author: Robert L. Brown, Justice. Ray Thornton, Justice,

text:
    OZARK GAS PIPELINE CORPORATION v. ARKANSAS PUBLIC SERVICE COMMISSION
    99-915
    29 S.W.3d 730
    Supreme Court of Arkansas
    Opinion delivered November 9, 2000

      Wright, Lindsey &Jennings LLP, by: AIM. Norton, for appellant.

      Lee McCulloch, for appellee.
   Robert L. Brown, Justice.

Tbis case involves the assessment of the ad valorem property tax by the Tax Division of the appellee Arkansas Public Service Commission (APSC) in 1995 and 1996, and specifically raises the question of whether $20.8 million in exit fees should have been taxed. The property assessed was a natural gas pipeline owned by appellant Ozark Gas Pipebne Corporation which extends from Pittsburg County, Oklahoma, to White County, Arkansas. The pipebne was completed in 1982, and approximately sixty-five percent of it is located in Arkansas.

Originally, there were four partners who owned Ozark: Columbia Gulf Transmission Co. (Columbia), Tennessee Gas Pipeline Co. (Tennessee), USX Corp., and ONEOK, Inc. Ozark was formed in 1978 and began delivering gas through the pipeline in 1982. In 1982, Columbia and Tennessee entered into contracts with Ozark and obbgated themselves for fifteen years to pay for fifty percent of the pipebne s capacity, whether they used the pipebne or not. Payments made under those contracts were $18.5 million annuaby. In 1993, the partners decided to put the pipeline up for sale. After soliciting bids in 1994, the partners and a buyer (a unit of NGC Energy Resources, Inc.), entered into a purchase and sale contract on February 10, 1995. The contract valued Ozark’s tangible pipeline assets at $24 million and an intangible asset, the exit fees, at $20.8 million, for a total purchase price of $44.8 million.

The exit fees were established to deal with the obligations of Columbia and Tennessee under the fifteen-year contracts with Ozark to use fifty percent of the pipeline’s capacity. Those contracts were due to expire in February of 1997. Before the sale, Columbia and Tennessee had agreed with Ozark to settle the contract obligation by making lump sum payments. The agreement reached provided that Columbia and Tennessee would pay exit fees of $20,841,750. These exit fees had not been contemplated in NGC’s bid of $24 million made in 1994. In addition, when Ozark and NGC entered into the purchase and sale contract on February 10, 1995, the Federal Energy Regulatory Commission (FERC) had not yet approved the lump sum agreement.

On May 1, 1995, Ozark and NGC closed the sale. In August of 1995, FERC approved the lump sum settlement agreement between Ozark and its two partners, Columbia and Tennessee. Prior to FERC approval, Columbia and Tennessee continued their monthly payments to Ozark. In September of 1995, Columbia and Tennessee paid $17 million to Ozark as the final payment of the exit fees.

In 1995, the Tax Division of APSC valued Ozark’s property for ad valorem tax purposes. The valuation was based on the Tax Division’s consideration of three statutory methods. See Ark. Code Ann. § 26-26-1607(b) (Repl. 1997). The weighted average of the three methods used yielded a value in 1995 of $44,093,606. Approximately sixty-five percent of that amount was allocable to Arkansas’s portion of the pipeline. In 1996, the valuation by the Tax Division of the same property was based entirely on the cost method, which is one of the three statutory methods under § 26-26-1607(b). At that time, Ozark’s book value was $44.7 million, and that was the value APSC used. The precise unit value placed on Ozark by the Tax Division for 1996 was $44,701,512, which represented an increase over the 1995 valuation. The sixty-five percent factor for property located in Arkansas was then applied to these values. The statutory twenty percent of value factor was next applied to determine assessed value, and that value was apportioned among the affected counties for the application of the county millage.

Ozark filed a petition for review in which it objected to the Tax Division’s valuation of its property for 1995 and 1996. It alleged that the Tax Division’s values were too high and did not reflect the true market value or actual value of its property, as required by Ark. Code Ann. § 26-26-1605 (Repl. 1997). Moreover, Ozark contended that the valuations were not done in accordance with the methods for determining value set out in § 26-26-1607(b).

On June 5, 1997, the Administrative Law Judge conducted a hearing, and invalidated the 1995 and 1996 valuations. In doing so, the ALJ found that the exit fees were intangible property and had been wrongfully included for valuation purposes. The APSC, on review, reversed the findings of the ALJ and approved the decisions of its Tax Division. Ozark petitioned for review by the Pulaski County Circuit Court, and the circuit court affirmed the order of the APSC. The matter was then appealed to the court of appeals, and that court certified the case to this court because the appeal involved a conflict in our statutes. We accepted certification.

I. Scope of Review

As an initial matter, Ozark urges this court to engage in a de novo review of the APSC’s order because it is an order deciding a question of law. We disagree that our standard of review is de novo.

The General Assembly has provided the applicable standard of review of an APSC order by an appellate court:

(3) The finding of the commission as to the facts, if supported by substantial evidence, shall be conclusive.
(4) The review shall not be extended further than to determine whether the commission’s findings are supported by substantial evidence and whether the commission has regularly pursued its authority, including a determination of whether the order or decision under review violated any right of the petitioner under the laws or Constitution of the United States or of the State of Arkansas.

Ark. Code Ann. § 23-2-423 (c)(3) and (4) (Repl. 1997). Furthermore, this court has' held that it is not within the province of the courts of this state to assess property, but only to review those assessments. St. Louis-San Francisco Railway Co. v. Arkansas Public Service Comm’n, 227 Ark. 1066, 304 S.W.2d 297 (1957). The burden is on the person or entity protesting the assessment to show that the assessment is manifestly excessive, clearly erroneous, or confiscatory. Tuthill v. Arkansas County Equalization Bd., 303 Ark. 387, 797 S.W.2d 439 (1990).

Accordingly, we will look to whether the findings of the APSC are supported by substantial evidence.

II. The 1995 Assessment

For its first point, Ozark claims that the 1995 assessment was erroneously made because the Tax Division determined value without reference to the actual sale of the pipeline, which, it contends, was in the amount of $24 million. Ozark concedes that the sale did not actually close until May of 1995. It urges, however, that Ark. Code Ann. § 26-26-1602 (Repl. 1997), does not require that all property be assessed as of January 1 of each year. Instead, according to Ozark, the statute requires that companies report what the value of their property was as of that date. Ozark further urges that Ark. Code Ann. § 26-26-1607 (Repl. 1997), authorizes the Tax Division to consider other information in addition to the reports filed by the taxpayer. It concedes that property must be valued as of a definite point in time and that any specific cut-off point may be arbitrary, but it argues that to exclude a sale in the market place such as Ozark’s sale of its assets to NGC in the amount of $24 million, as a means of determining value, is arbitrary.

Ozark also contends that the Tax Division erred by giving ten percent weight to the stock-and-debt method for deciding value under § 26-26-1602 because the pipeline was merely a partnership at the time of the assessment and had no publicly traded stock. If the stock-and-debt method had not been used, but instead its ten percent weight had been split between the other two methods, the 1995 valuation would have been $3 million lower, and the assessment would have been some $400,000 less than the figure arrived at by the Tax Division, according to Ozark. Finally, Ozark argues that the Tax Division erred when it did not consider future income because in 1995 it was known that the Columbia-Tennessee contracts would end in less than two years and Ozark’s income would substantially decrease.

In response, APSC explains how it reached the 1995 value for Ozark’s property, using the three methods prescribed by § 26-26-1607(b). According to APSC, the cost approach yielded a value of $50.7 million and was assigned a weight by the Tax Division of thirty percent. The stock-and-debt method under the statute yielded a value of $73 million and was weighted at ten percent. And the income approach yielded a value of $35.9 million and was given a weight of sixty percent. The resulting unit value, using the three methods, was $44,093,606.

APSC further explains that it did not recognize the actual sale of the pipeline to Ozark, which sale closed on May 1, 1995, because Arkansas statutory law requires the company to report to the Tax Division “the amount, kind and value of the property as of January 1st next preceding the filing of the annual statement,” and that all property be valued “according to its value on January 1.” Ark. Code Ann. § 26-26-1602(b) (2) (Supp. 1997). APSC also notes that there was no reason for the Tax Division to extend the statutory window beyond January 1, 1995, and to accept Ozark’s position that its value had decreased to $24 million.

Moreover, APSC emphasizes that the Ozark-NGC sale agreement stated on its face that the sale price was $44.8 million not $24 million. There were other references by NGC to the fact that the sale price was $44.8 million. NGC stated in an internal memo on February 17, 1995, after the February 10, 1995 contract, that Ozark had been acquired for $44.8 million. NGC also remarked in its annual report to stockholders that the property, plant, and equipment of Ozark had been purchased for $44.8 million. Finally, it was reported in Moody’s Industrial Manual and NGC’s 1995 annual report to the Securities and Exchange Commission that Ozark had been acquired for $44.8 million. Because of these facts, APSC maintains that its 1995 assessment of Ozark was not only very much in line with statutory requirements under § 26-26-1607(b) but that its determined value for 1995 ($44,093,606) approximated the actual sale price to NGC of $44,800,000. Finally, APSC claims there would be significant confusion if the Tax Division disregarded the January 1 statutory directive and had varying cutoff dates for the multiple companies it assessed.

We turn then to the applicable statutes relating to assessment of utilities. The Tax Division of the APSC is authorized by statute to assess the natural gas pipelines in Arkansas, including Ozark. Ark. Code Ann. §§ 26-26-1601(1) and 26-26-1602(b)(l) (Repl. 1997). Statutory law also provides how that assessment is to be made:

Each súch company doing business or authorized to do business in Arkansas and owning or having control of property, or owning or having control of property in Arkansas, shall, through its owner, president, secretary, general manager, or agent having control of the company’s affairs in this state, on or before March 1 of each year, make a statement in writing to the division showing all property subject to assessment and taxation in this state. The statement shall truly show the amount, kind, and value of the property as of January 1 next preceding the filing of the annual statement.

Ark. Code Ann. § 26-26-1602(b)(2) (Repl. 1997) (emphasis added).

In Central & S. Companies, Inc. v. Weiss, 339 Ark. 76, 3 S.W.3d 294 (1999), this court explained its rules for statutory construction:

As a guide for our review, we look to the rules of statutory construction. The basic rule of statutory construction is to give effect to the intent of the legislature. Ford v. Keith, 338 Ark. 487, 996 S.W.2d 20 (1999). Where the language of a statute is plain and unambiguous, we determine legislative intent from the ordinary meaning of the language used. In considering the meaning of a statute, we construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. We construe the statute so that no word is left void, superfluous, or insignificant; and meaning and effect are given to every word in the statute if possible. Id.

Id. at 80, 3 S.W.3d at 297. Applying these rules of construction to § 26-26-1602(b)(2), we note that the statute does not expressly state that a company’s property must be assessed as of January 1. Nevertheless, the intent that that date is the cutoff point for valuation purposes is clear. APSC is persuasive when it contends that it assesses hundreds of companies a year, and that to have different cutoff dates for each utility would be an administrative nightmare and would wreak havoc on the entire assessment process.

There is the further practical consideration that there was no guarantee that the sale between Ozark and NGC was going to be completed in 1995. The contract was signed on February 10, 1995, but the sale did not close until May. Any number of events could have occurred to delay the closing of the sale even beyond that date. Tax assessments must be certified to the counties by July 15. See Ark. Code Ann. § 26-26-1612 (Repl. 1997). Additionally, Ark. Code Ann. § 26-26-1605(a)(1) (Repl. 1997), requires the Tax Division to meet on the first Monday of March each year to determine assessments. It would be illogical to require the Tax Division to contemplate a sale in March that did not close until May. We conclude that § 26-26-1602(b)(2) provides for a determination of assessed value as of January 1 of each year. Accordingly, we find no fault in the APSC’s procedure in this regard.

The next issue is whether the Tax Division erred in its use of valuation methods. Section 26-26-1607(b) provides that in determining a company’s fair market value, the Tax Division shall consider:

(1) Original cost less depreciation, replacement cost less depreciation, or reconstruction cost less depreciation.
(2) The market value of all outstanding capital stock and funded debt, but where capital stock is not traded or capable of reasonably accurate determination, book values may be substituted.
(3) Operating income to be determined by the company’s historical income stream with consideration to the future income stream.
(4) Other information that will assist in determining fair market value.

Ozark urges that the Tax Division erred in giving a ten percent weight to the stock-and-debt approach under § 26-26-1607(b)(2)(A). We first note that the ALJ acknowledged in his order that Ozark stock was not publicly traded but then stated that the Tax Division’s methods of determining Ozark’s value were not “per se inappropriate.” Those methods, of course, included the stock- and-debt method for the 1995 assessment. At the hearing before the ALJ, the Tax Division’s assistant director, Steven Switzer, explained that the stock-and-debt method derives from the theory that “the assets of a firm on a balance sheet will equal its liabilities, and if you can determine the appropriate value for the liabilities, then by definition you have the value for the assets.” In sum, Switzer explained the method as an analysis of the balance sheet of a company. Here, Ozark certainly had liabilities for valuation purposes, even though it did not have publicly traded stock. We conclude that the stock-and-debt method was a viable method for determining value.

Ozark also contends that the Tax Division did not appropriately consider the fact that the Columbia-Tennessee payments would end in 1997 and, thus, future income would greatly diminish. However, Ozark provides this court with no basis for its conclusion that the Tax Division did not appropriately consider historical income and future income stream, as § 26-26-1607(b) requires, other than its disagreement with the weight given to the income method.

We find no error in the methods used by APSC in its assessment of Ozark’s property for 1995. We further conclude that the APSC properly considered the exit fees as part of the purchase price of Ozark.

III. 1996 Assessment

Ozark next contends that the Tax Division erred in its assessment for 1996 ($44,701,512) because it again completely disregarded the sale to NGC as a means for determining value and only relied on the cost method of valuation in arriving at the assessment for that year. The company urges that if the Tax Division had given a thirty-five percent weight to the cost method and a sixty-five percent weight to the income method, this would have resulted in an assessment that was almost a million dollars less than the assessment it calculated. We disagree that the assessment was error. Ozark argues that the sale price was $24 million, but we have already concluded that the actual figure was $44.8 million with the inclusion of the exit fees. Witnesses for the Tax Division, including Steven Switzer, are convincing to us as they were to the APSC that the cost method was the preferred method for assessing value in 1996, particularly in light of the sale to NGC and the uncertainties associated with new ownership.

On this point, Ozark argues once more that Arkansas law requires the Tax Division to give consideration to historical and future income stream, but that it did not consider the fact that the Ozark income stream, would be “virtually obliterated” in February of 1997 when the capacity payments from Columbia and Tennessee ceased. APSC responds by first noting that when the Tax Division performed the 1996 valuation, it considered all three statutory methods under § 26-26-1607(b). It then decided to give one hundred percent weight to the cost-less-depreciation method because the resulting value approximated the amount for which the company was sold in 1995. Furthermore, for future income, APSC states that though it knew the income stream was guaranteed only through February 1997, it did not know how NGC’s ownership would affect income. The fact that Ozark was in transition in 1995 and 1996 presented a highly unusual circumstance that made rebanee on past income or predicting future income questionable and unreliable.

APSC’s analysis appears entirely reasonable, and we affirm on this point.

IV Intangible Property

Ozark argues that the most serious flaw in the 1995 and 1996 assessments was the inclusion of exit fees in the amount of $20.8 million in the company’s value. It contends that these assessments were incorrect because, at best, the exit fees were intangible property, and under Ark. Code Ann. § 26-3-302, intangible property is exempt from ad valoremtaxes. It further claims that the exit fees were merely incidental to the sale, and that if the FERC had approved the exit fee settlement before February of 1995, the fees would have been paid by Columbia and Tennessee and taken out of Ozark by its partners, including Columbia and Tennessee, before the sale closed. Though Ozark readily admits that different sections of the Tax Code relating to utilities purport to tax intangible property, it contends that § 26-3-302 was enacted after those statutes and therefore is controlling. We disagree.

The rule is well settled that a general statute must yield when there is a specific statute involving the particular matter. See Shelton v. Fiser, 340 Ark. 89, 8 S.W.3d 557 (2000); Bd. of Trustees for the City of LR Police Dept. Pension and Relief Fund v. Stodola, 328 Ark. 194, 942 S.W.2d 255 (1997). Section 26-3-302(a) is part of the Tax Code and deals generally with exemptions. It reads: “All intangible personal property in this state shall be exempt from all ad valorem tax levies of counties, cities, and school districts in the state.” Utilities and carriers, however, have their own subchapter of the Tax Code. Several sections of that subchapter expressly provide that intangible property of utilities is assessed. For example, Ark. Code Ann. § 26-26-1606(b) reads:

The division shall ascertain the value of all property, tangible and intangible, including good will, easements, and franchises, except the right to be a corporation, it being the purpose of this subchapter to include in the valuation every element that adds value to the property. (Emphasis added.)

Another section of the utilities subchapter describes the procedure for the Tax Division’s assessment of a utility’s property:

(1) There shall be deducted from the true market or actual value of the entire property, tangible and intangible, ascertained as provided in this subchapter, the true market or actual value as ascertained from the information furnished by report or otherwise of all real and personal property of the company not used in its business as a public utility, and the remainder shall be treated as the true market or actual value of all its property, tangible or intangible, actually used or employed in its public utility business;
(2) The division shall then ascertain and fix the value of the total utility operating property, tangible and intangible, in this state by taking such proportion of the true market or actual value of the entire operating property, tangible or intangible, of the company actually used in its public utility business ....

Ark. Code Ann. § 26-26-1611(1) and (2) (Repl. 1997) (emphasis added). Under the principle that the specific statute controls over the general, the sections relating to utilities for fixing value, which include tangible and intangible property, must control.

We further observe that § 26-3-302 was enacted in 1977. The utilities subchapter of the Tax Code was amended substantially in 1980. See Acts 1980 No. 9 and 10, Second Extraordinary Session. In 1980, no effort was made by the General Assembly to exclude or exempt intangible property from assessment for payment of ad valorem taxes. Moreover, Act 9 of 1980, which was codified in part as § 26-26-1607(b), specifically included methods for assessing value. Those methods, as already discussed, included consideration of intangible property such as stock, debt, and future income. It reasonably follows that had the General Assembly desired to eliminate intangible property in calculating value, it would not have enacted Act 9 of 1980. On a related subject, we have held that the absence of a later change by the General Assembly of statutes interpreted a certain way by this court means our interpretations of the statutes remain the law. Lawhon Farm Services v. Brown, 335 Ark. 276, 984 S.W.2d 1 (1998). The same should be equally true of statutes that are clear but which have not been changed by the General Assembly.

There is, too, the point that Ozark is seemingly inconsistent in its arguments. It contends that the lump sum settlement payments, or exit fees, are intangible property and not to be assessed. At the same time, it urges that the Tax Division erred in not giving greater weight to the effect of the termination of the Columbia-Tennessee contracts on future income stream in both assessments. Income payable under the contracts also qualifies as intangible property; yet Ozark argues the merits of its impact on the assessed value of the company.

As a final point, we agree with APSC that the duty of its Tax Division is to “take into consideration the value of all the property of the company as a unit.” Ark. Code Ann. § 26-26-1605(c) (Repl. 1997). Unit value, according to the APSC, includes the synergistic value of all properties which comprise the unit, and that embraces real, personal, tangible, and intangible property. We agree that the determination of unit value for a utility company must include the value of substantial accounts receivable such as the contemplated income which was termed “exit fees.”

The dissent posits that the exit fees were not used in the business of providing utility services and because of this should not be included in determining market value under Ark. Code Ann. § 26-26-1611(1) (Repl. 1997). This was not an argument made by Ozark in its appeal, and we will not reverse on an issue not developed before this court. See In Re Adoption of D.J.L., 341 Ark. 327, 16 S.W.3d 263 (2000). But, in addition, we are hard pressed to conclude that the income from the pipeline contracts which was represented in the exit fees was not “used” in Ozark’s business. On the contrary, it is clear to us that the exit fees were a definite asset of the company and an integral part of its unit value. As already stated in this opinion, the subsection following § 26-26-1611(1) specifically contemplates using tangible and intangible property in determining market value. See Ark. Code Ann. § 26-26-1611(2).

We hold that the exit fees were properly assessed as property of Ozark.

V. Substantial Evidence

As its final point Ozark claims that the Tax Division’s 1995 and 1996 assessments are not supported by substantial evidence and, thus, its assessments must fail.

Substantial evidence is evidence that a reasonable mind would accept as sufficient to support a conclusion and force the mind beyond speculation and conjecture. Bohannon v. Arkansas State Bd. of Nursing, 320 Ark. 169, 895 S.W.2d 923 (1995). In Routh Wrecker Serv., Inc. v. Washington, 335 Ark. 232, 980 S.W.2d 240 (1998), we said, “Substantial evidence is defined as ‘evidence of sufficient force and character to compel a conclusion one way or the other with reasonable certainty; it must force the mind to pass beyond suspicion or conjecture.’ ” Id. (quoting Esry v. Carden, 328 Ark. 153, 942 S.W.2d 846 (1997)). When determining the sufficiency of the evidence, we review the evidence and all reasonable inferences arising therefrom in the fight most favorable to the party on whose behalf judgment was entered. See Union Pacific R.R. Co. v. Sharp, 330 Ark. 174, 952 S.W.2d 658 (1997).

We disagree with Ozark’s contention that substantial evidence is lacking. APSC emphasizes throughout its brief on appeal that its Tax Division considered the three methods for determining assessed value — cost less depreciation, stock-and-debt, and historical and future income — for purposes of both the 1995 and 1996 assessments. This is what the law requires under § 26-26-1607(b). Most of Ozark’s arguments under this point are a rehash of arguments previously made. Suffice it to say that expert appraisers testified for both Ozark (Mark Andrews) and the Tax Division (Michael Goodwin) in the hearing before the ALJ. The APSC gave more credence to the testimony and analysis of Mr. Goodwin, which supported the methodologies considered and used by the Tax Division in 1995 and 1996. Expert testimony qualifies as substantial evidence unless it is shown that the opinion is without reasonable basis. Dixon Ticonderoga Co. v. Winburn Tile Mfg. Co., 324 Ark. 266, 920 S.W.2d 829 (1996); Ford Motor Co. v. Massey, 313 Ark. 345, 855 S.W.2d 897 (1993); Wallace v. Williams, 263 Ark. 702, 567 S.W.2d 111 (1978). We hold that substantial evidence supports the APSC’s order.

Affirmed.

SMITH, J., not participating.

Thornton, J., dissents.

Ray Thornton, Justice,

dissenting. The majority upholds the decision of the Arkansas Public Service Commission finding that a payment of $20.8 million dollars by customers of Ozark to get out of a contract for fifty percent of Ozark’s pipeline capacity should be considered as part of Ozark’s property actually used or employed in its public utility business. This penalty to escape from a contract to use or pay for fifty percent of Ozark’s pipeline capacity in future years is referred to as an “exit fee.” I cannot agree that such an exit fee to avoid future purchases is property that is currently employed in Ozark’s public utility business, and I respectfully dissent.

There are two reasons why these exit fees should not be assessed as property used for public utility business. First, it should be noted that Ark. Code Ann. § 26-3-302, adopted in 1977, exempts all intangible property from ad valorem taxation. The statute reads as follows:

(a) All intangible personal property in this state shall be exempt from all ad valorem tax levies of counties, cities, and school districts in the state.
(b) The exemption provided in this section shall be applicable with respect to the assessment and taxation of intangible personal property on and after January 1, 1976, and no ad valorem taxes shall be assessed or collected on such property for any period after January 1, 1976.

Id.

In my view, this provision should determine the outcome of this case. Arkansas Code Annotated § 26-3-302 is both later and is more specific than other statutes suggesting that all property, both real and personal, tangible and intangible, are properly considered in assessing the value of property used or employed in Ozark’s public utility business. The majority interprets these statutes as allowing intangible property to be taxable when it belongs to a public utility. I cannot agree.

More significantly, even accepting the majority’s interpretation that the specific exemption of Ark. Code Ann. § 26-3-302 does not apply to property that is owned by a utility, the Commission’s conclusion that exit fees are used or employed in Ozark’s public utility business is untenable. The statutory framework upon which the majority relies to allow intangible property to be assessed has not been followed in this case. Arkansas Code Annotated § 26-26-1611 clearly and specifically prohibits the assessment of any property, real or personal, tangible or intangible, that is not used or employed in Ozark’s public utility business. That statute states:

The Tax Division of the Arkansas Public Service Commission shall assign or apportion the assessed value of the property of all persons, firms, companies, copartnerships, associations, and corporations which it is required to assess in the following manner:
(1) There shall be deducted from the true market or actual value of the entire property, tangible and intangible, ascertained as provided in this subchapter, the true market or actual value as ascertained from the information furnished by report or otherwise of all real and personal property of the company not used, in its business as a public utility, and the remainder shall be treated as the true market or actual value of all its property, tangible or intangible, actually used or employed in its public utility business;

Ark. Code Ann. § 26-26-1611 (emphasis added). There is no showing that the revenues received as exit fees are used or employed in the business of providing utility services. The true market value of Ozark’s property, real and personal, tangible and intangible, used or employed in its public utility business was established by an arm’s length purchase and sale of property. The administrative law judge described the transaction in its order, and found that:

By late 1993 the owner-partners wished to sell the pipeline and in 1994 solicited bids therefor from prospective purchasers. Four bids were received, ranging in price from $23.5 million to $26 million. When the latter bid was hampered by lack of financing, the bid of NGC Energy Resources, a limited partnership, was accepted at $24 million.
Each of the four owner-partners had the right to match the winning bid, but none chose to exercise this option.
On February 10, 1995, NGC and the owner-partners signed an instrument entitled, stock and interest purchase and sale agreement, which, among other things, identified the tangible pipeline assets as having a value of $24 million.
Ultimately, the parties apportioned the value of the assets involved in this transaction as follows:
Transmission Facilities $14,400,000
Truck Lines, Other $9,600,000
Fixed Assets
Exit Fees $20,841,750.
This allocation was the result of parties’ commitment in the agreement to negotiate in good faith on asset allocation, pursuant to section 338(h)(1) of the Internal Revenue Code and to make appropriate filings with the Internal Revenue Service.
The exit fees were not contemplated in the bids as submitted by the prospective buyers and arose as an issue after the parties had reached agreement on NGC’s bid of $24 million.

It seems clear that the exit fees were not part of the real and personal, tangible or intangible, property used or employed by Ozark in its public utility business, and I would reverse the Commission’s decision which is grounded upon the untenable conclusion to include exit fees.

I respectfully dissent.


source: Caselaw Access Project

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

license: Public Domain

text:
    SLOTS, INC. v. STATE of Arkansas
    00-95
    30 S.W.3d 105
    Supreme Court of Arkansas
    Opinion delivered November 9, 2000
    [Petition for rehearing denied December 14, 2000.]

      Barber, McCaskill, Jones & Hale, P.A., by: Baucum Fulk; and Walter Skelton, for appellant.

      Mark Pryor, Att’y Gen., by: C. Joseph Cordi, Jr., Ass’t Att’y Gen., for appellee.
   Robert L. Brown, Justice.

This appeal is from an order of the circuit court, which denied the motion of appellant Slots, Inc., to return certain seized devices. The items seized included twenty-five alleged gaming devices. The circuit court refused to return twenty-four of those alleged devices. Slots, Inc., raises four points on appeal which essentially concern whether the alleged gaming devices are in fact amusement devices and protected under the Coin-Operated Amusement statutes, codified at Ark. Code Ann. §§ 26-57-401 through 421 (Repl. 1997). Because we conclude that the order appealed from is not a final order under Ark. R. Crim. P. 15.2(e), we dismiss the appeal without prejudice.

The facts are that in 1998, Slots, Inc., with an address of Hydes, Maryland, received a $1,000 Amusement Machine Operator’s permit from the Arkansas Department of Finance and Administration to operate an adult amusement game room business in North Little Rock. The business was commenced with David Howard Shaw, Jr., acting as agent for Slots, Inc., and doing business as F&S Enterprises.

On October 1, 1998, North Little Rock police officers executed a search warrant on Shaw’s video arcade in North Little Rock and seized twenty-five video amusement machines. The police officers also arrested one of Shaw’s employees, Brian Keith Smith.

On October 29, 1998, Slots, Inc., and Shaw filed a motion for return of the seized machines under Arkansas Rule of Criminal Procedure 15.2 in the Municipal Court of North Little Rock, Criminal Division, where Smith’s case was pending. No hearing was held, and the devices at issue were not returned.

On April 1, 1999, Shaw was charged in Pulaski County Circuit Court with the crime of keeping a gambling house in violation of Ark. Code Ann. § 5-66-103 (Repl. 1997). On April 24, 1999, Shaw was killed in a vehicular accident. On June 1, 1999, Slots, Inc., filed a renewed motion for return of the seized machines. On June 11, 1999, the criminal charge against Shaw was deemed abated by his death. Thereafter, a hearing was held on the motion for return of the seized machines, and the circuit court ordered the return of one non-functional device and denied the motion with respect to the other twenty-four devices. The circuit court ruled in its order that the twenty-four remaining machines were illegal gaming devices and that operation of them violated the lottery prohibition of Article 19, Section 14 of the Arkansas Constitution.

We turn first to a jurisdictional defect asserted by the State. The State directs this court to Ark. R. Crim. P. 15.2, which deals with motions for the return of seized things, and particularly to the subsection dealing with appellate review. That subsection reads:

(e) Appellate Review. An order granting a motion for return or restoration of seized things shall be reviewable on appeal in regular course as a final order. An order denying such a motion, or entered under Rule 15.2(f), shall be reviewable on appeal upon certification by the court having custody of such things that they are no longer needed for evidentiary purposes.

Ark. R. Crim. P. 15.2(e). The State contends that although Shaw’s prosecution was abated by his death, the order of the circuit court does not contain a certification from the court that the devices seized are no longer needed for evidentiary purposes. Accordingly, the State contends that the circuit court’s order denying the motion is not a final, reviewable order and that this court is without jurisdiction to reach the merits. At oral argument, the State analogized the necessity for a circuit court certification under Rule 15.2(e) to court approval of a conditional plea, which is a prerequisite for an appeal of an adverse decision on a pretrial motion to suppress. See Ark. R. Crim. P. 24.3(b).

In response, Slots, Inc., contends that the criminal charge was abated by Shaw’s death, and that no other criminal charges relating to the seized devices are pending. Moreover, it asserts that the prosecution never advised the circuit court that it had need of these devices for evidentiary purposes. Finally, it notes that the twenty-four questionable machines are in the custody of the North Little Rock Police Department and not the circuit court. Thus, it contends, Rule 15.2(e) is inapposite.

The issue raised by the State is one of first impression for this court and presents us with a question of this court’s jurisdiction. We analogize the situation to the trial court certification required to render certain orders final for purposes of civil appeals. See Ark. R. Civ. P. 54(b). In civil appeals, this court has long had a strict policy that we would not consider an order final that is not conclusive of all claims affecting all parties unless there is an express determination by the trial court, supported by specific factual findings, that there is no just reason for delaying the appeal. See Ark. R. Civ. P. 54(b); see also Ark. R. App. P. — Civ. 2(a)(ll). We have emphasized this policy against piecemeal appeals in numerous cases, as well as the necessity to include a certification by the trial court that there is no just reason to delay the appeal. See, e.g., Hodges v. Huckabee, 333 Ark. 247, 968 S.W.2d 619 (1998); General Motors Acceptance Corp. v. Eubanks, 318 Ark. 640, 887 S.W.2d 292 (1994).

A comparable requirement for circuit court certification before an order is reviewable by this court is expressly provided in Rule 15.2(e). A certification by the circuit court that the items seized “are no longer needed for evidentiary purposes” protects against a futile appeal from a denial of a motion to return seized things when the items are needed for future proceedings. We view it as being incumbent on the appealing party, here Slots, Inc., to perfect a final order, the same as the burden is on the appellant in a civil appeal to obtain a 54(b) certification. That was not done.

It is true, as Slots, Inc., maintains, that Shaw is dead and no additional prosecutions in this matter are referred to in the record. But that is precisely the reason for a circuit court certification — to make certain with the participation of all parties, including the prosecuting attorney, that that is in fact the case. Otherwise, the matter is subject to some speculation on our part, and we will not engage in the futility of reviewing a matter that may not be final.

We do not believe that the point made by Slots, Inc., that the machines are not in the custody of the circuit court, as Rule 15.2(e) requires, has merit. The machines were seized pursuant to a search warrant issued by the North Little Rock Municipal Court and though the machines currently are kept by the North Little Rock Police Department, they are still held under the auspices of the circuit court.

In sum, we conclude that under the clear terms of our Rule 15.2(e), the required certification from the circuit court which would render the matter reviewable is lacking. We, therefore, dismiss the appeal without prejudice due to the lack of a final order.

There is one final point. One day before oral argument, the State notified this court that it would be raising our recent decisions in Miner v. State, 342 Ark. 283, 28 S.W.3d 280 (2000) and Thompson v. State, 342 Ark. 365, 28 S.W.3d 290 (2000), concerning the failure of Slots, Inc., to move for a directed verdict pursuant to Ark. R. Crim. P. 33.1 in order to preserve the issue of insufficient evidence. The State urges that the failure to make the directed-verdict motion at the hearing on the motion to return the seized devices constituted a waiver of the right to appeal from an adverse decision. We recognize that the State did not have the benefit of our decisions in Miner and Thompson until after it had filed its briefs in this matter. Nevertheless, the issue raised by those decisions and by the State at oral argument is essentially a new one. We deem it to be unfair to Slots, Inc., to raise a new issue at such a late date. We have stated that litigants are entitled to know all arguments made against their positions so that they can prepare adequate responses. Medlock v. Leathers, 311 Ark. 175, 842 S.W.2d 428 (1992). That did not occur under these circumstances. Hence, we will not address this argument.

Appeal dismissed without prejudice.

Glaze, J., dissents.

Tom Glaze, Justice,

dissenting. The majority court dismisses this appeal because the appellant did not obtain a certification from the lower court that the seized contraband in issue in this appeal is no longer needed for evidentiary purposes. It adopts the State’s contention that, because appellant failed to obtain the certification, the trial court’s order refusing to return the contraband to the appellant was not a final order from which the appellant could appeal. The majority court analogizes this situation to the ones covered under Ark. R. Civ. P. 54(b), and like in Rule 54(b) cases, the majority reads that a party’s failure to obtain a certification under Ark. R. Crim. P. 15.2(e) is jurisdictional and is reason to dismiss the appellant’s appeal.

As the majority opinion points out, the Rule 15.2(e) issue is one of first impression, and while the court now decides to interpret Rule 15.2(e) as jurisdictional, it is certainly not obliged to do so, because Rule 15.2(e) serves an entirely different purpose than Rule 54(b). It is quite clear that Rule 15.2(e)’s certification is to assure the seized contraband is no longer needed for evidentiary purposes, whether in criminal or civil proceedings. This is information the State in this case was fully aware of. If the State anticipated a future need of the contraband, the State could have made its needs known. The record reflects that neither the appellant nor the State needed the contraband as evidence since the defendant, David Shaw, is now dead and no additional prosecutions are mentioned. Surely, this is an evidentiary matter that could be waived and should not be jurisdictional. Rule 15.2(e) is unlike Rule 54(b), whose sole purpose is to prevent piecemeal appeals in order to avoid delay.

In conclusion, I am well aware that the court may interpret Rule 15.2(e) strictly as a jurisdictional bar when no certification has been obtained showing the seized contraband is no longer needed for evidentiary purposes. However, this court has a choice or alternative construction that is far more reasonable — a certification can be waived where a party or the record fails to show any future need for the contraband, and, in fact, reflects no pending or possible proceedings that might require the seized contraband. Certainly, the seized contraband must be preserved until the appeal is concluded, and if any future need for the contraband becomes evident in this appeal, this court has the authority to make specific directives dealing with such matters in its disposition.

For the above reasons, I would proceed with the merits in this appeal and avoid any further, unnecessary delay.


author: Ray Thornton, Justice.

text:
    Versie BURCH v. Bennie GRIFFE
    00-255
    29 S.W.3d 726
    Supreme Court of Arkansas
    Opinion delivered November 9, 2000

      Frances Morris Finley, for appellant.

      Dodds, Kidd, Ryan & Moore, by: Greg Alagood, for appellee.
   Ray Thornton, Justice.

Appellant Versie Burch, executrix of the estate of her sister-in-law, Aileen Griffe, who also claims the right to be appointed executrix of the estate of Aileen’s late husband, Robert, brings this appeal of the decision of the Pulaski County Probate Court permitting Robert’s brother and guardian, Bennie Griffe, appellee, to perfect an election on behalf of his ward to take against the will of Aileen. Ms. Burch also appeals the trial court’s decision declining to enter Robert’s will for probate and appointing a special administrator rather than Ms. Burch as executrix. This case is a companion to Burch v. Griffe, No. 00-444 (Nov. 9, 2000), and the facts are more fully set out in that opinion.

Robert and Aileen Griffe had each accumulated an estate in his or her own right, and their only son had died without issue. In 1995, Robert executed a will leaving his estate to his siblings in the event that his wife did not survive him. Simultaneously, he executed a durable power of attorney naming his wife and her sister-in-law, Ms. Burch, as joint attorneys-in-fact. His will designated his wife executrix, or, in the alternative, Ms. Burch. In 1996, Aileen Griffe executed a will leaving her estate to Ms. Burch and naming Ms. Burch as alternative executrix after her husband. Aileen Griffe died in 1997, and at the time of her death, her husband Robert was in a nursing home suffering from Alzheimer’s Disease.

Ms. Burch was appointed personal representative of Aileen’s estate on May 12, 1998, by the Pulaski County Probate Court, First Division. The first notice of probate was published on June 5, 1998. On September 15, 1998, Robert’s nephew, Bennie Griffe, petitioned the Pulaski County Probate Court, Fifth Division, for appointment of himself and his son Douglas as co-guardians of the estate and person of Robert. Ms. Burch, who held a durable power of attorney for Robert, did not oppose this appointment. However, on September 29, 1998, Ms. Burch filed a Waiver of Inventory and Accounting, as well as a Waiver of Notice and Entry of Appearance for Robert in the probate of Aileen’s estate. By these filings, she purported to waive the requirement of inventory and accounting of Aileen’s estate on Robert’s behalf, pursuant to her durable power of attorney. On October 27, 1998, the probate court appointed Bennie and Douglas Griffe co-guardians, and on November 12, 1998, the co-guardians revoked the waivers Ms. Burch had filed on Robert’s behalf in his late wife’s estate.

On February 16, 1999, Ms. Burch, in her capacity as executrix of Aileen Griffe’s estate, filed an Accounting and Petition for Fees, to which the guardians of Robert objected. Robert had been excluded as his wife’s beneficiary, and on April 12, 1999, the co-guardians filed an election of the surviving spouse to take against the will of Aileen. This election to take against Aileen’s will was not filed until more than nine months after the first notice of probate was published. Ms. Burch filed a motion to strike the election on May 4, 1999, contending that it was not timely filed nor had the probate court having jurisdiction over the guardianship of Robert granted advance approval, which she argued was required by Ark. Code Ann. § 28-39-405 (1987).

Ms. Burch contends an election to take against the will is untimely after seven months from the publication of the notice of probate and that the plain language of Ark. Code Ann. § 28-39-405 requires that permission to file an election to take against a will must be granted prior to filing the election. Ms. Burch also contends that a nunc pro tunc order cannot satisfy that requirement. In the companion case, cited above, without addressing the issue whether an election to take against the will is untimely when filed more than seven months after the first notice of probate, we determined that the election notice was untimely for other reasons. Based upon either analysis, this court holds that the election filed on Robert’s behalf to take against his late wife’s will was untimely, thereby rejecting the merits of Ms. Burch’s first point on appeal in this case as well.

For her second point on appeal, Ms. Burch charges error on the part of the probate court in declining to admit Robert’s will to probate and appoint her as executrix. Robert died on August 18, 1999, and Ms. Burch filed a petition for probate of the will, asking to be named personal representative as provided in the will. However, Bennie and Douglas Griffe also petitioned the court to terminate the guardianship of Robert and appoint them as personal representatives of the estate, stating that they were not offering the will for probate because of their concerns about the testator’s mental capacity at the time of its execution. Bennie Griffe challenged Ms. Burch’s suitability to act as executrix of Robert’s estate, charging her with breach of fiduciary duty in connection with her use of power of attorney for Robert, and alleged that Ms. Burch engaged in a course of self-dealing by which she profited from the estates of Robert and Aileen, to the detriment of their heirs and beneficiaries.

A hearing was held on September 17, 1999, in the Fifth Division, and the trial judge entered an order appointing attorney Claiborne Patty, Jr., as special administrator of Robert’s estate. The court noted in its order that there was a possibility of a conflict if the court appointed Ms. Burch as executrix of Robert’s estate, because of her interest in opposing Robert’s efforts to take against the will of his late wife in the estate of which Ms. Burch had already been appointed executrix. The trial court also noted that allowing Robert to elect against Aileen’s will would have the result of reducing Ms. Burch’s distributive share of her sister-in-law’s estate. Pending resolution of the issue whether Robert’s estate could elect against Aileen’s will, the probate judge withheld entering the will for probate at that time.

Petitions for probate and appointment of personal representative are governed by Ark. Code Ann. § 28-40-107 (1987):

(a) An interested person may petition the court of the proper county:
(1)For the admission of the will to probate, although it may not be in his possession or may be lost, destroyed, or outside the state;
(2) For the appointment of executor if no one is nominated in the will;
(3) For the appointment of an administrator, if no executor is nominated in the will, or if the person so named is disqualified or unsuitable, or refuses to serve, or if there was no will.
(b) A petition for probate may be combined with a petition for the appointment of an executor or administrator. A person interested in either the probate of the will or the appointment of a personal representative may petition for both ....

Id. The statute further provides that if the decedent died testate and the will is not filed, a petition for probate of will or for the appointment of a personal representative, or both, should include a copy of the will or a statement as to its contents. Ark. Code Ann. § 28-40-107 (b)(6). If the appointment of a personal representative is sought, the relationship to the decedent and other facts which entitled the person to appointment should be included as well. Ark. Code Ann. § 28-40-107(b)(8).

Arkansas Code Annotated § 28-40-113 (1987) provides generally for contests of wills: “An interested person may contest the probate of a will, or any part thereof, by stating in writing the grounds of his objection and filing them in the court.” Id. Sufficient grounds for contest include charges of incapacity or undue influence. Selle v. Rapp, 143 Ark. 192, 220 S.W.2d 662 (1920) (decision under prior law). After a petition for probate of a will or for the appointment of a general personal representative has been filed, and before that petition has been heard, the court will hear both petitions together and determine what instruments, if any, should be admitted to probate or whether the decedent died intestate. Ark. Code Ann. § 28-40~116(a)(1987).

We do not agree with Ms. Burch’s contention that the probate judge abused her discretion in finding that she was unsuitable to serve in the position of executrix of Robert’s will, in light of her simultaneous role as executrix of his late wife’s estate. The probate court possess considerable discretion in granting of letters of administration, upon a determination that the applicant is “qualified” and will “best manage and improve the estate.” Woodruff v. Miller, 209 Ark. 759, 192 S.W.2d 427 (1946). The trial court is not required to appoint a member of the proffered class of those named by the testator where there is no member of that class qualified or where the applicant of that class is not qualified, or who, in the opinion of the court, will not best manage and improve the estate, even if otherwise qualified. Id. Ms. Burch has not met her burden to persuade this court that the trial judge’s decision was an abuse of discretion, and therefore we affirm the appointment of Mr. Patty as special administrator to oversee Robert’s estate. In light of our decision in this case and in the companion case, we remand this matter to the probate court for further consideration of the admission to probate of the purported will of Robert Griffe, in light of the contest thereto filed by Bennie Griffe calling into question Robert’s testamentary capacity.

Affirmed in part and reversed and remanded in part.


author: Ray Thornton, Justice. Tom Glaze, Justice,

text:
    Michael Ray POTTER v. STATE of Arkansas
    CR 00-860
    30 S.W.3d 701
    Supreme Court of Arkansas
    Opinion delivered November 9, 2000

      George B. Morton, for appellant.

      Mark Pryor, Att’y Gen.,,by: C. Joseph Cordi, Jr., Ass’t Att’y Gen., for appellee.
   Ray Thornton, Justice.

The fundamental issue in this case is whether Officer Charles Edward Motsinger had reasonable suspicion of criminal activity sufficient to conduct an investigative stop and frisk consistent with the Fourth Amendment of the United States Constitution and also consistent with the provisions of applicable Arkansas Rules of Criminal Procedure. The stop and frisk of Michael Ray Potter produced a plastic bag containing marijuana and methamphetamine and paraphernalia. Potter entered a conditional plea of guilt after the trial court declined Potter’s motion to suppress the evidence. Potter then appealed the conviction and sentence based upon his conditional plea of guilty, contending that there was no reasonable suspicion of criminal activity to support an investigative stop and frisk. In a 4-2 decision, the court of appeals reversed the findings of the trial court and ordered the evidence suppressed. See Potter v. State, 70 Ark. App. 495, 20 S.W.3d 454 (2000). Because the Fourth Amendment rights against unreasonable searches and seizures are not identical to the protections against unreasonable searches and seizures expressed in Arkansas’s statutes and Rules of Criminal Procedures, and because the interpretation of our rules should be clarified, we granted the petition for review as requested by the State.

In his argument to the court of appeals, appellant argued that harassment was the only crime for which there was reasonable suspicion and that harassment without the threat of physical harm does not meet the criteria of Ark. R. Crim. P. 3.1 and 3.4. In response, the State asked that the trial court’s order be affirmed. In specific response to appellant’s argument, the State contended that our Rules 3.1 and 3.4 should be interpreted to be identical to the criteria established by Terry, supra with respect to unreasonable searches and seizures. The court of appeals limited its decision to the question whether reasonable suspicion of a nonviolent misdemeanor would justify a stop and frisk under our Rule 3.1. While we do not review the court of appeal’s decision, we note that the court of appeals ruled in favor of appellant without a careful analysis and review of the trial court’s findings that there existed a reasonable suspicion of both the felony offense of stalking and the misdemeanor offense of harassment.

On a petition for review, we review the case as if the appeal had been originally filed in this court. State v. Brunson, 327 Ark. 567, 940 S.W.2d 440 (1997). In reviewing a trial court’s ruling on a motion to suppress, we make an independent examination based on the totality of the circumstances and reverse only if the trial court’s ruling was clearly against the preponderance of the evidence. Muhammad v. State, 337 Ark. 291, 988 S.W.2d 17 (1999). We review the evidence in the light most favorable to the State. Id. Based upon our review of the totality of the circumstances of this case, we conclude that the trial court’s denial of Potter’s motion to suppress should be affirmed.

Potter claims that the trial court erred in denying his motion to suppress because the stop was not authorized by Rule 3.1 of the Arkansas Rules of Criminal Procedure and because the frisk was not authorized by Rule 3.4 of the Arkansas Rules of Criminal Procedure. We first address the question whether Officer Motsinger had reasonable suspicion to conduct an investigative stop consistent with the Fourth Amendment of the United States Constitution. The Fourth Amendment guarantees that “the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated . . . .” U.S. Const, amend. 4. This is a fundamental right that the courts must protect. Flowever, as the Supreme Court has indicated, this provision does not forbid all searches and seizures, but only “unreasonable searches and seizures.” Terry v. Ohio, 392 U.S. 1 (1968).

The Court noted that “a search of weapons in the absence of probable cause to arrest, however, must, like any other search, be strictly circumscribed by the exigencies which justify its initiation.” Terry, supra. In making this statement, the Court upheld the lawfulness of the search based on the need to allow an officer to search a person if the officer reasonably fears that the suspect is armed and dangerous, and such a search is necessary to protect himself and others. The standard used to determine reasonableness in such a situation is “whether a reasonable prudent man in the circumstances would be warranted in the belief that his safety or that of others was in danger.” Id. In making such a determination, the Terry court noted that “specific reasonable inferences” drawn from the facts in light of the officer’s experience may be used; however, an “inchoate and unparticularized suspicion or ‘hunch’” will not suffice. Id.

We address the question whether the stop and frisk violated the standards in effect in our state. Since Terry, the Arkansas Legislature has enacted statutes and we have promulgated rules establishing somewhat more rigorous standards than those articulated in Terry for stop and search situations. Arkansas Rules of Criminal Procedure 3.1 provides:

A law enforcement officer lawfully present in any place may, in the performance of his duties, stop and detain any person who[m] he reasonably suspects is committing, has committed, or is about to commit (1) a felony, or (2) a misdemeanor involving danger of forcible injury to persons or of appropriation of or damage to property, if such action is reasonable necessary either to obtain or verify the identification of the person or to determine the lawfulness of his conduct. . . [.]

Id. This rule requires a reasonable suspicion that a felony or serious misdemeanor has been committed or is about to be committed.

Our first inquiry is whether the trial court erred in finding that Officer Motsinger was justified in making a stop based upon a reasonable suspicion that Potter was committing, had committed, or was about to commit the felony of stalking, or a misdemeanor involving a danger of personal injury or the appropriation or damage to property. Our rules provide that an investigatory stop may be made upon a reasonable suspicion which need not rise to the level required to establish probable cause for an arrest. “Reasonable suspicion” is defined as:

[A] suspicion based on facts or circumstances which of themselves do not give rise to the probable cause requisite to justify a lawful arrest, but which give rise to more than a bare suspicion; that is, a suspicion that is reasonable as opposed to an imaginary or purely conjectural suspicion.

Ark. R. Crim. P. 2.1.

The Arkansas legislature has codified factors to be considered when determining whether an officer has grounds to “reasonably suspect” a person is subject to detention pursuant to Rule 3.1. These grounds include, but are not limited to, the following:

(1) The demeanor of the suspect;
(2) The gait and manner of the suspect;
(3) Any knowledge the officer may have of the suspect’s background or character;
(4) Whether the suspect is carrying anything, and what he is carrying;
(5) The manner in which the suspect is dressed, including bulges in clothing, when considered in light of all of the other factors;
(6) The time of the day or night the suspect is observed;
(7) Any overheard conversation of the suspect;
(8) The particular streets and areas involved;
(9) Any information received from third persons, whether they are known or unknown;
(10) Whether the suspect is consorting with others whose conduct is “reasonably suspect”;
(11) The suspect’s proximity to known criminal conduct;
(12) Incidence of crime in the immediate neighborhood;
(13) The suspect’s apparent effort to conceal an article;
(14) Apparent effort of the suspect to avoid identification or confrontation by the police.

Ark. Code Ann. § 16-81-203 (1987).

These procedural rules are to be examined in light of the totality of the circumstances. See Muhammad, supra. We have used various terms to describe how much cause or suspicion is necessary or reasonable in order to stop a person. Hill v. State, 275 Ark. 71, 628 S.W.2d 285 (1982). The justification for the investigative stops depends upon whether, under the totality of the circumstances, the police have specific, particularized, and articulable reasons indicating the person or vehicle may be involved in prohibited criminal activity. Id. See also Frette v. State, 331 Ark. 103, 959 S.W.2d 734 (1998); Kilpatrick v. State, 322 Ark. 728, 912 S.W.2d 917 (1995).

We review the facts to determine whether Officer Motsinger had a reasonable suspicion as required by Rule 3.1 to justify an investigatory stop. Officer Motsinger testified that on May 24, 1999, he was dispatched to a picnic area in Tyson Park in response to a call to the police from a woman who reported that she thought she was being followed by a man who allegedly had been following her for three weeks. She also reported that she believed he was stalking her. At the time of her call, the woman identified herself and her vehicle, described Potter’s vehicle, gave Potter’s license number, and informed the dispatcher of her location. When Officer Motsinger responded to the call and arrived at the park, he confirmed the elements of the woman’s report. The woman’s car was in the park, and Potter’s truck was parked approximately seventy feet from the woman’s car. As Officer Motsinger pulled into the area and stopped behind Potter’s truck, he noticed Potter’s furtive movement of repeatedly looking at him through the truck’s back window. When Officer Motsinger got out of his patrol car to approach the truck, Potter exited his truck and moved in the direction of the officer. Officer Motsinger asked Potter to return to his vehicle, and, in doing so, Potter fumbled for something in the seat. At this point, Officer Motsinger drew his weapon, and called for a backup officer.

Arkansas Rule of Criminal Procedure 3.1 provides that an officer may stop and detain any person who he reasonably suspects is committing or is about to commit a felony or misdemeanor involving danger of forcible injury to persons (emphasis added). See Johnson v. State, 333 Ark. 673, 972 S.W.2d 935 (1998) (holding that, under the totality of the circumstances, the officer had sufficient evidence of reliability of a tip to justify an investigatory stop under Rule 3.1). The key word is suspects. The officer must first have a reasonable suspicion in order to stop and detain a person. At the time of the stop, it is not required that all elements of the criminal offense be established, nor is it required that the officer have probable cause to effectuate an arrest at that time.

At the suppression hearing, the following colloquy occurred:

The COURT: And after the initial confrontation with the Defendant who was in and out of his vehicle as you have testified, you came to the conclusion, one, that he may have harassed this woman; two, he may have been stalking this woman; and three, that given his demeanor and dry mouth which you have described, he may well have been on drugs; is that correct?
Officer Motsinger: Yes, sir.

Under the totality of the circumstances, the trial court found that Officer Motsinger had a reasonable suspicion that Potter had committed or was about to commit the felony of stalking the woman or a misdemeanor of harassment coupled with the potential of forcible injury or property damage. Specifically, the trial court found that

[Officer Motsinger] saw the crime of harassment or arguably harassment being committed in his presence. . . . [I]n my judgment there was a reasonable suspicion at that point that the Defendant not only committed the crime of harassment but also the crime of stalking. He had under the Constitution of the United States and the State of Arkansas, he had a right to approach the Defendant, make inquiry.

The trial court noted that Officer Motsinger had the opportunity to evaluate Potters demeanor and mannerisms. See Ark. Code Ann. § 16-81-203 (1), (2), (3), and (9).

We observe that the woman notified police that Potter had been following her for several weeks and that she felt that Potter was stalking her. Her descriptions of the location and type of vehicles were confirmed by Officer Motsinger. Based upon the totality of the circumstances and by reviewing the evidence in the light most favorable to the State, we cannot say that the trial court’s ruling denying the motion to suppress was clearly against the preponderance of the evidence.

Having concluded that the investigatory stop was not in violation of our Rule 3.1 or the Fourth Amendment, we next address the issue whether the pat-down frisk was valid under Ark. R. Crim. P. 3.4, which provides in pertinent part:

If a law enforcement officer who has detained a person under Rule 3.1 reasonably suspects that the person is armed and presently dangerous to the officer or others, the officer or someone designated by him may search the outer clothing of such person and the immediate surroundings for, and seize, any weapon or other dangerous thing which may be used against the officer or others. In no event shall this search be more extensive than is reasonably necessary to ensure the safety of the officer or others.

Id. Ark. R. Crim. P. 2.1 and Ark. Code Ann. § 16-81-203 also apply to reasonable suspicion.

We have stated that this rule is consistent with the holding in Terry, supra, which emphasizes that the purpose of the protective search is wholly for the safety of the police officer:

We are now concerned with more than the governmental interest in investigating crime; in addition, there is the more immediate interest of the police officer in taking steps to assure himself that the person with whom he is dealing is not armed with a weapon that could unexpectedly and fatally be used against him. Certainly it would be unreasonable to require that police officers take unnecessary risks in the performance of their duties.

Hill, supra. Police officers are not permitted to search for drugs under the guise of a search for weapons. See Minnesota v. Dickerson, 508 U.S. 366 (1993).

In the present case, the search was permissible under Rule 3.4, which requires that Officer Motsinger reasonably suspect that Potter was armed, and that he was “presently dangerous” to Motsinger or others. When Officer Motsinger arrived at the scene, he noticed that Potter repeatedly turned around and looked at him through the back window of his truck. When Potter returned to the vehicle at the officer’s command, Potter began fumbling with something in the seat. Noticing appellant’s furtive movement, Officer Motsinger drew his weapon when Potter reached behind the seat to get his wallet. He then instructed Potter to place his hands on the steering wheel, and he returned to his patrol car to call for backup. After the backup arrived, Officer Motsinger ordered Potter out of his truck and conducted a pat-down frisk for weapons. When his hand touched Potter’s pocket, Potter said, “You might as well go ahead and take me to jail.” Officer Motsinger felt something bulky in the pocket. When he pulled it out, he found a plastic baggie containing contraband that included marijuana, a smoking pipe, and a small amount of methamphetamine.

We conclude that the trial court did not commit error in finding that the officer’s decision to conduct a pat-down search was appropriate to avoid a potentially dangerous situation. Given the nature of the woman’s call, Potter’s persistent nervousness, his statement to Officer Motsinger, and the bulge in his pocket, it was reasonable to frisk Potter for safety reasons under Ark. R. Crim. P. 3.4. Having concluded that the trial court did not err in denying Potter’s motion to suppress evidence, his conviction and sentence based upon his guilty plea is affirmed, and the ruling to the contrary by the court of appeals is reversed.

Affirmed.

Glaze, J., dissents.

Tom Glaze, Justice,

dissenting. I must dissent, and do so for the reasons set out in the court of appeals’ majority decision rendered in this same case. See Potter v. State, 70 Ark. App. 495, 20 S.W.3d 454 (2000). Everyone agrees that Officer Mot-singer’s stop and detainment of Michael Potter must be based on Arkansas Rule of Criminal Procedure 3.1, and on whether the officer had reasonable suspicion that Potter had committed or was about to commit (1) a felony or (2) a misdemeanor involving danger of forcible injury to persons or of appropriation of or damage to property. The State’s evidence fell short of showing Officer Motsinger suspected Potter as having committed (or being about to commit) a crime that would fall within these two classifications.

Officer Motsinger testified that he thought the crime he was investigating was stalking or harassment. However, the crime of stalking is a felony, which requires “a terroristic threat with the intent of placing [another] person in imminent fear of death or serious bodily injury.” See Ark. Code Ann. § 5-71-229(a)(l) and (b)(1) (Repl. 1997). Here, the officer offered no testimony that Potter was suspected of terroristic threatening, and, in fact, he related that the woman who had called to complain about Potter did not indicate she had been approached, contacted, or threatened by Potter. To the contrary, Officer Motsinger averred that there was no indication that the complainant was afraid of Potter; rather the woman was only concerned that she was being followed.

The officer was correct that he could have suspected Potter of committing the misdemeanor crime of harassment as set out in Ark. Code Ann. § 5-71-208(a)(3) (Repl. 1997) (a person commits the offense of harassment if, with the purpose to harass, annoy, or alarm another person, without good cause, he follows a person in or about a public place). However, as described above, Officer Mot-singer had no reason to suspect Potter’s actions involved the danger of forcible injury to the complainant or the appropriation of or damage to her property. Because Officer Motsinger’s stop and detainment failed to comply with the dictates of Rule 3.1, I agree with the court of appeals that the officer’s stop and detainment and subsequent search were unlawful.


author: Lavenski R. Smith, Justice. Tom Glaze, Justice, Robert L. Brown, Justice,

text:
    Harris J. BUCHBINDER, Personal Representative of the Estate of Barbara D. Blaisdell, Lyle B. Thompson, and Barbara Laney and David Thompson v. BANK OF AMERICA, N.A., as Trustee of the Trust Agreement of N.B. Dalton
    99-1450
    30 S.W.3d 707
    Supreme Court of Arkansas
    Opinion delivered November 9, 2000

      Shults Law Firm, LLP, by: Steven Shults and Reed R. Edwards, for appellant Harris J. Buchbinder, Personal Representative of the Estate of Barbara D. Blaisdell.

      Charles J. Lincoln, P.A., by: Charles J. Lincoln, for appellant Lyle B. Thompson.

      Wright, Lindsey &Jennings LLP, by: David M. Powell, Charles L. Schlumberger, Judy Simmons Henry, Sc Stephen R. Lancaster, for appellee Bank of America.

      Williams & Anderson LLP, by: Peter G. Kumpe and Stephen B. Nisivanger, for Barbara Laney and David Thompson.
   Lavenski R. Smith, Justice.

Harris J. Buchbinder, as personal representative of the estate of Barbara D. Blaisdell, appeals a final order of the Pulaski County Chancery Court terminating trusts established in 1940 and 1941 by N.B. Dalton (also known as Barbara D. Blaisdell). Trustee Nations Bank (now Bank of America as successor trustee) commenced this action in Pulaski County Chancery Court by a Petition for Instruction, seeking assistance in administration, termination, and distribution of assets of the two trusts. Lyle Thompson (formerly Lyle B. Dalton) as personal representative of the estate and as an individual filed a counterclaim and third-party complaint. Subsequently, Buchbinder succeeded to representation of the estate when he replaced Lyle as personal representative. Buchbinder asserts the trial court erred when it denied the counterclaim for repayment of thirteen disbursements made by the trustee between 1982 and 1995 to Blaisdell upon her request. The trial court found that estoppel applied and prevented recovery.

Lyle also appeals but seeks reversal of the trial court’s separate order holding him personally liable for $206,952.05 in attorney’s fees and expenses to Bank of America. Barbara Laney and David Thompson came into this action as respondents to the Petition for Instruction as beneficiaries under the estate. On appeal, they assert there was no error in assessing attorney’s fees and expenses against Lyle personally. We affirm the trial court’s denial of the counterclaim although not on the basis of estoppel. We also affirm the trial court’s order on attorney’s fees and expenses.

Facts

Blaisdell (then N.B. Dalton) established two irrevocable trusts in 1940 and 1941 respectively with Union National Bank of Little Rock as trustee. The trusts’ terms were identical except for the amount each was to pay each month. Under the terms of the trusts, the trustee would pay her the sum of $350.00 per month from the 1940 trust and $400.00 per month from the 1941 trust respectively. Blaisdell was both the setdor and the beneficiary of the trusts. The trusts listed several contingent beneficiaries including Lyle Thompson.

Pursuant to the terms of the trusts, Blaisdell could receive payment only if she requested it in writing in the prior month. In addition to the payment terms, the trusts also contained language giving Blaisdell authority to add additional principal to the trust at any time, control investment of the trust funds, and replace the trustee at her discretion. Blaisdell apparently received payment according to the trusts’ terms throughout her life when she requested it. Upon her death, the trusts were to pay the same monthly sums to the listed contingent beneficiaries. The trusts did not include instructions for their termination. Only Lyle survived Blaisdell. It appears she declined payment for a number of years. However, between September 7, 1982, and May 3, 1995, Blaisdell, with Lyle’s assistance, requested and was given thirteen separate disbursements greatly in excess of those allowed under the terms of the trust. The disbursements varied in amounts between $7,250.00 and $22,918.74. Blaisdell apparently used these disbursements to pay income taxes due on the trust funds.

Appellants asserted in their counterclaim that Lyle and Blaisdell were not entitled to the thirteen disbursements under the terms of the trusts because they exceeded the allowed disbursement amounts specified in the trusts. They allege these disbursements constituted breaches of the trusts’ terms and obligate the trustee to pay the amount of the thirteen disbursements back into the trusts and to pay additional damages for related losses.

Lyle is a beneficiary of the estate and would benefit from an increase of assets in the estate upon the estate’s disbursement. Lyle was Blaisdell’s adopted son and is a CPA, holds an MBA, and was a certified financial advisor retained by Blaisdell. Testimony also showed Blaisdell was experienced in business and sought expert advice when making financial decisions. No evidence questioned Blaisdell’s competency. Blaisdell died in Florida in 1996. The Florida probate court appointed Lyle personal representative of the estate. While in that capacity, Lyle brought suit in federal court in the Southern District of Georgia, federal court in the Western District of Arkansas, and finally in circuit court in Garland County, Arkansas. The suits all sought to compel the trustee to compensate the trusts for the amount of the thirteen payments he and Blaisdell received at their own request. They also sought recovery for damages arising from the trustee’s failure to modify the trusts to provide for direction on who would direct investment upon Blaisdell’s death and for termination of the trusts. Finally, Lyle sought termination and distribution of trust assets to the estate. All of these cases were dismissed by Lyle or by the relevant court.

At trial, the trustee and estate introduced evidence of the trusts, their terms, and their operation over the years. At the conclusion of the trial, the chancellor found estoppel prevented recovery of the trust distributions in order to prevent a windfall to Lyle and the estate. Pursuant to the parties stipulation, the court modified and terminated the trusts.

Standard of Review

We review chancery cases de novo on the record, but we do not reverse a finding of fact by the chancellor unless it is clearly erroneous. Simmons First Bank v. Bob Callahan Servs., Inc., 340 Ark. 692, 13 S.W.3d 570 (2000); Myrick v. Myrick, 339 Ark. 1, 2 S.W.3d 60 (1999). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Id. Similarly, we review issues of statutory construction de novo, as it is for this court to decide what a statute means. Simmons First Bank, supra; Hodges v. Huckabee, 338 Ark. 454, 995 S.W.2d 341 (1999). In this regard, we are not bound by the trial court’s decision; however, in the absence of a showing that the trial court erred, its interpretation will be accepted as correct on appeal. Id.; Stephens v. Arkansas School For The Blind, 341 Ark. 939, 20 S.W.3d 397 (2000).

Estoppel

The trial court found that the appellants were estopped from enforcing the trusts’ terms against the trustee. Four elements are necessary to establish estoppel. They are: (1) the party to be estopped must know the facts; (2) the party to be estopped must intend that the conduct be acted on or must act so that the party asserting the estoppel had a right to believe it was so intended; (3) the party asserting the estoppel must be ignorant of the facts; and (4) the party asserting the estoppel must rely on the other’s conduct and be injured by that reliance. City of Russellville v. Hodges, 330 Ark. 716, 957 S.W.2d 690 (1997); State v. Wallace, 328 Ark. 183, 941 S.W.2d 430 (1997); Foote’s Dixie Dandy, Inc. v. McHenry, 270 Ark. 816, 607 S.W.2d 323 (1980).

The first element is satisfied in the facts of this case. Blaisdell knew the terms of the trusts. She was the settlor and had the trust created to her satisfaction. Nonetheless, many years into the life of the trusts she sought disbursement of funds in amounts and at times not specified in the terms of the trusts. Also, Blaisdell sought the funds, and there was no reason to believe she, or her estate, would later assert the trustee should have refused her wishes and denied her the funds. The second element is, therefore, also met. The fourth element, injury, is also present in that the trustee would suffer the injury of reimbursing the trusts and paying damages suffered by the trusts due to the disbursements.

The third element, ignorance of the party seeking estoppel, however, is absent. The trustee argues that the third element was satisfied because it had no reason to know Blaisdell or her estate would withdraw her consent and assert a cause of action for breach of trust in order to receive the funds twice. The trustee was not ignorant of the facts but merely chose to act in response to the settlor’s request rather than according to the terms of the trusts. However, the decision of the trial court may be affirmed on other grounds.

A trial court’s decision can be sustained if the ultimate decision is right even if the basis for that decision was incorrect. Stated differently, this court may sustain the decision upon a different basis. Viswanathan v. Mississippi County Community College Bd. of Trustees, 318 Ark. 810, 887 S.W.2d 531 (1994); McNair v. McNair, 316 Ark. 299, 870 S.W.2d 756 (1994); Morrison v. Lowe, 274 Ark. 358, 625 S.W.2d 452 (1981). Further, we held in Ferguson v. Green, 266 Ark. 556, 587 S.W.2d 18 (1979), that the fact that the chancellor based his decision upon an erroneous conclusion does not preclude the appellate court’s reviewing the entire case de novo and entering such judgment as the chancery court should have entered upon the undisputed facts in the record, Rockefeller v. Rockefeller, 335 Ark. 145, 980 S.W.2d 255 (1998).

Consent

The facts show Blaisdell and Lyle specifically sought the funds from her trust, which the estate and Lyle now allege were disbursed in violation of the trust terms. Blaisdell as settlor knew the terms of her own trust. Her estate stands in her shoes and is bound by the limits of the rights she possessed during her life. McDonald v. Pettus, 337 Ark. 265, 988 S.W.2d 9 (1999). Additionally, Lyle Thompson testified he knew the terms of the trusts for many years, and he testified he was advising Blaisdell. Thus, it is apparent both Blaisdell and Lyle consciously sought the payments knowing such requests were contrary to terms of the trusts.

Appellants now contend that Blaisdell’s and Lyle’s requests or consent do not excuse the trustee’s violation of the express terms of the trusts. They cite Gantt v. Arkansas Power & Light Co., 194 Ark. 925, 109 S.W.2d 1291 (1937) and Austin v. The Most Worshipful Grand Lodge F. & A. Masons, 200 Ark. 726, 141 S.W.2d 7 (1940) for the general proposition that a trustee may not use estoppel or consent to excuse a breach of trust. However, both cases are distinguishable on their facts from the scenario present in the instant case. In Gantt the court neither announced nor followed a specific rule of trust law but instead applied a general equitable principle to prevent a governmental entity from forestalling legal rights of taxpayers through circumstances it helped create. In Austin, the principal issue dealt with the statute of limitations rather than consent or estoppel. The court cited Gantt approvingly for the proposition that neither laches nor estoppel could be interposed by the trustee. However, the instant facts differ markedly from any of the cases cited by appellant. In the case sub judice, we do not have acts of the trustee of which the beneficiary was ignorant, ignored, or acquiesced to. Rather, we have the trustee complying with direct, unequivocal requests of both the beneficiary and the only surviving contingent beneficiary.

Appellants also cite Cotham v. First Nat’l Bank of Hot Springs, 287 Ark. 167, 697 S.W.2d 101 (1985), and note that the legislature thereafter passed Ark. Code Ann. § 28-69-401 (Supp. 1999), which discusses consent. However, neither Cotham nor the statute are apposite. The issue in Cotham and in the statute is consent to revocation, modification or termination of a trust. In this case, we need not reach the issue of whether the parties ever attempted to revoke, modify, or terminate the trust. From the evidence it is apparent that all the parties agree as to the terms of the agreement. The trustee does not contend that the parties actually modified the agreement. It instead argues that the beneficiaries’s procurement of the trustee’s disbursement constituted consent to those specific disbursements sufficient to deny on an equitable basis the beneficiary’s recovery of the same from the trustee at a later date. They have not argued for a permanent modification of the trust agreement to some new terms which would implicate the statute. In fact, on appeal the bank has contended that the, trust agreements were void from their inception as impermissible spendthrift trusts.

There simply has been no case quite like this one before Arkansas’s appellate courts. Given the facts and the legal principles most closely applicable, we hold that the better result is to forbid recovery by the beneficiaries where the beneficiaries sought and received disbursement from the trust in excess of the amounts specified in the trust agreement. Consent of the settlor and beneficiaries under Ark. Code Ann. § 28-69-401 (Supp. 1999) is not to be confused with the equitable defense of consent by beneficiaries to alleged breach of the trust terms by the trustee. We think the principle contained in Section 216 of the Restatement of the Law, Trusts is sound. Section 216 states, “A beneficiary cannot hold a trustee liable for an act or omission of the trustee as a breach of trust if the beneficiary consented to it.” Restatement of the Law, Trusts, § 216 (2nd Ed.1959).

In Arkansas, knowing consent to an act by a trustee by a competent beneficiary will waive that beneficiary’s right to later bring an action against the trustee for the act. In Hunt v. Hunt, 202 Ark. 130, 149 S.W.2d 930 (1941), a tract of land was found to be held in constructive trust by the purchaser. The purchaser was George Brodie, the father of Abbie Hunt. The money Brodie used to purchase the tract was money Harry Hunt and Abbie had earned together as husband and wife. Thus, Brodie held the land for Harry and Abbie as a trustee of a constructive trust. Harry and Abbie later divorced and separated, but Abbie subsequently moved back in with him. Harry eventually indicated he wanted Abbie to have the tract of land. After Brodie s death, the Brodie family, then holding the land as constructive trustee, conveyed the tract to Abbie. Harry brought suit. The court cited 65 C.J. 955, §882, which provided that knowing acquiescence by a beneficiary of a trust to an act by the trustee contrary to the terms of the trust waives the beneficiary’s right to enforce the trust. Harry’s consent precluded any action against the trustee. Here we have not only acquiescence to the acts of the trustee, we have actual demand of the acts which the beneficiaries now call into question. Hunt was cited in Winters v. Winters, 24 Ark. App. 29, 747 S.W.2d 583 (1988), where the court of appeals discussed actions by a guardian appointed for an incompetent. The court of appeals found the guardian was subject to the law of trusts, and that in spite of the trial court’s contrary finding, the appellant was competent. The court of appeals also found that the appellant not only acquiesced in, but directed and participated in the investment decisions appellant complained of. The court of appeals found consent waived the appellant’s right to enforce the trust duties waived by that consent. See also, State Ex. Rel. Att. Gen. v. Van Buren Sch. Dt. #42, 191 Ark. 1096, 89 S.W.2d 605 (1936) (wherein this court stated, equity will not relieve a beneficiary who has acquiesced in misconduct of the trustee.)

The principle that a competent beneficiary of a trust may not knowingly consent to a breach of the trust and then seek to hold the trustee liable is longstanding. In Vreeland v. Van Horn, 17 N.J. Eq. 137 (N.J.Ch. 1864), Chancellor Green of the New Jersey Chancery Court stated, “It does not he in the mouth of the cestui que trust, while competent to judge of his own interest, to complain of acts as breaches of trust, which were occasioned by his own neglect or misrepresentation.”

The law has not changed. Knowing consent by a competent beneficiary continues to bar an action by the beneficiary to enforce the terms of the trust. George Bogert, The Law of Trusts and Trustees § 941 (2nd Ed. 1995). Ini 936, the Supreme Court of Pennsylvania stated it was then well settled that a beneficiary who consents or affirms acts of the trustee cannot thereafter question the propriety of such conduct. In re Strawbridge’s Estate, 322 Pa. 406, 185 A.2d 726 (1936). Other courts have also found consent bars suit by a beneficiary.

There is no issue as to BlaisdeU or Lyle Thompson’s competency. We hold the affirmative requests of Blaisdell and Lyle Thompson to the trustee bars their subsequent attempt to enforce the specific terms of the trusts. They cannot now complain that the trustee complied with their requests.

Attorney’s Fees

Lyle Thompson raises four issues with respect to the trial court’s order assessing fees against him. However, we are unable to address the merits of those issues in that Lyle’s notice of appeal was filed untimely. We note the court of appeals dismissed the appeal as to attorney’s fees by its mandate issued April 5, 2000.

Affirmed.

Glaze, J., concurs.

Brown and Imber, JJ., dissent.

Tom Glaze, Justice,

concurring. I concur. In my view, there is a simple reason for affirming the chancery court in this matter. As the trustee states, it appears clear that no trust ever existed. Even in jurisdictions where spendthrift trusts are permitted, it is against public policy to allow a settlor to create a spendthrift trust for her own benefit. See William F. Fratcher, Scott on Trusts § 156 (4th ed. 1987). The reason for this policy is that an owner of property should not be allowed to enjoy an interest in that property while at the same time preventing her creditors from reaching it. Id. See, also, Restatement (Second) of Trusts § 156; George G. Bogert, The Law of Trusts and Trustees § 223 (2d ed. 1992).

Also, in Arkansas, a spendthrift trust cannot be created without the settlor passing legal title and absolute control of the trust corpus to a trustee. See Cotham v. First National Bank of Hot Springs, 287 Ark. 167, 697 S.W.2d 101 (1985); Clemenson v. Rebsamen, 205 Ark. 123, 168 S.W.2d 195 (1943); Bowlin v. Citizens Bank & Trust Co., 131 Ark. 97, 198 S.W. 288 (1917). Such control was not transferred in the attempt to create the trusts in this case. Instead, Ms. Blaisdell retained control of the trusts whereby she managed investments, controlled the flow of income from the trusts and even paid income taxes from the profits made from the trusts.

Because Ms. Blaisdell did not create valid trusts and did not provide for what was to happen to any residual amounts remaining in the trusts upon her death, the chancery court’s decision to transfer the assets of the trusts back into her estate was correct. The court reached that decision by accepting the stipulation and agreement of all parties below that the trusts should be modified and terminated. The court modified the trusts to allow the trustee to purchase a lifetime annuity for appellant Thompson to be paid the $750 per month installments which were intended for any of the named beneficiaries surviving Ms. Blaisdell. The parties below stipulated that Thompson was the last surviving express beneficiary of the trusts. The court’s order then would terminate the trusts and all residual of the trusts would create a resulting trust which would be transferred back into the estate for distribution to the residual devisees of Blaisdell’s will, Barbara Laney and David Thompson. The chancery court was authorized by state law to accept just such a stipulated agreement to modify and terminate the trusts pursuant to Ark. Code Ann. §§ 28-69-401 and 28-69-402 (Supp. 1999). These statutes allow modification and termination of a trust and protect the trustee from liability provided that (1) all beneficiaries give written consent; (2) the court finds that the trust’s purposes are not being fulfilled or are frustrated; (3) the court consents on behalf of a deceased settlor by finding that a general family benefit will accrue, and (4) a guardian ad litem appointed to represent any unnamed beneficiaries and the personal representative of the decedent’s estate may rely on the accrual of a general, family benefit. Id. That appears to be what happened in this case. The chancery court specifically cited to these statutes in its order granting the modification and termination of the trusts, and, as to this point, none of the appellants dispute the validity of the modification and termination.

Robert L. Brown, Justice,

dissenting. The majority opinion draws a nice distinction between consent to action by the settlor and beneficiary of a trust under Restatement of the Law, Trusts § 216 and modification of a trust based on actions by the settlor and beneficiary under Ark. Code Ann. § 28-69-401 (a) (Supp. 1999). I do not agree that that distinction can be made in this case. Section 28-69-401 (a) reads:

By written consent of the settlor and all named beneficiaries of a trust or any part thereof, regardless of any spendthrift or similar protective provisions, such trust or part thereof may be revoked, modified, or terminated upon a finding by the court having jurisdiction over such trust, or otherwise being of competent jurisdiction, that the trust’s purposes, as expressed in or implied by the circumstances surrounding the trust, as a result of circumstances not foreseen to the settlor are not effectively being fulfilled or are frustrated.

As the majority points out, our caselaw on this matter is sparse. Furthermore, I agree that Cotham v. First National Bank of Hot Springs, 287 Ark. 167, 697 S.W.2d 101 (1985), which dealt with an attempted termination of a spendthrift trust by the beneficiaries of the trust is not on all fours with the facts of this case.

The distributions to the beneficiary, Barbara Blaisdell, by the trustee/bank which exceeded the amounts to be distributed under the two trusts are these:

Date Amount Source

9/7/82 $ 7,250 1941 Trust

9/7/82 7,250 1940 Trust

9/17/82 12.500 1940 Trust

9/17/82 12.500 1941 Trust

6/28/84 15.000 1941 Trust

12/21/92 27.000 1940 Trust

10/20/93 24,025 1940 Trust

2/17/94 25.000 1941 Trust

2/17/94 25.000 1940 Trust

8/4/94 56,537 1940 Trust

2/14/95 25.000 1940 Trust

2/14/95 25.000 1941 Trust

5/3/95 22,918.74 1941 Trust

TOTAL $284,980.74

Section 28-69-401 was codified following the enactment of Act 841 of 1989. Thus, with the exception of the payments made by the bank in 1982 and 1984, the distributions all occurred after Act 841 became law. The distribution on December 21, 1992, in the amount of $27,000 amounted to a modification of the trust agreement, particularly in light of the previous unauthorized payments made in 1982 and 1984. Evidence of this modification continued over the course of four consecutive years (1992-1995) and involved significant sums of money. This evidences a regular course of conduct, and modification of an agreement may be proved by the course of conduct of the parties. 17A C.J.S. Contracts § 410 (1999). In my judgment, the repeated actions of the bank over consecutive years with the agreement of the settlor and life beneficiary amounted to a modification of the trust agreement without court approval as opposed to mere consent to unauthorized actions by the bank.

Act 841 establishes the policy of the State with regard to modifications of a trust agreement, and it was not complied with. While I recognize that the bank would be required to pay damages to the Blaisdell Estate for breach of trust, having previously paid like amounts to Ms. Blaisdell, the heirs of Ms. Blaisdell are entitled to this. To do otherwise is to disregard the express intent of the General Assembly as manifested by Act 841.

For these reasons, I respectfully dissent.

IMBER, J., joins.

       In David v. Russo, 119 Ill. App.3d 290, 456 N.E.2d 342 (1983), the issue was whether constructive trustees who had paid for repairs to real property under trust in violation of a court order requiring prior court approval before such expenditures could be held liable for the repair costs. The court held the plaintiffs, as beneficiaries, acquiesced in the breach by accepting the benefits the trustees conferred on the property and thereby relieved the trustees from liability. In In re Willey’s Trust, 433 N.E.2d 1191(Ind. Ct. App. 1982), the beneficiaries asserted the trustee had incorrectly listed tillable acreage in a rental agreement that resulted m a low rental value on a farm. The court found the beneficiaries had agreed to the rental amount, and that the rental agreement specified the lower acreage. The court stated, “[W]e do not think the Beneficiaries can now challenge the propriety of the rental agreement, which is in effect what their objection does, after approving the transaction.”