author: John I. Purtle, Justice. Darrell Hickman, Justice,

text:
    HOT SPRINGS SCHOOL DISTRICT NO. 6, et al v. Earl R. WELLS, Garland County Judge, et al
    83-217
    663 S.W.2d 733
    Supreme Court of Arkansas
    Opinion delivered February 6, 1984

      Charles R. White, for appellants.
    No response by appellees.
   John I. Purtle, Justice.

The trial court dismissed appellants’ complaint for a declaratory judgment and writ of mandamus. This action was brought because the appellants did not receive a 10% increase in tax money resulting from the reappraisal mandated by Amendment 59 to the Constitution of Arkansas. The trial court held appellants were not entitled to a 10% increase as a matter of law. The court also held it had no power to authorize or impose additional taxes. On appeal it is argued that the decision of the judge was contrary to the evidence and the law and that the court erred in finding it had no authority to adjust the millage rates. The trial judge was correct.

Appellants are the various school districts in Garland County. Reappraisal and reassessment were mandated by Amendment 59 and the implementing Act 848 of 1981. In December 1981, the assessed valuation after reappraisal was furnished to the school districts. However, it turned out that the certification was erroneous. The error was discovered in March of 1982 when taxes were billed to the property owners. The incorrect figures were about $5,000,000 higher than the correct figures and this resulted in each of the appellant districts receiving less than a 10% increase in collections for the 1981 taxes. The increases ranged from 4.9% to 8.7%. No county official would correct the figures and the present suit resulted.

Acts of the General Assembly of 1981, Act 848, codified at Ark. Stat. Ann. § 84-493 et seq. (Supp. 1983), is the implementing statute for Amendment 59. Act 848 requires the school districts to roll back their millage whenever the reassessment results in an increase of 10% or more in the taxable property in the taxing unit. The crux of the matter is the language in the statute that states that “each taxing unit will receive an amount of tax revenue from each tax source no greater than ten percent (10%) above the revenues received during the previous year ...” From the unequivocal language of the statute the school districts are entitled to an increase of taxes for calendar year 1981 up to 10%. The taxes based upon the incorrect assessments yielded increased taxes of no more than 10%. There was no guarantee that any district would get exactly 10%. The guarantee was to the taxpayers that their taxes would not be increased by more than 10%.

This case involves the interpretation of an act of the General Assembly. We do not resort to general rules of construction when the legislative intent clearly appears from the context of the language employed. McClure v. McClure, 205 Ark. 1032, 172 S.W.2d 243 (1943). Therefore, we conclude that the trial court correctly interpreted the intent of the General Assembly when enacting Act 848.

In view of our holding above we do not reach the argument that the trial court had the authority to order a reassessment of the property whereby each district would receive an increase of 10%.

Affirmed.

Hickman and Hollingsworth, JJ., concur.

Darrell Hickman, Justice,

concurring. The majority opinion only addresses one question raised, and it is my judgment we have to address both.

A five million dollar error was made somewhere between the certificate of appraisal and the collection of taxes. Nobody disputes that. As a result, six school districts in Garland County will not receive about $95,000 which they expected to receive and which everyone intended for them to receive. Nobody disputes that. The districts sued all thecounty officials accountable, asking two things: that the court hold they were guaranteed a ten percent increase in revenues and that it order a mandamus to correct the conceded errors. The trial judge held there was no such guarantee, and, even though mistakes were made, the court had no power to impose additional taxes retroactively or prospectively by ordering corrections. I agree that in this case the judge was correct.

The parties stipulated to most of the facts, which essentially concede someone made the mistake. Marvin Russell, the director of the Assessment Coordination Division of the Public Service Commission, said he was familiar with the hurried reappraisal in Garland County, occasioned by court order. He couldn’t say where the error lay. All 90,000 individual cards on taxable property would have to be checked to be certain. Garland County is the only county that still relies on such a card system. If a reappraisal were ordered, the districts would have to pay 75 or 80 percent of it.

The appellants asked the court to order the local officials to collect more taxes from the taxpayers for 1981, admittedly a retroactive collection, and pass an ordinance to impose more millage to make up for the difference. Since the appellants could not demonstrate the ordinance passed by the quorum court was illegal and the quorum court has the discretion to correct this mistake, the circuit court was right in declining to enter an order of mandamus.

Hollingsworth, J., joins in this concurrence.


source: Caselaw Access Project

author: John I. Purtle, Justice.

license: Public Domain

text:
    Roy Chester HENDERSON v. STATE of Arkansas
    CR 83-118
    663 S.W.2d 734
    Supreme Court of Arkansas
    Opinion delivered February 6, 1984

      Ray Hartenstein, for petitioner.

      Steve Clark, Atty. Gen., by: Alice Ann Burns, Dep. Atty. Gen., for respondent.
   John I. Purtle, Justice.

This appeal is from the trial court’s denial of petitioner’s Rule 37 petition alleging ineffective assistance of counsel. On appeal it is argued that the trial court erred in denying the relief sought because the evidence clearly revealed petitioner had been denied effective assistance of counsel in matters relating to the appeal of his conviction. We cannot uphold this argument and the decision of the trial court is affirmed.

The facts of the case disclose that petitioner was tried by a jury and convicted of aggravated robbery on May 4, 1982. He was given a sentence of 40 years imprisonment. At the trial he was represented by retained counsel. On the same day, shortly after his jury trial, petitioner pled guilty to another charge of aggravated robbery for which he received a 40 year concurrent sentence. In addition he pled guilty to a third felony and was sentenced to a term of 10 years which was consecutive to the two 40 year sentences.

The evidence is in conflict as to what happened after the sentencing on May 4,1982. The petitioner and his sister and mother indicate he notified his attorney of his desire to appeal the jury conviction. Petitioner was held at the Columbia County jail for two weeks before being transferred to the Department of Corrections. After his arrival at the prison he wrote several letters to his attorney but no notice of appeal was given within the time required by law. Wayne Jewell, of El Dorado, Arkansas, petitioner’s attorney at the trial, unequivocally testified that he was not requested by the petitioner to give notice of appeal. The record of the sentencing proceeding clearly indicates the right of appeal was explained by the trial court. We have here a case of credibility of the witnesses. The trial court had the right to resolve the issue of credibility against petitioner. Certainly the attorney’s testimony that he was never notified of the desire to appeal until after the time had expired is substantial evidence.

This matter was before us in Henderson v. State, 278 Ark. 107, 643 S.W.2d 541 (1982) when we issued a per curiam directing the trial court to hold a hearing to determine whether petitioner was informed of his right to appeal and whether he waived his right to appeal. The trial court found that he was informed and that he waived. There is substantial evidence to support the findings of the trial court. A convicted defendant may waive his right of appeal. Munn v. State, 278 Ark. 283, 644 S.W.2d 945 (1983). In the present case we affirm the trial court’s finding that the right of appeal was waived by the petitioner.

Affirmed.


author: Robert H. Dudley, Justice. Darrell Hickman, Justice,

text:
    Mary Ann ABREGO v. UNITED PEOPLES FEDERAL SAVINGS AND LOAN ASSOCIATION, et al
    83-251
    664 S.W.2d 858
    Supreme Court of Arkansas
    Opinion delivered February 6, 1984
    [Rehearing denied March 12, 1984.]

      Harper, Young, Smith é Maurras, by: Robert Y. Cohen, II, for appellant.

      Warner ir Smith, by: G. Alan Wooten and Joel D. Johnson, for appellee United Peoples Federal Savings & Loan Association.

      Gregory T. Karber, for appellees Warner Holdings, Ltd. and Ruth Singer and Hymie Singer.

      Phillip Jack Taylor, for appellees Larry A. Cottenand Brenda S. Cotten.

      Hickman and Hays, JJ., would grant rehearing.

   Robert H. Dudley, Justice.

In 1976 the Federal Home Loan Bank Board adopted a regulation which preempted state law governing due-on-sale clauses in mortgages. The primary issue before us is whether the doctrine of preemption is applicable to a mortgage executed prior to the 1976 regulation. We hold that the doctrine is not applicable and reverse the trial court. Collateral issues affecting property rights are raised and, for clarity, the opinion is developed by numbered segments. The Court of Appeals certified the case to this Court since it involves significant legal principles of major importance. Rule 29(4)(b).

I

On April 28, 1974, Gilbert and Mary Ann Abrego purchased two four-plex apartment buildings in Fort Smith for $162,000. The next day, April 29,1974, in order to pay for their purchase, they borrowed $148,000 from the corporate predecessor of appellee, United Peoples Federal Savings and Loan Association) a federally chartered association. They executed an installment note bearing interest at the rate of 9% per annum and being payable in monthly installments of $1,242.10 for a period of 25 years. To secure the debt they executed a mortgage providing for acceleration of the maturity of the debt if “. . . the mortgagor or assignee sells or conveys (or contracts to sell or convey) all or any part of the mortgaged property without the written consent of the holder of said note.”

On May 3, 1979, Gilbert Abrego died and his estate is not a party to this appeal.

On January 23, 1981, Mary Ann Abrego violated the due-on-sale clause by contracting to sell the apartment building to Larry and Brenda Cotten. The consideration from the Cottens was $155,000 with $26,000 being paid on the day of sale and the remainder to be paid on monthly installments equal to the installment payments due United Peoples. Mary Ann Abrego executed a warranty deed conveying title to the Cottens and placed it in escrow with instructions that it was to be delivered to the Cottens upon payment in full. The sales contract contained a clause by which the Cottens agreed to hold Mary Ann Abrego “harmless from any liability or loss occasioned by the demand of United Peoples.” United Peoples was not notified of the sale and the Cottens took possession of the buildings.

Larry Cotten, a building contractor, spent $10,000 repairing the heating and air conditioning systems, fixing electrical problems, performing landscaping work, painting the exterior of both buildings and the interior of seven of the eight apartments. On March 17, 1981, United Peoples learned of the sales contract and subsequently requested that the Cottens either renegotiate the rate of interest to a higher rate or else immediately pay the full amount of debt.

On October 16,1981, the Cottens sold all of their equity and interest in the property to Warner Holdings, Ltd., and Ruth Singer. The consideration was $20,000 in cash, a $22,000 promissory note and the assumption of all indebtedness owed by the Cottens to Mary Ann Abrego. Hymie Singer, the husband of Ruth Singer, endorsed the note. The contract provides that Warner and Ruth Singer agree to pay “all costs incurred by the Vendors [Cottens] in protecting their interest herein, including a reasonable attorney’s fee and other costs.”

Notice of acceleration and demand for immediate payment were subsequently given by United Peoples. Fourteen months after the sale to the Cottens, and with none of the installment payments being in default, United Peoples filed this suit asking for acceleration of the date of maturity of the debt evidenced by the note, for judgment on that note, and for foreclosure of the mortgage securing the debt. The original complaint averred that the ground for acceleration was violation of the due-on-sale clause. An amended complaint additionally alleged jeopardy of the security. The chancellor ordered acceleration of the date of maturity as a result of violating the due-on-sale clause and also because the security was in jeopardy. In addition, the indemnity clauses were held to indemnify Mary Ann Abrego and the Cottens for 80% of their expenses.

II

In 1972 we held that the violation of a due-on-sale clause was not sufficient, by itself, to accelerate the maturity date of the entire debt. The additional requirement of proving a legitimate security ground for refusal to accept the transfer of title was placed upon the creditor. Tucker v. Pulaski Federal Savings & Loan Assn., 252 Ark. 849, 481 S.W.2d 725 (1972). As a result of Tucker, the property owner held an assumable loan. It constituted a valuable right. As interest rates rose on new mortgages after 1972 a property seller could increase the selling price of his property to reflect the value of his low rate assumable loan. The Tucker decision became a settled legal principle governing the ownership and devolution of property; it became a rule of property. See Gibson v. Talley, 206 Ark. 1, 174 S.W.2d 551 (1943). The note and mortgage executed by Mary Ann Abrego on April 28, 1974, was subject to the Tucker rule of property and, as a matter of law, gave her a vested right in a loan which could be assumed by a third person so long as there was no legitimate jeopardy of security ground for the creditor to refuse to accept the title.

On July 31, 1976, after Mary Ann Abrego had already acquired her assumable loan, the Federal Home Loan Bank Board issued a regulation which required that due-on-sale clauses in mortgages to federally chartered savings and loan associations be governed exclusively by federal law. 12 C.F.R. § 545.8-3(f). The Supreme Court of the United States held that the regulation was a valid preemption of state law. Fidelity Federal Savings & Loan Association v. de la Cuesta, 458 U.S. 141 (1982). In 1983 we acknowledged the federal preemption and reversed part of Tucker, stating: ‘‘[I]t is clear that our rule in Tucker can no longer apply to federal savings and loan associations in Arkansas.” Independence Federal Savings & Loan Ass’n v. Davis, 278 Ark. 387, 646 S.W.2d 336 (1983); see also case note Fidelity Federal Savings & Loan Ass’n v. de la Cuesta: A Federal Regulation’s Preemptive Effect on State Due on Sale Láw, 36 Ark. L.Rev. 705 (1983).

United Peoples tacitly acknowledges that the 1974 mortgage is subject to our Tucker property rules unless the preemption doctrine is applied as of the date of the mortgage. United Peoples’ first argument is that the Federal Home Loan Bank Board first preempted the field in 1948. See 12 C.F.R. § 545.8-3(a) and Schott v. Mission Federal Savings & Loan Ass’n, No. CIV-75-366 at 13-15 (CD Cal. July 30, 1975). The argument is without merit. The 1948 regulation does not expressly preempt the application of state laws governing due-on-sale clauses. It provides that due-on-sale clauses must be contained in the loan instrument along with provisions for failure to pay taxes, make assessments and repairs. The requirement that each association use a particular form of mortgage constitutes an internal operating directive to the individual federally insured associations. It is not a clear and manifest requirement for the application of the preemption doctrine. See Ray v. Atlantic Richfield Co., 435 U.S. 151 (1978). Likewise, the Tucker decision did not create such a conflict with the 1948 regulation that compliance with both was impossible. See Florida Lime and Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963).

We find no express or implied preemption in the 1948 regulation. Similar cases finding no preemption as a result of the 1948 regulation are: Holiday Acres No. 3 v. Midwest Federal, Etc., 308 N.W.2d 471 (Minn. 1981); Scappaticci v. Southwest Savings & Loan Ass’n, 135 Ariz. 456, 662 P.2d 131 (1983); and Orange Federal Savings & Loan Ass’n v. Dykes, 433 So.2d 642 (Fla. App. 5 Dist. 1983).

United Peoples alternatively argues that the board’s regulation effective July 31,1976 should be given retroactive application. Preliminary to examining the language of the regulation, we note that the Supreme Court of the United States in de la Cuesta, supra, manifested concern for property rights vested under state law and expressly did not decide the issue of retroactive application of the preemption doctrine as a result of the 1976 regulation. See Footnote 24. An examination of the regulation reveals that it contains no specific language making it retroactive and it contains no language expressing an intent to impair previously vested rights. As a general principle regulations and statutes operate prospectively only. The United States Supreme Court recently opined:

The principle that statutes operate only prospectively, while judicial decisions operate retrospectively, is familiar to every law student. Compare Sands, Sutherland’s Statutory Construction § 106 with Linkletter v. Walker, 381 U.S. 618, 622-625 (1965). This Court has often pointed out that
the first rule of construction is that legislation must be considered as addressed to the future, not to the past. . . . The rule has been expressed in varying degrees of strength but always of one import, that a retrospective operation will not be given to a statute which interferes with antecedent rights . . . unless such be “the unequivocal and inflexible import of the terms, and the manifest intention of the legislature.” Union Pacific R. Co. v. Laramie Stock Yards Co., 231 U.S. 190, 199 (1913) (citations omitted). See, e.g., United States Fidelity & Guaranty Co. v. Struthers Wells Co., 209 U.S. 306, 314 (1980) (“The presumption is very strong that a statute was not meant to act retrospectively, and it ought never to receive such a construction if it is susceptible of any other.”); United States v. The Peggy, 5 U.S. (1 Cranch) 103, 110 (1801).

United States v. Security Industrial Bank, et al. 103 S.Ct. 407 (1982).

In the absence of any express language requiring retroactive application of the regulation, and because of the vested property rights under state law, the regulation does not operate retroactively. We find no cases to the contrary. United Peoples cites Bailey v. First Federal Savings & Loan Ass’n of Ottawa, 467 F. Supp. 1139 (1979) as contra authority. We do not so interpret the case. There, the federal district judge held that the issue met the requirements for federal jurisdiction.

The mortgage in the case at bar, executed in 1974, is subject to the Tucker, supra, rule of property and the subsequent federal preemption of July 31, 1976 is not retroactively applicable. The ruling of the trial court is reversed on this issue.

Ill

The complaint did not allege, nor was there proof of, failure to pay any installment when due. In fact, United Peoples refused to accept payments after the suit was filed and the owners made the payments into the registry of the court. There was no allegation or proof of failure to pay insurance premiums or cancellation of policy. Similarly, there was no pleading of a failure to pay taxes and the proof was clear that, at the time of attempted acceleration, the taxes were not in default. By the time of trial they were in default but appellee Hymie Singer testified he did not know they were in default and that he would imediately pay them.

Mary Ann Abrego remained liable on the original note. United Peoples was familiar with the $500,000 net worth and credit reliability of the Cottens. In fact, United Peoples made a substantial loan to the Cottens only three days before the trial. The Cottens improved the security. Hymie Singer testified that Warner Holdings held 60 parcels of land in the United States alone, and that he had purchased approximately two million dollars worth of property in Fort Smith in the past two years. Harry Lieber, the executive vice-president of United Peoples, admitted that the primary reason for filing the lawsuit was for United Peoples to obtain a higher interest rate. The findings of fact by the Chancellor that United Peoples reasonably believed their security interest was in jeopardy is without support in the record and is reversed.

IV

In Bowen v. Danna, 276 Ark. 528, 637 S.W.2d 560 (1982), we found that the good faith requirement for acceleration, found in Ark. Stat. Ann. § 85-1-208 (Add. 1961), does not apply to clauses which permit the acceleration of a debt upon the default of a specific condition which is in the exclusive control of the debtor. See case note Bowen v. Danna: Application of Uniform Commercial Code Section 1-208 to Acceleration Clauses in Real Property Transfers, 36 Ark. L.Rev. 643 (1983). In that case we sought to make clear the remedies available to a creditor and the protections available to a debtor. We stated that if the acceleration clause provides that the creditor can accelerate “at will” or “when he deems himself insecure” or words to that effect, the creditor is in exclusive control of the act which triggers acceleration and there must be some protection for the debtor. As a result, we held the good faith requirement is applicable to clauses which place exclusive control in the creditor. However, should the acceleration clause provide for default upon occurrence of an event exclusively within the control of the debtor, such as the failure to maintain insurance coverage, then the creditor cannot bring about the occurrence of that specific event and there is no need for the protection by the good faith requirement of § 85-1-208.

The sale by the debtor in the case at bar was the occurrence of an event exclusively within the control of the debtor and, yet, the creditor is subject to the requirements of § 85-1-208. The reason for this exception is that Tucker, supra, has become a rule of property. This rule of property exists for all due-on-sale clauses except those in favor of savings and loan associations which were executed on or after July 31, 1976. The preemption of state law applies to state chartered savings and loan associations. Schulte v. Benton Savings & Loan Ass’n, 279 Ark. 275, 651 S.W.2d 71 (1983).

V

A rule of property is rarely, if ever, overturned, so that the bar can rely on the rule in drafting long term instruments and advising clients. Gibson v. Talley, 206 Ark. 1, 174 S.W.2d 551 (1943). However, a long term reliance upon our Tucker rule may constitute a misplaced trust. Congress has enacted a new federal preemption statute which eliminates restrictions on enforcement of due-on-sale clause in real property loans. See Garn-St. Germain Depository Institutions Act of 1982, 12 U.S.C. § 1701J-3. The drafters of the act recognized that in states, like Arkansas, where enforcement of due-on-sale clauses has been restricted by court decision, real estate transactions have occurred in reliance upon a rule of property. Accordingly, the legislation creates an exception for loans which were made or assumed after the highest appellate court of a state rendered a decision, like Tucker, which restricted the exercise of due-on-sale clauses, but which were made on or assumed before the effective date of the legislation, October 15, 1982. Loans made between these periods will remain subject to state law for three years, or until October 15, 1985. The loans which fall into this category are termed “window period” loans because they fall into the “window” between the time of the state decision and the time that the Garn-St. Germain Act closed the “window” by making all due-on-sale clauses enforceable. See Grier, Due-on-Sale Clauses Under the Garn-St. Germain Depository Institutions Act of 1982,17 Univ. of San Francisco Law Review 355 at 372 (1983), and see Scappaticci v. Southwest Savings, supra, which discusses the Arizona case which served as the foundation for our Tucker decision. Ultimately our rule of property may be eliminated by a complete federal preemption of the Tucker decision.

VI

The Cottens contracted to indemnify Mary Ann Abrego for “any liability or loss occasioned by the demands of United Peoples Federal Savings and Loan Association and will bear any and all expenses in connection therewith.” Similarly, Warner Holdings and Singer agreed to indemnify the Cottens for'“all costs incurred by the Vendors [Cottens] in protesting their interest therein, including a reasonable attorney’s fee and other costs.” The language in both agreements is clear, yet the trial court awarded indemnification of only 80% of the attorneys’ fees and expenses incurred by the parties. An award of only 80% of expenses and fees appears to be arbitrary, but it is possible the trial judge thought the amount of the attorneys’ fees was unreasonable. We remand this part of the case for the trial court to award attorneys’ fees and other costs which were reasonable, proper, necessary and incurred in good faith and with due diligence. See Love v. United States Fidelity and Guaranty Co., 263 Ark. 925, 568 S. W.2d 746 (1978). We find no merit in the indemnitors’ arguments that they should not be liable under their agreements.

Reversed and remanded.

Hickman and Hays, JJ., dissent.

Darrell Hickman, Justice,

dissenting. The majority has overruled a finding by the chancellor without reciting all of the evidence that would support the court’s finding. Instead, the evidence is presented in a light most favorable to the appellants, which is contrary to our decisions. See Taylor v. Terry, 279 Ark. 97, 649 S.W.2d 392 (1983). We can overrule a finding if it is clearly erroneous. ARCP 52. In this case the chancellor found:

Plaintiff (United Peoples Federal Savings and Loan Association) in good faith believed that the conveyance impairs its security for the note of the defendant Abrego held by it and that its security is in jeopardy as a result of the sale of this property without Plaintiff’s consent and/or assumption of the note by the Defendant purchasers.

In 1974 Mrs. Abrego and her husband purchased this property, which consisted of an apartment complex, and financed it with a loan held by United Peoples. Her husband died in 1979. The property became a financial burden, was losing money, and she did not have the experience to maintain it. So, in January, 1981, she sold it to Larry and Brenda Gotten under a contract of sale. Neither party notified United Peoples that it had been sold. The Cottens would pay Mrs. Abrego, and she would make payments to United Peoples. In October, 1981, United Peoples discovered the sale through its insurance department and notified Mrs. Abrego that the loan should be paid off or assumed.

Mr. Gotten then talked to the officials of United Peoples about the assumption, but an agreement was never reached. There was testimony that the Cottens never formally requested permission to assume the loan. There seems to be no doubt that the Cottens were well-known to United Peoples and could have qualified for a loan. The Cottens sold the property on October 16, 1981, to Warner Holdings, Ltd., and Ruth Siger on a contract of sale. It seems Hymie Singer was the real buyer through Warner and his wife. Again the association was not notified. Both the contract of sale to the Cottens and Singer recognized that the association could call the loan due and payable in full, and both contracts provided full reimbursement to the party that might have to meet that demand. In other words, the Cottens agreed to reimburse Mrs. Abrego, and Warner and Mrs. Singer made the same agreement with the Cottens. The contract between Mrs. Abrego and the Cottens provided “that in the event United Peoples Federal Savings and Loan Association of Fort Smith, Arkansas, makes demand on the seller for payment in full of its first mortgage, the buyers shall have the option of paying such mortgage in full or entering into a modification agreement with said Savings and Loan Association . . . that the buyers shall hold the seller harmless from any liability or loss occasioned by the demands of the [association] and will bear any and all expenses in connection therewith.” Singer agreed with the Cottens that “[a]ll parties acknowledge the possibility that the first mortgage holder may declare its loan immediately due and payable or attempt to do so and the Vendees are willing to indemnify and hold the Vendors harmless from any loss arising therefrom. In the event of default in the payment of the aforesaid indebtedness as well as the $22,000.00 obligation still remaining due from the Vendees to the Vendors, the Vendees, jointly and severally, agree to pay all costs incurred by the Vendors in protecting their interest herein, including a reasonable attorney’s fee and other costs.”

In the latter part of 1981, Hymie Singer went to the association and talked to them about the loan. The vice president in charge testified that he did not actually know whether the borrower was to be the Cottens or Singer and he did not know anything about Hymie Singer. Evidently, Mr. Singer submitted to the association some documents on his and Warner Holdings’ financial condition. According to the association official, they were outdated, unsigned and unaudited, and none of the assets or liabilities of Singer could be verified. The official testified this was rental property and the association needed to know the reputation and capabilities of the manager. Mr. Singer testified he got angry after talking to the officials about a new loan and left. He said he agreed to pay 1414 percent interest plus $300 or $400 for the documents. He said he thought the information he supplied on his finances was adequate, but he conceded the information was not certified. He testified that he gave the officials the name of his bank in Canada. There was testimony that neither the Cottens nor Mr. Singer made a complete application to assume the loan.

This suit was filed in March 1983. The chancellor found that United Peoples acted in good faith in deeming its security in jeopardy, and I cannot say that finding was clearly erroneous. We still do not know from this record Mr. Singer’s financial condition. The majority emphasizes several times that Tucker v. Pulaski Federal Savings and Loan Assn., 252 Ark. 849, 481 S.W.2d 725 (1972), has become a rule of property, and it abrogates the right of United Peoples to accelerate this loan. Even if it is a “rule of property,” Tucker does not require reversal of this case. There the savings and loan refused to approve a loan application of the buyer. The court held “there must be legitimate grounds for refusal to accept a transfer to a particular individual or concern.” Tucker did not hold that an institution could not renegotiate the interest and secure one more fair for the lending institution; it did not hold that when parties buy property knowing a lending agency may well accelerate payment, the agency can be prevented from doing so. I would not be so quick to hold that Tucker has become a rule of property and certainly not the rule the majority finds it to be. Tucker says a good deal more than the majority indicates. First of all, it was a case of unique facts. Frankly, the majority in Tucker felt that the lending agency had refused to approve a loan application from a buyer because of race. In this case, neither of the secretive buyers completed a loan application. In Tucker, the court left open considerations other than security for refusing to approve a new loan or assumption. The reputation one has for managing property can be a consideration. The lending agency in this case offered testimony that it did not know Mr. Singer and had no way to certify his large holdings. Singer conceded that he did not provide certified statements.

Perhaps more important, neither of the secretive buyers in this case is completely innocent. They wanted to keep the existing mortgage, which was beneficial to them, but knew the lending agency might call the loan in. To their credit, they agreed unequivocally to bear any costs if that was done. They were going to hold out for the best deal they could. This is not a case of a lending agency being arbitrary. In fact, Mrs. Abrego has no real complaint. She has recourse against Gotten, and Cotten has recourse against Singer. Singer said that if he could not keep the loan, he would pay it off. He should be given that opportunity.

What we have is a situation converse to Tucker. Here, there were surreptitious sales to prevent the lender from seeking a better return on its money. The reasons in Tucker for holding the clause invalid were because it could be used to defeat the right of one to sell property. In this case that is hardly in question since the property has been sold twice.

In Independence Federal Savings and Loan Assn. v. Davis, 278 Ark. 387, 646 S.W.2d 336 (1983), we held that Tucker was preempted by federal legislation — in other words, overruled. I assume the loan in that case was made after the federal legislation was in effect, although our decision does not say so. I doubt seriously that Tucker granted vested rights that cannot be superseded by this federal legislation.

I do not agree with the majority’s characterization of the case of Fidelity Federal Sav. & Loan Assn. v. de la Cuesta, 458 U.S. 141 (1982). Actually, the majority is basing its decision on a footnote to the decision. But the decision itself is very strong evidence that it was the intention of congress to preempt state law in this field. The Court stated:

The preamble unequivocally expresses the Board’s determination to displace state law:
‘Finally, it was and is the Board’s intent to have . . . due-on-sale practices of Federal associations governed exclusively by Federal law. Therefore,. . . exercise of due-on-sale clauses by Federal associations shall be governed and controlled solely by [§ 545.8-3] and the Board’s new Statement of Policy. Federal associations shall not be bound by or subject to any conflicting State law which imposes different . . . due-on-sale requirements, nor shall Federal associations attempt to . . . avoid the limitations on the exercise of due-on-sale clauses delineated in [§ 545.8-3(g)] on the ground that such. . .avoidance of limitations is permissible under state law.’ 41 Fed. Reg. 18286, 18287 (1976).
In addition, the Board recently has ‘confirm[ed]’ that the due-on-sale practices of federal savings and loans ‘shall be governed exclusively by the Board’s regulations in preemption of and without regard to any limitations imposed by state law on either their inclusion or exercise.’ 12 CFR§ 556.9(f)(2)(1982). Thus, we conclude that the Board’s due-on-sale regulation was meant to pre-empt conflicting state limitations on the due-on-sale practices of federal savings and loans, and that the California Supreme Court’s decision in Wellenkamp creates such a conflict.

The court essentially held that any state law that stood in the way of federal regulations had to yield.

To prevent the acceleration in this case denies United Peoples the right to receive a higher rate of interest. The federal regulation was adopted to permit federal associations to adjust their loan portfolios, and our decision denies them that right. Mrs. Abrego has been deprived of no right in this case.

Hays, J., joins in this dissent.


author: Robert H. Dudley, Justice.

text:
    Bobby L. HEFLEY v. STATE of Arkansas
    CR 83-124
    663 S.W.2d 732
    Supreme Court of Arkansas
    Opinion delivered February 6, 1984

      C. E. Christian, for appellant.

      Steve Clark, Atty. Gen., by: Theodore Holder, Asst. Atty. Gen., for appellee.
   Robert H. Dudley, Justice.

Appellant was charged with burglary, robbery, and attempted rape. He pleaded not guilty and filed a suppression motion alleging that the police had conducted a suggestive pre-trial identification procedure which created a substantial likelihood of in-court misidentification. Appellant withdrew the motion before the court ruled on it. His trial strategy was to admit identification. His attorney stipulated that he was illegally in the prosecutrix’s home. He testified that he was one of two burglars who entered the prosecutrix’s home with the intent to take her money but he denied that he was guilty of attempted rape. There was no objection to any of the identification evidence. Appellant was found guilty of all three crimes.

His point for reversal is that the trial court committed error by allowing the prosecutrix to identify the appellant. The point was waived at trial and will not be considered for the first time on appeal. Wicks v. State, 270 Ark. 781, 606 S.W.2d 366 (1980).

Affirmed.


author: Steele Hays, Justice. Darrell Hickman,

text:
    Marcella NILSSON v. Howard M. LATIMER et ux
    83-201
    664 S.W.2d 447
    Supreme Court of Arkansas
    Opinion delivered February 6, 1984
    [Rehearing denied March 12, 1984.]

      Steven G. Nilsson, for appellant.

      R. David Lewis, for appellee.
   Steele Hays, Justice.

Marcella Nilsson, appellant, and Howard Latimer, appellee, are landowners having a common boundary — the Little Cossatot River and Mill Slough. Nilsson sought a declaratory judgment to interpret the language of the deed of each party and to determine their respective rights to the stream bed, contending that Latimer was not a riparian owner. Each owner also claimed damages from the other for unreasonable uses of the water. The Chancellor found Latimer to be a riparian owner and that neither party had made unreasonable use of the water. On appeal, we affirm.

Nilsson’s land was acquired in two conveyances, one to Nall’s Island (lying between Mill Slough and the Little Cossatot) and the other to certain lands lying “west of the Little Cossatot River.” Nilsson’s argument that Latimer is not a riparian owner is based not so much on the strength of her own deeds as on the following wording in Latimer’s deed:

. . . and running North 2236 links to the left bank of Little Cossatot River, then meandering up stream with left bank of said stream to the mouth of the Mill Slough, thence up stream with left bank of said slough . . .

Nilsson believes that because Latimer’s land is described by a call to the bank and not to the river, Latimer did not receive title to any part of the bed of the stream and, therefore, is not a riparian owner. We disagree with the argument. The general rule in Arkansas, as in other jurisdictions, is that riparian landowners on a non-navigable stream take title to the thread, or center of the stream. Gill v. Hedgecock, 207 Ark. 1079, 184 S.W.2d 262 (1944); Thompson on Real Property, § 3075. The question to be settled here is how that rule is affected by the terms of a deed describing that part of the land bounding the water.

It has long been a rule of property that absent an express reservation by the grantor, a conveyance of riparian property conveys title to the thread of the stream unless a contrary intention appears or is clearly inferrable from the terms of the deed. Gill v. Hedgecock, supra; Kilgo v. Cook, 174 Ark. 432, 295 S.W. 355 (1927); Thompson, supra, §§ 3075, 3083; 78 ALR 3d 604; 78 ALR 597. There is some disagreement, however, as to what terms will express a contrary intention sufficient to rebut the general presumption. There is authority that land described as bounded “along the bank’’ or by some call in reference to the bank, or to the low-water mark, will exclude title to the bed, while a call to the river will not. But we believe the better rule of construction is that the grantee takes title to the bed, irrespective of whether the call is to the river or to the bank, if there is no specific reservation of the bed by the grantor, or a clear manifestation of such intent. The policies supporting such a rule are sound, as it is far less likely that the grantor would have any reason to retain title to the bed, where he has not reserved it, and that strip of land would be of much greater value to the grantee. Moreover, if the rule were otherwise, it would result in many instances in portions of the river beds to which title would remain in an unsettled state. We think this result is consistent with our holding in Person v. Johnson, 218 Ark. 117, 235 S.W.2d 876 (1951) and Gill v. Hedgecock, supra.

Nilsson places some reliance on Kilgo v. Cook, supra, a case involving disputed riparian claims. There, the language in Cook’s deed described the land bordering on the eastern edge of the water as “. . . to War Eagle Creek, thence down War Eagle Creek . . .”, whereas Kilgo’s deed purported to give him title to the entire stream bed. On appeal, Cook was held not to have title to the stream bed on the distinction that War Eagle Creek had not been meandered by the original government survey. Similarly, the Little Cossatot and Mill Slough were not meandered and Nilsson contends, therefore, that Latimer is precluded from any title to the bed. But we find that the distinction made in Kilgo was based on a misconception, because while a meander line completed by the government survey is prima facie evidence that the owner of the adjacent land takes to the thread of the stream, there is, however, no reverse presumption that a stream not meandered presumes no title to the bed. See Little v. Williamss, 88 Ark. 37 (1980). Under the facts of Kilgo and the case before us, it is immaterial that a non-navigable stream was not meandered when determining title to the bed. The erroneous distinction in Kilgo resulted in confusion, as subsequent cases reflect. Person v. Johnson, supra; McKee v. Gay, 226 Ark. 585, 293 S.W.2d 450 (1956). Although Person made the same distinciton as Kilgo, the result was consistent with our finding here, as the Person court construed language “to the Northern bank” in the more liberal manner, as we have done in this case. A later case, however, McKee v. Gay, supra, used a more restrictive approach, and construed language “to the low-water mark,” as precluding any bed ownership. McKee took no notice of the previous decision in Person, but relied instead on the distinction made in Kilgo and on a Wisconsin case to support a narrow construction of the language. To the extent that Kilgo and McKee are in conflict with our holding today, they are overruled.

We are nonetheless in agreement with the result in Kilgo. Both parties had derived their title from a common grantor, Kilgo’s title being acquired prior to Cook’s. Kilgo’s deed conveyed approximately fifteen acres, twelve of which formed roughly a rectangular parcel running through the bed of the stream. Kilgo’s deed read:

. . . Thence West across War Eagle Creek . . . Thence South with War Eagle Creek . . . Thence East across War Eagle Creek to the East bank of same, thence Northerly with said bank . . .

We find this language sufficient to defeat the general presumption of riparian rights which would ordinarily have attached to Cook’s deed under the circumstances of the case. Both parties took from a common source, and Kilgo’s deed, which was prior to Cook’s, expressly conveyed the entire bed of the stream! Thus, Cook took with notice that his boundary was the bank of the river and the general presumption that the language in his deed would otherwise create was overcome. Whereas, in this case there was no prior conveyance from which Latimer would take notice that title to the thread of the stream would not pass with his deed.

Nilsson also contends that even if Latimer is a riparian owner, his use of the water was unreasonable. But the trial court’s finding was to the contrary and we cannot say it was clearly erroneous. In Harris v. Brooks, 225 Ark. 436, 283 S.W.2d 129 (1955), we adopted the “reasonable use” theory of water rights, although recognizing that definite guideposts do not exist, leaving much to j udgment and discretion. We said:

. . . Use of the stream or water by each proprietor is therefore limited to what is reasonable, having due regard for the rights of others above, below or on the opposite shore. ... It is axiomatic in the law that individuals in society must put up with a reasonable amount of annoyance and inconvenience resulting from the otherwise lawful activities of their neighbors in the use of their land. Hence it is only when one riparian proprietor’s use of the water is unreasonable that another who is harmed by it can complain, even though the harm is intentional.

This dispute arose during an exceptionally dry year and two or three water holes on the river were pumped dry by Latimer’s irrigation pumps. The riparian right that Nilsson was deprived of was occasional recreational fishing at those particular pools, arguably an insignificant amount overall. We stated in Harris that recreational and commercial uses were of equal status, and we affirm that view. However, we cannot clearly determine from the record that the deprivation suffered by Nilsson was more than negligible, and it is impossible to say that it went beyond the “reasonable amount of inconvenience and annoyance” which may be imposed upon one riparian owner by another when riparian rights compete. It should be noted that claims of lower riparian owners are not involved here.

On cross appeal, Latimer argues that an award should have been granted for damages to his land from overflow caused by Nilsson’s low-water bridge. Although there seems to have been some flooding on Latimer’s land, there was not sufficient proof to show that the flooding was related to the presence of the bridge. The weight of the testimony indicates that the bridge had no great effect on the extent of flooding which would otherwise have occurred. We must accept the findings of the trial court which are not clearly wrong. Stokes v. Stokes, 279 Ark. 44, 648 S.W.2d 478 (1983). The arguments of neither side afford a basis for such a conclusion.

It is unnecessary to reach the other points raised by the appellant.

Affirmed on direct and cross appeal.

Hickman, J., dissents.

Darrell Hickman,

dissenting. This is a case involving water rights. The trial court and the majority pass over rather lightly the fact that the appellees, who own over 1,000 acres of land next to this nonnavigable stream, depleted several large holes of water to irrigate some of it. Not all their land could be described as riparian. The appellant, a riparian owner across the creek, had the same rights to use those holes of water as the appellees and had the right to prevent their destruction. I would reverse the trial judge on this issue and award some damages to the appellant.

The appellees did not own this water, although they acted as if they did. A riparian owner does not own the water flowing past his land. 1A G. W. Thompson, Commentaries on the Modern Law of Real Property § 261 (1980). Although the creek had ceased to flow because of a drouth, I see no change in their rights. They merely have the right to use it without damaging the rights of other owners. Seneca Consolidated Mines Co. v. Great Western Power Co., 209 Cal. 206, 287 P. 93 (1930). Neither party owned the fish in the stream. Medlock v. Galbreath, 208 Ark. 681, 187 S.W.2d 545 (1945). The fact that appellant may have wanted to use the holes to fish is enough to find he was deprived of that right however slight it may have been. A riparian owner does not abandon his rights merely because he doesn’t use them. Smith v. Morganton, 187 N.C. 801, 123 S.E. 88 (1924). A drouth is a severe problem to all farmers. But a few holes of water from a small creek are not going to save a large crop. The damage doe to this creek by completely drying up the holes may have been far worse than the short term gains by the farmer.

In a broader sense, we have reached the time in our state when we have to start thinking seriously in terms of a scarcity of water and of the competing interests for our water which must be fairly reconciled. No longer can we assume there is an abundance of water there for everyone’s taking for any and all purposes. We now know that most of our water actually belongs to no one. Subterranean water constantly moves, small branches create nonnavigable streams, which, in turn, create navigable bodies of water. All are interrelated and affected by any damage to the other.

The general assembly, an appropriate body to resolve these problems, has so far failed to deal with them in any definitive way. It would be better if they addressed the problem in a comprehensive way rather than if we settled all the conflicting interests in a case by case way.


author: Steele Hays, Justice.

text:
    FIRST NATIONAL BANK, Guardian of Knoxie M. SMITH v. NEWPORT HOSPITAL AND CLINIC, INC.; Ramon LOPEZ, M.D.; and John D. ASHLEY, M.D.
    83-218
    663 S.W.2d 742
    Supreme Court of Arkansas
    Opinion delivered February 6, 1984

      Harkey, Walmsley, Belew & Blankenship, by: John Norman Harkey; and Skinner ir Heuer, by: Sam T. Heuer, for appellant.

      Frierson, Walker, Snellgrove ér Laser, by: David N. Laser, for appellee, Newport Hospital & Clinic.

      Barrett, Wheatley, Smith ir Deacon, for appellees, Ramon Lopez and John Ashley.
   Steele Hays, Justice.

This medical malpractice suit was filed by Knoxie Smith against Dr. John Ashley, Dr. Ramon Lopez and the Newport Hospital and Clinic, Inc., alleging a negligent failure to diagnose and treat a fractured femur. Each side served interrogatories and the plaintiff asked the defendants to produce certain medical records. While these matters were pending, the defendants filed motions for summary judgment which the trial court granted. On appeal appellant contends it was error to grant summary judgment where interrogatories and requests for production of documents have not been answered and we sustain the argument.

The complaint alleges that Knoxie Smith fell on her left knee and leg, was hospitalized by the Newport Hospital and Clinic, Inc., under the care of Dr. Ashley, her family physician, and Dr. Lopez, an orthopedist; that surgery was performed to correct a recurrent dislocation of the left kneecap; that appellant was urged to walk on the leg and was discharged after surgery despite complaints of pain and an inability to walk; that she attempted to inform Dr. Ashley of her pain but was never examined and was told to continue physio-therapy; that after consulting another physician appellant was found to have sustained a fracture to the mid neck region of the left femur, requiring surgical removal of the femoral head with prosthetic replacement. Separate and specific acts of negligence by the hospital and physicians were alleged.

Prior to filing the suit, Mrs. Smith’s attorneys had referred her to Dr. Dennis Davidson, a Batesville physician, to evaluate her disability and advise counsel on whether a claim of malpractice was justifiable. Dr. Davidson was deposed by the defendants. He expressed the opinion that Dr. Ashley was not at fault because he depended on the orthopedist, Dr. Lopez, but not being skilled in that field of medicine he was unable to say whether Mrs. Smith received the proper orthopedic care.

Defendants moved for summary judgment on the basis of the pleadings, the deposition of Dr. Davidson, and affidavits of Drs. Lopez and Ashley that they had used their best judgment and the same caré and skill as of other doctors in similar localities in their diagnosis and treatment. Defendants objected to plaintiff’s interrogatories and requests on the grounds that they were entitled to summary judgment which would render plaintiff’s discovery moot. The trial court found no genuine issue of fact existed and granted summary judgment.

For reversal, appellant urges that the information and documents requested were crucial to her case and were relevant to the issues to be litigated. We agree. The Arkansas Rules of Civil Procedure, patterned after the federal rules, are to be given a broad and liberal interpretation in the implementation of discovery procedures. Vower v. Murphy, 247 Ark. 238, 444 S.W.2d 883 (1969). In Arkansas State Highway Commission v. Stanley, 234 Ark. 428, 353 S.W.2d 173 (1965), referring to a discovery statute now incorporated in ARCP Rule 34, we said:

The languge of this statute was taken verbatim from Federal Rule 34. It follows that our legislature, in adopting the wording of the federal rule, also adopted the principle of liberal construction that had been announced in the leading case of Hickman v. Taylor, 329 U.S. 495, 91 L. ED. 451, 67 S. Ct. 385: “We agree, of course, that the deposition-discovery rules are to be accorded a broad and liberal treatment. No longer can the time-honored cry of ‘fishing expedition’ serve to preclude a party from inquiring into the facts underlying his opponent’s case. Mutual Knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession. ” (our italics)

Here, there is no suggestion of a lack of diligence by the plaintiff in discovery efforts, as was found in Mixon v. Chrysler Corporation, et al, 281 Ark. 202, 663 S.W.2d 713 (1984). Nor is there any reason to challenge the relevancy of the information sought by the interrogatories and requests, they were clearly pertinent to the issues of the case.

The essence of the appellees’ arguments and authorities is that in a medical malpractice case a plaintiff has the burden of proving, ordinarily by expert medical testimony, that the plaintiff’s injuries were caused by the defendant’s failure to exercise the degree of skill and learning possessed by other physicians engaged in the same kind of practice in similar localities, which the plaintiff has failed to produce. That may be so, but before being required to fully demonstrate that evidence in response to a motion for summary judgment a plaintiff is entitled to have the benefit of adequate discovery from the opposing parties as the nature of the case requires. Those benefits were withheld in this case and the trial court should not have granted summary judgment until appellant was able to complete discovery and develop, if obtainable, the necessary proof. In Palmer v. Chamberlin, et al, 191 F.2d 532 (5th Cir. 1951), the Court of Appeals cautioned against the untimely granting of summary judgment under Rule 56:

However, before rendering judgment the Court must be satisfied not only that there is no issue as to any material fact, but also that the moving party is entitled to a judgment as a matter of law. Where, as in this case, the decision of a question of law by the Court depends upon an inquiry into the surrounding facts and circumstances, the Court should refuse to grant a motion for a summary judgmet until the facts and circumstances have been sufficiently developed to enable the Court to be reasonably certain that it is making a correct determination of the question of law.

See also Dumansky v. United States, 486 F. Supp. 1078 (D.N.J. 1980); Kinee v. Abraham Lincoln Federal Savings and Loan Association, 365 F. Supp. 975 (E.D. Pa. 1973), and cases cited in 6 Moore’s Federal Practice, 2d ed., p. 56-391, § 56.15.

Reversed and remanded.

      First National Bank of Batesville was later appointed Guardian for Mrs. Smith.


author: Steele Hays, Justice. Darrell Hickman, Justice,

text:
    CITY OF MOUNTAIN HOME, ARKANSAS et al v. David K. DRAKE et al
    83-228
    663 S.W.2d 738
    Supreme Court of Arkansas
    Opinion delivered February 6, 1984

      Richard Nelson and David H. White, for appellant.

      Osmon, Wilber <fr Moore, by: John E. Moore, for appellee.
   Steele Hays, Justice.

The City of Mountain Home adopted Ordinance No. 589 in 1980, known as the Occupation License Ordinance, imposing an annual fee on persons, firms and corporations for the privilege of engaging in a business, trade or vocation within the city. The ordinance covered a wide variety of enterprises, with fees ranging from a low of $25.00 for carpet and chimney cleaning to as much as $1,400 for manufacturers employing seventy or more persons. The bulk of the fees fell between $50.00 and $150.00.

Appellees filed suit against the City of Mountain Home, and its officials, the appellants, alleging that the ordinance is void on a number of grounds. The Chancellor sustained the ordinance in part, but invalidated portions of it, and both sides have appealed. We think it was error to invalidate portions of the ordinance on the arguments raised.

The Chancellor correctly found that the authority to impose an occupation licensing fee is expressly delegated to the city by the legislature under Ark. Stat. Ann. § 19-4601, which gives cities the right to classify and define any trade, business profession, or calling and to fix the amount any person, firm, or corporation shall pay for the privilege of doing business based on the amount of goods carried in stock, or the kind of vocation, but prohibits classification based on earnings or income.

Appellees, who are taxpayers under the ordinance, contended that parts of the ordinance violated the prohibition in § 19-4601 against a classification based on earnings or income, and their argument was sustained by the Chancellor with respect to some fifteen segments of the ordinance, wherein a fee was imposed according to the number of units being operated. For example: ambulance operators were taxed $50.00 for each ambulance, barber and beauty shops $7.50 per chair, pool halls $5.00 for each billiard table, restaurants according to seating capacity, manufacturing companies according to the number of employees, and motels were taxed at $3.50 per unit. Similar parts of the ordinance were also invalidated where the businesses were classified according to size or units.

Appellants maintain the ordinance is not based on income or earnings and, therefore, does not violate the statute. We sustain the argument, as we think the statute was intended only to prohibit a tax imposed according to the earnings of a trade or business, such as a percentage of annual sales, that is, a tax specifically related to income or volume. There was no proof that because one business was larger (in that it had more barber chairs, for example) than another it had greater earnings, and we are unwilling to assume that a motel with six units has greater earnings than a motel with five, it may well be just the reverse. Moreover, it is an obvious fact that one manufacturer with thirty or forty employees may be operating efficiently and productively, whereas one with a great many more employees may be operating at a loss. Nor is the seating capacity of restaurants any sure criteria that earnings will conform to size, one may be small and expensive, another large but relatively inexpensive.

The statute should not be construed as prohibiting any tax which takes into account the size of an enterprise, so long as the amount is not unreasonable and a reasonable relationship exists between the goods and services afforded by the city and the distinctions drawn as to size. The number of ambulances operating on the streets of a city has a direct bearing on the goods and services provided by the city in terms of street maintenance, traffic control, police regulation and even fire protection. We think, therefore, that a tax of $50.00 on an ambulance firm may properly vary depending on whether the firm operates one ambulance or five, without becoming a tax on income, even though the five-ambulance firm may be expected in the normal course to gross more than the one-ambulance firm. The important significance is that city services are burdened more heavily by the larger ambulance firm and therefore distinctions in size are not inappropriate. These same considerations apply equally to the other classifications which were found by the Chancellor to be in violation of the statute, whether motels, mobile homes, milk trucks, filling stations ($50.00 for the first pump, $7.50 for each additional pump) or manufacturers.

Apellees defend the Chancellor’s holding with the case of Davies v. Hot Springs, 141 Ark. 521, 217 S.W. 769 (1920). There we held a tax imposed by the City of Hot Springs violated the statute insofar as it attempted to impose a tax of $25.00 on lawyers who had been in practice less than ten years and $50.00 on those who had been in practice ten years or longer, with the following observation:

If the length of service in the practice of law or medicine can be made the basis of classification, it is because length of service denotes probable earning capacity, as a seasoned lawyer or physician of longer experience can probably earn a greater income than one of less experience, but to permit a classification based on the distinction as to length of service necessarily results in a basis of earnings or income which is expressly forbidden by the statute. It is difficult to see how men of the same learned profession can be put in different classes for purposes of taxation except upon the basis of difference in earning capacity or income and any other classification would be purely arbitrary.

We concur in that reasoning, as we can see no basis for concluding that a lawyer who has practiced over ten years places a greater demand on the city’s goods and services than one who has practiced a shorter period. Thus, the distinction, bearing no reasonable relationship to the taxing needs of a city, becomes nothing more than a classification based on income and, hence, a violation of the statute. We note, too, that the disputed ordinance makes no attempt to classify business activity on the basis of length of time such businesses have operated.

The right of the legislature to delegate taxing power to municipal corporations is provided for in Article II, Section 23 of our Constitution, and implementing legislation for occupation taxes began as early as 1885. City of Little Rock v. Prather, 46 Ark. 471 (1885). Taxing methods by municipalities similar to the ordinance in question have been generally upheld. See State Board of Tax Commissioners of Indiana v. Jackson, 283 U.S. 527 (1931); City of Miami Beach v. Kaiser, 213 So.2d 449 (1968). In Dicks v. Naff, Mayor, 255 Ark. 357, 500 S.W.2d 350 (1973) this court approved a levy of 1% on the gross receipts of motels, hotels and restaurants by the City of Eureka Springs, although the ordinance there was challenged on different grounds. The opinion recites governing rules of law applicable to the taxing powers of municipalities:

In Madden v. Kentucky, 309 U.S. 83 (1940), where a state tax set different rates on bank deposits in the state from those out of state, the United States Supreme Court held that the tax was consistent with due process and equal protection. The court said that “in taxation, even more than in other fields, legislatures possess the greatest freedom in classification. Since the members of a legislature necessarily enjoy a familiarity with local conditions which this Court cannot have, the presumption of constitutionality can be overcome only by the most explicit demonstration that a classification is a hostile and oppressive discrimination against particular persons and classes.” Again it was emphasized that “[T]he burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it.”

We conclude that the Chancellor erred in holding that certain parts of Ordinance 589 as amended are in violation of Ark. Stat. Ann. § 19-4601.

On cross-appeal David Drake contends the Chancellor should have excluded him completely from the effects of the ordinance because the statute exempts from an occupation tax any persons, firms, or corporations, “who pay a tax to the city, town or State on gross incomes, on premium income. . .” If cross-appellant’s interpretation of the statute were to prevail it would operate as a wholesale repeal of the occupation taxon which municipalities depend. That could hardly be thought to be the legislative intent, in spite of the fact that the provision exempting persons paying a tax on gross incomes was added to § 19-4601 in 1919, well before the adoption of The Income Tax Act of 1929, Ark. Stat. Ann. § 84-2001. Whatever may be said of the argument, the state income tax expressly applies only to net income. Morley v. Remmel, 215 Ark. 434, 221 S.W.2d 51 (1949). We have the same view as the Chancellor with respect to this point.

Reversed on direct appeal, affirmed on cross-appeal.

Hickman, Purtle and Hollingsworth, JJ., dissent.

Darrell Hickman, Justice,

dissenting. I believe the ordinance in this case does impose a fee based upon income, and I would uphold the chancery court. In the case of Davies v. Hot Springs, 141 Ark. 521, 217 S.W. 769 (1920), we held that such an ordinance was invalid. Obviously, a service station with more than three pumps has more income than a service station with one pump. Why shouldn’t the city impose a tax on someone operating just a service station rather than on the number of pumps? The same is true regarding all the other suspect categories.

I do note in passing that fortune tellers are still out of favor with the law. In White, County Treasurer v. Adams, 233 Ark. 241, 343 S.W.2d 793 (1961), we upheld a privilege tax of $100 a week payable to the county levied against fortune tellers. Fortune tellers have to pay $1,220 to tell fortunes in Mountain Home. This is more than it costs a bank with more than fifty million in assets to do business.

I would affirm the chancellor.

Purtle and Hollingsworth, JJ., join in this dissent.


author: P. A. Hollingsworth, Justice.

text:
    CORNING BANK and Bailey BIPPUS v. DELTA RICE MILLS, INC. and UNION PLANTERS NATIONAL BANK OF MEMPHIS
    83-245
    663 S.W.2d 737
    Supreme Court of Arkansas
    Opinion delivered February 6, 1984

      Phillip Crego, for appellant.

      Herb Rule, for appellee.
   P. A. Hollingsworth, Justice.

In early 1983, appellee Delta Rice Mill, Inc. was unable to make payments to farmers who had sold rice to it. On April 4, 1983, appellants filed suit in Craighead Circuit Court against Delta Rice Mill seeking a judgment and return of their rice. This suit was before Judge Gerald Pearson. During the month of April, six other lawsuits were brought against Delta Rice Mill by various individual farmers. These six suits were before Judge David Burnett, a judge of the same circuit. These six lawsuits also named an additional defendant, Union Planters National Bank of Memphis, the other appellee before us.

Delta Rice Mill did not timely answer any of the seven lawsuits. Appellants took a default judgment against Delta Rice Mill on May 16, 1983. Following this, on June 1, 1983, Judge Burnett entered an order consolidating the appellants’ suit with the six other suits. Prior to the order of consolidation, the court, on May 19, 1983, had ordered the rice sold to prevent its deterioration. Appellee Union Planters National Bank of Memphis filed a petition to intervene in the appellants’ lawsuit against Delta Rice Mill on June 2, 1983. The court granted intervention on June 30, 1983. This appeal is from that order.

Ark. R. App. P. 2 provides in part that an appeal may be taken to the Arkansas Supreme Court from:

1. A final judgment or decree entered by the trial court;
2. An order which in effect determines the action and prevents a judgment from which an appeal might be taken, or discontinues the action;

See also Ark. Stat. Ann. § 27-2101 (Repl. 1979). We do not reach the merits of an appeal if the order appealed is not final. We have held that, “[I]t is well established that before a judgment is final and appealable it must dismiss the parties from the court, discharge them from their action or conclude their rights to the subject matter in controversy.” McIlroy Bank & Trust v. Zuber, 275 Ark. 345, 629 S.W.2d 304 (1982); Roberts Enter., Inc. v. Arkansas Highway Commission, 277 Ark. 25, 638 S.W.2d 675 (1982). We also held in Johnson v. Johnson, 243 Ark. 656, 421 S.W.2d 605 (1967) that:

An appeal will not lie from an interlocutory order relating only to some question of law or matter of practice in the course of the proceeding, leaving something remaining to be done by the court entering the order or by some court having jurisdiction to entertain the same and proceed further therewith.

We have said that a judgment is final if it “discharges a party from the action, [or] operates to divest some right so as to put it beyond the power of the court to place the parties in their former condition after the expiration of the term.” Purser v. Corpus Christi State Nat’l Bank, 256 Ark. 452, 508 S.W.2d 549 (1974). The weight of authority is that an order granting permission to intervene is not appealable. 15 A.L.R. 2d 336, 377 § 12 (1951). See also, 4 C.J.S. Appeal & Error § 116 (2) (1957).

The granting of Union Planters’ motion to intervene leaves something remaining to be done by the court entering the order as required in Johnson, supra. Namely, the court must still determine the interest of the appellants in relation to that of Union Planters, Delta Rice Mill, and the other six parties to the consolidated action. In paragraph 16 of the June 30, 1983 judgment, the court stated in part, “but this judgment will not dispose of the issues raised in the cross-claim filed herein by Union Planters National Bank against Delta Rice Mill, Inc. nor dispose of the issued [sic] raised in the action filed by Corning Bank and Bailey Bippus.” (Transcript p. 201). When the trial court renders a decision dismissing the parties from the court, discharging them from their action, or concluding their rights to the subject matter in controversy, an appeal would then be in order. Accordingly, this appeal is dismissed.

Dismissed.


author: Per Curiam.

text:
    Kenneth Darrell EASILEY v. STATE of Arkansas
    663 S.W.2d 736
    Supreme Court of Arkansas
    February 6, 1984

      Jack R. Kearney, for appellant.

      Steve Clark, Atty. Gen., by: Theodore Holder, Asst. Atty. Gen., for appellee.
   Per Curiam.

Petitioner Kenneth D. Easiley, by his attorney, has filed a second motion for a rule on the clerk. His attorney, Jack R. Kearney, has by affidavit admitted it was his fault that the record was not timely tendered.

.We find that the error, admittedly made by the criminal defendant’s attorney, is good cause to grant the motion for a rule on the clerk.

A copy of this opinion will be forwarded to the Committee on Professional Conduct.


author: Per Curiam. Richard B. Adkisson, Chief Justice,

text:
    Paula C. RASMUSSEN v. STATE of Arkansas
    CR 82-78
    663 S.W.2d 735
    Supreme Court of Arkansas
    Opinion delivered February 6, 1984

      Lessenberry b Carpenter, by Jack Lessenberry, for petitioner.

      Steve Clark, Atty. Gen., by: Velda West Vanderbilt, Asst. Atty. Gen., for respondent.
   Per Curiam.

Petitioner Paula Rasmussen, after her sentence to life imprisonment had been affirmed, sought permission to apply to the trial court for postconviction relief on the ground that a deputy prosecuting attorney’s offer to recommend a 15-year sentence if petitioner would plead guilty had not been communicated to petitioner by her attorney. On October 24, 1983, we denied the petition, without prejudice, because petitioner did not state that she would then have accepted the offer or would now accept it.

Petitioner now files an amended petition, accompanied by her affidavit stating that if she had been informed of the offer she would have accepted it and have pleaded guilty. She asks for an opportunity to present witnesses to show the truth of her statement.

The cause is remanded to the trial court for a hearing to determine the complete circumstances surrounding the offer; whether the offer was made but not communicated to petitioner; whether it should have been communicated; and if so, whether she would have accepted it. Since the judge who presided at the trial is no longer on the bench, the present trial judge, if he finds the facts as the petitioner states them, must determine whether the recommendation for a 15-year sentence should be accepted. If so, he may order the sentence to be reduced accordingly.

Adkisson, CJ., dissents.

Richard B. Adkisson, Chief Justice,

dissenting. In Hall v. State, 281 Ark. 282, 663 S.W.2d 926 (1984), I dissen ted when this court set aside a j udgmen t of conviction after a plea of guilty because the defendant’s attorney had overlooked this Court’s Rule 30 regarding a speedy trial. This procedural rule did not in any way affect the defendant’s voluntary plea of guilty. He admitted his guilt and he still has not denied it.

Here we are allowing an accused to vitiate her judgment of guilt although she admittedly received a fair trial. Earlier I dissented in this case when we dismissed petitioner’s original petition to proceed under Rule 37. Rasmussen v. State, 280 Ark. 472, 475, 658 S.W.2d 867 (1983).

In neither of these cases have the convicted petitioners even suggested that they were not guilty or that they were denied a fair determination of guilt, but in each case they seek to have their convictions set aside because of a procedural technicality.