author: JOHN A. Fogleman, Justice. CONLEY Byrd, Justice,

text:
    LES-BIL, Inc. v. GENERAL WATERWORKS CORPORATION
    74-39
    511 S.W. 2d 166
    Opinion delivered July 8, 1974

      Brockman, Brockman & Gunti, by: E. W. Brockman, Jr., for appellant.

      Bridges, Young, Matthews & Davis, for appellee.
   JOHN A. Fogleman, Justice.

Appellant seeks reversal of an adverse decree in .a suit by appellant seeking an accounting for funds allegedly due it under the refund provisions of a water main construction contract entered into by appellant and Pine Bluff Water Co., Inc., to which appellee is the successor. The only question on appeal is whether the chancellor erred in his construction of paragraphs (4) and (5) of the contract.

Les-Bil, Inc. is a corporation organized to develop the Friendswood Addition in Pine Bluff. In order to obtain water service for the subdivision, appellant, in 1957, contracted with the Pine Bluff Water Co. to pay the actual costs incurred by the water company in extending an existing 10-inch water main from 36th Avenue and Olive Street southward along Olive to Friendswood Drive which is located south of 46th Avenue and Olive. A refund provision provided a formula whereby appellant could recover up to the full amount of the expenditure. The contract contained an estimated cost figure of $19,500 but the actual cost paid by Les-Bil was $16,905. At the time of the filing of this action, appellant had received less than $1,600 in refunds.

The sections of the contract pertinent to this appeal are as follows:

(4) Said actual cost will be refunded by First Party, its successors or assigns, to Second Party, its successors or assigns, on the basis of twenty-five per cent (25%) of the annual gross revenues received from water consumers located adjacent to and receiving water service from said 10 inch water main referred to herein. First Party agrees to refund twenty-five per cent (25%) of said gross revenues for a period of fifteen (15) years, but no refunds will be made after said fifteen (15) year period. In the event the actual cost referred to herein is entirely refunded on the basis of twenty-five (25%) of the annual gross revenues before the fifteen (15) year period has expired, then, in that event no further refunds will be made.
(5) In consideration of the above mentioned contribution First Party agrees to install, operate, and maintain the water mains above mentioned. The water mains and facilities which First Party agrees to construct shall be its separate property and shall be owned, maintained, and operated by it. First Party reserves the right to make extensions from said water mains to serve other customers, and in serving other customers from said extension no part of the income received from these customers is subject to the refund set forth in Paragraph (4).

Since 1957 two housing developments, Westridge Condominium and Greenbriar Condominium, have been erected on two parcels of real estate which border the west side of Olive Street and extend westward between 41st and 46th Avenues. Each of these complexes consists of a number of condominium units under one roof. Water service to Green-briar is provided by a 6-inch line which runs from the Olive Street 10-inch main to the complex with each individual unit being connected to the 6-inch line by service lines. A similar situation exists at Westridge where a 3-inch line and a 6-inch line, each running from the Olive Street main, bring water to the complex, with service lines to each condominium. The appellee took the position that service to these complexes was provided from an extension, and, in reliance upon paragraph (5), did not pay any refunds to appellant from the revenues collected for furnishing water to these developments.

Appellant contends that these two developments are . . . adjacent to and receiving water service from said 10-inch main. ...” and therefore it is entitled to refunds based on water furnished to all units of both complexes. It also alleges that “extension” as used in this contract refers only to an additional lengthening of the 10-inch main on Olive Street and that only a strained construction of “extension” could allow appellee to escape the payment of any refunds since no water actually flows from the 10-inch line directly into the homes of the consumers, but rather all users are connected to the 10-inch line by smaller lines. Appellant states that the meaning ascribed to the word “extension” is determinative of the issue in this case.

The chancellor, in a well-reasoned opinion, ruled that the term “extension” as used in the water service industry meant a distribution or transmission main intended to distribute water throughout an area as distinguished from distribution of water to a single customer by use of a service line. He also found that the parties intended that the revenue collected from any water consumer abutting on Olive Street be subject to the refund provision of paragraph (4) since such property could be served by service lines coming directly from the 10-inch main on Olive. Based on these findings he ordered appellee to pay refunds only on water provided to units number 1, 21, and 22 in Westridge and 408 West 41st and 513 Greenbriar, each of which had an exterior wall abutting Olive with no other unit between the wall and the street.

Appellant contends there was no evidentiary support for this construction of “extension”; that doubtful language of a contract should be most strongly construed against the drafter, appellee; and that even if “extension” did have a technical meaning, Dr. Bill Owen, who signed the contract, as President and one of two principal stockholders in Les-Bil, was not conversant with the language of the water industry and would therefore not have known the term had such a meaning.

Appellant admits that the definition relied upon by it is not the only one accorded to the word in dictionaries but argues that the most common use of the word is in the sense of an elongation or lengthening. Yet, we find that the word, in common parlance, has other definitions which include:

Any part added to or extended from a main structure to form an addition; prolongation; an extension to a hospital. The American Heritage Dictionary of the English language.
A part that is extended from or attached to a main body or section as a supplement or enlargement. Webster’s Third New International Dictionary.
A part constituting an addition or enlargement, as an annex. Webster’s New International Dictionary. 2d Ed.

Our cases clearly recognize that when a technical term is used in a sense other than the ordinary meaning of the word testimony is admissible to explain the meaning of the term and the question may be submitted to the trier of fact to determine in what sense the term was used. Paepcke-Leicht Lbr. Co. v. Talley, 106 Ark. 400, 153 S.W. 833; Wilkes v. Stacy, 113 Ark. 556, 169 S.W. 796. See also 17 Am. Jur. 2d 643, Contracts § 251.

Evidentiary support for the chancellor’s determination of the meaning of “extension” was provided by the testimony of George Flegal, Vice President and Division Manager of appellee, who testified that the term as used in the water service industry referred to a main intended to either transmit or distribute water throughout an area. Furthermore, as pointed out by the chancellor in his opinion, “extension” or “extend” was used five times in the contract. Both “extend” and “extension” appear in the contract in provisions preceding paragraph 5 and in each instance pertain to main distribution lines rather than individual service lines. There was no testimony that any other meaning of “extension” was contemplated by the two stockholders of Les-Bil who negotiated the contract.

Appellant correctly states our rule that any doubt as to the meaning of language used in a contract will be resolved against the drafter. However the rule does not necessarily govern in this case. In determining the intention of the parties at least equal regard must be given to the rule that, in spite of the fact that words in a contract are generally to be given their usual and ordinary meaning, words of art or words connected with or peculiar to a particular trade, profession or occupation are to be given the signification attached to them by experts in such art or trade, profession or occupation unless it appears that they were used in a different sense. If, in reference to the subject matter of a contract, words have, through usage acquired a meaning different from their usual and ordinary meaning, the parties must be taken to have used them in their peculiar meaning. Wilkes v. Stacy, 113 Ark. 556, 169 S.W. 796; Paepke-Leicht Lbr. Co. v. Talley, 106 Ark. 400, 153 S.W. 833; 17 Am. Jur. 2d 643, Contracts § 251. The dominant rule is that interpretation of a contract is controlled by the intention of the parties. Asimos v. T. L. Reynolds & Son, Inc., 244 Ark. 1042, 429 S.W. 2d 103; Schnitt v. McKellar, 244 Ark. 377, 427 S.W. 2d 202; Fulk v. Gay, 216 Ark. 462, 226 S.W. 2d 69; Sternberg v. Snow King Baking Powder Co., Inc., 186 Ark. 1161, 57 S.W. 2d 1057; Sydeman Bros. Inc. v. Whitlow, 186 Ark. 937, 56 S.W. 2d 1020. It is the duty of the courts to ascertain and give effect to the meaning and intent of the parties as expressed in the language used. Fulk v. Gay, supra; Texas Co. v. Kennedy, 190 Ark. 1178, 78 S.W. 2d 825; Alf Bennett Lumber Co. v. Walnut Lake Cypress Co., 105 Ark. 421, 151 S.W. 275. See also Love v. Couch, 181 Ark. 994, 28 S.W. 2d 1067. The sense in which the words used would naturally be understood, taking into consideration the circumstances surrounding the making of the contract and the situation and relation of the parties, is one of the most important factors to be weighed in making that determination. Scrinopskie v. Meidert, 213 Ark. 336, 210 S.W. 2d 281; Hastings Industrial Co. v. Copeland, 114 Ark. 415, 169 S.W. 1185. See also, Sternberg v. Snow King Baking Powder Co., Inc., supra. It may be fairly assumed that the parties used their words and understood them in that sense. Alf Bennett Lumber Co. v. Walnut Lake Cypress Co., supra. Evidence which tends to show the intention of the parties but does not contradict or vary the tersm of the contract is admissible for the purpose of showing the real meaning of the words and the intention of the parties. Sternberg v. Snow King Baking Powder Co., supra. There is no evidence that the term as used in the water service industry has any meaning other than that given in the testimony of Flegal. Thus, we cannot say that the chancellor’s interpretation of the contract was clearly against the preponderance of the evidence.

In answer to appellant’s contention that, because of his inexperience in this field. Dr. Owen should not be held to know the meaning of technical terms, it should be noted that he testified he had been involved in business ventures before although this was the first land development enterprise in which he had engaged. The other principal stockholder in Les-Bil, Leslie McIntyre, was a building contractor. On cross-examination Dr. Owen was asked whether McIntyre aided in the contract negotiation. Dr. Owen responded that he had done the majority of the negotiating himself. We may thus infer that McIntyre, a professional in the construction trade, aided in the proceedings. Dr. Owen also admitted that, although he could not remember having done so in this case, he normally consulted with his attorney prior to entering into any business agreements.

We conclude that Dr. Owen knew or should have known that “extension” had a particular meaning in the water service industry. At least, we cannot say that his inexperience compelled the chancellor to disregard the presumption that the word “extension” was used in the peculiar sense of the water industry.

The decree is affirmed.

BYRD.J., dissents.

CONLEY Byrd, Justice,

dissenting. The results in this case remind me of the man that couldn’t see the forest for the trees. It’s true that the appellee occasionally uses six-inch lines for extension purposes, but it is somewhat syllogistic to say that all six-inch water lines constitute an extension to the water service area. In my view the lines run to the condominiums here are nothing more nor less than service lines to furnish water in sufficient quantity to meet the anticipated demands of the occupants. Since the water service was already available to the area in question, I’m unable to comprehend how the six-inch lines to the condominiums amounted to a supplement, enlargement or extension of the ten-inch water service. After all it was the intensity of the use of the area that created the demand for the six-inch line and not the area to be served.

For the reasons stated, I respectfully dissent.

      George Flegal, Jr. testified that a service lateral or line is intended to serve an individual property.


source: Caselaw Access Project

author: John A. Fogleman, Justice.

license: Public Domain

text:
    Otis ANDERSON v. STATE of Arkansas
    CR 74-10
    511 S.W. 2d 151
    Opinion delivered July 8, 1974

      John Mann, for appellant.

      Jim Guy Tucker, Atty. Gen., by: Michael S. Gorman, Asst. Atty. Gen., for appellee.
   John A. Fogleman, Justice.

On October 31, 1972, appellant was convicted on five counts of' forgery and five counts of uttering by a St. Francis County Circuit Court jury which fixed his punishment at twenty years imprisonment. He was sentenced on November 1, 1972 and committed to the Department of Corrections on November 2, 1972. He filed notice of appeal on November 29, 1972 and requested appointment of counsel, alleging that he was indigent. No action appears to have been taken on appellant’s notice and motion. At some subsequent date, undisclosed by the record, Anderson filed a handwritten petition for relief under Criminal Procedure Rule 1. Most of the grounds alleged would have been more appropriately stated in a motion for new trial. Later, on a date likewise undisclosed by the record, an attorney who represented Anderson at his trial filed a motion for an evidentiary hearing. This motion restated most of the allegations of Anderson's grounds for relief, nearly all of which were appropriate grounds for a motion for new trial, but inappropriate for post-conviction relief under Rule 1. It was alleged, however, that Anderson had been held by the Department of Corrections without due process because he had been denied counsel to prosecute his appeal, due to his indigency. On October 5, 1973, the circuit court granted the motion for an evidentiary hearing, which was held on October 22, 1973. Relief was denied, but the court granted an appeal to this court. A belated notice of appeal was filed. A transcript of the original trial which had been filed in the trial court August 22, 1973, was lodged here as a part of the record. It appears to have been considered by the trial court at the evidentiary hearing on the motion.

On appeal from that order appellant alleges that certain evidence introduced at his trial was the product of an illegal search of the vehicle he was driving at the time of his arrest and therefore inadmissible. He also contends his conviction was based on the testimony of an alleged accomplice which was not sufficiently corroborated. Because it seems from the record that Anderson was denied a direct appeal due to in-digency, we consider his motion a belated motion for new trial and treat his points for reversal as having been raised on direct appeal from his judgment of conviction. We find both of the above contentions to be without merit.

Due to the mobility of the object to be searched, warrantless car searches are permissible where there exists probable cause to believe the vehicle contains articles the officers are entitled to seize. Carroll v. United States, 267 U.S. 132, 45 S. Ct. 280, 69 L. Ed. 543 (1924); Easley v. State, 255 Ark. 25, 498 S.W. 2d 664 (1973); Roach v. State, 255 Ark. 773, 503 S.W. 2d 467 (1973). In this case Sgt. Dave Parkman of the Forrest City Police Department received a report that forged checks had been passed in Forrest City and a description of one of the persons suspected. Deputy Sheriff Joe Goff of the St. Francis County Sheriff’s Department testified he received a report from Officer Parkman that the latter had just met and passed a green 1970 or 1971 Oldsmobile containing a person believed to be the suspect traveling north on Washington Avenue a few cars behind Deputy Goff. Goff slowed down and an automobile fitting the description he had received passed him. He followed the car for a short distance and stopped it. He was joined almost immediately by Officer Parkman.

The two officers placed the three occupants under arrest and searched them, finding $692.00 in appellant's pocket. At this point they searched the interior of the car and recovered two checks which had been made out but not endorsed and two billfolds containing Tennessee drivers' licenses in the names of Andrew Hearn and Thomas Doggett. A search of the trunk of the vehicle produced several items which corresponded to items which had been purchased with the forged checks.

The person cashing the checks, which were payroll checks payable to either Andrew Hearn or Thomas Doggett, was purchasing relatively inexpensive items at several stores in the city and receiving the balance of the amount of the checks in cash.

We conclude that the officers had probable cause for searching the vehicle. Officer Parkman, having received a description of one of the suspects, sighted a car carrying a person he thought to be that suspect and passed that information along with the location of the car to Deputy Goff. When Goff saw the vehicle matching the description he received, he had probable cause for stopping the vehicle and searching it.

It should be noted that, according to the testimony of Sgt. Parkman, appellant consented to the search of the car. This was not denied by appellant when he testified. On direct examination, Anderson stated that when the officers asked him for the trunk key he replied he did not have a key but that the trunk could be opened by a button in the glove compartment and he offered to open it. Appellant said the officers told him to remain where he was and opened the trunk themselves. No objection was made at the trial to the introduction of any of the evidence taken from the vehicle. It seems obvious that appellant and his employed counsel did not consider the search unreasonable at that time.

Appellant’s second point for reversal is that the testimony of the State’s key witness, Charles Herod, who had previously been convicted of forgery and uttering in connection with this check cashing spree, lacked the corroboration required by Ark. Stat. Ann. § 43-2116 (Repl. 1964). The test of the sufficiency of corroboration of the testimony of an accomplice is whether there is other evidence tending to connect the defendant with the commission of the offense which goes beyond a showing that the crime was committed and the circumstances thereof. The corroborating evidence need not be sufficient in and of itself to sustain a conviction, but it need only, independently of the testimony of the accomplice, tend in some degree to connect the defendant with the commission of the crime. Jackson v. State, 256 Ark. 406, 507 S.W. 2d 705 (1974); Lauderdale v. State, 233 Ark. 96, 343 S.W. 2d 422; Fleeman v. State, 204 Ark. 772, 165 S.W. 2d 62; King v. State, 254 Ark. 509, 494 S.W. 2d 476.

Bill Beck, the proprietor of the Automotive Parts store, testified that a check payable to Thomas Doggett in the amount of $97.01 was cashed in his store in the purchase of eight spark plugs costing $6.64. The difference in money was paid to the person making the purchase. The search of the vehicle Anderson was driving produced a sack containing eight spark plugs and a sales slip from the Automotive Parts store. Larry Carter of Southern Furniture store related that a $97.01 check payable to Thomas Doggett was used in the purchase of a $9.95 lamp from that store. A lamp was recovered from the automobile trunk. An employee of the Able True Value Hardware store, Judy Allen, testified that a shower curtain rod was purchased from that store with a $97.01 check payable to Thomas Doggett. A curtain rod was found in the search of the vehicle’s trunk. Mrs. Munn, the assistant manager of the United Dollar Store, said a check made out to Andrew Hearn for $94.66 was used in the purchase of a pair of pants and a shirt from that store. A sack with the United Dollar Store name on it containing a shirt and a pair of pants was found in the trunk of the car Anderson was driving. Furthermore, Mrs. Munn, on cross-examination, was asked if she could identify appellant as the man who cashed the check at the United Dollar Store.

Q. Well, I’ll ask you today if you will look at my client and see if you can identify him as the one that cashed the check.
A. Well, as good a look as I got at him I would say it was definitely him.
Q. This is the man?
A. Yes.

Two billfolds containing Tennessee drivers’ licenses in the name of Andrew Hearn and Thomas Doggett were recovered from the backseat of the automobile. Appellant had $962 in cash in his pocket at the time of his arrest. All this evidence, weighed collectively, constitutes sufficient corroboration to support the jury verdict.

The judgment is affirmed.


author: J. Fred Jones, Justice.

text:
    Nellie PALMER, Individually and as Administratrix v. Penney Elizabeth EVANS
    74-70
    511 S.W. 2d 157
    Opinion delivered July 8, 1974

      Hale, Hale, Fincher & Hoofman, P.A., by: John M. Fincher, for appellant.

      Lightle, Tedder & Hannah, by: Mike Beebe, for appellee.
   J. Fred Jones, Justice.

This is an appeal by Nellie Palmer individually and as administratrix of the estate of George R. Palmer from a chancery court order wherein the chancellor refused to set aside a temporary injunction pertaining to the disposition or sale of corporate stock which the appellee, Penney Elizabeth Evans, alleged to be a part of a trust estate created in her favor by her deceased father, George R. Palmer.

It appears from the record that the appellant, Nellie E. Palmer, was the second wife of George R. Palmer and the appellee, Penney Elizabeth Evans, was the daughter of George R. Palmer by his previous marriage. Penney Elizabeth Evans initiated this litigation by a complaint filed in chancery court alleging that she was the beneficiary under a trust instrument dated January 3, 1966, whereby George R. Palmer as grantor transferred to C. K. Powell as trustee 654 shares of J. C. Penney Company, Inc. common stock in trust for the benefit of the plaintiff, Penney Elizabeth Evans. She alleged that on or about September 23, 1970, the stock certificates were canceled and new certificates were issued to George R. Palmer and Nellie E. Palmer as joint tenants; that said transfer of stock was in derogation of the George R. Palmer trust dated January 3, 1966, and was accomplished through fraud. She prayed for an immediate order enjoining and restraining Nellie Palmer individually and as ad-ministratrix of the estate of George R. Palmer from disposing, transferring or encumbering the assets of the trust; and enjoining and restraining the J. C. Penney Company, Inc. from transferring or disposing of the shares of stock on the books and records of that corporation. Mrs. Evans then prayed for an order requiring the defendant Nellie Palmer as well as the defendant J. C. Penney to reconvey the stock back into the trust account, and in the alternative she prayed for an accounting by Nellie E. Palmer and C. K. Powell.

On July 23, 1973, the chancellor entered an order temporarily enjoining Nellie Palmer and J. C. Penney Company, Inc. from encumbering, transferring or disposing of the J. C. Penney Company stock. On November 9, 1973, Nellie E. Palmer, by power of attorney, filed a motion to dissolve the temporary injunction. On the same date she also filed a pleading designated “Demurrer of Nellie E. Palmer as Ad-ministratrix of the Estate of G. R. Palmer, Deceased,” in which she alleged that the complaint did not state a cause of action cognizable in equity, and in which she also alleged that the certificates were issued to George R. Palmer and Nellie E. Palmer as joint tenants and upon the death of George R. Palmer they became her individual property. She prayed for a dismissal of the complaint and for judgment in her own favor.

After additional pleadings were filed by the parties, the chancellor on October 24, 1973, issued an additional order “restraining defendant, Nellie E. Palmer, from in any way disposing of, encumbering or transferring J. C. Penney Company, Inc. common stock hereinabove described.” Following the filing of additional pleadings, including request for admissions and response thereto, the appellant Nellie Palmer gave notice of appeal in language as follows:

“Defendant, Nellie Palmer, Individually and as Ad-ministratrix of the Estate of G. R. Palmer, Deceased, hereby appeals the Order Requiring Bond, entered November 26, 1973, whereby t.he Court denied defendant Palmer’s motion to Dissolve Temporary Injunction and the Order Requiring Deposit of Assets and Overruling Demurrer, entered November 26, 1972, both Orders being rendered by the Chancery Court of White County-”

The “Order Requiring Bond,” entered on November 26, 1973, recites as follows:

“On the 26th day of November, 1973, this matter came on before the Court, upon the motion of the defendant, Nellie Palmer, to dissolve the temporary injunction heretofore filed. The defendant being represented by her attorneys. Hale, Hale, Fincher and Hoofman, and the plaintiff being represented by her attorneys, Lightle, Tedder and Hannah.

It appears to the satisfaction of the Court:

That the plaintiff should be required to post bond in this matter in the sum of $5,000.00, to be approved by the Court; that the injunction order issued by this Court on October 24, 1973, shall in all respects remain in full force and effect.”

On appeal to this court Mrs. Palmer contends that the chancellor erred in granting the appellee’s oral motion for deposit of the stock certificates into the registry of the court, and that the chancellor erred in refusing to set aside the temporary injunction granted plaintiff on July 23, 1973, together with amendment thereto on October 24, 1974.

We agree with the appellee that the order of the chancellor relative to the deposit of assets is an interlocutory order and as such is not appealable. Ark. Stat. Ann. § 27-2102 (Repl. 1962) governs appeals from interlocutory orders in injunction proceedings, however, and it reads in part as follows:

“Where upon a hearing in a circuit or chancery court or by a judge thereof in vacation, an injunction is granted, continued, modified, refused., or dissolved by an interlocutory decree, or an application to dissolve or modify an injunction is refused ... an appeal may be taken from such interlocutory order or decree. The transcript shall be filed with the clerk of the Supreme Court within thirty (30) days from the entry of such order or decree, and the appeal shall take precedence in the Supreme Court.” (Our emphasis).

We are of the opinion, and so hold, that the thirty days’ time fixed by statute, as above emphasized, is mandatory and jurisdictional. The orders appealed from in the case at bar were entered on November 26, 1973, and notice of appeal was filed on December 18, 1973. The transcript was not filed with the clerk of this court however until March 8, 1974.

In Page v. McKinley, 196 Ark. 331, 118 S.W.2d 235, we recognized § 27-2102, supra, as specific authority for the right to appeal from an interlocutory order refusing to dissolve an injunction, and in that case we made clear that the time for filing the transcript on such appeal runs from the date of the ordfcr refusing to dissolve the restraining order. See also Sager v. Hibbard, 203 Ark. 672, 158 S.W.2d 922. The transcript in the case at bar was not filed in this court until March 8, 1974, which was considerably more than 30 days from the entry of the chancellor’s order refusing to set aside the injunction.

We conclude, therefore, that this court is without jurisdiction to entertain an appeal on the question involved and that the appeal must be dismissed.

The appeal is dismissed.


author: J. FRED Jones, Justice.

text:
    James WISER v. STATE of Arkansas
    CR 74-42
    511 S.W. 2d 178
    Opinion delivered July 8, 1974

      Davis & Douglas, for appellant.

      Jim Guy Tucker, Atty. Gen., by: 0. II. Hargraves, Dep. Atty. Gen., for appellee.
   J. FRED Jones, Justice.

This is an appeal by James Wiser from an order of the Carroll County Circuit Court denying his petition for post-conviction relief under our Criminal Procedure Rule No. 1. Wiser was first convicted of first degree murder in 1970 and was sentenced to death by electrocution. Attorney Paul H. Jackson represented Wiser under appointment by the trial court, and on appeal to this court the judgment was reversed and the cause remanded for a new trial. Wiser v. State, 249 Ark. 271, 459 S.W. 2d 58.

Prior to Wiser’s second trial he was granted a change of venue to Benton County where, following a three day trial, he was again found guilty of murder in the first degree and on April 5, 1971, he was sentenced to life imprisonment.

On September 19, 1973, Wiser filed his pro s.e motion for post-conviction relief in handprinted script that has become familiar to this court and, after reciting the history of his case in the first three paragraphs of his petition, he sets out his alleged grounds for post-conviction relief in paragraphs four and five as follows:

“4. Petitioner was sentenced in Benton County Circuit Court, on or about, April 14, 1971, for the said crime of murder. Petitioner was represented by counsel when arraigned, asked to enter a plea, and then subsequently sentenced in Benton County Circuit Court. Petitioner did not intelligently understand his right of counsel.
5. The records of Benton County Circuit Court do erroneously reflect that Petitioner entered a plea of not guilty, herein to the said crime of murder. Petitioner was sentenced to life on the charge of murder, and was sentenced to serve said time in the Arkansas State Prison.”

The trial court, after finding of fact as above set out, concluded that the files and records in the case conclusively showed that Wiser was entitled to no relief and Wiser’s motion was denied without holding an evidentiary hearing.

It would appear that Wiser’s motion for post-conviction relief was drawn upon the theory or assumption that he had been sentenced on a plea of guilty without the assistance of counsel. He alleged in his motion that he did have the assistance of an attorney at all stages of his arraignment and trial; he alleges as ground for relief that he did not intelligently understand his right of counsel. Wiser was represented by the same counsel through the reversal of his first conviction and a change of venue for his second trial.

Different counsel was appointed to represent Wiser at his Rule 1 hearing and on this appeal from denial of his motion for post-conviction relief. Wiser now contends, for the first time on this appeal, that he was denied the effective assistance of counsel. Criminal Procedure Rule 1 (H) clearly provides that “All grounds for relief available to a prisoner under this rule must be raised in his original or amended petition.” Moreover, this court has consistently held that where an issue is not raised in the petition for post-convictior. relief, that issue will not be considered when it is raised for the first time on appeal. Carney v. State, 250 Ark. 205, 464 S.W. 2d 612. We are of the opinion that petitioner’s sole allegation that he “did not intelligently understand his right of counsel” is not sufficient to raise the issue of inadequacy o,f representation.

In Fleschner v. State, 253 Ark. 58, 484 S.W. 2d 342, we refused to consider the issue of competency to stand trial where there was no mention of such ground in the petition. Similarly, in Davis v. State, 253 Ark. 484, 486 S.W. 2d 904, we declined to reach the issue of voluntariness of a guilty plea where the issue was raised for the first time on appeal. In the case at bar Wiser does not allege in his motion that his counsel negligently represented him, he merely asserts that he did not comprehend the nature and scope of his right to be represented. One represented by competent counsel, as in the case at bar, does not have to understand his constitutional right to counsel. The Constitution only requires that an accused understand such right before he can intelligently waive it. Wiser waived no rights in the case at bar. Even though Wiser now questions the competency or adequacy of his counsel for the first time on appeal, there is nothing in the record before us that would indicate he was not well represented by competent counsel.

The judgment is affirmed.


author: CONLEY Byrd, Justice.

text:
    Calvin W. JONES v. WEL-BILT PRODUCTS
    73-13
    511 S.W. 2d 164
    Opinion delivered July 8, 1974

      Dodrill & Bethea, for appellant.

      Davis, Plegge, Lowe & Whitmore, for appellee.
   CONLEY Byrd, Justice.

The only issue on this appeal is whether there is any substantial evidence to support the findings of the Workmen’s Compensation Commission denying the claim of appellant Calvin J. Jones for an alleged back injury that occurred during his employment with appellee Wel-Bilt Products.

The record shows that Jones had previously received a back injury while in the employment of Brown Packing Company. As a result of that injury Dr. Chakales performed operations on March 22, 1971 and again in August 1971. Due to the fact that Jones waá still manifesting low back pain, he was referred to Dr. Rooney in November 1971, to be evaluated for possible lumbar arthrodesis. Dr. Rooney recommended a fusion but Jones declined to have a fusion at that time. Dr. Chakales at that time gave Jones a permanent partial disability of 20% to 25% to the body as a whole. In April 1972 Jones by joint petition compromised his Workmen’s Compensation claim with Brown Packing Company on the basis of a 30% disability to the body as a whole plus a payment of $900 for rehabilitation. August 1, 1972, Jones went to work for Wel-Bilt Products after explaining his back condition and asking for light work.

Jones testified that on August 7th, he hurt his back at Wel-Bilt when he was trying to lift a 55-gallon barrel filled with wood chips and sawdust. Jones says that the foreman told him he would have to empty the barrels but after he tried to pick up one of the barrels and failed the foreman sent another employee to help. Jones worked the remainder of the day but reported the alleged injury the next day.

The first doctor’s report shows that Jones placed the time of the injury as being at 2:30 p.m. on the 8th day of August.

Robert Webb, Jr., the manager of Wel-Bilt testified that the barrels weighed anywhere from 45 to 80 lbs. and that during the seven or eight years that he has worked for the company no one has ever been told to pick up a barrel by himself. Webb says that barrels were never emptied after two to two-thirty in the afternoon.

Dr. Chakales examined Jones after the fusion by Dr. Logue and gave him a permanent partial disability rating of 30% to the body as a whole. He also pointed out that Jones had a “history of recurrent accidents in the fal1 with subsequent arthrodesis of the spine from L3 to the sacrum.”

Dr. Logue in his report 10/25/72 in referring to the alleged injury with Wel-Bilt stated: “I believe that his re-injury caused further instability of the already unstable back following his previous two laminectomies.” However, in a subsequent deposition he testified as follows:

“Q. Doctor, would you characterize this event that occurred in August, in early August of ’72, as indicated in the first paragraph of your report of September 28, as a recurrence of Mr. Jones’ previous condition?
A. I would say since you couch it in those terms I would say yes. The question was posed to me earlier whether it was a recurrent disc. He didn’t have a further disc but I think he further worsened an already weakened back and, therefore, I think it is a worsening of a pre-existing condition. I think that — I didn’t have this detail that Dr. Chakales had when he referred this man to Dr. Rooney in that he had a flare-up on a trip to Illinois. He had several flare-ups I recall him saying but that had been several months prior to employment at Wel-Bilt, relatively symptom free and I think the symptom that happened a week or so after he went to work for them probably was a flare-up in retrospect to what occurred since he had been released by Dr. Chakales.”

Obviously the factual issues before the Commission were somewhat equivocal, but when we consider that the fusion performed by Dr. Logue was the same fusion earlier recommended by Dr. Rooney, we cannot say on the record here that there was no substantial evidence to support the denial of the claim by the Commission.

Affirmed.


author: Conley Byrd, Justice. Conley Byrd, Justice.

text:
    Lloyd MITCHELL et al v. A. H. BEARD and Hattie B. BEARD, Husband & Wife
    74-25
    513 S.W. 2d 905
    Opinion delivered July 8, 1974
    [Supplemental Opinion on Denial of Rehearing October 14, 1974, p. 929A.]

      J. L. Hendren and Jeff Duty, for appellants.

      Adams & Wilson, by: Douglas L. Wilson, for appellees.
   Conley Byrd, Justice.

Appellees Mr. & Mrs. A. H. Beard brought this action jointly and severally against appellants Lloyd Mitchell and J. T. Williams to recover under the Arkansas Securities Law, the value of two bonds given in a real estate transaction and against appellant J. T. Williams individually upon a common law count of fraud. The trial court, based upon the jury’s answer to interrogatories, entered a judgment jointly and severally against both appellants for the face amount of the bonds together with an attorney’s fee and in addition rendered a judgment against appellant Williams for punitive damages. For reversal both Mitchell and Williams raise the several issues hereinafter discussed.

There is evidence in the record from which the jury could have found that Williams held himself out to be a retired minister, a director of a bank and a real estate broker. There is also evidence that Williams and Mitchell entered into a partnership to purchase some land from the appellees while Williams was erroneously holding himself out as a broker representing appellees’ interest. In making the. purchase the transaction was handled in Mitchell’s name only but Williams gave all of the consideration. The sale of the land was for a recited consideration of $24,000 consisting of $10,000 in cash, a note in the amount of $4,000 and two $5,000 bonds issued by Digital Control Systems, Inc. to Rio Grande Holding Company, Inc. Appellant Mitchell and his wife as the designated purchasers agreed to indemnify the Beards for the face amount of the bonds in the event they were dishonored at the date of their maturity in 1976. Thereafter Williams, who had originally agreed to purchase the bonds within a short time after closing date, induced the Beards to execute a contractual release to the Mitchells and substituted instead a written indemnity signed by Williams and his wife for t£ie face amount of the bonds in the event of a dishonor at maturity. During all of the discussions prior to the contractual arrangements and before the institution of this litigation Williams was leading the Beards to believe that he was shortly going to pick up the bonds notwithstanding the written agreements. The proof at the trial showed that one D, L. Hopkins’ signature appeared on the bonds. In view of the testimony of Williams and Mitchell one could gather that they were not entirely strangers to D. L. Hopkins. Proof on behalf of the Beards showed that both the charters of Digital Control and Rio Grande Holding had been revoked in their respective states of Texas and Kansas and that the State Securities Commissioner of the State of Missouri had issued cease and desist orders oh the transfer of the bonds here involved. Other proof showed that before the transaction occurred, Williams had tried to transfer the identical bonds to one Ernest Varner and had been informed that the bonds were no good. Mitchell had suggested to Varner that the bonds could be collected through the underworld for fifty cents on the dollar. Coy Kaylor, Jr., a recognized securities salesman testified that the bonds had no value.

Mitchell first argues that the release executed by the Beards when Williams ostensibly took over the transaction also relieved him of his statutory liability under the Arkansas Securities Law. Like the trial court, we find no merit in this contention due to the fact that the instrument executed only released Mitchell from his contractual liability. Furthermore, the record shows that the Beards were not aware of the misrepresentations concerning the bonds at that time.

Mitchell contends the trial court erred in instructing the jury with respect to the liability of a partner under Ark. Stat. Ann. § 67-1256(b) (Repl. 1966). This contention is based upon the erroneous premise that a partner must materially aid in the sale before he becomes liable. While the statute does make that a prerequisite to a recovery against an employee, broker or agent, we do not construe that requirement as being applicable to a partner.

Although the record shows that the trial court properly instructed the jury with respect to the liability of a partner under the Arkansas Securities Act, Mitchell contends that the trial court erred in construing thejury’s answers to the interrogatories and that the trial court should have declared a mistrial because the jury’s answers to the interrogatories were unclear. We do not find any objection to the interrogatories as submitted to the jury and before the jury was discharged. Under those circumstances Mitchell’s objections here are raised too late. See Wheaton Van Lines Inc. v. Williams, 240 Ark. 280, 399 S.W. 2d 258 (1966), and Ark. Stat. Ann. § 27-1762 (Repl. 1962).

We find no merit in Williams’ contention that the Arkansas Securities Act, Ark. Stat. Ann. § 67-1256 (Repl. 1962), does not apply. There is ample proof that the bonds have no value and that Williams had knowledge of such fact when he was representing them to the Beards as being “as good as gold.” He admittedly held himself out as wanting to purchase the bonds. Furthermore, he represented and testified that Mitchell furnished the bonds that were transferred to the Beards while the proof is overwhelming that Williams furnished the bonds.

Williams contends that punitive damages cannot be recovered where the Securities Act applies. The record shows that he did not raise that issue before nor during the trial. Sometime before the judgment was entered he filed a motion with the clerk raising that issue but there is no showing that the motion was brought to the attention of the trial court or a ruling obtained thereon. Under such circumstances, we treat the issue as having been raised for the first time on appeal and do not consider it. See Flake v. Thompson, Inc., 249 Ark. 713, 460 S.W. 2d 789 (1970).

Williams contends that his subsequent scheme whereby he and his wife ostensibly took over Mitchell’s indemnity on the bonds now precludes the Beards from recovering on his fraud. He cites no authority whereby one can so conveniently relieve himself from liability for fraud and we know of none. Consequently, the contention has no merit.

After suit was instituted Beard refused Williams’ offer to pay the face amount of the bonds less the $400 due Williams by the Beards on a note that Williams had signed as surety. Williams now contends that because of that tender he was entitled to a directed verdict. We find no merit in this contention because the tender was not sufficient to cover Williams’ liability for interest, attorney’s fees, etc. to the Beards.

The Beards here request an additional attorney’s fee for the service of their counsel on this appeal which we grant in the amount of $1,000.00.

Affirmed with an allowance of additional attorney’s fee to appellees in the amount of $1,000.00.

Supplemental Opinion on Denial of Rehearing delivered October 14, 1974

Securities regulation — prohibited transactions & fraud — recovery of punitive damages. — Punitive damages are recoverable when an action is brought and sustained both under the Securities Act and common law fraud.

Petition denied.

Conley Byrd, Justice.

On rehearing Williams correctly points out that the trial court’s docket sheet does show that his motion for judgment notwithstanding the verdict was overruled by the trial court. However, we still find no merit in his contention that punitive damages cannot be recovered where the Securities Act applies. The Securities Act, Ark. Stat. Ann. § 67-1256(h), provides that “the rights and remedies provided by this act are in addition to any other rights or remedies that may exist at law or in equity ... .” The authorities generally recognize that where an action is brought and sustained both under the Securities Act and common law fraud, punitive damages are recoverable. See Coffee v. Permian Corporation, 474 F. 2d 1040 (5th Cir. 1973) and Young v. Taylor, 466 F. 2d 1329 (10th Cir. 1972). The proof here was amply sufficient to sustain the common law allegation of fraud.

Petition for rehearing denied.


author: Frank Holt, Justice.

text:
    ARKANSAS STATE GAME AND FISH COMMISSION v. Jim EUBANK and F. E. JOHNSON
    74-40
    512 S.W. 2d 540
    Opinion delivered July 8, 1974
    [Rehearing denied September 9, 1974.]

      William H. Donham, for appellant.

      Wayne Jewell and James E. Stein, for appellees.
   Frank Holt, Justice.

Appellees are resident landowners on Lake Calion. They secured an injunction preventing a proposed partial fish kill by appellant on 100 acres of the 600 acre lake which is owned by the appellant and open to public fishing. Appellees alleged that the procedure constituted a health hazard and subjected them and the public to irreparable damages. Appellant contends that the proposed fish kill is within its powers and the injunction against the appellant, a state agency, is a suit against the state prohibited by the Ark. Const. Art. 5, § 20 (1874).

Ark. Const. Amend. 35 § 8 (1874) authorizes the Game and Fish Commission to expend funds for fish management and conservation. The same provision extends the power of eminent domain to the Commission to be exercised in the same manner as is exercised by the State Highway Commission. Accord, Ark. Stat. Ann. § 47-108 (Repl. 1964). Both Commissions are bound by and subservient to the requirements of our eminent domain provision, Ark. Const. Art. 2, § 22 (1874), which provides:

.... private property shall not be taken, appropriated or damaged for public use, without just compensation therefor.

See Farris v. Ark. State Game and Fish Comm., 228 Ark. 776, 310 S.W. 2d 231 (1958); and Shellnut v. Ark. State Game and Fish Comm., 222 Ark. 25, 258 S.W. 2d 570 (1953).

First we observe that appellant is incorrect in its assertion that it cannot be the subject of a suit in our courts. A state agency may be enjoined in a suit in equity if it can be shown the pending action of the agency is idtra vires or without the authority of the agency. Shellnut, supra. The agency can also be enjoined if it is about to act in bad faith, arbitrarily, capriciously, and in a wantonly injurious manner. Gray v. Ouachita Creek Watershed Dist., 234 Ark. 181, 351 S.W. 2d 142 (1961); and State Hwy. Comm. v. Saline County, 205 Ark. 860, 171 S.W. 2d 60 (1943).

In the case at bar the commission had scheduled a fish kill by the use of rotenone which is an accepted technique for fish management. It is non-toxic to humans and does not harm the flesh of the fish. In fact they are edible and some are harvested by the public. It causes the capillaries of the gills in the fish to constrict and kills the fish by suffocation. Appellees do not dispute the use of rotenone as an accepted method. They testified, however, that in their opinion a fish kill was not needed and if so a fertilization method would accomplish the desired result. They adduced evidence that the use of rotenone would create a health hazard and nuisance since the dead fish would float to the top of the water and to the shore line for three to five days. The appellees asserted that this would subject them to irreparable damage. The chief biologist of the Ark. Game and Fish Commission testified that studies had shown a stunted population of bream in Lake Calion and the rotenone technique was highly successful in restoring the balance of the fish population which would last for three to five years. He also testified that an alternate method, fertilization, was not feasible on this lake due to its high water exchange ratio caused by the watershed conditions.

In view of this testimony we cannot say that the Commission’s proposed partial fish kill by rotenone was without the scope of its constitutional authority. The appellant and not the appellees is the owner of the lake with the public having fishing privileges. In fact, the action of the Commission accrued to the benefit of the public. The undesirability of the procedure as to appellees must be said, at most, to be of a temporary nature since it lasts only three to five days. Consequently, we cannot say that the Commission is acting 'arbitrarily, capriciously, or wantonly injuring appellees’ property. The injunctive proceeding is constitutionally prohibited.

Reversed and dismissed.


text:
    Charles CORBITT v. MOHAWK RUBBER CO. & TRAVELERS INSURANCE Company
    74-45
    511 S.W. 2d 184
    Opinion delivered July 8, 1974

      Toungdahl, Huckabay & Larrison, for appellant.

      Wright, Lindsey & Jennings, for appellees and cross-appellants.
   Frank Holt, Justice.

The Workmen’s Compensation Commission, in affirming the referee, found the appellant was permanently and totally disabled from the combined effects of two successive and compensable work related back injuries while employed by the appellee Mohawk Rubber Company. However, in awarding the benefits, the commission applied the provisions of Ark. Stat. Ann. § 81-1313 (f) (Supp. 1973) which limited appellant’s total recovery to $19,-500 which was the maximum when appellant received his last injury in 1969. The circuit court affirmed the commission and from that judgment comes this appeal. Appellant asserts for reversal that § 81-1313 (f) (1) is unconstitutional since it limits the amount of recovery where a second injury is involved whereas another statute, § 81-1310 (c) does not limit the amount of a claimant’s recovery from an industrial injury when total disability resulted from a single injury. We cannot agree with the appellant that the limiting statute is unconstitutional.

§ 81-1313 (f) (1), as amended, reads:

(f) Second injury: In cases of permanent disability arising from a subsequent accident, where a permanent disability existed prior thereto: (1) If an employee receive a permanent injury after having previously sustained another permanent injury in the employ of the same employer, for which he is receiving compensation, compensation for the subsequent injury shall be paid for the healing period and permanent disability by extending the period and not by increasing the weekly amount. When the previous and subsequent injuries received result in permanent total disability, compensation shall be payable for permanent total disability, but the sum total of compensation payable for previous and subsequent injuries shall not exceed 450 weeks or nineteen thousand five hundred dollars ($19,500.00).

At the time of appellant’s last injury, § 81-1310 (c) (1), in pertinent part read:

Exceptions. The maximum limitations on period of payment (450 weeks) and total compensation ($19,500.00) prescribed in subsection (a) of this Section shall not apply in cases of permanent total disability or death.

Appellant contends that the statutory scheme arbitrarily and discriminatorily creates two categories with respect to permanent total disability victims without a rational basis. Appellant is within the provisions of § 81-1313 (f) (1), since he is a victim of one previous compensable injury. Therefore, his maximum benefits are $19,500 by this statute rather than being open ended, under § 81-1310 (c) (1) which governs in the case of a single injury. Appellant asserts that § 81-1313 (f) (1) is violative of the equal protection clause of the federal Fourteenth Amendment as well as our Ark. Const. Art. 2 § 18 (1874).

Appellees argue that the statutory scheme has a rational basis for the distinction or classification in that it encourages employers to retain injured employees. Both appellant and appellees assert that their respective positions are in accord with the remedial and liberal purposes of the Workmen’s Compensation Act.

In determining whether a classification denies the equal protection of the laws, the court must consider whether the difference does injustice to the class generally, even though it bears hard in the particular case. Bain Peanut Co. v. Pinson, 282 U.S. 499 (1930). “The Equal Protection Clause of that amendment does, however, deny to States the power to legislate that different treatment be accorded to persons placed by a statute into different classes on the basis of criteria wholly unrelated to the objective of that statute. A classification ‘must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarily circumstanced shall be treated alike. ’ ” Reed v. Reed, 404 U.S. 71 (1971). Citing therein Royster Guano Co. v. Virginia, 253 U.S. 412 (1920). To determine whether a law is violative of equal protection, the court looks at (1) the character of the classification, (2) the individual interests asserted in support of the classification and (3) the governmental interests asserted in support of the classification. Dunn v. Blumstein, 405 U.S. 330 (1971).

Considering these guidelines we must look at the purpose of the Workmen’s Compensation Act to determine if the interests asserted are relevant to the purpose of the act and do not result in an arbitrary classification. The Workmen’s Compensation Act is based largely on the social theory of providing disabled employees support and preventing their destitution. The thrust of the legislative scheme is financial protection for those casualties of industry. We do not restrict the remedial design of the act to the purely mechanical feature of compensation. The encouragement of retention of injured employees is a reasonable and laudable remedial objective. Cf. International Paper Company v. Remley, 256 Ark. 7, 505 S.W. 2d 219, (1974). In the case at bar we hold the classification created by the statutes as being within the remedial purpose of the act. To hold otherwise and invalidate the limiting statute could result in the refusal of an employer, in many cases, to retain an injured employee who, as here, received a permanent disability rating as a result of his first injury and was accordingly paid and thereafter reemployed by the appellee employer.

On cross-appeal appellees contend that the decision of the Workmen’s Compensation Commission in awarding total permanent disability is not supported by substantial evidence. We disagree. In determining the extent of disability the commission looks at the totality of factors — medical evidence, age, education, experience and other matters affecting the capacity to earn. Wilson & Co. v. Christman, 244 Ark. 132, 424 S.W. 2d 863 (1968). Appellant herein was 34 years old at the time of the hearing with only a second grade education and no job training. His work experience was limited to farm work and manual labor. Evidence was adduced that his I.Q. test indicated that he would be a slow learner to the extent of being on the borderline of retardation. His levels of reading and writing ability confirmed that he had no transferrable skills since his only work experience had been in the unskilled labor market. His attendance at a night school did not improve his deficient reading and writing abilities. The local Social Security Rehabilitation Center had offered him no rehabilitation program. The rehabilitation counselor, whose qualifications are admitted, from the Employment Security Division stated that appellant’s chances of securing employment are extremely limited on the labor market and his rehabilitation unfeasible. Appellant testified, that he suffers continuing pain in his back, intestines and right leg and at times in his shoulder and neck as a result of the combination of the two back injuries, each of which had required medical surgery to alleviate his condition. He cannot walk without difficulty, including testicular pain. He is able to sit for only thirty to forty minutes because of his discomfort. He can only stand for about ten minutes at a time without having to change positions. There is corroborative medical evidence with respect to his complaints. Medically, 30% permanent disability to the body as a whole was assigned as a result of the successive back injuries.

Our inquiry on appeal relates only to whether substantial evidence exists to sustain the commission which is the trier of the facts even though the evidence would support a contrary finding. St. Michael Hospital v. Wright, 250 Ark. 539, 465 S.W. 2d 904 (1971); and Dura Craft Boats v. Daugherty, 253 Ark. 340, 485 S.W. 2d 739 (1972). We do not reverse the commission’s finding on a disputed factual issue unless the proof is so nearly undisputed that fair minded men could not reach the decision made by the commission. Plants v. Townsend Curtner Lbr. Co., 247 Ark. 824, 448 S.W. 2d 349 (1969), and Royal Shoe Mfg. v. Armstrong, 252 Ark. 1002, 481 S.W. 2d 737 (1972). In the case at bar, when we review all the evidence most favorable to the commission’s finding as we must do on appeal, we are of the view there is substantial evidence to sustain the commission’s award.

Affirmed on direct and cross-appeal.


author: William H. Sutton, Special Justice.

text:
    J. L. McENTIRE & SONS, Inc., v. HART COTTON Company, Inc.
    73-297
    511 S.W. 2d 179
    Opinion delivered July 8, 1974
    [Rehearing denied September 16, 1974.]

      Jones, Matthews & Tolson, for appellants.

      Bridges, Young, Matthews & Davis; Dried, Frank, Harris, Shriver and Jacobson and Coleman, Gantt, Ramsay & Cox, for appellees.
    Amicus Curiae for American Textile Manufacturers Institute, Inc. by; James H. Wilson, Jr., Bennett L. Eight, C. Christopher Hagg and John W. Bonds, Jr.

   William H. Sutton, Special Justice.

Appellants are twelve cotton growers. Between January 25, 1973 and March 22, 1973, each of them by separate contract agreed to sell his 1973 cotton crop to one of the appellees who are cotton merchants. While all of the contracts are not identical, the differences are not critical to the issues on appeal.

The contracts provided that appellants would plant certain cotton acreage and, using good farming methods, deliver the quantity grown to a designated location for a price stipulated in the contract.

After the contracts were made but before the cotton was to be delivered, the cotton market began an unprecedented rise which reached in some cases more than double the price at which appellants had agreed to sell. Appellants filed actions for declaratory judgments seeking a determination that the contracts were void because prohibited by Act 208, Acts of Arkansas, 1929. They also contended that the contracts lacked mutuality and were unconscionable. The Chancellor, holding that the contracts were valid, granted summary judgment for each of the appellees. We feel that he was correct.

Section 2 of Act 208 which is the primary provision relied upon by appellants provides:

“All contracts of sale for future delivery of cotton, grain, stocks, or other commodities (1) made in accordance with the rules of any Board of Trade, exchange or similar institution where such contracts of sale are executed and (2) actually executed on the floor of such Board of Trade, exchange or similar institution and performed or discharged according to the rules thereof; and (3) when such contracts of sale are made with or through a regular member in good standing of a cotton exchange, grain exchange or similar institution organized under the laws of the State of Arkansas or any other State shall be, and they are hereby declared to be valid and enforceable in the courts of this State according to their terms, provided, that contracts of sale for future delivery of cotton in order to be valid and enforceable as provided herein must not only conform to the requirements of clauses (1), (2), and (3), but must also be made subject to the provisions of the United States Cotton Futures Act, approved August 11th, 1916; provided, further, that if this clause should for any reason be held inoperative then contracts for the future delivery of cotton shall be valid and enforceable if they conform to the requirement clauses one, two and three of this section.”

The cotton merchants admit that no attempt was made to comply with the procedures outlined by the above statute. They argue that it has no mandatory application to the kinds of contracts made by them.

Appellants argue with some logic that while Section 2 of the Act has no direct prohibitionary language against any kind of contract, the Legislature specified requirements which must exist in order for a contract for future delivery of cotton to be enforceable. It follows, say appellants, that those contracts not made in accordance with the statute are void.

Section 2 of Act 208 is not free from ambiguity. Stripped of its legislative history and without the enlightenment of judicial pronouncements prior to its passage in 1929, it is, perhaps, arguable that the purpose of the act was to severely restrict agreements to buy cotton for future delivery. But we believe a careful review of the act in its proper setting reveals an intent on the part of the legislature to (1) enlarge the permissible scope of trading in commodities futures and (2) to carefully regulate the newly enlarged activities. We do not believe that the regulations apply to contracts like those now under review.

The parties to this appeal agree that prior law is most important in arriving at a correct interpretation of Act 208. They concur that the General Assembly, in enacting legislation, is presumed to be familiar with the holdings of the Arkansas Supreme Court. Lumbermens' Mutual Casualty Company v. Moses, 224 Ark. 67, 271 S.W. 780 (October 1954).

Act 118, Acts of Arkansas, 1883 characterized dealing in futures as gambling and flatly prohibited the practice as a criminal act. However, in Fortenbury v. State, 47 Ark. 188, 1 S.W. 58 (1886) the Court distinguished between dealing in futures and contracts for future delivery of actual commodities. It was there said:

“Certainly the Legislature did not intend to impose any restrictions upon legitimate commerce, but only to destroy the parasite that infests it. Contracts for future delivery, if entered into in good faith and with an actual intention of fulfillment, are valid as any other species of contract. A farmer may sell and agree to deliver his wheat or his cotton for a stipulated price before it is harvested.”

Under definitions of the Fortenbury Case, the contracts made by the parties to this appeal would be deemed legal contracts for future delivery and not illegal dealings in futures.

Act 162, Acts of Arkansas, 1907, continued the prohibition against dealing in futures “when the intention or understanding of the parties or either of them is to receive or pay the difference between the agreed price and the market price at the time of settlement ...”

Construing the 1907 Act, the Court reaffirmed in Huff v. State, 164 Ark. 211, 261 S.W. 654 (1924), and in Southwestern Bell Telephone Company v. Bagley & Company, 178 Ark. 876, 125 S.W. 2d 782 (1929) that dealing in futures was illegal gambling, even if done in accordance with the rules of an exchange and even if the conduct in question amounted to a simple hedge against market fluctuations.

We fell that the Legislature recognized in 1929 that the broad prohibition against dealing in futures was an unjustified restraint on many forms of legitimate commerce. Act 208 represents a careful effort to relax the former blanket restraints to allow legitimate trading in some areas which were once forbidden. Along with the enabling provisions the Legislature included safeguards to prevent abusive speculation in the newly opened areas of trading. To insure against resurrection of the old gambling nemesis the act required that contracts for future delivery of cotton, in order to be valid, must essentially be made through a recognized Board of Trade or an exchange. However, this requirement applies only to that body of trading authorized by Act 208, and may not be used to invalidate contracts such as those now before us which have always been considered lawful.

In so construing the act we believe that we have honored the principles for statutory interpretation offered in Ark. Highway Commission v. Mabry, 229 Ark. 261, 315 S.W. 2d 900 (1958) as follows:

“In arriving at the intention of the lawmaking power it is proper to consider the object to be secured, the circumstances attending the adoption of the measure, and its relation to other laws. Perry County v. House, 196 Ark. 317, 117 S.W. 2d 342.”

Under appellants’ interpretation of the statute it is most difficult to imagine what evil the Legislature could hope to cure by striking down agreements such as those made by these parties. It is patently clear that the General Assembly has constantly sought to abrogate the evil of “bucket shop” operations which amount to wagering on market quotations with no real contribution to legitimate commerce. None of that is involved here. While we do not substitute our judgment for that of the Legislature’s in defining wrongdoing we are most reluctant to apply all but the clearest mandates to penalize parties with whom we can find no fault. We have not recognized conduct on the part of any of these parties or practices followed by any of them which can be logically coincided with the social ills known to be the target of Act 208.

It is contended by appellants that the contracts should be voided as unconscionable. Section 85-2-302 (1) of the Uniform Commercial Code relied upon by them provides:

“If the court as a matter of law finds the contract or any clause of the contract to have been made unconscionable at the time it was made the court may refuse to enforce the contract . . ”

The contracts in question are to be reviewed under the circumstances that existed at the time they were made and not in retrospect. The record reflects that when the parties made their respective agreements, appellants considered the prices offered for their cotton to be good. Based on prior years, they were. There is no claim that appellees knew of the drastic price increases which were to occur later. So far as was known at the time, prices could have fallen as easily as they could have risen. There is simply no basis upon which a court would be justified in finding the contracts to be unconscionable.

It is contended that the contracts ought to be voided because they lack mutuality. Appellants say that the agreements are not binding on appellees and, therefore, ought not to be enforced against appellants. We don’t agree. In most of the contracts there was a rather ordinary promise to sell and a corresponding promise to buy. Mutual promises which constitute consideration for each other are the classic method of satisfying the doctrine of mutuality. Johnson v. Johnson, 188 Ark. 992, 68 S.W. 2d 465 (1934).

Emphasis is placed on the contracts of Appellee Harlow Sanders. Sanders used a form which identified Sanders as agent of the grower and recited that he had sold the cotton for a stipulated price. In each case the cotton was sold to a textile mill. Those appellants doing business with Sanders contend that they could not have enforced the agreements against Sanders because he had made no promise to pay. Whether Sanders was obligated to pay or whether that obligation was enforceable against the mills to whom Sanders sold doesn’t seem to be too important. The critical issue is whether, under the contract arrangements in each case there was an enforceable promise to buy for each promise to sell. We believe there was.

Finally, it is argued that the Chancellor erroneously failed to consider a deposition taken in one of the earlier cases when offered in a later case. Since the issues were the same in the cases where the deposition was considered and those where it was not and since the deposition alters none of the facts felt to be dispositive of the issues before us, we do not find it necessary to determine whether the deposition was properly excluded from consideration in some of the cases.

Affirmed.

Harris, C.J., and Fogleman and Byrd, JJ., disqualified and not participating. Special Chief Justice Robert Shults and Special Justice Frank Snellgrove join in the opinion.


author: Carleton Harris, Chief Justice.

text:
    CITY OF MULBERRY v. E. L. EDWARDS et ux
    74-73
    511 S.W. 2d 468
    Opinion delivered July 15, 1974

      Jeta Taylor and Ralph W. Robinson, for appellant.

      N. D. Edwards and Lonnie Batchelor, for appellees.
   Carleton Harris, Chief Justice.

The City of Mulberry filed a condemnation complaint against certain lands belonging to E. L. Edwards' and wife in Crawford County. According to the judgment, one 40-acre tract was taken; approximately 9.2 acres of another 40-acre tract, and a flowage easement containing 14.92 acres were also included in the taking. On trial, the jury found damages in the amount of $33,900 and from the judgment entered in accordance with the verdict, the City brings this appeal. The first three points for reversal all deal with the same contention and will be discussed together, such contention relating to alleged payments to be received by appellees from the Soil Conservation Service as contributions for the relocation of improvements on the Edwards property. Bobby Geliy, an expert witness on behalf of appellees, in estimating damages to the Edwards’ property, included the value of the Edwards’ home at $12,432.00 and estimated the value of outbuildings that would be destroyed at about $1,500.00. Out of the presence of the jury, counsel for appellant stated that he desired to ask the witness “if he knows whether or not the Soil Conservation Service reached an agreement with Mr. E. L. Edwards and his wife during his lifetime, but they would claim his relocation expenses and under the agreement Mr. Edwards was to build him a new house further east near the highway and would pay him something like Twenty-Three Thousand Dollars for his relocation expenses, and the reason he has not been paid is the state has not been paid that money because they were waiting for this condemnation suit to be tried. And that’s what I want to ask him.” After a long discussion, the court held that the question could not be asked. Counsel for appellant sought to propound a similar question to Mac Bolding, another expert witness on behalf of appellees, but this was also overruled. Following the noon recess, the court met with the attorneys in chambers, at which time counsel for the City stated:

“The plaintiff, City of Mulberry, Arkansas, offers to prove by the witness Bufford Polk, area Conservationist of the United States Soil Conservation Service, that has jurisdiction in Crawford County, Arkansas, that in the case of the City of Mulberry against E. L. Edwards and his wife, that the Soil Conservation Service would make available to the City of Mulberry Arkansas, approximate sum of Twelve Thousand Three Hundred Dollars to pay on the relocation expense of Mr. and Mrs. E. L. Edwards ***of approximate same quality that they had prior to the time that the City of Mulberry condemned their land on October the First, Nineteen Hundred and Seventy-One, and this relocation expense was provided in Unified Relocation Law passed by Congress in 1970 or ’71.”

It will be observed that counsel had backed off from the original contention, viz, that money would be paid by the Soil Conservation Service directly to appellees, and contended that the money (though a different amount) would be paid to the City of Mulberrry. Counsel for appellees responded that whatever the Soil Conservation Service paid to the City of Mulberry was between those two entities and that appellees were looking to the City for compensation since their property had been condemned by the City. The court held that the condemnation proceeding had been brought by the City; that it was responsible for any damages the jury might find the landowner entitled to recover and the testimony would be inadmissible, adding that if any money were paid to the City, “then at that time the court can pass upon it***.”

The court’s ruling was correct. This litigation was between the City and appellees and what the Soil Conservation Service might or might not pay to the City of Mulberry in the future on the relocation expense of appellees was not an issue.

It is next contended that there was no substantial evidence to support the verdict and that it was grossly excessive, it being the view of appellant that witnesses Geliy and Bolding did not give a satisfactory explantion of how they arrived at their conclusions as to damages. It is asserted that they ignored sales in the immediate area and used other sales not in the immediate area in arriving at their valuations.

Our comment in City of Mulberry v. Shipley, 256 Ark. 635, 509 S.W. 2d 536 (May 28, 1974), is, we think, apropos to the present argument.

“It is finally asserted that there is no substantial evidence to support the verdict, which appellant contends was grossly excessive. Under this point, it is asserted that the sales used by Bolding were not comparable, and that he, in effect, ‘by passed’ sales of land which were comparable to the Shipley property. It is true that witnesses for appellant mentioned sales which were not testified to by Bolding, and which might have been considered more comparable, but this was a matter for the jury to determine, since they heard the witnesses for both sides. There was no motion to strike any of Bolding’s testimony, nor any motion to strike the values he reached. Accordingly, the trial court was not requested to declare, as a matter of law, that his testimony fell short of that legally required.”

Here, again, there was no motion to strike any of the testimony of either Geliy or Bolding, nor was there any objection made as to the value figures given by the witnesses. In other words, the substantiality of their testimony was not questioned. As to excessiveness, the verdict was within the amounts set by the witnesses, and we are in no position to substitute our judgment for that of the jury.

Affirmed.

      Mr. Edwards died after the commencement of the action but prior to the trial and the cause was revived in the name of the widow and heirs.

      In Geliy’s opinion, the before the taking value was 861,000, and his after the taking value was 826,320, or damages in the amount of 834,700. Bolding’s before taking value was set at 850,000, the after taking value at 822,560, or damages in the amount of 835,440. Two expert witnesses on behalf of the City fixed damages at 814,625 and 814,844, respectively.

      Amond Edwards, a son of Mr. and Mrs. Edwards, 58 years of age, and who, upon his father’s death, became one of the owners of the property, testified that he lived with his parents until the time of his marriage, and was thoroughly familiar with the lands taken. On the basis of before and after values, he fixed damages at $38,000.


author: GEORGE Rose Smith, Justice. J. Fred JONES. Justice.

text:
    LIBERTY MUTUAL INSURANCE COMPANY v. James BILLINGSLEY et al
    74-62
    511 S.W. 2d 476
    Opinion delivered July 15, 1974

      Wright, Lindsey & Jennings, for appellant.

      Laser, Sharp, Haley, Young & Boswell, P.A., for appellees.
   GEORGE Rose Smith, Justice.

This is a personal injury action based upon products liability, but the appeal presents primarily a question under the workmen’s compensation law. Liberty Mutual, the compensation insurance carrier for the plaintiff’s employer, asks us to modify or explain two earlier decisions in which we considered the insurance carrier’s rights when a compensation claimant seeks to effect a compromise settlement with a third-party tortfeasor. St. Paul Fire & Marine Ins. Co. v. Wood, 242 Ark. 879, 416 S.W. 2d 322 (1967); Travelers Ins. Co. v. McCluskey, 252 Ark. 1045, 483 S.W. 2d 179 (1972). Specifically, Liberty Mutual argues that in this case the trial court should not have approved the proposed compromise without requiring the parties thereto to show that the terms of settlement were fair to Liberty Mutual.

The facts are best understood in the light of our two earlier decisions. The workmen’s compensation law provides, in broad outline, that an insurance carrier may recoup part or all of its past and future compensation payments by asserting a right of subrogation against the first two thirds of the claimant’s recovery from a third party. Ark. Stat. Ann. § 81-1340 (Repl. 1960). In Wood we construed subsection (c) of that section to mean that the carrier’s right to a lien is absolute only when the claimant’s suit is prosecuted to judgment. Hence, we said, the claimant and the tortfeasor can “settle around” the carrier if their settlement preserves the carrier’s right to proceed against the tortfeasor. In McCluskey we tempered Wood by holding that such a compromise settlement must have court or commission approval, after the carrier has been given notice of the proposed settlement and an opportunity to be heard.

Now, the facts in the case at bar: Billingsley, the claimant, was working for Reynolds Metals when he was seriously injured while operating a forklift truck made or sold by one or another of the three defendants. Liberty Mutual, as compensation carrier, began paying medical expenses and temporary total disability benefits. When Billingsley and his wife brought this action against the alleged tortfeasors, Liberty Mutual intervened to assert a subrogatory claim for its past outlays and possible future liability.

The Billingsleys had sued for $900,000. The three defendants eventually offered to settle for $195,000 if the release also extinguished their possible liability to Liberty Mutual. Billingsley rejected that proposal, not wishing to give up any of his rights under the compensation law. The defendants then offered $185,000 to the Billingsleys and $10,000 to Liberty Mutual. Counsel for the Billingsleys, pursuant to McCluskey, gave notice to Liberty Mutual that the circuit court’s approval of the settlement would be sought.

At the hearing the Billingsley’s attorney briefly explained the seriousness of Billingsley’s injuries, the possibility that his clients might recover nothing if the case went to trial, and his clients’ desire to accept the settlement. In opposition, Liberty Mutual’s attorney restated the position his client had taken throughout the negotiations: Liberty Mutual contends that it is entitled to a statutory lien for the full amount of its past and future liability and that the claimant “must make some compelling showing why he should be permitted to settle around the compensation carrier.” The circuit court approved the Billingsleys’ $185,000 settlement, leaving Liberty Mutual free to pursue its action against the defendants.

For reversal Liberty Mutual again insists that the burden is on the claimant, to make some “compelling showing” to justify his separate settlement with the defendants. There is no such requirement in the statute. Section 81-1340 (c) requires court or commission approval of the settlement, but the statute gives no hint of what considerations should influence those tribunals in reaching their conclusions. We must decline Liberty Mutual’s suggestion that we lay down guidelines to govern hearings held pursuant to McCluskey. Experience has frequently shown that .when a statute is silent upon some point, its interpretation is best developed case by case, when genuinely adversary arguments can be considered against a background of actual facts.

McCluskey afforded the carrier an opportunity to be heard, but here Liberty Mutual did not take advantage of that opportunity. It did not show, for example, that it had taken the lead in exploring the facts supporting the claimant’s cause of action in products liability. To the contrary, Liberty Mutual apparently doubted the probability of success and devoted hardly any time or money to the investigation. Liberty Mutual showed that prior to the hearing it had paid $14,000 in medical expenses and disability benefits, but it made no effort to estimate its possible future liability. Consequently there is no basis for saying that the defendants’ offer of $10,000 to Liberty Mutual was out of line with their offer of $185,000 to the Billingsleys, if such a disproportion be regarded as important. We are unwilling to say either that the statute places the entire burden of proof upon the parties to the independent settlement or that it affords the insurance carrier a veto of any compromise not to its liking (an attitude which is suggested by Liberty Mutual’s insistence upon a lien for its entire past and future payments). When we lay aside those two possibilities there is no basis for holding that the circuit court abused its discretion in approving the settlement between the Billingsleys and the defendants.

As a subordinate contention Liberty Mutual argues that its motion in the court below that Judge Means disqualify himself from passing upon the comprojnise settlement should have been sustained. It was shown that Judge Means had pending an action for an injury to his hand, in which Liberty Mutual was the defendant’s liability insurer. Under our constitution and statute those facts do not establish a disqualifying interest in the case at bar. Ark. Const., Art. 7, § 20 (1874); Ark. Stat. Ann. § 22-113 (Repl. 1962); Ark. State Highway Commn. v. Conway Development Corp., 244 Ark. 988, 428 S.W. 2d 291 (1968).

Affirmed.

Jones. J., dissents.

J. Fred JONES. Justice.

Notwithstanding our decision in St. Paul Fire & Marine Ins. Co. v. Wood, 242 Ark. 879, 416 S.W. 2d 322, I am still of the opinion that the compensation carrier’s statutory lien, when such carrier joins in an action against a third party tort feasor, is “upon two-thirds [2/3] of the net proceeds recovered in such action that remain after the payment of the reasonable costs of collection ...” as specifically spelled out in Ark. Stat. Ann. § 81-1340 (Repl. 1960).

I am unable to enlarge upon my dissent in Wood and my only object in dissent now is to point out that under the interpretations given § 81-1340 (a) and (b) in St. Paul Fire & Marine Ins. Co. v. Wood, supra, as well as Travelers Ins. Co. v. McCluskey, 252 Ark. 1045, 483 S.W. 2d 179, and now by the majority in the opinion in the case at bar, there is no substance left in subsection (c) of § 81-1340. It appears to me that the requirement in subsection (c) that the “Settlement of such claims under subsections (a) and (b)” have the approval of the court or Commission is a vain and useless provision without substance or reason in the light of the interpretation placed on (a) and (b) by Wood and McCluskey and now by the majority in the case at bar.

It should really be no concern of the compensation carrier or of the circuit court or Commission whether the injured employee settles his claim against the third tort feasor for $100,000 or $200,000 if the compensation carrier is only left with a separate cause of action against the third party tort feasor for such amount as such carrier is able to obtain, by jury verdict or otherwise, over and above what the injured employee and third party tort feasor can agree the case is worth for the purpose of their separate settlement in the first place.

I cannot escape the fact that in subrogation cases of this kind the entire amount the compensation carrier is required to pay is brought about and caused by the third party tort feasor. It is my view that the third party tort feasor owes the compensation carrier out of the same pocket or purse it owes the injured employee, and the compensation carrier should share in the statutory two-thirds of the proceeds of a third party settlement regardless of the amount of such settlement.

The effect of the majority opinion, as I see it, is to say to the compensation carrier “you must pay compensation benefits brought about by the negligence of the third party but you are only entitled to recover against the third party such amount as you can obtain after the injured employee gets what he wants and is satisfied.''

I agree with the majority that the trial judge did not err in refusing to disqualify this case, but I would at least modify our decisions in Wood and McCluskey, supra.


author: George Rose Smith, Justice.

text:
    Orville M. FINE d/b/a FINE TRUCK LINE et al v. Frederick M. JACOBS d/b/a WALDRON TRUCK LINES
    74-86
    511 S.W. 2d 491
    Opinion delivered July 15, 1974

      Harper, Young & Smith, for appellants.

      Crouch, Blair, Cypert & Waters, for appellee.
   George Rose Smith, Justice.

This appeal challenges an order by which the Arkansas Transportation Commission authorized the appellee Jacobs, doing business as Waldron Truck Lines, to extend his certificated route for a distance of some 35 miles south of Waldron. The fundamental question, as we view the record, is whether the Commission was justified by law in granting Jacobs’ application not upon the basis of public convenience and necessity but upon the ground that Jacobs needed a source of additional revenue to remain in business. We are compelled to conclude that our statutes do not contemplate the action that was taken by the Commission (and affirmed by the circuit court) in this case.

The applicant Jacobs, for some 20 years before this case arose, had owned and operated a small truck line (employing two drivers) with authority to transport general commodities from Fort Smith to a point slightly south of Waldron, with service to intermediate points. Jacobs testified that he had not considered the possibility of expanding his operation until he received the impression from certain questions asked by a member of the Commission at an earlier hearing, at which Jacobs appeared as a protestant, that the commissioners thought that Jacobs “should either expand [his business] or get out.” Acting on that impression, Jacobs filed the present application for additional authority, making this explanation in his preliminary written statement to the Commission:

“If our truck line is going to survive and continue to serve the public at Waldron, Arkansas, we are forced to acquire additional authority because of the dilution of traffic caused by the introduction of competition into Waldron. A natural point for us is Mena, Arkansas. Mena is directly south of Fort Smith, 85 miles from Fort Smith and 35 miles from Waldron.”

It is evident that Jacobs correctly understood the Commission’s suggestion, because in this case the chairman of the Commission announced a 10-minute recess at the end of the testimony, after which the commissioners returned to the hearing room for this statement by the chairman:

“A decision has been made in this, gentlemen; it. is not a unanimous decision, but the Commission will grant this application, and in granting it we realize that the case presented here was not the most convincing case that has ever been presented before this Commission from the standpoint of numerical numbers and supporting witnesses. However, the majority does recognize the fact that, notwithstanding that, this truck line is a small truck line and in order for it to continue to exist and serve its present customers this Commission is going to have to take some action in order to assist it to develop more revenue from some source. We know of no other way to do it except to extend its authority as requested, and therefore the application will be granted. The hearing is adjourned.”

According to the proof there was already existing service between Fort Smith and Mena when Jacobs filed the present application. In that situation it is well settled that “a certificate may not be granted where there is existing service over the route applied for, unless the service is inadequate, or additional service would benefit the general public, or unless the existing carrier has been given an opportunity to furnish such additional service as may be required.” Santee v. Brady, 209 Ark. 224, 189 S.W. 2d 907 (1945). We are not out of sympathy with the Commission’s desire to keep a small truck line in business by expanding its territory, but we can find nothing in the statute to support the action taken here. Needless to say, the matter of fixing the State’s policy upon the point at issue is for the General Assembly.

In its formal order the Commission enumerated a few minor points touched upon in the record, such as one shipper’s complaints about the appellants’ delay in settling claims, trivial instances of damage to property in shipment, and assertions that one-day service had not always been available between Fort Smith and Mena. We need not discuss those matters in detail, it being enough for us to note that when the record is considered in its entirety the preponderance of the proof does not establish any one of the grounds for additional service that were enumerated in the Brady case, supra. In fact, that was apparently the Commission’s own view, else there was no need for resting its decision upon the appellee’s need for additional revenue.

Reversed.

Byrd, J., dissents.


text:
    James G. COLLINS et ux v. Walter SKELTON, Assistant Director of Revenues
    74-90
    512 S.W.2d 542
    Opinion delivered July 15, 1974
    [Rehearing denied September 9, 1974.]

      Hubbard, Patton, Peek, Haltom & Roberts, by: William B. Roberts; Smith, Williams, Friday, Eldredge & Clark, by: Byron M. Eiseman, Jr. and Lewis II. Mathis, for appellants.

      Walter Skelton, Karl Glass, Terry Little, John Gaulney and Harlan Ray Hodnett, for appellee.
   George Rose Smith, Justice.

The appellants, residents of Texarkana, Arkansas, in filing their 1971 joint state income tax return, omitted three items of income derived from sources in Texas. The appellee’s predecessor in office considered the omitted items to be taxable and assessed a deficiency of $917.47. The taxpayers, pursuant to Ark. Stat. Ann. § 84-2038 (Repl. 1960), petitioned for a judicial review of the deficiency assessment. By a plenary decree the chancellor sustained the deficiency assessment with respect to the largest item. By summary judgment, however, the chancellor set aside the deficiency assessment with respect to the two smaller items. An appeal and cross appeal bring up all three issues for review. The questions presented, which turn upon the proper interpretation of our income tax laws, must be separately discussed.

First, the Cannon & Parker partnership income. The direct appeal questions the chancellor’s conclusion that this item was taxable. The appellant James G. Collins owned as an investment an interest in Cannon & Parker, a partnership operating a retail clothing store in Lufkin, Texas. The partnership engaged in no business activity in Arkansas. Collins, whose partners occasionally asked him for advice, received $11,274.99 as his share of the profits earned in 1971.

The chancellor was right in holding this item to be taxable. Our statute contains a sweeping levy of the tax “with respect to the entire income of every resident.” Ark. Stat. Ann. § 84-2003. The state’s power to tax the out-of-state income of an Arkansas resident was discussed and sustained in Morgan v. Cook, 211 Ark. 755, 202 S.W. 2d 355 (1947). The inequities of double taxation are avoided by Section 84-2017, which gives the taxpayer credit, up to our own rates of taxation, for income taxes owed to another state upon income derived from sources within that state. It is conceded that Texas levied no income tax in 1971; so Collins was not entitled to the statutory credit.

We cannot sustain the appellants’ argument that the income in question is exempted from taxation by the Uniform Division of Income for Tax Purposes Act, which we adopted as Act 413 of 1961. Ark. Stat. Ann. §§ 84-2055 et seq. (Supp. 1973). That statute applies to income “from business activity which is taxable both within and without this state.” Section 84-2056. It is clear that the taxable business activity must take place in two or more states (including Arkansas), because the act apportions taxable income to Arkansas upon a percentage basis determined by comparing the taxpayer’s property, payrolls, and sales in Arkansas with his total property, payrolls, and sales. Sections 84-2063 to -2071. Since Cannon & Parker had no business activity in Arkansas in 1971, the act was not intended to apply to the income now in question. Nor can the appellants derive any benefit from Arkansas Income Tax Regulation, Art. 3, § 84-2018.1, because that regulation merely repeats the three-part apportionment formula that is contained in the Uniform Act just mentioned.

Second, the Collins & Williams Leasing Company partnership income. The cross appeal challenges the chancellor’s conclusion that this income, in the amount of $1,615.79, was not taxable. Apparently the chancellor, in entering a summary judgment for the taxpayer, assumed that the Texas partnership was connected with a different partnership, Collins & Williams, which operated a clothing store in Texarkana, Arkansas. As we read the testimony, the Collins & Williams Leasing Company was an independent Texas partnership that was formed for the sole purpose of leasing certain personal property in Texas. If so, this item of income falls within the same category as the income from Cannon & Parker, previously discussed. In any event, however, there is an issue of' fact; so the entry of a summary judgment was error. That phase of the case will be remanded.

Third, the rental income from real property owned by Collins in Texas. The cross appeal also questions the summary judgment in favor of the taxpayers with respect to income of $86.14 received as rent from real property owned by Collins in Texas. Such income was formerly excluded by Act 162 of 1943, compiled as Ark. Stat. Ann. § 84-2018 (Repl. 1960). That exclusion, however, was repealed by Act 75 of 1969, compiled as § 84-2018 of the 1973 Supplement. We can find no basis for the summary judgment exempting this rental income from taxation. In fact, the appellants do not mention this trivial item either in their brief in chief or in their reply brief. Since the rental income appears to be prima facie taxable under Section 84-2003(a), this phase of the case will also be remanded.

Affirmed in part and reversed and remanded in part.