text:
    ARKOTA INDUSTRIES, INC. et al v. Charles E. NAEKEL et al
    81-111
    623 S.W. 2d 194
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981

      Friday, Eldredge ir Clark, by: James M. Simpson, for appellants.

      Blair, Cypert, Waters & Roy, for appellees and cross appellants.
   George Rose Smith, Justice.

This is primarily a dispute between two rival factions that were stockholders in an Arkansas corporation, Arkota Industries. In 1970 Charles E. Naekel, a resident of Rogers, was promoting an idea he had for the manufacture of sets of shelving, to be sold by retail furniture stores. He interested two North Dakota farmers, Stedman and Pueppke, in investing in the formation of Arkota Industries, to make the shelving. The company began business in Rogers in 1971 and later moved to North Dakota. The trial judge commented that it was undercapitalized from the start. Stedman, Pueppke, and other North Dakotans had to make substantial investments in the venture from time to time, at $100 a corporate share. Naekel, who was the first president and manager of the concern, invested no money in it, but he was eventually allotted 700 shares of stock, of which he had 200 shares issued to his son Gerald and 50 to his son Bob.

To what extent the venture was actually profitable is in dispute. In 1973 or 1974 the company’s accountants raised a question about the validity of the Naekel shares, owing to a doubt whether adequate consideration had originally been given for that stock. See Ark. Const., Art. 12, § 8. In May, 1975, the directors voted to oust Naekel as president and to cancel all the Naekel stock. Naekel protested the cancelation. In June of that year he settled his dispute with the corporation and the other faction by accepting about $7,600 in cash, two months’ termination pay, and 50 shares of stock. A release agreement was signed by Naekel and by the lawyer then representing him. The cancelation of the shares issued to Naekel’s sons was not affected by that settlement.

Naekel then organized Naekel Industries, Inc., to make similar shelving at Rogers. In 1977 the three Naekels brought this suit against Arkota Industries and the North Dakota stockholders, asserting that the defendants had wrongfully converted the plaintiff’s stock by canceling it and had made slanderous statements about Naekel and his new company. Eventually that company was brought in as a party. There were various cross-demands between the opposing factions. The jury made only three awards: $20,000 to Gerald Naekel for the conversion of his 200 shares, $5,000 to Bob for the conversion of his 50 shares, and $1 as their punitive damages. On direct appeal Arkota Industries and the individual defendants argue two points for reversal. On cross appeal Charles Naekel and Naekel Industries argue two other points. Our jurisdiction includes tort actions. Rule 29 (1) (o).

First, on direct appeal, the court was right in directing a verdict for Charles and Bob Naekel on the issue of the defendants’ liability for conversion. Apart from the question of the market value of the stock, which was submitted to the j ury, the only issue on this phase of the case was whether the stock was cancelable for inadequacy of the consideration originally given for the shares. When, as here, the rights of creditors are not involved, the judgment of the directors or stockholders about the adequacy of the original consideration is conclusive in the absence of fraud. Ark. Stat. Ann. § 64-205 (C) (Repl. 1980); Murray v. Murray Laboratories, 223 Ark. 907, 270 S.W. 2d 927 (1954), relying upon a similar earlier statute. There is no assertion of fraud in the original transaction. Hence the stock was not subject to cancelation.

On the second issue, however, the appellants are right in insisting that the trial court erroneously instructed the jury that Gerald and Bob’s stock was presumptively worth its par value ($100 a share). Corporate stock’s par value has no direct bearing upon its market value years later, because the company may either have prospered or lost money. Consequently we have adopted the majority view that rejects a presumption that par value is also market value. Beaty v. Johnston, 66 Ark.529, 52 S.W. 129 (1899). That case is not distinguishable on the ground that it was an action in contract rather than in tort, for in both instances the controlling issue is the market value of the stock.

Nor was the error harmless. It is immaterial that there was evidence that the stock was worth more than $ 100 a share at the time of its conversion, for there were also accountants’ figures to show that it was worth less. Nor does it matter whether the appellants’ own proffered instruction about the determination of market value was correct, for they simply asked that the court eliminate the reference to the presumption in the appellees’ proffered instruction, which the court would not do. The error was not harmless, because the jury awarded $25,000 for 250 shares, which was the presumed value to the penny.

On cross appeal neither of the two points argued requires a reversal. The court properly granted a partial summary judgment against Charles Naekel, finding that his affidavit in response to the motion contained no basis for a finding of fraud with regard to the release executed by him and his lawyer. Nor does there appear to have been any violation of a fiduciary duty owed by the other corporate officers to Naekel. The only such duty that occurs to us is that of full disclosure, but the affidavit suggests no concealment on the others’ part. Second, the court properly refused a proffered instruction with respect to the defendants’ possible violation of our Unfair Practices Act, Ark. Stat. Ann. §§ 70-301 et seq. (Repl. 1979), for the requested instruction contained several provisions of the statute that were not pertinent to the case and might have been confusing to the jury. Coca-Cola Bottling Co. of Blytheville v. Doud, 189 Ark. 986, 76 S.W. 2d 87 (1934).

We mention one other matter. Counsel for the appellees submitted a 34-page supplemental abstract, for which they ask an allowance to their clients of $68 for printing expense and $300 for attorney’s fees. The appellants dispute the need for a supplementary abstract and protest any award of compensation for its preparation.

Our Rule 9 (e) (1) authorizes such allowances, but we take this opportunity to explain that the Rule was intended merely to provide reimbursement to an appellee when there has been a clear-cut and demonstrable failure by the appellant to abstract matters essential to a full consideration of the issues raised by the direct appeal. Here there were no specific, discernible omissions in the appellants’ abstract of the record. It was at most a matter of judgment whether the appellants’ presentation should be supplemented by additional details. In such a situation the Rule does not create a lawsuit within a lawsuit for our decision. We do not award compensation for such a discretionary supplement to the abstract, leaving it instead to the appellee’s counsel to decide whether he should provide additional abstracting at his client’s expense, just as he must decide the appropriate length of his brief with its attendant expense. The appellees’ motion is denied.

Reversed on direct appeal, affirmed on cross appeal.


source: Caselaw Access Project

author: Frank Holt, Justice. John I. Purtle, Justice,

license: Public Domain

text:
    Patsy Crosno HUNTER et al v. G. H. McDANIEL, d/b/a McDANIEL BROTHERS CONSTRUCTION CO. et al
    81-95
    623 S.W. 2d 196
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981

      Guy Jones, Jr., for appellants.

      Friday, Eldredge ¿r Clark, by: James M. Simpson, for appellees.
   Frank Holt, Justice.

This appeal results from a jury’s finding that the appellees were not liable for the death of Michael Crosno, minor son of appellant Patsy Crosno Hunter, nor for the injuries suffered by appellant Pattie Jean Crosno when a collision occurred between a pickup truck driven by Michael Crosno and a mobile home being pulled by a tractor driven by appellee Henry Slatton, an employee of appellee McDaniel Brothers Construction Company. Pattie was a passenger in the pickup truck. For reversal appellants first contend that the trial court erred in ordering, sua sponte and over appellants’ objection, a bifurcation of the trial on the issues of liability and damages pursuant to Rules of Civil Proc., Rule 42 (b), 3A Ark. Stat. Ann. (Repl. 1979). The court had made known its intention to do so a few days before trial. As indicated the jury found no liability on the part of the appellees, and, therefore, did not reach the issue of damages.

The propriety of this bifurcation procedure is an issue of first impression in this state. Rule 42 (b) reads:

The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any claim, cross-claim, counterclaim, or third party claim, or of any separate issue or any number of claims, cross-claims, counterclaims, third-party claims or issues.

Appellants argue that the bifurcation of the trial on the issues of liability and damages deprived them of their right to a jury trial as guaranteed by Art. 2, § 7, Arkansas Constitution (1874), and Rules of Civ. Proc., Rules 38 and 39,3A Ark. Stat. Ann. (Repl. 1979). Our Rule 42 (b), supra, is copied from Rule 42 (b), Fed. Rules Civ. Proc. The bifurcation of the issues of liability and damages in personal injury actions is common in the federal practice pursuant to Rule 42 (b) as well as many states where a court rule, as here, or statute permits. Moss v. Associated Transport, Inc., 344 Fed. 2d 23 (6th Cir. 1965), and 85 A.L.R. 2d § 3, p. 12. The separation of the issue of liability from that relating to damages is an obvious use of Rule 42 (b). Logically, liability must be resolved by the factfinder before damages are considered. See 9 Wright and Miller, Federal Practice and Procedure, § 2390, p. 296. Mercado v. City of New York, 25 A.D. 2d 75, 265 N. Y. Supp. 2d 834 (1966). The bifurcation of these issues is not an infringement upon the constitutional right to a jury trial. Hosie v. Northwestern Ry., 282 F. 2d 639 (7th Cir. 1960), cert. denied, 365 U.S. 814, 81 S. Ct. 695, 5 L. Ed. 2d 693 (1961), and Wright, Federal Courts, Ch. 10, § 97 (1963), pp. 433-434.

Appellants assert also that the issues of liability and damages were so interwoven that it was prejudicial error to try the case in a bifurcated manner since they had to establish damages in order to prove liability. Appellants, however, adduced proof that they had sustained damages. They introduced photographs showing the condition of the vehicles following the accident. Upon impact the scene “looked like a big explosion.” There was testimony that Pattie Crosno was found alive after being thrown from the truck and Michael Crosno’s body was apparently thrown through the windshield of his truck. There is nothing in the record to indicate that the asserted liability and the nature of the damages were such that liability was dependent upon damages. In other words, it appears that the evidence pertinent to these two issues was totally unrelated. See Hosie v. Northwestern Ry., supra.

Appellants further argue that a simple vehicular collision, as here, is not an appropriate situation for a bifurcated trial. We cannot agree. The purpose of Rule 42 (b) is to further convenience, avoid delay and prejudice, and serve the needs of justice. The primary concern is efficient judicial administration, rather than the wishes of the parties, as long as no party suffers prejudice by the bifurcation. LoCicero v. Humble Oil & Refining Co., 52 F.R.D. 28, 30 (E.D. La. 1971). However, a bifurcation should be used on a case by case basis based upon the informed discretion of the court. Lis. v. Robert Packer Hosp., 579 F. 2d 819 (3d Cir. 1978). A routine bifurcation, however, would not be an exercise of discretion. Absent an abuse of discretion the decision will not be disturbed on appeal. Mosley v. General Motors Corp., 497 F. 2d 1330 (8th Cir. 1974); Nettles v. General Accident Fire and Life Assurance Corp., 234 F. 2d 243 (5th Cir. 1956). We cannot say from the record before us that the trial court abused his discretion.

Appellants next contend that the court erred in refusing their proffered instruction AMI 903 to cover their theory of the case. While it is error for the trial court to fail to instruct the jury on a statute applicable to the case, Life and Cas. Ins. Co. of Tenn. v. Gilkey, 255 Ark. 1060, 505 S.W. 2d 200 (1974), it is also error to instruct the j ury on an inapplicable statute. CRT, Inc. v. Dunn, 248 Ark. 197, 451 S.W. 2d 215 (1970). Portions of the statute not applicable to the facts must be deleted. Harkrider v. Cox, 230 Ark. 155, 321 S.W. 2d 226 (1959). Appellants’ proffered instruction consisted of a compilation of numerous statutory provisions regarding the transportation of trailers. Several of these sections were inapplicable to the facts presented. Therefore, the trial court correctly refused the instruction inasmuch as the proffered instruction contained abstract statements of the law. Harkrider v. Cox, supra; and CRT, Inc. v. Dunn, supra.

Appellants next assert that the trial court erred in giving AMI 305 (b), offered by appellee, and rejecting AMI 305 (c), offered by appellants. The instructions read:

AMI 305 (b):
It was the duty of all persons involved in the occurrence to use ordinary care for their own safety and the safety and the property of others.
AMI 305 (c):
It is the duty of both Michael Crosno, deceased, and Henry M. Slatton to use ordinary care for their own safety and the safety of others and their property.

Appellant Pattie Crosno argues that 305 (b) is a direct and prejudicial comment on the evidence as related to her inasmuch as it “directed the jury” to find against her. We do not so construe the instruction. This was an accident involving three vehicles and several parties. Appellant has demonstrated no prejudice; therefore, we find no merit in this argument.

In their final point for reversal, appellants assert the trial court erred in not allowing appellants to introduce into evidence the original and amended interrogatories and answers made by appellees pursuant to Rule 33 (b). It appears that appellants sought the use of the interrogatories and answers to impeach the credibility of appellees’ witnesses, citing Rules of Evidence, Rules 607 and 611 (b), Ark. Stat. Ann. § 28-1001 (Repl. 1979). Rule 33 (b) provides that answers to interrogatories “may be used to the extent permitted by the rules of evidence.” Our Rule 33 (b) is identical to Rule 33 (b) of F. R. Civ. P. In 4A Moore’s Federal Practice § 33.29 [1], p. 33-174, it is stated:

Under Rule 26 (d), as incorporated in Rule 33, answers could be used ‘by any party for the purpose of contradicting or impeaching the testimony of’ the answering party as a witness . . .

In § 33-29 [2], p. 33-180, it is summarized:

It must be, therefore, that the amended Rule [33] was framed with a recognition that answers to interrogatories are hearsay and inadmissible at the trial unless they fall within some recognized exception to the hearsay rule. Thus they would be admissible for purposes of impeaching the testimony of the person making them . . .

Here, appellants argue that they were entitled to introduce the interrogatories and answers by appellee McDaniel, who was unavailable as a witness, to contradict the testimony given by Earney and Bowie, witnesses for the appellees. Appellants argue that the important part of McDaniel’s answer is: “According to Mr. Slatton [McDaniel’s employee], he had pulled over on the shoulder of the road and had completely stopped at the time of the impact to our tractor and trailer.” It is argued that this answer controverts the testimony of Bowie with regard to the speed of the vehicle and location on the highway. Suffice it to say that the appellants have not shown how this answer or other answers would fall within a recognized exception of the hearsay rule. Thus, the trial court was correct in not allowing these interrogatories and answers into evidence.

Affirmed.

Adkisson, C.J., and Purtle and Hays, JJ., dissent.

John I. Purtle, Justice,

dissenting. I disagree with the majority for two reasons. First, I think the decision deprives the appellants of their right to a jury trial as guaranteed by the Constitution of the State of Arkansas. I further disagree because I do not think that Rules of Civil Procedure, Rule 42, provide for a bifurcation of the different allegations of a single trial.

Constitution of Arkansas, Art. 2 § 7 states:

The right of trial by jury shall remain inviolate, and shall extend to all cases at law, without regard to the amount in controversy;.. .

Certainly it cannot be argued that appellants did not claim damages from the appellees in the complaint which was filed herein. They have been denied the right of a jury trial in their claim for damages. The chief evil resulting from the severance of the liability claim from the damage claim is that it is likely to cause the jury to be prone to generally find in favor of the defendant in order to prevent a second trial on the damages. Therefore, it seems to me that in most cases it would deny a plaintiff the right of a true consideration of his lawsuit.

Rule 42 (a) states:

When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all of the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs and delays.

Section (b) of the rule has been correctly stated in the majority opinion. In my opinion, the plain meaning of this rule is to allow separation of different actions or consolidation of different actions. Nowhere in the language may it reasonably be said that a court has the right to split a cause of action without the consent of the parties. The reporter’s notes to Rule 42 indicate that little change is expected in the actions by the court as a result of the adoption of this rule. The note further states, generally speaking, consolidation of cases is normally permitted for convenience and economy in judicial administration and not to merge claims into a single cause or change parties’ rights. The many notes and annotations on decisions under prior law all dealt with claims of different parties, and nowhere in my research am I able to determine that a tort action has ever been presented in a bifurcated trial without the consent of the parties.

Adkisson, C.J., and Hays, J., join in this dissent.


author: Darrell Hickman, Justice.

text:
    Louise Bariola FARRIS v. Tom H. TVEDTEN
    81-127
    623 S.W. 2d 205
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981

      Robert G. Bridewell, of Holloway br Haddock, for appellant.

      Charles Darwin Davidson, P.A., for appellee.
   Darrell Hickman, Justice.

The issue in this case is whether a defamatory letter was “published.” The trial court granted a motion to dismiss holding that there had been no publication of the letter. For purpose of argument it has to be conceded that the letter was libelous.

The appellant, Mrs. Louise Bariola Farris, is a nurse who practices at the Chicot Memorial Hospital in Lake Village. The appellee, Tom H. Tvedten, is a doctor who practices at the same hospital. Dr. Tvedten dictated the letter in question to a stenographer. It was addressed to Mrs. Farris at Box 16, Jennie, Arkansas. The letter strongly criticized Mrs. Farris, implying that she had substituted medication thereby committing a criminal act.

By pleadings and arguments the sole question before the trial court was whether the letter was published and, if so, whether the publication occurred when Dr. Tvedten dictated the letter to a stenographer and when the letter addressed to Mrs. Farris was opened and read by her husband. The court ruled that there was no publication and we agree.

In a defamation case a libelous or slanderous statement must be published or communicated to a third person to be actionable. W. Prosser, The Law of Torts, § 113 (4th ed. 1971); Braman v. Walthall, 215 Ark. 582, 225 S.W. 2d 342 (1949). However, not every communication to a third person is deemed to be a publication. Some communications are protected by a qualified privilege; that is, the fact that a third party learns of the libelous matter is not necessarily publication. Unless there is an abuse of this qualified privilege, such as excessive or malicious publication, there is no publication in the eyes of the law. W. Prosser, supra, § 115; Braman v. Walthall, supra; Bohlinger v. Germainia Life Ins. Co., 100 Ark. 477, 140 S.W. 257 (1911). The statement by Dr. Tvedten to the nurse on its face was such a privileged statement since it was made by one with an interest or duty in a matter to another who had a like interest or duty. W. Prosser, supra, § 115; Braman v. Walthall, supra; Arkansas Associated Telephone Co. v. Blankenship, 211 Ark. 645, 201 S.W. 2d 1019 (1947).

The trial court found no abuse of the privilege in this case. The doctor and nurse worked in the same hospital. The letter was purely in reference to the appellant’s performance at the hospital regarding medication practices in which both parties had some duty and interest. The letter was dictated to the doctor’s stenographer, and that act alone did not amount to publication. W. Prosser, supra, § 115 n. 59; Polk v. Mo. Pac. R. Co., 156 Ark. 84, 245 S.W. 186 (1922).

The fact that the husband opened and read a letter addressed to his wife was not deemed by the trial court to be publication. That was an act beyond the control of the writer and there is no evidence that Dr. Tvedten knew or could have foreseen anyone else would have opened the letter. There is no liability for publication when a sealed letter is sent to the plaintiff personally which is unexpectedly opened and read by another. W. Prosser, supra, § 113, n. 41; Barnes v. Clayton House Motel, 435 S.W. 2d 616 (Tex. Civ. App. 1968); Weidman v. Ketcham, 278 N.Y. 129, 15 N.E. 2d 426 (1938).

The parties by pleadings and briefs narrowed the argument to the issues we have discussed. The trial court ruled on that basis and we have recited the facts that we have. Having reviewed the record on that basis, we cannot say the trial court was clearly wrong.

Affirmed.


author: Darrell Hickman, Justice. Richard B. Adkisson, Chief Justice,

text:
    James David SIMPSON, Jr. v. STATE of Arkansas
    CR 81-8
    623 S.W. 2d 200
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981

      Charles L. Carpenter, Jr. and Thomas M. Carpenter, for appellant.

      Steve Clark, Atty. Gen., by: Theodore Holder, Asst. Atty. Gen., for appellee.
   Darrell Hickman, Justice.

James David Simpson, Jr. was convicted of two counts of capital murder and one count of aggravated robbery. He was sentenced to two life sentences without parole for the murders and life imprisonment for the aggravated robbery.

The charges arose out of a shooting that occurred on March 4,1979, at a trailer occupied by two brothers, Carl and Larry Gilmore. The jury found that Simpson killed Larry Gilmore and his brother, Grealing, and shot Carl Gilmore and his girl friend, Cecilia Pigg, both of whom survived. The jury also found that Simpson robbed Larry Gilmore.

Simpson’s appeal from these convictions raises several arguments most of which are without merit. The issue which causes us to reverse the conviction concerns the trial court’s limitation of the cross-examination of Carl Gilmore, the State’s chief witness.

The defense sought to cross-examine Carl Gilmore about why he suddenly fled the state before his scheduled trial on several felony charges. He was subsequently charged with fleeing and failure to appear. Gilmore suddenly appeared back in Arkansas just before Simpson’s trial. He was not re-arrested by the State and all the charges were pending when he became the State’s chief witness against Simpson.

Before cross-examination of Gilmore, an in-camera hearing was held to determine to what extent the defense could cross-examine Gilmore about his criminal record. The trial court’s ruling regarding impeachment of Gilmore for criminal misconduct is not questioned on appeal. But, in addition to inquiring into Gilmore’s criminal record, four times the defense attorney mentioned that he wanted to examine Gilmore on why he left the state and the circumstances of his return, which the defense contended would relate directly to Gilmore’s interest and credibility. Counsel first mentioned this subject when the court queried counsel about the propriety of admitting evidence of offenses that were unrelated to truthfulness:

DEFENSE ATTORNEY:
. . .1 think it’s relevant for the jury to know that Mr. Gilmore fled the state. He says because he was afraid for his life. But it’s interesting he didn’t flee the state till shortly before he was going to have to plead guilty to five offenses and take a five year sentence. I think the jury is entitled to know that.

Later counsel elaborated on its theory by stating:

DEFENSE ATTORNEY:
Your Honor, I think it’s curious that Mr. Gilmore was supposed to be a witness for the State and this trial was initially set in September. That Mr. Gilmore was due to plead guilty to these offenses on a five year sentence. And while he says he was afraid for his life I think he was, also, aware that his testimony was essential to the State’s case and he stayed gone during that period of time. He shows up at the last minute and somehow he manages not to have to go through with his plea or with his trial. I think that had the normal courses of events had occurred as they would have Mr. Gilmore would have been convicted of these offenses by now and of course this type of evidence would have been proper.

Considerable argument resulted between counsel over the extent of the cross-examination. At first the trial court indicated that Gilmore could be questioned about his flight and return; the State strongly resisted the defense’s efforts and the court finally concluded that that was not a proper area of inquiry. However, that was not the end of the matter. After the parties had presented their evidence, the defense was allowed to offer proof as to what it would have shown had it been allowed to cross-examine Gilmore about his fleeing. In this regard the court made the statement:

. . . During the time that [Gilmore] was under cross-examination the defense counsel wanted to ask him certain questions on cross-examination and I refused to let him do that. And the questions as I understand it were to go to his credibility.

At the proffer the court was informed of several felony charges Gilmore had pending against him when he left the state. Gilmore was questioned and testified that he left Arkansas for California because he feared for his life. He said he contacted the prosecuting attorney’s office, but did not tell them where he was going. He said that he had talked to a deputy prosecuting attorney and a Chief Terry of the sheriff’s office. His story of whom he talked with and why he left did not fit with what the State had related at a previous hearing during the course of the trial.

After the trial the defense filed a motion for a new trial. At the hearing on the motion it was confirmed that Gilmore was not arrested for fleeing the state or failing to appear on charges of robbery, forgery and several other charges.

Also, at the hearing on the motion for a new trial, Gilmore’s attorney was called as a witness and he testified that Gilmore had been offered a five or six year sentence on his pending charges but that Gilmore felt that since he was going to have to testify for the State against Simpson, he should not serve any time. It was after that that Gilmore left the state. And, as it turns out, he was not sentenced to serve any time. After the trial Gilmore apparently received a suspended sentence on the recommendation of the prosecuting attorney.

The defense made it clear that it wanted to cross-examine Gilmore about his interest in testifying against Simpson. The defense sought to inquire about why he left the state and why, although he was charged with fleeing and failure to appear, when he returned no action was taken on those charges; instead, he appeared as the State’s chief witness. In other words, the defense wanted to ask what deal, if any, had been made for his testimony against Simpson. That subject would go to Gilmore’s bias and credibility as a witness.

We have consistently taken the view that wide latitude should be given during cross-examination, especially when bias is concerned. In Klimas v. State, 259 Ark. 301, 534 S.W. 2d 202 (1976) we said:

... It is generally permissible for a defendant to show by cross-examination anything bearing on the possible bias of the testimony of a material witness. Bethel v. State, 162 Ark. 76, 257 S.W. 740; Ringer v. State, 74 Ark. 262, 85 S.W. 410; Annot. 62 ALR 2d 611 (1958). This rule applies to testimony given under expectation or hope of immunity or leniency or under the coercive effect of his detention by authorities. Stone v. State, supra; Boyd v. State, supra. See also Campbell v. State, 169 Ark. 286, 273 S.W. 1035; Alford v. U.S., supra. The test is the expectation of the witness and not the actuality of a promise. State v. Little, supra; Spaeth v. United States, 232 F. 2d 776, 62 ALR 2d 606 (6 Cir., 1956).
The right of a defendant to show the bias of a witness does not lie within the court’s discretion. Wright v. State, 133 Ark. 16, 201 S.W. 1107. . . .
Denial of cross-examination to show the possible bias or prejudice of a witness may constitute constitutional error of the first magnitude as violating the Sixth Amendment right of confrontation. Davis v. Alaska, 415 U.S. 308, 94 S. Ct. 1105, 39 L. Ed. 2d 347 (1974).

We conclude that the trial court erred in failing to allow the defense to pursue the issue and the error can only be corrected by a new trial. It may be the court did not precisely understand the appellant’s posture in this regard, but the record reflects the request was clearly made several times.

There are several other alleged errors which we must discuss. The defense argues that it was improper to charge Simpson with capital felony murder with aggravated robbery as the underlying felony when the statute only lists robbery as one of seven felonies that can support such a charge. See Ark. Stat. Ann. § 41-1501 (1) (a) (Repl. 1977). The defense argues that Simpson should have been charged with first degree murder which can be supported by any felony. Ark. Stat. Ann. § 41-1502. The General Assembly could not conceivably have intended that robbery, which may involve no force, would support a charge of capital murder, while aggravated robbery, an inherently dangerous crime, would not.

Simpson contends that the first degree murder statute and capital murder charge are unconstitutionally vague because they overlap in such a way that an accused may be charged with either for precisely the same conduct. That argument has been raised before and we have decided that there is no constitutional infirmity in the statute. Earl v. State, 272 Ark. 5, 612 S.W. 2d 98 (1981); Cromwell v. State, 269 Ark. 104, 598 S.W. 2d 733 (1980).

Simpson also argues that the court was wrong in not inserting in its instructions on the lesser offense of first degree murder the specific underlying felonies of either aggravated robbery or simple robbery. Instead the trial j udge inserted the words “a felony.”

When we adopted the Arkansas Model Criminal Instructions we said in a per curiam opinion that any variation from them must be explained in writing by the trial judge. 264 Ark. 967 (1978). AMCI 1502 (a) provides that the court should insert the “applicable felony” that supports the charge of first degree murder. The trial judge should have done so.

The defense contends that the court should have instructed the jury on the elements of aggravated robbery and robbery in conjunction with its instructions on first degree murder. The court had already instructed the jury on the elements of those crimes when it gave the charge of capital murder. It may have been the better practice to instruct again on the elements of those charges as suggested by the defense, but the court’s failure to do so did not amount to prejudicial error.

The old issue of “death qualified” juries is raised, no doubt for posterity’s sake. We have repeatedly ruled that such a jury is not unconstitutional. Ruiz v. State, 273 Ark. 94, 617 S.W. 2d 6 (1981); Miller v. State, 269 Ark. 341, 605 S.W. 2d 430 (1980). The argument is slightly different in that the defense says it was denied an opportunity to put on evidence of the fact that such a jury is prone to find a defendant guilty. Evidently the trial court did not take the request seriously, nor do we. There was no genuine offer of proof.

The sentence imposed was improper according to Swaite v. State, 272 Ark. 128, 612 S.W. 2d 307 (1981), and in this case Simpson cannot be convicted for both capital murder and aggravated robbery.

Reversed and remanded.

Adkisson, C.J., and Hays, J., dissent.

Richard B. Adkisson, Chief Justice,

dissenting. The maj ority have held that the trial court commi tted prej udicial error by failing to let the defense cross-examine a witness, Gilmore, about his leaving town before his scheduled trial on five criminal charges. They conclude that “the defense wanted to ask what deal, if any, had been made for his testimony against Simpson,” thereby proving Gilmore was biased. The record in no way substantiates this conclusion reached by the majority.

Rather, the record reflects that what we have here is an objection by the defense to its not being allowed to cross-examine the witness as to specific acts of felonious misconduct under Rule 608, Uniform Rules of Evidence, § 28-1001 Ark. Stat. Ann., Vol. 3A(Repl. 1979). One of the acts of misconduct with which the defense sought to impeach Gilmore was the charge of Felony Failure to Appear resulting from his leaving town before his scheduled trial.

At the beginning of the hearing on this issue the trial court stated that the hearing was on defense counsel’s motion “to inquire of Carl Gilmore as to whether or not he is guilty of having committed certain criminal offenses.” The entire proceeding and conversation centered on this issue. The trial court ruled on the issue at page 805 of the record by stating:

You can attack his general credibility as a witness by showing evidence of previous convictions under Rule 609. Now, that’s questionable. But, under 608 (b) in order to go into specific instances of conduct you must show specific instances of conduct which would be the type of conduct to go to the truthfulness or untruthfulness. The mere fact that somebody may have been guilty of a drug offense or of an assault and battery or even of a murder does not go to the question of truthfulness or untruthfulness.
Later, the court further stated in regard to this issue:
. . . During the time that [Gilmore] was under cross-examination the defense counsel wanted to ask him certain questions on cross-examination and I refused to let him do that. And the questions as I understand it were to go to his credibility.

After the jury had returned a verdict of guilty but before it fixed the punishment, the defense apparently asked that the record be kept open for purposes of making a proffer of proof regarding this issue. In the hearing that followed there was no indication that the ground for objection was other than was originally presented.

The issue of bias was not raised. It is obvious from reading the record in this case that the trial judge could not have understood that appellant sought to prove bias by cross-examining Gilmore about leaving the state. Appellant never mentioned bias in the trial court, but if so, this fact should be set out in the majority opinion. We do not have a plain error rule in this state except for certain limited exceptions not applicable here. Wicks v. State, 270 Ark. 781, 606 S.W. 2d 366 (1980); Singleton v. State, 274 Ark. 126, 623 S.W. 2d 180 (1981).

An objection is not sufficient unless it specifically states the grounds relied on so that the ruling may be made understandingly and the objection obviated if possible. General conversation which merely mentions the word “credibility” as the basis for an objection is not sufficient. . This Court has consistently held that in order to preserve an objection for review on appeal it is necessary that the objection at trial be sufficiently specific to apprise the trial court of its basis. Wicks, supra; Turkey Express v. Skelton Motor Co., 246 Ark. 739, 439 S.W. 2d 923 (1969); Goodwin v. State, 263 Ark. 856, 568 S.W. 2d 3 (1978); Cf. Rules 46 and 51 Ark. Rules Civ. Proc., Vol. 3A (Repl. 1979); Rule 13, Uniform Rules for Cir. & Chan. Courts, Ark. Stat. Ann., Vol. 3A (Supp. 1981).

I am hereby authorized to state that Hays, J., joins me in this dissent.


author: John I. Purtle, Justice.

text:
    John F. WELLS, Individually, et al v. Frank WHITE, Governor, et al
    81-160
    623 S.W. 2d 187
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981
    [Rehearing denied November 23, 1981.]

      James F. Lane, for petitioners.

      Steve Clark, Atty. Gen., by: R. B. Friedlander, Asst. Atty. Gen., for respondents.
   John I. Purtle, Justice.

This is an original action in the Supreme Court of Arkansas for a Writ of Mandamus directing the Board of Apportionment of the State of Arkansas, and its members individually, to redistrict the legislature in a manner whereby no county lines will be crossed in the formation of the various districts. Petitioners rely primarily upon Amendment 45 to the Constitution of Arkansas which requires the House of Representatives to be apportioned in a manner giving each county at least one representative. Amendment 45 requires that the Senate be composed of 35 members and that the senatorial districts be constituted in a manner directed by the Supreme Court of Arkansas in the case of Pickens v. Board of Apportionment, 220 Ark. 145, 246 S.W. 2d 556 (1952). Petitioners further rely on Amendment 23 to the Constitution of the State of Arkansas as well as Articles 8 and 13 of the original Arkansas Constitution of 1874. Additionally, petitioners urge that Amendment 55 relates to this subject inasmuch as it guarantees to each county a degree of self-government through the recognition of local legislative authority. The respondents resist the petition on the ground that the many decisions of the Supreme Court of the United States hold that the equal protection clause of the Fourteenth Amendment to the Constitution of the United States requires the legislature to be apportioned, as nearly as possible, on the one-man one-vote theory as set out in Reynolds v. Sims, 377 U.S. 533 (1964).

We think the argument of the respondents must prevail for the reasons stated below.

We state in the beginning that Sections 2 and 3 of Amendment 45 have been held unconstitutional insofar as the boundary lines of the representative districts are concerned. Yancey v. Faubus, 238 Fed. Supp. 290 (1965), and Faubus, Governor v. Kinney, 239 Ark. 443, 389 S.W. 2d 887 (1965). These decisions did not change the number of representatives and senators but merely changed the manner in which the various districts were constituted. Even if we considered both Section 3 and 4 of Amendment 45 to be entirely unconstitutional, we would fall back then upon Amendment 23 to the Constitution of the State of Arkansas. Sections 2 and 3 of Amendment 23 also provide that each county shall have at least one representative and that the senatorial districts shall not divide any county into separate districts. Therefore, Amendment 23, as it relates to the boundaries of the various districts is likewise unconstitutional in that it violates the principle of one-man one-vote. The original Article 8 of the Arkansas Constitution of 1874 provided for 100 members in the House of Representatives and 35 members in the Senate. This article provided the same as Amendments 23 and 45 that of the 100 representatives one must be elected from each county and that the senatorial districts could not be constituted in a manner to divide a county into separate districts. Likewise, Article 8 has the same infirmities as do Amendments 23 and 45.

Although a number of decisions have held that it was proper for the reapportionment authority to consider county and district lines in the formation of reapportionment plans, the cases still hold that the paramount consideration is the numerical equality of the districts. Mahan v. Howell, 410 U.S. 315 (1973). The central theme of all the United States Supreme Court decisions reviewed pertaining to reapportionment of state legislatures is that there must be a good faith effort to construct the districts in a manner as nearly as possible of equal population.

The latest decision on this subject involves the 1981 reapportionment of the Virginia legislature. The three-judge federal district court held in Cosner v. Dalton, 522 F. Supp. 350 (D. Va. 1981), that Reynolds, supra, is still the standard by which reapportionment plans are measured. The district court in Cosner held the present Virginia plan to be unconstitutional on its face. Although the case is on appeal to the United States Supreme Court, we are of the opinion that Cosner reflects the present attitude of the federal courts toward the problem of reapportionment of state legislatures. The above decision quoted Chapman v. Meier, 420 U.S. 1 (1975), as follows:

Unless there are persuasive justifications, a court-ordered reapportionment plan of a state legislature must avoid use of multi-member districts, and, as well, must ordinarily achieve the goal of population equality of de minimus variation.

The court further held that plans departing from such standards must articulate precisely why single member districts were not adopted. A review of the cases on this subject would indicate that the first consideration is that of equal population districts. The second guideline is the observation of local subdivision entities. A third guideline is that the reapportionment authority avoid multi-member districts whenever possible. Also, it is proper to consider existing legislative districts, communities of interest, natural boundaries, incumbency and geographic interests.

The 1981 Virginia plan was struck down as facially unconstitutional because the deviation among the populations of the districts exceeds the limits of toleration authorized by the equal protection clause.

We do not have before us the question of whether the population of the various districts violates the equal protection clause as mandated by the federal courts. The only matter for consideration before this court is whether county boundary lines may be traversed in the formation of legislative and senatorial districts. The answer to the question is that the Board of Apportionment may cross county lines in the formation of the districts whenever it is necessary to comply with the Fourteenth Amendment to the Constitution of the United States, Some counties in Arkansas have a population of less than 7,000 and other counties have a population well in excess of 90,000. Therefore, without any examination of the numerical numbers in the present plan of reapportionment, we must say that it is obviously necessary to deviate from county lines in order to achieve anything in the arena of equal population among the districts. Therefore, we must deny the petition.

Writ denied.


text:
    Charles BLACKMON v. STATE of Arkansas
    CR 81-42
    623 S.W. 2d 184
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981

      Richard Quiggle, for appellant.

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

The trial court denied appellant’s Rule 37 Petition wherein he had claimed ineffective assistance of counsel. On appeal it is insisted that the trial court erred in finding that counsel was not ineffective in this case. We believe the trial court was correct and affirm the judgment.

The only facts we are concerned with in this particular case are those relating to trial counsel’s representation of appellant at the trial. Without restating the facts in detail it may be fairly said that appellant now contends that his attorney was inefficient in failing to properly investigate and prepare the case for trial and in his handling of the matter during the trial. Appellant relies upon the failure of the trial counsel to call several witnesses. Primarily the witnesses would have been able to testify that the decedent was a man who always carried a knife and generally looked for trouble. It is the appellant’s contention that this testimony could have been presented to show the habits of the deceased. Another allegation relating to ineffective assistance of counsel is that a witness voluntarily appeared and then the trial counsel failed to have her subpoenaed when she indicated she would not remain for the remainder of the trial. Her testimony allegedly would have been to the effect that she knew the deceased’s habit of carrying a knife. Also, it is alleged that the attorney was negligent in not interviewing members of the various police departments in the area to determine whether the deceased had a reputation for carrying a knife and whether he had been convicted of any crimes.

The real question for determination here is whether there was effective assistance of counsel at trial. The Sixth Amendment to the Constitution of the United States guarantees an accused the right to have assistance of counsel for his defense in all criminal prosecutions. Certainly this implies effective assistance of counsel but it does not guarantee any degree of success by such counsel. The most competent and skilled counsel may sometimes lose a case. Therefore, the degree of success is not a proper gauge to determine competency. Franklin & Reid v. State, 251 Ark. 223, 471 S.W. 2d 760 (1971); Hoover v. State, 270 Ark. 978, 606 S.W. 2d 749 (1980); and Leasure v. State, 254 Ark. 961, 497 S.W. 2d 1 (1973).

Apparently the state still feels that we abide by the “farce and mockery” standard as a measure of attorney competence. On the other hand, the appellant feels we have adopted the 8th Circuit Court of Appeals’ standard. As we understand the cases, we have not adopted either of these rules. We clearly stated in McDonald v. State, 257 Ark. 879, 520 S.W. 2d 292 (1975), and Cason v. State, 271 Ark. 803, 610 S.W. 2d 891 (1981), that the “farce and mockery” standard was not to be applied literally as the measure used to determine the competence of defense counsel. We recognize that hindsight is always better than foresight. We do not consider the fact that if a defense counsel had a second chance he might handle the matter differently to be an indication of ineffective assistance of counsel. No attorney has clairvoyant power and in almost all cases a retrospective examination would indicate to the judge or the lawyer that some action taken at the trial would have been better had another course of action been chosen. We have said that bad judgment, or even good but erroneous judgment, may result in adverse effects which are not sufficient to prove ineffective assistance of counsel. Leasure v. State, supra.

We recognize that our opinions have not drawn a hard and fast rule relating to the matter of ineffective assistance of counsel. Such rule is not possible due to the variable circumstances of each case. We have held that there is a presumption of effective assistance of counsel and that the appellant must overcome this presumption and show he was prejudiced by the conduct of his counsel. We now hold that in addition to showing prejudice the appellant must show by clear and convincing evidence that the prejudice resulting from the representation of trial counsel was such that he did not receive a fair trial.

On appeal we review the trial court’s proceeding and reverse only if its holding is clearly erroneous. Williams v. State, 273 Ark. 371, 620 S.W. 2d 277 (1981). This court defers to the superior position of the trial court when credibility of witnesses appearing before the court is at issue. Jones v. State, 267 Ark. 79, 589 S.W. 2d 16 (1979). Under the facts of this case we cannot state that appellant did not have a fair trial as a result of the trial counsel’s representation. Therefore, there was no ineffective assistance of counsel.

Affirmed.


text:
    Henderson BROWN, Jr. v. STATE of Arkansas
    CR 81-43
    623 S.W. 2d 186
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981

      James L. Tripcony, for appellant.

      Steve Clark, Atty. Gen., by: Theodore Holder, Asst. Atty. Gen., for appellee.
   John I. Purtle, Justice.

This is an appeal from the denial of a Rule 37 Petition in which appellant alleged ineffective assistance of counsel.

The only point argued on appeal is that there is insufficient evidence to support the trial court’s order denying post-conviction relief. We disagree with appellant’s argument.

The motion for relief pursuant to Rule 37 of the Arkansas Rules of Criminal Procedure alleged appellant was denied effective assistance of counsel by counsel’s failure to call David Turney as an alibi witness. The appellant, the defense attorney and the proposed witness testified at the Rule 37 hearing. The witness testified that he told the defense counsel that the appellant was at his place sometime during the day of the robbery for which appellant was convicted. However, he told the attorney he could not give an exact time. In fact, he did not give the attorney even an estimate of what time of the day appellant was at his place of business. David Turney testified that he had been interviewed by an investigator for the defense counsel on two occasions and that he appeared ready to testify on the date of the trial. He further stated he was very nervous around the courthouse as he had previously been sent to the penitentiary. However, he now states that if he had been asked to give an approximate time the appellant was at his place he would have testified that appellant was at his place of business from about 9:30 a.m. until about 11:00 a.m. The robbery occurred about 10:00 a.m. across the river in Little Rock. The appellant admits that he was at the courthouse when the attorney interviewed the proposed witness and that he reluctantly agreed with the attorney’s decision to not use this witness.

The defense counsel, who was chief public defender for Pulaski County, testified that he interviewed Turney and was unable to get an estimate even as to the time appellant was at his place of business. He further stated that the witness was wearing a canvas work suit and that Turney had previously been convicted of a felony. The attorney stated as follows:

I didn’t use Mr. Turney because, based on my conversation with him, I believed his testimony would be rather vague. He could tell me only that he saw Mr. Brown that morning or something to that effect. He could give me no specific time. His criminal record and his anticipated demeanor on the stand led me to believe that he would not be a good witness. I communicated this opinion to the defendant.

The attorney testified it was always his practice to leave the final decision on v/hich witnesses to be called up to his client. He used the same procedure in this case.

We have recognized that the decision to call or not to call a witness generally is considered to be within the realm of the professional judgment of trial counsel. Swindler v. State, 272 Ark. 340, 613 S.W. 2d 91 (1981). While hindsight probably indicates this witness should have been called, when the evidence is viewed in the light most favorable to the state, as it must be, the failure to call the witness is an insufficient basis for post-conviction relief. Sheppard v. State, 255 Ark. 40, 498 S.W. 2d 668 (1973). “Mere errors, omissions, mistakes, improvident strategy or bad tactics will not. . . justify post-conviction relief.” Leasure v. State, 254 Ark. 961, 497 S.W. 2d 1 (1973).

Here, the attorney did not have all the information which is now claimed by appellant to have existed, and it further appears that the witness’s testimony was not consistent in the Rule 37 hearing. Under the circumstances of this case we do not believe that it can be said that the failure of the defense attorney to place this witness on the stand amounted to ineffective assistance of counsel.

Affirmed.

Adkisson, C.J., not participating.


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

text:
    WALT BENNETT FORD, INC. v. PULASKI COUNTY SPECIAL SCHOOL DISTRICT; Bill CANADY, Purchasing Director; Bill GLADDEN, Comptroller and Members of the School Board of Pulaski County Special School District
    81-112
    624 S.W. 2d 426
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981
    [Supplemental Opinion on Denial of Rehearing December 14, 1981.]

      Gill, Skokos, Simpson, Buford & Owen and Mitchell, Williams, Gill & Selig, for appellant.

      Henry J. Osterloh, for appellees.
   Robert H. Dudley, Justice.

Appellant Walt Bennett Ford, Inc. filed this suit in chancery court after appellee school district refused to award appellant a contract for the sale of 18 school buses. The complaint states two distinct causes of action against different defendants. The first count sounds in contract and seeks to void the contract between appellee district and the successful bidder, although the latter is not made a party. The second count is a tort suit directly against individual board members and purchasing officers of the district for an alleged tortious interference with business relations. Obviously the parties sought a prompt trial and chose not to file motions questioning pleadings, parties or jurisdiction and we decide the case only on the issues presented to us.

The pertinent facts are as follows. Appellee school district advertised for bids on 18 school buses. A number of bids in reply were received with the Jim Nabors Company, Inc. being the lowest. After the bids were opened, but before the contract was awarded, appellant filed a written protest with appellee school district contending that Nabors was not a franchised dealer and could not give a valid warranty of repairs for the vehicles, was not a licensed vehicle dealer as required by Ark. Stat. Ann. Title 75, Chapter 23, Vol. 6B (Repl. 1979), had not claimed, and was not now entitled to claim, the five percent preference for Arkansas residents pursuant to Ark. Stat. Ann. § 14-293 (Repl. 1979) and that appellant alone had submitted a written request for the preference, all of which made appellant the acceptable low bidder. Nabors was then allowed to submit a letter claiming the five percent preference and in addition was allowed to proceed as the agent of a franchised and licensed vehicle dealer, Moore Ford. Appellee school district later awarded the contract to Nabors as agent for Moore Ford and appellant filed suit to void the contract. The record does not reveal whether the contract is executed or is executory. It only reveals that at some unspecified date appellee district paid Nabors $191,605.34, but we do not know if any or all of the buses have been delivered and placed into service.

The chancellor held that appellant Walt Bennett had no standing to sue. The chancellor relied on our holdings in Arkansas Democrat Co. v. Press Printing Co., 57 Ark. 322, 21 S.W. 586 (1893) and Bank of Eastern Arkansas v. Bank of Forrest City, 94 Ark. 311, 126 S.W. 837 (1910), both holding that the low bidder on a public contract has no standing to question an award to a higher bidder, because the laws requiring competitive bidding are passed for the benefit of the public and can be enforced only at the instance of a taxpayer. See Worth James Construction Co. v. Jacksonville Water Com’n., 267 Ark. 214, 590 S.W. 2d 256 (1979). Appellant asks us to overrule those earlier decisions.

This court has the power to overrule a previous opinion, Gregg v. Road Improvement District No. 2, 169 Ark. 671, 277 S.W. 515 (1925), but it is necessary, as a matter of public policy, to uphold prior decisions unless a great injury or injustice would result. Rhea v. State, 104 Ark. 162, 147 S.W. 463 (1912). There is a strong presumption of the validity of prior decisions. Roane v. Hinton, 6 Ark. (1 Eng.) 525 (1846). Even though we have afforded the proper presumptions to our prior cases on standing we are convinced that they should be overruled. We are satisfied that continuing to deny an unsuccessful bidder the standing to sue for an alleged wrong is to minimize protection of the public interest. On the other hand, the most practical way to protect the public interest is to allow unsuccessful bidders to seek judicial review of any alleged wrong in the contracting procedure.

The better reasoning is stated in Scanwell Laboratories, Inc. v. Shaffer, 424 F. 2d 859 (D.C. Cir. 1970):

This is a powerful argument for allowing the plaintiff . . . standing to challenge the governmental action of which it complains ... .If there is any arbitrary or capricious action on the part of any contracting official, who is going to complain about it, if not the party denied a contract as a result of the alleged illegal activity? It seems to us that it will be a very healthy check on governmental action to allow such suits . . .

We hold that an unsuccessful bidder does have standing to sue for alleged wrongs and on that point overrule our prior cases of Arkansas Democrat Co. v. Press Printing Co., supra, and Bank of Eastern Arkansas v. Bank of Forrest City, supra.

Although the chancellor held that appellant had no procedural standing he also ruled that appellee should prevail on the merits. We reverse on both issues.

The trial court found that the preference act, § 14-293, was not applicable in this case. We hold that the act is applicable because it applies to contracts of “ . . . subdivisions of the state . . .” School districts are political subdivisions of the state. See Corbin v. Special School District of Fort Smith, 250 Ark. 357, 465 S.W. 2d 342 (1971).

Appellee contends that the “Arkansas Motor Vehicle Commission Act,” Ark. Stat. Ann. Title 75 — Chapter 23, Vol. 6B (Repl. 1979) is not applicable to Nabors as school buses are exempted from licensing and therefore are not motor vehicles as described in that act. The fact that appellee school district is exempt from licensing does not mean that school buses are not motor vehicles. Clearly, school buses are motor vehicles. In addition, the attempt to change retroactively Nabors’ status from that of a principal to that of an agent for Moore Ford after the bidding was completed cannot be allowed to stand.

We have devoted considerable time to the proper disposition of this first count. This court does not normally remand a case to chancery court, but rather we try the case de novo and render the decree that should be rendered below. Ferguson v. Green, 266 Ark. 556, 587 S.W. 2d 18 (1979). The usual practice is to end the controversy in the court by final judgment or by directions to the trial court to enter a final decree. Wilborn v. Elston, 209 Ark. 670, 191 S.W. 2d 961 (1946). However, this rule is not imperative and this court has the power, in the furtherance of justice, to remand any case in equity for further proceedings, including hearing additional evidence. Fish v. Bush, 253 Ark. 27, 484 S.W. 2d 525 (1972). The appellant chose not to ask for a loss of profits from the appellee school district and chose not to seek an injunction but only asks to void the contract. Because we do not know if the contract is executory or executed and because one of the parties to the contract, Nabors, is not a party to this suit, it is impossible for us to know what the final decree should be. Therefore, we remand this count to the trial court for further proceedings, including hearing additional evidence, to determine whether the requested relief can be granted.

The second count of the complaint is against the board members and purchasing officers of the school district as individuals. It is alleged that they maliciously and willfully interfered with the contractual rights of appellant. This is a direct action against alleged tort-feasors. We have long recognized such an actionable tort. Mahoney v. Roberts, 86 Ark. 130, 110 S.W. 225 (1908). We have specifically recognized that school board members might suffer liability for the commission of such a tort. Mason v. Funderburk, 247 Ark. 521, 446 S.W. 2d 543 (1969). In that case we defined the tort and its elements as follows:

The fundamental premise of the tort —■ that a person has a right to pursue his valid contractual and business expectancies unmolested by the wrongful and officious intermeddling of a third party — has been crystallized and defined in Restatement, Torts § 766, # # #
The basic elements going into a prima facie establishment of the tort are (1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted.

The appellant stated a cause of action in count two of its complaint. The chancellor rested his decision in part on a finding that appellant had no standing to maintain the suit. That ruling was erroneous because the cases on standing to sue on a public contract simply are not applicable to a direct tort action. However, the chancellor also found, upon the merits, “I have no choice but to find that the defendants [individual appellees] did not act in bad faith in rejecting plaintiff’s [appellant’s] bid.” Unless those findings of fact are clearly erroneous we will not set them aside. Rule 52, Arkansas Rules of Civil Procedure, Vol. 3A (Repl. 1979).

It is clear that Nabors was the low bidder. Appellant claimed the resident preference on its bid form and that preference would cause it to be the successful bidder. After receiving the protest the individual appellees asked Nabors if it also was an Arkansas resident and if it also paid Arkansas taxes. Nabors wrote a letter stating that it met these requirements and was an agent of Moore Ford. The individual appellees then awarded the contract to Nabors on the basis that it was the low bidder and was entitled to the same preference as appellant. That action saved money for the taxpayers. We cannot say the chancellor clearly was in error when he ruled that the appellees did not act in bad faith. We affirm the judgment in favor of the individual appellees on the tort acton.

Affirmed in part.

Reversed and remanded in part.

Purtle and Hays, JJ., not participating.

Supplemental Opinion on Petition for Rehearing delivered December 14, 1981

Robert H. Dudley, Justice.

Walt Bennett Ford, Inc., has filed a petition for rehearing. We deny that petition but choose to supplement the discussion of one issue.

The lower court found that the individual appellees were not liable for the tort of interference with business expectations. In the original opinion we affirmed that ruling and one of the reasons given was that the individual appellees did not act in bad faith. The general rule is that an improper motive or bad faith is no longer an essential part of the plaintiff’s case in the tort of interference with existing contractual relations. However, the defendant may show that his interference was privileged. Stebbins & Roberts, Inc. v. Halsey, 265 Ark. 903, 582 S.W. 2d 266 (1979). The case at bar deals with interference with a business expectation and not an existing contract. The chief difference lies in the recognition of more extensive privileges in the case of business expectations. Prosser, Torts, § 130 (4th Ed. 1971). In either case, “. . . an impersonal or disinterested motive of a laudable character may protect the defendant in his interference. This is true particularly where he seeks to protect a third person toward whom he stands in a relation of responsibility. . .” Prosser, supra, p. 943. In this case, school directors without bad faith were trying to protect the school district. This privilege to interfer, without bad faith, was clearly set out in Middlesex Concrete Products and Excavating Corp. v. The Carteret Industrial Ass’n., 37 N.J. 507, 181 A. 2d 774 (1962) as follows:

Protection of the public interest has been recognized by the text writers as affording privilege to acts of interference. Prosser, Torts, p. 749, § 6.12 (1956); Restatement, Torts (2d Ed. 1955); Harper & James, The Law of Torts, § 767, comment clause (d) (1939). We are constrained to agree with the logic of that view.

Our rule announced in Stebbins, supra, that bad faith is no longer an essential part of the plaintiff’s case in the tort of interference with contractual relations is in no manner modified or varied by our original opinion.

Purtle and Hays, JJ., not participating.


author: Robert H. Dudley, Justice.

text:
    Lester EASLEY v. STATE of Arkansas
    CR 81-89
    623 S.W. 2d 189
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981

      Wright é Chaney, P.A., for appellant.

      Steve Clark, Atty. Gen., by: Victra L. Fewell, Asst. Atty. Gen., for appellee.
   Robert H. Dudley, Justice.

This case involves the interpretation of the statutes which dealt with probation and suspension of criminal sentences in 1973. It is certified to us by the Court of Appeals pursuant to Rule 29 (1) (c) of the Rules of the Supreme Court. Ark. Stat. Ann. Vol. 3A (Repl. 1977 and Supp. 1981).

On January 19, 1974, the trial court accepted appellant’s guilty plea for having committed grand larceny on November 22,1973. The order states that appellant “... was sentenced to a period of five years, this being probated and conditioned on good behavior ...” On April 11, 1978, the State filed a petition to revoke the probation. On January 10, 1979, the probation was revoked, the appellant was sentenced to five years imprisonment and ”... execution of sentence is hereby stayed and [appellant] is placed on probation for a period of five years ...” On March 22, 1979, the State moved for revocation of the suspension of the serving of the sentence. The appellant objected and on February 3, 1981, more than five years from the date of accepting the guilty plea, the trial court revoked the suspension and ordered the appellant imprisoned.

The sentencing procedure is controlled by the statutes in effect on the date of the commission of the crime. Art. 2, § 17, Constitution of Arkansas. Taylor v. Governor, 1 Ark. 21 (1837).

In 1974 the appellant was sentenced to a period of five years and placed on probation. Ark. Stat. Ann. § 43-2331 (Repl. 1977), adopted by the General Assembly in 1973 and effective at the date of the commission of the crime, provided that the court could accept the plea, suspend imposition of sentence and place the defendant on probation. Therefore the first sentence was a valid one. After 4 years and 11 months had passed, the court still had the authority to revoke the probation and require him to serve the remainder of the sentence imposed. Ark. Stat. Ann. § 43-2332 (Repl. 1977). However, a second sentence cannot be imposed at a revocation hearing. See Canard v. State, 225 Ark. 559, 283 S.W. 2d 685 (1955).

The case of Queen v. State, 271 Ark. 929, 612 S.W. 2d 95 (1981) had a factual situation remarkably similar to the present case. The statutes in effect in 1970 and interpreted in Queen, supra, are identical to the 1973 statutes involved in the present case. In interpreting the law in effect in 1970, we said:

In 1970 Queen pled guilty to burglary and was sentenced to five years’ statutory “probation.” This probationary period was revoked in 1974 and Queen was sentenced to ten years imprisonment with the sentence suspended. This was clearly improper according to Maddox v. State, 247 Ark. 553, 446 S.W. 2d 210 (1969) and Cantrell v. State, 258 Ark. 833, 529 S.W. 2d 136 (1975). In those cases we dealt with “court probation” as imposed by the Sebastian County Circuit Court and we held in both that where the plea of guilty was accepted a later revocation could not exceed the probation period. Here, the plea was accepted and the term of probation was five years. Consequently, a later suspended sentence for ten years was improper.

We have consistently held that sentencing procedures are controlled by statute. Holden v. State, 156 Ark. 521, 247 S.W. 768 (1923); Davis v. State, 169 Ark. 932, 277 S.W. 5 (1925); Culpepper v. State, 268 Ark. 263, 595 S.W. 2d 220 (1980). The 1973 statutes applicable to this case are identical to the 1970 statutes applicable to the Queen decision, supra. The two cases are factually indistinguishable. Therefore, the Queen decision must control and this case must be reversed.

Reversed.


text:
    Charles Martin NEAL v. STATE of Arkansas
    CR 81-39
    623 S.W. 2d 191
    Supreme Court of Arkansas
    Opinion delivered November 2, 1981

      Latham ér Watkins, by: Reed E. Hundt, Washington, D.C., Patrick T. Seaver, Los Angeles, Calif., and Michael Chertoff, Washington, D.C.; and William R. Wilson, for appellant.

      Steve Clark, Atty. Gen., by: Leslie M. Powell, Asst. Atty. Gen., for appellee.
   Paul B. Benham, III, Special Chief Justice.

In 1980, Appellant was given permission to seek postconviction relief in the trial court under Criminal Procedure Rule 37 on the basis of allegations of ineffective assistance of counsel at his bifurcated trial in which he was convicted of capital felony murder in connection with a robbery and sentenced to death. Neal v. State, 270 Ark. 442, 605 S.W. 2d 421 (1980). In his petition for relief under Rule 37, Appellant requested the appointment of counsel to assist him. The trial court appointed counsel who had not represented Appellant either at the trial or during the ensuing appeals. After an evidentiary hearing, the trial court denied relief and Appellant appeals, asserting that the trial court erred in refusing to grant a continuance of the Rule 37 hearing and in concluding Appellant had not been denied the effective assistance of counsel during the conviction and penalty phases of his trial.

Because we have only found error with regard to the sentencing phase of Appellant’s trial, we are affirming Appellant’s conviction but modifying the sentence to be life imprisonment without parole unless the Attorney General elects to request a remand for a new trial.

In arriving at our decision, we were impressed by the similarity between the facts involved in this appeal and those facts present in Giles v. State, 261 Ark. 413, 549 S.W. 2d 479, cert. denied 434 U.S. 894 (1977). The closeness of the factual similarity persuades us that the results should also be similar. Consequently, we have rejected Appellant’s arguments that we should reverse the trial court and either vacate Appellant’s conviction or remand this case for a new hearing under Rule 37.

Appellant’s appeals in 1975 (259 Ark. 27,531 S.W. 2d 17) and in 1977 (261 Ark. 336, 548 S.W. 2d 135, cert. denied 434 U.S. 878) questioned the sufficiency of the evidence to support findings that Appellant’s mental capacity was not diminished to the point of insanity and that Appellant’s diminished mental capacity was not a mitigating circumstance. In each appeal, this court concluded that the evidence was sufficient to support such findings. This appeal, however, does not question the sufficiency of the evidence, but raises for the first time the question of the sufficiency of the assistance provided by Appellant’s trial counsel.

Appellant’s arguments that trial counsel failed to provide him adequate assistance make it necessary for us to focus separately on the conviction and penalty phases of the trial. Appellant’s arguments can be summarized as follows:

1. That the trial court erred in failing to continue the Rule 37 hearing in order for Appellant’s chosen counsel to be present;
2. That the trial court erroneously applied the “farce and mockery” test rather than the test of “customary skills and abilities of a reasonably competent attorney,” when determining the adequacy of trial counsel’s assistance;
3. That the trial court erroneously concluded that trial counsel adequately assisted Appellant during the conviction phase since trial counsel failed to raise the defense of diminished mental capacity, failed to present sufficient evidence of insanity, and failed to object to the introduction of Appellant’s confession; and
4. That the trial court erroneously concluded trial counsel adequately assisted Appellant in the sentencing phase, since trial counsel failed to introduce evidence or to argue about Appellant’s diminished mental capacity as a mitigating circumstance.

Appellant has not persuaded us that the trial court erred in denying postconviction relief with regard to the conviction phase. The arguments on this point are essentially that trial counsel failed to do something, but Appellant has not shown a different result would have followed if trial counsel had acted as Appellant now urges. Appellant’s confession was found to have been voluntarily made (Neal, 259 Ark. at 36,231 S.W. 2d at 22) so that any objection to its introduction questioning its validity would have been futile. At the trial, expert testimony established that Appellant was “without psychosis” but Appellant has not shown that any contrary evidence was available. Other witnesses testified that Appellant’s mental capacity was diminished but Appellant has not shown that additional testimony would have been anything other than cumulative. As in Cason v. State, 271 Ark. 803, 610 S.W. 2d 891 (1981), we think it futile to order a new trial without any showing that facts favorable to Appellant could be developed.

Appellant has also asserted error in the trial court’s failure to continue the Rule 37 hearing to permit Appellant’s chosen counsel to appear. The record reflects Appellant requested court-appointed counsel and the trial court complied with this request. A colloquy between the trial court and appointed counsel, prior to the Rule 37 hearing, reveals that a law firm located outside of Arkansas contacted the trial court and appointed counsel purporting to represent Appellant. The same firm had represented Appellant in his petition for a Rule 37 hearing, in which court-appointed counsel had been requested, but it had not appeared as Appellant’s attorney of record in the proceedings before the trial court. After appointed counsel indicated that witnesses were present to testify, the trial court refused to continue the Rule 37 hearing. Because of our decision to reduce Appellant’s sentence, we cannot say that Appellant has been prejudiced by the trial court’s action. For the same reason, we feel a new Rule 37 hearing would be futile.

Appellant has also argued the trial court erred in concluding that trial counsel adequately assisted him in the sentencing phase of the trial. We agree. During the guilt phase, evidence as to Appellant’s diminished mental capacity was introduced. That fact has different significance in the determination of Appellant’s guilt and in the imposition of a sentence once guilt has been determined. Because Appellant’s diminished mental capacity did not render him insane does not mean that Appellant has sufficient mental capacity to be able to conform his conduct to the requirements of law. This court recognized the validity of that distinction in Giles and it is equally valid here.

While the jury could have considered the evidence of diminished mental capacity in determining whether mitigating circumstances existed (Neal, 259 Ark. at 35, 531 S.W. 2d at 22), trial counsel did little to impress the jury with the significance of this evidence as mitigating against a sentence of death. The record reflects trial counsel’s attempts at introducing during the sentencing phase additional evidence of Appellant’s diminished mental capacity, but these efforts were abandoned without any real success. Also reflected is the existence of expert testimony that Appellant could have been influenced by others to commit the criminal acts with which he was charged, but this testimony was never introduced. Closing statements of trial counsel were brief and, more importantly, failed to call the jury’s attention to the significance of Appellant’s diminished mental capacity.

Regardless of whether the “farce or mockery” test or the “reasonable competence” test is applied, we have no alternative to concluding that Appellant was not adequately assisted by counsel during the sentencing phase and that the trial court erred in concluding otherwise.

We may not speculate about what a jury might have done if it had considered different combinations of aggravating and mitigating circumstances. Williams v. State, 274 Ark. 9, 621 S.W. 2d 686 (1981). Having found error in the sentencing phase of the trial, we shall follow the course charted in Giles and Williams and direct that Appellant’s sentence be reduced to life imprisonment without parole unless the Attorney General timely requests a remand for a new trial.

Adkisson, C.J., disqualified.


author: George Rose Smith, Justice.

text:
    CBM OF CENTRAL ARKANSAS, d/b/a COLLECTION CONSULTANTS, INC. v. Geneva York BEMEL
    81-106
    623 S.W. 2d 518
    Supreme Court of Arkansas
    Opinion delivered November 9, 1981

      Donald H. Bacon, for appellant.

      James R. Cromwell, of Central Arkansas Legal Services, Inc., for appellee.
   George Rose Smith, Justice.

This is a tort action by the appellee, Mrs. Bemel, against the appellant, Collection Consultants, a company that collects past-due accounts. The plaintiff asserts that the defendant’s unwarranted and overzealous attempts to collect a $402.35 balance on a hospital bill constituted, first, extreme and outrageous conduct causing Mrs. Bemel severe emotional distress, and second, a wrongful invasion of her right of privacy. Both theories were submitted to the jury, which awarded Mrs. Bemel $1,000 compensatory damages and $4,000 punitive damages. Neither award is challenged as being excessive, but three other asserted errors are argued as grounds for reversal.

First, we treat two of the points together, because there was only a general objection to the instructions, presenting no point for appellate review. ARCivP Rule 51; Capital Steel Co. v. Foster & Creighton Co., 264 Ark. 683, 574 S.W. 2d 256 (1978). The same question, however, was raised by the appellant’s motion for a directed verdict, which the court denied. We therefore consider the sufficiency of the evidence to support either theory of recovery.

Mrs. Bemel testified that the bill originated in March, 1975, when her son shot himself in an unsuccessful suicide attempt and was hospitalized. Most of the bill was paid by insurance. The remainder had been reduced by Mrs. Bemel’s payments before it was assigned to the appellant for collection. She testified that she was harassed by Collection Consultants from January to November, 1976, when the creditor brought suit in a municipal court for $272.35. During some ten months she received about 50 collection letters from the appellant. She did not keep any of the letters and does not describe them as having been offensive in any respect except in number.

Her real grievance arises from about 70 telephone calls she allegedly received during the period. She worked at her job until midnight and usually slept until about 10 a.m., but over her protests the appellant’s employees repeatedly called at her home at 7:00 o’clock or later, awakening her. There were also many calls at her place of employment, also over her objections. She testified that the calls so upset her, by causing flashbacks to her son’s suicidal attempt, that she was unable to work for 15 to 30 minutes at her office or had to go to bed crying at her home. Her son provided some corroboration.

Mrs. Bemel also testified that a person identifying himself as Bill Morgan began calling in late July, saying that he was working out of the prosecuting attorney’s office and was going to garnishee her wages. At times Morgan left his number. When she returned the call the telephone was answered with “Collection Consultants,” and she was connected with a person whose voice was that of Bill Morgan. At first Morgan called four or five times a month, but later he was calling as often as ten times a month.

The defendant’s witnesses admitted having sent letters and having made calls to Mrs. Bemel, but their records, purportedly complete, indicated that the letters and calls were comparatively infrequent. They denied any reference to the prosecuting attorney’s office, but did admit that fictitious names were customarily used by the individual collectors to avoid being called at home after working hours — one of the same harassments that Mrs. Bemel complained about. The conflicting testimony raised questions of fact for the jury to determine.

We need not consider the tort of outrageous conduct, discussed fully in the Restatement of Torts (2d), § 46 (1977), because the jury could have found a wrongful invasion of privacy. We recognized such a cause of action in Olan Mills v. Dodd, 234 Ark. 495, 353 S.W. 2d 22 (1962). In Dodrill v. Ark. Democrat Co., 265 Ark. 628, 637, 590 S.W. 2d 840 (1979), we quoted the basic principles stated in § 652A of the Restatement. This language from Comment d of § 652B supports the cause of action in the present case:

There is likewise no liability unless the interference with the plaintiff’s seclusion is a substantial one, of a kind that would be highly offensive to the ordinary reasonable man, as the result of conduct to which the reasonable man would strongly object. Thus there is no liability for knocking at the plaintiff’s door, or calling him to the telephone on one occasion or even two or three, to demand payment of a debt. It is only when the telephone calls are repeated with such persistence and frequency as to amount to a course of hounding the plaintiff, that becomes a substantial burden to his existence, that his privacy is invaded.

The appellant’s remaining contention is that Mrs. Bemel’s lawyer made an impermissible “golden-rule” argument to the jury. The appellant’s motion for a new trial submitted a transcript of the opening paragraphs of opposing counsel’s closing argument, the record ending with this language:

Now to decide this lawsuit, I think you’re going to have to put yourself in the shoes of Geneva York Bemel
Defense Counsel: Your Honor, I hate to interrupt, but Counsel’s well aware that that type of argument is improper.
The Court: Your objection will be overruled at this point. Go ahead.

There is no indication of how counsel’s argument proceeded from that point on.

We have recognized the impropriety of a golden-rule argument such as counsel’s urging the jurors to award what they themselves would take for the life of their father or husband or wife. Missouri Pac. R.R. v. McDaniel, 252 Ark. 586, 483 S.W. 2d 569 (1972). Here, however, the argument was cut off after counsel had merely said that he thought the jurors were going to have to put themselves in the plaintiff’s shoes. That bare remark falls decidedly short of being reversible error.

Affirmed.


author: Frank Holt, Justice.

text:
    Charles D. RAGLAND, Commissioner of Revenues, Department of Finance and Administration, State of Arkansas v. MILLER TRANE SERVICE AGENCY, INC.
    81-120
    623 S.W. 2d 520
    Supreme Court of Arkansas
    Opinion delivered November 9, 1981

      James R. Eads, Jr., Joseph V. Svoboda, H. Thomas Clark, Jr., Timothy J. Leathers, Kelly S. Jennings, Wayne Zakrzewski, by: Cassandra Wilkins-Slater, for appellant.

      Laser, Sharp, Haley, Young ér Huckabay, by: Joe A. Polk, for appellee.
   Frank Holt, Justice.

After an administrative hearing in March, 1979, the appellant, through its Revenue Department Hearing Board, determined that appellee owed a sales tax deficiency of $8,253.71, which included interest and a 10% penalty, for appellee’s failure to remit the 3% gross receipts tax on the sale of commercial contracts from September 1, 1975, through August 31, 1978. The appellee paid the assessment under protest and filed this action to contest the correctness of appellant’s action. The chancellor found that 75% of the taxes assessed by appellant were improper, including the interest and penalty. Appellant was ordered to repay these funds. Hence this appeal.

Appellee is engaged in the business of inspecting, servicing, and repairing commercial heating and cooling devices. There are two types of contracts. The first is an “inspection only” contract, which all parties agree is exempt from the gross receipts tax. The second, or the one in dispute, is a “Full Coverage Commercial Service Contract” whereby appellee agrees with a customer to inspect (a minimum of 3 times a year), maintain, and repair commercial heating and cooling units. The contract provides for an annual or monthly prepayment. It is agreed, inter alia, that the full maintenance agreement is designed to assure the maximum service for the efficient and economical operation of the equipment. Contract jobs under this service agreement take priority over other jobs and are guaranteed prompt action upon request. It is stipulated that the issue presented is whether the total consideration paid pursuant to this contract is subject to the 3% sales tax, Ark. Stat. Ann. § 84-1903 (c) (3) (Repl. 1980), or only that portion which relates to specific repairs. Further, if appellee is liable for any unpaid sales tax, then whether appellee’s failure to pay it is subject to a penalty as provided by the pertinent provisions of the act.

Appellant first contends that the trial court erred in finding appellee’s full coverage commercial contract can be broken down into component parts for the purposes of collecting the gross receipts tax. § 84-1903 (c) (3). The component parts of this package of services are regular inspections, maintenance and necessary repairs. The latter is covered by insurance which appellee purchases after the sale of the contract. Therefore, when appellee makes repairs, it then bills the insurance carrier and adds a 3% sales tax. The trial court found that 75% of the taxes assessed by appellant were “allocable to non-taxable inspection service and insurance.” The chancellor, however, found that the maintenance services (25%) were taxable.

Section 84-1903 (c) (3) provides for a 3% tax on gross proceeds or receipts derived from the service of “alteration, addition, cleaning, refurbishing, replacement and repair of . . . machinery of all kinds ...” Gross proceeds or gross receipts is defined in Ark. Stat. Ann. § 84-1902 (d) (Repl. 1980), which states, in pertinent part:

The term ‘gross receipts’ or ‘gross proceeds’ means the total amount of consideration for the sale of tangible personal property and such services as are herein specifically provided for, whether the consideration is for money or otherwise, without any deduction therefrom on account of the properties sold, labor service performed, interest paid, losses or any expenses whatsoever.

In Belvedere Sand and Gravel v. Heath, 259 Ark. 767, 536 S.W. 2d 312 (1976), we held that where non-taxable services (hauling charges) were included as part of the total consideration received from the sale of a taxable item (sand and gravel), such charges constituted part of the gross proceeds under § 84-1902 (d) and were subject to the tax. In Larey, Comm’r of Rev. v. Dungan-Allen, 244 Ark. 908, 428 S.W. 2d 71 (1968), the appellee argued that the incidence of the gross receipts tax should be divided between non-taxable revenue derived from professional services consultation and taxable revenue derived from taking the photographs. We said that while the consultation service alone would not be taxable under § 84-1903 (d), when coupled, however, with a taxable service where the value of the end product is enhanced, the total consideration received for the consultation and sale of the photograph is taxable. In Ferguson v. Cook, 215 Ark. 373, 220 S.W. 2d 808 (1949), we said, in reference to the definition of gross proceeds or gross receipts, “where one sells an article in the preparation of which for sale he has expended labor, which adds to its value and was necessary to make it salable, he must pay the sales tax on the price received, without deduction for the value of the labor performed.”

Here, the total consideration paid by appellee’s customers is for the package of services, i.e., inspection, maintenance and repairs, which it agreed to perform during the period covered by the contract. Maintenance and repairs of the machinery are taxable services. Inspection of the equipment is a prerequisite to the routine maintenance and repair and is an integral part of the contract. This inspection involves labor performed pursuant to the sale of taxable services; therefore, the cost of such an inspection cannot be deducted from the total amount of consideration paid for the full service contract. Appellee’s insurance coverage for reimbursement to it for repairs it made, plus 3% sales tax, was for its benefit. In summary, appellant’s claim is properly based upon the total consideration received by appellee for the sale of its package contract.

Appellant next contends that the trial court erred in finding that it should tax only those services performed by appellee which are specifically listed in § 84-1903 (c) (3). It appears undisputed that “check” and “examine,” or inspection services, provided by appellee do not fit within the appellee’s other services which are within the ambit of the sales tax statute. However, the unlisted services enhance the value of the full coverage contract and increase the marketability of the taxable services provided by appellee. Therefore, under the rationale of Belvedere Sand and Gravel v. Heath, supra; Larey v. Dungan-Allen, supra; and Ferguson v. Cook, supra, the cost of these unlisted services cannot be deducted from the total consideration received.

Appellant next argues that the trial court erred in finding that the appellee had paid the gross receipts tax due on repairs pursuant to the full coverage contract. Mr. Miller, owner of appellee, testified that the 3% tax was added to the cost of repairs when it billed the insurance carrier. However, neither his testimony nor that of Mr. Wisely, who supervised the audit by the appellant, established that the state has ever received the 3% tax from appellee or its insurance carrier. The appellee, the taxpayer, is required to collect and remit the 3% sales tax to the state. Ark. Stat. Ann. § 84-1908 (Repl. 1980).

Appellant contends that the trial court erred in disallowing its assessment of the 10% penalty which it imposed on appellee pursuant to § 84-1910 (Repl. 1960), which provides:

If any part of the deficiency is due to negligent or intentional disregard of this act or of the authorized rules and regulations of the Commissioner, but without intent to defraud, there shall be added as penalty 10 percent of the total amount of such deficiency ....

Here, the trial court found the nonpayment of taxes to be reasonable and, therefore, the penalty was improper. In Great Lakes Chemical Corporation v. Wooten, 266 Ark. 511, 587 S.W. 2d 220 (1979), we said:

As we read the statute, if the tax [compensating or use tax] is not paid when due, there is either a 10% penalty for negligent non-payment without intent to evade the tax or a 50% penalty for fraudulent non-payment with intent to evade the tax. § 84-3113 (Repl. 1960). One penalty or the other is to be assessed; so Great Lakes cannot complain about the appellee’s [Department of Finance and Administration] having imposed the 10% penalty only.

In R. L. Qualls v. Georgia-Pacific Corp., 269 Ark. 426, 602 S.W. 2d 646 (1980), we stated: "A penalty assessment may very well be essential to maintain the integrity of the taxing system.” Here, the proof indicates that the appellee has failed to pay any of the disputed 3% tax over a three year period preceding the audit. Admittedly, appellee sought or received reimbursement for a 3% sales tax from its insurance carrier based onfthe repairs it had made under its contracts. As we have indicated, there is no evidence adduced by appellee that this nor any portion of the sales tax was remitted to the state. In the circumstances, we cannot say the 10% penalty is inappropriate.

We reverse the chancellor and reinstate the finding of appellant’s Revenue Department Hearing Board.

Reversed.