author: David Newbern, Justice.

text:
    Velma M. DIEBOLD and FIRST NATIONAL BANK OF WYNNE, ARKANSAS v. MYERS GENERAL AGENCY, INC.
    86-313
    731 S.W.2d 183
    Supreme Court of Arkansas
    Opinion delivered June 15, 1987

      Proctor & McCauley, by: Richard L. Proctor, for appellant Velma M. Diebold.

      Shaver, Shaver & Smith, by: Tom B. Smith, for appellant First National Bank of Wynne.

      Daggett, Van Dover, Donovan & Cahoon, by: Jesse B. Daggett, for appellee.
   David Newbern, Justice.

A judgment was rendered against appellant Velma Diebold in the amount of $156,905.51 for her failure to pay a promissory note in favor of the appellee, Myers General Agency, Inc. Mrs. Diebold asked the trial court to set the judgment aside pursuant to Ark. R. Civ. P. 60(b) or 60(c). She claimed, and contends on this appeal, that the judgment entered against her was a default judgment and that she had not had the benefit of the three-day notice period prescribed in Ark. R. Civ. P. 55. She also contends that because her attorney was allowed to withdraw from the case in violation of Ark. R. Civ. P. 64, she has been denied a fair trial in violation of her right to due process of law. We hold that the judgment against Mrs. Diebold was not a default judgment, as it was one taken on the basis of evidence presented by the appellee. Mrs. Diebold moved to set the judgment aside pursuant to Ark. R. Civ. P. 60. We hold that she was not entitled to relief under Rule 60(b) because the court did not act within the ninety-day limit prescribed in that rule, and that she was not entitled to relief under Rule 60(c) because she was negligent in failing to check on or show any interest whatever in the suit against her of which she had been given notice. For the same reason, we hold that Mrs. Diebold has not been denied due process of law.

Lloyd Diebold, Jr., Mrs. Diebold’s son, was charged with theft resulting, apparently, from his failure to remit insurance premiums which had been paid to him and were owed to the appellee. He owed some $44,000 on his “account” with the appellee, plus other money he had borrowed from the appellee’s president. The trial court accepted a plea of guilty and suspended imposition of sentence on Lloyd Diebold, Jr., for a five-year period. One of the conditions of the suspension was restitution to the appellee in a total amount of $162,932.55. Mrs. Diebold signed the note in that amount when she was visited by her son and Johnny Myers, an officer of the appellee corporation. Although Lloyd and Myers did not threaten Mrs. Diebold, Myers explained to her that he did not want to see Lloyd go to prison, and that would be the result if the “restitution” were not achieved.

Mrs. Diebold was not the only maker of the note. She had cosigned it with Lloyd and a number of other family members. She made one $10,000 payment on the note and thereafter no payments were made. The appellee brought this action on the note, and Mrs. Diebold was served with a summons. She called Lloyd and then did nothing further. Lloyd hired the law firm of Croxton and Boyer, of Rogers, Arkansas, to answer the suit. An answer was filed by Charles F. Hickman, an associate of that law firm. Mr. Hickman took no further action in the suit except to respond to a motion for summary judgment which was filed by the appellee and to respond to telephone calls from counsel for the appellee about the setting of the action for trial. He did not communicate with Mrs. Diebold at all.

On March 14, 1986, the case was set by the trial court to be heard in Cross County on April 1, 1986. Mr. Hickman was notified of the trial date. The appellee and its witnesses and counsel appeared for the trial, but Mr. Hickman did not appear. Rather, he called an attorney in Cross County and prevailed on him to present two motions to the court. The first motion was that the case be continued, and the other was that Mr. Hickman be allowed to withdraw from the case. The continuance motion was denied, and the motion to withdraw was granted. Mrs. Diebold was not present and had no idea the trial was being held. The court took evidence from the appellee’s witnesses and entered a judgment in favor of the appellee. Mrs. Diebold first learned that “something was wrong” when her bank account was garnished to satisfy part of the judgment.

1. Default judgment

Mrs. Diebold contends that the judgment taken against her was a default judgment governed by Ark. R. Civ. P. 55, and that it was error not to have set it aside because she had appeared in the action through the answer filed by Mr. Hickman but was not given the three-day advance notice required by the rule to be given to a party who has appeared. The problem with this argument is its basic premise. No default judgment was taken in this case. We have not addressed the definition of default judgment as discussed in Rule 55; however, our court of appeals has. In Dawson v. Pichen, 1 Ark. App. 168, 613 S.W.2d 846 (1981), it was held that where no motion for default was made upon the failure of a party to appear but a judgment was taken on the basis of the evidence adduced, Rule 55 was inapplicable. That is also the rule in some other jurisdictions. Coulas v. Smith, 96 Ariz. 325, 395 P.2d 527 (1964); Davis v. Klaes, 141 Colo. 19, 346 P.2d 1018 (1959); Biddy v. Preston, 555 S.W.2d 898 (Tex. Civ. App. 1977).

The only case cited by Mrs. Diebold dealing with Rule 55 is Magness v. Masonite Corporation, 12 Ark. App. 117, 671 S.W.2d 230 (1984), in which our court of appeals held it was error not to have set aside a default judgment where the defendant had appeared but had not been given the requisite three-day notice. In that case, however, no question was raised as to whether the judgment was taken by default. The judgment was entered against the defendant apparently because he had failed to respond to an amendment to the original complaint. The court of appeals consistently characterized the judgement as a default judgment in its opinion, and there seems to be little doubt that it was not a judgment based upon evidence presented before the court as in this case.

Our holding is that when a judgment is based upon evidence presented to the court at a trial, as opposed to being based on the failure of a party to appear or attend, the judgment is not a default judgment, and Rule 55 does not apply.

2. Ark. R. Civ. P. 60(b)

Rule 60(b) provides:

(b) Ninety-Day Limitation. To correct any error or mistake or to prevent the miscarriage of justice, a decree or order of a circuit, chancery or probate court may be modified or set aside on motion of the court or any party, with or without notice to any party, within ninety days of its having been filed with the clerk.

The judgment in favor of the appellee against Mrs. Diebold on the note was filed April 10,1986. The motion to set the judgment aside pursuant to Rule 60(b) was filed July 8, 1986, which was the eighty-ninth day after the judgment. No action was taken by the court, but a hearing was held September 8,1986, at which the motion was denied. No explanation of Mrs. Diebold’s delay in seeking relief under Rule 60(b) appears in the record. After the ninety days specified in Rule 60(b) had passed, the court lost the authority to set aside the judgment on the basis that there had been a miscarriage of justice. See Mullen v. Couch, 288 Ark. 231, 703 S.W.2d 866 (1986), where we said, in the context of ruling on a motion for new trial, that “a court must act within 90 days of the filing of the judgment with the clerk if it is to modify or set aside its judgment . . . unless certain conditions . . . exist.” The “certain conditions” referred to are those found in Rule 60(c).

While Mrs. Diebold’s original motion to set aside the judgment invoked only the provisions of Rule 60(b), at one point she amended her motion to include reference to all of Rule 60, so we will address whether she was entitled to have the judgment set aside pursuant to subsection (c).

3. Ark. R. Civ. P. 60(c)

Rule 60(c), in pertinent part, provides:

(c) Grounds for Setting Aside Judgment After Ninety Days. The court in which a judgment has been rendered or order made shall have the power, after the expiration of ninety (90) days after the filing of said judgment with the clerk of the court, to vacate or modify such judgment or order:
(7) For unavoidable casualty or misfortune preventing the party from appearing or defending. . . .

Mrs. Diebold contends that there was in this case an unavoidable casualty or misfortune which prevented her from appearing or defending.

While this court has held that a misunderstanding of counsel resulting in the entry of a default judgment may constitute an unavoidable casualty or misfortune sufficient to permit setting aside the judgment pursuant to Rule 60(c)(7), Foote v. Jitney Jungle, Inc., 283 Ark. 103, 671 S.W.2d 186 (1984), we have not so held when the party against whom the judgment was rendered ignored the lawsuit altogether. Meisch v. Brady, 270 Ark. 652, 606 S.W.2d 112 (1980). The words, “unavoidable casualty or misfortune,” found in Rule 60(c)(7) were taken from a statute which was similar to the rule and which has now been superseded. Ark. Stat. Ann. § 29-506. In applying that language we consistently held that a party cannot invoke the aid of the court in setting aside a judgment where she failed to keep herself informed. In Merchants & Planters Bank & Trust Co. v. Ussery, 183 Ark. 838, 38 S.W.2d 1087 (1931), we held that a woman who received a summons, as did Mrs. Diebold, and then turned the matter over to her son was not entitled to relief from a judgment entered against her without her knowledge. The knowledge of the son was imputed to his mother who had made him her agent, and we said her failure to appear was the result of her failure to keep herself informed. See also Midwest Timber Products Co. v. Self, 230 Ark. 872, 327 S.W.2d 730 (1959); Parker v. Sims, 185 Ark. 1111, 51 S.W.2d 517 (1932).

The record shows that Mrs. Diebold made no efforts whatever to keep herself informed. She simply trusted her son to handle the matter. Given his record to that point, we cannot say she was other than negligent. While there was evidence that Mrs. Diebold was taking strong drugs which had been prescribed for her during the time she should have been keeping up with her case, there was also evidence that she was continuing to act as trustee of a trust established in her late husband’s estate and handling other business matters. To the extent the trial court’s ruling may have considered that she had no excuse for failure to keep herself informed about the proceedings, we can hardly say any such factual determination was clearly erroneous.

4. Ark. R. Civ. P. 64

The most troublesome aspect of this case is that the trial court allowed Mr. Hickman to withdraw as counsel for Mrs. Diebold without complying with Rule 64. That rule provides:

Withdrawal of Counsel

A lawyer may not withdraw from any proceeding or from representation of any party to a proceeding without permission of the court in which the proceeding is pending. Permission to withdraw may be granted for good cause shown if counsel seeking permission presents a motion therefor to the court showing he (1) has taken reasonable steps to avoid foreseeable prejudice to the rights of his client, including giving due notice to his client, allowing time for employment of other counsel; (2) has delivered or stands ready to tender to the client all papers and property to which the client is entitled; and (3) has refunded any unearned fee or part of a fee paid in advance, or stands ready to tender such a refund upon being permitted to withdraw. . . .

In a deposition Mr. Hickman testified that after he filed the answer he sought on numerous occasions to discuss the case and obtain assistance from Lloyd Diebold who would not even respond to letters in which he was warned of the seriousness of the situation. Mr. Hickman also testified to numerous unsuccessful attempts to telephone Mrs. Diebold and to reach her through other attorneys. Mr. Hickman testified that Lloyd’s “disappearance” was making him very nervous, and he discussed his need to withdraw with the judge prior to the trial date.

As the reporter’s note to Rule 64 indicates, it has its basis in what is now called the Code of Professional Responsibility. It thus is a rule which deals with attorney discipline. However, the rule is aimed at protecting the client’s interest. Permission to withdraw should not have been granted summarily. We cannot say that such a violation will not be a basis for setting aside a judgment pursuant to Rule 60(b) or (c) when the party whose interests have been thus prejudiced has been diligent in protecting those interests. Here, however, Mrs. Diebold’s failure to keep tabs on her case was in large measure the reason she did not present the defenses she now claims to the action on the note. Even if the judge had overruled Mr. Hickman’s motion to withdraw, Mrs. Diebold would have been no better off, as she was unaware of the proceedings and Mr. Hickman was unavailable.

Had Mrs. Diebold inquired of her attorney or perhaps of her son, she could have avoided the situation that resulted. The violation of Rule 64 would not have occurred had she fulfilled her duty to keep up with the case, thus we find no deprivation of due process.

5. Motion for costs

The appellee’s counsel has moved to recover costs incurred in supplementing the abstract provided by the appellants. While the supplemental abstract prepared by the appellee was of some use, we do not find that there was the sort of clear-cut and demonstrable failure by the appellants to abstract so that a full and fair consideration of the matters in issue could be had. Arkota Industries, Inc. v. Naekel, 274 Ark. 173, 623 S.W.2d 194 (1981).

Affirmed.


source: Caselaw Access Project

author: Tom Glaze, Justice.

license: Public Domain

text:
    Vernon Dale TRAVIS v. STATE of Arkansas
    CR 86-204
    730 S.W.2d 501
    Supreme Court of Arkansas
    Opinion delivered June 15, 1987

      Gregory E. Bryant, for appellant.

      Steve Clark, Att’y Gen., by: Theodore Holder, Asst. Att’y Gen., for appellee.
   Tom Glaze, Justice.

While serving a life sentence for a homicide in the Arkansas Department of Correction, appellant killed a fellow inmate and was charged with capital murder in August 1981. Twelve months later, he pled guilty to a reduced charge of first degree murder and was sentenced to a twenty-year term to run consecutively to his existing life sentence. In September 1986, appellant brought this action, requesting the trial court to amend his commitment order to reflect the penitentiary time he was already serving on the prior homicide but which caused him, also, to be incarcerated for the twelve-month period between his arrest and his eventual conviction for this second homicide. The trial court treated appellant’s letter-request as a petition for mandamus and denied it. We affirm.

Appellant’s argument, while unique, is wholly without merit. He simply was not entitled to credit for his time in jail or the pentitentiary because the time he was serving was on an unrelated charge. See McGirt v. State, 289 Ark. 7, 708 S.W.2d 620 (1986). He cites Ark. Stat. Ann. § 41-904 (Repl. 1977), which deals with credit for time spent in custody, but that law clearly does not apply when, as here, the defendant’s incarceration exists because of charges or criminal conduct other than the one on which the defendant seeks credit and for which he is convicted and sentenced.

The trial court correctly denied appellant’s petition, and we affirm.


author: Per Curiam.

text:
    Steven D. HILL v. STATE of Arkansas
    CR 85-212
    730 S.W.2d 245
    Supreme Court of Arkansas
    Opinion delivered June 15, 1987

      Charles L. Carpenter, Jr., for appellant.

      Steve Clark, Att’y Gen., by: Jack Gillean, Asst. Att’y Gen., for appellee.
   Per Curiam.

The stay of execution is granted to expire June 30, 1987. In the future no stay of execution will ordinarily be granted when certiorari is sought from a denial of Rule 37 relief.

Hickman, Dudley and Glaze, JJ., would deny.


author: Jack Holt, Jr., Chief Justice.

text:
    Billy Joe EDGEMON v. STATE of Arkansas
    CR 87-26
    730 S.W.2d 898
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987

      Hurst Law Offices, by: Q. Byrum Hurst, Jr., for appellant.

      Steve Clark, Att’y Gen., by: Theodore Holder, Asst. Att’y Gen., for appellee.
   Jack Holt, Jr., Chief Justice.

Billy Joe Edgemon was convicted in 1981 of first degree murder for causing the death of Jimmy McCormick and was sentenced to life imprisonment. This court affirmed his conviction in 1982. Edgemon v. State, 275 Ark. 313, 630 S.W.2d 26 (1982). Edgemon’s application for post conviction relief was denied by this court on December 5,1983, in an unpublished opinion. On January 25, 1985, Edgemon filed a pro se petition in the trial court seeking a writ of error coram nobis because of newly discovered evidence. After a hearing on the petition, at which Edgemon was represented by counsel, the trial court denied relief. It is from that decision that this appeal is brought. We affirm.

We first explained in Penn v. State, 282 Ark. 571, 670 S.W.2d 426 (1984) that writs of error coram nobis will be permitted based on newly discovered evidence if the evidence is such that it might have resulted in a different verdict, provided the writ is filed between the trial and an appeal. In Williams v. Langston, 285 Ark. 444, 688 S.W.2d 285 (1985) we clearly stated:

Once a conviction has been affirmed on appeal, error coram nobis is not available to secure a new trial on the basis of newly discovered evidence or to raise issues which are properly raised in a petition pursuant to Criminal Procedure Rule 37. ... If a petitioner discovers some ground for relief .... after a judgment is affirmed, he may present that ground in a clemency proceeding. . .We expanded the writ of error coram nobis in Penn to fill a gap in the legal system. Petition for writ of error coram nobis is not available after we review a case.

See also, Pickens v. State, 284 Ark. 506, 683 S.W.2d 614 (1985); Stone v. State, 290 Ark. 204, 718 S.W.2d 102 (1986).

Inasmuch as Edgemon filed his writ of error coram nobis after this court had affirmed his conviction, it was properly denied by the trial court. Although the trial court based its denial of relief on the fact that the newly discovered evidence would not have changed the outcome of the original verdict, we uphold the decision denying the writ even though it was done, for the wrong reason. Marchant v. State, 286 Ark. 24, 688 S.W.2d 744 (1985). Once this court affirmed the conviction, the trial court lost jurisdiction in the matter. McDaniel v. State, 286 Ark. 246, 691 S.W.2d 153 (1985).

Affirmed.


text:
    Robert Harold MUNNERLYN v. STATE of Arkansas
    CR 86-193
    730 S.W.2d 895
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987

      Gregory E. Bryant, for appellant.

      Steve Clark, Att’y Gen., by: J. Blake Hendrix, Asst. Att’y Gen., for appellee.
   Jack Holt, Jr., Chief Justice.

Robert Munnerlyn, appellant, was found guilty of three counts of aggravated robbery, for which he was sentenced to three consecutive sixty-year sentences; and two counts of theft of property, for which he received two one-year sentences. A statement given by Munnerlyn shortly after his arrest on December 5, 1985, in which he gave a detailed account of his involvement in the robberies, was admitted into evidence at the trial. Munnerlyn contends that the trial court erred in overruling his motions to suppress the confession because it was not intelligently and voluntarily given and was the result of an illegal arrest. We affirm his convictions.

Munnerlyn first argues that his statement was not knowingly and voluntarily given because he was under the influence of drugs at the time the statement was made. Munnerlyn was arrested at his home at 8:30 p.m. and gave the police his statement at 9:44 p.m. Munnerlyn, in his recorded statement, openly and coherently recounted details of the robberies.

At the hearing on his motion to suppress, police officers testified that he was read his rights twice and indicated he understood them. One officer stated that, when told he did not have to talk to the police, Munnerlyn said “I know. You’ve got me.” One police officer, who was present during the taking of the statement, testified that Munnerlyn appeared cognizant and knew what was going on. Another officer stated that he did not ask him if he was on drugs because he appeared to be normal. The deputy prosecutor who was in attendance specifically asked Munnerlyn whether or not he was under the influence of any drugs or alcohol to which Munnerlyn responded, “I don’t think so. . . . Yes, I’m in full control.” There were no allegations by Munnerlyn that police officers used coercion in obtaining the confession.

Munnerlyn testified that he had injected himself with crystal methamphetamine between 2 and 4 p.m. the day of the confession. He said he was still feeling the effect of the drug when he gave the statement. The only other evidence in support of the motion was testimony by two witnesses, who examined Munnerlyn, that he had sores and marks consistent with repeated needle injections, and expert testimony that crystal methamphetamine creates a lack of fear in an acute situation and that a person is open to suggestions while under the influence of the drug.

When reviewing the admissibility of a confession on appeal, we make an independent determination of the voluntariness of the confession based on the totality of the circumstances, and the trial court’s decision will be reversed only if it is clearly against the preponderance of the evidence. Stone v. State, 290 Ark. 204, 718 S.W.2d 102 (1986). The state bears the burden of proving by a preponderance of the evidence that the confession was knowingly and voluntarily given, and any conflict in the testimony is for the trial court to resolve. Brown v. State, 277 Ark. 294, 641 S.W.2d 7 (1982). The United States Supreme Court recently held that “coercive police activity is a necessary predicate to the finding that a confession is not ‘voluntary’.” Colorado v. Connelly,_U.S__, 107 S. Ct. 515 (1986).

In Brown, supra, the appellant testified that he was drunk when he gave a statement to the police, and did not remember signing a waiver form or being interrogated. Other defense witnesses agreed that the appellant had been drinking that day, but were in conflict as to what extent it affected his behavior. The police officers who took the statement testified that the appellant understood the waiver, did not appear intoxicated, had control of his faculties, and spoke without slurring his words. We held that the trial court did not err in admitting the confession.

In Harvey v. State, 272 Ark. 19, 611 S.W.2d 762 (1981), we upheld the admission of a confession where the appellant maintained that he had been drinking heavily the night before, was still drunk while in custody, and did not remember his rights being read to him. The appellant’s testimony that he was intoxicated was uncorroborated. His testimony conflicted with that of the officers, who stated they smelled alcohol on his breath but that he was not drunk.

Munnerlyn’s testimony was the only evidence that he was under the influence of drugs when he gave his statement. His testimony was contradicted by the testimony of the deputy prosecuting attorney and the officers, and by his own statements made at the conclusion of his confession. Munnerlyn, in his recorded statement, clearly related details of the robbery, such as how much money was taken; how it was divided with his accomplice; the weapons used in each robbery; and who was in the liquor stores when the robberies were committed. In addition, there was no indication of “coercive police activity” in the taking of the confession. For these reasons, we find no error in the trial court’s ruling that the confession was knowingly and voluntarily given.

Munnerlyn claims, as his remaining ground for reversal “that the failure of the state to provide evidence or testimony that there was probable cause to support the issuance of an arrest warrant constitutes grounds for automatic reversal.” In making this statement, it appears that Munnerlyn is arguing that the state has the burden of proving that his initial arrest was based on a valid warrant issued pursuant to Ark. R. Crim. P. 7.1(c), and that the rule itself is constitutional. It is impossible for us to consider this issue as it is not developed beyond Munnerlyn’s pleading. The record is barren of proof as to the circumstances of his initial arrest, other than the fact he was arrested prior to the charges being filed in circuit court.

The record reveals that on January 2,1986, Munnerlyn was charged by felony information (which was later amended) in circuit court with several counts of armed robbery. He was arrested on these charges by bench warrant the next day. Later, Munnerlyn was tried and convicted. Prior to trial, Munnerlyn filed several motions, including one labeled “Motion to Suppress Derivative Evidence Obtained Pursuant to Invalid Arrest.” This motion stated that on or about November 1, 1985, a warrant of arrest was issued by the Municipal Court of Little Rock charging defendant with the crime of aggravated robbery, and that the warrant of arrest was invalid. It further claimed that Rule 7.1(c) was unconstitutional.

The trial court denied this motion after an omnibus hearing. There was no testimony or proof presented at the hearing as to the existence of an arrest warrant other than the bench warrant issued pursuant to the information filed in circuit court. The officers who participated in the investigation of this case testified about the arrest on December 5, 1985. However, the record does not reflect testimony indicating whether this arrest was with or without a warrant.

In Gaylor v. State, 284 Ark. 215, 681 S.W.2d 348 (1984), we held that all presumptions are favorable to the trial court’s ruling on the legality of an arrest and the burden of demonstrating error rests on the appellant. It is not clear from the record whether the trial court, in denying the motion to quash, directed his ruling to the bench warrant issued by the circuit court, or to Munnerlyn’s unsupported assertion that his arrest was the result of an illegal warrant issued by a municipal court. In either event, the trial court was correct, for the presumption is that the bench warrant issued by the circuit court is legal, and it is obvious that Munnerlyn has failed to demonstrate or present proof supporting his assertion.

Although the trial court did not make any specific findings as to the constitutionality of Rule 7.1(c), it is assumed that the trial court, in denying the motion to quash or invalidate the arrest, also rejected Munnerlyn’s challenge to the constitutionality of the rule. We are unable to address Munnerlyn’s argument in this regard since there is no evidence of record as to the issuance of a warrant of arrest other than the circuit court bench warrant. We do not make findings based on unsupported pleadings in criminal cases, as allegations in a motion do not amount to any proof of facts stated therein. Harvey v. State, 218 So. 2d 9 (Miss. 1969).

Affirmed.


author: Darrell Hickman, Justice.

text:
    The ELECTORS OF ETOWAH SCHOOL DISTRICT v. MISSISSIPPI COUNTY BOARD OF EDUCATION, et al.
    86-294
    731 S.W.2d 187
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987

      Michael Everett, for appellants.

      Fendler, Gibson & Bearden, by: Michael L. Gibson, for appellees.
   Darrell Hickman, Justice.

This is a school consolidation case. The appellants, patrons and electors of the Etowah School District, which is in Mississippi County, sought consolidation with the Lepanto School District, which is an adjacent school district but located in Poinsett County. The Poinsett County Board of Education granted the petition, which called for an election. The petition was not acted upon by the Mississippi County Board of Education. Instead the Mississippi County Board honored a resolution of the Etowah School Board which sought annexation to the Manila School District. The circuit court upheld that action and refused appellants’ request for a writ of mandamus ordering consolidation of Etowah with Lepanto.

On appeal the argument is that the trial court was wrong in denying mandamus because the appellants complied with the new law on annexation, and the county board was required to grant appellants’ petition to consolidate Etowah with Lepanto. The circuit court made the correct decision.

School consolidation has always been a volatile issue. Massive consolidation occurred in Arkansas during the 1930’s and 1940’s, but many small school districts remained. In 1983, we decided financing for public schools should be equal or nearly so. DuPree v. Alma School District No. 30, 279 Ark. 340, 651 S.W.2d 90 (1983). One consequence of this decision was the Quality Education Act of 1983. Act 445 of 1983. Since some school districts would probably be unable to comply with the new education standards, this new act gave those districts the choice of seeking voluntary annexation with an adjoining school district. Ark. Stat. Ann. § 80-4609(c) (Supp. 1985). Under this law the electors of the district or the school board could decide which adjacent school district to join. The statute provides:

Between June 1, 1984, and June 1, 1987, any school district may be annexed to one or more adjoining school districts by petitioning the county board of education of the county in which such district is administered to order the annexation. The annexation request may be by resolution of the board of directors of the district or by a petition signed by majority of the qualified electors in the district. Upon receipt of a request for annexation, the county board of education shall hold a hearing on the request and shall then order the annexation of the district to one or more adjoining school districts. If the county board of education fails to act within sixty (60) days of receipt of a request for annexation, the petitioning district may request the circuit court to issue a writ of mandamus to said county board.

The history of Etowah’s efforts to face its problems is extensive. Etowah is located entirely in Mississippi County. It is adjacent to three school districts: South Mississippi County School District (Rivercrest), Manila School District, and the Lepanto School District in Poinsett County. Evidently, Etowah could not comply with the new standards.

The first action taken was a petition by the Etowah School Board for an election to decide whether to consolidate with Rivercrest. The Mississippi County Board of Education approved the election. But the voters rejected this proposal in June, 1985. Immediately, the Etowah School Board adopted a resolution to petition the county board to combine the top four grades with an adjoining district and the lower grades and kindergarten were to remain a separate district. In July, 1985, this resolution was amended to provide that the top four grades be annexed to Rivercrest.

A suit was filed in chancery court to have the Etowah School Board’s resolution declared void and to enjoin the county board from acting on the resolution. The chancellor dismissed the complaint and no appeal was taken.

During this time, on June 24, 1985, some electors of the Etowah District and the Lepanto School District petitioned the Poinsett County Board of Education and the Mississippi County Board of Education for a special election on whether to consolidate Etowah with Lepanto. The Poinsett County Board approved the petition; the Mississippi County Board did not act on the petition. This is the petition which the appellants contend the county board was required to honor pursuant to Ark. Stat. Ann. § 80-4609(c) (Supp. 1985). The Mississippi County Board never acted.

On January 23, 1986, the appellants, representing the electors of the Etowah and Lepanto Districts, filed a suit in circuit court seeking mandamus against the board. On April 25,1986, in a special meeting, the Etowah School Board, by resolution, revoked the previous resolution and petitioned the Mississippi County Board of Education to order annexation of Etowah with Manila. On May 19, 1986, the circuit court, in agreement with the parties, ordered the county board to meet and consider the two petitions—the one filed by the patrons for consolidation with Lepanto and the Etowah School Board’s petition to annex to Manila. A lengthy hearing was held and the county board decided that the Etowah School Board’s petition should be granted. Annexation was ordered effective July 1, 1986. An appeal was promptly filed in circuit court with a pleading titled “Second Amended and Substituted Complaint.” After a hearing, the circuit court upheld the board’s action and this appeal was filed.

The legal issue is simple. If the appellants’ original petition complied with Ark. Stat. Ann. § 80-4609(c), the county board of education had to grant it. Appellants’ petition states:

We, the undersigned electors of Etowah School District No. 36 and of Lepanto School District No. 14, do hereby petition the County Boards of Education in Poinsett and Mississippi Counties to call a special election to submit to the electors of these two school districts the question of the consolidation of Etowah School District No. 36 with Lepanto School District No. 14 and the creation of a new school district for the consolidated area to be governed by a board with three members from the area of Etowah School District No. 36 and three members from the area of Lepanto School District No. 14. In the event this petition is signed by more than 50% of the electors of these two areas, then we petition the two County Boards of Education to direct the consolidation and creation of a new district.

This petition does not comply with the new law, and it is not, in our judgment, an effort to comply with the requirements of Ark. Stat. Ann. § 80-4609(c). This law provides an easy way for a school district to dissolve itself and simply join an adjacent school district. The only requirement is that either a majority of the electors of the district, or the school board petition for the annexation. The choice of which adjacent district to join is given to the petitioners. The rest is automatic; the county board must honor the request and the circuit court is to issue a mandamus if the board refuses.

The appellants sought to condition this request by retaining some elements of power in the electors of the Etowah District and some remnants of the Etowah District. The appellants asked for a special election to create a new district which would be governed by three board members from the Etowah District and three from the Lepanto District. This was obviously not the type of annexation the legislature contemplated by Ark. Stat. Ann. § 80-4609(c). The electors’ petition followed the consolidation procedure of Ark. Stat. Ann. § 80-414 (Repl. 1980). Under that statute, the county board is not required to approve the petition but has some discretion in the matter. The statute reads in part: . . . “[I]f in the judgment of said boards such a district should be formed, shall issue an order transferring the territory affected in their respective counties, to the proposed district.”

The Mississippi County Board of Education was not required to grant the petition filed by the appellants, because it was not in compliance with Ark. Stat. Ann. § 80-4609(c); it was required to adopt the petition filed by the school board because it did comply with the statute; therefore, the trial court’s order denying a request for mandamus is affirmed.

It is not necessary for us to discuss several collateral matters, such as whether the appellants actually represented a majority of the electors, or the fact Lepanto has since merged with Tyronza, or the form of the school board’s request.

Affirmed.


text:
    HORNE BROTHERS, INC., A. A. HORNE AND Don HORNE v. RAY LEWIS CORPORATION
    87-65
    731 S.W.2d 190
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987
    [Rehearing denied July 20, 1987.]

      John B. Hainen; John H. Jackson; and Dailey, West, Core,

      Coffman & Canfield, by: Ben Core, for appellants.

      Steel & Steel, by: George Steel, Jr., for appellee.
   Darrell Hickman, Justice.

This case has been referred to us by the Court of Appeals.

This was an action in chancery court by a creditor of a corporation to require its two sole stockholders and directors to repay the corporation money acquired in violation of the fiduciary duty to creditors. The chancellor held that the money should be repaid. On appeal two of appellants’ three arguments were not properly raised below and will not be considered. The third argument is that the chancellor erred in not upholding a valid assignment to the stockholders of a debt due the corporation. We find the issue to be one of fact and the chancellor’s decision not clearly wrong.

Appellants A. A. Horne and Don Horne, brothers, formed a corporation, Horne Brothers, Inc., to open and operate an Otasco store in DeQueen, Arkansas. The appellee, Ray Lewis Corporation, constructed a building to be occupied by the Otasco store. A ten year lease of the building was signed in the fall of 1977. For the first five years of the lease, the Horne brothers were individually liable together with their corporation for the rent. The brothers were its sole stockholders and directors. For the second five year period, only the corporation was liable for rent.

About two years later, Horne Brothers, Inc., sold the store to Galen P. Sullins, R. Kendal Harvey, and Ralph C. Harvey, and their corporation, Harvey and Sullins, Inc. The building was subleased by Horne Brothers, Inc., to Harvey and Sullins, Inc., and additional rent over and above that due the appellee was charged to Harvey and Sullins, Inc. The extra charge amounted to a little over $1,000 per year. No permission was sought for the sublease, but appellee was aware of the sale and did not object to it.

In September 1982, Harvey and Sullins, Inc., closed the store, and Horne Brothers, Inc., notified appellee of the closing and abandonment of the building. A dispute arose between Harvey and Sullins, Inc., and Horne Brothers, Inc., regarding the former’s liability under the sublease—whether the five year term commenced when Harvey and Sullins, Inc., signed the sublease in 1979, or whether Harvey and Sullins, Inc., merely assumed the first five years of the lease signed by Horne Brothers, Inc., and the appellee. There was also a dispute between these parties whether any liability remained under the original ten year lease. After Harvey and Sullins, Inc., abandoned the building, the appellee would send potential renters of the building to Horne Brothers, Inc., who would, in turn, refer them back to the appellee. One of the Horne brothers, A. A. Horne, was a director of the Clark County Bank, and several loans were made by the bank to the brothers in connection with their Otasco store. The total sum loaned by the bank for the operation was at least $150,000. In October 1982 there were no corporate assets left. The corporation determined that it still owed the bank $23,705.51 on a note signed by one of the Horne brothers. (According to A. A. Horne’s testimony, this debt was due on a $ 150,000 note dated May 2, 1978. It appears Don Horne signed this note.) The corporation assigned to the two Horne brothers any claim it had against Harvey and Sullins, Inc., in consideration of them paying the corporation’s debt to the bank. The Horne brothers were already individually liable on the notes to the bank. (The note in question was not signed by the corporation officers but by one of the brothers “d/b/a Otasco of DeQueen.”)

Horne Brothers, Inc., sued Harvey and Sullins, Inc., under the sublease and invited appellee to join. The appellee declined on advice of counsel. Eventually, a judgment against Harvey and Sullins, Inc., was obtained for $32,340 which was substantially affirmed by the Court of Appeals.

In the meantime, the appellee sued Horne Brothers, Inc., for rent due under the lease. A default judgment for $30,655.55 was obtained on January 17,1985. At that time half of the money due Horne Brothers, Inc., by Harvey and Sullins, Inc., had been collected. The total amount collected from Harvey and Sullins, Inc., was $30,940. Of that amount $4,859.30 was paid by the corporation for attorneys’ fees in collecting the judgment, and the balance of the money collected was placed in the individual account of A. A. Horne even though one-half of this amount belonged to Don Horne. This suit was filed to require that money be paid the corporation so appellee could collect on its default judgment.

A. A. Horne, Don Horne and Lawrence Lewis testified. Summarizing, the chancellor found: (1) the only two stockholders in Horne Brothers, Inc., were A. A. Horne and Don Horne; (2) Horne Brothers, Inc., is now insolvent and has been inactive for a number of years; (3) the transfer of the money received from Harvey and Sullins, Inc., was an unauthorized and unfair transfer of the corporate assets solely for the purpose of defeating the judgment lienholder, Ray Lewis Corporation, and a receiver should be appointed to take control of the corporation assets and to dissolve the corporation according to the law; and (4) A. A. Horne and Don Horne are ordered to return the money received from Harvey and Sullins, Inc., less attorneys’ fees, to the receiver for division among the creditors.

On appeal Horne Brothers, Inc., first argues that the appellee did not comply with Act 189 of 1893. The suit was filed pursuant to Ark. Stat. Ann. § 64-1103 (Repl. 1980), which is § 2 of Act 189. No argument was made to the chancery court that the appellee’s suit failed to comply with the act. Therefore, we will not consider it on appeal. First Commercial Bank v. Meyer, 289 Ark. 345, 711 S.W.2d 791 (1986).

The second argument is that the trial court failed to recognize a valid assignment to the brothers. The assignment is not in the record. A. A. Horne read into the record what it apparently said and testified about its date and circumstances. The trial court made a specific finding that the assignment was made to defeat their creditor’s claim. There is no doubt that the brothers knew of the appellee’s claim, and the corporation did not contest it, allowing judgment by default. The court noted that the corporation had only two stockholders. Detailed testimony was given regarding the notes signed by the brothers to the Clark County Bank and the financing of the store.

Also considerable testimony was given about the relationship of A. A. Horne to the Clark County Bank, which financed most, if not all, of the Otasco endeavor. The appellee, of course, had no notice of the assignment in 1982. The parties disputed their rights and duties under the original lease. Undoubtedly, the court considered whom to believe. Whether the assignment was made to defeat the appellee’s claim was one of fact, and we will not set aside such a finding unless clearly wrong. ARCP 52; Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986). We view all evidence on appeal in a light most favorable to the appellee. Sipes v. Munro, 287 Ark. 244, 697 S.W.2d 905 (1985). The Horne brothers did give themselves preference. The appellants argue the assignment was valid on its face and the appellee declined to join them in suing Harvey and Sullins, Inc., and should not reap the fruits of their labor. But the appellee did not have a lease with Harvey and Sullins, Inc., and could rightly stand on its claim against Horne Brothers, Inc., which it did, without having to join in the lawsuit. The appellants have been unable to demonstrate the chancellor was clearly wrong in his findings.

The general rule is that the capital stock and assets of a corporation constitute a trust fund for the benefit of creditors, which neither the officers nor the stockholders can divert or waste. Wilson v. Lucas, 185 Ark. 183, 47 S.W.2d 8 (1932). Contracts between corporations and their directors dealing with corporate assets are not void but voidable, and the fact that a corporation deals with its shareholders or directors is a circumstance to be considered along with other facts and circumstances in a case as tending to show fraud when the transaction is challenged by a creditor. Oliver v. Henry Quellmalz Lbr. & Mfg. Co., 170 Ark. 1029, 282 S.W. 355 (1926). While such contracts are voidable, they are more closely scrutinized than ordinary contracts, and the burden is upon those claiming under them to prove that they are made in good faith and fair to the corporation. Walker-Lucas-Hudson Oil Co. v. Hudson, 168 Ark. 1098, 272 S.W. 836 (1925).

We cannot say the chancellor was clearly wrong in finding the assignment in consideration of payment to a bank, of which one of the Horne brothers was a director, was unfair and made to avoid the appellee’s claim against the corporation.

The final argument is: “Chancery Court has no jurisdiction to supervise the entire liquidation of a corporation. Section 88, Act 576 of 1965 (Ark. Stat. § 64-906), is unconstitutional to the extent that it provides otherwise.” First, the argument was not made below. Second, no motion to transfer to circuit court was made. Stolz v. Franklin, 258 Ark. 999, 531 S.W.2d 1 (1975); Harris v. Umsted, 79 Ark. 499, 96 S.W. 146 (1906). Certainly, the chancery court was not wholly without jurisdiction. Chancery courts have jurisdiction to hear complaints by creditors against corporations and stockholders to set aside transfers made to defeat creditors’ claims. See Taylor v. Bank of Mulberry, 177 Ark. 1091, 9 S.W.2d 578 (1928). In Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986), we said that “unless the chancery court has no tenable nexus whatever to the claim in question we will consider the matter of whether the claim should have been heard there to be one of propriety rather than one of subject matter jurisdiction. We will not raise the issue ourselves, and we will not permit a party to raise it here unless it was raised in the trial court.” See also Towell v. Shepherd, 286 Ark. 143, 689 S.W.2d 564 (1985).

There was no motion to transfer in Liles, nor was there a question raised regarding the propriety of chancery court to hear the case. That is essentially the posture of this case. Therefore, we need not address the question of whether Ark. Stat. Ann. § 64-906 (Repl. 1980) is constitutional in giving chancery court jurisdiction over liquidation of a corporation.

Affirmed.

Glaze, J., dissents.


author: John I. Purtle, Justice.

text:
    ARKANSAS APPLIANCE DISTRIBUTING COMPANY, Robert WHITEHEAD and Van BUNCH v. TANDY ELECTRONICS, INC., d/b/a TANDY COMPUTER LEASING
    86-274
    730 S.W.2d 899
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987

      Meredith Wineland, for appellants.

      House, Wallace & Jewell, P.A., by: W. Michael Reif, for appellee.
   John I. Purtle, Justice.

On April 18,1984, the appellants entered into a contract with the appellee for a computer and software equipment. The contract called for total payments of $10,138.00. Subsequently, the appellants defaulted on the contract and appellee demanded the return of the equipment. Appellee then sold the equipment to Radio Shack, a wholly owned subsidiary of the Tandy Corporation, for the amount of $3,325.95. Suit was filed in Pulaski County, Arkansas, for the deficiency.

The trial court decided that Texas law was to be applied. The court also found that the sale to Radio Shack was commercially reasonable. A deficiency judgment in the amount of $5,544.43 was entered in favor of the appellee. On appeal it is argued that the trial court erred in applying Texas law and in finding that the sale was commercially reasonable.

The contract in question was initiated in Pulaski County, Arkansas. It was accepted in Forth Worth, Texas. The contract provided that Texas law would apply. The record does not reveal where the equipment was shipped from. The monthly payments on the contract were mailed from Arkansas to Texas.

When appellee filed its complaint, it attached a copy of the original contract which stated that the laws of Texas governed the transaction. Admittedly, this copy of the contract was almost illegible. This defect was subsequently cured by appellee separately furnishing a legible copy. It was stipulated by the parties that if Texas law applied, then there would be no usury challenge; however, if Arkansas law applied, the contract would be usurious.

The first issue is whether the court properly applied Texas law. Before this issue can be considered, it must be determined whether the appellee gave notice of its intention to rely upon Texas law. Arkansas Rules of Civil Procedure, Rule 44,1 (a) provides:

A party who intends to raise an issue concerning the law in a jurisdiction or governmental unit thereof outside this state shall give notice in his pleadings or other reasonable written notice.

The same issue was addressed in Yarbrough v. Prentice Lee Tractor Co., 252 Ark. 349, 479 S.W.2d 549 (1972). In Yarbrough, the appellant argued that the appellee had not given the notice required by Ark. Stat. Ann. § 27-2504 (Supp. 1971), which was the predecessor statute to Rule 44.1 and which was deemed superseded by the adoption of the Arkansas Rules of Civil Procedure. The present Rule is a verbatim recitation of the former statute. In Yarbrough the complaint had set out portions of the mortgage which stated that Louisiana law would control. This Court concluded that the notice requirement had been satisfied.

Óf significance in the determination of the notice issue is A.R.C.P. Rule 10(c), which states: “A copy of any written instrument or document which is an exhibit to a pleading is a part thereof for all purposes.” In the present appeal, the appellee attached to the complaint a copy of the original contract executed between the parties. The contract clearly stated that Texas law would control. Even though this copy was almost illegible, the defendants’ answers to interrogatories confirm that he did sign the contract. We find the facts in this appeal to be similar to those in Yarbrough and therefore conclude that the appellee properly notified the appellant that it intended to rely on Texas law.

We also conclude that the court correctly held that Texas law should apply. This Court addressed a similar conflict of laws question concerning the validity of a multistate contract in Snow v. C.I.T. Corp. of the South, Inc., 278 Ark. 554, 647 S.W.2d 465 (1983). The Uniform Commercial Code, Ark. Stat. Ann. § 85-1-105(1), affirmatively provides that the parties to a multistate transaction may choose their own law so long as it bears a reasonable relation to the transaction. Snow, supra. The parties to this case chose to apply Texas law, and the transaction bears a reasonable relation to Texas. This Court has, moreover, consistently inclined toward applying the law of the state that will make the contract valid rather than void. Stacey v. St. Charles Custom Kitchens, 284 Ark. 441, 683 S.W.2d 225 (1985); Grogg v. Colley Home Center, Inc., 283 Ark. 120, 671 S.W.2d 733 (1984); and Cooper v. Cherokee Village Development Co., 236 Ark. 37, 364 S.W.2d 158 (1963).

The seminal conflicts decision involving contracts is Cooper v. Cherokee Village, supra. In Cooper, the parties by the terms of the contract, expressed the intention that the laws of New York would govern the validity and interpretation of the contract. We stated that the parties had the right to select and intend the laws of New York to govern the contract since New York had substantial contacts with the contract. In the present appeal, the contract in question was accepted by the appellee in Fort Worth, Texas. The contract itself provided that Texas law would govern. Moreover, there is no evidence in the record that this is a case of a “cloak for usury” where the parties to a wholly Arkansas contract have sought to avoid the Arkansas usury law by having the validity of the contract determined by the law of a state having no substantial connection with the contract. See Cooper, supra. Since the state of Texas had substantial contacts with the contract, and since the parties expressed their intention in the contract that Texas law would govern its construction, we hold that the trial court was correct in its determination that Texas law should apply.

The appellant also argues that there was no reasonable commercial sale of the equipment. We do not know what the specific requirements for the sale of repossessed goods are under Texas law. According to the record the equipment was sold for $3,325.95. On its face it does not appear that the sale was not commercially reasonable. However, it was the duty of the appellant to prove how Texas law would characterize this transaction and the applicable remedies available to the appellee. The appellant has failed to demonstrate that Texas law would require a different result. Therefore, we affirm the trial court on this point.

Finding no reversible error, we affirm the decision of the trial court.

Glaze, J., not participating.


text:
    Carl WIDMER v. Raymond F. WIDMER, Executor of the Estate of Walter WIDMER, Deceased
    87-9
    731 S.W.2d 209
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987
    [Rehearing denied July 20, 1987.]

      Appellant, pro se.

      Hardin, Jesson & Dawson, by: Bradley D. Jesson, for appellee.
   John I. Purtle, Justice.

This is the fourth appeal in the same case by the same appellant. This time he attempts to appeal the trial court’s decree ordering the sale of real estate. The appellant is an heir in the estate. He timely objected to the order to sell the property, claiming an absolute, first right of purchase as an heir.

In Cash v. Cash, 273 Ark. 32, 616 S.W.2d 13 (1981), we stated: “This appeal is from the order overruling the motion to restrain the sale of the land. The order is interlocutory in nature and was in no manner a final appealable order.” The present appeal is in the same position as the appeal in Cash. Therefore, it must be dismissed.

The proper place for the arguments presented here is in an appeal from the order of confirmation of the sale of the property. That appeal has already been docketed in this Court as Case No. 87-136.

Appeal dismissed.


author: Robert H. Dudley, Justice. Tom Glaze, Justice,

text:
    Linda L. HARGIS v. Freddie W. HARGIS
    87-10
    731 S.W.2d 198
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987

      Pearson, Woodruff & Evans, by: C. Thomas Pearson, Jr., and Pat A. Jackson, for appellant.

      Everett & Gladwin, by: John C. Everett, for appellee.
   Robert H. Dudley, Justice.

This is an appeal from the denial of a motion to set aside a divorce decree. Appellant, Linda Hargis, and appellee, Freddie Hargis, both domiciliaries of the State of Arkansas, were married on January 31, 1986. During their one and one-half months of married life, they lived in Madison County. On March 13, 1986, they separated and the appellant moved back to her native Benton County. On March 31, 1986, appellee, Freddie Hargis, still a resident of Madison County, filed a complaint for divorce in Washington County. On May 7,1986, an instrument executed by appellant, Linda Hargis, was filed in the Chancery Court of Washington County. It was styled “Waiver of Service and Venue and Entry of Appearance.” The instrument “expressly waives venue in this action.” On June 30, 1986, the decree of divorce was entered.

On August 18, within ninety days after the decree was entered, appellant filed a motion pursuant to ARCP Rule 60(b) to set aside the decree. In her motion she alleged that appellee had never lived in Washington County; that she signed the waiver of venue under duress and without counsel; that appellee had defrauded her by telling her after a reconciliation that he would not use the waiver and would not file for divorce when, in fact, he had already done so. In the motion she did not allege that she had a valid defense to the complaint for divorce and, upon a hearing, did not make a prima facie showing of such a defense. The trial court denied her motion to set aside the divorce decree. We affirm.

ARCP Rule 60(d), and its predecessor statute, Ark. Stat. Ann. § 29-509 (Repl. 1962), provides that, on collateral attack, judgments will not be vacated unless a meritorious defense is alleged and proved. In H.G. Pugh & Co. v. Martin, 164 Ark. 423, 262 S.W. 308 (1924), we even said this was a “doctrine of this court.” For a case, almost identical to the one at bar, in which we affirmed the trial court in dismissing a motion to set aside a judgment, see Burnett v. Burnett, 254 Ark. 507, 494 S.W.2d 482 (1973). Here, the appellant neither alleged nor made a prima facie showing of a valid defense, thus, the decree of the lower court must be affirmed.

Though not expressly argued, the appellant, in effect, contends that Rule 60(d) is not applicable since the decree is void ab initio for lack of jurisdiction. We need not decide whether the Rule 60(d) requirement is applicable when a judgment or decree is void because the decree in this case is not void. (However, we note that in interpreting the predecessor statute we held that the requirement must be met even when fraud was practiced. Quigley v. Hammond, 104 Ark. 449, 148 S.W. 275 (1912)).

In Bachman v. Bachman, 274 Ark. 23 621 S.W.2d 701 (1981), we pointed out that there are two separate residency statutes in our divorce laws. One, Ark. Stat. Ann. § 34-1208 (Repl. 1962) deals with the necessity of residing in this State for a designated period of time before a court of this State can acquire jurisdiction. Residency in that statute is the equivalent of domicile in its more restrictive sense. Ark. Stat. Ann. §34-1208.1 (Repl. 1962). The other residency statute, Ark. Stat. Ann. § 34-1204 (Supp. 1985), deals with venue. The part of the venue statute which is applicable to this case provides that “the proceedings shall be in the county where the complainant resides. . . .” Ark. Stat. Ann. § 34-1204 (Supp. 1985).

In Gland-o-Lac Co. v. Creekmore, Judge, 230 Ark. 919, 924, 327 S.W.2d 558, 561 (1959), we explained the difference between jurisdiction and venue as follows:

[Vjenue meanfs] the place, that is the county or district wherein a cause is to be tried; and jurisdiction mean [s], not the place of trial, but the power of the court to hear and determine a cause, including the power to enforce its judgment.

A more concise definition of the two terms is:

Jurisdiction deals with the authority of a court to exercise judicial power. Venue deals with the place where that power should be exercised.

M. Green, Basic Civil Procedure 51 (1972).

Judge Newbern has written:

An action brought in the proper county is one in which the venue is said to be properly laid. The venue concept should have to do with nothing but choosing among courts of two or more places in which jurisdiction of the subject matter and jurisdiction of the defendant or defendants exist.

D. Newbern, Ark. Civil Prac. and Proc., § 6-1 (1985).

Jurisdiction cannot be conferred upon a court by consent or waiver when the court would otherwise have no jurisdiction of the subject matter of the action. Arkansas Association of County Judges v. Green, 232 Ark. 438, 338 S.W.2d 672 (1960). However, the venue of an action may be waived. Waterman v. Jim Walter Corp., 245 Ark. 218, 431 S.W.2d 748 (1968). For example, in Arkansas State Racing Comm’n v. Southland Racing Corp., 226 Ark. 995, 295 S.W.2d 617 (1956), we said “the settled rule is that an objection to venue is waived by a defendant who enters his appearance. . . .”

In this case the statute requiring residency in the State, or domicile, was clearly satisfied. The courts of this State had the authority to exercise judicial power over the res of the marriage. The suit was not filed in the county of proper venue, but the appellant expressly entered her appearance and waived venue. Since venue can be waived, the Chancery Court of Washington County could exercise its power, and the decree was not void.

Appellant points out that we have used the term “jurisdiction” in a number of cases when we were discussing the “venue” statute. We acknowledge we have, at times, inartfully used the terms. For example, in McLaughlin v. McLaughlin, 193 Ark. 207, 99 S.W.2d 571 (1936), we labeled “venue” as “jurisdiction,” but even though we transposed the terms in that case, we would still reach the same result that we previously reached on that direct appeal.

Affirmed.

Hays and Glaze, JJ., dissent.

Tom Glaze, Justice,

dissenting. Neither appellant nor appellee has ever been a resident of Washington County even though appellee alleged he was in his complaint. Because I believe extrinsic fraud occurred in appellant’s obtaining the divorce, I cannot agree that venue existed in the Washington County Chancery Court, much less that it could be waived. See Murphy v. Murphy, 200 Ark. 458, 140 S.W.2d 416 (1940). I would reverse and dismiss.

Hays, J., joins in this dissent.


author: Robert H. Dudley, Justice. Steele Hays, Justice,

text:
    NATIONAL BY-PRODUCTS, INC. v. SEARCY HOUSE MOVING COMPANY, INC.
    86-300
    731 S.W.2d 194
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987
    [Rehearing denied July 20, 1987.]

      Friday, Eldredge & Clark, by: James M. Simpson, for appellant.

      Matthews & Sanders, by: Gail O. Matthews and Marci L. Talbot, for appellee.
   Robert H. Dudley, Justice.

The sole issue in this tort case is whether an award of punitive damages should be upheld. We hold there was no substantial evidence to support the' award of punitive damages, and reverse the judgment.

On July 11, 1985, Robert Foley was driving a large tractor-trailer for appellant National By-Products, Inc. from Batesville south on Highway 167. At the same time, appellee Searcy House Moving Company was moving a house north on the same highway. Appellee could not get the house through a bridge which was just north of Bald Knob, and, while the house was being adjusted on the house moving trailer, traffic was stopped and flagged around in the one lane of traffic still open. Stacy McGee and Lorene Staggs were slowly starting to go through the open lane when appellant Foley, speeding in an over-weight truck smashed into the rear of their car, knocking it eighty feet forward, causing it to hit the house and trailer, and then to hit two bystanders. Appellant National’s truck also struck the house and then crashed into another tractor-trailer rig. Lorene Staggs died instantly and Stacy McGee died seven hours later. The estates of Lorene Staggs and Stacy McGee filed wrongful death actions against Foley and appellant National By-Products, Inc. and appellee moving company. Defendants Foley and National ByProducts and defendant moving company filed cross-complaints against each other, each asking compensatory and punitive damages from the other. The cases were tried before a jury which returned compensatory damage awards of $3,000,000 to the estate of Stacy McGee, $1,400,000 to the estate of Lorene Staggs, and $15,000 to appellee moving company. In addition, separate punitive damage awards of $ 100,000 were given to each estate and to appellee moving company. The judgments in the wrongful death cases were satisfied and appellee moving company agreed to a remittitur of its compensatory damage award from $15,000 to $1,883.14, the stipulated amount of compensatory damages. Therefore, the only damage award involved in this appeal is the $100,000 punitive damage award made in favor of appellee moving company and against appellant National ByProducts Company.

Appellant contends that the trial court erred in refusing to grant its motion for a judgment notwithstanding the verdict. The argument is meritorious. An award of punitive damages is justified only where the evidence indicates that the defendant acted wantonly in causing the injury or with such a conscious indifference to the consequences that malice may be inferred. Freeman v. Anderson, 279 Ark. 282, 651 S.W.2d 450 (1983). We have previously defined wantonness and conscious indifference to the consequences. In Ellis v. Ferguson, 238 Ark. 776, 385 S.W.2d 154 (1964), we said:

Wantonness is essentially an attitude of mind and imparts to an act of misconduct a tortious character, such conduct as manifests a ‘disposition of perversity.’ Such a disposition or mental state is shown by a person, when, notwithstanding his conscious and timely knowledge of an approach to an unusual danger and of common probability of injury to others, he proceeds into the presence of danger, with indifference to consequences and with absence of all care. It is not necessary to prove that the defendant deliberately intended to injure the plaintiff. It is enough if it is shown that, indifferent to consequences, the defendant intentionally acted in such a way that the natural and probable consequence of his act was injury to the plaintiff.

In Freeman v. Anderson, 279 Ark. 282, 651 S.W.2d 450 (1983), we quoted with approval from St. Louis, I. M. & S. Ry. Co. v. Dysart, 89 Ark. 261, 116 S.W. 224 (1919):

The terms ‘wilfulness, or conscious indifference to consequences from which malice may be inferred,’ as used in the decisions of this court, means such conduct in the face of discovered peril. In other words, in order to superadd this element of damages by way of punishment, it must appear that the negligent party knew, or had reason to believe, that his act of negligence was about to inflict injury, and that he continued in his course with a conscious indifference to the consequences, from which malice may be inferred.

In the case at bar there was proof of gross negligence, but gross negligence is not sufficient to justify punitive damages.

The facts, when viewed most favorably to appellee, reveal that Foley, appellant’s driver, was late leaving Batesville and his truck weighed 80,480 pounds, which is 480 pounds over the legal limit. Foley had received six citations in the last year for driving an overweight truck, and appellant had paid all of the citations. One of appellant’s employees testified that the company had a disciplinary procedure for drivers who got an excessive number of overweight tickets, and he testified that Foley had an excessive number of such tickets, but admitted that Foley had not been cautioned or disciplined for driving an overweight truck. Appellee’s expert witness on accident reconstruction testified that the 480 pounds excess weight on the 80,000 pound rig was a contributing, but insignificant, factor in the accident.

Between Batesville and the place of the accident, Foley exceeded the 55 miles per hour speed limit while going downhill. He got so close to one car that all the driver of the car could see in his rearview mirror was the grill of Foley’s tractor. He got extremely close to another car while “tailgating” downhill. Finally, he came around a curve at the crest of a small hill and had 804 feet of clear visibility to the bridge structure where the accident occurred. The house, which was sitting on the trailer, at the bridge, was 17 feet high, 28 feet wide, and 36 feet long, and because of its added height, could be seen from about 900 feet away. Foley either did not apply his brakes, or he applied them but they did not function properly.

Appellee’s witnesses said Foley was going 60 to 70 miles per hour and made no effort to stop even though he went past a vehicle with a flashing warning light. They testified his brake lights did not come on, the tires did not skid, there was no smoke from either the brakes or tires, and there were no skid marks. However, appellee’s expert brake witness testified that Foley probably did apply his brakes just before the accident, but the brakes were not working properly. While the expert did not testify about standards in the industry, he did testify that the Ryder Truck Company checks truck brakes every 8,000 miles. One of the appellant’s employees testified that the company policy was to adjust the trailer brakes once a month, but the brakes on this trailer had not been adjusted for three and one-half months, and the tractor brakes had not been opened for a complete inspection for almost six months, although they were adjusted about 6 weeks before the accident. He further testified that appellant conducted an internal inspection of the brakes every 50,000 miles as recommended by the American Trucking Association and, in addition, the drivers conducted a daily inspection. There was no evidence that appellant had any knowledge that the brakes were faulty.

As Foley sped downhill at 70 miles per hour, he ran into the rear of the decedent’s car and then struck appellee’s rig and the house.

The foregoing facts do not show that appellant, either by its own policies or through the actions of its agent Foley, intentionally acted in such a way that the natural and probable consequence was to damage appellee’s property. Nor do the facts show that appellant knew that some act of negligence was about to cause damage, but still continued to cause that damage. Accordingly, we reverse the judgment for punitive damages.

When we reverse a judgment for punitive damages, we normally must also reverse the award for compensatory damages because the issues are so interwoven that an error with respect to one requires a retrial of the whole case. Life & Casualty Ins. Co. of Tenn. v. Padgett, 241 Ark. 353, 407 S.W.2d 728 (1966). In this case, however, the parties have stipulated as to the amount of compensatory damages, so we reverse on the punitive damages, but do not remand for new trial.

Reversed.

Purtle and Hays, JJ., dissent.

Steele Hays, Justice,

dissenting. The majority’s opinion has examined the evidence supporting punitive damages more from the appellant’s standpoint than the appellee’s. When viewed most favorably to the appellee, and with its fullest probative force, I believe there was substantial evidence to support the trial court’s refusal to grant a motion for a directed verdict. Dalrymple v. Fields, 276 Ark. 185, 633 S.W.2d 362 (1982); Holmes v. Hollingsworth, 234 Ark. 347, 352 S.W.2d 96 (1961); Ray Dodge Inc. v. Moore, 251 Ark. 1036, 479 S.W.2d 518 (1972).

We no longer require actual malice as an essential constituent of punitive damages. It is enough if the defendant acted recklessly or wantonly, or with a conscious indifference to the safety and welfare of others using the highways. In Dalrymple v. Fields, supra, we said:

Before punitive damages may be allowed it must be shown that in the absence of proof of malice or willfulness there was a wanton and conscious indifference for the rights and safety of others on the part of the tortfeasor.

While excessive speed may, in many circumstances, be no more than ordinary negligence, actions are not to be viewed in a vacuum, and what may be no more than negligence in one setting can readily be seen as wantonness or conscious indifference in another context. Thus driving 85 m.p.h. on certain stretches of highway may be relatively safe, or it may be negligence, depending on the traffic, weather, etc. But driving only 35 or 40 m.p.h. past a school at dismissal hour or close to a playground crowded with children with an evident indifference to the known tendencies of children could meet even restrictive concepts of wantonness. In Airco, Inc. v. Simmons First National Bank, 276 Ark. 486, 638 S.W.2d 660 (1982), we upheld a monumental award of punitive damages, not on proof that Aireo had any intent to injure, but because the injury was the natural and probable consequence of Airco’s conduct. It seems a fair analogy to me to say that when one knowingly drives an overloaded 18-wheeler, with defective brakes, on the highway at speeds of 70 m.p.h. by some accounts, oblivious of warning signals and without slowing down and with no apparent effort at stopping, approaching congestion on the highway, a collision is the natural and probable consequence of such conduct. At least, reasonable minds could differ on the issue of conscious indifference and that is enough.

In sum, the proof was that Robert Foley was several hours late leaving Batesville for Little Rock. His truck, an 18-wheeler, was loaded beyond the lawful limit. His truck, by whatever standard one chooses, was equipped with brakes that were not functioning properly. For some miles prior to the point of impact Mr. Foley drove so fast and so close to preceding vehicles that two of those motorists were alarmed by it and described his conduct at trial as speeding and “tailgating.” Rounding a curve bearing into a straight, level stretch of highway some 900 feet from the appellee’s house-moving rig, Mr. Foley proceeded at a high rate of speed (70 m.p.h. by one account) and with no discernible attempt to reduce his speed (some witnesses testified that his speed actually increased as he neared the impact point), past one vehicle with a warning light flashing, to strike the Staggs-McGee vehicle, knocking it a considerable distance in the air, and resulting in the deaths of the two occupants, before striking another vehicle and the house. Photographs of the scene attest to extraordinary force of the impact.

There was testimony that one of the brake shoes on the truck was not even touching the brake drum, rendering it useless as a braking device. There was testimony that none of the four rear brakes met Department of Transportation specifications. There was other material evidence from which an inference could be drawn that the brakes on the truck were seriously deficient and that fact was known by Foley and was in derogation of the policies of National By-Products, Inc. Lastly, there was proof from which the jury could quite properly have inferred that National ByProducts, Inc., in addition to neglecting the safe operation of the truck involved, engaged in practices which promoted the overloading of its trucks beyond the legal limit, by routinely paying weight fines rather than demanding compliance by its drivers.

The proof, I believe, was such that a jury had a right under the law to exemplify the conduct of both defendants by assessing punitive damages. The judgment should be affirmed.

Purtle, J., joins.


author: Steele Hays, Justice.

text:
    Ray CHESTNUT, et al. v. Al NORWOOD, et al.
    87-5
    731 S.W.2d 200
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987

      R. Theodor Strieker, for appellant.

      Carl O. Lamar, for appellee.
   Steele Hays, Justice.

This appeal is an attempt to impose tort liability on a county judge and road foreman for damages allegedly caused by diverting surface waters onto the appellants’ lands. The circuit judge dismissed the complaint without prejudice based on governmental immunity and on a lack of jurisdiction. We affirm the circuit court.

Appellants are property owners residing along Cemetary Road. In 1986 the Benton County Road Department reworked the road and installed drains which affected the flow of surface water on appellants’ lands. They filed suit in circuit court against A1 Norwood and Keith Knox, individually and in their capacities as county judge and “road boss.” The suit alleged a cause of action in tort for negligence of the defendants. The relief sought was monetary damages.

On appeal appellants challenge the constitutionality of Ark. Stat. Ann. § 12-2901 (Repl. 1979) which reads:

It is hereby declared to be the public policy of the State of Arkansas that all counties, municipal corporations, school districts, special improvement districts, and all other political subdivisions of the State shall be immune from liability for damages, and no tort action shall lie against any such political subdivision, on account of the acts of their agents and employees.

The constitutionality of that provision has been upheld too often and too recently to be subject to serious question. Helms v. Southern Farm Bureau Casualty Insurance Co., 281 Ark. 450, 664 S.W.2d 870 (1984); Thompson v. Sanford, 281 Ark. 365, 663 S.W.2d 932 (1984); Chandlery. Pulaski County, 247 Ark. 262, 445 S.W.2d 96 (1969). In Chamberlain v. Newton County, 266 Ark. 516, 587 S.W.2d 4 (1979) we affirmed a lower court dismissal of a suit for damages for trespass by Newton County in allegedly causing a road to be constructed on lands belonging to Chamberlain. We pointed out that trespass was a tort and that the trial court had no jurisdiction. Ms. Chamberlain’s only remedy, we said, was in the county court under Article 7, § 28, Arkansas Constitution.

Nor can we sustain the argument that appellants’ damage is not a matter “relating to . . . roads” within the language of Article 7, § 28 of the Arkansas Constitution:

The county courts shall have exclusive original jurisdiction in all matters relating to county taxes, roads, bridges, ferries, paupers, bastardy, vagrants, the apprenticeship of minors, the disbursement of money for county purposes, and in every other case that may be necessary to the internal improvement and local concerns of the respective counties. The county court shall be held by one judge, except in cases otherwise herein provided.

The complaint alleges the defendants constructed drainage culverts on Cemetary Road which caused surface waters “to collect, flood and erode the plaintiff’s lands.” We find no merit in the argument appellants’ claims are not related to roads within the meaning of the article.

Appellants contend they initially sought relief by contacting the county judge, to no avail, and this satisfies the jurisdictional requirement of Article 7, § 28. They cite no authority for the far reaching premise that this informal step then frees them to pursue a cause of action in tort in clear contravention of the constitution and statute. Nor is the argument facially convincing. Gray v. Ragland, 277 Ark. 232, 640 S.W.2d 788 (1982); Hazen v. City of Booneville, 260 Ark. 871, 545 S.W.2d 614 (1977). We note, too, the record fails to reflect that the trial court was asked to rule on this issue. Smith v. Brooks Trucking Co., 280 Ark. 510, 660 S.W.2d 1 (1983).

Two final arguments concern the refusal of the trial court to grant a motion by the appellants for a default judgment. When the defendants responded in a timely manner to the complaint their pleading was styled in the chancery court rather than the circuit court. However, the pleading was filed with the clerk, marked with the correct docket number and the pleading itself was doubtless placed in the appropriate case file. Its content clearly identifies it as responsive to the complaint and a copy was forwarded to counsel for the plaintiffs. There is every reason to assume the naming of the court as chancery rather than circuit was, as appellees contend, a clerical error. Moreover, the pleading identified the parties in the style simply as “Chestnut and Chestnut, et al”, plaintiffs, versus “Al Norwood, et al,” defendants. On this basis appellants argue they were entitled to a default judgment against Norwood and Knox as individuals for failing to respond to the complaint.

The trial court noted that the usage of “et al” was a sufficient indication that the responsive pleading was intended to be inclusive of both the individual and official roles in which the defendants were being sued. We agree. This Court accepts as correct the decisions of the trial court which the appealing party does not show to be wrong. Clemson v. Rebsamen, 205 Ark. 123, 168 S.W.2d 195 (1943).

By this decision we are not denying recourse to the appellants for their damage, only the right to proceed in tort. Under our constitution appellants’ claims are redressed in the county court, subject to the right of appeal if they are dissatisfied with the relief afforded.

The order of dismissal without prejudice is affirmed.


text:
    POLNAC-HARTMAN & ASSOCIATES v. THE FIRST NATIONAL BANK IN ALBUQUERQUE, as Trustee for the Jicarilla Apache Tribe, Inc., et al.
    87-25
    731 S.W.2d 202
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987

      Croxton & Boyer, by: Charles F. Hickman, for appellant.

      Pearson, Woodruff & Evans, by: C. Thomas Pearson, Jr., for appellee.
   David Newbern, Justice.

The appellant, Polnac-Hartman & Associates, attempted to intervene in litigation in which The First National Bank in Albuquerque sought foreclosure of mortgages against Beaver Lake Lodge Resort, Inc., White, White, Wilson & Associates, Ltd., O. L. White, Tyree F. Wilson, Jr., and Benton County Abstract Co. The foreclosure litigation was set for trial September 15,1986, and on that day, counsel for the appellant appeared at the courthouse prepared to present an oral intervention motion. He discovered that the parties had settled the case and were proposing a consent decree. Counsel for the appellant then, on September 22, 1986, filed a motion to intervene. The motion stated simply that the appellant had performed certain services for Beaver Lake Lodge Resort, Inc., for which it was assigned certain notes and mortgages representing an encumbrance upon time shares sold by the resort and that it sought to intervene to protect its interest. The chancellor denied the motion, stating in his order that the motion was not timely and it was not presented in accordance with Ark. R. Civ. P. 24. The order provided, however, that the appellant should be allowed to intervene in aspects of the litigation remaining which were to be transferred to the circuit court. We hold the chancellor was right in not allowing the intervention in the foreclosure proceeding.

The appellant claims it had a right to intervene, and thus Rule 24(a) applies. The rule provides:

(a) Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of this state confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.

The appellant’s argument is that the chancellor erred in finding the attempted intervention was untimely because the motion to intervene was filed before a final judgment was entered. As authority for that proposition the appellant cites Bank of Quitman v. Phillips, 270 Ark. 53, 603 S.W.2d 450 (Ark. App. 1980), in which our court of appeals held that an intervention attempted after the entry of final judgment was untimely. The appellant argues that the rationale of the Bank of Quitman case, if extended, supports the view that any pre-judgment attempt to intervene is timely. We cannot agree that the entry of judgment is the only criterion by which the court can measure the timeliness of the attempted intervention. Rather, the court of appeals said that timeliness of intervention is a matter within the discretion of the trial court, and its holding was buttressed by authority developed in the federal courts’ interpretations of F.R.C.P. 24. See 3B Moore’s Federal Practice, 24.13 (2d ed. 1987). The appellant has given us no reason to disagree with this conclusion of the court of appeals.

Another deficiency in the motion to intervene is that it contained no pleading, as required by Rule 24(c), setting forth the claim or defense of the appellant. The appellant argues that, by attaching to its motion copies of documents assigning to it some notes and mortgages encumbrancing some time share agreements, it made clear to all concerned the interest it sought to protect, and that no party was prejudiced by the failure to file a pleading.

The failure to file a pleading with a motion to intervene was the subject of our decision in Schact v. Garner, 281 Ark. 45, 661 S.W.2d 361 (1983). In that case a party moving to intervene refused to file a pleading setting forth its claim or defense as required by Rule 24(c) but insisted on being allowed to intervene in the litigation. The trial court denied the motion, and this court affirmed, noting that the movant had not shown entitlement to intervene as a matter of right or permissively. That, of course, is the purpose of filing a pleading. Without it, the court may not have any idea of the right asserted by the would-be intervenor. Although the appellant in this case attached the assignments to the motion, it did not state how or why they should be protected, or what the claim of priority, if any, was. There was not even a statement telling the court that the assignments were, or were related to, the same properties which were the subjects of the foreclosure action.

The trial court did not abuse its discretion in holding that the attempted intervention was untimely, and the court was clearly correct in finding the appellant did not comply with Rule 24(c) in view of its failure to file a pleading setting forth a claim or defense.

The appellant also contends that there should have been a compulsory joinder of its claim. We will not address that argument as it was not made to the trial court. Puckett v. Puckett, 289 Ark. 67, 709 S.W.2d 82 (1986).

Affirmed.


text:
    Lanny Eugene BOSNICK and Sharon L. BOSNICK v. Jackie HILL, Stephen HILL, Verna C. METZLER and George F. METZLER
    86-292
    731 S.W.2d 204
    Supreme Court of Arkansas
    Opinion delivered June 22, 1987

      Daggett, Van Dover, Donovan & Cahoon, by: Robert J. Donovan, for appellant.

      Butler, Hicky, Hicky & Routon, Ltd., for appellee.
   Tom Glaze, Justice.

This case involves a warranty deed of conveyance and raises one issue: Is the grantee-covenantee entitled to recover his costs and expenses from his grantorcovenantor when the covenantee successfully defends or asserts his title against a third party’s claim of adverse possession? We conclude he is so entitled and reverse the chancellor’s holding to the contrary.

Appellees, George and Verna Metzler, conveyed by general warranty deed certain acreage to appellants, Larry and Sharon Bosnick. Upon the Bosnicks’ attempt to clear some of their newly-acquired acreage, the Bosnicks were informed by appellee, Stephen Hill, that Hill claimed 2.72 acres of it. After learning of Hill’s claim, the Bosnicks notified the Metzlers to take whatever action that was necessary to place the Bosnicks in possession of the disputed property. The Metzlers refused, so the Bosnicks brought this suit against Hill for possession of the property and against the Metzlers for their breach of warranty. The Metzlers answered, denying any duty or liability to the Bosnicks, and Hill counterclaimed, alleging that he had acquired the 2.72 acres by adverse possession and that the title to this disputed parcel should be quieted in him. The Bosnicks prevailed in their suit against Hill, but the chancellor held they were not entitled to recover their costs and expenses against the Metzlers because of their refusal to defend or assert title to the disputed property against Hill. In sum, the chancellor held that the Bosnicks could have recovered their costs and damages only if their title and possession to the property had been defeated. In considering the correctness of the chancellor’s studied opinion, we first review the law pertaining to covenants of warranty and, particularly, that which relates to the covenant of seisin.

The Metzlers warranted the title by the statutory warranty conveyed in the terms “grant, bargain and sell,” and specially covenanted that they would “defend the title to the said lands against all claims whatever.” See Ark. Stat. Ann. § 50-401 (Repl. 1971) (all lands transferred by deed by use of the words grant, bargain and sell shall be an express covenant to the grantee, his heirs and assigns that the grantor is seized of an indefeasible estate in fee simple, free from encumbrance done or suffered from the grantor). As this court noted in Dillahunty v. Railway Co., 59 Ark. 629, 27 S.W. 1002 (1894), a covenant of warranty is implied by virtue of our statute, and the general rule is that, in order to recover for breach of such a covenant, an eviction, either actual or constructive, must be alleged and proven. See also Smiley v. Thomas, 220 Ark. 116, 246 S.W.2d 419 (1952); Van Bibber v. Hardy, 215 Ark. 111, 219 S.W.2d 435 (1949); Fels v. Ezell, 183 Ark. 229, 35 S.W.2d 359 (1931); Belleville Land & Lumber Company v. Griffith, 177 Ark. 170, 6 S.W.2d 36 (1928); Carpenter v. Carpenter, 88 Ark. 169, 113 S.W. 1032 (1908); Collier v. Cowger, 52 Ark. 322, 12 S.W. 702 (1889). The covenant in issue here is one of seisin, which is a covenant that is broken as soon as made, if the grantor has not the possession, the right of possession and the complete title. Seldon v. Dudley E. Jones Co., 74 Ark. 348, 85 S.W. 778 (1905). See also Fitzhugh v. Crogham, 2 J.J. Marsh; Ky. 429, 19 Am. Dec. 139 (1829); 3 E. Washburn, Real Property § 2382 (6th ed. 1902); Lakelands, Inc. v. Chippewa & Flambeau Improvement Co., 237 Wis. 326, 295 N.W. 919 (1941).

In view of the language in Seldon, supra, the Bosnicks contend Hill, not the Metzlers, had possession of 2.7 acres of the acreage deeded the Bosnicks, and Hill’s possession and asserted claim of title was a breach of the Metzlers’ covenant of seisin upon which the Bosnicks were entitled to recoup their litigation costs and expenses in successfully acquiring possession to the disputed land. To further support their position, the Bosnicks cite the following:

“One suing for the breach of a covenant of title is not confined in his recovery of costs and expenses to such as are incident to actions in which he defends the title to the land conveyed to him, but he may also recover cost and expenses incurred in proceedings which he has been forced to institute to protect the title supposed to have been conveyed. Thus, where a covenant of a deed is broken by reason of a defect of title, the grantee, at least where he meets requirements as to notice to, and demand upon, the grantor, may, according to some courts, himself prosecute a suit to correct the title, and, where successful, may recover of the grantor the necessary expenses thereof. Also, according to some courts, where third persons are in possession of the land conveyed and the grantee is forced to resort to legal proceedings, such as an ejectment suit, to gain possession, he may recover the expenses of such suit when he sues for breach of covenant, if such outstanding possession was in fact a breach of a covenant of the deed.’’'’ (Emphasis supplied).

20 Am.Jur.2d, Covenants, Conditions and Restrictions § 153 (1965).

The issue evolves, then, to whether Hill’s possession of the disputed parcel of 2.7 acres was a breach of the Metzlers’ covenant of seisin to the Bosnicks. The language the court used in Seldon v. Dudley E. Jones Co., supra, would indicate such a breach occurred. That conclusion was reached and very well addressed in Lakelands, Inc., supra, wherein the Wisconsin court, quoting in part from 3 Washburn, supra, related with approval the law which we believe controls here:

‘The authorities seem to be uniform. . . that if the grantor has no possession of land . . . where he undertakes to convey it by deed and entered into a covenant of seisin therein. . . this covenant is broken at once.’ One can wade in the sea of adjudicated cases in order to discover what is meant by the word “seisin” until he is totally submerged and lost. But it seems clear, as matter of common sense, that a covenant of seisin implies that the covenantor is in possession of the land conveyed and all of it, and that if any one is actually in possession claiming adversely to the covenantor, the covenant of seisin is broken, no matter by what right he so claims, and no matter whether his claim is lawful or unlawful, and in any such case the grantee is as much entitled to recover the cost and expense of ejecting him as he would be entitled to those items in unsuccessfully defending his title if he were himself sued in ejectment. In either case he is endeavoring to vindicate his rights under his warranty. If in its suit the adverse claimant, Ilg, had prevailed the plaintiff would be entitled to his costs and attorney’s fees herein, under nearly all of the adjudicated cases. 14 Am.Jur. sec. 141, p. 574. It would seem strange indeed if it could recover them if it had failed in that suit, but could not recover them if it prevailed.

237 Wis. at 342, 295 N.W. at 926.

We believe the logic and reasoning in Lakelands, Inc. is sound and has unquestionable application to the facts here. While the chancellor held Hill had not fully satisfied the time requirements to support his adverse claim, the chancellor determined that, at the time the Metzlers conveyed the property to the Bosnicks, Hill had fenced 2.7 acres of the property and had run cattle on it for at least three years prior to when this suit was commenced. The Bosnicks were compelled to bring this action to gain possession of the disputed parcel claimed by Hill. Accordingly, the Metzlers are therefore obligated to pay the costs and expenses reasonably incurred by the Bosnicks for their successful efforts in vindicating their rights under the covenant of seisin given them by the Metzlers.

We reverse and remand with directions to award the Bosnicks their costs and expenses, consistent with this opinion.

       While § 50-401 was amended in 1917, the court in Dillahunty had the same relevant statutory provision before it as we do now.

       We note that at least one legal authority raises some doubt as to whether the mere fact that the land is in another’s possession constitutes a breach of the covenant of seisin, but after raising that doubt, it proceeded to cite only cases where such possession was held a breach. 4 H. T. Tiffany, The Law of Real Property § 1000 (1975).