author: Conley Byrd, Justice. John A. Fogleman Justice.

text:
    MISSOURI PACIFIC RAILROAD COMPANY et al v. John C. McDANIEL et al
    5-5707
    483 S.W. 2d 569
    Substitute opinion on rehearing delivered May 15, 1972

      William J. Smith and Boyce R. Love, for appellants.

      Williams ir Gardner, for appellees.
   Conley Byrd, Justice.

These personal injury actions grow out of a railroad crossing collision at Blackville, Arkansas. Reverend A. L. Perkins, age 76, a resident of Little Rock, was the pastor of a small church. He drove his car across the tracks in front of a Missouri Pacific Railroad Company train operated by C. Stover, the engineer and A. D. Harper, the fireman. Sam McDaniel, age 74, and Walker Templeton, age 86, were passengers in Reverend Perkins’ automobile. The two passengers were killed in the collision. Because of the injuries received, Reverend Perkins had no recollection of the accident, of having seen the train, or what happened immediately afterwards. The three actions by Reverend Perkins and Ada Perkins, his wife, by John C. McDaniel as Administrator of the estate of Samuel McDaniel, and by Adell Templeton, administratrix of the estate of Walker S. Templeton, deceased, were consolidated for trial. The only issue of negligence submitted to the jury was whether the whistle and bell had been properly sounded. The jury returned verdicts of $10,000 for Reverend Perkins; $25,000 for the widow of Walker Templeton and $5,000 each for the ten Templeton children; and $5,000 each for the eleven children of Sam McDaniel. Funeral expenses were also allowed. For reversal of the judgments, appellants, the Missouri Pacific Railroad Company, A. D. Harper and C. Stover, contend:

"I. The trial court was in error in permitting the attorneys for the plaintiffs to elicit testimony from various witnesses that they were in position to have heard the whistle or the bell if sounded.
II. It was error to give the jury verdict forms which did not permit separate findings for the three separate defendants.
III. The trial court should have granted a mistrial when attorney for the plaintiffs in closing argument asked the jurors if they would take $15,000.00 for their fathers or $75,000.00 for their husbands.
IV. The court erred in striking from the record the testimony of Mrs. Stella Swaim that there had been no accidents at the crossingin 35 years.
V. The court should have permitted counsel for the defendants to ask the driver what he should do as he approaches a railroad crossing.
VI. The verdicts are excessive.”

POINT I. The trial court permitted a number of witnesses, some of whom were as much as a quarter of a mile from the scene, to testify that they did not hear the train whistle and that if the whistle had been blown, they could have heard the whistle. One such witness was Cloudy Knight Williams. He testified that he heard the collision, that no whistle was blown and if it had been, he could have heard it.

As pointed out in Fort Smith & Western Railway Company v. Messek, 96 Ark. 243, 131 S.W. 686, 131 S.W. 966 (1910), such evidence is based upon what may be called negative knowledge. Other courts in admitting the statement that the witness could have heard the whistle if it had been blown have done so on the premise that is is “knowledge at short hand” — i.e., it obviates the necessity of a great many other questions. See Baltimore, C. & A. Ry. Co. v. Turner, 152 Md. 216, 136 A. 609 (1927), and Chicago & A. R. Co. v. Dillon, 123 Ill. 570, 15 N.E. 181 (1888). Since the evidence here shows that the whistle board for the crossing was 1592 feet from the crossing, we cannot say that the trial court abused his discretion in admitting such evidence.

POINT II. The record shows that appellants requested that the issues be submitted to the jury on interrogatories and that appellees wanted the issues submitted on a general verdict. When the trial court decided to submit the matter to the jury upon general verdict form, appellants were requested to submit verdict forms but refused to do so. Under the circumstances, we are at a loss to understand why they are now entitled to complain of the forms of verdict submitted.

POINT III: During closing argument counsel for appellees asked the jury how many of them would take $12,000 or $15,000 for their father’s life or how many of them would take $75,000 for their husband or wife. At this point the record shows the following to have occurred:

“MR. LOVE: Your Honor, I want to object to that argument and ask for a mistrial on the basis that he is putting a question to the jury of what they might take for their husband or their father. It’s highly prejudicial and not in any way—
THE COURT: Ladies and gentlemen of the jury, your motion for a mistrial will be denied. That portion of the argument dealing with what would you take, as the Court has explained- to you before, opening statements and remarks of attorneys during the trial and closing arguments of the attorneys is not evidence, but is only made to help you to consider this particular law suit. Go ahead.”

We have consistently held such arguments to be improper, Lin Mfg. Co. of Ark. v. Coursen, 246 Ark. 5, 436 S.W. 2d 472 (1969). In Kansas City So. Ry. Co. v. Murphy, 74 Ark. 256, 85 S.W. 428 (1905), the law applicable to the subject was stated in this language:

“When the ruling of the court is presented to the appellate court in proper manner, then it is the duty of the appellate court to look to the remarks, and weigh their probable effect upon the issues; then to the action of the trial court in dealing with them; and if the trial court has not properly eliminated their sinister effect, and they seem to have created prejudice, and likely produced a verdict not otherwise obtainable, then the appellate court should reverse. However, a wide range of discretion must be allowed the circuit judges in dealing with the subject, for they can best determine at the time the effect of unwarranted argument; but that discretion is not an arbitrary one, but that sound judicial discretion the exercise of which is a matter of review.”

Appellants here only contend that the trial court should have granted them a mistrial. They do not complain of the trial court’s admonition to the jury. On the record made, we cannot say that the trial court abused its discretion in refusing a mistrial.

POINT IV: Mrs. Stella Swaim testified that the accident in question was the first accident in 35 years. Upon motion the trial court struck the testimony. No error was committed. Appellants had not laid the proper foundation for the testimony by showing that the conditions at the crossing had remained substantially the same for the 35 year period. Furthermore, the issues having to do with a dangerous crossing, were withdrawn.

POINT V: Reverend Perkins testified that he had no recollection of anything that occurred on the day of the collision from the time he saw the tracks until he was talked to in the hospital. On cross-examination, he testified that he had crossed the crossing over a hundred times but he had never stopped for a train at the crossing. Thereafter the following occurred:

“Q. Reverend Perkins, what is a motorist required to do when he approaches the railroad crossing?
“A. He is supposed to—
“MR. GORDON:
Your Honor, I believe the law sets that out.
“THE COURT:
Sustained.
“Q. As I understand it, you don’t have any recollection of seeing or hearing a train, and you don’t recall anything after seeing that first track, so you really can’t tell us whether you looked to the right or left, can you?
“A. I know nothing except I saw that crossing, and the next thing I saw they were talking to me in the hospital.”

Appellees contend that appellants did not properly comply with Ark. Stat. Ann. § 27-1762 (Repl. 1962), in that they neither made an objection to the court’s ruling nor made known to the court the action they desired the court to take. Ark. Stat. Ann. § 27-1762 provides:

“Formal exceptions to rulings or orders of the court are unnecessary; but for all purposes for which an exception has heretofore been necessary it is sufficient that a party, at the time the ruling or order of the court is made or sought, makes known to the court the action which he desires the court to take or his objections to the action of the court and his grounds therefor; and, if a party has no opportunity to object to a ruling or order at the time it is made, the absence of an objection does not thereafter prejudice him.”

The foregoing statute is copied from Federal Civil Procedure Rule 46. The federal courts in interpreting that rule have held that the objection must be specific enough to inform the trial court of the point urged by the objector and to show the opposite party the point of the objection, so that he may have an opportunity to obviate the error, if possible. See Barron 8c Holtzoff, Federal Practice and Procedure §1021 and 88 CJS Trial §124. In treating Rule 46, in Fort Worth & Denver Railway Company v. Roach, 219 F. 2d 551 (5th Cir. 1955) it was said:

“The first specification of error relates to the following ruling of the trial judge: 1 will sustain the objection, gentlemen of the jury, to all of the testimony of this witness except formal matters like his training as a doctor and his experience and his interpretation of the X-rays that were identified by Dr. Van Sweringen. That part of the rest of it will be stricken.’ Immediately following this pronouncement and in language which is clearly indicative of assent counsel for the defendant said: ‘Very well, your Honor.’ This being the state of the record it is apparent that no proper objection was taken to the ruling of the court and under Fed. Rules Civ. Proc., Rule 46, 28 U.S.C.A. the court’s action may not be assigned as error on this appeal. We therefore overrule this assignment without inquiring into the question it seeks to raise.”

In Hammond v. Peden, 224 Ark. 1053, 278 S.W. 2d 96 (1955), we said:

“4. Next it is contended that the court erred in refusing to let the wife, Nellie Peden, testify concerning matters that took place or occured prior to August 3, 1954, when the last divorce was obtained. It is not necessary to consider the admissibility of this character of testimony because appellant made no objection to the court’s ruling in excluding it. In proceeding under Act 555 of 1953 it is required under §21 of said Act that the party object to the ruling of the court and make known to the court the action which he desires the court to take or he must state his objections to the action of the court and his grounds therefor. As stated this was not done in this instance by appellant.”

Consequently we conclude that appellants for lack of a proper objection are not in a position to complain of the trial court’s action with reference to the inquiry made.

POINT VI: Appellants contend that the mental anguish awards of $25,000 for Mrs. Templeton and $5,000 for each of the Templeton children are excessive. They make the same contention as to the $5,000 awards for each of the McDaniel children.

The record shows that Mr. Templeton was 86 at the time of his death. He was still supporting his wife to whom he had been married for 55 years. The wife testified that she missed going to social affairs and church affairs with her husband. He worked a truck patch, the garden, mowed the lawn and hoed some beans for their son. The widow had ‘‘nervous breakdowns” and had trouble sleeping at night. Under the circumstances, we cannot say that $25,000 for her mental anguish is excessive. After 55 years of married life, every horizon and every social stratum would be expected to hold some empty anguish.

The Templeton children fit into a different category. Their ages range from 29 to 51 and of the ten children, nine lived out of the state. When the fact that Mr. Temple-ton was 86 at the time of his death is considered together with the infrequency of the children’s visits, a majority of the court has concluded that anything in excess of $500 for the mental anguish of each adult child is excessive.

Sam McDaniel was 74 at the time of his death. He is survived by eleven children, all adults. The only child living with him was Ladelle McDaniel, age 37, a construction worker. Nine of the children testified at the trial. Of the two who did not appear, one was described as too sick and the other financially unable — having lost his job while attending the funeral. Upon the record made, a majority of the court has concluded that any award for mental anguish in excess of $500 for each child is excessive.

The judgment will be affirmed if within seventeen calendar days a remittitur is entered as indicated. Otherwise the specified judgments will be reversed and the causes remanded for a new trial.

Fogleman, J., dissents to remittitur.

John A. Fogleman Justice.

I do not agree with the remittitur on the judgments for mental anguish. I do not know the basis for it. It should not be based upon lack of evidence. I do not believe that it is based upon the ages of the survivors.

Whatever vices may be inherent in the allowance of recovery for mental anguish cannot be cured by judicial establishment of arbitrary ceilings upon judgments for this element of damages. I feel that jury verdicts awarding such damages should be subjected only to the same review on appeal as verdicts for other elements of damage. I cannot, in good conscience, agree that the evidence to support the awards made is not substantial, at least as to some of the children.

As to Ralph Templeton, 32-year-old son of Walker Templeton, who had lived in Chicago since 1955, there was evidence that he was very close to his father, saw him three or four times a year, wrote and called him at intervals and that after the death this son had nightmares, was unable to sleep and to carry out his normal functions of family life and work.

Other such evidence was, in brief:

Aloria Jennings, 37, a Chicago resident, had a close relationship with her father, visited him on every annual vacation, wrote him and sent birthday and father’s day cards. When told of his death, she became hysterical and started screaming. Subsequently, she has been unable to sleep without medication, which has been prescribed by her doctor.

Wilza Rene Ponds, a 29-year-old Chicago daughter, was very close to her father and stayed in touch with him at all times. Since his death, she is unable to sleep without taking a pill every night before she goes to bed, has lost her appetite and is unable to concentrate on the normal affairs of her daily life.

Ruth Pride, a 51-year-old Chicago daughter, saw her father one to three times per year, communicated with him and has had difficulty eating and sleeping since his death.

Wilbur Ray Templeton, a 35-year-old Chicago son, saw his father three to four times annually, and talked with him by phone or wrote him twice per week. Since the father’s death, this son says that he has lost his appetite, is nervous and has nightmares at night.

When Mrs. Viola Hensley, a 42-year-old Chicago resident, was told of her father’s death, she was unable to speak for 1!4 or 2 hours. She is still under a doctor’s care.

Walker Templeton, a 48-year-old son, lived in the same community with his parents, saw them daily and farmed with his father. He was only one-fourth mile from the scene of the accident. When he arrived there he found his mother screaming and saw his father lying on the ground across the railroad track. He still has sleepless nights.

Mrs. Louise Wesley, 39, of Coffeeville, Kansas, has developed high blood pressure and a heart condition since her father’s death.

Mrs. Rose Bell Mason, 30, of Wichita, Kansas, was very close to her father. Since his death she takes pills twice daily for nervousness.

Mrs. Dorothy Jones, 43, of Chicago, said she was quite close to her father and wrote him twice a week. She is unable to sleep and has required the services of a doctor.

It seems to me that the evidence shows that there was more than normal grief more clearly than it did in St. Louis Southwestern Railway Company v. Farrell, Admrx., 242 Ark. 757, 416 S.W. 2d 334. It is true that a $70,000 jury verdict was reduced to $50,000 in that case, but it seems evident that even a substantial part of the smaller judgment was attributable to mental anguish of a 50-year-old son, a 47-year-old son arid a 44-year-old daughter.

It seems to me that the jury was in a better position to determine the extent of the mental anguish of these children than this court is.

I would affirm the judgment.


source: Caselaw Access Project

author: Frank Holt, Justice.

license: Public Domain

text:
    Henry Tom PATTERSON v. Julia Walls WEBSTER, as Executrix of the Estate of Milton P. WALLS, deceased et al
    5-5876
    480 S.W. 2d 328
    Opinion delivered May 15, 1972
    [Rehearing Denied June 19, 1972.]

      George Howard, Jr., for appellant.

      John B. Moore and Daggett ir Daggett, for appellees.
   Frank Holt, Justice.

This is an action to quiet title. Appellant sought to have the ownership of 80 acres of farmland vested in him by adverse possession, and consequently, have appellees’ purported interest cancelled. The Chancellor held that appellant had not established ownership by adverse possession; that a 1932 warranty deed from appellant’s grandfather to appellees’ predecessor in title was absolute and not a mortgage as asserted by appellant; that appellant was a year-to-year tenant and appellees are entitled to immediate possession. The court confirmed the title in appellees and awarded them $146 for wrongful conversion of timber on the lands and $200 for the 1970 rental. Appellant brings this appeal contending for reversal that the Chancellor’s holding “that the deed executed by appellant’s grandfather in the year 1932 was not a mortgage is contrary to the weight of the evidence.”

Henry Patterson, appellant’s grandfather, purchased the property involved in this litigation in 1893 and in 1904 he moved upon the property where he conducted farming operations until his death in 1934. Immediately thereafter his son, George Patterson, took possession of the property and farmed it until his death in 1946. Thereupon his son, appellant, occupied the farm and continued the farming operation until the present.

In 1923 a realty mortgage on 40 acres of this property was given by appellant’s grandparents to James A. Walls (appellees are his heirs) as security for a $700 debt. This mortgage reflects three payments totaling $278.13 were made. In 1930 a second mortgage aginst the entire property (80 acres) was given as security for a promissory note for $1,600 to Walls by appellant’s grandparents. This mortgage does not reflect that any payment was ever made. Both granted Walls the right to sell the mortgaged property at a public sale and apply the proceeds to the debt if the debts were not paid when due. Both notes were due within a year after execution.

In 1932 a Warranty Deed to the property was executed by appellant’s grandparents to Walls. The deed recited: “That we, Henry Patterson and Dora Patterson, his wife, for and in consideration of the sum of Sixteen Hundred & No/100 Dollars, the amount specified in a note and mortgage dated December 8th., 1930, executed by Henry Patterson and Dora Patterson, his wife to James A. Walls, and Recorded Record Book 23, Page 372 of the Mortgage Records of Monroe County, Arkansas, together with other valuable considerations, do hereby grant, bargain, sell and convey unto the said Jas. A. Walls and unto his heirs and assigns forever the following described lands . . .” Of course, there is nothing on the face of the deed which indicates a mortgage.

In May v. Alsobrook, 221 Ark. 293, 253 S.W. 2d 29 (1952), we said:

“There is nothing in the deed itself which shows it to be in fact a mortgage. To engraft on a deed, terms, conditions or a consideration not expressed therein, the evidence must be clear, cogent and convincing (citing cases). There must be something more than a mere preponderance of the evidence (citing cases).”

See also Baker v. Helms, et ux, 244 Ark. 29, 423 S.W. 2d 540 (1968), Landers v. Denton, 213 Ark. 86, 209 S.W. 2d 300 (1948), Fox Brothers Hardware Co. v. Phillips, 210 Ark. 483, 196 S.W. 2d 754 (1946). The applicable test is expressed in Beloate v. Taylor, 202 Ark. 229, 150 S.W. 2d 730 (1941):

“In determining whether an instrument is a deed or a mortgage the test is: Did a debt exist at the time the instrument was executed, and was the instrument of conveyance intended by the parties to secure the debt. It requires clear and decisive testimony to prove that a deed absolute in form was intended as a mortgage.”

In DeLoney v. Dillard, 183 Ark. 1053, 40 S.W. 2d 772 (1931), we said:

“The law presumes that a deed absolute on its face is what it appears to be, and the burden is Sn the one claiming it to be a mortgage to overcome this presumption by clear, unequivocal and convincing evidence.”

See also Clark-McWilliams Coal Co. v. Ward, 185 Ark. 237, 47 S.W. 2d 18 (1932); and Gates v. McPeace, 106 Ark. 583, 153 S.W. 797 (1913).

Appellant, Henry Tom Patterson, initiated this suit after recieving notice from appellees (the heirs of James A. Walls) to vacate the lands involved. In support of his contention that the 1932 deed was intended as nothing more than a mortgage, appellant testified that he was born on the property and had lived there for 46 years and had occupied and operated the farm since his father’s death in 1946. Prior to his father’s death, he helped with the farming activities. He and his father made improvements, consisting -of a farm road, addition of a room on the house, and installation of gas and electricity which were made without consulting anyone. His father had told him that note was owed on the place and that he had heard M. P. Walls (James A. Walls’ son) tell his father that the note was for $1,600. It appears that James A. Walls died in 1959 and M. P. Walls managed the property for himself and the other heirs until he died in 1970, or about a year before appellant brought this action. Appellant testified that when he took over the farm, M. P. Walls told him: “. . .[n]ow H. T. he said your grandfather borrowed some money. He said you work and he said I don’t want your place, he say I don’t want it. He say you work and he say when you work I get my money, he says that is all I want. I will turn the land back to you. That’s what Mr. Walls told me.” Appellant agreed the taxes were paid by Walls and understood the taxes tvere added to his account. During the fall of each year, appellant paid 1/4 of the crops to Walls and understood these annual payments were to be applied to his account which included the taxes and furnishings.

On cross-examination, this witness testified that about seven or eight years ago his aunt had told him about the 1952 deed. He went with her to the courthouse to examine the deed records and only saw the mortgage; he had no reason to file a lawsuit because no one had interfered with his occupancy of the place and he filed this lawsuit when told to vacate the property following M. P. Walls death in 1970. He always paid 1/4 of his harvest each year to James A. Walls’ heirs (appellees) through Milton P. Walls. This payment was not regarded as rent and was to apply on the $1,600 debt and his account. Walls never mentioned to him about paying any interest. Appellant never asked for an accounting or any balance owed during his 25 years’ possession of the farm and annual payments thereon because, “he (M. P. Walls) always told me that I didn’t have to worry about that that whenever I would get paid, he would put me off all the time.” Appellant admitted he never saw any item for taxes on his statement nor did he ever assess the taxes. Appellant’s wife corroborated him and testified that they paid 1/4 of their crop or $300 to $400 each year on the indebtedness.

Appellant’s aunt, Mosella Thomas, although not a party to this action, claimed an interest. She testified that seven or eight years ago, M. P. Walls had told her of the deed, and she then saw the 1932 deed at the courthouse. She wanted to do something about it at that time; however, “I wanted to do but the rest of them didn’t want to do nothing.” According to her, the depression years prevented her father from repaying the two loans.

The County Executive Director of the ASC office in Clarendon, Arkansas, (this office administers the U. S. Dept, of Agriculture support program) testified that originally the 80 acre tract was shown on their records as belonging to H. T. Patterson, the appellant; that sometime in the early 1950’s this 80 acre tract was combined with other small tracts and placed under a new farm listing with the operation and ownership being in M. P. Walls. A clerk, in this office for 18 years, testified that office’s records reflected that since 1963 the appellees were the owners of this 80 acres as part of a combination of farms. However, the office was not concerned primarily about the title to the property and accepted whatever was represented to the office. In 1966 a new program for cotton diversion acreage payment was implemented. M. P. Walls had signed the “intention to participate” as “owner” and appellant signed as “producer.” In rebuttal, appellant denied having seen the ASC office records and asserted he did not authorize the removal of his name from their record nor did he authorize Walls’ name to be placed on the records. Also, he understood that 1/4 of the “government money” which Walls received was to apply to his grandfather’s 1932 indebtedness. Appellant received 3/4 of the “government money” as a producer. On re-cross he admitted signing the ASC papers in M. P. Walls’ store without first reading them. Appellees adduced other evidence of acts of ownership of this 80 acres. These acts consisted of executing and recording oil and gas leases, payment of inheritance taxes following the death of James A. Walls in 1939 and the probate of his will devising this 80 acres to appellees, and, also, that appellant was regarded as a tenant.

As we view the evidence, we agree with the Chancellor that the evidence fails to show by the required heavy quantum of proof that the 1932 deed from appellant’s grandfather to Walls (appellees predecessor in title) was by an agreement intended by the parties as a mortgage and not as an absolute deed as it clearly purports to be on its face.

Affirmed.


author: Frank Holt Justice.

text:
    MARINE MART, Inc. v. L. D. PEARCE
    5-5885
    480 S.W. 2d 133
    Opinion delivered May 15, 1972

      Jones, Gilbreath ir Jones, for appellant.

      Daily, West, Core ir Coffman, for appellee.
   Frank Holt Justice.

The appellee brought this action to rescind a contract of sale for a motor boat. For reversal of the decree rescinding the contract, the appellant contends that the Chancellor erred because the appellee (buyer) refused to permit the appellant (seller) to make a “conforming delivery” by making minor repairs; there was no rejection of the boat; and, further, there was an acceptance which precludes rescission.

On June 2, 1970, the appellant, a retail boat dealer, sold appellee a motor boat which was on display in appellant’s showroom. However, the appellant’s manager, Charles Robinson, then secured appellee’s permission to deliver another boat which was stored in the warehouse. This agreement was upon the representation that the warehouse boat would be “identical” to the one on display. It appears these were the only two boats in stock of the same make and model. It was agreed that the seller would deliver the uninspected warehouse boat to Lake Tenkiller, approximately 70 miles distant, since appellee had no facilities to transport the boat. It is appellee’s position that the boat which was delivered was not “identical” to the boat displayed in appellant’s showroom. It is, also, appellee’s contention that the condition of the boat when. delivered required more than the making of minor repairs.

Appellee testified that on June 12, 1970, he went by appellant’s business to ascertain if the boat had been delivered. Appellant’s manager advised him that the boat had been delivered and was superficially damaged during delivery. According to Robinson, there was a storm “coming up” at the time the boat was placed in appellee’s rented stall and a strong wind caused the boat to come in contact with a barge (two large posts were protruding from this barge), resulting in the damage. Appellee went to the lake the next day and “found the boat in a terrible condition. We [appellee and wife] spent that full day cleaning the boat. The bow section under the gasoline tank was full of water. The section in the engine compartment was full of water. The seats had been walked on, they were muddy, the top had been walked on, it had muddy footprints on it. We took the top off of the boat and got it out on the dock and tried to clean it. We spent all that day; we didn’t even start the engine. We went back on June 14th, which was Sunday, and spent the full day that day, and didn’t even start the engine. So we spent two days just trying to clean it up.”

He, also, found the following defects: “The upholstery on the operator’s seat, the back of the operator’s seat was cut in three places, cuts which were about half an inch long. We found that the rail which holds the rubber bumper around the boat near the bow section was damaged badly, a section eight to ten inches long. We found that the dash, above the dash was scratched badly, apparently in installing the windshield. We took a look at the stern light that they had delivered with the boat and found that it wasn’t working properly. The nut which fastens it on, the threads were stripped and wouldn’t hold.” Appellee reported these deficiencies to Robinson the following Monday morning. Robinson agreed to make the necessary repairs the following Saturday, June 20. Appellee waited for him on that day and Robinson didn’t appear. The first of the week the appellee again went to appellant’s business and repeated his complaints to Robinson. At that time, he observed the boat that he had originally intended to purchase back on display in the showroom. The week before Robinson told him this particular boat had been sold; therefore, the damaged seat in the warehouse boat could not be replaced. Appellee proceeded to demonstrate to Robinson that the original showroom boat was free of the defects which existed on the warehouse boat which Robinson had delivered. “It seemed to irritate him very badly. I had a list of things to go over with him. . . . Very obviously he was unhappy with me.” Robinson again agreed to meet him the following Saturday and “we would go over these things and that he was going to make everything right.”

On that day, appellee waited from 1 p.m. to 4 p.m. at which time Robinson and his mechanic arrived and “they proceeded to spread some repair material on the damages that had been done to the boat when he delivered it and we got into a discussion concerning the boat.” The defects and damages were discussed as well as the oil being low in the boat. Robinson offered to replace the rub rail and provide a “slip cover” as a repair for the damaged vinyl upholstered seat. He did not offer to repair the dash. He and the mechanic applied a “jell coat” bonding material to the exterior side of the boat which was damaged.

Appellee characterized the damage as “holes” into the side of the fiber glass boat. Appellee, who had owned three boats and had 15 years experience in operating them, testified, “I knew he couldn’t repair the damage that he had done to the boat in carrying it over there, because you just can’t repair a fiber glass boat properly. The finish can’t be restored. The conversation was rather unpleasant. I asked him to take the boat back.” Robinson threatened to take legal action. “The conversation was broken off by Robinson and his party taking a walk down to the dock looking at the other boats. They came back and checked the repair material, said it wasn’t hard enough to sand down as yet, and they prepared to leave the dock, and was ready to go back to Fort Smith, and I told them not to come back.” This was about 5 p.m. It was appellee’s testimony that they left on their own volition. Appellee further testified that Robinson never told him that if he could not repair the boat and “satisfy all my complaints and if I were dissatisfied, he would replace the boat.” Appellee, also, testified that the damage to the metal rub rail was so extensive it indicated to him this damage had existed for some time because the outside rubber band was undamaged; and, therefore, it was not a boat identical to the showroom boat.

On July 14, or about two weeks after Robinson had been at the lake attempting repairs, appellee- wrote one of the appellant’s owners and outlined the defects in his boat and described the transactions which had occurred between him and Robinson. Approximately three weeks later, of on August 10, appellee received a reply to his letter, not from the addressee, but from Robinson. In that letter Robinson acknowledged the fact that damages to the outside of appellee’s boat had occurred during delivery and noted that their offer to repair had met with a request “to leave it alone.” The letter recited an offer by him to resolve the matter upon a request to him by appellee.

Also, on July 14, the appellee addressed a letter to the boat manufacturer about a “warranty registration” for the boat and asked confirmation of the registration, inasmuch as he was not sure that their local dealer, the appellant, had reported the sale of the boat “for purposes of warranty registration.” Appellee never received a reply to this request. Appellee, also, wrote the motor manufacturer on July 14 as to appellant’s failure to provide him with an Operation and Maintenance Manual, a copy of the warranty, and a copy of the free 20 hour checkup certificate. Further, the serial number on the invoice did not correspond with the number on the boat which had resulted in the improper licensing of the boat. A complaint was, also, made that the “trailer” button on the power trim indicator on the dash did not function. On July 28, the motor manufacturer replied with an explanatory letter about appellee’s complaints. As to the mechanical difficulty, it was suggested that appellee bring it to the attention of his local dealer, the appellant.

On September 10, appellee again wrote a letter by certified mail to the motor manufacturer registering his complaint that the “Stern Drive Unit and the steering are not operating properly” and the dealer had admitted in writing “that the oil was low in the stern drive unit when the boat was delivered.” A copy of this letter was sent to appellant by certified mail. Return receipts were received from both the manufacturer and appellant. Neither party ever responded in any manner. As of the date of this letter, appellee had, on appellant’s advice, used the boat only on three occasions for a total of five hours. Thereafter, he never used the boat again and filed this rescission action on November 12, 1970.

Robinson testified that when he delivered, the boat it slipped into a barge causing a scratch about an inch long on the side of the appellee’s boat. According to him, the scratch was less than an inch wide and only damaged the paint. Subsequently, appellee complained to him of several “little things” which were wrong with the boat. “I told him, well, whatever was wrong with the boat I would meet him up on the lake and take care of it and fix it for him.” Appellee further told him “that a couple of the switches that didn’t work, about the stern-light, some small pin holes in the cushion of the right front seat, and also about the rail.” Robinson further testified to meeting appellee at the lake around 3:30 or 4:00 June 27. At that time, “I asked Mr. Pearce [appellee], let’s go over each thing that is wrong with the boat and we would correct it. And so we went over the switches and the trim and the lights and the scratch in the bow well.....There wasn’t a thing wrong with it [the light]; it just needed to be tightened up. . . . There was some scratches on the aluminum rub rail. I don’t really know how they got there but anyhow I agreed to replace them. . . .[T]here was three small pin holes about the size of a paper clip, end of a paper clip, in the seat [upholstery], and I agreed to replace the insert; that you can buy from the manufacturer, and what it is, the way these seats are put together, it is a piece of plywood cut out the shape they want it cut out, and it has foam rubber on top of it, and this cushion is just an insert that fits over the top of it. You take the old one off first, and you put it on, and just staple it on with a staple gun, which you can get from the manufacturer. . . We might have talked about the scratches on the dash, but I just don’t remember about the scratches. I would have fixed them.” Robinson’s testimony concerning repairing the damage to the outside of appellee’s boat was: “Well, that was the last thing actually we had fixed on the boat, and we mixed up this jell-coat putty and we had sanded a little scratch out and applied the putty to it, and it takes it three or four hours to dry, then you come back and sand it with 600 sandpaper, then you rub it out with rubbing compound, and you will never know that it has been scratched.” Appellant adduced corroborating testimony from the mechanic, as well as from a part owner who had received appellee’s written complaint.

Our Uniform Commercial Code provides that goods delivered must conform to the sales contract. Ark. Stat. Ann. § 85-2-106 (Add. 1961). The seller, however, has a right to “cure” a non-conforming delivery, § 85-2-508, and the seller has a “reasonable time” to effect corrective measures. § 85-2-309 (1). § 85-2-508 reads:

“(1) Where any tender or delivery by the seller is rejected because non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure any may then within the contract time make a conforming delivery.
(2) Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute a conforming tender.”

However, the words “a further reasonable time” are intended for the benefit of the buyer; and what constitutes “a reasonable time” depends upon the attendant circumstances in each case. See Committee Comment to this section, paragraph 3. With respect to what constitutes acceptance of goods, appellant cites us to § 85-2-606 (1) which reads:

“(1) Acceptance of goods occurs when the buyer (a) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity: or (b) fails to make an effective rejection (subsection (1) of Section 2-602 [ § 85-2-602]), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or (c) does any act inconsistent with the seller’s ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.”

And as to rejection of purchased goods, appellant refers us to § 85-2-602 which reads:

“(1) Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notified the seller.”

Appellant argues that pursuant to these provisions it had the right to make a “conforming delivery” by making repairs which were minor in nature; that appellee never rejected the boat and there was an acceptance of the boat which precluded rescission.

Appellee argues that the boat was not “identical” to the display boat; there was never an acceptance of the boat and, further, argues “even if appellee (buyer) accepted the boat, acceptance was rightfully revoked.” In support of this position, appellee relies on § 85-2-608 (1) which provides:

“The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it (a) on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or (b) without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.”

What constitutes a non-conforming delivery, acceptance, rejection, or revocation of acceptance are questions of fact to be determined within the framework of the facts of each particular case.

On appeal, this court will reverse a Chancellor’s findings of fact only when such findings are against the preponderance of the evidence, Hunter v. Dixon, 241 Ark. 725, 410 S. W. 2d 389 (1966); and further, where the issue is predominantly one of credibility between interested parties, we uphold the Chancellor’s judgment. Dodds v. Dodds, 246 Ark. 313, 438 S.W. 2d 54 (1969). In the case at bar, the testimony of interested parties was in direct conflict. The Chancellor had the opportunity and advantage to see and hear the witnesses. Upon consideration of all the attendant circumstances, we cannot say that the Chancellor erred by ordering a rescission of the sales contract.

Affirmed.


author: Carleton Harris, Chief Justice.

text:
    Edward J. QUATTLEBAUM and CBM, Inc. v. La Berta GRAY
    5-5913
    480 S.W. 2d 339
    Opinion delivered May 22, 1972

      Guy H. Jones, Phil Stratton and Guy Jones, Jr., for appellants.

      Clark, Clark & Clark, for appellee.
   Carleton Harris, Chief Justice.

Central Business Machines, Inc., hereinafter called CBM, Inc., a domestic corporation with its principal office in Conway, instituted suit in the Faulkner County Chancery Court against LaBerta Gray, one of its officers (controller) seeking an accounting and return of certain records. Mrs. Gray answered the complaint and also cross-complained against Edward J. Quattlebaum, appellant herein, a stockholder and Vice President of CBM, Inc. In this pleading, Mrs. Gray alleged that Quattlebaum was indebted to her for $5,000, evidenced by a certain note. This portion of the litigation was transferred to the Faulkner County Circuit Court, and appellant, after filing a general denial, further pleaded a failure of consideration. On trial, and after taking of evidence, the court instructed the jury to return a verdict for Mrs. Gray against Quattlebaum in the amount of the note, $5,000, plus interest and attorney’s fees, and further directed the jury to return a verdict over for said sum in favor of Quattlebaum against CBM, Inc. From the judgment so entered comes this appeal.

The execution of the note was admitted by Quattlebaum, but he and Mrs. Gray differed as to the purpose for the giving of the note. Mrs. Gray testified that she gave Quattlebaum $5,000 in cash on December 10, 1969, and he executed the note at that time to her. Quattlebaum stated that he signed the note in blank and that Mrs. Gray was to go to Hot Springs to borrow the money from her mother, the money then to be turned over to CBM, Inc. He said that he signed the note because Mrs. Gray said that her mother would not lend the money without his signature. Quattlebaum stated that he did not receive any money personally. Two days after the execution of the note, Mrs. Gray did deposit to the corporation account $5,952.25, which included a $5,000 personal check executed by Mrs. Gray. Quattlebaum admitted that the corporation did receive $5,000 but “I don’t know if it was this”. When asked if the money was made available to the company, he replied “I don’t know if this $5,000 was, but there was a $5,000 deposit”, and he then stated that the company did receive a benefit.

Appellant argues that a jury question was made as to whether he personally received the money. As stated, Quattlebaum had pleaded “failure of consideration” as his defense to the note. This defense is without merit. As early as 1882, in the case of Rockafellow v. Peay, et al, 40 Ark. 69, this court said:

“It was not necessary to the validity of Gordon N. Peay’s note and mortgage that he should have derived any benefit from the transactions out of which they arose. It is sufficient that a valuable consideration moved from the plaintiff to his brother. The consideration for the execution of the first mortgage was a loan of $4,000 to John C. Peay.”

In Hays v. McGuirt, 186 Ark. 702, 55 S.W. 2d 76, we pointed out that consideration does not have to move to the party promising, but may move from a promisor to a third person; that the consideration may consist in a loan to a third person. See also Anthony v. First National Bank of Magnolia, et al, 244 Ark. 1015, 431 S.W. 2d 267. As previously pointed out, Quattlebaum admitted execution of the note and admitted that the corporation received a benefit, and this was the purpose of his signing the note. Accordingly, from a legal standpoint, it makes no difference whether Quattlebaum received the money personally, or whether it was deposited to the account of the corporation — for, in either instance, he was liable.

The court acted erroneously in entering a judgment over and against CBM, Inc. in favor of Quattlebaum, since CBM, Inc. was not a party to this phase of the litigation. However, though CBM, Inc. filed a notice of appeal, it was not entitled to do so since it was not a party to this phase of the litigation. See Ark. Stat. Ann. § 27-2106.1 (Repl. 1962). Though, under the record herein, it is clearly entitled to a reversal, this court cannot act upon an appeal taken by one who was not a party to the action in the trial court. Accordingly, CBM’s relief should be obtained by an attack upon the judgment in the trial court.

Affirmed.

      The record does not reflect any order of transfer, but the parties, in their briefs, agree that this was done.


author: George Rose Smith, Justice.

text:
    GRANITE STATE INSURANCE CO. v. Grover L. MARTIN et al
    5-5896
    480 S.W. 2d 326
    Opinion delivered May 22, 1972

      Whetstone ér Whetstone, for appellant.

      Guy Jones, Jr., Guy H. Jones and Phil Stratton, for appellees.
   George Rose Smith, Justice.

This is the third time that some aspect of this litigation has reached this court. The present appeal is from a $10,000 judgment obtained in the court below by the appellee Grover L. Martin under the uninsured motorist provisions of an insurance policy issued to Martin by the appellant, Granite State Insurance Company. Granite State argues several points for reversal, the principal one stemming from Granite State’s contention that the pendency of another suit in Pulaski county is a bar to the maintenance of this suit in Conway county.

All the litigation derives from a traffic collision in Pulaski county, involving Martin and John L. Romes. Romes sued Martin in Pulaski county. Martin filed a counterclaim. That case was tried and resulted in a partial verdict and judgment, which were set aside on appeal. Martin v. Romes, 249 Ark. 927, 462 S.W. 2d 460 (1971). The case has not been retried and is still pending in Pulaski county.

Several months after the entry of the partial judgment in Pulaski county, Martin brought this action against his own insurance company, Granite State, in Conway county, where Martin lives. Martin alleged that he was injured in the collision, that Romes was an uninsured motorist, and that Martin was entitled to recover $10,000 under the uninsured motorist clause in the policy.

Granite State filed a motion to dismiss the Conway county case, on the ground that another action involving the same subject matter was pending in Pulaski county. Martin resisted the motion to dismiss, pointing out that Granite State was not a party to the Pulaski county suit and also that that suit was a tort action while the one in Conway county was an action in contract. The trial court denied the motion to dismiss. Thereafter we refused to issue a writ of prohibition against the maintenance of the suit in Conway county. Granite State Ins. Co. v. Roberts, 250 Ark. 442, 465 S.W. 2d 332 (1971). The Conway county case was then brought to trial and resulted in the $10,000 judgment now before us.

At the trial in the court below Granite State renewed its contention that the pendency of the suit in Pulaski county is a bar to the maintenance of this suit in Conway county. In that connection Granite State relies upon a provision in its policy to the effect that no judgment in favor of its insured (Martin) against an uninsured motorist (Romes) is conclusive as to Granite State unless the action by Martin is prosecuted with Granite State’s written consent. Granite State sought to prove that Martin’s counterclaim against Romes in Pulaski county had been filed with Granite State’s written consent, but the trial judge refused to allow that proof, holding that the question was not an issue in tíre case.

That ruling was error. In the prohibition case Granite State argued that it had consented in writing to Martin’s counterclaim against Romes; but its proof was deficient. For that reason we denied the application for a writ of prohibition. We quote from that opinion:

There is no evidence in the record before us that Granite State was ever a party to the litigation pending in Pulaski County, and there is no evidence, as the record now stands, that Granite State did or did not consent to the action instituted ... in the Pulaski County Circuit Court. We conclude, therefore, that the petitioner, Granite State Insurance Company, has failed in the discharge of its burden of showing grounds for the invocation of the extraordinary powers of this court to prevent by prohibition the exercise of jurisdiction inherent in the trial court, and of showing that the respondent judge erred in denying Granite State’s motion to dismiss Martin’s complaint in the Conway County Circuit Court. (Italics supplied.)

Thus we held that the Pulaski county case would be a bar to the Conway county case if Granite State either was a party to the Pulaski county suit, which it was not, or had consented in writing to the filing of Martin’s counter-claim, which Granite State failed to prove. That decision is now the law of the case. We must adhere to it upon this appeal and would do so even if we thought it to be erroneous. United States Annuity & Life Ins. Co. v. Peak, 129 Ark. 43, 195 S.W. 392, 1 A.L.R. 1259 (1917). It follows that Granite State was entitled to attempt to prove that it had consented in writing to Martin’s counterclaim in Pulaski county, so that the judgment in that case would be binding upon all concerned. The trial court erred in refusing to allow that issue to be litigated.

Granite State argues several other matters that may arise upon a retrial of the case. In the court below Granite State filed a third-party complaint against Romes, asserting that if Martin recovered judgment against Granite State, then Granite State would be entitled to judgment over against Romes in the same amount. Romes filed a motion to dismiss Granite State’s third party complaint against him. If is now argued that the trial court erred in dismissing Romes from the case.

We think the court was right. Rome had already fixed the venue as between himself and Martin by filing his own suit in Pulaski county. Hence Romes was entitled to insist that his part in the controversy be litigated in his tort action in Pulaski county rather than in a contract case in Conway county involving an insurance policy to which Romes was not a party. Granite State, needless to say, may assert its claim to subrogation by appropriate action in Pulaski county, where Romes resides.

The court erred in allowing Martin to prove by a State policeman that Martin had said at the scene of the accident that his neck and back were hurting. The statement does not appear to have been an involuntary exclamation indicating pain. Rather, it was a narration of what Martin thought his condition to be. As such it was a self-serving declaration and inadmissible. Prescott & N. W.R.R. v. Thomas, 114 Ark. 56, 167 S.W. 486 (1914). It was also error to allow Martin to explain what had happened to a traffic ticket that he received, but that matter was voluntarily injected into the case by Martin himself and should not arise upon a retrial. We express no opinion with respect to the reasonableness of the attorney’s fee allowed to Martin, for the pertinent facts with respect to the fee are certain to be somewhat different if Martin succeeds in obtaining judgment upon a retrial.

Reversed.


author: Lyle Brown, Justice.

text:
    Wayne MASSEY et al v. Mrs. Floyce PRICE
    5-5916
    480 S.W. 2d 337
    Opinion delivered May 22, 1972

      Spencer ir Spencer, for appellants.

      Nolan, Alderson ir Jones, for appellee.
   Lyle Brown, Justice.

This is a dispute over the location of a boundary line between the Masseys, appellants, and Mrs. Floyce Price, appellee (plaintiff below). In addition, appellee contends that she has acquired an easement for ingress and egress to her property over a circular drive the southern tip of which is on appellants’ property. The trial court held for appellee on her two points, both on the theory of adverse possession. Appellants attack the sufficiency of the evidence.

Eight witnesses testified for appellee and nine for appellants. As is usually the situation in this type of case the evidence was in substantial conflict. As to the boundary dispute it is concerned with a tract of land some seventeen feet in width across the south side of appellee’s property and the north side of appellants’ property. We summarize the highlights of appellee’s proffered evidence. In 1946 the Price family repaired the south fence on their property, believing that the fence was on the property line. They followed a line on which an old fence was recognizable; they farmed the area up to the old fence beginning in the late nineteen forties; they ran livestock up to the old south fence line; a logging contractor cut timber for both parties up to the old line fence on both sides; appellee built a small enclosure for a pony and tied into the south line fence; and they made a garden for ten years up to and including the disputed area. Appellee testified that it was not until 1970 when the Masseys, after a survey, first indicated that the fence was not on the true forty line. Events immediately following that revelation culminated in the filing of suit by appellee.

Appellants’ evidence strongly disputed that of appellee. They said the disputed strip was used as a lane by the predecessors in title of the present owners; that the north fence which helped form the lane was at approximately the true boundary line; that in 1932, by mutual agreement, the Price fence was torn down and D. C. Price (appellee’s predecessor in title) joined the Massey’s fence on the south; and that it was agreed that the location of the two fences would not affect the true boundary line.

It would be of no service to the bench and bar generally to summarize the testimony of the seventeen witnesses, all of which we have carefully scrutinized from the abstract of the evidence. Suffice it to say that we conclude that the finding of the chancellor was not contrary to a clear preponderance of the evidence. In order for adverse possession to ripen into title it is axiomatic that the possession must be open, actual, notorious, continuous, hostile, and exclusive under a claim of right. Montgomery v. Wallace, 216 Ark. 525, 226 S. W. 2d 551 (1950). The chancellor determined that appellee had met those requirements and we cannot say he was in error. It is true that appellee bore the burden of establishing title by adverse possession by a greater weight of the evidence. Of course “greater weight” does not mean the greater number of witnesses; just as important is the credibility of the witnesses and the chancellor is in better position to evaluate credibility than is this court. Loftin v. Goza, 244 Ark. 373, 425 S. W. 2d 291 (1968).

This brings us to the claimed easement for a driveway. Appellee’s home is situated in proximity to the road on the west leading to Strong, Arkansas. In 1959 appellee and her husband constructed a driveway roughly in the shape of a half moon. The driveway begins on the north side of appellee’s property and exits some 300 feet on the south side. The extreme south end of the driveway indisputably encroaches on the Massey property. The stated reason for the encroachment was that it was necessary to avoid a ditch alongside the highway. Appellee candidly stated that she was aware that she was going onto the Massey property and “I suppose I just assumed he was my neighbor and didn’t object and assumed I was doing it with his permission, which I suppose I was.” For use by permissiveness to ever ripen into title, the claimant must put the owner on notice that the way is being used under claim of right. Stone v. Halliburton, 244 Ark. 392, 425 S. W. 2d 325 (1968). We think the evidence in this case falls short of establishing a claim of right by appellee and we accordingly reverse the chancellor in his holding with respect to the easement.

Affirmed in part, reversed in part.


text:
    Robert COURTNEY v. STATE of Arkansas
    5715
    480 S.W. 2d 351
    Opinion delivered May 22, 1972

      John R. Henry, for appellant.

      Ray Thornton, Atty. Gen., by: Milton Lueken, for appellee.
   Lyle Brown, Justice.

Appellant Robert Courtney was convicted of grand larceny, and under our habitual criminal statute he was sentenced to twenty-six years imprisonment. For reversal he contends that the State failed to prove the value of the stolen property and that the court erred in refusing to give an instruction on joy riding or trespass.

The essence of appellant’s argument under the first point for reversal is that the State’s evidence failed to sustain his conviction of grand larceny as defined by statute. Ark. Stat. Ann. § 41-3907 requires a showing that the value of the property stolen exceeds the sum of $35.00.

At the trial the prosecution’s witness Fred Pearson, who worked at the Portis Motor Company Service Station, testified that the appellant appeared at the station about 6:00 p.m. on August 30, 1971, in Lepanto. Appellant was alone and on foot. He indicated that his car had stalled a few blocks away and that he needed help to start it. Mr. Pearson put the battery booster cables into an old yellow Ford truck that belonged to the station owner and accompanied by appellant drove toward the alleged stalled vehicle. After having proceeded for only one block, appellant directed Pearson to stop at a liquor store. When appellant returned from the liquor store he displayed a piatol and directed Pearson to drive to Dyess, Arkansas. At this point Pearson was under the impression that he (Pearson) was having a heart attack so he drove to the doctor’s office in Lepanto. When Pearson walked up to the doctor’s office appellant drove off in the truck and parked it near his father’s home, where he was apprehended. Pearson further testified that his employer, Portis Motor Company, was the owner of the truck, and that appellant was never granted permission to drive or use the truck.

The only evidence as to the value of the truck was introduced when the prosecutor questioned Mr. Pearson on the subject:

Q. All right. Are you acquainted with the value of that vehicle?
MR. FORD: Objection, your Honor.
THE COURT: He can state whether or not he was acquainted.
Q. (By Prosecutor) Are you acquainted with the value of that vehicle, Mr. Pearson?
A. Well, my boss told me what he wanted for it.
Q. It was for sale then?
A. Yes, sir.
Q. All right. And what was the price fixed on the vehicle?
A. Around two hundred dollars?
MR. FORD: I would object to this, your Honor. The man cannot tell even what year the truck was, and certainly he cannot testify as to any value.
THE PROSECUTOR: He can testify to the sales price of it, your Honor. That is an indication of its value.
MR. FORD: That is hearsay testimony, your Honor; if he wants someone to come in to testify as to the value of the truck, maybe Mr. Portis can do it.
THE COURT: The objection is overruled. Note your exemptions.
MR. FORD: Please note our exemptions.

It has been a long established and well founded rule that testimony regarding statements made to a witness by a third party is inadmissible as hearsay. Smedley v. State, 130 Ark. 149, 197 S. W. 275 (1917). Hearsay evidence is excluded because the safeguards which are present when a witness testifies in person on the basis of his own observations are lacking. Wigmore points out the two major reasons for the hearsay rule as being (1) principally, that there is no regular opportunity for cross-examination, the usual test of truthfulness, and (2) the fact that such statements are normally not made under oath likewise detracts from their reliability. Wigmore, Evidence, § 1362 (3rd ed., 1940).

Under an indictment for grand larceny the value of the property alleged to have been stolen must be established beyond a reasonable doubt to support a conviction. See Rogers v. State, 248 Ark. 696, 453 S. W. 2d 393 (1970). Since the testimony of Fred Pearson as to the value of the vehicle would be inadmissible as hearsay, and since the record is void as to any further evidence which might indicate the fair market value of the truck, the evidence fails to support a verdict of guilty of grand larceny. This court has said, “Without proof of value of stolen property there can be no conviction for larceny.” Ware v. State, 33 Ark. 567 (1878).

The issue involved in appellant’s second point may arise at a new trial. It is argued that the court erred in refusing to give appellant’s requested instruction on the offense of joy riding or trespass. The State answers that contention by pointing out that there is no testimony in the record which would justify any such instruction. In the case of Hall v. State, 242 Ark. 201, 412 S. W. 2d 603 (1967), the appellant Hall requested similar instructions which were refused. This court said that the trial court was justified in refusing defendant’s requested instructions where there was no testimony to support his purported intention to deprive the owner of the car temporarily without intent to steal it. The trial court under the present facts properly refused Courtney’s request for the same reasons stated in Hall.

Reversed.

Fogleman, J, not participating.


author: John A fogleman, Justice,

text:
    THE TRAVELERS INSURANCE CO. v. NATIONAL FARMERS UNION PROPERTY AND CASUALTY CO. et al
    5-5900
    480 S.W. 2d 585
    Opinion delivered May 22, 1972

      Terral, Rawlings, Matthews ér Purtle, for appellant.

      Wright, Lindsey ir Jennings and Catlett Henderson, for appellees.
   John A fogleman, Justice,

This appeal presents two basic questions. They are: (1) Is the particular clause in the uninsured motorist coverage of the liability policy issued by National Farmers Union Property and Casualty Company (hereafter called NFU) to Calvin E. McCord, deceased, providing that any amount payable under that coverage because of bodily injury shall be reduced by the amount paid and the present value of all amounts payable on account of such injury under any workmen’s compensation law valid? (2) Is the workmen’s compensation carrier for Calvin McCord’s employer entitled to subrogadon against uninsured motorist benefits payable to McCord’s administratrix? We answer both questions in the negative.

McCord was killed while performing his duties as an employee of Mitchell Machinery Company when he was struck by a vehicle driven by Kenneth Green, an uninsured motorist. Travelers Insurance Company had paid $3,558.-82 in workmen’s compensation benefits to McCord dependents at the time the judgment appealed from was rendered in the circuit court. It was stipulated that a sum in excess of $10,000 was payable under the workmen’s compensation coverage. It was also stipulated that McCord’s administratrix was entitled to recover a sum in excess of $10,-000 from the uninsured motorist.

Denise McCord, as administratrix of McCord’s estate, filed a suit against NFU seeking to recover the $10,000 uninsured motorist coverage, without any deduction for workmen’s compensation benefits. Travelers Insurance Company intervened seeking subrogation by virtue of its workmen’s compensation payments. The circuit court, upon motions for summary judgment by NFU and McCord’s administratrix, dismissed Travelers’ intervention on the ground that it was not entitled to subrogation, gave NFU credit for all workmen’s compensation payments made by Travelers up to the date of the judgment, and rendered judgment for the administratrix against NFU for the balance of the uninsured motorist coverage. All parties have appealed.

The circuit judge made a painstaking and thorough analysis of the possible results which might be reached on these questions of first impression in this jurisdiction. We agree with him that the intervention of Travelers should have been dismissed, but we do not agree that NFU was entitled to any credit for workmen’s compensation payments.

Travelers contends that it is entitled to subrogation under Ark. Stat. Ann. § 81-1340 (a) (Repl. 1960). Principal reliance is placed upon § 81-1340 (a) (1), wherein it is provided that the making of a claim for workmen’s compensation “shall not affect the right of the employee, or his dependents, to make claim or maintain an action in court against any third party for such injury” and that when the compensation carrier joins in the action, it shall have a lien upon two-thirds of the net proceeds. A literal reading of these words without further exploration of the section might lead one to the conclusion that it was the intent of the act to provide a lien in favor of the compensation carrier on any amounts the employee or his dependents were entitled to recover from any source because of the employee’s injury. We have held, however, that uninsured motorist coverage is a form of accident or indemnity insurance. Farm Bureau Mut. Ins. Co of Arkansas v. Mitchell, 249 Ark. 127, 258 S.W. 2d 395; MFA Mutual Ins. Co. v. Bradshaw, 245 Ark. 95, 431 S.W. 2d 252. If, under the broad general language of § 81-1340 (a) (1), the uninsured motorist insurer is a “third party” against whom the compensation carrier may join the injured employee or his dependents in asserting a claim because of the injury, there would be no reason why the employee’s health and accident and hospital insurance proceeds would not also be subject to a lien in favor of an intervening workmen’s compensation carrier. We cannot believe that the words “third party” are subject to any such broad interpretation. Examination of the remainder of this section of the statute makes it quite clear that a “third party” is one against whom an “action for damages by reason of injury” or an “action in tort” may be brought by the employee or his dependents. § 81-1340 (a) (2) and (b).

We cannot accept the theory that the recovery on the uninsured motorist coverage is a tort recovery subject to the lien just because liability depends upon a tortious injury. This would mean that the coverage is a type of liability insurance on the uninsured motorist — a premise we have rejected. Farm Bureau Mut. Ins. Co. of Arkansas v. Mitchell, supra. An action against the carrier of uninsured motorist coverage is in no sense an action in tort. It is clearly an action upon a contract by the insured as one of the contracting parties against the insurer as the other. See Farm Bureau Mut. Ins. Co. of Arkansas v. Mitchell, supra. A workmen’s compensation carrier has no more right under the subrogation statute to benefit from this type of insurance which a covered employee elects to take at his own expense than it would from the proceeds of health, accident or hospital insurance. We find the language of a New York court particularly applicable here. In Commissioners of the State Insurance Fund v. Miller, 4 App. Div. 2d 481, 166 N.Y.S. 2d 777 (1957) that court said:

The Fund argues that this makes no difference, that it has a lien on all tort recoveries, and the defendant’s insurer has agreed to stand in the shoes of the tortfeasor. Defendant’s insurer cannot, however, be deemed the alter ego of the tortfeasor. It does not insure the tort-feasor against liability, it insures its policyholder against the risk of inadequate compensation for his compensable injuries. Its liability to defendant is contractual, although premised in part upon the contingency of a third party’s tort liability.
The compensation carrier has a right to expect an injured employee to pursue whatever remedies he may have against a third-party tort-feasor, and if the employee fails to do so, the compensation carrier may protect its lien by pursuing his remedies for him [Workmen’s Compensation Law, § 29 (2).] It has no right to expect an employee to supplement his common law remedies and the compensation carrier’s statutory lien, by purchasing his own insurance. If the employee does choose to expend his own funds to provide additional protection for himself, whether by paying for an accident and health policy, or by having a Medical Payments or Uninsured Drivers Benefits clause added to his liability policy, the compensation carrier does not thereby acquire additional rights. It does not become a third-party beneficiary of the employee’s insurance contract. Nor is it subrogated to the employee’s contractual rights if the employee fails to assert them.

See also, Rhodes v. Automotive Ignition Co., 218 Pa. Super 281, 275 A. 2d 846 (1971); 12 Couch on Insurance (Second Edition) 585, § 45:650. Since Travelers had no right of subrogation, it had no right to intervene.

The trial court’s holding allowing credit for workmen’s compensation is based upon a portion of a policy “condition” reading:

6. Limits of liability:
(a) The limit of liability stated in the schedule as applicable to “each person” is the limit of the company’s liability for all damages, *** because of bodily injury sustained by one person as the result of any one accident and, subject to the above provision respecting each person, the limit of liability stated in the schedule as applicable to “each accident” is the total limit of the company’s liability for all damages, including damages for care or loss of services, because of bodily injury sustained by two or more persons as the result of any one accident, (b) any amount payable under the terms of this endorsement because of bodily injury sustained in an accident by a person who is an insured under this coverage shall be reduced by ***
(2) the amount paid and the present value of all amounts payable on account of such bodily injury under any workmen’s compensation law, disability benefits law or any similar law.

NFU is entitled to credit under this clause unless it is void as contrary to public policy or is contrary to the uninsured motorist act. Ark. Stat. Ann. § 66-4003 (Repl. 1966) reads:

No automobile liability insurance, covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this State with respect to any motor vehicle registered or principally garaged in this State unless coverage is provided therein or supplemental thereto, in not less than limits described in section 27 of Act 347 of 1953 [§ 75-1427], as amended, under provisions filed with and approved by the Insurance Commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, however, that the coverage required under this section shall not be applicable where any insured named in the policy shall reject the coverage. [Acts 1965, No. 464, § 1, p. 1570.]

Ark. Stat. Ann. § 75-1427 (Repl. 1957 and Supp. 1971) requires security subject to a limit, exclusive of interest and costs, for not less than $10,000 because of bodily injury to or death of one person in any one accident, subject to said limit for one person, to a limit of not less than $20,000 because of bodily injury to or death of two or more persons in any one accident. It would appear that, in this policy for the statutory amounts, the condition stated would on its face amount to a reduction of the stated policy limits.

There is a division of authority on the question of the validity of such clauses. They have been held void in Standard Accident Ins. Co. v. Gavin, 196 So. 2d 440, 24 A.L.R. 3d 1366 (Fla. 1967); Southeast Title & Insurance Co. v. Austin, 202 So. 2d 179 (Fla. 1967); Peterson v. State Farm Mutual Automobile Ins. Co., 238 Ore. 106, 393 P. 2d 651 (1964); Preferred Risk Mutual Insurance Co. v. Holmes, 287 Ala. 251, 251 So. 2d 213 (1971). Contra, Jarett v. Allstate Ins. Co., 209 Cal. App. 2d 804, 26 Cal Rptr. 231 (1962); Ullman v. Wolverine Insurance Co., 105 Ill. App. 2d 408, 244 N.E. 2d 827 (1969), Hackman v. American Mutual Liability Insurance Co., 110 N. H. 87, 261 A. 2d 433 (1970) (where same carrier had both coverages).

This clause has been held void by two eminent jurists in separate Arkansas Federal District Courts because the purpose of the statute was to provide a basic minimum coverage against the actions of financially irresponsible motorists. See Carter v. Saint Paul Fire & Marine Insurance Company, 283 F. Supp. 384 (1968), aff’d sub nom Vaught v. State Farm Fire & Cas. Co., 413 F. 2d 539 (8th Cir. 1960); Jones v. Morrison, 284 F. Supp. 1016 (1968). We find the reasoning of the courts which have held this clause void to be persuasive. We have held a "medical payments” deduction from the recovery to be in derogation of the statute. Heiss, Executrix v. Aetna Cas. & Sur. Co., 250 Ark. 474, 465 S.W. 2d 699 (where uninsured motorist’s premiums would be increased if medical coverage was in addition to uninsured motorist coverage). There is no indication that there is any premium differential here favoring an insured covered by workmen’s compensation over one who is not.

It is true that the parties are free to contract upon any terms not contrary to public policy or the terms of our statutes. MFS Mutual Ins. Co. v. Bradshaw, 245 Ark. 95, 431 S.W. 2d 252. It is also true that the particular policy provision has been approved by our Insurance Commissioner. We do not believe, however, that it was the intention of the General Assembly that the coverage provided be subject to reduction of the amount the insurer would be required to pay in a manner discriminatory against persons protected by workmen’s compensation coverage, as would result if we held the clause in this policy valid.

We cannot hold this particular provision valid simply because it was approved by the Insurance Commissioner. We cannot believe that the General Assembly intended that the coverage for which the insured paid his premium could be reduced simply because this official approved a policy provision that would have this effect. We do not find any indication that the legislative branch of the government intended to vest such broad authority in the Insurance Commissioner. We agree with the United States District Court for the Eastern District of Arkansas and the Supreme Court of Oregon that such action is beyond the scope of the authority of the Commissioner. Carter v. St. Paul Fire & Marine Ins. Co., supra; Peterson v. State Farm Mutual Automobile Ins. Co., supra. See also, State Farm Mutual Automobile Ins. Co. v. Barnard, 115 Ga. App. 857, 156 S.E. 2d 148 (1967). Furthermore, the argument that the public policy of Arkansas was declared in MFA v. Wallace, 245 Ark. 230, 431 S. W. 2d 742, does not persuade us to allow the credit. There the clause was an “other insurance” limitation and the two policies were issued by the same company. We said that it was not the legislative intention that the insured be afforded greater insurance protection against the uninsured motorist than would have been available had he been injured by an operator with a policy containing the minimum statutory limits required by Ark. Stat. Ann. § 75-1427. We do not equate the right of a workmen’s compensation carrier to subrogation against a tortfeasor’s liability carrier with the asserted right of the insured’s own indemnity carrier to reduce the amount of its coverage by the amount of benefits received from a collateral source, in spite of the fact that the insured had paid a premium for the full amount of the prescribed limits. Yet, this is precisely what we would have to do in order to sustain NFU’s argument and the trial court’s judgment. To do so would result in giving greater coverage to one who was not covered by workmen’s compensation than one who was. The uninsured motorist legislation was passed long after adoption of the Workmen’s Compensation Act. When we consider the basic purposes of the latter act, our belief that the legislature did not intend that the Uninsured Motorist Act be the means of discrimination against working people protected under the workmen’s compensation laws is strengthened. Analogy of the subrogation right of the compensation carrier to the right of the indemnity carrier to reduce its liability is inappropriate. The subrogation right is for the protection of die compensation carrier. The right claimed by NFU would simply provide it with a windfall in the case of one covered by the workmen’s compensation laws. The purpose of the Uninsured Motorist Act was to protect the insured, not the insurer.

We further doubt that there was any intention that the covered employee be afforded greater indemnity by his own insurance carrier against the hazards of injury by an uninsured motorist while following recreational pursuits, for example, than he would have while about his daily labors for his employer. We certainly do not believe that there was any legislative intent that the covered employee’s dependents be deprived of any protection by his uninsured motorist coverage, if workmen’s compensa don benefits paid and the commuted value of payments to be made should exceed the minimum indemnity required by Ark. Stat. Ann. § 66-4003. Yet if the credit clause were permitted to stand, this result could be reached in some cases.

We affirm the judgment insofar as it relates to the dismissal of Travelers’ intervention, but reverse the judgment allowing NFU credit for workmen’s compensation benefits paid, and remand the cause to the circuit court for further proceedings consistent with this opinion.

      For other cases holding that indemnity from collateral sources does not diminish the amount an injured party is entitled to recover from one liable to him on account of his injury or loss, see Freeman v. Reeves, 241 Ark. 867, 410 S.W. 2d 740; Manila School Dist. v. Sanders, 226 Ark. 270, 289 S.W. 2d 529. For a case where the collateral source was workmen’s compensation benefits, see Swindle v. Thornton, 229 Ark. 437, 316 S.W. 2d 202.


author: J. Fred Jones, Justice.

text:
    Dorothy EDMONDS, Adm’x. v. Leonard E. EDMONDS et al
    5-5901
    480 S.W. 2d 343
    Opinion delivered May 22, 1972

      Patten, Brown ¿r Leslie, for appellants.

      Spitzberg, Mitchell & Hays, by: John P. Gill, for appellees.
   J. Fred Jones, Justice.

Dorothy Edmonds is the widow of Marvin Edmonds deceased and is the administratrix of his estate. She brings this appeal from a decree of the Pulaski County Chancery Court inpressing a trust in favor of the creditors of D & M Construction Co. on the proceeds of life insurance on the life of Marvin Edmonds.

D & M Construction Co. was a partnership composed of Leonard Edmonds and his nephew Marvin. Prior to Marvin’s death, they were engaged in the construction of residential and other buildings in Pulaski County and other sections of the state. As a part of their business they would purchase lots, build houses thereon, and then sell the finished house on the open market at a profit. Leonard figured the materials and cost, submitted bids in connection with contract ventures and supervised the actual construction. Marvin kept the office books and records. He arranged for financing, made out the payrolls, did the partnership banking and wrote all the checks on the company account.

In February, 1969, a lot was purchased in the Lakewood Addition to the City of North Little Rock and a down payment in the amount of $100 was made by check on the D & M Construction Co. A construction loan was obtained from the Arkansas Savings & Loan Association in the amount of $22,500 and the balance of the purchase price of the lot was paid out of the loan. Title to the lot was taken in the names of Marvin and his wife Dorothy, and they executed a note and mortgage on the lot as security for the loan. As additional security in connection with the loan, a declining term credit life insurance policy in the face amount of $22,500 was obtained on the life of Marvin and Arkansas Savings & Loan Association was the sole beneficiary. The initial premium for this insurance in the amount of $176.60 was paid out of the proceeds of the loan, and interest on the loan in the amount of $571.20 was subsequently paid by check on D & M Construction Co. The house was completed and sold to a third party purchasér. After the contract of sale was entered into but before the transaction was closed, the second annual insurance premium in the amount of $176.60 was paid by Arkansas Savings 8c Loan Association and this amount was added to the principal of the loan. When the sale was completed, the indebtedness to the loan association was paid and the profit in the amount of $4,662.21 was deposited to the bank account of D & M Construction Co. The insurance contract was continued in force on the life of Marvin Edmonds with the Arkansas Savings 8c Loan Association as beneficiary.

Marvin Edmonds died on December 7, 1970; the Arkansas Savings & Loan Association applied for and received the proceeds from the insurance policy and upon request, paid the proceeds over to the estate of the insured. At the time of Marvin’s death, D 8c M Construction Co. had other construction projects in progress and owed labor and material bills in connection therewith. Leonard Edmonds, the surviving partner, instituted the present action for himself and the creditors of D & M Construction Co. alleging that the insurance on the life of Marvin was paid for with partnership funds and was obtained for the purpose of securing creditors of D 8c M Construction Co.; that the proceeds of the policy in the amount of $20,961.38 were partnership assets and that Dorothy Edmonds, as administratrix, held such proceeds in trust for the benefit of the creditors of D & M Construction Co. He prayed that a constructive trust be impressed on the proceeds of the policy; that a receiver be appointed for D & M Construction Co. and that Dorothy be required to pay the proceeds of the insurance over to the receiver so that the insurance proceeds might be added to the other assets of the partnership for use in the payment of the creditors of D & M Construction Co.

Dorothy Edmonds, as administratrix, denied that the insurance proceeds were assets of the partnership but alleged that they were assets of the estate of Marvin Edmonds. She joined in requesting that a receiver be appointed for D & M Construction Co. and prayed for an accounting of the assets of the partnership, and prayed that the proceeds from the life insurance on the life of Marvin Edmonds be declared assets of his estate and not of the partnership. Various creditors of the partnership intervened in the proceedings but the question before the chancellor was whether the proceeds from the insurance on the life of Marvin Edmonds were assets of the partnership subject to the payment of debts of the partnership, or were assets belonging to the estate of Marvin Edmonds.

The chancellor found and decreed that the insurance policy on the life of Marvin Edmonds was obtained and continued in force for the benefit of D & M Construction Co., and that the proceeds from the insurance were partnership assets impressed by a constructive trust for the benefit of the creditors of the partnership, D & M Construction Co. A receiver was appointed for the D & M Construction Co. and Mrs. Edmonds as administratrix was ordered to pay the proceeds from the life insurance to the receiver.

On appeal to this court Mrs. Edmonds relies on the following points:

“The Court erred in finding the insurance was maintained after payment of the loan for a partnership purpose.
The lower Court erred in finding the loan to be a partnership loan and the policy a partnership asset.
That the Court erred in establishing a constructive trust for all partnership creditors.”

The question before us on this appeal is whether the chancellor’s decree was supported by clear and convincing evidence and we conclude that it was.

Aside from the testimony of Leonard Edmonds as to any transactions he had with Marvin within the prohibition of Schedule 2 of the State Constitution, the record is clear that the loan from the Arkansas Savings & Loan Association was obtained for the purpose of purchasing a lot and building a dwelling house thereon for sale by D & M Construction Co. The record is also clear that the insurance on the life of Marvin Edmonds for the full amount of such loan was obtained for the additional protection of the lending agency in the repayment of the loan. The initial premium for the insurance was paid out of the proceeds of the loan, and the interest on the loan was paid by D & M Construction Co.

Mr. Jack Basham, president of Arkansas Savings & Loan Association, testified that his company disbursed the amount of the original loan for material and labor in construction of the house involved and he testified that when the loan was paid off, he recommended that the insurance be retained and kept in force for the benefit of Mrs. Edmonds and the children and to cover future construction loans. He testified that he had talked with both Leonard and Marvin on numerous occasions in regard to their construction business; that a loan card was kept in his files for D & M Construction Co.; that several loans were made prior to April, 1969, and that money was disbursed to D & M Construction Co. It is clear from his testimony, and that of Otis N. Stewart, a public accountant, that after a contract was entered into for the sale of the property and approximately nine days before the transaction was closed and the loan paid, an annual renewal premium on the insurance policy was added (o the principal of the loan and that after the entire loan was paid out of the proceeds from the sale of the property, the balance of the sale price in the amount of $4,662.21 was deposited to the bank account of D & M Construction Co.

The record is clear from the exhibits and from the testimony of the public accountant, Otis N. Stewart, Jr., that both partners withdrew funds from the D & M Construction Co. bank account as needed for their personal use and that the funds so withdrawn were charged to their draw account and balanced out in periodic settlements between them. The record is clear also that the premiums paid on the life insurance here involved were never charged to the draws made by Marvin, but it was stipulated that their accountant, Mr. Otis N. Stewart, Jr., would testify on recall, that premiums for life insurance on the sons of Marvin Edmonds were paid from the D & M Construction Co. account, and that these premium payments were charged to Marvin’s drawing account with D & M Construction Co.

Mrs. Edmond’s offered no evidence at all and we conclude that the chancellor’s decree is not against the preponderance of the evidence, but is supported by evidence that is dear and convincing.

The decree is affirmed.


text:
    INTERSTATE FIRE INSURANCE CO. v. Freddie JAMES
    5-5908
    480 S.W. 2d 341
    Opinion delivered May 22, 1972

      Bridges, Young, Matthews ir Davis, for appellant.

      Owens & Fikes, for appellee.
   J. Fred Jones, Justice.

This is an appeal by Interstate Fire Insurance Company from a summary judgment rendered by the Jefferson County Circuit Court in favor of Freddie James on a fire insurance policy.

The complaint filed by James alleged that Interstate had issued its two policies to him insuring his house against loss by fire in the amount of $2,100, and the contents of the house in the amount of $1,000. He alleged that on March 11, 1971, while both policies were in effect, the house and its contents were completely destroyed by fire; that Interstate paid the $1,000 for loss of contents of the house, but refused to pay the $2,100 for the loss of the building. He prayed judgment for this amount; for penalty and attorney’s fee.

Interstate filed its answer admitting the issuance of the policies as alleged in the complaint, but alleging that Mr. James’ sister, Della Sterling, had also procurred fire insurance from another company in the amount of $2,000 on the same building. Interstate alleged that Mr. James placed a value of $5,000 on the building when the policy was issued to him and since there was another policy in the amount of $2,000 on the property, Interstate was entitled to pro rate its liability under the terms of its contract. Interstate admitted liability for $1,556.57 or 21/41 of the $5,000 value under the provisions of its policy and it tendered this amount into the registry of the court.

From the motion and affidavit for summary judgment together with the responses to interrogatories propounded to James by Interstate, it appears that the appellee James together with his brother Frank and his sister Della Sterling, became the owners of the property in an undivided one-third interests by inheritance from their mother who died prior to 1950, and that they had owned the property as tenants in common since their mother’s death. James and his wife lived in the house when it was destroyed by fire. Prior to the date of the fire James’ sister, Della Sterling, borrowed some money from Flora Mogy and gave a mortgage on her undivided one-third interest in the property to secure the loan. The mortgagee, Flora Mogy, was the daughter of Aaron Goldweber, and unknown to the appellee James, Mr. Goldweber procured fire insurance on the property in the face amount of $2,000 with Mrs. Sterling as the named beneficiary. After the house was destroyed by fire, the face amount of this policy was paid to the' insured Sella Sterling.

After reciting the above facts, the trial court held that Ark. Stat. Ann. § 66-5901 (Repl. 1966), known as the Valued Policy Law, was applicaable to the case, and that Interstate was not entitled to credit on the pro rata basis of the value of the policy paid by the other insurance company to James’ sister. The trial court held that James was entitled to a judgment for the full face amount of the policy as prayed in his complaint, and the trial court entered judgment against Interstate for $2,100 together with 12% penalty in the amount of $252 and $525 as reasonable attorney’s fee.

Interstate relies upon the following points for reversal:

“There were material issues of fact left to be decided by the trial court which were precluded by the Summary Judgment.
The Valued Policy Act does not preclude or nullify the pro rata or other insurance clauses in an insurance contract.”

In arguing its first point, Interstate cites several cases in support of the familiar proposition that summary judgments are not generally favored and should be granted only where there is a clear absence of genuine material issues as to the facts. Interstate argues that it was never given an opportunity to question James as to his knowledge of other fire insurance his sister had on the property and that it had no opportunity to inquire into the possibility of fraud and collusion between James and his sister.

Interstate in its answer admitted the allegations in paragraphs one and two of the complaint and did not question James’ insurable interest in the house involved. As a matter of fact Interstate admitted its liability to the extent of $1,556.57 and stood solely on the pro rata liability provision in its policy. We conclude, therefore, that Interstate’s contention under its first point is without merit.

As to Interstate’s second point, it discusses the Arkansas Valued Policy Law, § 66-3901 supra, and cites a number of decisions interpreting the statute in this state and similar provisions in other states as applied to pro rata provisions of fire insurance policies. The policy provision on which Interstate relies is not in the record but is set out in Interstate’s brief as follows:

“This company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved, whether collectible or not.”

The case of Hensley v. Farm Bureau Mutual Ins. Co., 243 Ark. 408, 420 S.W. 2d 76, involved a total loss with dual and separate insurance coverage, and in that case the contract in litigation contained a provision in exactly the same language as that relied on by Interstate in the case at bar. In the Hensley case we said:

“This provision in the policy avails appellee nothing in the way of defense in this case, as the insured property was a total loss.” (Emphasis added).

In Hensley we further said:

“Although the policy provides ‘this company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved, whether collectible or not,’ we interpret ‘the whole insurance covering the property’ to mean the whole insurance procured by the insured on his own insurable interest and not including insurance on the insurable interest of some third party who has contracted to purchase the insured premises. Even if we should interpret this provision otherwise, it would be ineffective as in conflict with the Valued Policy Statute in this case.” (Citing Mann v. Charter Oak Fire Ins. Co., 196 F. Supp. 604).

There is nothing in the record of the case at bar that would justify a deviation from our holding in Hensley, supra, so the judgment of the trial court is affirmed.

Affirmed.