text:
    Copeland v. State.
    4832
    289 S. W. 2d 524
    Opinion delivered April 9, 1956.
    [Rehearing denied May 14, 1956.]

      Nance & Nance and Mann & McCulloch, for appellant.

      Tom Gentry, Attorney General, and Thorp Thomas, Assistant Attorney General, for appellee.
   Ed. F. McFaddiN, Associate Justice.

Appellant was convicted of keeping a gambling bouse in violation of § 41-2001, Ark. Stats. His motion for new trial contains thirteen assignments wbicb be has grouped and argues under the four topics now to be discussed.

I. Motion For Directed Verdict. This necessitates a review of some of the evidence. The Sheriff of St. Francis County obtained a warrant to search a gambling bonse ¡known as “The Groves”; and executed the warrant one night about ten o’clock. Appellant, Copeland, opened the door when informed of the warrant. Approximately seventeen persons were engaged in gambling, either at the dice table or the roulette wheel. Gambling equipment, firearms and liquor were seized; and also a book later to be discussed.

A crate was located which had contained the roulette wheel, and on the crate there was a shipping tag which gave Copeland’s name and Memphis street address. The money box contained only $70.80; but Copeland had $2,950.00 in his pocket. The “guests” were allowed to leave unmolested; but those operating the gambling devices were taken into custody. As the officers were leaving with Copeland, he instructed the cook to stay there and look after the building until he returned. Two officers testified that Copeland volunteered the information to them that he and one Harold Suitts owned The Groves. In view of all of the foregoing, it was clear that a case was made for the Jury as to Copeland’s guilt or innocence under § 41-2001, Ark. Stats.

II. Motion For Continuance. Copeland sought a continuance because of the absence of the witness, McMillan; and in the motion for continuance Copeland stated that McMillan worked at The Groves and was there at the time of the raid and would testify: . . that the said Joseph H. Copeland did not or does not have the ownership of or a proprietary interest in The Groves nor was he the operator thereof. ’ ’ After the motion for continuance was filed, the Prosecuting Attorney went to see McMillan — ill at his home — and when the Prosecuting Attorney reported to the Court, the following occurred:

“Q. Mr. Henry, did he say categorically on that occasion that he could not testify under oath that Copeland did not own any proprietary interest?
“A. He said he could not and would not testify under oath that Mr. Copeland did not own any interest in the club, nor could he testify to any other person that did or did not own an interest in the club.
“MR. LONG-: I believe that is all.”

CROSS-EXAMINATION BY MR. McCULLOCH:

“Q. The purpose of your questioning, Mr. Henry, was directed to whether he was able to state of his own knowledge positively as to the ownership?
“A. I asked him if he knew who owned it.
“MR. McCULLOCH: Well, in view of what Mr. Henry has said, we would be willing to amend that stipulation in line and put it on information and belief, that is so far as he ¡knows of his own knowledge Mr. Copeland is not the owner or operator, but that is as far as we can go. . . .
“THE COURT: Let me see if the Court understands the amendment you are making, Mr. McCulloch; you are willing to make what amendment?
“MR. McCULLOCH: We are willing to amend it to the extent that we are not positive that Mr. McMillan would testify positively as to the ownership of the place; he would testify on his information and belief.
“THE COURT: Now, the Prosecuting Attorney has just testified that he told him that he did not know who owned it and he wouldn’t swear whether or not the man did or did not own it.
“MR. McCULLOCH: Well, it is our contention that his testimony would be that from his knowledge of all the circumstances in view of his position as an employee, that it is his information and belief that Mr. Copeland does not own it.
“MR. LONG: I think you can say that.
“THE COURT: All right, you are ready to admit that?
“MR. LONG: That he will testify that.
“THE COURT: If present, he would testify that according to this statement here in the motion, to the best of his knowledge and belief; is that right?
“MR. LONG: I think we wonld have to do that.
‘ ‘ THE COURT: Then I presume the case is ready for trial.
“MR. McCULLOOH: Of course, we still have our motion for a continuance; we realize what position that puts us in and we object to going to trial at this time, for the record. ’ ’

In the course of the trial the Court told the Jury:

“Thomas McMillan, a witness called by the defendant in this case is ill and unable to be present as evidenced by a doctor’s certificate filed in this case and it has been stipulated and agreed between counsel for the defendant and the Prosecuting Attorney that said witness, Tom McMillan, if present would testify as follows: That he was an employee and worked in the operation of the place known as The Groves, that he was working there on the night when the raid was made by the sheriff and other officers and was present when the raid was made, that he did not have any definite information as to the owner or owners of the property known as The Groves or the personal property contained therein, but according to his information and belief Joseph H. Copeland was not one of the owners.
“MR. McCULLOOH: We object to the giving of the stipulation in the form as given by the Court on the grounds that it was not in the form agreed upon as shown by the prior notes of the reporter. (Exceptions noted.)
“THE COURT: Gentlemen, you are instructed that under the law when the State of Arkansas through its Prosecuting Attorney admits in a criminal case that the witness would testify to certain facts, the law requires them also to admit the truth of the statements which they admit the witness would make if present. Call your next witness.”

On appeal Copeland argues: (a) that he was entitled to the continuance as a matter of right; and (b) that the statement that the Court gave the Jury was not as strong a statement of the witness’ testimony as Copeland was entitled to have. There is no merit to Copeland’s claim for continuance as a matter of right. There was another witness, John L. Adams, who worked at The Groves and who testified that Copeland was not the owner of the place; so McMillan’s testimony would have been cumulative on that point. The Court could have denied the motion for continuance because the evidence of the absent witness was cumulative. Pool v. State, 121 Ark. 17, 180 S. W. 339; and see cases collected in West’s Arkansas Digest “Criminal Law,” Key No. 596(1).

The second argument made by Copeland — that the statement the Court gave the Jury was not as strong as he was entitled to have — is likewise without merit. In continuances in criminal cases, when the State admits that an absent witness would testify as claimed, then the State must also admit the truthfulness of such statements of the absent witness. See Graham v. State, 50 Ark. 161, 6 S. W. 721; and see Tiner v. State, 110 Ark. 251, 161 S. W. 195. As originally drawn, the motion for continuance recited that McMillan would swear that Copeland was not the owner of The Groves. To have admitted the truthfulness of that statement would have been tantamount to a dismissal of the case; so, in order to prevent such eventuality, the Prosecuting Attorney inquired of the witness what he knew, and found out that the witness did not know and would not swear that Copeland did not own The Groves. Thus, all that McMillan could have testified to was that he did not know who owned The Groves. The Court told the Jury, and the State admitted, that McMillan did not have any definite information as to who owned The Groves. That is the full force of McMillan’s testimony; that is what the State admitted and that is what the Court told the Jury; and no error was committed.

III. Admitting the Booh in Evidence. When the officers seized the gambling equipment, etc., they also seized a book containing what purported to be, inter alia, a profit and loss statement on the gambling operations. This book was admitted in evidence jnst as the gambling equipment, the dice and the other seized articles could have been admitted. It was not attempted to show who made any of the entries in the book; but it was shown that there was one entry in the book showing a payment for: “Wheel Refinished, $252.16.” It was not claimed that this was in Copeland’s handwriting; but it was merely shown that a certain amount was paid for having the roulette wheel refinished. It had previously been shown that the crate, in which the roulette wheel fitted, had a tag on it showing that the crate was shipped to Copeland at his Memphis, Tennessee, address. When Copeland was on the witness stand, he testified regarding the roulette wheel:

“Q. You say the wheel was shipped to you in Memphis?
“A. Yes, sir, c.o.d.
“Q. Did you own the wheel yourself ?
“A. No, sir.
“ Q. Who owned it ?
“A. We sent it, I sent the wheel to Chicago or Cincinnati, one, I believe it was Cincinnati.
“ Q. Whose wheel was it ?
“A. It was the place’s wheel.
‘ ‘ Q. The place ?
“A. Yes.
“Q. Where did they get it?
“A. I don’t know; it was there when I went over there.
‘ ‘ Q. So, you took it and sent it over to be refinished and they returned it to you hack in Memphis ?
“A. I didn’t take it; they told me to take it and have the hoard refinished, just the board.
‘ ‘ Q. And you did that ?
“A. Yes.
“Q. And it was shipped back to you in Memphis?
“A. Yes.
“Q. Did you return it from Memphis, yourself?
“A. Yes, sir.
“Q. You set it up?
“A. I didn’t set it up; I put it in the house in the rear. ’ ’

Since the only entry in the book sought to be introduced in evidence related to the payment for the roulette wheel, and since Copeland admitted having the roulette wheel, we can see no harm in the Court’s ruling regarding the book.

IY. Testimony of a Witness Not Under the Rule. One of the witnesses in this case was a deputy Sheriff named Kinzer. He was called by the State and immediately when he was called the following occurred:

“MR. LONG-: Your Honor, in fairness to the Court and to the defendant, also, I want to point out that early in the testimony of Mr. Thomas, I discovered Mr. Kinzer sitting in the courtroom; he had been working down here and he didn’t know he was supposed to be under the rule. He is being called for the purpose of corroborating an admission made out here in the jail. Now, if the defendant wants to object to his testimony under those conditions, and the Court wants to sustain it, now will be the time to do it.
“MR. NANCE, SR.: We would like to object to it, Your Honor.
‘ ‘ ME. LONG: His testimony does not touch on anything that Lt. Thomas did.
‘ ‘ THE COUBT: How long were yon in the courtroom?
“THE WITNESS: Ten minutes, Judge, I would say.
‘ ‘ THE OOUET: Is that the only witness you heard testify?
“THE WITNESS: Yes, sir.
“THE COUET: Well, this witness hasn’t actually been put under the rule, because he was not here when the rule was invoked and since this last witness — , if his testimony doesn’t touch on any matters that Lt. Thomas testified about, I think the objection to him testifying would be overruled. If he starts to testify to anything that Lt. Thomas touched on, however — .
“ME. LONG: That will be avoided, Your Honor.
“ME. NANCE, SE.: Note an exception, Your Honor.”

The gist of the whole point is that Mr. Kinzer had not been in the courtroom but ten minutes and all he had heard was the testimony of a State Policeman which related to matters entirely different from those connected with Kinzer’s testimony. When Kinzer testified, there was no motion made to exclude his testimony other than the one objection previously recited above. In this jurisdiction, the Trial Court is invested with considerable discretion in the matter of putting witnesses under the rule. Certainly there was no abuse of discretion under the facts and circumstances in this case.

Finding no error, the judgment is affirmed.

Justice Millwee concurs.

       In civil cases the person resisting the motion for continuance can admit that the absent witness would testify to certain facts without admitting the said facts (see.§ 27-1403 Ark. Stats.); but in criminal cases the State is required to admit the stated facts to be true (see note following § 43-1706 Ark. Stats.).

       Section 43-2004 Ark. Stats, says that in certain matters in criminal trials, the code of practice in civil cases shall govern. Section 28-702 Ark. Stats, comes to us from the civil code and the cases construing it show the broad discretion allowed the Court in this matter of putting witnesses under the rule.


source: Caselaw Access Project

author: MiNoe W. Millwee, Associate Justice.

license: Public Domain

text:
    Weill v. Weill.
    5-912
    288 S. W. 2d 946
    Opinion delivered April 9, 1956.

      Glenn F. Walther, for appellant.

      Richard W. Hobbs and McMath, Leatherman & Woods, for appellee.
   MiNoe W. Millwee, Associate Justice.

This is a suit by a husband to vacate a decree by which his wife was divorced from her former spouse.

Plaintiff, Leon Weill, filed suit in the Garland Chancery Court on November 9, 1954, to set aside a decree of divorce which defendant, Estelle Goldstein Price Weill, hereinafter called “Mrs. Weill,” obtained from defendant, Daniel H. Price, in the same court on December 13, 1949. The complaint alleged that all three parties are residents of New York; that Mrs. Weill obtained the divorce in 1949 upon perjured testimony as to her residence in Garland County for the ninety-day period preceding the date of the decree and under a collusive agreement between the defendants under which Price signed an entry of appearance in New York the day before the suit was filed; that Mrs. Weill was never domiciled in Arkansas; and that the perjured testimony of Mrs. Weill and any other person who might have testified concerning her residence in Garland County constituted a fraud on the court, which was without jurisdiction of the parties to said suit.

Plaintiff further alleged that he and Mrs. Weill went through a marriage ceremony in New York on May 1, 1953, and cohabited as husband and wife until October 18, 1954; that in March, 1954, she informed plaintiff that she obtained the divorce from Price after having resided in Arkansas for only one day; that, after investigation and consultation with counsel, plaintiff became convinced that Mrs. Weill’s divorce from Price was illegal and void and by reason thereof he had separated from her. The prayer of the complaint was that the 1949 decree be set aside and the marriage relationship between Mrs. Weill and Price be declared in full force and effect.

Mrs. Weill demurred to the complaint on the grounds that plaintiff was not a proper party to bring the action, and that the complaint did not state facts sufficient to constitute a cause of action on his behalf. Defendant Piice filed a “Response and Motion to Dismiss” the complaint because the matter decided in the original divorce suit was res judicata, and on several other grounds. This appeal is from a decree sustaining both the demurrer and the motion to dismiss.

The well-recognized general rule that strangers to the record have no standing on which to base an application to vacate a judgment unless so authorized by statute ordinarily applies to judgments and decrees of divorce. 17 Am. Jur., Divorce, § 479. Hence, the right to have an invalid divorce decree set aside ordinarily exists only in favor of the injured spouse, and does not exist in a person who was a stranger to the suit. 27 C. J. S. Divorce, § 170. The rule that a stranger to the record has no standing directly to attack a judgment or decree either by petition in the original proceeding or by an independent suit has been applied to decrees of divorce in many cases which are collected and cited in annotations in 99 A. L. R. 1310, 120 A. L. R. 822, 6 A. L. R. 2d 614 and 12 A. L. R. 2d 727. There are decisions cited to the contrary which usually involve an exception to the general rule and the plaintiffs were held not to be strangers to the record because they were privies to one of the original parties and their property rights were concerned.

' The general rule has been applied in many cases where relief from the divorce decree was sought by the new spouse of the original plaintiff, and no property rights were involved. Perhaps the case most nearly in point with the facts here is Suiter v. Suiter, 74 Ohio App. 44, 57 N. E. 2d 616. In that case Mrs. Suiter had obtained a divorce from Mr. Suiter on a complaint in which áhe' represented that she had resided in the jurisdiction for the required time. Mrs. Suiter’s second husband, McFarland, filed a petition in the original action to set aside the decree on the ground that her claim of residence was false and fraudulent. ° In affirming the action of the trial judge in sustaining a demurrer to the petition on the ground that McFarland was a stranger to the divorce action and had no standing as a party to seek to set aside the decree, the court said: “At the outset it will be observed that the original action was in divorce wherein the wife sued the husband for dissolution of the marital union. Upon the face of the proceedings and tipon'the judgment entry the proceedings are regular and all essentials of jurisdiction of parties and subject-matter appear. No property rights were involved, nor does the decree do more than to dissolve the marital relation and divorce the parties thereto. The divorce action in its nature is personal. There is nothing in the divorce proceedings nor in the defendant McFarland’s petition which would give application to the doctrine of privity of title. The defendant-appellant had no right which he could have asserted at the time of the decree, nor did he then, has he since, nor does he now, stand in the relation of either the plaintiff or the defendant in the original action nor has he succeeded to the rights of either.” A similar action was held subject to demurrer in Martocello v. Martocello, 197 Ga. 629, 30 S. E. 2d 108. Other cases applying the same principle under somewhat different factual situations are Tyler v. Aspinwall, 73 Conn. 493, 47 At. 755, 54 L. R. A. 758; Ruger v. Heckel, 85 N. Y. 483; de Marigny v. de Marigny (Fla.), 43 So. 2d 442; James v. James, 131 Okla. 276, 268 P. 726; Thomas v. Lambert, 187 Ga. 616, 1 S. E. 2d 443.

We: are convinced the chancellor correctly sustained the demurrer of Mrs. Weill to the complaint. Insofar as the record discloses, the decree sought to be vacated is perfectly valid on its face and the parties to it seek no redress. There is no allegation in the complaint suggesting that plaintiff’s property or other rights have been injuriously affected or prejudiced in any manner by the decree he seeks to vacate. In the normal course of events it would seem that if plaintiff, in good faith, married Mrs. Weill under an innocent reliance on the former decree, he would be seeking its affirmation rather than its nullification. The Florida court suggested the dangers potentially inherent in this situation in the Marigny ease, as follows: “If the appellant-petitioner may maintain the instant suit it would be possible for any party to a fraudulent divorce decree, which is valid on the face of the record, to conspire with another person to enter into a marriage with him or her with the sole purpose in mind of having said spouse thereafter bring a proceeding to impeach the divorce decree and thus accomplish indirectly, by means of such conspiracy and fraud, that which could not be accomplished directly. It is our conclusion that the lesser evil would result from a judgment unfavorable to the appellant-petitioner’s position and that decency, good morals and the welfare of society would be more nearly satisfied by such ruling. Certainly, such a decision would be less inimicable to the interests of our citizens as a whole than one favorable to the appellant-petitioner for the latter, in our opinion,- could lead to ‘widespread social disorder.’ See Shea v. Shea, 270 App. Div. 527, 60 N. Y. S. 2d 823, at page 827.” Mr. Weill’s position is also similar to that of the plaintiff in the Buyer case where the New York court said: “In bringing this action the plaintiff meddled with a matter which did not concern him. . . . It is impossible to discover any ground in law or morals upon which his complaint can stand. In refusing to listen to him the court does not aid in giving effect to a judgment obtained by fraud. It regards him as a suitor without a cause of action and rejects his petition, because he is not aggrieved.” Courts sit to vindicate rights at the instance of parties whose rights have been invaded, and not to vindicate mere abstract principles of justice. A party whose rights have not been invaded cannot be heard to complain if a court refuses to act at his instance in righting the wrongs of another who seeks no redress. Tyler v. Aspinwall, supra.

Since the chancellor correctly sustained the demurrer of Mrs. Weill and dismissed the complaint upon plaintiff’s failure to plead further, it becomes unnecessary to determine whether error was committed in also sustaining the separate motion to dismiss filed by defendant Price.

Affirmed.


author: George Rose Smith, J.

text:
    Fidelity Reserve Insurance Company v. English.
    5-911
    288 S. W. 2d 951
    Opinion delivered April 9, 1956.

      Dinning & Dinning, for appellant.

      A. M. Coates, for appellee.
   George Rose Smith, J.

This is an action upon a sickness and accident policy which provides twelve months of benefits for disability “resulting solely from bodily injuries effected directly and independently of all other causes through accidental means.” In appealing from a judgment for the plaintiff the insurer relies upon several clauses in the policy to support its denial of liability.

It is contended that the appellee’s disability did not result solely from accidental means, within the language quoted above. The undisputed facts are that the appel-lee accidentally stepped on a roofing tack, gangrene developed despite medical attention, and the afflicted leg had to he amputated below the knee. The appellant’s argument is based on proof that the appellee, a woman past sixty, suffers from arteriosclerosis, without which the wound would not have become gangrenous. In construing language like that appearing in this policy we have uniformly held that the injury is covered if the accident precipitates the disability, even though the condition would not have occurred without the contributing effect of a preexisting disease. Fidelity & Cas. Co. v. Meyer, 106 Ark. 91, 152 S. W. 995, 44 L. R. A., N. S. 493; The Travelers Ins. Co. v. Johnston, 204 Ark. 307, 162 S. W. 2d 480; Union Life Ins. Co. v. Epperson, 221 Ark. 522, 254 S. W. 2d 311. This view of proximate causation also answers the appellant’s argument that the appellee’s disability is due solely to heart disease, for which the policy does not provide coverage.

The appellant relies upon another clause in the contract which allows somewhat smaller benefits for confinement resulting from illness. It is insisted that the claim should have'been asserted under this provision rather than under the paragraph relating to disability-occasioned by accidental injury. The wording of each clause is sufficiently comprehensive to cover the present claim, and, since the policy is to he construed against the insurer, there is no basis for holding that- the insured is compelled to select the least beneficial claim that the contract permits her to assert.

Two additional defenses must be rejected for want of proof. The appellant’s reliance upon a clause requiring a disabled insured to he regularly attended by a physician is met by the complete absence of proof that the appellee was not so attended. This general provision, appearing in the latter part of the policy, constitutes an exception to the basic insuring clauses and therefore presents at most an affirmative defense that must be pleaded and proved. Stucker v. Hartford Acc. & Ind. Co., 220 Ark. 475, 248 S. W. 2d 383. Here the defense was pleaded but not proved. Neither is there sufficient proof to establish the contention that the appellee accepted a check in full settlement of her claim.

The insurer’s remaining contention, that its liability is limited in any event to specific indemnity for the ap-pellee’s loss of one foot, is in our opinion also an affirmative defense that was waived by the defendant’s failure to plead it. The complaint stated a prima facie cause of action under the disability provisions of the policy. The answer contained a general denial and a counterclaim to recover sums already paid, upon the theory that the plaintiff’s disability was due solely to heart disease. Thus the defendant elected to join issue with the allegations of the complaint, without suggesting in any way that it might be liable under a separate paragraph in the contract for specific indemnity for the loss of the plaintiff’s leg. In these circumstances the company waived the right to rely upon the alternative clause relating to specific indemnities, and the court did not abuse its discretion in refusing to allow this defense to be brought into the ease for the first time in the form of a requested instruction to the jury.

Affirmed.


author: Paul Ward, Associate Justice.

text:
    Speed v. Mays.
    5-926
    288 S. W. 2d 953
    Opinion delivered April 9, 1956.
    [Rehearing denied April 30, 1956.]

      Joe Holmes, for appellant.

      Sid J. Reid, for appellee.
   Paul Ward, Associate Justice.

In the “STATEMENT OP CASE” at the beginning of appellant’s brief is found, in substance, the following: Some time prior to 1943, Middleton Mays died intestate possessed of certain lands in Grant County; The deceased left surviving him sis children one of whom is Martha Speed, this appellant; On November 4, 1943, two of said children (Bennie Mays and W. L. Mays) brought a suit against this appellant and the other children (or heirs) of said Middleton Mays ashing to have said lands partitioned; All defendants in said suit were properly served except this appellant; Among the papers in said suit is an Entry of Appearance presumably signed by this appellant, but appellant alleges that she did not sign said Entry of Appearance; On June 21, 1944, a partition decree was entered, and the lands were sold to W. L. Mays' for $500; All of the heirs of said Middleton Mays except appellant received their share of the purchase price; The trial court [presumably speaking of the present litigation and not the suit filed in 1943 as above mentioned] sustained the demurrer to the petition of Martha Speed [this appellant] on the ground that the matter had been indicated and for the further reason that 12 years have elapsed and she [appellant] has not been diligent in seeking a remedy, and; Exceptions to the ruling were taken and an appeal was prayed and granted.

Following the above STATEMENT OF CASE the brief sets out two points for reversal and then follows the argument. The only reference made to the record in the entire brief is to ‘ ‘ The Entry of Appearance ’ ’ found on page 15 of the record. Reference to the record shows an Entry of Appearance signed by Martha Speed on November 6,1943, and filed November 8,1943. An examination of the record shows that Martha Speed was sworn and testified, and that Glean McDonald, the chancery clerk, was sworn and testified at length.

From the above it clearly appears- that appellant has wholly failed to comply with Rule 9(d) which requires appellant to abstract the “material parts of the pleadings, proceedings, facts, documents, and other matters in the record as are-necessary to an understanding of all questions presented to this court for decision. The abstract shall contain full references to pages of the record. ’ ’ In this case appellant has abstracted no pleading, no testimony and no decree, and there is nothing in the entire brief upon which the judges of this court could confidently say that the decree of the trial court should be reversed. The several judges of this court are not required to make an individual search of the record, particularly in the absence of proper references thereto, in order to arrive at a decision, and it certainly is not practical to do so.

What we have said above is not to be considered in any way a retraction or modification of Rule 9(e). The latter rule applies when the appellant has made out a prima facie ease for a reversal, which was not done here.

Since no error is shown the decree of the trial court must be affirmed.

Affirmed.


author: Sam BobiNsoN, Associate Justice.

text:
    Edwards v. The Carter Oil Company.
    5-887
    288 S. W. 2d 954
    Opinion delivered April 9, 1956.

      L. B. Smead, W. R. McHaney and Melvin T. Chambers, for appellant.

      Gaughan, McClellan & Laney, for appellee.
   Sam BobiNsoN, Associate Justice.

This action involves the ownership of part of the minerals in 65 acres of land. It is the practice in oil fields to refer to the ownership of a percentage of the minerals in a given tract of land as so many “acres of minerals,” or “mineral acres.” As an example, if a person owns 25/100ths of the minerals in 100 acres, he is regarded as owning 25 “mineral acres,” or 25 “acres of minerals.” We will follow that practice in this case.

A grantor’s act in purporting'to--convey 16.1 acres of minerals and to reserve 10 acres1 of minerals, when he had title to only 11.8 mineral acres., gives rise to this cause of action. The Chancellor held that appellants and appellee take the same percentage in the 11.8 acres of minerals they would have had in the 26.1 acres of minerals if there had been that many.

Jewel Edwards, J. M. Passwater, and the widow and son of L. L. McDonald have appealed, .contending that they are the owners of 9 acres of minerals; and The Carter Oil Company has cross-appealed, contending that under the deed, it is entitled to 16.1 acres of minerals, but since only 11.8 acres are available, it is entitled to that acreage.

Ben Wheeler died intestate, leaving twelve heirs and 65 acres of land. Five of the heirs conveyed one-half of their interest in the minerals to Jack Machen; later, four of these five heirs, along with two others, conveyed one-half of their interest in the minerals to L. L. McDonald for himself and as trustee for Jewel Edwards and J. M. Passwater. The heirs, Wesley Wheeler and Buck Wheeler, grantors in the deed to McDonald, had previously conveyed their interest to Wade Kitchens. Later, a suit was filed by the heirs to cancel the deed to McDonald, alleging that it was fraudulently obtained. That suit was settled and a consent degree was entered. In order to effectuate the settlement, L. L. McDonald executed a deed to his attorney, W. D. McKay, to 26.1 mineral acres; McKay, in turn, executed a deed to 16.1 mineral acres to O. D. Boreing, trustee for the Wheeler heirs. The deed specifically reserves 10 acres in McKay. McKay then executed deeds totaling 9 acres of minerals to McDonald, Edwards and Passwater (this apparently left McKay with one acre of minerals and, later, he gave a quitclaim deed to The Carter Oil Company). Standard Oil Company then acquired the interest of the Wheeler heirs and Machen. Several years later, this interest was transferred by the Standard Oil Company to The Carter Oil Company; later, in 1949, The Carter Oil Company brought in producing wells on the property.

Appellants Jewel Edwards, J. M. Passwater, and the widow and son of L. L. McDonald filed this suit, contending that they are owners of 9 acres of minerals. They contend that, by the deed from McKay to Boreing, 10 acres of minerals were reserved and that McKay deeded 9 acres to appellants. It appears that in the controversy between McDonald, trustee, and the Wheeler heirs, the parties reached the conclusion that McDonald had title to 26.1 mineral acres on the theory that there were only eight Wheeler heirs, whereas, in fact, there were twelve heirs; also, there was a slight miscalculation. In any event, actually McDonald never at any time had title to more than 11.8 mineral acres; this is obvious from the deeds.

The deed from McKay, trustee, to Boreing, trustee, apparently conveys 16.1 acres of minerals, and the deed further provides: “And it is the further intention to convey all interest acquired from L. L. McDonald et ux under deed dated January 29,1938, except 10 full royalty acres, containing 65 acres, more or less.” It will be noticed that the deed refers to royalty acres, however, all of the other deeds dealt with minerals. McDonald did not receive a deed from the Wheeler heirs to 26.1 acres of minerals, but the deeds from the Wheelers called for one-half of certain heirs’ interest. Of course, McKay could not convey 16.1 acres of minerals, as he had title to only 11.8 acres, but all the parties thought he had title to 26.1 acres. This was a mutual mistake, obvious from the provisions of the deeds. McDonald, owner of part of the minerals, and trustee for Edwards and Passwater, attempted to convey to McKay 26.1 acres. This was done so that McKay could, in turn, convey portions of the minerals to everybody concerned, as agreed. The Mc-Donalds, Passwater and Edwards are not now in a position to say that since a mistake was made, and there were only 11.8 acres of minerals instead of 26.1, they are to get 9 acres and the Wheeler heirs and those holding through them are to get only 1.8 acres (it will be recalled that the title to 1 acre remained in McKay).

The Carter Oil Company is not an innocent purchaser without notice. McDonald’s interest in the minerals is shown in The Carter Oil Company’s chain of title. In determining whether McDonald had title to enough minerals to convey to McKay 26.1 acres, the first thing to be determined was whether McDonald had a deed from all of the Wheeler heirs. An investigation would have revealed that only eight of the twelve heirs had conveyed to McDonald, and two of these heirs had previously conveyed one-half of their interest to Machen; two others had conveyed all of their interest to Kitchens. The oil company had notice of the deeds to Machen and Kitchens, and an investigation would have shown that only eight of the twelve heirs conveyed to McDonald, hence, McDonald could not have owned 26.1 mineral acres.' The deed from McKay, trustee, to Boreing, trustee, attempts to convey 16.1 acres. McKay had title to only 11.8 acres; therefore, of course, he could not convey 16.1 acres. The record was sufficient to put the oil company on notice that McKay could not convey the number of acres mentioned in the deed, and a proper investigation, called for by the condition of the title, would have brought to light the fact that there had been a mutual mistake by the Wheeler heirs and McDonald, trustee. Hence, it cannot be said that the oil company was an innocent purchaser without notice. We said, in Richards v. Billingslea, 170 Ark. 1100, 282 S. W. 985: “This court has held that whatever puts a party on inquiry amounts to notice where the inquiry becomes a duty and would lead to knowledge of the requisite facts by the exercise of ordinary diligence and understanding. Jordan v. Bank of Morrilton, 168 Ark. 117, and Walher-Lucas-Hudson Oil Co. v. Hudson, 168 Ark. 1098.” See also Kellogg-Fontaine Lumber Co. v. Cronic, 219 Ark. 170, 240 S. W. 2d 872; Trinity Royalty Company, Inc. v. Riggins, 199 Ark. 939, 136 S. W. 2d 473.

Affirmed on appeal and on cross-appeal.


author: Sam Robinson, Associate Justice.

text:
    Stephens v. Stephens.
    5-892
    288 S. W. 2d 957
    Opinion delivered April 9, 1956.

      Mac W. Martin, for appellant.

      Thomas B. Tinnon, for appellee.
   Sam Robinson, Associate Justice.

The appellant, Irene M. Stephens, and the appellee, Elmer D. Stephens, were married in Illinois in 1947; they were middle-aged, and Mrs. Stephens had three children by a former marriage. In October 1950, Mr. and Mrs. Stephens made a trip to Baxter County, Arkansas, and purchased some land. There was one tract of 3% acres conveyed to both parties as an estate by the entirety, and one 10 acre tract conveyed to Mrs. Stephens. The 10 acre tract cost $1,000.00, and Mr. Stephens made the down payment of $100.00; later, Mrs. Stephens paid the $900.00 balance of the purchase price. In 1951, the parties moved to Arkansas; they intended to build a home on the 3% acre tract, but changed their plans, sold that property, and built the home on the 10 acre tract. Both contributed to the cost of building the home; Mr. Stephens contributed to the extent of between $10,500.00 and $11,000.00 and later, contributed an additional amount by paying off mortgages on the property totaling $1,400.00. Mrs. Stephens contributed about $8,000.00, including what she had paid on the purchase price. In 1955, Mrs. Stephens filed suit for divorce. Mr. Stephens answered, alleging that the home on the 10 acre tract had been acquired by their joint efforts, and asked that the property be sold and the proceeds divided accordingly. Mrs. Stephens, although not denying that Mr. Stephens had contributed between $10,500.00 and $11,000.00 to the building of the home, denies that he has any interest in it. Upon trial of the cause, the chancellor granted Mrs. Stephens a divorce, and decreed that the property in question be sold, and the proceeds divided equally. Mrs. Stephens has appealed from that part of the decree ordering a sale of the property and a division of the .proceeds;

Soon after construction of the home, the parties realized that the title was in Mrs. Stephens, and, in the event of her death, Mr. Stephens could be dispossessed by the children of Mrs. Stephens. The parties, therefore, made a joint will; in this will, each left to the other a life estate in any property owned, with the remainder going to the children of Mrs. Stephens, Mr. Stephens having no children. At the same time, they entered into a contract to keep the will in force. The contract provides :

“. . . Whereas, all property owned severally or jointly by the Parties hereto has been acquired and improved through the mutual efforts of the Parties hereto; and in consideration of the mutual promises and agreements of the Parties hereto, joint wills were executed and entered into by the Parties hereto.
“Now, therefore, in consideration of the premises and promises herein, the Party of the First Part agrees, promises and covenants that the said will as now made in possession of the Peoples Bank, Mountain Home, Arkansas, shall not be revoked, cancelled or annulled, but shall be and remain his last will and testament without changes.
“In consideration of the foregoing, the Party of the Second Part hereby promises, agrees and covenants that dhe will leave in force and unchanged her will which has been made jointly with the First Party.”

By this contract in writing, the parties recognized that they had acquired the property through their mutual efforts.

The chancellor’s decree, providing for a sale of the property and a division of the proceeds, is in accordance with the principles of equity and good conscience. In effect, Mr. Stephens was given a lien. He has reached the age of retirement and only has a small pension of $101.55 a month. He invested his life’s savings in the home; he and Mrs. Stephens agreed in writing that the property had been acquired and improved by their joint efforts. It would be unthinkable to say, in the circumstances existing here, that Mr. Stephens has no interest in the home.

It is appellant’s contention that, since she had title to the 10 acres, Mr. Stephens’ contribution of all the money he had to the construction of a home on the property is considered in law as a gift to her. It is true that there is a presumption that the transaction was a gift, but such presumption is rebuttable. Mann v. Mann, 164 Ark. 43, 260 S. W. 731; Harbour v. Harbour, 103 Ark. 273, 146 S. W. 867. We think the presumption was overcome in this case. The will and the contract to keep the will in force shed light on the intention of the parties in respect to the interest of each in the property. Moreover, as was said in the Mann case: “. . . it does not comport with reason that one will denude himself of all his earnings during’ a long period of years without making some provision for his old age.” We have several cases holding that the chancellor has a right to divide the property on an equitable basis where it has been acquired by the joint effort of the parties, and here, the contract regarding the will and the other evidence in the cáse show that the property was acquired by the parties’ joint efforts.

In Taylor v. Taylor, 224 Ark. 328, 273 S. W. 2d 22, the husband was granted a divorce on the ground of adultery, but the wife was awarded certain household furniture and one-third interest in fee in real property standing in the husband’s name. The court held that this was proper, since the property was accumulated through the joint efforts and earnings of the parties. The court said: “In the instant case the Chancellor concluded that most of the property was accumulated through the joint efforts of the parties. This conclusion is not against the preponderance of the evidence.” In the case at bar, in the contract regarding the will it is agreed that the property was acquired by the joint efforts of the parties. In Williams v. Williams, 186 Ark. 160, 52 S. W. 2d 971, the court said: “It is clear from the evidence that both appellant and appellee worked and conducted the business which resulted in the accumulation of the property in controversy. It is immaterial whether there was a partnership. If appellee and appellant, by their joint work, labor and management, acquired the property, a court of equity would, even before the recent statutes [removing a married woman’s disabilities], protect the wife’s interest in the property.” The same principle that requires the protection of a wife’s interest in property also requires the protection of the husband’s interest. See also Price v. Price, 217 Ark. 6, 228 S. W. 2d 478. In Angelletti v. Angelletti, 209 Ark. 991, 193 S. W. 2d 330, it was held that where the husband, through a contribution of $100.00 on his part, assisted his wife in obtaining a fee simple title to property in which she had an interest but not the fee, the husband was entitled to a lien for the $100.00.

With reference to a situation similar to the case at bar, it is said, in 17 Am. Jur. 469: “Equity and good conscience require . . . that a fair division shall be made, taking into consideration the relative wants, circumstances, and necessities of each, of the property accumulated by their joint efforts and savings.” Here, the actual cost of the property involved is in the neighborhood of $20,000.00. Presumably, it will bring that much, or more, at a sale. The fact that it has such a substantial value is due to the joint efforts of the parties to this litigation, and the evidence is overwhelming to the effect that Mr. Stephens, in contributing his life’s savings to the project, did not intend such a gift to Mrs. Stephens.

The chancellor’s decree that the property should be sold and the proceeds divided between the parties is correct, and it is therefore affirmed.


author: Lee Seamster, Chief Justice.

text:
    Gardner v. Gardner.
    5-874
    289 S. W. 2d 182
    Opinion delivered April 16, 1956.

      Cooper Jacoway, for appellant.

      Owens, McRaney,-Lofton & McHaney, for appellee.
   Lee Seamster, Chief Justice.

This is the second time that the parties to this cause have been before this court. On the first occasion, Gardner v. Gardner, 225 Ark. 828, 286 S. W. 2d 23, this court affirmed a decree awarding appellee, Dr. Melvyn J. Gardner, a divorce from the appellant, Bernice A. Gardner. This second appeal follows from the action of the trial court in making alimony and child support awards.

The appellant insists that the allowance of $125.00 per month as alimony to her and $225.00 per month for the support of the four minor children of the parties is an insufficient amount to provide .for their living- expenses. The appellee has appealed from that portion of the decree allowing the appellant the sum of $125.00 per month as alimony.

The appellant contends that the total allowance to her for alimony and child support should he at least $500.00 per month and appellee contends that he is able to pay only a total of $300.00 per month.

The appellee is employed as a physician at the Veterans Administration Hospital at Fort Roots in North Little Rock, Arkansas. His net income, after deductions, is approximately $302.48 every two weeks and his yearly net income would be $7,864.48. Deducting the allowances made by the trial court, in the sum of $4,200.00, would leave a balance of $3,664.48 in expendable funds for the appellee. One of the items that is withheld from the gross income of the.appellee, is the sum of $600.00 per annum for insurance and retirement pay. The appellant contends that the $600.00 is a savings account for appellee and should be considered as such in determining his ability to pay.

The appellee contends that he owns only his clothing, some medical books and a 1953 model automobile. At the time of the trial, he still owed on the automobile seven monthly payments of $94.00 each.

The parties were involved in litigation in Florida by reason of a separate maintenance suit brought by the appellant against the appellee. The Florida court rendered a judgment in favor of appellant, against appellee, for $175.00 per week. The appellee succeeded in procuring a reduction of this allowance in the trial court. The appellant appealed this order to the Florida Supreme Court and the Supreme Court of Florida set aside the reduction order and required appellee to continue the $175.00 weekly payments. The litigation was expensive for the appellee. A fee in the sum of $2,500.00 was allowed appellant’s attorneys and a master’s fee of $500.00 was also allowed, and judgment rendered against the appellee for the amount and other costs. The ap-pellee still owes about $9,000.00 on the Florida judgment. He contends that he is unable to make these payments since said amounts are beyond his means.

There have been many cases of similar character before this court. Each is decided upon the peculiar facts as presented therein. Talking1 into consideration all the elements in the instant case, we cannot say that the order of the trial court is against the preponderance of the evidence.

The case is affirmed at the cost of appellee, and an additional attorney fee of $200.00 to appellant’s attorney, will be assessed against the appellee.

Justice Millwee not participating.


author: J. Seaborn Holt, Associate Justice. Ed. F. McFaddin, Associate Justice

text:
    Arkansas Power & Light Company v. Arkansas Public Service Commission.
    5-875
    289 S. W. 2d 668
    Opinion delivered April 16, 1956.
    [Rehearing denied May 21, 1956.]

      House, Moses & Holmes, W. H. Holmes, Ed. B. Dillon, Jr., and Richard McCulloch, for appellant.

      John R..Thompson, Tom Gentry, Attorney General, Ben J. Harrison,. Asst. Atty. General, Reed W. Thompson, James K. Young, Jabe Hoggard, O. D. Longstreth, Jr., Dave E. Witt and Joseph R. Broolcs, for appellee.

      P. A. Lasley, amicus curiae.
   J. Seaborn Holt, Associate Justice.

Proceeding under the provisions of Act 324 of the Acts of the Legislature of 1935 [Sec. 73-201 et seq. Ark. Stats. 1947] and an order of the Commission made June 24, 1944, appellant, Arkansas Power and Light Company, on May 27, 1954, filed its application with the Arkansas Public Service Commission asking for approval of an increase in electric rates over its present rates in order to increase appellant’s revenues in the amount of $3,900,000. In its petition the power company appears to admit that its overall net earnings then amounted to a rate of return in excess of 5%. Following a long and patient hearing, resulting in the taking of more than 1,500 pages of testimony, the Commission found that the company was earning — ,5.985%, — approximately 6%, all to which it was entitled, and denied the company’s petition. Later (December 2, 1954) the company’s petition for a rehearing was filed and also denied. Thereafter, (December 3, 1954) after filing an additional bond in the amount of $1 million, the company appealed to the Circuit Court of Pulaski County and that court, after a consideration of the record made before the Commission, on September 23, 1955 dismissed the company’s petition for review and in all things affirmed the Commission’s findings. This appeal followed.

At the outset we point out certain well defined rules governing this court in reviewing the powers and actions of the Arkansas Public Service Commission in a utility rate case such as is presented here. The Commission must and does have broad powers and is a fact finding body. Our Legislature has delegated and entrusted the administration of Act 324 to the Commission, and not to the courts. The primary object of the Commission is to provide that rate of return which is adjusted to appellant’s needs consistent always with the interest of the public. Apart from the judicial review that may he resorted to under the Act, it is not for us to advise the Commission how to discharge its functions. When an appeal is taken to the circuit court, that court, as well as this court on appeal from the circuit court, shall not extend the review of the Commission’s findings and actions “further than to determine whether the Department [Commission] has regularly pursued its authority, including a determination of whether the order, or decision under review, violated any right of the complainant under the Constitution of the United States or of the State of Arkansas.” [Sec. 73-233 (d) Ark. Stats.] The Circuit Court, and this court on appeal, reviews the Commission’s findings on the record before the commission, and if we find any substantial evidence to support it, it is our duty to permit the Commission’s order to stand if it is not arbitrary and is free from fraud. We said in the recent case of City of Fort Smith v. S. W. Bell Tele. Co., 220 Ark. 70, 247 S. W. 2d 474, “If the Department’s [Commission] order is supported by substantial evidence, free from fraud, and not arbitrary, it is the duty of the Courts to permit it to stand, even though the Courts might disagree with the wisdom of the order.”

As to the power of the Commission to regulate rates of utilities § 73-218 Ark. Stats. 1947 provides: “The Department [Commission] upon complaint, or upon its own motion, shall, upon reasonable notice and after a hearing, have the power to: (1) Find and fix just, reasonable and sufficient rates to be thereafter observed, and enforced and demanded by any public utility.”

The Commission on November 22, 1954, after the extended hearing as indicated, made the following findings: “1. The Commission has jurisdiction under applicable statutes to determine the reasonableness of the Company’s rates upon its own motion or upon application of the Company for approval of a change in rates. 2. The filing of a new rate schedule and application for approval thereof by the Company put in issue the reasonableness of the rates, and in that connection the Commission has the right to determine any and every question incidental and pertinent thereto, notwithstanding its previous orders. 3. Consistent with the law and reason, the question of whether the company’s rates are reasonable depends upon the amount of the rate base and the rate of return determined in the light of present day conditions and circumstances, and not upon a formula process for determining the rate base of the Company devised in the year 1944 which obviously did not contemplate conditions and circumstances now apparent which require adjustment of such process; nor upon the fairness of a rate of return calculated under conditions and circumstances in the year 1944. 4. In determining the rate base of the Company, as well as determining the revenue and expenses of the Company, for the purpose of determining whether it is earning an adequate return upon its investment, some point of time must be fixed for the purpose of submitting pertinent facts and data, and in this proceeding sound reasoning requires that this period be fixed as the year commencing April 1, 1953 and ending March 31, 1954, which is the period used by the Company in submitting its application in this proceeding. 5. In determining the Electric Rate Base as provided for in the 1944 order, the percentage relationship between electric property and total property must be determined in order to arrive at the electric rate base, which is the portion of capital, liabilities and surplus that is invested in electric property according to the procedure specified in the 1944 order. All of Account 100.3, Construction Work in Progress, is included in • electric property; and over the past ten years the Company’s plant under construction has included substantial amounts which represented plant which, upon completion, brought in additional income or reduced expenses of operation. It is improper to use this plant under construction in the determination of the. rate base unless some provision is made for the inclu-; sion of additional revenues, or the exclusion of expenses' saved, particularly where it appears that interest is capitalized by the Company during the construction period which, as of the period, ending March 31, 1954, amounted to $1,097,655. The better procedure is to remove from electric property that portion of plant under construction which, when completed, will be revenue producing, or will effect substantial savings in operation cost; and Appendix (i) shbws the calculations as they should be made for the applicable period.

[Appendix i Arkansas Power & Light Company Determination of Deficiency in Return Under Staff Motion

The portions of the amounts in plant under construction which represent plant which will he revenue-producing when completed, $22,096,692 at April 1, 1953, and $29,269,798 at March 31, 1954, should be included in the classification of “Other Property.” To include this plant under construction in electric plant in calculating the rate base would result in distortion because the Company would be permitted to earn a return on that property before it is useful in providing utility service and before the full influence of the property on revenues and expenses has been felt. By this process the Electric Rate Base as of April 1, 1954, is $151,101,618.

“6. While the Commission’s order of June 24,1944, specified a rate of return of 6%, Arkansas Statutes and Court decisions do not require that the rate of return be 6%. The only requirement is that the rate of return be reasonable. In Appendix (i) [above], a rate of return of 6% has been applied to the rate base of $151,-101,618, and the resulting figure $9,066,097, is the annual allowable return. To this figure are added $96,258, which represents interest on customers deposits, and $415,070, which represents amortization of electric plant acquisition adjustments. Both of these figures are taken from Company Exhibit “F.” The total $9,577,425, is the base allowable return. 7. On the basis of the Company’s operating revenues and operating expenses for the year ended March 31, 1954, the amount available for allowable return has been determined to be $9,358,255 according to Company Exhibit “G.” To this, the amount of $196,482 should be added because of over-accrual of Federal Income taxes during the year ended March 31, 1954. The total of these two amounts is $9,554,737, which is the total available return. The total available return, $9,554,737, after taking into consideration the allowances for interest on customers deposits and the amortization of electric plant acquisition adjustment, represents a rate of return of 5.985% on the rate base as determined in Appendix (i). The difference between this and the 6% allowable under the 1944 order expressed in dollars amounts to $22,688, which is negligible. 8. Therefore, (1) the application of the Company to increase its rates should be dismissed; (2) the company should refund to its customers all amounts collected in excess of those amounts which would have been collected under the superseded rates, by rates placed into effect under bond; (3) the order of June 24, 1944, with respect to Sections II-A and IY-A should be amended, as hereafter provided. It is, therefore, ordered that: 1. The application of the Arkansas Power and Light Company for increase in its rates which was filed with this Commission on May 27, 1954, be, and is hereby, dismissed. 2. The Arkansas Power and Light Company within sixty (60) days from date of this order shall make refund to its customers all amounts collected in excess of those accounts which would have been collected under the rates superseded by the rates placed into effect under bond together with interest at the rate of six per cent (6%) per annum. 3. Section II-A of the order of June 24, 1944, be, and is hereby amended as follows: ... ” Then follows the amendment which would, in effect, disallow, as part of the rate base Account 100.3 (Work Under Construction) supra, and also would disallow the right to capitalize 6% thereon as part of the rate base. As thus amended, “the order of June 24, 1944, and amendments thereto, shall be continued in full force and effect. This order shall become effective fifteen (15) days from the date hereof. ’ ’

For reversal appellant presents the following points: “I. The Commission’s Amendment of its own Prudent Investment Standard was arbitrary and unreasonable and its findings of fact are not supported by any substantial evidence.

“The arbitrary Amendment of the June 24, 1944, Order deprives Company of its property without due process of law. II. The Commission’s Findings of Fact and its Selection of a Test Period were not supported by the evidence and were arbitrary. The Commission’s action deprived the company of due process of law. III. The Company was denied its Constitutional Rights of Procedural Due Process of Law. (a) The Commission denied the Company due process by amending the order of June. 24, 1944, without prior notice to the company or a hearing and acted beyond the powers granted by Act 324 of 1935. (b) The Commission denied the Company due process by rejecting all evidence of operations after March 31,1954, without prior notice and hearing to the Company. IV. The Commission’s Order of November 22,1954, was retroactive in effect and is therefore void. V. The Commission’s calculations and findings were erroneous and contrary to the order of November 22, 1954.”

The record reflects that the company, pursuant to the 1944 order, kept three separate accounts: (1) Account 100.1 denominated Plant in Service, (2) Account 100.3 •— “Construction Work in Progress” and (3) a special account called “Excess Net Electric Revenue Deferred Credit Fund” and was required to place in this last fund any earnings in excess of 6% of its capital investment allowed under the 1944 order. So, appellant, in effect, will always be held to 6% earnings.

In short, appellant stoutly argues (1) that the Commission was bound by the 1944 order which required it to follow the Prudent Investment theory, invaded its constitutional guarantee of due process and equal protection by refusing to include as a part of the rate base a proper average, or portion, of Account 100.3 (Construction Work in Progress) and also 6% interest thereon, in the amount of $1,097,655. In this connection appellant says: ‘‘The inclusion of construction work in progress in the rate base is expressly authorized by the order of 1944 and the accrual of interest during construction is authorized by the Uniform System of Accounts.” Appellant further contends, (2) that the Commission was without authority to change the 1944 order without first giving notice to appellant, and (3) that the Commission arbitrarily selected the testing period of the 12-month period ending March 31, 1954, and in refusing to consider as an additional testing period that period from March 31 to August 31, 1954. We do not agree :to any of these contentions.

(2). As to the question of notice [which we first consider] we hold that ample notice was in fact given to appellant. This was evidenced in the order of June 2, 1954 and that of August 24, 1954, suspending the effective date of the rates in order that an investigation could be made. As indicated, appellant, initiated the present action for increased rates on May 27, 1954; and, it further appears that on August 20, 1954, one of the city intervenors, the City of Little Bock, filed its intervention which it denominated: “Petition for review of all prior orders establishing rate of return on plant investment,” and asked the Commission to review all orders previously made by it as to percentage of earnings allowable on net plant investment. The Attorney General’s intervention contained this prayer: “Wherefore, the intervenor prays that the foregoing matter be fully developed as to the Bate Base, Bate of Beturn and all other particulars in order that a fair and equitable rate may be established for all parties and classes of consumers concerned.” As indicated, the Commission’s order denying appellant’s petition was not made until November 22, 1954.

(3). As to the testing period, it clearly appears to us from the record that the appellant, itself, in its Bate Application chose the testing period, and the Commission accepted Appellant’s choice. Appellant’s Application was tried throughout on the theory that the test period should be the 12 months ending March 31, 1954. In other words, March 31 was to be the cut-off period of this pattern year. As we read the record, the Commission, in effect, appears to have adopted the course of using a test period selected by appellant and based on appellant’s most recent actual experience, and adjusted to known charges affecting operating costs and revenues in the immediate future. We, therefore, hold that appellant is not in position to question the test period.

THE RATE BASE. (1) It appears that the Commission determined the rate base to be $151,125,571 (Appendix i above) and the allowable rate thereon of 6% (or 5.985% or approximately 6%) amounting to $9,554,-737, as the annual allowable return. In establishing this rate base the commission refused to allow the average amount over the test period that the power company had invested in “Work Under Construction” (Account 100.3) .and not revenue producing. We hold that there was substantial evidence to support the findings and conclusions reached by the Commission, under the broad powers granted to it, and that the Commission in its actions did not invade the company’s constitutional rights. It was clearly the duty of the Commission, when the company sought an increase in rates, to determine whether the company was entitled to any increase in order to earn a fair return on its invested capital. It was not bound by its 1944 Order, and could make changes in it, on proper notice to appellant — which it did — just as long as, in so doing, it did not invade the constitutional rights of the power company. “Whenever there is filed with the Department by any public utility any schedule stating a new rate or rates, the Department may, either upon complaint or upon its own motion, upon reasonable notice, enter upon an investigation concerning the lawfulness of such rate or rates; ...” [Section 18 (b) Act 324 of 1935, now § 73-217 b Ark. Stats. 1947].

In a well considered and reasoned case — from which we' shall quote somewhat at length — where the situation was similar, in effect, to that on which our Commission acted here, the Supreme Court of Vermont in Re Central Vermont Public Service Corp., 116 Va. 206, 71A 2d 576, 83 PUR NS 47, with reference to the duty and powers of a public service commission of that state to follow any certain formula in fixing rates, announced certain rules and principles of law applicable here. It was there said: “In the employment of its test-year basis the commission made no adjustment for the revenues which would be produced from the plant under construction when completed. Once it had been decided to eliminate plant under construction from the rate base [as here] the exclusion of revenues to be received therefrom automatically followed. Only so could it be determined whether the petitioners’ earnings were adequate to provide a fair return on the property producing those earnings. Both property under construction and the estimated revenues therefrom must be included in the rate base, or neither.” Here the commission included neither, which was proper. “. . . The inclusion of property under construction before the plant which it is designed to replace has actually been retired would obviously result in a double return ... In the computation of the rate base, allowance is afforded the petitioner for capitalization of materials used in construction and inventories on hand before they were used in the process of construction . . .

“The issue here presented, that is, inclusion or exclusion of property under construction, is essentially one of fact for the commission’s determination. The commission has found for exclusion, and no error appears.
“An administrative agency performing the delegated legislative function of rate making has a broad discretion. Mr. Justice Cardozo, speaking for the United States Supreme Court, said of it: ‘Regulatory Commissions have been invested with broad powers within the sphere of duty assigned to them by law. Even in quasijudicial proceedings their informed and expert judgment exacts and receives a proper deference from courts when it has been reached with due submission to constitutional restraints . . . Indeed, much that they do within the realm of administrative discretion is exempt from supervision if those restraints have been obeyed.’ Ohio Bell Teleph. Co. v. Ohio Pub. Utilities Comm. (1937) 301 U. S. 292, 304, 81 L. ed. 1093, 1101, 18 PUR NS 305, 313, 57 S Ct 724, 730. Such Commissions are not bound to the service of any single formula or combination of formulas. Federal Power Commission v. Natural Gas Pipeline Co. (1942) 315 US 575, 586, 86 L ed 1037, 1049, 1050, 42 PUR NS 129, 138, 62 S Ct 736, 743. In that case Mr. Chief Justice Stone said for the court: ‘Agencies to whom this legislative power has been delegated are free, within the ambit of their statutory authority, to make the pragmatic adjustments which may be called for by particular circumstances. Once a fair hearing has been given, proper findings made and other statutory requirements satisfied, the courts cannot intervene in the absence of a clear showing that the limits of due process have been overstepped. If the Commission’s order, as applied to the facts before it and viewed in its entirety, produces no arbitrary result, our inquiry is at an end.’ ”

Having concluded that our Commission here, has acted within its statutory authority, and that there was substantial evidence adduced to support its findings and order, we must and do affirm the judgment of the Pulaski Circuit Court.

Chief Justice Seamster not participating, Justice McFaddin dissenting in part.

Ed. F. McFaddin, Associate Justice

(dissenting in part). There is only one point on which I dissent, but I consider that point to be of sufficient importance to require that the entire case be returned to the Public Service Commission to give further consideration to the matter of a rate increase in the light of this one point. It is this: in deciding that Arkansas Power & Light Company was not entitled to any rate increase, the Commission deliberately refused to consider an item of approximately Twenty Million Dollars which passed from “Construction Work in Progress” (Account No. 100.3) to “Plant Account” (Account No. 100) during the course of the hearings. I think the Commission should have considered this item in deciding a fair rate for the foreseeable future; it was duly called to the attention of the Commission and yet consideration was refused; and the result was to fix a rate of return ignoring this item of approximately Twenty Million Dollars that was used and useful in the public service at the very time that the Commission made its order of November 22, 1954 in this case. So much for summary: now for the details.

In 1944 the then Department of Public Utilities — now the Public Service Commission — had an extensive investigation into the affairs of the Arkansas Power & Light Company (hereinafter called “Power Company”). That hearing resulted in the order of 1944 adopting the “prm dent investment rate base,” and allowing the Power Company to earn 6% on the said rate base. The 1944 order also provided, inter alia, that the Power Company should file regular returns on prescribed forms and that if the net return of the Power Company at any time exceeded 6% on the said rate base, then said excess should be put into a special account to be held for disposition by the Commission. In the 1944 order, a rate base formula was adopted which allowed the Power Company to consider as used and useful in the public service all amounts shown in the “Construction Work in Progress Account,” which was and is carried on the books of the Power Company as Account No. 100.3: that is, during the time any plant was in the course of construction, the Power Company was allowed to consider that account as a part of its prudent investment, even though it might be some time until the particular plant under construction actually went into use as serving the public. This Account No. 100.3, called “Construction Work in Progress Account,” is one of the main issues in the present case, and must be constantly remembered. ' .

The 1944 order- — setting up the aforesaid formula — ■ continued as satisfactory both to the Power Company and the Commission until May 27, 1954, when the Power Company filed the presént application for rate increase, claiming that it was not earning 6% on its rate base as calculated under the 1944 order. To establish that it was not earning the 6°/o return, the Power Company selected the test year beginning April 1, 1953 and ending March 31,1954. Since the application for rate increase was filed May 27,1954, the year ending March 31,1954 was as near to the filing date as bookkeeping methods permitted. This test year was selected by the Power Company, so March 31, 1954 was the “saw-off” date at the time the petition was filed. After various interventions, pre-trial conferences, etc., the hearing finally got under way, and the Power Company established that on April 1, 1953, the beginning of the test year, it had in the Account No. 100.3 (Construction Work in Progress) the sum of $22,096,-692.00; and on March 31, 1954, the close of the test year, the Power Company had in the said Account $29,269,-798.00. The average of the opening and closing amount was $25,683,245.00, which, in round figures, I list at Twenty-five Million Dollars as the average of the ‘ Construction Work in Progress Account” during the test year.

When the Commission found this amount in the Account No. 100.3 (Construction Work in Progress), the Commission decided that the Twenty-five Million Dollars represented an amount that was not then — on March 31, 1954 — actually “used and useful in the public interest”: rather, it was an amount of money then tied up in construction but not actually used by the Power Company in serving the public. The Commission, by its order of November 22, 1954 (here appealed from), held that the amount shown in Account No. 100.3 should not be considered in deciding a rate increase. In other words, the Commission changed the “prudent investment formula” prescribed in the 1944 order so as to eliminate from the rate base the amount in Account No. 100.3 on March 31, 1954. With such amount of Twenty-five Million Dollars eliminated, the Commission found that the Power Company was making approximately 6% on its rate base and, therefore, denied any increase. As aforesaid, this Account No. 100.3 (Construction Work in Progress) is the big issue in this case. There are many other issues, but I direct my attention solely to this one issue because I consider it to be of sufficient magnitude to justify a reconsideration by the Commission.

The Power Company claims that the Commission had no right to change the ‘ ‘ prudent investment formula ’ ’ set up in the 1944 order, and that such change — the elimination of Account No. 100.3 — is confiscatory, retroactive, void, etc. I see no merit in this argument of the Power Company. Any regulatory tribunal, like the Public Service Commission, can change the formula for determining the rate base at any time, so long at the formula adopted and put into existence prescribes a fair rate of return for the foreseeable future. In the case of City of Ft. Smith v. Southwestern Bell Tele. Co., 220 Ark. 70, 247 S. W. 2d 474, there were mentioned several different methods for determining a rate base. The telephone rate was based on ‘ ‘ net cost less depreciation. ’ ’ Other formulas or methods to determine the rate base were mentioned as “original cost” and “reproduction value”; and, here, the Power Company’s rate base is on “prudent investment.” In the case of City of Ft. Smith v. Southwestern Bell Tele. Co., supra, we said:

“Prom all of the cases and authorities which we have studied, we reach the conclusion that no public utility has a vested right to any particular method of valuation. The aim of a regulatory body is to determine a fair valuation; and the method of calculation may vary as between the type of the utility involved and the economic conditions existing. ’ ’

No utility acquires a contractual right to any particular method of determining its rate base. The question is always: “What is a fair method to determine the rate base ? ” In its application of May 27,1954, the Power Company said it was entitled to a rate increase and thereby asked the Commission to investigate the affairs of the Power Company. The power to investigate carries with it the power to change the previous method of determining the rate base. The only restrictions on the Commission in event of such change are (a) that the rate base selected be fair and reasonable in the light of business conditions; and (b) that it will yield a fair and reasonable return in the foreseeable future. So I see no merit in the Power Company’s claim that the Commission had no power to change the rate base formula prescribed in the 1944 order. ' ■

But, when I consider what the Commission did in its order of November 22, 1954 about the Account No. 100.3 (Construction Work in Progress), I find myself in dissent from the majority opinion in the case at bar: the Commission refused to consider the fact that, within two months from March 31, 1954, approximately Twenty ^Million Dollars of the Twenty-five Million Dollars in Account No. 100.3 had passed from Construction Work in Progress into the Plant Account of the Power Company. In other words, during the course of the hearing before the Commission, it was definitely shown that approximately Twenty Million Dollars had passed to the stage of “used and useful in the public service”; yet the Commission refused to consider that matter of Twenty Million Dollars in deciding a rate base for the foreseeable future. I think the Commission acted arbitrarily in refusing to consider such fact before it when it made its order of November 22, 1954.

It must be borne in mind that months were spent by the Commission in examining and cross-examining the witnesses put on by the Power Company. Then, when the Power Company rested, the staff of the Public Service Commission moved that the petition for rate increase be dismissed because the staff of the Public Service Commission claimed that the Power Company had not shown itself entitled to any increase. Hearings were held all through August, 1954 and over into November, 1954; and in these hearings it was shown by the Power Company that, as of August 31, 1954, the balance in the Account No. 100.3 (Construction Work in Progress) was only $4,856,306.00. Thus, from the average of $25,683,245.00 shown in the Account No. 100.3 for the test year, the sum of $20,826,939.00 had passed from the ‘ ‘ Construction Work in Progress Account” to the “Plant Account” actually used and useful in the public service.' Thus, when the Commission made its order on November 22, 1954 (entirely eliminating the Account No. 100.3 — Construction Work in Progress), the Commission had uncontra-dicted evidence before it which showed that more than Twenty Million Dollars — entirely excluded because it was “Construction Work in Progress” on March 31, 1954— had, by August 31, 1954, become “Plant Account,” used and useful in the public service. Yet the Commission entirely refused, in its order of November 22, 1954, to allow the Company any return on the said Twenty Million Dollars that had become used and useful in the public service in the course of the hearing.

The Commission was not set up to determine whether a rate base was fair in the' past, but to determine a rate base that would be fair in the foreseeable future; and when this Twenty Million Dollar item was not taken into consideration, I think the result reached by the Commission was arbitrary and approaches the borderline of confiscation. In City of Ft. Smith v. Southwestern Bell Tele. Co., 220 Ark. 70, 247 S. W. 2d 474, in speaking on this point, we quoted from McCardle v. Indianapolis Water Co., 272 U. S. 400, 71 L. Ed. 316, 47 S. Ct. 144, as follows :

“ ‘In every confiscation case, the future as well as the present must be regarded. It must be determined whether the rates complained of are yielding and will yield, over and above the amounts required to pay taxes and proper operating charges, a sum sufficient to constitute just compensation for the use of the property employed to furnish the service; that is, a reasonable rate of return on the value of the property at the time of the investigation and for a reasonable time in the immediate future. ’ ’ ’ And then we stated our own conclusions:
“We recognize that a utility rate must be reasonable and just as to the present, and also for a reasonable time in the future, and that the Commission may — in order to forestall subsequent applications for rate increase — allow a reasonable figure for anticipated extensions to be made in the- future. But to anticipate reasonable future extensions is one thing, and quite another thing to select a future date after the closing of the evidence on which to base a factual finding as to value of property. We adhere to the view that in order to determine the actual plant, used and useful, on a certain date, there must be proof, as distinguished from mere promises or predictions; . . .”

In the case at bar the Power Company met the test by offering actual proof, because it showed that on August 31, 1954 more than Twenty Million Dollars had been passed from ‘ ‘ Construction Work in Progress ” to “ Plant, used and useful in the public service”; and yet the Commission refused to consider any situation arising after March 31, 1954. Therein I think was the fatal error in this hearing.

It is argued in the briefs that the Commission had the right to assume that the Twenty Million Dollars in new Plant would produce, enough additional revenue to afford a 6% net return on the Twenty Million Dollars. As far as I can find, there is no evidence from which the Commission could reach any such assumption. At all events, the Commission did not offer any such explanation in its order of November 22, 1954. In the 1944 order it was provided that the Power Company would make semi-annual returns and, if it ever earned more than 6%, such excess was to be put into a special account. With that provision facing the Commission, I can see no justification for the Commission’s refusal to consider the approximately Twenty Million Dollars that passed from Construction Work in Progress to Plant, used and useful in the public service, during the course of this hearing. I seriously believe that the Commission’s failure to consider the item justifies the Power Company’s claim of arbitrariness and confiscation, unless this Court is now willing to say — and I am not — that, even considering the item, the rate of the return to the Power Company, though less than 6%, is still an adequate return. I am not willing to go that far in this case. The majority has not shown itself willing to go that far; and, therefore, I think this case should be returned to the Commission to consider a rate increase in the light of facts that occurred during the course of its hearing. It is entirely proper to consider a test year, but what the Supreme Court of Pennsylvania said in the case of City of Pittsburgh v. Pa. Pub. Util. Com’n, 171 Pa. 187, 90 Atl. 2d 607, is apropos to the situation here:

“We recognize the necessity, as a practical matter, for a cut-off date and the use of a base year in arriving at a final determination. But the Commission cannot be oblivious to recent figures in its own files supplied by the utility. . . . The Commission may not ignore recent information and evidence which substantially affect the problem before it. Allowance must, of course, be made for property additions to the rate base. . . . The Commission should also consider any further available material evidence on this question. As the Commission said in its present order: ‘ Equity requires that respondent’s rates, being made for the future, should be predicated upon the latest tax conditions known.’ ”

For the reasons herein stated, I respectfully dissent.

       The Department of Public Utilities was the name of the administrative tribunal in 1944 (see Act No. 324 of 1935). By Act No. 40 of 1945, and later by Act No. 155 of 1951, the name was changed to the present name, “Public Service Commission,” and the powers and duties of the old “Department of Public Utilities” were transferred to the present Public Service Commission. See § 73-101 et s'eq., Ark. Stats.

       But months were spent in the course of the hearing, and the order of the Commission denying the Power Company a rate increase was dated November 22, 1954.

       I am inclined to believe that the Commission was in error in refusing due consideration to an item of increased labor costs that occurred during the course of the hearing.

       Part of this was Lynch Unit No. 3 which was placed in operation on June 19,1954; and Couch Unit No. 2 which was placed in operation on July 31, 1954; and part related to heavy transmission lines.

       If my views — as herein expressed — had prevailed and the cause had been remanded to the Commission to consider a rate schedule to include this Twenty Million Dollar item, then I would have voted that the Commission should exclude from the Account No. 100.3 (Construction Work in Progress) any amounts that represented accrued interest as distinct from actual cash invested. To allow accrued interest would be to allow the Power Company a rate of return on “accrued items” rather than “actual investment items.” This is discussed by the Vermont Supreme Court in “Petition of Central Vermont Public Service Corp., 71-Atl. 2d 576.”