author: Darrell Hickman, Justice.

text:
    HELL’S CO-OP GIN COMPANY, et al v. Earl BULLINGTON, et al
    77-71
    552 S.W. 2d 231
    Opinion delivered June 27, 1977
    (Division II)

      Butler, Hicky & Jones, by: Preston G. Hicky, for appellants.

      Frierson, Walker, Snellgrove & Laser, for appellees.
   Darrell Hickman, Justice.

This case, started between cotton growers, Ernest Bullington, his brother, Earl, Ralph Murphy, and a cotton buyer, W. B. Dunavent and Company, who brought a lawsuit against a ginning company, Hill’s Coop Gin Company of Arkansas, Inc., over the loss of seventeen bales of cotton that burned while in the custody of the gin company.

The lower court granted a directed verdict to the growers and buyer for the amount they sued for, plus penalties and attorneys’ fees. Hill’s Co-op and Farm Bureau appeal the decision of the lower court alleging two errors: the court should have granted the defendants’ demurrer to the complaint because the buyer,. Dunavent, was not a proper plaintiff party to sue Hill’s and Farm Bureau; and the court was wrong in granting a directed verdict to the appellee growers and buyer.

We agree with the appellants.

Earl Bullington and his brother are cotton growers from Missouri who have a farm in St. Francis County. Ralph Murphy is a part owner of that farm. They had all contracted to sell all of the cotton from this farm to Dunavent, a nonresident corporation, for thirty-two cents a pound. The growers delivered their cotton to Hill’s Gin and after it was ginned, while in the custody of Hill’s, but before it was sampled and graded, seventeen bales burned. Farm Bureau had an insurance policy with the gin company and offered to pay the growers thirty-two cents a pound. That policy had the following provision:

This policy covers only seed cotton, baled cotton and baled motes, cotton seed, bagging and ties, fertilizer and insecticides; the property of the insured or for which the insured may be legally liable or for which the insured has assumed responsibility for providing insurance coverage.

The growers demanded the market price on the date of the loss for strict low middling, inch and 1 /16th cotton which was 82.15 a pound. It was not disputed that the seventeen bales of cotton weighed 9,070 pounds, less twenty-one pounds per bale for bagging and ties. 9,070 pounds at 82.15 a pound totals $7,451.05, which is the amount the growers sued for. The buyer, Dunavent, joined in this suit against the insurance company and the growers and the buyer asked for 12% penalty and attorneys’ fees, which is authorized by Ark. Stats. Ann. § 66-3238.

The appellants demurred to this complaint stating that Dunavent was not a proper party to sue Hill’s and Farm Bureau because it was not the owner of the cotton, or a customer of Hill’s and, therefore, not entitled to recover for the loss directly against the appellants. The appellants were right. Dunavent was not an owner of the cotton. It only had a claim against the growers and not the gin or insurance company. We decided that an insurance policy, such as one in this case, is not a liability policy but insurance for property that is on the premises. Pacific Fire Ins. Co. v. Murdock Cotton Co., 193 Ark. 327, 99 S.W. 2d 233 (1936). However, in the Pacific case, the suit was brought in the name of the owner who had legal title to the cotton. Dunavent did not have legal title to the cotton. It only had a contract with the growers to buy the cotton. Only the owners of the cotton at the time of the loss would be entitled to sue the gin and insurance company directly. Therefore, the trial court was wrong in not granting the demurrer to the complaint. Any claim Dunavent may have against the Bullingtons and Murphy is not before the court.

There is no direct evidence in the record of the grade of the seventeen bales of cotton. It is not disputed that strict low middling, inch and 1/16th cotton was worth 82.15 on the date of the fire. The proof in the record that this cotton was of ; that grade was all circumstantial. Also, it is undisputed that each bple had twenty-one pounds of bagging and ties, and this figure would have to be deducted from the total weight of 9,070 pounds to arrive at a figure for which a verdict could be entered. This is assuming the appellees proved this cotton was worth 82.15 per pound. Therefore, even assuming the cotton was worth 82.15 per pound, the court improperly entered a judgment for the amount sued for plus penalties and attorneys’ fees. Since Ark. Stats. Ann. § 66-3238 (Repl. 1966) only permits attorneys’ fees and penalties when the exact amount sued for is recovered, the court improperly awarded penalties and attorneys’ fees.

The trial court improperly concluded that it was not disputed as to the grade of the cotton. Whether or not the grade was proved depends upon the inferences that may be drawn from the circumstantial evidence on grade. This means market value was a fact question for the jury and not a matter of law for the court.

It is the burden of the plaintiffs, the appellees here, to prove the market value at the time of the loss. It was a matter for the jury to decide the market value based on the evidence presented. The court could not have directed a verdict in view of the fact that the market value was disputed.

Reversed and remanded.

We agree: Harris, C.J., and Fogleman and Byrd, JJ.


source: Caselaw Access Project

author: George E. Campbell, Special Justice.

license: Public Domain

text:
    SOUTHWESTERN ELECTRIC POWER COMPANY and BEAVER WATER DISTRICT v. CARROLL ELECTRIC COOPERATIVE CORPORATION
    76-137
    554 S.W. 2d 308
    Opinion delivered June 27, 1977
    [Rehearing denied September 19, 1977.]

      Walter R. Niblock, Leonard Greenhaw, and RichardL. Arnold, for appellants.

      James F. Dickson, for appellee.

      Davis, Douglas & Penix, for Intervenor, Springdale Water & Waste Water Commission.

      James N. McCord, for City of Fayetteville, Amicus Curiae.

      Eugene T. Kelley, of Kelley, Luffman & Jennings, for Intervenor, Rogers Water Works.
   George E. Campbell, Special Justice.

This action arises from the providing of electric service to Beaver Water District (“Beaver”) by Southwestern Electric Power Company (“SWEPCO”). Beaver is a regional water distribution district organized under Act No. 114 of 1957 (Ark. Stats. Ann. §§ 21-1401 — 1415), as amended. Beaver has constructed water intake, treatment and pumping facilities in an area certificated for electric service by the Arkansas Public Service Commission to Carroll Electric Cooperative Corporation (“Carroll”).

From August 1, 1965 to December 31, 1972, electric service to Beaver had been provided by the Southwestern Power Administration (“SPA”), a Federal agency, which is empowered to distribute surplus electric energy from Federal reservoir projects. Such activity is authorized and governed by Section 5 of the Flood Control Act of 1944, 58 Stat. 890; 16 USCA § 825s. The electric service had been provided over a line constructed by Beaver from its facility in an area certificated to Carroll to a point outside Carroll’s area certificated to SWEPCO. SPA had contracted with SWEPCO to provide the electric energy which SPA billed and sold to Beaver, but Beaver was not a party to such contract.

SWEPCO and Beaver entered into a contract dated October 12, 1972, which provided that commencing January 1, 1973, electrical service would be provided to Beaver by SWEPCO which would bill Beaver directly. In September, 1972, prior to entry into the contract of October 12, 1972, Beaver requested that Carroll execute a waiver of its rights to serve Beaver.

Carroll commenced this action for a declaratory judgment on November 21, 1973, and thereafter judgment was entered in favor of Carroll determining that the contract of October 12, 1972, between Beaver and SWEPCO was void, and finding it to be in violation of Ark. Stats. Ann. § 73-240 (Supp. 1975) which provides, in part, that no utility service may be undertaken by a public utility in an area allocated to another electric cooperative or public utility.

The cities of Fayetteville, Rogers and Springdale were granted leave to intervene or appear as amicus curiae in this cause and have presented briefs in support of the position of SWEPCO and Beaver. The positions urged by these parties are substantially those of SWEPCO and Beaver and are addressed in this Opinion.

Beaver and SWEPCO have appealed and assert three principal arguments for reversal: (1) Beaver is authorized by its enabling legislation to own and operate electric transmission lines and may obtain electric power from SWEPCO; (2) Beaver is exempt from the authority of the Public Service Commission, and may in the exercise of its lawful powers contract with SWEPCO for electrical service without regard to Section 73-240; and (3) in any event, if Carroll had a cause of action it is barred by the statute of limitations or laches.

Beaver and SWEPCO urge the particular application of Ark. Stats. Ann. § 21-1408(3) granting to Beaver the power—

“(3) . . . ; to transport, distribute, sell, furnish and dispose of such water to any person at any place; to construct, erect, purchase, lease as lessee and in any manner acquire, own, hold, maintain, operate, sell, dispose of, lease as lessor, exchange and mortgage plants, buildings, works, machinery, supplies, equipment, apparatus, facilities, property rights, and transportation and distribution lines, facilities, equipment or systems necessary, convenient or useful.”

SWEPCO and Beaver argue that the statutory powers granted to Beaver to effectuate its purposes are sufficient to enable it to construct its own electric power line from Carroll’s certificated territory into SWEPCO’s certificated territory at which point SWEPCO may then lawfully deliver electric service. We do not agree.

While the grant of powers under Act No. 114 of 1957 is in many respects broad and general, these powers are granted in the context of the operation of water distribution facilities and services. We do not hold that it is not permissible for a district such as Beaver to construct electric utility lines to serve its needs, but these powers must be construed within the broader regulatory framework of existing statutes if such is reasonably possible. The construction of an electric power line from one certificated territory to another is not such a “necessary, convenient or useful” act as to frustrate the intent of the General Assembly in its structure for the regulation of public utility service established by Act. No. 324 of 1935, and as subsequently amended. While there appears to be no previously decided case in Arkansas, other jurisdictions have recognized that the place and purpose of the use of electric energy is controlling, rather than the place of connection. In Capital Electric Power Association v. Mississippi Power & Light Company, 218 So. 2d 707, a college was located in the area certificated to Capital Electric Power Association. The college provided electrical lines from its facilities to a point outside the certificated area of Capital Electric and obtained service from Mississippi Power & Light Company. The Mississippi Public Service Commission issued an order directing Mississippi Power & Light Company to terminate the service. The Mississippi Supreme Court stated:

“The explicit policy under our Act has been one of ‘exclusive’ service area. If Mississippi Power & Light cannot service Whittington Hall directly, certainly to do so would be a violation of the Act. Any right to serve Whittington Hall must come from rights statutorily possessed by the Company.”

The Mississippi Court also quoted with approval the conclusions of the Tennessee Supreme Court in the decision of Holston River Electric Company v. Hydro Electric Corporation, 17 Tenn. App. 122, 66 S.W. 2d 217, in which a private company had constructed a line to a point outside the city limits to obtain electrical service from a company which was not authorized to provide electrical service within the municipality. While the Holston case may be distinguished as to the nature of the private litigation, the sound reasoning that the place of delivery of the electric current is not controlling, but rather the place and the purpose of its use must be the controlling factor is without question.

Section 11 of Act No. 114 of 1957 provides:
“Water districts organized under this Act shall be exempt in any and all respects from the jurisdiction and control of the Public Service Commission of this State.” (Ark. Stats. Ann. § 21-1411).
Beaver and SWEPCO urge that since Beaver is exempt from Public Service Commission regulation under the foregoing provision its activities for contracting for electrical service with SWEPCO is not contrary to Section 73-240 because Section 21-1411 has impliedly repealed Section 73-240.
Section 73-240 is a statute of general nature in a scheme of public utility regulation. We do not believe it necessary in giving effect to Section 21-1411 that the repeal of Section 73-240 as to Beaver is necessarily implied. This Court has stated:
“The cardinal rule for the construction of statutes is that the legislative intent should be ascertained, which may be done by construing every part of the statute together with reference to all laws which relate to the same subject as a single system, so as to give effect to the legislative intent and to carry into effect the general purpose of the system.” Pace v. State Use Saline County, 189 Ark. 1104, at 1110, 76 S.W. 2d 294.

The purpose of Act No. 114 of 1957 was to enable cooperation with Federal programs to provide a means of water distribution through publicly created non-profit bodies. A reasoned construction of Act No. 114 in relation to the existing statutory plan of public utility regulation derived from Act 324 of 1935 necessarily permits the harmonizing of both Section 73-240 and Section 21-1411. We conclude that as to the sale and delivery of water a district such as Beaver formed under the authority of Act. No. 114 of 1957 may be free of Public Service Commission jurisdiction under the clear language of Section 21-1411. However, to extend the authority of Section 21-1411 further, and to permit Beaver to engage in any other public utility function or contract with public utilities totally free of the limitation of Section 73-240, cannot follow.

It is asserted, finally, that notwithstanding the possible application of one or more statutory restrictions, Carroll should have commenced its action within five years from the arrangement between SPA and SWEPCO, or is otherwise barred from this proceeding under the doctrine of laches. The record reflects knowledge by Carroll’s former manager that Beaver was obtaining electric service from SPA. Testimony was also developed that at some unspecified time Carroll through its former manager informally registered a verbal protest with an SPA official. No administrative or judicial proceedings were commenced by Carroll prior to the suit here on appeal.

Carroll urges that prior to October 12, 1972, it had no cause of action because SPA, an agency of the United States, was contracting to provide electrical service to Beaver and any effort to challenge this procedure would have been unsuccessful. We agree.

Had Carroll commenced an action against SPA or SWEPCO the Federal decisions are clear that Carroll could have obtained no relief. The authority of the SPA to make sales of electric power and contract with private companies for its distribution has been judicially considered and it has been determined that private parties (including particularly competing public utilities) have no standing to sue. Kansas City Power & Light Company v. McKay, 225 F. 2d 924, Cert. Denied, 76 S. Ct. 137, 350 U.S. 884. In certain instances Federal statutes concerning electrical production programs do require consideration of competitive matters, but this is not true of Section 5 of the Flood Control Act of 1944. See, e.g., Hardin v. Kentucky Utilities Co., 390 U.S. 1, 88 S. Ct. 651, construing Tennessee Valley Authority legislation.

We are of the opinion that Carroll’s right of action did not arise until SWEPCO entered into a contract directly with Beaver in violation of the provisions of Section 73-240, and that Carroll thereafter initiated its suit within the proper time.

Other arguments of the appellants have addressed the question of the probability of increased cost of service to Beaver from Carroll since SWEPCO would provide service at a lower cost. This may be the result of this litigation, but that matter is not properly before the Court for consideration.

The judgment of the Chancery Court of Benton County is affirmed, the stay order previously entered is dissolved, and this case is remanded for such additional relief as may be required to effectuate the judgment of the lower Court.

Fogleman, J., not participating.


author: PER CURIAM

text:
    Sammy GOODWIN v. STATE of Arkansas
    CR 77-85
    552 S.W. 2d 233
    June 27, 1977

      Guy Jones Jr., for appellant.

      Bill Clinton, Atty. Gen., by: Joseph H. Purvis, Asst. Atty. Gen., for appellee.
   PER CURIAM

After the Supreme Court Clerk refused to accept petitioner’s appeal record on the basis that his notice of appeal was not filed within the proper time, petitioner Sammy Goodwin moved for a Rule on the Clerk pursuant to Rules 36.9 and 36.22 of the Arkansas Rules of Criminal Procedure. The State has responded contending that the Clerk was correct in refusing the record because of Allen v. State, 261 Ark. 331, 553 S.W. 2d 690 (1977), which held that the filing of a notice of appeal within the 30 day limit is jurisdictional. We grant the Rule on the Clerk upon the showing made and for the reasons hereinafter set out.

The record shows that a jury verdict was returned finding petitioner guilty on August 21, 1976. On September 6, 1976 petitioner filed a motion for new trial but, for reasons not shown, the trial court has neglected to act upon the motion. Without notice to petitioner, a judgment of conviction was entered on January 17, 1977. The transcript of the trial was filed by the court reporter on January 26, 1977. Petitioner’s counsel, through a routine check, discovered on February 17, 1977 that the judgment had been entered and filed the notice of appeal on the same date.

Under similar circumstances, we held in Allen v. State, supra, that the filing of a notice of appeal in apt time was a jurisdictional prerequisite to our review. This same conclusion was reached in appeals of civil cases. See General Box Co. v. Scurlock, Comm. of Rev., 223 Ark. 967, 271 S.W. 2d 40 (1954) and White v. Avery, 226 Ark. 951, 295 S.W. 2d 364 (1956), involving the construction of Ark. Stat. Ann. § 27-2106.1 (Repl. 1962) with reference to appeals in civil cases. By Acts 1971, No. 333, the General Assembly provided:

SECTION 3. Time and Method of Taking Appeal. Within thirty (30) days from the date of sentence and entry of judgment by the trial judge, the person or persons desiring to appeal the judgment shall file with the trial court a notice of appeal identifying the parties taking the appeal and the judgment appealed. The notice of appeal shall include a certificate by the appealing party or his attorney that a transcript of the trial record has been ordered from the court reporter if, for the purposes of the appeal, a transcript is determined essential to resolve the issues on appeal. Notification of the filing of the notice of appeal shall be given to all other parties, or their representatives involved in the cause by mailing a copy of the notice of appeal to said parties or their representative, but failure to give such notification shall not affect the validity of the appeal. Failure of the appellant to take any further steps to secure the review of the appealed conviction shall not affect the validity of the appeal, but shall be ground only for such action as the appellate court deems appropriate, which may include dismissal of the appeal. If an appeal has not been docketed in the Supreme Court, the parties, with the approval of the trial court, may dismiss the appeal by stipulation filed in that court or that court may dismiss the appeal upon a motion and notice by the appellant.
SECTION 9. Other Remedies Not Abolished. Prior to the time fixed to file a notice of appeal, a person convicted of either a felony or misdemeanor may file a motion for new trial, a motion in arrest of judgment or any other application for relief. Such pleadings should include a statement that the movant believes the action to be meritorious and is not offered for the purpose of delay. Service of such motion shall be given to the representative of the prosecuting party. If requested or found to be necessary, the trial court shall promptly designate a date certain to take evidence, hear and dispose of all of matters that are presented. Upon the filing of any motion or other application for relief in the trial court, the time to file a notice of appeal shall not expire until thirty (30) days after the disposition of all motions or applications.
SECTION 10. Statutes Governing Civil Appeals to Apply. Matters pertaining to several appeals, the docketing, designation, abbreviation, stipulation, preparation, and correction or modification of the record on appeal as well as appeals where no stenographic record was made shall be governed by those statutes which now apply to, or may hereinafter be provided for, civil cases on appeal to the Supreme Court.”

As can be seen from the foregoing, Acts 1971, No. 333 is not substantially different from the provision governing appeals in civil cases — i.e. Ark. Stat. Ann. § 27-2106.1 (Repl. 1962). However, in adopting Arkansas Rules of Criminal Procedure effective January 1, 1976, this Court adopted Rule 36.9, which provides:

“Within thirty (30) days from the date of the sentence and entry of judgment by the trial judge, the person or persons desiring to appeal the judgment shall file with the trial court a notice of appeal identifying the parties taking the appeal and the judgment appealed. The notice of appeal shall include a certificate by the appealing party or his attorney that a transcript of the trial record has been ordered from the court reporter if, for the purposes of the appeal, a transcript is deemed essential to resolve the issues on appeal. Notification of the filing of the notice of appeal shall be given to all other parties or their representatives involved in the cause by mailing a copy of the notice of appeal to the parties or their representatives, but failure to give such notification shall not affect the validity of the appeal. Failure of the appellant to take any further steps to secure the review of the appealed conviction shall not affect the validity of the appeal but shall be ground only for such action as the Supreme Court deems appropriate, which may include dismissal of the appeal. The Supreme Court may act upon and decide a case in which the notice of appeal was not given or the transcript of the trial record was not filed in the time prescribed, when a good reason for the omission is shown by affidavit. If an appeal has not been docketed in the Supreme Court, the parties, with the approval of the trial court, may dismiss the appeal by stipulation filed in that court or that court may dismiss the appeal upon a motion and notice by the appellant.” [Emphasis Supplied].

The committee comment with respect to Rule 36.9 is as follows:

“Except for the emphasized language, Rule 36.9 is practically a verbatim rendition of section 3 of Act 333, now codified as § 43-2703 (Supp. 1973): ... .
The emphasized language is essentially that found in the authority superseded by Act 333, viz., § 43-2710 (Repl. 1964). Its restoration is suggested in order to permit a belated appeal upon a showing of good cause. While notice of appeal is a logical mechanism to bring into focus questions such as when a defendant should begin service a sentence of incarceration, there appears to be no persuasive reason for grounding an appellate court’s power to entertain the appeal on this procedural requirement. Extension of the court’s authority by addition of the supplementary language brings the rule into conformity with Standards, Criminal Appeals § 2.1.”

Consequently, the filing of a notice of appeal in apt time in a criminal case is not a jurisdictional prerequisite under Rule 36.9 and thus Allen v. State, supra, is overruled.

Under Rule 36.22 which is similar to § 9 of Act 333 of 1971, supra, appellant had 30 days after the disposition of his motion for new trial in which to file his notice of appeal and under Rule 36.9 the time for filing the notice of appeal runs from the date of entry of the judgment. Upon the showing here made, petitioner had already taken the necessary steps to obtain the court reporter’s transcript of the testimony before the judgment was entered without notice to him. Under the circumstances we must conclude that he has shown good reason for his one day tardiness in filing the notice of appeal. Consequently, the rule upon the Clerk to file the appeal is granted.

Amendment to Rule 19, Rules of the Supreme Court of Arkansas

June 13, 1977

PER CURIAM

IN RE: RULE 19. AMICI CURIAE ATTORNEYS.

Paragraph (a) of Rule 19 is amended to read as follows:

(a) May File Briefs, When. — Amici Curiae attorneys may file briefs, with the permission of the Court. The motion for permission should state the reasons why such a brief is thought to be necessary.


author: Elsijane T. Roy, Justice.

text:
    Denscelle Lee Massey WHITE v. STATE of Arkansas
    CR 76-202
    545 S.W. 2d 641
    Opinion delivered January 31, 1977
    (Division II)

      Gary M. Vinson, of Highsmith, Tatum, Highsmith, Gregg & Hart, for appellant.

      Jim Guy Tucker, Atty. Gen., by: Jack T. Lassiter, Asst. Atty. Gen., for appellee.
   Elsijane T. Roy, Justice.

Appellant was charged with burglary and grand larceny in connection with the alleged theft of certain items from a grocery store. On trial to a jury he was found guilty and sentenced to 15 years for burglary with a fine of $7,500 and to 5 years for grand larceny with a fine of $5,000, the sentences to run consecutively.

On appeal the only point relied upon for reversal is the court erred in failing to grant appellant’s motion to suppress evidence obtained as a result of an unlawful search.

The State contends the items were properly admitted because appellant consented to the search. At the hearing on the motion to suppress evidence Deputy Sheriff St. Clair testified he went to appellant’s home with Billy Quillman, appellant’s employer, to question him about the burglary of the Quillman home. St. Clair stated he asked appellant, “Do you mind if I search your house?” Appellant replied in the negative. St. Clair also testified he was wearing his gun and appellant recognized him as a policeman.

Quillman, a witness for the State, verified St. Clair’s testimony as to the alleged consent but noted he thought appellant was pretty drunk at the time. Although Deputy St. Clair testified appellant seemed to have control of his faculties, he admitted appellant was placed in the drunk tank to spend the night. It was undisputed that the alleged consent of appellant was obtained some time after midnight, about one o’clock in the morning, and that appellant had a strong odor of alcohol on his breath. St. Clair went to appellant’s home at Quillman’s request, and although appellant was a suspect no search warrant was sought; appellant was not asked to sign a consent form; and appellant was not advised he did not have to consent to the search.

Appellant testified he worked most of the day at Billy Quillman’s and started drinking about one o’clock that afternoon. After he left work he went next door to Willard Wilson’s house, where they drank “some whiskey and beer and some more whiskey and beer.” Appellant was asked if he recalled Deputy St. Clair’s asking to search the house. Appellant replied:

No, I don’t. The only thing I remember is somebody hollering and Mr. St. Clair in the door and the only other thing I remember is the man pulling his gun and putting it in my face, it was a chrome plated .38.

In Bumper v. North Carolina, 391 U.S. 543, 88 S. Ct. 1788, 20 L. Ed. 2d 797 (1968), the Court stated:

When a prosecutor seeks to rely upon consent to justify the lawfulness of a search, he has the burden of proving that the consent was, in fact, freely and voluntarily given. This burden cannot be discharged by showing no more than acquiescence to a claim of lawful authority. * * * (Italics supplied.)
The Court in Judd v. United States, 89 U.S. App. D.C. 64, 190 F. 2d 649 (1951), stated:
. . .[S]uch a waiver or consent must be proved by clear and positive testimony, and it must be established that there was no duress or coercion, actual or implied. (Citing cases.) (Italics supplied.)

When we consider all the circumstances in connection with the alleged consent here we are unable to say the State met its burden of proving consent freely and voluntarily given by clear and positive testimony. Therefore the evidence obtained in the search should have been suppressed.

Reversed and remanded.

We agree. Harris, C.J., and Fogleman and Hickman, JJ


author: Frank Holt, Justice.

text:
    Eva RUSSELL, Administratrix, et al v. NEKOOSA PAPERS, Inc.
    76-274
    547 S.W. 2d 409
    Opinion delivered February 22, 1977
    [Rehearing denied April 4, 1977.1

      Gaughan, Barnes, Roberts, Harrell & Laney, for appellants.

      Shackleford, Shackleford & Phillips, for appellee.
   Frank Holt, Justice.

The two appellants are administraces of the respective estates of their husbands, who were killed in an automobile accident involving two alleged employees of the appellee, Nekoosa Papers, Inc. The appellants brought a suit against each of these individuals without including appellee. That action, based upon the asserted negligence of the two defendants, resulted in compromise settlements which were approved in the probate court. The probate court orders expressly provided that the settlements were full and complete between these parties. However, the orders provided that the settlements had no effect on any other persons, partnerships or corporations that could have any liability for the wrongful deaths of the administratrices’ husbands. The action was then dismissed with prejudice in circuit court pursuant to that stipulation. About two years later these same appellants filed the present action against the appellee, alleging that the two individuals named in the previous action were the agents, servants and employees of Nekoosa and, therefore, their negligence was imputed to it as their employer. The court sustained appellee’s motion for a summary judgment which asserted that the settlement and dismissal with prejudice of the previous action against appellee’s alleged employees was res judicata which barred the appellants’ present action against it.

This appeal, say appellants, presents the issue as to whether a compromise settlement with an agent, servant and employee, followed by a dismissal of the action with prejudice, bars a subsequent action against the employer when the issues of negligence and agency in a previous action were never litigated. It is appellants’ position that this subsequent action against the appellee employer is not barred by res judicata or collateral estoppel and, therefore, the court erred in granting a summary judgment. Appellants argue that res judicata is inapplicable here because the appellee employer was neither a party in the previous action against appellee’s employees nor in privity to any party in that action; res judicata is not applicable because the first action was against appellee’s employees and was concluded by compromise settlement and consent order and not rendered on the merits following litigation; there is no recognized exception to, or extension of, the doctrine of res judicata which would be applicable here; consideration of public policy does not require extension of res judicata to the compromise settlement of the previous action; and, finally, Davis, Administratrix v. Perryman, 225 Ark. 963, 286 S.W. 2d 844 (1956), and similar cases involve collateral estoppel, not res judicata, and collateral estoppel cannot be applied to this case.

We agree with the appellants that it is well settled that the relationship of an employer-employee is not privity for the purpose of the application of the doctrine of res judicata. Frisby v. Hurley, 236 Ark. 127, 364 S.W. 2d 801 (1963); and Davis, Administratrix v. Perryman, supra. Appellants, however, recognize that this court has in the past discussed terms as to “an extension of res judicata" to one not a party or privy to an action. Frisby v. Hurley, supra; Davis v. Perryman, supra; Ted Saum & Co. v. Swaffar, 237 Ark. 971, 377 S.W. 2d 606 (1964); and Bounds v. Travelers Ins. Co., 242 Ark. 787, 416 S.W. 2d 298 (1967). Here appellants recognize that these cases are identified as “exceptions” to the privity requirement. Appellants argue that these cases are not the correct application of res judicata and are examples of the application of the doctrine of collateral estoppel.

We are of the view that the trial court here correctly granted the motion for summary judgment. There is ample precedent that whenever an action is dismissed with prejudice it is as conclusive of the rights of the parties as if there were an adverse judgment as to the plaintiff after a trial. Union Indemnity Co. v. Benton County Lumber Co., 179 Ark. 752, 18 S.W. 2d 327 (1929); Bryant v. Ryburn, 206 Ark. 305, 174 S.W. 2d 938 (1943); and Harris v. Moye’s Estate, 211 Ark. 765, 202 S.W. 2d 360 (1947). Here, as indicated, the previous action asserting negligence on the part of appellee’s alleged employees (although appellee was not a party to that action) was fully disposed of by agreement and a dismissal with prejudice. In that case the issue as to the two defendants’ liability was predicated on their negligence. The dismissal with prejudice was as effective as if it were concluded adversely to appellants by litigation at trial. Here the asserted liability of the appellee employer is derivative from the same negligent acts of its asserted agents, servants and employees. See Saum & Co. v. Swaffar, supra; Frisby v. Hurley, supra; and Davis v. Perryman, supra.

We hold that the settlement and dismissal with prejudice of the first action are conclusive of the issue of negligence of appellee’s alleged employees. Therefore, since appellee’s liability, if any, is derivative of their alleged negligence, the present action would be a relitigation of that issue and, consequently, the action is barred.

Affirmed.

We agree: Harris, C.J., and George Rose Smith and Byrd, JJ.


author: John A. Fogleman, Justice.

text:
    Benny LUNSFORD v. STATE of Arkansas
    CR 77-36
    552 S.W. 2d 646
    Opinion delivered July 5, 1977
    (Division II)

      Acchione & King, for appellant.

      Bill Clinton, Atty. Gen., by: Jackson Jones, Asst. Atty. Gen., for appellee.
   John A. Fogleman, Justice.

Benny Lunsford was found guilty of possession of marijuana with intent to deliver. A motion to suppress the evidence seized under the authority of a search warrant was denied. The motion was based, in part, upon the failure of the search warrant to inform the issuing municipal judge of the underlying facts and circumstances from which the informant concluded that marijuana was where he claimed it was. We find error in the denial of the motion to suppress and reverse.

An affidavit for the search warrant was made by Sheriff A. C. Hadaway. He stated that his reason to believe that marijuana was concealed in a mobile home occupied by Benny Lunsford on the Delton Lunsford property was based upon information from an unnamed reliable informant that Benny Lunsford had a quantity of marijuana upon the premises for sale and delivery. The affidavit contained a statement of sufficient reason for believing the informant to be reliable, but there was no statement of any fact to show how the informant knew marijuana was in the mobile home. The state attempted to supply this deficiency by the testimony of Sheriff Hadaway, who testified that he had related to the municipal judge the fact that the informant said that he had seen marijuana in a large square plastic bowl on the kitchen table in the house trailer that was the residence of Benny Lunsford. There was no indication that this statement was made to the judge under oath or that it was recorded.

We have long since recognized that an affidavit which states a mere conclusion of an unidentified informant is not sufficient basis for a magistrate’s finding probable cause for the issuance of a search warrant, under federal constitutional standards, and that it is necessary that some of the underlying circumstances from which the informant arrived at his conclusion be included. Walton & Fuller v. State, 245 Ark. 84, 431 S.W. 2d 462. It is no longer necessary, however, that all the information that furnishes the basis for probable cause be stated in an affidavit or that, if an affidavit is made, it contain all the information relied upon to show probable cause. It is necessary that it be given under oath. Rule 13.1 (b), Rules of Criminal Procedure. That rule requires an application for a search warrant to be based upon one or more affidavits or recorded testimony.

The state admits that the affidavit was deficient but relies upon the silence of the record on the question whether the facts related by Sheriff Hadaway to the municipal judge were “recorded testimony under oath” as required by Rule 13.1 (b), and that appellant failed to object to the state’s failure to produce the record of the testimony, or to the sheriff’s testifying what he had orally told the municipal judge.

Appellant’s motion to suppress was a sufficient objection in this instance. The state errs as to the burden of proof. It bore the burden of establishing that a search warrant relied upon by it was issued in compliance with the law by producing the required written evidence relied upon by the issuing magistrate as establishing probable cause. Russ v. City of Camden, 256 Ark. 214, 506 S.W. 2d 529. Since the state did not produce sufficient evidence to show that there was probable cause for the issuance of the warrant, the motion to suppress should have been granted. We consider the failure to record the testimony on which a search warrant is issued to be a substantial violation of proper safeguards in procedures for obtaining a search warrant.

Appellant urges us to dismiss the case but we cannot say with assurance that the state cannot produce other evidence of his guilt on retrial.

The judgment is reversed and the cause remanded.

We agree. Harris, C.J., and Byrd and Hickman, JJ.


author: Conley Byrd, Justice.

text:
    Donald C. POOLE and Clara J. POOLE v. STATE of Arkansas
    CR 77-35
    552 S.W. 2d 647
    Opinion delivered July 5, 1977
    (Division II)

      Hamilton H. Singleton, for appellants.

      Bill Clinton, Atty. Gen., by: Joseph H. Purvis, Asst. Atty. Gen., for appellee.
   Conley Byrd, Justice.

Appellants Donald C. Poole and Clara J. Poole were convicted of obtaining property by false pretense, to-wit, food stamps in violation of Ark. Stat. Ann. § 41-1901 (Supp. 1975). For reversal they raise the issues hereinafter set forth.

POINT l. The record shows that Clara J. Poole was a caseworker in the Camden office of the Department of Social Services and her duties consisted of interviewing food stamp applicants. It was the State’s contention that appellants obtained food stamps under false pretenses by causing food stamps to be issued illegally and to fictitious persons through the use of falsified records. One of the witnesses called by the State was Gemeta S. Dunn McDore. Mrs. McDore testified that she registered for the food stamps at the request of Clara J. Poole. Mrs. McDore’s testimony was that after she obtained the food stamps, she turned half of the stamps over to Donald C. Poole and then purchased his half for $30.00. The cross-examination was on the theory that the scheme for obtaining the food stamps was that of Mrs. McDore alone. During redirect examination Mrs. McDore was asked if she had a recent conversation with Clara J. Poole. Mrs. McDore then testified that shortly before the trial Clara J. Poole had made an inquiry as to what the investigator had asked her and that after she told Poole that she didn’t remember, Poole replied that McDore had to remember because if Poole went to jail, McDore would too. Appellants objected at the time on the basis of hearsay. They now contend that such evidence is not relevant being in effect, an attack upon the character of Clara J. Poole. We find no merit to either contention.

Such testimony is obviously not hearsay within the definition given in Rule 801 of the Uniform Rules of Evidence. See 29 Ark. L. Rev. 1, 33. Furthermore,^ the testimony was relevant to prove intent, knowledge or absence of mistake. See Rule 404, Ark. Stat. Ann. § 28-1001 (Non-cum. Supp. 1976).

POINT II. Appellants contend that it was hearsay and error for the trial court to permit Ann Hall, an investigator, to tell that when she was first assigned to the case that the person doing the assigning reported that there were eighteen questionable food stamp cases in the Camden office. While such testimony may properly be classified as hearsay, it is not excluded under the hearsay rule for the simple reason that it was not introduced to prove the truth of the matter asserted but as an introduction to the main matter by way of an inducement for the witness to act — i.e. to explain why the witness started an investigation or went to a certain place. Trotter v. State, 215 Ark. 121, 219 S.W. 2d 636 (1949).

POINT III. The bulk of the State’s case against applicants was proved through two investigators, Ann Hall and Floyd Durham. Over the hearsay objection of appellants, Ann Hall was permitted to testify, among other things, that her investigation showed that Mary Lee Holmes to whom Clara J. Poole had issued food stamps was a fictitious person and that while Mary Lee Holmes listed her place of employment as Camden Manufacturing Company, her investigation showed that Camden Manufacturing Company had no such employee on its payroll at any time. Similar testimony was permitted to show what Ann Hall’s investigation showed with reference to the records of the Camden Water Department files. Mr. Durham was permitted to testify that his investigation revealed that of the questionable food stamp cases there was given either a non-existent social security number or a social security number assigned to a person other than the named applicant. To support the action of the trial court, the State relies upon Ark. Stat. Ann. § 28-1001 Rules 803(7) and (10). However, it appears to us that the testimony elicited falls within the category set forth and excluded by Rule 803(8) as an investigative report of a law enforcement person. Rule 803(8) insofar as it excludes reports of the police, or other law enforcement personnel, complies with our previous holdings that negative evidence may be received when it is proved by those familiar with the records. Duren v. Arkansas State Board of Optometry, 211 Ark. 565, 201 S.W. 2d 578 (1947). Since the record shows that the two investigators here involved were not sufficiently familiar with the records about which they testified to state a fact as to what the records showed, we must agree with appellants that the trial court erred in failing to sustain their hearsay objection.

POINT IV. Appellants also complain of certain remarks of the prosecuting attorney and the trial judge, but since they will not necessarily arise in the same manner on a new trial, we need not reach those issues.

Reversed, and remanded.

We agree: Harris, C.J., and Fogleman and Hickman, J.J-


text:
    Phil McINTOSH v. STATE of Arkansas
    CR 77-31
    552 S.W. 2d 649
    Opinion delivered July 5, 1977
    (In Banc)

      John R. Henry, for appellant.

      Bill Clinton, Atty. Gen., by: Joseph H. Purvis, Asst. Atty. Gen., for appellee.
   Elsijane T. Roy, Justice.

Appellant Phil McIntosh was charged with the offense of theft of property in violation of Ark. Stat. Ann. § 41-2203 (Grim. Code 1976). It was alleged in the information appellant fraudulently prepared and delivered grain receipts for Cooper Elevator and cashed checks totaling 160,099.41 issued in payment for the receipts. On trial to a jury appellant was found guilty and sentenced to 15 years in the state penitentiary and fined $12,000. From this conviction and sentence appellant brings this appeal.

Appellant contends the court erred in failing to declare witness Jessie Jones an accomplice as a matter of law.

The evidence as to whether Jones was an accomplice was conflicting. Jones testified appellant had approached him and said someone had scrap soybeans for sale and needed someone to cash a check. Jones further stated appellant never told him why the person needed someone else to cash the check. Jones testified that at appellant’s request he took several checks drawn on Cooper Elevator to Lloyd Wade, who would cash them and give the money back to Jones to return to appellant. Jones further testified he did not keep any of this money and that he did not make a dime on any of these activities.

Jones also testified that some checks from Cooper Elevator had been made out to him, but that they were in payment for several loads of soybeans which he had delivered to the elevator on behalf of Don Reeves. He stated Reeves paid him $15 or $20 per day to haul the scrap beans and that he cashed the checks and gave the money to Reeves.

While the testimony may have indicated Jones’s possible involvement with appellant in these activities, it was not sufficient to justify the trial court concluding that, as a matter of law, Jones was an accomplice in the scheme for which appellant was charged. Therefore, the court under the present record properly submitted the issue to the jury. Russey v. State, 257 Ark. 570, 519 S.W. 2d 751 (1975); Froman and Sanders v. State, 232 Ark. 697, 339 S.W. 2d 601 (1960).

However, a different situation could arise on retrial as we find merit in appellant’s contention that the court improperly limited the cross-examination of Jones concerning involvement in similar schemes.

It was important to appellant’s defense that he prove Jones was an accomplice. 23 C.J.S., Criminal Law § 796a (1961) states:

The burden of proving that a witness is an accomplice whose testimony must be Corroborated is on the party asserting it.

23 C.J.S. Criminal Law § 796b states: “. . . any evidence is admissible which, if the witness were himself on trial, would be admissible against him to show his guilt, . . . .”

In the case at bar the court ruled that inquiry as to whether Jones was an accomplice Was limited to his participation and involvement in the particular crime with which McIntosh was charged. Appellant then made a proffer of proof that the weight tickets he attempted to introduce reflected transactions between Jones and McIntosh; that Jones was also involved in check cashing with Wade and that all these transactions tied in together with the crime charged against McIntosh.

If Jones had been on trial the proffered testimony would have been admissible, for in Caton & Headley v. State, 252 Ark. 420, 479 S.W. 2d 537 (1972), we held that:

... [I] n a prosecution for embezzlement by an employer of funds deposited by an employee as security, evidence of similar conduct in regard to other deposits was admissible to show a general scheme, plan or course of dealing. Singer v. State, 195 Ark. 345, 112 S.W. 2d 426 (1938). We also held that evidence of the defendant’s passing of checks other than the one on which a forgery charge was based was permissible as tending to show the method of procedure employed by the defendant to defraud. Walker v. State, 171 Ark. 375, 284 S.W. 36 (1926). * * *

We cannot say refusal to admit this evidence was harmless error because in Chapman & Pearson v. State, 257 Ark. 415, 516 S.W. 2d 598 (1974), we stated:

* * * Our settled rule is that error is presumed to be prejudicial unless we can say with confidence that it was not. Vaughn and Wilkins v. State, 252 Ark. 505, 479 S.W. 2d 873 (1972). * * *

Here we cannot say with assurance that the trial court’s exclusion of this evidence had no prejudicial effect upon appellant’s case. To the same effect see Clark v. State, 258 Ark. 490, 527 S.W. 2d 619 (1975).

As to the sufficiency of the corroborating evidence, Cooper, owner of the grain elevator, testified appellant was the manager and sole employee at his Waldenburg elevator during the interval in question. Cooper stated appellant disappeared on January 9, 1976, and that from that time until March no soybeans were put in or taken out of the Walden-burg elevator. He further stated his records indicated that as of that date approximately 60,000 bushels of soybeans should have been in the elevator, but when it was emptied in March they were 7,192.35 bushels short.

Cooper’s bookkeeper testified that during the period of appellant’s employment she issued several checks to Adam-son and Wade and that, as her records failed to show she mailed those checks, appellant must have picked them up.

Alfred Couch, an officer of a Newport bank, testified he had access to the bank’s records and that he had brought a cashier’s check “dated January 9, 1976, remitter, Lloyd Wade, payable to Phillip McIntosh in the amount of $16,-790.36 and the check is endorsed Phillip McIntosh.” This check, which was introduced as an exhibit, was dated the same day appellant disappeared. There was also other evidence tending to prove appellant’s guilt. Consequently we find the corroborating evidence, if believed by the jury, was sufficient upon which to base a guilty verdict.

However, because the excluded evidence could possibly have influenced the jury’s verdict the cause is reversed and remanded.

       The court did declare other witnesses, William Adamson and Lloyd Wade, accomplices as a matter of law.


author: Darrell Hickman, Justice. John A. Fogleman, Justice,

text:
    Margaret Ann MACK and Blanche L. CLUCK v. Charles Donald CLUCK et ux
    77-41
    554 S.W. 2d 325
    Opinion delivered July 5, 1977
    (In Banc)
    [Rehearing denied September 12. 1977.]

      Lee Ward, for appellants.

      Gus R. Camp, for appellees.
   Darrell Hickman, Justice.

This case started out as a mortgage foreclosure and ended up as an accounting between a widow and heirs.

The widow, Blanche L. Cluck, and her daughter, Margaret Ann Mack, the appellants, bring this appeal from a decision of the Clay Chancery Court. The appellees, Charles Donald Cluck, a son of Blanche, and his wife, were allowed in the lower court to require an accounting of the appellants for farm rent over a period of five years which resulted in a decision favorable to the appellees.

The appellants allege two errors: a previous trial barred the trial court from ordering and having an accounting of farm rent and expenses; and, the trial court erred in approving the accounting.

This is a family dispute arising from the operation of a family farm. The family, consisting of the widow and the heirs of W. A. Cluck, apparently had an agreement that a portion of the family farm would be used for the support and maintenance of the widow. Some of the land was owned individually and some of it was jointly owned by the heirs, subject to a dower right. For a while it was agreed that the appellee, Charles Cluck, would farm the land and see that his mother was taken care of, but a dispute between the parties resulted in a partition lawsuit in the Chancery Court of Clay County in 1971. Charles Cluck and his brother, who is not a party to this lawsuit, filed a lawsuit to partition the W. A. Cluck estate land. The partition request was denied. However, the chancellor allowed the appellants judgments against Charles Cluck in connection with the family agreement. After the 1971 lawsuit, the appellants managed the land by leasing it.

This lawsuit came about because the mortgage on the estate land was not being paid and the mortgage company threatened foreclosure. The appellants claim the appellees were not paying their fair share toward retirement of the mortgage debt. Margaret Mack paid off the mortgage, got an assignment of the note and mortgage and filed a laWsuit with her mother to foreclose the mortgage. The appellees were named as parties and they were asked to pay a pro rata share of the mortgage indebtedness. In addition, the appellants asked that their previous judgments be paid from the proceeds of the foreclosure sale. The appellees counterclaimed stating that an accounting should be made for the rent from the farm land for the five years that the appellants had control of it. Such an accounting would, the appellees claimed, reduce their liability to the appellants. The court allowed the accounting, signed a detailed order, which included all of the income, expenses and the rights of the heirs and widow for the five year period to the farm income, with a net result that the appellees owed the appellants only $505.91, plus the judgments which were already entered.

We cannot say from the abstract of the record that the previous partition suit is res judicata as to an accounting between these parties. We do not know exactly what the family agreement was, nor can we say from the meager abstract provided by the appellants, that the burden has been met to prove res judicata between the parties on this issue. The only evidence of the other lawsuit in the abstract is a copy of the first paragraph of the 1971 decree of the Clay County Chancery Court.

Although the entire record of that previous proceeding was introduced, it was not abstracted and the appellees’ argument that this is a violation of Rule 9 (e) of this court has merit. Therefore, we will affirm as to the first issue on res judicata because of an inadequate abstract of the record.

Necessarily this means that any objection to the right to an accounting ordered and approved by the court has no merit. That leaves only the question of the findings regarding the accounting. The appellants also did not abstract the detailed accounting ordered and approved by the court but the appellees supplied this deficiency. It is set forth verbatim in the appellees’ brief. We find one obvious error in the accounting. We cannot find substantial evidence to support the finding by the court there were 1,000 bushels of beans worth $6,000 held over from 1975. The only reference to 1,000 bushels was by a tenant who estimated the amount of beans to be “about 1,000 bushels”. One of the appellants testified that there were 800 bushels of beans. The only evidence of the market value of the beans was $4.60 per bushel. Therefore, the value of these beans would not be $6,000, as reflected in the accounting and finding by the court, but rather a value of $3,680.00.

The other findings in the accounting are supported by sufficient evidence. We cannot say from the record the chancellor’s findings were against the preponderance of the evidence.

This matter will be remanded only for the chancellor to make the correction regarding the value of the beans and to enter judgment accordingly. In other respects, the decision of the lower court is affirmed.

Modified and remanded.

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

John A. Fogleman, Justice,

dissenting. I respectfully dissent because I do not agree that this is a proper case for affirmance under Rule 9 (e). It is true that appellant did not set out the decree relied upon to establish res judicata, or the pleadings in the case in which that decree was rendered, in the portion of the brief devoted to abstract or abridgment of the record. The essential portion of the decree was reproduced in that part of the brief following the title, “Argument.” It is a complete statement of Finding No. 1 in the previous decree. That finding reads:

“1. Plaintiffs began this suit for the purpose of partitioning certain lands described in their complaint on the grounds that they are lawful heirs of W. A. Cluck, deceased, and are entitled to have their shares of his estate set over to them. Based not only upon defendants’ Request for Admission No. 1, of which there was no timely denial by the plaintiffs, but also in consideration of all the evidence presented on behalf of the plaintiffs, the court finds that shortly after the death of the late W. A. Cluck, his widow and children, being all of the parties to this litigation, entered into a family agreement by which all of the Cluck family lands, including all land described in the complaint herein, would be used for the support, maintenance, and enjoyment of Mrs. Blanche L. Cluck, widow of the late W. A. Cluck. In view of that family agreement, there can be no partition of the Cluck family lands during the life of said widow.”

Appellant also states, with appropriate transcript reference, that the court decreed that the complaint for partition of certain lands described herein should be and was thereby dismissed for want of equity.

The sole and only reason given by the chancellor in this case for denying the defense of res judicata was that there was a deed dated July 8, 1970 by which appellant Mack acquired the interest of her mother in the lands and that if the court (presided over by another chancellor) had been aware of this deed, he would not have made this decision. This was an unwarranted and speculative assumption on the part of the chancellor. It is clear that the deed was on record at the time the prior decree was entered. It is also true that appellant did not abstract this deed, but appellee elected to supply that deficiency by reproducing the deed in full. The consideration for that deed is stated as follows:

.....for and in consideration of the sum of One Dollar (Si.00), to me paid by Margaret Ann Mack, receipt of which is hereby acknowledged, and in further consideration of the promise and covenant of the said Margaret Ann Mack to see that I am well taken care of and provided for in every reasonable way during the remainder of my natural life, do hereby grant, bargain, sell, and convey unto the said MARGARET ANN MACK and unto her heirs and assigns forever.....

The terms of this deed were in no wise inconsistent with the earlier decree. The finding that appellee was not entitled to a partition of the lands was conclusive on the issue here presented. If he was not entitled to a partition for the reasons stated in the prior finding, he was not entitled to an accounting for rents during the lifetime of his mother. This may not technically be res judicata, but it certainly constituted a collateral estoppel.

I cannot join in the highly technical application of Rule 9 in this case. To say the very least, this is a case in which the court should find that the action taken is unduly harsh; and appellant’s attorney should be allowed to reprint his brief, at his own expense, to conform to Rule 9 (d).

I am authorized to state that the Chief Justice and George Rose Smith, J., join in this opinion.


text:
    Jerry D. NIPPER v. BRANDON COMPANY & Roosevelt JOHNSON
    77-49
    553 S.W. 2d 27
    Opinion delivered July 5, 1977
    (Division II)

      Me Math, Leatherman & Woods, by: James Bruce Me Math, for appellant.

      Gannaway, Darrow & Hanshaw, for appellees.
   Darrell Hickman, Justice.

This is a case involving some finer points of the master-servant, or as we would say now, employer-employee relationship. The question presented is the legal and factual problems that arise when an employee causes an accident while driving his employer’s vehicle. The finer points are: when does an employee return to the scope of his employment after deviating to perform a personal unauthorized errand; and, what is the law regarding the proof necessary to create a question of fact for the jury in such a situation.

The facts are not disputed. Roosevelt Johnson was a delivery truck driver for Brandon Company, a Little Rock wholesale company. He mostly delivered goods in the Little Rock-North Little Rock metropolitan area. His instructions were to deliver goods, taking the nearest and best route, but he had discretion in selecting the route. He had permission and did drive the company truck home after work. However, he was instructed never to use the truck for personal business. He was also told to never run a personal errand with the truck during his regular working hours.

On the afternoon of the 5th of January in 1973 Johnson left Rose City in North Little Rock after making a delivery. He had one more delivery to make and that was to Quality Floor Covering Company in southwest Little Rock. Johnson testified that the nearest and best route from Rose City to Quality would have been to proceed to Interstate 30 and go south to the exit at Geyer Springs Road. Johnson proceeded to the interstate but instead of taking the Geyer Springs exit, he turned off the interstate onto Cantrell Road to run a personal errand. After he got on Cantrell Road he turned off into a warehouse complex about a mile or so west of the interstate. He was on a personal errand for about five minutes. He returned to Cantrell Road and turned back east to proceed to deliver the goods to Quality. He stated he could have turned west on Cantrell to go to Quality but he chose the eastern, route because of traffic conditions at that time of day. After he turned onto Cantrell Road and had proceeded about a half mile, his truck struck the rear of Jerry Nipper’s vehicle. Nipper was injured and sued Johnson and Brandon. Negligence and damages are not issues on appeal.

The trial court gave the jury standard instructions on the liability of an employer for the acts of an employe. The instructions, all taken from Arkansas Model Jury Instructions, defined scope of employment and pointed out certain evidence the jury could consider in determining whether or not Johnson was acting within the scope of his employment at the time of the accident. AMI 702 and 703.

The court explained with an instruction that if an employee abandons the business of his employer to perform an act or engage in an activity for his own exclusive purpose and not in furtherance of his employer’s interests, then that act or activity is not in the scope of the employment. AMI 704.

These instructions were correct statements of the law. The jury found for Nipper and awarded him a $35,000.00 judgment against Brandon and Johnson. Brandon asked the trial court to set aside the judgment against it because, as a matter of law, Johnson was on a personal errand at the time of the accident, therefore outside of his scope of employment and, consequently, Brandon was not liable for Johnson’s negligent act. The trial court did set aside the verdict.

Nipper appeals alleging one error: the trial court erred in setting aside the judgment because the jury was properly instructed on the law and there was substantial evidence upon which a jury could find that Roosevelt Johnson at the time of the accident was acting in the scope of his employment.

We agree the trial court erroneously set aside the verdict. The question of liability was properly submitted to the jury, the court improperly determined that it was a question of law as to Johnson’s status at the time of the accident and the verdict is supported by substantial evidence.

The attorneys for the parties have submitted excellent briefs. Brandon relies on one of our cases decided in 1962, Davis v. Kukar, Adm’x., 235 Ark. 139, 357 S.W. 2d 275. In the Davis case an employee-tractor driver had deviated from his mission to run a private errand. The employee was returning to the place from which he left his mission when he caused an accident. The accident occurred just forty-five feet from the point of departure. We held that the jury should have been told as a matter of law that the tractor driver was at the time of the accident outside the scope of his employment.

Here Johnson had returned to his mission to deliver the goods. He was no longer on a private errand. Although Johnson could have turned east or west on Cantrell to proceed to deliver the goods, he decided to go east which, according to his testimony, would have been the best and most convenient route from where he was. Although Johnson had not reached the place of deviation, he caused the accident while enroute to deliver his employer’s goods. In the Davis case, the employee could not continue on his mission until he reached the point of departure.

The jury could have found Johnson was acting in furtherance of his employer’s interests based on these facts. It was for the jury to decide, not the trial court, whether at the time and at the place he was acting within the scope of his employment or acting for his own exclusive purpose.

The appellant argues that when a jury is given AMI 703 it may draw an inference that the employee is acting within the scope of employment at the time of the accident. The appellees argue that simply because a regular employee is driving a vehicle owned by the employer, this is not sufficient evidence to support a finding that the employee was acting within the scope of employment at the time of the accident.

When a regular employee is driving a vehicle owned by the employer, and an accident occurs, there is a presumption of fact that the employee is acting within the scope of his employment. It is a presumption of fact which imposes on the other party, against whom the presumption is directed, the burden of overcoming this presumption. Ark. Stats. Ann. § 28-1001, Rule 301 (Noncum. Supp., 1976).

When a plaintiff proves that a regular employee driving an employer’s vehicle is involved in an accident, there exists a presumption of fact which must be overcome by the defendant-employer. If it is not uncontroverted that the employee was acting solely for his own benefit and not in furtherance of the interests of the employer, then it is a question for the jury. The testimony of an interested party may not be taken as uncontradicted because his testimony is contradicted as a matter of law. Cousins v. Cooper, 232 Ark. 605, 339 S.W. 2d 316 (1960). We cannot say, as a matter of law, that it is uncontroverted that Johnson was acting solely for himself at the time of the accident.

We feel it necessary to point out that some of the language in our previous cases describing this presumption of fact is not correct. It is not an “inference”. Healey v. Cockrill, 133 Ark. 327, 202 S.W. 229 (1918). it is not an “inference or presumption of fact”. Curtis Circulation Co. v. Henderson, 232 Ark. 1029, 342 S.W. 2d 89 (1961). It is not a “temporary presumption”. Ford & Son Sanitary Co. v. Ransom, 213 Ark. 390, 210 S.W. 2d 508 (1948). It is not a “prima facie presumption”. Brooks v. Bale Chevrolet Co., Inc., 198 Ark. 17, 127 S.W. 2d 135 (1939). In other words, we have called this presumption by different names, but the precise description is a presumption of fact as defined in Ark. Stat. Ann. § 28-1001, Rule 301 (Noncum. Supp., 1976).

We reverse the decision of the trial court and remand the case with directions to reinstate the judgment against Brandon.

Reversed and remanded.

We agree: Harris, C.J., and Fogleman and Byrd, JJ.


author:
George Rose Smith, Justice.
      George Rose Smith, Justice.

text:
    Jerry Mike BELL v. ITEK LEASING CORPORATION
    77-84
    555 S.W. 2d 1
    Opinion delivered July 11, 1977
    (In Banc)
    [Rehearing denied September 19, 1977.]

      Robert S. Blatt, for appellant.

      Bethell, Callaway & Robertson, by: Bruce H. Bethell, for appellee.
   George Rose Smith, Justice.

In this case, essentially one of first impression in Arkansas, the single issue is whether a contract by which Itek Leasing Corporation purported to lease certain printing equipment to Jerry Mike Bell for a term of five years was in actuality an installment-sale contract carrying such an excessive interest rate as to be void for usury under Arkansas law. We are unanimously of the opinion, contrary to the trial court’s conclusion, that the overwhelming preponderance of the proof shows the purported lease to have been in fact a credit sale that is void for usury. We therefore reverse the decree on direct appeal and do not reach the cross appeal.

In 1968 we examined in detail a transaction that was argued on the one hand to be a sale and on the other to be a lease. Sawyer v. Pioneer Leasing Corp., 244 Ark. 943, 428 S.W. 2d 46 (1968). There the distinction was important only with regard to the existence of an implied warranty; the issue of usury was not presented. Nevertheless, in language that we adhere to, we made prophetic observations that have proved to be peculiarly pertinent to the present case:

[W]e think it well to point out that agreements of this nature will be examined closely by this court. It is possible that similar agreements could be used to cloak usurious charges, i.e., a transaction which was actually a sale could be set up as a lease in order to enable charges to be made that would, under a credit sale, constitute usury.

Our prediction in that case has come true.

In 1973, five years after the Sawyer decision, the plaintiff Bell and a salesman for Micro-Graphics (a North Little Rock company) completed at Bell’s home in Fort Smith the controverted contract for the “leasing” by Bell of certain printing equipment. The salesman filled out the printed form, and Bell signed it. Apparently the contract was next signed about six weeks later by the defendant, Itek Leasing Corporation, whose mailing address is Rochester, New York. The contract recites that it is to be governed by New York law, but there is no contention that Arkansas law is not controlling under Ark. Stat. Ann. § 27-2504 (Supp. 1975), as construed in Deposit Guaranty Nat. Bk. v. River Valley Co., 247 Ark. 226, 444 S.W. 2d 880 (1969).

The contract recites that the equipment’s price (an odd word to use in a lease) is $12,670. The “lessee” makes an “initial payment” of $1,498.05 and agrees to make 60 additional monthly payments of $299.61 each. Itek made no effort to explain how the amount of the monthly payments was arrived at, but if they are actually remittances upon a credit sale of the equipment for the recited price less the down payment, then the contract provides an interest return to the seller at the rate of 19.31% a year. Under our Constitution such a contract is void.

We do not discuss at length either the facts or the controlling rule of law, for in this case both are beyond dispute. A “lease” is a security interest under the Uniform Commercial Code (or at common law) if “the deal is in every respect a secured installment sale except that the parties clothe it in lease terminology.” White & Summers, Uniform Commercial Code, § 22-3 (1972); Burroughs Adding Mach. Co. v. Bogdon, 9 F. 2d 54 (8th Cir. 1925); McKeeman v. Commercial Credit Equipment Corp., 320 F. Supp. 938 (E.D. Neb. 1970); McGalliard v. Liberty Leasing Co. of Alaska, 534 P. 2d 528 (Alaska, 1975).

Upon the facts, five important points are plainly established by the proof or plainly to be inferred from the proof:

First: The defendant, Itek Leasing Corporation, is in «act a finance company. Although the main items that were covered by the contract were an “Itek Mark IV Platemaster” and an “Itek Duplicator,” the leasing company does not, in the words of its own witness, manufacture any equipment of any nature. It is a service company that has outstanding about 1,300 leases representing (an investment of) about eighteen million dollars. It is fair to infer that Itek Leasing Corporation finances the sale of Itek products.

Second: The printed form of lease puts all the risk upon the lessee, not upon the lessor. The lessee must pay the taxes and insurance upon the leased property and incurs, in the most detailed language, every risk of loss or damage to the leased property.

Third: The contract provides the same remedies upon the lessee’s default in the payment of rent, even at the end of the first month, that would be available to a conditional seller or to a mortgagee upon a similar delinquency. That is, the lessor can declare all the remaining payments to be due, can repossess the property, can sell it, and can hold the lessee personally liable for any deficiency. Thus the lessee may be held responsible for rent not even due for another four years or more if the property does not sell for enough to pay all future rents. We can recall having seen no bona fide lease containing such a remedy.

Fourth: The contract expressly provides that the lessee will, upon the lessor’s request, join the lessor “in executing financing statements pursuant to the Uniform Commercial Code and in the execution of such other instruments or assurances as Lessor deems necessary or advisable for . . . the protection of. . . the interest of the Lessor in the Equipment.” The Uniform Commercial Code, which the contract itself cites, provides that a lease is not a security interest and therefore not within the purview of the Code unless it is intended as a security. Ark. Stat. Ann. §§ 85-1-201 (37) and 85-9-102 (2) (Add. 1961). Here the contract not only required Bell to execute a financing statement upon request; such a statement was in fact demanded and filed. Itek Leasing is not in a position to contend that it had no thought that the lease was actually a security device.

Fifth: The authorities, supra, put great emphasis on the amount (in percentages) that the “lessee” must pay to acquire title after all the payments have been made. If the amount is nominal (10% is a figure frequently so described), then the transaction is patently a sale in lease’s clothing; for why would a bona fide lessor relinquish a valuable chattel for next to nothing? That question arises here. Itek Leasing’s witness, testifying in its own behalf, said that his company, about 30 days before the expiration of the five-year term, would have offered Bell the option (had he made all the preceding payments) of buying the equipment for 10% of its original contract price. During those five years. Bell would have paid a total of more than $17,500 for the “rental” of equipment that had an initial value of $12,670 and which, according to the indications in the record, would still have been worth $10,000 at the expiration of the 5-year lease. Obviously Bell would have had no real choice except to pay another $1 ,- 267 to protect, to salvage, an investment of more than $17,000 in equipment still worth some $10,000.

In reversing the decree we think it fair to say that Itek Leasing is not shown to have deliberately sought to circumvent our usury law by a transparently fraudulent scheme. Rather to the contrary, it seems to have used a printed contract form that may be valid in New York and other jurisdictions, and to have presented its case with candor. In Arkansas, however, the terms of this contract unquestionably run counter to our constitutional provision against usury, which we have consistently and vigorously enforced for many years.

Reversed and remanded for further proceedings.

Supplemental opinion on denial of rehearing delivered September 19, 1977

(In Banc)

George Rose Smith, Justice.

The appellee, in its petition for rehearing and supporting brief, continues to argue in effect that the so-called lease should be construed according to its form rather than its substance. It is settled, however, that if a transaction, such as a purported sale, is actually a mere device to cover the exaction of usurious interest, the form of the transaction is immaterial. Home Bldg. & Sav. Assn. v. Shotwell, 183 Ark. 750, 38 S.W. 2d 552 (1931). In the case at bar the transaction between the appellant and the appellee was plainly a credit sale, even though the finance company attempted to disguise its role as that of a lessor.

On rehearing counsel for the appellee for the first time call our attention to a 1973 amendment to the Uniform Commercial Code, contained in Act 116 of 1973. Ark. Stat. Ann. § 85-9-408 (Supp. 1975). The new section provides that a consignor or lessor of goods may file a financing statement, but the filing shall not of itself be a factor in determining whether the consignment or lease is intended as security. The intent of the amendment is to permit a lessor, for example, to file a financing statement as a precautionary measure, even while contending that the lease is a true lease for which no financing statement is actually required.

The 1973 Act does not affect our decision in this case, for two reasons. First, by its terms the statute did not take effect until January 1, 1974, which was after this financing statement had been accepted and presumably filed. Second, in Arkansas whether a transaction is usurious is a question arising under the Constitution, Art. 19, § 13, and is therefore for the courts rather than for the legislature. As we noted in Strickler v. State Auto Finance Co., 220 Ark. 565, 249 S.W. 2d 307 (1952): “[T]he lawmakers are powerless to declare that a usurious charge is not to be so considered by the courts.”

Counsel also question the statement in our original opinion that the equipment, “according to the indications in the record, would still have been worth $10,000 at the expiration of the 5-year lease.” At the close of the trial, counsel for the appellant, in asking that the appellee be required to give security to protect the appellant pending the appeal, stated without contradiction that at a pretrial conference it had been decided by attorneys for both sides and by the court that a reasonable value of the property was $10,000. The appellee in fact filed a bond in that amount. There is also a showing that as of September 10, 1975, when only 55% of the purchase price was still unpaid, the appellee itself offered to execute a bill of sale to the appellant for $8,950, which was 70% of the original purchase price. Hence according to the record the $10,000 figure, at least as of the date of the trial, appears to be a fair one. The actual figure, however, is not of much importance, the point being that in any event the value at the termination of the lease would apparently be far in excess of the 10% payment by which the “lessee” could acquire the property.

Rehearing denied.


author: George Rose Smith, Justice.

text:
    Milton Junior MOORE v. STATE of Arkansas
    CR 77-49
    553 S.W. 2d 29
    Opinion delivered July 11, 1977
    (Division I)

      Rickard B. Calaway, for appellant.

      Bill Clintom Atty. Gen., by: Joseph H. Purvis, Asst. Atty. Gen., for appellee.
   George Rose Smith, Justice.

In October, 1968, Moore was charged with first degree rape, assault with intent to rape, and two separate offenses of burglary and grand larceny. Upon a showing of indigency an attorney was appointed to represent him. Moore was sent to the State Hospital for an examination and found to be without psychosis. On December 9, 1968, Circuit Judge Paul Wolfe sentenced him, upon a plea of guilty to first degree rape, to imprisonment for not less than 30 nor more than 90 years, with 30 years to be served before he would be eligible for parole. Moore also pleaded guilty to the other charges and was sentenced to lesser terms of imprisonment, to run concurrently with the principal sentence.

More than seven years later, in July, 1976, Moore filed the present petition for postconviction relief, alleging ten asserted errors, including ineffective assistance of counsel, involuntariness of the plea of guilty to first degree rape, error in the information charging that offense, insufficient explanation by the trial judge of the rights of the accused, the indeterminate nature of the sentence, and its excessiveness. Circuit Judge Holland, hearing the matter after Judge Wolfe’s death, denied the petition upon the face of the record, without an evidentiary hearing. For reversal it is contended by appointed counsel that an evidentiary hearing should have been held upon practically every assertion of error. Several of the points now urged for reversal were so fully answered by Judge Holland or by the Attorney General’s brief that further discussion is not needed. Five of the points, however, should be treated here.

First, the interwoven charges of ineffective assistance of counsel, involuntariness of the plea of guilty, and inadequacy of the explanation of the accused’s rights may conveniently be examined together. We do not recall ever having seen as detailed and comprehensive an explanation of the rights of an accused as that made in this case by Judge Wolfe, certainly one of the ablest and most conscientious judges ever to serve in Arkansas. Moore was then 28 years old, with an eleventh-grade education. All of. his family and some of his relatives by marriage were seated in the courtroom when the plea was accepted by Judge Wolfe on December 3. Counsel, according to a remark by the judge, had discussed the case with Moore many times and had examined the prosecuting attorney’s file. Counsel agreed, adding that he had also talked to Moore’s family: “I think everybody knows the whole story.”

Although Judge Wolfe might have imposed sentence at once, he decided, in view of the gravity of the charges, to defer sentencing for six days, during which defense counsel was to confer further with Moore and report anything that counsel wanted the court to know in Moore’s behalf. On December 9 the court imposed sentence, explaining to Moore: “And it is the judgment and sentence of the court that you serve for a period of not less than 30 nor more than 90 years on this charge of first degree rape. That means, as far as this court is concerned, Mr. Moore, that you’re going to be down there for 30 years. That’s when you become eligible for parole. Now, that’s all I can do to protect society and to protect you from yourself. ”

We find, as did Judge Holland, that the record shows conclusively that the three asserted errors now being considered are without merit. If this record does not support that finding, it would be impossible for any record to do so. See Stone v. State, 254 Ark. 566, 494 S.W. 2d 715 (1973). Hence no evidentiary hearing was required under Rule 37.3 (a) of the Rules of Criminal Procedure (1976).

Second, the argument with regard to the indeterminate character of the sentence is without merit. In California, where such a sentence is authorized by statute, its validity has been upheld, with the court reasoning that an indeterminate sentence is in legal effect a sentence for the maximum term. People v. Wade, 72 Cal. Rptr. 538 (1968), cert. den., 395 U.S. 913 (1969). Here, however, we do not construe Judge Wolfe’s language to have created an indeterminate sentence. Instead, his intention was clearly to fix the sentence at 90 years, with one third of it to be served before the prisoner became eligible for parole. Judge Wolfe was evidently tracking the statute, which empowered him to require that a minimum period of not more than a third of a sentence be served before the prisoner would be eligible for parole. Ark. Stat. Ann. § 43-2807 (c) (2) (Supp. 1975).

Third, we are unwilling to say that a hearing should have been ordered with respect to the propriety of the 90-year sentence. It was not excessive as a matter of law. The statute then in force fixed the punishment for first degree rape at death or “thirty (30) years to life imprisonment.” Act 362 of 1967, later repealed. The same claim of excessiveness has frequently been rejected in Illinois, where the statutes can give rise to a similar situation. Under a statute permitting imprisonment for life or for not less than 14 years, no maximum in years being stated, the court upheld a sentence for 199 years, saying:

The jury evidently intended to permanently remove this defendant from society without exacting his life, and we hold that in doing so they were within the statutory provision that whosoever is guilty of murder “shall suffer the punishment of death, or imprisonment in the penitentiary for his natural life, or for a term not less than fourteen years. ”... Any other holding would force our courts into a morass of evidence as to the life expectancy of defendants and would seriously encumber and embarrass the enforcement of criminal laws.

People v. Pace, 362 Ill. 224, 198 N.E. 319 (1935); followed in People v. Rucker, 364 Ill. 371, 4 N.E. 2d 492 (1936), where a sentence of 199 years was also upheld. Upon the reasoning of such cases we do not find the 90-year sentence to be excessive, nor do we see what could be accomplished by an evidentiary hearing upon that issue. The question is essentially one of law, not of fact. (It may be noted that a similar question is not apt to arise in the future, for the Criminal Code of 1976 [§ 41-901 and Commentary] contains a 50-year maximum for prison sentences.)

Affirmed.

We agree. Harrís, C.J., and Holt and Roy, JJ.