author: Robert L. Brown, Justice.

text:
    Joe E. LOONEY, Jr., et al. v. Bill LOONEY
    98-712
    986 S.W.2d 858
    Supreme Court of Arkansas
    Opinion delivered March 11, 1999

      Rose Law Firm, by: James H. Druff, for appellants.

      Durrett & Coleman, by: Gerald A. Coleman, for appellee.
   Robert L. Brown, Justice.

The primary question raised in this appeal is whether an order partitioning land evenly between appellee Bill Looney and appellant heirs of Joe Looney, Sr. (hereinafter “Looney heirs”), and appointing three commissioners to determine whether partition is possible or whether the land should be sold is a final order. The second chancellor considering this issue concluded that it was. We disagree, and we reverse and remand for further proceedings.

On March 3, 1995, Bill Looney filed suit in Crittenden County against Joe Looney, Jr., who is executor of the Estate of Joe Looney, Sr., and prayed to have certain land belonging to him and to the Estate of Joe E. Looney, Sr., partitioned. Eight separate tracts are involved totaling approximately one thousand acres of farm land. In his complaint, Bill Looney alleged that the land was owned in partnership and that Joe Looney, Jr., as executor, had refused to agree to a lease of the land for farming. On October 25, 1995, Chancellor Rice Van Ausdall ordered a judgment of partition pursuant to Ark. Code Ann. § 18-60-412 (1987), and directed that the land be divided equally between Bill Looney, who owned fifty percent of the land, and the five Looney heirs, each of whom owned ten percent of the land. The chancellor stated in his order that it appeared to him that the parties had agreed to these ownership interests. The chancellor also ordered that three commissioners should be appointed to determine whether partition is possible pursuant to Ark. Code Ann. § 18-60-414 (1987).

On January 5, 1996, two Looney heirs — Diann McAuley, as trustee, and David Looney ■ — ■ filed an amended answer and counterclaim. In their answer, they denied the allegations in Bill Looney’s complaint. In their counterclaim, they alleged that the land in question was the sole asset of a partnership formed between Bill Looney and the decedent, Joe Looney, Sr. The two Looney heirs contended that the land should be divided according to the respective partnership interests of Bill Looney and Joe Looney, Sr., based on the capital accounts of those partners rather than split evenly between Bill Looney and the Looney heirs. They called on the chancellor to determine the capital accounts owned by each of the Looney brothers at the time of Joe Looney, Sr.’s death and to partition the land accordingly.

On February 6, 1996, Bill Looney moved to dismiss the counterclaim and asserted that there was no disparity in the two brothers’ capital accounts for the partnership (Looney Farms) and that the issues raised in the counterclaim were barred under the doctrines of res judicata and collateral estoppel because interests in the land to be partitioned had been admitted. The two Looney heirs responded that a dismissal of the counterclaim would be improper because there had been no adjudication relating to the division and ownership of the farm land in either probate court or chancery court. In a supplemental response to the motion to dismiss the counterclaim, the other Looney heirs, except for Jill Green whose interest was purchased by Bill Looney, asserted that they had joined in the counterclaim. They contended that there were procedural irregularities leading to the October 25, 1995 order and errors in the description of the land. Because no final order had been entered, they opposed dismissal.

On March 6, 1996, Chancellor Van Ausdall issued a letter opinion denying Bill Looney’s motion to dismiss the counterclaim. In his letter opinion, the chancellor stated that the October 25, 1995 order on the appointment of commissioners and judgment of partition was not a final order to which the doctrines of res judicata and collateral estoppel applied. This was so, according to the letter opinion, because the chancellor had not previously addressed the issue of the alleged partnership ownership between the parties. On June 20, 1997, an order incorporating the letter opinion was filed.

Chancellor Van Ausdall then recused in the case, and Chancellor Graham Partlow was assigned to replace him. Chancellor Partlow held a three-day hearing on the issues raised in the Looney heirs’ counterclaim as well as the commissioner’s report that the land be partitioned in kind. On December 19, 1997, he ruled that the issues addressed in the counterclaim were barred under the doctrine of res judicata because of the October 25, 1995 order. The chancellor further ruled that after this final order and the passage of time under the Rules of Civil Procedure, Chancellor Van Ausdall had no power to vacate or modify his order. The chancellor concluded that the counterclaim should be dismissed, and he confirmed the commissioner’s report of a partition in kind.

On March 30, 1998, a formal order of partition, which incorporated the chancellor’s rulings and which also awarded Bill Looney attorney’s fees of $7,500, was entered. It is from this order that the Looney heirs now appeal and argue three points for reversal: (1) the chancellor erred in concluding that the October 25, 1995 order was a final order that barred the claims made in the counterclaim on grounds of res judicata or collateral estoppel; (2) the chancellor erred in concluding that Chancellor Van Ausdall lacked authority to modify his order of October 25, 1995, by his order of June 20, 1997; and (3) the chancellor erred in awarding Bill Looney attorney’s fees.

Turning to their first point, the Looney heirs urge that the chancellor was clearly wrong to apply the doctrines of res judicata and collateral estoppel because these defenses only apply when a party attempts to assert a claim or contest an issue that has already been resolved by final judgment in a prior action. Thus, the issue becomes whether the chancellor’s October 25, 1995 order constituted a final judgment, notwithstanding the ongoing judicial process to define the land at issue and to divide it.

Arkansas law provides that the following elements must be shown in order to establish collateral estoppel: (1) the issue sought to be precluded must be the same as that involved in the prior litigation; (2) the issue must have been actually litigated; (3) the issue must have been determined by a final and valid judgment; and (4) the issue must have been essential to the judgment. See Miller County v. Opportunities, Inc., 334 Ark. 88, 971 S.W.2d 781 (1998). With regard to the doctrine of res judicata, this court has said that “res judicata bars relitigation in a subsequent suit when (1) the first suit resulted in a final judgment on the merits, (2) the first suit was based upon proper jurisdiction, (3) the first suit was fully contested in good faith, (4) both suits involve the same claim or cause of action, and (5) both suits involve the same parties or their privies.” See Hamilton v. Arkansas Pollution Control & Ecology Comm’n, 333 Ark. 370, 373, 969 S.W.2d 653, 655 (1998). (Emphasis added.)

We initially observe that the application of either doctrine depends on whether prior litigation has resulted in a final judgment which resolves the matter. Because the order of October 25, 1995, was part of the same litigation, application of either doctrine appears inappropriate. But, in any event, it is clear to us that the order of October 25, 1995, was not a final judgment of partition.

The last point becomes obvious when the statutory scheme for partition of land is examined. First, there is an initial judgment of partition declaring the rights of the parties to the land. Ark. Code Ann. § 18-60-412 (1987). Commissioners may then be appointed by the court to make the partition of land according to the rights of the parties. Ark. Code Ann. § 18-60-414(a) (1987). After the report of partition by the commissioners is made, the chancellor may confirm it, remand it to the commissioners, or set it aside for good cause shown. Ark. Code Ann. § 18-60-416 (1987). Subsection (c) of § 18-60-416 seems especially relevant to the case at bar:

(c) If no cause is shown, the report shall be confirmed, and judgment shall thereupon be given that the partition be firm and effectual forever. The judgment shall be binding and conclusive on all the parties to the proceedings, their representatives, and all other persons claiming under them by right derived after the commencement of the proceedings. (Emphasis added.)

A final judgment is “one that dismisses the parties, discharges them from the action, or concludes their rights to the subject matter in controversy.” McGann v. Pine Bluff Police Dept., 334 Ark. 352, 355, 974, S.W.2d 462, 463 (1998); Petrus v. The Nature Conservancy, 330 Ark. 722, 957 S.W.2d 688 (1997). We conclude, especially in light of § 18-60-416(c), that the initial order of partition by Chancellor Van Ausdall dated October 25, 1995, was not final so as to bind the parties and be conclusive of their rights. Section 18-60-416(c) is particularly revealing when it says the partition is not “binding and conclusive” of the rights of the parties until the commissioner’s report is confirmed and judgment entered.

Our caselaw bolsters our conclusion that the initial order of partition is not a final order from which an appeal can be taken. See Bell v. Wilson, 298 Ark. 415, 768 S.W.2d 23 (1989); Dorazio v. Davis, 283 Ark. 65, 671 S.W.2d 173 (1984). In Bell, the appellants sought the sale of land with proceeds divided among the joint venturers. One defendant counterclaimed and asked for partition of her 12.5 percent undivided interest. The chancellor agreed that this interest could be partitioned. On December 31, 1986, he ordered the partition and appointed five commissioners to conduct the division of land. On December 29, 1987, the commissioners filed a unanimous report of partition with the court. The appellants moved to set aside the report, but after hearing testimony from the chairman of the commissioners, the chancellor issued an order confirming the commissioner’s report. The appellants then filed a notice of appeal on April 27, 1988, which was apparently timely from the confirmation order, though not from the initial order of partition. The appellee argued on appeal that the appellants’ notice of appeal was untimely because the chancellor entered the initial order of partition on December 31, 1986, and the notice of appeal was not filed until April 27, 1988, after the order confirming the commissioner’s report. In holding that the notice of appeal was timely, we expressly overruled our holding in Smith v. Smith, 235 Ark. 932, 362 S.W.2d 719 (1962), where we held that the initial decree ordering partition was a final decree from which an appeal could be taken. We affirmed instead our conclusion in Dorazio v. Davis, supra, where we recognized that the better view was that a “decree ordering partition either in kind or by a sale and division of the proceeds is not a final order from which an appeal must be taken.” Bell, 298 Ark. at 418, 768 S.W.2d at 25. Bill Looney argues that the Bell case is distinguishable from the instant case, but we do not agree. On the issue of the finality of the initial partition order, the Bell case is dispositive.

Bill Looney goes further, though, and contends that this court should deem the order of October 25, 1995, to be an admission that a fifty-fifty division was a proper adjudication of the rights of the parties, even if there was no final judgment in effect. He adds that the Looney heirs should be bound by their admission and cites us to Rule 36 of the Arkansas Rules of Civil Procedure for the proposition that requests for admission that are admitted are binding on the admitting party for purposes of litigation. Rule 36, however, does not apply in the instant case because requests for admission were never filed by Bill Looney. Moreover, even if this court chose to analogize this situation to admissions under Rule 36, the rule gives the trial court some discretion to allow withdrawal or amendment of an admission. See Ark. R. Civ. P. 36(b).

There is, too, the point that we have held that during a trial and prior to final judgment, the trial court is at liberty to reconsider prior rulings and decisions. See Davis v. State, 325 Ark. 96, 925 S.W.2d 768 (1996) (judge could reverse himself on ruling regarding motion in limine); Government Employees Ins. Co. v. Akers, 279 Ark. 72, 648 S.W.2d 492 (1983) (reversal of ruling on motion in limine); Hill, Ledford, Overton & Snyder v. State, 276 Ark. 300, 634 S.W.2d 120 (1982) (reversal of ruling on constitutionality of the statute); Schaefer v. Schaefer, 235 Ark. 870, 362 S.W.2d 444 (1962) (decision changed on when child support payments terminated); Nancy v. Flaugh, 221 Ark. 352, 253 S.W.2d 207 (1952) (judge changed mind on submitting issue of liability to the jury); Arnold v. State, 220 Ark. 25, 245 S.W.2d 818 (1952) (judge changed mind on submitting issue of punitive damages to jury). We have no doubt that Chancellor Van Ausdall also was at liberty in the instant case to reconsider his order where the full statutory process for partition had not been brought to its conclusion and where the issue presented concerning capital contributions to the partnership had not been raised to the chancellor or decided.

Along this same line, Bill Looney echos the chancellor’s conclusion that Chancellor Van Ausdall lacked jurisdiction to modify his October 25, 1995 order due to the passage of time. He emphasizes that the initial order of partition was one on which the parties and commissioners were relying and which the commissioners were implementing, and, as such, it was an order that the Looney heirs were required to have set aside either under Rule 59 or Rule 60 of the Arkansas Rules of Civil Procedure, within the time periods permitted under those rules.

Again we disagree as we do not see Rule 59 or Rule 60 as Hmiting the authority of the chancellor to reconsider his initial order in the partition process. Rule 59, of course, concerns a motion for a new trial filed after the entry of a judgment which incorporates the results of the trial of the matter. We do not view the initial order of partition as an order contemplated under Rule 59. Nor do we believe that Rule 60(b) limits the chancellor in reconsidering a preliminary partition order, such as in this case. The ninety-day limitation under Rule 60(b) pertains to efforts to correct errors and mistakes such as clerical errors in judgments, orders, and decrees. See Phillips v. Jacobs, 305 Ark. 365, 807 S.W.2d 923 (1991). That is not what is involved in the instant case.

In sum, we hold that the order of partition and appointment of commissioners dated October 25, 1995, did not conclude the partition matter or finally resolve the issues regarding all the parties. That did not occur until the chancellor’s judgment confirming the commissioner’s report on March 30, 1998. See Bell v. Wilson, supra; Dorazio v. Davis, supra. Because a final order had not been issued, Chancellor Van Ausdall was free to reconsider and modify his initial order of partition after he learned of the new issues raised by the counterclaim of the Looney heirs.

Because we remand this matter for resolution of the respective rights of the parties in the land to be partitioned, the issue of an appropriate award for costs and attorney’s fees is premature. See Ark. Code Ann. § 18-60-419(a) & (b) (1987).

Reversed and remanded.

       The Looney heirs are Joe Looney, Jr., David Looney, Jill Green, Deborah Wintersteen, and Diann McAuley as Trustee.


source: Caselaw Access Project

license: Public Domain

text:
    Paul LOVELL v. James BEAVERS
    98-1357
    987 S.W.2d 660
    Supreme Court of Arkansas
    Opinion delivered March 11, 1999

      George Bailey, for appellant.

      Laser, Wilson, Bufford & Watts, P.A., by: Alfred F. Angulo, Jr., and Brian Allen Brown, for appellee.
   Robert L. Brown, Justice.

Appellant Paul Lovell appeals from a judgment in favor of appellee James Beavers following a jury trial on the issue of damages. Lovell raises one point on appeal — that the trial court abused its discretion in excluding medical records from evidence that should have been admitted under Arkansas law and our Rules of Evidence. We affirm the ruling of the trial court.

On April 7, 1992, Lovell, age 12, was injured when Beavers backed into the car in which he was a passenger. Lovell filed suit against Beavers, and after Beavers failed to answer in timely fashion, the trial court entered a default judgment in favor of Lovell. The case then proceeded to trial on the issue of damages. The first trial on the matter resulted in a declared mistrial before the jury was seated.

Prior to the second trial, Beavers filed a motion in limine seeking to exclude certain medical records of Arkansas Children’s Hospital (ACH). In his response to this motion, Lovell claimed that the medical records should be admitted because they were being offered under Rule 803(6) of the Arkansas Rules of Evidence as well as under the Hospital Records Act of 1995. After a hearing on the matter, the trial court ruled that the only medical records that could be introduced at trial were those that Dr. Krishna Reddy, a treating physician of Lovell’s, had referred to in his deposition. The trial court further ruled that all other medical records not referred to by Dr. Reddy, including certain ACH medical records, were inadmissible.

After the trial on damages, the jury returned a verdict in favor of Lovell’s father for Lovell’s premajority expenses in the amount of $3,500. The jury then found in favor of Beavers on the issue of Lovell’s damage claim. It is from that judgment in favor of Beavers that Lovell appeals.

In deciding whether the trial court abused its discretion in excluding certain ACH medical records, we first look at the records in question. The disputed medical records include various physician reports, notes, observations, and opinions over a five-year period. The referenced and treated conditions include an MRI of the cervical spine, headaches, nerve palsy, back pain, neck pain, and elevated high blood pressure that may have been attributable to the 1992 accident. There was also a notation about a second motor vehicle accident, where Lovell’s car was rear-ended in 1997.

Lovell’s counsel sought to introduce these ACH records, not referred to in the Reddy deposition, without calling the treating physicians as witnesses who made those records. His primary rationale for doing so was his contention that Rule 803(6) of the Rules of Evidence permits the introduction of business records kept “in the course of regularly conducted business activity.” His second basis for admissibility was the Hospital Records Act of 1995, codified at Ark. Code Ann. § 16-46-108 (Supp. 1997), which states that medical records kept as required by Rule 803(6) “shall be admissible in evidence,” if accompanied by an affidavit of the custodian of the records and proper notice is given to the opposing party. Stated simply, Lovell’s position is that this authority mandates the admissibility of medical records that are authenticated, even in the absence of the treating physician to explain the notes or reports.

The response of Beavers before the trial court and in this appeal is that irrespective of Rule 803(6) and § 16-46-108, the trial court still retains the power to weigh the relevance of the evidence in question against the potential for juror confusion. Here, the jury, according to Beavers, would have had unexplained medical reports, and Beavers would have been denied cross-examination of the medical witnesses who made those reports. The trial court agreed with Beavers’s reasoning and ruled that the ACH medical records, without a witness to explain them, would have been confusing to the jury and caused misunderstanding.

This court uses an abuse-of-discretion standard in reviewing evidentiary errors and has held that the trial court has broad discretion in making its evidentiary rulings. Parker v. State, 333 Ark. 137, 968 S.W.2d 592 (1998). A trial court’s rulings on evidence will not be reversed unless the appellant can show that there has been a manifest abuse of discretion. Id.

Rule 403 of the Arkansas Rules of Evidence provides: “Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.” This court has held that Rule 403 “allows a trial court to exclude relevant evidence if its probative value is outweighed by the possibility of confusion of issues. This weighing is left to the trial court’s sound discretion and will not be reversed absent a showing of manifest abuse.” Bohanan v. State, 324 Ark. 158, 166, 919 S.W.2d 198, 203 (1996).

The case of Southern Farm Bureau v. Pumphrey, 256 Ark. 818, 510 S.W.2d 570 (1974), has facts somewhat analogous to the facts in the case at hand. In Pumphrey, the appellee was injured in an automobile accident with an uninsured motorist. At trial, the trial court allowed appellee’s treating physician to testify that nothing in a written report of an examination made by another doctor was inconsistent with the treating physician’s testimony as to appellee’s injuries. On appeal, this court observed that the trial court properly sustained appellant’s objection to the treating doctor’s testimony as to what the specialist’s report stated because “neither the communication to the treating physician nor its contents were admissible in evidence since the specialist was not present to testify and [be] subject to the test of cross-examination.” Id. at 819, 510 S.W.2d at 571. We went on to hold that the trial court erred in allowing the treating physician to testify that the specialist’s report was not inconsistent with his own testimony, because the trial court allowed appellee to do “indirectly what could not be done directly.” Id. at 820, 510 S.W.2d at 571.

McCormick’s treatise on evidence agrees with our reasoning in the Pumphrey case:

[A]dmissibility of all such entries [under Rule 803(6)] is not assured. First, where there are indications of lack of trustworthiness, which may result from a lack of expert qualification or from lack of factual support, exclusion is warranted under the rule. Moreover, inclusion of opinions or diagnoses within the rule only removes the bar of hearsay. In the absence of availability of the expert for explanation and cross-examination, the court may conclude that probative value of this evidence is outweighed by the danger that the jury will be misled or confused. This is of particular concern if the opinion involves difficult matters of interpretation and a central dispute in the case, such as causation. Under these circumstances, a court operating under the Federal Rules, like earlier courts, is likely to be reluctant to permit a decision to be made upon the basis of an un-cross-examined opinion and may require that the witness be produced.

McCormick on Evidence § 293 (John W. Strong, Ed., 4th ed. 1992) (citing Raycraft v. Duluth, Missabe and Iron Range Ry. Co., 472 F.2d 27 (8th Cir. 1973)) (proper exercise of discretion by trial court to exclude complex diagnostic reports when author not available for cross-examination). A second treatise concurs with McCormick’s analysis. In Modern Evidence, the authors state: “Where the physician who made the diagnosis testifies, or where another with firsthand knowledge testifies, admitting reports reflecting difficult, elaborate, or unusual diagnoses seems easier to justify. Without such testimony, risks of confusing the issue or misleading the jury are likely to justify exclusion under FRE 403.” Christopher B. Mueller & Laird C. Kirkpatrick, Modern Evidence § 8.45 (1995).

Other courts have not hesitated to exclude medical records, if fairness, confusion or trustworthiness are at issue. In Nauni v. State, 670 P.2d 128 (Okl. Cr. 1983), the Oklahoma Court of Criminal Appeals upheld the decision of the trial court in excluding psychiatric opinions and diagnoses sought to be admitted without a testifying witness because “diagnosis of mental conditions is a subjective and abstract process. . . . [T]he probative value of this evidence is substantially outweighed by the danger of unfairness in the absence of cross-examination.” Id. at 131. In the same vein, the Superior Court of New Jersey has held that a trial court did not abuse its discretion in excluding portions of hospital records in which non-testifying physicians made certain conclusions regarding the extent of the plaintiff s injuries. Nowacki v. Community Med. Ctr., 652 A.2d 758 (N.J. Super A.D. 1995). In Nowacki, the Superior Court said: “The records involved a complex diagnosis involving the critical issue in dispute, as opposed to an uncontested diagnosis or insignificant issue. This is not a case like Blanks v. Murphy, 268 N.J. Super. 152, 164, 632 A.2d 1264 (App. Div. 1990) where ‘[t]he included hearsay to which plaintiff objected was a straightforward observation of a treating physician.’” Id. at 762.

In the instant case, the trial court was clearly concerned about the jury’s ability to assimilate relevant information from complex, unexplained medical records. This court has stated that a trial court had wide discretion in determining the admissibility of evidence, and the court in this case was attempting to balance that discretion with the relevant rules of law. Of course, the medical records at issue fall within both the Hospital Records Act and Rule 803(6) of the Arkansas Rules of Evidence. However, the fact that a piece of evidence falls within an exception to the rule against hearsay does not equate to automatic admissibility. To prevent possible prejudice or confusion, a trial court must still have the authority to exclude a record under Rule 403. We cannot say that the trial court abused that discretion in the instant case.

Affirmed.

Glaze and Imber, JJ., not participating.

       The Pumphrey case was decided prior to the enactment and adoption of the Arkansas Rules of Evidence, but a statute similar to Rule 803(6) was in effect at the time. See Ark. Stat. Ann. § 28-928 (1962). That statute allowed for the admissibility of writings when made in the regular course of business.


author: Annabelle Clinton Imber, Justice. Tom Glaze, Justice,

text:
    Harry McDERMOTT v. Rhonda McDERMOTT
    98-1169
    986 S.W.2d 843
    Supreme Court of Arkansas
    Opinion delivered March 11, 1999

      Lee Linzay, for appellant.

      Thomas J. Olmstead and Thomas B. Burke, for appellee.
   Annabelle Clinton Imber, Justice.

In this divorce case the central issue is whether an attorney’s contingency-fee agreements entered into during marriage are marital property under Ark. Code Ann. § 9-12-315 (Repl. 1998). The appellant, Mr. Harry McDermott, contends the trial court erred when it declared that certain contingency-fee agreements secured in conjunction with his law practice were marital property. We affirm the trial court’s decision as modified.

The parties were married in 1993 and separated in January 1998. At all relevant times, Mr. McDermott has been an attorney actively engaged in the practice of law, with his practice primarily sustained through contingency-fee agreements. Mrs. McDermott has been a professor at the University of Arkansas at Fayetteville. Mr. McDermott testified that he had approximately twelve contingency-fee cases pending at the time of the divorce. Two of those cases had been reduced to judgment, but there had been no recovery on those judgments at the time of the divorce. All twelve of the contingency fee agreements were in writing, and each agreement specified the percentage of any recovery Mr. McDermott was to receive as his fee should the case be resolved in favor of his client. Mr. McDermott’s percentage was to be one-third of any recovery in nine of the cases; one-half of any recovery in two of the cases; and one-fourth of any recovery in the remaining case. Finally, Mr. McDermott testified that he was obligated to pay all expenses in the two cases where his percentage was one-half of any recovery. However, he was uncertain whether any of the other contracts obligated him to pay all expenses.

The trial court held that the contingency-fee agreements constituted marital property under Ark. Code Ann. § 9-12-315, and that Mrs. McDermott was therefore entitled to a marital share of any compensation received by Mr. McDermott under the contingency-fee agreements. The trial court further held that it would retain jurisdiction of the cause for the purpose of assigning the marital share to each party as fees earned under the contingency agreements are received. The trial court directed Mr. McDermott to deposit fifty percent of any fees earned in an interest-bearing account where the funds were to be held in trust pending a final determination of the marital share by the court. Mr. McDermott appeals the trial court’s decision and contends that the contingency-fee contracts are not marital property.

Arkansas Code Annotated § 9-12-315 (Repl. 1998) defines “marital property” as “all property acquired by either spouse subsequent to the marriage,” subject to certain exceptions which are inapplicable here. There is a presumption that all property acquired during a marriage is marital property. Layman v. Layman, 292 Ark. 539, 731 S.W.2d 771 (1987); Boggs v. Boggs, 26 Ark. App. 188, 761 S.W.2d 956 (1988). Whether or not property is marital does not depend upon when the property is received, but rather depends upon when the right to the property is acquired. Bunt v. Bunt, 294 Ark. 507, 744 S.W.2d 718 (1988); Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986); Dunn v. Dunn, 35 Ark. App. 89, 8 S.W.2d 11 S.W.2d 336 (1991). To the extent that any party to the marriage acquires an enforceable right during the marriage, they acquire marital property. See, e.g., Bunt, supra.

In 1984, we realized that we had inadvertently faded to recognize the new concept of “marital property” created by Act 705 of 1979, which defined marital property as all property acquired by either spouse subsequent to the marriage, subject to certain exceptions. See Day v. Day, 281 Ark. 261, 663 S.W.2d 719 (1984). In Day, we held that pension plan benefits were marital property to the extent that a spouse had a vested interest in those benefits. Id. This decision represented a shift away from our previous case law, which had held that such benefits, even if vested, were not marital property until they became due and payable. See Sweeney v. Sweeney, 267 Ark. 595, 593 S.W.2d 21 (1980) (decided under prior statute); Knopf v. Knopf, 264 Ark. 946, 576 S.W.2d 193 (1979). In Day, Mr. Day had used family funds to purchase pension plan benefits. Day, supra. Mrs. Day had contributed to those funds by service as a homemaker and by bearing and raising the couple’s children. Id. We held that Mr. Day’s vested pension benefits were marital property under the new statutory concept of marital property. Id. We reasoned that benefits should be considered “vested,” or more than a mere expectancy, once they cannot be unilaterally terminated by the employer without also terminating the employment relationship. Id. In support of this conclusion, we quoted with approval the Supreme Court of California in In Re Marriage of Brown, 544 P.2d 561 (Cal. 1976):

The term expectancy describes the interest of a person who merely foresees that he might receive a future beneficence, such as the interest of an heir apparent... or a beneficiary designated by a living insured who has a right to change the beneficiary .... As these examples demonstrate, the defining characteristic of an expectancy is that its holder has no enforceable right to his beneficence.

Day, supra. We concluded that the enforceable right to pension benefits constituted marital property. Id. In doing so, we held that earnings or other property acquired by a spouse subsequent to a marriage must be included as marital property unless it fell within certain statutory exceptions, and that neither party could deprive the other of any interest in such property by putting it temporarily beyond his or her control through some device for postponing full enjoyment of the property. Id.

Our cases since Day have continued to focus on enforceable rights acquired subsequent to marriage. In Gentry v. Gentry, 282 Ark. 413, 668 S.W.2d 947 (1984), we held that a husband’s civil service retirement benefits were marital property subject to distribution. In Morrison v. Morrison, 286 Ark. 353 (1985), we held that disability retirement benefits were marital property even though such benefits are awarded for personal injury to one’s own body. Our rationale was that such benefits come from an annuity purchased during the marriage and, thus, there was no discernable distinction between an annuity payable upon disability and one payable upon longevity. Id.

In 1985 we held for the first time that a workers’ compensation claim for an injury suffered during the marriage was marital property subject to distribution. Goode v. Goode, 286 Ark. 463, 692 S.W.2d 757 (1985). At the time of the divorce, Mr. Goode’s claim had not yet been adjudicated, though he had received and refused an offer of settlement. Id. We noted that although Mr. Goode’s claim was unliquidated at the time of the divorce, he still possessed an enforceable right to workers’ compensation benefits. Id. Because that right accrued to him subsequent to his marriage and prior to his divorce, it was marital property. Id.

In Goode we acknowledged our previous decision in Lowrey v. Lowrey, 260 Ark. 128, 538 S.W.2d 36 (1976), in which we held that an unliquidated personal injury claim was not personal property for the purpose of property division. However, we declined to follow Lowrey because it was decided under the former marital property statute. Goode, supra. We reasoned that a rule which invites workers’ compensation claimants to protract arbitration so as to shield an award from equitable division should not be condoned. Id. Furthermore, the fact that such claims do not involve contributions is not relevant, because Ark. Code Ann. § 9-12-315 makes no general distinction as to the manner in which the item of property is acquired. Id. As workers’ compensation claims were not among the exceptions enumerated in the statute at that time, we held that such claims were marital property. Id.

In 1986 we applied the reasoning of Goode to a Jones Act personal injury claim. Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986). In Liles, the claim was liquidated, although part of the judgment was to be received in the future pursuant to a structured setdement. Id. We held that the personal injury claim was marital property insofar as it was acquired by one spouse subsequent to the marriage and was not specifically excepted by Ark. Code Ann. § 9-12-315. Id. The appellant in Liles had also received a remittitur of attorney’s fees from his Jones Act judgment after the divorce. Id. The appellant claimed that the returned fees belonged solely to him, as they were no more than a “contingent claim during the marriage and not to be considered marital property.” Id. In support of this proposition, the appellant cited Potter v. Potter, 280 Ark. 38, 655 S.W.2d 382 (1983), in which we held that fees earned by an attorney during marriage but not collected until after the divorce were not marital property. We responded to appellant’s argument by noting that the Potter decision preceded Day, supra, and that, given the same situation, we might reach a different conclusion. Liles, supra. We concluded that the fees were a part of the judgment and thus were marital property. Id.

Subsequent to our decisions in Goode and Liles, the General Assembly added an exception to the definition of “marital property” as follows: “Benefits received or to he received from a Workers Compensation claim or personal injury claim when such benefits are for any degree of permanent disability or future medical expenses.” Ark. Code Ann. § 9-12-315(b)(6) (Supp. 1987). By limiting the exception to portions of personal injury and workers’ compensation claims for permanent disability or future medical expenses, the General Assembly otherwise left intact our Goode and Liles decisions interpreting the definition of “marital property,” as set forth in Ark. Code Ann. § 9-12-315, to include workers’ compensation and personal injury awards. See Bunt v. Bunt, 294 Ark. 507, 744 S.W.2d 718 (1988).

Finally, in 1988, we held that any personal injury claim acquired during the marriage, whether liquidated or unliquidated, was marital property. Bunt, supra. Mr. Bunt had been injured in an automobile accident. Id. At the time of the divorce, he had not filed suit on the claim, and had been offered no settlement by the insurance company. Id. Mr. Bunt contended that the rule announced in Goode applied only when some appreciable steps had been taken toward liquidation of the claim. Id. We rejected Mr. Bunt’s contention, noting that “ the argument that no definite value can be assigned to the claim until an award is made . . . is no more persuasive here than in Goode.” Id. We also pointed out that to hold that personal injury claims are marital property only to the extent that they are “liquidated” would place claimants in the position of being able to manipulate the claim so as to “liquidate” it after divorce, thereby having the ability to determine whether or not it is included in marital property. Id. We had previously held in Goode that such a result was unacceptable. Goode, supra. We, therefore, held that to the extent Mr. Bunt acquired an enforceable right during the marriage to recover for personal injury, he acquired marital property. Bunt, supra. We have since applied the Bunt holding to an unliquidated FELA claim for personal injury. See Clayton v. Clayton, 297 Ark. 342, 760 S.W.2d 875 (1988).

With regard to whether attorney’s fees should be deemed marital property subject to division in a divorce action, we have specifically addressed the issue of accounts receivable and “work in progress” in Potter, supra, and Meeks v. Meeks, 290 Ark. 563, 721 S.W.2d 653 (1986). Potter involved fees earned before the marriage, but received during the marriage, and fees earned during the marriage, but not collected during the marriage. Potter, supra. We held that the property, or fees, must actually be received before it can be characterized as marital property. Potter, supra. Mr. McDermott relies on the Potter holding as support for his contention that the contingency-fee contracts are not marital property because they have no definite present value and remain uncollected. However, we noted in Day that Potter was one of several decisions which failed to give full effect to Act 705 since its enactment in 1979 (now codified as Ark. Code Ann. § 9-12-315). Day, supra. Finally, we relied upon our decision in Day when we overruled the Potter holding in Meeks, supra, and held that accounts receivables and “work in progress” were marital property under section 9-12-315. According to Meeks, the pivotal question is not when the property is collected or received, but rather when an enforceable right to the property is acquired. Meeks, supra.

This appeal presents an issue of first impression concerning whether or not contingency-fee contracts entered into during marriage are marital property under section 9-12-315. The resolution of this issue is governed by the above-cited cases that have interpreted section 9-12-315, beginning with Day, supra, and culminating in Bunt, supra. If an enforceable right is acquired during marriage by virtue of a contingency agreement, then the agreement is marital property. Bunt, supra; Goode, supra.

It is axiomatic that the right to perform a contract and to receive its profits, and the right to performance by the other party, are property rights entitling each party to the fulfillment of the contract by performance. Mason v. Funderburk, 247 Ark. 521, 446 S.W.2d 543 (1969). In other words, enforceable contract rights are deemed to be property rights.

The General Assembly has expressly protected the contractual rights of attorneys in their fee agreements with clients by the enactment of the attorney’s lien statute, now codified at Ark. Code Ann. § 16-22-302 to 304 (1989). The legislature’s intent is set forth in section 16-22-301:

Therefore, it is the intent of §§ 16-22-302 — 16-22-304 to allow an attorney to obtain a lien for services based on his or her agreement with his or her client and to provide for compensation in the case of a settlement or compromise without the consent of the attorney.

We have interpreted these provisions to allow recovery based upon the fee agreement when the termination was without cause. See Crockett & Brown, P.A. v. Courson, 312 Ark. 363, 851 S.W.2d 453 (Supp. Op. 1993). However, when an attorney is terminated with cause, the attorney only has a right to quantum meruit recovery for the reasonable value of his or her services. See Henry, Walden, & Davis v. Goodman, 294 Ark. 25, 714 S.W.2d 233 (1987); Ark. Code Ann. § 16-22-304 (1989).

Based upon our case law and statutory law, there are enforceable contract rights in contingency-fee agreements and those rights are property rights. The rationale for this conclusion is derived from the approach taken by Bunt to the effect that any enforceable right to future benefits, whether subject to a contingency or not, is not a mere expectancy, but a form of property that is subject to division if acquired subsequent to marriage. Bunt, supra; see also B.H. Goldberg, Valuation of Divorce Assets, § 7.5 (1984). Therefore, to the extent a spouse acquires an enforceable right during the marriage to recover fees under a contingency-fee contract, we hold that the spouse acquired marital property under Ark. Code Ann. § 9-12-315. See Bunt, supra; Liles, supra; Goode, supra.

We note that this same conclusion has been reached by a majority of jurisdictions considering this issue. See Garrett v. Garrett, 683 P.2d 1166 (Ariz. Ct. App. 1984); In re Marriage of Kilbourne, 284 Cal. Rptr. 201 (Cal. Ct. App. 1991); In re Marriage of Vogt, 773 P.2d 631 (Colo. Ct. App. 1989); Due v. Due, 342 So. 2d 161 (La. 1977); Quinn v. Quinn, 575 A.2d 764 (Md. Ct. Spec. App. 1990); Lyons v. Lyons, 526 N.E.2d 1063 (Mass. 1988); In re Marriage of Estes, 929 P.2d 500 (Wash. Ct. App. 1997); Metznerv. Metzner, 446 S.W.2d 165 (W. Va. 1994); Weiss v. Weiss, 365 N.W.2d 608 (Wis. Ct. App: 1985); see also Charles W. Davis, Annotation, Divorce and Separation: Attorney’s Contingent Fee Contracts As Marital Property Subject To Distribution, 44 A.L.R.5th 671 (1996). We recognize that a minority of jurisdictions oppose construing such contracts as marital property on the basis that such fees are speculative in nature. See, e.g., Roberts v. Roberts, 689 So. 2d 378 (Fla. Dist. Ct. App. 1997); Goldstein v. Goldstein, 414 S.E.2d 474 (Ga. 1992); In re Marriage of Zells, 572 N.E.2d 944 (Ill. 1991); Musser v. Musser, 909 P.2d 37 (Okla. 1995).

In contrast to those jurisdictions that have declined to construe contingency-fee contracts as marital property because ascertaining their value may be difficult, we specifically stated in Bunt that any argument relating to an inability to place a definite value on an asset is unpersuasive. See Bunt, supra. Thus, the difficulty of valuation, without more, should not preclude Arkansas courts from considering contingency-fee contracts as marital property if they were acquired during the marriage. See Layman v. Layman, 300 Ark. 583, 780 S.W.2d 560 (1980).

Any difficulty in valuing contingency-fee contracts may be solved by reserving jurisdiction in the trial court in order to await the outcome of the underlying actions. When the proceeds of contingency-fee agreements are actually received, the determination of the marital share in the ultimate recovery should be based upon that portion of the time devoted to the case during the marriage, as compared to the full amount of time devoted to earning the fee. This approach has been utilized by a number of courts in valuing contingent fee contracts for purposes of equitable division. See Garrett, supra; Metzner, supra; Weiss, supra; Vogt, supra; Estes, supra.

Mr. McDermott also suggests that sharing contingent fees with a former spouse would violate Rule 5.4 of the Model Rules of Professional Conduct. Rule 5.4(a) provides that “A lawyer or law firm shall not share legal fees with a non-lawyer.” Fees earned during marriage are necessarily shared with a non-attorney spouse. This has never been viewed as a violation of the Rules of Professional Conduct. Nor does an obligation to share a portion of fees with a former spouse violate the Rules of Professional Conduct, so long as it is limited to that portion of the fee earned by the attorney’s efforts during the marriage. See In re Marriage of Estes, supra. The sharing of such fees with a former spouse does not implicate any of the evils contemplated by Rule 5.4. Id.

We therefore affirm the trial court’s decision that the contingency-fee contracts acquired during the marriage were marital property under Ark. Code Ann. § 9-12-315. We also affirm its decision to retain jurisdiction over the matter pending the outcome of the underlying actions. However, the trial court’s decision should be modified to provide that the marital share of proceeds received under the contingency-fee contracts is limited to the portion of the fee attributable to work done during the marriage. See Vogt, supra. Thus, the marital share should be based upon the percentage of the number of hours worked during the marriage as compared to the total number of hours worked earning the fee. See In re Marriage of Estes, supra. We note that the trial court is not required to divide any asset equally between the parties if equity demands a different division, and the reasons for such division are stated. See Ark. Code Ann. § 9-12-315(a)(1)(B).

Affirmed as modified.

Glaze and Smith, JJ., concur.

Brown, J., not participating.

Tom Glaze, Justice,

concurring. I concur, but do so only because Goode v. Goode, 286 Ark. 463, 692 S.W.2d 757 (1985), and Bunt v. Bunt, 294 Ark. 507, 744 S.W.2d 718 (1988) — both 4-3 decisions — support the result reached by the majority opinion. My actual view is that the rationale upon which Goode and Bunt are premised is erroneous. However, eleven years have passed and the General Assembly has failed to fully address and correct the problems raised and discussed in the dissents in those cases, so it appears time for me to join precedent.

My main disagreement with the majority opinion and the cases it cites has to do with the consistent failure of those cases to mention, much less follow, the plain language of Arkansas’s marital-property statute. In this respect, Ark. Code Ann. § 9-12-315(a)(1)(A) (Repl. 1998), reads: [A]t the time a divorce decree is entered, all marital property shall be distributed one-half to each party unless the court finds such a division to be inequitable. (Emphasis added.) Ark. Code Ann. § 9-12-315(b) then provides that “marital property” means all property acquired by either spouse subsequent to the marriage. In construing this 1979 marital-property law, our court established the rule in 1983 that all marital property must be distributed when the parties’ divorce decree is entered. Forrest v. Forrest, 279 Ark. 115, 649 S.W.2d 173 (1983).

The majority opinion cites Mason v. Funderburk, 247 Ark. 521, 446 S.W.2d 543 (1969), to support the proposition that appellant Harry McDermott’s contingent-fee contracts contained enforceable property rights in which appellee Rhonda McDermott has divisible and distributable marital property interests. In reality, appellee has nothing more than an inchoate interest in the contingent-fee contracts the appellant entered into with third parties, and unless those contracts actually produced benefits of some determinable value during the marriage, no property rights can be vested or distributed as marital property at the time of divorce. In short, under the language of our statute, § 9-12-315, and all the relevant cases interpreting it, appellee is only entitled to marital property that has vested and is distributable when the parties’ divorce decree is entered. See Day v. Day, 281 Ark. 261, 663 S.W.2d 719 (1984) (court held husband’s vested pension benefits were marital property); Gentry v. Gentry, 282 Ark. 413, 668 S.W.2d 947 (1984) (court held husband’s pension distributable as marital property subject to distribution where all requirements for receiving benefits occurred during marriage, husband was fully vested and he was receiving benefits at the time of divorce); Morrison v. Morrison, 286 Ark. 353, 692 S.W.2d 601 (1985) (court held where, during marriage, husband with marital earnings purchased an annuity policy that paid monthly disability payments and he was receiving $1,165.00 per month at the time of the parties’ divorce, such monthly benefits actually being paid were distributable as marital property); Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986) (court held a liquidated Jones Act claim reduced to settlement was distributable as marital property at the time of divorce). (Emphasis added.)

From my research, the Goode and Bunt decisions are the only ones that fail to require marital property to be, at the minimum, liquidated or vested so the property can be distributed at the time of the parties’ divorce. In my opinion, those two decisions are simply inconsistent with the plain terms of § 9-12-315 and other cases interpreting marital property. Hopefully, the General Assembly may still act to give clarity to this statute where our court has failed. Until that happens or until this court realizes its errors in Goode and Bunt, I will concur in this and future cases where the rationale and holdings in Goode and Bunt appear controlling.

Smith, J., joins this concurring opinion.

         One judgment has since been overturned on appeal by the Arkansas Court of Appeals. See Unicare Homes, Inc. v. Gribble, CA 98-28, opinion delivered October 28, 1998.

       According to its opinion letter dated June 26, 1998, which was incorporated by reference into the divorce decree, the trial court reserved jurisdiction to determine the value of Mrs. McDermott’s interest in the contingency fee contracts “based on the reasonable value of services during the marriage.” This language is somewhat different from the language contained in the divorce decree.

       A majority of jurisdictions that have considered this issue have held that a personal injury claim constitutes property even if there has not yet been a verdict or settlement, consistent with our holding in Bunt. See Raccio v. Raccio, 556 A.2d 639 (Conn. Super. Ct. 1987); In re Fields, 779 P.2d 1371 (Colo. Ct. App. 1989); Boyce v. Boyce, 541 A.2d 614 (D.C. 1988); In re Burt, 494 N.E.2d 868 (Ill. App. 1986); Hanify v. Hanify, 526 N.E.2d 1056 (Mass. 1988); Heilman v. Heilman, 291 N.W.2d 183 (Mich. App. 1980); Covington v. Covington, 412 S.E.2d 455 (S.C. 1991); Richardson v. Richardson, 407 N.W.2d 231 (Wis. 1987).

       In fairness to the General Assembly, I do note that, after the Goode decision, the General Assembly corrected the Goode holding to the extent it excluded benefits received or to be received from a workers’ compensation claim, personal injury claim, or social security claim, when those benefits are for any degree of permanent disability or future medical expenses. See Acts 676 of 1987 and 1167 of 1991, codified at Ark. Code Ann. § 9-12-315 (Repl. 1998). In other words, the General Assembly provided that unliquidated or expectancy claims or benefits representing permanent disability or future medical expenses are excepted from the “acquired” marital property provision.


author: Ray Thorton, Justice.

text:
    James NEWBERRY and Connie Newberry and Pulaski Mortgage Company v. George S. SCRUGGS and Ann Scruggs; Larry Baker and Earlene Baker
    98-1375
    986 S.W.2d 853
    Supreme Court of Arkansas
    Opinion delivered March 11, 1999

      Marian M. McMullan, P.A., for appellants.

      Stockland & Trantham, P.A., by: Charles S. Trantham, for appellees.
   Ray Thorton, Justice.

George and Ann Scruggs acquired title to a tract of land by a warranty deed recorded on January 11, 1994. The financing for the purchase of this land was secured by a first mortgage in the amount of $70,000 in favor of Worthen Bank. On September 2, 1994, and October 14, 1994, the Washington County Circuit Clerk entered judgments against George Scruggs in favor of Larry and Earlene Baker in the amounts of $73,025.00 and $10,505.50. These judgments were inferior to the Worthen mortgage. On November 18, 1994, James and Connie Newberry made an offer to buy the tract of land from the Scruggses. The Newberrys sought financing for their purchase from Pulaski Mortgage Company (PMC). Before PMC would issue a mortgage to the Newberrys, it required them to obtain tide insurance. PMC and the Newberrys hired Bronson Abstract Company to conduct a title search, issue title insurance, and act as an escrow agent for the parties. Bronson conducted two searches prior to having American Title Company issue a tide insurance policy, and failed to locate the Bakers’s judgment lien on the Scruggses’ property. At the time of closing, the Scruggses’ existing first mortgage was held by Worthen Bank. Bronson, acting as an escrow agent, paid off this mortgage in the amount of $71,647.06 with funds the Newberrys' obtained from PMC to finance their purchase of the real property from the Scruggses. The sale was closed on December 15, 1994.

The Bakers obtained a writ of execution on their judgment Hen on February 17, 1995. In this writ, the sheriff was ordered to take possession of the property the Newberrys had purchased from the Scruggses to satisfy the $85,000 judgment owed to the Bakers. The real property described in the writ was the property the Newberrys had purchased from the Scruggses. After Bronson had paid the Scruggses’ mortgage to Worthen, the Bakers contend that their judgment hen moved from one of junior priority to the Worthen mortgage to one of senior priority over the PMC mortgage.

The Newberrys petitioned the circuit court to stay, quash, or set aside the writ of execution. The Newberrys also petitioned the circuit court to transfer the case to chancery court to address the issue of equitable subrogation. The circuit court ordered the transfer of the equitable issues to chancery court and reserved ruling on the petition to stay, quash or set aside the writ.

The chancellor found that neither PMC nor the Newberrys were entitled to equitable subrogation because their agent, Bronson, had acted with “inexcusable negligence,” which was imputed to PMC and the Newberrys, when it failed to discover the judgment hen on the Scruggses’ property during the two tide searches prior to paying off the mortgage owed to Worthen. The chancellor then returned the case to circuit court to decide the remaining issues.

The Newberrys and PMC appealed the chancellor’s decision to the Arkansas Court of Appeals. Holding that the parties appealed from an order that was not final, the court of appeals dismissed the case. The case was then returned to the circuit court. The circuit court refused to stay, quash, or set aside the writ and ordered a sheriffs sale.

On appeal, appellants contest the rulings made by the chancery court. We reverse and remand.

Because this appeal is from a final order entered by the circuit court on the basis of a decision by the chancery court,' we first address the decision of the chancery court. The standards governing our review of a chancery court decision are well established. We review chancery cases de novo on the record, and we do not reverse unless we determine that the chancery court’s findings of fact were clearly erroneous. Aycock Pontiac v. Aycock, 335 Ark. 456, 983 S.W.2d 915 (1998).

For appellants’ first point on appeal, they argue that the chancellor erred when he found that Bronson Abstract Company was an agent acting on behalf of appellants. Based on the finding of an agency relationship between Bronson and appellants, the chancellor imputed Bronson’s negligence to appellants and therefore denied appellants’ request for equitable subrogation.

Whether Bronson was appellants’ agent can be determined by looking at the general principles of agency law. In Taylor v. Gill, 326 Ark. 1040, 934 S.W.2d 919 (1996), we explained the law in this area:

The burden of proving an agency relationship lies with the party asserting its existence. B.J. McAdams, Inc. v. Best Refrigerated Express, Inc., 265 Ark. 519, 579 S.W.2d 608 (1979). This court has used different definitions of agency that were appropriate for the particular cases, but each of them includes the element of control by the principal. In Evans v. White, 284 Ark. 376, 682 S.W.2d 733 (1985) and Campbell v. [Bastian], 236 Ark. 205, 365 S.W.2d, we adopted the definition of agency contained in the Restatement (Second) of Agency. We said the two essential elements of an agency relationship are (1) that an agent have the authority to act for the principal and (2) that the agent act on the principal’s behalf and be subject to the principal’s control. In Hinson v. Culberson-Stowers Chevrolet, Inc., 244 Ark. 853, 427 S.W.2d 539 (1968), we examined the Restatement definition together with a quote from 2 Am. Jur. 13, Agency § 2 and concluded that the essential elements for a showing of the agency relationship were authorization and control.

Taylor v. Gill, 326 Ark. 1040, 934 S.W.2d 919 (1996) (citations omitted).

Applying this very well-developed body of law to the present case, it is clear that an agency relationship did not exist between Bronson and appellants. Appellants hired Bronson to perform two services. First, Bronson was to obtain and provide appellants with title insurance on the Scruggses’ property. Second, Bronson was to act as an escrow agent in the real estate transaction between the Newberrys, PMC, the Scruggses, and Worthen.

The tasks performed by Bronson were not subject to the control of appellants. Bronson performed a title search as an agent of American Title Company prior to the insurance company issuing a title insurance policy to appellants. The search was performed free of dictates or restraints from appellants. It was undertaken to allow American Title Company to determine the risk and liabilities against which they were insuring. Thus, any acts of negligence in the title search by Bronson should not have been imputed to appellants because no agency relationship was present.

Similarly, the acts performed by Bronson as an escrow agent for the parties do not fit within the traditional parameters of an agency relationship. Once again, appellants hired Bronson to perform a service; specifically, to act as an escrow agent. Bronson, as an escrow agent, held the money designated by PMC to pay off the Scruggses’ Worthen mortgage until the closing date and then released these funds to pay off the mortgage. These actions were not subject to appellants’ control or authority. Bronson, instead, was acting as a neutral third party. Thus, because there was no agency relationship between appellants and Bronson, the chancellor erred when he imputed Bronson’s negligent acts onto appellants.

We note with favor the analysis used by the Texas court when it was asked to address the issue of whether a title insurance company is acting as an agent of the home buyer when it is conducting a title search. In Tamburine v. Center Savings Association, 583 S.W.2d 942 (Tex. Ct. App. 1979), the Texas court held that “where the insurance company commits itself to issue a policy upon certain conditions, the unilateral conduct of the insurance company or its agents in investigating the title does not create an agency relationship.” Id. In that case, a declaratory judgment was sought to determine that the plaintiffs were vested with equitable title to certain land. The plaintiffs argued that they should have been awarded superior title to the land in dispute because the defendants had hired a title company to perform a tide search and issue title insurance. The plaintiffs contended that the title company should have found the plaintiffs’ claim to the land during their title search and if they found such a claim the defendants, as principals of the agency relationship between the defendants and the title company, were “on notice” of the plaintiffs’ claim to the land. Thus, the defendants could not be bona fide purchasers of the property. The court, in rejecting this argument, examined the various tasks performed by a title company and determined that:

as we understand the title insurance business, the company, before issuing a policy of title insurance, must necessarily take steps to inform itself of the status of the title to be found. In the search for information upon which must depend the decision to either issue or decline to commit itself to issue a policy, the insurance company obviously investigates the tide for its own use and benefit to determine whether it will undertake the risk. The tide information on which the company bases its decision relates to the condition of the title held by the grantor and is not made for the prospective grantee or hen holder to whom the policy will finally issue.

Tamburine v. Center Savings Association, 583 S.W.2d 942 (Tex. Ct. App. 1979).

Therefore, because appellants lacked the requisite control or authority over the actions of Bronson during the title search and activities as an escrow agent, the chancellor should not have found an agency relationship existed. Accordingly, the chancellor’s finding that Bronson’s negligence should be imputed to appellants was clearly erroneous.

For appellants’ second point on appeal, they contend that the chancellor erred by not applying the theory of equitable subrogation to their situation. We outlined the concept of equitable subrogation in Southern Cotton Oil Company v. Napoleon Hill Cotton Company, 108 Ark. 555, 158 S.W. 1082 (1913). In that case, the Southern Cotton Oil Company paid off two mortgages owed by J.U. Martin. Southern Cotton Oil Company paid off these obligations with the understanding that it would be the senior lien holder of certain property owned by Martin. However, Martin could not give Southern Cotton Oil Company this position as a senior hen holder because the property was subject to a judgment Hen in favor of Napoleon Hill Cotton Company. In applying the doctrine of equitable subrogation to these facts, we set forth the principles of this theory:

The doctrine of subrogation is an equitable one, having for its basis the doing of complete and perfect justice between the parties without regard to form, and its purpose and object is the prevention of injustice. Subrogation in its literal and equitable significance, is the demanding of something under the right of another to which right the claimant is entitled for the purpose of justice to be substituted in place of the original holder. It is the machinery by which the equity of one man is worked through the legal rights of another. It rests upon the maxim that no one shall be enriched by another’s loss, and may be invoked whenever justice and good conscience demand its application in opposition to the technical rules of law, which liberate securities with the extinguishment of the original debt. This equity arises when one not primarily bound to pay a debt, or remove an incumbrance, nevertheless does so; either from his legal obligation, as in the case of a surety, or to protect his own secondary right; or upon the request of the original debtor, and upon the faith that, as against the debtor, the person paying will have the same sureties for reimbursement as the creditor had for payment. Like the vendor’s Hen for purchase money, it is the creation of a court of equity from the circumstances. The doctrine is also justly extended, by analogy, to one who, having no previous interest, and being under no obhgation, pays off the mortgage, or advances money for its payment, at the instance of a debtor party for his own benefit; such a person is in no true sense a mere stranger and volunteer.

Southern Cotton Oil Company v. Napoleon Hill Cotton Company, 108 Ark. 555, 158 S.W. 1082 (1913).

Applying the principles announced in Southern Cotton, we held that:

One who advances money to pay off an incumbrance on realty, at the instance either of the owner of the property or the holder of the incumbrance, either on the express understanding or under circumstances from which an understanding wül be imphed, that the advance made is to be secured by a first Hen on the property, is not a mere volunteer; and, in the event the new security is, for any reason, not a first Hen on the property, the holder of such security, if not chargeable with culpable and inexcusable neglect, wiH be subrogated to the rights of the prior incumbrancer under the security held by him, and to this end equity will set aside a canceHation of such security, and revive the same for his benefit.

Stephenson v. Grant, 168 Ark. 927, 271 S.W. 974 (1925); See also, Baker, Adm’r v. Leigh, 238 Ark. 918, 385 S.W.2d 790 (1965); Cooper v. Home Owners’ Loan Corp., 197 Ark. 839, 126 S.W.2d 112 (1939).

The chancellor erred by not applying the principle of equitable subrogation to this case. The circumstances of the case fit within the classic framework of equitable subrogation. Appellants, who were under no legal obligation, paid off the Scruggses’ mortgage to Worthen to protect their interest. When PMC paid the Scruggses’ obligation, they understood that they would take the senior security interest in the home the Newberrys were purchasing. However, appellants were not able to obtain this position because the property had a prior judgment Hen on it that would, except for the principle of equitable subrogation, have advanced to the senior position after the Worthen mortgage was paid. Because appellants were innocent parties in this transaction, it would be inequitable to sell the home to satisfy the Scruggses’ debt. The chancellor should have allowed appellants to use the principles of equitable subrogation to preserve the first mortgage position held by Worthen prior to the satisfaction of that obligation.

For appellants’ final point on appeal, they argue that the chancellor erred when he determined that Bronson had committed culpable negHgence. Culpable negligence is the omission of something that a reasonable, prudent, and honest person would do, or the doing of something that such a person would not do, under all circumstances surrounding each particular case. Home Fed. Sav. & Loan Ass’n v. Citizens Bank, 43 Ark. App. 99, 861 S.W.2d 321 (1993). We find no error in the chancellor’s finding that Bronson did commit culpable negHgence in this case. It is in the business of performing title searches and to have missed the judgment Hen on the property not only once, but twice, is something that a reasonable, prudent, and honest person would not do. Accordingly, the chanceHor’s finding on this point was not clearly erroneous.

Because we have determined that the principle of equitable subrogation is applicable to the circumstances of this case, we reverse and remand to the circuit court for further proceedings consistent with this decision.

Reversed and remanded.

       Having held that Bronson was not acting as appellants’ agent, we will decline to determine whether Bronson was instead acting as an independent contractor. However, we do note that generally an employer may be held hable for the conduct of a careless, reckless, or incompetent independent contractor when the employer was negligent in hiring the contractor. Arkansas Pools Inc. v. Beavers, 281 Ark. 109, 661 S.W.2d 395 (1983). Thus, if appellants had negligently hired Bronson to act as an independent contractor they might have been hable if the selection of Bronson was itself a negligent act by appellants. Here there is no showing that engaging the services of Bronson was negligent in and of itself.


author: Per Curiam.

text:
    Eugene Isaac PITTS v. STATE of Arkansas
    CR 80-40
    986 S.W.2d 407
    Supreme Court of Arkansas
    Opinion delivered March 11, 1999

      Appellant, pro se.

      Winston Bryant, Att’y Gen., by: Kent G. Holt, Ass’t Att’y Gen., for appellee.
   Per Curiam.

Eugene Issac Pitts was found guilty by a jury of felony murder in 1979 and sentenced to life imprisonment without parole. In the decision affirming the judgment, we noted that petitioner kidnapped Bernard Jones from his home and killed him and that the Jones’s wife positively identified Pitts, whom she knew well, as her husband’s assailant. We further noted that an expert forensic witness had testified that hairs found on the victim’s body were like Pitts’s hair. Pitts v. State, 273 Ark. 220, 617 S.W.2d 849 (1981). Pitts subsequently filed in this court a petition pursuant to Arkansas Rule of Criminal Procedure 37 seeking postconviction relief. The petition was denied on its merits. Pitts v. State, CR 80-40 (February 1, 1982).

Pitts now petitions this court to reinvest the trial court with jurisdiction to consider a petition for writ of error coram nobis in the case. The petition for leave to proceed in the trial court is necessary because the circuit court can entertain a petition for writ of error coram nobis after a judgment has been affirmed on appeal only after we grant permission. Larimore v. State, 327 Ark. 271, 938 S.W.2d 818 (1997).

A writ of error coram nobis is an exceedingly narrow remedy, appropriate only when an issue was not addressed or could not have been addressed at trial because it was somehow hidden or unknown and would have prevented the rendition of the judgment had it been known to the trial court. Penn v. State, 282 Ark. 571, 670 S.W.2d 426 (1984), citing Troglin v. State, 257 Ark. 644, 519 S.W.2d 740 (1975). The writ is allowed only under compelling circumstances to achieve justice and to address errors of the most fundamental nature. A presumption of regularity attaches to the criminal conviction being challenged, Larimore, supra, citing United States v. Morgan, 346 U.S. 502, 512 (1954), and the petition must be brought in a timely manner. Penn, supra. Newly discovered evidence in itself is not a basis for relief under coram nobis. Larimore, supra; Smith v. State, 301 Ark. 374, 784 S.W.2d 595 (1990).

Petitioner claims that jurisdiction should be reinvested in the trial court to consider an error coram nobis petition on the ground that newly developed methods of scientific testing, namely DNA analysis, are now available to test the hair sample which was entered into evidence by the prosecution at his trial in 1979. He contends that the new tests would refute the testimony of an expert witness at petitioner’s trial that hair found on the victim was like that of petitioner.

The ground raised by petitioner is insufficient to warrant granting leave to proceed in the trial court with a petition for writ of error coram nobis. We said in Larimore, supra, that the writ was available to address certain errors of the most fundamental nature that are found in one of four categories: insanity at the time of trial, a coerced guilty plea, material evidence withheld by the prosecutor, or, as added by Penn, supra, a third-party confession to the crime during the time between conviction and appeal. See Taylor v. State, 303 Ark. 586, 799 S.W.2d 519 (1990). See also Smith v. State, 301 Ark. 374, 784 S.W.2d 595 (1990).

We further said in Larimore, citing Troglin, supra, that the following guidelines are applicable when considering a petition for writ of error coram nobis:

(1) The function of the writ of coram nobis is to secure relief from a judgment rendered while there existed some fact which would have prevented its rendition if it had been known to the trial court and which, through no negligence or fault of the defendant, was not brought forward before rendition of judgment;
(2) Coram nobis proceedings are attended by a strong presumption that the judgment of conviction is valid. The court is not required to accept at face value the allegations of the petition;
(3) Due diligence is required in making application for relief, and, in the absence of a valid excuse for delay, the petition will be denied; and
(4) The mere naked allegation that a constitutional right has been invaded will not suffice. The application should make a full disclosure of specific facts relief upon and not merely state conclusions as to the nature of such facts.

57 Ark. at 645-46, 519 S.W.2d at 741.

Where there was no fundamental error at the time of trial, newly discovered evidence is not a cause to issue a writ of error coram nobis. Smith v. State, supra. The mere fact that over time a scientific test may have been developed which did not exist at the time of a petitioner’s trial is not in itself cause to issue the writ because the development in scientific testing cannot establish a fundamental error made at trial. A petitioner who contends that newly developed scientific testing can exonerate him should submit the allegation to the executive branch in a clemency proceeding.

Petitioner next contends that he was improperly convicted of felony murder as that charge was interpreted by two decisions of this court rendered after the judgment in his case was affirmed. The State argues that neither case is apposite to petitioner’s case, but the core issue is whether there was some fundamental error at petitioner’s trial which was extrinsic to the record and could not have been raised at that time. Clearly, petitioner was aware at the time of trial of the charge against him and could have challenged the felony information at that time.

Petition denied.

       Petitioner states that he has filed two unsuccessful petitions for clemency, presumably raising the issue raised herein.


author: W. H.“Dub” Arnold, Chief Justice.

text:
    STATE of Arkansas v. James L. SHEPPARD
    CR 98-891
    987 S.W.2d 677
    Supreme Court of Arkansas
    Opinion delivered March 18, 1999

      Mark Pryor, Att’y Gen., by: Kelly S. Terry, Ass’t Att’y Gen., for appellant.

      Theresa S. Nazario, Deputy Public Defender, for appellee.
   W. H.“Dub” Arnold, Chief Justice.

This case presents an interlocutory appeal from a trial court’s order suppressing testimony regarding the appellee’s verbal statements to an Arkansas State Police investigator. Our jurisdiction is authorized pursuant to Ark. Sup. Ct. Rule 1-2(a)(8) (1998) and Ark. R. App. P.—Crim. 3(a). The appellant State of Arkansas contends that the trial court clearly erred by applying an incorrect standard to determine the statements’ admissibility. We agree, and we reverse.

On July 23, 1996, Kimberly Warren of the Arkansas State Police interviewed the appellee, James L. Sheppard, and his wife at Arkansas Childrens’ Hospital regarding the possible battery of the Sheppard’s eight-week old baby. Prior to taking appellee’s statement, Warren mirandized Sheppard. Warren testified that her standard procedure for investigating literate adults is to talk with the person, obtain information, write out a summary, and instruct the person to read the statement for accuracy and initial any additions or deletions to the statement. Following her interview with Sheppard, Warren wrote a statement summarizing the interview, and Sheppard read and signed the statement, making one correction. Subsequently, Sheppard was charged by information with first-degree battery.

During a hearing on June 20, 1997, Sheppard argued that the written statement was involuntary and moved for its suppression. He also disputed the truthfulness of the written statement. Ultimately, the trial court determined that the written statement was not admissible as Sheppard’s statement because it was “not the statement of the defendant at all.” Significandy, the trial court noted that it did not find any involuntariness in the taking of the statement but characterized the statement in the officer’s words as “inherently nontrustworthy.” Additionally, the trial court remarked that it suppressed the statement “not because what was said that day violates any Miranda or any voluntariness” but because “what we have here is suspect to the point that the State can’t meet its burden of proving that this represents a voluntary statement of the defendant.”

Following the suppression of the written statement, the State queried whether Investigator Warren could testify as to her memory of what Sheppard said during the interview. On May 11, 1998, the State filed a proffer of three statements that Investigator Warren would testify to based upon her “independent recollection” and not upon her “police report.” Specifically, the proffer included the following expected testimony:

1. Mr. Sheppard told me that he was trying to get the baby to sleep and that he was feeling frustrated and tired.
2. Mr. Sheppard told me that he had slammed the baby down on his leg and he was sitting in front of a coffee table.
3. I then inquired if the baby could have hit the coffee table, and he stated, “Oh my God yes, that’s what happened.”

On May 20, 1998, the trial court suppressed Investigator Warren’s proffered testimony. The trial court indicated that the testimony “absolutely lack[ed] the trustworthiness that statements ought to have to be admitted into evidence.” Further, the trial court found it “absolutely incredible that [Warren] could remember a statement being made that was much more damning than anything in the statement that she initially presented.” From the trial court’s order suppressing Investigator Warren’s testimony, comes the instant appeal.

Suppression of testimony regarding appellee’s statement

The State’s sole point in this interlocutory appeal challenges the trial court’s suppression of Investigator Warren’s testimony regarding statements made by the appellee to Warren during an interview at Arkansas Childrens’ Hospital. In Gooden v. State, 295 Ark. 385, 393, 749 S.W.2d 657, 662 (1988), we saw no difference in the admissibility of a written summary of a defendant’s statement as opposed to witness testimony regarding that statement. Here, although the trial court ruled that the written statement was inadmissible, the State’s subsequent attempt to introduce evidence regarding that statement, via Warren’s testimony, marks a continuation or revisiting of the prior issue. Accordingly, we apply the same standard for determining the admissibility of Investigator Warren’s testimony as we would apply in evaluating the admissibility of the written statement. See Gooden, 295 Ark. at 392-93, 749 S.W.2d at 661-62.

Notably, Sheppard moved to suppress Investigator Warren’s testimony based upon a lack of voluntariness, but the trial court excluded the testimony because it believed that the statements were untrustworthy. The Due Process Clause of the Fourteenth Amendment requires that confessions be voluntary in order to be admissible at trial. Due process also requires that a defendant is entitled to “a fair hearing and a rehable determination on the issue of voluntariness, a determination uninfluenced by the truth or falsity of the corfession.” Jackson v. Denno, 378 U.S. 368, 377 (1964) (citing Rogers v. Richmond, 365 U.S. 534 (1961)) (emphasis added). Accordingly, the State suggests that the trial court should have decided only whether Investigator Warren’s conduct “was such as to overbear [appellee’s] will to resist and bring about confessions not freely self-determined.” See Rogers v. Richmond, 365 U.S. 534, 544 (1961). Significantly, that question should be answered “with complete disregard of whether or not [appellee] in fact spoke the truth.” Id.

When we review the voluntariness of confessions, this court makes an independent determination based upon the totality of the circumstances and reverses the trial court only if its decision was clearly erroneous. See Hood v. State, 329 Ark. 21, 30, 947 S.W.2d 328, 333 (1997). In reaching its decision, this court may consider the accused’s age, education, and intelligence, whether the accused was advised of his constitutional rights, the length of detention, the repeated and prolonged nature of questioning, the use of physical punishment, the statement of the interrogating officers, and the accused’s vulnerability. Hood, 329 Ark. at 30-31, 947 S.W.2d at 333.

The State argues that the ultimate issue of the statement’s reliability is a question for the jury as fact-finder and not for the trial court at a suppression hearing on voluntariness. See Crane v. Kentucky, 476 U.S. 683, 688 (1986). We agree. Here, the trial court acknowledged that it “automatically suspects any statement that is not recorded or not in the handwriting of the person giving the statement.” However, this reasoning bears upon the statement’s credibility, an issue of fact for the jury, and not upon the statement’s voluntariness, an issue of law for the court.

Appellee cites Moore v. State, 321 Ark. 249, 253, 903 S.W.2d 154, 156 (1995), in support of its position that “[w]hen conflicting testimony concerning the circumstances of a confession is offered, it is the trial court’s province to weigh the evidence and resolve the credibility of the witnesses.” However, the circumstances of a confession relate to the issue of whether or not the statement was coerced or given voluntarily. None of the issues raised by the appellee concern any threat of coercion or other factor contributing to the statement’s voluntariness. In fact, appellee’s objections to Warren’s competency as a witness and her capacity for truthfulness are matters that may be explored during cross-examination.

Here, the record indicates that the trial court improperly focused upon Warren’s credibility as a witness and the truthfulness of the statement rather than the circumstances surrounding the giving of the statement. Given that the trial court found that appellee’s statements were voluntary, Investigator Warren’s testimony should have been admitted. The trial court was clearly erroneous in excluding Investigator Warren’s testimony because it believed that she lacked credibility and that the statements were untruthful. Accordingly, we reverse.


author: Donald L. Corbin, Justice.

text:
    SUNRISE ENTERPRISES, INC., Kenny Cain, John Smith, and Doris Butler v. MID-SOUTH ROAD BUILDERS, INC. and M. Gregory Jackson
    98-898
    987 S.W.2d 674
    Supreme Court of Arkansas
    Opinion delivered March 18, 1999

      Killough & Ford, by: Danny W. Glover, for appellant Sunrise Enterprises and Kenny Cain.

      John Biscoe Bingham, P.A., by: John Biscoe Bingham, for appellant Doris Butler.

      Pike & Bliss, by: George E. Pike, Jr., and Deborah Pike Bliss, for appellant John Smith.

      Christopher C. Mercer, Jr., for appellee.
   Donald L. Corbin, Justice.

This case involves an issue of juror misconduct. Appellants Sunrise Enterprises, Inc., Kenny Cain, John Smith, and Doris Butler appeal the order of the Woodruff County Circuit Court granting a new trial to Appellees Mid-South Road Builders, Inc., and M. Gregory Jackson. The issue presented is whether the trial court erred in granting a new trial on the ground that some of the jurors were exposed to extraneous legal materials during their deliberations. Our jurisdiction is pursuant to Ark. Sup. Ct. R. 1-2(b)(4) and (5), as this appeal is one of substantial public interest requiring further development of the law. We find no error and affirm.

Appellees filed suit against Appellants for replevin and conversion of various items of road-building equipment that had been stored on Butler’s property pursuant to an agreement between Jackson and Butler’s husband, the late Dr. John Butler. Butler counterclaimed for rent that Appellees allegedly owed her in exchange for storing the equipment. During the trial, which was held over several non-consecutive days in November 1997, Butler attempted to defend the suit by arguing that she had the right to sell Appellees’ equipment under Ark. Code Ann. § 18-16-108 (Supp. 1997). Indeed, during opening statement, Butler’s attorney, Mr. Bingham, read section 18-16-108 to the jurors. At the conclusion of the evidence, however, the trial court determined that section 18-16-108 was not applicable to the evidence presented and refused to instruct the jury on that statutory provision. The jury returned verdicts in favor of Appellants, but did not award damages to Butler on her counterclaim for rent.

Appellees filed a motion for judgment notwithstanding the verdict and for new trial, alleging numerous errors including juror misconduct. A hearing was held on December 19, 1997. Testimony from five jurors revealed that one of the jurors brought a document from home that contained a provision of law similar to section 18-16-108, upon which the trial court ultimately refused to instruct the jury.

One of the jurors, Carolyn Kittrell, testified that she brought a piece of paper from home and shared it with some of the jurors. She testified that the document was part of a 1982 real estate contract that she had on some rent houses. The part she brought into the jury room had to do with the landlord’s right to sell property left by the tenant after sixty days. She indicated that she retrieved the paper to help her clarify her notes regarding the provision of law read by Mr. Bingham. She stated that she did not read the paper to anyone, but that Juror Peebles read it. She explained that she retrieved the paper prior to the time that the judge instructed them not to bring in any outside documents. She admitted, however, that the paper remained inside the jury room during deliberations. The trial judge then inquired of Juror Kittrell whether any of the jurors had a copy of the law that Mr. Bingham read in his opening statement:

The Court: ... I heard you say, in response to Mr. Mercer’s question, that the Arkansas law which was read by Mr. Bingham on the first day of the trial —
Ms. Kittrell: Yes.
The Court: — will you clarify that for me?
Ms. Kittrell: I didn’t —
The Court: Someone read that to you in the jury room?
Ms. Kittrell: No. He read something about the Arkansas law regarding abandoned property the first day of the trial and I did not get it through my notes. I just wrote Arkansas law. Now, whether the part of my contract was the law, at that time, I don’t know. It was just part of my real estate contract and I thought it sounded like what he had read, but I couldn’t be sure. [Emphasis added.]

Immediately after Juror Kittrell testified, the trial judge called the attorneys to the bench and revealed that he had overheard some of the jurors’ deliberations in this case. He explained that due to the proximity of the judge’s chambers to the jury room, he had been able to hear some of the jurors’ discussions. Particularly, the trial judge recalled hearing the voice of a young male juror reading what the judge believed to be section 18-16-108. The hearing then continued and testimony was taken from four additional jurors.

The other four jurors testified that they saw the document brought in by Juror Kittrell. Three of them remembered that the document was read and discussed by some of the jurors; the fourth juror could not remember whether the document was discussed, but she did recall hearing it read to the other jurors. Glenda Calhoun, the jury’s foreperson, testified that the document was the same thing that Butler’s attorney read to them in his opening statement. Juror Calhoun also stated that Juror Kittrell indicated to them that the paper reflected the law.

In an order entered on December 31, 1997, the trial court granted the motion for new trial. The trial court found that Juror Kittrell carried into the jury room a document, which she described as a contract that related to an incident where some property was abandoned and sold, and exhibited it to Juror Peebles. The trial court found further that Juror Peebles read the document loud enough that it was called to the attention of the other jurors. The trial court concluded:

The record made herein, has several references to the Arkansas Law read by Mr. Bingham on the first day of trial. It is clear that the jury was exposed to extraneous prejudicial information and further that this information was improperly brought to the jurors [sic] attention. [Emphasis added.]

Appellants argue that the trial court erred in granting a new trial on the basis of juror misconduct. They contend that the trial judge’s ruling was erroneously based upon what he thought he overheard during the jurors’ deliberations, and not on the actual testimony of the jurors. Alternatively, they argue that even if there was juror misconduct, a new trial was not warranted because Appellees faded to demonstrate that they were prejudiced by the misconduct. We disagree.

In reviewing a trial court’s grant of a new trial, the test is whether the trial court abused its discretion. Razorback Cab of Ft. Smith, Inc. v. Martin, 313 Ark. 445, 856 S.W.2d 2 (1993). “A showing of abuse is more difficult when a new trial has been granted because the party opposing the motion will have another opportunity to prevail.” Id. at 446, 856 S.W.2d at 3 (citing Worthington v. Roberts, 304 Ark. 551, 803 S.W.2d 906 (1991); Turrise v. Crane, 303 Ark. 576, 798 S.W.2d 684 (1990)). When a new trial is requested pursuant to ARCP Rule 59(a) because of juror misconduct, the moving party must show that the party’s rights have been materially affected by demonstrating that a reasonable possibility of prejudice has resulted from the misconduct. Diemer v. Dischler, 313 Ark. 154, 852 S.W.2d 793 (1993). Prejudice in such instances is not presumed. Id. To show that extraneous materials were brought to the jurors’ attention, the trial judge may properly consider the content of conversations that took place in the jury room. St. Louis S.W. Ry. v. White, 302 Ark. 193, 788 S.W.2d 483 (1990).

Generally, it is misconduct for jurors to view reading material without the knowledge of the court and the parties; however, prejudice does not occur in every case. Franks v. State, 306 Ark. 75, 811 S.W.2d 301 (1991). Similarly, allowing the jury to have access to something that has not been admitted into evidence will not necessarily, without more, constitute an abuse of discretion. Dickerson Constr. Co., Inc. v. Dozier, 266 Ark. 345, 584 S.W.2d 36 (1979). Thus, the key inquiry when jurors take extraneous material into their deliberations is not whether such action amounts to misconduct, as it clearly does; rather, the pertinent question is whether there was a reasonable possibility that such misconduct resulted in prejudice. We conclude that Appellees have sufficiently demonstrated that a reasonable possibility of prejudice resulted from the misconduct here.

The evidence presented during the hearing demonstrated that at least six of the jurors were exposed to extraneous material during their deliberations. Juror Kittrell admitted that she brought into the jury room a piece of paper representing what she thought was a statement of the law read by Butler’s attorney during opening statement. Contrary to Appellants’ assertion, it matters not whether the document was a piece of an old real estate contract or a copy of section 18-16-108. What is significant is that the jurors discussed and considered extraneous information pertaining to a landlord’s ability under the law to sell property abandoned by a tenant, an issue upon which the trial court specifically refused to give an instruction. It is of no avail to Appellants that the five jurors who testified indicated that their verdicts were unaffected by the paper; the misconduct is apparent from the fact that outside legal material was taken into the jury room and discussed by at least some of the jurors during deliberations. See 58 Am. Jur. 2d New Trial § 248 (1989) (providing that if the extraneous material is of such a nature or character as to influence the jury against the unsuccessful party or in favor of the prevailing party, and it is shown to have been improperly in the jury room during deliberations and read by the jurors, a new trial should be granted even though the jurors may think that they were not influenced by that material). The fact that the very law ruled inapplicable by the trial court ended up in the jury’s deliberations, which ultimately produced a verdict for Appellants, demonstrates a reasonable possibility of prejudice to Appellees.

We are not persuaded by Appellants’ argument that the trial judge abused his discretion by granting a new trial based on what he overheard during the jury’s deliberations. To the contrary, the trial judge’s order demonstrates that his decision was based on the testimony of the jurors indicating that they had discussed an extraneous document that purported to be the law read by Mr. Bingham. Moreover, because they failed to object during the hearing below, Appellants have not preserved any argument regarding the trial judge’s statement that he overheard a juror reading the law, as opposed to a real estate contract. To preserve a point for appeal, a proper objection must be asserted at the first opportunity. Edwards v. Stills, 335 Ark. 470, 984 S.W.2d 366 (1998). That was not done here. We thus affirm the trial court’s judgment.