author: Kent J. Rubens, Special Chief Justice. Jill R. Jacoway, Special Justice,

text:
    THE SPICKES BROTHERS PAINTING CONTRACTORS, INC., et al. v. WORTHEN BANK & TRUST COMPANY, N.A.
    88-203
    771 S.W.2d 258
    Supreme Court of Arkansas
    Opinion delivered May 30, 1989

      Bryant, Owen & Rowell, by: William Owen: Hilburn, Calhoon, Harper & Pruniski, Ltd., by: James D. Lawson, for appellant.

      Wright, Lindsey & Jennings; Barrett, Wheatley, Smith & Deacon, for appellee.
   Kent J. Rubens, Special Chief Justice.

On April 26, 1984, Worthen Bank and Trust Company, N.A., (Worthen) lent to Lifesavers Center, Inc., (Lifesavers) the sum of $1,600,000 for the purpose of construction of improvements on lands upon which Lifesavers gave Worthen a mortgage. The mortgage contained the following language:

[Worthen] is firmly bound and obligated to make the $1,600,000.00 loan secured hereby which shall be applied by [Lifesavers] to payment of labor and material costs to be incurred in the construction of improvements on the above described land. Notice is hereby given that the lien of this mortgage shall have priority over any statutory liens on account of labor done and materials furnished in connection with the construction of such improvements.

It is undisputed that Worthen did not lend the full amount for the purpose of construction. The sum of $200,000 was applied at closing for the purpose of paying off the property upon which the improvements were to be constructed. An additional amount, $54,185.98, was disbursed at closing for “closing costs.” Worthen had a representative at the closing and does not dispute that its representative had knowledge that all funds were not to be used for construction. It is undisputed that Worthen recorded its mortgage prior to the beginning of any construction.

After construction progressed there was a default by Lifesavers, and Worthen, acting pursuant to the terms of its note and mortgage, filed suit for foreclosure. Various materialmen, who had properly filed their lien claims, were made parties to the action. A number of those materialmen denied that Worthen’s mortgage was superior to their lien and asserted that Worthen’s knowledge that the full amount of the loan proceeds was not to be applied for the purpose of construction of improvements rendered Worthen’s lien inferior to that of those materialmen.

At trial Worthen conceded that it was not entitled to a lien for the full amount of the loan and stipulated that its lien should be reduced to $1,345,814.02. The Spickes Brothers Painting Contractors and other materialmen (hereafter collectively referred to as Spickes Brothers) claimed that their materialmen’s liens were entitled to superiority over the lien of Worthen and that they, not Worthen, were entitled to the first $254,000 of proceeds from any sale of the mortgaged property.

The lower court concluded that Worthen was entitled to a first lien for $1,345,814.02 and that the liens of Spickes Brothers were inferior to the lien of Worthen to the extent of the first $1,345,814.02. We affirm.

Spickes Brothers claims that the lower court misinterpreted prior decisions of this court or, in the alternative, asks that we reexamine our precedents in light of the actions of Worthen in the instant case. Simply put, Spickes Brothers contends that Worthen’s knowledge that part of the proceeds from the loan was not to be used for the purpose of constructing improvements bars its lien from having priority over the materialmen’s lien claims. We have no hesitancy holding that the chancellor did not misinterpret our prior decisions, and we decline the invitation to overrule precedent for the reasons hereinafter given.

Ark. Code Ann. § 18-44-110 (1987) provides as follows:

The lien for the things or work specified in this subchapter [Mechanic’s and Materialmen’s liens] shall attach to the buildings, erections, or other improvements for which they were furnished or work was done in preference to any prior lien, encumbrance, or mortgage existing upon the land before the buildings . . . were erected or put thereon. However, in all cases where the prior lien, encumbrance, or mortgage was given or executed for the purpose of raising money or funds with which to make the erections, improvements, or buildings, then that lien shall be prior to the lien given by this subchapter. (Italics supplied.)

We have previously construed this statute. In Sebastian Building & Loan Assoc. v. Minten, 181 Ark. 700, 27 S.W.2d 1011 (1930), the materialmen asserted priority of their liens over the lien of a construction money mortgage. The materialmen claimed that the lender should be required to prove that the moneys had been actually expended for improvements and relied upon Chauncey v. Dyke Brothers, 119 F. 1 (8th Cir. 1902), which had construed our statute to that effect. This we declined to do.

There is nothing in the language of the statute to indicate that the Legislature intended that the mortgagee must see to the use, or the application of the money raised by such mortgages. The legislative declaration was that the purpose of the loan should determine its superiority... If the Legislature had intended the use to which the money borrowed was the test of the superiority of the liens, it doubtless would have so declared instead of making the purpose for which the money was borrowed the test.

We note that the legislature has not amended that portion of the statute. Thus our test has been the purpose for which the moneys were lent rather than the use.

The requirements for establishing the construction money mortgagee’s priority over the liens of materialmen are: (1) the mortgage must be executed and recorded before the commencement of the building; (2) the mortgagee must be unequivocally bound to advance money for construction; and (3) the recorded mortgage must show that the mortgagee is unequivocally bound. Dempsey v. McGowan, 291 Ark. 147, 722 S.W.2d 848 (1987). Although we have encountered cases where a portion of the proceeds from the construction money loan was applied other than for the payment for improvements either with or without the knowledge of the mortgagee, we have never ruled that the materialmen had liens superior to the amount of the construction money mortgage lien as finally determined when the above conditions have been met. See, e.g., Dempsey v. McGowan, supra; House v. Scott, 244 Ark. 1075, 429 S.W.2d 108 (1968); First National Bank v. Conway Sheet Metal Co., 244 Ark. 963, 428 S.W.2d 293 (1968); Planters Lumber Co., Inc. v. Wilson Co., Inc., 241 Ark. 1005, 413 S.W.2d 55 (1967); Ashdown Hardware v. Hughes, 223 Ark. 541, 267 S.W.2d 294 (1954).

In our decisions, we have continued to recognize the purpose for which the money is lent to be the controlling test once the other requirements are met. When a situation arises in which the mortgagee has permitted or known that funds were not to be used for the improvements, we have held that the lender cannot claim priority in these amounts. Planters Lumber Co., Inc. v. Wilson Co., Inc., supra. See also, First National Bank v. Conway Sheet Metal Co., supra. We are not unmindful of our statement in House v. Scott, supra, where we did not reach the issue but gave notice that in the future “we will reexamine the Minten case to the extent that it may hold that a lender can knowledgeably disburse construction money for purposes other than construction and still claim priority over the mechanic’s lien.” We have had the opportunity to reexamine our position, and we have declined to change it. In Dempsey v. McGowan, supra, we said:

Some of the funds released by the mortgagee were used by the mortgagor for purposes other than construction; however, when determining priority of liens we consider the purpose for which the funds were supplied rather than the use which was made of the money.

Our decisions do not protect the mortgagee’s lien as to amounts not spent for improvements when the mortgagee knew of the diversion. See, e.g., First National Bank v. Conway Sheet Metal Co., supra. Spickes Brothers has received priority over the amounts that Worthen permitted to be spent on matters not related to the improvements. That ruling provides little more than a Pyrrhic victory for Spickes Brothers because the asset is not worth the amount of the reduced lien awarded Worthen. But Spickes Brothers had the right to determine from the disbursing party how much money had been spent for construction. Review of Mr. Spickes’ testimony indicates the following:

Q. Now when you talked to Mr. Moore [Worthen’s representative] isn’t it true that what you were doing is what you normally do on any job with an owner to make sure that the owner has a financing arrangement?
A. That’s basically correct.
Q. You’re not telling this Court, are you, that Mr. Moore ever told you in that conversation that Worthen Bank would pay you?
A. No.
Q. [W]hen you stopped getting payments in April, 1985, you continued to send bills on a monthly basis to Lifesavers?
A. That’s correct.
Q. You never sent a bill to Worthen Bank?
A. I had no contractual obligation, agreement, with Worthen Bank.

Both parties have favored us with excellent briefs. The argument of Spickes Brothers is appealing, but it properly addresses itself to the legislature and not this court. The material-men’s lien and the construction money mortgage lien are in derogation of common law. Both are creatures of the legislature. The legislature is presumed to know the decisions of the supreme court, and it will not be presumed in construing a statute that the legislature intended to require the court to pass again upon a subject where its intent is not expressed in unmistakable language. Rhodes v. Cannon, 112 Ark. 6, 164 S.W. 752 (1914).

It should be pointed out that our decisions do not permit the construction lender to obtain a lien on any amount not spent for the construction of improvements when the lender diverted the funds for purposes other than construction. First National Bank v. Conway Sheet Metal Co., supra. Worthen has admitted that it is not entitled to a lien for the full amount of the loan, and to the extent Worthen has been penalized for diverting those funds for another purpose.

Because we find that the chancellor correctly interpreted our prior holdings and we decline the invitation of Spickes Brothers to overrule prior decisions of this court, the decree is affirmed.

Affirmed.

Holt, C.J., and Dudley, J., not participating.

Jill R. Jacoway, Special Justice, concurs.

Jill R. Jacoway, Special Justice,

concurring. I concur with the majority’s holding that the trial court’s decision should be affirmed. The statute under which appellants proceeded in this case does not afford them the remedy which they seek. However, my sympathies go to the materialmen. The “penalty” imposed on the lender for making misrepresentations does not, in this instance, seem harsh enough.

Ark. Code Ann. § 18-44-110 (1987) does not afford the materialmen the result they desire. Since the materialmen’s lien law was first put on the books before the turn of the century, it has been recodified three times. Seemingly, each recodification implies legislative investigation and approval. The statute has survived through the years virtually unchanged in spite of how this court has interpreted it.

The statute and the cases interpreting it .allow a lender to openly and fraudulently misrepresent that the purpose of a loan is to be for construction. Even though the lender knows that a portion of the loan is to be used for other purposes, the lender will still enjoy the position of priority over any subsequent lienholders and materialmen to the extent that the funds are used for the stated purpose. Such are the fixed facts of this case.

Worthen knew at the time of the loan closing that a portion of the funds was to be used for purposes other than construction, but did not disclose this information on its mortgage. As punishment for this intentional misstatement, the portion of the funds which was actually used for other purposes loses its priority while that portion used for the stated purpose retains priority above the materialmen. Given the drafting and interpretation of the statute, this result is appropriate. It seems to me, however, to be inequitable to allow one to profit from his lie.

I can understand the materialmen’s reliance on the purpose stated in the bank’s mortgage; i.e., that it was given for construction purposes only. There was no other mortgage of record; there was no indication of any “purchase money” mortgage in the county recorder’s records. Hence, materialmen might well conclude that the owner/developer had invested equity in the land. From a review of the revenue stamps on the recorded deed, the materialmen could have determined the amount of that presumed equity was $200,000.

In my view, construction money mortgagees should be allowed priority to the extent that the funds are actually used for the stated purpose; i.e., construction. However, any construction mortgagee who intentionally misleads others by falsely stating on publicly filed documents that funds will be used for construction, knowing full well that the funds are to be used for other purposes, should not be allowed the benefit and protection of priority. False statements should not be rewarded.

Perhaps a different result would have been available to these materialmen under some other theory, but they are not entitled to recovery under their theory based on the statute as drafted. Foreclosure, being an equitable proceeding, permits the use of such defenses as unclean hands and equitable estoppel. Had the materialmen pled those defenses, the result might have been different.

Worthen was not acting in good faith. Whether this conduct rose to the level of unclean hands is open to question. With the facts before us, Worthen’s actions, although misleading, were not egregious enough for this court to reverse the trial court on this issue sua sponte.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Jerry SUTHERLAND v. STATE of Arkansas
    CR 86-177
    771 S.W.2d 264
    Supreme Court of Arkansas
    Opinion delivered May 30, 1989

      Appellant, pro se.

      Steve Clark, Att’y Gen., by: Theodore Holder, Asst. Att’y Gen., for appellee.
   Per Curiam.

The petitioner Jerry Lee Sutherland was convicted of burglary and theft of property and sentenced as an habitual offender to twenty year terms for each, to be served consecutively. His convictions were affirmed on appeal. Sutherland v. State, 292 Ark. 103, 728 S.W.2d 496 (1987). The petitioner now seeks permission to proceed in circuit court for post-conviction relief pursuant to Rule 37.

The police interviewed the petitioner while investigating the burglary of a gas station where the petitioner had worked until a week before the burglary. A safe had been taken from the station. He denied knowledge of the burglary, but when the police subsequently searched the petitioner’s house and car, drugs were found and the petitioner was arrested. At his arraignment on the drug charge, an attorney was appointed for the petitioner. Four days after his arrest, the police brought the petitioner from his cell and questioned him in the interrogation room about the burglary charge. Sutherland was advised of his rights and signed a waiver. He then confessed to the burglary. He also told the police that the safe was taken and where the tools that were used could be found. The police testified that the tools were found and the state admitted pictures of the car that the petitioner confessed using and the damage it incurred from being loaded with the safe. The confession was used as evidence against the petitioner at his trial for burglary and theft. On appeal, the petitioner’s attorney failed to abstract the confession in the appeal brief so we refused to consider whether it was error to use it as evidence. The petitioner now claims that his attorney was ineffective for failing to abstract the statement.

To prevail on a claim of ineffective assistance of counsel, the petitioner must show first that counsel’s performance was deficient. This requires showing that counsel made errors so serious that counsel was not functioning as the “counsel” guaranteed the petitioner by the sixth amendment. Second, the petitioner must show that the deficient performance prejudiced the defense, which requires showing that counsel’s errors were so serious as to deprive the petitioner of a fair trial. Unless a petitioner makes both showings, it cannot be said that the conviction resulted from a breakdown in the adversary process that renders the result unreliable. A court must indulge in a strong presumption that counsel’s conduct falls within the wide range of reasonable professional assistance. The petitioner must show there is a reasonable probability that, but for counsel’s errors, the factfinder would have had a reasonable doubt respecting guilt, i.e., the decision reached would have been different absent the errors. A reasonable probability is a probability sufficient to undermine confidence in the outcome of the trial. In making a determination on a claim of ineffectiveness, the totality of the evidence before the judge or jury must be considered. Strickland v. Washington, 466 U.S. 668 (1984).

On appeal, prejudice will be presumed to have resulted where counsel failed to raise an issue of such significance that counsel’s performance can be said to have fallen below an objective standard of reasonableness and there was a reasonable probability of a different result but for counsel’s error. Dumond v. State, 294 Ark. 379, 743 S.W.2d 779 (1988).

In Arizona v. Roberson, 486 U.S. 675 (1988), the United States Supreme Court held that invocation of the right to counsel bars further police-initiated interrogation without counsel — not only about the crime under investigation at the time the request is made but also about other unrelated offenses of which the defendant may be suspected. In Bussard v. State, 295 Ark. 72, 747 S.W.2d 71 (1988), we quoted Michigan v. Jackson, 475 U.S. 625 (1986), as follows: “[I]f police initiate interrogation after a defendant’s assertion, at an arraignment or similar proceeding, of his right to counsel, any waiver of the defendant’s right to counsel for that police-initiated interrogation is invalid.”

Since the petitioner had been appointed counsel at his arraignment on the drug charges, his subsequent waiver of his right to counsel, after the police initiated the interrogation with respect to the burglary, was invalid. Therefore, had the petitioner’s counsel abstracted the issue, we would have found the confession inadmissible. Pursuant to Arizona v. Roberson, supra, we hold that his waiver was invalid and his confession inadmissible, as is the evidence got from the statement. We reverse and remand for a new trial.

Reversed and remanded.

Hickman, Hays and Glaze, JJ., dissent based upon Bussard v. State, 295 Ark. 72, 747 S.W.2d 71 (1988).


text:
    James Edward WILLIAMS v. STATE of Arkansas
    RC 89-21
    770 S.W.2d 666
    Supreme Court of Arkansas
    Opinion delivered May 30, 1989

      Bob Keeter, for appellant.
    No objection.
   Per Curiam.

Appellant, James Edward Williams, by his attorney, has filed for a rule on the clerk.

His attorney, Bob Keeter, admits that the failure to file the record in time was due to a mistake on his part.

We find that such an error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See our Per Curiam opinion dated February 5, 1979, In Re: Belated Appeals in Criminal Cases, 265 Ark. 964. A copy of this opinion will be forwarded to the Committee on Professional Conduct.


author: Darrell Hickman, Justice.

text:
    NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG, PENNSYLVANIA v. Annie Louise STANDRIDGE, Individually and as Administratrix for the Estate of Carroll Wayne Standridge, Deceased, et al.
    89-44
    771 S.W.2d 22
    Supreme Court of Arkansas
    Opinion delivered June 5, 1989

      Huckabay, Munson, Rowlett & Tilley, P.A., by: Beverly A. Rowlett, for appellant.

      Young & Finley, by: Dale W. Finley, for appellee.
   Darrell Hickman, Justice.

This is the second appeal concerning the estate of Carroll Wayne Standridge, deceased. In Standridge v. Standridge, 298 Ark. 494, 769 S.W.2d 12 (1989), we decided that Standridge’s marriage to Annie Standridge was not legal because her previous marriage had not been terminated by divorce. That appeal was pending in this court when the probate judge entered the orders questioned in this case. We reverse because the probate judge improperly entered the orders.

Standridge was killed in a motorcycle accident and a wrongful death action was filed in federal court by his second wife, Annie, the administratrix of his estate. A structured settlement was negotiated with appellant, National Union Fire Insurance Company. Annie petitioned the probate court for approval of the settlement. When the appellant became aware that Annie Standridge’s legal status would be challenged, it sought to intervene in the probate action and interplead the settlement money.

The judge agreed, but then the appellant decided it should not intervene because the probate court did not have jurisdiction to permit intervention and interpleader, and did not have jurisdiction to act on the case while the appeal was pending. After a hearing, the probate judge entered judgment in favor of Annie Standridge for $445,071, the settlement amount, plus interest. The court also ordered the appellant to interplead “funds necessary to fully consummate the . . . settlement.”

We need not address all the arguments made by the appellant because the trial court’s orders were improvidently entered. Ark. Code Ann. § 28-1-116(e) (1987) specifically applies to cases like this. It states in part:

An appeal shall stay other proceedings in the probate court except when, and to the extent that, the court finds that no interested person will be prejudiced and by order permits other proceedings to be had.

The statute indicates that a court may not proceed further in a probate case when an appeal has been taken unless it makes a finding that no one will be prejudiced and by order permits additional proceedings. No such finding or order was made in this case, even though it was pointed out to the judge that the appeal had been docketed in the supreme court.

The orders issued in this case were not collateral. They awarded judgment to an administratrix when the issue on appeal concerned the legal status of the administratrix. Therefore, the court did not have authority to issue the orders in question.

Reversed and dismissed.

Purtle, J., not participating.


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

text:
    Robert E. HALES v. STATE of Arkansas
    CR 88-135
    771 S.W.2d 285
    Supreme Court of Arkansas
    Opinion delivered June 5, 1989

      James G. Lingle, P.A., and George D. Oleson, for appellant.

      Steve Clark, Att’y Gen., by: J. Brent Standridge, Asst. Att’y Gen., for appellee.
   Robert H. Dudley, Justice.

The appellant, Robert Hales, a licensed physician, prescribed unneeded controlled substances to four of his patients at their request. He was charged with and convicted of violating the Arkansas Controlled Substances Act. We reverse and dismiss the judgment of conviction because this particular statute is not applicable to a licensed physician.

The Arkansas Controlled Substances Act, specifically Ark. Code Ann. § 5-64-401 (a) (1987), makes it unlawful for any person to manufacture, deliver, or possess with intent to manufacture or deliver a controlled substance. The State contends that the appellant “delivered” controlled substances as defined in the Act by writing prescriptions for other than a true medical purpose. “Delivery” is defined under the Act as “the actual, constructive, or attempted transfer from one person to another of a controlled substance or counterfeit substance in exchange for money or anything of value, . . . .” See Ark. Code Ann. § 5-64-101(f) (1987). The prescribing of a controlled substance by a licensed physician is not the “delivery” of a controlled substance; in fact, prescribing by a licensed physician is protected conduct under the Act. See Ark. Code Ann. § 5-64-308(a), (c), and (d) (1987). If the General Assembly had intended for “prescribing” to come within the definition of “delivery” it would have said so. It certainly knows how to do so. For example, “prescribing” is specifically included in the definition of “dispense” in the Act. Ark. Code Ann. § 5-64-101 (g).

The State contends that the prescribing of a controlled substance by a licensed physician does come within the term “delivery” because that term is described, in part, as the “constructive transfer” of a controlled substance. The argument ignores the cardinal rule of construction of criminal statutes and further ignores the prohibition against vagueness in criminal law.

First, the cardinal rule of construction: “It is well settled that penal statutes are strictly construed with all doubts resolved in favor of the defendant, and nothing is taken as intended which is not clearly expressed.” State v. Scarmardo, 263 Ark. 396, 565 S.W.2d 414 (1978) (citing Austin v. State, 259 Ark. 802, 536 S.W.2d 699 (1976)). The Supreme Court of the United States has written, “Statutes creating crimes are to be strictly construed in favor of the accused. They may not be held to extend to cases not covered by the words used. . . .” United States v. Resnick, 299 U.S. 207 (1936). The statute in question provides that the prohibited act is to “transfer from one person to another. . .in other words, to carry or take from one person to another. Here, the licensed physician wrote a prescription; he did not carry or take, either actually or constructively, a controlled substance from one person to another. Because of the strict construction requirement, we decline to interpret the words “constructive transfer” to include writing a prescription.

Secondly, such an interpretation would violate the rule against vagueness. That rule provides that a citizen is entitled to a fair warning in definite language of the prohibited act. Jordon v. State, 274 Ark. 572, 626 S.W.2d 947 (1982). No licensed physician could be expected to understand from this Act that the writing of a prescription could constitute the delivery of a controlled substance.

We are aware that in Moore v. United States, 423 U.S. 122 (1975), the Supreme Court held that the Federal Controlled Substances Act is applicable to physicians prescribing controlled substances outside the course of professional practice. However, the federal statute is significantly different from ours. The Federal Act contains provisions which require physicians to register and then provides specific prohibitions for physicians. 21 U.S.C. §§ 822, 823, 842, and 843 (1981). These specific provisions dealing with physicians, and other registered persons, show an intent to include these persons within the Federal Act. However, our General Assembly declined to adopt these specific provisions of the Uniform Act, see Ark. Code Ann. § 5-64-301 (1987).

In addition, the Federal Act specifically prohibits any person from manufacturing, distributing, dispensing, or possessing with intent to manufacture, distribute, or dispense a controlled substance. 21 U.S.C. § 841(a)(1) (1981). The Federal Act defines “dispense” to include prescribing. Since the Federal Act prohibits “dispensing,” which by definition includes prescribing, it is clear that it can be applied to physicians. Our legislature, on the other hand, chose to prohibit the “delivery” rather than the “dispensing” of controlled substances. The term “dispense” is only defined in our Act with relation to the protected conduct of physicians writing prescriptions under Ark. Code Ann. § 5-64-308. Thus, the prescribing of controlled substances cannot be a violation of our Controlled Substances Act.

Some other state appellate courts have held that a physician delivered a controlled substance within the meaning of their particular statute by prescribing it. See People v. Cliche, 111 Ill. App. 3d 593, 444 N.E.2d 649 (1982); Santoscoy v. State, 596 S.W.2d 896 (Tex. Crim. App. 1980); People v. Alford, 405 Mich. 570, 275 N.W.2d 484 (1979); and State v. Vinson, 298 So. 2d 505 (Fla. Dist. Ct. App. 1974). On the other hand, some courts have reached the same result we do. See, e.g., Evers v. State, 434 So. 2d 813 (Ala. 1983); People v. Lipton, 445 N.Y.S.2d 430 (1981); State v. Best, 292 N.C. 294, 233 S.E.2d 544 (1977); Baker v. Superior Court of Los Angeles County, 100 Cal. Rptr. 771 (1972).

The appellant’s conduct would have been more appropriately addressed under our Uniform Narcotic Drug Act, Ark. Code Ann. §§ 20-64-201 to -226 (1987), which was enacted with this specific type of conduct in mind. This Act specifically provides that it is unlawful for a physician to prescribe, administer, or dispense any narcotic drug other than in good faith and in the course of his professional practice. See Ark. Code Ann. § 20-64-202 and § 20-64-207 (1987). The Act provides for a fine of not more than $2,000 and imprisonment of two to five years for any violation of the Act. See Ark. Code Ann. § 20-64-220 (1987).

Reversed and dismissed.

Hickman, Hays, and Glaze, JJ., dissent.

Steele Hays, Justice,

dissenting. I concur entirely in the dissenting opinion of Justice Glaze, in which I join. The Uniform Controlled Substances Act defines “delivery” as including the “constructive transfer” of drugs. Ark. Code Ann. § 5-64-101 (1987). I submit that when a practicing physician repeatedly prescribes drugs for individuals who avowedly have no medical need and who tell him they want the drugs to sell, or for a husband who drives a truck, or for a boyfriend, those are palpably constructive transfers and are a violation of our statute. A paramount purpose of uniform acts is to give consistency and uniformity to the law. Yet the majority rejects an interpretation of our act in a manner consistent with that of other courts, preferring a narrow interpretation that strains both common usage and common sense. I respectfully dissent.

Hickman, J., and Glaze, J., join this dissent.

Tom Glaze, Justice,

dissenting. The majority court construes the Arkansas Controlled Substances Act so as to exclude from its proscriptions physicians who have unprofessionally and unlawfully prescribed a controlled substance to his or her patient. In doing so, the court reasons that the Act makes it unlawful for any person to deliver — rather than dispense or prescribe — controlled substances. Thus, even though the state prosecuting attorney showed at trial that the appellant, a physician, prescribed controlled drugs to patients who had no medical need for them (one patient had told the appellant that she planned to sell the drugs), this court’s interpretation of the Act precludes the appellant’s conviction. The court’s holding is contrary to the strong weight of authority.

In fact, courts in other jurisdictions with Controlled Substances Acts similar to Arkansas’s have held that a physician who dispensed controlled substances by prescriptions not in the regular course of professional treatment can be prosecuted for illegal delivery under the Controlled Substances Act. State v. Vinson, 298 So.2d 505 (Fla. App. 1974) (court held delivery includes the actual, constructive, or attempted transfer from one person to another of a controlled substance, whether or not there is an agency relationship, and the unlawful issuance of a prescription constitutes a delivery under the Florida Comprehensive Drug Abuse Prevention and Control Act); People v. Cliche, 111 Ill. App. 3d 593, 444 N.E.2d 649 (1982) (a medical doctor who dispensed controlled substances by prescription not in regular course of professional treatment can be prosecuted for illegal delivery under the Illinois Controlled Substances Act); see also People v. Chua, 156 Ill. App. 3d 187, 509 N.E.2d 533 (1987); People v. Alford, 405 Mich. 570, 275 N.W.2d 484 (1979) (physician dispensing controlled substances not in the course of professional practice or research can be prosecuted for unlawful delivery of a controlled substance under the Michigan Controlled Substances Act); Santoscoy v. State, 596 S.W.2d 896 (Tex. Crim. App. 1980) (court held physician who illegally dispenses or prescribes controlled substances violates the Texas Controlled Substances Act that makes it unlawful to knowingly or intentionally deliver a controlled substance); see also State v. Harris, 564 S.W.2d 561 (Mo. Ct. App. 1978); State v. Vaccaro, 142 N.J. Super. 167, 361 A.2d 47 (1976); contra State v. Best, 292 N.C. 294, 233 S.E.2d 544 (1977).

Clearly, a physician who is honest and ethical, and dispenses controlled drugs in a good faith effort to treat and cure patients, has no fear of the criminal sanctions under our Controlled Substances Act. However, a person’s mere status as a licensed physician who may dispense or prescribe prohibited drugs does not give that doctor the blanket right to abuse his authority and profession by dispensing drugs without relation to his sworn professional obligations. Cf. State v. Vacarro, 142 N.J. Super. at 173, 361 A.2d at 50-51; see also United States v. Moore, 423 U.S. 122 (1975).

In Moore, the Supreme Court held that registered physicians “can be prosecuted under sect. 841 [of the Federal Controlled Substances Act] when their activities fall outside the usual course of professional practice.” The Court noted further that “the legislative history indicates that Congress was concerned with the nature of the transaction rather than with the status of the defendant.” The Federal Act parallels Arkansas’s Act, which results from uniform law drafted to achieve uniformity between the several states and those of the federal government. See Uniformed Controlled Substances Act: Commissioners Prefatory Note, 9 U.L.A. 2 (1988).

As previously stated, the great weight of authority supports the conclusion that a physician who writes prescriptions outside the course of his professional practice is subject to prosecution under the Controlled Substances Act. In the present case, the' majority does not even suggest that the appellant had acted within the course of his professional practice when he prescribed prohibited drugs to his patients. In fact, the record solidly supports the conclusion that the appellant acted improperly when issuing the prescriptions that led to the charges filed against him under the Act.

The majority opinion surmises that it would have been more appropriate for the appellant to have been charged under the Uniform Narcotic Drug Act, which makes it unlawful for a physician to prescribe or administer any narcotic drug other than in good faith and in the course of his professional practice. See Ark. Code Ann. §§ 20-64-202 and 20-64-207 (1987). The Narcotic Drug Act provides for penalties that are substantially less than those provided under the Arkansas Controlled Substances Act. Specifically, the Narcotic Act provides for a fine of not more than $2,000 and imprisonment of not less than two nor more than five years, while the Controlled Substances Act provides that convictions under the Act are class Y and class C felonies, which have a range of fines from $10,000 to $250,000 and terms of imprisonment from three years to forty years, or life.

Clearly, the legislature did not envision the Narcotics Act to be the sole Act under which a physician could be charged; evidence of this fact can be seen in the severity of the penalties available under the respective Acts. It is inconceivable that a physician could receive no more than a $2,000 fine and five years imprisonment for a major drug transaction(s) carried out under the guise of prescriptions. In other words, the Narcotics Act fails to deal with physicians who are also drug pushers, and in this vein, I would submit that penal statutes should not be interpreted so strictly so as to reach absurd consequences which are clearly contrary to legislative intent. Russell v. State, 295 Ark. 619, 751 S.W.2d 334 (1988). Furthermore, in Miller v. State, 273 Ark. 508, 621 S.W.2d 482 (1981), this court stated that where two statutes authorize different ranges of punishment for the same conduct, the prosecutor may decide to proceed under the more severe statute.

In sum, this case involves a question of first impression in construing the Arkansas Controlled Substances Act and unquestionably this court could affirm the appellant’s convictions if we followed the decisions rendered on this issue by courts in most other jurisdictions. The underlying rationale given by these courts that have allowed physicians to be charged and convicted for improper prescriptions under controlled substances laws that prohibit the unlawful delivery of such drugs compels me to adhere to the same rationale when interpreting Arkansas’s Act on this same subject. Therefore, I would affirm the lower court’s conviction judgment against the appellant.

Hickman and Hays, JJ., join this dissent.

       The Federal Act makes it unlawful for any person knowingly or intentionally to dispense a controlled substance. However, as already discussed, most state jurisdictions have construed dispensing or the prescribing of drugs to mean the delivery of controlled drugs.


author: Steele Hays Justice.

text:
    Jim C. PLEDGER, Commissioner of Revenues v. ETHYL CORPORATION
    88-321
    771 S.W.2d 24
    Supreme Court of Arkansas
    Opinion delivered June 5, 1989
    [Rehearing denied July 3, 1989.]

      Timothy J. Leathers, John Theis, Joe Morphew, Robert L. Jones, William E. Keadle, Ricky L. Pruett, and Cora L. Gentry, by: Philip Raia, for appellant.

      Crumpler, O’Conner & Wynne, by: William J. Wynne, for appellee.
   Steele Hays Justice.

Arkansas levies a severance tax on each producer of natural resources. The rate of tax on oil is 5 % of the market value at the time and place of severance, unless the average monthly production of oil is ten barrels or less per day per well. In the latter event the rate is 4 %. The lower rate is intended to maximize the recovery of oil, including the stimulation of secondary recovery efforts where oil production is only marginally economical.

The appellant, after auditing the appellee’s records for July 1984 through June 1986, determined that an additional tax of $50,053.18 was owed, plus $4,127.98 in interest and a $5,005.33 penalty. The additional tax assessment was based upon a rate of 5 %, rather than the 4 % rate as calculated by the appellee. The appellee counted the injection wells and inactive wells in computing the average oil production per well per day because these wells are utilized in secondary recovery efforts to obtain oil from active, producing wells. By counting the injection and inactive wells, the average daily production per well resulted in ten barrels or less per day, qualifying for the 4% severance tax.

After unsuccessfully exhausting the administrative remedies protesting the additional tax, the appellee filed suit pursuant to Ark. Code Ann. §26-18-507 (1987), claiming a refund for the erroneous and unlawful assessment of taxes. The chancellor held that injection wells should be counted in determining the daily production per well per month for severance tax purposes. Additionally, the chancellor held that wells classified as inactive wells which are in fact active for any part of the calendar month should be counted in calculating the daily production per well. Thus, the chancellor found that the appellee was entitled to a full refund.

On appeal, the issue is whether injection wells and inactive wells, both used as part of secondary recovery efforts in a unitized oil field to ensure the production of oil, may be counted for purposes of calculating the average rate of production of oil when imposing the severance tax. This case requires interpretation of Ark. Code Ann. § 26-58-111(6) (1987), which states:

The severance tax is to be predicated upon the quantity severed and at the following rates: ***** (6) On oil, five percent (5 %) of the market value at time and point of severance. However, whenever the production of oil from a well which is measured separately or from a group of wells which is measured separately averages ten (10) barrels or less per well per day during any calendar month, the privilege or license tax on oil produced from that well or group of wells during that month shall be computed at the rate of four percent (4 %) of the market value at time and point of severance. The director shall have the power to promulgate such reasonable rules and regulations as shall be necessary to effectively enforce the foregoing provisions. [Our emphasis.]

Although injection wells are necessary in the production of oil from a group of wells on a unitized field, the appellant contends that this statute should be interpreted so that only those wells which produce oil may be counted in calculating the average rate of production per well per month. We agree. Recognizing the cooperative efforts and the direct relationship between injection wells and oil producing wells on a unitized field, nevertheless, we believe that the intent of the Legislature in passing this statute was to allow only oil producing wells to be counted in calculating production per well per day for any calendar month.

The first rule to be applied in statutory construction is to give the words in the statute their usual and ordinary meaning. If there is no ambiguity we give a statute effect just as it reads. Woodruff v. Shockley, 297 Ark. 595, 764 S.W.2d 431 (1989); Chandler v. Perry-Casa Public Schools, 286 Ark. 170, 690 S.W.2d 349 (1985). Giving the words and the juxtaposition of the words in the statute their usual, ordinary meaning, the phrase, “production of oil from a well or from a group of wells” plainly means oil producing wells. Therefore, in order for wells to be counted in the production per day figure, the wells must be oil producing wells. Testimony from Ms. Delores Davis, auditor for severance taxes, revealed a lack of ambiguity concerning this statute as “none of the approximately 71 other units had ever tried to use injection wells in their well count,” and thus there had not been a need for the Commissioner to promulgate rules and regulations concerning the computation of the oil severance tax.

Furthermore, Ark. Code Ann. § 26-58-111(6) (1987) provides a one percent (1 %) exemption from severance tax for those wells which average ten (10) barrels or less per well per day during any calendar month. These wells pay only a 4% tax rate, while all other wells are assessed tax at a 5 % rate. There is a presumption in favor of taxing power of the State. Ragland v. General Tire and Rubber Co., 297 Ark 394, 763 S.W.2d 70 (1989). Any tax exemption provision must be strictly construed against exemption, and to doubt is to deny the exemption. Ragland v. Dumas, 292 Ark. 515, 732 S.W.2d 119 (1987); Qualls, Director v. Georgia-Pacific Corp., 269 Ark. 426, 602 S.W.2d 646 (1980).

REVERSED.


author: David Newbern, Justice.

text:
    Larry LILLY, Peggy Hendricks, and Steve Westerfield v. John C. EARL, Probate Judge
    89-40
    771 S.W.2d 277
    Supreme Court of Arkansas
    Opinion delivered June 5, 1989

      Tami Harlan, Ass’t Gen. Counsel, Dep’t of Human Services, for appellant.

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

This is an appeal from criminal contempt citations levied by Probate Judge John C. Earl, the appellee, against the appellants, Larry Lilly, Peggy Hendricks, and Steve Westerfield. We reverse and dismiss because there was insufficient evidence to hold Lilly, Hendricks, and Westerfield in criminal contempt and because they were not accorded the fair trial safeguards to which criminal contempt defendants are entitled, such as notice of the charges against them.

Donna Shipman is one of seven siblings whose mother died and who were placed in the Southern Christian Children’s Home in Morrilton by Perry County authorities in 1971. For most of the time prior to the first hearing in this case in 1987 Donna lived in the home of Mr. and Mrs. Boudra who had been social workers at the Southern Christian Children’s Home.

The Department of Human Services (DHS) appeared by its attorney, Mr. Westerfield, before the probate court on March 20, 1987, to present a petition to change custody of Ms. Shipman from the Southern Christian Children’s Home to Ms. Shipman’s older sister, Debbie Lombardo, who lived in Chicago. Ms. Shipman was then 17 years old and a junior at Morrilton High School. Although no witnesses were sworn, a recorded discussion was held among the court, Mr. Westerfield, Mr. Boudra, Ms. Shipman, and an unnamed “gentleman in the audience” who stated he was a social worker from the Southern Christian Children’s Home. The only portion of the discussion abstracted is the judge’s remarks made toward the end of the hearing:

I am going to put this child in your [apparently Mr. and Mrs. Boudra’s] custody and order Human Services to provide protective services for the child’s specific medical and dental or orthodontic needs, and the future travel expenses for her to Chicago to visit with her nearest blood relatives. At this time I am not approving her moving from the State, pending the investigation of the sister’s home in Chicago, and pending further hearing of this to see what you think is best to be done regarding her last year in school, and pending a hearing for Donna for what she thinks she wants to do for her last year in high school and, more particularly, why she wants to do whatever she wants to do. Get her up there and back. I think she wants to go up there and spend some time to see what she thinks about it, and if she gets up there and calls and, six weeks go by and she is tired of being up there, or they are not treating her right and she hadn’t eaten in a week, then you bring her back down here, or be sure that I don’t find out that you don’t.

We note that the abstractor erroneously abstracted the court’s remarks in one particular. The record shows the court approved the visit “pending investigation of the sisters’ homes” rather than “sister’s home.”

The order entered by the court on April 4,1987, as the result of the March 20, 1987 hearing, as abstracted, provided:

(1) The Juvenile Court of Perry County entered an Order placing custody of Donna Shipman with the Southern Christian Children’s Home.
(2) The child now desires to live with family in Chicago, Illinois.
(3) Southern Christian Children’s Home approves of the request.
(4) Donna Shipman has been residing continuously in excess of one year at the home of Edwin and Gerald [Gerrell] Boudra.
(5) Donna Shipman does not have a legal guardian, and resides outside the care and control of previously appointed custodians; Donna Shipman should be placed in the care and custody of Edwin and Gerald [Gerrell] Boudra.
(6) Arkansas Department of Human Services should proceed promptly to request a home study of the sisters of Donna Shipman, namely Debbie Lombardo and Tammy Shipman; such request should be expedited together with periodic inquiries to ensure prompt response.
(7) Subject to receipt of a favorable report on at least one of the homes, the child shall be permitted to visit the home of said sister or sisters with a request and direction of the State of Illinois for monitoring the situation.
(8) Arkansas Department of Human Services shall arrange for, and bear the expense of travel to Chicago, Illinois, and return at the conclusion of the summer or sooner upon election of Donna Shipman.
(9) Arkansas Department of Human Services is directed to maintain a protective service case.
(10) Arkansas Department of Human Services shall provide all reasonable available services.
(11) The above placement is the least restrictive appropriate alternative.
(12) The whereabouts of Donnie Ray Shipman, the natural father, should be ascertained with notice to him of these proceedings.
(13) The court retains jurisdiction.
(14) This matter should be reviewed during the month of August, 1988.
It is so ordered the 2nd day of April, 1987.

Ms. Shipman went to Chicago and returned. A further hearing was held on August 21, 1987. Ms. Hendrix testified she was a DHS supervisor familiar with the case. She stated that Ms. Shipman went to Chicago on June 22, 1987, and returned on July 25 of that year, and that DHS was maintaining protective services in the case while custody remained with the Boudras. In response to questions from the bench, Ms. Hendrix stated that Ms. Shipman had not had a physical examination but that she had an orthodontic report from a Dr. Vaughan.

Mr. Lilly testified that he is a Perry County social worker and that he had spoken with Illinois authorities who, at his request, had performed a home study on the home of Debbie Lombardo. He was assured the home would be sufficiently stable to allow Ms. Shipman to visit.

Mr. Boudra testified that after the March hearing Ms. Shipman went to a doctor for a “medical checkup ... not a complete physical,” and that she had seen a dentist since her return from Chicago.

Ms. Shipman testified about going to the dentist, not an orthodontist, and about having seen a doctor after her return from Chicago. She said the dentist had told her she did not need any orthodontic care, but she thought she needed braces. She also testified that during her stay in Chicago she had a falling out with her sister, Debbie, in whose home she was staying, and thereafter she stayed with the other sister, Tammy.

At the conclusion of the hearing, the judge read to Mr. Westerfield the portion of his earlier order requiring home studies be done on the homes of both Tammy Shipman and Debbie Lombardo and “[t]hat subject to receipt of a favorable report on at least one of the homes . . . said child shall be permitted to visit. . . .” The judge then noted that only one home study had been performed. Mr. Westerfield responded that when it was learned that Tammy Shipman was single no further study was done on her home. The court then noted that the written home study report done by the Illinois authorities stated that Debbie Lombardo was living in a “common law” relationship with Mr. Lombardo, thus the fact that Tammy was single was hardly an excuse for not doing a study on both homes, since Debbie was technically single too.

The judge then inquired of Mr. Westerfield why the medical checkup and orthodontic checkup “as ordered in the Court’s Order that you presented” were not completed. Mr. Westerfield replied “I apparently didn’t have the specific notation in the listing that I made to help prepare the court order that was entered.”

The court then ruled from the bench that DHS had not complied with the previous order which required that home studies be performed with respect to both sisters. Further rulings were that Ms. Hendrix and Mr. Lilly were in contempt and were to be incarcerated in the Perry County jail until they purged themselves of contempt which Ms. Hendrix could do by paying $25, and Mr. Lilly by paying $50, to the clerk or sheriff. Mr. Westerfield was also held in contempt for failure to include in the precedent for the court’s earlier order the court’s specific directions for obtaining physical and orthodontic examinations for Ms. Shipman. Mr. Westerfield was ordered to jail until he paid $25. Mr. Westerfield voiced his objections to the contempt rulings.

Mr. Westerfield prepared a proposed order reflecting the court’s rulings. The proposed order included the contempt holdings. The court did not adopt the proposed order but entered two separate orders apparently prepared by the court. An order entered August 28, 1987, contained the contempt rulings. An order entered September 4, 1987, stated that DHS had not provided “appropriate” services for Ms. Shipman and “should offer all reasonable appropriate services.”

DHS appealed to the Arkansas Court of Appeals. The contempt citations were argued as a part of that appeal, but the court of appeals properly declined to review them as Lilly, Hendrix, and Westerfield were not parties to the appeal. The court of appeals declined to reverse the order with respect to DHS because the trial court had done exactly that which was asked by DHS by continuing custody of Ms. Shipman in the Boudras and providing protective services for her. Arkansas Dept. of Human Services v. Shipman, 25 Ark. App. 247, 756 S.W.2d 930 (1988).

The appeal of the contempt citation was not taken in a timely manner; however, upon motion of Lilly, Hendrix, and Westerfield, this court permitted a belated appeal pursuant to Ark. R. Crim. P. 36.9. The motion contended Lilly and Hendrix were represented by counsel (Westerfield) who was ineffective in not appealing the contempt order. It was also contended that Westerfield was not given notice of the contempt order.

1. Belated appeal

On behalf of Judge Earl the attorney general argues no notice was given of the motion for belated appeal. The appellants dispute that contention. It is contended this court improperly granted the motion and thus should not address the merits of the case. The attorney general contends that Lilly and Hendrix were not represented by Westerfield but were merely witnesses at the hearing and thus in no position to claim ineffectiveness of counsel. It is also contended that Westerfield had a duty to keep up with documents filed in the case.

Pursuant to Rule 36.9. the supreme court determines “good reason” for belated appeal. After Westerfield’s proposed order containing the contempt citations was rejected by the court, the record shows he received the court’s September 4,1987, order which contained nothing about the contempt citations. He then sought unsuccessfully to have the order amended to include the contempt citations. The attorney general does not deny Westerfield’s contention that he was not served with the August 28, 1987, order which contained the contempt citations. We recognized at the time we granted the belated appeal, as we do now, that an attorney has a duty to remain abreast of the progress of a case in which he is involved, Jetton v. Faucett, 264 Ark. 69, 568 S.W.2d 42 (1978). We again conclude, however, that there was, in the circumstances presented here, good reason for the belated appeal. Westerfield would have had no reason to suspect that there was a separate contempt order resulting from the March 20, 1987, hearing. It is apparent from the record that, when he objected during the hearing to the contempt citations, he was doing so on behalf of himself and the other DHS employees. Nor does the attorney general argue that Judge Earl is unfairly prejudiced by permitting the appeal with respect to Lilly and Hendrix.

2. Sufficiency of the evidence

In its opinion, referred to earlier, the court of appeals “reluctantly” concluded that it could not review the propriety of the contempt citations, and stated that “the action of the trial court was inexcusable and could not withstand appellate review. . . .” 25 Ark. App. at 252, 756 S.W.2d at 933. We agree.

The appellants have abstracted the March 20,1987, hearing only to the extent of showing the operative remarks of Judge Earl. The attorney general has not supplemented the abstract. Nothing in those remarks could be interpreted as requiring Lilly or Hendrix to provide a complete physical and orthodontic examination for Ms. Shipman, and there is nothing there to show Westerfield was directed to include such items in his proposal of an order to the court. While it was not necessary for us to do so, we have examined the record and found it could easily have been concluded from Judge Earl’s remarks that he intended the physical and orthodontic examination be conducted before a transfer of custody to one of the Chicago sisters rather than prior to a visit.

The order resulting from the March 20, 1987, hearing contained nothing about physical or orthodontic examinations. The order did state that DHS “should proceed promptly to request a home study of the sisters of Donna Shipman, namely Debbie Lombardo and Tammy Shipman; . . . .”

Mr. Lilly testified at the August 21, 1987, hearing that he spoke with Illinois authorities and was informed that they could not produce a written home study report within the required time. He received permission through interstate compact authorities to obtain a verbal report. He testified he had “recently” received the written report.

At the close of the hearing, the court noted that his earlier order had specified that studies “be done” on the homes of both sisters. Mr. Westerfield responded that once it was determined that Tammy Shipman was single “we determined there was no necessity to go farther with the study on her home.”

The attorney general concedes these were criminal contempt citations. As we wrote in Wood v. Goodson, 253 Ark. 196, 485 S.W.2d 213 (1972), “the general rule is that before a person may be held in contempt for violating a court order, the order must be in definite terms as to the duties thereby imposed upon him and the command must be expressed rather than implied.” 253 Ark. 249, 704 S.W.2d 614 (1986). There is nothing in either the court’s remarks at the March 20, 1987, hearing, as abstracted, or in its order based on that hearing to require DHS or Mr. Lilly or Ms. Hendrix or Mr.-Westerfield to obtain a complete physical or orthodontic examination for Ms. Shipman. No evidence whatever was presented to show that they did not “proceed promptly to request” home studies on the homes of the two sisters. To the contrary, the only information before the court on this point was the statement of Mr. Westerfield that the investigation proceeded to the point of determining that Tammy Shipman was a single person, and it was terminated as to her at that point because it was felt that a more stable environment would be required.

We review criminal contempt citations to determine if there is substantial evidence to support the finding of the trial court. Warren v. Robinson, 288 Ark. 249, 704 S.W.2d 614 (1986). Given the terms of the trial court’s remarks and the resulting order, we find no substantial evidence of a violation.

3. Lack of notice

While we need go no further than pointing out that there was no substantial evidence to show that there was a violation of a court order specific enough to constitute a command, we take this opportunity again to refer to the requirements to which courts must adhere in levying criminal contempt citations.

At the time the court made its decision that Lilly, Hendrix, and Westerfield were in contempt, none of them had received notice that he or she was charged with contempt. We have held, most recently in Fitzhugh v. State, 296 Ark. 137, 752 S.W.2d 275 (1988), that “criminal penalties may not be imposed on an alleged contemner who had not been afforded the protections that the Constitution requires of criminal proceedings,” citing Hicks v. Feiock, 485 U.S. 624 (1988). We held in Fitzhugh that those protections include notice of the charges.

Reversed and dismissed.


author: Tom Glaze, Justice.

text:
    Lloyd McELROY and Edna McElroy v. John C. BENEFIELD
    88-278
    771 S.W.2d 274
    Supreme Court of Arkansas
    Opinion delivered June 5, 1989

      David Hodges and Lohnes T. Tiner, for appellant.

      Matthews, Sanders, Liles & Sayes, by: Marci Talbot Liles, for appellee.
   Tom Glaze, Justice.

This tort action arises out of an automobile accident that occurred near Wynne, Arkansas. Appellants were in their pickup truck and had stopped on a private drive alongside highway 284. They entered the highway by crossing the highway’s eastbound lane to turn left to go west when their truck collided with the appellee’s Corvette, which was traveling east. As a result of the collision, appellants filed suit, and the appellee counterclaimed. The jury found against appellants and awarded appellee $20,000 on his counterclaim. In this appeal, appellants contend that the trial court erred (1) in permitting an accident reconstruction expert to testify and (2) in giving AMI 614 to the jury. Appellants also claim the $20,000 verdict in favor of the appellee is not supported by substantial evidence. We affirm.

Appellants first argue that the trial court erred in denying their motion in limine to exclude the testimony of the reconstruction expert, James Larry Williams. A discussion of the pertinent evidence in this matter is necessary when considering the admissibility of Williams’s testimony.

The respective parties’ versions in describing the collision were at extreme odds. The appellants testified that they had driven onto the highway, turned left into its westbound lane, and were actually heading west when the appellee’s vehicle, heading east, came over a crest in the highway. Appellants claimed that the appellee’s car was going 70 miles an hour and went airborne before the collision. In contrast, the appellee and his witness testified that appellee’s car was going approximately 45 miles an hour prior to the accident, and denied that the car went airborne. Appellee said that the appellants’ truck had stopped at the edge of the highway and had pulled out in front of him after appellee drove his car to the left so as to avoid colliding with the truck. The appellants called the officer who investigated the accident as their witness and after testifying to his physical findings, the officer was allowed to state (over the appellee’s objections) his opinion that the appellee’s vehicle had been traveling at a high rate of speed prior to the accident.

The appellee, in his attempt to rebut the officer’s testimony, called Mr. Williams as an accident reconstruction expert. While the appellants requested that such testimony be excluded, Williams’s qualifications were not otherwise challenged. Williams testified that, based upon 108 feet of skid marks left by appellee’s vehicle, the displacement of appellants’ vehicle of about ten feet from the point of impact, and the damage done to both vehicles, appellee’s vehicle, at most, was traveling at around 50 or 51 miles an hour. The minimum speed, Williams said, would have been in the mid-forties. Williams also addressed appellants’ assertion that the appellee’s car was airborne when his vehicle came over the crest of the road. Williams opined that, based on the grade of the hill of 2 %, appellee’s vehicle would have been going 600 miles an hour in order for it to be two or three feet in the air as described by the appellants.

While we have held that attempts to reconstruct accidents by means of expert testimony are generally viewed with disfavor, we recently noted that the general rule of not favoring reconstruction of accidents by expert testimony has been liberalized since the enactment of the Uniform Rules of Evidence. Drope v. Owens, 298 Ark. 69, 765 S.W.2d 8 (1989). The general test for admissibility of expert testimony is whether the testimony will aid the trier of fact in understanding the evidence or in determining a fact issue. Id:, see also B. & J. Byers Trucking, Inc. v. Robinson, 281 Ark. 442, 665 S.W.2d 258 (1984). The determination of an expert witness’s qualifications is a matter lying within the trial judge’s discretion, to be upheld on appeal absent an abuse of that discretion. Id.

We are unable to say that the trial court abused its discretion. The investigating officer testified that he was no accident reconstruction expert, he had no experience in performing a coefficient of friction test, nor did he know anything about the “crush factor” of a Corvette. He conceded it would be very difficult to determine the exact speed of the vehicles, but he nevertheless suggested that the appellee’s vehicle was traveling fast or at a high rate of speed prior to the accident. Such testimony, at least in some degree, supported the appellants’ testimony that appellee’s vehicle may have been traveling so fast it went airborne prior to the accident. Without detailing all of Williams’s testimony, he recounted the officer’s physical findings at the time of the accident and submitted additional measurements of his own. For example, he related the distance between the crest in the highway to the point at which the appellants’ truck entered it was 253 feet. From his calculations, Williams not only gauged appellee’s car was doing 28 miles an hour at the time of the collision, he also opined it was impossible for appellee’s car to have gone airborne after coming over the crest of the highway. We have no difficulty in deciding that Williams’s testimony served to aid the jury in its understanding of the evidence in this cause.

Appellants next argue that the trial court erred in giving AMI 614, the instruction on sudden emergency. Appellants basically contend that there was no evidence of a sudden emergency. AMI 614 provides as follows:

A person who is suddenly and unexpectedly confronted with danger to himself or others not caused by his own negligence is not required to use the same judgment that is required of him in calmer and more deliberate moments. He is required to use only the care that a reasonably careful person would use in the same situation.

The basis of the sudden emergency instruction is that the driver be in a stressful situation which dictates a quick decision as to possible courses of conduct. Bardwell v. McLaughlin, 257 Ark. 782, 520 S.W.2d 277 (1975). Thus, before a person is entitled to an instruction on sudden emergency, he must have been aware of the danger and have perceived the emergency and acted in accordance with the stress caused by the danger. Transit Homes, Inc. v. Bellamy, 282 Ark. 453, 671 S.W.2d 153 (1984). We find ample support in the record for the conclusion that appellee was confronted with a sudden emergency.

Appellee testified that as he came over the rise in the road, he saw appellants’ vehicle sitting at the edge of the highway. He stated that he decided to ease over to avoid hitting appellants’ car and that when he did so, appellants pulled out in front of him. Appellee testified that he then slammed on his brakes, causing his vehicle to skid some 108 feet to the point of impact. The evidence clearly supports appellee’s contention that he had time to make an emergency decision between alternative courses of action, viz., he either could have swerved to the right or he could have applied his brakes. If appellee had swerved right, the accident most likely would have been avoided. Instead, he applied his brakes, causing his car to continue straight, and due to a curve in the road, his vehicle entered the westbound lane where it hit the appellants’ truck. Based upon these facts, we find no error in the trial court’s giving AMI 614.

For their final point for reversal, appellants argue that the verdict in favor of the appellee is not supported by substantial evidence. Again, we must disagree.

Appellee sought damages in the sum of $45,000, but the jury awarded him $20,000. The total estimate to repair appellee’s vehicle was $9,897.13. Appellee also incurred $1,074.72 in medical bills, and as a result of his injuries he missed one week of work which amounted to approximately $400. Additionally, there was substantial evidence that appellee incurred pain and suffering from his right kneecap having been “pried off the knee.” That injury required some twenty stitches. Appellee also had to have skin grafts requiring extensive treatment to repair a previously burned area on his leg that was reinjured in the accident.

There is no definite and satisfactory rule to measure compensation for pain and suffering and the amount of damages must depend on the circumstances of each particular case. Hamby v. Haskins, 275 Ark. 385, 630 S.W.2d 37 (1982). Compensation for pain and suffering must be left to the sound discretion of a trial jury and the conclusion reached by it should not be disturbed unless the award is clearly excessive. Id. See also Morrison v. Lowe, 274 Ark. 358, 625 S.W.2d 452 (1981). We cannot say the award of damages in this case is clearly excessive.

We find no error and, therefore, affirm.


author: Ronald E. Bumpass,

text:
    Danny Carl STOBAUGH, et al. v. TWIN CITY BANK
    88-166
    771 S.W.2d 282
    Supreme Court of Arkansas
    Opinion delivered June 5, 1989

      Yancey & Nichols, P.A., by: Mark W. Nichols, for appellant Danny Carl Stobaugh.

      Ralph M. Cloar, Jr., for appellants Hunter Gammill, et al.

      Robert L. Brown, P.A. and Arnold, Grobmeyer & Haley, by: Robert R. Ross, for appellants W. Bigelow Robinson III, et al.

      Gill Law Firm, for appellants E. Stewart Allen, Claude B. Carpenter and Barbara Carpenter, James D. Gattis and Janet G. Gattis, Floyd R. McCann, and Sherman R. Moore.
   Ronald E. Bumpass,

Special Chief Justice. This is an appeal of a decision granting appellee’s Motion for Summary Judgment. The case was brought by a creditor of the limited partnerships to enforce individual capital contribution promissory notes subsequent to default by each of the limited partners. While separate actions were brought against limited partnership, the action was consolidated by the chancellor, argued, and decided on common facts.

Memphis Advisory Group, Inc. (“MAG”), a Tennessee corporation, served as the sole general partner to four limited partnerships formed in Arkansas. The Certificate and Agreement of Limited Partnership was filed with the Secretary of the State of Arkansas on February 18,1983. On September 10,1984, Community Bank of Germantown, Tennessee (“CBG”) loaned MAG approximately $2,000,000.00 for working capital for the four partnerships: Lagniappe Lafayette Limited Partnership, Lagniappe Columbus Limited Partnership, Lagniappe Wichita Limited Partnership, and Lagniappe Newport News Limited Partnership. Each of the limited partnerships held individual promissory notes for capital contribution from the limited partners. The amount of each limited partner’s capital contribution promised to be paid to the partnership was contained in the Certificate publicly filed with the Secretary of State. MAG assigned the capital contribution notes to CBG as collateral for the guaranty to repay the loan.

On September 11,1984, CBG sold the four loans made to the partnerships to Twin City Bank of North Little Rock (“TCB”). The four MAG notes and the guaranty by the limited partnerships, with the attendant capital contribution notes executed by the limited partners, were included as collateral and all assigned to TCB in the loan package.

In November of 1984, the Lagniappe hotel chain collapsed due to the theft of funds by principals in MAG,. probable mismanagement of funds, and dishonest dealings with these and other limited partnerships.

The capital contribution notes executed by the limited partners became delinquent. Therefore, CBG, acting in its capacity as escrow and collection agent for TCB, contacted the appellants and requested payment. The limited partners responded by purporting to rescind their agreement to pay their notes on the ground that they had been defrauded by MAG. Later in the year, a settlement was reached which included an agreement by a surety, Mutual Fire and Inland Insurance Company of Pennsylvania, to indemnify the limited partners on their note payments to TCB. However, Mutual Fire went into receivership in 1986, after making substantial payments toward the limited partners’ capital contribution notes.

After obtaining a judgment against Mutual Fire, TCB filed suit against the limited partners, the limited partnerships, and MAG. These suits were consolidated in one chancery division. In October of 1987, TCB moved for summary judgment against the limited partners to enforce the remaining and unpaid capital contribution notes. For purposes of that motion only, TCB conceded that the defendant limited partners were defrauded by MAG, and that misrepresentations were made in the limited partnership private placement memorandum, although TCB did not concede that the misrepresentations were material. As to the capital contribution notes, TCB further admitted that it was not a “holder in due course” as defined in the Uniform Commercial Code.

In addition to the stipulation between the parties that TCB was not a holder in due course and that the general partner was guilty of fraud and misrepresentation, the limited partners allege that the transaction between TCB and the Tennessee bank was a subterfuge to avoid the Arkansas usury laws. The appellee insists that it made a loan directly to the general partnership, but the appellants argue that the appellee is not a creditor of the partnership because it did not extend credit directly or indirectly to the partnership.

The Chancellor granted TCB’s Motion for Summary Judgment, thereby enforcing the limited partners’ obligation to make payment on the capital contribution notes, after taking into consideration all credits, including payments by the surety, to which each limited partner was entitled to respectively. From that decision, these appeals arise.

Appellants contend that the trial court erred in exercising subject matter jurisdiction. By virtue of the nature of the action, alleged to be a suit on promissory notes, appellants allege that the trial court, a court in equity, lacked jurisdiction to decide a collection case, which is an action at law. Under TCB’s theory of the case, which the Chancellor obviously adopted, these promissory notes were the limited partners’ capital contributions to be paid over a period of time without interest, but which would be paid under certain conditions contained in the Certificate of Limited Partnership. Appellants insist that an action to collect upon a promissory note is an action cognizable only at law. However, as appellee notes, TCB’s complaint alleged a number of equitable causes of action, such as equitable estoppel, detrimental reliance, and reformation of the promissory notes.

When the joint stipulation, which states that the appellants were defrauded, the notes were not negotiable, and appellee was not a holder in due course, is read with the allegations of the appellee and the appellants, it becomes clear that there were matters cognizable in equity pending before the chancellor. The chancellor, having the right to retain jurisdiction for one purpose, had the right to retain jurisdiction for all purposes. See Scroggins v. Bowen, 249 Ark. 1155, 464 S. W.2d 79 (1971). A complaint alleging more than one theory of recovery is actionable in the court where it was filed if at least one of the theories stated is a proper cause in that court. A complaint is not subject to dismissal for failure to state facts upon which relief could be granted if any one of the allegations would support a theory in the court where the action was commenced. Williams v. J.W. Black Lumber Co., 275 Ark. 144, 628 S.W.2d 13 (1982).

A case very close on point is Chelsea Nat’l Bank v. Lincoln Plaza Towers Assocs., 61 N.Y.2d 817, 462 N.E.2d 130, 473 N.Y.S.2d 953 (1984), wherein a bank brought an action to recover on defaulted notes of the limited partners. The bank brought the suit against the limited partnership on its guaranty of the general partner’s debt. The Court of Appeals of New York held that the limited partners were not liable to the bank for the general partner’s default on a loan. The opinion was based on the limited partnership’s agreement which did not give the general partner authority to obligate the limited partnership by liability on the limited partners. The Chelsea National Bank case does not stand for the proposition that the creditor of a general partner can never proceed against the limited partners for collection of a partnership debt. However, it does establish that a factual determination is necessary before a decision is reached in such cases.

In granting the motion for summary judgment, the chancellor relied upon Ark. Code Ann. Section 4-43-502(b) (1987), which reads in pertinent part:

[A] creditor of a limited partnership who extends credit, or whose claim arises after the filing of a certificate of limited partnership or an amendment thereto which . . . reflects the obligation . . . may enforce the original obligation.

The appellants argue that this statute is inapplicable to appellee because the appellee was a creditor of MAG and not the limited partnership.

Fraud may be a defense against a creditor’s claim against a limited partner for contribution. This topic was discussed in 59A Am.Jur.2d, Partnership, Section 1358, p. 923 (1987):

Repudiation or fraud would relieve the limited partner of his obligation, but the mismanagement, negligence, diversion of some assets, action beyond authority, or failure to perform certain elements of the agreement will not.

The article in American Jurisprudence cited the case of Partnership Equities, Inc. v. Marten, 15 Mass. App. 42, 443 N.E.2d 134 (1982). The Manen case involved a suit by the partnership against its limited partners and was decided in favor of the general partner. Nevertheless, the Massachusetts court stated:

Payment may be excused where there has occurred a failure to meet a condition expressed in the certificate of limited partnership or where there has been a profound failure of consideration such as a repudiation of, or fraud incident to, the essentials of the venture to which subscription was made.

Due to the broad scope of TCB’s stipulation to the general partner’s fraud and misrepresentation, which fails to address or exclude the actual knowledge of bank officials as to any dishonest dealings, an issue of actual knowledge of bank officials regarding unlawful activities must be more fully developed, through testimony, in the lower court.

We cannot accept the argument of TCB that the governing limited and general partnership law precludes the application of the Uniform Commercial Code to this transaction. See “Financing Limited Partnerships and Their Partners: Caveat Creditor,” 37 Bus. Law. The applicability of the Uniform Commercial Code to the transaction at issue was not adequately developed in the trial court; therefore, it needs to be addressed upon remand. Furthermore, there is insufficient proof to rule the allegation that TCB was using the Tennessee bank as a subterfuge to make a loan at a rate of interest higher than allowed in Arkansas.

In remanding the case, the general partner’s mismanagement, negligence, diversion of assets, action beyond the authority of the general partner, or failure to perform certain conditions of an agreement by the general partner is not within the category of fraud which will relieve limited partners from payment of their capital contribution obligation or bar a creditor of the partnership from enforcing the obligation.

The case is reversed and remanded.

Holt, C.J., Dudley, and Hays, JJ., not participating.

Special Justices Donis Hamilton and Gary Nutter join.


author: Jack Holt, Jr., Chief Justice.

text:
    Thomas Kevin TAYLOR v. STATE of Arkansas
    CR 88-202
    771 S.W.2d 742
    Supreme Court of Arkansas
    Opinion delivered June 12, 1989

      Matt Keil, for appellant.

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

Appellant Thomas Kevin Taylor was found guilty of first degree murder and was sentenced to forty years imprisonment. He argues on appeal the evidence was insufficient to support the jury’s verdict and the trial court erred in not granting his motion for a new trial. We affirm.

Taylor contends the State failed to prove he acted with premeditation and deliberation since he consumed large quantities of alcohol and was intoxicated when the crime was committed. We do not reach the merits of Taylor’s claim because he failed to abstract his motion for directed verdict and because he never challenged the sufficiency of the evidence below on the grounds the State failed to prove premeditation and deliberation.

Parties have an affirmative obligation to abstract those portions of the record relevant to the points on appeal, and the record is confined to that which has been abstracted. Lee v. State, 297 Ark. 421, 762 S.W.2d 790 (1989). It is equally axiomatic that arguments made for the first time on appeal will not be considered by this court, Addison v. State, 298 Ark. 1,765 S. W.2d 566 (1989), and parties cannot change the grounds for an objection on appeal. Harris v. State, 295 Ark. 456, 748 S.W.2d 666 (1988).

In arguing it was error not to grant the motion for new trial, Taylor contends the cumulative effect of the State’s discovery violations resulted in an unfair trial. He cites the State’s failure to provide copies of a crime lab report, a record of the accomplice’s prior misdemeanor convictions, and a complete list of the State’s witnesses.

Here again, Taylor abstracted the hearing on his motion but failed to abstract the motion itself. Parties must comply with our rules on abstracting. See Rule 11 (f) of the Rules of the Supreme Court and the Court of Appeals. Also, the record shows the motion was based entirely on the assertion that the “prosecution intentionally and in bad faith suppressed from the Court and defense counsel evidence which exculpated the Defendant,” referring of course to the crime lab report. As before, we emphasize that parties on appeal are bound by the scope and nature of those objections and arguments presented to the trial court for its consideration. The motion for new trial made no mention of the prosecutor’s failure to provide either a record of the accomplice’s prior convictions or a list of the State’s witnesses. While Taylor raised those issues during trial, they were not raised as grounds for a new trial until either the hearing on the motion or, in the case of the witness list, until this appeal.

Even if we consider Taylor’s arguments in support of a new trial on the merits, he is unable to demonstrate prejudice as a result of any error, a requirement he must meet to obtain reversal on appeal. Berna v. State, 282 Ark. 563, 670 S.W.2d 434 (1984), cert. denied, 470 U.S. 1085 (1985). First, the material presented in the crime lab report was for all practical purposes cumulative of that introduced at trial. Second, the record of the accomplice’s prior misdemeanor convictions is of no great concern as the State had already disclosed one prior felony conviction and at least one misdemeanor conviction.

As to the witness list, it is clear that the prosecution did not comply with its obligation under A.R.Cr.P. Rule 17.1 to furnish the names and addresses of those individuals the State intended to call as witnesses at trial. Yet, of the four witnesses not on the list, the court refused to allow one to testify, Taylor knew from a pretrial proceeding that another would testify, and a third was restricted as to the scope of his testimony, which was presented only after Taylor was allowed to voir dire the witness. With respect to the fourth, Taylor again objected but as with the others failed to request any of the sanctions available under A.R.Cr.P. Rule 19.7, such as a continuance. See Snell v. State, 290 Ark. 503, 721 S.W.2d 628 (1986), cert. denied, 484 U.S. 872, 108 S. Ct. 202 (1987).

Finally, we point out that Taylor’s argument concerning the information not disclosed by the prosecution is that it would have had an effect on the jury’s assessment of the accomplice’s credibility. Evidence which only attacks the credibility of other testimony is not grounds for a new trial. Williams v. State, 289 Ark. 69, 709 S.W.2d 80 (1986); Orsini v. State, 281 Ark. 348, 665 S.W.2d 245, cert. denied, 469 U.S. 847 (1984).

Affirmed.