text:
    B. Bryan LAREY, Commissioner of revenues v. CONTINENTAL SOUTHERN LINES, Inc. et al
    5-4325
    419 S. W. 2d 610
    Opinion delivered October 23, 1967

      Tom Tanner, for appellant.

      Smith, Williams, Friday & Bowen, and Harper, Young, Durden & Smith, for appellee.
   John A. Fogleman, Justice.

The question to be determined on this appeal is whether Ark. Stat. Ann. § 75-1251 (Supp. 1965) [Section 11, Chapter 2, Act No. 40 of the Acts of the First Extraordinary Session of the General Assembly of 1965] is constitutional. The action was brought against the Commissioner of Revenues of the State of Arkansas by appellees, all of whom are in the business of transporting passengers and goods, for hire, in interstate commerce to and through. Arkansas by motor buses which use special distillate fuels. Each of them filed reports, showing the mileage traveled, on forms prescribed by the Commissioner of Revenues of the State of Arkansas. Upon the basis of these reports, but under protest, each of the appellees paid taxes on the special distillate fuel used at the rate of 8½ cents per gallon on the number of gallons indicated by assuming that each of the appellees used one gallon for each five miles traveled pursuant to the section questioned. Appellees’ suit was to recover all that portion of the tax paid by each in excess of 8½ cents per gallon used, with interest from date of payment. They allege that each of them maintained an average consumption of ]ess than the amount determined by statute. The case was tried upon a stipulation of facts. In pertinent part, the stipulation was as follows:

“1. * * * There are intrastate carriers (bus companies) engaged in the identical business and competitive with the Plaintiffs over certain routes.
2. The plaintiffs and the intrastate bus companies operate motor vehicles which primarily use diesel engines for propulsion.
3. The intrastate bus companies pay an excise tax of $.085 per gallon on all distillate special fuels purchased by them either at the time delivered to their storage facilities for later use or when purchased from a retailer for delivery directly into the motor vehicle’s tank.
4. The Plaintiffs, as interstate bus companies, submit a monthly report to the Defendant itemizing the quantity of fuel purchased and mileage traveled in Arkansas during the preceding month. With respect to the distillate special fuel imported into Arkansas and used for operation of a motor vehicle, the Plaintiffs pay $.085 per gallon based on the presumption that their motor vehicles consume one gal-Ion of fuel for each, five miles traveled. The greater part of the fuel used is imported into Arkansas in the tanks of the vehicles.
5. All of the Plaintiffs obtain more than five miles of travel for each gallon of special distillate fuel consumed. The Plaintiff, Continental Southern Lines, Inc., maintains an average of 6.3 miles per gallon and this is representative of the fuel consumption of the Plaintiffs as a group. The intrastate carriers have comparable consumption standards.
6. An intrastate bus company which obtains 6.3 miles per gallon pays a tax of $.0135 per mile of travel. A Plaintiff maintaining the same consumption pays a tax of $.017 per miles of travel.”

The chancellor rendered judgment for appellees with interest at the rate of 6% from date of payment of the tax until they are paid. He also enjoined appellant from attempting to enforce § 75-1251 in such a manner as to result in the collection of the distillate fuel tax in an amount exceeding 8½ cents per gallon.

The third paragraph of § 75-1251 reads as follows:

“For the purpose of determining whether a distillate special fuels user is entitled to a refund or a refund credit, or owes the State of Arkansas tax on distillate special fuels used in this State, as provided hereinabove, the number of gallons of distillate special fuels used in this State shall be determined by the Commissioner of Eevenues on the basis of five (5) miles per gallon of distillate special fuels. The Commissioner may make appropriate rules and regulations to assure accuracy in the reporting of such mileage and to prevent violations thereof.”

Appellees contended and the trial court found that the section was unconstitutional in that it is arbitrary, unreasonable, a burden on interstate commerce and discriminatory against interstate carriers in violation of Article 2, § 3 and Article 16, § 5 of the Constitution of Arkansas, and Article 1, Section 8, Cl. 3, Article 4, Section 2, Cl. 1 and Amendment Fourteen, Section 1 of the Constitution of the United States.

Under the facts in this ease, we find that the paragraph above quoted from § 75-1251 is unconstitutional as a burden upon interstate commerce, in violation of Article 1, Section 8, Cl. 3 of the United States Constitution. .

There is nothing in this record or in Act No. 40 to indicate that the five mile per gallon basis was other than arbitrary. It is stipulated that an average of 6.3 miles of travel per gallon of special distillate fuel is representative of the fuel consumption of appellees and of intrastate carriers. This means that a tax of 8½ cents per gallon is paid by intrastate carrier's at the time they purchase gasoline in the state, while interstate carriers who purchase their fuel at a point outside Arkansas pay tax on the fuel used in Arkansas at the rate of 10.71 cents per gallon. Thus, whether the tax be figured upon a gallonage basis or a mileage basis, the interstate carriers pay 1.26 times the tax paid by an intrastate carrier. The only way the interstate user can avoid this inequality is by buying all his fuel in Arkansas. However desirable this might be from the standpoint of the economy of the State of Arkansas, this discrimination in favor of the intrastate operator violates the constitutional standards for interstate commerce. Halliburton Oil Well Co. v. Reily, 373 U. S. 64, 83 S. Ct. 1201, 10 L. Ed. 2d 202.

Appellant urges that since this tax is an excise tax on a privilege, the legislature may make reasonable classifications for the purpose of taxation which must be upheld by the courts unless the classification is clearly unreasonable and arbitrary aiid without just distinction as a foundation. While we agree with the general statement, appellant has not cited any case, nor do we know of any, where any court has held that a. classification based solely upon a distinction between intrastate and interstate commerce has been upheld as reasonable or appropriate. Cases such as Vaughan v. City of Richmond, 165 Va. 145, 181 S. E. 372, cited by appellant, upholding the imposition of higher license taxes on businesses of nonresidents than on businesses of residents have no application here. There the higher licenses were said to be justified because it was shown diat residents were taxed in ways which the nonresidents wholly escaped. Nonresidents of the City of Richmond who resided in the State of Virginia were charged the higher rate in that situation, so the commerce clause was not involved. To afford equal protection of the laws, required by Amendment Fourteen to the United States Constitution, such classification must rest upon some ground of difference having a fair and substantial relation to the object of the legislation so that all persons similarly situated shall be treated alike. Royster Guano Co. v. Commonwealth of Virginia, 253 U. S. 412, 40 S. Ct. 560, 64 L. Ed. 989. Equality for the purposes of competition and the flow of commerce is measured in dollars and cents and not legal abstractions. Halliburton Oil Well Co. v. Reily, 373 U. S. 64, 83 S. Ct. 1201, 10 L. Ed. 2d 202.

The commerce clause of the United States Constitution forbids discrimination whether forthright or ingenious. Best & Co. v. Maxwell, 311 U. S. 454, 61 S. Ct. 334, 85 L. Ed. 275.

The Supreme Court of the United States has held privilege taxes or license fees unconstitutionally discriminatory against interstate commerce in cases where the corresponding taxes or fees paid by those in intrastate commerce only are substantially less. Best & Com pany v. Maxwell, supra; Memphis Steam Laundry Cleaner v. Stone, 342 U. S. 389, 72 S. Ct. 424, 96 L. Ed. 436; West Point Wholesale Grocery Co. v. Opelika, 354 U. S. 390, 77 S. Ct. 1096, 1 L. Ed. 2d 1420. It has also been held that equal treatment for in-state and out-of-state taxpayers is a condition precedent to valid use taxes on imported goods. Halliburton Oil Well Co. v. Reily, supra.

This court has long recognized that privilege taxes on acts which are part of the processes of interstate commerce must be calculated so that in their practical effect they will not substantially discriminate in favor of comparable activities in intrastate commerce which compete economically with the interstate activities that are taxed. Nicholson v. Forrest City, 216 Ark. 808, 228 S. W. 2d 53.

Although our fuel tax is a privilege tax, it can be sustained as to those in interstate commerce, not as a tax, but as reasonable compensation for the use of our highways. As such, the measure of compensation exacted from an interstate carrier must have a reasonable relationship to the use which the carrier makes of the highways. Dixie Greyhound Lines, Inc. v. McCarroll, 101 F. 2d 572 (8th Cir.) affirmed 309 U. S. 176, 60 S. Ct. 504, 84 L. Ed. 683.

In an effort to sustain the classification, appellant urges that the cost of collection of the tax is greater where the interstate user is involved than it is where the intrastate user is involved. Appellant cites us no authority sustaining this position, but it is unnecessary for us to determine whether this difference might constitute a proper basis for classification since we have nothing before us to indicate that this cost bears any relationship whatever to the resulting difference in the tax collected.

We do not mean to say that any act basing the tax to be paid by one in interstate commerce upon a determination of gallonage consumption based upon a fixed mileage per gallon factor arrived at upon an appropriate factual basis would necessarily be unconstitutionally discriminatory. The determination of that constitutional question is not necessary to our decision, since under the stipulated facts, the result here is obviously an improper burden on interstate commerce.

There are two particulars in which the decree of the trial court is erroneous, and it must be modified. That decree stated that all of § 75-1251 was unconstitutional. We find no basis for this holding as to the first two paragraphs thereof. Obviously, this was inadvertently said as there is no question raised except as to the third paragraph. The court also allowed interest on the amounts to be refunded. As an attribute of sovereignty, the state is not liable for interest in any case, unless it has by statute made itself liable, or authorized a contract providing for the payment of interest. State v. Thompson, 10 Ark. 61; Jobe v. Urquhart, 102 Ark. 470, 143 S. W. 121. In the latter case, the court held a contract entered into by the Board of Commissioners of the State Penitentiary providing for the payment of interest was void and reversed and dismissed a judgment for interest. In discussing the possible moral obligation of the state to pay interest, this court .there said:

“In the next place, it does not lie within the province of the courts to speak for the State and determine and enforce her moral obligations. The courts are not the keepers of the conscience of the State. The honor and integrity of the State or sovereignty are lodged in the people — her citizens and the subjects — and in turn the honor and integrity of her people are reflected through the Legislature of the State. The people or sovereignty speak by legislative enactment, and on all questions involving the moral obligation of the State, the Legislature is the sole and exclusive tribunal to determine and adjust such matters. * * * ”

While appellant does not raise either of these questions, this is a matter of public interest. Since the trial here is a trial de novo, we may enter such judgment as the chancery court should have entered upon the undisputed facts in the record. Baxter County Bank, v. Copeland, 114 Ark. 316, 169 S. W. 1180; Pickett v. Ferguson, 45 Ark. 177. When a chancery decree grants relief to which an appellee is clearly not entitled on the record, this court will modify the decree to omit the excessive relief. Hess v. Adler, 67 Ark. 444, 55 S. W. 843. When it appears that a portion of a chancery decree is inadvertently inserted, this court may modify the decree by striking out that portion. City of Ft. Smith v. Mikel, 232 Ark. 143, 335 S. W. 2d 307. In view of the lack of power of the courts to recognize a moral obligation of the state, the action of the trial court in rendering a judgment for interest is in excess of its jurisdiction. When a trial court enters an order without jurisdiction over the subject matter, the question cannot be overlooked even if not raised. Sibley, Receiver v. Leek, 45 Ark. 346.

The decree of the chancery court is modified to declare only the third paragraph of § 11, Chapter 2, Act No. 40 of the First Extraordinary Session of 1965 unconstitutional as being in violation of Article 1, Section 8, Cl. 3 and Amendment Fourteen of the Constitution of the United States and to eliminate the clause adding interest on the recovery of each appellee at the rate of 6% from the date of payment until paid.

The decree is affirmed as modified.

      The action was instituted against Doris McCastlain, then Commissioner of Revenues, but B. Bryan Larey, her successor, was substituted as a party to the action, on his motion, on the date the decree was rendered.

      See Sparling v. Refunding Board, 189 Ark. 189, 71 S. W. 2d 182, where it is held that the tax is a privilege tax for the use of the highways.


source: Caselaw Access Project

author: John A. Fogleman, Justice.

license: Public Domain

text:
    UNITED EQUITABLE INSURANCE COMPANY v. Martha C. VIVION
    5-4317
    419 S. W. 2d 597
    Opinion delivered October 23, 1967

      Pope, Pratt, Shamburger, Buffalo & Boss, for appellant.

      Arthur O. Frankel and Donald G. R. McDermott, for appellee.
   John A. Fogleman, Justice.

Appellant seeks reversal of a judgment for $833.25, 12% penalty and attorney’s fees on a claim under an insurance policy covering hospitalization resulting from accidental injury.

Appellee, a 79-year-old lady, was residing in the home of her sister after having been in a convalescent home until February 1, 1966. She took out the policy of insurance on May 4, 1965. On February 13, 1966 she suffered an injury as the result of a fall while walking from her bedroom to the bathroom during the night. She was taken by ambulance to St. Vincent’s Infirmary at the direction of Dr. Andrew A. Pringos because of severe pain in her lower back resulting from the fall.

She remained in the hospital under care and treatment by the doctor until March 10, 1966. She was bedridden while in the hospital. Physical therapy during her hospital stay was given to enable her to again employ a walker she had previously used because of an injury unrelated to this fall. Appellee’s doctor testified that the precipitating cause of her hospitalization was her fall. In addition to a contusion of the back and loss of equilibrium, appellee suffered from shock and depression during her hospital stay.

The trial judge, sitting without a jury, found that the appellee’s injury and hospital residence were the result of an accident under the terms of the policy and gave judgment for compensation for the full period.

The policy provides for payment of benefits “in the event of hospital residence occurring solely as the consequence of direct bodily injury resulting from any accident and independently of all other causes.”

Appellant’s basic contention is that the trial court erred in allowing recovery for the last five days of appellee’s stay in the hospital. It asserts that this portion of her hospital residence was not solely the result of her fall. The testimony of all parties indicates that the primary reason for her being kept in the hospital for this period was the unavailability of a room or bed in a convalescent or nursing home.

Appellant has cited no authority for its contention that the court’s findings are contrary to the law and evidence. We have been unable to find any decision covering a similar situation. There can be no doubt, under the undisputed facts, that the incidence of the hospital residence was the consequence of direct bodily injury resulting from accident and independent of all other causes.

If the pertinent policy clause can be said to be ambiguous, we must construe it to justify a recovery if a reasonable construction will do so: Travelers’ Protective Association of America v. Stephens, 185 Ark. 660, 49 S. W. 2d 364; Metropolitan Life Ins. Co. v. Guinn, 199 Ark. 994, 136 S. W. 2d 681; Life & Casualty Ins. Co. of Tennessee v. Kinney, 206 Ark. 804, 177 S. W. 2d 768.

An obvious inference to be drawn from the testimony is that the residual consequences of appellee’s injuries required care and treatment unavailable in her home, but available in a nursing home. While appellant is not responsible for the want of nursing home accommodations, continued residence in..„the hospital appears to have been the only alternative. This is sufficient to support the findings of the trial court that hospitalization for the last five days was accrued solely as a consequence of her accidental bodily injury.

Inasmuch as the allowance of attorney’s fee and penalty hinges upon the correctness of the trial court’s action on the amount of recovery bn the policy, no question remains as to these items.

The judgment is affirmed and appellee is allowed an additional sum of $250.00 for attorney’s fee.


author: J. Fred Jones, Justice.

text:
    ARKANSAS POWER & LIGHT COMPANY v. CITY OF LITTLE ROCK et al
    5-4307
    420 S. W. 2d 85
    Opinion delivered October 23, 1967
    [Rehearing denied November 27, 1967.]

      Darrell Dover, for appellant.

      Perry Whitmore and Sam Robinson, for appellees.
   J. Fred Jones, Justice.

This is an appeal by the Arkansas Power & Light Company from an adverse judgment rendered by the Pulaski County Circuit Court, Third Division, on appeal to that court by the Power Company from an adverse decision of the Board of Adjustment of the City of Little Rock.

By municipal ordinance, the City of Little Rock is zoned into fourteen use zones or districts, ranging from “A One-family district” to “K Heavy industrial district.” By municipal ordinance any property, when newly annexed to the city, automatically falls into the “A One-family district” classification until a zoning plan of the area is prepared and adopted. Official Code of Ordinances of the City of Little Rock, Arkansas, § 43-28, subsection (d), adopted in 1937, and appearing in the record before us by stipulation, is as follows:

“Territory which may hereafter be annexed to the City of Little Rock shall be classified in the “A” one-family district immediately upon final acceptance by the city until a zoning plan of the area is prepared and adopted. The planning commission and board of directors shall proceed diligently to zone the newly annexed territory after a public hearing, of which due notice has been given.”

In 1961 a large area of land along the south side, of the Arkansas River, and west of the former city limits, was annexed by the City of Little Rock and automatically fell into the “A One-family district” classification. No affirmative action was taken by the Planning Commission and Board of Directors in zoning this newly annexed territory as provided in section 43-28 of the ordinance.

The Little Rock zoning ordinances provide for a five member board of zoning adjustment with jurisdictional power to hear and grant requests for variances in the permissible use of property in a given use zone.

Arkansas Power & Light has a franchise to furnish electric power to all of Little Rock including newly developed residential areas of western Little Rock, and including the newly annexed area south of the Arkansas River. Arkansas Power & Light transports its. electric energy at high voltage, through above ground wires or cables in the Little Rock area, and it becomes necessary throughout the transportation system, and at intervals along the transmission lines, to construct substations where the electric energy is transformed from the high voltage necessary in transportation to the low voltage necessary in safe distribution for domestic consumption. The electric energy, thus reduced in voltage, is delivered to the consumer through distribution lines radiating out from the substations, and can only be distributed in useful voltage within a limited radius of the substation. Thus it is necessary to have the substation near the center of the area to be served with electric energy through the substation.

In 1965, Arkansas Power & Light acquired, by purchase, a substation site, consisting of approximately three acres, near the Arkansas River and within the territory annexed in 1961. Arkansas Power & Light applied to the Little Eock Board of Zoning Adjustment for permission to use its property for a substation site, and the application was refused and permission denied by the Board of Review. Arkansas Power & Light appealed to the Pulaski County Circuit Court, and several property owners along a bluff overlooking the Arkansas River, and the site of the proposed substation, intervened in opposition to the proposed use by Arkansas Power & Light. The circuit court also denied the power company’s petition and Arkansas Power & Light has appealed to this court relying on the following points for reversal:

“1. There is no evidence to support the lower court’s holding that appellant is not entitled to the requested permit.
“2. The lower court erred in not weighing the evidence presented before it de novo and by instead applying an administrative review test and further erred in considering evidence not in the record.”

We do not reach the first point relied on by the appellant, as we have concluded that the decision of the trial court must be reversed on the second point.

This case presents a rather unique situation, in that it appears from the overall record, that the case may have been fully tried de novo on appeal to the circuit court, but it is quite clear that it was heard and considered by the trial court under the erroneous impression that the evidence was to be confined, and its considerations limited, to whether or not there was any substantial evidence to support the ruling of the Board of Adjustment or whether the ruling of the Board was arbitrary or capricious. The following excerpts from the rulings on admissibility of evidence throughout the trial leave no doubt as to the court’s impression on this point.

“If there had been no place other than this place I am sure the commission would have granted it, they didn’t, they refused it and that is not in the Commission Order, in other words all I cam under the law consider is whether or not the Commission was arbitrary in refusing it, not whether or not it would have cost them more or cost some other property owner more. Now they might have had several reasons for refusing it for which they would have been justified and the cost to the Power Company is not one of them.
“Reasonableness of the Power Company is not in question, it is whether the ruling of the Board is arbitrary, capricious or whatever.
“Those are the things the Court will have to take into consideration when he gets down to arriving at whether the Commission was. capricious in denying this petition.
“The way I see it the construction or non construction of a highway or express way would have nothing to do with the reason for the Board having refused the petition when it was filed. The only thing l am interested in was there any substantial evidence to sustain them or did they act arbitrarily, not whether or not there is going to be an express way.
‘ ‘ The thing I am trying to say is that the building of the express way that is not going to enter into the court’s decision as to whether or not the Board acted arbitrarily or if they don’t build the express way would have nothing to do with why the. Board overruled the petition.” (Emphasis ours.)

There is no evidence in the record that this erroneous conception was pointed out to the court during the trial of the case and there is no affirmative evidence that either party was prejudiced by the. error, but after taking the matter under advisement on briefs, the court directed a letter to the attorneys as follows:

“After a careful consideration of all the records in the above case, the evidence introduced dehors the record and the excellent briefs submitted by both sides, I have concluded that the action of the Board of Zoning Adjustments was supported by substantial evidence and that the Board should be affirmed.
“Judge Robinson will prepare precedent for judgment submitting same to Mr. Dover for his approval as to form.” (Emphasis ours.)

A precedent for judgment was prepared which contained the following language:

“After careful consideration of the entire record herein, the evidence introduced dehors the record, testimony and evidence introduced in open court, and briefs submitted by the parties, it is the finding and judgment of this Court that the action of the Board of Zoning Adjustment of the City of Little Rock, Arkansas, was supported by substantial evidence and that Arkansas Power & Light Company’s petition requesting a reversal of said Board of Zoning Adjustment’s decision should be denied.”

This precedent was approved, as to form, by the attorney for the appellant, Power & Light Co. and the attorney for the appellee, Board of Adjustment, hut it was not approved by the attorney for the intervening appellees and was not signed by. the trial court and entered of record.

The judgment that was signed by the trial court was approved as to form by the attorney for the appellee, Board of Review, and the attorney for the intervening appellees, but was not approved by. an attorney for the appellant. The judgment signed by the trial court and appealed from simply recites:

“After considering all the facts as shown by the evidence and the law applying thereto, it is the finding and judgment of this Court that the Petition should be denied.
“It is so ordered.”

This being the state of the record, we have no way of knowing whether any party to this litigation would have offered any additional, less, or different evidence than was offered, had they known the evidence was being accepted and would be considered on the merits of the case in a trial de novo, rather than in determining whether or not there was any substantial evidence to sustain the decision of the Board of Review, or whether the action of the Board of Review was arbitrary or capricious in denying the petition.

The ordinance setting up the Board of Review and defining its authority provides for appeal to the circuit court in the following language:

“Any person or persons, jointly, or severally aggrieved by any decision of the board, or any officer, department, board or bureau of the City of Little Rock, may present to the circuit court a petition, duly verified, setting forth, that such decision is illegal in whole or in part, specifying the grounds of the illegality.”

We do not imply that a municipal ordinance can limit the venue or restrict the scope of inquiry in matters on appeal from municipal departments, but in any event, this case was appealed to the circuit court. Upon appeal from the circuit court, we do not try the case de novo, hut only review the errors assigned. Fidelity Deposit Company v. Fairfield, 169 Ark. 997, 278 S. W. 658. The circuit court does, however, try cases de novo on appeal from a municipal Board of Adjustment. Ark. Stat. Ann. § 19-2830.1 (Supp. 1965). This point was very recently settled in the case of City of Little Rock v. Leawood Property Owners Association, 242 Ark. 451, 413 S. W. 2d 877, wherein we said:

“Act 186 of 1957 was amended by Act 134 of 1965 (Ark. Stat. Ann. § 19-2830.1 [Supp. 1965]), as follows:
“In addition to any remedy now provided by law, appeals from final action taken by the administrative, quasi judicial, and legislative agencies concerned in the administration of this Act may be taken to the Circuit Court of the appropriate county, wherein the same shall be tried de novo according to the same procedure which applies to appeals in civil actions from decisions of inferior courts, including the right of trial by jury.”

and in that case we held as follows:

“We therefore hold that under Act 134, above, ap-pellee was correct in its position that appeals from the Board of Adjustment to the circuit court are to be tried de novo on the same issue that was pending before the Board of Adjustment.”

For the reasons stated, we reverse this case and remand it to the trial court for a new trial, to the end that any party hereto may offer such competent evidence as may be desired on a trial de novo. We might add, however, that if it were not for the recited error of the trial court, we might well reverse this case on the evidence now before us.

Reversed and remanded.

Byrd, J., disqualified.


author: Conley Byrd, Justice.

text:
    HOUSING AUTHORITY OF THE CITY OF LITTLE ROCK, Arkansas v. Lawrence FISHER et ux
    Opinion delivered October 23, 1967
    5-4291
    419 S. W. 2d 606

      Smith, Williams, Friday & Bowen, for appellant.

      Spitzberg, Bonner, Mitchell & Hays, for appellees.
   Conley Byrd, Justice.

This is an eminent domain proceeding. Appellant, Housing Authority of the City of Little Rock, Arkansas, contends that the $161,000 award in favor of appellees Lawrence Fisher and Faye Fisher is excessive, and that the trial court erred in awarding interest on the amount in excess of the $101,081.26 deposit during the period appellees were entitled to collect rent on the property.

This action was initiated in circuit court on November 9, 1965. Upon deposit in the registry of the court of $101,081.26 as estimated just compensation, the Housing Authority was vested with fee simple title and immediate right of entry. Appellees, together with Black & White Oab Company, immediately filed motions contesting the Housing Authority’s right to take the property and requesting that the matter be transferred to equity. After the transfer to equity, the parties compromised the issue concerning the Housing Authority’s right to condemn the property by an order entered August 3, 1966, which provided:

“1. The defendants, Lawrence Fisher and Faye Fisher, are entitled to withdraw said total sum of $101,-081.26 without prejudice to their rights to have the amount of compensation to be paid by plaintiff to them for the acquisition of said parcel of real estate to be determined by the Court herein;
“2. The plaintiff has the right to acquire said parcel of real estate for the reasons and purposes set out in the plaintiff’s Complaint herein;
“3. By reason of the fact that the defendants contested the right of the plaintiff to take the above described parcel, the plaintiff did not become entitled to collect any rents becoming due from said parcel until June 1, 1966, and defendants, Lawrence Fisher and Faye Fisher, are entitled to receive all rents which accrued prior to June 1, 1966;
“4. The defendant, Black & White Cab Company, shall pay the plaintiff rent at the rate of $500.00 per month begining June 1, 1966, and ending when said defendant vacates said parcel, and said defendant shall vacate said parcel on or before November 1, 1967, unless plaintiff shall, in writing, extend the time within which said defendant shall occupy said parcel.”

The property in question is located at 114 East Markham in Block 1 of the original City of Little Rock. It is 55½ feet wide from east to west and 140 feet deep from north to south. It fronts on both Bridge and Markham Streets. The Black & White Cab Company advertising on the two-story building on the property is visible from a number of downtown businesss such as hotels, bus stations and professional office buildings.

With respect to the value of the property, appellee Lawrence Fisher testified that in his opinion the highest and best use of the property was- for the taxicab business, and that it was worth $200,000. Mr. Louis Cohen and Mr. Byron Morse were called as expert witnesses for appellees. Mr. Cohen testified that in his opinion the fair market value of the property was $166,000, based on both a comparable sales approach and an income approach. Mr. Byron Morse testified that he had considered both the comparable sales and the income approaches, but that he did not give particular weight to the comparable sales approach because of the difficulty in finding sales of comparable properties. Mr. Morse stated that the main thing he dwelt upon was the income approach, and that in his opinion the property would probably sell for $161,000. .

The Housing Authority called as its expert witnesses Mr. William A. Payne, who testified that the market value, based on the comparable sales approach, was $83,000; and Mr. James H. Larrison, who testified that the market value, based on the comparable sales approach, was $84,000.

All the expert witnesses are admittedly competent real estate operators. The testimony of every witness was to somfe extent discredited by expert testimony for the other side. The Housing Authority here intimates that a sale of property in Block 2 made by Ed I. McKinley and wife to appellees on April 1, 1965, for $55,000, is indicative of the market value of property in the area for comparable sales purposes. Of course, we can not accept this, because the record shows that the witnesses considered many sales and that some of them did not believe this sale a true arm’s length transaction. Even if it were an arm’s length transaction, it is still permissible for witnesses to consider it a bargain instead of representing the market price.

Little cross-examination was made of appellees’ witness, Mr. Byron Morse. To attack the credibility of Mr. Morse’s testimony here, the Housing Authority contends that the $1,000-a-month lease arrangement between Black & White Cab Company and the Fishers was not a bona fide transaction and that it was not representative of the rental value of the property. To substantiate its position, it points out that its witnesses estimate the rental value to be from $600 to $700 per month and that it was renting the property to the Black & White Cab Company at the time of trial for $500 per month. We find nothing in the record to show that the rental agreement between appellees and Black & White Cab Company was not an arm’s length transaction. Nor can we assume that the $500-a-month arrangement between Black & White Cab Company and the Housing Authority is any more an indication of its fair rental value than the $1,000 paid to the Fishers.

Consequently, we are unable to say that the trial court’s finding of a fair market value of $161,000 is contrary to a preponderance of the evidence.

We agree with the Housing Authority that under the record appellees are not entitled to interest on the excess judgment over the deposit during the time that they were entitled to collect rent from the property. See Arkansas State Highway Comm’n v. Muswick Cigar & Beverage Co., 231 Ark. 265, 329 S. W. 2d 173 (1959). Consequently, the judgment is modified to allow interest at the rate of 6% on the excess judgment from June 1, 1966.

The judgment is affirmed as modified.

Brown and Jones, JJ., dissent.


text:
    Sybil L. SHERMAN, Administratrix of the estate of Uriel Lambert Bearden, Jr. v. MOUNTAIRE POULTRY COMPANY, INC. et al
    5-4282
    419 S. W. 2d 619
    Opinion delivered October 23, 1967
    [Rehearing denied November 13, 1967.]

      F. C. Crow, for appellant.

      H. H. McKenzie, for appellee.
   Conley Byrd, Justice.

Appellant, Sybil L. Sherman, administratrix of the estate of Uriel Lambert Bearden, Jr., deceased, appeals from a jury verdict on interrogatories, finding that appellees, Mountaire Poultry Company, Inc., and William D. Purifoy, its employee, were not negligent in the death of Uriel Lambert Bearden, Jr., a five-year-old child.

The facts show that on January 14, 1966, Purifoy delivered a load of chicken feed to two poultry houses, the first one being south of and across the county road running by the Bearden home, and the other being to the north and somewhat behind the Bearden home. The decedent was in the Bearden home yard near a tree when Purifoy passed the home on his way to the second poultry house. As he passed, the boy waved to him. After backing the truck up to the poultry house, Purifoy found that the snorkel on his truck did not quiet reach the feed bin. Purifoy then crawled down from the top of the truck, drove the truck forward a short distance, cut the wheels to the left and backed the truck up s.o that its left side would be closer to the feed bin. While Purifoy was standing on the fender of his truck to turn on the bottom auger, he observed the decedent lying where a wheel of the truck had run over him. He ran to the house to notify the child’s parents and to use the telephone. Later, at the home of Mrs. Denton McKamie, in front of Mrs. McKamie and Purifoy’s boss, Robert Moeller, the child’s mother told Mr. Purifoy, “I don’t blame you, son, I know it was an accident.” “It was just an unavoidable accident, a terrible thing, but an unavoidable accident.”

This was Purifoy’s first trip to the poultry house where the accident occurred. There was testimony on behalf of appellant that it was the boy’s custom to get the feed tickets from the truck drivers.-The boy’s father testified that on this occasion, after the truck was first backed up to the poultry house, the hoy rode his tricycle down a path toward the truck; that after the truck started up the second time he saw his son ride his tricycle in front of the truck in an attempt to return to the house; and that a pile of dirt obscured his view thereafter. Purifoy testified that he did not observe the boy at .any time after he waved to him at the house, some 196 feet from the place where the boy was subsequently found. The record reflects that a three-foot high object within ten feet of the truck would not be visible to the driver.

After review of the record, we are unwilling to say that there is no substantial evidence to support the jury’s verdict.

Appellant contends that it was error to permit Mrs. McKamie and Mr. Moeller to testify that Mrs. Bearden told Purifoy it was an unavoidable accident. We have consistently held that statements in the nature of an admission by a party are admissible as original evidence. Bullington v. Farmers’ Tractor & Implement Co., Inc., 230 Ark. 783, 324 S. W. 2d 517 (1959). The authorities have extended this to admissions or declarations against interest made by a person who is not a party of record but who is a real party in interest, such as Mrs. Bearden in the instant case. Isley v. McClandish, 299 Ill. App. 564, 20 N. E. 2d 890 (1939), 31A C. J. S. Evidence § 320. Appellant relies on Coca-Cola Bottling Co. of Southwest Ark. v. Carter, 202 Ark. 1026, 154 S. W. 2d 824 (1941), as holding that such testimony is not admissible, hut we point out that in that case the truck driver whose admission was put in evidence was not a party of record, nor did he hold a pecuniary interest such as that of Mrs. Bearden in this case.

Error is also assigned by appellant to the trial court’s failure to give appellant’s instruction on res ipsa loquitur. As we pointed out in Chiles v. Fort Smith Commission Co., 139 Ark. 489, 216 S. W. 11 (1919), the presumption — i. e. res ipsa loquitur — arises from the inherent nature and character of the act causing the injury. Presumptions arise from the doctrine of probabilities. The future is measured and weighed by the past and presumptions are created from the experiences of the past. Thus when a thing that causes injury is shown to be under the management of the defendant and the accident is one which in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence in the absence of explanation by the defendant that the accident arose from a want of care.

While a claim for injuries to a small child arising from the use of a vehicle is always complicated by the rule that a child of tender years can not be guilty of negligence, we can not say that every accident such as that involved here is one which experience teaches us will arise from a want of care on the part of the driver. This is a much different situation from that involving a vehicle leaving a roadway generálly traveled by vehicles and injuring a pedestrian, or that in which a vehicle runs through a board fence and injures an unsuspecting pedestrian on the other side of the fence. Consequently, we hold that the trial court properly refused appellant’s res ipsa loquitur instruction.

Appellant argues a number of other points on appeal, but from the record we find that either she did not object at the time the matter transpired in the trial court, as required by Ark. Stat. Ann. § 27-1762 (Repl. 1962), or they were matters dealing with damages, making such errors harmless in view of the jury’s finding of no negligence.

One such point has to do with the courtroom behavior of a beautiful, mature young woman, apparentiv Purifoy’s wife; but the record is absolutely silent as to any such conduct and we have only appellant’s statement in the brief.

We readily admit that this case presents one of those close factual situations in which we are permitted only to ascertain whether there is substantial evidence to support the jury verdict, and are not at liberty to determine where the preponderance of the evidence might. lie. Consequently, upon the whole case and after a thorough search of the record, we find that the judgment must be affirmed.

Brown, J., disqualified.


text:
    Solomon Jerome SMITH Jr. v. Billy A. PUTERBAUGH
    5-4322
    419 S. W. 2d 594
    Opinion delivered October 23, 1967

      G. E. Smuggs, for appellant.

      L. Weems Trussell, for appellee.
   Conley Byrd, Justice.

Appellant Solomon Jerome Smith Jr.’s appeal from an order of the trial court overruling his demurer to a counterclaim filed against him by appellee Billy A. Puterbaugh, in the nature of an action for malicious abuse of process, is dismissed for lack of an appealable order. Coffelt v. Gordon, 238 Ark. 974, 385 S. W. 2d 939 (1965).


text:
    C. H. SCOTT v. Loma Beatrice RUTHERFORD
    5-4333
    419 S. W. 2d 595
    Opinion delivered October 23, 1967

      Guy H. Jones, and Phil Stratton, for appellant.

      A. F. House, for appellee.
   Conley Byrd, Justice.

Appellant, C. H. Scott, appeals from an order of the trial court sustaining the demurrer of appellee, Loma Beatrice Rutherford, to a complaint in ejectment.

The complaint as amended, together with the attached documents, alleges that appellant, through J. H. Mize, holds an undivided 1/5 interest in the lands involved. The allegation regarding the deed from appellee to J. H. Mize is as follows:

“That defendant has admitted execution of said deed to plaintiff’s predecessor in title; defendant has admitted acknowledgment of said deed conveying the lands described in the original complaint herein to plaintiff’s predecessor in title; for an amendment to his orginal complaint herein plaintiff alleges that defendant delivered said deed to her agent and brother, Keith Rutherford, with instructions to him to deliver said deed to the Union National Bank and there to be held by said bank and delivered during regular banking hours on or .before February 5, 1960, to Oresta Wilkins, agent, for plaintiff’s predecessor in title, upon payment of $5,000.00 therefor; that a letter addressed to Oresta Wilkins and signed by Keith Rutherford is attached hereto as Exhibit ‘A’ as evidence of the circumstances giving rise to the deposit of said deed in escrow with said bank; that a facsimile of the receipt of said deed by said bank is attached hereto as Exhibit ‘B.’
“That subsequent thereto and before the close of regular banking hours on February 5, 1960, said deed was surreptitiously recovered from said bank by one of defendant’s attorneys; that said deed was then mutilated by removal of the signatures thereon; that defendant has admitted that said deed is at this time in possession of her attorneys; that said attorney's have promised the court that the original deed would be produced in lieu of the facsimile heretofore produced by defendant which deed has been made a part of the record and is adopted by way of amendment to the original complaint herein.”

Exhibit A, a letter from Keith Rutherford, a brother of appellee, to Oresta Wilkins, reads as follows:

“This will confirm our recent conversations pertaining to the receipt that you and I secured from Mrs. White, an employee of the Union National Bank, Little Rock, Arkansas, in acknowledging the .deposit of a Warranty Deed executed by Miss Loma Rutherford, my sister, to J. H. Mize, Grantee for her one-fifth interest in the J. H. Rutherford’s estate. Deed deposited on February 3, 1960.
“This Agreement was consummated at the home_ of my sister, Miss Loma Rutherford, and her signature was witnessed by me, Keith Rutherford, her brother C. H. Rutherford, and yourself, and notarized by you. C. H. Rutherford and I, after a thorough discussion of this proposal with our sister told her that we thought it a fair and equitable proposal but that she should make up her own decision in accepting it. She did sign the instrument in good faith. I might add that you, as the purchaser, in behalf of J. H. Mize, Grantee, that you did not use any pressure of any character.
“You and I deposited the Warranty Deed on February 3, in the Union National Bank, and of course, I was acting as my sister’s agent, and followed her instructions by accompanying you to the hank. I specifically told Mrs. White to deliver this Warranty Deed to you, upon payment of $5,000.00, as first payment on purchase of her interest during regular hanking hours by February 5th, 1960.
“When you telephoned me on February 5, 1960, and told me that you had tendered the $5,000 payment, per agreement, but was told that the Union National Bank had delivered the Deed to Mr. Harry Meek, Attorney,. I was surprised and embarrassed, as this agreement of sale was entered into in good faith and should have been completed.
“I do hope that this statement will .assist you in clarifying any unfavorable feeling that Mr. Mize might have had against you, because of the manner in which this agreement was violated.
“I want to emphasize the fair and equitable manner which you have .always carried out your promises to me.”

Exhibit B, attached to the amended complaint, is a receipt used by Union National Bank when accepting items for collection. The receipt shows the total amount to be $10,0.00, payablé $5,000 cash in hand and $1,000 annually. On its face is this notation: “This Receipt is NOT NEGOTIABLE and is accepted subject to the rules of the Union National Bank governing Collection Items.”

In ruling on appellee’s demurrer and alternative motion to transfer to equity, the trial court properly offered to transfer same to equity before ruling on the demurrer. However, on appellant’s objection to the transfer to equity, the trial court ruled that the complaint failed to state a cause of action in ejectment.

Under Ark. Stat. Ann. § 34-1401 et seq (Repl. 1962), the exhibits attached to the complaint, as required by § 34-1408 to show plaintiff’s title in an ejectment action, are part of the pleadings, Jones v. Harris, 221 Ark. 716, 255 S. W. 2d 691 (1953).

Although it is true that appellant alleged as a conclusion that the bank was an escrow agent from whom the deed was surreptitiously recovered, we agree with the trial court that the facts pleaded do not show legal title in appellant on which he can recover in ejectment. We have consistently held that in ejectment a plaintiff must recover on the strength of his own title and not on the weakness of his adversary’s title, McCrory School Dist. v. Brogden, 231 Ark. 664, 333 S. W. 2d 246 (1960), and that the owner of an equitable title can not maintain an action in ejectment, Percifull v. Platt, 36 Ark. 456 (1880). In such case the owner of an equitable title is required to go into a court of chancery to secure the recognition and assertion of his title. Maupin v. Gaines, 125 Ark. 181, 188 S. W. 552 (1916).

Appellant, to sustain his argument that the complaint was sufficient against the demurrer filed, relies on Shreve v. Carter, 177 Ark. 815, 8 S. W. 2d 443 (1928). However, in Shreve v. Carter it was pointed out that the complaint in equity was very loosely drawn and that a motion to make more definite and certain, if it had been filed, should have been sustained. Here appellee’s motion asking that appellant comply with Ark. Stat. Ann. § 34-1408 (Repl. 1962) by attaching the muniments of title upon which he relied took the place of a motion to make more definite and certain, and the result thereof clearly shows that Union National Bank received the deed from appellee for collection purposes. The receipt certainly refutes appellant’s position that the bank was acting as agent for appellant’s grantor, J. H. Mize.

Affirmed.


author: Carleton Harris, Chief Justice.

text:
    Glen D. CHENOWITH d/b/a Russellville Livestock Sale v. BANK OF DARDANELLE
    5-4304
    419 S. W. 2d 792
    Opinion delivered October 30, 1967

      Laws & Shulze, for appellant.

      Mobley & Bullock, for appellee.
   Carleton Harris, Chief Justice.

Four checks in the amounts of $3,800.00, $3,000.00 (these checks being dated. January 13, 1966), $1,242.55 and $155.00 (these checks being dated January 14, 1966) were drawn on the Citizens Bank of Pottsville by Glen D. Chenowith, appellant herein, made payable to Homer Parham. These checks were all deposited in the Bank of Dardanelle by Par-ham, where he had an account, and were forwarded on to the correspondent bank in Little Bock. “When they reached the Pottsville Bank, this bank refused payment, noting insufficient funds on the two larger checks, and “Bank closed for examination” on the two smaller ones. The correspondent bank notified the Bank of Dardanelle by wire or telephone call that the checks were being returned. Thereupon, the Bank of Darda-nelle, appellee herein, examined Parham’s balance, and found that he had on deposit in excess of $6,800.00; a hold order of $6,800.00 was placed on Parham’s account so that when the unpaid checks were returned to Darda-nelle, they would be covered. In the meantime, Parham wrote a check to Chenowith, drawn on the Bank of Dardanelle, for $6,800.00, and this check was presented for payment in the Dardanelle Bank after the bank had been notified that the $3,800.00 and $3,000.00 checks' had been turned down, but before those checks were actually forwarded to the Dardanelle bank. When this $6,-800.00 check was presented, the bookkeeper at the Bank of Dardanelle mistakenly believed that the purpose of the hold order was to cover this $6,800.00 check, and, under this belief, the hold order was removed and the $6,800.00 check was paid. When the two checks (already turned down by the Pottsville hank) arrived at the Dardanelle hank, there were no funds in Parham’s account to charge hack. A hank employee, not knowing that the hold order had been removed, and that Parham no longer had sufficient funds on deposit to cover a chargeback, mailed both checks to Parham with a notice advising the latter that the two unpaid checks would be charged back against his account. The bank was unable to collect the $6,800.00, and accordingly instituted suit in the Pope County Circuit Court against Parham and Chenowith for the amount of the four checks. At the conclusion of appellee’s evidence, appellants moved for a directed verdict, and this motion was denied. At the conclusion of all the evidence, the court again denied a motion for directed verdict, and the case was submitted to the jury. The jury returned a verdict of $4,098.70 against Chenowith, and a like amount against Parham. From the judgment entered in accordance with this verdict, Chenowith brings this appeal. Parham does not appeal from the judgment rendered against him. Three points are alleged for reversal,, but since Point 2 controls the litigation, there is no need to discuss the other contentions. Appellant’s Point 2 alleges that the court erred in refusing to give a directed verdict for the appellant, at least insofar as the $3,000.00 and $3,800.00 checks are concerned.

This case is governed by the provisions of the Uniform Commercial Code. Ark. Stat. Ann. § 85-3-603 (Add. 1961), inter alia, provides as follows:

“(1) The liability of any party is discharged to the extent of his payment or satisfaction to the holder even though it is made with knowledge of a claim of another person to the instrument unless prior to such payment or satisfaction the person making the claim either supplies indemnity deemed adequate by the party seeking the discharge or enjoins payment or satisfaction by order of a court of competent jurisdiction in an action in which the adverse claimant and the holder are parties. This subsection does not, however, result in the discharge of the liability.
(a) of a party who in bad faith pays or satisfies a holder who acquired the instrument by theft or who (unless having the rights of a holder in due course) holds through one who so acquired it;”

Parham testified that he was notified by John Hamilton, Vice-President of the Dardanelle bank, by phone call that the Chenowith checks were not good, and that something would have to be done about them. Parham stated that he would have to get in touch with Cheno-with. Hamilton advised that he (Parham) had around $18,000.00 in the bank, and the banker requested that he be allowed to deduct these bad checks from that amount. Parham approved this procedure, and subsequently received the two checks in the mail. A few days later, Hamilton called back, and told him to come over to the bank. Parham complied with the request. He found Hamilton somewhat upset, the latter stating that the bank examiners would be in, wanting Parham to sign a “paper”; Parham signed a note for something over $11,000.00 Parham and Chenowith went back the next day, and according to the former, Hamilton informed him that the amount wasn’t as much as originally thought, and had him sign a new note. This note was in the amount of $8,847.55, and included the four cheeks here involved upon which payment had been refused. Parham insisted that the notes were signed at Hamilton’s request. 'The banker, however, testified to the contrary, i. e., he said that the suggestion had been made by Parham. Hamilton stated that Parham said, “I sure don’t want the bank to be in any jam on my account, and I don’t want the bank to lose on this. Just let me sign something to take care of it. Just let me sign a note.” Whereupon, Hamilton prepared a demand note, which Parham signed. According- to the banker, the note was not even filed; he simply “pitched” it into a box. When asked what the note was for, Hamilton replied, “Nothing whatever. It was never recorded in onr books at all. The note was not carried through the bank in any way.” The purpose of obtaining the note is never made clear, though it certainly would appear that it could only have been for the purpose of placing the bank in a position to, at some time in the future, collect its money for the checks that had not been paid. The testimony does not reflect that Hamilton even asked Parham for the checks. Chenowith was present when Parham signed the note.

The note was signed on January 25, and Chenowith testified that, on January 28, he settled the checks with Parham; at that time, Parham returned the checks to appellant. The settlement was reached largely on the basis of the fact that each man owed the other different sums of money for various transactions, and Chenowith stated that, after all credits had been allowed by each, Parham owed him $272.00. Parham’s testimony is not at all clear. He first said that they had not settled; he subsequently said that their accounts were settled within a few hundred dollars, not more than $300.00, and if Chenowith said $272.00, that amount was probably correct.

Appellant contended that his liability was discharged under the provisions of § 85-3-603, heretofore quoted, since he fully satisfied the amount of these checks with the holder (Parham). The Circuit Judge, however, denied the motion for directed verdict, because Chenowith was with Parham at the bank when Hamilton advised that the checks were unpaid. This ruling was erroneous. It will be noted that the statute says that the liability of the party is discharged “even though it is made with knowledge of a claim of another person to the instrument,” unless the claimant (the bank) supplies indemnity deemed adequate by the party seeking the discharge (Chenowith) or enjoins payment or satisfaction by court order in an action in which the adverse claimant (Chenowith) and the holder (Parham) are parties. No indemnity was supplied, nor did the bank, in filing its suit, seek an injunction, as provided by the statute. It is also asserted by appellee that Chenowith and Parham were acting in bad faith, i. e., they knew the checks had not been paid at the time they made this settlement. Appellee, in its brief, asserts that Parham was nothing more than a bailee, and his conduct amounted to a conversion of the checks “to his own use or a larceny by bailee, and accepting them with knowledge of the circumstances, Chenowith participated in the conversion or larceny and was nothing more than an accessory thereto.”

Under the statute, Chenowith would not have been discharged from liability if he paid or satisfied a holder “who acquired the instrument by theft or who holds through one who so acquired it,” but the commissioners’ comment with reference to Subsection (1) makes clear that the question of good or bad faith has nothing to do with liability. That comment is as follows:

“Subsection (1) changes the law by eliminating the requirement of the original Section 88 that the payment be made in good faith and without notice that the title of the holder is defective.”

Of course, Parham did not steal the check, and it might also be mentioned that the complaint does not charge that Chenowith and Parham entered into a conspiracy to defraud the bank.

Appellee also argues, as a matter of supporting its judgment, that Chenowith and Parham had not completely settled their financial transactions with each other (this contention being made on the basis of Parham’s testimony), and since they had not fully settled, Cheno-with’s liability had not been discharged. We disagree. Whether the entire indebtedness between the men had been settled is immaterial here, for it is admitted that the cheeks had been turned over to Chenowith by Par-ham, who had become the holder, having been sent the checks by the bank. Thus, Chenowith had settled this indebtedness with Parham.

Of course, the checks were sent back to Parham by the bank through error, but, under the quoted section of the Commercial Code, this is of no aid.

As to the two smaller checks, we think without going into detail, that the appellant is liable. Succinctly, this conclusion is reached because these cheeks, though not paid, were not returned by the bank to Parham, and appellee accordingly remained the holder of those checks. Being the holder, it had a right to proceed against Chenowith.

In accordance with the reasoning herein set out, we hold that the court erred in not directing a verdict for appellant on the $3,800.00 and $3,000.00 checks, and the judgment is reversed to that extent. There was no error in that part of the judgment covering the $1,242.55 and $155.00 checks. The cause is therefore remanded to the Circuit Court, with instructions to enter a judgment not inconsistent with this opinion.

      The two smaller checks are not affected by the controlling statute in this litigation, and will be treated separately in this opinion.

      Both Chenowith and Parham were engaged in the business of the purchase and sale of livestock, and they frequently sold and bought cattle from each other.

      There were other checks upon which payment had been refused, besides the four involved in this litigation.

      Under the Uniform Commercial Code, “Part 2 — General Definitions and Principles of Interpretation, [85-1-201] (20) ‘Holder’ means a person who is in possession of a document of title or an instrument or an investment security drawn, issued or indorsed to him or to his order or to bearer or in blank.”


author: George Rose Smith, Justice. John A. Fogleman, Justice,

text:
    PULASKI FEDERAL SAVINGS & LOAN ASSOCIATION et al v. Conway Lee CARRIGAN et al
    5-4312
    419 S. W. 2d 813
    Opinion delivered October 30, 1967

      Wright, Lindsey & Jennings, for appellants.

      Owens, McHaney & McHaney, for appellees.
   George Rose Smith, Justice.

This is a suit by the appellees, Carrigan, his wife, and their mortgagee, to enjoin the appellants from levying execution upon Lot 23 of Chicot Terrace Addition to Little Rock, which is owned by the Carrigans. The chancellor granted the injunction, holding that the deficiency judgment under which the appellants were about to proceed did not constitute a lien against Lot 23. That is the issue here.

All the facts are stipulated. Lot 23 was formerly owned by Roy Stillman. On December 9, 1965, Stillman and Mr. and Mrs. T. A. Hale executed a written offer-and-acceptance agreement by which Stillman agreed to sell the property to the Hales. On March 23, 1966, Pulaski Federal obtained a personal judgment against Stillman and his wife in a foreclosure suit involving other property. That property was sold pursuant to the decree on May 5, 1966, leaving a deficiency judgment for $2,644.07, which was later assigned to the other appellant, Southern Mortgage Insurance Corporation.

On April 20, in the interval between the entry of the foreclosure decree and the entry of the deficiency judgment, Stillman performed his contract with the Hales by conveying Lot 23 to them by warranty deed. Later on the Hales sold the land to the Carrigans. This suit for injunctive relief was brought by the Carrigans when the appellants levied execution on Lot 23 under their deficiency judgment and served notice that the property would be sold by the sheriff.

The chancellor was right. A judgment lien attaches only to the judgment debtor’s interest in the land, “and, if that interest be subject to any infirmity or condition by reason of which it is eliminated or ceases to exist, the lien attached thereto ceases with it. ... A judgment lien is subject to existing equities of third parties in the land.” Snow Bros. Hdw. Co. v. Ellis, 180 Ark. 238, 21 S. W. 2d 162 (1929).

More than three months before Pulaski Federal obtained its foreclosure decree Stillman had bound himself to sell Lot 23 to the Hales. There is no contention that the Stillman-Hale contract was anything other than a good-faith transaction. Hence Pulaski Federal’s judgment lien was subject to that contract and was defeated when Stillman conveyed the lot to the Hales.

The entire thrust of the appellants’ argument is that the Stillman-Hale contract was not a present sale of the land, because the agreement contemplated that various steps were to be taken in the future, such as the furnishing of an abstract of title, the obtaining of FHA financing, the execution of a deed by Stillman, the giving of a note by the Hales, and so forth. No matter. Contracts for the sale of land nearly always leave one or more steps, such as the examination of title, to be taken in the future, but the seller is nevertheless bound to perform his agreement. See McClain v. Alexander, 235 Ark. 64, 357 S. W. 2d 1 (1962); Bushmeyer v. McGarry, 112 Ark. 373, 166 S. W. 168 (1914); Meyer v. Jenkins, 80 Ark. 209, 96 S. W. 991 (1906). If Stillman had attempted to evade his obligation the Hales could have obtained specific performance. It follows that the Hales’ equitable rights were superior to Pulaski Federal’s subsequent judgment lien, because, as we have said, that lien was “subject to existing equities of third parties in the land.”

Affirmed.

Fogleman, J., dissents.

John A. Fogleman, Justice,

dissenting. I am unable to agree with the result reached by the majority in this case. I agree that a judgment lien attaches only to the judgment debtor’s interest in land. I am not in agreement as to what that interest was under the facts in this case. I do not believe that this court has extended the rule that a vendor of real estate retains a legal,title only to secure the payment of the purchase money, while the equitable title is in the purchaser, making the vendor’s property immune from execution on a judgment rendered after a sale of the property under the contract in 'chis case. It seems to me that the Arkansas decisions have gone quite a long way in this field — further than in most other states. I feel that this case is an undesirable extension of that rule, permitting an owner of real properly to facilitate putting assets in the form of real estate beyond the reach of creditors. Our rule is a rule of property, as far as it has gone. I would not disturb the rule, but where the extension of such a rule to an entirely new set of facts is concerned, we are not bound by the rule of property and should endeavor to make our statutes mean what they say. The mere fact that ours is a minority rule should not require us to limit the application of a rule of property, but it should cause us to carefully examine any extension that we are asked to make. I find no difficulty in distinguishing this case from those in which we have applied the rule, and think that there is no sound reason why we should not hold this property subject to the judgment lien in this case.

I do not believe there is any Arkansas case wherein an executory contract with a forfeiture clause, in which the vendor does not sell, but only agrees to sell and the purchaser does not purchase, but only agrees to purchase, and in which the purchaser is not put in possession, has been held to create such an estate in the purchaser as to deprive the vendor of such title as to make the property subject to a judgment lien. The holding of the majority enables an embarrassed debtor to put real estate beyond the reach of creditors and, thus, make the collection of just debts difficult. It unnecessarily enables such a debtor to convert real estate into cash so that it is at least difficult for the creditor to reach. I see no valid reason why the interest of Stillman in- this property should not be subjected to the lien of the judgment, subject, perhaps, to the right of the contracting purchaser to have paid the purchase price to an execution purchaser and demanded a deed, or to have paid the judgment debtor and withheld the amount paid from the balance of the purchase price. The abstract of title would have revealed the judgment to the purchaser.

Our statute makes all real estate whereof the defendant was “seized in law or equity” on the day of rendition of the judgment subject. to execution. Ark. Stat. Ann. § 30-201 (Repl. 1962). “Seize” means: “To put in possession, invest with fee simple, he seized of or in, he legal possessor of, or he holder in fee simple.” Black’s Law Dictionary, 4th Ed. Possession is the prime factor of seisin. See Black’s Law Dictionary, 4th Ed., page 1524. Although I think that Stillman was seized both in law and in equity of the real estate in question, I do not think that it can he said that he was not seized in law. His possession of the property, without any actual sale or conveyance, should make this property subject to execution.

I submit that the rule applied by the majority grew, out of decisions in which a bond for title, not an execu-tory contract with a forfeiture clause, was involved.

The entire concept of the fictional relationship of mortgagee and mortgagor ascribed to vendor and purchaser, on which the rule is based, arose out of bonds for title, something entirely different from the execu-tory contract of sale with a forfeiture clause, such as we have here. See Smith v. Robinson, 13 Ark. 533. The legal fiction has been applied to executory contracts of sale where possession was given Under the contract. Williams v. Baker, 207 Ark. 731, 182 S. W. 2d 753.

The bond for title, once in common use in conveyancing when lands were sold upon credit, (See Kelly v. Dooling, 23 Ark. 582; Sehearff v. Dodge, 33 Ark. 340) has fallen into disuse.

The common form of the bond for title recited that the vendor had bargained and sold the real estate to the purchaser and would deliver a proper deed upon payment of the balance of. the purchase price. See Arkansas Form Book, Stayton; Smith v. Robinson, 13 Ark. 533. On the other hand, the vendor in an ordinary contract for sale of real estate agrees to sell and the purchaser agrees to buy. It is implicit in the bond for title that the entire transaction shall be as complete as if there had been a conveyance by deed. Smith v. Robinson, supra. Generally, possession of the land involved was delivered to the purchaser under a bond for title, and it was held that an action for ejectment against a defaulting purchaser would lie in favor of a vendor, at least until the adoption of our statute permitting equitable defenses to be interposed at law. Smith v. Robinson, 13 Ark. 533; Refeld v. Ferrell, 27 Ark. 534; McGehee v. Blackwell, 28 Ark. 27; Cleveland v. Aldridge, 94 Ark. 51, 125 S. W. 1016; Higgs v. Smith, 100 Ark. 543, 140 S. W. 990; Williams v. Baker, 207 Ark. 731, 182 S. W. 2d 753; Weaver v. Gilbert, 214 Ark. 800, 218 S. W. 2d 353. A bond for title may be distinguished from an executory contract of sale with forfeiture clause in other ways.

The bond for title was something more than an execu-tory contract to sell. It imported a present sale, which passed the ownership and beneficial interest in the land to the purchaser, usually accompanied with possession or the right of possession as against the vendor. Moore & Cail v. Anders, 14 Ark. 628; Harris v. King, 16 Ark. 122; Maxwell v. Moore, 18 Ark. 469.

Upon default of vendee, vendor must proceed to foreclose the purchaser’s equity of redemption under a bond for title, but not under an executory contract for sale with forfeiture clause. Smith v. Robinson, supra; Newsome v. Williams, 27 Ark. 632; White v. Page, 216 Ark. 632, 226 S. W. 2d 973.

A default under a bond for title does not effect a forfeiture. Fairbairn v. Pofahl, 144 Ark. 313, 222 S. W. 16. An executory contract to sell with a forfeiture clause does. Harrison v. Mobley, 211 Ark. 772, 202 S. W. 2d 756; White v. Page, supra.

A vendee under a bond for title may encumber or alienate the land, subject to the lien for the balance of the purchase money. Smith v. Robinson, 13 Ark. 533.

The vendee under a bond for title is liable for taxes assessed on the lands after the sale Hall v. Denckla, 28 Ark. 506.

The purchaser under an executory contract where purchaser “agrees to purchase” is not liable for such taxes, but vendor is until the date the sale is consummated by payment and execution of deed. Tate v. Ellis, 201 Ark. 1185, 147 S. W. 2d 34.

A vendee holding a title bond from the owner may support an action to quiet title and recover possession from an adverse claimant. Norman v. Pugh, 75 Ark. 52, 86 S. W. 833. He may also devise it by will. Stubbs v. Pitts, 84 Ark. 160, 104 S. W. 1110.

It appears that it was first held by this court that the interest of the vendor who had given a bond for title was not subject to execution in Strauss v. White, 66 Ark. 167, 51 S. W. 64. In that case, the vendee had been placed in possession of the land before the judgment was rendered in favor of the execution purchaser. This court took this possession into consideration in arriving at the result, holding that the vendee’s possession was notice to the judgment plaintiff and execution purchaser of the title or claim under which the vendee held.

Virtually all of the cases in which the bond for title is credited with creation of a mortgagor-mortgagee relationship with the resulting legal fiction as to title show clearly that the purchaser was put in possession or had the right to possession. See e. g., Moore & Cail v. Anders, 14 Ark. 628; Maxwell v. Moore, 18 Ark. 469; Lewis v. Boskins, 27 Ark. 61; Hall v. Denckla, 28 Ark. 506; Garrett v. Williams, 31 Ark. 240; Roach v. Richardson, 84 Ark. 37, 104 S. W. 538; Hill v. Heard, 104 Ark. 23, 148 S. W. 254, 42 L.R.A. (n.s.) 446; Davie v. Davie, 154 Ark. 633, 18 S. W. 935; Alexander v. Mason, 216 Ark. 367, 225 S. W. 2d 680.

As a matter of fact, some of them hinge the legal fiction that the purchaser becomes the equitable owner of the land and the vendor holds the legal title only as security for the payment of the balance of the purchase money, at least in part, upon the purchaser’s being put in possession. See Stubbs v. Pitts, 84 Ark. 160, 104 S. W. 1110; Warren v. Henson, 171 Ark. 162, 283 S. W. 19; Fine v. Dyke Bros., 175 Ark. 672, 300 S. W. 375. Where the fiction or doctrine is applied to executory contracts for sale of real estate, the purchaser almost always has been put in possession of the premises. See Judd v. Rieff, 174 Ark. 362, 295 S. W. 370, and other cases cited in this opinion.

In all of the cases cited by appellee either the purchaser was put in possession of the land or the vendor had put his conveyance beyond his control. All may be distinguished from this case.

In State Bank of Decatur v. Sanders, 114 Ark. 440, 170 S. W. 86, the purchaser under the oral contract took the actual control, possession and management of the farm and made improvements. While the vendor had not executed a deed to make the sale fully consummated, he had an election to either take a mortgage on other land as security for the balance of the purchase money or reserve a vendor’s lien on the property sold. He did not make the election until after a judgment was rendered against him and the judgment creditor unsuccessfully asserted the lien of the judgment against the purchaser’s grantee.

In Howes v. King, 127 Ark. 511, 192 S. W. 883, the vendor gave a deed in which a vendor’s lien was retained. This lien was not subject to execution. The purchaser was in possession of the land at all times. After the death of vendor, the purchaser arranged for a loan to pay part of the purchase money notes and gave a mortgage as security. He then conveyed the land to the vendor’s legatee, who released the vendor’s lien and immediately reconveyed the land to the original purchaser, but retained a lien for the balance of the purchase money. The court said the various steps were parts of the same transaction and constituted but one act, and that there was no moment when the legatee-grantor owned the land free from the conditions of the transaction or could have conveyed them, except subject to these conditions. The court has later referred to the legatee-grantor as only a conduit in the title. See United Loan & Investment Co. v. Nunez, 225 Ark. 362, 282 S. W. 2d 595, where a “straw man” in a transaction between husband and wife was held not to have title subject to judgment lien. In Snow Bros. Hardware Co. v. Ellis, 180 Ark. 238, 21 S. W. 2d 162, the vendor had placed a deed in escrow under which he had no power of recall. Thus, he placed the delivery of the conveyance beyond his own control, unless he paid a certain note due one year after the date of the escrow agreement. The “purchaser” had only to deposit a fixed amount of money with the escrow agent to receive the deed, in case of default by the vendee. The court compared this transaction to a bond for title and said that the vendor had conveyed his interest in the land on condition.

The purchaser in this case offered to buy. Earnest money was paid. It was to be forfeited if the buyer failed to fulfill his obligation, without prejudice to the assertion of any other legal rights by seller because of the breach. Possession was to be given after the closing date, which seems to have been upon approval of an FHA loan to purchaser. Seller was to pay taxes due on or before the closing date. There is nothing in the. contract to remotely suggest a contemporaneous sale of the property. Certainly this purchaser had nothing — no title which could be alienated or encumbered by him.

I would dissolve the injunction and dismiss the cause of action.

      See 43 Iowa Law Review 366—374; 2 Freeman on Judgments, 5th Ed. § 964; Annot., 57 L. R. A. 643, at 646; Reid v. Gorman, 37 S. D. 314, 158 N.W. 780.

      The textwriter in 55 Am. Jur., Vendor & Purchaser, § 357, says: “An executory forfeitable contract for the purchase of land vests no element of title, either legal or equitable.” P. 784.


author: George Rose Smith, Justice.

text:
    CHARLES D. HILL et al v. LEE COUNTY BOARD OF EDUCATION et al
    5-4430
    419 S. W. 2d 807
    Opinion delivered October 30, 1967

      Forrest E. Long and Giles Dearing, for appellants.

      Daggett & Daggett, for appellees.
   George Rose Smith, Justice.

This is a suit filed in the chancery court by the appellants, patrons of Moro School District B, to enjoin the Lee County Board of Education from putting into effect an order by which that Board consolidated the Moro District with Marianna School District A. The chancellors sustained the Board’s motion to dismiss the complaint for want of jurisdiction, holding that the plaintiffs should have appealed from the Board’s order of consolidation to the circuit court.

Petitions for consolidation of the two districts were filed with the Board. That body, purportedly acting under Ark. Stat. Ann. § 80-408 (Repl. 1960), gave notice that the petitions would be heard on May 15, 1967. On that date the appellants appeared to protest the consolidation, but the Board voted unanimously to merge the two districts.

No appeal was taken from the Board’s order. Instead, the appellants filed this suit in chancery, alleging in substance that the petitions for consolidation were not signed by a majority of the patrons of the Moro District. It is the appellants’ theory that Section 80-408, providing for an appeal to the circuit court, was repealed by Act 21 of the Second Extraordinary Session of 1965. (Act 21 is not included in the Arkansas Statutes Annotated, for the reason that the compiler considered it to be temporary legislation. See Volume 8, Tables, p. 487.)

At the outset there can be no doubt that if Section 80-408 is still in force, the appellants have mistaken their remedy. That statute declares in explicit language: “Appeals may be taken to the Circuit Court from the findings of the board on the ground that the requisite number of electors have not signed the petition, or because the notices herein required were not given.” The appeal must be taken within thirty days. Section 80-236; McLeod v. Richardson, 204 Ark. 5 , 163 S. W. 2d 166 (1942); Gibson v. Davis, 199 Ark. 456, 134 S. W. 2d 15 (1939). The remedy by appeal is adequate and exclusive. Vaught v. Frey, 219 Ark. 525, 243 S. W. 2d 384 (1951); Portland Sch. Dist. No. 4 v. Drew County Bd. of Education, 217 Ark. 725, 233 S. W. 2d 66 (1950).

We are firmly of the opinion that Act 21 did not repeal Section 80-408. Act 21 provided for a comprehensive review of the public school system throughout every county having two or more school districts. Section 3 of Act 21 created a County School Study Commission composed of three members from each local school board and three members from the county board of education. By Section 4 of the act the Study Commission was directed, not later than August 1, 1966, to prepare a preliminary plan for the reorganization of school districts within the county. A public hearing was to be held not later than October 1, 1966. Thereafter, not later than March 1, 1967, the Study Commission was required to approve a reorganization plan and submit it to the State Board of Education. By Section 7 of Act 21 ten percent of the voters in the districts affected by the plan could petition for a special election at which the electors in the affected districts could approve or reject the plan. Section 13 of Act 21 had this repealing clause: “This Act is intended to be cumulative and not to have the effect of repealing any laws or parts of laws not in irreconcilable conflict herewith. All laws and parts of laws in irreconcilable conflict herewith are hereby repealed.”

There is no irreconcilable conflict between Act 21 and the pre-existing school laws. In fact, there is no conflict at all. The two statutory schemes are intended to accomplish two different purposes and may co-exist side by side. Act 21 provided for a county-wide study and plan of reorganization that might well affect every school district in the county. It could be put into effect only on petition of ten percent of the voters in the affected districts and by a majority vote of the electors in those districts.

By contrast, Section 80-408 deals with day-to-day mattérs that often involve only one or two districts. Under that statute the county board of education may form a new district, dissolve an old one, consolidate two or more districts, or detach territory from one district and add it to another. It is clear that if Act 21 were the sole method of reorganizing school districts, as the appellants contend, there would be a serious, even tragic, omission in the school laws as a whole. That is, there would be no way for a county board to make adjustments, such as the transfer of territory from one district to its neighbor, however badly such adjustments might be needed. Quite obviously such purely local matters ought not to depend for accomplishment upon county-wide action. We conclude that there is no irreconcilable conflict between the earlier statutes and Act 21, whether it be regarded as temporary or permanent legislation.

Affirmed. For good cause shown an immediate mandate will issue.


text:
    Willie Lee PASCHAL v. STATE of Arkansas
    5306
    420 S. W. 2d 73
    Opinion delivered October 30, 1967
    [Rehearing denied November 27, 1967.]

      McKay, Anderson & Crumpler, for appellant.

      Joe Purcell, Attorney General; Don Langston, Asst. Atty. Gen., for appellee.
   George Rose Smith, Justice.

Charged with having had possession of goods which he knew to have been stolen, the appellant was found guilty and sentenced to three years imprisonment. Ark. Stat. Ann. § 41-3938 (Repl. 1964). For reversal he contends, first, that his admission of guilt was inadmissible and, second, that it was not sufficiently corroborated.

On January 3, 1967, police officers were investigating the burglary of a liquor store in Ouachita county. Acting upon information that the stolen whiskey was being sold in Columbia county the officers obtained a search warrant and searched Paschal’s home near Magnolia. They found two cases of whiskey, which were later identified as having been taken in the burglary. The officers arrested Paschal and took him to Camden, in Ouachita county, for questioning. There is no contention that Paschal was not duly warned of his constitutional rights before the interrogation began. According to the State’s testimony, Paschal readily admitted that he knew that the liquor had been stolen.

Counsel for the appellant, citing McNabb v. United States, 318 U. S. 332 (1943), insist that the confession was inadmissible because Paschal had not been taken before a magistrate for commitment, as the statute requires. Ark. Stat. Ann. § 43-601. The McNabb case, however, involved the interpretation of federal statutes that do not apply to the states. State v. Browning, 206 Ark. 791, 178 S. W. 2d 77 (1944). Under our statute the failure to take an arrested person before a magistrate does not vitiate a confession, because the statute is construed to be directory only. State v. Browning, supra; Moore v. State, 229 Ark. 335, 315 S. W. 2d 907 (1958).

Nor is there merit in the suggestion that the confession should have been excluded because Paschal was held in confinement for several days before he was charged with an offense. Such an illegal detention does not retroactively affect an admissible confession that was made soon after the initial arrest. United States v. Mitchell, 322 U. S. 65 (1944). This is true because the necessary causal connection between the detention and the confession is lacking.

Secondly, it is argued that the confession was inadmissible for the reason that it “embraced an element vital to the State’s case which was not corroborated.” The statute does not require that a confession be corroborated in every detail. It is enough that the confession be accompanied by other proof that the offense was committed. Ark. Stat. Ann. § 43-2115; Mouser v. State, 215 Ark. 131, 219 S. W. 2d 611 (1949). Not only did the State’s evidence show that the two cases of liquor were stolen property; the jury could have inferred from Paschal’s own testimony that he knew this to be true. He testified that he bought the two cases at less than the retail price, in a dry county from two men who were transporting the whiskey in an automobile. Thus there was ample proof to show that the offense was actually committed.

Affirmed.