author: Robert L. Brown, Justice. Tom Glaze, Justice,

text:
    SYNERGY GAS CORPORATION v. Ida LINDSEY
    92-598
    843 S.W.2d 825
    Supreme Court of Arkansas
    Opinion delivered December 7, 1992

      Rieves & Mayton, by: William J. Stanley, for appellant.

      Butler Hickey & Long, by: Phil Hickey, and Killough, Ford & Hunter, by: Robert M. Ford, for appellee.
   Robert L. Brown, Justice.

The appellant, Synergy Gas Corporation, argues for reversal on the basis that a reference to Synergy’s liability insurance elicited from a Synergy employee by appellee Ida Lindsey’s counsel was prejudicial error. We believe that the reference to insurance was prejudicial, and we reverse and remand for a new trial.

On August 28, 1989, the appellee, Ida Lindsey, age 76, reported to Synergy employees that she smelled gas in her house, which was located west of Caldwell. That afternoon, two employees, Danny Shackleford and James Goings, were sent to her house from Forrest City to investigate. Shackleford tightened a valve, which slowed the leak. He did not go inside the house to determine whether the water heater or floor furnace pilot light were on. Nor did he advise Mrs.Lindsey to spend the night elsewhere due to potential danger.

The following morning, August 29, Shackleford accompanied by Bob Lee, Synergy’s Forrest City branch manager, returned to the Lindsey home to remove gas from an unused underground butane tank. The men did not remember notifying Mrs. Lindsey of their presence. They also failed to crawl under the house to determine conditions or otherwise to ascertain whether her pilot lights were on. They did not request that she leave the house or turn off her appliances. Instead, both testified that they went directly to work on “bleeding” the tank. Lee later testified, “I had one thing on my mind and that was getting that gas out.”

Lee attached 150 feet of hose to the tank and began releasing the butane in a field to the northeast of the appellee’s house. After the gas had been drained, the men removed the percentage gauge from the tank. Lee then left, and Shackleford, who was certified only to transport and deliver propane and butane gas, continued the work. He poured some dishwashing detergent into the tank to “kill the vapors,” and after that, he began to fill the tank with water. At that point, gas fumes started to escape, accompanied by what Shackleford described as a “roaring” or “whistling-like noise.” Detecting the odor of Mercap in the tank, Shackleford cut off the water. Shackleford turned the water on again but cut it off when the noise resumed and the odor resumed. He did not, however, warn Mrs. Lindsey. Concerned, he called the branch office and spoke with Lee, who told him “not to worry about it.”

After this conversation, Shackleford heard what he described as a “crackling noise” and saw a flame run out from a vent beneath the house. He was suddenly knocked back 15 to 25 feet by an explosion. He immediately contacted his office by radio, requesting it to alert the fire department. Shackleford next went to the front door of the house and found Mrs. Lindsey, who had come to the door in response to his efforts to break it down.

Mrs. Lindsey, testimony later revealed, was thrown from her chair by the same explosion and landed on the floor. As Shackle-ford attempted to get her away from the house, she insisted on retrieving her purse. Shackleford went back into the burning house and got the purse. Mrs. Lindsey filed suit against Synergy and sought damages for medical expenses, mental anguish (past and future), and property damage. In addition, she asked for punitive damages. The case was tried before a jury over two days. Synergy admitted liability for the occurrence but contested compensatory damages and denied liability for mental anguish or punitive damages. The jury returned verdicts in favor of Mrs. Lindsey in the amounts $36,436.46 for compensatory damages, $20,100 for mental anguish, and $120,000 for punitive damages.

Synergy first contends that Mrs. Lindsey’s counsel questioned Bob Lee, who was one of the last witnesses, in such a way as to elicit prejudicial testimony of Synergy’s liability coverage. At deposition, Lee had responded to counsel’s questions about assurances he had given Mrs. Lindsey’s son, Bee Lindsey, about Synergy’s willingness to cover the loss with the following:

I told Bee. I said you’ve got nothing to worry about. They have insurance. It will be covered. That is what John Neal told me. He said she ain’t got nothing to worry about. I told you what my supervisor told me.

At trial, counsel for Mrs. Lindsey called Lee as a hostile witness and challenged him on various points that were inconsistent with statements he had made in his deposition. At one point, the trial court ruled that appellee’s counsel stay behind the podium and let Lee finish answering the questions after Synergy’s attorney objected to the fact that counsel was badgering the witness. The following exchange occurred later in the cross-examination:

Q. What did you tell [Bee] about it? Did you tell him you had talked with your supervisor in West Memphis?
A. I told him I had called him.
Q. And what did you tell [Bee]?
A. I told him that I called him and he would be out there and I guess that’s it.
Q. You know what I mean. What did you tell [Bee] about the situation?
A. Well I told him the company had insurance and I was sure he didn’t have anything to worry about. That it would take care of it.
Q. You told him that you spoke to your supervisor, and he said tell Mrs. Lindsey she didn’t have to worry about a thing. That they would take care of everything, didn’t you?
A. That’s right. That’s what I was told.

Testimony continued on measures that Lee ordered to be taken after the explosion to determine whether there were any broken lines or loose connections under the house and efforts to assist Mrs. Lindsey. When Mrs. Lindsey’s counsel asked Lee whether Synergy continued to send her a bill, Synergy’s counsel objected, and the trial court summoned all attorneys to the bench. At that time Synergy moved for a mistrial on grounds that Mrs. Lindsey’s counsel had elicited a response regarding insurance coverage. Mrs. Lindsey’s counsel denied that he had elicited the response and stated that the insurance had not been mentioned at Lee’s deposition: “In his deposition he said tell Mrs. Lindsey that my people said we would take care of everything. I wasn’t soliciting insurance. Insurance was never mentioned to me, and I wasn’t soliciting that. Mr. Rieves knows that is what the deposition said.” (Emphasis ours.) Mrs. Lindsey’s counsel was not correct in light of the deposition testimony previously quoted in this opinion, which meant the trial court at this stage was misinformed. Insurance was specifically mentioned at the deposition.

The circuit court then denied the motion because he did not believe the questioning was purposeful. At the end of all testimony, Synergy’s counsel renewed the motion for mistrial and pointed out to the trial court that Bob Lee had mentioned liability insurance in his deposition in connection with Mrs. Lindsey’s not having anything to worry about. The trial court refused to change his ruling.

As a general rule, it is improper for either party to introduce or elicit evidence of the other party’s insurance coverage. Younts v. Baldor Electric Co., 310 Ark. 86, 832 S.W.2d 832 (1992). The injection of insurance coverage is proper only when it is relevant to some issue in the case. Peters v. Pierce, 308 Ark. 60, 823 S.W.2d 820 (1992). The crux of the matter, then, is whether the question that prompts a reference to insurance is “relevant to an issue or is designed to skew the jury’s thinking because of the presence or absence of a deep pocket.” Hacker v. Hall, 296 Ark. 571, 576, 759 S.W.2d 32, 35 (1988); see also Bull Shoals Community Hospital v. Partee, 310 Ark. 98, 832 S.W.2d 829 (1991).

We have held that where there has been an intentional and deliberate reference to insurance when it was not an issue in the case and when the opposing party had not opened the door for its admission, mistrial was the proper remedy. Vermillion v. Peterson, 275 Ark. 367, 630 S.W.2d 30(1982). In that case, the attorney for one of the defendants, in closing argument, argued that the plaintiffs carrier had already paid her medical bills. The trial court refused to declare a mistrial, and we reversed on the basis that the insurance comment was intentional, irrelevant, uninvited, and prejudicial. See also Pickard v. Stewart, 253 Ark. 1063, 491 S.W.2d 46 (1973).

In Hacker v. Hall, supra, we reversed a jury verdict because of the injection of insurance into the case. There, defense counsel was questioning the plaintiff about why he had employed a lawyer so fast. The plaintiff answered: “Because the insurance company kept harassing me.” Defense counsel pursued the point:

Defense Counsel: Which one?
Plaintiff: State Farm.
Defense Counsel: The one from State Farm or the one with
Burnham:
Plaintiff: No, State Farm.

Burnham Ford was the plaintiffs employer. We concluded in Hackler that the reference to Burnham Ford’s insurance by the defense counsel was misconduct and was one reason for granting a new trial.

On the other hand,we have also held that where the attorney poses a question with apparent sincerity and in good faith rather than in a deliberate attempt to prejudice the jury and the witness answers with a reference to insurance, an admonition by the court is ordinarily sufficient to correct the error. Lin Manufacturing Company of Arkansas, Inc. v. Courson, 246 Ark. 5, 436 S.W.2d 472 (1969).

Here, the facts are somewhat different, and they present an issue we have not considered before. The trial was solely about damages, liability having been admitted by Synergy. Mrs. Lindsey’s counsel had called Bob Lee as a hostile witness and had used his deposition twice for impeachment purposes before the colloquy at issue. Her counsel knew or should have known that in response to an almost identical question at deposition, Bob Lee said: “They have insurance. It will be covered.” Nevertheless, counsel forged ahead aggressively, using that deposition to impeach Lee and forcing the issue of precisely what had Lee told Mrs. Lindsey’s son. Lee had been told by Synergy’s attorney not to mention insurance. But counsel for the other side clearly pushed Lee into a corner.

. We cannot say with absolute certainty that the appellee’s counsel intentionally elicited the information about Synergy’s insurance coverage. We are certain, however, that counsel trod recklessly onto dangerous ground and should have known, based on the deposition he took, the response that he would get from Lee when he pressed him for an answer. Moreover, Mrs. Lindsey’s counsel incorrectly advised the trial court when the mistrial was first under discussion by stating that insurance was not mentioned in Lee’s deposition.

We are mindful of the appellee’s contention that Synergy is a major company with considerable assets and that this fact was brought to the jury’s attention in connection with the claim for punitive damages. Nonetheless, it would place us in an untenable position to premise a decision of prejudice on the extent of the insured’s means. Irrespective of a company’s assets, the mention of insurance would have a profound effect on any jury. It suggests, among other things, that a third party would foot part, if not all, of the bill — especially here when the witness added that the insurance would “take care of it.” That statement in itself was misleading because liability coverage typically does not cover intentional acts leading to punitive damages.

At that point, the metaphorcal bell had rung, and the prejudice was pronounced. While each and every mention of insurance at trial may not constitute reversible error, under the circumstances of this case where appellee’s counsel proceeded recklessly in eliciting an irrelevant response on liability coverage, the trial court erred in refusing to grant a mistrial. We note again in so holding that the trial court was misinformed about the reference to insurance in Lee’s deposition when it first denied the motion for mistrial.

Reversed and remanded.

Hays, J., concurs.

Glaze, J., dissents.

Tom Glaze, Justice,

dissenting. I respectfully disagree with the court’s decision to reverse by holding that Ms. Lindsey’s counsel improperly injected insurance through his cross-examination of Synergy’s branch manager, Bob Lee. The majority opinion sets forth Lee’s relevant deposition testimony and trial court testimony, and it is undisputed that, soon after the Lindsey house was damaged, Lee told Ms. Lindsey’s son, Bee, “he had nothing to worry about, it (the damage) would be covered.” True, Lee mentioned insurance at his deposition, but Synergy’s attorney informed Lee not to mention insurance at the court trial. Contrary to his attorney’s admonition, he mentioned insurance nonetheless. In fact, he did so, in my view, in answer to a very legitimate and relevant question posed by Lindsey’s counsel.

Obviously, Lindsey’s counsel wanted Lee to tell the jury that Synergy (per Lee) had told Ms. Lindsey and her son that Synergy would take care of her loss. By such a remark, Lee implied Synergy was liable for Lindsey’s entire loss. Lee could have conceded that point without mentioning insurance. Lindsey clearly had every right to have the foregoing admission against interest declared before the jury even though she might not be entitled to Lee’s earlier reference to insurance. Lee volunteered the reference to insurance anyway. When the reference to insurance occurs in good faith rather than in a deliberate attempt to prejudice the jury, an admonition by the court is ordinarily sufficient to correct the error. Lin Mfg. Co. of Arkansas v. Courson, 246 Ark. 5, 436 S.W.2d 472 (1969).

Here, Synergy requested no cautionary instruction, but instead requested only a mistrial which the court denied. In my view, the trial court did not abuse it’s discretion since the record reflects Lindsey’s counsel questioned Lee in good faith, and because Synergy — through Lee — assured Lindsey that Synergy would take care of her loss. With such assurances having been made known to the jury, Synergy would have suffered little prejudice if it had asked the trial court to inform the jurors that insurance was not relevant and to admonish them not to consider any reference to insurance in their deliberations.

For the above reasons, I would affirm.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Cassandra GREEN v. STATE of Arkansas
    CR 92-1194
    843 S.W.2d 316
    Supreme Court of Arkansas
    Opinion delivered December 7, 1992

      William P. Mills, for appellant.
    No response.
   Per Curiam.

Petitioner, Cassandra Green, by her attorney, William P. Mills, has filed a motion for rule on the clerk. Her attorney admits that the record was tendered late due to an error on his part.

We find such error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See Terry v. State, 272 Ark. 243, 613 S.W.2d 90 (1981); In Re: Belated Appeals in Criminal Cases, 265 Ark. 964 (1979) (per curiam).

A copy of this opinion will be forwarded to the Committee on Professional Conduct. In Re: Belated Appeals in Criminal Cases, 265 Ark. 964.


author: Jack Holt, Jr., Chief Justice.

text:
    Don RILEY, Virginia Kilburn and Susan Woods, Jointly and Severally as Concerned Citizens and Registered Voters of Baxter County v. The BAXTER COUNTY ELECTION COMMISSION and Its Members, Thurman Wood, Chairman; Delores Friend, Secretary; and Gail Tornquist, Vice Chairman
    92-659
    843 S.W.2d 831
    Supreme Court of Arkansas
    Opinion delivered December 14, 1992

      The Law Officers of Christopher O’Hara Carter, P.A., by: Christopher O’Hara Carter, for appellant.

      Gordon Webb, Prosecuting Att’y, for appellee.
   Jack Holt, Jr., Chief Justice.

The issue is whether the trial court erred by ruling in favor of the appellees, the Baxter County Election Commission and its members, with reference to its 1992 apportionment of quorum court districts within the county. We hold that it did not and affirm.

The appellants, Don Riley, Virginia Kilburn, and Susan Woods, registered voters of Baxter County (hereafter “the voters”), opposed a new quorum court redistricting plan for Baxter County on the basis that it would result in discrimination since the population varied among the districts by 10.149 % and this was greater than the acceptable 10 % variance set out by the United States Supreme Court in Brown v. Thomson, 462 U.S. 835 (1983), and earlier precedent.

Following a hearing, the Baxter County Circuit Court held:

The Court in reviewing the law, and in listening to the testimony of the Defendants, finds that the Defendants have given acceptable reasons for variance from a strict 10.0% deviation the Court [sic] further finds that the Baxter County Election Commission has substantially complied with the requirements of Ark. Code Ann. § 14-14-401 and therefore the claims of the Plaintiff for noncompliance are dismissed.

The general principle underlying this case is that unit voting systems which contain varying populations are unconstitutional per se because they deny residents equal representation ensured by the fourteenth amendment. Gray v. Sanders, 372 U.S. 368 (1963). The overriding objective of apportionment must be substantial equality of population among the various districts. Reynolds v. Sims, 377 U.S. 533 (1964). We have reiterated the rule that the primary consideration of reapportionment is the numerical equality of the districts, or “fair and effective representation for all citizens.” New York City Bd. of Estimate v. Morris, 489 U.S. 688, 701 (1989) (citing Reynolds v. Sims, 377 U.S. 533, 565-6 (1964)). See U.S. Dept. of Commerce v. Montana, 112 S.Ct. 1415 (1992); Taylor v. Clinton, 284 Ark. 170, 680 S.W.2d 98 (1984), Wells v. White, 274 Ark. 197, 623 S.W.2d 182 (1981). Since Baker v. Carr, 369 U.S. 186 (1962), the United States Supreme Court has “consistently adjudicated equal protection claims in the legislative districting context regarding inequalities in population between districts” and has developed and enforced the “one person, one vote” principle. Davis v. Bandemer, 478 U.S. 109, 118 (1986). Population variation among districts greater than 10 % is a prima facie violation of the equal protection clause. Brown v. Thomson, 462 U.S. 835 (1983); Connor v. Finch, 431 U.S. 407 (1975); Chapman v. Meier, 420 U.S. 1 (1975); Gaffney v. Cummings, 412 U.S. 735 (1973). After such a prima facie case is established, the burden of proof shifts to the defendant to justify the variances.

Although the voters raise five points for our review, there are, in essence, only two issues before us: whether the trial court erred in finding that the Election Commission justified the variance from “the 10 % rule” and whether the trial court erred in finding that the Election Commission substantially complied with our code requirements for apportionment.

I.

DID THE TRIAL COURT ERR IN FINDING THAT THE ELECTION COMMISSION JUSTIFIED THE POPULATION VARIANCE GREATER THAN 10% ?

At the hearing, all parties to the case stipulated to the 10.149% variance. The trial court stated that this was a prima facie case of discrimination, and the Election Commission then proceeded to explain why the variance exceeded 10%.

There must be some “rational policy” to justify a variance over 10%. Brown v. Thompson, supra. The testimony at the hearing revealed that the Election Commission had requested and received from the Attorney General the 10% variance guidelines in setting up quorum court districts, the Commission held several meetings, and the Commission sought to keep to the old district lines as much as possible to avoid inconveniencing the voters. One Commission member testified that the overriding principle they followed was equal representation. From maps with the new Decennial Census numbers, they took the total population and divided by eleven, the number of districts to be apportioned. The districts with population already closest to that number were kept the same, and the others were slightly modified, taking geography into account, to reach parity. The end result was that two of eleven districts were over the ten percent acceptable variance by four and three voters, respectively. Thus, a systematic approach taken by the Commission reveals a rational policy of redistricting in Baxter County.

Furthermore, the 10.149% variance is only slightly over the acceptable 10% variation. Applying Arkansas law, the Federal District Court for the Eastern District of Arkansas held that a population difference of 10.9% between proposed state Senate districts in Arkansas was not a “discrepancy sufficiently significantly to justify rejecting the [Board of Apportionment’s] plan . . . [which] represents official State policy.” Jeffers v. Clinton, 756 F. Supp. 1195, 1201 (E.D. Ark. 1990), aff'd 111 S.Ct. 662 (1991).

We cannot say that the trial court erred in finding that the Commission overcame the prima facie case of discrimination.

II.

WAS THE TRIAL COURT’S FINDING THAT THE ELECTION COMMISSION SUBSTANTIALLY COMPLIED WITH THE ARK. CODE ANN. § 14-14-401 — 407 (1987) CLEARLY ERRONEOUS?

Subchapter 4 of Title 14, Section 14 of the Arkansas Code Annotated governs the apportionment of quorum court districts. Ark. Code Ann. § 14-14-401 (a) states:

Each county of the state shall divide its land area into convenient county quorum court districts in a manner and at times prescribed by the General Assembly.

Testimony at the hearing revealed that in drawing the new lines, the Commission started with the 1980 districts and then adjusted their boundaries with their stated goal being population equality and convenience to voters. There is no evidence that the new lines were inconvenient for any voters. See In re Redistricting Voting Dists. of Ross Township, 557 A.2d 59 (Pa. Commw. 1989)(redistricting approved where trial court took into account election administration, topography, voter turnout, and convenience).

Next, the number of quorum court districts is determined by a population chart found at Ark. Code Ann. § 14-14-402. In the present case, Baxter County correctly created eleven districts.

The procedure for actually apportioning quorum court districts is found at § 14-14-403, titled “Apportionment of Districts”:

(a) The county board of election commissioners in each county shall be responsible for the apportionment of the county into quorum court districts. Until otherwise changed in the method set forth in this subchapter, the districts of each county shall consist of the territory of the township established by the county board of election commissioners on or before November 3,1975, pursuant to the provisions of Acts 1975, No. 128 [Repealed]. Thereafter, districts shall be apportioned on or before the first Monday after January 1, 1982, and each ten (10) years thereafter.
(b) All apportionments shall be based on the population of the county as of the last Federal Decennial Census, and the number of districts apportioned shall be equal to the number to which the county is entitled by law.
(c) The provisions of this subchapter shall not be construed to affect the composition of the county committees of the political parties, and the county committee of each political party shall designate the geographic area within the county from which county committeemen shall be selected.

The Election Commission complied with these requirements.

As additional requirements, § 404 orders the State Board of Apportionment to provide the Federal Decennial Census data to the county election commissions; § 405 requires county election commissions to file their plans setting forth boundaries and populations with the county clerk, and requires the plan to be published within fifteen days of that filing; and § 406 provides that a challenge of the plan may be made in the circuit court within thirty days of its publication. See Stack v. Clinton, 309 Ark. 400, 832 S.W.2d 476 (1992); Taylor v. Clinton, 284 Ark. 170, 680 S.W.2d 98 (1984); Goldsby v. Brick, 281 Ark. 58, 661 S.W.2d 368 (1983). The 1990 census data was provided and used in the redistricting, the plan was filed and published, and the voters’ present challenge was brought within 30 days.

Lastly, § 407 directs the county clerk to certify the plan and transmit it to the Secretary of State if no one has challenged it within the allotted time period. This has not been done due to the present ongoing challenge.

On review, this court will not reverse a finding of fact by a trial judge unless it is clearly erroneous, and we view the evidence, and all reasonable inferences therefrom, in the light most favorable to the appellee. Tuthill v. Arkansas County Equalization Bd., 303 Ark. 387, 797 S.W.2d 439 (1990). In so viewing the evidence, we cannot say the finding of fact that the Election Commission complied with the statutory requirements of Ark. Code Ann. § 14-14-401 — 407 (1987) was clearly erroneous. Ark. R. Civ. P. 52(a).

For the foregoing reasons, we affirm the trial court.


author:
Robert H. Dudley, Justice.
      Robert L. Brown, Justice,

text:
    Preston WILLIAMS and Gail Williams d/b/a Vowels Print Factory v, Richard SPELIC and Barbara Spelic d/b/a Vowels Office Supply
    92-33
    844 S.W.2d 305
    Supreme Court of Arkansas
    Opinion delivered December 14, 1992

      Lyons & Emerson, by: Jim Lyons, for appellant.

      Dennis Zolper & Assoc., P.A., by: Dennis Zolper, for appellee.
   Robert H. Dudley, Justice.

The issue in this case is whether the buyers of a business purchased the trade name and are entitled to protect that trade name. The issue is primarily a factual one, and we affirm since the chancellor’s findings of fact are not clearly erroneous.

In 1932, Mr. Vowels started a business in Jonesboro named “Vowels Printing.” The printing business was apparently successful, and about twenty years later Mr. Vowels expanded the business to include the sale of office supplies. At that time, in the early 1950’s, the name of the business was changed to “Vowels Printing and Office Supply.” In 1984, the name was changed to “Vowels Printing and Supply.” Preston Williams, whose wife Gayle is the daughter of Mr. Vowels, became involved in the business in 1984. In 1987, the Williamses began to physically separate the office supply section of the business from the printing section, and, by May, 1988, they had moved the printing part of the business across the street from the office supply business. The two sections of the business were operated as one proprietorship. They both had the same tax identification number, and if either or both sections did work for a customer, the account receivable was payable to the one business, Vowels Printing and Supply.

A real estate broker contacted the buyers, Richard and Barbara Spelic, and asked if they would be interested in buying “Vowels.” The husband, buyer Richard Spelic, knew “Vowels had an excellent reputation in town, and I thought buying Vowels would be a good opportunity for us to continue in the community and keep the Vowels’ name to go on.” The husband had been inside the business twice and the wife only once, when, on May 13, 1988, they signed an agreement to purchase “Vowels Office Supply.” They testified that they were told that the Williamses would retain the printing business across the street, but, they were not told that the sellers would try to retain the name “Vowels.” At the time of the sale, the sign on the front of the building housing the printing business across the street did not contain the name “Vowels;” it reflected only “The Printing Factory.”

The sales agreement, a form with blank lines that were filled in by the real estate agent, provided a sales price of $80,000.00 with $3,000 being allocated to a covenant not to compete. Under this covenant, the sellers, the Williamses, were not to engage in the sale of office supplies for seven years, and the buyers, the Spelics, were not to engage in printing for seven years. More important, the agreement provided that the buyers paid $1,500 for goodwill and $1,500 for the business trade name. The Bill of Sale provides that the buyers purchased the “business trade name, goodwill and any and all other assets, tangible or intangible, belonging or used in connection with or otherwise pertaining to the operation of Vowels Office Supply. . . .”

At the time of the sale, the sellers had listed the office supply business in the telephone directories as “Vowels Office Supply” and had separately listed the printing business as “Vowels Printing Factory.” The sellers, in contradiction of the testimony of the buyers, testified that they told the buyers of the telephone book listings.

The office supply building was being remodeled at the time of the sale, and soon after the sale was completed, a dispute arose over the cost of some of the remodeling. The buyers testified that at that time, the sellers placed a large sign on the front of their printing business that read “Vowels Print Supply” and began answering their phone by saying “Vowels.” The buyers were also answering their phone by saying “Vowels.” Customers, suppliers, and creditors were confused, and the sellers’ mail was sometimes delivered to the buyers and vice versa. The buyers later violated the covenant not to compete by taking a printing order for a local bank. A complaint and counterclaim was eventually filed. Ultimately, the chancellor enjoined the buyers from violating the covenant not to compete and enjoined the sellers from using the name “Vowels” in their printing business.

The chancellor’s findings of fact included the following:

[T]he name “Vowels” has . . . been an accepted and acknowledged local synonym for office supplies and/or printing. As such, “Vowels” has a special significance and meaning and to permit the continued use of the name “Vowels” in . . . [sellers’] business can only result in hopeless confusion for the general public.

The chancellor then applied Ark. Code Ann. § 4-71-113 (Repl. 1991), which provides:

Likelihood of injury to . . .a trade name valid at common law, shall be grounds for injunctive relief notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.

The sellers make four assignments of error, the first of which is that the trial court erred because the parties were not in competition with each other. The argument overlooks the plain language of the statute. The statute recognizes the value of a trade name in its own right and affords protection to the owner against its unauthorized use. Neither competition nor confusion on the part of customers is required. The issue is not one of competition, but of the likelihood of dilution of the value of the trade name as an asset by its use by someone other than the owner.

The sellers’ second assignment is that under the case of Howe Scale Co. v. Wyckoff, 198 U.S. 118 (1905), a family name may be used in the absence of fraud or deceit unless the exclusive right to the family name is contracted away. Again, the argument overlooks the statute. The chancellor impliedly found that the sellers sold the trade name “Vowels,” that there is a likelihood of injury to it, and that proof was sufficient for the issuance of an injunction under the statute.

A part of the argument on this point is that the sellers did not convey the trade name “Vowels” used in the printing business. The proof shows the buyers paid $ 1,500 to the sellers for the business trade name. The proof showed that the name “Vowels” had been used in Jonesboro for over fifty years, first in 1932 as “Vowels Printing,” then, in the early 1950’s as “Vowels Printing and Office Supply,” and then, in 1984 as “Vowels Printing and Supply.” There was substantial testimony, essentially undisputed testimony, from which the chancellor could find that the name “Vowels” carried a good reputation in the community in both office supplies and printing and that the name had acquired a secondary meaning to the purchasing public of quality in both office supplies and printing. The predominant word in the Vowels’ trade name used for over fifty years is “Vowels.” The buyers testified they were asked by the real estate agent if they wanted to buy “Vowels,” that they thought they were buying “Vowels,” and that the sellers never disclosed they had any intention of retaining any part of the “Vowels” trade name.

To the contrary, the sellers testified that they told the buyers they were going to use the name “Vowels Printing Factory,” and, in addition, the contract provides that the buyers purchased only the name “Vowels Office Supply.” The chancellor heard and observed the witnesses and found in favor of the buyers. We cannot say the finding of fact was clearly erroneous.

In his letter opinion, the chancellor wrote, “[T]he existing confusion will ultimately detract from the otherwise separate businesses of the parties, to the detriment of each,” and when one considers that three years from now, or seven years from the date of the contract, both parties can compete in both of the businesses, no other conclusion could reasonably have been reached.

The sellers’ next assignment of error is based on the law of unfair competition, and, again, the argument overlooks the statute. Contained in this assignment is a sub-argument that the chancellor erred in ruling that “the name, ‘Vowels’ has for many years to my personal knowledge been an accepted and acknowledged local synonym for office supplies and printing.” They contend that the chancellor should not have taken judicial notice of the secondary meaning. See A.R.E. Rule 201. The sellers are correct. The chancellor should not have taken judicial notice of the secondary meaning, but it is immaterial in this case because there was sufficient independent proof of the matter. Thus, the error was harmless. See Arkansas Sav. & Loan Ass’n v. Mack Trucks of Ark., Inc., 263 Ark. 264, 566 S.W.2d 128 (1978).

The sellers’ final argument of error is that the trial court erred in granting the injunction because Vowels is the maiden name of Gayle Vowels Williams. The general rule is that prohibiting an individual from using his or her true surname is to take away his identity, and courts will avoid doing that, if possible. Societe Vinicole de Champagne v. Mumm, 143 F.2d 240 (2d Cir. 1944). Here, the general rule has no application at all to seller Preston Williams, and seller Gayle Williams did not lose either her surname or her individual identity by the court’s ruling. Even if she lost some part of her business name identity, we would not reverse. When a surname is used as a trade name, it risks becoming a symbol of the business and losing its individual identity. Levitt Corp. v. Levitt, 593 F.2d 463, 468 (2d Cir. 1979) (citing R. Callman, Unfair Competition, Trademarks and Monopolies, § 85.2 (d)(1) (3d ed. 1969)). This is especially true when the name is conveyed as goodwill, and, if confusion is likely, there must be some limitation on a seller’s unrestricted use of his or her name. Taylor Wine Co. v. Bully Hill Vineyards, Inc., 569 F.2d 731, 734 (2d Cir. 1978). In a situation in which an infringer has previously sold his business name with its goodwill, a sweeping injunction is more likely to be an appropriate remedy. Id. at 735. When a business purchases goodwill and a trade name, it acquires a valuable property right, and that is the right to inform the public that it possesses the experience and skill symbolized by the original concern. Levitt Corp. v. Levitt, 593 F.2d 463, 468 (2d Cir. 1979). If the public is confused, the value of the goodwill is diluted. Courts will be especially alert to foreclose attempts by a seller to “keep for himself the essential thing he sold, and also keep the price he got for it.” Guth v. Guth Chocolate Co., 224 F. 932, 934 (4th Cir. 1915), cert. denied, 239 U.S. 640 (1915). Thus, the chancellor could validly issue the sweeping injunction against the use of the maiden name of the sellers.

Affirmed.

Holt, C.J., Glaze, and Brown, JJ., dissent.

Robert L. Brown, Justice,

dissenting. I cannot agree that the trade name at issue here is Vowels rather than Vowels Office Supply. What was sold by the Williamses and purchased by the Spelics was “Vowels Office Supply.” The Offer and Sale Agreement reads in part as follows:

BUSINESS TRADE NAME: Seller hereby (grants) grants (docs not grant)------Buyer effective at the time of closing of escrow, any and all rights which the Seller may have in the trade name Vowels Office Supply.

“Vowels Office Supply” is written in by hand. The value assigned to the trade name was $1,500 out of a total purchase price of $80,000. The sale closed on May 31, 1988.

Shortly thereafter, a joint letter went out to the customers of the former Vowels Printing and Supplies. It spoke of the division of the business into two entities — Vowels Printing Factory and Vowels Office Supplies — and read in part:

On the first of June, Vowels Printing and Supplies officially became two entities. The printing and copying services, recently relocated at 319 South Church (across the street from the blue awninged Vowels), will be known in the future as Vowels Print Factory. Preston and Gayle Williams will continue as owners and managers of the Print Factory. Barbara, Amber, Donnie, and Gina will be here, as well, to assist you in meeting all of your printing and copying needs.
The office supply sales will still be located at 324 South Church and be known as Vowels Office Supplies. The new owners, Richard and Barbara Spelic, will be happy to greet all our old customers. Come in and meet them, as well as Jennifer and Carol. Jonnas will remain at Vowels Office Supplies, also, and they all are eager to serve you.

The letter had the names of the Williamses and Spelics typed at the bottom. Barbara Spelic later testified at trial that she did not approve of the letter’s being sent but acknowledged that she knew of it and did not tell the Williamses not to send it. The letter, in fact, apparently was sent with bills to customers of the former Vowels Printing and Supplies which benefitted both Vowels Print Factory and Vowels Office Supply.

A few months after the sale, the Williamses put up a sign with the name “Vowels” in tandem with The Print Factory. The Spelics did not object to this.

The Jonesboro City Directory in 1987-1988 listed both Vowels Print Factory and Vowels Office Supply with different addresses and different telephone numbers. The 1988-1989 Indian County Phone Book listed Vowels Print Factory. The Southwestern Bell Telephone Directory also listed both entries in 1988-1989 in both the white pages and yellow pages. Inexplicably, Barbara Spelic testified that she did not know whether she checked the telephone directories in 1988 to determine if Vowels Print Factory was listed separately.

The genesis for this litigation was a complaint by the Williamses in August 1989 — more than a year after the sale — contending that the Spelics violated the covenant not to compete in the Offer and Acceptance Agreement by taking a printing order from a local bank. The chancellor enjoined this violation. The Spelics never complained about confusion between Vowels Office Supply and Vowels Print Factory until it filed a counterclaim to this lawsuit by the Williamses. The chancellor, nonetheless, enjoined the Williamses from using the trade name Vowels but in doing so found that Vowels had been accepted and acknowledged as a “local synonym for office supplies and/or printing.” In effect, the chancellor found that Vowels had a secondary meaning for both office supplies and printing.

The fact that the trade name, Vowels Office Supply, was sold is undisputed. Subsequent events, including the letter to customers, evidenced two separate entities, both of which used the name Vowels. The majority concludes, however, that the chancellor was correct in finding that there was the likelihood of injury or dilution to Vowels, a “trade name valid at common law,” under the statute. See Ark. Code Ann. § 4-71-113(1987). The focus at trial, however, should have been on the trade name at issue, Vowels Office Supply. It is clear that the Spelics recognized that Vowels Print Factory would continue to be associated with an independent entity, based on the letter to customers which they had knowledge of. They undoubtedly also knew that both enterprises were listed in various telephone directories. Yet they never raised a complaint until they were sued for breach of the non-compete agreement more than a year after the sale.

The chancellor expanded the scope of the trade name purchased by finding that the name Vowels had been bought for the Spelics’ exclusive use. That finding impinges on the retained rights of the Williamses in Vowels Print Factory. The chancellor did not find that Vowels had a secondary meaning associated only with the office supply business. On the contrary, he found that Vowels was synonymous with both businesses, which bolsters the Williamses’ argument. The statute, § 4-71-113, must be read to protect both trade names. I recognize the heavy burden inherent in holding that a chancellor’s factual findings are clearly erroneous. Flowever, I would do so in this case and reverse the chancellor’s order.

Hour, C.J., and Glaze, J., join.


author: David Newbern, Justice.

text:
    Billy Joe BARNES v. Anna M. BARNES
    92-658
    843 S.W.2d 835
    Supreme Court of Arkansas
    Opinion delivered December 14, 1992

      John Lloyd Johnson, for appellant.

      Stephen R. Cobb, for appellee.
   David Newbern, Justice.

This is a paternity and child support case in which the Chancellor determined the appellant, Billy Joe Barnes, to be the natural father of Jordan Barnes and required him to pay $51 weekly child support and overdue support owed in the amount of $ 1,700. Barnes raises ten issues on appeal. We find no grounds for reversal and affirm the judgment.

Barnes was married to the child’s mother, the appellee, Anna M. Barnes, now Anna Barnes Hicks, until they divorced in January of 1989. Two children were born during the marriage. Hicks testified that on December 24,1989, Barnes returned from Oklahoma with their children who had been visiting their grandparents. Hicks stated Barnes stayed at her home that night so he could open presents with the children on Christmas morning. Hicks testified she and Barnes had sexual intercourse at approximately 2:00 a.m. Christmas morning. After the incident, Hicks realized she was pregnant, and the child was delivered on September 14,1990, approximately nine months from the alleged date of conception. Hicks claimed Barnes was the child’s father and stated he was the only man with whom she was sexually involved for a month and a half before and after she became pregnant.

Hicks admitted having sexual intercourse with two other men, Richard Piggott and Bob Smith, after she divorced Barnes. She testified she stopped seeing Piggott in September of 1989, and she used birth control the entire time they dated. Hicks stated she did not remember the exact dates when she had sexual intercourse with Smith. Smith later testified he had been sexually active with Hicks in 1990 and 1991. He testified, however, that he had had a vasectomy in June of 1984, implying he could not have been Jordan’s father.

In January of 1991, Hicks filed a paternity suit in the Juvenile Division of Pulaski County Chancery Court, claiming Barnes was Jordan’s father. The parties agreed prior to trial that a blood test would be administered to determine paternity. The agreement also provided the test would be admissible at trial. The test, which was later admitted over Barnes’s objections, showed a 99.59% probability that he was the child’s father. Based on the results of the blood test, coupled with Hicks’s testimony regarding access during the probably period of conception, the Chancellor determined Barnes to be Jordan’s natural father.

/. Subject matter jurisdiction

Barnes relies on Ark. Code Ann. § 9-10-101 (a)(2) (Repl. 1991) and argues the Juvenile Division of Chancery Court was without subject matter jurisdiction, and the paternity case should have been transferred to Chancery Court. He contends the Pulaski County Chancery Court had exclusive jurisdiction over the case. Section 9-10-101 (a) (2) states that a chancery court has exclusive jurisdiction of paternity matters arising during the pendency of original equity proceedings. The proper interpretation of this section of the statutes is that exclusive jurisdiction will lie in a chancery court when a paternity matter arises during the pendency of an action already within its jurisdiction. This provision is simply inapplicable to the facts of this case.

The more relevant provision is Ark. Code Ann. § 9-10-101(a)(1) (Repl. 1991) which provides that a chancery court exercises concurrent jurisdiction with the juvenile division of chancery court in paternity cases. Furthermore, Ark. Code Ann. § 16-13-304(b) (Supp. 1991) states, “Notwithstanding the provisions of the Arkansas Juvenile Code of 1989, or any other enactment which might be interpreted otherwise, the chancery court or any division of chancery court shall have jurisdiction for all cases and matters relating to paternity.” (Emphasis added). The Juvenile Court is a division of Chancery Court, each exercising concurrent jurisdiction over paternity cases. Ark. Code Ann. § 16-13-602 (Supp. 1991); Schuh v. Roberson, 302 Ark. 305, 788 S.W.2d 740 (1990).

2. Transfer of paternity case

Barnes’s second point relates to the transfer of his paternity case among several Chancery and Juvenile Court Judges in the Sixth Judicial District. Barnes argues the intra-district exchange violated our holding in Lee v. McNeil, 308 Ark. 114, 823 S.W.2d 837 (1992).

The case was originally filed in the Juvenile Division of Pulaski County Chancery Court with Chancellor Joyce Williams Warren presiding and set for trial on Friday, September 27, 1991. Because the Juvenile Judges had a backlog of pending paternity cases, the other Sixth District Chancellors were assisting them in deciding these cases. Although the cases were technically not reassigned, the Chancellors assisted the Juvenile Judges by hearing their cases on Fridays on a rotation basis. The Barnes case was originally scheduled to be heard by one of the six rotating Chancellors, but due to scheduling conflicts, the case was sent back to Chancellor Warren’s Court where it had been filed originally.

In the Lee case, three judges in the Twentieth District entered into an exchange agreement which created within the District three divisions each of chancery, circuit, and juvenile courts. The practical effect of the agreement was that a criminal case could be heard by a duly elected chancery judge. In granting a writ of mandamus to prohibit this action, we held Ark. Code Ann. § 16-14-403 (1987), which addresses the exchange of districts among circuit and chancery judges within a district. The exchange contemplated by the statute was inter-district, as opposed to intra-district.

We recognize that the exchange of paternity cases among the Sixth District Juvenile and Chancery Courts was intra-district in nature. The exchange was, however, expressly authorized by statute. Arkansas Code Ann. § 16-13-1403(b)(2) (Supp. 1991) provides:

The circuit judges and chancery judges subject to this subsection [Sixth District] may by agreement, hold either of the circuit or chancery courts and may hear and try matters pending in any of those courts or may hear or try matters in the same court at the same time. The judges subject to this subsection may adopt such rules as they deem appropriate for the assignment of cases in the circuit and chancery courts of their district.

We therefore find the Lee case distinguishable. There is a substantial difference between an agreement which allows a chancellor to preside over a criminal case and an agreement which allows a chancellor to preside over a paternity case which is clearly within the jurisdiction of a chancery court.

3. Separation of powers

Barnes contends the General Assembly violated the separation of powers doctrine, Ark. Const, art, 4, § 2, by enacting Ark. Code Ann. § 9-10-108 (Supp. 1991) which governs the admissibility of blood tests in paternity cases. He relies on State v. Sypult, 304 Ark. 5, 800 S.W.2d 402 (1990), and Ricarte v. State, 290 Ark. 100, 717 S.W.2d 488 (1986), in arguing that Section 9-10-108 impermissibly conflicts with this Court’s established Rules of Evidence. The Chancellor held Barnes essentially waived his right to raise this constitutional issue because he and his former attorney agreed that the blood test would be admissible. In response to this ruling, Barnes testified his former attorney had not informed him that the test would be admitted in evidence.

The record supports the Chancellor’s conclusion that by agreeing that the test would be admissible, Barnes voluntarily abandoned the right to later argue the test was inadmissible because the statute under which it was performed was unconstitutional. See generally Bethel v. Bethel, 268 Ark. 409, 597 S.W.2d 576 (1980) (stating waiver is “the voluntary abandonment or surrender by a capable person of a right known by him to exist, with the intent that he shall be forever deprived of its benefits”). The agreement which was signed by Barnes’ counsel specifically stated the blood test would be admissible in evidence. It shows the test was requested by Barnes who signed a form authorizing the test to be administered.

Although Barnes testified he was not informed of the details and effect of the agreement, a client is bound by the actions of his attorney upon matters concerning which the attorney is employed or held out to be the spokesman of the client. Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986). General rules of agency law apply to the attorney-client relationship. McCullock v. Johnson, 307 Ark. 9, 816 S.W.2d 886 (1991); Peterson v. Worthen Bank & Trust, 296 Ark. 201, 753 S.W.2d 278 (1988); White & Black Rivers Bridge Co. v. Vaughan, 183 Ark. 450, 36 S.W.2d 672 (1931).

4. Sufficiency of the evidence

Barnes argues in his fourth point that there was insufficient evidence to establish paternity. To support his argument, Barnes cites testimony from other witnesses who indicated they had a sexual relationship with Hicks.

In a paternity proceeding brought against a living putative father, the mother’s burden of proof is a mere preponderance of the evidence, as the proceeding is civil in nature. McFadden v. Griffith, 278 Ark. 460, 647 S.W.2d 432 (1983). The statute, Ark. Code Ann. § 9-10-108(c)(2)(B) (1987), in effect at the time this cause of action arose, provided:

If the results of the paternity tests establish a ninety-five percent (95%) or more probability of inclusion that the defendant is the natural father of the child and after corroborating testimony of the mother in regard to access during the probable period of conception, such shall constitute a prima facie case of establishment of paternity and the burden of proof shall shift to the defendant to rebut such proof.

The blood test showing a 99.59% probability that Barnes was the natural father, coupled with Hicks’s testimony regarding access during the probable period of conception, gave rise to a statutory presumption of paternity. Although Hicks admitted having sexual relationships with other men, the events she admitted did not occur during the probable period of conception. The Chancellor found insufficient evidence to rebut the presumption of paternity, and we cannot say this decision was clearly erroneous. Ark. R. Civ. P. 52(a) (1992).

5. Continuance

Barnes claims the Chancellor erred' by failing to grant his motion for continuance based on four reasons. For purposes of simplicity, the issues relating to the continuance will be discussed under one heading.

Barnes argues a continuance should have been granted because opposing counsel failed to respond to several discovery requests. First, he alleges Hicks’s counsel failed to provide a copy of the blood test which was later introduced in response to a direct question asked in interrogation. Hicks’s counsel admitted that, through oversight, he had failed to attach the blood test to his responses, but he stated Barnes had previously been furnished a copy of the test. Barnes admitted receiving a copy of the paternity test prior to trial.

The Chancellor refused to continue the case, but allowed Barnes time to compare his copy of the blood test with the copy Hicks intended to introduce in evidence. After examining the blood test which was admitted, Barnes did not indicate how it was different from the copy which had been furnished to him. When a party cannot demonstrate how he was prejudiced by the denial of a continuance, we will not reverse. Jones v. State, 308 Ark. 555, 826 S.W.2d 233 (1992). Because Barnes was allowed to compare his furnished copy of the blood test with the test which was later introduced, and presumably the copies were identical, he cannot demonstrate sufficient prejudice from the Chancellor’s failure to grant the continuance.

The second argument is that the Chancellor erred by not granting a continuance because opposing counsel failed to list the names and addresses of the expert witnesses who would testify in response to discovery requests. This argument is meritless as no expert witnesses testified at trial. The paternity test conducted by Roche Biomedical Laboratories, which had been furnished to Barnes prior to trial, was introduced through the affidavit of Dr. Lloyd Osborne who supervised the test. Barnes and his counsel were aware of Dr. Osborne as his name appeared on the copy of the report which had been furnished to them. Dr. Osborne did not testify at the trial.

Barnes next contends a continuance should have been granted to allow him time to cross-examine the expert witness who actually performed the blood test. Barnes made the request to cross-examine the expert who lived out-of-state only six business days before trial. The Chancellor rules six days was not a reasonable period of time to have someone before the Court to testify from out-of-state, and Barnes’s motion for continuance was denied.

The law regarding cross-examining expert witnesses who perform blood tests in paternity cases which was in effect at the time this cause of action arose provided:

A written report of the test results by the duly qualified expert performing the test, or by a duly qualified expert under whose supervision and direction the test and analysis have been performed, certified by an affidavit duly subscribed and sworn to him before a notary public, may be introduced in evidence in illegitimacy actions without calling the expert as a witness. If either party shall desire to question the expert certifying the results, the party shall have the expert subpoenaed within a reasonable time prior to trial. Ark. Code Ann. § 9-10-108(b)(2)(A) (1987).

We cannot say the Chancellor was incorrect in finding that Barnes failed to request the expert witness’s appearance within a reasonable time prior to trial. Although Barnes argues he did not know the expert’s name who performed the test, the report clearly indicated the test was supervised by Dr. Osborne and also provided the address of Roche Biomedical Laboratories in North Carolina. In light of Barnes’s failure to comply with Section 9-10-108(b)(2)(A), we cannot say the Chancellor abused her direction by failing to grant the continuance. It is the challenging party’s responsibility to have the expert subpoenaed within a reasonable time prior to trial. One cannot complain if the inability to confront or cross-examine witnesses is brought about by one’s own inattention to the code requirements. Roe v. State, 304 Ark. 673, 804 S.W.2d 708 (1991).

Barnes’s last argument under this heading is that the Chancellor erred by failing to grant a continuance to allow him to obtain Hicks’s medical records from her obstetrician, Dr. Kemp Skokos. Barnes claims these records would conclusively prove he was not the father of the child. The Chancellor refused to grant the continuance because the subpoena duces tecum served on Dr. Skokos was not properly served. The first subpoena directing Dr. Skokos to appear at trial and bring Hicks’s medical records was served by Barnes. Because Barnes was a party to the case, he could not properly serve the subpoena. Ark. R. Civ. P. 45(c) (1992). The second subpoena served on Dr. Skokos was served by Barnes’s current wife the day of trial. This second subpoena was not served at least two days prior to trial, and therefore, service was untimely. Ark. R. Civ. P. 45(d) (1992). In these circumstances, we cannot say the Chancellor abused her discretion by failing to grant the continuance.

6. A.R.E. 903

Barnes argues the blood test should not have been admitted because Hicks presented no evidence regarding the authentication requirements in North Carolina, where the test was performed, as required by Ark. R. Evid. 903 (1992). Rule 903 provides, “The testimony of a subscribing witness is not necessary to authenticate a writing unless required by the laws of the jurisdiction whose laws govern the validity of the writing [emphasis supplied].” Barnes claims that, before an out-of-state writing is admitted, the proponent must offer proof regarding the authentication requirements in the originating state. He argues Rule 903 creates a condition precedent for admissibility of an out-of-state paternity test.

The Rule provides a subscribing witness’s testimony to authenticate a writing will be unnecessary unless required by the laws of the originating jurisdiction. The burden of showing that the laws of the originating state require testimony from a subscribing witness for proper authentication lies with the party challenging the document. Barnes has not shown that North Carolina law requires a subscribing witness’s testimony. We also note that as the paternity test was required to be notarized under 9-10-108(b)(2)(A), it was a self-authenticating document. Ark. R. Evid. 902(8) (1992). Hicks was not required to produce any extrinsic evidence of authenticity as a condition precedent to admissibility. See Monark Boat Co. v. Fischer, 292 Ark. 544, 732 S.W.2d 123 (1987).

7. Notice

Barnes alleges the Chancellor erred in finding the Attorney General was not timely notified that a constitutional question would be raised in the proceedings as required by Ark. Code Ann. § 16-111-106(b) (1987). Barnes had failed to offer any citation of authority or any convincing argument supporting this point, and we will not consider it on appeal. Dixon v. State, 260 Ark. 857, 545 S.W.2d 606 (1977).

8. Telephone bill

The eighth issue relates to the Chancellor’s refusal to allow Barnes’s telephone bill to be admitted under Ark. R. Evid. 803(24) (1992). The telephone bill would allegedly show that Barnes made a phone call to his fiance from his home at approximately 10:00 p.m. on Christmas Eve. Barnes argued this evidence would contradict Hicks’s testimony that he was at her home at the time she alleged. As Barnes could not offer a sufficient foundation to establish the telephone bill as a business record under Ark. R. Evid. 803(6) (1992), he argued it should be admitted under the catch-all exception found in Ark. R. Evid. 803(24) (1992).

The Chancellor ruled the telephone bill should be admitted, if at all, under the business records exception to the hearsay rule and refused to allow its submission under 803(24).

We have recognized that the common-law exceptions to the hearsay rule are based either upon necessity or upon some compelling reason for attaching more than average credibility to hearsay. Any new exception, such as 803(24), must have circumstantial guarantees of trustworthiness equivalent to those supporting the common-law exceptions. Hill v. Brown, 283 Ark. 185, 672 S.W.2d 330 (1984). In determining trustworthiness under the residual hearsay exception in 803(24), the Chancellor must determine that (1) the statement is offered as evidence of a material fact, (2) the statement is more probative on the point for which it is offered than any other evidence the proponent can procure through reasonable efforts, and (3) the general purposes of the rules and the interests of justice will best be served by admission of the statements into evidence. Blaylock v. Strecker, 291 Ark. 340, 724 S.W.2d 470 (1987). The residual hearsay exception was intended to be used very rarely, and only in exceptional circumstances. Ward v. State, 298 Ark. 448, 770 S.W.2d 109 (1989).

Barnes failed to offer any evidence that the telephone bill had “circumstantial guarantees of trustworthiness” as required for admissibility under Rule 803(24). In these circumstances, we cannot say the Chancellor abused her discretion by refusing to allow the bill to be admitted under the residual hearsay exception. Barnes also failed to comply with Rule 803(24) by not notifying Hicks that the bill would be introduced under the Rule. A statement may not be introduced under 803(24) unless the proponent of it makes known to the adverse party sufficiently in advance to provide the adverse party with a fair opportunity to prepare to meet it.

9. Child support amount

Barnes argues the Chancellor erred in setting the support amount at $51 per week. The Chancellor was presented with evidence that Barnes earned $300 per week, and that he was required by court order to pay $88 in child support for hisTwo children born during his marriage to Hicks. The Chancellor subtracted the $88 support amount from income to arrive at a weekly take home pay of $212. She then applied the child support chart amount for one dependent and awarded $51 in support for Jordan. Barnes argues that instead of applying the chart amount required for one dependent, the Chancellor should have set support based on three dependents. By applying the chart in this manner, Barnes would only be required to pay $110 per week in support, whereas he is now required to pay $139 per week.

The child support chart should be applied to the child who is before the court. The result of applying the chart as Barnes suggests would be that the amount of support for the one child before the court is diluted. The chart is structured so that the amount of support per child decreases in proportion to the number of added dependents. See Waldon v. Waldon, 34 Ark. App. 118, 806 S.W.2d 387 (1991).

In adopting the chart, we specifically provided that weekly pay would be determined after deduction for “Presently paid support for other dependents by Court order.” In re: Child support Enforcement Guidelines, 301 Ark. 627, 784 S.W.2d 589 (1990). We find no abuse of discretion.

10. Retroactive support

Barnes’s final point is that the Chancellor incorrectly awarded past due child support in the amount of $1700. The Chancellor determined this amount by multiplying the minimum support amount which can be awarded under the chart ($25) by 68 weeks (the period from the child’s date of birth to the date of judgment). Barnes argues this award was erroneous because there was not testimony presented on the needs of the child or his ability to pay.

In making the decision regarding retroactive support, the Chancellor recognized there was no evidence regarding Barnes’s weekly take home pay during the relevant timé period. Therefore, the Chancellor simply set the support at the minimum level required of an unemployed person. We find no error or abuse of discretion.

Affirmed.


text:
    Jessie ORRELL v. CITY OF HOT SPRINGS
    92-254
    844 S.W.2d 310
    Supreme Court of Arkansas
    Opinion delivered December 14, 1992

      Hurst Law Offices, by; Q. By rum Hurst, Jr., for appellant.

      Neil V. Pennick, for appellee.
   David Newbern, Justice.

In this case the constitutionality of an ordinance of the City of Hot Springs has been challenged as being in violation of the First Amendment guarantee of freedom of speech. The ordinance regulates “sexually oriented businesses” in Hot Springs by setting qualifications for licensing and assuring geographic disbursement within the City. The appellant, Jessie Orrell, who operates businesses which would require licenses pursuant to the ordinance, argued the ordinance (1) was unconstitutional because it did not guarantee a speedy determination of eligibility and (2) because it left so few locations for such businesses that it amounted to an unconstitutional deprivation of the right to speak or communicate.

The Trial Court held the ordinance was not unconstitutional. We must reverse because we agree with Mr. OrrelFs first argument.

Mr. OrrelFs two establishments feature topless (nude from the waist up) female dancers. The “Bottoms Up” club, located at 415 Albert Pike, was opened sometime in January of 1990. The Centerfold Entertainment Club, located at 214 West Grand, opened sometime later. The City had adopted, in 1987, Ordinance No. 3938 (Ordinance) entitled “SEXUALLY ORIENTED BUSINESS ORDINANCE,” and OrrelFs businesses fall within its definition of “sexually oriented business.”

Apparently there was no effort to enforce the Ordinance against either establishment, but early in 1991 Mr. Orrell learned the Hot Springs City Manager and other officials felt his establishments violated the Ordinance. He filed a complaint for injunctive relief and declaratory judgment seeking a determination whether the two establishments were “sexually oriented businesses” as defined by the Ordinance; whether they were excepted due to “grandfather” provisions; and whether the Ordinance was constitutionally defective in its scope and in the geographic limitations imposed.

A hearing was held, and it was shown that the “Bottoms Up” Club was in a location consistent with the ordinance, but the Centerfold Entertainment Center was not. The evidence also established that there were at most only four sites within the City available for location of such a business. Because of the requirement in the Ordinance for a substantial distance between these businesses it was probable, but not shown definitely, that no more than one such business could be located in each of these four areas. The Court held the ordinance was not unconstitutional and that the geographic restrictions were not unreasonable.

1. Prior restraint

The Ordinance in Section 3 requires a license for the operation of a sexually oriented business as defined in Section 2. Section 4 provides, in pertinent part:

(a) The Administrator MUST approve the issuance of the license within 30 days after receipt of an application unless he or she finds one or more of the following to be true:
***
(5) The premises to be used for the sexually oriented business have not been approved by the health department, fire department or the appropriate building official as being in compliance with applicable laws and Ordinances.
***

In Freedman v. Maryland, 380 U.S. 51 (1965) the Court held that the failure to place limitations on the time within which a censorship board decision maker must make a determination of obscenity is a species of unbridled discretion which constitutes a prior restraint on the First Amendment guarantee of freedom of speech. While prior restraints are not unconstitutional per se, any system of prior restraint bears a heavy presumption against it’s constitutional validity. FW/PBS, Inc. v. City of Dallas, 110 S.Ct. 596 (1990).

There are two evils not to be tolerated in such schemes. First, a scheme that places unbridled discretion in the hands of a government official or agency constitutes a prior restraint and may result in censorship. Second, a prior restraint that fails to place limits on the time within which the decisionmaker must issue a license is impermissible. Freedman v. Maryland, supra, at 59. Like a censorship system, a licensing scheme creates the possibility that constitutionally protected speech will be suppressed where procedural safeguards are inadequate to ensure prompt issuance of the license.

Three procedural safeguards are necessary to ensure expeditious decisionmaking. (1) Any restraint prior to judicial review can be imposed only for a specified brief period during which the status quo must be maintained; (2) expeditious judicial review of that decision must appear available; and (3) the censor must bear the burden of going to court to suppress the speech and must bear the burden of proof once in court. Freedman v. Maryland, supra at 58-60.

In FW/PBS, Inc. v. City of Dallas, supra, a Dallas ordinance required issuance of a license within 30 days of receipt of an application, but it conditioned the issuance upon approval by other municipal inspection agencies without setting a time limit for inspections by those agencies. As a result, a majority of the Court concluded that the timeliness requirement posed in the Freedman case had not been met. The ordinance failed to provide an effective time limitation on the licensing decision, and it also failed to provide an avenue of prompt judicial review so as to minimize suppression of speech in the event of a license denial, thus it was unconstitutional insofar as it was enforced against businesses engaged in First Amendment activity.

The Hot Springs ordinance is identical to the Dallas ordinance in that the administrator must approve the issuance of a license within 30 days unless the premises have not been approved by the health department, the fire department, or appropriate building officials as in compliance with other applicable laws and ordinances. This is the same defect found in the FW/PBS v. City of Dallas, supra, and from which the Supreme Court concluded that the licensing scheme lacked adequate procedural safeguards to stand constitutional muster. Thus Ordinance 3938 clearly constitutes an impermissible prior restraint on speech and must fail.

2. Alternative sites

The generally stated justification for ordinances such as the one reviewed here is that they are “content neutral” and have as their purpose the control of undesirable activities such as crime, particularly prostitution, often found near clusters of sexually oriented businesses. Their purpose is not to stifle speech but to prevent secondary effects which are subject to the police power of government.

Like the Supreme Court in FW/PBS, Inc. v. City of Dallas, supra, we find it unnecessary to reach the issue whether the ordinance was properly viewed as a content neutral time, place, and manner restriction reasonably aimed at the secondary effects arising out of sexually oriented businesses, but a brief discussion of the second argument with regard to the reasonableness of the geographic requirements is appropriate.

In Renton v. Playtime Theaters, Inc., 475 U.S. 41 (1986), ordinances regulating sexually oriented businesses were held facially valid if they (1) were designed to serve a substantial government interest and (2) allowed for reasonable alternative avenues of communication. The Supreme Court made it clear that content neutral time, place, and manner regulations are appropriate to control the location and proliferation of sexually oriented businesses so long as there are opportunities available within the city for the placement of these businesses.

The record presented in this case showed that there were four areas remaining in Hot Springs, after passage of the ordinance, where a sexually oriented business could have been legally located. It is not clear, however, whether these sites are actually available to the operators of such businesses. It is also unclear whether one of the sites already has a regulated business within the area and therefore may be unavailable for location of another such business.

In Walnut Properties, Inc. v. City of Whittier, 861 F.2d 1102 (9th Cir. 1988); Alexander v. City of Minneapolis, 713 F. Supp. 1296 (D. Minn. 1989); and Alexander v. City of Minneapolis, 698 F.2d 936 (8th Cir. 1983) (Alexander I), identical restrictions which essentially reduced the number of such business which could legally operate to a marginal number were found to violate the First Amendment. In the Alexander I case the reduction would have been from sites accommodating 30 existing business to 12 relocation sites. In the Walnut Properties case the ordinance had identical restrictions which would permit businesses to relocate to only three sites in the City of Whittier.

While our holding in this case does not encompass this point, we recite our concern with respect to the ultimate practical effect of a law such as Ordinance 3938 for the benefit of guidance in cases which may arise in the future.

Reversed.


author: Donald L. Corbin, Justice.

text:
    David MIDDLETON v. STATE of Arkansas
    CR 92-421
    842 S.W.2d 434
    Supreme Court of Arkansas
    Opinion delivered December 14, 1992

      Laws & Murdock, P.A., for appellant.

      Winston Bryant, Att’y Gen., by: Cathy Derden, Asst. Att’y Gen., for appellee.
   Donald L. Corbin, Justice.

Appellant, David Middleton, appeals from the part of a judgment of the Newton Circuit Court convicting him of “possession with intent to deliver a quantity of intoxicating beverages without having a valid license as provided in the Arkansas Alcoholic Control Act.” The judgment was entered pursuant to a jury verdict which, among other things not relevant to this appeal, sentenced appellant to serve one year in the Newton County Jail and fined him $ 1,000.00 for the charge in question. For reversal of the conviction, appellant asserts two points of error. Both of appellant’s arguments are procedurally barred and we therefore affirm the judgment of conviction.

Appellant’s first argument for reversal is that the charge for which he was convicted is not a criminal offense under the statute named in the charging instrument. The heading of the information lists a summary of the charges against appellant and among that list is the charge at issue on this appeal: “POSSESSION OF ALCOHOL WITH THE INTENT TO SALE, #3-3-205, 1 count.” However, the text of the information states the charge as follows:

Count §10 The said defendant on the 30th day of July, 1991, in Newton County, Arkansas, did unlawfully possess, with the intent to deliver a quantity of intoxicating beverages without having a valid license as provided by the Arkansas Alcoholic Control Act, against the peace and dignity of the state of Arkansas. [Emphasis added.]

Count Ten obviously charges appellant with conduct in violation of the entire Alcoholic Control Act. Thus, the premise of appellant’s argument, that he was charged with violating only Ark. Code Ann. § 3-3-205 (Supp. 1991), is false.

The fact that appellant’s argument is based on a false premise is of no .consequence to our decision on appeal because appellant has not preserved this argument for our review. Appellant did not object to the charging instrument at trial. The trial court was not apprised of the error about which appellant complains and made no ruling for our review. As this argument is raised for the first time on appeal, it is not preserved for our review. Mays v. State, 308 Ark. 39, 822 S.W.2d 846 (1992). We point out that while it is true that being convicted of a crime for which one was not charged is a violation of due process, Hill v. State, 303 Ark. 462, 798 S.W.2d 65 (1990), Hedrick v. State, 292 Ark. 411, 730 S.W.2d 488 (1987), even constitutional arguments are waived when argued for the first time on appeal. Collins v. State, 308 Ark. 536, 826 S.W.2d 231 (1992).

As his second argument for reversal, appellant asserts that if we determine the charge for which he was convicted is indeed a crime, there is insufficient evidence to support his conviction. We have repeatedly held that in order to preserve a sufficiency of the evidence argument for appellate review, an appellant must move for a directed verdict at the close of the state’s case and again at the close of all the evidence in the trial. A.R.Cr.P. Rule 36.21(b); Shankle v. State, 309 Ark. 40, 827 S.W.2d 642 (1992). The record reflects that appellant waived his right to challenge the sufficiency of the evidence by failing to make a motion for directed verdict at the close of the state’s case before presenting evidence on his behalf. In addition, appellant again waived this argument when at the close of all evidence, he merely made “the usual motions.” A challenge to the sufficiency of the evidence, whenever it is made, requires a specific motion to apprise the trial court of the particular point raised; a general “usual motion” such as the one made by appellant will not suffice. Rule 36.21 (b) is strictly construed. Easter v. State, 306 Ark. 452, 815 S.W.2d 924 (1991). We adhere to that strict construction and do not consider the merits of appellant’s challenge to the sufficiency of the evidence due to his waiver. McArthur v. State, 309 Ark. 196, 830 S.W.2d 842 (1992).

The judgment is affirmed.


author: Robert L. Brown, Justice.

text:
    215 CLUB d/b/a Decision Point v. Sue DEVORE, V.O. Jones, and Glenda Samuels
    92-715
    843 S.W.2d 317
    Supreme Court of Arkansas
    Opinion delivered December 14, 1992

      Davis & Assoc., P.A., by: Charles E. Davis, for appellant.

      Stephen Lee Wood, P.A., for appellee.
   Robert L. Brown, Justice.

The Arkansas Court of Appeals affirmed a jury verdict and judgment in a wrongful termination action in favor of the appellees/petitioners Sue Devore, V.O. Jones, and Glenda Samuels. The appellees/petitioners then moved for attorney’s fees associated with their defense of this matter on appeal. The Court of Appeals certified the question of attorney’s fees for work done on appeal to this court for decision under Ark. Sup. Ct. R. 29(l)(c). We deny the motion.

Statutory law now provides for a reasonable attorney’s fee to be assessed in certain civil actions, including breach of contract. See Ark. Code Ann. § 16-22-308 (Supp. 1991). The appellees/petitioners contend that § 16-22-308 also embraces legal services rendered on appeal. We recently had occasion to address this precise issue in a per curiam opinion. See Mosley Machinery Company, Inc. v. Gray Supply Company, et al, 310 Ark. 448, 837 S.W.2d 462 (1992). In Mosley, we stated regarding § 16-22-308: “We have reexamined the statute and again concluded that it is not applicable to appellate courts.” 310 Ark. at 449, 837 S.W.2d at 463. We further overruled court of appeals cases that conflicted with this interpretation of the statute.

We, therefore, deny the motion of appellees/petitioners for attorney’s fees for services rendered in appellate court.

Motion denied.

Newbern, J., not participating.


text:
    IN THE MATTER OF THE ESTATE OF EVELYN WILKINSON, Deceased
    92-1233
    843 S.W.2d 316
    Supreme Court of Arkansas
    Opinion delivered December 14, 1992

      Bill G. Wells, for appellant.

      Murray Claycomb and Clark W. Mason, for appellee.
   Per Curiam.

Mildred “Baby” Simmons petitions the court for a rule on the clerk. The clerk refused to file her record because it was not tendered within the time set by Ark. R. App. P. 5. She contends that her attorney had open heart surgery, and such surgery constitutes sufficient “unavoidable casualty” for us to grant the rule on the clerk. The argument is without merit.

The trial court signed the final order on February 28, 1992, and it was entered on March 9, 1991. An extension of time was granted by the trial court, but the record was due in the clerk’s office no later than seven months from the entry of the final judgment. Ark. R. App. P. 5(b). A trial court cannot extend the time for the filing of the record to a date more than seven months from the date of the entry of the judgment, except in event of a postjudgment motion under Rule 4(b), and in that case it is seven months “from the date on which a timely post judgment motion under Rule 4(b) is deemed to have been disposed of.” Here, there was no postjudgment motion. The petitioner had only seven months from the entry of the final judgment. When an appellant seeks an extension of time beyond the seven months to file his or her record, his or her remedy is to file a partial record in the supreme court and seek an extension for a compelling reason, such as an unavoidable casualty. Yent v. State, 279 Ark. 268, 650 S.W.2d 577 (1983). That was not done in this case, and we decline to grant the motion. We also note that the petitioner’s attorney had his open heart surgery in April of 1992, and the deadline was not until October of 1992.

In her motion the petitioner cites the case of Pentron Corp. v. Delta Steel & Construction Co., 286 Ark. 91, 689 S.W.2d 539 (1985), and while that case is not applicable to the case at bar because it deals with the date a record is due in the clerk’s office after a posttrial motion, we take this opportunity to correct a misstatement in one of the sentences in Pentron. There, we stated that after a posttrial motion, the appellant has seven months “from the notice of appeal” to file the record in the clerk’s office. The opinion should have stated that the appellant has seven months “from the date on which a timely postjudgment motion under Rule 4(b) is deemed to have been disposed of under Rule 4 (c).” See Ark. R. App. P. 5(b).

Motion denied.


text:
    FIRST PYRAMID LIFE INSURANCE COMPANY OF AMERICA v. J. Micheal STOLTZ, as Special Administrator of the Estate of J.P. Stoltz, Deceased
    92-4
    843 S.W.2d 842
    Supreme Court of Arkansas
    Opinion delivered December 21, 1992
    [Rehearing denied February 22, 1993.]

      Williams & Anderson, by: Peter G. Kumpe and JohnE. Tull III, for appellant.

      Davidson Law Firm, by: Charles Phillip Boyd, Jr., and Brandon L. Clark, for appellee.

      Dudley, J., not participating.

   Jack Holt, Jr., Chief Justice.

The focus in this appeal is whether fraudulent concealment was proven by the Estate of J.P. Stoltz (“Estate”) in order to toll the statute of limitations on its claim against the appellant, First Pyramid Life Insurance. We hold that the limitations period was not tolled. Thus, we reverse the finding of the trial court.

The facts leading up to this controversy are as follows. In 1975, J.P. Stoltz applied for life insurance with the appellant, First Pyramid Life Insurance (“First Pyramid”). Since Mr. Stoltz had health problems, he was heavily rated for insurance. First Pyramid felt he was a good candidate for a policy called a Flex 79 Trust. The advantage of this kind of policy is that it allows employers to provide employees with life insurance while making the premiums tax deductible. Through this, Stoltz could have his company, Polyvend, Inc., provide him with life insurance virtually tax free. In order to receive these tax benefits, however, the owner of the policy had to be someone other than the insured. Another problem was that at the time of Mr. Stoltz’s application, Arkansas had a $50,000 statutory ceiling on the maximum life insurance that could be purchased by an employer for an employee.

To overcome this ceiling, First Pyramid arranged for the Trust to be based in Oklahoma. In this manner, Stoltz could purchase two policies totalling $2 million — one $1,950,000 policy and one $50,000 policy. Flex 79 was made the owner of the policies. The insurance application, completed by Stoltz on December 18, 1975, designated Stoltz as the insured, Flex 79 Trustee as the owners and Mr. Stoltz’s estate as the beneficiaries.

In March 1976 Mr. Stoltz sought to change the beneficiary and ownership. In the required change of beneficiary forms, he named his son, James Stephen Stoltz (“Steve”), as beneficiary of both policies and owner of the larger policy. A First Pyramid employee, Elizabeth Oswald, accepted these forms. Yet, these forms were never signed by the policies’ owner of record, the Flex 79 Trustee. Ms. Oswald’s supervisor, Ron Mason, sent a memo in August 1976 advising Mr. Stoltz’s insurance agent that the attempted policy modifications were ineffective without the Trustee’s signature and that the policy should be returned to have the invalid forms removed. It is not disputed that Mr. Stoltz did nothing further after August 1976 to change the beneficiary from the estate to his son and that on his balance sheet dated October 5, 1977 (two months prior to his death), he listed the $2 million insurance as an asset and indicated that his estate was the beneficiary. Mr. Stoltz’s signature is on this balance sheet.

Mr. Stoltz died on December 18,1977. Only his son, Steve, claimed the policy proceeds. Prior to paying the claim, First Pyramid consulted their attorney, Allan Horne. Mr. Horne concluded in a memorandum (the “Horne memorandum”) that Steve Stoltz was the legal beneficiary but recommended that the proceeds be interpleaded because of uncertainties in file documentation, including the lack of the Oklahoma trustee’s signature on the change of beneficiary form completed by Mr. Stoltz. At an executive meeting with First Pyramid approximately a week later, Mr. Horne concurred that paying the son without interpleader was “the best course.” First Pyramid paid Steve Stoltz the entire proceeds of the policies within twenty-one days of his father’s death.

Subsequently, there was a dispute with the Internal Revenue Service regarding whether the face value of the policies paid to Steve Stoltz was includable in the decedent’s estate. This dispute arose because of a tax provision that dictates that if a gift is made within three years of a decedent’s death, the policy is presumed to be in contemplation of death. That gift is put back into the estate for estate tax purposes. The Estate through its attorneys, Friday, Eldredge and Clark, attempted to rebut this presumption. According to Mr. Saxton, the Friday firm attorney who handled the challenge, the procedure for challenging this is to include the policy proceeds in the taxable estate and then pay the tax and file a claim for a refund.

In pursuing this refund, Mr. Saxton requested and received First Pyramid Life’s file on the insurance policies at issue. In a June 27, 1983, letter to Steve Stoltz, administrator of the Stoltz estate and recipient of the insurance policy proceeds, Mr. Saxton alluded to the question of change of beneficiary raised by First Pyramid in 1977 and the Horne memorandum concerning change of beneficiary.

Eleven years after J.P. Stoltz’s death, representatives of the Estate brought this action against First Pyramid for negligence, breach of contract, bad faith as well as fraudulent concealment of the proper beneficiaries of the policies.

At trial, a jury found for the plaintiffs and awarded the estate $2 million in compensatory damages and $1 million in punitive damages. The court also assessed attorney’s fees for $666,666.67. The court refused to award the twelve percent statutory penalty for unpaid insurance claims.

STATUTE OF LIMITATIONS

First Pyramid Life contends that because the action is barred by the statute of limitations, the trial court erred in denying their motion for judgment notwithstanding the verdict. As we find no evidence of fraudulent concealment on the part of First Pyramid which would toll the statute of limitations, it necessarily follows that the action is barred, and the judgment must be reversed.

Representatives of J.P. Stoltz’s estate did not bring this action until April 20, 1989, more than eleven years after the payment of the insurance proceeds to Steve Stoltz and J.P. Stoltz’s death.

The statute of limitations on actions to recover on a life insurance policy is five years from the accrual of the cause of action. Ark. Code Ann. § 23-79-202 (1992); 16-56-111 (1987). The limitations period on torts actions is three years. Ark. Code Ann. § 16-56-105 (1987). This court has held that the action accrues upon the death of the insured:

It is a rule of universal application in the law of insurance that a cause of action arises in favor of the designated beneficiary in a policy of insurance against the insurer upon the death of the insured unless by the terms of the contract the accrual of such cause of action is delayed or some local statute fixes a different time.

United Mutual Life Ins. Co. v. Bransford, 190 Ark. 783, 81 S.W.2d 17 (1935). See also 20A John Alan Appleman, Insurance Law and Practice § 11585 (1980).

Representatives of the estate contend that the statute of limitations on this action was tolled by First Pyramid’s allegedly fraudulent concealment of the controversy. In response, First Pyramid denies concealment and asserts that the estate knew or should have known of the change in beneficiaries on the policies.

When the running of the limitations period is raised as a defense, the defendant has the burden of affirmatively pleading this defense. However, once it is clear from the face of the complaint that the action is barred by the applicable limitations period, the burden shifts to the plaintiff to prove by a preponderanee of the evidence that the statute of limitations was in fact tolled. Cleveland v. Gravel Ridge Sanitary Sewer Imp. Dist. No. 213, 274 Ark. 330, 625 S.W.2d 446 (1981); Rasmussen v. Reid, 255 Ark. 1064, 505 S.W.2d 222 (1974); Alston v. Bitely, 252 Ark. 79, 477 S.W.2d 446 (1972).

During the preliminary phases of the lawsuit below, the trial court made the following findings of fact and conclusions of law:

The cause [of] action here asserted against the First Pyramid Life Insurance Company is the estate lost the insurance benefits by reason of the Statute of Limitations and the Company was liable in tort, a bad faith action, on the event of the payment of the proceeds.
To avoid the loss of those causes of action, the plaintiff must prove either the defendant insurance company by its overt acts caused the legal right to be hidden and thereby becomes time barred; or there existed a specific legal relationship between the parties that in and of itself obligated an overt discloser [sic] of the existence of those claims. An insurer/beneficiary relationship does not seem to create that legal obligation; however on the claim of a factual cover-up, the plaintiff should have its day in Court.

(Emphasis added.)

We agree with this analysis of the issues; however, we hold that the trial court should have granted First Pyramid’s motion for a judgment notwithstanding the verdict because the action was barred by the statute of limitations.

There is simply no evidence of record that First Pyramid attempted to fraudulently conceal, “cover-up,” or misrepresent to the estate the problem with determining the proper beneficiary of J.P. Stoltz’s insurance policy. Even if there was evidence of fraud on the part of First Pyramid, and there is none, the statute of limitations would still have run on this claim. “Fraud does suspend the running of the statute of limitations, and the suspension remained in effect until the party having the cause of the action discovers the fraud or should have discovered it by the exercise of reasonable diligence.” (Emphasis in original; citations omitted.) Talbot v. Jansen, 294 Ark. 537, 744 S.W.2d 723 (1988). See also Walters v. Lewis, 276 Ark. 286, 634 S.W.2d 129 (1982); Carter v. Zachary, 243 Ark. 104, 418 S.W.2d 787 (1967); Williams v. Purdy, 223 Ark. 275, 265 S.W.2d 534 (1954).

We have said that the “classic language on this point in Arkansas” is:

No mere ignorance on the part of the plaintiff of his rights, nor the mere silence of one who is under no obligation to speak, will prevent the statute bar. There must be some positive act of fraud, something so furtively, planned and secretly executed as to keep the plaintiffs cause of action concealed or perpetrated in a way that it conceals itself. And if the plaintiff, by reasonable diligence, might have detected the fraud he is presumed to have had reasonable knowledge of it.

Wilson v. GECAL, 311 Ark. 84, 841 S.W.2d 619 (1992) (citations omitted).

As early as 1976, twelve years before the filing of this law suit, two of the complaining representatives of the estate, J.P. Stoltz’s sister and brother-in-law, Ruth Fields and John R. Smith, were aware that J.P. Stoltz had taken out $2 million in life insurance and named his estate as beneficiary. Further, J.P. Stoltz’s signed a 1976 balance sheet listed the $2 million insurance as an asset and named the estate as beneficiary. This balance sheet was made available to the beneficiaries. Armed with this information, the beneficiaries of the estate were on notice that the estate was potentially a beneficiary of the insurance policies and by the exercise of reasonable diligence, the parties could have discovered information relating to the policies and the designated beneficiaries.

There is no evidence that the beneficiaries of the estate ever requested First Pyramid’s files; nor is there evidence indicating that First Pyramid tried to hide the potential problem with the insurance policies from the beneficiaries. In 1983 the attorneys who represented both the estate and Steve Stoltz requested access to the insurance company’s files. First Pyramid readily turned them over. A like inquiry of First Pyramid would, in all probably, have made all files on J.P. Stoltz available to the beneficiaries as well.

The beneficiarys’ ignorance of their rights does not prevent the operation of the statute of limitations. The statute is tolled only when the ignorance is produced by affirmative and fraudulent acts of concealment. Atlanta Exploration Inc. v. Ethyl Corp., 301 Ark. 331, 784 S.W.2d 150 (1990). The acts of concealment or fraud alleged must have been committed by those invoking the benefit of the statute of limitations. Dupree v. Twin City Bank, 300 Ark. 188, 777 S.W.2d 859 (1989).

The estate obviously had notice of the original beneficiary of the policies; the fact that the beneficiaries of the estate failed-to act or did not know to act on this knowledge does not toll the statute of limitations. As there was an absence of fraud or concealment on the part of First Pyramid, it was entitled to the benefit of the statute of limitations.

On cross-appeal, the appellee, Estate of J.P. Stoltz, complains that the trial court erred in denying the twelve percent statutory penalty provided by Ark. Code Ann. § 23-79-208 (1992) and prejudgment interest. Prejudgment interest is based upon an “improperly disallowed insurance claim.” However, since we reverse the trial court’s decision to award the proceeds of the policy to the estate, the Estate’s argument for a statutory penalty and prejudgment interest has no basis.

Reversed on appeal; affirmed on cross-appeal.

Dudley, J., not participating.