text:
    CARDIAC THORACIC AND VASCULAR SURGERY, P.A. PROFIT SHARING TRUST and Donald L. PATRICK v. Earl BOND and Filmtrust of Arkansas, Inc. National Banking Corporation a/k/a National Bank of Arkansas v. Worthen Bank and Trust Company, N.A. Herb Sudbury, Intervenor
    91-296
    840 S.W.2d 188
    Supreme Court of Arkansas
    Opinion delivered November 2, 1992
    [Rehearing denied December 14, 1992.]

      Warner & Smith, by: G. Alan Wooten and J. Randall McGinnis, for appeilants/cross-appellees Cardiac Thoracic and Vascular Surgery, P.A., Profit Sharing Trust and Donald L. Patrick.

      Hilburn, Calhoon, Harper, Pruniski & Calhoon, Ltd., by: John E. Pruniski III, for appellees Earl Bond and Filmtrust of Arkansas, Inc.

      Hankins, Hicks & Madden, by: Stuart W. Hankins and Sherry S. Means, for appellees/cross-appellants National Banking Corporation and National Bank of Arkansas.

      Wright, Lindsey & Jennings, for appellee Worthen National Bank, N.A.
   Darrell D. Dover, Special Chief Justice.

In August 1988, Earl Bond, apparently a dabbler in land development as well as moving producing, contacted Dr. Donald L. Patrick, a Ft. Smith physician who had invested in some of Bond’s movie ventures, relative to a plan Bond had conceived for the development of a 11.62 acre parcel of land in North Little Rock.

Earlier, in May 1988, Bond had entered into a purchase contract with National Bank of Arkansas (NBA), the owner of the land, providing for the purchase of the land at a price of $945,000 to be paid $445,000 in cash with a promissory note secured by a mortgage back to NBA representing the difference of $500,000. Dr. Patrick invested $400,000 cash in furtherance of Bond’s plan and his $400,000 investment went toward payment of the cash portion of the purchase price.

Key to Bond’s plan for development of the 11.62 acre parcel was the construction of a building on a small portion of the parcel (apparently only two acres or so) and the leasing of space in the building. According to the testimony and a “Fact Sheet” intended for Bond’s investors which was introduced in evidence, this would serve two purposes: (1) completing the construction of improvements in the form of the building would satisfy some legal restrictions with possible reverter implications imposed by the City of North Little Rock as part of its urban renewal program and (2) the income stream from leases would enable Bond to obtain financing for the initial construction of the building and for future development.

Accordingly, the Bond-NBA contract provided that NBA would lease at least 3,000 square feet of space in the building to be built and NBA further agreed that it would either arrange for other tenants to lease an additional 3,500 square feet or that NBA would lease the additional 3,500 square feet itself.

The sale-purchase transaction closed on August 16, 1988. Title to the land was deeded by NBA to Bond. The cash portion of the purchase price was paid and the promissory note and the mortgage securing same were delivered by Bond to NBA. Thereafter, the leases alluded to above did not materialize and, as time passed, all parties became disenchanted with the transaction.

Dr. Patrick filed suit against Bond and NBA alleging various misrepresentations on the part of Bond which (he alleged) entitled him to rescind their transaction and to have a return of his $400,000. It was further alleged that NBA was aware of the misrepresentations and was therefore sufficiently tainted so as to justify relief against it in the form of a subordination or forfeiture of its debt/mortgage interest.

NBA filed a cross-complaint against Bond for foreclosure of its $500,000 mortgage and a third party complaint against Worthen Bank & Trust Company, N.A. to foreclose the lien of a mortgage which Bond had granted to Worthen. Worthen cross-complained against Bond for foreclosure of its mortgage and collection of the related debt.

Bond counter-cross-complained against NBA alleging that NBA had breached various material provisions of its agreement with Bond and that Bond was therefore entitled to rescission of the purchase contract and cancellation of the $500,000 purchase money note and the mortgage securing the note.

This proceeding was in the lower court for nearly two years during which a record of over 2,100 pages was created. On May 10, 1990, after the initial round of pleadings, motions and hearings, the Chancellor issued a Letter Opinion in which she found that there was insufficient evidence to justify a rescission of the contract between Dr. Patrick and Earl Bond; that there was insufficient evidence to establish any relationship between Dr. Patrick and NBA and certainly no contract between those parties; but that there was sufficient evidence to establish that the contract of sale of the land in question between NBA and Bond should be rescinded on grounds of constructive fraud and that a resulting trust should be declared in favor of Dr. Patrick in at least part of the cash purchase price which she ordered refunded to Bond.

The Chancellor further found that rescission attempts to place the parties in the position they were in prior to the contract and she therefore ordered that NBA’s obligation to return the cash down payment of $445,000.00 should be reduced by an amount equal to reasonable rental value of the land plus rents actually paid.

Following additional hearings having to do with the rental value of the property and the amount of the constructive trust in favor of Dr. Patrick, the Court entered a Decree on April 26, 1991, which dismissed Dr. Patrick’s complaint against Bond for failure of proof; rescinded the contract of sale between Bond and NBA and cancelled the deed from NBA to Bond; awarded Bond judgment against NBA in the amount of the cash portion of the down payment, plus interest less rents actually paid and less the reasonable rental value of the property which the trial court found to be $194,374.87 and less real estate taxes for 1988, 1989 and 1990 (and pro rata 1991) which had become due subsequent to the conveyance by NBA to Bond but prior to the Decree, the amount of such taxes being $24,023.81. The NBA Purchase Money Note and Purchase Money Mortgage were found to be void. Worthen’s Mortgage was also found to be void but, based on a stipulation of all parties except NBA, Worthen was awarded first claim against the judgment in favor of Bond and, after deduction of the amount of $18,000.00 to satisfy an attorney’s lien, Patrick and Sudbury were to receive, by way of constructive or resulting trust, the balance of the judgment in favor of Bond against NBA.

The Chancellor’s Decree appears to have pleased no one and virtually all of the parties have appealed and/or cross-appealed from her decision.

Despite the voluminous record in this case and the many arguments advanced by the parties below and here, the central issues which are largely dispositive of this matter number only two and they are:

(1) Is rescission of the NBA-Bond contract an appropriate remedy?
(2) If the Chancellor properly ordered rescission, was it proper to credit the fair rental value of the property against the amount to be returned to the Purchaser (Bond)?

We will discuss those issues in order.

RESCISSION

NBA argues rather strenuously that this is simply not a case in which the doctrine of rescission can be applied. We believe, however, that NBA was misled — or chose to be misled — by references in the Chancellor’s letter opinion of May 10, 1990, to “fraud”. The Chancellor clearly differentiated between constructive fraud and what might be characterized as “actual” or “true” fraud, and specifically stated that “ . . . .although there was insufficient evidence to find actual fraud, there was constructive fraud and, therefore, the contract of sale should be rescinded.” Letter Opinion, May 10, 1990. Nevertheless, NBA seems to us to take the position that the Chancellor could not properly rescind the NBA-Bond contract without first finding that NBA was guilty of outright, intentional fraud.

That proposition is not well taken. To the contrary, as we said in Davis v. Davis, 291 Ark. 473, 725 S.W.2d 845 at 847 (1987):

“We have many times held that there may be a constructive fraud even in the complete absence of any moral wrong or evil intention.”

Immediately preceding the quoted language, the Davis Court cited Lane v. Rachel, 239 Ark. 400, 389 S.W.2d 621 (1965) and the reasoning and holding of the Lane case is relevant here. The Lane case also involved an action to rescind a sales contract, cancel a deed, a note and a mortgage and for the recovery from the seller of the amount paid by the purchaser on the purchase of property. It appeared that the seller, or the seller’s representatives, had represented to the buyer that the house in question had an adequate foundation to support its weight. That later proved to be untrue, the house settled and substantial damage resulted, followed by the action to rescind. The seller’s defense was that he was unaware of the subsoil conditions which apparently caused the settling and that the assurances given to the prospective purchaser were therefore not fraudulently made. In reversing the trial court in that case and in holding for the purchaser, this Court said:

“To rescind a contract based upon fraud, it is not necessary that actual fraud exist. It is well settled that representations are construed to be fraudulent when made by one who either knows the assurances to be false or else not knowing the verity asserts them to be true. (Citing cases). In 37 C.J.S. Frauds, ¶2, Pg. 211, constructive fraud is succinctly defined as ‘a breach of legal or equitable duty which, irrespective of the moral guilt of the fraud feasor, the law declares fraudulent because of its tendency to deceive others *** Neither actual dishonesty of purpose nor intent to deceive is an essential element of constructive fraud’. [Emphasis in original]
In the case at bar it is undisputed that the [purchasers] relied, to their detriment, upon the statements and assurances made to them by the [sellers] and these statements proved to be untrue. [Sellers] lack of knowledge of these material representations asserted by them to be true is no defense nor can liability be escaped by their good faith in making the representations.” [239 Ark. 400 at 404].

Interestingly, as an additional or alternative basis for its decision, the Lane Court also invoked the maxim that if two innocent parties must suffer, the burden must be borne by the one who induced the loss and found that the seller’s conduct and assurances induced the loss suffered by the purchasers in that case. That reasoning and that holding might also be apropos to this case.

Here, it is undisputed that NBA committed to Bond that it would lease 3,000 feet in the building and that it would guarantee the leasing of an additional 3,500 feet. Mr. Tullos, the then President of NBA who made that commitment in behalf of NBA, testified that he had every intention of honoring his promise and we will take that at face value. However, the record also shows that there was a major reorganization of NBA in which Mr. Tullos and the board under which he served were replaced with a new president and a new board. Excerpts from the minutes of NBA’s board meetings show clearly that the new regime at NBA had no interest in leasing anywhere near the square footage to which Mr. Tullos had committed NBA and that the board and the new president, Mr. A1 Harkins, mistakenly felt no obligation to honor NBA’s commitment made through the prior administration. Accordingly, even though NBA understandably views the evidence in a different light, it is clear to us, as it was to the Chancellor, that NBA breached its contractual duty to lease the space it had committed to lease.

The Chancellor applied the four part test set forth in Ballard v. Carroll, 2 Ark. App. 283, 621 S.W.2d 484 (1981) to this factual situation and we agree that that test is appropriate. As set forth in the Ballard case, the four part test is:

(a) Was the fraud material to the contract; did it relate to some matter of inducement to the making of the contract?
(b) Did it work an injury?
(c) Was the relative position of the parties such, and their means of information such, that the one must necessarily be presumed to contract upon the faith reposed in the statements of the other?
(d) Did the injured party rely upon the fraudulent statements of the other, and did he have a right to rely upon them?

Ballard v. Carroll, 2 Ark. App. 283, 621 S.W.2d 484 at 486.

It is clear to us that all four parts of this test were satisfied inasmuch as the lease commitments made by NBA were of the very essence of the contract insofar as the purchaser (Bond) was concerned and Bond obviously relied on these commitments in entering into the contract, in hiring a contractor and in taking other steps in furtherance of developing the property. With respect to the relative position of the parties test, that test answers itself in this case since only the party making the contractual commitments (NBA) was in a position to know whether or not its commitments would be honored. Finally, (and consistent with the finding of materiality) there obviously was an injury in that the property could not be developed as planned without the commitments of NBA being honored.

We hold that the Chancellor correctly rescinded the contract between NBA and Bond.

THE FAIR RENTAL VALUE CREDIT

It is generally recognized that in an action for rescission of a contract in a court of equity, the court applies equitable principles in an attempt to restore the status quo or place the parties in their respective positions at the time of the sale. Bates v. Simmons, 259 Ark. 657, 536 S.W.2d 292 (1976). The equitable objective of a return to the status quo as the result of a rescission is consistent with the equitable maxim “he who seeks equity must do equity.” The practical meaning of this maxim is that whatever the nature of the remedy sought, the court will not give equitable relief to one seeking it unless he will admit and provide for all of the equitable rights, claims and demands of his adversary growing out of, or necessarily involved in, the subject matter of the controversy. Sample v. Sample, 250 Ark. 731, 466 S.W.2d 935 (1971).

Having determined that rescission is the proper remedy in this case, it is incumbent upon this Court to assess the propriety of the lower Court’s approach to restoring the status quo.

Without question, our previous holdings make plain that a purchaser entitled to rescission has some obligation to the vendor for the purchaser’s possession and/or use of the property in question. In Bates v. Simmons, cited supra, we endorsed the proposition that, in a rescission action, the requirement that the “purchasers” pay rent to the “seller” for the time the property is occupied is equitable. In Dunham v. Phillips, 154 Ark. 87, 241 S.W. 361 (1922), we held that where a buyer of a fruit orchard was entitled to rescind the purchase and recover the purchase money, he had a duty to restore the land and account for the rents and profits. In DUnham, the rescinding purchaser was ordered to pay the vendor the value of the crop raised and sold on the property while the land was in the purchaser’s possession.

The problem we face in this case is how to quantify what a rescinding purchaser owes to the'vendor in attempting to restore the status quo. In contrast to the facts in both Dunham and Bates, the property here was only partially occupied during the purchaser’s possession. The income generated from that partial possession is readily known and without question must be returned to the vendor (NBA) to restore the status quo. The lower Court properly so ordered. However, the lower Court’s additional award of $194,374.87 to the vendor NBA as reasonable rental value of the unoccupied portion of the property during Bond’s time of possession, even though the evidence showed that at all times this portion of the property was unimproved, unoccupied and had never generated any rentals, is troublesome.

A review of the Arkansas land sale rescission cases reveals no instances where the restoration of the status quo resulted in the award to the vendor of “reasonable rentals” where the property in question was, as here, unoccupied and unimproved before, during and after the sale. Further, exhaustive research in other jurisdictions has failed to turn up any similar holding.

However, guidance on this issue can be found in the Restatement of Restitution. Section 157 of the Restatement of Restitution states:

(1) A person under a duty to another to make restitution of property received by him or of its value is under a duty:
(a) to account for the direct product of the subject matter received while in his possession, and
(b) to pay such additional amount as compensation for the use of the subject matter as will be just to both parties in view of the fault, if any, of either or both of them.

According to comment b of Section 157, “direct product” means that which is derived from the ownership or possession of the property. Thus, a person who has a duty to make restitution of the title to land is under a duty to restore amounts received by him as rent upon a lease existing before he acquired title. This is true regardless of the relative fault as between the parties. In land transactions, where the recipient of the land is not more at fault than the vendor, the recipient is under no duty to pay for the value of the use of the land unless it was actually used. If actually used, he is required to pay the reasonable value of the use or what he received therefrom, at his election (see comment d, Section 157).

This approach does find support in cases from other jurisdictions, although these cases do not exactly mirror the fact pattern of the present case. For example, in a rescission case involving misrepresentation, the Oregon Court in LeTrace v. Elms, 595 P.2d 1281 (Oregon 1979) stated that “buyers were only chargeable to the extent of the benefit actually derived from the use of the land during their occupation.”

It should also be noted that in a myriad of rescission cases involving actual fraud, Courts of other jurisdictions have held that a rescinding purchaser, in addition to restoring the vendor to the property which was the subject of the sale, had a duty to reimburse the vendor only to the extent that the purchaser has profited by his possession of the property. See e.g., Zimmerman v. Kent, 575 N.E.2d 70 (Mass. App. Ct. 1991); West v. McCoy, 70 Cal. App. 3d 295, 138 Cal. Rptr. 660 (1977).

We believe the rule to be that in a case requiring restoration or return to the status quo, we must apply equitable principles in each case so as to best accomplish the undoing of wrong (See Bates v. Simmons, cited supra). We think that the parameters of this duty to balance as set forth in the Restatement of Restitution, and recounted above, best prescribe the equitable resolution of the present case. Accordingly, we reverse that portion of the Chancellor’s Decree below which granted NBA credit for the reasonable rental value of the property beyond the actual rents received, which the Court found to be $194,374.87. In our view, the equities of this case do not support the award to NBA of the reasonable rental value of the property. The evidence showed that the unimproved portion of the property had never generated income and to award NBA credit for theoretical rentals unjustly rewards NBA and places it in a better position than it had been in at the time of the sale. Similarly, we note that had NBA remained the owner of the land (and that is the theoretical effect of rescission), the taxes for 1988-90 (and pro rata 1991) would have been its obligation and it should not benefit by being relieved of that burden.

As we view it, there is no evidence to indicate that NBA would have received $ 194,000 (or anything near) had it remained the owner and possessor of the property throughout and it would have had to pay the taxes. The theory of rescission is to accomplish that result as nearly as possible and we think our holding does that.

OTHER MATTERS

NBA complained below, and continues its argument here, that rescission cannot possibly be proper because, according to NBA, the property is encumbered by the Worthen Mortgage, by the lien of the judgment against Bond, by a tax lien in favor of the Pulaski County Tax Collector and by certain reverter provisions in a resolution of the North Little Rock City Council. Worthen will be paid if NBA pays. The Chancellor so ordered and we are affirming except as specifically indicated above. Worthen’s lien thus disappears as will the tax lien when NBA pays the taxes which we have held to be its obligation. The judgment lien in question arose after the filing of a lis pendens in this case and is therefore subject to the holding, which we affirm, that Bond never had a title to which that lien could attach.

SUMMARY

We reverse as to the credits in favor of NBA for fair rent and value and for the 1988-90 and partial 1991 taxes. In all other respects, the Decree below is affirmed.

Special Justice Rosalind Mouser joins in this opinion.

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

       Bond was the principal of and sometimes dealt in the name of, a corporation called Filmtrust of Arkansas, Inc. NBA and its parent, National Banking Corporation (NBC) are both parties to the lawsuit. Dr. Patrick’s investment actually was made by his qualified profit sharing trust. In our view, these dual identities are not material to the litigation and we will therefore refer to Filmtrust/Bond as “Bond”, to NBA/NBC as “NBA” and to Profit Sharing Trust/Dr. Patrick as “Dr. Patrick”.

         The evidence disclosed that one Herb Sudbury had invested $100,000.00 in Mr. Bond’s North Little Rock project. Even though not a party at the time of the Letter Opinion, Sudbury later intervened. His rights parallel those of Dr. Patrick in every way, he raised no independent issues and, except where specific differentiation is made, we intend to include him when we refer to Dr. Patrick.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    McKinley Charles GREEN v. STATE of Arkansas
    CR 92-1171
    839 S.W.2d 535
    Supreme Court of Arkansas
    Opinion delivered November 2, 1992

      Jan Thornton, for appellant.
    No response.
   Per Curiam.

McKinley Charles Green, by his attorney, has filed a motion for a rule on the clerk.

His attorney, Jan Thornton, admits by motion and brief that the record was tendered late due to a mistake on her part.

We find that such an error, admittedly made by the attorney for a criminal defendant, is good cause to grant the motion. See our Per Curiam opinion In Re: Belated Appeals in Criminal Cases, 265 Ark. 964 (1979).

The motion is, therefore, granted. A copy of this opinion will be forwarded to the Committee on Professional Conduct.


author: Jack Holt, Jr., Chief Justice.

text:
    RICH MOUNTAIN ELECTRIC COOPERATIVE, Inc. v. Jerry REVELS, Richard Leach, and Mary High
    92-422
    841 S.W.2d 151
    Supreme Court of Arkansas
    Opinion delivered November 9, 1992

      Friday, Eldredge and Clark, by: Barry E. Coplin, for appellant.

      Dowd, Harrelson, Moore & Giles, by: Greg Giles, for appellees.
   Jack Holt, Jr., Chief Justice.

The appellees, Jerry Revels, Richard Leach and Mary High, are poultry growers in Howard County, Arkansas. After a nonjury trial the judge found the appellant, Rich Mountain Cooperative, Inc., fifty-one percent negligent in not correcting a power outage that resulted in the deaths of over 9,000 chickens owned by the appellees. The appellees were found forty-nine percent negligent because they failed to have adequate back-up generators. On appeal, Rich Mountain Electric argues that the trial court erred in considering certain photographs and that there was not substantial evidence to support the judgment. We agree that the court should not have admitted the photos into evidence as they are irrelevant. However, we find that the trial court’s finding of substantial evidence to support a judgment was not clearly erroneous.

This situation arose out of the following scenario. Because of a severe storm the previous afternoon, there were power outages on the electric distribution line servicing the appellees’ chicken houses. Apparently, the storm caused a tree to blow down into a phase wire causing it to sag within inches of the neutral wire (normally they are four feet apart). The following day’s one hundred degree temperatures and high electricity usage made the line sag even more and become heavily loaded. Once the line sagged into the neutral stage, the circuit breaker would go out at the substation, and outages would occur.

Due to the power outages and appellees’ lack of adequate back-up generators, the appellees did not have electricity to run the cooling equipment in their chicken houses. As a result of the ensuing heat, Mr. Revels lost approximately 6,300 chickens; Mr. Leach lost about 900 chickens; and Ms. High lost about 2,100 chickens.

There was testimony at trial that the power line problem had been discovered on the day before the outage and that the outage occurred when a pine tree fell into the power line. In support of this argument, the plaintiffs tendered several photographs of trees grown up in close proximity to power lines. The photos were taken over a year after the power outage and did not depict the same site as the power outage at issue. Over Rich Mountain Electric’s objection, the trial judge admitted the photographs into evidence.

SUFFICIENCY OF THE EVIDENCE

In finding that there was substantial evidence, the court stated:

[T]here is evidence that Defendant was negligent in that they could have more diligently pursued the cause of the outage. And, also, I believe these photographs are representative of the area and show that there’s a general lack of maintenance on the easement right of way. Primarily I think they should have been more diligent. Maybe they were short-handed and had to run to other jobs is the reason they couldn’t track down the tree across the line. And the plaintiffs are also somewhat negligent. I think anybody that’s dependent upon electricity knows there are outages, especially if your livelihood depends on chickens. I think — even though Tyson’s may not require you to have back-up generators, I think it’s a general rule everybody knows you ought to. The court finds that the defendant is 51 percent negligent and the plaintiffs are 49 percent negligent. They’re entitled to their damages less 49 percent of their own negligence, which, I think, it was undisputed what those damages were.

When a case is tried by a circuit court sitting without a jury, our inquiry on appeal is:

[N]ot whether there is substantial evidence to support the factual findings of the court, but whether the findings are clearly erroneous (clearly against the preponderance of the evidence). In reviewing a finding of fact by a trial court, we consider the evidence and all reasonable inferences in a light most favorable to the appellee.

City of Pocahontas v. Huddleston, 309 Ark. 353, 831 S.W.2d 138 (1992) (citations omitted).

The court’s findings that defendant should have been more diligent were not clearly erroneous. Evidence presented at trial indicated that Rich Mountain Electric was aware of the downed line on the day prior to the power outage and that the company was not actively diligent in discovering the cause of the outage on the day of the incident and making repair.

An electric utility company has a duty to inspect and maintain its power lines in safe and working order. Stacks v. Arkansas Power & Light Co., 299 Ark. 136, 771 S.W.2d 754 (1989). However:

Negligence of the company can not be inferred merely from the occurrence of the accident. That must be proved, and the burden of establishing it is on the party who alleges it.
It is recognized generally as well as by the courts that electric utility companies, such as appellant, must meet the public demand for a ready and adequate supply of power. In doing so they are not insurers against accident or injury, and are not held liable for such as can not be reasonably foreseen.

Arkansas Power & Light Co. v. Lum, 222 Ark. 678, 262 S.W.2d 920 (1953).

Electric companies must exercise ordinary care in the construction of their services lines, to make inspections at reasonable times to see that equipment is kept in a reasonably safe condition and to diligently discover and repair defects. Arkansas Power & Light Co. v. Johnson, 260 Ark. 237, 538 S.W.2d 541 (1976). They must use commensurate care to keep all electrical apparatus in a proper state of repair. Arkansas Power & Light Co. v. Cates, 180 Ark. 1003, 24 S.W.2d 846 (1930). “The obligation of repairing does not mean merely that the company is required to remedy defective conditions as are brought to its actual knowledge. The company is required to use active diligence to discover defects in its system.” Stacks v. Arkansas Power & Light Co., 299 Ark. 136, 771 S.W.2d 754 (1989), (citing Arkansas Gen. Utils. Co. v. Shipman, 188 Ark. 580, 76 S.W.2d 178 (1934)).

The evidence indicated that the electric company did not use active diligence to discover and correct the problem. Mr. Revels testified that Johnny Braswell, foreman for Rich Mountain Electric, told him that the power line problem was discovered on Monday. When Mr. Braswell testified, he denied having told the appellee that the sagging line had been discovered on Monday. However, Mr. Braswell admitted that a power company crew has a responsibility to resag a power line once this situation is discovered.

Although the evidence of the power company’s negligence in failing to resag the line the day prior to the outage rests in part on Mr. Revel’s testimony, as opposed to Mr. Braswell’s testimony, we must defer to the trial judge’s discretion in weighing the witnesses’ credibility. State v. Massery, 302 Ark. 407, 790 S.W.2d 175 (1990).

Mr. Braswell testified as to the stages taken to correct the outage on the day it occurred. According to his testimony, he received a call shortly before noon that the power on the appellees’ line was out. He sent the lineman to the substation and Mr. Braswell patrolled the line between the substation and the first breaker. (The whole line is approximately eight to ten miles long from the substation to the end.) When the lineman got inside the substation, he reset the breaker. Once reset, the line held and the power stayed.

Approximately thirty minutes later, the line went off again. Mr. Braswell stated that he and the lineman repeated the same routine: the lineman reset the breaker, and Mr. Braswell patrolled another portion of the line. Once again, resetting the breaker brought the power back on.

At about 2:30 p.m., Braswell learned that the power on this same line was down again. Following the same procedure, he got power returned to the appellees without discovering the actual problem. Mr. Braswell testified that he then inspected the full line. In a wooded area just before the end of the line, he discovered the problem — the wires were out of sag. He found the wires, normally four feet apart, merely inches apart. He resagged the line and had the lineman reset the breaker. The electricity returned to the line and remained on.

Braswell indicated that he did not discover the actual cause of the sagging lines until after Mr. Revels made his inquiry. Mr. Braswell then returned to the site and discovered that a tree had blown over, probably causing the problem.

In sum, Mr. Braswell patrolled various sections of the line on three separate occasions; yet, he did not find the problem until he inspected the entire line, after the power had repeatedly failed. As stated in Stacks, supra, “The company is required to use active diligence to discover defects in its system.” The evidence of record corresponds with the court’s finding that Rich Mountain Electric had not been actively diligent in pursuing the outage. After reviewing this evidence in the light most favorable to the appellees, Mr. Revels, Ms. High and Mr. Leach, we find that the evidence is not clearly against the preponderance.

RELEVANCY OF PHOTOGRAPHS

The relevancy of evidence is within the trial court’s discretion, subject to reversal only if an abuse of discretion is demonstrated. Bradford v. State, 306 Ark. 590, 815 S.W.2d 947 (1991); Turner v. Lamitina, 297 Ark. 361, 761 S.W.2d 929 (1988); Ryker v. Fisher, 291 Ark. 177, 722 S.W.2d 864 (1987). The test for determining whether photographs are admissible into evidence depends upon the fairness and correctness of the portrayal of the subject. Ryker, supra.

A.R.E. Rule 401 defines relevant evidence as evidence having any tendency to make the existence of the fact that is of consequence to the determination of the action more probable or less probable than it would be without that evidence. Although the definition of relevant evidence is broad, in order to be relevant, the evidence must be probative of the proposition toward which it is directed.

The photos depicted trees growing near power lines a year after the incident in question and in a different site. Further, they did not depict trees that were blown into power lines after a storm, as was the case in the power outage at issue.

The photos admitted into evidence did not fairly and correctly depict the situation at issue. They were not probative of the issue of whether the power company failed to clean up a situation after a storm, and for this reason, the trial court erred in accepting the pictures into evidence.

Although we find error on the part of the trial court, this error does not justify reversal. “[A] nonjury case should not be reversed because of admission of incompetent evidence, unless all of the competent evidence is insufficient to support the judgment or unless it appears that the incompetent evidence induced the court to make an essential finding which would not otherwise have been made.” Butler v. Dowdy, 304 Ark. 481, 803 S.W.2d 534 (1991).

Even though the photographs were inadmissible, the trial court based its ruling on Rich Mountain Electric’s failure to diligently pursue the cause of the outage, rather than on the photographs; for as the court stated, “[T]here is evidence that Defendant was negligent in that they could have more diligently pursued the cause of the outage.”

Accordingly, we find that the admission of the photographs was harmless error and that the trial court should be affirmed.

Affirmed.


author: Robert H. Dudley, Justice.

text:
    Carl William DIVELBLISS v. Laverne SUCHOR and Renell Suchor
    92-164
    841 S.W.2d 600
    Supreme Court of Arkansas
    Opinion delivered November 9, 1992

      Barber, McCaskill, Amsler, Jones & Hale, P.A., for appellant.

      Marc I. Baretz, for appellees.
   Robert H. Dudley, Justice.

We affirm the trial court’s denial of a motion to set aside default judgments in this case. In late November, 1989, plaintiff Laverne Suchor was standing inside a boom bucket, or cherry picker, atop a truck while stringing the city’s Christmas lights on Missouri Street in West Memphis. Defendant Carl Divelbliss was driving a tractor-trailer that was owned by co-defendant, Monroe Contractors Equipment, Inc. Royal Insurance Co. carried liability insurance on the tractor-trailer. The tractor-trailer, while being operated by Divelbliss, struck the plaintiffs rig, causing him to fall twenty to thirty feet to the ground and suffer severe and permanent injuries.

Plaintiff initially contacted an attorney in Memphis, but subsequently secured Arkansas counsel, Kent Rubens and Marc Baretz. On June 6, 1990, Rubens and Baretz filed suit for plaintiffs Laverne Suchor and Renell Suchor, husband and wife, against defendant Divelbliss and co-defendant Monroe Contractors. At about the same time, Lea Shedlock, a claims representative for Royal Insurance, contacted Rubens by phone. On June 8, 1990, Rubens wrote Lea Shedlock to advise her that he and Baretz represented plaintiffs. The material part of the letter is as follows:

We have taken over representation, and as I told you we have filed a complaint, a copy of which is enclosed. We have not sought to obtain service; however, our clients insist that we either show progress or we should proceed with it. We will forward the medicals to you as soon as possible.

On June 19,1990, Ms. Shedlock, the claims representative, responded, in part, as follows:

As we discussed, when I am in receipt of the medicals, I will be in contact with your office. Also, please forward your theory of liability. As of this date, I do not have your client’s version as to how this incident occurred.
I look forward to reaching a timely and equitable resolution.

On June 25, 1990, Rubens responded, in material part, as follows:

With regard to your request for a statement of liability, it seems that we have set that out in the pleading which I sent you. You want a statement from our client, but I am sure you realize that it will be in conformity with the allegations of the complaint. We are getting together all the medicals and the medical expenses for review, and we will be sending them to you shortly.

Between June 25 and August 1, there was no communication from Ms. Shedlock to Rubens or Baretz, and, on August 1,1990, Rubens attempted to have service of process upon both Divelbliss and Monroe Contractors. Service was never had on Monroe Contractors, but was perfected on Divelbliss on August 4, 1990. Divelbliss immediately give the summons and copy of the complaint to his employer, Monroe Contractors, who immediately forwarded the documents to Interstate Motor Carriers, the independent insurance agent for Monroe Contractors. The agent received the summons and complaint on August 8, 1990. The record does not disclose when the agent forwarded the summons and complaint to Royal Insurance, but it does show that the agent had not forwarded these documents by January 8, 1991, five months later. Obviously, Divelbliss was in default long before the agent forwarded the summons and complaint to the insurance company.

On September 18, 1990, Royal sent a letter to Rubens requesting medical reports, and on January 8, 1991, Royal sent letters to Monroe Contractors and Interstate Motor Carriers, the agent, warning of the possibility of a lawsuit.

On February 4, 1991, the trial court granted default judgments as to liability against Divelbliss since service had been perfected but no answer had been filed. The trial court heard evidence in open court on the amount of damages, and found that plaintiff Laverne Suchor had suffered damages in the amount of $200,000, and that plaintiff Renell Suchor had suffered damages in the amount of $25,000. Judgments were entered accordingly. On May 17,1991, Rubens notified Royal that the judgments had been taken, and three months later, on August 22, 1991, Royal took its first action when it caused Divelbliss to file a motion to set aside the default judgments. The motion was denied and Divelbliss appeals'.

Appellant first argues that the trial court committed reversible error in refusing to set aside the default judgments in their entirety. His argument centers around the recently amended A.R.C.P. Rule 55. On December 10,1990, we amended Rule 55 by making it more lenient, and allowing more discretion to trial courts in deciding whether to enter a default judgment. The amendment changed paragraph (a) to read:

When a party against whom a judgment for affirmative relief is sought has failed to appear or otherwise defend as provided by these rules, judgment by default may be entered by the court.

(Emphasis supplied.) Previously, the last clause of the paragraph read, “judgment by default shall be entered by the court.” (Emphasis supplied.)

Old Rule 55(c) listed the following factors that could warrant setting aside a default judgment: “Excusable neglect, unavoidable casualty, or other just cause.” The new Rule 55(c) reads as follows:

The court may, upon motion, set aside a default judgment previously entered for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) the judgment is void; (3) fraud, misrepresentation, or other misconduct of an adverse party; or (4) any other reason justifying relief from the operation of the judgment.

The new rule is more liberal in its treatment of default judgments and represents a preference for deciding cases on the merits rather than technicalities. Ark. R. Civ. P. 55 reporter’s note (1990).

The amended rule is a procedural rule, is remedial in nature and, accordingly, should be given retroactive effect. Forrest City Machine Works v. Aderhold, 273 Ark. 33, 616 S.W.2d 720 (1981). In addition, the effective date of the amended rule was before the date of the default judgments, and therefore, the amended rule is the applicable rule. Even applying the amended rule, the judgments on the issue of liability must be affirmed. We recently discussed the amended rule in B & F Engineering, Inc. v. Controneo, 309 Ark. 175, 830 S.W.2d 835 (1992). There, the agent for the insurance company received two summonses and complaints in two different actions stemming from the same accident. When the agent received the second summons and complaint, he mistakenly thought that the answer filed in response to the first suit also answered the second, and, as a result, failed to forward the second summons and complaint to the insurance company’s counsel. Our holding affirmed the trial court’s order granting default judgments. In reaching our decision, we held that the standard of review was whether the trial court abused its discretion, and we said that standard required us to consider the nature of the mistake causing a failure to respond on a case by case basis. Here, the insurance agent received a copy of the summons and complaint but did nothing with those documents for, at the very least, five months. There is no showing that the agent made an excusable mistake, or that there was some inadvertent occurrence, or that any excusable neglect took place. The trial court found, “The agent apparently did not tend to business.” The proof in the record discloses nothing more than carelessness on the part of the agent, and, on such proof, the trial court ruled correctly in refusing to set aside the default judgments.

Appellant also argues that the trial court erred in refusing to set aside the default judgments because Kent Rubens, the plaintiffs’ attorney, was guilty of misconduct. Appellant states:

The correspondence between Ms. Shedlock [the claims adjuster]'and appellees’ [plaintiffs’] attorneys reveal that the parties were working in a cooperative manner (at least in her mind) and that she was reasonable in expecting to be advised of service. Appellant submits that such failure to advise Ms. Shedlock that service had been obtained on Divelbliss constitutes “misconduct of an adverse party” sufficient to set aside the default judgment under Rule 55 (c) (3).

In her affidavit of August 16,1991, which was made a part of the motion to set aside the default judgments, Ms. Shedlock stated that she had a phone conversation with Rubens, and received the quoted letter and her understanding was that plaintiffs’ attorney “would withhold from obtaining service of process and advise me if and when service of process was obtained . . . . “However, the letter alone simply did not state that Rubens would notify her when service was obtained. Rather, the material part of it provides:. “We have not sought to obtain service; however, our clients insist that we either show progress or we should proceed . . . .” The record does not reveal the content of the phone conversation. It does reveal that, in preparation for the hearing on the motion to set aside the default judgments, the plaintiffs sought to obtain specific information from Ms. Shedlock about the phone conversation. By interrogatory plaintiffs asked: “Do you have any notes, diaries, memoranda of any phone conversations with the plaintiffs’ counsel concerning the above styled lawsuit?” Divelbliss responded:

Objection, Rule 33 of the Arkansas Rules of Civil •Procedure provides that Interrogatories may be served upon and answered only by parties to the lawsuit. Lea Shedlock is not even a named party to this lawsuit, no service has been obtained upon her and the Court has thereby acquired no jurisdiction over her person .... Therefore, to the extent that these discovery requests seek information from . . . Lea Shedlock, they are objectionable.

Ms. Shedlock refused to answer the interrogatory set out and refused to answer similar others. In sum, we cannot say the trial court was clearly erroneous in its implied ruling that there was no “misconduct” on the part of the plaintiffs’ lawyer, or that the trial court abused its discretion in its clear ruling that alleged “misconduct” on the part of the plaintiffs’ attorney was not the cause of the Divelbliss default. The trial court sagaciously observed that the cause of the default was not Rubens’ letter, but instead the cause was the failure of the agent to forward the summons and complaint.

Appellant next argues that the trial court erred in refusing to set aside the default judgments because Divelbliss was not given three days written notice of the application for the judgments. A.R.C.P. Rule 55(b) provides that if the party against whom the default judgment is sought has appeared in the action, he shall be served with written notice at least three days prior to the hearing on the application. Appellant tacitly admits that Divelbliss did not answer within the time specified, but contends that Ms. Shedlock’s contacts with Rubens constituted an “appearance” and, as authority for the contention, cites the case of H. F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689 (D.C. App. 1970). While the contacts in Livermore were much more extensive than the contacts in this case, and we could distinguish this case on that basis, we decline to do so because we choose not to follow the reasoning of that court.

We have cases decided before the adoption of the Arkansas Rules of Civil Procedure that hold that an “appearance” can be something other than the filing of a written pleading. For example, a defendant asking for a continuance constituted an appearance in Price v. Shope, 212 Ark. 420, 206 S.W.2d 752 (1948). In Spratley v. Louisiana & Arkansas Railway Co., 77 Ark. 412, 416, 95 S.W. 776, 777 (1906), we wrote:

There is no doubt but that where a party, who has not been served with summons, answers, consents to a continuance, goes to trial, takes an appeal, or does any other substantial act in a cause, such party by such act will be deemed to have entered his appearance.

The rationale is that the “appearance” was sufficient to constitute an implied waiver of the service of process. Price v. Shope, 212 Ark. at 421, 206 S.W.2d at 752. “Appearance” in all of our cases designates some overt act by which a party against whom a suit has been commenced submits himself to the jurisdiction of the court. Here, there was no act by which Divelbliss can be said to have impliedly waived the service of process or voluntarily submitted to the jurisdiction of the court prior to service. He took no action in court after service that would indicate an appearance. To the contrary, when his arguments are analyzed, they are the antitheses of a waiver of service. In this appeal, Divelbliss argues that the regular service of process was not sufficient, standing alone, to bring him within the jurisdiction of the court, but rather, in addition to that regular service, Rubens, because of his alleged misconduct, had a duty to notify the claims representative of service before Divelbliss could be brought within the jurisdiction. Below, he argued that Ms. Shedlock did not have to respond to an interrogatory as she was neither a party, nor within the jurisdiction of the court. These arguments are diametrically opposed to the concept that Divelbliss waived service of process through some act by Ms. Shedlock. In sum, Divelbliss did not make an appearance in the trial court until he filed a motion to set aside the default judgments.

Appellant’s final argument is that the judgments should be reversed with respect to the damages. Generally, whether a defaulting defendant is entitled to notice of a hearing on the amount of damages is a matter of state, not federal, law. Annotation, Defaulting Defendant’s Right to Notice and Hearing as to Determination of Amount of Damages, 15 A.L.R.3d 586 (1967). In Arkansas, a default judgment establishes the liability, but not the amount of damages. A hearing is required to determine the amount of damages, and the plaintiff is required to introduce evidence of the damages. B & F Engineering v. Controneo, 309 Ark. 175, 830 S.W.2d 835 (1992). Some jurisdictions require that notice of the hearing be given to a defaulting defendant even when he has never appeared, see synopsis of cases in Defaulting Defendant’s Right to Notice, supra, § 3, but the Arkansas rule, A.R.C.P. Rule 55(b), does not require that notice be given to a defaulting defendant who has not appeared. Perhaps the reason is that it would be superfluous to again serve a defendant who already received one notice but failed on an ongoing basis to respond. Because Divelbliss did not timely file an answer, and because he did not make a subsequent appearance, the plaintiffs were entitled to the default as to liability without further notice, and subsequently, upon proving their damages, they were entitled to the judgments in the amounts proven. The trial court did not err in refusing to set those judgments aside.

Affirmed.


text:
    Scott MANATT, Jr. v. STATE of Arkansas
    92-566
    842 S.W.2d 845
    Supreme Court of Arkansas
    Opinion delivered November 9, 1992

      Scott Manatt, for appellant.

      Winston Bryant, Att’y Gen., by: Teena L. White, Asst. Att’y Gen., for appellee.
   Robert H. Dudley, Justice.

Shortly after midnight on September 1, 1991, State Trooper Steve Shults was driving his police car on Highway 67 near the Missouri state line when he saw a pickup truck exceeding the speed limit while traveling south toward Corning. The trooper followed the truck, as it continued to exceed the highway speed limit, into a 45 m.p.h. zone in Corning, where he saw it veer across a yellow line. The trooper thought the driver of the truck might be intoxicated and stopped the truck at 12:26 a.m. The trooper got out of his car, and, as he was approaching the pickup, he glanced into the bed of the truck and saw a case of beer in cans, six bottles of beer, and four wine coolers. The trooper asked the driver for his license, looked at it, and saw that the driver, appellant Scott Manatt, Jr., was only sixteen years old. There were three other teenagers in the. truck. The trooper asked to whom the beer and wine belonged, and appellant responded that it was his. The trooper satisfied himself that appellant had not been drinking and shortly afterwards issued a citation to appellant as being a minor in possession of intoxicants, and let him go. The case was processed in the juvenile division of chancery court. The chancellor found that appellant was a delinquent juvenile because he had violated the statute prohibiting minors from possessing intoxicants. He entered an order denying appellant’s driving privileges for one year, but allowed him to drive to and from work and school. Court costs amounted to $35.00. Appellant makes five assignments of error, and those assignments, in turn, contain many subpoints. Some of the subpoints are not easily followed, but we are satisfied that there is no merit in any of them and, accordingly, affirm.

Appellant’s first point is:

UNDER RULE 29(l)(a), IT IS ALLEGED THAT THE LOWER COURT ERRED IN FAILING TO ENJOIN THE USE OF THE JUVENILE CODE AS FAILING IN EQUAL PROTECTION OF THE LAWS OF THE 14TH AMENDMENT TO THE U.S. CONSTITUTION AND ALSO FAILED TO ACCORD TO PERSONS UNDER THE AGE OF 18 YEARS PRIVILEGES OR IMMUNITIES WHICH UPON THE SAME TERMS SHALL BELONG TO ALL CITIZENS UNDER ARTICLE 2, SECTION 18 OF THE ARKANSAS CONSTITUTION, JURISDICTION-ALLY TREATING CITIZENS 18 TO 21 DIFFERENTLY THAN THOSE 16 TO 18 FOR THE SAME OFFENSE.

In this point appellant contends that the juvenile code is unconstitutional and that we should enjoin its use because, when a juvenile violates a criminal statute, he is subjected to more severe penalties than would be an adult for violating the same statute. We do not reach the merits of the argument because appellant was not sentenced under the juvenile code. Appellant was given a citation for being a minor in possession of intoxicating liquor. See Ark. Code Ann. § 3-3-203 (1987). The chancellor found that he violated the statute and consequently found him to be a delinquent juvenile. See Ark. Code Ann. § 9-27-303(11) (Repl. 1991). Without objection, the chancellor applied Ark. Code Ann. § 5-64-710 (1987), a part of the criminal code, and suspended his driving privileges. The criminal code provides that the trial court shall deny driving privileges when a person who is less than eighteen years old is found guilty of a criminal offense involving the illegal possession of alcohol. This penalty, denial of a driver’s license, “shall be in addition to all other penalties.” Ark. Code Ann. § 5-64-710 (Supp. 1991).

The salient fact is that there was no “disposition,” such as commitment to a youth services center, probation, or fine, as provided for in Ark. Code Ann. § 9-27-330 (1987), the statute that appellant contends unconstitutionally provides excessive punishment for juveniles. Instead, the only “disposition” was to deny appellant the privilege of holding a driver’s license as provided for in the criminal statute and driver’s license statute, and, by statute, that is to be “in addition to all other penalties.”

In order to have standing to challenge the constitutionality of a statute, a party must demonstrate that the challenged statute had a prejudicial impact on him. Montgomery v. State, 277 Ark. 95, 640 S.W.2d 108 (1982). Here, the challenged statute had no impact on appellant, and, therefore, he has no standing to challenge it. In his reply brief the appellant contends that he has standing because court costs were assessed against him under the juvenile code, but he has not shown that court costs are discriminately applied in juvenile court. Accordingly, we affirm the trial court’s refusal to enjoin the use of the juvenile code.

Appellant’s second assertion of error is:

THE LOWER COURT ERRED IN FAILING TO TREAT THE OVERBROAD DEFINITION OF “JUVENILE DELINQUENT” AS VOID FOR VAGUENESS BY FAILING TO FIND ACA 9-27-303 SUB PARAGRAPH 11 AS VOID FOR VAGUENESS AND BEING OVERBROAD WHICH DEFINITION CREATES AS A DELINQUENT EVERY CHILD IN ARKANSAS AT SOME TIME BEFORE ITS 18TH BIRTHDAY AS A JUVENILE.

The primary contention under this point is that the definition of “delinquent juvenile” contained in Ark. Code Ann. § 9-27-303(11) (1987) is facially void for vagueness. Appellant does not contend that the statute he was found to have violated, “minor in possession of intoxicants,” is void for vagueness. Rather he argues that the definition of “delinquent juvenile” is void. Since there was no disposition of appellant under this definition, we do not need to reach the issue, but we do discuss it in a summary manner only as a prelude to another of his subpoints.

The statute defines the term “delinquent juvenile” as any juvenile ten years old or older who has committed an offense that would constitute a felony, misdemeanor, or violation for an adult, excepting traffic offenses and game and fish violations. The statute sets out the age of a juvenile offender, and it defines the type of behavior that will cause one to be classified as a delinquent juvenile. Under the definition, a juvenile would only have to look to the criminal code and city ordinances to find the proscribed acts. Thus, the statute is not facially void. See State v. Torres, 309 Ark. 422, 831 S.W.2d 903 (1992), for a complete discussion of the standard for determining whether a statute is void for vagueness.

Appellant alternatively argues that if the definition is not vague, and if it is literally followed, it is overbroad because it subjects every juvenile to being declared a delinquent. Appellant did not offer any empirical data to sustain this argument. The only data on the subject of which we are aware, and of which we can take judicial notice, are the statistical publications of the Administrative Office of the Courts and the United States Census, and this data does not sustain appellant’s contention. Thus, the chancellor did not err in refusing to declare the juvenile code unconstitutional because the definition of “delinquent juveniles” is overbroad.

Also under the same point of appeal appellant contends that the statute he was convicted of violating, being a minor and possessing alcohol, is in violation of the Equal Protection Clause. Citing our legal drinking age of twenty-one, appellant contends that all persons who are under the age of twenty-one, and who possess alcohol, must be treated the same, but, under our statute, only persons less than eighteen years old lose their driver’s license when they possess intoxicants. Such an argument loses sight of the fact that a person reaches majority in this State at the age of eighteen years, Ark. Code Ann. § 9-25-101 (1987), and it is only minors who are subject to losing their driving privileges under this act. It is adults over the age of eighteen, but under the age of twenty-one, who cannot purchase intoxicants, who might make a hollow equal protection argument. In addition, in Carney v. State, 305 Ark. 431, 808 S.W.2d 755 (1991), we set out the basis for this dichotomy, and we held that it is rational and, consequently, not unconstitutional. We need not repeat that reasoning here.

Appellant’s third point of appeal is:

THE COURT ERRED IN EXERCISING JURISDICTION BEYOND ITS JURISDICTION BY ENFORCING ACT 93 OF 1989 ACA 5-65-116 WITHOUT REGARD TO ACT 1109 OF ACTS OF THE LEGISLATURE OF 1991 ACA 27-16-915 AND FAILING TO FIND THAT THE 1989 ACT WAS AMENDED BY THE 1991 ACT AND BY IMMEDIATE IMPOSITION OF THE RULING OF THE COURT WITHOUT REGARD TO THE DEFENDANT’S RIGHT TO APPEAL AND BY LETTER RULING DISALLOWS ANY STAY AGAINST IMPOSITION PENDING APPEAL.

Appellant contends that Ark. Code Ann. § 5-65-116 (Supp. 1991), the part of the criminal code passed in 1989 that provides for the suspension of driver’s licenses of juveniles under eighteen who commit offenses involving intoxicants, was repealed by implication by Ark. Code Ann. § 27-16-916 (Supp. 1991), a part of the code dealing with driver’s licenses that was passed in 1991.

The two statutes are not in conflict, and one does not repeal the other by implication. The criminal code section 5-65-116 provides that a person under eighteen who is convicted of driving while intoxicated, or who illegally possesses alcohol or a controlled substance, shall lose his driver’s license. On the other hand, the driver’s license statute, section 27-16-915, provides that any person, regardless of age, who illegally uses or possesses controlled drugs, as they are defined by the Controlled Substances Act, shall lose his driver’s license. Thus, there was no repeal of that part of the criminal code providing for the loss of a driver’s license by a person under eighteen years of age when he is found guilty of an offense involving intoxicants. In addition, this court has stated that repeal by implication is not favored. Johnson v. Sunray Serv., Inc., 306 Ark. 497, 816 S.W.2d 582 (1991).

Under this same assignment of error appellant makes an additional equal protection argument. He contends that there is an unconstitutional disparity in the way section 5-65-116 treats juveniles under eighteen as compared to the way it treats adults, and also in the way it treats juveniles under eighteen compared to the way it treats people eighteen, nineteen, or twenty years of age. We do not reach the first subpart of this argument because an adult cannot be convicted of the offense of possession of intoxicating liquor by a minor. See Ark. Code Ann. § 3-3-203 (1987). With regard to the second subpart of the argument, a person reaches majority in this State at the age of eighteen, Ark. Code Ann. § 9-25-101 (1987), and there is a rational basis for taking the privilege of driving from a minor who possesses intoxicants. Carney v. State, 305 Ark. 431, 808 S.W.2d 755 (1991). Under a different statute, a person must be twenty-one years of age before he can lawfully possess intoxicants. Ark. Code Ann. § 3-3-203 (1987). As we have already set out in the second assignment of error, there is a rational basis for treating minors under the age of eighteen differently from adults who have not yet reached the lawful drinking age of twenty-one.

Appellant makes yet another subargument under this assignment of error, “[T]he lower Arkansas trial court is acting beyond its jurisdiction in denying the Appellant an opportunity to appeal . . . .” We summarily dismiss this argument as we are now hearing this case on appeal.

Appellant’s fourth assignment of error is:

THE COURT ERRED IN ALLOWING THE JUVENILE INTAKE OFFICER AS ITS APPOINTEE AND ADVISER TO MAKE AN EXPARTE RECOMMENDATION TO THE COURT BY WRITTEN RECOMMENDATION PRIOR TO AN ADJUDICATION OF GUILT DURING THE TIME THAT THE COURT WAS SITTING AS A TRIER OF FACT AND INJECTING THE COURT INTO THE ROLE OF AN ADVOCATE.

Appellant’s first argument under this assignment of error is that the trial court violated Ark. Code Ann. § 9-27-321 (Repl. 1991), which provides that a statement made by the juvenile to the intake officer shall not be admissible in evidence against the juvenile. There simply was no statement to an intake officer that was admitted into evidence. An incriminating statement made to the trooper was admitted into evidence, but that is not prohibited by the cited statute.

Additionally under this assignment, appellant argues that the trial court abused its discretion in allowing the intake officer to sit at counsel table with the deputy prosecutor during this proceeding, and that the trial court erred in allowing the intake officer to make the recommendation that appellant’s driver’s license should be suspended for one year. Again, we treat the matter summarily because, even if appellant’s arguments were valid, there was no possible prejudice. There is no doubt appellant wás a minor and that he was in possession of intoxicants, and the applicable statute provides that in such case the trial court is required to suspend the minor’s driver’s license. See Ark. Code Ann. § 5-65-116 (Supp. 1991).

Appellant next argues that this case should be reversed because the chancellor took an adversary posture at trial. The argument is based upon the following: At the beginning of the case the chancellor asked appellant’s attorney: “How old is your son?” and, during the trooper’s testimony, appellant made an objection, based on the lack of a Miranda warning. The trial court then asked five pertinent questions of the trooper before ruling. One of these questions was: “How did he claim ownership?” Appellant cites no authority that these questions by the court were improper in a juvenile hearing, and we know of none. When a party cites neither cases, nor authority for an argument, nor gives a convincing argument, and the argument has no readily apparent validity, we will not further consider the matter. Brown v. Minor, 305 Ark. 556, 810 S.W.2d 334 (1991).

In his final assignment of error, appellant contends:

THE COURT ERRED IN FINDING A LINK BETWEEN THE POSSESSION OF ALCOHOL, AND THE DRIVER OF A VEHICLE, AND IN ALLOWING ALLEGED STATEMENTS BY THE DEFENDANT WITHOUT BENEFIT OF MIRANDA WARNINGS BY AN OFFICER STOPPING A JUVENILE WHEN THE QUESTIONS AND ANSWERS OF THE TARGETED JUVENILE RESULT IN ARREST AND COMPLETING A “LINK.”

Appellant makes a number of arguments under this assignment of error, but all but one of them are based upon the contention that the trial court erred in allowing the trooper to testify that appellant admitted that the intoxicants were his because the officer did not give a Miranda warning to appellant. The ruling was correct. Here, the officer issued a citation in lieu of an arrest. See A.R.Cr.P. Rules 5.1 and 5.2. The officer did not take appellant into custody. In Berkemer v. McCarthy, 468 U.S. 420 (1984), the United States Supreme Court held that persons temporarily detained pursuant to a routine traffic stop are not “in custody” for purposes of Miranda. The Court reasoned that Miranda warnings were not required in such cases because the stop was temporary, it was in public, and the atmosphere on a public street is not comparable to the “police dominated” custodial interrogation. The Court held that a motorist who is detained pursuant to a traffic stop is entitled to a recitation of his rights only when the stop becomes such that he is “subjected to treatment that renders him ‘in custody’ for practical purposes.” Id. at 440.

Finally, in two separate subarguments, appellant contends that this case should be reversed because the trial court did not act in an impartial manner and that there was a “predisposition” to “make an example out of this defendant.” The record does not show that the trial court acted unfairly or partially in any manner, or sought to make an example of appellant. We consider the argument to be disrespectful of the trial court and in violation of Rule 6 of the Rules of the Supreme Court and Court of Appeals, but, rather than take punitive action, we state that the argument is completely without a basis and inappropriate.

Affirmed.

Newbern, J., not participating.


author: Robert H. Dudley, Justice. Donald L. Corbin, Justice,

text:
    TROUTT BROTHERS, INC. d/b/a The Jonesboro Sun, John Troutt, Jr. and Larry Fugate v. Larry EMISON, Sheriff of Craighead County and T.R. “Dickie” Howell, His Chief Deputy
    92-522
    841 S.W.2d 604
    Supreme Court of Arkansas
    Opinion delivered November 9, 1992

      Penix, Penix & Lusby, by: Bill Penix and Robin Nix, for appellants.

      Henry, Walden, Davis & Halsey, by: Mike Walden, for appellees.
   Robert H. Dudley, Justice.

This appeal requires us to construe the Freedom of Information Act, Ark. Code Ann. §§ 25-19-101 — 108 (Repl. 1992). Two sixteen-year-old girls and one fifteen-year old girl were arrested in Mississippi County. One was arrested for stabbing a victim to death, another for carrying a deadly weapon, and the third for felony theft. After their arrests, the three were transported to the Craighead County Juvenile Detention Center, a regional facility. Under the governing statutes, the two sixteen-year-old girls could have been charged as adults, Ark. Code Ann. § 9-27-318 (Repl. 1991), and treated as adults, or they could have been charged as juveniles and would have remained in the juvenile detention facility until the juvenile division of the chancery court ordered otherwise. See Ark. Code Ann. §§ 9-27-326, 327 (Repl. 1991) & § 9-28-209 (Supp. 1991). If the fifteen-year-old were the one arrested for stabbing her victim to death she too might have been charged as an adult, see Ark. Code Ann. § 9-27-318(b)(1) (Repl. 1991), or she might have been charged as a delinquent juvenile offender. See Ark. Code Ann. § 9-27-303(11) (Repl. 1991). The salient fact is that none of the juveniles had been charged in the juvenile division of chancery court at the time the issue in this case arose, and, therefore, no juvenile proceedings had been commenced. Ark. Code Ann. § 9-27-310 (Repl. 1991). Subsequent testimony showed that both of the sixteen-year-old girls were later charged as adults in circuit court, one being charged with capital murder, and the other being charged in connection with another homicide. The fifteen-year-old was charged as a delinquent juvenile.

While in the regional juvenile facility, the three detainees attacked a matron, broke several of her ribs while overpowering her, took the keys to the facility and to her car, got out of the facility with one of the keys, and, with the use of the other key, escaped in her car. Newsroom employees of the Jonesboro Sun heard the police broadcasts of the escape through use of a radio scanner. Larry Fugate, the managing editor of the Sun, immediately went to the facility to ask what had happened. The Craighead County Juvenile Detention Facility is located in the same building as the Craighead County Jail, or adult jail, but the two facilities are separate. They have separate entrances, separate facilities, separate records, separate personnel, and separate standards. Upon arriving at the building Fugate asked Dickie Howell, Chief Deputy Sheriff of Craighead County, for the names of the escapees. The deputy sheriff responded that he understood the law to be that the names of juvenile offenders were not to be released and, accordingly, did not divulge the girls’ names. Later, he refused to allow Fugate to see the logs and booking sheets on the girls. The Sun filed suit in circuit court against Sheriff Larry Emison and Deputy Dickie Howell asking that the names and records be made public information. The trial court examined applicable statutes, considered the possibility that the General Assembly did not word one of statutes as it intended, and, in this case of first impression, concluded that the public policy in favor of keeping juveniles’ names confidential outweighed the public policy represented by the Freedom of Information Act. Accordingly, the trial court found no violation of the Freedom of Information Act. We reverse, primarily because the legislative branch rather than the judicial branch can create exceptions to the act, and the legislature has not created an exception specifically applicable to this set of facts.

The Arkansas Freedom of Information Act provides in pertinent part:

Except as otherwise specifically provided by this section or by laws specifically enacted to provide otherwise, all public records shall be open to inspection and copying by any citizen of the State of Arkansas during the regular business hours of the custodian of the records.

Ark. Code Ann. § 25-19-105(a) (Repl. 1992) (emphasis added). This language provides that only the General Assembly can create exceptions to the FOIA. We have followed this directive and have required that a statute specifically provide for nondisclosure before we will exempt a public record from the act. See Legislative Joint Auditing Comm. v. Woosley, 291 Ark. 89, 722 S.W.2d 581 (1987). Therefore, the issue is whether there is a statute that specifically provides for the exemption of the names of juveniles arrested for felonies, but not. charged as delinquent juveniles, and whether detention facility logs and booking sheets of juvenile detention facilities are exempt.

Deputy Sheriff Howell obviously thought that a part of the juvenile code, Ark. Code Ann. § 9-27-348 (Repl. 1991), provided for the exemption. However, the language of that exemption is as follows:

No information whereby the name or identity of a juvenile who is the subject of proceedings under this subchapter may be ascertained shall be published by the news media without written order of the juvenile court. [Emphasis supplied.]

Another statute, Ark. Code Ann. § 9-27-310(a) (Repl. 1991), provides that juvenile “[proceedings shall be commenced by filing a petition with the clerk of the chancery court or by transfer by another court.” Thus, these juveniles were not “the subject of proceedings,” and the exemption does not specifically apply. This construction of the statute is confirmed by the phrase “without written order of the juvenile court,” which clearly means that the exemption is to apply only to cases filed in the juvenile court.

One might argue that our construction of these statutes defeats, to some extent, the public policy of shielding juvenile offenders since our construction leaves a window of time, between the arrest and the charge, in which the name of a delinquent juvenile can be discovered. However, that result is in accordance with the language of the statute. If it is to be changed, it should be changed by the General Assembly and not by this court. If the General Assembly wants to declare the public policy to be that the names of all juvenile offenders are exempt public records, whether the juvenile is charged, or if charged, whether charged in juvenile court or in circuit court, it knows how to do so.

However, the General Assembly might not choose to create such a blanket exemption. One of these cases is a good example. There was testimony that the juvenile, who was charged as an adult with the crime of capital murder, stabbed her victim twenty-two times, then attacked the matron, escaped, and was loose in public. The General Assembly might well think that, for its safety, the public had a right to know the name or see a picture of such a dangerous escapee. But again, that is not for this court to decide. Our long standing position is clear. FOIA exemptions are to be narrowly construed, Hengel v. City of Pine Bluff, 307 Ark. 457, 821 S.W.2d 761 (1991), and when the legislature “is less than clear in its intendments, then privacy must yield to openness and secrecy to the public’s right to know.” Ragland v. Yeargan, 288 Ark. 81, 86, 702 S.W.2d 23, 25 (1986). Accordingly, we hold that this statute does not provide an exemption to FOIA.

Appellees also contend that two federal statutes provide for nondisclosure in these cases. The statutes, 42 U.S.C. §§ 5676 and 5731 (1988) are a part of the federal program for assisting states with their juvenile justice systems. Under the federal program the states submit plans to the Office of Juvenile Justice and Delinquency Prevention in order to receive grant money. 42 U.S.C. § 5633 (1988). If the states do not comply with the federal program they will not receive grant money. The first of the statutes, 42 U.S.C. § 5676, provides:

Except as authorized by law, program records containing the identity of individual juveniles gathered for purposes pursuant to this subchapter may not be disclosed without the consent of the service recipient or legally authorized representative, or as may be necessary to carry out this subchapter. Under no circumstances may program reports or findings available for public dissemination contain the actual names of individual service recipients.

The first sentence above protects “program records.” Here, the citizen asked the public official for the names of the girls before they were charged in any court. At that time their names were not part of the juvenile program records. In fact, two of the names never became part of the juvenile program records. Accordingly, we cannot say that this provision specifically provides for exemption. The same reasoning applies to the second sentence which prohibits printing the names of juveniles in “program reports or findings available for public dissemination.”

The second of the federal statutes advanced by the appellees as proving an exception is 42 U.S.C. § 5731. However, that statute is a part of the subchapter entitled “Runaway and Homeless Youth” and is simply not applicable to the case at bar.

The cited federal statutes are not laws “specifically enacted” to countermand the Arkansas FOIA’s general rule that public records must be available, and we hold that they do not provide an exemption. We are aware that this holding may make it more difficult for the State to receive federal funding for its juvenile justice program. One authority has written on the subject. See Watkins, The Freedom of Information Act: Time For A Change, 44 Ark. L. Rev. 535 (1991). But again, if a change in the state act is to be made, it must be made by the legislature. Until it is changed we hold that a federal law which does not prohibit disclosure, but only provides for the loss of funds if the information is disclosed, does not supersede the state FOIA. Accord, Student Bar Assoc. v. Byrd, 239 S.E.2d 415 (N.C. 1977).

Reversed and remanded for proceedings consistent with this opinion.

Corbin, J., dissents.

Donald L. Corbin, Justice,

dissenting. The majority directs the reader’s attention to the Arkansas Freedom of Information Act, Ark. Code Ann. §§ 25-19-101 to -107 (Repl. 1991), which provides in pertinent part:

Except as otherwise specifically provided by this section or by laws specifically enacted to provide otherwise, all public records shall be open to inspection and copying by any citizen of the State of Arkansas during the regular business hours of the custodian of the records.

Ark. Code Ann. § 25-19-105(a) (Repl. 1992) (emphasis added).

This court, very laudably, has followed the basic precept that the objectives of the FOIA are such that whenever the legislature fails to specify that any records in the public domain are to be excluded from inspection, then privacy must yield to openness. Ragland v. Yeargan, 288 Ark. 81, 702 S.W.2d 23 (1986). We have with lock-step precision consistently affirmed the view that the FOIA should be interpreted broadly and exceptions narrowly in order to counterbalance the self-protecting interests of governmental bureaucracy, McCambridge v. City of Little Rock, 298 Ark. 219, 766 S.W.2d 909 (1989). This is as it should be in order to safeguard the citizens rights to openness of government.

The Arkansas Juvenile Code of 1989 provides that “[a] 11 records may be closed and confidential within the discretion of the court.” Ark. Code Ann. §9-27-309(a) (Repl. 1991). The Juvenile Code further provides that “[n]o information whereby the name or identity of a juvenile who is the subject of proceedings under this subchapter may be ascertained shall be published by the news media without written order of the juvenile court.” Ark. Code Ann. § 9-27-348 (Repl. 1991). I read these two provisions to encompass the FOIA.

The majority notes that Ark. Code Ann. § 9-27-310(a) (1987) states that proceedings are commenced with the filing of a petition and that since no petition had been filed these juveniles were not subject to the discretion of the court. I do not believe the legislature intended this statement to be a definition of “proceedings” as used in section 9-27-348. Such an interpretation would result in a situation where the records of any juvenile being held in a juvenile detention center could be released just because the juvenile justice system had not yet permitted a petition to be filed. What an absurd result — it would render the policy of protecting juveniles’ identity absolutely meaningless. Thus, the majority holds today that it makes no difference that while a juvenile is held in a juvenile detention center awaiting charges on a matter that could possibly come before the juvenile court, his or her identity and any records relating thereto are subject to publication by the media without the prior approval of the juvenile court. This is so simply because the authorities have not yet filed a petition to trigger the “proceedings.”

There is an additional reason for affirming this case and that is the fact that these juveniles were being held in a federally funded juvenile facility which is housed in the same facility as the Craighead County Jail. The means to hold these juveniles in a regional juvenile facility were provided by our federal government. In order to receive federal funds, this regional juvenile detention center was subject to the following provision of Juvenile Justice Detention and Prevention Act (JJDPA):

Except as authorized by law, program records containing the identity of individual juveniles gathered for purposes pursuant to this title [ 42 U.S.C. §§ 5601 et. seq.} may not be disclosed without the consent of the service recipient or legally authorized representative, or as may be necessary to carry out this title. Under no circumstances may program reports or findings available for public dissemination contain the actual names of individual service recipients.

42 U.S.C. § 5676 (emphasis added).

The majority opinion places in jeopardy not only the juvenile detention center in Craighead County, but also any other juvenile facility in our state-in which is federally funded and faced with a request similar to the one made in this case. The majority opinion thus forces our juvenile facilities to make a Hobson’s choice — a choice of violating the Juvenile Code with its policy of protecting juveniles’ identities or violating the JJDPA and losing federal funding. This is the point at which the precision of the majority loses touch with reality by opining that the Juvenile Code and the federal act in question are not applicable as exceptions to the FOIA. I fail to see that our legislature acted irresponsibly in this respect.

This court has faced conflicting public policies courageously in times past. Today’s decision impairs, even more so than previous decisions, the concept of a juvenile system of justice; a concept which was approved as a Constitutional Amendment, after the passage of the FOIA, and for which a whole tier of new judges was authorized and funded (who may not have anything to do if this court continues to chip away the Juvenile Code). Today’s decision is a significant chip at the Juvenile Code because it not only threatens the regional juvenile facility in question, but also threatens any other juvenile facilities who have received federal funding under the JJDPA. Our juvenile facilities may now find their funds cut off because of today’s requirement of disclosure of the names of juveniles who are being held in a federally funded juvenile detention center while awaiting the filing of formal charges.

Sometimes, we create more problems than we solve. Fortunately, the legislature is set to go into session, otherwise the decision today would be a disaster.


author: Steele Hays, Justice.

text:
    Lee Edward ELLIS and Lereatha Ellis v. Dennis J. LITER and Marlene K. Liter and Boatmen’s National Bank of St. Louis
    91-348
    841 S.W.2d 155
    Supreme Court of Arkansas
    Opinion delivered November 9, 1992

      Davidson Law Firm, Ltd., by: Charles Phillip Boyd, Jr., for appellant.

      Bridges, Young, Matthews, Holmes & Drake, by: David L. Sims, for appellees.

      Pierce, Stanley & Robinson, by: William S. Robinson, for appellees Dennis J. Liter and Marlene K. Liter.
   Steele Hays, Justice.

Lee Edward Ellis and Lereatha Ellis brought this action alleging that a home purchased by the Ellises from Dennis and Marlene Liter and Boatmen’s National Bank of St. Louis in 1979 was misrepresented. The trial court directed a verdict in favor of the Liters and Boatmen’s and the Ellises have appealed. We affirm as to Boatmen’s and reverse as to the Liters.

When Dennis was reassigned to another area by his employer, Southwestern Bell, Southwestern Bell offered to help with the sale of the Liters’ home. The Liters agreed and Southwestern Bell secured the services of Boatmen’s National Bank of St. Louis. Boatmen’s worked with clients like Southwestern Bell and its employees who were relocating. Boatmen’s clients would “turn over” the properties to the bank (the details of these arrangements are not explained) and the bank would seek buyers for the properties.

It appears that Boatmen’s hired the Norton and Dunklin Real Estate Agency to secure a buyer for the Liter home. Norton and Dunklin were handling the Liters’ house and sold it to the Ellises through one of their agents, Evelyn Edington. The offer and acceptance is signed by the Ellises as buyers, and Ms. Edington as the seller. The warranty deed reflects a sale by the Liters to the Ellises.

After the Ellises moved in they encountered problems with the house, but were unable to determine the cause. In 1987 Mr. Ellis went to the office of the city clerk and discovered a statement by a building inspector at the time the house was built referring to a crack in the foundation. Ellis also found a waiver signed by the Liters stating they were aware of the crack but would not hold anyone responsible for problems which might result. The Ellises also learned the crack could ultimately cause serious problems and would be expensive to remedy. At that point the Ellises filed suit against the Liters and Boatmen’s, charging them with misrepresentation in the sale of the home.

The case was tried on April 19, 1991. When the plaintiffs rested, both Boatmen’s and the Liters moved for a directed verdict. The trial court granted the motion on the premise that the Ellises had not made a prima facie case against Boatmen’s because they failed to show Boatmen’s had any knowledge there was a crack in the foundation, and against the Liters because the defect was insignificant at the time the house was sold.

The Liters

The trial court found that if in fact there had been a misrepresentation by the Liters, a directed verdict was appropriate because the misrepresentation was not a material one. The trial court expressed doubt that anyone knew it was a serious problem when the Ellises bought the house in 1979:

Now that’s sort of going in the back door , but I’ve been wondering all along how would they know in 1980 — ’89 or ‘87 whenever they —’70 —’78 when they sold the house, how could the Liters know that there was a significant problem that they needed to reveal to anybody.
***
... I frankly doubt if the normal housewife or the normal house owner that knows nothing about concrete would be terribly disturbed about a hairline crack in the foundation.
***
. . . Now ten years later somebody finds some little something insignificant they thought, I suppose. But you don’t have a fact question to go to the jury.

We believe it was error to direct a verdict. The materiality of a misrepresentation is not a matter for the trial court but for the fact-finder. In Southern Equipment & Tractor Co. v. K & K Mines, 272 Ark. 278, 613 S.W.2d 596 (1981), we wrote:

To prove materiality of a misrepresentation, it is only necessary to show the misrepresented fact was a material influence on the decision; it must have been a substantial factor, but it is not necessary that it was the paramount or decisive inducement. This is a question of fact for the fact-finder. [Our emphasis.] Prosser, Law of Torts, 4th Ed. § 108; also see 37 Am. Jur. 2d Fraud and Deceit § § 177 and 178.

Prosser elaborates in his fifth edition at § 108:

The party deceived must not only be justified in his belief that the representation is true, but he must also be justified in taking action on that basis. This usually is expressed by saying that the fact represented must be a material one. There are misstatements which are so trivial, or so far unrelated to anything of real importance in the transaction, that the plaintiff will not be heard to say that they substantially affected his decision. Necessarily the test must be an objective one and it cannot be stated in the form of any definite rule, but must depend upon the circumstances of the transaction itself. . . . Thus, in particular cases, matters entirely collateral to a contract, and apparently of no significance to any reasonable man under the circumstances, have been held to be immaterial; the defendant’s social, political and religious associations; his motive or purpose in entering into the bargain; the details of a seller’s title, where good title is still conveyed; a false financial statement which still gives an accurate picture; the identity of the party for whom a purchase is made; and many other items of similar nature.
On the other hand facts to which a reasonable man might be expected to attach importance in making his choice of action, such as the identity of an individual or the directors of a corporation with whom he is dealing, the character of stock sold as treasury stock, the age, horse power and capacity of an automobile, the train service to a suburb . . . have been held to be material. The question is frequently for the jury whether the statement made might justifiably induce the action taken.

W. Page Keeton et al., Prosser & Keeton on the Law of Torts § 108, at 753-754 (5th ed. 1984).

As Prosser suggests, there may be matters so clearly trivial and unimportant that they could be said to be immaterial as a matter of law, but that is not the situation before us. We cannot say as a matter of law that a defect in the foundational structure of a home can be relegated to the trivial status comparable to that discussed in Prosser, supra. Nor can we say as a matter of law that the Ellises were not justified in treating the defect as posing a material influence on their decision. Furthermore, Mr. Mann, the original inspector of the house, testified the crack posed a very serious problem that would be expensive to rectify. Even the Liters testified they would want to be told about such a defect. Mr. Liter testified:

Q: Now, Mr. Liter, did you ever at any time during the course of this transaction communicate or tell Mr. and Mrs. Ellis sitting over there about this crack — this problem with the house you were selling? Did you ever tell them?
A: No sir. Eve never met them or even seen them before today.
Q: Did you make any effort to try to tell them?
A: No sir.
Q: Don’t you think that’s something that they needed to know before they bought the house?
A: Well, I certainly think so, yes, sir.
Q: You didn’t — in fact, you would want to know about that crack if you had been buying the house, wouldn’t you?
A: Yes, sir.

And Mrs. Liter testified:

Q: Okay. I also asked at that deposition, [Mrs. Liter] if you were purchasing a house and there was a crack in the slab running the length of one of the rooms in the house, I asked you — wouldn’t you want to know about it?
A: Yes, I would want to know about it.

Whether a crack in the foundation was a material fact in this case was a question for the jury. As to the trial court’s comment that even if the Liters had known about the crack there may not have been any culpable intent on their part because they thought it was not a significant problem, this too is clearly a question for the jury— a credibility matter as to the defendant’s intent.

Additionally, there was actually an admission of awareness of the seriousness of the crack on the part of Mrs. Liter. She testified about appraisers who had come to the house prior to their selling to the Ellises, and stated that one of the appraisers who was aware of the crack, apparently through the inspector’s note and the Liters’ waiver of the previous year, commented to her about the crack and told her that he had been a building inspector and he would never have approved the house in that condition.

The trial court referred to the Liters having signed a waiver of liability by the builders for the defect as an indication the problem was minor. However, why the Liters ultimately signed the waiver is not revealed and the waiver alone is not sufficient to remove this issue from the jury. To the contrary, it goes to the question of credibility as to the Liters’ intent. “In cases of deceit, the credibility of the witnesses is all important in determining liability, and it is the trier of fact that is the sole judge of the credibility of the witnesses and of the weight and value of the evidence.” Nicholson v. Century 21, 307 Ark. 161, 818 S.W.2d 245 (1991).

Boatmen’s

The trial court granted a directed verdict for Boatmen’s on grounds that the appellants had failed to prove any knowledge on Boatmen’s part of the crack in the foundation. The trial court was correct.

When the record is read in its entirety, it is clear the appellants failed to establish that any information about the crack ever reached Boatmen’s. The evidence was simply inconclusive that Boatmen’s had any awareness of the original building inspector’s report, or the appraiser’s report. There is evidence that appraisers visited the property when the Liters planned to sell, in 1979, and that one of them mentioned the crack to Mrs. Liter at that time. However, there is no evidence that it was Boatmen’s which hired the appraisers and therefore had even constructive knowledge of the crack. While the record indicates that in all likelihood the appraisers were hired either by Southwestern Bell or Boatmen’s there is nothing conclusive in the record as to hiring and a finding by a jury would be based solely on speculation.

For the same reasons, a negligence theory, which appellants also advance, must fail because the information of the crack was never shown to come within Boatmen’s purview, even constructively.

Appellants argue alternatively that Boatmen’s is liable under either strict liability or breach of warranty. However, these theories were not raised in the complaint nor were they argued to the trial court. Johnson v. Ramsey, 307 Ark. 4, 817 S.W.2d 200 (1991).

Reversed in part and affirmed in part and remanded.