text:
    Raymond THOMAS, Individually and as Special Administrator of the Estate of William E. Thomas, Deceased v. Dr. Leslie SESSIONS, et. al.
    91-19
    818 S.W.2d 940
    Supreme Court of Arkansas
    Opinion delivered November 11, 1991

      Morgan E. Welch, P.A., by: L. Ashton Adcock, for appellant.

      Mitchell, Williams, Selig and Tucker, by: Sherry P. Bartley, for appellee.
   Steele Hays, Justice.

This is a wrongful death action against two physicians and a hospital based on claims of medical malpractice. The hospital, Jefferson Regional Medical Center, and one of the physicians, Dr. Carl Bell, were dismissed by summary judgment. The other, Dr. Leslie Sessions, was acquitted by a jury verdict. The personal representative has appealed, contending there were material issues of fact as to Dr. Bell and trial errors with respect to Dr. Sessions and the hospital. We reverse and remand as to Dr. Bell and Dr. Sessions, but finding no issues of fact affecting the hospital, we affirm in part.

In appeals from summary judgment our review is in conformity with the rule that we examine the facts in a light most favorable to the appellant, and any doubts or inferences must be resolved against the moving party. Pinkston v. Lovell, 296 Ark. 543, 759 S.W.2d 20 (1988).

On the late afternoon of October 24, 1984, Misty Sturgis called on her neighbor, Mr. William E. Thomas. She found him in acute distress: sweating profusely, weak and trembling, extremely flushed, experiencing nausea, chest pain and numbness in his left arm. At her insistence Thomas agreed to go to the Jefferson Regional Medical Center and Ms. Sturgis drove him there, arriving around five o’clock. Ms. Sturgis asked the emergency room personnel to do an EKG. Another friend, Ms. Bernadette Allen, arrived and the two stayed with Thomas waiting for the doctor to see him. Ms. Allen testified to Thomas’s chest pain, as well as generalized pain. After some two hours Thomas left the emergency room, though whether he left of his own volition or was refused admission, is a disputed question. Thomas collapsed later that evening, was returned to the emergency room at 9:43 p.m., and expired shortly thereafter. Death was attributed to myocardial infarction.

Suit for wrongful death was brought by special administrator, alleging that Drs. Bell and Sessions conferred by telephone and concluded, without taking a proper history or performing proper tests and examinations, that Thomas was dehydrated due to alcoholism, resulting in a misdiagnosis and an abandonment in that Thomas was refused admittance to the hospital. Tests performed after Thomas’s second trip to the emergency room showed his blood alcohol content to be zero.

The hospital’s motion for summary judgment, which we will address momentarily, was based on a contractual agreement between the hospital and a group of physicians, including Dr. Sessions, operating as independent contractors. The summary judgment motion of Dr. Bell was grounded on the absence of genuine issues of material fact and in considering the motion the trial court had before it the depositions of Dr. Bell, Dr. Sessions, Ms. Rebecca Amos, a registered nurse on duty at the emergency room at the time in question, Dr. Wayne Smith, Misty Sturgis, Bernadette Allen and various records from the emergency room.

Since Dr. Sessions had no authority to admit patients to the hospital, he consulted Dr. Bell by telephone. Dr. Bell had staff privileges at Jefferson Regional and had treated William Thomas some four years earlier. Dr. Sessions recorded Mr. Thomas’s complaints as: “hypertension, drinking alcohol for several days, unable to walk without holding on to something, shakes in his legs and headaches.” He also observed nausea and vomiting. Dr. Sessions maintains that he and Dr. Bell concurred in recommending that Mr. Thomas be admitted to Jefferson Regional Medical Center for detoxification, or sent to Riverview in Little Rock for a twenty-eight day program of detoxification and rehabilitation. They further contend that Thomas refused either and left the hospital against medical advice.

Dr. Bell claims his only involvement in the case “consisted of a phone call from Dr. Sessions” wherein Dr. Sessions inquired of Dr. Bell whether he would be willing to admit Mr. Thomas as a patient to the hospital for purposes of detoxification. But there may have been additional phone calls and, as we will see in a moment, opposing medical opinion from which a jury might infer that Dr. Bell’s participation was more involved than merely approving Mr. Thomas’s admittance to the hospital, which in itself is a sharply disputed issue of fact. Indeed, Dr. Sessions testified that he and Dr. Bell discussed symptoms, treatment, and concurred in the view that Mr. Thomas should be admitted to the hospital. The two doctors were unequivocal in their contention that Mr. Thomas refused admittance to Jefferson Regional, but Ms. Amos was not so certain — her deposition states that the only conversation she had with Dr. Bell related to Riverview, the implication being that she and Dr. Bell did not discuss Jefferson. Moreover, the records of the emergency room do not reflect that Thomas refused hospitalization at Jefferson Regional, only that he “Refuses transfer” (a reference to Riverview).

Whether Thomas refused transfer to Riverview is, of course, immaterial. The pivotal issue is whether he was offered admission at Jefferson Regional. Appellees insist that is undisputed, but when that contention is weighed against other proof, both direct and circumstantial, we are unable to sustain the argument. The fact that Drs. Bell and Sessions maintain that Thomas did refuse, hardly renders the issue undisputed. Sanders, Adm’x. v. National Old Line, Ins. Co., 266 Ark. 247, 538 S.W.2d 58 (1979). Moreover, there are other material questions of fact, namely, whether adequate diagnostic procedures were followed, whether Thomas’s symptoms, properly diagnosed, would have indicated cardiac distress, whether, assuming Thomas refused to be hospitalized, his decision was based on an informed understanding of his condition, whether Drs. Bell and Sessions consulted, and whether early detection of myocardial infarction would have affected the likelihood of recovery.

The order of summary judgment observes that “the only competent evidence of what Dr. Bell said during the telephone conversation came from Dr. Bell, Dr. Sessions and/or Nurse Amos, who all three stated that Dr. Bell did authorize admission to Jefferson Regional Medical Center.” But that presumes the credibility of interested parties and focuses on the proof of the movant while disregarding opposing proof, exactly the reverse of how the proof should be weighed in deciding a motion for summary judgment. Some courts apply the “scintilla of evidence” rule which requires a court considering summary judgment to admit the truthfulness of all evidence favorable to the nonmovant, thereby removing all issues of credibility from the case, and determine if there are any facts from which a jury could reasonably infer ultimate facts upon which a claim depends; if so, the case must be decided by the factfinder. Schoen v. Gulledge, 481 So.2d 1094 (S. Ct. Ala. 1985). Our own rule is similar:

The object of summary judgment proceedings is not to try the issues, but to determine if there are any issues to be tried, and if there is any doubt whatsoever, the motion should be denied.

Rowland v. Gastroenterology Assoc., P.A., 280 Ark. 278, 657 S.W.2d 536 (1983).

Nor can we agree there was no other proof as to Dr. Bell’s involvement in the case. It is conceded that because Dr. Sessions had no authority to admit patients to the hospital he called Dr. Bell, who had treated'Thomas. Dr. Bell was consulted by telephone not once, but as many as three times concerning Thomas’s condition, symptoms and diagnosis and, according to Dr. Sessions, they concurred as to the proper course of treatment. If a jury were to agree with appellant’s contention that Mr. Thomas was misdiagnosed and “abandoned” at the emergency room, it would also be within its ambit to decide whether Dr. Bell was privy to that action, giving Dr. Bell’s assertions to the contrary such credence as it thought appropriate. We have said that summary judgment is not proper where evidence, although in no material dispute as to actuality, reveals aspects from which inconsistent hypothesis might reasonably be drawn and reasonable minds might differ. Walner v. Bozaw, 290 Ark. 299, 718 S.W.2d 942 (1986).

When the proof on the motion for summary j udgment is given its strongest probative force favorable to the appellant, we cannot say no doubts exist on the issue of whether Thomas refused an offer of admission to the hospital. The plaintiff was prepared to prove that Thomas experienced symptoms consistent with cardiac distress, went to the emergency room and remained for two hours, returned home and collapsed and expired from myocardial infarction. Records of the emergency room make no mention of Thomas refusing admission at Jefferson Regional, only that he refused transfer to Riverview. Ms. Sturgis testified that she was told by emergency room personnel to take Mr. Thomas home, “there was nothing the hospital could do for him”, and Ms. Allen testified she was told by a doctor at the hospital that Mr. Thomas had been drinking or was drunk, that he had an alcohol problem and “needed to be taken to Little Rock because there was nothing they could do for him.”

In addition to that evidence, there is the deposition of Dr. Wayne Smith. Dr. Smith expressed the opinion that William Thomas presented classic signs of myocardial infarction at the emergency room: weakness, confusion, inability to walk, pain in chest and shoulder. Dr. Smith was particularly critical of the emergency room records pertaining to Mr. Thomas’s initial visit which he labelled “grossly incomplete.” He testified that the records generated on the evening of the 24th and at the hospital and Dr. Bell’s office the following morning “belie the contention that Mr. Thomas was offered admission at Jefferson Regional Medical Center.”

We recognize that the trial court later excluded Dr. Smith’s testimony. But we disagree with that conclusion. Dr. Smith is a graduate of the University of Arkansas School of Medicine and has engaged in the general practice of medicine in Arkansas for twenty years. For the past eleven years he has limited his practice to his office, prior to that he engaged in general hospital duties including emergency room practice. Dr. Smith does not specialize in cardiology but regularly treats patients with cardiac problems and considers himself competent and qualified to render an opinion in the field of cardiology. Dr. Smith completed a general internship at St. Vincent Infirmary and has attended continuing medical education courses on a regular basis, including those dealing with cardiology. In short, Dr. Smith was not without the qualifications to testify as a medical expert based on training and experience and appellees have not demonstrated wherein Dr. Smith was incompetent to meet the moderate standards applicable to expert witnesses. Dildine v. Clark Equip. Co., 282 Ark. 130, 666 S.W.2d 692 (1984).

Having read Dr. Smith’s deposition testimony in its entirety, we are more than satisfied that he was knowledgeable by training and experience to recognize both the symptoms of cardiac distress and the appropriate medical response, whether occurring in an emergency room or an office setting. Appellees contended below that Dr. Smith’s general office practice rendered him lacking in the expertise of emergency room procedures, but they have not shown us why a specialization in emergency room operations is essential in determining whether Mr.Thomas’s complaints and history were properly evaluated and appropriate tests and examinations performed, all of which strike us as rather basic to the science of medicine. In the absence of such showing, we see no reason why a medical witness of Dr. Smith’s experience and background is not competent to express pertinent medical opinions.

We addressed a similar contention in Cathey v. Williams, 290 Ark. 189, 718 S.W.2d 98 (1986), where the trial court permitted a general practitioner to state his opinion that good medical care was exercised by a specialist treating the appellant. The issue there was whether the appellee, a neurosurgeon, should have ordered an immediate CT scan rather than waiting until the following day. On appeal, appellant argued that no general practitioner is qualified to testify with regard to the standard of skill that must be met by a specialist such as a neurosurgeon. We rejected that contention, citing with favor reasoning from the case of Evans v. Ohanesian, 38 Cal. App. 3d 125, 112 Cal. Rptr. 236 (1974):

Nor is it critical whether a medical expert is a general practitioner or a specialist so long as he exhibits knowledge of the subject. Where a duly licensed and practicing physician has gained knowledge of the standard of care applicable to a specialty in which he is not directly engaged but as to which he has an opinion based on education, experience, observation or association with that specialty, his opinion is competent. [Citation.] The reason for not requiring specialization in a certain field is obvious. Physicians are reluctant to testify against each other. [Citations.] Consequently, when an expert can be found, it is immaterial whether he is a general practitioner or a specialist providing he has knowledge of the standard of care in any given field; otherwise, the plaintiff could never prove a case against a specialist unless he had an expert of the particular specialty, and the plaintiff would never be able to sue a general practitioner unless he had a general practitioner who was willing to testify as an expert. [Citation.]

Having held that a general practitioner is qualified to express an opinion as to the standard of skill of a neurosurgeon as to the urgency of a CT scan, we could hardly say that an experienced general practitioner who regularly sees patients with cardiac problems may not state an opinion concerning the early indications of myocardial infarction. While we recognize the trial court’s discretion in this area, that discretion is not absolute and for the reasons we have noted, we hold that it was misused in this instance.

Turning to Jefferson Regional Medical Center and Northwestern National Insurance Company, its carrier, summary judgment was ordered on the strength of an agreement between the hospital and a group of physicians, including Dr. Sessions, practicing as Arkansas Doctors Emergency Group, Inc. (ADEG). The agreement obligated the corporation to furnish professional coverage for emergency room services and contained a provision reading: “[N]othing in this agreement shall be construed to constitute any member or employee of the corporation as an agent or employee of the hospital, nor shall anything herein be construed to constitute the Hospital as agent for ADEG.”

In granting summary judgment to Northwestern National Insurance Company, Jefferson Regional Medical Center’s insurer, the trial court found that Dr. Sessions was an independent contractor and not an agent of Jefferson Regional Medical Center. Appellant has not shown us the error of that finding. See Norton v. Hefner, 132 Ark. 18, 198 S.W. 297 (1917); Runyan v. Goodrum, 147 Ark. 481, 228 S.W.2d 397 (1921). In Medi-Stat, Inc. v. Kusturin, 303 Ark. 45, 792 S.W.2d 869 (1990), we held that a business corporation may be liable for the acts of a physician under the doctrine of respondeat superior, but that principle has not been extended to charitable corporations. Moreover, a number of factors existed in Medi-Stat which are not present here.

During trial, appellant called Dr. John Dale Dunn to refute the contention that William Thomas refused admission to Jefferson Regional Medical Center. Counsel for Dr. Sessions objected on the grounds that Dr. Dunn had no qualifications for addictionology and the objection was sustained. On appeal appellant renews his argument that Dr. Dunn was qualified to give expert medical testimony and we agree. Dr. Dunn is a member of the American College of Emergency Physicians, is board certified in emergency medicine and family practice and is Chief of Emergency Services and Director of Emergency Physicians at a Brownwood, Texas, hospital. He has been practicing medicine for sixteen years and practicing emergency medicine predominately since 1981. With respect to alcoholism Dr. Dunn testified more than fifty percent of the adult visits to emergency rooms nationwide are caused by alcoholism. He stated:

As a board certified Emergency Physician, I am called upon in my profession capacity to treat alcohol withdrawal. Alcoholics have most of their problems socially and family wise in the evenings or on weekends. (TR. 2258) Emergency Departments is frequently the only place they can go as most alcohol treatment programs are daytime programs. The Emergency Department is the place where alcoholics show up when they have an emergency either related to their medical problems or alcoholism. With alcoholics, because of their patterns of lifestyle and the times that they have problems, the Emergency Department is the most common place they might receive care for emergency conditions.

We can find no sound reason advanced by appellees as to why Dr. Dunn was not qualified to express an opinion with respect to the treatment of alcoholics in an emergency room setting. Ark. R. Evid. 702.

Two points remain — appellant argues that it was error to exclude the testimony of Ms. Christine Lalande, a claims representative for St. Paul Insurance Company, carrier for Drs. Bell and Sessions. Mrs. Lalande, in correspondence with counsel for appellant, had stated that intravenous fluids were administered to Mr. Thomas at the emergency room, an assertion which appellant evidently concedes is inaccurate. The proffered evidence was excluded as collateral and irrelevant and we cannot say the trial court’s discretion was abused by the ruling.

Lastly, appellant contends it was error to reject an instruction in accordance with AMI 1504. However, we do not address the argument as none of the instructions are abstracted and we will not search the record to determine that the exclusion of AMI 1504 was prejudicial to the plaintiff.

Affirmed in part and reversed and remanded in part.

       Indeed, Ms. Amos’s trial testimony, though not germane to summary judgment, is even more explicit: “I don’t remember Dr. Bell saying that Mr. Thomas needed to be admitted at Jefferson. Dr. Bell only talked to me about admitting him to Riverview. (T. 2403).


source: Caselaw Access Project

author: David Newbern, Justice.

license: Public Domain

text:
    Oliver Doyle ROY v. FARMERS & MERCHANTS INSURANCE COMPANY
    91-170
    819 S.W.2d 2
    Supreme Court of Arkansas
    Opinion deliverd November 11, 1991
    [Rehearing denied December 16, 1991.]

      Pope, Shamburger, Buffalo, & Ross, by: Brad A. Cazort, for appellant.

      Jacob Sharp, Jr., and Brian Allen Brown, for appellee.

      Glaze, J., not participating.

   .

David Newbern, Justice.

In this case we interpret, for the first time, a provision in Ark. Code Ann. § 23-89-208 (1987) requiring “reasonable proof of all benefits” be made to an insurance company. The issue stems from a further provision of the Statute that the insurer is liable for sanctions if a claim is not paid within 30 days after receipt of “reasonable proof as to all benefits accrured.” We hold that sending a hospital bill, unaccompanied by any sort of signed application proving that the medical expense entitles the sender to an insurance policy “benefit” is not sufficient to satisfy the “reasonable proof’ requirement.

Oliver Roy, the appellant, was a pedestrian crossing a street when he was struck by Cheri Rogers’ car. The appellee, Farmers & Merchants Insurance Company [F & M], is Rogers’ insurer.

Roy was transported to Cleburne Memorial Hospital where his care resulted in a charge of $6911.75. F & M assigned the claim to Tim Pipkins of L & R Adjusting Company. A bill for ambulance services provided to Roy was delivered to Pipkins on January 17,1991. On February 1,1991 the hospital sent a bill to F& Mfor the entire amount of services rendered, $6911.75. The bill showed F & M as “payer” and recited that “The patient [Roy] was hit by a car on 1-15-91. The owner or the person who hit this patient is Bobby & Sheri Rogers.” No signature or other authentication appeared on the bill.

On March 5, 1991, Roy filed a complaint against F & M alleging that more than 30 days had passed since F & M received reasonable proof of Roy’s medical bill, and it had not paid the $5000 medical payments limit authorized by the policy. The complaint sought the policy limit of $5000 for medical payments, 12% penalty, interest, and attorney’s fees as permitted in § 23-89-208(f).

F & M confessed judgment for $5000 on March 19, 1991. The question of F & M’s liability for the interest, penalty, and attorney’s fees was submitted to the Trial Judge who found the statutory sanctions inapplicable because payment was made within 30 days of the date Roy’s application for benefits was received by F & M.

Roy challenges the Trial Court’s interpretation of the Statute alleging the Court erred in it’s determination that “reasonable proof’ was not sent more than 30 days before payment. We agree with the Trial Court that sending a hospital bill is not sufficient.

The Statute provides:

Payments.
(a) Payment under the coverages enumerated in § 23-89-202(1) and (2) shall be made on a monthly basis as benefits accrue.
(b) Benefits for any period are overdue if not paid within thirty (30) days after the insurer received reasonable proof of the amount of all benefits accruing during that period.
(c) If reasonable proof is not supplied as to all benefits accrued, the portion supported by reasonable proof is overdue if not paid within thirty (30) days after the proof is received by the insurer.
(d) Any part or all of the remainder of the benefits that is later supported by reasonable proof is overdue if not paid within thirty (30) days after the proof is received by the insurer.
(e) In the event the insurer fails to pay the benefits when due, the person entitled to the benefits may bring an action in contract to recover them.
(f) In the event the insurer is required by the action to pay the overdue benefits, the insurer shall, in addition to the benefits received, be required to pay the reasonable attorneys’ fees incurred by the other party, plus twelve percent (12%) penalty, plus interest thereon from the date the sums became overdue.

The Trial Court wrote:

It appears to this Court that the mere mailing or submission of a hospital bill alone to an insurer is not sufficient to establish “reasonable proof’ of benefits accruing. An application by an injured person would need to be submitted along with a medical authorization and medical bills. This would allow the insurer to possess the basic information to investigation the claim.
The Court finds that the PIP application was dated 2-15-91 and was faxed by the Plaintiffs attorney to the Defendant’s claim adjuster, Tim Pipkins, on February 16, 1991, as reflected in the statement for professional services rendered. Reasonable proof of benefits was received by the Defendant on February 16, 1991. The benefits were received by the Plaintiff on March 14, 1991. The benefits were paid within thirty (30) days after the proof was received by the Defendant. The benefits are not overdue under A.C.A. § 23-89-208 (f).

Roy argues the Trial Court has created a requirement not found in the statute and contrary to legislative intent. True, there is no specific requirement in this subsection of the Insurance Code which requires submission of an application for benefits prior to payment of benefits, but “reasonable proof of benefits” means more than proof of a charge or loss.

Roy correctly asserts the basic rule of statutory construction to which all other interpretive guides must yield, and that is to give effect to the intent of the General Assembly. Graham v. Forrest City Housing Auth., 304 Ark. 632, 803 S.W.2d 923 (1991); Holt v. City of Maumelle, 302 Ark. 51, 786 S.W.2d 581 (1990); In Re Adoption of Perkins/Pollnow, 300 Ark. 390, 779 S.W.2d 531 (1989). When a statute is clear, it is given it’s plain meaning, Cash v. Arkansas Comm’n on Pollution Control & Ecology, 300 Ark. 317, 778 S.W.2d 606 (1989), and we do not resort to a search for legislative intent. Legislative intent must be gathered from the plain meaning of the language used. Hinchey v. Thomasson, 292 Ark. 1, 727 S.W.2d 836 (1987).

Roy’s further argument, that the lack of a statutory requirement of an insurance application or claim form showing “proof of loss” implies legislative intent not to require an initial showing by a claimant is not persuasive. The requirement is “reasonable proof . . . as to all benefits accrued.” Black’s Law Dictionary 158, (6th. ed. 1990) defines “benefit” for contract purposes as follows:

When it is said that a valuable consideration for a promise may consist of a benefit to the promisor, “benefit” means that the promisor has, in return for his promise, acquired some legal right to which he would not otherwise have been entitled, [citation omitted] “Benefits” of contract are advantages which result to either party from performance by other.

Because a “benefit” is an advantage arising only as a result of some action on the part of another, a requirement of a showing of the occurence of that activity is implicitly required to determine whether there are “benefits.” The hospital bill showed the amount of the charge or loss incurred by Roy, but a loss only becomes a benefit for Roy if he is legally entitled to recover under the policy.

The reason for enactment of a Statute like the one in question is encouragement of prompt payment of no fault insurance claims. See Hagains v. Government Employees Ins. Co., 150 N.J. Super. 576, 376 A.2d 224 (1977). While there is an annotation dealing with the varying statutory provisions having to do with presenting proof of a no fault claim, there are very few cases that even come close to being on point with the one before us. See Annot., Automobile Insurer’s Liability for Statutory Excess Interest for Delayed Payment of No-Fault Claim, 14 A.L.R. 4th 761, § § 2 (a), 4 (b) (198 2). We agree with the statement made by the Judge in the Hagains case, a reported trial court decision, that no fault insurance provisions should be interpreted liberally to prevent injured persons from having to bear the burden of payment while the insurer considers contesting a claim with no basis for doing so. Even so, it would be wrong to say the insurer must pay a claim based on presentation of a bill without the claimant asserting in writing or perhaps through counsel that he or she is entitled to a policy “benefit.” It is not inconsistent with the remedial purpose of the legislation to require such an assertion along with the documentation.

Affirmed.

Glaze, J., not participating.


author: Tom Glaze, Justice.

text:
    Patricia Faye DERRICK v. MEXICO CHIQUITO, INC.
    91-165
    819 S.W.2d 4
    Supreme Court of Arkansas
    Opinion delivered November 11, 1991

      Boyette, Morgan, Millar & Killough, P.A., by: Mike Millar, for appellant.

      Anderson & Kilpatrick, by: OvertonS. Anderson & Frances E. Scroggins, for appellee.
   Tom Glaze, Justice.

This is a slip and fall case in which the jury returned a unanimous verdict in favor of appellee. The appellant raises two issues on appeal: first, the trial court erred in refusing to allow appellant to photograph the interior of appellee’s restaurant; and second, the evidence was insufficient to support the jury’s verdict. We affirm.

On June 17, 1987, appellant and her business associate, Mark Dossett, ate dinner at appellee’s restaurant. As they were leaving, appellant went to speak to the manager regarding a cracked glass in which she had been served water. She walked from the area of the restaurant near the cash register across a tiled hallway toward the kitchen and restroom area. When she returned down the same hallway, appellant slipped and fell, sustaining severe injuries. Appellant filed suit against the appellee, alleging that her fall and the injuries to her arm were caused by a slippery substance on appellee’s floor.

After the incident, the restaurant was remodeled and the area of the fall was carpeted. Appellee’s motion in limine was granted, preventing any mention of this renovation to the jury. Appellant made an oral and a written motion for entry onto appellee’s premises for the purpose of photographing the scene. Both motions were denied because the conditions in the restaurant had changed and because it did not appear that allowing photographs would be reasonably calculated to lead to admissible evidence. However, the trial court permitted appellant’s counsel to enter the restaurant and to make any diagrams or plats they desired.

In reviewing the trial court’s denial of appellant’s motion to photograph the restaurant, the trial court has a wide latitude of discretion in matters pertaining to discovery. Curbo v. Harlan, 253 Ark. 816, 490 S.W.2d 467 (1973). This court will not reverse the decision of a trial judge in the absence of an abuse of discretion which is prejudicial to the party appealing. Marrow v. State Farm Insurance Co., 264 Ark. 227, 570 S.W.2d 607 (1978).

We conclude that the trial court acted within its discretion in this case. First, appellant made no showing that the taking of photographs would have lead to the discovery of admissible evidence, nor did she show any prejudice would result from the denial of her motion. Her attorneys were allowed to enter the restaurant, and they made a diagram depicting the floor area where appellant had been seated, where she walked, and. where she fell. Also, shortly after appellant’s fall, appellee took a Polaroid photograph of the hallway area as it appeared at the time appellant sustained her injuries and before any remodeling had been done. The parties introduced the diagram and photograph at trial and had their respective witnesses use them to explain their versions of what occurred. Because these exhibits enabled the appellant to describe and explain her version of the facts to the jury, the trial court cannot be said to have abused its discretion in disallowing appellant to take additional photographs of the same interior of the restaurant after its renovation.

As her second point of appeal, appellant claims that the verdict of the jury is not supported by substantial evidence. Substantial evidence is defined as that which is of sufficient force and character that it will compel a conclusion one way or another. It must force or induce the mind to pass beyond suspicion or conjecture. Bank of Malvern v. Dunklin, 307 Ark. 127, 817 S.W.2d 873 (1991). This court has stated that we must affirm if there is substantial evidence to support the judgment below. Handy Dan Improvement Center, Inc. v. Peters, 286 Ark. 102, 689 S.W.2d 551 (1985). Further, in testing the sufficiency of the evidence as being substantial on appellate review, we need only consider the testimony of the appellee and that part of the evidence which is most favorable to the appellee. Love v. H.F. Construction Company, 261 Ark. 831, 552 S.W.2d 15 (1977).

The law is well settled that the appellee owes the invitee the duty to use ordinary care to maintain the premises in a reasonably safe condition. Dye v. Wal-Mart Stores, Inc., 300 Ark. 197, 777 S.W.2d 861 (1989); Johnson v. Arkla, Inc., 299 Ark. 399, 771 S.W.2d 782 (1989). In order to prevail in a slip and fall case, the appellant must show either (1) the presence of a substance upon the premises was the result of the defendant’s negligence, or (2) the substance had been on the floor for such a length of time that the appellee knew or reasonably should have known of its presence and failed to use ordinary care to remove it. Dunklin, 307 Ark. 127, 817 S.W.2d 873; Safeway Stores, Inc. v. Willmon, 289 Ark. 14, 708 S.W.2d 623 (1986); see also AMI Civil 3rd, 1105. The mere fact that a person slips and falls does not give rise to an inference of negligence. J.M. Mulligan’s Grille, Inc. v. Aultman, 300 Ark. 544, 780 S.W.2d 554 (1990). Possible causes of a fall, as opposed to probable causes, do not constitute substantial evidence of negligence. Willmon, 289 Ark. 14, 708 S.W.2d 623.

In reviewing the record of the trial, appellee’s main theory was that no substance was present on the floor either before or after the accident. Maria Woodcock, the waitress who served appellant, testified that she had walked across the tiled floor approximately two to three minutes before the fall and there was nothing on it. Todd Underwood, the restaurant manager, testified that he had walked through the area within five minutes of the fall and nothing was on the floor at that time. Underwood also testified that he rubbed his hand across the floor after appellant fell and found nothing oily, slippery or wet on the floor.

Further, both employees testified that the restaurant took steps to maintain the premises in a reasonably safe condition. Woodcock testified that the restaurant had a policy concerning spills under which the employees were required to clean up any foreign substances off the floor as soon as they discovered them. Underwood testified that part of his duties as manager included “roaming” the restaurant to make sure there were no problems.

While conflicting evidence was presented by appellant, the jury was not required to believe appellant’s version of what occurred. In Blissett v. Frisby, 249 Ark. 235, 239, 458 S.W.2d 735, 738 (1970), the court stated the following:

Resolution of conflicts in testimony in a law case is not within the province of an appellate court, (citation omitted) It is fundamentally a jury function, and a verdict usually is conclusive, (citation omitted) Especially is this so where questions of negligence, contributory negligence and credibility of witnesses are involved.

Appellee presented sufficient evidence to support the jury’s verdict; therefore, we affirm.


text:
    W. J. JACKSON and Alta Jackson, His Wife v. Gothie YOWELL
    91-171
    818 S.W.2d 950
    Supreme Court of Arkansas
    Opinion delivered November 11, 1991

      Grumpier, O’Connor & Wynne, for appellants.

      Michael R. Landers, for appellee.
   Tom Glaze, Justice.

On May 22, 1986, appellee brought suit against appellants seeking, among other things, to set aside certain deeds and to quiet title in the mineral estate described in the deeds. After appellants filed their answer, little, and then no, activity occurred in the lawsuit, so the trial court dismissed the case for want of prosecution on January 2,1990, pursuant to the court’s standing order dated January 2, 1987. The trial court, however, ordered appellee’s case reinstated on January 25,1990. The appellants then moved to vacate the restatement order pursuant to ARCP 41(b), claiming the dismissal should have been with prejudice because the dismissal had been appellee’s second. The trial court denied appellants’ motion and appellants bring this appeal.

We do not reach appellants’ Rule 41(b) issue because the trial court’s order denying appellants’ motion to vacate the reinstatement of appellant’s case is not a final judgment or order from which an appeal may be taken. Rule 2(a)(1) of the Arkansas Rules of Appellate Procedure. For a judgment to be final, it must dismiss the parties from the court, discharge them from the action, or conclude their rights to the subject matter in controversy. Roberts Enterprises, Inc. v. Arkansas Highway Comm’n, 277 Ark. 25, 638 S.W.2d 675 (1982); see also 4 C.J.S. Appeal & Error § 121(c) (1957) (which provides, generally, an appeal will not lie from an order setting aside an order of dismissal.) Here, the trial court’s order makes no such disposition of the parties’ case, and in fact, retained jurisdiction over the parties and issues in controversy for future adjudication.

Because the trial court’s order is not a final one from which an appeal may be taken, we dismiss appellants’ appeal.


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

text:
    Charles Lee SMITH v. STATE of Arkansas
    91-146
    818 S.W.2d 945
    Supreme Court of Arkansas
    Opinion delivered November 11, 1991

      William R. Simpson, Jr., Public Defender, by: Andy O. Shaw, Deputy Public Defender; for appellant.

      Winston Bryant, Att’y Gen., by: Teena L. White, Asst. Att’y Gen., for appellee.
   Tom Glaze, Justice.

This case is another of a recent number of cases involving the interpretation of the new juvenile transfer statute, Ark. Code Ann. § 9-27-318 (Supp. 1991). Appellant had five juvenile cases pending against him in chancery court when the prosecutor moved to transfer two of these cases to circuit court. One case contained a felony theft-by-receiving count and the other case involved two felony counts of breaking or entering into two vehicles. A capital felony murder charge had also been filed against the appellant prior to the transfer hearing in this case, but the trial court specifically stated it did not consider that murder charge when it ruled on the state’s motion to transfer. After a hearing on the state’s motion, the trial court transferred the cases to circuit court. In this appeal, appellant claims the trial court erred (1) in failing to allow him ten days notice before the hearing, (2) in finding sufficient evidence existed to support the transfer and (3) in rejecting his argument that § 9-27-318 is unconstitutionally vague.

In his first argument, appellant cites Ark. Code Ann. § 9-27-325(f) (1987) which in relevant part provides that the Arkansas Rules of Civil Procedure shall apply to all juvenile court proceedings and the Arkansas Rules of Criminal Procedure shall apply to delinquency proceedings. Accordingly, he submits that, under ARCP Rule 6(c), the prosecutor’s transfer motion in this case was required to have been served on appellant no later than ten days before the time specified for the hearing. Appellant argues that because he was given only four days notice of the hearing scheduled for the prosecutor’s motion, the trial court abused its discretion in disallowing appellant additional time to prepare and respond to the state’s case.

By its own language, Rule 6(c) is not inflexible, and in fact, provides that for cause shown, the court may provide for a time other than the ten-day period set out in the Rule. In any event, our Rules of Civil Procedure clearly provide that court proceedings should not be disturbed because of a technical error which resulted in no prejudice. Robinson v. Abbott, 292 Ark. 630, 731 S.W.2d 782 (1987); see also ARCP Rule 61. Stated another way, the court has held that error is no longer presumed to be prejudicial, and it will not reverse for error unless prejudice is demonstrated. Peoples Bank & Trust Co. v. Wallace, 290 Ark. 589, 721 S.W.2d 659 (1986); cf., Purser v. Corpus Christi St. Nat’l Bk., 258 Ark. 54, 522 S.W.2d 187 (1975) (where Purser was not given the ten-day period to respond to the bank’s motion for summary judgment, this court upheld the trial court’s premature entry of the judgment because it was manifest that the error was not prejudicial); see also Keenan v. American River Transportation Co., 304 Ark. 42, 799 S.W.2d 801 (1990). And finally, Berna v. State, 282 Ark. 563, 670 S.W.2d 434 (1984); citing McDonough Power Equipment, Inc. v. Greenwood, 464 U.S. 548 (1984), is our seminal case on this point where this court held no longer is it presumed that simply because an error is committed it is prejudicial error. See also Gage v. State, 295 Ark. 337, 748 S.W.2d 351 (1988); Wheat v. State, 295 Ark. 178, 747 S.W.2d 112 (1988).

In the present case, appellant fails to show that he suffered prejudice. At the hearing, he never suggested that the abbreviated or four-day notice given him prevented him from presenting any witnesses. Nor did he proffer any testimony or evidence that he could, or intended to, present if he had been given additional time.

Although appellant argues the prosecutor was also hampered by the trial court’s ruling to proceed with the hearing on the prosecutor’s motion, the record fails to bear out appellant’s argument. While the prosecutor offered no testimony, he entered into a number of stipulations with the appellant, and based on those stipulations, we believe the prosecutor clearly showed by clear and convincing evidence that the transfer of appellant’s cases was warranted. Bradley v. State, 306 Ark. 621, 816 S. W.2d 605 (1991).

Under Ark. Code Ann. § 9-27-318(e) (Supp. 1991), the trial judge must consider the following factors before deciding whether to transfer a juvenile’s case:

(1) The seriousness of the offense, and whether violence was employed by the juvenile in the commission of the offense;
(2) Whether the offense is part of a repetitive pattern of adjudicated offenses which would lead to the determination that the juvenile is beyond rehabilitation under existing rehabilitation programs, as evidenced by past efforts to treat and rehabilitate the juvenile and the response to such efforts; and
(3) The prior history, character traits, mental maturity, and any other factor which reflects upon the juvenile’s prospects for rehabilitation.

As we have stated repeatedly, the trial court need not give equal weight to each of the foregoing factors and proof need not be introduced by the prosecutor against the juvenile on each factor. Pennington v. State, 305 Ark. 312, 807 S.W.2d 660 (1991); Walker v. State, 304 Ark. 393, 803 S.W.2d 502 (1991); reh. denied, 304 Ark. 402A, 805 S.W.2d 80 (1991); Ashing v. State, 288 Ark. 75, 702 S.W.2d 20 (1986). The standard of review in juvenile transfer cases is whether the trial judge’s finding is clearly against the preponderance of the evidence, and findings of fact by the trial court will not be set aside unless clearly erroneous. Bradley v. State, 306 Ark. 621, 816 S.W.2d 605.

At the hearing, appellant and the prosecutor stipulated to seven state motions that outlined previous charges and convictions against appellant. The charges ranged from loitering to theft and robbery offenses. The parties agreed that appellant was first convicted of theft and placed on probation in 1987. That probation was later revoked because of another theft of property charge. The parties further stipulated that appellant had been on home attention and had been committed to the Office of Youth Services on three or four occasions — which included robbery charges filed in January of 1989. The state also underscored the other offenses pending before the trial judge. Those cases involved alcohol, cocaine and carrying a weapon.

The foregoing stipulations and offenses unquestionably support the trial court’s finding that appellant exhibited a repetitive pattern to commit felony offenses and reflected he possessed character traits, a prior history and a mental maturity indicating he is beyond rehabilitation. In addition, the stipulated evidence reflects that the offenses committed by the appellant have become increasingly more serious. In view of the above, we are unable to say the trial court was clearly erroneous in transferring appellant’s cases to circuit court.

Before leaving appellant’s foregoing arguments, we address his objection made below, and argued on appeal, that the trial court erred by admitting into evidence the findings of fact and conclusions of law entered in an earlier case against appellant. Those findings included a 1988 psychological report reflecting the appellant “had a poor response to probation and home attention and that placement in a more restrictive environment may be indicated.” Appellant correctly points out that the report did not necessarily reflect his current psychological disposition and the trial judge erred in taking judicial notice of it.

We agree with appellant that judicial notice may not be taken of the record in a separate case. Leach v. State, 303 Ark. 309, 796 S.W.2d 837 (1990); see also Southern Farmers Assn., Inc. v. Wyatt, 234 Ark. 649, 353 S.W.2d 531 (1962). However, while we agree that the trial court erred in taking judicial notice of the psychological report in issue, we conclude the error was harmless. Aside from the report’s improper admission into evidence, we have thoroughly discussed hereinabove the stipulations and evidence that we hold support the trial court’s transfer of appellant’s cases to circuit court. We will not reverse for error unless prejudice is demonstrated. Peoples Bank & Trust Co., 290 Ark. 589, 721 S.W.2d 659 (1986).

In his final argument, appellant argues that provisions (b) (2) and (d) of § 9-27-318 are conflicting, and as a consequence are unconstitutional for vagueness. Basically, appellant contends that neither the chancery court nor the circuit court under these two provisions appears to have the final say as to which one should exercise jurisdiction. Appellant postulates that the initial court, be it chancery or circuit, could transfer the juvenile case to the second court’s jurisdiction only to have the second court return the proceeding to the initial court for trial.

Although appellant told the trial court he believed § 9-27-318 was unconstitutionally vague, he never mentioned the argument he raises now. For that reason, it is questionable as to whether this issue was preserved for appeal. In any event, appellant concedes the hypothetical situation he poses here did not occur below and for that reason alone, he lacks standing to raise the constitutionality of (b)(2) and (d) of § 9-27-318. See Burrow v. State, 282 Ark. 479, 669 S.W.2d 441 (1984).

For the reasons above, we affirm the trial court’s decision to transfer appellant’s case to circuit court.

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

Robert L. Brown, Justice,

dissenting. The majority holds that the juvenile in this case suffered no prejudice by the special trial judge’s surprise hearing on the motion to transfer the case from juvenile court to circuit court. I respectfully disagree.

When the special judge announced that he was going to proceed with the transfer hearing, the defense counsel made the following objection:

Your Honor, if that will be subject to defense objection, I would like to note for the record that the motion to transfer was filed on February 22,1991. Whereas we had initially made plans to file an answer to the motion, we were not afforded the proper length of time to prepare an answer, nor — as I understand it, we were tentatively set to have a hearing scheduled for today.
I understand if the Court wants to go ahead and hear it before, but for the record, I feel compelled to have my objection noted.

The special judge then stated that he would call up the transfer motion on his own motion and added, “so that takes care of your time problem.”

The hearing commenced over defense counsel’s objection, and the prosecutor sought to introduce a psychological evaluation of the appellant juvenile. The defense counsel objected again and said:

Your honor, we would object to the introduction of State’s Exhibit No. 1 on the following grounds: One, as this hearing has certainly sped up these matters, we have not had a chance to review the report in full detail. My understanding from the Code is that we are to be provided three days before any such reports are introduced to the Court. Ms. Merritt has indicated that this is a part of the Court’s file. I have no way of ascertaining that. I do not have Mr. Smith’s prior files with me at this time.

In sum, the transfer motion had not been set for hearing on this date, and the defense counsel was caught up short. He thought he had ten days from the filing of the motion to respond, and, indeed, the rules provide for that amount of time. Some prejudice to counsel and his client was evidenced by the lack of time in which to review the psychological report. But the real prejudice lay in foreclosing counsel from responding to the prosecutor’s motion to transfer and in denying him adequate time tp prepare his case.

The defense counsel objected before the hearing began and renewed that objection at the end of the hearing. What else could he had done to preserve his objection? It is true that he had no witnesses present and that he presented the court with no names of prospective witnesses whom he might have called had he been afforded appropriate notice. But he, admittedly, was unprepared due to the surprise hearing. Failure to proffer his case due to these circumstances should not be fatal to his appeal when the appellant had, under our rules, six more days to develop his case.

The majority cites civil cases to support its theory of lack of prejudice. In one case cited, we held that there was no prejudice to the appellant because he had a chance to respond to the motion for summary judgment and argue his position. See Keenan v. American River Transportation Co., 304 Ark. 42, 799 S.W.2d 801 (1990). In the case before us, the appellant had neither responded to the motion to transfer nor prepared his case.

In a second case cited by the majority, we affirmed a damage award even though the judge had improperly instructed the jury on punitive damages in a negligence case. See Robinson v. Abbott, 292 Ark. 630, 731 S.W.2d 782 (1987). Because the jury did not award punitive damages, we held that this error was technical and resulted in no prejudice.

In still another case cited, we held that a statement in oral argument concerning which bank would bear a loss involving an unauthorized endorsement was not presumptively prejudicial. See Peoples Bank & Trust Co. v. Wallace, 290 Ark. 589, 721 S.W.2d 659 (1986). That is clearly distinguishable from thé facts of this case.

Finally, the majority cites a case where the trial court entered a premature summary judgment, thereby preventing the appellant from filing counter affidavits. See Purser v. Corpus Christi St. Nat’l Bank, 258 Ark. 54, 522 S.W.2d 187 (1975). There, the trial court stated that the appellant had no meritorious defense available to him. Here, no such finding could be made by the trial court until the appellant’s counsel had prepared and presented his case on the statutory factors relating to juvenile transfer cases.

Transferring a case from juvenile to circuit court is a serious matter. The procedural rules must be followed, especially when fundamental due process is at issue. That was not done in this case. The resulting prejudice to the defendant is obvious. I would remand for a new transfer hearing.

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

       The report is not abstracted, and our only knowledge of what it contains is from our review of the trial court’s comments at the hearing and the parties’ arguments in their briefs.


author: Donald L. Corbin, Justice. David Newbern, Justice,

text:
    George SZALAY v. Oscar L. HANDCOCK and Keystone Insurance Company
    91-61
    819 S.W.2d 684
    Supreme Court of Arkansas
    Opinion delivered November 11, 1991
    [Rehearing denied December 16, 1991.]

      Hixson, Cleveland & Rush, by: David L. Rush, for appellant.

      Daily, West, Core, Coffman & Canfield, by: Eldon F. Coffman and Douglas M. Carson, for appellee.
   Donald L. Corbin, Justice.

The question presented by this appeal is whether an Arkansas court has authority under the Arkansas long-arm statute, Ark. Code Ann. § 16-4-101 (1987), and the due process clause, U.S. Const, amend. 14, to exercise jurisdiction over a foreign insurance company in a suit by the insured to recover under the insurance policy’s uninsured motorist clause for damages arising out of an accident in Arkansas with an uninsured Arkansas motorist.

On May 9,1989, appellant George Szalay, then a resident of New Jersey, renewed his automobile insurance policy with appellee, Keystone Insurance Company (Keystone), a Pennsylvania corporation doing business in New Jersey. The policy contained an uninsured motorist clause which provided in relevant part:

PART C — UNINSURED MOTORIST COVERAGE — Insuring Agreement
We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury:
1. Sustained by a covered person; and
2. Caused by an accident.
PART F — GENERAL PROVISIONS — Policy Period and Territory
This policy applies only to accidents and losses which occur:
1. During the policy period as shown in the Declarations; and
2. Within the policy territory.
The policy territory is:
1. The United States of America, its territories or possessions[.] [Emphasis supplied.]

Appellant moved to Fort Smith, Arkansas, in May of 1989 to pursue an employment opportunity in Shady Point, Oklahoma. He signed a six month lease to rent an unfurnished apartment in Fort Smith. Appellant’s wife stayed in the New Jersey apartment, and appellant rented furniture to use while in Arkansas. On June 16, 1989, defendant Oscar L. Handcock, struck appellant while appellant was riding his bicycle in Fort Smith. Appellant sued defendant Handcock in a Fort Smith Circuit Court to recover for his alleged injuries. Appellant subsequently amended his complaint to allege that defendant Handcock was an uninsured motorist and to join Keystone Insurance Company as a party defendant. Appellee Keystone filed an answer asserting that Arkansas lacked personal jurisdiction over Keystone. Keystone is not authorized to do business in our state, and the company has no office, employee, or agent in Arkansas. The company also does not advertise or otherwise solicit business in Arkansas.

The trial court granted Keystone’s motion to dismiss for lack of jurisdiction, and entered a final judgment as to appellee Keystone pursuant to Rule 54 of the Ark. R. Civ. P. We take jurisdiction under Rule 29(1 )(c) of the Rules of the Supreme Court which provides that this court has jurisdiction in cases implicating the interpretation or constitutionality of our state statutes. In this case, we are concerned with whether the trial court was correct in interpreting the Arkansas long-arm statute to forbid the exercise of jurisdiction over appellee Keystone. We reverse and remand.

To determine whether a court has in personam jurisdiction over a non-resident defendant, we must undertake a two-part analysis. First, we must determine whether the non-resident defendant’s actions satisfy the requirements of section 16-4-101 (C) of the long-arm statute. Second, we consider whether the exercise of in personam jurisdiction is consistent with due process. Capps v. Roll Serv. Inc., 31 Ark. App. 48, 787 S.W.2d 694 (1990).

Ark. Code Ann. § 16-4-101 (C)(1) (1987) provides in part:

1. A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a (cause of action) (claim for relief) arising from the person’s:
(a) Transacting any business in this state;
(b) Contracting to supply services or things in this state;
2. When jurisdiction over a person is based solely upon this section, only a (cause of action) (claim for relief) arising from acts enumerated in this section may be asserted against him.

Ark. Code Ann. § 23-60-102(13) (1987) provides, “ ‘Transact’ with respect to insurance includes any of the following: (D) Transaction of matters subsequent to effectuation of a contract of insurance and arising out of it[.]” In the instant case, appellant Szalay is suing Keystone to enforce his contractual right to uninsured motorist coverage. Appellant’s enforcement action arises out of Keystone’s explicit contractual promise to provide uninsured motorist coverage. While the parties entered this contract in New Jersey, the accident implicating Keystone’s contractual obligation occurred in Arkansas. Given the insurance code’s broad definition of “transact,” we believe the legislature intended the “transacting business” provision of the long-arm statute to encompass an insured’s attempts to enforce contractual rights.

We have stated that the purpose of the “transacting business” provision is to permit Arkansas courts to exercise the maximum in personam jurisdiction allowable by due process. CDI Contractors, Inc. v. Goff Steel Erectors, Inc., 301 Ark. 311, 783 S.W.2d 846 (1990). We therefore consider whether the exercise of jurisdiction over appellee Keystone is consistent with due process.

The United States Supreme Court has held that due process prohibits a state’s court from exercising personal jurisdiction over a non-resident defendant unless the defendant has sufficient “minimum contacts” with the forum state. International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). This rule does not afford us the luxury of applying a mechanical test. Leflar, American Conflicts of Law § 21. However, several settled principles guide us in answering our “minimum contacts” inquiry. ¡

First, the defendant must “purposefully avail itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253 (1958). The Supreme Court has held that the “minimum contacts” standard is not met when a defendant’s product merely winds up in a forum state solely as the result of the unilateral activity of one seeking to claim some relationship with the defendant. Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985); Hanson, supra. While a defendant might have foreseen that his product would end up in the forum state, foreseeability alone will not satisfy the “minimum contacts” test:

[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).

Appellee Keystone relies on World-Wide Volkswagen in arguing that Keystone did not purposefully avail itself of the privilege of doing business in Arkansas. Keystone contends that because it neither solicited business nor maintained an agent in Arkansas, it could hot reasonably anticipate being haled into court here. We disagree.

Appellant’s insurance policy contained a provision stating that the policy applied only to accidents and losses occurring within the policy territory. The policy explicitly defined the policy territory as “the United States of America, its territories or possessions.” Both the Fourth and Ninth Circuits have upheld jurisdiction over insurance companies in analagous situations. See Farmers Ins. Ex. v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911 (9th Cir. 1990); Rossman v. State Farm Mut. Auto Ins. Co., 832 F.2d 282 (4th Cir. 1987); August v. HBA Life Ins. Co., 734 F.2d 168 (4th Cir. 1984). We find the reasoning in these cases to be persuasive. The defendant insurance companies in the aforementioned cases also relied on World-Wide Volkswagen in arguing that they could not reasonably anticipate being haled into court in the forum state. However, the courts distinguished the business of manufacturing products to be placed in the stream of commerce from the business of selling insurance policies with nationwide territorial clauses. “Insurance by its nature involves the assertion of claims, and resort to litigation is often necessary.” August, supra, at 172. Furthermore, an automobile liability policy is typically sued on where the accident takes place. Rossman, supra. The courts concluded that insurance companies that contract to provide nationwide automobile liability coverage should reasonably anticipate being haled into the courts of a state where an accident occurs.

The Fourth Circuit reasoned that the insurance companies purposefully availed themselves of the privilege of doing business in the forum states by contracting to provide coverage for claims arising within policy territories that encompassed the entire United States:

In World-Wide Volkswagen, nothing about the defendant’s conduct indicated its willingness to be called into court in the foreign forum. Its only connection with Oklahoma was the result of the plaintiffs’ unilateral act of driving the car there. By contrast, [the insurance company’s] expectation of being haled into court in a foreign state is an express feature of its policy.

Rossman, supra, at 286.

In the instant case, Keystone’s territorial policy limit included Arkansas within its scope. Unlike automobile sellers and product manufacturers, insurance companies such as Keystone can control their amenability to suit by excluding certain states from the “policy territory” defined in the policy. See Rossman, supra. By not excluding any states in its definition of “policy territory,” Keystone purposefully contracted to fulfill its obligation of providing uninsured motorist coverage in foreign states such as Arkansas. Accordingly, we find that the contractual definition of the policy territory satisfies the purposeful availment prong of the “minimum contacts” inquiry.

Due process also requires that a defendant’s “minimum contacts” with the forum state be such that “maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe, 326 U.S. at 316, (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). This inquiry examines the reasonableness of suit in the forum state. Asahi Metal Indus. Co., Ltd. v. Superior Court, 480 U.S. 102 (1987).

The Supreme Court has held that in cases where a defendant has purposefully availed himself of conducting business in the forum state “it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well.” Burger King, 471 U.S. at 476. In this case, we find that appellee Keystone purposefully availed itself of the privilege of conducting business in Arkansas by contracting to extend appellant’s coverage throughout the United States. Given this finding, Arkansas’ exercise of jurisdiction over a suit arising out of this purposeful availment is presumptively reasonable.

We do not believe appellee Keystone can overcome this presumption of reasonableness. Arkansas has a manifest interest in providing its residents with a forum when insurers refuse to pay claims. “These residents would be at a severe disadvantage if they were forced to follow the insurance company to a distant State in order to hold it legally accountable.” McGee v. International Life Ins. Co., 355 U.S. 220, 223 (1957). In this case, appellant Szalay has moved back to New Jersey since instituting his Arkansas suit. However, only contacts occurring prior to the event causing the litigation may be considered. Steel v. United States, 813 F.2d 1545 (9th Cir. 1987).

In this case, appellant was residing in Arkansas when he asserted his contractual rights under the uninsured motorist clause of his policy. It is reasonable to require insurance companies such as appellee Keystone to submit to the burdens of litigating this claim in Arkansas since it expressly contracted to extend appellant’s policy coverage to a territory including Arkansas.

Accordingly, we reverse the trial court’s dismissal and remand based on our holding that sufficient “minimum contacts” exist under both the long-arm statute and the due process clause to assert personal jurisdiction over appellee Keystone.

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

David Newbern, Justice,

dissenting. In spite of its recognition that both the provisions of Ark. Code Ann. § 16-4-101 (C) (1) (1987) and the due process “minimum contacts” test must be satisfied, the Court’s opinion holds that the statutory requirement is satisfied because it does not violate the Constitution to subject Keystone Insurance Company to personal jurisdiction in Arkansas.

Keystone transacted no business in Arkansas, thus § 16-4-101(C)(1)(a) does not apply. A separate subsection of the long-arm statute permits in personam jurisdiction to be exercised of a party “contracting to supply services ... in this state . . . .” § 16-4-101 (C)(1)(b). That subsection is not at issue here because Mr. Szalay’s sole statutory argument for reversal is that this case arose out of Keystone’s “transacting business” in Arkansas.

If the definitions found in the Arkansas Insurance Code are relevant, they show the General Assembly did not define “Transact” there in a way that includes anything done by Keystone in this State. Arkansas Code Ann. § 23-60-102(13) (1987) is as follows:

“Transact” with respect to insurance includes any of the following:
(A) Solicitation and inducement;
(B) Preliminary negotiations;
(C) Effectuation of a contract of insurance;
(D) Transaction of matters subsequent to effectuation of a contract of insurance and arising out of it[.]

There is no evidence whatsoever that Keystone solicited, negotiated, entered, or corresponded with Szalay about the policy or billed him for premiums here.

The Court’s opinion is correct in stating that the Due Process Clause would not prohibit the exercise of jurisdiction of an insurance company which could anticipate litigation in this State by virtue of having agreed to protect its insured with respect to accidents which occur here. It is incorrect, however, to base a holding that the long-arm statute is satisfied because it would not be unconstitutional to assert personal jurisdiction of Keystone.

This Court has not held that the words of the Statute may be ignored if the Constitution is satisfied, and it should not do so now. The basis of the transition from statute to Constitution in the Court’s opinion is an obiter dictum from CDI Contractors, Inc. v. Goff Steel Erectors, Inc., 301 Ark. 311, 783 S.W.2d 846 (1990). In that case we wrote, “The purpose of this section [16-4-101(C)(1)] is to permit Arkansas courts to exercise the maximum in personam jurisdiction allowable by due process. Martin v. Kelley Elec. Co., 371 F.Supp. 1225 (E.D. Ark. 1974); SD Leasing, Inc. v. Al Spain & Assoc., Inc., 277 Ark. 178, 640 S.W.2d 451 (1982).”

In the CDI case we held that mail and telephone contacts which occurred in Arkansas between parties to a contract were insufficient to satisfy the due process requirement. We did not discuss whether the long-arm statute was satisfied.

In the Martin case, the U.S. District Court stated the purpose of the long-arm statute “was to permit courts in Arkansas, ... to exercise inpersonam jurisdiction to the furthest limits permitted by due process of law, and that the statute is to be liberally construed.” The holding, however, was that the statute requires that the actions sued upon “arise out of’ the activities which constitute the minimum contacts with this State. The complaint was dismissed for lack of in personam jurisdiction; the statutory requirement had not been met.

In the SD Leasing case we did not state that the long-arm statute permits whatever jurisdiction the Constitution permits. Rather, we stated, “We have held that the purpose of this statute is to expand our state’s personal jurisdiction over nonresidents, within the limits permitted by the due process clause of the United States Constitution. Nix v. Dunavant, 249 Ark. 641, 460 S.W.2d 762 (1970). [Emphasis supplied.]” We may have meant “to the extent of the limits,” but we did not say it. Even if that were the interpretation to be given the SD Leasing opinion, however, the holding of that case was that the statute was satisfied because of several acts of the defendant in this State, including the fact that the contract was not effectuated until it was approved here. That is also true of the Nix case where we found the statute satisfied by the negotiation of a contract in Arkansas.

Again, the important issue in this case is not whether the Constitution would be violated by permitting Keystone to be sued in Arkansas on its policy. Not only would it not be unconstitutional, but it would make good sense to permit it because, in the language of § 16-4-101 (C) (1) (b), Keystone has agreed to provide a “service” in this State in the form of insurance coverage. Presumably the witnesses to the accident are here and Arkansas law would apply at least to some aspects of the case. The problem is that this decision ignores the very words of the statute on which it must be based. To hold that Keystone has transacted business in this State from which this cause of action has arisen is a bald fiction unsupported by any authority whatever.

I respectfully dissent.

Holt, C.J., and Dudley, J., join in this dissent.

       Our reasoning today would also support in personam jurisdiction under the “contract” provision of the Arkansas long-arm statute. Ark. Code Ann. § 16-4-401(c)(1)(b) (1987) provides that an Arkansas court may exercise jurisdiction over a cause of action arising from the defendant’s contracting to supply services or things in this state. In the instant case, appellant challenges the trial court’s ruling under the “transacting business” provision of the long-arm statute. His challenge is proper since the Commentary to the long-arm statute recognizes that situations will arise where a jurisdictional basis may be found under more than one subdivision of the statute.


author: Jack Holt, Jr., Chief Justice.

text:
    BOB COLE BAIL BONDS, INC. v. Linda HOWARD, Crawford County Circuit Clerk, et al.
    91-176
    819 S.W.2d 274
    Supreme Court of Arkansas
    Opinion delivered November 18, 1991

      Person & Hughes, by: Gary D. Pearson, for appellant.

      Winston Bryant, Att’y Gen., by: Clint Miller, Senior Asst. Att’y Gen., for appellee.
   Jack Holt, Jr., Chief Justice.

The appellant, Bob Cole Bail Bonds, Inc., appeals from the trial court’s denial of its motion for declaratory judgment, concerning the interpretation of Ark. Code Ann. § 17-17-306 (1989 and Supp. 1991), the posting of bail bondsmen lists in facilities housing persons in custody. The trial court held that bondsmen are to be placed on the annual lists in the order in which they register with the circuit clerk each year. We reverse and remand.

Act 417 of 1989 governs the practice of bail bondsmen. Upon proper application to the State Insurance Commissioner, a bondsman is issued a license. Thereafter, the bondsman retains his license with an annual renewal application, barring any violations of the provisions of Act 417 or the rules and regulations of the commissioner. See Ark. Code Ann. §§ 17-17-201 through 207 (1989 and Supp. 1991). The sheriff and circuit clerk in each county are provided with a list of all licenses and any revocations or suspensions. Section 17-17-206.

Local jails and detention centers aré required to post a list of licensed bondsmen for the benefit of the inmates. A bondsman who wishes to be included oh the list in a certain county “registers” with the appropriate county circuit clerk, for that purpose, in accordance with section 17-17-306. The statute provides in pertinent part:

(a) The chief law enforcement officers of any facility having individuals or prisoners in their custody shall post in plain view in the facility housing those individuals or prisoners a list provided by the circuit clerk.
(b) The list prepared by the circuit clerk and approved by the circuit court shall contain the names of professional bail bondsmen who register with the clerk for the purpose of being included on the list.
(c) Professional bail bondsmen shall be included on the list in the order in which they initially register with the clerk.

(Emphasis added.)

In 1989, the appellant obtained its license from the commissioner, and was the first bond company to register with the Crawford County Circuit Clerk’s office; subsequently, appellant was placed at the top of the list posted in the Crawford County Detention Center, in compliance with section 17-17-306(c).

The following year, appellee Bob Underwood was the first bail bondsman to present his license to the Crawford County Circuit Clerk and his company, instead of the appellant’s, was placed at the top of the list for 1990. The appellant properly renewed its license with the commissioner, but was the last company to present its license to the Crawford County Circuit Clerk, thereby receiving the last position on the list.

The appellant filed a motion for declaratory judgment claiming that because it was the first bondsman to register in 1989, it is forever entitled to remain first on the list, barring the loss of its license due to revocation, suspension, surrender, or non-renewal. From the trial court’s denial of the motion, comes this appeal.

The order of the list is important, appellant argues, because the top-listed bondsman receives a greater volume of business due to the fact that most defendants consult the first name to appear. The issue is whether the order in which bondsmen “initially register,” under section 17-17-306(c), means, as the appellant contends, the first time the bondsman registers with the clerk (thereafter keeping his place by proper renewal), or the yearly presentation of a newly registered or renewed license, as interpreted by the trial court. While we agree with the appellees that the former interpretation leads to the anomalous result that one bondsman may forever retain a corner on the market, merely because he was first to register in 1989, the wording of the statute does not permit us to conclude otherwise.

The first rule in considering the meaning of a statute is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. Bolden v. Watt, 290 Ark. 343, 719 S.W.2d 428 (1986); see also Graham v. Forrest City Housing Auth., 304 Ark. 632, 803 S.W.2d 923 (1991). The legislature’s inclusion of the word “initially”, in the section at issue, inescapably reflects an intention that the lists remain in the order in which the bondsmen register for the first time with the clerk.

Registration for the purpose of being placed on a bondsmen list is obviously optional; however, once a properly licensed bondsman does so, section 17-17-306(c) mandates that the order in which he registers permanently determines his position on the list. Annual “registration” with the circuit clerk, evidencing license renewal, is not required, as the clerk will receive this information from the commissioner. See section 17-17-306 and 206.

Reversed and remanded with directions consistent with this opinion.


text:
    R. T. EDWARDS v. ARKANSAS ALCOHOLIC BEVERAGE CONTROL DIV. BD., et al.
    91-155
    819 S.W.2d 271
    Supreme Court of Arkansas
    Opinion delivered November 18, 1991

      Ronald E. Bumpass, for appellant.

      Donald R. Bennett, for appellee Arkansas Alcoholic Beverage Control Board; and Charles R. Singleton and Larry D. Douglas, for appellee Rudy Leach and others.
   Jack Holt, Jr., Chief Justice.

The appellant, R. T. Edwards, applied to the Arkansas Alcoholic Beverage Control Division (ABC) to transfer his retail liquor and beer permits from Fayetteville, Arkansas, to County Road 397, which is adjacent to U.S. Highway 412, in Springdale Township, Arkansas. Mr. Edwards’ retail liquor store in Fayetteville had been destroyed by fire.

The Director of the ABC denied Mr. Edwards’ request to transfer, and the ABC Board upheld the denial. Rudy Leach and Eunice Leach were allowed to intervene, on behalf of residents opposing the application, when Mr. Edwards appealed to circuit court. The circuit court affirmed the Board’s decision, and Mr. Edwards now appeals contending the Board’s decision was arbitrary and capricious, an abuse of discretion, and not supported by substantial evidence. In addition, Mr. Edwards claims the ABC Director and Board have entered into a course of conduct that violates federal and state antitrust laws and denies him equal protection of the laws. Our jurisdiction is pursuant to Ark. Sup. Ct. R. 29(l)(c).

Arkansas Code Ann. § 25-15-212(h) (1987 and Supp. 1991), of the Arkansas Administrative Procedures Act, provides that the circuit court may reverse or modify the Board’s decision if the decision was, among other things, “not supported by substantial evidence of record,” or was “arbitrary, capricious, or characterized by abuse of discretion.” Our review is similarly limited, and we review the decision of the Board, not that of the circuit court. See Singleton v. Smith, 289 Ark. 577, 715 S.W.2d 437 (1986); Green House, Inc. v. Arkansas Alcoholic Beverage Control Div. 29 Ark. App. 229, 780 S.W.2d 347 (1989).

Arkansas Code Ann. § 3-4-201 (b) (1987 and Supp. 1991) states that the Board is empowered to determine “whether public convenience and advantage will be promoted by issuing the permits. . . .” ABC regulations set out a number of factors to be considered in making this determination, including the number and types of alcoholic permits in the area, economic impact, traffic hazards, remoteness of the area, degree of law enforcement available, input from law enforcement or other public officials in the area, and comments from area residents in opposition or support of the permit.

In this case the proposed site is located on a sharp curve of two-lane U.S. Highway 412, just before White Bridge, and borders on Beaver Lake. It is just over fifteen miles to the Washington County Sheriifs Department and approximately eight miles from the city limits of Springdale.

Hollis Spencer, a retired agent for the ABC Enforcement Division, submitted a written opinion that Mr. Edwards’ permit should be denied based on the dangerous location of the proposed site, its proximity to the lake, the inability of law enforcement officials to police the area, opposition from area residents, and the fact that no material changes had occurred in the area since the last applications, for the same site, were denied by the Board.

Attorneys for the ABC Board and intervenors submitted a petition bearing some 264 names of residents in the surrounding area, indicating opposition to the proposed liquor store. The Board also considered a survey submitted by Mr. Edwards, in which residents expressed their support of the transfer. The Board found, however, that the survey did not actually reflect the views of all who live within the immediate area as it was not a radius survey and included only those residents living within one mile from the site, in a certain area. Letters from state legislators, advocating both sides, were also introduced.

Although we have said the number or official position of persons who object to, or support, the issuance of retail liquor permits is not significant under the statute, the reasons for the support or opposition may be very significant. Green v. Carder, 282 Ark. 239, 667 S.W.2d 660 (1984). As the circuit court noted, the “crux” of Mr. Edwards’ problem in obtaining the transfer is probably the fact that the proposed site is located on lakefront property and is easily accessible to boaters. This concern was expressed by Hollis Spencer, two state legislators who represent residents of the area, and a witness who testified on behalf of residents in the surrounding area.

James Dudley lives in the log cabin Mr. Edwards’ proposes to convert into the liquor store, and runs a boat storage facility next door. Mr. Dudley testified there was a large volume of traffic due to the boat storage and adjoining bait and tackle shop, and that he planned to double the boat storage units. Although Mr. Dudley testified the incline from the lake to the log cabin was very steep, photographs of the site indicate that there is a boat launch below the cabin and that access to the proposed store, from the lake, is quite feasible.

The sum of this evidence supports the Board’s conclusion that “the primary purpose of [Mr. Edwards’] application is not necessarily to serve the people in the immediate area, but rather is to serve people who are using the Beaver Lake facilities.”

The Board further noted that a number of previous applications had been made, concerning the same area, all of which had been denied, and that no changes had been made in the area to justify granting the transfer this time. Edwards argues the sole mention of the previous applications was by opposing attorney Larry Douglas; however, as the circuit court noted, the record reveals a number of other references to previous applications, including the testimony of Mr. Maggard, the owner of the log cabin and bait store, who stated he had applied and been rejected for a license in 1986.

The only recent changes to the area have been improvements in the widening of the highway shoulders and the installation of a stop sign on adjoining County Road 397. Mr. Edwards submitted a report from Larry Wood, Director of the Northwest Arkansas Regional Planning Commission, stating that in the future, Highway 412 would be expanded to four lanes and would be a significant east/west route. Presently, however, the only evidence indicating that “public convenience” would be served by the requested license transfer is the fact that the nearest liquor store is seven miles away, and many of the area residents favor the transfer. These are valid considerations, and future highway developments may generate a need for Mr. Edwards’ proposed store. However, the record before the Board contained evidence in support of both sides, and the question is not whether the testimony would have supported a contrary finding, but whether it supports the finding that was made. Green v. Carder, supra.

It is our responsibility to examine the entire record to determine if there was substantial evidence that would support the finding of the administrative agency. In doing so, we find the Board’s action in refusing the transfer was not arbitrary or capricious and was, in fact, supported by substantial evidence.

Throughout his appeal of the Director’s decision, Mr. Edwards has claimed that the reason for the denial of his application is the ABC’s “conspiracy” to preserve the monopoly of liquor store ownerships held by Mr. Harold Hewitt. Mr. Hewitt controls seven of the eight liquor permits in Springdale Township, the closest of which is some seven miles from the proposed site. In addition, Mr. Edwards points to the fact that no new permits have been granted in that area for the past twenty years.

Mr. Edwards raises several arguments with regard to discovery and cross-examination on the issue of conspiracy, in addition to a claim that such conduct, on the part of the ABC, violates anti-trust laws and equal protection. We find it unnecessary to address these arguments, however, as they are irrelevant to a determination of whether the denial of the application was predicated on the fact that the proposed location was unsuitable for transfer of the license.

For the foregoing reasons, we affirm.


author: Robert H. Dudley, Justice.

text:
    Lonnie Carl BRIGHT v. STATE of Arkansas
    91-173
    819 S.W.2d 7
    Supreme Court of Arkansas
    Opinion delivered November 18, 1991

      Daniel D. Becker and Terri Harris, for appellant.

      Winston Bryant, Att’y Gen., by: Teena L. White, Asst. Att’y Gen., for appellee.
   Robert H. Dudley, Justice.

This is another in the series of cases reviewing whether a circuit court should have retained jurisdiction over a juvenile or should have transferred the case to juvenile court. In this case, the prosecuting attorney filed two (2) felony charges against the appellant in circuit court. The appellant filed a motion seeking to have the charges transferred to juvenile court. The circuit court refused to transfer the cases. The appellant appeals. We affirm the circuit court’s ruling.

The applicable statute, Ark. Code Ann. § 9-27-318(e) (Repl. 1991), provides that, in deciding whether to transfer a case, the court in which the charges are pending shall consider the following factors:

(1) The seriousness of the offense, and whether violence was employed by the juvenile in the commission of the offense;
(2) Whether the offense is part of a repetitive pattern of adjudicated offenses which would lead to the determination that the juvenile is beyond rehabilitation under existing rehabilitation programs, as evidenced by past efforts to treat and rehabilitate the juvenile and the response to such efforts;
(3) The prior history, character traits, mental maturity, and any other factor which reflects upon the juvenile’s prospects for rehabilitation.

We have said that a trial court is not required to give equal weight to each factor, nor is the prosecutor required to introduce proof against the juvenile with regard to each factor. Pennington v. State, 305 Ark. 312, 807 S.W.2d 660 (1991).

The crimes charged in this case, burglary and felony theft of property, are not in the most serious category of crimes and did not involve violence against a person, although they did involve violence against property. However, the testimony at the hearing on the motion to transfer showed that the appellant previously had been in trouble, previously had been charged in juvenile court, and previously had been placed on probation by the juvenile court. Obviously, the past actions by the juvenile court have not prevented a repetitive pattern of offenses. The next step for a juvenile court would be to commit a person such as appellant to an indeterminate period in a youth services center. However, the appellant was seventeen years and seven months old at the time of the crimes, and has now reached his eighteenth birthday. A person who has reached his eighteenth birthday cannot be committed to a youth services center. Ark. Code Ann. §§ 9-27-331 (a)(1) and 9-28-209(a)(l) (Supp. 1991). The crimes alleged to have been committed by the appellant, if proven, will show a repetitive pattern of crime by a person over sixteen years of age who is beyond rehabilitation under the programs available to a juvenile court. Such a case fits exactly within Subsection 2 of Ark. Code Ann. § 9-27-318(e) quoted above. Accordingly, we affirm the decision of the circuit court.


text:
    CONSTRUCTION MACHINERY of Arkansas v. Jerry D. ROBERTS and Gloria A. Roberts
    91-157
    819 S.W.2d 268
    Supreme Court of Arkansas
    Opinion delivered November 18, 1991
    [Rehearing denied December 23, 1991.]

      Wright, Chaney & Berry, P.A., by: Don P. Chaney, for appellant.

      Karlton H. Kemp, Jr., for appellees.
   Robert H. Dudley, Justice.

The main issue in this case is whether a first mortgage lost its priority over a junior lien when the holder of the first mortgage chose not to foreclose, but instead chose to take a “warranty deed in lieu of foreclosure,” and then resell a substantial part of the same real estate to a stranger to the title without taking any action against the holder of the junior lien. Later, after reselling part of the land to the stranger, the first mortgagee filed suit to cancel the intervening lien. The chancellor granted the relief prayed. We reverse and hold that under the facts of this case a merger occurred, the first mortgage debt was extinguished, and the intervening lien remains outstanding.

On September 1,1985, Jerry and Gloria Roberts, the sellers, and Dwain and Virginia Glass, the buyers, entered into a written contract by which the sellers agreed to sell five (5) acres in Miller County to the buyers for $96,750, with $5,000 paid that date and the rest to be paid in monthly installments. The contract provided that upon payment in full the sellers would execute a warranty deed. The contract was recorded in the miscellaneous records of Miller County. The buyers failed to pay in full and a warranty deed was never given them.

On October 20, 1987, the sellers sold four (4) additional tracts to the buyers. These tracts, consisting of sixteen (16) acres, were also in Miller County. This acreage was conveyed by an instrument styled “Warranty Deed With Lien.” The deed contained language which reserved a vendor’s lien in the sellers. On the same day, the buyers additionally executed a deed of trust to the sellers which provided that it constituted the security for the $37,000 promissory note given to purchase the sixteen (16) acres. The note was payable in monthly installments.

On October 24,1989, Construction Machinery of Arkansas, the intervening lien holder, obtained a judgment against buyer Dwain Glass, but not against buyer Virginia Glass, in the amount of $9,766.77. This judgment was recorded in Miller County on the same day and became a judgment lien. See Ark. Code Ann. § 16-65-117 (1987).

By late October 1989, the buyers were in default to the sellers, and the sellers sought a remedy. They did not conduct a title search nor did they foreclose their security interests. Instead, they reached an agreement with the buyers by which the buyers executed a warranty deed conveying all twenty-one (21) acres back to the sellers. This warranty deed, dated November 27, 198 9, provided that it is “in cancellation of Contract of Sale dated August 16, 1985,” and “also in lieu of foreclosure of Deed of Trust dated October 20,1987,” and “also in lieu of foreclosure of the vendor’s lien retained in Warranty Deed dated October 20, 1987.” The next day, November 28, the sellers quitclaimed 1.2 acres back to the buyers.

On April 24,1990, the sellers sold a 5.622 acre tract, which was a part of the twenty-one (21) acres, to strangers to the title, Kevin and Laura Bassett. This 5.622 acre tract, which included a residence, was sold to the Bassetts for $70,000. The escrow agent, Miller County Abstract Company, required the sellers to leave $12,500 of the purchase price in escrow because of the cloud on the title created by the judgment lien.

The sellers were obviously displeased about the $12,500 being retained, and so they filed this suit in chancery court against the judgment lien holder and the original buyers. In it, they asked that the judgment lien be cancelled, or, in the alternative, that they be granted foreclosure against the buyers and the judgment lien holder, and that their mortgage be declared prior to that of the judgment lien holder. The chancellor cancelled the judgment lien. That ruling was in error.

The vendor’s lien and the deed of trust, for convenience hereafter labeled “first mortgage,” originally held priority over the judgment lien since the first mortgage was recorded before the judgment was entered of record in the county where the land is located. See Alston v. Bitely, 252 Ark. 79, 477 S.W.2d 446 (1972). In addition, the judgment lien was a lien against only buyer Dwain Glass’s interest in the land, but when buyer Dwain Glass deeded the twenty-one (21) acres back to the sellers, they took it back subject to the judgment lien against his interest. Automotive Supply, Inc. v. Powell, 269 Ark. 255, 599 S.W.2d 735 (1980).

The sellers held different interests in the sixteen (16) acres at different times. Prior to the sale they held fee simple absolute. Immediately after the sale, they held a first lien security interest, while the buyers held at least equitable title and also the equity of redemption. See Bank of Oak Grove v. Wilmot State Bank, 219 Ark. 107, 648 S.W.2d 802 (1983) for discussion of titles held by a mortgagor and mortgagee. Immediately after the buyers conveyed their title and equity of redemption back to the sellers, the sellers once again owned all of the interests. The issue became whether these interests remained separate or merged.

Whether a merger occurs when a mortgagee acquires the mortgagor’s interest is largely a question of intent. “The intention and interest of the party who unites the two estates in himself will determine whether or not a merger takes place.” 2 Jones on Mortgages, § 1080, at 509 (1928). The doctrine of merger is not favored and will not be applied in the absence of an intent on the part of the mortgagee, or unless the application of the doctrine is required by the equities of the particular case. Commonwealth Building & Loan Ass’n. v. Martin, 185 Ark. 858, 49 S.W.2d 1046 (1932). The evidence must be strong before we will apply the doctrine of merger. Id.

In Cowling v. Britt, 114 Ark. 175, 180, 169 S.W. 783, 784 (1914), as a part of the holding of the case, we cited Pomeroy’s Equity Jurisprudence as authority for the following statement:

‘Where a mortgagee takes a conveyance of the land from the mortgagor or from a grantee of the mortgagor, if the transaction is fair, the presumption of an intention to keep the security alive is very strong. It is generally for the interests of the party in this position that the mortgage should not merge, but should be preserved to retain a priority over other encumbrances.’

In addition we wrote:

‘Where a mortgagee receives a conveyance of the equity of redemption, his estate under the mortgage will not merge, but will be kept alive to enable him to defend under it against all liens of third persons, whether by mortgage, judgment, or otherwise, attaching between the execution of the mortgage and the giving of the deed, if his intention to that effect is shown, or if there is nothing to rebut the presumption that his intention correspond with his interest.’

Id. at 180-81, 169 S.W. at 784-85 (citing 27 Cyc., page 1381).

Holdings such as the one in Cowling v. Britt, supra, are eminently fair. The parties holding all of the interests in the land were before the court. The only issue was one of priorities. Once the priorities were determined and the land sold, the parties were paid, to the limit of the sale price, according to the priorities. The junior lien holders had the same chance to be paid that they had originally.

Yet, while the evidence must be strong before we will apply the doctrine of merger, we have applied it. Baily v. Eakes, 168 Ark. 872, 271 S.W. 978 (1925). A fuller explanation is given in the more recent case of Johnson v. Gammill, 231 Ark. 1, 328 S.W.2d 127 (1959). In that case the mortgagee, after receiving the property back, conveyed it to a third party. As a part of the holding of the case, we quoted from Corpus Juris Secundum, as follows:

‘The intention of the parties on the question of merger may be expressly declared, or it may appear from the conduct of the parties, the circumstances of the transaction, and the particular equities of the case. In any event, however, the intention to merge must be clear. An intent to effect a merger is indicated where, after acquiring the equity, the mortgagee conveys the property or leases it to a stranger, . . . .’

Id. at 6, 328 S.W.2d at 130.

Here, we have the same situation. The mortgagees, after receiving back the property by “Warranty Deed in lieu of foreclosure,” conveyed a part of the property to strangers to the title. This act constituted convincing evidence that the mortgagees intended to effect a merger so that the complete fee then could be transferred to the stranger. No other result would be fair. After the sale of all or a good part of the property involved, $70,000 worth in this case, there could no longer be a foreclosure sale involving only the property remaining in the first mortgagee which would give the junior lienholder any realistic chance of recovery of the amount owed him. Cancelling the junior lien without any sale, as the chancellor did, also unfairly deprived the junior lienholder of any chance of recovery.

If our law were that a first mortgagee could take back the property by deed in lieu of foreclosure and then resell it free and clear of an intervening encumbrance, we would wreak havoc in the marketplace of second mortgages. Under such circumstances, a second mortgage, or other junior encumbrance, would not constitute a meaningful security. The holders of intervening encumbrances are entitled to more; they are entitled to a fair chance to enforce their liens before those liens are extinguished.

The lienholder in this case, who is the appellant, does not separately argue that the doctrine of merger applies to the buyers’ equitable interest in the five (5) acre tract which was created by the contract of sale, and we do not address the issue.

There is a cross-appeal involving an entirely different matter. As set out, the escrow agent, Miller County Abstract Company, held in escrow $ 12,500 of the amount paid by the third party purchasers, the Bassetts. When the suit now before us was pending in the trial court, the abstract company interpleaded the $12,500 in this case. The trial court awarded an attorney’s fee to the interpleader’s attorneys. The sellers, who are the cross-appellants, contend that the trial court erred in awarding an attorney’s fee in an interpleader action. The argument is meritorious. See Saunder v. Kleier, 296 Ark. 25, 751 S.W.2d 343 (1988). Cross-appellees ask us to approve the fee under the relatively new statute providing for attorneys’ fees in an action based on a contract. See Ark. Code Ann. § 16-22-308 (Supp. 1991). The interpleader action does not come within the statute. Accordingly, we also reverse on cross-appeal.

Reversed on direct appeal and on cross-appeal.