text:
    James F. KYSER, Individually and as Father and Next Friend of James G. KYSER v. John Patrick PORTER et al
    76-334
    548 S.W. 2d 128
    Opinion delivered March 28, 1977
    (In Banc)

      Smith, Williams, Friday, Eldredge & Clark, for appellant.

      Laser, Sharp, Haley, Young & Boswell, P.A., and Gannaway, Darrow & Hanshaw, for appellees.
   Elsijane T. Roy, Justice.

This action was brought by James F. Kyser individually and as father and next friend of James Greg Kyser for injuries the youth sustained in an automobile accident while a passenger in a Volkswagen van driven by Thomas J. Aston. The Aston vehicle, while proceeding up a hill, pulled out into the lane of oncoming traffic to go around a car parked next to the curb, resulting in a head-on collision with a Cutlass Oldsmovile drive by John Patrick Porter. The accident occurred in a residential area in western Little Rock as all the youths were on their way to school. Kyser, who was lying in the back of the van, sustained serious injuries when he was thrown toward the front of the vehicle on impact.

Appellant sued appellees, Thomas J. Aston and his parents, Jaral D. Aston and Mari Alyce Aston, as persons statutorily liable for the negligence or willful misconduct of their minor son pursuant to Ark. Stat. Ann. § 75-315 (Supp. 1975). Appellant also sued appellees John Patrick Porter and Union National Bank, Administrator of the Estate of J. O. Porter, John’s deceased father, under the theory of negligent entrustment. At the time of the accident Porter was seventeen years of age while both Kyser and Aston were sixteen.

At the close of appellant’s case, the trial court directed a verdict in favor of the Astons, finding the guest statute, Ark. Stat. Ann. § 75-913 (Repl. 1967), was applicable and that appellant had failed to prove willful and wanton misconduct on the part of Thomas Aston. At the conclusion of the case the jury returned a general verdict favorable to appellees Porter and Union National Bank, Administrator.

With regard to the action based on the liability of driver Aston in whose vehicle Kyser was a passenger, appellant contends that Aston’s parents cannot avail themselves of the defenses inherent to the minor operator of the vehicle under the Arkansas guest statute because of the provisions of § 75-315 (Supp. 1975). This statute reads in pertinent part:

(a) The original application of any person under the age of eighteen (18) years for an instruction permit or operator’s license shall be signed and verified ... by both the father and mother of applicant, if both are living and have custody of him, or in the event neither parent is living then by the person or guardian having such custody ....
(b) Any negligence or wilful misconduct of a minor under the age of eighteen (18) years when driving a motor vehicle upon a highway shall be imputed to the person who has signed the application of such minor for a permit or license, which person shall be jointly and severally liable with such minor for any damages caused by such negligence or wilful misconduct.
(c) If any person who is required or authorized by Subsection (a) of this Section to sign the application or a minor in the manner therein provided, shall cause or knowingly cause or permit his child or ward or employee under the age of eighteen (18) years to drive a motor vehicle upon any highway, then any negligence or wilful misconduct or said minor shall be imputed to such person or persons and such person or persons shall be jointly and severally liable with such minor for any damages caused by such neligence or wilful misconduct. The provisions of this Subsection shall apply regardless of the fact that a drivers license may or may not have been issued to said minor. For purposes of this act, a minor is hereby defined to be any person who has not attained the age of eighteen (18) years.
The Arkansas guest statute (§ 75-913) reads as follows:
No person transported as a guest in any automotive vehicle upon the public highways or in aircraft being flown in the air, or while upon the ground, shall have a cause of action against the owner or operator of such vehicle, or aircraft, for damage on account of any injury, death or loss occasioned by the operation of such automotive vehicle or aircraft unless such vehicle or aircraft was wilfully and wantonly operated in disregard of the rights of the others. (Italics supplied.)

The Arkansas statute requires the guest to prove willful and wanton misconduct on the part of the operator before there is a cause of action against him, but appellant contends this is no bar to recovery against Mr. and Mrs. Aston because the defenses the minor might have under the guest statute are not available to them. Accordingly, appellant urges it was error to direct a verdict against him even if the evidence did not show willful and wanton misconduct on the part of Tommy Aston because all that is required to hold the parents liable is “any negligence or wilful misconduct.” Appellant urges that Garrison v. Williams, 246 Ark. 1172, 442 S.W. 2d 231 (1969), supports his contention. We do not agree.

From a review of authorities presented we conclude the better construction of the statutes is that the defenses available to the minor are also available to the parent. The statutory purpose of § 75-315 (Supp. 1975) is to insure financial responsibility for the minor’s use of the vehicle. We do not view the statute as imposing liability on the party signing the application for license where the law imposed none on the minor for whom the financial responsibility was assumed.

8 Am. Jur. 2d Automobiles and Highway Traffic § 473, p. 38, states:

The owner of a motor vehicle who would be otherwise liable to a guest injured through the negligence of a-third person, to whom he has granted permission to drive his vehicle, is entitled to the benefit of a guest statute, or comparable common-law rule. This is particularly the case where the protection of the guest statute is extended by its terms to the “owner or operator” of the motor vehicle. * * *

In Rogers v. Watkins, 258 Ark. 394, 525 S.W. 2d 665 (1975), plaintiffs alleged their damages were the result of the negligent driving of a motor vehicle by a minor daughter and her negligence was imputed to her father under Ark. Stat. Ann. § 75-315 (Repl. 1957). The Court held the daughter’s defense inured to the parent’s benefit, and it was thus improper to strike her father’s late answer.

Hately v. Hamilton, 81 N.M. 774, 473 P. 2d 912 (1970), held that an act imposing liability on the parent signing the driver’s license application of a minor did not deprive the parent of the defenses of the New Mexico guest statute. The court stated:

Plaintiff argues that this statute imposes responsibility for a minor’s negligence upon the person signing the application for license and the fact that the minor is absolved from liability under the Guest Act does not relieve the signers of financial responsibility for damages. With this contention we do not agree.

In McHugh v. Brown, 50 Del. 154, 125 A. 2d 583 (1956), plaintiff sought to charge the father of a minor defendant under a Delaware statute which provided that the person signing a minor’s driver’s license application was jointly liable for the minor’s negligence. In rejecting plaintiff’s contention that the parental responsibility statute modified the scope of the predecessor guest statute the court noted:

The guest statute, ... , is a statute of a special nature, dealing with one specific feature of the liability of an owner or operator of a car to a limited class of persons — guests riding in his car at the time of the accident. It is a general rule that in such a case the two statutes are read together and harmonized, and that in the event of repugnancy the special statute prevails .... The Delaware statutes, read together, may be harmonized by construing the parental-responsibility statute as placing liability on the parent in all cases in which the minor is liable to a third party, but eliminating the parents ’ liability in cases in which the minor is not liable to a guest. (Italics supplied.)

Appellant relies in part on Garrison v. Williams, supra, a case in which Garrison had entrusted his automobile to his minor son, Gary, so that he and his friend, George Baugher III, could attend a movie. Both youths were fifteen years of age. At the movie Gary gave the keys to the automobile to Baugher who took his fourteen year old girl friend, Pamela Williams, for a ride. Baugher lost control of the automobile and crashed into a concrete wall, causing Pamela to sustain serious physical injuries. Pamela’s father sued Gary’s father for negligent entrustment of the automobile and Baugher for willful and wanton negligence.

In Garrison an instruction on assumption of risk was requested and given in Baugher’s behalf, but no instruction on assumption of risk was requested by Gary’s father. Thus, the Court was dealing with the defense of assumption of risk and not with the question of whether the Arkansas guest statute applies to cases of imputed liability under § 75-315. The last paragraph of the opinion states:

The jury apparently found that the appellee assumed the risk of the willful and wanton neligent conduct of young Baugher and thereby waived her right of recovery against him. The jury did not find, nor were they requested to find, that the appellee assumed the risk of appellant’s own wrongful act of negligent and unlawful entrustment and we are unable to say, that as a matter of law, she waived her right of recovery against him.

Furthermore, in Garrison we recognized liability under § 75-315 is “vicarious,” and vicarious liability cannot exist unless there is primary liability.

The record reflects that as Aston proceeded around the parked automobile he was driving at a speed of approximately 25 to 30 miles an hour and that the automobile was parked next to the curb on the street. He testified he was still going up the hill and everything happened so fast that he “just saw a black flash” as the collision occurred. Conceding his conduct may indicate negligence in not pulling around the car more carefully, nevertheless even if we assume his conduct constituted gross negligence it does not show substantial evidence of willful and wanton conduct.

In St. Louis Southwestern Railway Co. v. Clemons, etc., 242 Ark. 707, 415 S.W. 2d 332 (1967), we stated:

Our court is committed to the majority rule that willful and wanton misconduct is, as a matter of law, higher in degree than gross negligence. Froman v. J. R. Kelly Stave & Heading Co., 196 Ark. 808, 120 S.W. 2d 164 (1938). * * *

In Steward, Administrator v. Thomas, 222 Ark. 849, 262 S.W. 2d 901 (1953), this Court stated:

* * * But assuming the facts would justify a finding of negligence, even gross negligence, still we do not believe there is any substantial evidence going to show that Jessie’s conduct was wilful and wanton within the meaning of the statute. * * * Splawn, Adm. v. Wright, 198 Ark. 197, 128 S.W. 2d 248.
* * *
In Edwards v. Jeffers, 204 Ark. 400, 162 S.W. 2d 472, there was testimony that the car was being driven 65 to 70 miles per hour on loose gravel over the protest of a guest. The court said that although the evidence was sufficient to show gross negligence, it was not sufficient to permit a recovery under the guest statute.

There being no substantial evidence of willful and wanton misconduct, we find the trial court correctly directed a verdict for Thomas Aston and his parents.

Appellant next contends as to the appeal involving Porter and the Administrator the court erred in giving Arkansas Model Jury Instruction 910, which states that “a passenger in an automobile or other vehicle is required to use ordinary care for his own safety.”

The testimony reflects at the time of this collision Kyser was reclining in the back of the Volkswagen on his own mattress, which was propped up by concrete blocks, leaning on one elbow, smoking a cigarette, with his head toward the front of the van and just behind the front seat, not paying any attention to anything, while the van in which He was riding was being driven up a hill. Although he was unable to see from his position in the van, we cannot say as a matter of law under the circumstances here Kyser was exercising “ordinary care” for his own safety. Accordingly, there was no error in the court’s giving the instruction to the jury.

Appellant finally contends it was error for the trial court to grant appellee Porter’s motion in limine which prohibited appellants from introducing any evidence on the issue of negligent entrustment. It was stipulated that the estate of J. O. Porter would be liable for any negligence on the part of John Porter under the provisions of § 75-315 (Supp. 1975). Appellant contends this ruling prevented him from presenting evidence of Porter’s past driving record and traffic offenses which would have proved negligent entrustment by young Porter’s father.

Our cases hold that a negligent entrustor, though guilty of a separate tort, is only liable to a third party for his en-trustee’s negligence, if any. See Chaney v. Duncan, 194 Ark. 1076, 110 S.W. 2d 21 (1937); Ark. La. Lumber Co. v. Causey, 228 Ark. 1130, 312 S.W. 2d 909 (1958); and Sanders v. Walden, 214 Ark. 523, 217 S.W. 2d 357 (1949). Thus, in the case at bar, had the appellant been allowed to present any available evidence on this theory of negligent entrustment to the jury, the end result could only have been established, at best, that the estate of Dr. Porter was liable, along with John Patrick Porter, for any damages chargeable to John. Since the estate of Dr. Porter had already stipulated to this effect the end result would have been the same.

John Patrick Porter testified that after he stopped to pick up A1 Crossland he drove uphill to the point of impact and during that time was entirely on his right side of the street and was driving about 25 miles per hour. He stated that the Volkswagen bus just popped up in front of him, and it happened so fast it seemed like it was only a car length away.

Porter stated that when he first saw the Volkswagen it was pretty close to the middle of his lane and the accident happened in a flash, and that he only had time for one instinctive reaction and that was to get his foot on the brake. He did get his foot on the brake and left skid marks up to the point of impact.

Porter stated that after the collision he had to get out on the right side of his car because his left door was jammed, and when he stepped out he stepped onto the Hedrick yard.

A1 Crossland and Kevin Selakovich, passengers riding in the Porter vehicle, confirmed Porter’s testimony.

Charles M. North, Jr., who has a Ph.D. in Engineering Mechanics, gave testimony based on the testimony of Don Eppinette, a witness for appellant who testified that he had made a model of part of the street to scale and that Porter could have seen the Volkswagen bus when he was about 90 feet from the point of impact. Based on this testimony and on the testimony that the Porter vehicle was traveling 25 miles per hour, Dr. North testified the Porter vehicle would have traveled this 90 feet in less than 2 1/2 seconds.

Appellees contend the court should have directed a verdict in their behalf since there was no substantial evidence of negligence on the part of John to go to the jury. Even though there may be merit in this contention, it is not necessary for us to consider it because of the jury verdict absolving Porter from any liability.

Finding no reversible error, the judgment is affirmed.


source: Caselaw Access Project

author: Elsijane T. Roy, Justice.

license: Public Domain

text:
    David BARNES v. STATE of Arkansas
    CR 76-234
    548 S.W. 2d 141
    Opinion delivered March 28, 1977
    (Division II)

      Don R. Langston and Hubert E. Graves, for appellant.

      Bill Clinton, Atty. Gen., by: Jackson Jones, Asst. Atty.
   Elsijane T. Roy, Justice.

Appellant David Barnes was convicted of the offense of defrauding an innkeeper in violation of Ark. Stat. Ann. § 41-1908 (Repl. 1964), which reads as follows:

Any person who shall obtain food, lodging or other accommodation at any hotel, inn, motel, motor court, motor lodge, resort, boarding or eating place with intent to defraud the owner or keeper thereof, shall be punished in the manner provided by law for the offense of larceny.

On appeal appellant first alleges error in one of the court’s instructions. The objection was to the following comment in Instruction No. 5:

* * *
If you find that the defendant absconded without paying or offering to pay for such accommodation, or that he surreptitiously removed or attempted to remove his baggage, it is not necessarily conclusive as to the defendant’s intent to defraud, but may be considered by you along with all the other facts and circumstances in the case.
* * *

Appellant contends this instruction constitutes an improper inference of intent to defraud. This type of instruction, which leaves guilt or innocence solely to the jury and permits it to draw an inference allowable by statute, has been upheld by this Court. See Milburn v. State, 260 Ark. 553, 542 S.W. 2d 490 (1976); Petty v. State, 245 Ark. 808, 434 S.W. 2d 602 (1968). Such instructions are unlike the one disapproved in French v. State, 257 Ark. 298, 506 S.W. 2d 820 (1974), in which the jury was told that proof of one fact raised a presumption that one of the elements of the offense existed.

Appellant next contends it was error for the trial court to tell the jury (which had returned to ask some questions), after deliberation of one hour and fifty minutes, that on a retrial there would probably be no different evidence and that the court did not anticipate a more knowledgeable jury would be called to serve. After this statement appellant’s attorney moved for a mistrial but the motion was denied. Thereafter, the jury, after deliberating only a short time, returned a guilty verdict.

In Evans v. State, 252 Ark. 335, 478 S.W. 2d 874 (1972), this Court held:

* * * An admonition to the jury as to its duty to return a verdict, without any expression of the court’s opinion as to the weight of the evidence, or any change in instructions previously given, or suggestion that any juror yiéld his individual convictions to reach a verdict is not improper. (Citing case.) * * *

In the present case the issues were relatively simple, and it cannot be said, as a matter of law, that a jury deliberation of one hour and fifty minutes under these circumstances was not sufficiently “prolonged” to justify the giving of the instruction here.

We see nothing in the record to indicate the charge was improper or coerced the jury into returning a guilty verdict. See Webb v. United States, 398 F. 2d 727 (5th Cir. 1968).

Affirmed.

We agree. Harris, C.J., and Fogleman and Hickman, JJ-


author: George Rose Smith, Justice. James C. Luker, Special Justice, George Howard, Jr., Special Justice,

text:
    EMPLOYERS MUTUAL LIABILITY INSURANCE Company of Wisconsin v. FARM BUREAU MUTUAL INSURANCE Company of Arkansas
    76-110
    549 S.W. 2d 267
    Opinion delivered April 4, 1977
    (In Banc)

      Smith, Williams, Friday, Eldredge & Clark, by: William H. Sutton and Joseph E. Kilpatrick, for appellant.

      Bailey, Trimble & Holt, by: R. Eugene Bailey, for appellee.
   George Rose Smith, Justice.

In this dispute between two casualty insurance companies, the. narrow issue is whether an exclusion in the appellee’s policy deprived an unnamed insured of liability coverage for bodily injury sustained by an employee of the named insured. The decision turns upon the meaning of the word “insured” in the policy. This appeal is from a summary judgment holding that the unnamed insured was excluded from liability protection. We cannot agree with that interpretation of the policy.

All the facts are stipulated, the parties having agreed that there is no factual question to be decided, the sole issue being the meaning of the exclusion just mentioned.

Farm Mutual issued the policy to be interpreted, a policy of automobile liability insurance covering trucks owned by the named insured, Jim Dixon. The policy provided, in a paragraph entitled “Definition of Insured,” that “the unqualified word ‘insured’ means the named insured and, if the named insured is an individual, his spouse, and also any person while using the automobile . . . , provided the actual use of the automobile is by the named insured or spouse or with permission of either.” The pivotal exclusion provides that the coverage now involved does not apply to “bodily injury to any employee of the insured.” (Our italics.) The decision turns upon whether the reference to the insured is restricted to the named insured, Dixon.

The facts are really not important. The insured vehicle, Dixon’s truck, had been driven by Dixon’s employee, W. D. Kissire, to Arkansas Kraft’s plant at Morrilton. Arkansas Kraft’s employee, T. C. Lee, admittedly with Dixon’s permission, was “using” the truck in the process of unloading it. In that process Dixon’s employee, Kissire, was injured. Farm Mutual denied liability, on the ground that the exclusion means that there was no coverage for bodily injury to an employee of Dixon, the named insured. Arkansas Kraft’s excess insurer, the appellant, contended that there was coverage for Arkansas Kraft, because Kissire was not its employee, so that Arkansas Kraft was protected against liability for Kissire’s injury. The appellant settled with Kissire and brought this suit against Farm Mutual for reimbursement.

The decisions elsewhere are of scant assistance, for as an A.L.R. annotation points out: “On this question the courts appear to be in hopeless conflict, with some holding the exclusion inapplicable where the injured person was an employee of the named insured and an additional insured was the party seeking protection under the policy, and other courts taking a contrary position.” Annotation, 48 A.L.R. 3d 13, 25 (1973). Courts that apply the exclusion to injuries to the named insured’s employees often do so on the ground that the exclusion is apparently meant to apply to injuries already covered by the insured’s workmen’s compensation insurance, which is not the situation when an additional insured, such as Arkansas Kraft, is concerned.

In aligning ourselves with those courts which hold that coverage is provided for an unnamed insured when the injured person is the named insured’s employee, we need not look beyond the basic rule that an insurance policy is to be construed strictly against the insurer. Here Farm Mutual’s policy flatly states in its definition that the unqualified word “insured” means not only the named insured but also any person using the vehicle with his permission. The pivotal exclusion uses the unqualified word “insured”; so Arkansas Kraft is presumably included. In drafting the policy Farm Mutual was certainly on notice, from conflicting judicial interpretations, that the limited reference was so ambiguous as to be open to contradictory interpretations. Elsewhere in the policy Farm Mutual referred to the “named insured” no fewer than 28 times, with the evident intention of excluding persons who would otherwise fall within its broad definition of “the insured.” It would have been so simple for the draftsman of the policy to use the phrase “named insured” a 29th time, had that been his intention, that we are unwilling to say that he accomplished the same result by his bare reference to “the insured.”

Reversed and remanded for the entry of judgment in favor of the appellant.

Holt and Roy, JJ., not participating.

Hickman, J., and Special Justices George Howard and James C. Luker, dissent.

James C. Luker, Special Justice,

dissenting.

The question before us is the interpretation to be placed upon the words “the insured” as used in exclusion (d) of Farm Bureau’s policy, which exclusion provides that there is no coverage for “bodily injury to any employee of the insured (Emphasis added)

Lengthy annotations at 50 ALR 2d 78 (1956) and 48 ALR 3d 13 (1973) report decisions from State and Federal Courts in over thirty states. As the majority opinion points out, these Courts are “in hopeless conflict”. Two United States District Courts have been called upon to anticipate what Arkansas Courts would do when presented with this question, and have reached opposite conclusions. See Curran v. Security Insurance Company, 195 F. Supp. 562 (WD ARK 1961) finding that the exclusion was not applicable to prevent coverage for an additional, insured for injuries to an employee of the named insured; and Employers Mutual Liability Insurance Company v. Houston Fire and Casualty Insurance Company, 194 F. Supp. 828 (WD LA 1961) finding that the exclusion negated coverage for an omnibus insured where the injured party was an employee of the named insured.

The majority reaches its decision by applying the long standing rule of liberal construction in favor of an insured. But, in this case, since the parties to this action are both insurance carriers, which is entitled to the benefit of the rule? In my opinion, it is neither, and we should look to the intentions of Jim Dixon when he obtained the automobile liability policy issued by Farm Bureau.

As is pointed out in the dissenting opinion of Special Associate Justice Howard, contracts of insurance should receive a reasonable construction so as to effectuate the purpose for which they are made and the object to be accomplished. Aetna Life Insurance Company v. Spencer, 182 Ark. 496. Employers v. Houston, supra, quotes extensively from American Fidelity and Casualty Company v. St. Paul-Mercury Indemnity Company, 248 F. 2d 509 (5th Cir. 1957) which reasoned that:

“A business assured has two primary fields of exposure: (1) to employees; and (2) to third parties, members of the public and persons not in the status of employees. The two present different hazards of frequency and severity and traditionally are underwritten separately. The first group is cared for by Employer’s Liability insurance which, includes as well, if applicable, State or Federal workmen’s compensation coverage. This insurance is carefully limited to persons in the status of employees and excludes all others. The second group is cared for by Public Liability coverage, either for general operations as Larsen’s CGL policy, or specifically in connection with automobiles, as in American’s automobile policy. These invariably exclude employees of the assured and, to eliminate any doubts, exclude liabilities imposed under workmen’s compensation acts. The obvious result is that the prudent businessman obtains two types of insurance and, of course, pays two premiums.
“Since, for businessmen, if not for the general public, business and law have long abandoned the naive idea that the payment of losses are “free” to the assured, the purpose of an assured to integrate his program and reduce costs is thwarted if the policies, so carefully dovetailed, are construed to duplicate coverage. In this sense, it is not a matter of the legal concept of liability (master-servant compared to third party), or the coincidence that an employee may be able to contrive a third party relationship on which to base a damage suit. The thing of importance is that for an injury received in the course of the named assured’s employment, his employee is enabled to recover ultimately from the employer’s Public Liability insurer (and hence him), the very kind of losses or damages which the assured has paid another to underwrite.
“Of course, these payments must ultimately come from somewhere, and it is the fact of business life that claims paid will, as they must, someday come from the assured’s pocket.
“Since (the named insured) obtained and paid for Employer’s Liability coverage, is it likely that for injuries to these employees while in his service, he intended to provide and pay for more?”

It is my opinion that Employers v. Houston and American Fidelity v. St. Paul-Mercury, supra, reach the better result. In each, the Court was simply unable to believe that the named insured, the one who will ultimately pay the price, intended the result reached by the majority in the present case. Neither can I.

I would affirm the judgment of the Circuit Court.

George Howard, Jr., Special Justice,

concurring in part, dissenting in part.

I concur in the reversal of the trial court’s judgment in behalf of Farm Bureau Mutual Insurance Company of Arkansas, but I dissent to remanding the case for entry of judgment in favor of appellant, Employers Mutual Liability Insurance Company of Wisconsin. I believe the case should be remanded for trial in order to develop fully the unresolved factual issues readily apparent facially from the stipulation of the facts between the parties.

It is true the parties concluded the alleged stipulation by asserting “As there is no factual question to be decided, the sole question to be determined by the Court is that of whether exclusion (d) above negated coverage to Arkansas Kraft and its employee, Thomas Lee, for injuries sustained by Drew Kissire, an employee of Jim Dixon.” However, it is incumbent upon the trial court, in considering a motion for summary judgment, to search the record in order to determine if there is only an issue of law involved.

Other than the date of the accident in which Wallace Kissire sustained his injuries and the admission that Kissire was an employee of Jim Dixon, the stipulation cast a cloud of doubt, indeed it is so arguable, as to whether Kissire’s injuries were proximately caused by the negligence of Thomas C. Lee, employee of Arkansas Kraft Corporation, and further, whether Lee had permission from Jim Dixon to use Dixon’s vehicle as an employee of Arkansas Kraft Corporation, or was merely a borrowed employee.

This Court has emphasized that one of the objects of the motion for summary judgment is to dispose of litigation on motion where the facts are not disputed and the law can be applied to them. Ashley v. Eisele, 247 Ark. 281, 445 S.W. 2d 76.

In Aetna Life Insurance Company v. Spencer, 182 Ark. 496, 32 S.W. 2d 310, this Court held:

“Contracts of insurance should receive a reasonable construction so as to effectuate the purpose for which they are made. In cases where the language used is ambiguous, it should be construed in favor of the insured because the policy is written on forms prepared by the insurer. Of course, legal effect should be given to all the language used, and the object to be accomplished by the contract should be considered in interpreting it.” (Emphasis Added)

What the contracting parties intend and the purposes to be accomplished are not covered by the stipulation. Moreover, the record is void of any expression from Jim Dixon, Farm Bureau’s insured, as to his understanding of the scope and coverage of the policy involved.

It is well established that the rule that insurance contracts are to be construed against the insurer is purely a rule of construction which comes into play as an aid to construction only when, after using all other effort to ascertain the intention of the parties, the contract is yet ambiguous as to which of two things was intended — one favorable to the insurer and the other to the insured. It is not at all a rule to be used in seeking a meaning favorable to the insured. It is the last straw moving the scale which has been left uncertain by an ambiguity. Aetna Life Insurance Company v. Spencer, supra; see also: Gulf Refining Insurance Co., et al v. Home Indemnity Co. of New York, 78 F. 2d 842.

For the reasons discussed above, I would remand this case for trial in order to develop the unsettled issues of fact involved.


author: George Rose Smith, Justice. Conley Byrd, Justice,

text:
    Edward BUTLER v. STATE of Arkansas
    CR 76-184
    549 S.W. 2d 65
    Opinion delivered April 4, 1977
    (In Banc)
    [Rehearing denied May 9, 1977.]

      Malcolm Smith, for appellant.

      Jim Guy Tucker, Atty. Gen., by: B.J. McCoy, Asst. Atty. Gen., for appellee.
   George Rose Smith, Justice.

Edward Butler and Larry Hutcherson were jointly charged with a capital felony in the shooting of Ron Brooks, a state policeman acting in the line of duty. The offense occurred on February 27, 1975; so the information was filed under § 2 (C) of Act 438 of 1973 rather than under § 41-1501 (1) (b) of the Criminal Code, which did not become effective until January 1, 1976. Butler elected, however, to assert defenses under the new Code, which it permits. § 41-102 (4) (Crim. Code 1976). Butler was tried separately, found guilty, and sentenced to life imprisonment without parole, the State having waived the death penalty. The first five points for reversal overlap to such an extent that we shall not try to discuss each one separately.

At the outset we make it clear that the fallacy in the appellant’s first five points lies in his attempt to break down into separate steps the continuous course of criminal conduct that must be considered as a whole in passing upon the sufficiency of the State’s proof and the admissibility of its evidence. When the entire sequence of events is considered as one continuous criminal occurrence, the five points for reversal are seen to be without merit.

On the morning of the crime the two men jointly charged, Butler and Hutcherson, were prisoners in the county jail at Clarendon. They and a third prisoner escaped together. The jailer, whose living quarters were in the jail, was away at the time. He testified that after the escape two pistols were missing fron his quarters. The first was a .22-caliber pistol which the jailer had converted to a toy for his children by filing down the firing pin, but one could not tell by looking at the weapon that it wouldn’t fire. The other was the .357-magnum pistol that was used by Hutcherson to kill Officer Brooks. Butler displayed the .22 in effecting the escape. Since both pistols were taken from the jailer’s living quarters and used in the brief period of escape, the jury was justified in concluding that Butler and Hutcherson each knew that the other was armed. It is not necessary that an unlawful concert of action to commit an illegal act be shown by direct testimony; it may be inferred from the circumstances. Griffin v. State, 248 Ark. 1223, 455 S.W. 2d 882 (1970). Furthermore, proof of the escape was not inadmissible under the rule excluding evidence of other offenses, for the entire sequence of events was such an inseparable whole that the State was entitled to prove the entire criminal episode. Polk v. State, 252 Ark. 320, 478 S.W. 2d 738 (1972).

The escape was reported within seconds by another prisoner, a trusty, who was forced to accompany the escaping group for a few moments. Officer Brooks was at the jail and immediately chased the fugitives to a nearby alley. When he ordered them to halt and fired a warning shot, Butler and Hutcherson fell to the ground. The third prisoner kept on running.

Officer Brooks handcuffed the two men to each other and searched them as they lay on the ground. He took the .22 from Butler, but he did not find the magnum pistol that Hutcherson had taken. As Butler was backing away after the search, the two handcuffed men got to their feet. Several eyewitness accounts differ slightly in details, but the jury could have found that Butler touched the officer or ran into him. Hutcherson picked up the magnum pistol from the ground and shot Officer Brooks twice, killing him. Butler searched the officer’s prostrate body and evidently took the officer’s pistol. Butler and Hutcherson, still handcuffed, then fled. They were apprehended almost at once, trying to get into a car. The magnum pistol and Officer Brooks’s pistol were in that car. Tests for traces of metal upon the hands of the two men indicated that Hutcherson had handled the magnum pistol and Butler had handled Officer Brooks’s gun.

Counsel for Butler, in arguing that the State did not prove Butler’s implication in the actual shooting, fails to recognize the jury’s right to weigh the entire episode as one continuous course of criminal conduct. The two men, each knowing that the other was armed, escaped from the jail. In their pursuit of a common plan to effect an unlawful escape, each was liable for the consequences, even though the particular result may not have been intended. Griffin v. State, supra; Dorsey v. State, 219 Ark. 101, 240 S.W. 2d 30 (1951). The possibility of homicide could be found by the jury to have been part of the planned escape; for otherwise, why did the men equip themselves with pistols? Butler’s continued active participation in the attempted escape, as evidenced by his taking Officer Brooks’s gun, rebuts the suggestion that he had a change of heart while he lay on the ground. The evidence, to be sure, is to some extent circumstantial, but whether it excluded all other reasonable hypotheses was an issue for the jury, not for this court. Brown v. State, 258 Ark. 360, 524 S.W. 2d 616 (1975).

Next, the other points for reversal. It is argued that the trial court erred in not instructing the jury, in the language of the new Criminal Code, that it would be an affirmative defense to the prosecution if Butler terminated his complicity prior to Hutcherson’s commission of the offense (§ 41-305) or if Butler did not commit the homicide or in any way aid its commission (§ 41-1501 [2]).

The court was not required to give those instructions, because the same points had been covered in a defense instruction that was given, with modifications. In that instruction the court told the jury that Butler would be liable as an accessory if he aided Hutcherson in committing the offense. The instruction went on to explain that before the jury could find that Butler was aiding in the killing, “you must find that he was acting in concert with Larry Hutcherson for the purpose of killing Ron Brooks and that he actually aided in the killing.” Further, that if Butler was not present for the purpose of aiding, abetting or assisting Hutcherson in killing Brooks, “then the defendant would not be responsible for the murder of the decedent and you must acquit him.” Still further, that the State must prove beyond a reasonable doubt that Butler and Hutcherson, acting in concert and in furtherance of a common objective or purpose, intended to kill Brooks; that Butler aided Hutcherson in killing Brooks, pursuant to a common objective; that Butler in fact aided or attempted to aid Hutcherson in killing Brooks; that Butler’s actions were the result of premeditation and deliberation; and that by his acts he specifically intended to effectuate the death of Brooks.

In Dorsey v. State, supra, we made two statements pertinent to the point now at issue: First, “The court is not required to give a multiplicity of instructions stating the law in various ways.” Second, “There is no distinction between one who aids, abets or assists and the one who actually fired the shots.” Here the court told the jury in unmistakable terms that Butler could not be found guilty unless he actually aided Hutcherson in killing Brooks, unless the two intended to kill Brooks, and unless their actions were the result of premeditation and deliberation. By its verdict the jury found all those conditions to be true. That finding necessarily rejected the possibility that Butler terminated his complicity prior to the commission of the offense and did not aid in its commission. The court was not required to make a positive statement of the law, as it did, and then say the same thing in the negative. As a matter of fact, the course chosen by the court was the more favorable of the two, with respect to the defense, because it emphasized the State’s burden of proving the points at issue, beyond a reasonable doubt.

We cannot sustain the appellant’s argument that the State’s waiver of the death penalty precluded the jury from sentencing him to life imprisonment without parole. It is true that Act 124 of 1971, in authorizing the prosecuting attorney to waive the death penalty, added that in such cases the punishment “cannot be fixed at more than life imprisonment.” But when that act was adopted, the intermediate punishment of life imprisonment without parole did not exist, that alternative being later provided by Act 438 of 1973. Hence Act 124 simply meant that when the prosecutor waived the death penalty, the jury could not disregard that waiver by condemning the accused to death.

We certainly cannot say that the legislature, by later creating the alternative punishment of life imprisonment without parole, meant to read that penalty also into the prosecutor’s waiver of the death penalty. Quite the opposite, § 3 of Act 438 of 1973 provided only two alternative punishments for the offense charged in the case at bar — death or life imprisonment without parole. Hence the appellant’s argument would provide yet a third alternative, contrary to the explicit language of Act 438.

Finally, the court reporter’s tape recording of the testimony was destroyed by fire before it was transcribed. The reporter prepared a transcript of the testimony from his shorthand notes, but admittedly there were omissions. The trial court settled the record at a hearing at which Butler’s attorney was present, but Butler’s request that he be allowed to be present in person was denied.

Butler was constitutionally entitled to be personally present at every substantive step in the proceedings. Davidson v. State, 108 Ark. 191, 158 S.W. 1103, Ann. Cas. 1915B, 436 (1913). Hence he should have been present when the record was settled, for he might have remembered some error or omission that no one else noticed. Even so, his absence does not in itself entitle him to a new trial. People v. Chessman, 35 Cal. 2d 455, 218 P. 2d 769, 19 A.L.R. 2d 1084 (1950). The situation is comparable to that in Jackson v. Denno, 378 U.S. 368 (1964), where the court ruled that the required hearing with regard to the voluntariness of Jackson’s confession might be held in a separate post-trial proceeding. So here, we direct that Butler be given an opportunity to examine the court reporter’s transcript of the testimony and to personally present to the court any objections he may have. Subject to the outcome of that proceeding, we find no error in the record. As we are required to do, we have examined all objections made at the trial and find none to be meritorious.

Affirmed and remanded.

Conley Byrd, Justice,

dissenting.

I think the appellant was entitled to his instruction embodying his affirmative defense pursuant to Ark. Stat. Ann. § 41-305(2) (Ark. Crim. Code). That statute provides:

“It is an affirmative defense to a prosecution for an offense respecting which the liability of the defendant is based on the conduct of another person that the defendant terminates his complicity prior to the commission of the offense and:
(a) wholly deprives his complicity of effectiveness in the commission of the offense; or
(b) . . .
(c) • • •”

In the commentary the committee in drafting the statute stated:

“Subsection (2) provides an affirmative defense. One who has already engaged in conduct sufficient to create accomplice liability upon the occurrence of the offense may in the time interval before its commission avoid liability, but only in the explicitly designated fashions set out disjunctively by 2(a) through (c).”

To me the instruction given by the Court never made that distinction to the jury. The instruction upon which the majority relies is as follows:

“The defendant is accused of murder, not that he actually fired the shots that took the life of the deceased, but that he aided and abetted the person who did. The defendant would be criminally liable for the conduct of Larry Hutcherson if he were an accessory of Larry Hutcherson in the killing of Ron Brooks. A person is an accessory of another person in the commission of an offense if, for the purpose of promoting or facilitating the commission of the offense, he aided the person in committing that particular offense. In other words, if the defendant was present with the intention and purpose of promoting o.r facilitating the killing of Ron Brooks and aided Larry Hutcherson in killing Ron Brooks then the defendant would be an accessory. If the defendant merely happened to be present without any intention of aiding and abetting Larry Hutcherson in killing Ron Brooks, he would not be guilty of anything. Before you can find Edward Butler was aiding and abetting in the killing, you must find that he was acting in concert with Larry Hutcherson for the purpose of killing Ron Brooks and that he actually aided in the killing. If you find that the defendant was not present for the purpose of aiding, abetting or assisting Larry Hutcherson in killing the deceased then the defendant would not be responsible for the murder of the decedent and you must acquit him.
In addition to proving the defendant was present, aided and abetted Larry Hutcherson in killing Ron Brooks, and that the defendant committed a voluntary act with that purpose in mind, the State must also prove beyond a reasonable doubt all of the elements of the crime for which he is charged relating to his state of mind. In order to make it perfectly clear, the State must prove all of the following elements beyond a reasonable doubt:
1. That the defendant and Larry Hutcherson acting in concert and in the furtherance of a common objective or purpose intended to kill Ron Brooks.
2. That the defendant was present and did aid Larry Hutcherson in killing Ron Brooks pursuant to a - common objective.
3. That the defendant did in fact aid or attempt to aid Larry Hutcherson in killing Ron Brooks and that his actions were the result of premeditation and deliberation and that by his acts he specifically intended to effectuate the death of Ron Brooks.”

For the reasons stated, I respectfully dissent.

Holt, J., joins in this dissent.


author: Frank Holt, Justice.

text:
    NORTH CENTRAL ASSOCIATION OF COLLEGES AND SCHOOLS et al v. TROUTT BROTHERS, Inc., d/b/a The JONESBORO SUN and Michael R. OVERALL
    76-365
    548 S.W. 2d 825
    Opinion delivered April 4, 1977
    (In Banc)

      Cearley, Gitchel, Bogará & Mitchell, for appellants.

      Penix, ¡(piper & Mixon, for appellees.
   Frank Holt, Justice.

This appeal involves the scope of our Freedom of Information Act. Ark. Stat. Ann. §§ 12-2801 — 12-2807 (Repl. 1968). Appellants are the North Central Association of Colleges and Schools (NCA), the Arkansas State Committee and its individual members. The State Committee, following its investigation, held a meeting with the board members of Jonesboro School District No. 1 regarding the possibility of loss of the accreditation of Jonesboro High School. Appellee Michael R. Overall, a reporter for the appellee newspaper, attempted to attend the meeting but was excluded. The appellees filed suit against appellants alleging violation of the Freedom of Information Act. Appellants Filed a motion to quash alleging that the NCA and its state committee were not subject to the provisions of the Act. The trial court overruled the motion to quash and entered judgment for appellees, specifically Finding that appellants are supported by and expend public funds and are, therefore, subject to the Act with respect to “any meeting of such defendants [appellants] concerning in any manner the Jonesboro School District and must allow the news media to attend such meeting.” For reversal appellants assert that “the trial court erred in overruling appellant’s motion to quash and in entering judgment against appellants because the Freedom of Information Act does not apply to private corporatioris.”

The NCA is a voluntary association of colleges and secondary schools with over 5,000 members in 19 states and is registered in Arkansas. Its dedicated purpose is to achieve and maintain high educational standards. By accreditation, a school is recognized as having met the policies and educational standards set by the NCA. Annual dues for its member schools (200 in Arkansas) range from $75 to $125. The membership of the Arkansas State Committee is composed of individual educators who serve voluntarily and without compensation. The State Committee collects data on Arkansas schools and makes recommendations to the NCA as to membership, accreditation or loss of accreditation. In the case at bar, the meeting between the State Committee and Jonesboro School Board members was for the purpose of resolving certain problems faced by the school (a member of the Association) which possibly could result in a loss of its accreditation. Appellants argue that since NCA is a private, nonprofit corporation, not authorized or created by state statute, and with no official status in the state, the Freedom of Information Act does not apply. We cannot agree.

§ 12-2803 provides:
‘Public meetings’ are the meetings of any bureau, commission or agency of the state, or any political subdivision of the state, including municipalities and counties, Boards of Education, and all other boards, bureaus, commissions or organizations in the State of Arkansas, except Grand Juries, supported wholly or in part by public funds, or expending public funds.

§ 12-2805 provides:

Except as otherwise specifically provided by law, all meetings formal or informal special or regular, of the governing bodies of all municipalities, counties, townships, and school districts, and all boards, bureaus, commissions, or organizations of the State of Arkansas, except Grand Juries, supported wholly or in part by public funds, or expending public funds, shall be public meetings.

§ 12-2806 provides, in pertinent part, that any party aggrieved by denial of the rights granted by the Freedom of Information Act has the right of appeal “when an agency of a county, municipality, township or school district, or a private organization supported by or expending public funds is involved.”

It is well settled that the Freedom of Information Act was enacted wholly in the public interest and is to be liberally interpreted to achieve its purposes. Arkansas Gazette Co. v. Pickens, 258 Ark. 69, 522 S.W. 2d 350 (1975); and Laman v. McCord, 245 Ark. 401, 432 S.W. 2d 753 (1968). Here it is true that the NCA is a private, nonprofit organization. Further, all ten members of the State Committee of the NCA are educators serving voluntarily and without compensation. However, the chairman of the State Committee is an employee of the Arkansas Department of Education who uses his state owned office in performing his duties for the NCA. His office secretary works for and is paid by the state. She, also, performs certain functions for the NCA for which the State Committee pays her. Over 90% of the money contributed by Arkansas Schools is public money. Dues paid by the member schools in Arkansas support the NCA’s functions. The State Committee receives operating funds from the NCA (Commission on Schools). The State Committee makes recommendations to the parent organization if a school should be accredited and, also, if a member should suffer a loss of accreditation. Acceptance by a member school of a student’s credits from another school is influenced by whether that school is a member of the NCA. Obviously, the NCA’s policies and decisions, which are most laudable, have a great impact upon students and parents and are a matter of great public concern.

In summary, the NCA affects public schools in Arkansas to the extent of the standards required for accreditation and its continuance. The State Committee is composed of public servants with its official situs and operation in a public owned institution. The NCA and its Arkansas State Committee are supported wholly or in part by public funds. In the circumstances, we are of the view, as indicated, that the Freedom of Information Act is applicable; If the legislature had intended otherwise, it could have easily made an exception.

Affirmed.

       The Jonesboro School District was made a defendant; however, it does not appeal.


text:
    Robert M. CHILDS III et ux v. Dwayne GOODE, Jack HENDERSON, Tommy WATSON, Jerry D. BELL, and G.H.W., Inc.
    76-378
    548 S.W. 2d 827
    Opinion delivered April 4, 1977
    (Division I)

      George F. Harlje, of Hartje & Burton, for appellants.

      Clark, McNeil & Watson, for appellee.
   Frank Holt, Justice.

Appellants sought an injunction to restrain appellees from interfering with their possession of leased property. The chancellor dismissed the suit and ordered the lease cancelled, in view of a zoning ordinance, for failure of appellants to comply with the use and occupancy provision of the lease. For reversal appellants assert that the court erred in finding that the lease placed an affirmative duty upon the appellants to operate a grocery store in the leased premises. We cannot agree.

Appellee Bell leased his grocery store to appellants in October, 1974, for a five year term. In January, 1976, Mr. Childs closed the store and continued to pay rent after he moved his stock to a nearby location. In March, 1976, Bell deeded the property to appellee G.H.W., Inc., (Goode, Henderson and Watson). Shortly thereafter, G.H.W., Inc., removed from the closed grocery store certain fixtures and equipment left by Childs. This resulted in appellants bringing an action to enjoin appellees’ interference and to compel the return of the removed articles. Appellees invoked Paragraph A-4 of the lease which provides:

To use and occupy the premises for retail grocery store outlet purposes only and for no other object or purpose without the written consent of the lessor. . . .

The property is located in a residential area and its nonconforming use as a grocery store was permitted by a grandfather clause inasmuch as it was used as a grocery store preceding the enactment of the zoning ordinance. The ordinance provides that the privileged status of the property would be lost if the “nonconforming building . . . becomes vacant” and “unoccupied” for a period of 18 months. There is a provision to toll this restriction if the vacant building is reoccupied within the 18 months’ limitation. Thus, a continuation of the grocery business was necessary, as expressly recited in the lease, to meet the requirements of the ordinance. In other words a vacant building, even though appellants continued to pay the rent, was not in conformity with the intentions of the parties as expressed in the lease. See Kahn v. Wilheim, 118 Ark. 239, 177 S.W. 403 (1915); and Amon v. Cummings, 67 Atl. 2d 687 (1949). Here the terms of the lease were clear and unambiguous.

In a subordinate argument, appellants assert that the closing of the store was consented to by the lessor Bell and, therefore, the lessor is estopped from requiring continuous operation of the store since he accepted rent payments for two months after the closing of the store. Suffice it to say that Childs wanted out of the lease and was aware of the negotiations to sell the building to appellee purchasers pending successful resolution of their efforts for permission from the city to remove the building, rebuild and then continue the nonconforming use. This was accomplished within two months after appellants closed the building and moved their grocery business to another location.

Appellants next argue that the appellee purchasers cannot complain of a breach of covenant which occurred before their purchase. The purchasers acquired the property subject to the restrictive covenant in the lease. Therefore, a sufficient answer to appellants’ contention is that the covenant by appellants to operate a grocery store was breached after appellee purchasers bought the property.

Affirmed.

We agree: Harris, C.J., and George Rose Smith and Byrd, JJ.


author: Frank Holt, Justice. Conley Byrd, Justice,

text:
    Rodney Dale REEVES v. STATE of Arkansas
    CR 76-203
    548 S.W. 2d 822
    Opinion delivered April 4, 1977
    (In Banc)

      Don R. Langston, Public Defender, by: Hubert E. Graves, Dep. Public Defender, for petitioner.

      Jim Guy Tucker, Atty. Gen., by: Joseph H. Purvis, Asst. Atty. Gen., for respondent.
   Frank Holt, Justice.

This case is a sequel to Reeves v. State, 258 Ark. 788, 528 S.W. 2d 924 (1975). There we reversed and remanded this petitioner’s conviction of possession of stolen property. Pending retrial the state charged that appellant, during the time he was released on bail, had committed two other felony offenses (theft by receiving and possession of stolen property). The municipal court found probable cause existed that petitioner had committed these two subsequent offenses. Then, in circuit court, upon the state’s motion and pursuant to Rules of Crim. Proc., Rule 9.6 (1976), the court revoked petitioner’s bail on the previous charge. Rule 9.6 provides:

If it is shown that any court has found reasonable cause to believe that a defendant has committed a felony while released pending adjudication of a prior charge, the court which initially released him may revoke his release.

This appeal results from the circuit court’s order revoking petitioner’s bail and remanding him to custody without bail. It is first contended that the requisite element of probable cause as found by the municipal court, must fail because the petitioner was not afforded his right to counsel at his preliminary hearing. We cannot agree.

In Gerstein v. Pugh, 420 U.S. 103 (1975), it is said:
Because of its limited function and its nonadversary character, the probable cause determination is not a ‘critical stage’ in the prosecution that would require appointed counsel.

Here, in our view, the hearing conducted by the examining court to determine reasonable cause in the two new cases was not a hearing of an adversary nature which required representation by counsel before the state could invoke and the circuit court apply the provision of Rule 9.6.

Petitioner next contends that the circuit court did not have jurisdiction to revoke petitioner’s bail because an appeal was pending in this court based upon the trial court overruling petitioner’s motion to dismiss Reeves v. State, supra, for lack of a speedy trial. It is true that a motion to dismiss from a denial of a speedy trial is an appealable order. Breedlove v. State, 225 Ark. 170, 280 S.W. 2d 224 (1955); and Warev. State, 159 Ark. 540, 252 S.W. 934 (1923). Therefore, petitioner argues that when his appeal was docketed here, the trial court then lost jurisdiction. State v. Adkisson, 251 Ark. 119, 471 S.W. 2d 332 (1971); and Andrews v. Lauener, 229 Ark. 894, 318 S.W. 2d 805 (1958). However, we do not construe these citations to be controlling here. Petitioner’s pending cause in this court is an interlocutory appeal from a denial of a motion to dismiss for lack of a speedy trial. We hold that the pendency of this appeal did not divest the trial court of its jurisdiction to determine if there should be a revocation of petitioner’s pretrial release previously ordered by that court. See Estes v. Masner, 244 Ark. 797, 427 S.W. 2d 161 (1968).

It is next asserted that Rule 9.6 is unconstitutional on its face and as applied to appellant. The state responds that since there was a showing of probable cause that defendant had committed two felonies (receiving and possession of stolen property) while on bail on another similar offense that his continuing criminal conduct constituted such a compelling state interest it would justify refusal of any future release of the petitioner on any bail. In response, petitioner correctly contends that he has an absolute right before conviction, except in capital cases, to a reasonable bail. Amendments 8 and 14, U.S. Constitution and Art. 2, §§ 8 and 9, Arkansas Constitution (1874). Kendrick v. State, 180 Ark. 1160, 24 S.W. 2d 859 (1930); Thomas v. State, 260 Ark. 512, 542 S.W. 2d 284 (1976); and Stack v. Boyle, 342 U.S. 1 (1951). Here, we are of the view the trial court misconstrued our Rule 9, which is entitled “The Release Decision.” The rule provides for release with or without bail and, also, the imposition of reasonable terms and conditions. Rule 9.6 provides that “the court which initially released him may revoke his release.” Significantly, the rule does not in non-capital cases, as here, preclude the setting of a new and reasonable bail with whatever terms and restrictions deemed appropriate within its provisions. We hold our Rule is constitutional; however, it was unconstitutionally applied to petitioner.

The order is affirmed as to the revocation of release and quashed with respect to a denial of a reasonable bail.

Byrd and Hickman, JJ., dissent.

Conley Byrd, Justice,

dissenting.

Rule 9.6 as interpreted by the majority permits the State to punish an accused who is subsequently charged with another offense without the necessity of presenting witnesses against him on either charge without a jury trial and without benefit of counsel. The Arkansas Constitution Art. 2, § 10 provides:

“In all criminal prosecutions the accused shall enjoy the right to a speedy and public trial by impartial jury of the county in which the crime shall have been committed; . . . and to be confronted with the witnesses against him; to have compulsory process for obtaining witness in his favor, and to be heard by himself and his counsel.”

Under the majority’s view, an accused person free on bail can be incarcerated upon the mere showing that some other court has found probable cause to believe that accused has committed a felony while on bail. The majority take this view even though the accused was without benefit of counsel at the preliminary hearing before the other court. Under this view the majority ignore the constitutional right of the. accused to be confronted with the witnesses against him upon either charge before being punished, not to say anything about his constitutional guarantee to jury trial and to counsel.

After all, the revocation of existing bail and the requirement of additional bail usually amounts to a substantial fine in itself — the standard fee for professional bonds where I practiced law was 10% of the bond amount and where the accused is unable to make the new bond authorized by the majority, it forces him to remain in jail.

For the reasons stated, I respectfully dissent.

Hickman, J., joins in this dissent.

       Upon a writ of certiorari, we ordered petitioner’s release upon a $15,-000 security.


text:
    Juanita BAILES, Individually and as Administratrix of the Estate of Fred O. BAILES, Sr., Deceased, et al v. Fred O. BAILES Jr.
    76-228
    549 S.W. 2d 69
    Opinion delivered April 4, 1977
    (In Banc)
    (Rehearing denied April 4, 1977.]

      Gean, Gean & Gean, for appellants and cross-appellees.

      Warner & Smith, by: Wayne Harris and G. Allen Wooten, for appellee and cross-appellant.
   Elsijane T. Roy, Justice.

Appellant Juanita Bailes and Fred O. Bailes, Sr. were married in 1953. They began operation of a business, Bailes Best-Made Dog Food, in Fort Smith, in 1958, and continued such operation until Bailes died intestate on October 31, 1969. Surviving him were Juanita, his wife, and an only son, Fred O. Bailes, Jr., by a previous marriage. After the death of Fred O. Bailes, Sr., Mrs. Bailes incorporated the business and continued its operation under the name Bailes Best-Made Dog Food, Inc.

This action was instituted by appellee Fred O. Bailes, Jr., claiming that all the assets of the business should become part of the estate of his father and should be distributed according to the law of descent and distribution.

The chancellor held that although there was no written partnership agreement the evidence supported a finding that the business was operated as a partnership on an equal basis and 50% of its assets should be included as part of the estate of Fred O. Bailes, Sr. Thereafter the court ordered that an accounting of said partnership be filed, showing all assets of the business as of October 31, 1969, the date of death of Fred O. Bailes, Sr. Juanita Bailes and the other appellants gave their notice of appeal from this decree.

This Court dismissed the appeal because a final order or decree of the chancery court had not been entered. On remand the chancellor appointed a master who, on the basis of additional evidence, submitted a detailed report to the court. In accordance with the report, based upon an equal division of the assets, the court ordered appellants to pay the sum of $114,482.14 to the estate of Fred O. Bailes, Sr., deceased. From this order appellants have appealed.

Appellee cross-appealed alleging that he is entitled to 80% of the assets of said business and appellant Juanita Bailes should receive 20% of said assets in accordance with the division of profits reflected by the tax returns.

The master and the chancellor found no merit in this contention. Mrs. Bailes testified the returns reflected the division of income in this manner for social security purposes only and the division was not a reflection of the interest of each in the partnership.

On appeal there is no allegation that the business was not a partnership, so we will discuss the issues in that light. Appellee contends the provisions of the Uniform Partnership Act, Ark. Stat. Ann. §§ 65-101 et seq. (Repl. 1966), mandate his father’s estate’s entitlement to an amount equal to the value of decedent’s interest in the partnership at the time of his father’s death. We do not agree with appellee’s interpretation of the Uniform Act.

In Alexander v. Sims, Executor, 220 Ark. 643, 249 S.W. 2d 832 (1952), we recognized the validity of an agreement between business partners which provided that the interest of the deceased partner would pass to the survivor. Although the agreement considered in Alexander was invalidated because of fraud in its procurement, the Court stated:

Absent any question of consideration, testamentary nature, or fraud on a partner or his creditors, spouse, heirs, etc., some courts have upheld a partnership agreement in which each partner agrees that the survivor will receive all of the assets of the partnership, [cases cited] but such an agreement is always subjected to the closest scrutiny to see if the utmost good faith was observed.

The Uniform Partnership Act does not require the initial partnership agreement be written and neither can we find any provision requiring an agreement which disposes of the assets upon the death of a partner be in writing.

In 68 C.J.S. Partnership § 294(a), the following comment is made:

It is entirely competent for partners to provide, in their articles or agreement of copartnership, that the death of a partner shall not dissolve the firm, and that, in such event, the partnership business shall, or may, be continued by the surviving partner or partners, either as sole proprietors of the business. . . . (Or continued on some other basis as indicated therein.)
It is not necessary that agreements such as have been mentioned should be contained in the original articles of partnership; a separate agreement with respect to such matters is valid and binding even though it be in parol

In Gammill v. Gammill, 256 Ark. 671, 510 S.W. 2d 66 (1974), another case involving a partnership, the Court emphasized the importance of the “actual intent” of the parties in determining the business relationship between them.

In Hogan v. Hogan, 234 Ark. 383, 352 S.W. 2d 184 (1961), this Court stated:

. . . partners can agree that certain matters can be handled in a different manner than that provided under the Uniform Partnership Act in the absence of other partners or creditors, a chancery court, in dividing property between man and wife in a divorce proceeding, may proceed in a different manner than provided in the Partnership Act. * * *

Since there are no other partners, no creditors, no partnership obligation, we must look to the action of the parties to determine whether their intention (actual or implied agreement) was that the survivor would take title to the partnership assets. Both the oral testimony and the written documents support such an agreement. In fact there is very little evidence to the contrary.

During the course of operation of the business from 1958 until October 31, 1969, the following items of property, listed on the partnership books, were considered assets of the business and title to them was held as follows:

(1) A tract of real property described as Lots 357, 358, 360 and 361 in Thibaut Place, an Addition to the City of Fort Smith. The title to this property was placed in the name of “Fred Bailes and Juanita Bailes, husband and wife, as tenants by the entirety,” by virtue of a Warranty Deed dated March 31, 1964.
(2) A savings certificate, dated May 8, 1967, given by the First Federal Savings and Loan Association of Fort Smith in the amount of $36,000, and issued in the names of “Fred Bailes or Mrs. Juanita Bailes, as joint tenants with right of survivorship, and not as tenants in common.”
(3) A savings account dated July 28, 1965, being Account No. 128827, issued by the First Federal Savings and Loan Association of Fort Smith to “Fred Bailes or Juanita Bailes, as joint tenant with right of survivorship, and not as tenants in common,” and further entitled “Special Account,” and which reflected a deposit of $2,290.77 as of the date of death of Fred O. Bailes, Sr. This account was marked “Rent Account” and a separate ledger on the books of the partnership reflected rent that was received from the real property described in (1) above.
(4) A savings account, No. 26939, issued by the First Federal Savings and Loan Association of Fort Smith in the names of “Fred Bailes or Mrs. Juanita Bailes” and which was in existence on the date of death of Mr. Bailes and which had a deposit therein of $4,686.95.
(5) Two checking accounts with the First National Bank of Fort Smith, Arkansas, one in the names of “Mr. or Mrs. Fred Bailes, Special Account,” being Account No. 036-14-2. The second, a checking account with the First National Bank of Fort Smith in the name of “Bailes Best-Made Dog Food Company,” being Account No. 13612-6.

The above assets reflect that title to the real property was taken in the names of the parties as “tenants by the entirety;” two savings accounts were registered in both names “as joint tenants with right of survivorship, and not as tenants in common;” as to the two checking accounts the vice president of the bank testified that both parties drew on both accounts and the bank regarded them as survivorship accounts.

In addition to the intention of survivorship rights being clearly expressed by the deed, savings and checking accounts, the undisputed testimony of four witnesses reflects this was the manifest intention of Fred and Juanita. The witnesses were Mrs. Marie Whorrall, who, with her husband, prepared the income tax returns of the partnership from 1958 to 1967; Buck Brown, who had known the decedent for thirty years; Mrs. Lena Sanderford, mother of the deceased; and Juanita Bailes, appellant. Each of them testified that upon several occasions Bailes had stated that his wife was to have the business on his death.

Mrs. Whorrall testified:
Q. Did you ever have occasion to hear Fred Bailes give any information during your course in contacting him in regard to your accounting and your bookkeeping and your tax return preparation — tell you as to the condition of the business or what would happen to the business upon his death?
A. Yes.
Q,. What, was that?
* * *
A. Well, Mr. Bailes would come over to see us when we lived here, and he and Mr. Whorrall and I would discuss his business and the operation and he said many times that he wanted Juanita to have the business if anything should happen to him because she had helped this up, she was the business head and she was a wonderful — she caught on to this operation and was very valuable to this business.

Mrs. Sanderford, who was appellee’s grandmother, testified concerning a conversation she had with her son, the decedent, the last time he visited her at her home.

Q. Did he ever express to you his intent as to what would be done with the business after his death?
A. He did.
Q. What was that, that he expressed to you?
* * *
A. Well, the last time Fred was home, he came in the kitchen where I was at and talked to me about it. And he said that they had had an opportunity to sell the business, but said Juanita wants the business and I said, “Now, Juanita you can take care of the business all right, do you want it, and she says yes, I do,” and he said, “well, it’s yours.”

A further statement as to the intention of the parties is found in Mrs. Bailes’ testimony:

Q. Mrs. Bailes, Mr. Harris has asked you about the ownership of the business. How was the ownership of the business known as Bailes Best-Made Dog Food prior to the death of Fred Bailes?
A. We went into business together on equal shares. We both worked in it, we established it together. We shared equal parts of all the revenue that came out of the business.
Q. Then what would happen on the death of either one of you?
A. If I should have died before Fred, it would have been his business. If he died before me, it was my business.

On the basis of the widow’s testimony alone, this Court would be most reluctant to find Mrs. Bailes had survivorship rights because such claims must be closely scrutinized as indicated in Alexander, supra. However, in view of the totality of the circumstances, including the written documents, conduct of the parties and the oral testimony, we find the evidence overwhelmingly supports the conclusion that Fred O. Bailes, Sr. and Juanita Bailes intended and had agreed with each other that the survivor would succeed to ownership of all the assets of the business at the death of the other.

In view of our determination that Mrs. Bailes, for the foregoing reasons, is entitled to full survivorship rights in the business property, it is unnecessary to discuss appellee’s cross-appeal contending’that he is entitled to 80% of the assets of the partnership.

Since the preponderance of the evidence does not support the trial court’s holding, the decree is reversed.

Byrd, J., dissents.

       The stock was held by Mrs. Bailes, her daughter Susan and the daughter’s husband, C.A. White, all of whom are appellants in this action.


text:
    Howard C. PRATT et al v. BALLMAN-CUMMINGS FURNITURE COMPANY, FORT SMITH CHAIR COMPANY and John G. AYERS
    76-269
    549 S.W. 2d 270
    Opinion delivered April 4, 1977
    (Division II)
    [Rehearing, denied May 16, 1977.]

      Bradley D. Jesson, of Hardin, Jesson & Dawson, and H. Clay Robinson, of Pearce, Robinson & McCord, for appellants.

      Edgar E. Bethell, of Bethell, Callaway & Robertson, for appellees.
   Elsijane T. Roy, Justice.

We have before us the second chapter of this litigation. Appellants as minority stockholders of Ballman-Cummings sued that corporation and Fort Smith Chair Company, seeking to enjoin a proposed partnership between the two corporations or, alternatively, seeking appraisal and payment of the fair value of their stock pursuant to the provisions of Ark. Stat. Ann. § 64-707 (Repl. 1966). After a hearing on the issue of appraisal only, the trial court held there was “insufficient evidence to establish a cause of action.”

On appeal to this Court from the dismissal of the action, we remanded the proceeding in 254 Ark. 570, 495 S.W. 2d 509 (1973). In the opinion we stated the law recognizes “de facto mergers — an association under the guise of a partnership whereby one of the corporations loses its identity as such and is actually controlled by the management of the partnership.” If this occurs the dissenting shareholders are entitled to an appraisement and cash payment for their shares. We held that whether there had been such a merger was to be determined by the trial court based upon a complete hearing, and since appellant-stockholders had made a prima facie showing of a de facto merger or consolidation it was error to sustain a challenge to the sufficiency of their evidence.

Over the objections of the minority stockholders Ballman-Cummings amended its charier to permit it to enter into partnership agreements, and Ayers Furniture Industries was established, consisting of two partners, BallmanCummings Furniture Company and Fort Smith Chair Company. Appellants formally notified Ballman-Cummings that they were demanding the “fair value” of their stock pursuant to the provisions of Ark. Stat. Ann. §§ 64-707 and 64-804 (Repl. 1966). When the company refused to make such payments appellants instituted action to enforce their rights as dissenting stockholders. The members of the Ayers family of Fort Smith, by virtue of their stockholdings, controlled both corporations and the corporations had interlocking directors. John Ayers is the chief officer of BallmanCummings, of Fort Smith Chair and the general manager of the partnership.

The partnership agreement provides, in Article II, § 5: “The partners shall designate one individual as a General Manager of the partnership who will be fully authorized to conduct the business and affairs of the partnership.”

Article III of the agreement provides:

Section 1. The partnership shall purchase from each partner, f.o.b. the respective manufacturing plants, all furniture produced by either partner.
Section 2. The partnership shall pay for said furniture ninety (90) per cent of the listed sales price of the furniture, which amount shall be credited to the account of the partner on the books of the partnership at the time of delivery.
Section 3. Either partner may, at any time after delivery of furniture to the partnership, upon demand receive payment of the purchase price of furniture sold to the partnership.
Section 4. The partnership shall establish necessary warehouses in Fort Smith and elsewhere, as required, to store furniture purchased from the partners. Risk of loss is on the partnership after the furniture leaves the shipping dock of either partner.
Section 5. The partnership shall maintain a sales organization, prepare and distribute appropriate catalogs and other advertising material, and pay salesmen’s commissions. The partnership shall be responsible for all merchandising functions in connection with the promotion and sale of furniture.
Section 6. The partnership will be responsible for the billing of its customers and the collections of its accounts with such customers. The partnership, as owner of such accounts receivable, may pledge or sell such accounts as it may deem necessary or desirable. Risk of loss on accounts receivable shall be on the partnership.
Section 7. The partnership shall be responsible for the distribution of furniture to its customers, and for the return of furniture when for any reason it is not accepted by the customer. In the event furniture is returned for reasons of defective manufacture, the partnership shall be entitled to return the same to the partner who produced it, and shall be entitled to credit on its account with such partner.
Section 8. Each partner agrees to provide for the use of the partnership and at its own expense, certain executive, administrative and clerical employees, as may be mutually agreed upon by the partners.

Prior to formation of the partnership, BallmanCummings had shown a net operating profit in all years except one since the early 1950’s. However, beginning with establishment of the partnership in 1967, the operations of Ballman-Cummings showed a net loss each year thereafter, leaving the company with a total capital deficit of $767,590 by December 31, 1970. The record shows assets are now being liquidated.

The only witnesses who testified were John Ayers, general manager of both corporations and the partnership, and Eugene Rapley, now employed by Riverside Furniture and formerly vice president and sales manager of BallmanCummings.

Ayers’ testimony reflected that all sales of furniture were made by employees of Ayers Furniture Industries; that purchasing for both operations was handled by the partnership with one comptroller. Before the partnership both companies had separate methods of invoicing and selling furniture. After the partnership was formed, all invoices were issued under the name of Ayers Furniture Industries. Ayers Furniture would also receive the payment for the invoices. All advertising and marketing were done under the name of Ayers Furniture Industries. Sales lists, invoices, etc. for both companies were published under the name of Ayers Furniture Industries, with the individual corporate names also being shown.

Ayers also testified that he and Tom Condren, former sales manager of Fort Smith Chair, and design and development manager of the partnership, and Gene Rapley were responsible for the decisions as to what prices were put on the price list issued by Ayers Furniture. When quizzed about Ballman-Cummings’ losses after the formation of the partnership, Ayers stated they were apparently caused by “loss cycles” and the loss of the “top production manager.” No explanation was given as to why some corrective measures were not taken after the initial big loss.

The partnership was dissolved and Ballman-Cummings still exists as a corporation but has no operations for manufacturing furniture. It has a “negative net worth position of . . . around $700,000.” The Board recommended liquidation to the stockholders of Ballman-Cummings. Fort Smith Chair is still in the manufacturing business and continues to market under the name of Ayers Furniture Industries and did make a profit in 1971, 1972 and 1973.

Rapley testified: The name Ballman-Cummings had good recognition with the dealers during his tenure there. Most of the dealers they sold to had dealt with BallmanCummings for a considerable period of time. Prior to the formation of the partnership the offices of Ballman-Cummings and the offices of Fort Smith Chair were at different locations, and the management of both companies was completely separate except for Ayers who performed common duties for both corporations. Thereafter the offices were at the same location and management functions were consolidated. Each company decided on its own designs, production schedules and credit policies. Each had its own comptroller and sales manager. After the formation of the partnership Rapley was sales manager of both Ballman-Cummings and Fort Smith Chair, as well as for the partnership; all sales were conducted through the partnership, there being no separate sales department in either Fort Smith Chair or BallmanCummings. Condren, formerly vice president and sales manager for Fort Smith Chair, became vice president and merchandise manager for the partnership. No furniture was manufactured without the approval of Ayers, Condren and Rapley, who decided jointly what type of merchandise would be manufactured and in what quantity. After formation of the partnership one person was in charge of making decisions concerning transportation and shipping for both companies.

Appellees argue forcefully that there has been no merger or consolidation — either de facto or de jure. Many factors which have remained the same in both Fort Smith Chair and Ballman-Cummings since the organization of the partnership have been called to our attention by appellees. One of the factors upon which appellees place special emphasis is that board meetings continued to be held by Ballman-Cummings and Fort Smith Chair. However, a review of the minutes reflects that almost no matters of any substance were taken up at the board meetings. All decisions of major importance were made by the partnership.

Appellees in support of their position rely heavily upon the case of Good v. Lackawanna Leather Company, 96 N.J. Super. 439, 233 A. 2d 201 (1967), and cases cited therein, including Applestein v. United Board & Carton Corp., 60 N. J. Super. 333, 159 A. 2d 146 (1960). Both cases set up key elements which should be considered by the courts in determining whether a merger has taken place. Appellees contend none of the factors indicating a merger are present in the case at bar. However, these are not the only factors to be considered, and this Court is required to look to substance not form in determining whether a de facto merger has occurred. The record indicates almost all the viable functions of Ballman-Cummings were taken over by the partnership.

In Rath v. Rath Packing Company, 257 Iowa 1277, 136 N.W. 2d 410 (1965), the court stated:

If, as we hold, this agreement provides for what amounts to a merger of Rath and Needham, calling it a Plan and Agreement of Reorganization does not change its essential character. A fundamental maxim of equity, frequently applied, is that equity regards substance rather than form. (Citing cases.)
It is our duty to look behind the form to the substance of the challenged transaction. Kurtz v. Humboldt Trust & Savings Bank, 231 Iowa 1347, 4 N.W. 2d 363. See also Gibson v. American Railway Express Co., 195 Iowa 1126, 1132, 193 N.W. 274; Metropolitan Edison Co. v. Commissioner of Internal Revenue, Third Cir., Pa., 98 F. 2d 807, 809; Chicago, S.F. & C.R. Co. v. Ashling, 160 Ill. 373, 43 N.E. 373, 375 (“There is no magic in words. Merely calling the transaction a purchase and sale would not prevent it from being a consolidation.”); 19 C.J.S. Corporation § 1604, page 1367.
* * * A shareholder who dissents to a merger may obtain the value of his stock if the right thereto is provided by statute, if procedure is established therefor and is followed by him. * * *
Applestein, supra, held that:
If, in truth and in substance the proposed plan in this case is a “merger,” why should the interested parties not frankly and honestly recognize it as such and pursue the statutory procedure . . . ? It is a fundamental maxim of equity that “Equity looks to the substance rather than the form.” For example, a deed absolute on its face, if in truth a mortgage, will be treated in equity as a mortgage. This court of conscience never pays homage to the mere form of an instrument or transaction, if to do so would frustrate the law or place justice in chains. The courts of equity in New Jersey, and elsewhere, have never hesitated to look behind the form of a particular corporate transaction and find that it constituted a corporate merger, if in fact and in substance it was a merger, regardless of its deceptive outward appearance. (Italics supplied.)

Without active participation in purchasing, pricing, customer sales, invoicing, collecting and with no effective control over management personnel, and with all important decisions made by the partnership, the Ballman-Cummings corporate image and goodwill were dissipated. Certainly all these factors constitute a fundamental change in operations causing Ballman-Cummings to become nothing but a shell of a corporation without substance, and a de facto merger has indeed taken place.

We do not mean that any and all partnership arrangements by corporations would constitute a de facto merger or consolidation. There are many combinations which would not lead to such a conclusion, but each case must be determined upon its own particular facts. Nevertheless, where the partnership arrangement results, as here, in an almost complete cessation of the operating functions of the corporation, such a de facto merger entitles the dissenting shareholders to the right of appraisal of their stock.

Reversed and remanded with directions to proceed in a manner not inconsistent with this opinion.

We agree. Harris, C.J., and Fogleman and Hickman, lb

       Entries were made on the books to reflect credits due each corporation.

       The exhibits reflect the corporate names were rather inconspicuously printed thereon.

       Ballman-Cummings formerly sold to hundreds of customers, now only to the partnership.


author: Darrell Hickman, Justice.

text:
    PHILCO-FORD CORPORATION v. Judge John G. HOLLAND
    76-408
    548 S.W. 2d 828
    Opinion delivered April 4, 1977
    (Division II)

      Griffin Smith, for petitioner.

      Gean, Gean & Gean, for respondent.
   Darrell Hickman, Justice.

The only issue in this case is the constitutionality of an Arkansas statute permitting a nonresident corporation to be sued in a contract action in the county where the plaintiff resides.

The lower court overruled Philco-Ford Corporation’s motion to quash service and from that order, Philco-Ford, the petitioner, requests a writ of prohibition against the circuit judge from proceeding further.

Philco-Ford is a non-resident corporation which has an agent for service in Pulaski County, Arkansas. It has no principal place of business or chief officer in the State. It was sued in Sebastian County, Arkansas by the respondent, a plaintiff-resident of that county, pursuant to a venue statute which reads as follows:

Contract actions against a non-resident of this state or a foreign corporation may be brought in the county in which the plaintiff resided at the time the cause of action arose. Ark. Stat. Ann. § 27-619 (Repl. 1962).

We have said, and the U.S. Supreme Court has held, that foreign corporations must be treated the same as domestic corporations regarding the venue of law suits. See Cavette v. Ford Motor Credit Co., 260 Ark. 874 (1977). Power Manufacturing Company v. Saunders, 274 U.S. 490 (1927).

The respondent in this case argues that the Power case was overruled by the U.S. Supreme Court in the case of American Motorists Insurance Co. v. Starnes, 425 U.S. 637 (1976). The Starnes case did not overrule the Power case. The Starnes case involves a Texas venue statute and the court found that the Texas law did not really discriminate against foreign corporations but treated them substantially the same as domestic corporations.

Arkansas law does not permit a domestic corporation to be sued in a contract action in the county where the plaintiff resides at the time the cause of action arises. The suit must be brought in the county where the corporation has its principal office or place of business, or where the chief officer resides. See Ark. Stat. Ann. § 27-605 (Repl. 1966).

Therefore, we hold that Ark. Stat. Ann. § 27-619 (Repl. 1962) is unconstitutional in that it discriminates against foreign corporations in violation of the Equal Protection Clause of the Fourteenth Amendment to the U. S. Constitution.

Writ granted.

We agree: Harris, C.J., and Fqgleman and Roy, JJ.