author: Donald L. Corbin, Justice.

text:
    ACME BRICK COMPANY v. MISSOURI PACIFIC RAILROAD COMPANY
    91-166
    821 S.W.2d 7
    Supreme Court of Arkansas
    Opinion delivered December 9, 1991
    [Rehearing denied January 13, 1992.]

      Kemp, Duckett, Hopkins & Spradley, by: James M. Duckett, for appellant.

      Friday, Eldredge & Clark, by: Herschel H. Friday, Michael G. Thompson, and Robert S. Shafer, for appellee.
   Donald L. Corbin, Justice.

This appeal involves appellee’s petition to discontinue a spur track providing service to appellant in Sebastian County. Pursuant to Ark. Code Ann. § 23-12-607 (1987), appellee filed with the Arkansas Highway Commission a petition to discontinue the spur track. Appellant was not represented by counsel at the hearing held on May 24,1990, at which the Commission granted appellee’s petition. Appellant filed a motion for reconsideration and a motion to recuse on July 26, 1990. The Commission denied both motions on August 1, 1990.

Appellant appealed to the Pulaski County Circuit Court, which affirmed the Commission’s order on March 28, 1991. Appellant appealed the circuit court’s decision to this court pursuant to Ark. Code Ann. § 23-2-425 (1987). Appellee filed a motion to amend the judgment pursuant to ARCP Rule 52(b), which the trial court denied. Appellant appealed again and appellee cross-appealed. Appellant then filed a motion to set aside the judgment pursuant to ARCP Rule 60(b) and attached as an exhibit thereto a letter from the Commission to the circuit court stating the Commission had applied the wrong standard of proof in the hearing below. The Commission filed a petition to intervene on the basis that it applied the wrong standard of proof and asked the trial court to remand for application of the proper standard of proof. Both the motion to set aside the judgment and the petition to intervene were denied by the trial court on June 12, 1991. Appellant appealed to this court again.

Our standard of review of Arkansas Highway Commission cases is a product of both statutory law and case law. Section 23-2-425(b)(3) provides the procedure for judicial review of the Commission’s order and states in pertinent part that “any finding of fact by the circuit court shall not be binding on the Supreme Court, and the Supreme Court may and shall review all the evidence and make such findings of fact and law as it may deem just, proper, and equitable.” In Arkansas Commerce Comm’n v. St. Louis S.W. Ry., 247 Ark. 1032, 448 S.W.2d 950 (1970), we interpreted this statute to mean that we review the Commission’s cases in the same manner as chancery cases, therefore our review is de novo. However, in making the de novo review, we do not completely ignore the findings of the Commission. Torrans v. Arkansas Commerce Comm’n, 246 Ark. 930, 440 S.W.2d 558 (1969). Thus, our review on appeal is de novo, however, we must affirm if the Commission’s decision is not contrary to the preponderance of the evidence. Id.; see Transport. Co. v. Champion Transp., Inc., 298 Ark. 178, 766 S.W.2d 16 (1989).

On appeal, appellant asserts two points of error. First, appellant contends the trial court erred in not reversing the Commission’s decision because it relied on the wrong standard of proof in considering the application to discontinue the spur track. Second, appellant argues the trial court erred in not reversing the Commission’s decision because the Commission’s act in hearing the petition created an appearance of bias. On cross-appeal, appellee makes two arguments. First, appellee argues appellant’s objection to the Commissioners’ hearing this case was untimely and therefore waived. Second, appellee argues the circuit court erred in finding the Commissioners should have disqualified themselves. We affirm the trial court’s judgment in all respects.

Appellant’s first argument is that the Commission applied the wrong standard of proof when it considered appellee’s petition to discontinue the spur track. In the order granting appellee’s petition, the Commission stated that section 23-12-607 requires the Commission to hear and consider all petitions filed with it for the discontinuance of railroad spurs and that Ark. Code Ann. § 23-12-611 (1987) provides the standard of proof to be used in determining whether the spur track should be abandoned. The order also stated that City of Caraway v. Arkansas Commerce Comm’n, 248 Ark. 765, 453 S.W.2d 722 (1970), a case involving the abandonment of an agency station, was persuasive and controlling in the current matter before the Commission.

Upon receipt of the Commission’s order, appellant filed a motion for reconsideration arguing that “[t]he standard of proof relied upon by the Commission was improper because it is the standard of proof for considering an application to discontinue an agency station, rather than abandonment of a spur. The Commission’s reliance on the standard of proof in Ark. Code Ann. § 23-12-611 was legal error.” Because section 23-12-611 and Caraway, supra, both involve agency stations rather than spurs, appellant claims the Commission erred in relying on them to determine the standard of proof applicable to the spur petition. Noticeably absent from appellant’s motion for reconsideration is a statement of what appellant believed to be the correct standard of proof applicable to appellee’s petition to discontinue the spur track. Because of this omission, we conclude appellant is precluded from raising this argument on appeal.

We recognize that on appeal to the circuit court and in its brief to this court, appellant argued that the standard of proof to be applied to appellee’s petition is found in Ark. Code Ann. § 23-11-209(6) and (7) (1987). However, a proffer at this late stage of what the correct standard of proof should be does not preserve appellant’s point for our review. We have stated that an objection below must be specific enough to appraise the lower court of the particular error complained of. See Bohannan v. Underwood, 300 Ark. 110, 776 S.W.2d 827 (1989). We think the current situation is analogous to the objection to instructions of law. In order to preserve the issue for appellate review, when objecting to the giving of an erroneous instruction, one must make a timely and specific objection to the instruction the trial court intends to give; when objecting to the trial court’s failure to give an instruction, the objector must offer an alternative instruction which he or she believes to be the correct statement of the law. Thomas Auto Co., v. Craft, 297 Ark. 492, 763 S.W.2d 651 (1989); ARCP Rule 51. This requirement is consistent with the principle that the trial court should be informed of the particular error of which the objector is complaining. The trial court’s ruling on the proffered matter then provides a record for appellate review. Without a proffer to the trial court and its ruling thereon, there is nothing for our review.

It is likely that appellant was not aware that the Commission was applying the standard of proof for the abandonment of agency stations in section 23-12-611 to appellee’s petition until it received the Commission’s written order stating it had indeed applied that standard. Therefore, it was not until it filed its motion for reconsideration that appellant was required to proffer a statement of what it believed to be the correct standard of proof. Appellant’s failure to proffer an alternative standard of proof left the Commission unaware of the particular error of which appellant complained. Appellant’s failure results in the following situation described in the circuit court’s judgment:

The Court finds that Ark. Code Ann. § 23-11-209 (6) and (7) (1987), which the Appellant argues is the applicable statute, does not contain a standard of proof. The Commission chose the standard set forth in Ark. Code Ann. § 23-12-611(1987) which is applicable to the discontinuance of agency stations. Until such time as the legislature provides an explicit standard of proof in Ark. Code Ann. § 23-12-607 (1987) for the removal of spur tracks, there is no basis for the Court to reject the standard adopted by the Commission.

Accordingly, there is no basis for us to affirm or reverse the application of the standard used by the Commission and we hold appellant has failed to preserve this issue for our review.

Because appellant’s second point on appeal and appellee’s points on cross-appeal are interrelated, we consider them together. Appellant contends it was error for the trial court to affirm the Commission’s decision because there was an appearance of bias in that counsel for appellee was simultaneously representing the Commission and its members in two pending lawsuits. Appellant did not discover the alleged appearance of bias until after the Commission entered its order in this case. At the time appellant discovered the potential appearance of bias, appellant filed a motion to recuse as part of its motion for reconsideration which the Commission denied without explanation. On cross-appeal, appellee contends appellant’s objection to the appearance of bias was untimely and therefore appellant has waived this argument on appeal. Appellee also contends the trial court erred in finding the Commissioners should have recused. Appellee argues this finding is inconsistent with the trial court’s ruling affirming the Commission’s decision.

In support of its argument that the trial court erred in not reversing the Commission’s denial of the motion to recuse, appellant cites the following rule of law:

[A]ny. tribunal permitted by law to try cases and controversies not only must be unbiased, but also must avoid even the appearance of bias.

Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 150 (1968).

There is no doubt that we have adopted the “appearance of bias” standard with respect to judges. City of Jacksonville v. Venhaus, 302 Ark. 204, 788 S.W.2d 478 (1990); Arkansas Code of Judicial Conduct, Canon 2. We have extended the appearance of bias standard to lawyers, even though this particular standard is not expressly stated in the Rules of Professional Conduct. This extension of the standard is made because the meaning of the appearance of bias standard pervades the Rules of Professional Conduct and embodies their spirit. First Am. Carriers, Inc. v. Kroger Co., 302 Ark. 86, 787 S.W.2d 669 (1990). The Arkansas Highway Commission is authorized by statute to decide all matters which come before it. Ark. Code Ann. § 23-2-211 (1987). There is a right of appeal of the Commission’s decisions to circuit court and to this court. Ark. Code Ann. § 23-2-425 (1987). Thus, the members of the Commission, although not judges and therefore not subject to the appearance of bias standard in the Judicial Code of Conduct, perform a quasi-judicial function and therefore, by analogy, should be subject to the appearance of bias standard for judges. This extension of the standard is consistent with the extension of the standard to lawyers acting in a non-judicial capacity. See Kroger, supra.

When applying the appearance of bias standard to the facts of this case, we conclude the representation of both appellee and the Commissioners by appellee’s counsel created an appearance of bias or impropriety on the Commissioners’ part mandating their recusal from consideration of appellee’s petition. However, we recognize, as did the trial judge, the absence of a procedure for the appointment of special Commissioners to hear this case. The trial court was correct in concluding:

The Court further finds, however, there must be a remedy for persons subject to regulation by the Commission. If this case were to be remanded to the Commission with instructions that the Commissioners recuse themselves, there would be no one to hear it. There is no procedure in place for the appointment of special Commissioners. The Court will not relegate a case to such status, where in effect it would be lost to further action by the Commission for the indefinite future, pending possible legislative action creating authority to appoint special commissioners.

Although without expressly stating so, the trial court applied the rule of necessity as an exception to the Commissioners’ disqualification. The rule of necessity, as stated in terms particularly applicable to administrative officers, is as follows:

Under the doctrine or rule of necessity, it has been held that administrative officers or bodies are not disqualified because of bias, prejudice, or prejudgment of the issues where they alone have the power and authority to act and where, if they are disqualified, action cannot otherwise be taken, particularly where a failure of justice would result if they are not permitted to act. . . .
The doctrine or rule of necessity has been held to apply only where the disqualification of the alleged prejudiced member or members of the tribunal would destroy the tribunal itself, leaving no competent tribunal to function or to act.

73 C.J.S. Public Administrative Law and Procedure § 61(b) (1983).

We have previously adopted the rule of necessity in Wheatley v. Warren, 232 Ark. 123, 128, 334 S.W.2d 880, 883 (1960), where we held that an exception to disqualification occurs “where the authority of the administrative officer is exclusive, and no legal provision for calling in a substitute is provided.” Accordingly, we conclude that although the Commissioners’ hearing this case created an appearance of bias that would ordinarily have required them to disqualify themselves from considering appellee’s petition, the rule of necessity, as implicated by the absence of a procedure to appoint special Commissioners, excepted their disqualification. Thus, because there was no statutory procedure in place for the replacement of the Commissioners, it was necessary for them to hear appellee’s petition and they did not commit reversible error by doing so. We note that the absence of the procedure for appointment of special Commissioners is an area of the law which the legislature may choose to reconsider.

With respect to appellee’s points on cross-appeal, we note that our application of the rule of necessity precludes consideration of appellee’s waiver argument. We also note there is neither error nor inconsistency in the lower court’s finding that the Commissioners should have recused and its ultimate holding that recusal was not warranted because there would be no one to hear the case. The rule of necessity cures any initial appearance of inconsistency, for the rule is itself an exception to the requirement of disqualification.

Based on the foregoing, we conclude the circuit court’s decision is not against the preponderance of the evidence. The decision is thus affirmed on appeal and cross-appeal.

       Act 153 of the First Extrordinary Session of 1989 abolished the Arkansas Transportation Commission and repealed the procedure for the appointment of special Commissioners.


source: Caselaw Access Project

license: Public Domain

text:
    QUALITY FORD, INC. v. Minnie Ruth FAUST and James and Betty Beaver
    91-214
    820 S.W.2d 61
    Supreme Court of Arkansas
    Opinion delivered December 9, 1991

      Rose Law Firm, A Professional Association, by: Webb Hubbell, for appellant.

      R. David Lewis, for appellees.
   Donald L. Corbin, Justice.

Appellant and separate defendant below, Quality Ford, appeals a default judgment entered by the Pulaski County Circuit Court contending the judgment should not have been entered because the answer filed by separate defendant Ford Motor Company inured to appellant’s benefit and because appellant was prohibited from presenting evidence concerning mitigation of damages. We do not reach the merits of this case because the order appealed from does not comply with the requirements of ARCP Rule 54(b) and is therefore not a final and appealable order. We must dismiss the appeal.

The essence of the order’s insufficiency is that, without stating any reason for doing so, it does not finally determine the rights of all the parties. When multiple parties are involved in a case:

[T]he court may direct the entry of a final judgment as to one or more but fewer than all of the. . . parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates ... the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the ordér or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.

ARCP Rule 54(b).

We have stated many times that for an order to be final and appealable it must dismiss the parties from the court, discharge them from the action, or conclude their rights to the subject matter in controversy. Wilburn v. Keenan Cos., 297 Ark. 74, 759 S.W.2d 554 (1988); Elardo v. Taylor, 291 Ark. 503, 726 S.W.2d 1 (1987); McIlroy Bank & Trust v. Zuber, 275 Ark. 345, 629 S.W.2d 304 (1982); ARCP Rule 54(b); Ark. R. App. P. 2. The order appealed from in this case does not comply with ARCP Rule 54(b) because it concludes the rights of less than all of the parties.

In the present case, there were originally six plaintiffs, namely Minnie Ruth Faust, James and Betty Beaver, Ricky Jynes, Dwight Meek, and Gary Williams, who filed suit against two defendants, Quality Ford and Ford Motor Company. The six plaintiffs had separate claims against the defendants; there was a common thread in their claims in that they purchased used cars from Quality Ford relying on the salesmen’s representations that the cars were either Ford executives’ cars or one-owner cars. In fact, the cars were later determined to have been rental cars which had been damaged or wrecked. On February 5,1990, all six plaintiffs filed one complaint against the two defendants and the case received one case number in the circuit court, No. CV 90-593. On October 8, 1990, upon motion of the plaintiffs, the trial court entered an order of dismissal without prejudice dismissing two of the plaintiffs, Dwight Meek and Gary Williams, and one of the defendants, Ford Motor Company. Following the entry of this dismissal, the claims of four plaintiffs, namely Minnie Ruth Faust, James and Betty Beaver, and Ricky Jynes, against the one defendant, Quality Ford, remained. The order appealed from in this case was entered in circuit court case number CV 90-593; it is styled as all six original plaintiffs against both original defendants and enters judgment against Quality Ford in favor of only Ms. Faust and Mr. and Mrs. Beaver.

Obviously then, the order appealed from does. not conclude Mr. Jynes’ rights in the action. In fact, there was never any evidence of Mr. Jynes’ claim or damages presented to the trial court. The only explanation given by counsel for the absence of proof of Mr. Jynes’ claim is that Mr. Jynes was in Saudi Arabia and could not be found. The trial court could have made a determination that there was no need for delay of Ms. Faust’s and Mr. And Mrs. Beaver’s claims and so stated in the judgment. However, no such finding was stated in the order appealed from and because it leaves the rights of Mr. Jynes undetermined it is not a final order which can be appealed.

The order appealed from is not a final order in another respect. Although the two plaintiffs and one defendant were dismissed from the case without prejudice on October 8, 1990, there was never a final judgment of dismissal entered stating there was no just reason for delay. Thus, because the two plaintiffs and one defendant were not finally dismissed from the case and the order appealed from does not enter judgment in their favor or against them, their rights were not finally determined. See Black v. Crawley, 304 Ark. 716, 804 S.W.2d 366 (1991); Middleton v. Stilwell, 301 Ark. 110, 782 S.W.2d 44 (1990).

The failure to comply with ARCP Rule 54(b) presents a jurisdictional question in this court which we are obliged to raise on our own. St. Paul Fire & Marine Ins. Co. v. First Commercial Bank, 304 Ark. 298, 801 S.W.2d 652 (1991). We dismiss the appeal without prejudice.

Brown, J., not participating.


author: Robert L. Brown, Justice.

text:
    Charles D. RAGLAND, Commissioner of Revenues v. PITTMAN GARDEN CENTER, INC., and Donald Pittman d/b/a Pitman Nurseries Co.
    91-115
    820 S.W.2d 450
    Supreme Court of Arkansas
    Opinion delivered December 9, 1991

      Cora L. Gentry, for appellant.

      Anderson, Crumpler & Bell, P.A., by: P.C. Crumpler, for appellees.
   Robert L. Brown, Justice.

This is the third time that this case has been before us on appeal. The issue each time has remained essentially the same. The appellees, Pittman Garden Center, Inc., and Donald Pittman d/b/a Pittman Nurseries Co., which are located in Magnolia, argue that certain of their employees — about 57 in number — should be exempt from state income tax withholding because they are engaged in agricultural labor. Donald Pittman is a principal of both businesses. The appellant, the Commissioner of Revenues, contends that affected employees of the appellees are not involved in agriculture, but rather’ are engaged primarily in providing horticultural and landscaping services.

The factual backdrop against which the case must be decided is this. The Pittman appellees operate a nursery that produces and sells multiple plants for the wholesale market and a garden center that sells plants to customers in the retail market. The employees of the Pittman appellees also deliver horticultural products and provide labor to a separate Pittman business, Pittman Landscape Planners, Inc., which is not a party to this litigation. The landscaping business serves customers in south and central Arkansas and northern Louisiana. Pittman Landscape Planners, Inc., was run during the relevant time period by appellee Donald Pittman’s daughter, Donna Pittman.

From January 1,1982, through April 30,1985, the commissioner conducted income tax withholding audits of the Pittman appellees and as a result of those audits, assessed additional withholding taxes. The Pittman appellees objected on the ground that their employees were engaged in agricultural labor and were, therefore, exempt. The assessments were reviewed administratively and upheld. From that ruling, the Pittman appellees filed suit in chancery court for judicial review.

The chancellor first found that the Pittman employees were engaged in agricultural labor and, thus, were exempt from withholding. The commissioner appealed, and we reversed. See Ragland v. Pittman Garden Center, 293 Ark. 533, 739 S.W.2d 671 (1987) (Ragland I). We first observed that the exemption is not applicable to wages paid for landscaping services after the commodity is delivered to the terminal market. In so deciding, we relied on the precise language of Ark. Code Ann. § 26-51-902(1) (1987), which specifically refers to a section of the federal social security law — 26U.S.C. § 3121(g) (1988) — for its definition of “agricultural labor.” Landscaping services are not included in the federal definition. We did note, however, that certain employees were engaged in both agricultural and landscaping work. To assist in determining whether the employees were agricultural or not, we looked to a federal statute incorporated within 26 U.S.C. §3121 (g) (1988), which provided that when an employee devotes one half or more of his or her time to agricultural labor, that employee is exempt from withholding. See 26 U.S.C. § 3121(c) (198 8). We remanded the case to the chancellor to determine the percentage of time the employees spent in providing agricultural services and the percent involved with landscaping services.

On remand, the chancellor included transportation time for the delivery of plants to customers as agricultural labor. After doing so, he again found that the employees of the Pittman appellees qualified for the exemption. The commissioner then filed a second appeal.

In Ragland II, we agreed with the commissioner that non-agricultural labor began when the employees left the nursery to commence delivery of the plants to a landscaping customer and not when they arrived at the customer’s location. See Ragland v. Pittman Garden Center, Inc., 299 Ark. 293, 772 S.W.2d 331 (1989). However, we were unable from the record to ascertain whether, even with the exclusion of transportation time, the employees were engaged in agricultural labor half of their work time or more. We, therefore, remanded the case a second time for the chancellor to make a finding of the time spent in each endeavor.

The Pittman appellees filed a petition for rehearing and asked us to clarify the issue of when transportation time attached to agricultural services and when it attached to landscaping services. In a supplemental opinion, we clarified this point by reference to a standard set out in a federal regulation which was adopted pursuant to the Fair Labor Standards Act. See Ragland v. Pittman Garden Center, Inc., 299 Ark. 298, 777 S.W.2d 222 (1989); 29 C.F.R. § 780.206. We concluded, on the basis of that regulation, that agricultural labor may indeed include time spent in delivering products to customers under some circumstances but should not be included if the delivery is merely incidental to providing landscaping services.

After a full hearing on remand on October 3, 1990, the chancellor entered a decree, stating that the Pittman appellees had established beyond a reasonable doubt that the primary purpose of the transportation was the delivery of agricultural products to market and was not merely incidental to landscaping services as defined by 29 C.F.R. § 780.206. There was no finding from the bench following the hearing, and no findings of fact accompanied that decree. The chancellor further concluded in his decree that Pittman was only liable for $861.18 in state withholding taxes for wages paid to employees who spent more than fifty per cent of their time engaged in landscaping activity. The commissioner moved to set aside the decree and for a new trial, but that was denied.

For his first argument on appeal, the commissioner argues that the chancellor clearly erred in finding that the employees of the Pittman appellees were entitled to the exemption. He cites us to Ragland II, where we stated that the law puts a pronounced burden on the taxpayer to establish entitlement to an exemption by proof that is both beyond a reasonable doubt and conclusive. 299 Ark. at 298; 772 S.W. 2d at 333. He then refers specifically to the testimony of Donna Pittman, who ran the Pittman Landscape Planners, Inc. during the operable time and who stated that following the delivery of plants, “seventy-five percent of the time we actually install the plants into the ground.” The commissioner further directs our attention to the testimony of the auditor, Dennis Johnson, who testified that all 57 employees of the Pittman appellees were reimbursed 100% for their employment time by Pittman Landscape Planners, Inc.

The commissioner is correct that we strictly construe tax exemptions, and any doubt is resolved in favor of the tax. See C.J.C. Corp. v. Cheney, 239 Ark. 541, 390 S.W.2d 437 (1965). We also review tax exemption cases by trial de novo. See Ragland v. Dumas, 292 Ark. 515, 732 S.W.2d 119 (1987). Moreover, the Pittman appellees have the burden of proving the exemption beyond a reasonable doubt. See S.H. & J. Drilling Corp. v. Qualls, 268 Ark. 71, 593 S.W.2d 178 (1980). In other words, the burden resided on Pittman appellees to prove that the transportation time was agricultural labor and not incidental to landscaping work at the trial on October 3, 1990.

In light of these well-established principles, we conclude that the Pittman appellees did not meet their burden. We, again, are drawn to the testimony of Donna Pittman, who testified that seventy-five percent of the time the employees of Pittman appellees put the plants in the ground following delivery. This more than suggests that the plants were delivered incident to the landscaping services. Donna Pittman was in the best position to know, as the person who ran the landscaping business, what the employees actually did on the job, and her conclusion carries considerable weight. Moreover, the landscaping firm was reimbursing the Pittman appellees 100% for the work done by these employees. That runs counter to any contention that the employees were not engaged in landscaping labor.

In reviewing the record of the last hearing, we find that sufficient proof to sustain that the transportation related to agriculture was not presented by the Pittman appellees. It was their burden to prove the exemption beyond a reasonable doubt. This they failed to do, and the chancellor clearly erred in finding otherwise.

Accordingly, we reverse the chancellors’ decision and remand the matter for a judgment to be entered consistent with this opinion in the full amount of the assessment.

Reversed and remanded.


author: Per Curiam.

text:
    Byron HOOPER v. STATE of Arkansas
    CR 91-232
    820 S.W.2d 276
    Supreme Court of Arkansas
    Opinion delivered December 9, 1991

      George Mason, for appellant.
    No response.
   Per Curiam.

Petitioner, Byron Hooper, by his attorney, George W. Mason, has filed a motion for rule on clerk. His attorney admits that the record was tendered late due to his negligence in meeting the ninety-day limit for filing the record in this court. See Ark. R. App. P. 5(a).

We find that such error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See Terry v. State, 272 Ark. 243, 613 S.W.2d 90 (1981); In Re: Belated Appeals in Criminal Cases, 265 Ark. 964 (1979) (per curiam).

A copy of this opinion will be forwarded to the Committee on Professional Conduct. In Re: Belated Appeals in Criminal Cases, 265 Ark. 964.


author: Jack Holt, Jr., Chief Justice. Robert L. Brown, Justice,

text:
    USABLE LIFE v. Thelma FOW and Judith Bohannan Cole
    91-197
    820 S.W.2d 453
    Supreme Court of Arkansas
    Opinion delivered December 16, 1991
    [Rehearing denied January 21, 1992.]

      Davidson, Horne & Hollingsworth, by: Allan W. Horne and Patrick E. Hollingsworth, for appellant.

      Gean, Gean & Gean, by: Roy Gean, Jr., for appellee.

      GIaze, Corbin, and Brown, JJ., would grant rehearing.

   Jack Holt, Jr., Chief Justice.

This case involves the payment of proceeds from a life insurance policy and the issue of whether the complaint in interpleader filed by the appellant, •USAble Life, relieves it of liability for prejudgment interest, a statutory penalty, and attorneys’ fees for its failure to make payment of the policy proceeds to the named policy beneficiaries within the 90 days prescribed by the policy.

USAble Life issued a $2,500.00 life insurance policy to Arlie W. Church under a group policy. On August 18, 1989, Mr. Church executed a change of beneficiary form naming the appellees, his daughters Thelma Fow and Judith Bohannan Cole, as his beneficiaries. Prior to this change, Mr. Church’s wife, Mrs. Faye I. Church, had been named the beneficiary of the policy.

Mr. Church died on July 20,1990, and Mrs. Cole submitted a written claim under the policy for herself and Mrs. Fow on August 13, 1990. Mrs. Church also contacted USAble Life by telephone claiming to be the policy beneficiary and threatened to institute a lawsuit if she did not receive payment. USAble Life requested that Mrs. Church provide documentation in support of her claim, but she failed to do so.

On October 10, 1990, USAble Life filed a complaint in interpleader seeking to pay the life insurance proceeds into the registry of the trial court and asking the trial court to determine the beneficiaries of the policy as among Madams Fow, Cole, and Church.

However, Madams Fow and Cole objected to the proposed deposit of the policy proceeds into the court’s registry and counterclaimed against USAble Life for a statutory penalty and attorneys’ fees. The parties subsequently stipulated to all of the relevant facts and submitted the issues to the trial court for resolution.

On May 16, 1991, the trial court entered judgment against USAble Life, finding it liable to Madams Fow and Cole for the $2,500.00 policy proceeds, prejudgment interest, and a statutory 12% penalty, but reserving judgment as to the amount of attorneys’ fees. In a separate final order dated June 11,1991, the trial court awarded Madams Fow and Cole $1,070.00 for attorneys’ fees.

On appeal, USAble Life asserts a single point of error and contends that the trial court erred in holding it liable for prejudgment interest, a statutory penalty, and attorneys’ fees. We disagree and affirm the judgment of the trial court.

USAble Life claims that the fact that it never denied liability and promptly filed a complaint in interpleader absolves it of any liability for a statutory penalty or attorneys’ fees. Its reliance on Clark Center, Inc. v. National Life and Accident Ins. Co., 245 Ark. 563, 433 S.W.2d 151 (1968) and Dennis v. Equitable Life Assurance Society, 191 Ark. 825, 88 S.W.2d 76 (1935), however, is misplaced.

In Clark Center, we determined that the beneficiary was not entitled to the statutory penalty and attorneys’ fee where the insurer in good faith, under the particular facts and circumstances of that case, believed an investigation was necessary and made a reasonable investigation before making payment.

In Dennis, it was apparent that the beneficiaries could not be determined by the insurance organization by a mere examination of the policy of insurance, but recourse had to be had to extraneous proof for a determination of the beneficiary in that case. The vague, uncertain, and indefinite designation of a beneficiary made it necessary to determine or decide certain facts and then to declare the law in relation thereto. We noted that the question of a proper beneficiary was a real one, and the insurance company could not, without involving itself in serious danger, assume the responsibility of deciding disputed facts and controverted propositions of law.

In this case, USAble Life’s policy provided that it had 90 days within which to pay claims after it had been notified of a loss. Although USAble Life has never denied liability for this claim, it is undisputed that it had in its files the change of beneficiary form naming Madams Fow and Cole as current beneficiaries of Mr. Church’s policy. Further, it is clear that USAble Life did not make an investigation as to the proper party for payment or make payment of the policy proceeds to Madams Fow and Cole as named beneficiaries, but chose instead to initiate an action for interpleader apparently based on Mrs. Church’s verbal claims and the threat of a lawsuit. By doing so, USAble Life avoided what is considered to be a potential lawsuit by filing an action in interpleader, while at the same time placing the burden on Madams Fow and Cole to bear legal expenses in perfecting their claim to the monies that were rightfully theirs as current beneficiaries under the policy.

It is undisputed that Mrs. Church’s claims were verbal and that USAble Life never received any written notice claim from her. Arkansas Code Ann. § 23-79-125 (1987) addresses payment by the insurer as a discharge to subsequent claims and provides in pertinent part as follows:

(a) Whenever the proceeds of or payments under a life . . . insurance policy . . . become payable in accordance with the terms of the policy . . . and the insurer makes payment of the amount in accordance with the terms of the policy. . .the person then designated in the policy... as being entitled to the benefits shall be entitled to receive the proceeds or payments and give full acquittance therefor.
(b) The payment shall fully discharge the insurer from all claims under the policy . . . unless, before payment is made, the insurer has received at its home office written notice by or on behalf of some other person that the other person claims to be entitled to the payment or some interest in the policy . . .

Arkansas Code Ann. § 23-78-208 (1987) addresses damages and attorney fees on loss claims and provides in pertinent part as follows:

(a) In all cases where loss occurs and the . . . life . . . insurance company . . . shall fail to pay the losses within the time specified in the policy, after demand made therefor, the. . . firm. . . shall be liable to pay the holder of the policy. . . , in addition to the amount of the loss, twelve percent (12%) damages upon the amount of the loss, together with all reasonable attorneys’ fees for the prosecution and collection of the loss.
(b) The attorney’s fee shall be taxed by the court where the same is heard on original action, by appeal or otherwise, and shall be taxed up as a part of the costs therein and collected as other costs are or may be by law collected. * * * *

Absent written notice, then, USAble Life’s payment of the insurance proceeds to Madams Fow and Cole would have fully discharged it from all claims under the policy. Since USAble Life opted to file an interpleader, rather than take advantage of its statutory protections under section 23-79-125, it should bear the responsibility of the additional expenses visited on the beneficiaries.

Consequently, the trial court’s award of prejudgment interest, a statutory penalty, and attorneys’ fees was not clearly erroneous. Allen v. Texarkana Public Schools, 303 Ark. 59, 794 S.W.2d 138 (1990).

Affirmed.

Glaze, Corbin and Brown, JJ. dissent.

Robert L. Brown, Justice,

dissenting. I would reverse the circuit judge’s decision to assess a statutory penalty and an attorney’s fee.

By its decision today the majority has mandated that insurance carriers should act, against their will, as judges and juries and decide who should receive benefits when a dispute arises between conflicting claimants. Yet, a dispute concerning claimants at odds is precisely the situation that the interpleader procedure was designed to cover. See Ark. R. Civ. P. 22. To my way of thinking, the carrier did what was entirely appropriate when it filed its compliant to interplead the funds, admitted liability, and requested a judicial determination of who was the appropriate claimant to be paid.

Here, the insured, Arlie W. Church, died on July 20, 1990. Prior to August 18,1989, his wife, Faye I. Church, was named the beneficiary of his life insurance policy. After that date, his daughters, Thelma Fow and Judith Bohannan Cole, were so designated. The daughters completed a written claim form which was received by US Able Life on August 17,1990. Fayel. Church asked for a claim form but did not file the claim. Nor did she provide the carrier with documents to support her claim. She did, however, notify the life insurance carrier on September 24,1990, that she was the correct beneficiary, and she threatened litigation if the proceeds were paid to the daughters.

On October 10, 1990, the carrier filed this interpleader action pursuant to Rule 22 to resolve the dispute. The case was then submitted to the circuit judge on stipulated facts. Rule 22 states in relevant part: “Persons having claims against the plaintiff may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability.” That provision governs the insurance carrier’s dilemma. The majority tries to distinguish written claims from verbal claims. But the rule does not make that distinction. Moreover, what prudent attorney for an insurance carrier would advise payment to the daughters knowing that the widow had put the carrier on notice of her claim?

The majority further implies that USAble Life should have conducted an investigation into this matter. Again, why? We have a judicial procedure to resolve precisely the kind of dispute set out in Rule 22. And this was no frivolous claim. Mrs. Church was the widow of the insured and had a plausible claim to the proceeds as a prior beneficiary.

This is not a case where the insurance carriers refused to pay within the allotted period of time, thus triggering the penalty statute. Here, the carrier admitted liability and offered to pay the proceeds into court. It did so within sixty days of the daughters’ claim, which was within the policy’s time period. We should not assess a penalty under such circumstances, especially when it is axiomatic that we strictly construe our penalty statute. See, e.g., Clark v. New York Life Ins. Co., 245 Ark. 763, 434 S.W.2d 611 (1968); Clark Center, Inc. v. National Life and Accident Ins. Co., 245 Ark. 563, 433 S.W.2d 151 (1968).

Turning once more to the enhanced role the majority’s decision places on insurance carriers to decide disputes, I concur with the position taken by this court in an earlier decision. See Dennis v. Equitable Life Assur. Soc., 191 Ark. 825, 88 S.W.2d 76 (1935). In Dennis, the issue, likewise, was whether the children or the widow were entitled to the insurance proceeds. We noted that the dispute was “a real one” and the claims were made “in good faith.” 191 Ark. at 833, 88 S.W.2d at 80. We then said:

The appellant insurance company could not, without involving itself in serious danger, assume the responsibility of deciding disputed facts and controverted propositions of law. We hardly think any responsible attorney would have assumed to advise the insurance company to make such settlement, when at a comparatively small expense it could interplead the parties, pay the fund into court, where the controversy could be settled at the expense of the contesting parties, even after the insurance company was discharged.

Id.

The status of the widow certainly suggests a potentially valid claim, especially when she had previously been a beneficiary. And there is nothing of record which would have alerted the carrier to the fact that Mrs. Church was making her claim in any manner other than in good faith. The fact that the files of the carrier contained a policy with the daughters named as beneficiaries does not conclusively resolve the dispute. Lack of capacity to change beneficiaries, for example, was an argument that Mrs. Church conceivably could have made.

In short, such factual issues are better left to the courts to decide than to the insurance carriers. I respectfully dissent.

Glaze and Corbin, JJ., join.


author: Steele Hays, Justice.

text:
    Troy Allen GULLETT v. Cecily BROWN and Gallagher-Bassett Services, Inc. as Administrator of Self-insurance Plan of Uninsured Motorists for Pulaski County, Arkansas
    90-320
    820 S.W.2d 457
    Supreme Court of Arkansas
    Opinion delivered December 16, 1991

      Hoofman & Bingham, P.A., by: John Biscoe Bingham, for appellant.

      The Walter Murray Law Firm, P.A., for appellees.
   Steele Hays, Justice.

By this appeal we are asked to hold that workers’ compensation benefits are not the exclusive remedy of an employee injured in the course of his employment by an uninsured motorist where those benefits are provided by the employer’s self-insurance. We decline that request and affirm the trial court.

In September, 1987 Troy Allen Gullett was injured in a motor vehicle collision. Gullett was a passenger in a vehicle belonging to his employer, Pulaski County, and being driven by another county employee. The other vehicle was driven by Cecily Brown. Gullett brought this action at law against Cecily Brown, Gallagher-Bassett Services, Inc., as administrator of a self-insurance plan of Pulaski County, and Jason Ruby and others as director and representatives of Metroplan Risk Management Association. The complaint alleges that Brown’s negligence was the proximate cause of the accident, that Brown was uninsured and that at the time of the occurrence Pulaski County had in effect an agreement to provide uninsured motorist coverage on its vehicles through a self-insurance agreement administered by Gallagher-Bassett which coverage inured to Gullett’s benefit. Gullett sought damages against the defendants in the sum of $100,000, costs and attorneys fees.

Cecily Brown generally denied the allegations of the complaint and the remaining defendants filed a motion to dismiss the complaint for lack of subject matter jurisdiction and for failure to state facts upon which relief could be granted. Ark. R. Civ. P. 12(b)(6). The motion alleged that Pulaski County was self-insured for workers’ compensation, that Gullett’s injuries were incurred in the course of his employment, that Gullett had filed for and was receiving workers’ compensation benefits and such benefits constitute an exclusive remedy under the Arkansas Workers’ Compensation Act. The motion further alleged that Pulaski County is a self-insured for uninsured motorists.

In response, Gullett alleged that Pulaski County had purchased a plan of insurance through the Metroplan Risk Management Association and said uninsured motorist was reinsured through an insurance carrier and administered by GallagherBassett. Gullett admitted his injuries arose from the scope of his employment but denied that workers’ compensation was an exclusive remedy where the injured employee is a beneficiary of a policy of uninsured motorist coverage, citing The Travelers Insurance Co. v. National Farmers Union Property and Casualty Co., et al., 252 Ark. 624, 480 S.W.2d 585 (1972).

The circuit court entered an order finding that Cecily Brown was an uninsured motorist at the time of the accident, that Gullett had collected workers’ compensation benefits under coverage maintained by Pulaski County through Metroplan Risk Management Association, that Pulaski County had in effect an agreement through the association “to provide uninsured motorists coverage for vehicles owned by Pulaski County and that said self-insurance was administered by Gallagher-Bassett Services, Inc.” Upon those findings the complaint was dismissed as to all defendants but Cecily Brown. Subsequently, Gullett took a non-suit as to Cecily Brown and appealed from the order of dismissal.

Appellant relies entirely on the case of Travelers Insurance Co. v. National Farmers Union Property and Casualty Co., et al., supra. In Travelers, the employee, Calvin McCord, was killed when he was struck by an uninsured motorist. Travelers paid workers’ compensation to McCord’s dependents and sought subrogation against the proceeds recovered by McCord’s estate under McCord’s uninsured motorists coverage through National Farmers Union Property and Casualty, a policy bought and paid for by McCord. We affirmed the trial court’s denial of subrogation by Travelers against uninsured motorist benefits payable to Calvin McCord’s administratrix. Travelers relied primarily on Ark. Code Ann. § 1 l-9-410(a)(l) (1987), providing that the making of a claim for workers’ compensation “shall not affect the right of the employee, or his dependents, to make claim or maintain an action in court against any third party for such injury” and awarding the compensation carrier two-thirds of the net proceeds. Noting that uninsured motorist coverage is a form of accident or indemnity insurance, we said that if Travelers could subrogate as to McCord’s own uninsured motorist recovery, there would be no reason why McCord’s health, accident and hospital insurance benefits would not also be subject to subrogation by a workers’ compensation carrier:

A workmen’s compensation carrier has no more right under the subrogation statute to benefit from this type of insurance which a covered employee elects to take at his own expense than it would from the proceeds of health, accident, or hospital insurance. [Our emphasis.]

We regard it as a significant distinction that in Travelers the uninsured motorist coverage was provided under the employee’s own policy, acquired by the employee and to which Travelers had no claim whatever. There are frequent references throughout that opinion to the fact that it was McCord who bought and paid for the policy under which the benefits were provided and it is clear this court placed considerable emphasis on that circumstance, which, as we have seen, is wholly absent in the case before us. We also note that in Travelers the court never reached the exclusivity rule, an additional indication of the dissimilarity between the two cases.

Turning elsewhere for guidance, we believe the case of Mitchell v. Philadelphia Electric Company, 422 A.2d 556 (1980), is instructive. Mitchell was injured while a passenger in a truck owned by his employer, Philadelphia Electric Company. The injuries were caused by an uninsured motorist. The electric company was self-insured. Mitchell brought this action against his self-insured employer to recover the equivalent of uninsured motorists benefits.

The electric company defended on the theory that Pennsylvania’s uninsured motorists statute, like our own, [Ark. Code Ann. § 23-89-403 (1987)] was not obligatory and that workers’ compensation benefits were an exclusive remedy as to any cause of action by an employee against an employer. Conceding that a claim for uninsured motorist benefits sounded more in contract than in tort, the court held nevertheless that the language of Pennsylvania workers’ compensation act does not except contract actions from the exclusivity rule and sustained the trial court’s dismissal of Mitchell’s asserted action at law. That holding was reaffirmed in Lewis v. School District of Philadelphia, 538 A.2d 862 (1988).

Our own statute, Ark. Code Ann. § 11-9-105 (1987), like Pennsylvania’s, makes no exception for contract actions and in numerous decisions we have interpreted the act as exclusive of all other rights and remedies. See, e.g., Seawright v. U.S.F.&G. Co., 275 Ark. 96, 627 S.W.2d 557 (1982):

The rights and remedies herein granted to an employee ... on account of injury or death, shall be exclusive of all other rights and remedies of such employee, his legal representative, dependents, or next of kin, or anyone otherwise entitled to recover damages from such employer. . . .

For the reasons stated the order is

Affirmed.


author: David Newbern, Justice.

text:
    Michael KEATON v. STATE of Arkansas
    CR 91-177
    821 S.W.2d 11
    Supreme Court of Arkansas
    Opinion delivered December 16, 1991

      Arlon L. Woodruff, for appellant.

      Winston Bryant, Att’y Gen., by: Elizabeth A. Vines, Asst. Att’y Gen., for appellee.
   David Newbern, Justice.

Appellant, Michael Keaton, was convicted of kidnapping. He contends evidence against him should have been suppressed because of a lack of probable cause to search him and his vehicle and that he was improperly denied a continuance. We hold the search was justified in the circumstances and that the court was well within its discretion in denying the continuance after having previously granted a continuance for the same purpose for which the second one was sought.

The evidence showed that Keaton approached a student who was studying in her vehicle parked on the Arkansas State University campus in Jonesboro, accosted her with a knife, entered her vehicle, and drove from the campus. He took her to a nearby motel where his tractor-trailer rig was parked, placed the victim in the cab, and handcuffed her hands behind her back. He took her keys and left to move her vehicle. The victim forced one hand free from the handcuffs and escaped. She ran to a nearby tire dealership and told the people there what had occurred. As she was explaining, she saw Keaton begin driving his truck away and pointed him out. Robert Deason, an employee at the tire store, got in his car and followed Keaton. He got the license number, the trailer number, and a full description of the vehicle and phoned the information to the tire store owner. This information was relayed to police officers who had come to the scene and broadcast on police radio. Keaton was stopped by an officer within minutes thereafter.

Keaton was taken into custody. An officer looked into the cab to check for other occupants and saw a knife matching the one described by the victim. The knife was at eye-level as the officer looked into the cab. Other officers who arrived shortly found that Keaton closely matched the description of the assailant given by the victim. They arrested him, and prior to admitting Keaton to the county jail, they removed his personal possessions including two sets of keys. One set belonged to Keaton and contained a key which was later used to unlock the handcuff remaining on the victim. The other ring of keys was identified by the victim as belonging to her. The victim also positively identified Keaton as her assailant.

Prior to trial Keaton moved to suppress the items obtained in the search of his person and the later search of the vehicle based on a lack of probable cause to stop him or search the vehicle. After having obtained one continuance to locate an alibi witness and being unable to do so, Keaton again sought a continuance on the eve of the trial for the same purpose. Both motions were denied. Following a guilty verdict, the jury set his sentence at 40 years.

1. Suppression

At a suppression hearing Keaton argued there was no probable cause for the initial stop of the vehicle and his subsequent arrest because of discrepancies in the victim’s description of the truck.

Keaton has no standing to argue suppression of the knife which was obtained by police in an inventory search of his truck after his arrest. There was no showing that he had a proprietary interest in the truck. Moore v. State, 304 Ark. 257, 801 S.W.2d 638 (1990). Before conducting the inventory search of the impounded vehicle Officer J.R. Thomas obtained permission from the owners.

In his argument concerning the initial stop of the vehicle Keaton ignores the fact that the stop of the vehicle was predicated upon the report of Mr. Deason which included the license number, trailer number, and a complete physical description. There was much more than a “suspicion.” Uncontradicted evidence shows that Mr. Deason’s description was exact, and there is no assertion that Deason ever lost sight of the vehicle. Nothing suggests that Deason’s description was inaccurate. There was ample cause for the initial stop, Stout v. State, 304 Ark. 610, 804 S.W.2d 686 (1991), and for the arrest, Ross v. State, 300 Ark. 369, 779 S.W.2d 161 (1989). The Trial Court did not err in denying the motion to suppress.

2. Continuance

Keaton’s defense asserted he was with someone else at the time and had nothing to do with the kidnapping. He sought and obtained a continuance. The police cooperated in searching for the witness, but they were unable to find a person with the name given by Keaton.

In considering whether a trial court was wrong in refusing to grant a continuance, abuse of discretion must be shown as well as resulting prejudice. McCree v. State, 266 Ark. 465, 585 S.W.2d 938 (1979). Nothing suggests an abuse in this case. The first continuance established that there was little likelihood the witness would be found, and the evidence was overwhelming that Keaton was indeed involved in the kidnapping. We find no error in the denial of the motion.

Affirmed.


text:
    P.H. KNOWLES, Jr. v. Sam. L. ANDERSON, Sr., et al.
    91-249
    821 S.W.2d 466
    Supreme Court of Arkansas
    Opinion delivered December 16, 1991

      Dan McCraw, for appellant.

      Ray Owen, Jr., for appellee.
   .

David Newbern, Justice.

The principal issue in this case is whether a purchaser of land with respect to which there is no use restriction in the chain of title may be required to comply with a “general development scheme” of which he may have notice by observation of conditions surrounding his land. We hold he may not.

The appellant, P.H. “Rocky” Knowles, purchased a 2 acre lot in the rural Lakeview Subdivision of Hot Springs on February 29, 1984. His intent was to develop the lot into a mobile home park. He checked his title abstract and found no restrictions applicable to his land. In the next two years Knowles prepared the lot for mobile homes by installing sewer, power, and water lines. He then purchased and moved two mobile homes onto the lot. The evening after Knowles placed the mobile homes on the lot he received a call from one of the appellees demanding that the mobile homes be removed as they were in violation of the residential scheme and certain restrictive covenants which had created this scheme. Upon his refusal to remove the structures a suit seeking permanent injunction against mobile homes on the property was instituted on May 16,1986, and tried May 16,1990.

The parties stipulated to the introduction of various instruments of record in Garland County. These included all instruments in Knowles’ chain of title from the creation of the subdivision in 1942, all instruments of record which appellee’s felt established restrictions prohibiting mobile homes, the original Bill of Assurance for the Lakeview Subdivision, and two deeds from the original developer, a computer printout summarizing the recorded restrictions in particular deeds, and a hand colored map which summarized the various restrictions by color coding. The parties stipulated that Knowles’ property fell into an area where a home had been built on site. It was characterized by the appellees as being “effectively restricted”. Knowles acknowledged that when he purchased the property there were two structures on it. One was a 50-year-old frame home which still stands, and the other was a one-bedroom cottage which was torn down. Across the street from him was property with a garage apartment in poor condition and a partially completed A-frame house. On one side of his property was completely undeveloped land and to the other side was another house similar to the one on his property. Knowles testified he had little knowledge of the kind of structures located in other parts of other surrounding subdivisions and that he felt he had no reason to look further than his own property when he checked with the abstract company to find that there were no restrictions.

Some residents of the subdivision testified on behalf of the appellees. They all had lots they felt were restricted and that there was a general development scheme for single family residential development only. They testified that they had been assured by the grantors that this scheme would continue, and they had purchased their properties in reliance on that fact.

The exhibits presented show that the original developers created at least four adjoining subdivisions: Lakewood, Lake-view, Lindale, and Bonair. Lakeview Subdivision was established June 28, 1942, with the filing of a bill of assurance. There are no restrictions in this bill of assurance which would prohibit mobile homes. Knowles’ property falls within the area covered by this bill of assurance, and none of the deeds within his chain of title, beginning with the first conveyance in 1947, contains any restriction. Lindale Subdivision was established December 14, 1959, with a bill of assurance containing restrictions prohibiting mobile homes. Bonair Subdivision, created May 31, 1961, and Lakewood Acres Subdivision, created June 12, 1961, were similarly restricted.

Knowles argued that Ark. Code Ann. § 18-12-103 (1987) prohibited enforcement of any restrictive covenant against him and denied that there was any general scheme of development. The Chancellor found that there was a general building scheme which prohibited mobile homes and that Knowles was familiar with the subdivision prior to purchasing the land. This familiarity with the area constituted implied or actual knowledge of the general plan. The Chancellor concluded that an equitable servitude had arisen which prohibited mobile homes and granted the permanent injunction.

Knowles raises two points of appeal. He challenges the finding of a restrictive covenant or equitable servitude based on a “general development plan” affecting his land, and he disputes the Chancellor’s conclusion that he had notice of any such plan. We agree with Knowles’ conclusion that there was no covenant or other servitude restricting his land against the' placement of mobile homes, and thus we reverse the decision and dismiss the case.

1. Validity of the restrictions

Arkansas Code Ann. § 18-12-103 (1987) provides:

No restrictive or protective covenants affecting the use of real property nor any instrument purporting to restrict the use of real property shall be valid or effective against a subsequent purchaser or owner of real property unless the restrictive or protective covenants or instrument purporting to restrict the use of real property is executed by the owners of the real property and recorded in the office of the recorder of the county in which the property is located.

There are restrictions in the deeds of other residents of Lakeview Subdivision but nothing to which Knowles would have been obligated or likely to turn in researching title to the land when he was considering buying it. The Chancellor acknowledged the Statute but chose not to apply it to this case because he concluded our case law construes the requirements for establishing a restrictive covenant on the facts of each case rather on the basis of the Statute.

The decision to disregard the Statute was based on Cook v. Jones, 271 Ark. 870, 611 S.W.2d 506 (1981) and Warren v. Detlefsen, 281 Ark. 196, 663 S.W.2d 710 (1984), which the appellees cited for the proposition that this Court has recognized the imposition of restrictive covenants based on a “general plan of development” theory. While the Cook case involved a covenant which prohibited mobile homes, and there was only a passing reference to the predecessor Statute, it is abundantly clear that this Court’s holding is consistent with the Statute.

Mr. Cook’s deed contained the restriction against mobile homes. His argument to the Chancellor was that because one tract of land in the subdivision had been sold without such a restriction the restriction could not be enforced against him. The Chancellor so held, and we reversed and enforced the covenant. We discussed the concept of a general plan of development and expressed our misgivings about such a method of imposing restrictions, but ultimately we concluded that restrictive covenants of this sort have been found legal where a general plan of development exists, citing Moore v. Adams, 200 Ark. 810, 141 S.W.2d 46 (1940). Our basis for the Cook decision was that Cook knowingly violated the restrictions found in his deed. It is entirely consistent with the Statute and our discussion of the general plan of development in obiter dictum does not indicate that we had chosen to disregard it.

In the Warren case, we were dealing with an entirely different type of land use control. The Warrens had sold some lots in their development with single family dwelling restrictions. They later attempted to construct duplexes on some of their remaining properties in the development. We affirmed a chancellor’s conclusion that a developer who sells lots with restrictive covenants for single family use in the deeds of the buyers cannot thereafter himself violate those restrictions. We held that the equitable servitude of a reciprocal negative easement had arisen against the Warrens. Again we mentioned the general plan of development theory but did so in support of the Chancellor’s admission of parole evidence to show that oral representations of a single family residential scheme had been made. The fact that representations of a general restrictive development scheme were made coupled with the restrictions shown in each of the deeds to the grantees led the Chancellor to conclude that the developer’s retained land should also be restricted. As we were not concerned with a subsequent purchaser seeking to avoid a restrictive covenant of which he had no actual knowledge, there was no need to refer to the Statute. Indeed, the Statute is wholly inapplicable to a reciprocal negative easement situation, as it arises not by operation of law but as a purely equitable remedy based on the contractual relationship between the common grantor and his grantees.

The Chancellor’s decision to disregard the Statute and look to cases from other jurisdictions to support his findings that the restrictive covenants in this case were valid based on a general scheme of development is not supported by the Cook or Warren decisions. The decision also ignores the rules for the establishment of restrictive covenants enunciated in Moore v. Adams, supra. There the common grantor, Mrs. Ingalls, sold a total of 71 lots in a four block area outside the City of Fayetteville. No plat or bill of assurance stating any restrictions was filed. There was testimony that the property was well adapted to residential purposes, and the deeds to eight of the lots sold restricted the property to residential use. Four deeds conveying 47 lots had no restrictions, and eight others conveying 16 lots provided a minimum cost for the building, house, or dwelling erected on the lot. The grantees whose lots were restricted sued Moore, another grantee whose deed contained no restrictions concerning what was to be placed on the lot, to restrain him from building a tourist camp. The deed to Moore’s grantor had a restriction requiring that a house costing not less than a minimum amount be placed on the lot. The Chancellor granted the injunction based on testimony from the plaintiffs that a camp would greatly depreciate the value of their property and that they had understood that the entire subdivision was to be a restricted area. We reversed, finding no general scheme of development, and even if there had been such a scheme, it had been abandoned. In discussing whether there were valid covenants we touched on the methods of establishing restrictions:

The ordinary method of establishing restricted districts when new subdivisions are surveyed and platted is to file with the dedicatory plat of the survey a bill of assurance, whereby the owner of the land platted obligates himself not to convey except in conformity with the restrictions imposed in the bill of assurance. The courts uniformly hold that such assurance induces purchases of the restricted property, and that the purchasers are entitled to have this reciprocal obligation enforced. . . .
The theory upon which these restrictions are imposed is that one taking title to land with notice that it is subject to an agreement restricting its use will not, in equity and good conscience, be permitted to violate its terms.
It is not essential, however, that there be a bill of assurance filed with the plat of the subdivision. The restricted use may be annexed to the conveyance of the land, and some of the cases on the subject have arisen out of an agreement between adjoining owners as regards the use of their land. Chapter on Equitable Restrictions, 3 Tiffany Law of Real Property, (3rd Ed.) § 58. . . . [I]n the section just cited the law is said to be that “The courts do not favor restrictions upon the utilization of land, and that a particular mode of utilization is excluded by agreement must clearly appear”.

The Chancellor’s conclusion that a restrictive covenant may be enforced based solely on a general plan of development in the absence of restrictions in the grantee’s chain of title is unsupported by the case law and contrary to the Statute. Even at the time the Lakewood Subdivision was established in 1942 it is clear that creation of a valid restrictive covenant in Arkansas required there to be some form of instrument containing the restrictions available to the grantee, either in his deed or in a bill of assurance in his chain of title. The Statute codified the requirement and did not change this rule of property.

Nothing in subsequent Arkansas cases considering enforcement of restrictive covenants leads us to conclude that this Court has contemplated any such change. See generally, McGuire v. Bell, 297 Ark. 282, 761 S.W.2d 904 (1988) (subsequent purchaser of land is charged with constructive notice of restrictions contained in every recorded deed in his chain of title; covenant enforced even though not in purchaser’s deed); Constant v. Hodges, 292 Ark. 439, 730 S.W.2d 892 (1987) (upholding covenant in bill of assurance filed in 1949 supported by overwhelming evidence of a general plan of development). In fact the McGuire and Constant cases support the conclusion that there must be restrictions in the grantee’s chain of title and a general plan of development before a restrictive covenant is enforceable. We so held when we refused to enforce a covenant which did appear in the grantee’s deed, but the evidence presented showed no clear general plan in Harbour v. Northwest Land Co., 284 Ark. 286, 681 S.W.2d 384 (1984). As the Harbour opinion makes clear, it is proper to consider whether a general plan of development exists when determining whether a written covenant or restriction contained in the chain of title of the party seeking to avoid the restriction remains valid. We have no case in which a restriction has been created as the result of a general development scheme.

On appeal we try chancery cases de novo but do not reverse a finding of fact unless it is clearly erroneous. McGuire v. Bell, supra. Here the Chancellor erred on the law. As there were no restrictions in any instrument in Knowles’ chain of title, there was no valid covenant effective against him. There was no basis for entry of the injunction. The decree is reversed and the case dismissed.

Reversed and dismissed.


author: Tom Glaze, Justice.

text:
    Harland BENNETT v. STATE of Arkansas
    CR 91-203
    821 S.W.2d 13
    Supreme Court of Arkansas
    Opinion delivered December 16, 1991

      Mark S. Cambiano, for appellant.

      Winston Bryant, Att’y Gen., Pamela Rumpz, Asst. Att’y Gen., for appellee.
   Tom Glaze, Justice.

This is an appeal from the appellant’s conviction of delivery substance and delivery of a counterfeit controlled substance. The appellant was sentenced to ten years imprisonment. He raises six points of error on appeal. Because we find merit in the appellant’s argument that the trial court erred in denying his motion for a new trial, we reverse and remand.

Appellant was convicted solely on the basis of Karen Willhite’s testimony. Karen Willhite was employed by the sheriffs department as an undercover narcotics officer. Willhite testified that she made two purchases of methamphetamine, or crank by its street name, from the appellant in his black Camero on March 8, 1990 and April 10,1990. Willhite did not wear any type of recording device during the buys, nor were drug buys witnessed by anyone else. After making the drug purchases with the sheriffs department money, Willhite took the drugs to Deputy Ricky West, who made out the offense/incident reports. One of the packages of crank was determined to be counterfeit. Willhite admitted during her testimony that she was friends with the appellant, but denied that they were lovers or had sex.

At the trial, the appellant presented an alibi defense that he was in California during the time of the March drug buy and that his black Camero was in the shop during this time and the time in April. To support his alibi, he had several witnesses testify that they had seen the appellant in California around the March 8th date. In addition, appellant introduced (1) a billing for an ad he placed in a San Francisco newspaper between March 6 and March 13,1990, (2) copies of two money orders paid in the order of appellant’s name received in California on March 2 and 3, and (3) a copy of a phone bill showing calls made from California to Willhite’s work number on March 4, 5, 7 and 9, 1990.

We first consider the appellant’s argument that there was insufficient evidence to support his conviction. The appellant properly preserved this point on appeal by raising this argument in his motion for a directed verdict. As this court has stated numerous times, we treat directed verdicts as challenges to the sufficiency of the evidence. See, e.g., Glick v. State, 275 Ark. 34, 627 S.W.2d 14 (1982). In criminal cases, this court affirms where there is substantial evidence to support the verdict. Lunon v. State, 264 Ark. 188, 569 S.W.2d 663 (1978). Substantial evidence is evidence which is of sufficient force to compel a conclusion one way or another and forces or induces the mind to pass beyond suspicion or conjecture. See Jones v. State, 269 Ark. 119, 598 S.W.2d 748 (1980). In determining whether there is substantial evidence, the court reviews the evidence in the light most favorable to the appellee. Pope v. State, 262 Ark. 476, 557 S. W.2d 887 (1977). It is permissible for the court to consider only the testimony which supports the verdict of guilt. Gardner v. State, 296 Ark. 41, 754 S.W.2d 518 (1988).

Clearly, Willhite’s testimony of her drug buys from the appellant is sufficient to establish that appellant delivered controlled and counterfeit substances in violation of Ark. Code Ann. § 5-64-401 (1987). In short, the jury believed the state’s case instead of the appellant’s alibi witnesses and other evidence. This court has stated numerous times that it is the jury’s job to judge the credibility of the witnesses. See Jones v. State, 297 Ark. 499, 763 S.W.2d 655 (1989); Lewis v. State, 295 Ark. 499, 749 S.W.2d 672 (1988).

However, we do find merit in the appellant’s argument that the trial court erred in denying his motion for a new trial on the basis of newly discovered evidence. Before the appellant’s hearing on this motion, his attorney and the state stipulated that Willhite had lied when she stated at appellant’s trial that she and the appellant had not been involved in sexual relations. Although she was subpoenaed, Willhite failed to appear at the hearing. When the appellant attempted to testify about a conversation he had with Willhite at the prison after his conviction, the trial court sustained the state’s hearsay objection. The appellant then proffered his testimony and argues on appeal that the trial court erred in excluding his testimony. We need not address this issue, because the appellant was allowed without objection to introduce into evidence a taped phone conversation he had with Willhite on April 16, 1991, after his conviction.

The phone conversation between Bennett and Willhite was lengthy, but in pertinent part, the following dialogue took place:

Appellant:. Well, what did I do to get you mad at me? I mean, you wouldn’t have just come out and lied, told that kind of a lie without being mad at me, would you?
Willhite: I just don’t know what I was doing. . . .And, I regret it, every day, all day long ... I never stop thinking about it.
* * *
Appellant: Well, I tell you what. You are not the one that got me convicted. It’s the rumors that people started about me, making it look like I was a . . . drug addict . . .
Willhite: I know. I didn’t think anything like that would happen, because you had evidence that, you know . . . Overwhelming.
* * *
Appellant: The only thing you can do is if you call Mark, and I know they are going to threaten you with perjury.
Willhite: That’s all right with me.
Appellant: But I can’t figure out, Karen . . . why you lied in the first place. ... I mean when I was calling you from California all that time, were you planning this?
Willhite: No, No, not at all. . . .

We do not reverse the refusal to grant a new trial unless we find the trial court abused its discretion. Franks v. State, 306 Ark. 75, 811 S.W.2d 301 (1991). In addition, this court has recognized that newly discovered evidence is one of the least favored grounds to justify granting a new trial. Williams v. State, 252 Ark. 1289, 482 S.W.2d 810 (1972). A new trial will not be granted because of perjury on an immaterial issue, or on a collateral issue, nor generally where the false testimony may be eliminated without depriving the verdict of sufficient evidentiary support. Little v. State, 161 Ark. 245, 255 S.W. 892 (1923).

Here, we cannot say that Willhite’s perjured testimony about her relationship with the appellant is an immaterial issue. In addition, from the context of the phone conversation quoted above, there is a strong inference that Willhite may have lied about buying drugs from the appellant. Our concern over these two matters is heightened in view of the fact that, without Willhite’s testimony, there would be insufficient evidence to support the appellant’s conviction. Accordingly, we are compelled to hold that the trial court abused its discretion in denying the appellant’s motion for new trial. See Myers v. State, 111 Ark. 399, 163 S.W. 1177 (1914).

For the purposes of instruction, we briefly address the remainder of the appellant’s argument which may arise on retrial. However, we find it unnecessary to address the appellant’s argument that the trial court erred in refusing to allow the appellant to cross-examine Willhite on whether she had sexual relations with Deputy West, because the appellant failed to make a proffer of what he might have shown on cross-examination. This court has repeatedly held that we will not find error on a trial court’s ruling that excludes evidence when there is no proffer, unless the substance of the offer is apparent from the context in which the questions were asked. Richmond v. State, 302 Ark. 498, 791 S.W.2d 691 (1990). The purpose of this proffer is to allow this court to see if prejudice results from the exclusion of evidence. Duncan v. State, 263 Ark. 242, 565 S.W.2d 1 (1978). While the appellant made it clear that his theory was that Willhite was involved in sexual relations with Deputy West and appellant at the same time, the appellant admitted that he had no evidence that Willhite was sexually involved with Deputy West. This court is uanble to determine without a proffer what Willhite would have said in reply to this question, and therefore cannot determine if the appellant was prejudiced.

We also summarily dismiss the appellant’s argument that his charges should have been dismissed because he is constitutionally entitled to an indictment by a grand jury. The Arkansas Constitution clearly provides that persons can be charged pursuant to felony informations filed by prosecuting attorneys, and we have addressed this argument on a number of occasions and have consistently refused to extend the right to a grand jury indictment to proceedings in this state. See, e.g., Taylor v. State, 303 Ark. 586, 799 S.W.2d 519 (1990).

Lastly, we address the appellant’s argument that the trial court erred in refusing to allow the police incident/offense reports into evidence. Appellant bases his argument on A.R.E. Rule 612. Under this rule, if a witness uses a writing to refresh her memory, an adverse party is entitled to have the writing produced at the trial and to introduce into evidence those portions relating to the witness’s testimony. Here, however, Willhite testified from her own memory and there is no indication from the record that she used these reports to refresh her memory. Thus, Rule 612 is not relevant to this issue.

Further, Willhite testified consistently concerning those matters contained in these reports. In furtherance of his alibi defense, the appellant sought to have Willhite state that the appellant was in his black Camero during these sales. While Willhite never mentioned appellant’s car during her direct examination, she testified on cross-examination that the appellant was in his black Camero at the time of the drug buys. Under the facts and circumstances of this case, the police incident/ offense reports were inadmissible hearsay. See A.R.E. Rule 803(a)(8)(i).

In holding that a new trial should be granted, we reverse and remand.


text:
    Ollie SWEAT v. STATE of Arkansas
    CR 91-168
    820 S.W.2d 459
    Supreme Court of Arkansas
    Opinion delivered December 16, 1991

      Val P. Price, for appellant.

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

Appellant appeals from her conviction of six counts of sale or delivery of cocaine. She was sentenced to thirty years in the Arkansas Department of Correction for each count, with the ninety years for the first three counts to be served concurrently with the ninety years for the other three counts. Appellant was also fined $150,000.00. In her appeal, the appellant argues two points of error. We find no reversible error; therefore, we affirm.

Appellant Ollie Sweat was one of the 101 people arrested as part of an undercover drug operation in Craighead County. At trial, Roger Ahlf, a narcotics investigator with the Arkansas State Police, testified that there were 224 cases or counts made against the 101 defendants. In the present case, he testified in detail about the drug transactions involving the appellant. Ahlf stated that a confidential informant introduced him to the appellant, and Ahlf bought controlled substances from appellant at her residence on seven different occasions.

We first address the appellant’s argument that the trial court erred by allowing Officer Ahlf to refer to his investigator notes and reports before answering questions on direct examination. Officer Ahlf testified that he made field notes during the investigation which included the time, the amount and the suspect involved in each transaction. He stated that usually the day after each purchase, he dictated a more detailed report and sent the tapes, to Little Rock, where a secretary transcribed them and afterwards returned the transcribed reports to Ahlf.

During direct examination, the state asked Officer Ahlf if the report which contained the details of a particular transaction would be helpful in refreshing his memory. The appellant objected, claiming that Ahlf was looking at the report as he answered the questions. Appellant’s specific objection was that Ahlfs testimony was not admissible as a past recollection recorded under A.R.E. Rule 803(5). The trial judge overruled this objection as well as three other similar objections on the basis that the reports helped to refresh Officer Ahlf s memory. Copies of Officer Ahlf s notes and reports were made available to the appellant.

Arkansas Rules of Evidence Rule 612 provides as follows:

(a) While Testifying. If, while testifying, a witnesses uses a writing or object to refresh his memory, an adverse party is entitled to have the writing or object produced at the trial, hearing, or deposition in which the witness is testifying.
(b) Before Testifying. If, before testifying, a witness uses a writing or object to refresh his memory for the purpose of testifying and the court in its discretion determines that the interests of justice so require, an adverse party is entitled to have the writing or object produced, if practicable, at the trial, hearing, or deposition in which this witness is testifying.

Under this rule of evidence, writings and objects are used for the limited purpose of refreshing the witness’s recollection and not as an independent source of evidence. Even though the witness may occasionally consult the writing, it is his testimony, not the writing, that is the actual evidence in the case. See Edward W. Cleary, McCormick on Evidence, § 9, at 18 (3d ed. 1984).

This court has repeatedly held that a witness is allowed to refer to writings before or while testifying. In Goodwin v. State, 263 Ark. 856, 568 S.W.2d 3 (1978), an arresting officer used notes prepared from his original notes to refresh his memory before testifying. See also Smith v. State, 286 Ark. 247, 691 S.W.2d 154 (1985) (where three law enforcement officials useda copy of .the defendant’s purported confession to refresh their recollection at trial); and Wilson v. State, 277 Ark. 43, 639 S.W.2d 45 (1982) (where a sheriff used a statement given by the defendant to refresh his memory while testifying).

McCormick has addressed this issue as follows:

. . . (T)he statement that a witness once refreshed must speak independently of the writing seems inflexible, and it is believed that the matter is discretionary and that the trial judge may properly permit the witness to consult the memorandum as he speaks, especially where it is so lengthy and detailed that even a fresh memory would be unable to recite all the items unaided.

Cleary, McCormick on Evidence, § 9 at 21. Consistent with McCormick’s view, our court has held that it will not reverse a trial court’s evidentiary ruling unless a clear abuse of discretion is shown. White v. State, 303 Ark. 30, 792 S.W.2d 867 (1990).

Here, we hold that the trial judge did not abuse his discretion in permitting Ahlf to refer to his reports or notes. As previously mentioned, the record before us reflects that Ahlf participated in a drug operation that involved 101 drug dealers and 224 drug purchases. Understandably, Officer Ahlf was unable to remember the details of each purchase without the aid of his notes. Because Ahlf s testimony was proper under Rule 612, we need not address its admissibility as recorded recollection under A.R.E. Rule 803(5).

Next, appellant argues that the trial court erred by refusing to strike testimony concerning the sale of cocaine on December 6, 1988, at 9:35 p.m., when the appellant was actually charged with having sold and delivered methamphetamine on that date. This argument has no merit.

At trial, appellant raised this issue by moving to direct a verdict on this methamphetamine count, and the trial court granted appellant’s motion, dismissing the charge. Thus, the appellant was given all the relief she requested, and has no basis upon which to raise this issue on appeal. Mitchell v. State, 281 Ark. 112, 661 S.W.2d 390 (1983). In sum, one cannot complain about a favorable ruling granting all relief requested. Parker v. State, 302 Ark. 509, 790 S.W.2d 894 (1990). Furthermore, appellant has failed to demonstrate any prejudice as a result of the trial court’s ruling.

For the reasons stated above, we affirm.

       Appellant was originally charged with eight counts of sale or delivery of a controlled substance. In a separate trial on one count, she was convicted and sentenced to twenty-five years in prison and fined $5,000.00. That conviction was affirmed by the Arkansas Court of Appeals in an unreported opinion in CACR-90-105 on March 27, 1991. A second count was dismissed by the trial court in this case which we mention in addressing appellant’s second issue in this appeal.

       Appellant suggested at trial (as she does on appeal) that Officer Ahlf read his report after each question he was asked. Our reading of the reports, field notes and testimony supports the trial court’s ruling that Ahlf only referred to his report to refresh his memory.