession of the company’s property and “conduct the business.” The Arkansas statute which authorizes the rehabilitation court to issue an injuction is a law enacted for “the business of insurance” within the meaning of the McCarran-Ferguson Act. Ark. Stat. Ann. § 66-4804 (Repl. 1980).

The McCarran-Ferguson Act prohibits Congress from impairing any law enacted by a state for the business of insurance unless such congressional action specifically relates to the business of insurance. Therefore, since the Bankruptcy Act does not specifically relate to the business of insurance, and indeed expressly excludes insurance companies from being debtors in bankruptcy, appellants cannot pursue their claims under the Bankruptcy Act once enjoined by a valid state injunction. If any meaning is to be given to the congressional exclusion of insurance companies from the Bankruptcy Act and the mandate of the McCarranFerguson Act, it must be that the determination of rights among an insurance company’s creditors must be left to state proceedings.

We do not hold that the McCarran-Ferguson Act prohibits a person from making a claim in Bankruptcy against an insurance company under any circumstances. In this instance, however, an insurance company is being rehabilitated pursuant to a state statutory scheme, and the rehabilitation court found it necessary to enjoin other proceedings in order to secure an orderly rehabilitation. Therefore, the McCarran-Ferguson Act prevents the Bankruptcy Act from being used to invalidate or impair the Arkansas statutes. The appellants do not have an absolute right to pursue their claims in bankruptcy court.

The rehabilitation of these three insurance companies is of vital state concern. On July 13, 1983, the appellants joined in appellee’s petition to seek an Order of Rehabilitation. The parties joined in this effort in order to protect the interest of the companies’ assets, the companies’ creditors, the policyholders, and the public at large. The over 300,000 policyholders affected by the rehabilitation and the appellants’ bankruptcy proceedings are at a distinct economic disadvantage in the protection of their interests. An orderly rehabilitation of the three insurance companies may provide the policyholders the only opportunity to recover their investments. The rehabilitation court needs to be able to subject the companies and those asserting claims to a coherent and compulsive legal process, or it would be severely constrained in its efforts. The rehabilitation court’s injunction does not leave the appellants without remedies. They may petition the court for relief from the injunction or litigate their claims in rehabilitation court. The trial court did not err in finding that in order to secure an economical, efficient, and orderly rehabilitation, it was essential not only that title and custody to the insurance companies’ assets be entrusted to a single court, but that all claims to those assets be adjudicated in that same court.

II

Appellants’ final argument is that the approved Plan of Rehabilitation is contrary to law and is not fair or equitable to the extent it will compensate policyholders far beyond what they would have received had the subsidiaries never encountered financial difficulties.

The Rehabilitation Plan offers policyholders several options with respect to their policies. Options A and B offer policyholders a crediting rate of the average of first year crediting rates offered by other insurers on comparable policies plus .5%. The .5% bonus is to provide compensation to policyholders for the difficulties encountered in the rehabilitation process. The court denied appellants’ motion to amend the Plan to base the crediting rate on the average rate offered by other issuers which are not in their first year guaranteed period plus .5%.

Appellants assert that first year rates guaranteed during the first year are artificially high to induce sales. After the guaranteed period, these high rates are reduced significantly to reflect true market conditions. Appellants assert that unless the court’s order is reversed the policyholders will receive a perpetual first year guaranteed rate throughout rehabilitation.

The court found the Plan “is fair, just, and equitable to all interested persons, creditors, claimants, and entities affected by the Plan.’’ The standard of review is whether the trial court’s finding is clearly erroneous. ARCP Rule 52.

The policies sold by the appellants’ insurance companies had a one year minimum crediting rate that was substantially higher than the interest rate guaranteed in subsequent years. However, significant reduction in the rate would have allowed the policyholders to surrender their policies and receive their full policy accumulation, plus the high first year rates. The policyholder could then obtain a new first year rate from another insurance company. The record reflects that appellants’ companies would have had to maintain high crediting rates to keep their business. Under the Plan of Rehabilitation the policyholders are locked in and cannot reinvest with another company. The Rehabilitation Plan’s crediting rates have a reasonable basis, and the adoption of the rates is not clearly erroneous.

Affirmed.


author: George Rose Smith, Justice.

text:
    Joe EDWARDS v. Paul JAMESON, Judge
    84-95
    677 S.W.2d 482
    Supreme Court of Arkansas
    Opinion delivered October 22, 1984

      Everett & Whitlock, by: John C. Everett, for petitioner.

      Steve Clark, Att’y Gen., by: Leslie Powell, Asst. Att’y Gen., for respondent.
   George Rose Smith, Justice.

The petitioner, Joe Edwards, was found guilty of criminal contempt of court and was sentenced to a $500 fine and 90 days in jail. Execution of the sentence was superseded to permit Edwards to seek a review by this petition for a writ of certiorari. The controlling question is whether Edwards was given sufficiently specific notice of the charge against him. We find the notice deficient and accordingly grant the writ and remand the cause for further proceedings.

A Springdale bank brought an action in replevin against Edwards to recover hundreds of items of personal property or fixtures to which the bank had acquired title by a foreclosure against a third person and which were at least in part in a building owned by Edwards. Exhibit A to the bank’s affidavit for delivery listed the items, in 54 different categories. The court entered three preliminary orders, two of which directed Edwards not to remove from-the court’s jurisdiction, damage, conceal, or sell any of the property listed on Exhibit A. Those are the orders giving rise to the present contempt proceeding.

The bank tried to take Edwards’s discovery deposition, but he refused to say whether he had sold any of the property in issue. The bank moved for an order to compel Edwards to answer such questions. At the hearing on that motion it became apparent that Edwards may have violated the court’s preliminary orders. The facts not being clear, the trial judge asked the bank’s attorney if he had evidence that a court order had been violated. The attorney said he could subpoena a witness to make that proof. The trial judge then entered an order directing Edwards to appear on a certain date to show cause why he should not be held in contempt “for violation of the lawful orders of this Court.”

At the contempt hearing four weeks later Edwards’s attorney admitted having had a reasonable time to prepare his defense, but he objected at the outset to the absence of any pleading asking the court to hold Edwards in contempt. The bank’s attorney answered that the court’s order to show cause was sufficient under the Henderson and CarlLee cases, infra. The court overruled the defense objection, apparently considering the order to show cause to be sufficient notice. Five witnesses testified at the hearing, at the conclusion of which the trial judge announced his decision and fixed the sentence.

A citation for criminal contempt is not unlike an information filed by the prosecutor in a criminal case. Such a contempt proceeding is usually based upon a litigant’s affidavit, but it may also be initiated by the coürt’s own order. In either case the charge must be in writing and must be sufficiently definite to inform the accused person with reasonable certainty of the charge against him. Henderson v. Dudley, 264 Ark. 697, 704, 713, 574 S.W.2d 658 (1978); Howell v. State, 257 Ark. 134, 514 S.W.2d 723 (1974); Roberts v. Tatum, 171 Ark. 148, 283 S.W. 45 (1926); CarlLee v. State, 102 Ark. 122, 143 S.W. 909 (1912).

Here the only written accusation was that Edwards had violated the court’s “lawful orders.” No doubt that language incorporated the earlier orders by reference, as in Henderson, but the orders broadly restrained Edwards from removing or damaging or concealing or selling hundreds of separate items. There was no specific written charge of a particular violation of the orders. Granted that Edwards may have been on notice at the first hearing that he was suspected of having sold some unspecified items among those listed on Exhibit A, we adhere to our settled rule that in fairness there should have been a reasonably specific written charge. Here it does not appear that the trial court knew just what violation had occurred until after the second hearing, at the close of which Edwards was held in contempt. The absence of the required specific notice invalidates the court’s finding of contempt.

The trial court correctly denied the petitioner’s request for a jury trial. Such a trial is mandatory only when the possible imprisonment may exceed six months. Taylor v. Hayes, 418 U. S. 488 (1974). Here the trial judge was aware of that limitation and imposed only a 90-day sentence. We point out that the better practice in cases of criminal contempt is for the trial judge to announce at the outset whether punishment in excess of six months may be imposed. If the judge does not contemplate the imposition of a greater sentence, a jury is not necessary; otherwise one may be demanded.

The writ is granted, reversing the trial court’s judgment, and the cause is remanded for further proceedings.