text:
    James RUTH and Selma RUTH, his wife v. J. B. LITES and Virginia C. LITES, his wife
    CA 79-141
    590 S.W. 2d 322
    Opinion delivered November 14, 1979
    Rehearing denied December 12, 1979
    Released for publication December 12, 1979

      Eugene Hunt, for appellants.

      Eilbott, Smith, Eilbott & Humphries, for appellees.
   James H. Pilkinton, Judge.

On September 5, 1955, James Ruth and wife were the owners of the Northeast Quarter of the Northwest Quarter (NE Vk NW Vk) of Section Twenty (20), Township Six (6) South, Range Twenty-Six (26) West, in Grant County, Arkansas, containing 40 acres, more or less. On that date they borrowed $1,055.00 from Dr. L. Routen and wife. Mr. and Mrs. Ruth executed a warranty deed to the Routens conveying this land. However, the parties to that transaction also executed a Sales Agreement under which the Ruths would be permitted to repurchase the land; and in connection with this agreement, Mr. and Mrs. Ruth executed an installment, note for $1,050.00 in favor of the Routens.

By November 4,1960, the Ruths were in serious default under the terms of the note and repurchase agreement. Dr. and Mrs. Routen were demanding full payment of the principal and interest then due totaling $1,253.73 which the Ruths could not pay. They were threatened with eviction.

OnJanuary 12,1961, J. B. Lites and wifepaid$l,264.30, the amount then due by the Ruths, to Dr. and Mrs. Routen; and the Routens conveyed the forty acres to Mr. and Mrs. Lites, who were friends of Mr. and Mrs. Ruth and resided near them. In connection with transaction, Mr. and Mrs. Lites executed a Sales Agreement under which Mr. and Mrs. Ruth would be permitted to repurchase the land from them within a two year period on the terms and conditions set out in such instrument and in a promissory note, dated January 12,1963. The Ruths continued to reside on the land. Mr. Lites recorded the deed, and paid the back taxes on the land. He also had the property transferred to his name on the tax books of Grant County, and has paid the taxes each year since 1961.

The Ruths made no payments on the note to Mr. and Mrs. Lites, and made no effort to repurchase the land prior to January 12, 1963. In fact they made no real effort to do anything about reacquiring title to the property until this suit was filed on September 12, 1973, a lapse of over ten years.

In bringing this suit, Mr. and Mrs. Ruth alleged they were indebted to Mr. and Mrs. Lites, and claimed that the deed they executed to the Lites in 1961 should be declared a mortgage. They seek to redeem the land by paying whatever amount is now due Mr. and Mrs. Lites. An answer was filed denying the allegations of the complaint. The answer also alleged that any agreement of repurchase between the parties had expired on January 12,1963, and that the Ruths were barred by laches from attempting to enforce the repurchase agreement at this late date. The Lites later filed an amended answer and requested that title to the land be quieted in them, and for a Writ of Possession inasmuch as the Ruths were still living on the land.

After an extensive trial, the Chancery Court ruled that the warranty deed ¿xecuted by L. Routen and wife to J. B. Lites and Virginia C. Lites, his wife, dated January 12,1961, was an absolute conveyance and not a mortgage; that the Ruths had failed to comply with the terms of a separate agreement to repurchase the land from the Lites; that Mr. and Mrs. Ruth have no right, title or interest in.the property. The complaint was dismissed. The Ruths have appealed and this case has been assigned to the Arkansas Court of Appeals pursuant to Rule 29(3).

Two issues are presented on appeal, (1) whether the deed dated January 12,1961, constitutes a mortgage, and (2) if it was in fact an equitable mortgage, whether appellants are barred by laches from redeeming the land.

The general doctrine prevails in this state that a grantor may show that a deed absolute on its face was intended only to be security for the payment of a debt and thus a mortgage. Hill v. Day, 231 Ark. 550, 331 S.W. 2d 38 (1960).

Whether any particular transaction does thus amount to a mortgage or a sale with a contract to repurchase must, to a large extent, depend upon its own circumstances. The question ultimately turns, in all cases, upon the real intention of the parties, as shown by the writings or as disclosed by extrinsic evidence. The rule is undisputed that to show a deed is not an absolute conveyance, but was intended to be a mortgage to secure a debt, the evidence must be clear, satisfactory and convincing. Matthews v. Stevens, 163 Ark. 157, 259 S.W. 736 (1924). In practice the line of demarcation between a mortgage and a sale with right of repurchase is shadowy, and it is frequently a matter of great difficulty to determine to which category a given transaction belongs. In reviewing the decisions of courts of chancery on questions of this character, great weight should be given to the opinion of the trial court as the Chancellor may be apprised of the existence of circumstances which but dimly appear to us from an examination of the record alone. Ehrlich v. Castleberry, 227 Ark. 426 at 431, 299 S.W. 2d 38 (1957). The trial court had an intimate knowledge of this case and of the character and situation of the párties. The learned chancellor found that the instrument, in light of the attendant circumstances and the evidence adduced, was in fact an absolute deed of conveyance, and was not a mortgage. The trial court concluded that this was the intention of the parties, and we are unable to say, after a careful consideration of the record before us, that the chancery court has wrongly decided that issue. However, there is one modification wihch must be made in the decree of the trial court. The testimony is undisputed that Mr. and Mrs. Lites have permitted Mr. and Mrs. Ruth to continue to live in the house on the premises. In fact, Mr. Lites testified that they had agreed, many years ago, that Mr. and Mrs. Ruth might make their home there as long as they live and told them so. Mr. Lites expressed the agreement in the following words:

“Q. You testified, that you made, “a gentleman’s agreement”, to let him live there.
A. We did.
Q. Why did you do that?
A. Well, it’s been brought out very vivid, that we have been friends all down through the years, and I didn’t have malice in my heart to want to put him out of a home. And when we made this agreement, that was the agreement that he had the two years to pay it back and, if he didn’t the property, in turn, would be mine. “If you do that and don’t pay it off, you can have a home as long as you live there, and I will not put you off’.

It is evident that Mr. and Mrs. Ruth relied on that understanding, and such agreement may explain why appellants did not pay the note and comply with the agreement to repurchase. In any event, equity requires Mr. and Mrs. Lites to honor their agreement and permit Mr. and Mrs. Ruth to have a home on this land as long as either of them lives and desires to reside there. The statute of frauds was not raised as a defense to such agreement.

The decree of the chancery court is modified accordingly and, as so modified, is affirmed. The case is remanded for entry of a modified decree consistent with this opinion.

Supplemental Opinion on Denial of Rehearing delivered December 12, 1979

The record in this case disclosed that appellees had promised appellants a home on the forty acres of land in question as long as appellants lived in event they could not repay the debt, and appellees retained the land. It was evident to this court on appeal that Mr. and Mrs. Ruth relied on that understanding, and the existence of such an agreement may explain why appellants did not pay the note and comply with the agreementfor repurchase. In any event, in considering this appeal de novo, we held that equity required appellees, under the circumstances, to honor their agreement and permit Mr. and Mrs. Ruth to retain a home on this land as long as either of them lives and desire to reside there. As so modified, the decree of the Chancery Court was affirmed; and the case was remanded to the trial court for entry of a final decree not inconsistent with our opinion.

Appellees have now filed a petition for rehearing claiming that the original opinion of this court should be clarified to declare definitely that the rights of appellants to reside on the land is confined to the dwelling, and an appropriate small amount of land only immediately surrounding the house.

Appellees certainly know what they promised the appellants. If any dispute remains between the parties, or should arise later, the Chancellor would be in a better position to deal with such matters than this court, and the Chancery Court should do so first.

The present record before us does not fully disclose how much of this land is being used by appellants, whether the land is farm land, timber land, or both. The record is silent as to the exact location of the dwelling on the land, whether the dwelling has access, whether the home site is fenced, and many other details which a court would need in order to pass on the suggested items of possible future dispute which might arise.

We view our opinion as clear, and the mandate to be issued on it as sufficient in scope to enable the trial court to properly dispose of any issues which might arise between the parties in the future.

Rehearing denied.


source: Caselaw Access Project

author: James H. Pilkinton, Judge.

license: Public Domain

text:
    ARKANSAS STATE HIGHWAY COMMISSION v. M. F. CASH and Josephine CASH
    CA 79-148
    590 S.W. 2d 676
    Opinion delivered November 14, 1979
    Rehearing denied December 19, 1979
    Released for publication December 19, 1979

      Chris Parker, for appellant.

      Jerry D. Pinson oí Pinson & Reeves, for appellees.
   James H. Pilkinton, Judge.

This is a highway condemnation case. M. F. Cash and wife were the owners of two parcels of land adjacent to Highway 62/65 north of Harrison, Arkansas. The first parcel was a triangular shape containing .20 acre fronting for approximately 190.9 feet on the highway. Of this parcel the Arkansas Highway Commission condemned and acquired .12 acre in fee simple, which is designated as Tract 52, leaving a residual of .08 acre. The second parcel was an irregular shaped piece of land containing .18 acre, with 229 feet of frontage on the same highway-. Of this second parcel, the commission acquired .16 acre, designated as Tract 69, leaving a residual of .02 acre.

Mr. and Mrs. Cash own numerous billboards, some erected on their own land, and some located on property they lease from third parties. The two parcels involved in this case were purchased by them as locations upon which to erect billboards. At the time of taking, there were two billboards, containing three faces, located on Tract 52. There were two billboards, also containing three faces, located on Tract 69. In addition, there was a small building on Tract 69 which Mr. Cash rented. Both tracts were income producing.

Appellee Cash, as owner, and Mr. Gene Lair, a real estate appraiser, each valued Tracts 52 and 69 by capitalizing a “net” income figure which was derived from money produced from each piece of property. Mr. Cash estimated just compensation for the taking of Tract 52 to be $ 11,000.00 and estimated just compensation for the taking of Tract 69 to be $18,000.00. Mr. Lair estimated just compensation for the taking of Tract 52 to be $9,100.00 and estimated just compensation for the taking of Tract 69 to be $16,600.00.

Mr. Robert Palmer, a real estate appraiser, called by the commission, valued both tracts prior to condemnation by using the comparable sales approach as well as capitalizing the rent payable under billboard leases from other sign companies at other locations. He estimated just compensation for Tract 52 to be $1,900.00 and just compensation for Tract 69 to be $4,700.00. The issue, as to each tract, was submitted to the jury under proper instructions. The jury returned a verdict of $5,500.00 as just compensation for Tract 52, and $10,000.00 as just compensation for Tract 69. The commission has appealed from the judgment entered on these verdicts. The case has been assigned to the Arkansas Court of Appeals pursuant to Rule 29(3).

1.

Appellant first argues that the trial court admitted, over the objection of the commission, evidence of the gross income derivable from the sale of advertising space on the billboard located on the subject property. We agree that the admission of testimony regarding business income or profits, and use of that income to compute market value in an eminent domain action, is reversible error. Hot Springs County v. Bowman, 229 Ark. 790, 318 S.W. 2d 603 (1958). However, we do not understand from this record that the trial judge admitted such evidence. It is well settled that capitalization of income is a recognized method of arriving at the fair market value of real estate used to produce rental income in determining just compensation in eminent domain cases. Housing Authority of the City of Little Rock v. Rochelle, 249 Ark. 524, 459 S.W. 2d 794. The Arkansas Supreme Court has also held evidence of rental value to be admissible as a factor to be considered in determining just compensation. Desha v. Independence County Bridge District No. 1, 176 Ark. 253, 3 S.W. 2d 969. See also Housing Authority of the City of Little Rock v. Rochelle, supra.

As we view the record, the rule that evidence of profits derived from a business located on the land is not admissible as a basis for computing the market value of such property in condemnation proceedings is not applicable to the situation under consideration. The commission fails to distinguish between income from the property and income from a business conducted upon the property. This distinction furnishes the criterion for the applicability of the rule. NLR Urban Renewal v. Van Bibber, 252 Ark. 1248 at 1254, 483 S.W. 2d 223 (1972). Here we are dealing with net income from the property, something that would be the prime consideration of any prospective purchaser of income producing land. The evidence does not support the commission’s contention that the income in this case is of the type derived from a business located on the land. We find no merit in the first point urged by appellant for reversal.

II.

Appellant next urges that the trial court erred in failing to strike the testimony of Gene Lair, an appraiser for the land owner. The claim is that Mr. Lair valued the property by capitalizing the income of a business conducted thereon. We do not so understand the evidence. Mr. Lair was qualified as an expert in real estate appraisals. He stated his opinion as to the just compensation for each tract involved. As a qualified expert, Mr. Lair needed only to have stated his bare opinion. Ark. Highway Commission v. Hartsfield, 248 Ark. 821, 454 S.W. 2d 82 (1970). However, as appellant points out, the testimony of such a witness should be struck if it is shown to lack a sound and reasonable basis. Ark.-Mo. Power Co. v. Sain, 262 Ark. 326, 556 S.W. 2d 441 (1977). In the case before us, we cannot say Mr. Lair’s testimony lacked a sound and reasonable basis. He valued both tracts by capitalizing a “net” income figure derived from money produced from each piece of the property involved. He stated that the subject property was being used for the rental of sign locations and, in the case of Tract 69, also the rental of a commercial building. Mr. Lair said he considered such purposes to be the highest and best use of the tracts. He also testified that he considered the best approach to the true market value to be the income approach in view of the fact that both tracts were income property, and considering their shape and size. He explained the factor which he used, and the step by step method which he employed in the capitalization. He did not attribute all of the income from the signs on his property, but in his calculation subtracted $10.00 per. month per sign to cover proper deductions. On cross-examination Mr. Lair said that he deducted the vacancy ratio and other factors in connection with the operation of the sign. He testified that, to his knowledge, he deducted all the cost of maintaining the signs at their location. We are unwilling to say that appellant’s cross-examination of this witness destroyed his opinion of any fair and reasonable basis. Therefore, the court properly refused to strike his testimony.

III.

The State Highway Commission also claims the trial court erred in failing to strike the testimony of M. F. Cash, one of the owners. Mr. Cash testified that the fair market value at the time of the taking of Tract 69 was $18,000, and the fair market value of Tract 52 was $ 11,000. He arrived at these figures by capitalizing a “net” income figure which was derived from the rents produced from each piece of property. According to Mr. Cash, the taking totally destroyed the use of the land for income purposes, and he gave no value at all to the small fractions which were left. He said they were not suitable for rental as a location for highway signs which he said was their highest, best and only use. Since Mr. Cash was in the sign business, the State Highway Commission argues he valued the property by capitalizing the income of a business conducted thereon. Appellant asserts that Mr. Cash’s testimony does not constitute a fair and reasonable basis for the landowner’s value estimate.

Appellant agrees that a landowner is a competent witness to testify as to the value of his land simply because he Owns it. Ark. Highway Commission v. Jones, 256 Ark. 40, 505 S.W. 2d 210 (1974). However, as appellant points out, the landowner must relate a satisfactory explanation on cross examination to justify his value estimate. Ark. Highway Commission v. Duff, 246 Ark. 922, 440 S.W. 2d 563 (1969); Ark. Highway Commission v. Darr, 246 Ark. 204, 437 S.W. 2d 463 (1969). In the case at bar Mr. Cash valued the property in question by using a percentage formula under which he placed a value on the property at 10 times the net annual rental. As appellee points out, a similar method was employed by an appraiser in Housing Authority of the City of Little Rock v. Rochelle, supra. The Arkansas Supreme Court said this was a crude but practical application of the income approach to the market value. Mr. Cash testified that he had bought a lot of property in the Harrision area, and knew land values there.

Even if Mr. Cash’s testimony be considered improper, reversal would not be required on this point because there is other sufficient evidence to sustain the verdict. It is evident that his testimony did not affect the verdict. Ark. State Highway Commission v. Ormond, 247 Ark. 867, 448 S.W. 2d 354 (1969). Any error in admitting the landowner’s value testimony did not enhance the award. The verdict was for less than the amount for which there is substantial evidentiary support.

IV.

The final argument of appellant is that the court erred in not directing a verdict in the amount of $1,900.00 on Tract 52, and $4,700.00 on Tract 69. This point is argued on the premises that the appellees failed to develop any substantial testimony to support their claim for just compensation, even when viewed in the light most favorable to them. Appellant contends that Mr. Palmer, an appraiser for the commission, furnished the only substantial evidence as to just compensation. We do not agree. As already mentioned, we find other substantial evidence in the record. The trial court was correct in refusing to direct a verdict for the commission based upon the values set by the expert who testified for the commission.

Affirmed.

Wright, C.J., not participating.


author: Marian F. Penix, Judge.

text:
    E. A. WELCH and Myrtis M. WELCH v. Mary Syble BREWER
    CA 79-142
    590 S.W. 2d 325
    Opinion delivered November 14, 1979
    Rehearing denied December 12, 1979
    Released for publication December 12, 1979

      Gardner & Gardner, for appellants.

      William R. Bullock, for appellee.
   Marian F. Penix, Judge.

This case was appealed to the Arkansas Supreme Court and by that court assigned to the Arkansas Court of Appeals pursuant to Rule 29(3).

Mary Syble Brewer, 95 year old appellee, brought suit to rescind a warranty deed. The deed was executed August 30, 1972. It deeded property belonging to Ms. Brewer to E. A. Welch (now deceased) and Myrtis M. Welch, appellants. The deed recites a total consideration of Four Thousand Five Hundred Dollars ($4,500.00). Ms. Brewer is the aunt of Ms. Welch, age 73. In June, 1972 Ms. Brewer was a resident of Ola Nursing Home. Ms. Welch and her husband visited Ms. Brewer and agreed to buy Ms. Brewer’s home property in Ola. The consideration was $4,500 plus the appellants agreed to care for Ms. Brewer for the rest of Ms. Brewer’s life. The Welchs contend the agreement was for Ms. Brewer to make her home with them only for so long as she could take care of herself. The Welchs moved from their home in Brinkley to Ms. Brewer’s home in Ola. Ms. Brewer moved from the nursing home and began living with the Welchs. The Welchs began extensive repairs and remodeling on the house. Ms. Brewer lived with them for 25 months. She fell and cut her head and was taken to the doctor who placed her in the hospital. The doctor advised she go to the nursing home and Mr. Welch took her from the hospital to the nursing home. The Welchs have not paid any of Ms. Brewer’s nursing home expense. Ms. Brewer has paid all of these expenses herself. She brought suit to rescind the deed and the court ordered rescission. In a subsequent hearing the court determined the value of improvements made by the Welchs to be $10,000.00. A judgment for $14,500.00 was awarded Ms. Welch bearing 8% interest from date of judgment, Jan. 5, 1979, and Ms. Welch was ordered to convey property to Ms. Brewer upon payment of judgment. The order provides if judgment be not satisfied within 30 days said property shall be sold upon application of either party. The order states the rental value due Ms. Brewer and the interest, taxes, insurance, and other repairs due Ms. Welch are offsetting when considering the care the Welchs provided to Ms. Brewer; thus no damages are awarded either party for said items.

The only issue on appeal is whether Ms. Brewer, the appellee, proved by clear, cogent and convincing evidence, the Welchs promised to care for her the rest of her life and, if they did promise this, that they neglected and refused to carry out the promise. The trial judge ordered rescission of the support deed and held Ms. Brewer met her burden of proof by clear, cogent and convincing evidence.

Both parties agree that even though the deed in this case doesn’t contain any statement to the effect the Welchs were to support or to care for Ms. Brewer for any period of time the law is clear in allowing this to be shown by parol evidence. Rebsamen Motors v. Moore, 231 Ark. 249, 329 S.W. 2d 155 (1959). Here the parol evidence is not in agreement as to the exact provisions of support and maintenance. Several witnesses testified for Ms. Brewer — a banker, a neighbor friend and a nephew. Several witnesses testified for Ms. Welch — a manager of a Savings and Loan who is an appraiser, a carpenter, Ms. Welch’s daughter and son-in-law, a retired minister, and a physician. Not one of the witnesses actually heard the terms or was present when the agreement was first made regarding the care which was to be afforded Ms. Brewer as part of the consideration by which she deeded her property to the Welchs. Ms. Welch’s witness, Dr. Pennington, testified he learned of the terms of the agreement from the Welchs who maintained the care given Ms. Brewer was for only as long as they were able. He testified Ms. Brewer understood the agreement to be she was to be cared for the rest of her life.

It isn’t reasonable a woman already past 90 would make ah agreement according to the terms the Welchs propose. For her to agree to such restrictions is not likely. The probability of her being able to card for herself up'until the day of her death is diminished by her already advanced years. The purpose of a support deed is to provide security both physicial and mental, to a grantor approaching the time of life when dependence on others is highly likely. The evidence shows the Welchs to be in poor health. Mr. Welch is now deceased. Mr. Welch’s death and Ms. Welch’s failing health are indeed unfortunate. But these facts are irrelevant to the consideration of the support deed. The language used by Justice Jones in Wood v. Swift, Trustee, 244 Ark. 929, 428 S.W. 2d 77 (1968) is pertinent to this case.

We agree . . . that support deeds are recognized in this state; that when a deed is executed in consideration of future support and maintenance and the grantee fails to fulfill the provisions of the deed, the grantor may sue at law for damages, or may sue in equity to cancel the deed for failure of consideration. . . . While reformation of a deed or contract for fraud or mistake is a proper matter for equitable jurisdiction, the burden of proving fraud, mistake or lack of consideration rests upon the one alleging it.

The grantees in the case at hand disagreed with the grantor as to the extent of care to be rendered by them to the grantor. Each party mistook what the other party understood to be a vital element of the consideration.

All of the evidence was oral testimony. The trial judge had to weigh the testimony, observe the demeanor of the witnesses, and judge the credibility of the witnesses. May v. Alsobrook, 221 Ark. 293, 253 S.W. 2d 29 (1952). The Welchs cared for Ms. Brewer for as long as they were able. But this falls, short of the complete consideration constituting their part of the agreement as the chancellor found it to be. Their agreement was to care for Ms. Brewer for life. This they did not do. From the record it is clear the chancellor had sufficient evidence from which he could conclude the Welchs failed to provide the complete consideration for the support deed.

Affirmed.


author: George Howard, Jr., Judge. M. Steele Hays, Judge.

text:
    RECTOR-PHILLIPS-MORSE, INC. v. HUNTSMAN FARMS, INC. et al
    CA 79-132
    590 S.W. 2d 317
    Opinion delivered November 14, 1979
    Released for publication December 5, 1979

      James M. Me Haney and John C. Calhoun, Jr., for appellant.

      Wright, Lindsey & Jennings, for appellees.
   George Howard, Jr., Judge.

The central issue tendered for determination is whether the trial court committed error in denying appellant’s claim to a commission purportedly earned as a consequence of producing a buyer who was ready, willing and able to purchase real estate from appellee pursuant to an agreement between the parties.

The pertinent facts are: Sometime during July, 1976, Robert Chowning, Executive Vice President of Rector-Phillips-Morse, Inc., hereinafter called Rector, Inc., was advised that Sidney Weniger was interested in buying the Riviera Apartments which are located on Old Cantrell Road in Little Rock. The apartments were purchased by Harold Huntsman and his wife in 1973 from Rector-Phillips-Morse Realty Fund, a limited partnership and a subsidiary of Rector, Inc., hereinafter referred to as Realty Fund; and Huntsman later conveyed the property to Huntsman’s Farm, Inc. A third mortgage was executed, on the apartments, by Huntsman in favor of Realty Fund to secure a note for $584,000.00 which was to mature on September 15, 1976.

On August 4, 1976, Andy Agar, a representative of Rector, Inc., confirmed Mr. Chowning’s telephonic conversation with Mr. Huntsman by letter and the communication further stated: “Should a sale be made by you to Mr. Weniger, we feel you should not enter into direct negotiations with Mr. Weniger without our being involved. In any event, and should you sell the property to Mr. Weniger, this is to advise you that we will consider ourselves entitled to commission of 6% of the total sales price.”

On September 16, 1976, Mr. Huntsman and Mr. Weniger entered into an offer and acceptance agreement which provided,, among other things: (1) The total sales price would be the outstanding principal balance due on mortgages involving the apartment, plus $150,000.00 cash to the seller, and (2) the agreement is subject to a special condition on Weniger closing a satisfactory mortgage loan to be obtained from First Federal Savings & Loan Association of Pine Bluff, Arkansas. Finalization of the transaction was scheduled for October 31, 1976. The offer and acceptance agreement also specified that “Seller agrees to pay Rector-Phillips-Morse, Inc., agent, a commission pursuant to the agreement between them.” While the offer and acceptance agreement was executed on a printed form of Rector, Inc., the agreement was executed by Mr. Weniger and Mr. Huntsman and no one from Rector, Inc. was present during the execution of the agreement.

A rider, dated the same date as the offer and acceptance agreement, was executed, by Huntsman and Weniger, and attached to the agreement. The rider, in material part, provides:

1. On or before December 31, 1976, if title has been acquired by Buyer to the Riviera Apartments, the Seller shall have the option upon 15 days notice to re-purchase said property by assuming any new mortgage financing arranged by the Buyer. (If satisfactory to lending institution) and any existing mortgages, which Buyer may have assumed at time of title, plus the payment to the Buyer of the following.
3. In addition, Seller shall pay to Buyer, the sum of $45,000.00 plus a sum equal to one percent of the amount of new financing arranged by Buyer.
If said new mortgage financing does not exceed nine (9) percent interest, Seller shall pay Buyer an additional sum of one (1) percent of said mortgage.
If said new mortgage financing is more than a 25 year term, Buyer shall pay Seller an additional sum of one (1) percent of the mortgage.
4. It is the express interest of this option agreement, that if exercised by the Seller, the Buyer shall be reimbursed for any and all out-of-pocket costs incurred by Buyer (or nominee) in connection with or on behalf of the purchase, financing, and closing of title to the Riviera, its operation from date of title to date of repurchase, plus the sums referred to in paragraph 3 above.
On September 24, 1976, an addendum to the agreement was executed by Weniger and Huntsman which provides in relevant part:
1) As an alternative to assuming the new mortgage as set forth in paragraph 1 of the Rider, seller may pay the same in full, including any prepayment penalties.
3) In the event seller pays the mortgage held by RPM Realty Fund in full prior to closing date of this transaction and pays to buyer the sum of $45,000 plus all costs and expenses incurred on account of this transaction (including legal fees, appraisal fees, mortgage application fees, etc.) buyer agrees to void the offer and acceptance and Rider dated September 16, 1976 and to release seller from all obligations thereunder.

Mr. Weniger testified that he had made arrangements with First Federal Savings & Loan Association of Pine Bluff, Arkansas, for financing the purchase of the apartments, but when First Federal became aware of the stipulation in the offer and acceptance agreement that Huntsman had the option of repurchasing the property and assuming the mortgage, First Federal refused to agree to the stipulation. Moreover, First Federal stated that it did not want Huntsman as a mortgagor under any circumstances. Consequently, Weniger’s arrangements with First Federal for financing the purchase of Huntsman’s apartments did not materialize.

On or about October 28, 1976, Huntsman deeded the apartments to Graceland College, an Illinois Institution sponsored by the Church of Jesus Christ of Latter Day Saints; and on October 31,1976, Graceland College paid off the third mortgage held by Realty Fund. In November, Weniger filed his specific performance action against. Huntsman and Graceland College. Rector, Inc. intervened in the action seeking to recover a commission of $75,000.00.

The trial court found that while Rector, Inc. was not afforded a general listing, Huntsman did agree to pay Rector, Inc. a commission, providing the apartments were sold to Sidnéy Weniger. The trial judge concluded the property was not sold to Weniger, therefore, Rector, Inc. did not produce a ready, willing and able buyer for the property. Consequently, the trial court dismissed appellant’s complaint with prejudice.

Appellant’s argument for-reversal may be summarized as: That appellant has established, by a preponderance of the evidence, that Weniger and Huntsman were brought together by appellant; that this meeting culminated in an agreement acceptable to the seller, Huntsman. Hence, appellant earned its commission effective September 16, 1976, the date offer and acceptance agreement was executed; and that the ultimate outcome of the transaction cannot vitiate Rector, Inc.’s entitlement to the commission.

First, it is fitting that we set out the scope and range of our responsibility as an appellate court in reviewing a proceeding on appeal from a chancery court. Admittedly, such proceeding is tried de novo. However, it is clear that an appellate court will affirm the action of the trial court when that court’s action is supported by a preponderance of the evidence. Alley v. Martin, 250 Ark. 74, 464 S.W. 2d 591 (1971); Summers v. Hook, 243 Ark. 368, 419 S.W. 2d 810 (1977). Moreover, where credibility as between interested parties in an action is pivotal, the appellate court’s practice is to abide by the chancellor’s judgment in the matter. Souter v. Witt, 87 Ark. 593, 113 S.W. 800 (1908).

Turning now to the issue to be resolved, we are persuaded that the universal rule provides that a broker is entitled to his commission when he produces a purchaser who is able, ready and willing to buy the property at a price and on terms designated by the seller, although no sale is made. However, this general rule is subject to exceptions. An exception, for example is where the agreement designates the person to whom the sale is to be made. 12 C.J.S., Brokers, Section 85, page 187.

In El Dorado Real Estate v. Garrett, 240 Ark. 483, 400 S.W. 2d 497 (1966), the Arkansas Supreme Court observed that one thread that seems to be woven in cases rendered by the Court between 1908 and 1963 relative to a broker’s commission involving real estate — where a purchaser has been produced who is ready, willing and able to purchase the lands — it is not necessary that an enforceable contract be executed before the broker is entitled to his commission, unless the agreement between the seller and broker calls for an actual sale of the property.

In Sarna v. Fairweather, 248 Ark. 742, 453 S.W. 2d 715 (1970), the Supreme Court again re-emphasized that a broker earns his commission by producing a buyer ready, willing and able to take the property on the seller’s terms, even if the contract were unenforceable, unless the agreement between the seller and agent required that the sale be actually consummated.

Appellant’s letter of August 4, 1976, to Mr. Huntsman, which puts Huntsman on notice that appellant expected a commission for its services provides:

Should a sale be made by you to Mr. Weniger, we feel you should not enter into direct negotiation without our being involved. In any event, and should you sell the property to Mr. Weniger, this is to advise you that we will consider ourselves entitled to a commission of 6% of the total sales price.

Andy Agar, a representative of appellant, testified that the agreement was that his company would be entitled to a commission if a deal were made with Mr. Weniger.

Mrs. Patsy Akers and George Sisco, who were called as witnesses by appellant, testified that they had heard a conversation between Agar and Huntsman to the effect that appellant would receive a commission if a sale were made with Weniger. On the other hand, Huntsman denies that he agreed to pay a commission to appellant under any circumstances. The trial court, however, concluded that Huntsman did agree to pay a commission only if the property were sold to Weniger.

Appellant argues that Weniger never had an opportunity to consummate the sale inasmuch as Huntsman declared the agreement terminated by virtue of deeding the property to Graceland College. In other words, the failure on the part of Weniger to make a sale was due to the fault of Huntsman. Moreover, appellant argues that Huntsman may not shield himself or take refuge in the circumstances surrounding the failure of Weniger to obtain financing for the purchase of the property through First Federal Savings & Loan Association of Pine Bluff, Arkansas, inasmuch as it was never the obligation or responsiblity of Weniger to obtain a loan from any source; that Weniger had no obligation to arrange financing until expiration of Huntsman’s right to terminate the agreement by paying off the third mortgage; that the “sole and only reason for the transaction not closing was the precipitous conduct of Huntsman.”

On the other hand, Huntsman argues that the special condition contained in the offer and acceptance with reference to Weniger’s closing a satisfactory mortgage loan from First Federal Savings & Loan Association of Pine Bluff, Arkansas, was not a condition tied to financing in general, but to a mortgage loan from a specific lending institution and this becomes most relevant and material to Huntsman when reference is made to paragraph 1 of the first rider which specifies that “ On or before December 31, 1976, if title had been acquired by buyer to Riviera Apartments, the seller shall have the option upon 15 days notice to repurchase said property by assuming any new mortgage financing arranged by the buyer.” By virtue of the rider, argues Huntsman, he had a vested right to assume the loan from First Federal Savings & Loan Association of Pine Bluff which Weniger intended to place on the apartments; and that this was vital to him because he was negotiating with Weniger for refinance money for the apartments.

It is clear from the record that prior to and during Huntsman’s negotiation with Weniger, Huntsman was having financial problems and was faced with the maturity of a note due Realty Fund and which was secured by a third mortgage on the apartments.

Weniger could not acquire the financing from First Federal Savings & Loan Associatin of Pine Bluff since First Federal refused to permit Huntsman to assume the loan.

Given these circumstances, we are persuaded that Weniger’s offer was a conditional one and, indeed, it seems clear until this condition was met, Huntsman had no duty to sell, nor Weniger a duty to purchase.

While the trial judge indulged, to a degree, in some mental exercise as to whether the condition relating to financing from First Federal could be waived by Weniger, the judge did not predicate his decision, in any way, on waiver, but concluded:

... I do not believe that the mere filing of the Specific Performance suit, and its allegation of'ready, willing and able’ to perform is, standing alone, sufficient to consitute either a waiver or establish financial ability to perfect the purchase. Further, I cannot conclude that the mere fact that Mr. Weniger ‘owns’ other properties in the Little Rock area is sufficient to establish his financial ability.

In other words, the evidence was insufficient to find a waiver of the condition, or that Weniger was financially able to consummate the sale in absence of the funds to be derived from the loan.

We are also persuaded that the contract between Weniger and Huntsman constituted the offer and acceptance, the first and second riders. As a matter of fact, both Huntsman and Weniger testified that the three documents represented the agreement between them and that the second rider (addendum) was executed to simply clarify the terms of the transaction as contained in the offer and acceptance and the first rider.

Under paragraph 3 of the second rider. Huntsman had the right to pay off the mortgage held by Realty Fund and to pay Weniger $45,000.00 plus all cost and expenses incurred; and Weniger agreed to void the offer and acceptance agreement and to release the seller from all obligations. In selling the property to Graceland College, Huntsman exercised this option.

After carefully considering the record, we are unable to say that the trial court’s holding is not supported by a preponderance of the evidence.

Affirmed.

Hays, J., dissents.

M. Steele Hays, Judge.

I earnestly disagree with the affirmance of this case. True, there was no written listing agreement between the owner and the broker, but a careful reading of the record convinces me that the owner (having indicated his willingness to the broker to sell “if the price is right”) permitted the broker to bring him into contact with a prospective buyer and rather promptly thereafter entered into a written offer and acceptance agreement with the buyer which included a provision plainly recognizing the broker’s right to a commission. Under the holding in numerous decisions of the Supreme Court of this state, a broker has earned his commission when the seller accepts the buyer’s offer. Moore v. Irwin, 89 Ark. 289 (1909); Wales-Riggs Plantations v. Pumphrey, 141 Ark. 565 (1920). The seller argues that this case is distinguishable from those decisions holding that the commission is earned when the broker produces a buyer ready, willing and able for the reason that here the terms of the verbal listing carried the special provision that a sale be actually consummated. This argument might be persuasive but for the fact that it was the seller, rather than the buyer, who aborted the closing. Emerson v. Stout Farm Agency, 161 Ark. 378 (1924); Chambers v. Ester, 159 Ark. 250 (1923).

I would reverse.

       Rector, Inc. managed the apartments for Mr. Huntsman under a five year contract.

      Rider 2 (addendum) was executed by Huntsman and Weniger purportedly on September 24, 1976, after Huntsman had consulted his attorney with reference to the offer and acceptance agreement and Rider 1. Huntsman was told by his attorney that “there were some things left out.” Weniger was consulted and Rider 2 was executed.


author: David Newbern, Judge.

text:
    RAWHIDE FARMS, INC., Harlan THORNTON, Jr., and Phil CAPUTO v. W. E. DARBY (R. A. LILE and Louis ROSEN, Co-executors of the Estate of William E. DARBY)
    CA 79-145
    589 S.W. 2d 210
    Opinion delivered November 14, 1979
    Released for publication November 26, 1979

      Jack D. Files, for appellants.

      Eichenbaum, Scott, Miller, Crockett, Darr & Hawk, P.A., for appellees.
   David Newbern, Judge.

This suit is for judgment on two promissory notes and foreclosure of a mortgage which secured the indebtedness evidenced by the notes. The chancellor found the appellants, who were the makers of the notes, were in default, and a foreclosure sale was ordered. The appellants appealed to the Arkansas Supreme Court, alleging the chancellor erred in failing to grant a continuance, in finding the appellants in default, and in allowing an inequitable acceleration pursuant to an acceleration clause in the mortgage. The case was assigned to the Court of Appeals according to Rule 29(3). We reverse on the last of these points. Although not necessary to our decision, we consider the other points raised by the appellants worthy of discussion.

The appellants entered an agreement with Mr. Darby to purchase his farm. They gave him two promissory notes dated November 1, 1977; one in the amount of $532,500 and one for $167,500. The first payment on the larger note to become due October 31, 1978. Only interest was to be paid the first three years on that obligation. The smaller note, however, was to become due and payable in its entirety April 1, 1978.

The farm was conveyed to Rawhide Farms, Inc., which in turn mortgaged it back to Mr. Darby to secure payment of the two notes. The mortgage was signed by appellant Caputo as president of Rawhide Farms, Inc. The smaller note was signed by both appellants, individually. The larger note was signed by Caputo as president of Rawhide Farms, Inc., and by both Caputo and Thornton, individually. The chancellor found, and there was no serious dispute, the mortgage was given to secure both of the notes. The mortgage contained the following clause:

If said indebtedness or any part thereof, principal or interest, shall not be promptly paid when due according to the tenor of said notes and of this mortgage . . . the whole indebtedness hereby secured, whether then due or not, shall immediately become due and payable for all purposes ... at the option of the grantee . . . and this mortgage and security may be foreclosed by judicial proceedings . . .

The appellants paid a portion of the smaller note, but it is undisputed that it had not all been paid as of its due date, April 1, 1978. The chancellor found $67,648.42 outstanding on that note. Extensions were granted by Mr. Darby and by his agents, and the appellants made occasional small payments, one as late as July 20, 1978.

The foreclosure complaint was filed September 5,1978. The appellants secured the services of an attorney, Guy Jones, Jr. The trial was set for January 3,1979, after the case had been continued twice. On January. 2, 1979, Mr. Jones informed the appellants it was necessary for him to be in Fort Smith at another hearing on January 3, and he could not appear with them in Perry ville at the trial of this case. The appellants dismissed Mr. Jones as their counsel and hired Mr. Jack Files who appeared with them January 3. Mr. Files moved for a continuance to allow him to prepare for the hearing and because of surprise that Mr. Darby, who was then still living, was not at the trial. A continuance until January 5, 1979, was granted. On January 5, Mr. Files again moved for continuance, and after considerable discussion among counsel for both sides and the chancellor, the motion was denied.

I.

The first point raised for reversal is the chancellor’s refusal to grant another continuance. The rule in Arkansas is that a motion to continue is addressed to the discretion of the trial judge, and his or her decision will not be overturned unless that discretion is manifestly abused. McMorella v. Greer, 211 Ark. 417, 200 S.W. 2d 974 (1947), and Watts v. Cohn, 40 Ark. 114 (1882). The appellants cite no Arkansas case dealing specifically with withdrawal or discharge of counsel. They cite a very distinguishable Texas decision, Leija v. Concha, 39 S.W. 2d 948 (Tex. Civ. App. 1931), in which counsel were forced to go to trial 30 minutes after being hired, and a Nevada case, Benson v. Benson, 66 Nev. 94, 204 P. 2d 316 (1949), in which the court said that the withdrawal on the eve of the trial of a party’s attorney is not ipso facto a ground for continuance.

In this case, it is clear that one continuance was given the appellants after Mr. Files entered the case. Mr. Files argued he was, between January 2, and January 5, involved in another important case to which he had to devote his time, but the chancellor emphasized that Mr. Files had taken this case knowing the constraints on his time. The chancellor also made clear his conclusion that Mr. Files had presented the case thoroughly and thus no prejudice had resulted to the appellants from the refusal to grant the continuance.

Although it was certainly not the fault of the appellants that they had to go to trial with a lawyer who was not very familiar with their case, the record shows the chancellor made every effort to see they had ample opportunity to present everything that could possibly have supported their defense. We cannot say the chancellor abused his discretion.

II.

The second point raised by the appellants is that the larger note was not due at the time the suit was filed and thus that obligation should not have been considered accelerated. The appellants do not contend the note did not represent an indebtedness secured by the mortgage. For the proposition the larger note should not have been accelerated, the appellants cite Vandergriff v. Vandergriff, 211 Ark. 848, 202 S.W. 2d 967 (1947). That case is not in point as there the only default was failure to pay interest on a note, and the mortgage did not provide for acceleration for failure to pay interest. The appellant’s only other citation in support of this point is Massey v. Tyra, 217 Ark. 970, 234 S.W. 2d 957 (1950), which we do not find at all helpful.

The notes were subject to acceleration as they must be read together with the mortgage. McCormick v. Daggett, 162 Ark. 16, 257 S.W. 2d 358 (1924), and Markel v. Fallin, 161 Ark. 504, 256 S.W. 841 (1923). The chancellor did not err in his determination the larger note was accelerated in accordance with the mortgage clause.

III.

The third point of the appellants is that the finding the larger note was in default was against the preponderance of the evidence. Neither the appellants nor the appellees cite any authority with respect to this point, and thus we need not give consideration to it unless the argument presented by the appellant is otherwise convincing or it is apparent the point is well taken. Hazen v. City of Booneville, 260 Ark. 871, 545 S.W. 2d 614 (1977); Dixon v. State, 260 Ark. 857, 545 S.W. 2d 606 (1977). We need only say the acceleration clause contained in the note becomes irrelevant when read in conjunction with the mortgage, and the fact that the mortgage was signed by the appellants only as representatives of Rawhide Farms, Inc., is also unimportant. To find the appellants should not be held responsible for the terms of the mortgage would require us to say the indebtedness represented by the notes was not that which was secured by the mortgage. The appellants do not, and apparently could not, seriously make that argument.

IV.

The appellants’ fourth point for reversal is that Mr. Darby waived the right to accelerate by accepting late, partial payments. Because they cite Seay v. Davis, 246 Ark. 201, 438 S.W. 2d 479 (1969), we may assume an assertion the acceleration was not made in good faith.

The appellants’ testimony indicated they felt they had an arrangement with Mr. Darby pursuant to which he would go as far as possible to help them buy the farm and be lenient in demanding, or not demanding, strict compliance with the terms of their agreement. Mr. Darby’s actions in accepting late, partial payments on the overdue note gives credence to their argument. But Mr. Darby’s deposition makes it clear he did not intend to be forgiving beyond a point.

Seay v. Davis, supra, was an interpretation of Ark. Stat. Ann., § 85-1-208 (Add. 1961), which provides:

A term providing that one party or his successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or “when he deems himself insecure” or in words of similar import shall be construed to mean that he shall have power to do so only if he in good faith believes that the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against whom the power has been exercised.

Although that section seems designed to apply only to “acceleration at will” clauses, it was applied in the Seay Case where the mortgage clause was described by the Arkansas Supreme Court as providing for acceleration in the event of default at the option of the holder. The Supreme Court held it was not error for the chancellor to have found bad faith where the holders invoked an acceleration clause because of a late payment. The mortgagors tendered payment 48 hours late, and the mortgagees sought foreclosure. The chancellor found the mortgagees were trying to take advantage of the mortgagors and obtain their down payment — not in good faith.

The important distinguishing factor here is that, unlike the mortgagors in the Seay Case, there is no record that the appellants in the case before us have tendered the amount due. Rather than bad faith, Mr. Darby apparently did try to work with the appellants by extending and taking partial payments on the overdue amount.

This brings us to the question whether the acceptance of these payments was a waiver of the right to accelerate. The law on this question has developed out of cases involving mortgages securing notes to be paid in installments. The most recent expression of the Arkansas Supreme Court on the matter is Philmon, et ux. v. Mid-State Homes, Inc., 245 Ark. 680, 434 S.W. 2d 84 (1968), in which Chief Justice Harris cited with approval language to the effect that, although acceptance of a late payment precludes acceleration because of the lateness of that payment, it is not a waiver of the right to accelerate when default occurs on a subsequent installment. The principle involves there is not applicable here if we confine ourselves to looking at the note which was due, according to its own terms without reference to the mortgage, at the date of the acceleration, as no installments were involved, the note having become due in a lump sum April 18, 1978.

However, in urging us to apply the acceleration clause found in the mortgage, the appellees ask us to view all three instruments together and declare the entire indebtedness due because of the default on the smaller note. When we do that, it becomes clear that the smaller note was designed to be a “down payment” or first installment. We hold that acceptance of the late, partial payments of the smaller note waived the right to foreclose until a subsequent default.

The first interest payment on the larger note became due October 31, 1978 and the second one became due October 31, 1979. This suit was filed on September 5, 1978, and we assume the appellants have, with some justification, not tendered these payments. Thus, the amount due at the time this suit was filed and adjudicated below has grown substantially.

Under these circumstances, where the appellants are at fault for not paying and the appellees for giving them some reason to believe acceleration would not occur, we hold the appellants should, upon remand, be given a reasonable time to make the overdue payments. If the entire amount owed by the appellants to Mr. Darby’s estate, that is, the entire amount of the smaller note plus interest and the payments due on the larger note in accordance with its terms plus interest, is not paid at the date to be prescribed by the chancellor, the foreclosure may proceed. This was the approach taken by the Arkansas Supreme Court in Crone v. Johnson, 240 Ark. 1029, 403 S.W. 2d 738 (1966), albeit far lesser sums were involved, and we think it fair. We note that, although we have said the chancellor will give the appellants a reasonable time to make their payments current, in no event will the appellees be precluded from acceleration and foreclosure on October 31, 1980, if the amount due then, including the payment which falls due on that date, has not been paid.

V.

The final point of the appellants has to do with computation of the judgment. The appellees respond with their own recalculation. In view of the result we reach, we deem it unnecessary to address the errors alleged in the manner of reaching the judgment, as the figures will undoubtedly be different in the event of a subsequent acceleration, judgment and foreclosure.

Reversed and remanded.


author: PER CURIAM

text:
    Lary FAUGHT v. Charles L. DANIELS, Director of Labor, State of Arkansas
    CA 79-203
    590 S.W. 2d 79
    November 14, 1979
    Released for publication December 5, 1979
    Appellant, pro se.

      Herrn Northcutt, for appellee.
   PER CURIAM

An agency determination held claimant ineligible for unemployment benefits under the provisions of Section 4(c) of the Arkansas Employment Security Law. The appeal tribunal affirmed the determination. On appeal to the Board of Review the appeal tribunal’s decision was affirmed. Claimant appeals to this court.

Claimant is employed 180 .days a year by the U.S. Forestry Service. He claims other forestry service 180-day employees have no trouble drawing unemployment compensation and thus he is the victim of discrimination. We can only evaluate employment security claims on an ad hoc basis. Our job is to determine whether the claimant has been denied compensation according to the law. We certainly would not approve any discriminatory practice, but we can review only the claims that come before us.

The claimant has worked 180 days a year for the past five years. The last 180 days worked were between October 2, 1978 and June 21, 1979. One of the pecularities of his job with the U.S. Forestry Service is the fact he is allowed only 180 work days per year. Because of the job location the claimant lives in a remote rural area of Deer, Arkansas. Deer is approximately forty miles from Harrison, Clarksville, and Russellville. He walks from his home to his Forestry Service job. His testimony indicates he wants very much to retain his 180 day job and work toward getting on Civil Service. His home is within 12 miles of his wife’s place of employment at the present time. Claimant testifies he would move if he went to work at Harrison, Russellville or Clarksville. But he is conditional about whether he would accept work forty miles away. “I’m not placing any restrictions. If they will refer me to a job, I’ll go or if I find one, I’ll go talk to them about it. I can’t say whether I’d take it until I do talk to the employer. I might not even be qualified. I’ve got to at least know what I’m getting into, know what I’ve got.”

Referee: But you say you’re available for job out there if you could . . .
Claimant: Yeah, in the area. I was reading a book here. If I can find the page, I’ve looked all the way through. I didn’t know what I was going to get into really. Says, available for work and being ready to accept work at once and make a reasonable effort to find work. To me I think I’ve made a reasonable effort to find work. Actually there’s not that much work, if any. If there are I haven’t been able to find any. It says, all states require that a claimant be willing to accept suitable work in the locality in which residing. Well I don’t know how far out this locality is gonna run and ah it said, also said, you can’t move out of a locality which has work for you and draw unemployment. I’ve certainly not moved out of it, I’ve lived there all my life.
Referee: Staying there aren’t you.
Claimant: Yeah.

We can certainly understand the dilemma in which the claimant finds himself. He wants and expects to return to his Forestry Service job each year in October. He would accept a full time permanent job if he could find one in his neighborhood provided it paid something near the rate of pay he has been receiving for his service with the U.S. Forestry Service. In the remote rural area where he resides this is virtually impossible as there are practically no jobs available.

The appeal tribunal found the claimant is not making a reasonable effort to find employment other, than of a very temporary nature as he plans to return each October to his Forestry Service job. It also found the claimant was not doing those things a reasonable prudent individual would be expected to do to secure work under the meaning of Section 4(c) of the Arkansas Employment Security Law. The Board of Review adopted the findings of the appeal tribunal.

We affirm.


author: Ernie E. Wright, Chief Judge.

text:
    Gary Dean STEVENS v. Lawrence SMALLMAN
    CA 79-151
    590 S.W. 2d 674
    Opinion delivered November 28, 1979
    Released for publication December 19, 1979

      Hamilton, O’Hara & Hays, P.A., by: James F. O’Hara, for appellant.

      Warren E. Dupwe, for appellee.
   Ernie E. Wright, Chief Judge.

The Appellant, Gary Dean Stevens, appeals from a judgment of the Craighead County Circuit Court awarding appellee $7500.00 for damages arising out of an injury sustained when the pick-up in which he was a passenger was struck by a vehicle driven by appellant. The judgment was pursuant to ajury verdict. The case has been assigned to the Court of Appeals pursuant to Rule 29 (3).

The appellant admitted the collision resulted from negligence on his part; but on appeal contends the court erred in allowing opinion testimony of a chiropractor as to permanent disability of appellee, and that the verdict was excessive.

The evidence shows that when the vehicle in which the appellee was riding as a passenger on May 27, 1977 was struck in the rear by a vehicle driven by appellant, the rear of the vehicle in which appellee was riding was substantially damaged; the appellee’s head went back and hit the rear window glass; he experienced headaches and that night his wife took him to the hospital emergency room, X-rays were made and he was given pain and muscle relaxer medications. He continued to work thereafter, but experienced progressive stiffness in his neck. He went to a medical doctor and more muscle relaxers were prescribed; he had the prescriptions refilled a few times and later went to a chiropractor, Dr. Hailey, in December of 1977 because the pain did not leave but seemed to increase. The pain was in his neck and between the shoulder blades. He did not have these problems before the accident, but continues to experience annoying pain in performing his work. He received some 33 or 34 treatments by Dr. Hailey that were helpful.

The evidence shows Dr. Hailey is a graduate of a chiropractic school, is licensed to practice his profession in Arkansas and some four other states, has practiced approximately twenty years and sees as many as fifty and more patients a day.

The doctor had occasion to examine the appellee, take a history of his complaints and treat him over a period of several months. He determined that he had and continues to have muscle spasms in the cervical area, some misalignment in the vertebral column, some limitation of motion in the cervical area and that he continues to complain of pain. He expressed the opinion that since the muscle spasms and pain had not cleared up in this substantial length of time the appellee, now age forty-one years, will probably have the pain when he is sixty-five, and that he has from five to seven per cent permanent disability to the body as a whole. The doctor testified appellee’s physical problems were compatible with injuries sustained in rear end motor vehicle collisions such as described by the appellee.

We conclude the trial court did not abuse its discretion in permitting Dr. Hailey, a chiropractor, to express his opinion on the permanent disability of the appellee. The question of the competency of a witness to express an opinion is largely within the discretion of the trial court. Ratton v. Busby, 230 Ark. 667, 326 S.W. 2d 889 (1959), announced this rule and cites a number of cases. The case also points out that it is for the jury to determine the weight to be given to the particular expert testimony.

In Badke, et al v. Barnett, et al, 316 N.Y.S. 2d 177, 35 A.D. 2d 347 (1970), it was held a chiropractor was competent to testify as to permanent disability sustained by a passenger in an automobile when struck from the rear by another vehicle. The court said: “Chiropractors are extensively trained within the scope of the practice of chiropractic. By virtue of their training and skill, licensed chiropractors are qualified to treat patients suffering from chiropractic ailment. A chiropractor should, therefore, be deemed competent to testify as an expert and express his opinion as to the nature of a chiropractic ailment and the probable cause and duration. The extent or degree of the witness’ qualifications affects the weight of the testimony, not the admissibility’ ’. In Corbin v. Hittle, 34 Mich. App. 631, 192 N.W. 2d 38 (1971), the court held it was not error to permit a chiropractor to testify that plaintiffs injury was permanent, that he would never be free from pain and that he would have problems with his neck the rest of his life. The court stated: “The general rule is that a chiropractor is qualified to testify in a personal injury accident concerning matters within the scope of the profession or practice ... In addition a chiropractor has been held competent to testify as to the permanency of an injury”. The cases of Daniels v. Bernard, 270 S.C. 51, 240 S.W. 2d 518 (1978), and Olivas v. Industrial Commission, 16 Ariz. App. 543, 494 P. 2d 743 (1972), also support this rule.

Black’s Law Dictionary, Fifth Edition, defines chiropractic as a method of detecting and correcting by manual or mechanical means structural imbalance, distortion of subluxations in the human body to remove nerve interferences where such is the result of or related to distortion, misalignment or subluxations of or in the vertebral column.

The evidence indicates appellee suffered and continues to suffer a great deal of pain arising from the injury sustained in the accident. While he has been able to perform his regular work and his direct medical bills have been less than $500.00, we do not find that the jury verdict of $7500.00 is so grossly excessive as to shock the conscience of the court or demonstrate the jurors were motivated by passion or prejudice. Moses v. Kirtley, 256 Ark. 721, 510 S.W. 2d 281 (1974). We therefore find no basis for reversal or ordering a remittitur.

Affirmed.


author: M. Steele Hays, Judge.

text:
    Winset STEWART v. KEY COMPANY, INC.
    CA 79-152
    590 S.W. 2d 872
    Opinion delivered November 28, 1979
    Released for publication December 19, 1979

      Mike J. Etoch, Jr., for appellant.

      Coleman, Gantt, Ramsay & Cox, by: Martin G. Gilbert, for appellee.
   M. Steele Hays, Judge.

This appeal was lodged in the Supreme Court of Arkansas and transferred to the Court of Appeals pursuant to Rule 29(3).

Appellant owns and operates a service station and fish market in conjunction with his home near Clarendon. He filed this suit to recover damages for the cost of repairing a gasoline pump and buildings housing the fish market which allegedly resulted from the negligent operation of a truck belonging to the defendant (appellee) and driven by defendant’s employee, Mr. McKenzie.

The case was tried to a jury and resulted in a verdict for the defendant, from which appellant appeals, assigning as error the trial court’s refusal to instruct the jüry in accord: anee with Ark. Stat. Ann. § 75-614(a), which reads:

The driver of a motor vehicle shall not follow another vehicle more closely than is reasonable and prudent,- having due regard for the speed of such vehicles and the traffic upon and the condition of the highway.

Appellant argues on appeal that his “entire case was based on the proposition that the Defendant (driver) was following the car in front too closely, at a high rate of speed. . . .” and, therefore, the court should have given the requested instruction. We have searched the record in vain for some viable basis on which to confirm this assertion by appellant. The fact is, as appellee correctly argues, appellant’s case was based upon the proposition that the defendant’s driver was driving too fast and struck a parked car, which then struck the gas pump and buildings, rather than upon a theory of following too closely.

Appellant’s case rested on the testimony of two eye witnesses to the incident — himself and his daughter, Mrs. Coburn. Mrs. Coburn testified that she saw the defendant’s truck from her kitchen window as it approached, travelling at a very high rate of speed (70 to 80 mph) and on the wrong side of the road; that she could hear the horn, skidding and brakes being applied; that the truck was out of control and collided with an unoccupied automobile that had been parked for some time near the gas pump; that the impact caused the automobile to collide with the gas pump and buildings, resulting in the damage complained of.

Appellant’s testimony was consistent with that of Mrs. Coburn with one exception — he did observe another vehicle, an automobile, going in the same direction as the truck; however, this vehicle, he says, did not stop but continued on its way (Tr. 113). Appellant’s brief suggests that it was this moving vehicle which did not stop that appellant was referring to in part of his testimony, rather than the parked vehicle, but a study of the appellant’s testimony in its entirety (very little of which is abstracted) simply will not support this contention. On at least three separate instances in his testimony the appellant states that it was the parked vehicle that was struck and then collided with the gas pump and buildings (Tr. 67, 110 and 157). Unquestionably the testimony of appellant and Mrs. Coburn agree on this point.

In contrast, the defendant’s driver, Mr. McKenzie, testified that he was proceeding at a speed of 40 to 45 mph, that he observed an automobile ahead approximately 100 yards distant, at a slightly slower speed; that he moved over into the passing lane when about 30 yards away and as he was proceeding to overtake the vehicle it suddenly turned sharply to the left and he was unable to avoid striking the left rear of the vehicle. Mr. McKenzie testified positively that it was this moving automobile that struck appellant’s structures and not the parked vehicle; moreover, the names and addresses of the occupants of this vehicle were supplied the appellant’s lawyer in response to interrogatories prior to trial. Whether Mr. McKenzie was otherwise negligent is not material to any issue on appeal, but one thing is clear — he could not have been found to be in violation of 75-614 on the basis of his own account of the collision, as appellant contends. If it were otherwise, it would be impossible to pass on the highways without risking a violation of this statute. Indeed, when the statute is examined in its entirely it becomes evident that the conduct of the defendant’s driver was perfectly permissible under the statute, as the final sentence reads: “The provisions of this subdivision shall not be construed to prevent overtaking and passing. ...”

Thus, a somewhat unusual conflict is presented — appellant contends that the parked vehicle was struck by the appellee’s truck and caused appellant’s damage; whereas, appellee contends it was the moving vehicle which was struck. Why this divergence occurred is not clear, but it is clear that the jury’s verdict rendered the issue moot, and whatever may have been the jury’s conclusion on the matter, its verdict discharged the defendant of negligence in connection with appellant’s damage. We mention this simply by way of observing that it appears clearly from the record that the trial court fully instructed the jury in a manner consistent with the appellant’s theory of the case and for it to have given the instruction now complained of would, we believe, have gone far beyond any theory supported by either the pleadings or the evidence. The record does not disclose whether the trial court’s refusal to give the instruction was because the issue of following too closely was not raised in the pleadings or because it was not supported by the evidence, or both; but we find that the decisions of this state would support him on either point. In Dominion Textile Company, Ltd. v. Beck, 188 Ark. 1090, it is said that in order to be submitted to the jury an issue must be raised in the pleadings. Further, the court was more than justified in refusing to so instruct from the standpoint of a total absence of evidence raising an issue of following too closely, as the law requires not merely evidence, but substantial evidence, in order to create a submissible issue for the jury’s deliberation. Some of the numerous cases in support of this point are: Hill v. Whitney, 213 Ark. 368, Kansas City & Southern Ry. Co. v. Diggs, 205 Ark. 150, St. Louis S.F. Ry. Co. v. Lane, 156 Ark. 465, Harkrider v. Cox, 230 Ark. 155, and State Bank v. McGuire, 14 Ark. 530.

The judgment of the trial court is affirmed.


text:
    Betty Sue Budd DILLAHA et al v. Henry Gresham TEMPLE, Jr. and Mollie Jo TEMPLE
    CA 79-153
    590 S.W. 2d 331
    Opinion delivered November 28, 1979
    Released for publication December 19, 1979

      Autrey, Weisenberger, Lingo, & Johnson, for appellants.

      Smith, Stroud, McClerkin, Dunn & Nutter, for appellees.
   M. Steele Hays, Judge.

This case involves conflicting claims of certain real property along the Red River in Little River County, Arkansas. The dispute is between Mr. and Mrs. Temple, the appellees, and the successors in interest of Mr. Kelly Budd, the appellants.

Kelly Budd bought his farm along the Red River in 1951. The property was west of the river which ran along a high bank fence but subsequently the river moved to the east, creating accretions to the property of both Kelly Budd and the Temples. The Temples did not reside on their property but had leased their farmland during this time (from the early 1950’s through 1977).

The property in dispute was controlled exclusively by the Budd family. Many of their farming activities were carried out on the property in dispute, i.e., building roads, erecting fences, and running cattle on the property.

Mr. Budd died in 1970, but the property continued to be exclusively controlled by his heirs. On January 30, 1978, the Budd family filed a complaint in equity to quiet title to the disputed area in their name. The trial court found that although the disputed property was in the exclusive control of the Budd family and had been since the early 1950’s, the appellant’s claim of ownership by adverse possession was without merit because Mr. Budd had acknowledged the Temple’s interest in the property and therefore lacked the required element of hostility for a valid claim of adverse possession. The appellants bring this appeal from the judgment.

The appellants allege three points for reversal, but, for purposes of this opinion, they may be combined into a single question. The central issue raised by this appeal is whether the appellants have acquired title to the disputed property through adverse possession. We concur in the trial court’s decision on the issue and therefore hold that title did not vest in the appellants.

It is well settled that in order to acquire title by adverse possession, the possession must be hostile and adverse. Utley v. Ruff, 255 Ark. 824, 502 S.W. 2d 629 (1973); Arkansas Commemorative Commission v. Little Rock, 227 Ark. 1085, 303 S.W. 2d 569 (1957). If the possession is in subordination to the rights of the true owner, whenever asserted, then the statute of limitations will not begin to run. Bayles v. Dougherty, 77 Ark. 201, 91 S.W. 304 (1905).

3 Am. Jur. 2d Adverse Possession § 32 (1962) states:

While occupancy of the premises, the payment of taxes, and the making of improvements are circumstances favorable to the claim of adverse possession, they do not in and of themselves establish title by adverse possession; in addition there must be a hostile title or claim. Thus title is not to be overcome by evidence of entry and occupation alone, but the hostile intent must be clearly demonstrated.

In a claim of adverse possession, the intention is the controlling factor. Arkansas Commemorative Commission, supra. The intention to hold must be clear, distinct and unequivocal.

In the instant case, there was testimony at trial which indicated that Mr. Kelly Budd had once told his son that he recognized some interest of the Temples in the disputed property. This occurred one afternoon when Kelly Budd and his son were walking along the high bank fence and Mr. Budd told his son that the Temples had some interest in the land above the area where they were standing, pointing in a southeasterly direction.

In Sloan v. Ayres, 209 Ark. 119, 189 S.W. 2d 653 (1945), a case with a similar fact situation, the plaintiff brought an ejectment action to determine ownership of approximately five acres of land which accreted to the west bank of the Little River. The defendant was an adjoining riparian landowner who had been in exclusive possession of the land. However, the plaintiff attacked his claim of adverse possession by offering evidence of a letter to him from the defendant which stated he would be glad to cooperate with the plaintiff as to boundary lines, roads, etc. This letter was written in response to a request by the plaintiff to leave open a road which the defendant was about to close. The jury returned a verdict for the defendant and plaintiff appealed. The Arkansas Supreme Court upheld the jury verdict, stating that the letter was not a conclusive admission. Such evidence is admissible on the question of whether claimant’s possession was in fact hostile, but it is for the jury to consider along with all the other facts and circumstances. [See also Shirey v. Whitlow, 80 Ark. 444, 97 S.W. 444 (1906).]

Similarly, in Sanders v. Baker, 217 Ark. 521, 231 S.W. 2d 106 (1950), plaintiff brought an action to quiet title to a strip of land and to cancel a deed to the land in possession of the defendants. Plaintiff asserted ownership of the property in question by adverse possession. He had title to four lots which he had purchased. The disputed property concerns two other adjoining lots. The chancellor dismissed the complaint, stating that although he had told friends that he owned all the land, other testimony revealed that he had made an effort to purchase the disputed property from the defendant. On appeal, plaintiff contended that title by adverse possession had already vested when these negotiations took place. Hence, title could not be divested out of the plaintiff by admission of a better title. Stroud v. Snow, 186 Ark. 550, 54 S.W. 2d 693 (1932).

The Arkansas Supreme Court rejected this argument, stating that although such testimony is inadmissible for the purpose of divesting title out of the adverse occupant, it is admissible for the purpose of showing that possession was not adverse. Hence, the court held that in light of this testimony, the chancellor’s findings were not against the preponderance of the evidence.

In the case before us, the testimony of Joe Kelley Budd indicated that both he and his father had recognized the Temples’ interest in the disputed property. It is clear from the cases cited above that mere possession is not enough to sustain a claim of adverse possession. Possession will not ordinarily be presumed to be adverse, but rather subservient to the true owner. Hence, there is every presumption that such possession is in subordination to the legal title. 3 Am. Jur. IdAdverse Possession § 34(1962). The intention to hold adversely must be clear, distinct and unequivocal. We believe the chancellor could reasonably find that this testimony was an indication that Mr. Budd lacked the hostile intent.

Although there was testimony that one of Mr. Budd’s employees had once “run-off’ some surveyors sent by Mr. Temple; Mr. Temple also testified that, subsquently, in telephone conversation between Mr. Budd and him, Mr. Budd had reaffirmed that they would work out their boundary line. This evidence again indicates a lack of hostile intent.

One other point should be mentioned. It is claimed by the appellants that if not the entire tract of the disputed property is determined to have been adversely possessed, then all of the property south of their north accretion line should be held to have been in adverse possession by the appellants. However, we find no substantial evidence on which to base this claim of adverse possession for a portion of the disputed property. We believe the chancellor’s division of the land was reasonable under the facts and the applicable law of - accretions. Moreover, Kelly Budd’s statements, both to his son and to Mr. Temple, indicated that he recognized the Temples’ interest in the property. Hence, the chancellor’s decision to divide the property according to its true boundary lines was not against a preponderance of the evidence.

Therefore, we affirm the decision of the lower court.


text:
    Roger KING v. FARMERS LIQUID FERTILIZER & RANGER INSURANCE COMPANY
    CA 79-46
    590 S.W. 2d 327
    Opinion delivered November 28, 1979
    Released for publication December 19, 1979

      Phillip H. McMath, for appellant.

      Laser, Sharp, Haley, Young & Huckabay, for appellees.
   Marian F. Penix, Judge.

On May 12, 1973, claimant was injured on the job when a cable broke and caused him to fall 20 feet. The administrative law judge awarded claimant permanent and total disability. The Workers’ Compensation Commission reversed the award'and reduced it to a rating of 60% permanent partial to the body as a whole. Claimant appeals the Commission determination.

The claimant contends the Commission had no substantial evidence to justify its modification of the administrative law judge’s award.

After the first hearing the deposition of Dr. Charles McKenzie and reports, from Dr. Thomas Fletcher and the Veterans Administration were made a part of the record before the full commission. These medical reports as to the claimant’s condition are in conflict. Dr. Fletcher reported the claimant sustained a lower spinal injury which was a cauda equina compression injury of the lower cord and nerve root in association with a lumbar disc injury. Dr. Fletcher indicated the claimant has a residual pain problem and is disabled as far as performing work activity. As to claimant’s anatomical disability Dr. Fletcher gave him permanent partial disability of 45% to the body as a whole. The VA report relates claimant has full function of his lower extremeties and is able to return to work. The respondents referred claimant to Dr. Charles McKenzie, an orthopedist. Dr. McKenzie reported he could find no objective evidence to support Dr. Fletcher’s diagnosis of a cauda equina compression injury. The Commission concluded both Dr. Fletcher and Dr. McKenzie are qualified and one’s opinion was no more convincing than the other. The Commission also concluded the doubt should be resolved in claimant’s favor and in favor of the diagnosis of the treating physician, Dr. Fletcher. It is the opinion of the Commission when the economic factors are considered along with the physical impairment the claimant has sustained a 60% permanent partial disability to the body as a whole resulting from the injury.

After reviewing all the evidence the Commission determined the claimant is able to regularly and systematically engage in a variety of physical activities including fishing, hunting and housework. It also determined the claimant’s income is now in excess of what he was making when employed by the respondents and that his income is now tax free. It concluded claimant lacked financial motivation to return to the labor market. The claimant introduced a written report from a rehabilitation counselor which stated that based upon a telephone conversation with the claimant, the claimant would not be a candidate for vocational training. From this evidence the Commission concluded the claimant has voluntarily chosen not to return to the job market.

All this court is required to do is to determine if there was substantial evidence to support the Commission’s finding. From the record we find there was substantial evidence the claimant is not 100% disabled from earning any wages in the same or any other employment within the meaning of the Workers’ Compensation Act, Ark. Stat. Ann. § 81-1302 (e).

It has repeatedly been held the decision of the Workers’ Compensation Commission on fact questions carries the same force and effect as a jury verdict. Superior Improvement Co. v. Hignight, 254 Ark. 328, 493 S.W. 2d 424. Even though the evidence would support another conclusion, or if the preponderance of the evidence would indicate a different result, we still affirm the Commission if reasonable minds could reach the conclusion reached by the Commission. Oak Lawn Farms v. Payne, 251 Ark. 674, 474 S.W. 2d 408 (1971).

Affirmed.


author: George Howard, Jr., Judge.

text:
    Priscilla KILGORE v. FALLS CHURCH ANIMAL HOSPITAL and Charles DANIELS, Director, State Department of Labor
    CA 79-74
    590 S.W. 2d 671
    Opinion delivered November 28, 1979
    Released for publication December 19, 1979

      Collins Kilgore, Jr., for appellant.

      Thelma M. Lorenzo, for appellee Charles Daniels.
   George Howard, Jr., Judge.

The question presented is whether the finding of the Agency — that appellant quit a permanent job for a temporary one was not for good cause connected with the job, hence, appellant was not entitled to unemployment benefits — is supported by substantial evidence.

Appellant, in August, 1977, accompanied her husband to Washington, D.C. where her husband would be enrolled in school, as a full time student, during the 1977-78 school term. The term was scheduled to end officially in May, 1978, at which time, appellant and her husband were scheduled to return to Little Rock where appellant’s husband would occupy a position of employment awaiting his return. At the time appellant left Little Rock for Washington, D.C., she was unemployed and receiving unemployment benefits.

Upon arriving in Washington, appellant promptly obtained employment at the Falls Church Animal Hospital in Falls Church, Virginia. Appellant advised her employer that her husband was attending school in Washington for the duration of the current term and that she would have to terminate her status as an employee in May, 1978, and return to Little Rock with her husband.

In January, 1978, appellant left the job at the animal hospital and accepted employment as a receptionist with Congressman Jim Guy Tucker in Washington, D.C. The new position afforded appellant a substantial salary increase — paying at least 50% more than what she was receiving at the animal hospital. The receptionist position was temporary since it would terminate in the middle of June, 1978.

In June, 1978, appellant returned to Little Rock and entered the labor market immediately in search of employment.

On June 28, 1978, appellant filed her claim for unemployment benefits. Appellant advised the Agency that she terminated her job at the animal hospital for the following reason:

I was offered a higher paying job, also an offer of better experience for the future and more contacts for a job in Arkansas.

The Agency concluded, in relying upon Section 5 (a) of Ark. Stat. Ann. § 81-1106 (Repl. 1976):

You quit your permanent job with the above employer [Falls Church Animal Hospital] to accept a temporary position with Congressman Jim Guy Tucker’s office. Although you may have had good personal reasons for quitting, you have not shown good cause connected with the work.

Section 5(a) provides:

... an individual shall be disqualified for benefits:
(a) If he voluntarily and without good cause connected with the work, left his last work. Such disqualification shall continue until, subsequent to filing his claim, he has had at least 30 days of paid work.

Appellant was disqualified for benefits until she had at least 30 days of covered employment.

The holding of the Agency was affirmed by the Appeals Tribunal, the Board of Review and the Circuit Court of Pulaski County.

We are persuaded that the finding of the appellee that appellant quit “a permanent job” with Falls Church Animal Hospital to accept a ‘ ‘temporary position with Congressman Jim Guy Tucker’s office,” is not supported by substantial evidence and consequently, we reverse.

Appellant testified that when she made application for employment at Falls Church Animal Hospital, she advised management that she would be in the Washington, D.C., area for the duration of the 1977-78 school term which would end in May, 1978; and that she would return to Little Rock, at that time, with her husband. She stated that her employer recognized that she was only a temporary employee. This, testimony has not been contradicted.

We have searched this record carefully in an effort to determine the basis of appellee’s finding that appellant’s employment with Falls Church Animal Hospital was ‘‘permanent. ’ ’ While it is clear that the position that the appellant occupied may be characterized as permanent in scope and range, the work arrangement between appellant and her employer was temporary in all respects. Appellant testified that the job offer from Congressman Tucker was temporary. The Agency also found that the employment with Mr. Tucker was temporary in scope and range.

During oral argument, counsel for appellee conceded, in a hypothetical situation, that if appellant’s employment with the animal hospital had been permanent and appellant quit the permanent position in order to accept another permanent position and later became unemployed, appellant would be eligible to receive benefits. In other words, if the position with Congresssman Tucker had been characterized as permanent, under the Agency’s reasoning, appellant would have qualified for benefits because she left a permanent job in order to accept another permanent position.

While it is understandable, and, indeed, logical, why an employee who quits a permanent job in order to accept a temporary one is disentitled to benefits when the temporary employment ceases, we are not persuaded that the same qualifying rule is applicable when an employee leaves a temporary assignment to accept another temporary position which affords more pay.

We perceive that the posture taken by appellee would impose a penalty on an employee who desires to transfer to another job in order to improve his financial position and a premium extended to an employee who is satisfied with some degree of permanence in his employment status at less pay. We cannot visualize such a policy as being in harmony with the legislative purpose of the Employment Security Act as á means of protection against the hazards of economic life.

Appellee has cited Harris v. Daniels, et al, 263 Ark. 897, 567 S.W. 2d 954 (1978) in support of its posture in this proceeding. Harris has no application here. In Harris, the claimant accepted what started out as a temporary job, but ultimately became permanent and claimant quit his job in order to look for other employment.

Accordingly, we reverse the Circuit Court of Pulaski County with directions to enter an order reversing the Agency.

Reversed and remanded.


text:
    SILVER FOX, INC. v. PENFIELD REAL ESTATE, INC.
    CA 79-143
    590 S.W. 2d 869
    Opinion delivered November 28, 1979
    Released for publication December 19, 1979

      James L. Sloan and Gibson & Crow, for appellant.

      Garrett & Moudy and Hall, Tucker, Lovell & Also-brook, for appellee.
   George Howard, Jr., Judge.

This is an appeal from the dismissal of appellant’s objection to the allowance of $19,000.00, from proceeds of a land foreclosure sale, purportedly due appellee, as a commission, for obtaining a buyer who was ready, willing and able to purchase real property listed by appellant for sale.

In December, 1977, appellant listed with appellee property known as the Silver Fox Restaurant. An offer and acceptance was executed December 14, 1977, between appellant and Gifford Powell and Stevann D. Powell, his wife, as buyers. As consideration for the purchase, buyers agreed to assume an existing mortgage held by Benton Savings & Loan Association of Benton, Arkansas, with a balance of approximately $93,382.00, payable in monthly installments of $1,044.26; buyers further agreed to pay the appellant $2,700.00 in cash and to execute a note to appellant for $90,000.00, payable over a period of fifteen years, which would be secured by a second mortgage on the property; and agreed to assume an equipment lease with Worthen Bank & Trust Company of Little Rock which involved a balance of $60,000.00, payable at approximately $2,000.00 per month.

It is undisputed that appellee was authorized and empowered to negotiate the sale and work out all of the details with the purchasers. Appellee assured appellant that the Powells were financially able to purchase the property and could comply with the terms of the offer and acceptance inasmuch as the purchasers had solvent backers. In reliance upon this assurance, appellant executed a warranty deed to the Powells on February 6, 1978. The Powells in turn executed an assumption agreement with Benton Savings & Loan Association and a note and second mortgage to the appellant.

On April 10, 1978, appellant assigned to appellee, to the extent of $19,000.00 as appellee’s commission, the note and second mortgage received from the Powells.

The Powells defaulted in making the May and June installments to the Association and the payments due appellant.

On July 5, 1978, the Association instituted foreclosure proceedings under the first mortgage securing its note. The Association made both appellant and appellee parties to the action.

On August 23, 1978, appellant filed its cross-complaint against the Powells for foreclosure on its second mortgage. Appellant also readily acknowledged, in its pleading, that appellee had a vested interest in the foreclosure proceeding inasmuch as it had an interest to the extent of $19,000.00, as its commission, in the note executed by the Powells and secured by the second mortgage.

The trial court on September 7, 1978, entered its decree foreclosing the first and second mortgages; and found that appellee should realize from the proceeds of the foreclosure sale its commission of $19,000.00 after the Association had satisfied its claim.

Sometime either immediately before or after the trial court’s foreclosure decree was actually entered, appellant learned that prior to the actual closing of the sale of the property to the Powells, appellee was notified that the financial backers for the Powells had withdrawn their support and commitment. Appellee did not disclose this information to appellant.

On November 29,1978, approximately 83 days after the entry of the trial court’s decree, appellant filed its objection to the trial court’s order of distribution directing that $19,000.00 of the proceeds be paid to appellee. Appellee resisted appellant’s action contending that appellant was precluded from raising this belated issue inasmuch as the matter had been fully resolved by the trial court’s decree which was entered of record on September 7, 1978. Moreover, appellee argues, that appellant expressly admitted in its pleading that appellee had earned the commission.

Appellant testified, by proffer since the trial court ruled a substantial portion of the relevant testimony inadmissible, that when appellant discovered the undisclosed information, appellant immediately consulted appellee; and that appellee •told appellant that in the event the Powells failed to finalize the- sale,- appellee would forego its commission; that the property would be relisted for sale; and that appellee would not receive a commission until a new sale was concluded. Consequently, appellant testified, it did not object to the proposed distribution until appellee reneged on its promise and insisted on its commission.

On the 31st day of January, 1979, the trial court conducted a hearing on appellant’s objection. At the conclusion of appellant’s evidence, the trial court, in response to appellee’ s motion to dismiss, denied appellant’s request for relief.

The thrust of appellee’s argument for affirmance is that appellant having admitted that appellee was entitled to its commission, appellant is now precluded from taking an inconsistent stance with this admission. In reliance upon this argument, appellee cites International Harvester Company v. Burks Motors, Inc., 252 Ark. 816, 481 S.W. 2d 351 (1972), where the Supreme Court stated that a litigant is precluded from assuming inconsistent positions on the same issue in the same case. In Burks, a party litigant, in a tort action, alleged initially that it was not liable in the action because its liability as a tortfeasor had not been established. However, the litigant later took the position it was entitled to contribution as a joint tort feasor in the same case. The Supreme Court, we submit, correctly concluded in Burks that the litigant was bound by his pleadings and statements before the court and could not maintain an inconsistent posture to his prior stance.

The position taken by appellee here fails to come to grips with the force of appellant’s argument. By way of summary, the evidence, which stands uncontradicted, shows that while appellant readily acknowledged the validity and genuineness of appellee’s claim for its commission, appellant was unaware, because of appellee’s failure to disclose, that the purchasers’ financial standing had materially changed after the offer and acceptance had been executed. It seems clear that had appellant been informed of the change, appellant would not have finalized the proposed sale with the Powells. Moreoever, it is plain that appellant learned of the material change immediately before or after the trial court’s decree had been entered. When appellant consulted appellee about the nondisclosure of the material change in the Powell’s financial ability to perform, appellee agreed to forego its commission until a new sale was consummated. However, appellee later reneged on this promise.

Affording appellant’s evidence its strongest probative force, on appellee’s motion to dismiss, as we must, we are persuaded that appellant stated a cause for relief which would, indeed, survive a motion to dismiss, or a demurrer to the evidence.

A real estate broker who fails to disclose material and significant facts which will enable his principal to act advisedly in determining whether the buyer’s proposal is satisfactory, forfeits his commission. Green v. Pickens, 251 Ark. 691, 473 S.W. 2d 862 (1971); Carnahan v. Lyman Real Estate Co., 170 Ark. 519, 280 S.W. 2d 5 (1926).

We are persuaded that our Supreme Court stated the essence of the relationship that exists between a broker and his principal in Taylor v. Godbold, 76 Ark. 395, 88 S.W. 959 (1905):

. . . ‘Like other agents in whom trust and confidence are reposed, the broker owes to his principal the utmost good faith and loyalty to his interests.’

Ark. Stat. Ann. § 22-406.4 (Repl. 1962 and Supp. 1979), provides as follows:

[A] decree or order may be modified, set aside or vacated within ninety (90) days from the filing thereof with the clerk of the court or in pursuance to a motion made within such ninety (90) days, wherever, under the law heretofore in force, it might be modified, set aside or vacated prior to the expiration of the term of court at which it was rendered or in pursuance of a motion made at that term.

Appellant having filed its objection within 83 days from the entry of the decree, it seems clear that the trial court had jurisdiction to entertain appellant’s request for relief.

We conclude that the trial court erred in sustaining appellee’s motion to dismiss, and accordingly, reverse and remand to the trial court.

Reversed and remanded.