author: Steele Hays, Judge. Marian F. Penix, Judge,

text:
    Verna PLANT v. Carl PLANT
    CA 80-297
    609 S.W. 2d 93
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980

      Steve W. Elledge, for appellant.

      Macom, Moorhead, Green & Henry, by:J. W. Green, Jr., for appellee.
   Steele Hays, Judge.

This suit was originated by Carl Plant to confirm his ownership of 67 shares of stock in Arkansas Land & Timber Company, Inc. Title to the shares was in his son, Max Plant, who died on November 11, 1977. Carl Plant had possession of the stock certificate representing the shares. Carl Plant asserts that he transferred the shares to his son on August 26, 1977, delivered the stock certificate to him and his son immediately returned the certificate to his father, but failed to endorse the certificate through an oversight. Named as defendants were Verna Plant, widow of Max Plant and executrix of his estate, who claimed ownership of the stock by gift inter vivos, the corporation and its president and secretary, Mr. & Mrs. Ellis Throckmorton.

The trial court found that no gift inter vivos of the 67 shares was intended by Carl Plant on August 26, 1977, when the certificate was issued, as it was not intended that the transfer of the stock be made without the right of recall. Verna Plant appeals on a number of points, the only one we need treat is the assertion that the finding of the trial court that no gift inter vivos was intended by Carl Plant is against the preponderance of the evidence.

Rule 52 (ARCP) provides that the findings of fact of the trial court will be affirmed unless clearly erroneous (clearly against the preponderance of the evidence). We have come to the conclusion that the evidence of a valid, irrevocable gift by Carl Plant to Max Plant on February 13, 1976, is clear and convincing, sufficient to meet the requirements of the law, and the trial court erred in failing to so find.

The facts are'not greatly disputed: prior to February 13, 1976, Carl Plant decided to transfer his ownership of 335 shares of stock in Arkansas. Land & Timber Company, Inc., to his sons, Max and Carl D. His reasons were his advancing years, poor health and the tax advantages of divesting his estate of this asset. His own testimony and that of Carl D. Plant bear witness to these purposes and no other. Carl Plant instructed Mr. Ellis Throckmorton of his desire to transfer the shares and gave him no qualifying instructions. Carl Plant’s original certificate was surrendered and two new stock certificates were issued on February 13, 1976, 168 shares going to Carl D. Plant and 167 shares to Max Plant. The actual, manual delivery of these stock certificates was carried out in Clarendon on February 13, 1976, at the home of Max and Verna Plant. Appellee’s brief makes the unsupported statement that the stock certificate was “at all times in the possession of Carl Plant.” But the testimony of Carl D. Plant clearly shows that the certificate was delivered to his brother at the February meeting and that either he or Max placed the certificates in a bank lock box to which all three Plants had independent access. Just when the certificate of Max Plant was removed is not disclosed, but prior to August 26, 1977, Carl Plant elected to sue the corporation and it was decided that 100 shares from Max would be transferred back to Carl Plant. The three men then made a trip to the office of the company’s lawyer in Jacksonville, Arkansas, where the certificate was voided and two new ones issued in its place: certificate number nine for 67 shares to Max Plant and a certificate for 100 shares to Carl Plant. Presumably, the oversight regarding endorsement by Max Plant occurred at this meeting on August 26, 1977, though that is not made clear in the testimony.

On November 11, 1977, Max Plant died of a terminal illness and on the day of his burial or soon after, Verna Plant received a check payable to Max Plant for $301 as a dividend on the 67 shares. Not certain what to do with the check, she took it to Carl Plant, who said, according to her testimony, that he would see that it was returned to her, which statement he did not refute. On January 9, 1978, Mr. Carl Plant endorsed the name of Max Plant by Carl Plant and received payment of the check. Thus, the dispute over ownership of the 67 shares arose and Carl Plant filed suit in November of 1978 to confirm his claim of ownership. The case law of gifts in Arkansas is copious. Both sides cite Bowling v. Gibson, 266 Ark. 310, 584 S.W. 2d 14 (1979), as a recent and definitive expression of the law on the subject:

To constitute a valid gift inter vivos there must be an actual delivery of the subject matter of the gift to the donee with a clear intent to make an immediate, unconditional and final gift beyond recall, accompanied by an unconditional release by the donor of all future dominion and control over the property so delivered. All of the elements of the completed inter vivos gift must be proved by clear and convincing evidence.

To begin with, there can be no real question but that in determining whether a gift was made the pertinent and significant event occurred on February 13, 1976, rather than on August 26, 1977, as the trial court found. Just how this misconception developed is not clear, but it is clear that the complaint, the judgment and the bulk of appellee’s evidence treat the August 26, 1977, transfer as if that were the crucial transaction in determining whether a gift had been made. Obviously, it is the earlier date that governs and the testimony of both Carl Plant and Carl D. Plant show intent and delivery. Carl Plant’s present intent to make a gift is best summarized in his own testimony: Q: “If you had died first, did you intend for that stock to go to Max?” A: “Well, I suppose so, at that moment and at that time, yes.” (T. 14)

The law is settled that a gift operates in the present and once made becomes irrevocable. In Hopson v. Buford, 225 Ark. 482, 283 S.W. 2d 337 (1955), it was said:

We have held in the case of Williams v. Smith, 66 Ark. 299, 50 S.W. 513, that, “If the gift be intended in presentí, and be accompanied with such delivery as the nature of the property will admit, and the circumstances and situation of the parties render reasonably possible, it operates at once, and, as between the parties, becomes irrevocable.”

When the circumstances surrounding the transaction of February 13, 1976, are examined in their entirety, we are convinced that Carl Plant intended to do the very thing he did, i.e., to transfer ownership of his shares of stock to his two sons as equally as numerically possible. The law places considerable emphasis upon the formalities of a transfer of shares of stock by the execution of a stock certificate and when, as here, the records of the corporation as to ownership on the instruction of the owner are properly followed, the original certificate submitted and voided, new certificates are issued in the name of the donee and then manually delivered into the possession of the donee, there can be no real doubt but that a gift in accordance with law is intended.

It is said that a man is bound by his acts [Williams v. Smith, 66 Ark. 299, 50 S.W. 513 (1899)] and the acts as well as the testimony of Carl Plant speak clearly that he intended to do something for his sons during his lifetime and his assertions that it was always understood that the stock was to remain his are lacking in weight and plausibility. The utterances have all the appearance of afterthought, influenced no doubt by the fact that his son, Max, predeceased him and his own health improved.

Carl Plant contends that the certificate to the 67 shares remained in the name of Max Plant through oversight, but that argument is not convincing. It is implausible that Carl Plant and Max Plant would have made a trip to Jacksonville to arrange for the issuance of new certificates — one to Max for 67 shares and one to Carl for 100 shares — if they actually intended all 167 shares to belong to Carl Plant. Carl Plant’s claim to the 67 shares relies on this theory as the explanation of his possession of the certificate, but the testimony of both Carl Plant and Carl D. Plant is devoid of any description of this alleged occurrence. What was done with the certificate itself after August 26, 1977, is not clear, but the fair inference is that it was kept in a lock box to which all three men had unrestricted access.

It is argued that Carl Plant was entitled to receive any proceeds of the stock, bringing the case within the rationale of Bowling v. Gibson, supra. We agree that this is one circumstance to be considered; however, it is not controlling, but simply to be considered along with other circumstances. Miller v. Reigler, 243 Ark. 251, 419 S.W. 2d 599 (1967), for example. The point is not persuasive in this case, as the only dividend check issued (except for the one interpleaded) was made out to Max Plant, mailed to his address, and plainly belonged to his estate. Thus, the circumstances here are not those of Bowling v. Gibson. The fact that Verna Plant asked Carl Plant what to do with the check and gave it to him attests to nothing so much as her uncertainty as to what to do with the check. Besides, the records of the company showed Max Plant to be the owner without restriction and Mr. Throckmorton testified that so far as the corporation records were concerned Max was the owner.

It is also argued that Max Plant never attempted to sell the stock thereby giving weight to the argument that his father had the right to recall the stock and, too, that the August 26, 1977, transfer of the 100 shares-bears out that understanding. We attach no particular significance to the fact that Max did not attempt to sell the stock. Certainly, he had every legal right to sell the stock had he elected to do so and the purchaser’s title would be unassailable. The second point is of more concern, in the light of repeated assertions that Carl Plant always had the power to recall the stock. But the testimony on this point lacks weight and substance. It is essentially the conclusory utterances of Carl Plant and Carl D. Plant and we believe the law requires more than general assertions, some years after the event itself, in order to set aside the formal acts of conveyance. Examined on the whole, we think the evidence proves that when Max Plant returned the 100 shares as requested by his father, he was simply responding to a filial duty rather than a legal duty, not uncommon in many families.

We are not unmindful of the testimony of Carl D. Plant that Max Plant acknowledged in the presence of Verna, Mr. Throckmorton and others at the February meeting that his father might need help in his old age, saying, “We don’t get anything from it till such time as Daddy dies.” But Verna Plant and Mr. Throckmorton heard no such statement. However, even if Cgrl D. Plant’s memory was perfect, even if he was free of any bias on behalf of his father, and Max spoke the exact words testified to, this is not the sort of evidence, we think, as should be permitted to override and nullify the steps necessary to a complete and lawful conveyance of stock, as was done. If that were so, then one could make a gift of stock in accordance with all the requirements of the law, complete the delivery to the donee, and years later invalidate it simply by an oral assertion that he intended to retain the power to recall. That is not the law and surely ought not to be.

We find that the case law dealing with gifts of stock reflects a solemn emphasis on the formal execution of documents which are the subject of a gift, especially when followed by delivery of the certificate itself. Such transfer of all the indicia of ownership, i.e., both the formal title and the manual possession of the certificate itself, should not be readily disregarded. In Johnson v. Johnson, 115 Ark. 416, 171 S.W. 475 (1914), in considering a gift of stock, the Supreme Court stated that since the stock was transferred on the records of the company and appeared in the name of the donee, the burden was on the appellant to prove that the stock was not the property of the donee.

Similarly, in Owens v. Sun Oil Company, 482 F. 2d 564 (C.C.A.-lOth Circuit), applying the substantive law of Arkansas, it was held that where the donor directed a transfer of ownership of corporate stock for the purposes of a gift to a donee who died before completion of delivery, the fact that the donee’s name was on the certificate was prima facia evidence of his ownership.

In Aycock v. Bottoms, 201 Ark. 104, 144 S.W. 2d 43 (1940), an attempt was made to subject various assets, including stock, to a trust for the benefit of heirs of a decedent, the shares being held in the name of the widow. The court rejected the argument that delivery of the stock was not proven, essential to a gift, stating that the assignment to a donee by a holder is tantamount to delivery of the stock, though manual delivery may be wanting.

In Allan-West Commission Company v. Grumbles, 192 Fed. 287, it was said that even the transfer of the certificate alone is generally sufficient to transfer ownership of stock to a donee. See Miller v. Reigler, supra.

When the circumstances here presented are examined and reflected on in their entirety, we are satisfied beyond a reasonable doubt that Carl Plant intended to make a gift during his lifetime to his sons for tax purposes and for the satisfactions intrinsic in such acts, and he did all the things necessary to make a legal transfer of stock, followed by delivery of the certificate. In so doing, he performed an irrevocable gift. The evidence that such transfer carried the right of recall is uncertain at best and, therefore, we conclude that the findings of the trial court are clearly erroneous. The case is reversed and remanded for entry of a decree consistent with this opinion.

Reversed and remanded.

Penix and Newbern, JJ., dissent.

Marian F. Penix, Judge,

dissenting. I do not find the Chancellor’s decision to be clearly against the preponderance of the evidence. The Chancellor, as the fact finder, had the opportunity to observe the witnesses, assess their credibility and determine the truthfulness of their testimony. Carl D. Plant, brother to the deceased, testified:

Q. How come that sixty-seven (67) shares of stock was in the name of C. Max Plant?
A. The stock had been put over half (1/2) in my brother and half (1/2) in my name. We had some litigation and in order for my daddy to bring this litigation in his name, it was necessary that part of the stock be put back to him, so it was decided, because my brother was ill, they would take part of his and cut it down from a 100 to the sixty-seven (67).
Q. Did your brother ever acknowledge that your father was the owner of the stock?
A. One day my brother calls in his wife and my wife and me, Mr. Throckmorton was there, everybody but my daddy, and he said, ‘now girls you see this, our daddy is doing this possibly for tax purposes and he wants to give us something in his lifetime, but y’all understand we don’t get anything from it until such time as daddy dies, cause he’s going to need to take care of himself in his old age.’ (Mr. Throckmorton is an official with the Arkansas Timber and Land Company, Inc.)
Q. Now when the 100 shares was transferred back to your father on August 26, 1977, and the 67 shares represented by stock certificate number Nine (9) retained by your brother, was there any argument on the part of your brother about transferring that back to your father?
A. No argument at all it was thoroughly understood that later on it would come back to him.
THE COURT: Do you know why the stock was transferred to you and your brother in 1976?
CARL D. PLANT: My father felt like he wanted to do something for my brother and I, and had the pleasure of knowing that we were going to get something, he said ‘Now I’m going to transfer this to you, also we might be able to do something with the inheritance tax,’ and so the understanding arrangement was entered into by all that it was to be done this way as long as my father lived for four or five years he would use up the rest of his Estate, it’s less than $100,000.00, and then that was all to take care of him and didn’t feel like it was to be disbursed ....

In the recent case of Larry Boling, Special Administrator v. Mema W. Gibson and CecilL. Gibson, 266 Ark. 310, 287 S.W. 2d 14, the Supreme Court held that there must be an actual delivery of the subject matter of the gift to the donee with a clear intent to make an immediate, unconditional and final gift beyond recall, accompanied by an unconditional release by the donor of all future dominion and control over the property so delivered, in order to constitute a valid gift inter vivos.

The elements required to complete an inter vivos gift must be shown by clear and convincing evidence. The gift must be beyond recall. The gift must be accompanied by an unconditional release by the donor of all future dominio^ in control over the property so delivered. These are factual determinations to be made by the fact finder — in this instance the Chancellor. The Chancellor found “. . . that it was never intended by Plaintiff, Carl Plant, to transfer beyond recall the 67 shares of stock represented by stock certificate number 9 to C. Max Plant on the 26th day of August, 1977, and said transfer did not constitute an inter vivos gift.”

I do not agree with the majority that the Chancellor’s findings of fact are clearly erroneous.

I would affirm the Chancellor; therefore, I respectfully dissent.

Newbern, J. joins in this dissent.


source: Caselaw Access Project

author: James H. Piikinton, Judge. Ernie E. Wright, Chief Judge,

license: Public Domain

text:
    Marvin D. HENDRIX et al v. SIDNEY M. THOM & CO. et al
    CA 80-306
    609 S.W. 2d 98
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980

      Laser, Sharp, Haley, Young, & Huckabay, P.A., for appellants.

      Middleton P. Ray, Jr., Frank B. Sewell and Stephen L. Gershner, for appellees.
   James H. Piikinton, Judge.

Appellants Marvin D. Hendrix and Michael W. Fendley are businessmen, engaged in land development under the name of Fendley & Hendrix Development Company. Both appellants, who will hereinafter be called Hendrix and Fendley, respectively, have had experience in the business of land development and are familiar with contracts of the type which are the subject of this action.

On or about December 9, 1977, Hendrix and Fendley retained appellee Sidney M. Thom & Co., Inc. (hereinafter called “Thom”), a mortgage banking firm, of Little Rock, Arkansas, to arrange for them a mortgage loan of $577,500.00 for 25 years, with interest at 9-Vk% per annum, to be repaid in monthly installments, including interest. The loan was to be evidenced by a note to be executed by the appellants and secured by a first lien on real property located on the Highway 59 By-pass, in Atlanta, Texas. The purpose of this loan was to construct a Wal-Mart store and place it on a permanent loan basis.

The agreement between Thom and appellants was executed by Hendrix and Fendley. This agreement called for the payment to Thom, for its services, the sum of $5,775.00. Appellants paid to Thom the sum of $5,775.00.

On or about December 12, 1977, Thom secured a loan commitment from appellee National Old Line Insurance Company (hereinafter called “National Old Line”), which was issued on December 21, 1977. As agent for and on behalf of the appellants, and with their knowledge and consent, Thom issued its check to National Old Line in the sum of $5,-775.00, which represented one-half of the “good faith” commitment fee that National Old Line required from appellants before the loan commitment would be made.

On or about December 30, 1977, appellants accepted the loan commitment offered by National Old Line. The brokerage commission claimed by Thom had not been paid as the only funds received by Thom were paid to National Old Line on behalf of the appellants.

The commitment issued by National Old Line was negotiated by appellants with National Old Line. The commitment called for the payment by appellants to National Old Line of a “good faith” fee of $11,550.00. This fee was paid, $5,775-00, of which was paid by the appellants and $5,775.00 by Thom on behalf of the appellants. This fee was to be refunded if the loan was closed in accordance with the commitment.

In addition to the “good faith” fee, which was paid, the commitment called for the execution by appellants of a non-interest bearing promissory note, payable to National Old Line, in the amountof $11,550.00, which was to be in consideration of the issuance of the commitment. The note was to be payable on September 1, 1978, only in the event that the loan covered by the commitment was not closed.

Appellants executed to National Old Line the promissory note for $11,550.00 as agreed. Because of the loan commitment by National Old Line to appellants, National Old Line arranged its corporate financial affairs in order to have the money available to fund the loan called for by the commitment.

Appellants, after the signing of the commitment, were unable to consummate their purchase of the land in Atlanta, Texas, upon which the Wal-Mart facility was to be constructed. They contended they had a valid cause of action against the land owner for breach of contract; however, in order not to compromise their future relationship with Wal-Mart, and seeing a way to obtain a profit, appellants accepted the sum of $22,000.00, paid by the owner of the land, for the release of all claims against the property. The Wal-Mart facility was subsequently built, but appellants were not involved.

By a letter dated February 9, 1978, which letter was received by National Old Line on February 13, 1978, appellants requested the cancellation of the commitment and a “reasonable cancellation of obligations.” Appellants stated they would be unable to perform under the terms of the commitment because they were unable to purchase the property which was to be the security for the loan.

Appellees contended that appellants by their action repudiated the commitment, thereby breaching their contract with National Old Line. Appellees took the position National Old Line had performed under the terms of the commitment insofar as it was able in view of the repudiation by appellants.

National Old Line did not agree to a cancellation of the commitment and the loan covered by the commitment was not closed during July, 1978, in accordance with the terms of the commitment. Therefore, National Old Line claims, under the terms of the commitment, it was entitled to retain the $11,550.00 “good faith” fee paid by the appellants, or in their behalf; and to collect the note executed by the appellants which became due and payable on September 1, 1978, and has not been paid.

Hendrix and Fendley filed this suit, praying for return of the fees paid to Thom and National Old Line, and for cancellation of the note held by National Old Line under the commitment agreement. They alleged, and sought to prove, that construction financing was refused them because the commitment was conditional, and required subjective exercise of judgment by National Old Line; but, in any event, that the project was cancelled and notice was given to National Old Line prior' to the commitment becoming binding. Thom and National Old Line denied the allegations, and counterclaimed. Thom claimed its brokerage fee was justly paid; and National Old Line prayed for a declaratory judgment that the agreement is valid and enforceable, and for a finding that it is entitled to keep the “good faith” commitment fee it now holds; and to collect on the note from Hendrix and Fendley.

The lower court dismissed the complaint for want of equity, and entered judgment on both counterclaims. Hendrix and Fendley have appealed.

We think the chancery court was correct and therefore affirm in all respects.

The evidence is clear that Thom fully performed under the brokerage contract, and thus earned its fee. Pursuant to its agreement with appellants, Thom arranged the loan commitment with National Old Line, and nothing Thom did caused the project to be cancelled. The record clearly shows that Thom fully performed his obligation to appellants.

We also agree with the chancellor that the commitment in question, issued by National Old Line, was a valid and enforceable contract. We find no merit in appellants’ contention that it was a conditional and illusory agreement. It is true that this commitment contained a so-called “satisfaction clause” with reference to the site, but the document was nevertheless a binding agreement. National Old Line could not have made a determination that it was not satisfied with the site except in good faith and for valid reasons. Thus the duty to act in good faith was sufficient consideration to support the contract, notwithstanding appellants’ argument that the promises involved were illusory. Mattei v. Hopper, 51 Cal. 2d 119, 330 P. 2d 625 (1958); Larwin-Southern California, Inc. v. JGB Investment Company, 101 Cal. App. 3d 626, 162 Cal. Rptr. 52 (1979); Commercial Mortgage and Finance Corp. v. Greenwich Savings Bank, 112 Ga. App. 388, 145 S.E. 2d 249 (1965); Boston Road Shopping Center, Inc. v. Teachers Insurance and Annuity Association of America, 13 App. Div. 2d 106, 213 N.Y.S. 2d 552 (1961), Aff'd 11 N.Y. 2d 831, 182 N.E. 2d 116, 227 N.Y.S. 2d 444 (1962). See also Draper, Tight Money and Possible Substantive Defenses to Enforcement of Future Mortgage Commitments, 50 Notre Dame Lawyer 603 (1975).

The commitment issued by National Old Line was consideration for the commitment fee. This commitment obviously had value to appellants. They had paid the refundable “good faith” fee in the amount of $11,550.00, and executed a promissory note in the same amount for the commitment. The note was to become payable on September 1, 1978, in the event the loan was not closed in accordance with the commitment letter. The record shows that appellants lost their option on the land involved and the project fell through for that reason. Appellant Hendrix admitted that the commitment would have been satisfactory if the project could have been built as anticipated. Under these circumstances, we cannot say that the decree of the chancery court is not correct. See Goldman v. Connecticut General Life Insurance Company, 251 Md. 575, 248 A. 2d 154 (1968). See also 93 ALR3d 1156 (1979).

The chancellor concluded that the commitment contract issued by National Old Line, and accepted by appellants, was a binding obligation, and that the enforcement of its terms did not depend upon any condition precedent.

We do not disturb a decree of the chancery court on appeal unless it is clearly erroneous. Rule 52, Arkansas Rules of Civil Procedure.

Affirmed.

Wright, C.J., dissents.

Ernie E. Wright, Chief Judge,

dissenting. I respectfully dissent from the majority opinion affirming the trial court’s decree determining the loan commitment issued by National Old Line and accepted by appellants on December 30, 1977, constituted a valid and enforceable contract between National Old Line and appellants.

The part of the majority opinion with which I disagree concerns the issue as to whether Naional Old Line is entitled to the fee of $23,100.00 it seeks to exact for its loan commitment to appellants. The commitment contained numerous conditions and most of them are reasonable and in keeping with what might normally be expected in such transactions. However, the commitment contains among others the following condition:

This commitment is issued prior to an “on-site” inspection by either National Ole Line Insurance Company or persons designated by National Old Line Insurance Company. Until written approval confirming acceptance of the site and/or existing improvements, this commitment is subject to cancellation. Prior to this inspection being made, National Old Line Insurance Company will need to be favored with an inspection fee in the amount of $75.00 to partially cover the incurred cost in making this inspection.

Prior to any inspection of the site being made, appellants by letter dated February 9, 1978, received by National Old Line February 13, 1978, requested cancellation of the commitment because appellants had been frustrated in their endeavors to exercise their option to purchase the property which they planned to develop with the loan funds.

National Old Line assumed the posture it was entitled to the $23,100.00 charges for the commitment if the loan was not closed regardless of the reasons for failure to close. Appellants contend the commitment is in reality an illusory promise and provides no firm consideration flowing to appellants because of the clause permitting cancellation any time prior to the site for the improvement being approved in writing by National Old Line. The commitment is on the letterhead of National Old Line and it can be assumed from all the circumstances it was drafted by it or at its direction. In keeping with the general rule applicable to the construction of contracts, it should be construed most strongly against the party responsible for drafting the document. With this rule in mind, I am unwilling to say that only National Old Line had the right to cancel the commitment, but on the contrary it is my view appellants likewise had the right any time prior to approval of the site by National Old Line. The notice given by appellants operated to cancel the conditional loan commitment and appellants should be allowed recovery of the portion of the commitment fees paid National Old Line and cancellation of the note given for the balance of the fees stipulated in the commitment. As stated by Justice Leflar in Motors Ins. Corporation v. Lopez, 217 Ark. 203, 229 S.W. 2d 228 (1950), “This one-sided undertaking is not a contract in any legal sense.” At the time appellants cancelled the commitment had not become a firm obligation on the part of National Old Line.


author: James H. Pilkinton, Judge. David Newbern, Judge,

text:
    SUNBEAM CORPORATION v. Lamar BATES
    CA 80-322
    609 S.W. 2d 102
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980

      Anderson & Kilpatrick, by: Joseph E. Kilpatrick, Jr., for appellant.

      Youngdahl & Larrison, for appellee.
   James H. Pilkinton, Judge.

This is a workers’ compensation case. The issue is the extent of appellee’s disability. At the hearing below it was stipulated that appellee had sustained a compensable injury on or about March 18, 1977, and was entitled to the maximum weekly benefit of $84.00. Temporary total disability was paid until May, 1977. After May, 1977, appellant paid additional permanent disability benefits. until June 12, 1979, the date of the hearing, based upon a permanent disability rating of 15% to the body as a whole, which appellant insisted was correct.

Appellee contends that he had sustained compensable injuries while working for appellant in 1972 and in 1975; and again finally on March 18, 1977. The last injury required back surgery. Appellee claimed that he had not returned to work since March 18, 1977, due to the injuries. He claimed that additional benefits were due.

Appellant has controverted payment of any permanent disability benefits over 15% to the body as a whole.

The administrative law judge found, among other things, that appellee is totally disabled. The Arkansas Workers’ Compensation Commission adopted and affirmed the opinion of the administrative law judge. The Commission determined that the healing period ended on October 2, 1978, and entered an award directing payment of weekly benefits from that date forward as long as appellee remains totally disabled. Appellant has appealed to this court from the findings and award of the Commission.

Appellant contends there is no substantial evidence to support an award in excess of 15% to the body as a whole. Under the principles of the Workers’ Compensation law as explained by this court and the Arkansas Supreme Court on many occasions, the decision of the Workers’ Compensation Commission must stand if supported by substantial evidence. The findings of fact made by the Commission are given the same standing as a jury verdict. Barksdale Lumber Company v. McAnally, 262 Ark. 379, 557 S.W. 2d 868 (1977).

Appellee testified that he was forty-four years of age, married and had two children living at home. It is undisputed that appellee had an eighth grade education, and no vocational training. He had started working for the appellant in 1967. Prior to that time, he had worked as a farm laborer, as a tractor operator for the highway department, as a plumber’s helper, and as a leather cutter. Appellee further testified that since going to work for the appellant company in 1967, he had performed nearly every job in the factory. He testified that he first injured his lower back in 1972 and was treated by Dr. Robinson in Dumas. He testified that he hurt his back again in 1975 and that time was treated not only by Dr. Robinson but also by Dr. Sam Thompson in Little Rock. It is undisputed that claimant injured his back again on March 18, 1977.

According to the evidence, appellee had not received any injury other than those sustained while working for the appellant. Subsequent to his injury in March, 1977, he had surgery performed by Dr. Robert Dickins and remained under his care as of the date of the hearing. According to appellee his back still gave him trouble and he had difficulty sleeping but was able to get along without medication.

Appellee testified that he had attempted to return to work for appellant in December of 1978. According to his testimony he saw the personnel manager, Ms. Margie Poole, who apparently had all of the doctors’ reports on the claimant at the time. Appellee says that Ms. Poole did not put him to work but told him she would let him know something in a few days. Appellee testified that he had not had any word from the company since his conversation with the personnel manager, although on more than one occasion he has talked with Ms. Poole in regard to the payment of bills and weekly benefits. Appellee candidly admitted that if the firm had a job which it would allow him to undertake, he would go back immediately.

The appellee testified that he had attempted to find work at other places. He said that he had made applications at the unemployment office in Dumas, at Curt’s Auto Parts Store, T. A. Edwards Trucking Company, the Piggly Wiggly store, Richard Powell’s One Stop, and at the Catfish Kitchen. Appellee said that he had lived in the Dumas area for twelve years but had been reared sixteen miles east of Dumas at a town called Watson. He stated that he knew the people in the area and they knew him. He had been unsuccessful in his efforts to find work in the area. The record shows that he had even talked to a friend of twenty years about a job at a car lot, but this friend also would not hire him. In addition to the appellee’s efforts to obtain employment at most available sources in the area, the record shows that appellant employed the Southern Rehabilitation Service to attempt to rehabilitate the appellee. The record shows that appellee went to Little Rock in December of 1978 and took tests, and in January of 1979 he was contacted at Dumas by a representative of the Southern Rehabilitation Service. He has had no further contact whatsoever from Southern Rehabilitation Service since January of 1979.

A review of the medical records in this case indicates that the appellee has a long-standing back problem which originated as a compensable injury while working for the appellant. The problems he has had since that time have all been related to his employment with the appellant. His testimony indicates that he would be working for appellant right now if appellant would allow him to return. The unexplained refusal by appellant to allow appellee to return to work is inconsistent with its position that he is only 15% disabled. The record is clear and undisputed that appellee has made a good faith effort to find employment in a somewhat rural area. Thus far, all of his attempts to find employment have been unsuccessful and, as far as this record shows, the efforts of the Southern Rehabilitation Service employed by appellee have been abandoned. We find that there is substantial evidence to support the Commission’s finding that the appellee is, in fact, totally disabled as a direct result of the injuries he has sustained at the appellant plant. It follows, of course, that appellee is entitled to be compensated for total disability benefits until such time as his total disability ceases. As a result of these industrial injuries, appellee has been placed in a rural labor market with very limited education, at forty-five years of age with three back injuries which have resulted in surgery and a permanent impairment rating of 15% to the body as a whole. The consequence of this situation is apparent. The appellee cannot secure employment. This case is governed by Ark. Stat. Ann. § 81-1313 (a) (Repl. 1976). The pertinent provisions reads as follows:

(a) Total Disability. In case of total disability, there shall be paid to the injured employee during the continuance of such total disability 66-2/3 of his average weekly wage. . ..

The term “disability” is defined in Ark. Stat. Ann. § 81-1302(e) as follows:

(e) ‘Disability’ means incapacity because of injury to earn, in the same or any other employment, the wages which the employee was receiving at the time of the injury.

The plain meaning of the language quoted above is that if the appellee is totally incapacitated to earn in the same or any other employment the wages he was receiving at the time of his injury, then he is entitled to receive weekly benefits “during the continuance of such total disability”.

By making this award, the Commission hoped that the appellee’s disability is not permanent and that he will eventually remain an employment status. That, however, remains to be seen.

Since the decision and award of the Arkansas Workers’ Compensation Commission is supported by substantial evidence, it is our duty to affirm.

Newburn, J., dissents.

David Newbern, Judge,

dissenting. The majority has cited no -case, and I know of none, which interprets our Workers’ Compensation Act or that of any other jurisdiction to permit payment of total disability benefits beyond the healing period and “during the continuance of such total disability.”

The appellee’s testimony shows clearly that there are many jobs he could do for Sunbeam or a similar company. The entire basis for parlaying this injury of 15% to the body as a whole into this new kind of “limited” total disability is the fact that Sunbeam will not rehire the appellee. The appellee’s brief says:

It should be noted that the appellant could avoid paying the appellee another nickel in disability benefits by simply allowing him to return to employment.

The appellee goes on, however, to recite factors which might lead to a conclusion the appellee is totally disabled in the sense that has become traditional in this jurisdiction since the decision of Glass v. Edens, 233 Ark. 786, 346. S.W. 685 (1961). His brief continues:

However, since they have refused to do so without any explanation, they have placed the appellee in a rural labor market with a very limited education, 47 years old with three back injuries which have resulted in a surgery and a permanent impairment rating of 15% to the body as a whole. The consequences of this conduct on the part of the appellant are apparent, the appellee cannot secure employment.

In a way, I believe the decision of the majority makes good sense. If we sent the matter back to the commission and said they would have to assess the level of the appellee’s disability “finally” they might simply say the appellee is permanently and totally disabled and be done with it. Maybe the majority is doing the appellant a favor by affirming the commission, as at least there is a chance that if the appellant can catch the appellee earning money later it can return to the commission and get some sort of new determination.

While I appreciate the seemingly practical nature of this decision, I question whether there is authority for it, and I fear it will create a very impractical precedent.

The majority predicates this new class of disability, which I will refer to as “limited” total disability on Ark. Stat. Ann. § 81-1313 (Repl. 1976), which reads as follows:

Compensation for disability. — The money allowance payable to an injured employee for disability shall be as follows:
(a) Total Disability. In case of total disability there shall be paid to the injured employee during the continuance of such total disability sixty-six and two thirds percent (66 2/3%) of his average weekly wage.

The subsections which follow prescribe amounts to be paid for “temporary partial disability” and “scheduled injuries.” No separate subsection is devoted to “temporary total disability,” thus it appears to me that the reason for inclusion in subsection (a) of the words “during the continuance of such total disability” is the intent of the drafter to have it prescribe the benefits to be paid for total disability whether it is permanent or the sort that may exist during the “healing period” defined in Ark. Stat. Ann. § 81-1302(f) (Repl. 1976). Our supreme court has clearly recognized and applied the concept of “temporary total disability,” meaning the kind that exists during a healing period or until permanent disability, if any, can be assessed. International Paper Co. v. McGoogan, 255 Ark. 1025, 504 S.W. 2d 739 (1974).

Rather than Ark. Stat. Ann. § 81-1313, supra, the purpose of which is to declare the specific amounts to be paid, I believe the section intended to set forth the periods of compensation payments in Ark. Stat. Ann. § 81-1310 (Supp. 1979), which provides:

Compensation — Periods — Maximum and minimum amounts. — (a) Disability. Compensation to the injured employee shall not be allowed for the first seven (7) days disability resulting from injury, excluding the day of injury. If a disability extends beyond that period, compensation shall commence with the ninth (9th) day of disability. If the disability extends for a period of two (2) weeks compensation shall be allowed beginning the first day of disability, excluding the day of injury.
Compensation payable to an injured employee for disability shall not exceed sixty-six and two-thirds percent (66 2/3%) of the employee’s average weekly wage, with a fifteen dollar ($15.00) per week minimum, subject to the following máximums:
(A) For a disability occurring after March 1, 1978 through February 28, 1979, the maximum weekly benefits payable shall be eighty-seven dollars and fifty cents ($87.50). The benefits shall be paid for a period of not to exceed 450 weeks of disability and shall not exceed thirty-nine thousand three hundred seventy-five dollars ($39,375.00) and shall be paid in addition to the benefits and allowances under Section 11 (Section 81-1311) hereof. The maximum limitations of time and money expressed in the foregoing sentence shall apply in all cases pertaining to the payment of money compensation except in cases of permanent total disability.

If, as the majority suggests, § 81-1313 determines the duration of compensation for total disability after the healing period, then why did the General Assembly limit in § 81-1310 payment for other than permanent total disability to 450 weeks?

Both § 81-1310 and decisions typified by tho. International Paper Co. case, supra, contemplate that at some point, and I suggest if is upon termination of the healing period or rehabilitation, if applicable [see, § 81-1310(f)], a determination of permanent disability, or lack of it, should be made. The majority apparently would permit the matter to drag on almost interminably. While we have recognized that refusal of a former employer to rehire an employee who has at least a partial permanent disability is strong evidence of permanent disability, M. M. Cohn v. Haile, 267 Ark. 53, 589 S.W. 2d 600 (Ark. App. 1979), neither we nor our supreme court have taken the position that a decision on the question of permanent disability should be delayed to see if the employee will get work.

I see some danger in this decision. First, it may stimulate the commission to shirk what I perceive to be its obligation to make final decisions. That, in turn, may stimulate employers to try to ride herd on former employee who have been determined to be totally disabled in this “limited” way but who may get some sort of job and then be hauled back before the commission for a reevaluation. That kind of interminable contest may not be all bad, but the possible prospect of wasted resources of the parties and the commission should be considered. I believe had such a scheme been intended by the General Assembly, it would have been spelled out.

Even more troublesome to me, however, is the discouraging effect this status of “limited” total disability is bound to have upon one who occupies it. If he tries to work, he loses his benefits. A claimant who had been determined to be permanently and totally disabled should be permitted to earn money without threat of losing his workers’ compensation benefits. As our supreme court said, quoting Larson, Workmen’s Compensation Law, § 57.10, in Glass v. Edens, supra:

The two ingredients usually occur together; but each may be found without the other; a claimant may be, in a medical sense, utterly shattered and ruined, but may by sheer determination and ingenuity contrive to make a living for himself; conversely, a claimant may be able to work, in both his and the doctor’s opinion, but awareness of his injury may lead employers to refuse him employment. These two illustrations will expose at once the error that results from preoccupation with either the medical or the wage-loss aspect of disability. An absolute insistence on medical disability, in the abstract would produce a denial of compensation in the latter case, although the wage-loss is as real and as directly traceable to the injury as in any other instance. At the other extreme, an insistence on wage-loss as the test would deprive the claimant in the former illustration of an award, thus not only penalizing his laudable efforts to make the best of his misfortune, but also fostering the absurdity of pronouncing a man non-disabled in spite of the unanimous contrary evidence of medical experts and of common observation. The proper balancing of the medical and the wage loss factors is, then, the essence of the “disability” problem in workmen’s compensation.

In my opinion it is the duty of the commission to make the “pronouncement,” attempting to avoid either “absurdity.” The task is difficult, but I believe the Act should be interpreted to impose this duty to make a final determination when the healing period has ended and there is no prospect of rehabilitation in the sense of § 81-1310(f).

For these reasons, I respectully dissent.


author: James H. Pilkinton, Judge.

text:
    W. Gerard GAUTRAU and Laura K. GAUTRAU v. Janice C. LONG d/b/a JAN’S REALTY
    CA 80-332
    609 S.W. 2d 107
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980

      Ian W. Vickery Law Offices, for appellants.

      Denver L. Thornton, for appellee.
   James H. Pilkinton, Judge.

This suit was filed by appellants seeking rescission and restoration of $2,000 paid as a real estate brokerage fee.

The record shows that appellants executed an exclusive listing contract to appellee d/b/a Jan’s Realty to sell the property involved at a gross price of $52,900, and providing for a professional fee to be due the realtor of $2,000. There was a space provided in Paragraph 4 of the contract for any specific conditions to be written, but none were inserted, and this space is blank on the instrument.

There was an offer and acceptance later signed by Dorothy Mathews as buyer, and Jan’s Realty as agent, which was accepted by appellants as sellers. This instrument provided for the payment of $9,000 to appellants for their equity, and the assumption of a certain note and mortgage then existing in favor of Union Fidelity Savings and Loan Association.

There was also a separate agreement executed by Dorothy Mathews, as purchaser, the appellants as sellers and mortgagors, and Union Fidelity Savings and Loan Association, under which Dorothy Mathews agreed to assume the note and mortgage and make the payments. This document expressly provides that the appellants were not to be released in any manner from the obligation of the mortgage, although it was being assumed by Dorothy Mathews with the approval of Union Fidelity. Dorothy Mathews paid the $9,000, and assumed the loan, or so all parties then thought. Union Fidelity later reneged on its approval, and caused a line to be drawn through the signature of Mr. Robert S. Boardman, who had signed for the Savings and Loan Association. The following notation was made over the signature: “Void — not approved by the board of directors.”

The mortgage provided in one paragraph that if the property is sold or transferred without the lender’s prior written consent, the lender may declare all sums secured by the mortgage due and payable. After Union Fidelity refused to assume the assumption, the monthly payments tendered by Mrs. Mathews were refused; and, the entire indebtedness was declared due, and foreclosure followed. Union Fidelity purchased the property for the amount of the judgment and the appellants actually suffered no loss. The record shows that appellants received exactly what they would have received had the buyer been allowed to assume the mortgage. The only expenses the appellants incurred were for attorney’s fees. Union Fidelity had earlier returned the $100 paid by Jan’s Realty for the transfer fee, which was for the assumption later vacated and denied. The record shows that this $100 had been deducted from the amount paid the apellants by Jan’s Realty in the closing of their transaction with Dorothy Mathews.

After trial below, the chancellor refused to grant rescission, and dismissed the suit except for the $100 withheld for the transfer fee. The trial court directed that this $100 be returned to appellants by appellee. Otherwise the suit was dismissed for want of equity, and appellants question that decision on appeal.

Appellants first sued appellee for damages. Since it was clear that no damages were suffered, appellants then amended their complaint alleging breach of contract and seeking rescission and restitution to them of the $2,000 brokerage fee. The argument of the appellants on appeal is somewhat difficult to follow as the purpose of the remedy of restitution is to restore the injured party to as good a position as he or she occupied before the contract was made. Restitution is an alternate remedy to damages or for specific performance. Likewise, as a general rule, payments which are voluntarily made cannot be recovered except for payments made as a result of duress, fraud, mistake or failure of consideration. There is no duress, fraud, mistake or failure of consideration pleaded or proved by the appellants in the case at bar.

In the absence of an express contract by which a broker warrants the financial ability of the purchaser procured by him, or in the absence of fraud on the part of the broker, the realtor does not lose the commission where a binding contract of sale is effected through the agency simply because the purchaser, procured by the broker, is financially unable, or for any other reason fails to carry out the contract of purchase. Harnwell v. Arnold, 128 Ark. 10, 193 S.W. 506 (1917). Moore v. Irwin, 89 Ark. 289, 116 S.W. 662 (1909).

We think the chancellor was correct in finding that there is no evidence to show that the contract between appellants and appellee was conditioned upon the final approval by Union Fidelity of the assumption of the loan by the purchaser. We also agree with the chancellor that the record shows clearly that appellee earned the commission by securing the buyer and obtaining execution of the offer and acceptance. While decisions of the chancery court are reviewed de novo on appeal, the appellate court does not reverse unless the decision below is clearly erroneous (clearly against the preponderance of the evidence). Rule 52, Arkansas Rules of Civil Procedure. We certainly cannot say that the decision of the chancellor in this case is clearly against the preponderance of the evidence. Therefore we must, affirm.

Appellants have filed a separate motion to tax the costs of what they term as “unnecessary parts of the record” against appellee. Appellants did designate only a limited part of the record for the purpose of appeal; and appellee additionally designated other parts, thus causing to be brought forward all of the record below, including the foreclosure proceedings. We cannot say here, however, that appellee under the circumstances has violated Rule 6 (c) of the Arkansas Rules of Appellate Procedure to an extent which calls for the imposition of costs under Rule 24. Therefore, all costs on appeal must be assessed against appellants.

Affirmed.


author: Marian F. Penix, Judge.

text:
    ARKANSAS STATE HIGHWAY AND TRANSPORTATION DEPARTMENT, Self-Insured Employer v. Johnnie M. BRESHEARS, Employee
    CA 80-351
    609 S.W. 2d 81
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980

      Robert L. Wilson, for appellant.

      William C. Gilliam, for appellee.
   Marian F. Penix, Judge.

Breshears, aged 55, was injured while working for the Arkansas Highway Department. He and a fellow employee were painting a ceiling at a highway rest area building on October 25, 1977. While engaged in the overhead painting Breshears felt a pop and heard a grinding sound in his left shoulder. Dr. Ralph D. Cash, an orthopedic surgeon, diagnosed Breshears’ condition as “degenerative cervical arthritis”. The claim was controverted in its entirety.

The Administrative Law Judge found Breshears was temporarily totally disabled from October 27, 1977 to May 17, 1978, with no permanent disability. Benefits were paid for this seven month period. On April 14, 1979 Breshears filed a claim for additional temporary total benefits ands permanent partial benefits. On June 5, 1979, a hearing was held to determine the question of additional benefits. On February 11, 1980, as a result of the June 5, 1979 hearing, the Administrative Law Judge found Breshears was temporarily and totally disabled from the date of the injury until November 9, 1978, and awarded Breshears the additional temporary total sum, plus 25% permanent partial disability to the body as a whole, all medical expenses, and maximum attorney fees. The Highway Department appealed to the full Commission which affirmed.

The Highway Department accepted the Commission’s award of 25% permanent partial disability. However, the Highway Department has appealed the award of additional temporary total.

The Highway Department contends the temporary total disability period ended on May 3, 1978. It bases its contention upon the May 3, 1978 letter of Dr. Ralph D. Cash which states “Mr. Breshears returned to my office today ... I am returning him to light duty at this time and will check him again in six weeks.’’ Again in a July 5, 1980 deposition Dr. Cash responded:

Q. In the letter of May 3rd, you mentioned that Mr. Breshears had full range of motion to his left shoulder. You also mentioned that he was non-tender over the bicep and at that time he was able to return to light work or light duty. You also said you would check him again within six weeks. My question is whether or not my mentioning light duty in that letter — were you talking about the type work previously described to you by me from the record with exception of overhead painting?
A. Yes, sir. I felt that his main problem at the time was stiffness in his neck. I thought he should do something that didn’t require heavy lifting, frequent jerking. I didn’t think he could look overhead and do overhead painting at the time. But I thought as you described light maintenance work that he could probably do.

The Highway Department argues Dr. Cash was aware of the Claimant’s duties as a rest area attendant and that such duties did not ordinarily require overhead painting, heavy lifting. It further argues Claimant was not disabled beyond May 3, 1978, as required by Ark. Stat. Ann. § 81-1310 which provides for compensation only during periods of disability. It contends the healing period is not synonymous with the disability period, and the Commission erred in holding Breshears’ healing period to be the basis for his disability. The Commission found the healing period to have ended November 9, 1978 and awarded temporary total benefits to that date.

It contends the legislature never intended the healing period be used to determine temporary disability. It further argues if the legislature had intended such the Act would have based compensation payments on “healing period” rather than on “disability”. §§ 81-1310 and 1313 speak of “period of disability” — not “healing period”. Disability is defined by Ark. Stat. Ann. § 81-1302(e) (Repl. 1976) which provides:

Disability means incapacity because of injury to earn, in the same or any other employment, the wages which the employee was receiving at the time of the injury.

The Highway Department argues Breshears was just as able to return to work on May 3 as he was on November 9- It argues Dr. Cash’s May 3 letter stating Breshears is able to return to light work is evidence his temporary “disability” was ended on May 3 and not on November 9, “the end of his healing period”.

The Highway Department concedes there are cases where the healing period and the temporary total disability period are concurrent. But in this case it argues there is substantial medical evidence of Breshears’ ability to return to work six months before the end of healing.

This Court recently dealt with this precise point in Pyles v. Triple P. Feeds of Texas, et al, 270 Ark. 729, 606 S.W. 2d 146 (Ark. App. 1980). In that case we rejected the argument that temporary' total is only available when the claimant is unable to work and held temporary total benefits may continue until the healing period ends.

Temporary disability is defined as the healing period following an injury. It exists until the employee is as far restored as the permanent character of his injury will permit. Blair, Workmen’s Compensation Law, § 11:02 (1974). Temporary disability is a separate and distinct disability from any permanent disability and may be compensated separately. See McKenzie v. Campbell & Dann Mfg. Co., 209 Tenn. 475, 354 S.W. 2d 440 (1962), where the Tennessee court held that temporary total disability benefits are payable without interruption from the time of the injury to the time at which the degree of permanent disability is ascertainable.

See also International Paper Company v. McGoogan, 255 Ark. 1025, 504 S.W. 2d 739 (1974).

Finding the payments are not barred by law, we next turn to whether there is substantial evidence to support the decision the healing period ended on November 9, 1978.

The record reflects Breshears returned to Dr. Cash on June 14, 1978 suffering from the same physical problems. In a July 5, 1978 letter Dr. Cash stated Breshears could do nothing which required lifting or overhead working. In Dr. Cash’s report of December 20, 1978, he states “I last saw Mr. Breshears on November 9, 1978. At this time, I feel he has reached his period of healing.” Again in Dr. Cash’s deposition he specifically refers to November 9, 1978 as being the date at which Breshears had reached his healing.

The Commission found, as a matter of fact, Breshears was temporarily and totally disabled from October 25, 1977 until November 9, 1978. The Commission’s findings of fact are binding upon this Court if we find substantial evidence to support them. Clark v. Peabody Testing Service, 265 Ark. 489, 579 S.W. 2d 360 (1979).

Affirmed.


text:
    Mina P. MORSE v. Charles L. DANIELS, Director of Labor, and FRANKE’S, INC.
    E 80-138
    609 S.W. 2d 80
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980
   Marian F. Penix, Judge.

The Claimant was employed as an assistant manager of Franke’s Cafeteria. Both of her parents were seriously ill. It became necessary for her to temporarily leave her job to care for them upon their release from the hospital. Claimant informed her employer she would have to quit work in two weeks in order to care for her parents. The day before the two weeks expired she asked if she might have 30 days leave of absence to attend to her parents. Her employer asked if she could insure she would not quit at the end of the 30 days leave. She told him she couldn’t be sure because she didn’t know what condition her parents would be in at the end of the 30 days. She was awarded benefits by the Agency under Section 5 (a) which determined she left her work voluntarily due to a personal emergency of such nature and compelling urgency that it would be contrary to good conscience to impose a disqualification. The employer appealed and the Appeals Tribunal reversed and denied the benefits, stating she left her last work voluntarily and without good cause connected with the work. The Board of Review affirmed this finding of disqualification for benefits. The Claimant appeals.

In reviewing the record we find the evidence upon which the disqualification is based to be not substantial. The Claimant had two ill parents who needed her care. She introduced a letter from Dr. Robert Taylor which described the physical conditions of the Claimant’s parents and which stated they were unable to care for themselves.

Section 5 (a) of the Arkansas Employment Security Law provides:

. . . Provided no individual shall be disqualified under this subsection if, after making reasonable efforts to preserve his job rights, he left his last work due to a personal emergency of such nature and compelling urgency that it would be contrary to good conscience to impose a disqualification. . . .

It is this Court’s belief the preceding paragraph was written to take care of just such personal emergency as we have in this case. The Claimant could not with good conscience abandon her parents at such a critical time. She couldn’t tell her employer the exact date when her parents would improve to the point when she could return to work. She was honest and candid with her employer. As the facts indicate, she was able to leave her parents alone after three weeks time. She conscientiously sought a 30 days leave of absence. We do not find that to be an unreasonable request. We are remanding this case to the Board of Review to make provisions for the award of benefits.

Reversed and remanded.


author: David Newbern, Judge.

text:
    Barbara PRUITT v. Elbert T. PRUITT and Mrs. Elbert T. PRUITT and JOHN MATTHEWS CO.
    CA 80-283
    609 S.W. 2d 84
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980

      J. Roy Howard, for appellant.

      Howell & Price, P.A., and Catlett & Stubblefield, by: S'. Graham Catlett, for appellees.
   David Newbern, Judge.

The question we find to be controlling here is whether the appellant’s amended complaint against the appellee, Elbert T. Pruitt, stated a claim which was barred by the statute of limitations. We agree with the chancellor that, if a claim was stated by the amended complaint, it was barred. We also agree with the chancellor that there was no showing of the negligence alleged against the appellee John Matthew Co., and thus we affirm the judgment favoring all of the appellees.

Barbara and Elbert Pruitt were divorced in 1970. Before their divorce, they had contracted to buy a parcel of land from the John Matthews Co. (Matthews). The divorce decree awarded the land in question to Elbert Pruitt, and after the divorce he continued to make the payments on it to Matthews. When the land had been paid off, Matthews conveyed it to Elbert Pruitt.

The appellant’s initial complaint, which was served in May, 1975, sought reformation of the deed from Matthews to Elbert Pruitt to make it one conveying the land to the appellant and Elbert Pruitt by the entireties. She contended the chancellor exceeded his authority in the divorce decree when she was effectively deprived of her equitable interest in the land arising from the purchase contract to which she was a party.

At the time the complaint was served, the land had been conveyed by Elbert Pruitt and the woman he married after the divorce to Paul Brooks. Thus, the complaint prayed that, if Brooks were determined to be a bona fide purchaser of the land without notice of the appellant’s claim, Matthews be held liable for damages in the amount of the value of half the land. The theory of the action against Matthews was one of negligence in conveying the land to Elbert Pruitt without naming the appellant as a grantee.

By an order of December 4, 1979, the chancellor held that Brooks was a bona fide purchaser for value without notice. Thereafter, the appellant amended her complaint to state that Elbert Pruitt had been guilty of fraud at the time the divorce decree was entered because he had informed the court that the appellant had only a “dower interest” in the land.

1. The claim against Matthews.

The chancellor found that Matthews was not negligent in conveying the land to Elbert Pruitt in reliance upon the divorce decree purporting to award the land to him. We find nothing in the record which would show that finding was clearly erroneous. A. R. Civ. P. 52(a).

2. The claim against Pruitt.

The chancellor found the claim against Elbert Pruitt was a tort claim and was barred by the three-year statute of limitations applicable to tort claims not specifically covered by other statutes of limitations, presumably Ark. Stat. Ann. § 37-206 (Repl. 1962). Bankston v. Davis, 262 Ark. 635, 559 S.W. 2d 714 (1978); Burton v. Tribble, 189 Ark. 58, 70 S.W. 2d 503 (1934); Field v. Gazette Publishing Co., 187 Ark. 253, 59 S.W. 2d 19 (1933). Whether the claim is one in deceit for damages or a restitutionary claim based on fraud, we agree it was clearly barred. The statute of limitations which applies to “actions not otherwise provided for” provides a five-year limitation. Ark. Stat. Ann. § 37-213 (Repl. 1962). Williams v. Purdy, Executrix, 223 Ark. 275, 265 S.W. 2d 534 (1954); Kahn v. Hardy, 201 Ark. 252, 144 S.W. 2d 725 (1940).

The fraud was alleged to have occurred at the time the divorce decree was rendered, i.e., August 20, 1970. The chancellor found a copy of that decree had been served on the appellant on that date. While the initial complaint in this action was served in May, 1975, and thus within the five-year period, it did not toll the statute with respect to any action against Elbert Pruitt based on fraud. Although that complaint asked for a remedy against Elbert Pruitt, it stated no claim or “cause of action” against him, as it did not allege facts showing he had committed fraud, negligence or breach of contract or any other actionable conduct.

If an amended complaint sets forth a new cause of action, it will not relate back to the initial complaint for the purpose of tolling the statute of limitations. The clearest holding to that effect by our supreme court was in Renner v. Progressive Life Ins. Co., 194 Ark. 874, 109 S.W. 2d 1245 (1937), where it was held that an amendment stating a tort cause of action did not relate back to the complaint which originally was in contract. Quoting from Davis v. Chrisp, 159 Ark. 335, 252 S.W. 606 (1923), the court said:

Our cases also hold that where there is an amendment stating a new cause of action . . . the statute of limitations runs to the date of the amendment and operates as a bar when the statutory period of limitation has already expired. [194 Ark. at 876].

This statement has more recently been approved in dictum in the case of Bridgmen v. Drilling, 218 Ark. 722, 238 S.W. 2d 645 (1951).

At the time the amendment was filed our new civil procedure rules had been adopted, and a complaint was no longer subject to a demurrer for failure to state a “cause of action.” To avoid the granting of a motion to dismiss, we now require that a complaint state “facts upon which relief can be granted.” A. R. Civ. P. 12(b)(6). The principle referred to above with respect to the statute of limitations remains applicable here, however, as no facts were stated in the original complaint upon which relief could have been granted against Elbert Pruitt. To the extent any such facts have been stated, they appeared in the amendment which came after any possibly applicable statute of limitations had run.

Affirmed.

Judge Hays did not participate.


text:
    Rex CAMP v. Gerald ELMORE and FIREMAN’S INSURANCE CO.
    CA 80-294
    609 S.W. 2d 86
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980

      Robert R. Cloar, for appellant.

      Jones, Gilbreath & Jones, for appellees.
   David Newbern, Judge.

The question here is whether the trial court should have granted a summary judgment because he found the appellant’s property which was destroyed by fire did not come within the description “usual or incidental to the occupancy of the [insured] premises as a dwelling.” We hold no summary judgment should have been granted, as this language contained in the homeowner’s insurance policy in question was ambiguous, and thus a material question of fact remained outstanding.

The appellant had left some of his personal property in a barn adjacent to the dwelling of Gerald Elmore who had his premises insured under a homeowner’s policy issued by the appellee Fireman’s Insurance Co. A fire occurred, and the appellant’s property was destroyed. The appellant’s property thus destroyed consisted of a wide variety of personalty, including items such as fishing equipment, a cement mixer, wrenches and motors. No facts were disputed except that the appellant wanted an opportunity to have a jury decide whether the appellant’s property was covered. The trial court denied that opportunity by deciding the property “was not property that was usual or incidental to the premises as a dwelling” and thus, on that basis alone, granted summary judgment.

Although his order does not say so, the judgment must have determined these words in the insurance contract were, as a matter of law, unambiguous. We disagree, as we consider the words highly ambiguous. What is or is not “usual” is a much more open question than, for example, the question where a “low boy” trailer comes within an insurance policy covering “motor trucks.” In a case where that was the issue, the New York Supreme Court Appellate Division held that summary judgment interpreting that term was improper, as it was a question of fact. Utica Carting, Storage & Contracting Co. v. World Fire and Marine Ins. Co., 277 App. Div. 483, 100 N.Y.S. 2d 941 (1950), reh. and app. den., 278 App. Div. 629, 102 N.Y.S. 2d 637 (1951).

When the intent of the parties as to the meaning of a contract is in issue, summary judgment is particularly inappropriate. Porter v. Deeter Real Estate, 255 Ark. 1057, 505 S.W. 2d 18 (1964); Peoples Outfitting Co. v. General Electric Credit Corp., 549 F. 2d 42 (CA7, 1977).

Reversed and remanded.


text:
    George SIEGRIST v. K. C. PENNY COMPANY, INC. and HOME INSURANCE COMPANY
    CA 80-347
    609 S.W. 2d 87
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980

      Bud Whetstone and J. R. Nash, for appellant.

      Tom Forest Lovett, P.A., for appellees.
   David Newbern, Judge.

The sole point submitted by the appellant for reversal is that the commission erred in determining that medical benefits owed to the appellant were not controverted by the appellees. In effect, the appellant asks us to say that, based upon the facts found by the commission, the medical payments were controverted as a matter of law.

The appellant received an unquestionably compensable injury while employed by K. C. Penney May 8, 1979, The evidence presented by the appellees tended to show they had difficulty ascertaining the appellant’s rate of pay. Conferences were held between the adjuster for the insurance company and the appellant and his attorney to make that determination.

The appellant filed a claim with the commission which held he was entitled to an award of temporary disability benefits and medical payments. It was held the award was controverted to the extent of “all temporary disability benefits.” It was therefore held the appellant’s attorney was entitled to the maximum statutory fee on the controverted part of the award. Ark. Stat. Ann. § 81-1332 (Supp. 1979).

The appellant contends here that the medical payments part of the award was also controverted. Although not stated by the appellant, the purpose of the appeal must be to obtain an addition to the statutory attorney fee based on a percentage of the medical payments awarded.

The commission determined specifically that the medical payments had not been controverted. The record reveals it is undisputed that the only medical bill received by the insurer before the hearing in this case was received by it on August 8, 1979- it was approved for payment by the insurer’s claims manager on August 10, 1979, and “put in for payment,” but the witness appearing for the insurer could not say definitely the bill had been paid at the time of the hearing.

The only authority cited by the appellant is Aluminum Co. of America v. Henning, 260 Ark. 699, 543 S.W. 2d 480 (1976), where our supreme court refused to say a finding of controversion could be avoided by an employer or insurer by simply advising the commission it would not controvert the claim. The case.treated the question of controversion as one of fact. We will uphold the commission’s factual determinations if we find substantial evidence supporting them in the record. Clark v. Peabody Testing Service, 265 Ark. 489, 579 S.W. 2d 360 (1979);O.K. Processing, Inc. v. Servold, 265 Ark. 352, 578 S.W. 2d 224 (1979).

In Turner v. Trade Winds Inn, 267 Ark. 219, 592 S.W. 2d 454 (Ark. App. 1980) this court sustained the commission’s finding of no controversion where there had been delay in paying hospital bills. There we held there was substantial evidence that the delay in payment was justified. Here we cannot even say there has been a delay in payment, as no medical bills were even submitted to the appellees for payment until 19 days before the hearing. No evidence showed the appellees declined to pay or delayed payment. There is substantial evidence to support the commission’s finding the medical bill was not controverted.

Affirmed.


author: David Newbern, Judge. Marian F. Penix, Judge,

text:
    Jimmy FOUST v. WARD SCHOOL BUS MANUFACTURING COMPANY and CMA INSURANCE CO.
    CA 80-382
    609 S.W. 2d 88
    Court of Appeals of Arkansas
    Opinion delivered December 10, 1980

      Guy H. Jones, Phil Stratton, Guy Jones, Jr., Casey Jones, by: Phil Stratton, for appellant.

      Wright, Lindsey & Jennings, by: Wendell L. Griffen, for appellees.
   David Newbern, Judge.

In this workers’ compensation case, we are presented with a problem of applying our supreme court’s decision in Shipper Transport of Georgia, et al v. Stepp, 265 Ark. 365, 578 S.W. 2d 232 (1979), which dealt with denial of workers’ compensation claim because of the claimant’s misrepresentation of his physical condition at the time of hire. As did the supreme court in the Shippers case, we conclude the evidence in the record before us is insufficient to make a determination whether there is a causal connection between the misreprsentation of the injury.

A month or so before he was injured on the job, the appellant applied for a position with the appellee, Ward School Bus Manufacturing Company. The appellant is semiliterate, and his wife assisted him in answering questions on the employment forms provided by the company. There is substantial evidence that the appellant, although asked, did not provide information about a back injury he had sustained some 13 or 14 years earlier. The appellant strongly denies this misrepresentation was done knowingly and wilfully.

In the process of drilling holes in a bus body, a drill bit bent and stuck, causing the drill to turn in the appellant’s hands, and in turn causing the appellant’s body to move in such a way as to cause a sharp pain in his back. The appellant thereafter consulted and was treated by several doctors and ultimately had an operation on his lower back. In the course of his consultations with physicians, the appellant revealed that some 13 or 14 years prior to this accident, he had injured his back while working in a fig harvest in California. This earlier injury was apparently mild, as the appellant testified he lost no time from his work and the only treatment he received was heat application for what was described as a muscle spasm.

During the time between the earlier injury and the one under consideration here, the appellant did various kinds of heavy labor requiring lifting and other uses of his back. There is no evidence in the record to show that prior to the examination in connection with the latter injury the appellant knew he was the victim of a congenital defect in his back. Likewise, there is no doubt that the appellant failed to inform his employer of the previous back injury. In the Shippers case, supra, the supreme court said:

The following factors must be present before a false statement in an employment application will bar benefits: (1) The employee mst have knowingly and wilfully made a false representation as to his physical condition. (2) The employer must have relied upon the false representation and this reliance must have been a substantial factor in the hiring. (3) There must have been a causal connection between the false representation and the injury. [265 Ark. at 369].

The appellant contends he did not knowingly and wilfully make a false representation and that there is no evidence of a causal connection between the false representation and injury. He does not argue that the misrepresentation was not a substantial factor in his being hired.

1. Knowing and wilful misrepresentation.

In stating this point, the appellant refers to the “preponderance of the evidence.” The standard on appeal to this court is that we must affirm the commission if there is substantial evidence to support its factual determinations. Clark v. Peabody Testing Service, 265 Ark. 489, 579 S.W. 2d 360 (1979); O. K. Processing, Inc. v. Servold, 265 Ark. 352, 578 S.W. 2d 224 (1979). Although we might agree if we were assessing the preponderance of the evidence, that it favors the appellant in these circumstances, we find substantial evidence to support the conclusions that he knowingly and wilfully failed to reveal his previous back injury at the time he was hired by the appellee, Ward. At one point, the appellant seemed to say in his testimony before the administrative law judge that he did not reveal the injury because he was only interested in getting a job. The context in which that statement was made was such that it is not nearly as devastating to the appellant as it will appear in cold print here. However, given the fact that he said it and the undeniable evidence that he, with the assistance of his wife, incorrectly answered the employer’s questions when he was hired, we cannot say there is no substantial evidence to support the conclusion that he knowingly and wilfully misrepresented the facts.

2. Causal connection.

Our supreme court took that which has become known to us as the “Shippers test” directly from IB Larson, Workmen’s Compensation Law, §§ 47 — 53 (1979). Professor Larson does not elaborate on the third of the factors he and our supreme court say must be present before an employee is barred from receiving compensation because of misrepresentation. To say there must be a causal connection between the misrepresentation and the injury leaves some questions in our minds. Does that mean that, as the appellee argues here, if the misrepresentation caused the employee to be hired, and had he not been hired no injury would have occurred, the misrepresentation therefore caused the injury? If so, then this third requirement would, in effect, be the same as the second one. Although we have not specifically addressed this problem, we have regarded the third requirement as being that a causal relationship exist between the previous injury or illness the employee misrepresented and the injury for which he seeks compensation. In Baldwin v. Club Products Co., et al, 270 Ark. 155, 604 S.W. 2d 568 (1980), this court held “a thorough scrutiny of the record fails to reveal any medical evidence touching on a causal relationship between the injury in 1969 and the current injury,” and thus the matter was returned to the commission for further evidence. This approach has been followed in other jurisdictions. See e.g., Daniels v. Gudis Furniture Company, 541 S.W. 2d 941 (Tenn. 1976); General Motors Corporation v. Cresto, 265 A. 2d 42 (Del. Super. 1970). We believe this is the correct approach, as otherwise, the third stated requirement would be meaningless.

Here, there is evidence that the appellant’s disease is a contributing factor to his injury. However, he cannot be said to have misrepresented his condition by failing to reveal his congenital back problem, as there is no evidence he knew he it when he was hired. Thus, we are left with the question whether there is a causal relationship between the appellant’s old injury and his new one. In his cross examination of the appellant, counsel for the appellees attempted to demonstrate that both the old and the new injuries resulted from a sort of lateral twisting at the waist: the first when he turned while holding a heavy fruit crate, and the second when he was turned about by the force of the drill. The appellant testified he could not recall where on his body the pain occurred when he was first injured. Thus, we only know that there may have been some similarity between the injuries and the manner in which they occurred, but that is no evidence of a causal connection between them.

The only other item which might be considered substantial evidence of the required causal relationship is the medical report of Dr. R. Barry Sorrells, in the form of a letter, which stated “this man tells me he has had recurrent mild to moderate back symptoms since 1968, when he was lifting a heavy case of fruit.” That statement might indicate the appellant’s back was in a substantially weakened condition because of the previous injury, thus making the first injury a contributor to the second one. At another point in his letter, Dr. Sorrells said that the back problem had been “allegedly quiescent” since 1968. That, of course, is inconsistent with his statement the appellant had described the problem as recurring. When asked at the hearing about this aspect of Dr. Sorrells’ report, the appellant emphatically denied he had said anything to the doctor, about recurring back symptoms since 1968, although he freely admitted he had told the doctor about the previous injury.

We cannot say this doctor’s letter which is predicated' upon a statement by the appellant, which the appellant denies having made, rises to the dignity of “substantial evidence.” While rules of evidence are not strictly applied, in administrative hearings, an inherently inconsistent statement such as the one relied upon here cannot be considered substantial evidence.

The commission’s decision, therefore, is reversed and the matter is remanded to the commission for the taking of further evidence with respect to the question whether there is a causal relationship between the two injuries. Shock v. Wheeling Pipeline, Inc., et al, 270 Ark. 57, 603 S.W. 2d 446 (Ark. App. 1980).

Reversed and remanded.

Penix, J., dissents.

Marian F. Penix, Judge,

dissenting. I disagree with the majority’s conclusion the Commission lacked substantial evidence in finding a causal relationship exists between the Appellant’s misrepresentation and the claim-related injury.

The Appellant may not have been aware his former back trouble stemmed from a congenital problem. He also may not even understand what a congenital problem is. However, the evidence in the record reflects the 1968 injury and the 1978 injury both occurred when the Appellant made the same kind of physical movement. The record reflects the Appellant continued to suffer backaches following the concealed 1968 back injury. The medical opinions of Drs. Sorrells and Lamey indicate the Appellant’s condition after the October, 1978 injury was related to the congenital spine disorder.

There is substantial evidence in this record to support the Commission’s findings. A reasonable man would have to agree there is substantial evidence. Therefore, I respectfully dissent.


author: George Rose Smith, Justice.

text:
    Shirley D. KING, a/k/a Shirley Dianne THOMPSON and Shirley Dianne WALTERS v. STATE of Arkansas
    CR 80-170
    609 S.W. 2d 32
    Supreme Court of Arkansas
    Opinion delivered December 15, 1980

      E. Alvin Schay, State Appellate Defender, by: Jack Kearney, Deputy State Appellate Defender, for appellant.

      Steve Clark, Atty. Gen., by: Arnold M. Jochums, Asst. Atty. Gen., for appellee.
   George Rose Smith, Justice.

Upon a charge of theft of property having a value of more than $100 and of being an habitual criminal, the appellant was tried without a jury, found guilty, and sentenced to 10 years’ imprisonment. For reversal it is argued that the State failed to prove all the elements of the alleged theft and that proof of prior convictions should not have been mentioned before there was a finding of guilt or innocence. We find no merit in either contention.

For the State, employees of the J. C. Penney Company, a chain department store, testified that the appellant and two other women were observed together in a Penney store in North Little Rock. They first stood in the lingerie department, with their backs to the employee who spotted their activities, and stuffed merchandise under their clothing. They went together successively to three other departments, taking merchandise in the same manner. They then left the store without paying for anything. When they were apprehended by the store’s security guard in their car in the store’s parking lot, two of the women were taking merchandise from their clothing and throwing it into the back seat, where the third woman was putting it into a garbage bag. Fifteen articles were recovered and introduced in evidence. They all had J. C. Penney price marks and had a total value of $236.48. The defense offered no testimony.

Even though the store employees could not say which of the three women took any particular article of merchandise, the proof is amply sufficient to support the trial judge’s specific finding that the three women acted in concert. Such a concert of action to commit an unlawful act may be shown by circumstantial evidence, without direct proof of a conspiracy by prior agreement. Caton and Headley v. State, 252 Ark. 420, 479 S.W. 2d 537 (1972); Griffin v. State, 248 Ark. 1223, 455 S.W. 2d 882 (1970). Hence under the Criminal Code the appellant could properly be found guilty not only by her own conduct but also by that of the other two women, her accomplices. Ark. Stat. Ann. §§ 41-301, -302, and -303 (Repl. 1977). The proof therefore supports the conclusion that the appellant was guilty of taking all the articles, that they had a total value of more than $100, and that they came from the Pénney store in question.

As to the second point, when both sides had rested the prosecutor stated that he had “some proof’ of prior convictions. In response to an objection (which the court overruled) that it was prejudicial to refer to prior convictions before the court had passed judgment, the prosecutor conceded that perhaps the defense was right and asked the court to make a ruling. The court then found the appellant guilty, after which the State introduced proof of prior convictions for forgery and uttering.

No error occurred. The case is unlike Hickey v. State, 263 Ark. 809, 569 S.W. 2d 64 (1978), where the case was also tried without a jury. There, however, the State proved in its case in chief that the defendant had been convicted of burglary and was on parole when he committed the offense on trial. An objection and a request for a mistrial were overruled. Since it could not be said that the trial judge had not considered that evidence in finding the defendant guilty, we ordered a new trial under the doctrine of Alford v. State, 223 Ark. 330, 266 S.W. 2d 804 (1954). In the case at bar the prosecutor should not have mentioned prior convictions before the judge made his finding, but even so, no actual proof was supplied before the finding of guilty was announced. For us to sustain the appellant’s argument would mean in effect that no case including a charge of habitual criminality could be tried without a jury, for it must be assumed that the trial judge is aware of the habitual criminal charge when the trial begins.

Affirmed.

Purtle, J., not participating.


author: Darrell Hickman, Justice.

text:
    Floyd WASHINGTON v. STATE of Arkansas
    CR 80-176
    609 S.W. 2d 33
    Supreme Court of Arkansas
    Opinion delivered December 15, 1980

      E. Alvin Schay, State Appellate Defender, by: Jackson Jones, Deputy State Appellate Defender, for appellant.

      Steve Clark, Atty. Gen., by: James F. Dowden, Asst. Atty. Gen., for appellee.
   Darrell Hickman, Justice.

Floyd Washington was charged with the aggravated robbery of the Stinger Sam Auto Parts store in Little Rock. The robbery occurred on June 8, 1979, and Washington was found guilty in a jury trial on April 8, 1980. After the commission of this robbery, Washington committed another robbery for which he was tried and convicted prior to the trial in this case.

On appeal, Washington argues that: (1) The State failed to show on the record that the appellant voluntarily and intelligently waived his right to the full and effective assistance of counsel; and, (2) The trial court erred in admitting, during sentence enhancement proceedings, evidence of a prior conviction which occurred after the commission of the principal offense.

In a separate hearing evidence was presented of two prior felony convictions and Washington was sentenced under the habitual criminal statute. The jury fixed his punishment at life imprisonment and the court directed that the life sentence run consecutively with any sentence the appellant was then serving.

The court finds merit in Washington’s second argument which is that the trial court erred in admitting evidence, for purposes of sentence enhancement, of a prior conviction for a crime which occurred after the commission of the principal offense. The situation is an unusual one and presents this court with an issue that we have not decided before. The following chart will indicate the problem:

Crime Date of Commission of Crime Date of Conviction

(1) Robbery February 1, 1974 May 13, 1974

(2) Aggravated Robbery June 14, 1979 December 5, 1979

(3) Aggravated Robbery June 8, 1979 April 8, 1980

Both of the last two cases were set for trial on December 5, 1979- Washington was convicted in case number 2 (above) on that date. However, case number 3 was postponed until April 8, 1980. When the jury returned a guilty verdict in case number 3, which is the case before us, the prosecutor presented the two prior “convictions” for the purpose of sentence enhancement under the Arkansas Habitual Criminal Act. That act, Ark. Stat. Ann. § 41-1001, reads as follows:

... A defendant who is convicted of a felony who has previously been convicted of more than one (1) but less than four (4) felonies, or who has been found guilty of more than one (1) but less than four (4) felonies, may be sentenced to an extended term of imprisonment . . .

The Arkansas statute provides for an increased penalty for previous convictions, but fails to specify the chronological order of the commission and conviction of the previous offenses. The statutes of some states do specifically stipulate that the principal offense must be committed after the previous convictions. However, an A.L.R. Annotation makes it clear that:

[R]egardless of the difference in phraseology, the preponderance of authority supports the view that the prior convictions, in order to be available for imposition of increased punishment as one as a habitual offender, must precede the commission of the principal offense, that is, the latest prosecution in point of time.

As a New York court stated in People v. Kenyon, 39 Misc. 2d 876, 242 N.Y.S. 2d 156 (1936):

To sustain sentence as a multiple offender it must be shown that the offense in question occurred after the conviction for the crime used to support multiple offender status.

The Texas courts have recognized this distinction from earliest days when the court stated, in Long v. State, 36 Tex. 6 (1871):

Many of the Codes of the different States declare in express terms, that before the party can be visited with the increased penalty, it must appear that the subsequent offense was committed after the conviction of the former offense.

A Kentucky court, dealing with a case where two former “convictions” for felony were set up in an indictment for a third felony, was faced with a statute similar to that of the Arkansas statute, imposing an increased penalty only for those convicted a third time of a felony. Brown v. Commonwealth, 100 Ky. 127, 37 S.W. 496 (1896). The court explained its decision as follows:

The statute was manifestly intended to provide an increased penalty for a subsequent offense, in order to deter the offender from its reception. After punishment is imposed for the commission of a crime, the double penalty is held in terrorem over the criminal, for the purpose of effecting his reformation, and preventing further and subsequent offenses by him. . . . The reformatory object of the statute, namely, to provide a deterrent from further crime, would not be effected by a construction which gives to the offender no opportunity to reform.

It is this policy of deterrence that we must assume was the basis for the Arkansas Habitual Criminal Act. In interpreting this act in Finch v. State, 262 Ark. 313, 556 S.W. 2d 434 (1977), the court noted that the act “is based upon the theory that one who is a persistent offender warrants an increased punishment for the offense of which he is found guilty, for the protection of the community, because he has not been deterred by previous punishment.”

Since we reverse and remand this case based on Washington’s second argument, we do not find it necessary to consider at length his first argument, which was that the record did not show that he voluntarily and knowingly waived his right to counsel. At this trial, Washington asked to serve as his own counsel. The court agreed, but appointed a public defender to assist as co-counsel. The public defender conducted the entire trial except for the closing statement, which Washington insisted on making himself. In effect Washington asked the jury to find him guilty and it did. The record reflects that Washington voluntarily and knowingly waived his right to counsel but the trial judge should have made a record of his remarks. However, Washington was correctly permitted to proceed pro se as he had a constitutional right to do. Faretta v. California, 422 U.S. 806 (1975).

Reversed and remanded for a new trial.