author: E. J. Ball, Special Justice.

text:
    Raines v. Toney.
    5-1335
    313 S. W. 2d 802
    Opinion delivered May 5, 1958.
    [Rehearing denied July 1, 1958]

      McMillen, Teague -& Coates; Robert S. Lindsey, and Edioard L. Wright, for appellant.

      Gannaway & Gannaway; Wood & Smith and Patten & Broivn, for appellee.
   E. J. Ball, Special Justice.

This appeal involves a derivative action brought by certain shareholders of. E. E. Baines Company seeking to recover damages for injuries sustained by the corporation against Appellants Sam P. Baines, James M. Coates, Sr., James M. Coates, Jr., and Cordon Y. Price; Commercial Union Assurance Co., Ltd., Commercial Union Eire Insurance Company of New York, The Palatine Insurance Co., Ltd. and Union Assurance Society, Ltd., herein referred to as Commercial Union Croup; and Creat American Insurance Company, Creat American Indemnity Company and Bochester American Insurance Company, herein referred to as Creat American Croup.

E. E. Baines Company was incorporated under the laws of the State of Arkansas as a general insurance agency on November 7, 1931, under the name of Coates & Baines, Inc., with its principal place of business at 410 Spring Street, Little Bock, Arkansas. Its official name was changed to E. E. Baines Company on January 5, 1944; and it was dissolved on February 7, 1956, after the present suit had been instituted.

Appellant Sam P. Baines was at all times since 1950 a member of the Board of Directors and at all times since 1944 a Vice-President of E. E. Baines Company. E. E. Baines, deceased, was at all times prior to his death on July 30, 1952, President and a Director of E. E. Baines Company. Sam P. Baines assumed full direction and control of the corporate affairs following the illness of E. E. Baines in January of 1952, and held office until the dissolution of the corporation on February 7, 1956.

Prior to October 1, 1952, Coates & Coates was a partnership composed of Appellants, James M. Coates, Sr., Gordon Y. Price and James M. Coates, Jr., and was engaged in the general insurance agency business. James M. Coates, Sr., the senior partner in Coates & Coates, was for many years prior to 1936 an employee of E. E. Raines Company.

Coates & Raines, a partnership, was organized on or about October 1, 1952, and is engaged in the general insurance agency business. It is composed of Appellants, James M. Coates, Sr., Sam P. Raines, Gordon Y. Price and James M. Coates, Jr. It took over the representation of the Commercial Union Group and the Great American Group on October 1,1952.

Prior to October 1, 1952, E. E. Raines Company was one of the most successful fire and casualty general insurance agencies in Arkansas and had represented for many years the Commercial Union Group and the Great American Group. The following schedule reflects the volume of business done by E. E. Raines Company for the five years prior to 1952 from all representations and from the Great American Group and the Commercial Union Group:

Gross Premiums Gross Premiums Gross Premiums Total Premiums Prom All From Great Prom Commercial From Great YEAR Representation American Group American and Representation Representation Commercial
1951 $1,477,825.65 $416,395.19 $205,516.91 $621,912.10
1950 1,491,888.59 413,959.47 221,253.57 635,212.99
1949 1,609,705.47 449,004.34 241,420.87 690,425.21
1948 1,658,891.65 426,699.78 256,554.82 683,254.60
1947 1,718,026.61 455,178.50 261,120.62 716,299.12
TOTAL.,..$3,347,104.02

E. E. Raines Company maintained “agency plants” in various cities throughout Arkansas as its outlet for the sale of fire and casualty insurance. Out of the gross premiums collected from the sale of such insurance it retained 10 per cent thereof as its profit and compensation. Prom 1947 through 1951, its five year average annual gross premiums from the Commercial Union Group and the Great American Group were $669,420.80 of which E. E. Raines Company retained an average of $66,942.08 as its profit and compensation.

At the beginning of 1952, there were 500 shares of stock of E. E. Raines Company outstanding, and it was owned as follows:

1. E. E. Raines.225 shares
2. Alice M. Coates.175 shares
3. Sam P. Raines. 37 shares
4. Edna J. Williams. 12 shares
5. Mary R. Toney, Trustee. 50 shares
6. Others. 1 share
TOTAL.500 shares

Mrs. Alice M. Coates is the Mother of Appellant, James M. Coates, Sr., and her shares in E. E. Raines Company passed to her at the death of her husband many years ago. She had not at any time participated in the management of E. E. Raines Company. During the period in question the Board of Directors of E. E. Raines Company consisted of E. E. Raines, Sam P. Raines, John E. Coates, Jr., W. R. Perry and J. D. Toney.

It appears that in January of 1952, E. E. Raines, President of E. E. Raines Company, became disabled, and on January 23, 1952, Sam P. Raines was granted authority to write checks, a power and duty that he apparently had not held before. It further appears that on June 4, 1952, at an informal and unofficial meeting of the shareholders of E. E. Raines Company held in an attorney’s office, Sam P. Raines proposed that he be retained as general manager of the corporation at an annual compensation of $25,000, and demanded an immediate acceptance thereof. However, by mutual agreement, action on the proposal was deferred until June 23,1952. It also appears that prior to the June 4th meeting and prior to June 23, 1952, Sam P. Raines, while acting as Vice-President, General Manager and as a member of the Board of Directors of E. E. Raines Company, solicited in Ms own behalf and on behalf of Coates & Raines, a new partnership to be formed by Sam P. Raines and James M: Coates, Sr., the representation of the Commercial Union Group and the Great American Group.

In this respect, the evidence reflects that as early as March or April of 1952, Sam P. Raines had made trips to the headquarters of the Great American Group and Commercial Union Group in New York, and had negotiated for the representation of these two groups. Following the month of May, 1952, considerable correspondence marked “Personal and Confidential” took place between Sam P. Raines and Mr. Florence, a Vice-President of the Commercial Union Group. The essence of this correspondence was that when Sam P. Raines resigned and left the employment of E. E. Raines Company, the Commercial Union Group would cancel the general agency agreement with E. E. Raines Company and give it to Coates & Raines, a partnership to be formed by Sam P. Raines and James M. Coates, Sr. On June 24, 1952, Sam P. Raines notified Mr. Florence that he had made his “final move” and that the way is “clear for you to send” out your letters. The general agency contracts between E. E. Raines Company and the Commercial Union Group provided for a 90 day notice of intentions to cancel, and, accordingly, Mr. Florence caused such notices to be given E. E. Raines Company terminating the general agency contracts effective October 1, 1952. On June 23, 1952, Sam P. Raines sent out a notice to shareholders of E. E. Raines Company stating that, “I am giving notice today to all stockholders of E. E. Raines Company that I will resign effective October 1, 1952. My future plans are such that cannot be disclosed at this time.” The record fails to reflect that Sam P. Raines ever resigned. It does disclose that he remained the Vice-President and a director until the corporation was disi solved on February 7, 1956.

The evidence further reflects that on June 10, 1952, Mr. James M. Coates, Sr., visited Mr. Florence in New York pertaining to the representation of the Commercial Union Group, and Mr. Florence made the following memorandum of the interview:

Mr. James Coates visited my office on Tuesday, June 10th and explained the situation as it exists in view of Mr. E. E. Baines’ condition.

The stock of this corporation is owned as follows:

Mr. E. E. Baines.45%
Mrs. Coates.35%
Mrs. Toney.10%
Mr. Sam Baines. 7%
Probably E. E. Baines’ other daughter. 3%

Mr. Sam Baines met with the stockholders but no arrangement could be worked out to his satisfaction. He is resigning as of September 30, 1952.

Mr. Sam Baines and Mr. James Coates intend to open a new general agency under the name of Coates & Baines.

They expect to dissolve the E. E. Baines Corporation and dispose of its physical assets. They expect to accomplish this by voting 52 per cent of the stock, (Mrs. Coates’ 35 per cent, Mr. Sam Baines’ 7 per cent and Mrs. Toney’s 10 per cent). In the event that Mrs. Toney does not vote with them for the dissolution they expect the corporation to be dissolved automatically for lack of companies.

The stock of the corporation of Coates & Baines will he owned as follows:

James Coates.. CO cn
Sam Baines. CO ai
James Coates, Jr. H üi
Gordon Price. K en

Mr. Coons and I explained to Mr. Coates that we were not interested in the dissolution of E. E. Baines Company and we explained onr position. That Mr. Miller had committed himself to Mr. Sam Baines to the effect that if he left E. E. Baines Company we would give him the representation of our companies. That this was a commitment made some months back. That when Mr. Sam Raines wrote ns to the effect that he had resigned Ave Avould serve notice of cancellation on E. E. Raines Company for all of our companies so that they Avould be available for Mr. Sam Raines 90 days thereafter.

I advised Mr. Coates that we planned to give Mr. Sam Raines only the CUA, CUNT and PALATINE. He Avas of the opinion that Mr. Sam Raines would prefer to keep the UNION for the time being. Mr. Coons is of the opinion that our position is a safe one and he will proceed to send the cancellation notices as soon as we are advised officially by Mr. Sam Raines of his resignation.

Insofar as that part of the business of E. E. Raines Company pertaining to the Commercial Union Group, it appears that E. E. Raines Company owned the “agency plant.” In this respect, on September 8, 1952, Mr. Florence wrote to Sam P. Raines the following:

Maybe you can enlighten me about a situation that is somewhat perplexing. What is our status insofar as the E. E. Raines office is concerned? We do not own the agency plant, so ordinarily in case of cancellation of contract we would ask the General Agency to cancel out the agency plant and return the supplies. If you have come to an amicable agreement with the Raines office and have their permission to take over their agents there Avould be no problem. If, however, no agreement has been effected between you and the Raines office the situation is somewhat aAvkward. It would seem to me that in this latter contingency it would be necessary for you to renegotiate with each of our agents individually. Technically it Avould be necessary for E. E. Raines to close them and you to appoint them. I hope this won’t be necessary because the supplies in the agents hands could be used to report through Coates & Raines since there is no E. E. Raines Company imprint on them.

As to the announcement of appointment, it seems to me that your letter to the agents would serve as an announcement for all companies, if we Avould advise the Bureau of the Appointments for our Group.

This situation is complicated by the fact that we do not own the agency plant and can’t take any action that might jeopardize the position of E. E. Raines Company in the offices of their agents.

Please reply air mail as the date October 1st is rapidly approaching.

While James M. Coates, Sr. was in New York in June of 1952, he solicited the representation from the Great American Group on behalf of the new partnership, Coates & Raines. Sam P. Raines had also solicited the representation on behalf of the new partnership prior to June of 1952, and as early in July or August, the Great American Group agreed to give the new partnership, Coates & Raines, the representation. The agency contracts between the Great American Group and E. E. Raines Company provided for a cancellation notice, and when Sam P. Raines notified the Great American Group that he intended to resign his position with E. E. Raines Company as of October 1, 1952, the Great American Group gave notice in accordance with the terms of the contracts that the agency agreements with E. E. Raines Company were to be terminated on October 1, 1952. Whether the Great American Group or E. E. Raines Company owned the ‘ ‘ agency plants ’ ’ under the agency agreements is not clear.

Both the Great American Group and the Commercial Union Group gave the representations to Coates & Raines as of October 1, 1952, and, it appears, that on that date Coates & Raines took over the “agency plants,” leaving E. E. Raines Company wholly without representations and without “agency plants” through which to market any insurance business in the State.

On July 6, 1953, a meeting of the board of directors of E. E. Raines Company was held. At that meeting a resolution was offered providing for the employment of legal counsel to investigate the cause for the cancellation of the general agency contracts with E. E. Raines Company by the various insurance companies, and proceed to recover any damages that the corporation may be entitled. This motion failed to receive a second. Sam P. Raines was present at this meeting as an officer and a director, and it appears that he made no comments whatever concerning the matter. Subsequently a group of the shareholders representing about 40 per cent of the outstanding stock of E. E. Raines Company instituted a derivative action against the appellants to recover damages on behalf of the corporation for the loss of the business. The Trial Court found for the corporation on the derivative action and awarded judgment in the sum of $210,312.50 against the appellants.

The foregoing facts compel a conclusion that the conduct of Sam P. Raines as an officer and a director of E. E. Raines Company falls below the standard required of corporate fiduciaries. In the instant case, the gravamen of the cause of action against Sam P. Raines is to be found in the violation of his fiduciary obligations while serving E. E. Raines Company. He failed in his obligation to retain and continue.to hold and to protect important business interests' for the benefit of E. E. Raines Company consisting of the general agency contracts, among others, with the Commercial Union Group and the Great American Group. He failed in his obligation to retain and continue to hold and to protect the “agency plants” situated in the various towns and cities throughout Arkansas through which E. E. Raines Company marketed the insurance. Moreover, he violated his duty by acquiring for himself and others these same business connections and “agency plants.” All of this was to the detriment of those relying and entitled to rely upon him as the corporate fiduciary, and resulted in the complete destruction of E. E. Raines Company.

The law imposes a high standard of conduct upon an officer or director of a corporation, predicated upon the fact that he has voluntarily accepted a position of trust and has assumed the control of property of others. Even a higher standard of duty rested upon Sam P. Raines. He was the vice-president and director of E. E. Raines Company, but he was the manager as well. Minhard v. Salmon, 249 N. Y. 458, 164 N. E. 545. Such a person occupies a fiduciary relation to Ms corporation and “may not acquire, in opposition to Ms corporation, property in which the corporation has an interest or tangible expectancy or which is essential to its existence.” Blaustein v. Pan American Petroleum and Transportation Co., 236 App. Div. 97, 31 N. Y. S. 2d 934, 962; Lincoln Stores, Inc. v. Grant, 309 Mass. 417, 34 N. E. 2d 704, 707. See also 3 Fletcher Cyclopedia Corporations (perm, ed.) Sections 838,861.1 and 1102. This doctrine of “corporate opportunity” is but one phase of the rule of undivided duty and loyalty on the part of corporate fiduciaries. It does not preclude a corporate fiduciary from engaging in a distinct enterprise of the same general class of business as that which his corporation is engaged, so long as he acts in good faith. Lincoln Stores, Inc. v. Grant, supra; Bump Pump Co. v. Waukesha Foundry Co., 238 Wis. 643, 300 N. W. 500; Lutherland, Inc. v. Dahlen, 357 Pa. 143, 53 A. 2d 143; 3 Fletcher Cyclopedia Corporations (perm, ed.), supra. Certainly Sam P. Raines as a corporate fiduciary and a manager cannot be said to enter in good faith into a competing enterprise which crippled, injured and destroyed the business of his corporation which he was then serving, and at the same time terminate the property interests of his corporation and appropriate them to his own use through his competing enterprise. Hall v. Dekker, 45 Cal. App. 2d 783, 115 P. 2d 15; Coleman v. Hanger, 210 Ky. 309, 275 S. W. 784; Bump Pump Co. v. Waukesha Foundry Co., supra.

It is clear that Sam P. Raines occupied a fiduciary position. He owed a duty to E. E. Raines Company to retain and protect and develop the then existing business opportunities his corporation had with the appellant insurance companies. He owed a duty to retain, protect and develop the then existing “agency plants” situated throughout the State of Arkansas and owned by his corporation which were essential to its existence. Moreover, he owed the duty not to separate his personal interest from that of his corporation with references to these property interests while serving or even after he had severed his employment with E. E. Raines Company. He owed a duty not to do anything that might result in injury to E. E. Raines Company or “deprive it of the profit or advantage which his skill, knowledge and ability might personally bring to it or enable it to realize the reasonable exercise of its power.” Pepper v. Litton, 308 U. S. 295, 311, 60 S. Ct. 238, 84 L. Ed. 281; Guth v. Loft, Inc., 23 Del. Ch. 255, 5 A. 2d 503, 512. See Central Ry. Signal Co. v. Longden, 7th Cir., 194 F. 2d 310, 313; 3 Fletcher Cyclopedia Corporations, supra, at Section 850.

Sam P. Raines insists that he resigned his employment with E. E. Raines Company when he sent to several of its stockholders a letter dated June 23, 1952, advising them that he would resign on October 1, 1952, thereby terminating this fiduciary duty to his corporation. The record fails to disclose such termination. He continued to serve his corporation for more than three years after the October 1, 1952, deadline. Substantially all of the documents terminating the general agency contracts with the appellant insurance companies were executed by him. Finally, he executed the Certificate of Dissolution of E. E. Raines Company on February 7, 1956. Even if he had effectively resigned his employment, as he contends, his fiduciary duty to his corporation did not then terminate. His duty to be loyal and faithful to E. E. Raines Company did not cease either on June 23, 1952, or on October 1, 1952. This duty cannot be renounced at will by the termination of employment. “It is as sacred and inviolable after as before the expiration of its terms.” Trice v. Comstock, 8th Cir., 121 F. 620. It is, however, a common occurrence for corporate fiduciaries to resign and form a competing enterprise. Unless restricted by contract, this may be done with complete immunity because freedom of employment and encouragement of competition generally dictate that such persons can leave their corporation at any time and go into a competing business. They cannot while still corporate fiduciaries set up a competitive enterprise. Witmer v. Arkansas Dailies, Inc., 202 Ark. 740, 151 S. W. 2d 971, or resign and take with them the key personnel of their corporations for the purposes of operating their own competitive enterprise. Duane Jones Company, Inc. v. Burke, 306 N. Y. 172, 117 N. E. 2d 237. But they can, while still employed, notify their corporation’s customers of their intention to resign and subsequently go into business for themselves, and accept business from them when offered to them. Aetna Building Maintenance Co. v. West, 39 Cal. 2d 198, 246 P. 2d 11. But they can use in their own enterprise the experience and knowledge they gained while working for their corporation. Witm&r v. Arkansas Dailies, Inc., supra. They can solicit the customers of their former corporation for business uidess the customer list is itself confidential. Continental Car-Na-Vor Corporation v. Mosley, 24 Cal. 2d 104, 148 P. 2d 9. In the instant case, Sam P. Raines negotiated for and procured for his own use the general agency contracts with the appellant insurance companies while serving his corporation. He also negotiated for and procured for his own use the ‘ ‘ agency plants ’ ’ belonging to his corporation while serving as a corporate fiduciary. His action in these respects was infected with secrecy and silence. His fiduciary position obligated him not to separate his personal interest from that of E. E. Raines Company without full and complete disclosure. The fact that Sam P. Raines was during the time in control of E. E. Raines Company with the power of direction charged him with even a greater duty of disclosure. He was obligated to disclose fully all of the facts and circumstances surrounding his negotiations and agreements with the appellant insurance companies ; and he was obligated to disclose fully all of the facts and circumstances surrounding his negotiation and acquisition of E. E. Raines Company’s “agency plants.” This greater obligation was owed because both of these property interests were highly essential to the successful and continued existence of E. E. Raines Company. It may be that in failing to make such a disclosure, Sam P. Raines was not guilty of bad faith, but he failed to realize and discharge his duties as a corporate fiduciary, and he wrongfully assumed that as such a fiduciary he had a right to take the property or the tangible expectancy for himself without informing those whom he was serving and who relied and had a right to rely upon him. This he was not permitted to do. “If dual interests are to be served, tbe disclosure to be effective must lay bare tbe truth, without ambiguity or reservation, in all of its stark significance. ’ ’ Wendt v. Fischer, 243 N. Y. 439, 154 N. E. 303, 304. Tbe record reflects that Sam P. Raines disclosed little, if any, of tbe facts and circumstances surrounding bis diversion of bis corporation’s property and opportunities. Tbe most that was said was that tbe appellant insurance companies were displeased about tbe situation. "When Sam P. Raines availed himself of tbe general agency contracts with tbe appellant insurance companies and tbe “agency plants” belonging to E. E. Raines Company in support of his own business enterprise, be necessarily usurped what belonged to E. E. Raines Company. Such a diversion by Sam P. Raines was wrongful and tbe appellees were entitled to relief.

Tbe facts as set out herein likewise compel a conclusion that tbe conduct of James M. Coates, Sr., as a stranger to E. E. Raines Company falls below tbe standard required of him. Tbe gravamen of tbe cause of action against him is to be found in bis alleged acts of conspiracy with Sam P. Raines to divert tbe business of E. E. Raines Company and in bis aid to and cooperation with Sam P. Raines in breaching bis corporate fiduciary duties to E. E. Raines Company. He aided and cooperated with Sam P. Raines in usurping what belonged to E. E. Raines Company. Finally, be aided and cooperated with Sam P. Raines in acquiring tbe same property interests belonging to E. E. Raines Company for tbe benefit of a new partnership, Coates & Raines, created for tbe purpose of taking over these property interests. If bis alleged acts of conspiracy and agency be disregarded, tbe other applicable principle imposes upon James M. Coates, Sr. liability equal with that of Sam P. Raines. This principle of law is that one who knowingly aids, encourages or cooperates with a fiduciary in tbe breach of bis duty becomes equally liable with such fiduciary. Jackson v. Smith, 254 U. S. 586, 589, 41 S. Ct. 200, 65 L. Ed. 418; Irving Trust Co. v. Deutsh, 2d Cir., 73 F. 2d 121, 125; Lonsdale v. Speyer, 249 App. Div. 133, 291 N. Y. S. 495. James M. Coates, Sr., was the senior partner in Coates & Coates, a general insurance agency competing with E. E. Raines Company. He was also a senior partner in its successor firm of Coates & Raines, a general insurance agency. As a competitor of E. E. Raines Company, James M. Coates, Sr. was legally entitled to use every reasonable means to secure additional business for his firm, including the acquisition of the general agency contracts that E. E. Raines Company bad with the appellant insurance companies and the agents of E. E. Raines Company. But bis acquisition of such interests for bis business is prohibited by law when be acquires such interest by aiding and cooperating with Sam P. Raines, a known corporate fiduciary of E. E. Raines Company, in usurping what belonged to E. E. Raines Company for the benefit of their mutual business enterprise. He knew that Sam P. Raines was the manager, vice-president and a director of E. E. Raines Company, and be is charged with knowledge that Sam P. Raines occupied a fiduciary position to bis corporation. He had been an employee of E. E. Raines Company; his mother bad owned for many years as much as 35 per cent of the outstanding stock; bis brother had been for many years a member of the board of directors; be attended the important June 4th meeting of the shareholders; he met with the representatives of the Commercial Union G-roup and the Great American Group in New York in early June, and he related to them an accurate account of the steps which had been taken by himself and Sam P. Raines for the acquisition of the general agency representations and the “agency plants” of E. E. Raines Company and its ultimate death. His new partnership was created on October 1, 1952, and he was in charge of the business on the partnership side while Sam P. Raines was concerned with transferring the business and property of E. E. Raines Company to the partnership. The evidence contained in the record makes it abundantly clear that James M. Coates, Sr. knowingly aided, encouraged and cooperated with Sam P. Raines in the usurpation of the general agency contracts and the “agency plants” belonging to E. E. Raines Company, and he is liable to the appellees for the resulting damages.

Appellants James M. Coates, Jr. and Gordon T. Price were partners in Coates & Coates and in Coates & Raines, the successor of Coates & Coates. The record fails to disclose any evidence whatever that they aided, encouraged or cooperated with Sam P. Raines in the breach of his fiduciary duty to E. E. Raines Company or that they were principals with James M. Coates, Sr. in his assistance to Sam P. Raines in the usurpation of the property interest of E. E. Raines Company. Neither does the record disclose any evidence that they were advised of the wrongful conduct of James M. Coates, Sr. and Sam P. Raines. Certainly, under the circumstances existing here, it cannot be said that they ratified the wrongful acts of the senior partners James M. Coates, Sr. and Sam P. Raines whose acts took place primarily before the partnership of Coates and Raines was organized. It may be that they would be required to account for any profits accruing to them by reason of their membership in the firm of Coates & Raines. But since this is a derivative action brought by the stockholders of E. E. Raines Company to recover damages on behalf of their corporation for injuries sustained, and not for an accounting for profits received, neither James M. Coates, Jr. nor Gordon Y. Price is liable for the damages sustained by E. E. Raines Company.

Likewise, the Appellants, the Great American Group and the Commercial Union Group were not guilty of wrongful acts, and they are not liable for the damages sustained by E. E. Raines Company. These appellants had general agency contracts with E. E. Raines Company which contained clauses providing for a notice of intention to cancel. According to these clauses no reason was necessary for the cancellation of the contract. These appellants cancelled the general agency contracts according to the provisions contained therein. They gave no reason therefor. They were not required to give any.

Finally, Appellants Sam P. Raines and James M. Coates urge that the cause of action did not survive the dissolution of E. E. Raines Company which took place on February 7, 1956. But this issue is resolved in favor of the appellees by Ark. Stats. (1947) Section 64-806 which provides that “All corporations . . . shall . . . be continued for the term of three years from snch expiration or dissolution as bodies corporate for the purpose of prosecuting and defending suits by or against them and of enabling them gradually to settle and close their business, to dispose of and convey their property, and to divide their assets . . . ; provided, however, that with respect to any action, suit or proceeding begun or commenced by the corporation within three years after the date of such expiration or dissolution, snch corporation shall only for the purpose of such action, suits or proceedings so begun or commenced be continued bodies corporate beyond said three-years period and until any judgments, orders, or decrees therein shall be fully executed.” Here the corporation’s Certificate of Dissolution was filed on February 7, 1956, and this action was instituted on October 14, 1953.

Further, Ark. Stats. (1947) Section 64-813 provides that if “any corporation becomes dissolved . . . before final judgment obtained in any action pending or commenced in any court of record of this State, against any such corporation, the said action shall not abate by reason thereof, but the dissolution of said corporation being suggested upon the record, the names of the trustees or receivers of said corporation . . . the said action shall proceed to final judgment . . .” It is clear from the foregoing statutes that the cause of action in question did survive the filing of the Certificate of Dissolution of E. E. Raines Company.

The evidence reflects that under ordinary circumstances a general insurance agency of the type of E. E. Raines Company can be sold for about one to one and one-half times its average net annual premiums over and above all other assets. In certain cases the sale price might go as high as two and one-half times such net annual premiums. In the instant case, E. E. Raines Company had a five year average net premium of $66,942.08 as received from business done for and through the appellant insurance companies; but its annual gross volume of business was declining substantially from year to year. In view of the particular facts of the instant case, the Court concludes that the proper measure of damage is one times the average net- annual premiums of the business done through the appellant insurance companies.

Accordingly, the decree of the Trial Court is affirmed as against Sam P. Raines and James M. Coates, Sr. to the extent of $66,942.08, and it is reversed as to all other appellants with directions to the Trial Court to dismiss the complaint as against them.

Harris, C. J., and Holt and Ward, JJ., dissent as to any affirmance; they are of the opinion that no liability was established against any appellant.

RobiNSON, J., disqualified and not participating.


source: Caselaw Access Project

author: Carleton Harris, Chief Justice. Sam Robinson,

license: Public Domain

text:
    Pine Crest Memorial Park v. Burton.
    5-1530
    312 S. W. 2d 919
    Opinion delivered May 12, 1958.

      McMillen, Teague $ Coates, for appellant.

      John F. Park, for appellee.
   Carleton Harris, Chief Justice.

Pine Crest Memorial Park is a privately owned cemetery, organized and operated under the terms of a certain declaration of trust, dated January 30, 1930. The management of the cemetery is the responsibility of a board of trustees. Under the authority of the Declaration, the trustees are empowered to make rules and regulations for the operation of the property, and rule 42 provides that only bronze markers shall be used. In 1936, appellee’s mother purchased from appellant a cemetery lot having four grave spaces. Appellee’s father was buried on this lot in 1936, and in 1955, the mother was buried in one of the spaces. Appellee, M. P. Burton, decided to purchase a double marker for the graves of his father and mother, and found a satisfactory marker at the WyattMonahan Monument Company for the installed price of $173.40. Appellant refused to permit the installation of this marker, contending that certain rules of Pine Crest had not been complied with. Upon hearing the case, the Chancellor held that the rules in question were unreasonable and arbitrary, and perpetually enjoined and restrained appellant and its board of trustees from enforcing or attempting to enforce such regulations. Prom such decree of the court, comes this appeal.

The deed conveying the cemetery lot to Mrs. Burton provides as follows:

“It is expressly agreed and understood that this conveyance is made subject to the provisions and restrictions specified in the Rules and Regulations of said Memorial Park at the present time, and which are made a part of this conveyance or which said Trust may hereafter make in conformity with the laws of the State of Arkansas, one of which Rules and Regulations, among other things, reserves to the Trust the exclusive right to control, regulate, install or have installed, all markers, and further reserves to the Trust the right to approve and supervise all construction, care and up-lceep of all lots, burial spaces and graves in said PINE CREST MEMORIAL PARK.

Tbe said Trust hereby covenants and agrees with the said grantee to set aside ten per cent of the gross sale price of this and all other deeds by it issued for lots and burial spaces in said PINE CREST MEMORIAL PARK, said fund so constituted to be known as the PERPETUAL CARE FUND, the principal of which shall remain intact and the income of which shall be applied toward the cost of the care, up-keep, and maintenance of said PINE CREST MEMORIAL PARK forever. ’ ’

It is admitted by appellee that appellant has the right to make reasonable rules and regulations. It is, on the other hand, admitted by appellant that appellee would not be bound by an arbitrary or unreasonable rule. The issue therefore, in this case, is whether the particular rules and regulations of Pine Crest Memorial Park, herein under attack, are arbitrary and unreasonable.

The controversial regulations, applying to grave markers, are as follows:

“48. (b) The Bronze Alloy shall consist of:

Not less than....................................................................................87% Copper

Not less than................................................................................................5% Tin

Not more than....................................................................................2%% Lead

Not more than.............................................................................................5% Zinc

All other elements in total not to exceed..............................1%

49. With all bronze markers or memorials not purchased through the Park, the Owner offering such marker or memorial for installation must furnish the Park an affidavit of analysis from an independent laboratory made on a test bar run from the heat from which the specific memorial or marker offered for acceptance by the Park was east. Analysis of smelter of ingot supplied to the manufacturer is not acceptable.

52. All markers or memorials shall be installed by the Park, on foundations built by the Park, at the cost of the Owner, and the Park shall assume responsibility for the proper construction of the foundation and the proper installation of such marker or memorial; but the Park shall not be liable for any defective materials or defective workmanship beyond replacement or repair of such defective materials as have been furnished by the Park. All foundations shall be of the size and material specified by the Park.

54. If the marker or memorial is purchased from an outside agent and is approved by the Park as herein-before more particularly set forth, the charge for service and installation shall be on the basis of seven cents (7c) per square inch of the size of the marker and an additional charge or contribution of seven cents (7c) per square inch of the size of the marker to the Perpetual Care Fund, to be used for the maintenance and operation of the Park. No installation shall be made until both the service charge and the contribution to the Perpetual Care Fund have been paid in cash in advance.” We proceed to a discussion of each regulation.

The marker purchased by Mr. Burton from WyattMonahan has an alloy content of: 85 per cent copper; 5 per cent lead; 5 per cent tin; 5 per cent zinc. Appellee argues that such content substantially complies with the regulation mentioned above. Mr. D. A. Newman, secretary of Newman Brothers, Inc., manufacturer of the marker, testified that his firm has, for many years, used the 85-5-5-5 alloy for casting markers. He stated that each manufacturer has his own preference for a certain analysis, some using the same alloy as Newman Brothers, and others using a different formula . . . there is no set formula from which bronze markers should be cast . . . among twelve manufacturers of bronze markers, nine different alloys were being used, ranging-in copper content from 83 per cent to 88 per cent; tin, 2 per cent to 6 per cent; lead, 1.5 per cent to 5 per cent; zinc, 4.25 per cent to 11 per cent . . . tests at the company indicated their markers would meet all reasonable standards for durability, corrosion and discoloration resistance. Mr. Newman is 32 years of age and holds a bachelor of laws degree from Cincinnati University. He received no metallurgical training in college, and testified that his knowledge of the subject has come from association in the business, and the reading and studying of various materials. Mr. William E. Hockenberger of Pittsburgh, Pennsylvania, was an important witness for appellant. Mr. Hockenberger is vice-president, metallurgist, and metallurgical engineer of the Pennsylvania Industrial Supply Company, a copper, brass, and aluminum •warehouse. He graduated as a metallurgical engineer from the Carnegie Institute of Technology, following which he served as research engineer and subsequently as metallurgical engineer for Chase Brass & Copper Company before entering his present employment. Mr. Hockenberger testified that copper, tin, and zinc form a true alloy, i. e., one which will mix together in any proportion and their components are not discernible. He stated lead does not enter ini o any composition at all . . . “* * * does not enter into alloys. It separates in the matter and can readily be seen under the microscope.” He stated lead served no useful purpose other than to “make it more machineable.” Mr. Hockenberger testified that he had examined the Pine Crest rules and regulations, and that this particular regulation contained the minimum for bronze. When asked if he was familiar with the composition of 85 per cent copper, 5 per cent zinc, 5 per cent tin and 5 per cent lead, he stated:

“A. 85 and three five’s is widely used ingot due to the fact that it is easy to fabricate. It is easy to case and is a fast color, used in plumbing materials, various jobs in castings. I would say it is an industrial alloy more than anything else. It is known as leaded red brass.

Q. It is widely used for plumbing fixtures?

A. Yes, probably the most common one it is used for.

Q. In these books yon have here, which I understand from yon to be the leading books on standards, how is the composition 85,5,5,5 listed?

A. 85,5,5,5 is listed in A. S. T. M. and all books as leaded red brass. It is not bronze.

Q. What would be the effect of five per cent of lead in there on weather?

A. In case of weathering I would say it would be a detriment in large quantities of lead, some of which would be on the surface, it would probably weather out. I would say it would certainly weather out. The corrosion products are undesirable.”

On cross examination, Mr. Hockenberger further testified :

“A. Repeating again, 5 per cent lead in there is a detriment. It is a detriment to the alloy, performs no function. It just discolors it after weathering.

THE COURT: Makes it cut easier?

A. Yes. I am sure somebody that buys a marker is not interested in how it cuts. The manufacturer would be.

Q. That small a difference in the percentage makes a whale of a difference in the marker?

A. What percentage ?

Q. 85 per cent copper and 87 per cent copper and 5 per cent tin in both — in other words, Newman requires 85 per cent copper, Pine Crest requires 87 per cent, two per cent difference in copper. Newman requires 5 per cent tin, so does Pine Crest. Newman requires 5 per cent lead and Pine Crest requires 2 1/2 per cent. Would that make all that difference of softness and discoloration?

A. You are doubling the quantity.

Q. There is 100 per cent in that marker and 2 1/2 per cent is not going to soften and discolor 97 1/2 per cent, is it?

A. If it was in the alloy, no, but it is not in the alloy, and the more lead in the mixture, the more difficult it is to get it finally disbursed.

Q. What I am getting at, there is only 2 1/2 per cent difference in the Pine Crest marker and in the Newman marker with reference to lead?

A. That’s right.

Q. Newman has 2 1/2 per cent more lead?

A. That’s right.

Q. Would that additional 2 1/2 per cent prevent the disbursal of all the other alloys to the extent it would soften it or make it accessible to discoloration to any great extent.

A. You are doubling the lead content. You have more chance of it being on the surface and be in larger globules.”

According to the testimony, the Battelle Memorial Institute at Columbus, Ohio, an independent research laboratory, has done various tests on bronze alloys in connection with bronze memorials, and on the basis of such tests, has made the following recommendation as to mixture: 86 per cent to 90 per cent copper, 5 1/2 per cent to 6 1/2 per cent tin, 1 per cent to 2 per cent lead, and 3 per cent to 5 per cent zinc. The principal objection to the formula used in the Wyatt-Monahan monument seems to be the amount of lead contained in same, and we are persuaded that the 2 1/2 per cent difference in the amount called for under the regulations, and the amount contained in the purchased marker, is great enough to make a difference in the durability of the monument. It might be said here that this case has been well briefed by both sides, and numerous authorities cited, in support of their respective positions as to each rule herein contested, some being favorable to appellant and some to appellee. Practically all the pertinent cases deal with particular requirements of various cemeteries, and all were determined on the basis of discrimination or the reasonableness or unreasonableness of the particular regulation in question. We are of the opinion that the rule here under discussion is reasonable. Appellee is not compelled to purchase a monument of this specific content. It is only a minimum standard. For instance, one containing 90 per cent copper would be permissible. A marker prepared under the required formula can certainly be obtained. As the evidence shows, there are dealers who would prepare this particular alloy. Appellee says that the content of 85-5-5-5 is substantial compliance with the Pine Crest regulation, but, under the proof, we cannot agree.

To the contrary, we consider rule 49 to be unreasonable. The requirement that an affidavit of analysis from an independent laboratory made on a test bar run from the heat from which the specific marker was east, would be most difficult to obtain. The rule provides analysis of smelter and ingot supplied by the manufacturer is not acceptable. Not only does this provide an extra burden and expense, but, likewise, is discriminatory. This requirement relates only to markers “not purchased through the park.” As stated in Vol. 14, Corpus Juris Secundum, Sec. 30, page 89:

‘ ‘ The proprietors of a cemetery may make rules and regulations for the care and management of lots in the cemetery, * * *. The rules and regulations must be reasonable, equal in their operation and uniform in their application to all owners of lots in the cemetery.”

It appears that the particular effect of this rule is to practically give appellant a monopoly on supplying grave markers in the cemetery, and we hold the Chancellor was correct in holding this requirement to be unreasonable and arbitrary, and thus unenforceable.

After purchasing his marker from Wyatt-Monahan, Mr. Burton selected that company to install same. Pine Crest refused to permit this to be done, contending that under their regulations, they had the exclusive right to install monuments. The trial court held this regulation to be unreasonable and enjoined appellant from enforcing or attempting to enforce such rule. Under the facts of this case, we approve rule 52, though in doing so, we should like to clearly emphasize that we are not, in general, approving a regulation which gives a cemetery the exclusive right to install monuments. Here, the cemetery regulations provide that the marking of each grave is ‘ ‘ restricted and limited to flat bronze tablets, set flush with the turf.” The testimony reflects that after a period of years, these monuments may shift or tilt from their original position, and it is necessary to reset them. Pine Crest, having agreed with the lot purchaser, to furnish perpetual care, may well be required at some time in the future, possibly even several times, to reset any marker installed by Burton. This being true, the cemetery should have the privilege of originally installing the' monument in a manner that, from its experience, will least necessitate an early resetting.

Having decided rule 52 to be valid, we conclude that, the charge of 7c per square inch for installation, set out. in rule 54, is also reasonable. Certainly, the charge is-not exorbitant.' Appellee states that this provision is-discriminatory in that it only applies to persons who' purchase their markers from outsiders, but the testimony reflects that the installation charge is included in the price of the monuments sold by Pine Crest. In other words, all lot owners pay this charge, irrespective of the source from which their monument is purchased. However, we do not agree that the 7c per square inch charge for the Perpetual Care Fund is valid, for the reason that Mrs. Burton, in purchasing this lot, had already contributed to this fund. As previously set out, the trust agreed with the grantee to set aside 10 per cent of the gross sale of the lot as a “PERPETUAL CARE FUND, the principal of which shall remain intact and the income of which shall be applied toward the cost of the care, np-keep, and maintenance of said PINE CREST MEMORIAL PARK forever.” Appellant argues that the intent of rule 54 is to provide a fund “for the perpetual care of markers rather than for the park,” but the regulation plainly states otherwise. We conclude that this portion of rule 54 constitutes a duplicate charge.

Summarizing, we hold:

(1) Rule 48 (b) is reasonable, and therefore valid.

(2) Rule 49 is unreasonable and discriminatory, and therefore invalid.

(3) Rule 52 is valid.

(4) The portion of rule 54 providing for a charge for service and installation is valid; that portion providing for a charge to the Perpetual Care Fund is invalid.

It is so ordered.

Justice Ward dissents, being of the opinion that all regulations are proper. Justice Robinson dissents.

Sam Robinson,

Associate Justice. In 1936 appellee’s mother, Mrs. J. W. Burton, purchased from appellant a certain cemetery lot having four grave spaces. J. W. Burton was buried on the lot in 1936. In 1955 Mrs. Burton was buried in one of the spaces. Not being satisfied with the marker purchased in 1936 for the grave of his father, appellee, M. P. Burton, decided to purchase a double marker for the graves of his father and mother. The appellant offered to sell such marker for $250.00, plus an installation charge of 7c per square inch, amounting to $40.04, or a total of $290.04. On shopping around appellee found a marker satisfactory to him at the WyattMonahan Monument Company for the installed price of $173.40. Appellant refused to permit the installation of the Wyatt-Monahan marker, contending that certain rules of the appellant had not been complied with. It goes without saying that appellee would not be bound by just any rule appellant could adopt. Certainly a rule providing that nothing except solid gold markers could be installed would be unenforceable. In fact, the appellant makes no contention that the rules can be sustained if unreasonable. Appellant says: ‘ ‘ The issues is this ease are as to whether or not the rules and regulations of Pine Crest Memorial Park are arbitrary and unreasonable.”

The marker from the Wyatt-Monahan Company has an alloy content of: 85°/o copper; 5% lead; 5% tin; 5°/o zinc. Mr. D. A. Newman, secretary of Newman Brothers, Inc., manufacturer of the Wyatt-Monahan marker, stated that for many years his firm and other foundries have used 85-5-5-5 alloy for casting markers. The cemetery rules require a marker consisting of not less than 87 °/o copper; not less than 5% tin; not more than 2y%°/o lead; not more than 5% zinc.

In my opinion a preponderance of the evidence shows that for all practical purposes there is no distinction between the marker supplied by Wyatt-Monahan Company and those appellant has for sale. True, there is some difference, but the only real difference is the price. So far as looks are concerned, it takes a magnifying glass to tell there is any difference at all. And there is no evidence to the effect that there is any practical difference in the lasting qualities. In my opinion, the evidence fully sustains the chancellor, and the decree should be affirmed. Therefore I respectfully dissent.

       This particular regulation is not under attack.

       One exception to the content is permitted — a marker furnished a veteran by the United States government.

       American Society for Testing Material.

       Among such cases are: Orlowski v. St. Stanislaus Roman Catholic Church Society, 161 Misc. 480, 292 N. Y. S. 333; Roanoke Cemetery Company v. Goodwin, 101 Va. 605, 44 S. E. 769; Wetherby v. City of Jackson, 264 Mich. 146, 249 N. W. 484; A. W. Carlson, Inc. v. Judd, 133 Conn. 74, 48 A. 2d 269; Chariton Cemetery Co. v. Chariton Granite Works, 197 Iowa 403, 197 N. W. 457; Roselawn Memorial Park v. DeWall, 11 Ill. App. 2d 66, 136 N. E. 2d 702; Johnson v. Cedar Memorial Park Gem. Assn., 233 Iowa 427, 9 N. W. 2d 385; Zimmer v. Congregation of Beth Israel, 203 Cal. 203, 263 P. 232; Abell v. Proprietors of Green Mount Cemetery, 189 Md. 363, 56 A. 2d 24, 174 A. L. R. 971.

       Rule 47.

       This rule was adopted in 1955.


author: J. Seaborn Holt, Associate Justice.

text:
    Childers v. Childers.
    5-1559
    313 S. W. 2d 75
    Opinion delivered May 12, 1958.
    [Rehearing denied June 2, 1958.]

      Wm. C. Jenkins & Herrn Northcutt, for appellant.

      Green S Green, YVest Plains, Mo.; Oscar E. Ellis, for appellee.
   J. Seaborn Holt, Associate Justice.

Appellant, Roy L. Childers, secured a divorce from his wife, Lucille L. Childers, in Mammoth Spring, Arkansas, October 8, 1957 under our three year separation statute (Sec. 34-1202 Ark. Stats. 1947). He had moved from Thayer, Missouri, to Mammoth Spring, Arkansas, in October 1956 and resided there since. He and his wife had lived together at Thayer, Missouri, for approximately 25 years, but had not lived together as man and wife since 1953. The parties are each 49 years of age. Two children, a minor daughter, Alberta Sue, who will be 18 years of age June 30, 1958, and a married son, 22, were born to this marriage.

In the divorce decree Mrs. Childers, appellee, was awarded use of the homestead, which they own as tenants by the entirety, at Thayer, Missouri, together with the furniture and household goods (until further orders of the court), $30 per month alimony for her support, $35 per month for the use and benefit of their minor daughter in addition to $55 per month the daughter was receiving from the rental of a salvage yard, which they also own as tenants by the entirety, and attorney’s fee of $200 for appellee’s counsel. From that decree comes this appeal.

For reversal appellant relies on these points: “1. The court did not take proper consideration of the appellant’s financial and physical condition in the award to the appellee and the child of the parties hereto and therefore there is an abuse of discretion. 2. In award of attorney’s fee for counsel for the appellee proper consideration was not given to the financial and physical condition of the appellant and therefore there is an abuse of discretion. 3. The court should have determined the property rights of appellant and appellee.”

The evidence showed that all the real property owned by the parties was as tenants by the entirety and consisted of the home in Thayer, Missouri, of approximate value of $10,000 and the salvage yard worth about $6,500. Mrs. Childers testified that her husband, according to a bank deposit book in evidence made deposits covering the period from February 2, 1952 to and including June 3, 1952, of approximately $9,950 (prior to the separation in 1953), or an average of about $1,990 per month over this 5 month period. It appears that these deposits represented gross receipts from appellant’s salvage yard and the expenses of operation are not shown.

Appellee further testified: (appellant’s abstract) “the salvage lot was covered with salvage when he gave me $2,000 in July 1952; he continually sold salvage after that but never gave me anything after the $2,000; I had the children in the home and the cost of living was high during that time; the boy is 22, married, and the daughter 17, a senior in high school; she gets $55 from the rent of the yard; not a penny was given for son’s upkeep and I paid his hospital bill out of the $2,000; I have had to help the girl as $55 is not enough to support her; he gave the boy a car and $5.00 weekly allowance and I had to pay the insurance and tires; I have used very little of the $2,000 for myself; I have had the utility bills, upkeep and repairs on the house to pay myself and I have had very little money for myself ... I do not think he divided the money in half; he gave me $2,000 before he left home and has sold scrap iron, a lot of radios, batteries and tin since that . . . The only real estate we own is the home and the salvage lot; I do not have any first hand knowledge of the appellant’s business income; I think it will take $75.00 to $100.00 to support our daughter; her expenses this month and last have been very high, our daughter is a senior in high school, my average earnings for the past year has been $30 to $40, I work only part time and try to be at home when our daughter is there . . .”

Appellant testified (appellant’s abstract) “I sold my brother what was on the salvage yard for $2,000 and leased the property with him for $35 per month, he paid $900 and owed $1,100, the arrangements were made to pay my daughter $55 a month, this being $35 a month from the lease and payments from the $1,100 owed; I gave it to my daughter and added $1,000 to it and I got nothing at all out of the deal in 1952; my wife has had the use of the home all of the time and bonds in the amount of $500 or $600, all bonds being made to me or her or to the children and she now has possession of such bonds, I gave to daughter the receipts of the scrap-iron. ’ ’ He further testified that he was averaging about $85 per month as a part time welder; that he had received a back injury that prevented his working full time. His employer corroborated this testimony. Mrs. Childers testified that she did not know -what he was earning.

The allowance of alimony and child support in cases of this nature is largely within the sound discretion of the trial court: “The amount to be allowed as alimony is within the sound discretion of the trial court; and all the circumstances of the particular case should be considered in fixing it, such as the husband’s ability to pay, the station in life of the parties, and the conduct of the wife bearing upon the cause of separation.” Johnson v. Johnson, 165 Ark. 195, 263 S. W. 379. After a careful review of all the evidence, we have concluded that the preponderance of the evidence is not against the trial court’s allowance of $30 per month to appellee as alimony, in addition to the property and other allowances to her and their daughter, Alberta Sue. While of foremost consideration is the husband’s ability to pay (See Coltharp v. Coltharp, 218 Ark. 215, 235 S. W. 2d 884), the appellant here will be relieved of any legal obligation to support his daughter after she reaches her majority in June 1958, when she will be 18 years of age; “Ordinarily the legal obligation of a parent to support a normal child ceases upon majority of the child,” Worthington v. Worthington, 207 Ark. 185, 179 S. W. 2d 648. Obviously appellant will be in a better position to pay the $30 monthly alimony awarded his wife when he is relieved of the $35 monthly payment to his daughter, out of his earnings.

Our rule is well established that the court may in its discretion award the homestead property, owned by the entirety, to the wife for her use and occupancy for her life subject only to the right of survivorship of the husband. See McClain v. McClain, 222 Ark. 729, 263 S. W. 2d 911.

We find no error in the allowance of $200 for attorney’s fee. 1

We conclude, therefore, that, while the allowances —especially to the daughter — were somewhat liberal, the evidence does not warrant a finding by this court, at this time, that the decree and findings of the trial court were against the preponderance of the evidence.

Affirmed.

Ward, J., dissents.


author: Ed. F. McFaddin, Associate Justice. George Rose Smith, J.

text:
    Hughes v. Holden.
    5-1550
    316 S. W. 2d 710
    Opinion delivered May 12, 1958.
    [Opinion on rehearing delivered October 6, 1958.]

      J. H. Spears, for appellant.

      Frierson, Walker & Snellgrove, for appellee.
   Ed. F. McFaddin, Associate Justice.

This case involves the claim of usury. The appellant, Hughes, filed the action against Appellee Holden, seeking to recover $4,128.90 because it was claimed that Holden had charged usury. The cause was tried before the Circuit Court without a jury; and the findings were made that the original contract and payments thereunder were free of usury. Accordingly, the judgment was in favor of Holden; and there is this appeal.

Holden owned a farm of several hundred acres in Crittenden County. In January, 1954 Hughes rented certain lands from Holden as a tenant, agreeing to pay Holden as rent one-third of the cotton and corn and other crops. Holden sold Hughes on credit certain farming implements, consisting of a tractor, plow, cultivator, etc., for a total in excess of $1,700. In addition, Holden, as landlord, furnished Hughes, as tenant, cash and supplies used in making the crop and amounting to several thousand dollars. There is no claim of usury in any such dealings.

The farming operations for 1954 were not financially successful, and in December of that year the parties made a new contract to rescind and supersede the landlord-tenant contract and the sales contract, both of which had been oral. In the new contract (likewise oral, but conceded, by all parties herein) Hughes agreed (a) to surrender to Holden all the farming implements without regard to value; (b) that the relation between Hughes and Holden for the crop year of 1954 was that of share-cropper instead of landlord-tenant; (c) that Hughes would receive the proceeds of only one-half of the crop instead of two-thirds of the crop; and (d) that Holden would charge all furnishings against Hughes’ half of the crop. Among other things, the effect of this was to relieve Hughes of all obligation to pay for the farming implements. All of the 1954 cotton had been sold and the proceeds retained by Holden except nine bales, and Holden took over Hughes’ half interest in this cotton at 33 cents a pound, and credited the amount against the furnishing account.

After the December agreement, changing the relationship from landlord-tenant to sharecropper as above mentioned, there were no further furnishings by Holden to Hughes and no further payments by Hughes to Holden. Some time thereafter, Hughes wanted a statement from Holden as to the final result of the 1954 operations; and Holden furnished Hughes a statement which showed that, after giving Hughes credit for all of the proceeds of his half of the crop and after charging Hughes with all furnishings, Hughes still owed Holden a balance of $740.05. This statement showed charges against Hughes of $5,093.81 and credits to Hughes’ account of $4,353.76. Included in the charge items against Hughes there was this: “Finance Charge, $370.00.” This is the item of usury.

Hughes moved from Holden’s farm to the State of Mississippi; and then on March 14, 1955 filed the present. action, seeking to recover the sum of $4,128.90, being the alleged value of all of Hughes’ one-half of the crops. It was Hughes’ contention that the charging of usury on the said statement in December, 1954 brought the previous dealings of the entire year within the interdiction of our Usury Statute (§ 68-601 et seq. Ark. Stats.)

But the defect in Hughes’ argument is in the fact that usury never entered into any phase of the original contract and was not brought into the dealings between the parties until the statement that Holden furnished Hughes after all dealings had been completed. The Trial Court found that in the original contract, “There was no provision for the payment of interest for moneys advanced to the plaintiff.” We can find no evidence that interest on the account was ever discussed in the conversations for the “new contract” in December; so the first appearance of any interest charge was in the statement furnished Hughes by Holden; and that was after all furnishings had been made and all crops accounted for. In short, the usury appeared only after the contract had been executed.

We have many times held that the taint of usury in a subsequent usurious contract does not invalidate a prior lawful contract, and the original contract may be enforced if clearly separated from the usury of the subsequent contract. Walter v. Adams, 138 Ark. 411, 211 S. W. 365; Bank of Malvern v. Burton, 67 Ark. 426, 55 S. W. 483; Hynes v. Stevens, 62 Ark. 491, 36 S. W. 689; Johnson v. Hull, 57 Ark. 550, 22 S. W. 176; Tillman v. Thatcher, 56 Ark. 334, 19 S. W. 968; and Humphrey v. McCauley, 55 Ark. 143, 17 S. W. 713. In 102 A. L. R. 573 there is an annotation entitled, “Contract not tainted with usury in inception as affected by subsequent usurious transactions in connection therewith ’ ’; and cases were cited from more than a score of jurisdictions to sustain the general rule that subsequent usurious transactions will not invalidate an original contract free of usury. See also 91 C. J. S. 640. Applying the rule of these cases to the case at bar, we are clearly of the opinion that Hughes is not entitled to recover any part of the proceeds of the crops because those proceeds were applied to his account by mutual consent before any usury ever entered into any of the dealings. So, on the main issue the judgment of the Trial Court is affirmed.

There is, however, a phase of this case which entitles Hughes to some relief, although it is a “Pyrrhic victory.” In his complaint, Hughes alleged that the finance charge of $370.11 was usurious on the furnish account and Hughes prayed for “all other relief.” He proved that the $370.11 was usurious; so he was entitled to a judgment finding that the finance charge was usurious and that Holden could not recover any part of the $740.05. When the Court dismissed Hughes’ complaint, the effect was to leave it appearing that Hughes owed Holden a balance of $740.05. But when the Court found, as it did, that the usurious $370.11 entered into the balance of $740.05, then the Court should have found that the usury tainted the balance claimed by Holden against Hughes. The effect of such a finding would have been to cast Holden for the costs in the Trial Court as well as in this Court. So, we affirm the Trial Court in all respects except in the taxing of costs; and the effect of this modification is to charge all costs of all courts against Holden.

George Rose Smith and Ward, JJ., dissent as to the modification.

ON REHEARING

George Rose Smith, J.

In a petition for rehearing the appellee contends that we erred in modifying the trial court’s judgment, by awarding the appellant his costs. We have concluded that this contention must be sustained. The circuit court was not asked to declare that the balance ostensibly owed to Holden was uncollectible, on account of usury, and in fact such a declaration would have added nothing to the legal effect of the judgment. This is so because the appellant’s complaint put in issue the account between the parties, and by the doctrine of res judicata the defendant’s failure to assert a counterclaim precludes his enforcing it at a later date. Ark. Stats. 1947, § 27-1121; Robinson v. Mo. Pac. Transp. Co., 192 Ark. 593, 93 S. W. 2d 311; Shrieves v. Yarbrough, 220 Ark. 256, 247 S. W. 2d 193. By his complaint Hughes sought a money judgment only, for $4,128.90. He recovered nothing either in the trial court or by his appeal to this court; so he is not entitled to his costs. Ark. Stats. 1947, § 27-2316; William v. Buchanan, 86 Ark. 259, 110 S. W. 1024; Supreme Court Rule 24.

The appellee’s petition for rehearing is granted, and the trial court’s judgment is affirmed without modification. The appellant’s petition for rehearing is denied.

McF addin, J., dissents.

       We copy a portion of the findings of the Trial Court: “(1) The plaintiff and defendant entered into a landlord and tenant agreement at the outset of 1954 whereby the rent reserved was one-third (1/3) of the crops grown on defendant’s land. As a further consideration, defendant agreed to furnish plaintiff with money and supplies necessary to make the crop, and to sell to plaintiff a tractor and certain tools to use in making the crop. There was no provision for the payment of interest for moneys advanced to the plaintiff. (Italics supplied.)
      “(2) The parties farmed under this agreement until some time in December, at which time it appeared to both that the contract was an unprofitable one for both parties. Plaintiff could not pay for the tractor and tools, and plaintiff could not pay for previous advances of money and supplies out of his share of the proceeds of the crop.
      “(3) The parties then agreed that in consideration of the surrender of the tractor and tools and the mutual surrender of their respective rights under their contract they would substitute a new contract


author: Minor W. Millwee, Associate Justice.

text:
    Ark. Power & Light Co. v. Cox.
    5-1563
    313 S. W. 2d 91
    Opinion delivered May 12, 1958.

      House, Holmes, Butler & Jewell, for appellant.

      Holland A. Bradley, for appellee.
   Minor W. Millwee, Associate Justice.

Ernest E. Cox was local manager for the appellant, Arkansas Power & Light Company, in the territory served by its office in Malvern, Arkansas, for 27 years prior to November 5, 1955. On that date he was accidentally killed by the upset of an automobile furnished him by his employer while driving on U. S. Highway 51 west of Malvern. The instant appeal is from a judgment of the Hot Spring Circuit Court affirming an award of compensation by the "Workmen’s Compensation Commission to appellee, Mrs. Ollie B. Cox, his widow.

Appellant contends that the injury and death of Cox did not arise out of and in the course of his employment within the meaning of the Workmen’s Compensation Law (Ark. Stat. Sec. 81-1301 to 81-1319). It is argued that there was no substantial evidence to support the Commission’s finding that Cox had permission to make the trip out of which his death arose or to support the conclusion that he was acting within the scope of his employment.

There is little dispute in the material facts. The territory served by Cox as appellant’s local manager embraced all of Hot Spring and parts of Garland and Grant counties. The automobile furnished him by appellant, and driven by him at the time of his fatal injury, was equipped with a two-way radio with which he kept in touch with the office, the other employees of appellant in the field and appellant’s district office at Hot Springs, Arkansas, while he was not in the office in Malvern. He also used the car, which was maintained entirely at appellant’s expense, in attending periodic meetings of local managers in Hot Springs. As a local manager, he had the responsibility of seeing that continuous electric service was rendered to appellant’s customers within his territory. He was not confined to any particular hours or places of work but was subject to call on a 24-hour basis and was expected to keep himself and the car available at all times in case.of such emergencies as storms and wrecks involving company property. These emergencies occurred about 20 or 25 times a year.

The deceased had two homes. One in Malvern and the other near Jones Mill on Lake Catherine where he and his family spent 6 or 8 weeks out of each year. He always used the specially equipped company car in traveling to and from both homes and the appellant not only expected but required him to do so. Upon reaching the home it was his custom to leave the two-way radio on until late at night. He usually arrived at his home on Saturdays and other days of the -week, except Sunday, at from 5:30 P. M. to 7 P. M. On Saturday November 5, 1955, he left Malvern about 5:45 P. M. for his home on the lake where he planned to have dinner with his wife and visiting relatives. A few minutes later he was killed by upset of the company car while proceeding on the most direct route to the lake home. Death was instantaneous and the first person to reach the scene found the headlights of the car burning and the radio receiving set in the car turned “on” as indicated by a green dash light on the vehicle.

While there was some dispute in the testimony concerning deceased’s right to use the company car on trips to the lake home when he and his wife were not actually residing in the home, there was substantial evidence to the effect that deceased kept and used the car on all trips to both homes and other places in his territory with the full approval of appellant; and that, being subject to call 24 hours each day, the appellant required him to do so in order to be available for all emergencies.

Injuries sustained by employees while going to and returning from their regular place of employment are not, as a general rule, deemed to “arise out of and in the course of the employment” within the meaning of the Workmen’s Compensation Law. This is commonly referred to as the “going and coming rule.” However, one of the many well established exceptions to this general rule is that off-premises travel injuries are compensable if the employee is on his way to or from work in a vehicle owned or supplied by the employer. We recognized the exception in Blankenship Logging Co. v. Brown, 212 Ark. 871, 208 S. W. 2d 778, where we approved the following statement by the Washington Court in Venho v. Ostrander Railway & Timber Co., 185 Wash. 138, 52 P. 2d 1267:

“When a workman is so injured, while being transported in a vehicle furnished by his employer as an incident of the employment, he is within ‘the course of his employment,’ as contemplated by the act. In other words, when the vehicle is supplied by the employer for the mutual benefit of himself and the workman to facilitate the progress of the work, the employment begins when the workman enters the vehicle and ends when he leaves it on the termination of his labor.

“This exception to the rule may arise either as the result of custom or contract, express or implied. It may be implied from the nature and circumstances of the employment and the custom of the employer to furnish transportation.” See also, Hunter v. Summerville, 205 Ark. 463, 169 S. W. 2d 579; and Tinsman Mfg. Co. v. Sparks, 211 Ark. 554, 201 S. W. 2d 573; Owens v. Southeast Arkansas Transportation Co., 216 Ark. 950, 228 S. W. 2d 646; Frank Lyon Co. v. Oats, 225 Ark. 682, 284 S. W. 2d 637.

The applicable rule is stated by the textwriter in 58 Am. Jur., Workmen’s Compensation, Sec. 218, as follows: “As an exception to the general rule that an employee is not in the course of his employment while going to or returning from his work, it is generally held that where transportation to or from work is furnished by the employer as an incident of the employment, an accidental injury sustained by the employee while being so transported arises out of and in the course of the employment.” Many cases from other jurisdictions on the subject are collected in an annotation in 145 A. L. R. 1033. Other recognized exceptions to the general rule applicable here, and under which off-premises injuries are held compensable, involve situations (1) where the employee is subject to call at all hours; and (2) when the employee has a clnty to perform for the employer while on route home.

Appellant relies heavily on the recent case of Martin v. Lavender Radio & Supply, 228 Ark. 85, 305 S. W. 2d 845, but the employer there did not furnish the means of transportation. The majority held there was no causal connection between the accident and the employment when the workman, in driving his own car to work, had not yet reached the point where he usually decided whether he would go by the postoffiee for his employer’s mail or send some other employee for it after reporting for work. Here the deceased was a managerial employee subject to call at all times and there is substantial evidence to the effect that it was his duty to take the specially equipped automobile of his employer with him to the lake home for the mutual benefit of himself and his employer, and that he was performin'*’ for his employer a substantial service required by his employment at the very moment of his fatal injury. In these circumstances we cannot say the Commission erred in concluding that his death arose out of and in the course of his employment. The judgment sustaining the findings of the Commission is, therefore, affirmed.


author: George Rose Smith, J.

text:
    Hickerson v. Lyon.
    5-1543
    312 S. W. 2d 930
    Opinion delivered May 12, 1958.

      John E. Harris & Clinton R. Barry, for appellant.

      Warner, Warner & Ragon, for appellee.
   George Rose Smith, J.

This suit was brought by the appellant, George Hickerson, to obtain cancellation of a deed by which he conveyed certain business property in Fort Smith to his daughter, Elma Dell Lyon, and her husband, the appellees. It is asserted that the grantees led Hickerson to think that he was executing a will instead of a deed and, further, that the deed is void for want of a proper acknowledgment. The chancellor held the deed valid as between the parties and therefore dismissed the complaint for want of equity.

The preponderating evidence rebuts the charge of fraud. The property was originally purchased in 1945, soon after Elma Dell’s husband, Gloyd Lyon, had returned from military service. Title was taken jointly in the names of Hickerson and his first wife and Lyon and his wife. The two couples improved the property, and for some years Llickerson and his son-in-law, Lyon, together operated a filling station and a liquor store in part of the building that had been put on the land. In 1948 Gloyd and Elma Dell conveyed their half interest in the property to Mr. Hickerson. The parties are not in agreement as to whether any consideration was paid for that conveyance.

Elma Dell’s mother, the first Mrs. Hickerson, died in 1949, and Hickerson remarried three years later. There is evidence, which Hickerson denies, that his second wife left him early in 1956. At that time Hickerson expressed a desire to make a will in favor of' Elma Dell, his only child. According to Elma Dell, it was decided, however, that Hickerson would execute a “life estate deed” instead of a will, to be certain that Hickerson’s second wife would not receive anything more than her dower in the property. An attorney was employed to prepare the deed now in question, by which Hickerson conveyed the property to his daughter and son-in-law, with a life estate being reserved to the grantor. This deed was admittedly signed by Hickerson at the attorney’s office on January 31, 1956, but Hickerson insists that he was induced to believe that the instrument was a will.

The chancellor was fully warranted in rejecting the charge of fraud. It is true that a confidential relation exists between a father and his daughter, but this does not prevent either from making a voluntary gift to the other. Giers v. Hudson, 102 Ark. 232, 143 S. W. 916. Such a gift is closely scrutinized in equity and will be set aside if it appears that the person in the dominant position has overreached the other. Young v. Barde, 194 Ark. 416, 108 S. W. 2d 495. We do not find that the father’s confidence was abused in this instance.

When the deed was executed Hickerson was an experienced businessman, in his early sixties. He had previously bought and sold real estate on several occasions. It cannot be said that he was under his daughter’s influence ; to the contrary, his seems to have been the more forceful character of the two. The other two persons present at the execution of the deed — Elma Dell and the lawyer — both testify that the nature of the conveyance was fully explained to Hickerson and that he understood its effect. In the circumstances it was not unnatural for Hickerson to give a vested remainder to his daughter and son-in-law, in view of Hickerson’s apparent dispute with his second wife and in view of the Lyons’ original interest in the property, which they may well have conveyed to him without receiving any consideration. All these facts are sufficient to overcome Hickerson’s unsupported statement that he believed the instrument to be a will.

The second point involves the effect of an invalid acknowledgment. The attorney who prepared the deed testified that his stenographer had not yet qualified as a notary public and that he, with Hickerson’s consent, took the deed down the street and had it notarized. It is conceded that Hickerson did not appear before the notary. The appellant, citing cases such as Miles v. Jerry, 158 Ark. 314, 250 S. W. 34, and Hall v. Mitchell, 175 Ark. 641, 1 S. W. 2d 59, contends that the invalidity of the acknowledgment rendered the conveyance void.

The cited cases do not apply here, for they involved the effect of a wife’s failure to acknowledge the execution of an instrument affecting the family homestead. In those cases we merely gave effect to the statute which provides that a conveyance affecting the homestead is of no validity unless the wife joins in the execution of the instrument and also acknowledges it. Ark. Stats. 1947, § 50-415. Here the property was not the grantor’s homestead, and consequently the unacknowledged deed was good as between the parties. Williams v. Kitchell, 212 Ark. 114, 204 S. W. 2d 873; McSwain v. Criswell, 213 Ark. 775, 213 S. W. 2d 383. It may he true that the notary public violated the criminal law in executing a false certificate, Ark. Stats., § 41-1818; but titles without number would he upset if we should hold that his wrongdoing made the deed void.

Affirmed.


author: Paul Ward, Associate Justice.

text:
    Ark. State Highway Comm. v. Watkins.
    5-1556
    313 S. W. 2d 86
    Opinion delivered May 12, 1958.

      Mehaffy, Smith £ Williams, W. R. Thrasher, Dow-ell Anders £ Bill Demmer, for appellant.

      Wayne W. Owen £ II. B. Stubblefield,, for appellee.
   Paul Ward, Associate Justice.

This is a condemnation proceeding involving 15.51 acres of land belonging to appellees. All testimony relative to the value of the land taken from appellees by the Arkansas Highway Department in this suit was directed to a parcel of land consisting of 28.955 acres. The 15.51 acres mentioned above is arrived at as follows: All four of the appellees own an undivided one-half interest in 26.885 acres, amounting to an entire interest in 13.44 acres, and all four appellees own the entire interest in 2.07 acres, making a total taking of an entire interest in 15.51 acres.

A jury awarded appellees damages in the sum of $45,000. Thus the judgment places a value of slightly more than $2,900 per acre for the land actually taken for highway purposes. It will be noted that in arriving at the acreage value above no allowance is made for severance damage or damage to adjoining property. We think, however, as will be later shown, there is no substantial evidence to sustain very little if any such allowances. Moreover we are unable to see how the jury could have fairly included in its total verdict such allowances since it appears that all the adjoining land is owned by only part of the appellees.

On appeal appellant urges two points for our consideration. One: It was reversible error for the court to permit the introduction of Exhibit 5 which is a plat showing the subject land and adjacent land divided into lots, blocks, and streets, and also in permitting the introduction of testimony relative thereto. Two: The verdict is excessive in that it is not supported by substantial evidence. Before discussing these points a summary of the essential background facts should be helpful to a better understanding of that discussion.

The subject land is located approximately four air-miles in a northeasterly direction from the Main Street bridge in Little Eock, and is to be used by the Highway Department in the construction of a new super-highway from Little Eock via Jacksonville. It is approximately four-fifths of a mile long (running generally north and south) and is 300 feet wide except that it is wider near the middle. The wider portion will be utilized for an over-pass and access roads on both sides of the highway. Approximately half (the south half) of the strip coincides with or includes a portion of the present highway No. 67. The land adjacent to and surrounding the subject strip is not in cultivation but is covered with small oak trees, and the strip is approximately one mile from the Lakewood Addition to North Little Eock.

One: The evidence shows that the best and most valuable use that could be made of the subject land and the adjacent land is for residential purposes. It is not disputed that appellees had the right to introduce competent testimony to establish and explain the suitability of the land for that purpose. In attempting to do that, appellees exhibited a Plat (shown as Exhibit 5) to the jury which showed the subject land and the adjacent land to be laid off in lots, blocks, and proposed streets. According to this exhibit there were approximately 70 lots on the subject strip, with approximately 140 lots on the east side, and approximately 190 lots on the west side thereof. After the Plat had been handed to the reporter and marked for identification only, the following occurred :

Questions by Mr. Stubblefield:

Q. Just hold that, if you will, so the jury can see your explanation, and tell the jury what that is.

A. This is a map prepared by me showing the land being condemned in the different colors due to identification and by parcel numbers, the red lines show the existing highway and showing where the project starts through the land owned by Mr. Matthews. This is shown over a layout of streets and roads which is the normal way that we arrive at land cost and values of land.

The Plat was offered in evidence over the objections of appellant and when the witness admitted the area had not “been platted as indicated by the map,” the court sustained the objection. It is not clear to us however, whether the Plat was later considered in evidence. As stated before, the Plat is a part of the record here, marked Exhibit 5, without further explanation, and it was shown to the jury. In any event, we think the effect of the court’s ruling, in sustaining appellant’s objection, was erased by what occurred thereafter. On re-direct examination of the witness (Arthur H. Thomas) he was asked to explain to the jury in a little more detail about the number of lots the land was going to be divided into, when appellant again objected. The Court stated: “He may testify as to how he arrived at it without reference to the exhibit.” Witness was then asked: “Q. “You arrived at the figure by figuring out how many lots?”.

Again appellant objected, but was overruled. Exceptions were saved by appellant. Witness then stated:

A. There is one tract of this land that lies adjacent and along an existing paved road which can be used for development; where the road is already dedicated, you can get four lots of the type and size that is being developed in Lakewood per acre and I put a per front foot on that property of $25.00 per foot which is about $2,000 per lot. I think that is a very conservative figure since we are getting $3,500 per lot in Lakewood. On the land being condemned, not fronting on existing pavement, I used three and a half lots per acre and a figure of $1,600 per lot for those eighty-foot wide lots and arrived at this figure that way.

Q. And that in your opinion was the value per acre on March 12, 1957 ?

A. I think that is a very conservative figure because we are getting much more than that in Lakewood right now.

Previously the witness had stated that lots in Lakewood sold for $6,000 to $12,000 a piece. Finally the witness stated that in his opinion the land in question was worth $6,000 per acre.

There can be little doubt that the above testimony and other testimony of a similar nature might have influenced the jury in fixing a value on. the subject land. Such testimony allowed the jury to compare the value of the subject lots in Lakewood Addition without any knowledge of numerous factors that would have to be considered in order to make the comparison fair and equitable. It necessarily follows then that the jury’s verdict would be based on conjecture and speculation. Our research of the numerous authorities dealing with testimony of this nature indicates it is universally condemned. The general rule is well stated in Nichols, Eminent Domain, Third Edition, Chapter 12, Sec. 3142(1) in the following language:

“It is well settled that if land is so situated that it is actually available for building purposes, its value for such purposes may be considered, even if it is used as a farm or is covered with brush or boulders. The measure of compensation is not (emphasis supplied) however, the aggregate of the prices of the lots into which the tract could best be divided, since the expense of cleaning off and improving the land, laying out streets, dividing it into lots, advertising and selling the same, and holding it and paying taxes and interest until all the lots are disposed of cannot be ignored and it is too uncertain and conjectural to be computed. The measure of compensation is the market value of the land as a whole, taking into consideration its value for building purposes if that is its most available use.”

In United States v. 620 Acres of Land, Etc., 101 Fed.Supp. 686, which concerned the condemnation of land in Marion County, Arkansas, the Court, at page 690, approved this statement:

‘ ‘ To warrant the admission of testimony as to value for purposes other than that for which it is actually used, however, regard must be had for existing conditions and wants of the community, or such as may reasonably be expected in the immediate future. The uses considered in fixing value must be so reasonably probable as to have an effect upon the present market value of the land and a speculative value cannot be considered. ’ ’

In the case of Carolina Power and Light Company v. Clark, 243 N. C. 577, 91 S. E. 2d 569, the court, in dealing with fixing the value of property based on its best adaptable usage, said that consideration must be given to existing business “or wants of the community, or such as may be reasonably expected in the immediate future to affect present market value.” It was then said by the court: “purely imaginative or speculative value should not be considered,” citing a long line of cases. This court, in L. R. Junction Ry. v. Woodruff, 49 Ark. 381, 5 S. W. 792, made this pertinent observation:

“One who anticipates an increase in the value of his property may feel it a hardship to surrender it without receiving more than its present market value, but it would be a hopeless task to either' measure or satisfy the anticipations of a sanguine land owner.”

Applicable to the question here considered is the language approved in Louisiana Ry. & Nav. Co. v. Baton Rouge Brickyard, 136 La. 833, 67 So. 922:

“At the time of the institution of this suit the tract in question had not been subdivided, and the question before the jury was as to the market value as a whole, considering all the uses to which it was adapted. The value of the tract for town lot purposes was one of the factors to be considered, but what the owner or purchaser might realize by a subsequent subdivision of the property and sale of lots partakes too much of the character of speculation to serve as a basis of valuation at the date of the institution of the present suit.”

“It is proper to show that the property is suitable for division into village lots, and that it is valuable for that purpose, but it is not proper to show the number and value of such lots.” Lewis Eminent Domain, Vol. 2 (2nd Ed.) P. 1058.

The matter of determining the value of property on the basis of a future subdivision into lots was under consideration in City of Philadelphia v. United States, 53 Fed. Supp. 492. There this question was asked: “Into how many lots would you subdivide this land?” The court in commenting on the propriety of the above question, said: “The question was not framed to test the basis of the witness” estimate, but was designed to circumvent the prohibition against introducing figures of subdivision. To have permitted this question, even on cross-examination, would have introduced a speculative feature to the minds of the jurors and would have been contrary to the well settled law of Pennsylvania.” The court then quoted, with approval, the following:

“Equally improper is evidence showing how many building lots the tract under consideration could be divided into, and what such lots would be worth separately. It is proper to inquire what the tract is worth, having in view the purposes for which it is best adapted; but it is the tract, and not the lots into which it might be divided, that is to be valued.”

The reason for the rule above set out is well demonstrated in the case under consideration. 'While some of appellees’ witnesses explained that, in comparing the value of subject land and lots with other subdivisions of Little Rock and particularly with Lakewood Addition; they had taken into consideration the location and the necessity of supplying paved streets, water and sewerage, etc., yet that fact in no way eliminates the element of chance and speculation. On the other hand, such explanation merely emphasizes that element. Any attempt to determine the cost of such improvements would have entailed the use of time and technical knowledge beyond the scope of practicability and reason. In addition to the above, many more speculative matters would arise for consideration.' For example: How much, other land in the vicinity is available for subdivisions; What will be the future demand for additional building sites; How long will it be before the subject land is made ready for the erection of dwellings; How fast will the lots be sold, and how much will be the finance charges, and; What will be the cost in real estate commissions for selling the property, and what will be the expense of numerous other items that could be mentioned?

It has been suggested that this court has approved the introduction of a Plat in a case similar to the one under consideration in Ark: State Highway Comm. v. O. & B. Inc., decided April 22,1957, 227 Ark. 739, 301 S. W. 2d 5. The facts in that case, however, were entirely different. There the subject land was a part of existing subdivisions of the city of Jacksonville. In that case the court pointed out the vital distinction to which we have referred by stating:

“This is not a case where use for subdivision purposes is merely speculative and too remote to influence present market value. As previously indicated, it is undisputed that the land of appellees was adjacent to and surrounded by well developed residential sections of the fast growing City of Jacksonville and that its best and most logical use was for residential lot development. In these circumstances we have held the testimony objected to by appellant to be admissible to establish market value.”

For the reasons set out and explained above we conclude, therefore, that the admission of the indicated testimony constituted reversible error.

Two: We have also concluded that the judgment for $45,000 is excessive. In order not to unduly extend this opinion we shall, in attempting to justify this conclusion, rely on all pertinent portions of what has already been set forth and upon a brief summary of the rest of the testimony relative to the value of the 15.51 acres of land.

A little more than a year before this litigation was instituted appellee Matthews bought and appellee Watkins sold the subject land (as a part of a 1,000 acre tract) for $225 per acre. The record shows that both parties knew at the time of the probability that the new highway would be built. It further appears from the contract of sale that the parties themselves anticipated some of the land might be taken by condemnation, and that they apparently thought the remuneration would not amount to more than $600 per acre.

Appellant’s witness, Harry A. Pittard, who showed a familiarity with the subject land and also the development in Lakewood, placed the market value of the subject land at $582 per acre at the time of taking. Wesley Adams, another witness for appellant, who showed a familiarity with the subject land and lands in the vicinity, and who, like Pittard, took into consideration all mentioned factors bearing on its utilization for residential development, valued the subject land in several different parcels as it is described in the pleadings and as shown by Exhibit 5. The highest value was $750 per acre for certain portions and the lowest for any of it was $500 per acre. James H. Larrison, another witness for appellant, who was experienced in the sale and valuation of real estate in the Little Rock vicinity and who had inspected and appraised property for many years, made an inspection of the property in question. After taking into consideration the best usage of the property for residential purposes he fixed a value of $500 per acre.

Over against the above appellee, Matthews, together with other witnesses who were apparently as well qualified as appellant’s witnesses, fixed the value of the subject land as high as $6,000 per acre. Matthews admits paying $225 per acre for 1,000 acres but said two-thirds of that acreage was not as valuable as the subject land. It seems to follow from this that one-third of the purchased land at $6,000 per acre would amount to much more than the total purchase price — in fact to $1,775,000 more. It must also be remembered that the other appellee sold the land for the same price that Matthews paid for it. In addition, appellees estimate that other land, not taken, was damaged several thousands of dollars, and that they were entitled to still more damages on account of severance.

We cannot escape the impression that appellees were over impressed with the value of the subject land based on their expectations of what it would be worth sometime in the future when it might be ultimately improved and sold as lots. However, as heretofore pointed out, full credence cannot be given to testimony based on such eventualities in arriving at present market value.

We do not think appellees are entitled to severance damages. One witness at least stated he did not know appellant’s plans provided for a wide over-pass across the subject land with walkways on either side, and also for a complete system of access roads. The record reveals such to be the plans. We find no substantial evidence to show that other lands belonging to appellees, or any of them, will be reduced in value because of the construction of the new highway. The evidence on the part of appellant was that the value of the said lands would be increased rather than decreased. Such would appear to be the implied effect of appellees’ testimony. That is, the lands which one of them sold for $225 per acre a short time previously are now worth around $5,000 or $6,000 per acre.

In summing up we find, under the most liberal view, no substantial evidence to support a valuation of the subject land in excess of $1,500 per acre.

Since the error pointed out in the first part of this opinion does not reach appellant’s liability for damages in some amount, this court can, in accordance with established procedure, offer a remittitur. See: Chicago, Rode Island & Pacific Railway Co. v. Caple, Admmistrator, 207 Ark. 52, 179 S. W. 2d 151; McCord v. Bailey and Mills, 195 Ark. 862, 114 S. W. 2d 840, and; St. Louis, Iron Mountain & Southern Railway Company v. Adams, 74 Ark. 326, 85 S. W. 768.

Therefore, if appellees will enter a remittitur so as to permit a recovery of only $23,265, the judgment so reduced will be affirmed by us. Otherwise, if such remittitur be not entered within 17 calendar days after the date of delivery of this opinion, the judgment of the trial court will be reversed and the cause remanded for a new trial.

Harris, C. J., and McFaddin, J., would affirm for the full amount.