author: Carleton Harris, Chief Justice.

text:
    Welborne v. Preferred Risk Insurance Co.
    5-2262
    340 S. W. 2d 586
    Opinion delivered December 5, 1960.

      Little & Enfield, J. R. Crocker and J. F. Robinson, for appellant.

      Dickson, Putnam & Millwee, Wright, Lindsey, Jennings, Lester <& Shults, for appellee.
   Carleton Harris, Chief Justice.

This appeal results from a decree entered hy the Chancery Court wherein the complaint of appellant seeking specific performance of an alleged agreement, was dismissed for want of equity.

Suit was instituted hy appellant on May 28, 1958, seeking to enforce alleged rights under a pre-incorporation subscription offer executed hy him in favor of appellee on March 31, 1954. Prior to this time, Welborne was a stockholder and member of the Board of Directors of Preferred Risk Mutual Insurance Company. On the aforesaid date, the mutual insurance company was converted to its present status as a stock company, and known as Preferred Risk Insurance Company. Appellant was a stockholder, and served as an officer and director in the company until May 26, 1956, when he resigned from the Board of Directors. He remained an employee of appellee until February, 1957, and, as of February 27th of that year, sold all shares that he owned in the company. The subscription agreement entered into on March 31, 1954, is as follows:

“WHEREAS, it is the desire of the undersigned to purchase 1,000 shares of common stock, par value Ten Dollars ($10.00), in an insurance corporation to be known as the Preferred Risk Insurance Company.
NOW, THEREFORE, BE IT AGREED AS FOLLOWS: That for and in consideration of the agreement of the undersigned to purchase the aforesaid shares of stock, and for and in consideration of the mutual promises of other subscribers to additional shares of common stock in said corporation to be formed, that the undersigned agrees to purchase from said corporation the above stock, on demand of said corporation.”

The stock structure of the appellee is reflected by the minutes of the meetings of the Board of Directors. On June 30, 1954, a motion was unanimously passed by the Board providing that stock subscribed to at $20 a share prior to the organization of the company, be delivered before July 20, 1954, to those paying said purchase price, and that no further stock be sold at this price without further authorization of the Board of Directors. Appellant was present at this Board meeting. In subsequent meetings, par value of stock was reduced from $10 to $1 per share, and the Board unanimously passed a motion that stockholders of record as of May 1, 1956, be offered one share of stock for each three shares held, the $1 par value stock to be offered for $2.50 per share. The record reflects that appellant bought 1,200 shares of this stock, apparently at the offered price of $2.50 per share. The Board, on May 23, 1956, with appellant present, unanimously voted to offer a public issue of stock at $15 per share (par value $1) and a motion was also passed unanimously providing “that all holders of rights or options to purchase stock be notified that any such right to purchase stock below the Public Issue price shall be void and of no effect after June 30, 1956. ’ ’ Sometime during this year, the subscription instrument was returned to Welborne, according to W. M. Ritter, president of the company, at appellant’s request. In June/1957, a stock dividend on the basis of two shares for each outstanding share was declared. On March 25, 1958, Bitter directed a letter to Welborne, stating that the Board of Directors had voted to make demand upon each subscriber for the amount of stock subscribed, at $7.50 per share for the- $1 par value stock. The letter states:

“Your subscription was for 10,000 shares, therefore the amount necessary to carry it out would be 10,000 x $7.50. The other alternative provided by the Besolution is that you release the subscription by signing the attached release.
We presume that you will not want to complete the subscription and therefore ask that you sign and return three copies of the attached release,-by-return mail.”

Welborne replied as follows:

“Pursuant to your demand of March 25, 1958, I hereby tender you $10,000.00 in cash and request that your company in return issue to me 30,000 shares of $1.00 par value common stock of the Preferred Bisk Insurance Company as per my subscription agreement signed by me on the 31st day of March, 1954.”

Appellee declined to accept this proposition, and suit followed.

Appellant contends that the subscription was a contract which he is entitled to enforce by specific performance, and appellee asserts five different defenses. We deem a discussion of the various contentions advanced by the parties to be unnecessary, in view of the fact that we consider this litigation to be controlled by the doctrine of laches. This defense is closely associated with estoppel, upon which doctrine the Chancellor’s decision was predicated, and we might here say that this is likewise a valid defense in this case.

Laches is defined by Bouvier’s Law. Dictionary (Third Bevision) as “unreasonable delay; neglect to do a thing or to seek to enforce a. right at a proper time.” Also, ‘ ‘ The- neglect, to- do what in law should have been done, for an unreasonable and unexplained length of time, and under circumstances permitting diligence.” Appellant’s right to purchase common stock came into being in March, 1954. The record does not reflect the reason for appellant’s failure to exercise this right at that time, or in the subsequent months and years, though appellant, as a stockholder, officer, and director, in the company, was familiar with, and had participated in, the various board meetings heretofore enumerated; no effort was ever made to enforce any purported rights under the subscription until the letter was received from President Ritter. This letter cannot be relied upon by appellant, for it was written without authority; i. e., the record reflects no authorization from the board for the proposition contained in the letter. For that matter, this proposal was entirely different from the terms of the original subscription, and, as earlier mentioned, according to the record, the subscription instrument had already been reclaimed by Welborne sometime in 1956.

It is at once apparent that enforcement of Welborne’s claim would be most inequitable, for it would permit appellant to stand by for an unreasonable and unexplained length of time (four years), and as far as this record reflects, under circumstances permitting diligence — yet, glean high profits through such conduct. We consider the language in Austin v. Hallmark Oil Co., 21 Cal. 2d 718, 134 P. 2d 777, to be entirely apropos:

“It is not appropriate to grant specific performance of a subscription contract when the, complainant, instead of paying for the stock subscribed to at the time the corporation is in great need of funds’, does not offer to pay until the success of the venture undertaken by the corporation is assured.”

As stated in 49 American Jurisprudence, under the heading “Specific Performance”, § 73, p. 89:

‘ ‘ The well-established equitable principle that equity aids the vigilant and refuses to help those who sleep on their rights to the prejudice of the party against whom relief is asked is fully applicable to parties seeking specific performance of contracts. It is universally recognized that inexcusable laches or default on the. part of the party seeking such relief will be a sufficient ground for the denial o f the. relief. * * * Laches is less excusable in regard to certain classes of property than others. For example, promptness, in seeking specific performance is especially required in reference to contracts involving property likely to fluctuate suddenly in market value.”

Also, from § 76, page 93:

“A common consequence of delay is a change in value of the property which is the subject of the contract, and where this has taken place the courts will usually decline to enforce, specific performance. This rule is especially applicable where tjhe. complainant has laid by apparently for the purpose of taking advantage of the change in value. Equity will not relieve one guilty of gross delay who has lain by until events enabled him to make his election as to completing the contract with certainty of advantage to himself. Equity will not enable a party to speculate upon the advantage of a contract by permitting him to hold back from the assertion of his rights until it is clear that the contract is to his advantage, and then allow him to have specific performance, and thus encourage delays and favor speculation in possible changes in value. * * * Promptness on the part of the complainant in seeking enforcement or in performing his part of the contract seems to he especially necessary in the case of property'which is particularly subject to fluctuation, such as corporate stock.”

In Lacey v. Bennett, 210 Ark. 277, 195 S. W. 2d 341 (1946), appellant entered into a contract on January 5, 1942, for the purchase of real property, but did nothing to assert his rights until September 9, 1945, when he sought specific performance in a cross-complaint, after Bennett had instituted suit to quiet title. In upholding the trial court’s decree refusing specific performance, this Court quoted from 65 A. L. R., page 53, as follows:

“To secure the aid of equity in enforcing the performance of a contract, it must be made to appear that the plaintiff or complainant has been prompt, ready, able, and eager to perform and abide by the same. If he has failed or refused to claim or act under the contract for such a length of time as to give the impression that he has waived or abandoned the sale or purchase, especially if circumstances justify the belief that his intention was to perform the contract only in case it suited his interests, he will be denied this equitable relief. The rule that, to be entitled to the specific performance of a contract, the party seeking such relief must show that he has been at all times ready, able, and willing to perform on his part, is quite universally recognized in holding that inexcusable laches or default on the part of the party seeking such relief will be a sufficient ground for the denial of the relief.”

Affirmed.

       Originally, the par value of the stock was $10 per share, but the initial subscribers agreed to pay $20 per share.

       Apparently the price for the public issue had been reduced from $15 to $7.50.

       Appellee, in its brief, states: “It would be a monstrous result if the law were such that a person could remain mute for more than four years and obtain 30,000 shares of $1.00 par value stock having a public sale price of $225,000.00 (i.e., $7.50 per share) upon payment of the mere sum of $10,000.00.” In his reply, appellant states: “The stock of Preferred Risk Insurance Company is not listed for sale on any exchange. Its value depends on finding a buyer and dealing with him on whatever price he is willing to pay. There was no showing in the record of the number of shares which have been sold by appellee at $7.50 per share or at any other price. Appellee’s contention that the stock in litigation here is worth $225,000.00 is a. mere fantasy * *' Irrespective; of the accuracy of appellee’s statement, it is obvious that the stock- has increased considerably in value.


source: Caselaw Access Project

author: J. Seaborn Holt, Associate Justice.

license: Public Domain

text:
    Economy Wholesale Co., Inc. v. Rodgers.
    5-2219
    340 S. W. 2d 583
    Opinion delivered December 5, 1960.

      C. E. Yingling, Jr. and Lloyd Henry, for appellant.

      Odell Pollard and W. R. Hastings, Jr., for appellee.
   J. Seaborn Holt, Associate Justice.

This is a zoning ordinance case. The appellant, Economy Wholesale Company, Inc., filed for a building permit under Zoning Ordinance 353 of the City of Searcy to build a business building in block 24 which was classified as R-l, residential. The building was to be of modern architectural design and constructed of concrete blocks and brick. The premises were to be landscaped and no parking allowed in front of the building. The appellees, Dr. Porter Rodgers and others, filed a protest declaring that the issuance of such a permit would decrease the value of the property in the immediate vicinity for residential, church, and school purposes. Pursuant to the terms of the ordinance, a public hearing was held and at the conclusion of the hearing the city council voted to grant the permit to the appellant. The appellees filed suit in the chancery court praying for a temporary injunction and cancellation of the building permit. This was granted by the lower court. At the final hearing of the matter which extended over a three month’s period during which time many exhibits and voluminous testimony were offered, the lower court issued its order, cancelling the permit and permanently enjoining the appellant from proceeding further with the construction of any building upon the property. This appeal followed.

Although numerous points are relied upon for reversal, they may be summarized in two. First, did the city council have the authority to issue the permit and, second, if it did, was there an abuse of discretion in issuance of the permit.

As to the first point, we think the city council did have the authority to issue the permit. Under Zoning Ordinance 353 the city council is vested with the authority to issue or not to issue such building permits as it deems advisable after a public hearing. Section 4 of the Ordinance states:

“That any such petition (opposing issuance of permit) so filed shall be referred by the City Recorder to the City Council of said City and said City Council shall, at the next regular meeting following said ten day period, conduct a hearing upon the application for a permit and the petition against such permit, at which hearing the applicant and petitioners may be present. At the conclusion of such hearing the City Council may issue or refuse to issue such permit.”

Under the above provision of the ordinance the city council, after a public hearing, may, as it did in this case, issue a permit for the construction of a commercial building upon property previously zoned for residential purposes. This is the same procedure as that contained in the ordinance which we approved in Herring v. Stannus, 169 Ark. 244, 275 S. W. 321. We cannot agree with the appellees’ insistence that Section 4 of the ordinance, above quoted, is deficient in failing to set forth standards by which the city council is to be guided in issuing permits for non-conforming uses. Since the council itself issues the permit it would obviously be free to amend or repeal any standards previously adopted for its own guidance. The protesting property-owners are amply protected against arbitrary action on the part of the city council by that provision of the statute giving a right of appeal to the chancery court. Ark. Stats., § 19-2806.

The appellees also argue that Section 4 of the ordinance, above quoted, has been repealed either by Ordinance 367, establishing a city planning commission, or by Ordinances 399 and 400, approving certain plans submitted by the planning commission. We find no merit in either contention.

By its original zoning ordinance the city council elected to reserve to itself the power to issue permits for non-conforming uses, rather than to delegate that power to a subordinate commission as it had the option of doing under the statute. Ark. Stats., § 19-2806. Later on, in 1956, the city council passed Ordinance 367, pursuant to Act 108 of 1929, and by that ordinance the council created a city planning commission. The appellees now argue that Ordinance 367 by implication repealed Section 4 of the original zoning ordinance and therefore vested in the planning commission the authority to grant permits for nonconforming uses. We think it plain, however, that there was no inconsistency between the two ordinances and therefore no repeal by implication. Ordinance 367 created a planning commission pursuant to the provisions of Act 108 of 1929, so that the commission might discharge the duties imposed upon it by that statute. Ark. Stats., §§ 19-2811 et seq. The discharge of those duties by the planning commission is not repugnant to the city council’s reserved power to issue building permits, and consequently there is lacking the irreconcilable conflict between the two ordinances that would be essential to a finding of an implied repeal. ‘ ‘ The courts have always leaned against repeals by implication, and subsequent laws do not abrogate prior ones unless they are irreconcilably in conflict.” Kendall v. Ramsey, 179 Ark. 984, 19 S. W. 2d 1020.

Neither can we say that Section 4 of Ordinance 353 was repealed by Ordinances 399 and 400. These ordinances merely approved a land-use plan and related plans submitted to the city council by the city planning commission, pursuant to Act 186 of 1957. Ark. Stats., §§ 19-2825 et seq. The land-use plan, which was introduced in evidence, is plainly not a zoning ordinance. It is merely a broad declaration of policy, specifying in a general way the uses to which the land in and near the city is now being put and to which it may be put in the future. The plan does not contain exact descriptions so that a property owner may ascertain what restrictions are being placed upon his land. Indeed, the land-use plan contains none of the details that are essential to a zoning ordinance. The statute itself contemplates that the land-use plan will be put into effect through the adoption of a subsequent zoning ordinance. Section 5 of Act 186 is entitled “Implementation of Plans,” and provides in part: ‘ ‘ Following adoption and filing of the land use plan, the planning commission may prepare for submission to the legislative body [city council] a recommended zoning ordinance for the entire area of the municipality. ” Ark. Stats., § 19-2829. It is undisputed that the city council of Searcy has not yet approved a zoning ordinance submitted by its city planning commission. It follows that the original zoning ordinance, under which the council acted in the case at bar, is still in full force and effect.

The only remaining question then is, has the city council acted unreasonably and arbitrarily. We hold that it did not. Photographs, plans, and traffic flow patterns introduced as exhibits, as well as the testimony, all show that the area, during recent years due to growth of the city and increased traffic, has become more and more desirable for use as commercial property and less and less as residential although the area in question contains a number of very fine and valuable homes. The property here involved fronts on East Race Street which the evidence discloses has the heaviest traffic count in the city. In fact, numerous businesses had been built in the area in question before any zoning was enacted. It should also be noted that the property in question is only a block from property zoned commercial. Several witnesses testified that the city was growing in the direction of East Race Street and the mayor testified that it was felt by the city council that the council should not impede the growth of the city and voted to issue the permit. We have held that we would not set aside the findings of a city council unless we find that the facts clearly show that the council acted unreasonably and arbitrarily. To do so would “be substituting our judgment for that of the zoning authorities who are primarily charged with the duty and responsibility of determining the question.” McKinney v. City of Little Rock, 201 Ark. 618, 146 S. W. 2d 167. In the case of Herring v. Stannus, 169 Ark. 244, 275 S. W. 321, we said:

“As we have said it is to be presumed' that the council in exercising the power conferred on it acted in a fair, just and reasonable manner and its action in the instant case indicates that the power to grant or to withhold permission to erect a forbidden structure in the restricted area was vested in the council. . .. .
“. . . (A)nd its action is final unless we can say that the council abused its discretion. But this discretion in so far as a discretion abides is vested in, the council charged by law with the duty of passing on the question, and does not rest in the courts which review the council’s action.
“The question is not what a member of the court might decide if the question were submitted to him as a matter of discretion, but rather is whether it can be said that the council abused its; discretion and we may not say that was the case unless the fact clearly appears.”

The language of this court, in Little Rock v. Pfeifer, 169 Ark. 1027, 277 S. W. 823, is applicable here:

‘ ‘ There is substantial evidence tending to show that the value of some of the adjacent residence property will be depreciated on account of the lessening of usable value of the property for residence purposes, but we do not think that this affords justification for interfering with the gradual expansion of the business district, which has already been established. As the size of the business district grows, it ceases to be a residence district to that extent within the purview of the zoning ordinance. . .

The judgment is reversed and the cause remanded for further proceedings not inconsistent with this opinion.


author: Ed. F. McFaddin, Associate Justice.

text:
    Southern Farm Bureau Casualty Ins. Co. v. Parker.
    5-2230
    341 S. W. 2d 36
    Opinion delivered December 5, 1960.
    [Rehearing denied January 9, 1961.]

      Hardin, Barton & Hardin, Charles B. Garner, for appellant.

      Jeff Duty, for appellee.
   Ed. F. McFaddin, Associate Justice.

In this case, the insured sued his insurance carrier to recover damages for failure of the insurance carrier to settle a lawsuit against the insured which could have been settled within the limits 'of the insurance coverage. The insured recovered judgment in the Trial Court, and the insurance carrier brings this appeal.

C. H. Parker, appellee, carried motor vehicle liability insurance with the appellant, Southern Farm Bureau Casualty Insurance Company (hereinafter called “Insurance Company”); and the limit of the coverage was $5,000.00 for injury to one person. In October, 1955, Parker, while driving his insured vehicle, was involved in a traffic mishap with a vehicle owned and driven by D. E. Bush; and Bush’s 19-year-old son, Boy D. Bush, was injured in the mishap. Very little damage was done to either of the vehicles; but Boy D. Bush sued Parker for $25,000.00 for personal injuries. The Insurance Company defended — as it was required to do — the case of Rush v. Parker; and trial resulted in a verdict and judgment against Parker for $12,500.00. Parker then retained personal counsel, who settled the Bush judgment for $6,500.00, with Parker paying $1,500.00 and the insurance company paying $5,000.00 as the limit of its coverage. Parker then brought the present damage action against the Insurance Company to recover the $1,500.00 he had paid to settle the Bush judgment. The complaint in the present case contained the following allegations:

“That the said Boy D. Bush, through his attorneys, made an offer of compromise to the defendant company prior to the trial of said cause. That said offer was in the amount of $4,000.00. That this plaintiff begged and insisted that said compromise settlement be made and entered into. That the defendant company ignored said offer and refused to make such settlement. . . .
“Plaintiff states and alleges that good faith demanded that the defendant company settle said case for the offered, amount of $4,000.00. . . .
“Plaintiff alleges that the acts of the defendant company in this ease amounted to bad faith and negligence and that this plaintiff was forced to, and did, pay the sum of $1,500.00 on account of said-negligence and bad faith of the defendant company.”

As aforesaid, trial in the present case resulted in a verdict and judgment in favor of Parker for $1,500.00; and on this appeal the Insurance Company urges two points:

‘ ‘ 1. The verdict and judgment are not supported by the evidence and are contrary to appellee’s theory of the lawsuit.
“II. The Court erred in refusing to give defendant’s requested instructions.”

I. The Evidence. The testimony is in sharp dispute on several issues, particularly as to what Parker insisted the Insurance Company should do in regard to settling the Bush lawsuit in advance of trial. “On appeal from a judgment based on a jury’s verdict, the evidence must be given the strongest probative force in favor of the successful party that it will reasonably bear.” Albert v. Morris, 208 Ark. 808, 187 S. W. 2d 909. This means that we state the evidence favorable to the contentions of Appellee Parker bearing on the matter of failure of the insurance company to settle. The facts showed: (a) that Parker lived in Benton County and Roy D. Rush and his father lived in Washington County; (b) that Roy D. Rush filed the damage suit against Parker in the Circuit Court of Washington County; (c) that Parker immediately contacted the Insurance Company and gave full cooperation to the Insurance Company; (d) that Parker at all times stated that he gave no manual or directional light signal before undertaking a left turn; (e) that while Parker was making, or had undertaken to make, a left turn, the Rush vehicle had the collision with the Parker vehicle; (f) that Roy D. Rush was a polio victim and it was realized that his appearance would arouse jury sympathy for him; (g) that the Insurance Company knew that one physician stated that Roy D. Rush sustained permanent injuries in the traffic mishap; (h) that the local attorney for the Insurance Company in Benton County, after investigation and on his own authority, offered Roy D. Rush $3,000.00 to settle the lawsuit; (i) that Rush’s attorney refused the $3,000.00 offer but agreed that the case could be settled for $4,000.00 (j) that Parker “. . . begged and insisted . . .” that the Insurance Company settle the case in advance of a trial; (k) that Parker was advised by the Insurance Company that Parker had no control of the litigation; (l) that the local attorney for the Insurance Company duly notified the State Office of the $4,000.00 offer; (m) that the Insurance Company did not reply to the local attorney; and (n) that even after the $4,000.00 offer was communicated, the State Claims Manager of the Insurance Company considered $3,000.00 as the greatest offer to make, even though he had all the reports heretofore mentioned. As aforesaid, the facts were not undisputed, but we have detailed enough to make applicable the hereinafter stated rules of law.

II. The Law. Among other instructions, the Court gave the jury the following:

I.

“Before the plaintiff can recover, it is necessary that the plaintiff show by a preponderance of the evidence each of the following four elements:
“1. That the claim of Roy D. Rush against the plaintiff growing out of the automobile collision on October 8, 1955 could have been settled within the $5,000.00 limit of the policy.
“2. That the plaintiff made due demand upon the defendant to settle said claim within the limits of the policy prior to the trial of the case on May 29, 1956 and the defendant refused or failed to settle.
“3. That the plaintiff, as a result of the trial on May 29, 1956, was forced to pay to Roy D. Rush the sum of $1,500.00 over and above the $5,000.00 limit of the policy which was paid by the defendant.
“4. That the action on the part of the defendant in refusing to settle the claim of Roy D. Rush within the limits of the policy when requested to do so by the plaintiff was negligence.”
n.
“You are instructed that due care, or negligence, as used in these instructions, means the doing of something in conduct of one’s business affairs that an ordinary prudent person would not do under the same or similar circumstances, or the failure to do something in the conduct of one’s business affairs that a person of ordinary prudence would do under the same or similar circumstances.”

Specifically, the appellant insists that the Court instructed on the wrong' rule — i. e., negligence — instead of the “bad faith” rule. This contention makes it necessary that we consider holdings in other jurisdictions, because we have no case in Arkansas that commits us exclusively to either the “negligence” rule or the “bad faith” rule. In American Mut. Liability Ins. Co. v. Cooper, 61 F. 2d 446, Judge Bryan of the Fifth Circuit, made this clear statement:

“It is well settled in cases of limited liability insurance that the insurer may so conduct itself as to be liable for the entire judgment recovered against the insured, although that judgment exceeds the amount of liability named in the policy. But the courts that have considered the question are not in agreement as to the nature and kind of proof which it is incumbent upon the insured to make in an action against the insurer for the excess which the insured has been compelled to pay over the amount named in the policy. Some of these cases hold that the insured is entitled to recover upon proof that the insurer in refusing to settle a claim for damages covered by the policy was guilty of negligence. (Cases cited.) Other decisions impose a heavier burden upon the insured, and deny recovery unless he can show that the insurer in refusing to make settlement acted in bacl faith. (Cases cited.) ” (Emphasis supplied.)

Some courts allow recovery on the rule of “bad faith”, while other courts allow recovery on the less stringent rule of negligence. We see no occasion to align Arkansas exclusively with either of these, because we take the same view as did the Supreme Court of Alabama in Waters v. American Cas. Co., 261 Ala. 252, 73 So. 2d 524:

“This question, presented here, has not been previously decided by this Court. "We are aware that in cases of this nature courts generally hold that there may be liability on the part of the insurer for the excess of the judgment above the policy limits, but there is a division among them as to whether the liability of the insurer is based on (1) the rule of bad faith or (2) the rule of negligence. 131 A. L. R. 1500; 71 A. L. R. 1485; 43 A.L.R. 329; 37 A.L.R. 1484; 34 A.L.R. 750; 45 C. J. S., Insurance, § 936, p. 1069; 8 Appleman Insurance Law and Practice, Sections 4712 and 4713. We hold that there may be liability under both rules and properly drawn counts based either on negligence or bad faith should be held good, and separate counts, one charging negligence and one charging bad faith may be joined in the same complaint.”

In the case at bar the complaint, as previously copied, contained allegations both as to bad faith and as to negligence; but when the plaintiff asked his instructions he limited them to the rule of negligence. We see no error in so doing. The Insurance Company owed Parker, as its insured, the duty to act in good faith., and also the. duty to act without .negligence. Appellant complains bitterly of the failure of the Court to give its instructions'on the “bad faith” theory; and says that in Home Indemnity Ins. Co. v. Snowden, 223 Ark. 64, 264 S. W. 2d 642, we approved instructions that contained the idea of bad faith. We are here considering a factual situation entirely different from that in Insurance Go. v. Snowden. There, the insurance company refused to admit ány unconditional liability; and the insured settled with the injured parties in advance of any trial and sued the insurance company for the amount of the settlement. Here, the Insurance Company all the time admitted to its insured full liability to the extent of the coverage, but failed to effect settlement within such limits. Even though we approved instructions on the bad faith rule in the Snowden case, it still does not preclude us from allowing a recovery on either theory, just as did the Supreme Court of Alabama. It may be negligence to refuse to settle, even though the negligent person may be acting in good faith. One may in good faith make an honest mistake which hurts another, and still be liable for negligence in making the mistake even though no harm was intended.

In American Fidelity & Cas. Co. v. Nichols, 173 F. 2d 830, Judge Orie Phillips of the Tenth Circuit, used this language:

“When a liability insurance company by the terms of its policy obtains from the insured a power, irrevocable during the continuance of its liability under the policy, to determine whether an offer of compromise of a claim shall be accepted or rejected, it creates a fiduciary relationship between it and the insured with the resulting duties that grow out of such a relationship. Under policies like those here involved, the insurer and the insured 'owe to e'ach other the duty to exercise the utmost good faith. While the insurance company, in determining whether to accept or reject án offer of compromise, may properly give consideration to its own interests, it must, in good faith, give at least equal consideration to the interests of the insured and if it fails so to do it acts in bad faith.”

See also Johnson v. Hardware Mutual Cas. Co., 108 Vt. 269, 187 A. 788.

In the case at bar the policy which the Insurance Company issued to Parker provided that the Insurance Company would defend any suit — “. . . but the company shall have the right to make such investigation, negotiation, and settlement of any claim or suit as may be deemed expedient by the company. . . .” By this language the Insurance Company became a fiduciary to act, not only for its own interest, but also for the best interest of Parker. The Supreme Court of South Carolina, in Tyger River Pine Co. v. Maryland Casualty Co., 170 S. C. 286, 170 S. E. 346, used this language:

“The charge that it was the duty of appellant to compromise the claim if that was the reasonable thing to do is supported by authority.
“In the annotation of the case of U. S. Casualty Co. v. Johnston Drilling Co., (161 Ark. 158, 255 S. W. 890), 34 A. L. R. 727, it was said: ‘It has been held that an insurer against liability for accidents which assumes the duty of defending a claim owes the assured the duty of settling the claim if that is the reasonable thing to do.’ Citing: Cavanaugh Bros. v. General Accident F. & L. Assur. Corp., 79 N. H. 186, 106 A. 604.”

After a thorough review of the record we reach the conclusion that no error occurred in the trial prejudicial to the appellant.

Affirmed.

         The local attorney for the Insurance Company in Benton County is a reputable high-class attorney, and nothing herein reflects on his ability or integrity.

       The $4,000.00 offer was contained in a letter from Rush’s attorney to the local attorney for the Insurance Company, dated April 18, 1956, and the letter reads as follows:
      “The above case has been set for trial in Circuit Court here on Monday, May 21,1956. We understand that the Clerk will notify you to this effect but we thought that we should inform you so that there will be no misunderstanding as to the date it has been set for trial. We are anxious to try this case as soon as possible.
      “If your client is still interested in settling this case, I believe that our client would be willing to accept $4,000.00 in settlement thereof, if settlement is effected before we go to further expense and trouble in preparation of the case for trial. The offer you made of $3,000.00 was not enough. While I do not think that the amount herein suggested would be adequate compensation for the injuries sustained by this young man, in order to get the matter settled soon without the necessity of a trial, I believe it could be settled for $4,000.00. Otherwise, it is our plan to be ready to try this case on May 21, 1956.”

       Here is the testimony of the State Claims Manager of the Insurance Company:
      “Q. Did you put as your top valuation in the case the sum of three thousand dollars for the purpose of settling?
      A. It would certainly be complete tops as far as I was concerned
      Q. Yes, sir. Now, I believe you’ve also testified that under no circumstances would you have agreed or did agree to anything over three thousand?
      A. I believe what I said, I felt in my opinion that was the top settlement.
      Q. That was the top settlement you would permit Mr. Little or anybody else to agree to settle on; is that right?
      A. That’s correct.”

       The Supreme Court of Alabama has reaffirmed this holding of liability of the insurance carrier on either negligence or bad faith. See Ala. Farm Bureau Ins. Co. v. Dalrymple, 270 Ala. 119, 166 So. 2d 924.

       In 40 A.L.R. 2d 168 there is a splendid annotation entitled: “Duty of liability insurer to settle or compromise.” Cases from many jurisdictions are cited. We have examined them all; but we list the following as those worthy of study, in addition to the cases cited in this opinion: Noshey v. American Auto. Ins. Co. (6th Cir.), 68 F. 2d 808; Maryland Cas. Co. v. Cook-O’Brien Const. Co. (8th Cir.) 69 F. 2d 462; Ballard v. Citizens Cas. Co. (7th Cir.), 196 F. 2d 96; Auto Mutual Indemnity Co. v. Shaw (Fla.), 184 So. 852; Stowers Furn. Co. v. American Indemnity Co. (Tex.), 15 S. W. 2d 544; Wilson v. Aetna Cas. & Surety Co. (Maine), 76 A. 2d 111; Dumas v. Hartford Accident & Indemnity Co. (N.H.), 56 A. 2d 57; Henke v. Iowa Mut. Cas. Ins. Co. (Iowa), 97 N. W. 2d 168; Abrams v. Factory Mutual Liability Ins. Co. (Mass.), 10 N. E. 2d 82; Best Bldg. Co. v. Employers Liability Assurance Corp. (N.Y.), 160 N.E. 911; Hoyt v. Factory Mut. Lia. Ins. Co. (Conn.), 179 A. 842; National Mut. Cas. Co. v. Britt (Okla.), 200 P. 2d 407; Burnham v. Commercial Cas. Ins. Co. (Wash.), 117 P. 2d 644; and Johnson v. Hardware Mut. Cas. Co. (Vt.), 187 A. 788. There are also notes involving matters allied with the question here at issue and found in 7 Ark. Law Review, p. 142; 10 Ark. Law Review, p. 138; and 11 Ark. Law Rev. p. 26. See also Am. Jur. 29A, p. 556, § 1444 et seq.; 45 C.J.S. 1069, “Insurance” §-936; and Appleman on Insurance, Vol. 8, § 4712 et seq.


author: George Rose Smith, J.

text:
    Halbrook v. Halbrook.
    5-2223
    341 S. W. 2d 29
    Opinion delivered December 5, 1960.
    [Rehearing denied January 9, 1961.]

      Lovell & Evans, for appellant.
    No brief filed for appellee.
   George Rose Smith, J.

This is an appeal from an order by which the circuit court refused to grant the appellant a new trial upon the ground of newly discovered evidence. Since the appellant concedes that Ms motion was addressed to the trial court’s sound discretion the only question is whether there was an abuse of that discretion.

The dispute grew out of an oral transaction by wMch the appellee, Ellery Halbrook, sold and delivered thirty-five head of cattle to his brother Archie, the appellant, for an agreed price of $3,500.00. Ellery’s suit to recover the purchase price was defended by Archie on the ground that the money had been paid. At the trial Archie testified that he paid his brother in cash, without taMng a receipt, wMle Ellery testified that he had received nothing. The decisive issue of fact was submitted to a jury, which returned a verdict for Ellery, the plaintiff.

The appellant, in his motion for a new trial, asserted that after the entry of the judgment he discovered that his brother Ellery had engaged in a conversation in a barber shop several months before the trial and had then said in the presence of three named witnesses that he had sold Ms cattle too cheaply but there was nothing he could do about it, as ArcMe had paid Mm for the cattle. The motion was supported by affidavits of the three witnesses.

At a hearing upon the motion two of the affiants were called as witnesses. One of them testified in conformity with Ms affidavit, but the other, upon being questioned by the court, was not sure whether Ellery had mentioned payment in the conversation or had merely said that he had sold the cattle too cheaply. In denying the motion the circuit judge indicated that he considered the newly discovered evidence to be cumulative and doubted if this proof alone would change the result of the first trial.

We are not willing to say that the circuit court abused its broad discretion in the matter. Our pertinent cases are cited and discussed in a comment appearing at á Ark. L. Rev. 60. There the authors point out that a motion of this kind is not favored by the courts, owing to the manifest disadvantages in allowing the losing litigant a second trial after lie has been afforded a fair opportunity to present his proof at the original hearing. Before granting such a motion the trial court should be convinced, among other things, that an injustice has been done, that the newly found evidence is not merely cumulative to that produced at the first trial, that the proof was not discoverable through the exercise of due diligence, and that the additional testimony will probably change the result.

There are two reasons for our reluctance to disagree with the circuit judge in this case. First, he had the advantage not only of having heard the testimony at the original trial but also of hearing two of the new witnesses at the hearing upon the motion. In the latter respect the case differs from Medlock v. Jones, 152 Ark. 57, 237 S. W. 438, where there was apparently no hearing upon the motion, so that its allegations stood undisputed. Here the trial judge, after observing the demeanor of the newly found witnesses, did not feel that their testimony would change the outcome of the case.

Secondly, the new testimony was to some extent of a cumulative nature. “Cumulative evidence is such as tends to support the fact or issue which was before attempted to be proved upon the trial.” Olmstead v. Hill, 2 Ark. 346, 353. At the original trial the defendant attempted to prove the same fact that is involved in his present motion — that Ellery had stated to a third person that he had been paid for the cattle. The witness Hilton was called by the defendant for the purpose of so testifying, but he proved to be a disappointment in that he failed to testify as counsel had expected. In this situation, where a party’s attempt to prove a particular fact has unexpectedly failed, he is not entitled to seek out additional witnesses to the same fact and upon that basis, with no affirmative showing of prior diligence, demand a retrial upon the ground of newly discovered evidence.

Affirmed.


author: Paul Ward, Associate Justice.

text:
    Goodin v. Goodin.
    5-2241
    340 S. W. 2d 580
    Opinion delivered December 5, 1960.

      Sam Sexton, Jr., for appellant.

      Heilbron, Shaw £ Beasley, for appellee.
   Paul Ward, Associate Justice.

This appeal by George J. Goodin challenges the action of the Chancery Court in awarding to his wife and their two minor children exclusive occupancy of the dwelling owned jointly by them and at the same time denying the wife’s petition for a divorce.

The parties were married on May 24, 1947, and lived together until August 15, 1959, at which time appellee and the two children (ages about 6 and 12) left the home in which they had all been living in the City of Fort Smith. On the following day appellee filed suit for divorce on the general ground of neglect and mistreatment. She prayed not only for divorce but for custody of the children and for alimony and child support.

Before the final order from which comes this appeal there were several preliminary hearings and orders. The first hearing was held on November 24, 1959, at which an allowance of $25 a week was made for the support of appellee and the children and the cause was finally set for March 8,1960. On this date, after hearing testimony, the Chancellor denied appellee’s prayer for a divorce, bnt decreed that she should have permanent care and custody of the two children with the understanding that she would not remove them from the jurisdiction of the court without permission; that appellant should have reasonable rights of visitation; and that appellant should pay $25 a week for the support of appellee and said children. Following that order, appellee and the children moved into the house owned by the parties, by the entirety, located on Chaffee Drive in Fort Smith. Almost immediately thereafter appellee filed a Motion in which she asked that appellant be enjoined and restrained from entering the premises and that the court fix a specific time and place for appellant to visit the children. A Response to this Motion was filed by appellant and on March 15,1960, the court made the following findings: That subsequent to the court’s decree of March 8, 1960, and without the knowledge or consent of the appellee, the appellant moved into the home in which the appellee had been living with their children; that such act on the part of appellant, along with other conduct on his part, was detrimental to the health and welfare of the children; that the decree of March 8, 1960, should be withdrawn and the case continued under the previous Order made on November 24, 1959; that final adjudication on the divorce petition be taken under advisement; that the Order made on November 24, 1959, should be amended to give appellee possession of the home and furnishings located on Chaffee Drive. The Order of the court was in compliance with the above findings.

After another hearing a final decree was entered on May 6, 1960, in which it was ordered: That the petition for divorce be denied at this time; appellee shall have custody of the children subject to appellant’s right of visitation at all reasonable and proper times; appellee shall have exclusive possession of the family home and furniture, as well as possession of the newest car, so that the children may be properly reared, can attend church and take care of medical treatments; the appellant shall continue to pay $25 per week for the support of the two minor children; appellee shall pay the house payments due out of the child support so long as she continues to occupy the house with the children; and this Order shall remain in effect as to the occupancy and payments on the family home so long as appellee continues to reside therein.

The only ground urged for a reversal, as stated by appellant, is that “the Chancellor erred in excluding the appellant from the jointly owed property of the parties.”

In support of the above contention appellant relies almost exclusively on the decision in the case of Walls v. Walls, 227 Ark. 191, 297 S. W. 2d 648. The particular language contained in that opinion upon which appellant relies is found at page 194 and 195 of the Arkansas Reports.

In the cited case, the Chancellor gave exclusive possession of the home to the wife and children but this holding was reversed by this court. The essence of the court’s holding appears to be that the wife had established no meritorious cause for leaving her husband and three older children and refusing to live with him. In the case under consideration, the situation is different in that respect. The effect of the Chancellor’s holding was that appellee was justified in leaving appellant. We have reviewed the record in this connection and are unable to say that the Chancellor’s finding is not supported by the weight of the testimony. This being the situation the court had authority to give the exclusive possession and occupancy of the property to appellee and the children. In the case of Cassell v. Cassell, 211 Ark. 489, 200 S. W. 2d 965, we held that the trial court had jurisdiction to give the wife the right of exclusive possession of the dwelling property even though her petition for a divorce was denied. The decision rested on the ground that such an order did not amount to a permanent disposition of property rights. Likewise, the order of the court in the case under consideration is not a permanent disposition of property rights. The latter portion of the decree states: “this order shall remain in effect as to the occupancy and payments on the family home so long as the plaintiff continues to reside on said premises.” It was also stated in the Order “that the petition for a divorce by the plaintiff be denied at this time” (Emphasis supplied.)

This is one of those unfortunate situations where a home with children has been, at least temporarily, broken up, and the court is faced with the task of finding the best possible solution. We are reluctant to say we could find a better solution than the one reached by the Chancellor. As in many other such cases we are reminded that the Chancellor saw and heard the witnesses, an advantage denied to us. Possibly the Chancellor entertained the hope of a reconciliation in the future. This of course would be the happy solution. In the meantime it appears more reasonable to us that the wife and children, rather than the husband, should be provided a place to live.

Appellee has cross-appealed from the portion of the decree refusing her a divorce. It would serve no useful purpose to set forth the evidence in this connection. We have carefully reviewed it and find that it fully supports the Chancellor’s decision.

From the above it follows that the decree of the trial court is affirmed both on direct appeal and cross-appeal.

Affirmed.


author: Sam Robinson, Associate Justice.

text:
    Tibbels v. Tibbels.
    5-2192
    340 S. W. 2d 590
    Opinion delivered December 5, 1960.

      Edward J. Rubens and Jake Brick, for appellant.

      J. H. Spears, for appellee.
   Sam Robinson, Associate Justice.

This is a contest between appellant, Jane Tibbels, and appellee, Aurelia J. Tibbels, as to which one of the two is entitled to the proceeds of a policy of life insurance issued by the Metropolitan Life Insurance Company on the life of John W. Tibbels. There is no indication or inference that more than one policy was issued to Tibbels by the insurance company. Jane Tibbels and John W. Tibbels were formerly husband and wife but were divorced on May 26, 1958. The policy in question was issued on the 17th day of June, 1958. Jane Tibbels was named beneficiary in the policy. About a year later, on April 4, 1959, John was killed in an automobile accident. The policy, which was a group policy, provides:

“Section 13. CHANGE OF BENEFICIARY.— Any Employee insured hereunder may, from time to time, change the Beneficiary designated in his certificate by filing written notice thereof with the Insurance Company accompanied by the certificate of such Employee. Such change shall take effect upon endorsement thereof by the Insurance Company on such certificate and unless the certificate is so endorsed, the change shall not take effect. After such endorsement, the change shall relate back and take effect as of the date the Employee signed said written notice of change, whether or not the Employee be living at the time of such endorsement, but without prejudice to the Insurance Company on account of any payment made before receipt of such written notice.”

Sometime prior to 11:00 a.m. on April 4, 1959, a letter written by John W. Tibbels, the insured, dated March 31, 1959, addressed to the Metropolitan Life Insurance Company, was mailed. John was killed about 1:30 p.m.. April 4th, the same day the letter was mailed. The letter to the insurance company is as follows:

“3/31/59
“Dear Sir
“As my wife and I are divorced I would like to have my beneficiary changed to my mother Mrs. Chas. D. Tibbels 508 Gibson West Memphis Ark-
“ Thanks
“John W. Tibbels”

On April 8, 1959, following receipt of the above letter, the insurance company wrote to John W. Tibbels as follows: “We are unable to act upon your recent letter because of our inability to determine the correct number of the policy to which you refer. Please furnish the following information and return this letter in the envelope provided.” Following the letter was a form to be completed, requiring the insured to furnish considerable information.

Mrs. Aurelia Tibbels, mother of the insured, who had possession of the policy at the time, furnished the insurance company the number and serial letter of the policy and the exact name of the insured, and informed the insurance company of the insured’s death. Jane Tibbels, the original beneficiary named in the policy, furnished the insurance company proof of the death of the insured and demanded payment under the terms of the policy. The insurance company filed this cause of action — an interpleader — in a court of equity, naming Aurelia J. Tibbels and Jane Tibbels as defendants, and deposited in court the principal sum named in the policy for accidental death of the insured. From a decree in favor of Mrs. Aurelia Tibbels, Jane Tibbels has appealed.

There is only one real issue in the case, and that is: Was John W. Tibbels’ letter to the insurance company above quoted sufficient in all the circumstances to change the beneficiary from Jane Tibbels to Aurelia Tibbels?

The provision of the insurance policy regarding change of beneficiary was not complied with. On this point there are two lines of authority, the minority holding that there must be strict compliance with the provisions of the policy pertaining to change of beneficiary, but the great weight of authority is that a substantial compliance is sufficient. 19 A. L. R. 2d 30 and cases cited therein. This State is among the majority. Robinson v. Robinson, 121 Ark. 276, 181 S. W. 300. It will be recalled that the insured was killed about two and one-half hours after the postmark time appearing on his letter to the insurance company asking that the beneficiary be changed. Of course, the insured could do nothing further about the matter, and could not respond to the insurance company’s request for additional information. In these circumstances we think there was a sufficient compliance. The weight of authority is that if the insured has done everything reasonably possible to effect a change in beneficiary, a court of equity will decree that to be done which ought to be done. True, the insured could have sent his policy to the insurance company along with his letter requesting a change in beneficiary, but there is no showing that Tibbels was an expert on insurance matters or realized the necessity of sending in the policy.

In the case of Bell v. Criviansky, 98 Mont. 109, 37 P. 2d 673, the insured wrote to the insurance company indicating his desire to change the beneficiary in a policy of insurance, but before he was able to complete the forms sent to him by the insurance company to effect the change he became ill and died. The court said: “Admittedly, the insured did not comply with the policy provisions with reference to change of beneficiaries in the following respect: (a) He made no written request, upon the company’s form, for change of beneficiary; (b) he did not return the policy to the company; (c) he did not deliver the written request on the prescribed form in his lifetime to the company.” And the court went on to say: “By the letter he indicated that he desired to change the beneficiary and that it was his purpose to change the beneficiary from his then wife to his four children, although he did not name them. At the time he received this blank, and continuing on to the time of his death, his physical condition according to the record was such as to render him unable to complete and execute the furnished blank form. ’ ’ The court further said: “We think the true rule is that, if the insured has pursued the course pointed out by the laws of the association and has done all in his power, under the facts and circumstances of the case, to change the beneficiary, but before the new certificate is actually issued or the change of beneficiary is indorsed on the old, he dies, a court of equity will decree that to be done which ought to be done, and act as though the certificate had been issued or the indorsement made.” The court held that in the circumstances the insured had changed the beneficiary.

A situation similar to the case at bar existed in the case of United Benefit Life Ins. Co. v. Elliott, 11 Alaska 466. There the court said: “While the question is not free from doubt, the weight of authority would seem to support the view that the failure to transmit or deliver the policy to the insurer with a written request for a change of beneficiary does not preclude the application of the rule of substantial compliance, even though the policy was available or could have been obtained upon demand, where it appears that the insured did everything that it was reasonably possible for him to do before death.

“It must be conceded, of course, that it may be argued with plausibility and much force that where the insured has failed to transmit the policy to the insurer with the request for a change of beneficiary he has not done every thing possible to effect the change. But where the insured does not know where the policy is or dies before the receipt of the insurer’s blanlc and instructions for its execution and return with the policy, no reason is perceived why a court of equity should order the proceeds of the policy disposed of in a manner directly contrary to the clearly expressed wishes of the insured.” [Emphasis ours]

Appellant argues that even though the insurance company could waive the provision of the policy requiring that certain things be done in order to effect a change of beneficiary, such waiver could not affect the interest of the original beneficiary; that such interest vested immediately upon the death of the insured. The answer to this proposition is that the rights of the new beneficiary, Mrs. Aurelia J. Tibbels, are not based on a waiver of a policy provision by the insurance company. Theré was a sufficient compliance by the insured with the policy to effect the change. Hence the new beneficiary is entitled to the proceeds of the policy regardless of whether there was a waiver by the insurance company.

Affirmed.


author: Jim Johnson, Associate Justice.

text:
    Thornbrough, Commissioner of Labor v. Barnhart.
    5-2217
    340 S. W. 2d 569
    Opinion delivered December 5, 1960.

      Lowell D. Gibbons and Luke Arnett, for appellant.

      Bass Trumbo and E. J. Ball, for appellee.
   Jim Johnson, Associate Justice.

On October 23, 1953, the Commissioner of Labor filed a Certificate of Assessment in the amount of $109.35 for unpaid unemployment contributions against Ralph C. Barnhart in the office of the Circuit Clerk of Washington County. Appellee Barnhart filed a petition for review in the Chancery Court of Washington County and prayed that the Chancellor quash the assessment and expunge it from the record because the assessment had been made without appellee’s having been afforded a hearing regarding appellee’s liability for contributions as 'ah employer under the terms of the Arkansas Employment Security Law, The Chancellor held that the Commissioner of Labor had not followed the procedure prescribed by the Act affording appellee an opportunity to be heárd before filing such assessment and ordered the assessment expunged from the record without prejudice to the Commissioner.

Thereafter the Commissioner instituted proceedings in accordance with the procedure the trial court found to be requisite for filing assessments and a hearing was held before the Commissioner and appellee was found to be indebted for taxes in the amount of $109.35, together with interest thereon from October 22, 1953, until paid. This finding by the Commissioner was appealed to the Board of Beview by appellee on the ground that the matter was res judicata because of the decree entered by the Chancellor in the prior proceedings.

On May 24, 1956, the Board of Beview held that the decree of the Chancery Court which was based upon technical defects in the procedure followed by the Commissioner in filing the assessment was res judicata regarding the matter of whether appellee was indebted for taxes; and further, that because this question was res judicata there was no liability for taxes on the part of appellee. The Commissioner appealed this determination of the Board of Beview to the Pulaski Circuit Court; the Pulaski Circuit Court sustained the determination of the Board of Beview by a final judgment; and this appeal is from that final judgment.

For reversal, appellant relies upon the following points: (1) The Court erred in holding the issues made before the court res judicata under the Washington Chancery Court decree for the reason that the issues now involved were not before the court in the proceedings in which the decree was entered. (2) The Court erred in holding that, the Chancellor’s decree entered “without prejudice to J. R. Cash, Commissioner of Labor” was a final judgment rendering the issues in this matter res judicata. (3.) The Court erred for the reason that “to expunge from, the record” does, not embrace a judicial or equitable determination of an issue, but denotes a physical act of obliteration, leaving the record, for all purposes, as if that “expunged” had never occurred.

The basic issue before this Court is whether the proceeding in the Washington Chancery Court, wherein the sole- question determined was that of technical procedure required by the Commissioner of Labor in filing a valid certificate of assessment, renders the merits of the claim for employment security contributions res judicata thereby defeating the right of the Commissioner to collect the contributions claimed.

There have been two proceedings in the instant case. In the first proceeding the record before this Court does not reflect that the question concerning the merits of the claim for contributions was tried but that a technical defense, i. e., that the procedure followed by the Commissioner of Labor in filing the Certificate of Assessment did not fulfill the requirements of the Arkansas Employment Security Law. Appellee’s technical defense was successful in that proceeding and the Chancellor issued his decree expunging the assessment from the record without prejudice to the Commissioner of Labor. Appellee now seeks to, prevent the, claim, for contributions being processed and collected by raising the defense of res judicata, although the merits of the claim were not in issue when the first defense of improper procedure was used.

Appellee did not raise any issue concerning the merits of the claim for tax;es. To the contrary, appellee’s petition for review filed in the Washington Chancery Court was based solely on the ground that the certificate of assessment was not founded on a finding of fact which could be reviewed by the Chancery Court. Therefore, we conclude that the merits of the claim of the Commissioner of Labor for contributions from appellee was not in issue but only the question whether appellee was entitled to a hearing on the merits before an assessment was filed; and if he was entitled to such a hearing whether the failure to afford him the opportunity for a hearing was a fatal defect in the procedure for filing a certificate of assessment by the Commissioner of Labor. The trial court was correct in holding that the failure to afford appellee such a hearing was a fatal procedural defect and in issuing the order to “expunge the assessment from the record without prejudice to the Commissioner of Labor.”

Having thus concluded, we reach the question whether such order is res judicata in the present case. The general rule applicable to this question is well stated in 30 Am. Jur. under the title of Judgments, p. 925, Sec. 180:

“The rule granting conclusiveness to a judgment in regard to issues of fact which could properly have been determined in the action is limited to cases involving the same cause of action. The established rule is that the judgment in the first action operates as an estoppel only as to the points or questions actually litigated and determined, and not as to matters not litigated in the former action, even though such matters might properly have been determined therein. Accordingly, before the doctrine of res judicata is applied in such cases, it should appear that the precise question involved in the subsequent action was determined in the former action. These rules prevail whether the judgment is used in pleading as a technical estoppel, or is relied on by way of evidence as conclusive per se. ’ ’

Appellee very forcefully argues that the rule set out in Crump v. Loggains, 212 Ark. 394, 205 S. W. 2d 846, should apply to the case at bar. There the Court said:

“The test in determining a plea of res judicata is not alone whether the matters presented in a subsequent suit were litigated in a former suit by the same parties but whether such matters were necessarily within the issues and might have been litigated in the former suit.”

There is nothing in the record to show that the matter of appellee’s liability for taxes was in issue nor that such liability was necessarily in issue. See Harvard Law Review, Vol. 65, p. 818, et seq.

Based upon the facts in the present case, as we view it, the rule applicable here is stated in Chiotte v. Chiotte, 225 Ark. 101, 279 S. W. 2d 296, as follows:

“In the application of the doctrine of res judicata, if it is doubtful whether a second action is for the same cause of action as the first, the test generally applied is to consider the identity of facts essential to their maintenance, or whether the same evidence would sustain both ... if, however, the two actions rest upon different sets of facts ... a judgment in one is no bar to the maintenance of the other. It has been said that this method is the best and most accurate test as to whether a former judgment is a bar in subsequent proceedings between the same parties, and it has been designated as infallible.”

The Chancellor in his decree recited that the act of expunging the assessment from the record was done without prejudice to the Commissioner. There can be no merit in the contention made by appellee that such action was a final judgment on the merits since the rule in Arkansas as restated by this Court in the case of Baughman v. Overton, 183 Ark. 561, 37 S. W. 2d 81, is as follows:

“A judgment dismissing a suit without prejudice is not res judicata in a subsequent suit involving the same parties and issues.” [Emphasis ours.]

See also: Jordan v. McCabe, 209 Ark. 788, 192 S. W. 2d 538. We believe that the Chancellor recognized that it would be inequitable and would defeat the ends of justice to bar a valid claim by the Commissioner of Labor on technical procedural grounds and entered his decree “without prejudice” which phrase is universally understood to preserve to the parties the right to proceed anew in order that the case may be tried on its merits.

The term “expunge” is defined in Black’s Law Dictionary, 4th Ed. p. 693 as: “To destroy or obliterate; it implies not a legal act but a physical annihilation. To blot out; efface designedly; to strike out wholly.” [Emphasis ours.] It is our holding that the certificate of assessment then of record had no legal force and effect as a judgment against appellee Barnhart but we cannot read into this physical act of striking the assessment from the record [because of procedural defects] a bar to further proceedings on the merits of the case since no determination was ever made as to appellee’s liability as an employer under the terms of the Employment Security Act. Since the issues now involved were not before the trial court when the decree was entered, we cannot say that the prior decree was res judicata.

Reversed and remanded to the Circuit Court with directions to remand to the Board of Review for further proceedings consistent with this opinion without prejudice to either party to introduce additional evidence upon the merits.

McFaddin, J., concurs.


text:
    Green v. Green.
    5-2260
    341 S. W. 2d 41
    Opinion delivered December 12, 1960.

      Langston é Walker by Wayne Foster, for appellant.

      Joe E. Purcell, for appellee.
   Carleton Harris, Chief Justice.

Appellant, Iva D. Green, married appellee, Hubert B. Green, in February, 1931. Sometime in 1946, the parties hereto adopted a male child, nine days old, whose name is Hubert William Green. In October, 1958, appellee instituted suit against appellant for divorce. Appellant entered her appearance, but did not contest the action. Appellee’s complaint, inter alia, alleged:

“The parties are the parents of an adopted child, Hubert William Green, now twelve (12) years of age and in the custody of defendant, who desires his custody and plaintiff feels that defendant is the proper person for his care and custody, and further feels that he should be required by order of this Court to pay into the registry of this Court for the maintenance and support of said minor child the sum of $25.00 per month, and should also pay into a trust fund account in some bank to be selected by the defendant the sum of $25.00 per month to provide an educational fund for said minor child.”

The divorce was granted, and the decree included the provision:

“* * * that plaintiff should contribute into the registry of this court the sum of $25.00 per month for the maintenance and support of said child, and an additional sum of $25.00 per month into some bank, to be selected by the defendant, as an educational fund for said child.”

In November, 1959, Mr. Green filed a petition alleging that Mrs. Green had taken the minor child from the State of Arkansas, thus depriving him of reasonable visitation rights; that he had remarried since the decree of divorce, and was now required to support a wife and step-daughter, as well as his mother; that he was unable financially to pay the $25 each month into the educational fund as provided in the original divorce decree, and prayed the court to modify the decree by eliminating the provision requiring the payment of said sum into an educational fund. Appellant responded, denying that she had deprived appellee of visitation rights with the boy, and alleging that Mr. Green was in arrears in the amount of $75 in his payments to the educational fund, and seeking judgment for that amount. She further asserted that the $25 for maintenance was insufficient, and prayed the court to increase the allowance. On hearing, the court discontinued the requirement for the payment of the $25 to the educational fund, and denied the motion for an increase in support and maintenance payments. From such order of the court, appellant brings this appeal.

Of course, it is necessary that appellee show a change in circumstances before being entitled to a reduction; for instance, his income is reduced, or increased obligations leave him less able to comply with the requirements of the original decree. We do not think such a change was shown. Mr. Green did not testify relative to the amount of money he was making at the time of the divorce, but Mrs. Green stated that, due to an injury he had received, he was drawing $100 per month workmen’s compensation. At the time of the hearing, Mr. Green had been an employee of the State Hospital for the past two years, and lived at the hospital. His testimony reflects that he earned $284 per month from this job, and obtained free rent and utilities; in addition, he received a veteran’s disability check of $52 each month. His present wife had an income of $170 per month, and his mother received $41 per month. Though the record does not reflect Mr. Green’s job income at the time of the divorce, it would appear from this record that he is perhaps even better off financially, since he was only drawing $100 a month at the time of the decree, and, by his own admission, was not at that time receiving free rent and utilities. Appellee mainly relies upon the fact of his remarriage to justify a modification of the decree. In Bostic v. Bostic, 229 Ark. 127, 313 S. W. 2d 553, this Court, in quoting from 27 C. J. S., Divorce, § 322, p. 1245, said:

“The fact that a divorced husband has remarried or was contemplating remarriage is not alone ground for reducing the amount of the allowance, although it is a circumstance that may be considered in weighing the equities of the situation; and the same rule applies to the remarriage of the wife, at least in the absence of an assumption by the second husband of any obligation to support the children of the first marriage; nor is the remarriage of both husband and wife to third persons, in itself, regarded as such a change of circumstances as requires a modification of the allowance.”

Certainly, the remarriage is not a ground for modification in this ease; the record reflects that Mr. Green married his present wife shortly after obtaining the divorce, and was well aware, at the time he asked the court, through his complaint, to enter the educational fund provision, that he was fixing to assume additional obligations, vis., a second wife and a step-daughter. In Wilson v. Wilson, 186 Ark. 415, 53 S. W. 2d 990, a divorced husband sought reduction of an award for support of the ex-wife and two minor children. The facts in that case were far stronger for reduction than the present one, in that it was established that the appellant’s salary had been reduced, and that one of the minor children, a daughter, had married. The Chancellor refused to grant a reduction, and on appeal, we affirmed the decree.

Appellee also argues that appellant’s financial condition has improved considerably since the divorce, since she was unemployed at that time, and attending school, while presently, she is employed in Oklahoma City, having net earnings of $170 per month. Of course, this fact does not relieve Mr. Green of his obligation to the boy, particularly when it appears that he is financially able to comply with the decree. Appellee also makes reference to an alleged agreement at the time of the adoption of the child, which he asserts should relieve him of the payment to the educational fund. We find no merit in this contention. Appellee’s obligation to this boy is the same as though it were his own natural child.

Likewise, the child should not be deprived of the opportunity to obtain an education because appellant removed him to Oklahoma. This was done, according to Mrs. Green, because she could obtain higher wages in Oklahoma City. Mr. Green complains that though he has extended invitations to the boy to visit him here in Arkansas, snch visits have not been made, and implies that appellant has alienated the affection of the child for appellee. Appellant testified that Hubert "William was very fond of Mr. Green, but the child did not want to go to appellee’s home. She insisted that she had not kept the boy away, but had, to the contrary, told him that he might visit Mr. Green whenever he wanted to. The evidence leaves some doubt as to appellee’s actual desire to visit with the child, since the testimony reflects that the boy visited in Little Rock for three weeks in the summer of 1959, and Mr. Green only visited with him one time. Certainly, appellee is entitled to have the child visit him at a time when the boy is not in school, and, if he (Green) desires such visits, and will furnish costs of transportation, the Chancery Court can be petitioned for this purpose. Except for the fact that the youngster is away from the state, we would give consideration to increasing the allowance for maintenance.

The decree is reversed, insofar as it relates to relieving appellee of the payment to the educational fund, and the cause is remanded with directions to reinstate the $25 monthly allowance for the educational fund for Hubert William Green, together with judgment for any unpaid amounts that may have accrued; in all other respects, the decree is affirmed.

Appellant’s attorneys seek an additional fee for services rendered on this appeal, and because of the findings herein contained, and the further fact that the attorneys have only received a $50 fee, we are of the opinion that an additional attorneys’ fee of $50 should be allowed.

It is so ordered.

       From the testimony of Mr. Green during cross-examination:
      “Q. How soon did you remarry? A. Just as soon as the law allows. Q. And this woman had a daughter when you married her? A. Yes, sir. Q. You had already made an obligation to pay $50.00 a month to the defendant at that time? A. Yes, sir. Q. And you were represented by Counsel at the time the divorce was granted? A. That is right. Q. Whose idea was it about this educational fund? A. It was mine when she insisted.”


text:
    Wells v. Adams.
    5-2256
    340 S. W. 2d 572
    Opinion delivered December 12, 1960.

      Tom Gentry and William H. Donham, for appellant.

      Mann & McCulloch and E. J. Butler, for appellee.
   J. Seaborn Holt, Associate Justice.

Tbis is an action for damages for alleged false arrest and false imprisonment. A trial resulted in a judgment for the defendants [appellees here] and this appeal followed. The evidence reveals that the appellant, Mrs. Ruby A. Wells, and her late husband, L. L. Wells, were doing business as the “Arkansas Tastee Freez Company,” and as such entered into a franchise agreement with the Harlee Manufacturing Company of Chicago, Illinois. Under the terms of this agreement, Mr. and Mrs. Wells were granted the exclusive privilege for the sale and distribution of Harlee Ice Cream Freezers in a designated territory in Arkansas which included St. Francis County. In addition, the Wells were entitled to lease one Harlee automatic ice cream feeder, a dispensing device, for each ice cream freezer sold in the territory. The Wells, in turn, sold ice cream freezers and leased automatic ice cream feeders in their designated area to individual proprietors of dairy stands who catered to the public by selling ice cream. One of the conditions upon which the feeders were leased by the Wells was that only an ice cream mix known by the trade name of “Tastee Freeze” would be used in the feeders and that violation of the terms of the condition would entitle the Wells, without notice or legal action of any kind, to take possession of the feeders free and clear of any claim of the lessee. In 1953, Mr. Charles Adams procured equipment from Mr. Wells to set up a dairy stand in the town of Hughes. Included in the equipment was an automatic ice cream feeder. At the trial it was contended by Mrs. Wells that the feeder was leased; Adams, on the other hand, maintained that he purchased the feeder from Mr. Wells. Another provision under which the feeders were leased, was that they would be serviced by appellant, Wells. On June 13, 1958, Mrs. Wells testified that she was in the town of Hughes to service the feeder, having received a complaint from Adams that the feeder was not working properly. During the course of inspecting the machine and repairing it, Mrs. Wells discovered that an ice cream mix other than “Tastee Freez” was being used in the feeder contrary to the express provisions of her alleged agreement. Upon discovery of this fact, Mrs. Wells informed the attendant at the stand that she would have to take the feeder with her and loaded it in her car. Shortly thereafter, Adams was notified of what had happened by one of his employees and upon receiving this information, he radioed the city police from his ear and an officer, William L. Harris, was dispatched to aid Adams in the search for Mrs. Wells. Mrs. Wells was located, and though the record is in dispute, it appears that she either voluntarily or involuntarily went to the City Hall and either voluntarily or involuntarily remained there for some two and one-half to three hours while attempting to call her attorney. Mrs. Wells testified that she was released when she removed the keys to her car from her bosom where she had secreted them. The keys were taken, a search made of her car, and the feeder recovered. As indicated, Mrs. Wells filed the present suit alleging in her complaint that she was falsely arrested and falsely imprisoned and prayed that she be awarded damages.

Appellees answered with a general denial. Trial was had before a jury and a verdict returned in favor of the defendants [appellees]. This appeal followed.

The sufficiency of the evidence to support the verdict is not an issue on this appeal since appellant, Mrs. Wells, admitted that the evidence was sufficient to support the jury’s finding that she was not falsely imprisoned but for reversal she relies on the following points: “I. The court erred in giving defendants’ Instruction No. 1 and refusing to give plaintiff’s requested Instruction No. 5. II. The court erred in giving plaintiff’s requested Instruction No. 3, as modified by the court. III. The court erred in allowing the introduction of defendants’ exhibits No. 7 and No. 8.”

-I-

We have reached the conclusion that appellant is correct in her first contention above that the trial court erred in giving Instruction No. 1 over her objections. This instruction contained this provision: “You are instructed that false imprisonment is a trespass committed against the person of another by unlawfully arresting and detaining him without any legal authority, or by instigating such unlawful arrest. It must be proved that the arrest was without legal authority before an action can be founded upon a false imprisonment.” We hold that the vice in the above instruction lies in the language of the last sentence -which clearly imposed the burden on the plaintiff [Mrs. Wells] of not only proving imprisonment but also the burden of proving that the imprisonment was unlawful. We think that this instruction is in conflict with our holding in Missouri Pacific Railroad Company v. Yancey, 180 Ark. 684, 22 S. W. 2d 408, where we said: “* * * The action was one for false imprisonment, and, the arrest having been proved by the undisputed evidence, the burden was upon the defendant to show that it was by authority of law. Every imprisonment of a man is a trespass; and in an action to recover damages therefor, if the imprisonment is proved or admitted, the burden of justifying it is on the defendant, [appellees here] Citing cases.” Also in support of this statement, the Supreme Court of Michigan in the case of Elmer Burlingame Donovan v. James S. Guy and Edwin James Ward, 347 Mich. 457, 80 N. W. 2d 190, said: “As general proposition, it must be admitted that it is only necessary for the plaintiff, in action for false imprisonment, to show that he has been imprisoned or restrained of his liberty; the presumption then arises that he was unlawfully imprisoned, and it is for the person who has committed the trespass to show that it was legally justified.”

-II-

Appellant’s next contention is that Instruction No. 3 of the plaintiffs [appellees] as modified by the court in which the court instructed the jury that if it found that the plaintiff [Mrs. Wells] had been imprisoned and had suffered damages thereby, they would be justified in awarding such damages. The appellant says that false imprisonment is a trespass and every trespass carries with it at least nominal damages to which she was entitled. While this seems to be a correct statement of the law, this court has many times held that we would not reverse for failure to award nominal damages. Yampert v. Johnson, 54 Ark. 165, 15 S. W. 363, Laflin v. Interstate Construction Company, 181 Ark. 1110, 29 S. W. 2d 280, Brown v. Bradford, 175 Ark. 823, 1 S. W. 2d 14.

-ni-

The third point urged for reversal is that the trial court erred in admitting in evidence a search warrant supplied by appellee, Adams, to show lack of malice and good faith on the part of appellees. Appellant insists that good faith and lack of malice must be specially plead and cannot be in issue on general denial. We do not agree. The plaintiff [appellant] put the issue of punitive damages in the case by her pleadings. Since exemplary or punitive damages are not allowed in this state without a showing of malice, wantonness, or lack of good faith, Kroger Grocery & Baking Company v. Waller, 208 Ark. 1063, 189 S. W. 2d 361, the appellees had the right to deny that part of appellant’s complaint asking for punitive damages and by so doing, show that they acted in good faith and without malice. The search warrant and the affidavit for it, as going to show good faith, were properly admitted. In Elrod v. Moss, et al, 4 Cir., 278 F. 123, an invalid search warrant was held to be properly admitted to refute the charge of malice and show good faith on the part of the officers in a false imprisonment suit. The court there said: “The so-called John Doe search warrant in the possession of the defendant Gosnell as a federal officer, although properly held invalid by the court, was clearly admissible to refute the charge of malice and wantonness. The search warrant under which Moss acted, even if its period of validity had expired, was admissible for the same purpose.” See also the case of Richardson v. Huston, 10 S. D. 484, 74 N. W. 234, where it was held the defendants were entitled to show under a general denial, all the facts and circumstances connected with an arrest in order to disprove the malice and thereby prevent a judgment for exemplary damages, and accordingly it was held error to exclude such evidence even though it might have some tendency to raise the defense of justification which had not been pleaded. To the same effect is Adair v. Williams, 24 Ariz. 422, 210 P. 853.

Accordingly, for error indicated the judgment is reversed and the cause remanded.


text:
    Campbell v. City of Hot Springs.
    5-2200
    341 S. W. 2d 225
    Opinion delivered December 12, 1960.
    [Rehearing denied January 16, 1961.]

      8am L. Anderson, for appellant.

      David B. Whittington, for appellee.
   Ed. F. McFaddin, Associate Justice.

This appeal challenges tbe judgment of the Garland Circuit Court, which ordered appellant, Joe Campbell, dismissed from the police force of the City of Hot Springs. The governing statute on civil service trials is § 19-1605.1, Ark. Stats., as amended by Act No. 326 of 1949; and one of the recent cases involving this statute is City of Little Rock v. Newcomb, 219 Ark. 74, 239 S. W. 2d 750.

Because of several complaints from citizens the Civil Service Commission of the City of Hot Springs notified Joe Campbell (appellant) that he was reduced from the rank of lieutenant to the grade of patrolman. In accordance with the previously cited statute, Mr. Campbell requested and obtained a trial before the Civil Service Commission, where the City was represented by the City Attorney and Mr. Campbell was represented by his own attorney. Evidence was introduced as to a number of incidents involving Mr. Campbell, one of which will be hereinafter detailed in Topic II. At the conclusion of the hearing, the Civil Service Commission reinstated Mr. Campbell to the rank of lieutenant. The City Attorney of Hot Springs appealed to the Circuit Court to reverse the order of reinstatement made by the Commission. After Mr. Campbell’s motion to dismiss the appeal (subsequently to be discussed in Topic I, infra) had been overruled, the Circuit Court tried the case de novo on the transcript of evidence heard before the Civil Service Commission, together with additional evidence ore tenus (§ 19-1605.1, Ark. Stats.); and entered a judgment discharging Mr. Campbell from the police force of the City of Hot Springs. To reverse that judgment, Mr. Campbell prosecutes this appeal to this Court and urges the points herein treated.

I. The Appeal From The Civil Service Commission To The Circuit Court. In the Circuit Court Mr. Campbell filed an unverified motion to dismiss the appeal from the Civil Service Commission order, and claimed that the City Attorney did not have the right and power to prosecute such an appeal. Mr. Campbell admitted that Mr. Whittington was the City Attorney and had given due and timely notice of appeal, and that the said Act No. 326 of 1949 specifically provided for a right of appeal by the City; but Mr. Campbell insisted that it was necessary for the City Council of Hot Springs to specifically authorize the City Attorney to appeal the case to the Circuit Court, and that no such specific action of the Council had been presented by Mr. Whittington.

The Circuit Court ruled that the case was properly appealed from the Commission to the Circuit Court; and in the state of the record before us, the Circuit Court was correct. It is true that § 19-1015 Ark. Stats, provides for the election of a City Attorney but does not prescribe his duties in detail: rather, leaving it to the City Council to fix such duties. No ordinance of the City of Hot Springs was introduced in evidence in this case fixing such duties of the City Attorney; and we do not take judicial notice of municipal ordinances. Lowe v. Ivy, 204 Ark. 623, 164 S. W. 2d 429; and City of Little Rock v. Griffin, 213 Ark. 465, 210 S. W. 2d 915, and cases there cited. So we have no evidence that the City Attorney of Hot Springs did, or did not, have the right and power under the municipal ordinances to appeal this case from the Commission to the Circuit Court.

Mr. Whittington, however, as the admitted City Attorney of Hot Springs, represented to the Circuit Court that he had the power to appeal the case; and his representation was not denied by affidavit. The leading case on the authority of an attorney to represent a client is that of Tally v. Reynolds, 1 Ark. 99, 31 Am. Dec. 737, wherein this Court said:

“. . . it is incumbent on the party undertaking to question the authority of the attorney representing his adversary, to show to the court by affidavit, facts sufficient to raise a reasonable presumption that the attorney is acting in the case without authority from the party he assumes to represent, then, and not until then, the attorney may be required to show his authority.” The above quoted language from Tally v. Reynolds is found practically verbatim in 5 Am. Jur. 308, “Attorneys at Law”, § 81. When Mr. Whittington appeared in the Circuit Court to prosecute the appeal of the City, his standing as an attorney at law, and an officer of the court, carried with it his presumed right to represent his client; and Mr. Campbell did not challenge that representation by affidavit. Therefore, Mr. Whittington’s authority was not sufficiently challenged; and the Circuit Court was correct in its ruling on this point.

II. The Correctness Of The Circuit Court Judgment. Mr. Campbell vigorously insists that the Circuit Court judgment was erroneous in ordering complete dismissal from the police force; but we find such insistence to be without merit. In the case at bar, the Circuit Court proceeded in strict adherence to our case of City of Little Rock v. Newcomb, 219 Ark. 71, 239 S. W. 2d 750, wherein we said:

“We conclude that the Legislature in enacting Act 326, supra, intended to provide for a de novo hearing by the circuit court on the record before the Commission and any additional competent testimony that either party might desire to introduce; and that this court should hear the matter de novo on the entire record before the circuit court, as in chancery cases.”

In the hearing before the Commission there was the matter of ownership of an automobile by Mr. Campbell, which automobile — it was claimed — had been used by persons committing a robbery. Mr. Campbell’s title certificate showed some replacement of names; but Mr. Campbell claimed that he purchased the car in the regular course of business and paid for it with money he had earned while working in off-hours at the Citizens’ Club. Here is a portion of his testimony before the Commission:

“Q. How much did you pay fo,r that automobile?
A. $250.00.
Q. How did you pay the $250.00?
A. In cash.
Q. Did you cash a check to get that money?
A. I certainly didn’t. I don’t have a checking account.
Q. Then where did you get $250.00 all of a sudden?
A. I made about $500.00 at the Citizens’ Club two or three months before, and that’s the last I had from that, and I made several more dollars in tips from taking some of them home, and someone up there one night handed me a fifty dollar bill just for being nice to him, and I certainly didn’t ask him for it. I made, I guess, between 6 and $700.00 up there, and it’s turned in on my Federal income too.”

The question of what kind of work Mr. Campbell was doing at the Citizens’ Club was not pursued before the Commission; but when the case reached the Circuit Court, the matter was pursued; and the following occurred in the examination of one witness:

“Q. Do you know of a place called the Citizens?
A. Yes, sir.
Q. Can you state whether or not Lieutenant Campbell worked there at any time?
A. Yes, sir.
Q. When did he work there?
A. Last year.
Q. Can you recall the time of year?
A. It was during the races.
Q. What type of establishment is the Citizens?
A. It is a gambling house.”
Mr. Campbell’s attorney then said:
“That is right, your Honor. We will stipulate it is a gambling house in Garland County. If you will recall, the testimony was about where he got some $500 with which he bought an automobile.”

We thus have a police lieutenant who was regularly working on the City police force of Hot Springs, hut who, in his off time, was working in a gambling house in that City. The City police force of Hot Springs cannot condone its policemen in such violations of the law. In Rowland v. State, 213 Ark. 780, 213 S. W. 2d 370, we held that when the City Attorney failed to enforce the municipal ordinances against gambling, he was guilty of law violation. The same rule applies to a policeman who violates the gaming statutes of Arkansas found in § 41-2001 et seq. Ark. Stats. A policeman in a municipality cannot represent the City as a policeman part of the twenty-four hours, and then assist in the operation of a gambling place of business the rest of the time. We cannot sanction such a “Dr. Jekyll-Mr. Hyde” arrangement. It is beyond the power of the Chief of Police or the Police Department of Hot Springs to condone such action.

In this case, Mr. Campbell openly admitted law violation ; and under the holding of Rowland v. State, supra, he should have been dismissed from the police force. That the Circuit Judge in the case at bar based his holding on this point is shown by the language of the judgment and the other order in the record:

“. . . that the additional oral evidence adduced before this Court on this date is so convincing and of such a nature as to justify not only a demotion, but a complete discharge of Appellee from the Hot Springs Police Department. . . .
“IT IS THE ORDER OF THIS COURT that Leonard R. Ellis, Sheriff of Garland County, and the Honorable Walter J. Hebert, Prosecuting Attorney for the 18th Judicial Circuit of Arkansas be ordered and directed to make an investigation and ascertain if gambling of any nature is being carried on at the said Citizens Club; that they and each of them take the necessary actions to abate said gambling house if same is existing, and report their findings to this Court.”

The judgment of the Circuit Court ordering Mr. Campbell dismissed from the police force of the City of Hot Springs is affirmed.

       Campbell’s motion in the Circuit Court reads in part: “The appeal which has been filed in this case is not a proper appeal, because the power of appeals in eases of this nature is not given to City Attorneys but to the City itself. In this particular case the City Attorney was not directed to appeal this case by the City Council nor by the Civil Service Commission.”

       We have not overlooked § 19-912 Ark. Stats, relating to the duties of a City Attorney; but that section is from Act No. 153 of 1923, which relates only to city attorneys of cities of the second class; and we know judicially that Hot Springs is a city of the first class. City of Malvern v. Young, 205 Ark. 886, 171 S. W. 2d 470.

       Mr. Campbell’s answer to the Circuit Court contained this language: “. . . admits that David Whittington is the City Attorney. for the City of Hot Springs, Arkansas . . . admits that the City Attorney filed with the Chairman of the Hot Springs Civil Service Commission a notice of this appeal.”