author: John I. Purtee, Justice.

text:
    John F. WELLS et al v. Richard HEATH et al
    79-148
    602 S.W. 2d 665
    Supreme Court of Arkansas
    Opinion delivered July 7, 1980
    Rehearing denied September 15, 1980

      Batten, Brown, Leslie & Davidson, by: Charles A. Brown, and Steve Clark, Atty. Gen. by: Jackson Jones, Asst. Atty. Gen., for appellants.

      Wright, Lindsey & Jennings, for appellees.
   John I. Purtee, Justice.

The chancellor granted a summary judgment in favor of the appellees in a taxpayers’ suit filed by appellants alleging that a lease entered into by the state and Educational Programs and Equipment Corporation (EPEC) was void, illegal, and unconstitutional.

Appellants argue three points for reversal: (1) the court erred in granting a summary judgment; (2) the court erred in failing to permit the deposition of a witness; and, (3) the court erred in excluding an affidavit and the attachments thereto. We hold that the doctrine of res judicata applies on all issues except as to whether the appropriation is sufficiently specific as to the balance owed on the agreement.

In order to clarify the facts, we must mention two other suits. The first is now cited as Equilease Corp. v. U.S.F. & G. Co., et al, 262 Ark. 689, 565 S.W. 2d 125 (1978). This suit was based upon the same contract we have under consideration here. John F. Wells and the Independent Voters of Arkansasa, Incorporated, filed an amicus curiae brief in the case.

The second case that involved the same subject matter and parties was Pulaski County Chancery Court No. 76-43Ó3, and the grounds for the suit were identical to those of the first suit. The issues were joined and a countersuit filed against Hornibrook by Equilease. By this time, Equilease had obtained the lease from EPEC. While the suit was pending, United States Fidelity and Guaranty Company (USF&G) had been made a party on their surety bond running in favor of the state in the amount of $50,000. On February 7, 1977, Case No. 76-4363 was dismissed with prejudice.

The present suit was filed on July 27, 1977, by John F. Wells and the Independent Voters' of Arkansas, Incorporated, as taxpayers. The same defendants were named; however, additional parties were named as defendants and additional grounds were set forth as reasons for the recovery. The additional defendants were in privity with the original defendants, and the additional grounds seeking relief had their genesis in the basic contract.

The basis of this suit and the two prior ones is a contract between the Arkansas Department of Correction and EPEC. As stated previously, Equilease has taken over the contract from EPEC because EPEC had in effort become insolvent. The original contract was in the amount of $528,000; but, at the time this third suit was filed, the balance on the contract was $148,276.

Among the allegations in the present suit were: (1) the payment was about to be made for nonperformance of an ex-ecutory contract; (2) the payment would be fraudulently procured exaction and expenditure of tax funds; (3) the services and goods had not been furnished; (4) the payment would be in violation of Ark. Stat. Ann. § 13-338(f)(2); (5) the payment would violate § 12 of Act 473 of Acts of Arkansas (1967); (6) the contract was illegally let without bids or advertisements; (7) the contract was usurious; and, (8) other alleged discrepancies relating to the basic contract.

The pleadings were joined, and the state officials filed a cross-complaint against Equilease claiming the defense of usury as to the unpaid balance of the contract price. They sought to have the lease declared void ab initio nullifying future payments to Equilease. After all pleadings were filed, Equilease moved for a summary judgment and petitioned for' a mandatory injunction requiring payment of certain sums alleged to be due then. This motion, as well as all others, was contested by various parties to the lawsuit.

Certain stipulations were entered into; but, because of our decision, it is not necessary to recite them. Also, we would mention that the court rejected the request of Wells to take the deposition of Lonnie Powers, Assistant Attorney General, who was about to leave the state. The court also required the balance of the payment claimed by Equilease be deposited in the constructive possession of the court.

The motion for summary judgment was presented on September 21, 1978. The court determined all parties were present and the court had jurisdiction of the parties and the subject matter of the action. During the hearing, the court rejected the proffered affidavit of John F. Wells and the exhibits attached to his affidavit. During an earlier hearing on March 21, 1978, the court had stated that all parties would be given sufficient time to place the evidence they desired into the record. The cutoff date was finally agreed upon as either October 17 or 18, 1978. The affidavit of John F. Wells was offered prior to October 18, 1978.

Among the exhibits introduced into the record were the pleadings and records of Pulaski County Chancery Court Case Nos. 76-480 and 76-4363.-The basic contract, subject of this dispute, was also included as an exhibit.

The court entered its decree on December 14, 1978, and the pertinent part of the decree states:

... ; the claims and causes asserted by the plaintiffs are barred by res judicata by virtue of the order of dismissal with prejudice entered by this Court in another taxpayer’s action in the Chancery Court of Pulaski County, Arkansas, identified as Case No. 76-4363; and Court specifically finds that the dismissal with prejudice of case No. 76-4363 was bona fide and free from fraiid or collusion, and the plaintiffs taxpayers herein have failed to prove otherwise.

The question to be resolved is whether the court correctly determined that res judicata applies in the present case. Appellants correctly state that a motion for a summary judgment should not be granted if there is any disputed issues of fact to be decided by the court. Also, a correct test is whether reasonable men may differ as to the inferences to be drawn from undisputed proof. We also agree that a motion for summary judgment must be viewed in the light most favoarable to the party opposing it.

The motion for a summary judgment filed in this case included the claim that res judicata applied. We will proceed to examine the doctrine of res judicata.

When we decided the case of Benedict v. Arbor Acres Farm, 265 Ark. 574, 759 S.W. 2d 605 (1979), recently and discussed res judicata, we stated:

The law of res judicata provides that a prior decree bars a subsequent suit when the subsequent case involves the same subject matters as that determined or which could have been determined in the former suit between the same parties; and the bar extends to those questions of law and fact which might well have been but were not presented.

The true reason for holding an issue to be res judicata is not necessarily the identity or privity of the parties but is designed to put an end to litigation by preventing a party who has had one fair trial on a matter from relitigating the matter a second time. One adverse judgment, free from fraud or collusion, prevents a second one involving the same issues, even though the parties may not have been named or may not have been in privity with the parties in the first suit. Hastings v. Rose Courts, 237 Ark. 426, 373 S.W. 2d 583 (1963).

In a class action suit, such as we have before us, the rights of the class cannot be foreclosed unless there is a trial which includes a reasonably fair presentation of the case before a court of competent jurisdiction. Such presentation must have been bona fide and free from fraud or collusion. Hollis, et al v. Piggott Junior Chamber of Commerce, 248 Ark. 725, 453 S.W. 2d 410 (1970).

Obviously, a taxpayer cannot file a suit on behalf of all other taxpayers and deliberately fail to put forth a good faith effort in support of his suit and thereby fraudulently prevent another taxpayer from filing a second suit. It is essential that there be a fair hearing before a court of competent jurisdiction and that there be no fraud or collusion involved in the matter. Any other rule would open the door to fraud and collusion and destroy much of the doctrine of res judicata. It is not necessary that the parties in all issues raised be exactly the same as those presented in the prior suit before the matter becomes res judicata.

In the case before us, there is no dispute that the basic cause of all three lawsuits was the contract entered into between the Arkansas Department of Correction and EPEC. All of the other issues emit from this basic requirement. In thoroughly examining the allegations presented by the plaintiffs in this case, we are unable to find any issue which did not have its genesis in the lease in question.

The matter of usury is argued by several of the parties to this action. The instrument which is claimed to be usurious is the same contract which gave birth to this whole series of litigation. Therefore, it was a matter which might well have been included in the Equilease suit.

The doctrine of res judicata is accepted as a rule of inflexible absolute law in practically every jurisdiction. If the judgment is entitled res judicata, it is conclusive as to the cause of action involved no matter how “unfair” or “patently erroneous” it may now seem to the court examining the judgment. 65 Harv. L.R. 818. There must be an end to litigation at some point; and, if there has been one fair trial on the merits of a case, that is all that is required.

As a general rule, Arkansas case law holds that a judgment rendered for or against a taxpayer is binding against all other taxpayers as if they personally had been involved in prosecuting the suit. Gynard v. Garner, 238 Ark. 415, 382 S.W. 2d 369 (1964); McCarroll, Commissioner of Revenues v. Farrar, 199 Ark. 320, 134 S.W. 2d 561 (1939). A dismissal with preudice is ordinarily synonymous with adjudication on the merits, barring further litigation on the same cause of action. Harris v. Moye’s Estate,211 Ark. 765, 202 S.W. 2d 360 (1947). In Harris we held that the dismissal of appellant’s action “with prejudice” was a complete adjudication of the controversy and, no appeal having been prosecuted, constituted a bar to.a subsequent action by a party involving the same subject matter.

We do not feel that the Hornibrook case presented a complete adjuciation of the issues and is therefore not res judicata. However, Equilease, supra, is res judicata to all matters except the issue mentioned below.

We agree with the chancellor that all matters except the appropriation for the payment of the balance of the contract are res judicata. Equilease, supra, was tried on October 5, 1976; therefore, Act 713 of 1977 could not have been considered as it was not passed until March 24, 1977. Therefore, on remand the court will determine whether there was a sufficiently specific appropriation to allow payment of the balance of the contract. Affirmed on direct appeal except as to the matter of appropriation and affirmed on cross-appeal.

Affirmed in part and reversed in part on direct appeal; affirmed on cross-appeal.

Sparks, Special Judge, and Mays, J., dissent as to the application of the rule of res judicata in this case.

Hickman, J., not participating.


source: Caselaw Access Project

author: John I. Purtle, Justice. John F. Stroud, Justice,

license: Public Domain

text:
    FAUSETT AND COMPANY, INC. v. G & P REAL ESTATE, INC.
    80-21
    602 S.W. 2d 669
    Supreme Court of Arkansas
    Opinion delivered July 7, 1980
    Rehearing denied August 25, 1980

      'Wright, Lindsey & Jennings, for appellant.

      John Haley of Counsel and Dennis L. James and Byron S. Southern of Southern & James, for appellee.
   John I. Purtle, Justice.

Appellee sued on the grounds of usury to cancel two construction loans which had been arranged by appellant on two building lots in Pulaski County. The trial court upheld appellee’s contention and voided both debts. We agree with the trial court that the loans were usurious because a rate in excess of 10% per annum was charged by appellant.

On appeal it is argued that appellee did not prove usury and that appellant was a broker rather than a lender.

G & P Real Estate, Inc., appellee, arranged for loans in the amount of $41,600 for construction on lot number 250 and $42,800 for construction on lot number 274. The notes and mortgages were executed by appellee and payable to Fausett and Company, Inc., the appellant here. All the instruments indicated the loan was for a period of one year at an interest rate of 9% per annum. At closing the appellant deducted a 1% service charge from each nóte and agreed to advance the balance at various periods during the year; therefore, the amount actually made available on each loan was 99%. Eventually appellant advanced $41,445, plus the $428 service charge, on lot 274. This was either $1,355 or $923 less than the face amount of the note, depending on whether or not the 1% service charge is deducted. The full amount of $41,600, including the 1% service charge, was advanced on lot 25Ó.

As soon as appellee executed the notes and mortgages, the appellant assigned them to two separate banks. Simultaneous with the assignment of the notes and mortgages executed by appellee, the appellant agreed to pay more than 9% interest on the loans at the banks.

We first examine the argument that appellant was a broker and was entitled to a 1% fee for procuring the loan. Copies of the notes and mortgages are included in the record and reveal that appellant was the payee and mortgagee on both loans. We find no evidence that either bank was mentioned to the appellee during the time the application for the loan was pending or at the closing. Appellee’s notes and mortgages were assigned to the banks as security for appellant’s notes.

The evidence indicates that appellee dealt only with the appellant in conjunction with these two loans. The only payment made by appellee was for interest, and it was made to appellant. No payments have been made on the notes to the banks. After reviewing the facts in this case, we have no qualms in stating that appellant was the lender and was not acting as a broker at the time of these transactions.

We turn now to the more difficult task of determining whether the rate of interest actually amounts to more than 10% per annum. We havé previously held that 1% service charge withheld by the lender is interest. Ark. S&L Assn. v. Mack Trucks of Ark., 263 Ark. 264, 566 S.W. 2d 128 (1978); Strickler v. State Auto Finance Co., 220 Ark. 565, 249 S.W. 2d 307 (1952). Therefore, for almost 30 years we have held such charges to be interest. The present factual situation is strickingly similar to those in Ark. S&L Assn. v. Mack Trucks of Ark. We must therefore hold that the 1% service charge withheld by the lender was interest in fact.

Neither loan is usurious on its face; therefore, we must examine the facts to make that determination. First, it is only a matter of simple mathematics to determine that a loan for one year, discounted at 1% with a full year’s additional interest at 9%, is usurious. Appellee only received 99% of the proceeds of the loan on lot 274 and a little less on the loan for lot 250. However, the full amount of the loans was not advanced for the entire year.

The burden is upon the party claiming usury to prove it. Davidson v. Comm. Cred. Equip. Corp., 255 Ark. 127, 499 S.W. 2d 68 (1973). We consider the facts at the time of the institution of the loan and in light of all attendant circumstances in order to determine whether the contract is usurious. Hayes v. 1st Natl. Bk. of Memphis, Tenn., 256 Ark. 328, 507 S.W. 2d 701 (1974). Clear and convincing evidence is required before a contract will be declared void on account of usury. Peoples Loan & Inv. Co. v. Booth, 245 Ark. 146, 431 S.W. 2d 472 (1968).

Appellant strongly relies on the case of Bank of Newport v. Cook, 60 Ark. 288, 30 S.W. 35 (1895). In Bank of Newport v. Cook it was simply held that the taking of the highest legal rate of interest in advance did not amount to usury. As far as we can determine, this case has never been specifically overruled. According to our calculations, the withholding of 10% of a one-year loan amounts to 11.11%. This is obviously more than the constitutional limitation of 10% per annum. We now overrule Bank of Newport v. Cook, 60 Ark. 288, as of the date this opinion becomes final. Hereafter, we will examine the record; and, if the withholding of interest at the beginning causes the interest rate to actually exceed 10% per annum, we will declare it usurious.

We agree with appellee that the factual situation here is almost identical with that in Ark. S&L Assn. v. Mack Trucks of Ark., supra. The testimony presented at the trial was not reduced to a set of tables or formulas as appears at pages 17 and 18 of appellee’s brief; however, we think the testimony supports the calculations Usted in appellee’s brief. These tables exhibit the periof of the notes and the date of each disbursement as well as the 1% withheld on the front end. In order to clarify these calculations, we include the illustration from appellee’s brief:

Lot 274 Calculations
Principal Amount — $41,445
Period of the Note — 12/6/77 to 12/6/78
Date Disbursed No. of Days Until Note Amount Is Due Service Chg. & Interest at 9% Interest at 10%
12/28/77 $9,717.48 343 $821.86 $913.18
12/28/77 SvcChg 428.00
5/9/78 16,227.52 211 844.28 938.08
6/19/78 4,000.00 170
nuns, 9,500.00 146
8/9/78 2,00040 119
Total $41,445.00 $2,662.49 $2,482.77
Effective Interest Rate — 10.723869%
Lot 250 Calculations
Principal Amount — $41,600
Period of Note - 7/5/77 to 7/5/78
Date No. of Days Until Note Service Chg. & Interest Interest
Disbursed Amount Is Due at 9% at 10%
8/25/77 $9,808.13 314 $759-39 $843.77
8/25/77 SvcChg 416.00
9/12/77 12,991.87 296 948.23
10/11/77 2,500.00 267
10/27/77 3,500.00 251
11/8/77 2,200.00 239
4/28/78 4,300.00 76
6/12/78 ■ 6,300.00 23 35.73 39-70
Total $41,600.00
Effective Interest Rate 10.6244%

There does not appear to be any disagreement between the parties that the dates and amounts set out in the tables are accurate. This being so, the interest rate for the loan on lot 274 amounted to 10.7238% and the interest rate on the note for lot 250 amounted to 10.6244% per annum. Therefore, we have no choice in the matter but to hold the notes void because they are usurious.

In figuring the date of the various advances on the loan pertaining to lot 250, we conclude that the advance on August 25, 1977, in the amount of $9,808.13 was for a period of 314 days and would have earned $759-39 interest at 9% per annum. We are unable to determine why appellant believes this amount was due in 278 days. The date of the loan was July 5, 1977, and the date of the disbursement was August 25, 1977. As we calculate it, the period of 51 days short of a 365-day year, or the money was lent for 314 days.

Although we try the case de novo, we affirm the chancellor’s decree unless we find that it was not supported by a preponderance of the evidence. Newberry v. McClaren, 264 Ark. 735, 575 S.W. 2d 438 (1978).

Affirmed.

Stroud, J., concurs in the result.

John F. Stroud, Justice,

concurring. I concur with the court, this court has ventured far from the path necessary to affirm that decision. The majority has by dictum reached out arid overruled a line of cases dating back to 1895. In Bank of Newport v. Cook, 60 Ark. 288, 30 S.W. 35 (1895), this court held that reserving the highest legal rate of interest in advance on negotiable paper having 12 months to run is not usurious. That decision was reaffirmed 44 years later in Simpson v. Smith Savings Society, 178 Ark. 921, 12 S.W. 2d 890 (1929), where a 10% discount was reserved and deducted at the time the loan was extended and held not to constitute usury. In Hickingbotham v. Industrial Finance Corp., 192 Ark. 429, 91 S.W. 2d 1023 (1936), a 10% deduction of interest at the time the loan was made was again upheld as non-usurious on a one year obligation. The history of this particular type of financing was reviewed in Bank of Newport and the court noted that the custom of discounting arose in commercial transactions in England for the convenience of trade. The custom was clearly recognized in Arkansas at the time our present constitution was adopted and surely was not intended to be barred by the drafters of that document. In 1875, just a few months after the constitution was adopted, the General Assembly recognized the custom by adoption of an act which provided:

It shall be lawful for all parties loaning money in this State to reserve or discount interest upon any commercial paper, mortgages, or other securities at any rate of interest agreed upon by the parties, said rate not to exceed ten per cent per annum.

It was not the intent of the legislature in 1875 to adopt a statute in direct violation of the usury provision of the constitution, nor was it the intent of this court in 1895, 1929 or 1936 to sustain a practice contrary to that constitutional limitation. It is true that the effective rate of simple interest in this type of discount exceeds 10% per annum and the majority indicates that in all future loans where the discount causes the rate of interest to exceed 10% the loan will be declared usurious. We held just last week in Martin v. Moore, 269 Ark. 375, 601 S.W. 2d 838 (1980), that a 360-day interest book did not void a loan for usury even though the effective interest rate as a result was in excess of 10% per annum.

Not only do I agree with this court’s overruling the Bank of Newport case, I even more vigorously disapprove of doing so by dictum in a case where the discount was not for 10% but for only 1%, a clearly different set of facts.

Fogleman, C.J., joins in this opinion.


author: John I. Purtle, Justice. John A. Fogleman, Chief Justice,

text:
    E. C. OLLAR and Maude OLLAR, His Wife v. Mr. and Mrs. George SPARES d/b/a GEORGE’S PLACE
    80-81
    601 S.W. 2d 868
    Supreme Court of Arkansas
    Opinion delivered July 7, 1980

      Balm, Bairn, Gunti, Mouser & Bryant, by: Kenneth B. Baim, for appellants.

      Edward 1. Slaten, P.A., for appellees.
   John I. Purtle, Justice.

E. C. and Maude Ollar, argue court granting a motion for a summary judgment against them in their suit against Mr. and Mrs. George Spakes, d/b/a George’s Place, appellees, for damages arising from injuries received by Maude Ollar in a fall she suffered as she approached the restaurant operated by appellees. We disagree with appellants’ argument and affirm the jhdgment of the trial court.

= The complaint alleged that on November 3, 1976, appellants were proceeding toward appellees’ restaurant when the injury occurred. The complaint also stated that the appellants intended to dine at appellees’ restaurant; and, upon finding the parking lot at George’s full, they proceeded to park on the lot next door. It was after dark; and, as, appellants walked from their parking place to appellees’ premises, Mrs. Ollar fell over a railroad crosstie before reaching the parking lot owned by appellees. Damages were claimed due to the injuries sustained by Mrs. Ollar.

Appellants allege that appellees were negligent, but the abstract of the record does not contain the particular acts which were alleged to have been negligent.

In their answer, appellees denied the allegations of the complaint and that the accident occurred on their premises. Appellees also argued that the fall was caused by Mrs. Ollar’s negligence and that her negligence was greater than the negligence of the appellees, if they were indeed negligent at all.

Appellees moved for a summary judgment on the grounds that the appellants were not on their property at the time of the injury, that appellees were not negligent, and that the Ollars assumed the risk of injury. The motion was based upon the pleadings and depositions of the parties and a Mrs. Herrod, a witness who owned the lot next door. Viewed in the light most favorable to appellants, the record disclosed the following facts:

The Ollars went to George’s Place to eat after they had closed their place of business, as they had done once or twice a week for two or three years. Whenever they could, they parked on the parking lot at George’s Place. If the parking lot at George’s was full, they usually parked on Mrs. Herrod’s lot next door. On the date in question, George’s parking lot was filled to capacity, and the appellants parked on Mrs. Herrod’s lot next to George’s.
Mrs. Herrod had placed a row of crossties from the north to the south length of her property very near the boundary line between her lot and that of the appellees. The Ollars had parked on the lot previously and were aware of the crossties which had been located in approximately the same place for at least six years. On the night in question, one of the crossties was slightly out of line and apparently Mrs. Ollar stumbled on it and fell to the ground between the crossties next to the boundary line between the lots. She did not know whether she fell on George’s lot or Mrs. Herrod’s lot.
Mrs. Herrod had placed a sign on either side of her property warning people not to park on her lot. Each sign was about 4 feet x 4 feet and placed approximately on the property line facing 28th Street. The Ollars denied noticing these signs although Mrs. Ollar acknowledged she had parked on the Herrod lot previously when the lot at George’s Place was full.
After Mrs. Ollar fell, the appellees came out of the restaurant and one of them stated: “Well, we have tried to get Irene to move these things and she hasn’t done it, and she said that this thing might happen to me sometime.” The purpose of the crossties being placed down was to keep traffic from coming from George’s Place onto Mrs. Herrod’s parking lot. Originally, the ties had been fastened down with steel pins but apparently vehicles had jarred them loose, and they were subject to being moved by vehicles. Appellees and Mrs. Herrod were not on good terms because she had come into George’s Place and ordered his customers to go and move their cars when they were parked on her lot. She had called the police and had cars towed away. About six years earlier, George had moved one of the crossties which became loose and apparently extended over to the edge of his property. After George’s Place closed, the Harrods retrieved the crosstie and replaced it in the line of ties separating the property.
Appellees had complained to Mrs. Herrod about having the crossties placed there to prevent vehicular traffic onto her lot. They also complained about her having cars of their customers towed away. Appellees had informed Mrs. Herrod they felt she owed their customers a place to park, and she informed them she felt she owed the customers nothing. Mrs. Herrod warned people by word and signs and by the crossties that she did not want George’s customers parking on her lot.
After appellants backed their car into a parking space on the Herrod’s parking lot, they got out of their vehicle and proceeded toward George’s Place when Mrs. Ollar stumbled and fell. At no time did any testimony place the crosstie on the property of appellees.
There were no lights on Herrod property. There was a street light on the southeast corner of George’s parking lot and two neon-type signs on the lot. In any event, there was not enough illumination for Mrs. Ollar to observe the crosstie before she fell.

Appellants argue that appellees were negligent because they knew the danger was created to their business invitees by the location of the crossties and the absence of lighting during darkness. They further contend that although appellees were aware of this situation, they took no action to stop their customers from parking on the adjacent lot. In summary, they allege that appellees did not use ordinary care to prevent injuries to those business invitees on their way to appellees’ place of business.

It is the duty of an owner or occupier of land to his business invitees to maintain a reasonably safe condition for those coming upon his premises. Although we have found no cases in Arkansas holding that this duty goes beyond the limits of the business property, we quoted a Massachusetts case in Alfrey Heading Co. v. Nichols, 139 Ark. 462, 215 S.W. 712 (1919), which stated:

The owner or occupant of land is liable to those coming to it, using due care at his invitation or inducement, express or implied, on any business to be transacted or permitted by him, for an injury occasioned by an unsafe condition of the land, or of the access to it, which is known to him and not to them, and which he has negligently suffered to exist, and has given them no notice of.

Therefore, the liability of the owner operator of a business to an invitee is not necessarily confined to his property boundary lines; however, before extraterritorial liability attaches, it must be shown that the owner or operator had actual or constructive knowledge of the danger of injury to his invitees. When an owner or operator learns or should have learned of a dangerous condition existing adjacent to his property and fails to attempt to correct the condition or warn the invitees of such danger, he is guilty of negligence.

In this case it cannot be said that appellees knew of the danger of injury to their invitees. The most that can be said is that they were aware that the crossties were present and that they created an inconvenience to customers coming from the Herrod lot to their own. There was no evidence, or even an inference, that other people had been injured due to the existence of the crossties.

There is no dispute that the appellants were business invitees. The duty owed to an invitee is that of ordinary care to keep the premises in reasonably safe conditions. Davis v. Safeway Stores, Inc., 195 Ark. 23, 110 S.W. 2d 695 (1937). The owner is not an insurer of the safety of invitees on his premises, but his liability to an invitee must be based upon negligence. Kroger Grocery & Baking Company v. Dempsey, 201 Ark. 71, 143 S.W. 2d 564 (1940). An owner may be held liable when injury could have been avoided by timely notice of a defective condition on the premises. St. Louis I. M. & S. Ry. Co. v. Dooley, 71 Ark. 561, 92 S.W. 789 (1906). In Little Rock Land Co. v. Raper, 245 Ark. 641, 433 S.W. 2d 836 (1968), we stated:

The owner is liable regardless of his lack of knowledge of the defective condition if it was also unknown to an injured invitee, when the surrounding circumstances are such that the former could and would have known of the dangerous condition had he exercised reasonable care and foresight for the safety of those who might come upon his premises by invitation, express or implied.

It is noted that the owner of the premises must have known of the dangerous condition or could have, in the exercise of reasonable care, discovered such dangers before he will be held liable. As previously stated, there was no indication that the crossties on his neighbor’s property constituted a danger to the customers of the appellees. Furthermore, the appellants knew of the existence of the crossties; and, by parking on the adjacent lot, they assumed the risk of safely traversing the crossties in order to reach George’s Place.

Even though we cannot say that the appellants absolutely failed to imply or allege any negligence on the part of the appellees, we must frankly state that we could not affirm a judgment on their behalf based upon the pleadings, depositions, and the record of this case even when we consider all reasonable inferences deducible from them.

We have viewed the evidence in the light most favorable to the Ollars and have resolved all doubts and inferences against the appellees, as we must. Russell v. City of Rogers, 236 Ark. 713, 368 S.W. 2d 89 (1963). We recognize the burden is upon appellees to show that no justiciable issue exists. Widmer v. J. I. Case, 243 Ark. 149, 419 S.W. 2d 617 (1967). We are also aware that a summary judgment is an extreme remedy which should be granted only when there is no genuine issue of material fact. Wirges v. Hawkins, 238 Ark. 100, 378 S.W. 2d 646 (1964).

Affirmed.

Hickman, and Mays, J.J., concur in the result.

Fogleman, C.J., dissents.

John A. Fogleman, Chief Justice,

dissenting. I could readily agree with the majority if this were not a case involving summary judgment. I submit that the trial judge and the majority have used the summary judgment procedure to predict the outcome of the case (probably correctly) rather than to determine whether the movant has demonstrated that there are no genuine issues of fact. The question, whether we would affirm ajudgment based upon the record before the trial court is wholly beside the point. A summary judgment is an extreme remedy which should be granted only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Weathers v. City of Springdale, 239 Ark. 535, 390 S.W. 2d 125. Wirges v. Hawkins, 238 Ark. 100, 378 S.W. 646. If there is any doubt whatever as to the existence of issues of fact, summary judgment should be denied. Trace X Chemical, Inc. v. Highland Resources, Inc., 265 Ark. 468, 579 S.W. 2d 89. If inconsistent hypotheses may be drawn and reasonable persons might differ, or reach different conclusions, summary judgment should be denied. Braswell v. Gehl, 263 Ark. 706, 567 S.W. 2d 113; Betnar v. Rose, 259 Ark. 820, 536 S.W. 2d 719.

The duty of the owner or occupier to a business invitee is not necessarily limited by the owner’s property lines. That duty with regard to the unsafe condition of access to the property has been well stated by the textwriter in 65 CJS § 63 (51), at p. 754 et seq, viz:

Any invitation to enter premises carries with it the duty toward the persons invited to provide reasonably safe means of ingress and egress, and where the invitation is to a particular part of the premises there is a duty to maintain the approaches thereto in a reasonably safe condition for use. There is also a duty to provide reasonably safe passages to and from such places as are included within the scope of the invitation.
The invitee, on his part, in order to retain his status as such, is bound to use the ordinary and customary means of ingress and egress, for an implied invitation will not extend beyond the necessary lines of travel. So, where there is provided a safe entrance to the portion of the premises to which persons are invited, the owner or occupant is not liable for injury due to an unsafe condition of another means of entry which is not provided for or usually used for obtaining access to such place.
An invitee does not lose his status by employing a means of ingress and egress which by allurement or inducement, express or implied, he has been led to employ. A business invitation includes an invitation to use such parts of the premises as the visitor reasonably believes are held upon to him as a means of access to, or egress from, the place where business is to be transacted. The duty to maintain premises in a reasonably safe condition includes and extends to approaches to the premises which are open to invitees in connection with their business on the premises, and which approaches are so located and constituted as to represent an invittion to visit the place of business and use such means of approach. Where an invitee or business visitor has been intentionally or negligently misled into a reasonable belief that a particular passageway or door is an appropriate means of ingress or egress, he is entitled to the protection due an invitee or egress, he is entitled to the protection due an invitee or business visitor while using such passageway or door. The duty of keeping premises in a safe condition extends to ways of ingress of egress which, although not the proper ways, the owner of the premises permits invitees or business visitors to use without taking precautions to prevent such use, ***
The duty to keep the means of ingress, egress, and passage safe is limited to the exercise or ordinary care to have such places in a reasonably safe condition or to warn the invitee of any dangerous existing condition not obvious to an invitee in the exercise of ordinary care.

In the application of that rule, it has been held that the duty of an occupier of premises extends beyond the premises to the entrances into and exits from such premises and it is his duty to warn his customers of hidden hazards upon, around or beyond his premises, if he would reasonably expect use of an adjacent area by his customers in connection with the invitation. Joseph v. Jet Air Frieght Corp., 479 S.W. 2d 325 (Tex. Civ. App., 1972), writ ref'd. n.r.e. To incur liability to a business invitee, it is not necessary that the owner or occupier own or control the property on which the hazard to safe ingress or egress exists, or that the owner or occupier create the hazard, if the hazard created a foreseeable risk of harm to his business invitees and the owner or occupier knew of its presence and should have taken reasonable precautions to eliminate it (by such measures as posting warnings, or barriers or providing adequate illumination). Rockefeller v. Standard Oil Co., 11 Wash. App. 520, 523 P. 2d 1207 (1974).

In viewing the testimony in the light most favorable to appellants, we should not overlook the fact that it was dark when Mrs. Ollar left the automobile and started toward George’s Place, and that she had taken only two or three steps when she stumped her toe on the “raggedy” end of a crosstie, stumbled and fell. Apparently the crosstie on which she stumbled lay at an angle to the line of ties (how slightly, I do not know.) Mrs. Ollar said that she did not see the crossties on the night she fell because it was too dark. There are no lights on the lot on which the Ollars parked and the only lights on the premises of George’s Place are those provided by two signs. Mrs. Ollar testified that there was no street light. She said she fell on the lot on which George’s Place was located but did not know for sure where the lines were. George Spakes testified that he did not have good relations with Mrs. Herrod because she did not want anyone parking on her lot. Mrs. Herrod testified that the ties were originally placed on the property line, but that, because the trucks of George’s customers jarred them loose and pushed them one way or the other, they might have been on either the Spakes lot or hers at the time Mrs. Ollar fell.

When I view the evidence submitted in this case, appellees’ entitlement to summary judgment is not a matter beyond doubt. It is certainly reasonable to infer that appellees knew that their customers parked on the beauty parlor lot when the lot at George’s Place was full, and that it was at least likely that these customers would enter appellees’ premises by the most direct route, i.e., by crossing the line of crossties. The Ollars may have been justified in the belief that this means of ingress to George’s Place was open to them. It would be reasonable to infer that they were permitted to do so by appellees. Under these circumstances, appellees had the duty to see that the access to their property was reasonably safe or to. warn their customers not to use it or that ■ there was a hazard in crossing the crossties. That appellees knew that the ties were not anchored and that they were sometimes moved from the position in which they had been placed by trucks driven by customers of George’s Place would not be an unreasonable inference. For these reasons, I conclude that summary judgment was not proper on the record before us. I do not mean to say that when the case is fully developed that there will necessarily be a question for a jury. I only say that appellees failed to negate potential issues for a jury. I should add that the question of assumption of the risk is, along with the negligence of Mrs. Spakes, a matter of comparative fault. Ark. Stat. Ann. § 27-1763 et seq (Repl. 1979). Such questions usually cannot be resolved on motion for summary judgment. They certainly cannot in this case.


author: John I. Purtie, Justice.

text:
    Samuel Edward DAVID, Jr. v. STATE of Arkansas
    CR 79-132
    601 S.W. 2d 864
    Supreme Court of Arkansas
    Opinion delivered July 7, 1980

      James C. Campbell of Campbell & Campbell, for appellant.

      Steve Clark, Atty. Gen., by: James F. Dowden, Asst. Atty. Gen., for appellee.
   John I. Purtie, Justice.

Appellant was convicted by a jury on June 27, 1977, on four charges of robbery by the use of a firearm. In the bifurcated trial, he received a sentence of 25 years as a habitual offender with three prior felony convictions.

On appeal it is argued that the court erred in: (1) allowing the state to introduce as evidence in chief the testimony of a witness at a prior trial; (2) holding the witness “unavailable” due to loss of memory; (3) refusing to allow appellant to proffer testimony concerning the witness’s loss of memory; (4) allowing a deputy sheriff to be present while defense counsel interviewed a witness; and, (5) permitting the state to introduce the entire tape recorded statement of the witness which was made to the police at the time of his arrest.

We reverse and remand for reasons stated in this opinion.

Four persons were originally charged as co-defendants in a four-count information alleging robbery with a firearm. Robert and Noah Russell pled guilty to the charges, and each received a 15-year sentence. They were nephews of the appellant. Carmen Burnett was tried and convicted, and her case was reversed by this court. On her second trial, a joint trial with appellant, she was again convicted. Carmen Burnett was the girlfriend of appellant. She and the appellant were convicted, and on appeal her case was affirmed and his reversed.

At the trial involved here, all three co-defendants were brought from the Department of Correction to testify as witnesses on behalf of the state.

The first witness called was Robert Russell, and he denied any recollection of the appellant being involved in any of the robberies. The state was surprised and called for a recess. At the in-chambers hearing, the state was unable to get the witness to recall prior testimony implicating the appellant. He recalled most other details of the crimes but steadfastly denied remembering that appellant took any part in the robberies. The witness did recall stating that he had been beaten by Major D. Jarnett of the Department of Correction and had been ordered to implicate the appellant at the former trial. He indicated the prior trial was held more than two years previously, and he could not remember all of his testimony. At this point the following took place:

The Court:
Well now, Mr. Russell, you’re working up to the possibility where I may have to set aside the convictions and try your cases over because you made statements in court, under oath, as to your involvement and the involvement of Carmen Burnett and Mr. David when you entered pleas of guilty. You’ve also testified twice since then under oath involving Mr. David and Mrs. Burnett. And, since your mind is a complete blank, the Court is going to grant the State’s request and will consider a State’s request to set aside your convictions and to try you over.
Mr. Hurst:
Your Honor, I would like to say something for purposes of the record.
The Court:
Now, he can make up his mind whether he wants to be tried on these four robberies or not.
Mr. Hurst:
Your Honor, I think in a review of the transcript of his sentencing, he never mentions the name of Sam David, and he certainly wouldn’t feel it would vacate his conviction.
The Court:
That is the Court’s ruling. Either he’s telling the truth when he testified and when he entered his plea or he’s lying now. The Court is going to accept that at face value. That will be if Mr. Russell — ***

The court then declared the witness was unavailable pursuant to Uniform Rules of Evidence, Ark. Stat. Ann. § 28-1001 (Repl. 1979), Rule 804 (a)(3); therefore, his testimony at the former trial was admitted in its entirety over the objection of the appellant’s attorney. The witness was declared, by the court, not to be a witness for the state; and, no cross-examination was allowed by appellant’s attorney for the purpose of testing the memory of the witness. In fact, the court declared this witness would be a witness for the defense rather than the state and excluded him from the courtroom.

After the court ruled in chambers that the witness was unavailable, the trial was immediately resumed before the jury. Appellant’s attorney attempted to cross-examine Robert Russell then, but the court would not allow him to do so. The attorney then requested the opportunity to proffer the testimony of the witness into the record. Three times the court rejected the request of proffer.

When appellant’s attorney was permitted to speak to Robert Russell the next day, the court, at the request of the state, ordered a deputy sheriff to remain with the witness during the interview for the purpose of listening to the conversation to determine if the witness had regained his memory.

Later in the trial when Robert Russell was called by the defense, the court allowed the state to play a taped conversation between the witness and the Hot Springs Police Department to rebut his testimony. The tape was played in its entirety, and it allegedly included matters not testified to on direct examination.

Finally, evidence of three prior convictions was introduced during the penalty stage of the trial, but these are not abstracted for the record.

The first three points argued for reversal are so interrelated we shall discuss them together. All of these points relate to the matter of whether the witness Robert Russell was “unavailable” as defined by Uniform Rules of Evidence, Rule 804(a) which states:

(a) Definition of Unavailability. “Unavailability as a witness” includes situations in which the declarant:
(1) Is exempted by a ruling of the court on the ground of privilege from testifying concerning the subject matter of his statement;
(2) Persists in refusing to testify concerning the subject matter of his statement despite an order of the court to do so;
(3) Testifies to a lack of memory of the subject matter of his statement;
(4) Is unable to be present or to testify at the hearing because of death or then existing physical or mental illness or infirmity; or
(5) Is absent from the hearing and the proponent of his statement has been unable to procure his attendance . . .

In reviewing the testimony of the witness in this case, it appears his memory on the subject matter of his prior, statement was rather complete, except he could not remember testifying that appellant was involved in the robberies. It is obvious the court felt the witness was not telling the truth. The penalty for perjury is quite severe, but apparent perjury does not justify the court in threatening the witness as was done in this case nor affect the right of the accused to a complete and fair trial, including the right of cross-examination and of proffering testimony.

Subsections 1, 2, 3, and 4 of Rule 804(a) provide that a witness is unavailable if he claims a privilege (as by invoking the Fifth Amendment), persists in refusing to testify about the subject matter of his prior statement, testifies to a lack of memory on that subject, or is unable to testify because of death or physical or mental illness or infirmity. The present situation falls within subsection (3), because the witness testified that he was unable to remember that the appellant was involved in the robberies.

The witness’s prior statement would formerly have been admissible only for the purpose of impeachment. Martin and Woodard v. State, 178 Ark. 1117, 13 S.W. 2d 597 (1929). That limitation, however, has been removed by Uniform Rule 801 (d)(1), which provides that a prior statement is not hearsay if the declarant testifies at the trial or hearing and is subject to cross-examination concerning the statement, and the statement is inconsistent with his testimony and, if offered in criminal proceeding, was given under oath and subject to the penalty of perjury. See Field, A Code of Evidence For Arkansas?, 29 Ark. L. Rev. 1, 32 (1975).

Hence, in the circumstances, Robert Russell became unavailable as a witness, and his prior statement on the loss of memory of the subject matter was admissible as substantive evidence for the state. Nevertheless, under Uniform Rule 613(b) Russell was entitled to an opportunity to explain or deny his former statement. The court denied him that opportunity. Moreover, it seems fairly obvious from the record that appellant’s attorney intended to elicit testimony from the witness that there were some details of his two year old testimony which he could not recall even though his memory on the subject matter was otherwise good. We think it was an abuse of the trial court’s discretion to refuse the appellant the right to make a proffer of testimony during the in-chambers hearing.

It was also error for the court to permit a deputy sheriff to listen to the interview of the witness by the defense counsel. An attorney has the right to interview his own witness privately if the witness is agreeable. Security was apparently not the reason for allowing the deputy’s presence during the interview. If security were • involved, the attorney and the witness may well have been placed in a cell or holding room during the interview. Intimidation of a witness, even out of the presence of the jury, will not be tolerated and constitutes prejudicial error. Watkins, Broomfield and Matlock v. State, 222 Ark. 444, 261 S.W. 2d 274 (1953).

We do not ignore the state’s argument that certain points are raised for the first time on appeal. We believe the trial court prohibited the development of the record on both the cross-examination and proffer of evidence. We are fully aware of the requirements of timely objections in order to prevent waiver. It is not intended that we depart from the rule but rather that we find in this case that the trial court prevented timely objection, cross-examination, and proffer of evidence.

Finally, the taped conversation of witness Robert Russell and members of the Hot Springs Police Department was played in its entirety to the jury as rebuttal testimony. Since the tape was not abstracted, we are unable to state it was prejudicial. However, on retrial it will, no doubt, be determined prior to admission whether it is proper rebuttal. The court’s ruling on the purpose of admitting the tape is not clear. Apparently, there was at least some excludable hearsay in the tape. If it is transcribed, such material might well be deleted.

Reversed and remanded.


author: John I., Purtle, Justice. John A. Fogleman, Chief Justice,

text:
    William Thomas HAYNES v. STATE of Arkansas
    CR 80-62
    602 S.W. 2d 599
    Supreme Court of Arkansas
    Opinion delivered July 7, 1980
    Rehearing denied August 25, 1980

      E. Alvin Schay, State Appellate Defender, by: Jackson Jones, Deputy Appellate Defender, for appellant.

      Steve Clark, Atty. Gen., by: Victra L. Fewell, Asst. Atty. Gen., for appellee.
   John I., Purtle, Justice.

Appellant was convicted of possession of marijuana, possession of LSD with intent to deliver, and delivery of LSD. He was fined $1,000 and sentenced to one year in jail on the marijuana charge and was fined $15,000 and sentenced to the Department of Correction for 20 years on each of the other two charges. The jail time merged with the Department of Correction sentences which were to run consecutively.

On appeal appellant urges three points for reversal. (1) The court failed to grant appellant’s motion to suppress certain evidence. (2) The sentence resulted from passion and prejudice and was cruel and unusual. (3) The trial court failed to sentence appellant pursuant to the Youthful Offender’s Act. We agree with appellant’s first contention but disagree with the second and third arguments.

Appellant lived with his father in room 114 of the Apple Valley Inn in Harrison, Arkansas, at the time the events considered here occurred. Other persons occupied room 116. The police became suspicious that drugs were being distributed from the motel and began an investigation. Apparently, room 116 received most of the visitor traffic, but there was some testimony that several people were in and around rooms 115 and 114, also.

About 8:00 p.m. on April 23, 1978, the officers decided to make a controlled purchase through a reliable informant. The officers moved into an observation post from which they observed five people known to them, plus several more unknown to them, in and around room 116. Detective Post stated:

Well, they were all over, and, there were cars there and I can’t remember what kinds of cars they were and all these individuals were outside and going inside room 116, back and forth and standing outside talking.

Sergeant Lucas testified that he observed the informant arrive on the scene at approximately 11:00 p.m. and that he saw the appellant emerge from room 114 and strike up a conversation with the informant in the parking lot. Shortly thereafter, the informant and the appellant entered room 116 where they stayed a few minutes, and the informant left. The informant later reported that he had been successful in buying drugs from the appellant. Although the record is silent, it is apparent that the purchase was completed in room 116. Lucas further testified that the people he observed were in room 115 or 116 but not in room 114. All of the people he saw arriving and departing were from room 116. He also testified that after the informant and appellant left room 116, the appellant returned to room 114 where he resided with his father.

The officers then decided it was time to secure the area; and, on command, they charged the motel and kicked down the door of rooms 115 and 116. Room 115 was vacant and only two people were in room 116. After discovering appellant was in neither room, they proceeded to room 114 where they entered without permission and without a warrant. At this time, other officers were attempting to obtain a search warrant, however, it took approximately three and a half hours for the warrant to arrive. In the meantime, the officers moved appellant’s father out of his own room and placed him in room 115 until the search warrant arrived. Appellant and at least one officer stayed inside room 114 for approximately three and a half hours. The officers admitted they did not have permission to enter room 114 as they were not there under friendly circumstances.

The evidence is in considerable dispute about what occurred while the officer remained in room 114 waiting for the search warrant, and it is uncertain when or if the appellant was arrested. Officer Post stated:

I did not tell them they were under arrest, but I did advise the defendant of his rights. This was when I walked into room 114. I asked Officer Hutchinson if the defendant had said anything, and he said he had not.

The officer testified that after a considerable amount of discussion the appellant finally stated that the only drugs he had were in a dresser drawer and that appellant went to the dresser drawer, opened it, and got a container with the marijuana in it. The officer opened the canister, looked in and saw the marijuana, and told appellant to replace it in the drawer. After the search warrant arrived, about 3:00 a.m., the police took possession of the marijuana again, and, they also discovered LSD with a market value of $58.

The crucial question to be considered by the court is whether the evidence seized should have been supressed.

Arkansas Rules of Criminal Procedure, Rule 10.1(a), states:

“Search” means any intrusion other than an arrest, by an officer under color of authority, upon an individual’s person, property, or privacy, for the purpose of seizing individuals or things or obtaining information by inspection or surveillance, if such intrusion, in the absence of legal authority or sufficient consent, would be a civil wrong, criminal offense, or violation of the individual’s rights under the Constitution of the United States or this state.

It seems quite clear that there was an intrusion into appellant’s place of abode at the time of this “seizure.” Since an intrusion without legal authority is a violation of one’s individual rights under the Constitutions of the United States and the state of Arkansas, this visit amounted to an illegal intrusion or search. Rule 10.1(a) is nothing more than an explanation of a meaning of the word “search”. The officers obviously were acting under color of authority and were on the appellant’s property for the purpose of seizing individuals or things. There is no question there was no consent to this intrusion.

Arkansas Rules of Criminal Procedure, Rule 14.3, states:

An officer who has reasonable cause to believe that premises or a vehicle contain:
(a) individuals in imminent danger of death or serious bodily harm; or
(b) things imminently likely to burn, explode, or otherwise cause death, serious bodily harm, or substantial destruction of property; or
(c)things subject to seizure which will cause or be used to cause death or serious bodily harm if their seizure is delayed;
may, without a search warrant, enter and search such premises and vehicles, and the persons therein, to the extent necessary for the prevention of such death, bodily harm or destruction.

It is quite clear that this was not an emergency search as defined by the above-quoted rule. We have always construed the Fourth Amendment to prohibit entry into one’s home, without a warrant, for any reason; except, exigent circumstances have been determined to allow a warrantless intrusion. Absent exigent circumstances such an intrusion is not permitted. Payton v. New York, 445 U.S. 573, 100 S. Ct. 1371 (1980). We do not believe any provision of the constitution permits officers without a warrant to break down doors, to enter the premises of an individual, and to detain him for several hours while waiting for a search warrant. Using an old cliche, a man’s home is his castle; and, it should be free from intrusion by outsiders, including the government and its officers. The United States Supreme Court has confirmed the statement that illegal entry into a person’s home is the chief evil guarded against by the Fourth Amendment. United States v. United States District Court, 407 U.S. 297 (1972); McDonald v. United States, 335 U.S. 451 (1948).

In Riddick v. New York, 445 U.S. 573, 100 S. Ct. 1371 (1980), which is a companion case to Payton v. New York, supra, it was held that when the police entered a residence without a warrant and seized evidence, the evidence thus obtained was inadmissible. In both Payton and Riddick, the trial court and the appellate court refused to suppress the evidence obtained in these two cases. In Payton the police knocked on his door; and, when there was no response, they knocked in the door and seized a spent cartridge which was in plain view. In Riddick’s case the police knocked on his door; and, when his young son opened the door, the police saw Riddick sitting in bed, entered his residence, and arrested him. Before permitting him to dress, they opened a chest of drawers and found narcotics and related paraphernalia which resulted in Riddick’s arrest and aided in his conviction. Both of these cases were reversed by the United States Supreme Court. It was held that the Fourth Amendment, made applicable to the states by the Fourteenth Amendment, prohibits police from making a warrantless and nonconsensual entry into a suspect’s home in order to make a routine felony arrest.

The opinion of the Court in Payton v. New York, supra, and Riddick v. New York, supra, is represented by the following statement:

It is a “basic principle of Fourth Amendment law” that searches and seizures inside a home without a warrant are presumptively unreasonable. Yet it is also well-settled that objects such as weapons or contraband found in a public place may be seized by the police without a warrant. The seizure of property in plain view involves no invasion of privacy and is presumptively reasonable, assuming that there is probable cause to associate the property with criminal activity. The distinction between a warrantless seizure in an open area and such a seizure on private premises was plainly stated in G. M. Leasing Corp. v. United States, 429 US 338, 354, 50 L Ed 2d 530, 97 S Ct 619:***

It is obvious that this case is controlling on the matter before us at this time.

We know of no statutory or other right which enables the officers to take the action which was described by Officer Hutchinson when he stated:

I told him that he was under arrest for the sale of a controlled substance and advised him of his constitutional rights, per Miranda, and seized the room until the search warrant could arrive.

Certainly, seizing the room is as much of an invasion of privacy as searching the room. Admittedly, there was no search warrant; therefore, the search and the seizure prior to the receipt of the warrant were not authorized.

We are unable to say from the record that the sentence was a result of passion or prejudice or that it was a clear abuse of the trial court’s discretion. Also, we point out that the Youthful Offender’s Act, Ark. Stat. Ann. § 43-2339 (Repl. 1977), is discretionary, and we find no abuse of that discretion.

Reversed and remanded.

Fogleman, C.J., George Rose Smith and Stroud, JJ., dissent.

John A. Fogleman, Chief Justice,

dissenting in part. I could accept a holding that the seizure of the marijuana in this case was the result of an unreasonable search and seizure, but I do not agree that the seizure of the LSD was the result of an unreasonable search. It was the fruit of a search pursuant to a search warrant which the officers were unable to produce until 34 hours after they knew there was a probable cause for a search of the motel room in which it was found. The officers who remained at the scene restrained themselves admirably except for the questionable episode relating to the marijuana. Perhaps the circumstances were not so exigent as to permit a search without a warrant, but Haynes did not have a constitutional right to flush his remaining inventory of LSD down the commode. Yet this is the unarticulated effect of the majority opinion. That is the only way that it can be said that the successful search pursuant to a proper warrant was the fruit of an unlawful intrusion.

In viewing this matter, it seems to me that the majority in making its independent determination of the reasonableness of the search, has given no weight whatever to the finding of the trial judge that the search was reasonable. The holding in Payton v. New York & Riddick v. New York, 445 U.S. 573, 100 S.Ct. 1371, 63 L.Ed. 2d 639 (1980), relied upon by the majority is strictly limited to arrests made in the absence of exigent circumstances. Throughout all the spate of its decisions during the past quarter of a century dealing with the Fourth Amendment warrant requirements in the light of what has been called the amorphous word, “reasonableness,” the United States Supreme Court has consistently recognized an exception to the warrant requirement in exigent circumstances, both in cases where a search was sustained as reasonable and where suppression was required because a warrantless search or seizure was unreasonable. See, e.g. Johnson v. United States, 333 U.S. 10, 68 S. Ct. 367, 92 L. Ed. 436 (1948); McDonald v. United States, 335 U.S. 451, 69 St.Ct. 191, 93 L.Ed. 153 (1948); United States, 335 U.S. 451, 69 S.Ct. 191, 93 L.Ed. 153 (1948); United States v. Jeffers, 342 U.S. 48, 72 S.Ct. 93, 96, L.Ed. 59 (1951); Warden v. Hayden, 387 U.S. 294, 87 S.Ct. 1642, 18 L.Ed. 2d 782 (1967) Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed. 2d 576 (1967); Chimel v. California, 395 U.S. 752, 89 S.Ct. 2034, 23 L. Ed. 2d 685 (1969); Chambers v. Maroney, 399 U.S. 42, 90 S.Ct. 1975, 26 L.Ed. 2d 419 (1970); Coolidge v. New Hampshire, 403 U.S. 443, 91 S.Ct. 2022, 29 L.Ed. 2d 564 (1971); Mincey v. Arizona, 437 U.S. 385, 98 S.Ct. 2408, 57 L.Ed. 2d 290 (1978). In Payton, the court specifically recognized that a different result might have been reached had the state found exigent circumstances, which arguably existed. In Riddick, there was no suggestion of exigent circumstances. In Warden, it was said that neither entry nor search is invalid where the exigencies of the situation make the course of action taken by the police imperative. The fact that the contents of the place to be searched might never be found again is a pertinent consideration in determining the reasonableness of the police action. See Chambers v. Maroney, supra. It is universally recognized that the danger of destruction of evidence, particularly contraband, is one of the most important factors in considering whether the circumstances were sufficiently exigent that action without a warrant is reasonable. See United States v. Santana, 427 U.S. 38, 96 S.Ct. 2406, 49 L.Ed. 2d 300 (1976); Cupp v. Murphy, 412 U.S. 291, 93 S.Ct. 2000, 36 L.Ed. 2d 900 (1973), and cases above cited.

There was evidence of exigent circumstances in this case. There was probable cause for the arrest of Haynes. The officers who arranged for the informant to purchase the controlled substance from Haynes proceeded immediately to obtain a search warrant and informed the state trooper, Hutchinson, a specialist in the enforcement of laws governing narcotics. Hutchinson said that he observed that a great many people were involved and many were leaving and he judged that the officers were running the serious risk of losing other evidence and having dangerous drugs get out on the street, so he decided that he and the officers still present should “secure” the area. He said that after he had gone to room 116 and Sgt. Lucas to room 115, he proceeded to room 114, where he found the door ajar, knocked on it, identified himself as a police officer, and said that he wanted to speak to Tommy Haynes and that he was there for a drug investigation. Hutchinson said that, after hearing a voice saying, “I am Tommy Haynes. What do you want?”, he entered the room, identified himself, and asked if the younger of two persons there was Tommy Haynes and, upon receiving an affirmative response, confirmed the identification by asking for the person’s driver’s license. Haynes testified that when he identified himself, Hutchinson asked him to step outside. He said that Hutchinson stated that he was conducting an investigation and had come to secure the area and that he (Haynes) responded, “Okay, go ahead.” According to Hutchinson, he placed Haynes under arrest for sale of a controlled substance and advised him of his rights a few minutes later when Officer Post arrived. Hutchinson said his basic concern was putting the individuals under arrest and preventing any further disposition of the evidence.

In Freeman v. State, 258 Ark. 617, 527 S.W. 2d 909, we held that the state had failed to show exigent circumstances to justify the warrantless seizure of an automobile. We said that there was no evidence that there was any danger that people in an automobile, from which the accused was taken when arrested, might remove the vehicle from the premises before a warrant could be issued, but that if that danger did exist, no reason appeared why two officers, other than those who made the arrest but who were present when the arrest was made, could not have maintained a guard sufficient to prevent' the removal of this evidence or why additional officers could not have been summoned to lend assistance in this respect. This was a clear recognition that circumstances that were not exigent might become so by subsequent developments.

In a narcotics case, it has been recognized that once the accused, who had recently made a sale to one making a “controlled buy” arranged by an undercover officer, saw the police, there was a realistic expectation that a delay would only result in destruction of the evidence. United States v. Santana, supra. There a warrantless arrest and search were found reasonable. In Michigan v. Tyler, 436 U.S. 499, 98 S.Ct. 1942, 56 L. Ed. 2d 486 (1978), the court pointed out that its decisions had recognized that a warrantless entry by criminal law enforcement officers may be legal where there is compelling need for official action and no time to secure a warrant. The inquiry is a dual one — whether the actions of the officer were justified in their inception and whether it was reasonably related in scope to the circumstances which justified the interference in the first place. Cupp v. Murphy, supra. A warrantless “search” must be strictly circumscribed by the exigencies which justify the intrusion. Mincey v. Arizona, supra.

In this case the evidence clearly showed that there were exigent circumstances to support the action of Hutchinson. A rather general exodus from the motel premises among the frequenters of room 116 and its environs commenced after the controlled buy. It became apparent to Hutchinson, whose, expertise as a narcotics officers is not to be ignored, that there was a reasonable probability that Haynes would join the exodus, with or without his remaining inventory of LSD. If he took it, it would undoubtedly surface on the street. If he did not, there was a strong likelihood that it would have “gone down the drain.” There certainly was a reasonable expectation that evidence would be destroyed, or that, in any event, it would never be found if the arrival of a search warrant was awaited. It was certainly reasonable to believe that there was a compelling need for official action in the form of an arrest and “securing the area” of the intended search. There was certainly a basis for finding that the actions of the officer were justified in their inception. Hutchinson carefully limited the intrusion by not actually conducting a search for evidence (contraband) until the search warrant arrived. There was an evidentiary basis for a finding that he did not extend his intrusion beyond the scope reasonably related to the initial intereference.

In its totally independent determination of the reasonableness of the officer’s action, the majority has ignored a basic factor of that review. We should give respectful consideration to the findings of the trial court and considerable weight in the resolution of evidentiary conflicts. Harris v. State, 244 Ark. 314, 425 S.W. 2d 293; State v. Osborn, 263 Ark. 554, 566 S.W. 2d 139. We should accord the trial court’s findings such weight that we will not overturn them unless they are clearly against the preponderance of the evidence. Degler v. State, 257 Ark. 388, 517 S.W. 2d 515; State v. Osborn, supra. I respectfully submit that the majority has given no consideration to the findings of the trial court. I do not see how it can be said that the trial court’s finding was clearly against the preponderance of the evidence. This decision will do nothing to counter the growing dissatisfaction with the exclusionary rule.

I would affirm the judgment.

I am authorized to state that Mr. Justice George Rose Smith and Mr. Justice Stroud join in this opinion.


author: John F. Stroud, Justice. Darrell Hickman, Justice,

text:
    Mabel ALLEN et al v. James R. RANKIN et al
    80-24
    602 S.W. 2d 673
    Supreme Court of Arkansas
    Opinion delivered July 7, 1980
    Rehearing denied August 25, 1980

      Thomas L. Cashion and Robert V. Light, oí Friday, Eldredge & Clark, for appellants.

      W. H. Drew of Drew & Mazzanti, for appellees.
   John F. Stroud, Justice.

This is a suit by three taxpayers of the Eudora Special School District seeking to void that portion of the annual school election that approved an 11 mill increase in school tax assessments. We disagree with the finding of the trial court invalidating the election.

At the annual election of the Eudora Special School District on March 13, 1979, the voters approved by a 25 vote margin the proposed 11 mill increase in the tax rate which raised the total school tax asessment to 53 mills. After the county election commission certified the vote as 698 for and 673 agáinst, appellees filed suit on March 29, 1979, alleging numerous irregularities in the election process and seeking to have the election declared null and void. Appellees contend that the irregularities led to approval of the proposed tax rate which would have otherwise been defeated. The school district and the school directors filed their answer to the complaint, alleging that appellees’ complaint failed to state a cause of action, and later, on September 28, filed a motion to dismiss the complaint on the ground that the relief sought was not authorized by law in that indispensable parties, the County Election Commissioners, had not been made defendants. The trial court did not rule on the motion until December 4, at which time it was denied. Appellants then filed a petition with this court seeking a writ of prohibition or other relief to block the trial of this matter, but this, too, was denied on December 31, 1979- Trial was held on January 3, 1980, before the circuit judge sitting as a jury, and on January 23 the trial court issued its written findings of fact. The court found that irregularities had occurred in the administering of the oaths to judges and clerks and in the selection of substitute election officials. The court found the irregularities to be sufficient to declare the election null and void in its entirety and to enjoin the county clerk from levying the additional millage. Urging three points for reversal, appellants bring this appeal.

Appellants first contend that the trial court erred in failing to dismiss the case due to the failure of appellees’ complaint to join the county election commissioners as defendants. In a case of first impression in this state, this court held in Henry v. Stuart, 251 Ark. 415, 473 S.W. 2d 165 (1971), that in the contest of a millage increase at a school election, the directors, or school board members, were the proper parties defendant, not the county election commissioners. The county board of election commissioners have the duty to certify the vote, but after that has been done, it is the school district and its directors that have the greater interest in defending a suit contesting the vote adopting a tax levy. We are not persuaded by appellants’ argument that the enactment of Ark. Stat. Ann. § 3-506.1 (Supp. 1977) authorizing prosecuting attorneys to defend a county board of election commissioners should cause us to overrule Henry v. Stuart, supra.

Appellants also contend that the trial court erred in refusing to dismiss the case on the ground of inexcusable delay in the disposition of this election contest in contravention of the urgent statutory mandate. It is clear that election contests are to be speedily determined, as evidenced by the tenor of all our statutes providing for election contests. It is also clear in this case that although appellees filed this lawsuit within 20 days of the certification of the election, it was not until more than nine months later that this suit came to trial. Ark. Stat. Ann. §§ 80-321 and 80-322 vest jurisdiction in the circuit court for a contest of the election of a school district director and require that the contest be brought within 20 days after the election. The statutes read as though they apply only to the contest of the election of a director, but this court held in Cowger & Stewart v. Mathis, 255 Ark. 511, 501 S.W. 2d 212 (1973) that § 80-322 was applicable in that suit attempting to void a tax millage levy.

The delay in the trial of this case was entirely too long, but we do not feel appellees should be saddled with the sole responsibility for this delay. The trial court noted the overcrowded nature of its docket during this period and commented that the suit had been brought to trial as expeditiously as his calendar would allow. Perhaps appellees should have applied to this court for a writ of mandamus to obtain an early trial setting; however, we are unwilling to say their failure to do so requires us to hold the trial court’s refusal to dismiss the case to be reversible error.

Finally, appellants contend that the trial court erred in its finding that the deviations from the statutory election procedures warranted declaring the election “null and void in its entirety.” Although appellees’ complaint alleged fraud as well as numerous irregularities in both the conduct of the election and the actual voting, their proof failed to establish fraud or show that sufficient votes were erroneously cast to change the result of the election. Only the following deviations were established by the evidence and set out in the trial court’s findings of fact:

(1) Several election officials were never administered the oath of office by one authorized to do so; and
(2) Several substitute election officials were appointed in an unauthorized manner.

While we do not condone disregard of the state’s election laws, we are quite reluctant to void an entire election due to a slight deviation from the statutory requirements. The failure to comply with the letter of the law by election officers, especially in matters over which the voter has no control, and in which no fraud is perpetrated, will not as a general rule render an election void, unless the statute expressly makes it so. Hogins v. Bullock, 92 Ark. 67, 121 S.W. 1064 (1909). The courts do not favor disfranchising a legal voter because of the misconduct of another person. Wilson v. Ellis, 230 Ark. 775, 324 S.W. 2d 513 (1959). Further, in Goggin v. Ratchford, 217 Ark. 180, 229 S.W. 2d 130 (1950), this court noted:

All provisions of the election law are mandatory if enforcement is sought before election in a direct proceeding for that purpose, but after election all should be held directory only, in support of the result, unless of a character to effect an obstruction to the free and intelligent casting of the vote, or to the ascertainment of the result, or unless the provisions affect an essential element of the election, or unless it is expressly declared by the statute that the particular act is essential to the validity of an election, or that its omission shall render it void.

We think the trial court was wrong in voiding the entire election due to the variances from the statutory requirements as set forth in its findings.

There were several other matters raised for the first time on this appeal, but it has been our policy not to consider matters which were not first presented to the trial court. Dunkum v. Moore, 265 Ark. 544, 580 S.W. 2d 183 (1979).

Reversed and remanded for the trial court to dissolve its order restraining the county clerk from levying the additional 11 mills.

Hickman and Mays, JJ., concur.

Darrell Hickman, Justice,

concurring. I agree the judgment of the trial court should be reversed. However, my reasons are different. There were innumerable irregularities in this school election, too many for comfort in fact, and the majority is approving practices which clearly violate several Arkansas statutes. I cannot say the trial court was wrong in voiding the boxes he did. However, the case should have been dismissed. This election contest was filed March 29, 1979. The case was not tried until January, 1980.

Ark. Stat. Ann. § 3-1002 (Repl. 1976) reads:
Hearing or contest — Adjournment of other courts. — If the complaint is sufficiently definite to make a prima facie case, the judge shall, unless the Circuit Court in which it is filed is in session or is to convene within thirty (30) days, call a special term, which shall possess the powers of a court convened in a regular term, and shall proceed at once to hear the case. If the case comes in regular term, it shall be given precedence and be speedily determined. The judge may adjourn other courts in order to hear such cases, and may call another judge in exchange to sit in other courts, or vacate the bench in other courts and cause a special judge to be elected to hold the same; and the session of the special term to hear such cases shall not interefere with the validity of other courts proceeding at the same time in said circuit. [Emphasis added.]

That statute clearly requires the circuit court to expedite an election contest. That was not done in this case. The trial judge referred to the fact that he had a considerable backlog of cases and I am sympathetic with that problem. However, the law clearly requires that an election contest be put at the head of the docket. There are good reasons, of course, for that. In the case of a candidate an early decision should be made for everyone’s best interest. In the case of an election on a tax, such as that before us, an early decision should be made so that the tax books and the collection of the tax can . be dealt with in an orderly and efficient manner.

The appellants filed a motion to dismiss this case because it had not been speedily disposed of and it is my judgment that motion should have been granted.

Mays, J., joins in this concurrence.


author: John F. Stroud, Justice.

text:
    Mary Louise PAULSEN v. Gerald Richard Ray PAULSEN
    80-109
    601 S.W. 2d 873
    Supreme Court of Arkansas
    Opinion delivered July 7, 1980

      Cearley, Gitchell, Bogard, Mitchell & Bryant, P.A., for appellant.

      J. Victor Harvey, for appellee.
   John F. Stroud, Justice.

The question in this case is whether military retirement pay should be divided pursuant to Act 705 of 1979 as marital property at the time of divorce. We agree with the trial court that it should not.

Gerald and Mary Paulsen were married in Tennessee in 1956, just as he completed his basic training with the United States Air Force. During the course of their marriage they had two sons, one of whom, Greg, is moderately retarded. Soon after his retirement from the Air Force in 1976, appellee left his family and, ultimately, was divorced by appellant on the ground of three years separation without cohabitation. Both appellant and appellee were employed and had modest incomes at the time of trial, but the only substantial income was appellee’s military retirement pay of about $500 per month. Appellant was awarded custody of Greg, $150 per month support for him, and $85 per month alimony. Appellant sought to have the trial court rule that appellee’s retirement pay was marital property and, as such, was subject to being evenly divided between the parties. The trial court ruled that military retirement pay does not come within the scope of Act 705 of 1979 and refused to award appellant any interest in it. However, the trial court stated that the military retirement pay was taken into consideration in the computation of the amount of support and alimony payments to be made to appellant. From the trial court’s denial of her request to divide the military retirement pay between them, appellant brings this appeal.

The parties agree the sole question on this appeal is whether appellee’s military retirement pay should be considered “marital property” under Act 705 of 1979. As neither party has challenged the validity of Act 705, we will not now address that question. Section 1 of Act 705 provides, in part:

(1) All marital property shall be distributed one-half to each party unless the Court finds such a division to be inequitable, . . .

Marital property is defined in this same section as “all property acquired by either spouse subsequent to the marriage,” with a few exceptions not applicable here. The relevant portions of prior Arkansas law had provided, in Ark. Stat. Ann. § 34-1214 (Repl. 1962), that upon divorce a wife was to receive “one-third of all the husband’s personal property absolutely, and one-third of all the lands whereof her husband was seized of an estate of inheritance at any time during the marriage ...” The change in the statute was obviously motivated by the desire of the General Assemby to eliminate a gender based division of property statute in divorce cases, and at the same time it erased the distinction between real and personal property for property settlement purposes.

Although it involved an interpretation of the prior statute, this court addressed the same issue as that presented here in Fenney v. Fenney, 259 Ark. 858, 537 S.W. 2d 367 (1976). There the court held that the husband’s retirement pay from the armed forces was not personal property within the meaning of § 34-1214 and, therefore, was not subject to division between the husband and wife. The court also noted that the right to pension and retirement pay, not yet due and payable, cannot be assigned, sold, transferred, conveyed or pledged. In Fenney, supra, this court chose to follow the rule laid down by the Colorado Court of Appeals, later affirmed by the Colorado Supreme Court, in In Re Marriage of Ellis, 538 P. 2d 1345 (Colo. App. 1975), in which it was held that military retirement pay did not constitute “property” under the Colorado statute providing for the division of marital property. But see Daffin v. Daffin, 567 S.W. 2d 672 (Mo. App. 1978) construing a statute similar to the Arkansas and Colorado statutes, but reaching the opposite conclusion. The Colorado Court of Appeals went on to note that, although not subject to division upon dissolution of the marriage, the retirement payments should be considered as any other economic circumstance of the husband in determining a just division of the marital property and in fixing the amount of maintenance and child support which the husband should pay to meet the needs of the wife and children. In this case the trial court properly considered the military retirement pay in setting the amount of the child support and alimony payments.

Military retirement pay is not a fixed and tangible asset such as a vested pension or profit-sharing plan that may be collected in a lump sum. Rather, it terminates at death and has no loan, surrender or redemption value. We agree with the decision of the trial court that military retirement pay is not marital property as contemplated by Act 705 of 1979.

Affirmed.


author: Richard L. Mays, Justice.

text:
    COUNTRYSIDE CASUALTY CO. v. Coy W. GRANT
    80-79
    601 S.W. 2d 875
    Supreme Court of Arkansas
    Opinion delivered July 7, 1980

      Matthews & Sanders, for appellant.

      Ted Boswell, P.A., by: David E. Smith, for appellee.
   Richard L. Mays, Justice.

An automobile insurance policy issued by appellant, Countryside Casualty Co., contained a clause providing insurance for newly acquired automobiles if all the automobiles owned by the insured were insured with the company. In a suit by appellee, Coy W. Grant, under the policy seeking recovery for damages to his newly acquired pick-up truck, which had been destroyed by fire, the trial court sitting as a jury held that appellant was liable for the loss, as well as a statutory 12% penalty and attorney’s fee, even though appellee owned a used car dealership which had an inventory of automobiles which were not insured by appellant. We affirm the trial court’s holding on appellant’s liability under the policy for appellee’s property loss but reverse on the penalty assessment and attorney’s fee award.

The automobile insurance policy in question was issued to appellee on November 1, 1978, to provide collision and comprehensive coverage on his private passenger 1977 Continental. It contains an “automatic insurance” clause for newly acquired automobiles which provides in pertinent part as follows:

The insurance afforded by this policy with respect to the described automobile applies to any other automobile of which the named insured or spouse acquires ownership if it replaces the described automobile or is an additional automobile and the company insures all automobiles owned in whole or in part by the named insured and spouse on the date of such acquisition; provided that the named insured or spouse notifies the Company . . . within 30 days after the date of such acquisition of his election to make the insurance afforded by this . . . policy applicable to such automobile . . . (Emphasis supplied)

Although the wording of this provision is not ambiguous on its face, the trial court concluded that the wording became ambiguous when considered in relation to the purpose and circumstances surrounding the making of the insurance contract.

When appellee took out the insurance on his private passenger automobile he in fact owned other automobiles which he sold through a used car lot business operating under the name “Coy Grant Motors.” These automobiles were not insured by appellant since it did not insure used car lot automobiles. On November 8, 1978, appellee purchased for private passenger use an additional vehicle, a 1977 Chevrolet pick-up truck, from Cecil Tate Ford for $4,300. The truck was destroyed by fire less than 30 days later, on November 29, 1978.

Appellant contends that the pick-up truck was not insured under the policy issued on the 1977 Continental because the “automatic insurance” clause plainly excludes coverage for additional vehicles when the insured owns other automobiles which are not insured by the company. However, since the appellant did not insure automobiles for sale on used car lots, the court found a latent ambiguity in the policy because the policy language did not clearly indicate that the applicability of the “automatic insurance” clause for newly acquired automobiles should be conditioned upon the ownership of automobiles which appellant could not insure. After admitting parol evidence to ascertain the true intention of the parties, the trial court concluded that the parties did not intend for appellee’s used car lot ownership to prevent the operation of the automatic insurance clause to insure newly acquired private passenger automobiles for 30 days without notice to the company.

Since we view the trial court’s finding of latent ambiguity and its conclusions concerning the true intention of the parties as primarily questions of fact, we shall not reverse the trial court unless its judgment is clearly erroneous. Rule 52 of the Rules of Civil Procedure. A latent ambiguity arises when the contract on its face appears clear and unambiguous but collateral facts exist which makes its meaning uncertain. C. & A. Construction Co., Inc. v. Benning Construction Co., 256 Ark. 621, 509 S.W. 2nd 302 (1974). Parol evidence is admissible not only to bring out the latent ambiguity but to explain the true intention of the parties. Jones on Evidence (Vol. 3, p. 134, § 16:23). An ambiguity found in an insurance contract is to be construed against the insurer since the insurer wrote the policy without any consultation with the insured. National Benevolent Society v. Harris, 178 Ark. 24, 9 S.W. 2nd 773 (1928); Aetna Life Ins. Co. v. Spencer, 182 Ark. 496, 32 S.W. 2nd 310 (1930). The policy of liberal construction in favor of the insured applies even more forcefully to the “automatic insurance” clause since its inclusion in the insurance policy is for the benefit of the insured. Michel v. Aetna Casualty and Surety Co., 252 F. 2d 40 (10th Cir. 1958). In the instant case, the parol evidence, which primarily came from the testimony of appellant’s insurance agent, not only indicated that the insurance agent who sold appellee his automobile insurance policy knew of appellee’s used car lot business but that he did not intend for the used car lot ownership to preclude automatic insurance coverage for additional private passenger automobiles. The evidence further established that the agent did not intend to insure additional cars acquired for resale in appellee’s used car business under any automatic insurance provisions and could not have insured these used cars on any basis since the appellant did not provide that kind of insurance. In fact, the insurance agent explicitly testified that appellee requested insurance coverage for his used car lot but was refused because the company did not write such insurance. Applying the policy of liberal construction in favor of the insured to these facts, we cannot say that the trial court’s findings concerning latent ambiguity and the intention of the parties are against the preponderance of the evidence.

Also, arguing that appellee’s newly acquired pick-up truck was not purchased for his personal use, appellant contends that the pick-up should not be insured under the automatic insurance clause even if appellee’s used car lot ownership does not prevent application of the clause. In support of his argument appellant alleges that appellee put dealer plates on his pick-up truck, a practice restricted to a dealer’s business automobiles, that the invoice for the pick-up truck indicates “Coy Grant Motors” and that the pick-up truck was not assessed on appellee’s property tax assessment. However, appellee’s banker testified that appellee had one method for financing his personal cars and another for financing his business cars, and the pick-up truck was financed as a personal car with the maker of the note being “Coy Grant” rather than “Coy Grant Motors.” Appellee testified that he purchased the truck for hunting and other personal use. He explained that he also put dealer plates on his Continental, which is admittedly for personal use, and that the Continental did not appear on his personal property asessment. Again, under these facts we cannot say that the trial court’s finding is clearly erroneous.

Appellant raises one further issue concerning the 12% penalty assessment and attorney’s fee award. Pursuant to appellee’s prayer for damages in his complaint, the trial court found appellee’s damage to his truck to be $4,500 and entered judgment accordingly, notwithstanding a $50 deductible provision in appellee’s insurance policy. Since appellee’s right to recover is based on his insurance policy, appellant contends that appellee’s judgment should be reduced by the $50 deductible. Since the attorney’s fee and penalty are not allowable against insurance companies unless the insured recovers the exact amount for which he sues, appellant contends that a reduction of appellee’s judgment below the prayer in his complaint eliminates appellee’s entitlement to the penalty and attorney’s fee. We agree. Although the wisdom of such a policy may be questioned, its principle has been statutorily preserved and will not be disturbed by us. See Ark. Stat. Ann. § 66-3238 (Repl. 1966) and Pacific Mutual Life Ins. Co. v. Carter, 92 Ark. 378, 123 S.W. 384 (1909). Accordingly, appellee’s judgment is reduced to $4,450 for the property damage loss and the statutory penalty and attorney’s fee are eliminated. See, e.g., Southwestern Ins. Co. v. Camp, 253 Ark. 886, 489 S.W. 2nd 498 (1973).

Affirmed as modified in part and reversed in part.