author: Darrell Hickman, Justice. John A. Fogleman, Justice,

text:
    Robert J. LOYD & Iris June LOYD, Husband & Wife et al v. SOUTHWEST ARKANSAS UTILITIES CORPORATION
    78-85
    580 S.W. 2d 935
    Substituted Opinion on Denial of Rehearing delivered May 21, 1979
    (In Banc)

      Crouch, Blair, Cypert & Waters, for appellants.

      James G. Mixon, of Little, Lawrence, McCollum & Mixon, for appellee.
   Darrell Hickman, Justice.

This is an appeal of an eminent domain case from the Benton County Circuit Court.

The condemning authority is the Southwest Arkansas Utilities Corporation, appellee, and the landowners are Robert Loyd and Iris June Loyd, husband and wife, appellants. Southwest condemned a one hundred foot strip of land through property owned by the Loyds to construct an electric transmission line. One tract of land consisted of about thirty acres and is owned by Mrs. Loyd; the other land consists of a 359 acre farm owned jointly by the Loyds.

There is no question raised on appeal regarding Southwest’s right to take the one hundred foot strip of land nor the damages that were awarded for that taking. The only questions raised on appeal relate to Southwest’s taking of an undefined right of ingress and egress over all the Loyds’ property in addition to the one hundred foot right-of-way taken by Southwest. The jury awarded the Loyds one dollar for the additional easement on each tract of land.

The Loyds generally objected to the taking and tried the case on the theory that Southwest’s taking of such a right of ingress and egress amounted to a taking of an easement and it should therefore pay for the full market value of all the Loyds’ property. We agree with the Loyds that the judgment of the trial court must be reversed.

Southwest, as a power company, filed its complaint to condemn the Loyds’ land pursuant to Ark. Stat. Ann. § 35-301, et sequentes. These statutes grant the power of eminent domain to corporations such as Southwest to acquire rights-of-way.

Southwest’s complaint, in addition to seeking a permanent one hundred foot right-of-way across the Loyds’ land to construct and maintain an electric transmission line, also sought:

. . . The right of ingress and egress to, from and over said lands for doing anything necessary or useful to the enjoyment of the easement herein granted.

The Loyds, by pleadings, objected to the taking and to the court’s initial order granting Southwest possession of the land and the estates as sought in Southwest’s complaint.

Before trial Southwest sought an injunction against the Loyds to prevent them from interfering with Southwest’s right of ingress and egress as previously granted by the court’s order of possession. The trial court, by order, made the following finding:

The Court finds that it is necessary that the plaintiff [Southwest] from time to time, and at places known, and places which are presently unknown, go across, over and upon other and adjoining lands owned by the defendants in order to have all reasonable ingress and egress to the land described [the hundred foot strip of land].... for the purpose of maintenance and operation of said transmission line and facilities cnnstructed. . . .

The court denied in this same order the right of Southwest to use its right of ingress and egress for purposes of construction of the transmission line.

It was the Loyds’ position at the trial and on appeal that the taking of the right of ingress and egress was a taking of an easement; and, according to the Constitution of Arkansas and our decisions, Southwest had to pay the Loyds the full market value of the land as though it were taken in fee. This argument is based on our decision in Baucum v. Arkansas Power & Light Co., 179 Ark. 154, 15 S.W. 2d 399 (1929), and related cases. In the Baucum case we decided that when a power company acquires by condemnation a permanent right-of-way across the land of others, it becomes liable for the full value of the right-of-way as if the fee had been taken. This is based on an interpretation of the Arkansas Constitution, Article 12, § 9, which reads:

No property, nor right-of-way, shall be appropriated to the use of any corporation until full compensation therefor shall be first made to the owner, in money, or first secured by him by a deposit of money, which compensation, irrespective of any benefit from any improvement proposed by such corporation, shall be ascertained by a jury of twelve men, in a court of competent jurisdiction, as shall be prescribed by law. (Emphasis added).

We have consistently followed the Baucum case since. Arkansas Louisiana Gas Co. v. Burkley, 242 Ark. 662, 416 S.W. 2d 263 (1967). (A temporary easement is valued as the fair rental of the property during the time it is used. Mobley Const. Co. v. Fox, 201 Ark. 646, 146 S.W. 2d 905 [1941]).

The rationale of the Baucum case was that ordinarily a condemning authority, such as a power company, would lay a pipe line or erect a transmission line under or on the land and effectively take the land for all practical purposes. Structures could not be built over a pipe line nor under a transmission line and whatever incidental value a landowner might have in growing a crop on such land was insignificant compared to the taking. The Loyds argue Baucum applies to the easement taken in this case.

The Loyds’ expert witness testified extensively as to the damages the Loyds would suffer from the imposition of such a right of ingress and egress on their property and concluded, the damages, assuming the taking was a permanent right-of-way as defined in the case of Baucum, supra, would be the market value of the farm.

The court struck all the testimony of the expert witness and refused all instructions offered by the Loyds supporting their theory of the case.

Southwest argued to the trial court and on appeal that the right of ingress and egress taken was merely a “secondary easement.” Although the landowner must be paid for this taking of a valuable property right, payment as though it were taken in fee is unreasonable; that is because the right of ingress and egress sought would not prohibit the landowner from utilizing the property by building on it or developing it. Also, although permanent, the right of ingress and egress sought does not fit in the same category as a permanent right-of-way that is normally acquired by a power company to be used for locating a transmission line or pipe line.

The trial court adopted Southwest’s position and instructed the jury that the taking was really a “secondary easement.” The court’s instruction reads in full:

INSTRUCTION NO. 8:

In connection with the terms, “egress” and “ingress” as it has been used in this trial you are told that under the law once an easement such as the one in this case has been acquired for a right-of-way then the condemnor, in this case Southwest Electric Arkansas Utilities, acquires a secondary easement over other adjacent land owned by the defendant. You are further told that this secondary easement may be exercised when necessary and only in a reasonable manner in order to get on and off the right-of-way acquired in this action. You are further told that the secondary easement is a property right for which the plaintiff may be required to pay if you find under the facts of this case that a reduction in the fair market value of the defendant’s remaining land has occurred as a result of the imposition of the secondary easement.

Southwest’s argument is that we should adopt the views of the Virginia Supreme Court and that either our decision in Baucum does not apply to this case or should not be extended to the facts of this case; that is, Southwest should not be required to pay for the right of ingress and egress as though the land were taken in fee. Also, that the law permits such a taking and that the measure of damages should only be the difference between the value of the land before the “secondary easement” was taken and the value of the land after it is taken.

The Virginia Supreme Court, cited by Southwest, decided that although such a right of ingress and egress must be paid for, it is really a “secondary easement” to a right-of-way such as that acquired by Southwest. Virginia Electric & Power Co. v. Webb, 196 Va. 555, 84 S. E. 2d 735 (1954). The Virginia court in its decision quoted a definition of a “secondary easement” from Thompson on Real Property. That definition, in part, is as follows:

The right to enter upon the servient tenement for the purpose of repairing or renewing an artificial structure, constituting an easement, is called a secondary easement, a mere incident of the easement that passes by express or implied grant, or is acquired by prescription. . . This secondary easement can be exercised only when necessary, and in such a reasonable manner as not to needlessly increase the burden upon the servient tenement.

2 Thompson, Real Property, (Perm. Ed.), § 676, p. 343.

By definition a secondary easement goes with an existing easement and consequently would not have to be separately acquired. It either exists or it does not exist as an incident to an easement.

A secondary easement, then, is simply a legal device that permits the owner of an easement to fully enjoy all of the rights and benefits of that easement. Conversely, it is a legal device that prohibits an owner of a servient tenement from interfering with an easement owner’s enjoyment of the full benefits and rights of an easement.

However, a secondary easement does not necessarily exist in every case. For example, a highway department or railroad company would not have a right of ingress or egress over all adjacent land to its rights-of-way. It is not needed because access is inherent in such easements or rights-of-way. Nor would one exist where access to a right-of-way, such as that taken in this case, already exists.

We have never had an occasion to recognize a “secondary easement” and there is no need to do so in this case, because what Southwest sought and acquired in this case was not a secondary easement but a separate and distinct right of ingress and egress over all the Loyds’ property.

While we do not find it necessary to rule at this time that a secondary easement exists in some cases, neither do we reject the idea that such a right exists.

The Virginia decision and Southwest’s position is not only inconsistent, it is a position that can only mislead a jury that must decide fair compensation for any taking. It should be pointed out that the Virginia court does not follow our rule of compensation regarding the acquisition of a right-of-way by eminent domain.

It was only in the trial court’s instruction that this right of ingress and egress was called a secondary easement and although the court limited it to “. . . when necessary and only in a reasonable manner”, there was no essential change of the right granted in its original order of possession as later modified.

The right of ingress and egress obtained by Southwest in this case resembles very nearly, if it is not, what we commonly refer to as an easement. A general definition of an easement is a right which one person has to use the land of another for a specific purpose. A right-of-way is an easement and is usually the term used to describe the easement itself or the strip of land which is occupied for the easement. 25 Am. Jur. 2d Easements & Licenses, §§ 1 and 8. In this case the right of ingress and egress was the right granted to Southwest to go on and off, at places known and unknown, upon, over and across all the lands of the Loyds. In other words, any vehicle that would be needed for the maintenance or operation of the line could be driven across the Loyds’ land.

Southwest’s acquisition of its right of ingress and egress in this case is based on its right to condemn land pursuant to Ark. Stat. Ann. § 35-301, et seq., and Ark. Stat. Ann. § 73-276, et seq. Such statutes delegating the power of eminent domain are strictly construed in favor of the landowners because the power is in derogation of a common right. City of Little Rock v. Sawyer, 228 Ark. 516, 309 S.W. 2d 30 (1958). The only right of access granted by these statutes is the right to acquire a right-of-way or reasonable access. Ark. Stat. Ann. §§ 35-302 and 73-276.15. These statutes do not elaborate to include any right of ingress or egress such as that sought by Southwest in this case. A right-of-way must be surveyed and located, that is, defined. Ark. Stat. Ann. §§ 35-404 and 35-305. Southwest’s was not located, nor was it reasonable, as we have indicated. Our decision does not in any way relate to any right by common law that Southwest may have to reach its property, such as a way of necessity. Nor do we preclude the right to a secondary easement as we understand it.

Consequently, what Southwest sought and acquired, in addition to its one hundred foot right-of-way, was not authorized by the statutes. The Loyds’ argument that Southwest pay the full price for the farm is unreasonable. At the same time it is unreasonable for Southwest to attempt to acquire a cheap right-of-way by calling it a secondary easement.

In summary, we agree with the Loyds that the case must be reversed, but not for the same reasons. We have ruled in effect that Southwest cannot acquire the easement that it sought.

We also disagree with the trial court’s characterization of the easement sought by Southwest, and the court’s order in striking all the testimony of the expert witness. While the case is remanded, Southwest is not precluded from amending its pleadings and seeking other relief not inconsistent with this opinion.

The judgment of the trial court is reversed and the case remanded to the trial court for proceedings not inconsistent with this opinion.

Fogleman, J., concurs.

Fogleman, J., would grant the rehearing.

John A. Fogleman, Justice,

concurring. I am both amazed and alarmed that this court would discuss an issue (1) not raised in the trial court, (2) not raised on appeal and (3) upon which the parties did not want a decision. The excuse for doing so is not only unprecedented, it is revolutionary in Arkansas jurisprudence. The opinion is purely legislative in nature, not just in the sense of lawmaking, but also in the sense of determining the extent of a utility company’s power of eminent domain. It makes policy determinations that should be left to the General Assembly. There is no reason for this gratuitous action, which is wholly unnecessary in giving an answer to the question the parties want answered. I have never before heard of a reversal of a judgment for a reason admittedly different from any reason relied upon by an appellant. The reason given for reversal is actually contrary to the position taken by appellants.

The majority has reversed the judgment on the nature and extent of the taking, regardless of the fact that appellants have clearly and fully waived any such objection. The case has been treated here as if the court were affirming a judgment adverse to appellee on the extent of the taking. The points for reversal stated by appellants do not even remotely approach the ground upon which the majority reverses the judgment. Every argument advanced here and every point for reversal stated by appellants was based on their contention that they were entitled to recover the full market value of the entire tracts through which the basic right-of-way passes, because of the secondary easement. In treating Ark. Stat. Ann. § 35-302 (Repl. 1962), appellants say:

The statute makes it clear that if the company wishes to have a right of ingress and egress, or a “secondary easement” as it was called by the lower court, then such right and access must be obtained by condemnation, and all the rules for condemning property and the assessment of damages thereto apply.

In objecting to the court’s instruction that appellants should be compensated for the value of the fee in the 100-foot easement, but that otherwise the measure of just compensation was the difference in the market value of the whole tract before the taking and its value after the taking, appellants’ counsel said:

Defendant landowners object to the court’s Instruction No. 3 because, while it correctly states the law regarding the 100-foot easement, it does not accept the fact that the right of ingress and egress is an easement, and that it should also be compensated by the condemning authority as if the taking were in fee.

Appellants complain here about the failure of the court to give three instructions they requested. Although two of these relate only to their theory that they were entitled to recover the full value of their farms crossed by the right-of-way, the first instruction they requested read:

You are instructed that a right-of-way for ingress and egress is an easement, and the landowner is entitled to the fair market value of his land, for such easement is imposed as if the land were taken in fee.

The majority has taken a much more drastic step than consideration of a question raised by a party for the first time on appeal. It has, in considering a question not raised on appeal, veritably built a straw man for the sole purpose of destroying it in order to reverse the judgment in this case.

I do not mean to say that the judgment should not be reversed. I can agree with appellants that the order of the trial court striking all of the testimony of appellants’ expert witness on the issues of ingress or egress was too comprehensive, although it would have been proper, if it had been limited to striking his testimony as to the value of the remaining lands after the taking of the right of way. If appellants are right in their assertion that they are entitled to recover as if the entire tract had been taken in fee, there was no basis for striking this testimony. Yet, this is the exact issue that was presented to the trial court and the issue presented to us on appeal and the one this court should answer, without directing the parties to litigate other issues. I think that this witness had no fair and reasonable basis for his testimony that the property subject to the secondary easement had no value after the taking and that to hold that it did would be an unwarranted and absurd extension of the doctrine of Baucum v. Arkansas Power & Light Co., 179 Ark. 154, 15 S.W. 2d 399, and other such decisions of this court. Certainly, it was never contemplated that the application appellants urge be made of a doctrine that is sound when limited to the applications we have made. So, for reasons elaborated upon elsewhere in this opinion, I think striking the expert’s testimony as to the value of the property after the taking would have been appropriate. But he did elaborate upon the disadvantages of the “ingress and egress” to the landowner. This evidence was properly admissible because a landowner has the right to show every disadvantage which his remaining property suffers by reason of a partial taking under the power of eminent domain. Arkansas-Missouri Power Co. v. Sain, 262 Ark. 326, 556 S.W. 2d 441; Arkansas State Highway Com’n. v. Lewis, 258 Ark. 836, 529 S.W. 2d 142. See also, Arkansas State Highway Com’n. v. Wallace, 247 Ark. 157, 444 S.W. 2d 685. He may show every element which a businessman of ordinary prudence would consider before purchasing the property. Arkansas Power & Light Co. v. Haskins, 258 Ark. 698, 528 S.W. 2d 407; Kirk v. Pulaski Road Improvement District # 10, 172 Ark. 1031, 291 S.W. 793 (on rehearing); Pulaski County v. Horton, 224 Ark. 864, 276 S.W. 2d 706. See also, Little Rock Junction Ry. v. Woodruff, 49 Ark. 381, 5 S.W. 792, 4 Am. St. Rep. 51; Stuttgart & Rice Belt R.R. v. Kocourek, 101 Ark. 47, 141 S.W. 511. So the court erred in striking all of the testimony of this witness on the issue of the right of ingress and egress of the power company.

There was a reason, however, for striking the testimony of the expert witness as to the value of the lands remaining after the taking of the right-of-way easement. There was no fair and reasonable basis for saying they had no value. This would mean that no informed purchaser would pay anything for the land. This is ridiculous on its face. But the approach taken by appellants and their expert was based upon an erroneous legal premise, i.e., that Baucum and its progeny require the taker to pay for a fee simple title for the secondary easement which, as I will presently show, is ancillary to the primary easement, i.e., the actual right of way.

In properly evaluating the issues presented to us, we must also look at the instruction given by the trial court and the objection made to it. The pertinent instruction was No. 8, which is set out in full in the majority opinion. Appellants’ objection was as follows:

Defendant landowners object to the court’s Instruction No. 8 which is plaintiff’s requested Instruction A, for the reason that the right of ingress and egress is improperly defined as a secondary easement rather than simply an easement and for the failure of the instruction to provide that the landowner is entitled to recover for the value in fee of the imposition of that easement and further that the part relating to future damages of the Defendant’s land is couched in terms of unreasonable use whereas the landowners’ right of recovery in the future is limited to Plaintiff’s negligent use and that the case of Board of Directors, St. Francis Levee District versus Morledge, 332 Southwest Reporter 822, a 1960 case of an Arkansas Supreme Court decision as it cites Baucum versus Arkansas Power and Light, 179 Arkansas 154, in discussing damages stated the court should have charged the jury that full compensation for the market value and damage assessed in this suit as future damages could be recovered only for the negligent use of the right-of-way condemned and further that the Arkansas Supreme Court has established that all land secured by a taking is assessed in one proceeding and the damages to be covered must cover all future use of the condemned properties that are or should be within the condemning of the property at the time of the taking and instruction — the court’s instruction in terms couched in terms of the words, “necessary or need,” do not take that rule of law into consideration and the Arkansas Supreme Court having further established that the rule should be that the right of the landowner is to sue for his damages is complete and he may recover the entire damages that may be caused by the location and subsequent construction.
In that connection, and for the reasons previously stated, defendant landowner further objects to the court’s refusal to give landowners’ offered instruction:
“You are instructed that a right-of-way for ingress and egress is an easement, and the landowner is entitled to the fair market value of his land, for such easement is imposed as if the land were taken in fee.”

Thus it is clear that appellants objected only to the denial of compensation as if the entire tract was taken in fee (a sort of have-your-cake-and-eat-it-too approach) and not to the nature or extent of the taking.

The holding in Baucum was never intended to be as comprehensive in scope as appellants urge. It has never been held that the taking of every easement requires the taker to pay the full market value of the property taken for the easement. It must be remembered that in Baucum the easement involved was a primary easement, i.e., “a right-of-way for an electric power transmission line.” The jury in that case was instructed that the taker had “no right in the remainder of defendants’ land outside the 80-foot right-of-way.” There was no objection to this part of the instruction. This court adopted the Tennessee view that “where an electric light and power company, in condemnation proceedings, acquired an easement across the land of another, it became liable for the full value of the right-of-way as if the fee had been taken.” (Emphasis mine.) We held that the trial court erred in limiting the consideration of the jury to the line as “now constructed” and “as established,” “for the reason that the company acquired by the condemnation proceedings the power to make such use of the right-of-way as its future needs require for the purpose for which the right-of-way was condemned.” We further said:

The court should also have charged the jury that full compensation for the market value and damages should be assessed in this suit, as future damages could be recovered only for the negligent use of the right of way condemned.
*****
What we have just said does not mean that the jury in a condemnation suit should attempt to compensate the owner for livestock which might hereafter be killed or injured, but means only that if the testimony shows there is such probability, and that fact affects the value of the land not taken, the same may be considered in assessing damages. ***

Soon after Baucum, came Patterson Orchard Co. v. Southwest Arkansas Utilities Corp., 179 Ark. 1029, 18 S.W. 2d 1028. There, it was contended that the trial court decreed to the power company a fee simple title to the strip of land constituting the right of way for electrical transmission lines. The situation there was far different from that here, not only in the fact that only a right of way was involved, but also in the rights sought to be acquired. On this point, the court, in holding that the decree granting a right of way only created an easement, emphasized the allegations of the pleading, saying:

*** In the amendment to the complaint it is alleged by appellee that the only use it has for the right-of-way is that it might have the right of ingress and egress for the men and equipment used in the construction and maintenance of the transmission line, and that it would not be necessary to cut and remove any peach trees, and that the cultivation and use of said land by the appellant need not be interfered with in any manner except in so far as the presence of said poles on said land would interfere with same, and, after the construction of the line, appellee would not have occasion, except in some unforeseen emergency, during the life of the poles (which was estimated to be from fifteen to twenty years), to enter upon the land, other than to send one of its men on foot along the transmission line to inspect same about twice a month; but it alleged that it desired the exclusive use of all appellant’s land if it had to pay the full value of same for damages for the right-of-way acquired.

We enlarged upon the holding in Baucum, viz:

*** By this decree an easement only is created, and the appellee is necessarily granted the exclusive possession of the property to the extent that such possession is necessary for the erection, operation and maintenance of its line, and to no other pr greater extent. By admissions of the appellee in its amended [complaint], it is shown that the exclusive possession granted was only necessary for the time during the actual erection of the line, or in the case of some unforeseen emergency, and that the extent of the possession absolutely necessary would be only for the purpose of occasional trips of inspection by its employees. In no case can the fee simple title in its true sense be vested in the corporation exercising the right of eminent domain, for, at whatever time the purpose for which the right-of-way was taken had been accomplished and its use terminated, the possession and all other incidents of ownership would revert to the original owner. It is true, the necessary uses for a parcel of land condemned may be of such nature as to preclude any possession except that of the corporation exercising the right to condemn, and to that extent an estate in the nature of a fee would be acquired; as, for instance, a railroad corporation might condemn a plot of ground for a depot. The purpose for which this land would be used would be such that the owner could not exercise any possession over it that would be consistent, and not interfere, with the rights of the railroad company, so that it would necessarily have the exclusive possession for all purposes. But in all other cases, except such as of the nature of the possession stated just above, the owner would have also the right to the possession, subordinate to the paramount possession of the condemnor, and might exercise any and all rights of ownership, except such as were inconsistent, and an interference, with the easement granted.
In the instant case the appellee has the exclusive possession’ of the strip of land taken for all purposes necessary to carry into effect and maintain the transmission line, and to no other extent. ***

The rationale of Baucum has uniformly been applied only to the right of way proper, i.e., the land actually embraced within the right-of-way easement — that strip or parcel of land actually taken for the construction of the power line, gas line or other such improvement. See Texas Illinois Gas Pipeline Co. v. Lawhom, 220 Ark. 932, 251 S.W. 2d 477; Arkansas Power & Light Co. v. Morris, 221 Ark. 576, 254 S.W. 2d 684. See also, Lazenby v. Arkansas State Highway Com’n., 231 Ark. 601, 331 S.W. 2d 705. Baucum was not actually a case of first impression in Arkansas, except as to electrical power line rights of way. The earliest case was Railway v. Combs, 51 Ark. 324, 11 S.W. 418, where a railroad right of way, running diagonally across the landowners’ farm, was taken. This case was cited in Baucum, and it, too, was based upon the premise that the company had the right to exclusive occupancy of the land condemned, whenever necessary to the proper operation of the railroad, leaving nothing of appreciable value to the owner.

The decision in State ex rel Publicity & Parks Com ’n. v. Earl, 233 Ark. 348, 345 S.W. 2d 20, is really an application, rather than an extension, of the Baucum rule. In that case, the condemnor asked to condemn a 350-foot-wide strip of land in fee for an airstrip runway and a permanent easement over a 400-foot-wide strip of territory on each side of the runway in order to keep trees trimmed and prevent obstruction to air navigation. We held that the condemnee was entitled to be paid the full market value of both the 350 foot strip and the 800 foot permanent easement, because the “use of the strip destroyed permanently all use and benefit” to the landowners.

The real reason for the Baucum rule and its application was stated in Arkansas Louisiana Gas Co. v. Burkley, 242 Ark. 662, 416 S.W. 2d 263, where the easement condemned was an 80-foot pipeline right of way. In conclusion, we stated:

The rule established in Baucum, that the landowner is entitled to receive full value of the fee for an easement of this type, tends to eliminate future litigation over damages sustained by reason of future additional construction on the easement, and should be sustained.

The proper application of the Baucum rule and its limitations were concisely stated in Chicago Mill & Lumber Co. v. Directors of St. Francis Levee District, 236 Ark. 322, 366 S.W. 2d 184, thus:

*** Under our law it is firmly settled that when a permanent easement is taken by eminent domain, depriving the owner of the use of the property, the compensation must equal the full value of the land, as if a fee were being acquired. ***

The limitation of Baucum to right of way is significant. Right of way, in the sense used in these cases, is: “The land, other than storage or station yards, occupied by a railroad for its tracks, especially for its main line; also, the strip of land over which a public road is built, or the strip over when an electric power transmission line passes.” Webster’s New International Dictionary, 2d Ed. The language of the opinions in Baucum and its predecessor, and subsequent cases, shows clearly that this is the meaning accorded to right of way.

The appropriate distinction and limitation of the Baucum rule were made quite clear in Minkowitz v. City of West Memphis, 241 Ark. 207, 406 S.W. 2d 887. In that case, the city condemned the landowners’ property to establish a clear zone, or avigation easement, in connection with the city’s airport. The landowners relied upon Baucum, Morris and Earl, in contending that they were entitled to the full value of the land acquired in the easement. We pointed out that the fee to the land subjected to the easement remained in the landowners and that the great weight of the evidence showed that it was useable to a large degree. In addressing the measure of the landowners’ compensation, and approving an instruction which permitted the landowners to recover only the difference in value of the property involved immediately before and immediately after the restrictions were placed or imposed on the property, we said:

In situations such as obtain here the well established rule appears to be that the land owner is entitled to recover the difference in value of the land before and after the imposition of the restrictions. ***

We also distinguished the cases relied upon by appellant, saying:

In our opinion the above decisions are not in conflict with the result we have reached, since they are distinguishable on the facts from the case here under consideration. Here, as pointed out previously, appellants’ entire use of the land has not been taken, nor can it ever be taken without remuneration. This is not the situation in the cited case. In the Baucum case the court pointed out “ *** that the company acquired by condemnation proceedings the power to make such use of right-of-way as its future needs required ***.” In the Morris case we made the same statement quoted above. In the Earl case, which also involved the taking of land near the landing strip for airplanes there appears this distinguishing sentence: “The court” — (sitting as a jury) — “concluded that appellants’ use of the said strip destroyed permanently all use and benefit to appellees, and therefore appellees should be paid full value”.

In Arkansas Power & Light Co. v. Mayo, 244 Ark. 435, 425 S.W. 2d 531, where a right of way 125 feet wide and 1572 feet long was condemned, we expressed a preference for the following instruction on the measure of the landowners’ compensation:

“You are instructed that the compensation to which the defendants are entitled in this cause is the fair market value of the lands within the right of way determined as of the date of taking, together with the difference, if any, in the fair market value of the remainder of the lands immediately before and immediately after the taking.”

I have no quarrel with the Baucum rule when properly applied, even though it seems to be a minority rule. See Arkansas Power & Light Co. v. Mayo, supra (Fogleman, J., dissenting). But as pointed out in Minkowitz, it has no application to a case such as this. Extending it to apply to secondary easements would result, in my opinion, in an absurdity and totally ignore the rationale of Baucum and other such cases. Since the evidence clearly showed that the secondary easement was not a right of way, and that, while it might result in some restrictions upon the landowners’ use of the property, it obviously did not leave them with no rights of appreciable value in their lands outside the right of way. It is for this reason the expert witness had no fair and reasonable basis for the zero value he placed upon those lands. His valuation was obviously arbitrary and plucked from the air just as surely as were the obviously excessive values assigned by the landowner in Arkansas State Highway Com’n. v. Stanley, 234 Ark. 428, 353 S.W. 2d 173, 4 ALR 3d 749.

As a matter of fact, the power company acquired the secondary easement, as limited by the trial judge, as an incident to acquisition of the right of way, without any necessity for taking it by the exercise of eminent domain. 2 Thompson on Real Property, (Perm. Ed.) 343, § 676 (611); Gale on Easements (10th Ed.), Chapters II & III, pp. 442-454; 25 Am. Jur. 2d 492, Easements & Licenses, § 86; 28 CJS 754, Easements, § 76b; 3 Powell on Real Property 34-181, § 415; Restatement of the Law, Property (Servitudes) 3004, § 480. A fuller quotation from Thompson than that contained in the majority opinion is enlightening. The author said:

§ 676 (611). “Secondary easement” defined. — The right to enter upon the servient tenement for the purpose of repairing or renewing an artificial structure, constituting an easement, is called a “secondary easement,” a mere incident of the easement that passes by express or implied grant, or is acquired by prescription. The owner of the dominant estate may enter on the servient tenement, and there do any act necessary for the proper user of the easement. This secondary easement can be exercised only when necessary, and in such a reasonable manner as not to needlessly increase the burden upon the servient tenement. The grant of the easement carries with it by implication whatever incidental right is necessary to its beneficial enjoyment, provided the grantor has power to bestow it. *** He may enter the servient tenement to make repairs, and use such tenement for this purpose to a reasonable extent; doing no unnecessary injury to the servient estate. The owner of the dominant tenement can make no alterations in his mode of enjoying the easement which will increase its burden. He has no right to commit a trespass upon the servient tenement, as he does when he enters upon the tenement and extends a ditch, which he has the right to maintain, either by grant or prescription, beyond the limits fixed by the grant or by use. ***

The same author further said:

§ 678 (613). Extent of right to make repairs. — One having a right of way may repair or improve same, provided in so doing he makes no material change in the state and condition of the soil, or does not disturb or interfere with the estate or privileges of other persons therein. In making repairs the owner of the easement can not increase the burden or enlarge the character or extent of the use. *** When an easement or other property right is created, every right necessary for its enjoyment is included by implication. *** The right to repair includes, as a matter of course, the right to enter, at reasonable times, to make such repairs. ***

It is also clear that appellants’ objection to instruction No. 8 was not well taken and that the instruction requested by appellants was not correct.

The right of way for a transmission line includes the right to service and maintain the line. Moore v. Indiana & Michigan Electric Co., 229 Ind. 339, 95 N.E. 2d 210 (1950); Youngstown Steel Products Co. v. City of Los Angeles, 229 P. 2d 814 (Cal. App., 1951); Papa v. Flake, 18 Ariz. App. 496, 503 P. 2d 972 (1972). It has been held that a power company may have a right of way of necessity across the owner’s remaining lands from the public highway to repair and maintain its transmission line, by operation of law and as a matter of public policy. Moore v. Indiana & Michigan Electric Co., supra. The right of access (or ingress and egress) to the right of way for such purposes as repair and maintenance is a secondary easement necessary for the full enjoyment of the primary easement. Youngstown Steel Products Co. v. City of Los Angeles, supra; Otter Tail Power Co. v. Malme, 92 N.W. 2d 514 (N.D., 1958); Shrull v. Rapasardi, 33 Col. App. 148, 517 P. 2d 860 (1973). See also, Papa v. Flake, supra; Ricenbaw v. Kraus, 157 Neb. 723, 61 N.W. 2d 350 (1953); 28 CJS 754, Easements § 76b; Anderson v. Southern California Edison Co., 77 Cal. App. 328, 246 P. 559 (1926). It has been widely recognized that this right of ingress is an incident to the taking of a right of way for the construction of a power transmission line. Papa v. Flake, supra; Otter Trail Power Co. v. Malme, supra; City of Gilroy v. Kell, 67 Cal. App. 734, 228 P. 400 (1924); Anderson v. Southern California Edison Co., supra.

The secondary easement described by appellee in its complaint was a “textbook” description of the secondary easement acquired as an incident to a right-of-way easement. It is quite clear that such an unlocated easement of ingress and egress may be acquired by eminent domain, as appellee sought to do here. Moore v. Indiana & Michigan Electric Co., supra; Virginia Electric & Power Co. v. Webb, 196 Va. 555, 84 S.E. 2d 735 (1954); Otter Tail Power Co. v. Malme, supra. The trial court’s limitation of that easement certainly did nothing to make the burden on appellants more onerous than that which would have been imposed by the easement sought. Thereafter, appellants were satisfied to seek recovery of the full value of the entire tract.

The appellee in this case faced the reality of the situation and, by its pleading, asserted its need for the secondary easement and correctly recognized that appellants were entitled to compensation for the right of ingress and egress by virtue of the unlocated secondary easement which was incident to its right-of-way easement. See Otter Tail Power Co. v. Malme, supra; Tennessee Gas Transmission Co. v. Million, 314 Ky. 137, 234 S.W. 2d 152 (1950); Tennessee Gas & Transmission Co. v. Jackman, 311 Ky. 507, 224 S.W. 2d 660 (1949). This is consistent with our decisions in such cases as Minkowitz v. City of West Memphis, 241 Ark. 207, 406 S.W. 2d 887.

The landowner as the owner of the servient estate is not left at the mercy of the utility company when an easement such as that sought by appellee is granted. A California court put the matter in proper perspective. In Youngstown Steel Products Co. v. City of Los Angeles, supra, it said:

In the case of the grant of an easement the law is alert to protect the right of the owner of the servient tenement to make any use of his land which does not constitute an unreasonable interference with the easement. Every incident of ownership not in conflict with the easement is reserved to the servient tenement. ***

See also, Anderson v. Southern California Edison Co., supra; Knudson v. Frost, 56 Colo. 530, 139 P. 533 (1914); Davis v. Arkansas Louisiana Gas Co., 248 Ark. 881, 454 S.W. 2d 331; Southwestern Bell Telephone Co. v. Davis, 247 Ark. 381, 445 S.W. 2d 505.

The holder of the right of way is not permitted to roam at will over the property of the landowner, but is held to a reasonable use of the secondary easement, at reasonable times, in a reasonable manner, upon a direct, practical route and for the exclusive purpose for which the secondary easement exists. City of Gilroy v. Kell, supra; Otter Tail Power Co. v. Malme, supra; Anderson v. Southern California Edison Co., supra. See also, 28 CJS 754, Easements, § 76b; Annot., 169 ALR 1147, 1148, et seq; Knudson v. Frost, supra.

The owner of the right of way may not inflict unnecessary injury upon the servient estate. Otter Tail Power Co. v. Malme, supra; Anderson v. Southern California Edison Co., supra; Ricenbaw v. Kraus, supra; 28 CJS 754, Easements, § 76b. Accord, Davis v. Arkansas Louisiana Gas Co., supra. When the condemnor uses the easement for any purpose inconsistent with that for which it was acquired it becomes a trespasser to the extent of the unauthorized úse and is liable to the servient owner for all damages which result therefrom. Otter Tail Power Co. v. Malme, supra; Youngstown Steel Products Co. v. City of Los Angeles, supra; Tennessee Gas Transmission Co. v. Million, supra. See also, Southwestern Bell Telephone Co. v. Davis, supra.

The majority’s statement that Southwest did not seek or acquire a secondary easement, but did acquire “a separate and distinct right of ingress and egress over all the Loyd’s property,” is incomprehensible to me, even if consideration of the question is limited only to the preceding content of the majority opinion. The statement that there was a taking of an undefined right of ingress and egress over all the Loyds’ property is not fully warranted or supported. The order awarding appellee possession contained the limitation by the trial court set out in the majority opinion, with the additional limitation that the ingress and egress was limited to ‘.‘the purpose of maintaining the aforementioned transmission lines and facilities.” The judgment entered after trial awarded the right-of-way “together with the right of reasonable ingress and egress, to the extent necessary over and across other lands (the remaining lands) owned by the said Defendant, .....for the purpose of maintenance and operation of said transmission line and facility which are constructed on [the right-of-way].” This is not a “blanket” right of ingress or egress. There are very real limitations uoon this right. The words “reasonable” and “to the extent necessary” are real limitations upon the ingress and egress.

The landowners did not attempt to show that the taking is arbitrary or excessive, or that the condemning authority has been guilty of fraud, bad faith or a gross abuse of discretion. Gray v. Ouachita Creek Watershed District, 234 Ark. 181, 351 S.W. 2d 142; State Highway Commission v. Saline County, 205 Ark. 860, 171 S.W. 2d 60; Wollard v. Arkansas State Highway Com’n., 220 Ark. 731, 249 S.W. 2d 564; Cloth v. Chicago, R.I. & P. Ry. Co., 97 Ark. 86, 132 S.W. 1002, Ann. Cas. 1912C 1115; Railway Co. v. Mitchell, 57 Ark. 418, 21 S.W. 883, 20 LRA 434.

I would reverse the judgment because of the scope of the order excluding testimony by the expert witness, and leave further proceedings to the litigants.


source: Caselaw Access Project

author: Darrell Hickman, Justice.

license: Public Domain

text:
    William H. WADE v. FRANKLIN-STRICKLIN LAND SURVEYORS, INC.
    78-173
    575 S.W. 2d 672
    Opinion delivered January 15, 1979
    (Division II)
    [Rehearing denied February 12, 1979.]
    Appellant, pro se.

      Jim Stallcup, for appellees.
   Darrell Hickman, Justice.

This appeal is affirmed under Rule 9(e)(2) of the Rules of the Supreme Court of Arkansas because appellant failed to abstract any of the record in violation of Rule 9(d).

Rule 9 requires the abstract of the record to be a condensation of the pleadings, proceedings, facts and documents in the record. The appellant totally failed to comply with the rule. In numerous recent cases we have found it necessary to affirm for noncompliance with Rule 9(d): Dyke Industries v. Johnson Const. Co., et al, 261 Ark. 790, 551 S.W. 2d 217 (1977); Manes v. M.O.V.E., Inc., et al, 261 Ark. 793, 552 S.W. 2d 211 (1977) ; Dairyland Insurance Co. v. Carter, 261 Ark. 795, 551 S.W. 2d 211 (1977); Bank of Ozark v. Isaacs, 263 Ark. 113, 563 S.W. 2d 707 (1978); Weston v. Ponder, 263 Ark. 370, 565 S.W. 2d 31 (1978); Merritt v. Merritt, 263 Ark. 432, 565 S.W. 2d 603 (1978); Smith v. Smith, 263 Ark. 578, 567 S.W. 2d 88 (1978).

Affirmed.

We agree.

Harris, C.J., and Fogleman and Holt, JJ.


text:
    Charles D. CLUCK et ux, et al v. Margaret Ann MACK, Frank FAULK, and Blanche CLUCK
    78-189
    576 S.W. 2d 930
    Opinion delivered January 15, 1979
    (Division II)
    [Rehearing denied March 12, 1979.]

      Gus R. Camp, for appellants.

      Lee Ward, for appellees.
   Darrell Hickman, Justice.

This is the third lawsuit involving the widow and heirs of W. A. Cluck and relates, as all the cases do in the main, to the property they received on his death.

The first case was not appealed. It was a partition suit decided by the Chancery Court of Clay County with the Honorable Terry Shell as Chancellor. The widow and all the heirs of W. A. Cluck were parties to that lawsuit. Partition was denied, the chancellor finding that a family agreement was entered into giving the widow, Blanche Cluck, a lifetime homestead right in the land. She resisted partition.

A second lawsuit was filed and decided in 1976 by the same court but a different chancellor, the Honorable Gene Bradley. This suit started out as a mortgage foreclosure and ended up as an accounting. The parties in this case were Blanche, the widow, a daughter, Margaret, and a son, Donald, and his wife.

In this second case, ownership of the land was raised as an issue. It developed that Blanche had deeded her interest in the property to her daughter, Margaret, before the 1971 decree with a stipulation Margaret would see that her mother, Blanche, was taken care of for the rest of her natural life. Chancellor Gene Bradley held that he was not bound by the findings of the chancery court in 1971, commenting that he did not feel the chancellor was aware of the existence of the deed at the time the decision was made in 1971.

In the decree in this second case, the chancellor found that because of the deed, the widow, Blanche, no longer had any interest in the land in question. The land in question in this suit was land Donald Cluck owned an interest in or farmed on behalf of the other heirs. Mostly, however, the case was an accounting between Donald, who farmed the land for several heirs, and the widow and the daughter, Margaret.

This case was appealed and our decision was reported as Mack & Cluck v. Cluck, 262 Ark. 12, 554 S.W. 2d 325 (1977). We decided the accounting issue but did not rule on the issue of the land ownership because of a violation of Rule 9 of the Rules of the Arkansas Supreme Court.

The third lawsuit, which is before us on appeal, was filed by Donald Cluck and his brother, Neil, and their wives, against their sister, Margaret, and a tenant who was farming the land. This action was a partition action and essentially involves the same land as that in the first lawsuit and the same interested parties. (Apparently some of the heirs sold their interest in the land to the two brothers in the interim.)

The widow, Blanche, asked to intervene in this lawsuit and that request was approved by the chancellor. Blanche claimed an interest in the land, the same interest that had been adjudicated in 1971; that is, a lifetime homestead interest in the property. She resisted partition.

The two brothers, Donald and Neil, appellants herein, argue that Blanche could no longer have an interest in the land by virtue of the trial court’s decision in 1976; a specific finding was made that she no longer had an interest in the land by virtue of the fact she had signed a deed giving her daughter, Margaret, her interest in the land.

The appellees argue that the 1971 decision declaring Blanche to have an interest in the property is the binding decree on the trial court and is res judicata as to ownership.

The case was submitted to the chancellor on stipulations and the chancellor decided that partition would be denied. He agreed that the 1971 decision was binding and that Blanche, in fact, did have an interest in the land. Partition was denied because it was found Blanche was the life tenant, entitled to possession of the land and exclusive authority to rent it during her lifetime.

The chancellor, after hearing arguments, stated that while he did not think he erred in 1976, he thought he made the wrong decision. He explained it as follows:

... At that time, when the court made the finding in [1976 case] that Blanche Cluck had no rights in the land, that was for the purpose of determining whether or not Charles Donald Cluck had any interest in the land, that is, the revenue from the crops on the land. That was the purpose of that, and the court found that he did have an interest in the crop that came off the land. . . .

We find no error in the chancellor’s decision in this case. The 1971 decision involving all of the parties who had an interest in the land, tried on the issue of partition, is binding on the parties in this case.

The parties are the same, the issue is the same and the chancellor in the 1971 case unequivocally declared that Blanche had a lifetime homestead interest in the land and denied partition because she resisted it.

The parties were not exactly the same in the first and second lawsuits and no doubt the chancellor was making a finding in the second suit relative to a complex accounting of farm rents and debts and the claims the parties had to such rents or responsibilities they had for such debts.

The appellants raise another issue but concede that if we decide the case as we have, it is a moot question. Therefore, we will not address it.

Affirmed.

We agree.

Harris, C.J., and Fogleman and Holt, JJ.


author: John I. Purtle, Justice.

text:
    J. D. BEVILLS v. STATE of Arkansas
    CR 78-136
    575 S.W. 2d 443
    Opinion delivered January 15, 1979

      Vincent E. Skillman, Jr., of Skillman & Durrett, for appellant.

      Bill Clinton, Atty. Gen., by Joyce Williams Warren, Asst. Atty. Gen., for appellee.
   John I. Purtle, Justice.

Appellant J. D. Bevills was charged with murder in the second degree in the Circuit Court of Cross County, Arkansas. A jury trial on February 14, 1978, resulted in appellant being convicted of the reduced charge of manslaughter and fixed his punishment at a sentence of five (5) years’ imprisonment in the Arkansas Department of Corrections.

At the close of all the evidence, the appellant moved for a directed verdict upon the grounds that there was insufficient evidence to allow the question to be presented to the jury. The question presented on appeal was whether the trial court erred in not granting appellant’s motion for a directed verdict.

J. D. Bevills and Frances Bevills, husband and wife, had been residents of Wynne, Arkansas, for a considerable number of years. Sometime during the day on June 30, 1977, Frances Bevills left her home for the purpose of going to a beauty shop. She did not return to the home until July 4, 1977. During the time she was away from the home, she had apparently been consuming considerable amounts of intoxicating beverages. In fact, the evidence indicates that appellant had been partaking of same while he was' at home waiting to hear from his wife. Mrs. Bevills spent the nights, while she was away from home, with neighbors. Mrs. Bevills was at the house of Sadie Mae and Dewey Spindle on July 3, 1977, and spent the night with the Swindles. Both Mr. and Mrs. Swindle were in the home of J. D. Bevills on the afternoon of July 4. During the day of the 4th, Mr. Bevills had been drinking. When the Swindles returned home, Mrs. Bevills stated she wanted them to carry her to her home. About 5:30 or 6:00 p.m., on the 4th of July, the Swindles drove Mrs. Bevills to the Bevills’ home where they had left appellant a short time earlier. According to the Swindles, they drove up to the driveway of the Bevills’ home and Mrs. Bevills got out of the car and walked up to the door, without any problems. She opened the door and disappeared inside the Bevills home.

Both Mr. and Mrs. Swindle had stated that Mrs. Bevills was not bruised or battered in any manner and appeared to be in pretty good shape for someone who had just come out of a drinking bout.

The appellant testified that his wife had a drinking problem. He said she was a very good housekeeper and cook and stated he loved her. He testified that she left their home in Wynne about 11:00 o’clock on June the 30th and went uptown, not to return until the evening of Monday, July 4, 1977. He stated that he had been drinking pretty heavy on July the 4th as he had started about 10:00 a.m. In fact, he stated he was so “well loaded” that he couldn’t say what time he went to bed on the night of July the 4th. Mr. Bevills stated that he didn’t know when the deceased came home but he does remember when the decedent came in the house and woke him up. He thought it was between 6:00 and 9:00 p.m. on the 4th when his wife returned home. Appellant stated that he and the deceased had some words and it looked to him like she had been into it with somebody or something because she was bleeding along the cheeks. The next thing appellant remembers is waking up about 4:20 a.m. on the morning of July 5, 1977, and finding his wife on her knees at the south end of a couch. He felt she was praying until he touched her, or shook her shoulder, then she fell over into the floor. She was obviously dead at the time, and the neighbors, police, sheriff, and medical examiner were called.

Steven Marx of the State Medical Examiner’s Office did an autopsy to determine the cause of death. He performed the autopsy on Frances Bevills on July 5, 1977. He found that her eyelids were bruised; she had bruises in the scalp and in the left temporal area above the ear; she had bruises in the scalp and the occipital area and midline, the back of the head; a bruise under the right eye; the entire bridge of the nose; bruises on both lips; lacerations on the underside of her lip; blood in her nose and mouth; two bruises on the left side of the chin; two bruises on the right side of the chin; bruises on both knees; and bruises on the left hip and left buttock. He further stated that the type of injuries he found were a result of trauma and would be consistent with blows from the hand. Although he stated the injuries would be consistent with various other methods of inflicting the injury, he clearly stated that about all of them are consistent with blows from the fist. The injuries could have occurred any time within a 24-hour period prior to Mrs. Bevills’ death. He also found high alcohol content in her blood. According to the medical examiner, the cause of death was hemorrhage on the surface of the brain and very high blood alcohol. He seemed to place emphasis on the subdural hematoma as a primary cause of death. The death certificate at the Bureau of Vital Statistics for the State of Arkansas lists the cause of death as (A) Subdural hematoma and (B) Trauma to the head.

Ark. Stat. Ann. § 41-1503 (Repl. 1977) provides:

“A person commits murder in the second degree if:
(a) . . .
(b) . . .
(c) with the purpose of causing serious physical injury to another person, he causes the death of any person.”

The evidence in this case seems clearly strong enough to support a conviction of murder in the second degree. However, the appellant was convicted of the lesser included offense of manslaughter.

Circumstantial evidence may be sufficient to warrant the conviction of various different crimes, including manslaughter. In this particular case, Mr. and Mrs. Swindle observed the deceased enter the home of the appellant at 6:00 p.m. on July 4, 1977, at which time she was in pretty good shape considering she was recovering from a drinking spree. In any event, she had no visible bruises, cuts, abrasions, contusions, or other evidence of injury, and, in fact, was capable of walking up the driveway, without difficulty, opening the door and entering her home. Appellant admitted knowing that she came home sometime in the evening of July the 4th. There is no evidence of any nature that any other person was present in the Bevills’ home between the time the deceased entered the home and the time she was found, by appellant, the next morning when he discovered she was dead. The evidence, as found by the medical examiner, is consistent with the verdict reached by the jury.

Circumstantial evidence has been held sufficient to support a conviction of murder in the second degree in the case of Thomas v. State, 250 Ark. 504, 465 S.W. 2d 704 (1971).

Manslaughter has been defined in Ark. Stat. Ann. § 41-1504 (Repl. 1977). “A person commits manslaughter if: (a) . ..(b)... (c) he recklessly causes the death of another person; . . . . ” Intent ot kill is not a necessary element to sustain a conviction for manslaughter.

In the case of Pixley v. State, 203 Ark. 42, 155 S.W. 2d 710 (1941), evidence from which the jury could have found that the defendant deliberately and with premeditation sought out deceased and administered to her a very severe beating causing a fracture inside the skull which resulted in a blood clot on the brain, thereby resulting in death the following morning, was held to sustain the conviction of manslaughter. See also the case of Cook v. State, 248 Ark. 332, 451 S.W. 2d 473 (1970) wherein the evidence indicated a crowd gathered on the sidewalk during which time the defendant was knocked down and that he arose with a knife in his hand and lunged at the crowd and shortly thereafter the deceased was found stabbed to death. This evidence was held sufficient to sustain a conviction of voluntary manslaughter.

From the evidence listed above and the cases cited herein, it is the opinion of the Court that the trial court did not err in refusing to grant appellant’s motion for a directed verdict.

Affirmed.

We agree.

Harris, C.J., and George Rose Smith and Byrd, JJ.


author: George Rose Smith, Justice. John A. Fogleman, Justice,

text:
    STANDARD LEASING CORPORATION v. SCHMIDT AVIATION, INC. et al
    78-197
    576 S.W. 2d 181
    Opinion delivered January 22, 1979
    (In Banc)

      Proctor & Proctor, by: Richard L. Proctor, for appellant.

      Donald F. Seay, for appellees.
   George Rose Smith, Justice.

This case is similar to Bell v. Itek Leasing Corporation, 262 Ark. 22, 555 S.W. 2d 1 (1977), where we held, in a chancery case, that an instrument which purported to be a lease of printing equipment was in fact a financing transaction that was void for usury. In the present case the circuit judge, sitting as a jury, found as a fact that the “lease” sued upon in this case is usurious and void. Several points for reversal are urged, but the validity of the contract is the essential issue.

We state the facts most favorably to the trial court’s judgment. Standard Leasing brought this suit to recover all future installments under the lease, which it had declared immediately due and payable. Standard Leasing is engaged in what its principal witness, John Coppedge, described as the leasing of all types of general equipment. Standard Leasing does not have possession of the property that it leases. Instead, it supplies sellers of equipment with its forms and instructs the vendors how to fill out a form when equipment is sold. The form, with the purchaser’s credit references, is then submitted to Standard Leasing for approval. If Standard Leasing approved the transaction, it pays the seller for the equipment and executes the “lease.” The trial judge could have found that the papers are then transferred to a bank or other lender. That is, Coppedge testified that its business was “funded through certain banks and funding associates that we have.” He also said that the original documents in this case were in the possession of the DeKalb County Bank. The lease itself contains detailed provisions for its assignment and ironclad restrictions against the possibility that either Standard Leasing or its assignee can be held liable for breach of warranty or for other claims that might be asserted by the purchaser of the equipment.

In this case two representatives of Grimes Oil Company, of Memphis, Tennessee, came to Jonesboro, Arkansas, in 1976 and sold an air compressor to the appellee Schmidt Aviation. The purchaser was offered the option of buying the compressor for cash or leasing it. The purchaser elected, for tax purposes, to lease rather than to buy. One of the sales representatives stated that at the expiration of the lease Schmidt Aviation could buy the compressor for 10% of the price.

The sellers used a Standard Leasing form in writing up the transaction. In most respects it is similar to the lease in Bell, supra. That is, the document sets forth a “price” of $2,-895.00, plus sales tax (at the Arkansas rate) of $86.85, making a total of $2,981.85. The instrument then provides for 36 monthly rental payments of $107.65, with the first and last to be paid in advance — apparently as a down payment. The monthly payments seem, mathematically, to have been arrived at by adding 30% to the total purchase price, which of course would amount to about 15% interest upon a transaction payable in 36 monthly installments.

The document, as in Bell, puts all the risk upon the lessee and provides the same remedies upon the lessee’s default that would be available to a conditional seller or mortgagee upon a similar delinquency. The lessee also waives trial by jury and the right to interpose any counterclaim or offset against the lessor in litigation with respect to the lease or the repossession of the property. The lessee authorizes the lessor to file a financing statement where necessary to perfect a security interest in the equipment.

In Bell the lease was silent with regard to the purchase of the property at the expiration of the lease, but there was oral testimony that it could be bought for 10% of the price. Here the lease, contrary to the salesmen’s representations, recites that there is no option to purchase. Coppedge testified, however, that in a number of cases Standard Leasing does not get the property back, from which the trial judge could infer that in those instances the purchaser becomes the owner of the equipment when all payments have been made. To say the least, after the defendants below had made a prima facie showing that the lease was a sham, Standard Leasing made no effort to go forward with the proof by showing that it is actually engaged in good faith in the leasing of the equipment, not as acting as a broker or middleman in financing its sale.

The situation presented by this case is evidently parallel to that in Hare v. General Contract Purchase Corp., 220 Ark. 601, 249 S.W. 2d 973 (1952). There finance companies, through the device of a pretended credit sale price, were actually financing the sale of automobiles and other products at an interest rate in excess of 10% annually. We left unimpaired the doctrine that a true credit price may be resorted to by the parties, just as we now leave unimpaired the right of the owners of equipment or other property to make bona fide leases. But we call attention to this language in the Hare case:

(2) If the seller, whether he has quoted two prices to the purchaser or not, subsequently transfers the title documents to an individual or company which is engaged in the business of purchasing such documents, at a price which permits the transferee to obtain more than a return of 10% on its investment, then a question of fact arises as to whether the seller increased his cash price with the reasonable assurance that he could so discount the paper to such individual or finance company. If that reasonable assurance existed, then the transaction is in substance a loan, and may be attacked for usury.
(3) When finance companies or purchasers of title paper supply dealers with a set of forms and a schedule for credit price increases, such will tend to show that the dealer had reasonable assurance that such finance company or purchaser of the paper would take the paper at such discount.

More than 10 years ago we gave explicit warning that agreements purporting to be leases would be examined closely to be certain that they were not being used as a cloak for usurious charges. Sawyer v. Pioneer Leasing Corp., 244 Ark. 943, 428 S.W. 2d 46 (1968). In the case at bar we hold that the testimony presented an issue of fact about whether the transaction was in truth an instance of financing rather than of leasing. We refuse to take the view that the entire transaction was purged of the possibility of usury by the insertion of a sentence declaring that the lessee had no option to purchase the property. It goes without saying that, despite that sentence, the lessor could simply permit the lessee to retain the property after he had paid the 36 monthly installments on the price. Coppedge’s testimony may be taken to imply that that is what actually happens.

At the trial Standard Leasing objected, under the parol evidence rule, to the testimony of one of the salesmen that he represented to Schmidt Aviation that the property could be bought at the end of the lease for 10% of the price. It is true, of course, that the parol evidence rule would exclude that testimony if Schmidt Aviation were now seeking specific performance of the oral option to purchase. But that is not the situation. Here the issue is the true nature of the contract, and upon that issue the parties cannot convert a mortgage into a lease simply by denominating it as such. In determining whether a contract is usurious we look to its substance, not to its form. Sparks v. Robinson, 66 Ark. 460, 51 S.W. 460 (1899). For a ruling upon the precise issue now before us, holding the parol evidence to be admissible, see McKeeman v. Commercial Credit Equipment Corp., 320 F. Supp. 938 (D.C. Neb., 1970).

Finally, we cannot sustain the argument that the contract is governed by the law of Tennessee, as the instrument recites, rather than by the law of Arkanuas. To begin with, counsel have not cited any authority holding that this transaction would be recognized as a genuine lease in Tennessee. But, apart from that, the principal significant contracts occurred in Arkansas. See Leflar, American Conflicts Law, § 147 (1968). The seller sent its representatives to Arkansas, where the actual sale occurred. The Arkansas sales tax was paid. The air compressor was delivered and installed by the seller in Arkansas. Efforts by the seller to repair it were made in Arkansas. The original written contract was prepared and signed by Schmidt in Arkansas. It may have been accepted and approved in Memphis, where Standard Leasing has an office, although the testimony is not positive on this point. Schmidt, however, made the mistake of signing the original instrument both as lessor and as lessee. Standard Leasing then retyped the contract and returned it to Schmidt for re-execution. Thus the contract was finally consummated in Arkansas, though we do not regard that fortuitous fact as being of controlling importance. Essentially it was an Arkansas contract, governed by Arkansas Law.

Affirmed.

Harris, C.J., and Fogleman, J., dissent.

John A. Fogleman, Justice,

dissenting. In its zeal to purge the commercial temple of usurers, this court has neither abrogated nor abandoned certain essential rules pertaining to alleged usury and judicial consideration of contentions that an apparently legitimate transaction really is a cloak or device for the extraction of usurious interest, although it seems to me that on occasions, such as the one at hand, it has found it relatively easy to overlook them. I submit that the evidence in this case will not meet the severe tests for finding a facially legitimate business transaction between competent and capable businessmen to have been a cloak, shield or device for a usurious loan.

The taint of usury can only attach to a loan of money or forbearance of a debt, either in form or substance. Haley v. Greenhaw, 235 Ark. 481, 360 S.W. 2d 753; Sloan v. Sears, Roebuck & Co., 228 Ark. 464, 308 S.W. 2d 802; Ayres and Graves v. Ellis, 185 Ark. 818, 49 S.W. 2d 1056. In other words, in order to constitute usury there must be an agreement to pay more than 10 percent per annum for the use of the money. Citizens’ Bank v. Murphy, 83 Ark. 31, 102 S.W. 697. There must be an intention on the part of the lender to take more than legal interest. Cox v. Darragh Co., 227 Ark. 399, 299 S.W. 2d 193. If neither party intends to contract for usurious interest, the law will not infer a corrupt agreement. Jordan v. Mitchell, 25 Ark. 258.

It is true that, in order to determine whether the contract is usurious, the law will look behind any device intended to evade the usury laws to determine the real nature of the transaction. Armstrong v. McCluskey, 188 Ark. 406, 65 S.W. 2d 558; Home Building & Sav. Assn. v. Shotwell, 183 Ark. 750, 38 S.W. 2d 552; Dickinson-Reed-Randerson Co. v. Stroupe, 169 Ark. 277, 275 S.W. 520; Hare v. General Contract Purchase Corp., 220 Ark. 601, 249 S.W. 2d 973. It is also true that when the manifest intention of a transaction is the loan of money, it is no less illegal because it is disguised as a sale or lease of personal property. Bell v. Itek Leasing Corp., 262 Ark. 22, 555 S.W. 2d 1; Sloan v. Sears, Roebuck&Co., supra; Hare v. General Contract Purchase Corp., supra. But usury will not be inferred or imputed to the parties where an opposite conclusion can be fairly and reasonably reached. Key v. Worthen Bank & Trust Co., 260 Ark. 725, 543 S.W. 2d 496; Brown v. Central Arkansas Production Credit, 256 Ark. 804, 510 S.W. 2d 571; Hayes v. First National Bank of Memphis, 256 Ark. 328, 507 S.W. 2d 701; Davidson v. Commercial Credit Equipment Corp., 255 Ark. 127, 499 S.W. 2d 68; Geyer v. First Arkansas Development Fin. Corp., 245 Ark. 694, 434 S.W. 2d 301; Peoples Loan & Investment Co. v. Booth, 245 Ark. 146, 431 S.W. 2d 472; Armstrong v. McCluskey, supra; Brittian, Admr. v. McKim, 204 Ark. 647, 164 S.W. 2d 435; Citizens’ Bank v. Murphy, supra.

The burden of proof is upon the party who alleges usury to show clearly that the transaction is usurious and that the requisite intent existed. Cammack v. Runyan Creamery, 175 Ark. 601, 299 S.W. 1023; Hogan v. Thompson, 186 Ark. 497, 54 S.W. 2d 303; Hallan v. American Bank of Commerce & Trust Co., 159 Ark. 141, 252 S.W. 359; Jones v. Phillippe, 135 Ark. 578, 206 S.W. 40; Smith v. Mack, 105 Ark. 653, 151 S.W. 431. Usury must be established by clear and convincing evidence, particularly where written instruments are alleged to be something other than that which they appear to be. Baxter v. Jackson, 193 Ark. 996, 104 S.W. 2d 202; Commercial Credit Plan, Inc. v. Chandler, 218 Ark. 966, 239 S.W. 2d 1009; Haley v. Greenhaw, supra. Where the evidence is conflicting and that offered in support of the charge of usury is not clear and satisfactory, it is not sufficient to sustain the contention. Simpson v. Smith Sav. Soc., 178 Ark. 921, 12 S.W. 2d 890; Hollan v. American Bank of Commerce & Trust Co., supra; Briant v. CarlLee Bros., 158 Ark. 62, 249 S.W. 577; American Farm Mortgage Co. v. Ingraham, 174 Ark. 578, 297 S.W. 1039; Citizens' Bank v. Murphy, supra; Mente v. Townsend, 68 Ark. 391, 59 S.W. 41. Because of the severely penal nature of the Arkansas usury laws, the plainest principles ofjustice require strict adherence to these standards. Arkansas Real Estate Co. v. Buhler, 247 Ark. 582, 447 S.W. 2d 126; Baxter v. Jackson, supra. See also, Citizens’ Bank v. Murphy, supra; Haley v. Greenhaw, supra.

This case is readily distinguishable from Bell v. Itek Leasing Corp., 262 Ark. 22, 555 S.W. 2d 1, relied upon by the majority. In Bell, there was a substantial initial payment which could have been considered as equivalent to a down payment. Here, the lease merely required that the first and last monthly rental payments on a lease for 36 months be made in advance. There was no “down payment” here. In Bell, we said that it was fair to infer that Itek Leasing Corporation financed the sale of Itek products. The majority is hard put here to say that appellant is a finance company and it certainly was not in the business of financing the sale of Grimes Oil Company products or those of any particular concern. The evidence shows that appellant leased property sold by many concerns and that, at the time of the trial, it was not leasing any property sold by Grimes. The trial judge did not find, as the majority says he might have, that the papers in the transaction are transferred to a bank or other lender. I submit that there is nothing unusual or significant about any business of any size being “funded” by loans or about a lessor’s securing a loan by a lease.

In Bell, considerable significance was attached to the filing of a financing statement under the Uniform Commercial Code. Ark. Stat. Ann. § 85-9-408 (Supp. 1977) did not affect the transaction in Bell. It does relate to this transaction. It provides that a lessor of goods may file a financing statement, but that its filing “shall not of itself be a factor in determining whether or not the.....lease is intended as security. ” This makes quite a difference.

In Bell, the leasing corporation’s own representative testified that the company, 30 days before the expiration of the five-year term of the “lease,” would offer the lessee the option of buying the leased equipment for a nominal amount, although there were indications that the property would then have been worth $10,000. In Bell, the “lessee” could have purchased the equipment, originally worth $12,670, for $1,-267, after having .paid $17,500 in rentals over the five-year term of the contract. There is no real comparison here. The total payments here amount to $3,875.40. The value of the property was $2,895.00. No one testified about the value of the compressor at the termination of the lease. Evidence on the question of purchase by the lessee is unsatisfactory, if it can be considered at all.

Coppedge testified on direct examination that, at the expiration of the lease, appellant sells the leased property on the open market. The testimony about lessees keeping the leased equipment at the expiration of the lease is at least subject to a reasonable interpretation different from that of the majority and I submit that it does not properly form the basis for an inference that the lessee becomes the owner of the equipment when all rental payments have been made. Nor does it imply that the lessor simply permits the lessee to retain the leased property after all rental payments have been made. The questions and answers, as appellee sets them out, were:

Q. O.K., now you mentioned a while ago when Mr. Woodruff asked you about what do you do with equipment when you get it back and your statement was if we get it back, we put it up for sale.
A. Right.
Q. What happens — are there a number of cases that you don’t get the equipment back?
A. Yes.
Q. Do the Lessees buy it?
A. Sometimes, yes.

As I read this testimony, the lessor gets the equipment back and sells it on the open market, except in those cases in which the lessee buys it. Furthermore, I do not think the testimony of the representatives of the actual seller (Williams Equipment Company, which represented Grimes Oil Company in some capacity) have any bearing whatever on the question of the nature of the transaction, in spite of the fact that I agree that parol evidence is admissible to show the true nature of a contract which is alleged to be a cloak for usury. As Coppedge testified, appellant had no control over the salesman. Merely furnishing the seller with forms for a lease contract did not make it, or its salesman, a general agent of appellant (if it created an agency relationship at all), or confer authority to change the terms of the contract. Williams certainly had no authority to make statements or admissions on behalf of appellant. There was no contract until it was approved by appellant. The contract approved by appellant contained the statement that the lessee had no option to purchase. The contract also contained this statement printed in red ink just opposite the lessee’s signature:

Please note that the Vendor’s salesman is not authorized to sign these forms on behalf of STANDARD LEASING CORPORATION. They will be processed by us immediately upon receipt, and upon approval applicant will be notified and our purchase order will be issued subject to the terms and conditions thereof.

According to the testimony of Schmidt himself, Williams never indicated that he represented appellant. As Schmidt put it, Williams was saying that he could sort of assist appellee in getting a “lease thing” set up with Standard Leasing if that was what Schmidt wanted to do. Schmidt said, however, that Grimes offered to sell the equipment outright.

The fact that sales tax was an element of the base price is not significant. There was testimony indicating that the sale of the property to appellant was subject to a 3% sales tax in Tennessee. In any event, if the transaction was a lease of property in Arkansas, it was subject to the Arkansas sales tax. Ark. Stat. Ann. §§ 84-1902 (c), -1903 (Supp. 1977).

I have no quarrel with the proposition that Arkansas law was properly applied in this case. I cannot accept the intimation that the parties could not have contracted under the law of Tennessee, or that the place the contract was “consummated” is not of significant, if not controlling, importance.

With the exception of Bell, the only other Arkansas case involving a contention that a lease cloaked a usurious loan is Tillar v. Cleveland, 47 Ark. 287, 1 S.W. 516. Real estate was involved. It is difficult to see how the court could have avoided holding that transaction to be a loan. The “lessee” was a clerk in the lessor’s store. The clerk applied to his employer for a loan to purchase a lot and complete a house on it. When the clerk offered to pay the highest legal rate of interest, the employer said that 10% was not enough and he suggested a leasing arrangement which would assure a substantially greater return. The clerk was forced, “by his necessities, to accept” those terms.

This was not an agreement between parties whose bargaining power was not equal. Appellee was not a necessitous purchaser. The contract was a matter of choice with it. It could have bought the compressor outright, but voluntarily chose the lease because of the obvious tax advantage of treating the rents as a cost of doing business. Schmidt himself said that he leased the equipment, rather than buy it, for tax and liability benefits. In concluding his testimony, on redirect examination, Schmidt stated that he did not buy any equipment from Grimes Oil Company, but that he leased a piece of equipment from Standard Leasing. Obviously, Schmidt knew the true nature of the transaction.

This is not a case in which this court can rest an affirmance upon finding substantial evidence to support the judgment. It must find clear and convincing evidence. That evidence must do more than give rise to an inference that the transaction was different from what it appeared to be. It must be such that an opposite conclusion could not reasonably and fairly be reached. The evidence in this case not only does not foreclose a conclusion that the transaction was just what it appeared to be on its face, it actually supports a different conclusion. The harsh and heavy penalty of the Arkansas usury law should not be imposed on a transaction such as this.

I am authorized to state that the Chief Justice joins in this opinion.

      I am not unmindful of Dickinson-Reed-Randerson Co. v. Stroupe, 169 Ark. 277, 275 S.W. 520; Tisdale v. Tankersley, 192 Ark. 70, 90 S.W. 2d 225; and Tisdale v. Maness, 192 Ark. 465, 92 S.W. 2d 380, wherein it was held that a fair preponderance of the evidence was all that was necessary. Later cases have restated the “clear and convincing rule.” All three of these cases affirmed the trial court and in each of the first two, evidence that seems to have shown clearly that there was usury was presented. The third might actually have applied the “mere preponderance” rule but cited no authority.


author: George Rose Smith, Justice.

text:
    Allen Scott CARDWELL v. STATE of Arkansas
    CR 78-159
    575 S.W. 2d 682
    Opinion delivered January 22, 1979
    (Division I)

      Vincent E. Skillman, Jr., of Skillman & Durrett, for appellant.

      Bill Clinton, Atty. Gen., by: Jesse L. Kearney, Asst. Atty. Gen., for appellee.
   George Rose Smith, Justice.

In March, 1977, the appellant Cardwell sold 20 packets of cocaine to a police informant for $180. Members of the West Memphis police department supplied the money for the purchase and took photographs of the bills in advance and also of the transaction as it was in progress. The jury found Cardwell guilty of the delivery of a controlled substance and fixed his sentence at 18 years. Several points for reversal are argued.

Many months before the trial defense counsel filed a motion for the discovery of the names of witnesses, of any written or oral statements, of books, papers, photographs, and other objects, and of various other matters. The prosecution did not file a response to the motion. It is now argued that the trial court should not have allowed the State to introduce the photographs taken by the police, because the prosecution failed to reply to the request for discovery.

In the circumstances of this case the court’s ruling was right. The governing rule does not require a written response, it being provided that the prosecuting attorney may perform his obligations under the rule in any manner mutually agreeable to himself and defense counsel. Rules of Criminal Procedure, Rule 17.2 (1976). During an extended colloquy with respect to defense counsel’s objection to the photographs it was brought out that the prosecutor’s settled practice with respect to motions for discovery had been to make the State’s file available to the defense. That practice was known to defense counsel in this case, who did not actually say that he had not examined the State’s file. Instead, defense counsel relied on the fact that the trial judge, a day or two before this trial, had announced in another case that he would, because of repeated disagreements between opposing counsel in criminal cases about their oral understanding with regard to discovery matters, thereafter require all responses to motions for discovery to be in writing. The judge ruled in the present case that he would not apply his new procedure until the next term of court.

The court’s ruling was perfectly fair. During a period of about nine months before the trial defense counsel did not ask for a written response to the motion for discovery. The point was not raised until after the court had announced, a day or so earlier, that the practice would be changed. The rules of the game should not be changed after play is in progress. Moreover, although defense counsel stated during the colloquy that if there was something in the State’s file that he was not aware of, “then I am going to plead surprise, ” when the photographs were introduced there was no such plea. Consequently the trial judge could infer that defense knew about the photographs before the trial; so the lack of a written response to the motion could not have been prejudicial.

It is also argued that the photographs of the bills used in the purchase (the serial numbers of which had been recorded by the police) were inadmissible under the best evidence rule. We do not imply that physical exhibits, such as currency, are within the purview of that rule. It is enough to say that the objection now urged was not made at the trial and cannot be raised for the first time on appeal.

Next, it is argued in substance that cocaine is not a narcotic drug. The statute includes in its enumeration of prohibited narcotic drugs any substance produced from coca leaves. Ark. Stat. Ann. § 82-2607 (b) (4) (Repl. 1976). The defendant’s expert witnesses conceded that cocaine is made from coca leaves and that it has a potential for abuse as a drug; but they testified that cocaine, chemically and medically, is an anesthetic or stimulant, not a depressant or narcotic. The trial judge ruled in effect that the testimony did not raise a jury question about the legislative classification of cocaine as a narcotic.

Our controlled substances law is a uniform act derived primarily from a similar federal law. Upon testimony similar to that offered by this appellant it has been held repeatedly that the legislative body may classify cocaine as a narcotic for penal or regulatory purposes, even though it is medically considered to be a nonnarcotic stimulant, and that the legislative classification is not irrational or arbitrary. United States v. Marshall, 532 F. 2d 1279 (9th Cir. 1976); United States v. Castro, 401 F. Supp. 120 (N.D. Ill. 1975); United States v. Amidzich, 396 F. Supp. 1140 (E.D. Wis. 1975); State v. Erickson, 574 P. 2d 1 (Alaska, 1978). Such cases answer the present contention that the jury should be given an opportunity to overrule the legislative judgment.

Finally, it is argued that a sentence of 18 years for the offense proved is cruel and unusual punishment. The sentence is within the 30-year maximum fixed by the statute, § 82-2617 (a) (1) (i), and so cannot be held to be cruel or unusual. Blake v. State, 244 Ark. 37, 423 S.W. 2d 544 (1968).

Affirmed.

We agree.

Harris, C.J., and Byrd and Purtle, JJ.