author: David Newbern, Judge. James H. Pilkinton, Judge,

text:
    H & M REALTY COMPANY v. UNION MECHLING CORPORATION, Ray GARDNER and CARDINAL CARRIERS, INC.
    CA 79-187
    595 S.W. 2d 232
    Court of Appeals of Arkansas
    Opinion delivered February 6, 1980
    Review denied March 3, 1980
    Released for publication March 17, 1980

      House, Holmes & Jewell, for appellant.

      Laser, Sharp, Haley, Young & Huckabay, for appellees.
   David Newbern, Judge.

The appellant asks us to find the trial court erred in refusing to admit certain testimony offered as rebuttal evidence and in refusing to permit the evidence to be reopened, after both sides had rested but before the case was argued, for the purpose of clearing up some confusion and rebutting the testimony of one of the appellees’ witnesses. Because we find we should reverse on the latter point, we decline the appellant’s invitation to render an exhaustive discussion as to the proper definition of “rebuttal evidence.” It is not inevitable or even likely that the question will arise if this case is retried.

On September 6, 1975, a tow boat, the Arkansas Traveler, and some appended barges owned and operated by the appellees, tied up on the bank of the Arkansas River in the vicinity of a marine railway dry docking ramp owned and operated by the appellant. The appellant alleged that in the process of bringing the boat and the barges to the bank, the appellees’ operators caused the railway ramp to be struck and damaged. The appellant’s evidence tended to show damage had been done on or about September 6 to the rails and concrete structure of the ramp which was used to remove large vessels from the river.

During the trial, an issue developed as to the amount of the load being borne by the barges which were being towed by the Arkansas Traveler. An eyewitness to the docking, who was presented in the appellant’s case in chief, said some of the barges were low in the water, indicating they were heavily laden. Appellee Ray Gardner, who was the captain of the boat, testified there was a very light load, and when questioned on cross examination during the appellee’s case in chief he said the barges carried “ten hundred ton” that day. The issue as to the weight of the barges could have had a crucial bearing on the result of the case apparently with respect to whether an impact could have been of sufficient force to have caused the damage and whether the hull of any barge could have been sufficiently submerged to have caused the injury of which the appellant complained.

After the appellees rested their case, the appellant sought to introduce the testimony of James R. Tollett, a U.S. Army Corps of Engineers official, whose proffered testimony was that lock records for September 6 showed a total cargo weight of two thousand tons for the barges with the Arkansas Traveler and that that was the only commercial traffic which passed through the lock on the day in question. The following discussion occurred in the judge’s chambers:

THE COURT: Let the record reflect that the defendant had completed their case and the plaintiff" proposes to call witness, Tollett.
MR. HARGIS [counsel for plaintiff-appellant]: Yes, sir, from the Corps of Engineers, who has records which indicate that there were two thousand tons of cargo, excluding the weight of the barges, in his tow on that date and that is different from the testimony which was given in the disposition earlier and which is the basis for his being called as a rebuttal witness initially, however, the witness now has acknowledged that he had ten thousand tons of weight which he was pushing down river and Mr. Tollett has an additional point which is that the Arkansas Traveler was the only boat on September 6, 1975, which went through Lock and Dam No. 5 and Lock and Dam No. 7, which shows that it was the only object on the water that day which is clearly rebuttal, which could have done the damage to the concrete slab, which our expert witness would say was necessary in order to bust the concrete slab.
THE COURT: Let me see if I am understanding you correctly. The problem of the amount of cargo is not in issue anymore. The only thing that you propose to elicit from this witness is that this boat, the Arkansas Traveler, was the only, I believe you said, commercial vehicle or vessel on the water on this particular day. I’m going to hold that that is not rebuttal, it could have been presented in your case in chief, there’s been no testimony that there was or was not other vessels of that character on the water. It is not rebutting anything that has been, on which there has been any evidence given.

It is apparent that both the appellant’s lawyer and the judge were under the false impression that Gardner had said “ten thousand” rather than “ten hundred.” Because of this confusion, the judge did not see any reason to consider whether the testimony of Tollett as to the cargo weight would have been proper rebuttal to the figure used by Gardner. The point was thus not decided at that juncture of the trial.

After the appellant rested its case in rebuttal, and apparently after realizing the confusion which had existed earlier, the appellant moved to reopen the evidence to permit Tollett’s testimony to be placed before the jury. Appellant’s counsel argued in support of the motion with emphasis upon assuring the judge understood the significance he attached to the discrepancy between Gardner’s and Tollett’s testimony on the cargo weight.

We do not know whether the motion to reopen was denied because the judge considered the testimony as being outside the scope of rebuttal evidence or because it came after both parties had rested their cases and at a time when a trial judge may grant or refuse such a motion within his discretion, and he saw no need to reopen under these circumstances.

This particular testimony about the cargo weight does not pose a difficult question as to the scope of proper rebuttal as might have some of the problems we have found no need to consider in this case. The appellees’ witness presented the first definite figure on the cargo weight, i.e., “ten hundred ton.” Tollett’s testimony, “two thousand tons,” was in direct rebuttal of this asserted subordinate evidentiary fact. See, VI Wigmore, Evidence, § 1873, p. 672 (3d Ed. 1976). No new issue would have been raised by this proffered testimony, and it would not have resulted in an unwarranted surprise to the appellees. The question of the condition of the barges in the water had been addressed by the appellant’s witness in its case in chief, but the appellees’ witness was the first to discuss the specific weight of the cargo. No doubt the court could, and we think should, within its discretion, have permitted this rebuttal evidence. For general discussions of the question of proper rebuttal evidence and the authority of the court to exercise its discretion, see Baker v. City of Little Rock, 247 Ark. 518, 446 S.W. 2d 253 (1969); Casey v. W. & A. Lumber Co., 142 Ark. 584, 219 S.W. 12 (1920); and Bain v. Fort Smith Light & Traction Co., 116 Ark. 125, 172 S.W. 843 (1915).

The only remaining question is whether the court should have permitted the proffered evidence to go to the jury despite the fact that both parties had rested. Here again, the court has the discretionary power to refuse to reopen the evidence after the parties have rested. National Life Insurance Co. v. Alexander, 193 Ark. 185, 98 S.W. 2d 316 (1936).

We find no Arkansas cases involving jury proceedings where it has been held that there was an abuse of discretion in failure to reopen evidence to clear up possible confusion, although we find a chancery case which can be cited for the point that failure through inadvertence to place before the trier of fact important evidence is a basis for reopening the evidence, and that refusal to permit it to be reopened under such circumstances will result in reversal. Bobo, et al v. First National Bank of Hope, 244 Ark. 448, 425 S.W. 2d 521 (1968). The principle involved is that evidence should be reopened where to do so would serve the interests of justice and cause no undue disruption of the proceedings or unfairness to the party not seeking to have it reopened. Cooke Trust Co. v. Edwards, et al, 43 Haw. 226 (1959); Akins v. Taylor, et al, 314 So. 2d 13 (Fla. App. 1975); Engelberg v. Putter, 146 N.Y.S. 2d 291 (1955).

Many of the cases in which a trial court has been held to have exceeded its discretionary authority, including the Akins and Cooke Trust Co. cases cited above, involve inadvertent failures to produce evidence without which the court is forced to direct a verdict against the party whose inadvertence caused the lapse. The Engelberg case, supra, is a very brief per curiam opinion, but it is apparent the court there dealt with a defendant’s motion to reopen evidence to admit a document which would have been directly contradictory to one of the plaintiff’s witnesses. Thus, the court was not concerned with defining “rebuttal” evidence or with the order of trial in that sense. But the principle announced there was, “[i]n the interest of justice, in an appropriate case, an application to reopen a trial for the purpose of taking additional pertinent testimony ... should be granted,” and based on that statement a judgment was reversed and a new trial ordered. No directed verdict was involved in that case.

A case analogous to the one before us is Narens v. St Louis Public Service Co., 238 S.W. 2d 37 (Mo. App., 1951). After the parties had rested, in that case, counsel for the defendant discovered testimony in a deposition the plaintiff had offered had been improperly transcribed, and a streetcar operator’s statement thus appeared to be that he could stop his vehicle in “5 or 6 feet” rather than “50 or 60 feet” under certain conditions. Had it been properly transcribed, his testimony would have been “50 or 60 feet.” The defendant’s counsel asked that the evidence be reopened and stated that he could produce the reporter who took the deposition, and that the reporter would state the witness had said “50 or 60 feet” rather than “5 or 6 feet.” The request was refused, and the appellate court reversed with the following statement we find applicable here:

From a reading of the record, it appears quite probable that counsel for defendant first became aware of the very obvious difference between the statement of the operator and the expert witness regarding the distance in which the streetcar could be stopped, after the expert had testified. It was probably then that he discovered the error that he desired to prove. There is nothing to suggest that to have allowed such evidence to have been introduced would have worked any unfair hardship on the plaintiff. The court, therefore, in the exercise of sound discretion should have allowed the case to be reopened and it erred in refusing the defendant’s request. [238 S.W. 2d at 42]

In that case, there was the additional factor that opposing counsel took full advantage of the mistake in arguing the case to the jury. We have no indication of that in the case before us, nor do we have any clear indication the jury was confused as were appellant’s counsel and the judge by the unusual terminology used by the appellee’s witness.” What we do have, however, is a case where the appellant, because of inadvertence or confusion, was denied an opportunity to present proper rebuttal evidence which might have been important in the jurors’ resolution of the case. The granting of the motion would not have been unduly prejudicial to the appellees, and it would have barely, if at all, inconvenienced the court to have permitted the air to have been cleared and this evidence admitted.

Reversed and remanded for new trial.

Hays and Pilkinton, JJ., dissent.

James H. Pilkinton, Judge,

dissenting. I would affirm this case. As I view the record, the mistake, misunderstanding or error, if any, was on the part of appellant’s attorney and not on the part of the trial court. Trial judges are not always privy to the tactics, or choices of evidence, adopted by lawyers practicing before them in a contested case.

I agree with the majority that the cargo weight, and the testimony of witness Tollett, would have been proper rebuttal testimony if it had been timely offered. Here the record reflects that the defendants had completed their case and the plaintiff discussed calling Mr. Tollett. At this point, counsel for the plaintiff advised the court that the amount of cargo “Is not in issue anymore”. The trial judge was under no obligation to inject himself into this decision, made by the trial counsel for appellant, even if the lawyer was under the false impression as to what Mr. Gardner, a prior witness for defendants, had said regarding the weight of the cargo. In fact, it seems to me that it would have been improper for the judge to have done so at this juncture. It would perhaps have amounted to “assisting” the appellant in trying its case. The judge was not called upon at that juncture of the trial to pass on whether or not this evidence was proper rebuttal because appellant’s counsel withdrew the issue at that time.

The majority speculates that the appellant later realized its mistake and moved to reopen the record to permit Tollett’s testimony to be placed before the jury. However, by this time both sides had rested, and the court had already instructed the jury. I do not believe that this motion to reopen was timely filed. To say the least, the granting or denial of the motion to reopen was a matter within the discretion of the trial judge. Under the circumstances, I cannot say that the trial court abused its discretion in denying the motion. Most trial attorneys in retrospect can always see things that they wish they had done differently during the trial; and, which they would approach in another manner if given a second chance. However, I do not believe that we should reverse a case because the lawyer misunderstands some of the testimony or fails to follow the evidence during the trial.

I also do not think the trial judge was under any obligation to monitor the evidence presented by one of the parties for the purpose of being certain that such party did not misunderstand some of the testimony; or, to be sure that one of the parties presented the strongest case possible; or, that an attorney for one of the litigants did or did not make a mistake in choosing to contest, or not to contest, a certain fact question in issue. To do so, I believe, would inject the trial judge improperly into the presentation of evidence. It would confuse the role of the judge with that of trial counsel.

If the weight of the cargo, and the fact that appellee had the only barge on the river that day, were as important to appellant’s case as it now claims, why was this evidence not offered by appellant as a part of its case in chief? As plaintiff below, appellant had the burden of proving its case. Witness Tollett was available, or could have been available to appellant at any time during the trial. Appellant did not attempt to call him until after both sides had rested, and the judge had instructed the jury.

I do not believe the trial judge exceeded his discretionary authority. Therefore, I respectfully dissent. I am authorized to state that Hays, J., joins in this dissent.


source: Caselaw Access Project

author: David Newbern, Judge.

license: Public Domain

text:
    Leverto “Tony” HOLMES and Gloria Estate HOLMES v. STATE of Arkansas
    CA CR 79-120
    594 S.W. 2d 267
    Court of Appeals of Arkansas
    Opinion delivered February 6, 1980
    Released for publication February 27, 1980

      John W. Achor, Public Defender, by: Theodore G. Holder, Deputy Public Defender, for appellants.

      Steve Clark, Atty. Gen., by; Dennis R. Molock, Asst. Atty. Gen., for appellee.
   David Newbern, Judge.

The appellant, Leverto Holmes, was convicted of robbery and theft, and his sister, Gloria Holmes, the other appellant, was convicted of attempted robbery. The case was tried to the court without a jury. The convictions resulted from an incident in which Judy Jones was battered and her car stolen. Leverto Holmes contends his confession, which was introduced in evidence, was illegally obtained. Gloria Holmes contends the evidence was insufficient to sustain her conviction, hearsay evidence was improperly admitted against her, and her constitutional right to confrontation was violated when the court considered Leverto Holmes’ statement which implicated her. We affirm the convictions.

While she was on her way home from a party at 1:30 a.m., Judy Jones, who was alone in her car, struck or “bumped” the back of a vehicle which had stopped ahead of her at a traffic light. She testified the three occupants of the car she struck, two males and one female, got out of their car. She said as she was getting out of her car to ascertain whether any damage had been done, Leverto Holmes pulled her by the shoulder and struck her face. She testified the woman, whom she could not identify, said, “give us some money.” Her testimony was that it was the female voice which spoke those words. A friend she had asked to follow her home in his car got out of his car to help her, and Leverto Holmes and the other male accosted him. Leverto Holmes then drove away in Ms. Jones’ car, and the other man and woman drove away in the car they were driving when it was struck by Ms. Jones’ car.

Ms. Jones’ testimony was corroborated by that of her friend, Kenneth Martin, who was the person she had asked to follow her home. He, however, did not testify as to who, if anyone, spoke the words, “give us some money.”

I. Leverto Holmes

Leverto Holmes was found driving Ms. Jones’ car at approximately 3:30 a.m. the same morning as the incident described above. He was placed under arrest at about 4:00 a.m. and questioned by police officers at around 8:30. His statement shows it was taken by police at 8:48 a.m. An arresting officer testified Leverto Holmes resisted arrest. In the statement, he admitted driving Mr. Jones’ vehicle away from the scene, but did not admit touching, striking or threatening her in any way.

Citing Degler v. State, 257 Ark. 388, 517 S.W. 2d 515 (1975); Perkins v. State, 258 Ark. 201, 523 S.W. 2d 191 (1975); and Payne v. State, 356 U.S. 560, 78 S. Ct. 844 (1958), the appellant contends his confession should not have been admitted. He contends the following factors made his confession inadmissible: (1) he was 16 years old; (2) he had an 8th grade education; (3) he had obviously been awake all night before the statement was taken and, (4) the “very nature of the crime” was indicative of his low intelligence.

In Degler v. State, supra the admission of a confession was upheld, and we find it of no help to the appellant’s case except that it says the “totality of the circumstances” surrounding the taking of the statement must be considered. We will be guided by that principle.

In Perkins v. State, supra, the question was whether an accused should have been permitted to produce, at a preliminary hearing held to determine the validity of his confession, evidence that he had also confessed to another crime and that this other confession was demonstrably false. The supreme court held evidence of the making of another confession which was false was relevant to the validity and admissibility of the confession made by the accused in the case there at hand. We find no such circumstance in the case before us.

In Payne v. State, supra, the factors cited by the U.S. Supreme Court as making a confession inadmissible were as follows:

The undisputed evidence in this case shows that petitioner, a mentally dull 19-year-old youth, (1) was arrested without a warrant, (2) was denied a hearing before a magistrate at which he would have been advised of his right to remain silent and of his right to counsel, as required by Arkansas statutes, (3) was not advised of his right to remain silent or of his right to counsel, (4) was held incommunicado for three days, without counsel, advisor or friend, and though members of his family tried to see him they were turned away, and he was refused permission to make even one telephone call, (5) was denied food for long periods, and finally, (6) was told by the chief of police “that there would be 30 or 40 people there in a few minutes that wanted to get him,” which statement created such fear in petitioner as immediately produced the “confession.” It seems obvious from the totality of this course of conduct, and particularly the culminating threat of mob violence, that the confession was coerced and did not constitute an “expression of free choice,” and that its use before the jury, over petitioner’s objection, deprived him of “that fundamental fairness essential to the very concept of justice,” and, hence, denied him due process of law, guaranteed by the Fourteenth Amendment. [Footnotes omitted. Emphasis in original. 78 S. Ct. at 849-850]

The only factors in this case comparable to those in Payne are the relative youth and lack of education of the appellant. There is not even a hint of the kind of oppressive conduct by the authorities or the lack of appropriate warnings that appeared in Payne. The “totality of the circumstances” in this case leaves us with the conclusion the confession was voluntary and admissible.

II. Gloria Holmes

A. Hearsay Evidence.

Gloria Holmes complains that Judy Jones should not have been allowed to testify what she heard “the female” say while Jones was under attack. She contends, as Jones could not identify her, the statement could not be admissible under evidence rule 804(3) as it cannot be said to be a statement against her interest in the role of declarant, as she cannot be identified by Ms. Jones as the declarant. We hold the evidence contained in Ms. Holmes’ statement that she was with her brother at the scene of the incident plus Kenneth Martin’s statement and that of Ms. Jones that only one female other than Ms. Jones was present sufficiently identified Gloria Holmes as the declarant.

B. Cross-implicating Confession.

Ms. Holmes contends her brother’s statement was used improperly against her. Neither accused testified at the trial. When Leverto Holmes’ pretrial statement was introduced no objection was raisd to it on behalf of Gloria Holmes with respect to the part of his statement implicating her, or at least placing her at the scene. The objection with respect to cross-implicating confessions came only when Gloria’s statement was introduced. The trial court said he would disregard the cross-implicating aspect of her statement, and he noted that Leverto Holmes’ statement had already been read.

Had there been an objection to the cross-implicating aspect of Leverto Holmes’ statement, and had the court agreed not to consider the part referring to Gloria Holmes, the evidence against her would still have been sufficient to sustain the conviction. As there was no objection to the introduction of Leverto Holmes’ statement on the basis of its references to Gloria Holmes, we need not consider that problem. McClendon v. State, 266 Ark. 88, (Ark. App. 1979); Hulsey v. State, 248 Ark. 323, 451 S.W. 2d 869 (1970).

C. Sufficiency of Evidence

As we stated in McClendon v. State, supra, we would dislike affirming a conviction on the basis of lack of objection below if we felt the objection and striking of the evidence would have made a difference in the outcome. This is not such a case, as the evidence against Ms. Holmes was sufficiently substantial absent Leverto Holmes’ statement. In any event, we find no error was committed.

Affirmed.


author: Ernie E. Wright, Chief Judge.

text:
    Dr. James M. FOWLER v. CENTRAL FLYING SERVICE, INC.
    CA 79-194
    594 S.W. 2d 580
    Court of Appeals of Arkansas
    Opinion delivered February 13, 1980
    Released for publication March 5, 1980

      Rose, Nash, Williamson, Carroll, Clay & Giroir, P.A., by: Webster Hubbell and Kenneth Shemin, for appellant.

      Wallace, Hilburn, Clayton, May & Calhoun, Ltd., by: Larry C. Wallace and Charles E. Smith, for appellee.
   Ernie E. Wright, Chief Judge.

Appellee, Central Flying Service, Inc., brought action against appellant, Dr. Fowler, upon an account for services, repairs, fuel, hangar rent, pilot training and other items, and a directed verdict was rendered in favor of appellee against the appellant for $15,170.69 at the close of the evidence. The judgment entered pursuant to that verdict is not in issue on appeal.

The appellant Fowler filed an answer, setoff and counterclaim against appellee seeking damages allegedly sustained to his aircraft while hangared in appellee’s facilities and damages allegedly sustained in the loss of use of the aircraft. At the close of the evidence the appellant moved for a directed verdict which was denied. The jury rendered a verdict in favor of Dr. Fowler on the counterclaim in the amount of $15,000.00. Appellee filed a motion for judgment notwithstanding the verdict or in the alternative a motion for a new trial on grounds the appellant failed to prove damages and the verdict was against the weight of the evidence. After considering the motion, response thereto and briefs by respective counsel, the court issued a memorandum opinion holding there was not substantial evidence to support the verdict in favor of appellant under the counterclaim and granting the motion for new trial unless appellant entered a remittitur within ten days reducing the amount of judgment to be entered to $1571.90. Appellant declined to enter the remittitur and brings this appeal from the judgment of the court granting a new trial.

For reversal appellant contends the trial court erred in granting the motion of Central Flying Service for a judgment notwithstanding the verdict.

Since the court did not enter judgment for appellee by dismissing the counterclaim, but only set aside the verdict and granted a new trial, the real issue on appeal is whether the jury verdict was supported by a clear preponderance of the evidence instead of whether the verdict was supported by substantial evidence. In ordering a new trial, the court found there was no substantial evidence to support the verdict on the counterclaim. This would be the test before a judgment could properly be entered dismissing the counterclaim, but the court had the power to grant a new trial upon a finding the verdict was contrary to a clear preponderance of the evidence. The trial court has large discretion in granting a new trial on the weight of the evidence, and this discretion will not be disturbed on appeal unless it is improvidently exercised. Brockman v. World Insurance Company and Mutual Benefit Health and Accident Ins. Co., 222 Ark. 877, 263 S.W. 2d 486 (1954).

In Hall v. W.E. Cox and Sons, 202 Ark. 909, 154 S.W. 2d 19 (1941), the court said:

It has long been the established rule that the trial court not only has the power, but it is his duty, to set aside a jury’s verdict and grant a motion for a new trial if he concludes that the verdict is against the clear preponderance of the evidence. — This court will not reverse the ruling of the lower court in setting aside a verdict where there is substantial conflict in the evidence upon which the verdict was rendered, but will leave the trial court to determine the question of preponderance.

In Stanley v. Calico Rock Inc. and Electric Co., 212 Ark. 385, 205 S.W. 2d 841, the appellant obtained a jury verdict for damages against the appellee. Appellee filed a motion for a judgment notwithstanding the verdict. The trial court treated the motion as a motion for new trial and granted a new trial. The plaintiff appealed from that order. The court said, “The effect of the motion filed by appellee is to allege the insufficiency of the evidence to sustain the verdict, we must affirm the action of the trial court, if it can be supported on this ground.” The court went on to state that where the trial court has found the verdict of the jury is against the preponderance of the evidence and has sustained the motion for a new trial the rule governing on review is the “Court will not reverse a decision of the trial court granting a new trial on the weight of the evidence unless it appears that there has been an abuse of discretion in setting aside the verdict which is sustained by the clear preponderance of the evidence. — It is the duty of the trial court to set aside a verdict that it believes to be against the clear preponderance of the evidence.”

We have carefully reviewed the evidence to determine whether the jury verdict was contrary to a clear preponderance of the evidence on the damage award, and we find that it was.

The only substantial evidence of damages sustained to Dr. Fowler’s plane in a two year period while based at Central Flying was damage to the nosecone on four separate occasions, and damage to the nosewheel caused by using the wrong towing bar in moving the plane. In addition there was evidence of faulty work in the installation of a Lycoming conversion kit Central Flying installed on the engines to cure an oil leak problem common to the engines on this particular aircraft. The cost of the conversion kit, including installation, was borne by the manufacturer.

Central Flying repaired the nosecone in each of the four instances it was damaged, and in two instances, including the last damage in October, 1977, the nosecone was replaced with a new cone.

Dr. Fowler was dissatisfied and in December 1977 took his plane to United Beachcraft in Wichita for annual inspection. He gave directions for a new nosecone to be installed, the oil leaks and nose gear to be repaired and in addition numerous other items for which there is no substantial evidence Central Flying was in any way responsible.

United Beachcraft installed a new nosecone to Dr. Fowler’s satisfaction, reworked the installation of the Lycoming conversion kit for curing oil leaks and repaired the nosewheel that had apparently sustained some damage from use of an improper tow bar. The aggregate cost of these repairs was $1696.00. There is substantial evidence that Central Flying should be held responsible for these items. Dr. Fowler arranged for United Beachcraft to provide other services and repairs, but there is no substantial evidence the other repairs were made necessary by the actions or negligence of Central Flying. The aggregate of the bills for service and repairs provided by United was $3925.59, including the $1696.00 in bills above mentioned.

The evidence is quite clear Central Flying caused no structural damage to the aircraft, and the preponderance of the evidence is that , such minor damages to the aircraft as were caused by Central Flying would not reduce the value of the plane after the damage was repaired.

The evidence shows the nosecone is made of fiberglass, that it serves to streamline and beautify the plane, that it is not a structural part of the plane, is easily damaged and a new one costs about $165.00 plus the installation labor. The evidence also shows that damage frequently occurs in hangars to the nosecone of this type plane.

The evidence indicated the greatest damage to the plane was hail damage not associated in any way with Central Flying.

The trial court did not abuse its discretion in granting a new trial in view of the fact the size of the jury verdict was clearly against the preponderance of the evidence.

Affirmed.

Hays, J., not participating.


author: M. Steele Hays, Judge.

text:
    Betty LOFTIN, Ruth WALLIS, Shirley CASEY, Maurdiece PASSMORE, Linda DREWRY and Glenda HENSLEY v. Charles DANIELS, Director, Arkansas Department of Labor et al
    CA 79-228
    594 S.W. 2d 578
    Court of Appeals of Arkansas
    Opinion delivered February 13, 1980
    Released for publication March 5, 1980

      John B. Driver, for petitioners.

      Herrn Northcutt, for respondents.
   M. Steele Hays, Judge.

This is a collective appeal by six claimants to unemployment insurance benefits. The claims were severally denied by the agency, Appeals Tribunal and the Board of Review upon findings that claimants were ineligible for benefits under the provisions of 4(c) of the Arkansas Employment Security Act. The decision reached by the Board of Review was that although unemployed, the claimants were not making a reasonable and realistic effort to secure work and were not available for work within the meaning of the act. Section 4(c) reads in part:

Such worker is unemployed, physically and mentally able to perform suitable work, and is available for such work. Mere registration and reporting at a local employment office shall not be conclusive evidence of ability to work, availability for work, or willingness to accept work unless the individual is doing those things which a reasonably prudent individual would be expected to do to secure work.

Claimants contend that they have made reasonable efforts to find work elsewhere and the issue on review is whether the decisions of the Board of Review are supported by substantial evidence, as it is our duty to affirm unless substantial evidence is lacking. Terry Dairy Products Company, Inc. v. Carsh, Commissioner of Labor, 224 Ark. 576 (Ark. App. 1979).

The underlying facts are similar in connection with each claimant, all of whom are employees of Ozark Opportunities of Harrison, Arkansas, working in the Headstart Program. Claimants have worked in the program in some cases in excess of ten years as teachers, child development workers or as cooks and the program operated on a twelve month basis until two years ago when a lack of funds necessitated a reduction to 8 Vi months per year. The current year is the second year of reduced operation and claimants are not paid during the months the program is not in operation. Each claimant testified to some three or four direct contacts seeking employment, although claimants candidly acknowledged that they expected to return to the Headstart Program in September, or as soon as recalled. Each claimant acknowledged that she was subject to being recalled during the summer for workshops of the Headstart Program, as in the past years.

On the basis of the evidence we are unable to say that the determination of the board of Review is not supported by substantial evidence. A number of circumstances weigh toward that result: a) The claimants are subject to recall at any time for workshops; b) The claimants are subject to return to the program at the end of the summer; c) The Ozark Opportunities assumes that claimants are part of its staff and, we infer, is relying on them to return to the program, making no effort to replace them. In short it is clear that a mutual expectation is present — Ozark Opportunities expects these claimants to return to their jobs in September and claimants expect those jobs to be available to them. Notwithstanding the contact with various prospective employers, it is reasonable to conclude that so long as that tie of expectation exists between these claimants and the Headstart Program, any meaningful effort to find work elsewhere is not likely to occur and, therefore, we find that the decision of the Board of Review that claimants are not available for work within the meaning of the act is supported by substantial evidence.

Compensation of wage earners who, like these claimants, experience regular amd prolonged interruption in employment with consequential loss of earnings, seems to come within the spirit of the Arkansas Employment Security Act as defined in Ark. Stat. Ann. § 81-1101, “Declaration of State Public policy.” Involuntary unemployment, even where temporary, is as burdensome to those affected as the interruption of income to those who become unemployed in more conventional fashion. However, it is apparent the relationship between the employer and the claimants in the present case is such as effectively to limit the opportunities of claimants to find and accept other employment during the summer months when the Headstart Program is not operating. Regardless of our perception of the overall spirit of the act, we are required to interpret its specific language, and we hold these employees are not “available” for work in view of the Board of Review finding that their circumstances limit their availability.

Finally and parenthetically there is some intimation in this record (although clearly not an issue before us) that some regional offices of the Arkansas Employment Security Division are affording benefits to Headstart employees during summer lay-offs. We have no way to gauge the accuracy of such information but profess that it would be puzzling to find that some claimants are receiving benefits while other are being denied.

Affirmed.


text:
    Donnie Ray FREEMAN and Susan Dianne FREEMAN v. STATE of Arkansas
    CA CR 79-17
    594 S.W. 2d 858
    Court of Appeals of Arkansas
    Opinion delivered February 13, 1980
    Released for publication March 5, 1980

      R.A. Schneider, for appellants.

      Steve Clark, Atty. Gen., by: Catherine Anderson, Asst. Atty. Gen., for appellee.
   M. Steele Hays, Judge.

Appellants were charged with violation of the Uniform Controlled Substances Act for possession of marijuana with the intent to deliver. They were tried before a jury and convicted. Appellant Donnie Ray Freeman was found guilty of possession of marijuana with intent to deliver and received a seven year sentence. Appellant Susan Diane Freeman was found guilty only of possession of marijuana and received a sentence of one year imprisonment. From the verdict below, appellants bring this appeal.

Their first point for reversal is that the trial court erred in overruling appellant’s motion to suppress the evidence because of an invalid search warrant. Specifically, they allege the affidavit in support of the warrant contains insufficient information and therefore, the application for the search warrant should have been denied.

The affidavit of Lieutenant Charles Evans stated:

Within the past 72 hours a confidential informant advised that a large quantity of marijuana and other controlled drugs was personally observed by the informant inside the above described residence and were being processed for sale by defendant. During this 72 hours a second confidential informant advised that in excess of five pounds of marijuana and over 200 capsules and pills was personally observed being stored inside the residence. Reliability of the second informant is established by allowing a controlled contact of the defendant by the confidential informant where conversation of the defendant was heard by the affiant clearly indicating that marijuana and controlled drugs were in the defendant’s possession and were for sale.

We are compelled to agree with appellants that the affidavit is insufficient to support the search warrant.

An affidavit may be based on hearsay information and need not necessarily be based on direct personal observations of the affiant. However, in such circumstances, the affiant must show some underlying basis for the officer’s belief that the informant was credible and reliable. Aguilar v. Texas, 378 U.S. 108 (1964). [See also Spinnelli v. United States, 393 U.S. 410 (1969)]. To a certain extent, the ruling in United States v. Harris, 403 U.S. 573 (1971) undercuts the requirements enunciated in Aguilar, supra. In Harris, the United States Supreme Court stated that a police officer’s affidavit “should not be judged as an entry in an essay contest.” As long as there is a “substantial basis” for crediting the hearsay information, then it is sufficient.

However, we believe that the affidavit fails even in light of the Harris case. Arkansas Rules of Criminal Procedure 13.1(b) requires that when an affidavit is based on hearsay, in whole or in part, “the affiant or witness shall set forth particular facts bearing on the informant’s reliability, and shall disclose, as far as practicable, the means by which the information was obtained. In Akins v. State, 264 Ark. 376, 572 S.W. 2d 140 (1978), the Arkansas Supreme Court stated that the informant’s personal observation of marijuana on the defendant’s property was insufficient to establish reliability of the informant. In State v. Lechner, 262 Ark. 401, 557 S.W. 2d 195 (1977), the court stated that reliability of an informant could be established in many ways, i.e., an incriminating statement by an informant; an informant who has given information in the past which led to convictions; an informant whose reliability is established by the affiant’s own personal knowledge of his credibility. Nevertheless, the court explicitly stated:

However, the bare statement by a police officer that he has received information from a reliable informant is not enough to satisfy the test.

Hence, the “substantial basis” requirement in Harris can not be satisfied by the informant’s own personal observations alone. Akins, supra. Also, a statement by the affiant that the informant is reliable will not support the test pursuant to Lechner, supra.

In the instant case, the affidavit stated no underlying facts to support the credibility of either informant. Aguilar, supra. As to the first informant, an attempt to establish credibility was predicated on the informant’s personal observation of the marijuana inside the defendant’s residence. This recital alone is insufficient to support a valid affidavit based on hearsay. Akins, supra. The second informant’s reliability was predicated again on the informant’s personal observations, and by a telephone conversation between the informant and the “defendant” heard by the affiant. However, an inconsistency was evident between the recital in the affidavit and the affiant’s testimony at trial. At trial, the affiant, Lt. Charles Evans, testified that he heard the conversation between the informant and the defendant indicating that marijuana and a substantial amount of controlled drugs were in. the defendant’s possession. Then, counsel for the defendant asked:

Q.: Now, at that time, did you know who the defendant was?
A.: Yes, sir, I knew the name.
Q.: Who was It?
A.: Don Freeman.
Q.: But you just said you talked to a female.
A.: I talk: I didn’t talk to anyone. I listened to the conversation who they identified and they said, “Susan, is Don there?” And, led me to believe it would be —
Q.: The conversation on the other end was all female voice though?
A.: Yes, sir.

Clearly, there is a distinct inconsistency between the testimony and the affidavit of Lt. Evans. The affidavit explicitly stated that the conversation was between the defendant and the informant. However, Lt. Evans’s testimony indicated that the voice was not that of Don Freeman but of Susan Freeman. This inconsistency is further supported by the search warrant which gave authorization to search only the premises and the person of Don Freeman.

Arkansas Rules of Criminal Procedure, Rule 13(b) requires the affiant to set forth “particular facts bearing on the informant’s reliability.” We believe this inconsistency diminishes the accuracy of the affidavit, and, in light of the rule and cases requiring “particularity” in an affidavit when it is based on hearsay, we hold that the affidavit was insufficient to support the search warrant.

Since the first point of appellants requires reversal, we need not discuss the other points alleged. However, we are compelled to discuss one other issue raised by appellants because we think it is of sufficient importance to require comment.

During the course of the search, the officers had a matron search the body cavity of appellant Susan Diane Freeman. This search was performed in the bathroom of appellants’ home and after contraband had been seized by the officers. While the matron was conducting the search, one of the officers entered the bathroom.

The treatment to which this appellant was subjected was clearly an unreasonable invasion of privacy and raises a serious Fourth Amendment question as to what constitutes an unreasonable search and seizure.

Obviously, a search warrant does not give officers the authority to conduct any type of search they deem necessary while on the premises. Arkansas Rules of Criminal Procedure, Rule 12.3(b) requires that any search of a body cavity must be conducted by a physician or a licensed nurse. In the instant case, the matron who conducted the search was neither. Also, Rule 12.3 only allows the search of a body cavity in three situations:

(1) if there is a strong probability that it will disclose things subject to seizure and related to the offense for which the individual was arrested; and
(2) if it reasonably appears that the delay consequent upon procurement of a search warrant would probably result in the disappearance of destruction of the objects of the search; and
(3) if it reasonably appears that the search is otherwise reasonable under the circumstances of the case, including the seriousness of the offense and the nature of the invasion of the individual’s person.

In this case, none of these situations was present. Officers had already discovered contraband which was the object of the search warrant. Although no amphetamines or any other “pills” mentioned in the search warrant were ever found during the search, there was not even a suggestion, much less a strong probability, that such substances would be found in the body cavity of appellant. Also, the seriousness of the offense was minor as compared to the nature of the invasion of the individual’s person. [Mrs. Freeman was convicted only of possession and was not even mentioned in the search warrant].

We believe this search violated Rule 12.3 of the Arkansas Rules of Criminal Procedure and was also a violation of appellant’s rights guaranteed in the United States Constitution in the Fourth and Fourteenth Amendments. [See Cupp v. Murphy, 412 U.S. 291 (1973); Schmerber v. California, 384 U.S. 757 (1966). In Wolf v. Colorado, 338 U.S. 25 (1948), the United States Supreme Court stated that the “security of one’s privacy against arbitrary intrusion by the police” was “at the core of the Fourth Amendment.” In Schmerber, supra, the Court elaborated on this point:

The interests in human dignity and privacy which the Fourth Amendment protects forbid any such intrusions on the mere chance that desired evidence might be obtained. In the absence of a clear indication that in fact such evidence will be found these fundamental human interests require law officers to suffer the risk that such evidence may disappear unless there is an immediate search.

Viewing all the facts and circumstances in the light most favorable to the state, we nevertheless find that this search was an unreasonable invasion of privacy which cannot be sanctioned. This type of search should only be allowed in compelling circumstances, and when it is allowed, strict adherence to Rule 12.3 should be required.

Reversed and remanded.


author: James H. Pilkinton, Judge.

text:
    Leroy NELSON and Avery NELSON v. Ralph COTHAM, JR.
    CA 79-94
    595 S.W. 2d 693
    Court of Appeals of Arkansas
    Opinion delivered February 13, 1980
    Review denied March 19, 1980
    Released for publication March 26, 1980

      Gannaway, Darrow & Hanshaw, for appellants.

      Rose, Nash, Williamson, Carroll, Clay & Giroir, by: George E. Campbell & M. Jane Dickey, for appellee.
   James H. Pilkinton, Judge.

This litigation calls for a determination of whether, under the facts of the case, a person signing a negotiable instrument is an accommodation party under the Uniform Commercial Code, and is entitled to foreclose a lien upon the affected real property. The chancellor held for the alleged accommodation endorser, determined the amount of the disputed balance, and ordered foreclosure. The property owners have appealed, and we consider the case de novo.

Buxton Homes, Inc. (the “Corporation”) was formed on July 15, 1975, as an Arkansas Corporation, the two stockholders of which were Ralph Cotham, Jr. (“Cotham”) and Charles G. Buxton (“Buxton”). Buxton became the President of the Corporation, serving the Corporation on a full-time salaried basis as manager and engineer. Cotham served the Corporation on a part-time, non-salaried basis as Secretary-Treasurer, in which position he kept the corporate minute book, handled all funds and kept the financial records. Although apparently now insolvent, the Corporation has retained its corporate status under State law.

Prior to June, 1976, the Corporation held title to Lot 158, Longlea Addition of the City of Little Rock, Arkansas, which real property is the subject matter of this suit. Leroy .V. Nelson and Avery Nelson (the “Nelsons”) desired to purchase Lot 158, subsequently learned that it was owned by the Corporation, and contacted Buxton in order to commenee negotiations for the purchase of the lot. Eventually the Nelsons and the Corporation entered into a Construction Contract (the “Construction Contract”) dated June 10, 1976, under which the Corporation agreed to build a house on Lot 158 for the price of $99,000.00. The Construction Contract was signed on behalf of the Corporation by Buxton. According to the contract, the sum of $99,000.00 also included the lot.

On July 28, 1976, the Corporation executed and delivered to Pulaski Federal Savings & Loan Association (“PFS”) (now Savers Federal Savings & Loan Association) a note in the principal amount of $75,000.00 (the “Note”), with interest thereon at the rate of 8.75 per cent per annum from the date of disbursement. This Note was also signed by Buxton and Cotham individually. The proceeds from the Note were deposited into the Corporation’s checking account. Concurrently with the execution of the Note, and for the purpose of securing payment thereof, the Corporation executed and delivered to PFS a mortgage (the “Mortgage”) on Lot 158. This lien instrument provided specifically that the loan proceeds were to be used solely for and in construction of improvements and buildings on the mortgaged property. The Nelsons were not aware of this mortgage, and did not learn of it until much later when it became apparent that the Corporation was in deep financial trouble.

Construction of the house began, and on October 1, 1976, Nelsons paid to Buxton Homes their personal check No. 28 in the amount of $49,500.00, in accordance with the provision of the contract that one-half of the contract price would be paid when the roofing had been applied. Nelsons placed on this check the notation, “constructon of home at 34 Woodberry”, which is the street address of Lot 158, Longlea Addition. Mr. Cotham also deposited this check into the Corporation’s checking account.

Construction continued at a slow pace, due at least partially, according to Ralph Cotham, to the fact that Buxton Homes had over-extended itself by taking on too many construction projects.

In early June, 1977, the Nelsons moved into the house located on Lot 158.

On July 7, 1977, Nelsons issued to Buxton Homes their personal check in the amount of $10,969.43, and on this check Nelsons placed the notation, “payment of bills for 34 Woodberry as listed in letter of July 5, 1977”.

Prior to August 22, 1977, Nelsons learned that Buxton Homes was in financial trouble, and shortly before that date Nelsons had learned for the first time that Buxton Homes had borrowed $75,000.00 from Pulaski Federal Savings & Loan Association of Little Rock and as security for the loan had executed a note and mortgage covering said Lot 158. Also, they learned from Charles Buxton and Ralph Cotham that nothing had been paid on the principal of this note, and therefore on August 22, 1977, Nelsons issued to Buxton Homes and Pulaski Federal their personal check in the amount of $44,372.57, placing on it the notation, “For balance of purchase price on House and Lot 158, Longlea Addition to the City of Little Rock, Arkansas”.

The total of the three checks paid by Nelsons, as set out above, amounted to $104,842.00, or $5,842.00 more than the contract price of $99,000.00. This additional $5,842.00 was payment for some changes; and Ralph Cotham testified that the amount of $104,842.00 paid by the Nelsons covered the full contract price and also the changes agreed upon by the Nelsons and Buxton Homes, Inc.

The sum of $104,842.00, paid by Nelsons to Buxton Homes, added to the sum of $75,000.00 borrowed by Buxton Homes from Pulaski Federal, amounts to $179,842.00. However, $44,372.57 of this, as represented by Nelsons’ third check, went to Pulaski Federal to apply to the note and mortgage on Lot 158, leaving a net balance of $135,469.43 received by Buxton Homes from the Nelsons and Pulaski Federal. Therefore, Buxton Homes received $30,627.43 more than the contract price and the changes, which is the exact amount of principal left owing to Pulaski Federal on the note and mortgage. Buxton Homes has paid nothing on this balance.

Ralph Cotham testified that from the time Buxton Homes, Inc. came into being Charles Buxton had been president and he had been secretary-treasurer, that they had been the only two stockholders, and that this same situation prevailed at the time of this trial. He also testified that through all of this time Charles Buxton had handled all of the construction undertaken by the Corporation because of his engineering qualifications, and that he, Ralph Cotham, had handled all of the finances of the corporation, including the payment of bills. He testified that he had deposited the money received from the Nelsons, and the $75,000.00 loan proceeds received from Pulaski Federal, in the general account of Buxton Homes and had used it to pay bills owed by Buxton Homes, including bills incurred on other construction projects being carried out by Buxton Homes.

At the trial, both Mr. and Mrs. Nelson testified that when they discovered that there was going to be an outstanding mortgage on their home, after they had paid in full the contract price and for the changes, they asked Ralph Cotham what happened to the rest of the money Buxton Homes had received on their home and, according to the Nelsons, he said, in substance, “It went to pay for bricks and boards in other houses”. Mr. Cotham did not deny saying this, but testified that he could not remember saying it.

Buxton Homes executed to the Nelsons a note and second mortgage on another house being built by Buxton Homes, but the Nelsons received nothing whatsoever when that property was sold at a foreclosure sale. This note and second mortgage both provided that Buxton Homes continued to be obligated to pay the balance of the note and mortgage to Pulaski Federal, and Mr. and Mrs. Nelson testified that their accepting that note and mortgage was merely an effort on their part to get some money to apply on the mortgage that had been left in their laps.

Buxton Homes has no assets whatsoever, and Charles Buxton is living somewhere in the State of California.

The Corporation was and remains in default in payment of the Note. Since Pulaski Federal was not being repaid, as had been promised by the Corporation, Buxton and Cotham, on March 28, 1978, PFS filed this action to foreclose its lien on the Nelson lot and home. After suit was filed, on April 25, 1978, Mr. Cotham paid this Note along with the balance due Pulaski Federal on some other notes covering other properties. He received the Note and PFS assigned to Cotham individually the Note and Mortgage on the Nelson home. The indebtedness of the Corporation under the Note as of January 3, 1979, amounted to $36,858 in principal and interest. No personal judgment is sought against the Nelsons. Mr. Cotham adopted the suit after the assignment and, as substitute plaintiff, and appellee here, now seeks to foreclose the lien on the Nelson home and lot. Mr. Cotham claims the rights of an accommodation endorser which, among other things, the Nelsons deny.

Appellants first argue that Ralph Cotham, Jr., received benefits from the proceeds of the Note to PFS and therefore he was a co-signer rather than an accommodation endorser, and cannot maintain this action.

Mr. Cotham was asked the following question:

Q. Where did the investment come from that went into the assets of Buxton Homes, Inc.?
A. The majority of it came from myself.

He also testified that as secretary-treasurer he handled all of the money matters of the Corporation, made all disbursements, paid all bills, and took care of the corporate books and records. All of these arrangements existed from the beginning of the business, and still existed at the time of trial, even though the Corporation had no assets. Mr. Cotham said that he deposited the $75,000 loan proceeds obtained from PFS into a Corporation bank account. He admits that these funds were commingled by him with other draws from other construction loans. Mr. Cotham said that while appellants’ home was under construction, the Corporation was building five to seven houses, in addition to the house for appellants, and the Corporation got into financial trouble because it bit qff more than it could chew. He admitted that some of the loan proceeds went to pay prior indebtedness on the lot in question, and the remainder was used to pay materialmen, laborers and other expenses on various projects of Buxton Homes. This, of course, violated the terms of the Mortgage given to PFS. The Corporation had no money to pay Charles Buxton a salary, and Buxton left Little Rock in the fall of 1977. The last word Mr. Cotham had from him, Buxton was living in California. At the time of trial Buxton Homes had no assets.

It is clear from the record that the $75,000.00 was borrowed from PFS in order to fulfill the contract with appellants, but the proceeds were disbursed by Mr. Cotham, as secretary-treasurer, on various construction projects of the Corporation. This was obviously an effort to keep the Corporation, in which he had a substantial interest, afloat. The motive with which an act was done may be ascertained and determined by inference from the facts and circumstances connected with the transactions and the parties to it. Seaboard Finance Co. v. Dorman, 4 Conn. Cir. 154, 227 A. 2d 441 (1966), 90 ALR 3d 342. Mr. Cotham did keep the Corporation afloat at that time and, as an officer, director and stockholder, was benefited to that extent. Lasky v. Berger, Colo. App., 536 P. 2d 1157 (1975); MacArthur v. Cannon, 4 Conn. Cir. 208, 229 A. 2d 372, cert. den. 154 Conn. 748, 227 A. 2d 562 (1967).

In Lasky v. Berger, supra, the court affirmed a judgment dismissing a comaker’s action to recover the amount he paid on the note from the other maker, where his primary purpose in signing the note was to benefit his business interests. The court said it was proper to consider that his business interests were in fact benefited even though that benefit was subsequently eliminated when he was required to pay the note, because the status of a party to a note must be determined based on the circumstances in existence at the time the note was signed. Accordingly, the court added in Lasky v. Berger, the receipt of benefits at that time could be considered as substantial evidence that the party did not sign as an accommodation maker but as a principal comaker. See also Wohlhuter v. St. Charles Lumber & Fuel Co., 25 Ill. App. 3d 812, 323 N.E. 2d 134, aff'd 62 Ill. 2d 16, 338 N.E. 2d 179 (1975).

In Reigler v. Riegler, 244 Ark. 483, 426 S.W. 2d 789 (1968), the Arkansas Supreme Court said:

“. . . The trial court based its decision on the ground that appellant did receive benefits from the proceeds of the note, and, therefore, she was a co-signer and not an accommodation signer. We think that is the correct rule, and we also find in the record substantial evidence to support that finding of fact.
On the ‘fact’ issue appellant testified, in essence: I assume we borrowed money to build our house; we borrowed some money from an aunt for that purpose; I did not put any money in the house, but did receive a half interest in it; I do not remember what the note to the bank was for; I cannot swear I did not receive any benefits from the note to the bank.
The burden was on appellant to prove she received no benefits. It was so held in the case of Fisher v. The Rice Growers Bank, 122 Ark. 600, 184 S.W. 36 and in McArthur v. Cannon, 229 A. 2d 372 (1967). Appellant appears to take the position it is immaterial as to whether or not she received benefits from the proceeds of the note, since the U.C.C. eliminated that element. The section of the U.C.C., relied on is Ark. Stat. Ann. § 85-3-415(1) (Add. 1961) which reads:
‘An accommodation party is one who signs an instrument in any capacity for the purpose of lending his name to another party to it.’
However, in the McArthur case cited above, the court held that a signer who received benefits from the proceeds of the note was not an accommodation signer. The above emphasized words are, we think, the key to a correct interpretation of the Code. . . .”

To the same effect is the later case of Hanson v. Cheek and Davant, 251 Ark. 897, 475 S.W. 2d 526 (1972). See also 90 ALR 3d 342.

While PFS did insist that Mr. Cotham personally sign the Note before credit would be extended to the Corporation, this record shows that Cotham’s purpose in signing the Note was not solely to lend his name as a surety to the other comakers. We are persuaded that his primary purpose in signing the Note was to benefit his business interests by obtaining money to keep his corporation going with the expectation that it would ultimately repay the Note. Therefore he was not an accommodation endorser under the circumstances. We hold that his payment of the Note to PFS ended the matter as far as these appellants were concerned as Mr. Cotham was a comaker.

II

Even if it could be said that Mr. Cotham was a accommodation endorser, he would still not be entitled to foreclose this mortgage.

The Construction Contract predated the PFS loan. When the contract was executed Mr. and Mrs. Nelson certainly acquired an equitable interest in Lot 158, Longlea Addition to the City of Little Rock. While that interest would have been subordinate to the Pulaski Federal lien, it does not follow necessarily that Mr. Cotham, as assignee, is entitled to foreclosure under the circumstances here. In equity the strict letter of the law of subrogation, which would otherwise be available under the ordinary principles of suretyship, must yield to what is right. We are persuaded that it would be inequitable to permit Mr. Cotham to foreclose this particular mortgage under the facts of this case. Not only did Mr. Cotham commingle the $75,000 loan proceeds and spend part of it on other projects, he also took and commingled the $49,-500.00 paid by the Nelsons (and expended a part of it on other jobs) at a time when he knew of the bad financial condition of the Corporation.

What the Supreme Court of Missouri said in Patzman v. Howey, 340 Mo. 11, 100 S.W. 2d 851 (1936), might be quoted here:

Regardless of whether plaintiff was induced by fraud to make the contract of purchase, it was fraudulent to take his money and keep on collecting from him without doing what was required to give him what he was paying for. That would be the same thing as taking his money knowing he would get nothing for it, and defendant would not be excused even if he thought that the land company would utlimately be able to make all the payments required by the Whitmer contract. See Lynch v. Southern Mining Land & Lumber Co., 135 Mo. App. 672, 117 S.W. 624. Defendant had no right to play fast and loose in this transaction by recklessly, in the hope that everything would finally balance out, applying the money, paid by plaintiff, for other purposes than to make the deposits which would insure plaintiff a deed.

Considering the admitted condition of the Corporation, it is clear that Mr. Cotham dealt with these funds in a way which resulted in injury to the Nelsons. He did this at a time when he knew there was no reasonable certainty that the Corporation could pay PFS and deliver good title to appellants. An officer of a corporation is not personally liable for the wrongful acts of the corporation, unless he had some participation in it. Hirsch v. Phily, 4 N.J. 408, 73 A. 2d 173 at 177 (1950); New England Box Co. v. Gilbert, 100 N.H. 257, 123 A. 2d 833 at 835 (1956). See also 152 ALR 696 at 705. Mr. Cotham certainly participated in the events which led directly to the loss which now must remain upon him or fall upon the Nelsons. Under the circumstances, equity requires that Mr. Cotham absorb the loss. He cannot in good conscience be permitted to shift it to the appellants. People’s Bank v. Pioneer Foods, 253 Ark. 277 at 282, 486 S.W. 2d 24 (1972).

There are therefore two reasons why we must reverse and dismiss this case. As indicated, Mr. Cotham was a comaker of the PFS Note, and the lien was discharged when he paid the Note. Mr. Cotham cannot maintain this action for that reason. Also, and apart from that ground, Mr. Cotham’s personal participation in a series of questionable events, leading to the loss sustained, makes it inequitable under the circumstances for him to now enforce the right of subrogation which he otherwise, would enjoy under the ordinary principles of suretyship. Equity cannot in good conscience enforce recourse on this mortgage.

Reversed and dismissed.


text:
    INTERNATIONAL HARVESTER CREDIT CORPORATION v. Bobby D. HURST
    CA 79-190
    594 S.W. 2d 582
    Court of Appeals of Arkansas
    Opinion delivered February 13, 1980
    Released for publication March 5, 1980

      Owens, McHaney & Calhoun, for appellant.

      J. Marvin Holman, for appellee.
   James H. Pilkinton, Judge.

This is an appeal from an order of the circuit court denying a motion of International Harvester Credit Corporation for judgment notwithstanding the verdict of the jury; and in ordering a new trial.

This is not a typical appeal from an order granting a new trial. Both appellant and appellee agree that the verdict of the jury cannot stand. The issue on this appeal is whether the court properly ordered a new trial, instead of granting appellant’s motion for judgment notwithstanding the verdict.

The entire case turns upon the interpretation of a group credit life insurance policy involved.

On October 10, 1973, West-Ark Equipment Co., Inc. (West-Ark), an independent dealer in Russellville, Arkansas, sold to Albert Yerton a TD-8 International Dozer. Of the $16,000 purchase price, $3,500 was paid down and the balance of $12,500 was financed under an installment contract. That contract was assigned for value to International Harvester Credit Corporation (IHCC).

At that time IHCC had a program in effect under which it purchased credit life insurance coverage for customers who financed this type of equipment. The coverage was purchased under a group policy from Association Life Insurance Company, Milwaukee, Wisconsin (ALIC). IHCC paid the entire premium for the coverage and was the sole beneficiary. Maximum coverage was $25,000 or the amount required to pay off the contract, whichever was less, in this case the latter.

The policy of insurance provided that only one debtor per contract could be insured, the “Eligible Debtor”. In the event more than one person was a debtor, the policy specifically provided that the Eligible Debtor was the debtor who was “primarily responsible” for the indebtedness.

On July 12, 1974, Albert Yerton transferred his equity in the dozer to appellee Bobby D. Hurst. Under the Transfer of Equity document by which Hurst acquired Yerton’s equity, Hurst was primarily responsible for payment of the balance of the contract and Yerton was a guarantor. Also under that document, the benefits of all insurance were transferred to Hurst.

After the transfer transaction on July 12, 1974, Hurst made only three payments, all late and the last one covering the October payment being made January 16, 1975. In an effort to collect the past-due installments, IHCC wrote to the guarantor Mr. Yerton in February, 1975. Hurst and IHCC then learned that Mr. Yerton had died on January 15, 1975.

Mr. Hurst then claimed that the credit life insurance should pay off the contract, entitling him to ownership of the dozer. IHCC took the position that Hurst as primary obligor was the only insured debtor and, since he was still alive, was obligated for payment of the indebtedness. When Hurst refused to pay, IHCC and West-Ark, the selling dealer, repossessed the dozer in April, 1975. It was subsequently sold to West-Ark, after notice and demand to Hurst, for $9,500. At the time of trial, four years later, West-Ark had been unable to sell the dozer. Testimony as to the value of the dozer was from $9,000 to in excess of $14,500.

Hurst filed suit in April, 1978, against ALIC for $10,-086.65, the debt at the time of the death of Albert Yerton, and for conversion against West-Ark and IHCC for $4,413.35, the difference between the debt and the alleged 1975 value of the dozer of $14,500.00.

At the conclusion of plaintiff’s case, a directed verdict motion by ALIC was granted. At the conclusion of all the evidence, a directed verdict motion by West-Ark was granted. The jury was instructed that it would return a verdict against IHCC if IHCC was entitled to recover the insurance proceeds upon the death of Albert Yerton, if IHCC knew or should have known that the proceeds were so payable, and if with that knowledge IHCC wrongfully repossessed the dozer from Mr. Hurst. If recovery for Mr. Hurst was found, the jury was instructed that the measure of damage was the fair market value of the dozer at the time of repossession.

The jury returned a 9-3 verdict for plaintiff and fixed his damage at “return all payments only.” Upon inquiry by the Court, this was amended to include “all payments made by Mr. Hurst before and after transfer of equity.”

A motion for judgment notwithstanding the verdict by IHCC was denied, but the Court did order a new trial since the verdict was not in accordance with the instructions. IHCC has appealed from the order overruling its motions and granting the new trial, and plaintiff Hurst has cross-appealed from the granting of the motions for directed verdict óf ALIC and West-Ark.

The entire case turns upon the interpretation of the group credit life insurance policy involved here. Unless the proceeds were payable upon the death of Albert Yerton, there was no submissible case against any of the defendants. In this respect this case is quite similar to John Deere Co. v. Atkinson, 252 Ark. 1074, 482 S.W.2d 115 (1972). In that case, as here, there were two debtors on a note, and one of them died. The Court held that the deceased debtor was not the insured debtor under that policy language and reversed a jury verdict. Here, too, if the deceased debtor was not the insured debtor, there was no jury case and International Harvester Credit Corporation was entitled to the grant of its motion for directed verdict or its motion for judgment notwithstanding the verdict. Since the decision turns on that issue, the points on appeal are considered together.

Albert Yerton purchased the subject dozer from West-Ark Equipment Co., Inc. (West-Ark) on October 10, 1973. The installment contract was assigned for value to International Harvester Credit Corporation (IHCC). As part of a program in effect at that time, the life of Yerton became insured under an IHCC policy of group credit life insurance at the time IHCC acquired the paper.

The credit life coverage was acquired by IHCC, was paid for by IHCC, and IHCC was the beneficiary. No portion of the premium was paid by Yerton, included in the contract, or included in the price of the equipment. It was acquired from funds of IHCC as additional collateral for the debt.

The master policy was issued to IHCC by defendant Association Life Insurance Company of Milwaukee, Wisconsin, and is in evidence. It insures the life of a debtor to IHCC by the following specific language:

“Eligible Debtor means that Debtor determined in accordance with the following rules: (1) only .one Debtor may be insured hereunder with respect to any one indebtedness; (2) if there is but one Signer, that person is the Eligible Debtor; (3) if there are two or more Signers, that Debtor primarily responsiblefor the indebtedness shall be the Eligible Debtor unless more than one Debtor is primarily responsible in which event the first named Debtor shall be the Eligible Debtor. In no event, however, shall a Debtor become an Eligible Debtor, prior to the Effective Date of this Policy.” (Emph. sup.)

On July 12, 1974, plaintiff Bobby D. Hurst acquired the equity in the dozer from Yerton and assumed the indebtedness. This was effected by use of the Transfer of Equity document introduced as Exhibit No. 2 By Stipulation. In that document the original purchaser (Yerton) “hereby consents to the substitution of the Transferee (Hurst) as the insured under any insurance presently in force covering all interests in the property under the aforesaid contract.” If for no other reason, this provision caused substitution of Hurst for Yerton as the debtor whose life was insured under the credit life program.

There is, however, an even more basic reason why the life of Albert Yerton was no longer insured under the policy, and that is the plain language of the policy itself. By virtue of this Transfer of Equity, Bobby Hurst became the party primarily responsible for the indebtedness, and Albert Yer-ton became the guarantor. The trial court so instructed the jury in Instruction No. 8, and Hurst even admitted that in his testimony.

The policy of insurance clearly states that “only one Debtor may be insured hereunder with respect to any one indebtedness.” Specifically addressing itself to the situation at bar, the policy goes on to say:

“(3) if there are two or more Signers, that Debtor responsible for the indebtedness shall be the Eligible Debtor. . .”

Here Bobby Hurst was primarily responsible for payment of the debt. Only he could have been insured under the policy IHCC purchased and paid for. There was debate at trial as to whether a certificate of insurance was provided to him or whether one was required, but that is all irrelevant. The insurance company agreed to pay the debt if, and only if, the party primarily responsible for payment died. That did not happen and that decides this case.

At trial the Court granted a directed verdict in favor of the insurer, ALIC. That decision was plainly correct since Hurst had no insurable interest in the life of Albert Yerton and had no standing to sue ALIC. Betts v. Brown, 219 Ga. 782, 136 S.E. 365 (1964); Hatley v. Johnston, 265 N.C. 73, 143 S.E. 2d 260 (1965); Kincaid v. Alderson, 209 Tenn. 597, 354 S.W. 2d 775 (1962); Ark. Stat. Ann. § 66-3204 (Repl. 1966). West-Ark also was correctly granted a directed verdict since it converted nothing and ended up losing money.

As to IHCC, the trial court submitted the case apparently on the theory that the jury could find that IHCC was entitled to the proceeds of the insurance and was not entitled to repossess the dozer from Hurst. There was no evidence to support such a theory. First of all, as stated, there is no basis under the insurance policy for concluding that Albert Yer-ton’s life remained insured after Bobby Hurst became primarily responsible for payment of the debt.

Secondly, it must be remembered that Hurst paid nothing for credit life insurance and refused to pay the debt for which he assumed responsibility. Under no set of circumstances could he fail to honor that obligation, refuse to pay the debt, and yet still be entitled to retain the dozer. For him to be entitled to any claim for conversion, he must have paid for the dozer and be entitled to its possession.

Credit life insurance only insures the life (and liability) of the insured, particularly where no premium is paid by the one whose life is insured. Moore, Adm’r v. Hansen, 250 Ark. 367, 465 S.W. 2d 684 (1971). Upon the death of Albert Yerton, therefore, even if he were the insured, all that would happen is that his estate could not be pursued for the debt. IHCC could not have enforced the guaranty, but Hurst as primarily obligated for payment of the debt could not escape that liability for payment. Having failed to pay, he is entitled to nothing.

As stated earlier, all agree that the verdict rendered cannot stand. The jury was told to award the fair market value of the dozer if they found for the plaintiff. Instead, the jurors obviously compromised to reach their 9-3 verdict by directing that Hurst recover only the payments he made. That verdict was a separate ground for the IHCC motion for judgment notwithstanding the verdict. The jury plainly refused to find for plaintiff upon the only basis permitted by the trial court and, instead, attempted to do equity and return the status quo ante. Plaintiff not being entitled to such equitable relief and the jury declining to return a verdict for anything else, therefore IHCC was entitled to judgment.

The order of the trial court denying the motion of International Harvester Credit Corporation for judgment notwithstanding the verdict, and insteád directing a new trial as to IHCC, is reversed and the cause dismissed as to International.

The directed verdicts in favor of Association Life Insurance Company and West-Ark Equipment Company, previously entered by the trial court and questioned by the cross-appeal, are affirmed.

Reversed and dismissed on direct appeal. Affirmed on cross-appeal.


author: Marian F. Penix, Judge. Ernie E. Wright, Chief Judge,

text:
    LONOKE PRODUCTION CREDIT ASSOCIATION v. PFEIFER MILLING CO.
    CA 79-118
    595 S.W. 2d 223
    Court of Appeals of Arkansas
    Opinion delivered February 13, 1980
    Petition for Review denied March 10, 1980
    Released for publication March 17, 1980

      Wright, Lindsey & Jennings, for appellant.

      Davidson, Plastiras, Horne, Hollingsworth & Arnold, by: Cyril Hollingsworth, for appellee.
   Marian F. Penix, Judge.

Pfeifer Milling Co., owned by Louis and Dorothy Pfeifer, began to furnish feed on an open account to Saline County Pork Producers (SCPP) in December 1975. On March 1, 1976 the balance due Pfeifer was $15,000. On March 12, 1976, the Pfeifers met with John M. Due, a general partner and bookkeeper of SCPP and with Henry Chambers, Vice-president of Lonoke Production Credit Association (PCA). The meeting was held in the PCA office in Lonoke, Arkansas. The Pfeifers were concerned about SCPP’s account being approximately $15,000 in arrears, and subsequently stopped delivering loads of feed to SCPP. Mrs. Pfeifer testified as to what transpired:

Q. Now, what did you tell Mr. Chambers, if anything?
A. We discussed the account and that we would not send feed to Saline County unless we were assured of being paid for the feed.
Q. What did he say?
A. He said the account was good and go ahead and send the feed over and they would go ahead and see that we got our money, the PCA.
Q. Did you talk to him about how it would be paid?
A. Yes, we discussed paying it direct, but we had to get a letter of authorization from Mr. Due and Mr. Kane.
Q. Who told you you had to get a letter of authorization before the PCA could pay you direct?
A. Chambers, I suppose.
Q. Did you discuss any terms of payment?
A. Yes, we did, If they would pay on a loan within ten days, we would give them a 2% discount.
Q. Now when . . .
A. And he agreed to that.
Q. Mr. Chambers did?
A. Yes, Sir.
Q. When would that go into effect, did you explain that to Mr. Chambers?
A. Well, the account had built up and when the account became current and they had sent those, you know, within ten days, we would give a discount.

Mrs. Pfeifer further testified that the 2% discount would go into effect once the back due account had been brought current and that such discount had never been done before with that account. Mrs. Pfeifer also testified that she did receive checks directly from the PCA each time a load went to Saline County. Mr. Louis Pfeifer verified Mrs. Pfeifer’s testimony and added PCA agreed “That they would pay the account up in full and we would give the Saline County Pork Producers a 2% discount if they paid in ten days.”

PCA received the letter of authorization from Mr. Due and Mr. Kane and made payments to Pfeifers between March 13 and July of 1976. On July 22 the balance due was $17,742.63.

Pfeifer sued SCPP, Diversified Financial Services Corporation International, John M. Due, Maurice Hannon, and Realty Consultants, Inc. as general partners of SCPP; David R. Kane, a limited partner and investor in SCPP; and Lonoke PCA, as a guarantor of the account of SCPP. David R. Kane is also President of Diversified Financial Services Corp. International and Realty Consultants, Inc. Before trial Pfeifer released Kane and Realty Consultants, Inc. for $10,-300. Diversified Financial Corp. International, through David R. Kane as president and SCPP through David R. Kane as limited partner, confessed judgment. The remainder of the lawsuit went to trial. The jury returned a defendants’ verdict for John Due and for Maurice Hannon and against PCA. PCA appeals.

The parties involved in this lawsuit are intertwined and somewhat complicated. From 1971 to November 1973 PCA provided 100% financing to defendant John Due’s swine operation in Saline County. John Due testified he sold 97 1/2% of his operation to David Kane and Associates with the help of Henry Chambers of PCA, and a limited partnership was formed — SCPP. Due signed notes to defendant PCA in the amount of $300,000. Due agreed to stay on as bookkeeper for the SCPP. Due also testified Kane was general manager and made all the decisions involving funds along with Chambers of PCA. Due testified defendant Hannon was swine manager who made decisions relative to personnel, feed used, sale of swine, etc. Due and Hannon were concerned about paying Pfeifers for the feed and cautioned Louis Pfeifer about selling without positive guarantees from Kane and Chambers. All invoices were sent to PCA for payment direct to Pfeifer.

Appellant PCA moved to dismiss the complaint against it because its only liability, if any, was as a guarantor and that payment or settlement by SCPP as principal, discharged the guarantor (PCA) as a matter of law.

Pfeifer discharged David Kane and Realty Consultants, Inc. The release stated:

The other individual Defendants who are not released by this Release agreement are as follows:
Diversified Financial Services Corp. International
John M. Due
Maurice Hannon
Lonoke Production Credit Association

PCA contends the above agreement did not reserve a right of action against SCPP — thereby PCA is discharged. Pfeifers do not allege PCA guaranteed debts or accounts of any defendant other than SCPP. PCA contends Pfeifers’ unconditional release of the principal debtor SCPP terminated the guarantor’s liability and discharged PCA’s obligation on the alleged contract of guaranty.

Appellee Pfeifer contends the question of whether or not there was an agreement between PCA and Pfeifers as an original undertaking and not merely as a security is an issue of fact for the jury. Pfeifer further contends the nature of this case is one of fact and not one of law as appellant PCA alleges. The jury determined the basis for PCA’s agreement with SCPP was more than a guaranty basis and was indeed an original undertaking. Mr. Due testified when he sold his swine operation to persons associated with David R. Kane his indebtedness to PCA was $300,000. He further testified Mr. Chambers, for PCA, negotiated the sale and an additional $250,000 loan from PCA to SCPP. PCA was obviously heavily involved in SCPP. Our Supreme Court has stated the factors to be considered in determining whether an oral promise is original or collateral — the intention of the parties at the time the promise is made, the words of the promise, the situation of the parties, and all the circumstances attending the transaction. Moraz v. Melton, 167 Ark. 629, 268 S.W. 41 (1925); Black Bros. Lumber Co. v. Varner, 164 Ark. 104, 261 S.W. 312 (1924); A.B. Smith Lumber Co. v. Portis, 140 Ark. 356, 215 S.W. 590 (1919); Leifer Manufacturing Co. v. Gross, 93 Ark. 277, 124 S.W. 1039 (1910).

PCA contends further there is no evidence of sufficient legal consideration for the alleged contract of guaranty. The jury was instructed to consider whether or not there was consideration for the agreement between PCA and Pfeifers. The jury was entitled to consider the 2% promised discount by Pfeifers in connection with the PCA agreement, along with Due’s testimony concerning the substantial loans which PCA had at stake, and to consider the benefit to PCA if Pfeifers continued to supply feed to the swine operation. PCA’s own witness testified PCA was owed $174,400.61 by SCPP. Pfeifers billed PCA directly. There were no attempts to collect first from SCPP. PCA paid Pfeifers directly. Pfeifers agreed the 2% discount would go into effect once the back due account had been brought current. Pfeifers have completely performed under the agreement. They continued to ship feed to SCPP until SCPP abandoned its operation. Pfeifers’ performance under the contract was ended by actions of SCPP and not by Pfeifers’ refusal to further perform.

PCA relies on Crawford v. General Contract Corporation, 174 F. Supp. 283 (WD Ark. 1959) and the language of Judge Miller:

Be that as it may, however, a promise ‘to stick by’ Crawford falls far short of a promise to finance him for an indefinite time without regard to conditions and circumstances.

The Crawford facts are easily distinguishable from the case at hand. There, a man named Bellinger, who was manager of General Contract’s Hot Springs office, actively solicited new and used car businesses. Bellinger offered to obtain financing for the car businesses. He represented to plaintiff Crawford that General Contract would stand by them in their financing operations “through thick and thin”. Judge Miller held this to be a unilateral contract, a promise in exchange for an act, in which the promisee (plaintiff), had not fully performed (giving all his business to defendants), therefore the contract was unenforceable. We are not dealing with a unilateral agreement in the instant case.

PCA argues Chambers lacked the authority to guarantee the debt of SCPP. There was contradictory evidence as to the scope of Chambers’ authority. From the testimony regarding his authority there were sufficient facts to go to the jury. Whether or not the facts demonstrated Chambers had authority to bind PCA was a proper jury question.

From a careful review of all the evidence we find the case was properly submitted to the jury and its verdict should be upheld.

Affirmed.

Wright, C.J., and Hays, J., dissent.

Ernie E. Wright, Chief Judge,

dissenting. In my view the evidence was not sufficient to make a jury question on the liability of appellant, Lonoke Production Credit Association, for the debt of SCPP to appellee, and the trial court erred in failing to grant appellant’s motion for a judgment notwithstanding the verdict.

To sustain the verdict there must be substantial evidence to support each of the following:

(1) That PCA entered into an original promise to pay the debt SCPP incurred with appellee prior to March 12, 1977, the date of the alleged agreement or promise on the part of PCA.
(2) Consideration flowing from SCPP to PCA to support the alleged agreement.
(3) That the alleged promise or agreement on the part of PCA was within the scope of the authority of Henry Chambers, its Vice President.

An examination of the record discloses no substantial evidence to support any of these requirements.

The evidence as to any agreement on the part of PCA with appellee only reflects PCA would pay for future feed deliveries by appellee to SCPP provided SCPP authorized such loan disbursements. I find no evidence that PCA promised or agreed to pay to appellee the account accrued by SCPP prior to March 12, 1977. The strongest evidence relating to such alleged promise was the testimony of Mrs. Pfeifer that Mr. Chambers said, “The account is good and we should go ahead and send the feed.” As to the old account, this statement is nothing more than an expression of an opinion and falls short of constituting evidence of a promise or agreement on the part of PCA to pay the old debt of SCPP.

There was no evidence of any consideration other than possible indirect benefits, flowing to PCA to support the alleged promise or agreement to pay the debt of SCPP.

There was no evidence Henry Chambers had authority to obligate PCA to pay the debt of another; on the contrary, the evidence was that there was no such authority. In Hutson v. T. M. Doves Mercantile Co., 170 Ark. 984, 282 S.W. 371 (1926) it was held,

A corporation, not expressly authorized to do so, cannot ordinarily contract to become a surety for, or lend its credit to another person or corporation. — It is ultra vires of a corporation to enter into contracts of guaranty or suretyship not in the furtherance of its business, unless given express authority to do so. The fact that the corporation may reap some indirect benefit from becoming a surety or guarantor for another does not confer upon it implied power to do so.

The case of National Surety Corp. v. Inland Properties, 286 F. Supp. 173 (E.D. Ark. 1968), affirmed 416 F. 2d 457, is in accord with this rule.

I would reverse.

I am authorized to say Judge Hays joins in this dissent.


text:
    Sandra Kay ANDREWS, Administratrix of the Estate of Kenneth ANDREWS, Deceased v. Mark Lincoln SPRINGER, Charles SPRINGER and Mrs. Charles SPRINGER
    CA 79-193
    594 S.W. 2d 586
    Court of Appeals of Arkansas
    Opinion delivered February 13, 1980
    Released for publication March 5, 1980

      Jeff Mobley of Mobley & Smith, and Niblock & Odom, for appellant.

      Crouch, Blair, Cypert & Waters, for appellees.
   David Newbern, Judge.

The sole issue here is whether it was error for the judge to refuse to give an instruction which correctly stated the law but which the judge found unnecessary and irrelevant. We affirm the refusal of the judge to give the instruction.

The appellant’s decedent was killed when the motorcycle he was riding collided with a car driven by Mark Springer who was sixteen years old. It was undisputed that Mark’s mother, Mrs. Charles Springer, had signed his driver’s license application and that Mark was driving with the permission of his father, Charles Springer, when the accident occurred. Thus, any negligence of Mark found by the jury would have been imputed to his parents pursuant to Ark. Stat. Ann. § 75-315(b) and (c) (Repl. 1979). Garrison v. Funderbunk, 262 Ark. 711, 561 S.W. 2d 73 (1978); Ross v. Vaught, 246 Ark. 1002, 440 S.W. 2d 540 (1969); and Vaught v. Ross, 244 Ark. 1218, 428 S.W. 2d 631 (1968). The elder Springers were defendants and are appellees along with Mark.

The appellant requested Arkansas Model Instruction 804, as follows:

Charles Springer and/or Mrs. Charles Springer were required by law to sign the application of Mark Lincoln Springer for an operator’s license. If you find that they knowingly permitted Mark Lincoln Springer to drive a motor vehicle upon any highway or street, and that Mark Lincoln Springer was negligent, then his negligence will be charged to Charles Springer and/or Mrs. Charles Springer.

The trial court refused to give the instruction because there was no issue whether Mrs. Springer signed the license application or whether Mr. Springer permitted Mark to drive, the appellees having conceded those facts. In a discussion among the judge and counsel, a lawyer for the appellant said he wanted the instruction because it would have a psychological effect on the jury as “[s]ometimes they would be very hesitant to saddle a youngster by himself.” He also said he wanted to argue to the jury that the parents would share the responsibility. The judge responded that he would sustain an objection to counsel arguing law to the jury outside the instructions.

The case was submitted to the jury on interrogatories. The first interrogatory was as follows:

Do you find from a preponderance of the evidence that Mark Lincoln Springer was guilty of negligence which was a proximate cause of the occurrence?

The jury decided the case by answering that interrogatory in the negative.

The judge was correct. The note on the use of AMI 804 is as follows: “Do not use this instruction when the case is submitted on interrogatories.” Judges should abide by the notes on use when possible. Chicago, Rock Island and Pacific Railroad Co. v. Hughes, 250 Ark. 526, 467 S.W. 2d 150 (1971); Beevers v. Miller, 242 Ark. 541, 414 S.W. 2d 603 (1967). Although the judge did not refer to the note on use as a reason for his refusal to give the instruction, the reason he offered, i.e., no factual issue, is most likely the basis for the note having been included with the AMI, and is a good reason, regardless of the note. Weatherford v. George, 229 Ark. 536, 317 S.W. 2d 147 (1958); Braman and the Gus Blass Co. v. Walthall, 215 Ark. 582, 225 S.W. 2d 342 (1949).

Nor was it wrong for the judge to indicate he would sustain an objection to argument of “uninstructed” law to the jury. We find a limited but useful analogy to Buckeye Cellulose v. Vandament, 256 Ark. 434, 508 S.W. 2d 49 (1974). There counsel for a plaintiff argued to the jury that the trial judge could reduce a big judgment but could not increase a small one. That was a correct statement of law, but the supreme court held it was improper argument and prejudicial to an extent which was not overcome even by the judge’s admonition to the jury to disregard it.

In the case before us, the appellant’s lawyer wanted the jury to know the parents would share any liability the jury found with respect to Mark. It would not have been an incorrect statement, but it could have been prejudicial because, as the appellant’s lawyer seemed to admit, it would have made it more likely for the jury to have determined Mark was negligent, despite its irrelevancy to that conclusion.

We are not unmindful that had this case been submitted to the jury for a general verdict rather than on interrogatories, with an issue as to signing the application or permission to drive, the instruction would have been appropriate, and the very prejudice we find to have been possible in this case would, as if by magic, have become unobjectionable. Nor are we unmindful that, as this case went to the jury, there were two named defendants who were not mentioned to the jurors either in instructions or on the verdict form.

Although this is an unsatisfactory state of affairs, it does not alter our view that a jury can and should answer a specific question whether one of the defendants was negligent without being distracted by an irrelevant instruction or by the knowledge that the parents have been sued but are not to have their liability determined by the jury.

Affirmed.