text:
    ARKANSAS LOUISIANA GAS CO. v. CITY of LITTLE ROCK, Ark. et al
    73-237
    506 S.W. 2d 555
    Opinion delivered March 4, 1974
    [Rehearing denied April 8, 1974.]

      Baker & Probsl, P.A., by: Charles II . Baker, for appellant.

      Joseph C. Kemp, City Atty.; Smith, Williams, Friday, Eldredge & Clark, by: William L. Terry, for appellees.
   LYLE Brown, Justice.

The appellant Arkansas Louisiana Gas Company (Arkla) is a privately owned gas distribution utility; its franchise covers the city of Little Rock. Appellees are the city of Little Rock and the Little Rock Housing Authority. The crucial question is whether appellant or appellee Housing Authority must pay the cost of relocating gas lines within the existing street limits made necessary by an urban renewal improvement project. It is not disputed that if the project work was done either by the City or its agents, then Arkla must do the relocations at its own expense. Arkansas State Highway Comm’n v. Arkansas P&L. Co., 235 Ark. 277, 359 S.W. 2d 441 (1962); Arkansas State Highway Comm'n. v. Arkansas P. & L. Co., 231 Ark. 307, 330 S.W. 2d 77 (1959). To the contrary, Arkla contends that Housing Authority did not act as the agent for the City in carrying out the project and therefore Housing Authority is liable for the expense. The trial court found that the burden of the cost fell on Arkla on the theory that Housing Authority was in fact the agent of the City.

To sustain the trial court we would have to hold that in performing the project, the relationship of principal and agent existed between the City and Housing Authority, with the latter subject to the direction and control of the City. For the reasons hereinafter recited we find to the contrary.

Over the last several years Housing Authority has been engaged in various urban renewal projects in Little Rock. One of the improvements, and the one which gave rise to this litigation, was the modernization of a storm drainage system and a drainage ditch, publicly known as Swaggerty Branch, south of Roosevelt Road and east of High Street. The branch traverses several street crossings in the area. New bridges, street improvements, channelization of the branch and installation of underground storm sewers and drainage were the types of work to be done. Those improvements required the relocation of appellant’s lines. Housing Authority filed this suit to require appellant to relocate the lines without cost 4o Housing Authority. By stipulation Housing Authority deposited the estimated cost of relocation and it was agreed that Arkla would be reimbursed if the court so required. Arkla completed the relocation at a cost of $8272.89. Approximately one year after the original suit was filed, the City was permitted to join in as a plaintiff.

Housing authorities in the various cities and counties were authorized by Act 298 of the 1937 General Assembly. Ark. Stat. Ann. § 19-3001 et seq. (Repl. 1968). Pursuant to that act the city of Little Rock passed a resolution activating the Little Rock Housing Authority. That act authorized the development and operation of housing projects. In .1945, the housing authority act was enlarged by providing for urban renewal projects by the Housing Authority, those projects having to do with acquisition, clearance and redevelopment of blighted areas. Ark. Stat. Ann. § 19-3056 (Repl. 1968). It was under the 1945 amendment that the Swaggerty Branch project was instituted.

The main reason fot holding as we do is that historically the housing authorities throughout the country have consistently been held to be separate and independent bodies corporate. The housing authorities acts heretofore enumerated are very extensive, a recitation of which would unduly lengthen this opinion. Summing up, the statutes demonstrate that the housing authorities are autonomous entities that have the power to act in every field related to their work independently of the cities.

The only case from our jurisdiction called to our attention is Fagan Electric Co., Inc. v. The Housing Authority of Blytheville, 216 Ark. 932, 228 S.W. 2d 39 (1950). The case is not squarely in point but it does point up the independence of a housing authority. There it was said that a housing authority “is no more an agency of the State than is any other corporation as to which the State has done nothing except bring it into existence”.

A case more in point is Housing Authority of City of Los Angeles v. City of Los Angeles, 243 P. 2d 515 (1952). There a slum clearance project under urban renewal had been in operation for two years and the city tried to rescind its cooperation agreement with the housing authority. The court said: “Each functioning body, the city and the housing authority, is a separate body politic vested with specific duties and powers under the Housing Authorities Law and Housing Cooperation Law ...”

In a New York case the court had before it the question of the relation of the housing authority to the State and the City. The court said: “The very name ‘authority’ given to this type of public corporation imparts a distinct historical connotation of separateness and juridicial distinction from the State and from the municipal corporations of the State”. Ciulla v. State, 77 NYS 2d 545, 191 Misc. 528 (1948).

Then there is the case of Tumulty v. Jersey City, 155 A 2d 148 (1959), which characterizes the local housing authority as being a separate, independent agency not subordinate to the municipality. It was the intent of the legislature, so the opinion concludes, that the authority be free from the domination of the local governing body.

An eighth circuit court of appeals case dealing with our housing statutes is L. C. Eddy, Inc., v. City of Arkadelphia, 303 F. 2d 473 (1962). The court there characterizes the Arkansas Housing Authorities Act as endowing the Authority “with all the attributes of a municipal corporation”.

From a study of the statutes, and in view of the cited authorities, we conclude that it was not the intention of the General Assembly that the urban renewal projects be carried out by the housing authority in some type of principal-agent relationship whereby the authority would be acting under the direction and control of and subservient to, the wishes of the local governing body. Once the governing body of the municipality approves a proposed urban renewal project and executes a cooperation agreement, the authority is free to develop the project according to the plans and without direction from the municipality. Incidentally, the cooperation agreement relative to the subject (Swaggerty Branch) nowhere intimates that the project shall be carried on with the City as principal and the Housing Authority as agent.

The main argument of appellees for the theory of principal-agent relationship between appellees is the passage of two resolutions. The City passed a resolution in August 1949 wherein it was resolved: “The Little Rock Housing Authority is hereby designated as the agency (emphasis supplied) for the city of Little Rock to do such things and perform such duties as may be necessary for the city of Little Rock to participate in the program established by the Housing Act of 1949 of the 81st Congress, and particularly the program established by Title I of said Act”. One week later the Housing Authority, in recognition of the City’s resolution, passed its resolution accepting the offer of the City and “hereby agrees to act as the agency for the city of Little Rock in the Program of Slum Clearance and Urban Redevelopment”. The word agent was used in one of the “whereas” paragraphs: “Whereas, Act 212 of Arkansas Act of 1945 designates Housing Authority in the State of Arkansas to act as the agent for municipalities in Slum Clearance and Urban Redevelopment”. We have carefully scrutinized Act 212 and we find no mention of agent. Also, later resolutions to which we shall later refer make no mention of an agency.

Although the City did lend its cooperation under a written agreement of cooperation, it is clear that Housing Authority was the dominant moving party in the Swaggerty Branch improvement. Arkla’s witness testified that “Arkla had all of its correspondence regarding this project from the Housing Authority and none from the City”. In Resolution 2483 of Housing Authority it is stated:

Housing Authority . . . proposes to undertake and carry out a Neighborhood Development Program . . . and Housing Authority proposes to enter into a Loan and Grant Contract with Housing and Urban Development.

The same language appears in the City’s Resolution 4352 and in the cooperation agreement executed between the Housing Authority and the City. The resolutions to which we refer were in connection with Swaggerty.

Clifford L. Giles has been executive director of Housing Authority for four years. With reference to the project before us, the abstract of Giles’ cross-examination reveals: “The resolution of the City Board of Directors contains the recitation that the Housing Authority proposes to undertake and that the Housing Authority with the aid and cooperation of the City proposes to undertake. It doesn’t say anything about Housing Authority being the agent of the City. There is nothing in the Resolution of the Board of Directors that says the Housing Authority is acting as agent”.

We hold that the redevelopment project in litigation,was in actuality the project of Housing Authority; that Housing Authority was the moving force in causing the gas lines to be altered; that so much of the deposit as is necessary to reimburse Arkla for actual cost should be paid over to it; and that the costs in the trial court should be assessed against appellees.

Reversed and remanded for entry of order consistent with this opinion.


source: Caselaw Access Project

author: JOHN A. FOGLEMAN, Justice.

license: Public Domain

text:
    Willie GRAVES v. STATE of Arkansas
    CR 73-164
    505 S.W. 2d 748
    Opinion delivered March 4, 1974

      Richard L. Slagle, for appellant.

      Jim Guy Tucker, Atty. Gen., by: 0. II. Hargraves, Dep. Atty. Gen., for appellee.
   JOHN A. FOGLEMAN, Justice.

Appellant Willie Graves, an indigent, was convicted of robbery and sentenced to nine years in the penitentiary. For reversal appellant contends the failure of the Municipal Court of Hot Springs to appoint counsel to represent him at a preliminary hearing held on the day following his arrest, together with the subsequent denial .by the Circuit Court of Garland County of his pretrial motion to remand for a preliminary hearing after counsel had been appointed, deprived him of the right to counsel at a critical stage in the criminal process. He also alleges that the judgment was not supported by the evidence and that a ring in-eroduced into evidence was obtained as a result of an illegal arrest and a warrantless search.

Robert. Simpson, a Springfield, Missouri, resident, who was in Hot Springs on business, gave the following account of the incident:

On the night of September 6, 1972, Simpson, who had been visiting bars and having a drink of beer in each, was approached in a bar by the appellant who inquired if Simpson wanted a girl. Simpson said no, left the bar and returned to his car. Appellant appeared at the car window and tapped on it. Simpson lowered the window and appellant reached through, unlocked the door, opened it, and got in the automobile. Appellant told Simpson to drive to a certain address to find a girl and Simpson, believing this to be the easiest way to get appellant out of the car, complied. Upon reaching the address (317 Grove), both men got out of the car. At this point, appellant struck Simpson from behind, and began clawing at his clothes trying to get in his pockets. When the first police officers arrived, both men were down, and the struggle was still in progress, but Graves then arose, and by the time the officers got out of the car both Simpson and appellant were searching for Simpson’s glasses which had been knocked off in the struggle. Simpson told the first officer to arrive what had happened, and in response to questions from the officers, realized that a diamond ring was missing from his little finger. The ring was recovered from appellant, but Simpson did not see the actual search of appellant’s person.

Simpson also testified he did not remember blowing the horn at the residence located at. 317 Grove, did not recall appellant going to the house and did not remember a woman coming out to the car. Simpson said he could not remember if he ever asked appellant to get out of the car, and could not explain why he did not drive off when appellant left the car at their destination. Simpson said he thought his pants were unzipped when the officers arrived, but denied any homosexual relationship with appellant.

Officer Hayes of the Hot Springs Police Department testified that at about 1:00 a.m. on September 7, he and Officer John Trammel were dispatched to 317 Grove. Hayes said that upon reaching the scene he observed another police car already there with the officers still seated in the vehicle. He stated no struggle was going on, and said appellant was attempting to enter the Simpson car and Simpson was stammering and “staggerin’ around” at the rear of the car. According to Hayes, he conferred briefly with Officer Cockman, who had arrived in the other police car, and then walked over to Simpson, who told him appellant had robbed him of a diamond ring which he described, in response to Hayes’ questions, as a Shriner’s ring worth $2,500. Hayes said he then arrested appellant, “frisked” him and placed him in his police car. After talking further with Simpson and taking a statement from Jewell Lofton, who lived at 317 Grove, and who had called the police, Hayes said he asked appellant if he had the ring, and appellant said he did not. Hayes stated he then ordered appellant out of the car and conducted another search which resulted in the ring being found in appellant’s shoe.

Appellant took the stand and gave the following version of the incident:

As appellant walked out of a bar, Simpson, who was seated in a car parked at the curb, asked appellant if he could arrange a date for him. At Simpson’s invitation, appellant got into the car, and directed Simpson to the Grove Street address, where Jewell Lofton lived. After Simpson blew the horn, appellant went to the door and talked to Miss Lofton, who refused his proposal. When appellant returned to the car, Simpson, who was urinating in the yard, made homosexual advances toward him. Appellant hit Simpson, and a struggle ensued. The fight stopped just before the first police car approached. Simpson asked appellant to help find his glasses, which had been lost in the struggle, and to say nothing to the officers. Appellant found the glasses and the ring, returned the glasses to Simpson, but, not knowing to whom the ring belonged, stuck it in his shoe. He then told the first officer who inquired that nothing was wrong. Officer Hayes then arrived, and Simpson told him appellant was trying to rob him. Hayes jumped from his car, grabbed appellant, searched him and placed him in the police car. Hayes talked to Simpson, and then returned to the car and told appellant to get out for another search, because Simpson said he had lost a ring. The second search produced the ring from his shoe.

We find error in the failure to provide counsel at the preliminary hearing. The United States Supreme Court has held that, when a preliminary hearing is conducted prior to a grand jury proceeding, the appointment of counsel for an indigent is required. Coleman v. Alabama, 399 U.S. 1, 90 S. Ct. 1999, 26 L. Ed. 2d 387 (1970). The court, looking, as it held it must, to Alabama law to determine the purpose of that state’s preliminary hearing, found that, since a grand jury indictment could have been sought without having it, the hearing was not a step required in prosecution, but was conducted for the sole purpose of determining whether there was sufficient evidence against the defendant to warrant presenting the case to the grand jury, and if there was, to fix bail. Still, according to the United States Supreme Court, a preliminary hearing under such circumstances is a critical stage requiring the assistance of counsel to an accused.

In Arkansas, as in Alabama, the holding of the preliminary hearing is discretionary. Jeffries v. State, 255 Ark. 501, 501 S.W. 2d 600; Ellingburg v. State, 254 Ark. 199, 492 S.W. 2d 904. We have held that the purpose of our preliminary hearing is to determine whether the accused should be held to await grant jury action so that, in the meantime, he would not unlawfully be deprived of his freedom if there were not sufficient grounds for holding him. Day v. State, 185 Ark. 710, 49 S.W. 2d 380. Since that decision our Constitution has been amended to make an information by a prosecuting attorney an alternative to indictment by a grand jury. Amendment 21.

The United States Supreme Court, in reaching the decision in Coleman v. Alabama, supra, set out four major reasons why counsel was required at a preliminary hearing:

Plainly the guiding hand of counsel at the preliminary hearing is essential to protect the indigent accused against an erroneous or improper prosecution. First, the lawyer’s skilled examination and cross-examination of witnesses may expose fatal weaknesses in the State’s case that may lead the magistrate to refuse to bind the accused over. Second, in any event, the skilled interrogation of witnesses by an experienced lawyer can fashion a vital impeachment tool for use in cross-examination of the State’s witnesses at the trial, or preserve testimony favorable to the accused of a witness who does not appear at the trial. Third, trained counsel can more effectively discover the case the State has against his client and make possible the preparation of a proper defense to rneei that case at the trial. Fourth, counsel can also be influential at the preliminary hearing in making effective arguments for the accused on such matters as the necessity for an early psychiatric examination or bail. . • . •

This case differs from Coleman only in that no grand jury indictment was returned against appellant; instead, he was tried on an information filed by the prosecuting attorney. The Coleman rationale set out above is fully as applicable when an information is filed subsequent to the hearing as it is when a grand jury indictment is the means of bringing the accused to trial.

The record in this case reveals numerous contradictions in testimony, which, if known to defense counsel prior to trial, could have provided a “vital impeachment tool.” For example, Simpson’s testimony indicated that the fight was still in progress when the officers arrived, and that he immediately told the first officers on the scene what had happened. When Officers Hairston and Hayes and Jewell Lofton testified, their testimony was that the two men were looking for something when the first police car arrived, and that, since appellant said there was no trouble and Simpson said nothing, those policemen were pulling away from the scene when other officers arrived and confirmed that this was the address where a disturbance had been reported. There was also a conflict in the statements concerning the recovery of Simpson’s glasses, with the officers saying that appellant had been arrested and placed in the police car when the glasses were found. Both appellant and Simpson stated the glasses were recovered and returned by appellant. Jewell Lofton’s testimony contained contradictory statements about whether appellant came to her door or whether she went out to the Simpson car. She also testified at the trial that she was listening to records when appellant arrived, but her earlier statement to Officer Hayes was that she had been asleep. This witness finally admitted she had been sick for a time since this incident, and said her memory had “vacated” until she was served with a subpoena, at which point she once more remembered what had happened.

In view of appellant’s version of the facts and his contentions concerning an illegal arrest and search, his counsel’s knowledge of the inconsistencies in testimony as to the sequence of events beginning with the arrival of the first police unit and as to whether Simpson was ever left alone in his car at 317 Grove could have been of crucial importance in preparing appellant’s defense. A preliminary hearing with counsel could have disclosed this information. Furthermore, such a hearing would have provided an opportunity to preserve the testimony of Miss Lofton, who admitted that illness had affected her memory and that she had completely forgotten the entire incident until she was served with a subpoena. Her memory was somewhat confused at the time of the trial, and required considerable refreshing. We do not know of any means more suitable than that employed by appellant’s counsel to seek to have, before trial, the benefits he might have had from having participated in a preliminary hearing.

We will presume error to be prejudicial in the absence of an affirmative showing to the contrary, unless it manifestly is not. Cabbiness v. State, 241 Ark. 898, 410 S.W. 2d 867; Connelly v. State, 232 Ark. 297, 335 S.W. 2d 723. If the record had revealed that the conflicting statements of the witnesses had been disclosed to appellant’s attorney or that the prosecution had furnished appellant with a complete transcript of the hearing, we might be able to say, depending upon the nature and content of such disclosures, that appellant had not been prejudiced by deprivation of the assistance of counsel at the preliminary hearing. Since we cannot say with assurance that the error in this case was not prejudicial, we must reverse the conviction. Upton v. State, 254 Ark. 664, 497 S.W. 2d 696.

However, since the previous trial provided appellant’s counsel with access to all the information that a preliminary hearing could hav afforded, and perhaps more, there is no necessity to remand the case for another preliminary hearing, but the judgment must be reversed and the cause remanded for new tria!. Sinoe we cannot say with assurance that the error was not prejudicial, no other result seems possible under the clear mandate of the United States Supreme Court in Coleman v. Alabama, supra.

Appellant also contends the judgment was not supported by substantia! evidence. On appeal, we must view the evidence in the light most favorable to the appellee. Murphy v. State, 248 Ark. 794. 454 S.W. 2d 302; Stanley v. State, 248 Ark. 787, 454 S.W. 2d 72. Robbery consists of the taking of anything of value from the person of another by force or intimidation. Ark. Stat. Ann. § 41-3601 (Repl. 1964). The prosecuting witness, Simpson, testified that appellant assaulted him, clawed at him and tried to get his hands into Simpson’s pockets. When the police arrived, Simpson told the officers what had occurred and that a diamond ring was missing from his hand. The appellant was arrested, and a search of his person recovered the ring from his shoe. We cannot say the evidence supporting the conviction was insubstantial.

We find appellant’s allegation that Simpson’s ring was recovered in a search pursuant to an illegal arrest and therefore improperly introduced into evidence to be without merit. A police officer may make an arrest without a warrant when he has reasonable grounds for believing that the person arrested has committed a felony. Ark. Stat. Ann. § 43-403 (Repl. 1964). We must look to the time, place and circumstances in determining the existence of the “reasonable grounds” required by the statute and the “probable cause” required by the Fourth Amendment to the United States Constitution. Smith v. State, 241 Ark. 958, 411 S.W. 2d 510. The police officers went to the scene at approximately 1:00 a.m. in response to a report that a fight was in progress. They found appellant and Simpson, with the latter appearing quite disheveled and having an abrasion on his head. Simpson told the officer that appellant had attacked him, and that his diamond ring was missing. To have probable cause for arrest, the police must have more than a mere suspicion that criminal activity had occurred, but the information need not be tantamount to the degree of proof necessary to sustain a conviction. Jones v. State, 246 Ark. 1057, 441 S.W. 2d 458. The circumstances here gave rise to more than a mere suspicion of criminal activity. Since the search was pursuant to a valid arrest, the introduction of the ring into evidence was not improper. Jones v. State, supra.

The judgment is reversed and the cause remanded for a new trial.


author: J. FRED JONES, Justice.

text:
    Allen GREEN v. ARKANSAS POWER & LIGHT COMPANY
    73-230
    505 S.W. 2d 743
    Opinion delivered March 4, 1974

      Hale, Hale, Fincher & Hoojman, I’.A., for appellant.

      House, Holmes & Jewell, for appellee.
   J. FRED JONES, Justice.

This is an appeal by Allen Green from a circuit court judgment against him for S3,671.99 in favor of Arkansas Power & Light Company on a bond signed by Green agreeing to be personally liable for the payment for electric service furnished by the power company to Allen Green and Associates, Inc. at its apartment complex in Little Rock.

On October 16, 1967, Arkansas Power & Light Company entered into a written contract with Allen Green and Associates, an Arkansas corporation, to furnish electric service to the corporation on “open order” (meaning temporary basis) at AP&L’s G-1 rate schedule beginning October 16, 1967. The contract was on AP&L’s printed form and was designated “Agreement For Temporary Electric Service,” the word “temporary” was inserted. Pertinent language in the contract, with the insertions underlined, reads as follows:

“(3) Company shall supply and Customer shall take and/or pay for all electric service required by Customer for the above operation in accordance with Rate Schedule(s) G-1 and Company’s Service Regulations. . . .
(4) No monthly bill (or seasonal bill when applicable) for electric service will be less than rate schedule minimum and Customer agrees to pay, as a minimum charge, such monthly (or seasonal) bill until this Agreement is terminated pursuant to the provisions of Paragraph 10.
(6) All bills for electric service hereunder will be rendered monthly, are due upon presentation, and are payable within ten days from the date thereof at any business office of the Company.
(10) The term of this Agreement shall be from October 16, 1967, or the date service is first made available hereunder, whichever is earlier, to Open Order, and shall be automatically extended for successive periods of one year each until terminated by written notice given by one party to the other nor more than six months nor less than three months prior to the expiration date of the original term or any anniversary thereof.
(12) This constitutes the entire and only agreement between the parties hereto with reference to the subject matter hereof and supersedes all previous understandings whether written or oral.”

In lieu of a cash deposit of $5,000 to insure the prompt payment of bills, Allen Green and Associates, Inc., and Allen Green personally, entered into a bond agreement as follows:

“THAT WE, Allen Green and Associates, Inc. as Principal, and Allen Green as Surety, acknowledge ourselves to be indebted and firmly bound unto the Arkansas Power & Light Company in the sum of Five Thousand and No/100 Dollars ($5,000.00) for the payment whereof we bind ourselves, our heirs, executors, administrators and assigns, jointly and severally by these presents.
WHEREAS, the said Allen Green and Associates, Inc. has entered into a contract with the Arkansas Power & Light Company, to take from it electric service at Chateau DeVille Apartment Complex in the 6200-6300 Blocks on Asher Avenue, Little Rock, Arkansas and to pay promptly therefor the bills presented by said Arkansas Power & Light Company in accordance with the company’s rules and regulations and to abide by said rules and regulations in other respects therein set forth.
NOW, THEREFORE, if said Allen Green and Associates, Inc. performs its obligations in said contract dated October 16, 1967, and shall pay all bills for such service promptly when due, then this obligation shall be void; otherwise, to remain in full force and effect; provided, that said Arkansas Power & Light Company shall notify said Surety, if, at any time, said bills are unpaid and in arrears for a period of sixty (60) days and thereupon, said Surety, upon giving ten (10) days notice, to quit such service under the terms and securities of this bond, shall be discharged from further liability thereon, and upon the payment by said Principal or Surety of the amount due and owing to said Arkansas Power & Light Company, the obligation of the Surety hereunder shall cease and determine.”
(Emphasis added).

All bills were promptly paid under the 1967 contract, and on September 7, 1970, AP&L and the Allen Green Corporation entered into another written agreement for permanent service on an identical printed form as the first agreement with the pertinent provisions and changes appearing as follows:

“(3) Company shall supply and Customer shall take and/or pay for all electric service required by Customer for the above operation in accordance with Rate Schedule(s) (75 and Company’s Service Regulations. ...
(4) No monthly bill for electric service will be based on less than $210.00 and Customer agrees to pay, as a minimum charge, such monthly bill until this Agreement is terminated pursuant to the provisions of Paragraph 10.
(10) The term of this Agreement shall be from Sept. 18, 1970, or the date service is first made available hereunder, whichever is earlier, to Sept. 18, 1973, and shall be automatically extended for successive periods of one year each until terminated by written notice given by one party to the other not more than six months nor less than three months prior to the expiration date of the original term or any anniversary thereof.” (Emphasis added).

This contract also provided the same provisions in paragraphs 6 and 12 as did the first contract, and this 1970 contract was simply designated “Agreement For Electric Service” without the insertion of the word “temporary.” At the top of the 1970 contract is typed in capital letters language as follows:

“SUPERSEDES AGREEMENT FOR TEMPORARY ELECTRIC SERVICE DATED OCTOBER 16, 1967.”

The power company furnished electrical service under the 1970 contract but the Allen Green Corporation failed to pay for the services furnished from November 18, 1970, to February 18, 1971, and the service was discontinued. On July 30, 1971, the power company filed the present suit in circuit court on the 1967 bond, and prayed joint and several judgment against the corporation and Allen Green for the amount of the account, in the amount of $3,671.99.

A jury was waived and the circuit judge, sitting as ajury, found in favor of the power company and rendered judgment against Green for $3,671.99. On appeal to this court Green contends that the trial court’s judgment against him is erroneous as a matter of fact and as a matter of law. We agree with the appellant Green that the judgment must be reversed.

The case was submitted to the trial judge in chambers and tried without a court reporter being present. Dale Booth, the manager of AP&L was the only witness who testified and the record of his testimony was prepared and submitted on stipulation under Ark. Stat. Ann. § 27-2127.11 (Repl. 1962).

In AP&L’s brief is found a statement as follows:

“When the new agreement was executed in September, 1970, appellee again waived the requirement of a $5,000 cash deposit and agreed to rely upon the original personal surety bond of the appellant. Appellant understood this and agreed to this procedure without the necessity of executing a new surety bond. It was just that simple.” (Our emphasis).

The appellee then argues equitable’principles that should be considered in this matter, but this is a law case and must be considered as such on this appeal. In St. L., S. W. Ry. Co. v. Cook-Bahlau Co., 187 Ark. 106, 58 S.W. 2d 428, this court said:

“Courts do not make contracts for the parties, but only construe them. The parties having made this contract in clear and unambiguous language, it is the duty of the court to construe it according to the plain meaning of the language employed, and not to enlarge or extend its terms on any theory. ...”

See also Brotherhood Ry. Tr. v. Deaton, 175 Ark. 733, 1 S.W. 2d 51.

It is true, according to Mr. Booth’s testimony, that when the new agreement between the two corporate entities was executed in September, 1970, the power company again waived the requirement of a $5,000 cash deposit and relied upon the original personal liability bond signed by the appellant Green. But we find no evidence in the record that Green agreed to such reliance or to such procedure.

Mr. Booth testified that when the 1967 agreement was entered into, the termination date was left open because it was a temporary contract only. He said the apartment complex was still under construction and at Mr. Green’s request he executed a surety bond in lieu of a cash deposit in the amount of the bond. He said that at Mr. Green’s request, and after receiving assurances from him that the facilities would not have to be moved for permanent service, the facilities were changed over on a permanent basis and a new contract was entered into. He said that under the termporary contract, a G-l rate, was charged and that under the second contract a G-5 rate was charged. He said the G-5 rate was much cheaper than the G-l rate and said: “We explained the difference between the G-l rate and the G-5 rate and encouraged Mr. Green to change over to G-5 at such time as he knew the facilities would be permanent and not apt to be moyed.” He then testified as follows:

“Of course, the change in permanent service was to the benefit of Allen Green and Associates, Inc., because it would be paying a much lower rate for electricity. We did not have Mr. Green execute a new surety bond in 1970 because we relied upon the 1967 surety bond he had already executed. We considered the 1967 surety bond to still be in effect. Arkansas Power & Light Company would not have given Mr. Green a new contract in 1970 without relying upon a surety bond in the amount of the Plaintiff’s Exhibit 1, or a cash deposit in lieu thereof in that same amount.”

As we interpret this testimony, when Mr. Booth used the pronoun “we,” it is clear he was referring to the power company personnel or officers and not to the officers and Mr, Green.

Appellant Green relies on the case of Rector v. McCarthy, 61 Ark. 420, 33 S.W. 633. The appellee power company argues that Rector v. McCarthy is distinguishable from the case at bar and relies on our decision in Powell v. Fowler, 85 Ark. 451, 108 S.W. 827. We find both of these cases distinguishable on their facts and neither of them controlling in the case at bar. We think the rule recited in St. L., S. W. Ry. Co. v. Cook-Bahlau Co., supra, is more applicable to the case at bar than are the rules by which contracts of sureties and guarantors have been construed as set out in Rector v. McCarthy, supra.

In Powell v. Fowler, supra, the surety was for the payment of commission on the sale of insurance and the additional or new agreement was to suspend or hold back advances on commissions until the end of the contractual year. The trial court gave an instruction to the jury to the effect that such agreement was not sufficient to discharge the surety in loto, but that said surety would be discharged only to the extent that he is injured by the withholding of such advances. This court in affirming the trial court on appeal distinguished that case from the one at bar in language as follows:

“[T]he agreement to postpone the payment of the September advance was not such a material change in the contract as would operate as a discharge of the surety. The surety by the terms of his bond expressly consented to any change in the contract which did not materially vary the agreement. He agreed that his bond of suretyship should apply to any further agreement not materially different in terms. The alleged agreement to postpone the September payment was in effect the making of a new agreement to that extent; and, as it did not materially vary the terms of the agreement, it was authorized by the terms of the bond.”

No such agreement by Green is evident in the record before us in the case at bar. It is true that in the case at bar Green was the president and perhaps the principal stock owner in Allen Green and Associates, Inc., but nevertheless Allen Green and Associates, Inc. was an Arkansas corporation as clearly recognized and set out in parentheses in both the contract of October, 1967, and that of September, 1970. He signed both contracts as Allen Green and Associates, Inc. by Allen Green. He also signed the bond for the principal as Allen Green and Associates, Inc. by Allen Green, Pres., and also signed the bond as an individual surety, Allen F. Green.

As we view the record before us, there were three separate and unambiguous contracts involved in this case. There is no question that under the first contract Arkansas Power & Light Company, a corporation, was dealing with Allen Green and Associates, Inc., another corporation, for the furnishing of electrical energy and service to the latter corporation on a temporary basis under a higher rate schedule and for an indefinite period of time while its apartment buildings were under construction. There is no question that under the second contract, the Allen Green Corporation and Allen Green personally agreed to promptly pay all bills presented by the Arkansas Power & Light Company accruing under the first contract dated October 16, 1967. There is no question that the bond signed by Allen Green provided that if the Allen Green Corporation performed its obligations under the contract for service dated October 16, 1967, and should pay all bills for such service promptly when due, then the obligation of Allen Green would be void. It is clear from the evidence that the bills presented under this first contract were paid. There is no question that the third contract entered into on September 18, 1970, by the two corporations, clearly provided that it superseded the previous agreement dated October 16, 1967, and it is also clear that it contained the following provision: “This constitutes the entire and only agreement between the parties hereto with reference to the subject matter hereof and supersedes all previous understandings whether written or oral.”

We conclude, therefore, that under the unambiguous language of the three contracts, including the bond signed by Allen Green, that the judgment of the trial court must be reversed and the cause as to Allen Green be dismissed.

Judgment is reversed.


author: CONLEY Byrd, Justice.

text:
    Robert CONWAY v. STATE of ARKANSAS
    CR 73-158
    505 S.W. 2d 758
    Opinion delivered March 4, 1974

      Jim Gunter, for appellant.

      Jim Guy Tucker, Atty. Gen., by: O. II. Hargraves, Dep. Atty. Gen., for appellee.
   CONLEY Byrd, Justice.

This is a criminal case in which the only issue on appeal is whether the trial court abused its discretion in refusing to grant a motion for a continuance because of the absence of an alleged alibi witness. The motion was denied, and appellant was convicted of burglary and grand larceny. We affirm.

Appellant asserts he hitchhiked a ride with Richard Stewart at the time of the alleged crime. Appellant’s appointed counsel filed the motion for a continuance, Ark. Stat. Ann. §§ 43-1705 — 43-1706 (Repl. 1964), lacking the necessary affidavits, Ark. Stat. Ann. § 27-1403 (Repl. 1962), immediately before the trial setting out the facts he hoped to prove by the alleged missing alibi witness. Counsel for appellant advised the court in presenting the motion that the witness was subpoenaed, but the witness was apparently in the air force and out of the state. Nobody seemed to know where the witness was stationed or how long ago he joined the air force. Counsel first attempted to subpoena the alleged alibi witness the week before the trial, and that was when it was first learned the witness was in the air force. Counsel stated he had no contact with the witness, and it was not known whether the witness could establish appellant’s alibi. The motion was denied.

The testimony at trial included two eyewitness identifications at the scene and appellant's own testimony he was at the burglary scene near the time of the crime.

Ark. Stat. Ann. § 27-1403 provides, in pertinent part, that:

“A motion to postpone a trial on account of the absence of evidence shall, if required by the opposite party, be made only upon affidavit showing the materiality of the evidence expected to be obtained, and that due diligence has been used to obtain it; and if it be for an absent witness, the affidavit must show what facts the affiant believes the witness will prove, and not merely the effect of such facts in evidence, that the affiant himself believes them to be true, and that the witness is not absent by the consent, connivance, or procurement of the party asking the postponement. * * *”

It is settled the granting of a continauance by the trial court is within the sound discretion of court. See, e.g., Roach v. State, 255 Ark. 773, 774, 503 S.W. 2d 467 (1973); Thacker v. State, 253 Ark. 864, 866, 489 S.W. 2d 500 (1973).

In Thacker, supra, we said:

“. . .Among the matters to be considered by the court in exercising this discretion are the diligence of movant, the probable effect of the testimony at the trial and the likelihood of procuring the attendance of the witness in the event of a postponement. Striphn v. State, [100 Ark. 132, 139 S.W. 1128 (1911)]. The purpose of the requirement of an affidavit is to permit the trial judge to evaluate these and other essential considerations and to permit the adverse party to controvert the movant’s statements in regard thereto. The failure to file such an affidavit is a significant factor in appellate review of the trial court’s denial of such a motion. Leach v. State, 229 Ark. 802, 318 S.W. 2d 617. Here, there was neither affidavit not testimony to show that the witnesses would testify, appellant’s belief in the truth of their testimony, what appellant had done to assure timely issuance and service of the subpoena or to show that their absence was not the result of an act or omission on his part, or that there was any probability that these witnesses would ever be available. . .” [Bracketed material added]

Here the record shows appellant failed to produce the affidavit required by statute so the state could controvert the claim. Ark. Stat. Ann. § 27-1403. Moreover, no due diligence appears on the face of the motion; Smith v. State, 181 Ark. 592, 26 S.W. 2d 889 (1930); Lee v. State, 145 Ark. 75, 223 S.W. 373 (1920); and from the belated attempt to locate and subpoena the alleged missing alibi witness; Andrews v. Lauener, 229 Ark. 894, 318 S.W. 2d 805 (1958). Finally, counsel was relying on conclusory statements provided by appellant as to the nature of what the witness’ testimony would be; see e.g., Davis v. State, 95 Ark. 555, 129 S.W. 530 (1910); and counsel had never personally communicated with the alleged missing alibi witness concerning the case to verify the testimony; State Life Ins. Co. v. Ford, 101 Ark. 513, 142 S.W. 863 (1912).

Under all the circumstances we cannot say the trial court abused its discretion in denying a continuance.

Affirmed.


author: FRANK HÓLT, Justice.

text:
    Napoleon FULLER v. STATE of Arkansas
    CR 73-143
    505 S.W. 2d 755
    Opinion delivered March 4, 1974

      Guy Jones Jr., for appellant.

      Jim Guy Tucker, Atty. Gen., by: Richard Mattison, Asst. Atty. Gen., for appellee.
   FRANK HÓLT, Justice.

Appellant was sentenced in 1971 to life imprisonment in the State Department of Correction when he pleaded guilty to a charge of first degree murder after a waiver of the death penalty. Subsequently, appellant sought post-conviction relief pursuant to our Criminal Procedure Rule 1. The petition was denied after an eviden-tiary hearing. On appeal we first consider appellant’s contention, through his court appointed counsel, that the trial court erred in failing to make findings of fact and conclusions of law in accordance with Rule 1 (E). The pertinent provision of that section provides:

***The court shall determine the issues and make written findings of fact and conclusions of law with respect thereto.***

This provision is mandatory. Orman v. Bishop, Supt. State Prison, 243 Ark. 609, 420 S.W. 2d 908 (1967) and McIntyre v. State, 242 Ark. 229, 412 S.W. 2d 826 (1967). Therefore, it is necessary to remand the cause for compliance with this requirement.

Until we have the benefit of the trial court’s written findings of fact and conclusions of law, we do not reach a determination of appellant’s other contention for reversal.

Remanded.


author: Carleton Harris, Chief Justice.

text:
    Grady Lee SHEPHERD v. STATE of Arkansas
    CR 73-153
    506 S.W. 2d 553
    Opinion delivered March 11, 1974
    [Rehearing denied April 8, 1974.]

      Fred .Newth, for appellant.

      Jim Guy Tucker, Atty. Gen., by: Alston Jennings Jr., Asst. Atty. Gen., for appellee.
   Carleton Harris, Chief Justice.

Appellant, Grady Lee Shepherd, was charged with violating Act 590 of 1971, as amended by Acts 67 and 68 of 1972, the Uniform Controlled Substances Act (Ark. Stat. Ann. § 82-2601 to 82-2640 [Supp. 1973]), in that he did unlawfully, feloniously and willfully possess with intent to manufacture, marijuana. Trial was held before the court, sitting as a jury, and appellant was found guilty and sentenced to a term of ten years imprisonment. From the judgment so entered comes this appeal. For reversal, it is first asserted that there is no substantial evidence to support the verdict.

Roy Leon Clouse, an acquaintance of Shepherd, the two previously having worked together, testified that he went, to Shepherd’s home on July 5, 1972. He said that he had visited Shepherd several times but did not know who owned the property. According to Clouse, appellant pointed out four or five rows of “weeds” about 100 yards from the house in which Shepherd lived, the latter stating to Clouse that this was marijuana. Clouse also said that Shepherd showed him a gallon jug containing what looked to him (Clouse) like tobacco. It was brown and Clouse said that Shepherd said the jar contained marijuana. Michael Earl Vowell, employed by the Bureau of Narcotics and Dangerous Drugs, testified that he and Deputy Sheriff Joe Borghetti went to the mentioned property and observed growing plants. They obtained a search warrant, searched the house, and found a Prince Albert Tobacco can approximately one-half full of a vegetable material that was suspected to be marijuana. Approximately 240 cannabis plants were in the field. The witness said that he did not see any grinding machines that he thought were used to grind marijuana. Borghetti testified that the plants were growing about 115 yards from the house where Shepherd lived, but he did not know who owned the property. Manuel Holcomb, a chemist with the State Health Department, Drug Abuse Lab, testified that he performed an analysis on the plants brought to him by Borghetti and found the same to be marijuana.

Rhonda Shepherd, fourteen-year-old daughter of the appellant, testified that her father was not cultivating marijuana and Shepherd testified that he did not plant the marijuana plants; that he had never processed marijuana, dried or ground the leaves, and that his son owned the property. As to the Prince Albert can. Shepherd simply said that it was brought to his home by Clouse. We think the evidence on the part of the State constituted substantial evidence to sustain the conviction. It was certainly established that the plants in question were marijuana and the testimony of Clouse, if believed by the court, was potent evidence to support the conviction. In fact, it was shown by the testimony of Shepherd himself that the garden, wherein the marijuana was located, had been cultivated by him. Appellant, though not arguing the point, suggests that, that portion of the act which prohibits “manufacture” comtemplates more than the cultivation of marijuana plants and there is no evidence that Shepherd was grinding or processing the harvested plants. We think the statute makes it clear that the growing or cultivation of marijuana is included in the offense of manufacturing. Sub-section (m) of Section 82-2601 provides that “Manufacture” includes “production” and sub-section (u) of the section sets out that “Production includes the manufacture, planting, cultivation, growing, or harvesting of a controlled substance”.

It is finally asserted that the act is unconstitutional in that it creates a rebuttable presumption which, appellant says means shifting the burden of proof and thus requiring the defendant to take the witness stand in his own behalf. The rebuttable presumption in the act refers to particular amounts of prohibited substances possessed by a defendant, this raising a rebuttable presumption that there is an intent to deliver or sell. That situation is not actually here involved, for the offense of manufacturing or growing marijuana contains no reference to any specific amount. Be that as it may, the simple answer to this argument, without adding further discussion, is that a similar contention was raised in Stone v. State, 254 Ark. 1011, 498 S.W. 2d 634 (there amounts were involved) and held to be without merit. This Court found the act not violative of the privilege against self incrimination and further held the act constitutional.

Affirmed.

       There was an old house also located much nearer the growing cannabis plants which was used, according to the testimony of Rhonda Shepherd, as a rent house from time to time. However, she could not name the renters (other than to mention that there had been one named Johnny), nor did she know when the property became vacant.

      From the testimony of Shepherd: “I have a garden out there. I raise trucks of vegetables for the whole neighborhood.
      Q, Do you think maybe he was mistaken and he thought it was marijuana?
      A. I would think so.
      Q. When you took him out to show him your garden, what did you show him?
      A. I showed him my turnips, and I had some squash and peppers.
      Q,. While you were out there showing him your turnips and squash and peppers, did you show him these plants that are on Exhibit No. 3?
      A. We walked right along the side of them, but I didn’t know what they were.
      Q. You didn’t know that that was marijuana really?
      A. No.
      Q,. And you didn’t tell-him that that was marijuana?
      A. I don’t think I did.
      Q, You don’t think you told him it was marijuana?
      A. If I did, it was just a joke.”


author: George Rose Smith, Justice. Carretón Harris, Chief Justice, Conley Byrd, Justice,

text:
    NATIONAL OLD LINE INSURANCE COMPANY v. Mary L. PEOPLE
    73-231
    506 S.W. 2d 128
    Opinion delivered March 11, 1974

      Skillman, Durrett & Davis, and Austin Cowan, for appellant.

      Jake Brick, for appellee.
   George Rose Smith, Justice.

On July 8, 1971, the appellee and her late husband, William R. People, bought a car from Chalmers Buick Company, executing a 36-month installment contract for the unpaid balance of $5,338.44. At the same time Mr. People applied for and obtained from the appellant a credit life insurance policy upon his own life for the amount of the debt. After People’s death on April 5, 1972, the appellee stopped making the payments on the installment contract. When the finance company holding the contract brought this action to recover the unpaid balance, Mrs. People filed a cross-complaint against the appellant upon the credit life policy. The insurer denied liability on the ground that People had obtained the policy by a false and fraudulent statement that he was in good health, when in fact he was not. The jury, in response to an interrogatory, found that People’s application for the policy contained no misrepresentations, omissions, concealment of facts, or incorrect statements. In appealing from the ensuing judgment for the appellee the insurance company contends that it was entitled either to a directed verdict or to a judgment notwithstanding the jury’s verdict, for want of any genuine issue of fact.

The application and the policy were combined in a single document. There was no medical examination nor any specific questions about People’s health. Instead, the application contained this sentence in the fine print above his signature: “I hereby apply for the insurance shown above and represent that I am now in good health, both mentally and physically, and free from any mental or physical impairment of any chronic disease, and am the age shown above.” Just above People’s signature, in larger capital letters, appeared the statement: “I AM NOW IN GOOD HEALTH.”

The policy became effective at once, being signed for the insurer by an employee of Chalmers Buick Company. It provided, however, that the insurer might reject the insurance within 30 days by mailing notice to its agent, with a return of the premium. There was also a one-year incontestable clause. An agent for the company testified that no investigation of credit life applications is ordinarily made. He stated that although there was no place on the application for any health questions to be answered, the applicant “could clip a note to it stating that he does have a health condition, and we would pass judgment on it.”

Although the jury might have found that People acted in good faith in signing the application, the undisputed proof shows that he was not in good health at that time. People’s own physician, Dr. Hayes, testified that he had treated People for diabetes and high blood pressure. Both conditions had existed for four years or more before the policy in question was issued.

There is, however, a substantial question of fact whether People’s existing ailments were contributing causes to his death. The death certificate listed the causes of death as uremia, chronic renal failure, and arteriolar nephrosclerosis, all of which pertain to the kidneys. Dr. Hayes testified that prior to February, 1972 (which was six months after the issuance of the insurance policy), repeated urinalyses done as early as 1964 were all negative as to any kidney ailment. The witness also stated that until March 3, 1972, there was no indication whatever that People would die of kidney infection or acute renal failure. Upon Dr. Hayes’ testimony the jury could have found that People’s death was not caused by either diabetes or high blood pressure, from which he was suffering when the policy was issued. (Dr. Hayes also said that People told him that he was drawing 100 per cent disability from the Veterans Administration for a nervous disorder, but there is no suggestion that the disorder was involved in People’s death.)

The appellant, in insisting that it was entitled to a directed verdict, takes the position that an absence of any connection between People’s death and the ailments from which he was suffering when the policy was issued is immaterial. The insurer’s position is clearly stated in its reply brief: “There is no necessity for showing a causal connection between a matter misrepresented in an application for insurance and the ultimate cause of death of an insured.”

We do not so interpret the statute upon which the appellant relies. That section of the Insurance Code reads in part:

“All statements in any application for a life or disability insurance policy or annuity contract, or in negotiations therefor, by or in behalf of the insured or annuitant, shall be deemed to be representations and not warranties. Misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery under the policy or contract unless either:
“(a) Fraudulent; or
“(b) Material either to the acceptance of the risk, or to the hazard assumed by the insurer; or
“(c) The insurer in good faith would either not have issued the policy or contract, or would not have issued a policy or contract in as large an amount or at the same premium or rate, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise.” Ark. Stat. Ann. § 66-3208 (Repl. 1966).

In the fifteen years that have intervened since our Insurance Code was adopted we have considered the foregoing section in many cases, but we have not passed upon the issue now presented — whether a misrepresentation will avoid the policy even though it had no bearing upon the insured’s death or disability. Nine of our cases might be considered to be pertinent. In seven of them the same ailment which was assertedly concealed by the applicant was also the cause of death or disability: Old Am. Life Ins. Co. v. McKenzie, 240 Ark. 984, 403 S.W. 2d 94 (1966) (back trouble stemming from spinal fusions); Dopson v. Metropolitan Life Ins. Co., 244 Ark. 659, 426 S.W. 2d 410 (1968) (recurrent back trouble); Life & Cas. Ins. Co. of Tenn. v. Smith, 245 Ark. 934, 436 S.W. 2d 97 (1969) (“serious physical ailments which proved to be fatal”); Union Life Ins. Co. v. Davis, 247 Ark. 1054, 449 S.W. 2d 192 (1970) (heart trouble); American Family Life Ass. Co. of Columbus v. Reeves, 248 Ark. 1303, 455 S.W. 2d 932 (1970) (cancer, which proved fatal); American Pioneer Life Ins. Co. v. Turman, 254 Ark. 456, 495 S.W. 2d 866 (1973) (cancer, which proved fatal); American Pioneer Life Ins. Co. v. Smith, 255 Ark. 949, 504 S.W. 2d 356 (1974) (heart trouble, which proved fatal). The eighth case, Old Republic Ins. Co. v. Alexander, 245 Ark. 1029, 436 S.W. 2d 829 (1969), was a chancery suit by the insurer to cancel the policy. We merely sustained the chancellor’s finding that there was no misrepresentation of heart trouble and that the insurer failed to prove that it would not have issued the policy had it known of the applicant’s prior surgery. Similarly, in the other case, Hartford Life Ins. Co. v. Catterson, 247 Ark. 263, 445 S.W. 2d 109 (1969), the insurer failed to present any evidence that it would not have issued the policy had a full disclosure been made by the applicant.

Thus the present issue of statutory construction is an open one. We are aware, of course, that at common law there was a split of authority on the question whether an insurer could avoid liability where the misrepresentation that induced the issuance of the policy had no causal connection with the loss. Appleman, Insurance Law and Practice, § 215 (1965). The Insurance Code, however, was a comprehensive revision of our law in that field and is to be interpreted according to the usual principles of statutory construction.

It is our conclusion that, under the Code, the insurer must show a causal relation between the applicant’s misrepresentation and the eventual loss. Subsection (c) of § 66-3208 to some extent carries that implication, by this language: “The insurer in good faith . . . would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known.” Thus it would be a defense to the insurer, in a back injury case, to show that if the applicant had disclosed a history of back trouble it would have excepted that hazard from the policy. In fact, that was precisely the insurer’s proof in the Dopson case, supra, where the insurer prevailed by offering proof that “it would not have issued the rider without an exclusion relative to Mrs. Dopson’s back.” Yet if Mrs. Dopson’s claim had been for a broken leg, an exclusion of coverage with respect to her back would not have afforded the insurer a defense to the claim.

Fairness and reason support the view that a causal connection should be essential. Otherwise, when the insured is killed by a stroke of lightning or by being run over by a car, the insurance company could successfully deny liability by showing that the insured was suffering from diabetes when he stated that he was in good health.

Such considerations of fairness are especially pertinent to a credit life insurance policy like the one before us. This was a short-term policy, to remain in force for only three years. The company made no medical examination of the applicant, relying upon him either to refuse to sign the application if he was not in good health, in which case the policy would never be issued, or to “clip a note” to the application, explaining his health condition. The appellant had the burden of proving its affirmative defense, but it made no effort to show that the automobile salesman who took People’s application made any explanation of the printed form or of the significance of the representation of good health. If People had lived for three years the insurer would have sustained no loss. In the circumstances it is plainly unjust to permit the company to deny liability on the basis of a misrepresentation that had no connection with People’s death (or so the jury might have found) and that would have provided no defense to the insurer if the policy had excluded coverage for loss resulting from the undisclosed ailments. We are therefore of the opinion that the appellant was not entitled to a directed verdict or to judgment notwithstanding the verdict.

The appellant also contends that Mrs. People should not have been allowed to testify that the automobile salesman who took the application merely asked People if he had been in the hospital within the preceding three months. We find no error, not only because the salesman was apparently acting for the insurer in taking the application but also because the evidence had no relevant bearing upon the insurer’s contention that it was entitled to judgment as a matter of law. Hence the court’s ruling, if erroneous, was harmless.

Affirmed.

FoglemanJ., not participating.

Harris, C.J., and Holt, J., concur.

Byrd.J., dissents.

Carretón Harris, Chief Justice,

concurring. I thoroughly agree with the majority that, under the code, the insurer must show a causal relation between the applicant’s misrepresentation and the eventual loss. Under the record, it is my own view that William R. People was probably not in good health at the time he applied for an obtained the credit life policy for the amount of the debt; however, it is not at all entirely clear to me that Mr. People knew that he was not in good health. I have noticed from time to time, in these cases involving credit life insurance that the affirmative statement called for from the applicant is rather general in nature, (I am now in good health) and can, in many instances, be honestly answered by the applicant by “Yes”, though actually he or she may not be in good health. For instance, perhaps one had open heart surgery a few months ago, or an operation on one of his carotid arteries which was partially blocked, endangering the flow of blood to the brain. He is told by his doctor that the operation was successful, and he genuinely feels that he has no further problems and is in good health. In fact, I know of an individual who underwent open heart surgery, and who is using a pacemaker. He constantly plays tennis and engages in other sports and considers himself as getting along fine, but I doubt seriously that an insurance company would consider him an acceptable risk. This man probably could honestly answer the question by stating that he is in good health, though the prospective insurer would disagree.

It would appear to me that the company selling credit life insurance, in its application form, could follow the practice generally followed by insurance companies selling regular life insurance policies, and propound more specific questions which, when answered falsely, if material, would enable the company to avoid liability because of fraud. I refer to such questions as whether one has been in the hospital any time during the last three years, consulted a physician within the last three years, ever been told he had high blood pressure, heart disease, diabetes, cancer, etc. On the basis of such answers, the company can intelligently determine whether to consider the man a good insurance risk. If answers are in the negative and are false, this fact should not be difficult to establish.

I recognize that most persons who apply for credit life insurance are primarily interested in purchasing some article of value, such as an automobile, television, etc., and that the insurance is more or less secondary, suggested by the seller, and if an applicant has to take time to read an application with several questions, he may not purchase the insurance. Of course, it is also “short term” insurance. I can only say if the insurance company selling credit life insurance is willing to take the risk of asking only general questions, it will just have to also take the chance of perhaps paying benefits to the designee of an applicant who was not in good health when he applied for the policy. At any rate, I only desire to point out that liability for fraudulent claims could largely be done away with if specific questions were directed to the applicant.

Holt, J., joins in this concurrence.

Conley Byrd, Justice,

dissenting. I disagree with the majority both as to the interpretation of the law and as to the conclusion that the misstatements here were not material.

The majority opinion does not state any precedent or authority for its construction of Ark. Stat. Ann. § 66-3208 (Repl. 1966) that there must be a causal relation between the applicant’s misstatement and the eventual loss. A reading of the cases will reveal two types of statutes — i.e., those like or similar to our own and those similar to the Missouri and Texas statutes which provide that no misrepresentation made in obtaining or securing a policy shall avoid the policy unless the matter actually contributed to the loss. As to the latter see, e.g., Doran v. John Hancock Mutual Life Insurance Company, 116 S.W. 2d 172 (Mo. App. 1938), and Pacific Mutual Life Ins. Co. v. Johnson, 74 F. 2d 367 (5th Cir. 1934).

Every state with a statute similar to our statute has construed theirs to mean that a misrepresentation as to a material matter renders a policy voidable at the election of the insurer without a showing that the misrepresentation had a causal connection with the loss claimed under the policy. See Jessup v. Franklin Life Insurance Company, 117 Ga. App. 389, 160 S.E. 2d 612 (1968); Lamark v. Lincoln Income Insurance Company, 169 So. 2d 203 (La. App. 1964); Goodell v. Union Automobile Insurance Company, 111 Neb. 228, 196 N.W. 112 (1923); and Bushfield v. World Mutual Health & Accident Insurance Co. of Pa., 80 S.D. 341, 123 N.W. 2d 327 (1963). The statute involved in the Georgia case is an exact replica of ours. The Louisiana code provided:

“ . . . The falsity of any such statement shall not bar the right to recover under the contract unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.”

The South Dakota statute provided that the falsity of any statement by the insured “may not bar the right to recover thereunder unless such false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer.”

The text writers all agree with my position. 43 Am. Jur. 2d Insurance § 737, p. 724, provides:

“ ... In the absence of a statute providing otherwise, however, it is not necessary to the defense of an action on a life insurance policy on the ground that misstatements in the application as to the applicant’s medical history were material to the risk, that the matters not disclosed should have had a causal relation to the death of the insured.”

45 C.J.S. Insurance § 473(4), pp. 177-178, states the matter in this language:

“A material matter is one which probably will affect the decision of the company as to the making of the contract or as to its terms. The question of what is a material representation is not affected by the causes which in fact lead to the loss. ...”

Í2 Appleman, Insurance Law and Practice § 7294 (1943), pp. 401-403, makes the following statement:

“The tests of materiality have been stated in various ways. If the representations materially induce the insurer to make the contract, or would reasonably have influenced the insurer in its action upon the application, the representation is deemed material. Some courts have made the test that of whether or not the insurer would have issued the policy had the true facts been known, or whether, acting in accordance with the usual practice of insurance companies, it would have declined to take the risk. Elsewhere it has been stated that the proper test is whether knowledge of the truth might reasonably have caused the insurer to decline the risk, and under this rule the question of whether the insurer would actually have issued the policy under those circumstances has been held immaterial. And, under this general doctrine, the fact that the risk of loss was not actually increased thereby, or that the loss arose by reason of some fact other than that which was misstated, has been held not to alter the result.” [Emphasis minel.

7 Couch On Insurance 2d § 35:47 (1961), p. 56, makes the following statement:

“The concept of materiality to the risk is distinct from that of contributing to the loss. In order to establish that a representation is material it is therefore not necessary to show that it contributed to a loss. Similarly, a misrepresentation in an accident insurance application which would influence insurer’s judgment in accepting the risk is material within the intent of the statute, even though the matter misrepresented does not affect the injury for which insured seeks recovery.”

Under our law as it existed before the 1959 Insurance Code, life insurance could not be economically written without the costly and cumbersome procedure of going through a medical examination to weed out persons who waited until they were uninsurable before making application. However, the code through what is now Ark. Stat. Ann. § 66-3208 permitted life insurance to be written without a medical examination. To prevent the seeming injustice that would arise when an individual has paid premiums for a considerable time and during which time the insurer has had the benefit of the premiums, the code also contains a relatively short incontestability clause — see Ark. Stat. Ann. § 66-3304 (Repl. 1966).

Aside from the history, however, logic and reason would dictate that we should not be in the position of quibbling over whether a misstatement contributed to the loss involved in an insurance contract. A person who honestly answers the questions in an application has nothing to fear. Old Republic Ins. Co. v. Alexander, 245 Ark. 1029, 436 S.W. 2d 829 (1969). Most litigation arises around issues that are generally debatable as to whether the misstatement involved a matter that contributed to the loss. For instance in this case I contend that the misstatements involved matters that contributed to the insured's death.

The misstatements by the insured here before us kept the insurer from finding out that the insured was suffering from diabetes and hypertension for which he was under constant medication and that insured was considered 100 per cent disabled by the Veterans Administration. Dr. Robert Hayes testified. |as abstracted) as follows:

“ . . . The death certificate indicates the cause of death is uremia and the contributing factors to the cause of death were chronic renal failure, and arteriolar nephrosclerosis; these conditions all refer to his terminal illness. Chronic renal failure and arteriolar nephrosclerosis are the end result of diabetes and hypertension. ... I would assume that Mr. People apparently went into an acute renal failure episode which overshadowed every other thing he had; the last time I saw Mr. People I certainly didn’t suspect that he was anything like going into an acute renal failure syndrome

Dr. Hayes was the appellee’s witness and from the foregoing I can only conclude that the misstatements by the insured here involved matters that contributed to his death. At least Dr. Hayes says that those matters contributed to his death.

CONCLUSION

There is nothing “just” about the majority’s interpretation of the statute because it will increase the premium rate of life insurance to the honest insured to the bounty of those who misstate the facts in making their applications — for after all life insurance is an actuarial business based upon the business written not necessarily the life of every individual.

The authorities all show that there were two different statutes in general use among the several states at the time of the adoption of The Insurance Code in 1959 — i.e. there was (1) the Missouri and Texas type which avoided a policy for a misstatement only when the misstated matter “actually contributed to the loss” and (2) the Louisiana and Nebraska type statute which our legislature adopted. Under those conditions we should have no problem in understanding the policy adopted by the General Assembly.

However, if the majority must insist in what I consider to be new legislation, then the majority should at least accept the insured’s witnesses at face value when he states that the matters omitted through the insurer’s misstatements contributed to his death.

For the reasons stated I respectfully dissent.

       Actually, some companies selling credit life insurance do set out questions relating to specific ailments in the application form.


author: George Rose Smith, Justice.

text:
    Elizabeth J. PARKER and O. D. HADFIELD Jr. v. ARKANSAS REAL ESTATE COMMISSION et al
    73-236
    506 S.W. 2d 125
    Opinion delivered March 11, 1974

      Baker & Probst, P.A. and Moses, McClellan, Arnold, Owen & McDermott, for appellants.

      Jim Guy Tucker, Atty. Gen., by: Bill D. Etter, Dep. Atty. Gen., for appellees.
   George Rose Smith, Justice.

The Arkansas Real Estate Commission is a public agency of the state, created in 1929. For about nine years one of the appellants, Elizabeth J. Parker, was employed by the Commission in a clerical capacity. For about eighteen years the other appellant, O. D. Hadfield, Jr., was employed by the Commission as its executive secretary. As of January 1, 1970, Mrs. Parker and Hadfield left the Commission’s employ and apparently became full-time employees of the Arkansas Real Estate Association, which is a private trade organization composed of real estate brokers and salesmen.

In July of 1970 Mrs. Parker filed this suit ¿gainst the Real Estate Commission and its Retirement Committee, the latter being responsible for the administration of the Commission’s pension plan for its employees. Mrs. Parker’s pleadings assert that she is entitled to a lump sum retirement payment of $2,016. Later on Hadfield was brought into the ease and asserted a similar lump sum claim lor $36,171.21. The Commission resisted the claims on the ground that the pension plan was illegal and void from its inception. This appeal is from a judgment finding the plan to be void and denying the claims.

As we view the case, the controlling question is whether the Commission was authorized by statute to adopt a pension plan for its employees. We find no statutory authorization for the plan and therefore affirm the circuit court’s judgment.

The governing statute is Act 148 of 1929, as amended. Ark. Stat. Ann., Title 71, Ch. 13 (Repl. 1957 and Supp. 1973). The purpose of the act was to regulate the professional conduct of real estate brokers and salesmen. The measure created the Real Estate Commission (§ 71-1303) and empowered it to grant licenses to brokers and salesmen (§§ 71-1304 et seq.) and to revoke such licenses for cause. § 71-1307. The act made it unlawful for an unlicensed person to act as a real estate broker or salesman (§ 71-1301), with criminal penalties being provided. § 71-1311.

The statute levied original and renewal license fees in specified amounts (§ 71-1306), which were to be collected by the Commission and expended “for the requirements, purposes and expenses of said Commission under the provisions of this Act.” § 71-1303. The Commission’s authority to employ a staff was set forth in this key sentence:

“The Commission shall employ a secretary and such clerical assistance as may be necessary to carry out the provisions of this Act and to put into effect such rules and regulations as the Commission may promulgate, and the Commission shall fix the salaries of such employees, and may, if it deems it advisable, require such employees to make good and sufficient surety bond for the faithful performance of their duties.” § 71-1303.

The act made no specific reference to retirement benefits, a pension plan, or anything of that nature.

For 41 years — from 1929 until 1970 — the Commission operated as a cash-fund agency, in the sense that its funds were not deposited in the state treasury and no legislative appropriation of its funds was ever made. That practice ended with the enactment of Act 184 of the 1970 Extraordinary Session (Supp. 1973, §§ 71-1312 et sec/.), which fixed the number and the salaries of the Commission’s authorized employees.

In December, 1964, the Commission adopted the pension plan now relied upon by the appellants. We need not detail its elaborate provisions. The Commission’s employees were to make no contributions to the pension fund. At the outset the Commission, apparently from its accumulated resources, made the only contribution that the plan ever received: A donation of $35,270, which was to be held and invested by the corporate trustee of the fund. The plan provided optional lump sum benefits for eligible departing employees. The appellants now assert such claims, totaling $38,187.21 with interest from January 1, 1970. The pension fund as of December 31, 1969, amounted to $38,211.58, so that payment of the two claims would have reduced the fund to $24.37.

The appellants, in insisting that the pension plan is valid, rely primarily upon three cases involving what have become known in Arkansas as cash funds. Gipson v. Ingram, 215 Ark. 812, 223 S.W. 2d 595 (1949); Gipson v. Crawfis, 225 Ark. 903, 286 S.W. 2d 336 (1956); and Rebsamen Motor Co. v. Phillips, 226 Ark. 146, 289 S.W. 2d 179, 57 A.L.R. 2d 1256 (1956). (We should point out that in the Rebsamen case the first full paragraph on page 155 of our Reports was deleted on rehearing; but the briefs in the case at bar have understandably overlooked that fact, because the deletion was not noted until it appeared as an erratum in 228 Ark. xxv.)

The appellants’ emphasis upon the cash-fund aspect of the case is misplaced. That the Commission’s revenues were not deposited in the state treasury and therefore were cash funds is immaterial to the determination of the issues. What is important, as we pointed out in Ingram, is that all cash funds of state agencies are public monies. The case at bar turns not upon the cash-fund character of the Commission’s revenue but upon the public character of that revenue.

The Commission was not at liberty to spend public money for any purpose it might choose, regardless of statutory authority. To the contrary, its mandate was to expend its funds to carry out the purposes of Act 148, as amended. Thus the really pivotal issue is whether that statute conferred upon the Commission the authority to put into effect a retirement plan such as the one it adopted in 1964.

We find no such legislative motive in the language of the statute. We have quoted the only pertinent sentence, which states that the Commission “shall employ a secretary and such clerical assistance as may be necessary to carry out the provisions of this Act . . . and . . . shall fix the salaries of such employees.” § 71-1303.

The issue narrows down to the meaning of the word “salaries.” We have no basis for thinking that in 1929 the General Assembly used that term to mean not only regular pay but also retirement benefits. Such benefits were not then commonplace, as they are now. The federal Social Security law was not adopted until 1935. The Arkansas retirement system for public employees was not adopted until 1957. And, as a practical construction, the Real Estate Commission itself did not interpret the statute to include retirement benefits during the first 35 years of the Commission’s existence.

In a decidedly similar case, Daggett v. St. Francis Levee. Dist., 226 Ark. 545, 291 S.W. 2d 254 (1956), we held that the improvement district directors’ statutory power to fix the compensation of the district’s officers and employees did not, in view of the history of the statute, authorize the creation of a retirement plan. From that opinion: “It is perfectly clear that the purpose of the 1943 and 1951 statutes was simply to transfer to levee districts a power that the legislature had previously reserved to itself, that of fixing the salaries [emphasis supplied] to be paid to officers and employees of the various districts. . . . If the lawmakers had meant to enter a new field by authorizing the use of tax money lor the creation of a pension fund that intention would doubtless have been expressly stated in the statutes. The fact that the intention was not so stated convinces us that it did not exist.” So here, if the meaning of the Real Estate Commission’s enabling act is to be changed, that change must be made by the General Assembly, not by the courts.

Alternatively, the appellants present a somewhat novel contention that they are entitled to the lump sum payments in question upon a quantum meruit basis. This theory appears to be founded upon the fact that the Commission and the appellants believed in good faith that the pension plan was authorized by law. The only authority cited is certain language in Vick Consol. Sch. Dist. No. 21 v. New, 208 Ark. 874, 187 S.W. 2d 948 (1945), to the effect that in some cases a quantum meruit recovery has been allowed for services rendered by an officer to a governmental subdivision under a contract that was not forbidden by statute, although it was still something that should not have been done.

That principle is not applicable here. To begin with, we are dealing with the State itself, not a governmental subdivision, so that coercive action falls within the prohibition of suits against the State. Ark. Const., Art. 5, § 20 (1874). Furthermore, the appellants’ argument amounts in substance to a contention that a public employee who believes in good faith that he is entitled to greater compensation than the law allows thereby acquires a quantum meruit claim to the excess. It seems to us that merely to state the contention is to answer it.

Affirmed.


author: Geokge Rose Smith, Justice.

text:
    Lawrence Joseph WALKER v. STATE of Arkansas
    CR 73-157
    506 S.W. 2d 537
    Opinion delivered March 11, 1974

      Robert A. Newcomb, for appellant.

      Jim Guy Tucker, Atty. Gen., by: Richard Mattison, Asst. Atty. Gen., for appellee.
   Geokge Rose Smith, Justice.

The trial judge, hearing the case without a jury, found the appellant guilty of robbery and assault with intent to commit rape, both committed with a firearm. There was also proof of two prior felony convictions. This appeal is only from the court’s finding that the accused was guilty of assault with intent to commit rape. For reversal it is argued that the State failed to prove any overt act that was actually directed toward the accomplishment of the crime of rape.

The prosecutrix, Nancy Westmoreland, and her escort, Richard Parker, had given Walker a ride shortly before midnight after Walker had helped them extricate their car from a muddy parking place near the Barton Coliseum in Little Rock. When the three reached Walker’s destination he held a pistol to Nancy’s head and, by threatening to kill her, forced the couple to walk over to an alley. There he took Richard’s money and, using a four-letter word, announced his intention to have intercourse with the girl. Upon her refusal he threatened her with his pistol and ordered .her to remove her clothes. When she continued her resistance he slapped her and hit her in the face with his fist. Nancy, however, fought back so vigorously that Walker discontinued is attack and soon drove away in Richard’s car — a theft which led to his apprehension by the police.

There is no merit in the appellant’s argument that “since he did not attempt to remove any of the woman’s clothes, nor attempt to touch any of the private parts of her body, he did not commit the crime of assault with intent to. rape.” The gravamen of the offense was stated in Tyra v. State, 120 Ark. 179, 179 S.W. 167 (1915): “The assailant must have done some act which is not merely one of preparation or solicitation, but is one which is intended to overcome the will of the female for the purpose of having sexual, intercourse with her forcibly and against her will. It is not necessary, however, that this attempt be persisted in to the uttermost, but it is sufficient if it was actually begun, without reference to the reason which causes the assailant to desist.” Here the State offered proof to show that Walker stated his purpose, ordered the prosecutrix at gunpoint to remove her clothes, and struck her in the face when she refused to submit. Both the assault and the accompanying intent were established just as clearly as would have been the case had Walker attempted to remove the woman’s clothing.

Pursuant to the holding in Anders v. California, 386 U.S. 738 (1967), defense counsel has asked that he be permitted to withdraw from the case, on the ground that the appeal is frivolous. That motion is granted.

Affirmed.