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

text:
    David J. POTTER v. Betty (Potter) EASLEY
    85-144
    703 S.W.2d 442
    Supreme Court of Arkansas
    Opinion delivered February 3, 1986
    [Rehearing denied March 10, 1986.]

      Mitchell, Williams, Selig, Jackson & Tucker, by: Jim Guy Tucker, and Steel & Steel, by: George E. Steel, Jr., for appellant.

      Smith, Jernigan & Smith, by: Robert D. Smith, III and H. Vann Smith, for appellee.

       Purtle, J., not participating.

   George Rose Smith, Justice.

This is the second appeal in this divorce case. Potter v. Potter, 280 Ark. 38, 655 S.W.2d 382 (1983). After hearing additional testimony on remand, Judge Ford referred to the parties’ constant bickering, felt that he had reached the limit of his endurance, and withdrew from the case. Judge Langston was then assigned to the case and, after another hearing, entered the final decree. By then Mrs. Potter had remarried and is now Mrs. Easley. Potter’s appeal comes to us under Rule 29(1)(j). He argues six assignments of error, none of which can be sustained.

I. Confirmation of Sale of Homeplace. Judge Ford ordered that the homeplace be sold at public sale for cash, check, or certified funds. The sale was conducted by the clerk of the court on May 6,1982. The only bidders were the Potters. Potter opened the bidding at $40,000 though the mortgage debt against the property was about $45,000. When the bidding reached a point at which Mrs. Potter had bid $87,000, Potter stopped the sale by producing a $ 1,000 supersedeas bond and persuading the clerk to discontinue the sale and declare that it had not been completed.

After stopping the sale, Potter wrote to Judge Ford on the same day, explaining why he had stopped the sale. His main reason was that Mrs. Potter did not have the money to pay her bid and intended to use the “credits” she was entitled to under the divorce decree, then being appealed. Potter’s letter went on to say:

[I]f those credits are reversed on appeal, Betty would not likely have any source of funds with which to pay if she were the successful bidder on the house. . . .
In essence, she was bidding play money, and when the bid reached and slightly exceeded the value I testified the house would bring, I posted the supersedeas bond. While I was as anxious as anyone to conclude this matter, I cannot be placed in a position of bidding against a person who has no money with which to perform the sale. . . . [I]f the money judgment awards are reversed, she will have no money with which to fulfill the sale. There would be no sanctions against her and I would be damaged with no recourse.

Later on Potter testified that if a resale were ordered his first bid would be $100,000. Mrs. Potter testified that she can pay her bid of $87,000.

Judge Ford was not unsympathetic toward Potter’s self-induced predicament, for he said to Potter upon withdrawing from the case: “I feel that when you decide something you probably really believe it, and when you decide this is the way it ought to be, that you go forward in that, whether it’s right or wrong or anything else.” Nevertheless, after a hearing about confirmation Judge Ford wrote in an opinion:

It is inconceivable that the Court-ordered sale of the home property could be stopped as was testified to. I feel Mr. Potter waived the supersedeas he later posted, when he took part in the bidding. I will confirm the sale.

Judge Ford withdrew without having confirmed the sale, which was confirmed by Judge Langston.

It is now argued that we should set aside the confirmation and order a resale. We disagree. To begin with, Judge Ford was right in saying it was inconceivable that a judicial sale could properly be stopped midway, as Potter succeeded in doing. The court had ordered the sale. It was the duty of the parties to obey the order while it was in force, presenting objections later. See Stewart v. State, 221 Ark. 496, 254 S.W.2d 55 (1953).

In the second place, Potter cannot be allowed to take inconsistent positions by taking part in the bidding in its early stages and then repudiating the proceeding when the bidding reached what he considered a reasonable figure. It can hardly be doubted that if Potter had bid $85,000 and the bidding had ended, he would have sought confirmation. His maneuver was necessarily planned in advance, for he came to the sale with a supersedeas bond already signed by him and a surety. A court has the responsibility of protecting the integrity of its judicial sales, for otherwise prospective bidders can have no confidence in their legitimate high bids. Fleming v. Southland Life Ins. Co., 263 Ark. 272, 564 S.W.2d 216 (1978). There we cited some of our cases holding that a sale will not be reopened merely to permit a party to offer more money for the property. Without discussing all the appellant’s lesser arguments, such as that the sale was invalid because the clerk did not announce the final bid three times, we conclude that the sale was rightly confirmed.

II. Division of Sale Proceeds. In the divorce decree, from which the first appeal was taken, the chancellor ordered that the homeplace be sold and the proceeds, less the mortgage debt and expenses, be divided equally between the parties. Potter argued on appeal that the proceeds should be divided in proportion to the parties’ contributions to the acquisition of the property, which he calculated in his appellate brief to have been as follows:

Potter’s contributions:
Mills fee $7,000.00
Fayetteville proceeds 9,656.08
Gift from McMillin 5,000.00
Debt reduction 3,051.00
24,707.08
Mrs. Potter’s contribution:
Debt reduction 3,051.00

On that basis Potter argued that he would be entitled to 89% of the proceeds of sale and Mrs. Potter to 11%. His theory of proportionate division rested primarily on the case of Tibbetts v. Tibbetts, 406 A.2d 70 (Me. 1979).

Potter’s calculation was based to a large extent upon his own testimony and so is not treated as undisputed. On the first appeal we recognized, on the authority of a Texas case, that property acquired in part out of marital funds and in part out of one spouse’s separate funds may be in part marital property and in part separate. We resolved the issue by holding that Potter “owns a separate interest in the lot and house in the amount of $9,656.08.” We cited the Tibbetts case, not for the principle of proportionate division but for the “acquired in exchange for” clause in statutes governing the division of community property.

On remand Judge Langston construed our opinion to mean that Potter is entitled to $9,656.08 from the net proceeds of sale, the rest to be divided equally. The judge was right. Our settled procedure is to review chancery cases de novo and to end the controversy by a final judgment or by a direction to the chancellor to enter a final decree. Wilborn v. Elston, 209 Ark. 670, 191 S.W.2d 961 (1946). When, as here, the facts have been fully developed, it would be pointless for us to remand the case to the chancellor for a further evaluation of the facts, with the possibility of a second appeal on the same facts.Yet that is in effect what the appellant is arguing to have been the intent of our opinion on the first appeal.

It is our practice not to leave questions unanswered on chancery appeals. That practice was followed in this case. Our holding that Potter is entitled to a separate $9,656.08 interest in the homeplace was a rejection of his theory of proportionate division. Had we meant to adopt that theory we would have spelled out the exact interest of each party and not have left that question for the chancellor to decide on the very facts that were before us. Needless to say, our opinion on the first appeal is the law of the case, which we would not be at liberty to modify even if we now thought it erroneous. Wilson v. Rodgers, 256 Ark. 276, 507 S.W.2d 508 (1974); United States Annuity & Life Ins. Co. v. Peak, 129 Ark. 43, 195 S.W. 392, 1 A.L.R. 1259 (1917); Taliaferro v. Barnett, 47 Ark. 359, 1 S.W. 702 (1886).

On this appeal the dissenting opinion argues that we should allow Potter a larger share of the proceeds from the sale of the homestead, proportionate to his contribution of $9,656.08. The justification offered is that the opinion on the first appeal was wrong in this respect.

There are two answers to this argument. First, we are by no means convinced that our decision was wrong. It was not contrary to the specific language of the statute. The statute defines “marital property” as all property acquired subsequent to the marriage, with five specific exceptions. Ark. Stat. Ann. § 34-1214 (B) (Supp. 1985). All five classes of excepted property might be acquired before a marriage, but only subsection (5) mentions an increase in value: “(5) The increase in value of property acquired prior to the marriage.” The homeplace in question was not so acquired. We do not say that increases in the value of property in the other classes are necessarily included in the definition of marital property, but that is a question of statutory interpretation that might vary with the fact situation.

On the first appeal we allowed one of the disputed items claimed by Potter, but disallowed two others. The actual award of $9,656.08 was evidently selected as the best choice among several possibilities. In fairness we should not reconsider only one of the items without reopening the whole issue and possibly deciding that even the allowance of $9,656.08 was too liberal.

Second, the doctrine of the law of the case requires us to adhere to our decision on the first appeal even though we might think it to have been wrong. The annotation cited in the dissent states in § 4 that some courts follow what is sometimes referred to as the “right or wrong” rule, by which the first decision is considered to be binding whether it was right or wrong. 87 A.L.R.2d 271, 285. The annotator then cites cases from 27 states that follow that rule. Not only is Arkansas included in that group; the annotator cites 13 of our cases. Those cases were selected with care, for every one of them states in effect that we are bound to follow the first opinion even though we might think it to be incorrect. In fact, four of the thirteen use the exact phrase, “right or wrong.” National Surety Co. v. Long, 85 Ark. 158, 107 S.W. 384 (1908); Miller Lbr.Co. v. Floyd, 169 Ark. 473, 275 S.W. 741 (1925), aff'd 273 U.S. 672 (1927); Arkansas Baptist College v. Dodge, 189 Ark. 592, 74 S.W.2d 645 (1934); Missouri Pac. R.R. v. Hunnicutt, 193 Ark. 1128, 104 S.W.2d 1070 (1937).

In one early case we did disregard the rule by doing what the present dissent would have us do again; that is, we reversed the trial court on the first appeal, and when that court obeyed our instructions, we changed our minds on the second appeal and reversed him again. Rutherford, Use of Callen v. Lafferty, 7 Ark. 402 (1847). We quickly regretted that error and overruled Rutherford in Porter v. Doe ex dem Hanley, 10 Ark. 186 (1850). Apparently we have not since deviated from the law of the case.

There are, of course, two familiar limitations on the doctrine: One, an erroneous ruling is binding only in later proceedings in the same litigation and may be changed in cases involving other persons. Taliaferro v. Barnett, supra. Two, the rule does not apply if there is a material change in the facts at the second trial. Hartford Fire Ins. Co. v. Enoch, 79 Ark. 475, 96 S.W. 393 (1906). (We do not regard an obvious mathematical error as having any bearing on the validity of the rule, any more than a misspelled name would affect the rule of res judicata.)

We really do not understand what the Florida court meant to hold in the case cited in the dissent: Strazzulla v. Hendrick, 177 So. 2d 1 (Fla., 1965). Apparently the court merely wanted to recede from an earlier statement that it was without authority on a second appeal to review or reverse what had been decided on the first appeal. That seems to have been the sole effect of the court’s discussion, for it affirmed the intermediate court decision that was being reviewed.

The Florida court tried hard to limit its decision by making it clear that an appellate court should reconsider its decision on a former appeal only as a matter of grace, not as a matter of right, and that an exception to “the law of the case” should be made only in unusual circumstances, for the most cogent reasons, and to avoid a manifest injustice. Here there are no unusual circumstances, no cogent reasons for changing our practice, and no manifest injustice, for Potter lived in the home for many years and is getting back the money he put into it. After that deduction he shares in the enhancement of value resulting from inflation.

Finally, the Florida court qualified its purported exceptions by restating what is actually the rule in Arkansas: “But the exception to the rule should never be allowed when it would amount to nothing more than a second appeal on a question determined on the first appeal.” That is the situation before us. No additional testimony on the point at issue was introduced in the trial court. The same facts that we considered on the first appeal are before us again. Potter presents the same argument that he made earlier. If Potter is entitled to a second try, then so is every other litigant coming to us on a second appeal. We adhere to the basic approach we chose in Moose v. Gregory, 267 Ark. 86, 590 S.W.2d 662 (1979): A litigant is entitled to one appeal only, not two.

III. Unpaid Child Support. The divorce decree awarded custody of the three children to Mrs. Potter and ordered Potter to pay $650 a month as child support. The amount was later raised to as much as $850 a month. The suit dragged on for some years. In the court below Mrs. Potter contended that Potter was $10,893.83 behind in his payments. Potter argued below and argues here that he had paid everything due. The chancellor fixed the deficiency at $8,000. For reversal Potter insists there is no deficiency.

The problem is simple. The chancellor, in specifying the amount of child support, expected that Mrs. Potter would have available, for the support of herself and her three children, the $700 a month she was earning as a school teacher and the payments Potter was ordered to make. She did not have those resources, for Potter did not make his payments in full. His explanatory testimony: “I have paid 100% of everything the Court has ordered me to pay except for the deductions I thought were legitimate expenses Betty should have paid.” His “legitimate” deductions run for page after page in the record and include such things as taxes, country club dues, swimming lessons, trips, deposits in a savings account, and others too varied to enumerate. When the chancellor found a deficiency of $8,000, Potter asked for findings of fact showing how that figure was determined. He now argues that, absent such findings, we should disregard the chancellor’s determination.

As with respect to the sale of the homeplace, Potter took it upon himself to disregard the court’s order. If the children’s standard of living called for a country club membership, swimming lessons, and other frills, it was for Mrs. Potter to decide whether such expenses should be paid from her comparatively modest resources. Potter was not entitled to make such decisions for her. It was, however, his burden to justify his deductions at the trial level and to convince us that the chancellor was in error. Actually, his brief makes no effort to show that the chancellor’s $8,000 figure is demonstrably wrong. Rather, his position is essentially that his deductions were proper and must be allowed in full. The chancellor, confronted with that all-or-nothing choice, adopted an intermediate figure that has not been shown to be wrong.

Under this point a novel subordinate argument is made. After the divorce decree became final Mrs. Potter married Herbert Easley and moved across the state line to Texarkana, Texas. It is argued that since Texas is a community property state, Mrs. Easley is legally the owner of half of her husband’s income and should assume a greater share of the children’s support than was contemplated by the original decree. That means, in substance, that Easley should bear a substantial part of the expense of supporting Potter’s children, in addition to providing two of them with a home. No authority is cited to support this position, which we do not find to be convincing. The situation might be different if the children were actually in need, but the record contains Potter’s own detailed statement of his net worth, which as of March 15, 1984, was $1,209,027.45. It appears that he is able to support his children.

IV. Child Custody. The divorce decree specified what almost amounted to divided custody of the three children: David, now 14, Stephanie, now 12, and Jackson, now 9. Mrs. Potter was awarded custody, but Potter’s visitation privileges consisted of three 24-hour periods a week, beginning at 8:00 a.m. each Tuesday, Thursday, and Saturday. That arrangement did not prove to be satisfactory. After the first appeal the order was changed to give Potter the full custody of David, Jr., and Mrs. Potter the full custody of the other two. Equal visitation privileges were granted for alternate weekends, so that the three children will spend every weekend together with one parent or the other.

Potter contends that he should have custody of all three children, with visitation privileges in the mother. We cannot agree. We said in 1958, and have often repeated, that there is no type of case in which the personal observations of the chancellor are more significant than in child custody cases. Wilson v. Wilson, 228 Ark. 789, 310 S.W.2d 500 (1958). Since 1980 the two chancellors have had opportunities, denied to us, to observe both these parents and to hear them testify. It does appear, among other things, that Potter has sought to undermine the mother’s parental authority in the eyes of her children. The trial court has attempted to offset those actions. We are not convinced that the custody order is clearly erroneous.

V. Interest. The final decree allowed interest at 6% on amounts due under the first decree from its date to the date of the final decree, and interest at 10% after that on all the awards. Potter argues that his tenders of payment were refused; but those tenders were in the nature of compromises and were conditioned on Mrs. Potter’s signing various unidentified quitclaim deeds, bills of sale, releases, and other documents. Potter was at liberty to pay the awards at any time and actually retained the money for years. There is no injustice in the allowance of interest.

VI. Attorney’s Fees. The chancellor allowed Mrs. Easley a $1,200 attorney’s fees, basing the amount on pleadings that could have been avoided “except for the unreasonable legal positions” taken by Potter. On the first appeal we sustained a similar allowance on the ground that an award of attorney’s fees is largely within the discretion of the trial judge, who is familiar with counsel’s services. We find no abuse of discretion in the supplementary allowance.

Affirmed.

Purtle, J., not participating.

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

David Newbern, Justice,

dissenting. In our earlier opinion we simply said David Potter “owns a separate interest in the lot and house in the amount of $9,565.08 which sum is directly traceable to the proceeds of the sale of his separate property owned prior to the marriage.” 280 Ark. at 48, 655 S.W.2d at 388. Contrary to the suggestion of the majority opinion on this second appeal, our first opinion did not say anything about limiting David Potter’s interest in the present value of the home to that amount. As the majority says, we cited Tibbetts v. Tibbetts, 406 A.2d 70 (Me. 1979), for the proposition that Mr. Potter is entitled to property acquired during the marriage in exchange for property he owned prior to the marriage.

Our first opinion did not say it clearly, but the briefs in that case, and the ones before us now, show that the $9,565.08 was money received by Mr. Potter from sale of property he owned before the marriage which was invested directly in the property in question here. He argued on the first appeal as he argues now that he is entitled not just to his $9,565.08 investment but to that portion of the current value of the property which represents increase in this initial investment of nonmarital property. I doubt our first opinion has to be read as precluding giving Mr. Potter the increase in value his separate, nonmarital property has borne. If it must be so read, it was wrong. Our law requires that increase, during marriage, in the value of property acquired prior to marriage be excepted from marital property. Ark. Stat. Ann. § 34-1214(B)(5) (Supp. 1985).Once we give Mr.Potter the benefit of identifying his separate property acquired before marriage by saying it can be found in property acquired in exchange for it, then we have established the very tracing principle Mr. Potter asks that we apply to the increase. It makes no sense to say he can identify and be entitled to his separate part and then ignore the statutory requirement that its increase in value also be regarded as nonmarital property. The only circumstance in which we should say such a gain is marital property is when it is demonstrable that both spouses contributed to the gain. See Marshall v. Marshall, 285 Ark. 426, 688 S.W.2d 279 (1985).

The remaining question then is whether the law of the case doctrine prevents us from correcting our mistake if we must read our prior opinion as does the majority. The cases cited by the majority place Arkansas among those jurisdictions which seem to be hidebound in application of law of the case even if we could correct an error without undue prejudice to any party. Yet in Ferguson v. Green, 266 Ark. 556, 587 S.W.2d 18 (1979), we allowed ourselves the luxury of correcting an arithmetical error in a former appeal in the same case. We were too bashful to do it in the text of the opinion, but we corrected our error with this footnote:

In our opinion on the first appeal, where we subtracted $80,349 from $165,000, we showed a remainder of $85,651, instead of the correct amount of $84,651. The law of the case is not so inflexible that we cannot resolve a conflict apparent on the face of the earlier opinion, by correcting an obvious arithmetical error. [266 Ark. at 566, 587 S.W.2d at 25.]

Unlike the misspelling to which the majority opinion refers, the correction of this mathematical error changed the result of the case to the extent of reducing the judgment by $ 1,000. We should likewise feel free to correct the mistake here and increase Mr. Potter’s share of the value of the property in question to reflect the increase in the value of his identifiable investment of property held by him before marriage.

In Washington v. State, 278 Ark. 5, 643 S.W.2d 255 (1982), we held that if interim decisions between the first and second appeals of a case change the law so that what we said on the first appeal is no longer the law, we are not bound in the second appeal by what we did or said in the first. Our “right or wrong” stonewall thus has another chink. In my view, application of the law of the case doctrine to preclude us from correcting a mistake makes no sense whether we have changed the law, as in Washington v. State, supra, or merely found it out as we seem to have done here.

The changes taking place in the law of the case doctrine and cases from the jurisdictions which have departed from the totally inflexible approach are outlined in Annot., 87 A.L.R. 2d 271 (1963), and its later cases supplement. While a long opinion could be written setting out the reasons given in modern cases for the exercise of some discretion in application of the law of the case doctrine, it need not be done here because the subject is treated comprehensively in A. Vestal, Law of the Case: Single Suit Preclusion, 1967 Utah L. Rev. 1. Additionally, I believe the facts of the case before us are sufficient to illustrate both sides of the issue. Potter v. Potter is a little like Jarndyce v. Jarndyce. It seems to go on forever. As the majority opinion points out, one trial judge left the case because of his frustration with it. The temptation to opt for “finality over everything” is present. However, we should not let our frustration get the better of us to the extent we refuse to recognize our mistake and correct it. If the majority wishes to say our historical embrace of the law of the case doctrine is unyielding despite Ferguson v. Green, supra, I believe we should do as the Florida court in Strazzulla v. Hendrick, 177 So. 2d 1 (Fla. 1965), and “expressly recede” from the doctrine to the extent it requires that we never correct in second appeals our errors in first appeals. See also Greene v. Rothschild, 68 Wash. 2d 5, 414 P.2d 1013 (1966), and Union Light, Heat & Power Co. v. Blackwell’s Administrator, 291 S.W.2d 539 (Ky. 1956). As Professor Vestal said in the article cited above:

An examination of the recent cases involving the effect of an earlier appellate decision upon the same question before the same court at a later time suggests that the “law of the case” doctrine has lost most of its force. Appellate courts should decide cases correctly; any other course would distort the law and treat litigants unfairly. It may be fair to say that the earlier decision is not binding, that “law of the case” does not apply, unless it is an exceptional case. Absent such exceptional circumstances, the appellate court should decide all legal questions correctly without regard to earlier decisions by the court. [1967 Utah L. Rev. at 15].

Leaving this case in its present posture presents a precedent for saying we will not allow increase in the value of property brought to a marriage by one of the parties to be regarded as nonmarital property. Again, that is a clear violation of our statute and a precedent we can ill afford. We should not perpetuate and emphasize it by an unnecessary or unnecessarily strict application of law of the case.

I respectfully dissent.

Holt, C.J. joins in this dissenting opinion.


source: Caselaw Access Project

author: George Rose Smith, Justice. Jack Holt, Jr., Chief Justice,

license: Public Domain

text:
    STEVENSON v. Lillie Belle Wood BARNES
    85-184
    702 S.W.2d 787
    Supreme Court of Arkansas
    Opinion delivered February 3, 1986

      James J. Calloway, for appellant.

      J.S. Brooks, for appellee.
   George Rose Smith, Justice.

In 1984 the appellee brought this suit to cancel a 1976 oil and gas lease on the ground that the appellant Stevenson, the lessee by assignment, has violated the implied covenant to develop the leasehold for the production of oil and gas. Stevenson asserts that he has acted as a prudent operator. The land covered by the lease consists of three contiguous 40-acre tracts lying in a north-south line. The chancellor canceled the lease as to all formations below the Nacatoch Sand and also as to all formations down to the Nacatoch Sand with the exception of five 10-acre tracts that were found to have been sufficiently developed that far down. The appellant argues that none of the lease should have been canceled. Our jurisdiction is under Rule 29(l)(n).

We first examine what Stevenson has done before turning to the lessor’s charge that he has not done enough. The lease is in the usual form, for a primary term of three years. The land lies about a mile northwest of some producing oil wells, but for some years before 1977 there had been no activity in the immediate vicinity of the 120 acres in issue.

Stevenson completed the test well, No. 1, in June, 1977. He testified that it proved to be very very good, started a small boom in the area, and has continued to produce about four barrels a day. It, like the other four wells he drilled, is in the Nacatoch Sand. That well is in the northeast ten acres of the southernmost forty of the 120 acres.

Stevenson’s next venture was a well just west of that forty, not on the appellee’s 1.20 acres, but that was a dry hole. He then moved north of No. 1 and drilled No. 2 on the adjacent ten acres to the north, but production was so poor that it is used as a salt water disposal well. He then completed another four-barrel well in November, 1978. That well, No. 3, was on the southeast ten acres of the leasehold. He next tried still farther north, drilling No. 4 north of No. 2, but it has produced only at a loss. Since No. 1 was the east edge of the leased land and No. 3 was at the south edge, the only direction left was west. He tried that, drilling a well in the center of the south forty, but it averages only one barrel a day.

Stevenson testified that in the process of his drilling he learned that the No. 1 well is high on the oil-producing structure. The active water drive that is present will drive the oil up through the sands to the high point. He testified that all the oil will eventually migrate to that point, “and we will eventually get it all.” When asked if he would be harmed if someone else went in and drilled a well (presumably to the west), he said he would be harmed, and explained:

They may go in and get a barrel or two barrels a day on the acreage; that is possible. And once you get a well drilled, you’re going to go ahead and produce it even though it is a barrel a day unless it is totally a losing situation, in which case I would be losing that oil because eventually I will capture it with the wells I have now, so I must keep that acreage to maintain it, marginal as it is now. And I need every barrel of oil I possibly can [get] to break even.

Stevenson’s testimony was not rebutted by the appellee’s principal witness, a petroleum geologist. He first said that if wells were drilled in the west part of the south fourth, “I suspect that you’d get from five to ten barrels a day.” He then admitted, however, that he did not know how much oil Stevenson was producing from any of his wells, a matter of obvious importance. Upon the record as a whole we think the decision to cancel the lease is clearly against the preponderance of the evidence.

The chancellor was apparently in some doubt about the issue, for he wrote in his letter opinion that he felt it was his duty to follow the law as stated in Byrd v. Bradham, 280 Ark. 11, 655 S.W.2d 366 (1983), though he disagreed with that case. We do not regard Byrd as controlling. There the lessee of 80 acres had done nothing in 28 years except to allow 5 acres to be unitized for a well on neighboring land and to testify that she was “just about to drill a well” when suit was filed. Here, by contrast, the lessee of 120 acres has drilled five wells in the most promising part of the lease, with good production from two of them, and has shown why he would be unduly harmed by cancellation. He has also developed the leasehold systematically and proceeded in every direction as far as is reasonably practical. We are convinced that his actions have complied with the implied covenant to develop the leasehold at the Nacatoch level.

The chancellor was right in canceling the lease as to the deeper acreage. Stevenson has already released or assigned all his interest in that deeper acreage except for the 20 acres on which his No. 1 and No. 3 are producing. He testified with respect to the deeper rights: “I do not have sufficient acreage to justify drilling a 7,500-foot test. If I had sufficient acreage. . . there is no doubt in my mind if I felt it was there, I’d immediately drill a well.” In view of the lessee’s own admissions, the cancellation of his lease with regard to the deep formations was proper.

Reversed as to the Nacatoch Sand, affirmed as to the deeper levels.

Purtle, J., not participating.

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

Jack Holt, Jr., Chief Justice,

dissenting. I do not find the chancellor’s decision to be clearly against the preponderance of the evidence and would therefore uphold the cancellation of the lease for the lessees’ breach of the covenant to develop the leasehold.

The majority states that it does not find Byrd v. Bradham, 280 Ark. 11, 655 S.W.2d 366 (1983), rehearing denied, controlling. To the contrary, the recitals in Byrd are sound and fully supported by case law, and they apply in this case.

In Byrd, we stated:

In oil and gas leases where royalties constitute the chief consideration, an implied covenant exists that the lessee will explore and develop the property with reasonable diligence. Smart v. Crow, 220 Ark. 141, 246 S.W.2d 432(1952). The duty to explore extends to the entire tract, and this is especially true where paying quantities of oil have been found on a part of the tract. Standard Oil Co. of Louisiana v. Giller, 183 Ark. 776, 38 S.W.2d 766 (1931).
Of course, due deference must be given to the judgment of the lessee in determining whether to drill, but the lessee must not act arbitrarily. Ezzell v. Oil Associates, Inc., 180 Ark. 802, 22 S.W.2d 1015 (1930); Smart v. Crow, supra. Furthermore, the lessee must act not only for his own benefit but also for the benefit of the lessor. Amoco Production Co. v. Ware, 269 Ark. 313, 602 S.W.2d 620 (1980). The lessee’s obligation to explore is a continuing one, even after paying quantities of oil are discovered, in order to effect the purpose of the lease. Ezzell, supra. Production on only a small portion of the leased land does not justify allowing the lessees to hold the entire leasehold indefinitely, thus depriving the lessor of receiving royalties from another arrangement. Nolan v. Thomas, 228 Ark. 572, 309 S.W.2d 727 (1958).

A duty to explore in this instance extends to the entire tract inasmuch as paying quantities of oil have been found on part of the tract. Stevenson’s testimony that the No. 1 well was high on the oil producing structure and that all of the oil would eventually migrate to that point and “will eventually get it all” is disputed by the testimony of the appellees’ principal witness, Mr. Gaffney, who stated that he believes the four wells each drain a ten acre area. He was not sure that they would drain twenty. Gaffney further testified: “Well, the general consensus, in my experience, has been that if wells are drilled at ten acre spacings, they believe that ten acres will be adequate to drain the ten acres.”

In further review of Stevenson’s testimony, the record reflects he made no attempt to drill the north forty acres of the leasehold. Stevenson explains his failure to explore the north acreage by stating that after drilling the No. 1 well, the further north he went the less oil he found. I cannot follow the logic of his statement in this regard. Stevenson describes the No. 1 well as a good well. His No. 2 well on the adjacent ten acres to the north, is described as a poor well, which is now used for salt water disposal. Well No. 4 which is north of No. 2, yet south of the north forty acres, is a producing well. Stevenson testified it is producing at a loss, however, he envisions that it may begin to produce at a profit. Although he makes this statement, he does not furnish us with any information about the extent of current production. Inasmuch as Stevenson moved north of well No. 2 and found production in well No. 4, one could assume that moving further north to the north forty, he might find even better conditions for locating oil. Likewise, Stevenson’s assertion that well No. 1 is high on the oil producing structure and that all oil will eventually migrate to that point calls for a migration from the furthermost northern forty through the intermediate forty down to the lower forty. This seems incredible, particularly in light of the testimony of Gaffney, that each one of these wells would only drain ten acres. Both Gaffney, and Gary Rutledge, Land Manager for Hudson Resources (had he been able to obtain a lease from Mrs. Barnes in 1983) would have drilled Mrs. Barnes’ north forty acres.

Stevenson has the duty to explore the entire tract which includes the north forty with reasonable diligence. This he has not done. He assumes the position that the further north he goes the less oil he will find and there would be nothing for him to gain in exploration of this area. We have held that if there is nothing gained then there is nothing to lose by cancellation of the lease, Byrd, supra. See also Skelly Oil Company v. Scoggins, 231 Ark. 357, 329 S.W.2d 424 (1959).

A close question develops as to whether or not Stevenson was in further violation of his implied covenant, when he failed to explore the eastern portion of the appellee’s 120 acres. I find the testimony of appellee’s expert and the appellant in hopeless conflict, the appellant standing on the fact that he has drilled five wells in what he considers the most promising part of the lease and his producing wells can eventually take all the oil in the leasehold, even though it takes twenty years or so, as opposed to the appellee’s expert who would expect the appellant’s wells to drain from ten acre areas.

If one assumes that appellants’ wells would drain somewhere in the neighborhood from ten acres, then it is obvious the eastern portion of Mrs. Barnes’ property is still subject to exploration. By allowing the lessee to hold the entire leasehold, Mrs. Barnes is being deprived of potentially “receiving royalties from another arrangement” as discussed in Byrd, supra. On the other hand, if one assumes that the appellants’ producing wells can eventually take all the oil in the leasehold, to take such oil over a twenty year or so period, deprives Mrs. Barnes of a receipt of her royalties over an unreasonable period of time.

In either event, the chancellor’s decision is not against a preponderance of the evidence. I would cancel the lease on the 120 acres except as to the ten acre tracts surrounding each of the four wells presently utilized by the appellee.

Newbern, J., joins in this dissent.


author: Darrell Hickman, Justice.

text:
    BOONE COUNTY, ARKANSAS, d/b/a HILLCREST NURSING HOME, et al. v. APEX OF ARKANSAS, INC., et al.
    85-279
    702 S.W.2d 795
    Supreme Court of Arkansas
    Opinion delivered February 3, 1986

      Robert L. Brown, for appellant Boone County, Arkansas.

      Steve Clark, Att’y Gen., by: George A. Harper, Special Asst. Att’y Gen., for appellant Arkansas Health Planning and Development Agency.

      Gill, Skokos, Simpson, Buford & Graham, P.A., by: Harold H. Simpson, II.

   Darrell Hickman, Justice.

The Pulaski County Circuit Court issued a. writ of mandamus ordering the Arkansas Health Planning and Development Agency to issue certificates of need to eight nursing homes. The court erred in issuing this writ because the matter was still in the process of administrative review and appeal and no clear duty existed to issue the certificates until the procedure was over.

The appellants are the state agency AHPDA ordered to issue the certificates and Hillcrest Nursing Home of Harrison. The appellees are eight of sixteen nursing homes awarded the right to have new beds.

In August, 1984, the Statewide Health Coordinating Council lifted a moratorium on nursing home beds and approved the need for 481 new beds in Northwest Arkansas. Forty-five nursing homes applied for the new beds. On February 28, 1985, the appellant state agency approved 16 of the applications, allotting all the new beds. Twenty-nine applications were denied. Hill-crest’s request for 33 beds was one of those denied.

Within 30 days, as required by regulation, Hillcrest asked for administrative review of the decision. Hillcrest also timely asked the agency to reconsider its decision, but the reconsideration was denied. Hillcrest took the position that the entire allocation of beds was being contested. The agency agreed because the contest by Hillcrest would necessarily mean that some nursing homes granted new beds would lose them if Hillcrest prevailed. So the agency decided in writing that the decision on the entire allocation was at issue and the issuance of the certificates of need must be delayed pending review.

The agency requested the governor to appoint a state agency to conduct the administrative review on May 31, 1985. The Department of Finance and Administration was appointed on June 21, 1985, and a hearing officer was appointed August 14, 1985.

Pending review, this suit was filed in circuit court on August 9,1985. The relief sought was mandamus which is a writ to require, in this case, a state agency to perform an act which is an established, clear and specific legal right. Chandler v. Perry-Casa Public Schools, 286 Ark. 170, 690 S.W.2d 349 (1985). It must be to enforce the performance of a legal right after it has been established and not to establish a right. Wells v. Purcell, 267 Ark. 456, 592 S.W.2d 100 (1979). There must be no discretion available to the ordered party to perform the act. Chandler v. Perry-Casa Public Schools, supra.

There is no doubt that the appellant agency is empowered to issue the certificates. The question is when. The regulations provide that any decision by the state agency to issue or deny a certificate of need, upon request, will be reviewed by an independent state agency appointed by the governor. In such a case the decision by the reviewing agency is deemed the final decision.

It is the appellees’ assertion that the request for the review in this case only concerned the denial of Hillcrest’s beds; the approval of the appellees’ beds was not part of that request for review. So, as to the appellees, the argument is made that the order was final.

That raises the question of whether the agency was right in treating this as a review of the decision made regarding all applications and all 481 beds. Hillcrest immediately notified the appellant agency that it considered all applications in issue. The agency agreed. We have stated that although the agency’s interpretation of its own rules is persuasive, it is not binding upon the court. The interpretation will be controlling unless plainly erroneous or inconsistent. Clinton v. Rehab Hospital Services Corp., 285 Ark. 393, 688 S.W.2d 272 (1985). In a letter from the director of the agency to the attorney for the appellee nursing homes, it was stated:

Since all beds were allocated, the reversal of a denial would require the reduction or reversal of an approval: i.e., if Mr. Brown [Hillcrest’s attorney] succeeds in gaining beds for his client then another applicant or applicants will lose beds. Thus, the appeal of any denial must be regarded as an appeal of all approved applications.

The agency based its decision on Statewide Health Coordinating Council v. General Hospitals of Humana, Inc., 280 Ark. 443, 660 S.W.2d 906 (1983). In that case we held that AHPDA was without authority to issue certificates of need for the construction of beds which exceed the number established by the state health plan. The agency, correctly in our judgment, decided that if Hillcrest were awarded any beds they had to come from the 481 allotted. So, the nursing homes granted beds were necessarily affected by the review proceedings and could not receive their certificates of need until Hillcrest’s complaint was resolved. Since the review was in process when this writ was granted, no clear duty existed for the agency to issue the certificates. The appropriate remedy for the appellees was not to seek mandamus; instead they must await the review process. Mandamus is improper when there is an adequate alternative remedy, which in this case was administrative review.

Reversed and dismissed.

Purtle, J., not participating.


text:
    Randy Lee YEAGER, et al. v. Ronald G. ROBERTS, et ux.
    85-222
    702 S.W.2d 793
    Supreme Court of Arkansas
    Opinion delivered February 3, 1986

      Bassett Law Firm, by: Wm. Robert Still, Jr., for appellant.

      Patrick Parsons, for appellee.
   Darrell Hickman, Justice.

The circuit judge granted the appellees’ motion for a new trial because the jury’s verdict was against the preponderance of the evidence. On appeal it is argued that since the appellees, plaintiffs below, did not move for a directed verdict, they were precluded by ARCP Rule 50(e) from moving for a new trial. We find no merit to this argument and affirm the decision of the trial court.

This is a negligence case involving an accident between a tractor-trailer rig and a car. The issue of liability was virtually conceded by the appellants. The appellants are the driver and owner of the rig. Mrs. Roberts was injured when her vehicle left the highway between Springdale and Huntsville on a curve. She and several others testified that Yeager, the truck driver, forced her off the road. During closing arguments the appellants’ lawyer said “We will concede the accident was our fault.” Evidence of the appellees’ damages was introduced, but the jury returned a verdict for the appellants.

The appellees did not move for a directed verdict at the close of the case but did move for a judgment notwithstanding the verdict, which was denied, and then made a motion for a new trial. The appellants argue that Rule 50(e), as interpreted by us, requires a plaintiff to move for a directed verdict or be precluded from filing a motion for a new trial because the verdict is against the preponderance of the evidence. Rule 50(e) has nothing to do with such a motion for a new trial. That rule provides:

When there has been a trial by jury, the failure of a party to move for a directed verdict at the conclusion of all evidence, or to move for judgment notwithstanding the verdict, because of insufficiency of the evidence will constitute a waiver of any question pertaining to the sufficiency of the evidence to support the jury verdict.

A party does not have to make a motion testing the sufficiency of the evidence to go to the jury as a prerequisite to making a motion for a new trial. Motions for directed verdict and judgment notwithstanding the verdict are made to preserve a later argument on the sufficiency of the evidence to go to the jury. ARCP 59 specifically states a motion for a new trial may be granted for eight reasons, one of which is where the verdict is clearly contrary to the preponderance of the evidence. Such a motion does not test the sufficiency of the evidence and is not precluded by Rule 50(e).

On appeal we affirm a decision granting a new trial unless we find a manifest or clear abuse of discretion. Landis v. Hastings, 276 Ark. 135, 633 S.W.2d 26 (1982). None occurred here. The appellees’ motion for reimbursement of costs is granted pursuant to Ark. Sup. Ct. R. 9(e).

Affirmed.

Purtle, J., not participating.


author: Robert H. Dudley, Justice.

text:
    Bobby Joe JOHNSON v. Robert HICKS
    85-229
    702 S.W.2d 797
    Supreme Court of Arkansas
    Opinion delivered February 3, 1986

      Guthrie, Burbank, Dodson & McDonald, by: David E. Guthrie, for appellant.

      Bill J. Davis, for appellee.
   Robert H. Dudley, Justice.

On July 18, 1984, appellant, Bobby Joe Johnson, was charged with a felony. His bond was set at $100,000.00. Appellant contacted a local commercial bondsman, but he was unable to write a bond in excess of $25,000.00. The commercial bondsman referred appellant to the appellee, Robert Hicks, who agreed to post the bond for a fee of $6,800.00. Appellant paid the fee, and appellee posted the bond.

Subsequently, on September 17, 1984, appellant, a felon, was arrested on the felony charge of being in possession of a weapon, a .357 magnum pistol, and for driving while intoxicated. While appellant was incarcerated on the new charges, appellee surrendered him on the original bond and asked to be exonerated and discharged from the bond.

Appellant made a motion in the criminal case for a refund of the $6,800.00 premium. The motion was apparently oral as the only pleading contained in the record is the information. The trial court denied relief to appellant. We affirm.

Appellant first argues that our holding in Troutt v. Langston and Robinson, 283 Ark. 220, 675 S.W.2d 625 (1984) requires the refund of the entire premium, as a matter of law. The argument is based upon a misunderstanding of the case and, in effect, asks us to hold that the execution of a bail bond constitutes an implied contract that the bondsman will keep the defendant at liberty until his case is called for trial, and breach of that implied contract entitles the defendant to a refund of the premium. We decline to so hold.

The surety on a bail bond may, at his discretion, apprehend and surrender the defendant. Ark. Stat. Ann. § 43-716 (Repl. 1977). The surrender of the defendant may be either with or without cause. If the surrender is without cause, the contract for bond implies that the bondsman must return the premium. Troutt v. Langston and Robinson, supra. However, if the surrender is with cause, there is no implied contract to return the fee.

When a bondsman has reasonable cause to believe that a defendant has committed a felony while released on bond, he has cause to surrender the defendant. Cf. A.R.Cr.P. Rule 9.6. (Rule 9.6 provides for revocation of release by a court under similar circumstances.) The defendant in this case, appellant, was arrested for committing a felony while released on bond. Therefore, it is not necessary, as a matter of implied contract, for the premium to be returned.

Appellant next argues that the bond contract in this case did not, in fact, provide that he would be liable for the premium if the bondsman surrendered him with cause. The argument is without merit. There was substantial evidence from which the trial court could find such liability on the part of appellant. The application for bail bond, which appellant executed, provides in part:

I further agree and understand that I will not leave the jurisdiction of the court without the permission of the bondsman; not commit any further offenses that will subject me to any subsequent arrest by any authority; nor fail to pay any premium due; and I will notify promptly my bondsman of any change of address and carefully comply with all specific instructions given me by the bondsman; FURTHER, I understand and agree that failure to comply with any of the herein contained conditions shall be cause for my immediate surrender without any liability for the return of any premium.
(Emphasis added.)

In addition, the bondsman testified that the appellant knew the amount of the premium and understood from their discussion that if appellant violated the law the bond would be revoked.

We do not decide the remaining point on appeal. The record reflects that no written pleading, other than the information charging the appellant, was filed. The record, which is composed of the criminal case file and the transcript of this hearing, does not contain any agreement between the attorneys and the trial court about the issues to be tried. The transcript contains the following caption: “Hearing on Motion for Return of Bond Premium before Honorable John M. Graves, Judge, October 4, 1984; Bobby Joe Johnson, plaintiff, and Robert Hicks, respondent.” At the hearing, appellant testified that he paid the $6,800.00 premium in cash, but that appellee claimed the cash amounted only to $5,800.00, which forced appellant to pay an extra $1,000.00. The ensuing colloquy established that appellant’s attorney only learned of the $1,000.00 claim by appellant on the day before the hearing. He did not notify appellee’s attorney. Appellee’s attorney claimed surprise and gave the name of a witness he would have called if he had known the alleged $1,000.00 overcharge was to be an issue. He then moved for a continuance. The court sustained the objection stating that he did not have jurisdiction over the $1,000.00 claim. Appellant’s attorney responded, “Very Well” and “Okay.” In this Court, appellant seeks to reverse the trial court on the complex issue of whether a criminal court has jurisdiction, to the exclusion of a civil court with a jury, to determine whether there was an overcharge in premium by a third party bondsman. We decline to decide the issue. We will not decide an issue if there were no written pleadings before the trial court; neither the opposing side nor the court was in any manner apprised of an issue; the point was only superficially mentioned at the hearing; and counsel raising the issue then assents to the ruling. To rule otherwise would allow an attorney to lay a minefield of traps for appeal concerning points which were not anticipated and for which preparation could not be made.

Affirmed.

Purtle, J., not participating.


author: Steele Hays, Justice. David Newbern, Justice,

text:
    John L. JONES v. STATE of Arkansas
    CR 85-139
    702 S.W.2d 799
    Supreme Court of Arkansas
    Opinion delivered February 3, 1986
    [Rehearing denied March 10, 1986.]

      Adair & Hance, by; William C. Adair, for appellant.

      Steve Clark, Att’y Gen., by; Clint Miller, Asst. Att’y Gen., for appellee.

       Purtle, J., not participating.

   Steele Hays, Justice.

The question presented by this appeal is whether the trial court properly granted a mistrial, so that a retrial of the appellant does not result in double jeopardy.

Appellant, John L. Jones, was charged with obtaining and using information from the Arkansas Crime Information Center in violation of Ark. Stat. Ann. § 5-1110. The trial was set for October 30, 1984, and after the defense and prosecution had announced ready for trial a jury was selected and sworn. When the state called its first witness, Carl Stuecken, there was no response. After a brief recess the state reported that Stuecken had been admitted to the hospital for emergency surgery and was presently in intensive care. The state argued that Stuecken was a critical witness and moved for a mistrial. The defense objected, contending it was not apparent Stuecken’s testimony was material. The trial judge commented that from similar cases he had already heard he regarded the testimony as material. The jury was dismissed and a conference was held with the state offering proof on the materiality of the testimony.

In January, 1985 the appellant filed a motion to dismiss the information on the grounds that to impanel another jury would subject him to double jeopardy. The motion was denied and appellant has appealed.

Relying on language in Cody and Muse v. State, 237 Ark. 15, 371 S.W.2d 143 (1963), appellant contends the mistrial could have been averted by diligence and care on the part of the state. In Cody and Muse, when it appeared during the trial that insanity could become a defense for Muse, the court, over the objection of defense counsel, declared a mistrial and committed both defendants to the state hospital for observation. Muse and Cody later moved to dismiss on grounds of double jeopardy and we reversed the denial of their motion:

The manifest necessity permitting the discharge of a jury without rendering a verdict and without justifying a plea of double jeopardy may arise from various causes or circumstances; but the circumstances must be forceful and compelling, and must be in the nature of a cause or emergency over which neither court nor attorney has control, or which could not have been averted by diligence and care.

We pointed out as far as Cody was concerned there was neither a plea of insanity nor a single line of evidence that would suggest Cody to be insane; that even if the mistrial had been justified as to Muse, there was nothing to prevent the continuation of the trial as to Cody. As to Muse, the state had possession of records for several months which should have alerted it to the sanity issue, and additionally, Muse had been held in jail for five months before an attorney had been appointed to defend him, time which might have been used in his defense.

In contrast, the facts in this case presented an emergency that could not have been averted by reasonable care. The trial was scheduled for the 30th of October and the witness, Stuecken, was subpoenaed twice, both subpoenas being served within a week prior to trial. In addition to the subpoena, the prosecuting attorney required the actual appearance of Stuecken and other witnesses at his office on Thursday, October 25. Stuecken appeared for the interview with no apparent difficulty. As Stuecken left, he was again advised by the prosecutor to be in court on the following Tuesday. He developed acute intestinal difficulties over the weekend and was admitted to the hospital on an emergency basis on Sunday night. He underwent surgery on Monday and was in intensive care on Tuesday, the day of trial. It was only then that the prosecution learned of his unavailability, having relied on his recent observations and the subpoenas.

There was nothing in these circumstances to alert the prosecution to any likelihood of Stuecken’s absence. Nor do we find that the prosecution should have exercised greater diligence in order to have discovered the absence of this witness.

The appellant’s claim is one of constitutional proportion and we have considered the argument in light of United States Supreme Court cases on the subject. That court has recognized in double jeopardy claims the difficulty of categorizing cases and the inadequacy of any standard formula, to the end that each case must turn largely on its own facts. Arizona v. Washington, 434 U.S. 497 (1978); Illinois v. Somerville, 410 U.S. 458 (1973). In Arizona v. Washington, noting the importance of a defendant’s right against double jeopardy and the fact that it is frustrated when a mistrial occurs, Justice Stevens wrote for the majority, “[T]he prosecutor must shoulder the burden of justifying the mistrial if he is to avoid the double jeopardy bar. His burden is a heavy one. . . . Thus, the strictest scrutiny is appropriate when the basis for the mistrial is the unavailability of critical prosecution evidence. . . .” In the same vein, the court has also warned of the danger of error originating with the government that would lend itself to prosecutorial manipulation. Illinois v. Somerville, supra. In discussing the need for examining prosecutorial error, both Arizona and Somerville cite Downum v. United States, 312 U.S. 734 (1963). In Downum, material prosecution witnesses were absent at the start of trial, but the prosecution had not subpoenaed these witnesses and knew they were unavailable when it announced ready for trial. A mistrial was granted and the Supreme Court held that further prosecution was barred.

Here we do not find the same potential for prosecutorial manipulation as in Downum. The evidence demonstrates the prosecution’s care in preparation for trial in combination with the unforeseeable absence of the witness. The requirement of diligence on the part of the prosecution has not been loosely applied, see Cody, supra, and we find it comes within the standard of strict scrutiny noted in Arizona. As discussed earlier, the prosecution in this case came within that standard.

The order appealed from is affirmed.

Dudley, J., and Newbern, J., dissent.

Purtle, J., not participating.

David Newbern, Justice,

dissenting. The question here is whether a mistrial was granted because of such “overruling” or “manifest” necessity that a retrial of this criminal defendant may be permitted despite the fact that jeopardy had attached in the first trial.

The appellant’s argument on this point is based primarily on Ark. Const, art. 2, § 8, which says “. . . no person, for the same offense, shall be twice put in jeopardy of life or liberty. . . .’’He also cites the similar provision, found in the Fifth Amendment to the U. S. Constitution, against placing “life or limb” in jeopardy a second time for the same offense. The latter applies to the states through the Fourteenth Amendment. Benton v. Maryland, 395 U.S. 784 (1969).

The Arkansas Constitution provision has been interpreted as requiring that there be “overruling necessity” for a mistrial in a criminal case in order to permit a second trial over the objection of former jeopardy. In Jones v. State, 230 Ark. 18, 320 S.W.2d 645 (1959), it was discovered, mid-trial, that a juror was related to a policeman who had testified. A mistrial was declared. The accused was to be retried over his plea of former jeopardy, and this court held he could not be retried. We said, in summary of a number of cases reviewed in the opinion:

In each of the above discussed cases there was a real reason — i.e. “overruling necessity” — to discharge the jury; and we held that the rule against double jeopardy had not been violated in those cases. But, in the case at bar, there was no sound reason for discharging the jury, and there was certainly no “overruling necessity.” The relationship of a juror to a witness in the trial does not per se disqualify the juror. Arnold v. State, 150 Ark. 27, 233 S.W. 818. Officer Campbell’s testimony was practically the same as that of Officer Dodd’s; and Officer Campbell’s testimony did not directly relate to the facts of the homicide. Furthermore, the defendant was perfectly willing to have Mrs. Ensminger as a juror, and so informed the Court. We can see no good reason for declaring a mistrial after the mention of jeopardy, and after the accused had urged the Court to continue the trial. So, the effect of the trial of October 8 th was to put the accused in jeopardy; and his motion of April 1, 1958, to be discharged because of former jeopardy, should have been granted. [230 Ark. at 23; 320 S.W.2d at 648.]

The point is that it was not shown that the trial could not have proceeded regardless of the juror’s relationship with the witness. The state was held not to have borne its burden.

In Cody and Muse v. State, 237 Ark. 15, 371 S.W.2d 143 (1963), the judge determined, mid-trial, that one of the defendants should be given the benefit of a possible insanity defense. A mistrial was declared to send both defendants to the state hospital for examination. We again held there was not sufficient overruling necessity for a mistrial to overcome a subsequent plea of former jeopardy. There, apparently adopting language from a legal encyclopedia, we said:

. . .[T] he court may declare a mistrial when the issue of insanity suddenly enters the case, provided that the circumstances are compelling or give rise to an emergency over which neither court nor attorney could have any control or which could not have been averted by diligence and care. [237 Ark. at 21; 371 S.W.2d at 147, emphasis in the original.]

That language means that there is overruling necessity if there are compelling circumstances which could not have been avoided by diligence on the part of the judge or the party moving for the mistrial. It imposes two burdens on the state in this case. The state must show that there were strong reasons for not going to trial and that it was not at fault. The state has failed to prove either.

The appellant’s argument is that the mistrial was declared with no showing that the absent witness’ testimony was necessary to the state’s case. He was correct. Here is the record:

MR. ISBELL: Your Honor, comes now the State of Arkansas and moves this Court for the unique and unusual remedy of a mistrial. That the State’s first witness, Mr. Carl Stuecken has been admitted to the Baxter General Hospital for emergency surgery, is presently in intensive care. In conversation with the doctor’s secretary, through the doctors, he is in critical condition. He is not expected to be available, out of intensive care for the next two weeks, due to the nature of the surgery and his present condition.
The State submits that Mr. Stuecken is a critical witness and that everything that flows from his testimony and were he not here, that the State’s case would be emasculated under the hearsay rule because Mr. Stuecken’s testimony lays a foundation for the entire prosecution of Mr. Jones.
Therefore, the State moves for the extraordinary remedy of mistrial at this point in time.
MR. ADAIR: The defense would respond that from the discovery it would not appear that Mr. Stuecken’s testimony was material. That other witnesses are available who have access to the alleged material that Mr. Jones is alleged to have wrongfully obtained, information wrongfully obtained from the computers and that the persons apparently to whom the information was allegedly given are presently in the courtroom. Therefore, this witness is not a material witness and the motion for mistrial should be denied.
THE COURT: The motion for mistrial will be granted.
MR. ADAIR: I would like for the Judge to reconsider his ruling. Without a proffer of proof, what this witness would testify to, to see if in fact he is material.
THE COURT: I would like to go ahead and dismiss the jury before the proffer.
MR. ADAIR: I would like for the Judge to reconsider his ruling after the proffer of proof. In other words, what he may proffer may show he is not a material witness.
THE COURT: The reason the Court is not inquiring in any more detail, I have already heard a couple of these cases arising at, or around about this same time and I have already heard Mr. Stuecken testify in at least one previous trial.
MR. ADAIR: He must be material to the charges filed herein.
THE COURT: We will have further discussion after the jury is dismissed.

The judge’s statement that he had heard Mr. Stuecken testify in previous cases hardly justifies the granting of the mistrial here. We cannot assume automatically, nor should the judge have assumed, that Stuecken’s testimony was to be the same in this case as in the other cases the judge had tried, even if we knew what his testimony had been.

The prosecutor, after the mistrial had been granted, made a proffer with respect to the materiality and necessity of Stuecken’s testimony. Even if the proffer was otherwise sufficient, it was obviously untimely and did not inform the judge’s decision.

Even if we were to hold, as the majority opinion suggests we should, that the entire emphasis should be on the diligence of the prosecutor, ignoring the question of “overruling necessity,” I would find the prosecutor had no excuse for not having his witnesses called to be sure they were there prior to announcing ready for trial and allowing the jury to be empanelled and jeopardy to attach. Particularly, he should have assured the presence of his very first and, according to him, most crucial witness.

If indeed there is a difference between the effects of the Arkansas and United States constitutional double jeopardy provisions, our protection of this individual right may exceed that found in the U. S. Supreme Court cases, see, e.g., State of Anderson, 286 Ark. 58, 688 S.W.2d 947 (1985), but of course we may not offer less protection than is afforded by the United States Constitution as the U.S. Supreme Court interprets it.

The Supreme Court’s cases show clearly that the test of “manifest necessity” has not been satisfied here. In Arizona v. Washington, 434 U.S. 497 (1978), cited by the majority opinion, defense counsel had made prejudicially improper remarks in his opening statement to the jury. The trial judge declared a mistrial but did not make a specific finding that “manifest necessity” required it. The question before the Supreme Court was whether the record demonstrated what Mr. Justice Stevens’ excellent opinion referred to as a “high degree” of necessity for the mistrial and whether the trial judge had acted precipitately in granting it. Upholding the trial judge’s exercise of discretion, and thus refusing to bar a second trial, Mr. Justice Stevens, for the court said:

Our conclusion that a trial judge’s decision to declare a mistrial based on his assessment of the prejudicial impact of improper argument is entitled to great deference does not, of course, end the inquiry. As noted earlier, a constitutionally protected interest is inevitably affected by any mistrial decision. The trial judge, therefore, “must always temper the decision whether or not to abort the trial by considering the importance to the defendant of being able, once and for all, to conclude his confrontation with society through the verdict of a tribunal he might believe to be favorably disposed to his fate.” United States v. Jorn, 400 U.S. at 486 (Harlan, J.). In order to ensure that this interest is adequately protected, reviewing courts have an obligation to satisfy themselves that, in the words of Mr. Justice Story, the trial judge exercised “sound discretion” in declaring a mistrial.
Thus, if a trial judge acts irrationally or irresponsibly, cf. United States v. Jorn, supra; see Illinois v. Somerville, 410 U.S. at 469, his action cannot be condoned. But our review of this record indicates that this was not such a case. Defense counsel aired improper and highly prejudicial evidence before the jury, the possible impact of which the trial judge was in the best position to assess. The trial judge did not act precipitately in response to the prosecutor’s request for a mistrial. On the contrary, evincing a concern for the possible double jeopardy consequences of an erroneous ruling he gave both defense counsel and the prosecutor full opportunity to explain their positions on the propriety of a mistrial. We are therefore persuaded by the record that the trial judge acted responsibly and deliberately, and accorded careful consideration to respondent’s interest in having the trial concluded in a single proceeding. Since he exercised “sound discretion” in handling the sensitive problem of possible juror bias created by the improper comment of defense counsel, the mistrial order is supported by the “high degree” of necessity which is required in a case of this kind. Neither party has a right to have his case decided by a jury which may be tainted by bias; in these circumstances, “the public’s interest in fair trials designed to end in just judgments must prevail over the defendant’s valued right” to have his trial concluded before the first jury impaneled.
[434 U.S. at 514-516, footnotes omitted.]

That case, where the remarks occurred in the presence of the court and the record was fully developed before the motion was granted, stands in stark contrast to the record in this case which has been quoted above.

In Illinois v. Somerville, 410 U.S. 458 (1973), relied on heavily by the majority opinion, Mr. Justice Rehnquist, writing for the court, found “manifest necessity” where a defective indictment was noticed by the prosecutor mid-trial and a mistrial was declared. He pointed out that it would have been foolish to have permitted the trial to reach a conclusion only to be reversed later because of the fatally flawed indictment. That, of course, makes an assumption Mr. Justice Rehnquist does not state, i.e., that the accused would necessarily have been convicted in the first trial. But even if the logic in that position could be followed, the opinion notes its distinguishability from Downum v. United States, 372 U.S. 734 (1965), which is the only case cited by the majority opinion in the case before us now in which the necessity for a mistrial was found by the trial judge to result from absence of witnesses. Mr. Justice Rehnquist said:

This situation is thus unlike Downum, where the mistrial entailed not only a delay for the defendant, but also operated as a post-jeopardy continuance to allow the prosecution to strengthen its case. [410 U.S. at 469]

Again, the majority opinion in the case before us now emphasizes that in Downum v. United States, supra, the prosecution proceeded to trial though it knew the witnesses were unavailable and had not subpoenaed them. This makes it seem that the emphasis in Downum v. United States, supra, was on the unpreparedness of the prosecution. That ignores the fact that the court pointed out that the absent witnesses’ testimony was essential only for two of six counts against the defendant, a fact surely considered in determining whether necessity for mistrial as to all six counts was appropriate.

In Downum v. United States, supra, Mr. Justice Douglas made it clear that each case must turn on its own facts, and not every case in which a mistrial is granted for failure of a witness to appear should result in a successful plea of former jeopardy. However, given the record here of refusal of the trial court even to hear evidence or argument on the question of the necessity of granting a mistrial before granting it, I find the U. S. constitutional former jeopardy provision applies.

The Arkansas and U. S. constitutions thus both should be held to bar a retrial of this defendant. The prosecution should be dismissed.

Therefore, I respectfully dissent.

Dudley, J. joins in this dissent.


author: Per Curiam.

text:
    Timmy TARRY v. STATE of Arkansas
    702 S.W.2d 804
    Supreme Court of Arkansas
    Opinion delivered February 3, 1986

      Gene Worsham, for appellant.
    No response by appellee.
   Per Curiam.

Appellant, Timmy Tarry, by his attorney, Gene Worsham, has filed a motion for rule on the clerk.

The motion admits that the record was not timely filed and appellant’s attorney accepts full responsibility for not perfecting the appeal on time.

We find that such an error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See our Per Curiam opinion dated February 5, 1979, In Re: Belated Appeals in Criminal Cases, 265 Ark. 964.

A copy of this opinion will be forwarded to the Committee on Professional Conduct.

Purtle, J., not participating.


author: George Rose Smith, Justice.

text:
    Michael A. HARWOOD v. Floyd J. LOFTON, Judge
    CR 85-185
    702 S.W.2d 805
    Supreme Court of Arkansas
    Opinion delivered February 10, 1986

      William R. Simpson, Jr., Public Defender, by: Arthur L. Allen, Deputy Public Defender, for petitioner.

      Steve Clark, Att’y Gen., by: Charles R. Lucas, Asst. Att’y Gen., for respondent.
   George Rose Smith, Justice.

On December 9, 1983, the petitioner was stopped and arrested for DWI. His resistance to the officers resulted in an additional charge of second-degree battery. The DWI charge, a misdemeanor, was promptly tried in municipal court. Petitioner’s appeal from that conviction was consolidated in the Pulaski Circuit Court, Fourth Division, with the pending felony charge.

On September 4,1985, after the case had been transferred to the First Division, petitioner filed a motion to dismiss for want of a speedy trial. By then the lapse of time since the arrest was almost 21 months. The First Division judge, who was not in any way at fault, denied the motion to dismiss, in the belief that the issue should be tested by an application to this court for a writ of prohibition. We issued a temporary writ, and the case has now been submitted on briefs. We find that the charges should have been dismissed.

The maximum permissible delay, after the exclusion of delays chargeable to the defense, is 18 months, A.R.Cr.P. Rule 28.1(c) (Supp. 1985). A two-month delay was admittedly so chargeable; the court’s docket entry recites that the continuance was on motion of the defense. Still, the only way the total delay can be reduced to less than 18 months is for the defense to be charged with another continuance from November 2, 1984, to January 22,1985. The court’s docket reflects the resetting of the case for trial on January 22, but the docket entry does not state why or at whose request the case was reset.

When the time allowed by the speedy trial rule has been exceeded, the prosecution has the burden of proving that the delay was legally justified. State v. Lewis, 268 Ark. 359, 596 S.W.2d 697 (1980). Here the pertinent testimony was that of the deputy prosecutor who was handling the case. The critical docket entry was dated November 2, 1984. The deputy testified that a day or two after she interviewed her witnesses on October 31, she talked to the defense and learned that the case was not to be tried on November 8, as scheduled. “I remember him saying at that time that that case is not going to trial on that date, and giving me the reasons why, which I do not remember.” She went on to say that she was present when the case was continued on November 2: “And on November 2nd I made the motion that it was continued at that point on the defense request. . . . I do not know why it’s not reflected on the docket.”

The prosecution failed to sustain its burden of proof. The witness could not remember why the case had been continued, leaving the possibility that the delay might have been excludable even though requested by defense counsel. Moreover, the deputy prosecutor was present and made the motion that the case be continued, but failed to make certain that the docket entry reflected which side was responsible for the delay. Understandably, it could not then have been foreseen that the omission would eventually be decisive, but we must nevertheless conclude that the State’s failure to make a complete record is fatal to its present argument.

Writ granted.

Purtle, J., not participating.


text:
    Kenneth LANE v. STATE of Arkansas
    CR 85-179
    702 S.W.2d 806
    Supreme Court of Arkansas
    Opinion delivered February 10, 1986

      William R. Simpson, Jr., Public Defender, Jerry Sailings, Deputy Public Defender, by: Cecilia F. Roberts, Deputy Public Defender, for appellant.

      Steve Clark, Att’y Gen., by: Charles R. Lucas, Asst. Att’y Gen., for appellee.
   Robert H. Dudley, Justice.

Appellant was found guilty of burglary, robbery and theft of property. He appeals the convictions for burglary and robbery, but does not appeal the conviction for theft of property. We affirm the convictions.

Appellant’s first point is that the evidence is insufficient to sustain the convictions. On appeal, the evidence must be viewed in the light most favorable to appellee, and the judgment must be affirmed if there is any substantial evidence to support the finding of the trier of fact. Phillips v. State, 271 Ark. 96, 607 S.W.2d 664 (1980). “Substantial evidence is that which is more than a scintilla and must do more than create a suspicion of the existence of the fact to be established; it is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Phillips, supra.

The evidence, viewed most favorably to appellee is as follows: On December 3, 1984, the victim was attacked by three men in the living room of her home; they hit her on the head; they tied her up with telephone cord and put a pillowcase over her head; they stole her car keys, some money, her jewelry and her 1981 Grand Mercury Marquis automobile; on December 22, 1984, appellant was observed in Rockford, Illinois, in possession of the victim’s car and was arrested for possession of stolen property; the victim’s photo identification card was found in appellant’s jacket pocket.

During his initial interview with the Rockford police, appellant first told them that a person in Rockford named Larry had given him the car; he then told them that he had found the car at Granite Mountain in Little Rock on December 6, with the keys in it, and that when it was still there on December 8, he took it and went to Rockford; he finally told them the story that is contained in his written statement, which is that he accompanied two black males to the victim’s house thinking they were going to purchase weed; that when he discovered what they were really up to he “pushed the door open and just stepped inside and told them [he] was leaving” and hitched a ride back to Granite Mountain; and that the two subsequently talked him into getting rid of the car.

Proof that is based upon circumstantial evidence must be consistent with the guilt of the accused and exclude every other reasonable hypothesis consistent with innocence. Ward v. State, 280 Ark. 353, 658 S.W.2d 379 (1983). On appeal, however, this Court’s “responsibility is simply to determine that the verdict is based on substantial evidence.” Ward, supra.

In the case at hand, the victim could not identify the appellant. She was certain, however, that there were three persons who attacked her, and she did not see or hear anyone come up on the porch. Appellant admitted that he accompanied the two assailants to the victim’s house; he just denied knowing of their purpose and taking part in their attack.

The evidence places the appellant at the scene of the crimes, in exclusive possession of recently stolen property, and giving inconsistent statements to the police in attempting to explain his possession of the recently stolen property. In Ward v. State, 280 Ark. 353, 658 S.W.2d 379 (1983), we wrote:

As early as 1879 we expressed the rule, already followed elsewhere, in cases of burglary, larceny and possession of stolen property that possession of recently stolen property is prima facie evidence of the guilt of the party in whose possession the property is found, unless satisfactorily accounted for by the evidence. Boykin v. State, 34 Ark. 443. Nor is the rule limited to larceny and possession. In Gunter v. State, 79 Ark. 432 (1906), we declined to draw a distinction between larceny and burglary, and explained the rule:
Such evidence raises no presumption of law as to the guilt of the accused, but only warrants an inference of fact, of more or less weight according to the particular circumstances of each case, which the jury may draw therefrom as to his guilt. It makes a question for the jury, and is sufficient to warrant conviction where it induces in the minds of the jury a belief, beyond a reasonable doubt, of the guilt of the accused.

The inference also arises in cases of robbery, when the defendant is in exclusive possession of property shown to have been recently taken in a robbery. 67 Am. Jur. 2d, Robbery § 53 (1985). See Shell v. State, 84 Ark. 344, 105 S.W. 575 (1907). In addition, the inconsistent statements given to the police in an attempt to explain the possession of the property authorize an inference of guilt. The evidence is sufficient to sustain the convictions for burglary and robbery.

The appellant next argues that the trial court erred in the manner in which he fixed the length of the sentences. However, there was no objection in the lower court to the fixing of the sentences, and we will not consider a matter not raised below. The reason for the rule is most obvious in this case. The appellant never notified the judge of his objection to the manner in which the judge fixed the sentences and, as a result, the judge never had a chance to rule on the matter, and to correct it if it was in error.

Affirmed.

Purtle, J., not participating.


text:
    Bill WAGGONER, Jr., and Pamela A. WAGGONER v. GAME SALES COMPANY, INC.
    85-195
    702 S.W.2d 808
    Supreme Court of Arkansas
    Opinion delivered February 10, 1986
    [Rehearing denied March 17, 1986.]

      Faber D. Jenkins, for appellant.

      George H. Bailey, for appellee.

       Purtle, J., not participating.

   Robert H. Dudley, Justice.

The appellee, Game Sales Company, Inc., holds a judgment of $39,079.20 against appellants, Bill and Pamela Waggoner. The appellee sued for a writ of garnishment of appellant’s funds held by the Union National Bank of Little Rock. The garnishee bank answered that it held $1,490.48 in the joint names of appellants. The appellants filed a claim for exemption, pleading that the funds came from disability payments by the Civil Service Retirement System. The appellant subsequently proved that the funds did, in fact, come from Civil Service disability payments. The trial court denied the exemption. We reverse.

Appellants contend that 5 U.S.C. § 8346(a) provides an exemption for funds paid from the Civil Service Retirement Disability Fund. The argument is well taken. The statute, in the pertinent part, provides: 11 The money mentioned in this sub-chapter . . .is not. . .subject to. . . garnishment or other legal process, except as otherwise provided by Federal laws.” (Emphasis added.)

By this clearly expressed provision Congress makes the exemption applicable to “the money mentioned in this sub-chapter.” The statute, unlike some others, does not base the exemption upon whether the government holds the money. Under this broad grant of immunity, the exemption attached to the money itself and, when the money was paid to the recipient, it was free from garnishment by a judgment creditor. Accord, In re Dickerson’s Estate, 5 N.Y.S.2d 86, 168 Misc. 54 (Surr. Ct. 1938). (Interpreting earlier statute using the same language.)

Two courts have reached the opposite result and have held that the exemption does not apply .after the money reaches the recipient. In re Estate of McGreevy, 445 Pa. 318, 286 A.2d 355 (1971) and In re Prestien, 427 F.Supp. 1003 (S.D. Fla. 1977). The Supreme Court of Pennsylvania based its decision upon Congressional intent and “the general rule is that language relating to exemptions is to be strictly construed.” In reading the statute and examining the legislative history of the act, we are unable to find anything to demonstrate a Congressional intent to limit the exemption to funds held by the Federal government. In fact, the Senate Report on a 1978 amendment to § 8346(a) provides: “Under existing law 5 U.S.C. § 8346(a), payments under the civil service retirement system are not assignable or subject to . . . garnishment. . . .” (Emphasis added.) S. Rep. No. 95-1084, 95th Cong., 2d Sess. [1978] U.S. Code Cong. & Ad. News 1379, 1380. In addition, our general rule, unlike Pennsylvania’s, is that exemptions are to be liberally construed. Williams v. Swann, 220 Ark. 906, 251 S.W.2d 111 (1952).

Similarly, we are not persuaded by the reasoning expressed by the Federal District Court in Florida. That court based its opinion on the Pennsylvania case, and on the case of McIntosh v. Aubrey, 185 U.S. 122 (1902). There is no need for further discussion of the Pennsylvania case, and the case from the Supreme Court of the United States is clearly distinguishable. In that case, based upon an entirely different statute, the exemption applied to “money due, or to become due, to any pensioner.” The language operated to exempt only payments due and future payments, in other words, funds still in the hands of the government, and not to funds already paid.

We are of the opinion that the better rationale is to follow the clear language of the statute and to hold that the money which came from disability payments by the Civil Service Retirement System is exempt from garnishment by a judgment creditor under the provisions of 5 U.S.C. § 8346(a).

Reversed.

Purtle, J., not participating.


author: Steele Hays, Justice. Steele Hays, Justice.

text:
    Charles D. RAGLAND, Commissioner of Revenues, Department of Finance and Administration, State of Arkansas v. GULF OIL CORPORATION and PAUL COLLUM DISTRIBUTOR, INC.
    85-205
    703 S.W.2d 449
    Supreme Court of Arkansas
    Opinion delivered February 10, 1986
    [Supplemental Opinion on Denial of Rehearing March 17, 1986.]

      Kelly S. Jennings, for appellant.

      Young, Patton & Folsom, by: Nicholas H. Patton, for appellee.

       Purtle, J., not participating.

   Steele Hays, Justice.

The only question on appeal is whether the chancellor erred in “directing a verdict” against the Commissioner of Revenue in this suit to abate a motor fuel tax assessment by the Commissioner against Gulf Oil Corporation and Paul Collum Distributor, Inc.

During the 1970’s shortages of diesel fuel prompted Department of Energy regulations affecting the distribution of diesel fuel. To comply with those regulations Gulf Oil Corporation required its distributors to sell diesel fuel only to consumers holding a Department of Energy allocation. The Commissioner of Revenue conducted a motor fuel tax audit of Gulf for periods beginning on December 1,1976 and ending December 31,1980. The audits established that Gulfs distributor, Paul Collum Distributor, Inc. had submitted invoices to Gulf reflecting sales of 734,428 gallons of diesel fuel by Collum to Coonrod Construction Company, Inc., which had a Department of Energy allocation. The Commissioner determined that Coonrod had purchased no fuel from Collum, that Collum had sold the fuel to other consumers and in its reports to Gulf had falsely invoiced the fuel to Coonrod. The Commissioner credited Collum with 363,116 gallons which were not subject to Arkansas motor fuel tax and assessed a tax liability on the remaining 370,312 gallons against Gulf and Collum in the amount of $38,882.97, plus interest of $8,980.06.

Collum and Gulf protested and when the Board of Tax Hearings and Appeals sustained the assessment, they filed suit in chancery court to abate the tax. At the end of the proof the chancellor held that the Commissioner had failed to produce sufficient evidence to substantiate the number of gallons of diesel fuel subject to the assessment and ordered the abatement of all tax and interest. The Commissioner has appealed. We reverse the chancellor.

Ark. Stat. Ann. § 84-4721 (b) (Repl. 1980) provides that when an appeal is taken from the Board of Tax Hearings and Appeals the case will be tried de novo in chancery court. The proof before the chancellor showed that Collum not only reported falsely to Gulf of sales to Coonrod which never occurred, Collum then destroyed its own records of actual sales to other consumers because those records did not conform to the fictitious sales to Coonrod.

When the Commissioner rested, Gulf and Collum moved for a “directed verdict,” arguing that there was no proof of the gallonage involved. That motion should not have been granted, as it is entirely clear that the amount of fuel was not disputed. Mr. Doug Reese, an auditor for the Commissioner, called by Gulf and Collum, testified that the adjusted gallonage amounted to 370,000 and neither Gulf nor Collum disputed the number of gallons involved. Indeed, Mr. Paul Collum acknowledged the correctness of the gallonage at several points in his testimony:

Q: The amount of fuel in controversy is approximately three hundred and seventy thousand gallons. What did you do with all this fuel, Paul?
A: We sold it.
Q: What type of people were you selling this three hundred and some odd thousand gallons to? Is this list part of them?
A: Yes, they were largely small consumers.

Moreover, it is clear from the pleadings and opening statements that the issue was not the amount of fuel, but whether the fuel was for road use or off-road use, which would materially affect the amount of tax due. Gulf and Collum’s complaint alleges:

. . . The assessment of the tax deficiency and interest in the amount set forth hereinabove was wrongfully assessed, in that no fuel was sold which was used upon the streets and highways of Arkansas, and, alternatively, the amount of fuel which was used upon the streets and highways of the State of Arkansas would require taxation in a much lesser amount than has been assessed.

In opening statement Collum’s counsel told the chancellor the only issue (aside from a constitutional argument which was not pursued) was whether the diesel fuel was for road use or off-road use. Thus, on the basis of the pleadings and the conduct of the hearing, the review by the chancellor was limited to the type and amount of tax assessed. Gulf and Collum did not contest any other aspect of the assessment. The first time the number of gallons was put in issue was at the close of the proof.

The general rule is that the necessity of introducing evidence to prove a fact may be waived by the adverse party where a case proceeds on the theory that certain facts are not in issue or a fact is admitted or conceded by the adverse party. Where a party admits in open court the existence of a fact material to the cause of his adversary, no proof is thereafter required for a finding on the matter and a party who causes a judge to understand that certain facts are admitted cannot object to the judge’s conducting of the trial on the basis of that understanding. 88 C.J.S. Trials, §§ 58, 59. “Where a party causes a court to understand that certain facts are admitted, he cannot object to a hearing being conducted on the basis of that understanding.” Bond v. Dudley & Moore, 244 Ark. 568, 426 S.W.2d 780 (1968); see also Schuman v. Hughes, 203 Ark. 395, 156 S.W.2d 804 (1941).

Under the circumstances of this case the amount of fuel was proven by the testimony of the state auditor but even if it were not, Gulf and Collum have effectively waived the issue by their conduct throughout the proceeding and by their own admissions.

On the issue of usage, the Commissioner relies on the prima facie presumption contained in Ark. Stat. Ann. § 75-1250 (Repl. 1979):

75-1250. Prima facie presumptions. — Any supplier, dealer or user who shall fail to keep records, issue the invoices or file the reports required by this Act, shall be prima facie presumed to have sold, delivered or used for taxable purposes all distillate special fuels shown by a duly verified audit by the Commissioner, or any authorized representative, to have been delivered to such supplier, dealer or user and unaccounted for at each place of business . . . from which . . . sold.

The statute creates a prima facie presumption that the fuel was used for taxable purposes because Collum admittedly destroyed the records. Collum contends the presumption does not apply because it was never audited, and the statute requires an audit before the presumption can arise.

The only purpose of the audit requirement in the statute is to provide an approved method to determine the quantity of fuel delivered to a dealer before it can be charged with that amount under the statute. There was an audit of Gulf that established the delivery of 370,312 gallons for which Collum could not account. As we have seen, the amount of fuel delivered to Collum was never in dispute in this case and the point was effectively waived by Collum throughout the proceedings. The point is equally waived for purposes of this statute and, hence, the contention is without merit.

705 S.W.2d 15

The order appealed from is reversed and the suit is remanded for the entry of a decree consistent with this opinion.

Purtle, J., not participating.

Supplemental Opinion on Denial of Rehearing March 17, 1986

Steele Hays, Justice.

By petition for rehearing appellees urge that we failed to give due consideration to appellees’ proof rebutting the presumption of Ark. Stat. Ann. § 75-1250. The proof was not disregarded, though our opinion fails to discuss this point. As it should have been addressed, we issue this supplemental opinion.

Ark. Stat. Ann. § 75-1250 (Repl. 1979) provides that any supplier, dealer or user who fails to keep records of motor fuel sales shall be prima facie presumed to have sold such fuel for taxable use, provided, “the presumption may be overcome by evidence adduced by the supplier, dealer or user.”

The substance of appellees’ proof, offered to rebut the undisputed fact that all records of sales invoiced to Coonrod Construction Company, Inc. were destroyed, consisted of questions to Doug Reece, auditor for the state, and to Mr. Paul Collum. Reece was asked whether in the course of his investigation he attempted to learn whether Collum had actually sold fuel for highway use. Reece said that he had not tried to obtain that information. The obvious answer to this proof is that the burden is not on the state to show what use was made of the fuel — rather, when the dealer fails to keep the records required under the law, the burden is his to show that the sales were not for taxable purposes. Thus the state was under no obligation to investigate to see what use was made of the missing sales.

The substance of the remaining proof consisted of questions to Mr. Collum, e.g. “Were you trying to commit a fraud?” “Were you trying to avoid paying road use tax?” “Have you ever sold fuel to people who use it for road use that you were aware of without collecting the tax?” “What type of people were you selling this three hundred and some-odd thousand gallons to?” (Answer: “Largely small consumers.”) The balance of appellees’ proof was that Collum’s plant would not readily accommodate trucks, as opposed to passenger cars, and that during this period of time (1976-1980) wheat combining operations were going on in the region which resulted in large sales of diesel fuel. Mr. Collum could not, however, name the purchasers or identify specific sales.

We think appellees’ proof wholly fails to meet the requirements of the statute. Section 75-1250 is intended to require dealers to preserve their records and invoices so the state can verify the payment of motor fuel taxes, if such taxes are due. Where a dealer destroys the records of his sales, he cannot expect to rebut the presumption of the statute simply by declaring that he did not knowingly sell to anyone who bought fuel for highway use, or offer similar generalized statements of non-liability. We interpret the statute as requiring proof of specific transactions not subject to the tax in order to rebut the presumption of liability.

Rehearing denied.

Purtle, J., not participating.

       Record, p. 35.

       Record, p. 30.