author: John A. Fogleman, Justice. John S. Daily, Special Justice,

text:
    ARKANSAS BEVERAGE COMPANY v. Richard R. HEATH, DIRECTOR DEPARTMENT OF FINANCE AND ADMINISTRATION, STATE OF ARKANSAS
    74-154
    521 S.W. 2d 835
    Opinion delivered April 14, 1975
    [Rehearing denied May 19, 1975.]

      Rose, Nash, Williamson, Carroll and Clay, P.A., for appellant.

      Karl Glass, Harlin R. Hodnett and Robert Brockman, for appellee.
   John A. Fogleman, Justice.

Arkansas Beverage Company brings this appeal from an adverse decree in its suit against appellee to recover a use tax deficiency assessment paid by it under protest. Appellant is engaged in the business of producing, selling and distributing bottled soft drinks called Pepsi Cola. The items purchased by it upon which the use tax was assessed were bottles, cardboard bottle cartons, an electronic bottle conveyor and a case conveyor. It is appellant’s contention that the glass bottles, which were returnable and reusable, and the cardboard cartons in which bottled drinks were placed and carried became recognizable, integral parts of the finished product, i.e., the bottled drink, and were thus exempt from use tax under Ark. Stat. Ann §§ 84-3106 (B) (Supp. 1973) and 84-1904 (i) (Repl. 1960) as items purchased for resale. Appellant also contends that the electronic bottle inspector, the bottle conveyor and the case conveyor were items of machinery purchased to replace, in its entirety, similar existing ma hinery used directly in producing and packaging articles of commerce at appellant’s manufacturing and processing plant in Arkansas and that the machinery replaced would have been exempt under Ark. Stat. Ann. § 84-3106 (D) (2) (a) (Supp. 1973), if that subsection had been in effect at the time of its purchase, and was exempt under Ark. Stat. Ann. § 84-3106 (D) (2) (Supp. 1973).

The chancery court held the returnable bottles and paper cartons were purchased for appellant’s use and consumption and were subject to tax, but that appellant was not a manufacturer within the meaning of Ark. Stat. Ann. § 84-3106 (D) (2). It also held the bottle inspector, bottle conveyor and case conveyor were not used directly in a manufacturing process and were subject to the use tax.

Let it be remembered that taxation is the rule and exemption the exception, so the heavy burden of clearly establishing the claimed exemptions beyond reasonable doubt rested upon appellant. Heath v. Miden Equipment Co., 256 Ark. 14, 505 S.W. 2d 739 (1974); Scurlock v. Henderson, 223 Ark. 727, 268 S.W. 2d 619. Tax exemption provisions must be strictly construed against exemption and to doubt is to deny the exemption. Heath v. Midco Equipment Co., supra; Hervy v. Tyson’s Foods, 252 Ark. 703, 480 S.W. 2d 592. It must also be remembered that appellate review in this case is by trial de novo upon the record, but that the chancery court’s findings of fact will not be reversed unless clearly against the preponderance of the evidence.

Appellant lists the following points upon which it relies:

A

RETURNABLE BOTTLES AND CARDBOARD CARTONS ARE EXEMPT FROM USE TAX AS PURCHASES FOR RESALE UNDER §§ 3106 (B) and 84-1904(i)

1. Returnable bottles and cardboard cartons are a recognizable, integral part of the finished product.
2. There is a sale of the bottles and cartons within the meaning of the Gross Receipts Act.
3. The cost of the bottles and cartons is included in the sales price of the product. The deposit is not the sale price of the bottle.
4. Prior to 1973 appellee recognized that returnable bottles and cardboard cartons were exempt from sales and use tax.
5. Other jurisdictions support appellant’s position.

B

THE ELECTRONIC BOTTLE INSPECTOR, CASE CONVEYOR AND BOTTLE CONVEYOR ARE EXEMPT FROM USE TAX UNDER § 84-3106 (D) (2) (SUPP. 1973).

1. Appellant’s plant is a manufacturing or processing plant within the meaning of § 84-3106 (D) (2)
2. The machinery in question is used directly in producing, assembling, processing or packaging the bottled beverage.
3. The items in question were purchased to replace existing machinery in its entirety.

The chancellor held that appellant had failed to meet its burden of proof as to the bottles and cardboard cartons. We agree as to the bottles but not as to the cardboard cartons. We should say at the outset that as to the bottles, we consider the case of Hervey v. Southern Wooden Box, Inc., 253 Ark. 290, 486 S.W, 2d 65 to be controlling in spite of the fact that there had been an administrative determination that the bottles were exempt.

The bottles were returnable. The beverage sold by appellant is bottled under carbonation, sealed with a crown, and sold, insofar as is pertinent here, to retailers who sell food and beverages for consumption and who collect and remit a sales tax. These bottles containing the carbonated drink are delivered to appellant’s customers in cases containing 24 bottles each in 24 separate compartments or pockets or with partitions containing cardboard cartons into which either 6 or 8 bottles of the beverage have been packed. Two-thirds of appellant’s bottled drinks are packaged in the cardboard cartons, and appellant’s customers nearly always sell a full package to the ultimate consumer, who takes the package from the seller’s place of business to the place of consumption in the carton. The retailer, appellant’s customer, puts up a deposit of SI.00 for each case of the bottled beverage. Seventy-two cents, or three cents per bottle, is for the bottles and twenty-eight cents for the wooden shell or case. No deposit is made on the paper cartons. The price of the drink is the same per bottle, regardless of whether it is packaged in a cardboard carton. The retailer requires the same deposit of his customer in order to encourage the return of the bottles. Whenever a new supply of beverages is delivered by appellant to a customer by truck, the driver picks up whatever empty bottles, cardboard cartons and wooden cases the customer has on hand and the retailer is credited with the amount he was charged as a deposit on such bottles and cases. The net charge for the bottles and cases delivered after deducting any such refunds is credited to appellant’s “deposit income account.” Appellant says that its customers are not accountable to it for either the bottles or the cartons and cannot be forced to redeem their deposits. Appellant charges the cost of new bottles and cartons as a part of the cost of sales at the time they are filled and packaged. The amount of any deposit charged or received is credited to the “deposit income account” from which is subtracted the amount of any refunds at the end of the fiscal year, the net credit balance in the “deposit income account” is then deducted from cost of sales, and appellant’s income, as shown by its books, is increased by that amount.

So far as appellant’s books are concerned the bottles and cartons are treated as a part of the cost of goods sold and not as overhead. New bottles that have never been put in service are carried on the books at cost when inventory is taken and used bottles, either full or empty, are valued at the deposit value. The only cartons on the balance sheet are new, unused cartons on hand at the end of an accounting period. Bottles and cartons in the hands of retailers or consumers do not appear on appellant’s books at all.

The reason given by appellant for requiring the deposit is to encourage the return of the bottles for reuse. By dividing the number of cases of returnable bottles delivered by the number not returned during a fiscal year, appellant calculated that during the tax year involved, it used a bottle an average of 10 times before it was lost or discarded. By dividing the net cost of bottles lost or discarded during that year by the number of cases of returnable bottles, appellant determined that its cost of bottles for each 24-bottle case was 17.2 cents. The actual average cost of new bottles bought during appellant’s fiscal year 1972 was 9 cents. During the same fiscal year the average selling price was Si.92 per case, the average cost was SI. 106, and the overhead cost $0,634, leaving a net income of SO. 18 per case before taxes and $0,078 after taxes.

Overhead expenses in appellant’s accounting system consist of depreciation, advertising, promotion, delivery truck expenses, and other general expenses not charged as direct cost of the product. The cost of bottles and cartons under this accounting method comprised about 20% of the total cost of goods sold. In the case of non-returnable bottles, appellant charges their entire cost to the sale, and the Department of Finance and Administration recognizes that disposable bottles and cans are exempt from use tax as an integral part of the finished product. The selling price of the product in a non-returnable container is higher than that in returnable bottles.

All the bottles bear the Pepsi Cola Company trademark. Appellant acquires bottles that come from other franchised Pepsi Cola dealers because it accepts any bottle bearing the company trademark in giving refund credit. If a neighboring Pepsi Cola bottler increases its deposit, refund it is necessary for appellant to also make an increase in order to insure return of bottles it had originally bought and distributed in its territory. Appellant, in the fiscal year 1973 had increased the bottle deposit to 5 cents for this reason. Using the formula previously applied, appellant calculated that it then used each bottle 12 times.

The bottle deposit is not treated as a part of the sales price of the product under regulations issued pursuant to the Wage and Price Stabilization Act, under which the selling price of the bottled drink was regulated. No sales tax is paid by appellant when its customer returns bottles for deposit refund. The trademark of the Pepsi Cola Company on the bottle serves to identify the product for the consumer. Appellant distinguishes its bottled product from those dispensed at a soda fountain or from a vending machine in a paper cup, because those so dispensed must be consumed immediately and usually on the premises where purchased, while the bottled drink, being carbonated and sealed under pressure in a strong container, may be transported and stored for later consumption.

Upon these facts, appellant contends that the returnable bottles become a recognizable, integral part of its product — a packaged, bottled beverage — exempt as goods used in the manufacture, compounding, processing, assembling or preparing it for sale. Thus, says appellant, under our statutes, the bottles were purchased for resale. Appellant admits that the Arkansas case nearest in point is Hervey v. Southern Wooden Box, 253 Ark. 290, 486 S.W. 2d 65, wherein we held that there was no exemption for wooden cases, in which the beverages sold by soft drink bottlers were delivered to the retailer, but that paper cups used in vending machines, from which the bottler sold its products at retail, were exempt. Appellant says that the crucial test is whether the bottle becomes a recognizable integral part of the product sold by it.

Appellant likens the bottles in this case to the paper boxes in McCarroll v. Scott Paper Box Company, 195 Ark. 1105, 115 S.W. 2d 839, and to the paper cups in Hervey v. Southern Wooden Box Co., supra, saying that the product sold is a bottled, carbonated beverage which could not be preserved or sold if it were not contained in a bottle and that there is no real distinction to be made between a returnable and a nonreturnable bottle. Appellant reasons that it surrenders both title and possession when it delivers the bottled beverage. It considers the Scott. Paper Box case controlling because the bottle is a component part of the product sold in unchanged form to the retailer and in turn to the consumer. Since the bulk syrup used at fountains is sold by it at a much lower price than the bottled drink, it takes the position that the cost of the bottles is an important element in the cost of the product and in computation of its selling price and is considered as such rather than as a part of general overhead expense, and the bottles are not used for any other purpose.

We do not agree, largely for the same reasons given for denying the application of the exemption statute to wooden soft drink cases. If appellant sells its bottled beverage at 8 cents per bottle, its cost analysis reveals that only $0.0075 is left for profit and payment of taxes. We cannot accept the premise that appellant is selling a 9 cent bottle for a 3 cent or even 5 cent deposit. The deposit, admittedly, is to “encourage” the return of the bottle and if appellant’s calculations are correct, it rather effectively does so. For this or other reasons, bottles are returned and used over and over. Appellant’s electronic bottle inspector is used to detect cracks in bottles to be used for bottling and to cause them to be discarded. Appellant’s internal bookkeeping, by which it shows a profit on a “sale” of 24 bottled drinks for $1.92 when the bottles alone, if new, had cost $2.16, does not afford any basis for distinction of the Southern Wooden Box Company principle, even if the method is used throughout the bottling industry. Obviously, regardless of the “surrender” of title and possession, appellant expects to get its bottles back and if the deposit is not sufficient to assure that it does, it is raised. Otherwise, appellant could not long remain in business.

We regard substance to be more important than form in determining the nature of the transaction. In substance, the transactions involving the bottles when delivered to appellant’s customers, when “sold” by them and when returned to appellant are not sales, and the purchase of the bottles by appellant is not for resale but for use. In this respect, we agree with the Court of Appeals for the District of Columbia, 214 F. 2d 197 (1954). See also, Gay v. Canada Dry Bottling Co. of Florida, 59 So. 2d 788 (Fla. 1952); Wichita Coca Cola Bottling Co. v. U.S., 152 F. 2d 6 (5th Cir. 1945); Evans v. Memphis Dairy Exchange, 194 Tenn. 317, 250 S.W. 2d 547 (1952). We find that the bottles are used by appellant and that there was no sale or purchase of them for resale. Appellant’s bookkeeping is, as appellee suggests, more consistent with an amortization of the cost of the bottle than with a purchase for resale. The fact that in some cases retailers charge a “sales tax” on the consumer’s bottle deposit, cannot transform the character of the bottler’s transactions. Although the administrative interpretation of the statutes by appellant’s predecessors may be considered as persuasive, we are not controlled by it and disagree with it. Certainly, we cannot say that appellant has, beyond reasonable doubt, established its entitlement to this exemption.

We reach a different result as to the cardboard cartons, which also bear the trademark of Pepsi Cola. Although it is true that a substantial number of them are returned and reused, it seems to us that this is largely attributable to fortuitous circumstances, among which is the convenience of using them for returning empty bottles. Appellant does nothing to assure their return. No deposit has ever been required. No credit is given to the retailer for return of the cartons. These cartons are delivered to retailers, primarily grocery stores, in non-compartmentalized wooden cases. The retailer almost always sells the filled carton to the consumer as a package just as he receives it. One purpose of the use of the carton is to encourage the purchase of more than one bottle of appellant’s beverage. Another is for convenience of the customer in carrying and handling. Appellant’s cost accounting on the cartons is handled in a manner similar to the treatment given bottles, except, of course, for the “deposit income.” Appellant calculates that enough usable cartons are returned to enable the six-bottle cartons to be used two or three times and the eight-bottle ones, 3.6 times or an overall average of 2.8 times per carton. On this basis, appellant calculated that its cost, per carton, was 4.7 cents, which is included as a cost item. Until returned cartons are put into the production line, appellant does not know whether they can be reused and does then discard damaged cartons. Because of this, and because their value is so small, used cartons are not considered for inventory purposes. Under these circumstances, we find that appellant’s cartons are more analagous to the paper boxes in the Scott Paper Box case and the paper cups in the Southern Wooden Box case than to the wooden cases in the latter case or to the wrapping paper, paper bags and twine in Wiseman v. Wholesale Grocers Association, 192 Ark. 313, 90 S.W. 2d 987.

B 1

We cannot agree with the chancellor that the appellant is not a manufacturer within the meaning of Ark. Stat. Ann. § 84-3106 (D) (2). The bottled soft drink is a distinctly different product from the mixture of syrup and carbonated water distributed at a fountain or by a vending machine. Even though appellant produces and sells Fountain syrup in bulk and buys and sells canned beverages, its principal business is the production and sale of bottled carbonated soft drinks, nearly all of which are sold to retailers for resale to the ultimate consumer. Appellant makes its own syrup. The bottled beverage is produced on a rather sophisticated production line, beginning with a case unloader, where empty bottles are removed from the cases and fed into the line, and ending with the “palletizing” of cases fitted with the bottled product and ready for market. During the process, the bottles are washed, inspected, filled, capped and repackaged into cases.

The syrup used by fountains and in vending machines serving the beverage in a paper cup is not the same as the concentrate purchased by appellant. The syrup sold to fountains is made by appellant who also makes it for its finished bottled product. In the preparation of the liquid beverage, water from the city supply is pumped into a reaction tank, where chlorine, lime and ferrous sulphate are added to reduce hardness and alkalinity, to oxidize such organic matter as bacteria and micro-organisms and to remove all insoluble material. The amounts of the chemicals vary from day to day after testing of the city water. The treated water is then passed through filters first of white, high silicate sand, then of carbon, and finally, of fine fiberglass. That water is added in proper proportions to granulated sugar in a stainless steel mixing tank to form a simple syrup to which is added, in precise order, á liquid concentrate purchased from the franchiser, vanilla, a citric acid solution, and, if necessary, a solution of benzoate of soda. The resulting mixture is “bottling syrup” if, after having been thoroughly stirred and left sitting for a certain period, and tested, it falls within accepted tolerances. Some syrups then require “aging” for a proper blending. After all tests are satisfactorily passed, the syrup passes into a tri-o-matic cooler where the syrup and water are mixed in exact proportions, cooled to 34°, and carbonated by being pumped through a spray head into a mist which is saturated with carbon dioxide gas. The finished beverage is then ready for the filling and crowning of bottles. This liquid goes into a uniblend filler, which by means of a counterbalance pressure system maintains a proper amount of the liquid in the filler tank where it, by a filling operation, is fed into the bottles, which have been through a cleaning and inspection process. Then the filled bottle is crowned and transferred to a belt for completion of the packaging and stacking process, after which it is moved to the stock warehouse or a delivery truck. The only item furnished by the Pepsi Cola Company is the concentrate.

The bottling operation is considered to be manufacturing in the bottling industry. “Rules and Regulations Pertaining to Bottling Plants” promulgated by authority of Ark. Stat. Ann. § 82-110 (Repl. 1960) require a properly screened syrup room for the mixing and handling of syrups and other ingredients whenever they are mixed for manufacture of beverages. They also require all products used in manufacture, such as extracts, flavors, sugar, syrup, color, water and the like be pure and wholesome.

For the purpose of the sections of the statute in question here, manufacturing and processing refer to and include those operations commonly understood to be within their ordinary meaning. It is the position of appellee that appellant has faiied to meet its burden of proof and that it has only shown that it is engaged in a process of pouring Pepsi Cola syrup and carbonated water into a cleaned and inspected bottle on which it then puts an air tight cap. Appellee relies principally upon C.J.C. Corp., v. Cheney, 239 Ark. 541, 390 S.W. 2d 437, where we held that the “ready-mix” concrete business was not manufacturing, because it involved only the mixing of various basic ingredients or material to prepare a concrete product for ultimate use.

We think, however, that the proof clearly shows that appellant is engaged in manufacturing at a manufacturing plant or facility. A particular flaw in appellee’s reasoning arises from the premise that the process is pouring Pepsi Cola syrup into a bottle. He does, however, recognize that the syrup poured into the bottle is a manufactured article. It is clear from the undisputed testimony that this syrup is manufactured by appellant and the extensive process by which this is accomplished was described in detail. The courts follow the common usage or popular meaning of the word manufacturing in construing the statute. Pellerin Laundry Mach Sales Co. v. Cheney, 237 Ark. 59, 371 S.W. 2d 524; C.J.C. Corporation v. Cheney, 239 Ark. 541, 390 S.W. 2d 437. We think of a manufactured article as something to be placed on the market for retail to the general public in the usual course of business. Morley v. E. E. Barber Construction Co., 220 Ark. 485, 248 S.W. 2d 689. The act itself recognizes that manufacturing encompasses the processing, fabricating or assembly of raw materials into a form of personal property to be sold in the commercial market. See, Ark. Stat. Ann. § 84-3106 (D) (2) (c). In a slightly different context we have approved a definition of a manufacturer as one engaged in making materials, raw or partly finished, into wares suitable for use. Riggs v. Hot Springs, 181 Ark. 377, 26 S.W. 2d 70.

We find that appellant is engaged in manufacturing a bottled carbonatecl beverage from raw ingredients such as water, sugar, Pepsi Cola concentrate, vanilla, citric acid and carbon dioxide and that the plant wherein the process is carried on is a manufacturing plant. This was the result reached in Oklahoma. Oklahoma Tax Commission v. Oklahoma Coca Cola Bottling Company, 494 P. 2d 312 (Okla., 1972). See also, Assessors of Boston v. Commissioner of Corporations and Taxation, 323 Mass. 730, 84 N.E. 2d 129 (1949). The fact that the Pepsi Cola concentrate or other ingredients had been partly processed does not take the operation out of the field of manufacturing.

It is not so easy to deal with the question whether appellant met its burden of proving that the electronic bottle inspector, case conveyor and bottle conveyor are used directly in the actual manufacturing or processing operation at any time from the initial state where actual manufacturing or processing begins through the completion and packaging of the finished end product. There is no difficulty in fixing one terminal of this requirement. The “packaging” of the end product is accomplished when the bottled carbonated beverage is placed in the wooden cases. The great difficulty lies in ascertaining the initial stage where the actual processing begins. There seems little room for doubt that each piece of machinery or equipment involved here was used directly in producing, assembling, processing, finishing or packaging of an article of commerce.

The bottling process is conducted on a fully automated production line. The case unpacker lifts empty bottles from the wooden cases and places them upon a bottle conveyor upon which they are fed into a bottle washer. The case conveyor, a continuous belt, then takes the empty wooden cases from the case unpacker to the case packer at the other end of the production line where it is loaded with filled drink bottles. The empty bottles taken from the cases are conveyed through a thorough rinsing and washing, to an inspection station. There two persons check for chipped, cracked, uncleaned or beaded bottles, which are removed from the bottle conveyor. The bottles remaining on the conveyor then pass to the electronic bottle inspector, which projects a beam of light through the base of each bottle into a receiver. If the beam of light is reduced or deflected by any object or material in a bottle, that bottle is rejected; otherwise, it passes to the filler where it is filled with the finished beverage coming from the tri-o-matic cooler and then moved to the crowner or bottle capper where it is sealed and then it goes to the case packer where it is packed into a wooden case with 23 other such bottles. According to appellant’s vice president and chief operations officer the manufacturing process begins, at the latest, with the case unpacker, and each step in the process thereafter is just as important to the production of the final finished product as any other and without any of them the production line would not function.

The bottle conveyor in question extends from the bottle washer through the electronic inspector. The functions of the bottle conveyor and the bottle inspector are completed before the filling of the bottles. Neither of the three machines in question has anything to do with the liquid before it is put in the bottle. It seems clear to us that the electronic bottle inspector and the bottle conveyor are used directly in producing, assembling, processing or packaging of the article of commerce between the initial state of actual manufacturing or processing and the completion of the finished article. A majority of the court also feels that the case conveyor falls into this category.

We cannot agree with appellee that only that machinery used in the mixing or the filling process could possibly be considered as machinery or equipment used directly in manufacturing or processing. Neither do we agree with appellant that the bottle conveyor is excluded as transportation equipment not directly used in the manufacturing or processing operation. The majority of the court does not agree that the case conveyor is excluded transportation equipment. In this respect we are influenced by the fact the process is a continuous, synchronized operation from the time the empty bottle is taken from the case until the case filled with the bottled beverage is palletized for storage, or delivery, without any human intervention, except for the removal of broken bottles and the intermittent removal of filled bottles for testing the product, and, if any one machine or device in the production line fails to function, the operation stops. In such an integrated process, we must consider each such machine or device as being used directly in producing, assembling, processing and packaging the ultimate product. This was the approach we took in Cheney v. Georgia-Pacific Paper Corp., 237 Ark. 161, 371 S.W. 2d 843; Arkansas Rwy. Equipment Co. v. Heath, 257 Ark. 651, 519 S.W. 2d 45 (1975). See also, State v. Try-Me Bottling Co., 257 Ala. 128, 57 So. 2d 537 (1952); Schenley Distillers v. Commonwealth, 467 S.W. 2d 598 (Ky. 1971).

The decree is affirmed insofar as it affects the bottles, but reversed as to the cardboard cartons, the case conveyor, the bottle conveyor and the electronic bottle inspector.

The Chief Justice, Mr. Justice Byrd and Special Justice John S. Daily dissent from the affirmance but concur in the reversal. Mr. Justice Holt was disqualified and did not participate.

John S. Daily, Special Justice,

dissenting in part. The majority of the Court makes a distinction between the cardboard cartons and the bottles which I am unable to draw. Each is a “recognizable, integral part of the manufactured product” (a carton of bottled carbonated soft drinks) — Sec. 84-1904 (i) (Repl. 1960). This total end product is sold by the manufacturer to the retailer, and by the latter to the consumer, incident to which resale the retailer collects from the consumer a Gross Receipts Tax calculated upon the total resale price of the complete package. I see no practical way for the retailer to separate the price of the components of this end product and impose a Gross Receipts Tax upon part of same and exclude other parts. The majority imposes a Compensating Use Tax upon the bottles at their purchase by the manufacturer, but Section 84-3106 (B) exempts these bottles from the Use Tax if they are subjected to a levy of a Gross Receipts Tax. A levy of both taxes upon the same item of tangible personal property is precluded by the statutes and by all prior pronouncements of this Court on this point. Henry v. International Paper Company, 252 Ark. 913 at 915; Henry v. Southern Wooden Box Company, 253 Ark. 290 at 291. This distinction drawn by the majority between the bottles and the cardboard cartons seems to be predicated upon the practice of the Appellant, in company with a great number of its fellow manufacturers in the carbonated bottled drink trade, to require its purchaser, the retailer, (in addition to paying the purchase price) to put up a deposit on each bottle; and the retailer makes a like requirement of his purchaser, the consumer. Each of these deposits is fully refundable in the event that the bottle is returned by the consumer to the retailer, and by the retailer to the manufacturer. This practice, according to the record in this case, is not applied to cardboard cartons. I view this deposit and refund requirement as to the bottles to be wholly irrelevant to the question of the impact of the imposition and exemption provisions of the Gross Receipts and Compensating Use Tax Acts. To me it is clearly a device, and only that, to induce the consumer to return the bottle to a retailer and reclaim his deposit, and for the retailer to return it to the manufacturer and reclaim his deposit, to the end that the bottle may be recycled by the manufacturer. This practice would appear to be laudable and in the interest of conservation benefiting the general economy. Also, according to the uncontradicted evidence in the record, it results in a benefit to the consumer in enabling the manufacturer to make more frequent reuse of each bottle whereby it can profitably include in its sale price the amortized (in the practical sense) cost of the bottle over the bottle’s returnable life, rather than the bottle’s total initial cost being included in the sale price on each sale of the end product. Also, according to the uncontradicted evidence in this record, there is an absolute sale of the completed packaged product, and all of its components, by the manufacturer to the retailer, and by the retailer to the consumer, and each of these latter two is free to do as he will with the product, including the bottles, which he may return for recovery of his deposit or not, as he chooses.

If the manufacturer is subjected to a Compensating Use Tax on its cost of the bottles, which I understand the majority to hold, it will necessarily be under economic compulsion to add this additional tax cost to its end product price and thereby pass it on to the consumer. Contrary to the opposite politically inspired pronouncements, producers do not pay taxes. They collect and remit them and pass them on in the price of their products into the hands of the consumer. If they do not they are soon out of business. If this economic law of the free market system prevails, the manufacturer will add the use tax imposed on the bottles to the price of its packaged end product which includes the bottles, and the retailer will impose a Gross Receipts Tax calculated on his total price to the consumer (i.e. his purchase price from the manufacturer, including the use tax imposed on the bottles, plus his retailers profit). There is no suggestion in the record as to how the retailer could eliminate the bottles from the retail price in calculating the sales tax he must collect. Thus the consumer will pay a Gross Receipts Tax upon the final retail price which will include the “passed on” use tax paid by the manufacturer. This results in the double tax, and even a tax on tax, that is proscribed by the Court’s decisions in the cases cited above.

I respectfully dissent from the affirmance of the Trial Court’s ruling on the bottles.

I am authorized to state that the Chief Justice and Mr. Justice Byrd join in this dissent.


source: Caselaw Access Project

author: J. Fred Jones, Justice.

license: Public Domain

text:
    Norman Wayne JOURNEY v. STATE of Arkansas
    CR 74-169
    521 S.W. 2d 210
    Opinion delivered April 14, 1975

      Gene Worsham, for appellant.

      Jim Guy Tucker, Atty. Gen., by: Robert A. Newcomb, Asst. Atty. Gen., for appellee.
   J. Fred Jones, Justice.

Some jewelry was taken in an armed robbery in St. Louis, Missouri, and was later found and recovered in Little Rock, Arkansas. Norman Wayne Journey was charged on information filed by the prosecuting attorney in Arkansas with the crime of possessing stolen property (the jewelry) of a value in excess of $35.00 knowing the same to have been stolen. (Ark. Stat. Ann. § 41-3938 [Repl. 1964]). Journey filed a motion to dismiss the information because óf prior acquittal and the motion was denied by the trial court. On appeal to this court Journey contends that the trial court erred in denying his motion to dismiss.

Journey’s motion was predicated upon the fact that he had been tried and acquitted in a United States District Court in Missouri under a federal grand jury indictment for the crime of transporting the stolen merchandise in interstate commerce. (18 U.S.C.A. § 2314). The district court, in the federal case, set out the specific charge against Journey, and the elements necessary to prove the charge, in its instructions to the jury as follows:

“The indictment is based upon a statute which is Federal law which reads as follows:
‘Whoever transports in interstate or foreign commerce any goods, wares, merchandise, securities or money, of the value of $5,000 pr more, knowing the same to have been stolen, converted or taken by fraud; or . . .’
shall be punished according to law.
Three essential elements are required to be proved in order to establish the offense charged in the indictment:
First: The act or acts of transporting, or causing to be transported, in interstate commerce stolen jewelry as charged;
Second: Doing such act or acts willfully and with knowledge that the property had been stolen;
Third: The value of the stolen property so transported or caused to be transported must exceed $5,000.00.”

The district court emphasized in its instructions to the jury that in order to convict, it would be necessary for the government to prove beyond a reasonable doubt, that the property had a value in excess of $5,000. The district court also instructed the jury as follows:

“Bear in mind that possession alone is not an offense, and that defendant is not charged with illegal possession. This instruction is given only to aid your understanding of the next following instruction.
Possession of property recently stolen, if not satisfactorily explained, is ordinarily a circumstance from which the jury may reasonably draw the inference and find, in the light of surrounding circumstances shown by the evidence in the case, that the person in possession knew the property had been stolen.
And possession in one State of property recently stolen in another State, if not satisfactorily explained, is ordinarily a circumstance from which the jury may reasonably draw the inference and find, in the light of surrounding circumstances shown by the evidence in the case, that the person in possession not only knew it to be stolen property, but also transported it, or caused it to be transported, in interstate commerce.”

The court also gave instruction as follows:

“If you should find beyond a reasonable doubt from the evidence in the case that the jewelry described in the indictment was stolen, and was transported in interstate commerce as charged, and that, while recently stolen, the property was in the possession of the accused in another State than that in which it was stolen, you may, from those facts draw the inference that the jewelry was transported, or caused to be transported, in interstate commerce by the accused, with knowledge that it was stolen, unless possession of the recently stolen property by the accused in such other State is explained to the satisfaction of the jury by other facts and circumstances in evidence in the case.”

At Journey’s trial in the United States District Court in Missouri, a Mr. Pettry and a Mr. Emory were identified as the robbers. There was evidence submitted pertaining to Journey’s activities in helping to dispose of the jewelry by sale in Little Rock and the ultimate recovery of the stolen jewelry in Little Rock. The evidence pertaining to the transportation of the jewelry from St. Louis to Little Rock was entirely circumstantial and actually proved only that Journey, Pettry, Emory, and the jewelry, all appeared in Little Rock at approximately the same time. As already stated, the federal district court found him not guilty.

The statute on possession of stolen property for which information was filed against Journey in Arkansas is Ark. Stat. Ann. § 41-3938 (Repl. 1964) and reads as follows:

“Any person who shall possess stolen goods, money or chattels which exceed the aggregate value of thirty-five dollars (135.00), knowing them to be stolen, with intent to deprive the true owner thereof, shall be guilty of a felony, and upon conviction thereof, shall be punished by imprisonment in the penitentiary not less than one (1) year nor more than twenty one (21) years; and if the aggregate value thereof be not more than thirty five ($35.00) dollars, such person shall be guilty of a misdemeanor and shall be punished by imprisonment in the county prison or municipal or city jail not more than one [1] year and shall be fined not less than ten dollars ($10.00) nor more than three hundred dollars ($300.00).”

The statutes under which the appellant contends he is immune to prosecution in this case are §§ 43-1224.1 — 43-1224.2 (Supp. 1973) which read as follows:

“43-1224.1. When a person has been either acquitted or convicted, on the merits, of an offense against the United States or against another state or territory thereof, the acquittal or conviction is a bar to prosecution for an offense against this State, or any governmental subdivision thereof, when the two [2] offenses were committed in the same course of conduct and are of the same character.
43-1224.2. For purposes of this act [§§ 43-1224.1 —43-1224.2] two [2] offenses are of the same character when the elements which must be proved to obtain a convic-. tion of one offense are not substantially different from the elements which must be proved to obtain a conviction of the other. In determining whether such elements are not substantially different, the court shall compare the respective purposes of the laws defining the two [2] offenses, as such purposes relate to the particular course of conduct of the defendant.
(a) Differences attributable solely to the fact that the defendant’s conduct affected, in the same manner, the person or property of two [2] or more individuals, and
(b) Differences consisting of elements necessary merely to establish subject matter jurisdiction, shall not be considered in deciding whether the two [2] offenses are of the same character.”

We are of the opinion, and so hold in this case, that the crime for which Journey was charged in Arkansas and the one for which he was tried and acquitted in the United States District Court of Missouri, were not offenses of the same character within the meaning of the above sections of the statutes. In the United States District Court Mr. Journey was charged, tried and acquitted of transporting or causing to be transported, stolen jewelry valued in excess of $5,000 across a state line in violation of federal law. Under the state information involved on this appeal he was simply charged with possession of the stolen property. He was charged with transportation in one case and possession in the other, of course, scienter was an element in both cases.

Sections 43-1224.1 and 43-1224.2, supra, are so loosely drawn they invite the argument in any case of acquittal or conviction in one state or in federal court that such acquittal or conviction would preclude the prosecution for any related offense or offenses involving the same subject matter in this state. We are unable to read such broad application into the statutory provisions. If such effect were to be given §§ 43-1224.1 and 43-1224.2 of the Arkansas statutes, there is no end to the extent the statute could be applied. A conviction or acquittal in federal court for transporting a female across a state line for purposes of prostitution would preclude prosecution under state law for engaging in prostitution on either side of the state line. As to the federal court trial in the case at bar, it was necessary to not only prove that Journey transported the jewelry across the state line under the charge for which he was tried in federal court, but it was necessary to prove that the jewelry so transported was worth $5,000.

No one questions the constitutional right of an accused to not twice be placed in jeopardy or given double punishment for the same offense, but we simply do not view the case at bar as that kind of case. The appellant cites, and relies heavily on, 22 C.J.S. § 285 where the “same transaction test” is discussed as it applies to double jeopardy. In this same section of C.J.S. we find the following language:

“[TJhere are many adjudications to the effect that, if two offenses grow out of the same transaction, and such offenses are severable and distinct and one is not included in the other, a prosecution for one will not bar a prosecution for the other. Thus a single act may be an offense against two statutes, or a single statute and the common law, and if the statute or the common law requires proof of an additional fact which the other does not, an acquittal or a conviction under one does not exempt accused from prosecution and punishment under the other.”

We deem it unnecessary to attempt distinguishing all of the cases cited by the appellant, and we deem it unwise to attempt laying down or adopting a “same transaction rule” or any other rule of law, that would control in any case regardless of the circumstances and facts in that case. In the case at bar guilty knowledge, actual transportation across state lines and $5,000 in value were all necessary elements of the crime charged in the federal indictment, under which the appellant was tried and acquitted.

Now, had the appellant been convicted rather than acquitted under the federal indictment, perhaps it could have been more logically argued that he also possessed the stolen goods as he transported them in interstate commerce because transportation might logically include possession, but certainly a charge of unlawful possession does not include transportation. It would appear, moreover, that one might “cause to be transported” in interstate commerce, stolen goods he had never possessed or even seen. Under the appellant’s theory and argument in this case, if the appellant had been acquitted of the federal charge simply on the basis that the value of the stolen jewelry amounted to $4,000 rather than the required $5,000, then the appellant would have been immune to prosecution for the possession of the stolen property in Arkansas regardless of whether he transported it or did not transport it in interstate commerce.

The judgment is affirmed.

Byrd, J., dissents.


author: Conley Byrd, Justice.

text:
    SECURITY SAVINGS & LOAN ASSOCIATION v. CENTRAL ARKANSAS SAVINGS & LOAN ASSOCIATION and ARKANSAS SAVINGS AND LOAN ASSOCIATION BOARD
    74-356
    521 S.W. 2d 220
    Opinion delivered April 14, 1975

      Smith, Williams, Friday, Eldredge and Clark, by: Hermann Ives ter, for appellant.

      Lester and Schults, by: Edward Lester, for appellees.
   Conley Byrd, Justice.

Following the remand of this case to the Arkansas Savings and Loan Association Board pursuant to our decision in Arkansas Savings & Loan Ass'n Board v. Central Arkansas Savings & Loan Ass'n, 256 Ark. 864, 510 S.W. 2d 872 (1974), the Arkansas Savings and Loan Association Board again sustained the protest of appellant Security Savings & Loan Association by denying Central Arkansas Savings & Loan Association’s application for a charter. Before the order denying the application had been served upon the parties, appellant’s counsel picked up a copy of the order at the Board’s office and, notwithstanding that his protest had been sustained, filed an appeal in the Circuit Court of Pulaski County. Thereafter appellee, Central Arkansas Savings and Loan Association, filed an appeal in the Circuit Court of Faulkner County. The Circuit Court of Pulaski County upon motion transferred the appeal pending therein to the Circuit Court of Faulkner County. From that order appellant brings this appeal which we dismiss for the reasons stated in Arkansas Savings & Loan Ass’n Board v. Corning Savings & Loan Ass’n, 252 Ark. 264, 478 S.W. 2d 431 (1972).

Appeal dismissed.


author: George Rose Smith, Justice.

text:
    The STATE DEPARTMENT of PUBLIC WELFARE et al v. Lula Mae Stracner LIPE, as mother and next friend of Michael Stracner, a minor
    74-357
    521 S.W. 2d 526
    Opinion delivered April 21, 1975

      Monroe L. Bethea, for appellants.

      R. W. Raster, for appellee.
   George Rose Smith, Justice.

This is a petition for a writ of habeas corpus filed by the appellee, Lula Mae Stracner Lipe, as the mother and next friend of Michael Stracner, a minor born January 26, 1956. The defendants are the State Department of Public Welfare and the Arkansas Children’s Colony Board, the latter now designated as the Arkansas Board of Mental Retardation. Ark. Stat. Ann. § 59-1003 (Repl. 1971). The petition alleges that Michael is unlawfully detained in custody at the Children’s Colony, in Conway.

The petition was filed in the Pulaski Circuit Court and was presented to Judge William J. Kirby. Judge Kirby issued a writ of habeas, directed to the above named defendants and returnable to himself. The defendants objected to the proceedings, on the ground that the writ should have been made returnable to the circuit court of Faulkner county, where Michael is detained. The trial court overruled that objection and ultimately entered a final order finding that Michael had been improperly committed to the Children’s Colony. The order directed that Michael be released “to the custody of Lula Mae Stracner Lipe, mother and next friend.”

The defendants were right in their objection to the court’s jurisdiction. The Pulaski circuit court had jurisdiction to issue the writ, it is true; but that jurisdiction did not rest, as the appellee argues, upon the statute fixing Pulaski county as the venue for actions against State officers. Ark. Stat. Ann. § 27-603 (Repl. 1962). Instead, the court’s jurisdiction was proper under the statute which provides that the Supreme, circuit, or chancery court’s power to issue writs of habeas corpus shall be coextensive with the State. Ark. Stat. Ann. § 34-1702 (Repl. 1962). In State v. Ballard, 209 Ark. 397, 190 S.W. 2d 522 (1945), we relied upon that statute in sustaining the Independence chancery court’s authority to issue the writ, even though it was directed to the custodian of a person in Saline county.

The question here, however, is where the writ should have been made returnable. The statute provides that the writ is to be directed “to the person in whose custody the prisoner is detained, and made returnable . . . before the Supreme, circuit or chancery judges of the county in which it may be served.” Ark. Stat. Ann. § 34-1710. Hence the controlling question is the identity of “the person in whose custody the prisoner is detained.”

We construe the statute to mean the person, usually an officer of some sort, having physical custody of the prisoner. “Habeas corpus,” literally translated, means, “You have the body.” In the few cases in which the issue has arisen, the courts have stressed physical custody in determining venue. Gibson v. Wood, 209 Ga. 535, 74 S.E. 2d 456 (1953); McBurnett v. Warren, 208 Ga. 225, 66 S.E. 2d 49 (1951); Love v. Love, 188 Kan. 185, 360 P. 2d 1061 (1961); Logan v. Rankin, 230 Miss. 749, 94 So. 2d 330 (1957).

Our statutes seem to be based upon that point of view, which has obvious practical advantages. The person having custody of the prisoner may be designated merely by the name of his office, if any. § 34-1711. Service is to be on the person to whom the writ is directed, “or, in his absence from the place where the prisoner is confined, on the person having him in immediate custody.” § 34-1713. The language just quoted suggests that the person to whom the writ is directed will ordinarily be found at “the place where the prisoner is confined.” Neither the officers of the State Department of Public Welfare nor the members of the Board of Mental Retardation (who are appointed by Congressional districts, § 59-1004) would ordinarily be found at the Children’s Colony, in Conway. We conclude that the Superintendent of the Arkansas Children’s Colony, a position created by statute, §§ 59-1101 and 59-1113, best fits the statutory designation of the person in whose custody Michael is detained. It may be observed that the same approach was followed by the litigants in the Ballard case, supra, where the writ was directed to the Superintendent of the Training School for Girls, which fixed the venue in Saline county.

It is appropriate for us to add, in the hope of avoiding needless litigation, that this habeas corpus proceeding is not one for the determination of custodial rights as between Michael’s parents. It simply tests the legality of his detention at the Children’s Colony. The issue of custody has been repeatedly before the Pope chancery court, where it originally arose in the parents’ divorce case brought in 1967, when Michael was 11. If the Faulkner circuit court finds the Colony’s detention to be illegal, custody will be determined by the prior orders of the Pope chancery court. Under our law the circuit court is not the proper forum for the determination of child custody, which often gives rise to litigation extending over many years, as conditions change. That jurisdiction is vested in the chancery courts.

Reversed and remanded for further proceedings.


author: Lyle Brown, Justice.

text:
    Ark MONROE III, Insurance Comn’r. of THE STATE OF ARKANSAS v. INSURANCE SERVICES OFFICE OF ARK.
    74-283
    522 S.W. 2d 428
    Opinion delivered April 21, 1975
    [Rehearing denied May 27, 1975.]

      William H. L. Woodyard 111, S. Doak Foster and Allan W. Home, for appellant.

      Wright, Lindsey & Jennings, for appellee.
   Lyle Brown, Justice.

This is an appeal by the Arkansas Insurance Commissioner (commissioner) from an order of the Pulaski Circuit Court reversing an order of the commissioner requiring Insurance Services Office of Arkansas (ISO) to reduce automobile insurance rates by specified percentages. (ISO is not an insurer. It is a statistical rating and advisory organization, or rating bureau for property and casualty lines of insurance. It gathers statistics from and files on behalf of its member-subscriber companies.) The trial court held that the commissioner has no statutory authority to reduce rates with the exception of fire insurance rates. The commissioner contends that he is charged with the responsibility of regulating private passenger automobile insurance rates “to the end that they shall not be excessive, inadequate or unfairly discriminatory”. Ark. Stat. Ann. § 66-3101 (Repl. 1966). The commissioner further contends that the mechanisms to be used to enforce the aforesaid responsibility are incorporated in Ark. Stat. Ann. §§ 66-3110, 66-3111, which he says requires the insurer or rating organization to file rates with the commissioner for prior approval. The commissioner also cites Ark. Stat. Ann. § 66-3112 (Repl. 1966) which he says provides for subsequent review of a filing previously approved.

Section 66-3101 provides: “The purpose of this chapter is to promote the public welfare by regulating insurance rates to the end that they shall not be excessive, inadequate or unfairly discriminatory, and to authorize and regulate cooperative action among insurers in rate making and in other matters within the scope of this chapter. Nothing in this chapter is intended :
(1) To prohibit or discourage reasonable competition,
or
(2) Prohibit or encourage, except to the extent necessary to accomplish the aforementioned purpose, uniformity in insurance rates, rating systems, rating plans or practices. This chapter shall be liberally interpreted to carry into effect the provisions of this section.”

The other two sections cited by the commissioner provide the procedure to be taken once there is a filing for proposed rates. Those sections are 66-3110 and 66-3111, and read as follows:

66-3110. (1) The Commissioner shall review filings as soon as reasonably possible after they have been made in order to determine whether they meet the requirements of this chapter.
(2) Subject to the exceptions specified in subsections (3) and (4) of this section, each filing shall be on file for a waiting period of fifteen (15) days before it becomes effective, which period may be extended by the Commissioner for an additional period not to exceed fifteen (15) days if he gives written notice within such waiting period to the insurer or rating organization which made the filing that he needs such additional time for the consideration of such filing. Upon written application by such insurer or rating organization, the Commissioner may authorize a filing which he has reviewed to become effective before the expiration of the waiting period or any extension thereof. A filing shall be deemed to meet the requirements of this chapter unless disapproved by the Commissioner within the waiting period or any extension thereof.
(3) Specific inland marine rates on risks specially rated by a rating organization shall become effective when filed and shall be deemed to meet the requirements of this chapter until such time as the Commissioner reviews the filing and so long thereafter as the filing remains in effect.
(4) Any special filing with respect to a surety or guaranty bond required by law or by court or executive order or by order, rule or regulation of a public body, not covered by a previous filing, shall become effective when filed and shall be deemed to meet the requirements of this chapter until such time as the Commissioner reviews the filing and so long thereafter as the filing remains in effect.
66-3111. (1) If within the waiting period or any extension thereof as provided in section 243 (2) [§ 66-3110(2)], the Commissioner finds that a filing does not meet the requirements of this chapter, he shall send to the insurer or rating organization which made such filing, written notice of disapproval of such filing specifying therein in what respects he finds the filing fails to meet the requirements of this chapter and stating that such filing shall not become effective.
(2) If within thirty (30) days after a specific inland marine rate on a risk specially rated by a rating organization subject to section 243 (3) [§66-3110(3)] has become effective, or if within thirty (30) days after a special surety or guaranty filing subject to section 243 (4) [§66-3110(4)] has become effective, the Commissioner finds that such filing does not meet the requirements of this chapter, he shall send to the insurer or rating organization which made such filing written notice of disapproval of such filing specifying therein in what respects he finds that such filing fails to meet the requirements of this chapter and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. The disapproval shall not affect any contract made or issued prior to the expiration of the period set forth in the notice.

We agree with the trial court that there is nothing in the recited three sections which gives the commissioner the power to fix a specified rate. In addition to the fact that no such specific authority is given, we think it is highly persuasive that the insurance code specifically provides that the commissioner may reduce fire rates but does not designate such authority for any other field of insurance. See Ark. Stat. Ann. § 66-3106 (Repl. 1966) which gives the commissioner the authority to adjust fire insurance rates.

There are two cases which are fairly well in point and which hold as we do. The first case is a 1975 Oklahoma case, Insurance Services Office v. State Board, 530 P. 2d 1359. Our chapter on insurance rates and rating organizations appears to be very similar to the statutes under which Oklahoma operates. The principal question in that case was the same as here, namely, the power of the Board of Insurance of Oklahoma to fix casualty insurance rates. The Oklahoma court said:

The Board does not have rate making or rate fixing powers and authority as to casualty insurance and all forms of vehicle insurance on risks or operations in this state. The Board does have authority to disapprove, during the waiting period, a filing; or order the discontinuance of the use of a rate in effect after investigation, proper hearing with notice and a determination in the rate is not in accordance with the terms of the Act.
* * * *
It seems admitted that in the Casualty Rating Act, the legislature did not specifically grant to the Board rate fixing authority. The Board argues, however, that because the legislature prescribed guidelines and framework within which rates should be considered neither inadequate or excessive the power to fix rates was thereby created impliedly in the Board. Such argument overlooks the specific provisions in the Act which provide the method by which the Board shall proceed to apply such guidelines. The existence of guidelines is the legislatively delegated authority upon which the Board acts when it disapproves or suspends a rate. The existence in the Act of specific authority to disapprove a proposed rate or to suspend from continuing effectiveness an existing one excludes any implication of an additional power in the Board to fix a rate itself as it has attempted to do in this proceeding. The legislature intended what was expressed in the Act and nothing more.

The State of Wisconsin has a law the substance of which is no different from the substance of our own statute. Fire Insurance Rating Bureau v. Ragan, Commissioner, 4 Wis. 2d 558 (1958) was a case adjudicating the proposition that under insurance regulatory statutes such as we have, the Commissioner of Insurance in Wisconsin has no authority whatever to promulgate, prescribe, or fix insurance rates. In that case the parties, i.e., The Rating Bureau and The Commissioner of Insurance agreed both with the circuit court and the Supreme Court in Wisconsin that the statute did “not give the commissioner authority to establish rates”. In addition, the Supreme Court of Wisconsin stated that it could not “find in the statute any authority for this court to determine rates or the percentages to be used for any of the factors necessary to determine a fair and reasonable rate”.

Our holding does not prevent the commissioner, when he specifies the respects in which he finds that a rate filing fails to meet statutory requirement, from stating the effect of those factors on the rates filed, both as to manner and extent.

Affirmed.


author: Lyle Brown, Justice. John A. Fogleman, Justice,

text:
    MATTHEWS COMPANY v. REYNOLDS-SELZ-FULKERSON, INC.
    74-363
    522 S.W. 2d 425
    Opinion delivered April 21, 1975
    [Rehearing denied May 27, 1975.]

      Stubblefield & Matthews, for appellant.

      House, Holmes & Jewell, for appellee.
   Lyle Brown, Justice.

This appeal is from a judgment in the lower court based on the jury verdict for $6,000 in favor of appellee against appellant for a real estate commission claimed on a lease by the Bonanza Steak House as lessee from appellant as lessor of a restaurant site in Jacksonville. For reversal appellant contends the verdict is not sustained by the evidence, the court erred in refusing two instructions, and it was error to permit testimony about the fair value of appellant’s services.

We shall abstract the facts in the light most favorable to the verdict of the jury and the judgment of the trial court. Robert Vogel, a licensed real estate salesman for appellee, met in Jacksonville with Jim Manning, president of the corporation that operates Bonanza Steak Houses, for the purpose of showing Manning property which he thought might be suitable for the location of a steak house. Mr. Manning decided that the site was not desirable. Robert Vogel then indicated that he knew of another location in the Wal-Mart Shopping Center about two blocks away. The two men proceeded to that site and spent a short time looking at the property and discussing its desirability as a potentially good location. Robert Vogel offered to find out who the owner was and get back in contact with Mr. Manning. In accordance with Mr. Manning’s request that he do so, Robert Vogel called Wal-Mart Store and found that the site was owned by appellant, Matthews Company. Mr. Vogel called Jim Matthews of the Matthews Company and asked him if the property was available for lease, and if he would receive a commission in the event that he provided the lessee for the location. Mr. Matthews stated that his company would pay a commission. Later that day, Robert Vogel and Mr. Matthews met at the site to discuss the proposed transaction. Mr. Vogel asked Mr. Matthews again if the Matthews Company would pay a commission. Mr. Matthews again indicated that they would. Mr. Matthews then inquired as to the name of the prospective lessee, and when he determined that it was Bonanza Steak House, he told Mr. Vogel that the Matthews Company had dealt with Bonanza Steak House in the past and that he would not pay appellee a commission for the transaction. Mr. Vogel then called Mr. Manning and told him that the owner of the property was the Matthews Company. Mr. Manning then indicated that he had dealt with the Matthews Company on several other leases and would be able to deal with it directly in perfecting the lease.

Subsequently a lease agreement was consummated between the Matthews Company and Bonanza Steak House for the Jacksonville location. A steak house was built at the site and went into operation. Appellant Matthews Company continued to refuse to pay a commission on the lease and appellee then asked the lessee of the property if he would be willing to pay a part of the commission. Lessee agreed to pay one-half of the proposed commission, one-half being figured at $6,000. That amount of money is being paid over a twenty-year period at $25.00 per month.

The amount asked for as against Matthews Company, being 16,000, was based on a quantum meruit basis since there is no contention that a definite fee was arrived at between the parties. There was testimony by competent real estate men that $12,000 would be a fair, full commission. The jury rendered a verdict in favor of appellee for the full amount of the commission claimed against appellant.

The first point for reversal is that the verdict is not sustained by the evidence. Without repeating the evidence just stated, and without recounting evidence favoring the point, we deem it sufficient to say that under the testimony offered by Vogel there was a meeting of the minds to the effect that Mr. Vogel would represent the Matthews Company in procuring a prospective lessee. It was only after Mr. Vogel revealed the name of his prospect that Mr. Matthews attempted to withdraw from the agreement. The jury was fully and fairly instructed on the prerequisites for recovery of the fee. It was told that the appellee had the burden of proving: (1) that Matthews Company agreed to let Mr. Vogel show the property for the purpose of leasing same; (2) that Matthews Company agreed to pay plaintiff for its services; (3) that plaintiff’s services were the procuring or efficient c:mse of the transaction; (4) that the lessee was ready, willing and able to perform, and that plaintiff performed all his duties honestly and in good faith.

The second point for reversal is that the court erred in refusing appellant’s requested instruction No. 3, which reads as follows:

As a defense to the commission claimed by plaintiff, defendant (appellant) contends that Robert Vogel was acting for Bonanza Steak House without the knowledge of James Matthews or Matthews Company. You are instructed that under the law a real estate broker or real estate salesman who attempts to act for both lessor and lessee with respect to a proposed lease without the knowledge of both parties for whom he attempts to act, forfeits all rights to any commission; and, in this case if you find from the evidence that Robert Vogel was attempting to so act for both the proposed lessee and the proposed lessor (defendant), then your verdict should be for defendant.

We find no error in refusing to give the instruction. Mr. Vogel started out to obtain a site for Bonanza; however, he never at anytime sought a commission from Bonanza until after Matthews refused to pay the commission and after the deal was consummated. When Matthews refused, to pay a commission it was at that time that Mr. Vogel tried to salvage a commission by asking Bonanza if it would pay him a commission. Bonanza voluntarily agreed to pay one-half the commission in order to maintain good relations. Mr. Vogel was not at anytime trying to collect a double commission; in fact he sued on the basis that one-half of his commission had been paid and he was seeking the other one-half from Matthews.

Appellant’s third point for reversal is that the court erred in refusing requested instruction No. 4, which reads as follows:

As a defense to the commission claimed by plaintiff, defendant contends that Matthews Company was first contacted about the proposed lease after Robert Vogel had been informed to the effect that the representative of Bonanza Steak House could deal direct with Matthews Company without any assistance from a real estate salesman; and, if you find from the evidence that Robert Vogel was told by a representative of Bonanza Steak House to the effect that no help was needed from a real estate salesman before he talked to James Matthews about the matter, then your verdict should be for defendant.

As we view the instruction it is binding; also it does not comport with this court’s per curiam order handed down when AMI (1) was published.

Appellant’s final point for reversal is that the court erred in permitting testimony about the value of appellee’s services. Over the objections of appellant the court permitted testimony of the accepted standard for reasonable compensation in the Little Rock area for brokerage services rendered. We find no merit in the point.

This court was faced with the same problem in Hodges v. Bayley, 102 Ark. 200, 143 S.W. 92 (1912). There we said: “We think there was some testimony proving that defendant listed his property for sale with the plaintiff and employed him to secure a purchaser for his stock of goods, and that plaintiff was the procuring cause of the sale thereof which defendant consummated with Thornton; and there was also evidence showing that the amount of the commission recovered was a reasonable and customary compensation for like service rendered in making such sales.”

Appellant argues that Mr. Vogel’s activities respecting the project were very scant, indicating he did not earn the commission claimed. It is true Mr. Vogel spent very little time with the venture, but the fact remains that he brought the parties together and the lease was consummated, whereupon he was entitled to his brokerage. Walthour v. Finley, 237 Ark. 106, 372 S.W. 2d 390 (1963).

The judgment is affirmed.

Byrd, J., not participating

Fogleman, J., concurs

John A. Fogleman, Justice,

concurring. I concur. The only valid reason, however, for refusal of the instruction on dual agency, is that, under the evidence, Vogel was not vested with authority to exercise any discretion on behalf of either the buyer or the seller. He was merely a middleman who brought the parties together. 3 Am. Jur. 2d 620, Agency § 255; 12 Am. Jur. 2d 912, 914, Brokers § 171, 173;3CJS 149, Agency § 339; Annot, 14 ALR 464, 472.


author: John A. Fogleman, Justice.

text:
    TRAVELERS INDEMNITY COMPANY v. Ark MONROE, III, INSURANCE COMMISSIONER of The STATE of Arkansas
    74-326
    522 S.W. 2d 431
    Opinion delivered April 21, 1975
    [Rehearing denied May 27, 1975.]

      Wright, Lindsey & Jennings, for appellant.

      William H. L. Woodyard III, S. Doak Foster and Allan W. Horne, for appellee.
   John A. Fogleman, Justice.

In this case, the Insurance Commissioner, after holding a hearing relative to previously approved rate filings of The Travelers Indemnity Company for voluntary private passenger automobile coverages of bodily injury and property damage liability, medical payments and physical damage, purportedly acting pursuant to Ark. Stat. Ann. §§ 66-3107, 66-3112 (Repl. 1966) and other provisions of the Arkansas Insurance Code and Ark. Stat. Ann. § 5-708, 709 (Supp. 1973) and other provisions of the Arkansas Administrative Procedure Act, issued his order directing reduction of the rate of Travelers voluntary private passenger automobile coverages of bodily injury and property damage liability and medical payments by 17% and physical damage by 17.7% effective May 1, 1974. Upon review, the circuit court held that the commissioner had the authority to make the order, but found no substantial evidence to support the commissioner’s order, even though he did find a preponderance of substantial evidence to justify a premium rate reduction of 10%, and entered judgment accordingly.

The judgment in this case must be reversed for the same reason that we today affirm the judgment of the circuit court in Monroe v. Insurance Services Office of Ark., 257 Ark. 1018 522 S.W. 2d 428 (1975). In view of this reversal, we feel that it is appropriate that we decide another question raised on cross-appeal. The trial court held that its judicial review was governed by Ark. Stat. Ann. § 66-3134 (Repl. 1966) and not by Ark. Stat. Ann. § 5-713 (Supp. 1973). Under the circumstances prevailing here, we agree with the circuit judge.

After the Insurance Commissioner’s order was entered, Travelers filed a petition for review in the Circuit Court of Pulaski County, alleging that its motion for appeal had been filed with the appellee, and a transcript of the proceeding filed with the Clerk of the Circuit Court, but appellee had asserted that the exclusive procedure for judicial review was prescribed by Ark. Stat. Ann. § 5-713. Appellant then stated that this petition was filed without conceding that appellee was correct in his contention. The record sustains appellant’s allegations.

We reject appellee’s argument on this point without hesitation. He contends that § 66-3134, a section of the Insurance Code enacted in 1959 is in irreconcilable conflict with the Administrative Procedure Act [Ark. Stat. Ann. § 5-701 et seq (Supp. 1973)] enacted in 1967, and thereby repealed. However desirable this result might be, without considering the effect of a general act on a special act or of a special act on a general one, the legislative intent is clear to us. The plain words of the Administrative Procedure Act in Ark. Stat. Ann. § 5-713, covering judicial review of an adjudication by an agency subject to the act, are, “Nothing in this Section shall be construed to limit other means of review provided by law.” If words have not lost their meaning, this sentence means exactly what it says and appellant was entirely within its rights when it sought judicial review under the appropriate Insurance Code Section. In Arkansas Savings & Loan Assn. Bd. v. Corning Savings & Loan Assn., 252 Ark. 264, 478 S.W. 2d 431, the circuit court from which the appeal from action of the board was taken had held that the Arkansas Administrative Procedure Act supplemented but did not repeal Ark. Stat. Ann. § 67-1811 (Repl. 1966), governing appeals from the action of that board. We said there that the Administrative Procedure Act provided an alternate appellate procedure and jurisdiction, and did not repeal § 67-1811.

The judgment is reversed on appeal and affirmed on cross-appeal.


text:
    S. R. DUMAS, Individually and as A Representative of all Taxpayers of Union County v. Carlton JERRY County Judge, et al
    74-354
    521 S.W. 2d 539
    Opinion delivered April 21, 1975

      Brown, Compton & Prewett, by: William I. Prewett, for appellant.

      Beryl Anthony Jr., for appellee Carlton Jerry; Mahony and Tocum, for appellee El Dorado Ind. Dev. Corp. and Shackleford, Shackleford and Phillips, for appellee Grace Smith. Amicus Curiae Ilerschel II. Friday for State Ind. Dev. Dept.
   John A. Fogleman, Justice.

The only question presented on this appeal is the applicability of Ark. Stat. Ann. § 17-304 et seq (Repl. 1968) to a lease, with option to purchase, of property deeded to Union County, Arkansas. We hold that these sections do not apply under the circumstances and affirm the decree of the chancery court.

American Oil Company owned approximately 450 acres of land in Union county upon which it operated a refinery. It decided to close that refinery and sought to make a donation of all of the real property and some personal property in order that it might be used to help alleviate the impact of the loss of more than 280 jobs and several million dollars in annual payroll which would result from the closing. After numerous conferences and negotiations, the company decided to give the property to Union county. On December 21, 1971 an official of the company wrote County Judge Carlton Jerry a letter stating the intention of the company to donate the property to Union county for expansion of its industrial development program. Again on March 29 the company advised by letter that specific property was to be donated to the county for its industrial development program.

An instrument denominated “Trust Agreement” was executed on August 17, 1971 appointing the El Dorado Industrial Development Corporation (EIDC) as agent for the county to make negotiations for, and accept donations, to the use and benefit of Union County, for industrial purposes. In the preamble, reference was made to the proposed donation by American Oil Company to be used solely for industrial development and expansion purposes. EIDC was authorized, subject to final approval by the Union county court, to accept donations in the name of Union county to be used for industrial purposes and to manage, develop, redevelop, sell or exchange, the property and to take other such action required to utilize it for industrial purposes. It was specifically provided that title to all property so accepted should vest in Union county.

By deed dated July 20, 1973, American Oil Company conveyed the land, with buildings thereon, and some personal property to Union county. No restriction on the use of the property was expressed in the deed.

On August 1, 1973 the county and EIDC leased approximately 150 acres of the property to Grace M. Smith for a primary term of seven years at an annual rental of $40,000. The lease referred to the authority of EIDC conferred by the Trust Agreement. It contained an option for renewal of the lease for three successive seven year terms and an option to purchase the property for $800,000 after the expiration of the primary term. No restriction as to use of the property was contained in the lease.

Mrs. Smith entered into possession of the property and commenced efforts to obtain industrial development of the property.

Appellant S. R. Dumas filed this taxpayers’ action to set aside the lease agreement and option to purchase, contending that it was void and invalid for failure to comply with Ark. Stat. Ann. §§ 17-304-309 (Repl. 1968). After trial, the chancery court entered its decree dismissing the complaint of appellant and quieting and confirming the title of Grace Smith under the lease against any claims of appellant, individually and as a representative of the taxpayers of the county.

The letters to the county judge relating to the donation of the property had pointed out that the property would be conveyed by a quitclaim deed only and that the county’s acceptance of the donations would be contingent upon receipt of proper deeds and abstracts. The property was conveyed by a quitclaim deed.

The lease agreement was submitted to the county court of Union county and approved by formal order spread on the records of the court. The county judge joined in the execution of the lease on behalf of Union county. Prior to his execution of the lease he did not enter any order directing the county assessor to cause the property to be appraised as required by Ark. Stat. Ann. § 17-305 and did not give notice of the lease agreement by publication in a newspaper and did not require or receive any sealed bids under the provisions of Ark. Stat. Ann. § 17-308. Under the provisions of Ark. Stat. Ann. § 17-309, any sale or conveyance of real or personal property belonging to any county not made pursuant to the terms of the act (Act 193 of 1945), is null and void and any taxpayer may bring an action for the use and benefit of the county to cancel any such sale.

Mrs. Smith is the sole proprietress of Benton Iron & Metal Co. She had purchased some equipment from American Oil Company and testified that she was interested in the lease in order to save some of this equipment and promote industry. She testified that she had entered into a contract with Interstate Development Consultants to assist her in deciding what types of industries should be located on the property. She had advertised in the Wall Street Journal, the El Dorado Daily News and the Camden News in efforts to obtain new industry for the area. She had leased 45 fuel tanks on the property to 15 industrial concerns and had leased portions of the property to industrial employers. She was conducting negotiations with others. She testified that she would not lease any portion of the property to anyone for anythng other than industrial purposes.

We agree with appellees and the trial court that the sections of the statute relied upon by appellant do not apply under the existing circumstances. As we view the transaction, it was made pursuant to Ark. Stat. Ann. § 9-504 et seq (Act 404 of 1955) [Repl. 1956] and Ark. Stat. Ann. § 13-1601 et seq (Act 9 of the Extraordinary Session of 1960) [Repl. 1968]. The first act authorized the formation of the commissions like EIDC and conferred power upon them to act for and on behalf of the counties in order to effectuate industrial development. The county was authorized by Ark. Stat. Ann. § 13-1602 (Repl. 1968), being § 2 of Act 9 of 1960, to own, acquire, sell, lease, contract concerning, or otherwise deal in or dispose of any land, buildings, or facilities of any and every nature whatever that could be used in securing or developing industry within or near the county. Under that act the word “sell”, insofar as pertinent here, means to sell for such price, in such manner and upon such terms as the county shall determine, including private or public sale, for cash or credit payable in a lump sum or in installments over such period as the county shall determine. Ark. Stat. Ann. § 13-1612 (e) [Repl. 1968]. Under the same act, “lease” means to lease for such rentals for such period or periods and upon such terms and conditions as the county shall determine, including the granting of such renewal or extension options for such rentals, for such period or periods and upon such terms and conditions as the county shall determine and the granting of such purchase options for such prices and upon such terms and conditions as the county shall determine. Ark. Stat. Ann. § 13-1612 (f) [Supp. 1973],

The provisions of the act of 1960 above referred to are in irreconcilable conflict with Act 193 of 1945 (Ark. Stat. Ann. § 17-304 et seq). Since the act of 1960 was the later of the two statutes, these provisions operate as a repeal of the earlier act in cases coming within the purview of the later act. This construction can hardly be questioned in view of § 2 of Act 208 of 1971 [Ark. Stat. Ann. § 13-1615 (Supp. 1973).] It reads:

13-1615. Liberal construction — Compliance with other laws. — Act No. 9 [§§ 13-1601 - 13-1614] of the First Extraordinary Session of the State of Arkansas for the year 1960, approved January 21, 1960, as amended hereby, shall be liberally construed to accomplish the intent and purposes thereof and shall be the sole authority required for the accomplishment of such purposes. To this end, it shall not be necessary to comply with general provisions of other laws dealing with public facilities, their acquisition, construction, leasing, encumbering or disposition. [Acts 1971, No. 208, § 2, p. 463].

The decree is affirmed.


author: J. Fred Jones, Justice. John A. Fogleman, Justice,

text:
    Jesse FERGUSON v. STATE of Arkansas
    CR 74-165
    521 S.W. 2d 546
    Opinion delivered April 21, 1975

      Lady and Webb, by: Kelley Webb, for appellant.

      Jim Guy Tucker, Atty. Gen., by: Jack T. Lassiter, Asst., for appellee.
   J. Fred Jones, Justice.

The appellant Jesse Ferguson, along with one Robert E. Foshee, was charged by information filed by the prosecuting attorney, with the crime of “Armed Robbery committed as follows, to-wit: That the said Defendant(s) did on or about the 24th day of May, 1973, in the District of Poinsett County, Arkansas, unlawfully, violently, feloniously, by force and intimidation, and by use and employment of a firearm, namely a rifle, take from the person of one Ralph Morgan the sum of $250 in currency. . .

At a jury trial the appellant was found guilty and his punishment fixed at a term of four years in the Arkansas Penitentiary on the charge of robbery, with an additional two and one-half years added for the use of a firearm. The trial court entered judgment accordingly with the two and one-half years to run consecutively to the four years.

The appellant did not appeal from the judgment so entered but on January 15,1974, he filed an ex parte petition for post-conviction relief under the Criminal Procedure Rule No. 1. He alleged in his petition that his conviction in connection with the use of a firearm was invalid because he was not informed of that part of the charge by indictment, warrant, or otherwise, and was not aware that he was to be tried “for the weapon charge in addition to the charge of armed robbery.” The appellant also contended that “armed robbery” is not a criminal offense provided by law or statute, and that his conviction of armed robbery and also using a firearm in the commission of a felony, placed him in double jeopardy in violation of his constitutional rights. The trial court denied the appellant’s petition for relief under findings of fact recited by the trial court as follows:

“1. On the 10th day of October, 1973, the petitioner, after a trial was found guilty by a jury of Armed Robbery and guilty of Commission of a Robbery with a Firearm and his punishment was set at four years in the State Penitentiary for Robbery and two and one-half years for Commission of a Robbery with a Firearm. The court entered judgment on said verdict and sentenced petitioner to a term of six and one-half years, said four year sentence and two and one-half sentence to run consecutively and petitioner was committed to the Department of Correction for the State of Arkansas. An appeal was not prosecuted. Throughout these proceedings, petitioner was represented by Michael Everett, Attorney, of Marked Tree, Arkansas, appointed counsel.
2. On the 15th day of January, 1974, petitioner filed a petition herein seeking post-conviction relief, alleging that he was not informed by indictment or a warrant that he was to be tried for the weapon charge in addition to the charge of Armed Robbery; that said charge is not provided by law or statute; that said charge placed petitioner twice in jeopardy; that said charge represents an attempt by the prosecution to enhance the punishment and the finding and sentence is otherwise subject to collateral attack because the evidence does not substantiate the verdict or the sentence.”

On appeal to this court the appellant has designated the points he relies on for reversal as follows:

“Petitioner was not informed by indictment, warrant or otherwise aware that he was to be tried for the weapon charge in addition to the charge of armed robbery.
The aforementioned charge is not provided by law or statute.
The aforementioned charge placed the petitioner twice in jeopardy.
The aforementioned charge represents an attempt by the prosecution to enhance the punishment received for being found guilty of armed robbery.
The finding and sentence is otherwise subject to collateral attack because the evidence does not substantiate the verdict or the sentence.”

The appellant’s first point was answered adversely to his contention in our recent case of Ilaynie v. State, 257 Ark. 542, 518 S.W. 2d 492 (1975), and we find no merit to this contention. The appellant’s other points are likewise without merit. The crime of robbery is defined in Ark. Stat. Ann. § 41-3601 (Repl. 1964) as:

. the felonious and violent taking of any goods, money or other valuable thing from the person of another by force or intimidation; the manner of the force or the mode of intimidation is not material, further than it may show the intent of the offender.”

“Robbery” and “armed robbery” are not designated by statute as separate crimes in Arkansas but we hold, that the word “armed” preceding the word “robbery,” as used in the information in the case at bar, was simply descriptive of the nature of the force or intimidation allegedly employed and, as further explained in the information, by use of the words “by use and employment of a firearm, namely a rifle. ...” The proper time to object to the form of an information or indictment is at the arraignment or call of the indictment for trial. Ark. Stat. Ann. § 43-1206 (Repl. 1964) Johnson v. State, 223 Ark. 929, 270 S.W. 2d 907. We find no merit to appellant’s points two, three and four.

As to the appellant’s last point, Ralph Morgan, the robbery victim, testified as to the intimidation by the robber in carrying a rifle under his right arm and waving it at him (the victirrj) when he (the robbei) demanded the money. A nine year old boy, who was also an eyewitness to the robbery, testified as to the use of a rifle in the commission of the crime.

The judgment is affirmed.

Brown and Fogleman, JJ., concur; Byrd, J., dissents.

John A. Fogleman, Justice,

concurring. I concur because not a single point raised by appellant is cognizable under Criminal Procedure Rule 1. There were effective procedures available to appellant in his trial and on direct appeal, for consideration of every question raised by him. No showing is made that he was in any way prevented from raising them. There is no imperative to provide an additional collateral review. Houser v. United States, 508 F. 2d 509 (8th Cir., 1974). Rule 1 is not a substitute for a direct appeal. Questions of sufficiency of the evidence and errors of law or fact must be raised on direct appeal. Defects in and sufficiency of an indictment or information are not cognizable in the absence of a showing of exceptional circumstances, where the questions raised are of great importance, the need for remedy apparent and the offense charged was one over which the sentencing court was manifestly without jurisdiction. The double jeopardy clause also falls in the category of pretrial matters not ordinarily cognizable. Insufficiency of the evidence is clearly not a proper basis for a collateral attack. See Houser v. United States, supra.

I am authorized to state that Mr. Justice Brown joins in this opinion.