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

text:
    Mark NICHOLSON d/b/a Nicholson Realty Co. v. SIMMONS FIRST NATIONAL CORP., d/b/a Simmons First National Bank
    92-464
    849 S.W.2d 483
    Supreme Court of Arkansas
    Opinion delivered March 15, 1993
    [Rehearing denied April 19, 1993.]

      Mike Everett, for appellant.

      Friday, Eldredge & Clark, by: Jerry L. Malone, for appellee.

      Holt, C.J., and Brown, J., would grant rehearing.

   Tom Glaze, Justice.

Appellant Mark Nicholson is an Arkansas licensed real estate broker who brought this suit, alleging fraud, intentional interference with a contractual relationship and breach of contract on the part of Simmons First National Bank (Bank) in Pine Bluff. Nicholson’s suit is premised upon a non-exclusive listing contract he entered into with Public Enterprises Corporation (PEC) whereby he agreed to procure buyers for the purchase of a thirty-seven hundred acre farm named Yellow Bayou Plantation in Chicot County. Nicholson subsequently learned the Bank had the major or real interest in the farm, and asserted that, because of numerous misrepresentations made by the Bank’s officers, Howell Davis and Craig Hunt, Nicholson eventually lost his fee under the aforementioned listing contract. After Nicholson had presented his evidence at trial, the Bank moved for a directed verdict on the three counts, at which time Nicholson voluntarily withdrew his breach of contract claim. The circuit judge directed a verdict in favor of the Bank on the remaining claims of fraud and intentional interference, from which Nicholson brings this appeal. Our review entails determining whether Nicholson’s proof was so insubstantial as to require a jury verdict, if entered in his behalf, to be set aside. See Williams v. Smart Chevrolet Co., 292 Ark. 376, 730 S.W.2d 479 (1987). In reviewing a directed verdict that has been granted, we view the evidence that is most favorable to the party against whom the verdict was granted and give it its highest probative value, taking into account all reasonable inferences deducible from it. Id.

We first describe the title and mortgage history of the farm which is the focus of the transaction involved in this litigation. Before and at the time the parties in this case became interested in Yellow Bayou Plantation, the property had been owned by a Jerry Winemiller under his corporation, Yellow Bayou Plantation, Inc. Winemiller had one mortgage on the plantation in the amount of $2.7 million. The Federal Land Bank held that mortgage. Winemiller later obtained a second loan in the amount of $2 million from the Bank, and the Bank took a second mortgage on the farm to secure its loan.

In 1985, Winemiller contacted the Bank through its officer, Hunt, and informed the Bank that Yellow Bayou Plantation, Inc. was about to go bankrupt. In an effort to avoid the property becoming entangled in bankruptcy proceedings, the Bank suggested that Winemiller transfer title of the farm out of Winemiller’s corporation; however, because the farm was ladened with the two mortgages, the Band was unable to take title to the property because the indebtedness was in excess of the Bank’s legal landing limits. Thus, in an effort to place title to the farm in a reliable third party, the Bank got one of its attorneys, Harley Cox, to agree to take title in the name of his corporation, PEC, and in October of 1985, title was so transferred. At this time, Federal Land Bank was about to foreclose on its first mortgage, and the Bank successfully induced FirstSouth F. A. to acquire the federal loan to avoid the foreclosure. This was the state of the title and mortgage history when this farm went on the market for sale and Nicholson first became involved. We now review the evidence necessary to determine whether it is sufficient to support Nicholson’s fraud and intentional interference tort claims against the Bank.

Through a friend, Joey Hill, Nicholson and his father learned that two investors, David Stokes and Paul Piper, might be interested in buying the Yellow Bayou Plantation, and this led Nicholson to contact Bill Bridgforth, a Pine Bluff attorney, who prepared a listing contract naming PEC by E. Harley Cox, Jr., President, as the owner of the farm. Bridgforth and Cox were partners in the same law firm, and Cox was also attorney for the Bank. The contract initially provided a listing price of $4.5 million and an agent’s fee of ten percent if the farm was “sold or otherwise disposed of’ by Nicholson or any other person, including the owner, during the listing period.

After the listing contract was signed on November 22,1985, Bridgforth introduced Nicholson to Bank officers Davis and Hunt, who informed Nicholson that PEC was “a friendly corporation that the Bank owned” and that the Bank held its acquired properties in that corporation. Davis and Hunt told Nicholson to work only with them concerning the sale of the plantation and that he would receive his commission from the Bank. Davis, Hunt and Nicholson then negotiated an amended listing contract reducing the sale price to $4 million and a fee of five, rather than ten, percent. Bridgforth prepared the amended contract, and it was signed by Chris Coker, who was authorized to sign for PEC in Cox’s stead.

Stokes and Piper later submitted an offer dated December 17,1985, naming the Bank as seller; they offered to buy the farm for “$4 million contingent upon Yellow Bayou Corporation having a $1.2 million tax loss available and assumable.” Stokes and Piper paid $200,000 earnest money to the Bank on December 19, 1985, which Hunt accepted in the Bank’s behalf. Nicholson testified that, when these transactions took place, Hunt said, “We have a deal.” Nevertheless, both Bridgforth and Hunt told Nicholson that the offer and acceptance could not be signed at that time because such an action would jeopardize the tax credits. Because no one knew whether the tax advantages sought by Stokes and Piper were available, the Bank contacted its tax attorney, Patrick Burrows, for guidance. On January 9, 1986, Burrows wrote Piper the following:

Dear Mr. Piper:
Our client, Simmons First National Bank, and the present and proposed stockholders of Yellow Bayou Plantation, Inc. offer for sale to you 100 % of the outstanding stock of Yellow Bayou Corporation for the sum of $4,000,000 cash ... it appears that the net operating loss carry-forward of the corporation at its fiscal year end, March 31,1986, will approximate $1,200,000.

On January 20, 1986, Piper’s attorney rejected the proposal set forth in Burrows’ January 9 letter. The Bank then refunded Stokes and Piper their earnest money.

Nicholson said that he learned the offer had gone sour, and that Davis and Hunt directed both Nicholson and Hill not to talk to Stokes or Piper thereafter. Davis and Hunt purportedly said that they would not sell the farm to Piper. Nicholson’s listing contract expired on January 22, 1986.

Between January 28 and February 6,1986, Hunt contacted Mr. Piper concerning whether any of the several foundations controlled by Piper would be interested in investing in the first mortgage held by FirstSouth on the farm in order to give the Bank more time to liquidate the property. Hunt further stated that it was the Bank’s hope that the property could sell for enough money to pay off the first mortgage and still realize something on the Bank’s second mortgage. Hunt explained that the Bank was attempting to get the most money it could out of the deal and to cut its losses.

Hunt’s contact resulted in the Bank and Piper, on February 6, 1986, closing a transaction whereby (1) Piper purchased the first mortgage held by FirstSouth for $2.7 million, for which Piper would receive 12% interest, and (2) Piper granted a one-year option to the Bank to purchase the $2.7 million first mortgage. The option also included an agreement for the Bank to release its second mortgage if it failed to purchase Piper’s first mortgage. Mr. Piper testified that the transaction was conceived by Harley Cox, who prepared the documents for the Bank and Piper. Subsequently, the Bank entered into other listing contracts to sell the property, but no sale occurred and no potential purchaser was located.

The Bank failed to make any payments on Piper’s note, and on February 16, 1987, Pipe called the note. On February 24, 1987, in an attempt to bypass lengthy and costly foreclosure proceedings, Cox as president of PEC, conveyed title to the farm to Piper by executing a “Deed in Lieu of Foreclosure.” Pursuant to their agreement, the Bank then released its second mortgage to Piper. Nicholson never received any contractual “Agent’s Fee.”

We now address Nicholson’s fraud claim against the Bank, and in doing so, are mindful that fraud is never presumed but must be affirmatively proven by one alleging it by testimony which is clear and convincing. Interstate Freeway Serv., Inc. v. Houser, 310 Ark. 302, 835 S.W.2d 872 (1992). To prove fraud or the tort of deceit, Nicholson was required to show (1) a false representation of a material fact, (2) knowledge or belief on the part of the person making the representation that the representation is false, (3) an intent to induce the other party to act or refrain from acting in reliance on the misrepresentation, (4) a justifiable reliance on the misrepresentation, and (5) resulting damage. Morris v. Valley Forge Insurance, 305 Ark. 25, 805 S.W.2d 948 (1991).

The trial court found that Nicholson failed to show any of the misrepresentations made by the Bank were material. Nicholson claims that Bank officers Davis and Hunt misrepresented that (1) the Bank owned PEC and its acquired property, (2) the Bank was “the boss” and Nicholson would be working for the Bank, (3) Nicholson would receive his commission or fee from the Bank and (4) although Hunt knew better, Hunt never informed Nicholson that the Bank was not the seller. The trial court held that, assuming these claimed misrepresentations were true, none of them affected Nicholson’s decision to procure a buyer under the terms of the parties’ listing contract. Indisputably, Nicholson already had Stokes and Piper as potential purchasers and had executed a listing contract on the thirty-seven hundred acre farm with PEC before Hunt and Davis made any of the aforementioned misrepresentations. Nicholson failed to show how the officers’ misrepresentations prevented him from finding a buyer for the farm or how such statements may have affected the only offer made, which was the $4 million plus $1.2 million tax credit contingency offer from Piper. Mr. Piper, who was called as a witness for Nicholson, testified that he simply was not willing to pay “a straight four million dollars for that property.”

The trial court also discounted the materiality of any of the Bank’s misrepresentations by pointing out that the Bank made every effort to meet Piper’s contingency offer by their attorney’s January 9 letter proposing an alternative whereby Piper would purchase Yellow Bayou Plantation Corporation. The trial court noted that it was the Bank’s benefit for the deal with Stokes and Piper to be consummated because the $2.7 million first mortgage on the farm was never in jeopardy of being satisfied; however, the second mortgage, held by the Bank, would not be fully satisfied, but the Bank could at least cut some of its losses if the deal with Piper was consummated. Again, Nicholson offered no proof on how Hunt’s and Davis’s false statements in any way impaired his contract rights or decisions in this matter.

Although the trial court’s decision was premised on the materiality issue discussed above, we also believe Nicholson failed to show the claimed misrepresentations caused his damage. The parties’ listing contract provided that Nicholson would be paid a fee if the property was sold or “otherwise disposed of by the owner,” after the expiration or termination of the listing period when such a disposition of the property resulted from information obtained from Nicholson. While the property was never sold, the farm was clearly “otherwise disposed of” when PEC eventually deeded the property to Piper. Under the terms of the listing contract, Nicholson was entitled to a fee. While he initially filed suit against Cox, PEC, Hunt and Davis alleging breach of contract and fraud, Nicholson dismissed those claims and limited his actions to the torts of fraud and intentional interference against the Bank. While Nicholson now claims it dismissed the breach of contract claim because PEC and Cox were “turnips,” the record simply fails to support such an assertion. In sum, Nicholson had contractual claims for his fee and failed to pursue them, but, most important here, he again has failed to show that any of the Bank’s misrepresentations caused him to lose either his commission or his cause of action to obtain it from the parties responsible under the listing contract.

In his second argument, Nicholson argues the Bank intentionally interfered with his contractual relationship. The elements necessary to prove such an action are as follows: (1) existence of a valid contractual relationship; (2) knowledge of that relationship or business expectancy on the part of the interferer; (3) intentional interference causing breach or termination of the relationship or expectancy; and (4) resulting damage to the party whose relationship or expectancy was disrupted. Stebbins and Roberts, Inc. v. Halsey, 265 Ark. 903, 582 S.W.2d 266 (1979); Navorro-Monzo v. Hughes, 297 Ark. 444, 763 S.W.2d 635 (1989).

In Navorro-Monzo this court stated:

... a successful claim for interference with a contractual relation must allege and prove that a third party either did not enter into or failed to continue with claimant as a result of the unauthorized conduct of the defendant . . .

297 Ark. at 447, 763 S.W.2d at 636.

Nicholson contends the Bank interfered with his contractual relationship in the following two respects: (1) when the Bank’s attorney, Burrows, wrote Piper on January 9, 1986, without informing Nicholson, that the “tax loss contingency” part of Piper’s offer could not be met solely through the conveyance of the farm property, but could only be realized by Piper’s purchasing the stock of Yellow Bayou Plantation Corporation; and (2) when the Bank contacted Piper after the listing agreement expired to request that Piper purchase FirstSouth’s first mortgage and in obtaining a one-year option to buy the first mortgage.

The answer to Nicholson’s first contention under this point is found in our earlier discussion pertaining to the clear purpose of Burrow’s January 9 letter to Piper. The evidence is uncontradicted that the Bank’s tax attorneys were attempting to meet Piper’s contingency offer by proposing Piper buy the stock of Yellow Bayou Plantation Corporation. The Bank’s action in this respect was made “in furtherance” of the terms of the parties’ listing contract, not “in interference” with them. If Piper had accepted the proposal, the farm would have been reconveyed by PEC to the corporation and such a sale and disposition of the property would have entitled Nicholson to his fee under the listing contract.

Nicholson’s second contention focuses on the Bank’s contact of Piper after the listing contract expired and its officers’ directive that Nicholson and Hill should not talk to Piper or Stokes. Once again, we mention that, irrespective of Hunt’s or Davis’s false statements, Nicholson’s agreement with PEC was still in effect even after the listing period expired. As we discussed in Nicholson’s fraud claim, Nicholson was entitled to a commission even after the listing period expired if the property was “otherwise disposed of’ by the owner when such disposition resulted from information obtained through Nicholson. The Bank gained knowledge of Piper through Nicholson, and while no sale was ever made to Piper and Stokes, PEC eventually transferred title of the farm to Piper when the Bank’s efforts to sell the property fell through. The disposition of the property to Piper triggered Nicholson’s rights under the contract, making Nicholson entitled to a fee. Obviously, if Nicholson was entitled to his contractual commission then it follows that no intentional interference with his contract rights existed. Put simply, Nicholson failed to show PEC breached their contract by refusing to pay any fee or commission, much less that the Bank’s interference caused Nicholson to lose such fee expectancy under the PEC/Nicholson contract. As a consequence, Nicholson failed to meet both the elements (3) and (4) in his attempt to prove tortious interference with a contractual relation.

The trial judge did not err in granting the Bank’s motion for directed verdict and we affirm.

Holt, C.J., Newbern and Brown, JJ., dissent.

Robert L. Brown, Justice,

dissenting. This case should have gone to the jury. Instead, the trial court directed a verdict in favor of Simmons First National Bank at the close of all the evidence.

Our task on appeal is to review all of the evidence in the light most favorable to Mark Nicholson and determine whether any substantial evidence of fraud or tortious interference exists. Bank of Malvern v. Dunklin, 307 Ark. 127, 817 S.W.2d 873 (1991). In looking at the case from Nicholson’s perspective and addressing the proof on his behalf, he presents a viable case of tortious interference.

The case presented by Nicholson was this. Simmons Bank held a $2 million second mortgage on the Yellow Bayou Plantation and was -advised that the corporate owner of the plantation was on the verge of bankruptcy. To avoid bankruptcy, the bank suggested that the property be transferred out of the corporation. The bank could not take title to the property because the total debt would exceed the bank’s legal lending limits relative to this property. The property was, as a consequence, transferred to a friendly corporation, PEC, which was owned by the bank’s attorney, Harley Cox. PEC was the alter-ego of the bank, and PEC acted to accommodate the bank and at the bank’s behest. With respect to this property, the two entities were acting on concert.

Nicholson then entered into a real estate contract with PEC to sell the plantation for $4 million at a commission of five percent. Nicholson brought Piper and Stokes to the table.as buyers on December 17, 1985, with an offer of $4 million and an earnest money payment of $200,000, and a tax write-off of $ 1,250,000 as a contingency. The agreement prepared by Nicholson showed the bank as the owner of the plantation.

After that point, Nicholson was effectively cut out of the deal. Another bank attorney, Pat Burrows, wrote a letter directly to Piper on January 9,1986, in an attempt to restructure the deal as a stock sale by the owning corporation so that Piper could take advantage of a loss carryforward of $1,200,000. No mention of either PEC or Nicholson was made in the letter. After receiving the letter, Piper wrote back, through his attorney, on January 20, 1986, and requested that his earnest money be returned because, as he put it, “the plantation cannot be sold as previously discussed with the bank.” At that point the deal was terminated. The bank’s officers directed Nicholson not to have further contact with Piper. Mark Nicholson testified:

[The bank officers] told us that the deal was off, and they told us not to go talk to the Pipers and the Stokes. They said that they were tired of running around after them, and they said they wouldn’t do a deal with them if they came back and offered them $4 million cash.

Larry Nicholson, the appellant’s father, testified in a similar vein:

[The bank officers] told us don’t be fooling with Paul Piper and them, that they weren’t going to sell them the farm. At that time, they told us that the deal was off with them. They told us that they wouldn’t be dealing with Paul Piper or David Stokes, but they were dealing with them all the time. They didn’t tell us that. They said they weren’t dealing with Nicholson Realty Company’s clients, but they were. They said that we shouldn’t deal with them, that they wouldn’t sell it to Paul Piper if he had golden gloves or something to that nature.

Nicholson’s listing agreement with PEC terminated on January 22, 1986.

The bank then continued to pursue its own deal with Piper. Piper himself testified that he was doing business only with the bank at this point. On February 6, 1986, just two weeks after Nicholson’s contract with the PEC expired, the bank contracted with Piper for Piper to purchase the first mortgage from First South in the amount of $2.7 million and gave the bank an option to purchase the first mortgage within one year. The bank then listed the property with several real estate brokers. No contact was had with Nicholson in the effort, and no sale was forthcoming. The bank failed to make any payments on the note now owned by Piper. Piper called the loan, and on February 24,1987, PEC deeded the property to Piper. The bank simultaneously released its second mortgage on the land, the net result being that Piper took the property free and clear.

Nicholson received no commission on the deed to Piper.

The trial court concluded that the deal between PEC and Piper could never have been consummated as originally envisioned because it was contingent on a tax write-off which Nicholson’s offer on behalf of Piper did not provide. The court also alluded to the fact that the property was ultimately disposed of to Piper, the intimation being that this entitled Nicholson to a commission under the original listing agreement from PEC. This transfer to Piper, however, occurred more than a year after Nicholson’s contract with PEC had expired and after the bank had structured a new deal with Piper and after Nicholson had been told by the bank to cease communication with Piper.

In sum, Nicholson was told by the bank not to contact Piper and that the deal was off. The bank then entered into a separate agreement with Piper, unbeknownst to Nicholson, and listed the property with other real estate agencies. Nicholson, thus, was severely limited in further negotiating a sale with Piper. Nicholson may also have had a cause of action in contract against PEC, but I am not prepared to say, as a matter of law, that the bank did not interfere with his business expectancy and that he was not damaged by the bank’s actions.

Viewing this case in the light most favorable to Nicholson a cause of action exists and the jury should have decided the matter. I respectfully dissent.

Holt C.J., and Newbern, J., join.


source: Caselaw Access Project

author: Donald L. Corbin, Justice.

license: Public Domain

text:
    Dan C. EDWARDS v. Steven NEUSE, Dale Evans and John Burrow, as Individuals Who Formerly or Currently Serve as Members of the Washington County Board of Election Commissioners Marlene Ray, as an Individual Who Formerly Served as a Member of the Washington County Board of Election Commissioners Job Serebrov, as the Individual Who Replaced Appellee/Cross-Appellant Ray, and Who Currently Serves as a Member of the Washington County Board of Election Commissioners
    92-810
    849 S.W.2d 479
    Supreme Court of Arkansas
    Opinion delivered March 15, 1993

      Donald C. Donner, for appellant.

      George E. Butler, Jr., Washington County Att’y, for appellees Neuse, Evans, and Burrow.

      William George Myers, for appellees Ray and Serebrov.
   Donald L. Corbin, Justice.

Appellant, Dan C. Edwards, appeals from an order of the Washington Circuit Court dismissing his petition for mandamus. Separate appellees, Marlene Ray and Job Serebrov, cross-appeal from the same order which also dismisses their cross-petition. We affirm the direct appeal for failure to comply with Ark. Sup. Ct. R. 9(d). We dismiss the cross-appeal as the record does not show that a notice of cross-appeal was ever filed.

The requirements of an abstract are clearly stated in Ark. Sup. Ct. R. 9 and we have interpreted those requirements time and time again in numerous opinions. See e.g., Mills v. Holland, 307 Ark. 418, 820 S.W.2d 63 (1991). As it is a practical impossibility for the seven of us to examine the single transcript that is filed with this court, Hunter v. Williams, 308 Ark. 276, 823 S.W.2d 894 (1992), it is absolutely essential that an appellant produce an abstract containing the information necessary for us to decide his or her appeal. Ark. Sup. Ct. R. 9(d) states that an appellant’s abstract should consist of “only such material parts of the pleadings, proceedings, facts, documents, and other matters in the record as are necessary to an understanding of all questions presented to this court for decision.” In D.J. v. State, 308 Ark. 37, 38, 821 S.W.2d 782, 783 (1992), we explained this particular sentence of Rule 9(d):

The word “only” is emphasized to stress that extraneous material should be omitted. However, some portions of the record are essential to an adequate understanding of the specific issues. They normally include at a minimum motions and orders relative to the argument raised.

In the present case, appellant did not include any pleadings, documents, or orders in his abstract. He merely listed the title of each pleading or document and its corresponding page number in the transcript. It seems too simple to require our stating so, but apparently we must: an abstract of appellant’s petition for mandamus and the trial court’s order dismissing his petition is necessary to our decision of the questions presented in this appeal. To decide this appeal, we must, at an absolute minimum, know what the trial court ruled before we can possibly determine any error. See Hunter, 308 Ark. 276, 823 S.W.2d 894; Logan County v. Tritt, 302 Ark. 81, 787 S.W.2d 239 (1990).

The absence of pleadings and documents is not the only deficiency in appellant’s abstract. The transcript of the hearing on appellees’ motion to dismiss the petition for mandamus is abstracted in the third person. According to Ark. Sup. Ct. R. 9(d), the hearing must be abstracted in the first person. Abstracting dialogue or testimony in the first person is much easier on both the one making the abstract and the one reading the abstract. Even if the abstract of the hearing was in the correct person, it would still be deficient because it does not supply the information necessary for deciding this case. To illustrate the deficiency in the abstract of the hearing, we quote the following paragraph of appellant’s abstract:

Response to Motion to Dismiss by Mr. Donner, counsel for Appellant Dan Edwards: Argument that action is an election contest, contesting Appellee Neuse’s qualifications to vote on quorum court district boundaries (T-94 and T-95).

Appellant’s abstract page 9. From the foregoing quotation, it is impossible for us to know the particular basis of appellant’s argument that appellee Neuse was disqualified. Thus, we are faced with an abstract that does not tell us anything about the arguments raised below or the trial court’s rulings thereon.

Ark. Sup. Ct. R. 9(e)(1) states that if an appellee considers an abstract to be deficient, he or she may elect to cure the deficiency by submitting a supplemental abstract. This is not a mandatory requirement. However, it is interesting to note that four of the seven briefs filed in this appeal presented the various attorneys with opportunities to supply us with a sufficient abstract, yet no such opportunity was taken.

Regardless of whether an appellee calls a deficient abstract to our attention, it is a matter we consider when the case is submitted on the merits. Ark. Sup. Ct. R. 9(e) (2). We have the option of affirming the appeal for non-compliance with Rule 9, or if we consider affirmance to be unduly harsh, we may order the parties to re-brief the case. Id. In this particular case, information about the proceedings below is sketchy at best. Based on the. extremely limited information we have before us, it appears that appellant’s claim has no merit. Therefore, we consider an affirmance for failure to comply with Rule 9 not to be unduly harsh in this case.

Appellees Ray and Serebrov add three additional points on cross-appeal. However, neither appellant’s abstract nor appellees’ supplemental abstract indicate that appellees Ray and Serebrov filed a notice of cross-appeal. Moreover, we are informed the transcript does not indicate that a notice of cross-appeal was ever filed. As appellees Ray and Serebrov seek affirmative relief and have failed to file the requisite notice of cross-appeal, we dismiss their cross-appeal. Pledger v. Illinois Tool Works, Inc., 306 Ark. 134, 812 S.W.2d 101, cert. denied, 112 S. Ct. 418 (1991); Brown v. Minor, 305 Ark. 556, 810 S.W.2d 334 (1991); Ark. R. App. P. 3(d).

Affirmed on direct appeal; dismissed on cross-appeal.


author: Robert L. Brown, Justice.

text:
    Kenneth HOLLOWAY v. STATE of Arkansas
    CR 92-1180
    849 S.W.2d 473
    Supreme Court of Arkansas
    Opinion delivered March 15, 1993

      William R. Simpson, Jr., Public Defender, by: Llewellyn J. Marczuk, Deputy Public Defender, for appellant.

      Winston Bryant, Att’y Gen., by: Sandy Moll, Asst. Att’y Gen., for appellee.
   Robert L. Brown, Justice.

The appellant, Kenneth Holloway, and his wife, Peggy Holloway, ran a day-care center in North Little Rock called Peggy’s Day Care. The appellant was charged with and convicted of four counts of rape, four counts of sexual abuse, and one count of terroristic threatening committed against nine children enrolled at the day-care center. He was sentenced to life imprisonment for each of the rape counts plus 120 years for the sexual abuse, to be served consecutively. No time to serve was given on the conviction for terroristic threatening.

The appellant now raises multiple issues on appeal: (1) whether the evidence was sufficient to support a conviction of sexual abuse in the first degree relating to victims K.H. and J.R.; (2) whether the trial court erred in permitting the state to reopen its case for six victims to identify Holloway after he made a motion for a directed verdict at the close of the state’s case; (3) whether the trial court erred in permitting the state to amend Counts VII and VIII of the felony information from attempted rape to rape; (4) whether the trial court erred in finding L.S., age four, and Je.Ca., age six, competent to testify. The issues raised are without merit, and we affirm.

An investigation of Peggy’s Day Care began in 1991 after several children who had been enrolled there reported that the appellant had sexually abused them. Following an investigation, an information was filed charging the appellant with two counts of rape, six counts of sexual abuse, and one count of terroristic threatening committed against several children who had been enrolled at the day-care during the time frame from 1989 to 1991.

On March 12, 1992, an omnibus hearing was conducted to determine the competency of the victims. The following witnesses were found competent to testify: L.S., age four; J.C., age five; Je.Ca., age six; K.H., age eight; R.W., age nine; Ja.Ca., age nine; S.G., age ten; H.C., age twelve; K.K., age twelve; and J.R., age twelve. At the competency hearing, the prosecutor announced that, based on the testimony of two victims, the state planned to nolle pros Counts VII and VIII charging the appellant with attempted rape and refile both counts as rape. The state instead amended the two counts on March 20, 1992, and added a count alleging that Holloway was a habitual offender.

The case went to trial on April 10,1992, and a motion for a mistrial was granted due to potential prejudice on the part of a juror. On June 17, 1992, the trial began a second time but was halted due to the trial court’s recusal. The trial commenced a third time on June 30,1992, and was prosecuted over three days to conclusion.

Multiple victims testified about various sexual improprieties by the appellant, whom they called “Mr. Kenny.” The state then rested. Holloway moved for a directed verdict on the basis that several victims had not specifically identified him in the courtroom as the culprit. The trial court allowed the state to reopen its case and recall six victims who made courtroom identifications. At the conclusion of the case, the jury returned a verdict of four life sentences on four counts of rape and 120 years on four counts of sexual abuse in the first degree, to run consecutively.

I. SUFFICIENT EVIDENCE REGARDING K.H. AND J.R.

We begin by considering the sufficiency of the evidence relative to the two counts involving K.H., age eight, and J.R., age twelve.

K.H. testified that she was eight years old and that Holloway had touched her “private spot” in front, which she called her “PG,” and her “private, spot” in back, which she called her “bottom.” She added that Holloway told her not to tell, but she did complain to Peggy Holloway. The appellant urges that this testimony fails the test of sexual contact.

With respect to J.R., age twelve, Holloway contends that she was indefinite about his touching her breasts. He points out that J.R. testified at the competency hearing that he came close but did not actually touch her breasts.

The testimony reveals that J.R., who was twelve years old at trial and presumably ten years old two years earlier when the incident occurred, described the circumstances of the touching at trial:

Q. Did he ever do anything to you?
A. Yes.
Q. Will you tell the jury about that?
A. I asked him. My back was itching one day, and I asked him to scratch it, and he did. And after a few minutes, I told him to stop and he didn’t. And then he started coming around, and he started rubbing at first under my shirt. And then he started coming around to my side, and then he started coming around to my breast area.
Q. And what did he do?
A. He started trying to feel or touch.
Q. Did you have a shirt on?
A. Yes.
Q. Okay. Where was this in relation to your shirt?
A. Up here (Indicating).
Q. Was it on the inside or the outside of your shirt?
A. Inside.
Q. Okay. What did you do?
A. I started to moving, and then I started to move. Then Peggy drove up, and he quit, because he said Peggy was here, and he quit.
Q. Okay. Can you tell us more about that? What he did when his hand started coming around?
A. He was rubbing, and he was trying to feel.
Q. Okay. Can you tell the jury what he was trying to feel?
A. He was trying to feel my breast.
Q. Okay. And did he do that?
A. He didn’t get all the way around, but Peggy drove up before he could.
Q. Okay. Did he touch your breast?
A. He did kind of.
Q. I need you to — When you say kind of, what do you mean?
A. He didn’t get all the way around on it, but he got to the side.

She then admitted that she was not wearing a bra at the time. On cross-examination, she repeated that he did touch her breasts, but said again that he did not get to the front but got to the side. She admitted that her breasts were not developed like “a full grown lady.” She said that she had testified that Holloway had not touched her breasts at the competency hearing because she was scared.

The elements of sexual abuse in the first degree are fixed by statute:

(a) A person commits sexual abuse in the first degree if:
(3) Being eighteen (18) years old or older, he engages in sexual contact with a person not his spouse who is less than fourteen (14) years old.

Ark. Code Ann. § 5-14-108(a)(3) (1987). “Sexual contact” is defined as “any act of sexual gratification involving the touching, directly or through clothing, of the sex organs, or buttocks, or anus of a person or the breast of a female.” Ark. Code Ann. § 5-14-101(8) (1987).

The standard of review on appeal is whether there is any substantial evidence to support the verdict that the appellant touched these two girls for purposes of sexual gratification, viewing the evidence in the light more favorable to the state as appellee. See Green v. State, 310 Ark. 16, 832 S.W.2d 494 (1992).

In the case of K.H., even though she used her own terms — “private spots” and then “bottom” and “PG” — that is sufficient for a jury to believe that a sexual offense occurred, if she describes where those parts are. Stewart v. State, 297 Ark. 429, 762 S.W.2d 794 (1989). She did that in this case when she said her “PG” was in the front and her bottom was in the back. J.R. testified that the appellant touched her on the side of her breasts, and the jury was free to believe or disbelieve this testimony. They chose to believe it. In both cases, the touching of the body parts constituted sexual contact under the statute, and this court may assume that the appellant’s purpose in touching the girls was for sexual gratification without specific proof that he was so motivated. See McGalliard v. State, 306 Ark. 181, 813 S.W.2d 768 (1991). We hold that sufficient evidence supporting the convictions existed on both counts.

II. REOPENING OF CASE

Holloway argues next that the trial court erred in letting the state reopen its case to allow six victims to identify him after he had made a motion for a directed verdict. He concedes that this court has held that the decision of whether to permit the state to present additional witnesses after it has rested is discretionary with the trial judge. However, he contends that here it was an abuse of discretion due to the prejudice that resulted from having six victims single him out in rapid succession.

The appellant is correct that we have held that the trial court has discretionary power to permit the state to reopen its case after the parties have rested and, further, that a trial court’s decision to reopen a case will not be reversed absent an abuse of that discretion. Sanders v. State, 310 Ark. 510, 838 S.W.2d 359 (1992); George v. State, 306 Ark. 360, 813 S.W.2d 792 (1991); Cameron v. State, 278 Ark. 357, 645 S.W.2d 943 (1983). The reasoning behind this rule is to permit omitted or overlooked evidence to get to the jury before it returns a verdict, when the defendant is not surprised by the introduction or otherwise prejudiced or placed at some disadvantage that cannot be overcome. Id.

Here, there was no surprise. Each victim had referred to the appellant as “Mr. Kenny” or specifically identified him. There could be little doubt that the reference by nickname was to anyone other than the appellant, Kenneth Holloway. Accordingly, the reopening of the case was to further a point that was all but obvious. In this regard, we have said that identification can be inferred from all the facts and the circumstances that are in evidence. Williams v. State, 308 Ark. 620, 825 S.W.2d 826 (1992); Becker v. State, 298 Ark. 438, 441, 768 S.W.2d 527 (1989). Hence, precise in-court identifications in addition to testimony about what “Mr. Kenny” did may not have been necessary, since he was the sole defendant and none of the victims, though of tender years, pointed him out as the wrong man. See Becker v. State, supra. Nevertheless, we hold that because the appellant was not surprised or otherwise disadvantaged by the testimony of the witnesses recalled by the state, the trial court did not abuse its discretion by reopening this case.

III. AMENDED COUNTS

The original felony information, filed on November 12, 1991, charged the appellant in Counts VII and VIII with attempted rape of H.C. and K.K. The amended felony information, filed on March 20,1992, changed those counts to rape after the girls’ testimony at the competency hearing. Holloway now claims that this amendment violated, Ark. Code Ann. § 16-85-407(b) (1987), which provides that an indictment shall not be amended so as to change the nature or degree of the offense charged.

Holloway rightly invokes the statute on the basis that the degree of the offenses was changed when the two counts were amended to rape. However, we can detect no prejudice resulting from the amendment, and this court will not reverse a conviction in the absence of some showing of prejudice. Berna v. State, 282 Ark. 563, 670 S.W.2d 434 (1984). Furthermore, the amendments resulted in no surprise to the appellant. The felony counts were amended on March 20, 1992, and the case was not tried until June 30, 1992, allowing almost three months for any adjustment in preparation. The appellant has not argued that he did not have adequate time to prepare due to the amendment; nor did he seek a continuance. We have held previously that we will not presume prejudice when a defendant fails to move for a continuance or claim surprise after he is put on notice that the state plans to amend an information. Mitchell v. State, 306 Ark. 464, 816 S.W.2d 566 (1991); Harrison v. State, 287 Ark. 102, 696 S.W.2d 501 (1985); Wilson v. State, 286 Ark. 430, 692 S.W.2d 620 (1985). There was no prejudice to the appellant in allowing the trial to go forward.

IV. COMPETENCY OF CHILD WITNESSES

Holloway claims that the trial court erred in finding L.S., age four, competent to testify because she was not able to demonstrate that she knew the difference between the truth and a lie and also because she did not have good recall of the events. He argues that L.S. could not remember how long it had been since she was at the day-care center, where the Holloways used to take her on excursions, or anything else that happened while she was at the day-care center. In addition, though she testified that the appellant made her perform oral sex, she could not remember how it happened and did not want to describe the circumstances. Finally, at trial L.S. testified that she did not know what Holloway’s “private” was or the difference between the truth and a lie.

With regard to Je.Ca., age six, Holloway claims that at the competency hearing she could not give an example of a lie to demonstrate that she knew the difference from the truth. Secondly, she changed the location of where Holloway sexually molested her in her testimony at the competency hearing, and she could not remember what she was wearing or what the appellant was wearing or many of the details.

We have previously set out the procedure and guidelines for determining the competency of a witness:

A trial court must begin with the presumption that every person is competent to be a witness. A.R.E. Rule 601. The burden of persuasion is upon the party alleging that the potential witness is incompetent. To meet that burden the challenging party must establish the lack of at least one of the following: (1) the ability to understand the obligation of an oath and to comprehend the obligation imposed by it; or (2) an understanding of the consequences of false swearing; or (3) the ability to receive accurate impressions and to retain them, to the extent that the capacity exists to transmit to the factfinder a reasonable statement of what was seen, felt or heard. (Citing authority.) The competency of a witness is a matter lying within the sound discretion of the trial court and, in the absence of clear abuse, we will not reverse on appeal. (Citing authority.)

Logan v. State, 299 Ark. 266, 272, 773 S.W.2d 413, 416 (1989); see also Jackson v. State, 290 Ark. 375, 720 S.W.2d 282 (1986). We have applied the same presumption and standards in deciding the capacity of a child witness to testify. See, e.g., Richard v. State, 306 Ark. 543, 815 S.W.2d 941 (1991); Bowden v. State, 297 Ark. 160, 761 S.W.2d 148 (1988); Jacksonv. State, supra. We further have observed that the evaluation of the trial court in these cases is particularly important due to its opportunity to observe the child witness and to assess the child’s intelligence and understanding of the need to tell the truth. Jackson v. State, supra.

In this case, L.S., age four, testified at the competency hearing that she would tell the truth. She identified a piece of paper as yellow and blue and testified that it would be a lie to say it was black. She said that she would get in trouble with her parents if she told them a lie. She also testified that cartoons are make-believe and people are real. The trial court found that though she was imprecise in her testimony, she understood the oath and the ramifications if she lied. When asked if Holloway did something to her, the court noted that she specifically said what it was he did. At trial, she identified an example of a lie — again with colors — but could not give an example herself and could not explain the difference between a mistake and a lie or truth and a lie. She repeated her identification of cartoons as make-believe and people as real. She testified that the appellant made her “suck his private,” which she described as a hot dog.

The testimony of Je.Ca., age six, was similar. She testified that a piece of paper was yellow and that it was a lie to say it was black and that a lie would get her in trouble. Like L.S., she knew that cartoons were make-believe and that her parents were real. She could not give an example of a lie without reference to a color. She testified that she had been touched “on the private” by Holloway and pointed between her legs. The court found her competent to testify. Subsequently at trial, she could not explain what a lie was and could not say what make-believe meant, but could give examples of both. She testified that Holloway touched her “private” and that he made her touch his “privates.”

This case is somewhat complicated by the fact that a different judge presided at trial from the judge at the competency hearing. Nevertheless, neither judge disallowed the girls’ testimony on competency grounds. There was no error in this regard.

Both girls could identify examples of lying and make-believe at the competency hearing and trial, and each knew the consequences of telling a falsehood. There was, to be sure, some imprecision in the details of the surrounding circumstances and an inability to define concepts such as “truth.” But each girl knew she would get in trouble if she told a lie.

With respect to the essentials of their testimony, they specifically described the requisite touching in one case and oral sex in the other. We have held that a child was competent to testify even when his testimony was not a model of lucidity. Bowden v. State, supra. Moreover, we conclude, as the trial court undoubtedly did, that the variances in testimony did not warrant a finding of incompetence but were for the jury to resolve. See McArdell v. State, 38 Ark. App. 261, 833 S.W.2d 786 (1992). We affirm the trial court’s rulings.

The record has been examined in accordance with Ark. Sup. Ct. R. 11(f), and it has been determined that there were no rulings adverse to the appellant which constituted prejudicial error.

Affirmed.


author: Per Curiam.

text:
    Carthel FULLER, Sr. v. STATE of Arkansas
    CR 93-166
    852 S.W.2d 107
    Supreme Court of Arkansas
    Opinion delivered March 15, 1993

      Hubert W. Alexander, Jr., for appellant.
    No response.
   Per Curiam.

Appellant, Carthel Fuller, Sr., by his attorney, Hubert W. Alexander has filed a motion for rule on the clerk. His attorney admits that the record was tendered late.

We find that such error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See per curiam dated February 5, 1979, In re: Belated Appeals in Criminal Cases, 265 Ark. 964; Terry v. State, 272 Ark. 243, 613 S.W.2d 90 (1981).

A copy of this opinion will be forwarded to the Committee on Professional Conduct.


author: Jack Holt, Jr., Chief Justice. Tom Glaze, Justice, concurring. Robert L. Brown, Justice, concurring.

text:
    CONLEY TRANSPORT, INC. v. GREAT AMERICAN INSURANCE CO.
    92-815
    849 S.W.2d 494
    Supreme Court of Arkansas
    Opinion delivered March 22, 1993

      Boyett, Morgan, Millar & Killough, P.A., by: Larry Killough, Jr., for appellant.

      Huckabay, Munson, Rowlett & Tilley, P.A., by: Lizabeth Lookadoo, for appellee.
   Jack Holt, Jr., Chief Justice.

Appellant Conley Transport, Inc. (Conley), is a White County trucking company. Appellee Great American Insurance Companies (Great American), is the insurer of Conley Transport under a truckers physical damage policy. This policy only covered physical damage to Conley’s trucks.

On November 4, 1990, Conley’s driver was in a wreck in Oklahoma with Todd Bridson, who was insured by Farmers Insurance Group (Farmers). Conley sustained physical damage to its truck of $17,143.67 and $18,500.00 in lost net income from the truck being out of use for two and one-half months.

Great American paid Conley $14,068.37, or $17,143.67 less the deductible and other adjustments for physical damages to its truck. Conley settled for an additional $10,000.00 in monies from Mr. Bridson’s insurer, Farmers. This payment represented Bridson’s maximum amount of coverage. In exchange, Conley executed a release discharging Mr. Bridson “from any and all rights, claims, demands and damages of any kind, known or unknown, existing or arising in the future, resulting from or related to property damage arising from” the accident.

Mr. Bridson filed a negligence action on October 21,1991, in Oklahoma against the State of Oklahoma, Duit Construction, Inc., and Action Supply Company, for injuries to himself and a daughter and for the death of another daughter, all passengers in the wrecked car.

On December 23, 1991, Great American filed suit against Conley seeking reimbursement for the $14,068.17 it paid Conley since Conley had accepted $10,000 from Farmers and not paid it to Great American in contravention of its subrogation clause and because Conley wrongfully signed a release preventing Great American from pursuing responsible parties. Conley assigned its rights in connection with the Oklahoma lawsuit to Great American on February 21, 1992.

After a bench trial the court entered a judgment in favor of Great American for $14,068.37 plus taxable costs, finding that Conley had breached the terms of its insurance contract by executing the release, by effectively depriving Great American of its rights of subrogation and by failing to protect Great American’s rights.

We disagree with the trial court and reverse its judgment.

The language of Great American’s “TRUCKERS PHYSICAL DAMAGE POLICY” reads in part:

If we make any payment, we are entitled to recover what we paid from other parties. Any person to or from whom we make payment must transfer to us his or her rights of recovery against any other party. The person must do everything necessary to secure these rights and must do nothing that would jeopardize them.

The proof of Loss Form which Conley submitted to Great American stated:

The insured hereby subrogates the said company to all rights and causes of action the said insured has against person, persons, or corporations whomever to the extent of amount claimed above for damages arising out of or incident to said loss or damage to said property.

(Emphasis ours.)

The truckers’ physical damage policy is physical damage insurance which only obligates Great American to pay for physical damages to Conley’s truck and it is obvious from an examination of Great American’s proof of loss form, executed by Conley, that payment to it of some $14,068.37 was payment of the “whole loss” to his property, i.e. damage to his 1991 Kenworth truck, nothing more.

This being the case, a fair reading of these documents reveals that Conley’s policy with Great American merely encompassed payments of monies for the physical damage to the truck. And for this reason, Great American’s subrogation claim for recovery against other parties for damages arising out of or incident to the loss or damage to Conley’s property is limited to a claim for reimbursement on monies paid for damage to the truck. Conley’s settlement with Farmers, for which a release was executed, was not for damages to its truck, but was for “damages resulting from or relating to his property damage” as stated in its release. It is obvious to us that settlement with Farmers for $10,000.00 was not a double payment to it for property damage to the truck, but rather was payment toward the alleged $ 18,500.00 Conley claims in lost net income which resulted from the fact that the damaged truck could not be utilized until the appropriate repairs were made.

Thus, we conclude that by executing this release, Conley did not deprive Great American of its right of subrogation against third parties for recovery for property damages only. We have long recognized the first rule of interpretation of a contract is to give to the language employed the meaning which the parties intended. First Nat’l Bank of Crossett v. Griffin, 309 Ark. 164-1, 832 S.W.2d 817 (1992); Green v. Ferguson, 263 Ark. 601, 567 S.W.2d 89 (1978); C & A Constr. Co., Inc. v. Benning Constr. Co., 256 Ark. 621, 509 S.W.2d 302 (1974); Lee Wilson & Co. v. Fleming, 203 Ark. 417, 156 S.W.2d 893 (1941). This rule applies equally to insurance contracts:

In American Homestead Ins. Co. v. Denny, 238 Ark. 749, 384 S.W.2d 492 (1964), we reiterated:
It is the duty of the Courts to construe the language [in an insurance contract] used by the parties and such construction is performed by considering the sense and meaning of the terms which the parties have used as they are taken and understood in their plain ordinary and popular sense.

Southern Farm Bureau Casualty Ins. Co. v. Williams, 260 Ark. 659, 662, 543 S.W.2d 467, 468-9 (1976). See also Universal Sec. Ins. Co. v. Ring, 298 Ark. 582, 769 S.W.2d 750 (1989).

In short, we cannot agree with the trial court that Conley breached the terms of its insurance contract by executing the release with Farmers or that Conley has effectively deprived Great American of its subrogation or has failed to protect Great American’s rights. With regard to the latter, it is noted that Conley has assigned its rights to Great American in connection with an Oklahoma lawsuit and has agreed to cooperate fully with Great American toward the end of asserting its subrogation rights.

For these reasons, we reverse the findings of the trial court.

Glaze and Brown, JJ., concur.

Tom Glaze, Justice, concurring.

The majority court reverses, and sets aside Great American Insurance Company’s judgment against Conley Transport. That judgment reimbursed Great American Insurance proceeds it earlier paid Conley. The court holds Great American Insurance can get reimbursed from others by exercising its subrogation rights provided under its policy with Conley. In brief, this court finds Conley Transport, Inc. did not breach the Company’s policy terms nor deprive Great American Insurance Company’s right of subrogation against tortfeasor Todd Bridson and other parties by Conley’s executing a release discharging Mr. Bridson. In sum, the court says the terms of the release were narrowly drawn and, as worded, do not bar Great American from exercising its subrogation claim against Mr. Bridson. This is a fine distinction in which I need not indulge. In my view, Great American simply has no right of subrogation under the facts of the case because Conley Transport has yet to be made whole for all its losses. See Shelter Mut. Ins. Co. v. Bough, 310 Ark. 21, 834 S.W.2d 637 (1992); see also 6A John A. Appelman & Jean Appelman, Insurance Law and Practice § 4095, at 275 n. 59 (1972). Under the parties’ insurance policy, Great American has no subrogation right against Conley Transport because Conley Transport has never fully recovered its losses. Therefore, the trial court erred in giving Great American judgment against Conley Transport.

Robert L. Brown, Justice, concurring.

I agree with the majority opinion but write only to clarify my position on subrogation rights in this case when double recovery for the same risk is the issue.

We have recently had a spate of subrogation cases where the issue presented was whether the injured party was entitled to be made whole by his insurance carrier and the insurance carrier of any third-party tortfeasor for all property and personal injury damages incurred before subrogation rights would be effective, or, alternatively, whether the injured party’s carrier would be subrogated to benefits paid by a third-party carrier irrespective of whether the injured party had been fully compensated.

The right of an injured party to be made whole and an insurance carrier’s right to subrogation are both equitable principles. Couch on Insurance 2d, § 61.20, p. 96 (1981). Subrogation rights, however, may also be delineated by contract, but contract rights will not be enforced when this works an injustice. Id at 97; see also Shelter Mutual Ins. Co. v. Bough, 310 Ark. 21, 834 S.W.2d 637 (1992); Hill v. State Farm Mutual Automobile Ins. Co., 765 P.2d 864 (Utah 1988).

Conflicts occur where the injured party’s carrier covers for a specific risk such as property damage and pays a claim in full on that risk. The carrier’s policy includes a subrogation clause in the contract relative to all payments recovered by the insured. In the event that the injured party receives benefits from the tortfeasor’s carrier for the same risk compensated, that is, property damage for which the insured has been fully compensated, subrogation should be allowed. However, if the contract between the injured party and the carrier provides that the carrier is subrogated to any and all other benefits received by the injured party, including benefits for risks not covered by the injured party’s carrier, I question whether that carrier should be subrogated to those benefits. For example, a carrier paying the injured party for property damage should not be subrogated to benefits paid by the tortfeasor’s liability carrier for bodily injury, regardless of the subrogation language in the property carrier’s policy. To allow subrogation in that event would, in my judgment, be contrary to public policy.

Absent clear evidence of double recovery for the same risk, the injured party has a right to be made whole by insurance benefits received from other sources including benefits received from the tortfeasor’s carrier.

In the case before us, the insured was made whole by Great American for physical damage to the truck. The facts, however, are not clear that double recovery for the same risk has occurred in the sense that it is impossible to discern from the record whether the tortfeasor’s carrier, Farmers, paid $10,000 for physical property damage under its policy, as did Great American, or whether the benefits paid embraced other elements of damage arising out of the property damage such as lost income. Great American should not be subrogated to benefits paid to compensate for some other risk than that covered by Great American for the public policy reasons already addressed. However, had it been clear that Farmers was paying solely for property damage, causing a duplication of benefits for this risk, subrogation rights in Great American would prevail.

Because it is unclear that double recovery for property damage has occurred, I agree with the majority opinion and would reverse the judgment.


author: Steele Hays Justice.

text:
    Scarlett DeHART v. STATE of Arkansas
    CR 92-638
    849 S.W.2d 497
    Supreme Court of Arkansas
    Opinion delivered March 22, 1993

      Young & Finley, by: Dale W. Finley, for appellant.

      Winston Bryant, Att’y Gen., by: Cathy Derden, Asst. Att’y Gen., for appellee.
   Steele Hays Justice.

This appeal questions whether a trial court exceeds its jurisdiction when, having imposed a sentence for a term of years, which the defendant has been serving, it adds a fine for a subsequent offense.

Scarlett DeHart was originally charged in September 1988 with overdraft and theft by deception. She was convicted and in January 1990 was sentenced to a ten-year term of imprisonment with suspended execution of five of those years, conditioned upon her living a law-abiding life. She began serving the five years which were not suspended.

In October 1990, Ms. DeHart was paroled from prison and the trial court entered an order acknowledging her release. Some months later she was arrested for attempting to obtain a controlled substance by the fraudulent use of a prescription. Separate proceedings were begun to revoke her parole and her suspended sentence. The parole revocation hearing was held first and the parole board chairman filed a summary of the hearing on September 9, 1991. He found insufficient evidence that the conditions of parole had been violated.

On November 4,1991, a hearing was held on the revocation of the suspended sentence. The trial court found by a preponderanee of the evidence DeHart had violated conditions of her parole by fraudulently obtaining a controlled substance. Sentencing was set for December 9,1991, and on that date the trial court held the sentence she was currently serving (10 years with five years suspended) should remain in effect and that in addition to the “fine, costs and restitution and fees previously assessed against the defendant in the judgment entered on January 9, 1990, she shall pay an additional fine of $250.00.”

Appellant DeHart first argues the trial court exceeded its authority in assessing the $250 fine. The crux of the argument is: Once part of a sentence has been put into execution, may the sentence be modified or changed? The answer is no. A trial court loses jurisdiction to modify or amend the original sentence, once any part of a valid sentence is put into execution. Jones v. State, 297 Ark. 485, 763 S.W.2d 81 (1989).

At the sentencing on December 9, 1991, the trial court sentenced DeHart to ten years imprisonment, with the execution of five of those years to be suspended after serving the first five. The trial court did not impose any fine for these convictions but included as a condition of suspension that she pay the fines on two existing, unrelated cases. Ms. DeHart began serving her sentence but was released on parole in October 1991. As she had begun incarceration, execution of the sentence had obviously begun.

It is clear that a trial court cannot modify or amend the original sentence once a valid sentence is put into execution. Jones v. State, supra; Toney v. State, 294 Ark. 473, 743 S.W.2d 816 (1987); Lambert v. State, 286 Ark. 408, 692 S.W.2d 238 (1985). The $250 fine was therefore invalid and the judgment must be modified to reflect that holding. See Queen v. State, 271 Ark. 929, 612 S.W.2d 95 (1981).

The state contends this point was not raised below and is therefore waived on appeal. However, we have treated the issue as jurisdictional and as not requiring an objection at the trial level. In Jones v. State, supra, the same issue was presented, i.e., the trial court had increased the sentence after it had been put into execution and objection was made for the first time on appeal. We wrote:

Although appellant did not object in the trial court, she need not have done so. The trial court’s loss of jurisdiction over a defendant “is always open, cannot be waived, can be questioned for the first time on appeal, and can even be raised by this court.” Coones v. State, 280 Ark. 321, 657 S.W.2d 553 (1983); Lambert v. State, 286 Ark. 408, 692 S.W.2d 238 (1985).

Second, Ms. DeHart argues that the trial court erred in not making written findings at the revocation hearing as required by Ark. Code Ann. § 5-4-310(b)(5) (1987), which reads:

If the suspension or probation is revoked the court shall prepare and furnish to the defendant a written statement of the evidence relied on and the reasons for revoking suspension or probation.

The trial court did not provide DeHart with a written statement of the evidence under § 5-4-310(b)(5), and she claims this is error. We disagree. The statute she relies on is, by its language, only applicable when the trial court has revoked a suspension or probation. Here, the trial court did not revoke the suspension. The record reveals the following:

1. The trial court issued an order on November 4, 1991, after the revocation hearing, finding defendant had violated the conditions of her suspended sentence by engaging in obtaining a controlled substance by fraud. The order continues: “Therefore, defendant’s suspended sentence should be revoked.” [Our emphasis.]
The order further stated it was taking the matter under advisement as to sentencing and directed the defendant to report back to court for sentencing on December 9, 1991.
2. The trial court issued an order on December 9, 1991, to direct sentencing in the case. The order stated:
The court, having previously found by a preponderance of the evidence that the defendant violated the condition of her suspended sentence, hereby finds that the sentence defendant is currently serving (ten years in the Arkansas Department of Correction with five years suspended) shall remain in effect. In addition to the fine, costs, restitution and fees previously assessed against the defendant in the judgment entered on January 9,1990, she shall pay an additional fine of $250.
All conditions of defendant’s suspended sentence shall remain in full force and effect, including the condition that she live a law-abiding life (not committing any offense punishable by imprisonment, either felony or misdemeanor), during the period of suspension. [Our emphasis.]

While the trial court’s order of November 4, 1991, did state that the suspended sentence should be revoked, with sentencing to be deferred for a month, it is clear from the wording emphasized above that the trial judge changed his mind before the actual sentencing on December 9 and declined to revoke the suspended sentence. As there was no revocation of the sentence, the statutory provision Ms. DeHart relies on is not applicable. Written findings are required only when suspension or revocation is revoked. See § 5-4-310(b)(5).

Scarlett DeHart next argues the evidence at the revocation hearing was insufficient to support a finding that she had committed any crime, and therefore, revocation was not appropriate. Again, the argument presupposes, incorrectly, a revocation was ordered. Consequently, whether there was or was not sufficient evidence to show she had committed the offense is moot.

Ms. DeHart next argues that the finding of the parole board was res judicata as to the issues decided in that hearing. Prior to the revocation hearing on November 4,1991, a hearing was held before the parole board and a summary and finding of the parole board was filed on September 9, 1991. The parole board was apparently considering the effect of the allegation that she had committed the offense of obtaining controlled substances by fraud. The board found there was insufficient evidence to find she had violated the conditions of parole and DeHart now contends this proceeding was a bar to the later revocation hearing on November 4th because it involved the same issues.

However, we can’t consider the argument as there is no abstract of the proceedings of the parole board. With no abstracted record of that proceeding, we have no way to review the argument. See Rule 9, rules of the Arkansas Supreme Court and Court of Appeals.

The final argument involves a second revocation hearing. On December 13, 1991, appellant was arrested for shoplifting in a Kroger store. The state subsequently filed a petition to revoke her suspended sentence and a hearing on the matter was held on April 6, 1992. Two witnesses testified. The first was Scott Renfroe, a lieutenant for the Pope County Sheriffs Office who was working part-time as security guard in Kroger at the time the offense occurred. The other witness was the appellant. Their versions differed as to an episode involving a bottle of perfume. Renfroe testified he had seen DeHart put the perfume bottle in her purse and leave the store without paying for it. She testified she merely laid it on a check-out stand as she was being checked out because she realized she did not have enough money to pay for it. The trial court stated at the conclusion of the hearing:

I do have a problem with the shoplifting. I think based on everything that has been presented to this court from the officer and Ms. Kendrick [appellant DeHart], the more believable version of what took place out there rests with the officer. I think that conduct violated a condition of her suspended sentence.

The trial court entered a judgment on April 24,1992, which reads in part:

After hearing testimony of witnesses, examination of exhibits and argument of counsel, the court, being well and sufficiently advised, finds by a preponderance of the evidence that the defendant did violate the conditions of her suspended [sic] by failing to live a law-abiding life, to wit: defendant was convicted of shoplifting in Pope County Municipal Court.

Appellant argues the trial court was in error in basing its decision on the municipal court judgment because that judgment is being appealed and is not yet a final conviction. However, the fact that it is on appeal does not prevent the trial court from using it as a basis for revocation. In Barnes v. State, 294 Ark. 369, 742 S.W.2d 925 (1988), the question was whether a revocation could occur before the appeal was concluded on the triggering offense. We answered in the affirmative:

We have held that a conviction in violation of probation warrants revocation even though the conviction may have been appealed. A conviction represented either a plea of guilty or nolo contendere or a finding of guilt beyond a reasonable doubt by a judge or jury. Given the fact that a revocation can be had in circumstances where the proof requirement is less stringent, see Morrisey v. Brewer, 408 U.S. 471 (1972), we find no error in revoking probation if a conviction has occurred, even though it may be on appeal.

Ms. DeHart also submits the trial court erred in relying on the municipal court conviction, as she was entitled to an independent determination by the trial court at the revocation hearing. We find no merit to this point. Judgments are generally construed like other instruments and the determinative factor is the intention of the court, gathered from the judgment itself and the record, including the pleadings and the evidence. Magness v. McEntire, 305 Ark. 503, 808 S.W.2d 783 (1991). Here, it is not entirely clear what was meant by the comment that Ms. DeHart was convicted of shoplifting in Pope County Municipal Court. However, any uncertainty is dispelled by the judge’s remark at the conclusion of the hearing that he was basing revocation on the fact that he found the security guard’s testimony more credible.

Affirmed as modified.

       Suspended execution is now authorized under Act 956 of 1985 codified at Ark. Code Ann. § 16-90-115 (1987).


author: David Newbern, Justice.

text:
    ANADARKO PETROLEUM CO. v. Robert VENABLE
    92-1009
    850 S.W.2d 302
    Supreme Court of Arkansas
    Opinion delivered March 22, 1993

      Smith, Stroud, McClerkin, Dunn & Nutter, by: Hayes C. McClerkin, for appellant.

      Crumpler, O’Connor & Wynne, by: William J. Wynne, for appellant.
   David Newbern, Justice.

This is an appeal involving a question in the law of oil and gas which arises out of the interpretation given three deeds executed and recorded in 1939 and the interest conveyed by the deeds. The grantors in the three separate deeds were, respectively, the Royalls, the Pattons, and the Wigginses. Each deed contained, in effect, two granting clauses of mineral interests. The first clause contained an outright grant, and the second granted an amount dependent upon the amount granted in a certain lease. An issue before the Chancellor, and before us now on appeal, was whether the grant based on the lease was only explanatory of the first grant in each lease or was intended to convey to the grantee of each deed whatever the lease provision would yield. Another issue is whether the claims of the appellee, Robert Venable, are barred by a statute of limitations, estoppel, or laches. The Chancellor held that the second granting clause in each deed, i.e., the one referring to the lease was controlling. He also found the claim of Venable was not barred. We affirm the holding.

Each of the deeds was entitled “Warranty Deed and Perpetual Royalty” and contained the following:

[A]nd the Grantee [F.W. McClanahan and R.H. Venable] shall at all times subsequent to the execution of this instrument, receive a (13/1920ths) [Royall deed]; (4/ 1440ths) [Patton deed]; (18/1440ths) [Wiggins deed] part of all oil, gas and other minerals produced and saved from the above described land, free and clear of any expense of drilling any well or wells for the production of said minerals, or any of them, or of the mining of said minerals, or any of them, or of the operation of any well or mine from which said minerals are produced, or from which any one of said minerals is produced, which provision and agreement is a covenant which shall run with the land to the end that it shall be binding upon the Grantors and their heirs and assigns forever.
It is understood that this land is encumbered with an oil and gas lease executed by J.G. Tissue, a widower as Lessors, to Record Owners as Lessee, on_, which lease is recorded in Book_, at Page_, of the Deed Records of Columbia, County, Arkansas.
And for the same consideration the Grantors do hereby bargain, grant, sell, convey and set over onto the Grantee an undivided (13/240ths) [Royall deed]; (4/180ths) [Patton deed]; (18/180ths) [Wiggins deed] part of all royalties on oil or gas produced from the above described land during the term of said lease, or any extension thereof.
However, the Grantee shall have no interest in the purchase price to be paid for any oil and gas lease or leases, or other lease or leases on the land, or any part thereof, made by the Grantors in the future; and the Grantee shall not be entitled to receive any portion of any sum or sums to be paid as delay rental under the terms of any oil and gas lease now or hereafter affecting the land, or any portion thereof or any interests therein, to defer the commencement of a well during the primary term thereof; and the Grantee, his heirs or assigns, shall not be entitled to join in the execution of any such future lease or leases on the land.

The appellant, Anadarko Petroleum Co. (Anadarko), has two producing wells within the Atlanta Field which are subject to the royalty interests conveyed by the deeds. Anadarko executed Division Orders and paid royalties to Venable from 1983 until the filing of the lawsuit in 1991 based on its interpretation of the deeds as granting the Venable interests a right to a fractional share of the proceeds from production equivalent to a one eighth C/sth) royalty, the same royalty interest retained in the Tissue lease which was in place in 1939. Appellee Venable argued that his interest should have been determined from leases which were executed in January, February, and March of 1980 by the descendants of the original mineral lessor mentioned in the deeds. In two of these leases there was provided an overriding three sixteenths (3/i&ths) royalty interest.

Anadarko argued that Venable was entitled to a lesser proportion limited to that provided in the granting clauses of the 1939 deeds and that any other claim was barred by estoppel, laches, and the statute of limitations. The matter was presented to the Chancellor for consideration on the arguments of counsel and the documentary record supported by trial briefs. The Chancellor found that Venable was due a royalty based on a computation derived from the 1980 leases, two of which provided for 3/16ths rather than the 1 /8th as provided in the 1939 lease. The Chancellor also found the claim was not barred by estoppel, •laches, or the running of a statute of limitations.

Anadarko argues first that the Chancellor erred in granting Venable a greater interest than that conveyed by the 1939 deeds. We find no error in the Chancellor’s determination that the intent of the 1939 deeds was to convey to Venable whatever royalty rights were held by the grantors as determined by the Tissue lease or leases and that the computation of the royalty using the 3/16th figure in the 1980 leases was proper.

1. Interpretation of the deeds

Anadarko calculated Venable’s interest in the Division Orders based solely on the deed’s initial granting clause without consideration of the subsequent language concerning the lease because it interpreted the latter language to be explanatory only. In support of its position it relies on the decision in Barret v. Kuhn, 264 Ark. 347, 572 S.W.2d 135 (1978), which essentially held that we would construe deeds in such a way that the granting clause of the deeds would be controlling in the event of an irreconcilable conflict between the mineral deeds granting clause and other clauses.

In the Barret case the appellees, or their predecessors, during the 1940s granted essentially identical non-participating royalty interests to the appellants. These deeds gave a fixed interest in any money paid from production of oil and gas from the lands. Subsequently the appellees negotiated with another party and signed other oil and gas leases on the property, granting the working interests. These leases all provided for the appellees to have an overriding royalty if production was obtained. In some instances the overriding royalty amounted to one-eighth (1 /8th) and in others a one-sixteenth (1 /16th) overriding royalty in addition to the usual one-eighth royalty that was reserved in these leases by the owner. There was no mention in the negotiations for the leases, nor in the leases themselves, of the non-participating royalty holders.

When production was obtained, a division order was prepared setting forth in detail who was to be paid a royalty and in what amount. The division order was the first notice to the parties that the non-participating royalty holders were making a claim to the overriding royalty payments to be paid to the appellees. The royalty deeds in question were form instruments, headed in bold type “ROYALTY DEEDS”, beneath which was the word, “nonparticipating”. The granting clause in the royalty deeds read:

That_for and in consideration of. __, ... do hereby grant, bargain, sell, and convey unto the said_and unto its successors and assigns forever, subject, however, to all of the terms, conditions and reservations hereinafter mentioned, an undivided one sixty-fourth (1/64) interest in and to all of the oil, gas and other minerals, in, under and upon the following described lands ....

After describing the property, the deeds contained two other relevant clauses; the royalty clause and the production clause. The royalty clause read:

Provided, that the grantors herein expressly covenant with the grantee that no oil and gas mining lease shall ever be executed covering the above land, or any part thereof, that shall reserve to the grantors herein, their heirs and assigns, as royalty, less than one-eighth of all of the oil and gas produced and saved from said land — and this covenant shall be deemed a covenant running with the land. It is the intention of the parties hereto that the grantee herein, its successors or assigns, shall be entitled to receive hereunder one-eighth of all oil and/or gas run to the credit of the royalty interest reserved under and by virtue of any oil and gas mining lease now in force and effect covering said land, and under any oil and gas mining lease hereafter executed covering said land, or any part thereof; ....

What is referred to as the production clause follows the royalty clause and it read:

[A]nd in any event the grantee herein, its successors or assigns, shall be deemed the owner of and shall be entitled to receive one sixty-fourth of all oil and gas produced and saved from said land or any part thereof.

The appellants in the Barret case argued they were entitled to an interest as described in that part of the royalty clause which read: . . the grantee. . . shall be entitled to receive hereunder one-eighth of all oil and/or gas run to the credit of the royalty interest.” We said:

It is our duty to interpret such instruments by trying to make all parts of the instrument harmonize, and stand together, if possible, so as to ascertain the intention of the parties. [Citation omitted.] The granting clause in these deeds says that a one sixty-fourth interest is granted to the oil, gas and minerals produced. This clearly limits the claim of the non-participating holders because if they were to participate in the overriding royalty, they would receive more than a one sixty-fourth interest. Also, this same one sixty-fourth interest is mentioned in the production clause. No doubt it would have been clearer if the parties had said in their instruments that participation would only be in the normal one-eighth royalty, but they did not. However, when examined as a whole, the instrument clearly limits the non-participating interest to one sixty-fourth of the oil, gas and minerals produced.

We concluded that the non-participating royalty owners could not participate in the overriding royalty created by the subsequent leases. As can be seen from the language employed in both sets of deeds, those in the Barret case are significantly distinguishable from those employed in this case. The interpretation of deeds advanced by the appellants in the Barret case would have rendered the deeds internally inconsistent, elevated the royalty clause over the granting clause, and ignored the stated intent evidenced in the production clause. There are no such problems with the deeds now before us, and while the language they use does not evidence the clarity of intent we found in the Barret deeds, it is clear that the language in the initial granting clause is supplemented by the language in the subsequent clause granting to Venable “an undivided. . . part of all royalties on oil or gas produced from the above described land during the term of said lease, or any extension thereof.”

The Chancellor found as follows:

10. That Plaintiff. . . is entitled to receive a royalty amounting to 1/2 of 127/720 of 1/8 of the oil and gas produced, saved and marketed under the terms of Lease D from the 29.8 acre tract covered by said Lease D and forming a part of the unit consisting of the Southwest Quarter of the Southwest Quarter (SW/4 SW/4) of said Section 15 and a royalty amounting to 1/2 of 127/720 of 3/16 of the oil and gas produced, saved and marketed under the terms of Lease E from the 10.2 acre tract covered by Lease E and forming the remaining part of said unit, upon which the Tissue “A” 1-15 is being operated. That accordingly, Plaintiff is entitled to receive a total royalty amounting to .012429903 (29.8/40 X 1/2 X 127/720 X 1/8 plus 10.2/40 X 1/2 X 127/720 X 3/16) from the oil and gas so produced, saved and marketed from the 40 acre unit.
11. That Plaintiff... is entitled to receive a royalty amounting to 1/2 of 127/720 of 3/16 of the oil and gas produced, saved and marketed under the terms of Lease F from the Northwest Quarter of the Southwest Quarter (NW/4 SW/4) of said Section 15, or to .016536458 of the production under the terms of said Lease F from the Northwest Quarter of the Southwest Quarter of said Section.

The Chancellor interpreted the deeds to mean that they had to be read in conjunction with the lease or leases to arrive at the proper fractions because of the interaction between these two granting clauses. Anadarko does not dispute that the 1939 deeds utilized the amount of royalty which the grantor had retained under the lease to arrive at the fractions stated within the deeds but characterizes that fact as “coincidental” and the language as merely “explanatory”. It is our duty to interpret instruments by trying to make all parts of the instrument harmonize, and stand together, if possible so as to ascertain the intention of the parties. Barret v. Kuhn, supra. The deeds here clearly sought to convey some interest defined by something in the lease “for the same consideration” to Venable. We cannot agree that the language was merely “explanatory” and ignore it as Anadarko would have us to do, as it utilized all the terms of art of conveyance and appears to have granted an additional fractional one-eighth (1 /8th) of that which it initially conveyed based on the terms of the lease.

While the 1939 lease is not contained in the record, there is no dispute that it expired. The Chancellor clearly considered the 1980 leases to be “extensions” of the original lease, and we have been presented with nothing which would render that conclusion clearly erroneous which is what is required if we are to reverse such a fact finding. Perry v. Nicor Exploration, 293 Ark. 417, 738 S.W.2d 414 (1987); A.R.C.P. 52(a). Anadarko argues that the deeds do not contemplate a “future lease” but it ignores the language in the deed which applies to the “said lease, or any extension thereof’. There is no question that this interpretation by the Chancellor is supported by the deeds.

2. Limitations, estoppel, and laches

Anadarko argues that the claim of Venable is barred because he signed and accepted Division Order #0323428 which sets out his interest and at no time did he dispute the calculation of his interest nor did he revoke or rescind the order. The Division Order is a multi-paged document which states in relevant portion:

The undersigned, and each of us, certify and guarantee that we are the legal owners of and hereby warrant the title to our respective interests as set out below in the oil and casinghead gas ....
***
Effective first production and until further notice, subject to the conditions, covenants and directions hereof, you are authorized to sell and deliver Products from the property above described and until further notice give credit for said Product as follows: ....

A division order is “[a] contract of sale to the purchaser of oil or gas. The order directs the purchaser to make payment for the value of the products taken in the proportions set out in the division order.” Williams & Meyers, Manual of Oil and Gas Terms § 258 (1985). The division order is typically terminable at the will of either party and may as is alleged here inaccurately reflect the interest owned by a party. Generally under such circumstances the purchaser of the minerals may rely on the division order in making payments to the owners and not be liable in contract or tort for underpayment. 4 Williams & Meyers, Oil and Gas Law § 704.5 (1984). In Hemingway, Law of Oil and Gas § 7.5 (3d ed. 1991) the following appears: “[b]y the better view, an owner of production who has executed a division order is not so contractually bound or estopped by the division order that he cannot recover for underpayment from owners of production who have been overpaid. He may not recover from the purchaser of production.”

Anadarko’s argument is that the signing and acceptance of the Division Order calculation should bar Venable from claiming any other formulation under several theories. First Anadarko argues that Venable is barred by the statute of limitations. Arkansas Code Ann. § 16-56-111 (Supp. 1991) provides a five-year limitation on actions concerning instruments in writing. Anadarko claims the statute ran in 1988 on the 1983 division order. The statute provides, however, “partial payment. . . shall toll this statute of limitation.”

In Johnson v. Gammill, 231 Ark. 1, 328 S.W.2d 127 (1959), the parties entered into a written stipulation as to a longstanding indebtedness on January 26, 1952. Several payments were made subsequent to that date and before suit was filed on February 8, 1957. A statute of limitations defense was raised which we rejected, holding that the stipulation constituted the written instrument and the part payments interrupted or tolled the statute with respect to the entire indebtedness. Assuming the division order constitutes the written instrument for purposes of triggering the statute in this case, the earlier payments made under the order tolled the statute.

Second Anadarko claims laches and estoppel bar this claim. It is clear from the language above that all that Venable’s signature on the division order represents is the warranting of his title and an authorization for Anadarko to sell the products, giving him credit for his share as calculated. It does not in any way indicate Venable’s ratification of the calculation or a waiver of his right to challenge that calculation. We have never been called upon to interpret execution of a division order in the manner suggested by Anadarko. We have, however, considered other arguments concerning the effect of such a document.

In Shreveport El Dorado Pipeline Company v. Bennett, 172 Ark. 804,290 S. W. 929 (1927), we rejected an estoppel argument against a royalty owner based on the contents of a division order directed to the Pipeline Company. The division order directed giving credit for a share of production to a party who had no right to a share. The oil company argued it had no knowledge its payment was in error because the information in the division order setting out an interest to others justified the payment it had made. We found that the oil company’s notice of the leases underlying that division order was sufficient notice that the payment was incorrect.

In Pope v. Pennzoil Producing Co., 288 Ark. 10, 701 S.W.2d 366 (1986), we said that a division order and a 13-year delay in raising any objections, combined with a ratification and adoption clause in the division order, barred royalty owners by laches and estoppel from challenging the distribution. The document provided in relevant part:

We . . .do hereby adopt, ratify and confirm each of Pennzoil Producing Company’s leases covering these tracts and provided Pennzoil pays royalties in the proportions set out, same will be maintained in full force and effect.

We said:

We have consistently held that oil and gas properties are unusual and require diligence on the part of parties claiming a property interest. Walker-Lucas-Hudson Oil Co. v. Hudson, 168 Ark. 1098, 272 S.W. 836 (1925). In Sanders v. Flenniken, 180 Ark. 303, 21 S.W.2d 430 (1929), this court cited with approval the following language from Patterson v. Hewitt, 195 U.S. 309 (1904):
There is no class of property more subject to sudden and violent fluctuations of value than mining lands. A location which today may have no salable value may in a month become worth millions. Years may be spent in working such property, apparently to no purpose, when suddenly a mass of rich ore may be discovered from which an unusual fortune is realized. Under such circumstances, persons having claims to such property are bound to the utmost diligence in enforcing them, and there is no class of cases in which the doctrine of laches has been more relentlessly enforced.

In Sanders we continued discussion of the concept as follows:

From these citations it will be seen that this court, as well as the Supreme Court of the United States, has uniformly recognized that, on account of the fluctuating and uncertain values of oil and gas lands, parties asserting title thereto must act more promptly than in ordinary cases in which the values remain practically the same. Of course, it is equally well-settled that, when the question of laches is an issue, the plaintiff is chargeable with such knowledge as he might have obtained upon inquiry, provided the facts already known to him were such as to put the duty of inquiry upon a man of ordinary intelligence.

These cases establish that laches or estoppel may flow from execution of a division order; however, in this case Venable first sought an accounting for and then judgment for the proceeds which were withheld under Anadarko’s calculation in the division order. “The equitable doctrine of laches is not applied in actions for damages, for accounting, for the recovery of money or property fraudulently obtained, and the like.” [Emphasis supplied.] Peek v. Brickey, 300 Ark. 354, 779 S.W.2d 152 (1989) ; S. Symons, Pomeroy’s Equity Jurisprudence, 917 p. 600 (5th ed. 1941). Additionally, laches is based on the theory that it is the unreasonable delay of the party seeking relief under such circumstances as to make it inequitable or unjust for the party to seek relief now. Reynolds v. Smackover State Bank, 310 Ark. 342, 836 S.W.2d 853 (1992). Venable asserts he had no knowledge of the contents of the 1980 leases prior to filing suit. There is nothing in this record to contradict that assertion, and we must assume that the Chancellor believed this to be the case. The Chancellor is in the best position to assess the credibility of witnesses, and where an issue turns heavily upon credibility, we will defer to the Trial Court. First Nat’l Bank v. Mercantile Bank, 304 Ark. 196, 801 S.W.2d 38 (1990).

Also in the Reynolds case we pointed out that for silence to constitute an estoppel there must be both the opportunity and the duty to speak. Lavaca School Dist. No. 3 v. Charleston School Dist. No. 9, 304 Ark. 104, 800 S.W.2d 703 (1990) . The action of the person asserting the estoppel must be the natural result of the silence, and the silent party must be in a situation to know that someone is relying on the silence to his detriment. Again, Venable’s lack of knowledge precludes the doctrine of estoppel from barring his claim.

Finally, in Worth v. Civil Serv. Comm’n, 294 Ark. 643, 746 S.W.2d 364 (1988) we said:

Estoppel is a doctrine which involves both, not just one, of the parties. Continental Ins. Companies v. Stanley, 263 Ark. 638, 569 S.W.2d 653 (1978). The party claiming estoppel must prove he relied in good faith on some act or failure to act by the other party, and that, in reliance on that act, changed his position to his detriment. Christmas v. Raley, 260 Ark. 150, 539 S.W.2d 405 (1976). Here, the appellee civil service commission has not shown that it detrimentally changed its position based upon an act or failure to act by appellant. Thus, the doctrine of estoppel is not applicable against the appellant.
Similarly, the doctrine of laches is not applicable because it too requires a detrimental change in the position of the one asserting the doctrine as well as an unreasonable delay on the part of the one against whom it is invoked. Padgett v. Bank of Eureka Springs, 279 Ark. 367, 651 S.W.2d 460 (1983). Here, twelve months did not amount to an unreasonable delay in filing the suit, and the commission simply did not change its position as the result of a delay.

The scant record in this case has given us problems with resolving this matter. It is absolutely devoid of any information regarding any payments made by Anadarko. As far as we can tell, however, there was no issue before the Chancellor with respect to any rights of innocent third parties which might have an effect on Venable’s entitlement.

As we cannot say the Chancellor erred in determining the amount due to Venable pursuant to the 1939 deed, and as we conclude Venable’s claim was not barred by a statute of limitations, estoppel, or laches, the decree is affirmed.

Corbin, J., not participating.